reflector/server/reflector-local/42min-StartupsTechTalk/42min-StartupsTechTalk-Transcript.txt

 because Max is really aware of that. So basically we're pretty close and pretty finalized with that partners to launch funds. I say funds, but technically this structure will be a corporation. And the difference is if you do a funds, there's very strict rules and regulations and a lot of compliance work with financial authorities. And I've done that in my past job and I really don't wanna do that because I know how intensive it could be and how much of a time drag. So what we're gonna do is incorporate a holding company and call it an investment company. And it's gonna sit on a pool of cash that we raise for people and we'll just keep it in the bank until we find investments that we think are good or suitable startup investments. And we'll take equity stakes in those companies and help them grow. And the funds that we raise will be a mix of my connections, our connections. And end partners is gonna put us in front of a lot of different investors that they know, which is why I was working on the pitch deck and there's more to come. So I was planning on doing this talk a bit later, but we spoke to the head of that partners this week. He would prefer us to have more of a pipeline when we go speak to investors, meaning companies that were close to pulling the trigger on an investing. And your reality is a pretty long process to get to know a company and go through all the details and do all the research. But I'd like to get started at least meeting founders of these super early stage companies because that's what we're focused on. And the thing is, given we have 36, 37 employees all around the world, it makes way more sense. It can be helpful. If I give everyone on the team a bit of a grounding and just what you should be looking for, what some of the key characteristics are of a company that could scale well and become huge one day. Because you know, we're not looking to invest in the dry plingers down the street. Maybe a fine business, but it's not a business that you really take to become a large enterprise and make a ton of money, which is what we're focused on. So if I kind of train everyone or at least explain these concepts and you guys all have your own networks, you're all different parts of the world. You have friends and your friends, you're gonna hear stuff. And I'd like you to keep your ears open and your eyes open and when you come across interesting, even interesting companies if you don't know, if you just find the cool local tech company, you can send it my way. I can always reach out to the founder. Most people are always very, very happy to speak to investors because pretty much everybody in the startup world needs my. So that's the point today. Just before I jump into this document here, does anyone have any questions on that in the funds? I think we had one before, right? So Jan? I didn't understand. Okay, anyway, which part? I missed it. Okay, anyway, continue. Okay, so just in terms of what we're looking for, Sujan, I think you're asking about a return. I mean, realistically with startups, so many of them go bankrupt. Like you invest in the intentions. It's just what it's, you know, it's the nature of the game. So let's say we make 10 investments, I would expect maybe two of them or three of them could be aquahires where you get your money back. Maybe you break even maybe five or six are complete zeros which happens for a very small return, or you know, some sort of recovery, but a loss. And then maybe one or two to be home runs like 10 to 10 next. Right, and those pay for all of the mistakes. And that's really the purpose of do and venture investing or angel, which is even you, right? What we're doing. All right, so all you're in through, so first is Tom. I'm sure you guys have heard me talk about this before or what it stands for is total addressable market. So what that means is if you were a business and you captured 100% of the market, well, that looked like in sales. Let's say we were, I don't know, doing cloud computing and you know, obviously the biggest companies now are KWS and Azure and they have big market share. But let's say one company captured all of it and it was a trillion dollars in revenue a year. It's less than that of just using that example. So that would be the time. So when you were investing and I said, you don't really wanna look at like the drag cleaners down the street, it's cause we want a company that's starting small, but it's really going after a big market. There's a lot of really cool companies out there that solve a really niche problem and that's great. They could be more of a pet project or like a mom and pop store, but as an investor we don't really wanna touch that because the ability to get that 10, 20, 100 X is pretty diminished. If they're not solving a problem in a big addressable market, there's not a lot of potential upside. There's some exceptions like medium sized markets in work. So for an example of a medium sized total addressable market that worked pretty well as Etsy. I don't know, does anyone know Etsy? They do like local kind of arts and crafts are very customized and you deal with people online. So Etsy is not a huge market and one of the reasons a stock did do great at the start is people thought it was so nichey and so specialized that maybe Amazon would just either crush them which they didn't or the market wasn't big enough. Etsy proved that wrong and it wasn't huge but it was medium sized and Etsy