#183 Pitz: Car Repair as Fast as an F1 Pit Stop

0:00Rohit Gupta: Welcome to The Pitch, where startup founders raise millions and listeners can invest. I'm Josh Muccio. And I'm Lisa Muccio. And on the show today, we have Natalia with Pits. She's raising$2 million. This is my favorite type of founder. The type of founder that I want to invite on as soon as I talk to them on my first call. The type of founder where you're like, I don't have any favorites, but you're my favorite. I have a lot of favorites. Every season. Every season, we have to have one instant Lisa yes. And this is my instant yes. And so far, you have a pretty unbroken record. I do. Let's go through Lisa's immediate yeses.

0:38Gemist, 2023.

0:40Rohit Gupta: Nectar, 2024. Mappa, 2025. Natalia, Pitts, 2026. Don't give it away. Okay, we don't know yet. Okay, Pitts. What are they doing? It's like a voice AI that can diagnose a car for a mechanic. If you go to a repair shop that uses pits, they're going to be better at diagnosing it the first time. And they're going to get their parts delivered potentially within an hour and a half after diagnosis so that they could repair your car in 24 hours. So you're not without your car for like weeks. And it's basically a whole operating system for the mechanic as well. Will Lisa's pick hold up for season 16? Will your untarnished record remain untarnished?

1:23We shall see. But I have faith in me.

1:29Rohit Gupta: The Pitch for Pits is coming up after this. But first, we are hosting two live shows this season. Not one, but two. One at SF Tech Week in October and another one in November in Brooklyn. We're also hosting our big pitch event to record season 17 in San Francisco. go. You'll get to hear all the pitches live and even ask questions that might get featured on the show, like the one from Yev later on in this episode. To learn more about any of these events, go to pitch.show slash events.

2:05Elizabeth Yin: Growing teams need a corporate card built for more, something that doesn't sacrifice speed for control. Introducing the American Express Corporate Cashback Card. Get 1.5 % cashback on eligible business purchases, advanced spending controls, and real-time visibility, plus intelligent expense management. Get started at go.amex slash Amex Corporate. Terms and cap apply.

2:34Rohit Gupta: Welcome back to The Pitch for Pits. Let's meet the investors. Mike Ma with Sidecut Ventures. I got strings. I'm not an easy yes. Rohit Gupta with Future Communities Capital. Sloshing money around all over the place. Michelle Kwok with Draper Associates. We were deep in the cut for three hours. My brain just like lit up. Jesse Middleton with Flybridge.

2:57Elizabeth Yin: I'm so sick of people that are building stuff for building stuff's sake. And Elizabeth Yin with Hustle Fund. My best deals have been the ones that I've committed on the spot.

3:11Rohit Gupta: Note that Elizabeth already invested in PITS in a previous round. PITS! Hi, everyone. Hello.

3:19Elizabeth Yin: Hi. How are you? Hey. Natalia. Rohit, good to meet you. Good to see you. Hi. Nice to meet you. Michelle. Hello. Okay. So my name is Natalia Salcedo. I'm the CEO and founder of PITS. We enable 24-hour car repair across any type of car, across any market. We are an Alexa-like platform. Through voice, we enable diagnosis, quoting, credit, and a marketplace that basically can deliver different spare parts in 90 minutes. I'm a serial founder. This is my third time doing a company. I have scaled companies from zero to billion dollar valuations. I also have scaled companies from zero to 1 ,000 people.

4:01And at my previous company, I fell deeply in love with this issue, not just professionally, but also personally. Because after speaking with more than 3 ,000 mechanics, I understood that the issue was not the mechanics, it was actually all the ecosystem that is around them. So I'm 10 years old, and with my dad, my mom, and my two older brothers squeeze in the middle of the car, and basically the car breaks down in the middle of nowhere. This is Armero Colombia. Do you know where Armero Colombia is? Exactly. Never been. My dad is fully stressed because he's wondering three main points. One, who's going to repair this car?

4:40Second, how much time is it going to get to get the car back? And third, the cost that it's going to get for our family. Who's going to take me to school? Who's going to take my brothers to university? That's, of course, cost that is not on the budget, you know? You'll imagine that 25 years later, this issue shall be solved. The reality is that it doesn't. It's not solved at all. After speaking with these 3 ,000 mechanics, I understood that the issue persists across the globe. The industry has two main pain points. The first one, 8 out of 10 diagnoses are missed or not fully correct. That's crazy.

5:14And I mean, imagine you asking a mechanic to memorize more than 360 billion different types of diagnosis. I mean, I cannot even remember what I have for breakfast today. And then the second issue is the part sourcing. That can take you between two to 10 days to find them and two to 10 days just to receive them. So imagine you being an Uber driver without a car for 20 days. How much debt are you going to get? Insane, right? So something that I'm really proud today is that Pits has been 10 months old. At this moment, we are doing more than$1.7 million in ARR with more than 1 ,400 customers. So we've been, as our name says, going pretty fast.

5:59And our main point as for example, Shopify became the infrastructure for the e-commerce, we are becoming the infrastructure for car repair. By the end of this year, we're expecting to get to more than 8 ,000 repair shops, opening also a third market that is going to be the state we operate now at Mexico and Brazil. That's why PITS is at the pitch today. Nice. Awesome. Thank you. Cool.

