AI Revolution Gains, Non-Consensus Startups & Prosperous AI | E2104

26:59Yeah, it would be purchasing, probably. Purchasing is the title. And then the company, if I were to think about the company size, what is the size of the company that would embrace a tool like this today? So we're kind of narrowing in here in our little discussion. who is the ideal customer and the title is procurement or purchasing great what's the company size what's like the typical name of a company like this are there lighthouse customers in this space give us an idea of the size of a company that would use this yeah so we look at companies um probably over 50 million dollars in materials uh they just so we can have that the negotiation and leverage ability of quantity and okay so that's describing how much they purchase a year.

27:47So if you're purchasing under$50 million a year, saving 5 % or 10 % on$5 million in sales a year isn't a giant number, but saving 10 % on$50 million or more is a huge number. We're talking about$5 million in savings. That's something worth using a tool for, yeah? Absolutely. Okay. What type of companies are these? What do they call these companies that you see? Yeah, so they fall within, we say infrastructure because they fall within organizing like large development projects where they're organizing a lot of things. And you can imagine anything from gasoline to lumber to steel to these types of items that go into their physical goods that they're building.

28:31Got it. So this would be a company that's building infrastructure. That means they're building homes, offices, I don't know, malls, strip malls. They're building something in the real world, which typically if you're building something that uses lumber, it's probably a house of some kind. It's a structure, correct? So this is for people who build structures. They could be building a mall, Mall of America, you know, or something to that effect. But they have to be ordering enough items for a tool to save them money to make sense. So how do you charge for the product? This would be the next question, Alex, that we want to understand as investors and just people trying to build a mental model.

29:09Now we know the size of the company. We know who is going to make the purchasing decision to buy Prosperous' product. and we know why they're going to buy it because they want to save money and they want to go faster. Perfect. How do you do this for them? Yeah, so we look at their internal databases and what we found is a lot of like ERP systems, procurement softwares are disconnected and fragmented across all their ecosystem. Many times these customers are trying to do gross margin analysis inside of Excel. They're fumbling over setting up BI tools, especially in this world where most of these people are non-technical.

29:45So we want to give them a purview of how to run these analytics, how to get these analytics without that technical lens. And then from there, we go and look at, okay, we see these category of materials. How do we source these materials better while protecting our gross margin? So they have an assumption of how much they're going to pay, but then they get the pricing back from all of these material providers. And they're usually like, oh, actually, this is 10 % too expensive. I'm eating away. I'm having a ton of gross margin erosion. So I need to go and negotiate on this price a little bit more.

30:15So we're looking at all of those systems and really carrying out that full process all the way to delivery. At launch, the entire company runs on Notion. If it's not in Notion, it doesn't exist. If you're a startup, you need to sign up for Notion. N-O-T-I-O-N. Notion, Notion, Notion. I love Notion. I use it every day. My entire team is there making sure that our workflow is perfect. Instead of buying SaaS product, after SaaS product, after SaaS product, we put our CRM into Notion. So we have a database now with tens of thousands of startups. If you want to understand what Notion is, Notion is the all-in-one team collaboration tool that combines simple stuff like note-taking, document sharing, but also project management and all these database templates.

30:57Still one price, but one login and all the data is synced and you have one source of truth. This is why I love Notion. Everything's in Notion. Search for the name of a company, search for a project we're working on, find all the pages written about it. That's one of our rules. Right first culture, super important. Amazon does a right first culture. It makes the stress in the company go down. It makes the efficiency go up. The number one thing people complain about in every organization in the world is our communication could be better. Well, Notion solves all those problems. I love Notion. Notion.com slash twist to start for free.

31:33That's a pretty good price. I want to thank my partners at Notion for coming up with a price that I can get behind. F-R-E-E is the price for you if you use the following domain name, notion.com slash twist, take the first step toward organized, productive work and a productive life today at notion.com slash twist. Prosperous does also include market data. So you can see where your prices come in compared to your kind of current market norms, right? Yes. So we do look at market data and we also look at the internal data that these organizations have, what they've paid in the past, what they paid on other projects.

32:06But then you have to go into some of the essence of at quantity. you're always going to get a better deal. So you have to understand what that affects. And then you can't just take a commodity price or a spot price and expect it to be the physical good price. And the ERP systems, when people have these ERP systems, they're talking about NetSuite. They're talking about SAP. They're talking about Microsoft Dynamics 365. Those are Odoo, I guess, is another one people use. Is that another vector for you to find these customers if they're using an ERP system and they're in infrastructure and they're in purchasing, now we've got kind of a thread here.

