This Week in Startups - E991: #StartupTuneup with Urban-X: Waste-reducing marketplaces, traffic liability reduction, recreational sharing spaces, firefighter safety software & energy cost saving AI

Episode Date: October 22, 2019

0:41 Jason intros the #StartupTuneup with Urban-X companies 2:33 David Rodriguez pitches Food for All: food marketplace to reduce waste & help restaurants sell unused food 12:43 Jim Selevan pitches Pi-Lit: innovating transportation thru a wireless lamp system 26:33 Caroline Hansen pitches Hubbster: providing easy access to outdoor games & gear 41:24 Patrick O'Connor pitches 3AM Innovations: safety software for firefighters 50:52 Michael Lee pitches Evolve Energy: SaaS product that helps consumers save on energy costs thru AI 1:02:51 Urban Us Co-Founder & Partner Stonly Baptiste joins Jason to discuss the companies

This week in startups is brought to you by Captera, the leading free online resource to find the best software solutions. Visit captera.com slash twist for free today to find the right tools to make 2019 the year for your business. Airtable, the all-in-one collaboration platform that is flexible enough to keep up with the most creative, fast-moving teams. Visit Airtable.com slash twist today to get $200 in free credits. and LinkedIn. To redeem a free $100 LinkedIn ad credit and start your first campaign, go to LinkedIn.com slash This Weekend Startups.

Hey, everybody. Welcome to This Weekend Startups. I'm your host Jason Callicanus. I invest in companies all year long. Some of them become huge. Some of them go away. All of them try hard. And one of the great ways for you as a founder to accelerate your growth and the growth of your

company is to join one of the accelerators out there or incubators. But how do you pick one? Well, it's hard. Most of them are run by people who didn't succeed in their life. Most of them are a waste of time. You're going to get bad advice. But there's a couple of them that I personally think are very good. One of them that I think is just great is Urban X. And my friend Stoney-Baptiste runs it. And he's brought five of the companies here today. You'll see the quality level of these companies tends to be very high. We'll see if he keeps up the performance. but you've probably seen some of his companies on the podcast before. They're all focused on cities,

and his UrbanX accelerator is a partnership between BMW Mini and his fund, Urban.us. And we're going to see five of the companies. They'll pitch for three minutes, and I'll give them my candid feedback, almost as if it was an investor meeting. And I'm going to give them a little poking and prodding. Hey, how does this work?

And you, as the audience, will see, for companies coming out of an accelerator, what would an angel investor or a seed fund like ours launch, what would we ask these founders? And then I'm going to ask them also what's their biggest challenge and we'll try to workshop whatever their biggest challenges. Well, each company will have seven minutes or so total, three to pitch, four to do some Q&A. We'll get through it pretty quickly. And then I'll pick my number one, two, and three company through the lens of my own investing.

In other words, which one would I be most likely to take a second meeting with in order to figure out if I wanted to invest? First up is David Rodriguez. is. He is from foodfor-all.com. Welcome to the program, David. Thank you, Jason. Okay, three minutes on the clock. Tell me about your business. Cool. So, hello everyone. I'm David Rodriguez, CEO and co-founder of Food for All, a marketplace for surplus food. So unlike hotels and airlines, the food industry is still not using excess inventory to increase sales and generate demand. And this results in food waste, which not only is one of the main causes for greenhouse gases,

but it also represents more than $2 billion of losses every year. And at the restaurant level, over production is actually not food waste. It is wasted food. Fresh prepared meals thrown away every day just because they were not sold. And with this problem, we support an opportunity and the need to change this into a completely new behavior. So that is why we created food for all, a marketplace for surplus food, where restaurants can simply input their extra meals to our app and sell it to our users for at least 50% off. We started last year in Boston, and over the summer we moved to New York.

We are now working with over 250 restaurants in both cities. This month we reached to $385,000 in annual sales. And our sales are growing 18% month per month. On the user side, we have now more than 120,000 registered users all over the U.S. And the way it works is really straightforward. Users logging and see where food is available. They pay directly through the app, and then they just go to the restaurants and pick up their meals.

Pickup window is only within the restaurants working hours, so customers are getting the same quality of food and service. And for us, the easiest side of the network are our users. They are really excited about food for all. They not only love the app, but they are willing to promote it. We have a net promoter score of more than 69 and over 200 reviews now on the Apple Store. And for restaurants, food for all is a seamless way to generate extra revenue, increase food traffic in slow hours

and create a new marketing and demand generation channel. To start simple right now, we're focusing on restaurants with pre-pre-pre-food. So think about fast casuals, buffets, coffee shops, and grab-and-goes. But our power is increasing user demand for surplus food. So we have the opportunity to go into supermarkets, packaged goods, and meal kits. Our competition, our two biggest competitors are located in Europe.

Food for All is the company with the strongest concept here in the U.S. but we couldn't do it alone. We have a great team back in New York. We're three co-founders and six other amazing co-workers. We're really passionate to solve this problem. So over the next 12 months, we plan to get to 1,000 restaurants, get to new cities, and get to $2.5 million in gross revenue. So thank you so much for food for all.

Come and join us to our movies. All right. Well done. I'll give you a little golf clap for that one. That was an excellent presentation. I will say the deck looks beautiful. Thank you. And when the deck looks beautiful, it shows that you have an attention to detail.

There's beautiful photography in here. Some of it you might have taken. Others might be stock images. But the font usage and the slides were all great. Now, why do I bring that up? If you have a sloppy deck, you better have off-the-chart performance. You don't have off-the-chart performance. You have good, interesting.

300K a year in revenue. That means you're making about $30,000 a month in revenue, about $25. $3,000 right now. 32,000 a month in revenue. That's always with founders. They're going to correct you down to the penny. $32,472, which is great. Now, when you use that number, $32,000 a month, is that how much food has been sold? Or is that your take, your percentage of the food that was sold? That is GMV, so gross revenue. Yeah, so that's the gross marketplace value, I think is what GMV stands for.

So you get what percentage. of what's sold? We're taking 25% right now. Got it. So your actual revenue, your revenue, is 25% of 32, which I believe would be 8,000. It's 7,200 right now. Perfect. So you're making 7,000. You've got three employees in the team, four employees?

Five right now. Five right now. So you're burning about 40K a month? That's correct. Okay. Yeah, really good. I know what I'm doing here. I've seen this movie before.

So you're losing, you're burning. 33,000 a month in order to build this business. But if you simply 4x, you'd have to 5x what you're doing, 4 or 5x what you're doing, you could very easily hit break even. This business has been done before. This wasn't your idea. This is something that swept through Europe over the last two years, correct? Correct. Those businesses in Europe, which one is the leading business in Europe? Dully business in terms of funding is karma. Karma. In terms of number of restaurants is too good to go. Got it.

Karma has received tens of millions in funding. Correct. And do you have any idea what their GMV is right now or their revenue, and what's their take rate? I'm not so sure about the data right now. Okay. So this is another test. I'm not asking you because I can't get the information. I can get it.

When you're an entrepreneur, we like to, as investors, just push you a little bit and see if you know, and you have competitive knowledge. So you failed the test on that. one. You passed on getting to market. You passed on this, but you need to know your competitor's cold. Okay. And the reason is if you know your competitor's cold, you know how to kill them. You know how to compete against them, right? So this is something where you can punch up your game. I'm always looking with that entrepreneurs and trying to figure out what skill can they learn. It's like a basketball player. Some people might need to pay better defense or hit more free throws, maybe work on their three, work on screens. In your case, know that competitive landscape cold because the credibility you will have

by saying karma has 400 employees. Karma has 750 restaurants. Karma reported in their talk six months ago that they had reached a million dollars in sales. So know your competitors. Now, I'm not saying you should interview people who worked previously at your competitors for jobs and pump them for information. But I am telling you that's what people have done. Got it. Oh, wow.

That seems pretty sinister, doesn't it? Welcome to the real world. Okay. What's the biggest challenge in this? Oh, and just to recap this business, my understanding of these businesses, food for all, karma, et cetera, is that they only sell for the last hour of business is open. That business says I have eight slices of pizza left, just like I used to do when they were closing. I would just ask them, hey, I know you're closing. Can I get two slices for one?

So I have somebody to eat tomorrow. I'm kind of broke, and they would always do it. Or they'd buy two. They'd give me one. So they would always do that for me at Maria's Pizza in Brooklyn. Thank you, Maria's Pizza. So this is the last hour people typically put their inventory up. That's correct.

They put it up for half price? That's correct. Do they have to put it up for half price or they pick their price? So we discovered that half price is really what drives the traffic. Got it. So you advise them half price. That's correct. Do they do that out of the gate or do they fight it a little bit? So it hasn't been a push all up to now just because everything is already prepared.