6:25Elizabeth Yin: Can you talk a little bit about the business model today and how it might evolve in the future? So the ARR you have that's paid for by the mechanics and what's the sort of mechanism there? Yeah. So we have different monetization models. The first one is, of course, subscription to the mechanics that it can go between$50 to$300. And then we have like this special or tailor-made solutions. For example, if you have more than, I don't know, 50 repair shops or you're, for example, OEM, they can pay around$5 ,000 or more. And then for the marketplace, where we deliver also in 90 minutes, we cover a take rate.

6:59And also the sellers, they pay for ad monetization. And then we're opening also the credit part. That's really small by the moment. We were just running some tests, trying to see, okay, how we can enable more, the NRR get to 100 more or less. So we're opening the credit at this moment. Can you speak a little bit to the diagnosis aspect? How are you able to support that? Is there like hard tech involved? So one of the main things is that we have alliances across Mexico and across Brazil and across also some parts in India, where basically we gather this information from mechanics, from a school of mechanics or universities, and we collect this data.

7:36We label them, we place also the sounds, and that's how we have all our proprietary data. And then how do you do the diagnosis itself? Yeah. So imagine you're a mechanic. You receive a Nissan Sentra of 2013. I always use this example because it's my mom's car and there is no power in the world that is going to make her change her car. Why? I don't know. Imagine you have a Nissan Sentra. It arrives to the repair shop. You as a final customer tell the mechanic, hey, it's throwing gray smoke. And then the mechanic is going to talk to Pete and he's going to say, hey, today I received a Nissan Sentra of 2013.

8:10It's throwing gray smoke. Then we are going to ask you, please send us the VIN number. So we run all this data and then we're going to tell you just two different types of diagnosis. It's throwing grey smoke because the injectors are dirty or perhaps because the chemical balances, they're not the correct ones. So here we reduce the diagnosis that it can happen between in an hour or two to just five minutes or less. And then we break like the barrier of lack of trust from the final customer because we tell you today you bring your car because it's throwing gray smoke. But your car also has these other issues that you need to be taking care of in this amount of time or X amount of kilometers, depending on the age.

8:53Mike Ma: Can you tell me a little bit about the go-to-market? Talk me through both increasing ACV and then how you want to expand different markets beyond Mexico, Brazil, etc. Amazing. So we have expanded it by really nice go-to-market, and this is how we have scaled this fast. I don't fight with the industry. I work with the industry. So what we do is we talk to the sellers, the ones that sell the auto parts, and basically we show them all the benefits. So they start cataloging all the SKUs, and then they receive benefits for all the mechanics that they actually manage to turn on on the platform. You start with the parts distributors.

9:30Yes, exactly. But just to give you an example, the smallest distributor, they can bring 100 mechanics. And Natalia is really good at GTM. Actually, that was a big reason we invested.

9:43Elizabeth Yin: Can you walk me through the customer experience? Yeah. So our regular user uses pits around 4.2 times per day. I come from working in the industry, and the average was four times per month. and the main part is that they start using the assistant. Of course, you're speaking with mechanics, you know, people that don't have much contact with technology. So they start just asking, what is the weather? It's going to rain today. What is the hour? And they start like that the first week. And after they build that trust with us, saying, ah, it works, you're right, it's that time, yeah, then they start using it for the diagnosis.

10:22And that's week two. After using us for more than 3.5 weeks, they arrived to the 4.2 uses per day.

10:29Elizabeth Yin: Got it. And what about the actual customer-customer, like their customer? So actually we don't tackle the consumer. We're just for mechanics. Yeah, but I'm just trying to understand, like, you started with 80, 90 % missed their partial diagnosis, right? Is that number improving or repair times shorter? Yeah, yeah, yeah, of course. So we enable 24-hour car repair. So what we are doing, basically, is increasing their productivity by 3x. I mean, there are so many stories that I can tell you. For example, there is one particular that I have in mind. Just a regular mechanic in Latin America, a repair shop, can give food or income to three different families.

11:10And the income that they receive is between$5 ,000 and$7 ,000 per month. And actually, one mechanic called us, like, saying, this is amazing. This is the first time that a person in my family is coming to college. We're going to be able to pay it because the productivity that we had increased by 3x. He was having like around$6 ,000 per month, more or less. They were doing$18 ,000.

11:34Elizabeth Yin: And so that's mainly through decreased diagnosis time as well as credit. The diagnosis time and the part sourcing, because we also have a marketplace that is fully integrated with us. We have more than 1.7 million SKUs being cataloged that we can deliver in 90 minutes. So does that mean cheaper and possibly faster? Yeah. Not necessarily cheaper, because what happens is if you need the part right now, you want to pay X amount for that part. But we also manage to have lower prices if you can wait for the piece.

12:09Mike Ma: I've looked at this space. Like, auto parts is the most inelastic market. Yeah, because you need it. You need it. And the opportunity cost when a car's up on the bay, people do not care about the car price. They care about just speed. And the consumer will pay it. Because it's like, well, what else am I going to do? Yeah, I need my car. I need my car. So you just pass that cost to the consumer. Exactly. So we have repaired more than 9 ,000 cars, more or less. And one of the amazing parts is this, how people are willing to pay more for just having the car faster. because, I mean, we kind of teach the mechanic saying, hey, you show the final customer.

12:45If they want this price that is going to take 7 to 15 days, or if they want the car today, this is the other big price. At least 90 % of the time, they always pick for the highest one. When you say you don't work on the consumer side, you have the marketplace, though, right? And the consumers go on the marketplace. What do you mean by... No, the marketplace is between the distributors or manufacturers of the parts to the mechanics.

