How Much Proof Does a Consumer Startup Need to Raise Money?

0:00So, um, it's tricky because you definitely want some, you definitely want some degree of verification that the thing you really want to do is a thing that other people want you to do. Meaning if it's a product, people want your product. I wouldn't just say follow your dreams and quit your day job. I mean, it's terrible advice.

0:17Jon Keidan: It's terrible advice. Yeah. Terrible advice. Stay in school, kids. Yeah. I mean, look, I'll let you back this into a different... Jon Keidan is founder and managing partner of Torch Capital, where he's backed companies like Sweetgreen, Acorns, DigitalOcean, and ZocDoc. We break down how he evaluates startups from the pain point up, what makes founders credible before there's much traction, why he passed on Sweetgreen twice before he invested, and how you can tell the difference between focus and distraction. We wrap up with a 30-day experiment you can run while you still have a paycheck to find out whether strangers care about your idea before you go all in.

0:54Jon Keidan: I'm Walter Thompson. This is Fund. Build. Scale. John, thanks for joining me. I really appreciate it. Great to be here, Walter. So when you're telling someone about Torch Capital, how do you describe the firm? So I think of us as a fund that's really thinking how technology is reshaping people's behavior. And that can be people as consumers, but it can also be people as employees or business owners, people managing their health care, their financials. It's very broad in a way. But the main thing is where technology is the catalyst to creating exponentially better customer experience or consumer experience.

1:34Jon Keidan: What's your outreach versus inbound? How do people usually get in contact with you? How do people arrive on your radar? Early stage is such a network-driven ecosystem that most of it is from a warm introduction. or we have a thesis or an idea or we hear something, a lead, and then we go find a founder ourselves, which is more outbound. But I would say since I started three startups in New York, starting in 2010 and been in the New York ecosystem a long time, we've got a seven-person investment team. They're all based in New York with some San Francisco exposure. We know a lot of people. We know a lot of founders.

2:12We love to hear from founders first. Founders we've backed, founders we're friends with. Founders know what it takes to win. They know how hard it is and they're busy. So if they get excited about something, we want to hear it. The bar is really high, but we also get deal flow through investors, just through relationships primarily. Or like I said, we're out looking, seeking certain specific sector experts or founders with backgrounds that could be really interesting in an arena that we want to invest in.

2:39Jon Keidan: Why do critical and chronic pain points matter to you more as an investor than cyclical ones? So we always start with pain point because if the thing you're solving isn't painful, it's not probably that worth solving. And if you solve it, you want to make sure people use it again and again and again. So critical, it's a must have, not a nice to have. Chronic means they're going to use it again and again, which is why, frankly, we've talked a bit about CPG. CPG can be harder because someone buys a product and they love it. And then that's it. You end the relationship. We like backing companies that have a continuous ongoing relationship, as long as the companies really build that trust.

3:17So critical, chronic, severe pain points is what we're focused on. And then the next phase is, can technology be the catalyst to fix those pain points? And then the next phase of the hierarchy and what is that technology? And the next phase of the hierarchy is if you solve it, Is it a big enough market to create a truly impactful venture scale outcome? And then the last piece, which is equally as important, is this the right founder to solve that pain point? Is this the right founder with the right background, the right intention, or the right mindset to be able to really power through and ultimately change behavior by creating something so compelling?

3:57Jon Keidan: Have you seen a founder turn a nice to have into a must have successfully? We have actually, and you hear about pivots and often maybe they thought the critical pain point when they really got into it wasn't that critical, but that unlocked something else that they did find was critical. Or maybe they found a critical pain point that wasn't chronic and they found something more chronic. And, you know, famous stories, Airbnb started as a very different company. But by starting that and it wasn't where they wanted to be going, it unlocked their observations, which enabled them to say, oh, this is an opportunity, a new way of people to do something that everybody needs and will need multiple times.

4:33And Airbnb got started. And obviously, that's completely changed the way people travel.

4:38Jon Keidan: Can you share an example of a pain point that looks big but actually fails the test? I was thinking recently about, I don't know if people even remember this, the Segway that was supposed to revolutionize how we all get around. I remember that. Yeah, I was thinking like that's just kind of it's not even it's not a thing anymore. I don't even see like security guards riding those things anymore. No, that's a great example. I mean, people needed to get around, but did it did it create an exponentially better experience? No, you can get better. You can get around walking. And if you want a fun ride and get around on a scooter or a skateboard, frankly, or so or city bike.

