This Week in Startups - The Gadget That's Better in Crowds Than Your Phone + Ring’s Founder Before Amazon Bought It | E2349

Starting point is 00:00:00 Hello, and welcome back to Twist. My name is Alex. I'm a regular co-host here on the show. Today, we are talking to a founder of a company that is building not an AI model, not AI infra, not AI connectivity, not even something for the enterprise. Instead, they have built a consumer device that helps you stay connected to your friends when you're out in the world, especially when your cell phone is going to struggle the most. I love this company.

Starting point is 00:00:23 I love this founder. I love that it's working on bringing people together out in the world. So please join me welcoming to the show. it's Toton Labs, Carter Fowler. Before we get to that, we're going to talk just for a second about Plod. Now, if you're a long-term listener of the show, you know that we are big Plod fans here at Twist. Got mine with me whenever I do these shows to ensure that I have the transcript I need to find quotes, to find information, to find tasks, to do's. Basically, if you work in the digital world and you use your voice and you need to keep track of things, you absolutely need to check out Plod.

Starting point is 00:00:53 We cannot recommend it enough. So if you want to get one of your own, again, do it. Go to plod.ai slash twist, p-l-a-u-d-a-i-slash-twist. Use the code twist, save 10% off your purchase price and then use it to save in advance your career. You won't be sorry. Trust me. All right. Carter, how you doing?

Starting point is 00:01:13 Great. Thanks for having me on, Alex. To be honest, it's a little surreal to be here. We didn't found Totem that long ago. And our very first angel investor at the company was actually our only investor that knew before the company was the one who originally turned me on to Twist. Started listening to it about two years before we founded the company. And this podcast was a big aid in just helping me understand how investors think in the first

Starting point is 00:01:36 place. So this is a pretty cool full circle moment. I'm so glad to hear that. And I'm so stoked to talk about what you're building because here on Twist, as you can kind of imagine, we've been talking a lot about AI for years now. We haven't talked as much about hardware. And we certainly haven't talked about consumer hardware that doesn't depend on AI. So I'm really glad you're here.

Starting point is 00:01:55 To catch everyone up, we're talking about Totem or Totem Labs, if you want. And you guys have put together a gadget that groups of people can wear at festivals or other high concentrations of humans to essentially find one another without the need of their phone or without the need for a cellular connection. Fair? Correct. Yeah. Well said. So you're wearing this gadget. For folks out there who are listening on the audio version, describe what it looks like.

Starting point is 00:02:23 And also, how much does it weigh? And then also describe how you're wearing it, if you don't mind. Yeah. So our flagship product, the consumer product here, is called the totem compass. It's traditionally worn as like an amulet, pendant style. You can see it on my chest right here. It has a nine-axis IMU in it. So the second you pick it up, it automatically, or as I like to say,

Starting point is 00:02:43 automatically goes into compass mode, starts pointing you in the direction of your family, friends, wherever you need to find at the event. It's an offline communicator. so it can also communicate like SOS status if you're in some state of distress. We have offline texting coming out through our offline mobile app as well soon. And it's incredibly light, probably lighter than you think. And it works just like kind of a traditional compass. You can think about it similar to Captain Jack Sparrow's magic compass from Pirates of the Caribbean, right?

Starting point is 00:03:12 It points you to what you want most in the world as long as you know what you want. We haven't quite gotten to the point where we can point you to anything you want in the world, but we do have your back if you're looking for the people that, you love. The way that I understand it is that if you have a couple of different friends and you hold up the compass device, it'll display lights on different corners pointing you towards different friends. So I might know that blue is Carter and then I can follow kind of the blue angle towards you. Does it tell me how far away you are? Yeah, it tells you the exact position like bearing and then also relative distance. So we designed to be super simple and intuitive. We stripped so many features

Starting point is 00:03:47 away from it in the early days to try to make it as simple for people to grasp as possible. That's also a big reason why we went with the kind of compass form factor in the first place. But as you get further from people, it's smaller as you get closer to them. It gets larger and larger. Then when you find your person, you collect them into your crystal at the very end. So when you have your whole family or all your friends with you, all of their lights are just within your little crystal. So when you're in the car on the way home from the festival, all of your compasses are going to be just a glow like a Christmas tree. Okay. Absolutely. We need to describe to people the environment you are solving a problem in because I think a lot of people are saying, well, how often would I need

Starting point is 00:04:24 this? What's the actual use case? So why don't you tell me about festivals like, I don't know, for example, lost lands where people love to come together. It's often dark and bright at the same time. And you might get a little bit further away from your friends than you meant to. Yeah. Well, festivals can be pretty chaotic environments. They're great time, obviously. But I mean, it's the case for pretty much any large scale event, right? We made this because the world is an increasingly crowded place every single year. And if there's one thing that human beings love to do, it's pretty much since the dawn of time, it's gather. Right? We love to gather. But in today's world with today's population density, every major gathering is basically

Starting point is 00:05:03 a failure condition for conventional connectivity networks. So we built an autonomous mesh network called the Unity Mesh Network that allows you to stay connected with all of your people, no matter what, overcome those types of environments. Because the reality is a major festival, whether it's Las Lands or an Electric Daisy Carnival, or even CES, if you were at CES earlier this year, right? So many people in the area, you know this experience. You have somehow, you're there with your friends, family. You have full bars on your phone.

Starting point is 00:05:35 Somehow a single text can't go through. You can't load a single web page anywhere. You look to your right where they were just a minute ago, and instead it's just a massive strangers. You have no way to get in touch with them. These environments, especially something like EDC Vegas, are some of the most challenging environments in the world for communication technology, other than maybe like active war zones or disaster areas.

Starting point is 00:05:56 The front lines of Ukraine and EDC. Yeah, something like that. And so that's why it's so important that this mesh network works completely offline. It's an autonomous self-governing network. It automatically manages usage across the mesh to maximize utilization while also preserving battery light and bandwidth for everybody. I'm glad you brought up other events that are not. not just electronic music festivals because while that is a large subculture, if you will,

Starting point is 00:06:23 while it is a large business, it's also not the majority of the world. But I think we are all in at least one time per year, a place with people, high density, at risk of losing them. And we'll talk a little bit more about expansions down the road. But let's burrow in on the mesh network point because to me, this is the real unlock. Because if you say bring your cell phone, limited number of towers, limited number of connections, limited amount of bandwidth, but a mesh network is designed to actually scale with more users. So it has kind of the inverse setup in that the more of these you have out there,

Starting point is 00:06:57 the smarter and more accurate the totem compasses get? Correct. Yeah. So essentially how I like to explain it is it basically works the opposite of a cell phone, right? The more cell phones you get in an area, the worse they all work. The more totems you get in an area, the better they all work. So with every additional totem in the area, each one acts as a relay. Even if you don't know those people, they're still helping connect, helping you connect to your friends, your family, no matter what, passing your message along. So for example, you mentioned Lost Lands earlier in the conversation. That was one of our highest adoption events of the year so far. We had over 10% of attendees with totems out there this

Starting point is 00:07:33 year. And we got our- Carter, we got to help people here. How many people went to Lost Lands? Because someone out there is thinking 55 people and you sold five devices and it's not in-dust. So put some numbers on this morning. Yeah, so Lost Lands this year, I believe they had somewhere around 50,000 people on site and a pretty small area. This is very dense, dense crowds. So we had over 5,000 users on site, and that was when we recorded some of our greatest mesh stats of all time. We had 35 hops across the entire festival. The mesh network carried over 330,000 messages in the weekend, and we connected people across over 1.5 kilometers. It's like two miles or so, purely offline, no towers, no infrastructure needed.

Starting point is 00:08:15 So if you had had only 500 of the devices on site, so let's just say, you know, like 1% penetration versus 10, would the mesh network still have worked? Yes, yeah, it would still work. However, at distances, it may not provide pure connectivity. And that's an interesting problem that's just inherent to mesh networks, right? There's a lot, there have been many, many attempts at creating mesh networks at scale, but there's an inherent cold start problem to mesh networks where, you know,

Starting point is 00:08:42 they get incredibly valuable as more adoption arrives. It's almost like a double-sided marketplace. But the question is, how do you get to that critical threshold of adoption to make it super valuable for everyone? I see. I see. Now, a question about how the technology actually works. So the mesh network can make sense to me for passing signals around an area.

Starting point is 00:09:02 But to me, it doesn't have as much to say about where someone is physically. So is there also a GPS or GNSS component to this that actually does the direction element? Correct, yeah. We use GNSS. There's really three core technologies in the device itself, the totem. It begins with GNSS, which, you know, common language is GPS. The reason we say GNSS is GPS is just referring to the American constellation. We pull from multiple constellations around the world. But our accuracy is incredibly precise. Many people think that it's actually impossible. If you go and check, you know, read it over the years, some people have been like one meter accuracy. That's literally technologically impossible. We get it pretty regularly. That's been our median accuracy over the last. year and that's the first core piece of the tech. The second is our peer-to-peer communication protocol. It runs on 2.4 gigahertz which is important because you know it's one of the most widely familiar widely accepted protocols across or frequencies across the planet and also it allows for incredibly you know real-time updates which is important because if you're only getting an update every

Starting point is 00:10:06 minute, two minutes, three minutes and a dense crowd. Oh yes, you have a hundred thousand people in a field sometimes that can mean you know, losing the 50, 100, 200 people between you and the person you're trying to find. So those real time second by second updates that we get are incredibly important. And then the third layer is that mesh network that we talked about, the Unity Mesh Network. Okay. This all makes good sense to me now. So we all know that GPS works, but I know GPS largely from an American perspective.

