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SPEAKER_06: Hey, everybody. Hey, everybody. Welcome to another episode of This Week in Startups. I'm your host, Jason Calacanis. I'm an angel investor here in the Silicon Valley. And I do this podcast twice a week, 100 times a year. We've been doing it for 10 years. We've done 900 episodes. And today's going to be a great episode. It's going to be a special episode, in fact, because I'm going to have four founders on the podcast. Now, these are not just four random founders. These are founders I've invested in.

SPEAKER_08: And not only are these founders I've invested in, they're founders that I've syndicated. Now, what is a syndicate? A syndicate is a group of angel or early-stage investors. These are people who maybe put $2,000 to as high as $100,000 into a deal that I'm investing in. And so there are many sites that do this kind of crowdfunding, you may have heard. There's two types. There's equity crowdfunding, which is what we call civilians, non-accredited investors, just mom and pop take out their credit card, and maybe they go on Republic or Seed Invest, and they might put in $100 or $500 to invest in a company. That's very cool. There's also thesyndicate.com. This is my website where I invest in companies. And I may put in $25,000 or $50,000 or $100,000 myself for my fund. And then I invite 2,900 other angel investors who we've got a relationship with that have applied to be part of our syndicate. And they read what's called a deal memo. A deal memo is just me explaining why I'm investing in the company, what the risks may be, what the opportunity is, and then the founder answers some questions. We send that deal memo out, and of the 2,900 people, maybe 100 or 150 will go to what's called a webinar, a webinar with the founder. And they may review a deck, and then they say to us, I want to invest this amount in this company.

SPEAKER_09: And on average, I'd say the median is about $500,000 invested in a company today. When we started, it was $200,000 or $300,000. Now it's gone up a bit, and we'll get into that. So that's what we do here.

SPEAKER_08: We've done 90 of these deals for over $30 million invested. Fantastic. That started about four or five years ago. Now at thesyndicate.com, I'm happy to announce that our first investment was Calm.com. And today, at the taping of this, Calm.com announced that they had raised $88 million, a lucky number, from TPG, one of the great late-stage investors. And they are worth a billion dollars. So the first unicorn ever from a syndicate is Calm.com. We did it about five years ago. And we invested about $378,000 in that company. Ballpark, unaudited figures. But I think it was, if my memory starts to be correct, $378,000. Most people told us we would fail. Most people told us that we wouldn't make any money. It turns out that that investment on paper, we haven't sold our shares yet, is up roughly 150x. That's not 150%, mind you. That means you put in a dollar, you get 150 back. That's yum yum.

SPEAKER_11: And that is what angel investing is all about, because you get a lot of companies that don't make it.

SPEAKER_06: About five years ago, when I was starting my angel investing career, I met a really fascinating guy named David Hassel. And he was thinking differently.

SPEAKER_08: I always remember he was very considerate about how people were managed at work. And he thought there could be a better way to do that. And he had this idea for a product called 15.5. And when he told me the idea, I immediately thought, my God, that's brilliant. And the idea was, at the end of your week, you write, you answer a couple questions, takes about 15 minutes of how work went for you that week. Not once a year with a 360 degree review that crushes your soul and is kind of mixed up in your compensation and kind of worthless. But every week, a check-in, 52 weeks a year. And the five in that 15.5 was five minutes to review by your boss. And then if your boss had thought you said something interesting in your weekly report, they could star it and give it to their boss. So information could flow up from the front lines. And we've used this product. And I was just amazed, David, when we used it. I always tell you this story. I'll say it once again.

SPEAKER_09: I literally had somebody say, in a moment of pure candor, I hate coming to work here every day. I mean, this is a person working for me, so it's not completely unexpected.

SPEAKER_13: But the person that I hate, it wasn't Jackie, by the way. Jackie was not Jackie. It was Jackie. I cannot stand coming to work here every day. It's crushing my soul.

SPEAKER_15: Wow.

SPEAKER_13: That's amazing. It was amazing.

SPEAKER_15: You have any stories like that or no? Oh, we have lots of stories like that.

SPEAKER_17: So we brought them in. We said, hey, I read your report. And he's like, yeah, I'm just doing this for the money.

Chamath Palihapitiya: And my heart's not in it. And I was like, okay, what do you want to do? Oh, I want to do sound editing on movies. And I was like, all right, well, you do good work. You're welcome to be here. But is it really soul crushing?

SPEAKER_23: And he was like, yeah, I think it's crushing my soul. And I was like, okay, do you want to finish up here over the next couple weeks and move on to your next adventure?

SPEAKER_08: Give you a great review. And they were like, yeah. But since that time, 15.5 has grown a bunch. Yeah. And you were raising a new round of funding, which is now closed, correct?

SPEAKER_06: Yep. And you announced it.

SPEAKER_26: We did.

SPEAKER_06: Tell everybody five years later what you announced.

SPEAKER_29: Yes. So we raised $8.2 million.

SPEAKER_30: It was technically a Series A. Arguably, we were at a Series B stage of the business. So we raised a Series A amount of money on a Series B run rate and Series B size valuation. We've got about 1,700 customers now. And we grew 86% last year, probably double this year. Wow.

SPEAKER_32: Yeah. And you waited a long time to do this Series A. Why?

SPEAKER_35: You didn't need the money? You guys were profitable?

SPEAKER_36: We didn't need the money. We weren't profitable. We had periods of being cash flow positive, almost for years at times.

SPEAKER_30: And I wasn't really clear that we had all of the formula in terms of product, market timing, and team to scale. And once we got very clear about that, which was last year, we decided to pull the trigger.

SPEAKER_40: And now we're on a much faster growth trajectory.

SPEAKER_09: So you are the opposite of the criticism of Silicon Valley going too fast and not being

SPEAKER_08: considered. You took four years to dial in your business before deciding to raise this $8 million round.

SPEAKER_09: And so people understand, you invited us to be involved in it. Yep. I put a little more money in and I syndicated to our syndicate. We put $493,881 in with 99 investors. Thank you for allowing us. So we were not even, we were just maybe 6% of the round, which is nice.

SPEAKER_45: But you had some other lead investors, I take it? Yep. Origin Ventures led the round. We had Matrix Partners. Who's Origin Ventures? They're a VC out of Chicago, actually. Right.

SPEAKER_09: Yeah. So tell us maybe where you're at with the business and how it's gone. And how did you know that it was the right moment to scale for you? It was a personal decision, right?

SPEAKER_23: It was. You have a four-year or five-year-old baby and now you're like, okay, you're going to be an Olympian.

SPEAKER_50: Exactly.

SPEAKER_23: What changes when you do that and how'd you know it was time?

SPEAKER_36: It's a good question. I think part of it was the team, right?

SPEAKER_30: So we had, we'd hired a phenomenal chief revenue, actually VP of sales who we promoted the chief revenue officer and we'd really dialed in how to sell the product. We were for years largely just inbound self-service. And I think we figured out the secret sauce in terms of how to actually go to market. And there was also this market shift that was happening. I think we were just, we had to be really patient because I think we were actually about two or three years too early to market.

SPEAKER_09: Ah, so this idea of giving weekly or twice a week feedback, when you came up with the idea five years ago, I remember my first reaction was like, oh my God, it's so entitled, like millennials wanting like all this precious feedback. And millennials were such a small part of the workforce, they're pretty easy to ignore. Yes. So what you're telling me in a way is the generational shift of workers and the value of millennials

SPEAKER_54: in the workplace and their propensity to get up and walk out if they did not feel fulfilled was a major driver in the market arriving for 15-5.

SPEAKER_30: I think that's really true. Yeah. I think you got to think about demographics as this like slow moving tidal wave that moves through society. And as you know, the millennials are moving into the workforce and then into management,

SPEAKER_45: right? That's what's, that's a lot of the, what's been driving it.

SPEAKER_54: And what's changed about the product? I gave the view of the product from five years ago. And by the way, how did we meet?

SPEAKER_36: We met. You at one of my events? I think it was one of my investors had mentioned that you were doing this launch festival and we're looking for one or two more people to present.

SPEAKER_60: That's hilarious. And you presented, I remember, and I coached you on your presentation.

SPEAKER_61: Was I brutal? Helpful. You were helpful. Tough, but helpful. Helpful to brutal?

SPEAKER_62: On a scale of one. Yeah. Two. You were candid. Can, yeah.

SPEAKER_63: I'm trying to get, what is the most inappropriate score? I used to be super candid with people when I was a conference producer, when I wasn't an

SPEAKER_54: investor, because I just cared about how the conference made me look.

SPEAKER_25: I was like, I want to put on a good show. And if you get up there and present at my event and you suck, people are not coming back to my event. So that was my obsession.

SPEAKER_36: Let's just say, let's just say I changed the pitch completely three times. Really? But the last one was really good. Awesome.

SPEAKER_23: All right. We'll be right back with more.

SPEAKER_67: Have you tried to hire somebody lately? It is bonkers out there. It is so hard to find somebody because unemployment is so low and the top people have so many options,

SPEAKER_68: let alone the fact that a lot of people want to work part-time or four days a week or from home. But there's all these great candidates out there who are passive job searchers. What do I mean by passive job searchers? Well, these are people who are hanging out on LinkedIn and they're, you know, maybe talking to friends or doing in-mail, updating their feed, reading news, all on LinkedIn, which is one of the world's largest social networks, as you know, and the largest one for business, clearly. Well, what if those people who are not looking, the passive job searchers, saw your opportunity? Well, they might say, hmm, I like my job, but I think I'll love that job working for J-Cal at launch. That's exactly what happened. That's how we got Sir Charles, our new director for our studio position here.

