SPEAKER_00: Hey everybody, it is Tuesday on This Week in Startups and I wish I could tell you that Jason was resting because as his adopted mother, I keep trying to get him to do that, but he's not. He's on airplane traveling for work, of course. So let's send him some good vibes and hope he heals up soon and doesn't make it worse. I am going to start the show with some solo dolo news because I'm really bummed that Jason is not here to talk about the DOJ suing Google to try to break up its digital ads business. And we have a whole antitrust story arc today. We're going to keep talking about antitrust because Ticketmaster finally got called before Congress to answer for its alleged anti-competitive practices. Thank you, Taylor Swift. We're going to cover some of that. Then producer Rachel joins to discuss her experience with an artist who is trying to find Ticketmaster alternatives. Maybe the market can solve this problem for us. And then we've got some startups for you. Two amazing Launch Accelerator founders. Join me to break down their businesses and their paths to $100 million. It's going to be an awesome show. Stick with me. This week in startups is brought

SPEAKER_03: to you by Agetech Collaborative. Startups, your go-to market team is waiting. Agetech Collaborative's cutting edge accelerator program connects you with investors, test beds, like-minded innovators, and industry expertise. They're taking Agetech to the next level. Join them at agetechcollaborative.org slash twist. And NutriSense combines cutting edge technology and human expertise so you can see how your body responds to different food, exercise, stress, and sleep in real time. By pairing a CGM with their app and expert dietician guidance, NutriSense can help you reach your health goals. Use code TWIST and get 30. Use code TWIST and get $30 off at NutriSense.io slash TWIST. All right, let's get right into this

SPEAKER_00: breaking news. The DOJ has teamed up with eight states to sue Google over its dominance in the digital ads market. And they're asking for Google to spin off its ad business and maybe some more. Obviously, this would be, I don't even have the right word, a tsunami, totally massive, a like nine on the Richter scale earthquake for the entire ad tech industry. If Google is forced to spin off its ads business, not to mention kind of a big deal for Alphabet. The Biden Department of Justice has actually been signaling that it's going to get a lot more aggressive with the tech industry on antitrust specifically. There have been some stories talking about how this lawsuit was coming and that, like, Apple could be next, maybe some scrutiny on Microsoft. This is a big move, though, especially since big tech lobbyists and a lot of big tech money have managed to effectively kill antitrust legislation that had been proposed in Congress. Here's a little, let's do a little context, a little level set on Google's ad dominance and why they might be in the spotlight here. I mean, first of all, the House of Representatives, I think in 2020, did a report on the tech industry and its dominance overall as part of this kind of antitrust push and noted that Google specifically has put itself in a pretty great place. Google controls more than a quarter of US digital ads. It's currently number one in terms of digital ad market share with that more than a quarter, 28.8% last year. That's actually down a little bit from 36.7% in 2016, according to Insider Intelligence. Another chart from Bloomberg using 2023 eMarketer data shows Google at 26.5% of the US digital ad market, so significantly larger than Meta and Amazon. Last quarter, Google's ad business made up about 79% of its total revenue. So when I say it would be a big deal if they had to split or if there were some other remedy that affected that business. That's what I mean. Ads generated 54.5 billion out of Alphabet's 69.1 billion total revenue. Google remains the market leader by a significant margin. So the lawsuit basically says that Google controls the vast majority of the tools that are used for digital advertising and is, of course, one of the only places, one of the major places that those ads actually live and that that is all to the detriment of advertisers, publishers, and consumers. Here's some quotes from the lawsuit. One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising marketplace, Google has used anti-competitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies. The lawsuit also tries to explain how Google does this. I mean, going all the way back to, you know, its acquisition of DoubleClick in 2000, I think. Here are a couple more quotes from the lawsuit. Google, a single company with pervasive conflicts of interest, now controls, one, the technology used by nearly every major website publisher to offer advertising space for sale, two, the leading tools used by advertisers to buy that advertising space, and three, the largest ad exchange that matches publishers with advertisers each time that ad space is sold. To understand this even more simply, the lawsuit actually quotes an unnamed Google ad executive who said the following, quote, is there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the New York Stock Exchange. Yeah, what that person said. All right, so then the lawsuit, you know, maybe this doesn't matter, right? Google makes a bunch of money, but who actually gets hurt here? Maybe it's just efficiencies, economies of scale, works great for everybody. Well, the complaint addresses that because this really is the crux of antitrust law. You don't have to necessarily be a monopoly in that you have 90% market share. You, the, the point is, is your behavior anti-competitive and is there harm? So the complaint says, quote, the harm is clear. Website creators earn less and advertisers pay more than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants. And this conduct, conduct hurts all of us because as publishers make less money from advertisements, fewer publishers are able to offer internet content without subscriptions, paywalls, or alternative forms of monetization. One troubling, but revealing statistic demonstrates the point. On average, Google keeps at least 30 cents and sometimes far more of each advertising dollar flowing from advertisers to website publishers through Google's ad tech tools. Google's own internal documents concede that Google would earn far less in a competitive market. And that number is pretty important, right? Because like 30%, for example, is also the take of the Apple app store. Anytime you see this percentage that drives a ton of profit and a ton of margin, but potentially at the expense of a more vibrant ad industry, that does start to capture some, set off some alarm bells. All right, let's talk about what the lawsuit is asking for in terms of remedy, because you're seeing, you're going to see like a lot of headlines about this today. So kudos to the producing team because we just went straight to the lawsuit to find out what the proposed remedy would be because, you know, it's being reported as people that, that Google's may be ordered to be broken up. Here's what it says. The remedy would be quote, order the divestiture of at a minimum, the Google ad manager suite, including both Google's publisher ad server, DFP and Google's ad exchange ad X, along with any additional structural relief as needed to cure any anti-competitive harm. Clearly that last sentence is pretty broad, any additional structural relief, but we should clarify that the lawsuit is not specifically calling for like, YouTube to be its own company, or you have to dump Android. It's not necessarily about getting smaller. It's about making sure that Google does not own and control all of the tools

SPEAKER_15: of digital advertising, of which it controls more than a quarter across the internet, basically.

