From Startup Novice to Veteran

From Gimlet, this is The Pitch. I'm Josh Muccio.

A little while back, an entrepreneur came on the show and gave a pitch that at first seemed pretty normal, but about five minutes in, something happened that blew us away, and suddenly an ordinary pitch became rather extraordinary. I don't wanna say too much about what happened next, because it's just a great story and I don't wanna spoil it, but this pitch from Mike Slagh for a startup called Shift is one of my all-time favorites.

So we're gonna hit play for you, and then we're gonna check in with Mike to see how things are going these days. Here's the original pitch for Shift.

Today, a military vet turned entrepreneur pitches his plan to tackle a systemic problem in America, one that he knows all too well. But first, let's meet our investors

Phil Nadel is with Forefront Venture Partners. Look for him to get right down to the cold, hard numbers.

Phil: So on the commercial side, do you have any signed orders, or is it just verbal commitments at this point?

Gillian Manus is with Structure Capital. She tends to see the best in every entrepreneur, and encourages them to see it too.

Jillian: Your passion shows through. Your commitment shows through. Your smile's fantastic.

Daniel Galati is here with Comcast Ventures. He doesn't invest often, but when he does, it's because he sees an opportunity in the billions.

Daniel: It's probably a huge business if, if you get to, you know, manufacturing scale.

And finally, on today's episode, James Altucher, an angel investor playing with his own money. When he's looking to invest, he loves getting into the dirty details.

Jillian: I’m thinking in my head. I want to discuss with – oh, hi! I’m so sorry.

Mike: How’s it going?

Jillian: Hi. What's your name?

Mike: Hi, I'm Mike.

Jillian: Hello, Mike.

Standing before the investors is Mike Slagh. He's tall and clean-cut, and if he's nervous, he's not showing it. He wastes no time getting down to business.

Mike: Um, so I'm, I'm Mike with Shift. Um, I was in the Navy for seven years. I was on the bomb squad. I made deployments to Afghanistan and Central America.

James: Does it... Does the bomb squad mean they see a potential bomb, and you have to go -

Jillian: They dismantle. They dismantle it.

Mike: That is the bomb squad, yes.

Jillian: Were you a Marine? Were you -

Mike: I was in the Navy. So I was basically a technical expert for some of the world's best military units. And so I always had this very deep interest in technology, I just didn't know where I would fit or what some of the skills that I learned in the military would translate to the technology industry.

As he was looking ahead to a life outside the military, Mike knew he wanted to be involved in tech, but he didn't have any idea how to get his foot in the door. It seemed like most people landing jobs at places like Google had a clear path from college to grad school to a career in tech, but he was in the military, and he didn't think his experience dismantling bombs would make him attractive to a tech company. And he realized that if he felt like this, other vets probably did too.

So when he got out of the Navy, he did something really enterprising. He arranged a field trip with a few other veterans to visit tech companies in Silicon Valley and basically ask, "What do we need to do to land a job here?"

Mike: And I remember sitting across the table from one of the vice presidents at Coinbase, and he was telling me he had just gotten out of the Air Force a few years before that.

Jillian: Yes.

Mike: And as he was talking through how he had translated operations management and program management, some of these things that he did on a daily basis in the military, to something that could actually be of high impact and value at a growth stage company, and I was like, "Why didn't I know about this?"

Mike realized not only was he already attractive to tech companies, but in fact, they were dying for employees with skills just like his and other veterans.

Mike: This is an opportunity on a scale that was so breathtaking to me that I was almost angry at myself for not knowing that it existed. It was at that moment I realized that there was a ton of potential we could unlock, and that's when I decided to start Shift.

Mike wants Shift to be this crucial link for what he estimates is 300,000 veterans who every year are leaving the military and, like him, are wondering what their next step is. He's asking for $1.5 million so that he can build out a technology that would help land these veterans in positions at tech companies.

Jillian: It's an on-ramp so that they, to match their skills, correct, with job opportunities or… Can you explain that more?

Mike: So what we do today is we facilitate internships, largely at high-growth technology companies. So we work with recruiting teams, diversity and inclusion teams, people operations, to find relevant fits based on people who - people's experiences in the military, and that's the core technology that we're building.

Phil: These are paid internships?

