How Founders Are Building the Next Great Startups | Paid.ai, iTruckr & Tenax AI | E2175

25:32No, so that's what we do. That's exactly what we do. So we eliminated, so we built and paid from the principles of what are the future interactions going to be like. And once you decide what the future interactions are gonna be like, then you need that kind of flexibility. You need to be able to provide, Like, again, I'm not saying anything new here. Like, you should be able to provide the value and deliver the value that your customer cares about and then charge for it. But as it turns out, every customer is in a different path, is in a different value perception curve. And they should be able to pay in the way they want.

26:06And like what we have done in the last 20 years is convince the software vendors that because we're so powerful and so magical that we can charge this arbitrary proceed thing. because it's really hard for us to like otherwise scale the pricing. And I think that's a big bag of lies. I think that in the end of the world, software is very cheap to build and you should be able to build exactly what your customers need. And like your inability to scale custom pricing doesn't seem like it's your customer's problem. That seems like your new problem, you should really fix it. Yeah. Okay. So in the future world then, let's say that I'm selling an agentic product to a Dubai dealership.

26:43do I have like a forward deployed engineer that's helping them, you know, dig deep into their granular business to define the right pricing setup for them? Or is this something that's automated enough that a dealership could set up a relationship with an AI agent vendor without having to do a lot of custom coding work to make their iteration function? Because I feel like if it's the latter case, your business is gonna be much bigger. If it's the former case, it's gonna be slower growing. I think that a lot of these rules are going to be baked in. So like as one of the things that is beautiful about this agentic world is that we are truly embracing services because we're replacing services.

27:23But as you embrace services and replace them, the kind of service you provide is higher level. You see what I mean? So instead of like doing forward deployed for, you know, hooking up the agentic workflow that is going to do discriminatory pricing based on your location, I think you will do some other kind of services around, you know, you know, where car dealers actually make money is on the trim is on the services is on the app sell. So like the idea that then you, you're going to really have your juices flowing more into like, okay, so what kind of marketing program kind of run to get people back in here?

27:53You see what I mean? Like, how can I elevate the trim? The moment you fall in love with that red Beamer, how can I, how can I sell you the one with a spoiler and the one with like, you know, more horsepower. So those are the kinds of things that you're thinking about that, that this, this kind of like, you know, pricing on locks. Well, I was really excited to talk to you because I feel like you were attacking a really interesting problem point in the AI economy today. Figured out what it costs to run an agent and also how much to charge for it. I didn't realize, though, Manny, and I'm so glad you came on, just how detailed you're going to need to get and also how good that's going to be for the end customers.

28:26But what this does do is put a lot of pressure on the AI agent companies, because if we're going to charge only for really defined value, they have to build high quality products that really get there. So I guess I guess good luck, everybody building, because there's going to be no you have to get signed up for a thousand seats to get the enterprise, you know, you know, SSO or whatever. You're going to have to really be good. A hundred percent. A hundred percent. But like, isn't that the way it's supposed to work? aren't we? I mean, I'm not saying this is bad, I'm saying it's exciting. So why would you go to a doctor that is okay versus a doctor who actually fixes your problem?

29:02The website is paid.ai. Manny, thank you so much for coming on. We really appreciate it. And when you hit 100 million ARR in like 40 months, just call me up and we'll talk again. You're right up. Good to see you.

29:18All right, Jason, speaking of founders, we have one literally waiting in the wings. I'm incredibly excited to bring Camilo Ramirez. He's the co-founder and CEO of iTrucker. Now, you know this company, Jason. It's based in Pittsburgh. It was in Launch Accelerator 34, and it's working on helping trucking companies do more using AI agents. And what's cool is Camilo is not just another Stanford graduate out there trying to sling code to a market. No, he's actually driven trucks on a cross-country basis, both dry and, as he says, reefer, which means refrigerated. Camilo, welcome to the show. Hey, guys.

29:48Nice to see you. Appreciate it. Yeah, nice to see you. I was absolutely in awe of your performance. You did a great job presenting in the accelerator. And yeah, sometimes domain expertise is great. Sometimes domain expertise can ankle you, but sometimes it can give you an unfair advantage in the space. So what have you learned in that aspect? And maybe start with telling us what your insight was as an insider of what needed to be built here. That'd be a good place to start. Sure. Yeah. Well, thank you guys for having me here. Appreciate it. Yep. Former truck driver a couple of years ago where I understood the pain points of the driver when you're driving over 600 miles per day.

30:31Then you're stuck with a flat tire at the midnight and no one is there to help you, right? So then we had the opportunity to own our fleet. We ended up with around like 15 trucks where we saw the problem from the other side. So at the time we had, you know, 15 drivers calling us, asking for a pickup number. Then we have 15 customers asking like, where's my load? You know, like, is it going to be on time? And it's a 24-7 business. So we understood that in order to build something to improve this kind of like activities coordination on a single basis, we needed to build something that is able to be part of the operations team.

