Scaling Childcare with Tech: Winnie.com’s Blueprint for Growing with Purpose & Profit | E2005

24:15So it's almost surreal that you don't have more direct competition so far. Yeah. And like some of the childcare businesses that have raised more money than Winnie are founded by men, but we won't get into that. No, I think they're doing cool things and that's great. And I'm happy that men are participating too. But I do think there's a little bit of a penalty that I don't know what it would be like to go out there and raise as a man. But I do know what the numbers say that women get 2 % of the venture capital or maybe it's less now. So I think we certainly aren't rolling in the investor interest.

24:55Yeah. Funding to companies with all female founding teams saw a slight increase in year-over-year funding in Q2 of this year to 1.1 billion. That's the second best number since Q2 of 2022, but it's still a very small fraction and mixed gender teams aren't doing incredibly well in the current market either. But again, there's so much TAM. It just seems like a misallocation of venture funds to not go after some of these markets where there's less competition and such clear need. And all you have to do is go talk to somebody who takes care of a child. It's not that hard. It turns out there's a lot of people out there who have kids.

25:25I learned that once I had one. And then it turns out I met every single parent in profit in like about 30 minutes. Okay. On the money front though, I was going to ask about why you hadn't raised venture capital in a while and if you were profitable, but to get there, we have to talk about a small convertible note that you raised after your A that I wasn't aware of before. So talk us through the post-A Winnie funding history. Yeah. So we raised our series A in 2019. And then the market got really frothy. I think it was like 2021. People are just like throwing money around. I kind of had like a...

26:02We weren't going out and fundraising at the time. But we were just like, maybe we should take some money. It seems to be really easy to come by. It has never been easy for us to raise. I think now would be a good time to take a little bit of money. So we did go out then and raise money on a convertible note. I'm probably going to get the math wrong. I think it was another like$8 million. So we've raised a little over$20 million in total funding to date. I'm really glad we did because after that, everything turned and we had to quickly get profitable, which wasn't that hard for us as it was for other companies, but we did have to whip ourselves into shape and get profitable.

26:45Why? Well, we kind of saw in 2022, 2023 that it was going to be very, very hard to raise money. And I guess we didn't try because we felt like it would be much easier for us to just get profitable than to spend quarters out trying to raise, further diluting ourselves when we could just literally raise money from our customers by selling to them harder. And that's what we did. We raised from our customers and it was so much easier and it made our business bigger and better and expanded us in new directions. And so once we realized that was such an easier path than going on trying to raise from investors who didn't...

27:30The stuff they were looking for was also less aligned with the stuff we wanted to build. We wanted to build the things customers needed and investors wanted us to build totally different things that didn't make sense for our business. Okay. I'll bite. Very curious now. What did investors want you to build that wasn't to align with your business? Please say it was an AI chop button. Well, yeah, I'm sure that would have gotten us a higher valuation. And I'm not talking about our existing investors. I'm talking about the market. It seemed like we have a usage-based revenue model. So when childcare businesses want to fill more spaces, they pay us more money.

28:06And when they don't have a lot of spaces to fill, they pay us less money. That works really well for them. It allows them to kind of ramp up and down depending on their needs. It's kind of how the market works. Investors hate that. They hate usage-based revenue. They wanted flat fee subscription revenue. And only that, that's just one example of like the many, and we do have a subscription. It's just, you can kind of dial it up and down depending on your needs versus, you know, investors we talked to kind of frowned on our usage-based model. All sorts of things. They want us to compete more directly with the businesses they know that exist in the market that are big, like a ProCare or a Brightwheel or something like that.

28:48Whereas that's not our business. We feel like that's a solved problem or it's a crowded space. We want to focus on helping childcare businesses attract customers and enroll those customers. So a number of things... Investors love selling to employers. We saw the writing on the wall was selling to employers. Employers are paying for fewer and fewer things, including childcare services. It just wasn't, you know, they would point to other businesses, many of them now out of business. And they were like, why is this business selling to employers so well? And we were like, I don't know, but I don't know if they are.

29:26So just a bunch of stuff like that. We saw like, if we wanted to go raise, we kind of had to pick one of those like investor-less theses. And we instead wanted to just build our thesis, which is like, let's just do what our customers want and they'll pay us for it. Okay. We all want to build products that users love. And we all understand in the startup game, it's product market fit. That is the goal. But increasing conversions and boosting engagement, well, you got to really understand your users in order to do that, right? And that's something you're not going to get just from analytics. Well, let me tell you about Sprig.

