SPEAKER_00: if this was now we're starting to get from 4d chess to like 70 chess but this is the world we David Friedberg: live in we live in conspiracy land it's clown world what if somebody said what would happen if we put a 90-day pause on i wonder what the markets would do and then we roll it back and SPEAKER_01: it's like sure enough if you say 90 day pause everybody then falls back into the camp of SPEAKER_05: these tariffs are negotiating tactics they're not going to happen for the long term i will tell founders now is a good time founders need to have plan b and plan c ready to go at all times David Friedberg: and then there's what we call cockroach strategy this is like plan c or d cockroach strategy is everybody's laid off we still have the ip the website's up and running and there's somebody getting paid five thousand dollars a month to maintain the entity and we'll see if the market comes back and we'll be able to fight another day if you're in cockroach mode you're pretty much shutting down with the optionality of maybe being able to restart things but it's kind of like being SPEAKER_07: in a coma for a startup and i do see people do that and i rarely see people come out of a coma but once SPEAKER_09: in a while you do this week in startups is brought to you by fidelity private shares if you want the all-in-one equity management platform fidelity private shares has you covered visit fidelity private shares.com mention this podcast for 20 off your first year subscription coda coda empowers your startup by bringing words tables and teams together strategize plan and track goals effectively with all your valuable data in one place go to coda.io twist to get started for free and get six free months of the team plan and gusto gusto is easy online payroll benefits and hr built for modern small businesses get three months free when you run your first payroll at gusto.com twist SPEAKER_14: all right everybody welcome back to this week in startups i am your host jason calacanis with me my co-host alex wilhelm he's x.com alex i'm x.com jason monday wednesday friday 12 pm texas time 1 pm eastern time 10 a.m left coast time we run through the news and we do founder advice stories questions SPEAKER_05: office hours so if you're a founder or you're just into technology and markets is the place to be SPEAKER_17: three days a week alex what's on the docket i think we have to start with some notes on the chaos today and i think there's a good social media story to tie into this my thought is we'll talk a little bit about the macro jason then dig into the discrete startup news but i don't think we can SPEAKER_20: avoid discussing the state of play which is to say we have to talk about what's happening with tariffs on again off again yes on again off again who knows markets going i mean i dropped my daughter off at school today and was just like oh my god it's a disaster oh my god they're on pause oh no SPEAKER_05: they're not on pause and so the market is just so chaotic and that makes it hard i was talking to somebody who has a development company uh and you know if you're a developer or a dev shop alex imagine you have customers now imagine those customers are impacted by all this impossible almost not to be they are going to say okay we had project a b and c lined up for quarters one two and three and we're figuring out what to do in the fourth quarter you know what we're going to push everything SPEAKER_24: back a quarter we're going to take q2 off yeah now you know a dev shop might have to say okay to SPEAKER_05: all of their freelancers hey everybody we have no work this month we're going to furlough everybody for eight weeks we'll let you know or we're going to do some internal project and you're all going to get paid a third or something so second order effects for consequences i guess is how some people say it in systems theory those have all happened and now we'll get to third order consequences i want SPEAKER_17: to talk to people really briefly about what happened because i think this is an important moment and warning for everyone out there who's watching the markets more closely than they should so first of all there was some news and i thought this was confirming your pitch that trump's going to SPEAKER_32: have to pull this back i'm still think he's going to do that by the way i still think that's the SPEAKER_14: likely outcome is that he will announce victory in the next couple days so stocks start today very SPEAKER_17: much in the red and then we get to an amazing little bit of now intranet history in which a tweet from an account called walter bloomberg said that trump is considering a 90-day pause on all tariffs now this tweet was deleted because it was wrong it was based off of an interview that was quoted i would say incorrectly uh but here is the original but the tweet changed the market it absolutely changed what was going on sadly it wasn't actually true not that far later on down the road it turned out that the white house was saying hey that's not true there is no pause coming at this point in time so jason that caused the markets to whipsaw very very quickly um sam stein from the bulwark previously from everywhere uh put the jump and then declined at about four trillion dollars so how much did the market go up and down the answer is quite a lot i prepared this very technical chart here jason looking at the s p the nasdaq and the dow jones and as you can see here from kind of where we were the tweet really did change trillions of dollars in global markets and SPEAKER_20: then very much quickly it went away it was up and down three percent maybe four percent five percent David Friedberg: something in that range because different indices were moving like the nasdaq i think was hit harder today yep but a six percent swing of markets is pretty huge here's the silver lining okay talk to SPEAKER_00: me if this was now we're starting to get from 4d chest to like 70 chest but this is the world we SPEAKER_01: live in we live in conspiracy land clown world i think mike solana calls it or the kids call it clown world we live in this like clown world conspiracy world what if somebody said what would happen if we David Friedberg: put a 90-day pause on i wonder what the markets would do and then we roll it back and it's like sure SPEAKER_01: enough if you say 90 day pause everybody then falls back into the camp of these tariffs are negotiating SPEAKER_05: tactics they're not going to happen for the long term i will tell founders now is a good time and i talked about this last week founders need to have plan b and plan c ready to go at all times and today is a good day for you to meet with your leadership team and actually just check plan b and plan c plan b and c should be how do we get to 18 months of revenue plan c how do we get to 24 months of revenue something in that range no less than 18 you need to have that plan and it doesn't mean you have to do it and if you really feel ambitious you could you know get to 12 months of runway 18 months of runway 24 months of runway how do you do it okay the founders are paying themselves 10k a month from these two founders okay in plan b you go to half salary yeah so you go down to 5k each okay now David Friedberg: you're saving 10k a month okay the team is going to get a 25 hit on salaries they're going to be asked to work just the same you're going to cut your marketing spend 50 or you're going to turn it off for 10 weeks and just work on delighting your existing customers and then there's what we call cockroach strategy this is like plan c or d cockroach strategy is everybody's laid off we still have the ip the website's up and running and there's somebody getting paid five thousand dollars a month to maintain the entity and we'll see if the market comes back and we'll be able to fight another day if you're in cockroach mode you're pretty much shutting down with the optionality of maybe being able to restart things but it's kind of like being in a coma for a startup and i do see SPEAKER_07: people do that and i rarely see people come out of a coma but once in a while you do uh and so David Friedberg: you know really depends on how much you believe in your idea of the market etc but you may sacrifice the team and then have to start from zero again so this is leadership time folks and leadership is SPEAKER_05: about defining reality the game on the field the reality on the field is no one knows it could get a lot worse and second and third order effects slash consequences i'll use the word consequences are going to be coming in hot and heavy if this thing isn't resolved let's say tuesday wednesday SPEAKER_14: tomorrow or the next day yeah this could get pretty ugly and pretty quickly i mean it already SPEAKER_52: has we're already in correction territory we are but there's some more good news i'll just follow you up here we think a lot about tariffs and how they impact global trade mostly tariffs don't apply SPEAKER_17: to digital services and software jason so you know we're talking quite a lot about how you know trade is going to be disrupted things will get more expensive but software the thing we talk about the most on this show is pretty much exempt so it's bad but it's not like we you know there's a new 50 tax on digital services around the world that will be worse could you bring it up because also David Friedberg: marketplaces and finance are also generally weathered from it so doordash uber and airbnb while in a recession those things could have different kinds of challenges people might go from uber black down to uber comfort uber comfort users might go to uber x uber x users to pull an uber pool you know or SPEAKER_01: sharing might go take their bike or bicycle yes well no i mean that is realistic so if everybody steps David Friedberg: down a little bit you could see revenue be flat instead of growing 20 30 percent at an airbnb airbnb hosts might need to lower their prices have less money to pay their cleaning crew or maybe they lay off the cleaning crew and the person who owns the airbnb literally cleans it themselves to you know make up for that lost revenue maybe people take shorter trips business travel is obviously going to be impacted in a major way so you are correct that people who are moving stuff around the world are the ones who are greatly impacted i do think the point about the uber and people moving up and down SPEAKER_17: in the kind of the brackets there that's a really fascinating way to kind of see a recession coming there's a lot of uh anecdotal evidence people cite and this is slightly non-pc but people say that people who work in the live adult entertainment industry you might say are often an indicator of when SPEAKER_62: spending is being pulled back people might spend less money at those establishments at the club SPEAKER_63: at the club you might say this advertisement is paid by fidelity private shares all right founders SPEAKER_65: we all know cap tables due diligence and of course managing investors is a huge headache but there's SPEAKER_67: a very simple solution for you today we're talking with kristen kraft an old friend of mine and she works at fidelity private shares a new group over at fidelity you've heard of fidelity before and they have a mission to help startups simplify equity management they're going to save you money they're going to give you better service welcome to the program kristen thank you so much jason it's great SPEAKER_71: to see you again yeah great to see you as well maybe just from a product perspective what are you trying SPEAKER_72: to accomplish with the product so jason we are super excited about our cap table management and data room platform we want to make it super simple for founders and startup operators to manage all sort of ownership and