Late-stage VC market update + Terra Kaffe's Sahand Dilmaghani | E1891

0:00Hey, everybody. I was in Miami all week doing meetings. It went really well. Thanks for asking. But I didn't get a chance to record a new liquidity episode. You know we talk about what's happening in venture and start up with a new company. cafe. How do I know this founder? Well, I bought this incredible, super deluxe espresso machine that I love. The design was amazing. So I wound up investing in the company. And we have a great talk about how to build a hard work company, how to have world class design, and just the ups and downs of startups right now. So this is going to be a great show. Let's get started.

0:45This Week in Startups is brought to you by wizard.io will help bring your vision to life in minutes, not days, with the power of AI. Visit wizard.io slash twist to get 25 % off Wizard Pro for an entire year. That's U-I-Z-A-R-D dot I-O slash twist. Northwest Registered Agent will form your company fast, give you the documents you'd need to open a business bank account, and more. Visit northwestregisteredagent.com slash twist to get a 60 % discount on your next LLC. And nuts.com is your one-stop shop for freshly roasted nuts, dried fruit, sweets, pantry staples like specialty flowers, and more. Nuts.com is offering new customers a free gift with purchase and free shipping on orders of$29 or more at nuts.com slash twist.

1:44First up, I want to talk to you about what's happening in late stage VC. What's late stage VC? see, this is after the seed round, Y Combinator, R Accelerator, Founder University, you get to a Series A. And then if a company starts to scale, I'd say getting past 10-20 million in revenue, that sort of indicates it's a later stage startup now and VCs in the late stage start investing in what you would hear somebody call a B round, a C round, a D round. And so a lot of statistics have been coming out and people are trying to figure out what's going in the market. So let's to the financial times and we call it ft in the industry us vcs are sitting on 311 billion dollars of what we call in the industry dry powder that is a record amount take a look at this chart it's unbelievable the dollars keep building up so what you're probably hearing as a startup is where's all this money going what why why are the vcs not investing this money well in order to explain this you have to understand how the LP and the VC, sometimes called GP, relationship works.

2:46LPs will give this money to VCs, but these funds are earmarked for typically three to four years of primary investment, and then they move into six, seven, eight years of harvesting those investments. The typical life of a fund is stated to be 10 years. They can go as long as 15 before all of the investments are returned and exited. So think about that 10 year window. And there's four years of primary investment. You have to do something called a capital call, you ask VCs, the VCs ask LPs, hey, can you send us some money and we'll invest it? Why don't they just take all the money down at once?

3:26Well, because it's easier to do it over a period of time. And the LPs can keep that money, you know, in an interest bearing account, or in the public markets, right? So day's interest rates, maybe they're making five, 6 % on it. So the next thing that we want to look at here, and we'll pull up this chart is looking just at how much money exited the system, right? So LPs give VCs money, VCs build companies with founders, those companies go public, or get sold. And then an exit occurs, there's a little tiny third way after the IPO, the main way, second way, M &A mergers and acquisitions, somebody buys your company.

4:04And the third way, there could be what's called a secondary transaction somebody else wants to own the shares and people sell them in private companies so let's take a look at this chart just to explain this chart there's a bar chart it has the exit value and then there's the exit count the number of startups uh companies that exited and if you see it cruises right around a thousand a year but it peaked at 1900 startups a year and close to 800 billion dollars in 2021 this was a bunch of ipos a bunch of sales of companies and it has plummeted since 2022 there were 1400 exits but only for 78 billion dollars and then it came back came down to in 2023 999 and then it just plummeted down to 61 billion why we all know the ipo window has been closed for two years now and the current regulatory regime uh i.e lina khan has been very hawkish on mna you may have seen Figma had there and that happened largely because of regulators in the European Union and in the UK.

5:08They are just blocking M &A transactions. So either you IPO, or you probably don't get an exit. And if you look at these, the average exit value from 2013 to 2023 per year was$185 billion. But if you take out the 2021 boom year, that number drops and you have an exit value of about$125 billion. a year. So we are seeing half of what the average has been for the last 10 years. Now, if you're a VC, you got to call capital. And these LPs are getting half as much as the average and a massive decrease from the peak. That means they can't recycle money. So the whole system has basically indigestion, we need to sell more companies, so that VCs can return capital to LPs.

