Nick Huzar On Raising $380 Million To Build A Marketplace App That Is Used By 44 Million People

Nick Huzar is the co-founder and CEO of Offerup which provides an online and mobile C2C marketplace app for people to buy and sell electronics, furniture, and cars. The company has raised $380 million from top tier investors such as Andreessen Horowitz, GGV Capital, Tiger Global Management, Warburg Pincus, T. Rowe Price, and Allen & Company to name a few. 

In this episode you will learn:

• The latest stats around storage and commerce
• Getting the right people on the bus
• OfferUp’s 3 core values
• Two of OfferUp’s most important Operating Principles
• What to look for in a cofounder

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For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Nick Huzar:

Nick Huzar is presently founder, CEO of OfferUp with a mission to revolutionize how people buy and sell locally by providing the simplest and safest solution. OfferUp is the largest mobile marketplace in the USA.

Most recently, Nick Huzar was the co-founded of Konnects Inc. There he designed the original platform and directly managed the engineering and design teams in addition to his daily duties as the company’s Chief Technology Officer.

With Nick Huzar leadership, Konnects growth exploded growing from 1,500 members to over 1 million within 18 months. Nick Huzar oversaw the hiring of personnel, growing the team from 2 to 26 people. Nick Huzar played a vital role in assisting the CEO with fundraising efforts which attracted over $6 million in investment.

Prior to Konnects, Nick Huzar played a key role on the web team at T-Mobile for 3 years where he was pivotal in leading the development and integration of web applications. Nick Huzar facilitated the design and implementation of a completely new website as the company transitioned from Voicestream to T-Mobile.

During his time at T-mobile Nick Huzar helped to redevelop the online channel enabling the company to accept over $45 million a month in payments and 8 million customers.

Connect with Nick Huzar:

• Crunchbase
• Linkedin
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I think that we’re going to really enjoy the guest that we have today. He is a founder that has done it multiple times. He’s seen the ups, the downs, and obviously, now, he’s seen a lot of traction. So without further ado, I’d like to welcome our guest today, Nick Huzar, welcome to the show.

Nick Huzar: Thank you so much for having me. I look forward to it. 

Alejandro: So, originally born and raised in the Seattle area. How was life growing up there? 

Nick Huzar: It was great. I grew up in a suburb about 20 minutes south of Seattle. I had a blessed upbringing. I had a father who worked at Boeing his whole life. He only had one job. So, I’m sure he thinks what I’m doing is a little crazy to him. I had a mother who was a therapist, so I like to think I’m a pretty good mix of both of my parents, which happens to, I think, be an advantage given what I work on. I think it was good. My parents threw me into a bunch of things as a kid. I played every different sport you can imagine, so that meant I wasn’t great in any one thing. Also, I spent a lot of my time in a private art class most of my life, which again, as we talked about, building up companies, and I think there’s a lot of creativity involved in that, so that’s been part of who I am.

Alejandro: Got it. That’s interesting. How will you associate putting paint on a canvas with perhaps building and scaling a business?

Nick Huzar: What I love about building companies. Sure, there are plenty of challenges. There are plenty of things that you just don’t sign up for that you have to address as somebody that’s running a business, but I think of companies as the ultimate creative experience. There are so many things that you can influence and help drive. For me, the most basic way, when I started an offer up, I came up with a design. I came up with a logo. I designed the app. So, that’s one way to think about it. But there are other dimensions to that. How do you hire? Where do you hire? How is your office laid out? Why is it that way? What do you look for in culture? You can keep going as a company and think about how those things get shaped. Most days, I feel like I am playing with Legos. I feel like I build things and sculpt things, and that works well for me.

Alejandro: For sure, and especially during the early days when you don’t have anything tangible, it’s like literally all in your own head, and it’s helping people understand what that canvas looks like. Definitely, I’m sure that creativity and how your mom pushed you in that regard, perhaps has had an incredible influence in your career. You went to Washington State University, and you got involved with business and computers. Why? How did you develop that love for computers, too?

