The Exchanges

Q So, um, the advice you got from the investors to strongly consider delivery services like Uber, Uber Eats, and DoorDash, like even though that's going to take a significant chunk of your margin, uh, did you follow the investors advice?

A So I, I didn't think it was the answer to how we were gonna long-term survive. Whereas a bigger restaurant, which might have, you know, 15 to 20 employees, a full kitchen, um, things like that, like, yes, I think that that's much easier to pivot into this delivery method, but for us and for a cafe, I mean, coffee doesn't really travel well. A lot of the reason of a cafe is, like, you think of the, you know, the conversations you have and seeing people, um, and then The crepes themselves, like part of the, part of the beauty of them was people love watching them be made. People love that they get it right away. Um, so it's, it was kind of, it went against everything that I kind of had built up in my head of why this business had worked in the first place.

AI assessment note: “I didn't think it was the answer to how we were gonna long-term survive.”

Q So what problem are zebra startups solving for?

A So, you know, you, you have your small businesses that are your mom and pop shops that are, you know, location based brick and mortar, et cetera. Those are great. Those, you know, you can get bank loans and stuff. If you have actual merchandise, if you're selling services and technology, it's really hard to find investors unless you're, you're telling a story of extreme scale and extreme growth. But if you are starting, if you're trying to build a company and services that are solving a particular problem for a community, Um, that isn't necessarily about scale first and foremost. It's really, really hard to find investment. These people who are building these different kind of companies aren't looking to exit on the other side with millions of dollars and go buy an island. They're looking to solve a problem for their community, and they're looking to make a living at doing it, and not necessarily a quote-unquote, like, lifestyle company. They might have really big and ambitious dreams, but they're not in it to maximize shareholder value for a small group of investors and themselves. They're looking at it to fix a system, and there's no funding for that.

AI assessment note: “They're looking to solve a problem for their community... fix a system”

Q from the investors was that you should skip education altogether and go for, you know, go for time and attendance for companies, for corporations, for factories. Like it was this discussion that went back and forth and you were like, what industry specifically? And they're like, anybody that has hourly employees could use this. You know, what did it feel like to get that kind of feedback in the room?

A Well, I think that, you know, it's important to always keep your ears open, especially when you have the privilege of getting feedback from intelligent, experienced people. Regardless, even smart people, you know, may say things that are, you know, not necessarily wise advice. With a startup, you have limited resources, energy, capital, etc. You need to focus. So I said, well, which industry is ripe for this? No one had an answer. So what we're doing now is we spend one percent of our time analyzing opportunities where we can deploy Fletch without having to change the core technology. So I think there was some wisdom that they gave us. Um, and we're using one percent of our time to, to see how that can make this a billion dollar company.

AI assessment note: “it's important to always keep your ears open, especially when you have the privilege”

Q things panned out. Before we dive into kind of what happened after the pitch, um, first I wanted to say I was listening to the pitch again this morning, and your opening spiel that you gave was the best I think I've ever heard. I was basically just mouth open, like, holy shit, like, where does, where does someone, like, where the hell did you learn to pitch like that?

A You know what I like to tell you before I went in is that You know, I was nervous, and I was, I was physically struggling a little bit, and a couple of nights of crummy sleep, and working really hard, and crummy diet, and two things happened. The first is that you guys told me that this was the same recording studio where Journey had recorded Don't Stop Believin'. And the second is, my best friend and right hand man sent me a text message, and he said, swing for the fences. And, and that was it. I took those things and I was basically like, screw it. Let's just go. And that, that, that gave me the fuel to, to just really connect with my story, tell it like it is. And, um, I dunno, go as hard as I could.

AI assessment note: “I took those things and I was basically like, screw it. Let's just go.”

Q Three out of four investors have passed. What does James have to say?

A Here's what I see here. I see this great, magnificent design, like it's just so beautiful, and it really appeals to me, and you even have that enthusiast who puts the designs all over their wall, and so there's, you have artists already thinking how to make use of this. I also see this excellent combination of design with Internet of Things technology, And, and this essence of, of gifting, and I wonder what other things these two minds can come up with in terms of Internet of Things and gifting. My, my problem is, unfortunately, I'm, I'm passing also, but my problem is, I'm an ex, it's unfortunate for you, really, in that, in that I'm an extreme use case of the opposite side, in that I, I, about a year and a half ago, I threw out all of my belongings, like, 99.99% of my belongings, anything that could fit, I only have things that could fit in my carry-on bag, and that's it.

AI assessment note: “unfortunately, I'm, I'm passing also, but my problem is”

Q With Phil. So he committed to invest 250 K, you guys walked out of the room, and what happened?

