TWiST News: $100k Veteran Pitch Winner EMPEQ, US Unicorn Dominance, and T500 Updates | E2055

0:00socialism is garbage capitalism plus democracy is the best operating system humanity has ever come out with when you and i look at this capitalism democracy as americans we go well of course you want to live in the country that is at war with itself is fighting it's messy it's sloppy this election the last election the election before that and every election before that it's a mess here it feels crazy but the economy keeps beating everything else out there why because we believe in the fundamental tenet of competition and that running from competition is a mistake and running towards competition is great.

0:42If you want to have big outcomes, you need to support crazy, vibrant competition. This Week in Startups is brought to you by Gusto. Gusto is easy online payroll, benefits, and HR built for modern small businesses. Get three months free when you run your first payroll at gusto.com slash twist. Fundrise. Fundrise provides access to diversified portfolios of private real estate to all investors with their industry-leading, easy-to-use platform. Sign up today at fundrise.com slash twist. And DevSquad. Most dev agencies only offer developers. Why? Because product management is hard get an entire product team for the cost of one us developer plus 10 off at dev squad.com slash twist all right everybody welcome back to this week in startups i'm jason calacanis he's alex wilhelm we do this three days a week but this week i think we're doing four shows next year it's just gonna be three i promise you alex i hired you for three shows a week 150 shows a year next week or next year three shows a week and hey if we sell out i don't think i'm adding in the fourth show.

1:54Jason, before we get into our guests and the rundown, I do want to jump on some breaking news, which is... Breaking news? Yes, breaking news. As of like roughly 29 minutes ago, as of right now, the upcoming president has announced that Paul Atkins is going to be the next chairman of the Securities and Exchange Commission, aka the SEC. I don't think anyone really thought that Gary Gensler was going to get more time in the chair, so not a huge shock, but I do know that Paul is a... i would say a person that the crypto community is going to love okay i see this is breaking this has all happened like uh alex says in the last couple minutes i actually have never heard of this person uh so i'm just pulling up a cnbc breaking news story here so here we go paul atkins founder and chief executive of potomac global partners llc don't know what that is speaks during a bloomberg television interview at the milken institute which has about 17 000 speakers in may of 2017 all right uh and uh currently he's the ceo of potomac global partners i think i'm pronouncing that right um critically jason he was a former sec commissioner during the bush w era so 2002 to 2008 and you know i think he's a crypto guy i think that's his that's his background nature so i think this is trump making good on his promise to the bitcoin folks and so forth who threw their support behind him and so if you were in favor of more stringent crypto regulation uh you're not going to get it and if you wanted less of that well good news for you this appears to be your guy so what did trump say let's uh let's read the trump quote if you use your best trump voice that would always be appreciated no you're i've actually never tried to do a trump impersonation so i'll pass but he does say that he's still you gotta do a lot of a lot of this i don't know i can't do it oh yeah i i wish he was doing more of this holding on to bars but he's not all right here i am delighted to announce the nomination they're going to call it so paul atkins here we go i'm delighted to okay go for it to announce the nomination of Paul Atkins to be the next chairman of the Securities and Exchange Commission.

4:09Paul is a proven leader for common sense regulations. He believes in the promise of robust, innovative capital markets that are responsive to the needs of investors. I can't do it. And that provide capital to make our economy, capital E, interesting, the best in the world, capital W. Okay. He also recognizes that digital assets and other innovations are crucial to making America greater than ever before. oh it's not maga it's again magab magab it's magab this time uh okay well there you have it folks uh the nominations are coming in fast and furious we should think about taking trump seriously not literally is the famous quote that peter thiel quotes that somebody else said okay so he said he was going to create a national bitcoin trust he was never going to sell bitcoin um he was going to fire gary gensler um and then he was going to allow more innovation in the space so if we took him literally i he didn't have to fire gary gary gensler resigned right uh so that happened literally um we'll see about the reserve building a bitcoin reserve i believe he wouldn't sell i would just sell the bitcoin it's that we don't need the money it's only well i mean well i mean you have to ask yourself like is it going to grow more than six percent a year or whatever our interest rate is on our debt you would think that asset is going to grow more than six percent a year well if you're michael saylor you certainly do you think it's 60 yeah so i mean between six and 60 is a big number so anyway if you think it's six percent you keep it and then here we go new leadership i'm excited about it i felt gary gensler um did a great job on prosecuting and going after people who are criminals i think he did a bad job of expanding and clearly explaining a roadmap for these new innovations so you know we'll see but you know the mandate is to execute the laws in the previous administration i think this administration wants to evolve the laws so that's what we're seeing here yeah it's going to be interesting to see how this actually plays out how much progress they can make but jason i just checked and in the last hour bitcoin has moved basically not at all so uh i believe in the words of market folks this was priced in even if it's all good news to the crypto fans i think it is priced in and then the the second thing is there was a shooting uh soon yes we should just at least mention that here at the top of the program uh united healthcare ceo brian thompson um and i guess united healthcare's insurance group this is other people in this um fatally shot in new york in a targeted attack if you pull up the drudge report they have actual a picture of the guy um and uh see him and there was just a um press conference uh nypd is asking people to help find this person suspect is described as using a firearm with a silencer and there it is folks zoom in on that let's do a little speculation uh this happened at 6 45 in the morning at a public event for united health um reunited health's shareholders it was a shareholder meeting so it was known he was going to be there therefore this was planned this happened at 6 45 this person is dressed like an assassin you know prepared to you know be on camera and he had an escape he had escape route on a on a city bike that seems like a really that to me means amateur but the silencer says professional so this is kind of a mixed bag here um based on my knowledge of uh you know mob hits and other type of hits but this is kind of crazy any thoughts i mean speculating is kind of meaningless here but there is an all points bulletin of like hey watch out for this guy because he can't get off the island of manhattan pretty easily because they can lock it down i don't know if they've locked down the bridges and gotten people on the platforms in every train leaving and buses leaving cars leaving but the takeaway that i have here is that i think we're going to see a rapid increase in corporate security budgets ah yes and i i think that the era in which ceos uh of companies of any sort of note are walking around and getting bagels or whatever you do as a normal person are probably behind us because you know if this had been and i'm going to try to get the language right here everyone just give me a little space if this had been a tragic uh random shooting i think it would have the same amount of pain but not the same implications for security of course yes that's a great insight actually and handled well we the week before in new york or two weeks ago in new york we had this person who was obviously mentally ill who was in their 50s with a knife stab and kill i think three people going from penn station to grand central or something just like went on a stabbing spree and killed three people that one is um easier to reconcile because it's random um still as horrific somebody dying but you can actually process it and make a plan for it you're right here like now in these situations just looking statistically you have to think there are a small subset of possibilities they're going to look at i asked chat gpt hey tell me about ceos actually getting trans pretty interesting it's almost universally there is a layoff at a company or somebody feels despondent at a company they've been mistreated there's some conflict at work and the person goes postal that's where the term comes from going postal is a postal worker at some point went crazy and shot up the post office so that's a possibility then of course there's like lovers triangle all kinds of other things gambling you know that's the long tail of crazy things that happened when i did my research but my lord uh how terrible and they said the person started shooting him from 20 feet away hit him three times and even did like one shot while he was down uh so that means they wanted him dead and they wanted to make an example of him in some way or a spectacle of it or the person didn't get their health care coverage had a loved one who didn't you know there's there's that possibility angle i see a bunch of speculation about online as well so yeah well in this country where we do have several hundred million guns and just to be just be clear i got my first gun when i was 12 so you know i'm one of the people who has them or had i don't in my current town but i did it in rural oregon where i grew up um you're not going to be able to have a gun-free environment pretty much anywhere unless you're screening every single person and you can't do that on the street so uh i think that's why we're going to see a a arming of corporate america to protect their principles so um a tragedy and a mess and a very sad story you don't like guns this ain't the country for you because it's number two in the rules freedom of speech if you don't like words you don't like guns might i suggest picking another country england australia there are plenty of countries that don't have any guns or almost no guns and they have different views of you know freedom of speech and slander right like so or you can move to the northeast where you can't have guns and you have free speech hey there you go well you know you do have that's a very interesting thing you know when i lived in new york you as a new york city resident you felt like there were no guns and then you went upstate new york to the catskills or whatever and people had guns over their fireplaces and you had this like juxtaposition what's going on here but no handguns in manhattan you're correct and or in san francisco unless you're a famous person and i remember like howard stern and some other famous people were given in new york the under 100 i believe it was uh carry permits were given to people who were basically celebrities or had donated.

