Plug: Jimmy Douglas & His First Investor

Oh, I remember it very vividly. Just came out and said, Hey, I'm ready to write you a term sheet right now. And we were something like two to three weeks out from my son being born. So my response was, let me have this baby and come back to you in 90 days.

Welcome to Leap Forward, a show about founders and the people who believed in them before anyone else. I'm David Rusenko. So a few years ago, I heard a pitch from Jimmy Douglas. He was raising money for a company, a marketplace for electric vehicles, called Plug. And in that meeting, there was something about him that really stuck with me. It was this kind of energy that clearly I wasn't the only one to notice. Every single one of his rounds has been oversubscribed. And Ann Miura-ko, this legendary startup investor, even chased him down to start his own company.

I could tell that there was sort of an entrepreneurial itch that he had. And so I asked him the question: what's keeping you from being a founder?

Where did that drive come from? What was it exactly? It wasn't until this conversation that I realized just how interesting and different his upbringing really was. He didn't go to Stanford. Instead, he got to start selling vacuum cleaners on straight commission at 16 and had to move out on his own in high school. Today on the show, Jimmy's unusual path to becoming a startup founder. And now, Jimmy Douglas.

Can you tell us a little bit more about that?

Yeah, it started back in San Jose, California. I was born in 1984, and my dad was running a company that he had co-founded called Test Point One. And they were a designer and manufacturer of testing equipment for printed circuit boards, which was very quintessential Silicon Valley back during that era. That was my introduction into the world. My third birthday party was at a conference room table. I had my own toys and books and a shelf inside of uh his office. And I recall my first day, uh quote unquote on the job where they brought everybody's kids in and gave them things to do with equipment we otherwise wouldn't be handling. My dad and his partner sold their company when I was six years old. And then at that point, we lived a bit of a semi-retired life for a little while. Uh, my whole family moved to a Christmas tree farm in the middle of nowhere in Oregon.

What was it that made your dad want to move and buy this Christmas tree farm?

I wish I could ask him. I'm not totally sure, but I think they had both romanticized the idea of a little bit more of a simple life where we can be owners of property, have space to do whatever we want. But obviously that comes at the cost of being pretty far away from everything else that's going on.

How was that experience for you moving from San Jose to the Christmas tree farm?

Honestly, really tough. It was a pretty big culture shock. We were living in a town that was so small that when I was old enough to go to high school, I had to go into the next town over, which was a population of 2,000 people. Uh, culturally, it was a really big shift. And it took a really long time for me to find my footing and feel like I had a sense of belonging in that community, well over a decade. Honestly, I never really felt like I fit in there. If I'm being brutally honest, I was bullied pretty mercilessly there. I uh I remember wishing that I could leave. And by the time I turned 16 and finally got a driver's license, I was basically never really at home. And I was making friends in uh cities that were closer to Portland, Oregon, and going out pretty much all the time, including getting a job outside of the family business so that I could start establishing a bit more of a sense of independence from that whole situation.

If you did sometimes feel really lonely, like what were you doing in your free time? What were you interested in at that point as a kid?

Well, uh, the internet came out, and that obviously changed the game for a lot of us. I remember being nine years old when we got a CompuServe account and then eventually an AOL account, and then eventually a dial-up connection through some sort of local provider. And I spent a lot of time on IRC. I did a lot of gaming. I was really big into uh like Quake Two as an example, way back then, early Counter-Strike when it was a Half-Life mod. And I was really involved in my Boy Scout troop too. But then my parents split up when I was 14, which was pretty tough. And my dad and I stayed in the house in Eagle Creek. Tragedy then struck. Uh, my dad unexpectedly had an aortic aneurysm. He died in the ICU uh a few weeks after that. And uh I made the conscious decision to be on my own, which in hindsight was a pretty arrogant move, but it seemed like a better idea for me at the time to hang on to that versus move about 100 miles away where my mom was at the time. I got a job at Sears selling vacuum cleaners on straight commission right after I got my driver's license. And when you're really motivated to make money and you're on a straight commission job with no hourly wage as a 16-year-old, that can take you really far. And then eventually I bounced around a little bit between friends' homes and uh people affiliated with my school before landing myself in an apartment when I was 17. And that's how I finished up high school, but I managed to finish early and actually start college early. And that was around the time I got a job at a Volkswagen dealership in the service department.

Yeah. So tell me about that. So you're on straight commission, you're motivated, you're making your own way. And then how did the job at the Volkswagen dealership come about?

