This Week in Startups - Founders from LAUNCH Accelerator’s 20th Cohort join Jason to talk fundraising, growth, pitching & more | E1180

Episode Date: February 27, 2021

Check out SparkPlug: https://sparkplug.app Check out Storybook: https://storybook-app.com Check out SkillBank: https://www.joinskillbank.com FOLLOW Jason: https://linktr.ee/calacanis

This Week in Startups is brought to you by Gusto. Running a startup is hard work, but thankfully, Gusto makes payroll easy. They also offer flexible benefits, onboarding, and so much more. Twist listeners get three months free at gusto.com slash twist. Outgrow. With Outgrow, any marketer can build calculators, assessments, chatbots, and recommendation tools to double their conversion rates. Go to Outgrow.co slash twist for a 30-day free trial and a $250 credit.

That's Outgrow.co slash twist. And Our Crowd helps you invest early in pre-IPO companies alongside professional VCs. If you're interested in investing, you can join Our Crowd for free at OUR CROWD.com slash twist. Hey, everybody, welcome to this week in startups today on the program. As is our tradition. Every time one of our accelerator classes graduates, we have the top three vote getters as determined by investors come on the program and talk about their companies and even

their fundraising process and then what they're going to do once they have that money and they're going to deploy it. These are very early stage startups. To give you a little background, we started the launch accelerator about four years ago. We've done 20 cohorts. This is LA20. So you might see YC20 or YC21W. Generally, how accelerators work is we count up each class or you use the year.

So in the case of Ycombinator, they use the year. So you'll see YCW20. That means winter session or S20, I think will be summer. I think they do two sessions a year of 200, 250, 150 companies each cohort. We do seven companies per cohort, but we do, maybe this year we'll do seven, eight, nine, or ten of them. We don't push it where we want to fill seats. We wait for seven great companies that are in our Goldie Locks zone. What is the Goldilocks zone?

It's very straightforward. It's not an idea. It's not a business plan on paper. That's too early. And it's not somebody who's raised $10 million and they've got five term sheets sitting on their desk and they're picking between them. That's too hot. An idea and a business plan and a mock up is too cold.

What's just right for us? Just right for us is the company has three, four, five, ten customers. Maybe they have three, four, five, K in monthly revenue, or maybe sometimes we'll have 50K or 100K in revenue. And then we put $100,000 into the company. We run a 16-week virtual accelerator. It used to be in person. We used to have a barbecue at my house at the end.

I would smoke a bunch of meat. We'd also have fish and a vegetarian dish. So don't get into my app mentions that I'm serving vegetarians barbecue. but we do like to do some nice brisket, maybe a pork shoulder, and I, of course, do some Wagyu and some Kobe beef at this incredible barbecue we do. Since COVID, we went 100% virtual. In this virtual accelerator, we have found, in my, you know, 10 years of experience as an investor and 25 years experience, oh my God, I'm old as a journalist doing podcasts and magazines,

really founders, the great founders, they really need two things. They really just need two things. They need capital. right? Capital comes from investors and they need to grow. If your startup has capital and it's growing, everything will be fine. Let me say it again. If you have capital, money in the bank, and you're growing, everything's going to be just fine. So companies that grow get investment. Companies that don't grow, in all likelihood, don't get investment. Sometimes they can convince people to give them money. And then getting investment is a numbers game. It's like a sales process. And so we've

developed our own little proprietary. I'm using air quotes here. Process. What's the process? We use my reputation as a, you know, Mount Rushmore level angel investor, one of the top four. Two, be a proxy for other investors to know that investing in these companies that we're about to show you are good investments, right? So if I was lucky enough to be in Uber, Robin Hoodcom, you know, desktop metal pick the company, investors will say, you know, J-Cal knows what he's doing. he's not going to accept somebody into his accelerator and give them $100,000 and spend 16 weeks working with them unless they're pretty good, right? They've got to meet some basic benchmark. And that's what accelerators and incubators do in the world. They validate that this company

is not a complete disaster for other investors. And hopefully the best ones validate these could be very special companies. And because we only pick seven, and I base that on memory, memory, I remember. Memory, I remember in getting my psychology degree, that short-term memory was seven plus or minus two. So if you gave people a random string of digits, they could remember seven plus or minus two. So somebody who was maybe distracted or hadn't slept would do five and somebody who was really focused and Chris might do nine. But that's why telephone numbers are seven digits. So we picked seven companies, also a great lucky number. Always seven. Never six, never eight, always seven. And so we've had 140 graduates. And then each week, we ask the

investors. If you come to the accelerator and you see these seven pitches for three minutes each, we want you at the end to tell us your number three, your number two, you're number one. And then we score them. And we'd make a nice little graph. And over time, the companies get to see how they're performing in relation to the other companies in the cohort. But here's the trick. They also get to see which investors like their business, business model, team, customer base, traction, whatever it is, versus other ones. And what this does is it starts the relationship on second base. Imagine I introduce you to a thousand investors and maybe 50 of them pick you as number one. Well, you know that those 50, the one out of 20, all really love your company. Think about how

much time that saves. And that's what we do for our startups. Now, what do we get in advance for doing all this? Well, we get pole position in the companies. We get to put 100K in for 6%. which is a pretty good deal, but not outrageous. That's kind of the standard deal. But then when the companies graduate, we get to put in another some amount of money. Could be $100K, could be $1 million into these companies and make a second bet on them.

