March 11, 2020

Will Coronavirus Kill This Deal? (#85, WYL)

by The Pitch

There’s a tried and true playbook in tech: get a ton of users, then figure out how to monetize them. Today’s founder, Ofo Ezeugwu, has plenty of users on his site, but the investors press Ofo about his plans to monetize. And then, complications arise when coronavirus enters the scene. 

Today’s investors are Sarah Downey, Michael Hyatt, Jillian Manus, Phil Nadel and Charles Hudson.

Also, don’t miss our exclusive episode, “Jillian Manus on the Coronavirus and Startups” available only on Spotify. Jillian has lots of timely advice for founders weathering rocky times.

Transcript

Okay so, a few weeks back, the team and I were hard at work, doing what we do best. Churning out new episodes of this show. when suddenly the coronavirus took hold in the US. And we thought ... This will have an impact on a lot of things, but it’s not something we’ll need to talk about on this show. Well, that apparently wasn’t very well thought out. Because in this episode of The Pitch, the virus otherwise known as COVID-19 plays a role. But that’s not till later in this episode.


Here’s the thing though, I did an interview with one of our investors, Jillian Manus,… And she explained how big of an impact this is already having on early stage startups. And she outlined exactly what founders should be doing right now, and what startups can expect in the next year or so. The team and I really enjoyed that interview. But we couldn’t fit very much of it into this week’s pitch. So we turned it into its very own special episode.


To hear that, head on over to Spotify. It’s the only place you can hear it. Search for The Pitch. The exclusive episode is called “Jillian Manus on the Coronavirus and Startups”.  


Alright, back to today’s episode. The pitch for WhoIsYourLandlord is coming up, in just a moment.


[break]


So there’s this classic startup strategy, get a boatload of users. And then figure out who’s gonna pay you to hawk their stuff to your users. This strategy worked out pretty well for Facebook and Google. 


Well today’s founder is well on his way to getting his very own boatload of users. He’s building a review site, kinda like Yelp and Tripadvisor, except it’s a place where people can rate their landlords.


But if so many companies have been so successful selling out their users, the investors are wondering. Why is this founder leaving money on the table?


From Gimlet, this is The Pitch. I’m Josh Muccio.


Let’s meet the investors.


I’m Phil Nadel

Phil’s companies have sold for hundreds of millions of dollars. Now he manages Forefront Venture Partners, one of the largest syndicates on AngelList.

I’m Michael Hyatt

Michael built and sold two software companies for over $500 million dollars and now he invests for himself.

I’m Sarah Downey

Sarah’s a partner at Accomplice where they’ve invested $600 million in over 200 startups so far, one example, a company called Draftkings.

I’m Charles Hudson

Charles started Precursor Ventures where he’s invested $20 million in over 100 startups to date. 

I’m Jillian Manus

Jillian is a partner at Structure Capital, where they’ve invested $98 million in high-profile startups like Uber.


Alright, here we go.


Sarah: Hey, I’m Sarah. Nice to meet you. How are you?

Ofo: Hi. Ofo.

Phil: Phil.

Charles: Nice to finally meet you.

[laughter]

Jillian: Hi.

Ofo: Awesome. My name is Ofo Ezeugwu, and I am CEO and cofounder of Whose Your Landlord. A few years ago I was a senior at Temple University, and served as the vice president of the student body. It was in that position that I saw a lot of complaints from students with the main one being mainly housing. So students were annoyed that they'd sign a lease and on the other side of the lease, if they were a female tenant, they were being harassed by their male landlords, there was infestation issues, there were septic tanks backing up and basements flooding, electrical fires that would happen over your break and you'd come back to seeing that house.] 

Phil: Welcome to Philly, baby.

[laughter]

Ofo: Right, welcome to Philly. And so the key for us was there had to be somewhere you could review your landlord before ever signing a lease so you'd know what you were getting yourself into. That being the nugget of an idea of what would become Whose Your Landlord. 

If you're a renter using our platform, you can go on it and post reviews, see reviews on Whose Your Landlord. We, we have reviews in seven key categories for landlords, property managers and developers, ranging from responsiveness to condition of property and safety. 

If you’ve ever had a crappy landlord, it should come as no surprise that it was pretty easy for Ofo to get people over to his new website to review their property managers. 