Mike: These are... So this is, this is the interesting twist, is these are active duty service members who are in their final couple months of military service, and they're actually able to jump into companies before they even ever transition out of the military.

Jillian: Yes.

Mike: And so it's the, it's the on-ramp that didn't exist when I left the military. And it gives service members a very low-risk way to just try something out and try something new.

Phil: Paid internship.

Mike: So the military still pays their salary.

Phil: The military's paying the – and the startup company, the startup company’s not.

Mike: That's correct.

All right. So this technology that Mike wants to build, matching skilled workers with jobs, is not exactly groundbreaking. A lot of companies are designed to solve this problem: LinkedIn, for example. But there's something that Mike said that got our investors' attention, what he described as an interesting twist. Because these skilled workers are veterans, companies can take advantage of this little-known GI benefit. The military will pay the first three months of salary for veterans transitioning to civilian life. This has the potential to set Shift apart from the competition. But then, right when it feels like our investors are about to start digging into the business, Jillian throws everyone a curveball.

Jillian: Okay, first of all, I have to say something. First of all, thank you for your service.

Daniel: Absolutely.

Jillian: First and foremost.

Mike: Thank you. Thank you.

Daniel: Absolutely.

Jillian: Okay.

Mike: Thank you.

Jillian: Second of all, you've hit a very big sweet spot with me. All right. What this country has done or not done for vets is so unacceptable. Thirty percent of the people in shelters, the families, are vet families and vets themselves. The fact that these men and women come back from serving and don't have a roof over their head or a hot meal is so shameful for this country, and it hurts me on such a deep level. The vets in this country should be celebrated and I think that companies want to do more of this. They want to reach out to vets, they want to employ vets, and they don't know how. The fact that you have built this, okay, to me is incredibly important, and if somehow we can get this in front of as many people as possible, then we should.

And I'm gonna put 100,000 of my money right now. You don't even have to go anywhere.

Daniel: Wow.

Jillian: Because what you're doing is something that we all need to be doing. And I see that you're about to cry and because of that, I'm about to cry too.

Yeah. Jillian just went in on a deal five minutes into the pitch. She's barely even heard how the business works. I wish you could have seen us freaking out in the control room when all this happened, but this is what it sounded like.

James: Holy shit. What?

Jillian: Because what you're doing is something that we all need to be doing. And there are other people like –

James: What?!

And we weren't the only ones shocked. Back in the pitch room, the other three investors are suddenly looking around at each other, their expressions a mix of confusion and excitement. The question hanging in the air is did Jillian just throw 100K at Mike because he tugged at her heartstrings, or is she seeing something here that we're not?

Mike: Well, thank you so much. It would be a very deep honor to be a partner with you in this, and, and I'm very excited to -

Jillian: I am absolutely –

Mike: - to be working on this together.

Jillian: I am absolutely thrilled about this. I'm thrilled. So.

Daniel: So should we get right into revenue model or?

Phil: I'd like to hear – I’d like to learn more about the business. Now, going back to the, the initial revenue model, the companies, the tech companies, the startups, are paying you to do the search?

Daniel: Regardless of conversion.

Mike: Correct.

Phil: Regardless of whether you fill the position or not. How much are they paying you to do the search?

Mike: $5,000 per person.

Phil: Per position?

Mike: Per position. And then they pay us an additional 20% of the first year's salary if a conversion takes place.

Daniel: That's great, and that's actually higher than what you would pay a standard recruiter, right? A standard recruiter gets paid on just the success.

Jillian: Yes.

James: Just the percentage.

Daniel: You get paid sort of this premium.

James: But to be clear –

Phil: I'd like to understand why.

James: - you haven't, you haven't made that money yet. That's the deal you're offering.

Mike: We have made the money for the initial search. So we've signed 15 positions at $5,000 a piece. But now it's our job to convert on those in the next three to four months.

Daniel: You're going in and you're sort of tapping this pool of candidature that they wouldn't otherwise have access to or that's really hard to tap, right? Is that, is that the value prop to the employers?

Mike: That's exactly right. And also going deep into military backgrounds to give people credit for experiences beyond their just their job title alone. So some of the most highly accomplished people in the military, maybe their title is Navy SEAL.

Daniel: Yeah.

