Entrepreneur Jack Abraham on How Innovation Rises from Ruin
For years, Jack Abraham was nothing short of a celebrity to the thousands of students and teachers participating in our annual investment competition. Abraham served as the subject of our competition case study for six years — the wealthy, young client for whom teams were creating their unique investment strategies in hopes of winning the top prize.
A one-time Wharton School student, Abraham is what’s known as a serial entrepreneur who has started and sold several businesses. In 2008, he left Wharton — where he studied technological entrepreneurship — to found Milo.com, which was purchased by eBay in December 2010 for a reported $75 million. Abraham worked at eBay until January 2013, and since then has been a venture capitalist and tech exec, investing in and working on entrepreneurial ventures in the San Francisco Bay Area.
Abraham just unveiled his latest venture, Homebound, a revolutionary approach to building homes. Homebound, which he founded with CEO Nikki Pechet, is a technology-enabled general contractor that, in part, finds labor from other regions to build houses. This is by far Abraham’s most personal entrepreneurial venture, created from the ruins of his own Northern California home, which burned to the ground in October 2017 during the Tubbs Fire. Pechet’s home was also affected – as were thousands of other homes in the region.
We reached out to Abraham to learn more about Homebound and to find out some of his biggest lessons about innovation rising from ruin. An edited version of our interview appears below.
Wharton Global Youth: Can you describe what happened the night your home burned and in the aftermath?
Jack Abraham: It was October 7, 2017, and my girlfriend Melissa and I had just hosted four of our friends at our home over the weekend. On Sunday after they left we were winding down and getting ready for bed when around midnight I suddenly had a sinking feeling in my gut that something was wrong and that my life was in danger. I’d never had a feeling like that before in my life and told Melissa we should leave and go back to San Francisco.
Thirty minutes later, we left. As we were driving down the crest of the hill from our house we saw a faint glow in the sky. We thought, “What could that be? A spotlight? Fireworks?” As we drove closer, we realized that a fire had broken out and witnessed 40-foot flames engulfing homes, trees on fire and embers being swept across the ground, igniting nearby structures. We called 911 and the line was dead. It was now past 1 a.m. and we were worried that people would be caught asleep in a burning home, so we started knocking on doors in our town to wake people up.
At this point, the fire had spread so much we thought it might approach the house. As we drove back to the house to get our possessions, we looked over the ridge heading up to the house and saw a red glow coming up from the forest beneath. We concluded that the fire was spreading so quickly that it was too dangerous to go back and instead drove back to San Francisco. After arriving at 3:15 a.m., we got a call from ADT notifying us that the kitchen alarm had gone off and at that point we knew we’d lost the house. With less than three hours to spare, we narrowly escaped death purely based on a gut feeling I’d had.
The roads were closed off to the area for two weeks as the fires continued to blaze through the region. When we finally drove to see the house, it was raining white ash and there were still fires on the ridges of the mountains that we could see from the house. We were amazed that everything was gone. The property was leveled, with appliances, walls and everything burned straight into the ground. Amazingly, one of the only recognizable things was the skeleton of the Peleton we had in the house.
“Having your back against a wall forces ingenuity and creative solutions.” — Jack Abraham, Venture Capitalist
Wharton Global Youth: How did that tragedy inspire the development of Homebound?
Abraham: It took months after the tragedy to recover mentally, at which point we started to think about rebuilding. As I started speaking to local general contractors, I was appalled by what I was hearing. Everyone was charging $1,000 per square foot for new construction, and most had such a long waitlist that they couldn’t get started for two or three years. At the same time, my insurance company State Farm was claiming my house was worth only one-third the value I’d paid for it just five months earlier, and was only willing to pay out that amount. I thought that there must be a better way. I’d stayed in an Airbnb recently in Arizona that was absolutely beautiful. After looking it up on Zillow, I discovered that it was a $700,000 home and remembered thinking that it would cost at least $7 million in California. With the materials being similar, I realized something was really out of whack and wrong in California.