32:47Yeah? Absolutely, yeah. And we're looking even right now just because competing with an Oracle or an Odoo is they are giants, right? Yeah, you're not going to compete with them, no. No, not right now. And we are actually going to be an orchestration level over the ERP, so we're not saying we're going to replace an ERP at all. We're going to be an orchestration level that operates like a human decision maker would, where everything is not just a discrete workflow and we are able to look at all of those, how we're going to operate in their business. Do these platforms have third-party app stores and plugins and which one, you know, would that be a vector to kind of get into these systems?

33:25Yeah. That's something that we've considered. The problem with add-ons is they don't usually communicate as well as you had hoped. So we want to avoid running into those challenges while trying to get our... All right. I think we understand the business pretty well. And you've got, this is year two of the startup, I think. Where are you at? Yeah, we're coming into year two, but I've been building since April of 23. Got it. So you were in the laboratory. When did the product launch? How many months ago did you have your first customer using the product? So we'll consider that as like the starting pistol.

33:56When did your first customer start using it? Yeah, first started launch April of last year. And then we took on our first customer shortly after in June. Got it. Okay. So this June will be one year of customers using the product. And you've got just ballpark how many people actually really using the product. How many customers are active? Not we've had this debate here on the pod recently, not trials, not faking it. Just is there one customer who actually uses it every day? Two, three. How many people are actually using the product every day, every week? Yeah. No vanity metrics over here, Jason.

34:29So we're working with three companies right now about 12 users. Got it. Okay, perfect. And you're learning a lot from them. You're bear hugging them, as we talked about in the accelerator. You went to the accelerator and Founder University or which one? Yeah, Founder U and the Launch Accelerator. Okay, great. So this was my thesis when we started Founder U was there were a lot of people who were in the laboratory, not yet incorporated, so we could meet them there and then come to Accelerator. So just briefly, which cohorts did you come to? And maybe just give us a minute on how the programs impacted your ability as an entrepreneur to get this business stood up.

35:03Yeah, so FoundryU, we were in cohort eight, and then we were in LA 33. I think that as we were going through FoundryU, working with your team, which is absolutely phenomenal, I will say, the guidance that they provide and the push to achieve something great in a three-month period as we're going through that process, really pushed our team to one, come together in an office. And we just started working in the lab every day as much as we could to hit those milestones within that three months. And that's kind of just carried on into this year. We've seen the progress in customer outreach. We have 38 companies right now that we're talking to just over the past six months and really just hunkering down and making sure this is a product that fits in the market, finding those things and understanding how we can fundraise to get this dream become a reality.

35:51Got it. Amazing. So that's where you're at. Great progress. I think one of the important things to hear in all this, Alex, in the takeaway, when you hear me interviewing a founder and kind of getting my framework built here is getting in that office with the product team and grinding it out is very powerful because you build up that energy, right? And then additionally, when you're part of one of these programs, and you know, it's not just ours, it could be Y Combinator, it could be Techstar, any number of these are great. What it does is it kind of gives you a framework, I want to try to accomplish every something every week.

36:25And I'm in this accelerator to accelerate, I might as well make the best of it. So those are all great things to hear. And it's great that we have been part of this. Alex, yeah? I want to give Mariano just to turn it around because I think the idea behind our new Office Hours format, Jason, is to let them grill you. So I want to spin these tables. And Mariano, please talk to us. Yeah, Jason, I have a great question for you. And right now we've seen a lot of success in getting into infrastructure and construction accounts. We're starting to see a pull towards aerospace, which is slightly different.

36:59But what the similarity that we've seen among those two markets is they all go to bid for every single project that they do for aerospace. They're required by the government, much like construction for every single product that they build and really want to understand what you think about moving into a new industry and understanding if we should focus on both or should we try to choose one and hear your thoughts around that. Okay. So that's a great question. A lot of times you define an ideal customer profile and another customer shows up and, you know, they want to use the product. And now maybe they have slightly different needs set.

37:33So it's going to there's going to be a cost to going after that. Right. If it was no cost and they're just buying the same product, if it's Slack and, you know, company A and company B both use Slack the same way. Great. but if company B is a finance company and they need to have ticker symbols and Bloomberg integration and this integration all of a sudden it's like oh god to sell into that group we've got to get our SOC 2 set up we've got to shout out to Fanta we've got to do all this heavy lifting and so there's some friction to going after this second category yeah? Yeah. So I guess the question is how much friction?

38:08Is it like a couple of dozen hours of developer hours or is it like we have to redo the entire code base we have to So let me just ask that question real briefly. Is this a heavy lift to work with this new vertical or is it a medium lift or a light lift? Yes, it's definitely not starting from zero. It's actually a pretty light lift because the way that you use the platform is pretty much the same. But you're right. Some of the challenges will be the compliance, right? CMMC is a$200 ,000 compliance issue that we have to go through to audit. And that's a little bit more challenging over a year for a young startup.