equity in the company and essentially prepare to raise we want to make sure that everybody goes into these fundraising conversations well prepared they're ready to share their cap table and that they're ready to go through due diligence as they're trying to close their round so from a product perspective that is where we're laser focused and that product is really well built really strong SPEAKER_74: attention to detail in the way that fidelity is known and beloved for so if you want an all-in-one SPEAKER_67: equity management platform fidelity private shares they've got you covered visit fidelityprivateshares.com that's one word no spaces no dashes fidelityprivateshares.com and uh hey mention this week in startups they'll give you 20 off your first year subscription once again fidelityprivateshares.com and tell them that you heard about it here on this week in startups we could probably just look back to SPEAKER_01: covid for some indication if people were feeling poor when the stock market crashed there and then there's David Friedberg: been other like after silicon valley bank you could probably look at consumption there and some headwinds but your job as a founder focus on your startup we will get through this it will be in all likelihood a negotiation like trump likes to do i'm sticking with that prediction is that this week we've largely resolved or contained the crashing and i think japan is sending their delegation vietnam said they're good the eu made a huge uh concession that they're going to drop everything and then we're going to be like an elon sort of indicated he thinks it should just be free trade which is another way of saying SPEAKER_01: reciprocal tariffs or zero reciprocal tariffs yeah yeah so reciprocal at zero yeah because if you put it at ten percent it actually really probably anything under fifteen percent nobody's going to notice so SPEAKER_05: if you have reciprocal five ten or fifteen percent sure tariffs and fifteen percent is called the just noticeable difference just perceivable difference so when you do studies of pricing or you do studies of the brightness uh or sound if people change the sound under fifteen percent they change the price under fifty percent they change the lighting the just noticeable difference the just perceivable SPEAKER_24: difference tends to hit above fifteen percent for most people so there you have it folks the latest news SPEAKER_17: item after the false report that there was going to be a delay and then the the lack of that being the next news item uh trump in a post over on truth social became cross with china for putting reciprocal tariffs on his reciprocal tariffs and he's now considering adding a fifty percent additional tariff SPEAKER_83: uh on the ninth which is wednesday so we'll see but not quite the the ratcheting back that we wanted SPEAKER_02: to see if they just raised it fifty percent on top of fifty percent it's a hundred percent which means SPEAKER_05: nobody's shipping anything it's over like nobody's shipping a fifty thousand dollar car and paying a hundred thousand for it so that basically means it's over buy your cables from vietnam if you want SPEAKER_24: an anchor cable i hope they make my anchor cables in vietnam okay i hope they do in some positive news SPEAKER_17: to balance out that conversation signal fire a venture capital from jason that i have to admit i don't know enough about and i really do need to go dig into they just announced they put together a billion dollars in new capital across a number of funds and uh that brought their aum up to about three billion which means that they just raised half of their firms total capital in a kind of one go yeah and to me that seems very bullish they are an ai-ish venture capital firm that invests in vertical ai companies so that strikes me as pretty good my concern though is that the denominator effect which we talk about occasionally here on the show will preclude other firms raising quite as much but no matter how you slice it huge new capital investment for um us entrepreneurs SPEAKER_91: fantastic and i think they operate in the seed stage which is great for everybody everybody's David Friedberg: moving towards seed why because a's are so competitive and you know if you're looking at value the entry price matters so doing a series a for 10 or 20 million and you're up against injuries and horowitz insight venture partners sequoia whoever's got these multi-billion dollar giant funds um it becomes kind of challenging right i think lightspeed's got the billion dollar fund as well so you know the series a's become very sharp elbowed very pricey and that means if you even have this billion dollar fund maybe you want to try to do seed like big seed and big seed the big seed industry is essentially now what series a were 10 years ago 5 million dollars for 10 of the company uh-huh seven million dollars for 10 of the company six million dollars for 10 of the company something in that 30 40 50 million dollar valuation with 1 million to 3 million in revenue yes or an incredibly SPEAKER_05: promising serial team when you see investments um happen just understand that you're seeing a lot of confirmation bias so you try to figure out as a founder i deserve that they have their pre-revenue their pre-product launch it might be that they're three team members two of them worked at this other startup that made signal fire sequoia a billion dollars or they had a 250 million dollar exit and they've got a great team and they've got great early customers that you don't know about and the products you know really promising so don't over index on the crazy fundings we talk about here or tech crunch or that go viral on twitter those those are people who hit a hail mary pass the industry is not about a hail mary it's not about you know a half court shot it's really about the basics the David Friedberg: blocking and tackling the pick and roll going to an accelerator raising a buck 25 raising a 500 000 to a million dollar seed at 5 10 15 million uh or what people might call pre-see then doing an extension and getting from 10k a month in revenue to the awesome 86 000 in revenue 3k a day or 2700 a day in revenue in other words a million in annualized revenue and when you get to that point you will know you have accomplished something great just a million dollars is not going to happen by accident maybe you have a million people who have ideas a hundred thousand of those people apply every year to different accelerators or try to do a friends and family round or get a prototype to market and i don't know 5 000 of them actually go into an accelerator and or raise a family friends and family around or put their sweat equity in to get a product to market of those you know then you get down from 10 000 of those maybe to a thousand that get to revenue of the thousand that get to revenue you get to 500 they get to a half million and then 250 get to a million this is very hard it's rarefied air so from the number of people with an idea down to getting to a million in revenue it's SPEAKER_102: got to be like 0.01 of the million people had an idea the absolute standout companies jason can i can SPEAKER_52: i ask though because i'm a little perplexed on something you said you said you know this is not SPEAKER_17: a hail mary business but what what i've heard from everybody in venture is that it's the hits that really drive the return so okay are you saying more that it's not a hail mary for founders but it is David Friedberg: a hail mary for venture returns just uh break that tension down for me amazing so this idea of like i am going to raise this 10 million dollar round for 10 of my company because somebody is just going to believe in me and the team is a very rare occurrence and the reason it's notable is because it's like a the same way a half court shot that you see on going viral where some high school kid inbounds the ball and somebody even before half court chucks it because there's no time on and got SPEAKER_05: nothing to lose and then they hit the three and they win the game you don't build your plans as David Friedberg: the founder around them in addition um there are power laws which is of the you know whatever number of people drafted every year and the 250 active players in the nba the number that actually can impact winning impact the portfolio is the top 20. yeah so you know lebron james steph curry luca luca like there's a small cohort who are power law players who if you land them your team is in the playoffs and you know getting to the finals are just going to be a perennial playoff team perennial top five six seven team and that's why people really try to get those power law players so you try to get those in your thing but i i the the the real point here is you you should run the business not based on hitting SPEAKER_05: this half court shot in terms of fundraising as the founder and from the gp's perspective you actually should not be you are trying to hit a power log but on a day-to-day basis i've been trying to explain to my team here at launch we need to take more risk on great teams who have product velocity if they're a great team and they have product velocity in other words they're they're shipping product that's enough for us don't overthink it at the precede stage just place the bet okay on the best possible teams and that would be and i because you know the team will take us where they're going now if you're series a and you're putting in a 25 million dollar check you do want David Friedberg: to be more thoughtful you're going to look for those kind of companies that you know okay they've proven not that they can just have a great team not that they just have product velocity but they actually have customers over the moon about it they have a quality of revenue i think you used to talk about quality of revenue when putting together to twist 500 a bunch absolutely the quality of the revenue also very important our language model 20 a month accounts quality revenue i don't think so SPEAKER_07: founders i know you're swamped you got a ton of stuff to do on your plate you know there's a lot of chores you got to juggle your priorities and that's why i want to tell you about coda that's what i use to keep everything under control it's an all-in-one platform and it's going to consolidate documents spreadsheets and apps you have running into a single scalable workspace with an amazing ui so code is going to help you set all your okrs you know that's objectives and key results and you're going to get access to hundreds of templates for tasks like setting priorities and mapping dependencies at this week in startups we use coda every single day for important projects like the twist 500 and founder university why do we use it well because we have all these portfolio companies who have tons of information and they submit updates and the beauty of code is it's so flexible we can use it for everything from tracking those companies to tracking their pitches to board updates and it all can live in one place and we don't get software overload we don't have 20 different sas products that everybody needs to learn they need to learn how to use one so instead of juggling all these different tools you got one platform and the whole team is super organized it's really intuitive the workflows are seamless and getting more powerful by the day so here's your call to action coda empowers your startup to strategize plan and track goals effectively take advantage of this limited time offer just for startups go to coda.io twist today and get six months free of the team plan that's coda.io twist to SPEAKER_31: get started for free and get six months of the team plan there's a company called krea k-r-e-a it's like SPEAKER_17: korea without the o and i hadn't heard of this