13:09Mike Ma: It's a B2B market. It's just a B2B market. It's a B2B market. Yeah, because what's happening is if I open the market to regular customers, it's like when you go to the doctor and you say, hey, I already diagnosed myself. I need ibuprofen. So please send me this.

13:23Elizabeth Yin: Yeah. Can you come back to go to market? I just wanted to double click on the, you start with the distributors. They may have hundreds of repair shops. Are they selling this for you to the mechanics? Are they saying, hey, I have this new thing. this is how you should find parts for me? Exactly. Okay. Exactly. And how much work is that for you? I guess just convincing them to use it, to explain it. I mean, these are, you mentioned the sort of mechanics are not necessarily AI native. They're not super tech savvy. And so they get a distributor, calls them and says, call this number instead. Yeah.

13:55So when we begin, we begin like Bible sellers, of course, saying, hey, this is Pits. It takes around a week, two weeks to just get the mechanic. But then with the sellers, I thought, okay, we're going to go to people that tend to have negotiations on around, I don't know, two to three months. And actually we have been closing huge negotiations in just one week or less. Because what they see is, okay, how can we sell parts faster? So our assistant also works on the other side and tells them, hey, you have an opportunity here. To give you an example. We cataloged more than 3 ,000 clutches from just one seller that was based on the south part of Mexico City.

14:39And he just collected these 3 ,000 clutches by, I don't know, eight to 10 years more or less. He didn't have any idea what type of clutches he had. He puts on, and like in 10 days, they were all gone by just one customer. And this was crazy because this customer was just 10 kilometers away. And then I was like, this might be fraud. I want to go and speak, you know. So I arrived and I spoke to the customer that purchases them. And he was like, this is crazy. I've been purchasing these clutches, bring them from China for the past 10 years. And they take around 40 days to arrive. And we just deliver them in 90 minutes.

15:24Mike Ma: What geographies do you want to be in next? You've mentioned you asked, pardon me, asked why.

15:34Rohit Gupta: Natalia's proven the market in Mexico and Brazil, but what makes her so sure the same playbook will work in the U.S.? That's coming up.

15:47Elizabeth Yin: At T-Mobile, the new iPhone 18 Pro is here with a big leap in battery life, and you can get it for nothing up front. With so many reasons to choose T-Mobile, you'll want to talk about it. I heard at T-Mobile, you can get iPhone 18 Pro for nothing up front and get$1 ,000 off. Pass it on.

16:05Rohit Gupta: Pay nothing today. No taxes, no fees, nothing down. Pass it on. Hey, Mickey, pass it on. iPhone 18 Pro has the most advanced iPhone camera ever. Pass it on. At T-Mobile, you can get iPhone 18 Pro or nothing up front. Pass it on.

16:23Elizabeth Yin: At T-Mobile, get$1 ,000 off the amazing iPhone 18 Pro with no trade-in needed. With 36 monthly bill credits when you switch to T-Mobile on a qualifying plan. If you cancel entire account before receiving all bill credits, credit stop and balance and required finance agreement is due. Example,$1 ,199.99 iPhone 18 Pro, 256 gigabytes. Bill credits end if you pay off device early. Qualifying credit, new line, cord-in, and service. $85 more per month with auto pay plus taxes and fees required. $35 device connection charged due at sale. Visit T-Mobile.com.

16:49Mike Ma: What geographies do you want to be in next? You've mentioned you asked, pardon me, asked why. I understand the playbook. I'm curious where, what theaters you want to run this playbook in. And if the playbook works in other countries the same way. That's an amazing question because I actually make trips to different parts of the world. And trying to understand if the issues that we were having at Mexico, I know that happened in Colombia because, of course, I'm Colombian. If they happen at Brazil, so I went to Brazil. If they happen in Argentina, happen the same. Then I was here at the States and I was like, I need to go to Silicon Valley.

17:24I'm going to find the holy grail of this. The same. Then I traveled to Spain. Then I traveled to Morocco. And the issue is consistent. And they go to market. It's the same. And in order to answer your question, why the States? It's because we've been receiving so many organic leads, like around 200 per month since December. They were like, hey, we love this. We need this. The only trick that we have to do is just train our assistant with the different slangs that, of course, mechanics uses in each type of country. Can you speak about your growth numbers, like when you started and then just like in numbers, how that's increased over time?

18:03So we started on May of last year. We're now 11 months old. We closed last month with more than$148 ,000 in MRR. I'm expecting to close this month with more than$170 ,000. So, yeah, that's the growth, basically.

18:18Mike Ma: Can I ask you what you're raising? So, we're raising$2 million. We already have committed$1.6 million. Do you have terms on that? Yeah. Yeah, yeah. Can you share them? I just asked if I had terms. That's fair. That's correct. That is what you asked. That's correct. Fair point. Exactly. What are? Okay.

18:36Elizabeth Yin: Would you be willing to share the terms? And the answer is yes. That's it. Done. $20 million post-money valuation. And what did you raise previously? So in total we have raised around$4 million. Okay. What was the last valuation? We did it in two different timeframes. So the first one was around$10.5 million valuation. And then this one. And you're based in Colombia now or? No, I'm based in Mexico City. Mexico City. I'm Colombian, but I fell in love with Mexico 10 years ago. Cool. Are you going to stay there? Or what are you thinking as you continue to expand? I go where sales go. So if the state is running, I'll move here.

