This Week in Startups - E1053: Ask Jason! Catching‌ ‌an‌ ‌investor’s‌ ‌eye‌ ‌with‌ ‌a‌ ‌cold‌ ‌email‌, what founders/investors often overlook during pitches, COVID’s impact on Jason’s deal flow, domain name hacks & more!

Episode Date: May 5, 2020

0:01 Jason intros today's questions! 2:18 Kate asks what founders & investors often overlook while pitching/being pitched, and what they should focus more closely on 6:58 Daniel asks about Jason's next book 8:59 Avery asks for advice on performing customer research 14:27 Dan asks what common traits Jason sees in the best founders and tangible steps to gain these traits 19:55 Shahpar asks what kind of cold emails catch Jason's eyes 22:10 Amy asks for the top 5 books Jason would recommend to an aspiring founder 27:18 Andrew asks Jason how his deal flow has been impacted by COVID-19 30:27 Dharma asks about the importance of a startups name/domain name and any hacks getting a better domain name 34:54 Pedro asks how to improve customer retention when acquisition goes down 39:57 Ivan asks how Jason is "sizing up" founders without meeting them in person 42:10 Gerry asks whether to offer a freemium version of a product OR to offer the full product free for a limited window before looking to convert 46:51 Naiem asks whether to push new products searching for product-market fit OR focus on improving existing products

Hey, everybody, thanks for joining us. It's another Ask Jason episode of This Week in Startups, and we got all of these amazing questions from our new Slackroom, which you can join by going to this weekin startups.com slash, wait for it, Slack. You all know Slack, you're all using it at work as we're remote. Well, we started our own Slack instance. It now has 25,000 members, and we have all these great rooms, including the book club, including S Jason, including small wins. We have one for every city, state, and country. We have ones for every profession or job function like design and U.S. or developers. And they're becoming very robust and there's lots of great conversations going on.

And really no marketing. We just bounce anybody who uses the Slack for marketing. And we only keep the people having intelligent discourse about this podcast and growing startups and investing in startups. On today's show, I answer a dozen questions. And boy, they were great questions. How do you catch an angel investor's eye in email? this is a really great question.

The top five books I would recommend to an aspiring founder. I gave more than five, I think, and why you should read those books, what investors are looking for in a virtual pitch versus a real world pitch. And if my deal flow, people want to know if my deal flow has gone up or down during the pandemic, the answer might be something other than what you think. So stay tuned. This week in startups is brought to you by Squarespace. Turn your idea into a new website.

Go to Squarespace.com for a free trial. And when you're ready to launch, use offer code twist to save 10% off your first purchase of a website or domain. Notion. Looking to stay organized and in sync with your team? Try Notion. It brings all your notes, docs, projects, and more together in one place. All fully customizable. Get 50% off Notion's team plan when you sign up at Notion.

com slash twist and net suite by oracle the business management software that handles every aspect of your business in an easy to use cloud platform schedule a free product tour and receive your free guide seven actions businesses need to take now at net suite dot com slash twist hi jason my name is kate morgan i'm CEO of demologista and i'm with several other ventures in africa and some other countries My question to you is, when an investor comes to you with a pitch deck at a meeting or you're asked to sit on something like a pitch session, what do you think the number one thing most investors overlook that you would like to see in that? Or what do investors overlook and what does the pitcher overlook? What does the person who is pitching the company overlook that would really help clinch the deal most of the time? Okay, this is a great question.

Thanks for asking. And if you look at one thing, people consistently leave out. It's not the team. It's not the problem. And it's not the product. In fact, that's what most pitch decks focus on. They focus on here's our team. Here's the problem we're solving. And here's our product. And then they get into the market. All of those things are pretty simple. You should be able to go through them very quickly. Hey, we're a team out of Google. We've created a new website that solves the problem of uploading videos. The market is everybody in the world who has a camera on their smartphone who wants to upload videos, we call the site YouTube, done. It's a very simple pitch. Here's the problem, etc. What people leave out most of the time, and it's such an astute question, is customers. Who is the customer for this product? Who are your existing customers? And who do you consider the most important customers? How do you make money from them? Why do they use your product? How did they solve this problem before? People leave out their customers all the time. And typically,

the reason a young company leaves them out is because they're embarrassed that they have so few customers or that the customers are pretty nascent or small. And then big companies, well, or larger startups, they may just leave it out of the deck because they get kind of bogged down in maybe their projections or the team or these weird market analysis, you know, statistics that really don't mean anything to anybody. For me, when I see, let me tell you about three of our customers. Our first customer is Harvard University. They're putting videos on YouTube in this example in order for people to take night classes and get them into their night programs. Our second customer I want to tell you about is a young executive name, I Justine, and she's obsessed with Apple products, and she makes all of these fan videos of every Apple product, and they get 100,000 views each. And let me tell you about our third case. It's a plumber. And this plumber out of Sacramento

is putting how-to videos up on how to do plumbing for yourself. And he has built a huge following and his plumbing business has grown 5x. Now, just those three I made off the top of my head, an educational institution trying to get customers, this weird influencer person who just is obsessed with, and that's actually a real person I just need, and then the plumber. It shows a range of people, a sophisticated college institution, a blue-collar plumber, just the range of people who might engage the platform. That's what you want to do. And I like leading with customers. Hi, I'm Jason. I'd like to tell you about my company, Airbnb. We let Susan here, who has three cottages on her property. One is an airstream. One's a cottage. And one of them is the actual main house.

