Interview With Blake Hall, CEO Of Washington DC Military And Veteran Services Startup TroopSwap

Blake Hall first got our attention when he spoke at the Gov 2.0 Summit in Washington, DC a while back. Since then, he’s been making waves with his startup, hiring people, raising financing, and doing public good. Editor-in-Chief Mark Drapeau caught up with Blake over cocktails in Georgetown to talk about what’s happening with Troopswap (“Because a life of service should have its perks”) and what to expect in the future. His unique approach to entrepreneurship due largely to his time serving in the U.S. Army really shines through in this conversation.

What’s Troopswap?

Troopswap.com is the first military only e-commerce platform. At the moment, we partner with merchants to provide great deals for veterans, service members, and their families. Our business model is similar to LivingSocial with a few important distinctions. First, we limit eligibility to veterans, service members, and immediate family. Second,we only employ military spouses. Third,we donate 10% of our profits to the Wounded Warrior Project. Our mission is to reward a life of service. We have designed our business model and our operations so that every touch point creates value for the military community.

Where did the original idea come from, and how did you arrive at where you are today?

TroopSwap started with a phone call to my co-founder, Matthew Thompson, while we were both classmates at Harvard Business School. Matt and I were both Army Rangers so we understood the lifestyle and were familiar with the social and financial challenges of military life. Originally, we planned on launching a military only classified site along the lines of Craigslist, but we needed massive distribution to make that idea work. We pivoted into the deals space and that has proved to be a winning move for us.

Can you tell us a little about your personal background, and how you came to be an entrepreneur?

I’m a third generation soldier, and because of that I’ve seen the community from a number of different angles; as a dependent growing up on bases around the world; as a soldier; and, finally, as a veteran. I led a scout platoon that hunted high value targets in Iraq back in 2006 – 2007 when things were pretty crazy. That leadership experience instilled lessons that have been highly valuable as an entrepreneur. While in Iraq, my platoon performed a mind-boggling spectrum of missions: from night-time raids on Al-Qaida suicide coordinators, to “days off” where we escorted provincial reconstruction teams  to rebuild and refinance local businesses, to important meetings with local sheiks and civic leaders. The only constant was that nothing went to plan — ever.

The most valuable lesson the military taught me was to plan to fail. Expecting to fail is so empowering. At TroopSwap, whenever something goes wrong, we have plans B, C, and D ready to go. And embracing failure as key learning moments – something to be treasured rather than feared – helps me instill a culture within which our team members are willing to take calculated risks. My battalion commander convinced me to apply to Harvard Business School, and there are some seriously smart people there, but the core leadership lessons I learned came from my military service.

Give us some basic numbers – how many users, what kind of capital invested, how much revenue? What are your short-term goals?

Our initial seed funding was $120k from a small group of investors that included David Tisch, the Managing Director of TechStars NYC. Dave introduced me to Kelly Perdew, former Army Ranger, CEO of FastPointGames.com, and the winner of season 2 of NBC’s The Apprentice. [Editor's note: Mark is a big fan of Kelly, too.] Kelly is a seriously smart dude and he practically became a co-founder after I first spoke with him. He is part of a group of angels called “First Wave,” who are military veterans turned successful businessmen who share a common mission of finding and funding veteran entrepreneurs. Thanks to Kelly’s leadership we raised $585k on our first close of this round from investors that include Paige Craig, former Marine and Founder/CEO of Betterworks.com, Frank Monestere, former Green Beret and President/COO of LegalZoom.com, and others here in DC. Our second close is soon and it looks like we’ll settle around $1 million and bring on some more top-notch tech leaders like Andy Dunn, the CEO of Bonobos.com.

Early adoption has been strong. On May 23, we launched in one market: Hampton Roads, VA. Since that day, we’ve had 4,166 military users join and we generated a little over $23k in revenue during our first month of operations. Our short term goals are to build the best product we can and to focus on working out our business process issues while we can manage them in one market.

Are you a for-profit or non-profit and why?

