#52 - AI Teachers, Deskless Workforce & The Passion Economy with Zak Kukoff

yesterday we asked people to do a thing to do a thing we asked we told them that we would send them a like a gif i don't know what we said oh i know they could ask any question they wanted to ask and me and sean would answer it'll do q and a and in exchange they had to subscribe unsubscribe and unsubscribe again we're trying to game the podcast ranking system of it we're willing to have our our real listeners kinda click farm it but we're not just being you know paying somebody in the philippines to do it that's our line i'm down to do it no that okay well so far that's been our line we dropped the stu episode today people are liking that dude christians everywhere are are hit me up oh yeah the ceo of pray reached out i was like hey dude read com it's do because we've been we've been talking about religious stuff for like two or three it's been a theme across a couple episodes and we went super deep it i don't know if you listened to the one was too and so a bunch of people who are like church tech bunch of church tech entrepreneurs reached out i had a rabbi email me really about this podcast i also had another guy email me saying i'm out of a job and stu gonna replace me and for the record i'm great with that i'm totally fine with that okay so we have a guest here you wanna yeah what's who are you hey how's it going my name is zach k off from investor emergence capital we're an early stage enterprise sas fund we're known for investing in salesforce yam zoom v gust etcetera etcetera it's a pretty cool job so i get to meet with some of the most interesting people in the world all the time i get to be a done guy in the room although we'll see after this room at the end of the podcast i'm feeling on that one yeah you should be the smarter here so yeah but i out on my back jokes at the end just keep the good jokes in get rid of the bad jokes so that portfolio is pretty bad you said salesforce zoom yam or blah blah are those like you guys get in that series d and you just get the logo or did you like actually invest before it was obvious we're predominantly invest in series a that's what we do about eighty five percent series a fifteen percent series b zoom we're the largest investor of viva we were the only what's viva viva systems was a pharmaceutical and d still as a pharmacy example that sounds huge how yeah it's a huge i mean think about for a second like you know ten years ago right nobody was thinking about vertical saas as an invest category what the conventional wisdom was oh r saas is a small category but sort if you go horizontal across thirty different industries maybe there's enough vest space there and viva was the first multi billion dollar hits in vertical saas so it was kind of salesforce but just for pharmaceutical companies and they've done phenomenal well we're were the only institutional investor leather series a and they went straight from series a ipo so a huge huge apple there right and before this you worked at flex and then you had drove own thing yeah years and years ago back in twenty eleven started a company called true today in the ed tech space where we can talk all about that because that was and very fun expert ask us how we know each other i asked them how they know each let's say the answer how do you guys do don't know each other we don't we we met downstairs he's a funny guy on twitter and i was like hey funny guy of twitter come come on monica like come on the podcast i think the exact exercises was alright go make me laugh that's what what you mean he's funny he's what do you mean i'm fighting please funny like like okay i'm gonna i'm gonna find one of your tweets that's funny but like you make like wisecrack cracks i mean yeah he's trying to make a joke i would say make his expense my own mostly oh that's cool you know do some occasionally some others too and we were talking before we start recording about the recent hot take on whether or not employers should offer equity that was pretty fertile ground like there are a lot of the truth days twitter's as weird and engine where it rewards people for saying pretty dumb things all the time and so i find it funny to comment on one of the things i think are not particularly well reason that people sort of tweet out with without particular purely well known or influential people who feel like should probably know better and yet instead just constantly say dumb stuff online you wanna give an example i think that equity things are pretty example for those who who may not have seen jason freed of base camp was tweeting about and the fact that employers shouldn't offer employees equity in our company right which i think on the face of it if you think about like tech as a wealth creation engine you're talking about beforehand little it too the engine of wealth creation it's not cash comp equity the ability to be twenty seven twenty eight thirty a relatively young person come into a startup and almost win a lottery in a serious way doesn't mean that everybody who joins aids tech companies gonna have a five million dollar outcome at the so what did jason say jason said people employer shouldn't offer equity to employees he's not actually so his take if i'm jason and i like jason he's has a good guy i don't know for friends but we know each he he basically was like you know what tech companies do is they sort of low ball you on the cash side offer you this promise of equity which most likely turns out to zero and you're left holding and losing lottery ticket better to just pay people treat them well give them great perks give them good like work life balance that's how you should compensate people well so that's his take the first part of that is right second part is wrong the first part saying that people low ball on cash and offer equity instead yeah like they don't have money i don't know that i so it's risk adjusted i think right like why i saw take and i forgot who said it on the totally ripping it off which was if you think about the number of companies hiring people and you kinda weight that by the equity offers it's predominantly like later stage companies that are really making equity offers and really a lot of fang companies are making offers right yep but those are startups ups those aren't startups ups so could cut out like anything public would even just wait private companies offering start like equity there are many many more jobs these later stage companies where the equity has some defined value and unlikely to go to zero may not have exponential upsides un undo but unlikely to go to zero and the cash comp is pretty good or at least relative to what you would make working for a non type company of the same size it's definitely an early stage you can get low ball on cash and make it up in equity i think low ball or all not a good yeah that's his terminology but you you just pay less yeah maybe you're making a little bit less on cash but if you're looking there like a series d startup you're probably making a pretty good cash comp base and you have real upside in the equity portion