Summer School 8: Graduation and the Guppy Tank

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0:31Welcome, summer school class of 2023. We gather today on the imaginary lawn of Planet Money University to celebrate what we have achieved. You worked hard this summer by pressing play on a podcast, adjusting the volume, occasionally paying attention. And now you are ready to become a Master of Business Administration. spelled without capital letters for legal reasons. Of course, you will have to pass a short online quiz first. You can find it in the show notes or at npr.org slash summer school. Answer 10 easy questions and you get a diploma-like image suitable for putting up on the fridge or in your office if they have a sense of humor.

1:16But I'm going to be honest with you. What really matters for an MBA is not that diploma. Sure, it looks nice on the wall. But what really matters is the confidence. The confidence to take everything they've learned in business school and stand in front of an investor and ask for money. That's what the MBA is all about. And that's what we're going to do on today's graduation episode. As a treat, we are going to do our own version of Shark Tank. Five Planet Money listeners, one shrewd investor. I'm excited to hear all of your pitches. Angela Lee teaches classes on VC, venture capital, at Columbia Business School.

1:58She's also an investor herself, the founder of 37 Angels, where she's heard 20 ,000 startup pitches and funded 100 of them. So I have to ask Angela, do you always know in the first minute or so whether it's worth funding a particular business? I would say that getting to a no is much faster than getting to a yes. So there are definitely folks that I talk to when, yep, first minute, I know it's not a fit. Either they're too early, they're too late, or the idea has been done 10 other times. I would say the fastest I've ever gotten to a yes is probably 15 minutes into a call where I'm like, yep, I'm going to give this founder capital.

2:35They are going to crush it. As we're going into our kinder, healthier version of the Shark Tank, which we're calling the Guppy Tank. I love it. Is there anything we should think about? Yeah, I mean, when we watch Shark Tank, is that in any way realistic? So what is realistic is that you have to get a lot of information out in a very short amount of time and that people are making decisions really quickly. A somewhat daunting statistic is that VCs look at pitch decks in about three minutes. That's how quickly they decide, am I going to meet with you? And that's kind of horrifying as a founder to realize that I just spent maybe six months, a year working on this idea.

3:14and then someone's going to decide in three minutes if they're going to take a meeting. So that's very similar. What's not similar is, I would argue, they are trying to be entertaining and provocative. And the fact that six VCs are in one room competing, that's also not super realistic. Yeah, but it's entertaining. But it's entertaining. Today on Guppy Tank, we will try to emulate the entertaining part of Shark Tank, the drama, the amazing inventions, without all the shouting and all that filthy money. Our five guppies are competing for something even nobler than cash, the right to be called valedictorian of the class of 2023.

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4:42This is it, students. We've spent the summer learning how a business works. The lingo, the accounting, the strategy. And the way you put that all together is in something called the pitch. One minute to convince an investor that you have a great idea. And you know what you're doing. We have warned all five of our listener contestants to trademark or patent their ideas first, so don't even think about stealing them, everyone. And this is the best part. We've asked professor and investor Angela Lee to take us inside her thought process. How does she evaluate a new business? What are the questions she asks before she gives out any money?

5:17So, you ready, Angela? I am. All right, let's do this thing. Planet Money Summer School, Guppy Tech.

5:28Coming in as our first guppies. Oh, wait, are they the guppies? Are we the guppies? I haven't thought through this whole metaphor. Anyway, somebody's a guppy, and who we have calling in is our very first founder, I guess we should say, from Missoula, Montana, although he does live in Portland, Oregon. He is a published author, and his name is Ian Descher. Hey, Ian. Hi there. Give us your short elevator pitch. So the idea is a sort of book of the month subscription, book subscription, where you get a book every month. But it's sort of that meets Cameo, which is the celebrity video service that we've all heard of.

6:03And the idea is then that your favorite authors will recommend books. They'll have a list of books, and those books will arrive to you once every month. So I could get the books from my favorite authors, who I, as a reader, would be super interested to hear. What does Tana French love? What does Stephen King love? What does James McBride love? So that's the idea.

