#194 Shmoody: Calm for College Students

0:00Welcome to The Pitch, where startup founders raise millions and listeners can invest. I'm Josh Muccio. And I'm Lisa Muccio. On the show today, we have Nate with Shmoody. He's raising$3 million. Shmoody is a wellness app for when you're feeling shmoody. I feel shmoody sometimes. There are a ton of mental health apps out there, Calm, Finch, Headspace, to name a few. But Shmoody is different. Nate and his co-founder built Schmoody for themselves. It's not a quiet meditation app or an overly sincere journal. It's really something they actually wanted to use when they were failing Schmoody. What they're building obviously resonates with people because they just hit$1.5 million in annual recurring revenue on a consumer product.

0:43Which is crazy. But that's not what Nate showed up in the pitch room today pitching. No, no. Schmudi is pivoting to EdTech because universities also wanted to use this product for their students. It's now being used to help retain students by keeping them from crashing out and dropping out. He does have some early momentum on the EdTech product, but will there be enough evidence for VCs to back his pivot? The pitch for Schmudi is coming up after this. But first, we are hosting two events this November, a live show in New York tomorrow, if you're listening the day we publish. And then our big pitch event is next week in San Francisco.

1:24We're recording season 17. Come join us at either event. You can learn more at pitch.show slash events. Support for the show comes from Engine. For you and your team, travel is a matter of business. You know business. Anything you do all day? I'm a very serious podcaster. That's business. Anyway, Enjin is the travel and spend platform that makes it easier and affordable to book and manage flights, hotels, rental cars, and everything in between. And their AI-powered personalization keeps track of your preferences and makes the booking process faster and simpler. More than 1 ,000 businesses join Enjin every month.

2:03Join them and get$500 when you sign up. Start traveling smarter at Enjin.com slash pitch. Welcome back to The Pitch for Shmoody. Let's meet the investors. Charles Hudson with Precursor Ventures. We have 500 companies, so you pick it, we have it. Ellie Barmazel with Perinot. Entrepreneurship is the dance between hubris and humility. Elizabeth Galbut with Sogal Ventures. Not all exits are created the same. And Jeff Cantalupo with Listen Ventures. Do you want this to be a premium brand?

2:46Go for it. Say the name of the company and then clap it. Schmoody? Nailed it. What's up, y 'all? Hello. Hi there. How are you? I'm Nate. Hey, Nate. Ellie. Ellie, nice to meet you. Nice to meet you. Nice to meet you. Hey, nice to meet you. Hey, Charles, nice to meet you, Nate. Charles, how are you? I'm Nate. Jeff, how are you? What's up, Jeff? Good to meet you. So, I'm Nate Thomas. I'm the co-founder and CEO of Shmoody, and we're building the engagement layer for institutional wellness. We know more about how to be well than any generation in history, but we're doing worse than ever. So a little story.

3:25I'm 17 years old. I'm full of promise. I'm an academic rock star at the time. I'm an athlete. I go off to college and I proceed to squander it all. So I have anxiety. I have alcohol issues. I don't know how to ask for help. And it's not until years later that I hit rock bottom. I find the help that I need. I transform my life and I end up working at Goldman Sachs, helping the rich get richer. And well-being - Recipe for mental health. That's exactly right. I learned everything I know from there. And well-being remains an important part of my life and being of service to others becomes my mission.

4:06So while I'm at Goldman, I meet my co-founder, Mike, at a 12-step meeting in New York City. And Mike has built a well-being app that's fun and irreverent. Exactly the thing we would have wanted when we were struggling the most. So we built this app that we loved and other people loved it too. And we grew like crazy. One million users, 4.8 stars. Last year, we did 1.5 million in consumer revenue. Just last month, Apple's app of the day. But a totally unexpected market comes to us, and that's universities. And that's the exact place where I was when I lost my way. So they come to us saying, hey, we have resources.

4:49What we don't have is engagement. We now have 10 university partners, including Texas Tech, Duke, three HBCUs, and 100 % renewal rate. And we're seeing 10 times higher engagement with students. and higher engagement means that more students thrive and less students drop out of school. So that results in direct ROI to the institution. And with higher engagement, we're unlocking data insights that transform how universities respond to student needs. With our new SMS product that we just launched, we now reach 100 % of enrolled students with no download required, becoming the engagement layer for the entire campus.