Nick Huzar: When I was in college, I was pretty fortunate that I lived in a fraternity, and the majority of the people living there were getting MIS degrees, which is Management Information Systems, basically a business major with an influence in computer science. I was just a sponge. I knew I was passionate about computers. In fact, short story, I took out a bunch of student loan debts to buy my first computer, which back then was $2,200. It was extremely expensive back then. And I didn’t tell my parents, and then my mom found out about it because they wouldn’t buy me one. I essentially told them, “Look. I can’t exist without my computer. I need to have it. I need to understand how these things work.” So, I finally bought one, and then I graduated and worked in a startup for one of my fraternity brothers, making half as much as all my friends did. I think I was making $27,000 a year back then. It was barely enough to eat and pay my rent. But I’d say the first year working there, there were about 25 people in that company. I was leading projects for Paramount Parks. They had a bunch of theme parks, but they had no online ticketing. So, we built the first online ticketing for them. Or, for BMX, we built their first-ever eCommerce website. So, that’s the time in history when I graduated. I was fortunate to sit next to engineers who taught me how to code. Again, given my artistic bent, I taught myself Photoshop. Within a year, year and a half, I was loving the internet. This is so creative. I can design things, and then I can cut them up, and I can make them interactive. I can work with engineers, and tie into databases, and be functional. I think I knew, right out of the gate, what I wanted to do with my life, which was something involved with the internet.

Alejandro: And this led you in your 20s to your first company. It was event networking, but this led to your real first experience, which was Konnects Inc. Tell us about this.

Nick Huzar: While I was out of college, within that first year, the whole dot-com scene was happening, and it was big. People were throwing money everywhere. This guy that I worked with, he was like, “I want to go through a big event together and bring all these different tech companies together in the Seattle area. What do you think?” I said, “Hey. I think that’s a great idea.” He and I threw in $800 the first event. The fast-forward, over the next year or so, we had done 30 of these. We had SUN and Cisco sponsoring these events to the tune of $10,000 each, every month. We were making more money doing that than we were in our day job. Then, also, the dot-com bubble hit, and everyone stopped sponsoring those events. I think the learning lesson was interesting because we realized that networking is valuable, but it’s also inefficient. It’s also a lot of work. We had this concept of why can’t we just emulate that online? Little did we know social media was coming. We started very early, way before Friendster, way before Myspace. The only examples we could look to at the time were dating sites. There were thousands of them. But if you peeled away the branding, you realized that under the hood, they all kind of functioned the same. We thought to ourselves, why couldn’t you just build a platform that would enable anybody to build basically what is now known as social media? That was the idea behind it. I think I learned a lot of painful learning lessons from doing that. That was my first big venture out on my own raising money, building out a team, everything associated with building a company. We learned through that experience. We hired. We raised millions of dollars, mostly from angels. We had a lot of great business minds on our board, but not tech-minded individuals, which created a challenge. We made a lot of mistakes hiring. We hired too quickly, and we didn’t know what we wanted. I think for anybody that’s building a company, it feels good when you fill that role, and then 90 days later, you realize you made a huge mistake. That’s something I definitely advise people to not do just given how much I learned through that.

Alejandro: Definitely, you learned the sleeping on an air mattress and living in the office. So, obviously, part of the startup experience too. Here, I think that you were alluding to it by hiring the wrong people, maybe not having the right people seated in the right seats. I’m sure this was an incredible MBA experience for you in real life. From the tough moments, from the tough experiences is where we learn the most. As you’re looking back, and after the time with Konnects, I’m sure you had a lot of time to reflect. What would you say was the most painful and the biggest lesson, at the same time, for you?

Nick Huzar: During my Konnects experience?

Alejandro: Correct.

Nick Huzar: I think businesses are about people, so when I think about it and when I think about the investors and the team. I think they were all great people in their own right, but for what we were trying to build, probably not. Probably just not the best advisors and folks around the table. I go back to even reflecting on my own decisions. We hired too quickly and didn’t have a focused strategy, and we weren’t intentional about culture, and we can talk about how that has changed now at OfferUp, but that’s another thing. I don’t think we even had core values or anything. It was more, “Can you do the work? Okay, great. You’ve got a job.” That’s probably one of my biggest painful lessons from back then.

