Building a consumer app’s MVP and how to fundraise with Zest’s Jake Gutstein | E1889

0:00Anybody that is a first time fundraiser, there is no golden goose. There is no perfect formula for going about this. Everyone's an N of one, at least in my experience. And I'm then going to speak for my own bias, but every experience is different. And so there are our best practices. Launches scorecard system for sourcing investors, a really good way to get on the phone with 130 different people. But the way to go about doing this, there is no right way. And it's going to unfold the way that it's meant to unfold. It's going to be a winding road. Then once you're on the tracks, if venture backed is the way that the business should be going if that's right for your business, then various factors start to take over a little bit more.

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1:43And I'm really excited to have our next guest on the program because he got an amazing response to his startup when he was in our accelerator, that accelerators called the launch accelerator. I'm joined by Jake Gutstein. He is the co founder and CEO of a company called zest, which is an app that helps people learn how to cook, you can think of it like Duolingo for cooking. And I thought what a clever idea. I wonder if that's going to get any traction and it has gotten traction and people love this app. And again, Jake went through our Accelerator's 29th cohort. Jake, welcome to the program. Thanks for having me on, Jason.

2:22So tell everybody a little bit about, and you came to the Accelerator. Were you at Founder University before that, our pre-Accelerator? Or did you come directly to the Accelerator? We applied directly into the Accelerator. Great. So tell everybody about how you came up with this idea and then how it's been going and what the app helps people do. Yeah, well, I studied engineering as an undergrad, but I found my passion in entrepreneurship. I started multiple companies as an undergrad. I ultimately sold one by the end of my senior year, but graduating school didn't have anything to go into. So I was in management consulting, was working the hours that it entailed.

3:02And the problem, I guess, found me, I had the fire department called on me for just like eviscerating a DiGiorno pizza in my oven. Oh, great. Which to me was like almost a call for agency. I lacked the agency to really fix that problem. So the way I went about doing that is I got on the phone with one of my close friends from undergrad. He ultimately became my co-founder and was an accomplished comedian and performer. So, you know, not the worst person to be on the phone with for a long time. He was also the best home cook I knew. And he started coaching me through how to get better at cooking.

3:34and in the process I realized he was up ahead on the curve for me but he was experiencing the exact same pain points so those bells started to go off I asked him if he'd be interested in founding a company and what are those pain points what is the pain point that you don't know how to cook well yeah but what we realized is that generally people go about learning how to cook and really one of two ways, younger people, you cook from, you learn from influencers online, your Instagram, TikTok, YouTube, or you will cook from online publications or blogs. So New York Times Cooking, Bon Appetit. And ideally those give you a streamlined and affordable and accessible and easy way to learn how to cook yourself.

4:18But what we found was with influencer content, it's highly entertaining, but it's not educational. People watch hundreds of hours of this content. They step into their kitchen, they can't apply anything. and then when it comes to cooking from online publications these blogs every recipe is like reading a chapter in a textbook every different recipe it's like a different chapter in a different textbook very difficult to inventory your knowledge very difficult to know what you want to learn next and how to get there i'm not so so tick tock's too short not dense enough and they lack detail i've seen that watching a short on twitter they're just like here's my perfect recipe bang bang bang bang bang bang bang and here's something beautiful and you're like wait a second and then online i had the same experience you have which is i just want to you know sear some salmon here and i'm reading war and peace it's why are there a thousand words in here on the history of salmon and and i just want to cook the damn salmon what's that why do i need your great aunt's life story to get to this salmon exactly exactly let me cook the salmon yeah uh and so you then decide you want to try to build a better mousetrap as it were a better solution and then you decide what did you do multiple tests did you think about doing youtube videos something in between the two how did you come up with a format or a product because that's you have the problem set you have an observation about what is available in the market and what's frustrating about it but now as a founder you got to conceive of a product so take us through that product creation story and process.