5:32So we're raising$3 million to help every human thrive. How do you come up with the name? The name Schmooty, because sometimes you're feeling kind of schmooty. Mike, my co-founder, who's dealt with depression, he has a very good friend. One day he calls her up and he says, how are you doing today? And she goes, I'm having a pretty schmooty pants day. And he said, I don't know what that means, but I know exactly what that means. And the whole point is to be fun and irreverent. That's when people will actually use the technology. So walk me through like what that means in practice and how it shows up in your product.

6:12We didn't know the term human centered design when we started. We just wanted to build something that we would use. We like meditation apps. We're familiar with some meditation apps like Calm, but we wanted something that was broader that would help us across the board to take action. That's how things change. So how do we make it engaging? The whole tone and approach of the technology is built with the end user in mind. And what does it feel like to be that person who feels like they're completely alone, who feels like there is no solution and they're always going to feel like this? It is amazing in technology how much of that is lost and doesn't connect with what it feels like to be that person.

6:53So who developed like all this content, how'd you guys test it? How'd you know, like, this is the right tone voice. We tested it on ourselves and our friends. Okay. Mike built it. All of it is based on clinical principles, right? So DBT, CBT share a common principle, which is behavioral activation. When you take action, it changes the way that you feel. So mindfulness, social connection, physical activity, joyful actions like positive psychology. but the tone, we worked with a humor writer early on, who's actually also in recovery. We just tested it with users and we went from a hundred users to a hundred thousand downloads in nine months.

7:34Is that just organic downloads or what was driving this very rapid growth? Yeah, we actually read this book, Traction by Gabriel Weinberg. Oh yeah. Highly recommend. And there are 19 possible traction channels and you can't test them all, but you better believe you should test four or five, including several you don't think will work. And early on, I tried something that seemed out of the box, which was funny memes. I found some meme influencers and I said, hey, you do funny memes about depression, about social anxiety, about being an introvert. Can you do some funny memes about schmooty? Later, I would create those myself.

8:09I was the meme lord in chief for a considerable amount of time. And then that time between midnight and 1 a.m., I was like, I need to reclaim that. Later, we found ways to grow with meta ads on the consumer side. But at this stage, the focus for us is all about universities because they came to us. And there's this huge, huge opportunity where we see a clear path to really scale. And what do those contracts look like? How much are universities paying per student? So our first contract was with Texas Tech for$100 ,000. And we said, we're going to make this real easy. Everyone gets access to the full premium version of Schmudi.

8:50after a year, we said, all right, we're going to dive in really deep with you on this data. You have thousands of students using the app. We had hundreds of students who are what we would call highly vulnerable or at risk. These were students that were coming in and they were reporting moods like hopeless, miserable. And those students were becoming the power users of the app and it doesn't take a rocket scientist to draw the line to those are the students that are likely to drop out and guess what they're losing millions of dollars to retention so when they said oh it's a hundred thousand dollar a year contract and you're helping not just thousands of students that are out there using it but hundreds who are really at risk of dropping out they said this is a no-brainer they renewed for five years they paid up front and built us into their what's called a QEP.

9:45It's a quality enhancement program, which is for their accreditation as a university. Now, since then, we've partnered with some smaller schools too, because we are a mission-based company. So we're not going to turn away. We have a couple of small HBCUs we work with, and they're amazing. We're not charging them a hundred thousand dollars a year. So that brings down our ACV a bit to about 35 ,000 right now, but we have a direct path to take that up to$100 ,000. Who's doing your selling for that as a ute? It's me. And then I do have a sales rep. She's amazing. And we're doing a great job. I mean, we've closed schools like Duke for three years, Texas Southern for four years, Texas Tech renewed for five years.

10:27But the main reason why we're raising right now, we're raising a$3 million round, is to scale sales. Jeff, you were an early investor in Calm, right? Yeah. How were they thinking about it? this early on first how he's thinking about it i mean they they were maniacally focused on the consumer product until they were 100 million plus in revenue before they ever diversified into b2b but they did diversify into b2b largely because they had people coming to them so i think just happening to him a little bit earlier in the curve the engagement issue is i think is very real for these universities and i think that sounds like your product solving it what i'm really curious about is what are the engagement metrics that matter with a student population?

