This Week in Startups - Building a consumer app’s MVP and how to fundraise with Zest’s Jake Gutstein | E1889

Episode Date: January 31, 2024

This Week in Startups is brought to you by… Vanta. Compliance and security shouldn't be a deal-breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. TWiST listeners can get $1,000 off for a limited time at vanta.com/twist MEV. Tired of the dev shop rollercoaster? Mev is your reliable technical partner, offering a well-established software development process designed to consistently deliver unparalleled value to their clients. Get $30,000 off your first three months at http://mev.com/twist! The Paintbrush Loan is the earliest startup financing on the internet. No pitch deck, no business plan, no minimum time in business, and no warm intros. Plus, you get to keep your equity. Visit http://getpaintbrush.com to see if you qualify for a $50K startup loan in less than 2 minutes. * Today’s show: Zest's Jake Gutstein joins Jason to discuss his journey in creating the cooking app Zest (1:37). The two dive into how the Zest team formed (10:29), finding the right tools for your startup (25:24), Jake's experience in the Launch Accelerator program (33:27), and more! * Timestamps: (0:00) Zest’s Jake Gutstein joins Jason (1:37) What prompted the creation of Zest and the initial concept and MVP for Zest (9:22) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist (10:29) The product development, initial testing, and finding a technical co-founder (17:21) The decision to go full-time with Zest, the process of raising initial funding, and the importance of overcoming ambiguity and uncertainty (20:54) MEV - Get $30,000 off your first three months at http://mev.com/twist (22:05) Demo of Zest’s product (25:24) Finding the right tools and mentors and the value propositions of Zest discovered through user research (32:35) Paintbrush - Visit http://getpaintbrush.com to see if you qualify for a $50K startup loan in less than 2 minutes (33:27) Product launch, approach to fundraising, and experience with the Launch Accelerator program (46:48) Future plans and goals for Zest * Check out the Launch Accelerator: https://launchaccelerator.co * Check out Founder University: https://www.founder.university * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Mentioned on the show: https://www.respondent.io https://therewiredgroup.com https://twitter.com/bmoesta https://twitter.com/nealsales https://twitter.com/jasonfried https://twitter.com/dhh https://www.youtube.com/watch?v=7LK6lKCKMQM * Follow Jake: X: https://twitter.com/GutsteinJake LinkedIn: https://www.linkedin.com/in/jacob-gutstein Check out: https://zestapp.co * Follow Jason: X: ⁠https://twitter.com/jason⁠ Instagram: ⁠https://www.instagram.com/jason⁠ LinkedIn: ⁠https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (9:22) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist (20:54) MEV - Get $30,000 off your first three months at http://mev.com/twist (32:35) Paintbrush - Visit http://getpaintbrush.com to see if you qualify for a $50K startup loan in less than 2 minutes * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

Anybody that is a first time fundraiser, there is no golden goose. There is no perfect formula for going about this. Everyone's an end of one, at least in my experience, and I'm then going to speak for my own bias. But every experience is different. And so there are our best practices. Launches scorecard system for sourcing investors, a really good way to get on the phone with 130 different people.

But the way to go about doing this, there is no right way. And it's going to unfold the way that it's meant to unfold. It's going to be a winding road. then once you're on the tracks, if venture-backed is the way that the business should be going, if that's right for your business, then various factors start to take over a lot more. This week in startups is brought to you by Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist.

Mev. Tired of the Dev Shop roller coaster? Mev is your reliable technical partner offering a well-established software development process designed to consistently deliver unparalleled value to their clients. Get $30,000 off your first three months at mev.com slash twist. And the Paintbrush loan is the earliest startup financing on the internet. No pitch deck, no business plan, and no warm intros. plus you get to keep your equity. Visit getpaintbrush.com to see if you qualify for a $50,000 startup loan in less than two minutes.

All right, everybody, welcome back. You guys know, I like to have my portfolio founders here on the program from time to time. And I'm really excited to have our next guest on the program because he got an amazing response to his startup when he was in our accelerator. That accelerator is called the launch accelerator. I'm joined by Jake Gatstein. is the co-founder and CEO of a company called Zest, which is an app that helps people learn how to cook. You can think of it like Duolingo for cooking.

And I thought, what a clever idea. I wonder if that's going to get any traction. And it has gotten traction. And people love this app. And again, Jake went through our accelerator's 29th cohort. Jake, welcome to the program. Thanks for having me on, Jason. So tell everybody a little bit about,

And you came to the accelerator. Were you at Founder University before that, our pre-accelerator? I did not go to the accelerator. We applied directly into the accelerator. Great. So tell everybody about how you came up with this idea and then how it's been going and what the app helps people do. Yeah. Well, I studied engineering as an undergrad, but I found my passion in entrepreneurship.

I started multiple companies as an undergrad. I ultimately sold one by the end of my senior year. But graduating school didn't have anything to go into. So was in management consulting, was working the hours that it entailed. And the problem, I guess, found me. I had the fire department called on me for just like eviscerating a de jrano pizza in my oven. Oh, great.

Which to me was like almost a call for agency. I lack the agency to really fix that problem. So the way I went about doing that is I got on the phone with one of my close friends from undergrad. He ultimately became my co-founder and was an accomplished comedian and performer. So, you know, not the worst person to be on the phone with for a long time. He was also the best home cook I knew. And he started coaching me through how to get better at cooking.

And in the process, I realized he was uphead on the curve for me, but he was experiencing the exact same pain points. So those bells started to go off. I asked him if he'd be interested in founding a company. And what are those pain points? What is the pain point that you don't? know how to cook? Well, yeah, but what we realized is that generally people go about learning how to cook in really one of two ways. Younger people, you cook from, you learn from influencers online, your Instagram, TikTok, YouTube, or you will cook from online publications or blogs.