Starting point is 00:10:34 And I know that there is a European Union constellation. I think China has one. Russia has one. There's a few out there. You guys also operate in a great number, I think dozens of countries you've sold units in. So what's it like to actually support the different GNSS networks versus, say, just GPS? I presume they're all similar, but I'm not quite sure if they're as easy to access as perhaps the American constellation. Yeah, the access is actually not too difficult.

Starting point is 00:10:58 And that's something that I think a lot of people misunderstanding many people have because governments have paid so much money to put these satellites up into space and they just beam the signals down for free. Right. And so it's actually accessing them is not that difficult, but then getting that incredibly precise positioning is the real challenge. Cell phones, of course, also have a GPS component, but we typically get anywhere from five to 15 times the accuracy and precision that any cell phone does. Especially in crowds, GPS drift with phones can be anywhere from 20 feet to 150 feet. And that just goes back to exactly what we were saying earlier. 150 feet can sometimes mean 100, 200, 300 people between you and finding your child in the main. middle of the field. I know a lot of you out there listening are wanting to start your own company.

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Starting point is 00:12:25 Northwest registered agent.com slash twist domain. I'm supposed to ask you business questions at this point, but now you've picked my curiosity. Okay, so why? Why does my phone have GPS drift? And I was, just for context. I was just in Manhattan dealing with what felt like this exact issue. So I'm really curious, what went wrong? Yeah. Yeah, it happens often, especially in major cities, especially if there's a big event going on. I remember last year at South by Southwest, I was trying to get an Uber and my phone was confidently telling me that I was about three or four blocks away from where I actually was, right? Yeah. And that's because cell phones rely on and depend on. They're kind of designed with the anticipation that you will always have cellular connectivity. You will always have that data

Starting point is 00:13:08 connection. And so they actually use three different layers for their positioning. They do use GPS, but then they also use trilateration between cell towers and sometimes even, you know, sensing off of other devices, Bluetooth nearby, Apple's Find My Network is pretty famous for that. Okay. So essentially my phone is trying to use multiple signals and expects connectivity. Your device is just GNSS slash GPS. Correct. Based and doesn't. Why would my phone, phone trying to do more if it ends up with a worse result? Because it sounds like you've nailed accuracy here and I would love my phone to be less garbage at it. Yeah, well, it's an interesting question. And we hear that a lot, right? Just like, why wouldn't Apple just do something like this with their

Starting point is 00:13:50 phones, right? Couldn't they just put a mesh radio in their phone and try to accomplish something similar? And the reality is, you know, like I mentioned, they're designed with the anticipation, the expectation, that you always have that data connectivity. And that's what they're striving for because that's really what their entire business model is built around, is keeping you connected at all times to that central hub. And large companies like Apple, Samsung, any of these, rarely ship products or technology

Starting point is 00:14:18 that undercut their core business model, and especially ones that really put them at odds with some of their greatest commercial partners, like sell carriers around the world that subsidize the purchase of tens of millions of phones around the world every year, you know, it would be incredibly damaging to many of these networks and many of these companies to ship something that works completely offline with an autonomous, decentralized mesh network like this.

Starting point is 00:14:41 There's a book written about this. It's called The Innovators Crisis. Oh, wait, no, it's Innovators Dilemma. Yeah. There's a lot I want to get into about the future implications of this tech, because I'm pretty excited about it. But let's get into some business brass tax here. What does a totem compass cost me?

Starting point is 00:14:56 And I know you sell them in packages for groups of festival goers. So what's the average number sold at a time? Yeah, great question. So right now, total encompasses go for, a single one goes for about $88, but almost no one ever buys one, right? That's kind of the key here. So our typical group size has gone up over time significantly during the early days. It was around 2.6, 2.7.

Starting point is 00:15:20 Now we're at around 3.8, 3.9. So the four bundle is definitely our most popular package. It comes with all kinds of different accessories as well. As you can see here, like I'm wearing just what it comes with standard with a black skin, but we have different kinds of skins, you know, natural necklaces, other kinds of chains for people. We have tethers for it as well in case you don't want to wear something over your chest. And in a couple of months, we're going to have a wristband attachment too. So you can kind of wear it how you want to wear it.

Starting point is 00:15:51 And the idea is that, you know, as you know, as the network grows, as more and more people adopt, it just gets more and more valuable. Network effects are really the primary factor that is driven all of our growth to this point in time, whether it's across the economics, how we actually price the compasses, them getting cheaper as you buy more, or just how the device itself works,

Starting point is 00:16:14 how the network builds itself, and also how eye-catching and conversation starting it is when you're out in public. So around 30% of all of our purchases over the last couple of months have at checkout cited them either coming from someone, recommending the totem compass or meeting someone in event who is wearing it seeing someone who is wearing it if it's on my chest and it has a big light in the middle it does attract the tension like i feel

Starting point is 00:16:38 like it is in a way brilliantly also a native advertisement for itself yes but let's keep talking about the economics here because uh i think your your four pack costs something like 365 somewhere in there which i presume there's some good margin uh hiding in there because electronics we've kind of solved how to manufacture stuff in this global economy. But what I didn't see, Carter, was a recurring revenue component to this. And I'm working my way towards your fundraising journey. So I'm trying to set the stage a little bit here. But am I correct in that this is mostly a thing that I buy and then I own and I just get to use?

Starting point is 00:17:14 Yeah, that's something that is very important to us in core of our philosophy at totem is your relationships, you own them, right? The totem represents your relationships. This is a connection to your people that we can never revoke. that you own it, you buy it once, you own it for life. We never plan to revoke access to the network based on any kind of subscription fees. We do have other features coming out that will be optional to upgrade on premium subscriptions for consumers and many other channels to add new revenue streams coming up.

Starting point is 00:17:44 But the core device itself, that's a central part of our philosophy, is you deserve to own your connections, your relationships in the world. And that's what Totem means. Yes. Yes, I really like that because in this context, I'm a consumer of your product versus someone who's thinking about investing in it. But if there's one thing I've learned from talking to, I mean, investors of all startups, not just VC but also private equity, they are obsessed about recurring revenue. So when you had come up with this idea, when you were thinking about raising capital, what was the investor reception to you coming up and saying, look, I'm not doing AI. I'm not doing recurring revenue.

Starting point is 00:18:19 I'm not doing enterprise agentic orchestration like everyone else. I am making devices that are going to help people at festivals and other events find one another. Did that resonate or were you running uphill while carrying sandbags? That's a great metaphor for it. And honestly, in year one, that is pretty much exactly how it felt, maybe with a little twist of eating glass too. Oh, good. But yeah, it's changed a lot on the fundraising world in relation to hardware like this over the last three years. You know, in 2024, pretty much anyone that I would speak to would say, hey, sounds pretty cool.

Starting point is 00:18:52 I get it myself, but ultimately all we like to do is B2B SaaS. Just B2B SaaS, B2B SaaS, B2B SaaS, right? 2025 comes around and then it all of a sudden switches. They're like, if AI isn't in your tagline on your deck, then sorry, like, this seems pretty cool, but we're just not interested. But in 2026, things seems to be changing quite a bit as people realize that the value distribution in AI is actually pretty uncertain and it seems pretty concentrated toward the top. Yep.

Starting point is 00:19:18 People are not sure where you're going to get that return. And so actually this year, it's been a complete change for us. Hardware and in particular hardware that generates proprietary data is like kind of what some people look as really the only remaining moats in a world where pretty much any SaaS product could be rebuilt overnight. Yeah. I mean, people are now just decompiling apps to get to the source code. And then, I mean, that's going to crush software IP, I think, forever. So I'm on board with this. But there's a quirk to how you raise money.

