SPEAKER_00: Okay, everybody, we've got a great show for you today. We're going to talk first about the Constitution DAO. We watched the live auction last night, it was super exciting. And I went live and what you're going to see today is me going live, thinking that the DAO had won. In other words, the internet had won the Constitution. And CoinDesk had published an article that they had won. And then the official Constitution DAO Twitter announced that they had in fact lost. So you can see me react live to those clips. But more importantly, I talk about all of

SPEAKER_01: the interesting things that we've learned about DAOs and

SPEAKER_02: capital formation and how great this is for the world. I'm all in on DAOs. I think they're brilliant. I want to do one. I don't know what for. But I think this could change the world in a very positive way, especially with capital formation. Then I'm going to get into our startup checklist. We got another 10 bullet points for you this time around operations best practices for you to run your startup correctly. And then

David Friedberg: finally, it's Friday. So you're going to get another Okay Boomer segment from Rachel reporting stick with us. It's a great episode.

SPEAKER_04: This week in startups is brought to you by Vanta. Compliance and

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SPEAKER_07: our first story today, the Constitution Dow has raised over $46

SPEAKER_00: million to buy one of the 13 copies of the Constitution that are still remaining, of course, the United States Constitution and early

SPEAKER_09: reports are that the Constitution now won the bidding. It was actually quite thrilling. Sotheby's hosted an auction, a quote of one of just 13 copies of the official edition of the

SPEAKER_00: Constitution surviving from a printing of 500 issued for submission to the Continental Congress and for use of the delegates to the Constitutional Convention. They did make a note at the beginning of the auction, that there were two or three more copies that they I guess did not originally know. So the denominator of the number of copies of this is obviously important in terms of the value of it. If there were more of them, if there were 200 of these, they obviously wouldn't be as scarce. And so they probably wouldn't go for as much. I got to know who was on the other side of this because they were going back and forth between two different bidders. One of the bidders was named Brooke, apparently she won. So she was representing the Constitution Dow. She was kind of funny. She was kind of laughing a little bit or having fun with it. And then I guess the other one was David. And he seemed a little bit more stiff upper lip and a little boring and dry with his additional bids. But very quickly, Brooke came over the top and just said 30 million. So this thing started, and they were going 20 million, 21 million of sudden, boom, Brooke says 30 million. So that was kind of a tell during this very exciting auction. I got very excited about

SPEAKER_12: our auctions are cool. That they had come over the top. And that means either it's like a Saudi Prince or something that was like one of the early reports that they might have been competing against the Saudi Prince for this, which would be

SPEAKER_11: kind of ironic, or paradoxical for a Saudi Prince to buy the Constitution to put in Saudi Arabia in a museum there, that would be quite a Yeah, I think paradoxical would be the proper

SPEAKER_01: descriptor of that turn of events. So if you don't know what a Dow is, let's explain what that is. It means a decentralized, autonomous organization, it means a group of people acting together. And in this new definition, it's a group of people who donated a bunch of crypto, in this case, Ethereum. And the concept behind the Dow is that you endows are kind of like saying corporations, you can do a lot of different things with them. It's kind of like saying paper, you can do a lot of different things with them. And Dow is mean a lot of different things to different people. But

SPEAKER_00: essentially, means the people put the money and get a vote, typically commensurate with the amount of money they put in. And then when it comes to issues of governance, they would vote on

SPEAKER_09: what would happen, and they would have ownership. However, this

SPEAKER_00: Dow was not based on ownership, when you put money into it, you would be not putting money in, in order to see the Constitution increase in value. In other words, if this goes from 41 million to 400 million, you're not going to 10x your money, you don't actually own it. And this was pitched as own the Constitution, we're buying the Constitution. So I think this auction, it sounds crazy. But there's a chance this could be reversed. Or there could be a problem here because this probably broke securities law. And I think the SEC will look into this. I know this sounds crazy. You think I'm a crypto hater. I love Dow's I think they're very awesome and very interesting new format. However, to the best of my knowledge, this was not done with accredited investors. In other words, people who are allowed to invest in these things. I don't think there was any KYC involved in this know your customer. And if that's the case, and they were pitching this and doing general solicitation in order to do this legally here in the United States, which is why a lot of crypto projects do not accept American investors, because we have rules here about capital formation, which I'm pretty familiar with, they would have had to do it like Republic or seed investor equity crowdfunding sites do, which is that would limit the amount of money you could put in, there's a holding period of 30 days, you can change your mind, you have to file a bunch of accounting rules. What's great about a Dow is they can be set up instantly, like we saw with this Constitution Dow, I mean, it came together very quickly, because all you're doing is throwing money from your wallet into another one paying

SPEAKER_01: some gas fees, and you're done. Well, that is going to be the crux of this issue. Because if Americans put this in here, and they thought they were owning the Constitution, which is what they said in all the marketing, we're going to buy it, we're going to which means we're going to own it, yada yada. And I was going back and forth with some people on Twitter who were saying, Hey, we're buying it. Hey, we own it. And I was like, Are you sure you own it? Yeah, they lost. Okay, we got breaking live news. It looks like the Constitution Dow lost community, we did not win the bid for the copy of the Constitution. While this wasn't the outcome we hope for. We still made history tonight with the Constitution. This is the largest crowd fund for physical object that we are aware of crypto or fiat. We are so incredibly grateful to have done this together with with you all and are still in shock that we even got this far. Sotheby's has never worked with a Dow community before we broke records. For the most money crowdfunding in less than 72 hours. That's the most amazing thing about this. We've educated the entire cohort of people around the world from museum curators to our tour and our directors to our grandmothers asking us what is is when they read about us in the news about the possibilities of web three and on the flip this is really written poorly. And on the flip side, many of you have learned about what it means to steward an asset like the US Constitution across museums and collections or watch and art auction for the first time. We had 17,437 donors with the median donation size of $206. Wow, that's like some

SPEAKER_00: Bernie Sanders strategy. They're really small donations. A significant percentage of these donations came from wallets that were initialized for the first time. In other words, people specifically bought crypto to do this, which is really cool. You will be able to get a refund of your pro rata amount effectively minus gas fees through juice box. Please expect more details about this tomorrow. Our team has not slept for the past week. And we're giving people the night to get some rest before we're back at it tomorrow. And each one of you were a part of this, we want to also thank our partners in this work, Almeida research into almond FTX us juice box morning brew and syndicate Dow. So these are really interesting times. Back to the legality of this, the legality of this is pretty clear. If you're going to do something like this, you need to have accredited investors only. If you do accredited investors, there are limitations on that. My understanding is 250 people up to 10 million or 99, you can go above it. In other words, like a venture fund. And if you were to do this the way they wanted to do it, they were saying you have governance, you can vote, but you don't own it, but we're buying it and you're owning it. So the messaging was not clear. But that's great. Because since they didn't win it, this doesn't have to be reversed. It doesn't need to be an SEC investigation into this if they broke secure as well. Because everybody's gonna just get their money back minus gas fees. And the gas fees are probably somewhere in the neighborhood of 15%. I saw when people were doing

SPEAKER_11: these because Ethereum, I guess is very busy and time on the

SPEAKER_00: blockchain costs money. I mean, I don't know why Ethereum is so expensive. Still, I mean, that's why salon is doing so well. But Ethereum does have a plan to make things much cheaper. So continuing on here, what an amazing moment in time to see this many people come together. And I think in order to contextualize this, what what I've been thinking about is what else can we do? Because if you can put $40 million together, you know, this quickly, what is the possibility? If instead of 17,000 17 million people got involved? Well,

SPEAKER_01: there could be 1000 x, you know, what we just saw, we can see a billion dollars show up for a cause. And if that seems crazy to you, just remember, this all reminds me of live aid and live

SPEAKER_00: aid raised $127 million. We had this incredible concert, all of this money was raised to feed Africa and to help people starving in Africa. If something trends like this through social media, and you really can just move money freely without having to worry about governments getting involved in regulations. We could see crazy things happen. Now we could also see crazy amounts of fraud, who knows, people could abscond with the money. But maybe people should be able to do what they want with their own money is something I've always said, so I don't want to be hypocritical

SPEAKER_09: here. If the donation size was 200 and somebody committed a crime here, then you have the legal system to come after them. Okay, SOC 2

SPEAKER_00: compliance is critically important. Why? If you don't have SOC 2 tight, you're gonna lose major customers, you just can't close them. It's that simple. And guess what? Vanta, B-A-N-T-A is going to give you 1000 off your SOC 2 compliance. Vanta's compliance software makes it easy to get and to renew your SOC 2. They continually test against technical and non-technical SOC 2 requirements. They partner with over two dozen audit firms who have been trained to file SOC 2 reports directly within Vanta. And on average Vanta customers are SOC 2 compliant in just two to four weeks, compared to three to five months without Vanta. Take it from Kitty Hawk CEO, John Hegreens. He heard me read Vanta's ad and emailed me about how much he loves Vanta. I'm kidding you not. John told me that Vanta was essential in helping Kitty Hawk get SOC 2 compliant so they could target larger customers. If you haven't heard of SOC 2, you will when you get to those big customers. So unlock the big sales and give your employees time to work on more business critical assignments, like your product, like sales, and is giving twist listeners a $1,000 discount on their subscription at Vanta dot com slash twist. Once again, Vanta dot com slash

SPEAKER_24: twist for $1,000 off B-A-N-T-A dot com slash twist. So what this

SPEAKER_09: says to me is we need to really think about the accreditation laws in

SPEAKER_00: the United States. People want to place bets. People want to do fun projects like this. Why are we stopping them exactly? Because we want to protect them? Well, there's other ways to protect them. Maybe we'd say hey, if you want to form a Dow, the max you can accept from anybody who's not accredited is $500, which by the way, equity crowdfunding has rules like this. But even those rules make it so people don't want to do equity crowdfunding. So I think it's time we just take accreditation rules. And we say anybody can invest their money in whatever they want to do. Under two

SPEAKER_01: circumstances, it's under a $500 bet. And number two, or any amount, if they have to have a driver's license, or a gun license, basically a license that says, they know how to invest. So there should be a test for financial literacy, that you get a driver's license or a gun license or a motorcycle license. Equivalent doesn't have to be an easy test, but it could be online, it could be in person, who knows who gives it out. We have series seven and some of those tests for Wall Street sharing just a simple test that people take, right? Take the simple test, and you got the simple test. You can do what you want with your money. It would be very cool if when people went to Vegas, they could take a gambling test before they played. We don't require people to do that. So doing this would be much more than people do when they go to Vegas. What are some ideas that you have for ideas of what you could do a