38:41So that would probably be the biggest barrier to entry. However, there's no software companies that have CMMC compliance at the current moment, so it becomes a moat potentially. Got it. Okay, so I nailed it on that one. There's going to be some compliance lifting, some work, some expense. If you have 10 more customers in the existing vertical and they're ready to go, you said you had 38. If you think you can close 20 % of those, seven or eight of them, and those are going to come in one every two weeks, you might want to get that done first because that's going to cover some percentage of your burn and show growth so that when you go raise around, and I think you're considering raising, so if you're going to go raise, that's going to look better to that group.

39:22And you can say, and as part of this million dollar raise, 300 ,000 of it is going to be to set up and stand up the second vertical. Great. And the question is, how different is the vertical and how much lift is it? This one seems like medium lift, I would say. Low hundreds of thousands of dollars to put it online. But the bigger problem here, Alex, is it takes you away from that first group, which are layups. So if you have the open shot, you take the open shot, like in basketball. If you have the layup, you got to take that layup and just get those points on the board early in the game. You may not want to be throwing Hail Mary passes or whatever.

40:02So yeah, this is like one of those tough questions. I, you know, I'm, I'm a fan of like taking the easy money and showing growth for the next 10 weeks, getting to some critical mass in that first customer base before you take on a second. The example would be Airbnb, Airbnb. They kept saying, do experiences, do boats, let people rent their lawnmowers. You know, it was the sharing economy was what Airbnb was. And they did a really good job of saying, you know what, the next best thing for us to do is to launch in a new market with the same product. And they were just super disciplined. Alex, you can look up when did Airbnb Experiences launch and when did Airbnb launch?

40:43I'm going to guess that there was five years between those two, at least five years. And so if you think about that, you're a startup that's under a year in market. They took five years minimum, I think, to launch their second major product line, which was Experiences. It was eight years. Okay, thank you, Alex. eight years. If you look at Uber, the time between Uber drivers and then Uber Eats, I'm going to guess that was also a very similar five years. Obviously, they could do that, but there was a lot of lift, a lot of lift, same drivers, same cars, but you had to get the third part, the restaurant inventory online, a lot of work.

41:21So they left it to DoorDash for a little while, then they launched a second one. So it's the time between. So Alex, what did you get that number two so yeah so uh uber launched uber cab in 2010 and then uber eats which was uber fresh to begin with launched in august of 2014 okay and then went standalone in 15 so four to five years perfect so if the two top companies we can think of from the last cycle launched their second product lines in four and eight years you know this is not a new product exactly it's just adding a new customer base, but it's similar. So this might be more analogous to Uber Eats, and not Uber Eats, but which is a totally new category that uses the same infrastructure.

41:59This might be more Uber Black going to ride sharing, which was a two or three year journey. You want to be thoughtful about this, not waste too much time and resources. And if you're raising, if you're the founder who's raising and you have new customers coming on, when you're talking to them now, Mariano, we have three customers using the product. You start talking to a seed fund to lead the round for, you know, 750k. And now you're in week three of discussions with them, and you've had two meetings. Oh, and you added a customer. Hey, by the way, let me tell you about this new customer we just onboarded.

42:31Their name is blank. They have 75 million in wood purchases and whatever and sheetrock. And you can talk to them and we're onboarding them. Boom. Now you've got a third more customers. Then you add two more. So you go from four to six people using the product. And you've got this person who's given you a valuation and they put in the 750k and you want to fill in another 750, wow, this thing is a growing startup. So to be showing growth while raising, chef's kiss, the raise is going to go a lot better. No growth during a fundraising process. You know, people are going to be like, oh, why aren't you growing?

43:05You didn't have any customers. Okay. You don't have momentum. So I like going with the momentum, unless you think that first customer base is not going to grow. No, Jason, I think that's exactly where my thoughts have been over the past few weeks is the aerospace industry, they move a lot quicker than maybe construction. Construction likes to take their time. They like to evaluate. They like to understand the technology. Maybe they just started using computers two or three years ago. So that is a challenge for us in terms of the adoption. Whereas on the other side of the coin with our aerospace customers that we're talking to, they're ready to go.

43:37And their sell cycles are looking to be almost half of what the construction is. So we're using that to carry out the growth, show growth in the company and show that there's a need just in purchasing overall across a lot of different industries that we can target into the future, but this would be one of those first takes. All right. So this is an obvious, I think, decision for you. Just understand the impact of it. If you do go with aerospace, you're going to be slowing down to speed up. You're going to be slowing down, you got to pull the car over, change the tires, and then get back on the track.

44:09So you have to basically say, do I have the resources time runway to pull the car over into the pit, change the tires, you know, whatever amount of minutes that takes and get back in the race, you'll have to make that decision. Not an easy one to do. And then if you do it and you get back on the track, what happens if aerospace doesn't sign up? Oh boy, now you got to get back into the pit, change the tires, maybe a quick change a row and, you know, get back to the construction company. So you really will understand this by talking to the customers. And then, you know, the funding environment, it's waking up right now.

