He Quit Tesla, Pivoted GTM 14 Times, Raised $20M Solo | Jimmy Douglas, Plug

33:54And then along the way, we realized there are some nuts and bolts behind transacting cars that we need a person to own before we even get started. We're talking title, money, arbitration, transportation, everything behind the scenes that actually makes vehicles move because we're an Adams business. When something transacts, a truck picks up a vehicle somewhere. So then we brought on TN, who I had worked with at Tesla, and the three of us in a WeWork shoebox that ultimately laid the foundation for the dynamic and the culture within the team. It's really hard to even quantify what that was like.

34:38It felt like the three of us were manifesting this idea into reality, riding on a whole lot of hope that it would actually work because solving a cold start problem in a marketplace is already hard enough. What we were finding was that our thesis around EV differentiators is true, but the absolute majority of the market didn't realize that yet and weren't necessarily feeling some of the pain that we were building for. So getting to that first transaction was an absolutely euphoric experience, even though we lost money. Can you share a little bit more about what it's like to hire people away from big companies?

35:23You know what I mean? It's one thing to leave a big company to start a company. It's a different scenario when you're joining something else, which obviously you have a lot of ownership in, You have a lot of ability to help shape the outcome, but you're not, you're not like the CEO of it. Yeah. So therefore you are putting, you know, your eggs and into a basket that, you know, you're, you're influencing, but you're not the ultimate, like final call. So how, how do you think about bringing on early teammates and kind of like convincing them or, or maybe it's not even convincing them. Maybe it like, how do you, how do you think about that?

36:01What, what is it there that, that goes on? when you're part of the founding team early team of a startup one of the most critical attributes is that you're very high agency and very high agency people are very unlikely to be very happy at big companies because it's not it's typically not an environment conducive of high agency people having agency over their outcomes so when it came to hiring tn as an example who was a known quantity to me and vice versa. TM thrives on having agency and building a structure beneath him that operates in alignment with his own vision. And the sandbox that I'm presenting to someone in his position is highly attractive to the right person.

36:56If you have to convince them, then they're probably not the right person. The person that needs to be convinced is the person that maybe is holding on to the sanctity of not having as much agency over their own outcome. And that's the biggest thing that we would look for. But then the other, of course, is just conviction around the mission of what we're doing and the need for it to exist. Most people don't get it. Most people in automotive really don't get it. People who get it realize how big of an opportunity it is. care deeply about it being solved. And if you combine that with high agency and the opportunity to build something that reflects your own personal vision, it's highly attractive to the right people and super unattractive to the wrong people.

37:46Maybe we could talk a little bit about this for sale because you have all these bids, you end up losing money. Oh yeah. what does that look like in terms of sort of how you feel after that happens? What does that mean? How did you change things? How do you think about losing money early on? Startups lose money generally. It costs money to hire people. Oftentimes businesses are not profitable. So losing money on the first transaction isn't necessarily a bad thing. But I'm curious what that was like to sort of come out of that with that first sale? Like, did it feel like momentum? What did it feel like?

38:28And kind of what did you learn from it? You know, the most critical feedback I'd give to myself in that time is we just should have done that more quickly. A lot of buildup took place before we got to that first transaction. And if we had figured out how to cut through some noise and have that first transaction six months earlier, we would have learned a lot of critical lessons much faster. Would it have been possible, do you think? Like to get it six months earlier? if we were the owner of the vehicle yes interesting if we didn't have the sacred cow problem could have we could have transacted a vehicle one month into starting the company wow uh maybe or at least one month after Saul joined yes uh that goes back to that question how do you know when you should like put conventional wisdom aside if conventional wisdom is slowing down your speed to first test or first rep that's when you know you should be thinking extra critically about it any founder I give advice to, I always ask, what's the thing that you're doing?

39:25Are you transacting vehicles or any other sort of marketplace? Are you transacting something or whatever the metric is? Everything is noise until you figure out how to do it for the very first time. And you see how real users in the real world react to the thing that you've built. When you think about that transition moment where you realized, wow, we spent a lot of time because we didn't make that sort of unconventional decision, and you actually switched to that, what did that feel like? How did you know that it was really working? You said you got this hockey stick pretty quickly after, so that probably made it quite clear.