The type of restaurant that we're targeting is restaurant that have food already prepared. Say what I love about this business. Instead of being a do-gooder and saying, I'm going to create a nonprofit to go collect all the food and then give it to the homeless or something, which is noble, and people have done it for a long time. But there just aren't enough homeless people to feed with all the surplus food, correct? Correct. There's more surplus food than homeless people.

So society is in some ways in good shape. But what there is is there are people who maybe don't have as much money as they need and who are price conscious. And if they could save money, they could either have a better experience, have a better meal, that they could normally not afford or they could be buying food that I bought at double the price just an hour earlier and just eat an hour later.

So it's fantastic for society that a free market system like this exists. And I think that's really the angle that we have, like really dropping the prices for people to be able to get to access these quality meals. A lot of people are used to, you know, like getting discounts on pizza

and getting discounts on patriots, but they are not used to get discounts and really healthy quality mold. So that's real this or price axis of what Food For All is bringing. All right. That's why the users are really engaged and willing to promote the app. All right. Well, that's all the time we have for Food For All.

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Software selection simplified. Captera.com slash twist. Okay. Let's get back to this episode. All right. Thanks to Urban X for bringing some. some of their great founders from their sixth cohort here. Thanks to BMW Mini for making my first brand new car I ever bought.

First car ever bought was Mustang, 73 Grande, and the second car I bought was like a 2003 or four Mini Cooper, and I loved it in Burgundy. Next up is Pilot, p-l-l-it.com. Jim Sullivan, you're the CEO, correct? Correct. Okay, tell us, you got three minutes on the clock. Are you ready?

I'm ready. Okay, three to go. Thank you. We're solving a problem of road safety. Approximately 800 deaths a year occurring on the highway, in addition to that five incidents of non-fit fatalities, $9 billion in liability claims. This is a consequence of a decaying infrastructure, knowing where people are on the highway during construction zones.

The technology that we bring to the market is a radio mesh network. We initially applied this network to LAMS. that are sequenced and flashing to help guide drivers through work zones. We then realize we could apply the same technology to sensors on the road to help manage infrastructure and assets. We currently are deploying infrastructure sensors for crash cushions, attenuators. When these get struck on the highway, they can be damaged and non-functional, but no one knows about it.

So now we've taken our mesh network. Not only are we applying it to traffic guys, guidance in the work zone and for law enforcement. We're now applying it also for notifying DOTs when infrastructure is struck. So people who aren't watching, it's those lights that we used to boost off of the wooden horses in Brooklyn. They have these big batteries in them. It's a big yellow light. Correct. Boost means steal. Just so you know, Jim, we used to steal these for no reason other than to take them apart. But we were part of the problem because these were put up for a reason so people wouldn't hit a pothole that would kill them.

You're saying 800 people die every year in the United States at construction zones. Correct. And it could be because some punk kid like myself 40 years ago decided to steal one of these. That's one option. Or the battery dies. The battery dies. Or it gets knocked over by another car. It gets knocked over.

We now can notify the DOT when these devices are non-functioning or they've been boosted. Or they've been boosted. Okay. Continue. Okay. We can also add. sensors to tell when bridges are vibrating. Why is that important? The infrastructure, the infrastructure was most of our infrastructure on roads and bridges were built around the second war, 10 years post

second war. Civil engineers will tell you that they have about a 70 year lifespan and it's 2020. 70 years later, they're beginning to fall apart. And that's why Congress is talking of a $1 trillion infrastructure plan. They're crumbling. So we are providing sensors that will start to notify the DOT when a bridge is starting to vibrate more than it should. And vibration would indicate that it could be compromised. Exactly. Or on the road to be going on. Exactly.

Exactly. The current traffic control deployment is about a $1 billion spend in the U.S. With our new sensor technology where we are attached to the cloud and we can notify the DOT on our dashboard, that it will expand that industry to about $5 billion. dollars. We currently have 60,000 units on the highway. Yes. We sell worldwide. We have a large customer base in Europe, New Zealand, Australia, Japan, Korea, of course, North America. We have $2 million in revenue for this current year, and that's scheduled to double for next year. Our gross margin on our hardware is 50%. And we're in.

anticipating a 65% margin when we move to our recurring revenue models. You're going to rent the sensors as opposed to selling them? We'll sell the hardware at a lower cost, but then they will have a monthly subscription to attach to the cloud and use our dashboard for the DOTs. You can do hardware as a service, as we call it. Exactly. Pass. Yes.

We have five states currently mandating our technology in the work zone. That is, they've codified our technology and written it into law. So when you go to a work zone in Pennsylvania or North Carolina, Massachusetts, you'll see sequential lamps flashing, much like a runway landing light to help guide traffic through the... The sequential lighting is done because they're smart, they're part of a mesh network, they have a little bit of intelligence in them, so they know that they're number two in the row.

Exactly. They figure that out automatically. You don't have to place them by any... They figure it out automatically? That is correct. Through GPS or the distance from the previous one? Through our mesh network. Which is just doing distance, right?

It knows... Yes. Reel of radio strength indicator. as well as knowing who's filling which hole. We have now 17 issue patents. We're notified of our next patent today, actually. So we have 17 issue patents. And the team that has brought us here includes several engineers, good salespeople.

And look at this, Adam Sullivan and Daniel Sullivan. So you, this is a family business I take it. Are these gentlemen related to you in some way? These are your brothers? No. They're my sons. However, I don't look at it as a family business. I look at it as low-cost labor.

Okay. Fantastic. Let's give him a big round of applause. Well done. All right. So I'll give it to you candidly. Okay. I love the fact that people are looking at construction zones and those 800 deaths as something noble and important to save.

Every life is critically important. There is nothing worse than us waking up every day thinking two people who did not need to die in any way. There was no rhyme or reason to it. They just randomly didn't come home. So on that, this business is already a success, whether you succeed or fail, if you can just save one life, it's worth the effort. You put into that. I think you know that because you got those two sons working with you, obviously, value family. So I thank you for that.

Second, what a great idea. Everything is going to be a smart device. Why shouldn't the construction signs be smart? And who knows what that could unlock? and it unlocks the sequential, which makes them like landing lights. What a great idea. Was that the original idea? That was the original deployment.

And then we moved to sensors in the business sense, the recurring revenue model. Got it. And a lot of this is because sensors have become essentially free. They're so low cost, you can put them in anything. Exactly. Those lights are bought by governments. I bet you those lights cost three or four hundred bucks for a government to buy, don't they? Actually, less.

We've worked hard to... the government buys them for about $60. $60. And if they were on eBay or on something like Amazon, that's probably a race to the bottom. They're probably $10 or something. These are more industrial. They'll last a long time.

Industrial and they're smart. They have the inherent radio. Well, what are the ones without the radio stuff in them? $15. $15. So they spend four times as much, but they're going to get this extra value, which is a de minimis cost change. The sensors in there are what?

Is there accelerometers, temperature, as well as the radio sensitivity to understand how far they are away from other radios? Got it. And the network, the magic sauce, the secret sauce is in what we refer to as flocking behavior. It's a patent we have so that the lamps or the sensors can talk to each other, send information up and down the roadway and attach to the cloud with a single cellular modem. Right. So we can have hundreds of sensors getting to our dashboard through a single cellular modem, which lowers the cost of deployment. So, cellular modems cost 50 bucks a month if you want to use the high LTE version and the low sipping versions, maybe 20 bucks a month, something like that.

Even less than that. So instead of putting that intelligence in every one, you put it in every 20th. Exactly. Or something like that. So you can deploy these super cheap. How long have these been marketed? Of the 60,000, how many are smart? 60,000.

Okay. So they're all smart. How long have you had them in market? Three years. Got it. So it took you three years to get $2 million this year. Correct. And you plan on doubling next year.

Correct. So that's where your presentation breaks down. And it's the only place where it really breaks down is you're growing too slow. Now, you're thinking, you're looking at me saying, who's this punk kid who stole these things? And then it's telling me doubling revenue is too slow. It's too slow for venture capital is to get super interested. You've got to double every six, seven months. And so what I would do is start thinking of a plan of how much revenue can you extract,

how much value you can do, and how quickly you can get to market, right? And so doubling every year, if you set the goal. to double every year, you'll probably hit that plus or minus 25%. But if you set it a triple and you hit it plus or minus 25%, or even 50%, wow, now you've got a real goal. So my hope for you is that you try to go 3x year over year and build that plan. Coming into VCs with a 2x plan just shows slow growth. Remember, they want to get to $100 million in revenue in seven to 10 years. That's what they're thinking about because that gives them the ability to $50x their money.

