Leveraging specialists to quickly scale with Roy Stein of BabelBark

Leveraging specialists to quickly scale with Roy Stein of BabelBark

Serial entrepreneur, Roy Stein, joined Maren for a conversation about his newest venture, BabelBark. Roy and his co-founder, Bill Rebozo, founded the company in 2014 to provide a subscription-based service that connects the whole ecosystem around pets in one place.

Being remote-first on purpose and by design allows BabelBark to offer a healthy and desirable work/live balance to its employees and to hire based on capability and not based on geography. This approach has allowed the company to grow from 4 to 20 in just 10 months. With tools like Google Hangouts and Slack working remotely is more effective than its ever been.

Roy attributes at least part of the company’s success to a particular business strategy that he learned from the book Exponential Organization by Salim Ismail. The concept is that you build a small core team of knowledge and anchors and then outsource projects to specialists; high-quality agencies and professionals. The reason for doing this is that an internal team would never be able to keep up with the pace of technology and advancement. It allows you to take advantage of a wide variety of specialists with narrow skill sets, rather than relying on a small group of professionals to be experts at a wide variety of skills.

Roy shared some advice for early-stage founders, “Don’t be too in love with your product”. Throughout his 25 years in the startup community, he has observed that founders who are willing to analyze the market, pivot, and change their original idea or even turn it completely on its head are the ones that are the most likely to succeed.

Other things mentioned in this article were digital marketing strategy and hiring strategy.

Be sure to check out Roy’s book recommendation, The Hard Thing About Hard Things.

If you liked this episode, listen to our conversation with Devin Bramhall of Animalz.

Photo of Roy Stein
Roy Stein

Founder of BabelBark, CEO, COO, and Board Member.

Maren Kate
Welcome to from 5 to 50, the podcast dedicated to helping startups and founders survive and thrive through the early stages. I'm your host, Maren Kate, we're here with Roy Stein of BabelBark. Welcome to the show, Roy.

Roy Stein
Thank you very much. My pleasure to be here.

Maren Kate
Awesome. So first off, when did you found BabelBark?

Roy Stein
So BabelBark started in late 2014. We incorporated officially in June of 2015.

Maren Kate
Okay, and just in 90 seconds or less tell our audience the founding story or the why behind it.

Roy Stein
So the company actually came about by mistake, to be really honest, Bill, my business partner, and myself we've been working together for over a decade and it's our fourth startup and the former one, the one before this, was acquired and we were kind of thinking of going on vacation and we both have kids, but we also have dogs and they're really what's important, to be honest. Honestly, when you get home at 10 o'clock at night, I mean, the only person who's happy to see you.

Maren Kate
Who’s still there is the dog.

Roy Stein
Exactly. So we were kind of thinking, Okay, how do we make sure that the dogs are taken care of in the right way when we are on vacation? So being software people, and the logical answer was to build some kind of software script, put it in the cloud where the kids will have to log on in real-time and update what they did with the dogs and wherever we are Caribbean, Alaska, or anywhere in between, we can log in and make sure that the dogs are taken care of in a good way. Seemed logical to us. And as we were building it and talking to people in the dog park and friends and family, within three weeks, we got 147 people saying they wanted to use it for their own use.

Maren Kate
Wow.

Roy Stein
And that's kind of when the idea that there could be an idea for a company here kind of went off and that's how we started.

Maren Kate
Okay, so what's the business model? How do you guys make money?

Roy Stein
It's a subscription-based model but the basic idea is we're connecting the whole ecosystem around pets in one place. So we took a different approach, both on the business model and on the actual grade platform than anybody else in the market today because there's a lot of really fantastic companies in the space and I’m not being sarcastic, I really mean it. But all of them have the same Achilles heel. They are all very vertically focused and they do a few things really, really well, in one very small vertical, just for the vets, just for the groomers, just for the pet parents, or anything in between. We took a horizontal approach where we said instead of providing services we will not provide any single service but we will connect all services and anything to do with pets in one place. Think of it a little bit like Expedia connects everything regarding travel in one place and that's what we did. So we have veterinary services with all of the telemedicine, telehealth, scheduling all that kind of stuff through shelters, groomers, walkers, trainers, nutritionists, anything you want, pet stores all the way to the pet parents, and we're monetizing it by basically monetizing the whole ecosystem. So think of Amazon and Amazon Prime. The basic system is free, there's a freemium model where everybody can use the basic system for free, but then once people want to upgrade services, they need to pay for the subscription level of the services. Now because we're monetizing all three legs of the ecosystem, we can be 70% cheaper on a per leg basis for the vets, for the pet parents, and for the pet businesses than what other companies who only monetize one vertical are.