stock has been extremely, extremely well. The market was bigger than people thought. Etsy captured not 100% but a very large percent of the total market and that's partly because bigger competitors like Amazon mostly ignored it because they didn't really see the potential. So there's other exceptions to the role where medium sized ones work like Etsy but in general we're gonna wanna go for big ones. Yeah, my wife buys it, kinda stuff off Etsy. Anyone have any questions on TAM or companies that you can think of? And they're curious if it's a big enough TAM or not. One question, Jordan, when you're talking about market, how do you define a market? Meaning that as we're located in different countries, how we can tell, this is going to be big here in my country, in my neighborhood, well, not in my neighborhood, but you know what I mean? Yeah, so depends on the company's plan but generally TAM would be the total market that you can reasonably address. So for Amazon, it's global online commerce, right? Like they touch everything. So any sort of retail online, that's Amazon's TAM. Cloud competing in any country, Amazon operates in all of them. So if you're a local company and you have zero plans, let's say you're in Canada and you have zero plans to go to the US, you can't really count the US but if it's been part of your long-term plan, is to go to the US and there's no roadblocks. Like let's say you're selling food, it's very hard to import food over borders, people do it, but it's harder. The US would not be your TAM. If you're a tech company, there's zero limitations, like Shopify, clearly Shopify is a Canadian company but their TAM is global because they sell around the world. So it depends on the type of company, but yeah, most companies we're going to be looking at are going to have global TAMs. So it's going to be worldwide or at least most of the developed world, which is the big chunk of the worldwide economy. Okay, so the next concept is product market fit. I wrote, being in a good market with a product that can satisfy the market. There's a few things here, so there's a lot of cool companies but maybe no one's actually going to pay for it. So you don't really find out until you get into the market and you start selling. Unfortunately, most of what we're going to be investing in is before that, they haven't actually launched the product. And of course, internally, we deal with a whole lot of companies like Virtupoker where we have a good idea, you know, what it's going to be like and we'll fix it. But we don't really know until we go into the market. One of the things we guess right, one of the things we guess wrong and how can we adjust it. So there's a few things to think about and we're going to be investing before companies are really selling. The good thing is you get them cheaper. Like if you invested in a good startup at five or six million bucks, it's probably because they haven't gone to market yet then all the sales. Like once they start selling and it's clear click, like most people consider that already ready for Series A, which is a further venture round. And a lot of the valuations could be like 20, 30 million. Coorsnet online, let's talk about like that BRD project he's doing. So that solves a real problem, right? It's both like breast rotors disease. It's the number one health impact that affects farmers per cows, above meat and milk. And I calculated the damage. The damage of the like the cows die. So total loss or after they recover from the disease, they don't gain as much weight. So you can't sell them for as much because it's meat times price. So it's pretty easy to calculate the total economic damage or harm. So if we stick in with BRD, if we solve that problem, meaning we recognize it earlier and prevent the farmer from having those losses, we can charge for part of the amount we're saving. The conversation I was having with them is why don't we charge about 20 by a percent? If the farm is going to have about $10,000 a year and economic damage, we can charge a quarter of that, $2,500, that's a real business. And it's a real solution, something wants to buy. We won't know how it works till we get in there and that's a product market fittest, but we can try. So the thing to focus on when looking at a company is it's saving the end buyer about time, money or pain. So for that example, let's use Uber. Uber solved the problem of getting a taxi was extremely painful. It was an old system. You had to call them on your phone and say, please come at 630. You couldn't see how close they were. So that saves a lot of, that saves people time and pain. Or it gives people, it gives people something like revenue. So if you're selling a business, some new product that gives them revenue, they're going to buy that. So for that example, think about booking.com. See if everyone knows booking. It's like the biggest travel website in the world. And the customer there on that side is the hotels. The hotels are all tied in. And the hotels know, oh, booking is aggregated. So many customers like you and Ray, you want to travel and gunpowder tells, if I'm a hotel in Milan, I better tie into booking.com. Because everyone's going to be searching for hotels in Milan. They're going to go to bookings. So if I tie an even a pack that pay booking 20% of the cost of the hotel might, or 15 to 20, which is what they charge, they're going to do it. Because they're going to bring a ton of revenue. And that's why bookings, a huge, huge business. And finally, could bring the