5:52Right. So we were working full time, but we kind of have a screw loose. And so what we were doing in our free time was basically creating a Google form that we would send out to people. And if they wanted to use it, they would pay us. And then we would create a custom meal plan that would essentially allow you to achieve your goals. And we did that in Google Slides. So like we would send you your meals that way. And then we would send you a grocery list over text. Got it. So you decided to test this with, tell us what you're what you like to eat a form of some kind and then give them a PowerPoint, basically a Google slide, and a checklist for shopping.

6:30That was your MVP, your minimum viable product. And how do people respond to those two things? I mean, what we got was that there was a willingness to pay or at least we were crazy enough to perceive that there is a signal that there was a willingness to pay. And so leaned into that quite a bit more built out the team. So we actually we did this. And I know that this breaks a cardinal rule of founder you. And if we were to do it again, we'd follow the steps of founder, we did it without a technical co founder at the time. Well, so you when you did it, you did a low code, no code version of it, which is just, hey, here's a Google form.

7:05But you know what, that doesn't break the rule of founder university that's actually a good way to just learn in the eric reese lean startup concept or before that steve blank with his startup engine concept of um what's the minimum viable product and what question do we need to answer the question you wanted to answer was would people pay for a meal plan and recipes and you got the answer to that right right and actually that's a fantastic way of putting it because we were essentially doing a meal plan at that point and through these mvps what we learned is the we refine that white space to learning to actually being on a path learning more about food itself um which we didn't know going in and so that was also a critical learning right before we jumped off and actually decided to develop a solution uh and so then somehow you go from you know this mvp concept hey here's a meal plan here's your list of what to buy you get dozens of people to try doing that or a half dozen people how many people did this mvp that was i i think that it's somewhere in between what you just outlined so put it in the teens 20s and yeah we had to acquire those customers you just emailed your friends emailed the friends and asked them to email their friends that was we took the one extra step where and some people took pity on you and decided to give you 10 bucks or 20 bucks to do this right which is also the number one thing is that was the that was the number one waste of time when we were starting off is the people that take pity on you do not give you usable product insights because they're not actually buying the product.

8:37This isn't how it would behave in the wild. And so we actually threw ourselves on a wild goose chase kind of following those pity buys for a while before we realized that we had to refine it. Got it. This is why maybe buying some advertising on Facebook, sending those people to a landing page, people you don't know, they are going to be savages. They're going to give you super critical product feedback. They're going to say like, why would i pay you ten dollars for something i can get free on youtube but gordon rancy has an omelet video or whatever it is right they're going to give you hardcore brutal candid feedback whereas your friends are going to be like oh my god this is amazing it changed my life here's 20 bucks and you're not getting any signal as to should this product exist in the world right all right listen selling software is hard it's hard right now right 2022 2023 it's been a grind 2024, it's going to be hard too.

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10:36And how did you come upon the concept for the app in this journey of triangulating? I like where we're going with this. You're triangulating and trying to build a product. What's the next product on this journey? Yeah, it's kind of so I, I think I like to take inventory every so often on the key skills that I think that I've learned along the journey. And one of the kind of five that I currently have has been this idea of uncovering demand. So if you remove your product, the supply from the market itself, people will behave, they have a latent need for something, or otherwise you'll build something and no one will buy it.

11:14And so what we did is we essentially started to look into, yeah, you ask 10 people if they want to learn how to cook eight or nine of them are going to say yes but who actually learns how to cook like and when really was the key question like when does somebody decide that they want to learn how to cook and we were doing this all the while uh we had brought on a technical co-founder omrit and we were building a version of the app itself got it so you decided hey we should figure out when somebody needs to learn to cook because when you ask people if they want to cook it's like hey do you want to learn how to play guitar do you want to learn how to be a black belt and take one dough.