5:55So LPs can then invest in the VC's next funds. So the whole system has been locked up for two years. And now it's just starting to crank back up. And one of the things that will, you know, kind of get this unstuck is IPOs. We're waiting on the Stripe IPO. You may have seen Instacart went out, it was a little bit of a disaster for the later stage investors and Reddit is about to go out. And that is at maybe half their valuation in the private markets 5 billion instead of 10, according to reports. Now, another article came out. So I want to dovetail all these issues. And this one is Lightspeed. Lightspeed is a very big venture firm, late stage, largely, they have$25 billion in AUM, that's assets under management, take all of their funds, put them together.

6:43That's how much they have in assets under management. Well, there's a really interesting thing that's occurring since there's no M &A. And since IPO window has been the IPO window has been closed. They've started something called continuation funds. What are these? These are new funds, where the firm will sell shares in the private companies in their portfolio. So in this case, according to these reports, Lightspeed is selling about a billion dollars worth of stakes in 10 of its portfolio companies. Now, who are they selling it to other investors. And what these are designed to do is to give liquidity to LPs so that the VCs can get back to work.

7:23And so this could be interpreted in the most cynical fashion as what is that some kind of shell game? You're selling these shares to another group, you're resetting the clock. But what it really is, is there has to be a buyer who wants these shares and they have to price these shares at a price that they think will get them a return. So a new set of investors is coming in they're looking at these private companies and saying yeah i want to own them but you can be certain that they're looking at them and they've really sharpened their pencils they've really done the math and said this is what i want to pay so that might not be you know that might not feel great to light speed or their lps you know these prices that the new people will pay but it is and this is i think my interpretation of this and this would be the most generous uh interpretation of events uh that are occurring here with these continuation funds is that we have a high functioning market.

8:13And people are being realistic about what's going on. So hey, these companies have been private for a long time, we know there's not going to be M &A until maybe there's a regime change in Washington. And if Biden wins again, maybe it's another four years of not being able to have M &A looks like the stock market will open back up to some new inventory. Great. But it's still going to be a bit of a slog. So we want to get liquidity for folks. And in this case, you know, it looks like Lightspeed is going to give LPs the choice of liquidating or holding to get a better return. So that's really interesting.

8:43And here's what lightspeed chief business officer told the Financial Times EFT. Quote, VCs can't just use the excuse that the IPO window is closed, they need to take a page out of the private equity playbook and build more consistent liquidity that LPs can count on. So some questions will emerge out of all of this. The number one question is, are we going to have more of these down round IPOs in 2024? Reddit at half price, Instacart, I think went out at 25 % of its peak private market valuation. And the answer to that is clearly yes, we're going to see a ton of down rounds, IPOs, but it's better to get out better to have that fitness of being a public company and the maturity of being a public company, and the scrutiny and the liquidity for everybody involved.

9:27Now, some companies will wait it out. So if you're Stripe, and you've got a ton of cash, and the business is doing great, maybe you wait, maybe you wait until 2025, and you hope your valuations bounce back to those 2021 levels, people will make those hard choices. And eventually, the market rebound will catch up with the market being overheated in 2019 2020 and 2021. Or the distance between those two numbers will be such that it'll be an easy decision to make. So how much value destruction are we going to see for late stage VC firms, that's going to be the interesting thing to watch. And what is that going to do to LP's appetite in the growth stage what i'm seeing in the market lps are really interested in going a little bit earlier uh we do pre-seed and seed at our fund launch we do the founding university which is pre-seed we do our accelerator and direct investments which is considered seed pre-seed typically means before your product launches seed your products in market series a your products got a couple million in revenue that's an easy way to sort of think about it and so yeah a lot of lps are going to be either pencils down they're not going to write checks or they might be looking earlier and maybe to write smaller checks.

