Startup pitch competition! Jason invests $25K into one of three founders | E1942

0:00And press candidly, how big can this business get? there's other tools like this out there you know we don't have to worry ourselves too much with that at this stage as seed stage investors what we need to do is find a great founder usually a great team with product traction with clients that's demonstrated they can build something understands the customer base and find good teams and back them this week in startups is brought to you by epo experimentation is how generation defining companies win accelerate your experimentation velocity with EPPO. Visit getepo.com slash twist. 8 sleep. Good sleep is the ultimate game changer.

0:42Now you can add the pod cover to any mattress. Go to 8sleep.com slash twist to check out the pod cover and get$200 off the pod plus free shipping. And mercury. 90 % of startups fail. Just 10 out of every 100 make it. Mercury exists to close that gap. Helping companies succeed with banking and credit cards engineered for the startup journey. Join over 100 ,000 companies banking with Mercury at mercury.com. All right, everybody, welcome back to this week in startups. Today, we're going to hear from three startups. I'm going to decide if I want to invest in them. With me is Presh Dinesh Kumar. He's been with me since he was 18 or 19 years old, and he dropped out of school to come work for me.

1:28This is a true story, yeah, Fresh? This is true. I turned 20, but yeah. You turned 20 and then you broke your mom's heart and dropped out of school. Tell the story. Yeah. Okay. Listened to the pod, The Speaking Startups. Thought you were smart. Didn't like school. Wanted to work for someone doing interesting things. And the first thing I did was, yeah, find interesting people on Twitter and different podcasts. And so, yeah, I reached out to you. And long story short, you let me help out at, uh an event called launch scale we let you um volunteer or we paid you you just said come out and i just tried to help so you basically put yourself out there you said hey i'll do some free work see if i can impress this guy correct yeah a bit of a lesson there isn't there yeah just like trying to stand out like resume and stuff anything to you know beat the beat the noise is how i thought how i saw it yeah and you know what you did you documented your trip on social media with short videos and i said anybody who's this thoughtful and energetic i probably want on my team so just for folks out there if you're just sending a resume in through the front door that's okay that's like a six out of ten if you've got a great if you've got a good social media presence your linkedin is tight your your social medias are tight i'm gonna get to a seven but when you start doing things actively you know you add like 10 points so all of a sudden you go from a six or seven you know if you just listen to what the guidance counselor says if you start making videos writing blog posts doing social media about a topic you care deeply about or around the subjects and the people you want to associate yourself with who you think are dope intelligent driven smart whatever criteria you're going for could be artistic could be you know musical talent could be filmmakers could be actors whatever comedians once you do something like that you go from like a six or seven to like a 16 or 17 out of 10.

3:21In other words, you're too good to ignore. And I press you in that category. So hopefully today we have three startups that are too good to ignore, ignore. They come out of our founder university program founder.university is the URL. I believe there's still time to accept some people, but I think we've accepted most people in this program, we call it a pre accelerator. This is what comes before tech stars before Y Combinator or before launch accelerator, you don't need to be incorporated, you don't need to have your product finished, you don't need to have customers, you just need to be two or three co founders, one of you is highly technical, at least.

3:57And you have a great idea. And you've been building and tinkering. It's a pre accelerator. In other words, we don't invest on you in the way on the way in. Typically, we might do that once in a while. We tend to invest in the companies during the 12 week program. It's a 12 week program. You pay 500 bucks. If you complete all 12 weeks by putting in a monthly, I'm sorry, a weekly report on Mondays, we give you the$500 back. So literally we hold your 500 bucks to make sure you don't blow it off. And then boom, we give it back. We're just finished our seventh cohort. Eighth one is starting. Presh and Kelly run the program.

4:33It is one of the great joys of my life to get to meet people in year zero. I've personally made it my mission to be the first investor on maybe a hundred startups cap tables um in this fourth fund we're doing we're deploying just over 50 million i think in our fourth fund we're just closing it up now and um i'm really excited to be the first investor on a lot of these cap tables not always so presh uh why don't you tell us about these three startups just give me one sentence in plain English. Don't even tell me the name of the company. Just describe the first one, what they do in plain English, the second one in plain English, and the third one in plain English, and why you brought me these three.

5:15Sure thing. So first one is a SaaS tool to analyze your LLM usage for AI tools. Got it. It is a piece of software for businesses that helps manage their spend on large language models so that's what it is and then i'll ask you the second question why is that important to you to you crush why do you think that is important yeah so obviously a bunch of ai companies um that'll be like the next wave of companies all using ai and language large language models sorry and so they're expensive and founders startups but also you know big corporations will want to keep a tight eye on spend as a company scale.

