I'm Matt honkler CEO and co-founder of powder keg and on the show today CEO and founder of megawatt Ilya Rector I'm wearing a suit I'm in the bus with the mayor sitting next to me just sweating watching you know straddle the driver's seat of the bus and open up all these electrical compartments and wires but to his credit 26 minutes and I think like 10 seconds is what it took he got it done all credit to him we won the bid Billy Rector has built one of the first sustainable Bitcoin mining companies in the world megawatt which is headquartered in Central Indiana prior to starting Mega lot Ilya was the co-founder and CEO of double map which was eventually acquired by Ford Motor Company in 2019 what started out as a college project scaled to one of the 100 fastest growing companies in America doing all of this without taking a single dollar of outside funding in our conversation with Ilia we talk about his family history and immigration to America from the Soviet Union Scrappy startup stories that are going to inspire you for sure and how to bootstrap a software business all the way to a successful exit that's all coming up on this episode of get in but I was born in technically a country that doesn't exist anymore at the time of the Soviet Union now that's Russia so in my dad was the ultimate in my opinion kind of Hustler entrepreneur where he wanted to get us out he did not like the system for a million different reasons some of which we're seeing today so he saw the writing on the wall back then but he started writing letters he learned English he was a scientist is a scientist started writing letters to all these different universities and academic organizations around the world one of which went out to the University of Washington in Seattle and this guy David Gordon read it thought thought there was something there and ended up convincing at the time the Soviet Union in early 1991 before it had collapsed to let my dad leave my mom and I were back in the middle of Russia and at the time I was young so I can't pretend that I remember this but in theory we weren't going to see each other again so my dad left and luckily a few months later the Soviet Union collapsed he didn't have any money but his boss this guy David Gordon sent some money to my mom and I and we caught the first plane out and came to America so I credit a lot of Entrepreneurship to my mom and my dad because my mom didn't know English she was very young my dad learned English but very much a second language and through these you know letters that he wrote got us out of there tell me a little bit about the psychology of that being you know first generation immigrant in the U.
S what kind of impact did that have on your career and what direction you took things well if you think about it I'm now in my second startup but going back to the first one startups that's just not a thing that existed in the Soviet Union it somewhat does maybe now which is questionable in Russia there you know capitalism didn't exist so had I stayed had my dad not taking those risks had my mom not taken those risks my life would be vastly different so I always felt the sense of responsibility to to do something of value with opportunities that they gave me well they certainly have it's got to feel good to deliver on that expectation sounds like you put on yourself but wild to think about it it really is literally if your father hadn't been able to if you hadn't seen a thousand letters got someone to reply got over here collapse of the Soviet Union your mom and and yourself move here at this very moment who knows where you would be that's that's pretty insane to think about yeah not somewhere I'd want to be yeah yeah alternate reality yeah I think about that parallel universe frequently right so I was adopted from Russia when I was nine months old and I'm constantly kind of drawn back to like wow you know we're having a bad day it's like could be worse yeah it's a great day yeah yeah did your family stay close was it David Gordon yeah did your family stay close with him or stay in contact with him as you guys like you know got settled in the states yeah we're still in touch with them today he was the reason he ended up getting a job at the University of Michigan this was a few months after we'd moved to Seattle he asked my dad hey I know you just moved across the world but do you want to move to Michigan my dad's response was well it's America I don't really differentiate Michigan versus Washington State so sure and at least the way the story's been told to me my dad is is not James Bond let's put it that way he's a scientist the CIA or one of the organizations rightfully so was I think watching oh wow yeah so he just left because we moved to take this job at in Ann Arbor and a few months later I think his lab got raided wow because they lost him oh my God and they started interviewing everybody's my dad's name is Mark you know hey you know does Mark actually do work here is he just in the back you know taking right jotting down some notes luckily you know he wanted to get out of Russia so he was doing you know actual academic work and science related research so that worked out but wow funny backstory there wow that's crazy well and you grew up in a college town Ann Arbor Michigan what do you think what impact do you think that exposure had on you just in your own cultural exposure yeah so my dad was doing his postdoc at U of M my mom went to grad school at U of M so we were living in low-income family housing so we didn't have any money which it depending on where you live that can create some class inequality where I lived my elementary school which had 300 kids I think had something like 70 countries represented so you get off the bus after school nobody has paid nannies or people to watch them so I still remember some of these you know people's names who I was friends with and we had zunjab from China and his family would watch us you know on Mondays on Tuesdays it was Kevin obungu from Nigeria we had Dominic from Australia we had ataro from Japan my family would watch them one day and it just rotated so the sense of hey it doesn't matter where you're from we're all here to build a better life doesn't matter what religion you are what skin color you have what background you have what orientation of anything we're all just working to build a better life the the most beautiful definition in an explanation of community right there absolutely absolutely that and that was my experience growing up in West Lafayette across the street from Purdue it was just all my all my best friend schools from Morocco my best friends in high school were from Sudan and Poland and Korea and I think a lot of times people who aren't from the Midwest maybe haven't spent any time in the midwest don't realize just how Multicultural many parts of the Midwest are absolutely I think it's one of our underutilized Assets in a lot of ways or at least lesser known in assets absolutely agree well tell me how you ended up in Indiana so I my dad basically got a job at Eli Lilly is the the short version of the story slightly longer I had this cultural shock where with a small school where I had 60 kids in my grade made this big leap to go to a public you know bigger high school I had two thousand kids and then Midway through freshman year moved down to Carmel which is like the biggest school in the country I think yeah and had to make all new friends there the city of Champions there you go I I know you say it as if it just happened make make new friends there but that that's actually really hard to do especially in high school when you're going to a school where maybe people have known each other for their entire lives you learn any lessons making new friends for the first I mean one I'll give credit to Midwestern Hospitality people were actually welcoming so from that standpoint it wasn't as bad for me I I was always athletic I would have these I play hockey and soccer and run track and all of a sudden you go to this big high school there's there's a lot more competition so you really do have to think about hey you know it doesn't matter that I was the best player on my soccer team when I was you know 13 or 14.