A Uh, so, uh, well, we started, we started to engage with Phil, uh, by email. So this is where it started to sink in a little bit that this was not the usual way of proceeding that I was expecting, um, because what I really was expecting was to, uh, have a second meeting, and that's not what was happening. It was, it was, uh, straight to the due diligence package. So I prepared what I could, uh, sent that out, uh, 10 days later, and then He had a lot of stuff to sort through as a result. At 1.1 of his questions was, well, just give me the rundown of your revenue over the past few months. And I thought, okay, well, what I need to do is, is we need, let's get this rolling so that we have revenue flowing in the bank for Phil. And so I kind of put it on the, on the back burner, uh, to, to have the revenue flowing in, uh, uh, for, for, for Phil later.

AI assessment note: “we started to engage with Phil, uh, by email.”

Q So you did all your due diligence before you went on your trip?

A Yes. And then, never heard from her and thought, okay, well, obviously, she doesn't want me or need me, or maybe something happened with the product, and I probably should have followed up, but, and that was my bad. Definitely my bad, but once again, this summer was quite the crazy, and I have, you know, 70 companies in our portfolio who were very needy, and, uh, I just absolutely kill myself here. Um, so then I get a little ping for you this morning saying whatever happened, and I, and I thought to myself, like, what happened is I never heard from her, and then I went back to my e-mails, And sure enough, so two or even three mad emails or two or three of her right when I was in South Korea.

AI assessment note: “Yes. And then, never heard from her and thought, okay”

Q There was something else I needed to ask Josh. When we were emailing to set up this call, he happened to mention that Calais, the award-winning barista slash co-founder of Sudden Coffee, was no longer working full-time with the company. So Calais, was he just not on board with this new focus? Was he, was he tired of working on Sudden Coffee? Like, why? What happened?

A Um, I, you know, he, ah, I think he, it, it got down to the, Um, point where we were, to, to shift this marketing strategy, um, it was just an entirely different skill set. And I think it was also got to be a, a slog of hitting, of like doing the same thing over and over again. And, um, I think, you know, Kale is an amazing inventor type, like he loves coming up with new ideas, creating, uh, new innovations in coffee. And so, um, We were shifting where, you know, we, we kind of figured that part out, and we didn't have the capacity to focus on, you know, a bunch of new different flavors in coffee just yet, and so it kind of made sense to say, hey, you know, take a break, like, you know, take a break from this. You know, he's still a founder. I saw him just last night, actually, so he's still involved. Um, I think, you know, for him personally, I think he wanted to, you know, explore different things and take a break and have some fun for a little bit.

AI assessment note: “to shift this marketing strategy, um, it was just an entirely different skill set”

Q Like Kitty Hawk where the first flight was taken?

A That's where they're named after. They spun out of Singularity University at NASA Ames Research Center, so it was an introduction, and then we had a Zoom call, and I was like, oh, I'm visiting customers in Santa Barbara. I know you live in LA. Do you want to come up for dinner and hang out with us and get your hands on gecko materials? I said it in A serious manner, but I also was like, that's a bit of a drive. Um, but he was like, yeah. And I was like, okay, we're doing this, you know? So I brought my head of engineering to the dinner, had some demos at the table. Had to borrow a bottle of wine, of course, do a little, like, wine trick on the pinky. And then after we walked out of that meeting, there was little geckos that were on the sidewalk. It was really cute.

AI assessment note: “That's where they're named after.”

Q a smart running shoe. But like when I dug a bit deeper, my takeaway was just like, oh, they're so dang passionate. And with the moment running is having right now, the thinking was like, okay, like if there ever was a moment for there to be a smart running shoe that takes off, It seems like it's now, and is this the team that could actually pull it off?

A But, but I think it's a matter of, like, what is most important in a running shoe? So to Charles's point, and I'm not even an avid runner, but one of the very first pairs of running shoes that I bought for this long distance running exercise was, like, really, really good, and then Nike discontinued it, and I've been trying to find shoes that are so similar to it in terms of breathability, and the weight, and the whatever, and even the colors, And I can't find anything. Like, I've tried several other shoes, like, even within the Nike brand, they're not the same. And that's why they have so many skews, right? And he has one skew, and if that, it doesn't quite fit your foot, like, it doesn't matter what the smart technology says, right? You're not gonna use that shoe.