6:04Great. So the reason why it's important is because these services are expensive. You can start spending wildly. Your developers could be inefficient. You could forget you started up a job or something. And money is important. What a great summary. Okay, let's keep going. Number two, tell me in plain English, no buzzwords. You put a couple of buzzwords, you put SAS in there. So give me even plainer English brush. it's important for investors to be able to talk to each other in plain english okay the second one is a marketplace for tabletop gamers to buy and sell their their pieces yeah got it so this is for tabletop games settlers of katan magic the gathering there's a bunch of these uh nerds dorks geeks and really cool people um who are closeted geeks and dorks who love playing these games they spend thousands of dollars a year it's collectible you'll find it on ebay you'll find it in different places but yeah there are a bunch of them so the reason this is important i'll do that this is important is um because having a dedicated marketplace for them uh means 100 of the screen real estate community experience is tailored to their passion um and it's a high margin high velocity business people are buying and trading these things you know very frequently i would say probably monthly or quarterly or maybe even some people do it weekly okay who's our third one and then i'll say why i think it's important i like that little back and forth here we're doing here little pickleball okay all right cool so third one this is a software product we call it a business in a box and so it uh is a suite of tools um that entrepreneurs freelancers can use to operate their business um it's like operating system for founders business in a box it's still kind of okay so business in a box is buzzwordy when you said it's a collection of tools to help people manage their business i understood that pretty well and the only way to make that even better is it's a collection of tools for freelancers and small business owners to manage their business including i don't know if it has this accounting marketing and timesheets i don't know i just made three things up so um that would make it even tighter the reason that's important is um a lot of these businesses are very unorganized and chaotic and the software that you would sell to a small small business is probably too industrial strength you know if you're going to use some giant accounting software giant hr software whatever it is it's probably got 99 of the 100 features or 97 of the 100 features are not going to be used so a simpler way um and a broad collection of them means i don't have to hire i don't have to buy 17 different solutions i like that a lot i think that's one of the trends so we're going to meet them right now and then at the end i'll pick one of them to invest in so there's a lot at stake here folks let's have the first person present for but two minutes yes brush that's right two minutes and then i'll ask them two or three questions and then we will zip zip zip through them because the audience is busy but really it's important for us to understand how good they are pitching their idea.

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9:51If you didn't know, it stands for Software Development Kit. EPPO keeps you informed with automated updates and shared reports, and the best part about EPPO is that it lets you go deeper into experiment results you can trust and understand root causes. So here's your call to action. Experimentation is how generation-defining companies win, accelerate your experimentation velocity with Eppo. Visit getepo.com slash twist. That's G-E-T-E-P-P-O dot com slash twist. Let's invite our first founder up. I'm really excited to meet these three companies. All right. Peter from Props AI. Hey, Brush. Hey, Jason.

10:26How are you doing? Good. How are you? I'm well. Let's get to it. Three, two, go. Hi, I'm Peter. I'm the founder of Props, a platform to help monitor and monetize your LLM applications. Let me introduce you to one of our customers, Riley, who's got an AI startup that's going viral. But today they get their bill from OpenAI and it's thousands of dollars, giving them no actionable insight into how that cost is broken down. They don't know what their unit level economics are. They don't know how to price their product effectively. And to set up a more complex billing model like usage-based billing could be a lot of work.

11:00They may assume that their cost is split evenly between all of their users, but this is rarely the case. Often, users will churn within the first time of using the product, and the users that are actually paying them may be costing them more than they charge. The solution to this is the AI proxy, real-time cost and usage tracking, enabling effortless usage-based billing. We give per user cost tracking in our dashboards. We integrate into Stripe to enable usage-based billing, and we provide observability across errors and latency. It's all available and only takes two lines of code to implement.

11:37We provide a free self-hosted version, which is from our open source product, and we provide a cloud SaaS offering for$47 a month and then$0.50 per billable user on the Stripe integration. So far, we've processed 80 million tokens, done 3 ,700 in revenue, and we've just crossed 100 users in the seven weeks since we launched on Product Hunt. We actually started before building the product by building our acquisition strategy, the AI job board, which is now the second largest AI-specific job board in the US, generating 15 ,000 unique users a month, and Props takes the native ad slot on that platform.

12:13We built the proxy dashboard and continue to build our metrics. And we've just launched usage-based billing into beta. My background is as a software engineer working in companies like IBM and Amazon and taking leadership positions over engineering teams for the past five years. That's Props.ai. We help monitor and monetize LLM applications. All right, Peter Kirkham, you did a fantastic job presenting. Let me ask you a series of questions. Is this your first startup? This is my first startup that I've got to the stage of incorporating. I've had a few different businesses in the past with Shopify stores.