Maren Kate
Ah, I see what you mean.

Roy Stein
Because we're monetizing all three and it seems to be working, based on the adoption, everything else, it seems to be doing the job.

Maren Kate
That's amazing. So are you guys bootstrapped, self-funded, did you take on any investment?

Roy Stein
We self-funded for the first two-plus years. Then we did a small series, a seed, with our own private network of people we know. All this is public knowledge. It was worth 1.6 million. Anybody can find it on CrunchBase. So we did a $1.6 million series seed all with high net worth individuals. Then we did a Series A. We were looking to do 3 million. We were advised we need four and a half million and again it was mostly the same investors and a few more that came in, same family offices and high net worth individuals. And we're actually now in the middle of our series B where we're already looking at multiple different term sheets and we need to make a decision over the next week about who we go with.

Maren Kate
Hey, that's a good problem to have. That's cool. By the time this airs you guys will have just raised it then. So what's the current size? What does the team look like? And are you guys a remote team, are you co-located in-office?

Roy Stein
So we’re a remote team. We’re a remote team on purpose by design because we believe strongly that A) it helps a lot in work/life balance. I mean, I've got four children, some are gone, and some are still in school but the mere fact that I can take a half an hour in the middle of the day and do some shopping or go pick up my son from school and bring him home that's worth a lot to me. So that's what we're doing with all employees. And the second reason is when you're working remotely you can hire based on capabilities and not based on geography.

Maren Kate
Totally. I'm a huge proponent of it. Every company I've built has been remote first. And what's interesting about where we are right now, in 2019, is that I've been doing remote for 15 years, since I was in college, and now I feel like it's not as crazy as it used to be.

Roy Stein
Yeah, I mean, in this day and age, there's so many systems out there that allow you to do everything that you need from Slack to Skype to Google Hangouts to, I don't know, a more expensive system. You can do everything. Now, you asked about how big we are. Last year in December, so exactly eight months ago, we were 4 employees. Yesterday, we hired employee number 17 and we're on the hunt for three more. So you can say that we went from 4 to 20 in about 10 months.

Maren Kate
That's awesome. So that kind of leads into my next question. I mean, you're obviously in the middle of raising the fee right now but are there any growth numbers you can share with my audience just to kind of get a sense of revenue, users, anything that you're comfortable sharing?

Roy Stein
So revenue I won't go into for the obvious reasons but I will say regarding growth that we already have hundreds of thousands of pets on the platform, hundreds of businesses on the platform, and we are growing at a rate of several hundred new pet parents and users per day.

Maren Kate
How amazing. What's the geographic location for the pet parents and the businesses? Are you guys going market by market?

Roy Stein
No, no. We're going by type of pet parent more than geography of pet parent. So we're marketing and we're focusing on the US and Canada and when you look at pet parents in the modern age, which also, I think, is a differentiator between us and other companies out there that are looking at it more like, you know, the total pet market. We're not. We're looking at the changes and the drivers in the pet market and what you see is that millennials and now the younger generation, which I think is called the Z generation I'm not sure, they are fast becoming a force. And the millennials, the younger, have now officially taken over as the largest demographic segment in pet ownership in the U.S. Dogs and cats.

Maren Kate
Really?

Roy Stein
Yes. 69% of millennial households have pets. 40% of them have two or more pets versus baby boomers and other segments which are going down in general percentages of pet companionship and ownership. So we're specifically targeting the younger generations that are born into technology. It's the people that use platforms across their daily life. Doesn't matter if it's a Facebook or some other social media platform regarding their social media, it doesn't matter if it's Expedia or any other kind of a platform to do their vacations and holidays, or if they're using Etsy or any other platform for arts and crafts and other stuff. People who are born into platform use and technology on their phones, that's our target market and that's where we've seen our hugest success. Because you don't need to sell the product. It sells itself because it just fits with perception, way of life, and everything else.