it's more hey long term what do you want to do what are your actual skill sets are there actual curiosity Beyond you know something like Athletics so that you want to pursue and was it the Kelly School of Business that jury to Indiana University so I I've got a funny backstory there too I I was an okay Spanish student I'm in high school but I placed well in the National Spanish exam so I I got to IU thinking I was going to take a Spanish scholarship and I I asked the academic advisor saying hey what level Spanish do I need to take they said well it's a foreign language scholarship you can take anything you want so I I speak Russian so I just wait a way to work the system that's awesome I love that I know that so it seems like right Academia like higher ed was part of your life growing up I mean with your dad and mom was was entrepreneurship part of your life in your home life I feel very fortunate my parents were and are extremely supportive at the same time and I joke with them still to this day I think as far as you know the scorecard the way they were raised which you know academics were the central Focus I'm a huge disappointment that entrepreneurship doesn't exist in the minds of that you know generation of people from that country let's put it that way so from that stand I I don't have a higher a degree like I have an undergrad degree I don't have a master's I don't have a PhD I'm not a doctor or a lawyer so that scorecard is off failure yeah well by our scorecard here you're doing great appreciate it I appreciate it well I and I I think your first entrepreneurial venture may be outside of some childhood lemonade stands and things like that kind of came about at Indian Indiana University is that right yeah so my goal at IU was to get good grades get a job and have some fun maybe not always in the right order but at the same time going into my senior year A friend of mine in my fraternity he was running for student body vice president wanted some help on the campaign I I ended up agreeing to help we we get elected and there's five platform issues that they ran on I I wasn't one of the main people I wasn't president or vice president but I helped enough on the campaign where once they they got selected I was one of the Chiefs there's five Chiefs so think of it as a Cabinet yeah so we had a very sophisticated way of picking who got what issue and platform issue and I lost five sequential games of rock paper scissors and got stuck with transportation and eventually buses because nobody wanted to do that so that was the origin story that right little did you know at that moment how cool buses would be it wasn't a passion of mine that's what's interesting it's it's something that I learned I'm either gonna do something 100 or I'm not going to do it so once I committed I became obsessed with Transportation I learned everything I could so it actually in a roundabout way so what happened so how did that evolve so in student government you want to just get things done to help Student Life at whatever University in my case IU so first we brought Zipcar at the time was new to Bloomington that was this big win then we brought something called zimride which there's there's an interesting Side Story as to a huge mistake personally and professionally I made there about passing on an opportunity but once those two were done what later became my first startup double map was what I started and the origin there is going into the summer before my senior year we had these issues that we as part of the transportation initiative had run on one of which was adding something called the U route if you're familiar with Bloomington they wanted to get more attendance at football games so they wanted to add a bus route just on Saturday mornings to bring people to the stadium which IU football was not very good at the time maybe it's gotten better but the time's certainly not very good attendance was low start there yeah short of teleporting to the game getting a better football team right are you administrators do maybe you should have been the coach they couldn't have done much worse although we did go to a bowl game one time so that was nice um but it they didn't like the idea of adding buses which was gonna wear and tear the buses at fuel costs at driver salary so I essentially got laughed out of the room by these administrators the summer going into my senior year and one of my just fears at the time and still to this day it's not even that I want to look smart I want to avoid looking stupid so I started pitching them ideas that I just thought up of on the spot although I pretended that I had put in months of research and work and all this stuff and one of them was we had the bus that I took every single day to class it had a paper schedule and we all know that weather happens traffic happens life happens buses rarely run exactly on time so the iPhone had just come out I said hey you know why don't we put an iPhone in every single bus and then using air quotes you know friend them and put them on a map which was very naive of me to say but I said hey why don't we do that would that be something a project that you are interested in and they said sure how much would that cost in my head a data plan was something like 30 bucks we had 30 buses so I said a thousand bucks a month and I think they were just trying to get rid of me is this you know kid that was pestering them about this random project they weren't that interested in so they said sure we'll give you a twelve thousand dollar a year budget and I walked away thinking oh my god I've I have a 12 000 a year budget this is this is more than zero which to me is binary yeah so all of a sudden it became very real let's go build this thing and throughout the course of the Year we We Built it we launched it wasn't a company at the time it was just a project an app I viewed it almost as my legacy we launched it but then going back to my roots you know with my parents there was an expectation that I got a job so I took a job instead of pursuing it as a startup but later came back to it what brought you back to it so I graduated I became a consultant I moved