Like many of us that were nerding out on the internet as nine-year-olds, I was uh moonlighting my income through fixing computers for money. And uh, I found myself doing that at this dealership uh through some friendly connections. And then one day when I'm working with the service manager on something, he just looks at me and he says, Do you want a real job? And I went from fixing their computers for pocket cash to uh becoming a lot attendant. And that went on for about six months before they fired the person who I was reporting to and they gave me his job. So shortly before I turned 18, I was more or less supervising a team of technicians, uh, parts people, receptionists, and operating a full business between the hours of 5 p.m. and 1 a.m. five days a week.

How did that feel being that age and then having that responsibility? Like, did it feel like you're doing something that you felt like was right?

Yeah, honestly, I vividly remember the moment that it happened. And the first thought that came to mind was, hey, my pay just doubled. That goes a long way when you're a 17-year-old and you're trying to make it. Uh, obviously, I had plenty of sales experience under my belt, having sold vacuum cleaners uh in exchange for straight up livelihood. And I got to be around cars the whole time. So for me, it felt like uh the universe was putting a gift in my hands that I needed to capitalize on. And truth be told, it was a 30 to 40 hour per week job on nights and weekends. And that platform enabled me to go to school full time and pay for it while I went. I literally don't even know how to take out a student loan because I didn't have to.

So you said during that time, I mean, obviously you were around an environment where there's a lot of cars that were being bought and sold. Did you have a lot of cars around growing up?

Not as many as I think we all would have liked. My dad had a Jaguar XKE. Uh, he had a Corvette that he bought right after he sold the company. When my father and his business partner were entering their semi-retired life, their first entry into it was attempting to build a replica of a 1934 Packard. And then we went through pretty traditional family SUVs that are really cool in retrospect now, like Bronco, Early Tahoe, and all of that. But this dealership, uh, that's what gave me a lot more access to vehicle supply. And one of the ways that manifested was me having owned 30 different cars before I was 30 years old. I could follow this path of rationalizing the idea of flipping in and out of cars like they were outfits. And it helps that it was the state of Oregon where there's no sales tax and therefore no consequences for doing that, which I'm sure is the sign of a diagnosable problem. But it was really fun at the time.

Was this like a big moneymaker buying and selling the cars? Or you just started getting super into, you know, all these different cars?

I did have interest in turning it into a business, but there was too much tension between that and my yearning to have a real technology career. I was pretty hell bent on getting into a high growth software company and just treating my time in automotive as a springboard into becoming more independent.

At what point did you become aware of this startup concept and that it's something you might want to do?

I actually always knew that I wanted to be a founder of a startup myself. It was definitely just being inspired by my father. And I certainly wouldn't have admitted it to him at the time, but I always idealized the concept of having an idea, manifesting it into something that's real, building it into a business, creating jobs, creating generational wealth for our family. It was really the only aspiration I had. So following the graduation of college, I had plenty of ideas that I was ideating on, but I didn't know how to build anything or manifest an idea into something that had been built. So I was really looking to join as early stage of startup as I possibly could.

Yeah. Was there a moment you're like, okay, it's time to move on to the next thing? And what was that next thing?

I found my way into my first software job at a company called Smarsh. There were about 30 people working there at the time. They had just received a round of funding. And uh, over the course of an eight-year run there, we grew to many hundreds of people. So that was the exact type of boot camp into a high growth environment that I was looking for.

And then you moved to Tesla. Tell me about that process.

Yeah, that was wild. Tesla happened a little bit on accident. I took a little bit of time off and I was searching for inspiration, but it wasn't totally clear what I should do. And I ended up speaking with a recruiter merely out of pure curiosity because I saw the company as one that has the intersection between multiple passions of mine. And she sized up my uh experience and put me in touch with a recruiter that was sourcing people for a non-advertised leadership development program. And the idea was that they would bring in people with some relevant experience, rotate them through a few departments, and then if you can make it, you'll land somewhere in an interesting role. Uh, within a couple of weeks, I had an offer letter in my hand and I started in January of 2018. And that was peak madness at Tesla. It was the most shorted company in the world. Elon was literally sleeping on the floor, and we were ripping our hair out to try and figure out how to manufacture 5,000 model threes per week so that we could hit cash flow positivity. And we did everything imaginable to try to make that happen.

What was that like? Like those first couple of days. Do you have any memory of like walking into the building and being like, this is crazy?

Um, I had never worked at a colossal company like that before. And what really struck me when I was put in the first seat on the engineering finance department was just the magnitude of responsibility each person has there, including me, somebody who is brand newly minted at the company in a finance role, having never done a finance job before.

