This Week in Startups - E982: Karmic Bikes Founder Hong Quan on creating the “Tesla of E-Bikes” with OSLO, bootstrapping through Kickstarter, lowering costs as a strategy, insights on U.S. resistance to widespread E-Bike adoption, & why this vehicle is the future of transportation, plus Office Hours with Jason!

Episode Date: October 1, 2019

1:10 Jason intros Hong Quan from Karmic Bikes 2:55 What is the OSLO bike? 4:10 Why are there separate classifications for e-bike laws? 9:15 What does OSLO cost? 12:35 How Karmic bikes are different 14:55 Why e-bikes haven't taken off in the US? 16:52 Is Palo Alto the most bike-friendly city in America? 17:28 Hong shows the OSLO Kickstarter Video 21:45 Why not go the scooter route? 27:34 Hong raps for Jason (yes, really) 33:06 Open Office Hours with Jason 33:18 Jason intros Mark from ZenSports, a P2P sports betting startup 40:22 Mark asks Jason how to attract investors as a "Vice tech" company

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. Send Pro Online from Pitney Bowes. Save time and money no matter what you ship or mail. Try it free for 30 days and get a free 10-pound scale when you visit pv.com slash twist.

And Monday. Monday.com not only helps teams manage work and meet deadlines, but also builds a culture of transparency to work better together. Manage all your core business activities in one place. Start your 14-day free trial by going to Monday.com slash twist, then use promo code Twist to get 10% off of a paid account. Upcoming launch events. Get your free founder pass or purchase a VIP ticket for Launch Scale in San Francisco, October 7th and 8th, at Launchscale.net. Tickets. Apply for the next launch accelerator cohort. Applications are due October 14. Learn more and apply at launch accelerator.com.

Cities are getting crowded and congested, and it sucks to sit in traffic. There are a small number of solutions that will solve this problem. One of them is Elon Musk, digging tunnels. The other is Elon Musk and Uber making self-driving cars. The third is micromobility. And micromobility is perhaps the easiest of all of these. People right now in America don't like to ride bikes. We're fat. We're lazy. We don't want to sweat. Other countries? Norway, Sweden, all these places, they have people riding bicycles everywhere.

And they protect them in protected roads and bike lanes so they feel safe. It's super clear to everybody. that micromobility is a game changer. We see it in Santa Monica already with the lime and the bird scooters. And we've seen it on the pli at Burning Man where everybody has electric bikes and they zip around all week long. Well, my next guest has been working in batteries and electric cars and electric bikes. I think you've been doing it for what? A decade, huh?

Yeah, it's been a decade. Hong Kwan is with us. He is not part of the first name club on Twitter. He's part of the last name club. He's at Kwan, Qua, and if you want to follow him. And Hong Kwan is the CEO and co-founder of Karmic Bikes, which you can see at, is it Karmicbikes.com? It's now just karmic.c.c.c. Very good. What is the dot-ccc? Well, for us, it's, I think it's Caribbean Islands or.

Oh, okay. Caribbean? Yeah, something. But for us, CC is a city cycle. City cycle. I like it. Yeah. Now, you've come out with this new Oslo bike, which I just rode around. Yes. Is this your third swing at the bat? Your third version? It's the third public version. We've taken many swings at the bat.

This is the third one that we've shown. Okay. The bike is stunning. I'll show it now. You can see me riding around. We'll include the B-roll here. The bike is gorgeous. It looks like a bike that maybe Apple would make.

We've heard that, yes. You've heard that. What's different about this electric bike or scooter? What category is it? Yep. How fast does it go? And how much does it cost? That's what everybody wants to know.

How fast? And what does it cost? Yes. So I think you're right about the point about our cities are getting congested. There's only so many solutions. For us, Better, Fast, or Cheaper has always been the goal. Better, faster, cheaper, a great way to build a startup. Yep.

So we've had two other models. And I'll explain the class system. It's a California law that's now in 20 other states or 23 other states. So it covers most of the U.S. at this point in terms of population. What's the name of this law? It's just California e-bike law. Oh, there's. There's a e-bike law.

Yes, there is. When did that start? I want to say like three or four years ago. Got it. But we were building products for it before the law was passed because we knew it was coming. Ah, okay. Why do they need separate laws for e-bikes? Yeah, so that's a great question.

I think the laws allow cities, in jurisdictions, towns, to decide who gets to use them where. Okay. Why wouldn't they just say use it where everything you use a bike? So in a way, they are saying that with the class one. It's basically a bike. So anywhere you go that a bike can go, you can take a class one bike. Got it. And that includes now recently in national parks.

So federal, you know, you can take it to USM, and you can take it to Yellowstone. And the class one bike is defined as? 20 miles an hour. And you have to pedal. So in Europe, it's called pedal electric because it only assists when you pedal. Got it. And then we do a class three, which is the same idea, but the speed limit is now 28. Okay.

Now we skipped over two. Yes. So two is the key thing. Nobody's really building great products at class two. And that's what the Oslo is. Okay. So class two keeps the 20-mile-hour speed limit of a class one bike, but now allows you to use the throttle as well. Ah.

