This Week in Startups - VenturusAI's instant MBA & Samantha Wong on identifying soon-to-explode startup markets | E1777

Episode Date: July 14, 2023

This Week in Startups is brought to you by… Embroker. The Embroker Startup Insurance Program helps startups secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance today at Embroker.com/twist. While you’re there, get an extra 10% off using offer code TWIST. Vanta. Compliance and security shouldn't be a deal-breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. TWiST listeners can get $1,000 off for a limited time at vanta.com/twist Superside. Design and creative are crucial for growth. Tech companies like Shopify, Amazon, and Meta have found the perfect solution: Superside.  Get quality design at scale without breaking the bank for your startup at superside.com/TWIST * Today’s show: VenturusAI founder Emanuel Ciciu joins Jason as he dives into the origin story of his new startup before talking about building vertical AI solutions (1:30). Then Blackbird VC's Samantha Wong gives a presentation at Angel Summit about identifying soon-to-explode startup markets (41:53). * Time stamps: (0:00) Emanuel joins Jason (1:30) VenturusAI origin story (5:20) The evolution of prompt engineering (9:09) Embroker - Use code TWIST to get an extra 10% off insurance at https://Embroker.com/twist (10:23) The true cost of building on top of a LLM (12:56) Building vertical AI solutions (18:15) VenturusAI demo (23:36) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist (24:42) VenturusAI path to 100 customers (29:51) Next steps for VenturusAI (35:40) Jason places a bet (40:28) Superside - Go to https://superside.com/twist to get $2000 off with Superside's Startup Accelerator package (41:53) Blackbird VC's Samantha Wong on identifying soon-to-explode startup markets at Angel Summit * Check Out VenturusAI: https://venturusai.com/ Follow Samantha: https://twitter.com/holasammy * Read LAUNCH Fund 4 Deal Memo: https://www.launch.co/four Apply for Funding: https://www.launch.co/apply Buy ANGEL: https://www.angelthebook.com Great recent interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland, PrayingForExits, Jenny Lefcourt Check out Jason’s suite of newsletters: https://substack.com/@calacanis Follow Jason: Twitter: https://twitter.com/jason Instagram: https://www.instagram.com/jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

It's important to look at how we'll take JAT as an example because we've been seeing all these changes throughout time now and we can see how better it is, let's say, four compared to the three version and so on and so forth. So I would expect five to be way better than four is. And if you're saying about seven, I don't even know what seven can build. We talk about building. I think if you're smart enough, you can build an. to build an entire product for you. It just depends how you want to look at it.

This week in Startups is brought to you by Mbroker's startup insurance program helps startups secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance today at Embroker.com slash twist. While you're there, get an extra 10% off using offer code twist. Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for.

for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for unlimited time at vanta.com slash twist. And Superside. Design and creative are crucial for growth. Tech companies like Shopify, Amazon, and Meta have found the perfect solution. SuperSide. Get $2,000 off with SuperSide's startup accelerator package at superside.com slash twist. more important and elitist and that they understand business better than founders who create these

things. So I am a little bit suspect. However, these things are actually valuable. There are any discussion about a business and analysis of a business while you're building it, if you're considering building it, is great because it lets you build a mental model. And so we did a demo of this product and it got an incredible response from our audience. So I told producer Nick, by the way, did a great job reading the news just yesterday on this podcast, or this week on the podcast, depending on we publish a show. He did a great job. He'll be coming back to read more news. I said, hey, producer Nick, let's get this kid on the pod. This kid is Emmanuel Kucho. Am I pronouncing your name, correct, Amanda? Yeah, that's, yeah. All right. So you saw our discussion of it. Tell me everything. When did you come up with this idea? And how long you've been working on it would be a good place to start and why did you build it? Yeah, sure. So I came up with the idea based on the studies you're just mentioning, right? Most of these things you see in the standard report are things you learn in the business school, which I've been true. And I realized that would be a great benefit for everybody to be able to get this information without having to go to business school.

Not only to learn how to do it, but I think it would be best if they would just be able to have at least a framework. using all these answers. And because we have LLMs at our fingertips these days, I came up with the idea, why don't we build a tool that allows entrepreneurs to generate all this content in a matter of minute and be able to go through it and try to validate their ideas

before they start working on the actual product. Okay. So you have this idea. And people can pay 20 bucks a month for chat, GPT, 4.4.4. or they can use Google's barred and they can go to one of the dozens of prompt sites that are out there. And these prompt sites will give you all kinds of tips on how to frame a question or instructions, I would say, it's probably better. There prompts are basically instruction sets for chat chp team. And there's a lot of different techniques. And I thought this would be a great way for us to introduce the audience here at this week in startups to advance prompt

engineering because my gut tells me what you've done here is you looked at something like a SWAT analysis SWOT SWAT analysis and you said how would I prompt chat GPT to analyze the strengths weaknesses, opportunities and threats of this business. That's SWAT. Am I correct in that you've spent a hundred hours banging your head against the wall creating super prompts? 100%. I probably wouldn't say 100 hours, but probably if you think about optimizing everything to the point where it's now,

we might get there. So you took 25, 50 hours of prompt engineering? Yeah, yeah, around that. So explain where you started your prompts for something like SWAT. And I had given the example of a school that teaches you venture capital. And that, I don't know if you saw the episode,

I'm sure, your friends must have sent it to you. So I just, and it gave me a really nice SWAT analysis. What kind of prompts would, you know, a neophyte put in to try to, you know, say, you might just say, do a SWAT analysis on the following one sentence description of a business. But you got more granular. You probably said, hey, what are the strengths of this business idea? Tell it to me, you know, as if I was an MBA or a business analyst at, you know, Gartner Group. I don't know how you did it.

