This Week in Startups - Startup pitch competition: Jason invests $25K | E1748

Episode Date: May 23, 2023

This Week in Startups is presented by: LinkedIn Marketing. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to http://linkedin.com/thisweekinstartups. Squarespace. Turn your idea into a new website! Go to http://squarespace.com/TWIST for a free trial. When you’re ready to launch, use offer code TWIST to save 10% off your first purchase of a website or domain. Lemon.io. Hire pre-vetted remote developers, get 15% off your first 4 weeks of developer time at https://Lemon.io/twist * Today’s show: Jason hosts another pitch competition featuring two startups from our Founder University program! Apply for Founder University: https://course.founder.university⁠ Check out NeighborBrite: https://neighborbrite.com/ Check out Coffee Clozers: https://www.coffeeclozers.com/ * Time stamps: (0:00) Jason kicks off the show (1:22) Jason and Kelly introduce the pitch competition (4:25) Luis pitches NeighborBrite (12:19) LinkedIn Marketing - Get a $100 LinkedIn ad credit at https://linkedin.com/thisweekinstartups (13:32) Liam pitches Coffee Clozers (21:24) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://Squarespace.com/TWIST (22:42) The value of Founder University (25:46) Jason awards the $25K investment (31:09) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist (32:28) Q&A with Jason * Read LAUNCH Fund 4 Deal Memo & Apply for Funding Buy ANGEL Great recent interviews: Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland, PrayingForExits, Jenny Lefcourt Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow Jason: Twitter: https://twitter.com/jason Instagram: https://www.instagram.com/jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

That's what I call like the slow coals marketing. You ever use like charcoal briquettes, Liam? You're making like a barbecue? You know, if you have one of those, and I put it on a table between the four of us, right here in the middle of this like Zoom call, we'd all be put our hand over to be like, oh, it's warm. And then if I put five of them there,

we put our hand out just like a foot, we'd like, oh, it's warm. And then if you put 15 of them, we'd all lean back in our chairs and be like, whoa, that's hot. And it's just one, five, 15, you know, you start getting these hot coals going. They kind of build on each other. Then when you put another, when you put the 16th call on, it immediately goes on fire. This Week in Startups is brought to you by LinkedIn Marketing. To redeem a free $100 LinkedIn ad credit and launch your first campaign, go to

LinkedIn.com slash this week in startups. Squarespace. Turn your idea into a new website. Go to Squarespace.com slash twist. for a free trial. And when you're ready to launch, use offer code Twist to save 10% off your first purchase of a website or domain. And Lemon.io.

Need to speed up your product development without draining your budget? Hire vetted engineers from Europe at lemon.io. Go to lemon.com slash twist to get 15% off for the first four weeks. Everybody, welcome back to this week in startups. I'm your host, Jason Kelloggannis, and we've been doing the show for over 17. hundred episodes, and when the show started, I started putting small bets, $25,000, into a bunch of different companies. You've heard of some of them, folks like Uber, Robin Hood, com.com, and that's when I was a scout for a venture capital firm called Sequoia Capital, and I started my first couple of venture

firms, uh, funds rather, and those funds were $10 million, very small, and I did it as a side hustle, if you will. That's quickly grown into the launch investment corporation. We have three funds we've deployed. We're raising our fourth fund. You're interested in hearing about our strategy. You can go to launch.com slash memo, MEMO. You can read the memo, which I wrote. It's just my vision for what we'll do with the capital in launch fund for. And one of the key initiatives is something called Founder University. The URL for Founder University is founder.com. University is founder. And this is a 12-week course I created, which helps founders who are thinking about starting a company, get their MVP out the door, learn the fundamentals of startups. Got a unique business model.

We charge people $500. And if they come to all 12 weeks and give us an update on Monday nights, just a short update on their progress, we give them the $500 back. This has resulted in over 90% graduation rate. But then one of the things we realized during this program was my goodness, people are building interesting companies and not everybody's got a rich uncle or aunt or a bunch of cash in the bank. So we started giving 25K investments to a bunch of the folks in the program with me is Kelly who runs the program with Presh on my team. Kelly, give us a little overview of how the fifth cohort is doing and what people find valuable in the program. Absolutely. Thank you so much for having me,

Jason. So Founder University cohort five is currently in the works right now. We are on week five. We had a great session last night going on just building in public and how to actually grow your users kind of in a free way early on and get some traction there. And yeah, the program's been really great. So far, we've been hearing from founders that have had a startup before that they really love just the speed and the cadence of having Founder University. It's two days a week. There's also offline curriculum. And then from there also that there is the accountability and a peer group, right, to hold each other to actually getting work done and moving fast. Yeah, people like a good community. So we thought we'd make some interesting content out of this by having the companies in the program, pitch me here. And then I'll just decide if I'm going to invest in them or not.

