This conversation is with Erica Pearson, Co-Founder and CEO of Vacation Fund. Vacation Fund is the first employer-matched saving tool specifically for employees’ travel goals. It allows employees to direct a portion of their paycheque into a separate Vacation Fund Account, and allows their employer to match a portion of the contribution. This makes dream trips more financially attainable and encourages people to properly disconnect.
Erica Pearson grew up a competitive athlete and began her career in Capital Markets before starting her first tech startup. The idea for Vacation Fund was born from Erica’s upbringing; her family was very frugal, but prioritized spending time and money on travel and experiences. By the time she turned 22, Erica had visited over 40 countries.
Tell us more about Vacation Fund.
I wanted to help people save for experiences and for travel goals. I started out by asking groups of people, “how we could help you achieve your goal? What actually prevents you from going on vacation?” 50% of people said, “I don’t have the budget to travel as much as I’d like” and the other 50% said, “I’m actually really hesitant to ask for time off”. Then I started talking to the tech and corporate community in Toronto and people there were telling me that they were having trouble getting their employees to actually take their vacation time! There was a real lack of communication between employers and their employees around the importance of vacation time. That’s where the idea of an employer-matched vacation saving fund as an employee benefit came from.
We started off with companies typically matching 50% of employees contributions into their vacation fund and we capped it anywhere between $500 and $1,000 per year. This allows companies to tell their employees that they expect them to use their vacation time and to rest or experience something new. It shows the world that they are a forward-thinking company that cares about their people and aligns with their employees’ wants and needs.
Who are your customers?
Our first 16 clients have come from all different types of industries. We’ve got a cannabis company, a veterinary clinic, a few financial services companies, and some growing tech start-ups. We’ve got clients in Canada and the United States. To qualify for what we’re doing, employees just have to be in a full time, salaried position.
A lot of companies seem to be having a burnout problem and we’re having really good conversations with companies in consulting, marketing and advertising because in those industries, their people are their assets. If their people aren’t coming up with new, exciting ideas, and if they’re not energized, then those companies and their output suffers as a result. Something I was told very early on was, “make sure you’re a painkiller, not a vitamin.” For certain companies, they already get it—they know their people are important and they can understand the value of putting money towards people’s vacations. For those companies, we really are more of a vitamin. The companies where we are a painkiller are the companies that have people burning out and not using their vacation time. There are so many layers to that problem and it also makes it harder to sell to those companies because it’s not aligned with what they’re currently doing.
One of our investors is also the CEO of one of our client companies. I met him a few years ago at a PwC start-up drinks event. As soon as he heard who we were and what we were about he said “I believe in this. This needs to happen.” It was the shortest sales cycle of my entire life. Two weeks later, we were onboarding his two companies. It was just so obvious to him that this was something that the world needed because he believes that business should be looking after more than just their shareholders. I think he articulates it really well. He says that over the last 20 years, a lot of emphasis has been put on shareholder returns but there’s more to a business than that. There are other stakeholders involved—the employees, the community, the environment. If you look after all of the stakeholders, it’s actually better for the shareholders in the long run. He’s been a fascinating person to learn from and I’m grateful that we crossed paths.
Your previous experience has mostly been in banking. This seems like a big step away from that. How did you make the leap?
When I was a kid, my dad was very focused on spending our family’s time and money on experiences and travel because he knew that was a way to create a valuable, memorable and enjoyable life. That’s where my passion for travel came from. When it comes to my career, I was hopping around different desks at the bank and while I mostly enjoyed it, I had to ask myself, what if I did something that’s perfectly aligned with who I am as a person? What if I want to make sure that when I get older, I can look back on my life without any regrets? I knew that I really wanted to work for myself. I wanted to create something out of nothing and take on this amazing experience as a challenge. Then became a question of, what do I care about bringing into the world? For me, it was a big step but I knew I was also in a good stage of life—no mortgage, no children. I knew I had more flexibility with my time and my money. The question was, what do I want to do with that time and money?
