David Friedberg: All right, everybody. Welcome back to This Week in Startups. We're doing a live Q&A. Not easy to do this, but we're figuring it out. Before these shows, you can always submit that you want to be on live at thisweekinstartups.com slash askjason. So if you have questions, you want to be mentored, you have questions about your startup, fundraising, life in general, technology, et cetera, we want to make this interactive. So we don't want you to just submit

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SPEAKER_06: So we'll take our first question. Here we go. We have Sean here. Hey, Sean, what's your question for

SPEAKER_10: me? Yes, Jason. Long-time listener, first-time caller. So my question is- There you go. Going

SPEAKER_13: to get a lot of those. You're going to get a lot of those. Yes, exactly. My question is as follows.

SPEAKER_14: In light of the trend where some startups inspired by success stories like Zapier and MailChimp are aiming for sustainable growth from profitability with minimal external funding, how do you envision the future of seed stage investment structures such as convertible notes and safes adapting for startups that may not plan to raise subsequent funding rounds? Yeah, it's a great question. So

SPEAKER_18: for people who know, there are companies that require very little capital and they can become sustainable. Zapier is one. And of course, you mentioned MailChimp. SurveyMonkey was like this. DistroKid was like this. Now, if they do get to profitability and it's been bootstrapped the whole way, you don't have investors to worry about. If you did happen to take seed money and now your businesses at scale, there are two devices in early stage investing. One's called a convertible note. It's a loan with an interest rate and then it converts at a certain agreed upon valuation or a discount to the next valuation of the company. And so in those cases, every two years or so, depending on how the documents are written in a convertible note, they convert into equity or the person can say, can I have my money back plus interest? And so that option is on the investor side. So the investors can't get screwed. The company grows really quick, Sean. And then the founder's like, oh, you know what? My company, you invested at a $5 million valuation. It's worth 50. I'll just pay your money back at five. That would be not cool to the investors. And there was a startup who did that. They changed the language to make it their option. That was really dirty. I won't say the name of the company, but that company came to me to pitch it later on. And I was like, you know what? This is a moral ethical issue. I don't want to be in business with these folks. Then on a safe, there have been issues where safes have never converted. TopTal is the Y Combinator company. I think it was a YC company that used the safe created by YC. And YC knew that this was an edge case. There was a possibility, which is you never convert the equity. You just pull

David Friedberg: all the money out of the business. You build a giant business. And then those investors are screwed. And the TopTal investors got screwed really bad. And you know what? The person who's a general counsel of YC, if you look up a video, general counsel Y Combinator on safes, she explains it. She gets challenged like, hey, what happens in this edge case? And she says, in the next case, we don't think it's going to happen because you'll always raise another fund. Your point, what if you never raise another and you never actually do an equity round? Those things can be hanging out there and they can be dangerous. What's more likely is the founder decides they just want to run the business for profits. And then you have to have a negotiation. In 400 investments, this has happened three or four times where, so I'd say maybe it's one in 150, maybe three times it's happened, where the founder

SPEAKER_18: says, you have 6% equity, JCal. We're accruing money on this loan. It might be like, on a convertible

David Friedberg: note, 5% interest. So this $100,000 has turned into 105. Next year, it turned into 111. And it just keeps compounding over four or five years. And then finally you have $150,000 into the company at a modest valuation. And we have generally taken the position of, hey, we'll stay in it with you because we know you're going to sell it at some point, right? In all likelihood. But we've been asked to be bought out. And we generally don't want to get bought out because if the founder believes in the business that much, and then we can just say, well, pick a number and talk to your attorney, we'll just convert it. So if it's hanging out there as a safe or whatever, we know there's a cap on it. Let's just convert it. And so we have done that for tax purposes or whatever, or we just extend the note. So with convertible notes, you can just say, we'll extend it for another two years. And so every two years we put in our database, the date of this is a very mechanical conversation, I guess, but it will keep happening when founders decide, I just don't want to, I don't need to do a series B, right? I'll just do seed and series A, or I'll do an incubator seed and then never raise again. I think with AI, we'll see it happen more often. For seed investors, I don't think it's a problem. For series B and C investors, I could see this being a very big problem because maybe some companies never raise money. Maybe they just dilute 10, 20% in their seed round, never do a series A, or they dilute 30% between their series A and seed, they never raise a series B. And that would be delightful. So I'm excited about that potentiality as an investor.

SPEAKER_29: I like the idea of skipping funding rounds and then just going public, but you have a follow-up,

SPEAKER_32: I'm sure. Yes, sir. You've opened up a can of worms. This is a super can of worms for the venture

SPEAKER_14: business. Let me ask you this then, at the seed stage, would it make sense to consider a preferred price round at a seed stage for companies that may be thinking in this option?

SPEAKER_18: Yeah, you will incur additional legal fees. So doing a safe, a lot of people I've heard founders

David Friedberg: doing safes without even consulting an attorney, they just fill out the form and collect the money. So some people do do that. I always think you should have a decent attorney and you could find solo practitioners who will only charge three or $400 per hour. Then there are the white glove, top tier firms that might charge 800 to 1,200 an hour in Silicon Valley, but they might do your

SPEAKER_18: price round, which typically plus 20 or $30,000, I think, to do a full price round. And that's why people tend to not do it. And then sometimes the VCs who lead that price round, they ask you

David Friedberg: to pay their legal fees. I don't think you should ever do that. I think that tradition is kind of like gnarly. So I would never pay the investors legal fees. I think everybody in the industry should just stop doing that. Um, it just creates an unhealthy environment where just $60,000 is coming

SPEAKER_25: out of the, um, startup after they raised their first two or 3 million. It's like, well, we don't

David Friedberg: want to just go in the startup. I'm not begrudging the legal folks, their fees. I just think lawyer,

SPEAKER_40: if the, if the founders are paying the legal fees of the venture capitalists, it just seems weird. The venture capitalists have money. They should do it themselves. Okay. So putting all that aside,

David Friedberg: it's just expensive. So instead of spending one to $5,000 closing your round and legal costs, you're going to be spending 30, 40,000. That's why people don't do this. So yeah, I think just stick with the safe and the convertible and you'll deal with it every two years. We put a conversion date in ours. So, you know, safes don't have a conversion date. We, I think we put in our side letter, like, Hey, it's got to convert by a certain point three years in or something, two years in four

SPEAKER_46: years in, um, just so we have that conversation. So it's healthy. Um, so it's not sitting out there. And the reason why, by the way, a lot of people, you didn't ask this, but people ask why are VCs

David Friedberg: putting in the convertible note documents interest? It's not that they want to, they put the smallest

SPEAKER_46: amount possible. It's that in order for the government, the IRS, et cetera, to consider it a convertible note alone against future equity. It needs to have an interest rate and it has to

SPEAKER_25: be somewhat in reality. So it can't be 0.01%. You know, if the LIBOR or whatever, then the fed funds rate is three, four or five, 6%. It should be somewhere in that range. Nobody's getting rich off it either. But, um, you know, I do think startups are going to change over the coming years and be less capital intensive and more revenue per employee. So you've probably heard people talking about this billion dollar, you know, unicorn valuation company with one employee. I don't think that it was not fun to run a company with one people. And if you did get to a hundred million in revenue and a billion dollar valuation, be kind of fun to have a dozen people around to think about the business. So I do think we'll see a 10 person company hit a hundred million in revenue, 10 million per employee and be worth a billion. I do think we'll see that very soon, like in the next couple of

SPEAKER_10: years. So great question. Shout out to Founder University, by the way, we just graduated the program. Absolutely outstanding. Kelly and Presh were phenomenal. And we had a fantastic experience.

