SPEAKER_00: All right, everybody, welcome to this week in startups, got a couple stories, news stories that I just wanted to give you my opinion and my hot takes on next two stories include companies that both signal a peak and the end of Zerp, but for different reasons, Uber was, of course, a poster child for stay private longer, grow at all costs. And, you know, it's just one of the great investments of the last decade. And now the company that was considered a money loser forever would never be able

SPEAKER_01: to make money. It was a broken business subsidizes subsidized by VCs. Well, now that company has hit profitability in three of its last four quarters. And according to reports is going to be joining the S&P 500 soon. This is incredibly important because if you join the S&P 500, a bunch of people have to programmatically buy your stock. On the other hand, FTX and Sam Bankman Freed, they were the poster child for the COVID era crypto craziness that we saw all the stimmy checks, and then

SPEAKER_00: this entire crypto madness. Well, SPF, you know, is this millennial prodigy that was going to become the first trillion, right? And he was gonna save the world. However, he got

SPEAKER_02: caught stealing $8 billion worth of customer funds and his

SPEAKER_00: entire empire collapsed, as we've seen in the past week. And now he's facing 100 plus years in jail, not just similar to Bernie Nadoff. So let's talk about these two stories and how they signify the nail in the coffin for Zerp. It's the end of an era, as we say. And then we'll touch on Biden's executive order on AI and the discussion that the boys had an all in when

SPEAKER_04: I wasn't in town.

SPEAKER_03: This Week in Startups is brought to you by Squarespace. Turn your idea into a new website. Go to squarespace.com slash twist for a free trial. When you're ready to launch, use offer code twist to save 10% off your first purchase of a website or domain. House of Macadamias is the next big health trend. Get a free month supply of macadamia milk with any order at house of macadamias.com slash twist by using code twist 20. And CLA innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at CLAConnect.com slash tech.

SPEAKER_00: Uber reported its Q3 earnings today, the shares are up 4% after Uber reported yet another net profitable quarter. Full disclosure, I still have a big stake in Uber. It's worth noting, Uber shares have almost doubled this year in 2023. That's why I'm in such a good mood. It's up 97% year to date. Two things that drive my mood, how my Knicks are doing and how my Uber stock is doing, among other things. Uber's market cap is right around that $100 billion mark for the first time since 2021. And as I said in the intro, three of the last four quarters, they've been profitable on a net basis. But Uber actually slightly missed on analyst expectations for its top line revenue because of some accounting changes, and earnings per share results, but they did beat massively on its gross bookings. I mean, this is just extraordinary gross bookings $35 billion up 21% year over year. Uh, and then revenue, uh, which is what they take, right? Bookings, a bunch of that money goes to the drivers. They take, you know, 9.3 billion of that. That's their actual revenue. That includes their advertising business. So they have a blended take rate of 26% app store. Apple gets 30%. Patreon, some of those services, uh, sub stack, they take 10%. Uber gets 26%. Now, Uber did not

SPEAKER_01: disclose its ad revenue for this quarter, but it mentioned there are now 445,000 ad merchants in the system. That's up more than

SPEAKER_00: 70% year over year. Now it's worth noting. Those are, uh, in two buckets. I believe there are some where it's Monday night football,

SPEAKER_01: or, you know, Netflix promoting to you when you're waiting for a ride, uh, for your Uber, they only accept really high end ads for the Uber transportation app. Then there's premium placement. So when you open up Uber eats and you're going to go shopping, it shows you the restaurants you always order from and the stores you always order from. They can, uh, a restaurant can insert themselves into that for a fee and try to intercept you, uh, and let you know about their offerings. So there's two ways for them to make money from advertising, in case you didn't know, 2.4 billion trips. That's a B in Q3. That's 25% year over year. Uh, and the monthly active users, Uber has a name for this, uh, monthly active platform customers. In other words, they have to do a transaction is 142 million. Let that sink in 15% year over year, 142 million people transacted on the service. Drivers earned a total of 15.9 billion, including their tips in Q3. Also up 24% year over year. And they have, I think 6 billion drivers in the network. Now it's extraordinary. You compare that to McDonald's, you compare

SPEAKER_00: it to Walmart, Apple, Starbucks, Uber has more employees than they do. Now, of course, 80% of them, 90% of them are doing part time, but it's still extraordinary. Q3 net income, 221 million, includes a $96 million loss, uh, from, uh, unrealized loss from Uber's equity holding. So it's even better, uh, than that 221 million. That means their net income is more like 315. Q3 free cashflow, 905 million, unrestricted cash and equivalence over 5 billion. It's got a ton of cash. Uber is going to be a money printing machine. This is my prediction. They're going to start doing a share buybacks. If the, if the stock is still underpriced, you, you really think this should be a $70 share. Most of the price targets out there are 67, 68, 69, $70. I think, you know, and I'm sure that'll change, but you know, everything's undervalued and the stock market wants you to prove

SPEAKER_01: to them that you can be profitable. They held Amazon to that standard. They hold other people to that standard, but once you get through the J curve and you have a profitable company after making all those investments, well, then you can just turn the dial. Like Google does for ads or Tesla does with the price of their cars. And, you know, these really strong companies can almost pick what they want their earnings to be.