customer something like enjoyment. So think about Netflix, right? It brings them joy. It brings them entertainment and they value that. Same with Nintendo, right? It doesn't save time or money, obviously. We're generating revenue, but it brings people entertainment that they're willing to pay for. So when we're evaluating companies, think of those three buckets, and really focus on is this company providing one of those in a way that people are going to want to pay for, does that make sense? Anyway, any questions there or thoughts about other companies you come across that do that well? OK, I'll keep moving along. I'll stop asking for questions and just jump in or raise your hand if you have them. OK, the next one is unit economics. So what does that mean? It's looking at the total profit for selling the product or service or whatever it is, minus the all in cost ability to, and you want it to be attractive. You don't want to like sell something and it costs 99 cents to deliver it. You sell per bucket cost 99 cents in your profits or 1% that's awful. So the way to measure this is revenue minus direct costs, and that's the unit economic itself, because unit economics mean building that one thing without all the overhead. So let's ignore, let's look at an article, for example. What are the unit economics? It's what we build out our developers at minus the developer's salary. That's the unit economics. Every company has certain amounts of overhead that aren't direct, but you still need to build off of. So let's say anyone on the upside, anyone in my role who's not writing code, not billed by the week or month, that would be more on the fixed cost side. Anyone on building code is kind of like in business we call it like a right book cost, and this is labor costs. So what we're looking for is companies that have really good unit economics, because that really allows them to scale and make a ton of money. And the next step of that is incremental margin. Let's say Facebook. Facebook has great unit economics, right? Like they serve ads, they sell ads. What's the cost of delivering that ad? If they get a dollar an ad revenue, it's like, I don't know, some basic server costs. Maybe it's like three cents per dollar of ad revenue. So it's huge. And what's the incremental cost? They're ready fully staffed, in fact, if I'm a people. So for every dollar of revenue they bring in, they'll get like 97 cents of gross profit, but they don't really need to add that money more operations people or that many more tech people and R&D. So their incremental contribution margin is huge. Like at the start it might be zero, because even if they're making 97 cents per dollar of incremental revenue, they still have to add operations people, they have to add tech people, they have to add sales people, and all that cost would eat up that 97 cents. But once you get to a certain level, it's completely incremental, and it works really well. Some other businesses with really high incremental contribution margin, MasterCard and Visa. Like they have some of the highest profit margins in the world, why? Because they're ready to set up, right? Like there's really just swipe the credit card, cost almost nothing. They get a fee every single time to do it. They're ready fully staffed. So you know, a hundred more businesses turn on tomorrow, say, hey, I'm gonna take MasterCard, it's free revenue for MasterCard. There's almost no cost associated with that. So really those are really good businesses. And I want you considering what the unit economics look like. Because you don't want to invest in something like, I don't know, some product that's just very low margin, it has no chance to get the high margin ever. So okay, I have low margins today, but you have to have high incremental unit economics to get to high margins eventually. The next one ties into that. So that's lifetime value and customer acquisition costs. So it's kind of measuring how attractive is it? How worth, how much is it worth to be spending money on marketing and sales to bring in a customer? So there's the big thing that's kind of math. The first is lifetime value. Lifetime value means how much is a customer gonna spend on your business over his whole customer existence? So obviously for customers gonna stick around for one year, it's not as valuable as a company that's gonna stick around or clients gonna stick around for 10 years. So it's how much they spend on average for transaction, times, how many purchases they'll make over their lifetime. So for a company with like a huge lifetime value, for customers think a Costco. You come in, you always spend like 500 bucks, it's more than you expected. Maybe you go like quite some month, you have a family. Nobody leaves Costco, they sign up for their membership like a hundred bucks a year and they're spending like a thousand bucks a month at Costco for like a decade. So the spending 12,000 a year times 10 years that's 120,000 that's huge. So even though Costco has like thin margins because people spend so much in the relief. Yeah, Hannah, you got kids, you need Costco, you teenagers. That's clear. We're just starting our Costco journey. These my kids are young, but yeah, my wife's there all the time now. But you're gonna keep going for a long time, maybe till your kids move out of the house and then it doesn't make sense together anymore. And then the other measurement here that's important is customer acquisition costs. I'm sorry, just the key state digital, like them value same thing for Amazon, right? Like