to DC and I had this very cool opportunity where I picked a boutique consulting firm because I knew I'd intern there I knew they had some overseas work and I was obsessed and still am obsessed with traveling so they wanted somebody to go to Ethiopia Nigeria and Ghana so for about six months I wasn't actually in DC I was I was abroad fascinating fascinating experience but while this is happening I'm getting messages from the IU Transportation manager saying hey we need X Y and Z bugs fixed in this bus tracking app that you've released and again it's my legacy so I wasn't looking for money I said sure you know I'm dealing with some some work things and some rolling blackouts potentially but I genuinely want to get around to it I will do this you don't need to pay me and he cut me off his name's Perry Maul I still actually have a relationship with him to this day this amazing guy by a lot of what we achieved to him believing in us I you know I said it's going to take me some time he said you don't understand we have 30 000 kids using this every single day I'm getting more phone calls then it's it's worth almost at this point if the thing doesn't work we need this fixed now you found product Market fit unintentionally yes so he almost started negotiating he said well what's it going to take for you to do this now is it going to cost money how much money all this and then I almost pivoted because I I had been entrepreneurial my whole life I was the kid with the lemonade stand I was a kid selling bootleg DVDs summer camp so I was always obsessed with you know some kind of whether you call it product Market fit but some kind of building right I wanted to build things of value and in this case there was dollars on the table so I think we negotiate our first deal with an annual contract for eighteen thousand dollars a year which is not enough to live off of let's put it that way but to me it's very binary I still believe this is the day that it's just as difficult for a startup to go from making zero dollars to making a dollar or two as it is to making millions of dollars yeah but can you imagine how many startups would love to have someone reach out to them and say Hey I want to be a customer and I'm gonna start at eighteen thousand dollars that's massive it's awesome but I think that only happened because as students a lot of times we feel powerless We're Young we don't have experience we maybe feel like we don't know what we're doing in my case I almost felt the exact opposite I felt plenty stupid not knowing what I was doing but I was paying tuition and I was representing students as part of student government who paid a whole hell of a lot of tuition and all of a sudden these IU administrators and these Transportation people at IU luckily in our case they were supportive and genuinely interested but even if they hadn't been they have an obligation to listen to us at which point if you build something of value and it's live today and that was you know 2009 2010 wow built it they they have to follow through on it so all of a sudden it wasn't that you know we were pushing them we found product Market fit like you said so for all the students that are right now as we record this using the bus mapping on campus at IU thank Ilia only if it works yeah exactly well yeah Nate already teased this talk to talk to Ford Ford ultimately acquired this company a lot of things happened in between what works some of those kind of like pivotal moments man I might back you up yeah right so you talk about your parents giving you this kind of like report card grades of go get your Masters go get your PhD how did the conversation go when you said I'm actually going to go work on a startup that makes 18 000 a year and quit my lucrative job abroad in Consulting I think not only at that moment but genuinely if you ask my parents now for the first five years of the company I think they thought that I'd lie to them and I'd actually been fired because in their head you know who quits a job any job much less a good job that I enjoyed it was letting me travel to go do and I again air quotes but this is what they call it this quote bus thing for what ended up being 10 years but for the first five years who knew what it was going to become yeah wow so I guess if you were they supportive or was it kind of like a fight there so that's where I credit a lot to them right they did not get it up until today we sold to Ford and solely because I think they knew what Ford was they they got it but they were always supporting and that that I'm forever grateful right that's I think the ultimate role of a parent is you might not get what your kids are doing but it's your job to be supportive and they work yeah I love that that's amazing okay I have I have this a map too right so you sign your first customer with IU you're now working on double map what do you do next so life came at me very quickly so going back I was I was living in DC and as a consultant you're taking Prime Time flights wherever you want booking them last minute I was living in a hotel room so my room was cleaned every day I wasn't spending any money on food all this stuff all of a sudden one of the first clients we ended up pitching that just became came up for bid was Georgetown University so I'm back in DC but I'm living in Indiana and all of a sudden I'm not flying to Dulles on a direct flight in the middle of the day I I remember this very well because it Stark over the course of two three weeks of a gap I'm flying from Indy to Baltimore on Southwest taking the 36 bus from BWI to the green line on the Metro in DC taking that to a buddy of mine who lived in Arlington and sleeping on his air mattress to go pitch Georgetown which did that for a while to build a relationship to show them we were committed to them that was part of our pitch because we're a young startup so they're buying I think us as much as they're buying the product and belief in US but eventually we won the deal and that was that was a big pivotal moment for us because that's the university like a brand that people know how old were you at the time a year out of college so yeah I'm 21 22.