12:15That was some scandal back when I was a kid. All right, you didn't start your company to run payroll, did you? Of course not. We all know that. Gusto is here to help. Gusto is going to help you run your payroll and handle all your benefits, onboarding, and HR all in one place. The market agrees. 300 ,000 businesses trust Gusto today, and you can too. As your startup scales gusto is going to grow with you you got state and federal taxes handled for your staff around the country gusto does all that and hey maybe it's finally time for you to offer a 401k plan for your team right gusto's got you on that and you might need to get your compliance sorted right well three out of four employers say gusto helps them be government compliant and even better gusto is simple easy to use software so you can focus on what matters building your startup up so here's your quick call to action do you want all gusto has to offer with no hidden fees well how about a discount try gusto and get three months free gusto.com twist that's g-u-s-t-o.com twist also hailing from upstate new york no it's not a guy with a gun over his mental beast though he might it's mike sherbakov from the veteran fund and herbert dwyer the ceo of impact actually herbert's the one who lives in upstate new york i kind of butchered that uh but jason these are our guests for today um from the veteran fund just closed their first fund 21 million dollars that was announced three weeks ago that was the final close and we also have herbert dwyer the ceo of impact empeq which just won a hundred thousand dollars jason in the veteran pitch competition that i do believe someone we know took part in ah yes you know welcome to the program mike and herbert uh great to have you here we uh i know mike and uh he invited me to come and And, you know, anytime there's any veteran event, I try to say yes, like it's kind of the top of my list of things to say yes to.

14:14Why? Well, I've got a family full of law enforcement. I know how hard the job is. And listen, I didn't have to serve. And so I always think, gosh, so much of my success in life and so much, think about how much your success as an American is related to the fact that we have a volunteer military goes out there and defends this country and not only our country democracy around the world and so mike and herbert just right off the bat alex and i thank you for your service and i know that's like a trite thing to say uh or maybe people say it all the time like as a funktutory thing that they have to say i actually sincerely think about this all the time like gosh i really do appreciate that the sacrifice uh maybe you could talk a little bit about your service each and uh yeah coming on the program.

15:05Yeah. Thanks so much, J. Cal. And, um, you know, on behalf of the veteran fund and the veteran community, thank you for everything you do. I think I remember at founder X, you stood up and said that same thing where you'll do anything for veterans and you shared kind of your support and, uh, it means a lot to us. So thank you for being a judge for the pitch comp and, and, uh, you've been incredibly supportive. Um, I'm happy to kick it off. And, you know, similar to what you just shared, Jason, I, you know, first generation immigrant to this country and ended up... Your first generation. Okay, there it is.

15:33Yeah, yeah. Grew up in the Bay Area and joined the Marines at 18 years old. So post 9-11, kind of peak of the war, June 2003, when we first went into Fallujah. And I felt like I had a duty to serve this country. And I saw what this country provided for my family, what it would provide for me later in entrepreneurship as a founder and now as an investor. And I really felt like it was my duty to kind of protect that way of life. And so served in the Marines, came back, ended up going to school, did the whole startup founder thing, had some wins in that world, and then realized that if there's an archetype of founder to invest in, you talk about this all the time, right?

