How Hitreset CEO Siri Chakka grew to $144K revenue and 400 customers in 2019.

hello everyone my guest today is siri shaka she is uh building a great company called reset based in austin texas before reset she consulted for fortune 500 ceos on corporate strategy private equity firms and turnaround strategies uh private equity firms doing turnaround strategies she's got a degree in chemical engineering from university of illinois in an mba from the university of texas siri you ready to take us to the top yeah all right tell us about reset what's the company doing how do you guys make money yes so reset we partner with local independent dinner only restaurants to transform their spaces during the day into workspaces for the remote working community we operate on a membership model so customers pay us money to have access to a private space to work half the price of a traditional co-working space we then provide a percentage of those proceeds to our restaurant partners um so we help local businesses out in the process this sounds like if you have a thousand customers all around the country you have to have someone on the ground every day like moving the tables out of the way to create like co-working space is like setting up electrical outlets and like surge protection i mean like how do you actually how does this actually work in person yeah it's actually it's very dependent by restaurant as part of our screening process but we have restaurants that take 20 minutes to set up we have restaurants that take five minutes to set up it really depends on how they were built so for example we had a restaurant downtown that was an old house so there was like no plug outlets whatsoever and so we have to figure out how to map electrical in uh through you know surge protectors and towers we have another restaurant on the east side that the owner actually built it from scratch there are plug outlets everywhere you can go outside and there's like rows of plug outlets he he of course saw this so set up there is a breeze and set up at our downtown location takes a little longer interesting but in the end like tables chairs i mean these restaurants are already set up to have a sense of community and small groups so it's really not that bad and are you your pricing model how are you pricing yes so we want to price at the same uh price point as you would have if you sat at a coffee shop all day so we have 10 bucks for a day pass 80 for a 10 pass and 150 for a monthly so if i'm squatting at a coffee shop all day i'm buying a few cups of coffee i'm buying some pastries because i'm paying for like my to be allowed to sit there all day right so we wanted to take away that guilt take away that obligation 1080 and 150. yep and sorry was the 150 unlimited monthly got it interesting okay so so and is it free for the restaurant uh yeah i mean the restaurant is operating in the background and they get a cut of the proceeds oh got it okay so so okay this is interesting so they get a couple of proceeds what percent do you give the restaurant or is it change yeah that's a negotiable okay what's a give me a big range like anywhere between anywhere from 10 to 20 depending on how big the restaurant is and and the amenities that they provide okay so they keep 10 to 20 percent this is like you're like you're like wework but you figure out a way to not have to deal with any of the physical issues i mean honestly look at the weworks p l right 65 percent of their costs come from the lease and the build out that's why they charge the prices that they do if you can remove that then like you can bring those prices down to a place that a ton of people that are currently priced out of the market can actually enter so i'm we're growing we're growing the share of the pie not yeah not taking from other co-working spaces the reason i want to have you on is because i saw a picture of someone i forget which city was in but space was so expensive they were turning parking spots into co-working san francisco it was san francisco yeah and i'm like i'm like i've got to get siri yeah no it's kind of insane uh san francisco as a whole yeah i don't understand it it is actually insane so when i ask you like how many customers do you have do you think of your customers in terms of the restaurants or the paid members per month we think of it as members we're technically a b2b b2c double-sided marketplace yeah right so my co-founder is um external facing she takes care of our members she does all the external communications i'm internals facing so i do all the bd the operations the finance so my customers are technically the restaurants but when when me and my co-founder talk we we talk about our members as being our customers so how many total restaurants are on the platform today uh we have two restaurants right now in austin we are yeah and we're onboarding more this summer so that's great okay and across those two how many members do you have uh we've had uh about 400 people try us out and we've converted 30 to 40 percent of them uh into members yeah for well hold on so you have three different pricing models so 400 have paid the the five dollars uh no no so it's 10 80 and 150 sorry the ten dollars yeah so we have people that use this on a drop-in basis they don't want to buy bulk they don't have a consistent schedule we have a lot of travelers we have a lot of business people so yeah we consider a day pass user like a regular day pass user converted member okay and