company tech runs just wrote today that they have announced that they've raised a total of 87 million dollars including a 47 million dollar series b bain led that and recent led the 33 million dollar series a and they are effectively a service that takes a lot of models uh to do images and video i'm going to pull it up in a second here and offers it as a service that they charge a monthly fee for this is kind of jason the 20 a month thing you're talking about if you go to the pricing page here you'll see roughly in line with what you're saying and you think this is pretty transitory i don't entirely disagree but vcs have now attached according to ingrid london a roughly half billion dollar evaluation to this company at series b so are are we being too pessimistic or are just these rappers going to be more valuable than we might SPEAKER_116: have thought so you know this reminds me in a way of canva and the argument there it's going to be a SPEAKER_05: dogfight for those 20 subscriptions and people might have three but they're not going to have 15. so i as a lunatic am subscribed to spotify co-buzz and apple music as part of my apple one subscription yeah a normal person would look at that and be like and you're wasting two or three hundred dollars a year just consolidate down to one or maybe apple music amazon music is available in your amazon account it's like you know what i i love co-buzz because i like high-res music my family love spotify on the family plan and we got apple music for free so it's a nice backup sure i'm not SPEAKER_111: over optimizing around these things but most people are discerning and they will have one two maybe David Friedberg: three yeah that's where i think there's so much money being flooded in here that what's the difference between crea.ai and the image generator and grok the image generator and gemini and the image SPEAKER_17: generator and chat gpt i can answer that kind of so what crea is pitching is that they can help you pick the best model for what you need and then you can have a lot more essentially access to image generation for a pretty low price point is that enough though to kind of beat back what you're saying essentially you're making the no one's going to have netflix and hulu and disney plus and this and that you're not going to have 80 different things you're going to pick the three SPEAKER_05: so some consolidation will happen at one point you know there were in terms of food delivery what David Friedberg: eight nine food delivery companies you could use postmates doordash uber eats r.i.p spoon rocket uh spoon rocket was back in the day there were like a lot of different amazon had a test for SPEAKER_05: delivery from restaurants that they were running and then there was that other one just eats or SPEAKER_131: something anyway these things have all been bought sold and merged over the last couple of years David Friedberg: there's usually winds up being two three four players in a space top two winners take most and SPEAKER_05: then everybody else is fighting for peanuts so without knowing this startup that well it looks great i love the idea of what they're doing with a meta one the problem i think they're going to run into is downward pressure on these subscriptions because of free and so would you pay for search perplexity SPEAKER_29: charges right uh they have free and paid accounts yes they i think they've broached the hundred million error mark of memory serves right so i worry about the quality of that revenue i think right now we're David Friedberg: in a unique moment in time where people are willing to pay because it's a new thing just like they would pay for browsers like you'd pay for netscape browser or you might pay for the opera browser if you like that better i think nowadays uh you know people are willing to sample these things but when SPEAKER_05: google microsoft and apple have these things for free built into their products built into their phones you know they might just sweep the bottom two thirds of users and google is not going to go down David Friedberg: without a fight and i don't think google with their money printing machine needs to charge for these things i'm paying for gemini i don't actually know why they're charging me they should just make it free as part of google docs you know they should know i'm a high-end customer in terms of google ads and probably make it free so there's just going to be massive downward pressure to the point at which somebody will jump the gun like youtube did uh-huh and we were you and i were on this week in tech with liola port yesterday and we were lamenting how expensive it was for being a podcaster SPEAKER_05: pre-youtube yeah and once youtube became free and people started posting there what happened to all these services i used to have to spend so much money hosting on mailchimp all of our email lists hosting all my files on s1 for this podcast etc and now it's like and i used to have huge um storage arrays in the office like literally fifty thousand dollars worth of storage arrays to to keep every camera angle of every podcast in hd and then i was like wait a second is it on youtube yeah okay so if we have it on youtube and we have it on our server then we have redundancy i'll back it up to my machine editors back it up to their machine we don't need to buy David Friedberg: those sand disk drives we don't need to have network arrays we don't need to have a s3 and do all this SPEAKER_52: stuff anymore and the consumer surplus is huge for that but there's also another side to this because SPEAKER_17: if we do see the major technology players the people who own their own hyper scaled infra come in and sweep the bottom two thirds as you said companies like kriya or i don't know chorus post service and so forth like i mean these these could be essentially undercut by the already large and it would be very disappointing to me as you know competition's number one fan to see that because to see that because it would just be essentially people with too much cash able to own part of the market much as we've seen spotify not have really any pricing ability uh to change their pricing because apple has anchored everyone at 10 bucks a month still even with inflation where it is day SPEAKER_141: which i think you spend on storing your photos alex right now uh i think we pay a couple bucks a SPEAKER_17: month to google and a couple bucks a month to apple because we're not efficient right now much like you SPEAKER_01: and your music okay so you you pay a little bit of storage uh for your overall phone and some David Friedberg: percentage of that is not just your apps and music and video it is your photos so you're probably it's abstracted that you pay an extra 100 bucks a year for your family plan somewhere in there it's so de minimis that you don't even know how much you're paying i don't in all likelihood same with me yeah i have apple one it includes apple tv apple music apple arcade and some amount of storage people used to pay for flickr they used to pay for 500 pixels was that the company that everybody 500 px yeah i know you're talking about something a smug mug oh throwback yeah wow and these and i think smug mug wound up buying flickr and i think you know the idea that a consumer would pay for those things you know maybe you'd have to have a lot of photos and you'd have to really want like certain features so this is the problem with consumer subscriptions is they can get abstracted into SPEAKER_23: you know a bundled offering the same way you know some spreadsheet can be bundled into an office SPEAKER_16: just like how microsoft teams was bundled into office 365 subscriptions and that really did i think SPEAKER_17: handicap um slack and zooms growth to some degree i mean it's not trivial now they're both public companies are part of one but still that's that was an i used to track the uh the slack weekly actives and monthly actives versus the teams numbers when they were kind of competing to see who grow faster and now it's just salesforce versus microsoft so who cares but yeah yeah things can get eaten up pretty darn quickly but uh korea.ai krea.ai if you want to take a look i think it's a pretty cool service i hope they crush it i hope that our our concerns are wrong and they go to a David Friedberg: kajillion dollars um we'll see i mean looking at it i can tell you that this offering is much better than the free ones i've talked about so just the ability to train they just have you know a whole cornucopia SPEAKER_07: of filters and styles and uh animation and so you probably can do much better things much faster on SPEAKER_17: it so yeah i mean it's definitely beautiful and people really eat this stuff up i mean i think that everyone remembers the time when they were a child and they just drew whatever they wanted without shame ai image generation is quite a lot like that you may not become the next famous painter but you can have a lot of fun on your own and that's not to be diminished all right you didn't start your SPEAKER_154: company to run payroll did you of course not we all know that gusto is here to help gusto is going to help you run your payroll and handle all your benefits onboarding and hr all in one place the market agrees 300 000 businesses trust gusto today and you can too as your startup scales gusto is going to grow with you you got state and federal taxes handled for your staff around the country gusto does all that and hey maybe it's finally time for you to offer a 401k plan for your team right gusto's got you on that and you might need to get your compliance sorted right well three out of four employers say gusto helps them be government compliant and even better gusto is simple easy to use software so you can focus on what matters building your startup so here's your quick call to action do you want all gusto has to offer with no hidden fees well how about a discount try gusto and get three months free gusto.com twist that's g-u-s-t-o.com twist now jason there's a clip from mid journey you wanted to talk about SPEAKER_104: which we have prepared here all about mid journey v7 and its new voice activation feature the reason i wanted to share this is David Friedberg: people kind of forgot about mid journey and because it was taking too long to make images was taking too long and the prompting was too long what i thought was really interesting about this is um nick saint pair who saint pierre he's like on a twitter account he kind of releases a lot of stuff and keeps you up to date on it on x he just put this um image out where it explains how it works and the new model lets you in this draft mode just talk to it like your decker in blade runner saying zoom in two to the left two to the right do this do that and it's almost real time so let's show it mid journey just SPEAKER_160: released v7 and the killer feature is this draft mode that they have it lets you just have a conversation with mid journey you don't worry about the prompting free flow the ideas let me show you how it works here so all you do is you hit draft mode and you can turn on voice now you can just now you can just talk to mid journey hey can you uh make a photo of a man uh sitting in the park please there you go it's starting to it's writing the prompt for me it's giving me some images and look how fast it is can you put him on a like a picnic blanket and put him next to a picnic basket as well so good it's so fast uh can you bring it in a little bit tighter and then make him wearing a black t-shirt and i want him to be sitting next to a woman as well who's in a like a red dress it David Friedberg: seems to be lightning quick looks pretty promising uh there was a great scene in wag the dog if you've ever seen that with dustin hoffman he's basically working over the shoulder