6:31That was Ian Descher with a celebrity take on the Book of the Month Club. So just to make this clear, Ian, how it works. Say I really love Stephen King. I would pay your company a subscription fee, and then every month I get sent a weird, creepy book that Stephen King loves? Although what he recommends might not be a creepy book. He might decide that you should read a volume A of the Encyclopedia Britannica. But I'm locked into the subscription. Like, I don't know what they are until they come. It's kind of a surprise. That's right, which also makes it the perfect gift for the reader in your life.

7:07We're going to bring in our investor, Angela Lee, to ask some of the hard questions. First of all, I think it's such a fun idea. I was already thinking, who are the five authors that I want to hear from? And I have a long list already coming into my brain. My first question is, if I am one friend, a book lover, talking to another book lover, how would I describe this, right? Specifically, you have to use this tool because. What would I say to my friend? And Ian, the reason why I'm asking that question is because what I'm really trying to get to is what is the problem you're solving for the customer?

7:41So I think that the real thing that I'm selling here is engagement with your favorite authors. I will say that as a reader, I'm always looking for new titles for my to-read pile. And so there is that part of it as well. But I think what you're really selling is the engagement with your favorite authors. And I imagine potentially higher tiers of this offering where you might get to be on a Zoom call with your favorite author. Or you might get some sort of special insight that people who are getting the basic subscription don't get. I love the clarity of your response. I think it's so important to know exactly the problem you're solving.

8:19It informs who you talk to, how you message, you know, your Instagram ad or your Facebook ad, whatever the case may be. And that clarity is really, really important. My next question is, what is in it for the celebrity? Because if their names are well known enough for people to be excited about it, I'm just curious what's in it for them. I imagine that every author who participates gets a base level amount for creating their list. And then they get a portion of every subscription that is sold under their name. So money is what you're saying. You're essentially saying like for some writers, they're like, yeah, I can make a couple bucks off of every subscription.

9:03I'm just making up a number here. Absolutely. I also think there is the possibility that if that author has a new book coming out, maybe that gets substituted as one of their picks for that month. So there is some possibility that they are also selling books in the process. My next question would be, what is the market size for this? And so, Ian, have you thought about how many folks are willing to pay for the service and then how many authors would sign on? I think the market in terms of readers is big because tons of people are out there buying books all the time. And the hope is that you would have a mix of authors from very popular authors who are selling millions of books every year to more niche authors.

9:44And then more people will join as they see the success of the company. If you were pitching me for funding, I would want numbers behind that answer. Right. So what I would love to hear is on the book lover side, we think that there are five million people willing to pay for this. And the reason why we know that is because there are this many people who pay for Audible or this many people who buy more than X number of books per year. However you want to quantify it, but really quantifying the market size on the reader side. All right, Ian, good pitch. Thank you. As Ian Descher walks out of the guppy tank, we're giving him extra points for pitching this to a network, NPR, that frankly adores books and authors.

10:27But how many people even buy 12 books a year? He's got some work to do running the numbers.

10:36Next entrepreneur facing the guppies, a man who wants to be an essential part of your next vacation. From Kingston, Jamaica, welcome Dane McGibbon into the tank. So I'm sure you guys travel a lot. Have you ever been to a new city and wondered, where do I get the really good food? Where do the locals go to eat? Or maybe you thought to yourself, am I getting an authentic experience or am I just stuck in one of these tourist traps? My idea is basically for the Uber of tour guides. It's an on-demand platform connecting travelers around the world with vetted, certified local guides for authentic tours of their home cities.

11:15With just a tap, see any destination through the eyes of someone who really lives there. You can get immersed in the culture, you know, hear the little-known histories, and find the hole-in-the-wall joint, while also economically empowering the real people who make these cities what they are. I think this is inclusive tourism at its best. What do you guys think?

11:40That was Dane McGibbon with Uber for Tour Guides. So with your idea, anyone could potentially be a guide and share what they love about a place. Like, I live in New York City, so I could sign up and bring someone to Steve's Key Lime Pies down by the harbor or give you a tour of the cemetery near my house, which I love to walk in. So, Angela, what do you want to know about Dane's business? The biggest question I have is around competitive landscape. This is a space where there are a lot of players playing in this area. And if I just think about how overwhelmed we all are, how do you get the attention of a traveler given how much things that you're thinking about?