So we have two companies today. Why don't we get started with the first company? You can introduce them, maybe, Kelly. Awesome. So first up, we have Luis with Neighbor Bright. Okay, Luis, it's time for you to shine. Okay, I'm Luis, the co-founder of Neighbor Bright, group deals for neighbors on home improvement projects. Meet Sarah and Francisco and Francisco landscaper.

Sarah is spending too much effort trying to get landscapers. She doesn't know if she's overpaying and she's having issues communicating. Well, Francisco is spending a lot of time visiting customers, quoting, and not getting hired. And he doesn't, he's not able to make efficiencies because all projects are very different. So maybe we're ready to solution where a marketplace for groups of homeowners and contractors. We help Sarah find the group. We offer design services. We run the bidding process to get the best price from top contractors.

And we facilitate payments. The way it works is Sarah joins the group. The site is like a group one page. It's a limited time, limited number of users. She enters a few details and she will off to go. Well, Francisco, on the other hand, he's able to see all the projects in a map. He doesn't need to go and visit Sarah's house because we have a design, we did it with Sarah. All the measurements are there, all the materials are there.

He's able to quote it right away and not lose time. We earn money, taking a 7% fee on the projects and mark up on design services. We'll be starting with landscaping and then expand U.S. wide with other exterior projects such as roofing, solar, heat pumps, etc. We are the only marketplace or the only company in the market that is offering finding contractors, design services, group deals, and facilitating payments. This is the way we're going to acquire users,

or at least partially, is an app that is going to be fun and it's going to be free, where users can visualize with generative AI, their new gardens. The team has over 20 years of experience building marketplaces, and we have advisors from the home services industry. We are raising a $1 million free seat round, and that's it.

We're a neighbor group deals for neighbors on home improvement projects. Okay, so have you put this product in market and what has the initial reaction been, giving as many details as you can about the number of users and the reaction? Yes, so we started this project as asking neighbors on Next Door.

And that was like, hey, neighbors, what do you think about, you know, grouping together and solving this problem that I have because I just move a new house to meet new hubs and I'm having trouble finding contractors and it's really annoying. So I want to solve this problem. And I got so many positive responses. And that was like, okay, I'm a product person. This is a very ripe opportunity marketplace with unhappy. One side of the marketing is unhappy. So I started like making a group together, calling contractors. We're also very unhappy with the Sustin Solutions solutions. So that's the way we started. We posted on Nextdoor saying, hey, neighbors want to join this group. We did one in Fremont. We got like 20 or so, like 15 or so

homeowners interested. And we've already signed 10,500 GMV. So they already paid for the projects. What project did they do? It's a landscaping. So the one time landscaping or like they're monthly landscaping? One time. So the idea is converting their gardens into drought tolerant landscaping, which is a lot of people are doing right now. So the concept here is you find a great contractor. You say, hey, here's a neighborhood. This person is going to be working in the neighborhood. And would you like to participate in us as a group doing projects related to our roof,

our landscaping, our pools, whatever it is? And then is the idea that that contractor can then have a density of customers in a small region because commuting and sometimes they live far away, they can get four or five customers in one area and that's more efficient because they tend to come for a couple of hours, work on a project, there's some blocker they come back the next day. Is that sort of the idea? Is that you're saving them

time? Yes. So yeah, it's a maximum five minutes drive one project from the other. That's how we build the groups. But every time, there's no subscription here, so every time you do a project that you're starting from zero again.

Yes. For the specific projects, Although the way we were thinking about repeated customers is these customers that we talk to, they love so much the idea that they were like, oh, can you also do my roof and can you also do my, you know, fence and stuff like that? So we are planning to, you know, take the existing customers and expand to the other projects that they want to do for their homes. Got it. But there are some regularly occurring projects you could include in here. So landscaping is something people like to do every month, every two weeks, every week, depending on the property and the person's desire. and like having a handyman or I don't know what the gender neutral version of handyman is,

handy person. Having a handy person come and, you know, just go in the neighborhood and solve a bunch of problems for people. And then having price transparency, that seems to be the big win, yeah? The price transparency of this. So does everybody see each other's pricing? Yes. Okay. So when we buy as a group, you can see, hey, I had an 800 square foot backyard.

Another person had a 1,600 square foot yard. one person got a $500 quote, one person got an $800 quote, hey, that seems reasonable. Oh, no, that kind of transparency. The transparency is like our fee and their cost and we say how much we were able to reduce the prices. And that's because we tried that

and we wanted to reduce friction. So even choosing the landscaper is something that we do. So we tell them like, hey, this is the winner landscaper is great. Are you in or not? So that we move, that way we move fast. So you aggregate all the quotes together, And you price them out with a landscaper or you, with your knowledge, price them out and then give the landscapers a group of 10 projects?