She calls them all cottages. And she rents them. One of them's, $49 a night, the other one's $149, and the main house is $349. She will stay in whichever one the customers are not in. And she has taken her home. She was unemployed. She had been laid off by GE, where she was a senior salesperson. And now she is making as much money as she made at GE. And she loves to make everybody breakfast and make scones in the morning, her famous scones. And she has over 400 reviews in just a year because she's had all different people staying there. You see the way I explain that. It's so illustrative. It's got so much detail that it pulls the investor in. And investors sometimes don't even ask for this. I see

investors get involved in these like intellectual discussions about the product and the market and hypotheticals and product features. And they never ask about the customers. The customers are the true north. It's very hard to fake a customer. And when we do actually spot people faking customers, by the way, they say we have three customers. And I say, okay, tell me where you got each one. and the first one is where they used to work. The second one is their fraternity brother, and the third one's their cousin. And we're like, okay, so you have zero customers.

Let's talk about customers four through ten. Okay, great question. Let's go on to the next one. Hey, Jason. My name is Daniel Craig. I'm the co-founder of a business called Coffee Cake Films. We make videos for businesses for either internal or external purposes.

And my question is, when are you going to be releasing your second book? I loved your first book, Angel. That's my dream to be. become an angel investor. And I'm super excited for your release of your second book. Thanks so much. Great question. I started working on three different book titles, three different actual books, and I decided just over the last couple of months which one I'm going to do first. And it's going to start, unlike the other one where Angel led to Angel University. This one is going to start as a course

where you pay to come to the course, a very small amount, and then you get the book. So I'm going to, Instead of building a course on the book, I'm going to do the course and build into the book so I can get that interaction with folks. So that's the big news is that the course will be announced on July 1st or so. And I'll be doing the first course in July, and I'm going to probably do it monthly for the rest of the year. And then the book will come out next year. So I'd actually start working on the book cover. And I'm really excited about it. Thank you. And in terms of being an angel investor, you can go join the syndicate.com if you're an accredited investor. and I've been working really hard with the Angel University course to train people and build a framework

that maybe even the SEC can use to help non-accredited investors prove that they're smart enough to invest money in private companies. And we really want to become partners with the SEC. And actually, we're going to reach out to them proactively in the coming months. So I hope you become an angel investor as well. And I hope that everybody, including a high school kid or, you know, somebody who's an Uber driver or a waiter or dishwasher would be able to go online at some point and say, you know what, I want to make a $10 bet. I want to make $100 bet on this startup because I believe in it. Why shouldn't you be able to do

that? You can put $100 on the Knicks and lose it. You should be able to put $100 on a startup and lose it. It's your goddamn money. So hopefully that'll change in the next year or so let's take another question. My name's Avery Nimes and I'm the CEO and co-founder of HiraFlux. So we have a program that is able to tell you how well your blogs and social media posts will perform before you post them. And that's using their own unique data. So we're currently targeting marketing and SEO agencies and are doing market research and how we can best serve them.

What is your advice on performing market slash customer research and what's the best way to approach them as a research group but also as future clients? Okay, this is a great question with an embedded promotion in it, well played. I like the idea of analyzing content and how it's going to do prior to publishing it because you have a chance to change it. And in fact, a lot of the at-scale content companies like BuzzFeed and Huffington Post back in the day, I don't know if they still do this.

My understanding of it was they would test 10 headlines on Facebook, see which one got the most likes, and then put another X number of thousands of dollars behind that headline to get the viral nature of the story moving, which if you're thinking about journalism and telling the truth is kind of weird, right? like they're going for what creates the most rage or emotional residents. You know, we've had this discussion before about late stage journalism. But what you're doing and your question is, how do you prove the value? It's very simple. People already have blog posts they've been doing for a long time. So if you were going to go to a company that had written blog posts before,

you would just go to Uber's website or Robin Hood's website. You take Robin Hood's previous blog posts. You run them through your engine and you say, by the way, we looked at the blog post you've already done. These would have done better if you had changed the following things. And we went ahead and did a test on Facebook with the same blog posts, but with three different headlines. And we put $100 against each.

And you can see here, this one that we edited for you would have gotten four times the number of clicks and views and likes. And this one would have gotten seven times the number of replies. So if you're looking for engagement in terms of replies, you should have went with this headline. and if you were looking for likes and clicks, you should have went with this headline because those might be two different things, right? One that asks a question might get replies and one that leaves you wondering like these

three things are going to make your more money in 2021. That one would have got more clicks because you're kind of link baiting people. So long story short, instead of telling people what you can do, which anybody's able to do and everybody does all day long, show them what you've already done because their work is already public. That's the way to do it. I've had people do this with me before where they take clips of the show and they make super cuts of it or they make a trailer and they show me their work. Whenever you can show somebody their work improved, that is a great way to get a meeting.