SPEAKER_67: We received 68 candidates in only two weeks by posting to LinkedIn Jobs. And I'm going to give you 50 bucks right now. I'm going to give you a 50 just by going to LinkedIn.com slash twist. LinkedIn.com. You know that it's already in your URL. It's in your bookmarks because you're on LinkedIn multiple times a week, maybe a day like me.

SPEAKER_68: And if you go to LinkedIn.com and just put slash TWIST, you get 50 bucks right now, 50 beans, go grab it. And you will find extremely high qualified candidates. We spent, listen to this punchline, $140 to find Charles. If we had hired a headhunter or we're posting on other websites, it would have been so arduous. Instead, it was easy. And the same thing.

SPEAKER_67: We have an office now in Toronto. We were looking for people up there. We found this amazing candidate, Maureen, who has been doing an incredible job for us.

SPEAKER_68: And when we posted, LinkedIn auto-populated our posting with some candidates. We started reaching out to them and we're like, who is this superstar? Boom, got him on the team.

SPEAKER_67: So once again, LinkedIn saved the day for me, J-Cal. It's just brilliant. LinkedIn has been building and building for over a decade. And now the benefit is here. The benefit is you can find the best people, especially if you're a great company and you take the time to write a good ad and put it on LinkedIn jobs. Again, 50 bucks, LinkedIn.com slash twist. LinkedIn.com slash twist. I use it. I love it. I love reading the ad for them because I get excited about finding talented people to work on our team. Okay. Speaking of talented people, let's get back to this episode.

Chamath Palihapitiya: So show me the product today. I'm curious where you're at. And some people are listening. In fact, most people listen.

SPEAKER_06: So give them a little bit of what they call the old sportscasting. You know, explain what's going on on the screen here.

SPEAKER_36: All right. So the core of the product is still that weekly check in the 15 minutes and the five minutes.

SPEAKER_30: So, you know, our whole company exists to try to bring out the best in people at work and create high performing teams. And we think that starts with a weekly reflection. Weekly reflection. Weekly reflection. Right. How am I doing? How am I feeling? How am I doing against my objectives? Am I clear on what I'm focused on?

SPEAKER_78: So I see here, the first thing it says to this person, Seth, is this somebody who works for you or is this a fake person? This is a fake person. Fake person. Yeah.

Chamath Palihapitiya: Okay, great. So Seth, how is he feeling? Awful or amazing?

SPEAKER_09: And it gives you a little, it's a fun like color. Yeah. You get like all the way to, you know, nice and green, all the way to red. And it says, this is amazing. What's your secret? You clicked on it and you get to optionally put an answer in. So it's kind of like rating your Uber driver. Exactly. And then if you want to give detail of how awesome and or.

David Friedberg: Or awful. Awful the cat smelled, you can go in there.

SPEAKER_30: That's exactly right.

SPEAKER_81: So we could say here, hey, he's feeling.

SPEAKER_30: So we call that the pulse check. So you can quickly see, you know, and you can quickly look at across the whole company. What's the pulse of the company?

Chamath Palihapitiya: Ah. And is there an anecdote about this that you can share?

SPEAKER_09: Like you don't have to tell me the company itself, but was there a company that was like

SPEAKER_13: cruising at four out of five and then all of a sudden they had a one or two week and they didn't know?

SPEAKER_84: Oh, we haven't had that, but we've actually seen dips and spikes depending on. The data. Things that are happening. Yeah. We're in our own company. Oh, really?

SPEAKER_30: So for example, every year we do an annual retreat in January and everything spikes to a five and then it goes back to like a 4.4. Got it. And, you know, you'll see that in different companies. I think we saw a big, you know, big dip around, you know, certain political events and things like that.

SPEAKER_05: Oh, when Trump was elected, people felt awful in Silicon Valley because it's a bunch of

SPEAKER_40: liberals. A lot of the scores went down.

SPEAKER_05: Yeah. Really? That's hilarious. I mean, that's an interesting point, isn't it, David?

SPEAKER_40: People's life outside of work influences how they show up at work. Absolutely. In a major way.

SPEAKER_30: In a major way. And most people don't recognize that or understand that. And I think, you know, one of the things we're a big stand for is like, how do we actually embrace the whole person and understand that, you know, can we support someone in thriving in their whole life? And if we do, then they're probably going to contribute more at work.

SPEAKER_92: I wonder how often they click awful and it's personal versus private.

SPEAKER_30: Yeah, that's actually been a question for us because I think we're going to be qualifying that we're changing this to say, you know, how are you feeling at work so that it qualifies it? Although there is benefit for not asking that because then, you know, you get more insight into if there's something going on for the person that I can...

SPEAKER_04: I actually like the idea of how you're feeling at work. Yeah. And then another one that says, how's everything going with the rest of your life?

SPEAKER_54: Right. We care.

SPEAKER_84: Yeah.

SPEAKER_54: You know, and it's just like, rate your... And then they might say, like, it's a two. And you're like, hey, what happens? I'm getting divorced. And I'm like, oh, okay, yeah, how's that going?

SPEAKER_35: Yeah. Objectives. Yeah. Objectives. So you might have any number here. Oh, now you've got objectives in here. That's right. This is a big addition. This is a big addition. Yeah.

SPEAKER_08: Accelerate revenue growth.

SPEAKER_30: So I might have, you know, certain key results related to that. I can just, you know, and once a week, I'm just giving this a quick score. Am I on track? Am I behind? Is this at risk? And as a company leader, now I can go in here and take a look at all the objectives across the company and see, okay, how are we doing against our OKRs? How are we doing by department? I can look into customer success and engineering, et cetera, and get a quick score on to how's

SPEAKER_40: everything going and what's the percentage complete?

Chamath Palihapitiya: And did people set those OKRs? Yep. Objectives. And key results. Key results. Objectives and key results. That, was that a Google innovation or a McKinsey innovation?

SPEAKER_106: Where did that come from? What's the origin of OKRs?

SPEAKER_29: It actually came out of Intel. Intel? Yep. Andy Grove wrote a book called High Output Management. Yes.

SPEAKER_30: And he talked about OKRs and there was very, you know, most people didn't know about it.

SPEAKER_45: And then it was John Dewar who brought it to Google. From Kleiner Perkins. Exactly.

SPEAKER_06: So he said, hey, listen, if you want to move fast, you got to have a set of objectives.

SPEAKER_108: Yep.

SPEAKER_06: And the objectives are broken down into actually key results that are measurable. So you have an objective, which is kind of 10,000 feet up in the air. Correct. Yeah. Interesting. Yep.

SPEAKER_29: And that way, everybody's aligned. They know what's most important. They tend to be those important but not urgent things that wouldn't get done if we don't

SPEAKER_30: constantly reflect on it and put focus on it.

SPEAKER_115: Got it.

SPEAKER_30: Yep. And so, again, you know, we'll quickly scan through here. I can say what I'm working on this current week and my priorities. What did I accomplish last week related to that? And then certain questions like what's going well? What challenges are you facing? Any other questions you want to ask to kind of seed conversations in the company you can ask?

SPEAKER_35: I like this one. How manageable was your workload this week? Right. Oh, my God, I'm scared to send that out to my team.

SPEAKER_11: It's like 10, smooth sailing. If you sent me smooth sailing with your workload, I would be like, what the heck is going on here?

SPEAKER_121: Well, it's good information, right?

SPEAKER_122: I need you to be sinking in the deep end of the pool. Let me get you another cinder block, Jackie. Oh, my gosh. My goodness.

SPEAKER_23: You're like, I can't believe that Jason's like my biggest fan and investor. And he's such a maniac at work. I've calmed down a bit. What is it? Give a high five stuff here.

SPEAKER_30: So high fives, this is actually one of the most popular features in the product. And I think what makes 15.5 really, really sticky is people give pure appreciation to other people in the company as to what great work they're seeing.

SPEAKER_84: And it elevates all the good work so everyone can see what's going on.

SPEAKER_134: Let me ask you this. What's the management overhead of implementing 15.5?

Chamath Palihapitiya: If you had to think about somebody has to manage, let's say it's a 50-person mid-sized startup. Yep. What would you think the amount of whoever manages the whole thing or the management, what's the number of hours per week, each individual and all the managers and the setup and everything?

SPEAKER_09: What's the commitment here?

SPEAKER_30: The rollout's pretty simple. For a company 50 people and up, we tend to have a customer success manager who's working with them. And we put a lot of attention those first 100 days. Typically, we'll roll it out in stages, leadership team down to the managers, to the employees. And then it's actually pretty simple.

SPEAKER_29: The first few weeks is the most critical time as people are getting into the habit. Got it. And then there's not that much to be done.

SPEAKER_30: Maybe on a monthly basis, you want to be thinking about the questions you want to ask. You can set them up in a queue so they rotate automatically.

SPEAKER_141: Oh, so you don't get fatigued. Exactly. Yeah, we had a little fatigue in the early days.

SPEAKER_30: Yeah, so the question and product fatigue was one of the things that we addressed early on. So these questions can come up on a rotating basis.

Chamath Palihapitiya: Somebody had pitched me at one point, I don't know if this company ever succeeded or not, just the how are you feeling idea on a watch or something. It was like an Apple Watch app or something. And they were just like, just rate how you feel.

SPEAKER_09: And I was like, you'd literally want millennials or boomers and cynical Gen Xers to sit there

SPEAKER_147: and rate how they feel multiple times per day on their watch. This is a terrible idea, right?