the regular day pass is 150 or 80. no that's 10 bucks okay what um how do you measure those stickiness though don't you want everyone as many as possible in the 150 a month uh no actually that's not our goal so our goal is flexibility and convenience we realize that with the 10 pass which is a pretty unique offering here that's where the bulk of our user is going to go and that's where the bulk of our users are okay so the 150 is there for people that want to do that but that's actually not the way we're structured um and so if i asked you then what the average member whoops pays per month how would you how would you calculate that it's probably around 30 to 40 a month so it's like three or four days yeah exactly they're dropping in once to twice a week usually interesting okay so call it 40 and then you have some power users that maybe say screw it i'm gonna do 150 a month exactly okay very cool okay so 400 customers now are all the do all those customers stay pretty active like like they do it once and they do have done it for the past four months every month yeah so that's that's actually been a really interesting journey so we've been operating for about eight months now so we're learning a lot about the customer segment that we're going after and we're going after a segment that really values flexibility and convenience so we don't get that so sometimes we it comes in waves right a lot of our customers are traveling quite a bit or they have the need for meeting space you know in certain parts of the year and and sometimes not so we'll see customers like come in for four months at a time and then we might not see them for another four months and then they'll come back and it's just based on when they need workspace and and their schedules that's that's the big benefit and the differentiation that we provide against other workspaces is this flexibility and convenience so they can still stay a member and they want we're trying to be an on-demand um drop-in workspace and we know that some of the some of the things that we have to sacrifice is the predictability of revenue but we're hoping that we can create something that is so sticky that people use us for that convenience factor so can i take 400 times average of 30 bucks a month and you say you're doing about 12 grand a month right now on revenue uh i mean it's uh well it's yeah i mean it's gonna be around there yeah and then you're gonna take about ten to twenty percent of that is actually gonna go to the restaurant so maybe go to the restaurants and then the rest of our costs really go to operating like wages marketing yeah are you operating a break even right now uh no we're getting closer we are getting closer yeah yeah well so how so it sounds like you're burning capital have you raised uh no we're bootstrapped so we're bootstrapped and we actually just last week closed our friends and family around so we raised um you know like what you raised in a friends and family around well about how much was that it's you know anywhere from 30 to 40 grand right right now okay so you're close to 40 000 bucks now you it sounds like you you're burning capital before that how are you covering those costs we were bootstrapped we were using our own capital to to incorporate so me and my co-founder actually both have our full-time job still okay god how many of you guys are there total just you two just the two of us and then we have part-time stuff all right so when you're gonna take the leap you're never gonna make this thing succeed if you have your you know if you're reliant on the full-time gig so when are you quitting yeah so i actually just went full-time to half-time um and uh hoping by the end of the year that i'll be done and my co-founder might be making the jump uh very soon yeah okay so operating it kind of break even you just raised a 40 000 friends and family round there's two of you guys right now you're both kind of part-time in your other jobs as kind of a safety net hoping to go full-time in the in the startup here by the end of the year yep that's great i love that okay um talk to me a little bit about uh growth so a year ago today were you like non-existent yeah a year ago we had uh we had just met with a lawyer to figure out what it what it means to file for a business instructor in llc that's funny okay so nothing and then do you remember uh six months ago december of 2018 how many members checked in that month oh yeah we are double since that what we were in december okay so you had about kind of 200 times 30 caught like 5 000 bucks a month in revenue at that point we were struggling to to hit demand there um and uh it's funnel traffic over there so you're familiar with austin so the mueller neighborhood yeah it was a beautiful restaurant that we're partnered with builders a very insular neighborhood and we were learning that it just takes a different marketing model if it takes if it's actually a good place to start it takes a different model than what we were having so we decided to cut our losses and just be like hey like we're gonna focus on these two restaurants first and then once we figure that out we can come back and the restaurant was like so grateful and and they were really good partners to work with that's good so how are you getting let's break down that i mean you had you have an easy job how are you convincing these restaurant folks to sign up oh this is fun um have you ever worked in the restaurant industry i i flipped