that's amazing and then fast forward right I I did some research and you were pitching the mayor of Columbia Missouri sure yeah and tell me about that story so even after we had gotten Georgetown and you know we got University of Michigan which was nice it brought me back to Ann Arbor and some of these other schools we started pivoting more into municipalities and cities eventually we ended up doing corporate fleets and airports and hospitals but Columbia Missouri was both right it's a college town but also a larger City in Missouri so we're pitching them and even though we have a product and we're making you know seven figures as a company we're still not you know the 800 pound gorilla in the room we still have a lot to prove so our pitch was that we're this Nimble product we can install it really fast we're not like this old Tech we have to tear apart a bus and do all this crazy stuff we were using not iPhones as I had originally pitched but something similar like a tablet infrastructure more ruggedized so we pitch and when you do these requester proposals rfps you you submit this hundred page document which that's a story of itself about creating that content and staying up nights there's a lot of Blood Sweat and Tears that goes into that but if you make it through the initial process where dozens of companies or I can submit they usually Whittle it down to three or four final and you go and pitch in person so in our case we we drive out there and you have no idea who is going to be in the room sometimes it's just the transportation manager maybe and a few more people in this case it was a big project for them so the mayor of the city is there and there's probably like 30 40 people were presenting all this too and again our pitch was under 30 minutes we'll install this in a bus here's our installer mind you our installer is my college roommate and one of my best friends is not not like a professional installer we hadn't timed him as to how long this was going to take I just I was relatively conscious was he wearing penny loafers as well we actually played enough right now it's amazing it's fun no it's a good point right because we all had to play our role and we usually did installs I'm getting my hands dirty all of us are doing everything good but in this case I'm wearing a suit and he's he's the installer so they they said oh that's that's really interesting let's pull up a bus and and test this so they they immediately pull up a bus they pull out an actual stopwatch and I want to help his name's Reed he's still in town here I'm still very good friends with him I want to help him we usually would tag team these installs I mean a few more people with us but I can't because the role that I'm playing is the presenter the CEO of the company I'm wearing a suit so I'm I'm in the bus with the mayor sitting next to me just sweating watching watching read gonna straddle of the driver's seat of the bus and open up all these electrical compartments and wireless but to his credit 26 minutes and I think like 10 seconds is what it took so by the skin of our teeth he got it done I'll I'll credit to him we won the bid and that is awesome that's amazing well you mentioned Reed is one of those early characters on your team but tell me a little bit about your co-founder Peter cervas so Peter and I met so going back to student government election he I didn't know him at the time I knew Jack McCarthy his vice president my fraternity brother Peter was ultimately the president that we essentially helped get elect yeah he's good at rock paper scissors well he didn't have to he was the president so I didn't know Peter he didn't know who I was but I think over time he saw that I I cared and in this case I think whether it's finding co-founders or you know getting ahead in any career just caring and giving a damn I think goes a long way over time it shows so in his case he was like wow this is actually turning into something him and I started talking he he was going into Investment Banking and ultimately did but we bonded over the fact that we both liked startups we liked Tech we wanted to frankly we didn't want a real job yeah we wanted to create our own jobs and ultimately became business partners that way that's amazing how do you think you guys complimented each other because some sometimes it feels almost like Alchemy how these co-founding teams get put together and and while a lot of times co-founder relationships are complementary a lot of times they're not gone into consciously being like hey you do all the things that I'm bad at and I do all the things that you're bad at how did that kind of play in the relationship between you and Peter I think so we had a third co-founder as well and there's probably a cleaner example with him his name's Eric sure Peter and I just being young and naturally you have different skill sets right even if you take what our professions were he was an investment banker I was a consultant there's different skill sets right so naturally a lot of the finances fell on him a lot of the operational efficiencies fell on me so we had natural deviations that way Eric I think is is a funnier story where we weren't technical so Peter with his pull as being student body president I still don't know how he did this he convinced the school of informatics to give us a Capstone team oh that's all this project and again it wasn't a startup at the time it was a project so yeah there was Merit there but they treated it like a class so I I wanted you know the finished product I was ready to you know work day and night to get this done I was going to graduate there was a taking clock they're going about this you know a week at the time a semester breaks or taking vacations all this stuff and I'm still friends with some of the people on that team so they were very talented but it was just different for them so after their Capstone finished we said hey we need some technical help so through a friend of ours that we met he said hey I've got this smart guy he's younger his name's Eric and I remember I was somewhat cocky at the time right we had a DOT map as we thought it was a bus we thought we'd invented fire so in walks this guy I'm a senior I think he was a freshman or sophomore at the time and you know I said hey here's here's what we have built so far if you start by doing some of these low-level bug fixes maybe you can work your way up to do this and then eventually this this and this that's amazing and he's super humble to this day he listened to me rant for 15 minutes and then our mutual friend had told maybe a week or two in advance what we'd been working on for six months he just casually turns his computer around oh this is and he had built exactly what we had spent six months building in in under a week wow so I just backed up and I was like listen what can I do to just get you to join our team we'll do whatever you say and it goes to show he ended up interning at Google fascinating brilliant guy but he became our CTO and co-founder that's amazing how did you convince him to quit the Google route and go in on a startup honestly I'm not sure it must have been in his DNA too so I remember I'll answer a little bit differently he he was pitched by a lot of as he called it you know businessy people at IU about doing this startup or that startup and he said what differentiated and Peter and I to other people who are presenting this to him was that we actually followed through and had an MVP a minimum viable product and it showed follow through and we're taking it very seriously ended up getting paying clients all of that most people they're they're just talking and have pretty slides and pontificating exactly right so I don't know exactly if that convinced him to leave Google Maybe by that point we'd gotten a little bit more traction I mean he saw you know that it was a legitimate startup that was going to be high growth but getting them to buy in early on talking about getting that traction again did my research here you guys topped off at what 93 on the Inc 5000 list so we made it four maybe five years in a row but that was the highest 93.