So tell me what you eventually ended up doing at Tesla.

In the end, I was overseeing sales and delivery operations for the core automotive business across North America. And most notably for Plug, the used car remarketing PL, which the financials, it's absolutely in the billions. Whole nother scale.

When was the first moment when you sort of looked at that and thought there might be a company to build here?

I made a couple of observations. And the first observation was that only a small number of dealers participate very meaningfully in the used EV business. Today in the US, uh, just 2% of dealers are selling over 50% of all used EVs. Most dealers are totally opting out. And the light bulb moment came on for me when I realized that it's extremely challenging to try to make this asset fit into what already exists. It just wasn't built for it. And we could move faster if we started from ground zero as if nothing had already been built.

But from there it's still a while until you launch your company, right?

Yeah.

So you wanted us to talk to Anne Miracot because she was the first person who really pushed you to start your own thing. So why don't you introduce Anne? Who is she and how did you meet?

She's a legend. Uh, I'd been following her on Twitter for years. I met her through a mutual friend, and she had put the beacon out to talk to general managers or operators from companies like Tesla and Uber. And I was excited to have an excuse to actually meet her for the first time.

So she kind of described that first conversation to us. And so I want to play that tape and then get your reaction.

Cool.

I realized he wasn't really a fit for the company that I was looking for, but I could tell that there was sort of an entrepreneurial itch that he had. And so I asked him the question, what's keeping you from being a founder? And he responded that he had a bunch of ideas and he wanted to figure out if the idea was big enough. And he was so busy working at Tesla that he didn't prioritize that.

Tell me about that conversation a little bit more from your side. It sounds like that was maybe the spark of thinking, you know, I might have this idea that I'll go start a company.

I think this is probably true for a lot of would-be founders. Uh, sometimes what you need to move through your inertia is seeing that uh somebody who very credibly has backed uh world-class founders believes that you can be one of those people too. And the experience of Anne uh giving me the impression that she had that belief about me definitely pushed me forward into finding the space to prioritize the ideation into what would become a plug.

I had heard this kind of similar refrain from a lot of people who are sort of thinking about doing something in the startup world. And the big question that they always ask is is this actually a venture scale idea? Like how big is this idea? And is it worthy of pursuing? And so one of our principals at the time, Liore, said, I think I can like run a program. And it was, I think, maybe a cohort of five or six individuals. And Jimmy sort of went through that process tinkering on this idea that he had that eventually turns into plug.

And she said, actually, you were the only person out of that program that they ended up investing in.

Oh, funny. I didn't know that.

I asked her why you stood out. And here's one of the examples that she gave.

So we have this concept within Floodgate, which is when you're at the very earliest stages of starting a company, there's moments where you're just gonna change your idea totally. And the best entrepreneurs, what might look like random path, it's a precise way of figuring out what your hypotheses are, testing them. And when we encountered Jimmy in this context of what we started to see, he was very much a truth seeker. He didn't get stuck in a particular form of an idea. He had strong convictions, but they were very loosely held.

I hope some of my team listens to this because they're going to laugh hysterically, because to this day that is a characteristic that we've been carrying around culturally. I build conviction on ideas really quickly, and I'm just as quick to push them aside if my hypothesis has been disproven.

And do you do you have anything else that you look for typically in founders?

So the other thing that we care about is founder market fit. And the depth of founder market fit actually comes from your own personal lived experience. That's something that Jimmy just had in spades. It's partially because he was in this market building out, you know, for Tesla, the used car market from the ground up. And so he knew literally what was required to make this all work. Now, another difference though was that Jimmy was a solo founder, right? And usually we have a little bit of an allergic reaction to the solo founder because there's a few reasons for that. One is will this person actually have a longevity? Will they be able to withstand the loneliness of being an entrepreneur? I actually had a lot of confidence that he had the grit. And so those are sort of concerns that we could overcome, given the fact that he was so outstanding and just sort of thinking through this idea.

Was there any one moment when you kind of helped him see that he might want to start a company or you know, maybe a conversation you had with him around like, hey, I actually think you'd be a good founder?

I think we were telling him that for a while. So part of putting him into this program, we're like, hey, we think you could actually explore something and see if it's big enough. Even after the program, we were saying, hey, we want to keep knowing what you're what you're working on. And then finally, I think um Jimmy went on paternity leave. So his son was born, and it was just sort of this moment where we're like, he is now taking a little bit of time off, and his brain is gonna sort of emerge from this fog, and he's gonna have this baby, and it's gonna feel like a new era for him. And maybe this is the moment.