Alejandro: Then, after this, you ended up leaving, and then the company ended up closing down. Is that right?

Nick Huzar: Yeah. I left, and I had a co-founder and an investor that ran it for another year. We made a series of pivots. We were never going to beat and become something like a Facebook. So, there were a series of different changes over a period of time to be explored. Ultimately, they decided to close it down.

Alejandro: Got it. In this case, it led you to where you are today. What an amazing business that you’ve built with OfferUp. I’m sure that all those experiences and lessons with Konnects you were able to apply them here. Tell us about the turning page here, going into a new chapter. I know that OfferUp was also a result of doing a pivot. Tell us about the early days, and also how you incubated the concept of the idea.

Nick Huzar: When I left Konnect, I had no intention of leading another company. Like I said, it’s been a lot of work, and as you mentioned, I was sleeping on an air mattress, which is not that comfortable. So, to jump into another startup was the last thing in my mind. But my wife and I moved into a good-sized house. We had been married, and we always wanted to have kids. I had a room full of stuff. One day, she said, “I’m pregnant.” I’m like, “I’m so excited!” I go into dad mode, and I open up that door to this room that I’m going to turn into her nursery, my soon-to-be daughter’s nursery. I’m thinking to myself, “Chill me now. There’s got to be a better way. This is going to take me a whole weekend just to post these items online yourself. I think just given the fact that I had just come off of another startup, I had no income because I had just quit. I had a wife that was working, and I had a daughter on the way. The first thing in my mind was not, “Hey, there’s something here. I’ve got to go get a job.” I’m out there interviewing for a job and spending a bunch of time on that, but I think like any good ideas, for entrepreneurs that are out there, I believe that if you can’t get it out of your head, you should listen to that voice. I kept thinking about that moment in the doorway, and I kept looking at my iPhone, which is the second-gen iPhone, and at this time, there’s no Android phone even on the scene. But I kept thinking to myself, “Man, because of these devices, can we re-imagine what local commerce actually is?” I started to uncover things like 25% of U.S. households with a two-car garage can’t park in their garage. Our homes are actually 30% larger than the 1950s, but we’re having less children. The hottest area in real estate is not commercial, is not residential; it’s actually storage. So, you can wrap a 7×7 square around every man, woman, and child in this country in storage space. You add all these things up, and I kept thinking to myself, “I think while there are existing solutions for this problem, I don’t think they’re meeting the needs of people, clearly. Why is this problem existing? This is just the consumer side of things, but I also started to spend time in local retail stores. What is in the retail store down the street, and why don’t people know that those things exist in there. I came back to my wife after probably four-and-a-half months, at least, and she kept asking, “When are you getting your job?” One day, I said, “You need to come home tomorrow. I need to show you something.” Basically, I had prepared a 12-slide pitch deck to pitch my wife on the idea. I told her; I said, “Look. I’ve been interviewing, but I also have this idea I want to run by you.” The pitch, to be clear, had nothing to do with used goods, and it still doesn’t to this day. The pitch is, why is value sitting, and why is it sitting all around us, and why can’t we see it. What if we can unlock all that value, but focusing on removing as much friction and bringing trust into that local experience? I didn’t get halfway through it, and my wife said, “This is the biggest idea you’ve ever had. I think you need to do it.” As soon as she gave me the blessing, I completely stopped interviewing, and I went all-in on OfferUp. I think an important lesson for people that are building businesses: have an amazing significant other that’s understanding because had she said no, we wouldn’t be talking right now. That would have just ended it for me. But, luckily, she was supportive, and I think she’s always believed in me. With her blessing, I decided to move forward and dedicate all my time to building up what is now OfferUp.

Read More: Bill Powers On Raising $500 Million To Improve Your Driving Behavior

Alejandro: So, you got the blessing from the boss-in-house. The boss, obviously, in your life. My wife is also my boss. So, you get the green light, and what happened next?

