My name is Martin and I am the CEO & Founder of UpSteam. That fancy title has been with me for 3 years but before that I was just a simple guy born in Tartu, grew up in an underprivileged family but was fortunate enough to prioritise school and learning over beer and partying. I am going to tell you the story of how we built UpSteam to where it is today. Publicly it may look all sunshines and rainbows but the kitchen part of it is often a lot different. It’s been a rough journey but today we are a platform connecting busy car owners with mobile car washers. For those who are not familiar with UpSteam then I would like to start off with a quick introduction:
When we first founded this business we thought we were just saving time and the planet. Our customers don’t have to drive, wait in a line or wait for the service to be completed. On top of that we are doing all that with just ~1 litre of water per car. Washing people’s cars where they are parked can look like a comfort-service but in time we’ve learned that it’s a lot more than that.
I’m pretty sure all founders have a “portfolio” of 1000+ cars washed individually and it’s just mesmerising to see your customer walk out of their office door and you see their face light up with surprise when they see their car. For businesses time means money so we’re cutting out the salary, fuel and amortisation costs that follow with the washing of your fleet. For our B2B customers it just makes more sense to focus on their core-business rather than sending their employees to a car wash.
More into the industry, we now realise that we are improving the unit economics of car washing drastically. Since we don’t have unnecessary operational costs like rent, heating and payroll for down-time we are able to provide this service on a competitive pricing level and pay more to our washers while keeping a sustainable cut for the company.
So how did we end up here?
THINK OF PROBLEMS, NOT IDEAS
Finding a business idea may seem hard but if you really look at it then it’s quite simple. All you have to do is:
I remember having this old and rusty Mazda 323F for my first car. When I was a student I didn't have a lot of money so I washed my car every 3-4 months or so. I mostly used those coin operated pressure washers but it never did the job I wanted. Having a car as a student is cool. Having a dirty car as a student - not so much. You can’t go “rollin the streets with your pals" if your car looks like a swamp.
So every year one time I did a birthday gift to my car. I took it to a professional car wash. So I went online, booked the cheapest voucher with the biggest list of services and for like 20-30€ I was promised a dream-wash. Most of the car wash places I went to were hidden somewhere deep in between the factory buildings. Sometimes even the final 100 metres of road to the car wash was a dirt road so after the wash I had to drive away like 1km/h so I wouldn't ruin my tire shine. But any car wash I went to, the most important thing was that the same sentence they tell you: “So come back in 3 or 4 hours to pick up your car.” Now, I’m in the middle of nowhere and I have to find myself something to pass the time.
I found the idea for UpSteam by selling educational books door to door in America with the Southwestern Advantage company. It’s the toughest internship on the planet a young inexperienced guy can do. Aside from the money I made and the powerful learning experience I got from there, I also found UpSteam.
It was just another day knocking on doors, the temperature was around +40C, I was melting like a snowman and right after I knocked on a door to sell kids books I saw a van drive up to the neighbours house. A guy came out and started cleaning the neighbours car with a pressure washer. And I thought to myself: “Why on earth - should anyone want to clean their car if the car wash can COME TO YOU?”.
It was the end of my first year in business school so I took that idea to a class room. We copied the hell out of it. I wrote all my business plans and school work on “Mobile car washing”. But very soon we ended up with a question: “So where does the dirty water go?” and again - we were stuck. The environmental regulations in the US are totally different from the EU. In driving school they teach us that you cannot wash a car on the streets.
So we had to find another technological solution for cleaning cars. One day I found steam (thank you Google) and hence we named our non-existing company “SteamWash”. It used about 30x less water and the temperature of the steam replaced harmful chemicals. My school work went so deep until I thought I had everything figured out. We had a working business idea that solved the frustration of taking your car to a car wash.
The only thing missing was the team.
BUILD A TEAM WITH THE SAME DREAM
I don't like to half-ass two things at the same time. When I finally picked up the courage and knew that I was going to build UpSteam I knew I wanted to commit to just this one thing. For that to happen I needed an A+ team. With no money to hire A+ I needed to sell the dream. As an ambitious but young guy without a huge network, that small devil on my shoulder whispered “Go to your friends or fellow students” but I didn’t want to pick the “low-hanging fruits”. I wanted to have the best people I could get.
So the most hard-core guy I knew very well at that time was Valjo Kütt. He was a role-model for me when I was selling books. He was a hard-working guy breaking sales records always with this funny smile on his face. He knew everybody and everybody knew him. Right after I sold books with him in the same team during my summer, I took my school presentation of SteamWash and asked to have a meeting with him.
It was a crappy school-presentation showing how we can make €1M in the first year, €10M next and so on. But pretty much the same as with VC’s - I guess he was not looking at the numbers as much as he was looking at the opportunity, the dream and my personal commitment to it. I guess that’s what "sold him". So after my first presentation I asked him: “Valjo, would you want to join me in doing a car washing startup?”. With a hippie-smile on his face, he said: “Sure, man! Let’s do it!’’.
None of us had any experience in car washing, building wash vans or any technical parts that come with it. And a couple weeks later I get a call from Aleksis Anijärv. He was pissed at me and said: “Dude, why did you not tell me that you’re building a business!?”. I was surprised and said: “Well, I couldn’t tell you because you’re still planning on selling books. I need full commitment.”. Nonetheless we had a meeting with him and it turned out he was studying engineering. As we decided that we will not duplicate power-skills in our team, we saw that he could fit the last piece of the puzzle we needed in our founding team. Also, Aleksis was this analytical guy and a straight-forward thinker. He was doing awesome at selling books and also building teams for it. So we figured out the book selling thing and that’s how our dream-team was assembled.