So just a recap for the people following along at home here, California came up with a classification system. Yes. Class 1, 20 miles per hour if you're pedaling. So you have to sweat. You have to put something into it. Yes. But you can go 20 miles an hour and could be 100 percent. electric, but you have to just be paddling.

Yeah. Which is a little bit weird. Yeah. But I guess, because I see people riding all the time at 30, 40, 50 miles an hour on their bikes without electric. Sure. So this doesn't make any sense to you, or is it weird? It's not weird. It's, so the way we explain it is the speed limit is what the bike will assist you up to.

You can go faster. Okay. You know, you can pedal faster than that. The bike is not limited in terms of like. But the electric assist is limited at 20. So you have a governor on it. Yes. That says at 20 miles an hour, no more juice.

Exactly. Okay. Now, class two, you can use a throttle. You don't have to use the pedals. But I was just on your bike. It has pedals. Sure. Do the pedals actually, are they functional or just for your feet to rest somewhere?

They will be functional. Okay. But the pedal is what makes it an e-bike still. Got it. If we were to launch it without pedals, which we can, it would be considered a scooter, like the kick scooter in some jurisdictions. Got it. And the kick scooter can go up to what speed? I think, you know, there's no clear law around it. I think right now it's around 15 to 18 miles an hour.

Got it. And then I used to drive a Vespa in New York. Yep. That was, I think, they did a 49 cc's was how they used to do, which I guess was the power of the engine. They still do. It's the size of the engine. Okay. And that meant it could go about 32 miles an hour. Yeah. On a downhill, maybe I get up to 35. You weren't supposed to take it on the highways, but I took it over the bridge. Brooklyn Bridge a couple times. I put the hazard lights on.

Sure. Deal with it. That's right. You know, I get honked by some people. I'm from New York. It's from New York. Yeah. Why? And then three is, you can go 28 miles per hour. Yes. Which is starting to feel like a scooter. But you don't need a driver's license for any of these. Nope. So you can go 28 miles per hour without a driver's license. But if you drive a 49cc, 28 miles per hour, you do need a license.

And not just a license, right? If you own a vest, but you don't pain in the ass. I'm sorry, pain in the butt. It could be a pain in the ass. It's a license. Registration. You need motorcycle license. You need a license plate.

You don't need a motorcycle license if it's Ford-N-C-R-L. A driver. It's a driver's license. So in California, you have different motorcycle classes, too. So you have M-1 or M-2 licensing. I think there's age limits for mopeds. So this makes no sense to me. But sometimes the law and governments don't make sense.

but if a VESPA with a motor engine as opposed to electric goes the same speed, essentially, but you need a driver's license and insurance. That's so weird. Yeah. It's just historical, I guess. It is. It's kind of a carryover from older form factors. And so I actually got into a Twitter argument with somebody who said,

you shouldn't be making e-bikes in the bike industry. You should leave it to Honda and VESPA. It makes no sense either. Yeah. Well. It makes no sense. Yeah. All right.

So we got the speed. This thing's going to go up to 28? 20. Just 20. Yeah. Are you going to make a version to 28? We can, but until the law has changed, it's really difficult to. We don't want to sell anything that's illegal.

Wait, wait. I thought you said three could go up to 28. Yes, three can go up to 28. Okay. Yeah. So the Oslo, the third version. You can't have a throttle then. Oh, you can't have a throttle?

Yes. Okay. So 20 is the limit. Yes. If somebody was industrious, would they be able to take a throttle? the governor off, it would deal a lot of work, right? We would not recommend it. You don't recommend it.

Yeah. But when I was in New York, people would do this. They would take the governor's off of stuff and zip, zip, zip. So it's possible. It's possible if you own the vehicle. We can't tell you. You can't do it. Yeah, we can't tell you what to do or not to do.

I mean, it's a free country, right? What does it cost? So this is the thing. Everybody thinks these e-bikes, and we were selling premium e-bikes. A premium e-bike in the U.S. average is $2,500. They go up to $5,000 or $6,000. And at the very high end, they're actually 15 or close to $20,000 for a bicycle still.

You still have to pedal. All right. Yeah. This is why I thought e-bikes were D-O-A, dead on arrival. $2,500 is like, that's just, you could buy two Vespas for that. Yes. Not a Vespa brand, but you could buy two Honda. You can use it.

Yeah, you get a used Vespa for that. Use Vesta for less than that probably. Yeah. Easy. So for us, when we started with this design, the price point was really critical. We said we had to bring it out at $14.99. $1,500. Yes.

Wow. Yeah. Can you make a living off of that? We can. So we still make a good margin. We don't make as much as we do on our other products, but the goal is to sell a lot more of these. Okay. It seems to me that these have not become super popular in America yet.

When we get back from this quick break, I want to know why. Why haven't e-bikes become a phenomenon like they are in Germany and in Scandinavian countries when we get back on this week in Sterling. I know you want to turn your idea. into a beautiful website. You want to start a company. You want to start a project. Maybe you want to blog or maybe publish some content. Maybe you want to sell a product or even a service.

Maybe you want to promote your physical or online business. Well, Squarespace is the answer. You know this. I use it. You use it. We all love it. Why do we love it? Because it provides beautiful, customizable templates.