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30:42So, see why top product teams at Figma and Notion are already using Sprig's AI to unlock new opportunities at scale. Visit sprig.com slash to book a demo and get a$75 gift card. That's sprig.com slash twist. So on the flat SaaS versus variable pricing, I guess we now know what the first move that private equity would do with Winnie if they ever bought you. So I guess that means you now can't sell the private equity because you don't approve. Good. That means you have to go public. Yes. Well, I think private equity, I don't know a ton about it, but my impression of private equity investors is they just like what makes money.

31:21And they just like cash flow businesses. And like, if you can prove you're doing something that works and is growing, and you have a model, like they'll buy whatever it is, they don't care if it's AI, they doesn't need to be AI, it can be a brick and mortar childcare business for all they care, it just needs to generate cash. And so like, I kind of feel like eventually our outcome might actually be more aligned with private equity that just looking at the numbers now, I think private equity's downside is they don't give particularly high valuation. So my dream for Winnie is to just keep running it as an independent company forever and ever.

31:56And that's what we've been doing for the last almost a decade. Yeah. No, I was just joking about private equity because I was just thinking about what is the Vista equity playbook that they're going to drop on the table and page one is going to be flat subscription pricing or whatever. I'm glad you've stood up for that. But going back to the convertible round, just because I'm a brat, was the cap on that convertible note higher than your series A valuation? Yes, it was much higher, which at the time, you could ask for whatever you wanted and you would get it. This was 2021. It's interesting now because we have not converted that note.

32:34We didn't raise the next round of funding. And if we go to those investors and say, you want to convert at that cap, they're not particularly itching to convert it that it was quite high. And so basically a convertible note just accrues more equity in the business or more debt. Now we also have got like a better interest rate than the interest rate now. So I'm not like super, it's not that worrying and it wasn't that much money that it's like stressing me out that much, but it's not, it's not the best. So there is a downside to like these high, you know, you'd love a high valuation at the time, a high cap, but has a downside.

33:10Yeah. Well, I was going to ask about the interest rate because we've talked a lot about how rates have changed. I know convertible notes were incredibly popular and still are, but they always made sense to me when the rate attached to them was going to be predicated on ZERP. And then there's today. So just poking my head one more time into the Winnie financial history box, did the convertible note have a variable rate or was it set at a certain... Ah, nice. Yeah. So not a variable rate, not a zero interest rate though. So there's definitely interest happening. We could pay it back one day. I think those investors are really invested on the premise of they're going to get equity in the company.

33:48So I think it will just eventually convert, whether that because there's some kind of fundraise or event, or maybe at some point we can just say like, look, it's very clear when he is this valuation, we should convert the note. Yeah. Okay. So looking at the history of the company, 2021, raise$8 million more, very generous terms, great time to do so. Market falls apart when he gets profitable. Now, the reason why I'm curious about the profitability point is you managed to grow very, very quickly. And I'm curious about how you managed to keep costs and headcount low as you've expanded. Because in my experience working at startups and talking to founders, is that as revenue or fundraising grows, so too does the cost base.

34:32So how have you managed to find profitability discipline so quickly to your loss capital rates? We have always been pretty thrifty and creative about our spend. Now, we did have an office that we no longer have. We did do things that other startups did at the time where we got fresh fruit delivered and spent too much money on nice office furniture and things like that. So we don't do any of those things. But I think the biggest cost for us was and still is headcount. One of the things we have found, I think to my surprise is with a smaller team, we kind of get more done. Now, there are certain big things that we would just love to do that are really needy and we just can't do.

35:19We just can't do them without a clear customer use case or if we would have to go raise money to do it. So there's a trade-off. But as far as just executing on our roadmap and growing, I love our team, the 22 people it is now. We work hard and we don't have any bureaucracy and there's no politics and we just make it happen. Everyone is a contributor. 22 people. You said earlier that when he's in the double-digit ARR range, if we just take that at the most minimal number, which is 10 million, 22 people call it 20. That's what, like a half to half million ARR per? That means that Winnie is, if you're at 20 million, you're generating roughly a million dollars in ARR per employee.