SPEAKER_00: Yeah. I think in my mind, they can just say, Hey, let's have this many ads on Google. Let's make the price of the cars, this price, or let's make the price of the rides, this amount. And that is extraordinary. So we closed the book on the Zerp era, out of control, investing and spending and blitz scaling. And now we are back to profitability, dividends, stock buybacks. Congratulations to Uber, Dara and the team over there and all of the alumni of Uber. Congratulations. I believe the best is yet to come. They have some really cool products coming too. I love the idea of like an Uber assistant, like a task rabbit, take out your phone and get somebody for 40, 50, 60 bucks an hour to come help you with either business or personal tasks, like a personal assistant type thing. Or a family assistant type thing could be huge. And I know they're testing that it's that's

SPEAKER_14: public knowledge. And just, you know, for some fun with numbers and charts, having been there from the beginning of this company before they even launched, looking at annualized revenue from 2014 to 2022 here in this table, started out with $400 million in

SPEAKER_00: 2014. And then this year, I think they'll hit 40 billion or something like that, they're doing over 9 billion, as we said, if you just take that, let's just round up to 40 billion for 2023, and you compare that, that's 100 times what they were

SPEAKER_01: making in 2014. 100 times, not 10 times 100 times. And this is one

SPEAKER_14: of the things about networked businesses, marketplaces, they can really sneak up on you how big they can get. And, you know, the

SPEAKER_00: other piece of it that's really interesting is the growth of Uber from last year to this year, if it winds up being you know, they go up 6789 billion dollars, let's just say it's 7 billion in added revenue, you know, if you look that they increased what they did in those three years 2014 2015 2016. And if you took $40 billion, that would be the first six years of the of these company reports here from 2014 to 2019. I think that's about 40 billion. So the the last couple of quarterly updates here,

SPEAKER_01: when you start looking at the quarterly updates, you know, what

SPEAKER_00: you really it's big numbers are kind of confusing to the human brain. But when you look at how much these big companies, whether it's Google, Facebook, Apple, Microsoft, how much revenue they

SPEAKER_14: add, you know, in their later years, when you get to years 11, 1213 20 21 22, they might be adding more revenue than they did in their first decade as a company, the percentage growth goes down massively in these companies. But the actual real

SPEAKER_00: number billions of dollars in growth is just mind boggling. And this chart is super indicative of how it's been for them. 2018

SPEAKER_14: into 2019. They're growing, they're figuring it out. The blue part of the of this bar chart is rides mobility, they call that I

SPEAKER_00: call it rides. And then the red is delivery. Obviously, you have the pandemic and then boom, you see delivery just explodes, it doubles. And then of course, it sticks around and door dash is also doing great. You can check out their earnings on your own. But these numbers have gotten very large and it's very attractive. What's next for Uber, you know, I think it's getting too big to be bought, I always felt like Amazon, Apple, Google, you know, one of these companies would buy it. When it was worth 30 40 50 billion, they would put it in offer for 60 or 100 billion. But now at 100 billion, it's going to be very hard for somebody to buy it, especially in the Lena Khan era of no acquisitions. It would be amazing if Amazon owned Uber, I'm not advocating for this. But if you just think about your Amazon prime, and then having some preferential treatment on Uber, and then that being able to use the Uber network to deliver from their, you know, warehouses and everything and you know, your Uber rides, you know, Amazon Uber would be just an incredible, incredible product. And if you know, Travis and Tim Cook hadn't gotten into it, I always thought Apple would have been amazing acquire an extension for them. Although I don't know if they want to operate in the real world, they've never released the Apple car. So and then for Google, it's obvious, you know, they have Waymo. And so Waymo is going to be part of the Uber network. With what's happened with Cruise, which were we will talk about today. But you can read the New York Times story. And you can read the rebuttal from the CEO of Cruise. There seems to be a lot of human intervention in rides as much as every couple of minutes, some human is intervening. So I think that com combined with them getting their license pulled, there's some lack of disclosure here that is making people feel I don't know, less trustworthy over self driving. And then maybe people are starting to think it's 10 years out, not two years out. So and Waymo, those cars are super expensive. And in order to deploy a fleet of Waymo's is still going to take a decade. So human drivers, I think, have a decade behind the wheel for being the majority of rides. But over time, who knows, we might see, you know, Uber, when you open up the app, just like you can pick all different types of cars and services from Lincoln Town cars in black to pool and hex and green, you could take a Waymo. Consumers may not want to some consumers may only want to have nobody in the car, maybe they'll be allowed in some jurisdictions and not others, I suppose it's going to be jurisdiction by jurisdiction. So it's going to be a slow rollout. Either way, could be 10 or 20% of rides in the next decade. And I think if Uber captures some number of them, it would be really much easier for Waymo, cruise and other folks to just be part of the Uber network. And, you know, let people pick from there and just split a little bit of economics with Uber and for Uber, which wants to be the everything app, it would be great for them to just have all those options in there, just like in some cities that Uber allows you to get a cab.

