Ask Jason LIVE!: Unpacking Startup Strategies with Real-Time Q&A | E1921

25:27The good news is suffering and less resources tends to make teams build better product. So when you get the money in, let's say you were to raise$3 million, now you'd be sitting there with your team. Okay, how do we allocate the$3 million? Oh, we should buy ads, we should do this. As opposed to right now where it's kind of pure, build a really great app, send it to a small number of people and talk to them and see what they think of it really. And just focusing on product market fit is always a good idea. I think doing a private beta and getting some information is a good idea. Now, pragmatically speaking, people will say, you know, once you've launched the product, you're going to be selling performance as opposed to promise.

26:09There are some truth to that. If it's launched, you're going to start having conversations about how many minutes are people spending in it? How many people have downloaded it? How many, you know, for the first week's cohort, how many people used it in week three or four, right? And so you're going to get into some of those questions. So be careful, you know, that that's going to happen. So if you severely limit it, it's a test flight app. You know, you say we're only invited 100. Here's what we learned. Now we want to raise capital. We've eliminated a lot of the risk. We think, you know, of the 100 people we invited, these 30 got massive value.

26:43We studied those 30. It turns out, you know, they're all dual income individuals who are 35 to 45 years old with kids, and they don't have a problem paying$25 a month for this app because it helps them solve these problems. You know, then that would be very impressive to me that you actually studied the customers. The experience we have as investors often is, hey, we built a bunch of features, we launched them, we don't know who's using the app, we put 100 people into it, we invited some friends from our college or sorority, or, you know, from our, you know, parents group or whatever, and you don't know anything about the customer.

27:21So just be prepared when you move to a beta, a closed beta, you're gonna have to start having conversations about engagement usage, and who are these people? How did you acquire them? You know, and how are they using the app? And they might want to talk to a couple of them, hopefully your investors will want to talk. And have researchers, analysts, and associates who work for us, RAAs, we call them, and we will have them talk to your customers. So if you were to pitch us and get to the second or third round of conversations, we might say, hey, yeah, we want to talk to a couple of customers. Do you think you can put us on the phone with some of your customers?

27:57Or we can go do that as a backdoor. We can go find people on Craigslist or Reddit who use your product and talk to them directly. So all of those are possibilities. Sort of a middle ground that we were thinking of is doing a soft beta launch. We have about 100 people signed up right now to beta test the app. We've done a lot of customer interviews. A lot of people are really enthusiastic about the features that we have. So we were thinking of doing a soft beta launch and then really just testing the metrics and seeing how often we're using it, how often they're referring other people. So we wouldn't have a closed beta testing and just seeing how much people are inviting others without doing a full launch and then using those metrics for funding.

28:36I think that's a good plan. Superhuman did a really good job of perpetually being in beta. In fact, when I use Superhuman, I'm still on test flight. I don't think you can openly get. So they're technically in beta and I get my updates to the app store, but I know that they've got lots of members. So I think they're probably pushing the envelope on this concept of keeping it in closed beta. But I like your strategy of trying to figure out how they're using it, how often they're using it. And that is what VCs want to hear. Before VCs doing Series A's, there are angel investors and seed rounds and there are accelerators.

29:12Are you aware of all that? And have you considered that as opposed to going directly to a VC? And have you run a company before this? Nothing at this scale. Only a video production company and we produced a film. But thank you. That's very hard to do. Yeah. It is very hard to do. Yeah. First time it's very hard to raise venture. Sometimes going to an accelerator or raising a seed round from a seed fund will kind of make it easier to go to that progression because, you know, you got the stamp. Oh, I went to Techstars. I went to Y Combinator. I went to the Launch Accelerator. I went to Founder University.

29:48Some group of smart people picked me in the top 1 % or 2 % of the applications. I went through the program. I learned some things. And now we're raising a seed round. Oh, some seed fund pair launch first round, whatever, put 500K and a million in. We deployed it. Now we're ready for a$5 million,$3 million venture capital round. So you might want to think about hitting those milestones in your checkbook if you're new to the industry because they do open a lot more doors, obviously. Yeah, I've heard wonderful things about Founders University. So I'll be looking into that. Yeah, I mean, it's a great thing to do.