36:01He must be nice and profitable. Damn. No. No. Well, we have other costs. Our second biggest cost is marketing. We have a sizable marketing budget and we do have to do that for our SEO kind of driven business. So we have lots of parents who find Winnie by typing into Google things like daycare near me or preschool near me. But we also have an SEM operation. And so we will pay to rank for a lot of those terms in markets or areas or niches where we don't have the organic search or as the organic search is building. So that's also a key component to our business and why we're not just rolling in cash.

36:41So essentially, Google is taking all your hard-earned profitability. This raises a pet topic of mine, which is, I don't, Google search is not what it once was for sending traffic out to the web. Publishers have noticed this. Businesses have noticed this. Do you feel you're like there's a rising need for greater search engine marketing spend as organic declines in value, or is this more of a organic steady, but we just want to grow faster. So we'll put more money into the, we are seeing a rise. Our organic growth is growing because we now have other ways of getting organic users besides SEO. So we now have a really large user base.

37:21We market to those same users who have multiple kids and need to find new childcare options. So we have big kind of email marketing operation. We now have brand, which was a thing we didn't have before. So people will just type in winnie.com or they will download our app in the app store. And that is something we think is really important to invest in because there's actually a lot of kind of branded childcare searches in the market. It's like people typing in things like care.com into web browsers. So people going directly to the brand. So we're growing that a bunch with Winnie and doing more beyond, you know, we're now doing video advertising, kind of trying to grow our brand a bit.

38:02That's kind of a really untapped opportunity for us. The SEM and Google search traffic declining has so far really helped our business in that childcare businesses are really hurt by this, like way more than, you know, it's impacted us. So you're the aggregator. So as individual people struggle to find their own audience themselves, they're coming to winning. So essentially Google, Oh, and Google has become a lot more pay to play in terms of like its local business listings. So all the businesses that got organic traffic from Google are not getting that anymore. Like Google has cut them off. So if you're not like pay to play showing up in the local business listings, you're not getting traffic from that.

38:44Wow. So we are... And these businesses don't have time to figure out the latest and greatest tricks with how to rank for SEO and SEM, especially the smaller ones, but even the bigger ones. And so they're just happy to come to us and have us get them their families. Does the rising pay-to-play element of Google, which definitely tracks with what I'm seeing and hearing out there, does that give you guys more pricing leverage? Yeah, I mean, just more and more childcare providers using Winnie has made Winnie more competitive. Because if we have hundreds of paying customers in San Francisco, we have a limited audience of parents in San Francisco.

39:25So people are willing to pay more money to get in front of that audience of parents. And so, yeah, we have customers that are like, I was getting so much traffic from you guys before. And now, you know, I'm not seeing as much in this region. It's like, well, now we have like 50 other customers in that region. Sorry that you were here first. You got it good. But now everyone else is going up. The challenge of running a marketplace is like you constantly have to keep supply and demand in balance. Our supply are the child care providers and the demand are the parents seeking care. And we have to grow both of those constantly.

39:58Yeah. and make sure they keep up. How is the demand side looking? I was going through some data about childcare, employment and labor participation and so forth. And I'm trying to kind of sort out how remote work has impacted the overall childcare, I don't know, like data set because I had tried to work and have a child nearby. And I discovered that you end up with a crying child and no work done. No one's happy. But it does seem that some people have found a way to maybe work from home some of the time, reduce the childcare influx. So does that show up on the demand side of the Winnie marketplace equation?

40:34Yes. So we see increasing searches for things like part-time care, drop-in care, kind of odd hours of care, only wanting care certain days of the week and not others. And we're constantly helping the childcare businesses adjust to this changing landscape of parents, not just wanting full-time nine to five Monday through Friday, but trying to get by with less. I don't know if it's so much remote work as the economy and people trying to spend less. And so they, you know, maybe remote work or some kind of hybrid work structure is an option. And so they're figuring out how they can have friends and family watch the kid on Friday, or they're working from home on Friday, and they can kind of make it work.

41:17People are just trying to get by with less paid hours of childcare as much as possible. Whether that's a good thing, I'd argue, like you said, you need childcare to really focus at work. And so you shouldn't skimp on that. But parents can't necessarily afford full-time care nine to five every day. And so they have to kind of figure out if there's a solution they can make work. Yeah, that's the thing that I want. I want everyone to be able to pursue their life as they see fit without it being an impossibility. At the same time, I'm looking at some recent data from BLS, from our government. And one thing that caught my eye when I was looking at how many people are working remotely is that the gap from men to women in remote work is larger than I thought.