44:45So I'm sure you're getting a decent amount of meetings with the, you don't have a problem getting meetings, right? Not at all. Okay. So you're getting meetings. Great. So then the question becomes, you know, you can be opportunistic here. If you do get really great traction, you can actually bring this up with your investors. This would be a credibility building exercise. You say to them, you know, we have this other group, they're knocking on the door, Prosperous, hey, we want your product, but we don't have the resources to service both groups. A frisky investor might be like, oh, we have the ability to give you resources.

45:22You should start that up. Here's 750K. Here's the valuation. Let's rock and roll. So you'll get that in the meeting. So I would bring this up with investors. You know what investors love? When you ask them for advice. Ask for advice, get money. Ask for money, get advice. It's a classic trope, and it is true. Alex, any final questions here or thoughts? I was just curious about this major ACV differential between the two markets and if that comes into your thinking at all, Mariana, because I don't know if aerospace companies are, on average, much larger and therefore potentially more lucrative. And I thought that would be an interesting angle to throw into the conversation.

45:57Yeah, the ACV of the aerospace companies, they do have a lot more gross margin to experiment with. So that's something that we have recognized through these initial conversations, looking at the data, those type of things. It sounds very appealing if you have pull larger ACVs and faster sales cycles. Average customer value is ACV for those people wondering. And then Mariano, just before we let you go, what's the URL and what's a role that you're hiring for or thinking about hiring for that you want to shout out here on the pod? Yeah, great question, Alex. So prosperousprocess.ai, you can find us and you see everything that we are up to within our product.

46:31And right now I am looking for a phenomenal full stack engineer who wants to work for a fast growing startup. Talent is super important to us. We are meeting up pretty often and we're hiring for this role here in the next month or two. So if you're interested, please reach out. we're looking for people who have founder founder experience we're looking to join a quick startup and understand uh what the market is like on this side of the house and where are you based we are in denver colorado perfect so if you happen to be in if you happen to be in denver you get to come to the office and have that exciting experience uh which would be amazing great city to live in great skiing uh and uh yeah just great food scene everything great in denver so So congratulations on that.

47:15And yeah, I'm really excited to be an investor. And thank you so much for joining us for Foundry University and The Accelerator. We've got a number of companies that have done this playbook, Alex. Were you incorporated, by the way, Mariano, when you started Foundry University? Were you unincorporated? We weren't incorporated, but there was a lot to learn still. Got it. Okay. And that's the thing with the curriculum that we put together. We tell people, or people report back to us, I knew half the curriculum. I'm like, which half? They're like, this, this, and this. I'm like, which day you know is X, Y, and Z.

47:45And then I'll say to another founder, how much is the curriculum you know? I knew 60%. I'm like, great. What didn't you know? And there'll be like G, H, Q. And I'm like, okay, this is really interesting. People come in and they know how to do a cap table, but they don't know about IP assignments. They know how to raise money, but they don't know how to hire. They know how to hire, but they don't know how to design. It's just across the board. People have little pockets of things they don't know. and one of the great things about this founder university we created is we can fill in those information gaps and those knowledge gaps so quickly that founders are like yeah i know how to clean the rifle now yeah i know how to storm the beach they just learn these little tactical things did you learn anything tactical or fill in any of those gaps that you can mention mariano between the two programs that were helpful to you as a founder i'm just curious myself the biggest thing that we learned is how to iterate amongst your your customer base without breaking the current processes.

48:41And that's a challenge, right? You can build in a vacuum, but nobody's going to pay for something that you only know is good, right? So you have to listen to your customers, have to design and create for what they want. Yeah, this is so key. At the end of the day, startups are pretty basic. You build a team that builds a product that embraces some customer group and delights them, makes their lives better, less painful, more exciting, more effortless. And if you're ever wondering what to do as a founder, you wake up on a Friday and you're like, what should I be focused on? It's like, make your team a little better, which you just did by calling out what you're looking for.

49:19Or maybe make the product a little better. Or maybe understand your customers a little better, which is basically the customer discussion we've had between construction and aerospace. So you're doing the right things. Anytime you're working on your chores and you're doing things other than those three things. And chores do come up. You got to do some legal work. You got to do some accounting work. You got to do some HR work. You know, the chores suck in a startup. The more time you're doing chores and not those three things, team, product, customer, you are really probably making a mistake as the founder and you got to get back to the core three.

49:54All right. Great job, Mariano. Thank you, Jason. Thank you, Alex. Wow. So exciting. I like this new feature, Office Hours with JCal. Does fundraising count as a chore? Because it doesn't fit into your talent, team, customer. Absolutely. Absolutely. It's something you do that's not part of the core process, right? The core process is, you know, and this is just something I came to in the last couple of years because I was getting so many questions about chores and so many questions about tactics. And, you know, that's what people are, you know, having to do on a day-to-day basis is, you know, their chores.

