On a recent sun-drenched spring afternoon, Daniel Mishin is strolling through the townhouse in Manhattan’s West Village where he lives, works and, if time allows, plays. It reeks of Manhattan real estate envy -- lofty ceilings, wooden staircases, gleaming appliances, capped off with a roof deck and a back porch. Trees line the street, where the Waverly Inn peeks through from the view on the front stoop.
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Most enviable is the price tag: Residents here pay $1,900 a month per private room, roughly 20 to 40 percent below the area average for a shared apartment -- but the price includes cleaning services, security deposit, internet, utilities and even some toiletries (among them a very lovely hand soap). “Adult dorms? We don’t play that game,” says Mishin, who is as crisp and friendly as his surroundings. “This is a home.”
His neighbors know they have Mishin to thank for the living arrangement. It’s the product of his company, Residenz, which aims to create affordable urban housing for young professionals. But many residents may not be aware that there’s a force behind Residenz -- and it’s the same force behind a growing number of buzzy startups run by young, ambitious founders.
It’s called Kairos. In the past 18 months, it has produced four startups and invested in 16 more, and it has aggressive plans to keep growing.
Kairos (Greek for “opportunity”) is a decade-old, New York-based concern with origins that are not surprising (Wharton) but an approach that is. The company is part venture capital, part mentoring group, part elite society, and it’s leading a war of ideas aimed at the kind of young entrepreneurs who would traditionally be lured into the highly paid, snack-filled sanctuaries of Silicon Valley’s Notification Industrial Complex. Kairos’ very different pitch goes like this: There is enormous untapped opportunity, and potential profit, in unsexy industries like elder care and rental security deposits, where innovation can literally change people’s lives. The key to success there is to reverse the typical Valley development process. Rather than create a product and then sell it to consumers, Kairos wants founders to identify real problems faced by consumers and then engineer their solutions.
In this way, Ankur Jain, Kairos’ 28-year-old founder and co-CEO, is thinking far more Warren Buffett than Jack Dorsey. And in a short amount of time, his focus on the hole in the marketplace rather than the pitch deck has produced results. Today there is more than $6.5 billion in companies that were founded by Kairos entrepreneurs, the bulk of which were started by people under the age of 30. And it’s been launching a new startup every few months.
“You see a lot of people in Silicon Valley going after these big, change-the-world ideas,” Jain tells me at his offices at 10 Hudson Yards, looking over a wide, twinkling view of Manhattan. Jain speaks with the enthusiasm of a TED Talk, even in casual conversation, rendering his voice slightly hoarse yet convincing. “Ultimately, you waste all this money and no one uses the product. They’re so surprised why, and it’s because no one was asking for it. Nobody wanted it.”
That may be true, but Kairos also lives in its own paradox. How does one marry the oft-criticized forces of technology with the real, deeper needs of consumers beyond Silicon Valley? And in industries where people have spent decades-long careers trying (and often failing) to solve problems, why would young entrepreneurs be expected to fare any better?
Jain is the first to admit the irony. He’s drawing a contrast with the same moneyed world he’s working alongside. His offices in the Hudson Yards development capture the tension well, located inside a skyscraper that’s so new that some stickers haven’t been pulled off the walls and the windows that overlook the New York panorama have barely needed to be cleaned. Many of the building dwellers are, like Jain, clad in the tech-casual garb of a black shirt and jeans, but there’s no shortage of suits roaming around. (Coach and Neiman Marcus are located here; KKR & Co. and BlackRock are moving in.)
Jain tells me about his childhood in Seattle and early exposure to megacompanies like Microsoft and Boeing, both in his zip code and in his household. His father is Naveen Jain, the founder and former CEO of InfoSpace, a company that boomed and busted with the dot-com bubble and a flurry of lawsuits. His father went on to co-found Moon Express, a lunar exploration business, and Viome, a nutritional genomics company. Jain’s mother, Anu, is an entrepreneur and a philanthropist focused on women’s rights, science and technology.
