This Week in Startups - Square becomes Block, Spotify Wrapped’s genius, $GRAB debut + Founders of Fathom, Deft & Krepling | E1338

Episode Date: December 3, 2021

First, Jason covers Square's corporate renaming to Block to reflect their broader ambitions (2:11), breaks down the genius of Spotify wrapped (13:15), and gives a nod to Grab's public debut (16:41). Then, Jason is joined by 3 founders who went through the Launch Accelerator, to extract the lessons from the early days of running a company. First is Paul Bloch of Fathom, an AI-enabled podcast search platform (23:03), then Zach Hudson of Deft, a E-commerce search engine (41:58) and finally Liam Gerada of Krepling, a no-code e-commerce platform (54:19).

Hey, everybody, hey everybody. We have a great show for you today. I'm in Miami for NFT, Basel or whatever they're calling this thing. It just spoke at the pre-money event. And today on the program, I'm interviewing three founders that went through our launch accelerator that have invested in, great companies. And one of them's in podcasting, one of them's doing an e-commerce search engine, and one of them is doing a no-code e-commerce platform. You're going to love all three companies. We talk about getting early product market fit and raising that first round from investors when you're just a two or three person company with an MVP or a modest product.

And we're going to talk about securing the bag. But first, some news. Square is rebranding as Block. And Jack Dorsey is back in the headlines. I love the stock. I own the stock. I'll never sell the stock if Jack Dorsey is running the company. That's my belief is that he's a great entrepreneur and his best days are ahead of him.

And then Spotify's wrapped came out yesterday and it is absolutely flooding social media. We'll talk about the genius of that growth hack. Finally, a friend of the All In Pod and the This Week in Startups Pod, Brad Gersner's SPAC Grab went public today. It's the largest public debut of a South Asian company, so congratulations to him and the team at Grab. We'll talk about that. Stick with us. This Week in Startups is brought to you by Lemon I.O.

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AI-driven growth is not just about technology. It's about organizational transformation. Join more than 45,000 people worldwide who are driving results with data IQ. Visit D-A-T-A-I-K-U.com. Okay, everybody on our first story, Square has rebranded to block, to align itself with cryptocurrencies and obviously the block chain. You remember on Tuesday's episode, We covered. Jack is stepping down as a CEO of,

Twitter. And I mentioned, hey, he's likely to put more effort into his passions, which are Bitcoin and the blockchain. And here we go. I think perhaps Twitter and Square, because they both logically could pursue cryptocurrency features, were maybe going to start overlapping. And then you'd have to think, well, when Jack has a new idea as CEO, which company does it go to? Does it go to Square? Or does go to Twitter? I just saw on Twitter they were going to do NFTs in your wallets and verify that if you're going to use an NFT of the Borde A Yacht Club or whatever hipsters or lions, you would have to actually prove that you had that NFT to put it into your profile picture, I think was the idea. I'm not sure where they are in executing that. But there's no reason that Twitter could not turn everybody's account into a wallet and then start accepting crypto, distributing crypto, and go head to head. and Twitter should obviously have a payments platform, which would then put it heads up against the cash app.

So that was probably one of the things that led to Jack giving up the CEO seat. New technology is emerging. You have Square at scale and you have Twitter at scale. Where does the CEO put its next idea? Pretty obvious that that's going to be a bit of a conflict going forward. So great idea for Jack to pick one and he controls more of Square and has a bigger interest in Square. and Square has obviously got a massive lead when it comes to finance. According to the Wall Street Journal Square holds $220 million worth of Bitcoin on its balance sheet. Pretty interesting, having your treasury partially in Bitcoin. A little controversial if I don't know what their total treasury is.

Anything more than 5 or 10% of your treasury in an alternative asset would be considered super, super aggressive. Square will still keep the name Square for its merchant services business, which makes sense since it's known and love there. You know, those are the little card readers you see at delis and coffee shops or the POS system, which means point of sale, not piece of anything else. Just so we're clear about what POS means, the first time I heard that in a meeting, they're like, we're making a POS. I was like, really, I think you guys should give yourself credit for making a really good product,

not a POS. And they're like, point of sale, right? I was like, oh, yeah, that's what I meant. So Block is going to represent the suite of tools that Square has. And if you don't know, Square also has the cash app, which has become an absolute juggernaut. We'll get into that in a moment. But that lets you send money, crypto and stocks to other people.

Square obviously does payments for small businesses. They have afterpay, which is, you know, buy it now, pay later, competes with a firm. And he bought title from Jay-Z. You may have seen the photos of Jack, I think, vacationing with Jay-Z at different points in time. Maybe they were doing the deal at that point. Not sure how title plays into all this, but you could imagine with and, NFTs, Jack making a play to have music rights entitled NFTable or lyrics be able to be purchased as part of

NFTs, etc, etc. So it's in a way the continuing trend of people who own collections of assets, giving them a new name as an umbrella company. Alphabet obviously owns YouTube, Google, Android, go right down the line. Now Zuckerberg has meta for their collection of products. And it does let you signal to the market, hey, we are going in this new direction. In fact, Tesla used to be called Tesla motors. They dropped the motors. They just called themselves Tesla now because they're obviously doing solar, battery packs, etc. So if you look at Block's ticker symbol, it's going to stay SQ for Square for now.

Square shares were down 3% on the news, but that's probably a result of the overall market being down at that same time. So I wouldn't attribute that. We'll see over time. I think Square is a juggernaut. I do own some shares in Square, full disclosure, that I got from being in a venture firm that had invested in Square. I was an LP in that venture fund.

I don't trade stocks, to be totally honest. Although my wife did buy a bunch of Roblox, which doubled. So good on my wife. Congrats to her. She was like, I think we should buy Roblox. I was like, I'm not so sure about that one, but go for it. Yeah, and she went for it. And she also made the Bitcoin trade.

She was like, I'm keep hearing about this Bitcoin and you're talking about it. And these other people in our family are talking about, should we buy Bitcoin? I was like, yeah, sure. And that's a seven-figure. asset. She's got in terms of percentage increase, even with my Uber, even with my Robin Hood, literally my wife is in the top 10 appreciating assets in our joint portfolio. So cash app subscriptions and services revenue grew 35% year over year and in Q3 was 474 million. So cash app is extraordinary.

That comes from cash app app card fees, instant bank deposits, which they charge one to three percent on. And Square overall is going to generate over 16 billion in revenue this year, 2021. They lost a little bit of money. Essentially, they're at break-even. They lost like just under 3 million in Q3. And their current market cap is 87 billion. I think that this company could go 10 to 20x in the coming years with Jack focused solely on it. So I am super long square. I'm not going to sell any more shares of it. I had sold. I think I sold half of my shares when it was at like $72 a share, because that was my previous plan. When I got equities, I would sell half, keep half.

Now my plan is maybe sell 10 or 20% and keep the rest. So you do have to have some sort of plan. And as time goes on and I build a bigger book of business, I'm selling less in the companies that I think are going to be here in 10 years. And Square, I put in that category with Uber and Robin Hood. I think Uber Robin Hood Square will be more important companies in 10 years than they are now. And so I'm all in on that. If you look at Squares price to sales ratio since late of 2016, they're trading at six times,

which I would put in the reasonable category. You'd see it peaked up at 12. People got a little excited about the product. One of the things I noticed was there were these always cash app trending on Twitter. So Jack, knowing Twitter market, I think that those cash app trends were, you know, his company, Swear, being able to understand how you use Twitter really well. but that could also have the appearance of impropriety, even if it's not impropriety. And I'm sure it's not impropriety, but that is another one of those issues.

If you keep seeing the cash app sweepstakes and other marketing on Twitter, it just creates this appearance that maybe Jack or the Square team is using Twitter to build another business. And I'm absolutely saying here, that's not true. They would never do anything unethical. Absolutely not. In fact, they would do things way above board because they would also be aware of the appearance of impropriety, but this is one of the things I trained first-time founders. If there is an appearance of impropriety, the public interprets it as impropriety. So never have the appearance

of impropriety. What's an example of this? I don't know. The founder goes on vacation and speaks at a conference. Okay, they spent $5,000 going on vacation or going to the conference. They brought their family. Who paid for what? You've got to be really careful with this stuff. And so you just always want to be careful with the appearance of impropriety as a founder. It's very, very, very dangerous to have shareholders think that you might be using one asset to grow another or your own personal bank account. So he's got to be really careful with that. And I think that was what was becoming untenable or potentially down the road would be untenable is for Jack to be making decisions about cryptocurrency opportunities for both companies. This is super obvious to everybody.

