This Week in Startups - Google AR, Peloton pullback + David Friedberg: Cana, the first molecular beverage printer | E1365

Episode Date: January 21, 2022

David Friedberg joins to discuss The Production Board's latest company, Cana, which is making, the world's first molecular beverage printer.  But first Jason and Molly break down some news. Google is reportedly working on an AR headset (2:15) and Peloton trying to improve their bottom line by raising prices and reportedly halting production and trimming headcount (18:54).  Then, David joins to chat about how his company Cana could totally remake the beverage industry with a device reminiscent of Star Trek's Replicator (36:57). You will learn:  1. How humans perceive taste.  2. How The Production Board incubates deep tech companies and evaluates if science is ready to be commercialized.  3. The way the Cana device will be able to recreate any beverage on demand. 4. Which types of beverages will be practical first. Check out Cana: https://www.cana.com/vision (00:00) Jason and Molly intro the show (02:15) Google is building an AR headset (10:19) Linode -  Apply to their Rise program for founder-led, early-stage startups and get 3 years of discounts at https://linode.com/twist.  (11:33) The killer app for VR Goggles (13:30) Over-under on when tech-savvy will use a headset daily (18:55) Peloton's stock is down massively (22:45) RealGoodFoods - Go to https://realgoodfoods.com and use code TWIST for $15 off! (24:15) Peloton's cost cutting measures (30:34) Jason's product requests for Peloton (33:18) Molly and Jason discuss David Friedberg's new company (35:53) Ourcrowd - Check out the deal of the week at https://ourcrowd.com/twist (36:57) Interview - David Friedberg brings his company out of stealth (38:05) Impacts of the All-In podcast on Friedberg's business (42:09) The Production Board history and structure (45:51) How The Production Board evaluates its projects (49:05) The inefficiency of how humans make and consume products (51:55) The story of Cana (57:16) What beverages are easiest to print molecularly (1:00:00) How the machine uses 80 flavor compounds  (1:02:13) Celebrity beverages, form factor and timeline (1:07:42) Cana's R&D cycle (1:13:57) The vision for the company

Hey, everybody, we got an amazing show for you today. On the program is my bestie from the All In podcast, David Friedberg, and he's on the show to debut his new company, Canada. It is a company that is basically the replicator out of Star Trek. You get a cartridge. It has a bunch of compounds in it. You put your drink container vessel underneath it. Press a button, and you could have the coffee, tea, red wine, white wine, white claw, whatever could come out of this new hardware solution that he's creating. It is like something out of the future that's going to change the world.

An incredible interview. But first. But first, Jason and I are going to break down some news, although I do just want to make sure that I get on the alpha list for when they start to distribute those and they need testers in the real world. Absolutely. David's the one I want to be besties with. Stuff he's working on is fascinating.

All right, Jason and I are breaking down some news about technology that used to seem cool until we heard about Kana. Google is reportedly working on an AR. Our headset and Palaton has run into some major headwinds, shall we say, looking at a number of ways to fix their bottom line, including potentially just halting production on all of their products. We will discuss who we think should buy this company and much more. Stick with us. It's going to be an amazing episode. This weekend Startups is brought to you by.

Linode has a startup program built specifically for founder-led early stage startup. It's called Rise and it comes with a three-year discount program and tech consultants to help with infrastructure growth. Apply today at Linode.com slash Twist. Real Good Foods is modernizing frozen foods and has become one of the fastest growing brands in the US. Everything Real Good Foods makes is low in carbs, high in protein and made from real food ingredients. Go to Real Good Foods.com and use code Twist for 15% off. 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-C-R-C-O-WD.com slash Twist. Hey, everybody. I'm like, look at that. It's been, this is the end of week three, and I'm doing my best J-Cal impression. Hi, everybody. Hey, everybody. Hey, everybody. Hey, everybody.

Hey, everybody. Hey, guys. Smash that like button. I think you're mocking me now. It took all of, it was so respectful and proper the first two weeks. Oh, I was mocking all the YouTubers.

Are you kidding? My child has been saying, hey guys, since he was like four, just like that. Hey guys. Hey, guys. Hey, everybody.

We are going to speed through some news today because our interview is so good, but they are just topics that are too good to walk on by, I think. Yeah. Can't let these ones go. Nope. All right.

Let's get to it. First story up. Let's get to it. Yep. So teasing ahead, tomorrow, we actually have Mark German from Bloomberg on the show to talk about all of these rumors related to the Apple AR and VR headset, which we can't help but be obsessed with, some more than others. Yeah, I am really excited about Apple goggles, Apple ski goggles, because I want to wear them skiing. But after that, I mean, I'm sure there'll be some other applications. And so just as, I mean, you know, spoiler alert, as we're taping this, we already taped that.

We've been talking about this all week in one way or the other. And then turns out news breaks on Thursday that Google is building an AR headset. And I know you're probably thinking they already did that. Yeah. Google Glass. Google Glass. But they seem to be building basically Google Glass 2.0. It looks exactly the same.

Code named Project Iris to take on Meta and Apple. Target ship year is 2024 for the headset and what they're calling, Project Starline, the futuristic and very expensive 3D video conferencing tech. Does this change the game? Yeah, I think you really couldn't count Google out. And so on tomorrow's show, when we're talking to Mark about the Apple one, we just had a little discussion about, like, hey, who's going to be the big player 10 years from now?

And I was like, you know, I really feel like we can't count out Google. They could come out with something, and they probably are working on something. I didn't actually know that. It was just intuition. because if this is the next big compute platform, we went from desktops to mobile, and now we have this one, you know, you might argue wearables

like the aura ring and the watcher are a new platform as well, but the three major ones, desktop, mobile, and now VR, if this is the third one, they need to play a role in that, right? They can't just let, not even take a swing at bat.

So they've got to take a swing at bat, and here it is. And I think Google has a lot to offer, but they have not done particularly well at selling hardware. With the exception of Nest, which was DropCam, and I think that project has been hit or miss. And it seems like this one is going to be focused on meetings, which paradoxically was something that in tomorrow's episode

I brought up about Facebook, I'm sorry, not Facebook, but FaceTime, and how Apple has a natural sort of FaceTime, you know, a sort of FaceTime, I message to their Google, to their Apple goggles. This is going to be really hard to keep track of. So Apple goggles, you know, have that. And then so what does Google have? You know, does search naturally play a role in AR?

Maybe. So if you think about Google Maps and you think about Google Local, these are going to be pretty amazing. And then you think about Google's office suite, which used to be called Google Docs. And I don't know what they call it now. They keep rebranding it, but Google Docs, you know, in Google meetings, which is called Google Hangouts. You know, they really have a couple of places where I think they have great assets for AR. Imagine looking at the world and just, you know, knowing which direction to go in because of their map data,

being able to look at buildings and knowing through Google local what restaurants or stores are inside that building and what their ratings are. So they have a lot of data from the real world that they could use in an AR headset. So I think they have a nice advantage. And they have had moments of great hardware. I think the Nescams have had great moments of excellence. The software's been hit or miss. I do think the Google Pixel, although it's not popular, I've owned a couple of them,

and they are spectacular phones and an incredible value. So I don't count Google out, but I do think that they're behind the big two in this case, Oculus slash meta and Apple. I think they, which is so ironic because Google, came out of the gate first. I mean, in 2012, right, with the glasses wearable product.

They were too early. The project ended in 2019. I think it did have some success in enterprise use cases. And so it is interesting that they're positioning this as, you know, a work thing. Like they described it then as a small, lightweight, wearable computer with a transparent display for hands-free work. This sounds a little more full-featured, but not completely.

I mean, it's like visual search engine, AR video conferencing, basically, which like, that's cool. I totally want that for remote work or for, you know, I mean, sort of, I guess. But it is like, I think the tough sell with all of these is that we don't know what the use case is yet. And that's not a reason to poo-poo it, right? I mean, any consumer product, it takes 10 full years to find a use case. But because we don't know yet, and we know that it's an incredibly hard thing to pull off the process. and keeping it cool and getting the right apps. And then we don't know what kind of like ecosystem dogfight there's going to be.

Is Google going to have like an Android thing? And then Apple's going to have one. Then you're going to have the Metaverse. And is it going to be a Metaverse app. Oh, you know, that's interesting. That is Google's probably biggest advantage here is they already have an app store and all those developers building for Android. Yeah.

And so now they can just say, hey, listen, when you download this app to your phone, it also, you know, just like when you have a watch app, I don't know if you've had this happen, but you download Spotify, for iOS and if you get an Apple watch, it's like, yeah, Spotify's already on your watch, you're ready to go. It's kind of seamless. So, yeah, the app stores are going to be a huge advantage,

and that's a disadvantage, obviously, then, for Oculus, meta, Facebook. Yep, definitely. I'm calling that company now. I am excited about this race. I do have a couple of ideas of what will be the killer apps. I think if you look at that beat saber, you know, lightsaber game.

Love that game. It's pretty cool. And so it is an interesting, workout, right? So things like golf or the Beat Sabre or snowboarding, things in the real world that have like a physical component where you're really moving your body and think Wii tennis, that genre of game since Wii tennis really hasn't had a home. And I think that this is the manifestation of what we saw with Wii tennis, which became a phenomenon around the world and sold a lot of those Nintendo Wii. That's what's going to be the big seller here. And Beat Sabres is but one example of it.

and the golf simulators, things that, like, Molly, are, you know, not super fun to do on an iPad casual game. Like, is it fun to do, to do, like, Beat Saber? I guess you could, you know, swing your, you know. I mean, it's fun to do, like, Fruit Ninja. They do have a version. Yeah, Fruit Ninja came to mine, yeah. Is gaming, though, enough?

