This Week in Startups - Economic Chaos, More Pitch Madness & the Shopify AI Manifesto | E2108

Episode Date: April 8, 2025

Today’s show: Jason and Alex unpack a wild week in tech and the markets — including a fake tweet that moved $4 trillion and Trump’s latest tariff talk. Lon jumps in for another round of Founder Fridays Pitch Madness, where four early-stage startups compete for a spot in the Elite Eight. Plus, Alex chats with Sunny Khamkar, CEO of MenuData, about how AI is revolutionizing the food industry. They also dive into how founders should rethink their runway, what Shopify’s bold AI memo means for the future, and whether VCs are placing earlier bets to chase that $1M ARR milestone. Don’t miss the founder pitches and a fresh take on AI-powered food trend tracking!*Timestamps:(0:00) Jason kicks off the show!(2:11) Market chaos, tariffs, and their effects(5:59) Economic uncertainty: Advice for founders(8:00) Tariffs' potential impact on tech sectors(9:58) Fidelity Private Shares℠ - Visit ⁠https://www.fidelityprivateshares.com ⁠! Mention our podcast and receive 20% off your first-year paid subscription.(13:27) SignalFire's billion-dollar fund(17:32) Achieving significant startup revenue and its importance(20:20) Coda - Empower your startup with Coda’s Team Plan for free—get 6 months at https://www.Coda.io/twist(21:54) Krea's $87 million raise and subscription model analysis(27:33) Big tech's influence on niche subscription services(30:02) Gusto - Get three months free when you run your first payroll at http://gusto.com/twist(31:09) AI advancements: Midjourney v7 and voice activation(36:43) Shopify's AI Manifesto(41:00) Founder Friday bracket updates(57:16) Founder Q&A: Lessons for first-time founders(1:05:00) MenuData's CEO Sunny Khamkar interview(1:16:10) MenuData's pricing, customer base, and growth plans(1:23:38) AI's vertical impact and Menu Data's strategy*Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcp*Links from the show:Check out MenuData: https://www.menudata.ai/Check out Krea: https://www.krea.ai/Check out Tobi Lutke’s ”AI Manifesto” https://x.com/tobi/status/1909251946235437514Check out Pitchfire: https://www.pitchfire.com/Check out CREATANT: https://www.creatant.com/Check out Vidala Labs: https://vidalalabs.com/Check out Kippy: https://kippy.ai/Follow Sunny Khamkar:LinkedIn: https://www.linkedin.com/in/sunny-khamkar-84b905a*Follow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm*Follow Lon:X: https://x.com/LonsLinkedIn: https://www.linkedin.com/in/lonharris*Follow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanis*Thank you to our partners:(9:58) Fidelity Private Shares℠ - Visit ⁠https://www.fidelityprivateshares.com ⁠! Mention our podcast and receive 20% off your first-year paid subscription.(20:20) Coda - Empower your startup with Coda’s Team Plan for free—get 6 months at https://www.Coda.io/twist(30:02) Gusto - Get three months free when you run your first payroll at http://gusto.com/twist*Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland*Check out Jason’s suite of newsletters: https://substack.com/@calacanis*Follow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com*Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

If this was, we're starting to get from 4D chess to like 70 chess, but this is the world we live in. We live in conspiracy land. It's clown world. What if somebody said, what would happen if we put a 90-day pause on? I wonder what the markets would do. And then we roll it back. And it's like, sure enough, if you say 90-day pause,

everybody then falls back into the camp of these tariffs are negotiating tactic. They're not going to happen for the long term. I will tell founders, now is a good time. Founders need to have Plan B and Plan C ready to go at all times. And then there's what we call Cockroach Strategy. This is like Plan C or D. Cockroach strategy is everybody's laid off. We still have the IP.

The website's up and running. And there's somebody getting paid $5,000 a month to maintain the entity. And we'll see if the market comes back and we'll be able to fight another day. If you're in Cockroach mode, you're pretty much shutting down with the optionality of maybe being able to restart things, but it's kind of like being in a coma for a startup. And I do see people do that, and I rarely see people come out of a coma, but once in a while you do. This weekend startups is brought to you by Fidelity Private Shares. If you want the all-in-one equity management platform, FidelityPrivate Shares has you covered.

Visit FidelityPrivate shares.com. Mention this podcast for 20% off your first year's subscription. Coda. Coda empowers your startup by bringing words, tables, and teams together, strategize plan, and track goals effectively with all your valuable data in one place. Go to Cota.io slash twist to get started for free and get six free months of the team plan. And Gusto. Gusto is easy online payroll benefits in HR built for modern small businesses.

Get three months free when you run your first payroll at gusto.com slash twist. All right, everybody, welcome back to this weekend startups. I am your host, Jason Kellyanis, with me, my co-host, Alex. I'm X.com slash Alex. I'm X.com slash Jason. Monday, Wednesday, Friday, 12 p.m. Texas time. 1 p.m. Eastern time, 10 a.m. left coast time. We run through the news and we do founder, advice, stories, questions, office hours. So if you're a founder, or are you just into technology

and markets, is the place to be three days a week. Alex, what's on the docket? I think we have to start with some notes on the chaos today. And I think there's a good social media story to tie into this. My thought is we'll talk a little bit about the macro, Jason, then dig into the discrete startup news, but I don't think we can avoid discussing the state of play. Which is to say, we have to talk about what's happening with tariffs on again, off again. Yes. On again, off again. Who knows?

Markets going, I mean, I dropped my daughter if at school today and was just like, oh my God, it's a disaster. Oh my God, they're on pause. Oh, no, they're not on pause. And so the market is just so chaotic. And that makes it hard. I was talking to somebody who has a development company. and you know if you're a developer or a dev shop

Alex imagine you have customers now imagine those customers are impacted by all this impossible almost not to be they are going to say okay we had project A, B and C lined up for quarters 1, 2 and 3 and we're figuring out what to do in the fourth quarter you know what we're going to push everything back a quarter

we're going to take Q2 off now you know a dev shop might have to say okay to all of their freelancers hey, everybody, we have no work this month. We're going to furlough everybody for eight weeks. We'll let you know. Or we're going to do some internal project and you're all going to get paid a third or something. So second order effects for consequences, I guess, is how some people say it in systems theory.

Those have all happened. And now we'll get to third order consequences. I want to talk to people really briefly about what happened because I think this is an important moment and rewarding for everyone out there who's watching the markets more closely than they should. So first of all, there was some news, and I thought this was confirming your pitch that Trump's going to have to pull this back. I still think he's going to do that, by the way. I still think that's the likely outcome is that he will announce victory in the next couple of news. So stocks start today very much in the red. And then we get to an amazing little bit of now intranet history in which a tweet from an account called Walter Bloomberg said that Trump is considering a 90-day pause on all tariffs. Now, this tweet was deleted because it was wrong. It was based off of an interview.

that was quoted, I would say incorrectly. But here is the original, but the tweet changed the market. It absolutely changed what was going on. Sadly, it wasn't actually true. Not that far later on down the road. It turned out that the White House was saying, hey, that's not true. There is no pause coming at this point in time. So, Jason, that caused the markets to whipsaw very, very quickly.

Sam Stein from the bulwark previously from everywhere put the jump and then decline at about $4 trillion. So how much do the market go up and down? The answer is quite a lot. I prepared this very technical chart here, Jason, looking at the S&P, the NASDAQ and the Dow Jones. And as you can see here from kind of where we were, the tweet really did change trillions of dollars in global markets.

And then very much quickly, it went away. I think it was up and down 3%, maybe 4%, 5%, something in that range because different industries were moving, like the NASDAQ, I think was hit harder today. Yep. But a 6% sort of, swing of markets is pretty huge. Here's the silver lining. Okay, talk to me. If this was, we're starting to get from 4D chess to like 70 chess,

but this is the world we live in. We live in conspiracy land. It's clown world. I think Mike Solana calls it or the kids call it clown world. We live in this like clown world, conspiracy world. What if somebody said, what would happen if we put a 90 day pause on? I wonder what the markets would do. And then we roll it back. And it's like, sure enough, if you say 90 day pause, everybody then falls back into the camp of these tariffs are negotiating tactic. They're not going to happen for the long term. I will tell founders, now is a good time. And I talked about this last week. Founders need to have plan B and plan C ready to go at all times. And today is a good day for you to meet with your leadership team and actually just check plan B and plan C. Plan B and C should be how do we get to 18 months of revenue, plans, see, how do we get to 24 months of revenue? Something in that range, no less than 18. You need to have that plan.

And it doesn't mean you have to do it. And if you really feel ambitious, you could, you know, get to 12 months of runway, 18 months of runway, 24 months of runway. How do you do it? Okay, the founders are paying themselves 10K a month from these two founders. Okay, in plan B, you go to half salary. Yeah. So you go down to 5K each.