SPEAKER_51: That's great. Uh, we, for people who don't know, we run something like Founder University. We were

SPEAKER_25: doing it four times a year. It was kind of killing the team. Uh, so we're now doing it three times a year. So they have a little break in between them. We're doing a quarterly and we realized, oh my God, we're just starting the second we end. Uh, so let's do a quarterly, uh, three times a year. Uh, and we have a curriculum and we help people learn the best practices, uh, in today's market for starting companies, except 200 people or 200 teams out of 2000 applicants. And then we

David Friedberg: wind up investing in, uh, 10% of those. So net net, we invest in 1% of them and it's been a great joy

SPEAKER_41: to do it, uh, because we're meeting founders about half the people in the program. I don't know if you are in this group are not even incorporated when they join. So we're really, we just graduated.

SPEAKER_14: Yes. We just graduated your cohort seven, uh, yesterday, actually with the presentation

SPEAKER_53: to Bianca. So very nice. Were you incorporated before you started or yes. And we actually

SPEAKER_14: launched during Founder University and along the way, all your videos and guides were exceptionally

SPEAKER_10: helpful as we went through that process. So, uh, it was worth the $500. In fact, you could keep it

SPEAKER_18: if I didn't need the money back, but yeah, no, no, we, um, we will know we charge $500 for it.

David Friedberg: If you come to all 12 weeks, we give the 500 bucks back and 94% of people complete the program. If we didn't charge the $500 and give the 500 dollars back, I think we'd probably be at half that number. So it's a round trip. Some people do, uh, wind up saying, just keep the 500 bucks, put it towards, uh, you know, your team or whatever. And we're like, oh, that's quite charming, but it's been a little bit of a challenge because 200 people giving 500 bucks, um, uh, is like a hundred thousand dollars. And then Stripe is like, what are you doing? A hundred percent of your customers or 90% of your customers get their money back. Like how terrible is your product? So we, we might need to like take the money in, pay the fees, and then write a check back just to, you know, or, or give gift cards back or something. I don't know. It's a mechanical issue, but I love this. I wish there was a gym that you paid $500 a month. And then they gave you a hundred dollars each of the first four times you did a workout. And, uh, then you just pay a hundred bucks a month. But if you didn't show up for a month, you pay the 500. That's, that's the kind of gym with the right incentives. All right. Great job. Uh, and continued success with Pouncer AI.

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David Friedberg: All right. That worked incredibly well. Let's take another interactive call-in show here from

SPEAKER_25: founders asking questions about their startups. Who do we have next? And if you want to call in, you can just go to thisweekinstartups.com slash join. Okay. All right. Jelly pod. How are you doing?

SPEAKER_70: It's Pearson? Pearson Marks. Okay. Yes. So you have a question for me. Let's, let's get right to it.

SPEAKER_74: I do. Yeah. So I'm Pearson. I'm the founder of Jelly pod, which is a personalized podcast service that creates podcasts based on your newsletter subscriptions. And I'm a solo founder. And you're pretty vocal that successful venture scale companies need multiple founders, you know, builder, designer, growth hacker, everything. And recently people like Sam Altman have come out to say that they believe in the near future, there's going to be a billion dollar single person unicorn. It's far-fetched, but you know, complete one man show. So my question is for you, why does your investment philosophy require multiple co-founders as an initial filter versus maybe like a tiebreaker? And what advice would you give to the solar founder?

SPEAKER_58: Yeah. So, um, and it's, this really wasn't my great insight. It was Paul Graham's, which is paradoxical that Sam is sort of, you know, promoting this, uh, one person unicorn.

SPEAKER_46: I think that's more, the point he's trying to make is with AI, one person could be this maestro and generate a hundred million in revenue, 50 million in profits, which is what it would take to be a unicorn. So it's a little fantastical. And if you did have that amount of resources, why wouldn't you have 10 people? Because it'd be more fun to work with 10 people and have like, you know, folks really thinking about the design, really thinking about stuff and, you know, customer support, et cetera, even, even, you know, uh, yeah, it's just weird that, um, you wouldn't have some number

David Friedberg: of people working because it's lonely. Most of the solo founder companies fail, um, at maybe three or four times the rate of multiples. Why is this? Well, one person, um, many hand, if you want, there's this expression, if you want to go far, uh, go together, if you want to go fast, go alone. So you will go fast as a solo founder. You don't have to have any tough conversations, but sometimes those tough conversations, should we be an enterprise company? Should we be a consumer company? Should we be advertising based? Should we subscription based? You're going to just make those decisions unilaterally, uh, or maybe after consulting, you know, some consumer data, but essentially the buck will stop with you. You'll make that decision. Um, and so if you had

SPEAKER_46: two other folks there working with you, uh, one of them was a developer, you're the designer, and the other person was a salesperson or a business head or, you know, MBA, you might have a

David Friedberg: more vibrant discussion. And then if one of you quits, well, there's two more people, to carry on the mission. And if you quit the company's over. So on a very practical basis, the way investors look at solo founders is if this, this is just, you know, it's a unicycle lose that wheel. That's it game over as opposed to like, Hey, we've got three or four of these. It's a trike. It's a car. It's got four wheels that we can lose a wheel and keep going. So it's really just about redundancy and downside protection in our programs. I tell my team, if it's a solo founder, they better have incredible performance. Um, that's higher than the people who have multiples, uh, multiple co-founders. So it, we probably accept into founder university, five percent, maybe, uh, solo founders. And we try to work with them on, Hey, why are you a solo founder? Most of the time it's because they can't find co-founders. And then you have to ask yourself, so they, most of the time they want co-founders. So out of 10, I'd say seven or eight want a co-founder. They just can't find one, which then means either the idea is not good enough for people to want to come on the adventure or the founder is not aggressive enough to convince people to come on this journey with them and quit their jobs or the founders. So small-minded that they think I don't want to give somebody else 10 or 20% of the company. Um, I want to own 80% of the company or 90% of the company. And we, we have had that conversation with folks. Yeah. All of those reasons together make it safer for angel investors, seed investors to invest after the products launched and in multiples. So you're trying to create some downside protection for your fund. So you have less zeros. If you want to have less zeros, invest post the product being in market. And when they get their first paid customer, and when you have two or three multiple founders and you will see the number of

SPEAKER_25: zeros in your portfolio plummet, that's why people are doing it. So it's really just a portfolio

SPEAKER_74: management, uh, question. Yeah, no, absolutely. That totally makes sense. And so like for somebody who does have a launch product that has paying customers and, you know, now is that definition of a co-founder irrelevant? Like at what point does that no longer become a co-founder, but an early

David Friedberg: hire, you know, initial founding engineer. So I will look at that and think founding team. So do you have a founding team and does that founding team have, let's say one, two, three, four points of equity each? In other words, enough skin in the game that they're going to stay at this company for five years, um, six years. Yeah. Because that consistency of talented people really does matter. So yeah, if I was evaluating your company and you were at a hundred thousand in revenue, I'm just picking a number, uh, per year and you had a CTO, a, uh, a CTO, VP of

SPEAKER_41: engineering, whatever your top tech person. And they had 4% equity. And then you had a top sales executive and you were selling ads, let's say, and they had 4% and you had a kick-ass UX designer

