Parenting and Entrepreneurship

Today’s entrepreneur and storyteller: John Kang

John is a software engineer, a corporate finance expert. He was a loan officer for a few years, worked at manufacturing companies doing corporate strategy as well as corporate finance. What got him to start Reasi was his loan officer experience about 10–15 years ago. At that time he thought it was just a backward performing industry. The value chain of how to get a transaction done, how you buy and sell houses was really inefficient. All the inefficiency was leading to a lot of moral hazards amongst the people who are supposed to have their customers’ backs. So that’s why he started Reasi, to fix the long-entrenched inefficiency and unethical behavior, to automate a lot of the processes, drive a lot of the costs out of the system, and create a more efficient process.

Name of the project: Reasi
About: A digital clearinghouse that provides a secure and seamless home closing experience.
Year started: 2015
Year closed: 2020. The company is technically still alive, I think it’s probably because I’m having a hard time letting go.
Location: Los Angeles, California / Remote
Industry: PropTech
Category: Residential
Stage: Pre-Seed
How much capital raised: $500k
Who were the investors: Founder, angels, MetaProp accelerator
Key competitors at the time: Technology-wise, there really wasn’t too many. There were other players out there, but they’re all getting started at the same time — like Endpoint, Spruce, Modus.

Traction reached: We measured it in terms of the number of transactions and we were actually doing pretty well. We’re growing pretty fast in terms of deal volume, 30–40% month over month growth. We were only launched for about 8 months, we were starting from one deal to about 16 a month. We were on a trajectory to go to 20 and beyond that but that’s when things started to fall apart, we needed more resources than we had.

Target market, the market situation at the time of start: I would say the entire industry needs some kind of digital service, our transaction platform. We’re targeting the home market, but given the nature of our funding situation, we targeted vacant land, which I thought was actually a very good place to start. I think it was a much easier market to scale versus homes.

What inspired the idea: 15 years ago, when I worked as a loan officer, having that software development background, I thought “this should all be done by a computer.” At that point, I didn’t feel confident in launching a startup, but after getting my MBA and working in corporate finance for a while, I felt confident. And then when I looked back at the problems in the real estate industry, nothing had changed. So it seems like a no brainer for me to start. I thought it was the right time, 15 years ago, but if it’s still the same now, then I think it’s an even better time now.

Success parts, what worked: We got a platform up where everyone could move the money through our platform security. The part that we didn’t quite finish up was automating the paperwork, which is actually not too hard to do. It’s more of a brute force, human-powered thing, but we were on that trajectory to automate that piece.

F*ckups/Challenges:

• I thought everything was going pretty well. A lot of the failure of the company I really see on me, on not being able to fundraise. It wasn’t a f*ckup, and I hate using this as an excuse, but it was a real impact — I had my second kid in February 2019, and that was right when we were supposed to be raising. I didn’t plan accordingly, I didn’t realize how big of a productivity impact it will be. So it just depends on my energy level, to get through the number of investors meetings. I just didn’t have enough meetings. With the fundraising process, we did get overpassed by other startups. Certain investors already invested in our competitors by the time we got to them.
• I think the f*ckup was when I did raise my round when I got accepted into MetaProp, I should have just raised a full round instead of the bare minimum that I needed. I decided instead to get the platform out and put my head down towards the product instead of fundraising.
• I think we probably should have started without blockchain, that would have been a lot easier. We had a lot of costs that went into the blockchain piece that we could have avoided, mostly legal fees. So we had to get our Terms of Service and Privacy Policy compliant with the requirements and legal team being comfortable with it. That probably ran us another $10,000 more than what we needed.
• Integration wise, the product was a bit tougher. We could’ve just used the normal private database that we owned and got the product out a lot faster. There’s also a user experience piece connected to the blockchain. I don’t think it actually hurt our user growth, but it definitely hurt our team and how stretched our teammates were all the time. One of my cofounders spent almost all her time towards the end just onboarding users. And that was a bad use of her time.

Key causes of failure:

• Slow fundraising process, founder’s time and energy management
• Miscalculations in fundraising strategy
• Overcomplicating first product version

Grateful for/Key learnings:

• I’m grateful for actually launching the platform. I know that was very difficult for the entire team and for me to get to that point. We actually did business with people, they liked our product. So I do think that we had a pretty good market fit with our customers and our industry.
• I think I learned so much, there are so many things I wouldn’t do or do differently. For example, I definitely had too many advisors, and then not enough recognition was given to certain people who advise us better than people that were on our cap table. I’ll totally do that thing differently and approach it differently.
• I’m starting to learn how important focus on traction is, but I think the biggest lesson is just to stick to simplicity.
• When I first started the journey, I had that ambition to redo the entire transaction from start to finish, the mortgage, the closing, you know, how the property was sold. And when it came to execution, I realized how severely under-resourced we were, what we launched with escrow was the simplest portion version of that original version — but even that was tough. I would say in my next startup, if I were to do it, it would be even simpler than that. I would start with something done almost purely through technology. I’d just focus more on automation of very simple things from the start and then build on that instead of trying to tackle the entire thing first.

How do you get over the startup death? We need to focus on the next chapter. I don’t think I’m honestly there yet. I think we had clear signs of the startup death in November — December. I’m in a much better place now, but if you think about just how many hours I put into this thing and compared it to your kids. This was almost like losing a child, it’s not really the same thing, but it’s close. This is a deeper thing I wanted to do and I didn’t succeed and I’m having all kinds of doubts about myself and questioning what’s the point of all this. I’m getting there, having family and kids, the network definitely helps.

I went through all these Tony Robbins tapes and then YouTube videos and all these other motivational videos. And I’m like, I don’t care. I think time heals a lot of things when you start to forget about all the pain. I think also being able to find that next thing that you want to do and working on it is probably the solution, but I haven’t found it yet. You know, it just felt like a breakup, it’s probably the same thing. You don’t want to date anybody for a long time.

You can watch the full interview here.

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This information’s purpose is to help learn from the mistakes (and pivots) of others, as well as to encourage founders to openly speak about things that failed. Look at it as a shared f*ckup depository for resilient brilliant minds.

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