Okay, now you're saving 10K a month. Okay, the team is going to get a 25% hit on salaries. They're going to be asked to work. just the same. You're going to cut your marketing spend 50% or you're going to turn it off for two weeks and just work on delighting your existing customers. And then there's what we call Cockroach strategy. This is like Plan C or D. Cockroach strategy is everybody's laid off. We still have the IP. The website's up and running and there's somebody getting paid $5,000 a month to maintain the entity and we'll see if the market comes back and we'll be able to fight another day.

if you're in cockroach mode, you're pretty much shutting down with the optionality of maybe being able to restart things, but it's kind of like being in a coma for a startup. And I do see people do that, and I rarely see people come out of a coma,

but once in a while you do. And so, you know, really depends on how much you believe in your idea of the market, et cetera, but you may sacrifice the team and then have to start from zero again. So this is leadership time, folks,

and leadership is about defining reality. The game on the field, the reality on the field is no one knows it could get a lot worse. And second and third order effects slash consequences, I'll use the word consequences, are going to be coming in hot and heavy if this thing isn't resolved, let's say Tuesday, Wednesday, tomorrow or the next day.

Yeah. This could get pretty ugly, pretty quickly. I mean, it already has. We're already in correction territory. We are. But there's some more good news. I'll just follow you up here. We think a lot about tariffs and how they impact global change.

trade, mostly tariffs don't apply to digital services and software, Jason. So, you know, we're talking quite a lot about how, you know, trade's going to be disrupted, things will get more expensive, but software, the thing we talk about the most on this show is pretty much exempt. So it's bad, but it's not like we, you know, if there's a new 50% tax on digital services around the world, that will be worse. Did you bring it up? Because also marketplaces and finance are also generally weathered from it. So DoorDash, Uber, and Airbnb, While in a recession, those things could have different kinds of challenges. People might go from Uber Black down to Uber Comfort.

Uber Comfort users might go to UberX. UberX users to pool and UberPool or sharing might go take their bike or public transit. I was not to say bicycle, yes. Well, no, that is realistic. So if everybody steps down a little bit, you could see revenue be flat instead of growing 20, 30 percent. At an Airbnb, Airbnb hosts might need to lower their prices, have less money to pay their cleaning crew or maybe they lay off the cleaning crew and the person who owns the Airbnb literally cleans it themselves to, you know, make up for that lost revenue. Maybe people take shorter trips.

Business travel is obviously going to be impacted in a major way. So you are correct that people who are moving stuff around the world are the ones who are greatly impacted. I do think the point about the Uber and people are moving up and down in the kind of the brackets there, that's a really fascinating way to kind of see a recession coming. There's a lot of, uh, anecdotal evidence people's site, and this is slightly non-PC, but people say that people who work in the live adult entertainment industry, you might say, are often an indicator of when spending is being pulled back. People might spend less money at those establishments. At the club. At the club, you might say.

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FidelityPrivatechairs.com. And hey, mentioned this week in startups. They'll give you 20% off your first year subscription. Once again, FidelityPrivate shares.com. and tell them, you heard about it here on this week in startups. We could probably just look back to

COVID for some indication. People were feeling poor when the stock market crash there. And then there's been other, like after Silicon Valley Bank,

you can probably look at consumption there and some headwinds. But your job, as a founder, focus on your startup. We will get through this. It will be,

in all likelihood, a negotiation like Trump likes to do. I'm sticking with that prediction is that this week, we've largely resolved

or contained the crashing. And I think Japan is sending their delegation. Vietnam said they're good. The EU made a huge concession that they're going to drop everything, and then we're going to be like an Elon sort of indicated he thinks it should just be free trade, which is another way of saying reciprocal tariffs.

Or 0% reciprocal tariffs, yeah. Yeah, so reciprocal at zero. Yeah. Because if you put it at 10%, it actually really probably, anything under 15%, nobody's going to notice. So if you have reciprocal 5, 10, or 15%

Sure. Taras, and 15% is called the just noticeable difference, just perceivable difference. So when you do studies of pricing or you do studies of the brightness or sound, if people change the sound under 15%, they change the price under 50%, they change the lighting,

the just noticeable difference, the just perceivable difference tends to hit above 15% for most people. So there you have, folks. The latest news item after the false report that there was going to be a delay and then the lack of that being the next news item, Trump in a post over on Truth Social became crossed with China for putting reciprocal tariffs on his reciprocal tariffs. And he's now considering adding a 50% additional tariff on the 9th, which is Wednesday. So we'll see, but not quite the the ratcheting back that we wanted to see. If they just raised it 50% on top of 50%, it's 100%, which means nobody's shipping anything.

It's over. Like, nobody's shipping a $50,000 car and paying $100,000 for it. So that basically means it's over. Buy your cables from Vietnam. If you want an anchor cable, I hope they make my anchor cables in Vietnam. Okay. I hope they do. In some positive news to balance out that conversation, signal fire.

A venture capital firm, Jason, that I have to admit, I don't know enough about it. And I really do need to go dig into. They just announced they put together a billion dollars in new capital across a number of funds. And that brought their AUM up to about $3 billion, which means that they just raised half. of their firms, total capital in a kind of one go. And to me, this seems very bullish. They are an AI-ish venture capital firm that invest in vertical AI companies. So that strikes me as pretty good.

My concern, though, is that the denominator effect, which we talk about occasionally here on the show, will preclude other firms raising quite as much. But no matter how you slice it, huge new capital investment for U.S. entrepreneurs. Fantastic. And I think they operate in the seed stage, which is great for everybody. Everybody's moving towards seed. Why? because A's are so competitive and, you know, if you're looking at value, the entry price matters.

So doing a Series A for 10 or 20 million and you're up against Injorewitz, Insight Venture Partners, Sequoia, whoever's got these multi-billion dollar giant funds, it becomes kind of challenging, right? I think Lightspeeds got the billion dollar fund as well. So, you know, the Series A's become very sharp elbowed, very pricey, and that means if you even have this billion dollar fund, maybe you want to try to do seed, like big seed. And big seed, the big seed industry is essentially now what series A were 10 years ago. Five million dollars for 10% of the company. Seven million dollars for 10% of the company, six million dollars for 10% of the company, something in that 30, 40, 50 million dollar valuation with $1 million to $3 million in revenue.

Yes. Or an incredibly promising serial team. When you see investments happen, just understand that you're seeing a lot of confirmation bias. So you try to figure out as a founder, I deserve that. They have their pre-revenue, their pre-product launch. It might be that they're three team members. Two of them worked at this other startup that made Signal Fire, Sequoia, a billion

or they had a $250 million exit and they've got a great team and they've got great early customers that you don't know about and the products, you know, really promising. So don't over-index on the crazy fundings we talk about here or TechCrunch or that go viral on Twitter.

Those are people who hit a hell-mery pass. The industry is not about a hell-marry. It's not about, you know, a half-court shop. It's really about the basics, the blocking and tackling, the pick and roll, going to an accelerator, raising a buck 25, raising a $500,000 to a million dollar seed at $5, $10, $15 million, or what people might call pre-seat, then doing an extension and getting from $10K a month in revenue to the awesome $86,000 in revenue, $3K a day or $2,700 a day in revenue. in other words, a million in annualized revenue. And when you get to that point, you will know you have accomplished something great. Just a million dollars is not going to happen by accident. Maybe you have a million people who have ideas.

100,000 of those people apply every year to different accelerators or try to do a friends and family round or get a prototype to market. And I don't know, 5,000 of them actually go into an accelerator and or raise a family, friends and family round or put their sweat equity in to get a product to market. Of those, you know, then you get down from 10,000 of those maybe to a thousand that get to revenue. Of the thousand that get to revenue, you get to 500, they get to a half million and then 250 get to a million. This is very hard.

It's rarefied air. So from the number of people with an idea down to getting to a million in revenue, it's got to be like 0.01% of the million people had an idea. The absolute standout companies. Jason, can I ask, though? Because I'm a little perplexed on something you said. You said, you know, this is not a Hail Mary business. But what I've heard from everybody in venture is that it's the hits that really drive the return. So are you saying more that it's not a Hail Mary for founders, but it is a Hail Mary for Venture returns?

Just break that attention down for me. Amazing. So this idea of like, I am going to raise this $10 million round for 10% of my company because somebody is just going to believe in me and the team is a very rare occurrence. And the reason it's notable is because it's like the same way a half court shot. you see on going viral where some high school kid inbounds the ball and somebody even before half court chucks it because there's no time on and you got nothing to lose and then they hit the three and they win the game you don't build your plans as the founder around them in addition there are power laws which is of the you know whatever number of people drafted every year and the

250 active players in the NBA the number that actually can impact winning impact the portfolio is the top 20. Yeah. So, you know, LeBron James, Steph Curry, Luca.

Luca, like there's a small cohort who are power law players who, if you land them, your team is in the playoffs and, you know, getting to the finals

are just going to be a perennial playoff team, perennial top five, six, seven team. And that's why people really try to get those power law players. Right.

You try to get those in your thing. But I, the real point here is you should run the business not based on hitting this head, half court shot in terms of fundraising as the founder. And from the GP's perspective, you actually should not be, you are trying to hit a power law. But on a day-to-day basis, I've been trying to explain

to my team here at launch, we need to take more risk on great teams who have product velocity. If they're a great team and they have product velocity, in other words, they're shipping product, that's enough for us. Don't overthink it at the precede stage. Just, place the bet on the best possible teams. And that would be, and I, because, you know, the team will take us where they're going. Now, if you're Series A and you're putting in a $25 million check, you do want to be more thoughtful. You're going to look for those kind of companies that, you know, okay, they've proven not that they just have a great team, not that they just have product velocity. But they actually have customers over the moon about it.