19:15I mean, when I arrived to Mexico, I arrived because I was relaunching a company and I was supposed to be there for just two weeks and I started there for 10 years, you know? How big is your sales team? Per country is around five people.

19:29Mike Ma: If you had to break up the work of your sales team, how much is spent on distribution acquisition and then how much is spent on repair shop acquisition? Yeah, so those are two separate teams. Three of them, actually, they work on just acquiring sellers. And then the other ones are just receiving inbound.

19:47Elizabeth Yin: The inbound and the onboarding for the mechanics, I would think that's fairly painless. And what's the onboarding look like, I guess? Yeah, so the onboarding is around 24 hours, more or less. It depends also on how big the repair shop is. And then for the sellers, it's a little bit longer because, of course, you need to coordinate more people. It's an onboarding of more than 72 hours. Got it. These two things may be connected, but your previous business that you built, I think you mentioned you were selling into this same market or where, can you explain a little bit of that? And then does that connect to your current team?

20:21The previous company that I was on, I didn't fund it. I was just the CEO of that company. We were doing a marketplace for spare parts. So when I took it, it was around$100 ,000 in ARR. And in 12 months, we achieved around$15 million, more or less.

20:36Elizabeth Yin: Got it. Are you working with that team again on this or? Some of them. Okay. Yeah. Some of them, I mean, the highest performance, they come with me. Smart. Don't hire the low performers. Exactly. That's such a good strategy. That's really good advice.

20:50Mike Ma: You should learn a LinkedIn post on the... Jesse Middleton. He's... Yeah, there you go. I'm on it. What does the competitive landscape look like? Yeah. So our competitors are highly fragmented because we have high competitors on the marketplace Then we have competitors that they can go on the CRM, competitors that they can go then on the diagnosis. That's not many competitors on that part. But yes, it's like some are really focused in just small parts of the business.

21:19Elizabeth Yin: How large is your team and what's your burn? My team is around 36 people. So we have around 12 people on the product and tech side. Then each country has their own sale. The burn that we're having, we closed last month on around$60 ,000 in burn.

21:35Mike Ma: So you're operating profitably. Yeah. Why are you raising this round? So, I mean, if we wouldn't raise a round at this moment, we can keep growing. But I mean, that will be like super flat growing. I want to go big or go home. We don't want to lose the mode also on opening the states because we are receiving so many leads that they're getting lost. As in you want to open an office in the states, build out a sales team in the states. Exactly. Exactly. How are you thinking your burn will increase if you go to the States? It's not going to increase that much because Brazil is going to do break-even this month.

22:08So basically, we're going to transfer the burn that Brazil was doing to the States. If we're going to have an increase, it's going to be around$10 ,000 to$15 ,000 additional to what we're having.

22:18Elizabeth Yin: Where do you start in the U.S.? We've been receiving a lot of inbound here in Florida. It's, of course, one of the biggest ones. Then we also have Texas. So we are running the test on which should be the first city that we should open.

22:31Mike Ma: The distributors are nationwide. Yeah. Why don't you just go through the distributors, then go over the leads? Why do you have to decide it a priori? The way that I do the go-to markets in this part is we go first with brands. And by going global with brands, we already know who are the main distributors and then who are the minor players. We go first with the brands. We know who are top tier. than if this top tier actually make distribution directly or not to the mechanics. Some distributors, they don't go directly to the mechanics, so there is a lot of intermediation. Just a fun fact in the middle of this, when an SKU is being built, the cost is, let's say,$100.

23:13When it's placed on your car, the price increases by 4x due to all the intermediation that you have. So we're trying to reduce all the part and just, hey, this is where the opportunity is for you, brand. This is where you should be opening new repair shops. This is where you should be doing this, this, and these other things instead of going directly to the consumer that is not the one that is going to be repairing the car. Does this still work with luxury cars? Because a lot of those have very specific parts that come from that manufacturer. Yeah, there is actually one specific brand that it's the hardest, but there's just one particular brand.

23:49It's top tier. I don't know if I can mention it. but the small part of the market.

23:54Elizabeth Yin: Yeah. So it doesn't affect your market size. No,

23:57Mike Ma: no. I mean, is this the part where we're like, we're looking for commits? You should do it. Yeah. Look, I've built a lot in this space. I know a lot about this market. It is a massive market. Your cap, I assume this is a note, is on the upper bound. That being said, your track is impressive. The things that you solved are things that I failed to solve. when I took a run at this. So I would love to have a conversation and dig in for sure. For sure.

24:27Rohit Gupta: The foxhole?

24:29Mike Ma: Well, that's the thing. I mean, our deal is that we work with all of our founders for 30 days. You like us, we like you. We're writing quarter million checks. This cap is tough for me. I've done one deal at this level. But if you're down for figuring this out, particularly on the distributor end here in the States, I have some thoughts. We can always talk about that part. If you're the correct person, that's always something that I'm looking for, you know? Yeah. Figuring out parts and starting with the shops was a wedge that I never figured out when I was thinking about this. And there's been a lot.

25:01Mike Ma: I think no one's taken a good run at auto repair here. There've been a whole bunch of capital poured in. It's been super expensive. This company is at an inflection point. I think this insight about the parts is key. Yeah, I built something called Partmazing, which I've spent time in shops being the auto parts manager, like ordering pads and struts. And I understand how hard this problem is. When I started in this industry, I didn't know how to change a tire. Now, if you want, I can change the oil of any type of car. So I'm your girl here. Yeah. And I love being with the mechanics. I mean, I've been with them always on the street.