SPEAKER_28: If your landing page is terrible, I'm out, right? Most consumers are. It's 2023. You can't have an ugly website. Stop selling for okay or good and have great and great means you're using Squarespace. It's out of the box. Beautiful. These websites have templates made by the world's greatest designers that are going to engage your audience, let you sell anything. And Squarespace over the past decade has just added feature after feature on top of the gorgeous templates that are designed for mobile. And the drag and drop web design with their fluid engine is just perfect, easy to use. And you get built in analytics, marketing channel analysis, sales data, all that stuff. Now, you know, it goes beyond page views and site visits and time and all that. And with Squarespace, you can create an online store. Or you can start a blog, click of a button, right? Easy peasy lemon squeezy. You can create a subscription business for members only content. You're seeing a lot of that out there. It's simple. It's cost effective. It's gorgeous. And they keep adding feature after feature after feature. That's when technology is at its best, isn't it? When you pay one price, but the product gets better and better and better. You get that with your Tesla, you get that with your iPhone, you get that with Squarespace. These are the legendary brands of the internet of this era. Go to squarespace.com for a free trial. And when you're ready to launch, I want you to go to squarespace.com slash twist. And they're going to give you 10% off your first purchase of a website or domain. Go to squarespace.com slash twist

SPEAKER_00: because they know we sent you. Looking at the next part of this puzzle here as we answer SPF, Sam Bankman fraud, I'm sorry, freed was found guilty on all charges. This happened last Thursday in New York City. We no longer have to say allegedly when talking about the $8 billion he stole from customers. Here are the official charges for which SPF was found guilty to counts of wire fraud, two counts of wire fraud, conspiracy, one count of securities fraud, one count of commodities fraud, and one count of money laundering conspiracy. There are also other charges that he faces, but because of his extradition from the Bahamas, those are going to have to be settled in another court case. Sentencing March 28, 2024. That's got to be hard for him and his family. Between now and then it's going to be a tough time to be wondering how long you're going to be in prison possible sentence 115 years in prison. This will be at the discretion of judge Lewis Kaplan. Reporters noted that he consistently seemed annoyed at SPF and his antics in the courtroom. SPF, of course, tried to defend himself and he testified. Maybe that was a mistake. Maybe it makes no difference. Maybe that was in order to help him on appeal. He was officially charged 11 months ago. So trial lasted five weeks. And that's your nail on the Zerp coffin for crypto. I believe there'll be plenty of other people who will get, you know, charged, et cetera. But this was the whale. This was the big one. Moby Dick. He's, he's been taken out. Uh, and I think it's the end of the era. Of course, if you really want to dance on the grave of the Zerp era, we work is now

SPEAKER_33: bankrupt. Isn't it amazing that this all happened within like five days of each other? I mean, it is extraordinary producer coming in. Almost joining S and P 500 SPF going to jail for possibly a hundred years. And we were going bankrupt within five days of each other. It's just like, it's like poetry.

SPEAKER_36: It happens in threes. They always say that, you know, like you'll have some, you know, famous baseball player pass away an actor, and then, you know, some singer, right? It

SPEAKER_00: always happens in groups of threes. So there you have it. Uh, Uber is profitable. Nobody ever said that would happen. Uh, we work goes bankrupt. Uh, and you know, they're working out all the leases crazy. Uh, and then finally I wasn't able to make, uh, all in last week. I was busy with LP meetings, still raising launch fund for it's going extraordinary and more than halfway done, but it takes time to raise these funds. And I've been on the road like crazy doing meetings. Uh, but the besties had a

SPEAKER_36: really good take. I think the strongest part of the episode was this discussion of the AI executive order that Biden put out there. It's a, it's a convoluted hundred