Like, I think that's fundamentally the question. Like, that's the reason I think these are starting to evolve in the direction of work, because these companies have sort of realized that there's, there are a lot of gamers. give me wrong. But it's also somewhat limiting because like I played, I'm just like everybody else in America. I bought the Oculus in the pandemic. I played a beat saber nonstop for like three months. And then I lost, I don't even know where the head said is. You did the try. Oh my goodbye. Exactly. Which is what I call what people do with Oculus. They buy it, whether it was the $2,000 one or the

$200 one. And it's just, it's not that compelling to keep going. So I think games are kind of a dud, with the exception of the beat sabers, which can be fun. Cloud infrastructure. structure costs are one of the biggest expenses for startups, and they're also some of the most unpredictable. It's no wonder that many startups get lured to the major cloud providers with the promise of all these free credits only to wind up locked into unpredictable cloud bills and outrageous costs. I've had this happen myself. Well, Linode is here to change the cloud journey for startups. How? Well, they provide predictable pricing, so you don't have any sticker shock, you don't have any unnecessary overages, and they have industry-leading price-to-performance ratios

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Linode.com slash twist. I wonder if you could play those more with this pass-through if they would be more fun. So if you and I were Jedi and we're running through, you know, General Grevis's ship on a mission, and we could see each other

through the lens and it had those cameras. Like maybe that's more appealing. but I do think people have some surprises coming. That will be, I don't want to say Zoom killers, but Zoom killers. So that's what everybody thinks. I think everybody thinks the killer. The killer app is going to be whatever keeps this on your face all day.

Yeah. And that's just new games. And I don't think it's games. I do think it will be this like video conferencing communication piece. And I wonder what that's going to look like. But I do think that that could be exciting for people. who are working from home to be able to sit in an office or, you know, be in some sort of 3D space together, maybe.

I don't know. But they seem to like it. I think everybody's watching work from home and trying to connect these two things. But I'm excited to see what Google has, and I'm excited for this to be a four-horse race. Yeah. Because then you have Microsoft and Google thinking enterprise,

and then you have meta and Apple thinking, you know, consumer. So it's kind of interesting that there'll be four players in this dogfight for another 10 years. And so stay tuned because tomorrow, of course, on the show is a deep dive into the Apple headset with Mark Herman from Bloomberg, who has been sort of a master at breaking a lot of these, you know, like getting the Apple leaks. Yeah, those Apple leaks. Yeah. But let's talk about other things that people apparently, oh, yeah. As we close that, everybody keeps saying next year.

So is this like one of those next years, like self-driving next year? It feels like it doesn't it? Like, what is the actual year that people are going to be? using these 2026, 2027, or is it actually 20, 23, 24? Even Google, which has like a decade of development of this thing under its belt is still saying like 2024. We need to have a line. What's the line on, you know, you and I, people in our strata, like, you know, let's just

say, you know, amongst the more tax savvy, are using it, let's say daily use. When do you think daily use of a headset will occur for people who are professionals in the technology industry, early adopters? Daily use for early adopters. They use it every day, just like we use our phones and watch every day. Man, daily use is a high bar. Yes. Daily use for the avant-garde. Or, you know, let's just say we could do multiple times a week, but that would be still like appointment.

I think it's got to be like daily, like you're saying. So when does daily use start for the early adopters, top 15 percent? Let's say before or after 2027. You say 2027, so I have to pick to maybe 27.5. I got to pick the over or the under for deli use. Wow, that's a good line because now I've got to think like that's a full, what, four years from now, five years from now, five years from now. Pretty much five years from now.

So if like let's say Google comes out the door, 2024, Apple, 23, 24. Such a good line. You said a good line. I got to take the under on 27.5. I'm taking the under that we'll be using it. That's a hard one. See, this is the sign that you did a good line. You're learning how to set.

You'd be a good, yeah. So many learning. You're becoming a good gambler. No, because if I set the line of 27-5, you know, 2027, you know, July 1st, what would you pick for Dalyus? Would you take the over to the under on your own line? I know. It's hard.

That's when you know you set the line right. Yeah. Because if you said 2025, it's easy to take the over. You said 2026, probably pretty easy to take the over. Right. It's not easy to take the over at 27 points. Well, because if they haven't, this is why I'm proud of this line, thank you, because if they have not succeeded in getting nerds like us, right,

assume that we're the 1% of nerds who are going to do this, the tip of the spear. If we're not doing that daily by 2027 and they actually do launch in 24, then they have failed badly. So I have to take the under. Yeah. Then it's DLA. Then it means that this is just not going to be a trend. And then just move on to the chip in my head.

Yeah, no, that is exactly right. Like, do we just move on to the chip and say, F it? Like, this is like not worth it. People don't want to put stuff on their face. It really is interesting because this is a hardware issue too. Like, can the batteries and the screens and the processors have the fidelity and not drain the batteries, not have the heat, not light your hair on fire. Yeah.

And the weight of the glasses. So this really is a classic, you know, Steve Jobs with the iPad moment or iPhone or any number of issues where like, remember lugables? Like we had laptops before they were. Oh, we did. Nobody wanted these laptops because they literally were 12 pounds. Yep. And car phones.

You picked them up like a briefcase. Yeah. Luggables. The whole, yeah, I mean, hardware is really. And honestly, I'm joking about the chip, which I do totally want and I'm ready for my cyborg life. But also, you know, I feel like we also started to, we still. stopped talking at all about ambient computing. Because the glasses are great.

But what I'd really rather have in some respects is like screens around and ambient computing. So they know it's. So I'm just start talking to you. And I just talk to it. You know, everything is like around listening Alexa style. Apologies if I set off any devices in your house. Alexa.

So it's safe to say it. I know. I talk to her very sternly. Do you? Alexa. My boyfriend yells at it all the time. He's like, Alexa! No, I'm just starting.

I'm like, she's not having that from you. I just assume they're good. Which is interesting because people were saying that the next compute platform would be voice. Right. And now we're kind of like, no, it's not. Because it doesn't work. It doesn't work well. It works well for setting a timer.

It works well for setting a timer. And unless it gives me the three most dreaded words in American tech history, by the way. Oh, no. like, whoa, whoa, whoa, whoa. I set a timer. I do not want to subscribe to, like, I can't even think of a good example that isn't totally inappropriate. Anyway, I don't know what happened, but like let that be your guide, right? When it, when attempting to create an all new compute platform, which glasses really are, and ambient computing was supposed to be in voice as your input everywhere, because that's

what I want. I want to walk through my house like a freaking queen. Turn these lights on, make this go over here. What's on my calendar today? Tell Jason, I'm five minutes late for the show. Tell Jason, I'm five minutes late. Tell Jason he's five minutes late and I'm five minutes early. Pull the car around. Seriously. Like, that's what I want. Yeah.

Queen of my damn house. Yes. You want to have a digital servant who just actually gets done. And, you know, like I was like trying to call my wife using Siri and it was like, there was, you know, it just didn't work. It was like, which phone number. I'm like, you know, at this point, I call her 10 times a day. You don't know which phone number, Siri?

Like, come on. Yes. Like, just pick the one I call every day. What do you think? You really don't know my child's name at this point? Yeah, it's so good. I want to play dire straits. Is this so hard?

Like, play dire straits, Alexa. Yeah, O'Rexha. Yeah, O'Rexha. Well, speaking of hardware being hard. Uh-huh. And abandonment. And abandonment. I am really feeling bad about our next story because I love my Peloton tread, and I love the company.

And I was thinking about buying shares in the company at the IPO. we're talking about Peloton. And as of Thursday, January 20th, Peloton's market cap is now under $8 billion from a peak of $46.7 billion. That was a year ago, exactly, and it was during the pandemic when nobody could go to gyms, and they were backlogged. And today they got absolutely crushed.

They are now trading at their lowest price-to-sales ratio, something we talk about a lot here on the show when we do back of the envelope math. Basically, price, the price of the company, another way of saying valuation. Today, Thursday, we should say. This is the Friday show, but we're recording Thursday. Yes, we're recording on Thursday. Sales being like how much money did they make, not earnings, but just top line sales.

And it's 1.85 the last 12 months sales. So what that's showing is, my lord, people do not believe that this company is worth much and that their future prospects are worse than their existing ones. they were trading, as you can see on this chart here, that my team made very good job to my team on the back. Yeah, nice job. This is the kind of production we're looking for here. I mean, they were trading well over 20 times their sales,

which would be an indication that people really believe in the future, right? Because we value a public company, you're valuing the future cash flow and earnings. So a number of reports this week that they're going to be doing way off. Talk about why it's down. Yeah. Well, it turns out. And here, this is the internal documents obtained by CNBC. Quote, Peloton is temporarily halting production of its connective fitness products as consumer demand wanes.

The company looks to control costs. And this is after they spent $100 million to sellage deliveries. What do you think? Do you believe this? Like, you're telling me that this company somehow is so bad at forecasting. Yeah. Like, I feel like something else must be going on here. I cannot imagine.

Also, this is a, yes, it's a hardware company as a brand new investor. I understand the risks in getting into hardware because people buy it one time and they don't buy it again. And so Peloton had its secret weapon, which was this like expensive subscription service and people will keep using it. And there will be new content and it will overcome the thing where everybody buys a wearable or healthy thing. And then, uh, like doesn't use it ever again. It's, uh, it's really a has company production. Yeah. So this is suspicious, right?

