799 Ali Nichols:

Okay, wait, we see the writing on the wall. We see that our initial hypothesis was wrong. Do we want to try and solve for the customer that is interested in this type of product?

Or do we want to go back to the drawing board and go back to solving for the mission we were super passionate about, solving for the world?” For us it was really going back to that mission.

I just tried to really have calls with as many potential customers as possible and go back to that idea of, what is the core problem we are facing? Versus trying to pitch them a new concept.

Being an entrepreneur is living in the land of ‘trial and error’, much like a scientist in a lab… testing hypotheses until the eureka moment. More often than not we need to pivot, and then pivot again. Ali Nichols is in the middle of such a pivot, and shares her insights on when it’s time to pivot and how to do it by co-creating with your desired customers.

MELINDA

Hi, I’m Melinda Wittstock and welcome to Wings of Inspired Business, where we share the inspiring entrepreneurial journeys, epiphanies, and practical advice from successful female founders … so you have everything you need at your fingertips to build the business and life of your dreams. I’m a 5-time serial entrepreneur and the CEO and founder of Podopolo, the interactive app revolutionizing podcast discovery and discussion and making podcasting profitable for creators. I’d like to invite you to take a minute, download Podopolo from either app store, listen to the rest of this episode there, and join the conversation with your questions, perspectives, experiences, and advice … Because together we’re stronger, and we all soar higher when we fly together.

Today we meet an inspiring entrepreneur who is in the middle of pivoting and rebranding her real estate business.

Ali Nichols is the co-founder of what was called Getaway, a platform to invest in vacation rentals and also enjoy them at member rates. Her startup is about to be known Hammock, and she shares what’s she’s learned in the market and how she’s pivoted to meet the needs of her customers.

It happens all the time. We fall in love with our ideas, build them, and then … crickets. It is easy to think that if you build it, they’ll come, but that is rarely true – unless you are deep into the real pain points and needs of your target customers. Sometimes all it takes is a small tweak, other times it is a major pivot.

And that’s ok because it is the nature of entrepreneurship. We make decisions based on what we know at the time, and you’re always learning.

Ali Nichols has always lived and breathed real estate even as a young kid. Before she founded her newly named company Hammock, she spearheaded raising and operating a $700 million real estate fund focused on acquiring single family rentals at Bungalow.

Today she shares her entrepreneurial journey, the secrets of the pivot, why you must test hypotheses and co-create with your customers, and what’s next for her company.

Let’s put on our wings with the inspiring Ali Nichols and be sure to download the podcast app Podopolo so we can keep the conversation going after the episode.

Melinda Wittstock:

Ali, welcome to Wings.

Ali Nichols:

Hi. Thank you so much for having me.

Melinda Wittstock:

Every entrepreneur comes to learn that pivots are part of the program, whether large or small, because there’s so many things we don’t know and we can’t control, and it’s this learning exercise.

So, you’re in the middle of a pivot right now. So, talk to me about what prompted it first, and then we’re going to get into some of the things you learned or why the pivot.

Ali Nichols:

Yeah, it’s such a great question and it’s such a tumultuous journey as you’re in it, but when we first started our company, we really set on our mission to help folks gain access to investing in real estate. Our goal was how can we increase the number of people in the world that have access to this asset class?

And in going down that path, we learned a lot along the way, specifically a lot of our assumptions going into our initial idea and our initial product, we weren’t able to prove them true. A lot of what we found, was initially we had expected that we could change consumer behavior, and that is something that is really, really difficult to do.

And so for us it was taking a hard look in the mirror and saying, “Okay, how can we actually set out, achieve what we wanted to and help people really be invested in real estate in a way that they want to be?” And that was the biggest thing for us, is we didn’t think that we were meeting customers where they wanted to be.

And so now we’re focused on building a product to help enable the behaviors that were already happening, but just increase the pool of people that are out there that can go through with it.

Melinda Wittstock:

So Ali, I find this so interesting because we all start out as entrepreneurs with a hypothesis. And just like a scientist in a lab, you just keep trying it and there’s the formula, until, “Eureka!”, it’s right.

And in the context of entrepreneurship, it’s all about the customers because we have these ideas, but just because we build it doesn’t mean anyone will buy it. And so what was the first clue that you were getting that, okay, well maybe… Because you mentioned you came to the realization you had to educate the marketplace. That’s a big sign, right?