12:21So who do you think are your biggest competitors? I don't want you to list specific companies, but categories of competitors. Okay. I think, you know, without saying their names outright, I think companies that already work in an on-demand type of platform, maybe they get people taxes or maybe they rent people homes on a temporary basis you know hint in they would be best positioned to do this kind of thing because it's basically what they do already but i think what a lot of them don't have is something that is security first like if you're hiring a local tour guide you want to know that you're safe you know you want to know that they'll take you somewhere where you won't be uncomfortable or in danger anything like that And also I think partnerships, local partnerships.

13:10Localization is a lot easier if you know your market, and doing that is easier if you have a partner in the market. I'm already thinking here about the tradeoff between scalability and safety, right? You want to build a big company? That was my next question. Yeah, you want to build a big company. You want to have lots of people come in. But if you have to vet each one and figure out who you trust to take you to a 1 a.m. party in a city you don't know, So that's a hard problem, right, Angela? Absolutely, right? So as investors, we're looking for companies that scale really quickly. And when we hear things that require human intervention, like vetting tour guides, it gives us some pause.

13:49And I want to go back a little bit to competitive landscape. So as an investor, what I'm looking to hear is that we have these two or three or four different categories of competitors. And so one might be local tour guides that you have to just find one-on-one. Others might be audio tour guides. Others might be things like the Yelps and Trip Advisors of the world. So just thinking about the categories. And what I'm looking to understand is how do you stack up against each of those different categories of competitors? So the commercial tours, you're right. This is the established competitor. But my issue with them is that it's so, how you say, so whitewashed.

14:32It's so not authentic. In terms of price, they can be pricey. What this type of platform would do is open it up to the potential guides to a lot of possible people. This could be like students, retirees, what have you, and let them set the price. So, you know, it would probably be value-based pricing based on if they're multilingual or whatever. But at least you would have the option from the lower end to, you know, very cheap if you just need someone who would take you to a nice place to eat for lunch. Or at the higher end, someone who's like a history buff, who knows five languages and has the time to take you all over the city.

15:09That's great. And I'm starting to hear your unique value proposition emerge, right? So I'm hearing authentic. I'm hearing cost effective. I'm hearing personalized. And that's great because I need to understand as an investor how you are different than everything that's out there. Thank you so much, Dane. Thanks, guys. Thanks for having me. Dane McGibbon leaves the tank with a classic conundrum. How does a little guppy with a big idea compete against the industry whales? This wouldn't be a Shark Tank ripoff without lots of ads and a dramatic tease to the next contestant. She spent a soggy weekend in Washington, D.C.

15:47wearing the wrong shoes. I really just toughed it out, and that's when I thought of this idea. The rubber hits the road after these quasi-commercial messages.

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17:00We are back floating around our lukewarm guppy tank. Our first two pitches nailed the classic business school game of taking a popular service and doing it for a different industry. So we had Cameo, but for books. An Uber, but for tour guides. Next up, an actual invention from an actual inventor. Kaylee Hubbard from Albuquerque, New Mexico. Come on in. Your pitch starts now. My product is the Collapsa boot. It is a collapsible rain boot. They would be just like regular rain boots, only the neck of them would collapse, making them more portable and making them easier to travel with so that more people would use rain boots and it would save a lot of people a lot of discomfort.

17:54The Collapsa Boot from Kaylee Hubbard. So this product idea came to you, I understand, from a recent wet experience. Yes, I got the dirty Washington, D.C. rainwater pedicure that I never wanted when I was on a trip there. And I didn't have any rain boots. I couldn't find any that I could pack, and I hate checking my luggage. So I really just toughed it out in my flip-flops, and that's when I thought of this idea. Angela Lee, our Guppy Tank professor, what questions do you have about the collapsible rain boots? Kaylee, this idea is so needed. One of the questions I have is, whenever I'm thinking about a physical product, supply chain is really, really important.