So New York Times cooking, Bon Appetit. And ideally, those give you a streamlined, an affordable and accessible and easy way to learn how to cook yourself. But what we found was with influencer content, it's highly entertaining, but it's not educational. People watch hundreds of hours of this content. They step into their kitchen. They can't apply anything. And then when it comes to cooking from online publications, these blogs, every recipe is like reading a chapter in a textbook. Every different recipe, it's like a different chapter and a different textbook. Very difficult to inventory your knowledge, very difficult to know what you want to learn next and how to get there. So TikTok's too short, not dense enough. And they lack detail. I've seen that watching a short

on Twitter. They're just like, here's my perfect recipe. Bang, bang, bang, bang, bang, bang, bang. And here's something beautiful. And you're like, wait a second. And then online, I had the same experience you have, which is, I just want to, you know, sear some salmon here. And I'm reading war in peace. It's, why are there a thousand words in here on the history of salmon? And I just want to cook the damn salmon. What's that? Why do I need your great aunt's life story to get to this salmon? Exactly. Exactly. Let me cook the salmon. Yeah.

And so you then decide you want to try to build a better mouse trap, as it were, a better solution. And then you decide what? Did you do multiple tests? Did you think about doing YouTube videos, something in between the two? How did you come up with a format or a product? Because you have the problem set. You have an observation about what is available in the market and what's frustrating about it. But now as a founder, you've got to conceive of a product.

So take us through that product creation story and process. Right. So we were working full time, but we kind of have a screw loose. And so what we were doing in our free time was basically creating a Google form that we would send out to people. And if they wanted to use it, they would pay us. And then we would create a custom meal plan that would essentially allow you to achieve your goals.

And we did that in Google slides. So like we would send you your meals that way. And then we would send you a grocery list over text. Got it. So you decided to test this with, tell us what you're, what you like to eat, a form of some kind and then give them a PowerPoint, basically, a Google slide and a checklist for shopping. That was your MVP, your minimum viable product. And how do people respond to those two things?

I mean, what we got was that there was a willingness to pay or at least the, we were crazy enough to perceive that there was a signal that there was a willingness to pay. And so leaned into that quite a bit more, built out the. team. So we actually, we did this, and I know that this breaks a cardinal rule of founder you. And if we were to do it again, we would follow the steps of founder you. We did it without a technical co-founder at the time. Well, so you, when you did it, you did a low-code, no-code version of it, which is just, hey, here's a Google form. But you know what? That doesn't break the rule of Founder University. That's actually a good way to just learn in the Eric Reese lean startup

concept or for that Steve Blank with his startup engine concept of what's the minimum viable product and what question do we need to answer? The question you wanted to answer was would people pay for a meal plan and recipes? And you got the answer to that, right? Right. And actually, that's a fantastic way of putting it because we were essentially doing a meal plan at that point. And through these MVP's, what we learned is we refined that white space to learning to actually being on a path to learning more about food itself, which we didn't know going in. And so that was also a critical learning right before we jumped off and actually decided to develop a solution.

And so then somehow you go from, you know, this MVP concept, hey, here's a mail plan, here's your list of what to buy. You get dozens of people to try doing that or a half dozen people? How many people did this MVP? That was, I think that it's somewhere in between what you just outlined. And so put it in the teens to 20s. And we had to acquire those customers. You just emailed your friends.

Email the friends and asked them to email their friends. That was, we took the one extra step where. And some people took pity on you and decided to give you 10 bucks or 20 bucks to do this. Right, which is also the number one thing is that was the number one waste of time when we were starting off is the people that take pity on you do not give you usable product insights. Because they're not actually buying the product. this isn't how it would behave in wild. And so we actually threw ourselves on Wild Goose Chase

kind of following those pity buys for a while before we realized that we had to refine. Got it. This is why maybe buying some advertising on Facebook, sending those people to a landing page, people you don't know, they are going to be savages. They're going to give you super critical product feedback.

They're going to say, like, why would I pay you $10 for something I can get free on YouTube? Gordon Ransy has an omelid video or whatever it is, right? they're going to give you hardcore, brutal, candid feedback. Where's your friends are going to be like, oh, my God, this is amazing and changed my life. Here's 20 bucks. And you're not getting any signal as to should this product exist in the world. Right.

All right, listen, selling software is hard. It's hard right now, right? 2020, 22, 23, it's been a grind. 2024, it's going to be hard too. Everybody's making very thoughtful decisions. And the last thing you need is to slow your sales team down because you don't have your stock to you. dialed in. So if you're a SaaS or services company that stores customer data in the cloud, you need

to check out Vanta. Vanta will get your startup, SOC2 compliant, easier and faster. Vanta makes it really easy to get and renew your SOC2. On average Vanta customers are SOC2 compliant in just two to four weeks. Compare that to three to five months without Vanta. Vanta can save you hundreds of hours of work and up to 85% on compliance costs. And Vanta does more than just SOC2. They also automate up to 90% compliance for GDPR, HIPAA, and more. You can't afford to lose out on major customers because of silly stuff like lacking compliance. Just work with Vantta. Get your compliance automated and tight.

Tight is right. Close those big deals, the lighthouse deals that send all the other customers to you. Here's the call to actions. Very simple. Vanta's going to give you $1,000 off at vanta.com slash twist. That's vanta.com slash twist to collect $1,000 off your sock, too. So how do you go to the next level and get actual product feedback? from actual customers who you don't know,

and how did you come apart the concept for the app in this journey of triangulating? I like where we're going with this. You're triangulating and trying to build a product. What's the next product on this journey? Yeah, it's kind of, so I think, I like to take inventory every so often on the key skills that I think that I've learned

along the journey. And one of the kind of five that I currently have has been this idea of uncovering demand. So if you remove your product, the supply from the market itself, people will behave. They have a latent need for something. Otherwise, you'll build something and no one will buy it. And so what we did is we essentially started to look into, yeah, you ask 10 people if they want to learn how to cook. Eight or nine of them are going to say yes.

