Interview With ThePillowPocket Founder Chad Riddersen, Pt. 1

Good morning monkeys,

Hope you all had a fantastic holiday weekend, full of face-stuffing dinners, football, brews, and friends.

Last week I had the pleasure of speaking with Chad Riddersen, a former Investment Banking Analyst turned entrepreneur with a unique story and a true drive and passion for business. Chad worked as a Big 4 Audit Associate before making the jump to Investment Banking, and has been working on two ventures since completing his Analyst stint -- The Pillow Pocket and a web-based film.

Part 1 of this interview will focus on Chad's experiences in Big 4, banking, and why he decided to take the entrepreneurial route, while Part 2 will focus on his ventures and what he has learned so far as an entrepreneur.

Q: So why don't you take me through how you got into banking step-by-step -- I know you were at USC, did audit for a little bit, then switched over to banking -- how did that happen?

A: I graduated early from USC, and decided that a little later in the game. It was in part a financially-driven decision, but also partly just because I could. I was in the accounting program at USC, which was a nice tangible skill-set to pick up, and I was debating whether to go for a CPA, which for me basically acted as my "fourth year" of school. The CPA was also really a sign of the times -- in '08 when I decided to graduate early, there weren't as many jobs in banking, not to mention the fact that while USC is a competitive school in terms of recruiting, it's not really a core target for most banks.

The transition to Deloitte was a pretty easy one, so I did that for a year and knocked out the CPA tests over the summer. Then I contacted a friend who was at Revolution Partners (now Raymond James) over in San Francisco, and I was at the right place at the right time. I would say now, if you've done Big 4, you have to really "explain away" the audit experience...it's obviously easier to try to go banking right out of undergraduate, because the "well, why did you do audit first?" question is always looming. 2008 was a different era for banking in a lot of ways, and it was more common to grab people from audit maybe in years following, but now I would recommend doing everything possible to get into banking straight out of undergrad.

Q: Fair point, having transitioned from a completely unrelated field to banking, I can certainly say that it would have all been easier if I had just done it straight out of undergrad. But since you went through the recruitment process for both Big 4 and IB, how would you say they are different? Everyone likes to say IB recruitment is really hard and really competitive -- how about Big 4?

A: Well, Big 4 recruitment is very "soft" compared to banking. It is almost entirely focused on soft skills, whereas banking focuses more on technical knowledge. I was off-cycle when it came to banking, however, so keep in mind that my interview process was a bit different from the standard "superday" recruitment procedures. But if you're transitioning to banking from something else, off-cycle is basically the only way to do it, which definitely affects the interview process -- sometimes they need someone immediately at a boutique, whereas a bulge-bracket firm rarely has that need.

Q: So for Big 4, they don't really ask you technical questions about accounting during the process?

A: No, not really, though I mostly skipped that process because I interned there...but I don't really know anyone who worked in audit that got grilled heavily, or at all, during the interview process.

Q: So you were at Revolution Partners (now Raymond James), then switched over to Montgomery & Co. in Los Angeles, focusing on tech. Were you also focused on tech at Revolution?

A: Yeah, it was tech, but there was also a semiconductor team that I worked with a little bit, which was really tricky without a computer science or electrical engineering background, so it was tough to see much opportunity for advancement coming from an accounting background. Montgomery, on the other hand, had a media group and a tech group -- the media group does a lot of internet deals, and the management team isn't the typical investment banking MD team that you'd expect to see. They have a lot of diverse backgrounds and are a very solid team in e-commerce and advertising, and because there aren't a lot of banks in LA right now, Montgomery is able to fill that void when interesting new companies pop up in the area.

Q: Okay good deal, so let's transition a little bit to your experience with the banking lifestyle. 100 hours a week -- is it a myth, is it fact?

A: Nope, not a myth. At first it was a badge of honor...a lot of people even seek out the heavy work weeks at the beginning. Banking is a very physical experience as well as psychological, there are many times where you are literally fighting and rationing out sleep. For certain tasks, it becomes very difficult to do them when pulling all-nighters, and you just have to sleep to get your head straight. The key is to sleep so that you wake up when the sun comes up -- while this sounds obvious, a lot of people will procrastinate and wake up before sunrise, and that'll really screw up your body clock.

