Miami Hustle Series Feature

Tim Berthold (MIAMI HUSTLE): I am here in Coral Gables with Chris Riley to talk about Chris’ side project that has turned into a start-up with some major momentum behind it. TIKD is a mobile application that takes traffic violations off your hands while reducing your fee and keeping points off your record and it is all handled in just a few minutes on your smartphone. Chris, welcome.

Chris Riley (TIKD): Thanks, Tim. Really excited to talk today.

Tim: Alright, why don’t you take a second to fill in anything I might have missed there and we’ll get right into your story.

Chris: No, I think you did a great job. The slogan we use is “A cheaper, faster, smarter way to handle your traffic tickets.” Everything can be done from your phone in three minutes or less.

Tim: So, Chris, let’s get into how this idea started. I mean, you’ve been working in the power industry for the last few years so how in the world did you get involved in a start-up and one that handles traffic tickets nonetheless.

Chris: Yeah, it’s certainly a strange area, particularly with our background. You know, I think even though we work in the power industry right now, before that I was in the investment banking industry. I would view myself as an entrepreneur above all and we got in to the energy business by being entrepreneurial. You could have asked me when we launched our energy company what brought me to the energy industry — we had no background, no experience there and we’ve been able to build a really successful company in an area that we had no experience and so TIKD is just another, you know, we view these as markets and that is how we came at TIKD, applying the same type of things we’ve learned in other industry to this one. When you look at it that way, it is actually very similar.

Tim: What are some of the lessons you’ve learned in the entrepreneurial ventures in the power industry that have been applicable here?

Chris: Yeah, I think first and foremost, look, we are data nerds and we love market inefficiency. The reason we were attracted to the power industry is because it is a very new market, it is very opaque, it is very nichey, and it’s very, very inefficient; but it’s very data rich. There’s a lot of data and it lends itself to using some very sophistic analytical approaches to dive in and figure out what is going on. The power industry at the end of the day, its physics, it’s a game of physics, and so it’s solvable. And we took the same approach with the traffic ticket industry. Once we got our hands on data and realized the data is out there, you can see all things in the data. This is a market just like anything else: it’s inefficient, it’s full of biases, it’s full of human behavior issues, and these types of things are really exciting to us.

Tim: Why traffic tickets? Why not something else?

Chris: This particular venture came from a personal experience that just happen to enrage me enough to get me to want to dig into this –

Tim: Got you “ticked off”?

Chris: Hah, yes, exactly. The story for TIKD is: I was driving here in Coral Gables one day and was subject to a random speed trap, which these things go on every day all over the country, and on this day they caught me on a particularly bad day. I was issued several tickets and I just could not get over the fact that it was random. You know, it was a random event that cost me, in this case, several hundred dollars. And being an obsessive compulsive type person that I am, it just really bothered me and ate at me. So, I had a little down time and…

Tim: How much were those tickets?

Chris: I think combined — I think I was issued three tickets in one stop and combined they were well over $500.

Tim: Wow. So it wasn’t something you were willing to just pay and be on your way with?

Chris: No, and it was more the principle of it, you know? The street that — I wasn’t going egregiously over the speed limit. I think I was going like 9 miles an hour, 8 miles an hour over the speed limit, driving just like everybody else on that street. It was timing. They happen to have just been — have just finished issuing the ticket to the previous person and had gotten back on station and that was the time I happened to be the time I was driving down the road, and so, the randomness of that really bothered me. The penalty, the financial penalty is really high, and you know, for some people who are fortunate it’s just a really frustrating event, but there are a lot of people out there that it’s much more than just a frustrating event- this has a real impact on people’s lives.

Tim: Yeah.