25:39So I actually know the pain. Well, I wish that I knew how to change the oil. I know how to change the windshield fluid. I thought that was pretty good. Yeah, I mean, I love your energy. It seems like you're a hustler. It seems that you're like out there really selling. I think that's pretty awesome. At Draper, we're definitely looking at industries that haven't changed or been disrupted in 20 plus years. Sounds like this could be one of those. I'll say I like know basically nothing about cars. No worries. It took me three years to be at this point. Yeah, I watch F1. and that's kind of, you know, for a lot of reasons.

26:15Those are the ones that she's not outsourcing.

26:17Elizabeth Yin: That's what I was wondering. I was like, does that work for those cars? I can tell you a fun fact about it, and it's on our cap table, there is actually some Formula One drivers. What? I didn't know that. What? And then if I join, I can meet them. Everyone's in now. She's in. She's wondering. Is it Franco? Do you like Franco? I love music.

26:40Mike Ma: The wire has to clear first, and then you can't. Same with, I really want to dig in more because I don't really know the competitive space and that's kind of where I'm lacking. For sure. But I like that Mike really likes the business model. Usually there should be an anti-signal. That sounds like, yeah, it sounds like he knows what he's talking about. I just met him an hour ago. You should trust him.

27:04Elizabeth Yin: And Elizabeth. You should trust Elizabeth too. Yes. But I think overall you have this really good energy and hustle and passion And if it's true that your business model is able to be plug and play and copy paste everywhere, that's huge. Your growth is amazing. And if there's a hard tech aspect to it and where the proprietary mode there is, because one of the most probably the data acquisition, the way that you're using the data. So I think that's one of the more interesting parts of what I was thinking would be more Draper aligned. I think it's really interesting. So I've invested in a few marketplace companies that sort of are the SMB, B2B marketplaces.

27:42Elizabeth Yin: And so I think it's actually a really good go-to-market motion and wedge that you've created here. I think you're in the right place now. But as you get bigger, consumers may start to recognize this as a value. And there may be a moment where you do allow in the consumer to. That's in the roadmap. Yeah. Not now. But for 2027, that's in our roadmap. Just because we don't want the final customer to come and say, hey, this is my diagnose. Right. No. We just want to basically control the demand saying, hey, you already placed this sound. So this is the repair shop that you need to take your car. That's for 2027.

28:16First, we need to correct the industry.

28:17Elizabeth Yin: Totally makes sense. So I'd like to start by committing. We do sort of$50 ,000 checks pretty early through our next wave vehicle, but you're almost at the end of this raise. We're typically writing sort of at a seed stage, a couple million dollars or larger. and whether it's in this round, which you're almost done raising or the next one in three months when you crush it on the launch. But I like to start with the$50 ,000 commit into this deal and go from there. All right. I'm already in there. She's like, I'm doubling down right now. Yeah, super interesting. I'd love to learn more. Probably have some intros for you as well.

28:54Amazing. I mean, that's something that I really appreciate. Intros are like gold for me. Me too, to F1 drivers.

29:02Elizabeth Yin: This would be the second deal I would do with an F1 driver. So I'm just, you know, that's. Do you know one too? I know like five of them, but yes. People got to bring that up a little more. And you're definitely in. She's in the network you want. Exactly. I mean, that's why we're called pits. I mean, I'm super fun Formula One. I was watching the documentary of Ayrton Senna. I wasn't even thinking about it. Yeah. So basically this guy is 1989. And this guy, just by listening to the sounds of the car, he could diagnose and say, hey, this is what is wrong. And he will go and repair with the mechanics.

29:33And I was like, if this guy can do this just by ear in 1989, there should be something in 2025 at that moment that should be doing the same. And I started doing the research and nothing, nothing came up. And I was like, okay, we can do it.

29:48Elizabeth Yin: Do you think there's a world where at some point a mechanic that's powered by pits is a thing, right? Like if I'm a consumer, I can go to this mechanic or I can go to one where I know they're a little more. Yes. This is why we're preparing first day industry before we jump into the final customer. So then in 2027, all the customers should be asking, hey, I want a mechanic that is powered by pits. When you go to Mexico or Brazil, now we're putting like stoppers saying this is powered by pits. So we are preparing for that. So you are going B2B to C? Yes. But in 2027. Yeah. Yeah. I mean, that's pretty soon.

30:26Well, she moves fast Yeah We move like a pit stop Believe it or not

30:32Mike Ma: I'm less excited And I'm a consumer person Consumers don't care I mean, the prosumer market cares But Sally Suburb They don't care But if something's actively wrong with her car Wouldn't she want to just go on this marketplace And immediately find something? Would you? Yeah, I totally would That's the thought that you're going to be repairing it? No, I don't know how to even do the wheel, the tire thing.

30:56Elizabeth Yin: To your point, I don't think it's a consumer that cares, right? It's B2B that cares. No, but it depends on the framing, right? Because I think we're now in a mode where consumers are self-diagnosing everything. It's like, oh, I have a mole. What is it? Like, I'm not a doctor, but I'm going to try to self-diagnose. And same thing here. Like, my car is broken. This thing is happening. What's the fastest way I can get it fixed? How do I fix this? I may not fix it myself, but I want to know where should I take it? Yeah. I would love to use it, you know, when a curb runs into my car. For sure. It just happens.