So if you want to, and I assume you're here, because you want to get the venture capital community's money, behind this. You've got to be a little bit higher growth. There are three or four different ways to do that. One is to raise prices. Two is to change the pricing model, which it seems like you're doing. You're going to have this hardware as a service model where they pay and they get the software. Be careful because now you're going to give them the ability to debate if they need the software or not. I would just make it one price for everything. And then maybe it has a two-year subscription and in year three, then the subscription turns on if they need to or whatever. So there's a lot of different things there, but you got to have a little bit of a faster plan. Additionally, on the

roadmap, I would start thinking about, okay, we found a business that we believe can double year over year. Okay, fine. So it's going to go from two in your three to four in your four or five, and maybe you can grow to eight. It's too slow. Is there something that having 600,000 of these out there and Moore's Law and the cost of things decelerating, 5G is coming. cameras are getting cheap. What if these things all have cameras in them? Well, the new ones do. Okay, perfect. So now we're really cooking with oil. If these things have cameras and one out of every five is taking video and then you now, and they have maybe speed indicators,

maybe these are also giving speeding tickets to people who are speeding in a construction zone, which is a huge ticket. So I want you to think a little more ambitiously here about revenue generation because building a $10 or $20 million business means you disqualified yourself in Silicon Valley. So let's start thinking about, hey, what if you could give these for free to cities to put up and they had the speed cameras and then you got a percentage of the revenue from those incremental? Because they say fines double or triple in construction zones?

Whatever they are, they're a lot. But I think they always have that side, don't they? Fines double. Fines double. All right, well, let's find out who's speeding in the goddamn construction zone. causing those 800 deaths. Let's get their money. All right? Okay. All right. It's really great. What an really interesting business. I just love that in entrepreneurship today, we're getting down to these very refined, you know, edge cases of where death occurs, and we're going to try to eliminate it.

I think it's very noble, and I think there's a, listen, I don't want you all getting a bunch of tickets, but if you don't go in two, three times a speed in a construction zone, you deserve the ticket. And Jim's going to give it to you. Okay. Okay. Pie dash lit. And we'll be back with more. Software should not dictate how you work. You should dictate how you work. That's where Airtable comes in. It's an all-in-one collaboration platform that is sweeping through Silicon Valley and

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Okay. Thanks again to Airtable for making an awesome product. Let's get back to this awesome episode. Hey, everybody. Welcome back. Thanks to Stoney for bringing Urban X's latest crop of companies here, and he did not disappoint. Next up, Carolyn. Caroline. Caroline.

Yeah, well done. She is with Hubster. Dot D.K., which I think D.K. has something to do with Korea. Denmark. No, Denmark. Okay. Thank you. There's North Korea.

I thought this was like the Democratic non-Republic of Korea. It's Denmark. Correct. It's Denmark. Which Copenhagen is the capital of. Is that where you're from? I'm actually, I'm French, but I live in Denmark. You live in Denmark.

We all hate you. We hate you. You know why? Because I don't want to sell Greenland to you? No. We don't need Greenland. Because Denmark is the highest functioning democracy in the world. There is an expression called getting to Denmark.

Do you know what? Have you heard that before? I haven't heard that before. So in the elite geopolitical circles where they debate dysfunctional governments and functional governance, they say we have to get to Denmark. And what they mean when they say we have to get to Denmark, getting to Denmark means that the people's will is reflected by the government and the people who serve them. And in Denmark, you get that sense. Do you not?

You do. And you go to Christiana and you get the cooking. cookies. Yeah, you did it too. That's right. You've been there before? I've been to Christiana three or four times. I've been to Tivoli. Yes.

I've been to Noma a couple times, not the new Noma. I love Denmark. I get the Schmorg there at Ida Davidson. You ever been to Ida Davidson? You ever been to Idaebburg. I haven't actually. You know what the Schmurberg is, right? Yeah.

Smilberg. Smirberg. Smirby is the brown bread. It is. Put the butter on it, put a little fish on there, some dill. Delish. Many great things can do. Denmark.

You love Denmark. We have to get to Denmark. We have to get to Denmark. Okay. You have three minutes. We do go. So hi everybody. I'm a co-founder at Hubster and the Hubster brings play to public and shirt spaces.

So basically if you're like me, you always glued to your phone and globally one in four adults is not active enough. And according to the WHO, engaging in play every day has direct health benefits for people's mental and physical health. Real estate developers and cities have expanded investments in amenities for sports. in amenities for sports and recreation in parks and waterfronts, etc. But there is a problem. We have great publicly accessible spaces and more new infrastructure, but people cannot play or train spontaneously. I give you an example.

A basketball court is not enough. You need a ball. That's where Herbster comes in. Hubster makes it easy to add play and training gear to any shared space, whether public or private. We are the last mile for sports and recreation, and we connect people, run playful activities outdoors. People use the Hubster app to see the different available activities on a map.

These activities are, for example, basketball, volleyball, TRX, ping pong, and similar to renting an electric scooter. When standing in front of a hub, people use their phone to unlock the shared box and they can borrow the objects they need. The app can also be used to connect with other potential players. We use patent-pending technologies to keep track of the object and who uses them. And it's easy to add our hubs to a new location because we don't need power or Wi-Fi. Once the hubs are installed, customers download the app, and then they can rent equipment

either on a monthly subscription basis or a pay-per-use basis. We are already operating in Copenhagen and in Paris, and people love the solution. Now, most active users are using the hubs twice a week. We have LOIs for 200 hubs in Europe, and after four months in the US, we're very happy to announce partnerships with some high-profile recreational destination in New York, and hopefully we have good announcements in the West Coast soon. There is a potential for at least 500,000 locations in 225 major cities globally, leading to annual recurring revenue of $2 billion. Revenue is a mix of owned and franchise hub.

We expect owned hubs to generate about $540 in MRR per hub, and franchise hubs generate one-time fee of $3,500, and ongoing license revenue of $160 a month. We will expand our network into 10 American cities and 10,000 European cities in 2020. Today the main alternative to our solution is for end users to bring their own equipment. The other solution, the other competition is to staff location to supervise rental, but only the best funded location can afford this model. Our team is equipped to build a global company and today we're looking

for partners to help us install 1,000 hubs in 20 cities and support 500,000 games for 100,000 players in 2020. So hopefully you'll want to to join this journey. Fantastic. Well done. We'll give me a big round of applause. So you said $500 per unit that you manage. So you are going to manage the network of these as opposed to selling it to other people to do their own thing. Exactly. But we just get a cut. Yeah. And you said $500 a month is what you think the revenue will be.

So if I rounded that up to $600, that would be $20 a day. per location per day. So basically the way it works is that we expect to have one hub for 1,000 inhabitants. Got it. Out of this 1,000 inhabitants, we expect 100 of them to be our users. Out of this 100, we have 15 per per per use per hub and 30 memberships per hub. Got it. Okay, so you're going to put the hub together, and the hubs cost 100 bucks, 200 bucks to build?

It's actually more expensive now because we have smaller amounts. So right now it's $1,900. Oh, wow, $1,900 to build a hub. And we can have to cost. So they're all bespoke. Right now. They're beautiful. We have a company called Colony, K-O-L-N-I, that is doing the same idea in America

that we invested in in our accelerator. So many people have the same idea at the same time. I think the sharing economy makes us possible. And I see ping pong is one. basketball is one. So we have 15 different solutions right now to have a large appeal to a broad segment of the population.

So we have basketball, volleyball, soccer, ping pong, bocce, and different type of board games. Great. Oh, and board games as well. Fantastic. And so you think direct to consumer is the way to go or selling it to people is the way to go

in franchising? What is your thought on that? Because you're doing both. That to me is always a recipe for disaster. So basically right now, we're mostly focusing on B2B clients, and our main clients are clients such as university campuses, got it. Real estate developers, retailers, the type of factors. And we start doing some lobby towards cities, but it's much more long-ground.

So there's two ways to do this. You could either have your own service, build your customer base, or you could piggyback and just sell the units to other people and charge them a monthly fee. You're choosing the B-to-B model. So we're choosing the B-2-B models, but one thing that we have also is that we have, actually several distributors in different parts of the word reaching out to us because this whole

area of recreation and sports, not sport, but recreation mostly in cities is really red ocean. So this year's, blue ocean, sorry. So they're saying us as a key differentiator in their business. We're hoping that blue ocean does not turn red. No, sorry. It's quite a right, but just having seen the Great Barrier Reef, about half of it was red and half of it was blue, it was pretty disturbing. It was actually kind of sad.