once they acquire customer or the customer it tends to order, order, order. The lifetime value is huge and it's still growing because Amazon sees very little customers actually just outright quit. And since they, like there's been customers spying on Amazon since 1998 and they're still buy it, so that value just keeps going and going. Customer acquisition costs measures the cost of society and the first time so the way to calculate that is look at the cost of sales so that can be like advertising and marketing people plus the cost, yeah, so the cost of advertising, marketing people building up your brands, all of that. For Stock2Ware, it's generally those that go costs and what you measure is okay. We added 1,000 new customers this quarter. We spent a million dollars on marketing. So clearly the cost for new addition was 1,000. Let's say the average customer is gonna spend $4,000 over the lifetime, just spending $1,000 to gain a customer. They're gonna spend $4,000 over their lifetime, which is a pretty good ratio. That's 401. Anything over three is good. And for Stock2Ware, if we stick with the like, let's call it 80% Chris margins, because it's, you know, Stock2Ware, there's not a lot of cost to roll out one more customer. The $4,000 might translate to 3,000, the unit contribution, profit contribution. So you spend the thousands, get 4,000, sales and 3,000 profit, that's pretty good. That's why it's such an important measure, right? Like you created so much value. In that example, every customer you add just created $2,000 of value. So if you're an investor on Wall Street or an investor in early stage companies like us, you really wanna see that. And a lot of our companies won't have that yet, but it's still an important concept to understand, because as you scale and do other rounds, I promise that you're capital, that you're capitalists look at that very, very well. Something else to get your cash low, your customer acquisition costs lower, is you want your customers to vagalize it. Like the cheapest way to grow is a word of mouth, right? Like Amazon didn't spend any money on paid advertising for years and years and years. Like Jeff Bezos would just say, grand theost things, go to conferences, and be featured in barons. And like all these people who didn't know about Amazon in 97, like all of a sudden, they're getting all over the front page of Wall Street Journal, not paying for it. People are like, oh, I've gotta check out this new thing called Amazon. Actually, I was listening recently, Bezos went public early with Amazon when they were pretty small, because he thought it'd be great publicity and free press. So if you get that free press, that's the last money in advertising, that ratio goes up because your customer acquisition cost goes down. Think about GitHub, right? Like a lot of new engineers, they've got to really spend money to get them to start using GitHub. No, they just come to GitHub, because everyone's like, oh yeah, you gotta get on GitHub. I stored my code here, you gotta come check it out and start coding here too, and posting it all. So their customer acquisition cost is very low, which is why it's such a good business. So again, the rule of thumb, a thumb is three or higher, and under that, you don't really want it. I'll just wait a sec, any questions? Yeah, that's a fair point on Dress. Tesla had like way more demands than supply, so that any depend anything on ads. Now they supply cut up and the man's flattening a bit, so they actually have to start spending some money. Now you're saying, they're still spending very little. Yeah, you're right. Eventually they'll have to spend more though, but you're right. Okay, so actually have a question now. How much, like a normal company like Ezra, how much would you spend on advertising? Like how do you calculate how much do you spend on advertising? Well, it's an equation, right? Like a CAQ to LTV, and it kind of salt math at the end of the day. If you had perfect knowledge, and you need like one more piece of advertising, drove like 0.2 customers in each customer generates, like let's say you wanted to completely maximize, you'd make it say your contribution margin, on incremental sales, is just over what you're spending on ad revenue. Because that's just the math equation. Does that make sense? Like if you spend the dollar on ads, and it contributed $2,000 in gross profit, cool. You know, that's working. And without having to invest anymore in infrastructure, reality is a lot more complicated, right? Like if you're, I don't know, well, let's see, I got like you don't really want to advertise a ton in the huge and everywhere, and then getting to ubiquitous, because you grab it, damage your brands, but just like an economic textbook theory, and be like, it'd be that basic math. Okay, churn. So we all know what churn is, the churn in, churn out, canceling Netflix, whatever. So churn fits into lifetime value, right? Because lifetime value measures how long customers last. If a company has a lot of churn, and the customers don't last very long, and their lifetime value is low. On the inverse, that super sticky product, and everyone loves it, nobody leaves, or they just can't leave, because they're trapped, which is great from the business side. You're gonna have very high lifetime value. So I'll just call it a few businesses at a high churn and low churn, and it'll be kind of intuitive to you. So one is like selling through a publisher revenue every year is hard. If you have customers that are on