Starting point is 00:19:50 Because you guys raised, as I go back to my notes here, oh yeah, 1.3 in a pre-seed round, but 1.6 in a crowdfunded round, making you one of the only companies I've spoken to, who I think has raised more money from their customers in pre-sales than from venture capitalists, which to me, Carter, is like the definition of product market fit. And so to me, like, you think investors

Starting point is 00:20:13 will be raining cash down from the skies. But you raised a couple million. What did that unlock for the company? And when are you going to go back to the well? Yeah, well, it was really important. for going back to that cold start problem that's inherent in mesh networks, it was really important for us to overcome that because in the early days, we were selling the product for much lower price point. Sometimes at certain volumes literally at cost in our first year to make sure that we

Starting point is 00:20:36 ceded the network with enough density so that it would be valuable for people. And now the interesting thing is with every passing month, every passing year, the devices themselves are more and more valuable because the network itself is more robust. So over time, our pricing has adjusted that. Our margins have accommodated that. And over the last month or two, we've been seeing the best margins that we have across the company around 58% gross margin, which is pretty healthy for a hardware company. Absolutely. Do you, I mean, look, I'm a big nerd for gross margins because I know how much they matter. So as the mesh network grows, as the devices become more valuable, more useful, are you able to raise prices and therefore just improve your margins strictly

Starting point is 00:21:22 by saying, hey, this is better now. And now instead of 88 bucks, whatever you said, now it's 100. Yeah, I mean, when we originally brought the product to market, the price for one compass to really get specific was $49. Wow, that's cheap. Yeah. And if you bought five or more, it was $37. So your cost basis is $37. Right around there. Yeah. And so, yeah, today we sell them for $80. of course, it gets cheaper as you buy more. We like to, you know, we're always looking for new accessories and things to rope into it. But I think the big reason why we're so effective in raising capital early on, especially in our pre-seed round from angels around the world before the crowdfunding round,

Starting point is 00:22:03 was the optimism around the long-term value of the data of our network that our network is generating at these events. If you're a founder who's not using AI to make yourself more efficient and productive, trust me, you've been left behind, but fear not. There is NetSuite next. You already know NetSuite. They're bringing together your financials, your inventory, HR, CRM, and every other system of record that you need. They're already trusted by 44,000 companies. Now they have NetSuite next. And that offers the same amazing platform, but with AI running alongside everything, your guide on the side. Just ask your question, in plain English, obviously, into Ask Oracle. And you'll get a real answer. Pulled from your companies,

Starting point is 00:22:44 live data. Plus, they've got an interactive canvas for automating your workflows, monitoring your real-time data, and managing your AI agents. Now, for the first time ever, you can try NetSuite next for free. If your revenues are at least in the seven figures, go to netsuite. com.A.I. slash twist. It's built for every industry, ready for every boardroom. NetSuite.aI. slash twist. So a beautiful segue. One thing that I saw is that you guys actually partnered with lost lands to some degree. And I think you're devices can also put out like an SOS signal and reach out to like the festival itself, which, you know, as someone who has been intoxicated in their life, I think that's a pretty good

Starting point is 00:23:25 idea. Just leave it there. But the data element to this is very interesting because on one hand, I can really understand why the data is valuable. If I'm a festival, I can track where people are walking. I can better design layouts and flows and all of that. But I, and I'm sure that I'm wrong. I don't see like infinite uses for the data. So I'm curious what the bull case is on the information you collect anonymized and so forth from these devices. Yeah. So it's important to note that all the data that we collect is fully aggregated anonymous data. There's no personal data attached to any of these devices. We have no way of tracking or attaching a node to a person's identity. But what we're really monitoring is the topology of our network and how it changes over

Starting point is 00:24:06 time. This is really essential for us because we need to monitor those KPIs to improve the network over time, deliver more value to our customers. Sure. But the real value for this data is in its fidelity and granularity, right? So this is incredibly high fidelity data like meter level, second by second updates, like I mentioned in the past, in some of the world's most commercially valuable spaces. And we aren't planning to sell that data directly, but what we're building toward is a world first predictive model for crowd blows to allow organizers, security event sponsors, anyone to actually watch their weekend unfold before the gates open. Because that's a unique challenge within live events, live entertainment, is you really

Starting point is 00:24:52 only have one go at it, maybe until next year, right? And that's a really, really long feedback loop to incorporate. And so the ability to incorporate a, you know, simulation model to actually watch how these people, how crowds will move around your event, try changing things. What if we add another exit here. What if we put a stage here? What if we had another kiosk here? Is incredibly valuable and can fundamentally change the event planning process around the world. Big sports events. You know, I think if you've ever been to an NFL game, I went once and that was enough, turns out. You'll be absolutely blown away by the sheer number of people. The television does not do it justice, folks. And especially when you're trying to leave, it's nuts. And so I can

Starting point is 00:25:35 I kind of see like, have you ever seen a child on a leash? Yeah, too often. It always looks kind of sad. And even though I'm a parent, I get it, but I can imagine families having these for non-fessional environments that are quite dense. And then I can imagine that that data would impact stadium design or a concession set up. So like, this is broader than I was thinking. I like that.

Starting point is 00:25:56 So basically anything live and large could benefit from your learnings about how people move through the world physically. Okay. Yeah. Okay. And it's not just about if there's absolutely no cell signal at the event as well. Because, you know, people are really, really hungry for connection these days. I believe it was 3% of people in 1990 in America said they had no close friends.

Starting point is 00:26:18 That was up to 10% last year in America. 10% of Americans said that they had no close friends whatsoever. But at the same time, companies like Live Nation are selling more tickets to events than they ever have. So people are clearly craving this kind of in-person immersive experience. connecting with people in the real world. And that's a beautiful part of the totem as well, because it is outwardly so simple. It's, you know, you look at it.

Starting point is 00:26:42 It's an analog device, screen-free. So it keeps you connected within the place you're trying to be while being completely disconnected from the outside world and allowing you to be fully present. Carter, you can't tell me how it talks to satellites and use this mesh networking and then call it an analog device. Screen-free device, I will allow. Analog interface, yeah.

Starting point is 00:27:03 There you go with that. An abacus is an analog device. It does not do anything that we're describing here. Okay. I want to talk about some future use cases that I'm really excited about. But quickly, tell me about what you're going to build for consumers, the premium subscriptions you mentioned.

Starting point is 00:27:17 I presume that down the road I'm going to be able to, what, use like Morse code on the little gym in the middle to send my friends a message. Like, what's coming for me and my friends at the festival that we can do with these things? Yeah,

Starting point is 00:27:30 well, the Morse code feature that you mentioned is already rolled out when you send someone an SOS signal that their crystal does begin to blink SOS in Morse code. That was one of the earliest features that we added in. I'm running behind. But the roadmap from here involves, I mentioned earlier, offline texting and offline social networking through our mesh network live on the grounds. So not just allowing you to find each other,

Starting point is 00:27:54 but actually communicate with each other, not just allowing you to find the friends and people that you already have relationships with, but make new relationships with people who share similar interests at the, event. We're also moving toward running on-site rentals at many different venues, which I think is going to open up a huge new market for us because there are only so many people who go to these events so frequently experience this problem pervasively consistently throughout their year that it makes total sense for them to buy and own one of these. But many, many people, you know, for a $30, $40 price point for the weekend, $15, $20 for the day, especially when you're thinking about

Starting point is 00:28:30 families with kids going to Disneyland. You mentioned sports arenas, et cetera. That's a huge, huge avenue for us that we're going to be exploring over the next year. We're going to be doing our first pilot of probably around New Year's Eve this year. And then, of course, the predictive models that we were talking about earlier. That's a big part of our path forward. And we have been working on that model now for over a year and we're ready to pilot it here in the next three to four months. Okay. The Disney example was actually something that I had in my in my notes because I was thinking about where would I use this? And I've learned recently how fast toddlers move.

Starting point is 00:29:05 And so if I can just staple one of these onto my children, then I could always go out and find them. That makes a lot of the rental thing's brilliant. How fragile are they? Because I'm kind of imagining giving them to my four-year-old and then saying, okay, honey, we have this for the day. And then she's like, ah, rock, bam. And, you know, so do the, are they durable enough to go through like 15, 20 rental cycles?

Starting point is 00:29:26 Yeah, well, the good news about the totem is from the beginning, we designed it, kind of the, principle we had in our mind was asked to be simple enough and durable enough for a five-year-old to use. Oh, thank you. Because even a 50-year-old at a music festival or at an NFL game is not all that dissimilar from a five-year-old. You know, we like to devolve to that cognitive state pretty quickly. So, yeah, a really nice byproduct of that is that it is simple enough for kids to use. It is durable enough for kids.

Starting point is 00:29:50 And kids actually really love it. That's a big reason why outside of live events and music, families with kids, especially under 12, is probably our second biggest demographic segment of our customer base, especially before you want to put a phone in your kids' hands, expose them to the entire broader world, get them addicted to the brain rot and TikTok and everything. And kids love it. It looks fun. It looks cool. My five-year-old nephew loves the totem compass, the pretty glowing crystal within it. And they also love that it's not just a tracker that mom and dad put on you because you're a liability, right? But it's something that the whole family has that they can also use. Exactly. And so many parents, I don't

Starting point is 00:30:30 know if you've had this experience yet. I think your kids are still pretty young. I hope not, but it will probably happen at some point where you're out in public. You look down and your child is no longer at your side. And with all the parents that I've spoken to since we started this company, many of them say that that was some of the most desperate, anxious moments of their life. And whatever you're feeling in that moment, yes, you know, do not. Whatever you're feeling in that moment, I promise you that your child is feeling twice over. Oh, 10. Yeah, I even have personal experience. with this, my wife's younger sister was actually abducted, kidnapped at Disneyland when she was four years old back in the 2000s. She was missing for over four hours. It required all of the Disneyland

Starting point is 00:31:12 security forces to find her. Family was in shambles, of course, during all that time and still talking to, you know, her parents about what that was like. It's almost like you're having those, not to make light of it, but almost like Vietnam flashbacks behind the eyes of that trauma. Yeah. Well, I'm never going to Disney if they allow. for abductions on site. But yeah, I think that's a very good point. But there's two use cases that I'm thinking about down the road that I'm really curious if you're also considering.