42:03In July of this year, women aged 25 to 34 are 28 % remote. Women 35 to 44 are 30 % remote. And those are 7.8 and 8.1 % higher than men of the same demographic, which to me, Sarah, is people trying to balance things Just because we throw childcare onto women in this country. So I presume that's driving that gap. Yeah. And I think that's, you know, worrying because what you don't want is like now that remote work or hybrid work is an option, it's women kind of stepping back from the workforce and doing less, you know, less work because they're doing more of the caregiving. That was one of the biggest reasons we wanted to build Winnie in the first place is we saw that when there are caregiving needs or when childcare is hard to come by, it is predominantly women that are kind of taking the hit to their earnings, to their working hours, all of that stuff.

42:58And, you know, that's not great. No, it's not great. I'm one of the rare couples. That's actually the other way around because my wife commutes to work and I work from home. So whenever there is a trained person, delivery, dog grooming, whatever's going on, like the nanny has to leave, I pick it up. And let me tell you, freaking sucks. It's so disruptive. Like the other day we had recordings, the groomers were here, the housekeeper was here and I was negotiating the whole household while trying to get the script ready for the show. And I was like, Oh my God. I felt like I was a complete failure.

43:34Every single thing that day. This is why my husband won't let me have a fourth child. Cause he's like, you're just going to pop this baby out and go back to work. And I'm going to have to be the one that's picking up all the all the slack even if we have child care you know there's a million days that it falls through yes yes man's got a point because children oh my god yeah if you've never argued with a toddler about how she can't go up the stairs while holding a bottle and her lovey because she's gonna fall and then yell that you don't know what we're talking about but it's a good experience everyone should have it yes one thing that when he isn't doing is working to reduce the overall cost of childcare?

44:12Because I don't think that's your limit. But is there anything in the future of the company that can help with the kind of cost of childcare crisis that we're seeing? Yes. So we are, but indirectly, indirectly. And one of the biggest expenses for childcare businesses is not running at capacity because it's all kind of fixed costs. So if you're not running a capacity all the time, you are just losing money. And that hurts you even more of your small business, but it hurts everyone. And the best businesses in child care are the ones that have many locations. Those locations are like close together because they're like always running a capacity.

44:54And as soon as they have too many kids, they're like overflowing into the next one. They're opening more classrooms. And so that's what we're aiming to do is help these businesses always run a capacity, not just have their classrooms be full, but make sure that they can offer part-time care and then fill those extra spaces with other part-time students, offer extra services like before care and after care that are just pure profit plays, offer things like camps and break camps and homework help for older kids. Those things make a center more money, but they don't make sense if you can't market them and fill them.

45:32And so we are aiming to make these businesses as profitable as possible. We see that because the businesses that we work with open more centers because they're growing and they have lots of demand. And then that's what makes the prices eventually affordable. It's not that like these child care centers are just like trying to rip off parents. Many of them are in this work because they really want to help families like that. why you do this work. It's kind of like thankless work. And so they don't want to charge more than they have to. We even work with businesses that are not turning a profit and we're trying to get them profitable.

46:07But you'd be surprised at how little profit margin they have for how expensive the service is. And so we're trying to kind of make that more so that they don't have to just pass along the cost to parents. Well, one thing that I heard was that a lot of the costs for a childcare business are essentially their facility, their rent, if you will. And some people are trying to get around that by having smaller, more home-based childcare offerings. Does Winnie work with people all the way down to the, I run a part-time childcare for three kids in my house? We work only with licensed businesses. So yes, we work with home daycares, but they have to be licensed.

46:44So in every state, there are some regulations around at what point you have to get licensed. And so, you know, sometimes you can have a tiny home daycare with like one or two families and you don't have to be licensed. You can still legally operate. We don't work with them. We typically work with a home daycare that's taking at least eight kids in their program. Whoa. And so they're like a legit business. They're a really small business, but they're a business. And that just is, you know, for safety purposes, we want to only work with the folks who've been vetted by their state and are kind of in good standing, that just helps us make sure that we're not giving recommendations that are not safe.

47:23Does that lower your overall legal risk if you are leaning on state accreditation as a quality lowered threshold? I think so. I mean, I think it's also the businesses that only take a couple of kids generally don't need Winnie. They don't need to market. So there's also not a lot of upside. They're not full. I mean, they're full, they're not growing. There's really no need for them to put their services online anyway. And so it's lower risk for us. It's lower risk for our families, most importantly. And we don't feel like there's a huge need in the market for us to help those folks. Okay. So I want to go back to the money question though, because you mentioned things like even like sports, I think earlier about things that you're adding on as kids get older.