10:35So you can check out those FT stories in our links. And next up, the Terra Cafe interview. Enjoy. Right now, startups have to do more with less. We all know that. And that means increasing your product velocity while maintaining or even lowering your costs. Now don't forget, product velocity is how startups beat incumbents. So here's the great news. AI is going to help you do that. So let me tell you about wizard. It's spelled U-I-Z-A-R-D. It's an AI-powered suite of UI and UX design tools. With Wizard, you can generate your app or web designs from simple text prompts. You can then iterate on these designs with an AI assistant, and then you hand off your completed designs as React or CSS code.

11:18Wizard's text to UI mockup tool is called Auto Designer, and it's really cool. If you're watching, you can see it on the screen right now. Here's the brass tacks. wizard is going to help you go from idea to mock-up in minutes so if you're creating a product from scratch this is going to save you so much time start building products today faster with 25 off wizard pro at wizard.io twist that's u-i-z-a-r-d.io twist for 25 off stop wasting time and start shipping faster all right everybody welcome back to this week in startups as you know americans including myself are obsessed with coffee 65 of us drink coffee every day and the average coffee drinker three cups a day no surprises there but brewing from home it's brutal right uh people have drip machines they do pour over coffee ponds destroying the environment i've always wanted to have a great one touch automatic coffee machine a super automatic And, you know, I was looking for one of these and I came across one called Terra Cafe and people were losing their minds over it.

12:26I wound up meeting the founder and I love this product so much that I invested in the company. So welcome to the program.

12:38Sahand Dilmagan. Sahand Dilmagan. Thanks for having me, Jason. Did I get it right, Sahand? You nailed it. You nailed it. you know when you have a name like calatanas as i always tell people you got an obligation to at least give it a shot to get the difficult uh or more than two syllable non-american names correct it's not that hard so i take a lot of i take a lot of pride in the the name being so difficult for baristas to write down on the cup that you know oh yeah such an inspiring moment that i had to start my own company to offset that pain point so uh you made this gorgeous coffee machine uh We were lucky enough to invest in it from our fund.

13:13And, you know, we're not big on direct-to-consumer. It's a really hard space, right, for founders to crack. And then, you know, especially in consumer electronics, appliances, that's a very crowded space as well. So why don't we start from the beginning? I know you're launching the TK2, the Terra Cafe 2. I have the Terra Cafe 1. Can't wait to get the 2. but maybe we step back for a second here and you could just tell the audience what was the inspiration for the company and then how did you assess as a founder this is the important question that you should go after this opportunity knowing how hard it is to create a direct consumer slash physical product in the rural world as an entrepreneur why am i a glutton for punishment basically why did you want to just put your hand on the table and smash it with a hammer every day.

14:03On top of the already prototypical slog of a journey that is entrepreneurship. Yeah. Yeah. You just increase the degree of difficulty. Yeah. Yeah, exactly. I just, I just throttled it up to the max. No, I, I think that it has to always go within that trifecta of kind of passion, competency and opportunity. You not holistically or any sort of absolutism by any measure, but you have to be able to check those three boxes before starting on any journey, let alone something within the hardware space. Because as we all know, every sort of path has a different varying degree of, you know, challenges and hurdles to overcome.

14:38But just as far as, you know, the early days from the inspiration from getting started, I will say as much as, you know, it is the starting point kind of dates as far back to kind of culturally, like, basically, I joke that the rule, not the exception is that if If you're Persian, hot drinks and dried fruits basically are the social nucleus of your life. So I had pretty much every gadget under the sun. The average household in the US, I believe, has around two coffee machines per household or 1.8. So I'm rounding up a little bit, but I like to think my household contributes as a pretty big outlier to that average.

15:16So we had everything under the sun. And as somebody who deeply, deeply loved just as an enthusiast, as a hobbyist, the space, I would say that, you know, when I started digging in, looking for a new machine, exactly as you said, in that area where you have the best of both worlds of ease of use, push button brewing, have the convenience factor that we need on a daily basis in our mornings, and then the higher quality that we were getting used to out of home, especially with the third wave coffee movement, the elevation of craftsmanship. throughout coffee, people drinking more espresso-based beverages than ever before.