It's a little weird. Um, And we'll have to wait and see because I don't believe Peloton has actually answered this. What could have happened was they got so excited about the demand, which was incredible, that they decided to ramp things up. And then all of a sudden it slowed down because people are like, well, why would I buy a Peloton? I'm going to go back to the gym because Omicron and this is all ending. So maybe the last couple of months, people were like, you know, anybody who could have afforded this did buy it.

You know what I'm saying? There's a concept of a natural audience for every product. Yeah. And if you hit the natural audience for a product, it's hard to get more people unless you change or expand the product. Yep. So I think... But don't companies usually do that instead of be like,

oh, crap, we totally didn't see the end of the pandemic coming in. We're just going to have to like... I mean, we don't know. It has not been confirmed at taping time that they are halting production. So we don't know that. We should assume we don't have complete information. We don't have complete information. We don't have complete information.

We assume that the information is not correct or we don't have the full information. We all know how hard it is to eat healthy when you're working crazy hours. But thankfully, Real Good Foods is working hard to help. They make nutritious foods more accessible to improve your health. And they're one of the fastest growing frozen food brands in the U.S. I've tried their foods. They're amazing, delicious, really well done. In fact, they just went public back in November under the ticker symbol,

RGF. So congrats to the team over there on their IPO. And they make all the food you love. Italian entrees, pizza, Mexican breakfast sandwiches. I've had the pizza. Very good. All 100% grain-free, low in carbs and high-in protein. You know that whole thing. That makes you lose a little bit of weight and a little bit healthier. I'm doing it. It's working. And it's all made from real food ingredients. Real good foods is perfect if you're trying to cut back on those carbs like I am or get more protein from real food, which I'm also trying to do. Maybe you're just trying to eat healthy in general, and this is a great option as opposed to maybe, you know, ordering something in that's not as good for you. So they are now available in the freezer sections at Costco, Walmart, Target,

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these rumors. Peloton is essentially raising prices also. They are asking customers to pay an additional $250 for delivery and set up for the bike, an additional $350 for tread. Like, it just sort of feels like something. Something's up. Something's up. I just am not buying the fact that this is just a big business change and they're like, we're reacting. Here's one thing I always look at with these companies. And this is kind of what you think about as an early stage investor, how much cash do they have and how much are they burning? So they ended their last quarter according to just a quick Google search here with $924 million. Now, I don't know how much they're burning. If they were burning $100 million or $200 million a quarter, you know, you'd be looking

at, you know, something in the range of a year or two of cash, which means they'd have to sell more shares in a secondary to raise more money for the company. They have to find somebody. That would create downward pressure. So I do think it's an exceptional product. The people who love it. are, you know, in a cult, basically. And I think they've got so much bad news, you know, the dangers of the treadmill, the supply chain issues. But I do think at its core, it's an incredible product, an incredible company, incredible software, incredible community.

And I think it coming down to earth, like, I think somebody's going to buy it at this level. It's just way too cheap. They burned $376 million last quarter. So that means they have three quarters of cash roughly, you know. I think they could probably control it. That's why they're going to start doing this massive cost. So this could also be, that could explain it.

Actually, now it's coming together in my brain. Maybe they halted production and they're slamming on the break so hard here because it was so hot they thought they had unlimited ability to raise money. Now they're realizing, oh my God, it's cold. We have too much inventory and we're running out of money, which means we can't raise money. So you see how the dominoes can fall in the other direction of a company. They should have done a secondary offering when their company was this hot and raised three or four billion.

And they should have bought tonal and they should have bought but mirror whatever, a couple of other companies and built a full of product line, hydro, et cetera. So this might be... That makes a ton of sense. Because it does...

Yes, like it does make me wonder if the executives are also too bought into the cult. You know what I mean? Like, oh, well, just, we'll ride this forever and nothing will ever go wrong and nothing will ever change. You have to, when you're running these companies,

when the market is hot, raise money. Yeah. Like, just as a general rubric, you just got to, you know, not overthink it. And if you're like, well, we're making money, we're about to hit profitability and we have a billion dollars in cash, you should be forecasting. Well, what happens if the pandemic, you know, ends? In their case, the pandemic ending is bad news.

Yep. You know, so what if it ends faster than we thought? Well, here we are. I don't know if you're watching the Omicron, but, you know, having gotten it and it is plummeting in the places that got hit first. And when the people on the left who were in favor of lockdowns are like, you know what, let the kids go to school. Forget the mass thing. We're all going to get it. Throw a party. I mean, they're basically getting to the point where they're like, Is that what happens? Fouchy's like, and if you wanted to throw a party and get the Amacron party like a measles, I wouldn't say you're out of life.

Yeah, that's not happening here. He's close to saying that, isn't he? He's like, I'm not sure with the mask. He's getting closer, but I'm in the, like, I'm in the bastion. Like, everybody's going to be hanging on until they're, with their cold dead hands. Like, you'll take my K and 95 out of my. I just like the mask.

Oh, my God. Because of anonymity. And warmth. Yes. I wish masks continue. I would like everybody to wear a mask on a plane forever. Because I'm a tro-o-phone. Please keep wearing masks, everybody.

And yeah. I'll probably wear a mask on a plane. I cannot imagine a scenario where I, like, want to fly without a mask again. Just because I don't understand how all of these years I've just been like, yep, I'm just going to get on this plane and take everybody's germs and eat them. Well, they, it's got pretty good air exchange. That's why we're not having up. It does.

That's true. planes probably not so bad. Anyway, we're slightly off topic. But yes, not... Why isn't Omicron had like massive outbreaks on planes? Or we're just not getting data? Why don't we suck at data? We have no. Are we not studying anything? I could give you like a solid hour on the fact that we are about to take the steps that we should have taken in March 2020 now after the pandemic is essentially becoming endemic. And we just don't care about data, apparently, I never have. And like, we'll never know about there. for free tests at the end of the pandemic as a keepsake. They're like, by the way, we got a billion tests.

They're going to ship at the end of January. Did you order your street house, though? Yeah, of course. Yeah, I ordered them and I ordered them and I'm like, don't need them anymore. Yeah. Really? Two years later, you're getting these to us?

I've literally been scrounging from my friends tests to make sure that I'm negative so I can get my child back because I cannot get one anywhere. Yeah. And so then I was like, sure, I'll order these ones. from the government. I just don't even get me. The stupid is overwhelming. I have to say the website did work.

So I was like, the website's working and the government's giving us this for free. It was a little confusing how well it worked. I do think, though, just to come back to Peloton for a second, I think like this is, I mean, not being able to see the possibility of a change in the business conditions that built your business in the first place feels like a big miss. And if they are this off target in terms of their own inventory and spending, that is a real management problem and there have been whiffs of that before and I just think it's kind of notable. I bought the half price. I bought the knockoff peloton. The mix. What is that called? The mix,

MIX. Why? I don't even know this. I know. No one knows about the mix. It's like the secret, the secret cheap person's Peloton. It's freaking great. It's white. It's super beautiful. It has when it came out. It's only 500 bucks. And when it came out, it had it, the Peloton didn't have the rotating screen. So the mix had that. And it has a lot. It has. a subscription, but it's not like live classes because I don't really care about that. I have a lot of things I want them to fix on the Peloton. Number one is the Peloton tread,

which crossed thousands of dollars, and has the most beautiful giant, like, IMAX screen on it. You can't play YouTube, CNBC, Hulu, no apps. I know, I hate that crap. I hate that. The mix is the same. I literally, I literally bought an Amazon, like a little plastic, like, S kind of tray

that hangs over it that I put my iPad Pro in. So I'm watching the next game, and then I move it to see my Pelopel. Like, really, guys, it's an Android computer. Don't ecosystem me. They're like, you can fix it. I'm like, really? So I look on these like groups.

Like, all you have to do is root your Android and then log in through the web browser. And then if when you reboot your or you, you know, goes to sleep, you just have to do this seven minute procedure every time. I'm like, really? And then boyage your warranty and it'll be great. No, it mixes the same and I can't hook up my Apple Watch to it or another heart rate monitor other than the polar that they, you know, I'm just like, don't ecosystem me. I don't want that. I'm with you.

It would take nothing because it's Android to just say, here are the approved apps. And every month we'll add one. So somebody clip this and send it to the Peloton CEO who I've invited on the program 10 times. And the nice mix people who are super nice. Would it kill you to allow, you know, next month Netflix, next month Disney, next month, Hulu. They're Android apps. Just turn them on. And instead of me looking at the back.

of like, I'm running on some trail, let me binge watch. I'll stay on there twice as long. I lose enough five pounds. I mean, it's really true. Also, we know who should buy Peloton's Apple. Yeah, if they, if Apple wasn't so prideful, they would. Yeah. I think Google gets it and puts it with Nest and their home products. Or Amazon, because Amazon could move these, like nobody's business. Amazon should buy it. $400 knockoff, though. I know, but If Amazon owned Peloton and they made it part of Amazon Prime, your Amazon Prime membership gets you, you don't have to pay the $40 for it,

and it just makes more people not unsubscribe from Prime because it's a sticky product. And they don't have health right now. So if you want to keep people from unsubscribing, but they bought beats at $2 billion. Peloton at $8 billion seems like a steal. I think it's steel. And the look is right.

