This Week in Startups - AI Revolution Gains, Non-Consensus Startups & Prosperous AI | E2104

Episode Date: March 29, 2025

Today’s show: Jason, Alex, and Lon cover everything from wild political headlines to big moves in AI and venture. They kick things off with the surprising Trump pardon of Trevor Milton, the disgraced Nikola founder, and break down CoreWeave’s rocky IPO debut. Then, Jason and Alex sit down with Mariano Apodaca, founder of Prosperous AI, to talk about AI tools for negotiating construction and aerospace material costs. Later, in a brand new segment called "Office Hours with JCal," Jason reacts to real founder feedback clips, pulls key startup lessons, and explains why building for a market that doesn’t yet exist might actually be your biggest edge. Along the way, the team explores the power of taking just 10% of the value you create — a pricing philosophy that could unlock your next big win.*Timestamps:(0:00) Jason kicks off the show!(4:05) Breaking news on CoreWeave and Founder University insights(9:21) Hubspot for Startups - Visit https://www.hubspot.com/startups and join the founders who are turning growth challenges into opportunities.(10:57) Trevor Milton's pardon and AnySphere's Cursor success(19:21) Pricing strategies for startups(20:19) Vanta - TWiST listeners automate your SOC2 and get $1,000 off at http://www.vanta.com/twist(21:38) AI sentiment and startup growth strategies(25:14) Guest interview: Mariano from Prosperous AI(30:21) Notion - TWiST listeners can try it for free at https://notion.com/twist(31:52) Prosperous AI's market data integration and growth(35:03) Founder University's impact on Prosperous AI(40:54) Product line expansions and fundraising growth strategies(44:20) Startup decision-making and investor feedback(47:02) Founder University and customer feedback importance(51:12) Canva CEO's insights and handling investor rejection(58:17) Products creating new markets and finding outlier founders(1:06:15) Venture success with Fred Wilson and Brad Burnham(1:09:18) Market selection, execution, and partner-product fit in startups*Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcp*Links from the show:Prosperous AI: https://prosperousprocess.ai/*Follow Mariano:X: https://x.com/Mariano_APOLinkedIn: https://www.linkedin.com/in/mariano-apodaca-45b07a16a/*Follow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm*Follow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanis*Thank you to our partners:(9:21) Hubspot for Startups - Visit https://www.hubspot.com/startups and join the founders who are turning growth challenges into opportunities.(20:19) Vanta - TWiST listeners automate your SOC2 and get $1,000 off at http://www.vanta.com/twist(30:21) Notion - TWiST listeners can try it for free at https://notion.com/twist*Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland*Check out Jason’s suite of newsletters: https://substack.com/@calacanis*Follow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com*Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

But the third one is the most interesting piece of feedback she got, which is you're building something for somebody who doesn't currently use the product or doesn't use a product. And that's very interesting. That means there's a new market that will manifest. The founder could manifest a new market. Those are typically power law companies. So let's just let that sink in. One of the pieces of feedback she got was from somebody who was so fucking dumb that they don't understand the most basic.

aspect of venture capital, which is a non-consensus product that manifest the market is the most powerful outlier of all. This week in Startups is brought to you by HubSpot for Startups. Smart founders aren't piecing together random tools. HubSpot is the customer platform that thousands of startups use to scale efficiently. Get up to 75% off plus three months of perplexity AI for free. Go to HubSpot.com slash startups. Vanta.

Compliance and security should. and be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a sock to report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. And, Notion. Notion combines your notes, docks, and projects into one beautifully designed space with AI built right in. Try it for free today at notion.com slash twist. All right, everybody.

Welcome back to this week and startups. It's Friday. We got a full docket. Jason, why don't let me start with where you are and why? I am at Google's headquarters here, or one of their headquarters. they were so nice to host Founder University, Founder University 12-week course, it's a pre-accelerator.

One of the things I learned was a lot of the people who listen to this week in startups and who are starting their entrepreneurial career, they want to engage with me and the firm and the pod long before they're ready to go to TechStars Wycombinator, launch accelerator, you know, name 50 great accelerators. What's an accelerator if you're listening and you don't know? It's basically like going to a college

to learn how to do a startup. But instead of you paying, a quarter million dollars to go to an Ivy League school, Y Combinator, launch, accelerator, or tech stars, I always shout them out, my friends, David Cohen over there, great guy. We put in 125K, you give us 7% of your company, and then probably half those companies,

I would say roughly half, go on to raise capital. So we net net wind up, you know, in terms of the pull through, Alex, you wind up paying basically 250 for that 7% or get three and a half percent, essentially for that 125K. it winds up being an okay deal for us and a great deal for the founders. There you go.

And the real reason our industry loves an accelerator is because we act as a filter. Just like Harvard, you know, is a fancy, dancy filter for people or maybe going to, what's the best place to get your screenplaywriting or like three places in law that famous screen playwriters went to to get their degrees. To me, UCLA, USC, NYU, Northwestern. Right. So they act as a filter. And it's basically like a two or three level filter.

One, you spend a couple of years here. You wrote some things. You learned some basic tactics on how to write a screenplay. And you could afford to do it. And, you know, whatever, 95% of the people who applied didn't get in because they weren't ready for whatever reason. It creates like a little bit of a filter, right? So we have that filter as well. And the industry likes that.

When they look at companies coming out of an accelerator, they think at the very least, there's some dexterity. There's some things they learn during. it. But it's basically the filter. I'll be totally honest. The analogy in film would be like the Sundance Film Festival, Toronto Film Festival. They have boards of people that are screening hundreds, thousands of submissions than the top 25, 50 get through and get screened at the festival. Those are the movies everybody's keeping their eye on. Like, these are the filmmakers. That's the filtering. No. No. Is it better than nothing? Yes. It's a lot better than nothing. A lot of, you know, these young filmmakers who become household names, iconic names,

you know, your Wes Anders, your Richard Linklators, your Kevin Smiths, they all came up through that system. All right, guys, breaking news. I have been watching, like a hawk today, the core we've started start of trading because this is the company went public. I've been watching it, waiting, hoping, for the love of God, it finally started like 10 seconds ago.

You're kidding. Yes, priced at $40 per share underneath the $47 to $55 per share range, a little bit weak there. The company is opened at roughly 395 off about a point and a half. Not a stellar star, Jason, but there for everyone on the livestream. Now you know in real time. And the ticker symbol, CRWV. CoreWeave is a neocloud, and neoclouds mean new clouds.

That's what the neo and new clouds in the film the Matrix means. Neo clouds basically are clouds made up of GPUs as opposed to CPUs. So AWS, Azure, and Google Compute now have a contemporary in CoreWeave for Neocloud, for people doing AI jobs. This company has a huge amount of debt. They have a huge amount of servers. And yeah, they went public. By goodness, but probably one of the worst days to go public. And, you know, kind of like a lot of bad news before this went public.

People were feeling pretty down about cloud computing and GPUs. Maybe there's not as much demand. Maybe there's overcapacity. A lot of hand wringing. But here we are. So let's just move on. Well, can I throw in one tiny thing, Jason, because I agree we shouldn't spend too long on this. But the company did raise something like $1.7 billion if the green shoe comes in.

So the raise will kick away at the debt. That's very important and good for them. It is a more than $20 billion valuation. We'll sort out the actual number in time. But like, it's a deco corn debut. We should give it points. And last thing, on the GPU. point. I know everyone's worried about overcapacity and data centers in China and Microsoft

walking away from certain data center commits, but then OpenAI dropped that studio Ghibli generator thing that everyone loved and melted their GPUs. So it's still possible to have a consumer hit big enough to whack even the largest cluster stays. I remain a bull, but that's Corey Weave and I'll watch it throughout the show and letting anyone know if anything big happens. I haven't made a J-trade on it. I don't know if I will. If I make a trade, usually it's I want to hold the company for 10 years. I'm looking for great companies I can hold for 10 years. have great management, great customers, great product. We'll see if CoreWeave is one of them, or if CoreWeave, frankly, is a financial instrument with good timing that was packaged

in a really good way, you know, but it's a commodity business. I don't think it's a commodity business. I think they provide a very unique service, but it could become commodified. And so that would be my main concern is, you know, when I talk to entrepreneurs, and I'm going to talk to a lot here at Founder University, back to Founding University, which we're hosting today here in Austin, our kickoff, you know, they don't care in many ways, which cloud they're using. Yes. They want to get a great price and they want great features and great service. So it's some combination of features and value.