48:09Camps. Yeah. Camps after care. In Oregon, growing up, we were just kicked out of the house. We didn't go to camps per se, but it's a big thing on the East Coast. Yeah. So many, there can be sports themed camps. There can also be in the Bay Area. We do all kinds of crazy coding camps or all sorts of fun stuff. But, you know, it's, it's childcare during the summer essentially. And also during school breaks. And it's a huge need for working parents is like you, you have these three months of the year where you need childcare that's not provided by the school and sometimes even not provided by your daycare preschool.

48:47And so we've started kind of working with providers that offer care during the summer months or during these breaks. But as you expand into more and more things, you will need more resources eventually inside your company, which means that you may want to break into your budding miniature Fort Knox you're building in your checking account. So at what point do you say, okay, we're going to stop trying to be more profitable or maybe just get back to break even, invest more and grow and go into more markets? Because 22 people won't scale forever. Right. I mean, for us, we just have to see the revenue use case.

49:24And generally, that's been a good practice for us because it's kind of forced us to really sell it in advance of building it. And we've thought a few things could be really big opportunities. And then we went out and like talked to customers and tried to sell it. And like, there was no opportunity there. And then there's other stuff that we are working on that it's clear people will pay us for it. They're ready to write the check now if we have it. And so it's just been, I think, a good practice for any company to go out and try to sell your thing and see if there are really paying customers there before building it.

49:58And it's also meant that we kind of know exactly what the investment will be before we start making money and can kind of choose the things that are going to pay off. Then do you ever have to raise money again or are you just done with that? We talk a lot about venture capital on the show, but you just seem to be, I mean, sitting pretty seems like a too cute of a phrase, but that's what it seems like. Yeah. So if we were like a bootstrap company, no, we would never have to do anything again. We should just be really happy. Unfortunately, I don't own the business. I own a small percentage of Winnie at this point because I've sold it to investors and employees.

50:36And so I have other shareholders to think about. And so I think we just have to think about what's best for the company, what's best for our shareholders. It's not just like, I wish we were bootstrapped and that I owned 100 % of this thing or me and my co-founder owned 100 % of this thing and we could just take all the profit and use it to reinvest and pay ourselves well and all of that. But that's not the reality of where we're at. And that's, You know, something that I always advise founders to think about when raising venture capital is like, you now are not, you know, the only shareholder here.

51:12But are you and your co-founder amongst the larger shareholders or have you been put more towards the middle? um combined we're the largest shareholder but we're uh you know there's lots of folks now on the cap table that have an interest and have been with us for the long run you know we have a board that my co-founder and i are both on but we always try to think about like what's in the best interest of the company in the long term and then you know think about all the folks around the table and what kind of outcome they're looking for yeah and because we're dancing around this according to The Crunchbase investors in Winnie include Homebrew, BBG, Reach Capital, A4 Capital, Unusual, Rethink, and others.

51:56Quite a list, actually, including some angels. And I think April Underwood was in there as well. Yes. She was one of our original angel investors, but now has her own fund. She does. April and Jess. Adverb Ventures. They're awesome. Adverb. There you go. So adverb is not an entity on our cap table, but I wish they were. I wish they were around when we got started. Well, I mean, if you do eventually raise more, then you know who to call. You put Hunter Rock to one side and you grab Advert Ventures and put it in. There you go. And I love, I love all our, we have just the, seriously, the most amazing set of investors.

52:28I think because we self-selected into this group, like the people that invest in childcare, similar to the people that work in childcare, like actually have an interest in doing good for families and children. And so, I mean, I just seriously, like for all the crap people say about venture capitalists, raising money like we just really lucked out with good people. Well, this is why going back to the private equity thing about they only see cash flow, which is to me, it's an accountability sink in a way. People will say like, oh, we have a fiduciary responsibility to our shareholders. I'm like, yes, for sure.

53:04But if you're working in, let's say, long-term senior care, I think you also have a moral responsibility to the people you're caring for. And whenever I read a story about private equity buying a chain of hospitals or senior citizen facilities and then gutting the staff and everyone's sitting and rolling around in their own filth. I'm like, I don't know if you're actually doing the right capitalism here. I wish we had a different conversation about responsibilities in the business world, especially as it relates to private equity. That's true. I may be biased because I was in my last job owned by private equity.