SPEAKER_00: page document. I've reviewed it, uh, and the summaries of it to just summarize it for you. The document focused on what it calls dual use foundational models. The executive order defines these as an AI model that's trained on broad data. Okay. Duh. It generally uses self, uh, supervision contains at least 10 billion parameters. Okay. It's got a certain scale is applicable across a wide range of contexts, whatever that means as general and that exhibits or could, uh, be easily modified to exhibit high levels of performance at tasks that pose serious risk to security, national economic security, national public health or safety. I mean, give me a break. Like a Volvo that you drive down the street could put everybody at risk. Uh, super vague, probably on purpose. Uh, it's just extraordinary that we can't close the Southern border, but we can do this. And companies, uh, building these dual use foundational models are now going to have to report to the government activities related to training, developing, or producing these models, ownership and possession of the model weights and results of any developed models, performance and relevant AI red team testing. That's like doing bad things, creating bombs, et cetera. Uh, and the EO calls out large scale GPU clusters, companies or individuals that own large scale GPU clusters have to report any acquisitions or developments, including the locations of these clusters and the amount of total computing available. Freeberg gave a big rant. That was really great. You know, and his point was awesome. You know, like we've only, we're only five years into this and, uh, it's way too early to regulate. And if they do regulate, why are we regulating these like little tiny techniques? Cause they're all gonna change obviously. Why don't we just look at the outcomes? Like did somebody commit a crime with this? Did they do fraud? Did they steal somebody's copyright or content? Uh, great quote from Freeberg. Come out and say, here are the standards by which we wanna regulate you. This is the size that the model can be. These are the types of models you can use. It's gonna look like a medieval literature in three years. None of this stuff is even going to apply anymore. And he's absolutely right. The pace of change is nuts. You try to regulate something like this, you know, based on the techniques for building it or the, the cluster size, it's not gonna work. Chamath actually wrote a sub stack blog, the case to regulate AI. If you remember back in May, uh, but he mentioned on the pod that the EO didn't really address his concerns. Uh, he said this was a kitchen sink EO. Cause it wasn't specific. It's really convoluted, but he thinks people are trying to do, uh, the right thing. Sachs said he thinks the technique here is the administration is unconsciously trying to make it so arduous for companies to self report that they eventually just give up and say, give us one agency instead of 20 agencies to do this. I think this is a lot of, um, manipulation by people who are paying off politicians. I mean, I'm a simple guy here. I just say follow the money. You've got a bunch of people who have leads in the AI space. They're gonna make a ton of donations. They're gonna give money to politicians to create regulations, to pull up the ladder behind them. So some startup that I invest in, that's got three people. Isn't gonna have a team of 10 people to do all these regulatory requirements. And so this is classic regulatory capture as Bill Gurley gave in his awesome talk. I think that this thing needs to get ripped up by the next administration and throw it in the garbage and you can

SPEAKER_44: start over with a better framework. Next up an awesome founder, uh,

SPEAKER_00: who is building an awesome product in an, an old slow, boring industry, uh, car dealerships. And I've invested in this company and I'm just going to start sharing in these news programs, some of the companies I'm investing in. Cause I want you to know, um, you know, how I think about investing. If you want us to invest in your company, us being the 21 person launch fund, you can go to launch.co slash apply launch.co slash apply. You apply for funding. We have three

SPEAKER_01: different ways to invest founding university, the accelerator or direct. You fill out your form. We read it within 24, 48 hours, get in touch with you, schedule a meeting, and, uh, hopefully we're off to the races. So stick with us. Okay. I got a funny story to tell

David Friedberg: you house of macadamias graciously sponsored the all in summit. And to wow, the crowds, they created a special edition, salt and vinegar pack of macadamia nuts. And guess what? People went crazy for them. Dozens have been messaging the founder, Brandon, asking him to make the salt and vinegar nuts available on the website. Listen, you've heard me rave about the health benefits of macadamias, but don't take it from me. The most health conscious people in the world are eating them. Dr. Andrew Huberman. I like his pockets. I started listening to it. He mentioned he's next on macadamias in his GQ profile. And that guy, Brian Johnson, he was on the podcast when he wasn't a health lunatic. He's trying to versus aging and he eats macadamias. So all you really need to know house of macadamias products are delicious and they support good health. My favorite dry roasted chocolate dip macadamias, you know, I get my chocolate dipped in there and they also have a dip snack bar. So I put a couple of those in my backpack. I put a couple of them in my little roller. So I have a healthy and delicious snack. I make a better decision. Listen, if I had a candy bar, which, you know, like as sometimes a breakdown and I buy one of those, not a good choice for me. Now I make a better choice house of macadamias. They got a new product macadamia milk, get a free month's supply of macadamia milk with any order at house of macadamias.com slash twist. That's a free month's supply of macadamia milk with the code twist 20 at house of macadamias.com slash twist.

SPEAKER_52: All right, everybody. Welcome to this week in startups. Our next founder is building in the car dealership space. Sounds pretty boring, right? Well, this is where a lot of the major businesses come from. So car dealerships are one of those big sleeping giant industries. Motive is a website builder for car dealerships makes it so much easier for shoppers to find and finance cars. Of course, this might sound like a tough industry to adopt software, but you'd be surprised at the size of this market and how much these dealerships can gain from a beautiful and intuitive website. John Haybeck is the CEO and co-founder. We're investors in the company. How are we doing, John? How's our investment doing?

SPEAKER_55: Doing pretty good. I'm trying to make you proud.

SPEAKER_56: And then people can go see the website ride motive.com. How'd you come up with the idea? How did you get your first customers?