I mean, the whole vibe, right, is so perfect. Like, it really is just a brand affinity situation that would be incredible. Peloton by Apple. And then put Apple TV. You can watch the little Apple TV subscriptions on their. Android. Put it on iOS.

Do it on iOS. Make it iOS. It syncs with your watch. It automatically synced. It knows your profile already. All right. But honestly, I think we have talked about these boring incremental technology solutions long enough.

And I know they don't sound boring and incremental. Yeah. And that's only because you have not heard today's interview. Yes, today is a game changer in the hardware space. Let's talk about it. This is bonkers. I listen to it.

Yeah, you set it up and I will just have my mind for them. My bestie David Freiburg is on to discuss his new company, Kana. It's a company out of his incubator called the Production Board, and it's basically in the change the way you drink. It's the replicator. It has 80 compounds in its flavor pack, but it's really a compound pack. It turns out that like wine and juice and soda and everything, is basically 90 plus percent water, six or seven percent alcohol, if it's an alcohol beverage,

and then a couple of percentage points is the flavor of the compounds. Those compounds can be made and reverse engineered. So if they're made in nature, you can make it with other compounds. So you say, you know, wake up in the morning, I would like to have this tea. In the afternoon, you want a juice spritzer and that at night you want a certain type of wine. And then other people can start making their own beverages. And we could have this week in startups, you know, caffeinated, afternoon beverage or, you know, some influencer on TikTok can make their own

white claw competitor, you know, some hard salsa with pineapple flavor. You have this long tail of drinks. It is a game changer of all game changers because it's also going to save the environment. It is bonkers. Mind-blowing. And what's remarkable about it, I mean, I don't want to give too much away because you're going to hear it and there's, you know, we've already ruined the reveal, but it is so fascinating and so game-changing. But what is so interesting to me too is the sort of vague sense of technocrat horror that you can't help

but feel when David so casually discusses the fact that all of the retail, all of the agriculture, all of the packaging, all of the trucking, all of the jobs associated with the beverage industry.

Bye, bye. Bye. We'll just go away. Just go. All that shelf space gone. All those trucks gone. Yep. You can't even intern. All those vineyards, all of Napa, all of Tuscany. I think he keeps doing the thing, but more people would have access to better wind.

Yeah. We don't want them to go away. It's remark. It's just like, listen to it and then put it through that lens and just have a minute of being like, that is what revolutionary change looks like. All right, without further ado, here's David Freeberg. All around the world, tech companies are innovating and driving returns for investors. And our crowd is an investment platform that analyzes many. of these companies across the global private market. Then they select startups with the greatest growth potential and bring them to you. From personalized medicine to cybersecurity and robotics to quantum computing and more. In state-of-the-art lab, startup barrages in anywhere in between. Our crowd identifies innovators so you can invest when growth potential is greatest, and that's early. Our crowds accredited investors have already invested over $1 billion in growing tech companies

and many of their members have benefited from their 46 IPOs or exits. And you want to invest early and often you want to get that nice diversification in your portfolio. And trust me, I do this for a living. Now you can truly diversify your portfolio by investing early in innovative private market companies that are crowd. Join the fastest growing venture capital investment community by going to our crowd.com slash twist. That's oh you are, CROWD.com slash twist. One of the besties from This Weekend Startups is making his first appearance on this Weekend Startups. You guys know David Sachs has been on three or four times, Chamath's been on four or five times.

But today we get the Sultan of Science, the Queen of Kinwa himself. David Friedberg is on today's show to launch his latest product from his incubator, startup, the production board. Welcome to This Week in Startup's, David Freedberg. I am excited to be on a top 10 podcast today. Thank you for having me. Absolutely, because you're on a top, I don't know, we were hit 37 for all in this week. Yeah, you said I was a bestie from this week in startup, but bestie from the all-in pot.

Sorry, bestie from the all-in podcast. Sorry, end of the day here. I've been in podcast land. But yeah, maybe just to start off, I mean, we're going to have this big triumphant launch of your new startup product. Coming out of stealth, not launching the product. Okay, I'm sorry, yes, coming out of stealth for the first time. Thank you for doing that here on this week. startups in an extended format, because we do have, we should talk about All In for just a quick

seconds, since everybody is enamored with the podcast, I'm curious for you who did not have a Twitter handle when the podcast started, and we're 63 episodes in now, you didn't have a Twitter handle, and you were known in Silicon Valley, certainly, but maybe didn't have as higher profile. What has the podcast going from, you know, a little niche thing a year ago to now, I think this past week, we were peaked at number 37 of all episodes in the United States. This is a pretty crazy thing for you. I've generally not been someone to seek the spotlight. I'd rather let, you know, like one's work kind of, you know, speak for itself.

And so for me, it's never really been a priority. But doing the pod, which we started out of COVID as a way to kind of deal with the pandemic and talk about it. and then obviously turned into this really interesting kind of show. I have found now that when I speak to candidates for hiring or to investors, they know me and they otherwise would not have known me and have gotten to know me a little bit because of the pod. And so that's the reason why I kind of have continued to do it. And I see value in that and it's really great because I can go have a conversation with someone

and I'm not some random guy that they have to kind of have a, you know, hey, who are you conversation to start the, you know, the meeting. And so that's also why I'm doing, you know, this conversation with us today because this business that we're going to talk about is super important to me. And I want to make sure that we generate a bit more of a profile. It's been installed for three years so that we can get great people to come and work with us on it and so on. So in a way, your initial thesis, hey, let your work speak for itself might not actually

be the best advice for a startup founder now that you have a bit of distribution and a more notoriety, correct? I've always said that there are three things that are the biggest predictors of startup success, or I haven't always said. This has been a point of view I've come to recently in the last year or two. Number one is grit. As we know, no startup is a straight line to success. In fact, most startups are persistent failure.

I always say it's like, you know, one step backwards each day and one out of every five days, you take a five-step leap forward. So that's number one. So to experience 80% of your time being spent failing, is very difficult psychologically for most people, especially if you come from places like Stanford and Google where your whole life, your whole career has always been about winning, always been about succeeding, always been about getting the A. And then all of a sudden, you're getting F's four out of five days. You're like, wait a second. So that's number one. So grit is a really

hard thing to learn. You have to come from a background, I think, of needing. That's why, in my opinion, immigrants do so well as entrepreneurs. Number two is bias to action. I've seen way too many people that come from an analytical background that they like to analyze and think about options and think about uncertainty and hedge their way into nothing. And having a bias to jump in and take risk and be ready to for that failure is important. Those two go hand in hand. But the third is narrative. A narrative is so important, which is can you tell your story? Do people know your story? And that really attracts, firstly, employees, attract capital, and attracts customers. And you know, you have a friend Elon who is probably the best in the world

at narratives. Steve Jobs is arguably one of the best in the world at narrative, but it's so important. And so I've really come to this understanding that it's not just about putting out the product. It's not just about making the business work. It really is about being able to articulate your narrative to get the best people to work with you on it, to get the customers to be aware of it, and to get the capital that you need to execute against your business. And to be honest in the early days, Elon was, I think, very much like you, let the work speak for itself. He wasn't a very public-facing person. Right. Just 15, 20 years ago. we would go out to dinner or something like that,

people would not even know who he was. Right. Quite a change. For people who don't know, also, you run the production board. According to our research, raised about $300 million from Alphabet, the parent company of Google, Allen Company Block Rock, and others. And I think you've been running that since 2016. And maybe you could just explain to people as we build up to now talking about the big launch today.

I'm sorry, the big coming out of stealth of this product today. Maybe you could tell people, what is the structure of the production board? How many projects have come out of it so full? and then what project number is this one? Yeah, so we have, I set it up in 2017. I started making personal investments and started a few companies after I sold my prior business called the Climate Corporation, which makes software for farmers. I sold it to Monsanto in 2013.

And then I was making personal investments and starting some project myself. I had a series of conversations with Larry Page from Alphabet about doing something together. I wasn't interested in working at Alphabet again. He was really interested in the kinds of things I was working on. And so I agreed to set up this holding company where I would contribute these investments and these companies I'd started into it. And Alphabet became a minority shareholder by putting capital in. And then over the years, we've raised additional capital from Bill Gates and Allen and Co

and Bailey Gifford BlackRock, all those folks you mentioned, a lot of strategic family offices. So we don't operate like a fund. We don't take a management fee out. We don't have an incentive to mark up investments and go raise our numbers. next fund, we're basically a balance sheet, right? We're a company that owns stakes in other companies. Most of those companies, we start. So several minority investments we've made in businesses that are strategically aligned with the stuff we're doing. But generally, we start businesses. So we will spend a lot of time with scientists, with research teams, with academics, trying

to identify new and emerging trends in science and technology that we think could enable some sort of breakthrough opportunity. We also spend a lot of time in the markets we operate in. And then we really try and identify what's possible. And we ask ourselves, you know, how can we reinvent a system of production on planet Earth, you know, one of these systems that makes things that people consume or provides health or therapeutic products to people? How can we reinvent that system using these emerging technical capabilities or emerging science? And then we'll typically run an R&D cycle in-house.

Once we've done that R&D cycle and we feel confident that the technology that we're contemplating is actually possible, then we'll typically run. will form a new business. When we form a new business, it's like any other startup. It's a C-Corp. And, you know, the team that we've been working with on this project will become employees of that business. They'll all get equity in that business. And we're the singular funder of that business, typically for quite a long period of time. And then, you know, in many of our businesses, we ultimately raise money from other investors into them. And so we've done, we have about 12 or 13 different businesses that we have stakes in today. And part of the advantage of the

advantage, by the way, of our model is, number one, we can take on a lot of risk. You know, we can think very long term. You know, we don't have a fun lifetime. We don't have to return capital. The goal at some point is for the production board itself to be a public company. And what could be like Berkshire Hathaway in a way. Is it set up like one of those business companies? There's some sort of setup where you can have a business holding company.