And such powerful e-commerce functionality. And you put those two things together. Wow, that is catalytic. And you can buy domains there, of course, from over 200 extensions. So you find a great name for your business. You put up a beautiful website from all those gorgeous responsive templates that work on iPad, phone, desktop, wide desktop, you know, narrow desktops. It just works.

And you get a great domain name with it. You get great analytics. You get the search engine optimization, free and secure hosting, and 24 by 7 award-winning customer support. Here's Prash making a new website for us. SuperhumanWallpaper.com. I asked them to make an example website as fast as fast. as beautifully as he could. And look what he did. He browsed the templates. He selected a beautiful photography template and he creates an active website within minutes. Here it is, superhuman

wallpaper.com, a site to showcase superhuman inbox zero images. Very clever, fresh. Okay, here's what you need to do. You think beautiful website with great functionality and great support. I want you to just think Squarespace. So go to Squarespace.com and get a free trial right now. And when you're ready to launch your website, you just use the offer code twist and you get 10% off your first purchase of a website or domain. Please don't forget to use Twist, TWIST, when you launch your website. Okay, thanks again to Squarespace for being one of our longest running partners on this weekend startups.

It really means a lot to be. Companies done amazing. It's been great to grow alongside of you and the whole team over there. So thanks again, Squarespace. All right, let's get back to this amazing episode. Hey, everybody, welcome back to this weekend startups. My guest is Hong Kwan. He is Q-U-A-N on the Twitter, and it's karmic.cc.

They make electric bikes. They've been doing it for about five years. You raise a bunch of money for this company? We have not. You're a bootstrapper. Yeah. Maybe you become a Pegasus. Maybe we should talk about that.

Yeah. So you've been bootstrapping this. You make some bikes, you sell some bikes. You had two versions before this. Yes. How many of those did you sell? Hundreds, thousands? Hundreds.

Hundreds. So they were kind of bespoke. Yeah, you would say that. And these were the ones that had like the big battery brick attached to the frame of a bike. That was the first generation of e-bikes. Yeah, it was five years ago. Were those your bikes or commodity bikes? commodity batteries, and you put it together, and you were the software layer?

So we're the brand. Got it. And the way the bike industry works is pretty much everybody uses similar suppliers and componentry. Got it. But when we developed the Coben, again, four or five years ago, it was the first premium e-bike, meaning mid-drive motor, modern battery. What does that mean mid-drive motor? So the cheaper e-bikes that had been around for 10 years before use kind of a hub motor.

The motor was in the wheel. Got it. They're really heavy. They're kind of like clunky. and mid-drive motor moves the motor towards the middle of the bike. So think of it like a 9-11. Well, 9-11 is not the right example.

Maybe like an old VW bug with the motor in the back or like a Porsche boxer with the motor in the middle. Got it. Awesome. So that means better stability, better ride quality. Everything. So you've been selling these bespoke ones, but then you decided to make your own.

Yeah. And that means you had to do the industrial design and make all unique components. That means it's much more expensive, isn't it? To do that? Yeah, it is a lot more expensive. Got it. So you're running a Kickstarter now. We are. And you can buy one of these Oslo's today. You can pre-order one, yes. You can pre-order one. I'm sorry, not buy. You can pre-order. And how much will it cost? You said $1,500? $1,500 for the Founder Editions. Got it. Yeah. So the price might go down after that. The price might go up.

Might go up. Yeah. How many founder additions are you targeting and how many of you sell so far? We only have 99. Okay. And I think we sold maybe 20, 25. Okay. I'm going to buy one. Yeah, I want to get one of those. Awesome. Yeah, it would be fun to keep at the office here. Let's got to have everybody sign a waiver, okay, if you use it at the office. How many miles does it go? Right now, the small battery pack that we have already developed is 20 to 25 miles.

Okay, that's not bad. You can zip around town for, what, two hours, an hour? Yeah, about an hour and a half. And then the big battery will be another 500 bucks or something on top? Yeah, so it would be twice the size. And twice a size. So you can ride for two hours. Yeah, or 50 miles up to.

Oh, that's more than enough. That's a pretty good commute. That might be a few days worth. the commuting. Yeah, absolutely. Why hasn't this taken on? What is your perception of why e-bikes are not as popular here in America as they are in European cities and obviously China?

Yeah, so there's two big things. Number one, which we address is price point. $2,500 for a bike is still a lot of money for most people. Even $1,500, I think we still need to convince people that they're going to be using enough. It's going to offset your Uber rides going to be cheaper than even public transit. Easy on the Uber rides, okay. I mean, if you...

You balance it out. Yeah, you balance it out. You balance it out. We're not saying you use one or the other, but no, it would make sense, actually, if you were, if you were a $5 a day each way commute for Uber pool or Lyft line or whatever, $10 a day in commuting, whatever number of days, five days a week, $50 a week, $200 a month. You could pay for this thing in seven months. Totally. And you can use it once or twice a week. It doesn't matter, right?

It doesn't have to be that consistent commuter. Yeah. The second thing, and it's kind of my own understanding of it. And again, I've only been doing this for a few years. So the bike industry itself has been very reluctant to sell these products. When we first started, you know, again, 2014, nobody wanted to really make e-bikes. And we said, well, look, in Europe and Asia, it's taking off, it's going to be huge. It's going to be the biggest thing in the U.S.