Following that insight, I wondered what would happen if I imported a team from another state or region to rebuild my home. I hired someone to fly around the country to get bids to rebuild my house. The bids came back between $250-$450 per square foot! I was floored. As I told my neighbors and other friends who had also lost their homes in the wildfires, they all wanted to do the same. So, I decided to turn what I had done for myself into a company and built up a team to start offering this service to others.
Wharton Global Youth: Why are challenging times like you endured also opportunities for entrepreneurial reflection and inspiration?
Abraham: A lot of great ideas come from suffering. The truth is, if you’re suffering from something there is a good chance that a lot of other people are suffering from it too. If you find a clever and unique solution to solve the problem for yourself, there are probably a lot of other people who would benefit from what you discovered. Building a business is bringing that solution to others that are suffering and liberating them from their pain.
Wharton Global Youth: How do you get beyond the shock of a tragedy to begin to problem-solve and see things more clearly?
Abraham: In this case, I was shell shocked and it took me months to even approach the problem. I would recommend once you muster the energy and strength to solve what you’re facing, try to channel that energy to a new, creative solution. If you try to implement it and you’re right, you might be onto something big that could help a lot of other people.
Wharton Global Youth: What valuable lesson did you learn from this very personal experience?
Abraham: I’m a big believer that all things happen for a reason and that great things follow great tragedies. Sometimes adversity brings out the best in people and organizations. Having your back against a wall forces ingenuity and creative solutions. When bad things happen to you, when you are able, try to realize why this ultimately could be good for you. Pick your head up and find a better path forward. We live in a turbulent world and this resilient approach to life is the only inoculation against the madness of the present.
Related Links
- Forbes: She Almost Lost Her Home in the California Wildfires. Instead, She Built a $200 million business.
- Crunchbase News: Homebound Raises $35 Million
- Entrepreneur: 10 Ways Successful People Push Through Adversity
- Wharton Risk Management: Wildfire Costs in California
Conversation Starters
Jack Abraham says, “A lot of great ideas come from suffering.” Can you think of any similar entrepreneurial stories, where hardship led to innovation and a business? Research the topic. Share your stories with a group and in the comment section of this article.
What is grit and why do some feel it is the most important quality of an entrepreneur? Does Jack Abraham have grit? Consult the Related KWHS Stories for help.
What part of Jack Abraham’s story do you find most compelling? What, if anything, will you take away from this and apply to your own life?
Mr. Abraham describes his personal experience to establish that hardships could force one to produce creative solutions. While this viewpoint is insightful amid “the madness of the present,” a limitation of this view is that hardships occur unpredictably and not everyone encounters the “shell-shocked” event that Mr. Abraham experienced. This can make it seem difficult to produce creative solutions. For many people to have a chance to follow Mr. Abraham’s advice, they would have to wait for an event to provoke a “having your back against a wall” scenario. For this reason, it is plausible for one to adopt a more flexible version of Mr. Abraham’s advice: to feel as if one’s back is against a wall.
What makes a dire situation, or having one’s back against a wall, an opportunity for creative solutions is the sense of urgency and seriousness that results from the situation. In Mr. Abraham’s case, finding an affordable way of reconstructing the house is a serious and urgent matter. This promoted thinking and allowed Homebound to appear. Therefore, one can try to simulate a similar urgent and serious feeling while attempting to solve their daily issues to induce oneself to be creative. People should tackle an issue as small as snoozing the alarm far too many times and waking up late with an attitude of “having your back against a wall.” This forces people to attack problems from multiple perspectives. This is a proactive approach to Mr. Abraham’s advice, since one is willingly putting oneself into an attitude that would force one to produce “ingenuity and creative solutions.” In addition to that, because this approach is about tackling everyday issues that are more common among people, it also aligns with Mr. Abraham’s idea that “if you’re suffering from something, there is a good chance that a lot of other people are suffering from it too.”