And that doesn't guarantee you're going to get the sale. But by God, does it incredible when you get a pitch from somebody where they put in more work than just cutting and pasting. So what I would do is I would go after 10 customers instead of 1,000. but I would do, you know, three, four hours of work for each of those 10 customers. And this is just something in general that young people or young startups don't do well. They go for mass as opposed to targeting. You want to really be a sniper. You want to set up that shot, right?

You ever see the snipers? And, you know, they have one person who's a spotter and they're making these minor adjustments. They're checking the wind. And they want to just, boom, snip it. You want to be that, a sniper rather than somebody just machine gunning and spraying and praying, because the spray and prey, you might hit a target, but it's going to be sloppy. What you want to do is pick the high quality target. You want to take out the high quality target.

Be a sniper, not a machine gunner. Okay, let's take another question. Do you want to turn your next idea into a new website? Then you could blog and publish content, sell products and services, promote your physical or online business, or just announce an event or a special project. Well, Squarespace is the answer, not just for me, but for you too. It provides beautiful and customizable templates that are so powerful that they do all the e-commerce work you want to do as well.

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Here's a little demo of my associate Prush. He's browsing the templates and he creates a site and he chooses a photography template because he wants to make a gorgeous superhuman wallpaper.com site to showcase superhuman inbox zero images. And you can build it in just minutes. And it looks gorgeous. Like you spent tens of thousands of dollars on your website

with some fancy, fancy, fancy agency consultant and designers. But nobody needs to know. You just did it with Squarespace. So simple, so easy. Here's your call to action. Go to Squarespace.com for a free trial. And when you're ready to launch, I want you to use the offer code twist. TWIST, TWIST, and you'll save 10% off your first purchase of a website or domain.

Once again, go to Squarespace.com and build a gorgeous website with all that great functionality. And use that promo code twist to save 10% off your first purchase. Okay, let's get back to this amazing episode. Hi, Jason. My name is Dan Hepworth. I'm a rising junior from Duke. from Long Island, New York. And I currently run two startups.

One is called the Massapequa Tudor. It's a peer tutoring company centered on Long Island. And the other is called Student Side. It's a nationwide network, helping high school students connect with college mentors to learn about the colleges they're applying to firsthand. And what I want to ask you is what traits you find in the most successful founders and what steps I can take to develop those traits?

So currently right now I'm trying to learn as much as I can to become the best founder possible by listening to your podcast, obviously, reading books like zero to one and talking to as many experts as I can. But I want to know what steps I can take tangibly to develop the traits that you have seen in the best founders. Thank you. All right. This is a fantastic question. And you know, you're already off to the races by listening to the podcast and building products. There are talkers. There are walkers. There are people who talk about building startups and who want to be rich, who want to be famous, who want to be leaders, who want to be great at the craft of entrepreneurship.

And then there are people who build stuff. And the people who build stuff learn every day. And the people who talk learn nothing every day. Customers are the ultimate feedback loop and learning how to build a product. Oh, my Lord, that is incredible. Now, you've got two businesses going. So that's fine when you're in college, amazing,

that you're doing that. But one of the things that great founders do is they get laser-focused. So you'll probably need to take one of those businesses and turn it off and ice it. Put it on ice and then focus on one. Other skills you're going to need to learn. Obviously building product. Obviously selling. Obviously hiring great people. Marketing. These are blocking and tackling skills that are easily learned by doing and reading and watching YouTube videos. All the secrets are out there. When I went to college in the late 80s, none of these secrets were out there. You could buy a book here or there, but the books were usually five, ten,

years old and they were management books or you could go to an MBA program at NYU or Penn or Harvard or Stanford but I couldn't get into any of those and today you have podcasts you have online tutorials you have YouTube videos you have blog posts that are for every topic there's a thousand blog posts on how to do it so really your job is to sort through this deluge of advice and find the best advice and then apply it. So you're doing everything right. You don't need to be too difficult on yourself. If you're of action, if you're doing something, then you're learning, you're making mistakes, and you're hitting the roadblocks. So ultimately, the greatest skill you can have is in acquiring new skills. So you have to be learn, you have to learn to learn. Let me just say that

again. You need to learn to learn. So just like Tim Ferriss is this incredible learner and he applies it to self-help, you can do the same thing applying Tim Ferriss's techniques and others and just be motivated to learn a new skill every day. And when you see a roadblock, don't think to yourself, I'm not a salesperson or I've never done product design. Think to yourself and just say to yourself, how hard could it be? That's what I always did. I'm not, I wasn't the, brightest kid in the class, obviously, but I was a hustler. And I always just said to myself, I met the product designer, I met the writer, I met the editor, I met the photographer, They don't seem that much smarter than me.

Maybe they're smarter. Maybe they're more skilled. But I think I could learn that. And that fearlessness of not being afraid to learn a new skill is what got me where I am today. I was never afraid. One of the first magazine, Silicon Hour Reporter and Cyber Surfer, Brian and Alvia, I would take the pictures. We'd write the stories.

We would sell the ads. We did everything. We didn't care. And the reason we did everything is we had no resources. But I've carried that forward now, you know, into... my life in my third act as a 49 year old, I just said to myself, how hard could it be to raise a venture fund?