Chamath Palihapitiya: Hey, everybody, it's time for a special interview with an old friend of mine, Rick Robinson. He is the GM of Agetech Collaborative, which is brought to you by our friends at AARP, which I think, correct me if I'm not, at 52 as of last week. Am I able to be in AARP now? You are, you are welcome to join. Oh man, you and I got old. What happened? This is amazing. You guys are really excited about engaging the startup community in building technology for folks who are getting up there in age.

SPEAKER_25: Yeah, it's really exciting for us developing the Agetech Collaborative to try to put a focus on what we call Agetech. And you might be wondering, like, what is Agetech? Well, it's the intersection of longevity and technology, really. These are health tech companies. These are fintech companies. These are wellness companies. Essentially, it's going to be almost every company because the market 50 plus is becoming so enormous that they can't be ignored. And then you've got a lot of people who are supporting that market who can be any age. It's kind of a white space because not a lot of product developers and marketers and startups and investors have put a lot of focus on this, but it's huge and it's growing. In fact, it's around eight and a half trillion dollars in terms of economic value in the US right now. All right. Thanks, Rick. When you're selling into

David Friedberg: the 50 plus market, having relationship with AARP gives you a bunch of credibility. Of course,

Chamath Palihapitiya: in the meantime, you can go learn more about the Agetech Collaborative at agetechcollaborative.org twist and join us later in the program and you hear more about the Agetech Collaborative

SPEAKER_00: and how they help innovative startups succeed. All right. And then remember, we mentioned earlier that this was the second major lawsuit that the DOJ has filed against Google in the last three years. Under the Trump administration in 2020, there was a lawsuit with 11 states over Google allegedly paying billions of dollars per year to make its search engine the default web browser on various devices. Now, of course, the last time any company truly faced the prospect of a breakup was the US versus Microsoft in 1998. In that case, the Justice Department alleged that Microsoft broke the law by bundling. Remember, we talked about bundling with Slack and Teams, the browser Internet Explorer with every copy of Windows to the detriment of competition among browser makers. Microsoft ended up settling that case, but there was a moment where they had initially lost and there was an order saying that Microsoft had to spin off Windows as its own company. I don't know that we'll see anything that dramatic here. It's a big deal that the DOJ is filing these lawsuits, that they're going aggressively after these antitrust complaints. But I mean, I think we should point out that history indicates that it's unlikely there will be a dramatic fracturing of the business here. However, the sentiment is not on Google side. So things could get pretty interesting. Jason, you cannot stop him from tweeting, even if he's sick or on a plane had a tweet about what a broken up Google might look like and said, you know, which we've said before, I think on the show that could actually increase shareholder value, especially if YouTube, Android or the ad platform were spun out. I mean, you can imagine that Google's ad business standing on its own would be worth a lot. If that became its own company, that would be pretty strong. But then the question is what happens to YouTube or even Google search if the ad market dramatically changes and its ability to leverage all of its own data. Because one of the things I think is interesting here is that the lawsuit doesn't address Google's data monopoly because there's not like a clean way to put that in antitrust terms. But it's a huge part of this conversation. The timing is also, I think, very interesting considering Google's layoffs, but also the rumors, which seem to be sort of, I've heard on another podcast today, people are talking about it as though this is a done deal that Sergey Brin might be coming back to help lead Google into battle against Microsoft and chat GPT and really return focus to its AI projects and how to commercialize them. It's interesting primarily because you have to think there had been stories about this coming for at least the last couple of weeks. So you have to think, you know, this is not a surprise to Google executives, but it makes it tough. One of the things that happened with Microsoft during that long, long battle with the DOJ is that that was considered a bit of a lost decade for Microsoft in terms of innovation. There was only so much they could on top of that, they were distracted. Like having a big lawsuit against you by the DOJ is extremely distracting. There's lots of discovery. You have to get your executives in to talk about what they knew and didn't know. You're combing through emails and you are limited in how aggressive you can be in terms of innovating, launching new products, trying to put, you know, Microsoft and chat GPT down before they even get started. This could be a really tough time for Google, both competitively, ironically, and in terms of fighting these antitrust and anti-competition lawsuits. So it's not an easy, it's not an easy time for Sergey to be coming back. It also suggests that that could be part of the reason. It's also, I got to point out, terrible timing, considering that tech stocks were starting to creep back just a little bit. And that's over now. But although so far, I will say the impact of the lawsuit, back to what I was saying earlier about how history suggests it's not going to be like an immediate massive problem for Google. So far, the impact of the lawsuit on Google stock price is pretty minimal, the stock is down about 2% today, the broader market is flat, kind of goes to show you,

Jason Calacanis: I guess, maybe how seriously the market takes these lawsuits at this point.