31:13So basically that is able to talk to the drivers, to talk to the customers, to brokers, forward information. We have a ton of paperwork going around. So, you know, reading those documents and forwarding the right information to the right party. So we learned that we needed to build these bottoms up in order to get to the trucking companies and put our service within their operations.

31:45Y 'all know I'm obsessive about a good domain name, and I'm so proud of my exclusive collection of single words, easy to spell.com from begin.com, inside.com, mahalo.com, aday.com. But the truth is the supply is dwindling. You could spend your whole life brainstorming ideas, but 99.99 % of the best.coms are taken by rich guys like me, or they're sitting there wasting away unused. But fear not, founders. There's a simple solution, dot tech domains. A dot tech domain means you don't have to compromise or give your company an awkward name you hate. Dot tech instantly lets everyone from customers to potential investors know you're a tech company building something innovative.

32:29It's in the domain. That's why over 500 ,000 founders have collectively raised over 5 billion in investment using their dot tech domain. Even CES, the world's largest electronic show, is using a.tech domain now for a reason. It's time to move over to.tech. So head over to get.tech slash twist, G-E-T.tech slash twist. So when this was done prior to your product, iTrucker, which is I-T-R-U-C-K-R, drop the for elite, you found there are dispatchers. Dispatchers are curmudgeonly humans who have to get on the phone with all these parties and yell at the drivers and manage the people who are, you know, sending a load across the country.

33:26and they're chain smoking Marlboro lights in some boiler room somewhere. And they're getting paid a large amount of money to do this essentially air traffic control for trucks. Yeah, they get paid. Yep. So there are like two different ways on how that operates. So we have like some fleets, they are able to like bring those dispatchers like in-house team of people. So it's a little bit cheaper for them because you're hiring like a full-time employee. But then there's a lot of trucking companies that use like dispatching services. So those fleets are able to, well, they're not able to, you know, bring a full-time employee.

34:10So they're paying like a portion of the revenue of the - Oh, that sounds expensive. Yeah, it's pretty much expensive. If you have like 10 trucks, you know, you're making 100K. So what was your solution then? I know you had an AI first solution to this. So what did you build? and how has it worked? Yep. So we are deploying A workers, A fleets within those operations. So basically we are automating the communication. So now a trucking company, instead of having like three dispatchers to dispatch a fleet of 15, 20 trucks, they probably just going to need one because we help them with like booking loads, right?

34:48So now our agents are able to go to different load boards, find different option of loads, make the phone call, send email, book deload, then talk to the driver. And that's being done by an AI agent that's calling on the phone using voice or text voice, I guess. And you've built all these sophisticated AI agents and they occur as a co-pilot where they're supervised or are they stable enough to deploy them and not have a human in the loop or a human checking them? How does that work? Because we've heard a lot with this MIT study. Oh my God, you know, AI doesn't work. Obviously, co-pilots work really well.

35:30Agents, people do have concerns. So yeah, unpack that piece. Yep. So we right now have, well, they have a dashboard where they can see like the whole operation. So they can see like how the AI is talking to the drivers through text messages. They can see like how the email is replying on lifetime. Then they also have the option to like stop whatever the AI is doing or the AI suggests a few things. So let's say just to give you like a specific workflow. So they have a truck idling for six hours. So the AI notified the dispatcher or the fleet manager saying, hey, we have these drivers in this location.

36:04It's idling his truck for five hours. You want me to find a load? So they just approve the option and then the AI go find the load, book the load and notify the driver and notify the dispatcher saying like, I found this based on the metrics that we already have set up. Camilo, how do you get that information? Is it IoT that lets you know that this truck is idle for five hours? Because that's a very specific actionable data point, but you can't have a human looking at GPS data. So how do you get that nugget? Yeah, so in trucking, there's a system called ELD, which is an electronic logging device where every single truck needs to put hardware into their trucks to see where they are for this hour of service that the driver can drive.

36:49They can just drive 11 hours per day. So they have this GPS tracking kind of thing. So they have all these telematics, like, you know, field consumption and all that. So we are integrating those ELDs into our system. So we are able to see where the truck is, how fast they drive, if they have enough fuel to get to the delivery location. So truck drivers have no privacy. They can't stop and like have a couple of beers and drink or have a hamburger and take a nap and then go 75 miles an hour the next morning to make up for it. They're monitored like very granularly. Yeah. Correct. Yeah, exactly. So are they required to have cameras in the cabin too?

37:30Right. Yeah. Some of them, they put like cameras in front of the dashboard. Is that required now or is that like your trucking company decides? Is that like a federal mandate? it no no no no that depends on the on the fleet and then depends on the insurance company some insurance are like a you're gonna record every single you know piece of the of the journey of the driver but uh some of them they're just uh you know fleet which is why we now have this video tragically i don't you must have seen this of this did you see this last week alex they have video of a lunatic truck driver who decides to make a u-turn on the freeway and i think he had a double cab i'm not sure if it was a it was a double cab yep it was the same way it's so tragic he decides oh i missed my exit so i'm going to use the u-turn which is like the police u-turn yeah in between the dual carriageway the gravel bit in between yeah yeah and then he because he decides to do this a car can't stop and smashes into the side of him and i think tragically two people were killed i'm not going to play it because of that but no we don't need to play it but it's awful It's awful.