But so maybe talk a little bit about the. evolution of your prompts, what worked, what didn't? 100%. So when we started was, I basically used every single framework that I managed to get from my business goal. And I just grabbed a business book and I'm like, okay, what do we need? We have a framework already built by people that worked on this before. So going back to SWAT was, give me a SWAT analysis.

What's the output of that? The output was quite brief, right? So going back to prompt engineering, I came up with the idea, hey, what if I say I'm a well-versed VC with over 20 years experience in SaaS products? So how would that prompt look like? And we tried that. And again, it was a bit more complex, but it was not reaching to what exactly we're looking for. And we did a bit of engineering hacking, if you want to call it, where we came up with. the concept that LLMs have been trained on all these books already.

And again, asking him to be a world first VC with 20 years experience, it doesn't mean that that VC in particular, whatever that instruction would mean for the LLM would mean that he can cover everything. So what we decided to do is to try to use the LLM with the information we have to improve on its own prompt. So we... So wait a second. You asked ChatGPT, how do I make a better prompt?

The easy way, yeah, probably at some point. To some degree on some aspects, not all of them. Some of them are a bit more complicated, and we've been working to give them, let's say, for a particular thing, I'll talk about finances. I'm like, hey, finances, I'm actually interested in the following topics.

And these topics are usually things you'll get from books. Like, before you've very, validate your idea, you would need some sort of financial projection, you would need to understand how much money you will initially need to spend, to be able to spin it from ground up. Would you require some funding or not? All this kind of criteria, as we mentioned them from the beginning, and then we're just looking on how we can continuously improve on that. And at some point, we got to, again, you can always improve on it more and more, and I think

the more time you're going to spend in improving the prompt, probably the better it's going to be. But at some point, we decided that it's good enough, and we now want to add more value for the money and be able to build on top of it. So this is probably the main reason we didn't think about building an LLM in the first place, because we're like, there is already so many companies, like big companies doing this that have been invested.

They have a lot of investment. They are investing. So you don't need to create a language, I'll use chat GPT4, I assume, or chat GPT 3.5 or are you using some other one? We use both, 3.5 and 4. And why would you use both? Are you seeing better results or it's just for redundancy or cost or something? Technically, four, it would give better results most of the time, but we also want to optimize

on cost. It's important, like our goal is also to make this cheaper on a long run and be able to offer it to everyone. Our initial idea was to try to do this like a B2C thing, but we had a lot of companies signing up from the standard version. And when we decided to go with the advanced features, we looked into being able to put them all through JetGPT4. Listen, I work with super early stage companies at launch, like literally year zero.

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startup package in broker.com slash twist. That's eM-B-R-O-K. k-e-r.com slash twist and use the code twist for 10% off. Okay, let's get back to this amazing episode. What does it cost in terms of if I wanted to do one or per hundred analyses? What does it wind up costing you in GPT 3-5 slash 4 cost just roughly? Is it a dollar? Is it 10 cents? Is it one cent?

It depends. First of all, it depends on a lot of criteria, right? we know that LLMs usually use some token methodology in order to charge you. And usually that is based on how big the prompt is, how big the response is going to be, and also how complex is going to become. At the beginning was probably roughly a dollar. But then we... To do the complete analysis, which was a lot of prompts, I'm assuming.

Yes. And then we look on how we can optimize that even more without trying to affect by any means the actual prompt. The response is really important. And we don't want to affect the quality of the report, but we want to be able to give this as cheap as possible. So yeah. A dollar is pretty cheap and you've got it down to less than that now.

And then I just saw, is it Claude the other one that just came out? that's one quarter of the price or one tenth of the price. Have you played, is it Claude? Is that the name of the one? Yeah, Clod too, yeah. Yeah. So, Claude just came out. I'm assuming as a founder in the AI space, you immediately went and checked it out.

What did, uh, what was your initial impression of the new Claude? Is it called Claude 2 or something? What is it called? I think it's just caught two. I don't think it's way out. So maybe to the best of your ability, like yeah, describe it. It seems that, at least from a business perspective, it seems that it can do something. a little bit better than GPD does it at the moment.

This is Anthropics, right? This is the company Anthropics. Yes, yeah. But I think, again, it all depends on how you're going to look at the entire product on a long run. And why do I say that is if you want to just build a prompt that would deliver your certain content, probably you'd be able to do it at some point with most of them. because I'm, again, I'm using a logic assumption right now. I don't have anyone in Open AI or Anthropics to confirm that to me,

but I'm guessing we all use the same information to train all these LLMs, right? So. Yeah, that's a controversy in and of itself. So you start this business and I guess the criticism of some of these businesses built on chat GPT4 or the criticism of businesses like this is, Oh, can I just use it directly in chat GP4? So you and I both know that there's a lot of accruedramon and features you can build on top of the chat chapti T responses

that chat chTP will never do. So maybe you could explain while you're convinced this is a good business idea and that people will want a more verticalized solution that you're creating with bells and whistles and details that maybe aren't available in chat deep. Or do you think an AI eventually is going to get so good that chat chad cp4, six or seven or Claude, six or seven, or barred, six or seven, are going to just do a better job than any startup that builds a wrapper around this up? That's a really valid concern and a great question. I think it's important to look at how

we'll take JGPT as an example because we've been seeing all these changes throughout time now and we can see how better it is, let's say, three, four compared to the three version and so on and so forth. So I would expect five to be way better than four is. And if you're saying about seven, I don't even know what seven can build. We talk about building. I think if you're smart enough, you can build an AI to build an entire product for you. Just depends how you want to look at it. But I think you get you'll get to a point where you could build, they call it GPT agents, probably you've heard about it. Yes, explain to the audience, GPT agents. Yeah. So GPT agents would be, a GPT agent would be a piece of software that would allow you to instruct

GPT different instructions based on the agent. So you'd say, hey, I need a developer. Then you'll instruct that agent to be a developer and act as one. Then you'll be, hey, I need someone to make some research for me. But then it will be how obviously you would need to build on top of it more things like, I need information from search engines. We know that at the moment that's really difficult to get. So you would build on top of that to be able to allow the agent to be able to get that information from you from a search engine,

and then feed that back into the LLM and be able to give you a better or more accurate answer. Yeah. And so this concept of role prompting is saying, hey, you're an MBA or you're a teacher at InSeed or Harvard Business School. you've studied the works of and you give a list of the works of 10 you know classic books on business analyze this business through the frameworks of these 10 people you could actually start to get really interesting things going here and um that is something that is going to be really interesting you didn't feed it in um like the works of major authors or thinkers and business cases because Harvard has all these case studies.