Q: So if you need to get an hour of sleep, are you doing that in the office, or did you have the luxury of living close by and being able to run home to snooze and grab a shower?

A: I lived about 2 blocks away, which was great, but anything under an hour, I'd stay in the office, but that only happened about a dozen times in 2 years. But ultimately there were a lot of really interesting transactions that I really enjoyed, so it wasn't too hard to put up with the hours and push your body to the limit.

Q: So the 2 year Analyst stint is widely-accepted, and most do PE afterwards, and that's something you didn't seem to want to do after banking. I guess the big three exit opportunities would be VC, Entrepreneurship, and PE -- talk me through how you started making the exit decisions.

A: I would say that entrepreneurship became a reality for me once I started working with many entrepreneurs at a boutique banking firm. VC, for example, is tough to break into, but I would say that a lot of boutiques prepare you well for transitioning to VC. Mainly, however, working at a boutique means that you're not working with huge F100 companies in most cases, but with companies where one guy is often the CEO, COO, and CFO. That means you get the chance to wrap your head around the entrepreneurial process a bit better, and this is a lot more common in boutique transactions.

Personally speaking, being a jack-of-all-trades and being able to accept failure are things that are both important to me, and you really only get the chance to do both as an entrepreneur.

Q: Okay, so you're in banking for 2-3 years, you've got some money saved up, the 2-3 years are about to expire on you, and there are some opportunities to move to the buy-side OR to start your own thing...that's a tough decision to make, right? If you do become an entrepreneur, there's not that safety net of continued earnings, you're burning into your savings, etc. Walk me through what's going on in your mind when you're making that decision about "the next step" as it were.

A: Well, think about it this way: as I get older, I will have more dependents, which changes my risk profile significantly. I felt that my skill-set was there, and transferring 100 hours of doing banking into 100 hours of working on a venture doesn't seem that daunting after actually being in banking...and if you think about it, if you spent 100 hours a week doing any one thing, you would get REALLY good at it. There aren't many people out there who can dedicate 100 hours per week to something, whether you are doing that to play piano, or to start your own company. For me, the timing was right, and I learned that I had to embrace the risk and in some ways even ignore it a little bit if I wanted to move forward.

That's all I've got for now folks, stay tuned next Monday for Part 2 of this interview, focusing more on Chad's ventures and what he's learned so far as an entrepreneur. Thanks to Chad for being available to speak with us!

Comments (32)

 
Nov 26, 2012 - 11:10am

If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 12:34pm

criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Chad, if you don't mind me asking, are you making (have you made) any money from this idea? How much have you put in and what are your sales figures?

Not trying to sound rude, but your product seems overly simplistic and entirely unnecessary. A pillowcase with a sewn in pocket for $15.00 (on sale from $20.00)? How is this at all different from simply placing your phone in your pillowcase or spending less than a dollar on a cheap sewing kit and throwaway piece of fabric and creating your own pocket in the pillowcase?

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.
 
Nov 26, 2012 - 1:23pm

Nefarious-:
criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Chad, if you don't mind me asking, are you making (have you made) any money from this idea? How much have you put in and what are your sales figures?

Not trying to sound rude, but your product seems overly simplistic and entirely unnecessary. A pillowcase with a sewn in pocket for $15.00 (on sale from $20.00)? How is this at all different from simply placing your phone in your pillowcase or spending less than a dollar on a cheap sewing kit and throwaway piece of fabric and creating your own pocket in the pillowcase?

Nefarious - you make a valid point, how big is the market for a pillow case with a pocket for your phone? (this will be a long-winded answer, btw).

The quick answer, not very big.

However, technology enables awesome things.

1) We launched the PillowPocket very fast (our VentureBeat explains that further: http://bit.ly/ONaE6m)
2) It only cost us a few thousand bucks (you should read Lean Startup by Eric Ries)
3) We can affordably reach the right audience at the right time (bankers, lawyers, entrepreneurs, hackers and people that use sleep apps like SleepCycle, Sigmund, etc.) [props to WSO for creating a dedicated banker community]

To answer your first question, yes, we have made money (admittedly, not a lot, but we are profitable... and have some tricks up our sleeves).

The best way to make money is to make sure you are solving a problem. Here are a few examples...