Ali Nichols:

Yeah.

Melinda Wittstock:

How did that go down for you and how are you feeling as you were going through all of that?

Ali Nichols:

It was interesting for us. We had defined customer segments. And when we talked to certain segments that we thought were our core group, everyone loved the idea. They love… Like, “Oh, that’s such a cool idea.” Like, “Oh yeah, I really like what you’re doing.” But when it actually came time to transact and pull out their wallet, people weren’t doing it.

And so it was like, okay, wait, so the concept is cool, but it’s not actually, what we quickly realized, is it’s not actually solving a problem for you. And now as we’re in the midst of this pivot, the core things that we’re focused on are ensuring that we understand the problem of that customer segment and that we’re actually building something that solves it for them.

And paying attention more towards behaviors versus attitudes. Because one key learning that I’ve come out of this whole experience is that as people, I think that we like to give others compliments or think of things in a positive way, but that doesn’t mean our behaviors match how we think about it, if that makes sense.

Melinda Wittstock:

It’s what your customers do, not what they say.

Ali Nichols:

Exactly. Exactly. So how do we build a product that helps enable them to do what they’re already doing, but better or make it available to more people that want to do it, versus trying to force a new cool idea onto people that they’re not ready for or just don’t see value in today.

Melinda Wittstock:

So from the time that it’s dawning on you, “Oh man, we’ve got to change this up,” to what you’re involved in literally as we speak. In fact, your new name and new website may or may not be up as this interview airs. What was that pivot process time? And walk me through how you got to where this new threshold of the company.

Ali Nichols:

Yeah, so things were not accelerating at the rate that we wanted to, and it goes back to our core hypothesis and our core customer we were going after. It wasn’t resonating with that group. And so what happened was, then we entered into a really competitive space where all of the companies in our world were going after the same customer group.

And so it really then became this game of the race to who’s willing to spend the most on customer acquisition. There’s new companies getting funded in this space every day, everyone’s going after the same customer. It just didn’t feel like there was an opportunity for that escape velocity.

And so I think the one thing my co-founder and I are, we’re very pragmatic. “Okay, wait, we see the writing on the wall. We see that our initial hypothesis was wrong. Do we want to try and solve for the customer that is interested in this type of product?

Or do we want to go back to the drawing board and go back to solving for the mission we were super passionate about, solving for the world?” And so for us it was really going back to that mission. And so in this period of, “Oh gosh, do we keep pushing forward or do we try something new?”

I just tried to really have calls with as many potential customers as possible and go back to that idea of, what is the core problem we are facing? Versus trying to pitch them a new concept. And this theme came out over and over and over again. And so for us, I really want to be invested in real estate. I am actively saving towards that investment.

This is what I have today. I’m ready to make the leap. And it’s the tough realization of, “Oh, that’s actually not enough money to really get into the space.” So that was a common theme I kept hearing over and over and over again. And so it’s like, “Okay, wait, how do we solve that problem?”

How can we build a product in that space where folks are already trying to do this on their own, but there’s a barrier to entry that seems daunting and only continues to grow with the way that real estate prices are going and inflation and all of these things. So that was for us like, “Wow, we identified a real problem.

We think we actually have the team, the support, the capital to go out and solve that problem.” So let’s focus on that, which helps us achieve our original mission versus trying to change our product to play in a space where we weren’t as excited.

Melinda Wittstock:

So this is really, really instructive. So you’ve got this, for anyone listening who’s in a really competitive marketplace where, yeah, like you said, it’s a race to spend money aggressively.

So who’s got the deeper pockets, but it can also be a race to the bottom in terms of pricing and a commoditization. When it comes down to it, what is the differentiated sweet spot? And so where you are right now, so you’ve really changed the game. How do you know that this particular direction is validated? So how are you going to measure that?

Ali Nichols:

Yeah, that’s a great question and it’s something that I don’t think there’s ever a perfect answer for until you can really launch and see how fast you grow. But for us right now, we are measuring this by inbound demand.

So how many folks are coming and signing up for our wait list, for our new product? When we get on the phone and have a conversation about the product, are they excited to move forward? So basically just conversion through the whole sales funnel and sales process.

