This Week in Startups - Google, Amazon & Apple earnings + OK Boomer with Slush CEO | E1672

Episode Date: February 3, 2023

Molly is off for the day, so Producer Rachel joins Jason to break down Google, Amazon, and Apple’s latest earnings report. (1:29) Then LA26 graduate Perrin Davidson, CEO of EATERCLUB, joins Molly. (46:05) Lastly, we end the week with another edition of Ok Boomer, where Rachel interviews Eerika Savolainen, the CEO of Slush. (1:02:16) (0:00) Jason and Rachel kick off the show! (1:29) Google earnings (11:19) MasterClass - Get 15% off an annual membership at https://masterclass.com/startups (12:44) Amazon earnings (23:28) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist (24:30) Apple earnings (33:36) Fitbod - Get 25% off at https://fitbod.me/twist (34:36) The US jobs report (46:05) LA26 Founder: Perrin Davidson of EATERCLUB (1:02:16) OK Boomer with Eerika Savolainen, the CEO of Slush FOLLOW Perrin: https://twitter.com/LAeats FOLLOW Eerika: https://twitter.com/EerikaSav FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

All right, everybody, welcome to Friday. Molly is on some well-earned vacation. So producer Rachel is filling in. We're going to go over all the results from Google, Amazon, and Apple. Yep, there are some hot takes from Jason and some things that jumped out, especially from those big tech results. And then Molly interviews and another amazing launch accelerator founder. And of course, if it's Friday, we have an OK boomer segment.

This is an interview that Rachel did with the founder of the tech. conference and programs slash it's going to be a great show stick with us this week in startups is brought to you by masterclass learn from the world's best minds anytime anywhere and at your own pace get 15% off an annual membership to masterclass at masterclass dot com slash startups vanta compliance compliance and security shouldn't be a deal breaker for startups to win new business Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at Vanta.com slash twist. And FitBod.

Tired of doing the same workouts at the gym? FitBod will build you personalized workouts that help you progress with every set. Get 25% off your subscription or try out the app for free when you sign up now at FitBod. All right, everybody. It's Friday. Molly Wood is off. Yeah, it gets a three-day weekend, well-earned. And with us is Rachel reporting. She's going to queue up some important news for us, God, these earning season. So we got to cover these important earnings reports. Google had their quarterly earnings. So did Apple and so did Amazon. So the big three. Let's start with Google. How did Google do? So Google shares are down 3% after missing on revenue and profit in its Q4 earnings report. And the big takeaway here.

So Google missed on top line and bottom line as its ad business saw a substantial slowdown in Q4 and revenue from search ads and YouTube ads were down 2% and 8% your rear respectively. All right. That's, as I always say, in a down market, a recessionary market. What are the things people cut first? They're going to cut ad spend, right? So you're going to just look there and cut some adspent. They're also going to cut some cloud computing. I'm sure we'll hear about that later.

People are going to look for places to cut that aren't human beings because it's emotional to cut a human. It kind of sucks to lay people off. Management doesn't like to do that. It's bad for morale. But cutting some advertising, if everybody cuts advertising 10%, 20% in a down market, sure, you're going to see it. But Google has some of the best ad tools out there.

Search is qualified, and it is some of the most targeted advertising in the world. Along with Amazon's new ad business, Google is some of the highest performing in the world. Now, YouTube, that's brand advertising, right? So you're not as much direct response. You're not getting people close to a sale. It's a little bit further away from the sale. So it makes sense that it's 8% only 2% for search. So actually, I think these.

results are not that bad. And I would expect Google to be able to come back from these. And have you ever bought anything off of a YouTube ad before? I myself have YouTube pro, which used to be called like YouTube Red, since it came out. So I haven't seen ads on YouTube with the exception of like accidentally getting logged out, you know, if I use an old laptop or something. So I don't see any and therefore I don't click on them. And I'm also not a very directed advertising influence consumer. I'm a research-based consumer. So when I do click on ads,

it's going to be on Amazon ads. The Google ads I do click on are Google flights or Google Local or Google Shopping. So when I do a search and I'm doing research because I'm a research-every-person, not like a video ad kind of person, that's kind of when I think click on a lot of ads.

And Amazon now, you'll see the editor's choice, you know, or the Amazon choice, whatever they call it, frequently, they also buy ads. So you'll see it in the organic results and you'll see it as an ad and sometimes I'll click on it even if it's an ad. And a lot of the search services on Google,

flights, shopping, hotels, those are all costs per click. People don't realize their cost per click, but people are getting paid a whole, Google's getting paid a whole lot of money. Do you buy stuff off of YouTube ads? Have you ever bought off a TikTok ad or a YouTube ad? I also have YouTube premium

and the only time I can think about if I would have bought something it's probably off of like a sponsored Reddit post if I was going to pick something off of like a social media because I read it has like again I'm also I guess pretty research based if I'm looking up for a product and it comes up as sponsored and Reddit I can see myself clicking on it

but not yet from YouTube. Yeah and it looks like YouTube ad revenue 7.96 billion so 8 times 4 $32 billion a year. It's incredible business but they fell shy of estimates the good news is I think the shorts business. Maybe we can tell us a little bit about that, Rachel. Yeah, the shorts business is really interesting to me.

So obviously TikTok has been a big competitor of YouTube, especially when we saw it, you know, kind of pop during the pandemic. But since I believe February 1st, YouTube has started really monetizing creators with their version of TikToks, which is YouTube reels. So that's an exciting thing that we're going to be seeing. although I or YouTube, no, it's called YouTube Shorts. YouTube Shorts, yeah. Instagram is Reels, yeah.

Yeah, and I don't know. I don't really like YouTube shorts, so I'm interested to see how this goes. I think they're getting a ton of views for it. I saw 50 billion daily views for shorts, which makes sense because they're really pushing them hard. We do them here on This Week in startups. We get views for them as well. But this is going to, I think, become a real business for YouTube. advertisers haven't particularly embraced making shorts yet.

So when a new content format comes out, creators exploit it first, and then marketers slowly try to figure it out. So I don't think advertisers have figured out shorts yet. Some on TikTok, you do see some ads on there. I've been seeing some ads for movies and stuff like that. So I think we'll see the entertainment companies kind of figure out shorts first. And some product companies are also doing. that, but it's going to be a big business for them.

And I don't see any ads on YouTube shorts. I haven't seen any ads ever. But maybe that's because I have the ad-free version. So I guess I'll never see shorts ads. Are they selling ads here yet? So I guess they haven't turned it on yet. I am not sure if they turn them on because I also use premium. And honestly, when it's like the first thing you see when you open the app, though.

And yesterday, CEO Sundar Kachai said that shorts actually surpassed 50 billion daily views. So obviously somebody's looking at them. People are liking them, obviously. At least that's because it's the first thing that you see when you open that YouTube app. And 50 billion daily views, that's up from 30 billion daily views back in April of 2020. Oh, okay. So it's growing significantly. It's almost doubled.