And is your team responsible doing the engineering of the hardware, or is that something out of China that already exists? We've done. You're building the hardware. So we have designed the hub, which has won several design awards. It is beautiful. I think it's one of the highlights. The ping pong ones particularly is beautiful.

Thank you. And this is actually the great thing about it is that because it's beautiful, we have also the different object manufacturers giving us the object for free because they take that as a way to sponsor the business. Ah, got it. So you put all your effort into making that hub. You do it bespoke in Denmark. You make it there out of wood.

So right now, so we have a factory working for us. It's actually a safe deposit manufacturer, so which makes perhaps really impossible to spend the money. A safe deposit? That's interesting. That's why it's so expensive. Exactly. 1900.

And you're doing it in a socialist country, which means people are getting paid $72 an hour minimum. But you're going to ship it to China and eventually make it there so you can make it with people making a dollar an hour, correct? So you get it. We can definitely have to cost. How does that feel as being somebody from Denmark, a socialist country, and you have to spend $1,900 building a locker,

and then you realize as an entrepreneur this is unsustainable and that you need to move it somewhere in the world that's communist? Well, we're actually looking at different options in the U.S., and we have pretty good options right now. What do you think it will drop down to if you do it in the U.S.? We can drop it down to 900. 900. What do you think in China it would cost to make?

Yeah, probably down to 300. Wow. So you can build three for one. Is it a moral or ethical thing as being somebody who lives in Denmark when you think about this decision? Or are you a capitalist who just thinks, I'm going to send this work to the cheapest labor in the world and have my business grow fluidly? This is, I guess, a decision-making process that you have to go through, isn't it? It is. So we haven't made the final decision yet.

But I have to say, I think, also in terms of branding for the company. and because of the segments we're addressing right now, it actually is quite important, I think, to be consequent with what we're saying. And the fact, for example, that we only work with the best designed object that we put in the hubs definitely has a strong appeal to our clients

that also make them ambassadors. And I think also these things are also quite important in order to grow the brand. So in America, having it be built in America or in Denmark, having it be built in Denmark is on brand for you. That helps the decision, you think? I mean, again, we haven't made.

the final decision, but I think can help the brand. Yes, to build it in Denmark. I bring it up, not to put you on the spot, but because you happen to be from Denmark, which is, I think, for Americans, we look at it as like, wow, this is like the social democracy that some people in this country perceive would be great.

It's hard to run a company there, isn't it? It's hard to run a company in Denmark? Yeah. Well, that's the reason where we're here. Definitely there is more money here and it's easier to scale and to go faster in the U.S. and it is in Denmark. But there are also issues around employing people and how you deploy capital there, correct?

Totally right. Yeah, it costs a lot more money. It does. And people take a year off to make babies. Is that a reason why people don't start companies there or leave? No, actually, you're going to see both ways because it's also, I mean, you have big incentive to start companies in Denmark because you have lots of public funding. Right.

Which is the reason why actually we've been bootstrapping for two years because we've got subsidies. Ah, the government subsidized to you. So in a way, there is an upside, and the upside of public health care is that you don't have to provide the health care. Exactly. You just provide a salary. Exactly. So that is something we're wondering about here in America. Should we just have it be a public option where the health care is provided by the public, do you think?

Do you want to have my opinion on that? I mean, I'm European, so obviously, I think I should come from the States. Do you think it's unconscionable and embarrassing for us that we don't have it as a human, and write like you do? Do you own my honest answer? Yes. I do think so. It's embarrassing.

I think it's embarrassing, yeah. Yeah. The country that has as much money as we do. I think it's embarrassing. But we can make these lockers for 900. Exactly. I'm just saying. I mean, that is really interesting in a microcosm like this.

It's the first time I've had a discussion with the founder who's faced with this issue. And a microcosm, if you look, the $1,900 in a socialist country to build something, 900 in our quasi, you know, our rampant, rabid, entrepreneurial one. And then in China, where, like, humans are, you know, less cared for is even cheaper, right? It's really fascinating. And we all live in this global economy. We have to make it work. All right.

Listen, continued success. I think it's a tremendous idea, which is why I invest in your competitor. And so in this situation, don't send me any more information. And I wish you luck. And I hope that this becomes an. Uber Lyft like situation where there's two winners. And I hope that I'm on the Uber team, but if I'm on the Lyft team this time, that'll be okay. And you could be the Uber and you could win.

And Stoney, this time you win. Last time I won, this time you win. It's okay. We'll both win. It's a duopoly. All right. Great job. Let's give a big round of applause.

Nicely done, Caroline. All right, you guys know LinkedIn. You're on LinkedIn all day. Me too. We love it. There's over 600 million members. Which you might not know is that 62 million business. decision makers visit there. That's right. 71% of people use information from LinkedIn to make

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We have a campaign up and running. And we get founders to apply to come ask me questions at open office hours, which become episodes of this very. podcast and that's how we get our funnel going. We use LinkedIn to find great founders that we can invest in. I want to give you $100. What? Yep, that's right. I'm going to give you $100 right now in LinkedIn ad credits. And I'm going to let you launch your first campaign by going directly to LinkedIn.com slash this week in startups. No staces, no dashes. LinkedIn.com, you know that, slash this week in startups. If you type out this week in startups, you get $100. It's that. It's that Simple. Terms and conditions, of course, apply because we're giving you a hundy, but you're going to love it. LinkedIn marketing works. Go get the hundy. Let's get back to this amazing episode. All right. We're cooking with oil and our next startup is literally working with fires. So that is appropriate. Patrick O'Connor is here. He's the CEO of 3am Innovations, which is 3.m., the number 3am Innovations.com. Three minutes on the clock. Three to go.

So I'm Patrick, co-founder of 3am, and we created a network of devices, software, and people designed to protect those who protect us. So when I was a firefighter arrived at the scene, I would first check in with my commander who would write my name down on a whiteboard. Then many people realized that firefighters still tracked themselves with docked eggs. And when we lost two of our own to unseen confusion, as you can see, there was about 200 deaths in the fire service last 10 years. It was time for a change. So we created a system of rugged wearable devices that mesh with each other to create their own network. So our proprietary hardware interprets the firefighters' movements on the edge and then broadcasts a 3D position anywhere within a structure, even nine floors below ground. So our devices do not need internet to operate, but we progressively enhance them through LTE, Bluetooth, alter wideband, and GVTS.

So our adaptive software listens to these broadcasts and ensures that every firefighter can be visually tracked and more informed decisions can be made. So we're initially targeting the volunteer organizations, which represent 73% of the U.S. firefighters. Now, fire departments have budgets for fire safety equipment, but we're working with insurance companies to extend discounts so that even the smallest fire department can offer, I mean, could afford everything that we have to offer. So our product is not just a fire product. It's a first responder product. So we are well positioned to support environmental disasters, which in the last 10 years have risen by 300% as well as wildfire. which have grown by 400%, and active shooter events,

which have increased by 158%. And while we're focused on firefighters for a market entry point, our devices can track any first responder, and tracking first responders is a $29 billion global opportunity. So mature companies have been trying for years to track first responders with GPS,

but GPS is just not reliable indoors. Startup companies have been developing solutions that require beacons and cell towers to operate, but none of them are practical, None of them are focused on the fire service, and none of them are commercialized. So our devices, they could track location without GPS, and we connect to each other to ensure that the commanders are automatically informed. We're the first and the only to do this from the ground up to the cloud, and we patented our approach. We are in trials of five U.S. fire districts and multiple government entities, including the Department of Homeland Security and of DOD.

We have seven letters of intent that represent $4 million of ARR with a line of site to $20 million. and we have a non-exclusive distribution agreement with W.S. Darlie, who sells fire safety equipment into 90 countries worldwide and has sales of 400 million last year. And so we're dedicated to securing the safety of a million firefighters worldwide, and we're raising our seed round to elect the next 20 million in the ARR. Thank you. All right, fantastic.

Big round of applause. My brother's a firefighter. He's faced this situation, tragically. You know, his second, the second fire he ever reported to duty on was 9-11. And so, oh, gee, is right. And my grandfather, firefighter, rest his soul, and McCabe. And, yeah, it's needed. This is the second mesh network discussion we've heard here.

And so this mesh networking technology is off the shelf now, and it works brilliantly. Well, yes and no. So our device didn't exist until we made it. No, I know, but the mesh networking core technology is built by other parties. And you put it into your device and build the software around, correct? Yes, just like GPS or Wi-Fi as a chip. What is that called? What is that mesh network?

Who provides that technology today? So it's ultra-wideband. So that's what we're utilizing. And ultra-wide band means what? So ultra-wide band is basically, it's a range of frequencies that span over a very wide band. And so it's more of a very wide band. So it's more of like a brute force tactic to get it through different structures. So if you have concrete rebar, it's going to be very hard to get a signal through it.