11:50It's like, well, yeah, I would love to be a black belt and take one dough, play guitar, and be able to cook a great meal. But you actually have to take that step. And you got a co founder along the way. So how did you and your other co founder, find your technical co founder? So we're a founding team of four. So we have three that were doing this, it almost essentially started as a club. I like it, like, we're meeting once a week on Sunday at the beginning, running these things and then divvy up the work, come back on next Sunday. What did you get done? And you were working your full-time jobs at the time.

12:22So this was a side hustle. Right. Exactly. Right. And it was like, I think that maybe as it was heating up, then we started doing Sunday, Thursday. It's like when in the week can we. You kind of made it like a fun little club for yourselves. I've never heard of a founder doing this. What a clever idea. Yeah. It was, it was a blast, but ultimately you do reach a point. In my case, I felt like we were doing a suboptimal job on the startup. We had proved out concept, but then at that point, we're working too slowly. And I'm also doing a suboptimal job at my full-time job because I'm starting to focus way more of my energy on this thing.

12:55And so what we did as a team, we gave ourselves three months to find how much funding we needed to survive for 12 months and a path forward at development. We were able to put together the first, build a financial model, essentially projected out what we would need for 12 months to run just really bare bones, did that and turned up Scoured Earth for a technical co-founder. I talked, I think that who we ended up hiring honestly illustrates this the best. Amr Saini is our CTO. He is fantastic. I can speak about him for a very, very long time. But who Amr was to me was he was my co-founders, landlords, roommates, boyfriend.

13:37co-founders, landlords, roommates, boyfriend. So only like three hops away. Yeah. Right, right. That's how deep in the Rolodex you have to go. And so like just imagining the conversations where I'm humiliating myself with like my family friends. Yeah. Like interviewing them. Do you know a programmer? Does anybody know a developer? Right. And what we did is ultimately we had a list of, call it six qualified and interested candidates from that process. and Amrit blew him out of the water like he was the person and he wanted to be at a startup he had a full-time job at that time or he wanted to be an entrepreneur so when you said hey we want you to come on this adventure that was exciting to him yeah entirely right so Amrit's background he led a product team to exit in the past um and was on the beach essentially for the four or five years prior now the company he built it was a crm in the funeral home industry and so I think that how uplifting.

14:34Yeah, this is a nice little counterbalance to that. So we have life and death. So but this is a super important thing for people. It's getting easier to learn to code, it's getting with co pilots. And you know, AI eventually is going to help people make better startups. And then you have the no code movement, which is absolutely fantastic. There are extraordinary no code tools and the no code tools, combined with MVPs made in forms and type form and zapier and all this kind of stuff those are all now colliding with co-pilots and gpts helping people write code but you still want to have a technical co-founder because now you've got an owner in the business who will drive it and has equity incentives and i think the mistake people make is they think all developers are just either servants who you know just you just pay them and it doesn't matter if they're owners that's not true like a great restaurant if the chef is an owner they're going to take a different level of pride a different level of ownership as opposed to being a surf and a hired gun you want the the the chef who has a mission and who really wants this beautiful food to exist in this world this experience you want the developer who wants that beautiful product to exist in the world and people underestimate to make developers, I think, wanting to be entrepreneurial and wanting to be their own bosses and wanting to make decisions because when they're just just quote unquote developers or just writing code, they kind of just get told what to do.

16:06And they get looked at like the person who is like a plumber. Like, you know, I'm just paying you to fix the pipes here. So did you have that experience? I think? Yeah. And well, number one is I appreciate the analogy in food that doesn't go unnoticed. And I think that you honestly speak to this brilliantly. When you talk about the team of five that gets done today, what a team of 15 or 20 over a decade ago would have had to get done. I always feel like it's speaking directly to me. And that only functions if you have an owner who's technical. That can only get done. Omrit leverages these AI tools heavily.

16:44We all do however we can within the functions of our team. But it just helps us move better faster. So now you've got the four co-founders. founders you're doing your uh side hustle club i'll call it the side hustle club thursday and sundays what what an awesome concept you came up with there it's exciting it's fun but of course it's going to get frustrating why aren't we doing this every day we're starting to get traction so you you all decide to go all in but you have to so to speak but you have to get some cash because people might have things like rent or they need food or they might have student debt so how do you make that jump from side hustle?