And for us as well, given our new product and how high consideration it is, we are able to collect a deposit upfront, which gives us a really strong signal of intent from customers because they’re willing to pay at that earliest stage saying, “I actually really want to use this. I want to be first in line to be serviced via this new product.” And so that gives us a strong signal right now that we’re really excited about.

Melinda Wittstock:

Amazing. So what got you into this space to begin with? Were you always entrepreneurial? What made you interested in real estate, real estate investing?

Ali Nichols:

Yeah, it’s so funny I say that my career in real estate started when I was a kid. Growing up, I was obsessed with residential real estate. I always joke that, and this is a true story, that after church on Sundays I would have the newspaper out and I would circle all of the open houses in the neighborhood that I thought that my parents should look at.

I’d force them to drive me around to each open house and I would pitch them on why they should sell their house and buy this house in terms of the opportunity. Whether it was like, “Oh, well this home has an extra bedroom or a view or is in a better area.” All of these things in terms of value, I was trying to pitch them on at a young age.

And so I always knew I would end up back in this space. But when I started my career, I started my career in consulting, but I lived in San Francisco. And all of my friends and everyone around me was working in tech. And I was like, “Oh, everybody seems so into what they’re doing. They love their coworkers. It seems like they’re having so much fun at work. What is this whole tech thing?”

And so I decided I had to enter the tech industry. And so I started that journey at Uber, where it was a super-fast-paced environment and learned so much from being in that type of environment where you’re just surrounded by so many smart people who are really motivated and really excited about being at work. And it’s really inspiring and I think pushes you to be better as well.

So at that point in time, I was like, “Okay, if there’s an opportunity to combine staying in this tech world, but also pairing it with real estate, I think that’s a dream for me.”

So after Uber, I had gone to a prop-tech company, which is property technology, based out of San Francisco and had the opportunity of joining them as a very, very early employee in their seed stage. And grew with that company and had really the chance to run so many different teams and so many different aspects of the business, that by my four and a half years there I was like, “Okay, it’s my turn to try and start something on my own.

I feel like I’ve learned so much here, but I really want to try my hand at building my own company.” So here we are today.

Melinda Wittstock:

That’s really interesting. Where you take a lesson from a different industry and apply it to your own passion. I think there’s so many really interesting cross disciplinary or chocolate peanut butter moments, where we can really learn that way as entrepreneurs from different industries. But I’d love that you got the inspiration from tech and combined that with this incredible, early passion.

Ali Nichols:

Truly.

Melinda Wittstock:

I love that. I think it’s so interesting when you look back on entrepreneurs’ stories, that they have something in their childhood. I was going door-to-door when I was six, not even six, with my black lab demanding prepayment for my show.

Ali Nichols:

Oh my God, I love that. Amazing.

Melinda Wittstock:

Have been in content and such, I don’t know, there are lots of clues there. And so what are some of the other challenges that you’ve found along the way? Presumably you’ve had to raise money for your company, obviously build a team, all these sorts of things, marketing, getting the word out. What have been some of the biggest?

Ali Nichols:

Yeah. So early on, so we went down the route of venture capital. And so early on it was a lot of putting yourself out there, putting your ideas out there, your experience and hearing a lot of nos. And so having the resiliency to continue to push on and find the right partners that believed in my co-founder and I and believed in our idea, that was our first big hurdle.

And I think coming out of that, I’m like, “Okay, to be in this space, you have to have thick skin. This is the name of the game. There’s no one there to give you affirmation anymore.” If you’re at a company and do a good job, your boss is going to praise you for that. In the entrepreneurship world, there’s none of that anymore. So that was one of the biggest transitions for me, I would say early on, of like, “Oh wow, yeah, you’re really on your own.

We’re on this lifeboat. Your co-founder and yourself, together.” But having to make it happen. And then I think as an early stage company and also in a period where a lot of the macro environment has been shifting around us pretty rapidly, especially being in the real estate space, the ability to find product market fit.

And a lot of what we’ve talked about with this pivot is also the ability to realize when something isn’t quite working and make the change and make the hard decision to actually alter your path to find something that does work. That’s been a new learning for me as I’ve previously only been at companies where they already have product market fit.

So it was really like, “Okay, how do we scale this as fast as we can?” So this stage of truly finding product market fit and making sure you’re building a company and a product that your customers love, it’s the coolest feeling in the world when you find someone who’s like, “Oh, this is exactly what I’ve been looking for. That’s amazing!”