They have a quality of revenue. I think you used to talk about quality of revenue. We're putting together to twist 500 a bunch. Absolutely. The quality of the revenue also very important. Are language model $20 a month accounts quality revenue? I don't think so. Founders, I know you're swamped.

You got a ton of stuff to do on your plate. You know, there's a lot of chores. You got to juggle your priorities, and that's why I want to tell you about Coda. That's what I use to keep everything under control. It's an all-in-one platform, and it's going to consolidate documents, spreadsheets, and apps you have running into a single,

scalable workspace with an amazing UI. So Coda's going to help you set all your OKRs, you know that's objectives and key results. And you're going to get access to hundreds of templates for tasks like setting priorities and mapping dependencies. At this week in startups, we use Coda every single day for important projects like the Twist 500 and Founder University. Why do we use it?

Well, because we have all these portfolio companies who have tons of information and they submit updates. And the beauty of Coda is it's so flexible. We can use it for everything from tracking those companies to tracking their pitches to board updates. And it all can live in one place. and we don't get software overload. We don't have 20 different SaaS products

that everybody needs to learn. They need to learn how to use one. So instead of juggling all these different tools, you've got one platform and the whole team is super organized. It's really intuitive. The workflows are seamless and getting more powerful by the day. So here's your call to action. Coda empowers your startup to strategize plan

and track goals effectively. Take advantage of this limited time offer just for startups. Go to coda.io slash twist today and get six months. free of the team plan. That's C-O-D-A.io-slash-T-T-S-T-T-E-P plan. There's a company called CREA, K-R-E-A. It's like Korea without the O.

And I hadn't heard of this company. TechR-R-R-Ns just wrote today that they have announced that they've raised a total of $87 million, including a $47 million-dollar series B. Bane led that, and Drason led the $33 million series A. And they are effectively a service that take, a lot of models to do images and video. I'm going to pull it up in a second here and offers it as a service that they charge a monthly fee

for. This is kind of Jason, the $20 a month thing you're talking about. If you go to the pricing page here, you'll see roughly in line with what you're saying. And you think this is pretty transitory. I don't entirely disagree, but VCs have now attached, according to Ingrid London, a roughly half billion dollar valuation to this company at Series B. So are we being too pessimistic or are just, these rappers going to be more valuable than we might have thought. So, you know, this reminds me in a way

of Canva and the argument there. It's going to be a dog fight for those $20 subscriptions. And people might have three, but they're not going to have 15. So I, as a lunatic, am subscribed to Spotify, co-buzz and Apple Music as part of my Apple One subscription. A normal person would look at that and be like, and you're wasting two or $300 a year, just consolidate down to one. Or maybe Apple music, Amazon music is available in your Amazon account. It's like, you know what? I love co-buzz because I like high-res music. My family loves Spotify. I'm the family plan. And we got Apple music for free. So it's a nice backup. Sure. I'm not over-optimizing around these things. But most people are discerning and they will have one, two, maybe three. Yeah.

That's where I think there's so much money being flooded in here that what's the difference between CREA.I and the image generator and GROC, the image generator in Gemini and the image generator and chat GPT. I can answer that kind of. So what Korea is pitching is that they can help you pick the best model for what you need and then you can have a lot more essentially access to image generation for a pretty low price point. Is that enough, though, to kind of beat back what you're saying, essentially you're making

the no one's going to have Netflix and Hulu and Disney Plus and this and that you're not going to have 80 different things. You're going to pick the three. So some consolidation will happen. At one point, you know, there were in terms of food delivery, what, eight, nine food delivery companies. You could use Postmates, DoorDash, Uber Eats. RIP, Spoon Rocket, Sprolet was back in the day. There were like a lot of different. Amazon had a test for delivery from restaurants that they were running. And then there was that other one just eats or something. Anyway, these things have all

been bought, sold, and merged over the last couple of years. There's usually ones up being two, three, four players in a space. Top two winners take most. And then everybody else is fighting for peanut. So without knowing this startup that well, it looks great. I love. I Love the idea of what they're doing with a meta one. The problem I think they're going to run into is downward pressure on these subscriptions because of free. And so would you pay for search for Plexity charges, right? They have free and paid accounts, yes.

I think they've broached a hundred million error mark of memory service. Right. So I worry about the quality of that revenue. I think right now we're in a unique moment in time where people are willing to pay because it's a new thing, just like they would pay for browsers, like you'd pay for a Netscape browser, you might pay for the Opera browser if you like that better. I think nowadays, you know,

people are willing to sample these things, but when Google, Microsoft, and Apple have these things for free, built into their products, built into their phones, you know, they might just sweep the bottom two-thirds of users. And Google's not going to go down without a fight, and I don't think Google, with their money printing machine, needs to charge for these things. I'm paying for Gemini.

I don't actually know why they're charging. They should just make it free as part of Google Docs. You know, they should know I'm a high-end customer in terms of Google ads and probably make it free. So there's just going to be massive downward pressure to the point at which somebody will jump the gun like YouTube did. And you and I were on this week in tech with the Olo Port yesterday. And we were lamenting how expensive it was for being a podcaster pre- YouTube.

And once YouTube became free and people started posting. posting there. What happened to all these services? I used to have to spend so much money hosting on MailChimp, all of our email lists, hosting all my files on S1 for this podcast, etc. And now it's like, and I used to have huge storage arrays in the office, like literally $50,000 worth of storage raise to keep every camera angle of every podcast in HD. And then I was like, wait a second. Is it on YouTube? Yeah. Okay. So if we have it on YouTube and we have it on server, then we have redundancy, I'll back it up to my machine, editors back it up to their machine. We don't need to buy those sand disk drives. We don't need to have network arrays. We don't

need to have AAS3 and do all this stuff anymore. And the consumer surplus is huge for that, but there's also another side to this, because if we do see the major technology players, the people who own their own hyper-scaled infra, come in and sweep the bottom two-thirds. As you said, companies like Priya or, I don't know, Kora's Post service and so forth, like, I mean, these these could be essentially undercut by the already large. And it would be very disappointing to me as, you know, competition's number one fan to see that because it would just be essentially people with too much cash able to own part of the market,

much as we've seen Spotify not have really any pricing ability to change their pricing because Apple has anchored everyone at 10 bucks a month still, even with inflation where it is day. How much do you spend on storing your photos, Alex, right now? I think we pay a couple bucks a month to Google and a couple bucks a month to Apple because we're not efficient right now, much like you and your music services. Okay, so you pay a little bit of storage

for your overall phone, and some percentage of that is not just your apps and music, and video, it is your photos. So you probably, it's abstracted that you pay an extra 100 bucks a year

for your family plan. Sure, somewhere in there. It's so de minimis that you don't even know how much you're paying. I don't. In all likelihood. Same with me. I have Apple 1.

It includes Apple TV, Apple Music, Apple Arcade, and some amount of storage. People used to pay for Flickr. They used to pay for 500 pixels. Was that the company that everybody used? 500 PX, yeah, I know you're talking about. PX or something, a smug mug.

Oh, throwback? Yeah. And I think smug mug wound up buying Flickr. And I think, you know, the idea that a consumer would pay for those things, you know, maybe you'd have to have to have a lot of photos and you'd have to really want, like, certain features. So this is the problem with consumer subscriptions is they can get abstracted into, you know, a bundled offering.

The same way, you know, some spreadsheet can be bundled into an office. Just like how Microsoft Teams was bundled into Office, 365 subscriptions. And that really did, I think, handicap Slack and Zoom's growth to some degree. I mean, it's not trivial. Now, they're both public companies are part of one. But still, that's, that was an, I used to track the Slack weekly actives and monthly actives versus the teams numbers when they were kind of competing to see who could grow faster.

And now it's just Salesforce versus Microsoft. off, so who cares? But yeah, things can get eaten up pretty darn quickly. But, uh, Korea.A-I-K-R-E-A-A-A-A-A-F want to take a look. I think it's a pretty cool service. I hope they crush it. I hope that our concerns are wrong and they go to a quadrillion dollars. Um, we'll see. I mean, looking at it, I can tell you that this offering is much better than the free ones I've talked about. So just the ability to train, they just have, you know, a whole cornucopia of filters and size. and animation,

and so you probably can do much better things, much faster on it. Yeah, I mean, it's definitely beautiful and people really eat this stuff up. I mean, I think that everyone remembers

the time when they were a child and they just drew whatever they wanted without shame. AI image generation is quite a lot like that. You may not become the next famous painter, but you can have a lot of fun on your own, and that's not to be diminished. All right,

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So here's your quick call to action. Do you want all Gusto has to offer with no hidden fees? Well, how about a discount? Try Gusto and get three months free. Gusto.com slash twist. That's G-U-S-T-O-com slash twist. Now, Jason, there's a clip from Mid-Journey you wanted to talk about, which we have compared here, all about Mid-Journey V-7 and its new voice activation feature.