17:22Hey, we're all getting great salaries to Oh, we're giving up salaries, we need, you know, whatever it is 5k a month, draw 10k a month, draw, you know, different people are different stations in life. So how do you make that jump as a team? Yeah, so for us, again, I, that was problem number two to overcome, let's call it opportunity, opportunity to to solve. And it what we looked at was essentially taking those elements that you just mentioned into consideration, plus give us a little bit of leeway to actually be able to invest into the business, not just like into ourselves to sustain the business.

17:55How much do we need to get by? And that number was around$100 ,000. And we raised that. $100 ,000 total, just$100 ,000 to get you through a couple of months or so. Correct. You know, it's funny, actually, I was just catching up with a friend about this, because where we are at as a business, everything is always as it always feels like it is existential, it always feels like, you know, you never know what's going to happen next. I truly feel like the number one thing that prevents people from founding a company is not risk aversion, but rather ambiguity aversion. And that lack of knowledge about their uncertainty, or what's going to be an outcome.

18:37It's highly uncertain, you don't have a revenue stream yet. You know, if you're working at Netflix, you got a quarter million subscribers, it's not going down to a million subscribers the next day is even if it has the worst year ever it's going to go down 10 right so we were catching up and what i what really true was true was that was as existential as it ever possibly could be was essentially like we put it on the line i don't really know we couldn't really cut back or be more lean we you know you always can but that was when it was as our backs were as up against the walls as they possibly could be so you accept reality as a founder you have to accept it it's not even to me it's you can't live in the past or future it's you control input that's it that really i i think that people become beholden to hitting metrics but the reality is that's a time machine you're looking at you're looking at a time machine you don't have the luxury to right now and so what we do is just what can we get done for us we fix on time in a certain period of time and then get that done do your job and ideally the right thing happens but you can't control for whether or not it's to your point so you do your sprints in two week sprints 10 day sprints five day sprints what do you do yeah so we we actually um this is comes from the 37 signals camp i that dhh pod that's Awesome.

20:05DHH is classic, yeah. He and Jason Free just like hold real estate. I like fanboy about them. Great entrepreneurs. And they've done it by bootstrapping in a very authentic way, right? So there's a lot of lessons there for founders. And what they have done in terms of building is rather than fixing on a product launch, you really have two controls. You can build a product to launch or you can fix on time, which is another limited resource. So what we do is we do six weeks, and that's long enough that you can build something substantial, short enough that you can see the end of it. And over the course of those six weeks, you have to make trade-offs to be able to ship what we commit to at the beginning of it.

20:46And that's kind of how we run. And so it's a bit of a longer sprint cycle, but we feel like we move faster that way. A lot of founders are great at going from zero to one. This takes vision, creativity, hustle, all that great stuff. But those same people often struggle with going from one to 100. If you want to scale and you want to do it efficiently, you're going to need process and you need structure. And that starts with your product. So if your startup needs a more structured engineering approach, you need to check out MEV. MEV helps businesses build and maintain their products faster and more effectively.

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21:56That's right. Get 10 ,000 off per month right now at mev.com slash twist. That's mev.com slash twist for$30 ,000 off your first three months. Oh, it's a good time for us to show the product that you got going and then talk a little bit about maybe coming to the accelerator and then fundraising and how that's all gone for you. Yeah, yeah, that'd be great. Oh, and this is your presentation from the accelerator. We focus in the accelerator really on mastering your presentation to investors. And hopefully we did a good job of that with you and you met a lot of investors. That's how I hope so. Is that or something else?