Ultra wide band just sends it across a wide spectrum. And if once some get through, some don't. Got it. So if you want to have a brute force for a short distance through thick walls, ultra wideband. Yes. As opposed to 4G or 5G, which is a narrower band. Yeah. So that's not going to actually penetrate.

So the lower you go in the spectrum, the more penetration, you get, but the lower data you could send. So with our devices, we do what's called edge computing, so we don't need internet or anything. Every second, it's saying, this is my longitude, latitude, and height. So it's 100 bytes of data. So we're able to hop that with each unit. So my unit could talk to you, and I can't talk to anyone else, but you could talk to him.

We could pass between you, and you packetize it and send my data with yours. And they all have 4G in them anyway. Yes. So if they do happen to have the last person, excuse me, the last person in still is, on the first floor, they get the person on the second floor, third floor, fourth floor down. All that data is eventually making its way over the 4G network to back to the truck. Yes, and ultimately to their alarm office as well. So if you're completely off-grid, let's say you're in a wildfire situation where you have no connection,

you could be complete off-grid and still be able to represent your team on this, on our laptop or tablet. But if you have an LT connection, you could stream it to your alarm office and they could see everything that's going on as well. So when you're in the field, if you happen to have, and every one of them has a 4G connection, so if just one person happens to get on, you're good. If nobody gets on and you're in the field and a fire, you're basically, it's good for you to know where everybody is, but nobody else knows where the team is. Well, yes, so each unit, if you're completely cut off because we're not going to be that

and I even say that we could connect everyone at all times, we could store up to eight hours of data on each unit. So in that case, it turns into more of a black box situation. Right. where you can find out what happened. Exactly, but then we could put in standard operating procedures to at least mitigate that moving forward. So feedback from my brother, lieutenant in ladder 28th, the Harlem Hilton, as they call it. This is the best thing he's ever seen since the Airpack.

And so he's been involved in a number of fatal firefighters, resafract search. I put you in touch with my brother, Josh. And maybe the NY, FDNY might be able to use this. The packs are not that expensive. to build. It's a $100, $200 bomb. So for ours it's actually $350 at the moment, but that's at low scale at the moment.

350 to kind of have bespoke ones. You make hundreds at a time. Yeah. So the bomb, for people who don't know, build of materials. Yes. That could go down to if you build 10,000 of them, what? So we'll look to actually kind of keep that static

because we always want to keep upgrading, our technology. And if we keep that static, then we can always have the best technology go out to them because it is a life safety product. So that's one of the nice things. This isn't like easy pass where, you know, a hundred million cars in the United States are going to have it eventually. And every dollar matters.

This is every life matters. Yes. So every dollar at this stage does not. When you're charging $50 a month, which means you break even in month seven or eight. Yes. So we're a Haas model. So we're hardware as a service. And the reason why we're doing that is we progressively replace.

So for the RMA, we're going to know everything that experienced, the union is experiencing. RMA is? Return to merchandise. Got. And so when the units are in the field, we don't need internet. But when they return to the fire hall, everyone has Wi-Fi. At that pump, that part, we'll do a data dump. And we see the heat load, the G-forces, anything that they experience. And we're going to write to them and say, look, we just overnight a new package to you when it gets there, takes serial number X, Y, Z out of service.

And since it's a life safety product, we ensure that it works in that 1% of time it needs to work. Now, I always think it's very interesting. And we had this with Pilot of, like, what's... next. I assume that this thing could have a panic button on it, a strobe light, it could have a camera, it could have a microphone. There's other things, an alarm, because they do have alarms on... The pass alarm, yes. The pass alarm. Yeah, P-A-S-S. That's somewhere else on the person's body. It's located right here. You just press that when you're in trouble. But yours could also have something similar. It could have a strobe light. It could have cameras. So if they're wearing it,

it could also be, if you wore it, you know, up top, it could be like the cameras that police wear. now. Yes, exactly. So what's on the road map? What's really interesting that you think could take this even to the next level? Well, the easy next step will be integrating with biometrics, so like a Fitbit, so we have Bluetooth, yep, and so we have Bluetooth already on our device. So just integrating with a Fitbit or Samsung walked or something like that. So don't reinvent the wheel. They already have it. Just get the APIs for that. And then we have other just integrating exactly what you said with video. So getting cameras up on the actual fire trucks and have that stream into our service so then the remote office can get a better picture as well so they could actually provide more information.

So there's a lot that we could do that's on the roadmap. Listen, this is incredible. I wish you continued success with it. And gosh, really important work. So thank you for doing it. I'll put you in touch with my brother Josh. And thank you for his service as well. Oh, and thank you for yours. Yeah. Okay. Big round of applause. And we'll be right back. Hey, everybody. Welcome back. Our fifth company. And we put them in random order, so don't read into that. Is Evolve Energy. Michael Lee is the CEO. Are you, Michael Lee?

Yes, that's correct. All right. Good. No interlopers here. Three, two, go. Great. So if there's one thing you want to remember about evolve energy is that we can save our residential customers up to 50% on their electricity costs and cut their carbon

emissions by 70%. And the best part is they don't have to do anything different from what they're doing today. So high level, what we're looking at is in Texas, where we just launched a few weeks ago, the average residential home. overpays for the electricity that they use to the tune of about $1,500 to $1,500 a year. Total bill is between $2 to $3,000, and we think $1,000 of that we can cut out. And the way that is, is that right now when people buy electricity,

is that they pay at the residential level the same price for electricity every single day, every single hour, regardless of what's actually happening on the grid. And so what that means is that there are actually a lot of dynamics, power prices, change. Oftentimes what we're seeing is that markets that have a lot of renewable energy, such as Texas, which has a lot of wind on the western side. When wind is available, we have an abundance, and power prices go negative sometimes. And then as soon as that wind stops, we hit a scarcity event. And then maybe a half hour later, we get abundance again when the wind kicks back in. And so we're seeing that in local markets as we have more and more renewable energy, this is creating a lot of

volatility. And so that's driving up fixed rate retail prices. So that's where we come in. We sell electricity to residential customers at the wholesale power price. Think of us as like Costco, but for electricity. And that alone saves about $1,000 for our customers. Even if they don't change any of their behavior, that alone can save them a ton of money. But what we do is where we like to focus on is the AI and IoT side. We like to predict how and when people will use energy and then integrate into their smart devices. A lot of them are, say, Nest EcoB thermosets that they already have as they go through their upgrade cycles for washer, dryers, a These are all IoT enabled, electric vehicles, hot water heaters.

These are all becoming electrified and controllable. And so what we're doing is we interconnect into all these different devices through their APIs and optimize the exact intervals that people use electricity on. A little bit of an example here. So Sarah, she spends about $3,000 a year on electricity. What we do is we kind of pre-cool her house in the morning when things are cheap. We see a power price spike. So we pause exactly how and when she's using electricity, but she doesn't feel it because we pre-cooled it. And then later on, we kind of maintain that normal temperature that she likes. So we, through this event, we saved her 50%. She didn't do any work. We get to a great outcome for her, and she starts trusting us more and more. So we have about 2,000 customers on our

waitlist in Texas, where we just launched earlier. We've been able to acquire these waitlisted customers about $20 a customer. We have a highly differentiated product in that market. And what we see is that the people who this is resonating for either already have connected devices or a connected house, care about the environment, or are millennials and are spending about five to 10 percent of their income on electricity, right? Because if you're making, call it $50,000 a year, net of taxes, if you're spending a couple thousand dollars, that's a pretty sizable portion of your after-tax income. So like I said, Texas is our first market, got 2,000 customers on our wait list. We're rolling them on in real time. We think that's a huge market. That alone is a huge market

of about $15 billion of electricity spend. And then we're kind of targeting a handful of select other states for our next market. So that's a summary of what we're up to. All right, fantastic. Let's give Michael a big round of applause. Nicely done. So I've got questions. I am your target in a way because I have Teslas and I have Nest.

And I'm constantly debating with myself because, like you said, with an electric vehicle, if you're only going to charge it for a couple of hours a night, you can kind of set it already in the Tesla. So I can set it, and I have them all set to do it at 1 a.m. because I don't know this, but I'm pretty sure it drops down. And it doesn't matter to me anyway because I only need to charge it for five hours a night or so. Plug them in, boom. But then I realize it's probably not that big of a difference.

We're probably saving a dollar or two, a day, a month or something. It's probably... You'd be surprised how much electricity to do those things stuck up. But I don't know is the key. Exactly. And it adds up. And then washers and dryers, same thing. it would be very cool if there was a standard that said just why is there no standard that just tells you what the energy price is in real time, like on your phone or on a network device in your house somewhere?