They take those very serious. Stanford has case studies. They're considered like very important IP. It'll be amazing if Stanford creates an AI or Harvard creates an AI of all those case studies. And then they say, hey, go through these case studies and use what you've learned there as analysis for this. But you've got to assume that ChachyPT sold that. I think OpenAI probably stole all that stuff already. I wouldn't know what to say.

Well, they did an open crawl of the web. seems. I mean, we'll, we'll get this information from the lawsuits eventually, but they clearly went out. If it's answering these questions so well, yeah, I mean, it probably went and took the full works of all of these authors. And then the other thing that's happened, correct me if I'm wrong here, is, you know, on the web, if there's a great book like good to great by Jim Collins, there have been 10,000 blog posts, articles, summaries, cliff notes, et cetera, spark notes about that book. There's been 10,000 podcasts. about that. So if you were to read those, those might be better than the source material

because they have a level of analysis on top of them. So the truth is, even if you wanted to protect the IP of Jim Collins's works, good to grade, etc., you would have all the people who have analyzed it and done fair use criticism of it, that you could just leverage that. So it's kind of interesting how this is all unfurling. You're spot on. And I think probably before we see more action on the GPD side, probably will see companies like Mind Journey being able to explain how they design all these images on the spot, knowing that certain prompts would actually even show you different copyrights

material from where they got inspired from. And this is how everything started in the first place. When they were generating all these images, they were seeing that there are some watermarks in them. And they're like, it makes no sense. How can it be a watermark if it's generated by the AI, right? It's hilarious. Here's my favorite part.

And if you missed the episode last time, I'll just share my screen here really quick. So this was when I asked the question. And I said, a school to train people to be venture capital. So I have a lot of people who want to come work for me for free. And I decided, I'm going to create a school to become an associate, basically. To get a job as an associate will be the, and it's basically, a Kaufman Fellows competitor, if you know that program, which is $80,000 for two years.

So my idea is to make this like 25K for a year full time and you come work in person with me at my new incubator. Maybe I'll have 10 people do it. And all you do is work with me and my team directly meeting 15 companies a week, sitting in on the investment team meeting. And then I'll have 10 people paying me to go through 15 companies each a week. That's 150 companies a week. this is some like Tom Sawyer, Huck Finn stuff, like paint the fence.

That's a lot of fun. You know that story? Are you aware of that one? I, no. There's a great story in America. I think it's Huck Finn. He's painting a fence. He's got chores to do.

And these kids come along and they're eating some apples and one of them's got like a toy. And they caught and said, what are you doing, Huck Finn? And he says, or Tom Sawyer, I can't remember which one. And this is like an adventure novel for kids. And so he says to the person with the apple, yeah, this is the most fun you can have on a summer day. If you'd like to whitewash the fence and paint it, it's one, the cost is one apple. And he says, oh, is it really a lot of fun? He's like, it's the most fun I've ever had. He gives them the apple. The kid starts painting the fence. The other kid has a toy. He says, yeah,

this is the most fun. If you let me play with your toy while you're watching the fence, I'll give it back to you after, but you can wash the fence. Then all of a sudden, he's sitting there eating an apple playing with a toy, and they're doing his work. And the lesson there is like framing. Like, hey, you know, this could be drudgery, it could be a chore, or it could be a lot of fun. And it is actually a lot of fun to paint, right? So, um, Yeah, that's the story of like Huckfan, etc. So anyway, this is my idea. And then here's what your report said.

Venture Capitalist Training School, Comprehensive Analysis, feedback, industry insights, SWAT analysis. And it said strengths, unique business idea with limited competition in the market. That's true. There's really only one I can think of that actually is a school for venture capital. Yeah, Tom Sawyer by Mark Twain, not Huckman. Unique business idea with limited competition in the market. It's true.

Taylor training program can address specific skill gaps in the industry. That's very true. like you went to business school, did they teach you anything about, you know, startups and investing in companies or evaluating business ideas or is it kind of like abstract?

Usually, I guess, again, I speak from my experience. It depends where you go to business school. But I went in the UK. So, so the Canterbury Research University.

Cool. So we basically, they start with some, basics and usually they try to bring different people that made already companies and startups to talk about all these things and how they validated all the books or all the frameworks from the books throughout their businesses in order to achieve that. Great. Potential to establish strong industry partnerships for internships and job placement,

that's true. And it's like really an amazing analysis and it was tight because I'm assuming you give it a very confined, give me a 10-word answer, give me a 15-word answer maximum, is that right? That's really difficult to tell LMS because we have to explain everyone that LLMs don't really understand. Like, they don't have an understanding of exactly what you mean. So sometimes if you say, can you write me a thousand words essay? He might make close to that, but it doesn't mean he's going to do a thousand words.

Usually we don't specify certain things, but we specify what we want to see. So in marketing strategy, we want to see this certain points which are mentioned within our problems. And so recommended marketing platforms, game changing. It was just a really great analysis. But the best part was it said books to guide you along the way. Venture deals by my friend Brad Feld, the lean startup by my friend Eric Reese, both friends of the show. And then finally, Angel, my book. And I thought that was pretty clever.