Mike: But that, you know, by the current transition process, they map Navy SEAL to these few underlying skills and these skills -

Daniel: You're this translation layer for every single title in the Navy and Army and translating that to what it means in sort of the civilian world.

Phil: Are you able to do that? Is that right? Are you breaking down what their experience is and identifying that so that you can translate it for the companies and say to Uber, "This guy who just says Navy SEAL on his resume, here's what he really did. Here's what his experience is." Is that... Are you able to decipher that?

Daniel: That feels pretty proprietary.

Phil: How do you get that information from, from the service member or from his resume?

Mike: So if - because the military data set is so specific and so sparse, we're able to say, If you were in the service for this many years, we can look at all of the underlying military source documentation that tells us exactly what that person should be competent in.

Even as Mike is dropping terms like underlying military source documentation, he's got the investors, well, standing at attention. They wanna get this thing, and maybe it's because, like Jillian, they see this as a big opportunity. Or maybe it's just because Jillian saw a big opportunity, and they don't wanna miss out.

Phil: And the companies you're working with see this as sort of a pool of untapped, unaccessible, inaccessible talent that they don't have access to, they don't understand the skillsets.

Daniel: They're just hard to get to.

Phil: They're hard to get to, hard to access.

Jillian: And hard to translate.

Phil: Hard to translate. They don’t know what their experience was.

Jillian: So you just say, so how does this bomb deployment or how does this, you know, how would that -

Phil: Right. Uber's going, We don't have bombs to dismantle. So how do you help us?

Daniel: And yet they're all motivated to hire these people, right?

Phil: But I think even beyond the sort of like the goodwill that comes out of hiring service members, they're - selfishly, this helps them access a whole -

Daniel: Well, it's great for business. It's great for business too.

Phil: - a new pool of talent.

Phil: How built out is the tech, though? I'm not clear on where you are in terms of building that tech out.

Mike: Sure. So the product today, we can automate 50% of the application process. So we send out a weekly email to both vets, and when vets are really active on the email and we're seeing high click-through rates, we'll turn around and feature them to different employer email lists as well.

James: So you're building an email list of soon-to-be ex-military or ex-military. How many people are on the list right now?

Mike: 20,000 people on the list today.

James: That's your asset. Not your contracts with the employers. Contracts with employers are coming because you have this high, highly valuable asset. So there are some valuable services that the people on your list will need and will pay for, and you're gonna be making revenues in both ways, in ways that you haven't conceived of yet. And you'll just be a - it'll be a huge company that way.

Jillian: So James, it sounds like you've done this, that you know this.

James: Yeah, I know this business very well. I know this extremely well.

Jillian: So I think you should come in with me and invest.

James: All right. I will come in for 25 behind her money.

Jillian: Only 25? How about 50?

James: Uh, let's see. We'll talk about it.

Jillian: Okay.

James: So I like the idea of providing value here more than I like the idea of providing money here.

Jillian: Yes. Okay.

It feels like this pitch is all about each investor finding their sweet spot. For Jillian, it didn't take much, just learning the business helped veterans. For James, it was realizing there was an email marketing play. But Daniel and Phil haven't yet been convinced.

Phil: One of the challenges is that every year you have a new crop of 300,000 people, service members, who are transitioning out. And the 300,000 from last year, many of them are already placed into a position or found a job or are doing something.

James: Which is why they need additional services, and but he still has their email address.

Phil: Right. You need to build - that's what I was gonna say. You can't just rely on the services for that transition period.

Daniel: The initial…

Phil: You need to have some ongoing, whether it be training or something that, you know, the idea of accessing the GI Bill or what do you do after that. There has to be some continuum of services so that you can tap into the ongoing value of the email list beyond just that transition.

James: And my guess, Phil, is Phil, he knows that. Like, there's ongoing resources for PTSD, there's additional training. There's how to manage your, you know, the, your savings that you've saved while you were over in Afghanistan. There’s a range of services.

Phil: If you do it right, you can build a rich database about these folks and really market to them a whole range of services.

Jillian: See, I think you hit upon the data piece.

Phil: Yeah, that's the key thing. If you build that data set out, could be very, very valuable.

Jillian: Yeah.

Daniel: How much is open after your guys' commits?

Jillian: Three. So it's, well, it's three, what, it's 375.