SPEAKER_46: and they had 4%. And then you had a chief operating officer, CFO, accounting type person, and they had 4%. Okay. Four times four, 16%. And let's say you owned, um, 70%. And then there was 10% or so in,

David Friedberg: uh, uh, employee stock option pool for the future. That would look good for me. Yeah. I would be okay with that. And because you would have a founding team and you can explain it to investors. Hey, listen, people have serious equity comp. They're not going anywhere. Um, so yeah, I think that's totally fine to have a founding team. So after co-founders comes founding team. The thing is people who are co-founders, like, you know, door dish at three or four, you know, they're, I think they're all still with the company. Right. And so when they have serious chunks of equity, 20, 30% of the company each, and it's hard to leave, it's hard to leave a company that's valued at a hundred million

SPEAKER_25: when you have 20% of the company, but you've only vested, you know, uh, 8% of that, right? You got 12%, you got $12 million sitting there. You're going to stick around, right? So it really is just about

David Friedberg: incentives. And so your performance will have to be higher, your ability to build a team and motivate them. It's going to be more challenged because they don't have the same equity. So you might get a second tier of employee, you won't get the co-founder level engineer, you'll get the next level, but maybe you convince somebody, Hey, listen, I've already taken the risk out of the business. We're at a million dollars in revenue. You're not joining a pure startup here. We're profitable. We got a million in revenue. So 4% of this is, you know, is a lot more than 20% of a white piece of paper startup. That's just, you know, a blank sheet. So great question. And, uh, I wish you well with it. Yeah. I like your idea. So you're taking a bunch of newsletters

SPEAKER_46: and then you turn it into a podcast. So I know we were doing this. We, there was a company called

David Friedberg: simply audio or something. I forgot the name of it, but they took the launch ticker that we were doing

SPEAKER_46: and every day they would have a voiceover person, just read it. Um, and that was like an interesting auto audio concept. Um, but I think what you're doing is you're taking all of my newsletters. I put them, I forward them to one URL and then you use AI to read them to me. Is that how it works?

SPEAKER_74: Pretty much. It distills the most important topic, de-duplicates everything. So if like New York times and somebody else talks about the same thing, provides both perspectives and you get

SPEAKER_89: a 10 to 15 minute long podcast every day about the news you actually care about.

SPEAKER_103: Killer idea. Um, kind of do something like that. Um, I have a product called speech if I'm not

SPEAKER_41: an investor in it, but like today, BlackRock's, you know, CEO did his annual letter. It's a 30 minute listen at 1.5 speed. I took the PDF. I took the BlackRock's, you know, yearly letter. I printed it to a PDF on my phone. I sent the PDF to, uh, speechify. And then I listened to Barack Obama's voice speaking it to me while I was at the gym. And so that was like a really interesting format.

SPEAKER_46: If you could have, if speechify just pulled in five interesting articles a day and made them audio, I would be really into that. So I think you have a really great idea. We were investors in a company

SPEAKER_97: swell that Apple bought that would let you swipe between moments in podcasts. So it had a similar

SPEAKER_29: idea there. So, um, yeah, Barack Obama and Gwyneth Paltrow are the voices on speechify. They have two

SPEAKER_108: celebrity voices. It's pretty cool. Oh, Snoop Dogg on there too. Oh, so you, you, you, you examine this

David Friedberg: product. So I think, yeah, I think you have a great idea. I could see people paying for, for business intelligence and as a newsletter owner and podcaster, I don't really have a problem with it too much. As long as it's like very clear, Hey, we've summarized, you know, this story

SPEAKER_25: that Jason Calacanis wrote, you can see it at, you know, calacanis.com. I'm cool with it. So

SPEAKER_74: absolutely. And I think the big thing too, is like, you can also read the email, the full thing in the app as well. So you hear something that you're interested in. I'm going to go in the app and just reread it and just figure out all the details. Is this app out? Can people go download it right

SPEAKER_58: now? It is, it's on the iOS app store. Great. Just search for jelly pod, like peanut butter and jelly,

SPEAKER_97: J E L L I P O D. Great job. Good luck with your app and a great question. Thanks.

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David Friedberg: this week in startups.com slash join. If you want to join us and ask a question, um, I'll take any

SPEAKER_46: question, by the way, people don't ask me too many life questions. It's always about startups and raising money product market fit. Hey, that's my wheelhouse, but I'll answer questions about anything on this format. It doesn't mean we're going to include it in the pod. Next up is Ann. Let's get in on the one, by the way, I don't know your question. They, they do, they are on the notes and, but I don't specifically like to listen or prepare for the questions. Cause I think it's better and more dynamic

SPEAKER_97: if I just get the question going in cold. Yeah. I like to, I want you to get my raw reaction without

SPEAKER_125: any prep. Great. Um, so I have a consumer app that is subscription based. We have enough capital to release an MVP, but it will be a small grassroots marketing effort. And I want to know if it's better to release the MVP and go with a smaller grassroots. And we will be able to start bringing

SPEAKER_128: in revenue at that point or wait for VC funding so that we can release with much higher velocity and

SPEAKER_25: give up points in the company. Yeah. I mean, the, the further back you can push, uh, venture funding,

David Friedberg: the higher, the valuation of the company will be, you know, in other words, the higher VCs will be willing to pay for it. And the more you have to suffer with less resources. The good news is suffering and less resources tends to make teams build better product. So when you get the money in, let's say you were to raise $3 million. Now you'd be sitting there with your team. Okay. How do we allocate the $3 million? Oh, we should buy ads. We should do this as opposed to right now where it's kind of pure, build a really great app, send it to a small number of people and talk to them and see what they think of it really. And just focusing on product market fit is always a good idea. I think doing a private beta and getting some information is a good idea. Now, pragmatically speaking, people will say, you know, once you've launched the product, you're going to be selling performance as opposed to promise. There are some truth to that.

SPEAKER_18: If it's launched, you're going to start having conversations about how many minutes are people spending in it? How many people have downloaded it? How many, you know, for the first week's cohort,

David Friedberg: how many people used it in week three or four, right? And so you're going to get into some of those questions. So be careful, you know, that that's going to happen. So if you severely limit it, it's a test flight app. You know, you say we're only invited a hundred. Here's what we learned. Now we want to raise capital. We've eliminated a lot of the risk. We think, you know, of the hundred people we invited, these 30 got massive value. We studied those 30. It turns out, you know, they're all, uh, dual income, uh, individuals who are 35 to 45 years old with kids and they don't have a problem paying $25 a month for this app because it helps them solve these problems.

SPEAKER_18: Um, you know, then that would be very impressive to me that you actually studied the customers. The experience we have as investors often is, Hey, we built a bunch of features. We launched them.

SPEAKER_36: We don't know who's using the app. We put a hundred people into it. Uh, we invited some friends from

David Friedberg: our college or sorority, or, you know, from our, you know, parents group or whatever, and you don't know anything about the customer. So just be prepared when you move to a beta, a closed beta, you're going to have to start having conversations about engagement usage and who are these people?

SPEAKER_25: How did you acquire them? You know, and how are they using the app? And they might want to talk to a couple of them. Hopefully your investors will want to talk. And so we always talk to, uh, I have, uh, researchers, analysts, and associates who work for us are AA as we call them, and we will have them talk to your customers. So if you were to pitch us and get to the second or third round of conversations, we might say, Hey, yeah, um, we want to talk to a couple of customers. So you think you can put us on the phone with some of your customers or we can go do that as a back door. Like we can go find people on Craigslist or Reddit who use your product and talk to them directly. So all of those are possibilities.