All right. Well, I mean, this chart, I think, tells you everything you need to know about YouTube. YouTube has peaked essentially at this $7,8 billion a quarter in. revenues. Google's cloud still growing, I think. Google Cloud is still growing. Their Q4 Google Cloud revenue, that was 7.3 billion year over year, that's up 32 percent, and quarter over quarter, that's up 6.5%. So cloud was really one of those bright spots for Google, and Google Cloud revenue actually beat estimates and showed pretty strong signs of growth. Yeah. Obviously, Google got in on the layoffs, 12,000 employees last month,

pretty charged as we talked about on the program. People were kind of upset about it. They didn't understand who was getting laid off and why. But that's not going to hit the books until maybe Q3, because they gave such generous severance packages, so we wouldn't see it. I guess we have the Sankey chart, which gives you a pretty good overview of how the revenue works

of their search advertising, obviously the bulk of their revenue. They do make some from cloud, and they do make some from their Google Play Store, getting 30% of apps. AdSense, Google Ad Manager, their ad tools also make some money. But yeah, still wildly profitable, still throwing billions of dollars, net profit, 13.6 billion. So a money printing machine. And flat is the new up. So if they're slightly down, if they miss the revenue, they miss a little earnings, while they

regroup during a down market. It's an advertising-based business. That's their revenue is advertising. So it's just going to, they're going to have to fight it out quarter to quarter. But I still think it's a strong company. And I think chat GDP, chat GDP and that whole headwind, I think might be a little overblown. I don't think people are going to stop using YouTube or stop using Google search just because chat GPT is available. I don't think it's going to take any time away. It's not going to take any revenue away from Google search. The answers on chat GPT are not reliable yet. So we'll see if chat GPT puts a dent in it. But I think we're a couple of years away from chat GPT taking away meaningful revenue from Google search franchise or YouTube's. I don't think that it's going to take

revenue away from either of those services or users. It's going to take a while for that to happen. Yeah. And we're already seeing like Google really branch into that AI space. So it's going to to be interesting to see when their competitor, like, officially comes out earlier this morning, even Google, Brian, you might have to pull this up. Google invested in a really interesting AI product that I saw that helped really detect when people put hateful prompts in AI. So I feel like the next two quarters, this could be something to watch in Google's other category, which includes, like, their AI projects that really haven't been announced, yeah.

Yeah, it's definitely, We're going to see a flurry of products come out from Google with their chat assistant, an API, natural language models or learning models for developers to play with. But again, it's not going to have any impact on the YouTube franchise, the Android franchise, the cloud computing franchise, and certainly not the search franchise. It's going to take years for that to even put a dent in it. So it's fun to talk about, but I don't think it's going to have a meaningful impact on. their revenue. They listen a lot more when you lose. And so be smart about your delivery and what you're saying.

But it can be an extremely important moment in your relationship with your team and the trajectory of your organization. That was the voice of Mike Chashefsky, aka Coach Hey, the winningness coach in NCAA men's basketball history at his point about leadership mattering more in hard times is so accurate. It's so true, it's easy to be a leader in the market. We all know that. But real leaders shine when things get tough. If you're a business leader, you can learn so much from Coach Kay's new master class. They also have Malcolm Gladwell teaching writing. He's an amazing writer. James Cameron on the filmmaking God Avatar 2 was mind-blowing and so many more legends of their

craft. Masterclass is the best way to learn from world class instructors and paying for an unlimited masterclass subscription. It's a total no-brainer. We just had an awesome insight from Coach K in 20 seconds. Imagine how much you can learn in 10 minutes or even two hours, right? I highly recommend you check it out. Get unlimited access to every class. And as a twist listener, you'll get 15% off an annual membership. Go to masterclass.com slash startups now. That's masterclass.com slash startups for 15% off masterclass. What's going on in Amazon? So Amazon's stock is down around 5% after beating on revenue, but providing weak guidance for quarter one. So Amazon's ad business, as opposed to Google's, is absolutely crushing

it. And if you, if you listened to the last all-in, you guys already gave kind of like a sneak peek on why that could be, their Q4 advertising revenue was $11.6 billion. And that was up 19% year over a year, up 21% quarter over quarter. Before, let's just get into the results, and we can explain that, I guess, in a minute. Their Q4 total revenue was $149.2 billion, and that was up 8.5% year over year, 17% quarter. And remember with those quarter over quarter results, that is like a holiday bump. So just be super mindful. The holiday season happened last quarter.

And with this revenue breakdown by segment, especially with online. store revenue. You can see that holiday bump. Online store revenue was 64.5 billion. That was down 2% year over year, up 21% quarter over quarter. AWS revenue was 21.4 billion, up 20% year over year, up 4% quarter quarter. So that's slowing. Amazon revenue is, Amazon Web Services revenue is slowing. It was in the high 30% it was in 30% year over year. Now it's down to 20% as startups and big corporations say, hey, let's take a look at our class. cloud spend, you know, like let's have some austerity there, right? People are looking at their bills. They look at marketing and then they look at cloud and they just try to cut them. So we see a

slowing Amazon web services. Exactly. So they're like tightening their belt there with their subscription revenue and that includes things like Prime, um, audiobooks, music. That was $9.2 billion for their revenue, which was up 13% year or over a year and up 3% quarter over quarter. And then finally, this is the really interesting part, the ad revenue, which I'd love to hear you talk more about. $11.6 billion of 19% year over a year, of 21% quarter over a quarter. So Amazon's ad business is just absolutely destroying it. They're doing crazy well. Yeah.

So this is really interesting. The advertising businesses at Uber and the advertising businesses at Amazon, these are new entrants into advertising. and when you look at them, what do they have in common? Well, you're very close to the transaction. And so when you do a search for, I don't know, some product, you need a ski helmet. If I go do a search for a ski helmet, you can be sure that people who make ski helmets are going to want to intercept me at the moment. I'm really considering buying that.

Now, where are the two places where I'm definitely considering buying it. One is Amazon and one is Google Search, right? And if I do a search result, the first one, the first three results are, well, actually, it's the first four results right now. I'm looking at Amazon. I did. Yeah, actually, it's five. So it's the first row has Findway some ski helmet provider. And then the first results, first four are sponsored and the first organic one is, in fact, the fifth.

Interestingly, one of the advertisers is the Amazon choice. So they're the Amazon Choice, this outdoor ski master, has an Amazon Choice logo on it in the sponsored one. So in order to become, to get a lot of reviews, that ranks you higher. So now you're forced. Just like on Google Search, if you don't buy Google Edge, you're not going to get good SEO. So you have search engine marketing, SEM, leads to SEO, search engine optimization. That's what's happening now on Amazon. It's the same exact playbook.

If you buy ads, you get more people to purchase it. If more people purchase it, you get more rankings. You move up in the organic results. So to be number one in organic, you're probably going to have to spend money on the ads. So it's kind of confusing. If you're number one in organic, why would you buy ads? Well, you're one of the first five and you're the sixth or the fifth or the sixth or the fifth or the six after the ad. Which is what you see.

People will buy their own names and they'll be in the first three results on Google. So it's kind of impossible to have a vibrant business if you don't buy those ads. And it's 100% paid for already. So what do I mean by that? If you, Rachel, look at Amazon service, they already built their service. The ad business is just all profits. I mean, with the exception of maybe some de minimis amount of technology to serve them, some developers to build the software and a sales team,

although much of this is probably self-serve, this is going to be an extraordinary high-margin business. The same is true for Uber, which will report next week. Uber, when they put ads in there and you probably have seen them, you're in a taxi, you're in an Uber or you're ordering food and you have this NFL ad there telling you about the game tonight. You can't miss it. You have to look at it because you have to see your taxi coming.

You're a captured audience. And think about the data Amazon has on you or the data Uber has on you. If you're a commerce business, the amount of data you have is extraordinary. at the same time that Apple is taking away the data that Facebook would have. So these businesses, these ad businesses for commerce companies are truly significant. And for the first time, I was buying some t-shirts and I used Amazon's checkout. Have you used that yet, Rachel, where you use your Amazon credentials, put your address in and payment on a clothing retailer or something like that?

