This Week in Startups - Trump, Saudi, & Adam Neumann’s obsession with cities + BioFluff CEO Martin Stübler | E1712

Episode Date: April 3, 2023

Jason kicks off the show by breaking down clips from a recent conversation between Marc Andreessen, Ben Horowitz, and Adam Neumann about Saudi Arabia’s promising startup scene (2:44). This leads to Jason diving into new city concepts and Trump’s presidential campaign (13:01). Then, BioFluff CEO Martin Stübler joins the show to discuss his sustainable fashion alternative (30:44). (0:00) Jason kicks off the show (2:44) Saudi Arabia’s promising startup scene (11:31) Coda - The All-in-one doc for teams, sign up for free at https://coda.io/twist (13:01) Creating cities and societies  (18:21) Trump-topia (23:33) Mercury - Apply in minutes and get up to $5M in FDIC insurance at https://mercury.com (25:02) Trump’s presidential campaign  (29:16) Revelo - Get 20% off the first 3 months by mentioning TWIST at https://revelo.io/twist (30:44) BioFluff CEO Martin Stübler on developing plant-based fur FOLLOW Martin: https://twitter.com/MartinStubler FOLLOW Jason: https://linktr.ee/calacanis Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1 FOUNDERS! Subscribe to the Founder University podcast: https://podcasts.apple.com/au/podcast/founder-university/id1648407190

Hey, everybody, welcome back. It's going to be a great week, five great episodes of this week in startups. Then I'll do an all-in. So I'm still at six a week and still trying to get out on that mountain to do 90 minutes of skiing a day. Yes, I broke 30 days. Last year's record was 40 days. Today, I'm going to try to do this quick show. And then I'll get out on the slopes with my daughters.

But some really important news at the top of the show. We're going to talk about the obsession with building cities and Saudi Arabia joining that fray with something they're doing called The Line. basically a giant walled city. Why is this coming up? Well, on Friday, there was a little reported on, perhaps nobody reported on it, video that was released on the internet. It's only got 900 views.

And it's Ben Horowitz and Mark Andreessen, two of the greatest entrepreneurs and investors of our time, obviously from Andreessen Horowitz, with Adam Newman, the real estate savant who brought you, WeWork, and is now doing a company called Flow that is going to be living and working for young people and maybe owning some ownership. in your home? Well, the three of them did a talk at Saudi's startup conference in Miami, and they were effusive in their praise of Saudi Arabia. What does this mean for our industry? Is this the beginning of another long relationship like the one we have with China, with massive investment in the U.S. or the one we have with Russia? And then what are the dynamics of a deep,

meaningful relationship on a business level and a startup level and an entrepreneurial level with an authoritarian country? We've had this happen with Russia, Saudi Arabia, and China. So let's have that discussion. Let's have a candid discussion. Then we do a fantastic interview with the CEO and founder of a company called Biofluff. What does Biofluff do? Well, they are a plant-based far for the fashion industry. It's a fascinating conversation of how they figured out how to find this opportunity.

It's going to be a great show. Stick with us. This week in startups is brought to you by Coda is the all-in-one dock for teams. If you've got a stack of niche workflow tools or if you're buried in docs and spreadsheets, CODA is the doc that brings it all together. Startups can sign up for free at coda.io slash twist. Mercury, where innovation meets peace of mind. Now more than ever, startups need a safe place to put their cash.

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Welcome to Monday. It's a little bit of a slow news day, but there is some news about Andresen Horowitz and Adam Newman, formerly of WeWork, working apparently in collaboration with Saudi Arabia and their public investment fund, the PIF. So there was on Friday a conference that Mark and Teresa and Ben Horowitz, the top two people at Entresen Horowitz, obviously, and Adam Newman spoke out at a conference in Miami. It's called Global Priority Summit.

It's organized by a nonprofit that's backed by Saudi Arabia, aka the Kingdoms, public investment fund. That's their $650 billion sovereign wealth fund and growing, I believe. Indrisen Horowitz and Newman discussed the possibility of launching Newman's new startup flow in Saudi Arabia. The video on YouTube only has 900 views, which is peculiar.

I'm wondering why this didn't get a lot of coverage in our industry. But here are some clips from it, and we'll discuss Saudi Arabia and their impact here in Silicon Valley as we go through this story. So Adam Newman and Ben praising Saudi Arabia as a startup country

in this 49-second clip. It's amazing because I've been meeting a lot of Saudi entrepreneurs. I've been meeting them for a few years, but I've been meeting a lot over the past year. And I've been hearing more and more, I'm moving back to Riyadh. I'm moving back to Riyadh. And I asked the entrepreneur, why are you moving back? And I said, what are you talking about? It's the most exciting place on the planet right now.

And I want to live where the action is. The more I think about it, the more Saudi almost feels like a startup. And Ben, we've talked a lot about what makes startups, startups. But that's the feeling I'm getting right now. You know, we've been quite a bit of time in Saudi and people, well, what do you mean it's a startup country? And it actually, it's funny because it starts with Saudi has a founder. Now, you don't call him a founder. You call him his royal highness.

But he's creating a new culture. He's creating a new vision for the country. He's got like a very exciting plan to execute. And then the people in the country are fired up to do it. All right. Yes. So you're not a founder in Saudi Arabia. You're your royal highness, obviously.

and here, and this is interesting because I've never heard anybody in Silicon Valley really talk about Saudi Arabia as a center of startups. I'm sure there are tons of startups there, but this seems like a new effort, and it's quite notable to get Ben out there speaking. You don't hear him speaking all that often these days. The same with Mark. So here's another excerpt from the talk, 72 second clip, and I'll talk to on the side. You know, when I walked in at first, I was like, wow, this really feels like it, but will it really behave like a startup? And it's interesting because Mark wrote a piece called It's Time to Build a while back. And when he wrote it, and it was about like we have to kind of build in America.

And I would say probably 50 people in the U.S. government reached out to Mark to talk to him about it, and then absolutely nothing happened. Like nothing. And then when I was in Saudi in October, I had lunch with Princess Freeman, and she said, you know, we're really excited. We're going to be a first-class country. We're going to build our own supply chain. We're going to do our own things. And I thought, wow, that's exciting.