31:27But the thing that I'm thinking is like, okay, so this actually happened recently. I needed new brake pads. But I think even before that, you know, it's like, oh, there's something wrong with my brakes. Now what do I do? It's not even what brake pads do I order. It's like, what should I do? And then know where to take it. And then there's that credibility and trust. Because when I go to an auto repair shop, I know nothing about cars. So I don't know if they're telling me a lie. I don't know if they know what they're doing. I have no idea unless something else goes wrong. Are they always upselling you for things that you don't need?

31:57Exactly. So basically when you receive the, you as a final customer, that's the only interaction that we have is you receive the diagnose for all the transcription that the mechanic did with PITS. So you would get the direct report of what your car actually needs. I would love that. I get upsold all the time. That's trust.

32:14Mike Ma: Look at all this. You can append Carfax. You can do a distributed ledger and do a token for every VIN. You can see the provenance of every single decision or thought about this card. That would be awesome. I'm out.

32:31You don't want to be in on Pitch Token?

32:33Elizabeth Yin: I'm all right right now. I'll just stick with the B2B product. It sounds awesome. Pitchcoin.

32:39Rohit Gupta: Michelle, how much would you be in for? Probably like$150 to$250, I would say. And Rohit, what are you in for? That's a good question.

32:50Elizabeth Yin: Probably 50 to 100 based on her size. Awesome. All right. Amazing. Good job.

32:56Mike Ma: Good job. That was awesome. So mic down, nap out. Goodbye. That's awesome.

33:02Elizabeth Yin: Great to meet you. Wow.

33:06Rohit Gupta: Okay, so one listener question is from Yev. He was asking, like, when you look at the current market mix of the business in Colombia and Mexico, how important is their current traction versus what you're looking at when they open in the U.S.

33:20Elizabeth Yin: or India? I would have been not in if they were only going to be across Latin America. We've backed a lot of companies down there and it's really fragmented. You don't like win all of Latin America. Typically you kind of win like a country. And so I discount that a reasonable amount, but I think all of that gives her such a massive advantage to launching in larger markets, whether it be the U.S. or India or somewhere else. So I think about this as future potential. I think those two markets will look very tiny in 12 months. I mean, she's moving super fast. So I'm going to say 12 months, they're going to look tiny compared to what she does in the U.S.

33:54She'll be able to raise quickly and easily if she has a U.S. market. Yeah. I imagine it was also super hard to coordinate in those Latin American countries and it'll be easy to coordinate in America. So if it's true that she's able to plug and play, that would be amazing.

34:09Mike Ma: The distribution is much more consolidated here. So if her leverage point is the parts distributors, she's going to have more scale per distribution calorie span.

34:19Elizabeth Yin: So is this one of the few companies where the U.S. is a monolith?

34:23Mike Ma: I'm not having to say monolith, but there are large regional distributors and their interfaces are terrible. Like I use them to order parts. They're literally like PlaySchool, my first website. And it was horrible to try. And that's probably why they're willing to do it because they're good at like buying parts, putting them on a shelf and making sure that this, this pad is different than this pad. And, but the e-commerce end was. And this era makes it more possible.

34:51Elizabeth Yin: Like you could now take a video of everything in your shelf and let AI pull out everything. And so like, there's a different moment in time.

35:00Rohit Gupta: She's very impressive. Are there any downsides to this business? It seems like the way you guys analyzed it, it was very quick and easy. Yes.

35:06Mike Ma: I'm not a huge fan of the cap. I mean, just, I mean, there's a selfish, there's a selfish aspect of it. There's a scenario where one of the large distributors, the part they're bad is software.

35:16Elizabeth Yin: Yeah.

35:16Mike Ma: There's an argument that they could become good at software and they will have, they'll own up the distribution and lower part prices and they could be margined out.

35:26Elizabeth Yin: Yeah. My biggest worry actually was, I think selling to small and medium businesses can be tricky. and market to market can be very different, right? Like down there, she speaks the language, she's native, she's hiring a native team there. Like when you get here, there just may be some things that happen in the market where it's like they don't trust the outsider. They don't like, they're looking at another competitor in the space that's kind of promising something similar. It's not as blue ocean, if you will. And so someone else out there is saying, we're also building a parts marketplace in this era and we're gonna call the suppliers.

35:58Elizabeth Yin: And like, how many of those will you upload your inventory into and send someone to? That's going to be the question. I used to think that because when she started this business, obviously she wasn't, she didn't really have any market. And in fact, when she told me that the U.S. was on her roadmap, I was pretty against it in the beginning. Now I'm for it. But I think part of it is, I don't think she speaks Portuguese either, but she has like knocked the Brazilian market out of the park. So she hires well in the local markets. And I think that's going to be a big key for the U.S. market.

36:32Rohit Gupta: Well, Mike, I can't wait to see you in the foxhole underneath the car, changing the Volkswagen. I'm okay doing it. Yeah. That's a wrap. Really impressive. Yeah.

36:47Rohit Gupta: Natalia walked out of the pitch room with four commitments. The only person who didn't commit was already invested. So Lisa's pick is looking pretty good. Will it hold up in diligence? That's coming up.

37:06Mike Ma: New and exclusive holiday decor just launched online at the Home Depot. Check out the viral Grand Duchess collection with smart holiday lights you can control from your phone. Easily customize the twinkle across trees, wreaths, and garlands to match your holiday vibe. Create stunning light effects, then switch it up with the tap of your fingers. Even the man in red will be impressed. Shop the holiday decor you want online only at HomeDepot.com.