38:33And there's a video of his perspective on it because you have not only video of the driver, not only video of the road and everything and the review mirror, you have video of the driver and their reaction to it. Oy yoy yoy. Yeah. That was pretty tough. Camilo, what's your average trucker? How many trucks do the average customer of you guys have? Because what I learned prepping for our chat today is that trucking companies come in size from absolute pipsqueaks to absolute behemoths. Yeah. So we started with smaller fleets, like one, three, four trucks operations. Once we fully deployed the product, we now are targeting mid-size fleets.

39:11So anywhere from three trucks to 100 trucks. Those are the ones that are feeling the pain that they're having four or five dispatchers working 24-7, talking to drivers, talking to brokers. So those are the fleets that we're targeting right now. And we are focusing - How many of those companies are there in the US? I don't think a lot of folks that are listening to us right now have a good feel for how many midsize trucking companies there are out there. I presume it's a lot. Yeah. So let's say that in total, we have over like 2 million fleets. That includes like box trucks and all kind of like fleets.

39:44Then within the trucking, we have around like 800 ,000, right? And then within those 100 ,000, we have around like 300 ,000 for midsize, like 300 to 100 trucks. so there's like a plenty of a room for us to play here awesome well it's office hours companies doing well you got through the accelerator you got customers you're growing nicely you're using ai to the fullest of its current abilities you're one of these companies that's like the tip of the spear and using this technology but you know we're here and there must be some things you're either struggling with or challenged with. Any questions for me that, or anything you want to discuss?

40:28Well, now we are seeing a lot of opportunities like an enterprises accounts, kind of like larger fleets, even like out of the country opportunities. Great. So in order for us, you know, to stay focused on how we're growing, because we're growing Any tips on how to handle both things, like how we handle enterprises? Yeah. So the great thing about enterprise customers is that they will spend more money. And if they love your product or service, they're probably less price sensitive. The great thing about the small boutique, you know, smaller customers is they might be more scrappy and willing to try something, right?

41:17Because they don't have the budgets. And, you know, that's why a lot of people will use startups as their first customers, because startups will actually use the product. Whereas if you go after the big enterprise clients, they take a long time to sell. They're going to need SOC 2, you know, so you're going to need to get in touch with Vanta, make sure your SOC 2 is compliant, all that good stuff. And they just take forever, right? They might have a six-month sales cycle. They may want you to build custom software. So they can be a bit of a headache. What's important is to study your customer base.

41:48And if you're in a highly fragmented market, there can be many customers. What's a highly fragmented market startup that's done incredibly well? Spotify. They went after small merchants. There was Magento and other big products, you know, going after the large enterprises, going after Target or, you know, I don't know, Walmart. Maybe those companies are even too big. They build their own because it's so critical for the user experience. But they went after the long tail. HubSpot, they wanted, you know, small firms, Squarespace. There are big companies that use it. There are small companies that use it.

42:26So then you have to make a decision. Do you want to have a sales team? Do you want to deal with custom software? Do you want to deal with approval processes? And both can work. Obviously, there are Salesforce and other tools for large enterprises for sales and marketing functions. And then there's HubSpot. And this will inform a lot of product decisions and a lot of go-to market decisions. Your go-to right now, I'm assuming, is founder-led sales. you email a small trucking company or they hear about it from another small trucking company, you get on the phone with them and the person you're talking to owns the business, gives you their credit card, fills out a form and you're done.

43:09Okay. So you get a nice quick hit, but it might only be a thousand dollars or$3 ,000 a year. And you might start to say, you know what? I want the$10 ,000 a year customer. I want the$30 ,000 a year customer. So it really is going to determine how you staff and fund your company. You may need more runway to go after that. So what does your gut tell you or what does your knowledge tell you about what type of market you're in? Are there a small number of large players and a long tail of small ones? Are there plenty of both? So both business models will work. I don't know enough about trucking to know the answer to that.

43:51Yep. Yep. That's pretty good advice. And right now we're seeing our product into this mid-size level, which is the sales cycle much faster because, like you said, the owner is involved, so it's really easy to show them the product. Like, hey, here's the solution. They're scaling their operation. So it's really working right now. But then those enterprises come and they're like, hey, I want to use your technology, not your product, but your technology to put into our current systems. But it's a different game, like you just said. So we will, um, you might need to price differently for them and you then have one group that is easy breezy.