The reason I wanted to share this is people kind of forgot about Mid-Journey because it was taking too long. To make images was taking too long, and the prompting was too long. What I thought was really interesting about this is Nick St. Pair, who St. Pierre, he's like on a Twitter account, he kind of releases. a lot of stuff and keeps you up to date on and on X. He just put this image out where it explains how it works and the new model lets you in this draft mode, just talk to it like your Decker in Blade Runner saying, zoom in, two to the left, two to the right, do this, do that. And it's

almost real time. So let's show it. Mid Journey. Just released V-7. And the killer feature is this draft mode that they have. It lets you just have a conversation with Mid-Journey. You don't worry about the prompting, free flow the ideas. Let me show you how. works here so all you do is you hit draft mode and you can turn on voice now you can just talk to midduring hey can you make a photo of a man sitting in the park please there you go it's starting to it's writing the prompt for me it's giving me some images and look how fast it is can you put him on a like a picnic blanket and put him next to a picnic basket as well hmm so good it's so fast can you bring it in a little bit tighter and then make him wearing a black

t-shirt, and I want him to be sitting next to a woman as well who's in a, like, a red dress. It seems to be lightning quick. It looks pretty promising. There was a great scene in Wag the Dog, if you've ever seen that, with Dustin Hoffman. He's basically working over the shoulder of a video editor. And he's like, okay, add a dog, add this. And they're like, oh, my God. It's almost like conspiracy theory, like they're faking the moon landing or whatever.

And he's just over the shoulder working with an editor to make more and more interesting stuff, but they're doing it so quickly. It's kind of like shocking at how fast they could do it. This has the same feeling to it to me, which is you don't need another human. So when we talk about job destruction or making people bionic or static team size, here's like a perfect example, you would send your notes to a video editor 10 years ago, wait a week. They would send you some stuff back. And what we just saw might have been four or five iterations until people give up and say, Okay, that's good enough. Now you can do all this stuff,

then give it to a video editor to finalize and polish with whatever tool they're using. Just like vibe coding, I might be able to build my annotated.com website and, you know, make it, make some wireframes and some designs and make it good enough and copy Coda or Notions Design, whatever, and make it look like those products

and then ship it to a dev team to polish it and finalize it. That's where we're headed. And, you know, this is truly impressive. this is version seven and this product. How long has Mid Journey been out, I wonder? I'm thinking it's like a four-year project. Maybe they're in year five of the project. So this is where they're at in Year 5, Version 7 of this.

And I believe Mid-Journey is an open-source project. The initial release was July 12th, 22. 22. I said five years. So this is three years. Holy cow. Less than three. That's seven years in AI.

Yeah. Yeah, so 21 years in AI. But they're three years during version seven. So they're releasing a version every five, six months. Man, if they get to version 14 in another three years, I can't imagine how fast and epic it's going to be. It's going to be 10 times. It's going to be essentially instantaneous and it's going to be three times as high quality and you're going to be able to go from a still to a video very quickly and then talk to it live. It's going to be insane. I can't wait.

And you're going to have an agent where you're going to say, go get me every video of Ashoka, you know, where I'm just going to upload, you know, 10 videos from the start. Star Wars genre I like and do my own training on my own machine with a, you know, a little tool, and then I'm going to make my own trailer for the new sequels I'm cutting to do George Lucas's original script. And that's when we'll know we've crossed the Rubicon here is when you start seeing trailers that you can't, that you get fooled by. You get fooled by a trailer, which I think is starting to happen. People can get fooled by a Star Wars trailer online, or you can make the entire episode of the next Mandalorian and people can't tell.

Those two moments will be here in three, four years. Well, I mean, the whole world got confused today by a tweet and a misunderstood interview to the tune of several trillion dollars. So I believe we're going to have spoofed trailers very soon. But the point you made about doing things quickly to then give them to someone else so that they can finish it is happening in the business world. Toby Lutkey from Shopify said today that his manifesto he sent around to Shopify employees was getting leaked,

so he just put it on the internet. And point two is that AI must be part of your prototype phase. The prototype phase of any project should be dominated by AI exploration. Prototypes are meant for learning and creating information, and AI dramatically accelerates this process.

Now, Jason, I was going to bring up the Toby memo because something else. In fact, there's a final note in it that I think fits very nearly into our static team size or compressed team size trend, and we pull that out here into a quote, the final item is, before asking for more headcount and resources,

teams must demonstrate why they cannot get what they want done using AI. What would this area look like if autonomous AI agents were already part of the team? This question can lead to really fun discussions and projects. And increased earnings and faster speeds. You know, it's, um, this is exactly what I wrote, I think two years ago when I wrote my little manifest. My ADD manifesto, automate, delegate, deprecate.

And here we are, you know, in our own company, when I add headcount, it is rare, and it has to be somebody who's a barraiser. No more, you know, throwing bodies at problems. And you know what? The team has stopped asking me for bodies, which is also very interesting. I forced everybody to put on their browsers,

open new tab, and it shows chat, cheap, Open new tab, show chat GPT. And what that did for the team was some number of people started using chat GPT regularly. Now, as part of locking down our computers, because we have a lot of interesting information on it, I can see an aggregate. I can run a report and see what percentage of time are people in Notion versus Slack versus chat GPT? And when I did like this little beta test of the software, I'm not going to mention what we're using to lock down our computers, but we've got to lock everything down. we have partners and like we have LP data, you know, it's like pretty serious stuff. And when you lock it all down, you get this productivity boost because I was like, wow, we use notion and Coda

and Slack all and Zoom all day long. Like all day long. For certain people in our team, their entire work life is those three or four cohorts of products. Yeah. And I'm like, where's the chat chPD? I was like, oh, the investment team is using chat chpity three percent of the time. I'm like, I wonder if that's low or high. People need to be doing a little more chat-shipating or maybe not. And then I realized, oh, a lot of the work we're doing in Coda, end in notion, the native AI in those products is what we're using. Yeah.

So it's actually really interesting when you start looking at the aggregate data of your teams and where you're spending your time. And that's the next phase of this. Man. Our computers are going to be studied, what we do every day. This podcast, what you and I do every day. They'll be an AI producer in here by the end of this year. saying, you know what?

You guys don't show charts all that often. I'm going to start making charts from the docket. And the docket, I think we do in Notion. We've done an encoded before. In this Notion docket, the docket is going to start suggesting, oh, there's an update to this new story. Here's a chart. Oh, there's a fact wrong.

Like, why isn't the Notion page of the docket? There should be a button that says fact check every hour. Or every time we add something, fact check it. Now, Notion doesn't necessarily. sorry, I have to put that in, but somebody should clip this and send it to the notion and code of founders. Why not have fact checking built into these? Or why not do suggestions for additional facts, right? Instead of having to proactively highlight something and then ask the prompt to do it, and that's where agentic is going to come in.

Right, so it's going to follow along and do things for you. Yes. And it should be following us here. And when I say something in this, you know, when I say, pull up the jump seats from the Model S, it should have already, when I mentioned the Model S has jump seats, it should have shown that on the bottom. and then giving you the ability or I have the ability to hit a checkbox to show? Yes, exactly.

Why isn't Zoom doing that? I just think we're talking about the future six months away versus the future, sorry, the future we're living today. So I think you're dead on. You're just slightly early, but the fact that you're saying, why isn't this here to me implies either companies are going to be on it and they're already building this,

they're going to win or they're not building it now and they're going to lose. But you have to have a really fast cadence. I do want to say, though, your point about having Chad GPT in our new tabs, going back to the Shopify memo, Two quotes. Reflexive AI usage is now a baseline expectation at Shopify and quote, using AI effectively is now a fundamental expectation of everyone at Shopify. And by the way, folks, Shopify is a well-run company. It's done very well. Like this is not some random company with some random person. This is tip of the spear company. And we're, I hope, a tip of the spear, you know, precede accelerator. And so if Toby and I are thinking this way, I think it's probably going to trickle its way down to every organization. We did our first round. Mm-hmm. Yes. Founder Friday. Here's the bracket as it now stands. So as you can see, a few companies have moved ahead. We've got Osprey from Houston. They've moved in to the next round. We've got Whisper from right here in Austin. And then we've got Med Simple from Florianopolis, Brazil. They've all moved forward. They are going to be competing in the elite eight. As you could see, still a lot of these matchups to do. So we've got two fresh matchups.

Right now, let's do it. We've got some decisions to make. So first up, from Portsmouth. New Hampshire, we have Pitchfire. I love getting cold calls and cold emails. In the history of the world, no one has ever said this. In fact, this year, there'll be 645 billion prospecting touches that will get ignored by prospects. It takes the average sales wrap 220 pitches to generate a conversation with a prospect. It'll cost their company over $3,500 to produce a meeting. 80% of B2B companies are missing their by number today.