too and i think that's the part of miss missing his other piece was like oh because you have equity hey you got skin in the game you should work your ass off for this and your skin in the game is like whatever point one percent of the company and he's saying that's not actually having skin in the game so that was his take he triggered everybody which i think is his goal with ninety percent of these right is like to trigger silicon valley yeah and then therefore stand out as the contrast the anti silicon valley that's the brand it's a good and he plays it like a fiddle it's awesome so let's talk about this is related your flex sport well no before that he said he raised money i wanna and you said it turned it well but yeah but the flex four one is actually the perfect example you worked at flex sport which was a well you were you which was a a hot startup andre i that so you a two hundred how did you think about your cash versus equity what was the equation you did in your head i mean i think it actually does help the back up a little bit to this to my startup first and maybe we can kinda come back the flex sport so think about my startup up i started really early it was twenty eleven i was sixteen oh and it wasn't like to be clear like this was not this was like a i'm a i'm still fairly young and i was really young man i didn't know i didn't know to a large extent and so i sort stumbled into start you want a contrast for a minute i think the flex sport approach was pretty well seasoned versus my startup when literally it was a science project that i ended up raising some money and going to techs star score right like i had no idea what was going on i was frantically kind of had did you drop out or your so i actually left my sophomore year high school early like took ap test and i was like peace and out of here and i spent the like three months in boulder colorado for techs stars was back when techs stars i was like two locations or three locations so it was like boulder york in seattle how old you york i'm twenty five now so i was i was young that i'm still pretty young now like think so at least and so that was like very much not a well considered it wasn't when i was thinking about this move and i was like oh i've evaluated all the options in my opportunity space and i'm going just for the one i think has the highest upside learning or value whatever it was one of these situations where i fell into it they became or a really steep growth curve i couldn't have predicted that of the outset versus flex where i was how much of you raised for that one we raised about two hundred and fifty k so we had ton of money i don't went out of a business i have this i mean you ever make revenue we made some revenue and we had some actually some partnerships i went in but the challenge was i was sixteen and my two cofounder were seventeen this easier to take you seriously you all actually it's like funded via allowance yeah because my lemonade stands now money to this no i'm really we've raised a little bit of money but the challenge was we actually had some investor interest and one of my c founders have gotten in the stanford his parents said to him and if you start take time off from for to go to a startup up that's it we're just designing you like we're we're cold shoulder frozen is he asian yeah they gotta use age i grew up in an immigrant job all of my asian friends parents in the same exact fix and off do a startup up that's it my phone were pretty supportive but at that point you're losing one of the two cofounder of a company your fundraising prospects it's become pretty good to knock rates and still by the way i was seventeen at of one at that point so it's still really really young by you know by violation that's kinda one into the we have these guys who work out here andy and ellis and they have a company that makes i won't reveal up but yeah good it's a great company yeah a great business to own and their parents were like when are you gonna go back to being yeah consultant they're both have chinese parent like from china and so i heard all about the asian culture this way i it's this like very you know my parents are both i guess second generation their parents were immigrants right and there's very where from italy on one side and from eastern europe argentina on the other side and so this is very like traditional mentality which is which is by the way been the right like if you were to pick a choice for the vast majority is high in america the better wealth creation tool was to go to college go to grad will become the white collar professional that was the successful path for a long time it's like recently that kind of playing the startup up lottery for lack of a better term has been the successful choice and so for these my immigrant grandparents their at to dude was they're gonna work hard and my great grandfather was a factory worker in argentina right and he worked his ass off that my mother and grandmother can be school teachers so that never minds i could go get you know a phd year an md or whatever become a professional and clearly it's not necessarily happening but that was like that was the the life plan for immigrant families in this country for generations was every generation one more level of educational attainment which correlates with one more level professional success it only recently has happened to couples mh totally and then so so you'd go to you go to flex sports you were saying yeah have that experience cool you're now seventeen eighteen yeah so yeah did just start up like seventeen eighteen decided i go to college went to nyu really special program there called gall make up your own major and so the whole school is it's like build a berry university universities ways used to joke but it's really that you can do an independent study you can do work study you can do classes sort of like hodgepodge programs together that's cool and then while i was there i was helping run dorm room fund which is first on capital college fund it's a about a million dollar a year actually maybe more than that i'm not sure now but a million dollar year vehicle just for investing at pre seed or student founders and that is this shit a good idea invest in these young kids i think the house dorm dorm hunt has been around for a while how how does it fucking horrible idea well we have the experiment ran what what happened experiment ran it was a pretty successful experiment what what came out of it what was i mean there have been some plus there have been some big hits and there have been some pretty big messes yeah know and i think got a big hit like fiscal notes done pretty well i was dorm fun bev the beverage company done pretty well informed fun brooklyn but those guys were yeah student founders yeah know brooklyn the lens company i'm amsterdam i'm gonna get probably raised on twitter after if for not having come up with the whole portfolio but i'm sure they're are words that i can't think of and on the side you have like lily ai which is if you guys remember lily drones yeah oh yeah they raised failure they raised like like thirty my i can't