Just like, you know, if you were going to get rent and you were going to pick an apartment, you know, there's a couple of variables there. You're going to live there. But it, the size of the apartment, the location equals price. So we'll see. So back to Founder University. Founder University is a pre-accelerator. A lot of the people who were applying, Alex, to work with us, they were too early. It was two people, three people.

They had an idea. They had a mock up. They weren't incorporated. You know, there were like maybe 10 things they needed to do before they could really go to an accelerator. So we said, let's create a pre-accelerator. It's a 12-week course. It's $500. And if you come, each of the 12 weeks, and you don't have to bring one of your two or three founders,

if you come to each of the Monday night sessions, which are two hours, Monday nights virtual, we give you your money back. What that has resulted in is a 95% completion rate. If we didn't do that, 500 bucks, people wouldn't have skin in the game and they wouldn't come,

or they would drop out. And so this has resulted in us building deep relationships with a lot of meaningful founders. And we're going to do 125K checks into these founder university companies this year, I believe,

which to me is like a little tribute to how I started my career, putting 25K into companies, into companies like Robin Hood or Uber or Thumbtack, just, you know, splashy cashy sending $2550K to folks. I'm kind of still doing it because I feel like that first check is the hardest. And, yeah, we'll have some big announcements. We're going to bring Founder University to another region around the world.

I won't say which one yet. But that's a big news for us, you know. And maybe we'll have, I don't know, eventually 10 Founder University is happening in 10 different cities around the world because I want to bring it in person. a big part of my in-person in Austin move because Austin is a great city to live in. It's affordable for founders. There's unlimited tech talent here. And you can get an apartment for $1,000, $1,500 a room, you know, in a nice part of town. Super great, as Lon has told us, since he's moving here from L.A. Yeah, what I'm paying for this very shoebox in Silver Lake,

I have a two-bedroom townhouse I'm renting in. Wow. Yeah. And there it is, folks. Same exact price. Same exact price. And yeah, it gets. better and better. And if you want more information on Founding University, you want to come to the next one, Founder.com. All right, everyone knows that CRM isn't just software. It's basically the heartbeat of your business. But it can get ugly quick if your data isn't organized and you're dealing with a messy tech stack. That's why I love HubSpot for startups. It's the all in one customer platform. So you don't need a frankincide of fools. No. Right now, early stage companies are going to get seven 75% off. And with this one system, you're going to automate marketing that actually converts,

track your sales pipeline without spreadsheet chaos, and you're going to manage your customers like the Amman Hotel, six stars all the way. You're going to get investor-ready analytics that tell your story perfectly. And man, when you pull up HubSpot and you get those metrics, you got those analytics, things are going to go really faster for you as a startup with potential investors. Plus, you're plugged into an amazing community of founders who've already tackled what's ahead. They've been around those sharp turns and they can tell you how to navigate them. HubSpot was built by scrappy founders. I know them. And they understand every dollar counts. That's why hundreds, thousands of startups trust HubSpot to scale their businesses.

Here's an amazing call to action. So generous from my friends at HubSpot, 75% off. 75. Not 7% off. Not 5% off. HubSpot for startups. You're going to get three months. some perplexity AI for free. That's a great pot sweetener. Head to HubSpot.com slash startups. What else do we have? We have any founder news, tech news. What do we got? I know we have a big docket today. I mean, we should talk about Trevor Milton, right? I feel like we got to at least mention this. Friend of the pod, Trevor Milton. He received a full and unconditional pardon from President Trump after the president called him personally. He posted a little bit about it on his Instagram, Wall Street Journal said, you know, like, he calls himself the greatest comeback story in America is about to happen.

Was that fire festival, you said? Was the greatest comeback story in America? No, no. Now Trevor Milton's self-describing himself. Right. Trevor Milton, he's saying he's the greatest comeback story. All right. Trevor Milton for background, created a company, came on this podcast. He made a bunch of false claims. S.C. pinched him. He went to jail. the company Nicola, which was going to charge per mile to have hydrogen-based trucks and eventually electric trucks on the highway to people like Budweiser. They were going to do like sort of trucks as a service. How do all the patina of a groundbreaking startup and, you know, the government found. And maybe it wasn't. So he's been pardoned.

Seems like there might have been some backdoor dealing going. on here. His lawyer is Brad Bondi, the brother of Attorney General Pam Bondi. Milton and his wife donated more than $1.8 million to Trump's fundraising committee in October. Okay. That's another coincidence. Recall also that back in 2021, Trump pardon gave a pull pardon to Anthony Lewandowski. And at the time, the White House said that pardon was strongly supported by Alex put a whole list here together. James Ramsey, Peter Thiel, Miles, Erlich, Amy Craig, Michaelovitz, Palmer Lucky, Ryan Peterson, Ken Goldberg, Mike Jansen, Nate Schimel, Trey Stevens, Blake Masters, and James Proud among others.

Founder Fund coming out strong there. So yeah, congratulations to Trevor and Anthony for for getting away with it. Yeah, okay, yes. Okay, on the show, on Wednesday, we were talking about a star up that was accused of maybe playing slightly fast and loose with the data and the importance of accounting, Jason, you were talking about information rights and deals and how ethics really are important, no matter where you are in the business game. And then two days later, here we are, Mr. rolling a truck down the hill to pretend that it works, writes a small check to the... It just...

One point eight mill is a pretty big check, actually. As far as, yeah, donations in politics go, I think that's pretty significant. It's not the 5 million XRP gave. Should have picked up Trump coin. Then we wouldn't know who it was. It would just be numbers in a wallet somewhere. Yeah. It's disappointing to me.

I think it sends a really bad signal to the market that you can do bad things and get away with it. Putting the politics of it aside, just making it very neutral. I don't think that's good for the business climate. And I think it sends a bad signal to founders. Yeah. All of that is probably true. And there is a long list of people getting pardons who shouldn't. And this is a very weird.

moment to live through. But apparently, if you write the check to the right person or you know the right people, the law does not apply to you forever. You have to, it applies to you for a period of time, and then it may not apply for you for another period. Let's keep moving through the docket. I have some big news, Jason, from Startup Land. I think put some positive spin on a stock market day that's deep in the red. Two milestones that really caught my eye. The first one, cursor, any spheres product that helps people do vibe coding. Natasha Moscarenas over at the information reports, it has now reached 200 million AAR. The last number we heard from now is 100 million. Doubling in such a short time frame, Jason, is in fact bonkers, I think is the right part.

It does seem like AI companies provide enough value and there's enough sampling going on in our industry where people like to just pull out 20 bucks and pay for something or even more. And cursor, I think, is a bit more. You can correct me on their pricing. But if you're a developer, you're going to want to use a co-pilot, you know, whether it's GitHub's, co-pilot or cursors, whoever's. And if you can make a developer 1% more effective, and the average global developer is 100K a year, that's $1,000.

Well, these things make you 20% better. I think we all know it's low double digits in terms of productivity. It might be 10. For some developers, it might be 30 or 40%. Might be different based on the project or the day of the week and what you're working on. Either way, you only have to hit $1,000 in additional value to pay for, you know, these kind of tools or less for researchers at a company,

20 bucks, 30 bucks a month for GROC, Gemini Pro, I think what we've learned is kind of a no-brainer. And that's where pricing comes in. When you price something and you underpriced it, what you're doing is you're telling the person, I want you to get a massive amount of value, and this is really the startup lesson, give more value than you take.