SPEAKER_125: Sort of a middle ground that we were thinking of is doing a soft beta launch. We have about a hundred people signed up right now to beta test the app. We've done a lot of customer interviews. A lot of people are really enthusiastic about the features that we have. So we were thinking of doing a soft beta launch and then really just testing the metrics and seeing how often we're using it, how often they're referring other people. So we wouldn't have a closed beta testing and just seeing how much people are inviting others without doing a full launch and then using those metrics

David Friedberg: for funding. I think that's a good plan. Superhuman did a really good job of perpetually being in beta. In fact, when I use superhuman, I'm still on test flight. I don't think you can openly get.

SPEAKER_46: So they're technically in beta and I, I get my updates to the app store, but I know that they've got lots of members. So I think they're probably pushing the envelope on, you know, this concept

David Friedberg: of keeping it in closed beta, but I like your strategy of, you know, trying to figure out how they're using it, how often they're using it. And that is what VCs want to hear before VCs doing series A's. There are angel investors and seed rounds, and there are accelerators. Are you aware of all that? And have you considered that as opposed to going directly to a VC and have you run

SPEAKER_140: a company before this? Nothing at this scale, only a video production company. And we produced a film

SPEAKER_41: company, but thank you. That's, that's very hard to do. Yeah. So it's very hard to do. Yeah. First time is very hard to raise venture. Sometimes going to an accelerator or raising a seed round from a seed fund will kind of make it easier to go to that progression because, you know, you got the stamp.

SPEAKER_46: Oh, I went to tech stars. I went to Y Combinator. I went to the launch accelerator. I went to found a university, some group of smart people picked me in the top one or 2% of the applications.

David Friedberg: I went through the program. I learned some things. And now we're raising a seed round. Oh, some seed fund pair launch first round, whatever put 500 K and a million in we deployed it. Now we're ready for a $5 million, $3 million venture capital around. So you might want to think about hitting those milestones in your checkbook if you're new to the industry, because they do open a lot more doors, obviously. Okay. Yeah. I've heard wonderful things

SPEAKER_152: about founders university. So I'll be looking into that. Yeah. I mean, it's a great thing to

David Friedberg: do and it's essentially free. You pay 500 bucks in week one or week zero. And if you come to all 12

SPEAKER_25: weeks, I mean, and if you had an excused absence, you know, if you missed one or two weeks, I'm sure they would not give you a hard time. Then we send you the money back. So we just do it so people don't

David Friedberg: burn the seats. But, you know, getting into an incubator accelerator is another way, you know, to get 125 K for 7% of the company and, you know, put another stamp in your passport that like, yeah,

SPEAKER_58: look, you know, we went to Canada, then we went to Spain and now we're ready to go to India. Like

SPEAKER_36: if you think of it like a passport, you know, and people open your passport and they're like, oh,

SPEAKER_25: you know, look, I got some stamps in here. Okay. Yeah. You've been to different places in the world. Oh, welcome to, you know, Dubai. I see you've been to these other places. So you, you, you, you build up a little momentum, I think with those, those, um, but if you have product market fit, that's what you really have to work on. It sounds like also, you're very good at talking to your customers. How do you talk to your customers? Explain to the audience how you

David Friedberg: like to interface with these customers. Do you have a discord? Do you have a chat open with them somehow? Are you doing zooms with them surveys? How do you get feedback

SPEAKER_125: from your customers? So it was social media groups on Facebook, mainly, um, it's groups that I'm part of, I'm pretty much one of our target customers. So I'm very intimate with what the needs are of these, uh, these people. Um, and then we did, uh, a Google form interview and poll seeing which of our features they were most interested in, how often they would be using the app, what they would be willing to pay for it. Um, and we got just incredible feedback from it.

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David Friedberg: You didn't mention your app or what you're doing. Is that because you don't want to tip your cards or because you don't want to use this as a marketing opportunity? You're worried about offending me

SPEAKER_41: because the first two people on had like logos and they were more than happy to talk about their products. Well, no, the second caller was more than happy to talk about this product. So are you, are you keeping this stealth because you don't want to tip your cards or are you just trying to be

SPEAKER_179: gracious? Um, just a little bit of both. Okay. Just a little bit of both, but, um, it's something

David Friedberg: You're going to be fascinated by the way. Tell me more about the Facebook group. Tell me more about the Facebook group. And cause I've heard this from a mo mo many startups that there are these like Facebook groups that are good places to talk about your product. Facebook groups are actually

SPEAKER_125: really interesting, um, tool for grassroots marketing. It was something that I used when I was crowdfunding for our film, um, because we crowdfunded our documentary and it was the best way that I did it with zero marketing dollars because you become very intimately familiar with the people you're essentially asking for things for. Um, so the app appeals to a very wide demographic of people, but our target first main audience will be women with children with minor children. So, um, one of the groups that I'm in is, um, based somewhat on income level because it's a Peloton group. Um, so it's, it's working mothers of Peloton. Um, and that's basically where I've been testing out some of the features and getting some feedback because that is somewhat the income level that we're targeting. And also there's a large utility function to this app that appeals to parents, parents, but our, our app is food related and the people who go and buy the meals for the family are typically women. So, um, uh, I've got three children myself, so I am basically our target customer and, um, I'm very active in all of these groups. Um, and it's just about kind of bonding with the

SPEAKER_58: people that you're going to sell to. Because these are incredible insights for, uh, you know,

SPEAKER_46: other listeners. If you really think who is my, um, you know, ideal customer profile, you may hear

David Friedberg: that term ICP, uh, or your beachhead or your first market, um, like the beachhead, I think means like where you land your troops first. So it's a lot of military, uh, references and startups, so everybody considers it war. Um, and so your beachhead market, your first market, your ideal customer profile, what a clever idea there. If you can afford Peloton ain't cheap,

SPEAKER_128: that's like a $42 a month subscription. It's not in the initial bike is an investment as well. So exactly. That was something of a demographic. Plus they're disciplined. Plus they care about time. If

David Friedberg: you're a Peloton person, you really want to get an efficient workout. That's kind of the, uh, cause you it's at home. So this is like a really clever thing you've done. You found the adjacencies to a parent really would like to save time, money and is health conscious about meals. So really smart to think about, and this is where brainstorming about like what other products

SPEAKER_18: your customers use. So if you know, your customers working on a product for inside.com, we did newsletters, business newsletters, but I've, I realized a lot of what in talking to people who read

David Friedberg: newsletters or news junkies, like what other products do they use all the time? Use Twitter all the time. They like to have, they listen to podcasts all the time. Why is that? Why did news junkie who are these news junkies? And did, and they, what do they pay for? Oh, they pay for New York times. Oh, they pay for the athletic. Oh, they, they pay for CNBC or Syria. I pay for Sirius XM just so I can listen to CNBC, but I also pay for Hulu. So I'm not sure why I pay for the Sirius XM, but it just always works with audio and the Hulu doesn't sometimes. So anyway, you start to get into what are the

SPEAKER_158: licenses? Like what else did they pay for? And that's a super unlock. If you pay for Peloton,

David Friedberg: you're used to paying $600 a year for something that keeps you healthy and is efficient. Wow.

SPEAKER_128: Well done. Yeah. And one of the things about this app is that it really reduces.

SPEAKER_163: What's your background? Are you a, sorry, I just want to know more about you. What's your background?