We'd love to be part of that. And so when I came back, I met with his excellency Yasser, and I said, hey, you know, we've got a supply chain. We'd love to be part of it. We'd love to bring it to Saudi. And he said, let's go. And within a week, and this is a week ago, within a week, we had a half a dozen, like, really interesting meeting set up,

and we're off to the races. And in April, we're bringing our companies out to Saudi. And that's what a startup feels like. So when we talk about Saudi is a startup, that's what we mean. And that's why we're kind of so excited to bring flow here and then flow to Saudi as well. Yeah, that's also how authoritarian countries work. If you live in an authoritarian country and you have a beautiful home, it's been in your family for 300 years, and they want to build a railroad.

And your home is in the line of that railroad. Your home is now confiscated by the state. And we see this countless times, imminent domain, makes it pretty easy to be able to, yeah, build infrastructure, of course. And if you have an authoritarian figure, whether it's Xi Jinping or MBS, you can move faster. That's true. But you also don't have all that democratic process. Maybe you don't have environmental concerns. Maybe you don't have people who are poor or underrepresented being protected in any way. And I guess that's the rub here. Now, there is a certain growth mindset that MBS has and Saudi Arabia has that is notable. They want to transition off of oil.

They understand that's happening. And they have an unlimited bankroll to do that. So it is an interesting, fascinating thought process to think, well, how do you do that? And I have some friends in the film industry. and I noticed they all were in Saudi Arabia last year, or yeah, it was probably at the end of the last year or the beginning of this year, and having a great time and, you know, in these incredible tents and going, you know, dune buggy racing in the desert and incredible dinners.

And it turns out the movie industry is being embraced in Saudi Arabia for the first time. So they're actually having movies there, and they want to bankroll movies. And so this is something the United States is particularly good at. If you look at Silicon Valley, you look at real estate, You look at finance and you look most of all at Hollywood. Hollywood is a very attractive place to come. And in some ways, Silicon Valley is the new Hollywood. So if you are in one of these countries that's trying to make a splash and you have cash

to invest and you're going splashy, cashy strategy, you can see that with China's relationship with Hollywood for the last 20 years. Before that, we start with Japan's relationship. They had a lot of money available because they're manufacturing boom. And they bought Columbia Pictures. They bought Columbia Records. and I think they even bought half a Def Jam. They bought a ton of assets here,

and they had gotten very involved in Hollywood, right? And to this day, I think Sony Pictures still owns Paramount. So if you follow the history there, this is, this sounds to me like the Starters Pistol for a similar relationship to what we did in China over the last 20 years. So it's probably instructive to look at the relationship with China, the good that came out of it,

and the challenges that came out of it. We created a pretty significant rival there with a lot of resources, especially in terms of human capital, and they're still an authoritarian country. So they might do things like take over Hong Kong and get rid of all the democracy in Hong Kong and replace all the judges. And then they might want to do that in Taiwan. So this is a very controversial topic of being candid inside of the halls of power.

Do you engage with authoritarian countries knowing that it could blow back at you pretty severely, knowing that there are human rights concerns and that there's a disjoint between the human rights we see here in the United States and the human rights we might see in the kingdom, where it's still illegal to be gay as just but one example. And so if you are an employee of a company like Adam Newman's new one, I wonder, like, would Adam Newman feel comfortable sending his gay employees from flow to the kingdom to operate there, right? And then you could have a blogger who writes something and is caned in the kingdom, right?

where caning is still a part of punishment there, especially for speaking out against the kingdom. So this is a very complicated issues. And every time, the deeper your relationship, the more you're going to have to be ready to answer these questions. And Tim Cook is the perfect example of it. Tim Cook has done,

I think, a pretty great job of deflecting the issues Apple has around suicides, working conditions, et cetera, in their factories. And in fairness, every time that happens, he has to answer for it.

And then this great dance occurs where they make things a little bit better for the factory workers in China. So this is perhaps one of the great moral questions of our time, engagement or speaking out and isolating dictatorships and ones that don't hit basic benchmarks of human rights that maybe we consider standard in our country. And then there is a contingent that who are we as a country to tell another country how they should morally act? Well, I think the Universal Declaration of Human Rights is a pretty good thing.

starting point. Eleanor Roosevelt wrote that and the UN passed it. A bunch of countries signed it. We all try to live up to it. Even our country doesn't because we still have the death penalty here in many states. And we have some cruel and unusual punishment. Most people would argue that being put in the shoe, being put in isolation, solitary confinement for 23 hours a day is cruel and usual punishment. So I would agree with that. 2023 is here and this is the year you need to perform. You need to be focused. And I want your startup firing on all cylinders. And how are you going to do that? You're going to use CODA. Coda helps you do more with less.

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Codda.io slash twist for a $1,000 sign-up credit. And this offer is so generous. I want you to take advantage of it right now because I don't know how long this absurdly generous offer from Cota will exist. Codda.io slash twist for $1,000 in sign-up credits right now. But this is kind of notable to get the big guns out to then go talk about, about Riyadh and Saudi Arabia in these glowing terms is unique for this moment in time, I would say.