16:13The three things investors look for is team product market. You could say product velocity as well. But if we're investing in the earliest stages, why not invest in the founder archetype of a military veteran, of someone who's gone through what we consider the world's greatest leadership academy that's going to run through walls that is so mission focused. So we had this idea for the firm three years ago. Happy to say that initially it was a proof of concept. We tried to go out and raise 10 million. We ended up closing over double at 21 million. and companies like herbert's and others you know we do space cyber defense everything our portfolio companies are absolutely crushing it largely because they have these incredible military veterans on the leadership team that are going to go out and make it happen awesome and i just showed on the screen some of the portfolio companies but mike if you had to pick your favorite child that's not impact who's growing the fastest who's the name that we need to have on the show next week like who's the who's the superstar come on look they're all amazing you You love all your babies, of course.

17:12I'll tell you the two crazy breakouts right now that you absolutely need to have on the show. You already had Vatten on. You had Nelson Mills on the team. So the underwater submersibles, incredible technology. What they're doing in submersibles, we have Dan Maggie and Chad McCoy who are doing for Firestorm. Unmanned aerial systems, agnostic payload systems. You can do ISR. You can do kinetic. Incredible technology. We did their pre-seed and seed. They just closed a series A. They're absolutely crushing it. got a big$100 million contract. Another one that I think you'll find fascinating is a company called Lone Star Lunar that landed on the moon earlier this year, February of this year, and is going back to the moon.

17:50So Jason, I know you're a big fan, obviously, Elon and SpaceX and all that. I'm going to go to my first space launch next year with the team because we're going back. So again, space, cyber, defense, these are all investments that matter. One last thing I'll say it's myself and three incredible partners, Ryan Micheletti, who Jason, you know as well, Justin Nahama, Lisa Song Sutton. All four of us had reached this point in our careers where I would say we'd had successful careers. And it was this time to think about what's next. What are the things that we care about most? And if we're going to put time, energy, and capital, what do we care about?

18:24And I say, these are investments that matter. Our tagline is advancing America through venture capital. So this is the stuff I wake up thinking about, i go to sleep thinking about it's what i'll do for you know the next few decades and so just grateful to be doing this and thanks for your support awesome you know the one question i have for you about the archetypes and then we'll get to herbert and you're a great company uh that won the competition there are things that you mentioned like hey um discipline focus running through walls leadership all great recruitment but is there a weakness perhaps in that founders sometimes are rule breakers and they need to do things that maybe are on the margins a little aggressive or improvised so give me the straight dog because i you know i'm using the word improvised in a very specific way because i've done a little research on the military you know i always thought i would have been good in uh you know a cia type you know on the ground role i was going to go into the fbi um i was like you know there's a lot of improvisation that occurs dare i say rule breaking bending in the field that maybe doesn't get reported on so maybe tell me about that piece of the puzzle i'm just curious yeah what i'll say is um in the marines we have a tagline which is adapt and overcome.

19:49And so I also think, you know, to be a good leader, you have to be a good follower first. So there is something to be said about that progression of when you start, you're kind of at the bottom of the totem pole and you have to learn to be a good follower. You have to understand, I know you're big on checklists and SOPs and understanding that whole thing. Then eventually you kind of, you know, earn your way up to this point where now you can start to be a little more flexible. You can break some of those rules. And in the Marines, we understand And nothing ever goes perfectly according to plan, but you have to have contingency plans.

20:19You have to understand how to adapt and overcome. So to your point, Jason, in addition to the leadership, resilience, and purpose that these veterans have, they also have this incredible adaptability and coachability that we look for in any great founder. Got it. Got it. All right, Herbert, maybe tell us a little bit about the company. You can give us a little picture if you like. You can run us through it, however you want to tee it up here. But tell us a little bit about the company and your mission. Yeah, sure. Thank you, Jason. it's a pleasure to be here and you know one more term i'll add uh that we use in the marine corps so everybody is typically familiar with sempa fidelis or sempa five right always faithful we have sempa gumby right fastened after our favorite little green friend which means always flexible and that that is literally you know sempa gumby sempa flexible i love it it's a thing ask any marine they'll tell you uh and because it's part of our culture and our ethos too we are rigid we are the marine corps however we also understand that we always have to be flexible because the battle is always changing right and what worked yesterday is probably not going to work right now in this current situation right so it is important and that that that kind of thing marines take into being founders i i've taken that into my company it's it's it's installed in my culture and the people that work on my team we're separate gumby it's important yeah yeah Love it.

21:36But with that being said, so, you know, really honored to win the pitch competition. There were so many incredible, thank you, Alex. There's so many incredible men and women veterans that just had, I mean, 200 of them, over 200 people came in. And it's just a deep honor just to get first place amongst this peer group, right? Because veterans, we are a community. Hundreds of people applied, right? Yes. And dozens made it to that final round and you wound up on top. So what is MPEC? Am I pronouncing it correct? MPEC, yes. MPEC. Yes, E-M-P-E-Q. That's right. And unlike some of the other technologies that you guys have covered in the show, you know, and even earlier, you know, we don't blow things up.

22:22It's not a super exciting, you know, technology. However, we do stop things from blowing up, right? So what we're focused on is really the equipment that runs our critical infrastructure. It could be anything from planes and automobiles to the buildings that we work and play within. And so that is our hyper-focus. Our passion is instant equipment insights. Helping the humans that are interacting with equipment at scale be able to have very deep information about that piece of equipment or its parts. So we like to say we're connecting the equipment you know with the information you need so you can make better decisions faster.