SPEAKER_00: Dow for, you know, there are the possibilities to me seem endless. But if you think about what GoFundMe does, it's basically like GoFundMe, except it's global. And you don't need a banking partner. And so one of the problems with these equity crowdfunding sites, or in the cannabis space, when people are buying and selling cannabis is that the payment processors become the chokehold with online gambling and wagering, nobody would support the poker sites back in the day. And so how did you get your money into a poker site? You had to use these illicit sites in Canada or, you know, Paraguay or Costa Rica, and you would route your money and you take pay huge fees. If Solana fees were lower, and people could do this with low fees, this could really change the world. So it's a shame they didn't win it. I'm actually think they dodged a bullet because I think this would be one of those cases where the SEC would come down on them pretty hard. Hey, did you know who you took money from? And did they think that they had ownership? And then we have to ask ourselves, if people are buying this, and they don't get ownership in it? Well, who actually owns it? Dow owns it? Well, the Dow is not a legal concept. And LLC is a legal concept. So who owns the LLC? Okay, we can have a certain number of members in an LLC, who exactly are the members? Is it this? I don't know if you have 17,000 members in LLC, I don't believe you can, there's an upper cap, and it's much lower for an LLC. So the structure we

SPEAKER_01: have of corporations in America today is very different than Dow's. Dow's are like writing code, you can do whatever you want. Well, that's the tension we're having here. We have an old paradigm. This is what a hotel is. This is what a taxicab commission is. This is what a corporation is. And then we have over here innovation. This is Airbnb. Okay, it's people staying on my couch. It's not a hotel. Okay, there's my extra bedroom. It's my my ADU in my backyard. Oh, I'm giving somebody a ride in my car. Oh, that's illegal. Is it? Okay, well, where's the law that says it's illegal? Well, there isn't a law in the books, because it's something new. Nobody ever thought about it. Before we saw Airbnb, we saw Uber and Lyft fight these laws, or non existent laws and regulations. Quite effectively, it was a little bit of a back and forth. It was a little messy. But ultimately made society better. I believe Dow's will make society better. Therefore, people who push the envelope like the Constitution down people did, I believe, pretty clear they did. They are actually in a way, taking the hour arrows and bending the rules. And in this case, I don't think for personal profit, whereas an Airbnb and Uber, it was for a

SPEAKER_02: corporate profit incentive, which is fine. Corporations are designed to make a profit and employ people. That's nothing wrong with

SPEAKER_01: that. But here it was like a nonprofit, trying to push the envelope on securities law and who could be participate. I love it. And I think we need to figure this out. Alright, here's our

David Friedberg: first clip 26 seconds, bro, going to 30 million right off the top coming in hot. I'll see you on the other side of this 26 second clip.

SPEAKER_29: And now let's begin the auction lot 1787. The Constitution of the

SPEAKER_31: United States of America will start spinning here at $10 million at $10 million, $11 million, $12 million at $13 million. Now, $14 million. The Bits here with me at $14 million. At $30 million with Brooke Lampley. $30 million now is bid with Brooke. It's Brooke's bid at $30. At $30 million with Brooke Lampley. Brooke, the bid is yours at $30.

David Friedberg: Alright, so there is Brooke representing Chamath

SPEAKER_33: Palihapitiya. Congratulations in his... I'm joking. Chamath didn't buy the Constitution. I think it's the last thing he would spend $40 million on.

SPEAKER_35: Chamath would totally do that just to f**k with all the people back.

SPEAKER_36: Can you imagine Chamath bought the Constitution just to screw with the DAO folks? You know what he'd do? He'd put it in his commode. Like the guest commode in his house would have the Constitution. He'd be like washing your hands after using the bathroom. He'd be like, Oh, wow, nice copy of the Constitution. So keep in mind, Brooke was not the DAO

SPEAKER_38: representative. Sadly, I have to say also, all of these Sotheby's people are dressed and groomed impeccably. And they keep it together in a in a pretty good way. Although Brooke was losing it

SPEAKER_00: a little bit at times, under the glaring lights. But those people on the phone, I'm told are representatives of Sotheby's. So they are an intermediary that's provided to the big whales who are bidding on stuff, I guess. And then they were doing something where they hold their hands level. Which I think either means like, they're coming in with another bid or something, but they were doing some sort of hand signals, somebody can fill me in on the hand signals. Yeah. And so here in this next clip, we're gonna see Brooke holding her hand level, which I think means I've got an incoming bid or please stand by. And then these auctioneers, I have to say, when they've got a chance to close this, they really drag it out waiting for that next big and they kind of beg for the bid is really credit to these Sotheby's auctioneers. They know how to really juice these

SPEAKER_41: whales out of their money. Here's 90 seconds. I'll see on the other side.

SPEAKER_42: At $39 million is Brooke's bid then. David is against you. It's with Brooke Lampley at $39 million. $40 million with David

SPEAKER_43: Schrader. Now it's bid at $40 million. It's with David Schrader then at $40 million here on my left with David and his bid at $40 million. So we're still thinking about it, but maybe that might've done it. David, the bid is yours at $40 million. It is not yours, Brooke. We can bring the hammer up again, increase the drama one more time at $40 million. David, the bid is yours. $41 million with Brooke at $41 million. Just in time at $41 million, Brooke Lampley, the bid is yours at $41. Mr. Schrader, what shall we say? At $41 million, it is Brooke's bid at $41. It's ahead of your phone. It's with Brooke at $41 million. This historic document with Brooke Lampley's bid at $41 million viewed around the country at $41. No? Are we sure? At $41 million. Brooke, looks like congratulations are in order to your bidder. David, you're out. Anyone else welcome to jump in, but Brooke Lampley, the bid is yours for the United States

SPEAKER_29: Constitution at $41 million. Sold $41 million paddle for one one. Congratulations.

SPEAKER_00: And this is why I never go to any fundraising benefits because they do this, where they do these auctions and then they they know your name and they start calling your name and they put lights on you. I never go to that stuff. And then when I give a donation, I say don't put my name on it. I give the donation. And I

SPEAKER_12: don't go to the benefit. I'll pay you to not go to the benefit. Please don't subject me to that peer pressure. I hate it. This is why I don't go to these benefits. I just give the

SPEAKER_45: donation. Don't put my name on it either. I don't want my name

SPEAKER_12: on any pamphlet. This is an interesting one. Because you see Brooke was losing it a little bit. So she was laughing. David was

SPEAKER_00: just like, I'm done. And he just hung up the phone. And yeah, you saw that like, I guess that means when you put your hand sideways, like there's an incoming bid or just give me a second. And

David Friedberg: $41 million I gotta know who bought this and we have to find out who

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SPEAKER_00: guess the question is, what's going to be the cold open on Saturday Night Live? On Saturday? Is it going to be this? Or is gonna be the written house trial? It has to be one of the two. I kind of think this is going to be on Saturday Night Live is when

SPEAKER_38: it feels like a cultural moment when the dorks and the crypto people are screwing with Sotheby's and the auction of these like, elite things in the world. I love these shenanigans. Like I'm not a fan of crypto griff. But these kind of shenanigans where a group of people put their crypto together, and then buy something for the fun of it. And the out and the lols. Like, I'm there for it. I am all here for DAOs being precocious and doing fun things in the world. Let's go. Like, let's get a DAO together and buy, like, whatever the biggest house in LA is and turn it into like a party rental. I don't know, come up with some great idea, where something's for sale. Like, maybe somebody has a giant farm or something, right? Put a DAO together and make it into a public park, you know, like a national park. That's the kind of stuff we should be doing with DAOs. It would be super cool. If we said, Hey, you know, Flint, Michigan is having these problems with

SPEAKER_01: lead in the water. Somebody started Dow for that. And let's all put 200 ETH in it. And then let's have the government try and stop us from deploying that money to fix the goddamn water pipes in Flint, Michigan. That's the cool. Sorry, you beep that out. But that's cool going on in the world. And when you can capital form quickly, listen, I form capital in the form of syndicates, that takes weeks, I form funds that takes months to a year. Capital formation is a slow, arduous process with a lot of friction. The reason I'm so excited about DAOs is the instantaneous nature of capital formation, that will be officially will will soon be free, or close to free all these gas fees. If they were as 10% gas fees, or 20% in gas fees, or 30% in gas fees on these small charges, I know there's they're big, you know, if people were paying 40 bucks to put in 200, that means there was like $8 million in gas fees. So

SPEAKER_00: I think the real winner is whoever gets those gas fees, people can let me know how that works. Exactly. Because I didn't realize gas fees had gotten that expensive. I think they're high for small donations, but Solana would have been really free. So this is kind of like a global GoFundMe, Patreon type moment. And with all that crypto while sitting out there, they have to do something with it. And these are interesting, cool projects. This would be as if, you know, the entire world decided to solve certain problems together. And yeah, I know the miners get the gas fees, right. And then there was this other party that was

SPEAKER_38: involved in the transferring of in the wallet. This is the big winner, by the way. The winner of today's auction was juicebox.money. Let's get the founder of juicebox.money on here. But it's really cool that you can program this stuff too. So this is where I

SPEAKER_00: think we're going to see something very interesting happen. For those of you who are not familiar with DAOs, you can program them. So you could say, Hey, you let's say you own the Constitution, you could have the ability to sell your shares. Okay, though, how do you sell your shares? Well, you first have to offer them to the people in the Constitution. Now, if they don't want to buy it, then you can sell it to somebody outside of it. Or maybe the rule is you can sell it to anybody anytime it's your fractional ownership, then what if the Constitution generates revenue? Well, then they could vote, what do we do with the revenue? The group might say, if we're making $1,000,000 a year off this, why don't we just donate that $1,000,000 a year to an educational program? Or they might say, you know what, I would like 2% as an annuity on the money I put in. So I put in $200, just ship me $4 worth of ETH or whatever you're using. So all of those rules can be programmed into the initial DAO. And you

SPEAKER_09: could have the ability to say if you want to change the rules, what happened? So that's kind of the great irony or paradox of what we saw today, and this week with the Constitution DAO is they basically created a new organization with its own constitution, its own rule set, to buy the original OG rule set

SPEAKER_00: for capitalism, America and democracy. Pretty cool. When you think about it, it's like very meta, I don't mean to get all hyped up on this. But we are seeing in crypto with these DAOs specifically, a new formation of, you know, maybe how a city or a community runs. So if you had a community, and your community collected taxes. So let's say you live in the you know, the town of you know, San Francisco, and your taxes went into a pool, and