so what what attributed to that growth like how do you go from you know your got a couple customers here you're on an air mattress in the DC area and out sweating while someone's installing on a bus to 93 on the Inc 5000 list so I don't know if there's one single thing but using double map and I'll dive a little bit into the details of what we did what our products did right so the story of a static schedule you want to know where your bus is in real time think Uber for buses that's how it started but if you think about Transit right so we're sitting here in Indianapolis if you need to ride the bus meaning you don't have a car you don't have a bike and you need to get across town exactly one choice and that's the bus system Indigo so there's almost this natural monopoly for Transit organizations and they have a budget to where ultimately they want to do the best for their Riders but there's only certain amount of dollars to go around to where an app to track the bus by itself oftentimes doesn't move the needle for them right is that going to increase ridership is that going to decrease cost is that going to increase operational efficiency maybe but there's not a scientific way to prove so we launched this and you know we thought we were again Geniuses right we had a DOT moving kind of map multiple dots by this point in time but it didn't sell so we started talking to real world custom customers and what we realized was there's other budgets and other projects they're pursuing but our technology we're putting brains inside of the bus and if you walk into a bus even today oftentimes you're walking back into the 1970s as far as you know Tech Systems aren't talking to each other all that so in our case we realized there was a bid coming up where they had a sizable budget to do to help visually impaired Riders so imagine now if you're visually impaired you're blind you're relying on a bus driver to announce when the next bus stop is bus drivers are human right they they might do it a little bit later they might do it a little bit earlier they might forget they're driving a bus at the end of the day there's all sorts of variables so again Siri was coming out around this time so we had voice synthesis technology we already had this tablet infrastructure in the bus we realized we could actually leverage the exact same Hardware we had plug into the speaker system on the bus and actually help visually impaired Riders and oh by the way there's a budget for that and oh by the way we have this cherry on top now this app to track the bus those are differentiator away from other companies that we were competing against so it became this ecosystem where we did a lot of things inside of the bus to integrate these siled systems help route optimization help count passengers so that you knew where and when people got on and off so that you could optimize your routes and that ultimately led to the company taking off and US winning bigger contracts make sure to mark your calendars for August 29th through 31st for rally the world's largest cross-sector Innovation conference featuring pitch competitions demo Arena interactive experiences and a whole lot more join us on August 29th through the 31st in Indianapolis and visit rallyinnovation.
com to secure your tickets today tell me about how you ended up getting acquired by Ford was that something that was always kind of a North star for you or did that kind of happen through some Serendipity as well I think hindsight's 2020 right at the time you're just trying to grow and stay alive yeah you know pay your bills but starting out I very much I wanted to be a true entrepreneur and you know you have this checklist where you want to sell a company I'm going to grow it to where it's valuable to somebody else so that that was a goal now it took way longer and it was way harder than I thought to where if that's the pure goal that somebody has I would advise them to go maybe do something else and we never expected to sell the Ford But ultimately we got big enough to where one of our competitors was actually acquired by them out of curiosity we we called the CEO we were at CES one year and we called the CEO and said hey how's life it and ultimately he introduced us and we ran a process to where we had I think four or five other offers and we ended up picking forward that's amazing did you have like VC or investors that were like kind of me pushing you towards an exit so we were bootstrapped we were at zero dollars throughout the history of the company that's amazing and there's Nuance there right it's not that we were against raising money it's the going back to these requester proposal like we talked to about Columbia Missouri a lot of these rfps they have grant funding to where they have let's say four or five hundred thousand dollars you win a bid it's it's a five-year bid but a good chunk of it is actually allocated up front so where you still have to deliver on the product and you still have to from an accounting standpoint recognize the revenue over 60 months cash is King yeah and when we were actually raising our initial run which we had a million dollar term sheet originally that we had raised throughout that process it took six months we won our first RFP and said hey we don't have to give any Equity here yeah your customers is your VC in essence yeah why don't we just do this model yep yeah that's great I love that well I I would love to understand what you were thinking after that exit I know a lot of times Founders can kind of feel a little bit lost after they've put so many years and so much of their life into something but I also know you have a lot of different passions and you've gotten involved with a number of different startups here in Indiana I'm sure you traveled a little bit as well tell me a little bit about that time period after you sold double map yeah I'm a pretty candid guy so I'll give the the good with the bad right yeah because everybody has this image right you sell I had this image of other entrepreneurs you sell and you're like on a beach somewhere right right in our case I actually think our work ramp up after we sold there was more meetings there was a lot of red tape and a lot of things we had to learn now being part of a huge huge international company that we as a little startup weren't necessarily paying attention to at the time so there's a lot more work I got married at the time I had my daughter at the time this was August of 2019 so little did I know kobud was right around the corner so a lot of things happened there but I I signed a non-compete for didn't particularly want me to you know start the next version of double map to compete with the one they bought or at least that's what I assume and I had some time I had to stick around at that company but once I left it's more hey I spent the last decade of my life in transit and I I can't start another company in transit so what is it that I do and in my head again there's this Playbook I don't know it's just in my head or if this is reality but if you're fortunate enough to sell a company then you start doing some manual investing so that's what I did just to stay plugged into the tech community and I had some connections of people