Customers paying money is the most powerful indicator that you are creating value. No artificial mechanism or contracting process or grant can adequately substitute for the will of the consumer. Provided you have a transparent business model, which we do, then adapting to optimize profits creates a win-win relationship for the company and for consumers. Fundamentally, it’s important to me as an entrepreneur that the core team maintains control over the direction of the product rather than to be dependent on institutions or individuals who might alter our mission. Non-profits play a powerful role supporting the military community, but ultimately they are dependent on third parties for funding and not independently sustainable, but as we grow and donate 10% of our profits to the Wounded Warrior Project, I’m excited to see the impact that we will have in both the non-profit and for-profit sectors.

That’s interesting. You also mentioned a terrific model where you hire a lot of military spouses… Tell us more about that.

Even as a third generation soldier, it shocked me to discover that the most underserved entity in the military community is the military spouse. Active duty families move once every three years, so military spouses have an incredibly difficult time crafting out their own career paths. They often move to communities where they have few friends or family. And, these days, their spouse leaves regularly for 12 month deployments. The unit support groups set up for military spouse have a sort of faux hierarchy that mimics the chain of command — i.e. the squadron commander’s wife runs the military spouse group, and, though it varies from unit to unit, there is a weird mixing of personal and professional networks that most of us try to avoid if possible.

The sum effect is an incredibly lonely lifestyle. The University of Maryland found a 42% wage gap between military spouses and their civilian counterparts, even though on average military spouses are more qualified. Considering that, for example, women are driving about two thirds of GroupOn’s growth, it was a no-brainer for us to exclusively hire military spouses in the markets where we are active.

What do you think about the role of entrepreneurs in doing “public service” like this which compliments government, but that perhaps the government shouldn’t explicitly do? How might this specifically relate to military members and their families?

This community is underserved because so many initiatives are well intentioned, and the military is so insular that it often appears efforts are being made to positively affect quality of life while nothing really changes at the grassroots level. Government is growing increasingly aware of its limitations and public/private partnerships are becoming more and more common because government recognizes that 99.9% of the innovation comes from the private sector.

We were just inducted as a national partner into the Military Spouse Employment Partnership at the United States Chamber of Commerce. [Editor's note: Microsoft is also a newly-inducted partner to the MSEP.] The biggest differentiator for us is our human capital – we have a brilliant team. Most of us came from the government but we left because our autonomy and initiative was stifled in the bureaucracy. There is no way had I stayed in the military that I would have been given the freedom to both speak my mind openly and to meet with the senior level officials I meet with now; I love the government but government employees don’t stay up working until 3 AM in the morning like our team does (ask my girlfriend).

Have any specific people in or parts of the military been helpful in getting this launched, or in getting the word out?

Lieutenant Colonel Jason Dempsey, a White House Fellow in the First Lady’s Office, and Deputy Assistant Secretary of Defense Robert Gordon have been extremely helpful facilitators for us to gain access to the vetting process for certain national level programs. DOD cannot specifically endorse a private sector company but they can expedite legal reviews to expand our access, or promote certain events that we run for the military community. In that sense, we are lucky that government is growing more integrated, inclusive of the private sector, and open. Things never seem to move at the speed we would like, but, in historical context we are moving at lightspeed.

Where would you like to see Troopswap in a year or two?

I would like to see it making a difference in the way that Matt and I hoped when we started out on this path: creating value with our offerings, employing hundreds of military spouses, and tangibly affecting the lives of Wounded Warriors who fell through the cracks of the VA. That would be the achievement of a lifetime for Matt and me. We’ve both been through a lot but this is the toughest thing we’ve ever done.

What could tech entrepreneurs in Silicon Valley or San Francisco learn from your approach to building TroopSwap, and your somewhat unique niche of customers/audience?

My high school English teacher, Dr. Terence Freeman, taught me how to write. I still don’t know why an Ivy League Ph.D. ended up teaching composition at Lawton High School, a public school in southwest Oklahoma, but it changed my life. He always used to tell us, “write what you know.” I could never lead deep technological change because I don’t know that stuff; someone smart or better connected in that space would beat me. But I know this community as well as anyone, it’s underserved, and I was able to find wonderful teammates who are smart where I’m dumb. I’m writing what I know.

Dr. Mark Drapeau is part of the Microsoft Office of Civic Innovation in Washington, DC. Read other Publicyte interviews: cybersecurity expert Jeffrey Carr, education entrepreneur Pooja Nath, Lukas Biewald, the CEO of Crowdflower, and iPad DJ Rana June Sobhany.