SPEAKER_00: We could all we can maybe hope that antitrust is real, or that enforcement is real, but it's a long,

SPEAKER_15: long, long road and seems like the market so far is betting on Google here. Speaking of antitrust,

SPEAKER_00: though, it is kind of an interesting day in that department because Live Nation Entertainment, which is the entity that was formed after Live Nation merged with Ticketmaster back in 2010, is in front of Congress today in what appears to have been a very spicy hearing about its monopoly power, or at least its alleged monopoly power. And they're asking the question of whether the lack of competition in the ticketing industry has unfairly hurt consumers and artists. This is not new, of course. I mean, Pearl Jam has been trying to warn us about Ticketmaster since 1994. And that's even well before Ticketmaster and Live Nation merged. At that time, Pearl Jam actually sued Ticketmaster claiming that it was intending to monopolize the ticketing service industry. Mm-hmm. In 1991, Ticketmaster had actually bought out its main competitor called Ticketron, which is an awesome name. Side note. The band highlighted that if you refuse to work with Ticketmaster or the venues that they had exclusive ticketing deals with, then you were out of luck, and that was a big problem. But in 1995, the Justice Department closed its investigation. The Pearl Jam bill died. I think they lost their lawsuit. And now 30 years later, Taylor Swift has brought this all to our attention again. Not that we haven't been sitting here complaining about the fees the whole time, because we have, but now things might be getting more serious for Ticketmaster. Here's where it sits today. This is, I mean, again, 30 years ago, Pearl Jam was like, you're a monopoly. Since then, Ticketmaster, or the Live Nation entertainment entity, now controls over 70% of the market for ticketing and live events. That is, again, not technically a monopoly, but the question is, are you engaging in illegal anti-competitive behavior? Ticketmaster is obviously not the only seller, but its large market share does give it a very dominant market position. And a lot of what this hearing was about today is the behavior. Does Live Nation retaliate against venues, for example, that don't use Ticketmaster, that use other ticketing systems? So the question really is buying the tickets, the venues, and then the actual entertainment. In 2010, when the merger was approved by the Department of Justice, they did require Ticketmaster to divest some of its business to competitors. Those divestitures did not lead to significantly more competition in the ticketing sector. And there was an interesting moment in the hearing today, Matt Stoller, who I love on Twitter, by the way, you should follow him. And he writes a newsletter called Big. He's been chronicling sort of anti-competitiveness and monopoly in the United States economy forever. He's the guy to go to. He said, in the Ticketmaster hearing, Senator Mike Lee asks why the Obama administration allowed the Live Nation Ticketmaster merger to happen. AAI's Kathleen Braddish gives a not very compelling answer that boils down to, the DOJ was afraid of losing. Womp womp. See again, this is why the stock market is not freaking out over this lawsuit against Google, because the DOJ's history here is not great. But let's talk about how Ticketmaster ended up here, because honestly, if in the year of our Lord 2023, Taylor Swift finally brings down Ticketmaster, I'll go to one of her concerts. The Senate Judiciary Committee is holding this hearing because in November, pre-sale tickets for Taylor Swift's The Eras tour had huge amounts of technical issues and wait times. It was just like a disaster of a ticket sale rollout. And then Ticketmaster ended up canceling the public sale. Taylor Swift issued a statement after the cancellation of the future ticket sales saying, quote, I'm not going to make excuses for anyone because we asked them multiple times if they could handle this kind of demand and we were assured they could. It's truly amazing, she went on to say, that 2.4 million people got tickets, but it really pisses me off that a lot of them felt like they went through several bear attacks to get them. When it comes to addressing this specifically, the CFO and president of Ticketmaster's parent company Live Nation, Joe Burchold said, quote, industrial scale ticket scalping and an unprecedented amount of bots were responsible for the large scale problems. People are not 100% having that because like, they control the platform. So if they added scalping and bot problem, which PS, like everyone knows, is part of the ticket buying experience and Ticketmaster itself should maybe be in charge of stopping that. Nobody's buying it. Anyway, Jam production CEO and president said that bots were probably not to blame saying you can't blame bots for what happened to Taylor Swift. There's more to that story that you're not hearing. This is all during this testimony today. SeatGeek CEO Jack Grotzinger said there was a lack of, quote, robust competition in live entertainment and that this harms consumers and venues who don't choose Ticketmaster. And there you, you should, you should, we'll link to some of the Matt Stoller tweets, but the, the kind of back and forth on this is interesting primarily because it's extremely bipartisan. Like everybody from all the sides of dials were yelling at them about this today. Um, the SeatGeek CEO is calling to break up Ticketmaster and Live Nation effectively to undo that. Now we don't, again, this is a hearing before Congress. It's live testimony. It's

Jason Calacanis: not necessarily legislation or even a DOJ lawsuit, but it is a pretty big deal. Hey everybody. It's time

Chamath Palihapitiya: for a special interview with an old friend of mine, Rick Robinson. He is the GM of Agetech Collaborative, which is brought to you by our friends at AARP. So how does the collaborative work? How do you help companies and investors kind of access these companies and these markets?