Yeah. So our whole thing is that not only do we want to provide that transparency, but we want to provide control and then feedback. Because it's one thing for people to do manual actions. It's another thing for that to be automated. And so the way, I didn't even get to the way that we structure up. But you back to my virtual question, why is there no, or does this exist yet in the market? Just a way for me to know what the cost is right now. Do I have to look it up on the website? You can look up a bunch of spreadsheets and hopefully figure it out. I think, unfortunately.

In what, in retrospect? Yeah. We're in real time. So again, there's two markets here. There is regulated and unregulated. Got it. So our focus first is deregulated markets. That's when people get to choose.

California, one of those? Unfortunately, not yet. Got it. So California, you can choose here in San Francisco. we can choose between PG&E and then what's called a CCA. But outside of California, community choice aggregator. So that's the city kind of developing its own municipal system, right? Is all this solved by nuclear?

I hate to get big question. So the answer on nuclear is that we have not, we don't have a very good track record on it. We're trying to build nuclear plants right now, and we are billions of dollars over budget. Well, yeah, they're stalling them. But I mean, nuclear would solve all of this. Well, even existing nuclear plants in places like Ohio, New Jersey, are not as the average per megawatt hour cost to produce electricity is about twice as much as renewable energy. So they are actually closing down right now because they can't compete with new renewable energy being built. It is amazing.

The new solar panels, building a new solar panel cheaper than building a coal plant for the first time, right? It's actually cheaper in a lot of markets to build a brand new coal and wind project than it is to operate currently existing coal plants. So, wow. As an example, northern Indiana, middle of coal country, is decommissioning halfway used coal assets because it's cheaper for them to just decommission those and move to brand new wind and solar that are yet to be built than to keep using that existing asset.

So we should feel good about what's happening in the free market with electricity. Are you telling me the free market has figured this out? So there are not many industries where the cost of the product has declined by 90 or 95% in the course of five or 10 years. That is renewable energy. So now renewable energy is no longer...

What drove that? Was that government intervention? It was mostly on the solar side driven because it's made out of silicon. So advances in silicon wafers have... Technology and entrepreneurship? Technology cost curves. I'm shocked. Wait, you're saying it wasn't a government official in a job for two years who didn't solve this problem?

You know, that's actually part of the stigma that we're all trying to fight right now, is that actually renewable energy is just the lowest cost source of energy almost anywhere. People don't understand this. We have won. We've already won. So anybody talking about putting in coal plants has lost their goddamn mind. Am I right or wrong? Unless that they like to pay a premium for their electricity.

Right. So we're literally putting in, anybody arguing for coal today in 2019, you're confirming with me, Michael. With your knowledge from evolveenergy.com, everybody go check that out, available in Texas, this year. It would be available this year. First sign up now. Pretty much right now. Pretty much right now. Okay. Go to Evolve Energy. If you're in Texas, you know somebody email them, evolveenergy. com. Anybody arguing for coal right now is arguing for more expense and more pollution and shorter lifespans. That's the reality. So all this hand-wringing, all of this debate was solved, in fact, by entrepreneurs and innovation like you. Because if you can

connect the washer and dryer to the smart grid and tell people not a good time to put on your electric dryer, which is the biggest culprit in the house, correct? Depends on the house. Air conditioning actually usually is for places. But here in San Francisco, we don't use air conditioning. Yeah, exactly. So it would be air conditioning in Texas. In San Francisco, it's the washer dryer or the refrigerator?

Washer dryer, all the appliances, hot water heater, and in your case, the electric vehicle. Electric vehicle. Those are the big culprits. It should be mandatory. that your software be included in all these washers and dryers. And the washers and dryers should just automatically, but you're creating the API layer that will put all this together, the glue. Exactly.

You're like the Zapier or if this than that. You're going to glue all this stuff together. So not only that, but we're the electricity company that doesn't make any money on electricity. So our whole product is we pass through electricity from the wholesale power price at cost, and we charge, call it $10 to start, more for additional services. $10 a month. So we're purely a subscription model. And so that's nearly 100% gross margin for.

us. We are... 10 bucks a month? 20 bucks a month? Call it 10 bucks a month. And we are... 60 million, 70 million homes in the U.S. is the addressable market or something like that?

Mm-hmm. Okay. Wow. And that's just the U.S. And this is very much an opportunity for EU, Australia, many markets today. Is there a standard for communicating between IOT devices and the grid yet? Is there an open source standard? Like there's HTML or, you know, the Wikipedia has like its own open source kind of philosophy

around data. In a way, that's kind of what we're providing. Yeah, it's about to say. We're that middle layer. You could lead an open source movement in addition to your company, an open source movement to just say, here's how to tell, here's a protocol to tell appliances high, medium, low, or just a number. And then here is a protocol and a standard to set your numbers.

Because they have eco-settings on the nest. which has been a godsend because if you've got the war going on in your house over the thermostat, you can say, well, what's the hottest you can take? 74, great. What's the coldest you can take? 60? Great. We'll put it at 60, 74.

Anything in between there, we don't turn on the stuff. Of course, some people, and I'm not going to mention names, like to pick a very specific degree as opposed to putting a sweater on. I'm turning into a dad. where I'm like, close the door. Well, with phones, we can tell who's in the house and what their definition of comfort is. And so we can actually pre-cool the house, do some dynamic stuff ahead of time.

If this works, what's next? If you can make this basic, you know, washer dryer, stuff work, is there another card you're going to uncover here? So you mentioned the opening API system and that's definitely something we're working on. You know, what we're actually generating here is actually a really unique proprietary data set.

We know exactly who's sensitive to what things. on what time. And so once we do that, then kind of sky's the limit. So what about batteries? Putting a power wall in is going to solve a lot of these problems? I like to say they are, if you can't control it, then battery is great. So let's put, for example, your electric vehicle. We could put an electric vehicle between your car or a battery between your electric

vehicle in the grid and then just never think about it. Or we could just use software instead of paying $20,000 for a battery and just use software to dynamically manage when it's charging. So it'll always be cheaper to dynamically manage with software, but say your television, you're not going to want to watch Game of Thrones at 2 in the morning just because it's cheaper then. So things that are inflexible, that's when a battery becomes really helpful for it. All right.

Big round of plus for Michael. Nicely done. All right, Stolen Baptiste is with us. Back on the pod. Is the third time we done this? Second, third. Third time. Thank you for doing this.

Always great companies. Thank you for having us. Always great to have your feedback. I really like this cohort. Did you have five or was there like this is like a highlight of five of ten or this is five of seven five of seven fantastic I guess I'll meet the other two by email and we'll see if we can meet them food for all great idea I met David a year ago he was a little too early for us but now you're starting to see some traction here yeah and this is a great one because we're not just taking the food and like doing a a B corporation you know oh we have to feed the pork kind of situation. It's more like a free market solution, which means it could be sustainable because all

these nonprofits that were running food from food banks and whatever. Because it wasn't a free market solution, there's probably a stigma with bringing the food to a food bank. Liabilities. Liabilities. You have to run the food. Oh, my God, there's so many. Not that those people didn't have good intent, but I think we see this over and over again.

And I hate to be a free market monster here. But the free market opportunity for that restaurant to sell at half price and get something, which would have been a zero. And for a consumer to eat with dignity, perhaps a little bit less. If you come in for the two for one, maybe you feel a little stigmatized. But I would actually do this. And I used to do it. I don't have any problem with going if I get a discount going in late because I eat late anyway. What do you think of this company?

What's their biggest challenge? What are your thoughts on it? Why did you accept it? and what's the biggest challenge? I guess that's a good way to frame it. We were and remain excited about Food for All's very high ratings and feedback from their users. Not the restaurants, the users, they like it. Yeah, and that's the leading indicator, right?

Because ultimately you can win restaurants by showing that you have a very passionate user base that will try your food just because you're on our app. Right. We're going to drive people. You're going to drive business to these restaurants. So there's an additional value proposition that they get to offer at scale. So the challenge is going to be maintaining that high fidelity, high quality of feedback and touch with the users. Half price, pretty good way.

Half price for the same thing an hour later, pretty good way to get high MPS. Well, granted, you can certainly buy love, we know. But keeping that love, users are very judgmental. And they're spoiled, right? They want very smooth UX, beautiful UI. They want an experience that doesn't leave them with food sickness in this instance. So you have to give food for all credit where it's due, which is they've been able to retain very high love from their users.

Amazing. Okay, Pi-L-I-L-I-T. This was a fascinating one, the Sullivan family. Yeah. When you first saw this one, what did you think? Well, there's a lot of minefields around what they're with the company that they're building. What is the primary minefield? Well, primary minefield is it's hardware and they're selling the government.