And the bike industry as a whole just kind of said, no, we're not interested. We don't want to sell those things. They're cheating. Cheater bikes, they call them. So. industry just wasn't down with it. No. Have they changed their tune a little bit?

Yes, very much so. Cool. So in Europe, if you go to Eurobike now, it's, it went from basically like 20, 30% of the bike show to now pretty much 95% of the bike show. So every single brand. So the idea of buying a bike that doesn't have it. It's crazy. It's crazy.

Yeah, in Europe. In Europe. In Europe. Because they're using them to commute. Is it also because of the safety in Europe is higher because they have the safety in Europe is higher because they have the. the bike lanes? Yeah, for sure. What's the safest city in America who's got the most progressive bike lanes, bike protections? So I'm biased, but I think it's Palo Alto. Really? Yeah.

And so how has Palo Alto addressed it? We have protected lanes. We have European-style intersections. I've got a roundabout, you know, right the next block over from my house. My kids ride to school every day. If we're talking about how do you get a majority of the population to ride, look at Palo Alto schools. We get 50, 60 percent of our students riding bikes. Huh. But they all stop when they get a job or something like that. Interesting. Yeah. Let's play the Kickstarter video.

I think you spend a lot of money out. Let's take a look. Let's take a look at this. Beautiful. I like the name, Karamik Oslo. Thanks. This is a sexy video. Nice logo, good font.

And the bike is stunning. Where is the battery? The battery is going to be in the C-tube. The C-tube. Got it. Again, keeps the mass centralized, keeps the handling really nice. And there's your first version. Very beautiful.

Going up a hill in Pack Heights, it looks like. Yep. And there it is at Chrissy Field, the Kyoto. And if you notice, all the bikes had batteries in the C-tube. Yeah. So. Good place to put it for weight. Yes, the best place.

The best place. It makes it more stable. And then why are, I noticed one of the key elements here is that the wheels have, they're solid instead of spokes. I would assume there's spokes underneath them. They are spoked underneath. So what are the covers for it? Is just aesthetics? Yeah, it's aesthetic.

It's an arrow of disc cover. Arrow disc cover But it doesn't do anything in terms of efficiency It's just aesthetic A little bit but not enough Well wouldn't having the wind blow Into a solid object make it more

We worse For a crosswind Potentially yes Yeah I mean but it's probably not even noticeable Not at these speeds Yeah And so Also I notice you can get on and off

It's super easy Yes So you don't have What do they call the bar that goes across the horizontal bar the top tube or the cross bar the cross bar no cross bar no top bar top tube you can just get on and off is that the key key feature that makes it more accessible yeah for sure yeah designed this from day one with the design team you sat down and said how do we make a bike that a a look like it's from the future

and b is really inviting got it all right when we get back from this quick break i want to ask you a tough question you're a bootstrapper you got you got you're 22k here you're 10 percent of the way to go you get 25 backers i'll get in there We'll get it up a little bit after this. What's the story with the competition having billions of dollars to splash around and throw these things on the streets and not make people pay $1,500 up front? How do you compete against Byrd and some of the other products out there with a different business model when we get back on this week in service? You are a busy founder. We know this.

And you should not be waiting in line at the post office. You need to send packages all the time. I know that. I do too. Well, you're going to do that right now by not searching for postal raids, not searching for packaging. Nope. You're going to go to Send Pro Online from Pitney Bowes and you'll be able to send all of your packages, all of your mail, right from your desk, or as low as $4.99 a month. It's basically free.

And no matter what you send, the packages, overnights, or letters are going to get there perfectly. Just click, send, and save with this offer for $7. Send Pro Online. For $4.99 a month, you can print and ship labels, okay, nice and easy, as well as stamps. No more going to your post office. You can get those stamps right off your own printer, and you're going to compare the rates using their online software, so you get the best deal. And you're going to gain access to very special USPS savings for letters and priority mail shipping. People don't know about priority mail from the U.S. Postal Service, but it is awesome. And it's affordable. So you can track your shipments and get email notifications when they arrive.

Here's your call to action. This week and startup listeners receive a free 30-day trial plus a free 10-pound scale to accurately weigh packages because that's usually the overpaying. You just throw 20 extra stamps on there because you don't want to get it sent back. That's dumb. Get the free skill, people. Go to pb.com slash twist. pb.com slash twist to get your free 30-day trial plus a free 10-pound scale.

experience the better way to ship with a free trial of Send Pro Online from Pitney Bowes. Save time and money. Okay, let's get back to this amazing episode. All right, we're back on this weekend startups. My guest is Han Kwan from Karmik Bikes. He has the new bike out. It's called the Oslo. And you can pre-order it now on the Kickstarter.

Just type in, I guess, Oslo, Carmic Bike. You'll find her go to carmoc.c.c. You can follow Kwan. He's Q-U-A-N on the Twitter. Why? Are you selling these instead of throwing them on the street and hoping people don't throw them off the Santa Monica Pier? Well, number one, the bike for me is pretty precious.