But what Ofo realized, was that there wasn’t all that much money in renters leaving and reading reviews. The people with the deep pockets are the landlords. So he started to build something for them.

Ofo: On the other side of our platform we've created a dashboard for landlords, property managers and developers to also see value as well in our platform. And the key thing for them is they want to understand what people are saying about them across the industry 

By aggregating reviews from all over the web, Ofo thinks that he can save the landlords a bunch of time. They can respond to reviews that come in on WhoIsYourLandlord, Google, Yelp, or wherever.

Plain and simple, he’s selling subscription software for landlords to engage with their tenants. In investor terms they call it SAAS.

Ofo: In the last four years we've grown tremendously. And at this point, we now have reviews in over 275 US cities, we have over 15,000 reviews between New York, Philly and DC alone, We've been named one of five apps to use when looking for housing in New York City by the New York Post, and we've been called the MVP of landlord review sites according to ApartmentTherapy.com. Um and we’re raising currently a million. With that, I'll take questions. 

Michael: And what’s the valuation this round?

Ofo: Ah 6 million cap. 

Phil: So you go to a, a landlord to pitch this, right, and you're saying, okay, this is going to enable you to be more responsive to problems or concerns that are being raised by potential renters, right. Is that the pitch? 

Ofo: So you, you're more aware as to, yeah, what's being said about your building online, how you, how you can address it. What we've seen often times too is a landlord will be based in Florida, for example, and have a management company in New York City. And really not be keen as to what's going on within their building. So when, when they are, are then made privy to that information, whether good or bad, they then also know how to best operate in terms of using that company going forward or not. 

Phil: And then how are you acquiring the landlords?

Ofo: That's been a lot through warm introductions. So right now in our pipeline for 20, 2020, we've got 350,000 units. The way we've gotten to that that number, is by getting personal introductions to the CEOs, the CMOs of these bigger development companies.

Phil: How are you getting those?

Ofo: Yeah. Because a lot of our ment... So three of our investors are CEOs of commercial real estate and residential real estate companies. and we've now partnered with some of the biggest clients in the real estate space, namely Berkadia, which is a Warren Buffet company, a Berkshire Hathaway and legal financial group partnership.

Ofo is doing some serious name dropping here. But for good reason! This name, Berkadia, is going to be important as this pitch goes on … 

They’re a real estate behemoth. They do a lot of things, but most importantly, they lend money to people who want to buy rental properties. So Berkadia's network of landlords is massive.

But before we get ahead of ourselves ...

Michael: How do you make money? 

Ofo: Yeah. Absolutely. So with the subscription SAAS software, we charge a dollar per unit per month for real estate developers, landlords and property managers to use our software. We're in version two of our beta. We're now in a paid pilot mode. Um, that's why we partnered with Berkadia, because they're actually rolling out our software to several of their clients. 

Michael: Okay. So I guess sell us on why this is going to be a big cash flowing business. Like where’s the, where’s the meat? Where’s the money here?

Ofo: Certainly. So we charge a dollar per unit per month for real estate developers, landlords and property managers to use our software. Currently in the US there’s just under 50 million residential units out there 

Michael: But that’s a small market. 50 million a month in a total market, I don’t know, whatever, 600 million a year, it’s too small to matter. 

Ofo: So … Well, it’s, it’s not in the sense that, first of all, the, the money will go up. So we’re not just going to be charging $1 forever in perpetuity. This is just what we’re charging right now. 

Michael: But is that where the money is?Something hits me with that’s not where the money is. 

Phil: What’s your current recurring, monthly recurring revenue?

Ofo: Yeah, right now we’re right around $1000 in terms of our software itself. So that...

Phil: $1000 MR?

Ofo: Yes. From the software.

Phil: Right. And then you have content income as well? Or sponsorship income? 

Ofo: Correct. And we’ve generated about $200,000 in the content incoming the last two years. 

When ofo says $200k in content incoming, he means $200k in revenue from sponsored content. These could be, moving companies, cable companies, anyone in the renter’s ecosystem who want to advertise.

Phil: So you, you referred to your business as a SAAS business, but you, you're not a SAAS business. You're, you're in the sponsorship business. You, you're generating $1000 a month in recurring revenue from the SAAS business but you've generated $200,000 in two years from sponsorships. To me, you're in the, you're selling sponsorships. That's your business.