Maren Kate
So how are you targeting those pet parents? How are you targeting those millennials and younger?

Roy Stein
It's all based on digital marketing. We're not doing TV, we're not doing print, because that age group and that target audience don't do that. I mean, how much are people dropping off from cable and moving just to streaming services? So what's the point of doing an ad in a print magazine or a TV ad when people don't watch it anyway?

Maren Kate
Totally, especially for your demographic. So how are you approaching digital marketing? Have you built out a team? Is that why you're raising money to reinvest?

Roy Stein
No. So we're raising money in order to kick up the marketing efforts another notch but with we’re outsourcing it. We strongly believe in the concept of the exponential organization, which is kind of some of the new ways that companies are being built and the long and short of that is a great book called The Exponential Organization.

Maren Kate
Oh my gosh, I just added that.

Roy Stein
Yep, it's a great book. But the long and short of the system is that the pace of technology and advancement in the modern age is such that an internal team will never be able to keep up because they're too heads down on work. So the only way to do it is to build a small core team of knowledge and anchors and then outsource on a project-based basis to high-end quality outsource, for that specific project. Not the same outsourcing that was done in the 90s to low-cost labor, but to high-cost project-based results for quality labor.

Maren Kate
Okay, so you build the core team and then you outsource to high quality, I would assume high-cost providers that are super narrow, right?

Roy Stein
Super narrow in their segments. So for example, take public relations, PR, right, and media, we're working with two different firms. One, which is focused on the trades, Another one, which is focused on consumers and general information. We're working with a digital marketing agency, which is focused on the millennial digital marketing approach and those guys, while we're working with another agency, which is focused on the vets and how to reach those guys. It's all based on a very new approach and, again, we didn't come up with this. We read about it in the book by Salim Ismail. But I mean, it's all based on that approach that, you know, hire professionals on a very narrow project-based kind of a basis where they are super, super, super professional at that specific thing, and then hire somebody else for something else. Because even you have a high end, multi expensive, CMO internally, that person will not be able to be professional in marketing, and in branding, and in digital marketing, and in everything else, because the world is changing so quickly, that you can never keep up with everything.

Maren Kate
I love that idea. I mean that speaks to me on such a deep level. It's that specialization. I have this idea that in the future, people aren't going to say I work for IBM like they did in the past. Instead, it's going to be like I work with Avra Talent and I work with BabelBark and you get really good at something and then you've leveraged that versus generalists. Oh, that's amazing. So that actually, I guess my next question was going to be what's the most successful growth hack you've tried for BabelBark, but maybe it's just exactly what you're talking about.

Roy Stein
It's doing digital marketing in a targeted way for a certain segment of the population where you know your results are going to be really, really high.

Maren Kate
Yeah. Okay, and then how did you go about choosing these agencies?

Roy Stein
Well, that's the hard part because we do the classic Google searches, and then background searches, and then looking here or there and how this works and how that works, and all of that. And then we did the process of interview and meeting, and all that kind of stuff. And we slowly narrowed down the pool until we decided on the one that works for us.

Maren Kate
You do a hiring process pretty much.

Roy Stein
Yes, but I can tell you it’s not 100%. We’ve had our goofs. We've had more than one example where we had to stop the relationship because it didn't work out. But I would say on a total overview scale, the success rate is way higher than the non-successful.

Maren Kate
And that makes sense. This is so interesting to me because I run an agency which focuses on helping startups recruit and hiring and I've been doing this for about two years now. I'm actually kind of thinking about pivoting to focusing solely on remote-first companies because we're remote first, we work with a lot of remote-first companies, and I just love that space but I guess one thing that we see is, you know, I do a pitch to a company about helping them hire, and they get pitched by recruiting firms, and they talk to recruiters all the time and a lot of them don't hold up that high-quality bar. So you're coming with that background of, “oh, well we've tried recruiters before but they don't really work” or it's just like sorting the wheat from the chaff because there's going to be 5% of agencies that are very excellent and after a while, the kind of word of mouth and that speaks for itself and testimonials and NPS but you do have to sort through a bunch of people that are maybe good at promoting themselves. So that makes a ton of sense and I liked your approach, taking the same approach you would hiring an employee to agencies. I think often people just kind of pick an agency and go with it without putting that rigor. So that actually leads me to my last question, how do you all handle hiring at BableBark, especially considering that you're fully remote?