of a video editor and he's like okay add a dog add this and they're like making a war scene and you're like oh my god it's almost like conspiracy theory like they're faking the moon landing or whatever and he's just over the shoulder working with an editor to make more and more interesting stuff but they're doing it so SPEAKER_131: quickly it's kind of like shocking at how fast they could do it this has the same feeling to it to David Friedberg: me which is you don't need another human so when we talk about job destruction or making people bionic or static team size here's like a perfect example you would send your notes to a video editor 10 years ago wait a week they would send you some stuff back and what we just saw might have been four or five iterations till people give up and say okay that's good enough now you can do all this stuff then give it to a video editor to finalize and polish with whatever tool they're using just like vibe coding i might be able to build my annotated.com website and you know make it make some wireframes and some designs and make it good enough and copy coda or notions design whatever and make it look like those products and then ship it to a dev team to polish it and finalize it that's where we're headed and you know this is truly impressive but this is version seven and this product how long has mid journey SPEAKER_102: been out i wonder i'm thinking it's like a four-year project maybe they're in year five of the SPEAKER_05: project so this is where they're at in year five version seven of this and i believe mid journey is SPEAKER_29: an open source project the initial release was uh july 12th 22 22. i said five years so this is three SPEAKER_05: years uh holy cow less than seven years in ai so yeah yeah so 21 years now but they're three years they're in version seven so they're releasing a version every five six months yeah man if they SPEAKER_14: get to version 14 in another three years i can't imagine how fast and epic it's going to be it's SPEAKER_175: going to be 10 times it's going to be essentially instantaneous and it's going to be three times as SPEAKER_35: high quality and you're going to be able to go from still to a video very quickly and then talk to it live it's going to be insane i i i can't wait and you're going to have an agent where you're going to David Friedberg: say go get me every video of ashoka you know where i'm just going to upload you know 10 videos from the star wars uh genre i like and do my own training on my own machine with a you know a little tool and then i'm going to make my own trailer for the new sequels i'm cutting to do george lucas's original script and that's when we'll know we've crossed the rubicon here is when you start seeing trailers that you can't that you get fooled by you get fooled by a trailer which i think is starting to happen people can get fooled by a star wars trailer online or you can make the entire episode of the SPEAKER_131: next mandalorian and people can't tell those two moments will be here in three four years well i mean SPEAKER_16: the whole world got confused today by a tweet and a misunderstood interview to the tune of several trillion dollars so i i believe we're going to have spoofed trailers very soon but the the point you SPEAKER_17: made about doing things quickly to then give them to someone else so that they can finish it is happening in the business world um toby lucky from shopify said today that his uh manifesto we sent around to shopify employees was getting leaked so he just put it on the internet and uh point uh two is that ai must be part of your prototype phase the prototype phase of any project should be dominated by ai exploration prototypes are meant for learning and creating information and ai dramatically accelerates this process now jason i was going to bring up the toby uh memo because something else in fact um there's a final note in it that i think fits very neatly into our static team size or compressed team size trend and we pulled it out here into a quote the final item is before asking for more headcount and resources teams must demonstrate why they cannot get what they want done using ai what would this area look like if autonomous ai agents were already part of the team this question can lead to really fun SPEAKER_183: discussions and projects and increased earnings uh and faster speeds you know it's um this is exactly David Friedberg: what i wrote i think two years ago when i wrote my little manifesto my add manifesto automate delegate deprecate and here we are you know in our own company uh when i add headcount it is rare and it has to be somebody who's a bar raiser no more you know throwing bodies at problems and you know what uh the team has stopped asking me for bodies which is also very interesting i forced everybody to put on their browsers open new tab and it shows chat gpt open new tab show chat gpt and uh what that did for the team was SPEAKER_05: some number of people started using chat gpt regularly now as part of locking down our computers because we have a lot of interesting information on it i can see an aggregate i can run a report and see what David Friedberg: percentage of time are people in notion versus slack versus chat gpt and when i did like this little beta test of the software i'm not going to mention what we're using to lock down our computers but we've got SPEAKER_05: to lock everything down because we have partners and like we have lp data you know it's like pretty serious stuff and when you lock it all down you get this productivity boost because i was like wow we use notion and coda and slack all and zoom all day long like all day long for certain people in our team their entire work life is those three or four cohorts of products yeah and i'm like where's the David Friedberg: chat gpt it was like oh the investment team is using chat gpt three percent of the time like i i wonder if that's low or high like people need to be doing a little more chat shipping or maybe not and then i realized oh a lot of the work we're doing in coda and in notion the native ai in those products is what we're using yeah so it's actually really interesting when you start looking at the aggregate data of your teams and where you're spending your time and that's the next phase of this man our computers are going to be studied what we do every day this podcast what you and i do every day there'll be an ai producer in here by the end of this year saying you know what you guys don't SPEAKER_05: show charts all that often i'm going to start making charts from the docket and the docket i think we do in notion uh we've done an encoder before in this notion docket the docket is going to start suggesting oh there's an update to this new story here's a chart oh there's a fact wrong like why isn't the notion page of the docket there should be a button that says fact check every hour or every time we add something fact check it now notion doesn't necessarily have to put that in but somebody should clip this and send it to the notion and code of founders why not have fact checking built into these or why not do suggestions for additional facts right instead of having to proactively highlight something and then ask the prompt to do it and that's where agentic is going SPEAKER_197: to come in right so it's going to follow along and do things for you yes and it should be following SPEAKER_05: us here and when i say something in this you know when i say pull up the jump seats from the model s SPEAKER_24: it should have already when i mentioned the model s has jump seats it should have shown that on the bottom and then giving you the ability or i the ability to hit a checkbox to show us exactly why SPEAKER_16: isn't zoom doing that i just think we're talking about the future six months away versus the future SPEAKER_52: sorry the future we're living today so i think you're dead on you're just slightly early but the fact that you're saying why isn't this here to me implies either companies are going to be on it and they're SPEAKER_17: already building this they're going to win or they're not building it now and they're going to lose but you have to have a really fast cadence i do want to say though your point about having chat gpt in our new tabs going back to the the shopify memo yeah two quotes reflexive ai usage is now a baseline expectation at shopify and quote using ai effectively is now a fundamental expectation of SPEAKER_52: everyone at shopify and by the way folks shopify is a well-run company it's done very well like this is SPEAKER_20: not some random company with some random tip of the spear company and we're i hope a tip of the spear SPEAKER_05: you know precede accelerator and so if toby and i are thinking this way i think it's probably going to trickle its way down to every organization we did our first round yes founder friday here's the bracket SPEAKER_206: as it now stands so as you can see a few companies have moved ahead we've got osprey from houston they've moved in to the next round we've got whisper from right here in austin uh and then we've got med simple from florianopolis brazil they've all moved forward they are going to be competing in the elite eight as you can see still a lot of these matchups to do so we've got two fresh matchups right now let's do it we've got some decisions to make so first up okay from portsmouth new hampshire we have pitchfire SPEAKER_211: i love getting cold calls and cold emails in the history of the world no one has ever said this in fact this year there'll be 645 billion prospecting touches that will get ignored by prospects it takes the average sales rep 220 pitches to generate a conversation with a prospect it'll cost their company over 3500 to produce a meeting 80 of b2b companies are missing their pipeline number today there simply isn't enough incentive for a buyer to get back to a prospect this is why we built pitchfire pitchfire is a paid prospecting platform that allows companies to build pipeline by rewarding their prospects to engage with their sales team on pitchfire businesses get answers buyers get respect a business can find a prospect on pitchfire write a quick thousand character sales pitch and offer the money to review and respond to that sales pitch buyers get paid to answer these pitches even if they're not interested as long as they get back to that person in seven days when they do answer 40 of the money goes to them 40 goes to their company so they can use it on pitchfire and the other 20 goes to us that's how we make money that's our business model businesses only pay money when a buyer responds our whole go-to-market motion is a flywheel we convince businesses to deploy capital on pitchfire and we run paid prospecting campaigns at their target accounts last month we sent over SPEAKER_17: 50 000 paid prospecting pitches out for companies offering all right so what do we think of pitchfire's SPEAKER_01: approach of building a circular economy of pitching for money at first you would think this is smarmy icky i don't like it and i didn't at first when i get one of these things hey if you do a call we'll David Friedberg: give you a 25 starbucks card i'm immediately like my time is worth more which means the sales team with that 25 gift card is probably wasting their time with somebody who just wants the 25 however if you do this with enough prospects i always think about those timeshare scams where you go and buy a timeshare SPEAKER_221: in jamaica right you know whatever town free trip but you got to listen to our pitch right and then SPEAKER_05: they hard sell you and then people record it and share it on tick tock it's a whole genre i went for some reason i got presented with one of those and i liked it and then i was just like it gave me 20 more and i was like oh god