SPEAKER_24: So essentially what we do is we look for companies, we incubate them, we invest in them,

SPEAKER_25: and then we bring them into this new environment we call the Agetech Collaborative Community. So yes, we have pitch competitions that we run throughout the year, themed, and some of them are open mic style. And it's a way for us to source and find great early stage companies, usually pre-series A. We invite some of them into our accelerator program, which is extremely high touch, eight weeks, four times a year, where we bring in aging experts. We help get them best prepared to deliver their product or service to the market. And as I mentioned, we often invest in these companies and then they graduate into the Agetech Collaborative Community, which is an online platform that makes up an ecosystem that we're developing that includes, of course, the startups, investors, testbed organizations, enterprises, and business services, all in this one online environment where they can support and draw from one another.

SPEAKER_46: Great. So there's an online community people can go visit, they can go visit that at

Chamath Palihapitiya: agetechcollaborative.org slash twist, agetechcollaborative.org slash twist. And so if you want to build in that market, if you want to sell into that market, if you want to invest in that market, this is a great way for you to

SPEAKER_00: partner with AARP, correct? Absolutely. Yep. All right, let's talk about some competition. One alternative is Axis, which is a ticketing outlet for sports and entertainment that was founded by AEG. AEG is the second largest entertainment promoter behind Live Nation Entertainment. Live Nation, of course, is the largest and they own Ticketmaster. So artists are starting to kind of rebel. And I know this thanks to producer Rachel, who is a country music fan. And she pointed out that Zach Bryan, who is a big country music star and popular songwriter, he's been super vocal about his thoughts on Ticketmaster on Twitter, and he is switching to Axis. So we pulled up some of his tweets about it. I mean, he has been no joke, right? Working class people can't even go to shows anymore at Ticketmaster, he tweeted in December. I was in the Navy once, I made $2,000 a month. My buddy Austin and I spent $850 on 12th row tickets. Why is this normalized? He said. It's Christmas time and it's nothing personal, Ticketmaster, but the homies are out and angry next year. Best year ever until next year, huh? Old sons said I was done touring, but I got a few shows and have some things I need to prove to Ticketmaster. Fair prices for everybody. And so on and so far. So he recently launched ticket sales on Axis and Rachel went to buy them. And so we want to bring on Rachel reporting to give us a firsthand account. Hello, the attempt. Hey there. Awesome. So yeah,

SPEAKER_54: I did not get Taylor Swift tickets. Did you try it or not? Were you like caught up in that? Oh, yeah, I tried. Okay, go back to that. What happened? Um, my computer just like I thought my computer couldn't have it as everybody on the twist team knows. And now everybody else will know I constantly have wifi problems. So I kind of thought it was like one of my wifi like shenanigans again. That's

SPEAKER_15: just because of your internet monopoly. That's different from your Ticketmaster monopoly. Totally

SPEAKER_54: different. Yeah. Um, but yeah, I didn't get the Taylor Swift tickets. My friends who did didn't get tickets in Philly where they're from, they got tickets in Chicago and they were still $500. So wow. For like nose leads. And then I've also heard of people going up like in the thousands, which is a little, absolutely insane. Um, and that to be clear is because like scalper slash

SPEAKER_66: scalper bots came and bought up all the tickets. So every ticket you could eventually get was a

Jason Calacanis: resale ticket. Exactly. Anything that Ticketmaster is responsible for, by the way, not Taylor Swift.

SPEAKER_65: Yeah, exactly. Exactly. And I've had issues with Ticketmaster before it actually dealt with like Penn State football games. And for all of my siblings that have gone to Penn State, including myself, you have to wait until like it hits midnight to try to get your tickets. Um, because of how buggy the site is, it crashes overall, just like a not great experience. And this past year, none of my siblings,

SPEAKER_54: three of them that go to Penn State got tickets to any of the football games. Um, so Ticketmaster

SPEAKER_65: and me are not friends. So I was pretty pumped to see Zach Bryan, um, over on access. And I've been following him and his hate for, uh, Ticketmaster in general for kind of a long time on Twitter. Um, and I was able to purchase one of his presale spots for a dollar over on access. And it works. Basically, there's like a login you can do for access, which is pronounced access, like you said before. Um, and it, once you get a presale presale ticket, which is a dollar, um, that can be purchased for, I think his is open for like a week or two. So you're not rushing to get it. The site's not getting overwhelmed. But once you purchase that ticket, that means you have a spot in order to wait in line, which I like a lot better because I think paying that like $1 really does help, um, minimize like the bots coming in. Because not only do you have to pay, but you have to give them your personal information. Um, and I think with $1, like that $1 placeholder, when you go in to get tickets, you can still buy four tickets. So it's not like you're spending a dollar and like have the chance to only buy one ticket and you can't sit with your friends. Um, I've used access before. And my only complaint was that I had to download a new app. Um, but one time I couldn't load an access ticket on my app because I didn't load it before I got to the venue and they still let me go up to a ticket booth, uh, and still claim my ticket, everything. So overall I'm super pumped. I think access is going to be like the main ticket company for a lot of events moving forward. Interesting.