repeat and growing with you, like some of the best tech companies, life is easy, right? Like you do nothing, 98% of your customers stick with you for next year, 2% leave, and then 98% of customers who stick with you probably group, because they're consuming more. So let's think about data dog snowflake. A lot of those companies, they're words still are some extent, like Wall Street darlings. Why? Because every year, their customers take more and more services from them. So data dog doesn't have to do anything. They literally could fire their, pretty much their whole sales force, and if their revenues are 100 bucks this year, they would drop to 98% because two percent of clients leave, and then go to 113, because their remainder consumed 15% more. So that's phenomenal, because it just such easy growth. Let's talk about something that are bad. So like meal kits, they lose like half their clients every single year, they turn out, let's look at Palatine. Now that COVID's done, a lot of people come into Palatine, they love it, they use it for a couple of years, and then they cancel. Maybe they're spending money, and they quit working out. I mean, that's like a super standard gym model too, in the real world, right? You sign up for the gym, you use it for a year or two, maybe you forget about it, and you're still paying and not using it. Eventually wake up, see your credit card bill, you're like, this is stupid, and you cancel it. So it's a very high-turn business. The good thing for what we're looking at is we're mostly going to be looking at tech companies and not retail tech, because retail tech does that by turn. But enterprise software tech tends to have some of the lowest turn around, and that's why it's some of the best businesses around. They get super sticky, and they're very hard to leave. Those are phenomenal businesses, and when you're looking at them, try to find businesses that have those characteristics. When you know people are going to be on it, they're going to stick with it, and not leave. And that kind of brings us to the next point, which is we're looking for businesses that have really high barriers to entry, to make sure copycats can't just come in, and mimic you and kill your business once you're established. So, you know, we're just talking about low-turn, so one of the things that makes it really good mo, meaning someone else can't just come in and duplicate you overnight, and they can't kill you overnight, is high-spotting costs, like you get locked in. There's a client that's really annoying to be locked in, but as a business, it's phenomenal. So, think about like Google Cloud, right? Like you move everything on cloud, we were speaking to Dochibo this week at the conference, and they're probably going to use Google for AI. Google's basically going to be giving in, they told us a bunch of fine-cuned foundational models off the Palm 2 for free, and see Janet and Shree have questions on that. And we're like, oh, you know, I asked Max and he were right, and like, why is Google just going to give you this stuff that I'm going to charge you? And it's like, Max, they want to lock everybody in. And the table's like exactly, we're going to be really cautious to like be able to move in a year if we need to, but Google's goal is going to be giving away foundational models, lock everyone in, make them use Google Cloud, make them use Google Tools, and it's going to be very hard to switch off. Any questions on that before I move on? Okay, the other things you want to look for is like make the product addictive, especially if it's in like the entertainment space, your video games, you wanted to addictive as help for the client, the customer, so they never leave in the key plane. I think that's evident. You want really steep learning curves sometimes for a product that's taken off, and that's a form of switching costs, right? Like if you think of how long and hard it is to really get your employees up to speed on something, they're not going to use something else. Like people, like designers, maybe just like, produce owners off Figma. They learn Figma, they're like Figma experts, they're not going to leave. Like that's why Adobe had to go and buy Figma. Figma, like that's Adobe's game plan, right? And Adobe was losing the market chair because Figma was so good, and all these people are like being trained on Figma. The best is when you see a company, and universities are offering classes and how to learn this, just like that's phenomenal. The next generation is just getting indoctrinated and trained how to do this. The universities are building up your software companies' value for free. So switching costs, yeah, Adobe for sure. So switching costs are high if you spend a lot of time trading someone internally, and it's hard to get people to use your product, but once they do, it makes it really sticky. So you kind of want them to become local experts on your thing, and it's just like a way you can make your business extra sticky. Okay, another one is two-sided liquidity. This is big. Basically, this is more for marketplaces, but like think about any business where there's two sides. We talked about booking before, right? You need to get all the consumers, and you're gonna use the hotels, and then you need, which is demand, and you need all the hotels themselves, which is supply. And if you have all this supply, but no consumer demands, the hotels are gonna live. If you have all the consumer demands, but they can't book anything on the site, they're gonna leave. So