Starting point is 00:31:39 The first one is something like an offline social network for children. I don't know if there's ever going to be a point to which there's enough density of these devices in like a neighborhood to make it work. But there's trying to not docks myself here. Children on my street. There you go. And I can imagine how my kids would like to be able to send them messages. but I'm also very much not going to give them a phone.

Starting point is 00:32:01 I'm not going to give them an old iPhone. I don't want them to use the iPads, trying to keep them off all the screens. But if you told me that this little device allowed them to send like a voice message or a tap message just to their friends and I can decide how many nodes they connect with. I think I would be willing to pay kind of an unlimited amount of money for that.

Starting point is 00:32:16 Yeah, I actually had a call with a dad in Australia recently who had been trying to solve this problem for his kids. He had bought them so many different trackers. He bought them $500 Apple Ultra watches to try. And he said, the totems and nothing performed better than the totem compasses. I spoke with a mother actually in the UK last year who got it because her child had been begging to walk to and from school for over a year. She felt so uncomfortable with that. And this just gave her the peace of mind to allow that, you know,

Starting point is 00:32:46 to be to be okay with that. So it really does have many, many other use cases beyond festivals where the biggest adoption has been. I've talked to ski patrol leaders who are using this to coordinate their teams out on the slopes in Colorado. And it's also become. very, very popular within the blind and deaf communities as an accessibility tool. Oh, that's lovely. Wow. A lot of people think there is a binary choice, be a capitalist who supports growth or care about the environment and the natural world.

Starting point is 00:33:14 But these two ideas don't have to be in opposition. Our friends at the Conservation Fund believe that you can protect land, wildlife, and our shared access to the great outdoors while also providing important economic opportunities. 40 years, the Conservation Fund has been acting quickly to protect at-risk land and important wildlife habitats, while also actively supporting local communities, and this is key, creating new jobs. The Conservation Fund already protects over 9 million acres across all 50 states, proving that we can watch out for the environment and keep our natural surroundings in balance without endless gridlock, debate and politics. And this isn't just a land trust scooping up property and sitting on it.

Starting point is 00:33:58 They're working alongside permanent stewards who will find practical uses for these important spaces without destroying them. Find out more about how the Conservation Fund is changing the playbook at conservation fund. It was something that we didn't really think about because the Gen 1 totem doesn't have haptic vibration in it. We were trying to preserve battery life early on. And I always thought that for a blind person that you would really need that feature, kind of like some kind of hot and cold experience for it to work well. But something that I didn't realize is that the majority of blind people, it's not that they can't see anything.

Starting point is 00:34:34 It's that they can't really see beyond a few feet away, which really makes crowds in public spaces. Terrifying. A very, yeah, terrifying, dicey experience. And, you know, not able to make out the face of your spouse, even at five or ten feet is really intense. You can hold the compass up and see the lights. Yeah, yeah, yeah, yeah.

Starting point is 00:34:52 Exactly. You can hold a pretty little compass in your hand and see those lights and follow a light far more easily than any. Are you going to make a haptic version? Yeah. So we do have plans to roll out a version specifically for kids, work in progress title, the buddy band that we're talking about, much smaller specifically for these use cases,

Starting point is 00:35:13 and a variety of other models of the compass, many of which are what we're really trying to move toward here is full independence from infrastructure with the tech. So right now, of course, it doesn't rely on towers for, communication. We do still have a reliance on satellites. So we're working on building the world's first dynamic trilateration algorithm to actually position you within a mesh with no satellites to get us away from, or to get us to full satellite independence. And then also incorporating solar charging technology into it to hopefully get you away from the grid as well itself. So this is just the one thing.

Starting point is 00:35:48 It's a fully self-sustaining communication ecosystem. The one thing that you can rely on to find your people communicate with them when nothing else works. It's a modern, Swiss Army knife. Okay, last question that I got to let you go. But as a big supporter of the Ukrainian armed forces, fending off Russian aggression and invasion, we're looking at a battlefield that is famously fraught for communications. I mean, this saw the rise of FPV drones because everything's jam, blah, blah, blah, blah, blah. Do simple, durable mesh network-based devices have a potential role in supporting people against invasion?

Starting point is 00:36:24 Like, is there something we could do here that could support? with the Ukrainian troops, so they have more and better technology to defend themselves. Yeah, I think decentralized networks are absolutely the future, whether we're talking about civilian use cases or military use cases like that. And especially over the last couple of years, we've even seen problems with satellite-based positioning in Ukraine specifically, right? You see the Russians jamming the actual satellite signals so you don't even get the position in the first place. And it also illuminates the importance or some of the other flaws within centralized networks. You remember the kind of fiasco when Starlink was discontinued for everyone

Starting point is 00:36:59 in Ukraine a few years ago. That's the danger of a centralized network. There's actually a switch that can be flipped. And we love Starlink. They've done a lot for connectivity around the world, especially solving coverage. Yeah. The real last frontier, big unsolved problem with connectivity is not coverage anymore. It is congestion. All right. Well, on that note, where can people find the website? And is there a role you are hiring for Carter? You want to shout out to the broader Twist audience. You can find us on totemlabs.com on social media, probably anywhere on your feeds. We're probably already there. We've done around 800 million views across social media over the last two years in the first place. And we are not hiring right now. However,

Starting point is 00:37:39 we are probably going to be bringing someone onto our team for social video editing and someone else to help us with building this proprietary data model to predict crowd flows here in the next six months or so. All right. Well, if that's you, give Carter a shout. In the meantime, my name is Alex. This is Twist. We'll see you next time. Bye. Glass from the past year. Also from 2017, we're going a bit further back. We're going to January 2017 this time to the CES

Starting point is 00:38:10 2017 event in beautiful Las Vegas, Nevada. You look like you're about to say something, Alex. I don't want to cut you up. Well, no, I just, I think it's important to tell the youngans why was Jason at CES? Why was this company at CES? Why was Jason there for long enough that he wanted to find a booth to camp out.

Starting point is 00:38:28 I feel like, yeah, like CES over, like, I feel like it's one of those things maybe during the pandemic that does, like, it just never recovered, maybe. CES used to be like the center of the technology calendar. Like way before tech had anything to do with like everybody going to Davos, which is a weird one now, like all the tech guys have to go to Davos all of a sudden. That was not a thing in the late teens. It was CES. Everybody had to go to CES.

Starting point is 00:38:56 And it's very curious. to me, like, part of me is like, well, because CES was gadgets and hardware and devices. And now we're all so obsessed with models and evals and AI agents that it just doesn't

Starting point is 00:39:11 translate until we figure out like the robots maybe that'll bring CES back. So that's part of it. Maybe it's just people that are not as into Vegas. I know that's also the trend that like Vegas gets a lot fewer visitors every year. And so maybe

Starting point is 00:39:26 that everybody's just less excited for an excuse to go to Vegas in January. I'm not really sure. I'd love to hear your thoughts on why it doesn't feel like CES is the place you've got to be anymore. Yeah, the problem is CES used to be bigger than the media footprint of a lot of tech companies. Yeah. Now tech companies are essentially nation states.

Starting point is 00:39:46 Why would they be subservient to a conference? But at the time, it was a way to aggregate companies together. And if you recall, major companies would do keynotes at CES versus having their own event. Because they needed a way to get people to care. It was, you knew there were reporters there, so you'd do a big thing. It was like CES and South by Southwest were like the two. Those were like the two tent poles of like, that's how you get people excited about your new device or app or whatever. You got to have a big splashy debut at CES or South by South by.

Starting point is 00:40:18 I don't even know what it is. It was like Burning Man and Davos in 2020. No, neither. But you're right. Hardware at CES. And then every year at Southwifax. People will say, what was the breakout app? You know, was it 4Square, was it Twitter, whatever it was.

Starting point is 00:40:30 Right. I'm dating myself very clearly here. But I think also startups began to do more Apple-ish things. Like, if you think back a long time, we didn't see founders giving like Apple-style keynotes about iterative launches, but Dropbox brought that to the fore. And I think Airbnb just have to agree as well. And I think once you realize that you don't have to use someone else's stage, you can just do it yourself and then distribute it online versus caring more about the in-person component. It went away. But in this case, we are talking to a hardware founder of a company that everyone has heard of.

Starting point is 00:41:04 And Jason has posted up at that booth. So, Lon, who are we talking to? Yeah, we're talking to James Seaminoff, of course, the founder of Ring, the doorbell, smart doorbell company that is now, if you're watching this and you're a younger person, you may not even know that was a private company before being purchased by Amazon, which happened about a year, a little more than a year after this interview we're about to watch. So that will be sort of interesting, too. There's discussion of like, are you going to sell the company? Are you going to keep growing? And we'll certainly talk about all that. But yeah, this is January 13th, 2017.