We've spent a lot of time and effort. It would really hurt to see somebody throw this off to the Santa Monica Pier. You realize the lifeguards all have to go to the Santa Monica Pier and get the lime and bird scooters out of the water. They said they take like 10 out a month. It's crazy. We obviously heard all about scooters when we went fundraising. People were asking us, is this a scooter?

And for me, you know, being our age, I said, yeah, it's a scooter, like a VESPA is a scooter, not a kick scooter, not these things that are out on the streets today. Yep. But you didn't raise money to compete against them with their model. Why? Well, there's two parts. One is we want to do a different business model. Okay.

That takes into consideration in the community and the effects of the environment and things like scooters sitting at the bottom of a lake. Got it. Number two is, to be honest, we couldn't raise money because the scooter startups kind of just sucked the air out of the room. They did. Yeah. And now people are realizing the unit economics. are not working. Explain why that is

with your inside knowledge. I think some of them have started to figure it out, like I think Bird has. But all the other ones, my understanding is, from my inside information, is that they have negative unit economics.

What does that mean? Explain it if you can. So the easy way to explain negative unit economics to people is if I tried to sell you a dollar, but I charge you 50 cents, I'd have unlimited buyers. For sure.

Right. What we're trying to do is sell something that costs 50 cents for a dollar. All right. It's that simple. It's going to take me a minute here to understand this, but you're saying have a profit. Of course.

So their union economics are terrible because if they're charging $3 a ride and the scooter cost X amount to make and put on the street, let's say, $500 a thousand dollars. They need whatever, 200 rides to break even, not counting, charging it. Yes. Then you take in the licensing. There's licensing fees, I think, for cities now. Permitting, yeah. Permitting, what is it, $100 a year?

or something? No, it's more. It's per scooter. Yeah, yeah. So it's on the order of, you know, 50 to 100 per scooter. Right. So they have to bake that into the expense. And if you get to $4 or $5 per ride, well, people are going to buy them or take an Uber

or Lyft line. Yes. Or Uber pool. Yeah. So they lose their value proposition. Right. They have to tread this really fine line between charging enough to not lose money, but not charging too much to lose ridership.

Can it work? Do you believe it can work knowing what you know? Because what is the average scooter ride? $3? It's about $3 to $5. Which is half of an Uber. Yeah. Or lift, I would assume, for the same distance.

Yeah. Is that right? They usually are less than a mile, though. So it only replaces a certain percentage of Uber rides. It doesn't replace all of them. But just apples to apples, if an Uber ride for a mile or a lift ride was six or seven, it'd be about half. Yeah. So if it was six to ten, it's three to six.

Right. At that $3 to $6, could it ever work, or is it just always going to be bad? It's not going to be price parity with the ride share. It can't be. Why? It has to be a cheaper option because there's compromises to it, right? Oh, yes. It can't.

But my point is, yes. So it can't be the same price as an Uber. What I'm saying is can it be profitable at that $3 to $6 for a short ride? Not right now. What would it take? What would it take? What would it take? New hardware?

What would the hardware have to cost? And what's missing from the hardware today? Is it that they break down too much? Is it for maintenance costs? Or is it the battery? Yeah. And the recharging? To be honest, it's all of it.

The charging is a big part of it. There's a huge operational costs involved around charging right now with the scooters that they're currently using, which are Xiaomi or Segway provided units. You have to take them in every night to charge them. Ah. So it just kills everything. What do they pay people? Because they use a network and they pay people to charge them at home.

What do they give them to charge them? It used to be a few dollars. Now I think it's being more competitive. So, again, you have to work this balance sheet where you're paying the charges enough for them to actually do it, but not enough that you're losing money every day on every single scooter. Got it. So I think they have to pay, what do they pay them, two or three dollars? We'll look it up. They do. So they pay people to go find a bunch of scooters at night, put them into a back of their van, go home, plug them in. How long do they take to charge typically? What is yours take to charge? It's probably the same. It's about four to five hours. So overnight.

So they have to charge them. Then they have to go out and place them. Yes. So it's sort of like being an Uber driver, except instead of driving people, you're just collecting all these scooters and putting them back out. Yeah, so most of the scooter companies are relying on what they call the gig economy. There's only a few of them that use their own workforce. Why isn't there a public charging network for scooters like this? Like wouldn't it be really easy for bird, lime, yourself? Because these things plug into a 110 volt to just have outside of every Starbucks a little parking space with a bunch of plugs. You plug it in and Starbucks gets the marketing or something for it. So I'm smiling because I wonder if you already saw our pitch deck.

I didn't. Okay. Oh, is that your idea? Is your part of your concept? Yeah. Yeah, it does seem to me that that would be the big win. Like if you're Starbucks or a restaurant, having these outside is a draw. And letting people plug them in is a really good one.

So you're thinking about maybe raising money and going head to head with them in some different model. Yeah, so we think we can make it profitable with a different business model. Actually, I wrote a rap song about it. I don't know if you want to hear it. Yeah, I do want to hear it. But, you know, it's getting a little repetitive with the guests who are coming on the podcast. Like, just please one rap per guest. going forward.

I will limit you to one wrap. We'll see if we can find a public domain beat for you, but no, we'll beatbox it. But yeah, five to $20 per charge is what Bird pays. Wow, that's a lot. But you've got to be 18 years old, okay? And you've got to drop off the scooters

between five and 70. Wait, up to $20 per scooter? I guess so. That's a lot. Yeah, they don't make that much for a day. I'm guessing it's $5 per scooter. Okay, three, two, wrap. All right.