18:41So I'm curious, have you thought a little bit about where this would be manufactured in the world? Right, I have thought about this. And we are capable of finding an easy supply chain for these because the collapsible technology has improved. I mean, I have a collapsible coffee mug. I have a collapsible bucket, collapsible cups. I don't know where I would get it. I would think wherever you make collapsible, you know, water bottles is where we would make them. And only there would be a boot, you know, they're just rubber. So it wouldn't be too difficult. Yeah. And so that's one of the questions that when we're talking to founders, we're looking for kind of that scrappiness in terms of talking to different factories to say, hey, how much does it cost to get a boot made?

19:27How many could I make and all that kind of stuff? And then also factoring in shipping. Yeah, when I trademarked this last week and patented it, they said the same thing, that we need to find like a factory that would make this or something. I cut off the neck of a boot and put one of my collapsible water bottle things in there. Love that. That's like the beginning of it, but right. Another thing I think about when you're building a physical product is the last thing you want to do is to make, 10 ,000 of these and have them sit in a warehouse somewhere. So I'll give you some ideas, Kaylee, in terms of how to test the market to know what are the features that really matter, and how do you know that people are willing to buy these things before you go and manufacture?

20:11One could be Kickstarter. Kickstarter and Indiegogo were created to do exactly this, to say, hey, before I go and make 1 ,000 or 10 ,000 of these in a factory, let me make sure that people want them and what really matters in terms of collapsibility. And so that's one idea for you. That's a great idea. Another idea is to go on to places where people are buying travel gear and maybe do a quick survey and just say, hey, how many of you would buy this and at what price? And so the more people you can talk to on the customer side, but also on the retailing side, the more you are able to then de-risk this idea.

20:49Kaylee, thank you so much. And you've got to let us know if this ends up being a thing. Like, I would order some. I totally would.

21:02Next up, a professional guppy. This Planet Money listener has already launched her business and has been working on it full time for the last three months. She wants the opportunity to help it grow faster. Eleanor Jacobs from Los Angeles is in the tank. Okay, let's talk about something that we all will encounter but often shy away from. Planning for aging and end of life. My name is Eleanor Jacobs and I founded Familial, a digital app that makes long-term planning easier and more collaborative for families. The impact of not being prepared when a loved one passes away can be huge. It can take hundreds of hours and thousands of dollars to sort through everything, not to mention the emotional burden and relationship toll.

21:52Imagine this. If you or a loved one suddenly gets sick or dies, what is left behind? Are your accounts organized? How about that old 401k or the timeshare you bought decades ago? Have you shared the story of your grandmother's wedding band? Familial is a guide to give you and your family peace of mind. Familial covers a holistic set of topics, from healthcare planning and asset organization, to legal document review and household management. To do this, we simplify complex tasks into manageable steps, all in an interactive app that families can use together. other.

22:37Eleanor Jacobs with Familial. I want to be able to picture exactly what you're offering. So if I wanted to sit down with my parents and use your app to plan their later years, what would I see? Is there a form I would fill out? Is it a set of questions? Absolutely. So one of the features you mentioned is something that has resonated with a lot of customers we've been testing with. And we call that feature a discussion guide facilitation. So essentially, it's kind of like a deck of cards. And it takes families through about 30 critical questions that will guide critical conversations for them to discuss.

23:13And what we've learned is it takes the onus off of either party. So neither the parent nor the adult child or whoever the relationship is has to be the person to lead the conversation. You actually get to have this third party lead it. Thank you for creating this really important service. My first question is, who is your customer exactly? And when are you capturing them in this life planning process? Our target customer, when people start to really think about longer term planning, is after they've hit retirement, after they've paid for their kids to go to college, and they're really starting to think more about their own future.

23:53So generally in that 60 to 75 age range demographically. Psychographically, they're people who are more open to new technology and they're people who want to be prepared. They care about how they leave their affairs behind. Love the use of vocabulary. Angela, you, of course, talked about demographics and psychographics in our very first episode this season. Exactly. I'm glad you were paying attention. Another question I had is, how are you going to get to these folks? Are you going through financial advisors, folks like that? What's the way that you're going to get in front of folks to capture them?