Starting point is 00:41:36 Jason speaking with James Seamanoff, the founder of Ring Doorbells. I believe the first clip is one that I had picked out. I feel like this was a classic bit that Jason does not do as much anymore. With serial entrepreneurs and founders used to come on the show, he used to like to kind of go back over there, failed projects and, you know, kind of like revisit like a little bit of an autopsy sort of what went wrong year, but also just a little bit sort of making fun of them. Jamie, James is a very good sport, which makes this all in good fun and self-effacing.

Starting point is 00:42:12 And I'm sure he didn't mind. Let's take a look at roasting some of his failed startups. We're over five years ago now. No, it's five years. Yeah, it's over five years. And as an entrepreneur, I have to say, I underestimated you. I looked at you as an entrepreneur.

Starting point is 00:42:26 We're friends, so I've been taught this way. You remind me of like a tinkerer because you would find all these little businesses and you would build beautifully elegant solutions to businesses. But none of them ever broke out. The first one I remember was brilliant. It was phone tag. Yep. And before speech to text was great.

Starting point is 00:42:48 You said, hey, forge your phone number here. And you had somebody in Manila transcribe it. Yep. And I would send people to voicemail, and then I would get a perfect transcript. Read your voicemail. And read your voicemail. It was so brilliant.

Starting point is 00:43:00 Yeah. That business did okay. Yeah, I mean like, still goes on. Still, it ended up nuance bought it. Nguyen up. Which is the text to speech people.

Starting point is 00:43:08 Yeah. But for very little. I mean, to your point, you're right. I mean, it was a single. It was a single. It was a single.

Starting point is 00:43:14 It was a bun. It was a bun. It was like getting hit with the ball and getting on first base. Yes. Which, by the way, I'll take, I was still on first base.

Starting point is 00:43:22 and you spent a couple years on that. I did, yeah. Then you were like, I got, and then you got unsubscribe.com. Yeah? And that's when I was like, I always liked you as a president, I was like, oh, respect going up as an entrepreneur.

Starting point is 00:43:36 This cat's figuring it out because you got unsubscribe.com an incredible million dollar domain name. And you created a really brilliant idea, which was put this Chrome extension or Google extension, something in and press the unsubscribe button, and you'll handle getting me off that email. Yes. So brilliant.

Starting point is 00:43:54 That business. Terrible. Was horrible. Nobody paid for it. I mean, the product still, to this day, one of the best products ever, I think. Yes. I mean, like it cleans up your email and the right way. It's the work.

Starting point is 00:44:05 It's great. The business of it was the worst. Zero. Ah. Zero dollars. Fantastic. So you come up with an elegant solution that everybody wants. Everybody tells you they want.

Starting point is 00:44:15 But as an entrepreneur, they basically, people can tell you that. the statistics can show you that they love the product, but then in the final moment, the credit card doesn't come out. There's just no way to convert it into dollars. Brutal. It just was brutal. So what happened with that business? You sold it or just saw it?

Starting point is 00:44:32 We sold it and got the investors their money back. Perfect. A hundred cents on the dollar I got there. Because I actually feel very, and for me, it's something I've been, I feel a very big responsibility to the dollars that we take in. This really hit home for me. Jason and I, a few years ago, he was doing a company called Inside. and the idea was, at first it was going to be apps,

Starting point is 00:44:52 and then we sort of transitioned in newsletters. It was like real-time news updates. It was kind of like the dying when people stopped caring about news. It was in like the last year or two that people cared about reading the news or what are the news headlines before everybody just switched over to what is my favorite podcast host think I need to hear about today and nobody reads the news anymore. Hey, hey. Sorry. But back then, so we were making this news product. And I mean, we would focus test it and the reactions would be like more enthusiastic than any product or service or video or content I've ever worked on.

Starting point is 00:45:28 Like people would give us like a plus scores and like I love this and I will download this and read this every day. And this is exactly what I want. And finally I don't have to watch CNN or like we got like the feedback was incredible. We were so excited. We thought we finally cracked it, you know. And then no, but nobody would download the app. It is so hard to get somebody to download an app. And this was in the era where everybody was like,

Starting point is 00:45:53 I got my, I got my 25 apps on my phone. I'm like, that's it. I've got app fatigue. I don't want more apps. I got the perfect balance. Today, people download an app or whatever. But like back then, it was like,

Starting point is 00:46:05 I've got it very organized. I like how my apps are. I don't want to download a new app. It was like pulling teeth every time you wanted to try to get somebody to download a new app. So this was like, it wasn't a problem with the product or anything. we were doing specifically, nobody could be like, oh, I don't want to download this because I don't like this feature or I don't like this button or I don't like the way you wrote that. There was nothing to fix.

Starting point is 00:46:27 It was just like the market doesn't want this thing you made. It seems great. You love it. People like it when you show it to them on their own. Nobody's ever going to access this. And we just gave up. Like eventually we just pivoted into other stuff because people didn't want it. Yeah.

Starting point is 00:46:43 This is the old startup mantra, if you will. that, you know, failure is fine as long as you learn something. People used to try a lot of different things and a lot of them would fail. Then you'd find the one that worked. And it was this expectation of experimentation. Yeah. That does seem to be a little bit now lacking because, you know, you want to like have an idea, get a co-founder, go to like injuries and speed run.

Starting point is 00:47:04 And then you want to build FOMO for your C. And you want to, it feels much more accelerated and therefore less contemplative, perhaps. Again, not a bad thing. But I am worried that we're going to lose something in the translation process. I think there's also so much more scrutiny on things the moment they launch. Like I was just talking on a call before we got on here. I was just talking about Jev, the TypeSafe AI's decision model. That's only been out for three weeks, by the way.

Starting point is 00:47:32 There's already competing products. Like if the company behind Jev tomorrow was like, you know what, we're not really going to focus on Jev. We got this other idea. Everybody would be like, oh, my God, they failed. they're miserable. They couldn't do it. And it's like, it's been a month,

Starting point is 00:47:49 you know, like there's no, there's no like, I'm just going to build quietly for six months and a year and see if my idea comes together and maybe we'll pivot to something similar.

Starting point is 00:47:59 Like the spotlight is on you immediately. And as recompense for the Insta spotlight is the chance for Insta scale. So the makers of Jev scaled to trillions of tokens really, really quickly. They just raised money at a $7.5 billion. 30% of the, Fortune 500 now using Jeb is what the founder just sent.

Starting point is 00:48:18 So you don't have as much time to tinker, but if you get it right, you can hit the equivalent of like six home runs at the same time. And so it's a tradeoff, but I do just love hearing people that are in their garage, tinkering around. And that brings us long to our next clip, which is how did this ring business get off the ground? So let's go to the garage literally and find out. So here's what that came out of.

Starting point is 00:48:41 So I get done with unsubscribe. And I'm like, I just have this. like kind of meltdown of to your point like I keep coming up with these great ideas right none of them are becoming real businesses question yourself as an entrepreneur you say maybe it's not for me no I said what am I like I really said to myself like what what I like what do I what am I like what am I like what I like what I'm like what I'm gonna do like what I'm like to do right and I've never really gone for money like I and that was part of the problem was actually was not going for money I was always so I realized you know what I am I'm an inventor I'm not an entrepreneur

Starting point is 00:49:11 I'm not a business person I'm an inventor I like venture first And so I said, so basically, how does an inventor build, but I have an inventor who wants to make a big impact. Right. And the only way to make a big impact is to build something that gets out there. So it has to be a meaningful business. Yeah. So I said like kind of, so I said, you know what I'm going to do? I'm going to go in my garage. I'm going to hire like two guys or two people. Yeah. On my dime. Right. And I'm going to keep inventing stuff off all these ideas I have. And we're going to let them stew. Like I'm going to let all this stuff marinate. And we're going to see what takes off. Right. So we're going to do multiple businesses. see what what happens and then if one pops we'll kind of go with it now I thought multiple would pop I had all these crazy ideas but yeah and they made an incubator in

Starting point is 00:49:54 your garage personal incubator a personal incubator which made it very pure a hundred percent yeah yeah it's pure oh I mean came out with this crazy idea you'd have like a box on that way you put it on a table with I eight charging ports with like a retractable chargers we had this like conference call this conference call system thing I had a gardening idea and then you come up with with this product ring. But I didn't. So I didn't come up with it.

Starting point is 00:50:18 I was in the garage. Yeah. And people are stopping over. And I couldn't hear the doorbell. Oh my God. So I said to one of my guys, I said, find a Wi-Fi doorbell online. Like, like, buy me a Wi-Fi doorbell so I can go to my phone. Yeah.

Starting point is 00:50:32 And they're like, it doesn't exist. And I'm like, you guys are idiots. You don't know how to use Google. It doesn't exist. I build it myself. Amazing. And everyone who comes over is like. Can I have that?