remember the exact number they raised a bunch them kind of flame out and that's the the tower side too you could have people who i remember it was one who experienced founder don't know how to manage what's the what's the one out of berkeley there's another there's a berkeley specific fun jeremy runs yeah the house yeah jeremy's is great and then the peter teal thing dude i'm down like yeah if you're like old enough to be an adult and that start something but i also think that you should just be getting drunk and like hooking up with people and yeah get drunk and kiss some people yeah like that's our fellowship the sam and shawn fellowship i mean a little blues and kiss him like that's so the dream the i don't know their and then give it then give it up quit and start intermittent fasting after that yeah that's the like plan at five am yeah like a little bit later to stay up until five yeah that i there's like an important socialization element of college which helps you learn emotional maturity and learn how to deal with people and it's tough if you don't have that i don't know when we make it up certainly don't make it up by moving straight out here and i'm working really hard early well plus you don't make friends dude you don't make friends after you graduate your friends are who you who you met in college and then the rest are just you just go to work and then you go home and you're like wait where do people make friends after that no more friends i'm like uncle rico like i think of college of like oh i would kill to go back yeah give it all that yeah for sure like sean who produces the podcast he's always like oh well you know you know he's like twenty twenty one he's like well you have you know experience you have capital you have this network you have i'm like dude i would give all of it up just to be right back where you are in your position right now like i'll trade you if we can do some freaky friday thing completely agree yeah we we remember that young guy oh you were there we met a young guy our meetup up and he was like twenty one and he flew up and i'm like wow so like if i was if i was eighteen and i lived and i went to nyu yeah i would be not being in the door i would only do the dorm room phone if it helped me me carol's i mean if you're in soho at your eighteen that's the dream i don't know why yours are really fun college to go to and and certainly i don't really fun i'm there but here's the flip side of it right like i i see the other side of this which is it does feel today like they're compounding effects both reputation and professionally so working and exposing yourselves over like some kind of real tangible ownership of work really early and the earlier you can do that whether it's like a startup or working for a large company a significant role or building some application even if it's just tweeting dumb jokes on twitter like that compounds over time and if you wait five years you can you can both have fun and build compounding professional returns at the same time it's sort of the argument i would make here right you can do yeah you could do both for sure for sure you could do it's not as fun as just doing the fun it's not as successful it's just doing the success but a lot of folks try to lock that but you'll end up way ahead of the curve because most people are just having fun and not doing anything that like builds their alert sort of like career foundation ironically when you're in college okay so you you do all this stuff and by the way when you said emergence you really emphasized the c at the end of it is it because people think it's emergent capital i i think people there's a couple of one of people think it's emergence capital people think it's like emerge capital i've heard like five or six different issues with the name the other thing is our website is e m c a p dot com like you first joined like oh it's m cap and people were like oh the letter m and then the you know c a e i probably you need to re you i've not up to me i probably had like six months of emails i didn't get because or like oh this jerk gave me like a wrong email address of that part you bouncing was screaming m cap on the top of my lungs people were like oh yeah like zach m cap mca a b right so if it were up to me be a different url alright so let's get to some of your ideas yeah yeah also i promise you're funny guy and i found a tweet from you oh okay so bird oh that's stuff do you hear about this bird launch bird pay so yeah bird scooters launch bird pay zach comes in on twitter says when you make scooters but then you see four fintech companies get acquired in one week you you make this pivot for talking afterwards so it sounds like turns out tweets aren't that funny when you read them out loud later in public it was like i know what to hear the room is done when you how how big is the fund yeah but half a billion dollar fund and how how what size checks do you rate it's a good question we are less constrained by individual check size and and so just just come on give me the answer this is the answer this is the real answer i i've been here about a year and a half now i've seen this everything from like two million up to like fifteen million okay there's my broad range so when you're coming from this perspective are you gonna come from those of these ideas of you think that wealth creation is in raising money or in owning all of it it's a tough i wrote the dichotomy really makes a lot of sense from where i'm setting but i'm my own is a false economy i agree with you but my own book but whatever i guess what i would saying is this like most businesses probably shouldn't raise venture capital this means mean you shouldn't raise outside capital at all but like when you raise venture capital there's a very specific growth trajectory you are signing up and the challenge is that can endeavor it's un down upside right like there's a huge opportunity if you do that well and if you don't do that well it can go to zero really easily so it's a high risk higher reward sort of life to be in if you're trying to build if you're thinking like i wanna optimize for i don't know like what number is i can retire but i'm not gonna buy a yacht whatever number that means you maybe it's seven million maybe it's ten million whatever like it's likely to get that by building your install business and growing sustainably and slowly rather than having a venture sized outcome whether that's positive or negative yeah i'm gonna throw out some bullets you sent me some bullet points beforehand i i don't know what they are i i don't know what they mean yet i just have the headlines so perfect desk list workforce what is that so that's one area we think a lot about an emergence and so think about like where do venture capitalists invest right think about what are the biases that vcs have most vcs invest in things that are pretty easy for them to find like things are around them i think about like every vc i know where are their investments it's you know it's it's saas tools for white collar workers it's social consumer social tools it's like cp g products that have like like