There simply isn't enough incentive for a buyer to get back to a prospect. This is why we built Pitchfire. Pitchfire is a paid prospecting platform that allows companies to build pipeline by rewarding their prospects to engage with their sales team. On Pitchfire, businesses get answers, buyers get respect. A business can find a prospect on Pitchfire, write a quick thousand character sales pitch, and offer the money to review and respond to that sales pitch. Buyers get paid against or these pitches, even if they're not interested, as long as they get back to that person in seven days. When they do answer, 40% of the money goes to them, 40% goes to their company, so they can use it on

pitchfire, and the other 20% goes to us. That's how we make money, that's our business model. Businesses only pay money when a buyer response. Our whole go-to-market motion is a flywheel. We convince businesses to deploy capital and Pitchfire, and we run paid prospecting campaigns at their target accounts. Last month, we sent over 50,000 paid prospecting pitches out for companies. All right. So what do we think of Pitchfire's approach of building a circular economy of pitching for money?

At first, you would think this is smarmy, icky. I don't like it. And I didn't at first. When I get one of these things, hey, if you do a call, we'll give you a $25. Starbucks card. I'm immediately like, my time is worth more,

which means the sales team with that $25 gift card is probably wasting their time with somebody who just wants the $25. However, if you do this with enough prospects, I always think about those timeshare scams where you go and buy a timeshare in Jamaica

or whatever town. Free trip, but you got to listen to our pitch. Right. And then they hard sell you, and then people record it, it shared on TikTok. It's a whole genre. I went, for some reason, I got presented with one of those and I liked it.

And then I was just like, it gave me 20 more. And I was like, oh, God, don't like these again. Super uncomfortable. But if people are doing them, it must work, right? What I like about this one is the reciprocity. If you take my pitch, I'm going to put half the money into your account. So if I pay you 50 bucks to do this, you get 20 lawn. Or I should say your company gets, wait, lawn gets 20.

Lod's company gets 20, and this pitchfire gets 10. Exactly. So I like this concept, and I would like to pull the string and see if it actually works. What the devil's in the details, what you want to make sure of

is that the people who are on the other side are not doing it just to get the money and that, hey, if some number of them actually use those dollars, it would be awesome. If they don't use the dollars, then that's found money. I wonder if you get the money back

or it sits in that other person's account for a year, have a year to use it and then who does it, who does the breakage go to is my question. But this is weird. And when I hear weird, I get intrigued. Juan, your thoughts quickly? You kind of said what I was thinking to, which is this, it's a good idea, but I think it's really all about the execution.

I can easily see this turning into mostly spam and junk, like people using it just to collect the money who don't really care about the pitches and aren't going to really take your product seriously. And like then, how do you weave through all of the? garbage accounts to find the 10% of people who are genuinely using it. Like, I feel like a lot of these kinds of systems that they eventually degrade into that. But if you did a really good job of managing the community and moderating and like, I think you could actually turn this into something pretty intriguing.

Some people like to, you know, get paid to do surveys. Who's next? Up next, we have a AI-powered workspace platform for creatives from San Francisco. Here's creatant. We are building a Creative Super app, an intelligent visual workspace for teams to focus on creativity on clutter. Meet James are fashion designer from New York to take his projects from idea to production he was juggling between multiple fragmented tools wasting immense time and losing track of his content. But James is not alone.

86% of content creators want a single unified platform to handle all the creative needs. This is exactly what created provides your entire creative world in one place. Since James started using creator in May last year, he reduced his project time for six months or just two weeks. Now let me show how created works. Now you have a beautiful user interface, your images, your videos, you're using your online content, your articles, your designs, and real-time collaborative. This is how you can reorganize folders, just drag-and-drop. It's intuitive. It's made for efficiency into WordPress profiles of your content.

You can create moodbots one-click from the folder. You go to MootBot View. Here's an example, into design and architecture. It's also used in fashion. We have visual bookmarking. Here you can see Pinterest drag-and-drop into our browser extension, Instagram, drag-and-drop, Spotify, you can pay instead of Creighton and YouTube. And here are also articles we use AI on top of it.

Created works in VR augmented reality for Apple Vision Pro and Quest. Just bigger screen. We have AI instant search on top of it. You can search hundreds of gigabytes of data in seconds. No manual tagging anymore. We can select content like this in one click and the content goes to the correct folder. There's no minimal organization anymore. And we support high resolution 3D content and this environment is also real-time collaborative.

And that's how created. helps creators designers and teams towards smarter, faster, and more efficient. All right, so that was pretty quick, but Jason, first thoughts, aren't created. I've seen it before. I've met the founder before. It's a clever, like,

Hail Mary crazy idea. Anybody can do anything and organize this information. And whenever you're trying to do something that expansive, it's kind of hard to get an ideal customer profile. When he started talking about creating mood boards, I was like, well, that's interesting. And I think this is what Pinterest

Chris learned, you got to have the there there, like a very specific customer you're going after. All creatives are not created equal. I don't want to use a tool like this. I'm too busy. But I might like to see if I was redesigning my shelves back here and asking you to redo yours and asking Lon to redo his, if there was a tool where, I don't know, Chris or Lon or all of us could be throwing together mood boards of, hey, this is what we want this studio set to look like, this studio set and it was just a quicker way to share and present ideas, I could see the person we hired to redo the studio using the tool like this, right? Yeah. So that's where I like it to be more specific. How's does something similar for, uh, you know, interior design as an example. H-O-Z-Z. Yes,

really great company. And then what they did was when they nailed that, then they were able to put all the providers on and then they made money by having profiles of the providers. So it's like a crazy idea with a crazy interface. It's like being presented for everybody. I would like to see it be presented for a more narrow group. Yeah. Like the first one is extremely focused on salespeople and even SDRs to get the first call, to go from email to meeting, to book a meeting. Not even close to still. Just get a meeting. So interesting. What do you think, Alex, of this one? Well, first of all, I'm an absolute sucker for a new interface. I love that they're building. I love that they're building. You know, in VR. I'm a very visual person, so I really enjoyed watching them blast through it. My thought was, are the people they're targeting having the budget needed to make this a big company? Because when I think of creatives, no offense, I'm not thinking about people in the eye banking income bracket. So I was just concerned about their ability to sell this for a price point that will allow them to run the expensive AI in the background. But I will say my vote between Pitchfire and Creatant is going to go to

createant because I don't like people sending me meeting invites. Okay. I'm going to go a pitch fire, just because as a business to invest in, I think they have a quicker path to getting to a million dollars in revenue would be a better investment right now. The other one's a little bit of a hell Mary, like I said, and it's going to take a lot to get there. I wonder if the other one should, I don't know of Cretin should be more AI-based where it just builds you the mood boards and it posts them based on a prompt as opposed to me doing all the work, which it seems like they're adding those features. Lon, you are the deciding vote. I thought, It is interesting, and I think visually it's cool, but I think the pitch is too focused on the drag and drop.

And actually, I think the better or the thing that's more intriguing to be is the organizational. Like, when you're trying to edit something that's complicated and you've got like a ton of assets that you're putting in, that gets out of hand immediately. And that's one of those use cases for AI that I think is so strong. Like AI can identify all the assets, keep them organized. Sorry. So that was kind of missing from them. So I'm going to go with pitch fire. Oh, okay.

Pitchfired by a nose. Okay, let's do our next pairing. All right, next up. We're now going to do Kipi, which is a personal language tutor. Let's hear from Kipi. Okay. Hi, my name is Steve Walshanski, and I'm the founder of Kipi. There is your personal language tutor.

There are over 2 billion people who are currently learning a foreign language, and many of them are struggling. The traditional methods don't really work well because those are designed as a one-sumption, fits all and at today's world, people are expecting more personalized approach. If you opt for a personal approach to tutor, then it can actually get really expensive, which is pricing out many people around the world. So what people do is they are trying to find their own speaking partners. There are hundreds of groups where people get together and trying to speak with each other. The problem is that if a beginner or kind of intermediate is trying to teach another intermediate,

they don't really make any progress. And I've joined a couple of these conversations. just to find out how difficult is for these people. While the language learning market is growing at 20% a year, it's expected to reach about over $300 billion in 2032. Languages like English, French, Japanese and Korean are gaining instruction as well. So keep easier to help people learn languages and advance to a conversation of fluency. Because many people don't necessarily need to reach full fluency, unless they want to go for a job or a university.

For most people, it really means knowing enough that they can travel and connect with local people. Kipi helps you practice your pronunciation, practice real-life scenarios, or simply chat casually about the things that you care about. Kiki launched in December 2023 and pretty much grew 10-fold in last year. Kipi already gained quite attraction of super fans and continues to grow. Our competition doesn't sleep, but our competition is focusing mostly on English learners, where Kipi found its strong vote with the people who are learning

languages. Oh, right. Jason, first thoughts on Kipi. I mean, I think this is the best way to do it because the AI will learn your style very quickly. So if it knows you're good at just learning words, but you're not good at grammar and putting a sentence together, you know, it'll give you enough positive reinforcement, make you learn a bunch of words,

and then gently get you to do sentences. If you're great at sentence structure, but your short-term memory, you have a hard time with remembering colors and food. You know, maybe it will help you with that. Or maybe you're like me and you have pronunciation issues because of your dyslexia.

I like adaptive learning. And we used to do that through machine learning or through like forked trees where we'd ask a series of questions and then try to adapt the learning style to you. AI is just going to do this naturally and it's going to work. I also like the idea that you could customize it a bit. If it's AI, you could say,

say, hey, I would like to learn about this topic through reading my Knicks news. So show me my Nick scores and show me my tech news in German and force me to learn, you know, German that way. So I kind of like it. I think it's great. I love the focus on non-English speakers. And, you know, it hit me as I was watching that pitch that I would use this because I've gotten to know a couple of people who are of Nepalese descent.