Starting point is 00:50:42 This is the greatest thing ever. Yeah. And they're like, how much is that quest? $300, $400, like, yeah. Sure, yeah. I soldered it together, $50. Like, I don't know. Lon, if there's ever a story of accidentally stumbling into what you need to build,

Starting point is 00:50:56 I think needing something, thinking it's been built, going trying to find it, realizing it's not being built, and then rushing into it is just about perfect. Yeah, I love the, I love the inventor slash founder narrative here. I feel like that, like not to take anything away from today's founders, many of whom are inventors or have invented things. But in that old school tinkering way, I feel like today's founders who are inventors are, it's coding or it's new ways to do machine learning

Starting point is 00:51:29 or to train models or it's become very technical. And this is just like he soldered this thing together that he wanted in his garage because it didn't exist. It reminds me like the old guy from Gremlin's, you know, like just like what's a good idea smokeless ashtray that doesn't exist I'm gonna figure out how to build one with my own two heads that's from that is from

Starting point is 00:51:49 the movie Gremlins that's the thing he's I don't know if I've seen the movie Gremlins what you've never seen the original 80s movie Gremlins I saw E.T that's from the 80s yeah well invite me over for movie night you still haven't done that anyway if you have not seen the classic film Gremlins the main character's dad is an inventor

Starting point is 00:52:08 and that's where he finds Mowgli is he's selling his wares in Chinatown and he stumbles into a curiosity shop. What's Mowgli? Mowgli's the god. If you seen like there's a cute guy and then he gets water on him and that's where the gremlins come from? I can just keep asking

Starting point is 00:52:25 questions all day and we make no progress. So I'm just going to say one thing I appreciated about that last clip was the optimism that the founder had. He said, you know, we're going to build stuff and then one of them will pop. I thought mini were going to pop. I do just love the endless and deep well of

Starting point is 00:52:41 founder optimism. It never gets old to see these people because they just see the world in a slightly different way than, let's be honest, I do. Maybe you too long. And as a nervous, anxious person by nature, I don't default to the best possible outcome. And yet here we have people just out. It's going to work out. We're going to have fun. Yeah. I'm, I'm way too, I'm way too cynical. And I'm always thinking about the reasons why something is not going to work. And I feel like the founder mindset is you just constantly focus on the reasons the thing is going to work. And that's how you like keep pushing through even when like your first three inventions don't work. You're like, but I'm a great inventor and I've got this whole setup and trust the

Starting point is 00:53:20 system. I'm going to just keep inventing things and one of them is going to take off. And that is probably the key difference between like a Jamie C. Monofina and Alon Harris. Like if you really want to boil it down. There's your tactical practical tip to the day. All right. Now, Lon, you and I have been friends for a while now. And I think that next clip involves all things friendship. Yes. I mean, where the goal is, or the lesson here from Jamie is that, you know, you bet on your friends and he's got a specific anecdote to share that I think highlights why, you know, even if you're not 100% on board with what they're doing, it's always a smart idea to, like, support your friends and back your friends.

Starting point is 00:54:00 You never know how things are going to play out. Let's watch the clip. Like, Lake, you're doing it. And he's like, okay. And yeah, so Lake's been a great friend and supporter. He actually, it's very funny. he was supposed to invest. He got another couple friends to invest.

Starting point is 00:54:15 And he backed out at the last second. Oh, my God. And that would be, I think it's like a 50 or 100 X now. Because that was the angel, angel, angel, angel, angel, four million dollar round. I may even sub. Like, it was really early. Yeah, you know, it's the thing.

Starting point is 00:54:31 The mistake I always make is, as an angel investor, is you always bet on your friends. You just always bet on your friends. You have complete knowledge. You know, I know you're not. going to let the business die yeah i mean somebody might kill you but you're not going to let it die you'll fight until there's nothing left and i think that's like when we talk about because we laugh about it but i think that's what makes him mad is that exactly that he knew it he knew it and

Starting point is 00:54:51 the product was not that good at the time i mean it was like he's not wrong it's a little clugie it was it was tough i mean it was a little clugee and when you got it dialed in yep you changed the name of it at some point to ring to ring it was doorbot or something in the beginning yeah um and when you you you rush the hardware out is that one of the lessons, you rushed it a little bit in the beginning? You know, it's funny because people ask, like, what would you do differently? Yeah. And I say, like, I would rob a bank.

Starting point is 00:55:17 I mean, no one was going to give me money. Ah. So I had to rush it. Like, survival was rushing it. Like, I would have died otherwise. Yeah. I mean, yeah, what would you do differently? I would rob a bank is, is very funny.

Starting point is 00:55:28 And, I mean, I think it does speak to when you've got, you know, ring is a product that was not just like an iteration of a previous kind of technology. It was like a brand new thing that people didn't. necessarily understand when you first explain it to them. They invented a whole new category of device. And so when you're doing something like that, I think it probably is a lot harder to raise money than like, oh, this is the next logical iteration of this thing that you already know that you like and want. Yes, but I'm more captivated by the bet on your friends you already know them points because actually I think unlocks an important learning. I've talked to a lot of VCs about the

Starting point is 00:56:08 founder-investor relationship, for example, and how they often describe it as a marriage. And I don't think you can really get entirely what that means if you haven't been married, but it means that you're with somebody and things will go wrong. And you have to keep going through it. And if you have friends and one of your friends is doing something, you've seen that person already fall out. Now, not in the exact same way as a marriage, but like if you have a longitudinal friendship of 10 years, for example, your friend will have had some Baha'is and some

Starting point is 00:56:38 lows and you will have seen things you're both. So it's already like a pre-vetted person. Right. Now, your friend's an idiot, you know, maybe not. But like, you know, presumably your friends are quite smart. And that, that hit me as well because really the only real angel investment I've ever made is just into a friend of mine. And I get investor updates and I'm like, whatever, I'm sure they'll figure it out. It's going to be great. I love the thing. I mean, it's a lot of the wisdom that we hear, not just on our podcast, but on any time you watch, if you watch like VC podcasts or angel investor podcast, like, especially when they invest in early stage companies, like, there often isn't a lot of evidence or signal that, you know, like you're looking at a limited

Starting point is 00:57:15 amount of data. So you have to make a decision that's hundreds of thousands or millions of dollars based on very limited evidence of what a lot of these guys and ladies have told us over the years. I think Doug Leone said this on his most recent appearance on a twist was like, it's almost all about your judgment of the founder. Like it's, you're sizing this person up. what kind of a person are they, are they going to be relentless? Are they going to be very clever and creative when things go wrong?

Starting point is 00:57:43 Like, are they going to try to screw me if things go very right? Like, you're taking a meeting, you're reading some board docs, you're trying to get a sense of who that person is in a very small amount of time. So you can make this huge decision about whether to back them to the two of millions of dollars. If you're already friends with that person, a lot of those questions are answered and boxes are checked. you that that job becomes a lot easier if you decide you want to bet on this founder. It's like, do I want to bet on this person who I know? Would I put money on they're going to achieve something they set out to do? And I think you do have a pretty good sense.

Starting point is 00:58:21 I'm not saying this is like criteria for having a friend. Like I've got lots of friends who I would not necessarily trust with like $5 million of money. But I do think you have a sense for which of your friends are like that person. them money would never give up trying to make it successful and pay me back. That person if I gave them some money, they are immediately going to Disneyland and it's gone. You know, like, I think you get a sense for who those people are. There's either friends that wouldn't lend $5 to, let alone $5 million. It doesn't mean they're not the friends.

Starting point is 00:58:54 It just means like they're not the friend I would make an angel investment in me. No, some people are just really bad with the money. And that's okay. That's how credit card companies make their money. How's up? Yeah, it's not even like they're bad with money. It's like, well, that person, like, every three years, they've got a different job or they're pursuing a different project or they're doing something else. And, like, they're just, they're not that kind of person where they're going to set this as the five-year goal and then make it happen.

Starting point is 00:59:21 And I feel like that is what, that is already what VCs are looking for. Like, they're going into that meeting, like, can I figure out if this is the kind of person who's going to, like, stay up till 3 a.m. every single night until they crack this problem. and get to the answer, or is this person going to be like, well, I've been working for six hours already today and my show is on, I'm going to knock off early, you know? The lesson for all you aspiring angel investor friends out there is if you do have a friend who's had several exits of medium and small size and they're working on something new that a bunch of other angels are going to put their money into, sell your mixer to be in the round. Like don't, like that is literally the slow pitch right over the, you got to swing at that one.

Starting point is 01:00:03 It's also the cost benefit or like the risk assessment. Like if this does go wrong and you lose that money, like, well, you lost that investment, but you backed a friend. You did a good thing anyway. You get to feel good about it even if it goes wrong. But if it works and your friend is wildly successful and like one day they're going to be on a podcast talking about their friends who invested in them and believed in them, like you don't want that to be the story.

Starting point is 01:00:30 You don't want to be the one person who was left out in this. big celebratory payday from your friends. You want to, it's worth the money to risk almost to be, for the chance to be a part of that. Live your life as if someone is going to provide a retrospective on a podcast 10 years later. I think about that a lot. No, don't you about that.