This gives us an ownership percentage in the winning company, so about 10%. Yum, yum, because if I had 10% of Uber, it's a $100 billion company now, that would have been a lot better than me having a fraction of 1%. same thing with Robin Hood. And so we're trying to build from the launch accelerator and then two or three subsequent financings about a position of call a 10%, sometimes as high as 15, sometimes as low as 6, 7, 8.

But that is a good place for us to be as an investment company. So we'll meet the first company now. His name is Andrew Duffy and his company is Sparkplug. Sparkplug. Sparkplug. App. S-P-A-R-K-P-L-U-G dot A-P-P.P. Welcome to the program, Andrew Duffy.

Thanks, Jason. Really appreciate it. Okay. Now, massive, massive congratulations are in order. You did great in the accelerator. And in fact, week after week, you were voted number one. You finished with 104.5 points, which was great. I think you're a very natural presenter.

And the business makes a lot of sense. And, but it was a tight competition. Our second place founder had 84.5 points. And their place at 76.5 points. So when you look at that, it was basically there was a clear number one, but then kind of tied for second and third, to be totally honest here. But these numbers kind of put things in perspective. And did you remind me in the early weeks when you were presenting Sparkplug, which you can go see right now, everybody Sparkplug. Did you come in first place in the first week or second week or third week?

Yeah, no, quite the opposite. We ended up coming in, I think fourth place, the first week, second or fifth place the second week. And that really forced us to think about how we were expressing the narrative of the application and the problem that we were solving, which I think paid really serious dividends for us going forward because we made that pitch a lot tighter, a lot better. And the process of earning points every week, as you'll all hear when you learn a little bit more about the company, is the perfect style of incentive for us. We're all about incentives and building up that sort of gamified strategy for getting better through time. All right. In a minute, I'm going to ask you

to describe what Spark Plug is. Everybody can go check out Spark. plug.app, but what I want you to do right now is just be candid with me. When you came in, you thought you knew how to pitch this business really well and that everybody would understand what you're saying. And what you quickly learned through our, what I'll call an incredibly rigorous process of basically destroying you week after week by showing you how convoluted your presentation is or how bad your answers were to investors, just to sort of wake you up that there is a higher level. Let's call it the Steve Jobs, Elon Musk, you know, level of presenting software, presenting companies, presenting ideas, and we wanted to push you to that level. Was that your actual

experience of, God, I thought you really knew how to do this and then you kind of got crushed a bit? Yeah, I'd say it was. I had won pitch competitions in the past. I felt really good about my presentation skills, but I had been fundraising for almost a year with very little success, particularly because we're a brick and mortar retail business trying to convince investors during COVID that this is a hot new spot to be investing. So when we came into the accelerator at first, I was trying to smush as much information as possible into a three-minute segment instead of really thinking about how do I prioritize the right information and make sure that that information sticks in people's heads as the trailer for a deeper and more serious conversation later on down the road. I think that was

the best piece of insight that I got about the presentation process. Right. You were looking at it in three minutes in this tight, what we call the trailer of the startup, not the full-blown movie, not the series, but the trailer, you were trying to put every plot point, every great moment, every fight scene, every dramatic scene, every close-up into that three-minute trailer, as opposed to using the trailer to get a follow-up meeting. And that's really what you're trying to do in an accelerator or in any pitch competition or any brief email or introductory call. You're just trying to get people to understand your business and to get to get to. that next meeting with the next set of partners to then move towards raising money. And you

were struggling raising money. When we get back, I want to have you pitch us, not the full pitch, but just explain to us what the business is and then explain to us how fundraising went when we get back on this week in startups. 2020 was crazy. It was hectic. There was a lot of uncertainty. We all know that. So let's do our best to minimize that uncertainty in 2021. And let's switch to a smooth and painless payroll and HR system. That's Gusto. Gusto wasn't just built for small. Gusto wasn't just built for small businesses. It was built for the people behind them. Their online payroll is so easy to use. Gusto can automatically calculate paychecks and file all of your payroll taxes. Three out of four customers say they run their payroll in 10 minutes or less,

which means you'll have more time to run your business, focus on your customers, focus on hiring, all those important things. Heidi, who manages operations here at launch, says Gusto frees upper time to do more business-critical tasks like running our syndicate. Plus, they offer unlimited payrolls for one monthly price. No hidden fees. Gusto also helps with time tracking, health insurance, 401ks, onboarding, commuter benefits, offer letters, and access to HR experts and more. If you're moving from another provider, they can transfer all your data for you.

It's no surprise, 94% of customers are likely to recommend Gusto. Here is the best part. Because you're a twist listener, you get three months totally free. Can you imagine? months free. 25% of the year, go to gusto.com slash twist. I'm telling you, you must go to gusto. G-U-S-T-O-com slash twist.

