Kevin Petrovic, The Youngest Founder to Raise Over 20 Mil. USD

Both Kevin‘s parents are from Slovakia – Bratislava and Bardejov. They went to the US to get their PhDs, now they are working as chemical engineers. Kevin was born in New Jersey but spent every summer in Slovakia and speaks Slovak fluently.

He worked hard at the school but always has been interested in entrepreneurship and doing business. One of the first businesses that he pursued was with his Slovak cousin and the very first iPhone. Since then, the projects have been growing in complexity.

FlightCar, the first real startup of Kevin in the US, aimed at the car owners who did a lot of flights. To save money on parking and earn some money, FlightCar gave them opportunity to share their cars while being away.

Having been part of two accelerators, one of them Y Combinator, they managed to raise two seed rounds and additional A and B venture capital rounds. It all resulted in selling the company to Mercedes-Benz Research. The side-effect? According to their own research, Kevin and his co-founder have become the youngest founders to raise over 20 mil. USD in VC.

Today, Kevin Petrovic talks about his Slovak roots, his first business experience, lessons he learned at Y Combinator, and much more.

Kevin, what did your childhood between the US and Slovakia look like? Did you visit Slovakia often?

Yes, I came every year since I was three months old until I was 18 for the summer, usually about six or seven weeks, to visit my family. I would read a lot, we would travel around Slovakia, Poland, Austria, and Hungary. My Slovak for some time was better than my English, and it was good to see a very different part of the world.

If you go back, what are your first memories you recall from your visits to Slovakia?

It’s hard to come up with something that was like “Wow, this is so different” because it was always part of what I did and where I came to. But I was always annoyed how difficult it is to get from one side of the country to the other as D1 has not been completed yet.

When you come to Slovakia today as an entrepreneur, how do you see the entrepreneurial system and the startup world of Central Europe? What are your impressions from outside?

If you were to ask someone who is not Slovak in the US, they would associate Central or Eastern Europe with cheap developers and engineers. In general, with the startup ecosystem and culture, San Francisco is number one by far and everything else is far behind that, whether it’s Berlin, Tel Aviv, London, Boston, or LA.

For companies to do well, you have to have an ecosystem. It means help from incubators, people working on companies, mentors, various types of inspiration for entrepreneurs, you need investors, both small angels and larger ones. It’s the same kind of thing when you look to a smaller US city–the ecosystem and infrastructure for starting a company is not always there. Slovakia is in the very early stage of developing such infrastructure.

Kevin Petrovic FlightCar

FlightCar Founders, Kevin on the left

“We decided to go ahead and delay our university education to work on the idea.”

What is the story of your first venture?

The first company I had was FlightCar. I had a friend in school, and one day we were talking about these companies that help you share your house or your car. We thought they were very interesting. As I was at airports a lot, we got this idea that if people would be willing to share their car to make some money, we can build a service that would let them do that at an airport. Not only make money though but also save money on the parking cost.

How did the process work?

You parked your car, paid nothing, and while you are away we hired your car to someone else who was flying into the same airport.

Did you work on the FlightCar during your college years?

We spent a long time researching and trying to figure out if the numbers and economics made sense. Then we decided to go ahead and delay our university education to work on the idea.

What was your journey? Did FlightCar follow the common trajectory of accelerator programs, raising capital, and selling the company?

We started off in one accelerator program, then moved out to California, did a second accelerator program and learned a lot about how to think about startups, how the startup network worked, how investments and getting customers worked.
In January of 2013, we raised a little bit of money, opened our first airport location in San Francisco and started growing the company from there. Because car rental is a business with such low-margin prices and requires a lot of money, we had to raise a lot of venture capital to grow the business.

We grew from one location to 12 airports throughout the US and from just the two of us from the very beginning to having about 140 employees. Eventually, we sold the company to Mercedes-Benz Research of North America in the summer of 2016.

One of the accelerators you took part in was the Y Combinator.

We went through two accelerator programs. One of them was a smaller program called Brandery in Ohio, the other one was Y Combinator in San Francisco Bay Area.

Kevin Petrovic FlightCar

FlightCar

“Y Combinator pushed us to launch the service before we were comfortable doing so.”

How did the experience of those two differ?

The Brandery program was very hands-on, it’s smaller program with about 10-11 companies each year. Everyone comes to the office every day, so you meet them, you can talk to them, you can get help. It is designed to help you learn about a lot of the business-type items for a startup. The legal challenges, how to fundraise, how investments work, how different growth and user acquisitions strategies work. One of the unique features of the program is that you get a free work from a design agency that helps you with your brand and all the things related to that.

What about the Y Combinator?

Y Combinator was a different experience because it is much more hands-off. You only come in once a week. The biggest emphasis is that you have launched your product, you have customers, and you can see results.