don't like these again um super uncomfortable but if people are doing them it must work right what i like about this one is the reciprocity if you take my pitch i'm going to put half the money into your account so if i pay you 50 bucks to do this you get 20 lon or i should say your company gets wait lon gets 20 launch company gets 20 and this pitchfire gets 10. exactly so i like this concept and i would like to pull the string and see if it actually works what the devil's in the details what you want to make sure of is that the people who are on the other side are not doing David Friedberg: it just to get the money and that hey if some number of them actually use those dollars it would be awesome if they don't use the dollars then that's found money i wonder if you get the money back or it sits in that other person's account for a year and they have a year to use it and then who does it who does the breakage go to is my question but this is weird and when i hear weird SPEAKER_206: i get intrigued lon your thoughts quickly you kind of said what i was thinking too which is this it's a good idea but i think it's really all about the execution i could easily see this turning into mostly spam and junk like people using it just to collect the money who don't really care about the pitches and aren't going to really take your product seriously and like then how do you weed through all of the garbage accounts to find the 10 of people who are genuinely using it like that i feel like a lot of these kinds of systems that they eventually degrade into that but if you did a really good job of managing the community and moderating and like i think you could actually SPEAKER_131: turn this into something pretty intriguing some people like to um you know get paid to do surveys SPEAKER_206: who's next up next we have a ai powered workspace platform for creatives from san francisco SPEAKER_231: here's create taught we're building a creative super app an intelligent visual workspace for teams to focus on creativity but cutter new teams are fashion designer from new york to take his projects from idea to production he was juggling between multiple fragmented tools wasting immense time and losing track of his content but james is not alone 86 percent of content creators want a single unified platform to handle all the creative needs this is exactly what created provides your entire creative world in one place since james started creative using create in may last year he reduced his project time for six months to just two weeks now let me show how created works you just need the browser now you have a beautiful user interface your images your videos your music your online content your articles your designs and real-time collaborative this is how you can reorganize folders just drag and drop it's intuitive it's made for efficiency and to work very fast with your content you can create mood bots one click from the folder you go to mood bot view here's an example into design and architecture it's also used in fashion we have visual bookmarking here you can see pinterest drag and drop into our browser extension instagram drag and drop spotify you can play instead of created and youtube and here are the articles we use ai on top of it created works in vr augmented clarity for apple vision pro and quest just bigger screen we have ai instant search on top of it you can search hundreds of gigabytes of data in seconds no manual tagging anymore you can select content like this in one click and the content goes to the correct fold there's no minimal organization anymore and we support high resolution 3d content and this environment is also real-time collaborative and that's how created helps creators designers and teams to work smarter faster and more efficient SPEAKER_52: all right so that was pretty quick but jason first thoughts aren't created i've seen it before uh i met SPEAKER_05: the founder before it's a clever like hail mary crazy idea anybody can do anything and organize this information and whenever you're trying to do something that expansive it's kind of hard to get an ideal customer profile when he started talking about creating mood boards i was like well that's David Friedberg: interesting and i think this is what pinterest learned you got to have the there there like a very specific customer you're going after all creatives are not created equal i don't want to use a tool like this i'm too busy yeah but i might like to see if i was you know redesigning my shelves back here and you know asking you to redo yours and asking lon to redo his if there was a tool where i don't SPEAKER_05: know chris or lon or all of us could be throwing together mood boards of hey this is what we want this studio set to look like this studio set and it was just a quicker way to share and present ideas i could see the person we hire to redo the studio using the tool like this right yeah so that's where i like it to be more specific house does something similar for uh you know interior design as an h-o-u-z-z yes a really great company and then what they did was when they nailed that then they were able to put all the providers on and then they made money by having profiles of the providers so it's like a crazy idea with a crazy interface it's like being presented for everybody i would like to see it be presented for a more narrow group yeah like the first one is extremely focused on sales people and even sdrs to get the first call to go from email to meeting to book a meeting not even close the cell just get a meeting so interesting what do you think alex of this one SPEAKER_17: well first of all i'm an absolute sucker for a new interface i love that they're building in vr i'm a very visual person so i really enjoyed watching them blast through it my thought was are the people they're targeting having the budget needed to make this a big company because when i think of creatives no offense i'm not thinking about people in the i banking uh income bracket so i was just concerned about their ability to sell this for a price point that will allow them to run the expensive ai SPEAKER_52: in the background but i will say my vote between pitchfire and creatant is going to go to creatant because i don't like people sending me uh meeting invites okay i'm gonna go with pitchfire David Friedberg: just because as a business to invest in i think they have a quicker path to getting to a million dollars in revenue would be a better investment right now the other one's a little bit of a hell mary like i said and you know it's going to take a lot to get there i wonder if the other one should i would have cretin should be more ai based where it just builds you the mood boards and it uh post them based on a prompt as opposed to me doing all the work which it seems like they're adding those features lon you are the deciding vote i thought creatin is it is interesting and i think SPEAKER_206: visually it's cool but i i think the pitch is it's too focused on the drag and drop and actually i think the better or the thing that's more intriguing to me is the organizational like when you're trying to edit something that's complicated and you've got like a ton of assets that you're putting in that gets out of hand immediately and that's one of those use cases for ai that i think is so strong like ai can identify all the assets keep them organized sorry so that that that was kind of missing from SPEAKER_31: them so i'm going to go with pitchfire oh okay pitchfire by nose okay let's do our next pairing all right next up we're now going to do kippy which is a personal language tutor let's hear from kippy SPEAKER_253: okay hi my name is steve walshansky and i'm the founder of kippy there are is your personal language tutor there are over two billion people who are currently learning a foreign language and many of them are struggling the the traditional methods don't really work well because those are designed as one size fits all and uh at today's world people are expecting more personalized approach if you opt for personal approach to tutor then it can actually get really expensive which is pricing out many people around the world so what people do is they are trying to find their own speaking partners there are hundreds of groups where people get together and trying to speak with each other the problem that is that if a beginner or kind of intermediate is trying to teach another intermediate they don't really make any progress and i've joined a couple of these calls just to find out how difficult it is for these people while the language learning market is growing at uh 20 percent a year it's expected to reach about over 300 billion in 2032 languages like english french japanese and korean are gaining instruction as well so kippy is here to help people learn languages and advance to a conversational fluency because many people don't necessarily need to reach full fluency unless they want to go for a job or a university for most people it really means knowing enough that they can travel and connect uh with local people kippy helps you practice your pronunciation practice real life scenarios or simply chat casually about the things that you care about kippy launched in december 2023 and pretty much grew tenfold in uh last year kippy already gained quite the traction of super fans and uh continues to grow our competition doesn't sleep but our competition is focusing mostly on english learners where kippy found its strong vault with uh people who are learning languages all right SPEAKER_20: in english jason first thoughts on on kippy i mean i think this is the best way to do it because the ai David Friedberg: will learn your style very quickly so if it knows you're good at just learning words but you're not good at grammar and putting a sentence together you know it'll give you enough positive reinforcement make you learn a bunch of words and then gently get you to do sentences if you're great at sentence structure but your short-term memory you have a hard time with you know remembering colors and food you know maybe it will help you with that or maybe you're like me and you have pronunciation issues because of your dyslexia i like adaptive learning and we used to do that through machine learning or through like forked trees where we'd ask a series of questions and then try to adapt the learning style to you ai is SPEAKER_05: just going to do this naturally and it's going to work i also like the idea that you could customize it a bit if it's ai you could say hey i would like to learn about um this topic through reading my nick's news and so show me my nick scores and show me my tech news in german and force me to learn you know SPEAKER_52: german that way so i kind of like it i think it's i think it's great i love to focus on non-english speakers and you know it hit me as i was watching that picture that i would use this because i i've gotten SPEAKER_17: to know a couple people who are of uh nepalese descent and so whenever i go to where i see them i learn a new phrase in nepali and then i try it on them and they giggle let me have a good time about it and if i could show up with like a couple of sentences i mean the line's blown anyways lon SPEAKER_267: who's next from arlington we've got vidala labs they're uh creating generic versions of high-cost drugs SPEAKER_268: let's take a look hi my name is isaac yonemoto i am the ceo and co-founder of vidala labs SPEAKER_269: i'd like to tell you the story of ben who is my friend and a member of the board he's a pediatrician and early in his medical career he did a medical mission to central america where he unfortunately contracted a pretty severe gastrointestinal bug now one of the side effects of this bug is that you can get an autoimmune disease called rheumatoid arthritis which is as it sounds