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And you'll receive a 15% discount for the first four weeks. of work with your new developer who's going to crush it for you. Get in there, everybody. Lemon.io slash twist. Here's something my crack research team, and man, do I have some great producers on this podcast who work really hard to make me look smart? So shout out to our producers.

You can reach them anytime. Producers at this weekinstarups.com and they saw this trend from 2017 to 2020. If you're watching on our YouTube channel, YouTube.com slash this weekend. You would see this video. And it shows the United States

for May to June of 2017 and the words cash app and Venmo in terms of searches. And you have but one lone state that's blue and blue is representing cash app and the rest of the country's red Venmo. And then you look at like 2018 and you know, I got about 20% of the country and the states are blue and the rest are red and so on and so forth until you get to May June of 2020. And now it's, you know, almost 50% of the country seems to be searching for cash app over Venmo. And this comes from somebody who tweeted this. At six times price of sales with the founder authority and a great business, block a good value.

Will it be a juggernaut? I think so. I don't tell people to buy stocks. I don't give financial advice. But I will tell you, I am not selling a share of square as long as Jack is running the company. I think it's a stock I would want to own for the rest of my life. And I turned 51 last week, so hopefully that's, you know, a couple of decades I got left.

I am telling you right now, I have no plans to sell a single share of Square as long as Jack is running the business. I think that highly of him as a visionary founder. He could be quirky. Sure, you might not see him on TV all that much. But, you know, having met him and talked to him many times in the early days, I was always very impressed with his project. insights and vision. And congratulations to him on getting super focused on crypto. I think his best days as an entrepreneur are ahead of him.

Also, what a great couple of days I've had for my ego on Twitter, because Spotify Rapped, which is a yearly recap of users' listening habits, dropped yesterday. The app shot up to number one in the app store due to this crazy virality. If you don't know what it is, they basically tell you your top five most listened to artist songs and now podcasts. And they have done this in this incredibly elegant, shareable slide show. So every year, people share their results on Twitter and Instagram.

I would share mine, except it's all BTS and Katie Perry and then Mark Knopfler and Mark Knopfler and Pink Floyd because we're on a shared account and my daughters are listening to BTS and Katie Perry. And I'm listening to Dio Straits and Mark Knopfler and Pink Floyd. Or at least that's my story and I'm going to stick to it. I'm not listening to BTS. Yes. But here's a 12-second clip of producer Nick, the great producer Nick's Spotify rap. All right, coming at you, here's Nick's top five songs on a Z morning zoo,

Gecko Overdrive, Radio Edit, Love Tonight by Shouse, Hippies featuring to another, Guru, Dancing in the Moonlight by King Harvest. But anyway, this gives tons of free viral advertising. People want to share this because it speaks about them. It lets them peacock a little bit and show what they're into. But the great part of this was, and kudos to my besties on All In, as well as my team here, Matt, Jamie, Jackie, Nick, Charles, Rachel, and Justin, and everybody who helps with This Weekend Startups, I was getting just flooded the last 48 hours with people who had All In and This Week in startups in their top five, not one, but both of them. and this was just incredibly heartwarming to me to know that people were listening to thousands and thousands of minutes of those two podcasts. Just absolutely fantastic. And what a great, great idea this was for Spotify to do this. And again, if you just want to look at how effective it is,

Spotify is the number one free app and Apple Store ahead of TikTok and YouTube, which obviously are juggernauts. And if you compare their rankings to last week, they were between 11 and 16 overall. So probably if you're a founder listening to this, I wonder if there's, you know, if you're a consumer-facing app, what yearly recap you could do to create some viral marketing. I wonder if com.com could do meditations or Robin Hood could do top trades. But it's so well done that I was absolutely impressed. Now, I don't think Instagram should do this because, or Twitter, because it would just show how addicted people are. And it would be quite embarrassing to share exactly how many minutes I spent on Twitter. last year instead of finishing the book. But, you know, Fitbit or FitBod or your Apple Watch

talking about your year or Peloton in terms of health? Yeah, that would be something they would share. But it is a massive engineering undertaking for a company with as much user data as Spotify has. Think about it. Here's a quote from Spotify's engineering blog. In 2018, the wrapped campaign data pipeline had one of the largest data flows jobs ever run on GCP. That's Google's cloud platform, the contemporary to Amazon Web Services, which resulted in limits around the amount of data we were able to shuffle. In other words, talk about a big data project, tens of millions of users, and then all of those minutes listened. So you need a lot of engineers to do this right if you have a lot of data, but it seems like it would be worth doing. And so congratulations

to Spotify. Finally, coming around third base here, a friend of both pods, Brad Gersoner, SPAC for Grab, went public today. don't know, Grab is based in Singapore. It's basically Uber for Southeast Asia, ride sharing delivery, and payments. They're the market leader, obviously, raised $4.5 billion in this deal that valued the company at $40 billion. They're at a $628 million run rate, so that's a nice, healthy multiple. They have 22 million monthly users. So they're a fraction of the size of Uber, but obviously a pretty big business there. And this is the largest public debut ever, according to our research for a South Asian company, 30 times larger than the previous record set,

at $1.2 billion by an Indonesian satellite company, according to CNN business. And Uber obviously has a nice slice of the company because Uber was competing with Grab. They were also competing with DD and China. They were competing in Russia. I forgot the name of the company there. And instead of competing in a race to the bottom of discounting, Uber made a really smart move to partner with Yandex in Russia, Grab and South Korea. Southeast Asia and D.D.

Creating just well over $10 billion, I think, in value. So let's move on now that we're through the news. And you get to meet three investments I made through our accelerator. This is from our 23rd class of the accelerator. We give people $100,000 for 6% of their company. We tend to invest in the companies after they graduate. If they grow, we'll make four, five, six bets on them like we did with Grin, which became a unicorn or blockable, lead IQ, cafe X.

many great companies have come out of our accelerator, and we spend 16 weeks with them, introducing them to hundreds of investors, helping them with their pitch, helping them with their company, helping them with growth. And the accelerator is just one of the great joys in my life. I'm so happy that we created it and we want to keep building it. And now it's 100% virtual. We used to have people be required to come to San Francisco for at least 10 of the 12 weeks because everybody wanted to come to San Francisco back then and meet all the investors

here. Now it's 16 weeks, 100% virtual. so you can do it from anywhere. We like to have people who have a couple of customers, you know, pre-seed round, pre-the-series A, and who want to raise that first seed round of $500,000 to $3 million. That's kind of our sweet spot. So you come, we introduce it to everybody.

And you're going to see we really like to focus on founders who build great products and have product velocity. What's product velocity? Very simple. It means that your product is improving every couple of weeks and you see that growth. The teams with product velocity, that means they're going to delight customers

or the chances of delighting customers increases because they're trying new things with their product consistently. Not constantly, consistently. Two very different things. You want to consistently improve the product and share those new features, look at the data and iterate on your product. So product velocity,

that's something you really want to think about, you know, establishing very early in your company. If you look at a great product in the world, whether it's YouTube or owning a Tesla or, you know, Google search, they just every couple of months, some new feature would be added to it that would make users delight it. So without further ado, let's meet some launch accelerator founders. Are you falling behind on your Q4 marketing goals? Well, wouldn't it be nice to hire a ringer right now to help you out to hit all those important goals? And with marketer hire, now you can. They give you access to expert freelancers on demand.

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marketer hire.com slash twist. Marketerhire.com slash twist. You can also get a free consultation on who to hire based on your needs and your goals. So that's 500 right now, marketer hire.com. M-A-R-K-E-T-E-R-H-I-R-E dot com slash T-W-I-S-T. Okay, everybody, I thought it would be nice for you here on this week and startups to hear about some startups. One of the great problems with this podcast is, you know, since we started 11 years ago, there were all these giant companies, the startups like Uber and Airbnb and Coinbase and Robinhood and

com.com that we used to talk about, well, they got big. And they do big company things, like go public and they have share prices and quarterly reports. All that's really important and interesting. And we covered in this week in startups and we all love it. But let's not forget. This show is about startups. So let's talk about some early startups so that we can cover the next Robin Hood, the next com, the next Uber, the next Tesla, when it's a year or too old, right? We want to keep getting back to our roots. So I thought, I would just share with you three companies today that we've invested in that I thought were particularly interesting.