44:30They'll just use your solution. Like I said, the other groups, oh my God, I need, you know, this custom thing. I need that custom thing. Can you get into our accounting system? And a way to do that is to say, yes, we can do it. It's going to require a$250 ,000 activation fee, uh, for us to build that. And we need you to pay up front. If you're willing to do that, we're happy to work on the project. And then you can hire two developers or a product manager and a developer. And you tell them, I will embed ourselves. You may have heard me talk in the accelerator or Founder University. Did you go to Founder University too or just accelerator?

45:07No, just the accelerator. Great. And so I've told the story before about bear hugging a client, which is when you embed yourself at their company. So you could say to one of the big ones, I'll put a product manager in your office for six months to sit with your team and to outline all these features. We just need 250K in advance. And that's for the first six months of this trial. And then afterwards, this is what the pricing would be. So you're kind of challenging them to not waste your time. The biggest problem founders get into is that, oh, my God, this is such an incredible lighthouse customer.

45:43and then some mid person there wants to get points. They drag you through different specs and documents and meetings. And then they try to sell it to their boss. And then that person decides they're going to leave the company. They get fired and you lost your contact there. So you got to kind of let them have skin in the game. You got to say, listen, we're a small company. We're eight people. In order to do this, I need two more people. In order to do this, you know, I'm adding five new customers a month right now for the existing product. I just need you to, you know, make a commitment up front.

46:16And so how do you feel about a 250K pilot for six months? And the person might say, I can't authorize that. And say, oh, who in the organization can? Maybe we should have a meeting with them. And you just challenge them. You challenge them. You challenge them. And if they're not serious, you say, you know what? We're just resource constrained. We'd love to work with you, but we need to stay focused on this. Can we check in in six months? And boom. Does that make sense? Yep. A lot of sense. Yeah. Thank you. Thank you. So don't be scared of these customers. Look at how many employees they have and times that number by$200 ,000.

46:47So what's the biggest of the customers you've talked to who are the big fish? How many employees do they have? Do you even know? What, a thousand? A thousand. Yeah. So a thousand times 200 ,000 is$200 million. dollars. They're probably spending all in about$200 million running that operation if they have a thousand employees. And if it's a public company, you can go find that out. But it's not that every employee is getting paid 200 ,000. It's that maybe on average, the employees cost 100 ,000 with their benefits, but they have to have office space. They have HR. They have turnover. They've got to recruit people.

47:24And you start just as a back of the envelope number for a midsize company, that, And then for a Google or for a Facebook, maybe it's$500 ,000 per employee. You can estimate what they spend. Alex, if you were to look up how much money Meta spends a quarter and how many employees they have ballpark and you were to divide those two numbers, and he'll go do that in real time because he's awesome at these kind of things, you'll get a certain expense base per employee. It might be$500 ,000,$750 ,000 in total spend because they build signature office space. They have other kinds of infrastructure. They have consultants.

48:02Free food. Free food, all this stuff. You know what the free food bill is at those big companies? It's like 10, 20K per employee. Wow. The free food is so expensive that the IRS felt the need to investigate if they were end running compensation by using their pre-tax dollars and giving an employee benefit, to which point the IRS said, hey, if you're going to spend$20 ,000 on Perkshire employees, we need you to pay tax on that because that would be the same as like paying for a corporate apartment, paying for a corporate car that's used personally. Like they have to eat. That's on you to give that perk.

48:44And I don't know where that IRS investigations wound up, but you know, that's how crazy the spending they have per employee is. So I would. So far as we can tell, Jason, you were very much close to dead on 2024, which is the latest full year employee data. They don't drop it every quarter. About 550 ,000 in expenses per employee against revenue of 2.22 million per employee last year. And that's why Meta is a good business. And that's why when they keep the team size the same and grow revenue 10 or 20 % per year, the earnings increase, which is why people keep betting more and more money on the Mag7.

49:22Listen, continued success, Camillo. Hopefully we did a good job for you in the accelerator, Did my team work hard and support you? Absolutely. Yanker was great. We made a lot of connections, great connections, a lot of business interests. So it was really good, really good. What was the best part of the accelerator for you as a founder that you got the most value from? And then after that, what do you wish we would add to the program that would make it better for you as a founder, if anything? Yeah. Take a second to think about that. The best thing definitely is the pitch sessions. you know, like practicing this pitch, this two minutes pitch like every single week.

50:04So after that, like every time I have a meeting and I'm pitching and they're like, you're done? Like, well, you just covered everything because, you know, we covered the issue, what's the solution, his product revenue, and that's it. So that's definitely really, really - The pitching really helped you. Yeah. And Alex, well, we originally were at like five minutes of pitch, then went to three minutes, then we made it two minutes. There's a dozen companies. That's only 120 seconds, man. Yeah. Well, here's the thing. You are making a trailer of your startup is what we tell the founders. Now the trailer for Star Wars doesn't tell you, spoiler alert, that Darth Vader is Luke's father.