But who actually learns how to cook? And when really was the key question. Like when does somebody decide that they want to learn how to cook? And we were doing this all the while. we had brought on a technical co-founder, Amrits, and we were building a version of the app itself. Got it. So you decided, hey, we should figure out

when somebody needs to learn to cook. Because when you ask people if they want to cook, it's like, hey, do you want to learn how to play guitar? Do you want to learn how to be a black belt and take one dough? It's like, well, yeah, I would love to be a black belt and take one dough, play guitar, and be able to cook a great meal. But you actually have to take that step. and you got a co-founder along the way.

So how did you and your other co-founder find your technical co-founder? So we're a founding team of four. So we have three that we're doing this. It almost essentially started as a club. We were meeting once a week on Sunday at the beginning running these things and then divvy up to work, come back on next Sunday. What did you get done? And you were working your full-time jobs at the time. So this was a side hustle?

Exactly right. And it was like I think that maybe as it was heating up, then we started doing Sunday. day Thursday. It's like when in the week can we? You kind of made it like a fun little club for yourselves. I've never heard of a founder doing this. What a clever idea. Yeah. So it was a blast, but ultimately

you do reach a point. In my case, I felt like we were doing a suboptimal job on the startup. We had proved out concept, but then at that point we're working too slowly. And I'm also doing a suboptimal job at my full-time job, because I'm starting to focus way more of my energy on this thing. And so

I gave what we did as a team, we gave ourselves three months to find how much funding we needed to survive for 12 months and a path forward at development. We were able to put together the first, built a financial model, essentially projected out what we would need for 12 months to run just really bare bones, did that and turned up scoured earth for a technical co-founder. I talked, I think that who we ended up hiring honestly illustrates this the best. Domrf Saini is our CTO. He is fantastic. I can speak about him for a very, very long time. But who Amort was to meet was he was my co-founders, landlords, roommates' boyfriend.

Co-founders, landlords, roommates' boyfriend. So only like three hops away. Right, right. That's how deep in the Rolodex you have to go. And so, like, just imagining the conversations where I'm humiliating myself with, like, my family friends. Yeah. Like, interviewing NINDAF.

Does anybody know a developer? Right. And what we did is ultimately we had a list of, call it six qualified and interested candidates from that process. And Amr blew him out of the water. Like he was the person. And he wanted to be at a startup. He had a full-time job at that time or he wanted to be an entrepreneur. So when you said, hey, we want you to come on this adventure.

That was exciting to him, yeah? Entirely right. So Amert's background, he led a product team to exit in the past and was on the beach essentially for the four or five. five years prior. Now, the company he built, it was a CRM in the funeral home industry. And so I think that Zest is kind of... Yeah, Zest is a nice little counterbalance to that. So we have life and death.

So, but this is a super important thing for people. It's getting easier to learn to code. It's getting with co-pilots and, you know, AI eventually is going to help people make better startups. And then you have the no-code movement, which is absolutely fantastic. There are extraordinary no-code tools. And the no-code tools combined with MVP's, made in forms and type form in Zapier and all this kind of stuff, those are all now colliding

with co-pilots and GPTs helping people write code, but you still want to have a technical co-founder because now you've got an owner in the business who will drive it and has equity incentives. And I think the mistake people make is they think all developers are just either servants who, you know, just pay them and it doesn't matter if they're owners. That's not true. Like a great restaurant, if the chef is an owner, they're going to take a different level of pride,

a different level of ownership, as opposed to being a serf and a hired gun. You want the chef who has a mission and who really wants this beautiful food to exist in this world, this experience. You want the developer who wants that beautiful product. to exist in the world, and people underestimate developers, I think, wanting to be entrepreneurial and wanting to be their own bosses and wanting to make decisions, because when they're just,

just quote, unquote, developers or just writing code, they kind of just get told what to do, and they get looked at like the person who is like a plumber. Like, you know, I'm just paying you to fix the pipes here. So did you have that experience, I think? Yeah. And well, number one is I appreciate the analogy in food that that doesn't go on notice. And I think that you honestly speak to this brilliantly. When you talk about the team of five that gets done today what a team of 15 or 20 over a decade ago would have had to get done. I always feel like it's speaking directly to me. And that only functions if you have an owner who's technical. That can only get done. Amherit leverages these AI tools heavily. We all do however we can within the functions of our team,

but it just helps us move better, faster. So now you've got the four co-founder. you're doing your side hustle club, I'll call it, the side hustle club, Thursday and Sundays. What an awesome concept you came up with there. It's exciting, it's fun, but of course it's going to get frustrating.

Why aren't we doing this every day? We're starting to get traction. So you all decide to go all in, but you have to, so to speak, but you have to get some cash because people might have things like rent or they need food,

but they might have student debt. So how do you make that jump from side hustle? hey, we're all getting great salaries to, oh, we're giving up salaries. We need, you know, whatever it is, 5K a month draw, 10K a month draw, you know, different people are at different stations in life. So how do you make that jump as a team? Yeah.

So for us, again, that was problem number two to overcome. Let's call it opportunity. Opportunity two to solve. And what we looked at was essentially taking those elements that you just mentioned into consideration, plus give us a little bit of leeway to actually be able to invest into the business, not just like into ourselves to sustain the business. How much do we need to get by? And that number was around $100,000.

And we raised that. $100,000 total, just $100,000 to get you through a couple of months or so. Correct. You know, it's funny, actually. I was just catching up with a friend about this. Because where we are at as a business, everything is always as, it always feels like it is existential. It always feels like, you know, you never know what's going to happen next.