Starting point is 01:00:48 Weirdly, I think about that. I'll tell this one story that we can move on very briefly. I went to Terry Blacks with Jason and Mark Jeffrey when I first moved to Austin. And this was coincidentally the dinner where they came up with the idea for Stillcore capital. So like if still core capital one day becomes like a $10 billion like huge thing and like those guys saw Tao coming years ahead and it's like now this massive thing everybody wants to talk about, I've got an unbelievable podcast story. And I was thinking that in the moment, I was sitting there eating my mac and cheese like one day if this thing blows up, I'm going to be like king of

Starting point is 01:01:27 the tech podcast for a week because I'm going to just coast on this narrative of like I was there. You know, like, there's that Pixar dinner that they talk about where, like, the four or five guys who were Steve Jobs and, like, the original Pixar guys, like, had lunch. We were like, we should do a movie about bugs. And like, like, a hundred people claim they were at that lunch now because it was where the first five Pixar was. They came up with like a large chunk of the early Pixar output was mapped out in that meeting. Correct. It was like, well, they were talking about Toy Story. And then they were like, I think Monsters Inc.

Starting point is 01:01:57 And bugs life. And like, they were just throwing out ideas and what, what are Pixar stories going to be? What's the vibe that we're going for it? Yeah, I mean, like, obviously, like, Lasseter and Stanton were there. But, like, it's one of those things where, like, somehow 30, 40 people were at this lunch, if you listen to everybody. We saw this, too, with honest trailers. Like, 100 people apparently were in the room when honest trailers was invented. Not me.

Starting point is 01:02:19 I was not one of them. You've made it when people are trying to larp your success. Exactly. All right. So, back to the interview. This next clip, I think, is the most important one from anything we've talked about today. I think it illustrates a very important business. It's well put together and I think I cannot improve on its language.

Starting point is 01:02:36 So if we can, roll the clip and I'll see you guys in a minute. Insecurity that you don't need to get into smoke detectors or door or door locks. It's it's a, you know, and again, this is where from the entrepreneur's side I've learned. And having a strong mission is cheating. It's just cheating. Why? Because it makes it so easy to run the business and to keep everyone on track. Ah.

Starting point is 01:02:59 Which is one of the most difficult things in any company. company is focus and keeping people on track. And when you have a strong mission, that's actually one that people want to work for. People want us to like our team is excited to have us succeed because it means we make neighborhoods safer. And that's exciting. And then the second thing is it keeps everyone on the same page. So no one's saying, Jamie, let's do a, um, you know, I heard XYZ like a pet feeder is doing really well. That's connected. We should do one. Like no one says that because they know that it's not our, that's not our mission. And so we'd never, so that we're the distraction layer is just like gone.

Starting point is 01:03:31 Amazing. And it's all the way through. And it's such an easy way with that just reducing crime in neighborhoods. Like you four words and you can just like. So when somebody comes to a meeting, they're like, oh, you know what? I was looking at this thing. There's like pools need to be automated. And you can have like a whole pool system.

Starting point is 01:03:45 Wi-Fi would fit right in. And we can have the interface. You're like, does that make your house safer? They're like, no. And you're like, well, what have we made something that if a kid falls in the pool, and the arm goes off? It's like, okay, well, that's when like, you know, we actually do that. Like someone will say that and they'll be like, but butt like this.

Starting point is 01:03:57 And you start to start. So I've been at a startup when we had an offsite on the executive team and went through and came up with our mission, our vision, and our values. I've done this exercise at adventure bat company. And it felt a little foe. It felt like you were like, if you ever like invented the fantasy world for a novel or a game to be played in, it feels a little bit like that. You're like, I'm going to put the forest over here and there'll be a mountain and we'll stand on it. Yeah. But here is an example of why those exercises, even if they are a bit contrived, matter.

Starting point is 01:04:29 Because if it does clarify your thinking, it will save you endless side quests. And those are often the cul-de-sacques where startups lose momentum, miss a trick, miss a quarter. And I have never heard someone quite say so succinctly why it matters. Yeah, I mean, mission creep is literally what they call that when their startup starts to like drift away from what you should be focused on. I think Open AI is such a fascinating case study here recently. Like when SORA came out, it was sort of obvious, I think, to a lot of us that, like, this does not feel like where it's important for these guys to focus their attention. Like, like, the slop feed feels like maybe meta, like would be focused on the slop feed,

Starting point is 01:05:13 but not, not Open AI. And then sure enough, once Anthropics started like really coming into their own, is like Claude is what everybody's using. They had no choice. They were like, all right, we got to like, we're buying the Tech Bros podcast, but we got to put this app to one side. And I think that's like, there's so many,

Starting point is 01:05:32 there's always the temptation, even for companies a lot smaller than Open AI, to be like, oh, this is a cool thing that sort of adjacent to what we're doing already. And it would be fun and it would goose interest. And we'd get like that short term sugar high of like a cool new feature. But, you know, It's so easy to get distracted when you're still starting out and figuring out what it is that you do.

Starting point is 01:05:55 The open AI example is interesting. Because I wonder if I would put more like corgi insurance making cafes, which Brex also did. They had the Brex Cafe. That to me is like a real side quest. In the case of Open AI, you know, I wonder what impact being a lab-ish like environment inside leads to products. I focus because you know they had a couple people working on SORA and they were like, this is awesome. And then they're like, let's put it out.

Starting point is 01:06:25 And someone was like, all right. Same way they launched a browser. Do you remember what it was called? Probably not. Because now it's a code egg. Yeah. Hold on. 10 points.

Starting point is 01:06:34 10 points. Are you on a startup podcast? Not a fair question. I know. No, but my point is most people wouldn't. But they were, they have the ability to experiment so quickly because they have their own infinite token agenetic coding setup. They can really do a lot.

Starting point is 01:06:48 I think you're right, but I think it's also an example that shows how much things are changing as well for these frontier labs compared to other companies. Well, I think it's both. I think the point there is like it's not just internally. Like obviously some things are distracting. It's good to have your whole team focused on like these are the big picture ideas and the vision. But I think it's also from a consumer standpoint, you don't want to distract people. Like you don't want to make it like fuzzy what open AI is. And I think that ever since then you can see very purposefully Sam Alton.

Starting point is 01:07:18 is like, I'm going to control more of the narrative about what it is that we do and what we sell. And, you know, I'm going to be this like meter for intelligence or whatever. Like, I think there is a lot more effort because of in the early days it was a little like, well, it's the chat GPT company. And also we have this other app. And also you can put it in your browser. And also you can do this. They're like, they are trying to now zero it in on like, what is open AI and what do we do?

Starting point is 01:07:44 Whereas Anthropics, like, it's a church now, you know? Like, they're both trying to sort of. close in. I'm writing about that eventually when I find enough time to pin it down. All right, listen, let's do one more clip here. Let's take a look at the conversation about selling the company or not. Keeping in mind, Lon's timeline you give us the top, which is this is a year-ish before the billion-dollar sale?

Starting point is 01:08:07 Like a year in a month, I think, before. All right. Hit the clip. Easy for them. They've just chosen an easy route. They want to go to bed at night and just make massive margins and not innovate anymore. They're lazy. ADT's lazy. You're going to eat their lunch.

Starting point is 01:08:21 How many rounds of funding? Have you done three? You see round? It's three, yeah. God. The company's going to, when are you going to file for public, what, Q4, you think? This is a public company. I'd like to take it public in the fall. You're kidding.

Starting point is 01:08:33 No, serious. Have you ever said that on before? This might be a startup exclusive. So I have said, so with this business, I have said from day one, my goal is take a public, not to sell it. We have too big of a vision. And also, it's when you, when you stand up for something. something when you say you're really going to do something like this like reducing crime in neighborhoods a company can't buy a company that reduces crime in neighborhoods they need to buy

Starting point is 01:08:54 even a margin and all this other shit and there's lots of stuff we do that they'll never get you never sold any secondary shares either i mean maybe i can get a little secondary sure actually they would they would but any company would kill all the good stuff here immediately they have to there's no way they could see this the the the stuff that i spend money on would kill a normal executive yeah they just would die they just couldn't see it like what just all these like i mean i have stuff that I'm doing. I'm working on products that will launch in two years. Wow. And I'm spending, you know, I'm budgeting $5 million for it

Starting point is 01:09:23 this year. Wow. And at the size company we are, there's just no one would let me get away with that in a real business. Yeah. I mean, being public, it does lead to a little bit. By that time, I think, I think the... You'll have escape velocity. Yes. You can't sell it, Lon. People won't get the vision. They're, all they want

Starting point is 01:09:39 is EBITR. Ring, ring. Hello, it's Jeff Bezos. If Jeff Fessor's calls and Amazon wants what you're making. I mean, I guess that's a very tempting offer. But also, what did Amazon unlock for Ring? An enormous amount of resources and distribution. And if they wanted to theoretically follow their mission of making your house safer, making your neighborhood safer, then, okay, I can see it.