So I guess at the end, you say, hey, what book should the person read? or you say what topics are mentioned here and then search for further reading? How did you get that prompt? So when we were building the standard report, I thought it's really important people. When they start any venture, I would always recommend start with also a book. While you build this, try to read something new. And what we were looking at is I basically went to what the prompt does is based on the prompt, we want to be able to deliver you books that are specific to that prompt you wrote.

So if we're going to write, I don't know, going back to what Sonny was saying, artisan water from icebergs. I know he mentioned ice caves, but I know that there is a company that does artisan water from icebergs. They will try to feed up information about people that are basically doing things with businesses with water, with, I don't know, bottling water. What does it take? Yeah. And how would you do that?

And we wanted to be able to feed that as a validation of someone that actually does it. It's absolutely fascinating. If you're a SaaS or services company that stores customer data in the cloud, then you need to be, uh, SOC2 compliant. You knew that from a third party. And you need that third party to close big deals. And if you want to get compliant easier and faster, you need to use V-A-N-T-A-N-T-A. Vanta makes it so easy for you to get and renew your SOC2.

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Listen, it's a hard year. last year was hard. You can't lose those major customers because you don't have your compliance dialed in. Just work with Vanta. Get your compliance automated and tight and tight is right. Lock down those big deals. Here's the best part. Vanta's going to give you a thousand dollars off. That's 10 hundies. Get $1,000 off at vanta.com slash twist. That's vanta.com slash twist for $1,000 off your sock, too. So you got a couple of hundred people to pay a 20 bucks a month for this already? Yes. Amazing. So you're off to the races. Great. How did you, just to talk about marketing here. Listen, you got picked up on this weekend startups. I'm not sure where Sunny found it,

but you somehow got the flywheel going here. How did you get people aware of the product and to try it? How did you get those first 100 customers? Because the first 10 and the first 100 are the hardest, of course. A hundred percent. When we build the initial standard report, there were no cost attached. So you couldn't, there was no pricing model. There was nothing you could have paid for. Everything was for free. And the reason we did that is there is only as much information. I can fit in within the AI, but what I'm looking for is actual feedback coming from people.

So we looked online at different things, and again, I've been trying some startups before, and I have some advertising experience. So I just looked at the platforms that I found to be really useful for feedback. And somehow we came up with the idea that Reddit would be a good start, mostly because people might be a bit more direct,

on Reddit than other platforms. You're referring to the fact that on Reddit, people are brutal. Exactly. Trust me, if you've ever been to the unofficial all-in subreddit, it is disgusting and brutal.

Really savage. Just horrible. Yeah, no, it's a difficult audience to deal with, but I think that's what intrigue me. I want to get difficult people to tell me how bad it is.

How stupid you are. Exactly. I wanted to get that. I wanted to just... Did they get your photo and tell you that you're ugly and that you should shave? And that's what they did immediately with. They're like, you're too fat. And you're...

You know, it's hilarious. And so they savaged you. What was the best feedback you got during the savaging on your sub... And which subred did you go to AI subredat or startups, entrepreneurship? Only entrepreneurship startups. Sorry, entrepreneurship subredited. So there are few of them. that I tried

probably one that we got a lot of interesting feedback was business ideas that is subredited just for that where just people test things and try to get like people just come with their ideas and say hey I'm trying to test this what do you guys think

and most of the time you'll get actual good insights people actually spend time to read that and give you really really good feedback and we got a lot of feedback that we didn't expect we're going to get right away some people were like really stoked with the product. Some people were like, hey, I can go there and replicate this. And I'm like, yeah, I'm glad.

That was the whole point. I want to expose this so people can be more knowledgeable about business, which was my main goal from the beginning. And basically, we started getting, I guess, 20. In the first week, we have like 20 signups a day, which was great. I was hoping that if we hit 30 signups a day, I'll be really, really happy. And we did that for like two weeks, I guess.

And then at some point, someone on social media picked this up. And I remember waking up in the morning. And we got like 500 signups in a day. And I was like, yeah, it was great. But then what we're looking to see what we can do next, because I was interested to get those people's feedback. Like, it's amazing they can use the product and they can test it, but how they feel about it,

how can we get people to give us their opinions? And basically that's why we decided, hey, let's open a Twitter. Let's have ways for people to reach out to us. Like, we didn't know how quick is. There's a cool business idea subreddit. I see that's where you posted. We just did a quick search while you were talking. And so I didn't know that subreddit exists.

I just joined it. But I love that idea. And then there's entrepreneurship right along. Wow. Yeah, there's some good subreddit. I've been in the entrepreneurship and the startups one. It's pretty cool, yeah. I mean, I tried to post on some of them, but as you're saying, everyone is brutal there.

I got removed several times. And because I respect everyone, obviously, I was not trying to push again. So when we managed to get, when we understood how every community works, we then started reaching out to moderator, say, hey, would you mind if we post this thing? Is this something you guys would find interesting for your community? Actually, with business ideas at some point, I even reach out to the owner and I said, hey, I know people are posting here ideas. Would you think it's useful if I write the Reddit bot that would pick up their ideas, put it, spin it into an LLM and then give them their report for free.

I'll do that for free. Just let me build it. And after some discussions, they were happy for me to build that and actually did it. So at the moment, I think it should be still live there. And if you write the prompt, they would give you a fee. So where do you, where do you think you're going to go with this? Who you, for their first hundred customers, is it entrepreneurs? You said businesses were buying it to do analysis.