53:35Yeah, I think that's something I definitely have been so lucky not to have to worry about because whenever there's anything that comes up, like, you know, should we do what's right for our users or our customers? Or should we do this other thing that's going to make us a lot of money? It's always do what's right for our users and our customers. And like our investors have not given that a second thought. And that's obviously first nature to, you know, my co-founder and I. Well, I mean, it's yielded a company that made the top 5 % of the Inc. 5 ,000 two years in a row. So you can be focused on the product and still make money.

54:11But Sarah, before we let you go, we're going to do a quick lightning round and we're going to start with, well, we're just going to do two of your tweets because I got to get your takes on these. This, by the way, is how not to treat your customers, I think. So Sarah writes, HubSpot automatically upgraded my account to an additional$1 ,600 a month and then doesn't let you downgrade without booking a sales call. Really cool grift. Did HubSpot reach out to you after you did this tweet? They did. So they did let me downgrade. And apparently it was in the contract that I signed that if I went over the number of like marketing contacts that they do automatically upgrade you for the rest of your term.

54:48So I did actually agree to this. So I guess it's on me. But I will say like when they reached out, they were very straightforward about the contract and what's going to happen if I do this again. And so I appreciate that. Like that's their business. Like I just wish they would have told me before I did it the first time, but now I know. A warning. Like I think, I presume that 1600 bucks a month is a reasonable chunk of your existing HubSpot spend. Yeah. I mean, I think also like, look, we're a tiny customer in their book, but for us, like this is a lot of our, we don't spend a lot of money. So we just, we have to fight for like every dollar and it's a lot for us.

55:28It's not a lot for them. Yeah. I brought up this tweet, not just so we could all take a quick run around poking the HubSpot, but are you seeing from other service providers an increasingly stringent or strict application of SaaS pricing, negotiation, contracts? And I'm just curious about how you're approaching that as a founder and a customer of other tech companies. Oh my God. Everyone has raised their prices. You just have to be so careful right now because everyone's facing the same challenges and needs to make money. And I get it. We raised our prices too. It's all happening. But if you're not careful, this stuff can balloon out of control.

56:05So we've just had to be super careful about what we spend money on. If we can build something ourselves for cheaper, we will. And we've cut out entire services that we use that way. So you're on the build versus buy side of things now, just because you have engineers, you can just make your own stuff. Yeah. Or maybe we don't actually even need it. We're like, oh, we thought it was cool, but we're not using it enough to justify it. Forget it. If you ask my co-founder, she might be like, it's fine. But I just feel like it adds up. And so if you're not careful and you don't look through every line item, you can quickly be paying for more stuff than you actually need to run your business.

56:43Well, this is the thing about people talking about AWS, like make sure to keep tabs of your S3 buckets or whatever, because you can make a mistake and spend a ton of money. But I hadn't heard that quite as much applied to standard SaaS, but it sounds like everything now is a potential, I don't know, bottom line exploder, if you will. Yeah. I mean, all these tools that you use to track your metrics too, especially as we've been growing, we're blowing all of our usage out of the water. And then it's like, they want to raise you to the new tier. And we're like, okay, we're just not going to track that metric then because we don't need to to run our business and it's like blowing up our usage of these kind of analytics tools.

57:22Yeah. People were joking that you could build like an 80 % of an existing SaaS product for like 20 % of the cost. And so if you don't need that top tier, you can just kind of make it yourself. I wonder if that idea plus AI accelerated programming is going to eventually yield people going back to like homegrown services more often than going out to get traditional SaaS products just because who wants to pay that much? You know, it's just too expensive. All right. We have one last tweet from Sarah to go through. So I brought this one because you're quoting Jason Calacanis, my co-host, who did an all cats tweet, which is always indication that someone needs to take his coffee out of his hand and put it somewhere else.

57:58And I know that because that's also true with me. So this is not a diss, more of an observation. Anyways, this is the DPI chart we talked about on the show a couple of weeks back. Essentially, a great number of venture capital firms, even with a longer vintage, haven't return cash yet. And he says that Lena Khan, who runs the FTC has to go because she's blocking too many deals. Then Sarah Moskov, she weighs in. She says, Jason is right. Whoever is our next president needs to replace Lena Khan. The future of innovation in the US is at stake. Not clear where the candidates stand on this. Okay, Sarah, how much M &A from the biggest tech companies would it take until you were worried about the largest tech companies becoming too large and too able to just snap up the competition.