Nick Huzar: I had, of course, a ton of energy and excitement. I analyzed every way, everybody. I started to buy and sell things locally. I used to go to Goodwill stores, and I’d realized the cars never stopped. In fact, the first code that I ever wrote for OfferUp was sitting in a Goodwill parking lot all day, and I was just sitting there starting to code, starting to think about and mapping out how Goodwill works or how Value Village works or how the existing eCommerce players work. I really just wanted to understand the landscape, but then, with a clean slate, a brand-new slate, how can you do it differently because of the smartphone? Our belief back then was everyone would have a smartphone, and now everyone will say, “Well, duh!” But that was one assumption. The other one was the cameras would get better, and we could leverage that. We could leverage chat. We don’t have to send out our phone numbers and our emails anymore, and we can make it much more secure. We could make it a visual experience, this kind of geo-aware. As I move from work or wherever I’m at, I just want to be able to open up the app and see and discover things that are all around me. That was the whole idea. It wasn’t to be great in search like other marketplaces are. It was to explore, like more of the treasure hunt type of experience. So, that was some of the initial sketches that we did. Today, you see a lot of apps that have this long, infinite scrolling pic list of pictures. At the time, I think we were the first app to do that. We didn’t see any examples of what we were doing in a smartphone. In the first year, I think the hard part was, I had convinced a brilliant engineer that I worked with and connected to co-found OfferUp with me. His name is Arean, and he’s very talented, and I think in the first year, it was just he and I coding. I would design. I would build out the website. I could code that. I could design all the apps, but I’m not a great back-end engineer at all. So, another great learning lesson I had is, find partners and co-founders that are very different than you and can complement the areas you’re not that strong in. He was definitely that. The first year, that’s what we did. Between he and I, we were able to build the first website, the first mobile app. We would find that handful of engineers, and we would pay them. We raised a little bit of money. We only raised about $100,000 our first year, but we didn’t have an office space. We were not paying ourselves. When we could find engineers, we would pay them just a teeny bit, but we’d compensate them more with ownership and stock in what we were building. That was a lot of work. Again, you have to convince people why do they want to come along in this journey, this risk of this fun, proven idea? So, we found a handful of people that were willing to actually do that at that time.

Alejandro: There, you talked about, Arean, your co-founder, and you were mentioning that he’s an amazing engineer, and I’m sure that there are a lot of people that are listening now that are maybe looking for a tech co-founder. What would you say really made him such an amazing tech co-founder?

Nick Huzar: By the way, he would hate it if I called him an engineer because he is definitely more than that. Why I definitely appreciate him is, he definitely thinks a lot like an engineer, but he also has a great business mind. He understands engineering is just enabling an outcome. It’s not engineering for the sake of engineering. He and I would sit down and rift on things quite a bit. He was able to figure things out. He set up our entire first back-end system on AWS. He did a lot of back-end database. He set that up. He coded our first Android app in the summer, all by himself. He figured that out on his own. I think in any business, you have to bring more to the table than an idea, and you have to be able to contribute. He definitely did that, and I feel like I did that. I think that’s another learning lesson I’ve seen over the years where you have people that have these ideas, and they say, “I’m going to go do this.” My response is, “Okay. What are you going to go do?” “I’m going to go hire people to build all this for me.” My response is usually, “That’s probably not going to work.” If you just had the idea, you need to bring more to the table. I think that’s a big part early on.

Alejandro: What ended up being the business model of the business? How do you guys make money for the people that are listening?