30:25And it's essentially free. You pay 500 bucks in week one or week zero. And if you come to all 12 weeks, I mean, if you had an excused absence, you know, if you missed one or two weeks, I'm sure they would not give you a hard time. Then we send you the money back. So we just do it so people don't burn the seats. um but you know getting into an incubator accelerator is another way you know to get 125k for seven percent of the company and you know put another stamp in your passport that like yeah look you know we went to canada then we went to spain and now we're ready to go to india like if you think of it like a passport you know and people open your passport and they're like oh you know look i got some stamps in here okay yeah you've been to different places in the world oh welcome to, you know, Dubai.

31:10I see you've been to these other places. So you, you, you, you build up a little momentum, I think with those, those, um, but if you have product market fit, that's what you really have to work on. It sounds like also you're very good at talking to your customers. How do you talk to your customers? Explain to the audience how you like to interface with these customers. Do you have a discord? Do you have a chat open with them somehow? Are you doing zooms with them, surveys? How do you get feedback from your customers? So it was social media groups on Facebook mainly. It's groups that I'm part of.

31:42I'm pretty much one of our target customers. So I'm very intimate with what the needs are of these people. And then we did a Google Form interview and poll seeing which of our features they were most interested in, how often they would be using the app, what they would be willing to pay for it. And we got just incredible feedback from it. Are you tired of slow A-B testing? Do you have trouble trusting your experiment results? Well, get ready to 10x your experiment velocity with EPPO. EPPO's experimentation and feature management platform transforms uncertain launches into clear-cut experiments.

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32:48So here's your call to action. Experimentation is how generation to finding companies win, accelerate your experimentation velocity with Eppo. Visit getepo.com slash twist. That's G-E-T-E-P-P-O dot com slash twist. You didn't mention your app or what you're doing. Is that because you don't want to tip your cards or because you don't want to use this as a marketing opportunity? You're worried about offending me because the first two people on had like logos and they were more than happy to talk about their products. Well, no, the second call that was more than happy to talk about his product. So are you keeping this stealth because you don't want to tip your cards or are you just trying to be gracious?

33:23A little bit of both. Just a little bit of both. But it's something... You got me fascinated, by the way. Tell me more about the Facebook group. Tell me more about the Facebook group. And because I've heard this from many startups that there are these like Facebook groups that are good places to talk about your product. Facebook groups are actually a really interesting tool for grassroots marketing. It was something that I used when I was crowdfunding for our film because we crowdfunded our documentary and it was the best way that I did it with zero marketing dollars because you become very intimately familiar with the people you're essentially asking for things for.

33:58So the app appeals to a very wide demographic of people, but our target first main audience will be women with children, with minor children. So one of the groups that I'm in is based somewhat on income level because it's a Peloton group. So it's working mothers of Peloton. And that's basically where I've been testing out some of the features and getting some feedback because that is somewhat the income level that we're targeting. And also there's a large utility function to this app that appeals to parents. Parents, but our app is food related and the people who go and buy the meals for the family are typically women.

34:38So I've got three children myself. So I am basically our target customer and I'm very active in all of these groups. And it's just about kind of bonding with the people that you're going to sell to. These are incredible insights for, you know, other listeners. If you really think who is my, you know, ideal customer profile, you may hear that term, ICP or your beachhead or your first market. But like the beachhead, I think, means like where you land your troops. So it's a lot of military references and startups. Everybody considers it war. And so your beachhead market, your first market, your ideal customer profile.

35:21What a clever idea there. If you can afford Peloton ain't cheap. That's like a$42 a month subscription. It's not. And the initial bike is an investment as well. So that was something of a demographic. Plus they're disciplined. Plus they care about time. If you're a Peloton person, you really want to get an efficient workout. That's kind of the, it's at home. So this is like a really clever thing you've done. You found the adjacencies to a parent really would like to save time, money, and is health conscious about meals. So really smart to think about, and this is where brainstorming about like what other products your customers use.

35:59So if you know your customers working on a product for inside.com, we did newsletters, business newsletters but i've i realized a lot of what in talking to people who read newsletters or news junkies like what other products do they use all the time use twitter all the time they like to have they listen to podcasts all the time why is that why did news junkie who are these news junkies and did and they what do they pay for oh they pay for new york times oh they pay for the athletic oh they they pay for cnbc or siri i pay for sirius xm just so i can listen to cnbc but i also pay for hulu so i'm not sure why i pay for the sirius xm but it just always works with audio and the hulu dust and sometimes so anyway you start to get into what are the adjacencies like what else do they pay for and that's a super unlock if you pay for peloton you're used to paying 600 a year for something that keeps you healthy and is efficient wow well done yeah and one of the things about this app is that you uh sorry i just want to know more about you what's Are you a marketer?