Obviously, if I invested, that's the highest level of signal, right? As Nassim Taleb would say, like skin in the game, right? If I invest in the company and our team spends time with them at our accelerator or found a university or the syndicate, it's going to do, it's going to, you can take that on a different level than just a random startup I picked off the internet. Although I might find a really interesting random startup on the internet, include them on the show. We're trying to do more of that. So if you want to email the brilliant, hardworking, diligent, producers at this show,

producers at This Week and Startups.com, because they keep everything nice and tight here. So we have no mistakes and everything's crisp. That's why you love the show because they put in so much hard work. All right. So first up is Paul Block. He is the co-founder and chief design officer. design really one of those great skills for starting a company, Airbnb,

founders or designers. A fathom.fam.fathom is the name of the company. Fathom.com. Fathom.com is the URL. We can go check it out. They came in first place, actually, at the launch accelerator's 23rd class. So, wow, 23 times 7. Wow, we've had 100.

Yeah, I guess we're getting closer to 200 now. Companies go through the accelerator. And they raise a little bit of money. They're pre-revenue, and they're figuring out product market fit, but they're growing nicely and crisply with all kinds of great growth. Welcome to the program. Paul. Thank you for having me.

All right, Paul. You went through the accelerator. I'm not sure. What was that? Over the summer of 2021? Yeah. Yeah, exactly. Awesome.

So in COVID, that had to be weird. Definitely. Are you based in San Francisco or you're based in? I'm based in San Diego. So I lived in San Francisco. for about a decade and now I'm in San Diego. How wonderful. Oh, God.

That's an upgrade if there ever was one. San Francisco's eternal autumn and San Diego's eternal spring. It is like San Diego, the weather is got to be the most perfect weather in the country, I think. Like, everybody thinks it's Los Angeles and then you go to San Diego and it's just... Absolutely consistent. Absolutely consistent. Everybody's so chill. Yeah.

Beautiful downtown, great restaurants, incredible beaches. You get to Cabo in 15 minutes on the, like, San Diego bus number seven or something. It's like literally down the block. There's so many great things about it. Now, I'm curious, would you have, and you can be candid about this, would you have come for 12 weeks to the accelerator in San Francisco? Like, if it wasn't the pandemic, do you think? Or was it the fact that we did it remote that led you to do it?

I mean, that's a great question. I think that doing the accelerator remotely was fantastic for us, you know, And it allowed things to be just incredibly nimble. My co-founder is in Sacramento. So it allowed us both to kind of equally participate. If it were in San Francisco, you know, there's ways that we could have made it work. And I think definitely. Yeah, for sure.

Yeah, it's interesting because there's some folks who are from out of town who wouldn't have made it, specifically East Coast folks or people in Europe or Australia. And we've been able to just get more people. and as people said, much more efficient. So let's get into your product. I may ask you a question or two about the accelerator later and where you're at. But tell us,

what's the inspiration for the product and then where are you at with the current product? What problem does it solve in the world? Definitely. So, you know, what is Fathom? We are basically solving the problems of search and discovery in podcasting.

And we use AI specifically to address this problem and this need. So often we kind of bring up the fact that, hey, you know, most people only follow up to seven or so podcasters. And the issue of finding relevant content is one of the highest, you could say, you know, problems that people face with regards to, you know, like all of the content that's out there and the experience that they have. In podcasting specifically, this is acute. People call it the discovery problem. Right. Why is this such a problem in podcasting, do you think?

I mean, at my own theories, as a podcast for a little while. Sure. I mean, we, one of the ways that we kind of think about it is that it goes back to the fact that podcasting and the kind of the user experience paradigm kind of evolved around iTunes. And when iTunes came out in 2005, well, sorry, when Apple released the kind of Apple podcast in 2005, the kind of the design paradigm hasn't really changed. and kind of it inherited, you know, essentially like iTunes. And so you're asking people to discover content by reading about it. And if you've ever, like, read through the show notes or even sometimes the title of episodes, they're not really instructive on, you know, or they don't really educate you

on the, you know, what's inside of this, this episode. And in many cases, you have a two-hour-long episode. So it's, it's a rather large ask for, you know, a person to just engage with, you know, podcast content when they're kind of casually browsing. This is absolutely annailed it. All of the information about a podcast is inside the MP3 file. Right. And you have no insight into that.

The only way to figure out what's in the episode is to read the notes in a podcast. And the notes are typically, because people are so busy making a podcast, they're like episode 56. And they just put three topics. And they don't even tell you the timestamps. So podcasters spend very little time. structuring their data. There are chapter headings now.

You can see them in Overcast, that player, which does a okay job in search. But nobody seems to be even indexing what's in the podcast. Nobody seems to be doing chapter headings. We happen to do that. But you need to have, like I do, three full-time producers, four full-time producers, to really have the ability to do this kind of work consistently. We all see that problem. Now, tell us about the solution you came up with and what it does for consumers.

maybe you can give us an illustrative answer or two. Right. For example or two, rather. Yeah, absolutely. So, you know, we say like, you know, podcast, sorry, Fathom is really designed for podcast lovers. And so when you listen to a podcast, Fathom Fathom's AI essentially listens with you, understanding the content and what you love about it. Then essentially we, you know, we're able to use the AI to locate interesting points within a podcast. and we're able to select that interesting point

that's also most relevant for you. So you are now able to kind of scroll through a feed of content, you know, similar to TikTok in a way. You know, you're getting kind of like a small segment that's most relevant from you from the podcast episode. So it's this kind of AI-generated highlight. That's one branch of what we do. So we're really kind of using the AI to kind of deeply understand

what's going on inside of the episode. and based upon what you listen to, it's going to start recommending you content based upon your preference. So now it's essentially, it's seeking out, it's finding content deeply within podcast episodes that is relevant for you.

So it's not based upon the title. It's not just based upon the show notes. It's based upon the actual content. So you are listening to the podcast that I'm listening to. You've now got the transcript somehow. You know all the words in it. You know when I'm, talking about a specific TV show or Apple, etc.

And then you can build some sort of profile of me, Jason. And now mine's going to be listening to the Knicks. I'm listening to the Brett Eastonella podcast, Red Scare, Sam Harris. I mean, this, I have a very diverse taste set. So that's going to be kind of weird. But then you, not through the titles and say, oh, if you like Preet Bihar, you're going to like Lawfare. If you like Brady Stenellis, you're going to like Lawfare.

you're going to like the watch. Like, that's obvious, right? We already see that inside the Spotify app. This podcast is similar to this. What you're saying is I listen and inside this podcast, they're talking about right wing stuff, left ring stuff, you know, art house movies versus popular movies. And you're going to try to find me by looking inside of other podcasts,

those moments that correlate. Am I correct in describing that? That is correct. I always like to reflect it back because then it gives me a fuller understanding. It's one of the tips I do for when I'm training you angel investors. if you can recap back to the founder, reflect back to the founder that you understand it, it makes the founder feel good.

Thank you very much. Well, it makes you feel heard, right? We all want to feel heard. So there's a little tip for angel investors listening to the pod, and there are many of them. And it also makes me confirm that I actually understand it. Because if you don't understand a company, how can you invest in?

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And it's accessible to everyone, whether technical or on the business side. Data IQ also facilitates using pre-built components and automation wherever possible to streamline work processes as well as consistent management and governance across teams and projects to create transparent, repeatable and scalable AI and analytics programs. Visit Data IQ to learn more. That's d-A-I-K-U.com. D-A-T-A-I-K-U.com. All right, so this is absolutely fantastic.

now what comes next in terms of, you know, you just, when I'm listening, are you, is the goal for you to be a search engine of these podcasts and recommendations or do you want to go heads up against the podcast player from Apple, the podcast player from Spotify? Well, you know, how do you think about that? Yeah. Yeah. I mean, I mean, we're dreaming big. And, you know, in this recommendation and, you know, highlight generation is just like one arm of what we're doing. We also have this next generation search. So the next generation. generation AI powered search is you can now ask a question in, you know, plain English, and we will find the exact moment in a podcast that is relevant to it, where the podcaster is actually answering your question. So in that way, our AI is able to appropriate human intelligence to answer your question. So in that sense, yes, we are kind of getting into the area of, you know, creating a audio search engine. That's really, really fun to play. with. It kind of, it's almost like an oracle or, uh, you know, in some ways it's kind of like

one of those eight balls that you might have played with as a kid. Or it's like, you know, what does this AI and, you know, the rest of the podcastosphere, uh, think about this and you'll get some kind of interesting results back from it. Um, the, you know, I love in that context, I love actually answering big questions about like, what is the meaning of life and, you know, etc, just to see, you know, what can the AI generate for me? What can it, what can it produce from within podcast content? So there's a lot of uses for that. You know, and I'd say the other thing that we're, just to kind of give you a heads up,

what we're working right now kind of in our R&D, is we are doing AI power topic segmentation. So we are now generating chapters for every single podcast episode. Oh, wow. So if a podcast and most don't. doesn't do chapters. Joe Rogan will put out a three-hour podcast. So what you're telling me is you'll go into Joe Rogan and come up with an AI way to using AI to make your own chapters.