Netflix at 15 bucks a month, when compared to going to movie theaters, Lon, I think you would agree, with a family of five, you know, when I go to the movies now, I like to see the IMAX screen. Like, if I'm going to go to the movies, I want to see it on an IMAX,

that's 18 bucks a ticket. Yeah, 18 bucks a ticket. It was the same fundamental as like Spotify. It was like, you took a thing where you were paying piecemeal every single time you wanted the experience to a flat subscription monthly, have this experience as many times as you want.

Obviously, from a consumer perspective, that's the better deal. It's a no brain. I think that's one of the things that people are underestimating about the AI revolution. It's absolutely conceivable to me that the gains from AI will be so great for different positions that corporations will have absolutely no problem spending 50 or 100 bucks making employees 20% more efficient because you just take their salary, 20% of an average American, maybe the average American makes 50K. Am I about right there?

Somewhere in there, yeah. Okay. So 20% is 10K. And you probably want to charge 10% of the gain. You want to take, as the person providing the service, you want to take 10 or 20% of the gain in this crazy model, which is you give most of the gains to the consumer, you take 10% of the gains. So 20% is the number, I think it makes you more efficient.

20% of an average salary of 55K is $11,000. $11,000. If you take 20% of the $11,000, you get $2,000. If you take 10%, you get $1,000. I mean, they're charging so much, less than that. So first of all, the pro plan costs 20 bucks a month if you pay monthly. It's $16 a month if you pay yearly. Ridiculous, yeah. The business plan is 40 or 32. So my view here is very simple. I think cursors are either charging way too little or way too much, but because

we all think that it is actually helping people become that much more productive, these prices are missing as zero in my view. So I wonder if this is just like getting people hooked on it so they can raise prices later or just competition, but such a cheap deal. They might boil the frog as Netflix has done. I think Netflix, when I signed up for first online, and when I signed up for Disney, Disney was like seven bucks a month, eight bucks a month with the introductory price, and I probably pay double that now. I think Netflix, I probably started eight, nine bucks. It might be, I pay 15 or 20 now. So it's doubled over 10 years or five years for those two different services, respectively, respectively. Respectively, you know, it can be nice about to.

Respectively is the word when you're comparing the two. I'm just like either way. But I do respect them for that service. So you can boil the frog a bit here. but that is the lesson. So when you're doing pricing, there's always room to raise the prices, but a tried and true strategy in today's economy is to take 10% of the value.

And I think that'll be like a theme we'll work on here is let's, as we do our show here, three days a week, Monday, Wednesday, Friday, 12 p.m. Texas time, 10 a.m. Pacific time, 1 p.m. Eastern time. Let's make this a theme. Take 10. The take 10% of the value theme.

So take 10 is an easier. remember and let's see if we can find and identify other places where people are taking 10% of the value they create for consumers and then maybe as an operating principle we could even think about where's another place you can do that right there's another place you could do that me you know as a founder sometimes looking at these business models or techniques is a good way to find an idea so if you're looking for an idea where's an area where people take take rate is too much they take too much of the value or you feel like maybe you're underwater in value. Like they're charging you so much because they got you.

Right? They got you. You're a captured audience. You have a cable modem. You got a Verizon account. That's 80 bucks a month, 90 bucks a month, 100 bucks a month. You're like, should I be spending that? I just, you know, we're going to issue phones for our company.

We decided we're going to give everybody, you know, a corporate phone lockdown so that, you know, we can protect data and all that kind of stuff. And I was just shocked that. Like, you can do this if you're buying 20 of them for with T-Mobile or something. I think we got a quote of a. like 50 bucks a month. And I'm like, wait, I pay less than that. It's like, oh, yeah, it's a corporate account. And I'm like, really, you can save that much money. In Google FI, I'm sitting here in Google's offices, I have Google Fy for my backup phone number. And that's like 30 bucks a month

if you're not using like a crazy unlimited data plan. Nailing product market fit is every founder's top priority. But once you've got your product dialed in, you need to focus on selling it, especially to big customers. You know, we call them lighthouse customers. Some people call them whales. To land those deals, your security compliance has to be rock solid. Certificates like SOC2 or ISO-1-1-1 are the keys to building trust and unlocking these opportunities, but they take time and energy, pulling you away from building and shipping a beautiful, great product. And that's where Vanta comes in. They're your partner. Vanta is the all-in-one compliance solution, helping startups like yours and mine, get audit ready and build a strong security foundation quickly and painlessly. How do they

do it? Well, Vanta automates the manual security tasks that slow you down, helping you streamline your audit. And the platform connects you with trusted VCOs to build your program. Auditors to get you through your audits quickly and a marketplace for essentials like pen testing. So here's your call to action. Whether you're closing your first deal or gearing up for growth, Vanta makes compliance easy. Join over 8,000 companies, including many Y Combinator tech stars and launch startups who trust Vanta. simplify compliance and get $1,000 off at veta.com slash twist. That's v-a-n-ta.com slash T-W-I-S-T. I feel like this is a thing, like I'm on blue sky.

I don't know if you guys spend a lot of time over there, but they're so anti-A-I. It's an extremely anti-A-I audience. Oh. And I feel like, but there's a really a sincere feeling that if we on a consumer level don't use these tools, all these companies will go out of business. Sure. They really think like it'd be.

Like, nobody use chat GPT. Like, don't do it. Like, and, and it's like, but I feel like if it's the, it's the company, it's, if businesses are using these things on such a massive scale already, it's sort of game over. Like, it's like I don't really feel like individuals not using Dolly is going to make the difference in the end. No difference whatsoever.

Because I have a second data point for us on the subject of fast going startups that have AI foundations. So here is a LinkedIn message from our VIN. Oh, yeah. The CEO of complexity. Yeah. So they just hit $100 million in annualized revenue. And they're very clear that this does not include trials, because we've been talking about

that lately. 20 months to get there. They said that they grew 6.3x last year. That's just crazy good, Jason. And I think it goes to show that they are undercharging similar to how cursor slash any sphere is because you don't reach revenue of that scale so quickly unless you're offering something that people want and at a price that rules. So they were at 15 million, six times 15, you know, about 90 million.

So they grew from 15 million to 100 million in 12 months. Pretty significant. So if you're a founder and you want to get unlimited funding, unlimited funding is available to founders who are tripling revenue or more. So, you know, I was just talking to a founder who has a company they were growing, you know, they're in a portfolio. And they've been, they had like a down year. They had like a flat year.

But before that, they had like high growth years. And I was like, well, what's our plan for the next two years? And they're like, oh, yeah, we have a plan. we're going to grow, whatever, 30% a year. I'm like, if your plan is to grow 30% a year, you're going to grow 20. Why don't we make a plan to grow 3x and then fall back to growing, you know, just double. Like, if you make a plan and you tell your team, we're going to grow 30%, you've just basically told all venture capitalists, you know, don't take the meeting. Because our ambition is to grow 20%. Your ambition has to be to double, triple. And so just make a

plan to triple. Always my best advice is to make a plan to triple. And then, What that does is it unlocks in your team a really great exercise, which is, how do we do that? Well, there's a way to do it. I mean, if this product is growing 6x, it obviously has market pull. So, Arvin is pointing out here, you know, hey, there's no trials in here. Great, because we talked about that on a previous episode, people counting trials and all kinds of weird Fugazi, Fugazi craziness. One thing about charging less is people don't worry about churning. So if you're paying 30 bucks a month for the Wall Street Journal and you're not reading it, you're like, I'm canceling.

If the Wall Street Journal was 30 bucks a year, you'd be like, what's the point? You know, like, I'm not going to be canceled. I'll just, you know, if I read one story every three months, I'll keep it, right? This is only 30 bucks a year. And that's another thing with pricing. You want to get a great price, obviously, for your company to grow. But you also need to be realistic. If you're doing this, take 10 or take 20, you.

You're only taking 10, 20% of the value. Man, you can avoid a lot of churn because people are like, yeah, I just pay for the year. Like, I think I pay 50 or 60 bucks for Calm every year. I pay maybe something 40, 50, 60 bucks for FitBod. If I stop using them for a month and I forget I have it, it's not a big deal for me. I just move on. All right. So we're going to do a guest now, Jason.