12:49Okay, so you have projects in the past. Yes, projects. This would be the first startup. Fantastic. Number two, are you technical? Do you write code? And are you writing the code for this startup? Yes. So I've written all of the code so far. We actually just brought on our first additional software engineer this week as well. Fantastic. Nice, tight answers. I like it. And how many co founders are there in the startup? Defined as only over 10%. Okay, you're a solo founder. Okay. Who designed your deck, your website? Who did the design, the UX, the design? I'm very fortunate. My wife is a senior product designer.

13:32Fantastic. I want to make some notes here, Prash. You as my associate in the firm, you're an associate, you got to make investment decisions. You got to say which ones we should invest in. i want to point out some of the very strong things about this the design is exceptional this is world-class design um i think or or it's it's getting close to world-class design and what i mean by that is shout out to your wife um this really does make a big difference at the early stages at the later stages anybody can pay a decent designer you know i would say for the design you have right now load thousands of dollars and get this outcome three four five thousand dollars with a designer two or three revisions you're going to get to this most startup founders don't do it they just push design down the road but design does say something about you just like uh you know your haircut your breath uh dandruff body odor uh something in your teeth um being overweight like i was for a long time and i'm going to tell it to you straight as i always do people judge books by their cover i hate to break the news to the audience brush but the don't judge a book by its cover is a classic saying because people do judge a book by their cover far too often but when you judge a startup and judging it by its ux and design there's a real rationale to it and the rationale brush is what why is really crisp clean design especially for a piece of business software like this why is that important in the marketplace not with investors yeah so it's going to come down to your customer and how they interact with the product so you've got a good good design customer wants to use a product um then you know that's beneficial fresh you've learned so much working with me over the years and startups you know if your customers see something that's really tight and beautiful um they can trust you that's why banking software all looks very similar and clean and perfect that's why uber and airbnb feels similar and clean and solid and trustworthy um if uber and robin hood and airbnb and mercury bank or wealth front didn't feel as tight as they do people wouldn't trust them as much okay also you're a technical founder love that you're a solo founder don't love that um and it's your first startup but you get some projects so that kind of puts you in between you know having scar tissue and yeah just having a little bit of experience on the product side so overall uh this is absolutely fantastic well done i don't have any questions for you except if i put a gun to your head and said you must pick one business props and monitoring of llm usage or the ai job board and i'll give you a hundred thousand dollars to pursue it which one would you pick props okay great awesome because i did see that job board and i want to make sure that you're not hedging your bets and you're thinking sometimes founders do this that hey that primary business i'm putting all my time into isn't working you're doing that strictly as a cheap quick way to provide a free service people come for that free service and they stay for the tool and most people say you come for the tool you stay for the marketplace here you're coming for a tool and getting free advertising for your tool so absolutely fabulous job presh do you have any questions no questions i like it okay well done peter that's a really good presentation we're off to a strong start here and presh candidly how big can this business get there's other tools like this out there you know we don't have to worry ourselves too much with that at this stage as seed stage investors what we need to do is find a great founder usually a great team with product traction with clients that's demonstrated they can build something understands the customer base and find good teams and back them so it does feel like we found something here now i don't know how big this can get but we do have a corollary there are companies that we've seen that do this kind of monitoring for your other web hosting.

17:45So those will be competitors, but this is solely for LLMs. And I think this is unique enough that it could give you other options and say, Hey, you're using chat GPT for, you might want to downgrade to 3.5. This is what you would have spent or you could have used, you know, an open source product with hosting for this price. So just being able to compare and contrast what you're spending and give you the other options and then have those other options have either a cost per click or an affiliate program attached to them so if you do choose to use quad you know uh gemini or you know some open source one you would get a vig and then if it also had you know this list of people who are using this man there's so many ways to upsell them so i think we can figure that out later we know this can become low millions of dollars pretty quickly and we know it could become you know 10 million dollars and you know when we invest at the seed stage uh for low single digits you know upwards to eight million dollars typically that's what seed rounds are um you know you feel pretty comfortable taking a little bit of a bet and they'll figure it out later okay any questions for me about that sort of pressure no i also i think it like makes sense as a third party tool to be doing this because you'll get like open ai or different model have like let's say their own analytics but they're going to prioritize you know usage of their product right and they may push it to a more expensive one right yeah yeah so i think it's interesting like as a separate party if they're optimizing for you and you just pay for that product objectivity it's great yeah and if you could bid out the software you know you could have like for vip clients like big you know people spending a million dollars a month you just have some concierge there who says hey we bid you we bid your workout um we can save you 15 if we do that we want to take five points of the 15 you'll save 10 are you interested in that service click here and you click there and you sign an agreement and then they go shop your jobs so to speak elite performers have a secret and it helps them stand out in their field you want to know what that secret is i can tell you it's sleep whether you're an athlete an entrepreneur or are you just a career-driven professional like the people who listen to this podcast?

