Spotlight: Rob Whalen – Co-Founder & CEO of PTO Exchange
Tell us about your personal journey - what makes Rob, Rob?
Obviously, I am who I am from my experiences. Growing up in a large Irish family with little money and a father who set high expectations around your character and responsibility to others is core to me. I started to work at 11 as a paperboy delivering the “Seattle Times” every day, rain, shine, or snow. I learned early that there was no such thing as a dream job; they all have bad days, but finding fulfillment in your commitment is key.
When I was 16, I was a night janitor for Generra Sportswear, cleaning toilets, mopping, and emptying garbage. I would take the bus to south Seattle after school and work until 9 p.m., putting in 20 hours a week. After doing that job for a year, I knew I would never be homeless because after that experience, any feeling of entitlement was gone, and gratitude for those doing that work was instilled. I still thank the janitors I see when I travel because I respect their commitment to work.
Getting through college took me longer because I had to work as I attended school, never expecting it to be easy or for someone to pay my loans. My mentor was my uncle Dick who dropped out of high school at 16. He was a serial entrepreneur and worked for Sam Stroum at Almac/Stroum Electronics in the early days of technology. My uncle went on and founded a number of companies, like Edmark, which he sold to IBM. He was the person that advised me after graduating from Seattle University to go into technology instead of going to one of the Big 8 accounting firms.
How did you come to found PTO Exchange?
PTO Exchange was founded at my dinner table. I had the idea to invite other entrepreneurs to talk about big ideas. I would buy the steak and wine, and we would all share ideas. Two of us had just left Cisco Systems and received a large check for our accrued PTO. We started talking about what we could have done with it when we were there and how the dollars would have been more impactful to our lives if we could have accessed those dollars during our employment instead. I started to evaluate the total addressable market (TAM) and then felt we had a very large idea. If we could get companies to allow employees to self-direct their unused PTO's value, the dollars we could move could be billions. It was not an easy decision to start the company because my wife never wanted me to do it. She would have preferred that I worked for a big company as a cog. But the idea kept me awake at night; I just kept thinking that if I did not do this, somebody else would, and then I would regret it, and that is not how I wanted to live. So, on my father’s birthday in 2013, I founded the company with four others at the dinner.
What was the genesis or real-world problem that PTO Exchange looks to solve?
The problem we found was two-sided. On one side, the average employee would accrue three weeks of PTO but would not use one week. When we initially started to do the math, the dollars behind those accrued hours added up to an $84 billion dollar problem, and this was in 2013. Today, there is roughly $144 billion that goes unused every year.
On the other hand, companies were expensing this accrual and holding it as a liability on their balance sheet. This liability would grow year over year as salaries and compensation grew. We also learned through the process that accrued PTO was a unique benefit from a regulation standpoint, and the employee would need to take a haircut on the value or have some limitation put within the exchange platform. This was when we realized we could provide value to the employee and the employer. The employees could access value, and the finance team could remove a liability at a discount. And our revenue would be the difference.
How have you found the startup journey?
The journey of a startup is hard. Entrepreneurship is not sexy or easy. The newspapers always make it look like it is easy because someone raised millions of dollars or they became a unicorn overnight. I guarantee there is so much more to the story because you never hear about the challenges the entrepreneur and their team face daily. Problems from not listening to the customer voice and product issues to delivering the value proposition, regulation, and employee issues.
I did not go into this with a preconceived vision or expectation of gold at the end of the rainbow without sacrifice. Getting intimate with the simple word “no” is an education; "No” means something different for everyone. Every day the journey is enjoyable; watching the idea come to life and hundreds of thousands of employees use and receive value from the platform you and your team developed gives me energy.
What keeps you up at night?
Four things give me “sleepless in Seattle” moments: employees, customers, capital, and competition, in that order.
Employees are the number one thing that keeps me up. If my employees are not happy and growing, we won’t be able to build products, acquire customers, and support and grow the business. Without them, we would not be able to achieve our goals.
Customers also make for a no-shuteye evening. Since we are still in the early days, focusing on customers and our users and ensuring they get value from our platform is critical. Innovating our platform to increase engagement is how we generate more revenue.
Investors or capital keep me up because we need to manage those resources in a way that will get a return for those investors. Capital is the founder's shares that are being sold to achieve the vision. You want to ensure every dollar is used to move the company forward to return the capital to those who believe in you.
The last is competition, and they remind me that there is a game to be won and the only winner is the one with the customers.
What has it been like working with WestRiver Group?
Anthony Bontrager and the team at WestRiver Group went alone and took a risk on our idea and the team. And if you know anything about venture investing, it is not easy to go it alone, especially when all your venture friends say no. When creating a category from zero to one, you need to experiment with different ideas for growth. By working closely with the WRG team, we figured out the recipe necessary to start scaling the business and getting adoption. WRG and the team have always been there to support, make introductions, and help with thinking through difficult or challenging problems. As an entrepreneur, you need to follow what you hear from the customers, even though it might mean changing the business model. During these unforeseen inflection points, WRG listened and trusted in us. Those days were very hard and very draining, but those moments are where you see the value of your board, investors, and team, and in those moments is where WRG made an impact.
What does the future hold for Rob and PTO Exchange?
My future and the future of the company are very bright. With the ever-changing work environment and the new paradigms of technology like AI and Web3, we see a lot of innovation that will continue to drive value for our customers, employees, and shareholders.