Correct. And you had to build that software yourself, correct? Yeah. To do that. So that's all our in-house model. We have a great new machine learning engineer. He's a PhD. His name's Uelvis Gonzalez.

He's awesome. He just joined the team a little while ago. and he's been working on that kind of nonstop, and we've made some awesome breakthroughs. And so in the coming months, we're going to be releasing that kind of, we think people are going to really enjoy it just because it also, again,

it gives the user or the listener, the ability to kind of jump into a part of the conversation that's most relevant for them. Well, I mean, just thinking about it, when I prepare for the all-in podcast, let's say, and I kind of play the role of the moderator there, you know, I would love to be able to type in writtenhouse verdict, you know, into fathom.fm.fm. And then instead of me having to scrub ahead and try to find it, you just tell me,

hey, Joe Rogan did talk about it. Hey, Ben Shapiro did talk about. Hey, Rachel Maddo did talk about it. Hey, it actually came up on Bill Simmons, and it came up on Prepa Har, and it came up on this bogus, and just jump me from chapter to chapter. Is it possible to put it in that mode, which is, like, almost like a super cut of all of the times people mentioned, I don't know, Quentin Tarantino. She was talking about NFTs last week, or I just love Quentin Tarantino. So I make a feed called Quentin Tarantino.

Now, any time a podcast comes up, or for me, it might be Dyer Shraids, since I love Dyer Shraits, or Ridley Scott, my favorite director, boom, it just gives me every Ridley Scott update because sometimes, like, I have a Mark Knopfler Google alert for this reason. Every day, I get two or three mentions of Mark Knopfler.

I go check it out. I'm like on top of it, like a sociopath, you know, like, is there a sociopath mode here? Like an obsessive compulsive fandom mode? You know, the, I, you know, one thing that's really amazing about, you know, kind of the era that we're in. And my co-founder, Ken Miller, he often talks about how we're entering into this age of cognition now with, with artificial intelligence and how it's, you know, giving us these kind of like, you know, these new superpowers. and in the way in which we are now able to kind of surface, you know, conversations and ultimately ideas.

There's all sorts of weird and wonderful things that now become possible. We've actually talked about that very thing ourselves. You know, we have found with Fathom when we are just kind of scrolling through our feed of recommended content, there's all sorts of interesting conversations that you come upon that you're like, oh, this looks awesome. I can't listen to it right now, you know, but you, when you like it, you know, it kind of, it just pops in your little like collection and you can go back to it later. But now I have like hundreds of episodes that I have not listened to.

And, you know, wouldn't it be awesome if we also then just build a tool that allows us to listen to the, you know, most relevant parts for us from, for me. Because the AI has a, you know, we call it like a thought vector or a taste vector for you, you know, in this hyperdimensional space, it kind of knows a lot about. what your interests are based upon what you've listened to. And it's, you know, auto-selecting, kind of intelligently selecting portions of a conversation so that, you know, you're kind of able to trim down how much time that you are, that's required to kind of, you know, get to the, to the meet of the conversation, that which is most valuable to you. Yeah, one thing, I mean, I'm looking at the test flight right now, test flight is how you test new applications. And I think Fathom will let you at fathom.com join the test flight. I wonder if, you know, I'm looking at, um, test flight,

you know, like the album art is such a wasted amount of space in the UI. It's just like this giant takes up half the screen or a third, 40% of the screen. I wonder if like you replaced the marketplace or the all in, a piece of artwork with your semantic chapters that you created. And then you would be surfacing all this data. It would just change the entire experience from, you know, like the cards to just here's like a list of all the moments and,

hey, we're dropping you into the third moment and you can watch your status bar. I know, have you seen that in Overcast, when you swipe right, if you do have chapters, which they bury the chapters too. I think they should have chapters be at the top. Somebody should put chapters at the top so people know it exists. It's just such a better experience. So just a little design test you might want to do, yeah. Yeah, I mean, just to comment on that specific portion. And yeah, I mean, I encourage anyone who's listening to definitely go to fathom.com. You're welcome to join our test flight. It's our beta app. It's public, you know, pardon the dust. and well listen you're not you're working on hard AI

problems this is not like the most polished design this is a very early stage startup this is my secret is to like invest in the companies before it's super polished but the promise is here

in terms of the technology already right and you know they say it's like if you don't if you're not embarrassed by the first thing you release then you release too late the you know the

so with regards to the cover art itself so one thing we are encouraging all creators, podcasters to do is start really investing in their podcast by releasing individual episode art. So in... Oh, can you do that now, individual episode art? You can. Yeah, absolutely.

In your RSS. Hey, producers, take a note of that. We can do individual art. We can do individual artwork. Oh, my Lord, we have to do that now. When did that happen? It's been around for quite a while. But see, the thing is, is that just because of the way that most interfaces function, it's

not really like necessary or a feature of the interface because the episode or say the podcast cover art is so small in most interfaces because it's just kind of a, you know, over glorified spreadsheet that it's not really something that's, you know, useful to the user even in terms of navigating. But, you know, our feed really features it much like Instagram. And of course, we are going to be reaching out to podcasters to really encourage them to take, to take advantage of that real estate because that image actually does tell a compelling story. And, you know, Netflix themselves have done a lot of tests and there's a lot of value in selling your podcast, you know, specifically that episode with an individual piece of art.

It does tell the, you know, the listener or something about it. So, but to your point, yes, there's ways in which we want to start surfacing those chapters and those topic segments. And there's going to be some user education around that because it's not something that's really available to people right now. And we are working through a user experience that we hope is going to be solving that issue. But right now, the current beta doesn't include that.

The current beta is really just kind of the MVP experience of scrolling through a feed of content that's generated for you by the AI. And very soon we're going to be releasing search on iOS as well as other features. Amazing. Okay, listen, tremendous success. Thanks so much for having us involved. Yeah. You've been able to raise a little bit of money and we'll talk about that. But at the end of this, I'm going to interview two more founders. I'm going to ask you about the business model and raising money as a group. So stick with us. And next up, another amazing investment I made in the past year or so. This company is called Deft, and you can visit the company

at Shop Deft. The founder's name is Zach Hudson, and they are building. I kid you not, a new search engine. To compete with that old one, you may have tried Google, but this search engine is specifically designed around e-commerce, where, in my personal opinion, Google is bought and sold. Google sells all of the inventory now above the full. when you do some kind of commerce search. You need only, say, you know, noise-canceling headphones. And when you do that, what you'll see is they give you that top row. It's all ads.

So I'm looking at it right now. I just typed a noise-canceling headphones while we're on the show. Five or six links up top, all paid for. Who knows if they're good or not? And the ad button that tells you its ads is so tiny that it's literally the smallest item on the page. under it two links for Bose that are ads. In other words, when I do it on my browser window right now, I see but one link for noise-canceling headphones and it's Best Buy.

In other words, it's worthless. This Google search is terrible. It's bought and it's sold. And of course, I already know Best Buy has headphones. There is literally no help here. It's just garbage, pure, unadulterated garbage. And you wind up just doing a bunch of clicks and making a bunch of clicks and making a bunch of money for Google,

but you don't get your problem solved because Google's doing the money grab. The company was founded in 2019. And their beta launched in December of 2020. They finished in second place during the launch accelerates 20 third class. And if you're wondering what that means is, we have the investors who come every week

tell us they're number one, they're number two, their number three startup. Why do we do that? Well, we like for the investors who are coming to pay attention and to see all seven presentations. So it's a way to make sure they pay it attention to all seven, take notes to pick their top three and be present. Now, most of them do that,

but I would say one out of every 10 or five judges, you know, might get distracted with their email or something like that and their VCs and they're busy. You get the idea. So I just asked them when they come to the accelerator, hey, be focused, just please for one hour on these seven startups. We get that mutual buy in an agreement and they give their one, two, and three. What it also does is it gives the founders an idea of what each of those investors is most interested in. If they don't like consumer apps, well, they're not going to vote for found them. Or they're not going to vote for deaf. They're going to vote for the B2B companies.