SPEAKER_57: How's the business going? So I got my start in the auto industry. I was in high school. I was the inventory photographer at a couple of dealerships in the hometown where I grew up. And through that experience, I kind of got like a bird's eye or like fly on the wall view of every facet of the business from like a participatory perspective. That was really helpful because it exposed me to the problems that dealerships face, which first of all, it eliminated this preconceived notion that dealerships are these small businesses. Even the smallest franchise dealership is actually quite large. I mean, we're talking seven figures in gross revenue annually and in larger cities. I mean, these are like, you know, multimillion dollar net profit businesses per year. They're huge and their problems span far and wide across every department. And it was really energizing for me to see that basically anywhere you throw a stick, there is this massive problem to solve and a ton of budget to really devote to solving those problems. And so through my experience as the inventory photographer, I realized that dealership websites are not consumer friendly at all. They are incredibly hard to navigate. They're loaded with these third party tools and plugins and iframes, you know, these chatbots that like bombard you from the second you get there. And you know, in an age where almost every auto brand is like trying to reimagine their consumer experience, the most important part of it, the actual retail experience is pretty poor still. So that was the initial idea is like, let's just make a consumer experience. That's actually quite nice. Something you would want to do. Shopify for car dealerships, like Shopify for car dealerships, a simple platform dealerships can make and manage their website. And for consumers, it's like really easy to actually find a car. Like ultimately that's what you're there to do is like find a car.

SPEAKER_56: I know when I go to the Corvette configurator, you know, at that website, a Chevy, it's going to be beautiful and amazing.

SPEAKER_36: But when you wind up at your local dealer and you know, I was buying a suburban, we needed to have a car for Tahoe. I think it's gonna be the last gas powered one we ever have to buy, but it's kind of our escape vehicle.

SPEAKER_56: You know, we were going to three or four different dealerships trying to find it. All of them had a different experience than there was like the Chevy Suburban website. It's just, it's confusing and ugly. And then I compare that to my experience buying Tesla's and it's elegant and simple and app like and really tight. So that's right. When you go to these dealerships, the thing I was confused about is they run very independently of the brands they sell, huh? And so they're, and I don't understand exactly how that works, but I guess the larger brands are not saying you have to use our software.

SPEAKER_64: They're saying the opposite. You have to have your own website.

SPEAKER_57: Yeah, it's very complicated. Franchise law is very complicated in the automotive space. And it sort of forces brands to operate at an arm's length when it comes to business decisions that the franchisee makes. And so that is why there is this massive software industry for auto dealers. First of all, the brands don't have necessarily the resources to create custom software that is perfectly tailored for what they need. And second of all, you know, it's that sort of hairy franchise problem that that allows this industry to exist. But more importantly, I think it's actually like by design an important way that cars are sold. I think net net, it's actually pretty positive for both communities and for the auto industry that you have these sort of independent entities that are trying to sell cars because ultimately they exist as like a consultant. You know, when you go in to buy a new car to your local Chevy dealership, they're there to help you through that transaction. They can buy your existing car. They can help you understand your financing situation and comparing that to buying a car online like with Tesla, which is clearly sort of a very seamless experience if you know what you're doing. But if you have a lot of questions, there's really not a whole lot of resources for you. There's no one for you to call and so dealerships play an important role in that regard. And I think that's part of why there is room for sort of both of the models to exist.

SPEAKER_68: Yeah.

SPEAKER_56: And so you build this better mousetrap. How do you get your first dealership? Because, you know, here on This Week in Startups, we're always talking about zero to one, not zero to one, like, you know, not having a product, having a product, but from zero to $1. How do you get the first dealership to say, Okay, I'm going to use this startup software, I'm going to be the first person up the hill and to use it, tell us that story and, and how you lock down that first dealership.

SPEAKER_55: I think more philosophically, like, the problem has to be really painful for a startup to get their first customer with an MVP.

SPEAKER_57: The problem has to be very, very painful. Otherwise, you know, the customer will just use some more developed piece of software. And that was kind of our situation. Like we had this, I mean, hardly usable platform when we launched. And we literally knocked on doors, and approached a few local dealerships and saying, Hey, you know, what do you think of your website? Would you be willing to give this a shot? And I mean, their loyalty to their existing sort of solution was was so minimal that they moved to us when we had zero features and really zero capability. The only thing that we had was like a promise and a vision and, and thankfully, like working with those early dealers allowed us to build a product that was had maybe a greater mass appeal. What's interesting about our business, you ask how you go from like zero to one. What was interesting is how we went from like one to 10 and 10 to 50 and now 50 to 150. Unique to our business, we have this flywheel where it's really quite elegant, like we launch a website with a dealership. And at the bottom of the website, we have our logo, and it says made by motive. Other dealers go to that website, and they see hate that website looks better than mine, who did it, they scroll to the bottom, they see that logo, they click it, they submit a demo request, they sign up. And then we launched their website, other dealers see their website, and just sort of the flywheel starts to build its own momentum.

SPEAKER_55: And so really, once we got like, just a tiny bit of escape velocity, where we're just sort of bouncing off the ground, it started to pick up really on its own.

SPEAKER_72: Oh, so the phone starts ringing, the email, the demos are coming in, because other dealers see our website in the wild, and they reach out.

SPEAKER_73: It's a wonderful flywheel. Yeah.