Mike: That's correct.

Daniel: 375 is open.

Jillian: Is now open as of -

Daniel: Would you raise more? Would you raise... I'm just thinking ownership. Would you, sort of, oversubscribe?

Mike: I would oversubscribe if it would be someone who could be a partner at series A, basically.

Daniel: Got it. So here, so here's where I'm at, which is… I think, I'm just looking at this purely as a business, first of all. So, just to abstract a level above to, to Jillian's -

Jillian: Emotional investment.

Daniel: - and right monologue, you know, I think the only way to make money in VC is to take a non-consensus view that turns out to be right. And I think the consensus view here is that it's a small market, right? There's 300,000 people every year. You know, you're monetizing off of this one-time fee, and it's a pretty hands-on business. I mean, you're selling to employers, you're training all these candidates. It’s generally a pretty... feels like a pretty high-touch model. That said, I don't think any of those points are actually right. I think it's actually a huge market. I think that if you play the numbers out, you can easily get to a billion-dollar market opportunity here.

James: And -

Daniel: I think that like -

James: Can I address that, Daniel, just to interrupt?

Daniel: Yeah.

James: Let's say he has a million-person email list.

Daniel: Yeah.

James: And 10,000 people get placed.

Daniel: Yeah, it's a huge -

James: And their average salary of $50,000.

Daniel: That's the math that I was doing.

James: Twenty percent of that is $200 million.

Daniel: So it's actually a huge market. And I don’t even think -

Jillian: I think it's bigger than we even -

Daniel: Yeah. And I don't even think, I don’t even think it's a one-time fee. I think there's all sorts of subscription, recurring opportunity here.

Jillian: And partnerships. And partnerships with educational institutions -

Daniel: And partnerships.

Jillian: - in terms of the training piece of that. I see that as another piece.

Daniel: Totally. I would love to invest. The little caveat that may be interesting to you is we're investors in a company called hired.com.

Mike: Know them very well, yes.

Daniel: Which you probably know. I'd like to do a conflict check on whether this is competitive, because, you know, I wouldn't want you to think we're investing in a, you know, competing company and vice versa. So I do wanna do that check. But pending that, would love to, would love to have the opportunity to invest.

Jillian: And I also want to say that that 100,000 right now is coming from me personally, but I always have to, per Structure Capital, I always have to run every company by them first. If they wanna invest, if the fund wants to invest, that knocks me out. Okay. So I can invest personally, but that would be even a happier situation and potentially could be even a bigger investment.

Daniel: Just don't knock me out. Just make sure -

Jillian: I'm not gonna knock anyone else here, but that’s -

Phil: I was gonna say to Daniel, do you wanna split the rest of what's... There's like 375 left. Why don't we split it?

James: All four? Are we doing an all four?

Jillian: Yes, all four in. All four in. Everybody's – So I think what we should do is we should, okay, we're all in. Okay, everybody, okay, raise hands.

Daniel: We should, we should hold hands and cry for a little bit. And then we should –

Jillian: Wait! Link hands! I want this! I want this!

Daniel: And then we should –

Jillian: All right. Okay, we're all in. We're gonna sell this app.

Mike: Thank you so much.

Jillian: This is, for me, a very proud moment, and I think for all of us, and we thank you so very much once again, and we're gonna rock this.

Phil: It's a great mission. The company and you have a great mission here and we're gonna do what we can to help you succeed and fulfill that mission and help our service members.

Mike: Thank you, sir. I appreciate that.

Jillian: They're gonna fulfill their missions, their continued missions in life, from one mission to the next one.

Mike: Find your next mission.

Jillian: Thank you, sir.

Daniel: Thanks again.

Jillian: Thank you.

James: Yeah, thanks so much. Yeah and we'll talk.

Jillian: No, we’re giving a hug. We're giving a hug.

Mike: Thank you so much. I really appreciate it.

Jillian: Absolutely.

Daniel: Thanks for coming in. Appreciate it.

Phil: Real pleasure.

Mike: Look forward to working with you. Thank you. Thank you.

Everyone left this pitch feeling great. Mike had budding relationships with all four investors. But some relationships sour on the vine while others flourish.

Coming up after the break, we'll hear a little bit of both when we check in with Mike a year later.