SPEAKER_01: everybody in the pool voted, let's pick a let's pick a small town, let's say it was like Napa. And Napa says, Okay, here's who we're using for garbage collection, here's how many police we have, we want everybody who's paying taxes, based on how much tax they spent to get a vote. So if you were paying 100,000, you had some huge ranch by $100,000 in taxes a year, somebody else is paying 10, and somebody else playing one, you get 100 votes, 10 votes, one vote, and you get to vote on what's happening in the community seems unfair, maybe should be one person one vote, maybe it should be by dollar amount, or maybe it should be some fraction, you know, if you spend over an amount, you get two votes, but not 100 to one, all of those could be programmed into a DAO. And then people could say, you know what, we have 30% of extra budget here, what should we do with it pay down our debt? Should we build a new park? Should we add pre K or nursery school for our students? And then people could vote on that. And then in real time, people could say, you

SPEAKER_00: know what, we got another problem here. Hey, it's fire country, we want some ideas around how to solve for fires, let's all vote on what we want to do. Okay, the easiest thing to vote on would be doing fire roads, great, we'll all vote on fire roads, boom, that's like the really interesting part of this. And then you think about nonprofits, we have this whole discussion of like, solving world hunger, or how do you help people in the developing world? Well, what if you put a bunch of money together, $200 at a time, and this 41 million, instead of to buy some old piece of paper, was to help people, you know, in an emerging country. And you said, you know what, we voted on it, or we had the people vote on it, or some governance occurred, here's what we're going to do, we're going to make 5% on our money every year, we're gonna put $800,000 from this 41 million, into a school into education into wells into electricity. And you could kind of have really interesting donations and deployment of capital with voting without politicians and intermediaries. And let's face it, does anybody trust a politician with their money? I don't do you? You shouldn't. Do you trust these nonprofits? Maybe probably not. They're all in these like, I know when these people ask me to

SPEAKER_38: donate money to them. And I look at their address, and they're like on 57 street in Manhattan, or they're, you know, in Soma in San Francisco. And I'm like, you're in the Salesforce tower. And I'm in a dumpy place over, you know, by the tenderloin, like, and I'm giving you money and you're got $110 square foot office space like screw you guys like, and you know, I know how much salaries you're making, you get this huge salary, some, you know, don't

SPEAKER_02: begrudge anybody their salary. But the Dow's could keep track of all that it could be done on a very, very tight basis. So it's super interesting. And okay, that's as much as I can tell you about it. I'm super, super excited. All right, next up on the program is

SPEAKER_01: the startup checklist. Stick with us. If you listen to this week in startups often, you've heard me talk about Odoo suite of business apps a lot. Well, they're going to give you your first app free forever, and then $1,000 off your implementation pack at odoo.com slash twist odoo.com slash twist. And here's why Odoo is so great for startups. Well, their suite of business apps can help you run your entire company from just one platform. They're going to streamline all your workflows by bringing all your information together. This eliminates all the annoying repetitive tasks like entering data across multiple platforms. Plus, if you only need two or three apps right now, that's okay. Use those two or three apps to optimize your workflow. And that's all you'll pay for. Odoo is not going to charge you for apps you don't use. Of course, they wouldn't do that. So Odoo offers 30 main apps, and over 16,000 apps from their open source community. You know, the apps they have bookkeeping sales, CRM website builders and more. Again, your first app is free forever and Odoo is offering $1,000 credit on your first

SPEAKER_00: implementation pack. Go to odoo.com slash twist for $1,000 off that's odoo.com slash twist. Alright, next up on the show, we're going to continue our startup checklist. We've been doing this now for about six weeks. And you can see all of these items at

SPEAKER_01: this week in startups.com slash checklist. Like the startup basic series, I created the series because I wanted to have all of the blind spots all of the obvious and sometimes not obvious issues

SPEAKER_00: you're going to face as a startup founder, just in a checklist somewhere where you can go down it and check off that you understand this point. Now, if you're a serial founder, you're going to

SPEAKER_01: look at these 100 points and say jacow, duh. Because you don't remember what it was like year one as a founder. If you're a year one founder, I'm going to guess you can tell me at producers at this week in startups.com how many of these you had done or

SPEAKER_00: already know in your first year? Maybe you know 20 or 30 or 40 of them is my guess after your first year and then in your second year, your second startup, you get up to 60 or 70. Which means you

SPEAKER_01: know if you've done three or four times, maybe you're at 80 or 90 and all these things are going to get done and maybe there's 10 or 20 10 or 20% of the list 10 or 20 checklist items that you maybe didn't think think of or consider this time around you started in other words, this is worthwhile for anybody to go through even me, because I went through this and I'm looking at the ones I'm talking about and I'm like, Oh, I got to take care of that at inside. Oh, I got to take care of that at lunch. And that's what checklists are about. There's a

SPEAKER_02: great book called The Checklist Manifesto that Jack Dorsey from Square and Twitter fame turned me on to on as a way to create operational excellence. And I think he's achieved that at Square a long time ago. And I think he figured it out at Twitter, which you can see in their product velocity. What is a

SPEAKER_01: checklist? And what's the history of these? Well, according to the book, these checklists in modern society really helped

SPEAKER_00: surgeons and pilots and other people not make mistakes. And so you can incorporate a checklist into your life. You know, hey, before we go skiing, we need to make sure we've got an extra set of gloves, everybody's goggles work, everybody's got their ski passes, you know, you do that checklist in your mind before you get out on the mountain. Oh, do we have a protein

SPEAKER_01: bar? Do we have lip balm? What do we need to have? We have 20 bucks to go in cash to go get some hot cocoa, you want to make sure you have all that stuff ready to go. And so that's what a checklist does. It reduces mistakes, increases performance. It also has a function of reducing anxiety and making you feel more confident. And that's what I love about them. Our producers here on this weekend startups as one example, have a checklist before a guest comes on the show, they have a checklist when we start our live streams on YouTube. We have a checklist after we publish the episode of what we do on social media. Okay, did we share this on Instagram? Do we share it on Tick Tock? Share it on Twitter? Did we make a LinkedIn post, etc? All of these important things that we let the person who was on the show know that the show is published. And here are the clips to it.

SPEAKER_00: Once we had checklists, we found anxiety went down, performance went up. And that's what it's all about. Now do you need to

SPEAKER_02: create a checklist for everything in your life? I don't know if you do. But I do know that since I started doing it, I feel like everything's more in control. I feel like people do a better job at their job. And I think everybody wants to do a good job at work. So if you look at pilots, and I've watched pilots, a lot of my friends are pilots, you know, hey, are the

SPEAKER_09: flaps at 10% flaps 10%. They repeat it back, call and repeat

SPEAKER_02: right back and forth. Okay, did we tweet this? Yes, we tweeted it, but not the pilots. I'm talking about my producers. And this is a

SPEAKER_01: really great system for keeping planes from falling out of the air. And when they have a problem, they pull out the checklist. Okay, here's the checklist for engine one engine out. Okay, right. Turn the engine off, restart the engine. Okay, check the RPMs, check the oil pressure, check the oil, and they go back and forth. And they have dual sets of gauges, they're checking both sets of gauges are going back and forth, man, the power of a checklist in a really frightening situation, like a plane, really important. And that's why they say aviate, navigate, communicate, I think is

SPEAKER_02: their alliteration for keeping the plane there. You got a

SPEAKER_01: problem, you got to aviate, make sure the wings are level, make sure you have speed, make sure you know your height, all that stuff. Okay, navigate. Okay, where's the nearest airport? Okay, and then communicate, okay, let the ground know, you got an engine out and you're going to land. This is very important. ABC airway

SPEAKER_02: breathing circulation. When I was on ambulance, that's what they taught us. I don't know if that's changed. Airway, the person's head back is what we were taught at the time. I don't know, I haven't been an EMT for a while. But make sure you check that airway, breathe, you feel the air coming out, you hear it.

SPEAKER_01: Okay, the airway is good. Okay, breathing. Okay, do you hear the breathing? Okay, circulation, let's make sure the blood's pumping. Airway breathing, circulation, they just pounded that

SPEAKER_02: into us. But I'm going to read from the NIH initial assessment

SPEAKER_11: and treatment. The airway breathing circulation, disability exposure approach is a systematic approach to immediate assessment

SPEAKER_02: and treatment of critically ill or injured patients. The approach is applicable in all clinical emergencies. That's why I like to create these kind of literations. I didn't actually know disability exposure. That's kind of cool as well. So anyway, let's go into our

SPEAKER_01: checklist for today. Again, you can check all these checklists that this week in startups.com slash checklist. And I'm doing this as much for you as for me, you can take this checklist and you can

SPEAKER_00: edit it, you can write a blog post about it, you can remix it if you want to make a PDF out of it for us. All I ask is that you put that Lincoln taken from this week in startups by Jake Allen's team, this week in startups.com slash checklist. So if you want to make a PDF, just non commercial, please. But if you want to remix this or rethink it or change it, or, you know, say what you think is

SPEAKER_01: wrong or better about it, let's make it a living doc, put your

SPEAKER_02: comments in this week in startups.com slash checklist. Okay, item number one for today, because we're gonna talk about operational excellence, optimizing your operations is today's theme. So number one, which is number 61 in our overall checklist. So 61 on our checklist number one for today, do you have

SPEAKER_00: a low burn culture? I want you to ask yourself that question, because as a founder, you set the tone for everything in your

SPEAKER_01: company, especially how you spend money, and you typically have more to do than other companies, because you're trying to create something new in the world, and you have less resources, that means you have to have a low burn culture. So you don't want to have excessive spending, you want to spend intelligently. This means when you hire somebody, and they say, hey, listen, Google and Facebook are offering me x, plus y and z, your response is we can offer you 50% of x, and there's no way we can offer you y and z. But we will offer you a, b, and c, the ability to direct what you're doing here, be part of something exciting, not soul crushing, like optimizing an ad network at

SPEAKER_02: Facebook, or working for our dystopian future in the metaverse. And see, you're gonna get stock options, which will in all likelihood, be worth zero, but could be worth a lot more than zero, if we all figure this out, and we're in it together. So

SPEAKER_01: essentially, what you're saying is, no, we were not going to compete with that. And you don't want anybody who wants you to compete with that if they say, Hey, I'm getting, you know, 18 weeks off, and I'm getting RSUs, and I'm getting, you know, my car paid for whatever nonsense it is, I'm getting severance, you say, Yeah, we can't compete with that. Sorry, no. And then once you've set that expectation, then you're gonna want to really negotiate things hard. So every time you have a vendor, you want to negotiate, if you've got a lawyer, you can say, Hey, can you do our legal work at this flat rate? Can you do our fundraising at a max of $20,000? You'd be surprised how many lawyers will actually agree to cap their fees, or will negotiate their fees or accountants to keep you in business and support you in the early days. So don't be afraid to ask for a discount or to ask for a cap on services. You don't need to get fancy office space. Obviously, we know in pandemic,