pretty subway ads new york right mean that's kind of the areas coastal yeah c soul elite people a hundred percent like like yu who like have disposable income but you you get it really quickly you see it no way it's like oh i visceral really understand like people are listen to this shit right if anybody was snip it all you yu out there yeah yeah i'm gonna get dragged by chocolate later in that one but yeah like anybody who's like an upper middle class y is solely in the demographic adventure and you think about the fact that eighty percent of workers don't work behind a desk every day and that doesn't mean though all blue collar but it means they might be like a nurse they might be a doctor might get a teacher on desks right there's a huge segment particularly in enterprise or in b to b saas a huge segment of folks who fall into that category and right now one percent adventure funding goes to companies that sell through that category can you give me an example of a company that sells that category know what you're thinking about so like an an an example of a company that does it it was like a rig up or something like that right or like whatever earn in or something like that upkeep is one of ours too stand of that way which just like facilities management like any company selling software to a bit like we have other one rich you give so what's a dip what's one that you think could exist okay that doesn't got it got it got it i think there's of innovation still in manufacturing itself like you think about the line of manufacturing we have one bet that helps people learn how to do our seasonal manufacturing better so like there's a lot of manufacturing that's just put slot a in the portion me and it's sort of wrote over and over again there's a lot of manufacturing that's human driven you actually have to know some skill to build the thing right and so we have about in that space when you think about like the rest of it ever warehouse or a the rest of the factory beyond just the line itself when optimizing everyone moves optimizing where you store things optimizing the actual process and workflow i think there's a huge opportunity there still i was in the ad tech back in the day i think there's a lot of opportunities still in med tech that's a huge one that's considered can you go back go back to this first one yeah yeah what's a an example of factory who would use this so you could think about okay i know you guys have a lot of like to fill by amazon guys in the show right you think about any factory and like shenzhen that's making a bunch of tools if they could have like a five percent more efficient factory that's probably that create some real gross margin if that doesn't exist before and thought it gives them some leverage on labor costs they didn't have before so any factory making commodities probably wants to optimize their ability to quicker because the pricing is an area when they can't really increase it who's the leader in the space now a lot of this is blue field a lot of this stuff there's not anybody making software for it today it's like i have a factory manager who might have a clipboard who walks around and says like okay one is do this thing step two is do that thing and they're on foot saying hey make sure you're doing this at this time teaching a process and so the question is the same way like salesforce for sales managers created optimization or workflow for those folks to understand the will levers their business is there like a similar opportunity in manufacturing or you can kind of sit at this higher level and do that as well which industry would you start at this is interesting to me that's a good question so while you think about that for a sec so there's one which is he's what he's talking about which is a software tool for to manage the actual work that's being done then there's all the like sort of robotics and automation that's going into these factories to improve them so like for example i was looking at a video of this printing factory so basically they print you know if you're wearing you know none of us in the room were wearing a pattern but like okay adam's wearing a striped shirt so that fabric has to get printed and basically gets printed on these like you know football field yards of fabric and then they literally have a guy and that guy's job the there's a machine that un spool it really fast and he's just looking for defects so he's just staring at it not blinking and he's just looking was does the does the do all the stripes of the great in in china and so i was thinking like this is something that a camera with computer vision does way better than a humans gotta stand there and be like is there any defect there defect it's like qa right quality control you know this guy is literally just staring at this thing as it un spool the whole role and then he's like yeah look good or if he if you see something he has to hit the button rewind the spool would be like no it was fine sorry continue using general all time yeah have you seen on the the remember did you ever watch that tv show how it's made yeah time i love that show and you see it all the time like at whether making candy and shit and hershey's right there's like staring at it count machine picks no great it's the same thing it's how it's made just on twitter it's phenomenal machine picks through and see like thousands of really cool examples of machines you never thought about so i think that's a one opportunity the other thing is if you particularly think about like really high margin goods i think about an iphone for a minute right like our iphone iphone is a big margin attached to it every component apple has like some up upsell their paying that many fact true for that's an situation where that maybe humans who still do a lot of that work because it's it's too much finesse for a robot to do effectively it's not the stare at this like thing un linking for five hours and when your eyes give out it's right mis peel this put it on the backside put it back together and push it forward that working in a lot of ways and so people do that and it's expensive to have people people are hard and by the way people get tired they're not optimal there's a lot of of challenges we have them just like company that's built on human labor and so if you can help people be better of their jobs a you can ideally up level them to to more intellectual roles but also b you can increase the output of the whole factory entirely you're not thinking about a collection of individuals for the first time can look at the entire system at once it's about distinction makes sense right what else what else we got we scroll down a little bit so so the the your stuff's at the top right now so passion economy yeah i think there's yeah this is kind something i'm thinking a lot about and and this is a term interesting and you're speaking my in my language these are all boring ass topics i love maybe it's not like five listeners but i love boring no people like that we talk about that a lot my that's my i mean listen emergence everything we do is boring like it makes way more money it's