36:56I'm a social media video marketer and a film producer. So I've been doing that for the past 10 years. I released a feature documentary on Amazon Prime and had this really great idea for something that will reduce the mental load in my life, my husband's life, my team leader's life all around. So I had the idea and decided I'm actually going to do it. Awesome. Well, it sounds like you're figuring a lot of great things out. many folks are really good at building product, but they're not good at studying their customers or understanding their target market. So I think that you've done that really well.

37:29And so congratulations and good luck with your startup. It sounds like, yeah, if you want to come to Founding University, kelly at launch.co, kelly, K-E-L-L-Y at launch.co runs the program with Presh and she's amazing. And yeah, or you can email me anytime, jason at calacanis.com thank you great can i just say um i read your book angel that was how i became familiar with you and i loved it i was on vacation i couldn't put it down found it in the library i loved the book and then i bought it so wonderful i loved it it makes me want to write another book just takes six i'm like halfway down with two books it takes six months to write a book a year you should write another one do another six months of a year of promoting it and i'm trying to do less and get focused on like some very small number of projects, but the book keeps calling me.

38:18I have another idea for it, but if I had it, there was another topic you'd want me to take on, what would it be? You know, I think I'd like to expand on what you were talking about, the insights on the investor side. One of the things that I really loved hearing you say was even if a founder isn't doing well, keep up the communication. You just want to hear from them. Even if they're sending you an email saying this is delayed, you want to hear it. And I think A lot of people are worried about failure and not meeting deadlines. And some people just want to hide under the covers and, you know, pretend that it's not happening.

38:48But just having that insight from the investor side of we understand as happens, just let us know. So I think really expanding on that and bringing it into the current day. I love that. So I'll read any book. Yeah. People like the anecdotes in the story because in the writing style, because maybe they said they laughed a couple of times or they couldn't believe the story. So I have, I write down all the crazy I go through as an investor. It's crazy. Like weird stuff happens. Like people screw each other or behave crazy. And I, you know, I basically write those down and then I make amalgamations of them.

39:21So I don't, to protect the guilty or innocent or however they perceive themselves, but I blend the stories together. So you don't have to worry about anybody getting singled, but singled out, but good luck with it. And, um, you know, one of the things that gives me great hope that you're going to have a really good chance of success here is that you're listening to your customers and you know where to find them. A lot of people just build stuff and they don't go find those customers. You got to find those customers and talk to them. All right. Great job. Stay in touch. You're part of the family now.

39:49Yeah. And hopefully I'll see you at the university. Yeah. You will. Thank you. Bye. Oh, wow. I just love doing this. So let's keep moving. Francis, how are you? Doing great. How are you, Jason? I'm well, I'm well. I know you're from Twitter. Yes, indeed. Tell me what's your question for today. My question for you is how you balance skepticism with enthusiasm when you look at a company. Yeah, such a great question. So I like to be enthusiastic with the founders and really try to understand their vision because it's really hard to be a founder. And so one of the things we've added to our script, you know, our dialogue, when I'm training my young associates and researchers how to interact with founders is to just say at the end of the conversation, hey, can I repeat your vision back to you to make sure I understand your vision?

40:43And I try to get them to say the word vision twice and to say the name of their company. So can I get your can I explain your vision for Uber taxi one more time, just so I make sure I understand your vision for Uber taxi? Like literally saying the name of their company twice, saying vision, and then you reflecting back to them and saying it. So if you've ever read anything about therapy or just making people feel heard, repeating it back to a person is incredibly powerful as a tool. So I like to do that as a technique. I think if you're an investor, repeating back to the person your understanding of their business, their challenges, etc.

41:19It's incredibly powerful that nobody does it, especially not arrogant VCs or investors who, over time, because you're writing the check, because you're judging people and trying to make a judgment and saying no to 99 and 1TS, you can get high on your own supply. So you really want to stay humble because nobody knows who's going to figure it out. You know, like somebody might figure out a rocket ship company or an electric car or, you know, Airbnb. You figure out weird things. And the big outliers are often weird and hard to understand. So to your point, what I try to do is remember as an investor that cynicism is the coward's way out.