SPEAKER_128: Are you a marketer? I'm a social media video marketer and a film producer. So I've been doing

SPEAKER_125: that for the past 10 years, released a feature documentary on Amazon Prime and had this really great idea for something that will reduce the mental load in my life, my husband's life, my team leader's life all around. So had the idea and decided I'm actually going to do it.

David Friedberg: Awesome. Well, it sounds like you're figuring a lot of great things out. Many folks are really good at building product, but they're not good at studying their customers or understanding their

SPEAKER_46: target market. So I think that you've done that really well. And so congratulations and good luck with your startup. It sounds like, yeah, if you want to come to found a university, uh, Kelly at launch.co Kelly, K E L L Y at launch.co, uh, runs the program with presh

SPEAKER_83: and she's amazing. And, um, yeah, or you can email me anytime. Jason at Calacanis.com.

SPEAKER_125: Thank you. Great. Can I just say, um, I read your book angel. That was how I became familiar with you. And I loved it. I was on vacation. I couldn't put it down, found it in the library. I loved the book.

SPEAKER_128: And then I bought it. So wonderful. I loved it. It makes me want to write another book and just

SPEAKER_02: take six. I'm like halfway down with two books. It takes six months to write a book a year.

David Friedberg: You should write another one to do another six months of a year of promoting it. And I'm trying to do less and get focused on like some very small number of projects, but the book keeps calling me.

SPEAKER_97: I have another idea for it, but if I had it, there was another topic you'd want me to take on.

SPEAKER_140: What would it be? You know, I, I think I'd like to expand on what you were talking about,

SPEAKER_125: the insights on the investor side. One of the things that I really loved hearing you say was even if a founder isn't doing well, keep up the communication and you just want to hear from them. Even if they're sending you an email saying this is delayed, you want to hear it. And I think a lot of people are worried about failure and not meeting deadlines. And some people just want to hide under the covers and pretend that it's not happening, but just having that insight from the investor side of we understand as happens, just let us know. Um, so I think really expanding

SPEAKER_128: on that and bringing it into the current day. I love that. So I'll read anybody. Yeah. People like

SPEAKER_97: the anecdotes in the, in the story. Cause, uh, and the writing style, cause it was maybe they said

David Friedberg: they laughed a couple of times or they couldn't believe the story is. So I have, I write down all the crazy I go through as an investor. It's crazy. Like weird stuff happens. Like people screw each other or behave

SPEAKER_46: crazy. And I, you know, I basically write those down and then I make amalgamations of them. So I don't to protect the guilty or innocent, uh, or however they perceive themselves, but I blend the stories together. So you don't have to worry about anybody getting singled, but singled out, but good luck with it. And, um, you know, one of the things that gives me great hope that you're going to have a really good chance of success here is that you're listening to your customers and

David Friedberg: you know where to find them. A lot of people just build stuff and they don't go find those customers. You got to find those customers and talk to them. All right. Great job. Stay in touch.

SPEAKER_97: Thanks so much. You're part of the family now. Yeah. And, um, hopefully I'll see you at university. Yeah. You will. Thank you. Bye. Oh, wow. I just love doing this. So let's keep moving. Francis, how are you? Doing great. How are you, Jason? I'm well, I'm well. I know you're from Twitter.

SPEAKER_216: Yes, indeed. Tell me what's your question for today. My question for you is how you balance skepticism with

SPEAKER_103: enthusiasm when you look at a company. Yeah, such a great question. Um, so I like to be enthusiastic

SPEAKER_46: with the founders, um, and really try to understand their vision, uh, because it's really hard to be a founder. And so one of the things we've added to our s script, you know, our dialogue when I'm training my young associates and researchers, um, how to interact with founders is to just say at the

David Friedberg: end of the conversation, Hey, can I repeat your vision back to you to make sure I understand your vision? And I try to get them to say the word vision twice, uh, and to say the name of their company. So can I get your, can I explain your vision for Uber taxi one more time, just so I make sure I understand your vision for Uber taxi, like literally saying the name of their company twice, saying vision, um, and then you reflecting back to them and saying it. So if you've ever read anything about therapy or just making people feel heard, um, repeating it back to a person is incredibly powerful as a tool. So I like to do that as a technique. I think if you're an investor repeating back to the person, your understanding of their business, their challenges, et cetera, it's incredibly powerful that nobody does it, especially not arrogant VCs or investors who over time, because you're writing the check, because you're judging people and trying to make a judgment and saying no to 99 and one TS, you can get high on your own supply. So you really want to stay humble because nobody knows who's going to figure it out. You know, like somebody might figure out a rocket ship company or an electric car or, you know, Airbnb, you figure out weird things. And the big outliers are often weird and hard to understand. So to your point, what I try to do is remember as an investor, that cynicism is the coward's way out. It's really easy to be cynical. And what you want to focus on is not all the things that could go wrong. It's what could go right. It's not all the times people failed pursuing this, but why might this idea work now? You know, if you were to look at electric vehicles, man, they had failed for a long time. And, but we did know there was not exactly Moore's law, but there were some laws around battery density, right? So eventually batteries might become cheap enough or the range might become high enough that, you know, a 50 mile to a hundred mile electric car could become a 200 or 300 mile electric car. Instead of $200,000 in batteries, it could be 20,000 in batteries. Um, and so I like to squint a little bit and just say, yeah, it's here's the obvious reasons why this isn't gonna work. What if Microsoft or Google decides to do it? What if you run out of money? What if customers don't want it? You could have all of those reasons. Those are easy. Everybody knows the reasons of why something might not work. If I said, Hey, why might a restaurant not work?

SPEAKER_46: People can be like, the food sucks. The service sucks. Location is terrible. Um, you know, it's too expensive. The food quality is inconsistent, whatever you can, you can make a really, there's too much

David Friedberg: competition. Okay. Congratulations. You just pointed out all the obvious reasons of why something might not work out. Let's work on something more important. What could work out? Okay. Well, you build Shake Shack as but one example. Okay. The world needs another burger joint. Well, we're going to try to do really high end, high quality meats, really great French fries, really great shakes. And we're going to just try to make it healthier and higher quality. And we'll see if

SPEAKER_46: a gourmet hamburger, people will pay twice as much as in and out burger for it. Sure enough, they will.

David Friedberg: Um, and so some things went right with Shake Shack, uh, that helps scale that business versus McDonald's and in and out. And so yeah, cynicism is so easy. You kind of get through it so quickly when you've done as many meetings as you and I have done with founders. The cynical takes are just

SPEAKER_227: so easy. They're so easy. Um, and so I, I tend to look at what could go right now that doesn't mean you can ignore like how insane it would be to try to launch an Airbnb or an Uber competitor today. Like, you know, that market has, you know, significantly deep pocketed players, right? It's

SPEAKER_25: going to be really hard for a new entrant to displace Airbnb. They would have to have a really unique concept around this. And so, you know, you, you, you do need to study also like what exits have occurred. We always get pitched on. I'll give you another example and then I'll get your feedback on

SPEAKER_231: my answer. For example, like there's never really been a great exit in the job space after LinkedIn.