How hard could it be to build a syndicate? How hard could it be to build a podcast? Whatever it is. None of this stuff should be scary to you. And so learning to learn, being resilient, and getting up to 60, 70% of the knowledge and proficiency in a skill is enough.

If you can make a 60, 70% logo, it doesn't have to be the best logo ever built. It can be 60, 70% of perfection. That's good enough. Then move on to the next skill. Okay, you're not the best sales executive ever, but you're 60, 70%, you're better than 60% of them. Good enough. And just keep adding those skills. So then when you hire somebody, you know how to interact with them. You speak the lingo. You've done the job before. And you're more like peers. So you can have this empathy with them. You can have this dialogue with them. Hey, you're doing sales. What kind of collateral do you need?

What's your funnel like? How are you keeping track of your leads? What's the CRM? If you can speak that language, you're going to be in great shape. and it's all online now. That's the great thing about the web. When I started as an entrepreneur, the World Wide Web did not exist. Let me say that again. When I started as an entrepreneur, we did not have the World Wide Web.

That happened in 1993, 94 timeframe. And even at that time frame, it didn't support images. So it was just some text, sometimes flashing text, which is really annoying. That's on the side. So anyway, you're doing everything right.

Great job. And I'll see you in the This Week in Startup Slack. That's another great breakthrough. It's like just going into these communities and asking people for help and asking questions, right? So great job. And I really like your business ideas. All right, Shapar asks,

what is an ideal subject line for a cold email to an angel investor? What kinds of emails catch your eyes? The best thing you can do to get an angel investor to reply is to show traction. So, if your company was FitBod or Com.com, the meditation app, if you said, our meditation app just broke 300 paid subscribers. I'm opening it. And if the top was a chart of your weekly cumulative or your weekly subscribers or both,

those two charts are pulling me in. Performance, traction, that trumps everything. Now, second to that, talking about me, the investor, and why I am the perfect investor for you is another way to do it. So if you said, hey, I'm starting an online yoga app and I know you're an investor in FitBod and I know you're an investor in Com,

and I know your investor in Steasy and meditation, cross-fitness, and dance deserve to are very similar to yoga, which doesn't have a subscription business. We do a yoga pose a day, and we do a yoga, we perfect a yoga pose each day for 365 days a year, and then we do a class every night. So we do two videos every day, perfecting a pose and a class, and we now have 275 paid subscribers at $60 a year. Now you've personalized it to me because you're telling me that my signaling was so good on calm, steasy, and FitBod that I should recognize the opportunity. So that's two things. One, your traction, two, my investor startup fit, investor product fit. So always lead with the traction, even if it's

modest, got our seventh client, got our 17th client, that will separate you from 90% of the emails we get. 90% of the emails an investor gets are from people with ideas. and who are telling us their sob story, begging for money, telling us their entire history, all their pivots. We don't care. We don't have the time. Just tell us, what's the traction? Why am I the perfect investor for you?

And things will go a lot faster. And you're probably saying, well, what if I don't have traction? Then why are you emailing angel investors? Get back to work and get some goddamn traction and separate yourself from the 90% of talkers and be a walker. Okay, let's take another question. All right, Amy asks, top five books you would recommend to an aspiring founder of why? Fantastic question.

All right, I'm going to leave Angel out of it, which would teach you how investors think. I like Creativity, Inc. By Ed Catmille, he was also on the podcast. That gives you a good idea. I like these inspirational ones. Shoe Dog, another great inspirational one. I think that you need to read The Lean Startup. That's sort of blocking and tackling to learn those techniques.

Also on my list, hmm, let me think about this now, because those are the ones that I think are must reads because they'll inspire you. Good to Great is another good one. Yeah, I think good to great would be on that list. It really depends on if you need tactical advice or if you need advice on or inspiration. So I like the inspiration stuff. Who else is another great inspiring? Yeah, I'll go with Who is Mike Ovitz

or we recently read in the This Week in Startups Book Club in the Slack. We recently did Bob Auger's The Ride of a Lifetime. I like these stories about the executives from the 80s and 90s before the internet because you can really see how those media companies were built. I think Pixar, CAA, and Disney all fit into that. And those are what those three books are about. So I just take that triumperate and then add it to Angel and Lean Startup. I think you're off to a good start.

And really a lot of these books will show you that the focus and making products incrementally better and not giving up and that these things take decades, that's one of the reasons to read these books. If you look at Shoe Dog, you can see how Nike grew over decades and exactly how much resiliency Phil Knight had to show. If you look at the Bob Iger book, you can see him just iterating and iterating when he was at ABC Sports all the way through Disney and ABC News and all the innovations they did. When you look at Ed Catmo from when he was building very rudimentary computer graphics in the 70s all the way up into building Toy Story and then eventually getting bought by Disney. Creative Artist Agency.

You really get to see how Mike Ovid's built an entire, he just revolutionized the entire industry of the agency and took over Hollywood. I mean, and packaged together things like Rain Man and Jurassic Park. These are all stories, what all these stories have in common is that they were decades-long arcs and that people innovated and they were relentless in their pursuit of greatness.