SPEAKER_72: And it does seem like it really depends on artists making that switch. And then that was a big part of

Jason Calacanis: the conversation in, in the congressional testimony was whether live nation, AKA ticket master actually um, retaliates against artists who choose a different ticketing platform. So it'll be curious. So it takes like, I mean, it's, so it's great that Zach Bryan, for example, is like leading the way doing this because that's, it could be kind of scary. Right. And these are concerts too,

SPEAKER_65: that are held in like pretty big venues. One of which is like red rocks in Colorado, which is like a giant outdoor, really popular, beautiful stadium built literally into the red rocks. Um, so that's really cool to see that like even venues, it seems to be pretty open. And again, if anybody else is interested in checking out their website, that is axs.com. It's spelled access, but it's pronounced access. Um, I only, I just, I honestly feel like there's a lot of room in this space for startups to work in though, as much as I prefer access over ticket master, there's still just a bunch of bugs. There's another startup that I have used before for more things like DJ sets and finding out about events Jeremy called Dice. Um, producer Justin, um, was the person actually to show me that. So shout out to producer Justin. Um, Dice is a London based startup and it's big thing is it really does help you discover events, but it's also does ticketing. It raised, uh, $122 million in its series C back in September, 2021. Um, and that was at a $400 million valuation led by SoftBank. So that was pretty cool, but their customer service sucks. Like it's really, really bad. In my opinion, I've had a ton of issues with them. And unlike access, if your ticket isn't on your app before showing up to the venue, and if that venue doesn't have really good internet and you can't show your ticket, you're out of luck. It isn't one of those things where you can go up to the ticket booth and say, Hey, listen, my app's not working. Um, so is there a startup that wants to work in this space? You don't, you don't screenshot all your

SPEAKER_81: stuff and put it in your photo album, like a boomer. Oh, I screenshot. That's what I do.

SPEAKER_74: Confirmation. Yes. I'm an aggressive screenshotter. Totally. Yeah. That saved me with AXS, but in the

SPEAKER_65: AXS, the access situation, what happened is I didn't have it. I think I had to like reload the app. Like, you know, after a while an app gets undownloaded from your phone. Yeah. What the hell? Stop doing that Apple. Yeah. That's what happened with me with them. And I actually accessed the first time I ever used them was for a mad realities event, which is a New York based, um, like a crypto dating show that was happening for a little bit, which was really cool. Um, so yeah, I mean startup,

Jason Calacanis: startup, please. If your startup get into the space and luckily now there's so much attention on live nation and the ticket master hegemony that hopefully they won't be engaging in like wide scale anti-competitive practices, like retaliating against you or making sure that you can't, um,

SPEAKER_88: get a book, a show at any of their venues. Right? So shout out to Zach Bryan for really taking action here. I was like an artist trying to get away from Ticketmaster. Shout out the others will follow. I think we should go to a show. All right. Awesome.

SPEAKER_92: Thanks Rachel for the on the ground, uh, reporting. Thanks Molly. Thanks. All right.

SPEAKER_00: And then now it is startup time. Next up. We have two awesome founders from the launch accelerators, 26 cohort. You're going to get those interviews back to back and learn all about these two amazing products with these amazing energetic founders. Enjoy. That's coming up right now.

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Chamath Palihapitiya: glucose was spiking. I, uh, sometimes stress eat cereal with whole milk would spike my glucose like you wouldn't believe. And then I'd have a small portion of full fat ice cream, like a Haagen-Dazs. And I was like, wait a second. I am having my glucose spike much lower. I would have thought the opposite. I would have thought that the Haagen-Dazs was worse than a bowl of cereal.

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SPEAKER_101: All right, everyone, the launch accelerator 26th cohort just wrapped up and over the next few weeks, I will be interviewing all the founders from that cohort today. I'm very excited. I have Rian Boitler, who is founder and CEO of Govalo. And Rian, welcome. And congratulations on completing

SPEAKER_81: the accelerator. Thank you. Why don't you tell us in your own words what Govalo does?

SPEAKER_106: Well, I could tell you or I could show you which I think might be even better.

SPEAKER_107: Why don't you tell us exactly in your own pictures what Govalo does. That'd be great.

SPEAKER_106: Yes, yes, yes. So Govalo is reinventing the digital gifting experience and we are a Shopify app. Okay.

SPEAKER_109: So meet Bobby. He's the VP of commerce for Felix Gray. And they recently migrated from a custom CMS over to Shopify Plus. And they immediately started using the Shopify native gift card solution.

SPEAKER_106: Now, Bobby has a problem because the native gift card solution only allows the buyer to add the gift card to the cart. And that means that the buyer receives a gift card. The gift recipient never

SPEAKER_109: receives a gift card. So it's not really a gift experience at all. It's like this really disjointed, yucky experience. And it's like, oh, and then people don't use gift cards. And it has this, this whole big cascading effect. And this doesn't work for Felix Gray. And this doesn't work for Bobby because gifting is a major component of, of their strategy. And so that's when they found Govalo.

SPEAKER_106: With Govalo, you're able to add a gift card, delineate the name, email, and then delivery date, as well as the gift note. And then what Bobby loves even more is what's under the hood, the advanced analytics, especially the redemption right there, the ability to scroll down and to see who's opened it. You can see that on the right. And then of course, his customer experience team loves that you can look up a customer and say, you know, some of his customers say, hey, I didn't get that gift card. I never spent it. And then you can go in and you say, actually you, you did open it and you spent it. But if they're upset, maybe you resend the email or if they didn't have a great customer experience, you update that balance. The other feature that Bobby really loves is this. So this is just sending a gift card from the admin, but also importing gift cards in bulk. So this is used in a lot of sales and corporate gifting. And this configuration page is loved by their UX team, because you can make Gavalo look exactly like your Shopify store. They'll never know the difference.