5:10There's just so many other options. It wasn't critical. And and and therefore, it certainly wasn't chronic.

5:16Jon Keidan: And yet it got a ton of oxygen. I mean, we're talking about that for a solid year, as I recall. Why do you think that was in that case? I think, well, the people that built it weren't a couple of people in a garage. I think it was a very famous inventor who, and we didn't have Tesla at that time. There weren't that many exciting things in mobility. And to rethink the potential of human mobility is a big, exciting arena. Yeah. But so it got because the anticipation and the aspirational nature of what the promise and what the founders were saying the promise of these vehicles would be didn't live up to people's usage.

5:58And that's the real test on all this. Like, do people use it? And the more they use it, do they use it increasingly? I mean, that's why ChatGPT and now Claude and it's the first time we've seen mass consumer applications probably since the mid-2010s where people intuitively get it right away. They see the value and they start using it more and more and more. And immediately it changes behavior. It changes the way they do and live their lives on a day-to-day basis.

6:24Jon Keidan: Are you building something that's hard to explain? It can be a sign you're working on something interesting, but it also raises the risk that you're missing out on fundraising, sales, hiring, and media opportunities. I help early stage founders sharpen the narrative. What matters? Why now? Who needs to care and why they're the right team to make it happen? If you're preparing for a raise, a product launch, an important customer meeting, a panel discussion, or even a hiring push, I can help you pressure test your story before the stakes get higher. Visit the Fund Build Scale website to learn more or email fundbuildscale at gmail.com.

7:01Jon Keidan: Getting back to market size and turning that insight into actual scale. So once you believe in the pain point, how do you start thinking about market size? And specifically, how do you, I know a lot of first-time founders, they really have, they have fantastical notions of the TAM they're going to reach. How do you bring them back down to earth? I mean, so a couple of different things. When we're looking at it, really think of concentric circles. So how big is the direct audience of people that will satisfy the use case that you're creating a company to fix or to help? Then you look at, okay, then who is the second and third tier concentric circles?

7:40Who may not be as chronic a pain point and maybe more of a nice to have, but once they see other people doing it, they may get to appreciate that. And so you literally build that out and you can look at public comps. You can look at what the demographic information is. You can look at what use case and user behavior can be in other types of companies or cross sections. And you get a good idea of whether they can reach that is very different, but you get a good idea of what that potential TAM is. At least when you're early, it doesn't have to be a precision exercise. It's really a directional exercise.

8:11But if it doesn't pass the test of a directional exercise, you can just put pencils down and you can go on to the next thing.

8:18Jon Keidan: I mean, do you have a, is there a simple or not so simple kind of framework to kind of just kind of fit check yourself to see whether your TAM is, you know, a moonshot or whether it's actually in the bounds of reality? I mean, coming from McKinsey, which was my short stint between being a manager in the music business and getting into the startup world, a lot of, a lot of the exercises we did there were just finding data, something from nothing, and then starting to try to build a use case around it. I think that's very, it's a very similar approach. It's bottom-up. So ZocDoc, the TAM was enormous.

8:51I mean, I met Cyrus right as he was starting the company and Oliver, and they were saying, okay, the direct use case is people who are moving, but probably young people are more open to trying new things and new technology. And ZocDoc to this day is still the biggest platform in the United States for people to find doctors across the country. And so they're like, okay, well, it's probably kids out of college or young people moving for their job or young families moving where they set up in a new city and they need a primary care doctor. They may need an optometrist and a dentist. So that's the first concentric circle.

9:25The next concentric circle are people within a city who just may not have a relationship with a doctor or need to build one. And those are people who maybe are newer to a city or starting families. And you can sort of build out how big that TAM can be. And eventually you could get to a massive piece of a massive part of the u.s population huge 10 and they fulfilled that i mean if you there's probably no one almost anyone you know knows someone who's on zoc doc and and so that's been a that was a an interesting exercise of seeing if they fix this problem and they do a great job how big can that audience grow over time there is a phrase you brought up

10:04Jon Keidan: actually. The phrase you brought up is called the earning the right to solve problems. And I thought that was interesting. Well, what does that mean exactly in practice for you? So if you're starting a company, you earn the right by having a unique perspective and, and frankly, a mission to solve that problem. And generally what that translates into in the real world is someone solving a problem that they've struggled with. And so we have a very successful fast-growing healthcare company. And the founder's mom was diagnosed and unfortunately passed away from cancer. And so he saw a piece of the health system that really needed fixing and an opportunity of how to fix it.