We're going to bring up Mariano from Prosperous AI to do a little office hours with you. This is a launch portfolio company. part of the accelerator. And they're going to tell us what they're up to and they have a couple of questions for you. All right. This is a new feature here, office hours with JCal. All right, Mariano, how is business going?

And maybe explain a little bit about what you're building. Yeah, absolutely. Business for Prosperous, it feels like a rocket ship some days. And some days it fills the other direction. But I think that's just the life of a founder. Yeah. We at Prosperus are focusing how to give companies time, information, and leverage in their material negotiations.

And how we do that is basically looking at a broad stroke of all of their internal systems of records. They go into finding those resources and making sense of them and also helping them make those decisions better. So we give them more view into their supply chain, how much they're paying, how to protect their gross margin, all things across the board. And we're really focusing right now on the infrastructure construction space. A little bit of adjacent industries into the commodities and aerospace. But we're definitely talking about. So, Prosperous AI, provides. a tool to people in construction that helps them negotiate for better prices on materials that are

being supplied to them. Am I correct in my sort of simple sentence explanation of your business? Correct. Okay. So your customer is who, if you would describe the ideal customer? Our ideal customer today is usually within someone in purchasing or procurement or sourcing. Okay. And they are looking to basically get those pricing. better for their gross margin, protecting their gross margin.

What is the title of that person? If I were to look on LinkedIn and search for a title, what would their title be? Yeah, it would be purchasing, probably. Purchasing is the title. And then the company, if I were to think about the company size, what is the size of the company that would embrace a tool like this today? And so we're kind of narrowing in here in our little discussion, who is the ideal customer and the title is procurement or purchasing, great.

What's the company size? What's like the typical name of a company like this? Are there a lighthouse customers in this space? Give us an idea of the size of a company that would use this. Yeah, so we look at companies probably over $50 million in materials. Just so we can have that the negotiation and leverageability of quantity in their stack. Okay, so that's describing how much they purchase a year. So if you're purchasing under $50 million a year, saving, you know,

know, 5% or 10% on, you know, $5 million in sales a year isn't a giant number, but saving 10% on 50 million or more is a huge number. We're talking about 5 million in savings. That's something worth using a tool for you, yeah? Absolutely. Okay. What type of companies are these? What are they called these companies that you see?

Yeah, so they fall within, we say infrastructure because they fall within organizing like large development projects. where they're organizing a lot of things and you can imagine anything from gasoline to lumber to steel to these types of items that go into their physical goods that they're building. Got it. So this would be

a company that's building infrastructure. That means they're building homes, offices, I don't know, malls, strip malls. They're building something in the real world which typically if you're building something that uses lumber, it's probably a house of some kind. It's a structure, correct?

So this is for people who build structures they could be building a mall, mall of America, you know, or something to that effect. But they have to be ordering enough items for a tool to save the money to make sense. So how do you charge for the product? This would be the next question, Alex, that we want to understand as investors and just people trying to build a mental model. Now we know the size of the company. We know who is going to make the purchasing decision to buy Prosperus's product. And we know why they're going to buy it because they want to save money.

and they want to go faster. Perfect. How do you do this for them? Yeah, so we look at their internal databases. And what we found is a lot of like ERP systems, procurement softwares are interconnected and fragmented across all their ecosystem. Many times these customers are trying to do gross margin analysis inside of Excel. They're fumbling over setting up BI tools, especially in this world where most of these

people are non-technical. So we want to give them a purview of how to run these analytics, how to get these analytics, without that technical lens. And then from there we go and look at, okay, we see these category of materials. How do we source these materials better while protecting our gross margin? So they have an assumption of how much they're going to pay,

but then they get the pricing back from all of these material providers. And they're usually like, oh, actually, this is 10% too expensive. I'm eating away. I'm having a ton of gross margin erosion. So I need to go and negotiate on this price a little bit more. So we're looking at all of those systems

and really carrying out that full process all the way to deliver. At launch, the entire company runs on Notion. If it's not a Notion, it doesn't exist. If you're a startup, you need to sign up for Notion. N-O-T-I-O-N. Notion, Notion. I love Notion.

I use it every day. My entire team is there making sure that our workflow is perfect. Instead of buying SaaS product, after SaaS product, we put our CRM into Notion. So we have a database now with tens of thousands of startups. If you want to understand what Notion is, Notion is the all-in-one team collaboration tool that combines simple stuff like note-taking, document sharing, but also project management and all these database templates. Still one price, but one login, and all the data is synced and you have one source of truth. This is why I love Notion.

Everything's in Notion. Search for the name of a company. Search for a project we're working on. Find all the pages written about it. That's one of our rules. Write first culture. Super important. Amazon does a right-first culture. it makes the stress in the company go down,

it makes the efficiency go up. The number one thing people complain about in every organization in the world is our communication could be better. Well, Notion solves all those problems. I love Notion. Notion.com slash twist to start for free. That's a pretty good price.

I want to thank my partners at Notion for coming up with a price that I can get behind. FRE is the price for you. If you use the following domain name notion.com slash twist, take the first step toward organized, productive work and a productive life today at notion.com slash twist. Prosperous does also include market data.

So you can see where your prices come in compared to your kind of current market norms, right? Yes. So we do look at market data. We also look at the internal data that these organizations have, what they've paid in the past, what they paid other projects. But then you have to go into some of the essence of at quantity. You're always going to get a better deal. So you have to understand what that affects.

And you can't just take a couple of things. commodity price or a spot price and expected to be the physical good price. And the ERP systems, when people, you know, have these ERP systems, they're talking about NetSuite, they're talking about SAP, they're talking about Microsoft Dynamics 365. Those are, Odo, I guess, is another one people use. Is that another vector for you to find these customers if they're using an ERP system and they're in infrastructure and they're in purchasing? now we've got kind of a thread here.

Yeah? Absolutely. Yeah. And we're looking even right now, just because competing with an Oracle or no-do is they are giants, right? But there's a lot of... Yeah, we're not going to compete with them, no. No, not right now.

And we are actually going to be an orchestration level over the ERP, so we're not saying we're going to replace an ERP at all. We're going to be an orchestration level that operates like a human decision-maker would, where everything is not just a discrete workflow, and we are able to look at all of those... how we're going to operate in their business. Do these platforms have third-party app stores and plugins and which one, you know, would that be a vector to kind of get into these systems?

Yeah. That's something that we've considered. The problem with add-ons is they don't usually communicate as well as you would hope. So we want to avoid running into those challenges while trying to get our... All right. I think we understand the business pretty well. And you've got... This is year two of the startup, I think.

Where are you at? Yeah, we're coming into year two. but I've been building since April of 23. Got it. So you were in the laboratory. When did the product launch? How many months ago did you have your first customer using the product? So we'll consider that as like the starting pistol.

When did your first customer start using? Yeah, first product launched April of last year. And then we took on our first customer shortly after in June. Got it. Okay. So this June will be one year of customers using the product. And you've got just ballpark how many people actually really using the product. How many customers are actually?

not, we've had this debate here on the pod recently, not trials, not faking it, just, is there one customer who actually uses it every day, two, three? How many people are actually using the product every day, every week? Yeah, no vanity metrics over here, Jason. So we're working with three companies right now about 12 users. Got it. Okay, perfect. And you're learning a lot from them. You're bear hugging them, as we talked about in the accelerator. You went to the accelerator and Founder University, or which one? Yeah, Founder You and the launch accelerator. Okay, great. So this was my thesis when we started Founder U was there were a lot of people who were in the laboratory not yet incorporated so we could meet them there and then come to Accelerator. So just briefly, which cohorts did you come to and maybe just give us a minute on, you know, how the programs impacted your ability as an entrepreneur to get this business stood up. Yeah, so Founder U, we were in cohort 8 and then we were in LA 33.