Welcome back. Coming off a very emotional pitch, our investors were pumped, especially Jillian. Her $100,000 commitment turned into a $350,000 check from Structure Capital, and Phil put in 100K as well. But not all of them came through. Daniel and James, they dropped out. And for those of you who don't know the story of James Altucher, well, it turned into kind of this whole debacle. He never actually wrote checks to any of the founders on our show. But there's more details on that in episode 19, Sandbox Commerce, if you wanna hear that story.

Okay, back to Shift. It's been a year since Mike came on the show, and it seems like this guy, he can't go wrong. His luck in the pitch room was just the beginning. Producer Heather Rogers started by asking Mike to reflect on that fateful afternoon with our investors.

Mike: I mean, the show was really a tipping point for us. That's where I met Jillian, and she has been just an incredible crusader for Shift, and has opened up tons of new relationships for us. You know, we just... It would be a completely different business if she was not involved.

Heather: Can you tell me what Jillian has brought that you didn't have?

Mike: I think common advice that founders always get is that always find or at least optimize for investors who see the world in the exact same way that you do, who also don't wanna exist in a world where this problem that you're solving is still a problem. And I think that, you know, many of us, when you're raising money for the first time and just struggling to find somebody to believe in you, you sort of roll your eyes at that advice. But Jillian is that person to Shift. She's so aligned and is so all in. That's just been incredibly helpful.

Jillian: Mike and I, we like text at night, we text in the morning, we text in the afternoon. What about this, and how’s this? And I talked to this, and does it make sense here? And that's, you know, it's very... Mike and I are definitely in real time on, on... Yeah.

Heather: So you're very close.

Jillian: Yeah. I'm super involved. Yeah, I'm hand in glove. Because I never wanna miss anything, and I don't want them to miss anything. And I think that in order to build a relationship and trust that you have to build it up over time, and you have to be accessible, and I really, really try to be that way. And unfortunately, much to my boyfriend's dismay, it's 24-hour, seven-days-a-week.

Mike: You know, when you do find that believer or that investor, the benefit is that you can just move so much more quickly. And, you know, if you don't have that person, it's, there's no one real ringleader that's like, Hey, we're, we're doing this. We still believe. We're gonna, you know, we're gonna press go here, and everybody better get in line.

Heather: That's what Jillian did in the room during your pitch. She like got everybody -

Mike: Yeah.

Heather: Right?

Mike: That's right. Uh, and I think that dynamic has played out after The Pitch a couple times as well.

Mike told us that Jillian has made introductions to some hard-hitting investors, like she helped him get in the room with the folks at Andreessen Horowitz, also known as a16z. This was huge for Shift.

Mike: Andreessen Horowitz has backed some of the biggest technology companies and is the lead investor in Airbnb, Lyft, Coinbase, many, many companies who have gone from zero to public companies over the last 10 years.

So when Andreessen Horowitz asked Mike to make the trip to Menlo Park and give his pitch, he jumped at the opportunity. He got his PowerPoint deck together and headed to their HQ in Silicon Valley.

Mike: There was probably 30 people in the room, 25 or 30 people, and I just remember being like - thinking that I was walking into a meeting of, I don't know, me and three or four other people. And it just, you know, feeling way more high stakes than that. The mood in the room quickly moved from, you know, diligencing the business and asking questions about, All right, what's the plan for this month and next month? More onto, What's possible? If this works, how many lives could it change?

After we got back to San Francisco, I was sitting in a meeting room at one of our other investors' space, and I didn't expect to get an answer later that afternoon, a few hours later. And I got an email since that said, Hey, we all had a chance to speak and we'd like to proceed forward with an investment in Shift, we'd be excited to work with you in building this important company.

And time slows down a little bit when you get really, really phenomenal news like that. I think I, I think I yelled and - which was, like, uh... I think it's always okay to do that if it's a really, like, if you're only, like, making, like, one loud yell in a startup space per year.

Heather: So you let out your one yearly yell.

Mike: Yeah. I checked the box.

Heather: Was it like a Woo-hoo! Or was it like Yes! What kind of yell was it?

Mike: It was definitely a - I think a loud Yes.

This deal led to a whole new round of funding for Shift. They did a $4 million seed round with Andreessen as the lead investor. And with such a big name VC in Shift's corner, things really ramped up.