37:38Rohit Gupta: Welcome back. A few months after her pitch, we caught up with Natalia and her little doge dog, Mija. Where are you right now? Mexico City at my house, finally. You've been traveling a bunch? I've been traveling a bunch. And you take Mija everywhere with you? Yes. Yes, I take Mija. Does she do well on planes? She loves them. I mean, she just goes to sleep. At the beginning, she's just sitting down on my legs. So she's seeing everyone and waiting for everyone to pet her. Even like in three flights, the pilot has said like, we know that in the seat, blah, blah, blah, there is a small and beautiful dog, but please continue.

38:23Rohit Gupta: Please do not pet the puppy. Exactly. That's so funny. Well, I'm so excited to catch up. what was your experience like pitching on the show? Oh, it was amazing. I mean, I thought it was going to be like a stress moment, but I mean, the investors and you guys making it so easygoing. And of course, the people also on the team. So I find it amazing. That's awesome. We heard Sarah from MAPA convinced you to come on the show. Yeah, she did. She was like, I don't care what you're doing, but you have to be there.

39:02That's amazing. Oh, my gosh. Do you go to other pitch competitions or that's not your thing? No, that's not my thing, actually. Well, you did really well for pitch competitions not being your thing. Yeah. You got four commitments in the room. It was quite an amazing way to kick off our Tampa event. Let's start with Jesse. What happened with him? Yeah. So Jesse committed with$50 ,000 and that was amazing. It was an easy process. He's really excited about the company. He's like, I want to then invest more depending on how the company is actually going. So that's a really good outcome.

39:40Rohit Gupta: So he signed and wired? Yeah, already. He was the first one. Oh, really? Jesse was the first one. Wow, stepping it up. Jesse was the first one. So next up is Michelle Kwok with Draper. She was interested in investing, but I think mostly interested in meeting F1 drivers. As am I. Yes. As everyone. Did you hook her up with Carlos Sainz? No, not yet. Not yet. She was more into Franco Colapinto. Oh, okay. Okay. Well, then I'll take the connection to Carlos. Yeah, I'll take that. No worries. We can do it. So then what happened after the show with Michelle? Yeah, so with Michelle and with Raper, I mean, we were doing follow-ups, but I think the company was not a fit for Tim because he drives a Tesla.

40:33He's a main investor there, and he still doesn't seem how electric vehicles can make a fit with Pits. So at the end, the investment didn't happen over there, but we still have a really good connections and also pretty good feedback that I received. So that makes us just growth.

40:49Rohit Gupta: What was Tim's feedback? well it was most like if he's done break also the context where he's based and the context where he lives around i mean if you have a san francisco bubble exactly the san francisco bubble even in san francisco i was also speaking to an investor like a week ago and he was like i have my tesla on the repair shop since a month ago oh i was like different experiences but Yeah. Something that really surprised me in your response over email, you talked about how people now are actually holding onto their cars longer. Yeah. It seems that the third party parts and third party repairs market was actually growing.

41:37It is not just growing for gas cars, but also growing for hybrid, growing for EVs. It's growing around 5.7 % across the world.

41:49Rohit Gupta: Per year? Per year, yeah. Huh. That's so interesting. Yeah. So Draper Associates passed. Next up, Rohit Gupta. What happened with that guy? So with Rohit, he's doing a check of$50 ,000. Cool. He helped so much then for some other investors to join the company. For example, he presented me to... Mike McCombie. To Mike McCombie. Oh, yeah. Also then his help is invested at the company too. What? Yeah. How much? How much? Around$600 ,000. Get out. But then Mike Camacombi is also investing$250 ,000. Oh, my gosh. So through that one intro from Rohit, you raised$850 ,000? Yeah. Okay. Now, finally, we're in the foxhole with Mike Ma.

42:41Rohit Gupta: So you had a pretty normal follow-up call with him where you pitched his partner, Chad. And then you had a call where you extensively nerded out about auto parts. The transcript of that call is 43 pages. I hope you learn a lot. So tell us about that call. What was it like to talk to a VC who knows the car space so well? Yeah, he's really passionate about it. So it was actually so easy to speak about it. And also, it's really nice when someone understands the pain, but also has tried to build it. That was amazing. We also met in San Francisco, and we had another big meeting over there. He introduced me to Maria.

43:22Maria, that was the person that he wanted to make this company also with him, like 10 years ago. So he has shown me his original deck. He showed me like three or four times about how he wanted to build this. Yes. Was he jealous that you could figure it out and he didn't? He was like, I'm so mad that this hasn't success, but now I'm happy that you actually managed it.

43:45Rohit Gupta: Okay. So I don't know how many meetings you had with him, but I'm curious, like, what was your foxhole experience like? Well, I know that everyone, it's around 30 days doing the diligence. I was like for just two meetings. You only did two meetings? Yeah. We just did two, maximum three meetings. And then Mike was like.

44:05Mike Ma: We're excited to just proceed with the investment in Pitts. And we don't need to do more than 30 days. I saw everything I needed to see from an operator perspective. This is out of thesis for us generally in terms of where we do. We've only done a couple seed investments where we've had some sort of unique circumstance and extraordinary conditions. And we think Pitts and you are extraordinary founders. And extraordinary means extraordinary in the most literal sense of the term. That's it. I didn't know the foxhole could be abbreviated. I was the first one ever. Wow. To skip it. How much did he invest?