I truly feel like the number one thing that prevents people from founding a company is not risk aversion, but rather ambiguity aversion. And that lack of knowledge about their uncertainty or what's going to be an outcome. It's highly uncertain. You don't have a revenue stream yet. If you're working at Netflix, you got a quarter million subscribers. It's not going down to a million subscribers the next day. Even if it has the worst year ever, it's going to go down 10%. Right. So we were catching up. And what really was true was that was as existential as it ever possibly could be. It was essentially like we put it on the line. I don't really know. We couldn't really cut back or be more lean. You know, you always can. But that was when it was as, our backs were as up against the walls as they possibly could be. So you accept that reality as a founder. You have to accept it. it's not even to me it's you can't live in the past or future it's you control input that's it that really I think that people become beholden to hitting metrics but the reality is that it's a time machine you're

looking at you're looking at a time machine you don't have the luxury to right now and so what we do is just what can we get done for us we fix on time in a certain period of time and then get that done do your job and ideally the right thing happens but you can't control for whether or not it's got to your point so it's so you do your sprints in two week sprints 10 day sprints five day sprints what do you do yeah yeah so we we actually um this is comes from the 37 signals camp that dhhh pod that's awesome i that those like the h is classic yeah he and jason free just like hold real estate i i like fan boy about them having never great entrepreneurs and they they they done it by bootstrapping in a very authentic way, right? So there's a lot of lessons there

for finders. And what they have done in terms of building is rather than fixing on a product launch, you really have two controls. You can build a product to launch or you can fix on time, which is another limited resource. So what we do is we do six weeks and that's long enough that you can build something substantial, short enough that you can see the end of it. And over the course of those six weeks, you have to make tradeoffs to be able to ship what we commit to at the beginning of it. And that's kind of how we run. And so it's a bit of a longer sprint cycle,

but we feel like we move faster that way. A lot of founders are great at going from zero to one. This takes vision, creativity, hustle, all that great stuff. But those same people often struggle with going from one to a hundred. If you want to scale and you want to do it efficiently, you're going to need process and you need structure. And that starts with your product. So if your startup needs a more structured engineering approach,

you need to check out MEV. Mev helps businesses build and maintain their products faster and more effectively. They'll make your product more stable, scalable, and secure. They'll build custom infrastructure that scales, and they can help build additional features for your product and more. For each of your needs, Mev organizes an entire tech team comprised of senior engineers, delivery managers, DevOps, Q&A, and designers. And they've been in business for 17 years.

And they've helped the following companies build complex tech products, Cartier, Toet, and OZempic maker, Nova Nordisk, my favorite. So, let Mev help you increase product velocity and make product engineering more sustainable.

Mev is going to give you $30,000 off the first three months. That's right. Get $10,000 off per month right now at mev.com slash twist. That's Mev.v.com slash twist for $30,000 off your first three months. Well, it's be a good time for us

to show the product that you got going and then talk a little bit about maybe coming to the accelerator and then fundraising and how that's all. gone for you. Yeah. Yeah, that'd be great. Oh, and this is your presentation from the accelerator. We focus on in the accelerator really on mastering your presentation to investors, and hopefully we did a good job of that with you, and you met a lot of investors.

That's how I would hope so. Is that or something else, but I don't really, I can't, hard to pin down the other thing. Ferry does, maybe. But I think, so this is just the product demo. If you prefer to me, no, product demo's great. Let's just show people. And you can talk a little bit about how you present it to investors along the way. Sure. Awesome. So, of course, at this point, you know, but we were building dualingo for cooking with zest. And the way that that actually functionally works is people come into the app itself.

They take a skill assessment, which places them in a level based on their current level of knowledge. So in this case, this user gets placed in level two. It's all about getting the basics in level two. So say they want to cook a soup, they might cook our Thai curry soup. And within that, they'll learn things like the way that you cut your ingredients, actually impacts the way they cook, that though it may seem counterintuitive, intimidating, cleaning as you go is a really important part of the cooking process.

And we teach that through digestible slides, through tap quizzes, and then you have green in-recipe chef tips, which come up, they reinforce those lessons that you just learned and allow you to internalize them for later use. So now flash forward to today for this user, they might be on level six. They might be learning things like the complexities of flavor. And within that, if they want to cook a soup, they might cook our beef ramen. and in the beef ramen, they'll learn about the science behind flavor extraction and fusion, the idea behind concentrating flavors, the reduction, the idea behind brazing

a meat in a flavorful liquid. Now, that's like the basic skeleton of how people use this. Using it, their lives around food are totally changing. They cook four times a week, save over $500 a month and get to take care of the people that they care about while doing something that's fairly productive for them. So that's the short and it's got gamification built into it. You go up levels and you've added a bit of it. it. So you're, you are taking a little bit from the TikToks, which is bite-sized content,

little tips, like, hey, here's cleaning as you go, something I always talk about when I'm teaching my daughters about cooking, hey, look, we put the pasta in the water. We've now got, it's Capilini. We got three, four minutes here to make it Aldente. We could wipe the counter down. We could throw away the box of pasta. We could set up the calendar or two. There's things you can do at that downtime. And as people level up, that's got to be addicting, right? It keeps people engage. And you mentioned there, part of the value proposition and the metrics you're tracking there is the money save. And so that's super interesting. For one person, it might be super motivating to hit level six, right? For another person, saving $500 ordering DoorDash or Uber Eats or Postmates,

that could be very exciting because they could redeploy that $6,000 a year to something else. And then finally, you had the non-financial reward, but the incredible feeling of taking care of and building nourishing food for people. What I really love about that slide is you understand that there's a multitude of reasons of why somebody might engage with zest. And you learned that when? Did you learn that intuitively? How did you learn that that's what people are responding to in your product? And then did one of those become a North Star? or how do you think about incorporating that into the product, those learnings?

So it's a great question. It all trickles down from that when moment that we were talking about earlier. So when we were going to market with that first version of zest, as Ambrit was building it, we were conducting a series of interviews. And what we were looking at was people who throughout the pandemic learned how to cook and did it successfully. How did you find those users to interview? A fantastic website.

It's called respondent.io. So respondent. Yep. You can people, it's a two-sided marketplace. Researchers come on and offer certain queries and then people can sign up for user interviews as long as they meet the criteria. Amazing. So congratulations to respondent.com. Great day for that.

For getting a free plug on the show, you earned it. So it's earned media, right? How did you find respondent.com. So I always like to ask founders because you find the right tool, man, it could unlock anything, right? You start using Coda, Notion. You know, some of these tools are just so powerful. You know, they put you on second or third base. And if you don't know about them, oh, my God, you know, you're stuck in the dugout.