Yeah. And pass there was a set up like that? It is today. But, you know, if you were to go public, you'd probably convert it into a C-Corp. And it would end up being kind of like. a more traditional legal structure. But again, we don't take management fees out. So we don't have an incentive to raise more capital.

We don't have an incentive to mark our investments up because we have no reason to mark a fund. And we don't have any reason or any priority to return capital to our investors. They're all just shareholders. So our goal isn't to just sell a company and then flip it. And as a result, because our investors are very patient, because of the way we're structured, we can take on these big kind of risky technical long range projects, spend a lot of time on them.

and really make a bet that's 10 years out rather than try and iterate to some markup and then raise more money and then go raise our next fund and flip the business. You've abstracted away the milestone-based financing that happens in Silicon Valley where you have to prove yourself to the venture community,

find a new venture firm to mark up the previous venture firm's investment, and you just make that decision unilaterally inside of the company, if I'm reading it correct, which leads to more efficiency. And in your view, I think a little more intellectual intellectual honesty and less outside incentives that could be perverse at their worst. Yeah, I mean, there's always this question of what if we did X, we could show progress, and then it looks like there's a real business here, and then we can go raise money.

And that framework often trades away the long-term opportunity for the short-term market objective. And I think that that's an unhealthy framing for big technically risky projects, because then you don't go after the moonshot. You typically go after something that I would argue is more iterative than you know, order of magnitude changing. And so that's a big kind of orientation for us is let's make sure we're grinding away at the really hard problem, even though there's a lot of risk and it's going to take a lot of time

and a lot of money, similar to the project we're going to talk about today. Yeah. You know, rather than try and scurry away into something that quickly finds product market fit and we can quickly go raise money. And that works well in a web app ecosystem. It doesn't work well in what people are calling deep tech and things that are generally very hard and take time. And you have to solve many, many problems in a row in order to get the product right.

I mean, think about Tesla and SpaceX, right? You know, there was no quick, rapid iteration to... Well, in Tesla, there was one. I mean, they did... The Lotus launch. Right. The Lotus launch was. And if you think about that, that set them back.

Because they weren't thinking from first principles. They were thinking, how can we get something on the road that just somebody buys, that put some fuel in the gas tank, as in money. But, I mean, I think it would be very interesting before. before we get to the new product here, and there'll be the final thing we'll talk about before we get there, if a concept like, hey, we're going to do blood testing,

like there are notes, we're sitting here in 2022, if you're listening to this years later, and Elizabeth Holmes is found guilty, if you took that same project, you put it in the production boards, research and development sort of phase, how would that have gone down if you were supervising that project,

and Elizabeth Holmes was just somebody who was talented? It's assumed she was talented. It's funny. We are working on a diagnostics company. We have a fantastic team working, on it with us. So it's a system. I can't talk too much about it because it is one of our stealth R&D project right now. But it's a system that will be, I think, pretty extraordinary if it works. And we have a great team working on it. But we have really clear technical milestones.

We know from here to product, what do we need to prove? What do we need to accomplish? How do we de-risk the technology? And that's a big part of my job and my team's job at TBB is really figuring out we have to have a deep understanding of the technical build cycle and then drive the outcome. And it's not just about go and raise a bunch of money in the next phase. It's like, are we actually making the progress that we think gets us to a product? And then if we are, we unlock more capital. We put more in. And ultimately, we kind of say, hey, look, we've derrifts this enough. I think we can actually make a product that can work and that can change the market and change the world. Let's form a business around it. And then we start a business.

All right. So let's get to today's business. You had shown at a poker game, myself, Chumath and a couple of besties, this project, I guess, when you were in the industrial design phase. What is it today that you're announcing and taking out of stuff? Well, if you wouldn't mind, let me just take a step back and talk about some, like, one of our kind of core beliefs at the production board and how that led to this opportunity. So, you know, when you look at, you know, how humans make and consume things. We've built the system of industry, right? And so we take all these things that were old technology. And we've talked about this in our all-in pod, like growing animals to make meat. The way we do that today is we take fertilizer. We mine it from we mine potash in Canada. We put it in the corn belt in the U.S., put it on the ground.

We grow corn. We take that corn. We feed it to cows in Texas. We kill the cows. We move them to New York steakhouses. the whole system is super inefficient. We use technology that's been around for 10,000 years, growing plants, feeding animals, making meat, and delivering it.

And that whole system takes about 30 times as much energy as it actually produces in food. And this is true in many of the things that humans make. And manufacturing and production is really kind of the mainstay of consumerism, right? Like every year, humans are only happy if they have more this year than they had last year. That's a fundamental fact of human psychology. And so every year we see consumption go up. And as a result, we see production go up and GDP goes up.

Gross global product goes up. And the way that we've scaled up our production to meet all of humans' needs for more food, for more cars, for more entertainment, for more computers, for more betting, for more housing, is we've taken old tech and scaled it up and centralized it and made repeatable processes out of it. And that was really kind of the framework of the first and second industrial revolution. We centralized manufacturing. We put all these capabilities in one place to repeat a process over and over again and to make a product repeatedly and scale it up and distribute it. And that system is what's largely led to climate change.

It's largely led to extraordinary carbon emissions. And, you know, we use CO2 to move stuff around. We use CO2 to make stuff. And it's all about getting the cost down through centralization and distribution of produced products. it. And so a big thesis for us, and the reason we're called the production board is how do you rethink the whole systems of production that humans use to make the stuff that we consume. And this can range from stuff like we've talked about in the all in pod, bio manufacturing. We have several big projects in biomanufacturing where you can use biological organisms to make things. And you can use the biological organisms to make things locally. Also 3D printing, right? We've talked a little bit about this. But a big part of what we're going to talk about today is really the beverage industry. So, I'll tell you a little story. The story is I went to dinner, and some scientist I went to dinner with was telling me, hey, there's this really cool research.

You should check it out. This guy took a glass of wine, and a glass of wine is 87% water, 12% ethanol, which is alcohol, and less than 1% is all the compounds that make up flavor, color, odor, and mouthfeel. And there's about 500 of those compounds, and that's what makes the interesting flavor of a red wine. And the guy took all the compounds out and started adding. them back one at a time. And he was able to recreate the red wine using just 27 of those compounds. And then he did it again with another red wine and then with a white wine and then other beverages and basically showed that you could recreate most beverages or all beverages really

with a reduced number of compounds. And so we read all this research at the production board and I started speaking with my team and our team started running an R&D cycle. And the R&D cycle was, hey, can we recreate beverages using a simplified set of compounds? And doing so, can we reduce the compounds to make all beverages to a fixed number? You know, can we just use 70 or 80 compounds to make wine, beer, coffee, tea, juice, soda? And, you know, the answer is yes, yes, you can. Now, why is that interesting? Because any beverage, whether it's a bottled water, soda, coffee, tea, juice, wine, whatever,

is almost entirely water, right? So beer is 94% water, 5% alcohol, and less than 1% is the chemicals that make odor, color, flavor, and mouth feel. Same with wine, same with juice. Juice is 93% water, 6 to 7% water and less than 1% is all the chemistry that makes vitamins, flavor, odor, color, and mouthfeel. And so if that 1% is all that you need to ship to make beverages, why don't we distribute the manufacturing of beverages and put a beverage printer in every home, and then ship the 1% that you need to differentiate water into nearly any other beverage.

And that's kind of the idea behind this business called Kana. It's a molecular beverage printer. It's a molecular beverage printer, a molecular assembler of some type. And we would be remiss if we didn't say that this is something we saw on Star Trek with the replicator. People would walk up to this machine that looked like an oven or whatever. Or we see in the real world starting in, I think, about 2010, every movie theater, lots of quick serve restaurants would have a Coca-Cola freestyle machine. where you could press a bunch of buttons and get a mixture of beverages. Totally.

So where are you with this product called the Kana? I mean, you had shown us an industrial design. Are you literally making wine? And is the wine any good? Yeah. So we, by the way, when I had dinner with that guy, the first thing I said was, why do we just make the Star Trek replicator? Because that's always, I've always said my North Star, TBB, is just make the replicator.

Because you can make the replicator and you've infinitely available. energy. And technically, if you have the ability to convert any molecule to any other molecule with infinitely cheap energy or zero cost energy, you don't need to grow plants to make stuff. You don't need to have industry. You don't need to have factories. You can do everything locally. And that's, you know, that's, I think, where we're headed over the next couple hundred years. So with Kana, again, we started running all of these R&D experiments. And our initial focus was how do we make high quality red wines? And I thought it'd be great because you could have a high quality red wine printer at home.

And what we realized over the years of R&D cycling is just how much people spend on other bottled and canned beverages. So just think about the craziness of what I'm going to tell you. Consumers spend $2.3 trillion a year on bottled and canned beverages. Half of it is beer and wine. Half of it is coffee, tea, juice, and soda. And most of those beverages are mostly water that are put in cans and bottles. First of all, we put a ton of water on to grow the crops.

we use to make these beverages. So to make a single liter of OJ takes 40 liters of water. And the OJ is 93% water and 7% sugar. And only 1% is what makes it OJ. To make a bottle of wine, take 600 liters of water on the grapes. And then you put all these grapes, which are 88% water. And you're putting them in a vat and you're fermenting them. And you're turning the sugar into alcohol and less than 1% is what makes it wine. So the whole thing, and then we take these bottles that are, you glass and plastic and aluminum, it takes a lot of carbon to make those things. We put mostly water into those bottles, and then we put those bottles on trucks and you CO2 to move them around. I mean, the whole thing is just like insane.