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23:14Our marketplace charges a 5 % fee for all products and services sold. Over the last 90 days, we have converted 194 people to our marketplace who have listed over$8 ,000 inventory and items. We are using our dedicated Facebook groups, gaming stores, and Manaverse podcasts to go to market. Over the past 10 years, our dedicated Facebook groups have grown to over 16 ,000 members who have traded over$5 million annually with over 200 ,000 listings. The average gaming store purchase is about$40 and eBay does about 312 million transactions a year. So our TAM is about$12 billion. To earn$10 million, we are going to use our over 50 years of experience in the industry, our relationship and knowledge of gaming stores, and running local, regional, and national events, along with our Manaverse podcast.

24:06For$100 million, we are going to consolidate the tabletop gamers and companies from Ebays and the Etsys with better margins and targeted marketing results, utilizing things like YouTube, TikTok, and Twitch, and our Facebook trade group. Our leadership team has been there since the beginning of the tabletop gaming industry. we have owned stores run events hosted gaming conventions and promoted the industry it started with dungeons and dragons and now with trading card games and miniatures it has grown into a 25 billion dollar a year industry we are the perfect team to make this change thank you for seeing secondhand geek all right well done uh so when did this product launch this marketplace when when did you launch it i know you have the facebook podcast going for a lot november last year okay great so it's it's very nice and you got six months of data yep well tell me honestly what have you learned about running a marketplace what are the top lessons two or three lessons you've learned so far getting this product into the market you have to have a balance between both sides of the marketplace both the products and services provided and the customers to consume the product that you have got it and there seem to be stores that do this yeah there's still a lot of stores out there uh that people go to roughly 45 000 stores in the u.s that have a brick and mortar location yeah and these are typically comic book stores that have this section no actually there are five things in the industry there's miniatures trading card games role-playing games and board games sometimes a lot of the comic book shops are just standalone comic book shop got it okay and so what are the lessons have you learned here um in running the marketplace um that the having a lot of pictures and a lot of descriptions um will push somebody to do a sale online versus going into a store to pick something up got it okay so you learn supply and demand matter both sides matter you gotta have buyers you gotta have sellers second thing you uh learned here is that the descriptions in the landing page really matter yes okay how many listings have been added to the system to date in the six months you've been operating uh to date we have twelve thousand and nine hundred dollars worth of listings okay so you're giving me the dollars which i always uh 351 items okay so great um what happens with founders and you know uh you are using the jedi mind trick doesn't work on sith lords we invented it um so that's not gonna work on a jedi fellow jedi so when you give me the number the value of it i immediately say oh there's somebody put a ten thousand dollar thing in there this number is going to be low hundreds and i was right so um this seems to be your biggest challenge what is your solution if i asked you right now to come up with on the spot how you get ten thousand items in this marketplace in the next 30 days.

27:02How do you do it? We have created an upload system with ShareTribe that allows gaming stores to upload their entire inventory that they have in their store instead of going to Amazon or eBay and sell on our platform and only give up 5 % instead of 15 % of their margin. Okay. So number one, you're not going to win them by the margin necessarily. The margin isn't what matters. Finding a great buyer at the right price is what matters. When you talk to your customers, that's what they're going to care about most is like getting the best price. They're happy to pay 1015 five, even 20, probably if you get them a buyer quickly.

27:39And so I think what you need to think about here is finding a way to have either offshore individuals we get paid$1 or$2 an hour, or software, or both to make this marketplace have a dramatic number of listings, which will do extraordinary things for your SEO, because you have a long tail here. There's some, you know, character in some card game that somebody looks for, you know, that 10 people look for, and there's not that many pages of it. So on a software basis, there's a very simple tool you could build, which is export your eBay listing and post it here. So a bulk editor to export, that could be a toolbar, whatever, you know, and you can probably build that very simply where the toolbar goes in and moves it over, or you do something even a little more sneaky.

28:34And this is where sneaky. Well, it's a little bit gray hat, a little bit freestyle, you know, like when you and I were, were, were in the field, you know what I'm saying? Yeah. You were, you were, you were on the frontline. I was behind the scenes, you know, CIA stuff. um you know sometimes we got a freestyle sometimes there's people who can do things for us you know and we can uh you know grease the wheels so to speak you know what i'm saying we don't talk about this stuff uh in public you know this is the job so um imagine there was a third-party company in manila that you could pay and you could say hey this person is the best seller on ebay i want you to go to their ebay bank and take their 20 listings and move them over to ours and then you as the founders say you saw your great listings we're building this startup um you know and hey we really love what you're doing took the liberty of showing you how much better our landing pages are by moving your inventory over here if it's okay with you i'd like to give you zero commission for your first 10 sales and we have a team that will automatically move your inventory over here and you don't have to lift a finger we'll just camp out on your you know who were cognizance you know how we do this but put up put up a bird you know we watch it snipe it fresh this is stuff that's like just don't ask questions just enjoy the peace and prosperity that you get to live in the free world stuff alan and i do or i'm sorry alan does it i'm not involved anyway now Now you just took the 10 best sellers and you took their 20 best items and you did them a solid, did something really gracious for them.