11:15It sounds like the real ROI for them is the vulnerable. And so while you can be for every student, it might not be how many are on it. It's actually about how many are deeply engaged. So what are the, how do you measure that? That's exactly right. So University of Louisiana renewed with us and they just looked at, oh, wow, you have 15 % engagement or whatever. That's literally five times higher than we're used to, renewed. And we said, cool, but let's dive in here a little bit more because what we really want to show with your highly vulnerable users is that they're using the app a lot. Those users are using the app 27 times on average, right?

11:54Which is actually far, far more than what they would ever be used to. The vast majority of apps in our space are used one time. And so when we can show them the resources that were accessed, So how many times are the at-risk students using it? That's a big deal. What are the resources that we're connecting them to? And then what we just unlocked with our SMS product. So we launched this at the very beginning of April. Right now we have 96 % opt-in and we already have 45 % engagement across the platform. This is in 23 days. I'm curious kind of when you're looking at this initial data from universities, from the users that are using the app, what percentage then falls into that vulnerable category?

12:3915 to 20%. And how are universities thinking of this? I know when I went to school, a lot of their counselors are pretty like strapped and it may be you can't even get in to see one for four months, which is obviously not when somebody's highly vulnerable, the answer they want to hear. How are they thinking about that and your product? Yeah. Once we explain our ability to reach those students, that they would never see or that they don't have time to see that this is huge because they can get help to those students and again it's not just what's in the schmudi app it's all of the other resources that are available because they're spending millions of dollars on these resources many of which are completely what were they doing to distribute these resources before honestly a lot of its websites yeah students sometimes don't even want to go to the hub in the app you better believe, Charles, they do not want to go to a website that looks like it was designed in 2005.

13:32Because it was. Because it was. Yeah, it was. All right. I'm going to get personal with you for just a minute, Nate. I was on the cap table of a company that was doing something similar. They've since sunset, but mental health is really personal for me. My dad was my person. He's the reason I became an entrepreneur and investor. And he was agoraphobic. He ran his businesses from home. And so when I think about all of the ways that he was limited because he didn't have resources to help him navigate his mental health journey. This is so deeply personal. And today would have been his 83rd birthday.

14:02So getting to be here with you right now in this moment feels like a little wink and a nod from the universe. But this is deeply personal for so many of us, right? And when I think about, first, the people that we're not reaching, right? So what's the PLG motion within the product itself? How is the product doing the lift to get, if I'm feeling schmoody, how do we give the schmoody bat signal to each other as peers? And then I want to know about your retention, like your 30 day retention, because I have to ask that. Absolutely. So thank you for sharing that about your dad. And the way we think about it, if we can make it more social, that is huge.

14:41We're building a new version right now of friends. And, you know, the other reason why we're raising this round right now is to be able to bring on a new product designer and grow out both the current product. and then also the larger university platform. So the company where I was on the cap table, conversion was great. Seven-day retention was great. Something happened around day 15 where they just couldn't figure out what the nut to crack was, right? So tell me about what's working in your funnel right now. Like what's conversion rate looking like? What's seven-day retention? And then where are we at 30 days?

15:21One thing I do want to make an important distinction on because it's one of the reasons why we're pivoting to focus on B2B is that we actually are not trying to become something you use forever. We just aren't. And I know that that might not appeal to some people, and I frankly do not care. We're trying to help people change their life. We don't have to have people that stay on it forever. This is the opposite of social media. This truly is human-centered design, which is like, let's give people the tools to make change. and get them off of their screens.

16:01Outside the pitch room, that answer perked up the one and only Mike Ma. He wasn't on the panel, but he was still watching pitches. He's always watching. Mike invades the pitch room when we come back.

16:20Support for the show comes from Engin. A business trip doesn't end when the plane lands. According to Enjin's data, 18 % of business travelers spend five or more hours filing expenses after a single trip. Five hours. Too many. Enjin was built so that businesses could manage travel and spend all in one place. Finance teams get visibility before the dollar is spent, not after. You'll be able to set limits per employee, per category, per trip, so you're never surprised by a receipt again. And if you need to cancel a trip, an Engine Flex Pro subscription lets you change or cancel any booking up to the last minute without fees, without question.

