Pivoting in a Pandemic 😷

Lessons learned from the Lula founders

Founder Interview: Lula 1.0 ➡️ 2.0

Welcome back to The Weekly Bloom,

We caught up with our friends Matthew and Michael, founders of Lula (and twin brothers), to spotlight their successful pivot to Lula 2.0.

Founder Conversations :: Michael and Matthew, LULA

When COVID-19 shut down college campuses in March, revenue from Lula’s peer-to-peer car sharing platform wasn’t far behind. Matthew and Michael were challenged to re-imagine their startup’s business model, revealing massive opportunity in the insurance as a software business.

What is one lesson you learned the hard way building Lula?

The importance of focusing on creating a self-sustaining business with healthy cash flow.

As the business grew with Lula 1.0, we found it was difficult to find a nice bottom line. We were constantly influenced to raise capital, and were distracted from the importance of growing a self-sustaining business. Capital was widely available for mobility companies, and capital was constantly top of mind. When we encountered COVID, capital dried up and we were forced to look at our revenue. We decided to re-focus on cash flow and got granular to cut all unnecessary costs and expenses. Now we make every business decision on keeping as high of margin as possible.

What experience are you leveraging from Lula 1.0 in Lula 2.0?

The secret recipe for Lula 1.0 was being able to figure out how to rent cars to 18-20 year olds with no additional insurance fees. Going through the vicious cycle of working with insurance providers and finding brokers made us quickly realize that insurance is messy and expensive. We started to see insurance was a problem for other enterprise companies, and found a viable business model to go all-in on.

Now we are leveraging our experience and data from Lula 1.0 to pivot to Lula 2.0. We’re using our technology to give car rental and mobility companies the ability to mitigate risk with unique insights. We found that the data insurance companies have is for personal auto, and the way people drive their personal autos is behaviorally different than how they drive autos of their peers and corporations. Our experience with Lula 1.0 uniquely positions us to create a success business with Lula 2.0.

What advice would you give to other first founders working through a pivot?

Build a business model that prioritizes your revenue. And focus obsessively on the customer.

There’s so much excitement and pizzaz that comes with fundraising that often times founders build a product and they start building around a north star metric that will appease investors. There’s a lot of metrics that will attract (the wrong type of) investors, but won’t push the business forward. When we focused on pivoting to a self-sustaining business model with Lula 2.0, what we found is that we were obsessively focused on the customer- before marketing, investors or cash flow the customer now comes first. If you’re able to get customers and generate revenue, fundraising capital becomes significantly easier.

How has Bloom provided support for them as founders?

Bart helped us structure our sales process, pipelines, customer on-boarding and customer success processes.

One of the first things we did when Bloom invested in Lula was get on a call with Bart to help us build structure in the company. We were able to get our entire sales team on a call with Bart, and he treated us like a priority, regardless of check size. The entire Bloom network moves ridiculously quick and always responds to our needs efficiently.

ICYMI: MicroAcquire Podcast

Did Bart invent WFH? Probably not. But the first Sapling office also doubled as Bart’s bed at his best friends house.

BloomVP Founder and Managing Partner, Bart Macdonald, joins @agazdecki on the MicroAcquire podcast and shares his experience building @saplinghq from zero to $1m/ARR + insight on acquiring your first 10 SaaS customers

Full episode: https://twitter.com/bloomvp_/status/1308813247726972941

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