004: David Callis, Co-Founder and CEO of Hiatus

David Callis was young rising star in the insurance industry. His specialty was global risk. One day, he realized he was being hit by bills and charges for things that he'd forgotten he'd ever signed up for. That was the genesis of his entrepreneurial idea — a company called Hiatus, which uses big data to see what you and I are being billed for, compared to the average consumer. David explains how Hiatus went from an idea to a finished product in a short time, and how they are improving it daily as more user data is gathered. David had to develop a user persona and a business model, and he had to learn the laws and the language of raising startup cash. Tune in to hear David's remarkable success story.

Key Takeaways:

[1:10] David Callis studied Economics. His major at Sewanee was Global Studies, with an emphasis on Economic Policy. David always had an appreciation for the free market. [1:54] David interned at Brent Scowcroft's company, The Scowcroft Group, in 2009. That gave David exposure to how the government approaches foreign policy issues. David describes Brent Scowcroft and his team as humble.

[3:01] Hiatus came about when David realized he was unable to track his personal digital subscriptions. He had forgotten them, until he was billed for them. David thought of building a subscription manager.

[3:16] He talked to Todd Gower, who was building enterprise software. He had the same problem, so they built a minimum viable product that solved the pain point. With a product, they thought it would be a bigger risk to stay at their full-time jobs than to do Hiatus full-time, so they made the jump.

[3:48] David had spent a lot of nights and weekends on Hiatus, while working a day job. The hardest thing about building a startup is going from the idea to a product that's out in the wild. Todd was building the technology while David was determining the conceptual uses and business model.

[4:30] Hiatus is David's first experience with a startup. The real education, he says, was actually talking to the users. There was no class he could take to replace customer feedback. That information helped David decide to invest more time into Hiatus.

[5:12] David and Todd worked in a cramped studio apartment in D.C. in early 2016 to develop Hiatus. They had their computers, and built a company. Within a month of starting Hiatus, David and Todd had a survey out. It showed 62% of consumers waste money on uncanceled automatic subscriptions. It was enlightening.

[5:59] They talked to friends and family to see how they were using the app and deriving value, and they reached out to the press and bloggers for exposure. David sent a lot of emails and called a lot of people to see if they would be interested in writing about Hiatus. It was a big pain point, and a lot of people could relate to the problem.

[6:45] Once the product was in use, David and Todd looked for deficiencies and fixed them, to make a better product people would use and talk about. As user behavior data came in, there were tweaks to make everyday. A small difference in user interface can lead to completely different user behavior. Hiatus is iOS. A text chatbot is a possibility.

[8:03] In one year, they raised $1 million in seed funds. This gave them enough for experimentation and growth, and to make the subscription scanning more accurate. Ultimately, they want to serve more areas of finance to save the consumer money.

[8:46] The seed funds were a milestone, and gave David and Todd a sense of responsibility to the consumers to make the best use of the really good technology behind Hiatus, and their understanding of the problem and the market.

[9:38] There were a lot of late nights trying to understand various aspects of fundraising. There is a lot of money going into fintech, so they had to understand where they fit within that market. While learning the capital markets, Hiatus learned where it stood.

[10:20] David was impressed by how investors were oriented around the consumer problem, and in empowering the consumer with technology. There is uneven information between financial services providers and consumers. It impressed David how investors understood Hiatus could bring consumer awareness up to par with vendors.

[10:59] The capital allowed Hiatus to test different approaches. They were prepared for two or three tries to get one right, but the first test was positive. They were fortunate to realize people would accept financial advice generated by a software and take it to a financial service. That opened the door to other uses in consumer financial services.

[11:44] If student debt rate is too high, or insurance rates are too high, the Hiatus software could refer you to providers that can lower those future expenses. Consumers will take that advice, and will act on it, and Hiatus can build a scalable business from it.

[12:01] Hiatus metrics are how much they save consumers. The initial seed funds will allow Hiatus to save an enormous amount of money for their user base. As they build revenue channels, they will hire engineers, and improve the technology. In a year, they have gone from two to eight employees.

[12:37] Hiatus has the potential to be the consumers' access point to finance. It is delivering contextual financial advice to users. It's relevant and non-intrusive. It incorporates behavioral economics and consumer psychology into a product that nudges users into making better financial decisions. This is unique.

[13:38] David always wanted to be an entrepreneur. Now, he has an interesting product.

Mentioned in This Episode:

David Callis on LinkedIn

Hiatus

Sewanee, The University of the South

The Great Recession

The Scowcroft Group

Todd Gower on LinkedIn

Apple iOS

Android

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