SPEAKER_02: you can build just as easily. We would do our meetings at, you know, a burger joint or we would, you know, Brian Alvey, and I and Peter Rojas and Ryan Block and Sean Gold when we got

SPEAKER_01: together to do weblogs, Inc. We were in cafes, you know, doing stuff for free, you don't need to waste your money on swag or things that you see big companies doing. Everything goes into the product, everything goes into sales and growth. And you really

SPEAKER_02: try to scale your startup intelligently. And on episode nine, three, four, in our scaling your startup series, which is about something different than the checklist that was about growth, we did talk about low burn culture, and you can double

SPEAKER_00: click on that if you want to. Now related to this item 62, on our checklist of 100 items, can you calculate your burn rate and runway? So first, you need to know your revenue. In some cases, it's going to be zero. So let's say in year one, you're gonna

SPEAKER_02: have no revenue, you're just gonna be building product building team, and getting some beta customers and unpaid trials,

SPEAKER_00: which I never really think you should do. I think you should always do pay trials. But let's just say, it's an ad based business. And you decided for year one, you'll spend six months

SPEAKER_11: building it six months having free users and in year two, you'll

SPEAKER_02: address paid. Well, if you spend 100,000 a month, your burn is 100,000. Now, if you were to, in month 13, have 10,000 in advertising revenue, and it grew 50% a month, and you got to 15k,

SPEAKER_01: and then you got to 22, five, etc. You and your spend stayed the same, you're gonna have 100 minus 10k 90k burn. The next month, let's say you bring in 15k in revenue, 100k steady state burn, that's all your salaries, legal expenses, etc, minus the 15k

SPEAKER_00: 85 and burn. Okay, next month, you did, let's say 25. Now you're at 75k in burn, whatever you spent minus what you made, there's whatever that net is, that is your burn rate. Sometimes I'll have people calculate their burn rate as their entire spend. They just don't understand this calculation. It's what's going out of the business every month. It's basically a way of saying your loss and burning cash means you're losing money. Another way of framing losing money is investing in your business, which is what we're doing here in Silicon Valley. We're saying instead of you bootstrapping the business and spending what you make, we'll accelerate your growth, we'll trust you to spend

SPEAKER_01: some money intelligently, and we'll take the risk that hey, maybe the revenue never shows up and this thing goes out of business or gets sold in a fire cell. But you do need to know how to calculate it. Once you have your burn rate, what you can do is

SPEAKER_00: you can look at how much did you lose in the last three months, and you could average. So in the example I gave, you know, for the 13th, 14th, 15th month, you know, in your second year with

SPEAKER_01: the advertising, we had 10k in revenue, 15k in revenue and 25k in revenue. If you add those three numbers together 25 plus 15 is 40. And then 10 is 50. Yeah, 50k and you spent 300. So in the first quarter, you spent 300,000, you made 50. That means you burn 250. If you divide 250 by three, you're basically burning

SPEAKER_00: 83,000 a month. So your average burn was 83. If you don't think you're going to grow revenue in the next nine months, you could say, hey, 83 times 12, you get an idea of what you're going to spend for the year. In that case, it would be roughly a million dollars is what you're going to burn for the year. Why is it important to know this? Well, then you can take your burn rate. You can look at your cash in the bank. And you can do a very simple, I'm going to divide our 830,000 in the bank by $83,000 in burn a month, okay, I've got 10 months of runway. Okay, if you

SPEAKER_13: had 1.7 million in the bank, okay, now you got 20 months of

SPEAKER_01: runway, very easy calculation, super easy to do, you should know this as the founder. And you should be looking at not just your accounting, but also the cash balance. Because sometimes you'll

SPEAKER_00: have one time expenses, you won't take that into account, you had to pay off a 50k legal bill, you know, whatever, you know, some big you bought 10 laptops, you understand this is why people like to spread out their spend over time. And I like to be very cautious about this. So understand your burn. And what your real goal is, I think is to have 18 to 24 months of runway in

SPEAKER_02: the bank at all times, I think that that is the best way to run a

SPEAKER_01: company in the early stages. Why sounds too conservative? Because it means you have at least a year to be heads down and not worry about money. You can go 12 months, iterate two or three times

SPEAKER_02: figure it out, you'll be able to sleep at night, maybe not chew your teeth and grind them down to nubs. And then you know, you'll be watching this. And maybe you say, you know, we got enough

SPEAKER_00: traction here. I'm going to start raising in month 13. I'll need six months to raise the next route. Or you can say, God, nothing's working, I need to meet with my board in month seven, eight, nine,

SPEAKER_01: and get some idea of a pivot here or what I should do. And really, it's like, in the case of a pilot, understanding your altitude, and your speed. And just knowing, hey, my descent is x. And my speed is y, my altitude is z, I can get to a runway. Oh, I'm low, I just took off and I lost both engines like Sully. Okay, I'm not

SPEAKER_38: making it to Tita borough. I'm not making it to JFK. That's not happening. Going in the Hudson. Remember that live call? You can insert that here. We're gonna be in the Hudson.

SPEAKER_02: Was incredible moment. What a hero. You know, sometimes you just you need to ditch and the equivalent in a startup is you shut the company down, and you're going to return the money if you have money left, or you're just going to make sure everybody gets a soft landing and gets off the plane and the plane is going to sink and be totaled. That's not what you're trying to do in that situation. You're just trying to get everybody off the plane safely. It's not life and death. But it is nice to close things up cleanly so that you can go start another company. Okay, 63. Do you have a forward looking org

SPEAKER_00: chart? What does it mean forward looking or truck? Well, I just made that up. We all know what an org chart is. Okay, I'm the there's two founders. And we've got two developers under one founder and we've got a sales and a marketing person and

SPEAKER_02: operations funder under the other founder, one person's building the product, other person's building the

SPEAKER_01: business. Great, easy org chart. What does it look like in year two? What does it look like in year three? Let's have a two year org chart. We want to we're gonna we're seven people

SPEAKER_00: when I say five, six, seven, seven people now. And we're going to wind up at 35 after 18 months. Okay, how does that fill in? Okay, we're gonna have a director of sales, who has three sales executives and two SDRs under them. Okay, we're gonna have a CTO, or the founder is going to be the CTO. And we're going to give them that title. And she's going to have under her four developers and they're going to have under

SPEAKER_02: them to product. And then oh, there's gonna be a project manager and a designer also reporting in for those six people. Alright, operations, we don't need us, you know, COO yet. So we're just going to have a director of operations. And the director of operations is going to manage our outsourced accounting outsourced HR. But in year three, we want to bring

SPEAKER_01: accounting and HR in or want to bring HR in year three, you get the idea. What this does is it signals to the organization how things are going to play out. And what milestones you need to hit in order to add that person. And then you'll also be able to say, hey, here's the expense associated with that. And there are tools out there to build org charts and to even do

SPEAKER_02: this timestamped org chart type situation. So you're definitely looking to those. Okay, and by the way, there's a really cool piece of software that a lot of people use for this. It's called chart hop.com. You can go to chart hop.com slash twist, because they previously sponsored this podcast and get like a $600 credit, I think I think the page is still up. So check out chart hop it like lets you play your org chart. It's really brilliant. So make sure you have an org chart. And by the way, we didn't include this in the checklist because they were sponsored previously. It just we happen to have the best sponsors on

SPEAKER_01: this podcast. So what's important here in an org chart is not just who reports into who but who's responsible for each project. So org

SPEAKER_00: charts are kind of like old school concept of like the hierarchy, put

SPEAKER_01: that aside for a second. And then you can make a similar chart, which would just be for who's in charge of a product, ultimately. And so if you read the Amazon book, or you have an idea of Amazon's culture or

SPEAKER_00: Google's, this concept of a single threaded leader, STL on new projects, somebody has to be accountable for any new

SPEAKER_01: initiative. So just think about new initiatives. When we did the This Week in Startups meetups, I said, Rachel, you're doing a great job, you're in charge of this. Now everybody in the organization knows who's in charge, they have a question, they go to her. And she knows she's in charge. So she won't say what Oh, I didn't know I was responsible for that. It's like, no, you're responsible for it. So one of the things we're dealing with right now in this meetup program is okay, what's the content? And can the meetup local meetup people have sponsors? Are they going to make this into a business? Or should it just be to cover costs? And so when those questions come up, Rachel knows that she has to get an answer to those questions and get it to the people who are coordinating the I don't know, 15 local meetups we're doing when we have something like the SAS syndicate, we just launched a new syndicate at the syndicate.com just focused on

SPEAKER_02: SAS, I thought it was important to put one person in charge of it and give them a clear instruction in 2022 want to do two deals a month consistently. 25 deals a year every other week, we share a deal with the SAS syndicate very simple, single threaded leader with a clear KPI, just a clear goal of who's responsible for this project. Okay, item 64 in the checklist. Are

SPEAKER_09: you tracking and properly categorizing your expenses? This

SPEAKER_00: is super important because eventually, you're going to get funded, you're going to get audited, you're going to do due diligence, you're going to have to submit to a board of directors, your P and L's your books. And let's say you're spending money on stuff and you're co mingling on your corporate card, your personal expenses and paying them back. Or you're

SPEAKER_14: just not categorizing properly, where expenses are in your

SPEAKER_01: books, and you do all this wrong. Oh, my Lord, you don't understand your business, you look like an amateur, and it could wind up slowing down a future fundraising. So you really want to understand every single tool your team's using, you want

SPEAKER_00: to get one of these fancy credit cards, we can give each member of the team a credit card, but you can turn them off in a web interface, you can give people, you could have one credit card just for professional subscriptions, one for SaaS software, you could turn both down from $1,000 a month to $100 a month, and then have all of your services get rejected. And trust me, if you reject the SaaS software or subscription, you're going to get 20 emails about it. And then the person who's the leader may not even be at the company, and they were paying for some SaaS software for some, you know, newsletter, and then nobody was even knew they were still paying, and they get charged for the entire year upfront, because they wanted to get the discount when they were here. And they thought that was a good idea. Boom. And now you're burning money, which you got to be frugal, we talked about that earlier. So track your expenses, use one of these new powerful cards, there's like a dozen of these companies out there, I won't mention specific