1) An iBanking analyst that sleeps 4 hours a night will do anything to wake up to his / her alarm in the morning... and $15 is a small price to pay if it means getting a top-bucket bonus
2) A sleep app user that has trouble getting their phone accelerometer to capture data accurately
3) A startup tech guy that needs to be alerted when their system goes down in the middle of the night

My last (and most important point) is about being curious and not being afraid to fail.

I launched the PillowPocket with a buddy b/c we wanted to learn more about crowdfunding (we got denied by Kickstarter so we used Indiegogo). We had fun, sold some product and learned a lot. It was never intended to be a business but...

During the crowdfunding campaign people started talking about what else you could put in the PillowPocket...

1) Condoms (you can expect to see our launch video on one of the major online comedy destination sites in the near future...)
2) Aroma therapy packets (see below...)

Sleep is a huge problem for people (we surveyed 1,000... 1 in 4 said they were willing to try aroma therapy... we were going to pursue it as a business if it was better than 1 in 20).

We have a simple solution. Rather then putting a phone in your PillowPocket you are putting an aroma packet (essentially, a tea bag that smells like lavender, eucalyptus, etc.). We are launching an infomercial in January (we are initially targeting sleepless midwest housewives).

Yes, this was a long-winded response. But I really like the WSO community and have a lot of respect for the audience. There will be another part to the interview that explains how a simple project can turn into a business...

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 12:44pm

criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Interesting.... So I am also curious about how much you have sold, what you've put in (I know it's rude to ask). Understand that you may want to keep that private.

Also, not sure if the pillow has the capability to charge your phone? It is a must-have for me... Couldn't find anything about that on your website about it. If not, I'm not sure most people's cell phone cords would extend up onto the bed and into a pillow. And if so, what is the risk of someone strangling themselves or starting a fire from a live wire going into the pillow and burning one's head. What are your thoughts here? Must have considered this point, as I would be willing to bet that over 98% of people charge their phones overnight.

 
Nov 26, 2012 - 1:28pm

iRX:
criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Interesting.... So I am also curious about how much you have sold, what you've put in (I know it's rude to ask). Understand that you may want to keep that private.

Also, not sure if the pillow has the capability to charge your phone? It is a must-have for me... Couldn't find anything about that on your website about it. If not, I'm not sure most people's cell phone cords would extend up onto the bed and into a pillow. And if so, what is the risk of someone strangling themselves or starting a fire from a live wire going into the pillow and burning one's head. What are your thoughts here? Must have considered this point, as I would be willing to bet that over 98% of people charge their phones overnight.

Charging cord length can be an issue. I purchased a 6-foot cable to accommodate the extra distance (altho, many people have their phone an arms-reach away so the extra distance isn't too far).

The bottom of the pocket has a little hole for the charging cord to sneak through. The pocket itself should fit even the largest smartphones.

Check out my recent response to Nefarious' comment about the economics of the business itself.

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 3:32pm

iRX:
criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Interesting.... So I am also curious about how much you have sold, what you've put in (I know it's rude to ask). Understand that you may want to keep that private.

Also, not sure if the pillow has the capability to charge your phone? It is a must-have for me... Couldn't find anything about that on your website about it. If not, I'm not sure most people's cell phone cords would extend up onto the bed and into a pillow. And if so, what is the risk of someone strangling themselves or starting a fire from a live wire going into the pillow and burning one's head. What are your thoughts here? Must have considered this point, as I would be willing to bet that over 98% of people charge their phones overnight.

The charger bit was the first thing that came to my mind as well.

I would pay the $20 for it if it included the wireless charging system (removable for washing) and I would pay $30 if it included the wireless charging adapter for my device. But $15 for a pillowcase? No thanks! I just put mine under the pillow if I need it to be in my ear. Also, there does not appear to be any means of securing the phone to the pillowcase, so there's a good chance it could fall out and onto the floor in the middle of the night.

Someone should pay me consulting fees!

-No comment-
 
Nov 26, 2012 - 2:01pm

criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

15% WSO discount: "WSO15"

Cheers,
Chad

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 12:42pm

I looked at the product page.

No offense, but...

LAWL!

Hope this company is fake and is just a money-laundering scheme for some crazy international business. That would be cool.

-No comment-
 
Nov 26, 2012 - 1:52pm

donkeymoney:
I looked at the product page.