His literal DNA, a mix of private and public partnerships, was part of what fueled Jain to attend Wharton’s undergrad program in 2007, where he says he was surprised to find most of his classmates gunning for investment banking gigs rather than starting their own businesses. But then the financial crisis began to dawn. “All of my smartest friends were panicking,” Jain says. But he was seeing an important shift: Big business was being demonized, new startups like Facebook were being celebrated and the recession was highlighting society’s fault lines. It was “a crazy, lucky combination of factors,” he says, which led some of his friends to ask themselves a question: Why don’t we come together and work on companies that can solve problems?
In 2008, Jain and some fellow students launched Kairos as an incubator. To gain support, they tried to organize a meeting of Wharton minds and business leaders aboard the aircraft-carrier-turned-museum Intrepid, in New York City. Jain sent out 50 letters to CEOs, and while walking to class one day, he received a call from Phil Condit’s office. “I could not for the life of me remember who it was at the time,” Jain admits. Condit, it would turn out, was the former CEO of Boeing. He’d soon become a mentor to Jain. “It was a true startup experience,” Jain says.
The incubator would grow into multiple projects, including something called the Kairos 50, an annual batch of early-stage companies that receive seed funding of $50,000 and guidance. In 2012, intrigued by data and frustrated by his inability to manage the contacts in his phone, Jain left Kairos for a few years to launch his own startup, Humin, a platform that helped people manage their contacts. When Tinder bought Humin, Jain became the parent company’s VP of product. (Kairos kept going under the leadership of Jain’s business partner, Alex Fiance.) The experience taught him a lot about how product works, particularly on a large scale, but he says he missed the birthing stage of company development. “The reason you hear me emphasize the pain points of consumers is [because I learned that] just because they use your product, it doesn’t mean they want to use all the features you have,” Jain says.
So in 2017, Jain returned to Kairos full-time as co-CEO with an idea for what is essentially Kairos version 2.0. Rather than just help incubate early-stage companies, Jain wanted to be directly involved in building some of the most promising ones -- using Kairos as a parent company, under which new startups could grow and thrive, and where Jain himself would function as a co-founder of each one.
To begin, the company would do a version of what Kairos did way back at Wharton when just starting out: It would set out to find big, overlooked problems for entrepreneurs to solve.
Image Credit: Courtesy of Kairos
There’s an attitude in Silicon Valley that’s so mocked, it’s become a recurring punch line on HBO’s Silicon Valley: Startups will make the world a better place.Critics say it’s a symptom of self-importance -- that tech founders see their work as critical and infinitely good, regardless of what their actual product is. (Canned air, anyone?)
Jain knows this, and he doesn’t want to fall into the trap. And frankly, he says, there are problems startups just aren’t suited to solve. That’s why, as he built this new version of Kairos, he first needed to build a way to identify the right problems.
Step one: “We do a ton of research,” Jain says. It began with pulling data, having conversations with founders worldwide and sifting through a sea of company proposals. Instead of looking for flashy pitch decks, or just nodding in agreement about the depth of a problem, Jain and his team looked at how or if a startup was the best way to solve what’s going on. Was there potential government red tape, and if so, could it be circumvented? Would people really pay for a solution to the problem? What was the slack being used?
Kairos assembled an advisory board of immense names, which currently includes makeup mogul Bobbi Brown, NFL commissioner Roger Goodell, Dr. Mehmet Oz, former Mexican president Vicente Fox and his wife, Marta and MetLife’s chief marketing officer, Esther Lee, among others. Together, after taking in all the research, the leaders collectively settled on five societal pressure points for Kairos to focus on: student loan debt, cost of rent, parenting, job loss and senior care. (This can change. The process is repeated on a quarterly basis, Jain says, with the notion that it’s deploying capital on a two-year cycle.)