SPEAKER_84: I think it's a terrible idea. As a standalone thing, yeah, I think that's a terrible idea.

SPEAKER_30: I think it's a good thing in context with all of the other business-oriented data. All right.

SPEAKER_148: Yeah. And you're going to deploy all this money.

SPEAKER_06: How? You raised $8 million. That's a lot of money. It's a decent amount of money. Yeah. And you've been such a conservative, bootstrapped entrepreneur. We have.

Chamath Palihapitiya: Do you have to change your mindset? And do you have to grow a little bit of, what would the idea here be? Do you have to be more bold in your approach to losing money, spending money, taking risk? If you were to self-evaluate yourself as a CEO?

SPEAKER_29: We're definitely being more bold. But I'd say we're still, you know, we still have that ethos of, I wouldn't say frugality, but looking for what we, you know, our first core value is find the leverage, right?

SPEAKER_30: So we're not just, you know, we're very focused on, like, when we invest a dollar, we want to get multiple dollar return on everything we invest. So we are aiming to, you know, we're around about eight figures now.

SPEAKER_45: We're aiming to double in the next year, which will be that.

SPEAKER_154: Almost eight figures.

SPEAKER_45: Yeah. Or right about eight figures. Yep. Right about today.

SPEAKER_84: Wow. That's incredible, dude. Within the next week or so.

SPEAKER_122: When I invested back, what is that, 2014 or so?

SPEAKER_84: I think 2013, maybe. Yeah.

SPEAKER_122: 2013. That was the second year of the business or first? First.

SPEAKER_84: Second. We launched the product in 2012. Okay. So it was, yeah, about a year in.

SPEAKER_147: And you were at what in revenue?

SPEAKER_84: Oh gosh, 20K a month.

SPEAKER_147: Hilarious. Yeah.

SPEAKER_156: So you went from 250 and five years later, you're at eight figures. Yum, yum skis.

Chamath Palihapitiya: That's about 40X revenue growth for four years. See, it's an interesting thing. I think, I remember we had this discussion at some point where, like, it was a little bit, we were wondering if you were going too slow. And it was like, well, it's actually accelerating. And it was, like, real thoughtful.

SPEAKER_159: What's this last feature here as we wrap up?

SPEAKER_29: Real quick. So, you know, as a manager, you can quickly scan through.

SPEAKER_30: You can, like you said, pass things up. You can add things to the one-on-one agenda, which is new. Oh, a one-on-one agenda. Great. So this actually, you know, so the check-ins are asynchronous, but we also encourage one-on-ones. So you can go in here and when you actually sit down with your direct report, you pull this up on your phone, you have an agenda built out from everything that you've talked about. Right? So we're doing that. And then we're moving into the other thing is we've replaced the performance review with something we call the best self-review.

SPEAKER_36: Your best self-review. That is very Oprah. Explain. Exactly.

SPEAKER_30: So our belief is that performance is a by-product, not something you can manage directly. So you support someone in being and becoming their best self, right? And then performance and loyalty are the by-product. And so we recommend doing a review that is like a performance review. You're evaluating performance, but you're also focusing on the person's growth and development. You're focusing on their strengths, figuring out what's next for them. Amazing. And it's lightweight. It pulls all that data from the weekly check-ins and you can do it up to four times a year with very low overhead.

SPEAKER_09: That's amazing. Yeah. That's great. And then you lower and raise their salary dynamic based on what the manager says. You could. They just get a new surprise every paycheck.

SPEAKER_06: No, it's really impressive. Well, this is great. Thank you for letting us be part of the journey, David. Absolutely.

SPEAKER_09: And you do a great job, by the way. I just want to thank you for you come to all my events. Whenever I ask you to come to Founder University or anything, even the incubator and speak and talk about your journey as a founder, you always take that time. I think you're a very special individual in that way. Oh, thank you. And it's just really great to be in business with you. All right. Stick with us. We're going to meet more companies that I've invested a ton of money in and that I'm going to make even more money from. And that's what David is really all about.

SPEAKER_23: All right. When we get back on This Week in Startups, stick with us.

SPEAKER_173: If you're running a business and if you're listening to This Week in Startups, we know you're running a business.

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SPEAKER_179: waste any money because every dollar is precious when you're running a startup. Okay, let's get back to this very important episode.

SPEAKER_173: All right, thanks to our sponsors and welcome back to This Week in Startups.

SPEAKER_09: My next guest is Amelia Chagas, and she is the CEO and founder or you have a co-founder?

SPEAKER_181: Co-founder.

SPEAKER_09: Co-founder of Growth Boulevard, which produces content tools.

Chamath Palihapitiya: Yes.

SPEAKER_09: That's when we met.

Chamath Palihapitiya: You came to launch Accelerator 7 or 8? 7. 7. That was what, a year and a half ago?

SPEAKER_183: Actually, six months ago. Yeah. Was it six? We started a year ago and, yeah, up until May. Oh, right. It was only a year ago. You guys are fast.

SPEAKER_06: We're doing a lot of classes now. We're going to do seven classes in 2019. We did four in 2018. I think we were doing two a year for the two years before that. Explain. And then we, I know, invested in your last round. I know we had about 69 investors from my syndicate and I invested. And I'm not sure how much we invested. What did we invest?

SPEAKER_185: Around $269,000.

SPEAKER_06: Great. So, we put in $269,000. And we were co-leading that round? You raised a half million or a million?

SPEAKER_185: Yeah. No, we raised $450,000. Got it.

SPEAKER_169: And you're super capital efficient. Yeah. And that's what I've always loved about your business. And you're, you have how many full-time employees?

SPEAKER_185: We have 40 now. 40? Yeah. We used to be 25 when we met and now we're 40.

SPEAKER_17: And you're based in Brazil. Yeah. And in San Francisco.

SPEAKER_09: And you're doing about how much in revenue? Ballpark?

SPEAKER_185: Yeah, $890,000 in ARR.

Chamath Palihapitiya: Wow. Yeah. Amazing. And when we started together, I think you were at $400,000 or $500,000?

SPEAKER_197: Yeah, $500,000. $500,000.

Chamath Palihapitiya: So, we've almost doubled in a year.

SPEAKER_09: That's fantastic. Why don't you tell everybody what Content Tools is? Because that was the business we invested in. Now you've got Growth Boulevard as the big name. So, that means other tools are coming, I guess?

SPEAKER_198: True. Yes.

SPEAKER_09: Okay. So, show us the product and explain to us what we invested in and how it's going.

SPEAKER_183: Cool. Content Tools is a content marketing platform. We help marketing teams organize everything regarding content production and all of the projects inside one single place. Instead of spreadsheets, emails coming in, different approved versions of the same content, you have everything under one single software. So, here you select a project. Sometimes you have multiple projects in different countries. Sometimes you have different products and different content projects for each one of them. So, here you have the dashboard where the marketing manager can understand everything that is happening, ideas he has to approve or she has to approve, content that is maybe delayed and they can act right away.

SPEAKER_09: So, this could be, in this example, what? Who is the marketing manager in this example?

SPEAKER_183: Yeah. We work with many types of companies from educational companies, pharmaceutical companies, even tech companies, so if you have a team of around 10 people working with content creation, sometimes they're internal, sometimes there will be agencies and freelancers also working with content creation for you, and you have everything spread around, you want to centralize all the operation, and here the team can actually act and create the content inside the tool. So, one example here is the strategy. You can centralize all of your strategies here at Content Tools. If one single persona is updated, all of the content being created for that persona is updated, the briefing is updated at the same time, instead of the PDFs majorly used right now.

SPEAKER_09: So, if this was, let's say, Calm.com, the meditation app that we invested in, and they have 20 people working in their marketing group, doing content, Instagram ads, blog posts on Medium, social media on Twitter, maybe paying for ads.

SPEAKER_08: This would be the central hub of all that content, all those assets, instead of putting it on a Google Drive, or in an Excel spreadsheet, or a project management tool not made for marketing.

SPEAKER_183: Exactly. And sometimes what we do here is replacing 10 to 12 different of these tools for the marketing team.

SPEAKER_206: Got it. So, it's all in one place.

SPEAKER_183: Yeah. Planning creation, also distributing online.

SPEAKER_204: We integrated over a thousand different applications, and collecting the results, and gathering all the analytics.

SPEAKER_09: So, in a way, you have, like, I guess, Buffer app is, like, one that does just one thing, scheduling of tweets. You do that. We do that.

Chamath Palihapitiya: That schedules also other social media. Yeah. So, scheduling is one piece, but also editing it, approving it, having some sort of workflow.

SPEAKER_183: Automating the workflow. That's a big issue as well. If you forget to update one task, maybe, in a certain project management tool, the manager doesn't know what's going on. Right. And with content tools, that does not happen. The workflow will go live automatically. What is all this cost?

SPEAKER_09: Because I remember when you were in the program, you had a very low cost per month. It was almost, I thought, too cheap.

SPEAKER_218: Yeah.

SPEAKER_08: Was that correct? And have you changed the pricing? Is it getting more enterprise-y? It is. As opposed to self-serve?

SPEAKER_183: Yes. It is more enterprise-y. And what we saw is that the largest teams and the teams with the more volume of content were taking the best from the tool. So, we're targeting these companies now. And the pricing, of course, has been adapted to that. So, we don't cover number of users. It's the same for 10 or 100. We want everyone on board. What we do is we charge per project.

SPEAKER_219: So, the more projects a company has, the more customers an agency has, the more we charge.