15:53So we saw 2017, latte became the most ordered drink in the US, surpassing drip coffee, and that kind of continues to climb. So as much as maybe people like to dunk on Starbucks here and there, you got to pay a bit of reverence, a bit of respect to their three and a half decade growth of what is kind of known as the EBB category or espresso-based beverage category, and seeing how much that was growing, seeing how much we were looking for that convenience, but didn't want to resort to single use plastic aluminum pods or capsules. It became very clear to me when I looked at that intersection of super autos, what was out there, it was this incredibly dated, incredibly antiquated assortment of only a few incumbent brands that were serving this space.

16:41Nothing spoke to the modernity that we came to expect of appliances, consumer electronics, automotive, and so on. You know, I kind of like to say that we created the Apple of our category where, you know, the five or six incumbents were, you know, the BlackBerry. But, you know, I kind of feel like that's an insult to BlackBerry. It really felt like it was more of a, you know, the Sega Genesis or Game Boy Color at the time and really wanting to stand out in the early days with the hardware design and an attractive price point not cheap per se but a great value for money from what we were seeing where the average selling point when we started was over two thousand dollars yeah there was jura i had a jura at some point my my my brother-in-law had the seca seca seca seco yeah seco uh and you know at the time 10 years ago they were okay but what i found was uh i didn't get consistent um flavor that i was looking for from espresso tons of work to maintain them uh and you know listen any espresso machines a bunch of work just by the nature of pulverizing a bunch of grounds but you came out with this i think when the tko1 came out originally it was maybe 795 now it's 895 a little bit of inflation we're in the 700s exactly yeah and now you have the tko2 coming in for 1495 can't wait for that i think that's going to be shipping soon um and so we just started shipping so you did oh wow just started getting the first units out the door people have just started receiving them over 10 000 units of demand in just the pre-order alone wait list you know 5 000 plus and growing so it is you know beyond exciting if anything the demand that ended up coming our way for the for the o2 really did uh exceed our forecast because we didn't No, look, I didn't want to do a race to the bottom.

18:36I was looking at, we have seen some new entrants come in. And it really ends up being this kind of, you have like this$400 or$500 engine model that really is just a hunk of junk. And then you have this$4 ,000 or$5 ,000 category, which is prohibitively expensive. And it was, again, in that kind of sweet spot that we saw an opportunity to say, okay, look, the pod-based systems, yeah, of course, the upfront cost is going to be cheaper. But actually, if you look at what you're paying in the lifecycle of the product, that's how they're obviously their business model is designed. And where we wanted to enter in was being an amazing value for money, the V1, great entry model, the original SuperAuto that we came out with, still a great bargain for what it does.

19:16And then the V2, I just want to blow everything else out of the water. So again, doubling down on the hardware design, but then using the software and the data as how we're going to kind of carry the torch forward because it's OTA updatable. So it's going to keep improving as we get more of that information back from the customer. and kind of having those feedback loops on a regular cadence. And when you're, you know, just bean to bean, apples to apples, oranges to oranges, using a pod system, what are these pods charging per pod of coffee? And then if you buy the equivalent coffee bean and grind it fresh in a super automatic machine, what are we looking at, you know, apples to apples cost?

19:59you're you're going to be saving anywhere from 50 cents to a dollar per cup depending on which pods you buy because there are differences between them so you can get some you know the virtuo pot for example or any of the kind of like seasonal like pods that you see come out you're going to be saving basically per cup you know anywhere from 50 cents to a dollar you depending on how many people are in the household you have to imagine especially with you know the stats you shared at the beginning you know three cups a day you're having you know on average you know the the number of people in the household you're having two people use this device every morning really it depends on how many of those cups are in home versus out of home but you are essentially if you're comparing this to out of home coffee you're paying back this machine in a matter of months not years so uh yeah you save 50 cents a dollar per cup three bucks a day two bucks a day four bucks a day over a year it pays for itself and this is like and also thinking about the environment is one of the things that makes me crazy i'll go to an airbnb or i'll stay at a hotel and i'll use these pods under duress but i mean i was in italy and i had an airbnb and they had a pod based system there i don't know which one this is there's like k cups and then this one was like so much plastic it had like a hard plastic was sort of like a cylinder have you ever seen those ones i think it's the delta the delta i know you know i love illy yeah i love illy and you know god bless them you know it's delicious espresso but you can buy the beans you know and they had these pods and i was throwing you know i drink five cups a day or six six people finish a full sleep in one day in one morning and i'm just like come on this is the most uh this is the most abusive thing is there any way that you could justify the use of these pods in your mind like it just seems unconscionable the way i like to talk about is it's that like the evolutionary scale of coffee graduation like you you have this trajectory where nobody is really kind of starting out even oftentimes with any of the pod based systems a lot of times it's going to be a pot of coffee approach, even at times instant coffee, depending on which geography you're in.