SPEAKER_109: And of course, Bobby loves integrations like Klaviyo because Klaviyo helps him with the integration with Gavalo, increased customers, LTV, AOV. And then of course, with retention. And now this is something that I don't think you've seen yet before. So we also have corporate gift. I'm like, hello, there's more.

SPEAKER_101: Let me actually though, let me back up though and ask a couple of clarifying questions about, because some people will be listening to this and not seeing. So fundamentally, what's the problem that's being solved here? If you're a Shopify merchant, it is hard for you to sell gift cards to your store in an effective way that you can track. Like what does the analytics

SPEAKER_106: dashboard, for example, do for a merchant? Absolutely. So, so the fundamental problem with

SPEAKER_109: the Shopify native gift card experience is that it, it's never a gift. It, it, it becomes this challenge where it gets sent to me, right? If I'm the buyer, it gets sent to me, I have to forward it to you. Then I have to text you. And it's like this really awkward process. And that's, that's gross. And nobody likes that. But, but one of the components that really differentiates Govalo from, from any of its competitors is that advanced analytics to your point. And for instance, 57% of all gift card recipients never redeem their gift cards. Now there's a way to fix that, right?

SPEAKER_121: And with Govalo, it's actually, we flipped it on its head. 75% of all of our gift cards that have been

SPEAKER_109: issued have been redeemed in year one. And we're attributing that to the fact that you can track the

SPEAKER_106: redemption, right, right in, right in the analytics and also with our integrations with the email

SPEAKER_109: providers, Klaviyo, OmniSend and Drip to send out those reminder emails. Like, Hey, remember that gift

SPEAKER_106: card you got? Hey, you've already shopped with us and you like X. Have you thought about using your gift card for Y and just reminding folks to use them? Because that's a major problem with gift cards. It's not that we don't want to spend gift cards. It's that we forget we have them. And then they're, especially physical gift cards. They're like in our wallet or, or they're in our email. You forget them. And then all of a sudden, you know, it's the pandemic. This is what happened to me. I open a drawer

SPEAKER_109: and there's 30 gift cards for my daughter's bat mitzvah. I was like, Ooh, I forgot about shopping,

SPEAKER_106: right? Let's go shopping. Just getting everything's closed.

SPEAKER_101: And then how is if say, you know, 50% of those gift cards don't get redeemed. How is that? Is that a problem for the merchant? Like, are those, is that just hanging out there for them on their

SPEAKER_130: balance sheet somehow? It is actually hanging out for them on their balance sheet. And it's

SPEAKER_109: not hanging out on the right side of their balance sheet. That's hanging out as a liability.

SPEAKER_106: And so there's, there's this common misconception with gift cards that merchants should just sell the gift cards and get that cash in. But the reality is with Govalo, when you spend, when you redeem a gift card on average, their AOV goes up $70, which is higher than the national average for anybody who

SPEAKER_109: doesn't know. Oh, oh yes, of course. And we love our acronym soup in commerce enablement, uh, average order value. Got it. Thank you. Great.

SPEAKER_106: Yeah. So, so not only is the merchant, they're getting $70 more than what they would have gotten before. And so I always challenge merchants to flip their thinking on its head and say, no, no, no, no, it's not about the 50 bucks you just made. It's about the $70 you're going to make. And it's about winning that customer over for life, especially in this world where, you know, we've had our iOS

SPEAKER_109: changes and we're, we're headed towards a cookie list future. The more data we can get and the more buyers we can bring in and retain the better. So got it. So if you're, so you're a Shopify merchant,

SPEAKER_15: you need to first and foremost, be offering gift cards. And this is a way to do that, right? Like

SPEAKER_101: baseline. This is a way to at least to start doing that. Yes. And then most of the time when merchants offer gift cards or whatever Shopify is built in tool for that just is not full featured enough

SPEAKER_15: to actually get the merchant all that they could be getting from this gift card experience.

SPEAKER_115: Absolutely. Absolutely. Enter Govallo. Okay. And then you are, and because you are like Shopify expert galore, the queen of Shopify, tell us you're a Shopify plus certified app. Tell me

SPEAKER_109: why that's important. Okay. So that's super important. So Shopify plus certified app means that we hold, we hold special insurances. We've been technically diligent multiple times. We, we hit all of these thresholds and it's, it's also important because there's only 98 of us. So the last class, which is the one I was in, it was, it was us and Zendesk. And I did think at the time I was like, wow, that's, that's a heck of a person, you know, a heck of a brand to be next to, because they're doing, they're, they're publicly traded company and they're crushing it. And it, it just means that if you're a Shopify plus certified app, it's an app that is trusted. And it's an app that Shopify plus when they're selling into enterprise that they're recommending you and they know you're stable, they know you don't have downtime and they know you give flawless customer service. So they know there's 8,000 plus Shopify apps in general, but there's only 98 of us.

SPEAKER_136: That's amazing. Um, and then tell me how you make money.

SPEAKER_109: So we make money in two ways. One, we have a SAS fee, although I will caveat, we do have an essential plan, which has $0. It's, it's a fairly limited plan though, in terms of functionality, but you know what, it gets you in the door. And if you're a smaller mom and pop shop, that's the one you should start on. We do it. Um, we do a take rate, right? So we do for, for the essential plan, a 2.9% take rate. That means for every, if you issue a hundred dollar gift card, we make $2 and 90 cents. Okay.