All right. And here's another clip from Adam Newman about Flow. That is his real estate startup and the opportunity they have in the kingdom. I said to Flow and I was talking to Mark and Ben, we're going to build a future of living. It's a little hard to build a future of living in New York City because New York City is already built. But to really build from zero, you need infrastructure. And if you could, what's happening in Saudi right now, they're dreaming up cities. you're starting from scratch and that's unbelievable because you can apply the right

technology and the right energy from the first day and as we were talking before and maybe we'll talk about that a little bit not forgetting for a moment the soul it's institutions like this that are actually going to change the world and its leaders like his royal highness that are actually going to lead us to where we need to go and it's entrepreneurs that are ready to have the courage and bring the soul and the technology together into one that I'm really excited about. This is a really interesting point here that Adam Newman, who I believe is a bit of a

savant when it comes to real estate and communicating. I know that he's got a, I know some people have criticism of him, and many of those are valid, but say what you will, he thinks big, he executes at a high level, and he is a branding, marketing, and communication savant. Just a complete virtuoso when it comes to those things. And this concept of new cities is incredibly appealing. This is like a mind virus. When you say new city, everybody's brain, the neurons just light up. And any intelligent person, especially the ones who've been to the TED conference and in any of these elite halls of power, starting from zero in building a city is the height of entrepreneurial madness and vision. Literally being able to create your own society from scratch, whether Walt Disney

did that with the Disney theme parks, right? You built some of his own cities, essentially towns, buying a town, like you see these YouTube, you know, folks who influencers who buy a small town and then try to rebuild it. This is like the siren song of entrepreneurship in some ways. Like the siren calls you to the rocks. It never seems to work. But in a major place like Saudi Arabia, yes, you could pop up a city. And remember, even Peter Thiel, right? So if you go on the list of like crazy entrepreneurial visionary thinkers, Peter Thiel's up there, right? And he wanted to build a C-stead, right? He was going to build a society that was not part of any society. It was past the whatever hundred miles of a nation's territory out in the

ocean. And then they wouldn't have to pay taxes or they come up with their own system. And this is what is very appealing. There's that project called the wall, I believe, which is super dystopian, where they're going to build a wall through the desert and the wall will have everything you need in it. It looks like a prison slash shopping mall, but you can get pretty creative when you have a lot of land, an unlimited budget, and no, absolutely no regulation to stop you. I can understand why Adam Newman is absolutely enthrilled with this. And in fact, Trump started talking about this. And I think this is going to be part of Trump's victory. And I'll say it right here. I think there's a great chance. I might put it at the majority chance now that I think

Trump is going to win the presidency. I know this sounds crazy coming for me, but yeah, I think he's got a clear path to victory. And he calls, he called for a contest. I don't know if you, this also is another story. That's one of the reasons you should listen to this weekend startups is because we find stories that are super important that other people aren't covering. And so this Saudi story is super important because if Ben Horowitz and Mark Andresen, absolutely champion Saudi Arabia, that means it's okay for everybody. And in fact,

in the kind of dogged race between venture firms and capital allocators, once one major one takes money from Saudi Arabia, let's say, or from China, from whoever it is, a Russian, you know, oligarch and or a person from Russia with a large bankroll, from an oligarch, anytime those folks come in and they disrupt the game here. And then the people who don't take money from them are at a massive disadvantage. So I think what we're going to see here is Saudi Arabia. This is the grand courting of Silicon Valley. And this is the dry run. MBS had come to, did a tour. And there's a famous picture we can pull it up of MBS with Mark Andreessen and a bunch of other leaders visiting Facebook. This is before the murder of Khashoggi, the Washington Post correspondent who was brutally

murdered by Saudi Arabia and the kingdom. So this, and I think everything about Saudi Arabia kind of went quiet after that. Now here we are two or three years later. I think they're going to try to reboot this process. And if it seems like here, I wouldn't be surprised if the big announcement is going to be that there's going to be an Andreessen Horowitz kingdom fund. Look for that announcement shortly. And when the kingdom fund is launched, then it's going to be, yeah, all hands on deck to court Saudi Arabia. But the second part of the story is the city part. And I think we should sit there for a second. And this Trump story that was covered in Politico, he's calling for a quantum leap. And he released a video, and I don't know this video was his,

for these freedom cities. And this concept, I'll read a little bit about it here. Past generations of American pursued big dreams, a daring project that once seemed absolutely impossible. they pushed across an unsettled continent and built new cities in the wild frontier. Actually, where I am now, Lake Tahoe, Donner Pass. They transformed American life with the interstate highway system, magnificent it was. And they launched a vast network of satellites

into orbit all around the earth, Trump said in this video. But today our country has lost its boldness. Under my leadership, we will get it back in a very big way. If you look at just three years ago, what we were doing was think about how good it was, yada yada yada uh and i think this is like a grand plan that people would get behind this revolution of like say a carless city or a city that was very walkable that was very affordable and here's a

quick video of the wall i'll sportscast it for you as you can see it looks uh incredible inside it's got this uh greenery this looks actually just like decker's apartment in blade runner uh or it looks like corsont in the star wars films if you're familiar with very vertical versions of cities. And I guess if it's a wall, there is a path in the middle, then two walls facing each other with an open, you know, roof or maybe perhaps a cover on the roof that opens up. And then, of course, the top of it is a giant walking forest. So you get to have a forest on top of a wall of apartment buildings, apparently. And this, he's got the Elysium, I guess, vibes to it, Blade Runner vibes.

And this thing would race across the desert and have a high speed, some sort of high speed rail or, you know, hyperloop inside of it. And you could travel along the wall and a billion people could live in it. And I think that's like kind of where society is getting to. Can we build something that a million people could live in? A billion is obviously crazy.

That's like talking about Khorasan to one of these sci-fi films. And so, I'm sorry, they don't call this thing the wall. They call it the line. line is what they call it. So will that become a reality? Who knows?

But I could see it being kind of interesting. You could build a wall around Saudi Arabia and nobody could come in and out. Would have a dual purpose to it. Okay, and here is a cul-de-sac, a startup here in America that is building walkable, bikeable cities, no-car cities. Your car would be on the outskirts of a city. This looks like a walking mall, like a town, like the 3rd Street Promenade in Santa Monica, the Dominion, which is an open air kind of mall and living space already in the Austin area.

I think North Austin is where it is. And so you're starting to see startups do this in America on a small scale. And the concept, it's pretty obvious. You don't, you and your family could just come downstairs and walk to dozens of restaurants. It's quite charming, European, like living in Florence or something, except, or even Denmark comes to mind because they have these incredible bike lanes. And so when the city becomes no car, then pedestrians, children, bikes come out in droves. And of course, you would have, you know, since it would be a bike-designed city, you could bike to dinner or bike to shopping and they would have places for you to put your bike.