The point of this process is to ultimately narrow down the list of startup ideas Kairos will acquire and develop. There were macro issues with regulation that only governments could really deal with, Jain says. Then there were social issues that were better addressed (or were already being addressed) by nonprofits, NGOs and in some cases giant, social-oriented tech companies like Apple, Amazon and Google. “When we looked at the market, we tried to focus on the communities that were the most squeezed,” Jain says. “Then the question is, Is [the solution] better done by a startup?”
And this is how, for example, a group of mostly childless 20-somethings came to talk a lot about baby food.
In 2017, Kairos made a prelaunch seed investment in a startup called Little Spoon, co-founded by Lisa Barnett, Ben Lewis, Angela Vranich and one mom, Michelle Muller. They’d seen a problem in need of solving: Parents of newborns care about their children’s nutrition but don’t necessarily have the time or, often, the funds to produce high-quality foods catered to the child’s needs. So instead of pureeing organic meals for the critical first 1,000 days of a child’s dietary life, most parents are buying jarred, processed food that’s been sitting on store shelves for months, like outdated fossils from another era -- and often not necessarily the right fit for an individual baby’s diet.
This wasn’t a hard problem to solve, they thought, but it would require new thinking. First came the partnership between two founders with compatible expertise: Barnett understood health and consumer products, having spent six years as an investor and operator, including at Sherpa Foundry, Maveron and Dorm Room Fund, and before that through her experience at Estée Lauder and Boston Consulting. Lewis, meanwhile, knew food distribution, having cofounded the Greek yogurt company The Epic Seed and the food distribution company Green Shoots Distribution.
They saw the nutrition problem as really an issue of access and time. Although many of the ingredients are available at big-city grocery stores, parents in smaller, rural communities may not be able to find the diverse set of organic ingredients for their baby’s specific nutrition needs. And if they do, many still don’t have time to prepare these meals. “This issue was what some mom-preneurs were trying to do in their kitchens,” Barnett says, “but for them to start scaling, it would have been $14 a meal. The average household income is $69,000. We knew we had to solve for that.”
Little Spoon built a platform it calls a Blueprint -- a series of questions parents answer about their baby, from whether they were delivered by C-section to their head circumference, that leads to a personalized nutrition plan for each child. Then, to produce the food, the startup has food producers ship to a production facility in Southern California, where it’s all prepared -- blending, packing and the same cold pressure processing (to help kill off any remaining bacteria) that the expensive juice market has popularized. A proprietary distribution system then enables Little Spoon to mail the customized meals to each family at about $3 per blend -- about the cost of baby food at Whole Foods.
Little Spoon launched in November 2017 and delivers to doors in 48 states. “That supply chain allowed us to not be just a brand for the coastal cities or the 1 percent,” Lewis says. “We were a brand accessible to everyone, everywhere. We knew that to fulfill our mission, we had to have a national footprint on day one.”
Barnett believes that Little Spoon’s outsider thinking -- no founder came from the baby industry -- is part of what enabled its success. “When you’re an expert in something, you may be trained to think in a certain way and not necessarily to ask big questions,” she says. “When you’re young, or new, you may be more inclined to ask, ‘Why do people do things in this way? Why has this been the case for so long?’ ”
As Kairos continues to grow, its startups seem to be developing a pattern. Each searches for smaller vendors that may, on their own, hold part of the solution the startup is trying to solve -- and then it coordinates them all to sing together.
That’s been the case with Cera, for example, which plays in one of business’s least exotic corners: taking care of the elderly. The startup, based in the United Kingdom, was cofounded by Ben Maruthappu, a 30-year-old, Harvard-educated physician who previously worked at the National Health Service. “At NHS, I kept seeing these patients ping-ponging in and out of hospitals due to poor care at home,” Maruthappu says. Then the problem became personal when he tried to find care for a relative. It was expensive, and providers seemed completely uncoordinated. “It was a nightmare. There was this revolving door of caretakers. We never knew who was coming and going.”