SPEAKER_11: ones, or, you know, make sure your QuickBooks and your accounting is just tight, and you have all the different categories, and you're assigning your expenses and your people properly. Have a professional bank account. I

SPEAKER_02: know, it's so stupid. And people who are watching this are like, Do you really have to say that? I mean, I've seen people operate out of personal bank accounts and personal credit cards, or vice versa, or not give themselves a salary and pay for their apartment out of their corporate account and say, Well, I work from home, and people come over sometimes for meetings, and that gets you into all kinds of trouble with the IRS and makes you look like an amateur. So keep your books tight, which then leads to item 65, which is are you doing a monthly P&L? And are you do you have like a clean balance sheet? You if you want to understand a balance sheet, it's pretty simple, you have all your assets, if you were making things like, you know, iPhones or a watch or something, those could be assets, if you own some fabrication machine or a factory, those could be assets, they have liabilities, you took loans, etc. They have shareholder equity, and it basically gives you an idea of the what's in the company and what the value of the company is. And then profit and

SPEAKER_00: loss is more important. Basically, this takes all of your revenue, your costs and your expenses during a specific period of time, a month, a quarter, a year. And then it puts them into categories. So you could have your marketing spend, you could have your

SPEAKER_11: discounts, you could have your cost of building the product, like if it's a hardware product, you could have your staffing costs, you

SPEAKER_00: could have your operational costs, travel, entertainment, all that stuff. It gives you a nice snapshot of the business. And so you could have a plan that's in a Google sheet, which is your plan and

SPEAKER_01: how much money you plan on making and your customer acquisition costs and staffing. But the P&L is what the account is great. And so

SPEAKER_00: you can take those two things and kind of put them up to the light and you know, kind of put one behind the other, okay, what is your what are your books say? What's reality? And what is your plan saying? And you can then hopefully see the delta the difference between those two. And when you start having board meetings, you'll be attaching these people will be looking at them, they'll be looking for things that are wrong, looking for things that are not nominal things that are not normal, it comes up in diligence, you want to get the stuff right. And I tell you, it probably takes you 100 hours as an executive to get good at this stuff and to get into a rhythm well worth you doing because then when you get to fundraising, I think it might increase your chances five or 10%. If these things are right. Now, I'm not saying people are going to invest in a company just because they're P&L and their books are tied and everything's perfect. But I do see like five or 10% people maybe don't get funded because this stuff is a mess. You know, one out of 10, one out of 20 things are messy. And then a VC is just like, yeah, I don't want to deal with this or you know, come back

SPEAKER_02: if you've cleaned it up. So it could delay financing. Or you just come across as less credible because you can't keep your stuff tight. It would be this similar thing that could happen in legal where you don't have IP assignments or employee stock option or vesting schedules. We gave 30% of the company to some fakakka crazy predatory consulting firm slash accelerator that charged you to build your app and then took 30% on top of it to maintain your app. Really, I do see those things crazy. Checklist item number 66 make a growth plan and resource it

SPEAKER_00: properly. People who make plans to grow have a much greater chance of growing than people who don't make a growth plan. Startups are intended to grow. If they are not growing at a brisk, consistent, vibrant pace, they are dying. That's basically how the venture community and public markets eventually look at these things. You're either growing, or you're dying. If you're going sideways, you're not growing, you're dying. Maybe you're in it to fight another day. Great, your default alive. But we're really looking for growth. And when you're starting, you're telling a story about future growth. When you start actually ringing the register and have users signing up. Now you're selling performance. So you have to know, hey, am I selling the promise of my company or the performance of my company? In the early days, you're generally selling the promise. But at some point, you get to a million in revenue. And now they're going to

SPEAKER_02: be looking at the performance, as well as the potential and

SPEAKER_105: promise of your business. You know, you can make in your plan a 5% to 10% or 20% month over month growth plan. And I

SPEAKER_02: suggest you do that. And then you should look at what compounding growth does to a company that's making 100,000 in year one versus

SPEAKER_00: and then 5% compounded growth 10% pounded growth and 20%. If you're making but 10k a month, these are radically different scenarios, right? Adding $500 a month versus 2000 doesn't seem like a lot. But go ahead and do compounding. And you'll see why

SPEAKER_02: compounding interest rates and people will fight for one point or 50 basis points or 25 basis points on a mortgage. There's a reason compounding interest rates, compounded growth rates really do work. And you got to ask yourself when you make these plans, well, if I'm trying to grow 20%, where's that 20% growth going to come from? Okay, 25% of the 20% of growth is going to come from landing and expanding. Okay, that means we have to have great customer success, great customer support so that people will add people and are we asking people if they want to add people and do we have that set up? Okay, well, we're going to resource that we're resourcing one group of people. Oh, we

SPEAKER_00: want to get 75% from new customers this year. Okay, 75% from new customers means we need more salespeople. Okay, and the salespeople need more leads and the salespeople turnover quicker than regular people in the company. So we need for every two salespeople we want to have online, we're going to need to hire three because one out of three are going to leave voluntarily or unvoluntarily. So make a plan, and then benchmark

SPEAKER_02: yourself against the plan and you will be delighted to see how well things go for you. And again, just like this checklist helps

SPEAKER_00: reduce anxiety and keeps people focused. So does a plan. Okay,

SPEAKER_02: startups should always use accrual based accounting. And that's item number 67 here, make sure you're using accrual based accounting, not cash based. You know, just like some people will start a venture backed startup and make it an LLC and then have to change it to a C Corp. Some people start with cash based accounting, they sell somebody a two year contract, they book $100,000 in November, then they have somebody on a monthly contract in November, instead of selling them 100,000 over, you know, two

SPEAKER_00: years in advance, they're just taking 2500 a month right now. And that's coming in on a cash basis. So you, you basically are confusing everybody as to what's going on, have a great accountant, or have a good accountant, but have an accountant, and get to accrual based accounting, so that you're booking your revenue when you actually delivered the service. That's what it means. If somebody buys a year long membership to a gym, the gym doesn't take all that money in January, they spread out, you know, the $1,200 $100 a month, right, and you book $100 every month. And the same thing is true for expenses, you can then spread out expenses, if you had to buy, I don't know, a forklift, or a tractor at a farm, and you're leasing it while you're paying every month at least but if you didn't lease it and you pay cash for it, well, you could say well, the life of this, you know, $120,000 tractor is going to be 24 months, and then we're going to sell it and get half our money back there for 60k over 24 months equals this amount of money. And we'll spread out those costs. And you

SPEAKER_02: can talk to your accounts about how to do that legitimately. And it gives you just a more crisp view of the business and it builds your credibility, doesn't it? So often people ask me if you're using cash based accounting, if that eliminates you from raising venture capital? No, but they might say fix this, and then we'll fund so it might delay your fundraising. If you're kind of meandering, and you're not high growth, and you have cash based accounting, those two things combined might lower your credibility so much that the VC just invests in somebody who's got tighter books and a tighter snapshot of the business when

SPEAKER_00: you're doing cash based accounting, really, the problem becomes, you don't understand the business. And we really want to understand the business. And if you can't understand the business in a crisp, clean way, can explain it, and you had all those cash problems, because you paid your legal bill that comes up every nine months, and you were behind a year, you paid 75,000

SPEAKER_11: this month, and we don't know what's happening with the business because it's so spiky. That's that's a big problem for investors. So I really think that that's the problem is your credibility and the ability to tell your story and understand the reality of the business 68 on our checklist, are you default alive? And why is that so meaningful? Paul Graham wrote

SPEAKER_02: this in a 2015 essay, he wrote some great essays about startups, really just a master of focusing on what's essential in a startup. And then that comes from investing in, you know, he probably did the first 1000 investments or so in Y Combinator and default alive, basically means you're at break even or even profitable. And you've got unlimited runway, you don't need to raise any more money. And it puts you in the driver's seat of a founder for many reasons. You only need to raise money if you want to. And if the terms are great. So in September of 2019, I coined the term the Pegasus startup in a blog post. And quote, I'm quoting myself a little obnoxious, a Pegasus startup is one that is so profitable that is able to use profits to store so high that it skips multiple rounds of funding. And I've got a couple of these in my portfolio common

SPEAKER_11: fitbot are the two best examples that both subscription based consumer businesses interesting and trend there. And what it

SPEAKER_00: basically means is, you know, you don't do these dilutive rounds. So if you skip a 20% dilution round two or three times, my Lord, you might have twice as much equity in the company. And that's meaningful. And building off profits and being efficient, having low burn culture, that means that those kind of companies when people come to raise money, and they say, Oh, well, we want to have two board seeds, or we want this ratchet, or we want these terms, or we want to buy 25%. You can say, I'm only raising I'm only selling 5% take it or leave it. I think notion was the other Pegasus company, they just skipped multiple

SPEAKER_11: rounds of funding as well. And so shout out to Sarah Cannon, for

SPEAKER_116: doing the notion round, I think they just raised that a billion dollars like 50 million or something or 2 billion. And they

SPEAKER_00: skipped all these, you know, highly dilutive early rounds. And that was I'm saying that as an early stage investor. And the reason I can say that with confidence is listen, if I only own 5% of the business or 7% of the business, I really want on 15. But you don't dilute me 50% in the future rounds, well, I'm kind of in the same place, aren't I? Because the company's worth more? Yeah, I

SPEAKER_01: would have liked to own a higher percentage. But it is what it is, right. And actually, it offered the fit bod team multiple

SPEAKER_02: times to invest, they said, they said no to me. We don't need the money, Jake, we love you. We don't need the money. And then finally, I got them to accept a couple million bucks at higher and higher evaluations, and then was able to put a little more money

SPEAKER_12: to work. But you know, I'm just happy to be in business with them. And I love an efficient company and a founder, you know, default dad, pretty obvious, like you're not making money, the

SPEAKER_02: you haven't hit your milestones. You have no more cash, or you're running quickly out of cash, nobody wants to invest in you, you're kind of going to be default dad, you're what we call in the business a zombie. And so this is why growth is so important. And at some point, you need to know when to wrap it up and just throw in the towel, concede this match, you see it with chess players, you'll see it in poker, somebody folds a hand had a great hand on the flop, but it got really bad on the river in the turn, and they fold, it could be getting bluffed, there could be a mistake, but whatever, you live to fight another day, play another chess match. You know, sometimes you take the starters out and you throw in the bench or you throw in the, you know, developing prospects, because you're down 30. And you just want to rest your team. And you know, you don't play the fourth quarter, it

SPEAKER_11: happens. And so, you know, it's important to know where you're at and be candid with yourself. Okay, number 69. On our very special 100 list established a frugal but not cheap culture and