We price them out with the landscapers. Got it. Okay. Several quotes. Got it. And then whichever one you think has the best reputation, the best pricing, some sort of balance, you say, hey, we're all going to get this. So it's sort of like a coupon for services in your neighborhood. It's an easy way for people to think about it.

Some people aren't old enough to remember group ons, but everybody could get a free dessert with their entree if 100 people decided to pay in an advantage. advance for their meal or if a hundred people bought a yoga pass for a month, but you would get, that model was a little bit flawed because you weren't getting great customers. They were people who were drive by. This would be better customers. All right, very good. And Kelly, on our team, perhaps you could talk about the two or three things that we look for in a company when we fund them at this early stage.

Everybody always asks me, hey, how do you pick a company at this early stage? What are the things you look for in a company? Maybe you could say a few words about what we saw in this company that we liked. Yeah, absolutely. This company specifically has a really incredible team of builders. They've got a few folks on their team who can actually bring this to life and they won't have to outsource the development, the marketing. So that's something that always stands out to us.

And the fact that they have early traction and I have found kind of scrappy ways to get people using the product and make those early learnings happen quick. Okay. So they have multiple founders. Those founders are builders. and they have early traction and are a bit fearless in getting out there and putting product in market. These are all good signs in the early stage.

You mentioned, hey, they're not outsourcing all this development. They're builders themselves. We like to back builders. So well done. Okay. Now, and they have a decent business model here. It's a unique business model. It's not exactly a marketplace.

It's an aggregator of services. So I guess it's a marketplace, arguably, but it's a different model than a marketplace, typically because you're doing this bundling of, I guess it's a subset of marketplace, this bundling of pricing, group pricing. So it's kind of e-commercey slash marketplace. When you're selling to B2B buyers, we only want to get your pitch in front of the decision makers, don't you?

Of course you do, because upper level execs are the ones who make the purchasing decisions. They're the ones that can take out their corporate cards, sign the purchase order, but there's a problem. We all know the problem. It's hard to get them. They're busy. They're in meetings.

They're skiing in Aspen. They're in Italy in the summer. It's hard to get those decision makers to make a decision, but not on LinkedIn, which now has 930 million members. And those members are ready to do business, including the 180 million senior level and 10 million C level executives. They're just waiting there. And they have all that purchasing power.

LinkedIn ads let you reach those 180 million senior level executives and those 10 million C level executives. Okay? LinkedIn equals business. Business equals LinkedIn. It's that simple. Everybody's in the business mindset. when they're on LinkedIn.

Hey, listen, on other social networks, people might hang out and talk about politics. That might do dance moves. Maybe they're shopping. Maybe they're showing their vacation. That's fine for other social networks. But for business, I just want you to use LinkedIn.

And I've got a $100 credit waiting for you for your first ad campaign. Go to LinkedIn.com slash this week in startups to claim your credit. LinkedIn.com slash this weekend startups. Terms and conditions do apply because they're giving you a hundee. Let's go on to our next company.

Kelly, please introduce us to our next company. All right. Next up we have Liam with Coffee Closers. Brilliant. Hi, I'm Liam, co-founder of Coffee Closers. Meet Luis. He's an aspiring young real estate investor who's on his lookout for his first deal.

He currently spends his time scouring through Zillow, clicking on random properties, and then running the numbers in Excel. To do this for an entire city literally takes in months. Now, what we do is we invert this process. We take every property in his target city, we run the numbers on all of them,

and then we rank them all from top to bottom by monthly profit and cash-on-cash return. So now Luis literally just has to peel off the top to find a great deal. Business model is two-fold. You can either get a report on an individual property for $2.50, or you can get a monthly subscription for $20 per city. Traction launched on the 1st of March. We have 12 paying customers, and we've made $205 in total sales.

Go-to-market, we've been using my co-founder's real estate and tech YouTube channel and also the BiggerPockets Real Estate Forum. Road to 100 million. There are currently 80 million people in the United States alone who can afford a down payment on a reasonably priced investment property. We need 1.7 million of those to spend $60 a year to get to $100 million per year. Roadmap and Vision. We currently only help investors find a great property to invest in,

but we could also help them find a great city to invest in from an appreciation perspective and also to manage that property. No service currently aggregates these three things, and we think that one that did could amount to a $10 billion. dollar valuation someday. Competitors, two main ones. One is Mashvisor, but they're not very beginner friendly. The other one is PropStream, but they're more for analyzing off-market properties,

and we do more on market properties. Team, I'm Liam. I'm a full-stack developer with some past startup experience. My co-founder, Ariel, is a senior data scientist at a tech company. She's a four-time real estate investor, and she sold over $18,000 worth of real estate courses to people in our target audience. And that's it. I'm Liam, co-founder of Coffee Closers.