a debilitating joint inflammation to treat this he takes a drug called humira which is a biologic antibody drug that costs upwards of 150 000 us us dollars per patient per year and sometimes can even be more depending on how frequently you need to self-administer the drug so this is well out of the range of affordability for most people around the world and also a burden on our health care system since we all subsidize each other via either private insurance or public options such as medicare or the va so the goal of vidala labs is to bring down the cost of the drug by reimagining the manufacturing which allows us to make good margins and charge way way less this will increase the accessibility of the drug around the world and also at the same time lessen the burden for patients all around the world because not every patient uh is lucky enough to be a health care provider and have fantastic health care insurance like ben thank you very much jason and lon what do you think hard to know David Friedberg: not my uh you know um vertical so for me easy choice i'm going to go with the language kippa because i don't know enough about this space but it does seem promising and so i do know that doing these drugs is um you know really effective and generics change everything i think the whole roman and hymns business model is based on generic and compounding pharmacies and instead of even SPEAKER_277: bothering with your insurance to just buy these things for pennies on the dollar so i do think this SPEAKER_206: is like a big part of the future i'm sort of with jason on this one obviously a cheaper version of humira that people with rheumatoid arthritis could take would be great i'm very for it i wish them all the best i think that sounds like a great concept but in terms of a pitchable startup that sounds like something that people would invest in that is like a founder friday sort of friendly company i think kippy is a very cool idea another great use for ai just helping people run their languages and train you don't need a live partner for that an ai partner is perfect for that so yeah i'm going with SPEAKER_279: sydney's kippy yeah same i just want to say the vidala labs your website's a little bit bare but what SPEAKER_17: you're saying is awesome so when you have more to show us let us know because if you can actually bring the prices of those drugs down you're a legend uh but in the meantime we can play and touch kippy SPEAKER_90: so i think that's going to be my pixel so three to zero on that one but shout out to the biotech people for pushing ahead on trying to make the world a better place so there we go so now we're going David Friedberg: to have these next companies if they want to uh do a new pitch uh and tighten it up i'm okay with that they just have to get it in within the next week or so we've got six companies three matchups SPEAKER_232: left to do before we're before we're at the elite eight great let's do it in the next episode uh do we SPEAKER_00: have a founder question lon we have a quick founder question from reddit oh i like this one from sean SPEAKER_206: guitarists on r slash startups what was your hardest learned lesson as a first time founder he's got his own example he read the books knew uh that he was supposed to keep 18 months of runway nonetheless at one point it dipped down to more like 12 months but he had so much faith in his team didn't want to let people go just in order to shore up the financials but as a result conventional wisdom in this case was right things got worse eventually about 50 percent of the team had to be let go that was this person's hardest learned lesson so his question to the others is what were tough lessons that you learned from your first startup sure and what's the hardest classic principle of running startups to put into SPEAKER_116: your actual practice so uh i have learned this lesson twice maybe like to you know right the ship David Friedberg: and you know get the expenses correct and that is very hard so i empathize with him once you've been through it once or twice you understand that you want to preserve the altitude you have to find runways to land and get more gas so if you're flying between islands uh you know you don't want to be out at sea and have to ditch the plane on the ocean so instead of ditching the plane you ditch some baggage from the plane to lighten it it's pretty dark metaphor but it is what it is humans are sandbags yeah if there's if you had you were transferring you know iphones from china SPEAKER_24: to san francisco you might throw some iphones overboard rather than all of them going down there SPEAKER_05: you go uh so i think the other one is with talent how to manage talent is always a hard lesson for folks if you want to do a training program do a training program invest in the training program that was a choice we made here at our investment firm if you don't want to do training then hire people who have the skills you know and just get out of their way both of these strategies can work and they can work in the same company you might hire very elite people to run finance let's say David Friedberg: and you might hire one really great sales executive and then because you can't find great sales executives or they don't match your philosophy you decide with your top salesperson i'm going to create a training program for sales people and i'm going to do professional development what doesn't work is hiring people who don't have the expertise and then expecting them to be able to perform like an expert so when we hire researchers here we use the term researcher not associate or not partner or principal or managing director the other venture terms this is a hard lesson you can't be upset at SPEAKER_05: people who you hire to be experts if they're not experts you need to train them to be experts and you have to invest in professional development and if you have experts then you have to demand excellence from them and not be intimidated by them and demand they hit targets and that you know they are self-starters etc and it's really about crisp clear communication when you're interviewing people i find almost universally when a founder tells me or when i've had this situation somebody's not hitting expectations it's because either you know one two or three things happened one you know they oversold themselves in this in the hiring process and you got duped and you weren't able to get reality from their references etc that can happen it does happen i see it happen all the time when people hire like this sales executive with press shirts and cuff links and they come across as incredible but then they're terrible at actually getting on the phone and closing sales uh the other is you saw the signs David Friedberg: that this person wasn't going to work out and you just ignored them and you just hoped they would you know kind of get there and you probably saw that uh alex many times at tech crunch you hire a writer and you don't they sold themselves as something and they actually don't file on time and okay they misrepresent themselves but then there's other times you enabled it you didn't you know cut bait and so if there's any doubt there's no doubt in hiring uh and firing fire fast almost universally when i knew something wasn't going to work out i took too long to cut bait yeah people stay too long in relationships SPEAKER_17: jobs and employee situations uh can i just throw in other things that i've learned at startups because i've worked on a couple of days uh don't don't tolerate toxicity that's a good one like i like this is a thing that will bring down your even if it's a high performer if they're just miserable to be around they will scare away other talent and they will end up by themselves with a lot of mediocre people around them again jason it's kind of one of those things you can detect early but you might ignore for the sake of a deadline or whatever but it's just it's never worth it don't tolerate it i i call SPEAKER_206: this my no jerks rule i've got one too actually from years of working not not a founder but uh just like as in in screenwriting they use the the expression kill your darlings which means sometimes you may love a character a scene it may be the reason you wrote that thing in the first place but it doesn't end up serving the story or the plot or the the moment at when you're done and you've got to cut it anyway they call that killing your darlings i feel like startups are the same way there may be a feature or an idea or a concept that you it's been with you since the very beginning it was part of the pitch it's a beloved part of the product for you but if it doesn't fit where you're going now you might you might have to lose it and i've seen that happen multiple times in different startups where it's always a hard decision like well but i love this feature this was what i thought power users would be into but it's not where we're going this course some refer to it as sunken cost fallacy where you're SPEAKER_24: just you've put a year into a feature it's got modest success and modest success is almost SPEAKER_299: universally the blocker to breakout success i tell founders so you know if you have a product David Friedberg: or an aspect of your product let's say you've got this week in startups it's sold out it's doing incredible then you do some other thing and it's not and but it's not not growing but it's growing 10 a year and the other product's growing 200 a year that thing that's growing 10 a year you could just reallocate those resources to the thing that's really growing quickly you just have to understand the sunken cost fallacy sometimes referred to as throwing good money throwing good money after bad so you made a bad decision you invested a million dollars in a product that only makes a hundred thousand and you decide i'll put another million into it we should put a million into that one it's like yeah nope better to do something else this is a great reddit rapid SPEAKER_05: response let's get this will fly up there as quick as possible to our friend and uh well done David Friedberg: he is x.com slash lawns i am x.com slash jason he's x.com alex go do a search for this week in SPEAKER_05: tech to see alex and i uh guest uh guesting on leo laporte's podcast which this week in tech was uh the predecessor to this week in startups which was a predecessor to all in uh fingerprints along David Friedberg: the whole way and if uh leo hadn't taught me how to do all this and alex and giving us a shot uh you uh we wouldn't have created this week in startups without this we can start so we know all in without all in trump would have won this presidency so it's all dominoes thanks to leo laporte for SPEAKER_29: getting trump elected that was the joke we made yesterday he loved it we had a lot of fun we went SPEAKER_305: for like three hours or something crazy like that it was a lot of fun give it a listen everybody and SPEAKER_306: we'll see you back here on wednesday bye bye bye bye all right so today we're going to talk to a company a startup called menu data but before i get into what the company does and i bring up the founder i want to tell you a little story so i live in rhode island which is a very small state here in the united states and actually my family has some history here my father got his advanced degree here in the city so why does that matter well back when my parents lived here in rhode island in providence they told me that at the time this was back i think in the 70s that there was essentially no place in the entire state to get mexican food and the one place where you could wasn't very good by the time that i moved here there was an absolute plethora of food options we've got uyghur cuisine thai cuisine stuff from all over the world and i'll just