23:02Right. And a great example, I guess, to bring it home for all of us is we all have an appliance in our home. We've all had the light bulb go out in the refrigerator or in the oven or something. And it's not just the one you go to your basement or your attic and pull one out. It's like the regular Edison bulb and plug it in. It's a special bulb. and in order to find out what that is and it's typically the bulb is all burned off you can't see anything so you take down the make model and cereal of the piece of uh you know refrigerator or whatever and then you google it right and you're like that's not mine that's not oh that's mine okay now i gotta find out the part spec and then oh here's the light bulb okay now i'm gonna find out where the light bulb is ready copy paste and you go to maybe amazon or ebay or hardware store or whatever right you just wasted 45 minutes to an hour of your life looking for doing archaeology i call it we got to do the like archaeology of this water heater i uh i own multiple homes i'm embarrassed to say and i'm trying to sell them all so that i don't have to deal with so many water heaters in my life and then them blowing up so i know the dividing line you decided that the homes were too many because of the water heaters i thought it was the property taxes there's the property taxes in california or not pretty or texas i will say um but it is It's just a known problem.

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25:32Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the innovations funds prospectus at fundrise.com slash innovation this is a paid advertisement and so you have people take out a smartphone take pictures of all the equipment and do a really quick or a fast site survey to kick this off you know this is not just for military people this could be for any company correct yes that is correct we are b2b uh currently uh we do have military customers uh our most notable is the pentagon uh headquarters air force is actually paying customers.

26:10So we're very proud of that. But yeah, I mean, if you picture this at scale, imagine your job being to look for light bulb types within refrigerators and you're doing maybe operating with hundreds or thousands of pieces of equipment or parts as part of your job. And you're typically a six-figure engineer or field analyst or something, right? You're wasting a lot of time of just doing manual stuff. And 87%, this is a real number, 87 % of the critical infrastructure marketplace that has men and women at scale working with parts and equipment every day uh 87 is still using pen and an analog capture device like a paper or an ncr form or something oh my lord today so that's and now you have ai so when you're taking pictures like this you know it's silly to say but you're in these old legacy systems somebody would write down the serial number the model number somebody would then type it into a legacy system or maybe into a google sheet and have like a local inventory of stuff it was a disaster uh and now you have ai who reads the labels does ocr and makes sense of it all and you can do this at a fraction of the cost in a fraction of the time and just charge a sas fee per number of items per number of users in the system?

27:29How do you price it? That's a great question. So we went to market with a per seat pricing model. We're like, this is how everybody does SaaS and this is what we're supposed to do, right? Get in line. And we start talking to big customers. I mean, our customers include Joss Control, Siemens and many others worldwide. And, you know, they first got out of the game like, yeah, we don't really have a hard time with that. That's not really how we operate. We operate, you know, kind of more of a, you know, cost, the COGS accounting model or cost of goods sold. can you work with your pricing so it kind of fits into that it makes makes sense to how we we we expend right and so just charge us a license per year yeah and it's just it's it's use as much as you want let the ai run as much as it needs to to do its job for you so it's highly scalable up and it's highly scalable uh down herbert does that does that impact your gross margins at all because i love the consumer or the customer like friendliness of an all-you-can-eat price tag but ai is famously expensive so i'm curious if if that does impact your overall gross margin profile?

28:29You know, it's a great question. It actually, we did a case study on this and we looked at kind of doing it the traditional way and versus how much it actually costs to expand into an account, right? The salesperson has to not just sell the first license and has to keep selling all the licenses, right? And they kind of land expand that where the other side of this is you just sell once and it's just, you know, whoever can come and eat, that's fine. But then we also looked at the actual cost of running the technology in the backend And actually the margins increased to this new model. So not only did you save money on your sales and market in line item, but you also save money on gross margin.

29:07Right. And we also reduced the barrier of sales friction. Right. Because we're aligned with how the customer wants to buy. Will this be how we're going to go to market for everybody? Eventually, no. We're going to have to work our way back and include some sort of traditional pricing model just because we'll start to automate people to be able to get on the platform without a human being involved. And I think that we'll move in that general area. But right now, today, this is what's being successful. Self-serve people being able to pay some entry fee for a certain amount of inventory, a certain number of users you'll eventually get to.

29:41But starting with big companies and whales, not a bad idea. Either of these strategies can work. what's most important is that you you know define an ideal customer profile as we say in the business and icp and say hey this is who we're going to go after first and you have some rationale behind that hey we're going to go after this group first because they they desperately need a solution they have a budget for the solution they see the value in it um and um you know they're not so large that it's going to take three years to get through their process but they're not so small that they don't need the product and that's where you know this great art of go-to market comes into play did you define an icp i know you're in early stages here but is there an icp that that you've settled on or do you have two or three you're experimenting with yeah we do have two or three that we're experimenting with in regards to uh field analysts right so again this goes back to a male female kind of field engineer type that is highly analytical that's dealing with lots of pieces of equipment or parts as part of their job and they need deep information about what they're looking at in front of them right the refrigerator or the car the saleable the counterfeit part the electronic you know part of the heating and cooling system and they're they're there like i know that's a chiller i know that's a you know a printed circuit board but what is that black spec on there does that belong there i don't know right take a picture oh it doesn't belong there i'm glad i took a picture with unpex technology because i almost put in my airplane and put into in the sky yeah that is a whole other uh reason to use stuff like this is to know the provenance um fancy way of saying where it came from uh and making sure you don't have counterfeit parts amazing book by the way alex by michael crichton called airframe which is about the counterfeit it's basically you know one of his great books he got into like why planes fall out of the sky and found out that there's all these pain planes that are maintained suboptimally and when you get to the uh developing world formerly known as the third world now called frontier markets and emerging markets i think is the proper term uh yeah people might want to save money on parts and they use third party aka counterfeit parts and you're giving spirit a lot of props here uh and other discount discount carriers i want to say though i'm not shocked that herbert won this competition because we have this um a little bit of information from him about his financial performance jason and i believe that you would call this number tasty yeah 300 percent uh growth in 2024 uh to looks like 1.4 million in revenue is your your estimate there and so that means you tripled you're going to triple revenue year over year that's actually like uh we just found out that we're uh we'll be we'll be over that issue nice and so there is a term in sass or just in the industry triple triple triple double double basically means in the early stages somebody starts with 100k in revenue you know that first to second year they get to 500k in revenue second to third year 500 to 1.5 maybe two then they get to like six and then it's harder to get from 6 to 18 obviously you know it's a bigger number and so maybe they go 6 to 12 or 6 to 14 or you know even 6 to 10 things slow down a little bit they have to you know maybe some growing pains here and there headwinds competitors whatever it is but you start to pattern match when you're going for the series a but you're a seed stage company total amount raised for the company is so far uh so 2.5 in equity and convertible to venture uh we haven't had a vc round we're just uh that's So this pitch competition essentially kicked off as a$4 million seed.