G-U-S-T-O-com slash twist to get three months free. Okay, let's get back to this amazing episode. Welcome back to this week in startups. I'm your host, Jason Calacanus. I'm an angel investor in Silicon Valley. We've been doing this podcast for 1,100 episodes. If you're just finding out about it, my God, where have you been? Here we are.

It's our accelerator's 20th, class, we're meeting the top three companies. We don't have time to meet all seven. So we hold this out as a little incentive, speaking of incentives. So if you do great, you get to be on the podcast. The other folks, the four who are in there, we still love those companies. We're still investing in those companies. And they'll be on the podcast eventually when they hit whatever milestone. But we do like to celebrate the top three vote getters so that you, the audience, can learn what it takes to clear market with tech investors, with venture capitalists in 2021. And going forward, Now, you struggled, Andrew, with raising money for Spark Plug.

Why don't you tell us what Spark Plug is, what your traction was, and then what the reaction was from investors? Yeah, absolutely. So Spark Plug, put simply, is Google Ads for Brick and Mortar. It's a tool that allows brands to bid on influence in these physical spaces that people shop in. So we specifically gear it towards verticals for consumer products that have complex products that a person might walk into a store and have difficulty deciding between this product or product, they typically, about 92% of the time, resort to asking that point of sale employee, that expert in the store about what product they should purchase. And our tool allows brands

to scalably incentivize those employees for each recommendation that they provide. So in that sense, we're allowing them similar to the way that they bid on digital ad space to kind of bid on, based on the amount of incentive they're willing to offer, getting those recommendations in store. So when I heard the pitch, you were initially going after cannabis retail stores where people were, as but one example, making a decision, a considered purchase, if you will, on a vaporizer. Now, my friend told me that there are many different vaporizers you can choose from on a very wide range of prices and feature sets. And one of those vaporizers or companies is called PACs. They're a customer of yours and packs those products cost hundreds of dollars. And they're considered the best, I guess, or one of the best.

And they wanted to educate the retail employees. The retail employees are generally not educated or self-educated, but here they're now logging into your system on their phones, learning, watching educational videos. And every time they make a sale, they get a point. and those points add up to eventually some kind of a prize. That's the basic concept here. It's almost like a Miles program or an affiliate program, but for the retail workers who are typically underpaid or paid modestly, and now they've got a reason to learn more.

They've got a reason to engage more, correct? Yeah, absolutely. Our big focus is on those sales incentives. Education is definitely a piece of what we do to help them get both the skills, and the will they need to sell products effectively, but we're really focused on how do we get them excited about selling products and how do we allow them to capture a portion of the value that they create every day? You know, if you think about a $15 minimum wage, yeah, that's a great opportunity for people to get paid more for the hours that they put in. But the way that people

generate real wealth and get real value out of what they do is through things like equity and profit sharing. And in a sense, this is like profit sharing for the point of sale employee. The frontline worker gets a portion of what they sell for every single sale that they make so they're able to gather a lot of value rather than just creating value and maybe getting underpaid or underappreciated. Even when they're such passionate workers, they really care about what they do and about what they sell, but they're not really getting rewarded for that. Okay. Now, tell me what were the reasons that people told you prior coming to the accelerator of why they weren't investing and maybe just generally describe how much you struggled

fundraising. And then let's talk about this massive, turnaround and what fundraising was like. And I'm not just saying this to plug our accelerator, but you did have, I think, one of the best fundraising experiences we've actually seen in 140 companies. So let's talk about the struggle you had briefly. And then let's move on to how you turned it around. Sure. The big problem I can break down into three points. Or a brick and mortar retail company during COVID, that's really challenging to raise through. We're a cannabis focus company in the early days, which means that 50% of investors can't invest because of their LP agreements and the other 50% are concerned about the volatility of the market. And then, of course, the third

piece is that we're a Colorado-based company. We're not in one of these tech hubs. We're not in SF. We're not in L.A. We're not in New York. So we didn't really have the same network or the same connections to leverage to get those sort of next steps into fundraising. So just to pause there, those are three serious headwinds. One, you're making enterprise software for retail stores to help them increase sales and to help those brands when retail got shut down. That sucks. Yeah. And that's a bad beat.

That's not your, that's not your, that's not because of you, but you still have to deal with it. Number two, you're in Colorado. Okay. Colorado is a great city, you know, a great state to do business in, but let's face it, that doesn't have the density of Silicon Valley. And then number three, you started your spearhead, your beachhead market, your initial market, was in cannabis, which more than 50% I would say of funds can't invest. And I would say it's 95% of funds, obviously individual. And so when we spoke initially, I said, hey, you got to,

if you're going to do this and you really do want to raise venture capital from serious investors, you're going to need to branch out, right? Yeah, absolutely. And that had always been, you know, one of our goals is to move horizontally across verticals, but it was really challenging to do that without the capital at the outset to be able to invest in updates to the product that those sort of more traditional verticals expect. So what we heard from every single investor we talked to was either one of those concerns or, hey, you're too early. You know, let's talk a little bit down the line. And you can't really ever believe an investor when they say you're too early. What that really means is we have some problem about your business that we're not really sure about