But it can also be very disheartening when a lot of folks don’t feel the need to use it. And you’re like, “Wait, I thought this was amazing.” So there’s lots of ups and downs in the journey.

Melinda Wittstock:

Oh gosh, a hundred percent. I mean the product market fit thing is harder than it looks. I mean, one of the things about entrepreneurship is from the outside it looks easy because we hear all about successes.

But often, what’s not really told is all the many failures, even failed companies before getting to the successful company along the way.

And so for women in particular, it’s tricky because women tend to be perfectionists and we’re already trying to prove ourselves. And so talking about failure and the context of being female, it’s harder, I think, because we have so much to prove.

Ali Nichols:

Definitely.

Melinda Wittstock:

So how do you walk that? Because I see a lot of guys talking about failure and they’re applauded for it, but a woman does it and it’s like, “Oh yeah, well of course.” You know what I mean? How do you walk that?

Ali Nichols:

It’s something I struggle with all the time. I actually was just talking to another female investor about this. But there is, I think, and don’t quote me on this stat, but I believe it’s 2% of all venture capital dollars go to female founders.

Melinda Wittstock:

That’s the correct stat! And it hasn’t changed in more than two decades.

Ali Nichols:

And so it’s now being in that position, I feel immense pressure to succeed. Because it’s like, “Oh wow-”

Melinda Wittstock:

Yes, I know I feel the same thing. A hundred percent.

Ali Nichols:

It’s tough. It’s like, wow, you’ve been given this shot. You need to succeed. So that number goes up. If you fail, you’re actually hurting everyone else’s chances. So that’s-

Melinda Wittstock:

That’s a lot of pressure.

Ali Nichols:

That’s tough. It’s tough.

Melinda Wittstock:

It’s a lot of pressure. And I think for the women who are stepping up with businesses that are venture backed that stand a chance of being billion dollar plus businesses, there’s not very many because it is certainly a tough road. And so, yes. We need our version of our cojones.

Ali Nichols:

Yeah, totally. And I’m so excited to see the first couple real major successes come out. I think that the last, call it 10 years, there’s been more and more female founders. So we’ll start to see those companies emerge here very shortly.

Melinda Wittstock:

What’s interesting though too is because we tend to, not only is it that we get the minute percentage of the capital, but when we do get funded, our valuations tend to be lower. So the amount that we’re raising in seeds and A rounds tends to be lower comparatively. And then we have to compete with folks that have gotten more.

And so the silver lining to this is other stats that show that women get a better return on capital on average, 63% more on every dollar-

Ali Nichols:

Wow!

Melinda Wittstock:

Is an amazing statistic. That goes right from startups all the way up to Nasdaq and Dow.

Ali Nichols:

Wow.

Melinda Wittstock:

And it’s almost like, the silver lining is we’ve been forced to do it because it’s the only way. But the downside is it’s less likely that we can succeed in big growth businesses because we got to show profitability earlier.

Do you know what I mean?

Ali Nichols:

Mm-hmm.

Melinda Wittstock:

Would a woman be able to create Amazon even if she had all the same skills and ideas and ability and everything that say, Jeff Bezos had, because he was allowed to just go forever just growing without profitability. And so the founder of Stitch Fix was talking about this. That her investors weren’t going to let her do that.

Ali Nichols:

It will be interesting too, now I think the next, let’s call it vintage of a VC company, is in this period that we are in right now is so focused on profitability. And what is your path towards becoming profitable, that we might be the chef where women get their chance to really come out on top.

Melinda Wittstock:

Well, we’re better at that. We are more likely to take more educated risks, so we’re not going to be crazy about it.

But the downside is sometimes we’re too slow to take the risk. I think of a lot of women in early stages that are afraid to hire, thinking of hiring as an expense rather than an investment, for instance.

So if I bring in this person, the company’s going to grow more and that person is going to return on what I… Just attitude shifts like that in terms of how to manage capital and how to think more like an investor. So I think women are getting savvier and savvier at that, but there’s still a big mindset shift that has to happen.

Ali Nichols:

Definitely.

Melinda Wittstock:

And so when you’re coming at it, you’re already coming at it from an investor mindset because your whole company is about investing in real estate. Does not give you an edge in terms of being able to raise money for your own company?