And then there was a project at Google called Sidewalk. And I think that got shut down. But Google was doing a smart city project in Toronto. And I don't know if they spun it out or what the eventual. outcome was, but they ditched it. They were going to do it in Portland. They were going to try to do it in Toronto. I think trying to do this in a major city just resulted in, I think, just too hard to execute on.

And the vision was to do, sidewalks labs was going to really be based on data. Back when big data was what people were obsessed with not AI, not energy, but big data. The idea was, oh, how could you optimize the city for people walking around. So I don't know, you were walking home from work and your house would turn the heat on or the air conditioner and make it the right temperature because it would know where you were between those two things. Or your reservation, you would know where your bicycle was and you're on the way and then they'd have your table ready. Shopping would be automated. But a lot of this stuff that was in sidewalk labs, which was going to be better parking and better building materials, all of this stuff kind of started to happen independently.

So the big vision of the big city became postmates and Uber Eats and DoorDash as well as Joe Jebius' new ADU project or blockable investment we have in modular homes that stack. So a lot of the concepts that were bundled into smart cities became broken up and now their Tesla power walls or they're an on-demand service. As a founder, ensuring that your cash is safe is priority number one. And the $250,000 FDIC limit is just not enough for most businesses. We all know that. So let me tell you about Mercury. Through its partner banks and sweep networks, Mercury customers can access up to $5 million in FDIC insurance.

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technology company, not a bank. Banking services are provided by Choice Financial Group and Evolve Bank and Trust members, FDIC. But this is the Siren song, and I think it's worth, It's notable and worth watching both in the presidential race. If Trump were to make this one of his major talking points, this would be incredible because retirees who vote, young people who are increasingly voting and having a hard time finding place to live and everybody in between who's suffering with housing costs, you could say, hey, we're going to build 10 of these. And he's a real estate developer.

I hate to give Trump advice, but this would be one of the greatest pitches ever. I know real estate, we have a housing crisis. you can't find a place to live. I'm going to make the best development ever. These are going to be done by our government with private companies, and we're going to build 10 million more homes. And these are going to be the greatest, most beautiful, safest cities, right? And so you start weaving in safe cities,

and then you start going up against the democratic cities and say, hey, you can live in San Francisco and New York and get killed, or you can live in one of these Trump towns. And these Trump towns, these Trump cities, these Trumptopias, the Trumptopias are going to be so safe and they're going to be so beautiful and no homeless people and no drug addicts. Trumpopia could be like his path to the White House. All right. So we'll keep an eye on the Saudi Arabia story.

I would think this is going to be very much a China story. And maybe we can learn some things from that relationship of how to use our influence and build healthier relationships maybe with autocratic kingdoms, authoritarian countries. countries, you all know my position on human rights. I'm passionate about human rights. I do not know the right answer because for every example of holding the line with a dictator and saying, hey, we're not going to, we're not going to do commerce with you. Things don't get better necessarily for people in the short term. And then when you have engagement, things can get better in the short term, but it can also enable people and you have a situation like the Uyghurs. So because Hollywood, the NBA, and Apple bent the knee to China, then that enables them to say,

okay, we can do commerce with the United States, and we can also have this Holocaust happening with the Uyghurs. And I don't say that lately. Anybody who's Jewish has looked at the situation here, and many Jewish people have looked at and said, this is Holocaust level genocide. And they use that term to warn the world of what? happening to the Uyghurs there, systematic annihilation of, you know, an entire population. It's pretty dystopian and dark. The precursor to that was the fact that we didn't hold the line with them.

But you also have a half billion people in China who probably came out of abject poverty and started working in factories and a middle class emerging. So things maybe could have been even worse if we didn't engage. And this is one of the great moral questions of our time. And it's one that I am not qualified Dan. answer and maybe we could ask Sam Harris what he thinks. He's a great moralist on these issues. Should you engage and make people's lives better and build bridges with authoritarian regimes to try to make things better? Or should you hold the line and say, hey, we're just not comfortable doing business

if you're going to, you know, make it illegal to be gay and then we can't have our gay people working in this country and partnership. These are very challenging issues. Next up is Martin Stubler. he is a really innovative founder. He is the CEO and co-founder of Biofluff. What is Biofluff? It's a company that's focused on creating plant-based fur for the fashion industry. And we discussed Biofluff's business model, the strategy, how he came up with the idea, and how he's working backwards, going high to low, just like Elon did with the Roadster,

eventually to the model three, $150,000 car to a $40,000 car, eventually maybe a $20,000 or $30,000 car. He's doing that with fur. He's going for the high end. and then eventually this ethically produced, no harm-produced fur, could be available in, you know, even the most affordable clothing objects. And it's quite luxurious to have these fur mittens. And if you could do it without harming animals, why wouldn't you? It's a great interview.

It's great to see how he triangulated around this opportunity. Stick with us. Revello helps U.S. companies to build and scale software engineering teams quick. and easily, and Revello provides world-class full-time remote tech talent. Don't think of Revello as a quick, one-and-done hiring platform. Nope, they want to partner with you and help you build a strong remote team of developers for the long term. With more than 300,000 tech professionals, Revello has the largest online platform for U.S. companies to source, hire and manage remote engineering from Latin America, according to Revello. And Revello's engineers are fluent in English. They work long-term,

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That's R-E-V-E-L-O.com slash twist for 20% off. All right, everybody. Welcome back to the program today. I am talking with Martin Stubler. He is the CEO and co-founder of Biofluff. What is Biofluff doing? Well, they're making plant-based fur technology, of course, for the fashion industry. Their mission to become the biggest supplier for all environmentally conscious high-end fashion brands and replace animal fur and synthetic fur with plant-based fur.

Martin, welcome to the program. Thank you, Jason. It's a pleasure to be here. Stubler. Did I pronounce it? Did I get close to the pronunciation there? Stubler? That was close.

It's a German name, so I would say, probably say Stubler. Stubler. Yours was pretty close. Stubler. Yes. Stubler. Okay. Where in Germany are you from?

You're from Frankfurt. You're from Munich, Berlin. Where? German people probably would not approve of that, but I'm from Austria. But we are off the German language, I would say. You're a fan of that schnitzel with the spetzel on the side? Is that one of your? favorite dishes there?