So that's kind of cool. So it's strategic business people are used buying it for their company for 20 bucks a seat per month or something. How much you're charging? What's your plan to roll this out? So we have two pricing plans. One is obviously the subscription that I wouldn't say most, yeah, most of people are using it. But we have half customers.

that are subscribed and the other half are pay as you go. So you can always just generate a standard report for free. And if what you read, it's useful to you, you can just click on one of those other advanced features and just convert that into an advanced report. And that would be just 10 bucks. It's not, you don't need to subscribe to anything. You can just get that and use it as, as you like.

I mean, I just love the idea of also having pools around the results. So if in the advanced, version, I'm just going to jam with you here for a minute, when I look at the results, I immediately had questions in each of the subsections, and I had feedback to give it. Like, I don't believe that this is correct. Or like, you know, who are the competitors to this? Or how would a person go about learning to be a venture capitalist, right? If they didn't, if this school didn't exist, right? So I think there's like jumping off points where if I had a team of five people in my venture firm, or if I had a team of five people in my strategic

planning group, you know, at my bigger company, a mid-sized company, or our innovation group at a corporation SAP or, you know, Salesforce had some innovation group. They could really be doing this, keeping it private, but then having comments around the results and then, you know, kind of dipping into second and third level prompts and threads. So I see it as like a jumping off point, you know, each of those sections you could kind of keep jumping off of. So I see you almost as like a brainstorming notion or coda for business ideas. That's like single purpose for that. So I really thought it was interesting and a really good start.

So I believe you can get this to a thousand people. And I think there's corporate people who would pay, you know, $1,000 a month for a corporate account, $12,000. And I think you'll get there pretty quick, actually. Do you have any big customers like that who are paying $10K a year? No, not yet. And to be honest, I would need to look into all the legalities

before we can manage to talk about any companies that actually use the product. What do you mean by that? I mean, on the show here, yeah, I'm not having to name the company. I was like,

I'm just curious if a company you should never disclose that without them giving explicit permission to be on your plan. Exactly, exactly. On your customer page and give you a testimonial. But I do think there's, I think, like,

giving out the free, one free is great. and giving out one phrase great and then going from there. 100%. So going back to the advanced features, you mentioned something earlier. I want to point on that. You said that you're looking to some of those things and you are not sure those things are accurate. And I agree with you.

I can take one of the, so on the top of the website on the Navarayu, there is a thing called report examples where all those reports are run by us. They are not public reports generated by any of our users or customers. None of their reports are being published anywhere. So all these reports are best for individuals to come in and kind of test the waters before to have to pay anything. And I'll take an example report here. We some month, I think two weeks ago, we did one for a 2,000 square meter terrain outside of Strasbourg, suitable for go-car tracking. and the beauty about that is in finances,

it came up with an estimate amount of $237,000 to be able to open such a carting. But because I love carting, I love carts and cars in general, I kind of invested some time to figure out every single detail of it to the point where is it how, accurate these numbers are. And it all depends on a lot of criteria, such as, hey, we talk about, let's say, facility setup and construction here, it says it's $150,000, which would include the track spectator area and a snack bar. A spectator area could be like 20 people or it could be 200 people.

Yes. Right? So you need more specific details there, yes. Exactly. And this is where we realize that, hey, if you feed as much information as possible to the prompt, it's going to take that under consideration. So when it's going to build the financial stats, is going to think about all these things. So when I did again a report where I said, hey, I know that a kilometer of tarmac could cost X amount of money in Europe, especially close to Strasbourg, because again, there's no point to bring tarmac from the US unless it's extremely cheap. we realized that it might be a bit more expensive.

So in the end, the $237,000 was like the minimum that anyone would need if they decide to build a track, basically. Yeah, I mean, this is going to, this is, I mean, if you think about everything MBAs do, a language model is perfectly suited for that, any kind of consultant. And it's going to give you ideas much faster than you can ideate. It's going to give you all the corners and pockets. stuff you may not know. And it's going to tell you where to look for things, right? And, you know, just even putting in a business plan and saying, what did I miss? Could be amazing, you know?

A hundred percent, I totally agree. All right. Let's talk Turkey here. You seem pretty smart. And I'm an angel investor. You may have heard. Of course. You've raised no money for the startup.

This is just like a side hustle project. Is it even incorporated? It's not. We... All right. So you got a friend working with you on it or something? thing, it's just a couple of you, or what's the story? It's three of us.

Great. Two of us basically engineers and the other one is a marketeer. That's all the communication. Three people's great. Three co-founders, great. So here's what I'd like to do. I'd like to work with you on this product because I think it's meaningful and it's kind in my wheelhouse.

Help you promote it. Have you come to our accelerator? Give you 100 grand. Sign the paperwork today or tomorrow whenever you, and to get a Delaware C corporation. and let's build this into a unicorn. Is that something that might interest you? 100%.

Okay, great. So when we get off the call, I'll put you in touch with Jackie Deegan and Andre, and they'll tell you about the accelerator when the next class is happening. And as quick as we can get you going, we'll do a little mini diligence, make sure that you didn't steal the coat,

and you set up a company, and you do IP assignments, and everybody gets their equity, all the standard due diligence things, you can just put into your chat sheet for what you're come up in diligence, we'll give you a list of all the things we'll ask for. But I really love what you're doing. And I think it's really fantastic. The launch accelerator is virtual right now. We do one week in person at the beginning and the end. And eventually we'll go back in person

when I get the space set up in San Mateo here. But for now, I love what you're doing. I like to place bets. And I go with my gut. When I saw this, I thought the product design was exceptional, well conceived, and you've got product velocity, and you got multiple founders. And you clearly have some sort of what I'll call the X Factor as a founder. I think you're pretty clever. So let's see if we can consummate this as quick as possible before this episode gets published and other people start making you offers. I need to be the first investor in companies. That's my mission. I want to be the first fund in and the first fund to 10% ownership. Those are my two goals for our fourth venture fund. Okay. I really appreciate it. Thank you so much. We'll do a virtual handshake here.