And that's good for the founder to know because you can then eliminate them as potential targets for your fundraising round. So they've raised a little bit of money post-accelerate. I've been lucky to invest in the company twice. And they had a little bit of revenue last month, just starting to ring the register. It's very early days. They have 400 monthly active users and last month they did 3,000 in revenue. Welcome to the program, Zach. Thanks for having me.

All right, Zach. We have a quick demo here of the product, which we can jump to for the people who are on YouTube, and you can talk over it maybe to explain what is happening here in the demo. Sure. Yeah. So in this search, a user's typing in pet-friendly sectional for under 5,000, and we're giving completely SEO-free, add-free results to the user. And this, the user is actually uploading a photo and combining it with text. And we can do some pretty magical stuff with that to help them find an exact match or similar-looking products. And then also we save the user, the trip to multiple websites with our QuickView.

So we actually parse information from all around the web so they can make their decision more quickly. Completely beautiful. The entire interface, unlike Google's, which I just savage, 90% of the Google interface is clicks. One was a generic SEO, you know, obviously Best Buy has been around for a while. So as you mentioned, definitely in your presentations, Zach, to get into Google's results, you have to be graded SEO, which means you have to have been around for a long time. You've had to have links. You probably have to have spent money on Google because if you spend money on the ads in Google,

it self-reinforces, correct? Yep, exactly. And the cost of ads are going way up. And now with the introduction of all these new AI tools that are generating content, SEO has become a much harder game to play. So this is the nefarious nature of what's happened to search. If you spend money with Google and they'll deny this, etc. But users don't know what's an ad.

And they don't, you know, literally when they ran tests, not Google, independent folks, 67% of people didn't know it's an ad. And in shopping, it's probably 80 or 90% of the people don't know their clicks are monetized. The government, the FTC, the FCC, everybody's out to lunch. They should force them to put these ads in a background color or maybe a different color for the link. So it was clear to users, but, you know, the government's bought and paid for. So what happens here, sorry to be cynical, everybody, is if you spend money with Google, if you're best buying, you spend money with Google, you're going to get more clicks. means you're going to get more inbound links. You're going to get more SEO juice over time.

So what Google has done is they force you to buy ads. They put those first. And then to rank, if you really want to rank, it's not by how good you are. It's really by how much money you've spent over decades with Google ultimately. Am I being too cynical here? No, I think you're spot on. I mean, that is your opportunity, correct? But continue, yes. Yeah, yeah, I was going to say in the original paper from the founders of Google, they said ads lead to great short term revenues, long term, worst results for the customer. And that's kind of what we're building our product around. In other words, Google started in such a great place of indexing the world's data.

And now they've basically shot themselves in the foot and become a total money grab. They really basically ruined their own product in a way because everybody's kind of like, it's the only option out there. But now you have another option. Exactly. So one of the other things you're doing is a concierge. And you are just taking on but one percentage of search. I would say shopping is what, 10% of?

of searches, 5%. Do you have any idea of the overall search pie? It's a, there's a ton of searches. Most of them happen on Google and Amazon today. And it's a, it's a $500 billion market just for search. So if you were to get, but 1% of that, a very difficult task, it would be worth $5 billion. So here we go. You are starting this. You're having great success already. Talk about the subscription product you're testing, because this is one of the things that attracted me most to investing in your company and what you're doing. There is a group of people, the top 10% of any market, who are price insensitive. In other words, you could ask them for any amount of money, if you solve their problem,

they don't care. These are the people who will pay for FastPass at Disney or the FastPass to go in the fast pass-pass laying on a highway, even though they don't care. In other words, they have more money than time. They want to reduce suffering. Explain how the concierge product works. Totally. And just to the subscription.

themselves. We're seeing a lot of proxy for demand for this. You've got Spotify premium allowing you to remove ads. We've got superhuman paying for email. We've got Twitter blue coming out recently. I think there is an appetite for having this ad-free SEO experience that we're tapping into. But the way the concierge experience works. I pay for all three of those that you said. I never thought about this as a concept. What a great way to think about it. What would you call that category? Paying for... Just getting rid of the junk. If you're not paying for the product, you are the product. And I think there's consumers that are willing to, that are just tired of all their data being sold

and for selling the links to the highest bidder. And then in terms of the concierge, there's this piece missing in e-commerce right now where you go to a store, you have a sales rep who helps you and tells you, hey, you look good in that shirt, for example. It's completely missing from e-commerce. So the concierge fulfills that for those people who are just tired of researching online and want a personal touch. When I was writing about your startup recently, because I shared it with some investor friends, you gave me a great example of somebody who'd actually use the service.

Maybe you could talk about an actual use case without mentioning the person's name of somebody who wanted to buy something, I believe it was a sofa. They were having a particular challenge, and then your concierge solved that. Maybe you can walk us through how that happened. Sure, yeah. So one of our customers had come to us, she'd been looking for a sectional trying to make a decision. decision for about six months. And at that point, she was just completely frustrated. She wanted to give up, tired of looking online, tired of all the ads and crappy results.

So she used Def to do her research. And then she connected with a personal shopper to find a couple of options. And what we do is we prepare these results. It's almost like a wirecutter post was written specifically for you. And it gives you all. Oh, I love that. A wire cutter post written for you. Yep.

Genius. Exactly. And so she has all the things she needs right there. in one place since she was able to make a decision. And she also saved money on the actual sectional. So generally, our users are finding that with our aggregation of discounts, they're saving more than the cost of the membership itself. So it's money back in your pocket.

You, and you save a ton of time shopping online. So to be clear, with your concierge service, the purse, it's a real human that you hire, freelance. What do you pay somebody like that? I'm curious. So how do you pay them? So the personal shopper, we're actually working to outsource to all of these amazing experts that are out there. So there are content creators that play a very important role in the decision-making process today.

So for the example that I just gave you, we send it off to a home interior designer. And she already writes her own blog post. So this was right up her alley and provided the results directly to our customer. And so you're recruiting experts in the field. What type of pay do you give them? I'm curious. Just ballpark. Right now, they get a, they get a,

percentage of our affiliate revenue. And because we, yep, and that's kind of the icing on the cake for us. So since we already make money for subscriptions, that's margin we have to play with and to pay back to these amazing content providers. Got it. So they are incentivized to give the best answer. Do you have a concern that if they're getting it based on affiliate revenue, then they would steer towards a more expensive product or one that has an affiliate link. What if there isn't an affiliate program? How do you deal with that? Totally. We're trying to build some curation in there. And we're also working on just giving them money out of pocket just for fulfilling it regardless of the affiliate revenue. So we're definitely taking that into consideration.

And what would an affiliate in this case, you know, a couple thousand dollar sectional, that would be a 5% affiliate fee or 2%? It's actually higher. It's closer to 8. And we're actually working on negotiating those affiliate rates with the brands directly. There's potential for us to make anywhere between 10 to 20% average. Fascinating. So if you got 8%, you know, this could wind up being, you know, two or hundred bucks or something, then you could just say to the person, listen, if you do it,

and it doesn't wind up in them actually buying it, we'll give you 25 bucks or 50 bucks for your time. What are you testing for the subscription prices? I know you were testing two different prices at some point. Yeah, so we have a basic subscription, which allows you to customize our search results. So there's some really cool stuff you can do with that. And then we charge 20 months for the personal shopper.

We're testing out some manual plans. We'd also test it out a usage-based model as well to see if, how people are going to interpret that. We're definitely leaning towards subscription than we are usage-based. So how do you plan on getting this product out there? How do you plan on acquiring new customers aside from doing PR hits like this?

Yep. So one of the things that is about to launch for depth is our browser extension. You can kind of think of it like honey, but for search. So we will actually be able to reach all of those mainstream users who are already shopping on Amazon, Wayfair, you know, all the major marketplaces, without them having to even think about it.

So if you've ever used grammarly, if you've ever used honey, it just takes over the discount bar or it takes over the email, we do the same thing but research. Absolutely, fantastic. So when do you think the toolbar will come out? That's good.

Sounds incredible. It's an alpha right now. It should be out in about three months. I am totally excited and can't wait. Thanks so much for letting me invest in the company. We'll talk a little bit more about your growth strategies and raising money after our third interview, which is coming up immediately.