SPEAKER_56: And it's kind of in some ways, like the perfect market one, nobody discovered it, it feels like some ancient, you know, vestige or something dealerships, but they're not going away, they're going to be here forever. Correct. And these old school dealerships have tons of profits. So they, and now they're probably getting handed down from generation to generation. Now you've got young people taking over for their parents who owned it. Correct. And they are like, why is this software so terrible, we need to upgrade it. And they grew up on phones, and they know about Tesla's website and how easy it is to order from Tesla or even Rivian. And they're like, hey, we need to catch up. And of course, they're going to go look and study. And like you said, you go from having to do the hard sell to order taking. Now, it's not exactly that easy. But what is the process of demoing for them and closing? How do you what have you learned about that process now that you get it out in the wild? You got that virality because it's got the logo on the bottom power by how do you close them? And what's what's the process from doing a demo to closing some best practices there you can share?

SPEAKER_73: Yeah, I mean, it's pretty simple.

SPEAKER_57: On our end, the industry has consolidated pretty dramatically, the dealership industry that is so you know, there's sort of this idea that like every car dealership is independently owned small business, a lot of them now are part of larger auto groups. So 5, 10, 15, 30, 40, 200 stores in a single entity. And so a lot of times we'll have one of those auto groups reach out and say, hey, you know, we're unhappy with our current provider, you know, we'd like to do a demo for the whole group. And so we sort of get many rooftops in one deal. So our deal sizes can be quite large, but still in that regard, they're fairly simple. So once we do the demo, usually there are many, I guess, stakeholders in that decision. I mean, to get set some context, over 95% of a car dealership sales on average come from website leads, right? So this is like pretty core to their multimillion dollar business. And so it's a big decision to change websites. It's like changing the building that you're in, you know, like moving addresses. It's a huge decision. So usually the owner is involved, general managers, marketing people, and then even salespeople, business development representatives. I mean, the whole company kind of gets involved in the decision, which does create some complexity in the sales process. But really, like it's for the better, because when everybody is bought into the solution, then the rollout becomes like confetti in the air, as opposed to this sort of situation where you're ripping out some technology that somebody liked and wasn't aware of the change. So despite the inclusion of a ton of stakeholders, it's pretty simple. Once they see the demo, we do maybe one or two demos and it's on implementation.

SPEAKER_81: All right, everybody. Steven Estes is a principal at CLA Clifton Larson Allens, a professional service provider that specializes in CPA tax consulting and wealth advisory. Welcome to the program, Steven.

SPEAKER_84: Steven Estes Thank you for having me.

SPEAKER_81: Tell us a little bit about what a startup should expect to pay in terms of managing their taxes, managing their accounting, outsourcing the whole thing in those first couple of years.

SPEAKER_86: Steven Estes You know, for the early stage startups, it really just depends on oftentimes the number of states in which they're filing in, which can be dependent upon where they have employees. Steven Estes Got it. Steven Estes Got it.

SPEAKER_88: Steven Estes So when you have multiple employees with this remote work, that can trigger filing taxes in multiple jurisdictions.

SPEAKER_89: Steven Estes Correct.

SPEAKER_86: Steven Estes Right. Once you have an employee there and you're registering with that state, the state's aware of your presence. So if they don't receive a tax return, you might be getting a lot of notices for failure to file.

SPEAKER_81: Steven Estes Get started right now at CLAConnect.com slash tech. Let them know your boy, Jake, how I sent you CLAConnect.com slash tech to get started right now.

SPEAKER_64: Steven Estes So how many dealerships are there here in the US?

SPEAKER_36: Steven Estes And I know you've you've gotten a well over or let's just say hundreds, I guess.

SPEAKER_56: Steven Estes What's the march to kind of capture this market? And how do you think about that? Steven Estes And then, of course, with investors, then comes the big Oh, what's the Tam here? Steven Estes Right. Steven Estes What's the Tam now as an early stage investor? Steven Estes Just to inform the audience, I don't have to worry too much about Tam because we're going to be the earliest investors. Steven Estes But now Series A Series B investors, they might look at and say, hey, is there an ability to get this thing to hundreds of millions in revenue? Steven Estes Or is it only going to get to 25 million in revenue? Steven Estes So how do you think about how many dealerships are out there and how big can this get? Steven Estes Right.

SPEAKER_73: Steven Estes So in the US, really North America, most car dealerships operate similarly to how they do in the US.

SPEAKER_57: Steven Estes So, you know, there is some sort of market expansion there. Steven Estes But in the US alone, there are 17,000 franchise dealerships, which means a dealership that has a Ford sticker on its door or a Chevy sticker. Steven Estes And then there's about 40,000 independent, like used car lots that sell used cars and no new cars. Steven Estes So there's a pretty huge market, especially considering the deal size. Steven Estes But just looking at the auto software market alone, the average franchise store spends 40 to $50,000 a month on software and technology solutions. Steven Estes And thankfully, the industry is so specialized that our platform runs a butt to many other segments of the car buying process. Steven Estes So I mean, really, to grow the market, there's not only sort of expanding the customer type, the ICP, but also sort of running ourselves into these adjacent categories that we can sort of draw a circle around and say, okay, that's our next target. Steven Estes And then to sort of close the loop here, there are a ton of adjacent industries, I call them the wheeled vehicle industries, which is basically anything that has wheels is pretty similar to a car dealership. Steven Estes So our platform fits in quite nicely with maybe just a little bit of retooling. Steven Estes So there's a huge market.