SPEAKER_09: Ah. So, the agencies really benefit from this because a lot of people outsource their content creation, marketing to a PR company, a social media company. Do they typically do two or three companies or one when they outsource it?

SPEAKER_183: Yeah. It really depends. We have companies working with four different agencies working with content tools and centralizing everything created by these agencies. We have agencies with 50 customers working with content tools as well. So, it really depends. 50%, actually, 54% of our business comes from the digital agencies.

SPEAKER_199: Ah. So, you sold into those agencies. What's your background? How did you come up with the idea for content tools?

SPEAKER_204: I'm a journalist and I worked with content management as a content manager for over eight years. And content tools came as a dream for me as a content manager. I did not have access to a tool like this and I wished I had.

SPEAKER_232: Got it. So, that's always good if you have an itch and you can scratch it because you have the firsthand knowledge.

SPEAKER_09: What's it like running a company in Brazil and in the U.S.? Do you get treated differently here in the valley or do people think it's smart to have, like, this incredible arbitrage?

SPEAKER_06: Because I'm assuming a developer in Brazil is not as expensive as in San Francisco.

SPEAKER_183: Not as expensive, but it is also very challenging as well. Brazil is being very much targeted by companies all over the world. We have fabulous talent there. So, yes, back when we launched, 2015, it used to be like, hmm, that's weird. You have your product team in Brazil and you're here. How does that work? And nowadays, I have founders coming to me asking how I do that and wanting to bring operations abroad. Yeah.

SPEAKER_228: And how do you do it? What's the secret to making this work?

SPEAKER_204: I was just talking about that and 15.5 is one way to do it.

SPEAKER_183: I have these very, I'm very disciplined with management and I have all the team with one-on-ones being held accountable with all the communications in place, OKRs, rituals for development and rituals for recognition.

SPEAKER_239: So having a tight team, of course, really helps.

SPEAKER_09: Yeah. It's one thing if you're all in the same office to just show up and put out fires. But when you're distributed like this…

SPEAKER_183: You have to hire people that understand that they're also as committed as you are.

SPEAKER_09: Got it. And you're super capital efficient. What's the next phase for you? Do you know what you need to prove in order to clear market for a Series A? Because you went to my accelerator. That was step one. Yeah. Then you were able to raise a seed round.

SPEAKER_06: Great. Now you're at that million-dollar run rate about to hit it. So Champagne Corks will be popping soon. When? March you hit that run weight, you think?

SPEAKER_244: Yes. That's the plan. March? All right.

SPEAKER_09: Hopefully we pop some bottles in March. What do you need to trigger a Series A from a Silicon Valley investor? Because you've met some Silicon Valley investors.

SPEAKER_08: I know I introduced you to a couple. What do they tell you you need to hit today as an enterprise SaaS company?

SPEAKER_06: And do they look at this as like too small of an opportunity, content, or they not understand it? What do you have to hit?

SPEAKER_183: I believe that there is some market issues. It is not that easy to understand. You're right. It is still not clear. Even for the marketing manager to have all of these tools nowadays, it's still super inefficient. And that's something that it's difficult to believe. It's 2019 and marketing still needs more and different tools and a different approach to how they do things.

SPEAKER_248: Yeah, because sales has Salesforce. Exactly.

SPEAKER_199: Yes. And the marketing team has what? 12 tools? That's not right. They have HubSpot, which does a little bit of what you do.

SPEAKER_251: Yeah, but... And CRM.

SPEAKER_183: We use HubSpot. HubSpot uses content tools for some of their projects as well, so we don't do the same thing. Right. Yeah, it's complementary, of course. We do have integrations with different applications. Let me show you here. The main ones are these ones.

SPEAKER_219: In HubSpot's there, we also integrate with their CMSs. It's something really interesting for our customers. So Twitter, Facebook, LinkedIn, Instagram, all those tools.

SPEAKER_183: And a thousand different tools total. So one thing for sure is to help these marketing managers to have everything under the same space. And that need is to...

SPEAKER_219: It takes a lot of education, of course.

Chamath Palihapitiya: Do you also put in things like paid marketing yet? Because people spend money on Instagram ads or boosting their Twitter ads. In fact, this week in startups, we're doing so well, we wanted to kind of like increase the reach of the podcast. Because we do the podcast, and I meet people, and they're like, oh, you have a podcast? And I'm like, that's super frustrating. So now we're doing clips, best of clips, whatever.

SPEAKER_08: And then we'll do a little paid marketing to try to reach people maybe who don't know about the show and it's really working. Do you incorporate paid into here, or is that another tool, you think, or a different type of company?

SPEAKER_183: No, we are incorporating paid, but very strategically, it's not something that we'll do to drive traffic or even leads. It's more like driving qualified leads and what we call hands up. So the demo requests. So that's very... We are doing that, but that's not what will change things. I believe what will change things are more product investments that will make us achieve this awareness around the marketing managers.

SPEAKER_97: What revenue number do you think you need to hit, or are there other milestones that will trigger a Series A?

SPEAKER_06: Back to that question.

SPEAKER_271: From two to three million.

SPEAKER_06: Two to three million is what you're hearing? That's interesting.

SPEAKER_05: And then how many people do you have in San Francisco? Do you need to have a presence here, or is it just like two people in a WeWork?

SPEAKER_194: Just three people in a WeWork.

SPEAKER_05: Is that right? I nailed it. Okay.

SPEAKER_06: That was just a guess.

Chamath Palihapitiya: See, I like the strategy. I think that this is the winning strategy, is to have like a little executive team here, product team, maybe sales, so that the VCs can go meet you, you have an office, you have a boardroom, they can talk to you anytime, or if they want to meet somebody, they can go to the office and meet two or three people, eventually it'll be 10.

SPEAKER_05: But then the bulk of the people are in the same time zone or similar down in Brazil, and you get to be the best employer down there and pay the best rates.

SPEAKER_23: So smart.

SPEAKER_277: Thank you.

SPEAKER_23: And how is it going with the investors? I know some people, when you send 10 updates a year, will you try to?

SPEAKER_182: I send 12. Oh, wow. Actually one a month, yeah.

Chamath Palihapitiya: Oh, wow. Very good. Explain to people what the value of sending an update to your investors is.

SPEAKER_183: The first one is for yourself and your team, I believe. When I sit down and I write these monthly updates, they are the sum up of the weekly updates that I send to my team. So I send the entire team updates weekly, and I also send my direct reports, emails, with the top of my mind for that week. And once a month, I sit with all of my KPIs to send you guys the updates. And the first person being, I mean, benefited by that is myself.

SPEAKER_204: Once I organize my thinking, what happened that month, what will happen the next month and quarter and year, I'm actually helping myself and my team first.

SPEAKER_183: And, of course, having everyone aboard and on the same page and having this type of visibility also helps to bring amazing people like yourself to give us feedback and to maybe introduce a new employee or a new customer.

SPEAKER_09: Ah, so that's helpful, too.

SPEAKER_08: Yeah, so what people don't realize is when you do a syndicate and you've got 60, 70, 80, sometimes 150 investors in a deal, you can send an email to one email address, and you can get one signature from me if you need a document signed for corporate matters. And you can reach whatever it is, 60 or 70 investors in your case, and maybe one of them knows somebody at Disney or Ogilvy or whatever you're trying to reach.

SPEAKER_183: One month after we raised, I sent the first update, and one of the feedback came from an amazing CFO bringing a lot of value to us.

SPEAKER_204: And I sat with him and with my finance manager, and we got an amazing 30 minutes of top-level mentorship. Wow. Yeah.

SPEAKER_287: And this is a person who probably put $10,000 in or $5,000 or something. So now their consultation would have been the same price. True.

SPEAKER_09: And you get all that free advice. Well, listen, it's great to be in business with you. I'm very impressed by the results, but just double them, okay? I have one request.

SPEAKER_290: Yes.

SPEAKER_09: It's a simple request. Just take whatever revenue you have and double it.

SPEAKER_291: I'll do that.

SPEAKER_06: Easy peasy. Okay, you promise? Yes. Okay, good. Then we'll go work on the Series A, and then maybe we'll do another syndicate. All right, we'll be right back with two more companies that have raised money from the syndicate. One of them is crushing email newsletter, something near and dear to my heart. And the other one is doing the other thing that's very near and dear to my heart, teaching people how to do hip-hop dance, which obviously people know I do on the side.

SPEAKER_292: We'll be right back. Stick with us.

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Chamath Palihapitiya: All right. Welcome back to This Week in Startups. We're doing a little syndicate showcase, as it were, today. Thesyndicate.com is our website where we syndicate deals.

SPEAKER_09: I'm angel investing. You know me, Jason Calacanis, the author of Angel, a book about angel investing. I've invested in over 200 companies. Most of them fail. They go to zero.

SPEAKER_280: But it doesn't matter because the founders try and they swing for the fences. And then once in a while, you hit an Uber or a Robinhood or a Calm or a Thumbtack or a Data Stacks or a Wealthfront or Desktop Metal.

Chamath Palihapitiya: So, it's not a competition. It just happened to be winning it. Seven unicorns, huh? Isn't that crazy?

SPEAKER_296: No.

SPEAKER_09: It's nuts. And then here's probably our eighth. Evan Zhao. Am I pronouncing it correctly? Zhao? Zhao. Zhao.

Chamath Palihapitiya: Z-H-O-U is the co-founder of Steezy.

SPEAKER_151: Steezy went to the Launch Incubator 8? That's number eight. Yep. Number eight. That was about nine months ago.