50:43It just tells you like, this is an epic thing happening in space and there's lasers and there's ships and it's, there's a Wookiee and you're like, Oh, I want to know more about this movie. That's what we try to accomplish, which is, oh, wow, this is an interesting founder or interesting founders. And they found it's a really interesting market. Oh, and this is a really interesting solution. Oh, and this is a really interesting TAM. Oh, and the competitive set is, you know, Marge smoking those Marlboro Lights, two packs a day, you know, yelling into a landline and who tells you to get the hell out of her office and throws the ashtray at you when it's filled with 20 cigarette butts if the boss comes in there and tries to give her a hard time today is excessive smoking you're smoking two packs a day man what's inside of you i mean i know these dispatchers they're these are curmudgeonly hardcore individuals i love them i knew them from the dispatch at uh harbor car service in bayridge brooklyn where i grew up uh because yeah there was like a large marge there too who would yell and scream at people and get the hell over there.

51:48Pick up John the Beard's kids. It's the middle one, Jason. He's got to get to school. He's late. They give him a hard time. Okay, what can we do better? Is there anything that you would have liked to add to it? Sometimes people ask for mentors. I always felt the mentor thing was kind of garbage because they had these mid-mentors. But you tell me, is there something that we could have added to the program that would have helped you more? I mean, well, yeah, the thing with mentors is that it really depends, like who's the one that is going to help us, You know, if it's going to be like a, you know, founder, maybe could be a good advice.

52:26But what else I can say? More money. Could be more money. Could be more money. Okay, sure. We'll double it. Sure. Great. Add more money to the program. Thanks, Alex. You just cost me more money. That would be a great opportunity to double the money. Yep. But no, for real, it's a really full program. We really love the pitches, the introductions. I mean, we haven't seen programs like this one where you see every single week, five, six, seven different VCs and just not like associates, but also like the managing partner and then he's the owner of the fund. So that adds a lot of value. To unpack that, Alex, some firms do this big demo day and they advise you, hey, don't do meetings with investors before then.

53:16Just get your startup nice and tight. I took a different approach. I'm not saying the other approach doesn't work. It does to create a bit of a marketplace at the end. What I said was, let's pick our favorite investors who we have deep relationships with, who give great advice and who are willing to give up an hour and a half of their time. And then we say to those ones we like best, here's the calendar, pick a date you want to come. And then it becomes competitive. They're like, I want to get these companies in the first, second, third week, because I want to pick them off before other people see them.

53:47And so then what happens is, you know, Camillo will get some great piece of advice, you know, three or four times where people are like, hey, this TAM is, you're charging too little for the value you're creating. And when a founder hears that, not from us, not from their customers, but from three or four VCs in three or four weeks, and then they just try raising their prices and then they present, oh yeah, we have three pricing models. There's the introduction for, you know, one truck company or two, three and under companies. And we charge them, you know, a hundred bucks a month. But then these ones, we charge 750 a month and 1500 a month.

54:26And when we changed that pricing, we saw people, half our customers moved up. And when we deprecated the free product, we got rid of 20 % of our annoying customers and the 80 % said no problem. And they just, you know, agreed and checked a box to pay the higher rate. So we record every piece of feedback, Alex, we normalize it and we say, okay, you keep getting this question about your pricing. Should we have a discussion about that? And do you want to read a module we've written on pricing? Or would you like to talk to an expert about pricing? And I find this model works better with great founders where we're not dictating to them how to run their company.

55:05They're just collecting lots of feedback, lots of feedback. And then they themselves normalize it and make their own decisions. And we help them by normalizing it and taking out all that work. If you had to set up those seven meetings each week for 12 weeks, it would be a full-time job to get half of that done with the associates at the firm. There's nothing wrong with associates. We have plenty of them. But like you said, we try to get more senior folks. The associates, though, I will say can be sneaky, influential in some firms where you have lazy VCs who are like, they just send all the associates.

55:39I can't meet with all these companies. We do 100 meetings per week at our firm, introductory meetings. I could never do more than 20 of those. Back in the day, I could do 100. But man, that becomes hard. Your brain will melt. All right. Listen, great job. Very excited for you. Thank you for letting us invest. And thanks for the kind words about the program. All right. Thank you, guys. Appreciate it for the time.

56:02All right. Next up on the show, we have Elise Myrens. She is the CEO and co-founder of 10X. It's 10X AI. Jason, this is a company that wants to get more information about potential risks, help homeowners harden their houses to prevent wildfire damage, and also ensure that insurance companies can properly underwrite potential risk. It's an enormously important business because we've seen more natural disasters, higher repair costs. The entire U.S. insurance market seems to be a little bit upside down, so I'm very excited to hear more from her. And here she is. Elise, how are you doing? Hi, I'm great.

56:35Thank you. How are you? Nice to see you again. You are from the Launch Accelerator 35th class, if I'm remembering correctly. 34. 34. Okay. So I'm not remembering correctly, but I was close. I was in the ballpark and we had the chance to partner with you on your new company. Maybe you could tell us a little bit about what you're building and why it's important. Yeah, happy to. So 10X AI protects homes and their insurability from extreme weather. So I'm talking about things like flood, wildfire, storms. and essentially what we have built is software that uses computer vision and AI to assess risk at the individual property level so at a home level and what that does is it gives insurers a granular view that helps them understand the true risk of that property which enables them to underwrite and insure that property more accurately and what it also does is it enables the homeowner, so the people who live there, to understand their exposure to risk and to take actions that can actually reduce that risk as well.