Not very much. It's a very, I would say, famous national meal here in Austria, but being, yeah, not very into. Oh, you're vegan. You're vegetarian. I take it. It's a mixture. It's a mixture, but probably mostly vegetarian.

Man, I dream about that. I dream about that, Vinichnitzel and the, um, that spetzel. You ever have the spetzel? Spetsle, yes. Spetsle is how you say. Spetsleu? Yes, Spetsler.

Oh, so good. So good. If you ever find yourself in Germany, I highly recommended. All right. Spetsleu. I learned something new here on the program every day. It all comes whenever I travel, it's just about the food. All right.

So we all know why fur is, at least fur that is purposefully grown for clothing. It's kind of horrible, right? factory farming, and then you're murdering all these animals for clothing that we don't need. And then there's, of course, byproduct. People are eating steaks anyway. You get the leather from cows. That, I think, is less reprehensible. It would have been thrown away anyway. But let's talk about what you're doing, because I thought synthetic fur was a okay and was fine, but is there a problem with synthetic fur? And then how did you come up with the idea for bioflop?

Yeah, I would say synthetic fur as a material is already a step in the right direction. Biofluff was not founded as a synthetic fur. Biofluff's origin, surprisingly enough, is in a tannery. So when I was, yeah, so when I was working for a Bay Area company here, a Bay Area company that was focused on mycelium ladder, I was sent to Europe. that was early, early 2020 to help them implement the process in a tannery in Spain.

And I was planning to be there for about two weeks in week two COVID hit and I stayed in this tannery for about a year and a half. Explain what mycelium is in this regard. I mean, I know that's fungi if I'm hearing you correctly. Yes, correct.

Mycelium is the underground root system, so to say, the underground root network of fungi, of mushrooms. whereas the fruiting body is usually the part that's edible above ground. Every fungi has a huge network of usually white mycelium fibers underground, and these fibers can be used in very advanced biotic applications to produce food, but also leather products. Really? You can make leather products from the mycelium.

And these mycelium fields can be over, from what I understand, hundreds of miles, and they all communicate with each other. You're starting to see this come up in science fiction. There was one of the Star Trek series made it a core series arc that mycelium networks were communicating with each other and they do seem to communicate with each other in some way. I should think the last of us also, kind of the new zombie flick on HBO,

kind of taps into this phenomenon. So you go to this tannery where they're trying to use mycelium to make leather and you make some discoveries. Explain. Mm-hmm. So replacing cowhide with mycelium that is already one step in the right direction, I believe. But during my time there, I was just exposed to not just cowhide or mycelium processing,

but also to a lot of fur animal processing. And coming from the biotech field myself, I was never exposed to fashion or anything close to fur. I would not wear fur items myself. But being in this tannery and being stuck there for over a year, basically, yeah, showed me this is still a thing. People are still tanning animals to create animal fur and to use it in fashion applications. So I thought to myself, well,

if we have a really innovative and cool replacement product for cowhide, for leather, then why is no one making an innovative and sustainable replacement product for animal fur? Plastic fur being already one step in the right direction but the problems with plastic fur are manifold. There are so many environmental concerns about having, for example, microplastic pollution come off the main fabric or the end-of-life cycle scenario.

We're currently all plastic furs are not recyclable and need to be probably either burned or put in landfill. Ah, so yeah, we've had some other founders on the show who are working on recycling of clothes, but if it's plastic, there's probably very little change. chance of doing that. Okay, so we have a trend that's going on. You identify this trend. Hey, people are making alternative. We have, you know, mock chicken. We have people trying to make sustainable fish, you know, that are printed in basically labs with slurry. So this is all happening. And you discover fur as a possible item that could be optimized, whether it's the plastic, for obvious reasons.

We don't want to have microplastics in the ocean and then in the fish and then in our bodies, nor in landfills. So how do you go about going from that to figuring out a solution? Well, step one was to identify the problem. And it was very obvious after talking to industry experts

or people in the fashion industry that no one is really happy with the current solution. The current solution being either animal-based, coming along with all the problems that animal-based materials, but in particular fur has in terms of animal welfare. But then also the alternative did not seem to make people very happy.

And we're talking here about polyester or acrylic-based faux fur. That's a.k.a. plastic fur. So after talking to people in the industry identifying, hey, you have these two options and none of these two options make you happy. How about we create a third option, an option that's completely plant-based and even biodegradable as an end-of-life cycle scenario. And that's when I first discovered, hey, people are listening up. They're like trying to understand, ooh, how could we use that?

Like, how would that fit into our supply chain, for example? So from, I would say, conversations with these people, the most important part that I took away from my early weeks and month of research was, how can we make this fit seamlessly into a fashion brand supply chain? Got it. So how is it made? It's plant-based. So am I to believe that some plants are grown and then in some way processed so that they don't degrade and then are made into fur?

What's the actual process of making this? Yeah, thank you for asking. We're not able to dive too deep into the process, but at the moment we are using a a variety of different natural fibers that we then assemble into a fur-like material. And the finishing aspect or the finishing step is the most important one. That's also where our secret sauce lies. If you, for example, ever touch the fur of a dead animal, I don't say you should, but in case you would touch the fur of a deceased animal,

the fur is rough, the fur is very coarse, and only through this tanning process, the fur gets the shine, the softness, and the shimmer that it's known for in fashion. So we are drawing from a similar technology. We developed a similar technology to tanning technology, but specifically for plant fibers, whereas animal-based hair is usually keratin-based, our fibers are cellulosic.

Got it. But the process is similar. Got it. Yeah, because we obviously cotton, linen, these don't come from animals. And then you have hemp, right? So people are using hemp to make certain things. I guess bamboo is used in certain parts of the world to make clothes.

But I guess the question is, how does it not degrade? Or does it naturally degrade over time? I mean, obviously, it's not like an apple where it's going to degrade in a couple of weeks. But what's the, is there a shelf life issue because it is plant-based? Or is there some way to make it resilient? or is it using some of those more resilient fabrics, I guess? So a good comparison I always tell people is just imagine an organic undid cotton t-shirt.