10:46And he experienced it directly. And he also had run growth at a tech company. So he really understood how do you build a company quickly? And he looked at all the pieces and said, all the ingredients are here. I want to solve this problem because this horrible situation, the one shining light in it was this one piece of the health system that worked really well for me. I want to adapt that and democratize that and make that accessible to anyone dealing with a situation like this, which unfortunately is a lot of people. And so he was very mission-driven and he was solving his own pain point and he had the skills to do it because he worked in startups and knew how to grow an audience and grow a user base.

11:27Jon Keidan: When you come into contact with them, are you expecting them to kind of articulate those adjacencies from the beginning or is that something you kind of they'll uncover as they go? It's a mix. Some founders are very focused on either the very big picture and like what their North star is and what their mission is that they're solving. And then they go immediately heads down and are razor focused on the first critical thing they need to prove or solve to get the first piece of market traction. And I'm okay with that, which means they haven't really thought about the middle as much. and that's left to us up to us to first see what we think the adjacencies are and then discuss that with the founder and see what their thoughts on and sometimes they move our thinking around a lot other times they're like oh i never thought of that and other times it just feels too small and we realize they're never going to get there and therefore we back off and so it's a real mix it's 50 50 i mean i love it when we ask these questions that founders have thought through this they have answers they may disagree with us but they have answers because they've thought through it and And you can see how thoughtful they are on a 360 degree level.

12:30And that's our favorite type of founder to work with because they're already intellectually curious and intellectually rigorous, which means as they're trying things that are working and not working, they're going to be thinking holistically about it. And they're going to be moving, constantly moving to if the first thing didn't work, what's the next thing that they've learned that they can maybe try to run at? And that generally, almost no massive company unicorn is a straight curve up. It's a roller coaster, especially in the early stages. And some of the biggest companies had massive pivots.

13:01So you need to believe the founder is going to figure out their trajectory through those pivots.

13:07Jon Keidan: I am curious, though, as far as founder market fit, because we're talking about unpedigreed, maybe first-time founders, at least kind of the ICP I have in my mind. And so, you know, there's, you know, you're assessing their ability to learn and their leadership skills, maybe their ethics in some small way, perhaps. But I want to make the bar really explicit. Like, what are some of the traits or qualities that for you are just non-negotiable for a consumer founder? Yeah, I don't think it's a consumer founder. I think it's any founder because I think these traits are universal, at least in our opinion, of what makes a founder great.

13:44Mission is first. they will live and die by they need to solve this and they have good reason to solve it. But the trait is that they need to do this. Like you could pay them nothing and they'll spend all night just doing it on their, like, it's just something they have to do. I think obsession with product and customer experience, that's more our taste of when we look for a founder, what I want them hearing to probe in on. And we've had a lot of, I mean, if you look at all the companies you mentioned at the beginning, whether it was DigitalOcean, Acorn, ZocDoc, Sweetgreen, Roe, all of those founders, and most of them don't know each other, and they come from very different backgrounds and very different approaches.

14:21Every single one of those founders at any stage of those companies' lives, when they were starting out in seed to being a unicorn to even some of them are public companies, all they want to do is talk about the product and how it's innovating to create a better experience for their users. It's unbelievable. It's the same language. They use it in different ways, but that is the thing that's driving them. So that's really important. None of them would ever say, I want to create a unicorn or I want to raise a lot of money or I want to make a lot of money. That doesn't come in. It's just not what's driving them.

14:50And so understanding that drive, that mission driven drive is really important. I think confidence is critical, but some humility because things change. You need to be able to read the market. You need to be able to read your users or your audience. And you need to be able to listen to experts. You can disagree with them, but you need to have an open mind because nothing is as you expect it. And in a way, the faster you grow and the quicker you have success, the more that's true. And you need to have an open mind to be able to take feedback, whether it's from other people, whether it's from your team, whether it's from your users, and be able to digest that, internalize it, and then make educated decisions.

15:29And I think we're some phenomenal, confident founders. If confidence turns to arrogance, they miss stuff and they can run a hundred miles an hour, but then end up running that into a wall. You want a hundred miles an hour to go vertically. And I think that's another trait that's really important. A little bit of humility and open-mindedness mixed with that intellectual curiosity.