Pending due diligence. There it is. Give me your virtual handshake. Okay, wait, I got to do the other way. Hold on. Here we go. Virtual handshake. No, that way. Here we go. Now we're doing a virtual handshake.

No, no, you got it. That was it. We did the left and the right. So that's our virtual handshake, pending due diligence. And,

you know, if it's not a fit for you and you decide you don't want to do it as a business, of course you can back out. But this is a hundred K bet I like to make. I feel frisky right now. I got launch fund for money. I'm investing.

I'm trying to do build big businesses. If you want to hear about launch fund four, and you're listening to this podcast. We fold up all the accredited slots. but we do have spots for qualified purchasers and I'm spending the next two months meeting with family offices, etc., launch.co slash memo. You can read my deal memo.

In fact, you should read my deal memo and then you should run it through your system and see, is this a good idea for, I mean, this is where it gets really interesting. You could actually put in there, not just an idea for businesses, you could say, hey, what's a good idea for an investment firm? You know, subsections of businesses

and those might have different analyses that I'm unaware of. like I'm sure the the guy, the famous guy from Yale, who sadly passed away, the Yale guy probably has like a really good framework for how to analyze venture firms and fund managers. It'd be really good to put that in. All right, listen, we talked for, gosh, 40 minutes here.

I'll let you get back to it. You're in Spain, huh? Yes. My favorite country. Spain and Tokyo. Oh, man. I love both those places. Just Japan generally.

I haven't been to Spain years. Yeah, just let me know. I'm going to come around. It's just really hot at the moment. Yeah, I think maybe when it's 80 degrees, not 100 and 5. But, man, I love Galithia and Barcelona, man. I actually got to take my kids there. They haven't been there yet, and I want them to experience having supper at 10 p.m.

and drinking hot chocolate at, what's that thick hot chocolate you guys do over there? What's it called? It might just be called hot chocolate, but you know that thick hot chocolate they make and you get it at like midnight? There's always old ladies going out for thick hot chocolate in Barcelona. alone in the Rambla. Yeah, I don't think they really have it here in Canada. It's probably because it's hot most of the time.

It's not as hot as there, but like even in December. What are those like lobsters slash shrimp crustacean that have the really long claws? Lagastinos, maybe. It's not the, they kind of look like lobster. Yeah, it might be langostinos. Really long. Yeah, I love those.

When I was in Galithia, you know, and I went to the shore and there were all these great restaurants on the shore, you know, shortly from the way from. there and man, I had the best cheese plate on my life and some of the best seafood. I love Spain. Yeah, that's pretty good. I need a speaking gig in Spain. Somebody get a speaking gig going for me, please. All right. Talk to you later. This has been this week in startups. We'll talk soon. Bye. If you are listening to this podcast, you care about innovation, right? You're listening to Twist this weekend startups. And the startup sector changes constantly. But one thing does not change. And that is the importance of world class design. In the past, you either worked with like

some old school, stodgy ad agency, and boy, was that expensive. Or you go to a freelance marketplace. Okay, things can get really messy there. The work is, to say hit or miss, might be graceful. So let me tell you about a third choice, the better choice. It's SuperSide. SuperSide is the new way to get great designs done quickly. They call it Cass, Creative As a Service, C-A-A-S.

This is such a great idea. It's a fully managed end-to-end service, and it's completely hassle-free. here's how you use it. You subscribe. And then you get an amazing dedicated design team built specifically for you. And you get access to a platform that makes it so easy to request designs and have them delivered quickly. SuperSide only hires the top 1% of designers from around the world. And they keep them engaged because they have to work on so many different creative projects. From ad creative to landing pages, motion design, custom illustrations, it is amazing what they do over there. So you're going to save $2,000 a month on Supersides startup accelerator package. SuperSide.com slash twist. That's super side.com slash TWI-T to get too large off of your package. Well done, SuperSide. Next up, Blackbird Ventures, Samantha Wong, gives a talk on finding and identifying up-and-coming startup markets live from Angel Summit. Thank you, everyone, and thanks, Jason, for inviting me. As you mentioned, my name is Sam Wong. I'm a general partner at Blackbird adventures. And the title of my talk actually was changed last minute to temporarily unpopular investing

in Australia and New Zealand. And after Mars talk this morning, I actually think I want to change it to be there and develop insights. That's essentially the flavor of what I'm going to talk about today. First up, why should you care about these two little islands in the Pacific? It's a very good question. I'm just coming after the guy who did Snowflake Series B. I'm just before the guy who did hot mail. So I find myself asking that too. But I find Brad's last talk quite instructive because I would argue that investing in Australia, New Zealand over the last decade, and I think there's still some way to go in it, is the epitome of anti-consensus investing in. We'd love to explain the learnings that we've had building Blackbird over the last 11 years. So let's start

with a little context. Australian and Kiwi companies over the last 20 years, and, and we're have built enterprise value of over $126 billion. Hands up if you recognize some of the logos on this page. And did you know that they were Australian and Kiwi founded? Well, it's a fairly knowledgeable crowd, but you're the anomaly. Most people don't know that there's all this economic activity happening in these little islands in the Pacific.

And I think being underestimated or being out of the purview of where most of the investment minds are, is actually a really great strategy. And I think for a bunch of you in this room, you know, there are probably some juicy markets hidden in plain sight that you too could be taking advantage of. And that's what I'd like to encourage you to think about today. And the reason why, I believe, is that too much competition impacts returns.