We're not using cotton or any similar fiber, but just imagine a t-shirt like this and the way you would use it. You would probably wear it, wash it, dry it, and then keep it in a stack ready for the next time. The same can be done with our material. Our material does not biodegrade. itself or basically by wearing it or using it properly. But once this particular example,

cotton t-shirt would come to an end-of-life cycle scenario, then the material can be simply degraded in an industrial composting facility or even in home composting. Got it. And you don't come from the fashion industry. You do come from a chemical background or anything like that? What's your background to make you unique or qualified to do this? Yeah.

Well, what's the background that would make me uniquely qualified to create plant based fur? You know, that is one of the things in venture capital we talk about is sometimes it's good to have an outsider. So the fact that you're not a fashion person makes you an interesting person to do it because you can just look at the problem with fresh eyes and not having a bias, I guess. Yeah, we've, we've, yeah, to my, to my background, I'm, I studied agriculture focused plant agriculture. or plant breeding and second or I started a few things but basically in a nutshell it's agriculture

then biotechnology chemical engineering and plant-based bioeconomics as these like four four small verticals and they seem to work pretty well to invent something like plant-based fur as yeah there's

there's a huge bioconomic aspect coming into how we designed biofluff and there's chemical engineering coming in terms of how we processed the material. So let's talk about the actual cost of doing this.

How much does fur cost if people were going to buy, I guess, chinchilla or fox? These are animals that are specifically bred and then murdered, killed in order to make fur. Doesn't seem like that would be too expensive,

but there has to be some cost of processing it and I guess they have to get to a certain age in order to have the fur be viable. How much does it cost for faux fur? I think they charge per square foot. Is that how they do it in the industry per square foot or something? Then how much are you able to do this? Because economics does matter or it doesn't matter

because for a high-end brand, if it's Gucci or somebody or you're doing somebody high-end, they actually probably, the cost of the fabrics isn't that larger percentage overall to the cost of the item. So let's talk about the economic. of those, because economics do matter in some cases and they matter less than others. Correct.

Economics do matter even in, let's say, impact investment scenarios. Biofluff is not an impact investment. Our economics make total sense, and we're currently squarely between animal fur or the price of animal fur and the price of synthetic fur. I believe synthetic fur is sold by the yard. The yard is a weird measurement, but it's approximately 10 to 12 square feet. foot. So I would say material costs there very widely. If we start with very affordable polyester faux fur or plastic fur, the costs are probably more like one to five dollars per

yard. Whereas if we're going towards high-end fare, and with high-end fur, I mean, let's say, a combination of polyester and acrylic fibers to imitate a very specific animal hair, then the prices probably closer to $10 to $20. $1 per yard. And yeah, biofluff is currently right between these two price points being placed

exceptionally well for the new luxury material with fur, animal fur, of course, and being now canceled or basically... And some of these are incredibly expensive. Like, links, I think is the highest price in my research of all of these

They only use the belly of the animal, and they use 15 of them to make a jacket. So you have to kill 15 links, and I think it's thousands of dollars in materials. How would you say your material today currently feels compared to elite materials, sable, chinchilla, mink, whatever? And could a person tell the difference?

Fo fur, your organic plant-based fur, and then the real deal, murdered animal fur. So maybe we should start with our material first, because that's what I know best. Our material currently is from a hand-field perspective, and hand-field is really a test that people do in fashion or in the tanning industry to really assess a material. So on the hand-field test,

our material is currently as soft as comparable synthetic furs. and we have plants and we have experiments currently planned to reach the softness level of mink fur that's our target so the highest

the highest softness I think you mentioned sable before or yeah chinchilla fox all of that stuff comes to mind yes all of these are very

very very soft fur I believe female European winter mink is one of the softest I've ever I had to touch just to compare them to our material and it's still softer. It's still softer by, I would say, a long shot.

But then we're not competing really with animal fur because animal fur is going away anyway. Brands are already preparing to be completely animal fur free within the next few years. And I cannot speak, of course, for brands, but that's what we are hearing when we're talking to bigger brands and behind the scenes. So for them, the discussion is now

which plastic fur are we using or are we using organic plant-based fur as a replacement product? How do, I know this is crazy for me to ask, but if these things are becoming indistinguishable, and I would believe with science and technology, you should be able to

make fur that is better than in nature because you have the ability to change nature at a rapid pace, whereas nature has evolution or I guess you could do bioengineering on some foxes or chinchillas, but that sounds awfully expensive and probably would take a long time. So how does the market of a person walking down the street with a fur collar, you know, in New York, how do people know if it's faux or if it's

real or if it's vintage? Because there is a discussion today about, hey, if it's vintage, hey, that seems okay to buy it. Why would you throw it away? And so is there like some little logo they put on people's clothing or a way of distinguishing it so that people who want to signal please don't throw red paint on me please don't think I'm a horrible person I'm using yours and have you thought about that

yes of course coming from my personal background coming more from the people that are that say yeah maybe against fur and maybe throwing something this was one of the primary concerns when I started this

company like are we going to create something that people will not like because they will identify it with an animal. They will identify historically with what has been harvested from killed animals. And we designed this primary concern into the product from the very onset. So biofluff will be distinguishable from animal fur as well as from synthetic fur by doing a simple hand-field test. We are planning on having two product attributes, let's say being present in the material at all times, it's number one, a natural roughness or a natural, let's say, a natural hand feel

that is different from animal fur and also very different from polyester or acrylic-based fur. And number two, biofluff is completely anti-electrostatic. So this is one simple test that we recommend all our customers. If you touch polyester fur or any sort of faux fur, it will charge naturally. And if you rub it against your hair, your hair will probably be. standing up in the process, whereas natural plant fibers

do not charge. And this is also a handful property that people can distinguish, that you can use to distinguish. But there's no industry test. There's no industry test or standard. This seems like a huge mistake. Like, why doesn't,

why don't the people who've elected to stop using real fur say, if you see this logo on, you know, the lapel, right? When I get these nice ESAIA jackets, I have one of them. It's a really beautiful jacket. They put like a little logo on it so I can make sure people know that I have an

East IAA jacket. And then I spent two grand on or whatever cost. I think it's more, but I got on the discount rack. So shouldn't there just be like a little logo that's like a heart or something and lets people know, hey, don't throw red paint on me? The industry never came up with that, like a fair trade stamp or something? good housekeeping seal of approval maybe you could come up with that.