22:20And you kind of graduate, you graduate, you graduate. And look, what we saw was when we got started six years ago was there was this level of saturation around the pod-based system where people were looking to graduate. The problem is when the jump goes from a$500,$400 system upfront with a long running cost to a, what we were seeing for$5 ,000 machine or device, That is a very challenging step function for most people. Now, if people kind of graduate away from us, let's say in the interim, in the early days, into a Lama Zocalinia mini, they want to spend$5 ,000 for the machine, another$2 ,000 for the grinder.

22:58That's beautiful. If you want to take that time every morning to do that, and you want to make that investment for your coffee corner, that's great. That is not the lion's share of the market. That is not what that actually looks like. The vast majority of people are holding into the pot ecosystem for one factor. all the surveys empirically show convenience it's ease of use it it is important when it comes to the morning coffee that you have it get you know delivered in as seamless a way as possible you cannot overestimate convenience in that moment i have um at the ski house this mille uh in wall unit now that that was i didn't purchase that it's a fancy uh fancy owner had the house before me and spent a bunch on the appliances yeah this thing is mille uh or millie i don't know how to pronounce it mille yeah mille yeah is the bane of my existence um the thing costs like five grand it's breaking constantly yeah uh in the amount of maintenance and the amount of messages it gives me now listen i understand you got to clean the thing you got to fill the beach you got to fill the water there are steps to this it's nothing's free but my lord this thing costs five large and your new one costs 15 i could buy three of yours yeah yeah that is give two away as christmas presents or i could buy six of the tko ones i can tell you right now the espresso from the tk one is as good as better than the melee and it's less maintenance so what what is the secret in these super automatic machines to making great tasting espresso at the core is it the temperature Is it the grind?

24:36Is it the amount of coffee? Is it all of those things? What comes into having that perfect crema, delicious espresso that I get from your machine? So to the first part of what you said, I will say that we took a lot of the insights from the O1 and fed those into the O2 development process too, right? So tens of thousands of O1s in field learning from that, learning what mattered most to people. It was obviously enhancing the customization, enhancing the technology, the precision, the reliability. But frankly, what you just hit on about the maintenance, the cleanliness, the ease of use, that was one of the most critical elements to keep enhancing, enhancing, enhancing to stand out from anything else out there.

25:17So from the front loading, water tank, waste bin, everything from the front facade, having everything kind of dialed in where you don't have to access the brew or anything like that any further. So from a reliability standpoint, covering all of that, having technology built into it that provides a proprietary level of precision makes a huge difference. To your question, I will say investing in the components is critical. So that in terms of not just quality at first brew, but over time. So the quality of the grinder, one of the most important things, quality, the precision, not just the components, but then also the firmware, code and logic around the thermal blocks, the flow meters, everything.

25:56That is where we invest a lot in the V2 and where I say, I want it to be like crossing the Sahara Desert to get to the next best option after the V2. Because I looked at the Meleys, the Mele, connected Mele machines, the connectivity, again, it's almost generous to call it a connected device. at this point but it's it's it's six thousand dollars you know you're looking at thousand yeah because they don't have a competitor so have you looked at them with the six thousand wall unit and thought to yourself hey maybe i should get in on that or is it just you know when you look at it how many people are going to hire a contractor to put this thing in the wall that's like what that's one percenter madness most people just going to put an appliance on their counter like me yeah the roadmap of what it accounts for right now is just the level of inbounds we're getting we have no shortage of opportunities because coffee shows up everywhere whether that's in an office space whether that's in a retail showroom whether that's in a it can be a university campus a hospital you name it a car dealership you know it's showing up in so many places so what inevitably ends up happening is the v2 from a durability standpoint is going to be incredibly powerful and, you know, again, leaps and bounds beyond anything else.