40:09But was there anything before that that kind of made you feel like as soon as you made the decision, like, wow, this is a notable difference? People were coming to us. We didn't have to go find them. The hardest part in our cold start between supply and demand was supply. We've never had a demand problem. We sell virtually every single vehicle that we get into our rails. and virtually all of the supply up until that point that we had sourced, which was, God, 40, maybe$50 million worth of EVs that we'd sold at that point in time, was through brute force. We found believers. We did sales calls. We did sales meetings.

40:52We socialized the hell out of what we were doing. and every vehicle that ended up being listed on that platform was largely the result of some sort of glass-chewing exercise. When we started sourcing from consumers, it happened purely organically. They were coming to us asking us to make cash offers on their vehicles despite nothing on our website suggesting that we would even do that. We had no beacon for them to even believe that we were in that business, but they were coming to us anyway. and that was a light bulb moment that that's that is what market pull actually feels like and prior we'd been trying to push our way into the market so the moment you feel pull that's how you know you're you're going in a better direction so back in the day uh and like shared a lot of reflections on marketplaces with me and and one thing that always stood out was that um you never want to be demand constrained you always want to be supply like supply is the is the thing to figure out if you can figure out supply um then and which is which is what you did by switching switching the model um if you figure out the supply then it unlocks everything because the demand is already there that's right um are there other things about marketplaces where principles like that like are important for people to be aware of and maybe if they haven't built a marketplace before they're not aware of them.

42:20Obviously, there are some things that are conventional wisdom that you should ignore, but what are some things about marketplaces that similar to you always want to be supply constrained versus demand constrained that people should be aware of? Yeah, I would say don't underestimate the extent at which people make emotional decisions. We took a very data-driven approach to everything in the product experience, but when it came down to it, we're selling to car dealers, and sometimes car dealers will pay more for a car just because there's a dealer that they don't like that's the high bidder it's stuff like that yeah so it's actually a positive thing and that that means bringing more transparency into the marketplace like what's the current bid who's the person behind the current bid uh as a single example activates forms of competition and market clearing price acceleration that you simply can't quantify or anticipate.

43:17And it's not like we're going in and gamifying the experience or turning it into a casino, but understanding the persona and the reasoning behind the actions that are being taken at the human level and not trying to quantify your way toward everything makes a big difference. It's kind of, it's kind of, I almost feel cringe saying it because it's so obvious, but plenty of people are skipping it. You have to go where your customers are, show up watch them interact with your products see what they're saying over the shoulders to their own teammates see what's getting them excited and pissed off uh which is different than just listening to their feedback because what they say to you is not necessarily 100 reflective of what's actually going on and they're not trying to deceive you maybe but like in our case not everybody is all that self-aware of why they do what they do i mean is anyone self like very few people are right yeah no i don't think we're built that way so um maybe maybe this is a this is a maybe an interesting thread to pull on here around around belief uh an external belief and you know ultimately as the founder um you hopefully believe a lot of the time though obviously there are some times that shake shake your belief um and uh and then you need to you need to get potential teammates to believe um customers are obviously the the first people that believe and they usually understand before anybody else hopefully and they they continue to um but then investors are this interesting one right because um at every stage of the business there's like a new sort of belief that somebody needs to have right seed round investors have to have a different belief than maybe uh series a investors or growth stage investors very and i would i would be curious if you could share a little bit about kind of your reflections on investors and belief because I think that if somebody has maybe worked at a startup but they haven't been a founder themselves they kind of assume that um that maybe like once they get over a certain part like belief becomes easier you know what I mean easier to come by and I and I recall like when we were talking about I can't remember which round it was but I was talking to you about some investor feedback and it was interesting because they had some strong opinions that they never worked necessarily in the space before.