SPEAKER_300: No, it was like three months ago. Was it three months ago? Yeah, it was only three months ago. It was about two years ago. God damn, things are moving fast.

SPEAKER_301: It's like three startup years.

SPEAKER_06: It is. It does feel like that, doesn't it? And you had a great experience. How did I meet you? I know that I met 15-5 from the conference. Content Tools, I met because they came to Founder University, which you can go to Founder.University, which is our free founder, like a two-day class I teach with my team on how to build companies. It's free, Founder.University.

SPEAKER_77: How did I meet you?

SPEAKER_305: One of our users actually referred us. Crazy. Yeah, someone from Germany, part of RTA Ventures, signed up for Steezy a while back. She was super into dancing. And then she tried to get the partners involved, but they said, hey, we're a little too far away. You guys should go join Launch Incubator. Wow.

SPEAKER_09: So our reputation made it around the world. You were in Los Angeles. We were. And you had developed a website to teach people how to dance. Yes. Now, when I heard this idea, I said, hmm, aren't there free dance videos on YouTube? Yes, there are.

Chamath Palihapitiya: And then you educated me. Let's educate the audience as to the difference between the dance videos I did with Mahalo back in the day, which got millions of views and made us low thousands of dollars.

SPEAKER_23: So you're making close to a million dollars a year, I think, off of subscriptions.

SPEAKER_09: Show us how it works.

SPEAKER_305: Yep. So we are Steezy. We create online dance classes with some of the world's best instructors, mostly based out of L.A. And focused on hip-hop right now, but our goal is to teach any dance style that you can think of. So our users are constantly requesting things like ballet, tap, jazz, salsa, even shuffling and twerking. Jazz? Jazz. Yeah. I'm kidding. I'm ready. What about ballroom dancing?

SPEAKER_322: You want to be a teacher?

SPEAKER_61: I would be the same. Okay, so you're starting with hip-hop. Sure.

Chamath Palihapitiya: And to my point, how is it different than going on YouTube or whatever, TikTok and learning a move on there?

SPEAKER_324: Yeah.

SPEAKER_305: So there's a couple of different problems with YouTube tutorials. Obviously, there's just so many out there. They're very low quality. You don't know who you're learning from. So we want to be the trusted resource for dance. Okay. And we've also built a very unique video player that breaks down the entire learning process that makes it really easy and fun.

SPEAKER_326: So, for example, as dancers, I started as a hip-hop dancer, and so I really understand how classes work. And so the video itself is mirrored right away, so it feels like you're falling along on a mirror.

SPEAKER_305: You can switch views, so you can also learn from any angle that you want. Got it.

SPEAKER_78: So you just went from the front view to the back view.

SPEAKER_13: Yep. So I guess when you're recording these, you're recording from multiple views. Yes. But it happens so instantly and snappy. That's pretty cool tech.

SPEAKER_328: Yeah. So we built our own custom video player.

SPEAKER_305: When we were trying to figure out, you know, what is the right product to build, we looked around, didn't see anything that we liked, so we just decided to build it ourselves. You know, just like in a dance class, everything is broken down into moves. So YouTube tutorials are typically like three to five minutes, but we tell the instructors to really walk through move by move just like you were in an actual dance class. And, you know, in classes, you always want to ask questions, repeat things, review. So we break down each class into these reviewable sections, so you can always click back and review as much as you want. And we also built this really cool looping mode that you can repeat each section like over and over as many times as you want.

SPEAKER_326: So you can really practice and drill. So that's like one of the main selling points of staging.

SPEAKER_09: So if I'm trying to figure out how that flossing works, the dance from Fortnite, I can loop just one little segment of the floss and figure it out. Yep. Oh, that's super helpful. Yep.

SPEAKER_11: And how do you make money?

SPEAKER_305: We sell subscriptions. Surprise. We are 20 bucks a month or about $120 a year. We're still trying to figure out, you know, the right pricing model to really scale the business.

SPEAKER_337: Yeah.

SPEAKER_06: And I think you came to the incubator, had 50, 60,000 a month in revenue?

SPEAKER_338: Yeah, we had 50,000 in revenue.

SPEAKER_06: Yeah.

SPEAKER_09: And now you've been building out a studio. We invested, I think, $750,000? Yes. No, maybe more. Syndicate did 750.

SPEAKER_339: Syndicate did 750.

SPEAKER_23: Across 73 investors. So on average, 10K, that's pretty high. So people felt some conviction.

SPEAKER_173: Tell everybody, what was the process of going through the syndicate like?

SPEAKER_305: Sure. Walk them through it. Yeah. So we joined Launch Incubator. We met a bunch of different investors all throughout the program. Met a bunch of really great syndicate investors.

SPEAKER_09: How many investors do you think you met during the 12-week Launch Accelerator program?

SPEAKER_305: Wow. Definitely more than before I joined.

SPEAKER_324: I think it was like 40 or so, 50. Yeah. At least.

SPEAKER_08: Back then, we were doing five a week. Uh-huh. So 12-week, 60. Uh-huh. Now we do seven a week. Yeah. Yeah. And then we bring now five or six of the syndicate members. Yep. So then you meet all these investors. What happens next?

SPEAKER_305: Yeah. So right when we joined the program, you already were very convinced we could be the next com.com.

SPEAKER_326: So it was very easy to get all the investors together. We did syndicate. We presented our deal memo. We launched out to the email list. And then we did a webinar. And then-

SPEAKER_05: How did the webinar go? What kind of questions did you get? Were they good questions? Basic questions?

SPEAKER_305: Yeah. They were good questions. You know, just like the typical smart, savvy investor questions that we would get asked. And we would just answer them all together. And then it was a very easy process.

SPEAKER_280: Yeah. And how much did you raise total?

SPEAKER_305: Total, we raised $3 million. You guys actually co-led the round with your friend Dave Samuel from Freestyle.

SPEAKER_09: Dave Samuel from Freestyle, which is a great firm here. You met them through the program. They put in half the amount of money we put in half. So I think we maybe did. What did we do from our fund? $250, $500?

SPEAKER_353: $500 and then $750 from the syndicate.

SPEAKER_09: Yeah. By the way, that's our biggest investment to date from our fund. Yeah. So congratulations on that. Thank you. We know you're going to make it happen. Sure. Startup to having over $2 million in the bank. Is that right?

SPEAKER_356: Yeah. Three.

SPEAKER_09: Three. Yep. How mind-blowing is that for you to wake up one day from... Because you were living essentially, what, month to month, quarter to quarter? How much runway did you have typically?

SPEAKER_305: In the beginning of 2018, we actually only had two to three months runway left. And then we got to cash flow positive and joined the incubator.

SPEAKER_173: Got it. So you were not sleeping at night in the first half of the year.

SPEAKER_06: Not at all. You wake up a year later after going through the launch accelerator and you got $3 million in your bank account. That's pretty dope.

SPEAKER_362: Yeah.

SPEAKER_361: And I'm still not sleeping.

SPEAKER_362: And you're still not sleeping, but it's because you're so enthusiastic, not anxious. Sure. Yep.

SPEAKER_81: Do you feel more anxious now or less anxious? How does it change when you see that bank balance?

SPEAKER_305: Yeah. I think there is obviously a lot of expectations, but it's really exciting. Like we've always dreamed about all these different things that we could build and how

SPEAKER_326: we could serve our users better. And now we actually have the resources to do it. So I've been spending all day just recruiting. Recruiting. We talked about this.

SPEAKER_11: Now that you have that money and you were at break even, you couldn't afford to burn

SPEAKER_08: a certain amount of money. How do you go through that process of saying, I'm going to burn, which means lose every month money? Because you spent all this time getting to profitable, break even, whatever. Now you have to reset your thinking and say, I'm going to go into investment mode. I've got $3 million in the bank. Do you plan on spending burning $300,000, losing $300,000 a month for 10 months or losing $100,000 a month for 30 or 60 months of runway? How do you think about that?

SPEAKER_305: Yeah. So definitely focused on hiring. We've essentially done all this with one engineer and myself, one product.

SPEAKER_326: So obviously there's a lot of things to be built, a lot of UX improvements and really being able to take big swings on our product to really get that next step change function of growth. So spreadsheets help out a lot. We're modeling everything, figuring out how we can spread out our hiring to make sure we spend smartly.

SPEAKER_371: Oh, so there's a certain order you want to hire in. If you hire a developer before you have the designer or something, it might not be a great

SPEAKER_23: idea.

SPEAKER_305: So we're focused on hiring some designers first since we've actually never had a designer all this time. So focused on hiring a designer first.

SPEAKER_374: Firing yourself as designer. Yeah, exactly. For sure we're doing it.

SPEAKER_326: Yeah, yep, yep. And then once we have all of that in place, then moving on to the developers and getting that work done.

SPEAKER_08: Got it. So you have to build out a staff. Yep. And then how long should the money last? Did you get any advice from Dave at Freestyle or from any of your other mentors? Because you had some good mentors and advisors for the company.

Chamath Palihapitiya: What did they tell you how much to deploy? Because that is the big criticism sometimes of venture funding is that it's jet fuel and that you've chosen now to try to take that $3 million you took down.

SPEAKER_09: You have to return hopefully 50 times that. You're going to take that $3 million and turn it into $150 million. No pressure. Yeah. How do you plan on doing that investment? And what was the advice you were given? How long should it last?

SPEAKER_305: Sure. You know, like your blog post said, take more money than you need. And we were lucky enough to have really smart, great investors. And, you know, we filled out the round.