I had to ask myself, what if I did something that’s perfectly aligned with who I am as a person? What if I want to make sure that when I get older, I can look back on my life without any regrets?
I was sitting at one of the desks on the trading floor of the bank and I would read Notable Life every single day. I was reading about young people starting companies and I thought it was really cool. I realized I was envious of these people that have taken something they love and made that their full-time job. I started reading and listening to all ‘how to start a start-up’ resources I could find online such as Y Combinator and essays by its founder, Paul Graham. Because I had only worked at a bank up until that point, I started doing my homework on the tech and start-up scene. I knew that innovation and technology could make processes more efficient, but it was a very foreign world to me and I knew I needed to learn more about it before I jumped in. I started taking part-time courses at BrainStation. I took an intro to web development course in the evenings. I learned that I’m not the best coder but it allowed me to wrap my head around what a coder’s day to day looks like and where their role fits into technology and innovation. Then I took a part-time UX design course and it made me think about how users intuitively know how to interact with digital products. How they know where to go next and how they interpret the call to action. These were things I’d never really had to think about before. So BrainStation was a really good stepping stone for me to wrap my head around what roles in the technology and start-up scene actually look like.
One other thing that I think is important to note is that I wasn’t paying off student debt at the time. I know that I was in a privileged position because I wasn’t in debt, I was making some money, and I had the time and the ability to dedicate my life to this. That’s a position that not everyone is lucky enough to be in, and I know many people have gone into an incredible amount of debt to start their companies. Before I started Vacation Fund, I asked myself what my own personal boundaries were. How long was I willing to go without taking a salary? How much of my own money was I willing to put into the company? At what point would I be comfortable asking other people to invest their own money? Those were all mental hurdles that I had to wrap my head around.
Being a first-time founder is a challenging position to be in because you don’t have credibility yet. All you can do to establish that credibility is keep showing up and keep trying to prove yourself.
What was the hardest step you had to take?
As a young founder, just getting people to take you seriously can be tough. Being a first-time founder is a challenging position to be in because you don’t have credibility yet. All you can do to establish that credibility is keep showing up and keep trying to prove yourself.
Do you have any business partners?
I have a co-founder, Abhinav Mathur, and if I hadn’t met him in early 2017 I don’t know if this company would be here right now. He is the technical genius behind the operations and I got very lucky meeting him. After I left my job at the bank, I walked into a HackerNest social in Toronto and I talked to five people about the thing that I was trying to do. Technical people are approached all the time by non-technical people with ideas for what they’d like to build. I think for me, it helped that I’d actually quit my job and taken some courses. I’d also built out a clickable prototype at that point so I was able to show them what I had in mind.
The first four people I talked to laughed at me and said, “You want a technical co-founder? Get in line!”
The first four people I talked to laughed at me and said, “You want a technical co-founder? Get in line!”. The fifth person I talked to, Abby, told me he was already working for a company but he could help me write my job postings and find someone qualified to be my technical co-founder. He offered to do it out of his love for start-ups and out of the goodness of his heart. After he’d been helping me for a couple of months, he sent me a message saying, “I was thinking about how many people this would help I think it’s pretty cool. What if I were to build this with you?” If that hadn’t happened, I don’t know if I would be here today. I’m just lucky that he made the move to say, “I could actually do this with you.”
What are some of the challenges your business faces?
We know, based on our existing clients, that people love what we are doing. This is one of the few employee benefits that often gets over 80% opt-in from employees and that’s been really exciting. It shows that we’re doing something that very much resonates with people today.
But our fist 16 clients have all been under 100 employees so the challenge for us is how to get some larger companies on board. We know some of these larger companies have trouble communicating messages around their vacation policies and the importance of taking time off. We know we can have a really big impact at larger organizations, but getting the first few large organizations across the finish line is by far the biggest challenge. Not only are we trying to sell our business and our software to these companies, but we’re also asking them to match people’s contribution to their vacation fund. It’s a massive budget consideration and if they’re not budgeting for the upcoming fiscal year, it’s the wrong time to talk to them. So it’s also an issue of timing.