Ali Nichols:

I do think through my experience and being in an investment focused field, our company, we’re very focused on the metrics. And we’re very focused on, “This is what we need to do to succeed. This is what our margins need to look like. This is what our payback periods need to look like.”

We’re thinking about that constantly, which I think is an advantage in an environment where we are today. And hopefully we’ve gone to our seed round. So our next fundraising event would be a series A. So hopefully in 12 months from now I can come back to you and say, “Yes, we thought about the right things and it did help us raise more capital.” But I would like to think so, but we’ll see how time plays out.

Melinda Wittstock:

So let’s talk about your customers because you, you’ve pivoted now. And so who are your ideal customers now and what is the value that you’re providing?

Ali Nichols:

So our product is really to help retail investors or in the real estate world, it’s considered mom-and-pop investors, meaning you’re just not at institutional level of investing. Buy more properties and build an investment portfolio.

And so a really unique key insight we’ve found is that there is this rising trend in the US that more and more millennials are looking to buy an investment property before they’re primary.

And oftentimes this is because someone lives in New York City, they live in San Francisco, LA, these expensive, expensive metros where buying a primary home doesn’t always make the most sense. But, I think a lot of us have been taught growing up, and even if you read financial, ‘How should I invest?’ That owning real estate should be part of your portfolio. And so people are starting to look to do that.

The thing that the key insight there is that a lot of folks are high earners but haven’t built up a ton of liquidity or saved up a ton of excess capital to be able to deploy in real estate. And so we are coming in and helping our customer increase their purchasing power to buy investment properties by investing alongside of them on the down payment.

So we come in, we’ll partner with you on the down payment so that you can qualify for a loan and be able to buy an investment property. And then we stay invested with you for over a five-year period. We stay on as the asset manager of the property. So we make sure that the property’s performing to what we expected.

And then at the end of the fifth year or before, the goal is that you’ll be able to do a refinancing event, pull out the equity that the property has gained and pay out, pay us back and then own the property outright.

Ali Nichols:

It’s nice because for folks you can get into buying an investment property now with 5% to 10% down versus the 20% to 25% that’s required today.

Melinda Wittstock:

There’s so much about our education system that does not educate people, men or women about concepts like passive income or how to actually generate wealth. And so real estate is a significant way to do that. So giving people a way to get into it without having to be wealthy to begin with, it’s super helpful.

Ali Nichols:

Definitely. And for us, our ideal customer and who we’re right for is someone who is looking to build a portfolio of real estate throughout their lifetime so that when they hit their fifties, they have an option to potentially retire or not continue to work a nine-to-five job because they have enough passive income to pay for their lifestyle, or they can pass portfolios down to the next generation, and things like that.

So we’re really geared towards folks that are thinking about real estate as a very long-term investment for their future and working with us, you can start building that equity today.

Melinda Wittstock:

That’s fantastic! So right now you are changing your name and changing your website, and so as co-founder of Getaway… Now Getaway is going to become Hammock.

Ali Nichols:

Yes!

Melinda Wittstock:

So why did you shift into Hammock?

Ali Nichols:

Yeah, so for us, we loved the name Getaway. It was a very hard decision, but for us, we are expanding. So initially we were really only focused on short term rental real estates, so think Airbnb-type properties.

And as we expand to really be this enabler of investors to continue to grow to buy their first investment or continue to grow their investment portfolio, we want that to be across all different types of real estate, not just short term rentals. And so we are switching our name to be all encompassing and thinking about us when we’re much, much larger.

And so we’re switching to Hammock and there’s a cute play on the whole goal is someday you can enjoy life sitting in your hammock and real estate can be your way to getting there. And so that’s our big pivot right now. And so if you want to visit our new website, it will be at byhammock.com. So, byhammock.com.

Melinda Wittstock:

Byhammock.com. B-Y. Okay, awesome. And so that just gets so nicely in the next segue, what’s the best people? Sorry, what’s the best way for people to find you, work with you, be a client?

Ali Nichols:

Yes, for sure. Visit us at byhammock.com or you can directly connect with me on LinkedIn. It’s under Allie Nichols, A-L-I Nichols. And I will get back to everybody. I’m pretty good about that as well.

Melinda Wittstock:

Fantastic. Well Ali, thank you so much for sharing your story and putting on your wings and flying with us today!

Ali Nichols:

Oh, thank you so much for having me!