58:38So the other side of this argument. I think the challenge is they're not really going after the right folks. Lina Khan is not going after the right folks. If it were like breaking up Google or Microsoft or Amazon, like these actual companies that have way too much power and are too big, I think that would be one thing. But when it's like going after like smaller, you know, Figma trying to sell or things like, which I know was like the EU or whatever that eventually killed that deal. But I feel like that's the concern for startups is like, if you can't sell to a slightly bigger startup, not if Google can't aggregate all of the power in the world.

59:15No one wants Google and Amazon and Microsoft to aggregate all power and kill all companies. That's who we want to split up and break up. It's everyone else that I think M &A needs to be able to happen. So Adobe is worth a quarter trillion dollars. And in the Sarah Moskov line, that would be the can still do deals. So at what scale - I don't know. I think the problem is like, where is the outcome then? Like can Figma not sell? We're going to pull up an article that has a headline of mine on it. I had a particular take about this. Oh, okay. So maybe they can't. Maybe they're too large. But like at what stage can companies actually continue to sell?

59:57and have an outcome. I think if they can't, that's just going to be a problem for venture because they need companies, and especially if there's no IPO market, something's got to give or it doesn't make sense for a fund. I'm sympathetic to all sides of this argument because I'm a capitalist. I'm also somebody who's worried about monopoly. I have friends who are very worried about their funds. And I also have founders who would like to have a soft landing somewhere that has cash. I get it, but I don't know. If we let Adobe buy Figma, we're just going to end up with big Adobe. And then it's going to be worth a half trillion.

1:00:34And then, I don't know, all the good stuff will get just sucked up into these big companies. So I wonder if there's like a... Anyone can buy anything for less than$50 million. But if you're worth$200 billion or more, you can't... There's got to be some... 50 million or 50 billion? Million. 50 million is not going to work for VCs. That doesn't fit their model. Absolutely. So I'm trying to say that anyone can do any deal under 50. Don't care. no one, no one cares. But if you're like worth a hundred billion or more, maybe you can't buy companies for more than a billion dollars or something like that.

1:01:05There has to be something between Lena Khan and Google buys everything. Right. And I just, I want it. Right. I feel like there's only two poles to this debate and there needs to be something reasonable to prevent agglomeration to no end. Cause do you think they're going to break up Google? I don't. Right. But I think that was like the idea. Like we need to break up Google and Amazon and Microsoft and Apple and like really, really large companies and not like we can't give startups any exit. And, you know, what's happened is startups have no exit. But I think more importantly, like we need to understand where the both of the presidential candidates really stand on like innovation and startups and, you know, the venture ecosystem.

1:01:51And it's not clear to me like what the policies are of either of the candidates and how that will necessarily impact startups or not. Well, one candidate is avoiding putting policy up and the other one's policy is whomever they talk to last. Good luck sorting out who's in charge of that. So, I mean, it would just be great to know, like, you know, who is really the pro innovation candidate? Because I think it's, you know, we just we haven't heard a lot yet. Yeah. Also, we're still in the phase of the campaign, which everyone's putting out economically unsound ideas that that pull well on one hand.

1:02:25Right. Kamala walked back price controls pretty quickly, but that was still a really bad weekend. And then we had Trump's like 60 percent tariffs. And I'm like, no, no. What's going on? I want to take my old AP econ textbook and start whacking people with it. This is not super complicated stuff. All right. We've done our topic. We got to bring it in. We got to bring it. Sarah, thank you so much. We'll have you back on next year when you make the Inc. 5000 2025 list. And I wasn't going to mention this because you mocked other lists, but I am putting you on the Twist 500, which is our working database of the companies that we think are the most interesting in the market today.

1:03:00And Winnie clearly makes that list. So you'll be on that. You don't have to do anything. all do all the light work, but I can't think of a better company with such a big market, a great founding team, and profitability. So thank you. Amazing. Thank you so much. Oh, and where can people find you on the internet? So I'm at SM on X. I'm also on LinkedIn, Instagram, TikTok, everything. Winnie.com. That's all you really need to know. That's all you need to know. All right, Sarah, we'll see you again. Thanks, everybody. Bye. Bye.