50:28You wake up and you're like, you have a family now, right? You wake up and it's like, I got to change a diaper. I got to order diapers. I got to feed. You know, these are the like daily chores. but what are the big picture things that are important in raising a human being okay you've got this curiosity confidence yeah this curiosity is a good one you know the ability to learn new skills the ability to communicate like there are some core things um that you can build into a human that will serve them no matter what environment they're in so yes you want to clean the diapers it can't be in a dirty diaper and get a rash or something and yeah you can't starve them and they need to eat something healthy but you know while you're doing all those chores Whereas don't forget the other big picture and high order items that actually make a great human in the world.

51:12All right. Let's do a few startup insights gathered from around the web. We look for videos, clips, interesting things people are saying about running a startup, building a startup, growing a team, whatever. This first one was found by Jason himself the other day. This is Hanva CEO and founder Melanie Perkins. And she's talking about being rejected at first when she started to go out and pitch her company. I went to San Francisco and just got rejected a lot. So I was pitching people, trying to get them to join my tech team. I was pitching investors, trying to get them to invest. And most people were saying that for various reasons, and they were ready, that they weren't really quite ready.

51:55Unfortunately, right now, I do not think that it is quite the right fit just now. We have reached the conclusion that the$8 million cap is above the top end of what we think is fair value. My biggest issue is physical distance. A lot of people said that they need to be able to ride their bicycle to our office, and they couldn't really do that in Silicon Valley. They're based in Australia. They weren't happy to invest in an Australian startup. So many other reasons. And each of these hurt a lot. I'm not sure it's going to make sense just right now. Other people told us that the size of the market, a design product for non-designers was just like an oxymoron.

52:33Why would you do that? there was so many rejections and each one of them really hurt and I asked the question at the start who's been rejected and pretty much everyone stood up and who feels like giving up and half of you sat down well I'd be in the half that sat down because rejection really hurts but I think that what you feel like doing and what you kind of need to do to actually get to that goal can sometimes be quite opposite things so we persevered for years it was actually three years between first meeting an investor bill and then three years wow but then eventually we raised our feed around and we're extremely excited amazing because all of a sudden we could start to grow our team and we did and perfect we started three years amazing today canvas valued at around 40 billion dollars which is higher than 8 million for that 8 million dollar cap my sons are a little It is a little bit higher than that$8 million cap that was too high when they were pitched around.

53:35Yes. So many lessons here. You know, one, it took an Australian company three years. One of the things that she did was she apparently wrote down or had top of mind all the excuses and reasons VCs had for not investing. This is super helpful to write them all down because some of them will be valid. Other ones aren't. So I always encourage people to write down the advice they're getting and then just think about it, you know, after that initial hurt of being rejected happens. Is it actually interesting advice or is it bad advice? Is it valid or invalid? And in some cases, like the cap, that might be a valid piece of criticism because she met somebody who's running an accelerator and they don't do seed rounds.

54:22Or she might met somebody from the East Coast of America, New York, Boston, where the valuations are lower and they're more sensitive to it as opposed to the West Coast, where they're just like, yeah, I'm swinging for the fences power law. I'm going for a Decacorn or bust, so it doesn't matter if I invest at 6, 7, 8, 9, or 10. So these are very important things, I think, to do to help you get through the emotional part of being turned down. But the good news in all of this, and what she realized is, if you keep track of all that stuff, you can use it to dunk on people later, which is always good.

54:55Keep your receipts. And people do that with me sometimes. They'll email me and be like, yeah, you know, I sold the company. I'm doing my new company. Here's the email where you didn't even respond. Which is why today I have a team of people filtering all these things. And I've taken myself out of that process. Because now I can blame somebody else if we don't meet with somebody. Jackie. Oh, good to know. Jackie, what happened here? Why didn't we meet with this person? But no, you do live with that torturous part being a capital allocator. But it is about perseverance and not taking it personal.

55:23So this is why I always tell people, write down the reasons. Keep an investor CRM going, like just create a Google sheet or a Notion page or a Coda database of everybody you've met with and ask them, why are we not ready? Why are you choosing not to invest? And what you can do is the technique is very easy, Lon. I encourage them when they get the rejection or if they don't get a rejection to ping the person say listen you know we met twice I haven't heard from you I'm assuming it's not a fit it would be very helpful for me since we you know took the time to meet and I respect you to get three reasons of why you think we weren't worthy of investment right now and what we should focus on really do appreciate you and I appreciate the time you had if you could just give me a one two three that would be very helpful to me so now what you're doing is you're giving people not only permission, but the instruction of how you want your feedback.