With all the exciting new things going on we forgot that none of us actually knew how to wash cars. So we tried it out on our own cars and it turned out that it’s not some kind of miracle steam that cleans the car. You really need to know what you’re doing. So we practiced a few days, bought some random supplies we got from the car accessories store and started calling our friends saying: “Hey, would you like to try out our service?”. One thing we never did was a free job. So in the same month where we founded the company, built the prototype, learned very early basics of car washing, we also made our first revenue of 20€! The next month we grew 700% (160€). The month after that +900% growth with ~1600€ revenue. We were on fire! :)
LEARNING LEADS TO EARNING
And then again, we got stuck. Until the end of the year we bounced around between 2000€ and 4000€. We tried selling more, creating social media presence and everything we could to improve our sales. Nothing worked. But the one thing we did well was that we gathered data. We made reports, wrote down our progress and learnings, built complicated spreadsheets, gathered our user data, made surveys, went to trainings and so on. We really wanted to crack the code for car washing.
Then one day I had a call from a new customer - “Can you wash my Tesla today?”. I was shocked - I was responsible for washing that day and I thought to myself: “I’m not really sure if I can clean that car without scratching it. And if I do - with the revenue we have, we will have to work for 2 years for free to fix that paint. That will ruin our business!”.
So I arrived at the seaport parking lot and started cleaning that car as carefully as I could. Once I finished, the owner came out - a very friendly guy and he was actually surprised by how clean it got. It was Rain Rannu - the founder of Fortumo and a very well-known business angel. And he asked: “Are you guys looking for investments?”. I really had no clue what that meant back then but I said: “Yeah, sure!” and he gave me his card. Once we had our first meeting with him, I was surprised by how many of his questions we could already answer simply because we collected data from day 1. With a monthly revenue of a couple of thousand he invested €25K to help us build the next wash unit. He also gave us the idea to start building subscription-model into our business.
We had our doubts that when our competitors or “devilish people” see us there, they will just rip off our idea. But let’s face it - we had nothing to lose. At that point we were approaching 6-7K revenue but we knew that we can’t grow fast being a secret startup. We knew that even if our idea is the best in the world - if nobody knows about us then all that potential goes to waste. So we let the “TV-people” of Estonia be the judge of our business.
The critique we got from the judges played a critical role in our growth. We were put into a stress-situation where we had to find answers to hundreds of critical business questions and answer them in front of the camera. We needed to learn about our business, customers, figure out an expansion model and eliminate our growth-limiting factors. We stayed up long nights in our garage analysing our business and practicing our pitches. Finally, we felt like we were getting close to a “Doctorates degree in UpSteam”. This helped us to finish as a TOP 3 finalist among 300+ startups. Most importantly, I felt that all this struggle brought our founding team more together and helped us find a shared vision.
EMBRACE THE CHANGE
We knew what we had to do but the 3000€ prize money wasn’t going to cut it. So we went straight to fundraising. At that point we had about €14K revenue and an MRR of €8K. We finished raising half a million via 2 VS’s (Superangel & Spring Capital) and crowdfunding (Funderbeam). One of our investment promises were “To build a scalable wash product”. We had made many major adjustments in our business before but none that would qualify as close to pivoting.
We started off as the “Wash-van guys” and we spent a lot of time and money on building the best wash vans with the most advanced washing technology. The sizes and the construction costs of those vans went up and up. We knew it would become tough to scale a 40 000€ washing van.
As we started seeing more businesses like Bolt & Wolt doing food deliveries using shared economy models to scale fast, we asked ourselves: “What if we tried to fit our car washing into that bag?” The biggest problem was that our steam washer weights 200kg and you need to carry an additional 200 litres of water for the whole day. As we always spend a lot of time researching the car washing industry, we found a technology that is not so popular yet but is being used in many countries already. The best part is that it uses approximately 1 litre of water to clean a car and with zero electronics needed.
Since we’ve spent 2,5 years building the most advanced car washing technology there is, it sounded too good to be true. We just couldn’t believe that this can be safe for the car. Nonetheless we saw that being the key to our expansion so we had to try it out. At the same time we were preparing for launch in Finland and building our full-stack platform. We went to Finland and started recruiting for a country manager but we also found a guy who had been running a car wash business with this waterless car washing technology for about 2 years. We hired him to build a working product for us as well. Since our standards for quality and safety were high then it took us 3-4 months to finally launch this product. We had to test multiple detergents, methods and tools to make sure that we are able to launch it with pride & confidence.
LEARN FROM THE BEST
We’ve been lucky (and brave) enough to approach top executives in different industries to ask whether they want to have lunch with us or even become our mentor. You would be surprised by how much they like helping other young entrepreneurs become successful and avoid the mistakes they’ve made. We’ve took learnings from AirBNB, Bolt, Fortumo, Wolt, Veriff, Vapiano and many more A+ heroes to combine them into something you see today.
We have a long way to go but with each breakthrough we get even more hungry to learn more. We really believe that there is a “car-washing code” to break and with each day we solve a part of it, we open new opportunities which would never have run into our young minds a couple of years ago. I find that as the exciting part of building a startup. Today we are not “Car wash boys” anymore. We are here to build the future of car care.
Martin Kristerson - Founder and CEO of UpSteam