45:35But you know, like it caused them to not believe, right? And the reality is, I think you'll probably share some more interesting anecdotes that I possibly could about your situation and your company building it, is that, you know, most investors will not believe for many rounds, you know? So maybe you can share a little bit about sort of what that's been like interacting with investors who are a little bit more removed from the ability to believe than maybe somebody who is a customer, who's actually using the product and engaging with it. Yeah, so we were raising our Series A in the middle of an EV hellhole cycle.

46:12The administration was very hostile toward electrification. The Inflation Reduction Act incentives had just come to an end, which meant that in the prior quarter, a lot of demand had been pulled forward. So it looked like we were sitting in a vacuum of demand thereafter. EVs are dead in the US for the foreseeable future. This market will not grow nearly fast enough. That's what it looked like to certain people. Something like, something in the hundreds of, I want to say it was$20 billion worth of investment into EVs between the OEMs and the federal government and charging infrastructure had been canceled.

46:50Worst timing possible, you would think. So the biggest, not criticism, but root of skepticism around our business from VCs was whether or not there's a venture scale opportunity in building for this space right now. We had a different take, and our take was that it's not going to be driven by the U.S. government. It's really being driven by China. and I think it's pretty well known China is the farthest along by far in the world right now in EV adoption and manufacturing and their vehicles between BYD and Xiaomi and Zeker and all of these companies are permeating throughout the globe and it's my point of view that in order to survive on the global stage our domestic automakers are going to have to figure this out they'll simply get annihilated everywhere else in the world, whether we're protectionist of it here or not, if they have not hit volume ramp production, having spent significant cycles in R &D on compelling and affordable electrified products.

47:57And that doesn't happen quickly. That takes years and a ton of investment. And it's my belief that they will survive and that they will do that. And EV adoption in the States will be driven by compelling products for compelling prices, not by government incentives, which frankly is the way it should have been done the whole time. The Inflation Reduction Act was not unanimously popular inside of Tesla. Elon's been a critic of it since the beginning. He said very publicly that Tesla will benefit the least from these subsidies. So yes, absolutely. Knock yourself out. Kill them. But in that moment in time, we were on an EV down cycle.

48:37There were some believers out there, and obviously we had the team at Lightspeed that was actively researching the space. They developed their own thesis around this before finding out that I existed. And the team at Galvanize as well, both of which who made significant investments in the company at the Series A financing. And for investors who couldn't quite get there on the EV space at the time, relationships for the most part remained largely positive. And we have to remember that when it comes to later rounds, B, C, and beyond, those checks get bigger, the stakes get higher, and investors really like writing checks into companies that they've been following and founders that they know.

49:21So for the most part, I didn't think of a single pass from a fund that invests in a or later as a never going to happen. It's just not right this second. And as recently as last night, I ran into an investor who we went pretty deep before they ultimately passed for that reason. And they've effectively, proactively had a front row seat ever since we closed the round. It's really cool. And I think that's true. It's like belief is something that changes over time, right? And people can develop conviction or things can change and they can view things differently. I feel like it happens very frequently where somebody, it wasn't the right time for them and they end up investing in the later round.

50:09And there's nothing wrong with that. Nothing wrong with that. It makes a lot of sense. And one other thing I'll say, Julian, is like you can tell a lot about a person, the way that they pass. And I have very fond feelings of some of those investors based on the way that they passed. Also, plenty of them didn't pass. they just went into the data room and you never saw them ever again. And I remember who those people are too. You know, it's funny. I was talking to somebody who raised Series A and it went really well. The fundraise went really well ultimately. But I said to them, we were having a little dinner with Solar Founders program, and I said to them, how many of the investors did you even hear from to close the loop?

50:54And the answer was shockingly low. Like they probably said that they didn't even hear from like 40 % of the investors. That's about right. Yeah. Yeah. It's pretty crazy. That's insane. Yeah. You know, I think it's like, it's easy to say that it's people being rude or discourteous or something. I think it's like the always, the thing I like to say is like, you know, it's much easier to explain something when it's just like, you know, things come up like they drop the ball. I think it's less that people are intentionally trying to be rude or discourteous, usually. Yeah, I don't think anybody had ill intent.