Reflecting on my own journey, I can relate my experience of learning English as a second language to the themes of this article. Having arrived in America during sixth grade with virtually no knowledge of English, I ran into many problems. I could not socialize with my classmates, nor could I understand my teachers in some of my classes. While many may assume acquiring adequate English skills to be my top priority, I learned that many around me believed that it didn’t have to be, because I had time to learn the language. I had enrolled in the ESL program in my school, which was a program designed to help students who learn English as their second language. In the program, I met many students who have been in America for multiple years but still could not speak with native fluency. One of them explained to me his philosophy: there are seven years between middle school and college, which meant that even if he learned English at a slow rate, eventually, he would be fluent before going off to college, where the ESL program doesn’t exist. He felt no urgency due to the amount of time he had.
My friend’s words didn’t resonate with me. Instead, I created an artificial urgency for me to learn the language. I wanted to learn English quickly, perhaps reaching native fluency in a year or two. This made me feel as if my “back is against a wall.” This urgency that I created for myself pushed me to find learning methods that would work for me. However, when I looked for methods online, the method that appeared overwhelmingly was to speak to others regularly in English. While this method is an effective one, I had a hard time implementing it. As a timid and introverted person in a completely new environment, I was frightened to speak to others. To make matters worse, many of my peers didn’t have the patience to continue the conversation when it took me ages to speak two words. Because of the above reasons, I attempted to come up with my own learning strategy. Through experimenting, I realized that listening to other people’s conversation was a great way to learn a new language. I listened for rhythm, articulation, and the way specific vocabulary is used in a sentence. I would then imitate how people spoke to become comfortable with speaking a new language, since it was much easier to follow examples. This method worked surprisingly well, and by the middle of seventh grade, I had graduated from the ESL program and begun to attend regular classes.
The real reward for learning English at a quicker pace came when I moved from Boston to New York City at the end of seventh grade. When I arrived in New York City, I learned that there was a high school entrance examination at the beginning of eighth grade. The test comprised an English section and a math section. Had I not created the urgency I needed to learn English, I would not have scored well enough to attend my current high school. My zoned high school didn’t offer the educational experience I was looking for, but my current school offers high-quality education.
Through this experience, I realized that creating urgency while tackling problems is rewarding. It allowed me to focus on a task which gave me the possibility to produce a creative solution that worked for me. However, on top of that, having a problem solved beforehand prepares oneself for future opportunities. Just as Louis Pasteur said, “chance favors only the prepared mind.”
Open your eyes, and take a look around yourself. Take notice of everything that reaches into your sight, and more than just that. Notice your clothes, whatever you’re wearing, or remember what you last ate. Maybe you made it yourself? Or perhaps you bought it with some pocket change left behind? It really doesn’t matter what you see or what you think of—all that matters is the simple moment when you realize it all started with one person who wanted someone to love. A mother spends her days, year after year, caring for the one person she hopes to see rise up, sometimes only to see it all fall into ruins, just as Jack Abraham’s home burned to ashes.
As I read through Abraham’s interview, his mention of the role of his community immediately struck me. He tells his audience what he had experienced the night he lost years of memories to a flame and why it is so important to connect with others. Many times we like to tell ourselves that because we are older and experienced, we are capable of finding our own solutions and solving our own problems, but often, that is not the case. We need help from others more times than we’d like to admit, finding ourselves struggling to repay our social debts. However, we live in a full circle and we will also do whatever we can to complete it by helping and caring for others.
When Abraham lost everything, he was determined to find a way to end more than just his own suffering, he wanted to end it for others as well, because he understood he was not alone. He was not alone when that fire swallowed his home, and he knows that the people suffering alongside him are worth helping because they are not just his neighbors, they are a part of him. When the pieces inside him broke, he wanted to heal. In the end, he just wanted to liberate everyone from their pain, because “the truth is, if you’re suffering from something there is a good chance that a lot of other people are suffering from it too.”