All right. Great job, Liam. So I'll ask you a very specific question. How did you come up with your pricing model, 250 per report or you have a monthly fee or a yearly fee? What's the yearly or monthly? What's the monthly? $20 per month per city. $20 per month per city. Okay. So how did you come up with this pricing? If you want the honest answer, we just plucked it out of thin air and we gave it a go. And it seems to be doing okay. Excellent. How much does the average customer invest in real estate? Obviously, it's going to be a range. But for this type of user, they have to be an accredited investor, correct? If they're investing in real estate like this? Or maybe not? Not as a private individual now. Okay. So they could be buying the property themselves and not be accredited. But to buy a home, the down payments has to be tens of thousands or hundreds of thousands of dollars, yeah? Yes, but here's the interesting thing. Most properties that actually positively cash flow are quite affordable, somewhere between maybe 80K to 250, depends on the market, etc. But that kind of range. So a 10 to 20% down payment, if it was 100,000 would be 10 to 20K.

Or they can do 3.5% if they house hack, meaning that they live in it themselves and they rent out the other rooms. So it can be as low as $3,500. Got it. All right. But you're charging $20 a month, which is, 240 a year. You said you had to get to 1.7 million customers. This is just advice. It feels like you're charging way too little, which is a negative signal that this doesn't have value.

So in terms of pricing, do we have a pricing module, Kelly and Founder University? Is that something more for Launch Accelerator, our next program when people have products in market? I'm curious. We have high level, but I think we should build it out. Yeah. So pricing is super important. It's something when we have these discussions with founders. We always try to highlight, are we giving enough background or information? You want to start, to my personal belief, at the high end. You don't want to start at the low end. I just want to start at the high end.

Why would you want to start at the high end? Well, then you have a high margin business. The business is profitable. Now, if the business is profitable out of the gate, it's going to look much more attractive to users. So we get rid of the $2.50 per property, I'd let people sign up with a credit card and get 10 reports for free. Then you would find out after they get 10 reports,

They put their credit card in after 10 reports, you know, or after two weeks of trial, if they put their credit card in, so you know it's a legit person, they're not just using fake emails to get 10 reports and then starting over. They put their credit card in after two weeks, it charges their first month or for the year. And I would make it $499 a year, and I would make it, you know, $89 a month. Because if they're going to be spending money on this and you give them the ability to find a better property. I mean, that's going to result in tens of thousands of dollars in value, maybe hundreds of thousands of dollars of value in the coming years. So it's grossly underpriced. And I think

you got to be careful, if I told you, I could give you omocase sushi dinner for $6. What would you think? What would you want that? Yeah. Was it sushi grown on a farm? Yeah, but I mean, what would you think if there was a $6 omelkase sushi dinner? You'd be a little concerned, right? Like how on earth is a $6? Are you giving me tuna fish out of a can? I mean, what's going on here? Now, if I told you it was a $60, say, hmm, not cheap, but not too expensive. You know, there's $300, omel, casa, you know, sushi dinner.

So, yeah, 60 sounds reasonable. I could probably get a good 12 pieces, $5 a piece. So you're probably massively undervaluing the value you're providing. Obviously, once again, Kelly, we have here Builder Founders, Fantastic. You've got some early traction, I understand. You've had $165 in people putting their credit cards in and giving you some money, yeah? Yeah, as of yesterday, 205. 205, great.

So we love founders who are obsessed with these early numbers. All those early numbers are signal, you know? When you open a coffee shop and you're going to charge $6 or whatever Phil's coffee charges for a pourover, man, that is a crucible moment for that startup. Will people pay to watch a hipster at Phil's coffee? pour hot water over their freshly ground beans or not, or are they going to think it's stupid? And you know what? A lot of people think it's stupid to pay six bucks for a cup of coffee, but they're not going for everybody. They're going for the people who think it's bespoke and awesome, and they want to have the best cup of coffee possible. They're willing to pay the extra

four bucks for a cup of coffee. So I think you are that elite cup of coffee and you should price it as such, early traction, builder founders. This is what we love to see. And it's a space where on the surface, people might say, Kelly, oh, my God, AI, chat GPT, all this stuff. So I'll just ask Liam, how do you think about using AI yourself? And then, you know, the general AI tools out there, whether it's barred, et cetera, and their applicability to this space. Are those going to be competitors to yours, or is this too deep of a data science problem? You'll always be able to build interesting features around the product that outpace those.

So it's an interesting question. The framework that we've had thus far is just what is the problem the customer has and how do we best solve it? And for the problem of finding cash flowing deals, we thought that we could solve it at least to a reasonable degree without relying on AI. That said, my co-founder is actually a machine learning coder, should we say? She's a data scientist. So she does have those skills to hand.