Chris: And that ate at me and bothered me and so I decided, what the hell, let’s dive in and see what’s going on in this industry. It turns out its fascinating and full of inefficiencies. People leverage — I think people take advantage of the fact that it’s a pretty opaque area, it’s dealing with the government, it’s dealing with the courts, there’s kind of a lot of built in intimation there. So, I took the time and dove in and did it the old fashioned way of first, just getting on the phone and calling lawyers and calling people and trying to learn what I could. And then, that evolved again, because I have this tendency to, you know, just continue to dive into these obscure things, to spending hours and hours sitting in traffic courts here in Miami, randomly showing up to the all the different court houses and just sitting in the back and just watching. And when you watch, it very quickly became apparent to me that it was not what people think it is. It’s an administrative matter. The vast majority of tickets are getting dismissed. People should be challenging their ticket, but they don’t, and they don’t do it because they are intimidated by the system, it’s time consuming, it’s largely random. And then from there I realized there was data available. Once we got our hands on the data, then we were off to the races. From there we could see exactly what was going on, ticket by ticket, and began to form the idea for a business.

Tim: One of the things I heard from you that really stands out is, you weren’t spending your time going to networking events or tech events and getting yourself immersed in the whole ecosystem here. Instead, you were getting yourself immersed in the market, in the actual problem. Can you just say more about that and what the value is, has been, for you?

Chris: Yeah, I think it is an interesting point and, in fact, I’ve never been to a single tech event or a single conference in Miami.

Tim: This is your first?

Chris: Laughs. This is our first foray. And really I didn’t even come at it from trying to start a business. It started as a problem that kind of upset me, and the way we know how to solve things is to just dive into them and figure them out. There’s nothing glamourous about spending hours sitting in court rooms and watching these traffic tickets, but I can tell you I learned a whole bunch more there. There’s no number of conference I could have gone to, to tell me that. I think all good business ideas come from finding a problem and recognizing a market is inefficient and not working properly and figuring out how to do it and the only way to — at least the only way I know to figure those out, is to jump in and learn them. And that’s what we did here. We’d look at opportunities all the time. You know, we have more ridiculous ideas than anybody and 9 out of 10 of the things we come up with are crap. But what we’ve found is that even the bad ideas, we learn a lot from them. Over and over I have found (and I’ve learned this from Leo who is our chairman here in another business) that the things you learn always come back to provide some value later on.

Tim: You say you evaluate — let’s say you come up with 10 different ideas here, 9 of them are going to get thrown away. What is the process behind which you actually evaluate these ideas? For the benefit of whether it is an entrepreneur listening in or someone in a 9–5 job who has an idea, what are the things — what is the process behind your idea evaluation stage?

Chris: I mean, I would love to say that we have a super sophisticated approach to how we do these things, but really what we do is we get excited about things and we roll up our sleeves and we dig into them. Over time, you start to notice characteristics that different business ideas have. Either, how much capital does it take to launch the business, if it takes a whole bunch of start-up capital, if it’s very capital intensive up-front, then these are risky ventures, right? You have to bet a whole lot of money at the beginning without a lot of information to know if they are going to work. So, that is one thing we look at. The other is, what does the cash profile of the operating business look like? Is it cash intensive? Is it capital intensive? These are all aside from the actual business idea itself, but you get pretty efficient at sorting businesses into kind of their risk profile and their capital intensity profile. One of the things that, frankly, was so exciting about TIKD is that very quickly, we were able to recognize that this has a very attractive start-up risk profile as well as an attractive cash profile. And then again, as cheesy as it may be, just being excited about something is probably the main driver. Our process has always been, somebody has to be the champion of something and, in order for something to get legs and grow into something more than an idea, that person has to be excited enough to convince a few other people that it’s a good idea. If you’re able to do that, then that kind of makes it through our filter. A lot of ideas just die out because you can’t get anyone excited about them and you yourself are not excited enough to try to convince people. It’s probably a messy process and an inefficient one, but it works pretty well.

Tim: So we’ve talked before and it sounds like you’ve got some investors definitely interested and knocking at your door, but you don’t seem especially interested in that at the moment. Why not?

Chris: Yeah, it’s a very fortunate position to be in. I would say twofold: One, the characteristic of this business, in reference to your previous question, the capital require to launch the business, the risk profile, and the cash flow profile of the operating business all are very, very attractive from our perspective. Because of that, we are able to self-fund. I say that knowing that’s a very nice luxury. You’re right, we’ve gotten a lot of attention and it’s really nice to be in a position to not need it right now — not to say that we won’t at some point in the future.