33:28But we have another million dollars in grant instruments, mostly from New York State, NYSERDA, New York State Research Energy Development Authority. So$2.5 million to get to$1.4 million in revenue. It's pretty good use of capital so far. Yeah. And then also, you said that you have a match, I think, with the formulae that you're raising. So it's actually eight. Is that correct, Herbert? Yeah. So what's great about dual-use companies, right? And these are companies that serve a commercial purpose and a military purpose. I can tell you the military wants that. They don't want the startup to be fully reliant on military funding because that's like watching paint dry sometimes.

34:03So with that being said, there are programs within the federal government that enable you to accelerate and provide typically a one-to-one match for highly targeted technologies. uh so we have right now two programs that were uh will be applying to early part of 2025 that is a one-to-one match on that four million dollar equity so for every dollar we raise an equity up to four million we'll get a up to four million dollar match in two programs in the federal government amazing awesome listen this has been great uh what's the website if people want to go learn more about your solution, Herbert?

34:42MPEC.co. E-N-P-E-C-U. C-O. Got it. I'm assuming you're Herbert at MPEC.co? Yes, I am. That's right. Mike, if people want to learn more about the veteran fund, either potentially as an LP down the road, I'm not sure if the phone's open or not, nor do I want you to say because you'll be soliciting. So if they wanted to potentially participate as an LP down the road, I'll frame it like that. Or if they were seeking funding, how can they get in touch with you? Yeah, thanks, Jacob. We'll be back to market next year. So not fundraising, not general solicitation. And we'll go out for we're targeting 100 cap on that one.

35:16Simple veteran dot fund. Mike at veteran dot fund. Super easy. And one quick thing, Jason, I'll say is it was 100k pitch comp that we did. But because of Herbert and Impact, we were really impressed. First of all, we'd love to co-invest with you on this. We're bumping our investment up. It'll be a 250 minimum, probably closer to 300. And what Herbert just said is a very important takeaway, I think, for all founders and investors listening to this is this whole dual-use technology. We love companies that have strong commercial traction like Herbert's and then go out and get the government as a customer.

35:45They lock in that non-dilutive capital in the form of SIBR and SIDRs and then they get fund matching through TACFI, STRAPFI, and other vehicles. SIBR and SIDRs, just to find those real quick. SBIR, Small Business Innovation Research, it's essentially R &D and product development, non-dilutive funding the government provides. They have billions of dollars available to companies to get into the government. Amazing. Alright, well done. and we'll drop you guys off and we'll see you next time. Keep us informed of your progress and I look forward to the next pitch competition. And just for my brother, go Army.

36:18All right, thanks guys. Oh God, I just got some Marines on here. Hoorah. Hoorah. Hoorah. Simplify, boys. Hoorah. Okay. Bye guys. I had to get in the Army elbow in there. Absolutely. It's got to do it for the family. All right, take a second and picture the ultimate all-star team for your startup. Okay, you got that mental image? Maybe the Avengers, maybe even X-Men, Wolverine, Cyclops. Pick your favorite superhero team. And let's be realistic. Until you've raised your Series A or your Series B, you might need some help building that dream team. And finding top-tier talent, managing all the timelines you've got, and maintaining quality.

36:57It's a big lift for all founders. I mean, scouting for that elusive 10x developer, that's going to eat all your time. And that's where DevSquad comes in. Think of them as like Professor X, you know, they know where to find those exceptional mutant developers who are 10x devs. And Dev Squad offers a complete product team from Latin America. You're going to get two to six full stack developers, a technical product manager, and specialists in case you need them, like product strategy, or UI and UX design, DevOps, and of course, quality assurance, all for 75 % less than a US-based team. all for 75 % less than a US-based team while being on your same time zone, which is really important.