AI assessment note: “he has one skew, and if that, it doesn't quite fit your foot”

Q want to see this like systematic approach to churn out billion dollar companies. It, it kind of bothers me a little bit because I'm just like that. Like, aren't you investing in the person building it and trusting that they're going to figure out ways to grow the business? Like, there are hundreds if not thousands of DTC businesses that are not getting funding from VCs anymore because of that.

A Yeah. In situations that are uncomfortable, like iOS or, you know, not being able to raise capital or whatever it might be, whatever kind of, like, roadblock you're going through, like, it forces you to, like, be creative and try something new and go back to basics. And what works for us is we're like, okay, let's take that money we just pulled from Facebook and let's invest it into Trade show. Let's go to Atlanta. Let's set up a booth. Let's go to Coterie. Let's set up a booth. And with that, I mean, oh my God, like we saw like a 10 X at Coterie from like what we invested versus like what we got out of it. And that's just a first order with some of these like stores around the country now. And so there's obviously going to be a repeat purchase rate, but like that's a way more efficient use of our dollar. That doesn't mean that we're not going to run Facebook ads. We're just going to run at a way smaller scale and we're going to supplement and fill the funnel elsewhere.

AI assessment note: “not being able to raise capital... forces you to, like, be creative and try something new”

Q A more specific question, you may have already answered this, Al, but like, You said you, you needed more time as you were kind of mulling over her, her strategy. And then you said, I want to go along for this ride. What exactly changed your mind?

A Um, I just had to think through the coffee shop space. Like I want, I want this to exist where once people sample it and they want to go back and get it, it shouldn't be as hard as it is. But the, the D to C I didn't think was the right move. I think like, I want to see this in like whole foods and everywhere else. So as soon as you make that customer, one of yours that they can go and replenish all day long, but I don't know, man. Uh, yeah, it's, it's her, like, she's, she's very self-aware. She's got a good angle on stuff. You know, I didn't feel like she was BS-ing us through any of the, we're gonna market our way to victory here.

AI assessment note: “it's her, like, she's, she's very self-aware. She's got a good angle”

Q Wait, wait, how is a shitshow a good thing?

A Yeah, are we, I mean, you know, it was just like the amount of important decision made on one day, and then like every day was just like, you know, putting out fires and debates and, and, and arguments, but all for the better, you know, and we were like, okay, as of now we're meeting every morning. Uh, at, at nine 30 and we're re, which is, which was early for us. Uh, and we had the, the overall plan was to first know how to sell it. Then we would look for signups and then we would build a, a Kickstarter, uh, campaign. We wanted to test the product traction that way, because like there was no point in building anything if we couldn't get any traction on the way we would sell it.

AI assessment note: “putting out fires and debates and, and, and arguments, but all for the better”

Q But they seemed concerned that you weren't focusing on other verticals other than children and pets, and that there might be money left on the table. And, but GeoBit started out as a personal project of yours, scratching your own itch for a need you felt. What did it feel like to have the investors challenging you about whether your approach to focus on kids first was the right one?

A Um, it's one that I have heard before, and I agree with, um, in the sense that I think there's a bigger market. Um, I've always thought that way, and I've always pitched my company that way. Really? But, but, I also understand that you can be incredibly distracted by boiling the ocean. Uh, and so just having that true north, like, what is the first problem that we're gonna go out and solve, and like, at least going out and solving one, like, really, really frickin' well, and then thinking, okay, now we've done this, where else can we go with it? When you think of, like, any, I mean, we're, we're probably no different than many others, but like, smart hardware, you have a little bit of service, you have a little bit of software, you have a little bit of hardware. Right. You know, all the, um, like, you're doing so much that to then layer on top of that, like, five or four or three or two, Different verticals.

AI assessment note: “it's one that I have heard before, and I agree with”

Q So what ended up happening with the round as a whole? Did you stop raising from VCs?

A Yeah, you know, we dialed back on the VC. It's the time investment, right? You know, being a small team, we had to make a decision, like, do we want to raise capital for a business that we haven't had time to manage that, or do we want to focus on the business, understand the value that we're creating, and continue to go to market and allow people to come to us, and that's exactly what's happened. You know, the show's been ridiculously meaningful. The number of LinkedIn Messages that I've gotten from not just all around the country, but all around the world that say like, hey, I would love to introduce you with a good friend of mine who's the director of climate here. Now we're making a lot of inroads with states kind of in the north of the country here that really have values at the line with the pillars of our business.

AI assessment note: “Yeah, you know, we dialed back on the VC. It's the time investment”

Q Okay, so excellent co-founders with the twin effect, deep industry background, but then why are you not worried about competition here?