It just kept making products better and better and innovating. And really, that's what startup culture is about, is not giving up. taking a decade, multi-decade view and iterating. Look at my career. I'm here I am at the end of my third decade and it's, you know, it's working. And it started working, be honest, in the first decade, but the third decade got pretty damn good. I'll tell you that. All right, let's take another question. We got a lot going on here at Launch My Investment Company. You know we have the podcast and we do the

launch accelerator over a hundred companies have gone for that. We do all over our events like the Angel Summit and Launch Festival Sydney and scale, just tons and tons of stuff to keep organized. and our company has become addicted to a product you may have heard insiders talking about. It's called Notion, N-O-T-I-O-N, notion. Like I've got a notion that you've heard about this. If you haven't, it is an all-in-one tool that does so many different jobs in our organization. You can organize all your notes, documents, projects, and workflows in one spot. In a way, kind of like a to-do list, a project management, or a wiki, or a Google Doc, but it's all in one place.

And you never have to worry about where that information is. It's got all this ability to put different structures of data on one page. And when people send me the reports of what they did for the day, they'll just include a link to their Notion page. And it's almost like a little dashboard for me to see the top level of what they're working on. And here is our associate press showing us his to-do list tracking system that he built on notion. You can see it's customized by how he likes to get track of what he's working on. And as some of you know, I get my team to write what's called an EOD.

Here, this to-do list is just easy way of keeping track of things. He's templated it. So each week, Prush can just click a button and have the layout ready to go. And on top of that, Notion is so customizable that we're able to work exactly the way we want to. We can store meeting notes, trace deal flow, and even track our time spent throughout the day, all customized to our exact preferences. Here is your call to action. To get started, Notion is offering 50% off their team plan for your first year.

This is real money. 50% off the first year. by going to notion.com slash twist. Notion.com slash twist. Once you try it, you'll be surprised about how much it can do for you. Again, notion.com slash twist. I am just delighted that they are supporting the podcast because we're using the product all day long.

And when they said they wanted to reach this audience, our audience, you, the founders out there building great companies, I was like, it's going to be the easiest ad read for me because I am addicted to using the product. Let me know what you see behind the slash key, right? forward slash. You know what I'm talking about if you use notion. Let me know what your favorite is. Okay. Let's get back to this amazing episode. All right. Here's a timely question from Andrew. How has your deal flow been impacted since the virus outbreak? It's gone up. It's gone up massively because people know that I'm one of the investors who are still writing checks. We did seven

companies into our accelerator, 100K check each for the launch accelerator. And I've met none of those in person and we're doing it virtually. I would say a third of VCs are definitely not making investments in 2020. A third are hyperactive and looking at this as an opportunity to invest more. I'm in that group where there's an unique opportunity here to get into great companies and to support founders. And then there's people in the middle who I would say are taking a very measured approach. They want to see what happens.

So they'll selectively make investments. But for sure, I'm seeing many more companies contact me. And I expect that many more companies that have traction are going to be. having flat rounds. So what that means is they may have raised money at, let's just call that a $10 million valuation two years ago. And they had no revenue at that time. They were just a hot startup, great idea, slick product. And here we are two years later, let's say, and they now have $2 million in revenue. Well, they might, their valuation might only, they might have a flat round at $10 million, or they might, their valuation might go up to $12 million, only go up 20%,

even though they added $2 million in revenue. So I look at the value. So I look at the value. that. And what I see is the market was way overheated when they raised that $10 million around. It should have been $4 million. But they filled into it and at $2 million, maybe they should have a $15 million or $20 million, but maybe it will be on sale at $12 million. And so I think the savvy investors are going to look at this and say, this is a unique opportunity when one-third of people have closed for business and one-third are taking a measured approach for that one-third who are not scared. I'm not scared. I'm going to get in there and write these goddamn checks and I'm going to get a piece of the action now while those other two thirds are wondering if they should and they're

curled up in a ball under their desks. When people are scared, we're going to be greedy. And I think that's Warren Buffett's quote. When other people are scared, you want to be greedy. And so we're not greedy necessarily, but yum, yum, we would like to be in business with founders who are building great businesses. And if we can get in at the right price, as an investor, you need to get it, what price you get in matters because your multiple will be based on how low you bought and how high you sold. And I made my investments in Uber, thumbtack, data stacks, Robin, who had all these great companies when the market was very low. And I was able to liquidate some of those when the market was very high.

And here we are, the market's very low again. And I'll just ride the cycle again. It's basically like getting to the beach when the tide's just coming in and it's low tide. You get to get all those great waves as opposed to showing up when the tide's peaked and about to go down. And market timing is everything. So we work through these up and down markets. But that's basically what my life's been like.

A lot more emails. and a lot more Zoom calls, which are exhausting. Like, staring at a Zoom camera all day is brutal. I'm turning my camera off now. I just turn my camera off so I don't have to stare into it, or if I'm looking down, I don't look like a maniac. But we're getting there. We're getting there.

I'm really shocked that I actually made those 700K checks without meeting the founders. I never thought I would do that. But you have to adapt or you die. Okay, Dharma has a blocking and tackling technical question. How important are trademarks and what impact can a great name domain name have on a company? And he hacks for this for sure 100%.