Tim: Let’s say that that weren’t the case: How would you approach getting investors, or what advice would you give to a start-up founder who’s trying to get investors?

Chris: I think it’s hard. Were we not so fortunate to be in the position that we are, I think you kind of have to do it the old fashioned way. You have to build your deck, you have to build your pro forma, and you have to go hit the road and convince people that this is as good idea. Now, with TIKD, I think it would be relatively easy to do that because I think any savvy investor would recognize the characteristics that we ourselves are so excited about. But absent that, look, this is why entrepreneurship is a game only for those who are very passionate about things. If we were not in the position we are in, I would have to put together all the road show materials, and the dog and pony show materials, and go hit the road and talk to Angels and talk to VCs. As you know very well, and anybody who’s tried this game knows, that’s a long drawn out process full of frustration, and — but, that’s the process, and if you want to be an entrepreneur and start businesses, that’s what you’re signing up to do.

Tim: So, you’re still very early in the journey with TIKD and it’s not your first rodeo, as you’ve alluded to, but is there anything you wish — that you know now that you wish you would have known before launching?

Chris: Laughs. Yeah, several things. As you said in the beginning, we had no business being in this industry. I have no experience in the tech industry, I have certainly no experience in the ticket industry, I, in fact, have no experience in consumer facing businesses. So on all fronts I have no business doing what we are doing here. I’ve learned a lot on all fronts, starting with the software development. The whole software development world is a new animal to me. It’s turned out to be much more complex than I had initially understood. If I had that to do over, I would certainly do some things differently. And there is big path dependence problem, particularly in start-ups and the stakes are really high. When you make a decision, particularly in the development front (this is something I’ve now learned that I didn’t know before), man, you own that decision, and the cost of switching or the cost of changing your mind gets really, really high. So you’d better be sure that you’re right. I don’t know if we’re right or not, but — and then on the marketing front there is a lot to learn still. I’ve never ran a marketing intensive business before and I think here we’ve benefited from the fact that the story of the business is pretty easy to comprehend and pretty intuitive and pretty attractive and lends itself to, kind of, a word-of-mouth approach. So, we’ve done OK there, not because we know what we are doing, but I think we just stumbled onto an idea that resonates really well with the public. And that’s benefited us.

Tim: Alright, Chris, let’s get into the business side of things, but I want to take it from the perspective of a consumer, so let’s say I drive out of here leaving Coral Gables, I’m going back to Miami Beach, and I get a speeding ticket. What happens next? If I know about TIKD and I decide to use it?

Chris: Very simple, and that is what is so exciting to us! If you get a ticket in one of our operating cities, all you do is take out your smartphone, either Apple or Android, download the app, open it, take a picture of your ticket, answer a couple of clarifying questions, and we will tell you the discount that we’ll offer to your ticket. If your ticket is accepted and you like the discount –

Tim: Let’s say my ticket is $200.

Chris: Your ticket is $200. In most cases we will be able to offer at least 30% and as much as 50% off the face value of that ticket, guaranteed up-front from your phone.

Tim: So normally, I would just pay a ticket, because I don’t want to deal with anything. I don’t want to challenge it, I don’t even know what that process is like. So you’re telling me I would download the app and I would pay — instead of paying $200, right to the city, I would pay TIKD somewhere between $100-$130 dollars and it is essentially off my hands?

Chris: Exactly. We will take it from there, risk free to you, guarantee the outcome, no matter what happens, and handle all aspects of the process. You literally have to do nothing from that point on.

Tim: And so when you say “guarantee the outcome,” what are the potential outcomes?

Chris: What TIKD is doing is taking that ticket and challenging it with fully qualified lawyers in court on your behalf. The difference is, we eat the outcome no matter what happens. So say in your case, this $200 ticket, we take it to court and we lose and that ticket has to pay the court $200 dollars. TIKD pays that ticket for you, the full $200 even if it is more than you paid us, and then we send you the paperwork when we’re done. Now, the reason it’s a business is because, more often than not, we can get that ticket dismissed altogether or at least reduced, and therefore our payment to the court is ideally something less than what you paid us, on average. So we make a little profit, you get a big discount up-front, you don’t have to deal with the hassle of a lawyer, you don’t have to deal with the hassle of going to court yourself, and you benefit from the law of averages without having to take any of the hassle yourself.