17:03Last year, thanks to Flex Pro, Engine customers got$160 million back on travel they canceled. Bottom line, you could be saving time and money by switching to Engine. So what are you waiting for? More than 1 ,000 businesses join Engine every month. Join them and get$500 when you sign up. Start traveling smarter at engine.com slash pitch.

17:28This is the opposite of social media. This truly is human-centered design, which is like, let's give people the tools to make change and get them off of their screens. So I want to probe at this a little bit, right? Because I think there's the first motion of, I'm not in a great place. I need the right support ecosystem to make a change. But as we both know, once you make a transformation, then you have to maintain the transformation. Right. I hear you like you're not going for maximum attention. I like that. But it seems like you go from that to a very opposite extreme where it's like use it once or twice and that's good enough for us.

18:08And I wonder how you split the difference when you think about the product roadmap for that maintenance phase, where it's like maybe once or twice a week. There's something that helps support you in staying in that good place to the best of your ability. So that when inevitably life lives, you know to go back. So what does that look like? Yeah, well, right now I have a notification that Schmoody's checking in right now. Super friendly and funny. We're checking in with notifications regularly. Here's the thing about the new SMS product that's so cool. This is sending a text pulse every one week or two weeks, depending on what the school wants to do.

18:42And this also can drive students who need it back into Schmooty. So the two are going to work together as a flywheel. So we have higher overall engagement and can get the right people into the Schmooty app. But we also can get the right information and the right resources to those who don't need the app. And just a quick clarifying question. Are you guys abandoning the B2C motion altogether? No, it's a good question. we will invest more in it because it's a great sandbox to build the best product. We also have brand awareness. We have 600 students at University of Texas, Austin using Schmudi, right?

19:21You better believe we're in talks with them right now. Western Governors University, a thousand students using it, and we're in talks with them right now. So we're not going to abandon it altogether, but we don't look at that as the main driver of our success as we scale. Yeah, so I'll share where I'm kind of at on this. My godmother was actually a counselor at a university for her whole career. And she unfortunately passed away very suddenly. But at her funeral, over 100 of her students came saying how she was this motherly figure in their life. Many of them said, you know, I was having tons of suicidal ideation and she's the reason I'm still here.

20:03And it was very clear, you know, the impact that I could see that just one person had had on so many. And I think from your early data here, like you've found a scalable way to do this. I also have had some mental health startup failures in my portfolio. Also some that seem to be getting interesting. I can't say yes or no today, but I would love to learn more. Thank you. is schmoody as you think about a platform play and you think about the sms product and you think about the b2b2c strategy is schmoody still front and center as a brand it is although we are actively talking right now about white label not a white label there are possibilities to do that too but in terms of the platform if it's a different name we're calling the SMS product Campus Pulse.

20:58That market has been proven, by the way, there is a company called Ed Sites. They don't do anything around well-being like we do. They just raised$80 million doing just SMS. I feel like half of venture is looking for the Goldilocks moment, right? Not too much capital, not too little capital, just right. And so I want to understand more about that 3 million that you've arrived at. Tell us a little bit more about how you got to that number. And if we were digging into what this 3 million gets you to 18 months down the road, what's happened? It's going to be awesome 18 months from now. Let's just hone in on that.

21:35So right now,$350 ,000 in recurring university revenue. We're going to get that north of$1 million this calendar year,$4 million next year, 12 million the year after that. And that's by doing two things. That's scaling the sales team as well as investing in some top of funnel tools like Starbridge right now is absolutely crushing it in our space. I do have a little feedback on that. So I do have one company that actually returned my first fund twice. It was a university company and the CEO actually led all the sales. So he was past 150. Well, and that's amazing. And listen, you best believe I'm going to be involved with all of these, but can't do it all myself.

22:24I need people building these up, but I do appreciate that feedback. And yeah, I plan to be intimately involved. It seems like you're really good at sales. So yeah, yeah, yeah. We really believe to get to a$3 billion company. There's bigger than an ed tech play, but in the ed tech space, we can get to 50, I believe to a hundred million in recurring revenue. And what's the valuation of this round? 15 million. Okay. Post money. Safe. So I think I have too many conflicts to say yes now. You're really impressive. And you've cracked a bunch of problems I think are hard. And if I can clear these conflicts, I would love to look at making an investment.