Jillian: I don't think so.

Ofo: Well, no, we just, well so the thing is for the software, we just started the software, right. So, we partnered with Berkadia three months ago and the reason being was we finishing out the software to roll out top of 2020 to many clients. Their client pipeline as well as our own. 

Michael: So talk to me, you know, normally I shy away from saying this, but I, I, I see the value of your company being a a data aggregation play of, of tremendous amounts of information about people renting. And when you get enough of them, it becomes statistically significant for that data to be meaningful to a lot of places like, you could literally sell this stuff to hedge funds, and stuff like that. 

Ofo: Redburn, yeah, CEO of Redburn Development, Jeff Buell, so he mentioned to me... he was telling me, he was like, wait, you founded Whose Your Landlord? I was like, yeah. He's like, your site helped me make $42 million in the last two years.

Jillian: Oh bother.

Ofo: I said, how is that possible? He goes, there was a distressed property in Binghamton, New York. It wasn't performing well. Um, he's like my company acquired it, we rebranded, renamed, and in over two years performed very well, got really good reviews on your platform, and saw the value increase by $42 million.

Michael: But don't you find that terrible? Because I mean, how did you make off of that 42 million?

Ofo: But that's before we even had the software built out for any of this. This is just reviews. 

Michael: But I mean, the point is is that, why are you doing what you're doing? Why this one dollar? Why don't, why wouldn't your platform be as getting as many buildings on as possible, many people on as possible, making money off the data, but also, like, ah, are you interested in coming to this building? And that lead goes to the landlord. You get paid for that lead. Like, there's a whole bunch of non-friction ways to build this thing. Because your value is strictly how many buildings, how many people. But you, your putting up this friction.

Phil: Or just give it away for free. Why not give it away for...

Michael: Give it away and then start layering on all these other services. 

Ofo: Mm, well, I don't, I don't think we're not doing that. I think it's a matter of timing, right. We build up the community, built up the data on our end first. And, you know, and just learned a lot about the industry and also made a name for ourselves.

Jillian: Yeah, they have to prove out...

Ofo: Exactly. And then the second part of that is now bringing on these buildings and… 

Phil: But wouldn't it be easier to bring on the buildings if you were doing it for free? 

Ofo: I, I think so. I don't, but, the reason why I push back on that a little bit is because when you charge them something for it, they take it more seriously. And they, they give us feedback. You know what I mean, they're using the software, they're looking for ways of improving it. So that's, it's more of a, of, of, we're thinking of the psychology behind it more than just giving away something for free. Um, that's, that's how we're thinking about it. 

Ofo is desperately trying to defend his $1 price tag. But Michael and Phil see it very differently. They want it to be free, so Ofo can get even more landlords on the platform .. .and then take all that data and go sell that to the big players. 

When we come back, Ofo will have to convince a divided panel of investors, that his plan is better than theirs.

[break]

Welcome back. The investors just started to dig into the Who’s Your Landlord business model. Ofo explained his strategy to get a bunch of landlords paying $1 a month. Now, Sarah’s like, what about all the bad landlords that don’t really care what their renters have to say.

Sarah: What do you do about like, I mean, you're going after the good guys here, right. But what of the slum landlords that, the ones who like you really need, as a tenant, you really need good reviews and good information about. Like how does that work?

Ofo: Yeah. So, that's very important that you ask that because we've seen all kind of horror stories, as you can imagine.

Sarah: Yeah. 

Ofo: Um, one of the funny things that happened this summer was um the head of branding at Twitter, Meg Dudley, reached out to us. I thought we’d finally earned our blue check. We were making it. And then she was like, actually I live in Brooklyn, and me and my husband are going through a horrible situation with our landlord and property management company and I need assistance. Right. And in situations like that, what we usually do is we’ll connect them with our legal partners. Here in New York we work with BFK legal group, um, as well as there’s a myriad, like, Met Council and… 

Michael: Do you get paid for that? 

Ofo: With those kind of partnerships? Um, if it was to, I think, manifest into working with them in some capacity...

Michael: But why? Why? If you’ve just sent someone a potential client, they should pay you for that lead. It’s, it’s like, I guess I’m a little frustrated because I like what you’re doing but it’s like there’s all these places for you to make money that you’re not. It’s almost like you’re doing this as a, almost volunteerism. And it’s like, I, I, that’s great, but I don’t want to do that. I want to make a lot of money. So how do I make a lot of money out of this. Have you really thought this through? 