SPEAKER_74: Steven Estes Let's talk a little bit about your entrepreneurial journey. Steven Estes This is your third startup.

SPEAKER_56: Steven Estes I always tell angel investors, I love founders who have a little scar tissue in there on there, you know, Travis was on his third startup, you had two startups, I think both failed or both didn't return capital and you shut them down.

SPEAKER_99: Steven Estes Yeah, both failed more or less. Steven Estes Yeah, graveyard.

SPEAKER_56: Steven Estes Got it. Steven Estes What did you learn from each that has led to you to be so successful with this one with motive?

SPEAKER_100: Steven Estes Well, I'd say I'm successful so far, you know, we'll see if I make it through.

SPEAKER_63: Steven Estes I would invest if I didn't think it was successful so far. Steven Estes So definitely successful. Steven Estes So far, you're ringing the register and you have a product that people can't live without.

SPEAKER_56: Steven Estes Right. Steven Estes Just by the way, most startups never build an essential product that people can't live without nor monetize it. Steven Estes So you've got like, now scaling is the last piece here, right? Steven Estes Right. Steven Estes And defending the franchise would be the, you know, the next two pieces and, you know, can you scale it and can you go into other verticals? Steven Estes So I'd say you're halfway there. Steven Estes Tell me what did you learn from the first two and then you know that you took into this one and how much easier is it? Steven Estes For people who are first time founders.

SPEAKER_101: Steven Estes So they understand like, hey, these are the hard lessons. Steven Estes And then here's how much easier it can get when you get your third one.

SPEAKER_73: Steven Estes Yeah, there's a couple of, like, broad strokes notes here.

SPEAKER_55: Steven Estes I mean, for both companies that failed really, I made the sort of raw startup mistakes that they tell you not to make. Steven Estes You know, you take forever to ship. Steven Estes You don't listen to customers.

SPEAKER_57: Steven Estes You know, you build things that you think you want and not what they want. Steven Estes And you spend wildly on on dumb ideas. Steven Estes And looking back, if I had just simplified what I was trying to do to its essence and just like gotten very scrappy, I would have been way more successful. Steven Estes And I think both both businesses could still be successful if someone did them today properly. Steven Estes But ultimately, it's just like start simple and and I would have been a little bit more successful on those on those past ventures.

SPEAKER_56: Steven Estes So to unpack that, you didn't listen to customers enough, you needed to do more product discovery. Steven Estes And you were building products for yourself, maybe not for, you know, the actual customer base, and you were going slow.

SPEAKER_101: Steven Estes And going slow, explain why product velocity matters, and then how you sped things up?

SPEAKER_52: Steven Estes What was the technique to get things to move faster and have product velocity?

SPEAKER_112: Steven Estes Yeah, I mean, so like, as far as moving slow goes, I mean, it wasn't like we were unable to take action.

SPEAKER_57: Steven Estes It was like we were trying not to move quickly in a way, you know, like, like taking forever to make product decisions, trying to sort of like stick our finger in the air and say, Okay, is this what the world wants instead of really asking what the world wants. Steven Estes And so that was where the the failures came in. And by the time we realized that we were making all of the mistakes they say not to make, you know, it was way too late. Steven Estes So I mean, that that's really the thing is, is you need to like, you know, fail quickly enough where you have time to correct it, as opposed to trying to create this like perfect solution right away, which was just not going to work.

SPEAKER_113: Steven Estes Yeah.

SPEAKER_57: Steven Estes And then you asked what makes it easier this time around, I would say like, like getting the like getting your teeth cut on just like the general like operating functions of a business has really helped like understanding what a P&L is and and like how you should run your accounting department and like how your book should be done. Steven Estes And then like all these things that like really I was like pulling my hair out about in the beginning as if they were like the biggest problem, like having a handle on that is really helpful because then you can just focus on like the core of making your startup work and not like how do I file for an LLC. Steven Estes And so I think having those failed startups beyond just learning to, you know, increase velocity was like getting my teeth cut on those like basic sort of organizing principles of running

SPEAKER_63: Steven Estes Blocking and tackling is you could get knocked on your butt. Steven Estes Right.

SPEAKER_56: Steven Estes Because you could wind up having all of this operational legal accounting debt build up, you know, people talk about technical debt, you know, this other stuff cruft builds up. Steven Estes And once you become a really solid founder, it's part of why we started Founder University was to and we're going to have our seventh cohort.

SPEAKER_101: Steven Estes So apply now at Founder University for a plug there was because people didn't know, oh, I have to do an IP assignment. Steven Estes Oh, I need to be a Delaware Sea. Steven Estes Oh, I need to have a cash based or accru accrual based accounting, not cash based. Steven Estes Oh, I need to do this IP assignment. Steven Estes Oh, I need to have employee stock option plan. Steven Estes Oh, I need to do a foreign.