So how did you find out about this tool? Right. So that is through two people. We were talking about DHH and Jason Freed earlier. And the reason that I know them is through two people in particular. So Neil Sells Griffin, who was actually on Twist a while back, back when you guys were starting off, was my entrepreneurship professor in college. And he was the one that turned me on to all of this. Essentially kind of unlocked my mind to what I could be doing rather than kind of what the current of undergrad can lead you into.

And then Bob Mesta, who has been a fantastic mentor of ours as well. So Bob created the jobs to be done framework for product development alongside Clayton Christensen. And he also, he works at the CEO of a company called ReWired Group, they're a consultancy that works with major companies. And Bob uses them respondent for his interviews, sent them our way, and we never looked back. This was like a number one. Because sourcing those interviews is really hard. And this just happened.

That's why I asked. And so you were lucky enough to have great mentors, those great mentors, those great mentors, had frameworks or thoughts. So here's the rewired group and Bob's group there to talk about the JTBD, Jobs to be done framework that helps you understand why and how people buy products. Really cool.

And so you were able to understand product development in a way that you didn't have to reinvent the wheel here. So you get these folks on a call and then what do you ask them and how do you learn all this information that becomes the product value proposition essentially. So this is the fun part with Respondent is made for the scripted,

this is kind of a hack that you have to pull on it. We don't have a script. We go in and we talk to them about their journey, essentially do our best Calcanus impress and like go after just leading them to best understand because this is honestly why I like entrepreneurship in general, making the abstract concrete is one way to say it. the seemingly irrational, there's always a rational reason if you talk to the person. And so understanding that journey and the best way to do that is without a script.

You just go in, you put it around a moment when I talk about the when. For us, it was learning how to cook, knowing that there was that successful outcome. So this is one of the use cases where it works. So you ask them what? What did you ask them? Like, as your first question or two. Getting started, you start broad and then really want to trigger the memory. When did you start learning how to cook?

One comes back that, well, it was during the pandemic, what's the first thing that you made? Bagels. Why did you start making bagels? Right. It's like, yeah, right. Exactly. So you do this naturally. But what I found, you know, I didn't know anything coming out.

I'm like yon. See, the way, you only have to say one word. Bagels? And if you, if it has a question mark at the end, the way I said it. And I say bagels. Well, that actually had a little question mark, but bagels? say more or tell me more why bagels right or why why bagels really and they're like oh no no bagels are incredible you know like it's actually not that hard and I missed my Brooklyn bagels

or something right that's so fascinating you're saying somebody was making bagels from scratch right just and that's the first thing that's the first thing that they made now they're a proficient cook who cooks habitual wow but it's a start at bagels is so right so that's one of so that's one of the four things that we came to realize are like a trigger and that is providing for going from a heavily socialized environment to a less socialized, moving from being around a lot of people to being around very few in wanting to then provide for people. Got it.

And so you see that. So you found out through the bagel interview and other interviews that there was a social component to this and people wanted to cook for other people. You were thinking, hey, somebody wants to cook for themselves because they burnt their pizza. That was your experience. But for this person's experience,

was I want to make bagels and invite people over for Sunday brunch and show off maybe or give them this great bagel experience that I made homemade bagels. Which, by the way, when I smoked meats and my smoker, my great joy in life, you can only, if I'm smoking a 15 pound brisket, it gets down to 9, 10 pounds. I'm only eating a pound of that or two max over the next week. The other eight, I'm slicing up and giving to friends and it's my great joy. Hey, here's my brisket. Oh, when can I get another brisket?

Right. And the other kind of, so you start to see contrast in the stories as well. of similarities. And the other version of this that's like the Fun House Mirror version is you have people providing for their significant others. That's the one that we call out in that product demo. And what it is is like, I'm living on my own and I eat four day old chicken and rice and it works for me. But I serve that to the person I care about. All of a sudden, it's like FBI's most wanted. Like, you're that partner. That's how you provide for the person that you care about the most on a consistent basis. And you see like they draw on these similar emotional or emotional

elements, but the social element of it is slightly different. And so kind of playing with those components there. Oh, and Neil Sales Griffin, he was from Code Academy. That's right. Oh, wow, that was a long time ago. That's episode 230. For those of you counting at home, man, that episode is 11 years ago. Yeah. My lord, I've been doing this for a long time. You know, he remembers he's driving around, him around in the Tesla. Yeah. That is so crazy. Um, to think about how long ago this was. This is the old set. What a walk down memory lane for those of you who are watching.

This is the old set in Santa Monica. And here's Neil. And this is 11 years ago. We got 6,000 views on this video back in the day. And what an archive this week in startups has turned out to be. Crazy. Listen, not every business is venture scale. If you're not, you won't be able to raise money from VCs.

We all know that. And not everybody has a rich family member to do their friends at family. round. So if you want to jumpstart your business with $50,000, let me tell you about Paynebrush loans. Paymbrush has created a new kind of loan product. They connect ID-State startups with bank capital, so you don't need to give up any equity, and there's no pitch deck or revenue required. And the Paynebrush loan is available at the IDEA state. In fact, you can apply the moment you incorporate your company. Monthly repayment is a flat, predictable amount, which makes cash flow planning really simple. So here's your call to action. If you're a founder in the U.S., go to getpaintbrush.com

to see if you qualify for a $50,000 startup loan in less than two minutes. That's getpaintbrush.com to see if you qualify in less than two minutes. So you get all this product information and then you start realizing, hey, there are reasons why people are cooked. There's a social aspect, taking care of people, being the host, saving money, and being healthier. And the gamification obviously is kind of built in. Is there one that is working more than others right now? And have you found any other value props that you didn't expect? Yeah.