Figuring out who to talk to within each organization has been a big learning curve for me because I’ve never worked in the HR space. Sometimes I go to our potential buyers and I say, teach me how your budget works. Teach me the things that you care about, and how can we help you sell this. That that has been a really interesting sales challenge for us because we’re selling to people that we’ve never really had a history of engaging with before.
A lot of employee benefits are becoming more flexible because people have different wants and needs. Regardless of your age, your gender, your income bracket, your marital status, your stage of life, you should take some time off at some point throughout the year. And if your company could help you maximize that time off by helping you save for it, that’s wonderful. This started out as a very millennial mission and anyone that’s a millennial gets it immediately—no selling is necessary. But a lot of the decision-makers at larger organizations are of an older generation and sometimes they need a little bit more convincing. So we have to bring in the numbers that support everything that we’re doing.
What’s the most powerful lesson you’ve learned as an entrepreneur so far?
I think it’s figuring out how to enjoy the journey. A couple of years ago, someone defined success to me as “doing things you care about, with people you like”. There’s so much of this journey that is out of your control—you can’t control the timing that things happen, you can’t control when a client or an investor will come on board. You can take actions to move in the right direction, but if you wake up knowing that you are doing things you care about with people you like, what more can you ask for? You only get one life so you might as well spend your day doing things with that mindset.
If you wake up knowing that you are doing things you care about with people you like, what more can you ask for?
If you could remove one task or responsibility from your day-to-day, what would it be?
One of those things that I struggle to focus on regardless of how many times it’s on my to-do list is reviewing legal documents, whether it’s employee documents or channel partner agreements or contracts. I understand them to an extent, but having to go back and forth or bothering our lawyers to explain certain sections to me can be a pain. In can be difficult trying to figure out how much time I should spend digging into the pieces that I don’t understand and how much I should trust that our lawyers have got our best interests at heart.
What aspects of being a founder do you struggle with the most?
Something that I struggle with personally is negotiating because I am an eternal optimist. I believe that everyone has everyone’s best interests in mind. I want to believe that people are being trustworthy and transparent, and just doing the best that they can with what they’ve got. As a business leader whose job it is to protect our company, it’s my responsibility to make sure that we’re not getting taken advantage of. I’ve surrounded myself with people who are more realists than optimists and I’ve gotten better at going to them and saying, “from your perspective, would you see this as something that I should be pushing back on harder?” Having those other perspectives is really important to me because I know that negotiation is something that doesn’t come naturally to me.
When it comes to your operations, what are some of the more specific pain points and how do you deal with them?
Because we’re a tech company but we’re also a service company, one of the biggest challenges we’ve had was knowing a little bit about financial services and KYC (know your client/customer) requirements. How do you actually know that someone is who they say they are? How do you protect that person’s information? etc. For us, the KYC requirements are actually looked after by the company’s payroll provider, which is a good thing, but it also means that we’re payroll provider agnostic. It doesn’t matter what payroll provider a company is using, we offer the ability to coordinate our services with that payroll provider. That means we’re coordinating with a lot of different parties to make sure everyone’s information is secure and to make sure that somebody’s after-tax payroll contributions are reflecting that exact amount in their Vacation Fund account. When you’re dealing with people’s money, you can’t allow anything to go wrong. People are very careful about where and how their money is held. It’s important for us to be very involved with the various different payroll providers to make sure that information is held securely and, with regards to the little bit of information we do hold on to, we need to understand where it’s being stored and how. Because we work with so many different providers, we have to make sure everything is efficient and flowing on our end.
What’s the best thing about being an entrepreneur?