And we've had conversations about how we might potentially leverage AI. But we've been quite hesitant to just sort of shoehorn it when we don't necessarily have a very specific use, which we can see for it. About it. Listen, we have been doubling and tripling down on Founder University here at launch. In fact, it's kind of the future of our firm, and it's amazing for us to work with hundreds of early stage founders, even before they incorporate, right? They have ideas, and they're trying to figure out what tools to use to make their ideas

into our reality, and we're seeing so many of these Founder University startups using Squarespace. Everybody knows Squarespace has beautiful design templates. They're all mobile optimized. And of course, they have powerful e-commerce integrations, but did you know that Squarespace also added member areas? This is where you can sell members-only premium content, okay, educational stuff, et cetera. And if you're a consultant of some type, you have now appointment scheduling built into Squarespace.

So listen, if you build it on Squarespace, everything's going to work. They keep adding amazing features, and you're going to load super fast on your desktop and mobile. It's going to look great, super easy to edit, super. super easy to evolve. And if you're looking to start your business, you can't go wrong with Squarespace. We all know that. So I want you to head to Squarespace.com slash twist for a free trial. And when you're ready to launch, use the offer code Twist to save 10% off your first purchase of a website or domain. We love you, Squarespace, our longest running partner here on This Week in

startups. Thank you so much for supporting our founders and for supporting this week in startups. Let me just ask both of our founders here, Louise and Liam. when you, how did you find out about Founder University? And what value have you gotten out of the program for people who are listening, deciding if they want to be part of the sixth cohort? So, yes, I'm a member of your syndicate. Oh, okay, great. I've been quite familiar and done a couple of investments as an angel.

So, yeah, I knew the whole programs, the accelerator and so on. In regards to value, I'll just give an example of like a story that I went through. So I got this very famous VC reach out to me on LinkedIn and I was kind of like, how do I do? I have never pitched to a VC before. What do I do? So I posted on the group and Kelly jumped in

a few minutes later and she like coached me through send me videos and then she had me pitch, send the pitch to her and gave me feedback. And the meeting was quite successful. So yeah, that's a great example of how you guys thought about you. Excellent. So there's a community there for people who don't know. We're using a piece of software right now called Circle.

I think it's Circle.S.O. And it's a nice kind of combination of a message board, Wiki and Slack like community, I guess. And it's worked so far. I don't know if we'll build our own software eventually or use a different package, but so far Circle has worked okay for us. And we keep all of the Kelly alumni in the same instance. So we now have over a thousand founders in there, I believe, hanging out and helping each other.

So the cohort helping each other is part of the magic. And then the alumni hanging out there. It's kind of like bookface at YC where all the alumni get to hang out together. Maybe they sell into each other. They can meet co-founders, that kind of stuff. That stuff's all happening, I think, in there, Kelly. Yeah, absolutely. Lots of questions and folks asking, have you ever used these tools?

Can we get a discount? All of the things. All of the things. Liam, maybe talk a little bit about your experience in the program, people who are thinking about it. What's your advice to two or three people who got laid off from meta or, you know, we're working at Google or they're thinking about leaving or they're graduating from Berkeley and they want to start a project? What's your advice to them? They should certainly apply. And for me personally, the main thing which stood out to me, of course, there's the mentorship, which is very valuable.

But the number one thing is that I'd never been a part of a startup community before. So being part of a community with another 200 people was extremely motivating and one could even say ever so slightly intimidating at times. And I had a note on my laptop which said, everyone else is working right now. And I always looked at that. And so whenever you have a slight moment where you feel slightly distracted, I'd look at that and I'd get back to work. You know, it is the nature of startups that people maybe don't want to admit, Kelly, but it is a lot of work. And you're going to have to sacrifice and there's going to be sacrifices. in your personal life, family, career, whatever,

it's just going to take time and effort and you're in a competition. That's just the nature of it. All right, now I've got to make a decision, Kelly. Keep bringing me such great companies. I have to say, haven't brought me any duds yet. So it makes it very hard. Well, these founders are doing the work, Jason.

It's what we love. Yeah. Well, also, I think you're skimming the cream. Maybe you're not bringing me the ones who are struggling to pitch here, which I guess is reasonable. But here's what I can tell you about both of this. I don't know exactly where neighbor bright is going to wind up. But I do know they found a problem.

That is, as Paul Graham would say, why I see a hair-on-fire problem, an annoying problem, an acute problem, a problem that anybody who's a homeowner has, which is vendors. It is exhausting. And there is safety in numbers.

And if you could offload the vetting and the quoting, those two things of vendors, that's like having an estate manager. And that is incredibly valuable. It probably takes the average person 10 hours to research, interview,

and manage and get quotes from vendors. And on the other side, the vendors have probably takes them hours or 50 bucks a lead on Thumbtack, which we're investors of, or Google or Yelp, or wherever's doing home services. I got to pay that 50 bucks.