I think that the one that honestly, what we did is we have a playbook, but we went live with this version of the app. And we just started speaking to kind of these moments that we saw. And most of them resonated very well. So we built with these four in my, mind, we haven't necessarily needed to deprioritize any of the moments, any of the moments to date. Got it. So now you get the product, you launch it. What do you learn at launch and then how do you start thinking about having a launch product in the market? And then maybe when you came to our

accelerator and maybe talk about that experience, either of those, you can know whichever direction you like. I'm not sure what happened next in this story here for. Yeah. There's a weird thing particularly. I think, listen, everybody's experiences and I have one, so I'm going to speak from my own bias. But you never, we never felt like we were launching per se. It was just kind of the first of a bunch of rapid iterations that were still kind of in the middle of spiraling towards. And so it's, I think that it's just kind of a prototyping and nothing's finished mentality

that has been constant. I like to say, this is true of the processes through which we run the business. And then how the business is performing itself. This is the worst or the best. worst possible version of this product that we have. And it's just kind of getting better from that perspective. On the launch side of things, well, you tweeted in April. I'm investing in, I believe it was five companies over the next 30 days of here.

Yep. Oh, great. Those tweets were. That's how I acquire customers. I'm investing in companies. Would you like money? And you were like, huh, he's an investor. I've watched his podcast.

And he has money. well this is like you i mean you talk about the focus thing but then you know launch stands out right away because of i we were talking catching up i was catching up nick and john earlier and it's just the operation is so it's just you get on first of all you get on with on this is my experience i hop on with andre he is extremely now associate andre started as a researcher skipped the analyst phase went right to associate one of the fastest uh her ascensions in our organization. He are in it.

Because he just is, he has this unbelievably pleasant demeanor balanced with no nonsense. And so cutting to exactly what he wants to know with our product. Within 48 hours, I was on with Jackie. And then we had our decision like pretty quickly after that. So we started to move,

and to translate what you just said, you see a tweet for me. No, I just want to recap it because for me, is now product discovery. I'm now on a client call. So I'm fascinated by how our 21 person organization that invest a million dollars a month in startups or so and invest in 100 new companies a year and maybe 50 existing portfolio companies we do a re-op with every year, something in that range. You see a tweet for me. Then you apply. Then you get on the phone with

an associate, Andre. He is incredibly deft and no BS in getting and understanding your product. and you felt heard by him. Right. And let's also... And he was positive, you said. It was positive. He's a positive person, but launch has a very specific way. People see as they go through the program that you are to present information.

Someone who had never been through launch might not present information that way. Right. And Andre was able to essentially steer me into that very easily, such that even by the time I was on with Jackie, I was like, oh, they probably want more of this and less of that. And I was able to kind of almost... And what did you perceive? More of what and less of what? I'm curious. Concision.

More concision. Like, just as punchy as I possibly could make it. And focus. So the more on the product down. So being concise and really getting to the heart of the matter, not superfluous information. That's interesting that you got that vibe from our first call. For people who don't know, we do what's called an introductory call. And we do an incredibly large number of these a year.

thousands of these introductory calls a year. And we try to get to the heart of the matter of the startup. And we really try to understand the vision of the founders because one of the pieces of feedback I got earlier in my career was Jason didn't understand our vision. When we started asking people to review us as investors, he didn't get it. I think this is when you don't invest in a company and we don't invest in a hundred, 99 out of 200 companies that apply for funding. So the 199 are not going to feel so good about us because we passed, but we want them

to feel at least that we understood their vision. And man, we had this negative piece of feedback that kept coming back about me. He didn't understand our vision. And I realized I came across as a bit arrogant, which is not how I want to come across. So I started saying to people, founders, when I talked to them, and I train my team to do this,

may I repeat back to you, your vision for your company? And if you just do that, you ask permission to repeat back the vision. And we say, okay, so you're doing this, it's subscription model, right? Okay, and it's Duolingo, okay, and it's called Zest, and it's gamified, and it's $10 a month, and it's $60 a year, and you've got four co-founders, one technical co-founder.

Did I get everything right? Just by doing that, the person feels heard. And the objection, we didn't get it, went away overnight with just that one tweak, and it's a 30-second moment in the call. And you know what? It was good for me, and everybody else in the team, to have a device, may I repeat back to you, your vision for zest,

it gave us, added a little humility, but it also confirmed for us that we did actually know it and that we didn't make a mistake. It's so interesting from a meta standpoint, looking at that, because it provides you also a two piece of it.

The founder is able to draw contrast there. So no, because. Or yeah, yeah, you nailed it. Or no, you didn't get it and here's why. And from, I assume, the launch standpoint then, you can gauge focus. Because if I can answer and if I can tell you in a short way where you were off or why you're so spot on, then all of a sudden you're actually, I would say the bets might even get better. And so- Well, we want to make really thoughtful

bets. Our job is to bet on founders and we bet on teams that make products that delight customers. When we were evaluating you and your team, we were like four-person team, we got one technical person. You're a management consulting. I don't remember exactly what your other two founders did, but it was like a really good team of builders. I remember when they brought you to me, I was like, snap, yes. And then we said product wise, the product looks pretty good. Like, even in the early stages, it was a well-designed product. And I'm a design guy. So I was like, this is designed pretty well. And then we thought, well, the customers really like it. You had some early customer traction, I remember. And so product, a team builds a product, delights customers. You had all three,

and you had four co-founders, and you were builders, and you had a little bit of product velocity, something else we look for. So then you're 48 hours later on the phone with Jackie, who's a managing director, you basically skip a level, go right to the top, she's able to make a decision. Andre's able to make a decision too,

just needs to get approval on it. So he can make decision, hey, I want to invest in this, we just want to make sure, but Jackie could just go for it with a hundred-k check. And so then next thing you know, you're in the program. And we got done in under a week.

So we applied right after you filled the seventh for the April cohort 28. And so we basically, we matriculated in, but for the net, for the summer. Perfect. That's great to know.