23:00What size would you be looking at, Charles? 25 to 50. 25 to 50. Okay, well, we would love to have you on board if you can clear those conflicts. I completely agree with Charles. You're super impressive. I love the push there, which is go on every sales meeting because I think you'll continue to crush it. I love the flywheel that you've built into the product. For me, I think the path you're taking with the engagement infrastructure layer is going to look more B2B in practice as a business. And all I do as a consumer, I just don't think that I'm probably the best investor for you for this next phase of growth.

23:37But I really like what you're building. So I'm not in, but I love to see how you're building it. I appreciate that. All right. So I like a B2B2C. Here's where I feel a little limited right now. I come from product design and doing human-centered design and doing all of the consumer insight piece. I'm a product nerd and I want to nerd out on this. And so it's hard for me when we're talking digital product to not go through all my nerd trappings to get to the yes. Here's what I can say. regardless of whether we do this through Paranaut or this is a little baby Ellie angel check, I will do something.

24:19I cannot give you a hard number right now, but definitely want to participate. Something, yeah. Really happy to have you on board and would love to product nerd out with you. So this is awesome. I have to thank you for building from a place of your pain. Pain is a very, very difficult place to live and it's hard to get unstuck from there. And if you can get unstuck and find a gift in the pain and translate that gift at scale, it's a really beautiful thing to witness. And I really appreciate the fact that you and your team are translating the pain into a gift for all of us. Well, thank you for saying that, Ellie.

24:53I appreciate that. And I do think ultimately that kind of struggle and pain can be turned into a force for good. And it's kind of actually the theme of my life. If I can take the things I struggled with the most and the things I used to feel the most ashamed over and turn that into a way to help others, that's the mission. So thank you. We can't toxic positivity our way out of these problems, but we sure can fight the good fight. And that passion is clear. Thank you. Thank you. I appreciate that. Thank you. So we have another VC who's been listening in. Mike Ma is interested in jumping in here.

25:24Should we scoot? Is that Mr. Ma? Hello. So I'll start. F*** it. I'm interested. We're writing quarter million checks. When you said, I don't care about LTV, I put in the chat, I was like, everyone pay attention. That was a gangster answer. It's gangster. when you said founder-led sales, those two things got me over the S. That being said, I don't love the price. I don't know if I can participate. I got strings. I'm not an easy yes. Ask around outside. I'm not an easy yes. Your reputation precedes you, but a yes means a lot for me. Sure. So I'm in. I love it. I'm not. Thanks, Nate. Thanks. Appreciate it.

26:03Thank you all. Thank you. How often does that happen where an investor comes in from the other room and is like, wait for me, guys, I'm down. That's the first time. I just love Nate. I don't know why. He's fantastic. He's the antidote to feeling schmoody. You know what I mean? You're like, how could you feel schmoody around this guy when he's in this zone? I think the ROI part is quite interesting, right? If you have 150 students at a university that are, you know, thinking of not enrolling, that contract price of$100 ,000,$200 ,000 becomes real cheap, real fast for a university. And that becomes a really quick, like, I don't even care about anything else.

26:50If you just keep four students of mine out of that 150, I've made my money back and some more. Yeah. I mean, I know about you guys, but I've spoken to so many AI mental health apps that just made me feel... Black Mirror. ...Icky. But I wanted to solve the problem, but none of them felt right. And that's why I'm interested in he has such good reviews. He has good engagement. I'm like, what is this product? He tried to describe it, but I didn't really get it. And like Ellie, I'm like, I gotta get my hands on this and see what this magic sauce actually is. I mean, it's definitely marketed towards another generation other than me.

27:29But if the numbers say it works. He had me at irreverent, right? Like, I think that everything has been so soft and gentle, which isn't a bad thing. But at a certain point, it's like, if that's now become the dominant and it's no longer the outsider thing to be soft. Right. Right. So that irreverent piece where like it's either laugh or cry and sometimes laughter is the best medicine. And if you can lean into that feeling, I'm just wildly excited about that value proposition. Yeah. Yeah. We talked to this team where we spent a good bit of time with the co-founder and they've been at this for five years, slogging it out on the consumer side and then made the switch last year.