The quicker the checkout, the better it is, in my opinion. And I like it better than PayPal's option for. quick checkout because what PayPal can do is it kind of has a delay. So, like, you, I know I've heard from other people's experiences that they've checked out before and accidentally not transferred enough money or something, right? Into their account, they can still check out the project, excuse me, they can still check out the product, but you can still get a, like, non-sufficient fund fee if you use PayPal because you, they have that like one day delay when they actually charge you, whereas Amazon will charge you run right away. So it really doesn't have,

any space for error there. So I love it. I'm a huge Amazon fan, especially living in the city. Sending my stuff right to Whole Foods to pick it up is pretty big. And what's really nice is, you know, I have my, if I go to my Amazon account, I can see my Amazon orders. And, you know, if you go to when you're on the Amazon interface, if you go to your account list, you can see your orders. When you click on orders, one of the tabs is Amazon pay. And I can see in one place all of my spend. So this is really nice to see it consolidated in one place

and I can buy direct from the merchant. So I think that business is going to be huge as well and it's super competitive. Advertising is just extraordinary for Amazon. Now they don't consider it a pillar. So the three pillars,

e-commerce, AWS and subscriptions are the three pillars. I think the fourth one, which isn't going to show up in their revenue yet, it's going to be healthcare because they announced they're doing their drug prescriptions, and they bought One Medical. So I think that we're going to see some really great future revenue from that.

Yeah, I totally agree. If you guys want to check out the One Medical founder come talk to us. We can link that in the show notes because that was a really great conversation. And even if we compare like Amazon's add revenue to other big tech companies, Google's search revenue, like I said, that was down 2%. YouTube has revenue down 8%. Meta's ad revenue down 4%. So Amazon's ad business just seems way more resilient than Google, YouTube, and meta.

Yeah, it's new. So it's new, so it's growing. And advertisers are going to probably move some amount of spend from meta, aka Facebook, and some spend from Google to Amazon, but they're going to have to learn the interface, learn the creative. So it's a process. And then some folks are not natural advertisers on the Amazon ad network. So if you're advertising a TV show, I don't know that you're putting that on Amazon, but if you're obviously doing e-commerce, it's more natural. But yeah, this is going to be a huge business for them. And I think

on all in, Friedberg talked about it. We have a 30-second clip of that. So Amazon's ad business is booming, right? As Jamop pointed out earlier, but so much more of consumer behavior is shifting where people are going direct to e-commerce sites. And then the ads that are getting the highest click-through and where advertisers are spending more and more money is on e-commerce sites. I know this from experience on a couple boards I'm at where companies stopped spending on Facebook and Google and just started spending exclusively on Amazon. And that's where you get consumers that are much more likely to purchase. The purchasing perclivity is higher. The click-through rate is higher. so the return on ad spend is much higher.

Yeah. And as I said, you have no choice. If you don't spend on it, your competitors and a lot of these products are commodities. Like a pair of ski socks, again, back to skiing on my mind. But I buy ski socks on a pretty regular basis. You know, if you're not buying the ads, you're not going to get seen. And a lot of times I see on the ads, like this is a four and a half star with 3,000 reviews, I really want to check out those socks.

It's proven to me that they have a large number of people who have. purchase them. So Amazon is going to do fantastic. And, yeah, but yeah, not a lot of profit there. So that's something they're going to have to make a decision on is do they want to start showing a profit or do they just want to keep growing that top line and taking all that e-commerce share? They obviously have headwinds with Azure doing really well for Microsoft, and that's growing faster than AWS is. So AWS could be a little bit challenged here. And you could see Azure catching up and certainly chat GPT and that being available as part of Azure. That's headwinds.

I'm also seeing in startups, Microsoft startup program, which advertises here on the program, they give $150,000 in Azure credits and AWS, I don't see doing similar startup promotions. And so I think Azure is being really aggressive. Microsoft is being super aggressive in trying to win cloud business. If you're a SaaS or services company that stores customer data in the cloud, you need to be SOC2 compliant from a third party to close big deals. And you need to use Vanta if you want to do this quickly and easily. Vanta makes it incredibly easy to get and renew your SOC2. On average, Vanta customers are SOC2 compliant in just two to four weeks compared to three to five months without VANTA.

And they partner with over two dozen audit firms who have been trained to file SOC2 reports directly within Vantan. This is a total no brain. A bunch of my portfolio founders have used Vanta and have had amazing experiences. And one more time, if you don't have Stock 2 compliance, you can't close major customers. One major customer that can keep your whole startup alive. That could be the difference between being profitable or losing money. You need to be SOC2 compliant. And here's the best part. Vanta's going to give you $1,000 off. Get $1,000 off at vanta.com slash twist. That's Vanta.com slash twist for $1,000 off your SOC2 app. Oh, by the way, I think Jeff Bezos is coming back. I know it sounds crazy, but I think Amazon is going to have some significant headwinds and challenges.

And so I could very much see Jeff Bezos coming back and maybe running the health group and just making sure that that works. But I think Bezos is going to just be like Bob Eiger, been into a couple years off the grid and get bored, and he's going to want to come back. So that's my prediction. You heard it here first. I can't wait to clip this later. We'll see if I'm right about this one. It'll be on TikTok if you are. This is going viral.

What a great business. You know, like, I mean, how many weeks can you do skiing on your yacht at the Grammys, whatever Bezos is up to, you know, working on rocket ships on vacation.

You know, someone like him is just going to, he's so engaged in life that I think after a couple of years decompressing, he's going to come back. Let's hope. So we can move forward now, I guess, with Apple like you were saying. So Apple, just like Google, they also missed on the top line and bottom line,

but its stock is actually up 3% today. iPhone sales really missed revenue estimates by around $2.5 billion and max sales missed by around $2 billion. Holiday buyers obviously tighten their belts a lot. And they were just not as active as Apple anticipated. And also I like to note that the iPhone kind of came out around that time, like the holiday season, like it always does. And in my opinion, it just wasn't as impressive. And I wonder if that's like, I'm.

The 14. Yeah. Yeah, the new one. Yeah. I have 13. I went to the Apple store recently. I just, um, I, my daughters were getting boba and I was giving, uh, my daughter was out with one of her friends. So I gave them a little privacy to get their boba. While they were getting their boba and going to Sephora, I just walked.

the Apple store. And I picked up the 14. And I looked at my 13 and I was like, I'm not a price sensitive shopper. I always like to get the latest thing. And for the first time, I felt not compelled to take out my credit card. I was like, this 13's enough. I don't want to have to unbox the phone. I don't want to have to set it up.

And literally not maybe a little bit in the back of my mind, austerity measures as a down market. I do think about austerity frequently. But it was more just like the act of unboxing it, having to return it, and going through a half hour with the sales clerk, that was the friction for me that I was like, there's not enough here for me to go through that 30 minutes. I just want the 30 minutes of my life.

So that is, I think, to your point, Rachel, it's not that compelling. And then I walked around, I looked at the iPad Mini. And I was like, maybe I got an iPad Mini. I always like this. Nothing was super compelling to me. I looked at the iPad. I looked at the new MacBook Air, which is amazing and extraordinary and beautiful machine.

I was like, nope, my M1. Yeah. MacBook is just fine. I got the big monitor on it. I'm happy. And so this is austerity. Now, I did, I do have to say, I j-traded last week. So on February 1st, what is today? Today is the 3rd. So two days ago, I bought 500 more shares of Amazon, 500 more shares of Apple, 500 more shares of Disney. The Amazon trade is down a little bit. I guess I bought at $107 a share. It's at 105. I bought Apple at $145. and it's at 154, so I'm up on that one, and I bought Disney at 110, and it's at 111, so I'm up modestly on that one as well. But I just feel all three of those companies, Amazon, Apple, Disney are just going to do extraordinary. And I'm not too worried about this pullback.