SPEAKER_46: And one might argue LinkedIn, the jobs functionality of that was a by-product of the original product, which was a social network for business. And if you listen to read Hoffman when he was on the show, you know, it's like one of these things where they just had recruiters calling, begging them to give them the ability to DM potential candidates. Right. And they, they came up with a $5,000 a year product that because they would, people were demanding it, but that wasn't the original product. The original product was a social business network. People could put their resumes and, you know, uh, build a

David Friedberg: professional network that was different than my space. So, um, you do need to look at why hasn't there been an exit, a giant exit in careers and job boards. And it's like, well, maybe it's just too easy to build a job board, you know, and like there's indeed and there's glass door and there's a long tail of all kinds of recruiting and job services, but there's really only been one giant exit. And that was LinkedIn. So, you know, you, I, I do try to teach my team to be thoughtful about, has there ever been an exit here? And what can we learn from the past? And then you inevitably wind up with a question of why now what's changed for LinkedIn. The why now was social networks, the idea that virality, which was like

SPEAKER_25: a new business concept existed. And that's why they won because they had a viral hook. You joined LinkedIn, you invited 10 employees or coworkers or partners. And I was one of them and I invited 10, you got a viral coefficient over 1.1 and the thing just explodes. Boom. Everybody who joins invites like, you know, more than one person. Okay. That's gonna, that's gonna speed up the process. So,

SPEAKER_29: um, yeah. What are your thoughts? And when you want to say any follow up questions? Yeah.

SPEAKER_216: One thing that's interesting to me is how your own psychology could affect that. Like there's research that judges give out harsher sentences right before lunch because they're tired and they're cranky. Maybe in our, maybe in our context, it's the last deck I'm looking at in a day and I'm pretty much ready to go anyway. And so maybe sometimes I try to give that one a little extra attention

SPEAKER_22: because it would be awfully easy to dismiss it. Human psychology is, um, definitely plays a part for investors, also for founders. Maybe they're just exhausted. They're tired of talking to investors.

SPEAKER_41: You know, 39 have said no, and the 40, it's going to say yes, but they come into it with a bad attitude. And wow, that person's got a terrible attitude. I would never invest in them. So yeah,

SPEAKER_34: I would be very aware of your own psychology going into these things, being well rested,

SPEAKER_46: coming with a prepared mind, being open-minded, asking really insightful questions, um, and having a great thoughtful process as I, in any discipline you get into, I think you eventually will start to look at systems and processes and really try to optimize those. I have really tried to think about systems and processes both for podcasts that I do events. I do, uh, and for investing

SPEAKER_25: in companies. I really think about that process in a very tight way. And, um, that's really helped. I think me become a better investor and find better companies and have less zeros and more companies that go on to future funding, right? So be thoughtful about your process, um, and build a process that you like. That's the other thing, you know, if you know, you know, you have the energy for three calls a day and the fourth and fifth, you always screw up and just do two a day and have extra time and do two on the weekends, you know, uh, and, and make up for it that way. So you do have to understand your own psychology. I like talking to people as my way of learning. And so people are like, you do a lot of podcasts. I'm like, that's my professional development. You know, people asking me questions here is making me better at my job. You asking me these challenging questions that the three callers before this is making me think, um, and I write notes and then those eventually get put into my businesses or the businesses we invest in. So figure out what process you like, right? Some people are introverts. They like reading. So just asking somebody to write a deal memo, um, and send you a deal memo, or you write a deal memo and then send it to the founder. Um, like I have friends who are introverted and they're like, I can't do this many meetings and I can't talk to as many people without being exhausted. Okay, great. So you like to write and you like to read. Yeah. I love reading. I love writing. Okay. Hire an associate to meet with companies and have them write a deal memo for you with the questions. And then you ask questions back to the founders and you work on the deal memo together. I like that trend of deal memos

SPEAKER_46: for people who like to read and who like to write. So that's just, but one example of like, understanding your own energy, your own cynicism, et cetera. Um, I'm hiring people for our fun, our fund who are incredibly good on zoom, like just really good at keeping a high energy level and really enthusiastic for 20, 30 minutes with a founder. And so I am optimizing for that because we have to do it, you know, 70 right now, I think introductory calls per week, and we have to get it to a hundred by the end of this year to hit my goals. Think about that.

SPEAKER_97: Five people doing, you know, six people doing 15 to 20 meetings a week, four meetings a day, three meetings a day. It's a lot, it's a lot, lot, um, for people to be able

SPEAKER_46: to do for us to hit our goals of investing in one or two companies a week on average, a hundred new names a week. Now we have programs, which make it a little bit easier, but yeah, I like your question a lot about cynicism and energy. I think it's really important and understand yourself. Right. And then build a team around you that compliments you. I can't say enough about that either. My management philosophy now is I know I don't want to do accounting and legal and, you know, negotiations and stuff like that. So I just hire people who are great at that. And then I focus on podcasts and meeting with founders who hit a certain criteria at a certain sweet spot. So if they have their product launch, they got a couple of customers, they got two or three co-founders and they're builders. Yeah. Let me, let me meet them and bring them to me. But I try not to waste time on people with ideas who are idea people who, you know, aren't building it because there's just too many, too many people

SPEAKER_257: with ideas, not enough people building actual real products. So infinitely many.

David Friedberg: It is a challenge, you know, and then people get to me through my network. Hey, can I meet with you

SPEAKER_46: and chew your ear? Can I bend your ear? Can I buy you a cup of coffee? It's like, I am not constrained by coffee right now or having my ear bent. I'm constrained by

SPEAKER_25: time with my family, skiing, my friends and with the portfolio companies we currently have. So let's make it efficient for everybody here. And, you know, I, I, I'm a big fan of process and efficiency. So people want to meet with me first. That's the other thing when you get to a, when your firm gets bigger and I'm like, you know what? I want you to meet a couple of the great people who work for me, um, because I'm super proud of them and you'll, they'll be helping you along the way in ways that I can't. So why don't you meet two people at the firm and then talk to me and, uh, you can actually get more information on what it's like to work with us because they might be the ones answering your questions. If we do make an investment and we are in business, it may not

SPEAKER_97: just be me. So under, you know, building a great team, I think of support team around you is also important. Do you, do you have a support team around you yet or are you just still doing it all

David Friedberg: yourself? So this is something to consider, um, is, you know, who would that first hire be? How many

SPEAKER_262: investments are you doing a year? Uh, probably eight to 12, I would say. Yeah. I mean, you might get to

David Friedberg: the point where having an associate or a researcher, even part-time makes sense where, you know, they're

SPEAKER_46: sorting through your deal flow, writing deal memos, doing diligence. Like that's kind of the next step for you is to have like a partner in crime to really help organize stuff. And then it might become

SPEAKER_97: more enjoyable for you again. Yeah. All right. Great talking to you. Let's take another caller.

SPEAKER_40: Yeah. Take care, brother. Wow. Great calls from both sides of the table so far. All right. Let's take another call. All right, here we go. Next up is five by five. Hosom, right? Yeah, that's correct.