or we're not willing to point to, but we'd still like to have a relationship with you going forward. So when we entered the accelerator, the biggest change for us was the instant validation. You mentioned it earlier, knowing that the launch accelerators. had invested in us and thought of us as a really reasonable and meaningful opportunity, really serve to destroy those headwinds and make people think about, okay, wait a minute, is this actually one of those outside bets that will turn out to be really, really valuable through time? Wait a minute. Brick and mortar retail is still a $1 trillion industry, even though there are these headwinds and it's not going to change just because of one particular

global event. And that's when they all started thinking and having more serious conversations with us that, like you said, really started at the second stage rather than me trying to cold call them and convince them that I'm someone they should take seriously. Okay. Now, let's talk about what else went right. Where did you end up? We always tell our founders, hey, listen, if you can get a term sheet, if you can raise half the round, we're in all likelihood going to do the other half of the round. So if you're looking to raise a million and you can find somebody to sign on the dotted line and give you a term sheet for 500, well, in all likelihood, do the other 500 because you've done your job of being able to raise money. So we never want to be, just to be clear, the sole source of

funding for companies. And we tell them that straight up. If you can't raise money, that's a muscle, that's a skill that founders have to have. So how did you go about doing this? Did you go the party round route? Did you get an anchor to give you a term sheet? How did the round come together? Yep. So we came into it looking to do a little bit more standard strategy of get an anchor, lead investors who can be the center point of the round that people orient around. And through the accelerator, we met a number of investors who were interested in taking that position. We ended up deciding to go with 10-110 ventures out of L.A. Mini Ingersoll, we met during the accelerator and just had a fantastic relationship with her, but was also really impressed by the relevant

experience of the rest of their team. And what was really, really important for us was that all the investors that we were bringing in had been operators in the past. I think by far the best VCs or people who have started startups and been successful or unsuccessful with those startups and therefore have a better view into how that experience actually goes. We leverage that to obviously get interest from a number of other strategic investors, launch and the syndicate took the biggest chunk of the round other than 1010. And then we filled it out pretty quickly after that with a couple of additional investors who we thought would be really perfect fits based on how the strategic value they could provide.

Great. So how much did you wind up raising, before launch decided to invest in this round and syndicated approximately? Yep. So, you know, in the whole history of the company, we'd raised about 800K, a pretty, you know, small angel round and then a bridge round to get us to the point where we met launch. And then through the launch accelerator with their investment plus the investment of the investors able to find, we've now raised almost $3 million. Wow.

And you syndicated through the syndicated? com. How much did our fund put in? And then what were you planning on raising from the syndicate? And then how much interest did you get from the syndicate? So it's like basically three numbers there. Yep. So launch fund put in 250.

The syndicate we set out to raise 500 and ended up oversubscribing to just over a million. So pretty successful there. And, you know, the best indicator for me there was that the syndicate members were behind it and thought that it was a really viable concept. Because in my experience, raising through the syndicate, I've encountered. a lot of syndicate members who reached out to me with additional questions or, you know, outreach to support us. And they're pretty serious people. They're executives at some of the best companies around or they're really successful operators who have, you know, started and sold

companies themselves. So having that, you know, bench of people on your team is a pretty fantastic opportunity. Probably 150 or 200 individual investors in that SPV, that syndicate group. Yep. Something in that ranch. And now you have access to all of them. But on average, they're putting in $7,000 or something like that. So they're putting in a small amount on average. But what you'll see in my experience with the syndicate.com, which is for accredited investors, is they will put in, if you add two zeros, that's kind of how they behave with their investments.

They put in 7K, but they acted like they put in 700K. So, Andrew, I can't tell you how happy I am for you to come in with all these headwinds, to get your ass kicked for the first three or four weeks. And then, you know, really focus on your own performance, your own limitations. as a founder and to evolve, right? And that, when I talk about the growth of the startup, that also for me means the founders. And you know what? Watching you has been a delight, watching you get better, watching you answer the questions, and now watching you get oversubscribed and for your funding. Now comes the hard part. You got to return 50 times my money. You're going to

do it? Oh, you bet. 100 times. All right. Good. Yum. Now you return 50 times my money. You and I are going to Tokyo and Kyoto together. And I'm, love it. You return 50 times my money. We're staying at the Amman Hotel. You got the video right now. Okay, Amman Hotel. Going to go to the best sushi restaurants and we're just going to tear it up.

Okay, great job, Andrew. When we get back, you'll meet our amazing second place and third place finalists and winners of the launch accelerator's 20th class. We get back on this week in startups. How do you know when a product is just killer? How about when the market leaders start adopting it when it comes to interactive content marketing, Outgrow.com is used by Adobe and Salesforce to engage and educate their audiences while improving their lead conversion rates. Outgrow's wide range of intuitive, no-code tools such as

calculators, chatbots, assessments, and quizzes help you drive engagement and boost conversions. So you ever know when you come to a website and they're trying to get you as a customer and they give you a nice quiz? And then that allows you to talk to somebody who is, you know, going to help you close that sale, like an associate. Well, that's what these. funnels are about. And if you use these no code tool things like a calculator, you can do a mortgage calculator, you could do a calculator of savings accounts. You get the idea. Well, these pre-optimized templates make it easy for the modern marketer to quickly create interactive content, as opposed to going to your dev team and saying, I need this. And they never get to because you've got other

things to work on. When you think Outgrow, you should think growth. It's that simple. Outgrow equals growth. Our Associate Presses Loves Outgrow and built this Twist Podcast recommendation tool for fun. If you head over to This Weekend Startups.com slash get started, you can use the tool for yourself and get a personalized recommendation on what episodes to check out based on your preferences. Really cool idea, right? And we would have never hired a developer to do that. But since Outgrow.com, 4 slash Twist, is giving a 30-day free trial and a $250 credit. It was a no-brainer for us. Go ahead and go to Outgrow.com slash twist and get that $250 credit. You get it. You put it in your account and you're all set.