I think that as we were going through Founder You, working with your team, which is absolutely phenomenal, I will say, the guidance that they provide and the push to to achieve something great in a three-month time period as we're going through that process,

really pushed our team to one, come together in an office, and we just started working in the lab every day as much as we could to hit those milestones within that three months. And that's kind of just carried on into this year. We've seen the progress in customer outreach. we have 38 companies right now that we're talking to just over the past six months and really

just hunkering down and making sure this is a product that fits in the market, finding those things, and understanding how we can fundraise to get this dream become a reality. Got it. Amazing. So that's where you're at. Great progress. I think one of the important things to hear in all this, Alex, in the takeaway, when you hear me interviewing a founder and kind of getting my framework built here is getting in that office. with the product team and grinding it out is very powerful

because you build up that energy, right? And then additionally, when you're part of one of these programs and, you know, it's not just ours. It could be Ycomitory. It could be tech star. Any number of these are great.

What it does is it kind of gives you a framework. I want to try to accomplish something every week and I'm in this accelerator. To accelerate, I might as well make the best of it. So those are all great things to hear. And it's great that we, you know,

have been part of this. Alex, yeah. I want to give Mariano just to turn it around because I think the idea behind our new office hours format, Jason, is to let them grill you. So I want to spin these tables. And Mariana, please talk to us. Yeah. Yeah, Jason, I have a great question for you. And right now we've seen a lot of success in getting into infrastructure and construction accounts.

We're starting to see a pull towards aerospace, which is slightly different. But what the similarity that we've seen among those two markets is they all go to bid for every. every single project that they do. For aerospace, they're required by the government, much like construction for every single product that they build. And really want to understand what you think about moving into a new industry and understanding if we should focus on both or should we try to choose one and hear your thoughts around that.

Okay. So there's a great question. A lot of times you define an ideal customer profile and another customer shows up and, you know, they want to use the product. And now maybe they have slightly different needs that. So it's going to, there's going to be a cost to going after that, right? If it was no cost and they're just buying the same product, if it's Slack and, you know, Company A and Company B, both use Slack the same way, great.

But if Company B is a finance company and they need to have ticker symbols and Bloomberg integration and this integration, all of a sudden, it's like, oh, God, to sell into that group, we've got to get our Slack 2 set up. We got a shout out to Fanta. We got to do all this heavy lifting. And so there's some friction to going after this second category, yeah? Yeah. So I guess the question is how much friction? Is it like a couple of dozen hours of developer hours? Or is it like we have to redo the entire code base? We have to, you know, so let me just ask that question real briefly. Is this a heavy lift to work with this new vertical or is it a medium lift or a light lift? Yeah, so it's definitely not starting from zero. It's actually a pretty light lift because the way that you use the platform is pretty much the same. But you're right. Some of the challenges will be the compliance, right? CMMC. is a $200,000 compliance issue that we have to go through the audit. And that's a little bit more challenging over, you know, over a year for a young startup.

So that would probably be the biggest barrier to entry. However, there's no software companies that have CMMC compliance at the current moment, so it becomes a moat potentially. Got it. Okay. So I nailed it on that one. There's going to be some compliance lifting, some work, some expense. If you have 10 more customers in the existing vertical and, you know, they're ready to go,

you said you had 38, if you think you can close 20%, of those, you know, seven or eight of them, and those are going to come in one every two weeks. You might want to get that done first because that's going to cover some percentage of your burn and show growth so that when you go raise around, and I think you're considering raising, so if you're going to go raise, you know, that's going to look better to that group. And you can say, and as part of this million dollar raise, 300,000 of it is going to be to set up and stand up this second vertical. Great. And the question is how different is the vertical and how much lift is it. This one seems like medium lift,

I would say, hundreds of, low hundreds of thousands of dollars to put it online. But the bigger problem here, Alex, is it takes you away from that first group. Yes. Which are layups. So if you have the open shot, you take the open shot, like in basketball. If you have the layup, you got to take that layup and just get those points on the board early in the game. You know, you may not want to be thrown hell mail or maybe passes or whatever. So yeah, this is like, one of those tough questions. I'm a fan of like taking the easy money and showing growth for the next 10 weeks, getting to some critical mass in that first customer base before you take on a second. The example would be Airbnb. Airbnb, they kept saying do experiences, do boats, let people rent

their lawnmowers, you know, it was the sharing economy was what Airbnb was. And they did a really good job of saying, you know what, the next best thing for us to do is to launch in a new market with the same product. And they were just super disciplined. Alex, you can look up when did Airbnb experiences launch and when did Airbnb launch. I'm going to guess that there was five years between those two, at least five years. And so if you think about that, you're a startup that's under a year in market.

They took five years minimum, I think, to launch their second major product line, which was experiences. It was eight years. Okay. Thank you, Alex. Eight years. If you look at Uber. the time between Uber drivers and then Uber Eats.

I'm going to guess that was also a very similar five years. Obviously, they could do that, but there was a lot of lift, a lot of lift. Same drivers, same cars, but you had to get the third part, the restaurant inventory online. A lot of work. So they left it to DoorDash for a little while, and then they launched a second one. So, you know, it's the time between. So, Alex, what did you get that number two? So, yeah, so Uber launched Uber Cab in 2010, and then Uber Eats, which was Uber

fresh to begin with launched in August of 2014, and then wins standalone in 15, so four to five years. Perfect. So if the two top companies we can think of from the last cycle launched their second product lines in four and eight years, you know, this is not a new product exactly. It's just adding a new customer base, but it's similar. So this might be more analogous to Uber Eats, not Uber Eats, which is a totally new category that uses the same infrastructure. This might be more Uber Black going to ride sharing, which was a, to a three-year journey. You want to be thoughtful about this, not waste too much time and resources. And if you're raising, if you're the founder who's raising and you have new customers coming on,

when you're talking to them, now, I know, we have three customers using the product. You know, you start talking to a seed fund to lead the round for, you know, 750K. And now you're in week three of discussions with them and you've had two meetings. Oh, and you added a customer, hey, by the way, let me tell you about this new customer we just onboarded. Their name is blank. have 75 million in wood purchases and whatever and sheetrock. And you can talk to them and we're onboarding them. Boom. Now you've got a third more customers.

Then you add two more. So you go from four to six people using the product. And you've got this person who's given you a valuation and they put in the 750K and you want to fill in another 750. Wow. This thing is a growing startup. So to be showing growth while raising, chef's kiss, the raise is going to go a lot better. No growth during a fundraising process.

you know, people are going to be like, oh, why aren't you growing? You didn't have any customers. Okay. You don't have momentum. So I like going with the momentum. Unless you think that first customer base is not going to grow. No, Jason, I think that's exactly where my thoughts have been over the past few weeks is the aerospace industry. They move a lot quicker than maybe construction. Construction likes to take their time. They like to evaluate. They like to understand the technology. Maybe they just started using computers two or three years ago. So that is a challenge for us in terms of the top sheet. Whereas on the other side of the coin

with our aerospace customers that we're talking to, they're ready to go and the cell cycles are looking to be almost half of what the construction is. So we're using that, carry out the growth,

show growth in the company and show that there's a need just in purchasing overall across a lot of different industries that we can target into the future, but this would be one of those first takes. All right, so you've, you know, this is a, you know,

an obvious, I think, decision for you, just understand the impact of it. If you do go with aerospace, you're going to be slowing down to speed up. You're going to be slowing down. You've got to pull the car over, change the tires, and then get back on the track. So you have to basically say, do I have the resources time runway to pull the car over into the pit, change the tires, you know, whatever amount of minutes that takes and get back in the race,

you'll have to make that decision, not an easy one to do. And then if you do it and you get back on the track, what happens if Aerospace doesn't sign up? Oh, boy, now you've got to get back into the pit, change the tires. maybe a quick change, Aroo, and, you know, get back to the construction

company. So you really will understand this by talking to the customers. And then, you know, the funding environment, it's waking up right now. So I'm sure you're getting

a decent amount of meetings with the, you don't have a problem getting meetings, right? Not at all. Okay. So you're getting meetings. Great. So then the question becomes, you know,

you can be opportunistic here. If you do get really great traction, you can actually bring this up with your investors. This would be a, credibility building exercise. You say to them, you know, we have this other group. They're knocking on the door. Prosperous, hey, we want your product. But we don't have the resources to service both groups. A frisky investor might be like, oh, we have the ability to give you resources. You should start that up.