And then you store them in factories, store them in your house. We have to have bigger houses. We have to have bigger, you know, sheds or... They got to go in factories. They got to go in warehouses. They got to go in the retail store. They got to go in your pantry. And then you got to store them in your fridge. And then you drink them. And so the whole production supply chain is just bonkers. Now, every home has running water. So why not just take the water from your tap, put it in a machine, and if that machine has the ability to dispense the right volume of these flavoring compounds into that water and then has sugar and alcohol to turn it into all these other different kinds of beverages, then theoretically that machine could make coffee, tea, juice, soda, wine, and beer. What's the easiest thing to make?

And when you launch it, yeah. Yeah. So it seems to me, I mean, when you said you red wine was your first. first idea. I was like, that seems crazy. That seems like those people have very sophisticated palettes, their snobs. It's really hard. Like, why not pick something easier? Like, I don't know, like White Claw or other alcoholic beverages, you know, it seems like me. You nailed it. Our white claws are awesome. So we've got this whole line of hard celtzers, this ability to make hard celtzers with flavors that wouldn't generally be available because the audience would be

too small. So think about a print of example. Ammon, like a hazelnut. You know, no one's going to buy hazelnut, but some people taste this and they're like, oh my God, it's the best thing I've ever had. But if there's only 50 customers for hazelnut hard seltzer, the brand is not going to make hazelnut hard seltzer because there's not enough shelf space in the store to put that product there. So think about what this means over time. To me, this is about what's going to happen with YouTube and media.

We all used to watch network TV, you know, at 8 o'clock on Thursday night. There was like four channels you could pick from. Three originally, yeah. Three originally. And then Tivo came along. And then the internet came along. And on any given night, I would be hard pressed to find more than a few houses watching the same thing. Everyone's watching their own content when they want to watch it, how they want to watch it.

And it's a long tail. And I think the same will happen in beverages. Because today, there's only a certain amount of shelf space at the store. As a result, you have to limit how many brands can show up at the store. And as a result, the brands can have to make enough product that it meets the lowest common denominator, which means the widest audience possible. Right. And so there is not a long tail. of brands and a long tail of beverages that really gives everyone something that they say,

oh my gosh, that's my favorite. That's the best thing I've ever had. That blows my mind. That's my perfect flavor, which, by the way, is what you get at Starbucks. And it's why Starbucks is so popular. There's four trillion permutations of a Starbucks coffee. Everyone's got their own little iteration of how they drink Starbucks. And it's also why the IPA craze took off and the microbrewer craze took off in the U.S.

Everyone got to find their own personal version of beer. and now those microbrews kind of outsell Budweiser and Miller and it's also why the Coca-Cola freestyle machine became such a phenomenon these last two generations. I didn't even know it was a specific name, but kids will specifically want to go to restaurants that have the freestyle machine because they can go there and they can mix and match lemon and root beer and cherry cola and they find that fascinating. They have their own little formula they want to do. But here, what's the difference between what we see in the freestyle on a technical basis? Yeah.

Which is, I think, just a bunch of syrups that get mixed together. And what you're doing, which is molecular. If you could explain it to a layperson. So there are basic compounds, and we have about 80 of them in our cartridge. So we have a flavor cartridge. The flavor cartridge slides in the machine. Sorry, I'm not going to speak. I can't share too much detail on the machine because we're going to be doing a nice

little product reveal in a month or two. Okay, great. And so I'll come back and show you demos and stuff. stuff, you can get first look or whatever. But just at a high level, there's a flavor cartridge. The flavor cartridge has a call it roughly 80 different compounds in it. And you can think about those as being like the colors in an inkjet printer, right? C, M, Y, and K.

And those compounds are not compounds you're typically hearing of, but they're the compounds that make up all the flavor and everything you drink. What's an example of one of those compounds? You know, they're like an acid, like an acorbic acid or a turpeen or a flavor, these sort of chemistries that make up the base of most common flavors that you might

kind of allude to when you think about a certain flavor. So to call it a flavor cartridge isn't exactly accurate because it's not like one of them's almond and one of them's hazel, not and one of them's cherry. It's a compound cartridge that then would make, the 80 would make how many known flavors.

Infinite. And that's what makes it so kick out. And then in addition to the flavor cartridge, there's also another cartridge that does a sugar solution, another one that does alcohol. And so those cartridges, all three of them, will last you for a month or two months or three months, depending on how much you're using the machine. And then using the touchscreen or the app, you'll be able to print all these different beverages.

And so you could have one machine that can print you a cola. It can print you a mojito. It can print you a white wine. It can print you a hot seltzer. It can print you an iced tea, an ice coffee. You can flavor your ice coffee. You could add extra caffeine. You could add vitamins.

You could change the calories. You could have reduced sugar, all the kind of personalization that we're kind of used to in the rest of our world you can do on this machine. But really, there will be an infinite number of brands that can show up on this machine. And so, you know, J-Cal could make his J-Cal-Hard Seltzer brand, launch it on the device, and you don't have to actually make anything. You don't have to make cans. You don't have to make packaging.

And you don't have to go find shelf space at a store where you could sell your beverage. It's just printed and you would get a red share on what gets printed through the device. So we had Honor Palmer, famous. made his drink and it became canned, or you could have Mr. Beesme, Mr. Beesburger. You could literally have a celebrity like that. Kim Kardashian could say, you know what, I would like to make my own line of skinny beverages that were low calorie and had great flavor and were alcoholic. And then, wow, all of a sudden, everybody's machine says, would you like a Kim Kardashian Pinacolada, skinny pinacolada, and you pressed a button and you got it?

And that's what I'm most excited about, right? Because we've talked about this on our all in pot a lot is like this crater economy that's emerging where there are lots of folks who have influence or are influencers. And one of the ways that, you know, very, very, very large influencers have been able to monetize their brand historically is by creating a beverage category. But you've got to have 100 million people following you for any beverage business to want to partner with you to make a beverage. And so now, you know, JCal with your million followers on Twitter or what have you, you know,

you can go promote a beverage brand to your followers. And as long as they have the ability to print your brand at home, they can, you know, use the device to do so. Now, this is like, hold on. Let me ask you one, there's one stupid question I had. If you're putting that cartridge in with the compounds, the flavor cartridge, but I'll call it compound cartridge, what if my household is like heavy on coffee and white claw, and I'm using, you know, whatever of those 80 compounds, 40 of them?

But the other 40 I never touch. Do I take that cartridge out and throw away half of it's super inefficient? No, so again, I'm not going to, I shouldn't be getting into too much of how this is going to work, but it's recycled. So new cartridges show up when you're running out, and then you ship back the old ones and they get recycled. Got it. So if you didn't use that specific compound. Yeah.

Because you don't like acidic stuff. Unlike Misspresso and Courage, you know, where you're taking one aluminum thing and throwing the thing away, this cartridge will sit in your machine. And then when you're done, you ship the cartridge back. And it's all included. So it will be a subscription model. That's the business model. Paper beverage. Got it.

Yeah. And then, you know, it'll give people the ability to have flexibility. Look, I mean, I think Generation 3 of this device and Generation 4, we can start to do really interesting things like variable cartridges based on your home's particular use. So smart. Yeah.

And so anyway, I've got like, that's offensive very well. Yeah, if it was, no, but I mean, if it was connected to the internet and you saw, hey,

this family likes, you know, acidic drinks or citrus drinks more than they like, you know, creamy drinks and alcoholic drinks, the next cartridge would lean into that.

That's right. So genius. And so when do you think, a product like this would be available to consumers. What is your target? Next year. Hopefully not too far into next year. So we are now moving from, look, we did our R&D cycle, then we started a company.

Then we started building our prototype models. So we're now on version X of our prototype that we feel confident enough that we can now go to commercialization, meaning we can make these devices and start to ramp up our production ready models of these devices. Gen 1 of the machine is going to be expensive for us to make because it's low volume. So that's a big thing that we're trying to figure out is how do you trade out features to get price down, but do it in a way that the features still meet enough of the needs that we can deliver on the promise of the product. And then also, there's just a lot of boundary testing on this device, as you can imagine, right? What does it mean boundary testing in this context?

So think about like dispense precision. We are talking about all the flavoring, compounds in a typical beverage being less than 1% of that beverage. Okay, so for a 350 ML can of Coke, we're talking about three MLs makes up the entire flavoring palette. So let's say you've got 30 compounds. You're talking about needing to dispense one-tenth of an ML. Okay, so to dispense one-tenth of an ML with high precision, because if you're off even slightly, you'll end up having a flavor that's very different. And so, you know, what is the average precision of each of our dispense?