41:57It's really easy to be cynical. And what you want to focus on is not all the things that could go wrong. It's what could go right. It's not all the times people failed pursuing this, but why might this idea work now? You know, if you were to look at electric vehicles, man, they had failed for a long time. And but we did know there was not exactly Moore's law, but there were some laws around battery density, right? So eventually batteries might become cheap enough, or the range might become high enough that, you know, a 50 mile to 100 mile electric car could become a 200 or 300 mile electric car instead of$200 ,000 in batteries, it could be 20 ,000 in batteries.

42:36And so I like to squint a little bit and just say, yeah, it's, here's the obvious reasons why this isn't going to work. What if Microsoft or Google decides to do it? What if you run out of money? What if customers don't want it? You could have all of those reasons. Those are easy. Everybody knows the reasons of why something might not work. If I said, hey, why might a restaurant not work? People can be like, the food sucks. The service sucks. Location is terrible. You know, it's too expensive. The food quality is inconsistent, whatever. You can make a really, there's too much competition. Okay, congratulations.

43:13You just pointed out all the obvious reasons of why something might not work out. Let's work on something more important. What could work out? Okay. Well, you build Shake Shack as but one example. Okay. The world needs another burger joint. Well, we're going to try to do really high end, high quality meats, really great French fries, really great shakes. And we're going to just try to make it healthier and higher quality. And we'll see if a gourmet hamburger, people will pay twice as much as In-N-Out Burger for it. sure enough, they will. And so some things went right with Shake Shack that helped scale that business versus McDonald's in and out.

43:49And so, yeah, cynicism is so easy. You kind of get through it so quickly. When you've done as many meetings as you and I have done with founders, the cynical takes are just so easy. They're so easy. And so I tend to look at what could go right. Now, that doesn't mean you can ignore like how insane it would be to try to launch an airbnb or an uber competitor today like you know that market has you know significantly deep pocketed players right it's going to be really hard for a new entrant to displace airbnb they would have to have a really unique concept around this and so you know you you do need to study also like what exits have occurred, we always get pitched on.

44:34I'll give you another example, and then I'll get your feedback on my answer. For example, there's never really been a great exit in the job space after LinkedIn. And one might argue LinkedIn, the job's functionality of that was a byproduct of the original product, which was a social network for business. And if you listen to Reid Hoffman when he was on the show, it was like one of these things where they just had recruiters calling, begging them to give them the ability to DM potential candidates, right? And they came up with a$5 ,000 a year product because people were demanding it. But that wasn't the original product.

45:15The original product was a social business network. People could put their resumes and build a professional network that was different than MySpace. So you do need to look at why hasn't there been an exit, a giant exit in careers and job boards? And it's like, well, maybe it's just too easy to build a job board, you know, and like, there's Indeed, and there's Glassdoor, and there's a long tail of all kinds of recruiting and job services. But there's really only been one giant exit. And that was LinkedIn. So, you know, I do try to teach my team to be thoughtful about has there ever been an exit here?

45:52And what can we learn from the past. And then you inevitably wind up with the question of why now what's changed for LinkedIn. The why now was social networks, the idea that virality, which was like a new business concept existed. And that's why they won because they had a viral hook. You joined LinkedIn, you invited 10 employees or coworkers or partners. And I was one of them. And I invited 10, you got a viral coefficient over 1.1. And the thing just explodes. Boom. Everybody who joins invites like you know more than one person okay that's gonna that's gonna speed up the process so um yeah what are your thoughts and what are you any follow-up questions yeah one thing that's interesting to me is how your own psychology could affect that like there's research that judges give out harsher sentences right before lunch because they're tired and they're cranky maybe Maybe in our context, it's the last deck I'm looking at in a day.

46:51And I'm pretty much ready to go anyway. And so maybe sometimes I try to give that one a little extra attention because it would be awfully easy to dismiss it. Human psychology definitely plays a part for investors, also for founders. Maybe they're just exhausted. They're tired of talking to investors. 39 have said no, and the 40, it's going to say yes, but they come into it with a bad attitude. And it's like, wow, that person's got a terrible attitude. I would never invest in them. So, yeah, I would be very aware of your own psychology going into these things, being well rested, coming with a prepared mind, being open minded, asking really insightful questions and having a great, thoughtful process.