So there's got to be a better way, is what comes to me. mind and here is what could be a better way. And then something I noticed about it, which was something I hear from the vendors who come to my house, which is they're driving in from far away sometimes. And maybe they live in a neighborhood an hour away from the people they're servicing 30 minutes away. And when they get there, if they can have five homes in the same area and they can remove that, you know, 30 to 60 minute drive between and it becomes a five minute drive, that's super efficient and that's valuable to them. And then if they can do five,

five jobs at once, they can have four other workers come with them for those projects. They can do those projects over 30 days in a dense area. Man, that's just super efficient to bundle all that. So when you see that kind of efficiency on both sides, you got to think the take rate 7% is too low. It should probably be more like 20%. There's probably a pretty significant take rate that could come from this. That is, you know, again, founders always underestimate the value they're providing. So if you just charge us on hourly, if you were to hire somebody to do this project, it would take them five hours. You pay them 30 bucks an hour. You pay 150 for somebody to manage, you know, just finding somebody to do your electrical work or roofing work. Probably pay more.

So I really love the idea. I don't know if what they're doing right now is the exact format they'll get to, but we'll see. It seems like a really good start. And then for our second company, coffee closers, you got that nice Glenn Gary, Glenn Ross reference there. I like that. I don't don't like misspelling it. I think you're doing that for the domain name. So I would just call it closers, maybe. And so, or coffee closers. It's okay, two words. I always like one word. I would just call it closers and then put a cup of coffee next to it, call it and then call it a day. You can come up with another domain name. But yeah, providing data for people to make better decisions with seriously considered purchases, like an investment, that's worth a lot of money. And I think it's worth one percent

2% of the cost of the transaction. So if it's 100K home, I think the value of providing is probably $2,000, which means if you charge but $600 a year, they're getting three times what the actual value is. Again, if they hired a consultant, if they hired a broker, they hired somebody to do this,

that person would probably be charging, you know, three, four, five percent the cost of the property for their services. So you're greatly undervaluing the value, the value you're providing. and that means there's a pricing power here. And if you can get half the people to say no, that's too expensive, that's good. You're probably getting rid of the looky-lose and not great customers.

So if I only had to pick one, I wouldn't do it. It's my money anyway. It's RLP's money. I have to make the decision. I'll invest in both. So you got me again, Kelly. You can't bring me all these good companies and then expect me not to give them, you know, but these small amounts of money.

And so, you know, we like to put in this small amendment. as a, for people listening. We consider this the start of the relationship. Then we like to see the monthly updates. As the monthly updates come in, we'll see $200 turn into $2,000, turn into, you know, $6,000. I'll say, hey, maybe you come to the accelerator, here's another $100,000. Or maybe it goes to $40,000 or $30,000.

We say, hey, here's a $250K check from our fund or a $500K check from our fund at a $6 million valuation or a $4 million valuation. Hey, you got some traction. And we want to send it to our syndicate to 11,000 people. And Lewis is part of the syndicate, so he sees us send those deals out. And we will have on average $6,000 or $700,000 come in from the syndicate investors at the syndicate.com. So our fund tends to put in these 200, 250K, 500K slugs, gives us another 2 to, you know, 6% of a company pending on their valuation. And that's our goal. Kelly, get to 10% in the winners.

We like to do that over four investments. So this is but the first of what I hope is four investments in each year a company. getting us to 10% ownership in the breakout winners. So well done, everybody. All right, you got a great idea for your tech startup. And hey, listen, you're going to change the world. I know you're going to do it. But there's a problem. You don't have engineers, right? You need engineers. You need those developers. But it's hard to find them. And it's certainly hard to find them quickly. So if you're trying to reduce your burn rate and you're in a tight spot and you need to get engineering talent right now, but what you want to do is imagine there was a

partner who could provide you with more than a thousand on-demand developers. These are really good developers. They're vet it, they're experienced, results-oriented, and they're passionate about helping you grow your startup. And they're available at competitive rates. Does this sound too good to be true? Well, you need to head to lemon.io right now. Startups choose lemon.com because they only offer handpicked developers with three or more years experience, and they've got to have strong portfolios. Only 1% of candidates who apply get in. And if something goes wrong, no problem. Lemon.io will get you a replacement as soon as possible. Many of our launch founders have worked with lemon.io and they've had great experiences.

So here's your call to action to learn more. Go to lemon.com.i.o slash twist and find your perfect developer or tech team in 48 hours or less. And Twist listeners get 15% off their first four weeks. So stop burning money, hire developers, and hire developers smarter by visiting lemon.io slash twist. We have time for one question from each of you. If you have a question for me about startups or fundraise, or product. Do you have any questions for me about your startups?

Yes. One of the, another part of the business model that we are thinking about, for example, when we get into heat bumps, is adding manufacturers as part of our platform. So we get like the cheapest manufacturer with certain quality to be our kind of main brand that we partner with. And we take some fee out of that and add them.