Heather: How quickly did you get other investors?

Mike: When Andreessen came in, the entire round was spoken for right away.

Heather: So that seems like a very big turning point.

Mike: It was certainly a turning point. Some of the smartest people in the world feel like our approach is promising, and they wouldn't have invested in us if they didn't think that this could be a venture-scale-sized outcome, that Shift could be a public company someday.

For Mike, sure, building a business is important, but he also thinks a lot about the people Shift is helping. He told us the story of this Army veteran, Brett, who had a ton of military experience.

Mike: He was a West Point grad. He had flown helicopters for the Army. He was a military intelligence and aviation officer. And I think the last unit he was serving at was a leadership position at a ROTC unit in Florida.

Mike told us that when Brett started thinking about his next move, he came to Shift, and a year ago, they found Brett a gig at a financial tech startup called Affirm. The company was started by one of the founders of PayPal and is growing fast.

Mike: Brett arrived at Affirm, and he was working on as a project manager for the human resources teams. And I think that he did something like had 40 coffee meetings with various other people in the company over the, over the first month that he arrived. I thought this was just, like, the smartest thing ever. He was probably way over-caffeinated by the end of a month. But this sort of, like, rapid immersion into a new company, a new culture, a new way of doing work was extremely valuable for Brett. And since then he's been promoted. He's like the chief of staff to the chief revenue officer.

Heather: And, like, when did you find out about that?

Mike: I was just catching up with him at one of our happy hours or something like that, and I said, Whoa, so this is like a promotion then? And he's like, Oh, this is actually my second promotion. Going from: I am teaching ROTC students in Jacksonville, Florida, to I'm basically on the management team at a 500-person company worth $2 or $3 billion, all that's transpired over the course of the past 12 months.

Heather: Wow.

Mike: Yeah. I mean, I - it's kinda hard for me to wrap my head around that. And in that moment, I think the first thing I thought was, This is - it's actually happening. This is actually working.

There are a lot more people like Brett that Mike really wants to help, but so far it sounds like things are off to a good start.

Mike: The 85% of people who participate in Shift programs receive a full-time offer of employment from their host company within three months of arrival. Today, we're working very closely with over 700 people. So in terms of what we've done year over year, it's more than a 10X increase. We are trying to grow as quickly as possible because 700 people would be an unbelievable accomplishment for us as a company, but there's still a quarter million people who separate from the military every single year, and many of them could really benefit from a program just like this. Seven hundred - we're just getting started.

Mike said that Jillian is still really involved in Shift. In fact, her fund, Structure Capital, put in almost a million dollars in that $4 million seed round, and that's on top of the 350K they'd already put in. And Mike has some other stuff happening, too. He's got deals with Uber and Major League Baseball, for example, which is totally cool.

And when I step back and like just look at this update from Mike, it has me thinking about favorites. Like, if I had a favorite kind of startup origin story, what would it be? Mike's story, I would say, is definitely in the running. Here you've got a founder who felt a particular problem acutely because they went through it, and then they decide to do something about it. Mike comes on our show, sparks fly, and then a star is born. Just kidding. But what I like about Mike is he's not flashy. He just keeps showing up every day, slowly building his business. And I don't know if it's that or because he's like supporting a good cause or if he's really doing something innovative, but good things just keep happening to him. And the reality is it just doesn't happen that way for most people. But I'm happy for Mike, and I'll be cheering him on.

Our show is produced by me, Josh Muccio, Heather Rogers, Molly Donahue, and Kareem Maddox. We are edited by Blythe Terrell, with editing help on this episode from Devin Taylor. Theme music by The Muse Maker, original compositions from Breakmaster Cylinder, Bobby Lord, Haley Shaw, and The Muse Maker. We were mixed by Enoch Kim, with help from Matthew Boll.

Lisa Muccio plans our recording events, and thanks to Asthaa Chaturvedi for her reporting on this episode. And a big thank you to Jake Chapman for introducing us to Mike.

This is our disclaimer: No offer to invest is being made to or solicited from the listening audience on today's show. You can find more episodes of our show on Apple Podcasts, Spotify, or wherever you listen.

We'll be taking a break next week so I can spend some quality time with the fam, but we'll be back with a brand-new episode in two weeks. See you then.