Talking Daily Deals with Veteran-Turned-Entrepreneur Blake Hall

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As a third generation soldier, retired Army captain Blake Hall understands the challenges of military life. He led a battalion reconnaissance platoon that hunted high value targets in Iraq for 15 months in 2006–2007. Both he and cofounder Matt Thompson, who served four tours of duty in Iraq and Afghanistan, created TroopSwap to provide value to the military community. Like Groupon and Living Social, TroopSwap offers local discounts but with a twist—deals are exclusive to military service members, veterans and their families. We caught up with CEO Blake Hall to find out more about the ins and outs of a daily deals startup and what inspired him in the first place.

What is TroopSwap?

Blake: TroopSwap is the first military-only e-commerce platform. What we do is we partner with merchants who want to give discounts to the military, but would otherwise be unable to reach them online, because there’s no online military validation mechanism. We provide a platform where merchants can give e-discounts to military family members, and military family members can come and take advantage of them.

Long term, we have plans to expand to more of a community-type website. Given that the military is the most tightly knit fraternity in the world, we think there’s a lot of opportunity to further social connections online.

One other thing that makes us a little bit different is that we give 10 percent of our profits to the Wounded Warrior Project.

How important is the partnership with the Wounded Warrior Project?

Blake: Right now, we haven’t realized much of a benefit, other than the fact that people really appreciate that we basically took the extra step of donating monies back to Wounded Warrior Project.

Over the long term, as people see us making a difference, and as we grow, and the funds that we provide start to catch some of the veterans who have fallen through the gap of the VA and to further employment opportunities for those service members, that just the word of mouth and the good will will take care of itself.

Do you think that’s important part of a business is giving back to the community?

Blake: I think for my generation in particular, double bottom line organizations and business that also have a social purpose are very important to my peers and maybe the business people who graduated 10 to 15 years before me. You really see a level of self-awareness that you didn’t previously see in business, where consumers are really conscious about the impact of the dollars they spend.

I think that will continue to be true as different communities are passionate about different causes. The Wounded Warrior Project is probably the cause that military community members feel most passionately about, taking care of those guys who are returning home with the scars of war.

How has TroopSwap been received by the military community?

Blake: It’s pretty amazing. We have yet to receive one negative piece of feedback. Just the look on people’s faces, knowing that this is an exclusive platform that’s for them, and we have no agenda to capture value from the community. Overwhelmingly, it’s been, thank you for providing this service.

At a time when so many Americans are looking for a way to give back to the military community, that’s a really powerful wall to break down between the general public and the military. The military can be recognized for the sacrifices that they’ve made, especially over these last 10 years of war.

How has the response been from businesses to donate and deeply discount their services for TroopSwap?

Blake: I’d say our conversion rate is better than Groupon and LivingSocial’s. At the same time, we have a smaller user base. But on the margin, where it counts, we’ve gotten into several businesses that would not run a Groupon or a LivingSocial, but will do it for the military community.

Our retention rate is over 90 percent with the merchants that have run with us and I think that speaks for itself.

How did you come up with the idea?

Blake: For us, we had credibility in this space, and we really understood it. That was part of the prerequisite. Even if we did understand it, but didn’t come from it, we just wouldn’t have the level of credibility to stand in front of an audience or even to gather customer feedback from members.

But, I use this pretty often in that entrepreneurship is a lot like combat leadership in that the first thing you have to do is you have to understand the problem that you’re facing. But what’s never clear is how exactly you should tackle that problem, and what are the moves that you should make to align yourself in such a way that you can adapt and overcome. That’s was something that the military really taught me to do well is to be very analytical, to be responsive, and to constantly assess if something’s going well or something’s not going well, and to have a feedback loop at every level of the organization.

What lessons did you learn in the military that have helped you in business?

Blake: I think the most important lesson I learned is that it’s okay to make mistakes. I don’t think that’s always true, especially in larger companies. But because I had leaders that trusted me and really mentored me through mistakes, it taught me that sometimes—and combat’s a hard teacher—sometimes your best just isn’t good enough. There’s going to be something that goes wrong, that’s outside of your control. Getting to a comfort level like that really gives you a sense of humility and confidence.

So humility is an important characteristic?

Blake: Yeah, I think that emotional intelligence is the biggest differentiator, after you get to a certain level. Your intellect, your experience in a particular field will take you so far, but really to get to the next level where you can provide purpose, motivation, and direction for teams and get them moving in a common direction, that requires a great deal of emotional intelligence and things that we associate with great leaders. That’s the ability to communicate effectively to different audiences by speaking to that constituency’s needs.

And I think that emotional intelligence and confidence are inextricably linked. And if humility is a byproduct of confidence, then you can throw that in the lot as well.

What is your business day like?

Blake: I think someone distilled the three most important things that a startup CEO can do is: One, make sure there’s enough money in the bank that the company can survive, and certainly that consumes a lot of my time. The second thing is to recruit and retain top-notch talent. And I’m more proud of the people that we’ve assembled than I am of anything else we’ve accomplished.