But it's like, Then it's like a three-party marketplace. It's complicated. Yes. I was wondering. Yeah. And those parties. So if you make an X, Y, graph, right?

So it's a great question. And you say, how long is it going to take to get this done, you know, in hours, right? So something's going to be one hour of work. So take your X axis and put one hour at the top and at the bottom put a thousand hours. So in other words, it's easy. And then on the right, how much value does it provide? Value to you. value to the company, profits, whatever you define value as.

High value, low value. This is something that's going to take 500 hours to get in touch with these big corporations, find the right person. And the value it's going to provide is you're going to get 5% of the sale, like an affiliate commission, 3% of the sale. It's not going to be huge. And so I don't think it's a great thing to do. I think it's better to put your energy on finding great vendors,

who have great reputations and who provide amazing service and make sure that every, and you're on site, I would do like a concierge kind of thing for the first couple of these, where you're on site checking the work, you know, you're the foreman for a person, you're the general contractor in this, the concierge,

whatever you want to call it. And you're just making sure 10 out of 10 people who have their heat pumps done just really, really enjoy it. So that's not capital efficient, but it will get to those great reviews early on. And then what I would do is I would say, these are the three pumps that people recommend.

Here are links to the manufacturer. Here are reviews of those pumps. Here are the ratings of those pumps. Here are what our vendors say about those pumps. And this is the ranking in which we think you should consider them. This is the best value. This one is the most technologically advanced. So I look at something like wire cutter or like this is the budget pick.

This is the overall pick. And this is the step up pick. So I just went through this with generators. Right here in California, we're losing electricity. And there's Genentech, I think, is the generator. I can't remember the name of it. But anyway, they were all back order. And there's like three or four different brands.

And then there's two or three different models. And my lord, just going through that. And I got quotes from multiple people. We're talking about hours and hours, tens of hours of work, maybe 40 hours of work to get these generators, quotes. And, you know, one person's like, you don't need that much power. Just enough to, you know, do these three services. But it won't do your, you know, these other services.

And I was like, you know what, for the extra 10 grand, for me, I would just like the whole house to be powered. So I'm willing to spend the extra 10 grand. Now, if it was me in my first house, I would have been like, you know what, just give me the bare minimum. I want to have the lights on, the refrigerator on. I don't need to run the washer and dryer because the power goes down for a day, you know, on average, less than a day. And if we had a three-day thing, I can always go to a laundry mat. And I don't need to charge the Tesla's I can go to supercharge. Right.

So people make different tradeoffs, depending on their station in life or where they're at. And so I think explaining that and providing that level of value would be more important than you chipping off 3%. So customer delight is how you're going to rise and fall and then vendor efficiency. Just like with Uber. If customers love the Uber experience or the DoorDash experience, great. And then if the drivers feel like they got compensated and the dashers feel like they got compensated well, great. I just read a story about dashers being, uh,

asking people while they're waiting to pick up the food for people to increase their tips and saying, it's taking a long time. Is there any way you can increase the tip? Now, the person's already accepted your order. So how do you know they're not going to spit in your food or they're going to cancel the order? I mean,

this is like, and then you've got to give you an extra tip. You're like, of course I've got to give you an extra tip. And now you know my home address. And so DoorDash is like really, you know, addressing this head on like, and explaining to the dashers like,

you can't. harangue the customers. There'll be an example of this in yours, where they might say, oh, you know what? We went over and we got to charge you an extra $1,000. And now the vendors felt like they accepted the job, but it was too little. The person who's doing it feels like they're getting, you know, held hostage by the project. And that's what you're going to have to really spend your time on. So I think it's an okay idea, but it's the core of the idea that's brilliant is getting a great outcome at a fair price.

And then on the vendor side, efficiency and getting five customers at once and being able to pay the bills this month. Because they got bills to pay too, right? They got to make their truck payment. They got equipment. They got a mortgage at home. They got kids in school, whatever it is. That vendor, you need to make it so it's worth their time and efficiency and enough that you can take your take rate. So great question.

All right, Liam, you had a lot of time there to think of questions. Go ahead. Yeah. Could you let me know what specific milestones or metrics we would need to show you to get into the launch accelerator? Yeah, so Jackie, who runs the accelerator, I think she would be looking for 10 to 25 customers. And I think the subscription model, and if it went from 2 to 10 over three months, and you could say, hey, here's how we acquired those customers. That would probably be enough getting to 5 to 10,000 a month in revenue. But really being able to show that, you know, there's a, you know where to find your customers and they're willing to put the credit card in.

we have a lot of founders who, unlike yourself, are scared. They're scared to ask for money from customers. So then, well, how much confidence do you have then in your product? You must think your product's terrible if you are unwilling to charge for it. With few exceptions, I mean, there's advertising-based businesses in the world, like TV shows or whatever, or magazines, or some news websites choose to be advertising-based. This podcast is advertising-based. But, you know, generally speaking, if customers are not willing to pay for it, that tells you something. And, you know, if I made this podcast, if I got rid of the advertising, I made this a paid podcast,