22:29But I don't really, I can't, hard to pin down the other thing. Very dust, maybe. But I think, so this is just the product demo. If you prefer to me. No, no, product demo is great. Let's just show people. And me, you can talk a little bit about how you present it to investors along the way. Sure. Awesome. So of course, at this point, you know, but we're building Duolingo for cooking with Zest. And the way that that actually functionally works is people come into the app itself. They take a skill assessment, which places them in a level based on their current level of knowledge. So in this case, this user gets placed in level two.

23:01It's all about getting the basics in level two. So say they want to cook a soup, they might cook our Thai curry soup. And within that, they'll learn things like the way that you cut your ingredients actually impacts the way they cook, that though it may seem counterintuitive, intimidating, cleaning as you go is a really important part of the cooking process. And we teach that through digestible slides, through tap quizzes, and then you have green in-recipe chef tips, which come up, they reinforce those lessons that you just learned and allow you to internalize them for later use. So now flash forward to today for this user, they might be on level six, they might be learning things like the complexities of flavor.

23:36And within that, if they want to cook a soup, they might cook our beef ramen. and in the beef ramen they'll learn about the science behind flavor extraction and fusion the idea behind concentrating flavors the reduction the idea behind braising a meat in a flavorful liquid now that's like the basic skeleton of how people use this using it their lives around food are totally changing they cook four times a week save over 500 a month and get to take care of the people that they care about while doing something that's fairly productive for them um so that's the short and it's got gamification built into it you go up levels and you you've added minimized it.

24:10So you're you are taking a little bit from the tick tocks, which is bite size content, little tips like, hey, here's cleaning as you go something I always talk about when I'm teaching my daughters about cooking, hey, look, we put the pasta in the water, we've now got it's capellini, we got three, four minutes here to make it all Dante, we could wipe the counter down, we could throw away the box of pasta, we could set up the colander to do there's things you can do with that downtime. And as people level up, that's got to be addicting, right? It keeps people engaged. And you mentioned there, part of the value proposition and the metrics you're tracking there is the money saved.

24:45And so that's super interesting. For one person, it might be super motivating to hit level six, right? For another person, saving$500, ordering DoorDash or Uber Eats or Postmates, that could be very exciting because they could redeploy that$6 ,000 a year to something else. And then finally, you had the non-financial reward, but the incredible feeling of taking care of and building nourishing food for people. What I really love about that slide is you understand that there's a multitude of reasons of why somebody might engage with zest. And you learned that when did you learn that intuitively? How did you learn that that's what people are responding to in your product?

25:28And then did one of those become a North Star? Or how do you think about incorporating that into the product those learnings so so it's a great question it all trickles down from the that when moment that we were talking about earlier so when we were going to market with that first version of zest as omar was building it we were conducting a series of interviews and what we were looking at was people who throughout the pandemic learned how to cook and did it successfully didn't know how did you find those users to interview a fantastic website it's called respondent.io so respondent yep dot io you can people it's a two-sided marketplace.

26:04Researchers come on and offer certain queries and then people can sign up for user interviews as long as they meet the criteria. Amazing. So congratulations to Respondent.io for getting a free plug on the show. You earned it. So it's earned media, right? How did you find Respondent.io? So I always like to ask founders because you find the right tool, man, it could unlock anything, right? You start using Coda, Notion, you know some of these tools are just so powerful you know they put you on second or third base and if you don't know about them oh my god you know you're stuck in the dugout so how did you find out about this tool right so that is um through two people we were talking about dhh and jason freed earlier and in the reason i know them is through two people in particular so neil sales griffin who was actually on twist a while back back when you know you guys were starting off was my entrepreneurship professor in college.

27:03And he was the one that turned me on to all of this. Essentially kind of unlocked my mind to what I could be doing rather than kind of what the current of undergrad can lead you into. And then Bob Mesta, who has been a fantastic mentor of ours as well. So Bob created the Jobs to Be Done framework for product development alongside Clayton Christensen. And he also, he works, he's the CEO of a company called Rewired Group, they're a consultancy that works with major companies. And Bob uses them, respondent for his interviews, sent them our way, and we never looked back. This was like a number one, because sourcing those interviews is really hard, and this just happened.