15:49Jon Keidan: I live in this reality distorting field of San Francisco, Silicon Valley. And I see definitely, I think people, they model, they model what they think is successful behavior. And a lot of it turns out to be a little arrogant, uh, generously speaking. And so how do you, how do you solve for that? Is that kind of, um, I mean, maybe you don't, maybe that's a red flag and you're just kind of like pass. Uh, but when, when you see that in the room, what's, what's coachable and over time and what isn't for you? That's a great question. It's definitely a red flag. It's not necessarily a walk away, but then you got to probe a lot more deeply and you have to do a lot of reference checks because it's funny.

16:28Someone getting a bad reference at a company doesn't necessarily mean they're not a good founder. That can actually mean they're a good founder. They wanted to do things their own way. The company was too slow. So references are, you have to be very thoughtful in how you you take references and what they suggest. But if you think someone is going to turn into arrogance, what are the results of that arrogance? Where's that gone wrong? And, and maybe where they, where it's gone, right, but where it's gone wrong, you have to say, is this a net positive or a net negative? Sometimes it is that positive.

16:58I think the other thing is you just go a lot deeper with that founder. We have a founder who had a reputation for that. And the more we dug in, the worst, the references were on that reputation, but we liked him. And we sensed there was some other piece to him. And it was a second time founder. And I ultimately called him and got a coffee with him. And I was totally blunt and honest. I said, listen, we really like you. We like your idea. We think you've got a phenomenal idea here and you have the right characteristics to make it happen. him. But there's one thing that concerns me. We've gotten all these references and I just absolutely was honest with him and took it head on.

17:37And he thought about it and we had an incredible discussion. And he goes, first he thought about it. He goes, that's probably right. And he wasn't defensive at all. He was incredibly thoughtful. And he said, honestly, no other VC has ever been this honest and open and willing to just discuss something. Most of them would just move on or they just ignore it. And we had a really deep discussion and it completely changed my perception of him. And we ended up leading his round and he's been terrific. And it created a much more honest, open dynamic between the two of us because of that. So it's not an automatic walk away, but you got to really probe.

18:11And if the deeper you probe and the arrogance goes to the beginning and they're always right, then it's a walk away.

18:17Jon Keidan: I'm curious, in that specific case, did that founder have a sense before you told them how they were perceived in the community ecosystem? him? He wasn't shocked. I think the way I brought it up, I think he was maybe a little bit surprised, but he thought about it quickly. And he's like, I don't, I think that's fair. Him even just saying that he thought that was fair showed humility, right? He was like, oh no, they're wrong. Or that was this situation or that situation, that situation. He was totally open about it. And I smile, you know, for those who aren't watching, I'm smiling. It's just, that was a really nice breakthrough with a founder that deserved the breakthrough completely.

18:56But I don't think it was a total shock to him. No, I think there was definitely self-awareness.

19:02Jon Keidan: When I found out you were in Sweetgreen early, actually, when I found out that you passed on Sweetgreen twice, that was the inciting incident that made me want to talk to you, actually. You passed on Sweetgreen early. Why? So I met them very early. I'd been an early investor in Sir Kensington's and had been in the music business as a manager before I got into the startup world. And at the time, Sweetgreen, I don't think maybe they just graduated Georgetown. They were really young. They had a couple stores up and they were starting the Sweet Life Music Festival. And the reason I got introduced by one of their other investors who I was friends with was because it was food and music.

19:45and I thought they were terrific. I thought the product was terrific, but I was worried about focus. I was like, the music business is a totally different industry. It's really tough. And if you're trying to do this, a successful festival in DC and try to run a restaurant chain, I don't think you're going to be able to do both well. And so I passed. In hindsight, there's a funny, and I did end up investing because they're, they focus on the restaurants. Those guys are absolutely brilliant and wildly creative, very customer experience focused and quality and product focused. And it's been, it was a terrific investment, but what the funny, they only did it a few years, so they did stop doing it.

20:25But the interesting thing, it was for college students and all those college students, cause there wasn't another big festival in DC, they were at Georgetown, uh, had this, these incredible experiences. Cause when you go to a festival and you're in college and it's the one in your town and you meet the significant other, or you have a great time with your friends or you see an artist that means something to you. It's a very impactful, life-changing experience. And so all for the three or four years they did this festival, all those kids graduated and went all over the U.S. and they had this incredible connectivity with the brand Sweetgreen because of the music festival.