Welcome back, everybody. Second place, amazing company in the launch accelerator's 20th class. Francisco Coronero, I love saying your last name, Francisco. He is the CEO and co-founder of Storybook. You can go visit them at Storybook dash app.com or if you type in Storybook massage or Storybook into the app store, you'll find the app, correct, Francisco? Absolutely. Okay.

You got to hear first place talk about, you know, their experience. tell everybody what was your experience. How did you find us to start? How did you find the launch accelerator? It was out of luck, actually. I knew about this weekend in startups. I knew about the Founder University. And I ran up with a friend who went to Founder University back in the day

when you actually went to an event. Yes. He was there for three days. In person. That's right. He was there for three days, two years ago, and he told me, you should join now they are doing online, and it's an amazing, amazing class. So I joined, and that's when I pitched to you storybook for one minute, and you select me number first, number one on that day. So for people who don't know, we run something called founder dot university.

We do it, I think, four times a year. And it's for free. It used to be in person for 60 people. Now it's online, and it's free for 200. 150 founders, and your company is based where in which country? We are in Ecuador. Ecuador. So we, so explain to everybody what storybook does?

Sure. So storybook is the only app to combine infant massage, narrated bedtime stories, and music to help children relax and sleep better. So you help people put their kids to bed. This is one of the most acute problems. any parent knows that it is brutally hard to put kids to bed sometimes. And they look for a couple of different techniques. And my wife discovered from a friend of ours massage for kids and infants,

just a little rubbing of the shoulders, et cetera, gets them very relaxed just like it does for adults, obviously playing of music, and obviously story time. That's why kids have been read bedtime stories. bedtime stories will exist. Now, the question I had when I saw your product was, wait a second, we're going to put kids in front of a screen. Isn't that going to wake them up? And your answer to that was? No, we don't put kids in front of the screen. Storybook is actually audio stories. So the kids will only listen. The parents are looking at the infant massage guides. Right. And so infant massage is a studied science,

or is this more of a yoga kind of unproven but, you know, respected nonetheless, you know, technique? Has there been any research on this? Is there any science on it? 100% science. In fact, there's the Touch Research Institute from the University of Miami who has been pioneering the research on the power of touch. And the coolest part of this is that when a parent is using a storybook, or is actually just robin his, his, his, he's, back or head, the benefits are not only for the kid, but also for the parent. There's a proven release of oxytocin. Oxytocin, the love chemical. Exactly.

And you reduce cortisol as well. So you reduce stress and increasing love at a time when most parents are struggling. So just the act of a parent pausing for a second and not being frustrated at putting their child to bed and maybe just massaging their hands or their arms while telling them a story, while listening to some beautiful music in the background, can not only help the child full asleep quicker and have a deeper sleep, but also helps the parent experience more love and less stress. So you've turned a stressful event into a more loving and calming for everybody involved. Exactly. And creating an everlasting memory for the family.

And the product is free to download. It's a subscription model and it's 4799 a year, correct? That's right. Or do you charge $15 a month for it or is it just only for a year? No, it's only. We have yearly plans only. Only yearly plans. I think in 2020, you did almost $400,000, correct?

That's great. Amazing. So that's a good start. You've had over a million downloads. But this is a business, you know, it reminds me a little bit of calm where people thought I was an idiot for an, you know, investing in com.com. and that turned out okay. So people thought we were crazy for investing that one.

When I saw yours, investors thought you were a little bit crazy with this stuff. Like what is infamacage and story time and you're from Ecuador? What business do you have in all of this coming to American raising from the venture community? What was the reaction when we over 16 weeks introduce you to over 1,000 investors? And obviously you came in second with 84.5 points. So spoiler alert, people liked it. They liked the reoccurring revenue. but tell me what was the experience of being in the accelerator and fundraising.

Yeah, just like Andrew said, after entering into launch and having that validation and Jason's name behind us, suddenly we were into something interesting worth looking at. Before that, it was really tough for us to convince people. We had the reviews, we had the research, but actually convinced people that we were heading into somewhere interesting was a big challenge. But after entering launch, all of the... a little bit of validation. Exactly. Lots of validation. So tell me how the round came together. At some point, in what week did somebody say, I'm in? And at what point did you win first place? Because you

must have won first place or second place. Do you remember the week you won first place and how that felt? And then do you remember the first person to say, I'm in? Yes, both of the things. Tell me. The first person to say, I'm in was actually before the first time we pitch, just by knowing that we were into launch accelerator, they said, I won in. Oh, wow, that's amazing. Yeah. So we feel that the angel round, we were racing,

we feel that in the first two to three weeks of launch accelerator. So that was great. And the first time we won. Wait, wait. In the first two or three weeks, you're saying you got all the commitment you wanted for your angel round? That's right. Wow.