So the wrap is called the problem of scooters, and I'll just be honest, I'm not a rapper, so this is more like... I think we know that. Word poetry? We're fully prepared for... And this is like no beat. No beats. So here we go.

Okay. I got Sprighting on the cup, a lemon line twist. That's what's up. We out here trying to make a couple of bucks. Let me tell you something about a thing or four. Scooter stars are the unicorn de jour. But their valuations are over. Optimistic. Business operations not so simplistic. Littered on the ground like dropping's all around. Riding on toys ain't fun or mentally sound. Flood in the streets before the gates is locked. checking each other while e-bikes get docked. Micromobility is the front end that they sell, in the back of the bus it stinks like hell. Broken frames, broken teeth, broken bars, broken seats, and that's chapter will end

with all birds on the feet. Our cities are locked up, but they don't know what to do about this traffic ship show. Might be look and fly in your model X wings. Your Tesla's get stuck, exit off and forth in King. Ain't no problems down on Sand Hill Road. We got capital in the back. Here's a truck load.

They got a scooter startup. Now we got to do too. but no one ever questions their own world view. We build bikes for everyone in the town because it's still the best way to get around. Okay. Buses, trains, and Uber's too slow. Get yourself a faster Carmic Oslo.

Yo, what's up? Yo, what's up? I'm sway in the morning. Welcome to the breakfast club. What's up? You don't got the answer, sway. Welcome to the breakfast club. No stumbles.

No stumbles. Wow. It's going to have to. I think we set a new bar. Everybody's got to drop there. drop their startup wrap. If we put a beat behind that, I think it's going to be great. Yeah.

I think we can put a drop a beat behind that. We can make it into something. Absolutely, absolutely. Well, listen, continued success for this. I think you're on to something. What about a Peloton-like model? Yes. Because people pay like 60 bucks.

They put down 500, 60 bucks a month. You consider it in that? Yes. I love that model. And obviously it can work. They just IPO like yesterday. Yeah. Can you put these things on the street?

You have to lock them up? Or do they have the GPS and 3G in them now? They don't, but we can definitely get it. that. We wouldn't develop ourselves. Those systems are available. We are talking to a partner, a pretty big partner. Those are just what, using like a little data sipping kind of model

where they just use a very low data connection. You pay like a dollar a year or $10 a year and you're good. Yeah, it's even less, I think, from a service provider network. So we call it a comms module, which the bikes don't currently have and they're personally owned, but you can add it. But if you put these on the street, they would just get stolen without locks. I don't think so.

I mean, we have locking. So it would be It would have an integrated locking, but it also has kind of electronic locking. So it's the same as you leaving your Vespa on the street. Like, somebody might take it, but the likelihood is not. But these are lighter. They are. So throwing them in a back, but you would have the GPS on it so you probably know where it is. And also when we designed it, we thought.

So you could find it in the tender line. Yeah. God knows what they're going to do it to it there. They can't do much with it. That's the thing. We designed it. You obviously have not been to the time. I have.

I can think of a lot of things they could do to it. Many of them would not be PG-13 for this show. They could definitely strip it down, but the problem with bike. I'm just talking about them. Yeah. Yeah. Bike theft is like they resell it. Right.

So there's no resale market. All right, listen, continued success with it. I think it's a great idea for a business. And I wish you tremendous luck with it. Thank you very much. And I'll look forward to reading your deck after this. Yeah. All right.

Let's go back one more. Monday.com is team management made perfect. We use it here at this week in startups. And in fact, you may have experienced it yourself. We did office hours. I said I have this new project, Prresh. And Presh and Namesh and Named. and Charles got to work, and here they are.

They made a beautiful Monday board outlining the process and setting up our open office hours. And you can see precious assigning tasks to different team members, and he set up a type form integration so that we could see the status of our founders and their biggest challenges, which is what they ask about on office hours. Hey, this is my biggest challenge. And then he made the board public on our website. So everyone could see the topics that were going to be discussed.

And you can see this all at officehours. launch.co slash August. What this does is it makes your organization transparent. Everybody in the team can then help, and you get rid of long meetings, you get rid of whiteboard sessions, ridiculous spreadsheets everywhere with disparate information,

and you have accountability. And boy, Monday's got a great mobile app, and it's the perfect operating system for your company to build on. That's why startups love it. Our startups love it. Ben from Neighborly, one of our investments, he uses it to build out new locations,

and Pete Davis from Amtrar. He uses it for his marketing projects. They have a ton of templates, and here is your call to action. This is what you are to do right now. You get in front of that computer and you start your 14-day free trial by going to Monday.com slash twist. Please go to Monday.com slash twist and get control of your organization and let all the different people in your organization

contribute to the projects you're working on, create that accountability, create that transparency, and let people who want to rip through stuff do that work and impress you, the founder. Get that transparency, give everybody a chance to contribute, and go to Monday.com slash twist, and you will get 10% off a paid account just by using the promo code Twist, TWI,ST. Thanks again for making great software Monday.com and for supporting independent media like this week in startups. Let's get back to this amazing episode. All right, welcome back to office hours at neighborly.