20:59And so as the company grew and they started building new stores across the country, they had this built-in affinity evangelist audience that had really been formulated when they did this concert. So as a business model, I wouldn't suggest it, but they really turned it into gold. And I think that was a huge reason they had such success when they'd open a market because they already had people who were excited, who identified with them and loved the salads, but also loved the experience that Sweet Cream represented.

21:29Jon Keidan: That is pretty, I mean, was that their plan to basically kind of seed, pardon the pun, but like seed the nation? They thought, hey, there's no festival. It would get our name out there. And this is a really fun, cool thing to do as one does when they were in college. And that's how I got music. That was how I approached things. But in hindsight, it ended up being a very powerful marketing driver for them. So for a founder out there who is listening, who might have, you know, I've got this thing happening over here that makes me money on the side. It's not my main thing, but I have this main thing I want to work for.

22:03Jon Keidan: How would you talk to somebody about kind of thinking about unconventional moves like that without losing focus? so um it's tricky because you you definitely want some you definitely want some degree of verification that the thing you really want to do is a thing that other people want you to do meaning if it's a product people want your product i wouldn't just say follow your dreams and quit your day jobbing it's terrible advice it's terrible advice yeah terrible advice um stay in school kids yeah i mean look i'll actually back this into a different way so i got in the music business i I love music.

22:36I was a drummer. I was very good at it. It was the thing I was really good at in high school. And when I was a kid, I wasn't great at sports. That's what I was good at. So then everywhere I would go, I'd start a band. So I get to college, I start a band. I found out there's a concert committee. I didn't ever think I was going to be a drummer for a career move. So that wasn't on the table. But the music industry, when I realized by booking bands for the university, that there was an industry, I was like, that's all I want to do. Now, it's impossibly hard to get in. You're working for free. it's just there's no easy there's no ladder to get into the music business you just have to hustle it's all hustle and so I also luckily I was in college so if it didn't work out I'd continue going through college and figured out what I wanted to do but turned out I was pretty good at it I was able to start working with artists I knew I played in bands I knew music I was able to get internships at record labels I built those relationships I was able to book bands that became successful then I started working with those bands so there was a bunch of proof points on the journey, by the time I graduated, I was very, it was very, very clear to me that I could just do nothing and try to get some band sign and I'd have a shot.

23:38And within six months of graduating, I got two bands signed to major labels, started a management company, but just graduate college and say, I'm going to get band signed. It was a four-year process and it took a hundred percent of my energy. It was, it was razor focused on any opportunity I got to intersect with the music business. I took it, I did it for free. I did it with a smile. I did it the best to my ability. And through that, I created enough momentum that once I decided to quit my day job and do that for real, it worked. And so I think you need these proof points, build something small, see if people like it.

24:11If it's a tech thing, put it online and see if some people use it, talk to your friends, talk to people you work with. Like there's many, many proof points, but you really have to hustle to get people who are busy and frankly, not that interested to see if that idea has real connectivity and potential.

24:30Jon Keidan: I used to live in DC or inside the Beltway. And I had a job working at a gourmet deli. It was called Marvelous Market. And we had nice high-end foods. And I was a manager and our location did pretty well. And we sold a lot of artisanal food things. And I had ideas for things that we could probably sell. But I never took it very far because I told myself, I'm not a food guy, didn't go to culinary school, didn't have all the background. But after, you know, in talking to you, I realized I was there all day, every day, like five, six days a week. I had a great sense of customer behavior. I understood products that people preferred.

25:04Jon Keidan: I was demographically tracking people without even trying to. I was tracking what we were ordering and what we were out of fast and what didn't sell, what people actually bought. I probably had a pretty good sense of, you know, what the market was as far as like a condiment for high-end, you know, Volvo drivers. so like what would i have needed to get you to take me seriously if i'd walk into your office or pitch to you at that point well what would you have wanted to do you mean start a uh i it was the idea for it it's i've never still i still haven't seen this uh it's a it so the most popular sandwich topping we had were uh was caramelized onions and we and we had to make them every day from scratch which is fine because i love the smell but like i was like it would be great if you just buy of caramelized onions in the store and just put them on a sandwich.