So next up on the program is a company called Crepling, K-R-E-P-L-I-N-G.com, and their founder is Liam Garada. He is building a SaaS, no-code e-commerce platform. So no-code everybody knows means you don't need a coder to build a website, e-commerce, everybody knows, Shopify, etc. And SaaS, software as a service, that means you just pay a certain amount per month. So they charge $15 to $35 a month for small and medium-sized businesses. the industry term for that is SMBs. So if ever hear the term SMBs, that's what it stands for, small, mid-sized businesses, not the big giant corporations like IBM,

but, you know, company typically like under 1,000 employees would be SMBs, under 500, actually. 2,000 a month for enterprises. They launched payment fees in Q1 of 2022, and Liam is the co-founder and CEO. They were founded back in October of 2019, and they came in fourth place out of seven finishers, right in the middle of the pack for LA 23, although not too far behind.

So we have a point-based system. It typically turns out the first place and second place are usually pretty high above everybody else, but then three through seven in the rankings tend to be very closely grouped. Revenue last month, almost had 15K. They're growing 20% month over month,

which is a nice growth percentage that we're looking for in early-stage startups. What that means if you're growing 20% month over month. So you're probably double revenue in four months or so, Rule of 72. You can Google Rule of 72 to understand how to calculate those very quickly. And they're trying to get the big D2C merchants out there as customers. Welcome to the program. Liam. Thank you. We'd appreciate it. We have a quick demo here that we can show. And maybe you could sportscast this for the people who are

listening, describe what you see on the screen. Yeah, sure. This is basically the run rate of getting started on Crappling. Users can simply head up to a website, select a plan that resonates with their business, fill out their business details. And our AI also tool, then actually gives them a fully functioning website that is cross-border functionality in just a couple of seconds, as opposed to the 12th, 18-month platforming process that is most common with other ecombin enablement companies. How did it get all the creative into that? Did it pull it from Instagram or something?

Actually, it's very much based on inputted data. So if it uses, you know, usually you look at a repletforming process. It's usually a very manual process. We're building our technology that allows you to just import the data. their brand, the color palette, import their products, and that creates them a new store based on those datasets. So it's pulling from day-to-day upload, which really removes the pain point of, you know, starting a store from scratch, which is a pain point for large DDC-focused companies. How do most D-to-C companies or people who are popping up in e-commerce store build it

today? Do they use Squarespace? Do they use Shopify? Do they build their own website? Do they use a webflow or bubble or one of those no-code tools and then plug in e-commerce? How does it typically occur today? Yeah, I mean, it's pretty straightforward. I think brands, you know, they leverage tools like Shopify, like WebFlow, which are great tools for getting started. They choose from a theme, and they're almost good to go in a couple of hours, supposedly. The problem with today's e-commerce industry is when brands get a particular size, whether it be on Shopify or any other platform, you tend to pay an arm or a leg to begin to scale, whether it's through revenue share, graduating to a developer-focused solution, or even through

with third-party apps. And this is really what Crapping is trying to solve. We're building a no-code enterprise commerce platform that allows users to create rich, modern customer experiences without the burden of hiring a full-stack developer team or graduating or a platform that costs hundreds of thousands of dollars. Yeah. And so how did you come up with the idea for this business and how did you get your first five customers?

Yeah, I think the opportunity really came to us from our own experience as e-commerce founders. We started off on native platforms like Shopify, and that's where we started building out our own e-commerce store until moving aside to the more monolithic platforms, the more developer-focused platforms as our business began to grow. Now, we spotted a shift very early on that retailers were simply looking for ways to keep up. This led to them to explore more sort of developer-focused solutions. solutions that Amazon had actually used to scale, namely the head in the headless commerce space and the service-oriented architecture.

We saw this as a huge pain point. The status quo of no-code solutions being unable to support mid-market brands with a scalable solution led to millions of customers that were not only underserviced, but also overpriced. So this is exactly why we built pre-appling. Our ability and value really lies in our way to power those brands without grown

this type of decentralization. And we've been growing on that concept ever since. The big criticism of Shopify, if you're starting a small store, paying whatever, $29 a month, $79 a month, whatever their SaaS fee is, is not a big deal. However, they charge 2.9% plus 30 cents a transaction, which again, no big deal. If you're selling $1,000 a month, that winds up being another $29. If you get to $10,000 a month, it's $290.

Again, you're probably not going to notice it. But then once you hit $100,000, you're at $2,900,000 extra fees. you hit a million, you're at 29,000, and somewhere between 100,000 and a million, people who are using Shopify, start to say, hey, wait a second, I'm giving too much money to Shopify, is that correct? Yeah, it's also robs into the fact that there's this,

this sort of service-orientated structure, Shopify runoff, other native solutions do as well, that if you want to add functionality to your store and the native solution doesn't support what you want to add, you have to find an app for that, which makes stitched together different systems, highly fragmented, you're paying hundreds of thousands of dollars a month when it comes to the big brands and extra app functionality,

or you're hiring a whole developer team just to get things off the ground at Rollout updates. This is where the term graduating from a Shopify or NoCo solution comes. And this is particularly because building a platform that is a one-size-first-all isn't really the way to go anymore. E-commerce has evolved, especially over COVID. And to have a platform that is really focused on a mid-market to enterprise brand is what's lacking. What we saw was lacking as e-commerce founders, which is why we set out to build a solution ourselves.

Yeah, I think they call this headless e-commerce where you kind of separate the back end from the front end. Is that sort of what you're doing or just a more affordable, faster, easier way to do all this? Because do you also charge, remind me, for a percentage of the sale? Yeah, no, exactly. I mean,

the headless is not quite upper alley. We do separate some functionality, but we're more on the use services, microservices based architecture. So if users want to add functionality, they can integrate with the best to breed applications as opposed to stitching together through developers or paying for about five different apps that currently don't provide the right functionality they're looking for. So that's really what we're based on as a microservices architecture. And that's really the better brother for our success as

has been so far. We've been able to attack those brands and allow them to re-platform not only because we're services based and we're integration based, but also because our repletforming process isn't is painful. You know, we surveyed early on that the, you know, most merchants of the size we're after are happy to leave from a native solution. The issue is the 12 to 18 months reproving process and the risks they have to take in order to do that. So to find any scalability.

So really it's about functionality for you guys. People aren't going to use the service necessarily to save money. That may happen or may not. But it's really about just being able to quickly iterate on the front end of your site and the functionality on the back end. Yeah, I think scalability is a thing that's been left sort of into the dust when it comes to e-commerce and there's something that's been in demand in this post-COVID era, even pre-COVID, we swore quite heavily on our platform. And the merchants we're after are scaling rapidly. They're looking for solutions.

You know, this is the notion once you hit $5 million in sales, you then have to find a solution to case towards that. Then when you hit $10 million, you have to find another solution. So merchants are constantly battling with this cycle of trying to find a suitable solution. And we're trying to remove that by building a solution that is built towards the specific category that is also no code enablement and no code friendly. Awesome. Well, listen to continued success. And let's bring back our other two founders if we can. So joining Liam is Zach, again from shopdeaf.com and from fathom, Paul Block.

So if we can have all four folks on, I'll just throw out a question and maybe we can just go through this in the order in which you appeared on the show, Paul, Zach. And then Liam, what did you learn about presenting your startup to investors in the launch accelerator? Right. So, I mean, I thought that the launch accelerator itself was just like a great opportunity to really learn how to tell a compelling story in three minutes time. And as you said, examples matter and, you know, showing, not telling, in many cases matters quite a bit. I think that the format of weekly pitching was, you know, indispensably valuable in that, in that case, just constant practice. Yeah.

How many times did you pitch investors in total? Because we moved it. I know when we went to remote, we went from a 12-week program. And I think we went all the way up to like maybe 16 weeks, including the week zeros and the week minus one where we sort of had Jackie do some training. I did some training before we brought the investors in. Can you think of how many times you actually presented to investors? I mean, it's, I mean, there's, I think it was something around 14, at least, you know, times that we, we invested to various different groups.

And then there's, you know, all of the other times in between where, you know, we, we, we, you know, had conversations afterwards and, you know, followed up, yep, followups, et cetera, you know, so I would say it was, you know, you're, you're, you're pitching kind of nonstop week after week, you know, if not once, twice, or even three times. And people don't know this, but we record it. We used to record it with cameras, and I'd bring Sir Charles on the ones and the twos to actually set up a giant AV, break it all down. It was a full day's work.

Sorry to my teams. Now we just have it in Zoom. We could just hit the record button, which takes away the need for all the equipment I bought over the last decade. Really hilarious. If not, I would cry over all this equipment I spent tens of thousands of dollars on.