51:37Part of me also believes that the way you do something is the way you do everything. And that is a signal when it comes to what life might look like when you're partnered with somebody. And if you're selecting an investor in a competitive situation based on the promise that there is value creation on their end, you should be mindful about how organized and communicative they are when you're in a potentially vulnerable moment in your company's life. Well, maybe we talk about one thing before we kind of like pivot to the classic questions where we wrap this up, which is I'm really curious about some of the cultural aspects of what you took away from your experience building a Tesla.

52:23You've built in so many different areas of the company. You built sort of one of the largest businesses inside of the business. I'm curious, you know, what you've taken from there that you kind of apply, what you've taken from there that maybe you thought was good for their business, but maybe it wasn't right for your business. Yeah. Yeah, I'm just really curious to hear about that. I think that one thing that just to, for people who are listening, just to come back to, we don't have to talk about it, you already talked about it, but just like as a, as a flag, like that idea of rigor, I think that that was like, that was an interesting aspect of culture that seemed to be at Tesla, um, that maybe isn't at all companies at that stage, um, where they're all trying to sort of like not poke holes in an unproductive way, but poke holes in a, in a very productive one.

53:07What are some other aspects of culture that you kind of took away from there, either, either as something that you wanted to emulate or something that you didn't feel is right for, for this company? The biggest one I like to talk about is the concept of self-manufactured constraints. This is my own terminology for it, but I think Elon's superpower is he's able to spot them from a mile away with quite minimal context. I had it happen to me multiple times where he provided a mandate and I was absolutely certain it would lead to catastrophic failure. And I was totally wrong. And my basis for that belief was founded once again on conventional wisdom, not having actually tried.

53:50And it's quite amazing what you find out you're capable of or what can actually be done when you work under the mindset of burning the boats and acting as if you have no choice but to figure out how, especially when the outcome you're chasing seems calculatively impossible. those types of targets were so normal there. Every quarter, there was some Herculean effort we were going to need to pull off that had never been done, that seemed physically impossible, but it wasn't, and we kept doing it. Or we got like 95 % of the way there. One of my, one of the best people I ever worked with there, Zach Perkhorn, who was CFO for a very generational run, reflected with me not too long ago when I was having a bit of a down month in the business and I was kind of hard on myself about it, to which he reminded me, remember how often we actually missed our targets?

54:52Barely, but they were so astonishingly high and we basically failed our way to where we got. So I guess what that means, even if the outcome is not exactly binary, you did the exact impossible thing that you thought, like the strive for getting there and cutting through our own manufactured belief that it cannot be done is what enables you to achieve world-changing results. And I got to hand it to him. I don't know how Elon always can tell, but he can. That's the biggest one. So we think about it that way at Plug all the time. We shouldn't assume anything is impossible until we've actually exhausted reasonable options to prove to ourself that it cannot be done.

55:34How about the unreasonable options? Yeah. Well, you find out from data. And they are out there. They are out there, but they're a lot less common than you think when you actually try. And nobody can be upset with you if you actually exhausted every single reasonable option to get there and can actually prove that the constraints exist, which is different than manufacturing the constraints yourself. okay the last the last three questions are the classic questions that we ask they usually go really well i think that we're we've kind of made it a tradition at this point i think we're like two months into recording podcast um thank you for being a guest by again like this is such a pleasure um to catch up with you and to see all the progress you've made with plug it's it's so it's so incredible the first question is what's the sort of the bear case for solo founding um And I'll let you answer that and we'll maybe talk about it a little bit.

56:33And then just to get you ready for the next part, and I'll prompt you again, when the time comes, I'll ask you about the case for solo founding, like the bulk case. But let's start with the bear case. What's the bear case for solo founding? So the bear case for solo founding is maybe you don't have enough credibility or network or skillset to properly recruit. I personally don't get any of my best work done in a vacuum in isolation. I need the benefit of a partner and a team to unlock my greatest potential. And I felt very comfortable going down this route because I was the most qualified person in the world to build what I was building.