Here's 750K. You know, here's the valuation. Let's rock and roll. So, you know, you'll get that, you know, in the meeting. So I would bring this up with investors. You know what investors love when you ask them for advice? Ask for advice. Ask for money. Get advice. It's a classic trope. And it is true.

Alex, any final questions here or thoughts? I was just curious of this, a major ACV differential between the two markets. And if that comes into your thinking at all, Mariana, because I don't know if aerospace companies are on average much larger and therefore potentially more lucrative. And I thought that would be an interesting angle to throw into the conversation. Yeah, the ACV of the aerospace companies, they do have a lot more gross margin to experiments with. So that's something that we have recognized through these initial conversations looking

at the data, those type of things. Sounds very appealing if you have poll, larger ACVs, and faster sales cycles. Average customer value is ACV for those people wondering? Yep. And then Mariano, just before we let you go, what's the URL? And what's a role that you're hiring for or thinking about hiring for that you want to shout out here on the pot? Yeah, great question.

So prosperous process. com. product. And right now I am looking for a phenomenal full stack engineer who wants to work for a fast growing startup. Talent is super important to us. We are meeting up pretty often and we're hiring for this role here in the next month or two. So if you're interested, please reach out. We're looking for people who have founder, founder experience. We're looking to join a quick startup and understand what the market is like on this side of the house. And where are you based? we are in Denver, Colorado.

Perfect. So if you happen to be in Denver, you get to come to the office and have that exciting experience, which would be amazing. Great city to live in, great skiing. And yeah, just great food scene. Everything great in Denver. So congratulations on that. And yeah, I'm really excited to be an investor.

And thank you so much for joining us for Founder University and the Accelerator. We've got a number of companies that have done this playbook, Alex. Were you incorporated, by the way, Mariano, when you started Founding University? were you unincorporated? We were incorporated, but there was a lot to learn still. Got it. Okay. Well, you know, and that's the thing with the curriculum that we put together. We tell people, where people report back to us, I knew half the curriculum.

I'm like, which half? They're like, this, this and this. I'm like, which did you know? X, Y, and Z. And then I'll say, to another founder, how much the curriculum we know? I knew 60%. I'm like, great. What didn't you know?

And there'll be like, G, H, Q. And I'm like, okay, this is really interesting. People come in and they know how to do a cap table, but they don't. don't know about IP assignments. They know how to, you know, raise money, but they don't know how to hire. They know how to hire, but they don't know how to design. It's just across the board, you know, people have little pockets of things they don't know. And one of the great things about this Founder University we created is we can fill in those information gaps and those knowledge gaps so quickly that founders are like, yeah, I know how to clean the rifle now. Yeah,

I know how to storm the beach. They just learn these little tactical things. Did you learn anything tactical or fill in any of those gaps that you can mention, Mariano, between the two programs that were helpful to you as a founder? I'm just curious myself. The biggest thing that we learned is how to iterate amongst your customer base without breaking the current processes. And that's a challenge, right? You can build in a vacuum, but nobody's going to pay for something that you only knows get right. So you have to listen to your customers, have to design and create for what they want. Yeah, this is so key. At the end of the day, startups are pretty basic. You build a team that builds a product that embraces some customer group and

delights them, makes their lives better, less painful, more exciting, more effortless. And if you're ever wondering what to do as a founding, you wake up on a Friday and you're like, what should I be focused on? It's like, make your team a little better, which you just did by, you know, calling out what you're looking for, or maybe make the product a little better, or maybe understand your customers a little better, which is basically the customer discussion we've had between construction and aerospace. So you're doing the right things. Anytime you're working on your chores and you're doing things other than those three things. And chores do come up. You got to do some legal work. You got to do some accounting work. You got to do some HR work. You know, the chores

suck in a startup. The more time you're doing chores and not those three things, team product, customer, you're really probably making a mistake as the founder. And you got to, got to get back to the core three. All right, great job. Mariana. Thank you, Jason. Thank you, Alex. Wow.

So exciting. I like this new feature. Office hours with J-Cal. Does fundraising count as a chore? Because it doesn't fit into your talent, team, customer. Absolutely. It's something you do that's not part of the core process, right? Yeah.

The core process is, you know, and this is just something I came to in the last couple of years because I was getting so many questions about chores and so many questions about tactics And, you know, that's what people are, you know, having to do on a day-to-day basis is, you know, their chores. You wake up and you're like, you have a family now, right? You wake up and it's like, I got to change a diaper. I got to order diapers. I got to feed. You know, these are the like daily chores.

But what are the big picture of things that are important in raising a human being? Okay. They've got to be. Curiosity. Confidence. Yeah. This curiosity is a good one. You know, the ability to learn new skills, the ability to communicate.

Like, there are some core thing. that you can build into a human that will serve them no matter what environment they're in. So, yes, you want to clean the diapers. It can't be in a dirty diaper and get a rash or something. Yeah, that's terrible.

You can't starve them and they need to eat something healthy. But, you know, while you're doing all those chores, don't forget the other big picture and high order items that actually make a great human in the world. All right. Let's do a few startup insights gathered

from around the web. We look for videos, clips, interesting things people are saying about running a startup, building a startup, growing a team, whatever. This first one was found by Jason himself the other day. This is Hanva CEO and founder Melanie Perkins, and she's talking about being rejected at first

when she started to go out and pitch her company. I went to San Francisco and just got rejected a lot. So I was pitching people trying to get them to join my tech team. I was pitching investors trying to get them to invest. and most people were saying that for various reasons, and they were ready, that they weren't really quite ready. Unfortunately, right now, I do not think that it is quite the right fit just now. We have reached the conclusion that the $8 million cap is above the top end of what we think is fair value.

My biggest issue is physical distance. A lot of people said that they need to be able to ride their bicycle to our office, and they couldn't really do that from Silicon Valley. They're based in Australia. They weren't happy to invest in Australia. Et cetera, et cetera. They weren't happy to invest in an Australian startup. So many other reasons.

And each of these hurt a lot. I'm not sure it's going to make sense just right now. Other people told us that the size of the market, a design product for non-designers was just like an oxymoron. Why would you do that? There was so many rejections. And each one of them really hurt. And I asked the question at the start,

who has been rejected? And pretty much everyone stood up. And who feels like giving up? And half of you sat down. Well, I'd be in the half that sat down because rejection really hurts. But I think that what you feel like doing and what you kind of need to do to actually get to that goal can sometimes be quite opposite things. So we persevered for years. It was actually three years between first meeting an investor bill and then after branding investors.

Wow. But then eventually we raised our feed around and we're extremely excited. Amazing. Because all of a sudden we could start to grow our team. And we did. Perfect. We started. Three years.

Amazing. Today, Canvas valued it around $40 billion. Which is higher than $8 million for that $8 million cap on. My sons are a little. It is a little bit higher than that $8 million cap that was too high when they were being pitched around. Yes. So many lessons here. You know, one, it took an Australian company three years.