who I knew were raising money who I'd worked with in the past that I was passionate about helping and participating in so I thought that I would try that as like a real job going back to I only do things if I can go all the way in yep so I suck dozens if not hundreds if not probably a thousand plus pitches and slide decks I picked five deals that I did Equity Investments on various sizes but what I realized through that process there's some people and I admire them they wake up in the morning hungry to chase deals and meet these companies I admire that but that's not me I realized that process that I am who I am I like building stuff I like when it's a pirate ship mentality when it's a small team we're all very much pulling in the same direction we're gonna make mistakes but you know we control our own destiny so I did that for probably about a year and then I said okay I need to think of what I'm going to do next and I spent about a year meeting with potential co-founders just ideating coming up with ideas and all sorts of and it was a very difficult time because it's not like an idea just pops into your head and you just run with it yeah so ultimately maybe not quite fully depressed but I I was not sure what I was going to do the rest of my life and that was actually a very difficult time how did you get interested in Bitcoin so right around 2016 I got interested in Bitcoin and I wanted to have some skin in the game so just like I'm sure a lot of people who got interested in that stuff I bought some on coinbase and fell down the proverbial Rabbit Hole researched it felt smart in 2016 maybe 2017 felt stupid 2018 2019 smart again 2020 you know the whole roller coaster sure throughout that journey I learned about Bitcoin mining which that's probably a longer conversation if we ever want to get into what that is and how it works but ultimately what I was interested in going back to doing Angel Investing is a passive form of income right you plug in a very noisy computer and it just prints you Bitcoin every single day right imagine a rental property but you don't have to deal with tenants you don't have to deal with broken plumbing all that so I wanted to do that as part of a passive investment yeah it's noisy and power hungry and I had a newborn at home so that wasn't going to fly in my basement yeah so I set out and I found some hosting companies across the country I found four different ones I think one was in Colorado one was in Pennsylvania Illinois and Kentucky the Assumption with the two weren't going to be very good The Hope was that one would be okay and one would be excellent and I would consolidate my operation there what I learned is that they're all genuinely run by good people I still am friends with a lot of the founders of those companies but they either didn't own their own land didn't own their own buildings in some cases didn't know how to run a business or wouldn't pay their bills on time and then I had this you know six-figure personal investment of these weird computers that were homeless collecting dust and I I didn't feel good about it much less explaining that to my wife so I hadn't set out to start a Bitcoin mining company but I said hey I've run a business before there's clearly need here and a demand why I actually try my hand at this and I hired a consulting company to do a nationwide search the goal was to find affordable available and sustainable energy we looked at Wyoming we looked Texas I happen to be passionate about Indiana so I started looking at all of our local Utilities in Indiana and I found one that's actually 85 carbon emission free I worked with some Local Economic Development corporations to find some land and outside of just being passionate about Bitcoin and Bitcoin mining which we launched and now a seven figure business of its own in megawatt I'm obsessed with bringing more of that to Indiana yeah that's incredible I I love that one you have the passion to go deep on something when you're interested in it and like really figure out where's the need where is the the kind of uh Breaking the Chain of operations and then say okay there's got to be a better way to do it and I also love that you kind of looked in your own backyard and said what does Indiana have that I could use knowing that you've got all these relationships in Indiana to lean on and then then you made it happen well and that's I think a lot of people they they talk about Silicon Valley and they talk about New York and you know we're here you know in a flyover State some would call I've always looked at wherever it is that I am in this case I'm in Indiana and I'm here for the long run so I'm very passionate about Indiana I look at what do we have here that's a competitive Advantage we have a lot of really high-end academic institutions a lot of technical institutions if we can keep that brain drain low and keep that Talent here I think that's a natural competitive Advantage because their friends and family and relationships here the other part Bitcoin mining and sometimes gets a bad rap because it uses a lot of energy right well that's also why it's not going to happen in New York City or San Francisco or Los Angeles because there's a lot of people there that need that energy whereas here we had this Automotive infrastructure that was built and all these factories some of which are you know now gone but the electrical infrastructure still exists yeah so where the city we're in and the location specifically where it used to be this 700 000 square foot Warehouse that an employee torched in the 80s and got upset or something torture the newspaper articles about it so it looks like a bomb went off it's just a carcass wow but there's this electrical infrastructure there from the grid that's 85 carbon emission free so we're talking a lot of wind a lot of solar a lot of nuclear in that area and all of a sudden we're revitalizing this area where the downtown the building's falling since we've been there there's buildings that have just collapsed because there's nobody in them and all of a sudden they're a high-tech Hub on the bleeding edge of Bitcoin mining yeah and we're creating you know local jobs and working with local contractors all that that's amazing are there are there states that are trading Bitcoin mining as an industry and leaning into that with you know tax credits or energy credits or in in and talk about that are there states are treating it that way and how does Indiana think about that so Indiana thus far is not doing anything and funny enough if that we were as a state to attract do a tax credit probably be bad for my business that'd be more competition for energy I'm so in favor of that because I'm okay rationalizing an AI startup being in San Francisco we have talent here and there's nothing stopping Indiana from having AI startups there's just a disproportionment of capital out there to where it's it's going to be difficult for us to compete on a macro scale I I Over My Dead Body will Kentucky beat us there's nothing against Kentucky but that's that's where I'd kind of draw the line right so Texas has some incentives Wyoming has some incentives but Kentucky is a more recent example where they have this seven percent