30:13And you're a founder. They're a founder. You say, Hey, I want to get you the best price. We're really trying to own this specific category. I'll make it super easy for you. If you just give me your email address and phone number, Stripe account, whatever, I'll put it into the account for you. But now you just hire somebody in Manila for a dollar an hour,$2 an hour, and they do it overnight. and you just tell them move these into here and then find the seller and then you as buyer could then go buy something from them put it into your house inventory so now you're selling it so now that you're a buyer you have their contact info so this is like a really interesting thing um i had a friend who was trying to figure out how to sell a piece of um uh they were struggling they were trying to sell a button that you could put on a table it's very popular in asia but you press a button and the server comes to you when you press the button in the back room this is 25 years ago in the back room it um puts a number there now if you go to any chinese restaurant or you go to china hong kong every table has a bell on it you ever been to asia and seen these bells no okay so if you want your waiter like just press the button and then 17 happens the person races to your table this is before smartphones and ordering through right you know ordering services and qr codes and they couldn't figure out a cell i said it's very simple you go to the bar you talk to the manager you order a drink chat up the bartender give him a nice tip so can i ask a question who's the manager here um you know um she wanted to leave my card and and this little bell for them and it would be real solid for me um if you could do that um this is a crazy idea but it really increases tips because people get better service and hey you're the bartender you understand how important that is if they can't find you if they can't find the waiter right you probably can't find the waiter sometimes you've already made the drinks and the ice is melting so i just gave him that script he went out and did it but it worked now why did it work because you bought a drink you gave a tip so for 30 or 40 bucks he would go into a restaurant bar whatever have a little snack you have to eat anyway and you know he had done reciprocity he had done something nice for them which then meant they wanted to reciprocate it's very powerful device so anyway you got to start thinking about acquisition you got to start thinking about really building up the inventory i gave you a couple strategies here but you you you can't go to market without this being 10 000 20 000 you got to come up with a really great system so it could be done with software could be done with you know um humans um that are just going to be faster to be totally honest than you know getting the software out there and trying to explain to people how to use it.

32:49And pick a beachhead where you think it's over under service. You mentioned so many of these things. Which one do you think you can crush eBay and other places on that's under service, that's high velocity, high margin, whatever? Is it the figurines? Is it the card games? Warhammer Games Workshop. They are the number one seller at$312 million a year. I have a Facebook group over the last 10 years that has a lot of margin there. so critically important you own that category every item possible is in there the top sellers are in there and then you go find the buyers which you seem to have done because of your facebook groups which is also a brilliant strategy people are also hanging out on discord but you know the the two other growth hacks are like having a podcast having a discord slash facebook groups and facebook groups are brilliant at this so i just love everything about what you're doing great job i'm really interested in your business so great job good start oh by the way let me ask a couple questions you have a developer on staff or how are you doing it you have a full-time contract uh how many co-founders you got we have four all together perfect so four people own over 10 of the business each correct something in their range okay great 20 20 we keep 20 for an equity pool for employees for okay so it's chopped up five ways got it i love it that's perfect so we love having multiple co-founders as you know you know spent a little time in the field i'm gonna have a squad gotta have my squad you know you're only as good as the the weakest link in the chain and uh you know they you got to trust they got your six right yep i'm talking about yeah this you don't you translate this later fresh but you got the guy whoever's got your six this is important thing he's a great guy yep exactly uh and you have his six by the way so absolutely all the time this is uh you know you get if something happens you know They got to protect your back, you got to protect theirs.

34:43So that's great. We love having multiple co-founders. You have deep expertise and passion for the space. This is like normally as a business, you'd be like, why would you do this? What I love about your business is you understand how much money is at stake. You understand the customer base really well. And now you just got to understand how marketplaces work. We've invested in a couple. we have one that matched drivers of cars passengers of cars it did well we had one that did service providers with homeowners thumbtack we have one meow tell meow tell matches people who own cats and cat sitters we have another one called gigster it matches spaces where you could go rent a pool a tennis court or a location shoot by the hour for a photo shoot or a movie they're crushing it with people who want to rent a pickleball court or who want to you know make a movie or a television commercial or social media influence stuff we've got another one that takes diamonds from all different sources puts them into a marketplace called stone algo we love a good marketplace we've got the playbook for your partners one of the things we try to do is um introduce you to people maybe who are one two three four five years ahead of you in deploying these marketplace strategies and who are non-competitive and let's face it it's not like there's going to be 20 of these startups coming to our accelerator next year this is true all right good luck with it thank you sir being a founder can be overwhelming don't i know it you know i I get those phone calls on the weekend.