In the same way that Abraham was looking for a way to help and heal, a mother looks after her child with undying love and care. Mothers do so much for us and we don’t even notice how we’re blind to it all; when it’s hard for us, they are there for us; when we are struggling, they work hard to help us. When we get hungry, they take the time to cook the delicious meals that build our childhood, and when we fight with them and yell at them, they’re the ones that still love us. Sometimes we want to believe we are strong, that we’ll be perfectly fine on our own because that’s the person they’ve raised us to be, but sometimes, we lie. Remember your mother’s warm smile, that smile will be gone one day. How many people died in that fire that night? How many smiles were lost? Not just our mothers, but everyone we associate with and call a part of us have worked so hard for us. But we may never realize in time, so we are always late when it’s time to work hard for them. They are right in front of us everyday, they do all of this every single day, and it’s these people that we forget about the most.
We don’t create bridges just to burn them down, Abraham was doing what many are not able to, and by doing so, he shows how crucial it is to connect with people, to show others what they mean to him and how they are changing him. When he first submersed himself in his research trying to find a way to rebuild his home, he was hit with a price dilemma, but soon discovered a new, groundbreaking method that much better suited his financial needs. Once he confirmed his findings, he decided to use his discoveries to benefit more than just himself and share them with everyone around him. When Abraham built bonds and connections with all those around him in his past, he had built an undying community that would push him to bring light to his creative, life-changing ideas These people were the root of his cause, they were the reason why he was able to “liberate (everyone) from their pain”.
“The truth is, if you’re suffering from something there is a good chance that a lot of other people are suffering from it too. If you find a clever and unique solution to solve the problem for yourself, there are probably a lot of other people who would benefit from what you discovered,” Abraham said. When Abraham was creating his company Atomic, he was not just thinking of himself. We can now understand the importance of all these people in our lives; they’re there for us, so we do the same, for anyone from our neighbors to our mothers.
Although it was a not tragic personal experience, I too had a similar idea to Mr. Abraham that was inspired from a great tragedy. As many know a large portion of our war heroes, despite causing great success for our country, struggle in many aspects of civilian life when they return home. Being appalled by stories of veterans living in poverty and taking drastic measures to cope with mental health disorders they developed after serving on the front lines to keep us safe, I decided to take initiative to combat this. After a meticulous research I came upon the Wounded Warrior Project, which aides in helping any veteran who has a mental or physical injury from September 11, 2001 or after. I believed that this was a great organization to work with in order to help those who I think deserve it the most. That is when I created my company “Hats off to Veterans” which is dedicated to raising money to donate to the WWP. Hats off to Veterans is established on a cause greater than itself and will not stop selling its apparel to raise money for the veterans until every single hero is given what they deserve for the sacrifice they made for our country. So, far HOTV has raised over $200 and is constantly looking for new ways to aid veterans in any way possible. This company taught me the lesson of creating something that was bigger than itself and is supportive of a cause that combats one of the greatest tragedies of our country. Entrepreneurs will always see opportunity in every facet of life that can be used to fix any misfortune.
This article about Jack Abraham’s story is full of very compelling aspects throughout, however, one aspect that caught my attention the most was the fact that Mr. Abraham describes his personal experience to establish that hardships could force one to produce creative solutions. This was insightful and extremely true in various ways. On the other hand, this view also provokes the idea that hardships occur unpredictably and not everyone encounters the “shell-shocked” event that Mr. Abraham experienced. This can make it seem difficult to produce creative solutions.
I like how this experience goes. Some inspires I got are don’t give up, keep up even in the lowest point, look in the other perspective, always want to study new. We could change everything back even better than before. It made me come up with an idea which is, deliver to many people by a talkshow (online/offline) so whoever experience something like this didn’t feel alone. This can be for teenagers, so they can start to decide whether want to be an entrepreneur or advice and also can be for adults, may give spirit, certain business and entertain. People that want to start business or being an entrepreneur could study too from here, many support they get. Stronger to reach our goals, worth money and uphold the good values of life.
We all have experienced many hardships. Rising innovation from ruin isn’t something easy to do because you need to be good advisor and listener to become one. Updating somethings that have already existed is actually harder than making or creating something new. By updating you need to create solutions and ideas from your problems. You mustn’t give up easily on things you find difficult, helping each other when we needed the most, listen more than talking, observe things that are related to the subject you do to get ideas, connect yourself with new thoughts.