And then in aggregate, we're trying to dispense all these things at once because we want the whole machine to be able to print very quickly. We want the machine to be able to cool your water very quickly. We want you to be able to have an amazing experience with this device. So all of these features, you start to trade off technically to save price. And then, you know, you realize, wait a second, maybe we should add that back in. And then you want to know, like, look, if someone's using the machine nonstop for three, four, hours, you know, are we going to have issues with keeping the water cool? So that's boundary testing. It's really like, to what extent can you push the device? To what extent are you going to

have failure modes on the thing? And that's a big part of where we're up. I mean, if you make a mistake with the Coca-Cola freestyle and you put in 10% more cherry cola, who cares? It's just a slightly sweeter soda. Here, if those MLs are off and, I mean, I think that's like an eye dropper maybe or a tiny eyedropper. Less than a tiny eyropper. I mean, you could just make something that tastes incredibly bitter or base or gross. And so this goes back to my point about being technically difficult, right? To pull this off, you're trying to create an inkjet printer for beverages. It takes a lot of time and a lot of capital.

I mean, we've invested over $30 million in this project to date. $30 million. Take me through the R&D process. I had a, I put a note when you said you have this R&D process. You've been at this for three years on the Canada. Canada, by the way, you show me that you didn't go to your Catholic school or pay attention. It was the town in Galilee where Jesus turned water into wine. Got it.

So that's where the name came from. I mean, you're literally turning water into wine. It's pretty genius. So take us to the R&D cycle. How long did that take your R&D cycle? Yeah, so the first thing we did, we probably spent about six to 12 months really running the gamut on flavor testing. So what beverages can we make? Can we actually make enough beverages for this to make sense?

And at the time that I showed up with you guys, we were only a few months into it, and we were starting to try out a couple of different wines. where the original concept was, let's just focus on wine. And then after that, when we started doing things like salsa and iced tea and ice coffee and juice and cocktails, particularly, the cocktails are fantastic, then you start to realize, wait a second, this can be a lot more than just a wine printer. Maybe we should be thinking about this as having multiple uses throughout the day for a home. And then once we, and so that was being done in parallel.

So the R&D cycle on flavoring and can you buy the core compounds, number one, Are they generally available? Are they safe? Are they affordable? All that sort of stuff? The answer is yes. Number two is, can you combine them in a way that you can make an amazing tasting beverage using a reduced number of compounds?

The answer is yes. Number three is what are beverages made of? There's nowhere you can go online to get the chemical composition of every beverage you may want to make. Ah, so you literally had to make the Wikipedia of beverages or whatever the DNA project is. Precisely. We have an analytical chemistry team at Kana, and we have multiple devices where we all day long, they're just scanning beverages and they're identifying what is the molecular makeup of each beverage. And then based on that catalog and seeing what compounds are in the beverage,

then our production chemistry team can start to iterate and test on different formula that might use a reduced set of compounds to try and recreate multiple beverages and see if we can actually recreate the beverage we just scan. And so that's a big part of the chemistry R&D cycle. And so as we got more and more confident that that was going to work, you know, we obviously get closer to forming a business. And then, In parallel, we start running these industrial design and what are called bomb programs. You're trying to figure out what's the rough cost of a device going to like this going to look like? Build of materials.

Build of material. Yeah. And so. Now, it's critical here for people to understand. I'm not an expert on IP, but, you know, I go down that rabbit hole, having been a publisher my whole career with fair use, et cetera. And I distinctly remember recipes and flavors cannot be trademark. A recipe, a formula, can be trademarked.

but not the flavor itself. So you can take any flavor and make it. You just can't take the Coca-Cola brand, but you could make something that tastes very much like Coca-Cola, correct? Yeah, absolutely. And that's kind of the idea of taking a printer, right? I'm not trying to sell people copies of Coca-Cola. I'm selling them a printer,

and then I've got a device that can print a cola for them. And look, I mean, we do, so then we have a sensory team. That's the third part of the chemistry team I didn't tell you about. The sensory team then takes our production output, and then we run sensory panels. We bring actual consumers in, and we score on a sensory, on a taste panel, how do our beverages taste compared to others? And our goal is to meet or beat the standard in that category. And so everything from Sprite to Coca-Cola, to Pinot Noir to Chardonnay, to Hard Seltzer,

to iced tea, to ice coffee. We're trying to make sure that we can knock it out of the park. Right. And that's a big part of that kind of R&D cycle on the chemistry side. Give me the range of, you know, coffee juice, cocktails, wines, et cetera, easy? Or the extremely easy and extremely hard. It would seem to me that making cocktails would be incredibly forgiving because it's five or six different flavors. They tend to, you know, and then it would seem to me that wines would be extremely hard.

But I don't know. Maybe coffees are harder, but maybe flavor coffees are easy. I don't know. You tell me, what's the hardest? Your intuition is totally right. You know, wine is very complex. There's many layers to a wine. And if you don't hit all the layers, people notice.

And so, you know, wine is very hard. Generally, more complex red wines like Pino Noir, you know, big, heavy wines, you can recreate pretty easily. Why is that? Why can a big heavy wine be done? If there's something that overpowers the palate versus having lots of subtle cues in the palette, I think about a nice burgundy that you might have at your French Samoff's house. You know, like, you could probably identify 50 really interesting notes in that

burger. You're like, oh my God. Pepper. Oh, my God. Yeah. But if you go down, if you go down to like, you know, San Luis Obispo here and you taste like a big, heavy cab from a really hot summer or Zinfandel in Dry Creek Valley here, for example, you know, there's a there's a tone that's overwhelming in that wine. And you're not picking up all these little notes. And so that wine ends up being a lot easier to reproduce. If people love a buttery chardonnay, that's pretty easy because you can just give them a buttery kind of note, and you don't need to have all the little subtle cue. So, so anyway, that's one element. So a ginger ale or a ginger beer is so strong in one compound, ginger, it's going to be easy to hit that one out of the park. Yeah, but ginger isn't

a compound. So remember, like, these flavors are made up of lots of different compounds. The way that we've created heuristics for flavor as humans is associated with a set of compounds. And what's interesting is not all of those compounds are necessary to recreate that flavor sensation. And that's the magical science. And that's the science discovery that enables this business. A double click on that. So you're saying the compounds that made this flavor in nature or humans doing the process, in the cana, you would be able to do it with less com, with fewer. Precisely. And this is to get the same outcome. So it's more efficient on another layer. Precisely. Because think about a grape, right? A grape has all these different chemicals in it

to grow a friggin grape. And at the end of the day, you've got all those chemicals in the wine, but you really only need, turns out, 27 of them to make the thing that your body actually tastes and that your flavor senses can be triggered by. And so that's a really kind of important, but subtle but important understanding of the work that we've done is how you can kind of recreate lots of different kinds of beverages using only a few dozen different compounds. And that's what really enables a lot of what we do is really kind of simply missing down.

Let's talk about this on a business level. Do you see this as a premium product that you're going to charge for, it sounds like, you know, based on a subscription here, based on a per beverage? So you consider a high-end thing, or do you consider this a way to save money like people who make those soda streams, right?

The promise of a soda stream is, hey, you have all your soda at home, and it's going to cost one-tenth, or I think they maybe say a quarter of buying Coca-Cola or buying your art show. It's save money, save time, save space, taste better, infinite variety, better experience. That's what we have to hit, right?

Like, it's got to save you money. It's got to have better... Does it? I mean, I would think if it had all these choices and selections, you could go premium and say, hey, listen, you can't get these flavors anywhere else, and you can't get this convenience anywhere else, we're going to charge you, you know, 50 cents a soda, a dollar, an alcohol beverage.

So it's a little bit cheaper, but we're not going bargain basement here. You're right. Gen 1 and the product features and the pricing are going to be a lot different than what we aim for with Gen 3 and beyond. So you'll do the roadster. You'll do the Model S before you do the Model X, a model one.

That's right. And we're going to do very limited release on Gen 1 of the device because we're building Gen 2. And remember, like, in hardware, when you build for scale, you get cost down, right? So a lot of the stuff that we're buying is not in volume today. It's custom fad. So there's a lot of stuff that you get cost savings at volume. And so, you know, are you buying 100,000 or a million parts or 10 million parts and you see a dramatic

difference because the line can be run for you for a long period of time and the factory can make money making those components for you? And so that's why we kind of think about gen 3 being our breakout device. And Gen 1 and Gen 2 will have incredible value on the own, but they're not going to be for every home, for every income level to replace every beverage on day one. That's going to come in Gen 3. Okay. The non-accoholic beverages are a trillion dollar market globally. If you succeed at this and every home has one, just like every home has a television, you know, or a refrigerator, what does the world look like in 20 years? So look, I mean, we all drive down the street and we see trucks and trucks and trucks delivering bottled beverages, the stores, the homes.

You can walk through any supermarket and you can see how many aisles are filled with what is mostly water. You know, these are plastic, canned, and glass bottles that are holding water that's been moved thousands of miles and used a ton of carbon to move that water all of those miles and a ton of carbon to make the container. that store all that stuff, we use 50 to 60 million acres growing all the stuff that we use to make our beverages. You could think about all of that land going back to nature, not having to irrigate that land, not having to put water on that land. You could think about all the CO2, you know, hundreds of millions of tons of CO2 being put into the atmosphere to run the beverage supply chain globally today going away, all the shelf space going away, the cost dropping by more than 50% for all the beverages we consume. And the variety and optionality for beverage consumption going

up to infinity. Today, you can go into a store and you can buy maybe 50 different kinds of beverages. What if you could go into your kitchen and buy 100,000 different kinds of beverages? And it costs half as much. And so I really do think that all of the centralized bottlers, packages, warehouses, retail stores go away. And we use the water that runs into our homes. And then we differentiate that water with an in-home printer into all the different things we might want to conceal. Here's a crazy idea. And you worked at Google. And so you saw a user-generated content become a phenomenon. And you saw sharing the revenue at YouTube specifically become a major driver. What if you came out with a kit and I, as a civilian at home who loved beverages, could sit there

and geek out and make my own beverages. And then if I decided, you know what, this J-Cal lemonade with a couple of extra flavors in it and I geeked out to it. I want to just sell that to everybody and put it in the app store, the Kana app store. Yeah. Stay tuned. Okay. I mean, I don't want to go down the roadmap here, but. Jason, you are, you are so in your lane on the startup stuff.