36:21Sometimes people are a little overwhelmed. They need to talk to JCal. They got my phone number. I know the reason why. There's a hundred different things you're responsible for. You got to take care of your office space or remote workers, HR, software, raising money, product, customers. It never ends. And I know you just want to focus on your product and your customers. Well, fortunately, Mercury is here to help simplify your banking and finance operations. Complete any banking task in just a few clicks. Streamline your operations with real-time data from your bank account and they've got an amazing interactive demo right on their website that lets you explore all the tools and how it works with mercury you're going to pay bills faster you're going to stay in control of company spend and you're going to speed up reconciliation the end result is the precision control and focus your startup needs to transform how you operate join over 100 000 startups that trust mercury for financial excellence growth and of course the community mercury the art of simplified finances apply minutes mercury.com and start transforming your startup's journey today.

37:18Let's have our next founder. Man, two strong companies. Pressure can make my life hard if I can only pick one of them. All right, next up, Alex from Zweily. Let's keep this train moving. Hi, Jason. How are you? I'm well. Three, two, go. Hi, I'm Alexana, founder and CEO of Zweily. We help you run an awesome business by giving you all the tools you need in one place. Meet Emily. Emily's two-person consulting firm is bogged down by overpriced, complicated software with scattered data. Running a business takes many tools. Emily starts with one, and the cost just adds up. Connecting them together also costs more.

38:00This really cross-integrates tools like tasks, emails, presentations, CRM, and much more. We launched March 2024 and have six customers with over 4000 in AR and five products and more on the way. We offer bundling with savings for three or more subscriptions. Products range from$15 to$100 a month and without fees for seats. So these customers end up saving an average of 50 to 80 % based on competitor post pricing. We target freelancers, small business owners, and startup founders using LinkedIn and word of mouth for growth. To hit$10 million in AR, we need 4 ,167 SMBs at 200 MR. I'm a two-time technical founder with John, a marketing expert, and Hashi, a business consultant on my founding team.

39:00We are Zwilli, and we help you run an awesome business by giving you all the tools you need in one place. Great. Well done. Have you raised venture capital before? On my last one, yes. Private, but private equity, not VC. Oh, private equity. Got it. Have you had a successful exit defined as selling a company to another company and returning capital to the investors or equity in the next company? No, not on the last one. Not yet. We didn't get to. How many co-founders do you have? On this one, three. Two other ones. Two other ones? How many of the three are technical and writing code for this product or otherwise doing the ux design and uh yeah i'm the only one like i'm doing okay what are the two other people's expertise in the world where they exceptional one uh one of them is business uh development and sales and the other one is marketing social media marketing um perfect growth okay so you got a growth person you got a sales person a tech person nice trio uh which customer just tell me a description of the customer who's getting the most value who's the most addicted who's giving you the most great feedback out of these five or six customers you got just describe them yeah we have a i had a customer about two weeks ago who just sent a referral video like a recommendation and he was like uh he loves the customer support from me it's like that's what number one okay that's what he loves what does he love about the product and what is his business describe what he does for a business so he's a sales director for a company called becoming institute they offer therapy to universities colleges and using crm he was using a cell spreadsheet and he's using crm to keep track of all his leads got it so you think your beachhead market is people who have service businesses perhaps who have customers who have to be managed and then everything that's downstream of that and the current collection of crm like salesforce is awesome everybody loves salesforce there's a bunch of other contemporaries in that space of course there's hubspot and other uh tools uh but you think you can carve a niche because you will be cheaper and better am i correct yeah yes not necessarily cheaper but uh all these other companies don't have that founder-led support but also um they're very bloated that's what we're hearing um people just don't want all the bells and whistles got it so you want to build a tighter collection of software modules that are easier to use exactly so simplicity is really important here zendesk was one of those companies that tried to simplify all right well done alex thank you that's all my questions for you fresh um we saw three great companies here um all three of them have their product in market all three of them have a couple of customers kind of our sweet spot if i'm being honest um rank these three in order of how much money and the likelihood of um the likelihood they could be a hundred x so if we're investing in them in our accelerator whatever uh making some small bets and then bigger bets let's assume we invest in them which one has the most likely chance to return a hundred times our money which is what our lps are entrusting us to do is to find in every 25 or 50 companies a company that will return 100x that's the math of what we do i think i'll pick props ai um to return yeah okay great uh and then who's second oh uh second i'll go with zwieley and third second and geek okay um and i can only pick one of these companies to invest in that's the hard part here for me and all three of them are worthy of investing oh wait a second i can do whatever i want i can invest in all three if i want to all right pressure you know what get these guys the paperwork i'll invest in all three that's my decision i feel like all three of these companies are worthy of investment so let's get going let's figure out um you know where in our program they want to go to let's get the diligence done we got due diligence all this is pending due diligence i'd like to place a bet on each one small bet grow up because they're very early stage and and let's see if they can hit a series of milestones let's bring our three founders back for a second here and i will let them ask me one tight question each one tight question each about startups uh and being a founder so take a moment to think it through raise your hand when you've got your question locked and loaded okay alex your question keep it concise yeah you've had uh other companies before So how do you navigate shifts in strategy while staying true to your vision, considering all the constant changes that may occur daily?