So walk us through what that moment was like for you.

Oh, I remember it very vividly. She said, Hey, I'm ready to write you a term sheet right now. And uh, we were something like two to three weeks out from my son being born. Uh so my response was, let me have this baby and come back to you in 90 days.

More after the break. And now, back to the episode. So I just want to take a pause here. I mean, you just had your first kid. One of my biggest memories, you know, with both of our kids is just they're so tiny, you know, almost like the size of a burrito. They're, you know, those first couple weeks, they're snuggling on your chest. You have a lot to do, you're not sleeping very well. But, you know, between all the tasks and chores and diaper changes, you know, I remember having a lot of time to think. So talk me through like what's going through your mind at that point.

It became very simple. In the types of careers that we are in that I was in at the time, no matter what, I would be working long hours, I wouldn't be there, at least for the near term, quite as much as I wish I could be. And it dawned on me that there was going to be such a colossal difference between the energy I would bring home as an executive at a mega corporation and the energy I would bring home as somebody that was building something that's ours.

You know, a lot of people, they have their first kid, they seek stability. People might think of this as a bolder but riskier path. Like, how how did you think about that kind of stability risk trade-off, you know, jumping into this?

I thought about it a lot, but ultimately I believe the greatest form of stability is having more control over your own destiny. So that's how I looked at it.

So I want to get into the series A in a second, but um can you just describe sort of where plug is now in terms of, you know, who's using it, what does it do for them, and kind of like a rough sense of scale?

Yeah, absolutely. Uh, plug is a marketplace at its core and it facilitates buying and selling of used electric vehicles. We got off the ground with the thesis that electric vehicles should be represented in a differentiated way because when a combustion vehicle rolls off the line, its capability is static. The equipment on it, unless it's physically modified, is not going to change. Whereas an electric vehicle can change its capability overnight through over-the-air software updates. So factors such as their software-enabled features, their computer hardware, their batteries, their charging network access, all of these factors really matter to buyers and sellers, but this information is not straightforward for anybody to just collect. So developing the expertise around what needs to be represented and how was our initial differentiator. And it worked. We have very clear-cut data that shows that most EVs that are sold on plug are either going to sell faster or for more money, or both. And it's because of the confidence that we've injected into the transaction.

Yeah, I think that the piece that I didn't totally appreciate was how different it is to value an EV versus an internal combustion engine car. Like I hadn't thought to question that at all. But he had seen it viscerally from the fact that the way uh a car actually ages is very different because you don't have as many moving parts. And so mileage is less relevant than the health of your battery. And then these cars, they've become basically, you know, roving batteries on wheels with software. And then the software also can be valued in different ways. And so when the car actually changes to that degree, how do you value it, especially in a used car market, was not something that I had really thought through. And the world hadn't really caught up to that either. And so that was interesting to me.

One of the things that I've admired about you is um you seem to be phenomenal at telling your story and doing a good job with fundraising. You've now been through that a couple of times. So I'd like to kind of touch on each of those. Let's start with this seed round, right? So you have a newborn at home, you're pitching investors. Anne had said, you know, Floodgate was willing to write a check. Um, how was that process?

It was really fortunate. Floodgate led the round. They filled half of it immediately and made a few introductions, including to you. That's right. And I learned really quickly uh about funding aro dynamics that I was naive to before. And we were fortunate to be in the, to be honest, stressful situation of being oversubscribed and not being in a position to bring everybody on board that resonated as an investor. In the end, what would have been a $2.5 million initial close ended at $6.7 million in total seed funding.

And, you know, Jimmy just seems to be a really talented fundraiser.

Yeah.

What do you think about him that, you know, makes him good at fundraising?

He's always thinking through what the objections might be. And so he's practicing constantly the stories, how he's gonna tell that story, how he's gonna respond to an objection in a way that I don't think people want to do. And then he backs it up, I love, with like facts and like graphs and articles. It's not just a story that he's spinning.

So, yeah, let's move on to the series A. So I think, you know, every round of funding is different. And, you know, my experience has been that they just get harder and harder over time. Tell me the story about how your series A came about.