57:42So AI is the better way to do this. How is it currently done and why is AI a better solution? And maybe you can show us because you had some really interesting demos in your deck. And I remember when you presented to Sequoia, I was there and they were fascinated by your approach. Yeah, absolutely. So to date, what has been done is insurers would normally make a regional sweeping decision based on regional models about the exposure of a property. So they might say this entire zip code or neighborhood is this general level of exposure. And then they use that to inform how exposed that home is to a particular peril, such as wildfire or flood or hail or winds.

58:30Now there's the introduction of some manual inspections where a person or a professional would be booked and organized and they would go to the property on behalf of the insurer and they would do an inspection that could take a couple hours. They got to write up a report, ingest all of their written and verbal notes to put together a report to explain that exposure and then hand it over to the insurer who then has to ingest it into their underwriting process. What we do is about 80 % more efficient than that process because we have built, I mentioned, AI and computer vision models that essentially enable images, which can be collected in up to 30 minutes max on a mobile phone.

59:11So we can just take their cell phone, walk around the property with our app. Very, very simply, you need zero expertise whatsoever. The average homeowner can do it. And we can upload those images and run it through our proprietary models to be able to diagnose the exposure of that property. The other thing we're doing that is quite unique is we are now starting to send drones to properties as well. And this is really important because in some cases, insurers would actually prefer that the homeowner not be the one collecting the data. It just offers another level of verifiability. Sure. Yeah. As we've seen, homeowners can, you know, value their homes and maybe get into shenanigans on the margins.

59:55And, you know, this is very interesting to me, this company specifically, Alex, because when we had the tragedy in the Pacific Palisades, you know, I'm just playing a quick video here on YouTube without the sound. I'm assuming you two can see it. Yeah. Yes. So this home was made to be fire resistant. It has a number of features. And if I were to zoom in on this for a second, let me pause it there. Perfect. Now, when you look at this home, what you'll notice is it doesn't have overhangs of the roof. You'll also notice it's fire retardant material everywhere. And around the home is a giant stone fence with landscaping with a lot of gravel and metal and not a bunch of trees around the home.

1:00:47You can build homes today that in a wildfire would be resistant to them, but this home, Elise, would have been bundled with all homes in Pacific Palisades, correct? Spot on. And that's because of the way that risk has been being calculated by insurers, I said, in these sweeping regional models. And so what happens is even if your home was lower risk, so in that case, that home's insurance actually is probably higher because they're technically compensating or paying for their neighbor's original risk, right? Which is wild. Elise, if I understand, this is not because the insurance companies are lazy, but because there's actually a regulatory barrier they can't cross or couldn't cross until recently.

1:01:30Yeah, there's a couple of crazy forces at work, which are kind of unexpected. And so one of them is actually in California. Until about a month ago, insurers literally did not have regulatory approved catastrophe models that they were allowed to use that were forward looking, that enabled them to calculate the exposure to true and up-to-date wildfire risk, which is bananas. You would think that that would be very obvious, but it hasn't been the case. And so as a result, of course, they would be pulling out. They literally haven't been able to measure risk accurately. And so there are now three catastrophe models that have just been approved in the last about four weeks, Veririsk and Moody's among them.

1:02:18And what is really cool about these, if you are nerd like me and get into the weeds and looking at these models, is that they have placeholders within them where you can insert data about specific secondary factors related to the home. So we're talking about characteristics like what material is the fence made of? Is it combustible? And does it link up to a large patch of vegetation? Because you may think you have defensible space around your home, but say you have a wooden fence and it connects, you literally have a wick to a combustible source. Or what type of windows do you have? Are your vents covered with the right mesh?

1:02:54And what's really cool and what we factor in mathematically to our algorithm so we can actually tell a homeowner and tell an insurer and tell a community how exposed they are is we have risk factors with each of those characteristics of a home. So if you have the right type of roof, you're reducing your risk by six times. If you have the right porch material, you could be reducing it by three times. If you have vents that are covered by the right size mesh so embers can't fly in, you You could be reducing it by 1.5 times. And it goes on and on. And a lot of these things are not things that people think about every day.

1:03:25And so that's what we're able to offer people really simply. This goes to the question that I really have for you, which is who is the customer here? Because I can imagine the insurance company being the customer, or it might be the individual who wants to get a better rate. So they might pay for what you guys put on. So who do you sell to in the market? Yeah. So insurance carriers are our ICP. So those insurers who have exposure to perils like flood, wind, hail, storm, wildfire, which increasingly is kind of everywhere, as we all know, for anyone who picks up the news. The homeowners themselves are the users.