burgers at west end grill at virginia tech so i know like about friars and flipping and cleaning and all that i've never worked in the restaurant industry my co-founder never worked in the restaurant industry i come from a management consulting background i'm very email and phone heavy yeah i was wondering why no one was answering my phone calls no one was answering my emails so what do i do i just start showing up at these restaurants but you can't stroll up at service because they're really busy so then i start learning if a restaurant opens at five they're they're back of the staff back of the house is usually there around one or noon their front of the house is around two or three i'm like okay the manager is going to be around there sometime so i literally just drove around different neighborhoods popping into different restaurants i had to get my pitch down to about 10 seconds because literally open the door and they're wondering who we are what do you say pitch me uh i say uh you know i'm uh youtube grad starting a company that supports the restaurant industry and helping you monetize your space while you're not using it interesting and then they're like oh because um you you don't even have to be in the restaurant industry to know this like restaurants they don't make that much money um the vast majority of restaurants are actually below break even um and then they get to break even and then you have the uchi's and the eberles of the world that you know for other reasons are doing really really well and so you just um when when you say that you can help them use their space their ears perk up and they're like okay like let's talk let's let's talk and you have to make it seem like this is we had to structure our operational model so that it was really hands off to the restaurant because they already have so much work to do to get set up we can't add that additional burden um even though we're paying them so we had to make it in a way that it's like really hands off someone asked the obvious question well like why wouldn't i just go to a coffee shop and instead of and pay 10 bucks on coffee instead of paying you 10 bucks being a random restaurant somewhere that may or may not have strong wi-fi yeah so we actually upgrade all the wi-fi to business speed and it's a private it's a private network because um all restaurants actually have additional encryption in their wi-fi because they take credit cards so it's actually a really it's a ultra safe uh internet and we upgrade all of it to business speech okay same question though why you why a random restaurant over just a coffee shop yeah no so uh i was a coffee shop worker right i had my first remote job out of grad school my co-founder did as well i was finding that i was um it was unreliable i had to wake up really early to actually get a seat in a lot of these coffee shops i felt obligated to continue purchasing things even if i didn't want to purchase them wi-fi was unreliable sound was unreliable i remember i was sitting in the starbucks um on riverside and i was working and this gaggle of like 15 year olds came in after school and they were just laughing and they were making so much noise and i got upset i was like this is really annoying and then i'm like they actually have just as much reason and right to be here than i am you're actually spending way more money than i am um i was like this there has to be like an optimal i really liked co-working but i just can't um i had a company that uh subsidized that for me but once i left that company i was like i can't i can't defend this payment of 350 400 a month for a spot that i actually don't want monthly i just want a place to drop in when i like need to get out of my house and i was like there has to be a way to build a model that does that thank you so much random restaurants we're picking beautiful restaurants yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah i know that makes sense i hope you guys keep scaling that'll be a lot of fun you have to come back on and give us an update in a year um in the meantime though let's wrap up with the famous five number one what is your favorite business book oh um setting the table number number two is there a ceo you're following or studying indoor nui from pepsico uh number three what is your favorite online tool for building your company trello yeah it's a good one number four how many hours of sleep do you get every night nine that's a huge priority it is big and what's your situation married single kiddos single and no kids running around no kids and there you go and you might be asking how old you are i'm 29 29 last question what do you wish your 20 year old self knew uh oh god talk to people just learn about their their stories and their um and their lessons and and try not to learn everything the hard way guys hit reset is turning restaurants into co-working spaces during the day to help the restaurants make money when they're not leveraging that space that they pay for anyway via their lease so they're currently serving about two they're serving two restaurants here in austin 400 people have come in and paid their membership fees they're doing about 12 000 per month right now in revenue they give the restaurants anywhere between 10 and 20 of that revenue as they look to scale they raised 40 000 bucks from friends and family team of two right now hoping to go full time on this by the end of the year siri thank you for taking us to the top thank you