I didn't realize it was that quick. And how much money were you looking to raise? We were looking to raise $350,000 for that first chunk and then top that with the syndicate. Got it. How did that process go? And then we'll go back to what week you went. Or actually, tell us which week you remember winning first place for the first time and what that was like. And how you yourself as a founder, Francisco, got better at what you do.

Yeah. So we won at first, at the third week. We started at fourth, third, and then first. and it was really, really a great feeling. Like the quality of the other founders and startups is amazing. So it was great. And I remember something that really marked me. And when I pitched to you, the first time you told me your pitch is awful.

Your design is really disgusting. You need to improve this. And the first time we pitch, we put a lot of effort to make it better. I try to be supportive when I absolutely destroy founders for having terrible pitches. but did I do that in front of everybody? No, no, no. No, that was in private. Hopefully I did it just in private.

But it worked. It worked? You really pushed us into becoming the best that we can be. So again, three weeks later, we won the first time. So it was a great feeling. So in a roundabout way, you're saying I was right. Absolutely right. Great.

Can we clip that and send this clip to my wife that I was right about something? No, when it comes to presentations, having an ugly deck. as I told you, you can't have a great business and then show an ugly deck. That would be like going to a restaurant and you cook the perfect steak and you put it on a dirty plate with like, or you serve somebody

the perfect cocktail and there's lipstick from the last person who had the martini or the, you know, you can't do it. You have to have a beautiful deck. You have to present concisely and they have to understand it and you did that and it paid off obviously. Tell us about the syndicate process.

I know you're, you know, by the time we air this, you'll be done with it. But you had a tremendous response, even after we just sent the deal memo. So every time, just so people know, we send a deal memo to, I think, what's close to 7,000 accredited investors now, over 3,000 of which have actually invested in a deal so far. So what was that experience like after we sent the deal memo? How much were you looking to raise? And then we give you little updates. So tell us about the 48-hour, 72-hour updates. yeah we once we launched we were aiming for 350,000 from the syndicate we oversubscribed in nine hours so it was terrific after 48 hours we are at 200% the allocation that we expected so great

and at the time of this you're going to do a webinar where you meet all of the great investors and answer their questions and then if you do take that money you're going to have to put it to work and return 50 times the money and you're telling me you're going to work and incredibly hard to return 50x our money, correct, Francisco? Exactly. Okay, good. And if you do it, then do you want to go to Tokyo? Or would you rather we go somewhere in South America, which I've never been to?

Where we go? You're moving to Miami, I heard. Is that true? Yes, that's right. So then we'll all go to Miami. So on the way to Tokyo, we'll stop by Miami. We're on the way back, one of the other. All right, continued success, Francisco.

When we get back, you'll meet, essentially, our third place winner, who was kind of tied for second. It was pretty close. when we get back on this week's startups. Do you ever wish you invested early in some of the best performing IPOs of 2019 and 2020, while Our Crowd investors did invest early in many of those awesome IPOs? With Our Crowd, accredited investors can invest directly and easily in startups early before they IPO and before they get bought.

Our Crowd investors have benefited from companies IPOing like Beyond Meat and Lemonade. Wow, how about those returns? And some of the companies have been acquired by buyers, Intel, Nike, Microsoft, and Oracle. The investment professionals at OurCrowd have already invested hundreds of millions of dollars in over 200 companies with dozens of exits. Today, you can join Our Crowd's investment in NexA 3D, a 3D manufacturing innovator that's shaping the future of a projected $150 billion market.

NexA 3D's best in class solutions give customers a productivity advantage of 20X their competitors at up to 85% lower cost. you can get in early on NexA 3D and other unique opportunities at our crowd.com slash twist. I recently wet my beak and placed a little bet on Saibra. That's a company that uses AI to uncover disinformation and expose fake news on social media, which is a great idea.

The R-C-R-C-O-R-O-W-D is always free. Just go to O-U-R-C-O-W-D.com slash twist. Again, O-U-R-C-O-W-D.com slash twist. R-Crow.com slash twist. Let's get back to this amazing episode. Okay, welcome back to this week. startups in third place, uh,

was mehek, Vora, M-E-H-A-K, I'm pronouncing it correctly. Yep, what the mehack. What the mehack? Uh, now, we met, um, I'm not sure if you came to Founder University.