Starting point is 01:10:04 I can actually see in a non-symical way, no BS, how that vision could have been well-served by selling to Amazon. Am I disappointed? Yeah. But, you know, I do think that, as Jason has said on the show many times, those type of deals are critical to the startup and venture capital landscapes, health. So maybe this is one of those win, win, win moments. It is also, I will say, just a fascinating bit of ring Amazon synergy

Starting point is 01:10:27 that that's so much of what ring cameras are recording is like, is my Amazon delivery here yet? Like, it is kind of like that they are verticalizing the front door doorbell delivery loop. You know, like your entire front door stack is now going to be Amazon. Oh, don't say front door stack, I can't. Like, that's what, you know, like next it'll be like the Amazon robot brings you your delivery or whatever. Like they kind of like Amazon owns your front door in a weird way. Okay, so what if, what if the ring provides the view for the drone from Amazon Prime Air to drop your package? That's exactly what I'm saying.

Starting point is 01:11:10 Therefore, it's not just part of your door stack. it's also your door control tower. That's what I'm saying. Like, yeah, I think, I think that may be the play like 10 years ahead is like your front door brought to you, but your stoop. Stoop by Amazon is where we're, is where we're headed. All right. Last thing for me about this one, I just love how he's like, I'm doing things that no sane executive would let me do. And that is just, ah, that's why I, founders are never boring to talk to because they are not so molded by the NBA process.

Starting point is 01:11:40 Yeah. have lost all their flavor. But I would say humanity. Yeah, I mean, again, it's like the appeal of Jamie, I think, is that he's like this old school like tinker. He's like Rick Sanchez in the garage, like fiddling around with these like devices seeing and like building real things. And there is sort of an inherent like romance to that, especially I think today when, you know,

Starting point is 01:12:03 building is so associated with like sitting down and telling your agent what you want to build and letting them sort of go. One final thing I wanted to talk about here. Obviously, when you hear about ring doorbells today, it is often in the context of everyday ways people use them. But sometimes you hear about it in terms of the concerns about privacy, concerns about surveillance. Obviously, ring and flock have that if your pet goes missing in your neighborhood will help you find it Super Bowl ad. They caused a whole lot of blowback and they ended up canceling that whole project. So they were already talking about this in sort of a different way back in 2017.

Starting point is 01:12:41 I think it's fascinating to see how that conversation has progressed over the last nine years. Let's take a look at a little clip. Let me run another idea up to flagpole. Automatic license plate readers is a big debate in my community. A bunch of communities are doing this. Yes. It is a million dollar install for a million to $2 million. And we have a good friend that lives in a neighborhood in L.A. that has one that you might.

Starting point is 01:13:03 Really? Yeah. Brentwood-Bellair kind of place. The mandeville. Oh, Mandeville, sure, of course, yes. They have licensed by reading in Mandeville. Yes.

Starting point is 01:13:11 This cost a million dollars to put into a neighborhood, I understand. Extremely expensive. Millions. Extremely expensive. With your product and your inroads into communities, you could easily create, and I'm sorry, I got to start using we since I'm on the board. We, we could easily create a solution.

Starting point is 01:13:28 No, no, no, no, we, we, we could build a system where the community could extend and put these in their front of their houses, people who have it. If you're not on a street or not on the main street, you could say everybody on the block contribute this amount of money and we'll put it in the street, install it, and we could put it in this for what? $100,000 instead of a million.

Starting point is 01:13:50 Like a couple hundred dollars. Okay, but let's just say we want to put a hundred of them into a community. We want to do all of Santa Monica. What I put a hundred in. Like a city. Yeah, town. let's say town town 50 cameras 50 cameras and we want to provide the service and we want to provide the admin and interface for the police 20 grand 20 grand plus 20 a year in service

Starting point is 01:14:15 maintenance what if i want service 500 bucks a month maybe we want service we want to be able to cost somebody 24 hours a day and have it fixed and repaired of course of course but you need to have logos this is the big win that would help reduce crime in neighborhoods so it's good i'm just i'm just saying hot dog but by the way but again like look at the cheating side of how that works as running a business. Literally, we're having this discussion in my neighborhood right now. And I was like, listen, guys, there is an open source solution for license plate readers. I don't know if you saw it.

Starting point is 01:14:40 Of course. There's an open source product. And I'm like, I'm going to put this open source product on my street. And I'm going to put a sign up that this is a lot. I'm going to put literally an arrow and say, this is a license plate reader? We've read your license plate. Yeah. So I mean, I think what's so fascinating to go back and look at this now is that there

Starting point is 01:14:56 was like not no real like pause to be like, is this a thing that would upset people? Is this a thing that would make people feel spied on? It was... Jason did say it was a debate in his neighborhood. But he then comes right immediately to the cost. And it's like it's so prohibitively expensive. Who's watching the videos? How do you be sure that the camera is seeing something?

Starting point is 01:15:17 And then someone responds and it relates to real world action. And we're not just like producing all this footage that goes into the ether. So it's a very practical. Like back then it was not, it wasn't a thing that was happening. flock and companies like that, mostly flock, they're the most visible, have sort of figured out the practicality. And now we're sort of past that discussion. We all understand, sure, a police department could set up a camera. I mean, that's the other thing I would talk about.

Starting point is 01:15:44 So we figured out all the logistics took care of themselves. You could set up a camera. You could read lights and plates and triggers. If they're looking, the cops are looking for somebody or stolen car, whatever, we could route that or whatever. It's looking out for unsafe things. You know, then the conversation shifted to, well, is it up to homeowners or who's going to, you know, we ended up now falling into this like, well, it should be law enforcement. Like the flock is selling the cameras to the sheriff's department or the police department and then they're putting them up in communities and they're monitoring it. And it's up to them to sort of use it responsibly as opposed to Jason's idea of like some guy in his basement with a bank of monitors watching the entire street and every, every car that drives that.

Starting point is 01:16:29 It's just so fascinating to be how this conversation has not never gone away, but only increased in intensity, but we're looking at it so differently now. I don't think if you told those two guys in that studio, like, in 10 years, there will be license plate reading cameras everywhere, and people will be, like, attacking them with bats. And it'll be so bad for flocks business that they'll be going through a very public round of layoffs after they offered bios to people because the reaction to this idea was so monstrously negative because people didn't like it. The price came down so far.

Starting point is 01:17:00 We blanketed the nation and then people turned their noses up at it and said, you know what? I don't think so. And this is actually the limitations, the limits of a company's mission. Because if your only mission is to make neighborhoods safer, then you will do things to do that than maybe less salubrious. If you're an AI head, this is the paperclip problem, if you will. So we've seen monobinical efforts can run into certain problems. But it also goes to show one thing, Lon, nothing ever changes in tech. It's a, yeah, if the mission, it was always like to make neighborhoods as safe as possible without violating anyone's privacy rights, like, that's a very different company.

Starting point is 01:17:42 Very different company. Yeah. But, ring, though, mostly okay, because it's your house. It's your feed. It's your view. I've never had a friend come to me and be like, have you seen these ring doorbells? Have I had friends talk to me a lot about flock? Oh, yeah.

Starting point is 01:17:56 Well, I think, yeah. I think we all, the idea like I could set up a camera on my porch that films people coming up to my house. That's been, people have been doing that for many, many years. In fact, they're doing construction on the lot next to me and they have cameras looking at the lot to make sure, you know, kids don't run in there after hours and drink beer in the half-built house or whatever. Leave the kids alone. That's what the houses are for. I say kids. I meant me.

Starting point is 01:18:21 But, you know, but no, I don't think anybody's really complaining about that. I don't think anybody has an issue with that. It's as soon as you turn the camera and now it's like just down the street at things you don't own in places that don't belong to you. So right, ring, I feel like they're on pretty safe ground because it's just like, well, I can record my stoop. That's my stoop by Amazon. We don't want minority report. We want safe houses. That's, I think, the balance point here.

Starting point is 01:18:47 But an absolute treat of interview, I had not seen that one before, Lon. So when I was prepping for this, it was actually really enjoyable to see. And a very, very refreshing founder to speak to. Really impressed by Jamie. Love it's fun to take a flashback into the Twist Archives. There's so many, there's like 17 years of Twist Archives. We're never going to, if you like flashback episodes, you are in luck because we are never going to run out of classic twist.

Starting point is 01:19:11 Jason has talked to everybody dozens of times. So always more to, always more in the archive to comb through. You know, the next time you want to go back into the archives, just give me a call and I'll jump back on. And if you want more of Twist, if you want to stay up to date on the interviews that will in later years become these absolute classics, then pay attention to Twist everywhere you get your news, X, Instagram, WhatsApp, Substack. Substack, please, substack. Not so much WhatsApp. Substack, though. T-WI Startups.substack.com. That's where to go. It's a free version. You'll get the, you will get the episodes of the podcast. You will get our morning ticker, which is our sort of news dump. but if you pay $10 a month, you will also get daily tactical and practical posts based on stuff from the Twist Archive, based on stuff we found elsewhere on the internet.

Starting point is 01:19:59 All helpful founders giving you tried and true tested strategies they have used at their own company. Don't just wonder what to do the next time you're facing a difficult question. There are some other founder has already gone through that and answered the question. So TWI Startups.substack.com is where to go. Sign up for $10 a month and join the tactical practical crew for Alex Wilhelm. I'm Lon Harris. We'll see you next time on this week at startups.

This Week in Startups - The Gadget That's Better in Crowds Than Your Phone + Ring’s Founder Before Amazon Bought It | E2349

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