it's a bit of a chicken and egg, which is why it's very hard to replicate, and knock off the companies that are doing this. But if you do it well, like booking did, you scale both to a nice level, or if you do it well, like Uber did, you're always balancing to make sure you've been of drivers and enough passenger demands. Your drivers don't leave, and your customers keep staying. And you could grow, and it's really, really hard. It's the same with credit cards, right? Like they have two-sided liquidity. If I had, and this brings up my next point, if I had, or my last point, a billion dollars to go start a new credit card company, and I could just blow the billion to try to build it. Could I do it? Could I go to Merchant and be like, hey, you want to pay anything to take my credit card? Just gonna quick integration, and you're done. Okay, really, versus 2% for Visa. Are they really gonna offer it? If I'm like Jordan Card? No. If you have a huge brand in your global, you can start with something like Apple's doing, but Apple's the biggest company in the world. But generally, liquidity, two-sided, liquidity marketplaces, like credit card systems, are extremely hard to knock off. And that's why there's some of the best businesses where Visa and MasterCard have 60% margins. Other things that offer a nice mode that can really protect you is patents, obviously, like anything that's really patentable, hard to knock off, but not impossible. Patents aren't the best mode. Like I prefer two-sided liquidity systems to patents any day. Same with any type of intellectual property. It's also not as good as two-sided liquidity and some of the other things. And then branding, branding's huge too, right? We talked about Apple. Like there's nothing that overly unique. But as Andreas and I were talking about the start of the meeting, Apple did a great job building up two-sided liquidity on the iPhone when it was released, right? Like all the apps, you have to have the developers come and build on your platform, so that's supply. And you have to have tons of consumers have an iPhone, which is demand. And then if you're launching a new one, the developers are like, I'm not gonna build that new OS because there's no one using it. Wow, and I waste my time. I'm gonna stick with iPhone. I'm gonna stick with iOS. It's like way better. And that's the benefit of two-sided liquidity. And that's the benefit of Apple branding. And why maybe they'll have an impact in finance and ultimately have more Apple cards, not to take on master or visa card, but maybe they'll have a shot. Something else to look for. We do not want any hyperscalers who can roll you over quickly. So by that, I mean, I don't want to invest in a company. No one should invest in a company that like Microsoft or Amazon or Google can just copy you overnight and say, hey, we're gonna get into this. We're gonna give it away as part of our suite for free and fresh you. So like Zoom, stock took off during COVID. It's doing shit now. Why? Because that Microsoft gives away teams. Most enterprises, or a lot of them, they buy the office suite. So why are they gonna pay for Zoom? When teams calls are pretty good, like in my old company, we just, we had Zoom, we had Slack. We just dropped all of it. And we just went all in on Microsoft because it was way cheaper and pretty good. So we use teams for the Zoom equivalent. We use teams for the Slack equivalent. And we use teams for the Dropbox equivalent. And all those stocks came under tremendous pressure. And they kept growing the revenues, but the stocks went nowhere or down because nobody wanted to touch it. Because people know Microsoft is lurking there or has already started to chip in on their thing, their business and it's gonna have a big impact. So we wanna stay away from something that's super easy for those guys to roll and do. Now you can always like make the argument that they can get into anything, which is true. There was a port last week that Amazon wants to look at launching a phone plan in the US. But like we'll just deal in the realm of reality and what was logical for them to get into. It was logical because Microsoft had teams for years and they would eventually be doing this with teams. It was already around, it was already installed and everyone's a Windows computer. Next, scale could be a barrier to entry. It generally works against startups. Hyperscalers do work out, seems like some of these companies get bought. Yeah, so that'll be my last thing. So I get to that one's there, him. So scale could be a barrier to entry, but works against most startups not for them. So some companies like Amazon and think when they started, they didn't really have any barriers, right? Like they're just selling books on the internet that's what they started off with. Same with Walmart when they started. They were just telling a lot of different items. They knew that to actually create a mo and prevent me from opening up a bookstore online and competing against them was to get big fast. So they focused on getting as big as possible. They have as much scale as possible and then they actually created a mo purely out of that scale. Like if I wanted to compete against Amazon, how can I? They have like 90 planes, they own, they have like hundreds of DCs around the world. It just became extremely expensive. There's a reason they beat Barnes and Nobles starting from nothing when Barnes and Nobles was the biggest bookseller in the US is that they focused on getting big online quickly instead of just