And so whenever I go to where I see them, I learn a new phrase in Nepali and then I try it on them and then they'd giggle and we have a good time about it. And if I could show up with like a couple of sentences, I mean, mine's blown. Anyways, Lon, who's next? From Arlington, we've got Vidala Labs there creating generic versions of high-cost drugs. Let's take a look. Hi, my name is Isaac Yonimo. I am the CEO and co-founder of Vidala Labs. I'd like to tell you the story of Ben, who is my friend and a member of the board.

He's a pediatrician, and early in his medical career, he did a medical mission to Central America, where he unfortunately contracted a pretty severe gastrointestinal bug. Now, one of the side effects of this bug is that you can get an autoimmune disease called rheumatoid arthritis, which is, as it sounds, a debilitating joint inflammation. To treat this, he takes a drug called Humaira, which is a biologic and antibody drug that costs upwards of 150,000 US dollars per patient per year, and sometimes can even be more depending on how frequently you need to self-administer the drug. So this is well out of the range in affordability for most people around the world, and also a burden on our health care system,

since we all subsidize each other via either private insurance or public options such as Medicare or the VA. So the goal of Vidalal Labs is to bring down the cost of the drug, by reimagining the manufacturing, which allows us to make good margins and charge way, way less. This will increase the accessibility of the drug around the world and also at the same time lessen the burden for patients all around the world because not every patient is lucky enough to be a health care provider and have fantastic healthcare insurance like Ben. Thank you very much. Jason and Lawan, what do we think? hard to know, not my, you know, vertical.

So for me, easy choice. I'm going to go with the language, Kippa, because I don't know enough about this space, but it does seem promising. And so I do know that doing these drugs is, you know, really effective and generics change everything. I think the whole Roman and Hymns business model is based on generic and compounding pharmacies.

And instead of even bothering with your insurance to just buy these things for pennies on the dollar. So I do think this is like a big part of the future. I'm sort of with Jason on this one. Obviously a cheaper version of Humira that people with rheumatoid arthritis could take would be great. I'm very for it.

I wish them all the best. I think that sounds like a great concept. But in terms of a pitchable startup that sounds like something that people would invest in that is like a founder Friday sort of friendly company, I think Kippie is a very cool idea. Another great use for AI, just helping people run their languages and train.

You don't need a live partner for that. And AI partner is perfect for that. So yeah, I'm going with Sidney's Kippy. Yeah, same. I just want to say, the Vidalil Labs, your website's a little bit bare, but what you're saying is awesome. So when you have more to show us,

let us know because if you can actually bring the prices of those drugs down, you're a legend. But in the meantime, we can play and touch Kippey. So I think that's going to be my pick still. So three to zero on that one. But shout out to the biotech people for pushing ahead on trying to make the world a better place. So there we go.

So now we're going to have these next companies. If they want to do a new pitch and tighten it up, I'm okay with that. They just have to get it in within the next week or so. We've got six companies, three matchups left to do before we're at the Elite 8. Great. Let's do it in the next episode. Do we have a founder question line? We have a quick founder question from Reddit.

Oh, I like this one from Sean Gittarius on R slash startups. What was your hardest learned lesson as a first? first time founder. He's got his own example. He read the books, knew that he was supposed to keep 18 months of runway. Nonetheless, at one point, it dipped down to more like 12 months, but he had so much faith in his team, didn't want to let people go just in order to show up the financials. But as a result, conventional wisdom in this case was right. Things got worse. Eventually about 50% of the team had to be let go. That was this person's hardest learn lesson. So his question to the others is what were tough lessons that you learned from your first startup?

Sure. And what's the hardest classic principle of running startups to put into your actual practice? So I have learned this lesson twice maybe, like to, you know, write the ship and, you know, get the expenses correct. And that is very hard. So I empathize with him. Once you've been through it, once or twice, you understand that you want to preserve the altitude you have to find runway.

to land and get more gas. So if you're flying between islands, you know, you don't want to be out at sea and have to ditch the plane on the ocean. So instead of ditching the plane, you ditch some baggage from the plane to lighten it. It's pretty dark metaphor, but it is what it is. Humans are sandbags.

Yeah. If you were transferring, you know, iPhones from China to San Francisco, you might throw some iPhones overboard rather than all of them going down. There you go. So I think the other one is with talent, how to manage talent is always a hard lesson for folks. If you want to do a training program, do a training program, invest in the training program. That was a choice we made here at our investment firm. If you don't want to do training, then hire people who have the skills, you know, and just get out of their way.

Both of these strategies can work, and they can work in the same company. You might hire very elite people to run finance, let's say. And you might hire one really great sales executive. And then because you can't find great sales executives or they don't match your philosophy, you decide with your top salesperson, I'm going to create a training program for salespeople and I'm going to do professional development. What doesn't work is hiring people who don't have the expertise and then expecting them to be able to perform like an expert. So when we hire researchers here, we use the term researcher, not associate or not partner or principal or managing director of the other venture terms. This is a hard lesson.

You can't be upset at people who you hire to be experts if they're not experts. You need to train them to be experts and you have to invest in professional development. And if you have experts, then you have to demand excellence from them and not be intimidated by them and demand they hit targets and that, you know, they are. self-starters, et cetera. And it's really about crisp, clear communication when you're interviewing people. I find almost universally when a founder tells me, or when I've had this situation, somebody's not hitting expectations. It's because either, you know, one, two or three things happened. One, you know, they oversold themselves in the hiring process and you got duped, and you weren't able to get reality from their references, et cetera. That can happen. It does happen.

I see it happen all the time when people hire like this sales executive with press shirts and cufflings and they come across as incredible, but then they're terrible at actually getting on the phone and closing sales. The other is you saw the signs that this person wasn't going to work out and you just ignored them and you just hope they would, you know, kind of get there. And you probably saw that, Alex, many times at TechCrunch. You hire a writer and you don't, they sold themselves as something and they actually don't file on time and. okay, they misrepresent themselves. But then there's other times, you enabled it. You didn't, you know, cut bait. And so if there's any doubt, there's no doubt in hiring and firing, fire fast, almost universally.

When I knew something wasn't going to work out, I took too long to cut bait. Yeah, people stay too long in relationships, jobs, and employee situations. Can I just throw in a thing that I've learned at startups? Because I've worked out a couple of else. Don't tolerate toxicity. That's a good one. on. Like, this is a thing that will bring down your, even if it's a high performer, if they're just miserable to be around, they will scare away other talent and they will end up by themselves with a lot of mediocre people around them. Again, Jason, it's kind of one of those things you can detect early, but you might ignore for the sake of a deadline or whatever, but it's just, it's never worth it. Don't tolerate it. I call this by no jerks rule. I've got one too, actually, from years of work. It's not a founder, but just like as in screenwriting, they use the expression, kill your darlings, which means, sometimes you may love a character, a scene.

It may be the reason you wrote that thing in the first place, but it doesn't end up serving the story or the plot or the moment when you're done and you've got to cut it anyway. I call that killing your darlings. I feel like startups are the same way. There may be a feature or an idea or a concept that it's been with you since the very beginning. It was part of the pitch.

It's a beloved part of the product for you. But if it doesn't fit where you're going now, you might have to lose it. And I've seen that happen multiple times at different startups where it's always a hard decision. Like, well, but I love this feature. This was what I thought power users would be into,

but it's not where we're going this course. Some refer to it as sunken cost fallacy where you're just, you've put a year into a feature. It's got modest success. And modest success is almost universally the blocker to breakout success, I tell founders. So, you know, if you have a product or an aspect of your product,

let's say you've got this week in startups, it's sold out, it's doing incredible, then you do some other thing and it's not. But it's not growing, but it's growing 10% a year

and the other products growing 200% a year. That thing that's growing 10% a year, you could just reallocate those resources to the thing that's really growing quickly. You just have to understand the sunken cost fallacy,

sometimes referred to as throwing good money, throwing good money after bad. So you made a bad decision, you invested in a million, million dollars in a product that only makes a hundred thousand and you decide oh put another million into it we should put a million into that one it's like yeah nope better to do something else this is a great Reddit rapid response let's get this will fly up there as quick as

possible to our friend and well done he is x.com slash lawns i am x.com slash jason he's x.com slash Alex go do a search for this week in tech to see Alex and i guest guesting on leo Laporte's podcast, which this week in tech was the predecessor to this week in startups, which was the predecessor to All In fingerprints along the whole way. And if Leo hadn't taught me how to do all this and Alex and giving us a shot, we wouldn't have created this weekend startups without this weekend startups. So we'd know All In. Without All In, Trump would have won this presidency. So it's all Domino's thanks to Leo Lipport for getting Trump elected. That was the joke we made yesterday. He loved it. We had a lot of things. We went for like three hours or something.