The economy is obviously in some type of recession or in some sort of down market, even though it's not clear exactly. It's a definition of a recession, but people are spending less, and they're going to let their phones last another year. They're going to let their cars last another two years.

And just austerity across the boards is, I think, the theme for 20, 23. Definitely. And if you're choosing between like that new MacBook that came out or the iPad, that M2 chip doesn't really, for like the average person, make that big of a difference between the M1 chip and the iPads now, even though the Lenovo keyboards are kind of crappy, I feel like, in fact, I know, because as a consumer, I went to the Apple store, I was going to buy a second computer when I bought an iPad and just stuck one of those Lenova keyboards over it.

The iPad sales actually increased almost 30% from $7.2 billion to $9.4 billion, and that was the only one out of those three categories to go up. And I don't think that's super surprising because if people are tightening their belt and they are having to go buy a new MacBook and the new MacBook that offers, just isn't that big of a difference from the last one,

you might as well just get an iPad with how much it can do now, which is kind of cool. Yeah, this 10th generation iPad, which they just call iPad, comes in a bunch of colors. It's an incredible deal. It's not expensive. I just upgraded when this one came out, the 10th generation.

It's quite a deal. It starts at like 450 bucks. And I bought my twins, yeah, new iPads because they're all ones were so broken and janky. And it's got the flat bezels on the side, like the iPhone, you know, design that everybody loves so much. And it's just a great bargain. So I could totally see people saying, instead of getting a $2,000 laptop, I'll get a six or seven, $800 iPad, which kind of does everything you need, right? Google Drive, like all you need, just as long as you got a Google Doc in there for college, unless, like you're doing some heavier.

I did like some coding classes in college. And besides those, I basically just use Google Drive for everything. So as long as your iPad can get that, that could be your device to bring the class. I'm interested. Yeah. To see how those, see if MacBooks go up, especially. They have also in the software level made it really nice to have two windows up at a time. So you can have a browser on the left with your document.

And on the right, you can have a browser up with the Wikipedia or Grammally or something. So this ability to have two different apps open or one takes up two thirds of screen, one third. It's starting to feel more like a desktop, right? and the keyboards are so good. Yeah, I could see people buying them in lieu of buying more expensive laptops. It makes sense to me. The services business has been also doing fantastic,

and they're still printing a ton of money. Net profits of $30 billion. I mean, the profit of this business is still extraordinary. Yeah. How did the services business do? So the services revenue was $20.8 billion, and that's up 6% year over year, up 8.3% quarter over a quarter.

And that really, that was a bright spot. I mean, it beat estimates by like $300 million. And remember, services, that includes all those subscriptions that they have, plus Apple's App Store fees. So like you said, the speed estimates. Like, it really, it really did do well. If you think about the services business, that's almost $21 billion. And if you look at like the MacBook, $7 billion, iPad, nine,

billion. The watch and AirPods, $13 billion. Services is bigger than those three categories, and services is a third of the iPhone revenue. So even if iPhone sales slow a little bit, people are going to buy Apple Music, Apple TV,

they're going to pay their app store 30% tax. You're going to need extra storage because now with photos, there's no way to store all of your photos in year 5, 10, 15 of having a mobile phone, you know, on your phone, so you're going to have to pay for extra cloud.

And then, like, news is actually a pretty good service. I find myself using Google News a whole bunch. And then my kids use the, I'm sorry, Apple News. And then my kids use Apple Arcade. So when you have this family plan, whatever I'm paying for it, this Apple One or whatever it's called, their version of prime, I, man, I spend a, I spend a lot of money on it, and I get a lot of value from it. And I'll never get rid of it.

So, this is a really. bright spot for Apple. So it seems like each company, Apple had the bright spot of services and iPad, Google, their cloud is doing pretty well. And then Amazon, their ad business is doing well. So, you know, even though they got headwinds, they are doing really innovative product things. And I think when you're looking at these companies, you have to ask yourself, are they throwing off cash and are they continuing to make innovative products that delight customers, I think, in all three cases? they're still throwing off some amount of cash, depending on the unit,

and they're still blinding customers with great products. So I still love all three companies. As you know, I've been on a health kick for over the past year, and you know I care about data-driven solutions as well. And if you listen to this podcast, I bet you do too. So let me tell you about FitBod. It's a data-driven workout app that blends machine learning with exercise science. FitBod creates a custom dynamic program based on your fitness

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That's F-I-T-B-O-D-M-E slash T-W-I-ST for 25% off. Awesome. I'm excited to see what happens next quarter, especially. You kind of mentioned this last time we did earnings reports. I believe this was on the time when we had Sunny and Vinion, which was cool because I think Molly was also out last time. This isn't in the notes, by the way, but you mentioned how you thought we were basically, I think, last quarter halfway through the kind of recession that maybe we had two or three more quarters.

I'd love to get your thoughts on how much more time you think we have now moving forward in this kind of like downturn. Yeah, so we had the second quarter, the third quarter. were down markets and then the fourth quarter, right? And so now here we are in the first quarter. I've said these recession type things typically are six quarters. So three quarters, you know, second, third, and fourth. And now we're in the first.

So we could be four of six or seven quarters away from a normal environment. Of course, the stock market popped. The Fed was talking about how, you know, they were having a disinflation. They said that like a dozen times on the call. They were very doveish. And they did a 25% rate hike, not a 50. I'm sorry, a 25-bip rate hike, not a 50-bip. And they're going to do another 25 probably next month.

So I think the market is starting to think soft landing. And then we had the jobs report come out today. And the jobs report was supposed to be like 150 or so. And it was 500 new jobs were added. So now we have a 50 year. And in some states like Utah or some cities like Salt Lake City, we have record low unemployment since we've started recording unemployment. So the fact is, I think, young people of which you are one, and maybe you could tell me this anecdotally true, a lot of folks who had maybe some savings, maybe some stimulus, maybe they had some great consulting gigs.

They spent all that money, and now they have to get back to work. They got to pay bills. There's not as much saving left. They may have bought some NFTs. They're worthless or they flip some NFTs previously that kept them afloat. whatever the confluence of events were during the pandemic when we didn't go out and spend, pandemic ended, everybody spent, YOLO, now we're sitting here in 2023, it's maybe time to get back to work.

And so some normal relationship is going to occur and people have to take jobs, whether they're a waiter or a copy editor or a developer, whatever. You're going to have to go back to work at some point. Is that what you're seeing anecdotally? I'm seeing a lot more of my friends that did get, laid off, especially from big tech. I had a ton of friends in big tech. And if they got laid off, I actually don't see them going back to

traditional nine to five jobs, but I don't see them going to Bali, like, I think, like, or Lisbon. Like, they're not taking those crazy vacations and not coming back to the States for like six weeks on end. Like, I thought they were, that they were doing about a year ago. Instead, I see a lot of them doing things like consulting for other startups, trying to start things their own. Like, this definitely isn't like that vacation mindset.

I think like it was this time last year. And the January jobs report, according to CNBC, it showed that non-farm payrolls increased by $517,000. And that's insane. That's insane. That's way higher than the $187,000 that the market actually estimated. Like, that's crazy. The chart, it's almost like it's a mistake.

So I'll give you the chart here to pull up, Brian, if you don't mind. If you look at this New York Times chart from January 22, you almost feel as if, take a look at this, Rachel, that some sort of mistake has been made in the chart because you had last month, or for the last, I don't know, it looks like one, two, three, four, five months. We've had between about 250, maybe 300,000 jobs. And it was going down for like four months in a row, five months in a row, and then all of a sudden we have double the number of jobs as last month, 250 last month, and now 517 in January. What happened exactly?