27:44That's why I asked. And so you were lucky enough to have great mentors. Those great mentors had frameworks or thoughts. So here's the Rewired Group and Bob's group there to talk about the jtbd jobs to be done framework that helps you understand why and how people buy products really cool um and so you were able to understand product development in a way that you know you didn't have to reinvent the wheel here so you get these folks on a call and then what do you ask them and how do you you learn all this information that becomes the product uh value proposition essentially so this is the fun part with respondent is made for the scripted this is kind of a hack that you have to pull on it um we don't have a script we go in and we talk to them about their journey essentially do our best calc anderson press and like go after just leading them to best understand because this is honestly why i like entrepreneurship in general uh create making the abstract concrete is one way to say it the other the seemingly irrational there's always a rational reason if you talk to the person and so understanding that journey and the best way to do that is without a script you just go in you you put it around a moment when i talk about the when for us it was learning how to cook knowing that there was that successful outcome so this is one of the use cases where it works and then as long as you ask them what what did you ask them like as your first question or two um getting started you start broad and then really want to trigger the memory when did you start learning how to cook um one comes back that um well it was during the pandemic i what's the first thing that you made bagels why did you start making bagels right it's like yeah right exactly so you do this naturally um but what i found i you know i didn't know anything coming out i'm like you see the way you only have to say one word bagels and if you if it has a question mark at the end the way i said it now if you say bagels well that actually has a little question mark but bagels say more or tell me more why bagels right or why why bagels really and they're like oh no no bagels are incredible you know like it's actually not that hard and i missed my brooklyn bagels or something right that's so fascinating you're saying somebody was making bagels from scratch right just and that's the first thing that they made now they're a proficient cook who cooks habitual wow but i mean to start at bagels is so right that was one of so that's one of the four things that we came to realize are like a trigger and that is uh providing for going from a heavily socialized environment to a less socialized moving from being around a lot of people to being around very few and wanting to then provide for people got it and so you see so you found out through the bagel interview and other interviews that there was a social component to this and people wanted to cook for other people you were thinking hey somebody wants to cook for themselves because they burnt their pizza that was your right experience but for this person's experience was i want to make bagels and invite people over for sunday brunch and show off maybe or give them this great bagel experience i made homemade bagels which by the way when i smoke meats in my smoker my great joy in life you can only if i'm smoking a 15 pound brisket it gets down to 9 10 pounds i'm only eating a pound of that or two max over the next week the other eight i'm slicing up and giving to friends and it's my great joy hey here's my brisket they oh when can i get another brisket right in the other kind of so you start to see contrast in the stories as well as similarities and the other version of this that's like the fun house mirror version is you have people providing for their significant others that's the one that we call out in that product demo and what it is is like i'm living on my own and i eat four day old chicken and rice and it works for me but i serve that to the person I care about, all of a sudden it's like FBI's most wanted.

31:34Like you're that partner. That's how you provide for the person that you care about the most on a consistent basis. You see like they draw on these similar emotional or emotional elements, but the social element of it is slightly different. And so kind of playing with those components there. Oh, and Neil Sales Griffin, he was from Code Academy. That's right. Oh, wow. That was a long time ago. That's episode 230. For those of you counting at home, man, that episode is 11 years ago. My Lord, I've been doing this for a long time. You know, he remembers he's driving him around in the Tesla. Yeah, that is so crazy to think about how long ago this was.

32:18This is the old set. What a walk down memory lane for those of you who are watching. This is the old set in Santa Monica. And here's Neil. And this is 11 years ago. We got 6 ,000 views on this video back in the day. And what an archive this week in startups has turned out to be. Crazy. Listen, not every business is venture scale. If you're not, you won't be able to raise money from VCs. We all know that. And not everybody has a rich family member to do their friends and family round. So if you want to jumpstart your business with$50 ,000, let me tell you about Painbrush Loans. Painbrush has created a new kind of loan product.