When people see a great domain name like robin hood.com or com.com, this inspires people because it's hard to get those domain names. It's hard to have a one word domain name. And it makes you look like you have a serious brand, inside.com. And a great brand should evoke something in people. com. Inside.com. These, one of them makes you feel calm, because it's calm.com.

And one of them means, hey, we're going to go inside this topic. Inside.com slash transportation, inside.com slash AI, inside.com slash San Francisco. You inherently know what this research is going to be about. And inside.com is like a research company. So if you want to get inside of AI, you just go to inside.com slash AI. So I think it's great. When you have the domain name, you kind of have the trademark. So whoever owns Calm.com, they basically own com, even if somebody else had it.

or they have, you know, there's inside the NBA and inside baseball, right? These two things existed before I own the inside.com trademark. So I can't use inside the NBA, right? I think TNT would be quite upset, or I think inside baseball is actually a long running television show, if I'm not correct. So I can do inside.com slash baseball or inside.com slash NBA and then make it clear this is inside's newsletter about the NBA, but I would not use the branding inside the NBA. And I would not refer to it as such because I don't want to infringe on anybody else with trademark. But that shows you the power of a great domain name is that whoever gets the dot com, they kind of get the best branding in the entire space.

So it's really worth trying to get that dot com eventually. You could start without it. You could have inside.net or inside newsletters.com. That's fine. But if somebody were to create right now, you know, inside artificial intelligence, the podcast, I'm going to beat them with Inside AI. and when we do the Inside AI podcast, eventually, we're going to just outrank them, right?

So that's one of the things that gets baked into having a domain name. If somebody wanted to try to create, you know, a meditation app and say, you know, be calmer.com. It's like all that's going to do is half the people who hear be calmer.com are going to go to calm.com. And they're going to assume calm.com's it. So if you start newsletters that take you inside a topic. dot com, all it's going to do is drive more traffic to me. So that's why you don't want to create a

derivative name that's already known in the world, right? And trademark is a bit of a test. A trademark is just something you spend $1,000 on to officially when you have somebody come at you and do something confusing in the market to say, here's my trademark. Here it is. Iamcom.com, the meditation app. We have it in this vertical. And it's all verticalized. You generally don't have it across all categories unless you have a very unique, weird name like Yahoo or Google. You can't, even Apple, the mighty computer company, can't own Apple records that came before it, or they can't own Apple dry cleaners, or if you wanted to start a restaurant called Apple or a cafe called the Apple Cafe, they can't stop you.

Apple's a generic word. I can't stop you from starting something called Inside, because Inside's in the dictionary. Of course not. But I can stop you with the inside trademark from doing a newsletter that would confuse the public because I have that trademark. You get the idea. So I wouldn't obsess over it, but I would really be. thoughtful about it. And just as another aside, if you can't get the domain name yet and you're

negotiating it, you can get something like get blank. So let's say you were com.com.com and you didn't have the domain yet. You could say becom.com. Now, the app could be called com. And the domain name to get you to the app store would be getcom.com or try. So we have a company called Lately that makes social media tools very slick. If you're a social media manager, go to trylately.com. So they put try in front of it, get any of those words as a prefix or sometimes a suffix like project. You could do the comm project. Com, you know, obviously was lucky enough to get the domain name. And when you have the great domain name, it leads to investors having more confidence in you. One of the reasons I really was interested in investing in Com was that Alex had gottencom.com, a four-letter domain name.

It showed me he had some amazing ability to negotiate with that owner of the domain name and to get something as an asset that was super important in the world. Great question. Okay, Pedro asks, if startups are seeing customer acquisitions slow down, do you have any recommendations to improve retention? This is a great question. I don't think that customer acquisition is slowing down for all startups. Right now in the middle of the pandemic, it's feast or famine. For some people who have public real-world businesses, yes, it's going to be hard for them to acquire customers. They're going have to really retain the customers they have. But for some, people have time on their hands. Maybe they want to try a meditation app. Maybe they want to try trading stocks. Maybe they want to try

you know, looking for homes on Zillow or something. So it really depends on the category. One of the things that's also happened, so the premise of your question I question is customer acquisition cost has gone down. Less people are spending on advertising. All the people who have real world businesses are no longer spending on advertising. If you were seat geek or or Ticketmaster trying to sell tickets, you don't have the ability to sell tickets because there's no real-world events. So those people who bought a lot of ads

on Instagram, Facebook, and Google and YouTube, they're no longer in the market. Their marketing budget is now 0.0. That means if you are steazy and you have a dance app or your com.com and have a meditation app or FitBod or Tonebase, you're trying to teach people classical guitar, you get to have that ad space at a lower price.

So there is cheap ad space to be had in a down market, which means the strong companies will be spending money into the down market to get customers. Now, in terms of keeping people in retention, I think lower prices and longer duration for the subscriptions equals less churn. The more opportunities people to have to churn, the more frequently they will. So I would never, ever sell monthly. I would always sell yearly and charge a much lower price for yearly. So you only have one time a year that you're asking people to renew. com.com, I think when they started, was $10 to buy the app one time. Then it was $10 a month.