28:13So it feels like they've done their time like figuring out what works on the consumer piece. And I think that's what excited me despite like the cap table, obviously not being a great price at the moment. Nope, it isn't. However, when he says things like, I don't care about LTV, I'm interested. Those are the people who break curves. Yeah. I don't know if he's going to get there, at least in terms of how I'm saying the curve. But if I don't find out, I'm going to kick myself. That was a fun day. Thank you guys. Yes, you were a great panel, but that's a wrap on season 16. Thank you. Yay, I got to run.

28:48Congrats.

28:54That's almost a wrap on season 16. We still have some bonus episodes coming your way. Anyway, Nate walked out of the pitch room with commitments from Charles, Elizabeth, Ellie, and Mike. Can he win them over in Schmilligence? That's coming up.

29:13This is Advertiser Content from Engin. I'm Christina. I run a startup that facilitates care coordination for major hospital groups. In very basic terms, we want to improve the way patients can communicate and book appointments with their doctors. It's all in service of streamlining telehealth. The irony is that this requires our team to travel all over the country to different hospitals to onboard and train our clients. Two years ago, I mean, it was chaos. Not the service we provide, just the reality of constantly coordinating travel for the employees on our field team. Back then, we were doing everything manually.

29:51Half of our team was booking everything on their own dime and getting reimbursed because they wanted to rack up rewards points. I booked travel directly for the other half of the team, which was tedious and time-consuming. I had this pitiful little spreadsheet with everyone's traveler details, but it never felt like enough information. Every month felt like a scramble to stay on top of everyone's bookings and reimbursements. We just didn't know any better. That was before I found Enjin. The difference is night and day. Enjin handles all the annoying parts of managing corporate travel and saves us money.

30:28All of my employees have their traveler profile details, like frequent flyer miles, TSA pre-check numbers, things like that, plus their travel preferences saved in one central location. and all transit details are completely transparent. We can all see who's traveling where and when, which makes coordinating with clients so much easier. If ever we need a change travel to accommodate our client's schedule, it's not a problem. And we can track spending per person or per department. It's not just convenience. Enjin's Flex Pro offering has saved my company thousands on trips that changed after we booked them.

31:02And Enjin stops out of policy bookings before they happen, not after. I honestly don't know how we ever did it without Enjin. It completely changed how we operate. Imagine what it could do for you. No contracts, no agent assist fees, 24-7 member support. Enjin lets you easily book, manage, and save on every work trip. You're going places. Enjin can take you there. Learn more at Enjin.com.

31:36Welcome back. A few months after his pitch, we caught up with Nate. Nate, hello. It's me. Lisa. And Josh, don't forget about me. What's up, Josh? Nate doesn't want to talk to me. Tampa, so you were the very last pitch at our Tampa event. I'd love to hear from your perspective, what was your experience like pitching on the show? Yeah, my experience on the show was incredibly positive. I didn't know what to expect in terms of how my pitch was going to go. But I had all this evidence of how other people's pitches were going because I was last to go. Yeah, because you were there for all three days.

32:16Yeah. And I was always trying to be out there high fiving people and rooting them on. But of course, in my mind, I'm like, A, I want to raise additional funds here. And B, this is a huge podcast that y 'all run. So I sure hope I don't get out there and sound like I don't know what I'm talking about. you know? So I was, you know, of course, just prepping like crazy. I would go for these walks around the block where I'm sort of rehearsing, you know, like a crazy person, people are looking at me like, why is that guy loudly talking about engagement layers and institutional wellness to no one in particular?

32:47You know, as I walk around the blocks of Hyde Park, Tampa, loudly enunciating. So it was, there was a lot of nerves, I would be completely lying if I said there wasn't nerves going into it. But the environment was amazing. It was kind of electric. And then as soon as I got in there and sat down with the VCs in person and made eye contacts, I felt connected. And that's an experience I usually have. Obviously, I have to pitch on Zoom and whatnot sometimes, and that's fine. But I really value that ability to connect with people, have some rapport. And that just immediately happened. And then it just went great.

33:27I mean, the pitch itself and then the question and answer I felt was really strong. You know, we had this crazy situation where Mike Ma jumps on Mike from the other room. Yeah. So let's start with that. Obviously, your pitch went super well. You got four commitments in the room. Elizabeth, Charles, Ellie, and Mike, who wasn't even on the panel. Let's start with Mike, the one VC who wasn't even supposed to be in the room. What happened? Long story short, Mike did not end up moving forward. I want to say we had two calls and they had great questions. You have this new, very powerful SMS product.