That's great. And then so in the process of going through the accelerator, I think it's 14, 16 weeks or so. I don't know if you did 16 weeks or 14 weeks this time around? 14 weeks. 14 weeks. You do 14 weeks. We introduce you a ton of investors,

hopefully. And yeah, you did well with investors. Yeah. I mean, it is, high, obtain the way that launch goes about doing it. You're on weekly. You, I mean, you put everybody on the spot on those calls. I don't know how much I'm allowed to say. Yeah, say everything. Sure. Okay. Right. Right. So like our cohort is presenting to a room full of investors who then give us live, candid feedback. One of the really difficult things when it comes to

fundraising a vendor round, so I sold my first business, but it was not venture back. And the first time you go out to raise money, it's very difficult to gauge the feedback. You want to one provided systems for that. But then two, you're getting so much feedback so quickly that you can just so quickly throw out elements that are on working, some elements that are in charge forward. And then the other side is obviously just deal flow, right? Like just getting as many people across the desk as possible. We talked about controlling. How many investors did you need to meet with in order to raise money for your company? We met with over 130 people. Wow. So I'm going to pretty great.

We are, yeah, we are, I think up there in terms of, listen, when I say consumer subscription app that teaches people out of cook, I can say this now because we just closed around. Like, now we get to speak on our own traction for the next 12 months. But let's just say that a lot of people are on for the hills or ran for the hills. And so it's on us to prove it. Most people are not consumer. Consumer subscription. Some people don't like. Some people do.

We happen to like it. We've had great success with it multiple times. But some people are like the churns too high. We actually had a conversation about this on All in recently. And I was trying to explain to the. my bestie is like, hey, you know, Netflix is a hell of a business, Disney Plus, a hell of a business, Spotify, heck of a business. When you get that large amount of subscription, yeah, I know there's churn issues with consumers, but overall, these are very meaningful businesses, I believe, and I believe there's going to be hundreds of businesses that have millions of subscribers. And, you know, like, I think New York Times is proving this to people by putting a bundle of things together. And, you know, it's a jury still out, but I think this is a wonderful business you have. I think this is a wonderful business you have. I think There's a million people who will pay you $60 a year for this and you will get to, you know, $60 million in revenue.

I think I believe that. You and I both and I, that's the beginning. But I look at, I don't know if you remember the first time that we met in San Francisco and you and I had the chance to walk. You were hearing Founder U pitches. Yeah. And so we walked from the launch site to the Founder U site and really you broke it down. It's KAC, it's LTV and it's the payback period.

How long does it take for you to get that money back? Yeah. And for me then, a lot of this is a lot of this is a lot of, articulation gap, I think, in fundraise. And so I was sitting down and I was speaking French in a room full of people that only speak English. Yeah. And once you're able to kind of articulate both the vision side that you're speaking to, I mean, you come from this operator background, though. But also then you're able to articulate kind of the right brain and you have that left brain going. So you have to educate investors on why their objections maybe weren't valid here

or just how the architecture of your business works. I would say even more, I had to de-risk the areas that their minds were going to jump to. In my mind doesn't think like that. Because if I spent all of my time thinking about not what drug... I live in the trees, right? I just start speaking to the forest quite a bit more. And I understand what the name of the forest was a bit more. Well, yeah, I mean, there are and different,

there are all kinds of different investors. Some investors make the decision on the product. They use the product. They're like, this product is awesome. I'm going to bet on it. Does anybody know who made this product? right and literally they'll work backwards from the product whoever made this I'm giving them money because I love it so much

other people are just like I love this team and it's like well this product is a little janky and it's like not very polished and they're just like whatever I really connect with these founders other people are like I heard this customer and this market size and there's a demand I'm going to work backwards to find the products that are servicing that market and then which like Bill Gurley was looking for somebody

in a marketplace that was doing transportation work backwards found a bunch of different players and made his best on Uber. So, you know, there are different investors and you have to qualify them, right? This is such a good. Anybody that is a first time fundraiser needs, there is no golden goose. There is no perfect formula for going about this. Everyone's an end of one, at least in my experience, and I'm then going to speak for my own bias, but every experience is different. And so there are our best practices, launches scorecard system for sourcing investors, a really good way to get on the phone with 130 different people. But it's the way to go about

doing this, there is no right way, and it's going to unfold the way that it's meant to unfold. It's going to be a winding road. Then once you're on the tracks, if venture backed is the way that the business should be going, if that's right for your business, then various factors start to take over a local. What do you have to prove now? You have a year of runway or more. You've got, you know, I think tens of thousands of dollars a month in revenue. It's clear people want the product.

You've got some audience. Over the next year, what are you going to try? try to accomplish with the money you've been given and the time you've been given? Yeah, really three things. So we're looking at making the game more cohesive. You spoke to the gamification elements. What's a unifying theory that links this all together and puts us on a track to building something more in-depth and greater?

The second is building a really solid operating system around food. We want to be the end-to-end resource that people turn to when it comes to how they manage their food in their kitchen, retaining people through like a classic B2B SaaS strategy. makes less sense for me to leave than it makes for me to just stay on. And then thirdly, starting to invest in these channels of acquisition. Right now we acquire through two organic channels and one page channel that we've tested a little bit. How can we de-risk that such that if it comes time, if fundraising is the right route for us moving forward as well, which probably will be, then have we de-risk the business to the point where people want to either up their bet or bring on some new people who we've been talking to?

were met along the way. I like it. I like it. And so you mentioned earlier TikTok. You're matching organic growth channels, which are really good because if you can figure out an organic one, you know, the cost is your time, but you're not handing a bunch of money over to Facebook or Instagram or Google, which, let's face it, there are higher priced products.

Like I think Duolingo, I don't know how much they charge, but they might charge more. There have been people who are charging a lot of money for their products, which means they have a higher cap. With cooking, maybe you have a harder time. and you don't have tons of money around to burn. Is TikTok, because TikTok has so many influencers, so many views, and the content is compelling visually, but doesn't actually deliver on the value prop that you deliver on,

is there not an arbitrage there to try to maybe hire a couple of these influencers to work for you or, you know, send people to the app, hey, if you want to learn more and have you tried those kind of ideas of TikTok or YouTube shorts as a funnel? Yeah, I mean, so this is an amazing point. The Zest channel, and I might, you know, I might get sent to jail by my co-founder Graham, who's been managing these for saying this.