SPEAKER_326: We weren't going to raise three. But seeing the climate, we decided to go for it. And now, you know, we can hire all the smartest people we know and really build a company. I think we're going to last 18 months, 24 months. 18 to 24.

SPEAKER_06: Yeah, that makes sense to me. Burn 100, 150 a month. Because what's going to happen is if you do it right, revenue will start coming in. Yep.

SPEAKER_08: And so the burn will drop.

SPEAKER_382: Yep, absolutely.

SPEAKER_08: And do you have iOS and Android apps yet?

SPEAKER_156: Do you have subscriptions turned on in those stores yet?

SPEAKER_305: Yeah, but they're just in the early days. We haven't really had a big focus on it. But, you know, we're going to be hiring iOS and Android engineers.

SPEAKER_201: Okay, great. So if somebody wants to come work for STEEZY, what do they do?

SPEAKER_326: They go to careers.steezy.co.

SPEAKER_201: Careers.steezy. Spell STEEZY for everybody.

SPEAKER_305: S-T-E-E-Z-Y.

SPEAKER_201: What does STEEZY mean?

SPEAKER_305: STEEZY is a combination of style and ease.

SPEAKER_05: Did you make that word up or does that exist in the hip-hop community and dance community already?

SPEAKER_326: Yeah, it's from like the hip-hop street community. I think it started in skating culture. Ah. Yeah.

SPEAKER_383: So they'd be like, oh, that's STEEZY.

SPEAKER_326: Yeah. When I was thinking of a name, the idea was that, you know, the best dancers in the world have a ton of their own unique style, but they make it look effortless.

SPEAKER_09: Now, I follow you on the social media. Yep.

SPEAKER_280: And I saw you unboxing what looked like a very expensive stage in a very expensive studio you're building. Yeah. How much of my money are you burning on this studio? We need to raise again soon. When I saw this studio, oh my God, it looks beautiful.

SPEAKER_390: Yeah. It's great.

SPEAKER_305: You need to come by.

SPEAKER_21: What are you going to spend on this studio in downtown LA, DTLA?

SPEAKER_305: Yeah. Luckily, our rent is super cheap. Of course. We are very frugal founders.

SPEAKER_08: What will the studio build out be? Because this is kind of cool when you think about it. You were filming what? And this looks like...

SPEAKER_305: Same place. We just renovated it. Ah. Yeah.

SPEAKER_05: So what did you spend on the renovation? What are you going to build out of the studio and get like all the 4K cameras, video switchers?

SPEAKER_305: Yep. So I think it cost around 100K to build out. Oh.

SPEAKER_393: With that big STEEZY sign. You got a gorgeous STEEZY sign going.

SPEAKER_326: It's great. So we're going to flood your feeds with a bunch of STEEZY videos soon. Cool. But yeah, it was 100K. We can film and edit classes like in a fourth of the time.

SPEAKER_05: So having that dedicated, gorgeous soundstage, you're going to go faster.

SPEAKER_305: More content. Yep. The goal is to get to 10 more dance styles of this year.

SPEAKER_395: In one year? Yeah. In one year. So you want to get like ballet, jazz, funk, whatever?

SPEAKER_09: Yep. All of it. What about like alternative interpretive dance? Because I'm really into the interpretive. Yeah. Whatever you want, Jason. I do like a little bit more modern interpretive. Yeah. It's kind of confusing for people. But you know, it's very intellectual. That's why we're here. We're here to educate everyone. Exactly. Exactly. All right. Listen, Evan, I'm very proud of you. Thank you. You went through the program. First of all, I'm proud you came to the program with a product that was, you know, break even

SPEAKER_08: with a decent amount of revenue. Yeah. But really, you put a lot of effort into the accelerator. Thank you. You showed up early. You stayed late. You followed up with every investor. And you took the fundraising process seriously. You ran a process. Yep. How many meetings did you take to raise the $3 million? How many in-person meetings outside of the accelerator?

SPEAKER_305: I think we were incredibly lucky. We met really good investors early on in the program. I think maybe in week three, our entire panel was all media judges. So we had Dave Samuel. We had Ed Roman. We had Jared Fleissler, who introed us to Andy. And that's our entire round. Wow. By week three, it was insane.

SPEAKER_08: Yeah. See, that is interesting.

SPEAKER_305: Super lucky.

SPEAKER_08: Super lucky. Yeah. So you just did like a dozen meetings? Probably like 20.

Chamath Palihapitiya: 20.

SPEAKER_321: Yeah.

Chamath Palihapitiya: Okay. So that's interesting. See, because you consider doing 20 in-person meetings, no big deal. I've had founders who do like, they're like, I can't raise my round. I'm like, how many meetings have you done? They're like, ah, like six or seven now. And like, everybody said no. I'm like, seven people said no. And you're, I think it's 30 to one is the right number. Yeah.

SPEAKER_08: 30 in-person meetings resulting in five second meetings resulting in one or two term sheets. Sure.

SPEAKER_05: How many meetings did you have to have at Dave before they decided to invest? I'm curious.

SPEAKER_322: How many meetings with Dave?

SPEAKER_05: Yeah. Meetings, phone calls, back and forths.

SPEAKER_305: Like two or three.

SPEAKER_05: Two or three. He made a quick decision. Great investors make a quick decision.

SPEAKER_305: He also found a private breakdancing instructor off of Craigslist to come teach his kids, which is why he likes us.

SPEAKER_09: Oh, I see. Yeah. So he had, so this is where targeting investors is super important. Absolutely.

SPEAKER_06: If the investor already has an affinity for the space, the topic, the whatever it is, man, did things go smoother. Yep.

SPEAKER_23: Well, listen, you've done a great job. Thanks. And now the clock is ticking.

SPEAKER_280: Yeah. You're worth $10 million, $15 million as a company. All I need you to do, Evan, is two simple things.

SPEAKER_419: Build out the studio.

SPEAKER_280: No. You have the million, you're about a million dollars in revenue. I need you to do just two things. So you're willing to do those two things without even hearing them.

SPEAKER_420: Revenue.

SPEAKER_11: Very simple. I want you to add a zero. Yep. Because then you go from a million. Yep. You put a zero on the end of that. Yep. Where does that put you? 10 million. Correct. Now, I want you to look at that 10 million number. Then I want you to go through an exercise. This is a little bit more complicated. I want you to get another zero. Okay. And I want you to put it at the end of that number. Sure. Now, do the math. Take a second. Okay.

SPEAKER_395: You need a pen or whatever, but just ballpark it. Where does that put you? I can pull out my calculator. Yeah. Where does that put you? A hundred million. Exactly. And you know what a hundred million makes you?

SPEAKER_425: A unicorn. Correctamundo. Just like Calm.

SPEAKER_28: Just like Calm, Robinhood, and the other ones.

SPEAKER_06: Great job, Evan. You got a lot of work ahead of you, but I'm very excited. And good luck to the team and everybody who wants a job and get that sweet, sweet early

SPEAKER_08: Series A equity. Careers. Steezy.co. C-O. No M. No M.

SPEAKER_23: And I'm assuming Evan at Steezy.co goes to you. Yep.

Chamath Palihapitiya: Usually first name at company name. Yep. Jason at Inside goes to me. Jason at Wash.co goes to me. All right. We're doing our syndicate showcase. As you know, we run a website called thesyndicate.com. We're 2,900 members now. Look at deal memos and 50, up to 250 of them, but typically 75 or 100 of them decide, sure, I'd like to invest in that company. We've done it 90 times. We're going to do it 50 times this year. We did like 25 last year. And then maybe in 2020, we'll try to double it again.

SPEAKER_23: Who knows? It depends on the quality of the deal flow. And when I met our next founder, Chris, he was running something near and dear to my heart, which was an email newsletter company.

SPEAKER_433: And how did we meet? I'm curious, Chris.

SPEAKER_435: You had come down to Miami for a book event because our fellow launch incubator company,

SPEAKER_438: he bought 200 of your books, I think, to get you to come to Miami.

SPEAKER_23: Yeah, there was 50 of them. Yeah. That was hilarious.

SPEAKER_08: Yeah. So the founder of Blanket, I tweeted like a maniac. You know, sometimes you get an idea. I was like, all right, listen, the book's coming out. People were like, oh, will you come speak? I was like, all right, if you buy 50 copies of the book, I'll go to any city. And of course, 10 maniacs do it on the spot. And I was like, oh God, that was a mistake. So I said, no more. I did the first 10. And one of them was Miami. So I go down. They do a fireside chat. I sign the books. And I guess you were there?

SPEAKER_438: Yeah, there were three startups that pitched you for two minutes each.

SPEAKER_17: Oh, right, on stage. And you were one of those. Yeah. So, and tell me, what did you pitch me?

SPEAKER_435: Well, according, I believe the exact words were, this is a fine business, but the pitch is completely backwards and terrible. Oh, okay.

SPEAKER_440: So I was my normal, charming, delightful self.

SPEAKER_435: Yeah. But what I pitched you on was, I think I started with something very broad. I was like, cities are a thing. People live in them. They're growing. And I'm sitting there like rolling my eyes.

SPEAKER_443: I'm like, wow, there are cities. Tell me more about Athens. Go ahead.

SPEAKER_435: So I wasted about a minute on that.

SPEAKER_444: And then we got to the actual business that we're doing, which is that we're building a platform that allows us to serve people in cities across the country, across the world, help them figure out what's going on, where they live, and get more involved and active in their cities. And we're doing it starting with email newsletters.