56:17Yeah. And this is important if you want to get better in life. I feel I'm at the top of my game as a podcaster, right? So I have people who will give me criticism and they're like, you could do, you could be better. And I'm like, okay, here's how I want the criticism. Give me a timestamp in an episode where I could have done something better and, you know, how and what you would have done differently. and literally I had somebody who was being critical. I said, I really appreciate the general thoughts. Can you get very specific? And they never provided anything specific. Ah, of course. Right. Cause you know, it's just like somebody who's, you know, a bit of a, you know, I would say has somebody with a bent towards negativity, but who's in my life.

57:01Right. And I, and I, so I was like, you know, just if you want to criticize, give me something specific. That's where they, and the reason I'm saying give three reasons is because they might give you one or two that are not super valid, but one that is. And if you get three, you've given them the ability to give you a lot. Number one, I don't like the valuation. Number two, you're in Australia. Number three, I have questions about if you're making design tools for non-designers, how does that make sense? What's really great about that is if it is true that the valuation and the location are the issue, well, the valuation will take care of itself over time.

57:37Okay, great. And okay, the location, I get it. then you could say, well, if we were a Delaware corporation and we were incorporated in America, but we had our offices, our headquarters in Australia, would that change it? So you can kind of dig into it, double click on it. But the third one is the most interesting piece of feedback she got, which is you're building something for somebody who doesn't currently use the product or doesn't use a product. And that's very interesting. That means there's a new market that will manifest, the founder could manifest a new market. Those are typically power law companies.

58:12So let's just let that sink in. One of the pieces of feedback she got was from somebody who was so fucking dumb that they don't understand the most basic aspect of venture capital, which is a non-consensus product that manifests the market is the most powerful outlier of all. let's think about companies that nobody was using the product before it exists. There are so many incredible names that we could do right now. In other words, there's not that product is not in currently in market, but when they introduced it and they persevered, many, many poor people used it. Alex, can you think of one of these types of products?

58:53That's not Canva canvas tools for non designers to make really cool design stuff. So if you already know Photoshop, you're not using Canva, but my daughters use canva to do their party invites for this weekend and for their birthday party and they had a wonderful time perfect example give us an example of a company alex i i don't know this is a great one jason but the first one that came to mind was uh online search and how that becomes kind of a de novo category that came out of nowhere and immediately became huge great so people didn't know they needed a search engine when lycos magellan they just knew they needed to find something on the internet and they couldn't those people who made those first search engines said here's a way to do it we have a technology full text indexing and we're going to put it out there we're going to put a box you type something in and of course it caught fire and the 11th or 12th major one google won the day it's actually a great example before that people used a directory there was the yahoo directory there was gnn the global network navigator and there was at mosaic a list of the new websites of the day so that was how people navigated the internet originally, which was, they didn't search, they used a directory.

59:59They went to arts and humanity, photography, nudes. That's how you found naked pictures on the internet. Lon, give us one, give us a product, give us a product that manifested in your mind. And then I'll give. Yeah, the one I will think of, because I remember the first time somebody told me about it, I was like, you're an a lunatic. That's a terrible idea was Airbnb, the idea of there was vacation home rentals so there were like vrbo and that kind of stuff but the idea of i'm going to pittsburgh for two days for business and i just want to crash somewhere i'm going to rent out your pool house or i'm going to rent out your guest house or your spare bedroom that was not a category that existed when i first heard about it i was like you're an you're an idiot if you do that you're going to get murdered same thing with uber and lyft you're getting into a stranger's car and now it is the most common thing but not let me get a ride from a stranger for a few bucks they invented that business and now they induced a market to exist and if you look at airbnb they weren't competing against hotels and people thought airbnb was a terrible idea they thought ride sharing was a terrible idea and they said poor people they you know what they do they stay at their friends houses they don't go on vacation their vacation is limited to family members houses i know this because when I was a kid, my dad would be like, I'd be like, oh, you know, like, yeah, we're going to go on vacation.

1:01:22I'm like, where are we going? Oh, we're going to my cousin's house. We're going to go up to Connecticut for a couple of days. We're going to go to, yeah, we're going to go to my friend, little Michael's house at Wyndham, and we're going to stay at little Michael's house. That was the original Airbnb. Yeah, this is why I spent summers at the Jersey Shore as a kid. My grandparents had a place. Exactly. It's not like you're, all three of us, our parents couldn't afford a hotel. there was no Airbnb and they basically turned this phenomenon into something. Absolutely correct. And those become great outliers.

1:01:52Why are they great outliers in all of this is because if you actually build the product and it works, then I don't know, middle-class people can be like, you know what? I'm going to go to Japan and I'm going to stay outside of Tokyo. And literally people will stay an hour outside of Tokyo who would never have been able to afford to go to Tokyo because they found a two-bedroom with a kitchen for 150 bucks a night and they have five people in their family there but five people in Tokyo means three hotel rooms at 400 a night 1200 a night the entire budget of the Airbnb for 10 days might be 1200 versus one day in a hotel and so one of two things happens people become more adventurous they go to places they couldn't normally go to etc it's just such a great clip from uh Melanie and she was on our pod back when we had the studio in person.