One of the things that she did was she apparently wrote. down or had top of mind all the excuses and reasons VCs had for not investing. This is super helpful to write them all down because some of them will be valid. Other ones aren't. So I always encourage people to write down the advice they're getting and then just think about it, you know, after that initial hurt of being rejected happens. Is it actually interesting advice or is it bad advice? Is it valid or invalid? And in some cases, like the cap, that might be a valid piece of criticism because she met somebody who's running an accelerator and they don't do seed rounds. Or she might met somebody from the East Coast of America,

you know, New York, Boston, where the valuations are lower and they're more sensitive to it as opposed to the West Coast where they're just like, you know, I'm swinging for the fences power law. You know, I'm going for a decoorn or bust. So it doesn't matter if I invest that six, seven, eight, nine, or ten. So these are very important things, I think, to do to help you get through the emotional part of being turned down. But the good news in all of this, in which he realized is if you keep track of all that stuff, you can use it to dunk on people later,

which is always good, keep your receipts. And people do that with me sometimes. They'll email me and be like, yeah, you know, I sold the company. I'm doing my new company. Here's the email where you didn't even respond, which is why today I have a team of people filtering all these things

and have taken myself out of that process, because now I can blame somebody else if we don't meet with somebody. Jackie, oh, good to know. Jackie, what happened here? Why don't we meet with this person? But no, you do live with that porcherous part being a capital allocator. But it is about perseverance and not taking it personal. So this is why I always tell people, write down the reasons, keep an investor CRM going,

like just create a Google sheet or a Notion page or a Cota database of everybody you've met with and ask them, why are we not ready? Why are you choosing not to invest? And what you can do is the technique is very easy, Lon. I encourage them when they get the rejection, or if they don't get a rejection, to ping the person, say, listen, we met twice, I haven't heard from you. I'm assuming it's not a fit. It would be very helpful for me since we took the time to meet and I respect you to get three reasons of why you think we weren't worthy of investment right now and what we should focus on. Really do appreciate you.

And I appreciate the time you had. If you could just give me a one, two, three, that would be very helpful to me. So now what you're doing is you're giving people not only permission, but the instruction of how you want your feedback. And this is important if you want to get better in life. I feel I'm at the top of my game as a podcaster, right? So I have people who will give me criticism, and they're like, you could do, you could be better. And I'm like, okay, here's how I want the criticism. Give me a timestamp in an episode where I could have done something better.

and what you would have done differently. And literally I had somebody who was being critical, and I said, I really appreciate the general thoughts. Can you get very specific? And they never provided anything specific. Ah. Of course. Right.

Because, you know, it's just like somebody who's, you know, a bit of, you know, I would say has somebody with a bent towards negativity, but who's in my life, right? And I, and I, so I was like, you know, just if you want to criticize, give me something specific. That's where they, And the reason I'm saying give three reasons is because they might give you one or two that are, like, not super valid, but one, that is. And if you get three, you've given them the ability to give you a lot.

Number one, I don't like the valuation. Number two, you're in Australia. Number three, I have questions about if you're making design tools for non-designers, like, how does that make sense? What's really great about that is, if it is true that the valuation and the location are the issue, well, the valuation will take care of itself over time. okay, great, and okay, the location, I get it. Then you could say, well, if we were a Delaware corporation and we were incorporated in America, but we had our offices, our headquarters in Australia, would that change it? So you can kind of dig into it, double click on it.

But the third one is the most interesting piece of feedback you got, which is you're building something for somebody who doesn't currently use the product or doesn't use a product. And that's very interesting. That means there's a new market that will manifest, the founder could manifest a new market. Those are typically power law companies. So let's just let that sink in. One of the pieces of feedback she got was from somebody who was so fucking dumb that they don't understand the most basic aspect of venture capital, which is a non-consensus product that manifest the market is the most powerful outlier of all. Let's think about companies that nobody was using the product before it

There are so many incredible names that we could do right now. In other words, that product is not currently in market, but when they introduced it and they persevered, many, many poor people used it. Alex, can you think of one of these type of products that's not Canva? Canva's tools for non-designers to make really cool design stuff. So if you already know Photoshop, you're not using Canva, but my daughters use Canva to do their party invites for this weekend

and for their birthday party, and they had a wonderful time. Perfect example. Give us an example of a company, Alex. I don't know. This is a great one, Jason, but the first one that came to mind was online search

and how that comes kind of a de novo category. They came out of nowhere and immediately became huge. Great. So people didn't know they needed a search engine when Lycos Magellan, they just knew they needed to find something

on the internet and they couldn't. Those people who made those first search engine said, here's a way to do it. We have a technology, full text indexing, and we're going to put it out there. We're going to put a box. You type something in.

And, of course, it caught fire. And the 11th or 12th major one, Google won the day. It's actually a great example. Before that, people used a directory. There was the Yahoo directory. There was GNN, the global network navigator. And there was at Mosaic a list of the new websites of the day. So that was how people navigated the internet originally, which was they didn't search.

They used a directory. They went to arts and humanity, photography, nudes. That's how you found naked pictures on the internet. Lon, give us one. Give us a product, give us a product that manifested in your mind, and then I'll give. Yeah, the one I will think of, because I remember the first time somebody told me about it, and I was like, you're a lunatic. That's a terrible idea. It was Airbnb. Of course. The idea of there was vacation home rentals, so there were like VRBO and that kind of stuff. But the idea of I'm going to Pittsburgh for two days for business and I just want to crash somewhere. I'm going to rent out your pool house. or I'm going to rent out your guest house or your spare bedroom.

That was not a category that existed. When I first heard about it, I was like, you're an idiot if you do that. You're going to get murdered. Same thing with Uber and Lyft. You get it into a stranger's car. Exactly. And now it is the most common thing. But not let me get a ride from a stranger for a few bucks.

They invented that business. They induced a market to exist. And if you look at Airbnb, they weren't competing against hotels. and people thought Airbnb was a terrible idea. They thought Rye Charing was a bad terrible idea. And they said, poor people, they, you know what they do? They stay at their friend's houses. They don't go on vacation.

Their vacation is limited to family member's houses. I know this because when I was a kid, my dad would be like, oh, you know, like, yeah, we're going to go on vacation. I'm like, where are we going? Oh, we're going to my cousin's house. We're going to go up to Connecticut for a couple of days. We're going to go to, yeah, we're going to go to my friend, little Michael's house at Windham.

and we're going to stay at Little Michael's house. That was the original Airbnb. Yeah. This is why I spent summers at the Jersey Shore as a kid. My grandparents had a place. Exactly. It's not like all three of us. Our parents couldn't afford a hotel.

There was no Airbnb, and they basically turned this phenomenon into something. Absolutely correct. And those become great outliers. Why are they great outliers in all of this? Because if you actually build the product and it works, then, I don't know, middle class people can be like, you know what, I'm going to go to Japan and I'm going to stay, you know, outside of Tokyo.

And literally people will stay an hour outside of Tokyo who would never have been able to afford to go to Tokyo because they found a two-bedroom with a kitchen for $150 a night. And they have five people in their family there. But five people in Tokyo means three hotel rooms at $400 a night, $1,200 a night. The entire budget of the Airbnb for 10 days might be $1,200 versus one day in a hotel. And so one of two things happens. People become more adventurous. They go to places they couldn't normally go to, et cetera. It's just such a great clip from Melanie.

And she was on our pod in whack when we had the studio in person. Great company. Great investment. Congratulations on the people who saw it. I keep at, this is the one thing I'm frustrated with my team. One of the reasons I'm doing founding university is my team is, you know, like many young people or inexperienced people, they're pattern matching. And we have two categories.

and are 13 reasons to invest in a company, outlier founder, outlier idea. And I keep asking them, please bring me more outlier ideas, outlier founders to do, who are doing weird stuff that you don't understand. If it's weird and you don't understand it, but you find the founder compelling,

like you might find Melanie or Joe Jebia and Brian from Airbnb or Travis Garrett, you know, from Uber. If you love the founder and the team, the idea is confusing to you, the market is confusing to you, that should be an along arm bell ringing. Winner, winner, potential outlier, potential outlier, bring me more of those.

Don't bring me the next SaaS, Slack messaging, split your bill, app to split your bill, app to plan your vacation, app to publish your music and get, you know, affiliate links for planning your vacation, like all these crazy ideas that have been done for the 500th time, throw them right in the garbage. Let's come up with some really weird ideas. I'm looking for weird ideas, apply to founder. University. Give me another one. Hit me. I just want to say, I really do think that it's the next time someone tries to solve fractional jet ownership for the middle class that it's going to work. I believe it. It's the next one.

I mean, Sir Faire, I had a chance to invest in that. I think they've gone through like three iterations of that company. I think they're like selling the software now to other people to build those. And, you know, the fact is, if you can figure out a way to do fractional jet ownership like JetSuite has, there's a group of people who really love JetSuite. and what they love is that they go through an FBO. I don't know what FBO stands for it, but it's a fancy word for the terminal for private jets. So when I fly on my friend's private jets or I take a fixed-based operator.