SPEAKER_08: Amazing. And I, too, was running inside at the time, which is email newsletters. So in a way, we're competitive, I guess. But it's sort of like being competitive when we're like the first of like seven people in California.

SPEAKER_06: Like, there's nobody doing it. You, me, Axios, Stratechery is kind of like an edge case on an email newsletter. Substack. What's Substack?

SPEAKER_449: It's like a, let's, you run a subscription newsletter. Oh, right.

SPEAKER_06: Like that's, people use that for paid ones. Do they have one that's gone big in that? I don't know any of the people on that.

SPEAKER_08: It's a platform. But you actually hire writers, to be clear. What cities are you in?

SPEAKER_435: We started in Miami. Great. And today we're in Miami, Orlando, Seattle, and Portland. Amazing. So we're starting on the corners and coming in. And your thesis was what? Our thesis was that what was happening in cities, you have this incredible growth rate, particularly

SPEAKER_444: around the urban core of communities. You look at a 50,000 person city, 15,000 person city, a 5 million person city, the same kind of trend happening where just a ton of new energy and growth. But that was happening the exact same moment that traditional local media is collapsing. Newspapers and other traditional providers. And so that opens up this huge moment of you have a ton of new people living in these communities who want to know what's going on. And they want to find ways to feel at home like they belong. But the old model for providing that has turned out to be inefficient and broken. And so we looked at how do we provide that in a better format where you can do it at scale, you can build technology behind it, and help people every day feel more connected to the city in a way that can really grow.

SPEAKER_09: So that's how we approached it. We used to do in New York, we would grab something called the Village Voice, or I guess in Los Angeles was LA Weekly. There were these alt-weeklies. And then there were also Time Out New York or Paper Magazine, which was my first writing gig in New York. The death of those publications led to this huge opportunity.

SPEAKER_21: There's just nothing there.

SPEAKER_435: Yeah, and one of the things we found before we started the company, actually, we did a big research project, my co-founders and I, because we were curious, what's it like to

SPEAKER_444: live in a place like Miami right now? And what are all the different experiences people are having, sort of regardless of income or background or job or geography? What was it like for different people to live there? And one of the things we found is that people felt bombarded by information, number one. It's like, I've got too much content already. I have Netflix, like, don't give me more stuff to look at. And then two, people felt like all of the existing local media that they had access to had a sort of either the view from nowhere kind of objectivity disease, or it had this sort of old school kind of cynical voice that felt very negative. And so people just didn't feel a desire to spend time with those brands really more than they needed to. And that just felt wrong to us. It's like, yeah, you wake up every day. And part of what you try to do is figure out what's going on in my industry, what's going on in the world, but also what's going on here in this place. And that layer was just missing for people we talked to. So that's kind of how we got focused on it.

SPEAKER_06: The media business is one of the most challenging, difficult businesses to do. But you somehow figured out how to make about a million bucks a year, if I'm correct, or so.

SPEAKER_09: How did you bootstrap your way? And I think you had raised a little bit of funding here and there on the edges from

SPEAKER_06: maybe the Knight Foundation or something, if I remember correctly.

SPEAKER_456: Yeah, they were our first investor.

SPEAKER_06: And those are real investors, or are they more like a grant or a donation?

SPEAKER_435: It's a real investment, but certainly that initial investment that Knight Foundation

SPEAKER_444: made was, it's a real investment in our company, but definitely with a charitable bent to it where they were looking at the same problem we were.

SPEAKER_201: So it's a foundation.

SPEAKER_08: So that doesn't really clear market with the sort of return on investment investors. How did you get the ball rolling in that direction?

SPEAKER_435: We spent about a year trying to figure out what the product would be in Miami that was really going to work and that was going to land.

SPEAKER_444: And the thing we were looking for more than sort of audience size was stickiness. Like are people coming back day over day and are they reading it a lot? And is there that level of trust? So we were looking at net promoter score, open rate, churn, like how are we doing it building a real community of people? Um, and once we got to a certain place where we were seeing momentum and by, uh, month 10 of our first year, we had hit, um, profitability in the Miami market. Got it. Um, and then we said, okay, now we think we're ready to try this in a second place and figure out whether the model that we've built is actually one that's portable or does it just work in this one place? Cause we happen to get lucky. Um, and that's when we found a great, uh, two people to work with in Seattle to grow the business there. And ever since then, we've, um, been approaching it more and more like a software problem rather than a content problem where we think the real obstacle is what's the technology that lets sort of anyone do this in their city and, and really open it up.

SPEAKER_461: Ah, so you're thinking maybe go platform, let other people start newsletters on it or

SPEAKER_435: yeah, not, not fully platform in that way, but we're just internally when we're trying to think about what are the tools we need and how do we build it?

SPEAKER_444: We trying to think about what's the playbook, what are the tools, how do we package it in a really sensible way that so that when we bring on new people to do a city with us that it's just a really straightforward process and, uh, it, it runs really seamlessly.

SPEAKER_463: Now I super believe in the media business.

SPEAKER_09: I think something has to solve these problems. I know our syndicate had about 60 or 70 investors put in close to 300,000. We put a little bit of money in ourselves. Um, how do you deploy that money and then how do you get the big investors, uh, to embrace this or is that not a focus because the media business is so as constructed by, uh, yourself.

SPEAKER_06: It's, it's so efficient that maybe you don't need to go raise like Buzzfeed did some massive venture capital. How do you think about that? Because right now you and I are both in the middle of this, me with inside and you with where by us, like, God, the media business is collapsing around us. Like in the past month, like thousands of jobs have been lost. And of course, when media jobs get lost, when you're on Twitter, it becomes like, you would think that literally California fell off the coast. Like, like the, the great one happened in San Francisco and Los Angeles are underwater. They're Atlantis. It's Pompeii. And it was a hundred people at Buzzfeed.

SPEAKER_11: Now for those a hundred people, 150 people, I know it's serious, but they'll survive. It wasn't this gigantic thing, but it certainly is not looking good for media. How do you think about it?

SPEAKER_435: Yeah, I, you know, part of it is we try to keep our heads down and like build great stuff for our users. I mean, that's honestly internally the way that we think about it. Um, and, and so, you know, how are we deploying our, our, our capital?

SPEAKER_444: I mean, what we're really looking at first is, um, in Miami, we've been able to build a brand with the new Tropic, which is our brand in Miami. That's really lucrative for us. We get like 300% monthly return, um, out of the Miami market in terms of what it costs us to make it and what we generate off it. So we know that over time in Seattle, our second city is headed that way as well. We know over time that we can get a lot of positive cashflow out of each city and, and have a really meaningful product. And so we're looking at, um, doing that our first goal in Portland and Orlando, our third and fourth city as well. And that's, as we're starting the process of expanding to our next cohort of cities. So that's really what we're focused on along with continuing to build on the tech side.

SPEAKER_173: Um, you want to have that playbook that you can quickly get to break even, which is probably what month three, four, five, six.

SPEAKER_435: Yeah.

SPEAKER_444: We've been doing it, uh, in these new cities in, uh, about 12 months, but we, I think we can cut that in half in the next set.

SPEAKER_08: You can pull it up for a second if you want to show it, uh, on the website, we can at least let people see it. Uh, the best thing to do, of course, is to sign up, but here it is. Yeah. Uh, the new tropic.com. Great name.

SPEAKER_435: This is one of our, this is our Miami brand. Um, and you know, the sites are very email, email centric. And what you do when you sign up is you'll get, uh, an email in your inbox every day, uh, that looks something like this. And we cover everything from, uh, today we're collecting stories about dates, uh, gone right and gone wrong in Seattle.

SPEAKER_474: So this is feedback from your readers. So the readers are providing content. That's a classic, great device.

SPEAKER_435: And then we'll also curate news from around town, um, asking people for input and then,

SPEAKER_444: uh, giving you a sort of a rundown of what do you need to know today that's happened around the community as well as events. Uh, and we partner with a lot of event producers around the community to do different kinds of experiences that we can offer to people. Um, everything from stuff for kids to, you know, weird costume shows to, uh, bar events.

SPEAKER_173: Can people pay to be in those like line items? Is that a possibility or is it just sponsorship from absolute and they just do a big wrapper? Yeah. How do you think about advertising?

SPEAKER_435: We have small scale, uh, uh, advertising that we offer that's, you know, for locals. Um, we have, uh, always a title, um, uh, advertising, advertisement here that you can see. And then we have a paid event listings and other kinds of content, um, uh, offering. Some of them are custom. Some of them are automated. Got it. Um, and we run all of that off of, um, our own technology that we built, which is a system

SPEAKER_444: for, um, advertising and email newsletters that people can come on and buy self-service, check out with a credit card, um, and, and deliver it into the newsletters and get different kinds of metrics and targeting off of it.

SPEAKER_463: Fantastic. Uh, and then half a writer full-time, a full writer.

SPEAKER_81: I know at Insight it takes about, I think they take about four hours to write each newsletter.

SPEAKER_435: We start with a part-time person. And then as the brand grows, uh, what we're finding is that actually to build the kind of depth in each city that we're looking for, um, the work sort of matures over time. And it moves from being about just getting the newsletter started, which eventually we

SPEAKER_444: can, uh, sort of centralize and make easier to book, to sort of building the community and doing partnerships and other kinds of relationship building.

SPEAKER_453: So it moves into a full-time job, uh, there in the city as the brand gets to a certain place and kind of grows.