57:09And I had backing from extraordinary partners. And I had pretty decent social reach too. That trifecta gave me a lot of confidence that I can embark on this on my own and assemble a world-class team from nothing. not everybody has the benefit of that trifecta or maybe even a single one of those three things and i think it's important for people to be realistic about how likely are they to recruit world-class talent not just warm bodies but force multiplier humans with what they bring to the table it actually brings me back to the concept of disproving your hypotheses and people should ask themselves what's going to prevent me from having that capability and do i have total conviction that it's going to be possible and it's the most likely outcome it's really interesting that you talk about sort of not thriving in a vacuum um because in a way being a solo founder um when you're starting out before you have a team you know you are in theory potentially in a vacuum yeah but in your case you weren't because you had these incredible thought partners you know with with ann and mike and probably other people who were in that group that they were organizing Yeah, Lior too.

58:26I want to give him credit. Yeah, Lior is awesome. So maybe you share a little bit about sort of how being solo but being alongside of other people helped you in that time. I actually leaned on Lior a ton during that period of time. If nothing else, sanity checking, ideating, having a warm body to connect with, and over time built the same level of rapport with a handful of my earliest investors. I would say one really positive signal when thinking about a seed investor relationship is to what extent do you organically solve problems together when you get into conversation? And I leaned on Lior and Barack in particular really hard, Barack from Autotech Ventures, to help me wade through the process of recruiting and articulating the business and evolving the model over time before I had people fully in the seat.

59:30And it just so happens those are relationships that have persisted very durably ever since then. Certainly having friends that are founders is also really good. I would venture to guess most of your audience here are people that are networked or friends with other people who are thinking about doing and are already doing similar things. And it can be a lonely experience or an unrelatable business if you don't have a social group that can normalize it for you. And certainly I would encourage anybody that's doing this to look around at their social circle and make sure that they're surrounded by people who are force multipliers for this life choice.

1:00:10part of the reason we do what we do here is because we think that that idea of um being solo alone is not nearly as good as being solo with other people solo together totally um and that thing that you brought up about and sort of even though you didn't actually have a board back then um but and sort of like asking you that question about you have a bunch of money like what would you do if you started over that's the type of question that someone would only ask if They have a ton of context on what you're working on and you, but they aren't maybe your co-founder. Right. So it's like it's like something that you have a lot of that a lot of that perspective, but you're not quite the same level of sort of relationship and investedness as a co-founder as.

1:00:56And I think that that's partially what like we're trying to do here is like bring people together who are working on their own things or, you know, if we're supporting them. is this idea of can they have context but be enough removed to not sort of be in that co-founder seat where they can't ask that question. Yeah, that's extremely valuable. It's really hard to think about the business in pure objective and abstract terms when you're in the business. And I think that exercise of pretending that you have a board a few times a year was extremely helpful in not just developing the muscle memory to be prepared for our first board meeting, which happened just a few hours ago, but bringing indisputable value from the investors that you did bring on board as you're ideating through the existential questions before you find product market fit.

1:01:56Sweet. So let's get into the question. The case for solo founding. What's the case for solo founding? You know, it's a very high agency move. and founders are very high agency people. The agency maximizing play is to be solo founded and self-funded, which is not what I did. I was not self-funded. There are lots of different arguments for or against, but if you're a person that is entering entrepreneurship, among other reasons, in pursuit of total agency, it all comes down to you, right? there's total accountability and there's total, I don't want to say total control because that's not necessarily how I think about it.

1:02:45The inverse is a low agency environment, like a big company where if you know what the right thing is to do, but you can't do it, be there for political reasons or because you can't win alignment from more senior decision makers, the same can certainly be true in a partnership. It's all yours to make those decisions, positive or negative. And I think high agency people would gravitate toward that naturally. I certainly did. So this is the last question. This is the hypothetical of, you know, we hit stop on the record, we stand up, and then 30 seconds later, you think to yourself, oh, I wish he had asked me this.