Was it that people were taking off for the holidays and then everybody decided, hey, new year, new me, I got to get a job? And they just, because there's two jobs out there for every unemployed American. And we're now at 3.4%. It is the lowest unemployment since 1969. There are many factors at work here. People retired early. We've talked about them here. People died of COVID, sadly. Some people because of COVID said, you know what, I'm just going to retire early. It's not worth the pressure. And then obviously we're not letting people immigrate into the country over the last two administrations. Biden and Trump, both anti-immigration and we were anti-immigrant during COVID, obviously, because we were concerned about people spreading the virus. I don't know how this gets resolved. And this is, this could cause more inflation. If people have more money to spend,

could they start spending it? I mean, people who have jobs spend money, labor force participation, which has not changed all that much, you know, is at 62.4%. The peak,

when I was in my 30s, I think, was 69%. So we're still off 10% from the peak participation. I'm interesting to see, too. Like, if people will, continue to spend money. Like they have,

just because even going grocery shopping, it is actually insane. Like, it is nuts. And I think, like, small changes like that, even though,

like, some things around me haven't changed. Like, I haven't seen as many, although there are some, like, restaurant prices, for example.

Um, it was restaurants, restaurant week in New York City. I didn't know this restaurant week being any more expensive than any of the other ones in the past. However, just because I'm starting to see,

like those day-to-day prices like gas, groceries. What are they charge for a restaurant week now? because when I was a kid, they made it the year. So in 1999, it was $19.99 to go in for lunch during restaurant week. And you got three courses for 1999. What is it now? So I went to the Red Hook Lobster, I believe it's called like the Lobster Pound or the Red Hook.

I think it's a Red Hook Lobster Pound. Mike Savino actually has been to it before too, which is kind of cool. Their price was around $30. and it was for lunch. And that was for two courses. It was great, wonderful, highly recommend. It seems like $30 is pretty much the standard dinner, though, is like 60. Which again, in New York City, that's pretty good good for a three-course dinner.

Yeah, I'm looking at it right now. Two-course lunch, three-course dinner, 30, 45, or 60. New York Restaurant Week. This was like a great thing to get people out and to try all these new restaurants. and man, it was amazing how packed places got. It was also like a fun vibe too, right? Do they give you a pre-fix menu, though? It's like a shortened menu, like pick.

Yep. From these three appetizers to each three. Exactly. It's a lot of young people are there too because it's normally people that can't afford the restaurant. Normally you have to get a reservation to go places. For example, I don't think Valentine's Day is covered. I think of Valentine's Day is right after.

But when I was booking, like, reservations, for example, for Valentine's Day, I actually had to book it January 14th at like 9 a.m. right when they opened because stuff for like the whole month is just completely booked. Oh, wow. Look at this. It's a four week week, week, week, three, week four. And they can participate in any number of those weeks. Exactly. So they don't have to participate all of them, which kind of saves the restaurants a little bit, I think. Because if you do all four weeks, I'm sure that's a little bit taxing.

That's a little bit taxing. but I'm looking at them, and the first two restaurants I picked up on the website are, in fact, doing all four weeks. They're participating in all four weeks. So very cool. If you're in New York City, go see those great restaurants. Awesome. All right. Well done, Rachel.

Great job. Any more questions for me as we wrap here on these three big names? I think I will have to message you later with any more questions. I'm sure I have a ton. This is the first time, I guess, in 2008, I was 10 years old. So I have not really been through a recession. this before. So I'm sure some are going to pop up, but not really too short to ask about yet. I mean, it's basically, this one is pretty shocking, I have to say, because in the previous

ones, we never had these high watermark of entitlement and how easy business was. It was really easy to raise money this last couple of years, really easy to get revenue or to get people to try your SaaS product. Everything was easy. The only thing that was hard was raised was hiring people. Now, the opposite. It's easy to hire people, at least in tech, because we have so many people available, and because you have a global workforce and people have figured out remote. So it's really easy to hire people now.

And I think we're going to start to see salaries normalize across the globe. And so that's going to be particularly hard for maybe some people who got Google jobs, non-technical Google jobs. And maybe, as we saw in some of those reports, were getting paid twice as much as somebody doing the same non-technical job at Amazon or Microsoft and at Google they're getting paid twice as much. Maybe you have some friends in that sort of bucket. And they were doing a PR or marketing job or PM job and they were getting paid some

crazy amount. They may never get that salary again or it might take 20 years to get that salary again or they might need to re-educate and get more technical to get somewhere near that salary. So I think that's the, just like we had some valuations that were peak valuations we might have had peak employment compensation for certain jobs. For developers, maybe not. Honestly, now that you say that I actually haven't had any friends really be impacted, to be honest with you, except for my friends in tech,

none of my friends at the banks have really been impacted. None of my friends that work in health care. In fact, I have a ton of friends because the pandemic happening in 2022, and it being 2023, that two-year mark, if they did extend and do a further two-year program to go into the medical field after seeing what happened in 2020. I have a lot of friends just joining the healthcare industry. And that seems to be hiring phenomenally well. So really cool to see that.

And I know that it also talked about in that jobs report that it added like 58,000 jobs in healthcare. And you can really see that. Healthcare we're going to be behind the April because we have an aging population. People live longer. And yeah, that's not going to, that trend will not correct her. We're going to be short stuff.

So yeah, I think you're going to detect people, the ones impacted any other industry, services like healthcare. They're not going to, that's not going to change in our lifetime. All right, we have a great interview. Molly did with one of our accelerator companies, Perrin Davidson, from Eder Club is going to be on the program next. And then after that, of course, you're doing one of your OK boomers. So next up, LA 26 interview.

Launch Accelerator, our 26th class. All right, everybody, I am back interviewing founders from the Launch Accelerator's 26th cohort. And today we have Perrin, the founder of Eater Club. Welcome to Twist. Thank you. Excited to be here. I know, me too. There's been a lot of excitement about Eater Club.

I feel like you, there's a lot of buzz. A lot of buzz around Eater Club. I appreciate it. Tell us, I guess, in your own words slash pictures, what you do. Yeah. So let me just play a. little bit of a demo that we have and excited to share what we're doing. But ultimately, we are a next-gen distributor disrupting the food service industry by creating a new kind of curated approach

to helping the next-gen restaurant operator. Yeah, so Eater Club was born out of our editorial approach with LA Eats, and it really was actually trying to solve a true pain point. So we've been in over 800 kitchens, interviewed hundreds and hundreds of chefs from amazing pop-ups to Michelin Stars, you name it. And in that process, we really learned a lot about what's working for them and what's not. And in that world, we realize that there's a giant industry issue of really the world's best brands really can't find these great restaurants. And restaurants have a hard time sourcing amazing brands. And for a lot of people to understand, 70% of the million plus restaurants in the United States are all single unit operator. So it's the person you imagine down the street that you might know who's wearing many, many hats.

So they don't have a lot of free time. They're trying to hire. They're trying to stock their restaurants. They're trying to get customers. So really, we wanted to bring our background and ability in terms of storytelling and curation and bring that. and bring that to a wholesale food service club, really in a way that makes it super easy for them to order, where the old way was a lot of triplicate, carb and copy legacy kind of approach. There's a lack of transparency and pricing.

And really, we're all about trying to make it as easy as possible for them. And in the process, if we're doing that, we're helping these amazing vendors find great brands in the process. So it's supposed to be a really holistic approach. If we're doing it right, it means we're putting great products into great restaurants. It means we're helping sell them. And I'd love to get into a little bit how we support them after the sale. and ultimately that means the vendor's working and then it works for us.