34:03But I think there was a little bit of a disconnect there where Mike didn't fully understand how the two products actually are part of the same engagement solution. Yeah. He kind of looked at them as two separate products. And that's a challenge and useful feedback. So no hard feelings. You are actually the one pass from Mike this season that wasn't because of sales or go to market. So like you didn't get investment, but you got that stamp of approval from the guy who doesn't think anyone is good at sales. Congratulations. But how does that feel? Thank you. No, well, that does feel good. Mike's obviously like a tough nut to crack.

34:43Like I know that that's his reputation. And I can tell that like, he's not just saying stuff. He's not just spouting compliments to people that he doesn't believe in. No, not at all. I think he saw that I've been able to do founder-led sales and build a sales motion in a tough space because obviously higher ed is not easy. And I think Mike saw that I'm able to articulate the value in a way that resonates with people. And so we're going to keep building on that on the sales side. All right. So next up, Charles. You had a pretty classic Charles call after the show. and at the end, you tried to upsell him.

35:22I'd love to ask you, you know, what you would need to see to go in at the higher amount. You mentioned that you could go in maybe at 50K. I mean, we'd love to have you on board at 100K if you could, but what would you need to see? Two things. One is like we have a bunch of other portfolio companies that are doing follow-ins right now. So part of this is me just trying to manage, like what do we have available? And then most of the checks I write on the pitch are in the 25 to 50k range so 100 is a little bit outside of that band but like you know certainly happy to write it if everything lines up okay always be upselling a bu do you always try that move no not always but in the case of charles he seemed actually quite receptive yeah because when i brought it up he said yeah no that that seems like that could be an option.

36:12He didn't have a ton of follow-up questions. And so I really thought like, all right, cool. This is kind of a slam dunk. And I love what Charles is about. He's kind of no BS. So ultimately, Charles decided not to come in. I was surprised. I will say that. Because it just really, it seemed like he wasn't asking the same kind of challenging questions that I would expect from somebody that was on the fence. He seemed like he was on board. Yep. That's a pretty classic Charles call. You think things are going well and it sounds like they're going well. And then either two months later, he's in and he's wiring the money or two months later, he's out and you're like, wait, why are you up?

36:51Yeah, no, exactly. Next up, we have Elizabeth Galbut. What happened with her? In fairness, Elizabeth was the one on the pitch itself who was really a maybe. she hadn't said for sure. So I thought, hey, my job is to see if I can win her over, but never got to have that next call. So I pushed for a meeting and said, hey, let's follow up. And once or twice, she wrote back saying she was apologetic that she'd been so busy and this and that. But it became clear that she was super busy and it wasn't a priority for her. So ultimately, I just had to accept that that maybe was actually a no. So three passes that all kind of felt various forms of vague.

37:36How are you feeling at this point? At this point, good, because I really had a strong connection with Ellie in the pitch room. And in my view, this is the perfect investor who understands the traction of the company, who understands the sales motion, but also deeply believes in the mission. And to me, that is the sweet spot. I'm a big believer that mission on its own isn't enough. Good intentions alone do not a great company make. But it can be such a powerful driving force if you're executing well. And so I think Ellie saw both. And I knew from the nature of her commitment in the room that she was really bought in.

38:22And she continued to be. Yeah. Ellie was your final commitment in the pitch room. And you jumped on a call with her and your product person, Laura. You guys got to nerd out about product together. What was that like? That was great. Laura is exactly the person to be geeking out on product with Ellie. And Ellie, I think, really loved that. I know Laura did on our team because she's a product nerd, self-admitted. How was the rest of the Ellie diligence process? It was good. The only area of uncertainty with Ellie is that she is a big believer in the power of Shmuti as a consumer app. Ellie also understands that we're, it's not a full pivot to just B2B because we have this amazing consumer app, But also right now, there is this opportunity to grow B2B.

39:21We had to talk through some of that. And what's fun is we'll still be talking about that with Ellie here now that she is, you know, spoiler alert, she is on board. Now, I understand during the diligence process, you also tried to hit Ellie with the upsell. How did that go? I did. and it became pretty clear that Ellie was sticking to her guns with the$25K check. We are happy to stay with our$25K commitment that we made in the deal room. I mean, that's two out of the four investors, the ones that you seemingly got pretty far with. You tried to upsell them. So it sounds like this is pretty standard fare for you.