47:28In any discipline you get into, I think you eventually will start to look at systems and processes and really try to optimize those. I have really tried to think about systems and processes, both for podcasts that I do, events I do, and for investing in companies. I really think about that process in a very tight way. And that's really helped, I think, me become a better investor and find better companies and have less zeros and more companies that go on to future funding, right? So be thoughtful about your process and build a process that you like. That's the other thing. You know, if you know, you know, you have the energy for three calls a day and the fourth and fifth, you always screw up and just do two a day and have extra time and do two on the weekends, you know, and make up for it that way.

48:20So you do have to understand your own psychology. I like talking to people as my way of learning. And so people are like, you do a lot of podcasts. I'm like, that's my professional development. You know, people asking me questions here is making me better at my job. You asking me these challenging questions that the three calls before this, it's making me think. And I write notes and then those eventually get put into my businesses or the businesses we invest in. So figure out what process you like, right? Some people are introverts. They like reading. So just asking somebody to write a deal memo and send you a deal memo, or you write a deal memo and then send it to the founder.

48:55Like I have friends who are introverted and they're like, I can't do this many meetings and I can't talk to this many people without being exhausted. Okay, great. So you like to write and you like to read? Yeah, I love reading. I love writing. Okay, hire an associate to meet with companies and have them write a deal memo for you with the questions. And then you ask questions back to the founders and you work on the deal memo together. I like that trend of deal memos for people who like to read and who like to write. So that's just but one example of like understanding your own energy, your own cynicism, etc.

49:26I'm hiring people for our fund who are incredibly good on Zoom. Like just really good at keeping a high energy level and really enthusiastic for 20, 30 minutes with a founder. And so I am optimizing for that because we have to do it, you know, 70 right now, I think, introductory calls per week. And we have to get it to 100 by the end of this year to hit my goals. Think about that. Five people doing, you know, six people doing 15 to 20 meetings a week, four meetings a day, three meetings a day. It's a lot. It's a lot, lot for people to be able to do for us to hit our goals of investing in one or two companies a week.

50:05On average, 100 new names a week. Now we have programs, which make it a little bit easier, but yeah, I like your question a lot about cynicism and energy. I think it's really important and understand yourself, right? And then build a team around you that compliments you. I can't say enough about that either. My management philosophy now is I know I don't want to do accounting and legal and, you know, negotiations and stuff like that. So I just hire people who are great at that. And then I focus on podcasts and meeting with founders who hit a certain criteria at a certain sweet spot. so if they have their product launched they got a couple of customers they got two or three co-founders and their builders yeah let me let me meet them and bring them to me but i try not to waste time on people with ideas who are idea people who you know aren't building it because there's just too many too many people with ideas not enough people building actual real products so infinitely many it is a challenge you know and then people get to me through my network hey can i meet with you and chew your ear?

51:05Can I bend your ear? Can I buy you a cup of coffee? It's like, I am not constrained by coffee right now, or having my ear bent. I'm constrained by time with my family, skiing, my friends, and with the portfolio companies we currently have. So let's make it efficient for everybody here. And I'm a big fan of process and efficiency. So people want to meet with me first. That's the other thing when you get to a, when your firm gets bigger. And I'm like, you know me because I'm super proud of them and they'll be helping you along the way in ways that I can't. So why don't you meet two people at the firm and then talk to me and you can actually get more information on what it's like to work with us because they might be the ones answering your questions.

51:51If we do make an investment and we are in business, it may not just be me. So building a great team, I think a support team around you is also important. Do you have a support team around you yet or are you just still doing it all yourself? So this is something to consider um is you know who would that first hire be how many investments are you doing a year probably eight to twelve i would say yeah i mean you might get to the point where having an associate or a researcher even part-time makes sense where you know they're sorting through your dealfollow writing deal memos doing diligence like that's kind of the next step for you is to have like a partner in crime to really help organize stuff and then it might become more enjoyable for you again yeah definitely yeah all right great talking to you let's take Another caller.

52:34Yeah, take care, brother. Wow, great calls from both sides of the table so far. All right, let's take another call. All right, here we go. Next up is 5x5, Hosam, right? Yeah, that's correct. All right, great. Awesome. You have a question for me? Let's hear it. Thanks, Jason, for having me on. I'm Hosam, the co-founder and CEO of Quasium. It's an autonomous procurement management platform for construction companies. were part of your the well, the Founder University cohort 7 Awesome, just graduated Yeah, President Kelly was amazing. What was the number one thing you got out of Founder University?