SPEAKER_139: And then we have premium plans as enterprise plans and yeah.

SPEAKER_101: Got it. So is SAS fee assuming that a company, a merchant subscribes and then a take rate, whether they subscribe or not, you have a take rate no matter what on every trend and even on the

SPEAKER_130: premium plans. Yes. We have a take rate no matter what they just, they just go down depending on,

SPEAKER_101: on which plan you're on. Right. Um, and then, you know, our, our classic accelerator question, of course, for every founder is what's your path to 10 million and a hundred million dollars.

SPEAKER_109: Absolutely. I love this question. So this year we're taking on backwards compatibility in terms of point of sale, which sounds nerdy because it is. So basically there's a lot of folks out there who have like a business mullet situation going on. So inside of their brick and mortar, right. And we're seeing this return to retail and Shopify has signaled a return to retail. And so they have square in their store, but they have Shopify e-commerce, right. Solution. If you buy a gift card on square, you cannot use it on Shopify and vice versa. So then the merchants offer gift cards nowhere. Okay. So that's a problem. It seems bad. It seems like gift cards wouldn't be appealing then. So that's the, that's what we were aiming to solve this year. We then, so, so this is what that's going to get us over into the 10, 10 million dollar range that, and what's coming after that, which is kind of our stripe of vacation moment, which is a platform agnostic API. So we want all SMBs to have access to this functionality. It's super important to us. We, we want them to have it, but as of right now, there's a lot of limitations in terms of platforms and, and, and how the infrastructure works. Now, what happens next after that? And what I'm really excited for is we're kind of taking on Blackhawk.

SPEAKER_106: So for those of you who are like, what is Blackhawk and why should I care? Blackhawk are the people that power target gift cards, Kohl's gift cards, basically all the gift cards. I think Amazon is powered by Synchrony. Either way though, if you get a big gift card, like from, you know,

SPEAKER_109: a grocery store off the side, that is probably powered by Blackhawk or Synchrony, but there is nobody providing stored value cards, which is another word for a gift card, to SMBs.

SPEAKER_121: That work in a way, right? You know how you can get those cards is like, oh, you can go to Chili's or TGI Fridays or the whole rack of them that you see like at Target.

SPEAKER_109: Yeah. Yeah. You can't do it. So, but it's like, well, what if, you know, fellow, which is one of our merchants wants to start working with Chamberlain coffee

SPEAKER_157: and offer a gift card that covers both? They can't. Oh, I see. See, this is where like,

SPEAKER_109: I don't want them to hear this. Yeah, I know. Kind of. Right. But like a little bit. I know. But it's really important that SMBs have that access because SMBs are the backbone of our

SPEAKER_101: society. Yep. 100%. Rian Boitler, this is why I'm obsessed with Rian, you guys, founder and CEO of Govalo. Congratulations and can't wait to hear more from you. Thank you so much for having me. Thank you. All right. Daniel Sakai is the founder of Hey Hire and was part of the Launch Accelerator's 26th cohort, which just graduated. And Daniel started Hey Hire back in 2018. Of course, over the next few weeks, I'll be talking to all of our Accelerator founders. Daniel, welcome

SPEAKER_52: and congrats on completing the course. Thank you. Appreciate it. And it's great to be here. Daniel, tell me in your own words, what does Hey Hire do?

SPEAKER_167: So Hey Hire helps businesses hire hourly workers. What we do is we focus on a few things to help them

SPEAKER_168: find the right employees. A very big problem that most of these businesses have been facing is finding the job seekers that are actually local to their place of business and then communicating

SPEAKER_169: with them. So what we do is we allow the business to post their positions to attract actual local job

SPEAKER_168: seekers. To do that, they can post our QR code banners at the place of business. They can post it on their social medias and their website. And then job seekers will be able to scan that QR code, create a profile in just under five minutes, and then use that profile to apply to that business in just two taps. They can also open the map on our app and find other businesses around them and use that same profile they created to apply to any of the other businesses. And then we also facilitate the communication. So that is the next problem that they've faced. Other than sourcing the right candidates, communicating with them was a very big problem that they faced. So we have a chat system on our platform where the employer chats and the job seeker gets it as a text message. So it's just a very instant connection between job seeker and employer, which is what brought our average time to hire down to two days,

SPEAKER_115: which is the lowest in the market. And this is remind me, primarily the platform is designed for hourly workers. So somebody who might be looking to work at a restaurant or a hotel, all the places

SPEAKER_168: that are desperate to hire right now. Yes, the high turnover jobs. Most of our customers currently are restaurants, cafes, bars, we have some retail stores using it as well. But since the turnover is so high for the restaurants, they're in a constant demand of employees, the the supply is there as well. But the handshake, that's the most crucial part. So that's where we come in and really help them find

SPEAKER_101: each other and communicate. So walk me through the differentiators. It sounds like the speed

SPEAKER_92: is key here. And then how would it normally happen? Like you might see a help wanted sign, like sort of, you know, give me a compare and contrast here.