I think it comes back to that definition of success—doing things you care about with people you like. We’ve built such a great team. There’s only four of us right now on a full-time basis but I love the people that I get to work with every day. When I was in my banking role, I remember telling my mentor, I think if I could network for a living, I’d be in my happy place. And now, in a lot of ways, I do network for a living, whether it’s with clients or with investors or with partners. I get to talk about something that we started and that we’re really excited about. It’s easy to speak passionately about something when you’ve been watching it grow. Regardless of what happens in the future—whether I spend the rest of my life building companies or I go back into a larger, more corporate work environment—I will always have it in the back of my mind that I want to be doing things I care about with people I like.
Regardless of what happens in the future—whether I spend the rest of my life building companies or I go back into a larger, more corporate work environment—I will always have it in the back of my mind that I want to be doing things I care about with people I like.
What would you say is the most important trait a founder should have?
Having a really good understanding of your values and your ‘why’. I know that’s such a cliche, but knowing what your personal why is, is so important. I’ve read a lot of articles and books talking about how people think they’re working towards an end goal where they never have to work again, but that’s not where satisfaction is found. Satisfaction is found in the journey, it’s found in the pursuit. You need to make sure you’re doing something that you’re excited about. Beyond that, it’s about maintaining an incredible sense of focus. If I don’t remind myself on a weekly or daily basis what the most important things for me and my business are, then it would be so easy to just be reactive and to meet with people who can’t help me with what I need right now. Knowing what’s important to you and having the ability to focus on what needs to happen next are probably the most important traits for being able to do this.
Satisfaction is found in the journey, it’s found in the pursuit.
We went spent three months at the Techstars accelerator in Chicago and they really drill into you that you can’t have any conversations that are outside of what your business needs right now. There are only so many hours in the day. We’ve got a whiteboard in the office that we’ve split into two separate pieces—the product side and the business side—where we can say, “what are the only things that matter right now?” Always having an understanding of the only things that matter at any given time allows us to figure out what the company needs to do to survive and how do we keep building on our product side and our business side to support that need?
What percentage of your time is proactive versus reactive?
Right now it seems to be 50% proactive, 50% reactive. I do engage a lot of people in what we do—I send out monthly email updates to over 500 people and I’m always very intentional about writing specific asks. Those emails come out the first Wednesday of every month and I’ve been doing it for over two years now. They’re broken down into sections—here’s what we’ve done in the last month, this is what we’re working on next month, this is our one very specific ask. I’ve learned that results come a lot more easily when I make the ask very specific. Even though fewer people may be able to help with that ask, the more specific I make it, the better the likelihood I have of getting a meaningful response. It’s definitely easier when you go into a phase where you’re just focused on one thing like fundraising because you ignore everything else. Other times it’s more challenging because we’re always trying to grow the company and find new clients, new decision-makers, and new channel partners. It’s definitely more of an art than a science.
Are you responsible for all sales?
Audrey on our team supports me on the business side—she’s been managing a lot of the benefits broker relationships and potential channel partners, which has been amazing because there are so many benefits providers that have said, “This is something new and exciting that we haven’t seen in the market before. Can we talk to you?” The challenge for us is that most of these benefits providers cater to companies that are in the 10 to 100 person range and as we’re trying to work our way up market, we’re trying to focus more on larger companies. It’s easier to show the impact you’re having when there’s more data and more employees to work with. Audrey’s been very helpful with both the travel partners and the benefits partners. But in terms of investors? That’s on me. And in terms of meeting decision-makers, I think we’re still at the stage where people still like to hear the background story and why we’re so excited about this. I’m still doing a lot of the sales meetings but that’s the part I really enjoy.
What’s the best thing that’s happened to Vacation Fund so far?
