2020 was a year made for superlatives. Between a global pandemic, torrential weather, and a polarizing presidential election, it is hard to find any semblance to the status quo. This can also be said about Inspectify’s 2020 year in review. It was a year of unexpected change, some backwards, but predominantly forward as a company. If I had to summarize our biggest success for 2020, it was building and maintaining momentum.
A Look Back: January 2020
A year ago, Inspectify looked very different than where we are today. We were fresh off a pivot from a SaaS company in home inspection software, to a managed marketplace for home inspections. Our founding team looked different, we had no employees and were completing a handful of transactions a month through our newly pivoted platform. More than anything, Taylor and I were incredibly optimistic about the future of Inspectify. We had just locked in a partnership with our first partner, REX and had a vision of raising capital, building a team and, above all else, offering an incredible experience to our customers and partners.
A Tale of Three Moments
For Inspectify, our 2020 was defined by three pivotal moments over the last year. Each brought their own share of victories and setbacks, but were equally defining in terms of where we are today and the direction we are going.
Inspection volume throughout 2020
Moment 1: COVID-19
The first pivotal moment for Inspectify not only grossly impacted our business, but that of almost every human being on the planet; the global pandemic caused by the COVID-19 virus. We had just had a huge month of growth in March and were embarking on our fundraising efforts when markets and effectively real estate, went into an absolute free fall. In April we saw our revenues plummet, had a co-founder leave the company for personal reasons and had almost every VC on the planet tighten their purse strings on new deals and focus all their efforts on keeping their current portfolio companies alive. For Taylor and I, there was incredible uncertainty, but what we had going for us was we were still a very early stage company with no burn and could weather the storm for a few months.
Due to the pandemic squashing our hopes of raising a seed round for the foreseeable future, we decided to look for other avenues to capitalize and grow the company. This setback led us to apply to Y-Combinator (YC) with the hopes to regain the momentum that was lost due to COVID-19. There was no guarantee we would get it; we had applied the fall before and didn’t even get an interview! That being said, we had a new product, we were generating cash, and we were bullish of our chances. Alas, we were fortunate enough to get an interview, prepped with lots of practice and completed the rapid-fire, 10 minute interview that YC is famous for. A few days later received the blunt and deflating feedback that we were not accepted, predominantly due to our lack of a technical co-founder. I had been writing code in the evenings once inspections were complete, but the YC partners were not impressed with my coding abilities. Yet, at the end of the email, there was a glimmer of hope, “If you are able to bring on a dedicated tech founder I would be happy to talk to you guys again - just ping me on this thread”. The path forward was clear, we had to find a technical co-founder if we wanted to rebuild momentum.
Entire articles are written around how to find good co-founders, but for us it was rather simple. I called a good friend of mine, Denis, arguably the best engineer I know, to ask if he knew anybody that was looking for an opportunity. You see, over the years I have asked Denis to start a company with me more times than I can remember (each time being turned down) so this time I was just asking for recommendations. To my surprise, Denis expressed interest and the rest is history. After a quick re-interview with YC, now including Denis, we were quickly accepted in the Summer 2020 cohort of YC. Looking back on it, while I was initially offended by the fact that I wasn’t “good enough” from an engineering perspective, the rejection from YC and subsequent “acquisition” of Denis was an absolute game changer for Inspectify.
Instant Book - feature launched during YC
Moment 2: Raising Capital
Over the summer YC helped us reignite the momentum from March, seeing solid monthly growth and positioning us well to raise our first round of capital. The partners at YC did their best to prepare us for the craze that is fundraising post Demo Day, holding multiple sessions and bringing YC alum to speak about their experience. Unfortunately, Denis, Taylor and I still underestimated just how time consuming the process would be and how much of an emotional roller coaster it would take us on.
The first indicator of our gross miscalculation came from the amount of interest we saw post Demo Day. Over the first 48 hours, we had over 150 investors reach out to discuss. It took us days just to clear out the inbox and make timely responses. Then, came the meetings. Over the next month, my days consisted of 10-15 pitches with investors, follow up calls with partners and a wave of mostly disingenuous rejections. While we were quite fortunate to have such a large number of investors interested in Inspectify, the downside was we had an equal proportion of investors telling us what was wrong with our business model and how it would never work. Emotionally, this was a hard experience to go through. At one time, I had nearly convinced myself to return all the money that we raised to date out of fear of wasting someone else's money. What got me through those dark moments were 1) Taylor and Denis’ continued pep talks, 2) support from our first employees, Conner and Umair and, 3) the continued affirmation from our customers and partners on how we were making a huge difference in the real estate transaction.
By October the dust had settled and we walked away raising the amount of capital we had set out to raise and collecting a network of passionate investors on our side who had decided to take on the same risk we had taken. We also collected our fair share of battle wounds as well, namely a deflation of the momentum we had acquired during YC, both in terms of growth with me not doing sales for almost two months, but also in terms of energy of the team. Much like we had to do earlier in the year, we would have to reignite our momentum to keep the business moving forward.
A snapshot of Josh's calendar during fundraising
Moment 3: Progressing Product Market Fit
After wrapping up our fundraising efforts in October, we found ourselves stalling in terms of growth and a weak pipeline for sales. To make matters worse, we were going into the end of the year, which historically meantimes a precipitous drop in real estate activity and thus inspections. We would need to unlock new channels for our business if we had hope to show ANY growth by end of year. What we had was strong relationships with the national real estate partners we had acquired which now included Homie, Home Bay, Flyhomes and a growing number of teams at traditional brokerages like Keller Williams / Compass. From these partners, we knew that our platform, in its current state, struck the strongest chord with companies who had to coordinate a high volume of inspections every week.
We quickly identified institutional investors, including iBuyers and wholesalers as prime candidates for our platform and made a huge push in October to start conversations with as many players in this space as possible. To our delight, we were met with strong interest and sales cycles that typically take months, were shortened to a matter of weeks. We were able to reverse the curve in November, achieving our best month ever in terms of inspections completed / revenue and were confident we could maintain those levels in December as real estate came to a screeching halt with the Holidays. What happened next exceeded even my typical overly optimistic expectations. In December, we not only launched more partnerships, but saw our existing partners double down and launch new markets, resulting in our revenue more than doubling in a single month.
The main driver in our success? I attribute it to making significant progress on product market fit. There are many articles, books and theories around finding product market fit, most describing it as a binary quality; either you have it or you don’t. In our experience, I see it as a series of stages and a journey that is impossible to complete. You may reach absolute product market fit at one point, only to have the market change and thus requiring the product to as well. We are still quite early on our journey, but I’m more confident than ever that we are building a product that our partners and customers truly need and desire.
Launching repair estimates to support institutional investors
Looking to 2021
As we look to the New Year, we have ambitious plans to continue to build momentum and drive change in the industry. In the coming months, we will release new products that provide more certainty to our customers around home buying and selling, and also allow them to receive exponentially more value out of the data of the home inspection report. We are excited about our pipeline of new partners and the features we are building to continue progressing on product market fit. Much like 2020, we know we will have setbacks, some avoidable, some not, but also know with each setback, we will have momentum to help us push even harder on moving forward. Here’s to another exciting year for Inspectify.
Cheers,
Josh and the Inspectify Team