53:13I'm curious One is to be pretty clear about the problem that we've started working on and sort of distill it down to you know, being clear on what we're working on at the beginning was a bit it was a bit vague and we had to sort of go and talk to customers multiple times to figure out what was the initial value proposition that we're offering. And the second thing was to move as fast as possible. And I think being in a community helped a lot. Third thing is, I felt very comfortable asking questions. Fantastic. What's your question for me today? And by the way, if anybody's listening, founder.university for more information.

53:53So my question is, we started working on our idea in May, December, and we launched in February. And we're currently in late discussions with about three customers. And as soon as we start closing in three to four customers, we're about to start raising. And I've been wrestling with the question, what is your moat? To me at this stage, it's execution and building a delightful product. I see in the long term, given that we're building an AI product, I'm not a big fan of Datalog, but we are unlocking the unstructured data that currently exists throughout the procurement process that no one has been able to tap into.

54:38And that, especially in the construction industry, where there's a massive difference between the gross margin and the net profit. And so it's mostly in the business operation optimization. So your question is about a moat. For people who haven't heard that term, investors will sometimes ask, how defensible is the business? In other words, how quickly can somebody storm the castle, take the gold, and get across the moat? And then the defenses of a castle tend to be the arrow slits, the drawbridge, the moat, the water around it. It's hard to seize the castle and take the gold. And so you have to answer that question to investors.

55:17A lot of times they just ask it because it's a common question and they want to see your thoughtfulness. Your answer was great. Data. We have data that other people don't have that's going to accrue to us over time. That's going to give us a massive advantage. You know, for the first three people doing construction and logistics, we have to put all this data in, we get it, but we know the price of bricks. We know the delivery time of bricks. We know who makes the best bricks. and when the next person the fifth person comes in we've already had three people who've ordered bricks and we've studied their data and we know who to send them to and we know who not to send them to when they procure bricks and you just think you know when we hit 500 people what we're going to know about bricks and the cost of bricks and the travel time of bricks and we're going to just keep learning from our customers we put all that into our algorithm them in the same way you know anybody could build tiktok but could they build the tiktok algorithm and could they study users and have that data advantage?

56:14Of course they couldn't. So, you know, and Tesla's got an incredible advantage with data as well. They drive, you know, they put the self-driving hardware into every single car, whether they pay for it or not. They collect data from every single car. Google has Google Maps on your phone. They collect data from Google Maps and Waze in real time. They've got all that data. So explaining a data advantage and other giant companies that have the data advantage, that's how you explain a moat. And you can just say, listen, yeah, the moat, when we have five customers, is going to be like somebody spilled a bottle of water.

56:50And then when we have 500 customers, it's going to be like a little stream that you can step over. When we get to 5 ,000 customers, you're going to have to jump in the water with the alligators and swim across. It's going to be hard. So although the moat is very, very tiny right now, Now it's kind of like a bathtub moat. It's going to be a giant moat and most people will not be able to swim across it. And there'll be plenty of alligators in there and IP protection and data. So you kind of answered your own question. The data is such a great answer for a moat because there's so many examples of people having a data moat.

57:24Google has a data moat, right? So when people talk about AI, they're like, open AI has got this advantage. And then people are like, yeah, but Google's got the data from YouTube. They've got the data from your Gmail. and then you know oh well microsoft you know what's their mode and it's like they've got a lot of desktops using windows and when they want to give people copilot i have a windows i got a new dell latitude 16 over here it's awesome shout out michael dell um you know i've loaded windows and the copilot popped up and i'm like oh so everybody with windows now has copilot they don't know what chat gpt is but copilot's explaining to them that you can ask a question there and get an answer so pretty huge advantage so i like your answer of the data mode because you don't have a distribution mode yet you will when you have a lot of companies i appreciate it no my worry was that at the moment that um you know the motors doesn't currently exist and i don't have any defensively at this point so if someone were to start working on the same idea how am i going to be different like what's going to distinguish us the other thing is like how motivated are people to go after your idea.