And then we would make transcripts. We would also talk about maybe keep track of the questions people asked you and kind of organize them so you could actually understand the questions even better. Zach, what did you learn about presenting specifically to investors? And I'll expand the question a little bit as we go, answering questions from investors. Yeah, when answering questions, get to the point. That's probably the main thing. Telling a story is great, but when they start answering, when they start asking questions, it's good just to be terse with your responses. I think it. Tight responses.

Tight is right. Did you do that in your first answers? In my very first answers with launch, probably not. I think later on we learned that valuable lesson as time went on. If you were to teach people about this, you know, the way we sort of instructed you on, hey, listen to the question, answer it concisely. What would you say the benefit of answering concisely is? You give them time to follow up, ask more questions. It just leaves more room for a dialogue that you wouldn't have if you just do a huge monologue.

And it's a little bit scary to answer questions, I would think, especially when you start getting some like really notable investors in the room, which, you know, we'll have a range of investors from seed investors, members of syndicates, syndicate leads, seed funds, venture funds, the biggest investors in the world like Sequoia and Kraft. We'll meet with our companies one-on-one, incredible. So maybe you could tell me, what is the mistake? you see people doing and why do you think they make that mistake of giving this long rambling answer? It's probably just nerves. They feel like they haven't explained enough. They feel like they maybe they haven't rehearsed the answer enough. So it's just it's just talking through it. Honestly, I do feel like the remote nature of launches accelerator helped with some of the nerves because you don't have to stand up in front of somebody as much anymore. So it was interesting going to this new

cycle of kind of Zoom style meetings with big name investors through launch. But yeah, I'd say just take a deep breath, take your time, don't go too long, go straight into the numbers, cut out some of the filler words, you know. Basic stuff. And it becomes much easier when you see a transcript of yourself saying, um, and ah, and it takes you 300 words to actually answer the person's question if you answer it all. I mean, that's one of the frustrating things I live with on the other side of the table as an investor now is a lot of times I'll ask a question. I get 300 words back, which takes two

or three minutes, and I never actually get the answer to the question. So all that time is burned, the credibility of the founder goes down, and my understanding of the startup goes sideways. Liam, what did you learn through presenting, answering questions, and then I'll expand the question a little bit here, and following up with investors? Yeah, everything Paul and Zach said, I think, you know, showing, not telling is a big thing. I think we learned that very early on, the first time we pitched Crapping to you especially. We learned that, you know, we got to get to the point as quickly as possible. But I also think explaining, you know, the problem you're solving.

I think that's something we lost in our first couple of pitches. But as time went on, I think that's one thing we perfected. And that even went into, you know, how investors would interpret the startup and ask questions to us. If we could answer some of the five burning questions in the pitch itself, then the questions we tend to answer will be more focused on the things we want to answer. and I helped invest a better understand the startup. So I think that's been the biggest lesson that we had for sure. If I remember correctly, Liam, correct me if I'm wrong here,

you got off to a slow start, but you finished very strong in the Accelerary, correct? Yeah, no, exactly. We started off, you know, my co-founder myself, we're very much technical in that sense. You know, understanding e-commerce is something that comes almost second nature to us. But translating that and explaining that through a pitch and to investors is something we almost missed in the opening pitch. So that was something that really helped us, sort of through the accelerator, was not only through the guidance teams, but also from actually testing it out, going in front of investors, trying it out, getting certain questions repetitively, knowing how to answer those questions rather through the pitch, I think was a great, a lot of learning curve for us.

Even for talking to customers, I think it really sort of profounds that as well, be able to communicate more directly and more to the point. And this falls into the category for people who are watching deliberate practice. So if you just go on a basketball court and start throwing the ball in the hoop randomly from all different locations, okay, sure, you're going to get 10,000 hours of throwing the ball in the basket. But in the NBA, they have machines that actually will look at the arc, the release, the stance of the person, how what percentage knees bent, and they'll shoot a hundred, three-pointers from four different specific spots, look at tape afterwards, and really try to understand it. So we created the launch accelerator.

I said, hey, let's record everything. Then I said, hey, let's transcribe everything. Then I said, hey, let's record, transcribe, and then categorize every question. And then the founders started to realize, hey, wait a second. If I'm getting this question and it's, you know, every single week, I'm getting the same question. What about Shopify? Well, maybe I should put a slide about what about Shopify. Or if it was fathom, you know, how do you recommend what's the process of, what process does the AI use?

to recommend, you know, the next podcast, you can actually put that into the presentation and actually form it as question. So right about now, you're thinking, what about Shopify? How is this different than Shopify? Great question. Let me answer it. So you can literally go back and incorporate that. I'm sure you did a little bit of that, correct?

Yeah, back and forth. In fact, that was an interesting thing. The more things been incorporated, the more interesting questions we got, I'm really got to figure out, you know, what is exactly investors really thinking about? what are they pushing back on? What are they like? What don't they like? But you're going to only get there once you're answering the key questions

and how are you different from any other player in the space, which I think, as you said, you've got to answer that in the first sort of five, 10 seconds of your pitch. All right. So let's do another question about fundraising. Zach, I'll start with you. We'll do Zach, Paul, Liam on this one. Zach, tell us about the fundraising process.

Obviously, coming out, you're in the hottest fundraising. market I've seen in my lifetime, possibly the only exception being the dot-com boom where people would throw money randomly at pitches without ever using the product from knowing what it was. It was a bit of a mania. We have a bit of a mania now combined with very sophisticated investors placing very big bets. So it's slightly different. I'd say it's distinctly different in that regard. One was a mania.

One is based on actual performance, greed, and a little bit of fomo. But what was it like to raise money in this? this environment, you did particularly well. You got a lot of attention for what I think is a very difficult pitch saying, hey, we're going to go after Google. Most people gave up on that pitch for the last 10 years. Yeah, the environment's very different. There is more capital that's out there. And there's also different fundraising vehicles that weren't accessible in the past. You've got RVs and all these sorts of new funky party round things that are coming out. That made the dynamic very different. It allowed us to meet with a lot of other operators that we usually wouldn't get to meet with.

So that was our approach. I will say, though, that with the new access to capital, there's also a lot of other not-so-good startups that are popping up and are promoting it. So there is more volume of capital, but there's also more volume of startups that are out there trying to raise funding. So it kind of leveled the playing field in terms of like it did make it that much easier to raise money. But, you know.

But you were successful. despite all that, you had a lot of interest. We were very successful, brought on awesome operators and investors across, you know, e-commerce, payments, AI, blockchain, all that stuff. Did you pursue the party round or did you pursue the, let's try to get a strong lead and fell in after that? Yeah, so what we did was we went party round as a means to build momentum. So we got on amazing people who opened up their networks to us.

And from there, we met, we continued to kind of meet more institutional investors. They got into the round. So it was a different approach. We just kind of met all these awesome operators. We wanted to get on board, angels at operators, and then we use that to build a momentum to lead to a much bigger round. And that works really well in today's environment, I think. We're seeing more and more of that.

And we're just going to start the raise. We're not going to wait. We'll start bringing in small checks because what a lot of angels have learned is if they don't commit early and they say, let me know when you find a lead, the lead takes the whole thing. Yep. And so just to, if you do game theory, if you don't commit, boy, you're going to have a problem. Of course, one of the value propositions we try to add to what we're doing is when the companies graduate, we try to do up to half the round.

And we were lucky enough to invest. And my gosh, I think we overperformed as well with our group of investors. So you absolutely did. Yeah. Very quickly. It's a little bit of a crazy time right now, but we're very excited to. be in business with you. All right. So, and how are you doing, Paul, with your fundraising? We're doing really well. Initially, we were going after a lead investor and we actually pivoted

also just going to a party around in part just because, you know, we didn't want to have to continue courting investors while leaving money on the table from angels. And that would allow us to, you know, start accelerating in ways that we couldn't when we were still just, you know, only two people that were really, you know, full time. So that was a kind of a strategic change that we made. And, you know, I think that, you know, one of the other strategies was actually lowering our original amount that we were looking for to put a little more pressure on investors. When they see that you're not actually raising as much, it creates a little bit more of an impulse for them to get in.

Got it. Scarcity. Scarcity. Absolutely. Going to fill up quickly. We're going to go back to work. The valuation is going to increase. Nothing makes raising around. Nothing makes raising around easier than being oversubscribed.