When there's too much capital chasing too small a set of quality companies, returns get averaged away. And this is a business about alpha. According to Pitchbook, there are 10,000, over 10,000. thousand venture firms in the US and almost a thousand sea deals done a quarter and I actually think that's probably an underestimation and you're going against folks like like mar the besties and so that's really effing hard it's significantly less hard I think if you try and find a pocket that fewer people are fishing in and that's been super successful for us for friends of mine as well in other areas of the

world like Eastern Europe you know early bird east I'm super successful latam monoshees Kazakh, and there are probably other ways to think about this too, not just geographic, but also sector-specific. A little bit about Blackbird. We're a firm with $7 billion in assets under management. We're 11 years old. We have about 50 staff now across Australia and New Zealand. And we're probably best known for doing the seed investments in Canva, Zook's Culture,

and Safety Culture. And the thing that all of those companies have in common is that they were founded by Australians. So that's our mandate. and New Zealanders, wherever in the world they might be. Basically, everything that I believe about venture is really captured in this chart. This is the performance of Blackbird Fun One over the first 10 years of its life. This is the power law kind of personified where the aqua bar is the performance of Canva.

Truly, you know, a power law story. But what I think is the incredible thing is that even without Canva, you take out the aquachite, this is still a seven times gross multiple fun, which is awesome performance. Why is that? That's weird, right? Like, why would one fund, like, capture that much performance? And the answer, I think, is a lack of competition. Like, there is something to be said for being the only game in town or one of the,

only games in town at that point. And so I am just kind of obsessed now about trying to harness and harvest these sorts of fund one opportunities over and over again. The thing about being early is that you can't be too early. And Australia in the 2013 to 2015 era was just perfect. Not too early, not too late. So I want to share a few things that you might think about looking. for that might indicate you're right at that point of time. So the first, obviously, is you have to have

an under supply of capital. This chart shows the VC deal value between 2010 and 2020. You can see in 2010, it was only 200 million of investment, 2011, went even lower to 100 million, and this includes growth stage and late stage venture investing. The curious thing, though, is if you were on the inside of those ecosystems right at this this early era, it was getting really exciting. Atlassian had just taken, well, it didn't actually take external capital because it was highly profitable. So it was an employee secondary. Axel did a $60 million employee secondary at a 400-mill valuation in 2010. Canva was founded in 2013 and did a chunky Series A on very, very low revenue in 2015. Atlasian IPOed, I think it was late 2015, maybe early 2016,

And then obviously the word got out and deal sizes grew quite significantly. And now there are many multi-hundred million dollar funds in Australia. So the lack of capital plays out in a couple of ways that I think are quite interesting. So the first is Blackbird Fund One has a very low loss ratio, obviously without sacrificing returns. So we have a 20% loss ratio in that fund, which is odd because you would expect a successful fund to have sort of 50 to 60% loss ratios. And that has led me to think that perhaps when you have the luxury of choice, you can pick,

you can choose, you actually choose better. It's a working hypothesis at the moment. The second is entry valuations. And entry valuations, you know, do matter to performance. And in our first fund, the average valuation for a pre-seater, a seed stage company, was $4.2 million. There are, however, always exceptions. Canva was pricey even then.

It was an 8 mil cap for a pre-product PowerPoint stage company. And Zooks also was a pre-product, still this kind of pre-product, stage company at a 40-mill cap. So always be willing to make exceptions. So the second thing that's really important, I think, for that Goldilocks stage market is you need lighthouse companies. none yet that are so successful that they've really attracted the hordes of global investors and attracted a lot of competition.

And I think some indicia that you could look for are sort of valuations and exits that kind of seem, they're kind of successful, but they look a bit meek or meager compared to what you're used to in Silicon Valley. So I mentioned the Atlassian round, that 400-mill valuation. That was a huge deal in Australia in 2010. That wouldn't, you know, that wouldn't make a twist headline probably. in Silicon Valley. And then a few years ago, Vand,

which is a point of sale software company, sold to light speed for half a billion dollars in New Zealand about four or five years ago. And that was a huge deal. And there was a sequent exit for a billion dollars in New Zealand a few years ago. But these are really big deal in the ecosystem, and they're very important for ecosystem development.

You get these lighthouse founders that the next generation of founders want to be like, and it's just this biological need, right, that some very small proportion of the population want to top the next best person out there. And so you have to have these icons in the ecosystem that other people want to learn from, be proximate to, and then beat, essentially.

And also they play a very important role as well in mentoring and angel investing. And so around that sort of early 2010s era, you did have a bunch of these lighthouse companies. Atlassian was kind of the probably best known one in this room, but there are a bunch of others. And the same in New Zealand. So trade me as like the eBay equivalent

or sort of directory for everything kind of business. And some alumni of that went on to Found Zero, which is a $6 billion accounting SaaS software company. And some of those went on to Found Vend. And so you sort of start to see this circle of life happening within the ecosystem. Very important to look for that. And then the probably other thing

is obviously you need to have a density of entrepreneurial talent. And again, I think this can show up in different ways in different markets. This is a really ugly slide, but basically it's showing that Australia has a lot of small business. And obviously, we hope to invest in some small businesses that become big businesses, but it's a good starting point that your country has a appetite for risk for taking a bet on yourself as a starting point. Again, some small percentage of those, you know, three decimal places, etc. will hopefully start a startup and have the ambition to do something. And then very highly educated or skilled people in your ecosystem. So about 48% of Australians hold a tertiary degree, so that that's good raw material to start with.

The other thing I would say is small businesses can be maybe a turnoff in some regions. In Australia, we love it. Most of our founders, you know, had a small business skeleton in their closet. Most people know, you know, Canvas started as a yearbook business. Safety culture started as a PDF checklist business before it was a mobile app. And Zooks' founder and Culture Ams found it. They essentially ran agencies, successful ones, before they went on. to start startup. So we love that. And I think probably separate to that is, you know,

certainly when I was growing up in Australia, you know, we looked up to people for better or worse, like Rippet Murdoch who founded Fox. You know, at least it was a globally recognized brand. There was a precedent for global success for people from my country. And you could say the same for the founders of Westfield, Transfield, Macquarie Bank. So that's super important as well. And the third thing, which I think I would love to spend a bit more time digging into, I'm doing research on. But the global tech companies have R&D centres all around the world. They're not just here in California.