That's a really good question. Yeah. Maybe you should add this to our product features. I think you should just, yeah, get together with somebody. If it's an organic thing, you could make it like, I don't know, an Apple or something or a bamboo shoot or something, something, some logo to do that. So how do you go from making this as an experiment to getting your first customer? obviously these big brands in fashion do not want to be on the wrong side of history. I think you're pointing that out that they're kind of discontinuing it.

Maybe people in Europe or China or some other markets feel differently about this. I would suppose there's different cultural standards around this. So how do you go from this prototype, a very innovative one, to maybe becoming more industrial scale, right, in terms of manufacturing and how to get a partner to buy into this? I would think that they're open to new ideas, but explain how you go about that as an entrepreneur. If the idea itself is captivating and fascinating to industry players, it's usually easy to start a conversation about,

hey, what are you using now? Or what's the best and most sustainable material that you're using at the moment? And from discussions around what they are doing, there's usually some knowledge to be extrapolated from in terms of how we can design the new or the scale, or scale the process for biofluff. So for us, we had a lot of customer interviews and a lot of also interviews with industry partners.

And biofluff is currently not owning any facilities, but we designed the process to be completely outsourced to different key industry players across Europe, for example. So for us, it was completely key to understand what is currently done, what is the best practice for the current best material, and then to start from there to design our process around these parameters,

or even with it partially with these machines. And I believe this is something that biomaterial companies are sometimes getting wrong, because they're spending so much energy and creating a new process, a new innovative process to create something like, yeah, there are multiple biomaterials out there that are very, very cool. but it's then hard to scale

this material at an industrial level and no matter how high the quality no matter how good in material if it's not scalable at economic with specific economic values then brand partners will not buy in and so how did you get your first customer

you have a customer now I understand yes we are we're currently in co-development agreements with a variety of different luxury brands. A co-development is basically the brand assesses your material. They decide this is super cool, but not quite ready to be put on the market.

So they start a co-development with the startup, basically, and work with you to fine-tune specific product parameters. Great. So you're underway, and this is all interesting timing. People may not know this, but this year, California, became the first U.S. state to ban the sale of animal fur products. On January 1st, 2023, a law came into force that makes the production cell and donation of fur illegal. EU is also getting in on this.

20 other countries have voted to ban fur farming. Pretty, you got a lot of wind at your back in terms of if people want to have this solution. They're going to need an alternative. Yeah, and we're definitely feeling this dynamic or this drive basically from the brand side a lot because brands that were not open to the solution a few years ago are now, hey, how what's your stage? Can we steal with you? Can we buy your material? How ready are you to go to market?

So in this particular case, I would say fur is the only biomaterial or the only, let's say, alternative, no matter if we're talking about, about the alternative proteins based or other biomaterials that is outlawed on a legal basis by states like California. And I'm not sure, but I've heard that also New York has banned the import and the wholesale of animal fur on the same date. So January 1st, 23. And you can do this for $20 a square foot or something, or you can produce it for less than that, but you're going to sell it for 20 bucks a square foot or something like that. So a jacket it takes 10, 20 square feet. I'm not sure how much waste there is when you make something,

but if you were going to make a full-on fur coat out of this, what would the cost of the materials be? Is that 10 feet or 5 feet square feet? It really depends on the size of the garment, of course, but we are currently working with brand partners to create, let's say, simple showcase garments for fashion, for runways, for runway collections. and we're estimating between 10 and 20 square foot per garment.

So 200, 400 for like a full-on fur jacket, which means if you were to just do the fur hood or the inside or something, it could be less to have it just around your lapel or something like that, which is quite reasonable considering doing that with chinchillas or foxes or whatever would be low thousands of dollars, probably, in all cases. So you're going to be half the price or something or a third. heard of the price. Is that what you did?

We try to be, yes, we're trying, so it's really hard to compare our material to the price of animal fur, because animal fur is auctioned by, by annually in, I believe in Hong Kong and in Denmark as well. So the fur price is set for every season,

for every fur type. Yeah. This is also a big disadvantage. When brands are working with biofluff, they know the price, they can plan ahead, and they really know how much biofluff will cost them. season, next season.

That's crazy. Fur is auctioned off. And yeah, I guess they do it by harvest or whatever, so it's like a crop in a way. And it can vary. That means it can vary based on demand. And if people are young people do not want to wear this, this is going to, you know, paradigm, like they say, paradigms don't die people do. The paradigm of people willing to wear this, obviously boomers. you know, and the greatest generation

they wore fur carts. I remember my grandmother had one. It was a prized possession. My mom probably would be less inclined. My wife would probably be not super interested. She's Gen X. And then I think millennials in Gen Z would have zero interest in this.

So this is basically the tail end of the fur industry. It's ending either way. It's really if consumers are not purchasing this product, industry is just very fast. And the fur industry is going down. in many respects. That's also one reason why we're not marketing biofluff as

let's say a fur, but we want to have it playful. We want to have it as a luxury element. We can also envision it in many fantasy colors, recreating, for example, fantasy beasts or other fantasy animals that never existed, but we can play and fine tune our platform.

What's an example of a fantasy animal? You're going to do like, you know, unicorn fur or you can do like our favorite is the unicorn fur that has never been harvested in nature but biofluff is absolutely able to recreate unicorn fur in its precise texture physical, haptical appearances and yeah. Fantastic. And so were you able to raise money from this from traditional investors? Did you go to the emerging sustainability, ESG climate type investors?

seed funds because material science kind of falls in between a lot of different venture fund mandates. So I'm curious how you're fundraising one as an entrepreneur. And how did you frame it for them? Because it's hard to know, you know, this isn't software, so it doesn't necessarily have the highest gross margins like software does. And it requires a lot of physical research and production. So were you able to get venture capital is interested in something as physical to produce like this? Biometrials are always a hard sell compared to software, for example. But in this case, in the fur case, the legal trend globally is just pointing really clearly in one direction. So we were able to get venture capital money on board last year.