1:03:58And so they would be prompted by their insurance provider, either if they are at a point where they're looking for a new coverage. So if an insurer is deciding how to price the risk and they need this kind of data so that a homeowner could actually get rewarded with discounts, which is now there's new regulation that helps enforce that in California, for example. And then they would be able to access that software basically through their insurer. Yeah, this is, I am obsessed with this. And because we had an investment, it didn't work out in a company called Blockable. They were making prefab homes.

1:04:33Now, you might think, oh, a prefab home, oh, that's just going to burn up. No, au contraire, mon frere. What they were doing was the gaps in these homes and the materials that you can build in a factory as opposed to on site, because cutting certain types of materials is impossible in the field, Alex. And so Dwell did an interesting series on this, especially in Australia. This is a big deal because the wildfires in Australia are – I think they make some of the wildfires we have look like campfires, not to make light of anything here. But as you can see here, this is a fire-wrested infrastructure.

1:05:17This is a Dwell story, greatmagazinedwell.com. And you can see they're using steel for the roof, et cetera. but at least the gaps is a key because if there are tiny, even the tiniest of gaps, the air gets sucked in. You have all kinds of suction kind of situations that happen with heat that you've all experienced when you open an oven, et cetera. And what that does is suck embers into the home or it sucks embers into, you know, a pile of leaves in the gutter, all this kind of stuff contributes. and they have been working on this specifically to do fire-resistant timber. Here's an example of a timber that is fire resistance.

1:06:01And then other folks are making what some people might consider ugly, you know, made out of iron, but you don't have to go that far. And then as you see here, the distance of the trees to the home also critical. So it is completely possible that if you clear the brush around your home, the chances of it burning down go way up. If you look at flood resistance home, that was another thing that happened in the wake of Katrina and Breezy Point where I used to summer as a kid in Brooklyn and the Rockaways, they started building homes that are four feet above the water. Yes, at least, and have these really interesting panels on the side of them.

1:06:35My brother was a firefighter, my grandfather as well. And what these panels do is when the water comes rushing in, you know, so you don't see under the house, but when the water comes rushing in, it just blows the panels out. The pressure from the water just blows them out. And then you just have, you know, whatever you have in your basement is like, you know, you keep surfboards there or whatever things, you know, you're not putting a full on, you know, theater in your basement. These panels blow out, allowing the water to flow through. So aesthetically, it doesn't look like you're living on stilts, but essentially you are because the panels just are made to break away.

1:07:10So flooding is the other big high order bit here, Elise, I guess. Yes. Flooding is going to be second for us. And I think you're touching on something, Jason, that's really important. And we hear this so often when we talk to homeowners who say, well, what can I really do? I live in an area that, you know, I'm told is prone to, in this case, wildfires. The reality is there are so many things that people can do, but they don't know. And it's not only a roof, you know, and then people, you know, say it might be the roof. They're like, well, that's so expensive. Well, the reality is the numbers have been run.

1:07:42And we know without a shadow of a doubt that at the very minimum,$1 invested in the right retrofits or controls on a property saves at least at a minimum six in recovery cost. Right. And then if you can do these types of retrofits and then get insurance as well, so you're insurable and you're not having to pay for, you know, an insurer of last resort that is insanely expensive, well, then you're in a really good position. And so we're trying to give people advice on those things that they can do to help maintain their insurability. at least i have a kind of annoying question here but if we make it so that people who are very proactive about fire hardening their house from either fire or flooding or whatever uh can be insured on a one a single house basis and is that going to leave a lot of homeowners who may not be able to harden their homes out in the cold essentially because they'll become uninsurable because the risk pool will be narrowed from a neighborhood size to an individual home what's the other side of the good news that we can have more information, I guess?

1:08:40Yeah. Okay. So there's a few aspects of that. One is actually something that we are seeing as interest from communities themselves. Like, so from HOAs, local and regional governments who actually want to take a community wide approach to risk reduction. And so the idea here is that, you know, when you can harden multiple homes in a neighborhood, you can actually improve the survivability of the entire neighborhood. And we also see from a behavioral lens, when one person in a neighborhood starts to take action, it does spread. I was going to say like wildfire. It's the wrong pun. But it does. There is a contagion, you know, in a certain aspect of.

1:09:20These are terrible, terrible analogies. Terrible analogies. It spreads like a smile. I could have used. That would have been even worse, Alex. But in some ways, those homes at least become a firewall. And there would be an argument in my mind, Alex, to even make the disparity between the safe homes and the unsafe ones even greater. To incentivize. To incentivize it, because if, let's say we lived in a thousand home planned community, that entire community could save the three communities next to it. when the embers start flying, they're just a natural blockage. And you might look at it in a community and, you know, the, um, the, the floral arrangements and the, and the, and the parks and everything, uh, and the structures that are not homes, you know, those are kind of a tragedy of the commons.