Nick Huzar: Today, years and years later, we try to figure out how can we help buyers and sellers be more successful? That’s been the whole focal point of the business since Day One. In fact, in the early days, before we had a lot of traction, I used to show up to people’s houses, and I would buy their items, and I would stick them in our very small office that we had. If you can imagine five guys sitting down in a room coding with just stuff everywhere, that’s what our first office looked like. And, by the way, I never told the seller that I worked at OfferUp. I just wanted them to believe it actually worked. That’s what we did for a while. We’ve always focused a lot on this excess of sellers and buyers and connecting them. There are two areas in which OfferUp generates revenue. One is promotions, and that’s simply helping sellers to be more successful. The other one is payments. Today, we offer that via shipping. On the promotions bucket, we have what we call 1P ads, and that’s simply going into the product, and the seller can decide to increase their visibility and pay either one time or a subscription to dramatically increase the visibility of their listings. That helps them to sell things faster. The second promotional area is our auto business. We sell a ton of cars at OfferUp. I think we’re probably one of the top places in the country in terms of units. We partner a lot with local car dealerships, and we help them to be more successful by integrating with their inventory management system. We give them promotions and analytics. We were finding that they’re able to sell cars way faster by signing up for this program. That’s been a big part of it. Then, the shipping business, we take a little over 12% of transactions there, but that was a business we launched in 2018. Again, because we’re always focusing on removing friction. I remember when we launched it, one of the questions was, “Are we now becoming like other online businesses where—why are we focusing on shipping?” My response to that was, “We are about removing friction.” There are many times when you won’t even get in your car to drive 30 minutes for an item. So, when we built out shipping, we said, “Why not just enable this so you can continue to do local transactions, but now you don’t even need to get in your car.” And it opens up the nation for buyers and sellers. You have a lot more exposure across the country. That’s the focus on why we want shipping was not necessarily to build a new line of revenue for us, but again, to further remove friction in the process.

Alejandro: I understand that you guys have raised quite a bit of money for the business, too. How much money have you guys raised to date that is probably disclosed?

Nick Huzar: I think so far, we’ve raised 260, and then we just announced this latest financing, and we’ll be raising another 120 million.

Alejandro: Very nice, and very timely given the times that we’re living in. So, good stuff. Now, in terms of the business itself, how big is the platform, or can you talk to us about the number of employees or users that are using this so that people get a sense of the operation?

Nick Huzar: Yeah, definitely. To date, OfferUp is the largest mobile market place in the United States, where people are using our app to buy and sell anything from cars to shoes to furniture. In fact, this chair I’m sitting in—in my office is from OfferUp. I’d say a good healthy portion of my house, probably over half of my house are things I bought from OfferUp. So, I have three kids bikes. I have a trampoline that I purchased. The shoes I’m wearing are from OfferUp. You can literally use it for almost anything. I’d say our vision, as you think long-term, is really to help people to connect and prosper. I mentioned the stories of our origin; I still feel like we’re very much in the early days. If you look at commerce in general in the U.S., about 85% of it is still not online today. Even though we have these amazing giant tech companies, we still think there’s a huge opportunity in local, and that’s going to be our focus and continue to be our focus. To give you an idea of scale, we’ve been installed about 90 million times. Again, we’re only in the United States. If you look at annual adoption from our customers, we’re looking at over 44 million. A few other stats that I think might be interesting about our OfferUp community and usage is, especially with this transaction coming together, we’ll have 20 million users across the U.S. We also have a lot of our top markets where we started to see double-digit growth. We have markets like LA and Phoenix, for example, where over 18% of the adult population is now using OfferUp on a monthly basis. They’re using it, and if you look at the usage overall, we’re looking at billions of dollars every month worth of goods being sold on the OfferUp marketplace. It’s become a part of people’s daily lives that use it on an ongoing basis throughout the country.

Alejandro: Very nice. How many employees do you guys have, Nick?

Nick Huzar: Currently, we have about 280, and we are actively hiring at the moment. So, we’re looking to grow not only our Seattle office, but we also have an office in Miami as well.

Alejandro: Marketplaces are obviously a beast. You’ve probably thought about this very well at the beginning, and now as you’re looking at pushing other markets, how do you guys think about liquidity in the marketplace?