So one of the things that's unique about our approach. Well, let me, yeah, let me back you up a minute and just make sure I understand. So basically, you have all these restaurants and these restaurants are standalone. So they're not part of a chain. And they just literally have a hard time finding high quality or affordable, like, food and drink or their restaurants.

Yeah, anything. It could be great sustainable packaging. And also the larger distributors, let's just say, the smaller you are, the less of a priority you are, as it might make sense. In a new world where operators are used to shopping on Amazon and that traditional digital commerce experience, that's really great, how do we actually bring that to those food service operators to have a similar experience and not have to have a salesperson show up and really can shop on your time? But what we do that's even more important is we're trying to cut out

the middleman. So for us, it's about creating story as the new salesperson and really connecting these brands directly to restaurants with nobody in between. So we produce fully original business and consumer content for all of the curated vendors that we bring on the platform. Everyone's invited specifically to join, and that's a really important part. We know that ultimately, if we can be that gatekeeper, we're helping not only the great restaurants, find great products, but also the customers who are the ultimate judge and jury are going to love them too. So this is why it's club.

It's like curated, you're invited in to on both sides of the marketplace, the restaurant side and the vendor side. Yes. And right now, restaurants are only invite only as well, too, so we can make sure that we have a really great experience for both sides. at the marketplace. Gotcha. Okay, great.

So you have this club. You are a vendor. You are a restaurant. You're connected there. You can kind of shop online. And then I think you were getting to this part where you support after. Yeah, that's one of the things we think is really important, which is it's great to get accounts. It's great to drop off wonderful products.

But in a world where they're so busy, how do you actually help these restaurants or sell them? So for us, it's about creating original content for the consumer as well. So everyone, whether it's a 30-second founder story, 15-second, or about the specific product, We want to catch the customer in a moment before they come into the restaurant when they're hungry and they're looking for where to eat or where they're checking out another brand. So it's our job to help these restaurants meet the customers where they are. 90% of customers will experience a restaurant in some capacity online before ever dining there. So our goal is to give them great content to help them meet those people where they are

and also grow their audience. Everyone's looking to grow their online channels. And for us, it's about those 10 real customers that become regulars. How do we get them to be excited about some new sustainable type of coffee? we've got to help them understand what it is if they want to help reduce that carbon emission or if they want to have something with a lower water impact or if they're just looking for something that's a little bit more transparent without artificial flavors. We cover organic, natural, sustainable, emerging brands, everything and anything that might be more interesting.

And also, it's a little bit more premium. It requires a little bit more storytelling. And ultimately, that's what's really important is that these products are exciting. They are interesting. But to get into them, we want to have that founder story as part of it so that they can understand where this journey started. It didn't just start in this great bottle or great product, but it started with someone's idea. So part of it is bringing those people into the process and returning that value by cutting out the salesperson so that we can get better prices to the restaurants. So would you say that you are a wholesale marketplace and a studio?

I love that. That's very much. We keep trying to define how we want to define ourselves. That's why we've kind of said next gen distributors supporting next gen restaurants. But yeah, we see ourselves as a wholesale food service company, a media company, whether that's a studio or a network. There's so many ways of looking at it, but our experience in producing content for the last few years has really positioned us well. We know exactly what makes sense, what's scalable.

Ultimately, creating first class content is not cheaper, easy, but we've come up with really original processes to make it a lot faster and cheaper. And ultimately, it's that editorial approach that's so important for us. So it's worked at LAEats. It's the same approach we're bringing in terms of curation. And that's what we think so important is we continue to want to grow. It's about finding new restaurants that we can cover in that process. It makes us more valuable to the vendors because we've grown our audience. and in that process, we're actually growing our consumer audience along the way.

So it's a flywheel that we're looking to keep pushing, but it has to do with authenticity and integrity and really standing behind the products and the restaurants. And that's something that can help separate us and we're excited. The world's so crazy, everyone's bombarded with content, advertising, marketing in every way. So how can we just make it a little easier for the restaurants and a little easier for the customers? Yeah. Talk to me about the LA Eats origin story. What is that?

It was literally my sister and I wanted to start it a few years ago. It was really just a casual thing. And the whole idea was in a world where things are super busy, how can we share things that we stand behind that we would say are eight out of 10 or better in the food category? And we're $20 or less initially, which was most things. Eventually, after we got to 500 curated reviews, we removed the $20 cap because maybe you want to have a great $50 or $100 steak, whatever it is. We always say, it's not that everyone has to have it every night. It's just everyone has a special moment. There's always a right time and a right place.

So we decided to have a little bit broader spectrum. but at the same time still just doing things that are eight out of ten or better or that we can stand by and that's what's really important. So in a world where plenty of people share bad reviews or other stuff, we figured, hey, people just want to know where to eat, not where not to eat. So that's the whole idea of our approach. And we have an emoji-based review format that we've been using for the last several years, really just trying to have a quick takeaway. Again, a world's super crowded. How can we give you a quick food score, service score, ambiance? We have an eats fact with everything. We share the location, the item price. Just that top level information that kind of is the

most important. But ultimately, everything on our feed and everything we've done is something we can stand behind. We can say, go try. Not everything's a 10, but that's okay. Right. And this is LA Eats official on Instagram. Yes. Right.

Is that okay? So you've got like almost 100,000 followers. And then the content that you're creating for the restaurants and vendors who are part of the marketplace, does it go on that Instagram? It's for their own social channels. Like, what does the distribution look like? Great question. So for us, it's kind of three parts.

One is there's the business content which lives on our platform and then we do some internal promotions like interstitial things like that that will be on LA Eats and some of our other channels. The consumer content is actually meant to live on all of our buyers' platforms. So they may have two, three thousand followers, whatever it is. Any number is good because those are real people, real customers, real fans. If we can get a few of them excited about it, that's going to translate into trying great products. So that's really important for us. But at the end of the day, we do bring our audience, which has some of the world's best chefs,

restaurant tours, operators. So we leverage all the different channels in different ways, depending on what makes sense at a different time. But we want to make sure that the restaurants are actually leaning into putting it on their platforms and their channels to get those core audience excited. Amazing. All right. And then the accelerator style questions are next. How, tell us how you make money. We have an interesting approach. So we've taken a hybrid model compared to a traditional distributor. We have a membership fee for our vendors. Again, we're trying to return value. There's a set up fee of $1,499 to join and a fee between $89 and $299 a month, depending on what services they get with us. We actually handle fulfillment.

We can do cold chain storage. So we have a whole variety depending on what's needed. And then we have a 15% take rate. And that's what we're doing with the vendors. So we can keep our cost down in terms of what the final price point is. So we can ultimately keep these more premium products priced a little more aggressively. So we're trying to pass that on. A restaurant will pay a small monthly fee probably in late 2024 when we're ready to turn that on. But right now we're just inviting restaurants that we are excited about to join and really just having them kind of leverage some of the products we're offering. And then does that talk a little bit about that pricing model and how it helps maybe lower prices

throughout the chain? Yeah. So for us, a traditional distributor has a much higher margin, which if you start to tack it on, if we had a higher margin, that means there's a higher final price point to deliver those goods to the restaurant, which means by the time they're marking it up to their appropriate margin, the price could be on an average drink, maybe 50 cents more than what it would be, with our lower margin because we're able to keep it in a more aggressive wholesale price point to them. We also bake everything in. We make it super easy. We make the shipping is all baked in. Everything is

next day that we can deliver. So the goal is to try to simplify everything possible so these restaurants can try products or fulfill and kind of pivot from something they're already offering. So they may want to bring in a new skew. We want to make it as easy as possible to turn that cost into a profit for them. And then talk to me about scale. What does the path look like to $10 million and $100 million dollars and how hard is this to scale if you're doing fulfillment in addition to connecting? Absolutely. So we're really excited to be working with 3PL partners that allow us to kind of scale nationally. And so where the demand is, we can kind of scale on third party logistics. Third party logistics, yes. On the wholesale side, which maybe people aren't as familiar with,

it's very common more on the D to C side. But we're trying to leverage that same kind of warehouse capacity to help us scale. And that starts with us back to that editorial flywheel. So as we grow through California. We'll be expanding our coverage into northern California. Then as we grow east, we'll be expanding our coverage into certain warehouses in Texas, Chicago, Florida, New York. So we'll be targeting those main markets initially and kind of continuing to grow. It's all about really building the relationships and having great coverage. And in that process, continuing just to grow our audience. And then we just make ourselves more valuable to the vendors. We're also looking internationally to source vendors exclusively for Eater Club as well.