Yeah, they had absolutely nothing in common. I I would say the the smart thing that I did was met investors with introduction calls very early on, effectively right after closing the seed round. By the time I decided to start raising the series A, I had been building relationships and periodically checking in and showcasing our work with over 70 Series A funds. And I was transparent about the fact that I was raising. Uh, I see a lot of founders out there that try to be coy about it and uh put together materials and pretend that they're not. I was very explicit that we were ready to do this now that we had built a repeatable growth model and we were heading directly into 2026, which I believe is the year of the used EV in this country, because of the mountain of lease returns that are about to start coming back from the Inflation Reduction Act's impacts. So it was a seven-week process. I had over 100 meetings, and ultimately we signed with Lightspeed Venture Partners, specifically their fintech team.

You said there's a mountain of used EVs coming down the pike. You know, tell us more about what that impact's going to be.

Yeah. So what happened was in 2023, the Inflation Reduction Act took effect, and one of the many components of that was a tax credit for newly purchased electric vehicles. There was a loophole in the way the law was written that also applied to leasing with uh far fewer restrictions. So what happened was basically overnight, over half of new EVs that were sold in this country were leased generally for 36 month terms. So three years later is now. And there's an estimated 1.1 million EV leases coming back over the next three years. So we're going to be looking at very rapid growth of the market overall. By my projection, it should 8X between now and 2030, at which point it should be worth north of $100 billion nationwide.

Wow. Back to the series A. You know, my experience with a lot of these rounds is that they're they're very manic in a sense. You go out there, you have your first meetings, and it's very exciting. You know, you always think that first meeting goes well. And then you start having some second meetings, and then you start getting the no's. And then that is like the most depressive point. And you keep getting no's before you finally get your first yes. I mean, what you know, talk us through just like what was that process like for you?

No different from what you just described. And in fact, I put together a presentation with a screenshot of every no email that we got. And I went through the painful exercise of reading out loud every single one. But it actually became funny. It was funny because they were basically all the same, how they would articulate the past.

What was that language they'd use?

That the easiest one to make fun of is cheering you from the sidelines, sort of just like on repeat.

Yeah, I mean, that face is so hard, right? I remember when we were raising our Series C and kind of like in that moment where all the no' started coming in. I remember calling up my co-founder just like in this full-blown panic, and he was able to calm me down. You know, you're a solo founder. So I'm really curious to who you call in moments like that. And I actually talked to Ann and she brought this up too. So let me play you one last clip from our conversation.

I always think about the fact that being a founder and being a CEO is such a lonely job. And the stamina required for it is just extraordinary. And so I hope, and this is sort of a hope I have for all the CEOs that we work with, is that they have the right support networks. Sometimes it's found within your team. Like your team is an incredible support network, but sometimes it's like you need other CEOs who understand what it's like to be in that situation and who will tell you that they're not crushing it.

Well, it definitely resonates. Ann's right. It's lonely in that it's just an unrelatable career path. I have several friends that are founders, and several of them that I actually worked with at Tesla, they were some of the best people to confide in uh because they could relate on multiple vectors, uh, having gone through similar fundraising journeys themselves, let alone having lived through uh the environment we were in prior. And I do have a CEO coach as well. And she played an absolutely critical role in helping me keep my head in the game all the way through. I have a few friendships that are very core to my existence. And of course, I have my family.

You know, I think a lot of entrepreneurs are seen as risk takers, but really the main trait is um is actually being an optimist. You know, some people see risk, you see opportunity, right? Like, is that something you would identify with?

Oh, absolutely. As you know, every day when you show up to work, when you're at this stage of company, you're growing, you have real customers, real revenue, real competitive pressure. Something is on fire every single day. And you have to enter it with the mindset that no matter what gets thrown at you, you're going to figure it out. Without that, I don't know how anybody could do this. And so much of what we are building is aspirational. We are trying to rebuild an entire industry with noble cause behind it. It's not just about economic impact, it's about the great importance to myself and the whole team around electrifying transportation. And then while on leave, thinking through what the future would look like if I did do it versus didn't do it, I wanted to lean all the way into the most optimistic outcome possible. And some of that even rooted back to my own origin story of thinking through the office we would have and my son watching it evolve into something small, into something huge.

This podcast is brought to you by Leap Forward Ventures, an investor in early stage startups. If you like the show, the number one thing you'll want to do is sign up to get notified when we release new episodes that includes transcripts and key takeaways from each story. Head to leapforward.fm to sign up. I'd also love to hear your feedback on the episode and who you want to hear from next. Just shoot us a text at 415-915-3050 to get in touch. This episode was produced by Theo Balcomb and Kim Nederveen Peterse. Craig Ellie is our engineer. Reece Laudano made our cover art. Music is by Jim Brunberg and Ben Landsverk of Wonderly. I'm David Rusenko, and this is the Leaf Forward Podcast. See you next episode.