And I think now they kind of settled at around $60 a year. And then you can buy a two year maybe for $99. So if those people buy a one or two year, that means they don't have to ask them again. And you don't have this cognitive dissonance or this tyranny of, of making a decision as a consumer every month. That's why when Disney Plus came out at $7.99 or $699, I think was their introductory price. They also had $69 a year or $59 a year as an introductory price. When I saw that, I was like, yes, yearly.

And if they had offered a five year, I would have just bought it five years for $250. I know Disney Plus isn't going anywhere. Why they didn't do that, I have no idea. They should literally offer a 10-year Disney subscription for $500. They would crush it. Somebody send this to Bob Iger. Bob Iger, you should offer a 10-year. $600 subscription or $500 subscription that comes with one free ticket to Disneyland,

you would have so much cash come in, it would be ridiculous. And then you get to book that cash. I'm sorry, get that cash flow in now and then book it over time. Man, it's a big win. So that's how you reduce churn is not being monthly, but lowering the price and letting people make a decision yearly. Because if they get even a modest amount of value from what you're offering, they're not going to unsubscribe.

If you like the Mandalorian and it comes out once a year, and you pay 60 bucks a year, that's what it costs to take your family to a movie anyway, right? Five people go into a movie a year. That would used to be 15 bucks here. So it's like $100 basically to go to the movies and buy popcorn. $60 a year, I go see 10 episodes of The Mandalorian. Easy, peasy decision.

So lower the price and extend the duration of the subscription, and you'll see retention plummet. Great question. Well, everybody, the last few months have certainly taught us what's important in life. It's also taught us what we need to eliminate a close. even change. It's the same for business. What are the changes you need to make? Do you have a hairball of multiple software systems? And you could streamline on just one? Well, all you need is NetSuite by Oracle, the world's number one cloud business system. Finance, HR, inventory, e-commerce,

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in startups. It means a lot to our community that you've been with us for so many years and supported us so deeply. And I personally appreciate it. Let's get back to this amazing episode. Okay, we got a question from Ivan, which is really prescient.

How are VCs sizing up founders without physically meeting them? What are your tips on evaluating, recognizing any it factors over Zoom? I cannot get a read on people over Zoom. Zoom, nor am I trying to get a read on them. There's no body language. We're not in the same room. We don't have that extra like half hour of, you know, getting to know each other before and after the meeting and making small talk. So when you're making decisions now, it's really going to be based on diligence. So I stopped trying to make this decision based on what I normally do, which is half diligence and half my read on the person. I've gone 100% to diligence. That's it. I'm not going to even try to read you. It's like playing online poker. Online poker, you don't have the ability to read somebody. So you just go with the data you have, which is how much did they bet? What position are they in?

What do they do the last 10 hands? Here, I'm just looking at what's their customer base? What do their customers say about them? What's their revenue? How's their revenue growing? What's the quality of that revenue? What are the cohort data? That's what we've moved to, to be totally honest.

And looking at the product. So I think if you are a founder trying to raise money right now, you really want to lean into having really clean data sets and a really clean data room because you're not going to be able to rely on your presentation ability over the next year. You're going to have to rely on the actual data, the actual customer testimonials. So really dial those in. I would rather see you have 10 great customer testimonials and 10 great months of cohort data that you really parse and understand that you can speak about critically. And then don't worry about the presentation. Let the data be your guide as the fact.

And then for investors, same thing. If you're a great reader of people, you're not going to have that ability. It's going to be muted. So really just look at the data. And so what that means is overall, the people who win in a Dow market are the people with performance. The people who lose are the people who are raising money based on charisma or their ability to spin a yarn.

That's over for now. And maybe it's over for a year. Maybe it's over for three months. Nobody knows. But really get focused on your data room. Get focused on your customer testimonials. get focused on your cohort analysis. If you don't know what any of those things are, Google them.

Let's take another question. Okay, Jerry asks better to offer a free version of a product with limited functionality or offer the full product free for a 30-day trial and then look to convert. Both of these can work. I've heard arguments on both sides. Here's the argument for giving people a time-based trial and letting them use all features. If you let them use all features, they know what all the features are and they get to experience it fully and then they time out and then they pay. So the argument for limited functionality is,

okay, they really want to try to use that feature and they're frustrated and then they pay. It really does vary by product. I think you have to look at exactly what kind of product you have. If you look at Slack, the free version, most people who use Slack don't know that they have Zoom essentially built in because that's not in the free version or they don't know that groups exist or that some of these other really nuanced features exist like analytics. And so I really don't like the way Slack does it, which is they give you a version that doesn't work and doesn't show you all the features and then you upgrade to unlock those features. I would much rather see Slack give you all the features and then say, you know, these features turn off

at 60 days or 30 days. But I think what Slack's doing is a little bit of a hybrid. When we started that this week and started up Slack, we didn't have the advanced features. Obviously, we're not paying for 25,000 people, $6 a month.

And, you know, there's a couple thousand who are active. So I think our bill would be probably $30,000 a month, a half a million dollars a year. It's a free Slack. And so we're actually looking at Discord, which people say is better for large groups. I don't know if it is,

but we're going to stick with Slack for now. We might try Discord later. But all of a sudden, we woke up one day and Slack had turned on the premium version for us, so we were able to see our analytics. And I was like, wow, this is cool. Seeing our analytics is not worth a half million dollars a year, obviously, even if we could charge the people in the Slack to pay for it. Like, it's interesting to look at the analytics, but it's not going to make us convert. But groups was a really interesting one.