25:50Jon Keidan: You can't.

25:55Interesting. So I'll go back to, I think there's a great use case there. How big is the market and the toppings market? Now I mentioned, I invested in Sir Kensington's market's huge. So, but it's huge for the things that people do. If you're changing consumer behavior or trying to adopt and adapt to new, newish consumer behavior, where it's not a go-to thing you take out of a jar. That's always more difficult. I'd probably want to see you make it and give it to some delis and just see what people are responding with feedback on the sandwiches they're making with it. That's probably my, if I was you, that would be my starting point.

26:33Jon Keidan: That's pretty low bar actually. That would be the starting point. I would invest in the company at that point. Well, sure. Yes. But it's, yeah, it's worth it. Some of the proof points that, okay, people really, they all want more of your product because they want to put in all their sandwiches just because people love their sandwiches that much more. And maybe also proving it saves them time and costs to have people cooking caramelized onions every morning when they can be doing something else for the store. Okay, so this backs into the question of like how early is too early then for you specifically?

27:01Jon Keidan: And is it about the product or the market or the founder? Wow, it's about all three. It's very hard to disassemble them because a great market and a great product or the bad founder isn't gonna go anywhere. a bad product with a great founder and a good market can definitely go somewhere. They just have to have that open mind to be able to change and evolve. So I really think it takes three. What's, what's too early. You need, and I'd say this, the bottom line, the bottom bar, the bottom run for us is a founder that can credibly, we like the pain point. We like the market and they incredibly solve it.

27:42We have to understand why and how they're thinking about it. And so it's more than an idea. It's quite thoughtfully done. Ideally, we like to see a product, even if it's a prototype, like they have the platform built, even if it's the early phase, they have some early users. but if they have a very clear plan and their plan of how to execute on it seems achievable and they have the right intrinsics to solve this pain point, meaning they found it's solving something they struggled with and they have the right capabilities that we think they can credibly do that, or they've already hired some people who are working with them part-time, but they're the right people that would be the right team to help them do this.

28:25You've got to see some proof points. And that's why I keep saying it comes down to proof points. The more proof points you get, even before something's formally launched, the more comfortable we can get that they'll be able to get it launched. Then the big question is product market fit. But we're comfortable investing before a founder has product market fit.

28:43Jon Keidan: It's May 7th, 2026, and AI is still sucking up all the oxygen, but it's not everything. So how should founders think about this right now if they're doing a consumer play? So the irony in this is the exact same way. Nothing's changed. Just because you shout AI doesn't mean someone wants to use what you're doing. What people always want is an exponentially better customer experience, consumer experience, more seamless, more intuitive, more customized, thinks almost for them. and the AI, and that's what we need to create. What AI is creating should be working quietly in the background and can enable founders to do all those things I mentioned more efficiently, more effectively, and more quickly than ever before.

29:32And so you're still thinking not about AI. You're thinking about what am I trying to solve? What is that pain point? But now you have an insanely potent tool or tools to use to build product, to test product, to test creative, to get data and feedback, to use that data. There's just a thousand new capabilities that every founder has been handed, which are wildly inexpensive, that gives them to create a better customer experience and build that out. And more cheaply than ever before. And so it's the potency of the tools that is really changed. But the ultimate thing a founder should be thinking about is what am I trying to deliver for this person or this team?

30:17AI just gives you an infinitely bigger palette with a lot more depth than one would have been able to do before.

30:27Jon Keidan: How do you personally discern whether AI is a feature versus the story? So you really have to think through what the customer journey is going to be. And, and is it something, and again, nice, that's where things get, get pulled out and nice to have, right? Like it's a tool, it's a feature, it's not a company. A company ultimately for us is a platform that people come back to and they get more and more value over time. and if it's just a tool they use it and maybe they use it all the time but where does that grow and it's a point solution and it's something that may be really helpful but maybe they buy it once you want something that's constantly growing and of all the companies you mentioned you know RoHealth just doesn't sell one type of thing and have one type of interaction they have many conditions they can treat they have many different ways they can treat it they have they customize to your specificity.

31:21They have everything from real doctors to AI helping identify things that maybe through your patient data that can be identified to help the doctors give you better treatment advice. There's so many aspects. The deeper and more trust is built with that end user, the more they're going to use the product and platform. And the more the product and platform creates new opportunities, again, it's a flywheel of stickiness and trust. And that's what we're looking for. And if you don't have that, then it's probably not something we're going to look at. And in an AI world, there's a lot of really amazing tools and features people can build now, but that itself doesn't make a platform.