Ofo: Absolutely. You know, from that, from that point of view, I think one of the things that we, we knew we had to do focusing on in terms of growth, was focusing on the data and the community, community building first. Um, and goal for next year is to roll out an app, an app that both, you know, the residents as well as a landlord or property managers can use. Timing is a... 

Michael: But tell me more, it’s more than an app. Tell me about data scientists. Tell me about prediction machines. Tell me about building something. What, what’s the thing?

Ofo: The the...

Jillian: What’s the endgame here? 

Ofo: The endgame, I mean, so, our partnership with Berkadia is huge because organizations like them, we’re meeting with Fannie Mae’s soon too, kind of very similarly, those kind of companies, they see a lot of value in what we’re doing and could potentially, potentially exit to them.

Jillian: Okay. Can you expand a bit more if possible on your partnership with Berkadia.

Ofo: Sure.

Jillian: What exactly, okay.

Ofo: Absolutely. So we meet with Berkadia every week Um, the focus of our, of our partnership with them is simply to build our software and technological stack

Jillian: So they're going to help you, they're helping you....

Ofo: They're helping us do that now. Um so they have a team of over 800 developers, like software developers. They're working with us now on building that out. Versus us making it as a team and then just rolling out and hoping it sticks.

Jillian: I actually like that a lot. I often think that if you can have one sort of halo anchor partner, right, to help you build the product, that, that we look for in most of our companies. 

Oh that’s Ofo’s plan, get in deep with this industry kingmaker. Solving their problems could suddenly get a lot of landlords using Ofo’s software.

And while Jillian is intrigued by that path forward, Charles is more interested in another path. Advertising to renters.

Charles: You look at Yelp. What is Yelp? You can pay to advertise if you're a restaurant or a business on Yelp to boost your listing, but the product is effectively free to both sides to generate the most activity. And I keep thinking like, wow, well if you have, if I'm a renter and I'm looking at three different buildings and I come to Whose Your Landlord and you help me decide to go to Building A instead of Building B, there is a precedent in that industry for paying for lead gen. And it seems to me that a dollar per building is too little to be worth your trouble, and...

Ofo: Per unit.

Charles: Per unit. Sorry. Per unit. And so I just keep coming back to the point that Michael has which is there's so much money, you, you, you're creating so much value for the landlords. I kind of would be happier if there were a model where you're like hey, it's $5 a unit, $1000 building minimum. And this thing's amazing. Or it's free, but like you gotta get on our lead gen platform and you know, you can advertise your new property that you just built, it doesn't have any... 

Phil: Because you want to get scale. And if you get scale, which, which means...

Jillian: Welcome everyone on.

Phil: ... you know, both sides, if both sides are free, you'll get to scale more quickly and that'll enable you to generate the leads and to generate more sponsorship revenue and those kinds of things. But you need scale… 

Michael: I want you to become a TripAdvisor, you know, of apartment rentals, right? In the early days they had to get this mass community. And now they're in the business of helping you actually book the hotel. In the beginning, they weren't. Right? They started somewhere, just reviews, right? That's all TripAdvisor was. And then it got enormous. And then… eventually what I think in your, your site becomes is a place to book or actually in leasing, I want to live there, and it goes right to the building manager. 

Ofo: You're talking out of two sides right now, right. Because one part is bring them on for free, and one part is charge em a lot of money...

Michael: No, no! That's not what I'm saying! I'm saying that if you create a community for free, it's not. Because whenever something's free, you are the product. In other words, there are so many people, for instance, a lawyer may pay $50 or $100 a lead you pass over. That's a big chunky revenue. All these partners and services you have around these pass through, or maybe Verizon would pay you for it, a bank would pay you for it, a title insurance will pay you for it, whatever it is, um, is, is, those partnerships are big chunky revenue. If you had that ecosystem, you could prove that working, you have a very valuable business. 

Ofo: Exactly exactly. 

Michael: Look I...

Jillian: Sometimes that middle point is the worst point. one dollar seems ridicu -- it’s just not right You either do free or you do something considerable. 

Ofo: Sure but...

Phil: I think we're all saying the same thing. That's exactly right, Charles. I mean...