i think so yeah these are things that do really well and by the way boring is good the more like sexy big press and tech crunch stuff you get the more competition you have for that slice of your market if you are boring under the radar like aviv great example right no one knows who they are multi billion dollar company that only raised one round of funding in in a in a huge like big whale hunting market yeah that's magic that's that's kinda like that's the dream scenario can you can only walk that tight rope of raising money and still owning a ton how much do they raise we put in seven i don't know i think they only in total raise like ten and then went public on that which is the seemingly capital for that's crazy i haven't even heard of this what's their market cap says like twenty bill now but i'm what the fuck i feel like i do have all the cool yeah it's not time's upset it himself yeah how can i let this keep by me anyway sorry say again what do they make in like that or no the products yeah it's think about like everything salesforce says for sales managers it's a crm or a crm mask tool just for far circle companies so like for research for clinical trials for managing new drug development pipelines like all this kind of wonky gore stuff that no one from the outside looks at that is hugely lucrative the founders work and they might they had to have worked in that industry it's a good question i believe actually was off off my head i believe one was from the industry i believe one maybe even came from salesforce around some salesforce background beforehand too because how do you even find that that's a problem that you have made i mean it's how it's always helpful when you can come from the industry you're tackling because not only as you know like where all the boring corp stuff it's not up visible is you also know which those are good business ideas we a lot of boring stuff that is impossible to go after we're not possible unless you have millions of dollars to burn which is less attractive so this idea of like passion economy think about for a minute alright there's a long tail of people who are building really small businesses some cases like podcast broadcasters podcast are a great example of that right podcast newsletter writers are kind of classic examples anybody who's on like there's a huge long tail folks and streamers youtubers or was anybody twitch right providers fans right there's literally a huge tale of these people and today there's a lot of work that they're there's some software that's starting to be developed to make their jobs easier here so i don't know what you guys use to distribute this podcast like subs stack for newsletters is it's a kind of a classic example right pat for creative in general so that's a horrible business i like that you call it pat well i call it's a it's nice like it's not it's nice pat patreon like a patron like a page now you know i fair feeling that makes a lot of some yeah sorry learning realize welcome to the passion connor passion comments so that's the password to get in patreon but like it's interesting because some of them are are are not good businesses and some of them the whole business is just collecting payments and having a huge margin on top which is a really really go fund is a great business that's because the whole thing is cash comes in you take your margin on top and you should you cash app so it's a really easy business to run anyway think about guys there's a lot tail these folks and there's a lot the people who've have been doing the long tail to today have been focused mostly on creative so a lot of people who produce or create new products or contents i think there's a similar long tail emerging in a little bit professional services so about anybody who was like a one or two man consultant shop anybody's like a tiny law firm kinda of middle of nowhere anybody's got two or three person accounting firm and think about the fact they're probably very good at running their specific business they're they're probably great at being a local doctor or a local accountant a low whole lawyer but they're not created to all the stuff around running the business like collecting invoices on time jennie you know having docs and setting up documents to secure way generating documents use thirty times a month and i think there's not need to build a pretty low cap like capital efficient business but it rolls up like five or six features around these and then picks a vertical and just sells aggressively into this sm smb long tail them what features probably go like some other say like invoicing are kinda classic one where you can just collect cash flow build margins send cash flow back out document generations are really good ones so if you're an attorney and every you know week you have a new client who comes in and they have to submit same like five pieces of information maybe some of them use doc sign doc expensive if you're looking at shoe manage you know a law firm in like idaho you're not gonna spend a thousand bucks a month and a doc sign subscriptions so you can have your four clients a month out form right and so it's a generation of the form it's filling it in again these are a boring features this is not a tech problem that needs to be solved but there's a massive distribution opportunity in the long field go here let me catch in on that yeah go for okay so i'm a c owner in a small software company that makes fifty sixty seventy thousand dollars a month mh and it's a checklist software mh we try so here's what we did yeah checklist doesn't like to do list yeah to do list and what we did was we i bought it yeah and we tripled prices and that's all we did yeah and we just made a lot more money and we carry guys it tiny he's my friend yeah okay so that's i'm telling you things george yeah like that's a great model yeah that's what we did we bought a company for single digit hundreds of thousands of dollars triple or quadrupled the prices i mean if we're talking like two dollars and ninety nine cents month to like eight dollars and ninety nine cents a month no big deal then what we tried to do was we learned that selling things that are eight dollars a month is really hard yeah and so what we did was we looked at who uses us and we went to we pardon hard and what do you mean by that it costs it's really hard to acquire customers so you can't spend on if you're acquiring someone yeah for a five dollar a month product that means it's sixty dollars a year and it's really hard to quote spend money on advertising to get a customer approximately for sixty dollars a year you could blog yeah and build a brand but that's a little bit harder for guys like me who are just buying companies that only make money and not like making making it like a personality driven thing by the way it's hard tubes you can't invest in customer success then too so if i'm kind churn somebody right there's like there's not a a mechanism in place you correct me if i'm wrong but i don't see off mechanisms in place that capture those folks in a profitable way if for selling ten dollar a month off yeah it only works if