It was a lot of funny. Give it a listen to everybody and we'll see you back here on Wednesday. Bye-bye. Bye-bye. All right. So today we're going to talk to a company, a startup called menu data. But before I get into what the company does and I bring up the founder, I want to tell you a little story. So I live in Rhode Island, which is a very small state here in the United States. And actually, my family has some history here. My father got his advanced degree here in the city.

So why does that matter? Well, back when my parents lived here in Rhode Island in Providence, they told me that at the time, I mean, this was back, I think, in the 70s, that there was essentially no place in the entire state to get Mexican food. And the one place where you could wasn't very good. By the time that I moved here, there was an absolute plethora of food options. We've got Uyghur cuisine, Thai cuisine, stuff from all over the world. And I'll just say, some pretty banging Mexican food, too. That's now the norm.

I kind of go to a city and I expect there to be a great number of food options out there. Anything that I want should be probably within five or ten blocks or five or ten minutes if it's a driving city versus a walking city. This is the new world. People eat more variously, more diversely, and I would say probably eat out a bit more frequently than they used to. What this means is that there's a lot more data and information out there about what people are eating across menus and other sorts of things like that. So what do we do with all that data?

Well, this startup, menu data, has an idea about just that. So please, welcome to the show with me. It's Sunny, the CEO of Menu Data. Hey, how you doing? Nice to meet you, Alex. Good to be on. Oh, an absolute pleasure. Sure. So first of all, before we break into the company, you were telling me in the pre-show that menu data is now actually based, not in Silicon Valley, not in Austin, not even in New York City, but instead in a place that I mostly associate with whiskey. So tell me about that.

Yeah, so we're actually in Chattanooga, Tennessee. Part of this really awesome kind of accelerator program called Brickyard. So 12 teams come out here from all different parts of the country and just grind on their startups. You know, they have a sauna in there. They have like a cold, plunge, they have a gym, and it's just a really awesome place to build. So little known fact about Chattanooga, it is the home of Coca-Cola bottling. So as, you know, it's a famous railway station endpoint. There's just a lot of Coca-Cola and freight and 3PL going on here. I just pulled the Brickair website, and it says, for the maniacs. I love that. I love that. It's always good to know that I'm talking to a fellow maniac, Sonny. It's my favorite type of person. All right. So I wanted to brought just a little context about why I care about what you're building. But in this case, I'm a little bit curious what the starting spark was. Why did you choose to build a company around data from menus? And we'll

get into why that matters in the business model in a second. But I'm so curious as to why you picked this problem to really, you know, put your back into. Yeah, it's very interesting. So kind of coming out of grad school, did a lot of research in human computation and training data for AI. Before AI was cool back in 2012. I worked for a startup called crowd flower. where we'd solve these awesome big data problems for, you know, large companies. But when I was living in the mission, I would see kind of chefs with their hair on fire. They couldn't read what they were buying, 30,000 different vendor templates. So there's just kind of big data problem that always existed,

especially for the independent restaurants all the way up the supply chain. And I wanted to focus on that, yeah. Is that because the hospitality business has always been pretty hands-on, people-oriented? And dare I say it, low-tech, I mean, you know, a gas range, doesn't change that much, I think, over time. And so did that lead to just the restaurant business being relatively fractured and kind of stuck in the paper and PDF era, if you will, longer than I should have? Yeah, I like to call it old school.

But yeah, so it's a very kind of relationships-oriented business. There isn't a lot of data transparency that's going on. And in our opinion, you know, food and beverage is one of the last sectors to kind of modernize. So it's undergoing lots of change all across the industry. You can see it from the way consumers. or eating at restaurants to trends around Ozmpic, GLP1, the need for data is just, you know, astonishing.

As a person who has young kids, and therefore I'm at times strapped all the time, I've become a real connoisseur of finding menus online to figure out what they have and what's in it so that way I can check against allergies and so forth. It does seem that since COVID, a lot of information was taken off of, you know, menus that I can hold in my hand

and turned into QR codes in digital formats. Did that lead to an explosion in the amount of information that was actually available in the market for you guys to kind of hoover up, if that makes sense? Yeah, absolutely. After COVID, almost every single restaurant and grocery retailer has put their information online. So, you know, through advanced scraping techniques, whether it's PDF, JavaScript, HTML, we're able to not only extract that data, but make sense of it using large language model. So we're able to convert the menu item in description, look up the recipe online, and ultimately translate that into ingredients. But, okay, so let's say that you and I are sitting down and we're both going to make a red sauce. I would go about it with my favorite methods, my favorite olive oils, spices and so forth.

You would do it differently. But if you're going to be assigning ingredients to recipes or to menu items, isn't there a risk of having the wrong actual recipe for a chicken parm or a chicken paccata or whatever and therefore missing something that might be important? Yeah, I mean, so, you know, everything is based on confidence intervals. So, you know, for the large, you know, high confidence items, if it's exactly explicitly mentioned there, then of course it's going to be 100%. But if it is something obscure like a sauce, it might, you know, have a different sort of percentage. So we're able to weight those out and give that to manufacturers or distributors or, you know,

even menu strategy teams to sort of execute and either create new products or make sales. I'm sorry, menu strategy teams is a business or a profession. Yeah. Why do I work for a living? I should be eating for a living. Yeah, why not? Well, I quit. Anyway, I want to talk about the scraping point because when I was just thinking about the business,

I was thinking, okay, there's a lot more data out there. So that makes a lot of good sense. But we've also talked a lot here on Twist, and I think out in the broader technology scene about information rights, intellectual property, the ethics of scraping and so forth, do those concerns apply in this space? Or is menu data just kind of treated it as something that everyone can collect? if they want and it kind of no harm, no foul. Yeah, we kind of view it in the no harm, no foul point because, you know, this is kind

of restaurants that on their own website have put their menus, you know, for public consumption. We're just simply using it for trend analysis. And eventually our goal is to have an independent restaurant version, almost like a premium model where actual restaurants can find localized trends and they can start becoming more data driven. So we sort of view this as an overall improvement to the ecosystem. I was going to take us into the product before customer, boy, you just said it's very interesting. It sounds like then Minutata, by the way, minudataa, if you want to take a look, is not aimed today at the single store that might be looking at trends, but instead more at chains. Is that fair?

Yeah. I mean, you know, our initial customer base is going to be that large-scale manufacturer. They're typically spending millions of dollars on R&D and innovation, and they're frequently coming out with products like McDonald's, McPlants, or Spineering. spicy Coca-Cola that completely missed the mark. So there's 80- McDonald's McPlants? Yeah. So plant-based burgers are really popular on kind of the coastal regions,

but not so much in the Midwest. And they just didn't have a lot of data around it, right? So when you can kind of compile the right sort of data and sort of create products that people actually want to eat, you know, you're starting to really use this data to provide, you know, insights for business outcomes. Okay, so the tech stack here is a crawling mechanism, a data cleaning mechanism on top of that.

And then AI on top of that to parse through it and find things and also answer questions for people. And you're selling to more Panera than to Percy's single person coffee shop. Okay. All of that makes sense to me. Can you show it to me? Can I see it? I would love to give my eyes on this.

Enterprise tech is always a little nebulous until you see the actual thing. So let's take a look. So imagine I'm an analyst at a Consumer Insights team at a food and beverage company. And I just simply want to know what's out there or what's innovative in the market. You can simply search for something like mocha, for example, and you could simply see the amount of data that you have to deal with, right? 64,000 results. That's a lot.

So we're actually running AI through every single menu item, looking at all of the ingredients and identifying information. So here you could see, you know, the cinnamon cayenne mocha is very interesting. Maybe a charcoal mocha, Alex, if you've ever heard of that. No, Sonny, all of these are blowing my mind as a black Americano drinker. But just for folks who are listening to your watching, what the system has done here is pull up what appeared to be the more exotic mocha variants that allows people to then see what other people are trying. But you can't today tie this to sales data, for example. So you can't probably tell me if the cayenne mocha is doing better than the black walnut white chocolate mocha or whatever.

Yeah. So what we do as an approximation is for every single restaurant location, we have kind of geo location data. So that geolocation data will say how often consumers are going to that restaurant, the overall sentiment analysis based on reviews. And then for top, you know, within kind of, you know, food delivery websites, we're able to kind of grab those popular menu items and then tie that back to these items as well. So if you are a sales rep, you could understand if, hey, is this? This really one of their top sellers or are consumers mentioning it a lot. Okay, I want to try to put this into Duncan Donuts terms, if that makes sense. I live in Rhode Island, so, you know, the dunk is a big deal out here.

Let's say that, you know, Duncan was going to roll out a nationwide promo. Let's say they were doing their equivalent of the McDonald's McPlant. And it doesn't do well in certain markets. Let's say this new item only does well on the coast to stick to that point. What menu did it be able to say that, hey, you know, the Dunkin, that are in the middle of the country have pulled this menu item from their menus, but it's being kept up on the coasts.