SPEAKER_57: Steven Estes Yeah, it's nice to be able to have an opinion on those things after the first couple of times where it's like, you know, you don't need to like reinvent the wheel. Steven Estes You know, you don't need you don't need to innovate on how you form your secret.

SPEAKER_112: Steven Estes No. Steven Estes Standardize everything. Steven Estes That's right.

SPEAKER_73: Steven Estes You just get it done and you get started with your business. Steven Estes Yeah, yes.

SPEAKER_74: Steven Estes Have great vendors who do it right. Steven Estes Standardize it so that you could focus on, you know, your team, your product and your customers.

SPEAKER_112: Steven Estes Well, that's another thing to the vendor piece.

SPEAKER_57: Steven Estes It's like knowing who to install to do certain functions without having to like go through the process of vetting vendors is is really nice. Steven Estes So like having some some priors on like, okay, this works. Steven Estes This doesn't because really to say all of that is like I did not figure out how to actually create a successful startup by failing on the previous to rather I just figured out how to like focus on doing that.

SPEAKER_56: Steven Estes Yeah, I mean, it's you. Steven Estes If you don't have an AV person for your house or a handyman, let's say, and then you have a great one. Steven Estes The experience of trying to solve, you know, little things around your house could be absolutely cumbersome, or it could be elegant and simple. Steven Estes Once you have the right vendor, everything just as easy. Steven Estes So you know, getting those right vendors dialed in not promoing for anybody here.

SPEAKER_64: Steven Estes You know, cruise as but one example of an accountant, they do such a good job for early stage that I always recommend them because I just don't want my founders to have problems.

SPEAKER_36: Steven Estes And there's like tons of other accounting services that do a great job for small and medium sized businesses, but you got to get that stuff right.

SPEAKER_56: Steven Estes Tell me as we wrap here, how do you study customers? Steven Estes What are your techniques for listening to customers and developing the product? Steven Estes Because you can get lost in the wilderness building tons of new features or you can study your customers and make the existing feature set better and better and better and increase their utilization and the value they get from existing stuff. Steven Estes So so walk me through that, particularly with my business.

SPEAKER_57: Steven Estes And I would say uniquely to my business, there is a lot of customer communication. Steven Estes We play a really important role in this incredibly large industry and in this important place within the business. Steven Estes And so they contact us a ton to go through new ideas, initiatives, things that they want to do with their website. Steven Estes And so we're, we're constantly getting feature requests. Steven Estes And so we have had to build some processes around how to prioritize those. Steven Estes And you know how a decision is made when something gets done. Steven Estes I would say that that the biggest thing that's been important for us is to not necessarily like build exactly what the customer wants, but almost kind of let feedback accrue over time. Steven Estes I've never had a problem in this business in particular of getting feedback, but really it's like, how do you make it actionable and by letting it accrue. Steven Estes You sort of let the dots connect naturally because sometimes you'll start to get similar or like adjacent feature requests from other customers of similar profiles. Steven Estes And you can start to sort of merge those and your head like okay well this person wants to be able to do this function on the search results page and this person wants to be able to do this function on the vehicle detail page. Steven Estes How can we like knock out both of those birds with one really elegant primitive or one really elegant solution. Steven Estes And so on our end, we have a way of connecting all of these these feature requests where rather than just sort of doing one off features that aren't really coherent. Steven Estes We let them build up and then we sort of, you know, aggregate them into into light releases. Steven Estes So that's how we handle customer feedback and what's also unique about our our product is that a lot of the customer feedback comes from the business, but it's really a consumer product right consumers are interacting with it. Steven Estes So we're we're able to like analyze what consumers do on our platform and and work from that as well.

SPEAKER_101: Steven Estes Awesome Melissa and continue success. Steven Estes Thanks for letting me invest in your startup. Steven Estes Hopefully we can be helpful to you on this journey, or at least provide some capital and some support.

SPEAKER_56: Steven Estes And you know, reach out if you ever need help and you're are you hiring right now and do you have or do you have any specific positions you need to fill because sometimes we actually help people find people here.

SPEAKER_101: Steven Estes Yeah, absolutely.

SPEAKER_57: Steven Estes If you are a skilled operator or a skilled engineer, we would love to talk to you.

SPEAKER_101: Steven Estes Awesome, so." Steven Estes Great Job and we'll see everybody next time. Steven Estes Oh, and how can people reach you.

SPEAKER_112: Steven Estes They can go to our website and apply on there or they can request.

SPEAKER_133: Steven Estes Say the name about our website as well. Steven Estes Yeah Right Motive.com Got it. Steven Estes Awesome.

SPEAKER_101: Steven Estes Alright and we'll see you all next time on this week and startups great job, brother. Steven Estes Great job, brother. Steven Estes Thank you for your introduction. Steven Estes You your every opportunity to join your partners on you day.