like your buffer and you could like pick up face behind it and we like oh this is i buy because this guy i call us guy twitter for us if we were just buying them it was just cash cut it still is a miniature and so what we did was we looked at which industries use it most and for some reason this one company that was a dentist had a lot of their customers on it and so we are vision was let's talk to them and build something for them where they any job that has a to do list let's build something just for them and see if we can do like a dentist to do list yeah and we did it and it and and what we found was it was really hard to go after these small businesses because even then when we raised prices it was prohibitive expensive to go after these small to medium sized customers it was very expensive and very hard and so my opinion with that is that an idea like that that goes after these people only makes sense if you're gonna if you have an interesting way to get your product into their hands what's exactly right try this is not a tech problem it's a distribution problem i think you said it really well and people typically don't understand that they say well i've created this interesting thing therefore everyone will buy it yeah they're actually you unfortunately wrong i think that what i always say is if you have amazing distribution in a shit product you're gonna win if you have amazing distribution and amazing product you're gonna dominate yeah and so it's kinda like kylie card what's the fuck kylie card jenner kelly the fuck general generated dude that matter fuck sells you're right here's a huge distribution channel she owns but this is relationship with you know millions and millions people and by the way that's when i think about my startup back in twenty eleven we fell the shop you just said it's not gonna go built are really great product dates spent so much time effort on product and we had no idea how to distribute it through this long tail like schools and teachers are trying to sell to right it's think the hardest people to sell oh in impossible because a person who buys is not the person who pays was like think you have this crazy cash crunch every month where it's like oh even though i have committed arr of you know a hundred grand whatever is hundred k i in fact have really arr of zero because it goes through like provisioning goes through the accounting cycle like in the district that you don't get the money for six months after the actually on the contract right die and that's six months the way yeah this is generically this is like the what they call the smb problem right and some some people crack it and when you do crack it works like even in education i really wanna have the guys from mystery science on yeah because i feel like they actually have cracked this problem or more than anybody else seen in that space where they said you fifty percent of elementary schools use mystery science and there's actually that's an amazing penetration there's a calculator that you can use to do this but you could my my opinion i'm gonna launch another software or i'm gonna launch a software product one day i'm gonna do is make sure that it costs enough money that i i could hire a sales team yeah and i think that number a minimum would probably be five or ten grand a month well or sorry a a year there's this trend right now where it's very sexy and fun say we're bottoms up a shit and we're growing bottoms up we don't fuck that but let's look at i'll go through the s one of all these major tech companies that gone public in the last two years look at zoom which where i look at pager beauty look at slack and look at where their revenue comes from i think it's like slack like five of their or maybe it's another one but like for in many cases five of their customers have like thirty percent of their revenue it's super super concentrated in just a few huge customers and so the bottoms up motion can actually can work in early days and it works for a little bit but when you get big enough that you have a billion dollar outcome you need big whales to actually pay for the whole company so at our company i didn't wanna i was like i was like not gonna hire sales team it and it was like putting a match on fuel a hundred percent and normally with be you said something like five to ten k per year yeah that's well that's too low because like if you're gonna actually have a sales right like a fully loaded sales they're like you know two hundred grand or whatever so i guess what i mean is there's actually a stat that shows like the companies that achieve a hundred million arr there's like a dead zone so you either need loads and loads and loads of customers at a really affordable rate of like a hundred dollars a month or you have to our minimum five five g a year right but and in order to have a sales team i think that for software what's the sales code of five hundred thousand dollars a year there's a there's so david sack who was a founder of yammer put out a a beautiful post or maybe it's a youtube video that says how to how to build your sales team he's like look i didn't know this one when i got into it we started yammer thought we're gonna get this bottoms up adoption then we needed to make money they did actually get bottoms up adoption but they didn't make bottoms up revenue yes and and so the they got the product in and then they go to cio and they're like hey every you know twenty percent of your employees are using this don't you want control over this and and so then he just walks through he's like look this thing you don't need to be a genius like just follow the playbook don't try to deviate an invent venture own sales system like playbook and so he was so he walks through it i don't i don't remember off the top of my head but it he walks it on youtube he's like look here's how you calculate your comp for your salespeople here's how you calculate your quotas there's these two options are either gonna do with this path or this path depends on the price of your product and here's how you need to think about it here's when you hire you know sort of a sales manager and here's what you here's how you compensate them he literally just lays it out and it's like oh this is if you're somebody who's in that who's you know building your sales organization and you kinda don't know what you're doing just google david sacks youtube how to build your sales team or whatever and you'll find this youtube video with like a hundred views but it's great sa is the best he's super smart on this is obviously done it a bunch of times where think is interesting you know saying what you said earlier like when we come into companies one of the first things we help them do is just triple prices and that does that's the same thing if it's a five k arr is there a five k ac same thing if it's it doesn't matter what it is yeah you almost always can compress things significantly higher than you think you can and generally the companies we work with you wanna see them at a minimum like twenty five k ac that's like that if you're having if you have twenty five k accounts so that's