58:29If you're doing like a construction business, like who's motivated to go after this? How fast are they going to go? You've got a fast team with no legacy business. You don't have to worry about existing, you know, revenue streams or getting approval. You can test things, you can make mistakes. Nobody's even paying attention. So that's the other nice thing is nobody's paying attention and you can just zip, zip, zip and build this. So, you know, know most investors are going to understand this and if they do tell you like the moat and the defensibility of the business is the reason they don't invest they're probably lying and they're just using that as an excuse um so you'll know that you have a moat problem when you go talk to a customer and they say uh oh there's uh we already have a solution for this we're using acme and we We used to use Delta, and you're this other product, Gemini.

59:25We already have two solutions, right? Is that happening to you when you go to customers, they tell you we've already solved this problem? Yeah, totally. So the first thing that they say, we already have an ERP system, or we use another procurement software. What we come in and say, listen, we save you a lot of time by automating your procurement process. So currently we're automating the process of debate analysis. where you receive multiple offers and you see them in different unstructured PDF formats. So to do that, you normally have to go through all of these documents and then consolidate them.

1:00:00So they don't have a way to do that comparison without you. So they don't have a solution for that. They have a solution that collects data, but it doesn't analyze data. So it sounds like you have no competitors for that feature, right? And so people draw these nice, you know, quadrants, four quadrant charts. I encourage you to do that and exercises with your team and with your customers, hey, where would you put us in this four quadrant? What's unique about us? And it's like, oh, you analyze and normalize the data from a DL to save me money, you know, and my ERP system doesn't do that, right?

1:00:34Or my other procurement system doesn't do that. And so, you know, you pick the X, Y axis, you know, in those quadrant competitive charts to benefit you, right? And so I think making sure you understand what is truly unique about your offering is the other piece and then leaning into that and really um you know you can take the existing features and make those free um and then sell that piece so that's saying like a person you can do this the same question you can turn on your competitor so if they're charging for like the zrp system and it's you know easy for you to build you can build that and give it away for free and then just upsell people on the analysis part um so this is what like google did to outlook and to other folks they made gmail free and gave massive storage before that you were you would pay for your email there was no such thing as free email email was a paid service gmail was like you know what let's just give it away for free with like you know whatever 100 gigs five gigs whatever the first offer was and people were like oh i'm just gonna move to gmail they took a massive audience then they did google docs and that was super cheap and free.

1:01:45And then if you wanted your corporation, your own domain name, you paid a little bit more for it, but they really went after Microsoft's business, uh, in a very aggressive way. So I would also think about that, not just your moat, think about other people's moats and how you can drain those moats and how you could sabotage their castle and make their castle crumble. And you just swoop in and take all the gold. Right. Yeah. Yeah. Interesting. Yeah. Turn it around. All right. Great job. And, uh, keep us informed on your progress and keep, stay in touch with Kelly. So yeah, I'll talk to you soon.

1:02:14Thanks, Jason. Okay, great. I think we have time for one more. This is working out great. If you want to be on the next episode, thisweekinstartups.com slash ask Jason, thisweekinstartups.com slash ask Jason. Follow me on Twitter, x.com slash Jason or Instagram, instagram.com slash Jason. And then follow me on LinkedIn. Just type in Jason Calacanis, you'll find me. All right, Tom, welcome to the program. You have a question for me. Yes, I do. Good to see you, Jason. Good to see you, Tom. So see co-founder creating a benchwell.app, an easy way to help families, friends, and colleagues share critical information they need to share in emergencies.

1:02:50And also, shout out to what Sean Arville said. Can't say enough good things about Founder University. Another Founder University attendee. I like it. Another graduate. Amazing. We're hitting a lot of people with this. I mean, we've done seven cohorts with 200 plus teams. So it's starting to add up. I think 2 ,000 people have gone through the program. So really proud of the team over there. Yeah. So what's your question for me? Not my first startup. And as a longtime entrepreneur, our current app uses a lot of machine learning and generative AI in some pretty unique ways. But to me, this is just a fundamental technology that's going to be included in virtually every product.

1:03:26So I kind of roll my eyes a little bit at everybody's pitches nowadays, it seems like, who try to position themselves as an AI company or an AI this or an AI that. So my question is, when we're out seeking pre-seed seed funding in this current climate, how much is it going to hurt us for not making AI a big part of our pitch, that we're not an AI company, we're a product that uses AI? Yeah, so I think most investors are realistic about what's an AI enabled business and business that could not exist without machine learning and AI, and what's in product or service that has features, you know, that obviously benefit from AI.