Oh, wow. Right. Yeah, a degree of difficulty just way up. Yeah, this is one of those instances. as an investor, you'll appreciate you, just have your rules. I'll never invest in this thing or these combination of things. Government or hardware? Well, for me, we invest in hardware, we invest government, but I'm like, we're never going to invest in both at the same time. Put in some music licensing and let's make it maybe some medical records. Let's see if we can increase the degree of

difficulty here. So as you know, rules are meant to be broken. You say you'll never do something as an investor and then you find a great opportunity. You do it. We also, I think, tend to do things that other investors might not want to do. That's where you find alpha. And so a family business, hardware, government. Like, there's a lot of investors that would not even take the meeting on those bases alone. But then you look behind that and you see that they've built a solid business with revenue. They're coded into law. So there's something about their business development skills that are above par. And what they're doing is necessary. It's underappreciated, underserved. But it's necessary. We're above the 70.

mark on a lot of our infrastructure, and you don't deploy a trillion dollars, you know, happenstance and just throw it everywhere. You have to figure out where to target that investment and they're the leading indicator on where to invest that money. Interesting. And yeah, people like us are looking for alpha and our job is to believe in people that maybe the later stage investors do not yet believe in and figure out how to make it palatable for those later stage investors for it to admit their criteria, which is why

said, hey, double, why not triple? Right. What did you think of that feedback, a little too harsh or accurate? Accurate. I mean, at the core of our value ad, I believe, for Pilot, has been how to frame what they're doing to be the large story that it really is. And they're light years ahead of where they were just half a year ago. But there's still always work to be done.

You're the master of crafting a story and really pitching a narrative around a company's potential. And so, yeah, a lot of the opportunity is hard to state in a believable way, which there's a conservativeness, I suppose, to the way that it's currently being pitched. Yeah. Because it's a business with real legs, right? And so it's, you know, when you're a pitcher with just an idea and charisma, you know, you sell a- Say anything, yeah. You say anything. But when you've got real revenue, you've got real customers who might be watching, you don't want to over-promise it. So there's a sort of walking a fine line there. Yeah, and it feels like we're moving into a different phase in Silicon Valley, doesn't it? Yeah. Where real revenue is more appreciated than maybe hypergrowth, but maybe the revenue and the union economics are broken.

Yeah, I mean, I think you can't get away from the need for hypergrowth with venture. I mean, we're taking really early risky bets. We need that growth to be able to get the ROI for our investors or in your case, for our personal needs. And so now I just think the job has gotten harder for entrepreneurs, frankly. The rules have changed to, I need you to, you have to have revenue and fast growth and margin. It keeps going up. Yeah. The benchmark to clear market continues.

Yeah. The bar continues to rise. Right. And I think founders are looking at who got funded 10 years ago, five years ago, and even two years ago. and they're waking up to the reality that that is not who will get funded in the next year. It's changed. Right. Okay.

Hubster, we happen to have something in this space. Really clever idea. But from another country, how do you think about an international investment like that? Yeah. I mean, you probably have noticed a pattern with the companies that we bring to you, which is there's always a good, healthy mix of international founders. It's, again, part of our secret sauce is playing that arbitrage, finding underappreciated opportunities overseas, opening up the U.S. markets for them, including U.S. investors.

It is predicated on the company, at least strongly considering becoming a U.S. entity. A lot of the risks related to investing internationally, well, there are two main risks, really, which is, can you help them in the market that they're selling to? And if you're not in Denmark, you're not going to be able to help them find customers in Denmark. So can you convince them to find customers in your backyard? And two, can you help them raise money? They're probably not going to get anywhere with Denmark investors. So can you convince them to do their roadshow? No offense to the investors in Denmark, but you got to start writing some checks, people. Stop sitting on that capital. Yeah. No, they're also conservative in Europe.

Honestly, it's like they're so scared of placing a bet. And there is no this weekend startups with Jason to give feedback and sort of a, this show is sort of a launching point into the tech ecosystem and raising. Or urban X to take you for 12 weeks. They need to build up that infrastructure. You do see it in Stockholm, Sweden, Norway. I mean, but there's a power law still to specifically the Bay Area more broadly. The U.S., the competitor, where that dynamic is shifting is really Asia, is the China markets.

And those dollars are focused inward. And so you can't go from Europe to China to raise, but you could still come to the U.S. and we're still the leader. Yeah. Yeah. And we will continue to be because founders here are still aspirational. They still want to build global businesses. Yeah.

And you can still fail here. Yeah. And get up and get increased the chances you get funded. Exactly. As opposed to Europe where if you fail, that's it. One and done, I think. Here, it's like, oh, tell me about your first two failures. Great.

What's next? Let's do the next one. You failed before? Awesome. Permission to go again. 3 a.m. loved it. Obviously, I'm a captured audience here with my brother being a firefighter.

My brother's firefighter, too. All right. So you live with that, right? You live with that fear of that phone call or, you know, somebody could disappear. And this is a really niche thing, but so important. And you think about the wildfires alone. Sadly, this is going to become the new norm on a global basis with global warming. Right.

And so we're going to need more and more of these. Right. And I could see these also eventually. coming down and maybe having a second life. I was thinking about it. I was like, I wonder if there's a personal use for this, hiking, you know, skiers, carry the avalanche GPS kind of stuff. And you start thinking about these mesh networks.

There was always this promise of the mesh networks, but it never worked. You noticed that? Like, five, six, seven years ago, we got pitched on a lot of mesh network stuff. It never worked. Well, so. Why is it working now? It's not that it never worked. It's that the focus was broadly on creating these networks that.

we would eventually find a use case for. And so that was phase one. We need mesh networks. Nobody knew why. Phase two was we need sensors and IOT everywhere, but still there was no why. And so you have specific use cases like pilot like 3am where it's like we need to save lives. That's why we need the mesh networks. And so again, that's something you'll probably notice from our portfolio.

We're not chasing a technology stack. we're chasing a problem to solve a stakeholder to serve. Well, I was about to ask that. Did you say, hey, let's look for mesh network technology companies that are solving a problem. You just happen to stumble upon two in one cohort. Exactly, yeah. But now that you stumble on two, you have some dexterity. You understand what a mesh network is, which means if these work and they get traction,

now you start thinking, well, maybe mesh networks is a why now for our industry. Sure, sure. I mean, we pride ourselves in, I mean, we have a phenomenal engineering team so we can respond to any, it could have been mesh networks, it could have been graphite material advancement, right? We like to stay responsive to whatever is next in technology. We will never start a mesh network fund. No, having the funds is so dumb because by the time you can identify the trend, it's basically you miss the opportunity. It's too late. I have an on-demand fund. It's like, really? Whereas to your point, fires, natural disasters, it's not too late. We're probably at the beginning of a really big problem slash opportunity. And so you introduced us earlier as an urban focus fund. We are and have always been actually a climate change focused fund. Cities are just a concentrated market where you can get things out into the world.

That's why we're urban focused. But this is the beginning of a trend around natural disasters. resilience is a very big part of that, hence 3 a.m. It's amazing where we are in society, I think, that we're looking at what used to be deaths that we just accepted. Okay, certain number of people die in cars, certain number people die in fire, certain number number people die drowning, certain number people die, you know, construction accidents, getting hit on the side of the road while they're working.

And now we're like, well, wait a second, why? Why can't we solve those 800? Why can't we solve those 1,200? Why can't we solve those 30,000? And it sounds silly, but, you know, whatever number of people, we always use bee stings as like, how many people die from? Why haven't we solved that? Like, why are people still dying from bee stings or, you know, and people make fun of, I think it's very easy to be cynical, right? Yeah.

Oh, you're using lasers to kill mosquitoes inside the house. Like, remember that one? Yeah. And I was like, wait a second, a laser is becoming really cheap. A laser at that level can't hurt a human. And with computer vision, if it sees the mosquito, And points a laser out and shoots it. And somebody doesn't get malaria, and that thing costs 50 bucks.

And malaria vaccines or shots or whatever cost a thousand. We might be saving money. Right. And our job, you quickly, is one of the great things I love about being an investor is you don't have to be cynical. In fact, cynicism is death for an investor. If you're cynical, you're at cynical at your peril. Right. Because it's the person who tries the 17th time to figure this shit out who winds up hitting the big motherloat.

It's like people were drilling for oil. 16 rigs got zero. And then the 17th one's the one that struck oil. Right. And you were like, well, you know what? I tried twice, no oil here. All right. Speaking of energy, evolve energy.