SPEAKER_169: Yeah, so you'll still see a lot of businesses with just like a now hiring apply within sign at the door or the window. And then the current situation is, you know, a job seeker that sees the sign and interested in working, they're going to walk in and they're going to ask, hey, are you guys hiring? Yes, we are. This is the email, send your resume over here. And then they'll do that. And then once the manager has some time, they're going to open their email, they're going to see a bunch of random spray and pray applications that all look different. And then when they have some time to go through them, they're going to try to reach out to the ones that they like. But hearing back from them almost never happens. So the main things would be having the job seekers create a very standardized, generic looking profile. So it's very easy to compare. And then yeah, the communication as well

SPEAKER_101: is definitely one of our main differentiators. And then it sounds like the other one is locale, like the kind of geofencing, right? Like you're making sure that people don't necessarily have to have to have a long commute to the places they apply. Yeah. And that's that that would be the

SPEAKER_169: main thing. Yeah, making sure that those job seekers are actually local. So basically, by not posting these jobs all over the place online, we really restrict the places these job seekers are going to come from. So the only way a job seeker can find this job is if they have been to the place physically, if they visited their website, which usually means they're a new or returning customer, or if they follow them on social media. The only other way is if the job seeker opens the map on the app, they can see businesses that are within their range. So that way, it's it really

SPEAKER_183: limits it down to people that are either customers of the business or people that live around it.

SPEAKER_81: Does that restrict the pool of potential applicants?

SPEAKER_169: It does definitely does. But it filters out most of the spam, you know, non relevant non local applicants. Originally, we thought, you know, maybe we won't get enough job seekers per each position. But we were even surprised to find out that we've had a very high ratio of job seekers per business. So we have an average of 65 job seekers per business, with an average of three positions per business. So an average of 22 job seekers per job post. That's fascinating. I mean, I keep hearing all these news

SPEAKER_101: stories that are like no one can hire. Like what? What do you think the disconnect has been? Like, is it literally just as simple as solving for communication and proximity? Not simple. Obviously,

SPEAKER_169: I know your team works really hard. Yeah. So yeah, other than the proximity part, it's definitely the communication. One thing people don't realize is that most job seekers in this space, you know, they're Gen Z people who don't really check their email every day. And that's the main source of communicating with them through every other platform and solution. So by allowing the employer to instantly reach out to this job seeker through text message, we've had numerous cases of the employer being able to call the applicant for an interview within an hour of them applying. So that way, there's just a very

SPEAKER_191: instant connection. And we've had people make hires, you know, two, three hours after the job

SPEAKER_136: applicant actually applied. Wow. Tell me how a hire makes money.

SPEAKER_169: So we have a very simple model, we charge a business $100 a month. And that's per location. So if they have multiple locations, it's actually $90 a month. And that will be for unlimited positions, unlimited chats, unlimited applicants, unlimited users, there are no hidden fees, there are no additional costs. That way, even the smallest business that hires, you know, maybe one person a

SPEAKER_179: month, they're going to be able to use this and not have to worry about breaking the bank on a, you know, $500 to $1,000 a month platform. And then how do you acquire businesses

SPEAKER_101: to be on the platform? Like, does that you know, because you have to acquire like every business in

SPEAKER_169: America one at a time? Oh, not not one at a time, hopefully. But we have a few different channels of go to market. So how we acquired all of our customers so far was door to door sales. So both me and my co founder Benjamin, we have gone door to door here in Austin, Texas, and just selling it to businesses. We we kind of tricked our way into meeting the decision makers. You know, we just go in and ask, Hey, are you guys hiring? And if they say yes, okay, who do we talk to about applying? And if the managers there, we sit down with a manager and we pull out the demo right away, we don't waste their time, we make it very clear. We're not here for a job because they're not very happy when people kind of tricked them into meeting them. But it's working, we've we've had a very good conversion rate of 25% on every manager that we've met. So that's something that we definitely intend on continuing that door to door local, because, you know, so so here's the thing, seven out of 10 restaurants in the US are independently single location operated. So the manager or the owner or the operator, they wear a bunch of hats. So they're in charge of everything from, you know, making sure everything's good at the restaurant, running the kitchen, running the bar, supplies, obviously employees and hiring. So a lot of them don't really have time to look at their emails and go through all of these spam companies trying to sell them their products. So one thing we've noticed is if you're at the place of business, and if you're there sitting with a decision maker, you have a way higher chance of closing them. So that's been our strongest working strategy for now. We're also we just released our enterprise version. So some of our advisors have a lot of connections with with big, you know, multi location franchises. So we're starting to get on calls with some of those. And then the third would be working on SaaS partnerships with some very strategic companies. So that would be the third thing.

SPEAKER_179: But that's something we're probably going to start putting more of a focus on in Q3.

SPEAKER_101: Awesome. And then finally, our clutch accelerator question, what is your pathway to 10 million? It sounds like you've covered some of that, but your pathway to 10 million and then 100 million dollars.

SPEAKER_169: So yeah, pretty much, like I said, our plan is to build. So we're actually hiring a few salespeople to get started next week here in Austin. So our plan is to have a local takeover and just have every business in Austin if they're not using us to at least know who we are, and then expanding into additional markets. You know, we're we want to have a steady growth, we don't want to grow too fast, because we want to stay loyal to our customers. So other than building local sales teams, it is working with those strategic SaaS partnerships, and hopefully closing an enterprise deal this quarter,

SPEAKER_179: we're already talking to a few. So that's, those would be the main, the main things that we're going

SPEAKER_101: to do in order to reach 100 million in ARR. Amazing. Daniel Sakai is the founder of Hey Hire, and we look forward to hearing more from you. Thanks so much for the time.

SPEAKER_210: Thank you. Thank you, Molly. It's been a pleasure.

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