say some pretty banging mexican food too that's now the norm i kind of go to a city and i expect there to be a great number of food options out there anything that i want should be probably within five or ten blocks or five or ten minutes if it's a driving city versus a walking city this is the new world people eat more variously more diversely and i would say probably eat out a bit more frequently than they used to what this means is that there's a lot more data and information out there about what people are eating across menus and other sorts of things like that so what do we do with all that data well this startup menu data has an idea about just that so please welcome to the show with me it's sunny the ceo of menu data hey how you doing nice to meet you alex good to be on oh absolute pleasure um so first of all before we break into the company you were telling me in the pre-show that menu data is now actually based not in silicon valley not in austin not even in new york city but instead in a place that i mostly SPEAKER_311: associate with whiskey so tell me about that yeah so we're actually uh in chattanooga tennessee part of this really awesome um kind of accelerator program called brickyard so 12 teams come out here from all different parts of the country and just grind on their startups you know they have a sauna in there they have like a cold plunge they have a gym and it's just a really awesome place to build so little known fact about chattanooga it is the home of coca-cola bottling so as you know it's a famous railway uh station endpoint there's just a lot of coca-cola and freight and 3pl going SPEAKER_306: on here i just pulled the brickyard website and it says for the maniacs i love that i love that it's always good to know that i'm talking to a fellow maniac sunny it's uh it's my favorite type of person all right so i i wanted to provide just a little context about why i care about what you're building but in this case i'm a little bit curious what the starting spark was and why did you choose to build a company around data from menus and we'll get into why that matters in the business model in a second but i'm so curious as to why you picked this problem to really you know put your back into SPEAKER_319: yeah it's very interesting so kind of coming out of grad school did a lot of research in human SPEAKER_311: computation and training data for ai before ai was cool back in 2012 i worked for a startup called crowdflower where we'd solve these awesome big data problems for you know large companies but when i was living in the mission i would see kind of chefs with their hair on fire they couldn't read what they were buying 30 000 different vendor templates so there's this kind of big data problem that always existed especially for the independent restaurants all the way up the supply chain and i wanted to SPEAKER_306: focus on that yeah is that because the hospitality business has always been pretty hands-on people oriented and dare i say it low-tech i mean you know a gas range doesn't change that much i think over time and so did that lead to just the restaurant business being relatively fractured and kind of stuck in the the paper and pdf era if you will longer than it should have yeah i like to call it SPEAKER_311: old school but um yeah so it's a very kind of relationships oriented business there isn't a lot of data transparency that's going on and in our opinion you know food and beverage is one of the last sectors to kind of modernize so it's undergoing lots of change all across the industry you can see it from the way consumers are eating at restaurants to trends around ozempic glp1 the need for data is SPEAKER_306: just um you know astonishing as a person who has young kids and therefore i'm time strapped all the time i've become a real connoisseur of finding menus online to figure out what they have and what's in it so that way i can check against allergies and so forth it does seem to that since covet a lot of information was taken off of you know menus that i could hold in my hand and turned into qr codes and digital formats did that lead to an explosion in the amount of information that was actually available in the market for you guys to kind of hoover up if that makes sense SPEAKER_311: yeah absolutely after covet almost every single restaurant and grocery retailer has put their information online so you know through advanced scraping techniques whether it's pdf javascript html we're able to not only extract that data but make sense of it using large language models so we're able to convert the menu item in description look up the recipe online and ultimately translate that into SPEAKER_306: ingredients but okay so let's say that you and i are sitting down and uh we're both going to make a red sauce i would go about it with my favorite methods my favorite olive oils spices and so forth you would do it differently but if you're going to be assigning ingredients to recipes or to menu items isn't there a risk of having the wrong actual recipe for a chicken parm or chicken piccata or whatever and therefore missing something that might be important yeah i mean so you know everything is SPEAKER_311: based on confidence intervals so you know for the large um you know high confidence items if it's exactly explicitly mentioned there then of course it's going to be a hundred percent but if it is something obscure like a sauce it might you know have a different sort of percentage so we're able to weight those out and give that to manufacturers or distributors or you know even menu strategy teams to sort of execute and either create new products or or make sales i'm sorry menu strategy teams is a SPEAKER_306: business or a profession yeah why why do i work for a living i should be eating for a living yeah why not i quit uh anyway i want to talk about the scraping point because when i was just thinking about the business i was thinking okay there's a lot more data out there so that makes a lot of good sense but we've also talked a lot here on twist and i think out in the broader technology scene about information rights uh intellectual property the ethics of scraping and so forth do those concerns apply in this space or is menu data just kind of treated as something that everyone can collect SPEAKER_311: if they want and kind of no harm no foul yeah we kind of view it in the no harm no foul point because you know this is kind of restaurants that on their own website have put their menus you know for public consumption we're just simply using it for trend analysis and eventually our goal is to have an independent restaurant version almost like a premium model where actual restaurants can find localized trends and they can start becoming more data driven so we sort of view this as an overall SPEAKER_306: improvement to the ecosystem i was going to take us into the product before customer but what you just said is very interesting it sounds like then menu data by the way menu data.ai if you want to take a look um is not aimed today at the single store that might be looking at trends but instead more at SPEAKER_311: chains is that fair yeah i mean you know our our initial customer base is going to be that large scale manufacturer they're typically spending millions of dollars on r d and innovation and they're frequently coming out with products like mcdonald's mcplants or spicy coca-cola that completely missed the mark so they're just 80 mcdonald's mcplants yeah so plant-based burgers are really popular on kind of the coastal regions but not so much in the midwest and um they just didn't have a lot of data around it right so when you can kind of compile the right sort of data and sort of create products that people actually want to eat you know you're starting to really use this data to to provide you know insights for for business outcomes okay so the tech stack here is a crawling mechanism a data SPEAKER_306: cleaning mechanism on top of that and then the ability and then ai on top of that to parse through it and find things and also answer questions for people and you're selling to more panera than to um you know percy's single person coffee shop okay all that makes good sense to me can you show it to me can i see it because i would love to get my eyes on this enterprise tech is always a little nebulous until you see you know the actual thing so um let's take a look so imagine i'm an analyst at a SPEAKER_311: consumer insights team at a food and beverage company and i just simply want to know what's out there or what's innovative in the market you can simply search for something you know like mocha for example and you could see simply see the amount of data that you have to deal with right 64 000 results that's a lot so we're actually running ai through every single menu item looking at all of the ingredients and identifying information so here you could see you know the cinnamon cayenne mocha is very interesting maybe a charcoal mocha alex if you've ever heard of that as no sonny all of these are blowing my mind SPEAKER_306: as a black americano drinker but just for folks who are listening you're watching what the system has done here is pull up what appeared to be the more exotic mocha variants that allows people to then see what other people are trying but you can't today tie this to sales data for example so you can't probably tell me if the cayenne mocha is doing better than the uh the black walnut white chocolate SPEAKER_333: mocha or whatever yeah so what we do as an approximation is for every single restaurant SPEAKER_311: location we have kind of geo location data so that geo location data will say how often consumers are going to that restaurant the overall sentiment analysis based on reviews and then for top you know within kind of uh you know food delivery websites we're able to kind of grab those popular menu items and then tie that back to these items as well so if you are a sales rep you could understand that hey is this really one of their top sellers or are consumers mentioning it a lot SPEAKER_326: okay i want to try to put this into dunkin donuts terms if that makes sense because i i live in rhode SPEAKER_306: island so you know the dunk is a big deal out here let's say that you know duncan was going to roll out a a nationwide promo let's say they were doing their equivalent of the mcdonald's mcplant and it doesn't do well in certain markets let's say this new item only does well on the coast to stick to that point would menu data be able to say that hey you know the the duncans that are in the middle of the country have pulled this menu item from their menus but it's being kept up on the coasts can you can you get that granular today yeah so one reason why clients really love our platform is we are able to SPEAKER_311: grab not only what are the top most popular items per location but we're actually able to get grab pricing per location oh we're able to say like whether whether you're on the coast or whether whether you're on the midwest how are those prices changing uh whether it's for their own business or against competitors and i'll give you an interesting example you know especially for you know chains like panera bread where they're not looking at conventional competitors anymore because if you've kind of seen uh in the news and headlines chilies is really exploding because they have this 9.99 um you know triple dipper package and like a 9.99 like burger where you can kind of sit down have a meal just for 10 bucks so the idea of competition is changing especially as consumers are looking SPEAKER_306: for things that are are definitely not as expensive i love it so what does it cost so if i'm if i'm a big company i've got big dollars you've mentioned teams and you know if i'm spending a million dollars on this my impression