27:12So we look at a lot of these commercial environments. Sometimes that can be working with developers for spec and unit, but in terms of, you know, immediate opportunity and pipeline, the amount of commercial activity that doesn't require a new product, but instead actually looking at the software and how we can layer in things like fleet management over time, how we can use the data that is actually valuable to them in terms of maintenancing and repair, just things that are ultimately going to reduce the overall product cost for both TK and the end user, as well as just having a longer term seamless experience is where I think we don't just win today.

27:46I want to win when somebody has this on their countertop on year five. This is just the best thing. So from a lifecycle testing standpoint, putting a bar so high up there that I think that's ultimately how you build the customer intimacy, loyalty, goodwill that you would see in a brand like an Apple. yeah i i i always tell folks when they get this tko when i sent one to chamoff as a as a christmas present at some point and you know like he loves it right and you know he can have his choice of machine didn't me like out of the wall no i you know i think those of us who have them you know might be a little frustrated with them or whatever um you know i almost want to rip it out of the wall i'll be totally honest because then i have guests over and the guests can't figure it out and they can figure out what happens in the repair do they have to send someone over or is it what is there's like they have their own fleet of people who fix it yeah and they'll troubleshoot it and you know you're in for eight hundred dollars and when people see you have that device it's like you live in a certain zip code or you have a certain appliance like i had these melee um uh dishwashers as well man and they see you coming and they're just like this is a whatever it's a fifteen hundred dollar dishwasher we're going to charge you eight hundred to fix it you know whatever it is whatever the problem is and they just added zero to whatever they were initially basically basically you got a nice american brand all of a sudden they're just like oh yeah boom yeah no problems you know 150 bucks to fix it starting a business used to be a pain you needed a lawyer there were fees it was a mess now with northwest registered agent it only takes 10 clicks and 10 minutes northwest provides everything you need to start and maintain your business every llc corporation or non-profit at northwest forms comes equipped with registered agent service, a business address, a website and hosting email, a phone number, and this is all covered by Northwest's privacy by default.

29:35Again, your full business identity will be live in 10 minutes and in 10 clicks. So here's your call to action for$39 plus state fees. They'll form your LLC, corporation, or nonprofit and launch your business in just minutes. Visit northwestregistered agent.com slash twist today that's northwest registered agent.com slash twist today so let's talk about offices i was going to put the tko one in the office back when people went to an office and you're like not exactly for an office you got a certain number of cups a day you know and so is the tko2 going to be for small offices or like in the doctor's office kind of situation or when people ask you about that how many cups a day before you got to fill water before you got to empty grinds and then how do you think about that next tier up which is maybe somebody wants to have it in a in a location with 10 people or 20 people not just you know a family of three to five yeah i think you know the guidance that we generally give people on the v1 is when you see you're brewing in excess of 40 cups a day then you know it's time to like check whether or not you're in the right category.

30:46And then for the B2, you're looking at about 80 to 100. And so you also have a bigger water tank, bigger waste bin, easier to clean. Bean hopper can hold more beans, also a cleaner geometry. So no beans will ever get stuck behind a grinder dial. So automating and actuating the grinder dial is what allows us to do true drip coffee. So taking that out and having it controlled means we can automate the coarseness setting. So when you're doing drip coffee, you're getting true drip coffee. That was one of the biggest functionality. The TKO2 does drip. yeah oh fantastic so you're not just doing americano hey here's your two espressos with six ounces of hot water in it correct some people do like that flavor that that's like a thing some people like some people hate it it's a it's a two-partner decision when you buy this product so it could be that the person who's actually buying it is a latte lover a flat white lover a cortana lover but their partner only drinks drip or they'll say i drink normal coffee is what they'll say yeah they won't even know how to articulate it and that's fine that's fine but given it's a two-partner decision, it's really important for us to hear that with all of our O1 customers, the value of D2C, the value of direct relationship is knowing how valuable that was to them in terms of it.