Tim: And what about points?

Chris: You bet, so, many tickets will qualify for our no-points, no-traffic-school guarantee, and again, at the time that you take a picture of your ticket, we scan it and make a real-time decision on whether you qualify. If your ticket qualifies, we will tell you up-front “this ticket qualifies for our no-points, no-traffic-school guarantee,” and in that case we will guarantee that not only will we take care of your ticket for you no matter the outcome, you will not receive points on your license or have to attend traffic school, which, incidentally, saves you about $1000 of increased insurance costs over the next three years. If we are wrong, not only will we pay the outcome, whatever it is, we will refund your money back. Back to my original point: In all cases, you are better off using TIKD then simply paying your traffic ticket. In that circumstance, even if we were not successful in our guarantee (which we will be the vast majority of the time), you got your traffic ticket for free, whereas if you would have paid it, you would have paid the full amount and still had points.

Tim: I think a big part of what makes this an attractive business is, it seems very cash flow advantageous. So, if you agree, can you just more about that and any entrepreneurs listening in, what they might be able to benefit from and take away from the sort of model this business allows?

Chris: You bet, so, the cash profile of this business is very attractive based on the fact that we get our money up-front from the customer. When you get your ticket, in your example, you pay us your $130, $120 dollars on day one, we challenge that ticket on your behalf and that court date comes two months, three months, four months later, and if we lose, we have to make that payment sometime in the future. But I have gotten, $120 up-front and I have a liability, my matching liability of on average, say, $80, comes three to four months later. So this is a very attractive cash profile that not many business out there see, and one thing that made it so exciting for us and significantly reduces our need to bring in capital, our working capital needs here are negligible. We can use that money we get, obviously setting aside our reserve for our liabilities, for marketing and continue to fund the business.

Tim: So basically, this is a cash flow advantageous business because the government is slow?

Chris: Laughs. Exactly right. We leverage the bureaucracy and the time it takes to work these tickets through the system and we get to hold that cash in the meantime.

Tim: A lot of your — a great deal of your development is taking place overseas. How did you weigh, if at all, the tradeoffs between having a technical developer type of co-founder and using a developer overseas?

Chris: For us, initially, it was about cost and we made the decision that we would take a little extra risk of using someone that wasn’t here in Miami or a short plane ride away in order to save that cost, subject to meeting a whole bunch of due diligence requirements. In our case, we did a lot of diligence on our developer. The particular developer we chose is somebody that personal friends of ours have used and are happy with and recommended and so that was enough to get us over the hump. That said, I am not sure that bring somebody in full — in house, full-time was not the right decision here, and I wouldn’t be surprised to see us go that route here, probably as we move into our version 2.0.

Tim: How do you think you’ll find the pocket of customers that are really willing to give TIKD a try?

Chris: Yeah, that’s a great question and I think, as any business, there is a certain population out there that, in this case would be called “early adopters,” and those are probably the people that are already inclined to challenge their tickets. Our hope, at least, is that when they see TIKD, as an alternative to some of their other options out there, we’ll be an obvious choice. We are not targeting those folks aggressively, per se. In fact, our market is the 90% of people, 95% of people who just pay their tickets, and that’s a little harder customer to reach. Not many people either even realize that they can challenge their tickets, and, in fact, I think there’s a subgroup of people that are uncomfortable with the idea of it. And so, you’re right that we will have some work to do there to targeting those people, but there’s a big market of people out there that are already predisposed to challenge their tickets. That will give us a lot of traction initially and then over time we are pretty confident we will be able to convince people to use TIKD as opposed to just paying.

Tim: And so who do you see as your competition?