37:41There's no long-term commitment. It's just seamless collaboration. So if you want a GSD, if you want to get stuff done and you're ready to squad up, head to devsquad.com slash twist for 10 % off your first engagement. That's devsquad.com slash twist and transform your startup with the all-star team it deserves. Alex, I just wanted to also inform the audience that we're doing are launch cloud kitchens incubator again uh all of you know my friend diego and travis formerly of uber created cloud kitchens and they are doing an incubator with us it's a 14-week program for food and tech entrepreneurs if you want to break into the ghost kitchen space and you think that you can create the next great food brand this is the way to do it if you know alex a lot of people will start by doing a pop-up or being like a chef for people maybe doing parties right yeah absolutely and then you build up to like uh maybe a food truck and a food truck that might cost you like and setting up your own catering business and might cost you zero dollars might cost you ten thousand dollars sure setting up a food truck and going into business there it's like low hundreds of thousands of dollars uh setting up a restaurant or like let's say you had a really cheap storefront like i think a minimum million dollars two million dollars proper restaurant you know you start getting three four five million dollar investment and the problem with that is you don't know if it's going to work or not right there's no mvp of restaurants no well now there is called the ghost kitchen when you get a ghost kitchen and we're investors in cloud kitchens our fund is it's like a you know a cloud kitchen costs you low thousands of dollars a month and you're up and running and you're plugged into immediately an incredibly high volume infrastructure called food delivery uber eats door dash etc so the cloud kitchens uh are run you know to make food for those and what we're doing in this accelerator and incubator is just getting you plugged into all that starting you on third base kitchen economics the operations how to do marketing and branding inside of these apps it's completely different than doing a restaurant um oh right that's actually a really good point it's an entirely different like marketing space yeah totally different you know should you pay for ads on uber eats and doordash to move up in the rankings uh what market should you launch in what should you be your second and third market you know there's a big um issue like hey if you're got something great out in brooklyn is your next best idea to be further into brooklyn brooklyn's a pretty big place or to go to queens and manhattan or is it to go to philly and boston or rhode island you know how do you you know deploy that second third fourth you know cloud kitchen and that's the magic of i think this new space also delivery food is different than in a restaurant you can do a souffle in a restaurant you can do a little ice cream tasting can you do ice cream and souffle you know delivery i don't know it's a good question maybe you can figure it out mate if you can figure that out if you can bring me a souffle delivered that's actually good my god i'll give you all my money but there there i can tell you i know boba and ice cream is getting delivered and it's getting delivered in a certain way a certain radius so anyway these are all the technical things uh we're on our second class we had great companies come to the first it's an experiment i like to do little experiments you can apply at ck.launch.co we put money into each company we have a little fund a micro fund uh it's like a million or two million dollar fund and uh we give a little bit of money a bunch of mentorship a bunch of networking so if you want to come to lick the launch cloud kitchens incubator see that we we took the uh letters lcki and we just call it like internally uh go to ck.launch.co i i love that and i'm just gonna say it again i've i've been watching a new bakery slash coffee shop open a couple blocks from where i live keeping it slightly vague and you know i i met the owner and the proprietor and the entrepreneur behind it before they opened and i was just so hoping that the care and the effort that will lead put into this place was going to get paid off and now every time i go there there's a line out the door and i'm like i'm like how dare you guys eat my croissants that i was going to eat get out i live here anyways but there was no mvp to your point so when he built this place brown b coffee he didn't know it was literally a gamble with i think his life savings yes brutal you're basically and then if you it doesn't work out hey you gotta go maybe you gotta go drive uber eats and doordash to to pay for the bills and there's all this modern technology stack i've learned a lot there you know you can use like uber eats drivers and or uber drivers or even doordash drivers as like an api service so a lot of these folks are trying to convert you to directly going to their website directly ordering from them to get rid of the fees that uber eats or doordash charge so there's a whole bunch of ideas here about how do you build direct relationships with your top customers you know what are high margin things that you can include in it so you know i've brainstorming with folks i'm like how come you don't have like anything for the whale in the system i'm always wondering like where's the peking duck where's the you know ribeye for two you know you should have a hundred dollar item every menu and i when's the last time you saw a hundred dollar item on uh to go menu well never but i have paid what feels like a hundred dollars have a burrito brought to my house precisely so exactly and so you should be thinking about that and i was talking to one of the companies i was like you know this is really great it'd be great for breakfast the next day like um when you sell in why don't you put kids because i was literally ordering and i was like why don't you offer something for the kids school lunch or breakfast the next day when you get into the private chef space um you know a lot of what private chefs do is they serve you dinner one night as you know alex and then they will prepare for you breakfast for the next two days lunch for the kids for the next three days and then maybe a dinner you cook yourself tomorrow you know they put the salmon in the tray and let you bake it um so a lot of these i don't know chef services do that yeah i do not have private chef money uh i have i have used those um there's a local meal service that does something very similar that essentially it was a one or two woman shop and they would you would sign up for some number of meals per week and they would pre-make like half of it and then you kind of finish it and we loved that but then our kids just were more picky than what the offerings were supposed to be to drop it but i would love to have a private chef what do those cost uh there was just a story on it in silicon valley in silicon valley it's 150 to 300k you're all in comp for the chefs and there is a big competition amongst elite people to be able to say my chef previously worked at x y and z um or zed and so i have been to people's homes and hey this person you know worked at quince this person worked at this michelin store place whatever it is and it's a little bit of bragging right it's like a little fancy like oh yes our chef at home worked at quince you know a michelin store place in the city um so and then you got food on top of that obviously so you know you would be talking about spending a thousand dollars a day basically on something like this i mean it is rarefied air uh it's one percenter territory but there are other ones that are doing what you're sort of talking about or the one i'm talking about so here in austin i was looking at it because i have some friends who have it who are affluent but not 0.01 percenters with like and don't want a full-time chef and those services and i've looked at these because there's like marketplaces that have tried to come out to do this and i think there might be a marketplace business for it of hey you pay 500 bucks for a chef to come for a day plus the cost of the food let's say 300 bucks so for 800 bucks they make the meals for four days so they serve you dinner that night but they come early they stay a little bit later so you get like this nice you know monday night tuesday night wednesday night meal but then they prepare for you hey you got two kids here's their breakfast for the next couple days you know we like to make um these egg bites that you get at starbucks we make those at the house because we all love them and so we'll make those in advance when i say we i mean my wife and i will make them um and those are great you know grab and go kind of options and they'll do that kind of thing right or maybe make lunches or maybe make two dinners for you and you know here's your salmon with pesto on it here's your baked lasagna you know pop it in the oven easy breezy so there's a lot of opportunities there and i think this could be a very interesting business what i love about the cloud kitchens model is you know you you can do these with two people and you can pop it up for 25k or less if you lose the 25k it's not the end of the world and if you lose our 25 or 50k it's certainly not the end of the world you got to take a shot and so my advice is if you are somebody working at a kitchen maybe you're a sous chef maybe you work in the front of the house or maybe you and your friend work front and back of the house and you got an idea you know hey these three menu items are really killer we should make a caesar salad branded restaurant and we're just going to do caesar salads yeah but it's caesar salad with three or four different things on it's like you know caesar's palace uh make some pun about caesar salad palace uh caesar salad palace actually that's pretty good can you and this is the kind of riffing you can do caesar salad palace would be a great idea you know everybody loves good caesar and you have three or four different options there you have two or three different types of anchovies you got two and you can get a caesar wrap you'd have it as a wrap you'd have it as a salad you can get a caesar burger maybe there's all kinds of like interesting things you can do in that space and people might want to try it there you go people don't try to pitch that now for the incubator i'm going to be really disappointed and by the way if you do make caesar salad palace uh we'll have you on the show what's your idea alex give me your best idea what's your favorite dish of the moment what's something you keep going back to what's your favorite dish let's do a little riff right here i'm not gonna lie it's it's not as adventurous as i wish it was to share on the show but it's a it's a sandwich called the vermonster uh there's a place uh near where i live called amy's it's open five days a week and the for monster is a wrap that has sausage and uh scrambled eggs in it it's kind of like a breakfast burrito but critically it has this maple aioli that goes through it and so it's like hot maple-y sweet but salty it's the best breakfast thing i've ever eaten and i've purchased hundreds of them the breakfast wrap shop there we go dude and so you Doing a wrap shop is such a good idea and making it 24 hours a day because I bet you would eat that for lunch.