Boom. Go to neighborly.com, rent an office space for an event, for an offsite, for a Sweet 16 engagement party for $94 bucks an hour. What a deal. Bring in your own food, music, DJ, and save a ton of money. Next up is Mark from Zen Sports. It's a peer-to-peer sports betting marketplace. Now you're talking my language. You don't touch the money. We just make this bet peer-to-peer. Is that right? We do actually touch the money from an escrow standpoint. So you create a to bet, we match you up to somebody else in the marketplace, and then we handle all the movement of funds between both parties. Okay, so you escrow, and then you check to see who won the game,

as it were? No, so we're a decentralized marketplace, so the creator of the bet is actually responsible for submitting their own results. And we set aside a penalty in case they submit incorrect results, and so we have this full penalty reward system to ensure that everyone acts in good faith. Okay, so you and I bet a hundred bucks on the Warriors game, and then I originated the bet, so I say I won. But if I lie that I won and take the 200 bucks, you can protest it, and then I get a reputation hit. But the funds, I still can abscond with them. No, so you actually lose an additional 5% of the bet amount, and you will actually lose the bet, because then the marketplace votes on who actually won.

Oh, and then... Who in the marketplace gets to vote? so anyone that holds our cryptocurrency token. So we haven't talked about that. It's a crypto. Yes. All right, here we go. So this is, I would say, one of the few applications of crypto that I don't file under

Crypto dipshit.com. I file this under, yeah, like native crypto great idea. What I love about this idea is because it's decentralized, it can be global. And there are places where maybe people can't. wager. So this automatically has an audience of 100% of the planet minus the places where they would enforce against this, which may or may not be certain places. And you take, you're putting out this stable coin. So we have our own cryptocurrency utility token. Okay, you got a utility token that doesn't change in value or it does? Right now it doesn't, but we will be actually

getting it listed on an exchange probably soon. Got it. So it could go up in value. And then when we make the bet, do you freeze the price of the currency at the moment we made the bet? Yes. Got it. So if it was Bitcoin, it was $10,000 today. We made the bet for one Bitcoin of $10,000.

If it went down to $7,000, we just have to settle in more Bitcoin, one point X Bitcoin. Correct. Got it. Perfect. Now I understand it. When you made the cryptocurrency, did you take any of the cryptocurrency? Did you take any of the cryptocurrency for yourself? And is that how you're going to make money because you own 10% of the pool of crypto coins?

So we take a rake. We take anywhere from 0 to 4% of the betting volume through our app. And then we also have a separate feature where you can actually exchange between currencies in our app. And we take a 5% fee on that. How does that fee relate to what I would pay at a sports book in Vegas? Significantly cheaper. You're going to pay 10% to a traditional bookmaker. So you're spending...

That's 5% Vig. No, 10%. 10%. Well, it's 9.1%. You're going to pay 1.10 to win 100 back. Got it. And you can bet on anything. Anything in sports. Oh, anything in sports.

Yes. So if I wanted to bet my friend just pulling and we wanted to play whoever pulls the high card out of a deck, we couldn't do that on your platform? No, it's got to be sports related. Because that gives the ability for people to then say who should have won the bet.

Yes, and it also creates a more closely-knit community and allows us to stay more focused versus trying to be everything to everybody. Got it. Do you throttle the number of bets I can do so my reputation in the system is... No, but you just have to have enough funds in your available balance.

So when you create a bet, we remove those funds from your available balance along with that 5% escrow fee on the potential penalty in case you can submit wrong results. Got it. So if I renege on the bet where I lie, it could be reversed by the community in a voting

or if that voting doesn't go that way you can just take a 5% of penalty? No, the voting will always, because the marketplace actually gets half of your escrow fee, so they want to vote correctly. They want to vote on the correct results. So the marketplace, the people voting, yes.

Want to vote correctly because they get paid to vote. They get half of losing sides escrow fee. Wow. Yes. Like the Bitcoin miners get money for keeping the servers up. What a brilliant concept. How many months have you been working on this?

So we pivoted from an old product to this about a year ago. Got it. And we spent the first six to seven months on regulatory licensing and other legal matters to make sure we could even do business. So you got to, in this industry, you have to crawl before you can walk. And then we launched our peer-to-peer app end of March, so about five months ago. Got it. And where are you able to provide this service? So we're licensed in over 100 countries worldwide.

Did you do that all from one like service that gets you on to all the easy ones? Exactly. What's the name of that service that does that? Well, we have a private legal firm in Europe that handled it. Right, because in Europe, they're much more permissive about this. Everywhere else outside the U.S. is. Yeah. What are the chances the U.S. becomes as permissive as Australia and the U.K.?