A I just think that when you've got two people like what we just saw who are incredibly dedicated, I get the feeling, I don't know them, but this is what they do night and day. If you get woken up in the middle of the night, like they do, um, and you want to solve this problem, they're heavily motivated to solve it. And I just, I was really impressed with them. And so, yes, there could be competition out there, but are they like them? Are they twins? Do they have those psychic abilities? You know, I don't know if you noticed, but when she stopped talking, the sister just jumped right in. And that's the kind of co-founder you want when they see that and they just pick it up. That's the pairing that you're looking for when you're looking for co-founders.

AI assessment note: “yes, there could be competition out there, but are they like them?”

Q And what did it say on the shirt? Did it say like, tap your phone here?

A Yes. Yeah, exactly. We built the whole technology. We had stickers, we had even tags, you know, clothing tags that had our NFC things in them, and you can program thousands and millions of them. Oh. Remotely. Yeah. We built A crazy platform. It was huge. It was awesome. It was working, and it was just starting to happen, and we didn't even have a salesperson or anybody. We were just getting deals organically like that by just literally, like, sending messages on LinkedIn to people. We kept, I mean, we kept at it. We were still broke. We were still underfunded. You know, we raised maybe a total two million over like four years, which is nothing in hardware. You can't imagine how many pitch meetings I went into.

AI assessment note: “Yes. Yeah, exactly. We built the whole technology.”

Q So Jillian thinks Maria has grit, but she's not willing to put her dollars behind that grit. What about Daniel?

A I'm... Loving the product. And I think that the product you put out is truly disruptive. I'm certainly not a med devices expert. I've never invested in a medical devices company. Um, but I just get the sense that this is a massive between the therapy and the licensing opportunities that are in front of you. I just think this is a massive sort of market opportunity here. And I think you're going after something really interesting. Um, and to Jillian's point, I think the founder opportunity fit here couldn't be better. And so that's why I was kind of pushing you on. Why can't you grow with the business? And why can't you be the CEO here long-term? Because I think you've got a great background for it. And I think, you know, the business seems like it's on a, on a great trajectory.

AI assessment note: “I'm... Loving the product. And I think that the product you put out is truly disruptive.”

Q Time's up. Has David convinced investors that his VR company is the one worth betting on? Here's Shiel.

A I'll say I, I like what you do. I think it's really cool. I fly a lot of long hauls a few a month. Um, I think that it'd be cool to, to have a VR headset on there. Um, I'm probably not your, your best use case. I mostly just fall asleep as soon as I get on a plane because I'm chronically tired. Me too. But, um, and I think that sort of what you said is, is right. Like you guys probably are the right team to do this. I just struggle with, um, Whether this is a short-term opportunity or, or a long-term, like, will, will we see lots of people with VR on planes? But, like, totally, I think you guys are the right team to do it, and I know that, like, United, for example, is locked into a shitty contract with DirecTV on a bunch of their planes.

AI assessment note: “I just struggle with, um, Whether this is a short-term opportunity”

Q Well, that's great that you've got half the round committed. You mentioned following up with the investors. Have you followed up with, with all of them?

A Michael, I had a chat with Michael shortly after the pitch. He introduced us Yeah. I knew you were going to say that. Yeah. He had a lot of questions about unclaimed money. Um, it started to feel like it was my, Full-time job answering some of these questions, but, um, I, I very much appreciate how diligent he was, and he asked some very, very good questions, and I appreciated his feedback. He also told me to put aside an allocation for, um, his syndicate pending a lead. They wanted to make sure there's at least a certain amount, um, allocated for him and his fund, which is great. So it's all hinging on getting a lead, working on it, work in progress.

AI assessment note: “Michael, I had a chat with Michael shortly after the pitch.”

Q On the show, Jesse committed 50 K and Charles 25 K out of their funds. What happened after the show?

A I was able to get in touch with Jesse pretty quickly, and we found out right after filming that he actually works just a few blocks from my apartment. So he said in person to, to the Flybridge office, and we'll do our diligence there, and we'll kind of make the final calls together in person. So that was great. It's a cool office vibe. His, his wife was working in the room next door, and I feel like we're very aligned in the vision, and we just kind of immediately got into, like, a brainstorming session more than a due diligence session, and that's always a good sign when you're vibing on ideas versus nitpicking on doubts and stuff.

AI assessment note: “I was able to get in touch with Jesse pretty quickly”

Q Oh no. But can you put them on a podcast? Is that acceptable?