SPEAKER_97: All right. Great. Awesome. Uh, you have a question for me. Let's hear it. Thanks, Jason, for having

SPEAKER_271: me on. I'm Hosom, the co-founder and CEO of Quasium. Um, it's a autonomous procurement management platform for construction companies. Um, we're part of your, um, the, well, the founder university cohort seven. Awesome. Just graduated. Yeah. Question Kelly. Um, it was amazing. What was the number one thing you got

SPEAKER_273: out of founder university? I'm curious. One is to be very clear about the problem that we've

SPEAKER_274: served working on. Um, and sort of still down to, you know, um, you're being clear on what we're working on at the beginning was a bit, um, it was a bit vague and we had to sort of go and talk to customers multiple times to figure out what was the, you know, what was the sort of the initial value propositions that we're offering. And the second thing was to move as fast as possible. And I think being in a community helped helped a lot. Third thing is, you know, I felt very comfortable

SPEAKER_276: asking questions. Fantastic. What's your question for me today? And by the way, if anybody's listening

SPEAKER_271: founder.university for more information. So my question is, um, you know, we started working on our idea mid December and we launched in February and we're currently in late discussions with, um,

SPEAKER_274: about three customers. Um, and as soon as we start, uh, close again, three to four customers, we're about to start sort of, um, raising and I've been wrestling with the question, um, what is your moat? Um, to me at this stage, it's execution and building a delightful product. Um, I see in the longterm, given that we're building an AI product, um, I'm not a big fan of data lock, but we are unlocking the unstructured data that currently exist throughout the pre-human process, um, that no one has been able to sort of tap into and, and that especially in the construction industry, um, where then sort of there's a massive difference between the gross margin, the empty net profit. Um, and so it's mostly in the business operation optimization.

SPEAKER_58: So your question is about a moat for people who haven't heard that term. Investors will sometimes ask how defensible is the business? In other words, how quickly can somebody

David Friedberg: storm the castle, take the gold and get across the moat, right? And then the defenses of a castle

SPEAKER_58: tend to be the arrow slits, the drawbridge, the moat, the water around it. It's hard to seize

SPEAKER_46: the castle and take the gold, right? And so you have to answer that question to investors. A lot of times they just ask it because it's a common question and they want to see your thoughtfulness. Your answer

David Friedberg: was great data. We have data that other people don't have. That's going to accrue to us over time. That's going to give us a massive advantage. You know, for the first three people doing

SPEAKER_36: construction and logistics, we have to put all this data in, we get it, but we know the price of bricks. We know the delivery time of bricks. We know who makes the best bricks. And when the next person, the fifth person comes in, we've already had three people who've ordered bricks and we've studied their data and we know who to send them to. And we know who not to send them to when they

SPEAKER_25: procure bricks. And you just think, you know, when we hit 500 people, what we're going to know about bricks and the cost of bricks and the travel time of bricks. And we're going to just keep learning from our customers. We put all that into our algorithm. So in the same way, you know, anybody

SPEAKER_36: could build TikTok, but could they build the TikTok algorithm and could they study users

David Friedberg: and have that data advantage? Of course they couldn't. So, you know, and Tesla's got an incredible advantage with data as well. They drive, you know, they, they put the self-driving

SPEAKER_46: hardware into every single car, whether they pay for it or not, they collect data from every single

SPEAKER_41: car. Google has Google maps on your phone. They collect data from Google maps and ways in real time.

David Friedberg: They've got all that data. So explaining a data advantage and other giant companies that have the data advantage, that's how you explain a moat. And you can just say, listen, you have the moat

SPEAKER_41: when we have five customers is going to be like somebody spilled a bottle of water. And then when we have 500 customers, it's going to be like a little stream that you can step over. When we get to 5,000 customers, you're going to have to jump in the water with the alligators

SPEAKER_46: and swim across. It's going to be hard. So although the moat is, you know, very, very tiny right now, it's kind of like a bathtub moat, uh, it's going to be a giant moat and most people will not be able to swim across it. And there'll be plenty of alligators in there and IP protection and data.

David Friedberg: So you're, you, you kind of answered your own question. The data is such a great answer for a moat because there's so many examples of people having a data moat. Google has a data moat, right?

SPEAKER_58: So when people talk about AI, they're like opening eyes, got this advantage. And then people are like, yeah, but Google's got the data from YouTube. They've got the data from your Gmail. And then, you know, oh, well, Microsoft, you know, what's their moat? And it's like,

SPEAKER_25: they've got a lot of desktops using windows. And when they want to give people co-pilot, I have a windows, I got a new Dell latitude 16 over here. It's awesome. Shout out Michael Dell. Um, you know, I've loaded windows and the co-pilot popped up and I'm like, oh, so everybody with

David Friedberg: windows now has co-pilot. They don't know what chat GPT is, but co-pilot's explaining to them that you can ask a question there and get an answer. So pretty huge advantage. So I, I like your answer of the data moat, cause you don't have a distribution mode yet. You will when you have a lot of companies.

SPEAKER_274: I appreciate it. No, my worry was that at the moment that, um, you know, the motors doesn't

SPEAKER_271: currently exist and I don't have any defensively at this point. So if someone were to start working on the

SPEAKER_274: same idea, how am I going to be different? Like what's going to distinguish us? Um,

SPEAKER_41: The other thing is like, how motivated are people to go after your idea? If you're doing like a construction business, like who's motivated to go after this, how fast are they going to go? You've got a fast team with no legacy business. You don't have to worry about existing, you know, revenue streams or getting approval. You can test things. You can make mistakes. Nobody's even

David Friedberg: paying attention. So that's the other nice thing is nobody's paying attention and you can just zip,

SPEAKER_46: zip, zip, zip and build this. So, you know, most investors are going to understand this. And if they do tell you like the moat and the defensibility of the business

David Friedberg: is the reason they don't invest, they're probably lying and they're just using that as an excuse.

SPEAKER_25: Um, so you'll know that you have a moat problem when you go talk to a customer and they say, uh, oh, there's, uh, Uh, we already have a solution for this. We're using Acme and we had, we used to use Delta and you're the, this other product Gemini, like what we already have, like two solutions, right?

SPEAKER_100: Like, is that happening to you when you go to customers, they tell you we've already solved this problem?

SPEAKER_271: Yeah. I mean, totally. So, um, the first thing that they say, we already have an ERP system, um, or we use, um, you know, another procurement software, um, and what we come in and say, and it's, we save you a lot of time by automating your procurement process. So, currently we're automating the process of debate analysis where you receive multiple offers and you see them in different, and those are, um, unstructured PDF formats. Um, so to do that, you normally have to go through all of these documents and then consolidate them.

SPEAKER_41: So they don't have a way to do that comparison without you. So they don't have a solution for

David Friedberg: that. They have a solution that collects data, but it doesn't analyze data. So it sounds like you have no competitors for that feature, right? And so people draw these nice, you know, quadrants, four quadrant charts. I encourage you to do that as an exercise with your team and with your customers. Hey, where would you put us in this four quadrant? What's unique about us? And it's like,

SPEAKER_46: oh, you and you analyze and normalize the data from a deal to save me money, you know, and my ERP system doesn't do that. Right. Or my other procurement system doesn't do that. And so you, you know, you, you pick the X, Y axis, you know, in the, in those quadrant competitive chop charts to benefit you. Right. And so I think making sure you understand what is truly

David Friedberg: unique about your offering is the other piece. And then leaning into that and really, um, you know, you can take the existing features and make those free, um, and then sell that piece. So that's saying like a person, you can do this, the same question you can turn on your competitor. So if they're charging for like the ZRP system and it's, you know, easy for you to build, you can build that

SPEAKER_25: and give it away for free and then just upsell people on the analysis part. Um, so this is what, like Google did to outlook and to other folks, they made Gmail free and gave massive storage. Before that you were, you would pay for your email. There was no such thing as free email.