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Maruthappu was once a part of the Kairos 50, and he stayed in touch with the company as he continued his work as a doctor. He decided he wanted a way to lower the cost of care while providing more consistent service. It seemed impractical to just launch a traditional elder-care company, but he figured that the solution lay in coordination: Caregivers needed a way to reliably and predictably get around to different families, thereby being available when needed and not just sitting around costing families money while a patient sleeps, and they needed to easily share information with other caregivers. But how? Using Kairos cash, Maruthappu began acquiring many small nursing companies. Then he developed an app for every nurse to coordinate their work through.
The result: For $450 a week, his caregivers are scheduled to visit a patient three times a day, and additional help can be had on demand, 24-7. Caregivers, in turn, can schedule their own hours and do things like fill out reports on their iPhones as they’re commuting home.
Less than two years since its launch, Cera now averages more than 6,000 care visits a week and is growing at a monthly rate of up to 25 percent, Maruthappu says. The company recently closed a $17 million Series A fund-raising round and launched Cera Flex, a program that allows for caregivers to check in on a larger number of patients by visiting during their downtime. Thanks to the efficient use of time, the average family saves $20,000 annually with Cera Flex over traditional home-care nursing, Maruthappu says.
The Kairos startup Rhino approached its problem in a similar way. Rhino was designed to address the problem of security deposits, that extra month’s rent (or so) a renter must pay a landlord as a kind of insurance against damages. Neither side likes this system. It makes renting an apartment unaffordable for many people and may put landlords, who just stick the funds in an escrow account, in a jam if damages from a tenant exceed the amount of their deposit. “It’s one of those remaining inefficiencies from an antiquated system,” Jain says.
To find a solution, Jain collaborated with Paraag Sarva, who was already working on the idea behind Rhino. He’s a New York native with a varied resume -- working at Goldman Sachs, then Mayor Michael Bloomberg’s office, then the online dating startup HowAboutWe.com and finally managing his father’s 20 buildings and 350 multifamily rental units. Could they find a way to replace security deposits?
Sarva’s solution was to replace the deposit with insurance. Rather than pay a large amount up front, a renter would pay into a small monthly plan -- say, $10 or so a month for a $2,000 rent -- which could drop as much as 40 to 50 percent after a year. That insurance would cover the landlord in the event of damage. The tenant never gets the funds back, but in exchange, they never have to fork over a lump of cash upon moving in, and the landlord is spared the paperwork and headaches of escrow.
Kairos, in addition to providing the initial infusion of cash, helped introduce Sarva to the powerful real estate families of New York to pitch his idea. Rhino launched last February and is currently available in 50,000 units. “In hindsight,” Sarva says of his job as Rhino’s CEO, “this job makes way more sense because it takes bits of things I’ve learned at all those places and puts them to my own projects.”
And one of Rhino’s partners is Residenz, the company Mishin spearheaded and now literally lives with. It’s essentially a property management company that approaches landlords with, say, two-bedroom units and makes a case for how they could be divided into units for three tenants. The company re-creates certain spaces to meet city regulations, fully furnished, and puts itself in charge of all roommate vetting, thus solving the dilemma of swapping leases or one ending a lease before another. The extra roommate, in turn, creates additional revenue, making the unit more profitable to the landlord. Residenz takes a cut of the overall rent.
In all cases, it was a matter of giving smart, young entrepreneurs the power to tackle complex problems in new ways. This is Jain’s vision coming to light. Will these startups (ahem) change the world? Maybe. But Jain knows he’s playing a long game.
“Two years can turn into 10 when you’re working on something,” he says. “Companies may not take off too fast, the team may not be working as well as we thought or the consumer pain we thought they were addressing wasn’t big or urgent enough to adopt the product. But I think, for us, it’s about being comfortable with whatever scenario. We’re young. Time is on our side.”