We've raised half a million last year to create this early industrial prototype. And we're now raising a second round around 2.5 million to really scale this industrial prototype to a full-scale industrial manufacturing plant. amazing. And are you doing this in the Bay Area? Where are you basing this plant at? Will you be making this in the United States? Are you going to do it in Mexico or in Asia? Where are you planning on putting manufacturing for this? Our goal is to, or our beachhead market is the European luxury market. So our typical brand partners are located in Paris or in Milan. And for these brands, having worked with them in the past, for these brands, it's really, important to get European made raw materials. So they're able to, or they're willing to pay a premium, for example, to get Italian leather or French fur. So we're following this trend and we're, this is basically what biofluff is doing all along.

Like we're trying to understand industry trends. We're trying to understand what do brands like. And then we adjust our process accordingly. So at the moment, biofluff is 100% made in Italy. Wow. So if you can say, even though it's not actual leather, it's faux and it's organic, the fact that you can say it's created in Italy will create that aura and be part of that ecosystem and be part of that rich tradition in Milan.

What a brilliant idea. Wow. So you're literally trying to be in sync with their ethos to make it easier for them and remove friction. See, you're a smart founder. I got to give you a little credit. you're not trying to change the game on the field. You're not trying to change the rules. You're trying to just slide in there

and just make it a very easy, breezy option. They can order leather from Tuscany or wherever it comes from in Italy. Or you can order, you know, this new, you know, bio material also made in Italy. And I bet you the Italian government, which is super pro entrepreneurship right now, would love to invest in your next round. I think that's where you'll get your next investor. So are you living in Milan now as you build this company? I am currently living in the Bay Area, but I'm in Milan every other month.

Wow, we hate you. Italy is a great place for manufacturing. It is also a great place to raise money and build, yeah. Well, we collectively, I speak for the entire industry, hate you for having figured out a way to spend so much time in Italy for your company. Absolutely brilliant. These biomaterials are going to be a big thing, huh? We're going to see this in all aspects of our lives, new biomaterials, just really changing the world, huh? Yeah, it's not, so many brands are not putting this, let's say, on their website or somewhere,

but a lot of big brands we've spoken to have internal agreements and also agreements between brands that are, for example, forcing them to switch to a completely plant-based, or at least to a completely recyclable materials by 2030. So, yeah, there's a huge potential for biomaterials, especially biomaterials replacing animal products or replacing current plastic products. Amazing. All right. Well, listen, I really appreciate you sharing this vision. And I assume you're hiring and then you're always willing to take meetings with investors if you're a founder.

So where can people reach you or learn more about what you're building? The best way to reach biofluff is on our website. we have a type form just to fill in your information and we will get back to you as soon as possible. And it's bio-dashfluff.com so B-I-O-Dash-F-F-F-F.

Yeah, B-I-O-D-F-F-com and I assume your first name at bio-dash-fluff.com. We're able to get the first name at your own company? You're Martinette. All right, everybody. Great job.

We really enjoyed hearing about how you're going to change the world and reduce suffering. and make things more sustainable, which is absolutely good on you, and I hope you make this into a very vibrant business. That's always the challenge in the space you're in. Everybody loves a feel-good story,

but it's got to be a high-margin business too. So I hope and wish for you that you keep grinding on, making it a high-margin, highly profitable enterprise so that you get shareholders really interested in backing this and continued success to you, Martin. Thank you, Jason. Yeah, we're doing a writer right now, and it's really about changing the,

It's hard to change the world. So focusing really on one thing at the time is key for us to bring Belf to the market. Thank you for time, Jason. It was great talking to you. I really like your focus on going high end, by the way, just for entrepreneurs. A lot of entrepreneurs, especially the ones who want to change the world or do good in the world, they always start with trying to help the less well-heeled consumer. They want to go and try to help everybody.

They want to create the Uber pool or the lift line, the most affordable service. The problem with that is the most affordable service takes a decade to get to, and you need to scale and learn and optimize manufacturing or software to get there. So in the case of Tesla, they started with a $170,000 roadster, went to a $120,000 Model S, and then a Model Y and the Model S, the Model 3 for $50,000 or $40,000 now, and they'll be obviously another car. That'll be even cheaper. Uber started with Lincoln Town cars. Extremely expensive, only for the top 5% of society. Then they went to UberX, okay, for 50%

of society, then they went to UberPool for the bottom third of society that would normally be taking public transportation, but hey, for a dollar extra, $2 extra, they could take this shared ride service. This is so critically important, and you understand this natively. If you had started trying to

mass produce fur, for, you know, kids in school or for emerging markets, or frontier markets, you would never have the margin to invest in your manufacturing process. You need to start high end. You need to have the LVMH, Gucci, house of whoever, buy into what you're doing, Chanel. Therefore, they can pay a high margin. They can sell $5,000 jackets, $10,000 jackets.

You can make a little bit of money and then really invest in your technology. Correct. Yeah, it's all about identifying a problem and then identifying an appropriate B-Chad market with the proper margins. Yes. And the Vichet market, you picked perfectly high end. And here's the other genius of what you're doing. Just like when Elon created the sports car, he's like, well, the sports car is the most desirable car.

What's the least desirable car? Probably like a two-door Honda Fit or something. I don't know. Like a or maybe a pickup truck, you know, like a utility car. And those came, those haven't even come out yet. So you start with the high end, two-seat. roadster sports car, high-end sedan, like a 500 SL Mercedes. You start with that 7-series BMW competitor, not with a two-door hatchback for 25 grand.

You'll get there. But you start with the high-end, high margin. Beachhead, so important. Great job, Martin. And we'll see you all next time on This Weekend Startups. Bye-bye. Thank you. Thank you, Jason.