48:41Oh, yeah. And I'd love breakfast all day. When I see breakfast all day on the menu, I'm like a French person. They like to have an omelet at dinner sometimes. You ever see that? Go to a bistro and they're like, you go to Balthazar, they still got the$18 omelet on the menu. I love that. I'm more than willing to have an omelet for dinner. I think it's quite sophisticated. So this could be like a really good one. The breakfast wrap shop 24 hours a day, absolutely fantastic idea. why did we do this week in startups when we could just pivot the whole brand and do this week in food this week in food we just talk about food the whole show uh so anyway if you got great ideas ck.launch.co or if you go to launch.co it should be in the menu ck.launch.co so uh let's talk about the twist 500 the top 500 private companies in a database selected editorially by our research team and talked about here on the podcast every episode yes that's what we're doing we've got 100 of them or so and we're trying to get to 250 by the end of the year yep go to twist 500.com to see this database the idea is people always ask me what are the top private companies after spacex and stripe and all the ones you know that are in public yet and we want to help people sort that and so we are slowly but surely getting there yes and uh jason tasked us with putting together a little graphic to show off today's company that we're going to add and jason this is a company that I would have sworn we had on, but I had not added.

50:04And so I want everyone to say hello to our dear friends over at everyone's favorite emoji-based startup, Hugging Face. Jason, really brief, just in a couple of words, it hosts AI models, it sells some AI compute, and also hosts AI community. So it's a bit more than just a repository. And on the business model front, two-part, mostly it's SaaS. They also do have some on-demand compute, but I wasn't able to figure out from the outside how much of that their business is predicated on that um but certainly amongst the ai companies this is one that i think has probably top five mind share out there today a lot of people are talking about hugging face because if you want to track what's happening on going on in the ai open source model with open source models you just go there and you can actually use them you can fire up instances of them and um yeah it's a backed by lux capital um josh shout out to josh beta works my friend john borthwick uh salesforce ventures i guess has gotten in there in addition i'm not sure which firm that is i may know them uh salesforce ventures led one of the the later rounds according to quench base so i threw them in but lux capital has i if memory serves led several different rounds in this company so if hugging face does well josh will be able to afford his own private chef in new york um but they raised 395 million dollars that's a big number that's a lot of money I think that goes to show Jason how active the AI market is in a positive sense, because this is not a foundation model company.

51:36This is not a Neo cloud. This is something that sits in between them, but has become the GitHub of AI. I want to say. yes and github obviously has their own hosted ai models and github is was purchased by microsoft right so by microsoft there's a really savvy move uh because microsoft loves developers developers developers you could throw in the graphic of steve barmer clapping and yelling developer developer developers in post if you don't know that meme uh and the other competitor is kaggle obviously k-a-g-g-l-e which we should put into the twist 500 um if they pass the bar and then we would have them in the database as competitors so yes we should in the database i don't know if we have competitors as a field but let's make a note to add that to the field hugging face welcome to the twist of 500 we're going to do a series of events next year by the way twist 500 uh just so alex and i can do live events together so um we will be booking like a day for the robotics companies here in austin or maybe boston uh wherever like some of the top ones are and it's not going to really have an agenda i'm not really doing it to make money i'm doing it because i'm passionate about tech it'll make great content and i'll get to meet all these amazing founders in a very efficient fashion they get to meet each other yeah so i'm trying to think of a format for an event i was thinking of having i usually like single track events i was thinking of maybe making this a multi-track event where there's maybe five tracks going on in five rooms each room has 100 200 seats something like that and then one track for sass one track for robotics one for ai one for marketplaces etc uh fine fintech and consumer and my idea is 30 minutes you just pitch your company as best you can for 15 20 minutes you take two or three questions from the audience yeah and then you got a nice like hey here's our company here's why it exists and then at the end you know those groups get to all hang out together and have uh dinner pretty simple format right so we just have 10 of them what would you do if you did two let's see nine twelve and then two to five is three plus three hours so six hours half hour each 12 per day per stage yeah 12 per day per stage maybe five stages you get 60 companies a day you get 120 so you get one out of four yeah well i think it'd be a lot of fun especially because what I've learned about how you host events is there's usually a poker table within about a one mile radius of the event.

54:08And so that means that I can go collect venture capital money via third parties. I staked you the last time. No, you didn't. I didn't stake you? No. I offered to stake you. Okay, how did you do? Did you wind up up or down? Be honest. I was up like 150 or something relatively modest. Alright, that's fine. Yeah, but no, the reason why I played the lowest stakes is I'm out of shape. My poker game has fallen off because I have small children. I do want to add one more thing to the hugging face because I was looking into them today. I've known them. I, you know, we all follow each other on Twitter.