So you can make groups of users, right? We could have the New York users in one group, et cetera. So I could understand why a corporation would want those features. So that's a hybrid system. of these can work. It really is product dependent. You can test it. It also depends on how expensive your product is too. So for something like Canva, they may let you use most of the features for free. And then you hit a roll block. I think when you hit the libraries of the templates, but you can still see the templates. You just can't use them. So that's a nice friction point because it's like,

well, I see the template, but I can't save it or use it unless I pay $8. Well, $8 is nothing. So I think it really depends. One of the problems with like a Slack or like a sales force is those products are so expensive that the, if you discover a tiny feature that you like, it's still maybe too expensive for you to turn it on. So this is where it's really about looking at the data and really understanding your product and how many features it does have. And if you have a sales team or not, if you don't have a sales team, well, you know, you might be better off doing. the time-based one where they can see everything and then it turns off. If you do have a sales team, maybe it's better that you don't let people even try the product without filling out a form, contacting a sales version and having them turn it on so they can start the dialogue, right?

So there's actually a third piece that you missed out here, which is give us your information for us to set up a trial and a demo for you. I think that that's what high-end products do. And then the more lower-priced products, let's call it, under $10 a month, will probably do one of these two other methods. And there's a new one that emerged, actually on this podcast itself. We see folks like Zendesk or Notion giving the product for free for the first year or half price for the first year for startups that don't have a Series A or have under 10 million or under 50 users. So there's this new concept, at least for SaaS, of let's not even try to make money off the small companies. Let's just get them addicted to it. And if they happen to grow past 25 or 50

employees, if they happen to raise $10 million or more, then we'll charge them because they can afford it. But for the companies that can't afford it, why not be a mensch and support them by giving them the product free or with a steep discount? I also think HubSpot had a startup program as well when they were an advertiser on this weekend startups last year. So the startup programs is a third, a fourth vector here. In another spin, you might want to try. Great question. All right, Naim, I hope I didn't butcher that, has a question. Having tried. seeing sticky user behavior. Should we push new products in search of product market fit or focus on improving existing products and finding the right market for them? This is a timeless

question. A lot of people go on the feature Death March where they just make a new feature every three months for 18 months, whatever their funding is, and they try six things, none of them stick, and they shut the company down. And then people are worth wondering, you know, the third thing we tried had the most life in it. If we hadn't even messed with ideas four, five, and six, and we had just tripled down on number three, I think we would have got product market fit. And so what I always like to do is, is there a sign of life in this feature? Let's double it and see if the usage doubles. And so I'll give an example of that. We used to do this week startups once a week, and then we did it twice a week, and we did better. And now we're doing it

three times a week. And this is like a classic challenge for people, is this focus ability. And then I see founders who have what we call in the business founder ADD. It's not a little clinical like you have ADD or ADHD. But the founder can't stick to one thing long enough to go deep. And I would say more often than not, startups die because they're founder ADD than founder focus and obsession over one thing. If you know that your customers are getting value from that one thing, keep making it better.

And you need only look at Facebook and Uber and Airbnb. These companies were relentless at focusing on the core product and not add second and third products for a long time. Facebook was really focused on making your wall and posting to your wall and building out your social graph the focus for years. They didn't add groups. They didn't add their marketplace, their Craigslist, Killers, Story. buying Instagram, all of this other stuff, the portal. They didn't do all that stuff until years 5, 6, 7, 8, 9, 10. They were focused for those first five years just on getting everybody on the platform and

building out that social graph, which led to this incredible foundation on which to build. So if the foundation is building and getting stronger and the footprint's getting bigger, why would you build up when you could build out? Build out that giant foundation and then build up. another example is Airbnb. They just kept getting more inventory on the core product and then they added experiences. And people said, well, why don't you own and operate? Why don't you do get around and have cars?

Nope. They just wanted to build out that foundation of getting you an instant booking for a room for $50 to $250 a night and just crushing those one, two, three, four star hotels. One, two, three star hotels, really. The four and five star hotels did fine. But those one, two, and three star hotels that were, $50, 100 bucks, those were the ones that got demolished by Airbnb because they were so relentlessly focused.

Also Uber. They didn't add Uber Eats until years five or six. They didn't add UberPool until year five or six. They were really focused on ride sharing and Lyft remains focused on ride sharing without ever adding a second product. So focus almost always if you have a product that's getting traction is a better idea. Now, there is the question of, hey, we've been focusing on this one feature and it's a top. out at a thousand users and we can't get the next thousand.

Well, then you have to talk to those next thousand and say, why aren't you doing? It's an issue of price. Do they not need the product? And you just got to do a little product discovery there. And what that would mean is you're probably just going to shut down that first product and then start over with what you learned and pivoted to something else. So there's pivoting. And then there's just adding features that nobody needs.

You want a feature that everybody's going to use frequently like Uber-Rates or meditation, anything that people are going to use over and over and over again and get massive value from, that's when you get a big win. Okay, great question.