And working out exactly where they are and then the talent that is coming out of those is a very, I think, compelling strategy. And a few people know this, like a little bit of trivia, but one of the key pieces of technology that went into Google Maps was actually founded by a four-person team in Sydney. It was a company called Ware 2 that kind of got rolled up together. And that four-person team became a 60-person team that worked on Google Wave. I don't know if anyone here remembers Google Wave. R-I-P Google Wave was awesome.

But that became a predecessor to Google Docs and really pioneered some of this in the browser collaboration that ultimately made a product like Canva possible. So the kind of the dudes on the left were the Google Maps and Google Wave folks. made it to the photo on the right and are still really, really critical parts of the technical team at Canva. And I could probably draw lines to about a dozen startups in Australia that have come out of this Google R&D center. There are thousands of engineers working on Google products there.

And you can see a sort of similar thing happening now in Melbourne where Square has had an R&D center for quite a while and a bunch of those are spawning their own startups. Israel obviously is a really, you know, good example of this with Intel Capital and IBM having R&D centres there for quite a while. So, you know, pull out the map, start working out where all these R&D centres are because I think that they're going to be very interesting places to hunt. So onto the learnings part, we, our bias is just to invest in Australian New Zealand founders. They could be anywhere in the world, but that's still a total addressable market of 35 million people. It's not big.

So for that reason, we've always had a really strong bias for big ambition and founders who are tackling global markets from the very beginning. And that has taken us to invest in some awesome areas with generalists. We have to be because we're addressing such a small group of people. 60 to 70% ends up being in software, all sorts of software. And then 30 to 40% ends up being what we used to call science nonfiction. but I think the term is now deep tech and lots of interesting things there. We co-invest with some of the world's best investors in the latest stages across that portfolio. However, we have recognized that our global bias has become a blind spot for us.

It's an Achilles heel, for sure. When you want to invest in global businesses, it means you're necessarily saying no to local first or local only models. because you believe that, well, in our case, we believed that venture scale outcomes couldn't come from something that's the size of Texas, essentially. The population of Australia and the population of Texas is the same, and no one builds a startup for Texas, as far as I know.

So that is mostly logic that has held true and has served us really well by some of the logos you're looking at. But it's also responsible for probably, you know, our biggest area, which is not investing in afterpay. And some of you might know after pay was acquired by Square for $30 billion just a few years ago. And we can probably come up with another example, which is Air Wallach's in our second fund. Just to make this painfully apparent to you what we missed out on,

if we had invested at the first round that holding even after rounds of dilution would have been worth 600 million at the time of the merger of square, assuming we'd liquidated that. And so that first one would have been a gross multiple of almost 70 times. And so it still doesn't

compete with Canva in terms of returns for that fund, but a very painful lesson. And it's a reminder that you're, puristics are exactly that. They're not rules. And for exceptional founders, be prepared to make exceptions. And that's all I've got for you. All right. Well done. How do companies make the jump, just on a tactical basis, Australian companies, to US consumers, or is it just the consumers are the exact same? I think it really depends sector by sector, right? So sometimes they're exactly the

same. And you know, our bias is go sell to the world from the beginning. So for most of our companies, they are selling to the US, to Brazil, to all manner of places from the beginning. That's a little different for enterprise, right? And so, honestly, that is the chasm. That is a difficult jump to make. And probably why we do have a bias for product-led growth or one where you don't have to have this Rolodex salesperson and trust that you've kind of hired the right person in country. But typically, honestly, it requires a founder to just like pick up sticks and move over and wrap their arms around it. And what's the competition like, if at all, from American investors coming to Australia to investing companies? Are they typically, you know, coming once a year

and you introduce them to what you've already invested in? Or has anybody kind of set up shop there as it was? Yeah, it's no one's set up shop. They're one partner for, from Sequoia, China actually has his family moved. So he's a regular fixture on the scene. Over, you know, the last three years, for sure, there were lots of people on lots of planes. And then, of course, as well, you know, we share a common language and even similarities in culture.

And so I think global investors find it quite easy to kind of invest in Australian and New Zealanders, more so potentially where there's a language barrier, for instance. but we've definitely seen that the retreat, I would say, stage-based. So they were coming down as early as seed two years ago. And now I would say that's adjusting back to sort of the norms of late series A to be. They'll let you queue up the companies for them. Yeah. And look, I think there's like something to be said for on the ground knowledge,

you know, like there are, you know, maybe even some semi-high profile Australian founders who've not done terribly well in the last couple of years. And there wasn't a dollar of Australian BC in that company, you know, for a reason. So I think there are a few people who are like, oh, once bitten twice, I'm maybe we'll work with a local player, which we love to do. Okay. We'll take a question. I wanted to ask the Australian ASX is very different to the US public markets, right?

where especially on tech companies, you can get, let's say, high evaluations of early attraction. Why is that, and is that an advantage for exits, do you feel, in investing? It's a good question. It's the best answer I can give you is it's supply demand. There's far fewer opportunities to invest in technology companies on the ASX, but there's a lot of demand from investors on the ASX, both institutional and retail, to invest in technology. And so that just drives up the appetite and the performance that they can get. I mean, we are, the ASX will be the right place for a handful of our companies, but it's not the place that Canva's going to list, for example. There'll be advantages for some companies for sure where they have maybe a bigger profile

or sort of, you know, are earlier in their trajectory. Like you generally have to be sort of well over 300 million revenue to kind of, you know, get a NASDAQ IPO away. You can be much earlier on your journey on the ASX. All right. Let's give it up for Sam. Well done.