So we're trying to look across the globe, across the country for great products. And in the process, kind of help launch some of these emerging brands. Many of the companies we have are their first time in Southern California, definitely their first time in food service in Southern California, if not. So we're trying to help them just really build that brand awareness. And we're comfortable working with organizations to have a great mission, great founders, but maybe zero brand awareness. And we're not turned off by that at all.

What just out of curiosity is the kind of ideal customer profile? Like, what's the restaurant in the sweet spot for you? The ideal customer profile is like a popular, like a deli or a cafe. or a restaurant, kind of the place that might be in your town or on the main street that's a little bit more interesting. And at the end of the day, they're catering and serving an audience. It's a bit more excited to try new products that are a little bit more open-minded. That's the ideal customer. And the complement is also with the ghost kitchens and virtual concepts and hospitality groups. So when we're not servicing the independent restaurant tour, our digital front of the house

is really important for hospitality groups to be able to market and also for ghost kitchens that have no front of the house whatsoever. So we're trying to provide value to all of those sectors and let the chains kind of be the chains. And in a world where the independent operator needs to stand out, how can we give them products that get customers excited to ultimately come in the door? So we want to say, hey, we're the first to carry this or we've now changed over to a new sustainable product, whatever it might be. But if we tell the story, right, that's what we believe is going to lead to the foot traffic of people coming in. If you pick curated products, we know they're ultimately going to love it, which is really important. So we're trying to really think through all the way

to the customer, even though we are a B to B. We consider ourselves B2 to C. way, even though we don't sell to the customers. Right. I'm trying to put this into like a framework that people would understand in terms of a restaurant. So not like a cat's as delicatessen where you're going to go because you know you're going to get kind of roughly the same thing all the time, but more like an indie Dean Induluca. If Dean and Duluca was more of like a restaurant instead of like a grocery, absolutely exactly. So I guess another answer for those that love the Irwan is like the equivalent of the

Irwan restaurant or place like that, even though I would say they're a bit more boutique. we're trying to be a little bit more accessible. And the other thing that we're trying to do is that these are the first tier of restaurants that we want to take it to. But ultimately, we believe everyone should have better products that are cleaner and better for people. So how do we actually get them into the places that people are the most excited about now? But ultimately help them bring the price down so it becomes accessible to that next

at a restaurant. So it would say, hey, I can't afford that. I might like it. How can we help get the price down to make those products more accessible? Because we want to grow the market. We don't want to just go after what's there. We want to help people understand that there's an opportunity to increase what that market share is.

But it's up to us. And that's why we're so excited. to do that selling and not leave it to the vendor or the restaurant. Amazing. Eaterclub.com is where you can find it. Parent, thanks so much. And congrats on what you've built so far. Thank you so much.

This was great. All right. Next up, great job, Molly, on Eater Club. Is an OK Boomer. Who did you have on OK Boomer this time? So this time I had a guest that has been long awaited for me. Erica Solvin Linen, sorry if I bertured that last name, Erica, is the CEO at Slush, which is a student-led, not for,

profit-based, kind of like tech program based in Helsinki, and they have a giant event that I went to. Huge. Really cool. And it's like an- Oh, you went to? Slush? When did you go to my first solo, female travel trip. And I messaged the city of Helsinki.

I was like, hey, this is what I'm interested in. This is what I do for work. This is what I do for pleasure. This is, I gave them a list. I was like, City of Helsinki, you don't have any female solo traveling stuff. What do I know to do? They took me on a tour of like an egg. alternative egg factory because I told them I was a pescatarian.

I went to slush with a bunch of other people around my age. Helsinki is wonderful. When did you do that? BFAPs. I took a vacation right before Thanksgiving. This is a while ago. I wanted to get Erica on, but being the CEO.

But last year, you did it just past year. Yeah. Oh, they invited me. They've been lobbying me to come to slush all these years, but I just, they asked me to keynote it every year.

And the problem is, you know, it's like there's so many speaking gigs. I get offered. But I've really wanted to go to Slush and Finland is amazing. So that's awesome. You had a great time. Wonderful. The cool, I think she's the prime minister who is, she's controversial for a little bit because she, she had that one partying photo. She spoke at it. Oh, she did. It's really cool. Yeah. That was awesome. Leave the prime minister alone. Sonna Maron. I think she's cool. Sona Marin. Unfortunately, there's one person I wanted to see, speak there, but she was unable.

I think she was sick or something. It was Sophia Amaruso. And I saw her. She just recently raised. Yeah, I'm an L.P. Yeah, from Girl Boss. Yes. Nasty. Nassi Young Girl Boss. I just became an LP in her fund.

And she's raising her first fund, correct? Yeah, trust fund doesn't have trust, but also like trust fund. But she's not a trust fund baby. She's an actual hardcore entrepreneur and friend of the pod. All right. Actually, we should book her to be on the pod. We should. We should.

Let's have Sophie on the pod. Yeah. Good friend of mine. Erica and I talked about Slush's ecosystem and her the origins of slush, but hopefully next year I'll be able to go again and we'll actually get to hear here Girl Bosses talk.

Congratulations and enjoy the interview everybody. Okay, Erica, thank you so much for joining me on this segment of OK Boomer. Erica Savalaina is the CEO at Slush, which is an amazing student-led startup event

based in Helsinki, Finland that I had the honor of attending this past year. Again, Erica Thank you. Thanks for having me. So slush isn't just a tech event. It feels like to call it a tech event is a little bit of a disservice. Can you please explain to everybody what slush is? Yes. So slush is a movement led by students and recent graduates. Our mission is to help and create founders to change the world. And yes, you're right. Our main tool for that is a tech event. So 13,000 people in Helsinki every November. However, actually, when you look at our team, our team members don't really feel like they're event organizers. We rather see ourselves as young people learning as much much as they can about startups and entrepreneurship while they're at slush. And then once a team member has spent a few years in the team, we hope that everyone will kind of go to their next adventure and maybe build a company as a founder, operator or join a VC.

Do you know what percentage of the students that are helping create slash actually become founders themselves? I don't have you an exact number because of course there's some lag. Like not everyone founded as a company directly after. However, I would say that maturity of our team members end up in the ecosystem. Wow. And also the number of companies founded by our alumni is growing year by year. I think there's at least three companies cooking, like under the radar at the moment, by previous team members. Very cool.

So before I went to Finland, and Finland was my first solo trip I ever did, and Slusch was a big part of it. So thank you. Before I went to Finland, I only really knew two startups that came out of Helsinki or Finland in general. One of them, I think, was ORA ring, and the other one was Angry Birds. What startups have come out of Slush members or operators? Yeah, I think the most famous one would be Volt, which is a food delivery startup recently acquired by Nordash, actually. And Vault was founded by Mickey Kousi, the first student CEO of Slush. And actually, the early team was fully comprised of slushers and many slushers joined after.