1:02:43Great company, great investment. Congratulations on the people who saw it. I keep, this is the one thing I'm frustrated with my team. One of the reasons I'm doing Founding University is my team is, like many young people or inexperienced people, they're pattern matching. And we have two categories in our 13 reasons to invest in a company, outlier founder, outlier idea. And I keep asking them, please bring me more outlier ideas, outlier founders who are doing weird stuff that you don't understand. If it's weird and you don't understand it, but you find the founder compelling, like you might find Melanie or Joe Jebbia and Brian from Airbnb or Travis Garrett from Uber.

1:03:23If you love the founder and the team, the idea is confusing to you. The market is confusing to you. That should be an alarm bell ringing. Winner, winner, potential outlier, potential outlier. Bring me more of those. Don't bring me the next SaaS, Slack, messaging, split your bill, app to split your bill, app to plan your vacation, app to publish your music and get affiliate links for planning your vacation, like all these crazy ideas that have been done for the 500th time, throw them right in the garbage. Let's come up with some really weird ideas. I'm looking for weird ideas. Apply to founder.university.

1:04:01Give me another one. Hit me. I just want to say, I really do think that it's the next time someone tries to solve fractional jet ownership for the middle class that it's going to work. I believe it. It's the next one. I mean, Surfer, I had a chance to invest in that. I think they've gone through like three iterations of that company. I think they're like selling the software now to other people to build those. And you know, the fact is, if you can figure out a way to do fractional jet ownership, like JetSuite has, there's a group of people who really love JetSuite. And what they love is that they go through an FBO.

1:04:30I don't know what FBO stands for, but it's a fancy word for the terminal for private jets. So when I fly on my friend's private jets, or I take a fixed based operator, fixed based operator. So what's incredible about that is, it's literally like a small building. And the front door, you pull up in your Uber, and you get out. Or if you're driving, there's a gate on the side of the FBO, you come up to it, you tell them your tail number, you tell them the name, they open the gate. And then a little car comes out like a golf cart in front of your car, and they drive you to your plane and you get out of your SUV and you walk up the steps of the plane like you see on TV.

1:05:05So, but the FBO is the secret. When you get dropped off, you walk in, there's three or four, you know, lounge setups. Somebody grabs your bags and you walk, I kid you not, 50 feet. And there's another door. You tell them you're telling them, but they open the door and now you're on the tarmac. That's the magic of an FBO is the distance between being dropped off and the actual plane it's a hundred yards typically 200 yards they're now superior flights they've changed their name jet suite uh it's for a very light jet up to four passengers 4k an hour for a heavy jet up to 14 passengers 10k an hour that's basically what you're going to spend if you're going to take private 10k an hour so if i go to tahoe on private 30k there 30k back that's why i don't do it i can't afford to do it but just every time i burn 75 000 i'm just like that doesn't make sense even though i can afford it whatever i i prefer to just fly commercial i didn't mean to get us off onto the private jet thing but there are companies that want to use the the empty return legs and sell those and it not never works right all right moving on jason we have time for one more and uh this is a clip of fred wilson and brad union square ventures sure um they are talking on a podcast called The Slow Hunch with Nick Grossman.

1:06:22Never heard of it. Thank you for finding it. This is great. Yeah, here we go. A mentor of mine way back in the early days at AT &T, he used to say you can be successful in two ways. You can be successful by doing the right thing or doing things right. You run into entrepreneurs who iterate and iterate and iterate, but they execute well. And so that buys them the time to do things right. And ultimately, they find a fit. And then you run into other entrepreneurs that are just riding this rocket because they happened to stumble on the right thing. My skills in venture were a lot about doing venture right.

1:06:53And so Brad talks about working out the portfolio, triaging the portfolio, staying with the companies, being there for the founders, sticking it out for the long haul. That's very much about how to do the venture business right. And I feel very strongly about that. And I had that even then in my DNA. What Brad really taught me was how to do the right thing, which is what to invest in. I was just like, we're just going to invest. Like I said to Brad, we're just going to invest in the internet. Like, that'd be great. He's like, yeah, but Fred, like, there's a lot of the internet. Like, where are we going to invest?

1:07:23So I think when you think about USV, I think it's two people who both had a lot to bring and we both brought it. And USV, I think, does both of those things. I think we do venture right and we also do the right venture. Wow. It is such a powerful concept. I love this clip for so many reasons. The first time I'm seeing it, so you're getting my raw reaction to it. I always like to think about the process in which you do things. I am a process guy, as you two know. And so I'm always talking to you about process. You know, for background, Fred, I met when he had Jerry Colon as his partner, and then Brad was his partner.