tax credit where electricity that's used in Bitcoin mining is tax exempt so that's attracting publicly traded companies there's over 30 publicly traded companies that do just Bitcoin mining wow it's a setup what are the market cap ranges do you know off top of your head by any chance hundreds of millions of billions yeah there's a there's a wide range yeah and they've you know Market has not been doing great so they're not doing great so there's questionable portions there but that's kind of my point is that even if the companies that come go bankrupt let's say that I'm wrong and all these companies are wrong what happens to the state well they they built a lot of electrical infrastructure and they they put Transformers and a lot of this wiring down at their expense that's now left over at which point go build a data center yeah right in the meantime they're paying taxes and it's taxed as ordinary income use that tax income to build roads hospitals and schools you don't have to be bought in on bitcoin to do this stuff right not to match that can help balance the grid and all this in my opinion fascinating stuff the Bitcoin mining can do beyond what people view it as which is just Bitcoin yeah well I I think this might be a good opportunity to ask you your opinion just overall on bitcoin obviously you're all in but I know there's a lot of Skeptics out there obviously there are a lot of people who are naysayers and have kind of been down on it the entire time and of course the market is fluctuated too so no matter what you want the narrative to be you can find the data to support it sure either way but what's kind of your take on it after going super deep on bitcoin so I'm I'm just Bitcoin so I don't nothing against all other coins but I'm just into Bitcoin and Bitcoin mining specifically and nothing against all of the coins I'm just a Bitcoin guy that's that's what I believe in and I'm not all in like I love it that's to say we're running a business right we have a payroll we have bills those bills are in US dollars so ultimately it has to be a balance of both I can't just lead with my heart ultimately we have a bottom line with that said I think that there's opinions and you said there's data to support any Viewpoint I totally agree but I like practical physical examples that's what I love about Bitcoin mining relative to any sort of coin because you can touch it you can see the actual link so an example in 2020 2021 you might remember there's a snowstorm that blew through Texas and if you lived in let's say Austin for example it just happened again like last week yeah so last week it didn't impact the grid as much because of Bitcoin mining and I'll give that example so back in 2020 2021 if you think about how electrical grids work and I'm not trying to get deep because heck I'm six to eight months ahead of you guys if nothing else right I'm learning this myself but you have a certain amount of power plants that are built for the community that they support and they assume some level of growth rate in that City you take Austin in 2020 covet happens all of a sudden all these people move there that's going to stress any power plans that they have oh by the way it then snows it doesn't snow that often there that stresses agree even further which Texas is an unregulated grid we can talk about that some other time but largely that meant that if you live there either your power costs went up 10x which that's substantial or you didn't have power and you had a ceiling fan that had icicles going on it and that's very bad for a million different reasons right so how do you fix that well you build more power plants right that's expensive that's slow or you can tell businesses to power down you don't want to tell a hospital to power down right they use a lot of power but that's probably useful right you can tell a data center to power down and they could but then you can't watch your Netflix show and you know you're not happy or whatever you can imagine right Gmail is down that's not good or Bitcoin mining again the knock is that it uses a lot of power but it doesn't have in some people's opinion not mine utility Beyond just Bitcoin itself that it generates well great shut us down and it releases all this energy back into the Grid at which point if you lived in Austin and we're actually doing this here in Indiana all of a sudden your power costs don't go up you're completely unaware oh and by the way the grid is perfectly stable to where your power costs don't go on you still have power you have heat you have AC in the summer all these things and it's actually fascinating how it works so the grid for example in Indiana it's split in half the portion we're in stretches all the way from Indiana to New Jersey wow so you can have sizable impact by doing this wow that's good that's interesting yeah me neither what are you most excited about with what you're doing at Mega lot so that's new for us we just started doing some of this grid balancing stuff I think we can do way more yeah that is something I'm obsessed with because that's that's beyond just my belief in Bitcoin is you know gold replacement or you know substitute that's something we can help people's lives today in real practical dollar and cents terms what do you think about the people that say well the governments across the globe are just letting the private sector build up this infrastructure and then they're going to just step in and say okay no more Bitcoin you now have a US coin and Fork it over and you can't use it anymore or take it over to control people and shut off people's cash to force them to do two behaviors that uh that they want at least get the quick version we can always go deeper on the the future episode yes and yes is the answer what I mean by that is mutually exclusive governments and I don't like this but governments will do what governments do they are actively already creating their own digital currencies but they're digital currencies for the dollar or for whatever country and their local currency that's like saying the dollar competes with gold they're they're fundamentally different to some degree right Bitcoin and specific again Bitcoin mining where I think it's interesting is that anybody can Bitcoin mine you don't have to be in Indiana you can be in you know any other country in the world and the network will exist as long as there's miners plugged in to where a government can't just shut it off that's like saying you can shut off the internet right it's that's the definition of being actually distributed and not a centralized currency which is what centralized government currencies will will be yeah I'm interesting that's pretty exciting I I would love to see the facility sometime I don't know if you allow outside tours we started doing tours so you're welcome to come oh that's amazing yeah how do people find out about it I ping me on Twitter find me on LinkedIn my Twitter is Ilya and then the letter X Indy awesome I'm happy to do it all right we'll link that all up in the show notes so so people can find it before we wrap here we do have a lightning round if you're open to it totally Nate perfect I I do have um two additional questions that we're adding to the