40:04If and when it seems like an appropriate thing, 100%. Oh my gosh. Salesman Nate. I do believe that when we go into a new school or when a new consumer downloads us, we are having a major impact in a positive way. So it's like, why wouldn't we put our best foot forward in terms of the product that we're offering in a sales context and talking to an investor? And they can always say no. How often does the upsell work? With investors, it has worked. I'd say probably less than 50 % of the time. Yeah, because as a VC, you have your check sizes. You have your ownership targets, and you model that out.

40:51And so you have to stay true to your portfolio construction, as they say. So I would be surprised if it was very effective. But, you know, another way to look at it is like, what is the downside of just putting that out there? Because any VC that would be in any way offended or like hold it against you that you asked for more, it's like, who are you investing in? Don't you want to invest in people that truly believe in what they're doing and are willing to be bold in getting it out there into the world, right? Right. So I think even if you get a no, it still sends that strong message of how much you believe in yourself and what you're building.

41:29So on the show, you were trying to raise$3 million. What has happened with the round since the show? So right now we've decided to split it into two tranches and do$1.5 million now and the rest perhaps later in the year. And we'll see whether the valuation will stay the same. We might think of that as becoming a different round. So we've raised over 800K as of right now, but we're putting that 3 million target kind of aside for right now. You already know this, but for anyone doing the math at home, 150K of that is from the Pitch Fund. That's right. So we're excited to be in as well. Which we are very grateful for and couldn't be more excited to have you all on board.

42:17All right, we got to get this out of the way before we can recap the season for you. No offer to invest in Schmoody is being made to the listening audience on today's show. But if you invest in the Pitch Fund, you get ownership in all the companies we invest in on the show. We're open to new investors through the end of the year. To learn more, go to the pitch.fund.

42:40We did it. Yeah. 12 pitches, season 16. I'm ready to go on to the next season, Lisa. Let's go. Although before we do that, I have to say we had some pretty good episodes this season. We did. Starting with your pick. Yes. Natalia from PITS, who raised 1.5 million as a result of the show. We rediscovered Rohit's evil side during Super Cool Earth. Church AI got the first ever commitment from a VC in a group chat. A$1 million term sheet from Draper. We backed back-to-back drink companies, WonderAid and Jubilees, so our kids can get jacked. We had some life-changing hardware with Hapware, helping blind kids flick people off.

43:26We had the brightest light the pitch room, or any room, has ever seen. And to finish it off, We had schmooty, but it's hard to feel schmooty with all those investments flying around. The total raised on season 16 was over$3 million, between the VCs, angels, and the$1.2 million invested by listeners via the pitch fund. And we're about to head off to SF to record season 17 and do it all over again. But before that, we've got some bonus episodes coming your way. An interview with a founder who bootstrapped his business for almost 20 years before reluctantly taking VC money. and our live show from SF Tech Week.

44:05Next week on The Pitch. Almost all of them sounded the same. We're a$10 billion fund, we're out of here and here's our thesis and here's what we did. It just all felt very cold and transactional. It was pitching you on them, like I should be impressed. And frankly, I probably should have been, but it didn't have the same allure to me, right? I wasn't Silicon Valley still. I didn't get the whole thing. 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.

44:41And 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. Go to pitch.show slash apply. We'll see you next week in the bonus room. That was dumb.

45:00This episode was made by Josh Muccio, Lisa Muccio, Anna Ladd, and Enoch Kim, with deal sourcing by Peter Liu, John Alvarez, and Phoebe Sun. Music in this episode is by The Muse Maker, Breakmaster Cylinder, The Firmware Rebels, Our Many Stars, Imagine Nostalgia, Soul City, Dreaming of Stars, and Peter Jean and the Runaway Queen. The Pitch is made in partnership with the Vox Media Podcast Network.

45:33Support for the show comes from Engine. Engine is the travel platform that takes the hassle out of business trips. Their AI helps match travelers with hotels and properties that are the best fit. That means the more you use it, the better it knows you, and the faster it can book exactly what you need. More than 38 ,000 businesses and groups have joined. Now it's your turn. Get$500 off when your business signs up. Start traveling smarter at engine.com slash pitch.