44:44$200 ,000.

44:45Rohit Gupta: Awesome. Wow. So on the show, you were raising a$2 million round. Yeah. And you had$1.6 million committed when you pitched. Did you close out the round? I did close the round and I oversubscribed the round. How much did you raise in total? $3.1 million. Whoa. Nice. Yeah. Yeah. All over subscribe due to the pitch. I mean, you had something to do with it, too. Also, the pitch fund invested$300K. So thank you very much for allowing us to be part of that round. No, no, no. Thanks to you. I mean, I couldn't be more happier to having you on board. Well, thank you. We're very excited to be a part of it.

45:29Rohit Gupta: You're the first check out of fund, too. Amazing. So what's next? Moving to the U.S.? Yes, perhaps. Yeah, that's actually on the plans. In three more months, I'm just waiting for some documents to just be ready. But yes, in Q4, we're going to do the launching of pits on the States. When I launch the States, of course, then I'm going to be the most intense person in the world. Okay, prepare myself. Exactly, exactly. After your pitch, I found you in the event space. What do we call that? We'll call it the pitch viewing area. Yeah. And you told me your true ambitions for the company. Yeah. Which you did not say in the pitch room.

46:12Rohit Gupta: Are you open to sharing those here? Yeah. So my true intentions with the company is to be the first company led by a Latin American woman to ring the bell on Wall Street. This can open doors to so many Latin American people and so many women founders. I come from a city that is called Bucaramanga in Colombia. that basically people don't know how to pronounce it and people don't know how to locate it on the map, you know? So, I mean, showing people like, hey, if a person from this small city can do this because I don't come from a wealthy family and showing everyone that this can be possible, that dreams can come true.

46:51Maybe this wasn't my dream when I was just a small kid because I wanted to be a veterinarian. But after I understand that the animals can die on the table, I was like, I don't want to be a veterinarian anymore. Yes, I mean, things can come true. And I didn't find my path until I was around 30 years old, you know? So, yeah. Yeah, that's awesome. That's so cool.

47:21Yay! I did it again.

47:27Rohit Gupta: I'm happy for you. Your record remains untarnished. Thank you. So what do you see in these founders where you're just like, yes, we have to invite them on the show? So obviously I love a strong female founder. And I think that there are people who want to build a company and then they go looking for some problem to solve or something to build. And then there are people who experience a problem and like are innately motivated to go solve that problem. Mission versus mercenary? Yes. Ultimately, I think what I see in her is the motivation that she wants to make a way for other female founders to do what she's doing.

48:10I'm looking for people that are, one, humble enough to be a good leader and people want to follow. But also, if she's pursuing something that's greater than herself, that makes her an excellent leader as well because people will want to join her in that mission and build that company with her.

48:27Rohit Gupta: You know what I see? What? I think that you have to be insane to want to build a billion-dollar company. Oh, yeah. Because once that first offer comes in and somebody wants to buy you for a couple hundred million dollars, that's going to look pretty nice. So I think the founders who say no to that and go big, big, they have a reason other than money to go that big. Yeah. Of course, every founder could just reverse engineer this and be like, yeah, I'm going for a billion dollar company because I want to be the first person from, you know, Wichita, Kansas to build a business that IPOs. But obviously with Natalia, it feels like this is genuine.

49:10Rohit Gupta: This is her. I mean, she said that to me when the mic was off afterwards. Like she's not flaunting that this is her desire. Yeah. It just feels like such an obvious yes. And you see that even with Mike and his foxhole here with Natalia. It was such an obvious yes. He like nixed the whole foxhole. He would say he completed the foxhole. It did its duty, right? Right. The foxhole confirms what Lisa's intuition always knew. Glad you were right once again, Lisa. Thank you. Congratulations. You're four for four. Yes. Can't wait to see season 17's pick. Yeah. But first, we have all of season 16 ahead of us.

49:49Rohit Gupta: And I promise that these companies are amazing too. I have some favorites in here too. You always do. No offer to invest in pits is being made to the listening audience on today's show. But did you know we have a venture fund where we invest alongside the VCs on the show? When you invest in the pitch fund, you get ownership in all the companies that we invest in on the show too. We're open to new investors through the end of the year. To learn more, go to the pitch.fund. Next week on The Pitch. We're building modular industrial gas plants starting with CO2.

50:23Mike Ma: Why do you guys care about that? Because we were really worried about climate technologies. They're not deploying as fast as we want. Around$80 billion has gone into carbon capture, and 80 % of them actually failed.

50:35Rohit Gupta: That's next week. Subscribe to The Pitch on your favorite podcast player so you don't miss future episodes. You can watch full-length versions of every pitch over on our Patreon at The Pitch Uncut. And if you're a founder raising a pre-seed or seed round, apply to Pitch at our next event. It only takes a couple minutes to apply. Just go to pitch.show slash apply. We'll see you next week in The Pitch Room.

51:22Elizabeth Yin: Vox Media Podcast Network.

51:33Mike Ma: New and exclusive holiday decor just launched online at the Home Depot. Check out the viral Grand Duchess collection with smart holiday lights you can control from your phone. Easily customize the twinkle across trees, wreaths, and garlands to match your holiday vibe. Create stunning light effects, then switch it up with the top of your fingers. Even the man in red will be impressed. Shop the holiday decor you want online only at homedepot.com.