43:52Okay. Mission, strategy, tactics. Okay. The mission for your firm is to help small businesses operate more efficiently, whatever it is, to help your businesses become profitable. You have to figure out what that North Star mission is. so let's just say we want to help small businesses grow faster and profitably well that leaves any piece of software you can build or service you can create on the table and that gives you permission with the mission with your team to say hey we're here to help people hit profitability and to help them run a more efficient business that grows fast so we're going to help you run your business more efficiently grow faster and grow profits specifically so if you set that mission well then strategy becomes pretty easy because you just make a list of here are all the different products people told us they want and we did customer interviews with a dozen people and this is what those dozen people told us was important to them and then we did second meetings with those 12 people doesn't have to be a ton of customer interviews who used our product and man four of them said you know crm was really important but sequencing tools and prospecting and finding the next lead were like they're really acute problems so we built a software and a human service that allowed us to help them get more leads and tell them these are the 10 people they should go after next whatever it is and then you can just move things up and down the strategy pole and just watch engagement and do that now tactics they're going to change frequently so mission doesn't change if you change the mission it's like well are we shutting the company down are we getting permission from our investors you know to to to pivot hard here that's a hard pivot changing the entire mission of the company second piece strategy well that's just something that would change quarterly maybe every couple of quarters tactics could change weekly hey you know we're going to try this week um knocking on doors and physically going to storefronts next week we're going to try inviting people to a webinar.

46:00The week after, we're going to try cold calling. The week after, we're going to do email sequences. So you say, okay, this month, we're going to try four different sales strategies. We're going to push as hard as we can on each, and then we'll figure out which one works. And then that moves into a strategy, right? So you try different tactics, you move into a strategy. So just keep that framework that I talk about often. M-S-T. M-S-T, mission, strategy, tactics. And your team can change the tactics anytime they want. you can empower them just say hey listen you can try all kinds of different tactics you want just don't do anything unethical moral etc leave that to guys and you know cia you know doing stuff we have some gray areas we can work operate in that you can't um and then strategy well you know we have to have a thought out meeting about that because that's a quarterly you know making a big plan and mission you're not touching that obviously you know rank and file and touching the mission Okay, great job.

46:50Thank you. Peter, you got a question? You don't have to. Yeah. Keep it tight. At the early stage of a company, when we're talking to customers every day and building real relationships, at our stage, we're onboarding everyone personally at the moment and having regular conversations with them. When you also mentioned pivots, how do you balance supporting those early adopters and those initial customers that you build really deep relationships with, with new opportunities that arise to serve a wider audience of customers. Yeah, you're gonna have to figure out who your ideal customer profile is.

47:29Great question. You'll figure that out over time. Typically, customers will fall into buckets, right? And so we did that with startups. There are startups at the early stage like yours that come to founder university, and they're trying to figure out if there's a business here and how to get customers they may or may not be incorporated. We have the accelerator, accelerator you all are kind of accelerator moving into the accelerator phase hey i got five i got 10 i got you know 10 you know 3k a month 10k a month in revenue i need to accelerate this i need to get a proper seed round of a million to three million dollars done you know and then there's like growth after that so bucketing your customers and then understanding those personas and this is you know stuff that's been going on in sales for a long time and then figuring out what um you know why they use your product and what the sales pitch is to them.