32:01And really we have to see the path to a platform and how that platform gets more valuable over time or we're not investing.

32:09Jon Keidan: Where are the gaps in the marketplace right now that you see? What do you wish someone would pitch you tomorrow, but they haven't yet? so this is where it gets very complex for all the gaps in the marketplace some people are able to build claude has gotten so good that people who are completely not technical are able to fill their own gaps whether it's a personal assistant or scheduler or whether it's a shopper for them you could even a year ago i would have said someone should use ai to build that and now people are literally building their own version themselves in a weekend or in a few hours.

32:40It's incredible potency. So that's where you have to be careful because what could be, have a massive TAM and a big market and a critical pain point may not actually be a pain point for much longer. That's the first issue. The second issue is you then have obviously the big players who are building new things in 10 seconds. They have the distribution and the compute. They can create a lot. So it is a moving target right now. And we're picking, the way we're playing that is we're picking more specific niches that are unlikely to be to be jumped on by the big players and a little too complex for someone to build for themselves.

33:16And, and these can be huge industries by the way. And so we're trying to find what's in the middle, but I do think as people get used to the technology and the consumer behavior gets better understood or more equalized over across the base, those ideas and those gaps you can become much more apparent, but it's still so new and it's still so nascent. And the moves that the biggest players are making is still unclear. It's hard to tell right now.

33:46Jon Keidan: I mean, any sense on where demand is really obvious to regular people like me, but I mean, healthcare, healthcare is just infinite amount of pain points. Everything in healthcare is complicated and terrible in terms of user experience, whether it's provider or dealing with insurance, whether it's finding your healthcare records, which you just invested in a company called Hermes Health, which is going to create a unified platform for people to find their healthcare records in one place. Whether it's a healthcare companion, which is one of our companies called Qi, QI, where they're helping people with chronic conditions, not just look at clinical data, look at Reddit threads and community data and social data to paint a picture that's very customized to you and come up with a game plan of how to solve a particular issue or manage a particular issue that's a healthcare companion.

34:37The more bad customer experiences there are, the more opportunity there is. And AI is enabling fixing in ways that never could because of all the ability to deal with many pain points and many intersections of information and data layers and customize all of it to your specific needs. That's a monumental shift and I think one of the most exciting areas to look at.

35:04Jon Keidan: If you were advising somebody who is, I have an idea or I'm noodling for, you know, I've got a consumer tech app, or I have a consumer tech idea in the back of my head, I still have a day job. What's an experiment they could do to kind of validate their idea in the next 30 days without quitting their job or spending 10 ,000 bucks? Yeah, I think it's a great question. It's going back to the proof points we talked about. I think the first thing you could do, which is take the value proposition, get it online, market it a little bit and see if people sign up for a waitlist. You don't have to build it yet.

35:36Just see if that need is there and how potent that is. The next thing you can do, and this is where Claude has changed the game in just the last two or three months, you can build a V1 of a product very simply. It may not have depth, but at least you could see if people go from the waitlist to actually use it or poke around it a little bit. And then they may get bored because you haven't built it all the way out, but at least you know there's intention. And so you see interest and then you see intention. And then if there's intention, you may want to still don't quit your day job, build it up more or partner with an engineer or find a way to build it out further.

36:11And then let people, and if they go that one extra step, then you want to start querying that audience of people who have used it. And if you're getting this feedback cycle, that's continuously positive, then maybe you start thinking about taking a little more seriously, but you got to have proof points in the market if you're going to put your day job at something very specific.

36:31Jon Keidan: John, this has been a great conversation, super tactical. Thank you so much. Yeah. Pleasure, Walter. It's always great to see you in the chat. Great questions. The fund build scale theme was written by Michael Tritter and performed by Michael and Carlos Chires. Michael also composed Ocean, the track you heard at the top. If you enjoyed the episode, please subscribe and leave a rating. It helps more people find the show. You can get the Fund Build Scale newsletter on Beehive, follow along on Instagram, and if you have a guest suggestion or a question, reach me at fundbuildscale at gmail.com. Thanks for listening.

37:09Jon Keidan: Fund Build Scale is a production of Truth and Soul Media, LLC.