The third part is to have the strategic vision that aligns the organization in the early stages. That has me doing everything from business development to local sales pitches to product discussions with the engineering team.

What’s special about your team?

Blake: One of the neat things that we do, after interviewing several thousand members of the military community, it was certainly shocking to me, as a military dependent growing up and served in uniform, then as a veteran, that the military spouse is the most underserved segment of the community. They suffer from a 42 percent overall wage gap relative to civilian wives, despite, on average, having higher attainment levels in terms of education.

So we’ve adopted a policy of only employing military spouses in the local communities who are active, and so far it’s been a huge success for us.

What was your money-raising strategy?

Blake: Once we’d done all the research (I talked to over a thousand members of the military community in person), got my hands dirty with customer research, then we went out for funding. We weren’t big enough or late enough to go the VC (venture capital) route, and not a lot of VCs understand the military community anyhow. It just turned out there’s a lot of successful businesspeople, whether they’re in the tech space or just successful businessmen in general, who understand the military community and got what we were trying to do.

They provided the core around which we were able to raise a subsequent round of $925,000 inconvertible debt to have the marketing budget to start one market initially, and now we’re starting two more, in San Diego and D.C.

We put just enough at each stage to do what we needed to do in order to demonstrate proof to the next set of strategic partners that would advance our business objectives when we were ready for it.

Are these angel investors or venture capitalists?

Blake: Primarily angel investors. Now some of them might be venture capitalists as well, and I think we had some venture money in that. But I would call it an angel round. I’d say $700K plus came from angels who were prominent with that space.

Is that kind of support unusual?

Blake: Well, I would say the thing that was key for me, especially as a first-time entrepreneur, to raise money, was having a mentor to not only walk me through the pitfalls, but to vouch for me to his network of angel investors that I was credible enough, I was confident enough to execute on sort of the strategic roadmap that we had laid down for investors. Were it not for him, I highly doubt that we’d have raised the money.

How hard was it to transition to the private sector?

Blake: That’s a tough question. I’d say that it’s very difficult. I’m not going to lie. I had to use every ounce of intellect and perseverance and scrappiness that I had. I think most entrepreneurs do. But, in a sense, coming from a military background, going to do things like setting up a business and hiring folks and payroll and everything else, that maybe other people at least had some peripheral experience with it, because a family member was involved with business, but I’m a third generation soldier.

What tips do you have for other vets looking to start a business?

Blake: I’d say the first thing before you do it is make sure that you’ve found a real problem and that you understand how big it could be. No matter what else, you need a great idea. But then you’ve really got to be ready to commit once you start to go down that path. You’ve got to be willing to say, I could realistically spend the next six to 10 years of my life working on this idea.

Did any of your experiences from Iraq inspire you in being an entrepreneur?

Blake: Every day I think that experience has shaped my life. I’ll touch on why it’s so important to me. I think when you’re 23 years old, and you have to think about dying or being maimed every day for 15 months, it really gives you perspective on life that not many other people have at that stage. What that combat tour really drove home to me is how precious life is and how short it can be.

I saw half my guys walk away from stuff they should have never walked away from and saw guys on a clear, open day get hit by a stray bullet, who had come out of some of those crazy situations without a scratch. It just reinforced how short life can be. If you don’t follow the things that you’re passionate about and try to make a difference for the communities that you feel are underserved and care about helping, then you’re going to end up 40 or 50 years old, looking back and having a lot of regret.

How does a teenage Iraqi interpreter code-named “Roy” fit into your plans?

Blake: You had to serve 12 months with the Americans before you qualified for a visa, and since Roy joined my platoon in January, and we left in September, he’d only done nine. So I hated leaving him there. The night we left, I saw Roy, and I said, “Hey, man, I wish to God we could take you home.” He told me that he was scared. We’d been on combat patrol in some pretty crazy places, but he’d never said that he was scared before. That was the last time I talked to him.

So I’ve got to live with that. He stayed on with another platoon, and right as he hit the 12-month mark in January, when I was waiting for the email to send the address, that’s when I found out that he was killed. I still get emotional talking about it now. I think he was just a good kid.

I’m sure it’s very fulfilling to help his family.

Blake: They just went through their second interview over in Iraq and could be within the U.S. within the next four to six months. So it’s his 11-year-old sister, his 20-year-old brother, and his mom and his dad. I know they’re going to go through a pretty tough transition, coming over here to the States, and that I’m going to have to carry a lot of the burden for that as well.

That certainly takes the stress level even one step higher for this current venture, because it’s not just the military community that depends on me. It’s an Iraqi family whose son protected my guys for a long time. So yeah, I’d say it drives me every day.

That’s pretty incredible.

Blake: I think our country owes him and his family a debt. They sacrificed more for America than most American households over the last 10 years. My job as a platoon leader meant that I was responsible for all the lives of the men in my platoon, and I’ll be damned if Roy wasn’t one of the guys in my platoon. He was as American as they come. So I’m fulfilling a debt that I feel I owe to him.

Read more about Blake’s tribute to Roy in the Washington Post:

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/27/AR2010082702133.html