Roy Stein
So the first step in every hiring is LinkedIn.

Maren Kate
Interesting

Roy Stein
We post a position on LinkedIn and we always get a ton of CVs and outreach directly from LinkedIn and only if that doesn't work, we bring a hiring agency into the fold. Out of the 17 employees that we have or actually 15, because Bill and myself are part of those 17, so out of the 15 employees that we have only one ended up coming from an agency. All the others came to us directly via LinkedIn in one way, shape, or form.

Maren Kate
Okay, fascinating.

Roy Stein
And it could be like somebody on LinkedIn Premium that saw an ad or it could be a friend of a friend that saw something and passed it around.

Maren Kate
Where are your people located? Are they in North America, are they all over the world, is there any hubs?

Roy Stein
All in the continental U.S. We have people split out from New Hampshire to New Orleans, and from the east coast through Kansas and Missouri and Texas, all the way to Seattle.

Maren Kate
I have just have a few more questions and then I'm going to wrap up with our final three. Because you have such a cool model with outsourcing to these high-quality agencies, what does the core team look like? Is it mostly product-focused?

Roy Stein
So we have five developers who are kind of core development kind of folks. We have, obviously, Bill who's the real anchor around the company and he does all of the product design and product strategy and all of that. We have Rose who's our core operational person and she does everything regarding operations in the wide sense of the word. We have a person Kristen who does marketing, she's our marketing manager, and all things marketing flow through her. And then we have a business development person, Booth. We have two salespeople, one for the vets and one for the vet services. And that's about it. And then all the rest are, I would call them kind of vines, like grapevines, of professional people who are around each one of these people on a per-project basis.

Maren Kate
Okay, make sense. Okay, great. So final three, what is your favorite book or podcast from the last year? And it may be what you said but it may be another one.

Roy Stein
The best book, in my opinion, that I read is The Hard Thing About Hard Things.

Maren Kate
I love that.

Roy Stein
I think it's a must-have for every entrepreneur and every founder. I mean, I read multiple books from Crossing the Chasm to whatever, right. I think no book comes close to that one in really explaining in real-life terms what it means to create a company and to own it.

Maren Kate
I love it. Yeah, I agree. I've read that book I think two or three times in the last five years. What business tool could you not live without?

Roy Stein
Instant messaging or instant connectivity, and we use several, so it's either Google Hangouts or Slack, which are the two that we use most because that's the lifeline to the company. If I don't have that I don't connect.

Maren Kate
Especially with a remote company, of course. Last question for founders who are listening and they’re somewhere between that 5 to 50 stage, what's the best piece of advice you've either received or you can give?

Roy Stein
Don't be too in love with your product.

Maren Kate
Interesting.

Roy Stein
And I'll tell you why. This is my fourth startup. I’ve been in the startup community for over 25 years. The number one mistake in my humble opinion that founders make is that they are so in love with their product, they fail to analyze the market and really look at what's going on. What you need to do is you need to respect your product. You need to love it, but you also need to be aware of what's going on in the market, and if you need to pivot, and if you need to change, and if you need to change your original idea and turn it on its head and make something that you know might have a very different look and feel than what your original ideas were. You know, if you're not able to do that because you're too blinded by your love for your original idea, you're not going to succeed.

Maren Kate
I mean, that speaks to me so much. I agree with you 100%. I've definitely fallen into that trap several times. Trying to be more conscious of it now. Okay, so how can people find you online? babelbark.com. Any other platforms, you're pretty active on?

Roy Stein
LinkedIn. I'm always very, very active on LinkedIn. Just my name, Roy Stein. You can look me up at BabelBark on LinkedIn or just through our website. Just send me a note.

Maren Kate
Awesome, especially for the pet parents out there, which is myself included. Roy, thank you so much. This was absolutely fascinating.

Roy Stein
My pleasure

Maren Kate
Myself included

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