No offense, but...

LAWL!

Hope this company is fake and is just a money-laundering scheme for some crazy international business. That would be cool.

Certain WSO comments reminded me of another important point about why ibanking prepares you for entrepreneurship (I would argue, ibankers make the best entrepreneurs).

Not only do you develop all the professional skills, you get a (unique) opportunity to digest a lot of criticism without letting it completely derail you.

There is a lot of recent press out there about the psychology of entrepreneurship. The simple point is that you have to deal with a lot of no's before you start hearing yes.

Cheers,
Chad

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 1:31pm

My follow-up comment would be that it's easy for anyone, especially those who are browsing WSO, to forget that there is an enormous spectrum of tastes out there. Just because you don't love the idea, it doesn't mean that there isn't an ENORMOUS market for it. i.e.) his idea for aromatherapy in the pillow. Would I use that? No. But, I imagine there are a ton of people that would.

Best of luck.

 
Nov 26, 2012 - 2:00pm

seems like someone could easily setup a copycat operation overnight and steal a % of your sales. What are the barriers to entry? What's the outlook on existing and future competition?

WSO's COO (Chief Operating Orangutan) | My Linkedin

 
Nov 26, 2012 - 2:13pm

AndyLouis:
seems like someone could easily setup a copycat operation overnight and steal a % of your sales. What are the barriers to entry? What's the outlook on existing and future competition?

Right - I doubt this idea is patented

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.
 
Nov 26, 2012 - 2:54pm

Nefarious-:
AndyLouis:
seems like someone could easily setup a copycat operation overnight and steal a % of your sales. What are the barriers to entry? What's the outlook on existing and future competition?

Right - I doubt this idea is patented

Regarding competition...

Although there is some truth that "imitation is the best form of flattery" I won't let that be my full response.

Protecting our IP - "PillowPocket" is filed for a trademark (as well as some stuff to do w/ the condom and aroma therapy applications). We are working with a lawyer on a potential design patent (believe it or not, there is a condom pocket design patent that exists, haha).

First to Market - We are the only ones with this product currently (granted, it is easy to replicate). If someone copies us, it gives us a reason to stop bootstrapping and go out and raise money (as it validates the market). We will also do better in any organic search online (at least initially).

Laser Focus - If the competitor was another startup, I would take comfort in being months ahead of them. If the competitor was a large company, I would take comfort in being able to make decisions quickly. You should check out the book The Innovator's Dilemma by Clayton Christensen regarding the latter point.

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 3:04pm

beezle:
Why can't you just put the phone, condoms, aromatherapy packets inside your pillowcase?

You can, but why risk damaging any of these items when you don't really have to? A pillowcase isn't designed to safely store items like phones or aromatherapy packets -- having a dedicated area for such items, an area that is likely not going to be exposed to changing pressures from the sleeper's head, could definitely be useful. If I carry a $600 phone and must sleep with it, I can probably stand to pay $15 to have a "pouch" that will store it safely and allow for charging.

 
Nov 26, 2012 - 3:05pm

beezle:
Why can't you just put the phone, condoms, aromatherapy packets inside your pillowcase?

I've tried putting my phone directly into a pillow case on several occasions (without an actual pocket), and it didn't work out as I had hoped. The phone kept sliding toward the middle of the pillow case, making it uncomfortable to sleep, and hard to find (and on another occasion, it fell out entirely). Looking at the website, it seems that the pillow "pocket" is placed on the edge of the pillow which would keep it held in place and within arms reach.

 
Nov 26, 2012 - 3:13pm

criddersen:
If any Monkeys are interested in a PillowPocket let me know and I will hook you up with a WSO discount.

(a PillowPocket is a pillow case with a pocket for your phone... and it may save your bonus one day when it wakes you up to a 3am to do-or-die e-mail from your MD...)

Cheers,
Chad

Thanks for the discount code. Just purchased & interested to try out such a unique product made specifically for bankers like me. And it's cheap! $15 to save me from MD emails? heck yea

Good luck.

 
Nov 26, 2012 - 3:35pm

What a great interview and conversation. Loving all your responses Chad Riddersen, very insightful and great to see you take a leap. The point I really appreciate: working at anything over a 100 hours a week will make you very good at it. Completely agree with this, although it truly does require strong motivation.