48:14So, you know, for you guys in Founder University, like you want to get to know our team, you might want help on growth, you might want help with strategy, figuring out how the businesses work, asking hard questions, getting some knowledge. You know, when you move into the next phase, you know, and you're like a seed stage company from this pre-seed stage to seed stage, you might be asking us, hey, can I, how do I, how do I double my revenue every month and how do i find a great sales manager or first salesperson you got a different set of needs that are more operational and then you might have scaling needs from us you might have fundraising needs from us so we can craft products founder university launch accelerator or direct investing or our syndicate for each of those early stage moments so you'll do the same there might be somebody who's a startup with two people using your product and you're going to grow with them they're not going to be hard to service they're going to only have like a small number of jobs running who knows then it might be series a people who are already been spending a million spending a million dollars a year for the last two years they might take longer to make a decision but they might make a bigger decision they might want more white glove service and then there's giant companies that might be a three to six month sale cycle so you have to pick and learn about each of those different customer segments right and then decide which one you're going to focus on in which order perfect example uber went after lincoln town cars the highest and highest margin elite service bc ceo showing up at the airport with the person at you know baggage claim with their name and they you know they walk up and they get out of business class and they hand the person their bag and they get back on their phone and pound out some messages got the earpiece in and you know they're not going after like the family on a budget, Spirit Airlines, in coach, looking to get a minivan and save money and that kind of thing, right?

50:03And they want to add three extra people, even though it can only fit five. It was critically important for Uber to do that because those customers were profitable from day one, massively profitable. UberX customers, modestly profitable. UberPool or Lyftline and those kinds of things, not profitable. So you have to make that decision who you're going to go after first the big customers might take a long time and you don't have the time to do that the small customers might not ring the register enough and so maybe it's you know um you know um who was the porridge is too hot too cold just right goldilocks goldilocks you got to find your goldilocks customers boom okay last question alan um with all the experience that you guys have with marketplace is what you think is either the best piece of software or partnership to have in trying to create a scalable marketplace i think you got to really you know and there's a group of people who say you got to have the customers and then the supply you know the demand the supply side takes care of itself the truth is in talking to travis long times about this you got to have a certain amount of supply and in your case is a long tail of supply so i'd really work on supply Once you get some supply cranking, you can fake demand.

51:20How do you fake demand? You got 20 important customers putting stuff on there. You create 20 accounts with your friends, your team, whatever, and you buy one item or two items from them each month. Now they're like, oh, wow, people are buying our stuff. Then you take it, you resell it on your own platform, whatever. And you just get them used to, oh my God, they got a booking, they got a sale, right? And the way Uber did this famously was they went to some midsize cab companies when they opened in LA, my understanding. and they said hey we'll pay you for 10 drivers on the road 24 hours a day this amount of money all you got to do is put these phones in your cabs can we buy that from you now we'll pay you up front and the cabcomers like yeah dummy um we'll take a guaranteed payment and they just bought out the 10 cars boom and they had venture money to do that so it was no big deal there's equivalence here for you okay where i explained it earlier right so i think it's really about getting the great supply, then you know, you could always buy ads.

52:16So you could buy Google ads, you could buy, you know, make YouTube videos of what's for sale, and then amplify those. You could do content marketing and, you know, say, Hey, here are the five coolest items on the marketplace this week, we think these ones are really good value, and have a great price, we think these ones, maybe you want to put an offer in for 10 % less. So you can juice the marketplace, but it all starts with in your case a decent amount of supply that people can peruse right does that make sense yep perfect sense but i'm happy to be on the adventure with you and put you in touch with some of these great marketplace founders um who might be able to give you some tips and you know i i really think when you got to set like an unrealistic you know i want 10 000 items in this marketplace by may 1st and then you get to may 4 or i'm sorry june 1st yep and then on june 1st you see your team hey listen we we got to 7 000 we didn't get to 10 we got to 7 now i want to get to 25 based on our lessons here and this is just you know unrealistic sometimes you know when you were in the and put that out in kuwait sometimes somebody gave you an order that you know two guys in the squad were like that's not possible and your job as a leader to say yeah okay on the surface perhaps not let's get creative right come give me some ideas here folks no is not an option we got to take a shot at this the odds are long there's a certain amount of risk involved here let's get creative let's figure out if we can we can figure it out right and so i always like to set those unrealistic goals i told my team i want a hundred first person i want a hundred meetings introductory meetings per week i got so how much pushback did i get pressure a lot yeah how many did we do last week 60 50 60 yeah 60 okay so we're almost there we get 60 when i tell lps we did we're doing we're on pace to do 3 000 meetings a year and put them in our database people are like whoa that's a lot of meetings and i say yeah and you know the denominator is 20 000 applications and so i keep pushing and pushing and we're going to hit 100 meetings in the next couple of weeks i think we We have three more researchers coming on board.

54:23So if two of them click and do a good job, we'll hit my goal of 100. Now, I set that goal a year ago, but here we are and mission accomplished. And so it's going to be great to be in business with all of you. I hope we can work all these details out. If you are a founder and you're listening, we are passionate about helping founders like Peter, like Alex, like Alan. We're passionate about rolling up our sleeves at launch at founder.university, at the Launch Accelerator. And this week in startups, of course, we want to help you succeed. Most startups fail. We know this going in. We don't mind. We're okay with failure.