Great question. So last year the U.S. Supreme Court said that states can begin legalizing it. 14 states have, but they have not made it tech-friendly. They've all catered to the physical brick-and-mortar. Got it's in sports books, so it's going to be a while. It's going to be a while. Before the U.S. Would you say it's,

five years behind the cannabis legalization process? Not that far. I'd say in a year and a half to two years, we'll be there. Got it. So the same way we were sitting here 20 years ago, and nobody could imagine walking into MedMen or using Ease or one of these services, we could be sitting here in another 10 years and be, it's incredible. I can take out my phone and bet you on the Warriors game,

which is what people in Europe do. They take out their phones, and they bet, because it's their money. Right. and we're 100% mobile, so we've already gotten permission from both Apple and Google to have our betting apps in the app store, which is not not easy to do. Actually, it took a while. Whoa, whoa, whoa, whoa. Apple's going to let you be in the app store? Oh, we're in the app store right now.

You can download our app and check it out. You're in the, I thought Apple had a no vices thing with no gambling. Nope, as long as you have the appropriate legal opinion stating that it's legal in the jurisdictions that you're operating in. I guess they had to do that or else everybody in Europe and Sydney and Australia would have moved to Android to gamble. Yep. Because if you were to ask a poker player, like, you want to play, you know, no limit hold them or PLO right now, but you have to get your iPhone and get a pixel, they'd be like, okay, they'd throw their iPhone in the garbage.

Exactly. They literally just go by a pixel in 10 seconds. So it took a while to get Google's approval too for the PlayStore, but we got that also. Got it. Okay, what's your biggest challenge, Mark, with Zensports. com? Okay, you got the com. Okay, Zensports.com.

And co. We've got everything. Okay. What's your biggest challenge? Yeah, so, you know, just kind of like all the other startups here, here, fundraising is actually tough in the space because it's vice tech. I lose half investors just right off the bat that won't touch anything crypto or won't touch anything gaming or betting, despite that we have both regulatory, legal, and even some customer traction.

So if you want to pass market, you're going to have to do the slow burn of getting investors in the community to do this outside of their funds in all likelihood as a trial balloon and then slowly work your way up. An example of that is a lot of venture capitalists and angel seed funds, their founders made cannabis bets three, four, five years ago. Personally, small ones. Just to see what's going on in case regulatory change. Now you're starting to see specific venture funds launched for cannabis,

where the LPs know going in, I'm investing in a cannabis fund, and that really is the rub of the issue. issue. When you're a venture capitalist and you have a fund, you signed an agreement five years ago with your LPs on what you were going to do and going back to them and saying, hey, I want to change it. And then one of them is, you know, some retirement fund or some Ivy League schools endowment. And they're like, yeah, no, we're going to go ahead and say we don't want to be in the next jewel and have that come out, that X endowment backed a cannabis company and then some teenager, you know, flip. their car off a bridge and died because they were using some vape pen and whatever. So you'll fall into that same category of like some young person does something really stupid and bets their family's mortgage and their entire fund because they're addicted to poker or something, which is happening anyway. Just you don't hear about it. When you add tech to any bad thing somebody does, it's like the technologists are responsible. Like it'd be the equivalent

of making Volvo responsible for a bank robbery. It's like, is Volvo responsible? And you can see this actually, literally. A Volvo used in a bank robbery, nobody cares. A Tesla used in a bank robbery would be like front page news. Like a Tesla goes on fire. People are like, a Tesla's on fire. Literally there are, for every Tesla that's gone on fire this year, there are 10,000, you know, cars with ice engines and 20 gallons of fuel in them.

That also went on fire that never make it to the news. If tech, then press and click. So I think that's the way I would go. about it is to try and we made our first cannabis investment on the Cush marketplace specifically because there were no consumers involved it was a B to B marketplace they never touched the product and they just match buyers and sellers and we're like that's the safest bet in another two or three years when there's a national referendum and somebody comes up and has a product that's like we're making a

consumable product a direct-to-consumer tea or ointment or whatever we might be like sure it sounds reasonable so I think that's what you have to do I'm personally having a affinity for gambling and risk-taking, which is, let's face it, exactly what venture capitalists and seed funds and angels are doing anyway. You're trying to make some odds of success, just like you might at a table game or in a sports book. So it's all the same stuff. How much have you raised to date? Are you self-funded? No, we raised $400,000 last year, and then $300,000 earlier this year. And you raised it from high net worth individuals who like to make bets?

Almost all angel investors. Yeah, I think maybe coming to our accelerator, we'd have to look at it. That would be another unlock. So what you're trying to do when you're in one of these outside categories is slowly unlock the establishment through the side door or getting into an accelerator. And I like this space. You know, crypto, I was always a fan of crypto before it became a total complete fraud. And now I feel it's bottoming out and all the fraudsters are like, oh, what's the next fraud?

And so they're going and running music festivals. But for now, it's true. It's funny because it's true. I was going to say 100% of the bets in our app right now are using our token. So about 200,000 a month in betting volume is all in our token. Yeah. So you're the example of the utility token actually being a utility token as opposed to the 9,996 other ones that were complete and utter fraud. So congratulations on not being a fraud.

Thanks. Congratulations on building something that people use and doing it right. And you're what the space needs. whenever you're going to have something like this that's non-traditional, breaking some rules, bending some rules, just moving the ball forward on a controversial topic. You need to have people who are upstanding and who want to do things in a fair and concise way. And you seem like that individual. So I'd love to follow up with you. Email me, Jason, at Calacanis.

And let's have you come by the accelerator and just sit in and meet some companies. Good job. Let's hear it for Mark. Thanks much. SendSports.com.