31:53When you invest in this product, you want it to serve everyone, whether it's the whole household or the whole office, you want it to serve everyone. And so being able to do that actually has a true drip function where it does take longer because again, it's drip. So it's truly running the process where it's letting gravity do the work. that is where things get very exciting because it opens up a new optionality in terms of the brewing and then we actually bifurcated the way that the brewing works it's espresso profiles and then your custom drinks so we wanted to think about it what we learned was it's kind of think about it like how you would go to a cafe now with espresso profiles roasters can you know upload their own recipes and profiles to the machine so you know you can have a bean type but of course the average user does not think about it like oh what is the bean when i go to a cafe i don't think what bean am i getting you think i'm going to stump town and then when you're brewing and you're ordering or drink you're thinking i want a flat white i want a latte i want to just straight espresso you're not thinking 20 grams at this temperature for this long of a poll which is what baristas do great um we wanted to make the the science the kind of like we want to demystify it in the sense that it matches exactly the user experience you're used to when you want that ease of use, that convenience.

33:06But the science, the precision behind it is all happening within the machine. So you don't need to dial that in. You can play with the settings and where even, you know, playing with ideas like a pro mode where you can get more analytics on the usage and stuff like that. Because again, the number of sensors, the amount of information we have, you can basically, you know, create so many different profiles and views of data as it's actually extracting the drink. But it's one of those areas where I want to be measured with how much we share on the pipeline side of things. Because of course, we have a prioritization, first units in field, we're getting feedback.

33:40The priority right now is making sure everything we're hearing from people be layered into our product development process, our program and planning on how we're making changes. Because again, it's going to keep getting better with time. So everything everyone's experiencing right now is truly the B1. If anybody has electric vehicles or any of the connected vehicles in the automotive industry. They've seen version after version how the software can improve. And when you're an nimble startup, that's where you really get to stand out. So you're going to be able to upgrade the firmware here through an app.

34:07If things need to be tweaked, you can do that. You don't have to put a... I don't know how you do... How would you upgrade the TK01? Is that like you have to put a thumb drive in or you can't? Yeah, exactly. You would need the device back to actually plug into the PCB and just like you can. In a way, that... that unlocks so much by way of different use cases we can tap into with the device. It unlocks so much by way of customization that we can create over time. And then I think just the most importantly is that when people say, hey, we would like it to be able to do this, or we would like the drinks to come out this way, we can play with those parameters and how people can use them.

34:46Of course, safety is critical. So from a testing standpoint, and also from a certification standpoint, we always have to be listening to you know rcms or tier one suppliers certification agencies and so on but with adequate testing yeah you you just take all of that feedback and we want to set up stuff doing like feedback fridays let people vote almost in like a reddit-esque way what do you want to see built out as a new feature into the device and we'll you know put that into our can ban boards the most important thing for great espresso is the grind and the amount of the beans and the temperature yeah those three things yeah and then you just want consistency as much as possible okay it's always been helpful to have great snacks around the house if you have kids or if you like to host people like me it's a great look to have a bunch of awesome snacks for guests ready to choose from so let me tell you about nuts.com it's your one-stop shop for freshly roasted nuts dried fruit sweets and pantry staples nuts.com has something for everyone cashews almonds pistachios classic candies like butterscotch fudge and licorice also they have the great dried fruits which i love to pair with my nuts and so much more here's the most important part at nuts.com quality is the top priority they roast their nuts and pop their corn on the same day it ships so when it arrives it's deliciously fresh and they have gluten-free organic and other diet-friendly products so here's your call to action right now nuts.com is offering new customers free gift with every purchase and free shipping on orders of$29 or more at nuts.com slash twist get that free shipping get that free gift at nuts.com slash twist and you're going to receive that free gift and free shipping when you spend$29 or more one more time nuts.com slash twist well this is amazing it's been great to invest in the company in in terms of channels you're i noticed that you're in some stores now and how is that going you know i i presented you as a direct to consumer company because i think most of the sales come from the website majority majority but then how do you think about having it on amazon or in williamsonoma or whatever you know and you know channel conflicts or just in general dealing with channels discipline channel strategy over everything we we are very fortunate that we sell well direct we're not dealing with a lot of the challenges i know after ios 14 a lot of people got hit with a sledgehammer um you know i do think just by virtue of the brand we build, the product features, functionality, price point, and white space.