1:03:26I wish he had asked me about this topic. What's the thing that we, and feel free to pause if it's not immediately coming to mind. And what's the thing that we should have talked about that we haven't talked about yet? Let's talk about AI for a second, Julian. They're calling it SaaSpocalypse out there. The most extreme reaction I've heard from an investor was that their partnership just believes all vertical SaaS is going to zero. Probably not true. But what is true is something fundamental has changed in the venture landscape since we got started compared to where we are right now. And it's around moats and defensibility in a post-software world.

1:04:09One of the greatest examples is the attitude and mindset around balance sheet risk marketplaces. One top 10 global venture capital firm that passed on us for the reason of balance sheet risk, I kid you not, is suddenly no longer allergic to balance sheet risk because of where we are in the age of AI. and I'm looking at even more controversial concepts like heavy CapEx physical infrastructure to augment the atoms, if you will, and the bits flowing through the marketplace. And that's just something I don't think I ever could have aspired toward as a venture scale startup before AI entered the scene.

1:04:56So say more about that. Is that because you now feel like those options are now on the table because there's willingness from capital. Yes. Venture capital traditionally has leaned very heavy into asset light, balance sheet light, pure play marketplace, pure play SaaS, pure play software, bits over atoms, full stop. Suddenly the defensibility in that arena outside of businesses with true network effects has all but disintegrated. And suddenly the venture market seems to be hungry for, not just welcoming up, hungry for the types of business models that were otherwise unobtainium in the venture market.

1:05:45And for us, it's especially exciting because these are aspects of building a marketplace like this that can be forced multipliers and colossal moats that we can build over time. and we otherwise might have had to consider alternative funding sources than venture in the pre-AI world. That's pretty cool. So I feel like that's one of those big to be continued because I feel like we can't share more right now about what that actually means for Plug. But that's really interesting. If you were to maybe extend that thought to other businesses, is what would you say to people who are kind of maybe in a similar position to you like how would you how would you think about that if you were in their shoes it's funny because we can just come full circle on what we said earlier around forgetting about not forgetting about but being very careful about what inhibitions you allow conventional wisdom to place on you because the conventions are different now and they're kind of uncharted but what remains true is developing moats around your business that cannot be replicated and vibe-coded away are going to require some creativity that otherwise might have been outside of the boundaries of where venture capital was willing to participate.

1:07:10And now we're in a new era. And this is a really important point because the era of AI is one where people talk a lot about how the only way to get venture funding is to be an AI company. That's not true. certainly every company that's venture backed should be leveraging the hell out of ai and getting 100x leverage out of every member of their team when you're at scale we're holding ourselves accountable to that standard but the other piece of it is is rethinking what are components of your business that you either have or you can build that cannot be replicated with ai and much of that will naturally point you to the physical world super cool this is like a great way to end it because I feel like people will listen to this and will say, oh man, there's a lot, there's a lot to consider and there's, there's a lot of potential.

1:07:56Um, and I feel like, um, when that happens, uh, that might lead to these big breakthroughs, similar to, uh, that breakthrough that you had when you sat down with, uh, with your, your investors before you had the actual official board and you got this idea, um, that really changed the entire business for the better. So hopefully folks who are listening to that can apply that and have similar inflections. Jimmy, thanks for doing this. This has been amazing. Thanks for having me, Julian. If you enjoyed this conversation, we would love it if you could share solo founders with everyone you know, particularly people who are considering starting companies solo or who are already doing it.

1:08:31You know, the entire goal of what we do is to normalize solo founding, encourage more people to solo found instead of end up with co-founders of convenience. If you'd like, and we'd really appreciate it, you can go leave a review on Apple. You can go give us a thumbs up. You can subscribe on the YouTube channel. Anything helps. And of course, if you are starting a company or considering starting a company, you should go look at the Solo Founders program. We work together with you in San Francisco alongside of a bunch of other Solo founders. The idea is it's much better to be Solo together than to be Solo alone.

1:09:02I'll spend a lot of time helping you. And we also invest$100 ,000 in your company. So if you're excited to learn more about that, go check out solofounders.com slash program.