Nick Huzar: As I mentioned earlier, with some of the founding stories, I’d say liquidity [28:19] is the number one metric that we spend a lot of time focusing on because we want to make sure that we’re creating the best experience for buyers and sellers. We do a lot within the product to connect buyers to the right sellers. When you first open up the OfferUp app, there are a lot of different things that we are doing and surfacing to buyers on the platform because we’re trying to find things that we think people are really interested in. We have really good features like search alerts and things you can say that will notify people right away. You also are going to see a lot of big changes this year in our product. Particularly, the browsing experience when you first open up the app. That’s going to continue to evolve this year in a big way just to make it an even better buying experience for people. We’ll continue to obsess over liquidity.

Alejandro: Very nice. You’ve been at it now for quite a while with OfferUp and also what you did with your previous initiatives, like Konnects. I want to ask you this: if you had the opportunity to go back in time, and maybe to that time when you were in your early 20s thinking about how to launch a business, how to start a company, how to scale and build it. If you had the opportunity to go back in time, knowing what you know now, and give your younger self one piece of business advice before launching a company, what would that be and why knowing what you know now?

Nick Huzar: I’d say definitely the people. I’d say as hard as it is, the people are everything. Don’t cut corners on that. I think I’ve even learned that mistake early on at Konnects, but I think at OfferUp, we definitely made mistakes there too. You want to find the right people to believe in where you’re going and are really motivated and excited about that. I think that also ties nicely into culture and the intention about that. If you’re not intentional, culture is just going to take the form that it’s going to take for better or worse. So, I think it’s a founder’s job to be intentional about the type of culture that they’re going to build as a company and bring that into everything they do from promotions to recruiting. It’s not necessarily just about—you’ll find the most talented people you can, but you want to make sure they’re also rowing the same direction for the rest of the company. I feel like if you get those things right—sure, there are plenty of other challenges, but they’re going to be a lot easier to navigate if you have the right people on the bus.

Alejandro: I’ve heard you talk about core values a few times and how that ties into culture. What are your core values at OfferUp?

Nick Huzar: In our case, we happen to have two different buckets. One is core values, and the other is operating principles. The way we separated those out was intentional, where we came up with core values fairly early in our evolution, and what we didn’t want to do is what I think a lot of companies do. They have too many, and they’re just on a wall, and no one really thinks about them. In our case, we happen to have three to make it easy. It was Driven, Neighborly, and Adaptable. We came up with those three because we looked around the company at the time. We said, “Who are the people that are striving here, and why?” You look at driven, for example. That’s a growth mindset whether they’re at OfferUp or in their own lives, they’re not happy with the status quo. They’re constantly in this process of bettering themselves. Neighborly: we have a no asshole policy. You can be the most brilliant person and work hard, but if you can’t work with others, it’s just not going to work well. So, we got very intentional about that. Then, adaptable. Like I said, in any small startup, that’s got to be there. Success is not a linear line. It’s not just up and to the right. For some people, that’s not comfortable, so you need people that can zig and zag with the company as it scales. Those are our overall what we look for in people before they even come into the halls of OfferUp. Then once people are hired and we interview for the best, we have what we call our Operating Principles. I won’t list them all, but that’s everything from simplified. An example of that is, can I take complex problems and distill them down? Can I communicate succinctly? Or, diving deep. How deep in the business are you going and understanding the metrics and inputs and the outputs, and we expect that from everybody, whether an executive or somebody on the frontlines of our customer service team. We expect people to dive deep into things like that. There’s a handful of operating principles that we use, and then for people that are on the interview loop, we ask them to ask some questions to probe for those, and we also bring those principles into our performance reviews. In the last years, as we got more intentional about this, we say, “Okay, every review cycle, half of your review is the overall performance in getting the work done. The other half is how did you do the work. That’s equally as important.

Alejandro: Very cool. So, Nick, for the folks that are listening, what is the best way for them to reach out and say hi?

Nick Huzar: You can always reach out to me on Twitter. That’s a nice, easy way to get ahold of me. That’s probably the biggest one. I’m happy to chat.

Alejandro: What’s your Twitter handle?

Nick Huzar: #nickhuzar

Alejandro: There we go. Amazing. Well, Nick, thank you so much for being on the DealMakers show.

Nick Huzar: Thanks for having me. It was great. 

 

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