SPEAKER_02: know the difference between those. You know, if you're going to lose an employee because you're being cheap with the employee and you, I don't know, don't pay for, you know, something that's important to them,

SPEAKER_11: they wanted a new laptop because it makes them 25% more efficient or they asked for a couple days off and extra days off a year, you didn't do it and it was super important to them. Well, that's dumb. That's

SPEAKER_00: being cheap. Being frugal is hey, listen, we're going on a business trip. I want everybody to if you know somebody in the city, and you could stay with them. Great. If you got family, please stay with

SPEAKER_12: them. Hey, we're going to be flying, you know, to Australia, and we're going to be in coach. That's just the nature of it. If you want to come, you come if you don't, you don't. We can't fly everybody out in $10,000 seats. So, you know, if you want to come, come and it's literally what happened with our company. I was like, Hey, if you want to come, come if you need to be in

SPEAKER_02: business or first class, you can pay for like I do. But if you don't, you don't. So be super generous where you can and where and where you can as equity, right? Or where you can is, you know, responsibility in a company. But know that every dollar that you waste could have been put towards something productive. So

SPEAKER_11: just be frugal. It's so critical to start early fancy office spaces, like daily catered lunches, massages, snacks, all this stuff. It can get crazy. And it really is a sign, if you're wasting money, and you're blowing through it, that you really shouldn't be in charge of the company. And Adam Newman is probably the ultimate example of that, you know, $60 million private jet, while we work is losing billions of dollars, and people are questioning their model. And he's smoking cannabis on a plane, I promise from the cannabis, but smoking cannabis on a plane, and the pilots getting high who are trying to transport you like, this is just such bad character. And credibility destructive for the organization that you started your brand, your personal brand, but that guy had to go, right? Okay,

SPEAKER_02: number 70 on our list. Have you read the lean startup? Do you understand this concept of the lean startup? And that was published by author Eric Reese. He was on the program episode 199 and episode 1041. And it basically says, you know,

SPEAKER_11: you're going to take the startup, the scientific method, you're going to spend the least amount of money as possible in order to get the answer to your question. So if you are wondering if

SPEAKER_00: people will, I don't know, join a SAS syndicate, well, you can put up a landing page for SAS syndicate, and do it in 10 seconds, or you do a remote demo day, I can put up a Squarespace website, see if anybody applies, possibly 20 bucks a month or close to

SPEAKER_11: nothing. I don't need to build out a bunch of infrastructure, build a bunch of software to know if that's going to work. Do it with the least amount of work possible, be the laziest possible to get the answer to the question. That's the whole concept of an MVP, a

SPEAKER_02: minimum viable product as you build the least amount, and you spend the least amount to get the most knowledge. And then you can

SPEAKER_11: iterate from there. And the book mentions a methodology developed by Toyota called the five whys. Eric Reese wrote an article for the

SPEAKER_02: Harvard Business Review. And I'll just read his quote. Number one, a new release broke a key feature for customers. Why? Because a particular server fell. Okay. Why did the server fail? Because an obscure subsystem was used in the wrong way? Okay. Why was it used in the wrong way? The engineer who used it didn't know how to use it properly? Why didn't he know how to use it properly? Well, because he was never trained. Why wasn't he trained? Because his manager doesn't believe in training new engineers because they are too busy. So, Reese argues that to build a great company, you should start with a customer in the form of interviews and research discovery. That's obvious. You really need to understand your customers and then building an MVP is great. But asking these whys over and over again, why did that happen? Why did have really getting to the core of it is critically important. So this has been the next 10 items on the checklist, you can read the checklist at this week in startups.com slash checklist if you want to see our startup basic series dovetails nicely with this, does some deep dives into accounting and legal. That's at this week in startups.com slash basics. And then again, at the website this week in startups.com slash meetups. If you want to talk about these issues with other founders, I think going to the startup checklist with a group of founders might make for a nice offside. So maybe the meetup folks for a meetup want to do, you know, you know, groups of, I don't know, six or eight to go through the checklist together, maybe six is a good number and you sit around a table with six of you and go through the checklist and talk about your experiences. It can be fun. You spend a whole day doing it, right? Don't cater lunch, have dinner afterwards. All right, what a great checklist. We're doing great job to my team who's been working really hard in the checklist suffering through it. In fact, trust me, they're working with me, they're suffering. But next up on the program, it wouldn't be Friday if we didn't have reporting Rachel's amazing series, okay, boomer. So without further

SPEAKER_09: ado, let's boomer this out. All right, next up on the program is the segment that people are going crazy for Yes, Rachel reporting is here. Rachel, how are you? Hi, great. How are

SPEAKER_00: you? I'm well, you are in week three of okay, boomer. How is it

SPEAKER_139: going? It's going really well. I think we've had some pretty interesting guests so far. Yeah, and great feedback on the

SPEAKER_00: socials. So congratulations. This week, you're interviewing

SPEAKER_141: Megan Loist. Is that my person that? Yes, Megan Loist. She is the

SPEAKER_142: creator of a community that focuses on Gen Z VCs. Got it. And

SPEAKER_00: she's at Lear Hippo. I'm friends with Eric Hippo. I knew him when I was in New York. He's a magazine publisher, turned venture capitalist. So from what I understand, and I watched your interview with her ahead of time. For those people who are about to watch, she just did a tweet and said, Hey, anybody in Gen Z investing and all these people came out of the woodwork people both who were working as investors, and people who aspire to be investors. So what are we going to hear in this conversation? Because this is unlike our emotional work guest about bringing your emotions to work and your whole self and all that. This is just a rabid

SPEAKER_13: capitalist, correct?

SPEAKER_143: I think our conversation definitely focused just on different things that our previous episodes focused on. And I'd like to continue doing

SPEAKER_142: that having each episode differ conversation conversation just to keep things interesting. And Megan is known to be the queen of venture capital that is in her Twitter bio that's pretty much known in the Gen Z VC community. So we talked about her role in venture capital. And what I thought was most interesting during our conversation was her thoughts on community building, and how she thinks that community building is actually going to be more of an integral part of the founder pipeline, for lack of a better word from here on out, especially if you are focusing on Gen Z's.

SPEAKER_00: It does seem like a big part of the puzzle. In fact, you are working on here and you talked about it with our this week and startups.com slash meetups. So every business is trying to activate their community, and DAOs, which we've talked about on the program, a whole bunch are a community plus capital, all these different communities will drive the growth of a product or service or startup or organization. So it's critically important, I think it's going to become one of the great career paths is, you know how to build a community, you know how to

SPEAKER_02: coalesce, and get people excited about a project on social media. Yeah,

SPEAKER_143: I definitely agree with you. Because I think the three buckets that were most focused on before community really came in, were obviously product, team and

SPEAKER_142: customers. And I think community is probably going to be added to that. And the thing that I think is very cool about that is community will probably start coming out before product. I mentioned a really cool startup that I saw, and I believe it's a dating app, but I don't even know that much about it because they started building community before their products even launched. And I follow them on TikTok, and they had really hilarious stuff they were posting. And I went to check them out. And they said they were pre launch. I was like, how do you have this many people following you already? And there's like that phrase where it's like, what does it build and they will come and I feel like they didn't have to build it. They first they kind of did a reverse where they went to the people. And before launching and I think I think that's also nice, because they'll probably avoid a lot of bumps in the road in the future, by seeing what people want first. And before we did like user testing, obviously, we have a small pool. But with being able to create an entire community kind of branches out user testing a

SPEAKER_00: little bit more. All right. And if anybody wants to pitch Rachel on a an idea for Gen Z and the OK Boomer segment, you can just email producers at

SPEAKER_02: this week in startups.com producers at this weekend startups.com with their ideas for the show. Great job. And we'll see you all next time. Here's your

SPEAKER_11: interview for OK Boomer for the week.

SPEAKER_151: Hello, everybody. Welcome back to another episode of OK Boomer. Rachel Reporting here. Today we have Megan Loyst on. And Megan's actually been on my radar since October of 2020 when her Medium article came out titled Gen Z VC's Way In. Top four trends we're watching and our favorite companies. It covered how she was able to survey 71 young investors to find out what should investors be looking out for in terms of the Gen Z market. Some questions included what trends are you interested in? What's an unexplored area or trend you think can be served by a new company focused on Gen Z? And what are your favorite Gen Z brands or companies? A few months later, I ended up joining a Slack you ran called Gen Z VCs. What's really crazy is last week's guest, Emily Herrera, is actually also a part of the group, but I had no idea she was a part of it due to the thousands of people that are actually active in the Slack now. So thank you so much for joining the show today, Megan. Thanks for having me. Yeah,

SPEAKER_154: very excited. I know Emily very well and many other Gen Z VCs all over the world. So I'm excited to dive in.

SPEAKER_151: Yeah. So I think I want to start off with a question. What areas do you see young investors honing in on? I know in your Medium article, you focused on the creator economy, ed tech,

SPEAKER_159: and social gaming. Is there any one of those three that you really feel like you could dive into?

SPEAKER_154: Yeah. I mean, I think the creator economy is a, it's a, it's a very obvious one, right? You think of

SPEAKER_160: young investors today and the way that we sort of engage with social media in particular, I would say tick tock, like they hit a billion users, I think faster than any other social platform that we sort of see in our generation. And also just like the cultural ramifications of that, right? You saw basically within a year, you know, people like Addison Rae, Charlie D'Amelio go from just regular people like living in high school or in the Midwest to becoming the app, like stars that everyone looks up to all over the world. Same with Ryan Kaji, but on, on YouTube, and he's, you know, he's eight years old or nine years old now. Um, I think that people are just exposed to creators in a way that I think our previous generations were exposed to celebrities. Like they're the people we look up to, but in a much more authentic way. Um, and you, you naturally build a different type of

SPEAKER_162: relationship with those creators. You look up to them. You also trust their recommendations and the barriers to creation have never been lower. It's never been easier to become a content creator. Um, I think particularly because tick tock is built for discovery, not necessarily for it's not, it's not really a social platform. It's more of an entertainment platform, right? And so you discover content creators, you build relationships with content creators in the comment section. Uh, and there's a lot of different tools that are serving those creators who are

SPEAKER_160: effectively becoming the next generation of small businesses, right? There's 50 million plus creators today all over the world. And I think a large focus on how you can help these

SPEAKER_162: creators monetize beyond, uh, brand partnerships. I think that's still a very large portion of creators income today. Uh, I think it's something north of like 70% of creators are monetizing via brand deals, but like, how do you help them own that income stream on their relationship with their fans beyond the sort of nature of the platforms that they live on? So I think there's been a lot of excitement around the creator economy. And I would say even more so in the past few months,

SPEAKER_160: the intersection of the creator economy and web three and crypto and how sort of new native platforms are enabling creators for the first time to really own their work and like own that relationship with their fans. Uh, and for fans to really be able to like benefit from the upside of like taking part in their favorite creators or communities early. So I would say like, we didn't, you know, last, last year, a year ago, when I wrote that article, I don't think many, many people, not many people of the 71 talked about crypto. I think if we were to do that today, it'd be a very

SPEAKER_151: different story. That leads me to my next question. I was going to ask, has anything changed since this medium article came out? And I think it's really interesting how you mentioned crypto, because I think the creator economy and crypto and the thought around ownership is going to absolutely explode come the new year. I always tell people, I think that is the one area that I'm most excited to see.