Jillian: Absolutely.

Ofo: So one of the key things Berkadia said to us when we agreed on the partnership at the start of the meeting, was there was two key value adds they saw for them, right. We've been building a strong community of renters with our own data. And another thing is that now their clients can see how they rank amongst other buildings and living communities in their region. So for them, it was very important we keep both sides of the business. I don't think you guys are inaccurate in saying one could be its own thing and the other could be its own thing. But I think the way we have real power in the real estate industry and become that big player you're talking about is by keeping both.

Charles: If every tenant is on it, they'll pay attention. And I keep coming back to something that, it's like a core belief for me, which is there is a very strong relationship between the product you build and your business model. And if you want to charge, if you have a business model, you want, this is... For me, this is why this is so important, this whole conversation. If you really want to build a SaaS business, and you really want to extract money from landlords, that is a totally reasonable way to go. You are going to end up building many more features that increase the value of the product to the landlord so that you can take out more money. If instead you say, hey, we're going to be a marketplace, you're going to pick up the phone and go call Burrow, and you're going to call moving companies, you're going to say, who are all of the ancillary providers around a move...

Phil: And then you need scale, though.

[crosstalk]

Charles: And you need scale. And you need to build relationships.

Phil: And then you want to do it free.

Charles: And you want to do little product features that enhance viral distribution that bring more traffic to the site. And those are two really different businesses. And it's not for me to say which one you should build. And so I'm I'm gonna pass because I think my instincts are around building a business that sounds like it's different than what your instincts are going to lead you to do. Which doesn't mean that I'm right and you're wrong. It's just hard for me to work with entrepreneurs when I feel like we're not totally aligned. And I have to say, I think you have so many insights about what works for both sides of this marketplace that no one else has. I think you're not getting properly compensated for what you've built...

Michael: That's what I'm trying to say.

Charles: And I think, I think, um, and it's, I think you are sitting on a goldmine of information -

Michael: Yes!

Charles: - about what works. And to me it would be a tragedy for you to not extract an appropriate amount of value for what you've created. 

Charles just said the words gold and mine ... but he passed? h Let’s see if any of the other investors are willing to roll up their sleeves and start digging.

Michael: Ah, I'm gonna pass. But here's the thing. I would really like to invest in your company. I just need you to come back and tell me how you're gonna have big fat chunky revenue come in, and I'm not sure you know exactly how to do that yet. I think when you figure this out it's going to be extremely powerful. You're onto a very interesting thing here, but you're gonna have to make the jump to how do I get, extract, what Charles said, which is how do I extract the value out of people... And, and I, I'm kind of pained in this pitch because I'm like, but, you know, where's the... I know Jillian wants me to say it. Where's the beef? Is that it's sitting there. I want to track you. I think you're a wonderful young man. I, I love what you're doing. But I want you to show me where the real revenue is. 

Sarah: The thing, the thing I'm struggling with here is like, and I get what people are saying, like, you're almost, you're straddling this line of like should it be free and pro-tenant, should it be paid and, I mean, it could be... There's a lot. I think you just need to figure that piece out. I'm with Michael in the sense that like once you answer that question, um, which is I think the fundamental question for this whole business, I think it's really interesting. And you have like a spark to you that is really awesome. So I would love to keep in touch. And, and, So it's a pass for me for now. But I really like what you're doing. And you.

Ofo: Thank you. 

Phil: So you've sort of gotten me over my initial concern about um when I asked you about the sales process because I just don't see that as scalable. And also the fact that if you're a SaaS business, which you say you are, you know, you're at $1000 MRR which is a great start but too early for us. So sort of for all those reasons, it's too early and I'm gonna pass. 

Ofo: Thank you. 

Jillian: So I think that you're going to address a lot of these questions I think, Berkadia With their help, and their contacts, um, I think you're good. I think you're, I think you know what you're doing. And so I do feel even though you keep saying this sounds like a volunteery thing, I think that this has both the values that I look for. Along with elevating communities, creating more transparency. So I'm going to put 25,000 in.

Ofo: Okay. Awesome.

Jillian: Okay. Of my own. And then I'd like to just spend a little time figuring out and maybe helping you to make some of those decisions.

Ofo: That'd be awesome. I'd appreciate that. Thank you.

Michael: Great. Thank you for coming.