twenty five a thousand dollar accounts rather that's where a year yeah year that's where you start to see some real leverage running out of sales team if you you're a little softer that it can be a little bit tough to break even on here's a little trick to make money i i don't think it's the easiest way but this is a small trick find a business and you could buy these businesses for cheap mh find a business that's engineering lead so someone who made the software built it okay and you could buy these companies for s cheap ten thousand dollars or all the way to billing i mean doesn't matter but you could buy there's all these quite like brokerage who sponsored this is one of them you could find these widgets or whatever you can buy them for one times revenue and if it's too expensive for you you can quit a small business loan you could put only ten percent down so you could buy a hundred thousand dollar business that may that for ten grand and if it's engineering led the likelihood that the pricing is wrong is high yeah so you literally just eat buy a product okay and just change the number on command to a price like dollars on you're you're a code now price okay and put a zero like so it's like one dollar a month if make get ten dollars a month it's ten dollars a month make it a hundred dollars a month and if that's all you did people will pitch and complain to you customers might bitch and complain to you the numbers will likely stay the same except for the revenue will change yeah that is like most most people are shocked by that no it's it's it is always surprising the pricing elasticity of most customers like if you have a good products not even great products a good one average products most people will pay so much more than you think but engineers in particular are always guilty of us absolutely by the way that's the same thing to too if you are even a decent marketer or buying one of these businesses is a huge opportunity for you they because a you can just jack up prices you're so aptly pointed out and b if you can even get like one percent more efficient than acquiring customers between that and higher prices you basically built off a substantial flywheel that can really be a multimillion million dollar business one of the best twitter guys to follow if you want enterprise stuff is this guy chai from benchmark yeah right just follow this guy it's c h e t a n and then the letter p such chai and p talking about a show and how wants to do it yeah he's great i a good guy too he literally he'll just summarize a whole business and a tweet and you'll learn a lot about how these enterprise businesses are structured just from following this guy on twitter and so that's good what are some of those sort of different different companies you wanted to call so what's grew yeah so guru is a company that we're i'll i'll talk my own book we're investors i have two here i i list one that phrase talk my own book i gotta and sorry using that i love listen any opportunity i can twenty five specifically talking to some fucking twenty five okay so know it's all he's awesome guru guru is we have this broader idea that there's like a whole bunch of ai companies that exist people are investing in and a lot of ai businesses that are out there are replacing the ability of people to do their job we think there's money in that there's a lot of money in that we think there's a bigger opportunity much larger in not replacing people but augmenting that do their job better so for example we think for a and a if you have a tool that could write sales emails for you right maybe it does a pretty good job maybe it's not perfect but ai is there's a long way to go before we get some true ai and so probably is like doing the job of your you know fourth or fifth best sdr not your number one salesperson but your middle of the tier salesperson we think the promise of these ai enabled businesses is they can learn what is the best salesperson your business do that's different from t or fort best salesperson person in your business and then you help teach those thirty or forty ranked people to act more like the top one how don't you do that well here's the idea you can listen to every almost everything is quantified quantifiable you can listen to a conversation i'm talking to you you're a prospect now i'm trying to get you to to buy my product hey maybe you have an objection that you bring up you say oh it's too expensive or oh we use this thing as an integrate with whatever and i fl it i have no idea how to handle that objection and the call goes really poorly and you're like i never open this company and we're done the idea of like a lot of these businesses is you can hear what is the top ranked salesperson do that like how they handle objection really well and no sales coach or sales manager considered on every sales call in your business and actually understand the way that you respond to every objection but an ai tool can sit in on every call is that really good group so so what's the what's the the broad concept guru what's the url yeah guru it's what's the it's a not get guru group get group oh is i was i was describing because like the thesis broadly what just use that to teach dudes how to meet girls i mean really this like you know college enjoy you know my thing with business is like the best products you to help you get late helps them make money or that's probably yet made paid late that's the what is it made paid or laid what's made famous so fame money or get laid there okay that trades for it and so when i hear get guru like okay cool you're gonna teach copy and hug get more sales love it yeah but like i just think that all this is like an early stage thing and it's like on the cutting edge i just think that the set the sex industry is at the forefront of everything interesting yeah so the internet listen you have sex what but and listen to you have sex and then it tells you there's some tips maybe i wanna last that like like video streaming yeah dvd dvd yeah not it's true with all porn i think that if if they let poor guys get a hold of it it's gonna make it way better that's what i do with this if i was yeah right i mean no it's true and if you think about a lot of consumer applications obviously the sex industry is at big one but other ones like the the example i was think about it is you wanna learn to play a tar right you're kinda limited a you're gonna learn from whoever the local guitar who can teach you is and maybe they're not a very good teacher or maybe there's frankly not a very good guitar player and so at some point you're gonna hit a wall or you can't learn anything more from them but if instead you could learn from a ai that's been trained on all the best guitar performances in history and all the best teachers in the world wouldn't you learn better and faster how to be a good guitar ideally by the way who knows here's an idea that's like that that he is working el ai familiar yeah elsa so correct me if i'm wrong because i only know the surface level elsa is basically for english language learning so there's a lot of people you know especially in asia