My question to you is how does the learning differ between your stint in IB and your venture? Does the lack of "mentors" affect the speed at which you are learning?

The error of confirmation: we confirm our knowledge and scorn our ignorance.
 
Nov 26, 2012 - 3:35pm

What a great interview and conversation. Loving all your responses Chad Riddersen, very insightful and great to see you take a leap. The point I really appreciate: working at anything over a 100 hours a week will make you very good at it. Completely agree with this, although it truly does require strong motivation.

My question to you is how does the learning differ between your stint in IB and your venture? Does the lack of "mentors" affect the speed at which you are learning?

The error of confirmation: we confirm our knowledge and scorn our ignorance.
 
Nov 26, 2012 - 3:54pm

Yekrut:
What a great interview and conversation. Loving all your responses Chad Riddersen, very insightful and great to see you take a leap. The point I really appreciate: working at anything over a 100 hours a week will make you very good at it. Completely agree with this, although it truly does require strong motivation.

My question to you is how does the learning differ between your stint in IB and your venture? Does the lack of "mentors" affect the speed at which you are learning?

You raise an interesting question, I would argue there is actually a lack of banking "mentors" more than there is a lack of entrepreneurial "mentors".

WSO has a great tech platform that solves the mentorship for bankers (you clearly are leveraging it).

On the entrepreneurial front, I would recommend a few things:
- Follow Mark Suster's blog and watch his videos (http://thisweekin.com/thisweekin-venture-capital/)
- Follow Fred Wilson's blog and watch what he links out to (http://www.avc.com/)
- Check out Mixergy (www.mixergy.com)

I also use GrubWithUs and Meetup to connect with people in a physical setting in my area.

Those resources will connect you to a variety of potential mentors regardless of whether you are in a startup hub or not.

Cheers,
Chad

Bank like a Boss. Buy a PillowPocket.
 
Nov 26, 2012 - 4:49pm

criddersen:

You raise an interesting question, I would argue there is actually a lack of banking "mentors" more than there is a lack of entrepreneurial "mentors".

WSO has a great tech platform that solves the mentorship for bankers (you clearly are leveraging it).

On the entrepreneurial front, I would recommend a few things:
- Follow Mark Suster's blog and watch his videos (http://thisweekin.com/thisweekin-venture-capital/)
- Follow Fred Wilson's blog and watch what he links out to (http://www.avc.com/)
- Check out Mixergy (www.mixergy.com)

I also use GrubWithUs and Meetup to connect with people in a physical setting in my area.

Those resources will connect you to a variety of potential mentors regardless of whether you are in a startup hub or not.

Cheers,
Chad

Thanks for the reply!

The error of confirmation: we confirm our knowledge and scorn our ignorance.
 
Nov 26, 2012 - 3:50pm

Call me old fashioned, but I manage to wake up with a standard alarm clock. I put my phone on vibrate at night. I hate to be waked up at night by someone with a wrong number. Or the sound my phone makes when a new email arrives. It would be cool to see you at Shark Tank Chad. I can only imagine their faces when you present this product.

 
Nov 26, 2012 - 3:56pm

andres17:
Call me old fashioned, but I manage to wake up with a standard alarm clock. I put my phone on vibrate at night. I hate to be waked up at night by someone with a wrong number. Or the sound my phone makes when a new email arrives. It would be cool to see you at Shark Tank Chad. I can only imagine their faces when you present this product.

Haha, the sharks would rip me apart for the phone use-case. I am thinking of pursuing it as it relates to the aroma therapy use case. Do you know anyone that has been on show by chance?

Bank like a Boss. Buy a PillowPocket.
 
Nov 27, 2012 - 3:04am

criddersen:
andres17:
Call me old fashioned, but I manage to wake up with a standard alarm clock. I put my phone on vibrate at night. I hate to be waked up at night by someone with a wrong number. Or the sound my phone makes when a new email arrives. It would be cool to see you at Shark Tank Chad. I can only imagine their faces when you present this product.

Haha, the sharks would rip me apart for the phone use-case. I am thinking of pursuing it as it relates to the aroma therapy use case. Do you know anyone that has been on show by chance?

Sorry bro, I just watch the show from time to time. But I would love to see your idea in the show. I think there's a big chance you can get a spot. Good luck with your project.

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