1:04:08So, you know, I would assume when you're talking to investors, a high degree of knowledge and that they've met with dozens and dozens of folks. And I would always tell them the honest truth about it. Hey, you know, AI is helping us with customer support. It's helping us here with, you know, this feature of the product. But in all honesty, you know, we're not an AI first company. We're not making AI tools. We're making a tool that solves this problem. and right now operationally we use ai to lower our customer support and delight our customers with better customer support and you know we sort information and normalize data with an ai tool we use this tool and in the future we think there could be these three features um so you can just tip their tip them down the roadmap if there are you know if ai could solve certain problems how would that affect your business but it's going to be in the mix so i would be thoughtful about how do we run the company better using AI?

1:05:06How does the product better using AI? And then what are the future AI opportunities? I think you're kind of required in 2024 to be able to answer those three questions. And I would be prepared to do so. Yeah, I'm old enough. I'm dating myself here. I'm old enough to remember when Esther Dyson, an industry pundit famously got up at the very first multimedia industry conference and told him that there should not be one because it's going to be in everything. um ai is going to be in everything so yeah i mean it's like saying cloud computing today you'd be like we're a cloud company it's like oh so you're not going to make people buy servers and rack them in their data center in their office because they don't even have an office or a data center so like it's going to be assumed but i think i would say today it's a really great thing because when you're talking to investors, they're really trying to figure out what's it going to be like to be in business with you, right?

1:06:05Am I going to have thoughtful conversations with you over the next decade about growing this business? And when bad things happen, are you going to be a great leader? And you're going to be able to discuss things that are hard, you can be able to have hard conversations, you know, about any number of topics, distribution, layoffs, hiring, firing, raising money pivoting and so you know the the ai discussion is but one chance for you to show your potential future investors and for you to see how smart they are like if they're stuck on like some weird issue like defensibility you know to a level that makes no sense or they're focused on ai to a level that doesn't make a lot of sense you could maybe eliminate them from the running as an investor like this person doesn't get what we're doing they there was somebody who wanted i've told the story countless times but they wanted travis to make uber into an enterprise software company for cap companies and they were insistent that this was a better model and i was just like you know in my mind like wow this is a really famous venture capitalist who's really smart and this is the stupidest take i've ever heard like they want to convince travis to make an enterprise software company.

1:07:19And the whole point is the cab companies were taking 50 % of every dollar, they weren't earning it. And you could cut that down to 25 % with Uber's take. And then the prices could get lowered and more people could afford to get a ride sharing ride because you were making it more efficient. Oh, and you didn't have to have a dispatcher because the app did the dispatching. So you got rid of another person in the whole system who was mucking it up and making it more miserable and they want to you know enable the cab companies the cab companies were the enemy the cab companies were the you know the the the piece of the puzzle that needed to be removed because the medallion holders were taking too much the take rate from the medallion folks was too great they had people in indentured servitude basically with these you know in new york the medallions were worth hundreds of thousands of dollars they were owned by lawyers and business speculators who would then rent them back to, you know, folks at unreasonable rates.

1:08:17So, yeah, I think be ready to talk about it. Be ready to have a great discussion. It's your chance to ask them, what do you think we should use it for? What are you seeing? Is there anything we're missing? I wish people would ask me those kind of questions, you know, in an investor meeting, because then it would signal, oh, this founder is, you know, well, yeah, willing to listen or they're querying other smart people in the marketplace about what they should do. That's what smart people do all the time. Like they're querying smart people. That's why I do this podcast, because I get to query smart people about the market.

1:08:54More information. All right, listen, continue your success. Good luck with the product. Can people find more information about your product if they want to check it out? Eventual.app. Eventual.app. There it is. All right, everybody. if you want to be on the next episode of ask jason go to thisweekandstartups.com slash ask jason and uh my team will get you on live we're probably doing this every like the first tuesday of the month or something or the second tuesday and so we do it during the day we'll give you a zoom link you get queued up in the zoo zoom the zoom zoo and uh zip zip zip we have you on we make some great content we learn from each other uh and so tell your friends about this week and startups Take this episode, if you made it to this point, and just share it with a friend who is a founder and say, hey, you might learn something.

1:09:38And that's why we're all here is to learn. See you all next time this week in startups. Bye-bye.