Right. And you always have the option to oversubscribe. You know, so long as when we're starting out this party around, we're, you know, kind of doing a post money value cap that would, that's, you know, kind of right for us that allows us to do that, you know, without giving way too much of the company. I'd say, like, to any of the startup, you know, know, founders that are listening, you know, one thing that I learned through this process is that success isn't easy, but it's possible. And persistence is really key. You're going to get a lot

of knows before you get a yes. And, you know, ultimately, VCs that you speak to, you know, they're all incredibly smart people, but they also have their own biases. And they're going to have opinions and you can't get discouraged. Not everyone is going to see your vision, but there are those that will. What was the, you know, like this will never work kind of feedback you got about your product. I'm curious, because that's got to burn you a little bit. Oh, for sure. I mean, you know, the, you know, sometimes you get the feedback that, hey, there's, you know, aren't podcast players a dime a dozen, you know, sort of thing. Or, you know, like, are you really going to go head to head with, you know, Apple and Spotify, et cetera.

And it's like, yeah. Competition, yeah. Yeah, yeah, absolutely. So competition is a big one that we got, you know, and also the, I think, you know, just the nature of the accelerator itself is most of the companies were kind of post-launch early revenue. And we were actually pre-launch pre-revenue. So, you know, we have been playing catch up, you know, we've been building the technology

to get it to market as fast as we're. we can. So a lot of investors were eager to kind of like see the product in action, you know, not just in the prototype. And that I'd say like, you know, initially, you know, it didn't play very well. And, you know, but finally getting something to market, it's something now in people's hands was, was invaluable, you know, so in that way anyways, we're, I think that the, the big lesson is keep going. Yes. And just keep going. And just keep going. And, And for people that think, you know, it's like, hey, I have a great idea. Get a prototype.

When you have a prototype at the very least, you have something in your hands and you can, you can demonstrate how you're solving a real problem. I was always to tell people, like, a picture is worth a thousand words. And like a movie is worth like 10,000 words. And an MVP or a demo is worth like a million words. So you will just get so much more value out of having an MVP, people can click on all of a sudden their brain. It really is like a brain chemistry thing.

When they see a demo, what happens is, even if it's an incomplete demo, even if it's a non-functional wireframe, your brain starts firing because you're having an experience. That brain is firing and your mind is such a creative organ that it just fills in what's not there. So when it doesn't see something, they might say, oh, what if you edit this? Or oh, what if you had this feature? Or like I did, hey, I got the test flight open right now. I wonder if you took the album art out and you put in your chapters, if that would be better.

The discussion becomes much more textured, much more based in reality, which then means if you're having a textured conversation about reality, writing a check becomes a lot easier, doesn't it? Right. And it's also the question is, you know, whether you can build it, you just did. And, you know, now the question is, it's like, okay, taking it from this stage, where can we where can we bring it yeah everything becomes

a race for credibility as I tell folks and you know you're so much more credible when people can use the product obviously Liam what did you learn about raising money and working with investors and where are you out with your fundraising yeah we had a pretty crazy time before we joined the accelerator I think we had a lot of talks

and potential investors but I think you know the nature of the accelerator process really helped us refine sort of how we're going after investors and how to value certain investors over others, especially. I think it's, as you said, a crowd and market. It's crazy capital going around. And I think for us, we really wanted to have a right fit that's going to be with us in the trenches and it's going to be with us as long term in that sense.

And I think that's really what we sort of knew how to identify. I think once you speak to so many investors, you really start to value, you know, what kind of value ad they can bring as well as opposed to capital, you know, a capital intensive raise was something we didn't want to do. So yeah, I think that was, I think the biggest sort of wake-up call for us is, you know, it's not just crazy markets don't necessarily mean good capital. So I think that was something that really sort of woke us up and sort of listened, you know, value these leads and value these services just speaking to. And yeah, I think it's just got more crazy. A lot of investors, I think we spoke to, you know, as soon as we saw there were sort of part of accelerator, that's sort of a new reason to speak, new easy to open conversation.

Which was great. I mean, I think it's good for, it was a great sort of process even during the accelerator. post and pre. It's one of the great things. When you're in an accelerator, I recommend obviously ours because we run it. Then there's also Y Combinator and TechStars, which are also very good.

I think the drop off after that for these is pretty significant. That being said, joining any accelerator, as long as you're not giving away more than 6% or 7% of your company for a brand new company is not a big deal because it will start the conversations. You could even flip a local accelerator, you know, in Miami or in London or wherever into going to one of the big three.

And that actually then, okay, you're not diluted 6%, 7%, depending on the program. You have diluted 15%, but boy, your network has exploded and now you raise a Series A or a big seed round and you'll make it back with that. And it does open up all conversations. If you're in an accelerator, especially the top three, people assume you have a relatively good chance of closing around to funding, which means they're going to take it seriously because, oh, if I don't get into this round, clock's ticking, I may never get into this startup.

That's really the value of these. I can tell you, my lord, starting an accelerator is very easy and running one is extremely hard and painful. The amount of work it takes for our team to do this, to sort through all the companies applying, to spend 16 weeks with them, my lord, it is hard. And I think a lot of people think the accelerators are like really easy to do.

I can tell you, I thought that, and I was wrong. a ton of work and we like to put a lot of work into it. So I hope you guys had a great experience at the Accelerator. Your team is awesome. Shout out to Jackie, Prash, Charles, all of them. They did they're fantastic. That is great to hear. I mean, we really put a lot of work into it and it's been great for us. We have our first unicorn company coming out of the Accelerary. Accuraries only been around for four years now and Grin. And we have multiple ones now that are worth nine figures, but, you know, we have a unicorn. And so I think if we get one unicorn every hundred companies that goes through, the accelerator will do just fine and be worth it.

But it's worth it just to be able to be there at the moment of inception of these great companies. Just for three great founders today. I'm really excited to be in business with all of you and great to have you on the program. If you had to give one piece of advice to people who are, you know, thinking of starting a company, things you could go back and tell yourself in day zero, you're trying to start a company, you got an idea. It's your best piece of feedback to somebody who's considering taking the jump and being an entrepreneur going around the horn, lightning round. Do it.

Okay. Paul says, do it. I would say, just put your product out there. They're earlier the better. I know Paul said it earlier in the conversation, but don't be afraid. People aren't really going to steal your idea. In the early days, no one's really even paying attention to you. So just put it out there, see if there's a little.

the market for it and then just keep building. That's probably the top piece of advice. When I was starting out, there was other ideas that I had in mind, and I was always afraid to put them out there. And obviously, they don't go anywhere when you do that. So you have to be willing to take a risk. That is something that we hear from young founders all the time. What if somebody steals my idea?

Well, when you launch your idea, if it's successful, you can be certain 100 people will steal your idea. 100 people tried to, you know, compete against Postmates, DoorDash, Uber, and Instagram. Of course you're going to inspire competitors if you're successful. And in the beginning, nobody cares. Nobody knows who you are. You're under the radar. I had a company that we were going to syndicate.

And they're like, I'm really scared of sending my deal memo to 9,000 people. I'm like, these 9,000 accredited investors are also potential customers and we'll tell everybody about your product. You actually kind of want to get the word out to this group of influential people. And they're like, I never thought about it that way. Yeah, let's do it. Okay. Coming around the horn?

Liam. Yeah, I build on what all in Zach said. I'll add to it by saying, you know, get to market as quickly as possible. There are other vehicles, you know, don't wait to get funded. I think nowadays, I think you even precede. So Paul knows you've got to have something that works and look great. You know, and I get that done as soon as possible. I think that was something that we learned and you learned early on is, you know, get it done

and get it to market as crazy can. All right. If I could ask you to do one thing as loyal members of my audience, is to try the products. Go to Fathom.fm. Try a Paul's company, Fathom, doing AI for podcasting, getting you your next podcast

that much quicker. Try shop, death, D-E-F-T, S-H-O-P-D-F-T dot com, Zach's company, and see if you can, join the beta. You have to fill out a form, and if you are willing to pay for a concierge to help you solve your problem,

this is an amazing, great service that's going to save you a ton of time. try crepling.com, K-R-E-P-L-I-N-G-com, Liam's company, if you're in e-commerce, and always give feedback to the founders. Almost universally, the founder gets their first name at their company name. If you have great ideas, remember founders spell love, T-I-M-E, give them some time. If you're an angel investor, if you're a venture firm, you're a seed fund, these are great companies for you to reach out to the founder and get to know now before they hit scale,

and you still have an opportunity to partner with those companies. We'll see you all next time on This Week in Startups. Bye-bye.