In late May, a writer for CBC reached out to me because she was writing an article on vacation time and wanted to chat. Awareness is a big thing for us because not many people have heard of what we’re doing and we haven’t had the resources to funnel a bunch of money into marketing or PR. So I said, of course, I’d be happy to chat about what we’re doing and why. She was so excited about the story and about the fact that companies were doing this for employees, that she then went on to interview our clients and interview an employee that spent her vacation fund money on a trip to France. I was expecting this to be a back column thing but before I had even woken up on June 4, I had four people send me this article saying “You didn’t tell me we’re going to be on the cover of CBC!”. As a result of that CBC article, we were trending on LinkedIn for two days and it seemed that everyone really bought into the story and realized how timely something like this was. Normally we get anywhere between zero and three inbound inquiries a week from companies that are curious about what we’re doing and what the implementation process looks like. The week of the CBC article, we got 30 inbound inquiries, including American companies that saw us because we were trending on LinkedIn. The article did so well that they ended up doing a video segment on CBC’s The National. That gave us so much more credibility. As we’re talking to these larger companies, we can show them that people are paying attention. The CBC piece was great exposure and it initiated some very interesting conversations with a lot of companies I didn’t even know existed.
What are some of the tools you use to inspire you or to make your life easier?
Leading up to jumping ship from my stable corporate career, I was reading a lot of Tim Ferriss books like Tribe of Mentors, and I had actually put together a whole document of inspirational quotes from people that had gone out on their own and started their own company. Another amazing book that I have read twice now is The Hard Thing About Hard Things by Ben Horowitz. Zero to One by Peter Thiel and Blake Masters is a classic that a lot of start-up founders read. The Subtle Art of Not Giving a F*ck by Mark Manson is a really good book as well, and Bad Blood by John Carryrou is a fascinating read. It’s about Elizabeth Holmes and the Theranos scandal. It’s a bigger book that I finished very quickly because it was so captivating. It highlighted a lot of the flaws with the way tech start-ups are run today and how valuations work. As a start-up founder, you’re supposed to embellish or to paint a bright, shiny picture of the future, but you don’t want to deceive people and you don’t want to flat out lie. Women founders are often stereotyped as being almost too transparent and too realistic and don’t embellish or exaggerate as naturally as male founders. After reading Bad Blood, I’m able to say why I’m more comfortable being so transparent and why I’d rather show people what we’ve done and what I actually think we can accomplish versus claiming we’ll be a billion-dollar company two years from now.
I’m less into podcasts because I think my mind just gets distracted very quickly. I’m a relatively slow reader but I treat reading as my time to disconnect if I can. I know when I’m reading I can’t think about other things or else I’m going to have to go back and read the page again.
As a start-up founder, you’re supposed to embellish or to paint a bright, shiny picture of the future, but you don’t want to deceive people and you don’t want to flat out lie.
I try to stay up-to-date with tech start-up news so I read things like BetaKit regularly. I haven’t been reading Notable Life as much since I actually started the company, but I think just having a general understanding of what’s going on in the tech scene and in even in the corporate world, is so important. You need to be so aware of the trends, what these companies are talking about, and where their challenges are coming from so you position yourself as a solution to the challenges they’re seeing on a daily basis.
When it comes to software, I absolutely love Slack. Just as a communications channel, it’s been very helpful for us, even as a smaller team. I still live and die by my emails though. I know some other people have moved away from that and are more active on LinkedIn. A lot of great things have come to us through LinkedIn, but that being said, I am slower to respond to my LinkedIn messages than I am to my emails.
As for other resources, I’ve already mentioned how helpful BrainStation courses were to me early on. Our front end developer, who’s been with us for over a year now, came from Lighthouse Labs bootcamp. So I’m a big fan of bootcamps because they let people get very focused on one very specific topic or skill. I’m a big fan of that type of education.
I’m very intentional about which evening events I go to and I have this strategy that I call “Protect and Preserve”. I’ll limit myself to only attending events that fall Monday-Thursday and the other nights I make sure I’m home cooking a meal with my fiance. For me to be energized in the events where I’m networking and putting myself out there, I need a couple of nights to myself.
What’s next for Vacation Fund?
Vacation Fund is experiencing tremendous growth and interest across Canada and the United States. We plan to continue to prioritize increased awareness and movement up-market to larger enterprise clients.
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To learn more about Vacation Fund, check out their website https://www.vacationfund.io/ and follow them on Facebook, Twitter, and LinkedIn.
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