Ofo: Thank you guys. It was a pleasure, all right. Nice to meet you all.

The investors see so much potential, but Ofo’s business plan is pushing them away. All except for Jillian, who’s not really sold on his plan either. But she thinks that with a little bit of guidance from her, he can figure out if he wants to be a SaaS business, or a review site. 

Phil: I think he needs to decide if he’s fish or fowl.

Michael: Right.

Jillian: I agree.

Phil: That’s the key thing. He can also make a business, I believe, out of a SaaS company, but not charging a dollar a unit a month. So that’s a way to go. Or the marketplace where you’re just scaling it for free to both sides and selling leads to everyone and, you know, and doing it that way. But you can’t… if he’s at a thousand MRR, and he’s generated 200,000 in sponsorship -

Jillian: I agree!

Phil: - he’s not a SaaS company right now.

Jillian: I agree. But he, he’s not a SaaS company, but he’s building this out with Berkadia. And that’s not a small, that is not a small feat gaining their partnership. I need to understand that more and what they’re going to do. Because a lot of these companies, I have two right now, they have an anchor, they’re building it out, and that anchor’s going to buy them. I mean, that’s basically how it, how it’s looking right now. And so I think that...

Phil: Yeah, I’m uncomfortable with that. 

Jillian: Well, I want to find out more. And I’m willing to invest a bit. 

When we come back... Jillian meets with Ofo, and then ... coronavirus.


[break]


Welcome back. Ofo walked away from the pitch, with a $25K commitment from Jillian. But he also walked away with a clear message from all the investors, dude. You gotta pick a side. Are you going to be Yelp for renters, or build software for landlords. Because you can’t be both. Ofo didn’t really communicate this in the pitch room, but in talking to him a couple months after the pitch, it was clear that he couldn’t disagree more.


Ofo: When we sat down with Berkadia in August to really put this all together, our partnership, they said it sounds like two businesses in one. And they said, We like that very much. We feel like the beauty and what's going to be the gold of your businesses is that you do marry the two." This isn't just a landlord-driven company where you don't care about the residents, you're about the dollar signs from the landlord. This isn't just a tenant-driven company where it's all about just shitting on your landlord, for lack of better terminology on it, and then doing away and not caring about how landlords, property managers, developers feel. The reality is somewhere in the middle is always the truth. I've looked at our information and data. I know the beat of a millennial in general, especially in urban environments, being cities. I can speak to those experiences. This is where I really genuinely feel like the founders of a company come into play, because my personality has always been bridging that gap. There's so much money right in the middle. 


Josh: Jillian said she wanted to invest $25k in the room, even though she seemed to agree with the other investors and felt like you did need to make some big changes to the business, that you did need to pick a side. I'm curious, what's happened with Jillian after the pitch?


Ofo: Yeah, Jillian's been great. So Immediately after the show, she was pretty responsive I think within the first 48 hours. We had a conversation. You know when you're talking with her you know not to cross her. But also you feel like she could give you a hug at the same time. I love that. That's how I feel like the call's energy was, you know? Throughout it, it was, "I'm going to hold you to task for being a founder. You need to be a CEO", right? "So I'm going to ask you CEO style questions. But I also, I care about the founder part of you as well".


Ofo: That's what I constantly felt throughout our 45 minute or so call. That, All of those parts I think are great, because that means I can show up as my full self in speaking with Jillian. I felt like that on our phone call.


Josh: Yeah, that sounds like the Jillian I know for sure. What did she want to see changed? What was she pushing for in that call?


Ofo: We definitely revisited the business model approach, right? It was ... let me meet with Berkadia. Let me learn a little bit about how they're looking at things too. But I think there's a way we can really blow this up in a very very strong way" Then we closed the call by her talking about next steps right. And umm post that meeting with Berkadia, we were in the green. She was reaffirming that she was committing the $25k. 


Josh: And they're cool with that? Your customer is cool with talking to a prospective investor who hasn't made up their mind yet, and filling them in on all the details of your business?


Ofo: I'll be real. Berkadia's the reason why we closed the last three investors. Every time, they leave that Berkadia meeting being like, "Oh yeah, this is the future." We just met with Fannie Mae on Monday. Berkadia facilitated that connection. Fannie Mae has things, and I won't get into all the details of it, but it's major, man. It's major.