Can you get that granular today? Yeah, so one reason why clients really love our platform is we are able to grab not only what are the top most popular items per location, but we're actually able to get grab pricing per location. Oh, interesting. So we're able to say, like, whether you're on the coasts or whether you're on the Midwest,

how are those prices changing, whether it's for their own business, or against competitors. And I'll give you an interesting example, you know, especially for, you know, chains like Panera bread, where they're not looking at conventional competitors anymore because if you've kind of seen in the news and headlines,

Chili's is really exploding because they have this $9.99, you know, triple dipper package and like a $9.99 like burger where you can kind of sit down, have a meal just for $10. So the idea of competition is changing, especially as consumers are looking for things that are definitely not, expensive. I love it. So what does it cost? So if I'm a big company, I've got big dollars. You've mentioned teams and, you know, if I'm spending a million dollars on this, my impression is that you probably have some pricing flexibility just given that you're working with companies that have

budget. Yeah, exactly. So, you know, all of our models, you know, start at probably around $5,000 to $10,000 a month. But, you know, if you want access to kind of different countries worth of data, or, you know, if you want the retail module or the social media module, of course, it would cost more. I'd love to hear that. I mean, I'd love to hear startups charging a lot of money because it means they're doing quite a lot of good. Sunny, clearly having a lot of mocas in the database is good,

but I'm curious what other types of data you're hoping to add into the overall database because I presume that there's quite a lot of information out there that you're going to accrete over time. Yeah. As we were mentioning earlier, we kind of are also storing thousands and thousands of ingredients. So within our database, right, it's segmented by different categories. And let's just for, you know, fun to look at top fruits, right? So ASEI is a mainstream ingredient growing at 47% in retail. So we were talking about new data sets, right? So menu data is just recently added in kind of retail

information. So we're grabbing data from new retailers, showing growth numbers, the top categories that's being used in, brand information, average pricing. So, you know, one of my favorites is kind of dole, right? Dole, they have this assaí bowl line, and they're focusing on protein, right? So these are interesting trends and tidbits. Competitors would want to know. New product development teams would want to be interested in consumer insights teams as well as marketing and eventually. This is awesome.

So really, the thing that I've learned most in this second demo is that you're really not just targeting restaurants and chains, but also grocers and buyers and a much broader democracy. graphic of people than I had initially planned, which is good because in startup terms, that means your Tam is bigger. So that makes a lot of sense. Do you think you'll have marginal pricing power on adding more data in the future? Like, will that allow you to basically up your prices? Yeah, I believe there's this immense opportunity to become kind of the leader in food and beverage AI. So what I mean by that is to be able to continually add more and more data sets and by using AI and eventually adding in chat, functionality, create this sort of product that anyone on the team can use. You don't have to be

an expert on food. You don't have to be an expert on innovation, R&D. Anyone within the food and beverage company can just simply log in, ask a question, and get their answer. Can I give you a tip slash request at this juncture? One thing that I've gotten a lot in my history of writing about startups for so long is, you know, how do I make my company stand out? How do I get more press and attention. But I always tell people it's if you have interesting data, anonymize it and then publish it in some way, turn it into blog posts and headlines and share that data with the masses because me, the journalist, doesn't have the same data system that you do. You guys are like the best possible example of this, like especially in a

high inflation environment with everyone watching. I've seen more charts of egg prices than I ever want to admit in the last couple of weeks. So I just really feel like you guys with your datasets and your ability to already extract insights out of it. My God, do you have a publishing campaign set up to just show off what you have and also explain the world of people? Because it seems like a big opportunity. Yeah. So basically our marketing right now is basically done for free because we have these two amazing partnerships, one with Cantar, one with the Food Institute, where we're able to kind of partner on new ideas, new trends that are happening in 2025. One example of that is definitely what's happening in probiotic and prebiotic sodas, right?

Oh, because Poppy just sold. Yeah, yeah, yeah. Yeah, so we had this really cool slide showing how many skews were added at at Oli Pop and Poppy and how they were able to differentiate and win the market. Because when you sort of look at the flavors that they have, they always have flavor combination. So it feels more premium. You know, they have a raspberry rosé or they have an orange cream, which feels more

unique and they're able to charge more. So we were able to kind of have this information out there. And then people from Coca-Cola were reading it, Petsia, obviously. And it just kind of brings this new wave of brand awareness, you know, for us. That's great. But have you had Oli-Pop and Poppy before?

Have you drank them yourself? Yeah, I've tried Oli-Pop. You know, it's a really, really interesting. Oh, I knew it. I knew you were going to say interesting. What you're reaching for there is, It turns out that humans find high fructose corn syrup delicious. And when you swap it out for something healthy, it's not as good.

So shout out to Poppy for making the bank, but that's a trend that I'm not entirely sure I believe in, which makes my point that I would love to see charts from menu data, kind of breaking down like, are actual grocery stores adding more skews to this trend? Is this real? And if I was like a CPG investor, I would kill to have more that information. And then I would go share it and spread the word and make you. you guys look like kind of the crunch pacer pitch book of food. Yeah, that's

our goal. And the thing is Gen Z, for example, they're increasingly interested in dry January, the sober curious movement, healthier lifestyle. So every generation is going to have those fundamental differences when it comes

to food and beverage. And yeah, I mean, it's really leading to more and more innovation in the market. Sunny, tell me about growth. I know you guys founded the company, and I think it was early 2024. So How big is it today? And there's been a lot of talk about startups needing to grow, frankly, faster than ever. So I'm just curious about how quickly you're growing today and kind of your expectations for 2025.

Yeah. I mean, towards the end of the year, we're already a little bit under half a million, you know, of ARR. We have new clients really lined up that are willing to pay more if we're able to add more functionality. And especially this new AI feature we're working on where essentially we're going to have the first of kind where it's going to be a chat GPT AI for food and beverage, essentially, pulling in all sorts of data, whether it's retail, you know, social media, menu data. And the first step is to create a system where, you know, consumer insights folks, folks in food and beverage, they can easily search and an answer on external sources of food

and beverage. The next step, though, is to connect in internal data. So maybe it's supply chain information, maybe it's information about their existing products and their sales data. and the AI could give personalized recommendations on how their company could be doing better, whether it's a personalized sales script or just even like what sorts of products they should be pushing to the market. So we're actually building this AI tool

to allow Insights teams to actually create products. So it's going to be like an AI product generator. It's going to bring in kind of trends and ingredients and flavors and consumer preferences and create new ideas on the fly. And it might yield actually a world in which we have more menu diversity because if people see more trends, they can be more creative.

So maybe we're going to end up with better food overall. As an eater, I'm a fan. But, Sonny, I would be remiss not to ask you this. So there's been a lot of questions in the startup world about where value is going to accrue in the AI game. Is it going to accrue to the data centers,

the AI model companies, the data owners or apps, or is it going to be vertical AI? Are you concerned at all? And I'm asking for the founders who are tuned in today. Are you worried at all about the AI model companies taking on ingesting the same data that you are and offering a similar competing service at what might be a more consumer-friendly price point?

Yeah, no, I'm a firm believer in the vertical AI kind of model because there's just so much data ingestion, getting it in the right formats, normalization that has to be done along with fine-tuning your own rag pipeline. So I don't really see a world where, you know, the AI is literally going to do every single business. Although, you know, there's been so much talk about it on X where people are like, hey, you could just spin up Salesforce in the day. Yeah, but Salesforce is still in business. Exactly, right? Not like, I think they're doing fine.

Yeah, exactly. So our belief is that because these data pipelines are really hard to create and the data normalization is very, very unique to the industry. and food data is so messy inherently, that turns out there's actually 82 ways to have an ex-Bedict on the menu. And just even normalizing their data takes, you know, millions and millions of LLM calls. We really feel like we're in this unique space

where we're able to leverage what's already out there and have our own proprietary data set and then, you know, bring on existing models like plot or, you know, Open AI or even Mistral, and then have the ability to create these curated insights that never have been seen before. Okay, last couple of questions. Then, Sonny, how big is the company and staff today?

Are you hiring? And what is a difficult role you're trying to fill? We're primarily a team of three, you know, core team. Yeah, so really, really small. We have two outsourced developers, though, so actually a team of five. We just hired our first AI engineer. So, yeah, it was a very interesting process. So we actually had, you know, Chad GPT, 01, create the job description for the AI engineer.

and then it also created a challenge. So we actually got 50,000 rows of our menu data and then issued that out where people could actually build their own version of this bot, send it back to us. And it really allowed kind of a real-life example to see how people were approaching it, were they using RAG or are they using TFIDF algorithms? And it was just really fun overall.

Okay, last word for folks out there who are building and are not in a major technology hub setting. Can you just give them some props that you can build in Chattanooga, you can build in Wyoming, you can build anywhere? Yeah, I mean, I would just say, you know, get out of the house, go to your local AI meetup. If there isn't one, just create it. But just try to find like-minded individuals. They're literally everywhere.

I was so shocked to see the amount of great startups coming out of Tennessee and just the amount of innovation that people are doing, especially kind of the younger folks out there. It's just incredible. You know, they just taught me cursor two weeks ago. So I'm actually pushing code. So, yeah, it's just a wonderful time to be an entrepreneur. It's also a very funny time. if they're letting people like you and I write code.

I don't know if that's incredibly bullish or incredibly bearish. It's like got to be one of them. All right, Sonny, and just to make sure the URL is menudata. If people want to take a look and we'll have you back on when you hit the million in an error. So let us know. Yep, looking forward to it. All right.

Thanks, man. See you. See you.