How did we meet? I came to an office hours episode, this time last year. Right. I had this crazy idea that I wanted to be more available to founder. So I said, just take one of these neighborly spaces since they're available and we're an investor in neighborly, which are pop-up spaces that you can rent by the hour. And I said,

rented for a couple of hours and just asked anybody to come and ask me any questions. You came and asked me a question and you had maybe a couple of minutes on stage. How did that go? What was our interaction like? I don't remember it. Yeah, it was great. I mean, I was so nervous getting up on stage and this was pre-COVID. So yeah, I think just being in front of an audience, I hadn't pitched on Delta at all yet. So this was my first experience doing that. It was good. Awesome. And then we invited you to come to the accelerator and tell us what is on Delta. I know you're going to be rebranding it and think you're okay talking about the rebranding. But tell me what on Delta is and what the rebranding is and what you do as a company. Yeah. So we're rebranding on Delta to SkillBank. And Skill Bank is a company that you come to and within 15 weeks, we help you land your dream job. So right now, we're teaching very specialized marketing skills, starting off with paid acquisition,

and we're helping our participants land full-time demand generation or paid acquisition roles at a company. So to translate that for people who've never heard about growth hacking or marketing, companies need marketing. We talked earlier in the episode that growth is what startups are about. And there are people who want to work at startups and maybe want to work in marketing, but you can't go to college and learn CRM or SEO, search engine optimization or buying ads on Facebook. That's not taught in college.

If you learn that, how do people typically learn those skills? They just learn it themselves or do they go work at a company and they teach them at the company? How do people typically learn how to do paid acquisition and funnels and all this great marketing stuff that drive startups and now increasingly bigger companies to grow? Yeah, so there's a couple of ways.

One is you can join a company at an end. level and maybe it's starting off at a customer support level and working your way up or finding some company that wants to take that risk on you. The way that I learned was I just learned on someone else's dime. So I'd go out to startups or companies and say, hey, I really want to learn paid or I really want to learn SEO. I'll work for really cheap as long as I can play around with your data set. So we look at ourselves as being a career accelerator. So how can we give you those skills within 15 weeks and help you land a job a lot quicker than doing what I had to do and struggle for a couple of years trying to figure out how to learn that on my own.

And you are pursuing the ISA movement, income sharing agreement movement. If people come to your school, is it a 10-week program, a 14-week program? I forgot the exact duration. 15 weeks. So it's a 15-week program. Is it full-time or part-time? It's part-time. So classes are Mondays, Tuesday. days and Thursdays for two hours in the evenings. So it's specifically designed for people who might be working at a Walmart or driving for Uber or in college or in some dead end job. And then they put in these hours at night. And what is the cost of the degree? And then how does an income sharing agreement work if people are hearing about that for the first time? Yeah. So we take 10% of your salary for

two years as long as you're making over 40K per year. So if you're making under-firm, 40K or under 3.3K per month, you owes nothing because we did a really bad job at helping you change your life. So whenever people are coming to us, they're looking for that upskilling. They're looking to get into learning how to do marketing and we're here to be that stepping stone. Got it. So it's free to come to the school. If you're accepted, you have to apply. And I'm assuming you don't accept everybody. You're looking for people who are serious about this and have some aptitude. Yes. If you do get accepted, instead of paying up front, you give 10% of your salary if you make over 40K and it's capped at some number, right?

What is the cap? Our cap is at 18K. So if you come through on Delta, you are skill bank now, we won't make over, or we won't make over 18K from a participant going through the program. And you've had, I think, 26 people have signed ISAs so far, income sharing agreements, which represents about 500K or so. So this is really a great business. very early days, but you take all the risk on educating them. They put no money up and then you

actually help place them. Explain this component of the education or the upskilling. Is upskilling the word we use now in the industry? That's what we're using. Yeah. I like this term because, you know, people will spend what, $100,000, $250,000 going to college or more in some cases. They go massively into debt, 50 to 250k in debt, and they don't, they wind up getting a 40 or 50k job. And it turns out what they learned in college does not actually work, but you say, hey, we'll take all the risk and we'll actually help you get placed. What are the placement services? And if you were to describe, you know, the, you know, 100 units of energy that you put into

a student, how many units of that on a percentage basis of your energy goes towards placing them versus educating them? A lot of it is around education. And we've actually structured our program to be very similar to the way launch thinks about how you connect founders with investors. So what we teach our students or participants during the first couple of weeks of class is this is how you interview. This is how you reach out to companies. These are what companies are looking for. Wow. So you literally teach them those skills, which are not the hard skills of SEO or buying. These are kind of the soft scales of how to present yourself and how to interact during an interview or how to land a customer or client or job. And they're learning paid acquisition

as well. And that's the main meet of the first six weeks. But what we're really focusing on is how can we help them get that entry level job within the first while they're going through our program? Because if they can get that foot in the door, then they can use our program while they're learning in the evenings as a way to help them learn while they're going through their learning experience working at a company. Amazing. And so 80% education, 20% placement. If I had to pick a number, do you think?

6040, 70, 30. Yeah, maybe 80, 15 is probably what we put it at. Yeah. You're already at a ballpark 60% placement rate? About there, yes. Of graduates. Yes. And then how long is the average time period between,

them graduating and getting a job? This is really student dependent. We've seen that we've had some students that have gotten placed while they're going through the program. The average that we're seeing, though, is between two to three months after completing. So they get the education and then they really have to start grinding to get that job placement. What is the range of salaries, median salary? You've placed 60%.

So you've placed over a dozen people, I assume. What kind of salaries are they getting and how do they compare to their previous salaries? Yeah, so a student when they're coming into the program is making anywhere from 10 to 20K per year, leaving our program, our average right now is 75K. Wow. That's incredible. So for people who are out there who are listening, you can go to ondelta.io or skillbank.com or skillbank. Join skillbank.com.