everywhere. They just focused online and they built DCs specifically to be able to ship direct to consumer, their fulfillment centers. Barnes and Nobles had a lot of DCs, but it was to ship huge pallets of books to book stores and then sell them to individuals from that process. They were really bad because it was a different business at actually shipping to individuals. And by the time they realized that, Amazon had already built a big mo by these barriers to entry. And then finally to kind of sum up that whole segment, one of the core questions that like good investors ask themselves all the time with thinking, is this a good or bad business? Could a well-funded competitor starting up today easily duplicate this business or is it cheaper to buy the startup? So that ties into what David was saying. Like David, you were saying like, I was saying some of the hyper scalars you don't want to compete against them. If you create a really different product then you get a big quick enough, sometimes it's cheaper for the hyper scalar to buy you. So let's look at like Figma and Adobe, right? Like Adobe bought Figma for like a crazy number and it's because of what I was saying earlier. Like Figma did such a good job and got there quickly. And people were being trained on it that it was at the risk of starting to cut into Adobe's market. So you know what, I'm not even sure if that deal will be approved by regulators. It might do it should not because it's clearly anti-competitive. It's Adobe which is like a monopoly business and has a lock on their customers. So a real threat for the first time in years and they're like, we're just gonna overpaying by this to kill this threat and own it internally. Because it would be too difficult for them and too hard to get everyone to switch over. Everyone had to inspect someone's time on the Figma ecosystem and learning how to they do it. And there's a lot of cases where it's just gonna be cheaper to buy the business outright than it is to compete against them and hire people. Like I said, this is a good or bad business. I gave the example earlier like MasterCard could a well-funded competitor start up today easily duplicate this business, like hell no, you can spend $10 billion and not have anywhere near the distribution of MasterCard and it's accepted everywhere. So that's a phenomenal business, right? Cause it's almost impossible to replicate today. Any questions on that? Yeah, I have a question. So how would you go about like, think Figma as like the example, right? Like if you were starting to develop Figma, you might say, okay, well Adobe is just gonna eat my lunch, right, like right away. But then obviously they didn't say that and they were able to get it to the point where they were repetitive to the point where Adobe wanted to buy them. So it seems like there needs to be some kind of like distinction in the analysis to figure out whether or not you can actually reach that threshold from wondering completely. It comes down to asking the founders what their plan is. They should be aware of it. And I say the founders for last, it's probably the most important point. Investing startups versus public companies. But yeah, the first thing that would have asked Figma is how are you gonna differentiate yourself for Adobe and how are you gonna make sure they don't just roll you over and they better have a good answer or I don't want to invest. If they haven't thought about that, like forget it. So there's. So sorry, like what would their answer possibly have been that like what do you think in their view, their answer would be that that question. I think you said we're gonna focus on a niche that it doesn't make sense for Adobe to get, go for and then roll it from there. So we're gonna get people on the ecosystem and learning how to use it because we're gonna focus on something really nichey that Adobe doesn't have anywhere on their roadmap. And they're gonna use that as a beach head to roll out to other products. Like anytime you're going up a well-established data company that's kind of the only way, right? Then you start super specialized and branch out after you have existing clients. You start adding more modules, more features and you start encroaching on Adobe's core business. And then Adobe sees it as a threat and they're like oh shit, we're just gonna buy these guys. But yeah, Adobe probably could have done that, but they probably would focus on like 100 different things. And any decent founder, if you're gonna invest in them, they better have an answer for that and it better be something smart. Cool. So MasterCard, they kind of invented the market, Sean, right? Like is that my visa? So like they kind of invented the card networks, right? It's like a MasterCard visa and American Express really, but American Express isn't as widely covered. The MasterCard is huge around the world. Like you can invent a space, which is what MasterCard and Visa basically did. They also had tons of travelers checks so they're already global to start with. They had a big travelers checks business. They had relationships with banks around the world from that. And from that they transitioned it to this great part system which is annoying her merchants useful for consumers, but insanely profitable monopolies. Apple, they started with no developers users. Branding is huge, right? Like Apple was on the verge of death until Steve Jobs came back. I think it was like 97. And Apple came out with those colorful Macs, which kind of like got them off the death bed and