But essentially, those people that you're speaking to, these fluid influencers, they serve to build a tremendous amount of intent in our future users. And so people are watching this unbelievable cooking content all the time. Our channel does not really speak to that. That's not really what it's about. What it's about is calling out

the fact that you're spending all this time watching these amazing things and you've lost agency over your own life. This is another reason that people joins us, another critical moment for them, which is I work a job that is just not that great. I come home, I watch Love is Blind on Netflix. I'm scrolling through TikTok, looking at brilliant food and I'm eating my Chipotle burrito. It's like something's weird here. And so our channel right now, as it's built, is built to speak to that. If we're going to start partnering with creators, we're going to partner right now, you know, give me license to change this, should it change. But right now, the idea is partner less with food creators, more with people that speak to the

moments in life that would lead somebody to want to learn how to cook, to the moments that we've spoken about through the course of the problem. Right. You're a lonely. You want to have more friends. I mean, if you want to have more laughs, right? Like, I love to cook and I love to have people over and I love to have people over. to go to dinner because I like to laugh. I like to have a conversation. I like to be amongst people. I'm

a major extrovert. And also it became a super weapon for me in terms of my business, the fact that I was able to have dinner with people and host people for dinner. Like it actually became a wonderful superpower and being able to cook for people. It's just such a great joy. If you're listening to this, go download zest and pay for it. 60 bucks a year? What is it? 10 bucks a month? Yeah, that's right. Okay. Just go pay for it. Buy it. Give us some feedback. And And listen, continued success. Thanks for letting us invest in your company. It's great to be on the journey with you.

And anything we can do to help at this point as we wrap up the episode. Give us a download. Give us a nice review on the app store. Write a little nice review after you play around in the app itself. Yeah, if you got 10 great reviews here with really good feedback. We did our job. That would be huge. That would be good.

Yeah. 100%. Jake, to you and the team. We'll do this over food. Yeah, we'll do it over food. Thanks for coming to the program. Thanks for all the candid feedback. And we wish you great success.

And we'll see you all next time on this week of startups. Bye bye. Hey, everybody. I talk to a lot of founders here on this weekend startups and as an investor. And they tell me the same thing over and over again. They want two things from me, more FaceTime and money. They want me to invest in their companies. And they want to spend time together.

So we've been working here on a new meetup program. We call it Founder Fridays. and Founder Fridays are an event by founders for founders. This is an event that is hosted in cities by people like you. If you're listening to This Week in startups, you're a founder. So what are you going to do at Founder Fridays? You're going to get together with other founders in your community. It could be four or five of you.

It could be maybe up to 30 of you in a location. Pick a cafe, pick a co-working space. I like to go to a great Mexican joint or maybe a dim sum restaurant. You know, where you can do shared food, have a couple of cocktails maybe. you do it on a Friday, you get together, and you host it. Now, why is it important for founders to get together? Shouldn't you be at home just focusing? Shouldn't you be in the office just focusing on your startup? Well, if you get together with other founders, true founders who are in the arena, building like you are, you're going to get a lot of value from that because you can trade notes with that other

founder about what's working at your startup and what's not working. The truth is, if you're facing a problem, there are hundreds of founders out there who have probably solved it already. And instead of you, banging your head against the wall. When you sit there and you talk to three or four founders, you're having some dim sum, you're splitting a cassidia, some prajitas. Somebody say, oh, you know what? I had that same human resources problem.

Oh, I had that same technical problem. Oh, I had that same marketing problem. And they might tell you about a tool or a service that'll solve that problem for you. This happens over and over and over again when I do Founder Fridays with our portfolio companies. Now we're going to give you that same experience, but here's what I need you to do.

I need you to host this in your city. So you're going to go to this week in startups.com slash meetups. That's it. And you'll see a landing page where you can sign up and you can say, I want to host in my city. Now, your city may already be hosting so you can just join that person. And what if you go to this event and you learn some go-to market strategy that 10-x is your growth? That might unlock funding. Or you might be talking to somebody and they say, hey, I'm a marketplace too.

I'm not a competitive marketplace. Your marketplace is for use cars. My marketplace is for hairstylists, whatever your jam is, whatever you're working on. but they give you some technique that you didn't know about to increase your supply side or get more demand in your marketplace and you 10x your business. I see this happen all the time and founders are like mutants, right? And I'm like Professor X here. I'm trying to put on Cerebro and find all the founder mutants in the world and then have you get together and do your own little meetup. And here's what you're not going to have to deal with. You're not going to have to deal with a bunch of service

providers trying to sell you software or services. And you're not going to have to sit through a bunch to passive speakers. You can listen to This Weekend Startups and get the greatest speakers in the world on your own time. And you're not going to have to pay for a ticket to a conference or get on a plane or fly somewhere. No. This is about having an intimate experience with five, 10, maybe two dozen other founders in your city. Please go to this week in startups.com slash meetups if you are a founder. This is four founders by founders only. If you are not a founder, this event is not for you. You can start your own meetup for lawyers, accountants, recruiters. This is for founders by founders. We vet everybody to make sure you're a founder. And if you host it, it's a non-commercial event. Our first founder

Friday will start on February 2nd. So please mark your calendars. And we're going to do these on a rolling basis. You can join an existing meetup if it's already occurring in your city or you and one or two other founders can start your own. We're using a wonderful piece of software that we've invested in called River. You can sign up for a River account just by going to This Weekendstartups.com slash meetups. We've already got hosts and attendees lined up in San Francisco, New York City, Toronto, Los Angeles, Las Vegas, London, and even in India. So this is your chance to connect. And if you didn't hear your city named, you can start your city. Go to this weekendstartops.com slash meetups.