So I guess that is the kind of most exciting road story we've had this far. but many younger companies kind of going to the same direction. Yeah, that's awesome. Yeah, I saw that Volt got acquired. That's really, really cool. And I know Celeste has been around for a while. I believe it started in 2008, although online there are a ton of different origin stories. What's the origin story that you think is true?

Because I saw too, and I'm interested to see what you think. Yeah, I actually do know that this one is true. So Celest was correctly. founded in 2008. And back then, it was an initiative of five Finnish entrepreneurs. And they were worried about Finland in general, like the lacking attitude of entrepreneurship, the lacking networks of people wanting to build companies, and also the lack of venture capital available in Finland and for Finnish founders. And they decided to organize a small event to tackle that. So a few hundred people in one room.

However, these people were busy founders, so they didn't really have time to commit for this side project. So luckily, Peter Westerbock, who is one of the core team members in Rovio, the creator of Angry Birds that you just mentioned, met this young guy called Mickey Kuzi. And Mickey was back then a president of a student society called Alta E.S.

And he was extremely eager to have an impact and change the world. And this group of Finnish entrepreneurs ended up handing slush the small event to the hands of this student association. The student association didn't really like the kind of small scale. So they started growing at the event heavily. And a few years after, it was 10,000. people, then 15,000 people, then 20,000 people. And now it is an extremely strong movement for over 10 years. But the first one was already 10,000 people? Not really. So it was like

increasing with thousands of people a year by year. Okay. Okay. I would say, wow, that's a really big one. I was in a student run venture capital club in college and we had like a pitch event. And I can't imagine putting on the level of professionalism you guys do during the slush event. And I know there are other locations of slush that happened. I saw one was in Tokyo and there was one, I think it's Shanghai. Are these still run by students and do you guys have to do them remotely? Or are these done by people actually based in those country? It's a great question.

So yeah, we've had many global editions of slush events. and our way of doing things has always been kind of believing in a local team. And like if you want to create impact, it has to start from the grassroots. So our global events have always been run by local teams. At the moment, we don't have any large-scale global events, where is that focusing on relevance over-scale in Helsinki. But, yeah. Okay, that's awesome.

I feel like when I was at the event, there was a lot of other people that were, I met up with some journalists and they said they spoke at like other events and different kinds of slush parties and things like that called like slushed, which I thought was really cool. So really awesome to see your guys's reach. And I know as CEO, there's been several different CEOs, obviously, because I feel like you're your CEO during like when you're in college and when you graduate college, you might move on like you said to starting a company or joining a startup. how long are CEOs in the position, like the position that you are in, and how often do you guys have to, is it like a voting system? Like, how does that work? Yeah. So nothing's set in stone. So it might change based on the situation.

But the idea is that we would rotate CEO every two years. Okay. It is fairly, or the reason is basically to give opportunities always for the next generation. So this is no one's life work rather than a launch pad. And maybe my answer to how the CEO is selected is a bit boring. So the board will nominate the CEO as in many companies. However, it is often chosen from the team among people who worked for the community for several years and kind of learned a lot while doing that and also kind of developed love towards the work we do.

Okay, so will this be your second year or? Yeah, so I'll be on board still this year. And then let's see, I am sure that my successor will be amazing, even though I'm not certain who it will be yet. Yeah, that's super exciting. And it's really cool how you do it by the board. And is the board comprised also of all students or is it of like former slush members as well? Yes, our board consists of former slushers.

so many a former slas CEOs and also a few kind of more experienced members of the Finnish startup ecosystem. So it really is like by the community for the community movement. Yeah. And as CEO, what does that actually entail? What are you doing for Slush? Yeah. So Slush, it actually is like quite a complex product. So putting together a 12,000 people event, we have 10 million in revenue, we have a full-time team of 50 people and all that. So it is a lot of leadership and management making sure that we have clear goals. We understand how to get to those goals and we understand kind of how each and every team members work contributes in achieving what we want to achieve.

After this position, do you think that you want to be CEO of your own company? any? Yes. I think the more time you spend in an environment like slush, the harder it becomes to imagine anything else than ultimately building your own own company. So definitely I will want to find a company in the future, whether it will happen directly after this. Who knows? But it will definitely be my end game. And your student during all of this, right? Is this, does the universities of Helsinki, like, cut you any slack or anything because they know that you're doing this? The university system in Finland is actually fairly flexible. So it is fairly easy to start a job, like take a job alongside your studies.

What happens to many Slash team members is, of course, that when they get on board, they see that there's a lot more learning in actually working for slush than studying. So the university might not always be that happy for that decision. But then at the same time, I do feel that the kind of atmosphere in the university is here in Helsinki is very supportive for students taking on different kind of initiatives and learning also outside of the lecture halls. And what's your major? I major in finance. Oh, that's awesome. How old are you right now?

I'm 27, so I actually am like an older slusher and I did kind of stop studying full time a few years back because I got caught by slush. I think our average age in the team might be somewhere around 24. Wow, that's still, that's absolutely incredible being a CEO of such a large organization. And how many people make up slush? So as said, we see our team as a place to learn a lot about building companies. And I think how our team functions also emulates a growth company to some extent. So we start each year with around 20 people and scale up to 50 full-time employees closer to the event in the fall. And finally, for the event, 1,500 volunteers will join the ranks.

So at that point it is a rather big operation. Yeah, yeah, of course. And so when you're doing this, you're also a student. Is this something where you guys can give yourself a salary or is this something that you have to do, like fully volunteer in this position? Yeah, we do have a full-time team that is paid. So yes, there is a salary.

However, I think it is important to recognize that any community of this size wouldn't live without people volunteering and wanting to give back. So I guess that the salary isn't why anyone's joining rather than actually learning and being part of the community. But it gives you, I like that you guys at least are given a chance to, I feel like if you had to also focus on another chance, like, okay, how do I afford to like live? And being able now to at least get a paycheck lets you be all in at slush 100%.

Definitely. Of course, if you needed to think of like maintaining your life without salary, then of course you wouldn't be able to focus on what matters at your work. So it's necessary. Very cool. And I guess my last question, and this is kind of a big one, so you could take a while if you want, what problems are most likely to occur at student-led ventures, like Slash? So if other students are listening to this and they want, become like a CEO of their own student-led organization, what should they be looking out for?

That is a correct question. There is one clear problem, but at the same time, I also do think that it is a problem that necessarily don't need to get fully resolved. That is the fact that when your organization is run by students and recent graduates, the rotation is rather high. like you will have new team members joining and more experienced team members leaving and that's part of the game that's part of the deal in a way. Of course

with that rotation there's something we might call organizational Alzheimer at Slash. So you do lose some human capital with that and there are many things to do to tackle that to ensure that there's this kind of learning over different generations so that we actually

end up improving and not reinventing the wheel year after year. At the same time, I wouldn't be too scared of this challenge because as said, if the team wouldn't rotate, new people wouldn't get the learning opportunity. And what's the point of all this?

If that wouldn't happen. Yeah, yeah, that's awesome. Well, super duver excited to see the next. This last one that I went to is really awesome. I loved that I was able to meet other people in the tech community around my age, especially when traveling. That's always fun. And I look forward to hopefully making my way back to Helsinki someday.

Yeah, we'd love to have you. So I'm sure to be there this year. Right. Thank you so much, Erica. Yes, thanks, Rachel. All right, everybody. That's a wrap. What a great week.

Rachel, thanks for stepping in. You did great. Thanks for having me. I'm super excited for Molly to be back. She is just gone for today. Don't worry. She'll be back on Monday. All right.

We'll see you all. Have a great weekend. and we'll see you all on Monday. Bye.