Chris: It’s really a new business model, right? There’s nobody out there doing what we are doing. There are ticket lawyers, and I don’t — even though it’s counter intuitive — I don’t view the ticket lawyers as our competition. First of all, keep in mind, TIKD is only handling minor, plain vanilla traffic tickets. So anything that involves minors or alcohol or egregious speeding or anything that has any sort of messiness associated with it, we won’t take and not only will we leave those to the ticket lawyers, we will, in fact, happy to send them that business. So, I don’t think we will be taking a lot of business from the ticket lawyers. And there is also a demographic difference here. Our customers are people who have smartphones, who are seeing our business on social media, and they are probably not the crowd of ticket lawyers. So, outside of that, not to mention, the ticket lawyers cannot do what we are doing. Our business is taking risk, we are assuming your liability and can lose money if we are wrong, which lawyers are not able to do. Outside of that, it’s probably copy-cats or entrepreneurs, but we’ve done quite a bit to protect the business on that front.

Tim: You’re expanding into multiple cities right away. Why not focus on Miami at the moment?

Chris: These are all the classic questions that people face, and we spend a lot of time on this. In fact, I second guess myself even as recently as today on this. Do you go narrow and deep or do you go wider and more shallow? I think what we’ve struck is hopefully a happy medium here. Our plan is to launch in three metro areas, and really, our — ultimately what decided it for us is that, there’s a lot of uncertainty in the message and how it will be received in different geographies and different cultures. In fact, Miami, I think it’s pretty easy to say, is a distinctly different culture than, say, Houston, Texas or Denver, Colorado. We wanted to have enough breadth and expand, launch in enough cities that we could get data points on what resonates, what works from a marketing perspective in more than one place. The risk to us that I was primarily concerned with of launching in Miami is that the things that’s work here would be really tempting to extrapolate and think that they’re going to work well everywhere and it’s probably not the case.

Tim: Let’s say that your budget was limited to $1 million over the next year. How would you spend that money?

Chris: My initial reaction is to say marketing, but I think where we’ll really excel is if we can get very, very accurate at predicting what the given outcome of a ticket will be, and trying to minimize our loses on an individual ticket basis. So the more accurate we can be on that front, the more refined we could be on that front, even though it might not pay off as much as spending a lot of money on marketing in the beginning, over time will make us a much stronger company and erect much higher barriers to entry for anybody else who would try to get into this business.

Tim: Yeah. Let’s say we are sitting here a year from now and TIKD wasn’t quite having the success that you expected or hoped for. What would you expect would be the reasons why?

Chris: I think in that case, pretty clearly because I screwed something up. It would be –

Tim: Laughs. You’re the old captain, “take responsibility” here.

Chris: Laughs. It would be an execution problem. I, look, we are very confident in the business model — it’s intuitive, it makes sense. Somebody is going to do this. And so if we are not off the ground a year from now, it’s because all the reasons I talked about where we don’t have experience as a marketing company or maybe we have got something wrong with the software, the technology side. But I have all confidence in the business model here, so if we are not successful, it will be an execution problem. The beauty in that is that at least that’s fixable. Business model problems are hard to fix, execution problems are fixable.

Tim: What’s preventing a law firm with deep experience and deep pockets from doing this instead?

Chris: This beauty of the TIKD model is we are taking risk with your ticket. You pay us $140 dollars for a $200 ticket, on average we are going to be right, but on an individual basis there will be many cases where we will have to pay more than you paid us. Law firms are structurally able to do this, due to legal ethics issues, are not able to do this, so they simple cannot replicate this business model.

Tim: You are in the enviable position of not looking actively for investors at this stage, but let’s say you did go out to Silicon Valley and you did meet with some top Venture Capitalists, you were trying to raise money, and in the end they decided not to invest. What would you expect to be the reasons why?

Chris: Again, I think the business model is sound and it would be unlikely that people wouldn’t be excited about the business model and the cash profile that we’ve talked about. Fortunately, we don’t have to do this, because a lot of VC’s look for experience of the founders in these areas and I would be able to point to none.

Tim: Laughs. I wouldn’t quite say that.

Chris: I am sure that would be something that a lot of people looked at. Frankly, another area is we make our money by challenging tickets in the court systems and to the extent that we are working with the government here, there might be some firms that that’s just not something they are comfortable doing. But, really, I think the fact that we as a team don’t have experience in this space and, in fact, haven’t launched a tech focused business before, I wouldn’t blame them if they were somewhat concerned by that.