SPEAKER_139: And I've actually really enjoyed seeing brands now kind of break out into the creator space as well. So not just using like creators as a tool for marketing, but to actually be creating that content themselves over on platforms like TikTok. I'm going to shout out this one app. I believe it was called Keepler app. It's a dating app. But they're all over my For You page, right? And I was like, they are just so funny. And I went and I actually checked out their product and it hasn't even launched yet. But they're just killing it on social. And I'm like, this is going to provide such great opportunity, not only for having ownership as a creator, but for brands to kind of get their voice out. Because like you said, TikTok is such a great platform for exploration. And it's not a social network. I mean, I guess you're connecting with strangers, which is social, but I am far less

SPEAKER_151: likely to go over to the tab that's like watching all the TikToks of people I follow than my For You

SPEAKER_160: page. Yeah, 1000%. And I agree. I think like, we actually for so a month ago, we hosted the sort of Gen ZBC summit, and we actually did a new survey of people, which we're not releasing the results just yet. They'll come out next week. So keep an eye out. But what I will say is like, FinTech, crypto, it's top of mind for every young investor today. It's also just like top of mind in conversations. I feel like every week, there's a new NFT project that's launched. Every week, people are flipping NFTs and actually making income from it. It's actually changing people's lives in a lot of ways. Where a year ago, it just wasn't part of everyday conversations and also culture. I think there's been such a cultural shift. And when there's a cultural shift, there's oftentimes tech that's powering things behind the scenes. And even for me, right, like, I wrote the first Gen ZBC's article on Medium. It's been a great, it's been a great article. It's what started like, it's what really kicked off the Gen ZBC's community and movement. And we've had like 9000 people read it. It's been shared a ton of times, like really great visibility. But like, I've made like a cent off of that article, right? Yeah. Versus you look at newer platforms like Mirror, like I think the evolution of writing on Medium, building a subscription based audience on Substack to now writing on Mirror, and minting your articles as NFTs that people can sort of collect and take part in. It's just a really interesting evolution, I think over the past year in particular, where people are turning to Mirror because like you can actually make money for your work and own your work for the first time. And I think particularly for like a community community leader like myself, it's like, it gives an it creates an opportunity for people to really buy into the mission, and like, take part in in that. And so I'll be actually there, there'll be some fun Gen ZBC's announcements, right after Thanksgiving. Super exciting. That pertains to this. So we'll dive into it. But again, I think it's like, our generation is interested in investing in web three, but we're also living it through our own experiences like we want to, we want to have side hustles, we want to make money doing the things that

SPEAKER_176: we love. And web three creates an opportunity to, to really think about those things in real time.

SPEAKER_151: It's funny, because I think all of my friends have a side hustle that I know of, that are also a Gen Z.

SPEAKER_139: And even talking about this week in startups and our team at launch, there are a few other Gen Z's that are company not very much, I believe there's three of us in total. And I know at least two of us, including myself, have side hustles. And it's crazy to think that that is so different generation to generation, because I can't even imagine my life without having to do a side hustle. And it's such a big part, not of I guess my identity, but of my time that I am really pumped to see web three elaborate on the space more. The first mirror article that I read was a few weeks ago, actually, I didn't know too much about it. Until very recently, where I saw another, I believe another Gen Z VCVC actually wrote an article about her journey to becoming sober. And it was on Twitter, I forget who posted it. But it was a really it was a long form article. If you know who it is, you can totally

SPEAKER_179: let me know. I think it was Brooke LeBlanc. Yeah, yes, yes, it was Brooke that wrote it.

SPEAKER_139: Yeah, and it was the first time I read that too. Oh, my gosh. So first off, incredibly well written. She's so well spoken, obviously, a badass girl, a badass woman. And I saw the mirror URL. And I was like, What is this? Because the URLs for mirror are really funky all over the place. I was like, Is this is this is this woman posting a spam link for me? And can you elaborate a little bit more for everybody who doesn't know what mirror is and how we both probably think that this will soon replace

SPEAKER_160: Medium articles, at least for our generation? Yeah, it's basically a new writing platform, akin to Medium, but built natively for Web3, like you connect your your MetaMask wallet, you can mint your articles and as an NFT that you can collect, you can embed them into your articles. It's very similar functionality just built for a new audience in that like you own your work, you can monetize your work much more easily and sort of enable community around it. We have a bunch more like functionality to either they're organizing a DAO, I think right now, where they do this right race every every week where people can sort of try to get into the DAO. I've not been successful yet. But it's awesome. Like it's like, you know, they're building a truly

SPEAKER_184: native Web3 company. So it's great. That's super cool. Yeah. Have you explored anything in the NFT

SPEAKER_160: space yourself? So yeah, I've been involved in like different NFT projects as like a mentor, like the the club CPG did one NFT project a few weeks, a few moves a few months back now, where I was given a NFT as like a founding member of the group. And then also a mentor pass that I could give to someone else who wants to learn about CPG. There's a telegram group, we talk all the time about like things that are happening in CPG. And it's like, it's again, it's like you're part of like a community, which is what I love about NFTs. It's like, I, I personally don't see like, I don't think of it as much as like an identity thing. For me, I see much more power on like how NFTs create access to unique things, whether it's loyalty, if you're like a consumer brand, whether it is community. You know, I think community is what connects us all based on different interests, right? Like people who are in Gen Z VCs where you enter the community and you know, like exactly what

SPEAKER_162: you're going to get, you're going to find young people that are passionate about what they're doing. They're interested in tech, they're interested in startups, and you have that like

SPEAKER_160: immediate commonality that connects you all. If you're participating in the constitution now, you're all aligned around this central mission to own a piece of the constitution, right? It's like, you have that innate like sense of belonging, which I think is what everyone is looking for at the end of the day. But sometimes NFTs access to these communities that can be like

SPEAKER_162: that gateway to finding that sort of sense of belonging, which is a beautiful thing.

SPEAKER_139: You're obviously one of the best community builders that I know and whose communities I'm a part of. And I would love you to kind of explain to our young audience. First off, can you tell us how many people are in the Slack? And then I would like you to tell me, how did you even get started in community building? This is my first time building community at This Week in Startups. I do a lot over on the Slack if anybody wants to join This Week in Startups.com slash Slack. But it is really difficult and so time consuming. I was talking to my boss on our weekly stand up and I'm like, community building can be a full time job with how many messages come in and having to facilitate conversation and to kind of keep that spark going. Like how did you start that? How did you

SPEAKER_160: find out that this was your talent? Yeah, it's so it's, it's funny. I think some of the best things in life come to us when we're not even looking for them. And that was the case with Gen Z VCs. As of this morning, we're actually 12,000 members strong. Congratulations. Thank you. It's really exciting. And I started, I started the community a year ago, basically to the day, like I sort of made the

SPEAKER_157: community public on November 17th of 2020. But what's interesting, and I think why Gen Z VCs has

SPEAKER_160: worked so so well is like, it's not it's by no means the first community for young people in venture or young people in BC, like there are plenty that have come before us and really paved the way. But I think why Gen Z VCs was so special in the way that it sort of started was because it, it happened so organically, like it wasn't like I start I woke up one morning, I was like, wow, I need to start a community. This will help my career a lot. It was like, I was literally solving a problem and a pain point for my friends. And it emerged out of this article, like I was so a year ago, I was two months into my job at Lear Hippo. I did have I didn't have any friends in venture. I knew like maybe five people that I can count on one hand, all of whom were, you know, they lived in San Francisco, I didn't really know them super well. But my job as a young person in venture is to like, be the boots like be the young person boots on the ground meeting people going to events. And that just wasn't happening because it was COVID. I was living at my parents house on Long Island. And you know, it was I wasn't like meeting people. But one thing that was pretty unique is like, I was trying to find my own voice. I was writing about EdTech at the time. I'm like doing a bunch of research on EdTech. And but really quickly at Lear Hippo, because we invest in so many Gen Z companies, we see like a lot of Gen Z brands and like Gen Z consumer products. And very quickly, I found that I had like a very unique perspective, just as a Gen Z consumer in those conversations, where we'd meet with a company, they'd be like, Oh, Megan, you're the target customer. Like, why don't you take a meeting and let us know what you think? And I was like, Oh, like, wow, people are actually really value my perspective. Because like, I understand these companies in a way that I can relate to founders in a different way, because like, I am who they're building for. And so I just had this idea one morning, it was like 2am. I remember and I like woke up. And this is like, all my best ideas come to me when I should be sleeping, where I just kind of like, wake up, I wake up out of bed. And I'm just like, I have an idea. And for that, it was like, there have to be other Gen Z investors that are thinking and doing the exact same thing that I am. But I don't know any of them. How do I find them? I want to like, just pick, I just want to like meet them and like understand like, what are they looking at? What are they thinking about? What are they struggling with? And that's what I did. I literally tweeted about it. I think a few days later, I was like, Hey, Gen Z investors investing in Gen Z companies, who are you? I want to meet you. What are your favorite companies, favorite trends? I'd love to compile like maybe an article of our stories and share like the Gen Z perspective on these spaces. And the tweet blew up. And again, like a year ago, like when I started at Larry Hippo, I had 50 followers on Twitter, I had no online brand presence, I had no community I had written any, I had never written any articles. Like I was starting from square one, got my job through cold email, like I didn't have a network like it was like, in every sense, I think like, I was like an outsider in venture. And I think that perspective gave me like, it's helped me create this, this, I think, like really unique environment where it's like, no one is an outsider. Yeah, in venture anymore. And Gen Z VCs, you're not an outsider, like your unique perspective makes you different and valuable. No matter what school you went to, no matter what your parents did, like, it's like, it's you create your own destiny, and you create your own destiny by helping one another. And with Gen Z VCs, it was basically the same, like, I like just tweeted, I was like, Hey, like, I want to make friends who are like, who's out there doing Gen Z investing, I want to meet you. And that's literally how it started. I did calls with 71 investors who commented on that tweet from all over the world, Beijing, Stockholm, London, Africa, like, just Gen Z investors, and it blew up, right? It was because for the first time, a people didn't even know Gen Zers were old enough to be doing investing. So that was like a surprise. People were like, what? Like, Gen Zers are investing? That's crazy. Gen Zers were starting their own funds, Gen Zers were creating funds in college that they were investing out of and starting as early as you know, high school in some cases. And also, the third piece, I think is like, people are always curious about what the next generation is doing and thinking because we are like the kingmakers of platforms, where the pace of technology and innovation, I think has never been faster. And also just the way that Gen Z, the next generation interacts with technology, it informs a lot of investment decisions around like, culture, company building, literally everything. And so the article blew up. I started the community on the backheels of that, where like, almost every single person I spoke to through that article had the same thing. They were like, I also don't know anyone. I started like a month ago. Like, I also have no friends. I want to meet all the people you're meeting. And I was like, well, great, I'll put together a Slack group for us to organize a Zoom call. Just to like, because I knew everyone, but everyone didn't know each other. And it was really a great exercise in the importance of curation in early community building. Because very quickly, like this group of 30 people that signed up for the Slack community, again, it was I wasn't even calling it a community at that point. It was just like a Slack group that