is that you probably have some pricing flexibility just given that you're working with companies that have budget yeah exactly so you know our all of our models um you know start at SPEAKER_311: probably around five to ten thousand dollars a month but you know if you want access to kind of different countries worth of data or you know if you want the retail module or you know the social media module um of course it would cost more i'd love to hear that i mean i love to hear startups SPEAKER_306: charging a lot of money because it means they're doing quite a lot of good sunny clearly having a lot of mocas in the database is good but i'm curious what other types of data you're hoping to add into the overall database because i presume that there's quite a lot of information out there SPEAKER_311: that you're going to create over time yeah um you know as we were mentioning earlier um we have kind of are also storing thousands and thousands of ingredients so within our database right it's segmented by different categories let's just for you know fun to look at top fruits right so acai is a mainstream ingredient growing at 47 percent in retail so we were talking about new data sets right so menu data has just recently added in kind of retail information so we're grabbing data from new retailers um showing growth numbers and the top categories it's being used in brand information average pricing so you know one of my favorites is kind of dole right dole they have this acai bowl line and they're focusing on protein right so these are interesting trends and tidbits competitors would want to know new product development teams would want to be interested in consumer insights teams as well as marketing and eventually this is awesome so really the thing that i've learned SPEAKER_306: most in this this second demo is that you're really not just targeting restaurants and chains but also grocers and buyers and a much broader demographic of people than i had initially planned which is good because in startup terms that means your tam is bigger so that's that makes a lot of sense do you think you'll have marginal pricing power on adding more data in the future like will that allow you to SPEAKER_333: basically up your prices yeah i believe there's this immense opportunity to become kind of the SPEAKER_311: leader in in food and beverage ai so what i mean by that is to be able to continually add more and more data sets and by using ai and eventually adding in chat functionality um create this sort of product that anyone on the team can use you don't have to be an expert on food you don't have to be an expert on you know innovation r d anyone within the food and beverage company can just simply log in ask a SPEAKER_306: question and get their answer can i give you a tip slash request at this juncture yeah one thing that i've i've gotten a lot in my history of writing about startups for so long as you know how do i make my company stand out how do i get more press and attention and but i always tell people is if you have interesting data anonymize it and then publish it in some way turn it into blog posts and headlines and share that data with the masses because me the journalist doesn't have the same data sets that you do you guys are like the best possible example of this like especially in a high inflation environment with everyone watching i've seen more charts of egg prices than i ever want to admit in the last couple of weeks so i just really feel like you guys with your data sets and your ability to already extract you know insights out of it my god or do you have a publishing campaign like set up to just show off what you have and also explain the world to people because it seems like a big opportunity SPEAKER_311: yeah so basically our marketing right now is basically done for free because we have these two amazing partnerships one with cantar one with the food institute where we're able to kind of partner on new ideas new trends that are happening in 2025. one example of that is you know definitely what's happening in probiotic and prebiotic sodas right um this whole copy just sold right yeah yeah yeah yeah so we have this really cool slide showing how many skews were added at olipop and poppy and how they were able to differentiate and win the market because when you sort of look at the flavors that they have they always have flavor combinations so it feels more premium you know they have a raspberry rose or they have a orange cream which feels more unique and they're able to charge more so we were able to kind of have this information out there and then people from coca-cola were reading it at sea obviously and it just kind of brings this new new wave of brand awareness you know for us okay that's SPEAKER_315: great but have you had olipop and poppy before like have you drank them yourself yeah i i've tried olipop um you know it's really really interesting oh i knew it i knew it i knew you were going to say SPEAKER_305: interesting what you're reaching for there is it turns out that humans find high fructose corn syrup delicious and when you swap it up for something healthy it's not as good so shout out to poppy for SPEAKER_306: making the bank but that's a trend that i'm not entirely sure i believe in which makes my point that i would love to see charts from menu data kind of breaking down like our actual grocery stores adding more skews to this trend is this real and if i was a like a cpg investor i would kill to have more that information and then i would go share it and spread the word and make you guys look like kind of the uh the crunch base or pitch book of food yeah that's our goal and the thing is gen z SPEAKER_311: um for example they don't you know they they're increasingly interested in dry january the sober curious movement you know healthier lifestyle so every generation is going to have those fundamental differences when it comes to food and beverage and um yeah i mean it you know it's really leading to more and more innovation in the market sonny tell me about growth i know you guys founded the SPEAKER_320: company and i think it was early 2024 so how big is it today and uh there's been a lot of talk about startups needing to grow frankly faster than ever so i'm just curious about how quickly you're going today and kind of your expectations for 2025. yeah i mean you know towards the end of the year we're SPEAKER_311: already a little bit under half a million um you know of arr we have um new clients really lined up that are willing to pay more if we're able to add more functionality and especially this new ai feature we're working on where essentially we're going to have the first of its kind where it's going to be a chat gpt ai for food and beverage essentially pulling in all sorts of data right whether it's retail you know social media menu data and the first step is to create a system where you know consumer insights folks folks in food and beverage they can easily search get an answer on external sources of food and beverage the next step though is to connect in internal data so maybe it's supply chain information maybe it's information about their existing products and their sales data and the ai could give personalized recommendations on how their company could be doing better whether it's a personalized sales script or you know just even like what sorts of products they should be pushing to the market so we're actually building this ai tool to allow insights teams to actually create products so it's going to be like an ai product generator it's going to bring in kind of trends and ingredients and flavors and consumer preferences and create new ideas on the fly and it might yield SPEAKER_306: actually a world in which we have more menu diversity because if people see more trends they can be more creative so maybe we're going to end up with better food overall well as an eater i'm a fan but sunny i i would be remiss not to ask you this so there's been a lot of questions in the startup world about where value is going to accrue in the ai game is it going to accrue to the data centers the ai model companies the data owners or apps or is it going to be vertical ai are you concerned at all and i'm asking for the founders who are tuned in today are you worried at all about the ai model companies taking on ingesting the same data that you are and offering a similar competing service at SPEAKER_333: what might be a more consumer friendly price point yeah no i i i'm a firm believer in the vertical ai SPEAKER_311: kind of model because there's just so much data ingestion getting it in the right formats normalization that has to be done along with fine-tuning your own rag pipeline so i don't really see a world where you know the ai is literally going to do every single um business although you know there's been so much talk about it on on on x where people are like hey you could just spin up salesforce in a day SPEAKER_305: yeah but salesforce is still in business exactly right not to throw shade but like i think they're SPEAKER_311: doing fine yeah exactly so our belief is that um because these data pipelines are really hard to create and the data normalization is very very unique to the industry and food data is so messy inherently it turns out there's actually 82 ways to have an ex-benedict on the menu and just even normalizing their data takes you know millions and millions of llm calls we really feel like we have we're in this unique space where we're able to leverage what's already out there and have our own proprietary data set and then um you know bring on existing models like plot or you know open ai or even mistral and then have the ability to create these curated insights that uh never have been seen SPEAKER_306: before okay last couple questions then sunny uh how big is the company and staff today are you hiring SPEAKER_311: and what is a difficult role you're trying to fill we're primarily a team of three you know core team yeah so really really small we have two outsourced developers though so actually a team of five we just hired our first ai engineer so oh yeah it was it was a very interesting process so we actually had you know chadgpt01 create the job description for the ai engineer and then it also created a challenge so we actually got 50 000 rows of our menu data and then issued that out where people could actually build their own version of this spot send it back to us and it really allowed kind of a real life example to see how people were approaching it were they using rag were they using tf-idf algorithms and um yeah it was just really fun overall okay last word for folks out there who are building and are SPEAKER_306: not in a major technology hub setting can you just give them some some props that you can build in chattanooga you can build in wyoming you can build anywhere yeah i mean i would just say you know get SPEAKER_311: out of the house go to your local ai meetup if there isn't one just create it but just try to find like-minded individuals they're literally everywhere i was so shocked to see the amount of great startups coming out of tennessee and just the amount of innovation that people are doing especially kind of the younger folks out there it's just incredible you know they just taught me cursor two weeks ago so i'm actually pushing code so yeah it's just a wonderful time to be an entrepreneur it's also a very funny SPEAKER_373: time if they're letting people like you and i write code i i don't know if that's incredibly bullish SPEAKER_297: or incredibly bearish it's got to be one of them all right sonny and just to make sure the url is SPEAKER_306: menu data.ai people want to take a look and we'll have you back on when you hit um the million in ARR so let us know yeah looking forward to it all right thanks man see you see you