During the Brandery, we were still in the stage of developing not just our software but many of our operations, deciding where to open the first location. With Y Combinator, we started our operations soon after we started the program. A lot of the partners gave us very good advice on how we can grow the company. There were a lot of network opportunities where we could talk to different alumni companies and people who had gone through the program and get advice from them.

Y Combinator is very valuable not just because it has such a strong brand name, but because the network is so strong with everyone willing to help you. No matter whether it’s a question about H-1B visas for a new employee, something about finding a supplier for products from China, or how to use a certain type of advertising.

What did FlightCar look like before and after the Y Combinator program?

Y Combinator pushed us to launch the service before we were comfortable doing so. That was helpful because it immediately started to give us feedback what was working well and what was not. Immediately we heard from customers what they liked and what they did not like. That allowed us to very quickly make changes early on and adjust what we were doing based on that very early feedback.

Having the Y Combinator program behind us as such young founders helped investors see our business more seriously and helped us to have a lot of investor conversations that we might not have had otherwise.

What stage was the business in when you sold it? I would be interested to know the reasons of exiting the company, to the extent you can talk about.

Very good question. The company was growing in terms of users, and we were in a situation where we could add more airports. But we identified a problem.

In car rental business, price margins are very low. We had been losing money from day one with FlightCar and continued to do so. We had a plan to achieve profitability with a certain amount of customer volume but it was still a significant distance away. And we knew we would need considerably more venture capital to reach the break-even point.

One effect that we did not see in the beginning but became more obvious as time went on was that the self-driving cars and on-demand cars like Uber and Lyft would become very big competition. And as a result, many investors believed in them on long term. We weren’t sure that we could continue to raise money for FlightCar to achieve the break-even point given the situation where people believed that car ownership would fall in the future.

We had more parties interested but the deal with Mercedes-Benz Research & Development North America was the best choice for us to take. It was better than the alternatives we had in terms of continuing and hoping to raise money for series C round. We had already done two seed rounds, series A and B, totaling in 42 mil. USD.

Kevin Petrovic

Kevin Petrovic

“It was very difficult for us to hire correctly. We made many mistakes.”

What have been the greatest challenges you had to face during your the development of your first business as such young founder?

An issue that we faced repeatedly was that we did not have any experience in hiring. It was very difficult for us to hire correctly. We made many mistakes.

One, because we did not know what we wanted from our job candidates and our employees as it was so early in the development and it was changing all of the time. But the other thing was that we just did not have the experience to talk to people, to understand them and to figure out who would be a good fit for a certain position. To me, that was almost the biggest challenge because we made many mistakes which set us back and delayed our progress quite a bit on many different fronts.

People warned us not to do something or to do something. For example, we were told about how important the company culture is. When it’s three people, it’s very hard to see what does it mean. In 3 months, you have 20 people, and suddenly you realize your company culture is not what you wanted it to be. You’ve already made a mistake and you don’t really know how to fix it.

Another big challenge was learning how to deal with city government, local governments, airport management. We wanted to grow fast without being slowed down by regulations and delays. And that was a difficult position when dealing with airports and governments; we had to learn a lot about how to interact with those types of organizations.

I heard that you are the youngest founder ever that raised more than 20 mil USD. How much truth is in that?

At the point when we closed our series A round, we had raised total of 20.2 mil USD in the first three rounds of financing. Someone asked us whether we were the youngest to get such amount. We were not sure, asked around Y Combinator and different venture capitalists, had some people do some searching for us, and we could not find anyone younger that raised so much money in venture capital. That‘s how we came to that conclusion.

Why did you decide to go back to school after you sold FlightCar?

I thought about it for some time myself. The biggest factor for me was to put myself around a lot of very smart people who are working on cool projects and have interesting ideas. I’m good at business models and operations but I am not really good at technology development. Being in a place which has a lot of people who are very good at research and technology development, such as MIT [Massachusetts Institute of Technology], is great for me. I get to learn a lot from them about their ideas, about interesting technology, and I get to see a lot of the newest technology and research that’s going on around.

What is your piece of advice for a young Slovak student who is thinking about their own venture?

One of the greatest things you can do is to find people who have worked on similar things and have solved similar problems and talk them. Lots of people are willing to help if you ask them and don’t waste their time.

I would also try to be very connected to what’s happening in startups, what kind of companies are raising money, who is working on what kind of projects. If you do have your own idea, one of the most important things you can do is to just have a very high-quality team of people helping you, particularly co-founders.

Your choice of who you work on your idea with is extremely important because it’s almost like a marriage. You spend a lot of time with those people. Knowing what they are good at, knowing how they work with you, knowing their response when there is a difficulty or trouble is crucial. Having a bad founding team or a team that does not work well together can be permanently damaging if you are just trying to start out.

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