SPEAKER_157: my friends could like chat in. They had such positive experiences in that first week where I set

SPEAKER_160: up that Zoom call, and they made like immediate friends, like that pain point for Gen Z VCs and why it exists was literally friendship. It's like connection with other people doing the same thing as you. But like, in totally different areas of the world, different focus areas, or sometimes the same focus areas that you never would have met otherwise. And that's what they shared with their friends. That's why we had like this organic growth and viral moment. Where like when I opened up the community, I was like, look, this is there are 30 of us. It's fun. Come join, come hang. And we went from 30 to 1000 in four days, and then Business Insider picked us up. And then we went had 3000 a month later. And then it became the movement that it is tons of initiatives and identity. People have like Gen Z VC and their Twitter bios all over the world. That's a term that I created a year ago. It's wild in every sense. But again, I think it's like, it all started from this community being built around this authentic problem and pain point for people versus starting a community just to start a community.

SPEAKER_162: I don't even know if I answered your question, Rachel, but I hope that was

SPEAKER_139: Definitely. Thank you. And I didn't realize I must have joined your Slack crazy early because I joined in like January because that's when I started getting into venture. I was in a VC fellowship and kind of very similar to you. I didn't go to a school that had a huge venture capital presence. I went to Penn State and we do have an awesome venture capital club that I was a part of, but I wouldn't consider like a ton of people coming out of that club to be staying in venture capital. So the alumni that I had from my university was very few and far between. And throughout college, that was my community that I totally relied on because Penn State was a giant school. Yeah. But then when I graduated, I was like, Oh my gosh, like there are, first off, the people that are in VC that came from my university are so much older than me. And like second off, the people that are in VC that are my age are doing things so incredibly different than I was. I was looking at like supply chain and mobility at the fund I was at and which I am still very passionate about. I think it's a very interesting space. You just don't get a lot of young people talking about it. And when I joined your group, I was actually able to connect with other people that were interested in the supply chain space that were around our age. And we have another Slack channel that like broke off that just talks about supply chain and mobility. And it was super just awesome, honestly. So big thank you to you. And in Business Insider, you said that it's not just about networking. It's about building friendships and genuine relationships. And I think that's totally true. And I would like to ask you, how does one actually

SPEAKER_151: build these authentic genuine relationships online?

SPEAKER_179: I really think it all comes from a sense of vulnerability, right? I think some,

SPEAKER_162: some junior investors have a negative reputation for being very transactional.

SPEAKER_165: Like you kind of join a fund, you want to build your, your presence internally, you want to get good deal flow. And so you think that the way to do that is by, you know, oh, hi, I'm Megan. I work at

SPEAKER_160: their hippo. I focus on seed. Like these are the areas that I'm interested in. Like, what are you, what do you focus on? And then no one remembers those conversations. Like that is not how you build

SPEAKER_162: actual relationships with people. You build relationships by being vulnerable and by being yourself.

SPEAKER_160: And you know, maybe it feels a little bit atypical for most people, but I think like I'm someone, I like, I can't be anything other than myself. It's like, it's a blessing and a curse because like, sometimes it can be a lot. Like I got coffee with a friend this morning and I was like, and I tweeted about this. I was like, I was very emotional this morning. Like, I felt like I was going to cry just like talking about things that were really important to me. And that's not a bad thing. Like that builds like even stronger relationships with the people around you because you're being like, it's just, it's gravity, you gravitate towards people who are like warm and, and like human at the end of the day. And I think that's something that I do really well. I was like, I'm very, very good at like removing any and all barriers around like myself and who I am to let people in to like my brain, my thoughts, and also encouraging other people to do the same. Like I usually start a conversation. Like if people are new to venture, I ask like, how can I help? And also what are you struggling with? Like, what are the, what are the areas that you could use help with versus like, what areas do you spend time in? Like, how do you think about like the future of e-com enablement? Like no, one's going to remember those conversations. They're going to remember the people that like really took the time to get to know them. And also that like lend it a hand or lend in an arm to, you know, to make their experience more positive, especially if they're newer to the ecosystem. So the answer is vulnerability. I think you have to be vulnerable. You have to put yourself out there and that's how you build great relationships. And even for me, like the initial sort of the original, like 30 Gen Z VCs that were in the Slack group. So many of them are like very, very close friends of mine. Like I'm doing a sleepover with two girls on Friday. Oh, that's awesome. Like they were, they were the original, like they were in the original group of, of people. And like, I've just gotten to know them so well over the past year as friends. Like that's the difference. They're like the people that I know what best in venture, a lot of them are women in

SPEAKER_223: VC, which I think is very special, but like they're friends. Yes. Like venture is what like initially

SPEAKER_160: connected us. But like, if we were all to like, stop being investors tomorrow, we would still be very close friends. I would have a very hard time believing that, um, you know, anything else would be the case. And like, it's not like the deal flow that connects you. It's like the genuine

SPEAKER_143: relationships that you have with other people. That is so awesome. And I think it's more, it's even better that you did this for specifically the field of venture capital, where

SPEAKER_139: a lot, this is a lot smaller of a playing field you're dealing with than maybe at a big bank or something like that. Like friends tend to be a lot smaller. So not only, I feel like at least in my experience, the Gen Z's that I've talked to that work in a similar space than me, they're also some of the only people in their office that are around their age. So I think by having like these external communities in fields that are similar to VC, none are coming off the top of my head, but I would hope that other industries do this as well, because I know it's helped me a lot, especially being a Gen Z that's now post-grad. And even when I was like a senior in college, I started joining these because I was like, I just need to get out of my bubble. You know what I mean? Like I need to find more people interested in this. And obviously there are a ton of people interested in it, but they tend to not be in the Pennsylvania. So having things like a Slack group were incredibly beneficial. And I think Slack groups are really interesting because me and my other producer were talking how normally you would build a product and it's very much like build and they will come mentality, I feel like with a lot of startups. Whereas now we're starting to see more people start to like build the community and then introduce the product. Like I was talking about before, like the Keepler app on TikTok. I know Kinsey Grant who formerly hosted Morning Brew's podcast has thinking is cool now and she opened up a community before they really officially launched their product. Do you think that this community building mentality is going to disrupt the classic funnel that's like product, team, customer? Do you think this is going to be added to the flywheel or do you think this is just something kind of like

SPEAKER_155: special and unique to the world of venture capital?

SPEAKER_214: No, I think it, I think it extends way beyond. And I think it's something that every founder should be

SPEAKER_162: thinking about from day one, because community is what builds loyalty. Loyalty is what builds like repeat purchase behavior, like building lasting, sustaining companies on Facebook and Instagram alone. Maybe that worked a decade ago. It's not going to work today. Your community is literally

SPEAKER_160: your lifeblood and you build, you have to build community. And I think even some of our best consumer companies are best like Gen Z companies started with like great wait lists around like a vision, a product and a community, right? It's like, it's the future of consumer. And I think it's also really important for enterprise too. But you know, it's interesting, like maybe you didn't, you don't call it community, but I think many founders start building community, even if they don't even realize it, like many founders start with a problem, right? And then they start doing user interviews. That was like, how I built Gen Z VCs was just like that, even though I didn't even know it was doing it. I was basically interviewing Gen Z VCs about like their pain, like their pain points, what opportunities they were seeing in the world. And then I put them in a group, many founders do the same thing, right? Where like they, they, they fear, they see a problem, they interview people and do like customer interviews. And then like, they solve that problem. Sometimes community is the start of that or like, you you're bringing all these people together around this common issue, you're you're gathering feedback, and then you build the product. Gen Z VCs was no different. It was it was, you know, just like the product is effectively community. Yeah. But I think founders do that all day,

SPEAKER_167: every day. And it's also the future of startups. Yeah. I think it's cool to have Gen Z. I don't

SPEAKER_151: know about you, but I feel like I'm very brand loyal. So like speaking of layer hippo, let's talk about

SPEAKER_139: like all birds, Glossier, like, I will never use anything else on my eyebrows again now, you know, because they just not only have created really good products, but the community around them, like, I haven't gotten into the all birds yet. But like Glossier, I think is a great example of how they were able to actually have a killer community. And like, maybe I'm not using all of their makeup. But I just, I think their Twitter is really witty. I think the people that use their products that they like test on like they say, like, Oh, it hasn't launched yet. But like, this is going to be like a test on somebody, I think those videos are so interesting. Their ability to create community has now made me be such a brand loyal customer. And I think you're incredibly right with startups need to be thinking about this for day one, because just imagine if Glossier started off with like a Slack group, and they're already killing it. Like imagine, I saw online another company, Merit, M-E-R-I-T, another makeup brand, where the community was just really, really awesome. And I'm excited to see, to see where all that, all that can go. And well, thank you so much for being on the podcast. This was a great conversation. I think you are so good at community building, I'm going to say it again, and you have helped me out in more ways than one. And this is the first time we've even spoke. So thank you so much for helping me connect to others in the venture capital community. I've gone to a ton of book clubs and happy hours virtually because of you. So you are absolutely kicking butt and I'm excited to see where GenzVC can

SPEAKER_154: go. Thank you, Rachel. Thanks for having me. Yeah, it was a ton of fun and big things ahead. Awesome. Thanks, Megan.