Join skillbank.com. Join skillbank.com. If you want to get a free education and pay for it, only if you get a job. love the ISA space. We've now done investments in Maritas, yourself, Lambda, and we're looking at this revolution. We think it's going to really change education. Just briefly, you were able to, you met a bunch of investors. At what point did you get your first offers during the 16-week program? We got our first commitment. I believe it was during week five or six. Great, which is amazing. And then you were oversubscribed very quickly. What week were you over-subscribed? What week were you over-

subscribed? We were over subscribed. We had completed our round by the time we got to demo day. Wow. Amazing. And we add it, we never used to have a demo day, but we tell founders start raising money in week one. Start raising money in week zero, as we heard from Francisco. We got an offer just based on people knowing he was joining the program, which by the way is not, um, you know, that big of a deal in my mind. If you get accepted to Ycombinare tech stars, somebody might take that. as a, okay, you were 1% or 2% of the applicants, therefore you've already been filtered by one of those organizations or our organization. So that does help the filtering of it. Anything that you personally, as a founder, felt you upskilled during the launch accelerator.

Our narrative and how we pitched ourselves, going into launch, I had never fundraised for a company before and my background was in running services businesses. So, learning how to not only get over that mental hurdle of reaching out to company or reaching out to investors and talking to them, but also being able to A-B test every week and see how is an investor responding if I pitched skill bank in this way or how is an investor responding when I pitched skill bank in this way was really helpful. And it gave us this very rigorous opportunity to really define our narrative within the

first five to six weeks of the program. Amazing. Well, you did fantastic. Congratulations on coming in third place. Did you have a week where you came in first place? Do you remember that moment? And remember what it felt like that night to go home and watch your video and watch all the points come in? Yeah, it was funny. The first week, we came in dead last. And I was like, you know, we have to get it together. What's that like to come in last? For somebody like you, who I know your personality is a bit competitive. I can see the frustration on your face to literally come in last place. Every single person going in front of you, you getting dead last. What was it like? It hurt a lot. And especially whenever you spend so much of your personal, like, a lot of my, like, personal

worth is in skill bank and working on it. So getting a no was like, oh my goodness, like they don't like me. Like, what did I do wrong? But I think that was the other thing. Yeah, exactly, that I learned throughout the process is learning how to separate myself from my company. But second week we got first. So it worked out.

See, I think this is a very important observation. call it the negative zone that can happen sometimes. And also when you're a young founder, which I believe you are, I don't know if it's your first company or second, it's first company. So, you know, when I had my first or my second company Silicon Eye Reporter, people used to refer to me as the Silicon Allie Reporter. Like you're the reporter from that publication Silicon Alley reporter. And when that brand went away, you know, it really was a bit crushing for me because I would go out to a part and they go Silicon Island Reporter and they're like, oh, you shut it down. Yep.

During the dot-com bust, I had to shut it down and change the name of it. And it was just, it was crushing, right? And then you have to learn as a founder, okay, there is my creation and then there is me, the creator. You're the creator. The creation is a piece of art. It's your work. It is the manifestation of everything you've done.

But that doesn't mean every piece of work is going to be perfect or recognized. And that is part of the process. And that is the challenge of being a founder is going from last place to first. And all it takes- yourself as your biggest project at the end of the day. And then what you're working on and what you're building is an extension of that. So it's something that we try to live through here. Yeah.

I mean, you, you really, watching you as well, you know, develop and go from last to first was just great, great for me and the team. I know everybody was just thrilled to watch you. And you did the syndicate as well. And it came in massively oversubscribed 2x, 3x times what you wanted to raise. Yeah, it was great. Yeah, we were so nervous going into it too. But yeah. Was it double what you, you had wanted to raise three or four hundred and thirty four percent over subscribed. Wow. Amazing. And you did a nice webinar. You answer questions. What was that process like? We always do a webinar when we syndicate companies. What was that like meeting all those investors and taking questions? It was great. It just felt like a longer experience compared to the, the 10 minute questions that we'd have after the, Thursday session, so just a longer version of that.

All right. Listen, continued success. Thanks to everybody for joining us. And really, thanks most of all to Jackie, Prash, and now Jad, who are working on the accelerator tirelessly. I get to take a lot of credit. I get a lot of the kudos for the companies we invest in. But there is a team that meets with hundreds and hundreds of companies every month

and thousands of companies a year to find these great companies. for us to put our full effort behind, doesn't mean they're all going to succeed. In fact, the majority don't succeed. But the ones that do succeed, you know, they really can change the world. And I really think you're on to something the heck.

So continued success. Everybody just, if you really want to help out, go ahead and visit sparkplug. Dot app. Go ahead and search for, you can go to join skillbank.com and do a search for storybook massage in your app store.

And try the products, you know, and you might even want to tweet about them or share them with friends or apply for a job at those companies. And if you want to apply for the launch accelerator, go to launch.com slash accelerator. Launch.com slash accelerator. And you will see how to apply for the launch accelerator. We'll see you all next time on this week in service. Bye bye.