SPEAKER_156: Yeah. And I guess the big question for everybody is like, why are we in business together if

SPEAKER_09: we're like on the margins competitive? Uh, we talked about it, but, uh, tell me your thoughts because people, I did get like

SPEAKER_23: three or four emails like, isn't this the same as Insight? And I was like, not exactly. It's completely different, but completely the same. Yes. Why did you get involved with us, take our money? If we have a competing business, then I'll answer the question.

SPEAKER_435: I think the first thing is that, like you said, right, we're, we're the early people

SPEAKER_444: in a new space and, um, that's really getting a lot of, of growth. And most of the other email newsletters that are out there are coming out of traditional media companies.

SPEAKER_435: And, you know, some of them are, are just fantastic, but, uh, they tend to approach them as if with the sort of same legacy sort of thinking, which in some cases is very valuable, but I don't think is where the future of this stuff is going to get made. Um, and so part of it is, you know, I think there's strength in, in sort of nearness when working on that kind of thing. And then the other piece of it is, I think inside and whereby us are up to slightly different things in terms of where the success really happens. Like for us, it makes a big impact.

SPEAKER_444: We sort of, you know, say, yeah, we're checking, like it's really clicking when we're getting that depth and, and lots of feedback and conversation from users and feeding it back in and getting that kind of depth in the community. Like that's where we get sort of the, the best returns financially and for users. Um, you know, and inside is able to sort of capture all of these different topics across, you know, anything. And so I think those are different, different layers.

SPEAKER_09: Yeah. My thinking on it, I think that's a good one is this is going to be super hard and there's going to be a gold, silver, and bronze medal in every city and every topic. For inside, if we want to get to 300 of these topics, making, I don't know, I just did back of the envelope math, but if you want to be a unicorn, you're going to get to somewhere in the hundred million dollar range. You're going to need 300 cities, 400 cities doing $250,000 each, 300 doing 350 or 330 each, whatever that is. That seems reasonable to me, 5,000 a week in advertising. Uh, the launch ticker makes five, 10,000 a week in advertising if we try to sell it. And so that makes sense.

SPEAKER_06: Therefore, if you get gold in Miami and I get silver and I get gold in Pittsburgh and you get silver, like that would be just fine. Right? Like it's, there's going to be, it's sort of like the magazine business. Like you could invest in 20 different magazines and maybe share your printing or your advertising or your infrastructure or other ideas, but you don't, Vogue is not taking away Vanity Fair or New Yorker or paper magazines. Like people are going to buy five magazines. I thought it was like fine, but it was interesting. Like, did you get any of that feedback? Like, isn't this competitive with Jason's doing when you did the syndicate?

SPEAKER_488: A couple of people. What'd you say?

SPEAKER_435: Yeah, not syndicate investors actually, but just sort of other folks out in the world. Like, doesn't he have that inside.com thing? But I mean, I said really this, I mean, it's like, you know, I think there's, there's a real future here, but it's got to be approached differently.

SPEAKER_453: And I'd rather be, you know, working with and, and sort of connected to the people who are thinking about it than, than not.

SPEAKER_09: But also, if you get yours to 10 million, I get mine to 10 million and maybe, you know, any possible thing is possible. You know, you merge companies, you do partnerships, like anything's possible in the future.

SPEAKER_06: Like I've seen it happen many times where people are starting out in the same vein and they wind up joining forces to, you know, you saw that with DD and Uber in China. Okay. We're killing each other in the field. We're not even in to what, 1% of the audience? Like, I think we have 40 topics right now. A lot of them are once or twice a week, right? So we're experimenting, but I think it's going to work because of the low overhead.

SPEAKER_09: My perception of the media business is the big problem is they spend so much money on things that don't go on the page, that don't go in the email, that are not the content. For every dollar you spend, I'm going to guess 60 cents, 70 cents goes into the newsletters,

SPEAKER_287: like content.

SPEAKER_492: Yeah.

SPEAKER_287: Could be more.

SPEAKER_492: Yeah. Pretty close to it.

SPEAKER_444: I mean, the only other expense that we really have is the development we're doing on the technology side. Otherwise, pretty much everything goes into building the actual product.

SPEAKER_201: Sales team, you got sales.

SPEAKER_06: But if you were to think about these businesses, if you were in 500 cities, well, you're, you got a full-time person in each one.

SPEAKER_09: That's the majority of your, you know, you're spending 50, 60, 70 million dollars a year paying for your writers and you're maybe spending five or 10 million dollars on tech. Like, it's going to all go into the page. When you look at the New York Times, they're got some giant building somewhere and a bunch

SPEAKER_06: of layers and layers of publishers and editors and, you know, inefficiencies and a print magazine that's just, oof. I mean, the printing presses that a lot of these companies had to do was just, what a, I mean, that was half their infrastructure and cost.

SPEAKER_435: And you lose all the nimbleness. I mean, I think that's part of the thing is like, you know, we, we talk about this internally where email is an amazing platform today and I think there's only good stuff

SPEAKER_444: ahead in the, you know, next year or two for email, particularly like Google now rolling out AMP for email and some other really exciting stuff there that's like, okay, we're changing. We're creating more capability. Well, they're going to do AMP for email? Yeah.

SPEAKER_471: Oh, so that means they'll host the email and it's just lightning fast when you open up Gmail? And you can do more dynamic things inside of it, which is going to be a game changer, I think.

SPEAKER_09: Sure. You can do like surveys or whatever, because Mixmax is some of those platforms hack, you know, to really make cool features like surveys or pick a time to meet.

SPEAKER_06: Like you have to really build your email campaigns, even with Mixmax, which is super sophisticated, like our sales teams use it, uh, mixmax.com slash twist, I think, uh, I think they're sponsored to, um, but even those things, they have to think about the lowest email client and like breaking it or something, I don't know, Apple's, you know, built in crummy email client versus Gmail's sophisticated or superhuman sophisticated.

SPEAKER_337: It's a little ton of work to do there, but it's great that nobody controls it. Right.

SPEAKER_444: I mean, our, our, our trickiest thing developmentally is like one user who, you know, has Windows Outlook from, uh, 10 years ago and like nothing loads right.

SPEAKER_453: Right. I mean, you know, Oh my God. Yeah. That's the challenge.

SPEAKER_173: Yeah. No, you got, you got to do is you got to just have it say you're using Windows out using

SPEAKER_06: out Microsoft Outlook from over 10 years ago. We support Microsoft Outlook from under 10 years. Here's how to get an Outlook.com account.

SPEAKER_173: Like you just got to point out, like, why even bother? What do you do in that case? You just tell them.

SPEAKER_444: Yeah. Eventually we just say, Hey, this is not supported by your browser and we're really sorry, but here are some other ways.

SPEAKER_173: Is there a standard to all this email design stuff? Like, is there like some overarching standard that makes it better or is it just everybody's

SPEAKER_169: trying to figure it out?

SPEAKER_435: There's a really good, actually new, um, site that I really like where, uh, we're one of the people that are putting in it. So I'm biased, but, um, called 99 Newsletters and it's this guy's sort of, uh, sort of side

SPEAKER_444: slash marketing project, uh, uh, best I can tell. But what he's doing is essentially looking at, uh, 99 Newsletters that, that, that they subscribe to and they just sort of run through different best practices that people are, are using, um, and, and run through different ones, uh, you know, every, uh, every, every day or every week. And it's really good stuff that they're doing. I mean, there are obviously some web standards around email that are common, but I think some of this best practices around how to be user centered about it, because so much of the stuff that's out there about email is like, um, e-commerce marketing and stuff like that. That's really just completely different idea.

SPEAKER_309: So the 99 Newsletter project, better email strategy, drives reader revenue and builds

SPEAKER_173: trust with your audience. Is this it? Yep. That's the one. For Impact TK? That's pretty cool.

SPEAKER_502: Yeah. I think it's really great.

SPEAKER_173: Oh, I got to check this out. Awesome. Well, listen, continued success. Uh, thanks for letting us be part of the journey and, um, keep sending those monthly

SPEAKER_169: updates. It's great to read them. Thanks. And we'll see you next.

SPEAKER_511: Oh, oh, yes. Oh, I'm sorry. I was supposed to close the show.

SPEAKER_169: Uh, well, you saw four great companies. We've invested, uh, you know, a little bit in each company and we try to support them

SPEAKER_06: as much as we can. The next stop for almost all these companies to do a series A, except maybe 15-5, which is probably a series B level. So if you want to, uh, build a great company and have us as an investor, it's pretty simple. We have the Launch Accelerator and we have thesyndicate.com. You can go to either of those websites, Google it, uh, or you can email me at any time, jason at calacanis.com if you're interested in having us invest in your company and we can direct you in the right way. For the Accelerator, we're looking for companies that have product in market and maybe some revenue. Call it 100,000 a year to 2 million a year. Uh, but on average, maybe 500,000 a year, that's where we can really help. And then for the syndicate, we're looking for companies that are doubling their revenue every six months. You gotta be high growth. If you're growing your revenue 20% year over year, that's a slow growth company in Silicon Valley. That might be a high growth company in the small to medium sized business market. Obviously a company growing 20% a year is going to double every four years or whatever, but we're looking for what we call a hyper growth here in Silicon Valley, venture scale. So if you're growing very quickly, the syndicate.com is for you and very quickly would be doubling or tripling revenue year over year, or maybe doubling your revenue every three to nine months, something in that range makes you interesting to the venture capital community and put you on the track to be a unicorn. So go ahead and go to the syndicate.com and sign up if, uh, you want us to invest in your company and we'll see you all next time. Bye-bye.