Josh: All right. It sounds like a lot hinges on the relationship with Berkadia. Maybe too much of the business's success just hems on this one relationship.


Ofo: You're good!


Josh: How do you feel about that?


Ofo: I think everything's kicked into overdrive since the deal. But it doesn't hinge on it, because we still … The first 500K, it didn't necessarily rely on that Berkadia deal. I look at it as more fuel to the fire. You know really sparking that ignition. I think that's great. It's no steps backward, just forward progress. So I'm excited for the next Berkadia, and the next one. So are they. That means that they've bet on the right jockey and horse. 


Josh: Nice. Awesome, man. Well I hope you're right.


Ofo: Me too. Me too. 


Then, a few weeks later, Ofo forwarded me an email he received from Jillian. In the wake of the coronavirus hitting the US. And she said, in that email, and I quote “I am going to pause on all investments at this time … With the crashing of the market, my companies are very worried about a contraction of business and the need for additional runway. I am going to redirect my funding right now to help them.” end quote.


And when I called Jillian up, she explained that she is just way more risk-averse right now. She's paused on investing in companies that seem promising, but aren’t on a strong trajectory yet.


Jillian: I have not stopped on all companies, I've just stopped on companies that I do not see the clarity and a clear opportunity, the clarity of the product.

Josh: So the bar just got higher. 

Jillian: For sure. 

Josh: So you told Ofo you can't invest right now?

Jillian: Correct.

Josh: Or you won't be investing at all?

Jillian: No, no, no, I actually said listen, I still would like to talk to her Berkadia I've set Ofo up with a couple of VCs. I really like him a lot.

Josh: Mm-hmm (affirmative).

Jillian: I think that the business is yet to understand what it wants to be. I think that ofo is trying to serve both sides here and I don't feel that we understand the, the big product yet.

Josh: Yeah.

Jillian: Because, because I'm starting with all these businesses, you really invest into , the finish line, right? And so what I'm trying to see when I invest in a business is what it's gonna be what it has a capacity to be in three years, what it looks like and then I work backwards from that.And it's not necessarily the exit but I'm really, I'm trying to reverse engineer a company. And with ofo I couldn't see how I could reverse engineer because I didn't really know what the finish line is looking like. 

Josh: So those are all a lot of the concerns that were brought up in the pitch room and that's that was the bulk of the discussion between you and the other investors was around where's the real business here? Where's the real venture scale business here ofo but, but ultimately you invested kind of despite those things, , because I got the sense that you really wanted to, to help him. 

Jillian: I did. 

Josh: so what, what changed?

Jillian: I, I think the coronavirus. 

Josh: Mm-hmm (affirmative).

To hear what Jillian is advising her founders to do to protect their startups from the coronavirus … and why she does not think we’re heading into a recession, listen to my full interview with Jillian, exclusively on Spotify. In our exclusive episode titled “Jillian Manus on the Coronavirus and Startups”

But before you go listen to that, I have a question for you. How has the coronavirus affected your startup so far? Whether you’re a founder yourself, or if you work at a startup. I want to know how the fallout from this is affecting you. 

We’re moving quick on this, on Thursday, March 12th we’re opening up the pitch line to take your calls. I’m here for your coronavirus stories. 

I’ll be on the line from 12:30 EST to 2:30. And we’ve got a new hotline for you to call-in, at 833-PITCH-IT that’s 833-PITCH-I-T see what I did there!

And if you’re hearing this later and you missed the chance to call in, you can also email us at thepitch@gimletmedia.com and with the word “coronavirus” in the subject line. 

Alright, we’ll be back on Wednesday, March 25th. See you then!



The Pitch is hosted by me, Josh Muccio. Produced by Kareem Maddox and Heather Rogers. We are edited by Sara Sarasohn.

Theme music by The Muse Maker. Original compositions from Breakmaster Cylinder, Peter Leonard, SoWylie and The Muse Maker. We are mixed by Enoch Kim. 

Lisa Muccio coordinated the recording of this pitch. 

Thanks to Christie Pitts and the backstage crew for introducing us to Ofo.

As a reminder, no offer to invest is being made to or solicited from the listening audience on today’s show.

Thank you so much for listening. We’ll be back with a brand new episode. In two Weeks, on Wednesday. And please “follow” The Pitch on Spotify, so you don’t miss a thing.