Another interesting one. I'm in that wheelhouse. Yeah. Do you worry about one like that going into a regulated space like that with consumer adoption, with technology risk? I was thinking, again, about all the hurdles that have to be solved. And I'm seeing it for that founder, Michael, like, hmm, wow. A lot of hurdles here.

Right. So is it ready? The way we think about regulated industries is we're investing at pre-seed along the lines of when you invest, right? So super early, there aren't a lot of resources to go help rewrite policy or hire lobbyists. So we'll never invest in something where we think that for this to work, regulations have to go in your favor. This is one of those instances where it is in a regulated industry, but the field is already

wide enough between the four or five states they already have access to deregulated energy markets. It's not a question of whether this is going to be big. It's a question of how big. If more markets open up, then it's a difference between them being a 10 billion versus a hundred billion dollar company. For us, both of those are fantastic outcomes. Okay. Now, you can't pick your favorite. No. But I can pick my favorite. Yep. And going through these, I always think about which one I think has a clearest path to 100 million. And I'm just going to go through that as an exercise. Evolve energy, $10 a month, $100 million, 10 million, a million subscribers, $100 a year. Seems possible. That would be one out of 60 million homes. They need to have a market

penetration of roughly 2%. Right. Possible. It doesn't seem impossible. Patrick O'Connor, $600 a firefighter, right, $50 a month. $600 a year. year per firefighter. A million firefighters would be 600, so 100,000 would be 60 million. So it's like 150, maybe 150 or something like that, 150,000 firefighters. Seems pretty easy, actually. If it becomes a standard, it might be a straight path to that. Have you done this, by the way? Have you done this math? Yeah. This is part of our diligence, yeah. Oh, you do the $100 million question? Yeah. All right. All right. Somebody's taking notes. Okay. Hubster. Same thing. $10 a month subscription, $20 a month's subscription if you did that.

Okay, $100 a year, a million subscribers, Com's got $2 million, FitBod's got $150,000, getting $2 million subscribers, not so difficult. Listen, the Sullivan family is already at $2 million, but they're only doubling a year. But if they were tripling to $2, $6, $18, then maybe you go to the doubling territory, you get to $30,000, maybe then you're growing 50%.

Seems like they have a very clear path, and they have the most revenue of everybody, correct? Yep. And then you have food for all. wow, this could become a trend. This could be like millennials. They like to say money, right? Yeah.

That's their whole thing. They're at 30K a month, $7,000 a month. Yeah, so they're at $100,000. They'd have to $10x to $10,000 to $10.10 again. So they got a little ways to go. I think that 3 a.m. and Pitlett are direct paths to $100 million. It's between those two for me in terms of the clearest path to $100 million. And it's a hard.

decision for me. I do have three runners up that I would like to applaud, food for all, Hubster, and Evolve Energy. Those are my three runners up. Okay. But for my number one and my number two, God, two million. It's a lot of revenue. But boy, at 3 a.m., that's clear path, too. People are willing to pay a lot of money for keeping those firefighters safe. Save one life. It's talking about $10, $20 million. I mean, just aside from the tragedy of a life loss, but those lives are, there's a dollar or cost associated with those lives that could be quantified by those unions and those firefighters. Insurance companies.

Insurance company, everybody kind of, yeah. But then you think about that crumbling infrastructure, right? And so this is where it gets very hard. This is why we don't place one bet as a founder, as investors. Right. We place multiple bets. You got action in all five. I have action in none.

I have zero exposure. Not yet. Not yet. I need to get some exposure here. get a little slice in the pie, a little, get my beak wet. But I have to go with the one that has the most revenue right now. So I'm going to pick the Sullivan family.

Who's that young Turk you got here? Who's that young, that whippersnapper, Jim? How old are you, Jim? Oh, you can tell me. I'm 48. How old enough to know that? 70 yet? You're 65, 70?

What are you? A little older? You could say? You might be the wrong. record for the oldest founder on the show. How old are you? 71. Yeah. Look how young he is. Look at the energy. This is what entrepreneurship's about. Yep. You look like you've got more energy than all these other whippersnappers. More importantly, Jim doesn't have to be up here. He doesn't have to be doing this. He was a successful medical professional before this.

And he's in the game. He wants to win. You can see the energy. Can't wait to get back to the office. I love it. This is what entrepreneurship does. Keeps young. So that's my number one. Is that young Turk, 71-year-old young, and we have a lot of bias against age in this industry. Let me tell you something. It's a huge mistake. It's a lot of wisdom in people who've lived the life. And if they come into entrepreneurship at 35, 45, 45, 55, 55, it turns out the numbers, the returns out, the returns are better for that group.

There are outliers in young people, but it turns out overall, the sweet spots in the 40s, according to some of the recent statistics. I think we're leaving a lot of entrepreneurial talent in the 60s and 70s. If you're 60 or 7, you want to start a business, go freaking do it. Don't wait. But you've got to get your kids involved, too, because there might be some heavy lifting. And then number two for me is 3 a.m. And I'll just do the other three.

Really great job. You're going to make a lot of money. Thank you. Although I noticed that you're doing a little bit of vacation on your Instagram. You're on a boat. What's going on with the boat life? It was a nice week away in Turkey. with my now fiancé.

Congratulations. Wait, when did you get engaged? I'm on the boat after the... As one does. Yeah, as one does. Boat life. Yeah. You actually interviewed her on this show.

Oh, really? Five years ago. What's her name and what's her coming? Tamara Lucienne. She was running, Can You Start back then? That startup failed. She's now CEO of a new startup, mental happy, which just graduated from YC.

Oh, great. Yeah. And they're trying to help people with me. Mental help, yeah. Yeah, which is big. Yeah. You've had success in that space yourself. With calm, yeah.

That's my second biggest. Yeah. How many unicorns are, you know, six that you can talk about? Six none. How many that you, including the ones you can't talk about? Well, I think there's, you know, listen, we have a little unicorn deflation going on at the moment. Sure. So who knows with these things?

But I do think at a, there's probably another half dozen that are, you know, somewhere in, you know, sunicorn territory. Sunicorn. Soonicorn. Yeah. They might get there. And you recently wrote about Pegasai? Yeah, the Pegasus movement is really interesting. Like if you think about these companies, you know, they're all going to raise money in all likelihood.

But let's say the flywheel gets going for food for all. There's going to be food for all might be thinking David and his co-founders. You know, success for us is raising $3 million. That's what they might be thinking. But it might turn out that the restaurants value. you what they're doing so much, that the restaurants give them, and that food was going to be thrown away anyway, that they could pay them quarterly for the thrown away food. It's just an idea. They say, listen, we'll let you on the platform. We pay you net 60, six times a year.

So you get this nice lump sum every other month. It's a nice, you know, little thing, and they could float that two months. So if they sign up more restaurants, they have more cash to invest in signing up the next restaurant, and the flywheel starts going. Just like, But Com is $59 a year when billed annually. Right. And if you want to peck around and try to find the monthly pricing, good luck. That's fine. You can, but just pay the $60 and let's get on with it.

You don't have to pay the $12 a month. It's a better deal. It's better for everybody. And then that money can go into getting the next group of people, the next group of people. And so what I encourage all founders to do is be creative in that model and all investors. To work with your founders on that, can you skip around to funding? Because every time a founder dilutes 20%, we get to do that. I alluded 20% if we don't participate, or we got to put more cash in.

But there are creative ways to not do that. And Calm went from a $5 million investment, $5 million valuation. The next valuation was $250. FitBod. We had whatever, $6 or $7 million valuation when they graduated. They haven't raised money since. Companies worth $100 million now in all likelihood or $90 or $80, or $80. Who knows?

We'll see how they keep growing. But by the end of the year, probably going to break $100, right? So just give yourself permission to not raise money. That is not the goal here. The goal is to have profits. So raise a little bit, and it's noble to skip around to funding for you and on behalf of your team. Yeah.

And the Pegasus is that. Yeah, we have the biggest company in our portfolio, our Sunicorn, never raised more than one round after us and now has more revenue. Which one is that? The printing cash can't say. Can't say. But they're printing cash. And that's what business is about.

Just print that cash and pay it forward to your investments. You know, everybody's, one of the things that happened in this cycle, you know, you can tell these cycles when they get hot, is that the founders get better. They understand investors better than they understand their customers. That's a very dangerous moment in time. When you're, when you understand, it's great to understand investors, great to understand the investment community and be able to quickly and efficiently raise funds. But when you get so good at it that, you're, you know, you're, you understand. You are, you know twice as much about investors than your own customers? That's a problem.

That's a big problem. Know your customer. Know your business. Know your union economics. Everything will also follow. All right, listen, continued success. Thanks for sending the companies here. And we'll see you all next time on this week.