1:10:14Like who's going to change those, but you could say, you know what, these trees are no bueno. There, there are some trees in California that are literally like, I mean, you, you, you could put Duraflame logs around your house and it'd be more fire resistant than some of these, like the, are they the, the palm fronds that one of the things that fall off of the palm trees, these giant things. I don't know what they're called. Yeah. Palm, some things. Anyway, those light up like Tinder, Tinder. Yeah. God. And then they break off and they fly like a, like a literally like a missile and land on somebody's roof.

1:10:48And then that person's got, you know, a shake roof and okay, game on now. So, yeah. So, uh, we're here for a little office hours. How's the company going? Is there anything we can help with? I love that question. Thank you. Yeah, things are going well. We're working with a handful of insurers that are helping feed into our product development, which is very exciting. My question for, well, there's a couple things. One is actually an offer that I'm going to make, which is for any insurers, brokers, and even homeowners who might be listening to this, who are really interested in figuring out how to protect their home and understand their risk.

1:11:28We're currently working with some partners in California. And essentially, if there are people who would like to get an early version, a test of their property, contact me at Elise at 10xai.com. That's at T-N-A-X-A-I.com. And I'd be happy to put you in the queue for some of that. Great. So we need some Vanguard here. We We need some early adopters who want to get early access. So great. Let's get some of those going. And then the question I would put, this is something I'm loving brainstorming around right now, are different ways to hack sales cycles in really regulated industries that are slow moving, right?

1:12:10So in that B2B space, I love talking about this and I'd love, I don't think you and I have talked about it. I would love to hear your thoughts on that. You know, that's a tough one. You know, whenever you go into education, let's say, or you go into housing, as you are, healthcare, these are some of the giant castles that are hard to scale. We've got moats around them. They've got drawbridge. They've got alligators in there. They've got arrow slits. It's not fun to scale those. One thing I've seen is companies like Brilliant.org, and Alex will pull it up, you know, they thought, hey, we can help educators, right, teach kids math more efficiently, etc.

1:12:49But I think one of the lessons Sue learned over there very early was we can actually sell into the top parents and have those parents, you know, use these tools to make their kids superhuman, to use a term, and another startup that we're investors in. And then those people bring it to their schools or it becomes, oh, the kids who are doing really good in the class are using brilliant.org and their STEM stuff. And then they say, hey, can we get this for our school? And so I wonder if you find high-end homeowners where you can consult with them or build some product or service that helps them navigate lowering their insurance.

1:13:39and also just lowering their risk and advising them. So if there was an audit of my home and you told me for$500,$1 ,000,$2 ,000,$5 ,000, you know, I have some expensive homes that cost a lot of money. And somebody said, hey, we can audit your home for$500 and give you recommendations right now of how to lower your insurance, or we can go call your insurance company and tell them you've done these things. And whatever we lower your insurance by, we'll take half of the gain. You know, there could be something there. Now, I don't know enough about the insurance business and lowering insurance based on these remediations, but that could create a way for you to integrate yourself into the industry to just raise awareness.

1:14:29And I think I spoke to you a little bit about you're so passionate and you're so great at communicating this and you have that just natural enthusiasm, a YouTube channel just about this issue where you have homeowners, you have builders, you have the person who makes the roofs. You have the person who is a contractor who you met in Santa Rosa, you know, up by Napa where they've had some terrible fires and does this kind of retrofitting and just short videos, even TikToks. Hey, my name is Elise. I'm from 10XAI. I, we help fortify your home from floods and fire and lower your insurance. Today on the program, I'm going to show you this tip, or here's a tip for, you know, stopping wildfires and dealing with floods.

1:15:11Those kinds of things could just make you, you know, the queen of this topic. And that would naturally start you off on second or third base with partners. I know this because people, when I had This Week in Startups and I started my angel syndicate on AngelList and then moved it to thesyndicate.com, were like, oh, yeah, I watched This Week in Startups. I'd love to be part of your syndicate. Or I saw 10X AI. Are you going to syndicate that company? So we inserted ourselves into the discussion, and then we became the host of the discussion. We became the place where the discussion about startups was happening.

1:15:47the discussion about angel investing was happening which is why i wrote the book on angel investing literally called angel uh you know now in 12 languages and so i had that calling card that just made you know any meeting request uh happened very quickly now with all in it kind of moved over into pop culture so when i go to another city now and i want to talk to people about bringing founder university to their region or you know i want to record an episode of this week in startups with a founder. We just had a founder on the pod from Neuro and he was referencing Alex and I's conversation from previous episodes about self-driving.

1:16:28And so that means their chance of coming on the pod goes up. The chance of me investing in the company goes up. You get the idea. All right. Everybody go to 10xai.com, T-E-N-A-X-A-I, T-E-N-A-X-A-I.com. And if you are a homeowner or you're in insurance and you want to help a founder out, just with some conversations and maybe some tips and advice, Elise at 10xai.com, E-L-Y-S-E, at. Great job. Thank you for letting us invest in your company and we will see you all next time on this week in startups