Like, you always, you always nail it. When we get into politics arguments with SACs, it's a whole other story. How many of those have we channed and spiked? Totally. But you have great intuition on where this goes. right. That's exactly right. The consumer, first of all, having infinite variety and the consumer, in the same mode that you look for content online today, you can look for beverage brands in the future. And then who's going to make a beverage brand? Well, initially, maybe, you know,

influencers and brand ambassadors and so on. We're not going to have this thing launched with Canada's brands. We're going to have this thing launched with third-party brands that are now going to be able to access an audience and have kind of this really interesting differentiated way. So there's not going to be a house set of brands? There will be a few, but that's not the intention. The intention, as you point out, is to be an enabler and to, you know, enable initially existing brands and over time anyone to be a brand. So it's a platform. This is a platform. Yeah.

I mean, that is so brilliant. So everybody who's listening right now is saying, hey, J-Cal, you have an allocation, so can't wait for the syndicate. So you're guaranteed me to have a little allocation. I guarantee you an allocation in whatever first outside round we raise. Thank you. That's all that I care about. all of this is that I get to wet my feet. Lock. That's a lock. Lock it up. So now you need talent to do this. And if somebody was looking for a project that could go to the moon, this is

truly a moon shot in the Larry Page, Sergey Brand model. This is a, you know, a truly revolutionary product. So that's incredible to be able to work on that. And obviously, there could be equity that could become worth a lot. But I think also if you're, if you're a really talented person to go and optimize, all due respect to Facebook and Google, to optimize, to optimize the ad network to be, you know, 0.01% more efficient with your genius brain is a goddamn waste of a genius brain. If you put your brain on this as a really talented person, you have a chance to get rid of an environmental disaster that's occurring with plastics, aluminum, carbon, driving beverages to and fro, the whole distribution cycle. So what kind of talent are you looking

for now? And what's the culture of the company? Hardware engineering. So, you know, We, we, we, you can go to cana.com, C-A-N-A-com and see kind of the, uh, the jobs page and, and what we're, we're looking to. Oh, you go Canada.com? Yeah. Wow. That's a million dollar domain. That's probably a million of your 30 million.

I mean, like I said, like I said, we don't mess around. I mean, we're, we, we build for success. We don't build for, this is not a, uh, fly by night. I hope it works. It's like big bets. Um, this is a big bet. Yeah. And so, um, Canada.com.

And then, uh, hardware engineering and this, uh, is, uh, uh, the full stack. Software engineering. So, you know, we do have software that runs on the device. We have, as you pointed out, this is a subscription business that's going to basically require all of the necessary infrastructure to deliver that service, mobile app. And then, you know, really important is around design and content creation because we are putting digital brands on our platform. And those digital brands don't exist today. So, you know, we are looking for creatives. that can come and work with us to help take influencers and take brands and make them available on our on our device and that involves you know um imagery it involves video uh it involves um

uh you know a whole bunch of content naming creating logos and really trying to enable a lot of different brands to succeed on the device so product management in both hardware and software i mean all the traditional kind of roles in a hardware software type company are our our our our team, you know, that one we don't really have as much of a difficult time hiring. But we are also hiring for offs. One thing to note, this is, yeah. So no one's ever made these flavor cartridges before. And so in addition, a lot of people have made an appliance, a hardware, and then shipped it to homes. Sure. So we're trying to make up appliance and ship it to homes that does something that no one's ever done before, which is microliter and sub microliter dispensing of liquid. So that's hard. So that's

like very difficult life sciences scale liquid handling. But the other thing that's really hard is how do we fill cartridges, make cartridges, get them to your home, how do we get alcohol to your home, how do we get sugar solutions to your home, and how do we make this whole service seamless and amazing to the consumers? So just solving the ops problem. If you're an ops person and you worked at an Uber or an Instacart or some logistical company that has to deal with hardcore logistical errors, you know, issues and errors, you know, this is a place to go.

And I just want to take a moment of Canada.com slash vision and a very important page. We'll pull it up here. I just want to read it to folks because that's really what this is about. We need to solve the damage we're doing to this planet. Every year, the world uses 121 million acres of land, 300 trillion liters of water, 543 million metric tons of CO2, creating and shipping beverages around the globe every minute, one million beverage bottles and cans are sold with only 20% of recycling. Incredible. The waste has led to massive buildups of trash that disrupt ecosystems hurt wildup and end up back in our bodies as microplastics.

This is far more than having a delicious beverage. This is the Tesla of beverages, and you get to drive the most advanced car that is the most joyful to drive while saving the planet. It's just an incredible vision, incredible job. It's just great to know you, David, and to see you, you know, building a product like this. I think this is the promise of the production board realized. And I know you put a lot of time, effort and resources into this, namely your own.

I mean, you're millions of dollars into this, 10s of millions of dollars into this, correct? That's right. And this is a big manifestation of what I care about, right? I've had lots of offers to go be a VC and other, you know, make money doing lots of things. But this is, I think, you know, a time in human history and a time in my life where there's important work to do. And I think that in order for that work to realize the light of day and for it to scale, it has to be an incredible business. And it has to have an incredible product. And so this is, you know, it's not just about working at an NGO or nonprofit. It's about making things that if they work and they scale, they will change the world and fundamentally, you know, fix these things that are very obviously broken. And that's key to kind of to the work that I do and that we do at the production board and that the Canada team does. All right. So go to Canada.com and look at all the jobs here. Engineering Program Specialist, firmware software engineering program manager, senior cloud back in software engineer, senior firmware engineer, you know, just tons of important jobs. Your creative director, great job, product manager, senior product manager, automation.

engineer, scale up chemist, molecular beverage printer, senior data scientists, lots of great jobs there. And the moat you're building, incredible, the platform, incredible. I wish you great luck on it, my friend. Any behind the scenes with All In, people love the behind the scenes all in. Favorite behind the scenes, All In story, you feel okay telling here. I don't feel okay telling any of the behind the stories. Or what if it, given how this is going.

Like we talked about on the last All In pod. You know, there were several moments, one of which was not ever publicly known that this pod basically ended for a week, but the All In Pod ended for a week. And we weren't going to get back together. And there was a big falling out. But look, I've realized that you and David Sacks are like oil and water. But you guys are the stepbrothers in the movie Step Brothers. We're great friends.

One of these on the top of the bump bit. You guys think differently. very differently. Yeah. But you guys both cut and you guys both cut each other in a way that no one else can cut you. Yes. And that's what makes a brother, right? Like, you can go, any guy can insult you on the street and you'll wave them off.

But if David Sacks insults you, it gets you. Yeah. Yeah. And vice versa. And when you insult him, it gets him. And he just, he gets tweaked. He gets tweaked. We all get tweaked.

You guys laugh off other people, but you don't laugh each other off. No. And it's so interesting because you guys are both truly like, I would say, I wouldn't say easygoing, but you guys are both forgiving and fun-loving. We are fun-loving. I just think, you know, since we both stopped eating carbs and we lost all this weight, 50 come up, it really has been a problem for the everybody's really dangerous. Listen, I told you this before.

One of the great things for the pandemic, and I think we, now that we're at the, hopefully, the end game is upon us. one of the great things I told your mom that's at your non-super spreader party with the vegan food which was not good

delicious delicious delicious delicious for vegan food but not good for a meteor but I'm trying to be flexitarian here I'm trying to be your I told your mom she was such a

so gracious and so such a fan of the pod and she was very nice to me about my moderation skills or whatever and I told her and I tell you this sincerely one of the great things, you know, I knew Chimoth and Sacks for a long time, but you and I, you know, we knew

each other, but maybe not to this level. One of the great, great things for the pandemic for me was getting to build a deep and meaningful friendship with you, especially through the lens of collaborating on building the pod. And it's just great to know you and to have somebody in my life who was doing it for another amazing person in my life creator who's doing incredible important work in the world. It's an honor to know you. Thanks, Jayco. You're a big enabler because, you know, the work I've always done, like I said, I've always been heads down and You've really brought me out and work with me on the pod and inviting me here today. And so hopefully that makes the work more impactful and, you know, helps it succeed.

That's because of you, man. So I appreciate it. I mean, you've, I mean, I will say the audience really recognizes when we have a high Friedberg ratio. And I really, you know, once I realize, gosh, when you're, when you speak more on the pod, the, you know, the fans love it more. I've really tried to get you more involved and passion the ball more. more plays for you. And you're just such a critical piece of the puzzle there when we get together every week. And who knows, you know, maybe someday we'll be sitting here and we'll be a top 10 pod

next year instead of just number 37. And it really is due to that real team chemistry there. Totally. Good to know you. Congratulations on this. Thanks for guaranteeing me a $10 million allocation. Look forward to shipping you the money. If you're in the syndicate.com, you can start the riot now because there are 9,500 members. and the syndicate.com trying to figure out how do they go to weasel themselves into this allocation. It's going to be a lottery, folks. We'll get them in. We'll get everyone in. All right. Thanks, pal. We'll see you all next time on this week in startups. Bye-bye.