1:08:00They did Flatiron Partners. I worked for them for a couple of weeks reading business plans in the 90s, like 96, 97. I read business plans for them, and they pay me a thousand bucks every time I would write a report on a business plan. And then Fred's wife, Joanne Wilson, worked for me at Silicon Valley reporting was the ad salesperson. And a large part of my success was that she was an extraordinary champion for me, and for the magazine and for the industry. And she was just one of the best salespeople I've ever seen. Putting all that aside, I do think when you have a partnership, that's the other interesting thing here is talking about the partnership between co-founders.

1:08:33When you found a venture firm like those two individuals did, they're founders, just like the founders of Airbnb or Uber or Tesla are founders. And being a founder, you know, being complimentary is such a big win. And the fact that they were complimentary, you had somebody like Fred, who was like, the right way to do venture is to always be by the side of the entrepreneur through thick and thin, and to, you know, do it right, having this kind of discipline and process great. Then, you know, you had Brad who was thinking strategically, well, where should we we be placing bets and that is an ongoing thing you know placing bets in crypto now might be a loser's bet but placing them 10 years ago might be a winner's bet you know you might be too late getting into sass now because sass is coming apart because of ai and the chat interface solving a bunch of problems so you know i just really like the the lessons learned here one is very pragmatic you got to pick the right beach to surf out as i always say you know pick the right market because the market can determine your success, how you run a business and how you build systems can determine your success.

1:09:37There are people who have built systems that make them incredible athletes. And then there are people who draft really well and pick the right players, you know, and they win that way. So you could literally build a basketball team by having a great coaching staff, great nutrition, great exercise, great three-point coaching, great sleep, rest, meditation. and then you could also just draft really well and trade really well you know like some people do and they pick the right players and they do deal making both of those techniques work some people build their teams through the draft and through systems inside of it and other people are just really good at trading for amazing talent i've seen both of those things in the nba work to build championship teams so uh really really great clip good job lon yeah that was fantastic and to the whoever the podcaster is.

1:10:24We got, we found that out. Nick Grossman is a partner at Union Square Ventures. So that's how he landed these amazing guests. Is it the house show? Is it the house show? It's gotta be the in-house show. Yeah. What's the name of the in-house show? Pirate Wires is like the house pub for Founders Fund. The Slow Hunch podcast with Nick Grossman of Union Square Ventures. Very well done. Fred Wilson is the person who I want to meet and talk to whom I haven't yet met and spoke with. Friend of mine. he doesn't travel all that much i you know i always invite him to come to the west coast or to do things he's just like to stay in new york he's a new yorker tried and true and like you know uh you know just really great i remember talking to ev williams a little inside baseball and he was raising around and he was choosing between fred wilson and sequoia and i said well sequoia is the gold standard you know even more so then you know like this is guys about google you know peak google and he's raising for twitter and then i said you know and fred is like really going to to be harder working for you in some ways because like it's up and coming VC firm.

1:11:26And maybe they'll pay a higher price because, you know, that was like my candid advice. Like maybe Sequoia doesn't have to pay the same price. And I told him just take, you know, split the round, do it. Larry and Sergey did take 10 million, take 5 million from each and tell him that's the way it's going to be. Famous story. Evan Williams wound up picking Fred Wilson, not Sequoia, not Kleiner, not a bunch of other people he had offers from. He went with Fred Wilson, I think, because he thought Fred got it better. He understood it better. He was using the product, I believe, when he made the investment.

1:11:56So, you know, sometimes you can find these VCs and you find partner product fit. And that's super important. The product is loved and understood and the market is loved and understood by the partner at the firm. it'd be very powerful because then when they wake up every morning they're thinking about social media and writing which fred had a blog before that he was a writer so it made more sense to maybe pick fred over i don't know even michael moritz because michael moritz well he was a writer actually but i think maybe not a social media type writer right so if michael moritz was writing 10 tweets a day or five tweets a day maybe he wins that deal verse in the mind of evan williams versus Fred Wilson.

1:12:44So it's important for the capital allocators, I think, and the founders to think about that. Is this person taking Ubers all day long? Is this person willing to go stay at Airbnb? And do they love travel or are they a homebody? If you're going to pick an investor for, you know, Airbnb, it's kind of helpful that that partner has that wanderlust. Is that the right word for people who like to, you know, be gadlings, gadlings, vagabonds. Make sure you check out the docket thisweekinstartups.com slash docket. Make sure you follow our TikTok and Instagram accounts. We're now publishing to those, the live feed there, TWI startups, or just type in thisweekinstartups, you'll find us.

1:13:19Say hi to us on Instagram and TikTok specifically. We're trying to wake up those accounts and maybe meet some young folks over on those platforms. He's Lon's on Twitter. He's Alex on Twitter. We have mastered Twitter already. We're going to try to master Instagram and TikTok next. Okay. We're on it. Bye-bye. Bye.