Fixed-based operator. So what's incredible about that is it's literally like a small building. And the front door, you pull up in your Uber and you get out. Or if you're driving, there's a gate on the side of the FBI. You come up to it. You tell them your tail number. You tell them the name. They open the gate.

and then a little car comes out like a golf cart in front of your car, and they drive you to your plane, and you get out of your SUV, and you walk up the steps of the plane like you see on TV. But the FBO is the secret. When you get dropped off, you walk in, there's three or four lounge setups. Somebody grabs your bags, and you walk, I kid you're not, 50 feet, and there's another door. You tell them you're telling them, but they open the door,

and now you're on the tarmac. That's the magic of an FBO is the distance between being dropped off and the actual plane it's 100 yards typically 200 yards they're now superior flights they've changed their name

jet suite it's up for a very light jet up to four passengers 4K an hour for a heavy jet up to 14 passengers 10K an hour that's basically what you're going to spend

if you're going to take private 10k an hour so if I go to Tahoe on private it's 30k there 30k back that's why I don't do it I can't afford to do it But just every time I burn $75,000, I'm just like, that doesn't make sense, even though I can afford it, whatever. I prefer to just fly commercial. I didn't mean to get us off onto the private jet thing, but there are companies that want to use the empty return legs and sell those.

And it never works. All right, moving on. Jason, we have time for one more. And this is a clip of Fred Wilson and Bradford, Union Square Adventures. They are talking on a podcast called The Slow Hunt with Nick Grossman. Never heard of it. Thank you for finding it. This is great. Here we go. A mentor of mine way back in the early days at 18T. He used to say you can be successful in two ways. You can be successful by doing the right thing or doing things right. You run into entrepreneurs who, you know, iterate and iterate and iterate, but they execute well. And so that buys them the time to do things right and ultimately they find a fit. And then you run into other entrepreneurs that are just riding this rocket ship because they happen to, you know, stumble on the right thing. My skills in venture were a lot about doing venture right. And so Brad talks about like working out the portfolio, triaging the portfolio, staying with the companies, you know, being being there for the founders, like sticking it out for the long haul. That's very much about like how to do the venture business right. And I feel very strongly about that. And I had that even then in my DNA. What Brad really taught me was how to do the right thing, which is what to invest in. Like I was just like, we're just going to invest. Like I said, we're just going to invest in the internet. Like that would be great. He's like, yeah, but Fred liked. There's a lot of the internet.

Like, where are we going to invest? So I think when you think about USB, it's two people who both had a lot to bring, and we both brought it. And USB, I think, does both of those things. I think we do venture right, and we also do the right venture. Wow.

It is such a powerful concept. I love this clip for so many reasons. The first time I'm seeing is you getting my raw reaction to it. I always like to think about the process in which you do things. I am a process guy. as you two know.

And so I'm always talking to you about process. You know, for background, Fred, I met when he had Jerry Colonas as his partner. And then Brad was his partner. They did flat iron partners. I worked for them for a couple of weeks reading business plans in the 90s, like 96, 97. I read business plans for them and they pay me a thousand bucks every time I would write a report on a business plan. And then Fred's wife, Joanne Wilson, worked for me at Silicon Island Reporter and was the ad salesperson.

And the large part of my success was that she was an extraordinary champion for. for me and for the magazine and for the industry, and she was just one of the best sales people I've ever seen. Putting all that aside, I do think when you have a partnership, that's the other interesting thing here, is talking about the partnership between co-founders. When you found a venture firm like those two individuals did,

they're founders, just like the founders of Airbnb or Uber or Tesla are founders. And being a founder, you know, being complimentary is such a big win. And the fact that they were complimentary, you had somebody like Fred, who was like, the right way to do venture is to always be by the side of the entrepreneur, through thick and thin, and to do it right, having this kind of discipline and process, great.

Then, you know, you had Brad who was thinking strategically, well, where should we be placing bets? And that is an ongoing thing. You know, placing bets in crypto now might be a loser's bet, but placing them 10 years ago might be a winner's bet. You know, you might be too late getting into SaaS now because SaaS is coming apart because of AI and the chat interface, a bunch of problems. So, you know, I just really like the lessons learned here. One is very pragmatic. You got to pick the right beach to surf out, as I always say, you know, pick the right market because the market can determine your success. How you run a business and how you build systems can determine your success. There are people who have built systems that make them

incredible athletes. And then there are people who draft really well and pick the right players, you know, and they win that way. So you could, you could literally build a basketball team by having a great coaching staff, great nutrition, great exercise, great three-point coaching, great sleep, rest, meditation. And then you could also just draft really well and trade really well, you know, like some people do, and they pick the right players, and they do deal-making. Both of those techniques work. Some people build their teams through the draft and through systems inside of it,

and other people are just really good at trading for amazing talent. I've seen both of those things in the NBA work to build championship teams. So really, really great clip. Good job, Lon. And to whoever the podcaster is. We found that out. Nick Grossman is a partner at Union Square Ventures. So that's how he landed these amazing guests.

Is it the house show? Is it the in-house show? It's got to be the in-house show. What's the name of the In-Hash? Pirate Wires. It's like the House Pub for Founders fun. The Slow Hunt podcast with Nick Grossman of Union Square Ventures. Very well done.

Fred Wilson is the person who I want to meet and talk to whom I haven't yet met and spoke with. A friend of mine, he doesn't travel all that much. I always invite him to come to the West Coast or to do things. He's just like to stay in New York. He's a New Yorker tried and true. And like, you know, just really great. I remember talking to Ev Williams, a little inside baseball,

and he was raising around, and he was choosing between Fred Wilson and Sequoia. And I said, well, Sequoia is the gold standard. You know, even more so then, you know, like, this is guys who about Google, you know, Pete Google, and he's raising for Twitter. And then I said, you know, and Fred is like really going to be harder working for you in some ways because like it's up and coming VC firm. And maybe they'll pay a higher price because, you know, that was like my candid advice.

Like maybe Sequoia doesn't have to pay the same price. And I told him just take, you know, split the round, do it Larry and Sergey to take 10 million, take $5 million from each and tell them that's the way it's going to be. Famous story. Evan Williams wound up picking Fred Wilson, not Sequoia, not Kleiner, not a bunch of other people he had offers from. he went with Fred Wilson, I think, because he thought Fred got it better. He understood it better. He was using the product, I believe, when he made the investment. So, you know, sometimes you can find these VCs and you find partner product fit.

And that's super important. The product is loved and understood and the market is loved and understood by the partner at the firm. it would be very powerful because then when they wake up every morning, they're thinking about social media and writing, which Fred had a blog before that and he was a writer. So it made more sense to maybe pick Fred over, I don't know, even Michael Moritz, because Michael Moritz, well, he was a writer, actually. But I think maybe not a social media type writer, right? So if Michael Moritz was writing 10 tweets a day or five tweets a day, maybe he wins that deal versus in the mind of Evan Williams versus Fred Wilson. So it's important for the capital allocators, I think, and the founders to think about that. Is this person taking Uber's all day long?

Is this person willing to go stay at Airbnb's? And do they love travel or are they a homebody? If you're going to pick the investor for, you know, Airbnb, it's kind of helpful that that partner has that wanderlust. Is that the right word for people who like to, you know. I think that's fair. Be gadlings, gadlings, vagavons. Make sure you check out the docket this week in startups.com slash docket. Make sure you follow our TikTok and Instagram account.

We're now publishing to those, the live feed there, TWA startups, or just type in This Week in Startups, you'll find us. Say hi to us on Instagram and TikTok specifically. We're trying to wake up those accounts and maybe meet some young folks over on those platforms. He's Lon's on Twitter. He's Alex on Twitter. We have mastered Twitter already. We're going to try to master Instagram and TikTok next.

Okay. We're on. Bye. Bye. Bye.