Tim: What would you say your biggest challenge is right now?

Chris: Really our biggest challenge is navigating the software technology side of things, and then getting the right growth expansion strategy. The best thing we can do from a competitive perspective is to grow and expand to virtually all metro areas as quickly as possible, but doing that in a controlled way, doing it, making sure we have the right data and the right information before we do that is probably our biggest challenge of trying to figure out how quickly we will roll out.

Tim: Alright, Chris. I’d like to move into some closing questions here. What would you say is the best advice or lesson learned in your professional career or otherwise?

Chris: You can’t be an entrepreneur and be afraid of having bad ideas. I am full of bad ideas, and as we’ve talked about before, 9 out of 10 things that we come up with and kick around turn out to be bad ideas for one reason or another, and some of them are just horrendous ideas. As I’ve said, the things I learn with the bad ideas that we have, have in almost all cases have turned out to be beneficial to me in some other thing at some other time. TIKD is a great example of: All of a sudden the pieces fall into place and things just click and before you know it, you have a good business that you are excited about and can make something of.

Tim: Any books you’d recommend any current or aspiring entrepreneurs?

Chris: Like conferences, I’m bad at business books. I spend more time reading obscure philosophy books than I do than I do business books.

Tim: What’s a good obscure philosophy book?

Chris: My go to is, Zen and the Art of Motorcycle Maintenance, which I am a big fan of.

Tim: Alright, yeah! What is it about that book?

Chris: I think the idea of, you know, the central theme of the book is exploring quality and coming up with something that has quality to it, which I realize is a fairly out-there concept. But doing things — the way I interpret it at least, is doing things that actually matter and have a real impact and not just doing things for the sake of making a buck. We try to have a filter for everything we do, that is has some benefit to society. The things we do in the energy space are lowering people’s power bills. TIKD will lower the cost, materially, and in many cases to the very people who need it the most, of getting a traffic ticket. Those things, even though they are a little cheesy sounding are really important to us, and things that I pay a lot of attention to and mean a lot.

Tim: What would you say are the pros and cons of launching a startup in Miami?

Chris: TIKD could have launched in virtually any major city. We have found in some of our other ventures that, depending on the industry, getting the right talent here in Miami can sometimes be difficult. In this particular case, I don’t see that it’s a pro or a con one way or the other. This happened to be where we live and where we do business and where we came up with the idea. I think TIKD works in any city, but we are happy to be in Miami and launching it from here.

Tim: What would you do if you were brand new to Miami and all your room and board was taken care of and you only have $500 that you could spend on starting a new business. How would you spend that money? What would you do?

Chris: So, I think for this, I’ll steal the line from my good friend, Chris Miller: I would buy a lawn mower. I would buy a can that would hold gasoline and I would go spend however much time it took me mowing lawns to turn that $500 into $10,000 or $15,000 and do something with it. I think there’s no substitute for working your ass off, rolling your sleeves up, and getting out there and trying to get a good return and get enough capital that you can take some risk with it.

Tim: Alright, Chris. Any final advice for our listeners?

Chris: Don’t be afraid to jump into your idea. If you have something, or notice these little everyday moments in life, if something doesn’t work right or something is frustrating to you, take some time and find some time in your day to just think about these things that don’t work and see if you can find a solution for them. We are still as a society and as a country innovating every day. And even I, when I pick up the paper, see things almost every day where I wonder, “Why the hell didn’t I think of that?” These things are out there, these ideas are out there. I would encourage people to find sometime in your day to sit back and contemplate just the little things that are frustrating you and see if you can build a business around them. In many cases I think people will be surprised to see that they can.

Tim: Ok. Alright, Chris, where can people learn more about you and/or TIKD or connect with you guys?

Chris: You bet, our website is up www.gettikd.com.

Tim: How do you spell that?

Chris: G-E-T-T-I-K-D.com We’re on Twitter, we’re on Facebook, we’re on Instagram. GetTIKD is our handle for all three, follow us, and be ready to download our apps here in a few weeks when we’re ready to launch.

Tim: Alright, Chris, it’s been great.

Chris: Thanks, Tim. It’s been fun.

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