54:38Great company. I use it. Love it. But I didn't know that it actually started off as a chatbot and then they open sourced. I didn't know that either. They open sourced their own model and then they began to open source more models and then it kind of grew from there. But I love seeing people come together, build something, notice something else, and then go hard into it. And I, I give this speech to people. It's so interesting that you have this observation. It's not necessarily a pivot. what i call it is keeping your peripheral vision open so when i have a talk with founders like hey you want to have blinders on you're staying super focused got your ideal customer profile as we've talked about with countless founders you know you're really trying to solve an acute problem uh as paul graham would call a hair on fire problem for people that's what these companies do you know startups you build the best team you can to build a product that solves a really hard problem for customers if you do that things tend to work out if you break that model not a great team not a great product that doesn't solve a problem you're going to have problems so keep your peripheral vision open and sometimes you're like on an adventure and you see something off the side uh christopher kumblis comes to mind i always talk about christopher columbus going you know trying to find a new route to uh you know the new spice route or whatever he was looking for a new way to get spices and he wound up hitting north north america here we go boom uh so keep your peripheral vision open hugging face did it let's get the founder of hugging face on the show here we should have him on this week in startups and this would be i think the next piece of this twist 500 is we announce them we walk through it boom then we have them on so i'm currently trying to get clem to come on uh because he dropped some very interesting 2025 ai predictions and then he graded his 2024 predictions i love the public accountability there saying what he got right and wrong and he was mostly right so i think he's probably the person to talk to at the end of the year as we look forward so that is on the list um uh if you hoagany face pr team if you see this i i have emailed you so please hit me back um and jason to close this out today uh can i can i show you something that i think you're gonna find very interesting because i i want absolutely i want to talk about europe again this is one of my um something i've been thinking a lot uh did you see the report that came out in september from the eu about why its economy isn't growing as much it was the droggy report i didn't but it's no news having been in technology and business since the early 90s which means i've been doing it for 30 years yep i have been meeting founders in europe all the time and i hear them complaining lamenting rules regs and even like a culture that doesn't celebrate entrepreneurship dare i say reckless entrepreneurship at its best yeah risk-taking reckless abandon pursuing your dream it's just it's looked at differently there um and that's actually part of the complaint too is that you just feel unsupported you feel like people look down on you uh as opposed to america they come to america they're like everybody i told everybody i have a startup they all give me a high five i tell them when i'm in france or europe germany wherever i have a startup people look at me and they think i'm trying to pull one over on people i'm running iraq well the report highlighted a result of what you're describing which is that and i'm quoting from um a speech about the report in fact there is no eu company with a market capitalization of over 100 billion euros that has been set up from scratch in the last 50 years all six u.s companies with valuations above one trillion euros have been created in that time period and that is indicative of of the gap but that's old news people have talked about that what's new is that um a guy from mit andrew mcafee took the same idea jason he said what if we lowered the threshold to 10 billion dollars not 100 billion okay a jack of corn as opposed to a centurion got it and these would be public from scratch es us and eu companies so they have to make it through the threshold but here is what well so you have klarna you have uh spotify you have clash of clans i'm wondering if any of these i know obviously spotify went way past the 10 billion mark yeah but i mean we're you're just a wide window this is since the 70s or 80s this is this is 50 years so sap a multi-hundred billion dollar company yes is actually 52 years old so just missed this chart but this is on screen a look at the different companies and their uh relative market caps by bubble size um and so we see a lot of green bubbles the giant ones being the magnificent seven amazon google microsoft apple nvidia etc uh meta and that's wild you see the eu this is interesting wow so what are the purples the purples are the 10 billion uh the The purples are the other companies.

59:35So green is tech, blue is just like, you know, Blackstone, Home Depot, Uber. So we're living in a tech world. So what are the two or three largest blue circles in America? I'm curious. Tesla, UnitedHealth, T-Mobile, Costco, Vertex. Wait a second. I would consider Tesla and T-Mobile tech. Yeah. So, I mean, this speaks to a number of things. American exceptionalism being the primary one. um and you know the culture of american exceptionalism we are a young country we're a hungry country i think other countries maybe are not as hungry um because they're older and when i meet families there they may be into the country the culture might be into capital preservation and so when i was talking to some of the people from italy trying to do economic development there or england or france they would often tell me that the differences this is not my opinion this is what was told to me is that you know families that own businesses there do not participate the legacy companies let's say uh the old money does not participate in things like venture capital now when i came here to texas and i was talking to a bunch of venture capitalists and people who run spvs here they were telling me the oil money the old money here loves to get in on tech deals loves to do an spv loves to drop a half million a million five million into some new technology i'm like who are these people like they don't want you to know who they are nobody knows who they are they're just rich people and they really want to get in on the action and that is another part of it so the high order bit for me is you know the american exceptionalism a young country but then there's also capital formation in capital markets and regulation and here we talk about regulation all the time we talked about the wrath of lena khan for the last four years we talk about accredited investor regulations and in this show we talked about gary gatzler not creating a path forward getting fired essentially um getting a lot of you know criticism some of it's rightful some of it's not um and you know i was saying you know what let's replace him and i don't know what you think but here's my question for you what percentage of young men coming out for trump do you think could have had to do with the pro crypto stance and then what percentage of the money he raised came from pro crypto you know uh individuals because crypto is not a niche anymore in america or south korea there there's a large contingent of people low double digit percentage who are either holders holders or fans of this it's not niche anymore so when you look at the election and getting to denmark to question what percentage of the voting populace do you think might have voted with that as one of their top issues not the top but it could be the top top issues and then what percentage of the money think sloshing around is crypto well the second one's larger than the first if you look at you know that number compared to the the whole i don't think the number of people whose votes changed strictly due to crypto was that large in terms of a percentage of the electorate comma but But in the US, where Trump won by about a point and a half, 1.7%, whatever the latest numbers of the vote tally, a couple of points is a lot.

1:03:09And that's why I think people talk a lot about this. Now, on the money side, I forget her name. Is it Molly White? Ran a very interesting site looking through all the crypto packs and so forth. And the answer was hundreds of millions of dollars, if I recall correctly. And so I think that what crypto did was they decided that they were going to get very involved. They backed, if I recall, several hundred different candidates, mostly Republicans, some Democrats, and they made this an issue that they then won. I mean, we started off the show with the new head of the SEC who is very much aligned with the crypto industry.