I'm sure I would get to 10,000 people paying 10 bucks a month for it pretty quickly and have a million dollars in revenue. I think that would be, it's worth it, yeah, to get the edge of having this podcast. So, you know, it would just take a little while. So I think showing that you know where to find those customers. So not only did you get 10 or 20 to pay 500 bucks a year, five to $10,000 in yearly revenue, 50 bucks a month each, 40 bucks a month each, but you knew how to find them and which then could crack open the ability to scale finding them with money. So if we gave you the $100,000, you can say, you know what, the way we found these people was, and it was very simple. We, there's forums on

Reddit, and there's a couple of other web forums. We participated in them. We shared reports on neighborhoods, and we shared our reports and asked people for feedback on them. And then we didn't even try to sell it. They just went to the website and bought it. So like, just think off the top of my head, that's what I call like the slow coals marketing. You ever use like a charcoal? Cole briquettes, Liam, when you're making like a barbecue, you know, if you have one of those and I put it on a table between the four of us right here in the middle of this like a Zoom call, we'd all be put our hand over and be like, oh, it's warm. And then if I put five of them there, we put our hand out just like a foot, we'd like, oh, it's warm. And then if you put 15 of them,

we'd all lean back in our chairs and be like, whoa, that's hot. And it's just one, five, 15, you know, you start getting these hot coals going. They kind of build on each other. then when you put another, when you put the 16th call on, it immediately goes on fire, right? As opposed to when you put the first one next to the first one that's on fire and it takes a little while. So hot coal marketing, something I came up with, which is just one at a time finding these evangelists, right? Now you get the 10 or 15 of them, it starts burning a little bit hotter. When you need feedback and you email 15 people where you send the 15 a new version of the report with an extra, you know, graph in it, you know, six of them respond. It's like, oh, I got a little bit of a fire going here.

This is good. So you want to show that you got those like those hot coals burning. It doesn't have to be a raging fire. Doesn't have to be like a barn fire yet. But just enough to show like you got some heat, as it were. And going and finding people where they're already talking. There's got to be countless forums for real estate people on the web where you can participate and never ever mention your product.

Just talk about homes you're finding and how you're analyzing them. and, you know, sharing a chart. Like, hey, where'd you get that chart? They might just DM you on, you know, Reddit. Hey, what did you get that chart? Or somebody might say, oh, you know, and you put the URL to the chart in your Dropbox. But at the bottom of the chart, it has the URL of your company. So it's like, you're not spamming.

You're participating in an intelligent way. Somebody says, hey, I'm looking for homes in Arizona. And you're like, oh, you should check out Phoenix. In this area of Phoenix, I was just looking at it myself and I ran this report. Don't even tell them when you ran it. But I found these 10 homes. Now people are like, huh, how did you run that report? say, oh yeah, you know, I do it for a living. Oh, okay. What's a URL? Oh, yeah, you see it on my email. If you email, I'll help you with it. You don't even try to sell them. And then some people come into those forums and they're like, I'm giving a three for one monthly special. And people are like, oh, marketing, delete. What you want to do is be helpful. And that's one of the things that Zillow did really well. There's a really good playbook for you. Zillow got tons of press just doing zestimates. You know, and they were wrong in the beginning.

and variable, and then people came in and corrected the data, and then they would do reports. Redfin and Zillow had huge content groups that did reports on each market, and then the press would get those. So then they would email the New York Post and talk about Brooklyn versus Queens versus Ston Island. You know, they would email Orange County, L.A. Times, whatever, on Santa Monica versus Malibu versus Laguna. They just really had great local data.

And you can start giving that local data to news, local news places or local community groups. that cover this and man, that could be powerful too. It was also an SEO strategy because people would link to the reports. We'll get to work. All right. This has been great. And by the way, this kind of discourse is what happens at Founder University. We just brainstorm.

Talk about things we've seen in the market. At our firm, 15,000 people apply for funding a year or email me. 3,000 meetings a year resulting in 100 to 150 investments just like this. Small investments, medium-sized investments, and then a lot of help. Most startups fail. That's the truth, but it's awful fun to try and build these. And I wish you both luck. On your journey, you're off to the races.

You're building product. I can see the excitement. And just really focus on those customers and the product. Customers are your Nordstar. My advice, Kelly's advice, all the free advice on Twitter and blogs and podcasts, Chatsy-PT giving advice, all that advice. You know, it can be helpful on the margins. But what really matters is your customers and then the product delighting them.

So please keep that in mind. team product customers. That's all that really matters in a startup. Okay, we'll see you all next time on this week's startups. Bye-bye.