A Um, some of them are just like, you know, reading about the rules of golf so that I can be well versed because I will only be relevant if I know about golf. Other crazy things I have done for investment. Crash a friends, family, and cast-only film release party because I knew there would be wealthy people in the room looking to fund directors and producers, so why not also me, the pee pants girl? I stayed up until four a.m. to attend a DJ rave where I knew an interested investor would be present. I don't do anything with rave culture, so that was, like, an experience for me. Another thing was follow an investor down a double black diamond mogul filled ski run.

AI assessment note: “Other crazy things I have done for investment. Crash a friends, family”

Q truly impressive feat. Um, but it seems like where things fell apart in your pitch is when, like, it seemed like they were thinking you were thinking too small, and that you needed to raise more money, build out a bigger team, and, like, really go hard to get the big publishers on board, people like Random House. Do you think they were right that you were thinking too small?

A I think, um, I think it's yes and no. It's a combination of, you know, sometimes we, we dream big and that actually works. Um, and investors like buy into the big dream and, and the idea and, and they go with you. And then sometimes you, you dream big and people are like, well, that's crazy and unrealistic and we don't understand how you're going to get there. And even when you show them the numbers and the, and the plans and projections, um, there still is a lot of implicit bias in the system. And sometimes they don't think you personally can get there or your team can get there or, um, they've They just have a bias against the, the industry you're in. Um, and so, you know, we've, we've had to kind of temper, uh, some of the, the things that we've, we've planned for. And, um, and I think that's a, that's a mistake, right? Like, that's something that I don't ever want to do again. Like, I just want to, like, be really true to myself.

AI assessment note: “we've had to kind of temper, uh, some of the, the things that we've planned for. And, um, and I think that's a mistake”

Q Any other leads on VCs that you're working on?

A So where I'm kind of at is we got a 500 K check from another strategic angel. They're a silent angel. They're just a high net worth individual. One of my dad's friends. And I was talking to them about the platform and I was showing them how it worked and I like was explaining and he was like, this is genius. I want in. And he ended up investing 500 K. And so where my mind is, is I'm going to build the vision and bring it to life. And then Be able to actually show them tangibly, because a lot of the feedback we got from investors that passed was, we just want to see you have further traction points, which is

AI assessment note: “we got a 500 K check from another strategic angel”

Q Well, I think, um, yeah. What are like for you? Like, what are the learnings?

A I mean, you know, to move forward and to, you know, to, to continue to put out good work in the world and to not worry about, you know, um, all the outliers that exist is to really focus on creating and improving the world, and I think that's what I'm doing, and I think oftentimes when you do that, you know, there are naysayers that want to, you know, jump on, on top of that to keep, you know, status quo strong, and I think that's, You know, what I learned. I learned that, you know, when you're pushing boundaries, um, and you're changing culture, there are going to be lots of pushback against that, and I think it's, it's important to, you know, really, um, know that, and once you know that, then, and when you are pushing the boundaries, and you are running into people who are trying to maintain status quo, then you are strong enough to, you know, um, stand strong. I think that was the biggest lesson.

AI assessment note: “I learned that, you know, when you're pushing boundaries, um, and you're changing culture”

Q went down in the room. So after the pitch, when you and I were talking and it looked like no deals were going to happen, and then right as you went to leave, the investors all started reappearing one by one, kind of saying, Oh, you know what? I think I made a mistake and I want to invest. What was going through your mind when that was all happening?

A Um, in that moment, I think it was just like, I'm open to hearing what she had to say. You know, we had said, we take small checks sometimes as a, you know, sort of like a leeway into a bigger check. We'll say, oh, you know, we'll take this small check. We'll kind of keep you updated on the business. I send out that email update every week with what we did last week, what we're doing next week and all that sort of fun stuff. Um, and so I think they wanted to be a part of that update. And also they wanted to build a personal connection with me and like them putting money on the table, like really shows that they're actually You know, willing, uh, and that they want to build that relationship.

AI assessment note: “in that moment, I think it was just like, I'm open to hearing”

Q Yeah, you did very well in the room, and in particular, like, the investors gave you high marks for your ability to control the room. Where did you learn how to do that?

A Um, yeah, um, I think it's easy, potentially, to let the room, like, frazzle you, or, like, it's easy, it's easy to get caught up in the speed that investors are asking questions. Um, but I think that's, I think that's a trap. I think the, the key is to answer questions at your own pace, and make sure you're conveying the information that you want to convey. Uh, I think, yeah, I think this pitch is no different than any pitch with, like, a one-on-one pitch with an investor. You know, it's on the entrepreneur to control the story. No matter what questions are being asked, you know, it's, it's still on the entrepreneur to control the narrative and get out the points that they want to share.

AI assessment note: “the key is to answer questions at your own pace”