making money. And he kind of used that and crazy, crazy branding to bring her back from death. And that actually brings me to my last point, which is like founders or with Apple and CEO with Steve Jobs as the founders. So it's important for large companies. It's even more important for startups, right? Like it's number one, two, three. But the founders must be religious about their products and believe they're gonna change the world against all odds. Because you have to be a little bit crazy to be a founder, you have to be a little bit arrogant. Most of them are gonna be crazy arrogant and wrong but the ones who are crazy arrogant and right, like their good founders. So for founders, if you just have money in the bank, it's not enough to build a successful company. If you just have good tech, it's not enough to build a successful company. Like how many times have we talked internally, there's something like really smart academic who created something really often, had no idea how to sell it, had no idea how to raise the funds, had no idea how to motivate people to come work for him. And he just died on the vine and then like a year later, someone who has those skills basically just took that idea and ran with it. They did a great job. And it was massively successful. So founders, what I'm looking for is founders who are motivated to build something. They care about money, but it's not all about money. They would be doing this for free because they believe in it. They're not looking for a quick score, they're looking to build something. Like it's a bit of a cliche, but they're looking to change the world in some way or at least have their product to have a huge impact on the world and they truly believe that. Founders need to be persuasive. They're gonna be asking other people to make like sacrifices, to make the founders dream come true, which is bringing this company to life. They're gonna ask for long hours. They're gonna ask people to give in and just work on their vision, not the employees vision, so they need to be persuasive. They're also gonna need to be able to convince investors that this company is gonna work in the future and there's their funding. So that's what I mean. They need to be charismatic and they need to be able to tell the story well or it won't grow and it'll die on the vine. They also need to understand who their customer is and what problem they're helping to solve. So that ties into the answer, the question and the conversation before, right? A founder has to be able to articulate that. What exactly is the problem I'm solving and who am I gonna help and what's the approach to do that? I don't expect founders to know every single point that I just mentioned or in this presentation today, but they should have a general understanding of all these things. Like if we talked about, oh, you are gonna compete against Adobe. What's your plan on that? Like that's question one, if I'm sitting down with the big founders, they'd better have a good answer. And let's just talk about some of the super famous CEOs and the huge companies. Just so happens, these guys are all assholes. You do not need to be an asshole, do well, but you do need to character as excited as it explains. But like Zuckerberg, he's like all these guys are zealous. Like Zuckerberg, Steve Jobs, Elon Musk, Bill Gates, Jeff Bezos, Travis Klamik, AppLike Uber. All these guys have all those characteristics and they're not bigger than their companies, but I promised you at the same time, they would build in their companies. There was like 10 of a guys in the world who probably had the exact same idea as all of them. I mean, a lot of them weren't even first. Like Facebook obviously was like, I don't know, maybe the 20th social network out there. And yet it dominated because these guys were killers and they knew all this stuff, they could tell the story, they understood what their consumer was. They had the tech and the money, but they needed all those other characteristics to actually make it work versus everyone else who failed. So that's it for my thing here. So I'm happy to have a more general discussion if anyone has questions or wants to talk like specific companies or what they're thinking. And they were lucky, you need luck too. Yeah, that's basically life. Better be lucky than good. Yeah, you need all those things, but like you control what you can't control. So look, so when you go out there after today, Max and I are gonna be trying to find companies. We're gonna take a lot of meetings. A lot of them are gonna be bad. We're gonna pass on them, like that's just a numbers game. We're pretty much happy to sit down with anyone with like a happy, it's an idea of. Hopefully after this you have like a bit of a sense of what we're looking for and what could work. And now you have more of a critical eye. So when you see a startup or talk to a founder and he's saying these things in your head like, man, this isn't gonna work because of, you know, there's no tab or there's, you know, like Amazon's gonna roll these cuts over in like two days or whatever, you know, or the man, this is really interesting because not only they're not doing it and no one else is doing this, but like they're going after a big market. It makes perfect sense. They're solving a huge pain point and like this guy can tell a story for this girl, tell a story like that's what we want. So yeah, that's it guys. Hopefully that was like kind of different and interesting. Thanks Jordan. Cool, all right, I'll see you guys later.