lightning round but we'll be quick on them first just like a personal personal question for you has it been difficult right you said you had 10 years in transportation has it been a difficult transition going from the Transportation guy to the Bitcoin guy Bitcoin and energy guy it was difficult before I became the Bitcoin and energy guy because then what am I right and there's an existential crisis I don't mean to make it dramatic but if I don't have a purpose I'm that type of guy where I actually like to work I like to go build things so my crisis was before I found what I'm doing now now I have a purpose and I'm I'm forging ahead there perfect I love that I read about this in the ibj when you were deciding between Consulting there was another option on the table what was Zero what was the after you turned down and what could have that pained out to be yeah I I'm not complaining because I feel incredibly lucky to have the career that I've had and meet the people I've met along the way which is to say I made a huge mistake and my career would have been way cooler had I taken this one opportunity so I mentioned when I was in student government we brought Zipcar and well one day we get an email on student government Transportation chief or whatever my title was and it's a guy named John Zimmer with zimride who's partnered with Zipcar I just saw a lot of Z's it's a lot of disease yeah yeah I took the meeting sure in comes this guy who's like 26 at the time he's like hey I've got this ride share idea to where if you want to go from the airport to IU or back you know we can hop in each other's cars it's like a digital Ride Board in the union imagine that with some Facebook integration it's like we're gonna charge like eight to ten grand for it we've got all these other schools I saw it from a student government standpoint it was a cool idea don't get me wrong but I saw it as again another check win that we're helping the community yeah so he was lobbying IU admin IU admin didn't have the budget I lobbied student government to pay for it for I think two years and we got it done in probably two three weeks which later having sold to universities and student governments that is very fast I just didn't know any better yeah right I wanted to get something done something to that yeah so that impressed him and you know he said hey you know why don't you come join our team and I said that's that's a kind offer I'm really focused on this Consulting thing I just gotten my offer there I'm okay but let's keep talking huge startup yeah yeah so I I graduate I'm like two weeks into my job and he said hey we're actually pivoting the company so I wanted to Circle back to you so this whole ride sharing thing we're no longer going to do it just from the airport to you know universities we're going to try to compete with taxis and we just raised 400 000 I believe the number was to go do this come join us and be I think it was employed like seven or eight in San Francisco and I said hey I'm actually genuinely interested because I really liked him I met this other guy Curtis at the company he was great still have a relationship with him to this day but I said four hundred thousand dollars is Gonna Last you like a minute and a half in San Francisco and I don't know about this whole idea about getting into strangers cars so I passed and I saw this email correspondence of course it's awesome fast forward a few months I think we're pitching Stanford or something like that so I'm back in San Francisco and I take a lift to meet John at their office and I realized what their office was and like what had become it wasn't in the midwest yeah we didn't have it here but I realized the scale that they were already on then I was like oh oh my gosh I've made a terrible terrible mistake so this company has lit and it became Lyft yeah so I I don't know financially what that means but when they went public I can imagine people there did well we won't do the math on that I yeah I've I've avoided doing the maths just so I can keep my sanity there you go all right great so now to the the true lightning round outside of the amazing entrepreneurs what is Indiana known for I mean I think Hospitality Sports Marketing Tech would be kind of the things I would say we're known for today in racing I think that we have opportunities to expand on that a lot I use Bitcoin mining as an example of this infrastructure that already exists that I feel like is untapped that's just what I'm focused on I'm positive that there's dozens of other things that if people really look at it through that lens that there's opportunities for us to not only compete but to have natural competitive advantages over the coasts I love what is a Hidden Gem in Indiana Hidden Gem in Indiana megawatt I like megawatt it's a good question I I mean at what point will you enter the jigawatt that was our joke when we were coming up with a company name and people asked that and I said listen we'll Rebrand that'll become a good good problem if that happens I love I was in Bloomington yesterday and I I there it's called dats here it's called yats I think they have falling out I love that yes they renamed it I love that too yeah I like Nick's English hot so they went there and then buffalouie's those are those are great engines I'm just thinking to the Future now 1.
21 J watts yeah 88 miles an hour I love it all right who is someone that we need to keep on our radar someone who's doing some big so I talked about Angel Investing and the first company I invested in that is called malomo so they're run by Anthony Smith and Yao ning I know nothing about e-commerce I just believe blindly in those guys as ambition and intellect so I think those guys are awesome and crushing it amazing stuff this this is a great episode I agree is that it that's all I have you have completed the lightning round awesome and a very energy efficient way perfect not surprisingly no yeah thanks for being on the show man this is great thanks Celia yeah it's amazing this has been get in a powder kick production in partnership with Elevate Ventures and we want to hear from you if you have suggestions for a guest or segment reach out to Matt or Nate on LinkedIn or on email to discover top tier tech companies outside of Silicon Valley in hubs like Indiana check out our newsletter at powderkeg.
com newsletter and to apply for membership to the powder cake executive Community Check out powdercake. com premium we'll catch you next time and next week as we continue to help the world get in since you've just listened to this podcast you might be thinking about starting one for your company lucky for you our partners over at cassid have you covered cassid is the first and only podcast in video marketing platform made specifically for B2B Brands I love this about them the platform makes it possible to publish Syndicate amplify and measure the value of your podcast and video content in fact we use it for our podcast here at Powder Keg and if you're a startup you should listen up because cassid for startups is definitely for you they are offering exclusive deep discounts of up to 82 percent off retail price for qualifying startups connect with casted at casted. us slash powder keg