David Friedberg: Email was a paid service. Gmail was like, you know what, let's just give it away for free with like, uh, you know, whatever, a hundred gigs, five gigs, whatever the first offer was. And people

SPEAKER_46: were like, Oh, I'm just going to move to Gmail. They took a massive audience. Then they did Google docs and that was super cheap and free. And then if you wanted your corporation, your own domain name, you, you paid a little bit more for it, but they really went after Microsoft's business, uh, in a very aggressive way. So I would also think about that, not just your moat, think about other people's moats and how you can drain those moats and how you could sabotage their castle and make their castle crumble. And you just swoop in and take all the gold, right?

SPEAKER_97: Yeah. Yeah. Interesting. Yeah. Turn it around. All right. Great job. And, uh, keep us informed on your progress and keep, stay in touch with Kelly. Yeah.

SPEAKER_46: I'll talk to you soon. Thanks Jason. Okay. Great. I think we have time for one more. This is working out great. If you want to be on the next episode, this week in startups.com slash ask Jason, this week in startups.com slash ask Jason, follow me on Twitter, x.com slash Jason or Instagram, instagram.com slash Jason. And then follow me on LinkedIn.

SPEAKER_227: Just type in Jason Calacanis. You'll find me. All right, Tom, uh, welcome to the program.

SPEAKER_306: You have a question for me. Yes, I do. Good to see you, Jason. Good to see you, Tom. So see, co-founder, creating a ventral.app, an easy way to help families, friends, and colleagues share critical information they need to share in emergencies. We just, and also shout out to what Shauna Rale said, can't say enough good things about founding university. Another university attendee.

SPEAKER_25: I like it. Another graduate. Amazing. We're hitting a lot of people with this. I mean,

David Friedberg: we've done seven cohorts with 200 plus teams. So it's starting to add up. I think 2,000 people

SPEAKER_29: have gone through the program. So really proud of the team over there. Yeah. So what's your question for me?

SPEAKER_311: Not my first startup. And, you know, as a longtime entrepreneur, our current app uses a lot of machine

SPEAKER_306: learning and generative AI in some pretty unique ways. But to me, this is just a fundamental technology. It's going to be included in virtually every product. So I kind of roll my eyes a little bit at everybody's pitches nowadays. It seems like we're trying to position themselves as an AI company or an AI this or an AI that. So my question is, when we're out seeking pre-seed, seed funding in this current climate, how much is it going to hurt us for not making AI a big part of our pitch? That

SPEAKER_314: we're not an AI company. We're a product that uses AI. Yeah. So I think most investors are realistic

SPEAKER_46: about what's an AI enabled business and business that could not exist without machine learning and AI, and what's in product or service that has features, uh, you know, that obviously benefit

David Friedberg: from AI. So, you know, I would assume when you're talking to investors, a high degree of knowledge and that they've met with dozens and dozens of folks. And I would always tell them the honest truth about it. Hey, you know, AI is helping us with customer support. It's helping us here with, you know, this feature of the product. But in all honesty, you know, we're, we're not an AI first company. We're not

SPEAKER_25: making AI tools. We're making a tool that solves this problem. And right now, operationally, we use AI to lower our customer support and delight our customers with better customer support. And, you know, we sort information and normalize data with an AI tool. We use this tool. And in the future, we think there could be these three features. Um, so you can just tip there, tip them down the roadmap. If there are, you know,

SPEAKER_227: if AI could solve certain problems, how would that affect your business, but it's going to be in the mix. So I would be thoughtful about how do we run the company better using AI? How does the product better

SPEAKER_25: using AI? And then what are the future AI opportunities? I think you you're kind of required

SPEAKER_227: in 2024 to be able to answer those three questions and I would be prepared to do so.

SPEAKER_306: Yeah. Yeah. I'm old enough. I'm dating myself here to I'm old enough to remember when Esther Dyson, an industry pundit famously got up at the very first multimedia industry conference and told them that there should not be one because it's going to be in everything. AI is going to be in

SPEAKER_189: everything. So yeah, I mean, it's like saying cloud computing today, you'd be like, we're a cloud

David Friedberg: company. It's like, oh, so you're not going to make people buy servers and rack them in their data

SPEAKER_41: center in their office. Cause they don't even have an office or a data center. So like it's

David Friedberg: going to be assumed, but I think I would say today, it's a really great thing because when you're talking to investors, they're really trying to figure out what's it going to be like to be in

SPEAKER_46: business with you, right? Am I going to have thoughtful conversations with you over the next decade about growing this business? And when bad things happen, are you going to be a great leader?

David Friedberg: And you're going to be able to discuss things that are hard. You're gonna be able to have hard conversations, you know, about any number of topics, distribution, layoffs, hiring, firing, raising money, pivoting. And so, you know, the, the AI discussion is but one chance for you to show your potential future investors and for you to see how smart they are. Like if they're stuck on like some weird issue, like defensibility, you know, to a level that makes

SPEAKER_46: no sense, or they're focused on AI to a level that doesn't make a lot of sense, you could maybe eliminate them from the running as an investor. Like this person doesn't get what we're doing. They, there was somebody who wanted, I've told the story countless times, but they wanted Travis to make Uber into an enterprise software company for cab companies. And they were insistent that this was a better model. And I was just like, you know, in my mind, wow, this is a really famous venture capitalist who's really smart. And this is the stupidest take I've ever heard. Like they want to convince Travis to make an enterprise software company. And the whole point is the cab companies were taking 50% of every dollar. They weren't earning it. And you could cut that down to 25% with Uber's take, and then the prices could get lowered and more people could afford to get a ride sharing

David Friedberg: ride because you were making it more efficient. Oh, and you didn't have to have a dispatcher because the app did the dispatching. So you got rid of another person in the whole system who was mucking it up and making it more miserable. And they want to, you know, enable the cab companies, the cab companies were the enemy, the cab companies were the, you know, the, the, the piece of the puzzle that needed to be removed because the medallion holders were taking too much. The take rate from the medallion folks was too great. They had people in indentured servitude,

SPEAKER_29: basically with these, you know, in New York, the medallions worth hundreds of thousands of dollars. They were owned by lawyers and business speculators who would then rent them back to,

SPEAKER_220: you know, folks at unreasonable rates. And so, yeah, I think be ready to talk about it.

SPEAKER_25: Be ready to have a great discussion. It's your chance to ask them, well, what, what do you think we

SPEAKER_227: should use an ad for? What are you seeing? Is there anything we're missing? I wish people would ask me those kinds of questions, you know, in an investor meeting, because then it would signal, oh, this founder, um, is, you know, well, yeah, willing to listen, or they're, they're

SPEAKER_25: queering other smart people in the marketplace about what they should do. That's what smart people do all the time. You know, like they're querying smart people. That's why I do this podcast, because they get to query smart people about the market, you know, more information. All right, listen, continue success. Good luck with the product. Can people find more information about

SPEAKER_308: your product? They want to check it out? Eventual.app. Eventual.app. There it is.

SPEAKER_46: All right, everybody. If you want to be on the next episode of Ask Jason, go to thisweekandstartups.com

SPEAKER_97: slash ask Jason. And, uh, my team will get you on live. We're probably doing this every, like, the first Tuesday of the month or something, or the second Tuesday. And so we do it during the day. We'll give you a zoom link. You get queued up in the zoo, zoom, the zoom zoo, and, uh, zip, zip, zip. We have you on, we make some great content. We learn from each other. Uh, and so

David Friedberg: tell your friends about this week in startups. Take this episode, if you're made it to this point and just share it with a friend who is a founder and say, Hey, you know, you might learn something. Uh, and that's why we're all here is to learn. See you all next time this week in startups. Bye-bye.