who really desperately wanna learn english and so else what elsa is they don't wanna just learn english to read it they wanna speak it like if i if your final learning is just because i wanna speak english and so what they do is yeah they have you you speak into the mic of your phone and it basically corrects your pronunciation yeah so it's like a really smart insight like my mom's you know her insecurity with her english she was you know first moving to america was not do i know the vocabulary but does it sound right do awesome and so these guys were making you know a while yeah so they were they had crazy stats so i think i think vietnam was their biggest market at the time they were doing like i forgot what it was like think like six million a year already annual from their just like in in app subscriptions of people paying for their pronunciation coach their ai pronunciation coach and i was like when i saw that i was like this is a genius idea because there's i i don't know know the exact number but there's in the hundreds of millions of people who are trying to learn english at any given time and this is a sort of novel take that i think resonates because pronunciation is so important it's so hard to come by awesome yeah it's a really good example and so you could imagine like basically infinite applications of the same type of tech and google was one of them so how do you build this google like yeah i'm building this if i wanna start this from scratch what do i have to do yeah it's a hard business to build because what you need is a dataset set to learn from and what you need is much the data set to learn from that static but one that continually evolves over time so an example of guru they do kind of the the sales example talked through that's similar work but for customer success so you could think about it sits and your knowledge base becomes your knowledge base and as your customer success or customer support agents are responding to inquiries it actually knows what they need to say back in the content from your knowledge base they need to reference and then brings it up to them in real times they're not sending five minutes searching for an article in jira that was written ten years ago that may or may not describe the actual scenario they're doing so like read your email it's sits well it's sits alongside like usually it's it's yeah i can be email can be customer chat and if it's alongside the method of companies or all companies good question so it it sits in the in your internal yeah so that would only work then if you had a huge you need you you need repository of of like corp a corpus of data it's and if i wanted to start with these companies i would look at so you think that has a lot of information so what are other examples you think so we have another which is a great one so like for example you you need a you need a big you need training data so so the tools for this have all become pretty remarkable so like google and whatnot facebook they've basically open sourced a lot of their ml stuff the models and whatnot so now you know people on our team you know who are let's call like they're not phd in machine learning or ai they're just like engineers capable smart engineers they are able to in a couple weeks take stuff that's off the shelf ml tools that are off the shelf customize it for this application like when we did it at be we wanted to say hey right watch this per watch this video game stream so watch a video game video and tell us what's happening when somebody gets a kill when they win when they lose when they die whatever right and we were able to train a computer vision system within i don't know two months to be able to detect in real time what's happening in a game as if somebody was watching it and then we used it to score esports and do like referee and score and all we automated esports which is like a goofy application of it but it was so easy given where the tools are so for example if you had a corpus of data like i don't know like all the youtube videos that are out there for like some topic or whatever you can train you can train your systems off of either data you have or just public data that's out their books and whatnot this depends what your what the applications you're trying to do so for language learning you you need a whole bunch of people who are speaking and then you have to go in and label it and correct it and say okay when this person said this thing that was incorrect here's what it should be that's hard but but once you build that dataset set you can sort of get the flywheel going right and that's where the opportunity is the opportunity is having either a unique dataset or a unique take on that dataset set like the the challenge the reason why i can be hard about this kind of business is you have to have some set of data that everybody in the world doesn't because as you said the tools to make use of the data are publicly available and so whether it's like we have another one in our portfolio called text which is similar it's kind of same idea for job posts right it's the idea if you're already to i saw this yeah so you might have seen it you write a job post and it tells you how to make it better about how to make job better so it started like that and now what it does is you can just say i wanna hire a junior web designer right right and it writes the whole thing for you yeah that's so smart editor that's so smart right and so what most people do anyways is just go copy their competitors job postings app and use it anyways so another thing that that you could do is i think ax axiom is doing this and now i understand a little bit why so ax axiom so you know they're like us or i guess we're like then they start first and they have a bunch of newsletters and what they've what they're doing is they're doing this technology g that optimize your newsletter your internal company newsletter for best practices so if you're fucking salesforce or morgan stanley more concise right yeah and you're the head of char and you need to make sure that all ten thousand of your employees understand new policy it i'm a believer in that if dude if grammar can be as big as it is yeah that shows how much people care about the quality and the sort of looking smart and being smart in their writing and so if you could help people be more concise dude look at how much i'm talking jeez imagine if i could be more concise that would be amazing i think this actually that actually could be a big business which is it so it would be all about making people concise just making people understand information faster via email right okay that sounds so small and then i'll make it even smaller in which is the hr company or the hr department make sure employees under stay a new pile families know what the coronavirus and what they have yeah and then what i here's what i would do is i build basically a mailchimp for internal companies and at the bottom i'd be like to confirm that you read this click this and then if you didn't click getting in twenty four hours to get you i like this mailchimp internal that is actually really smart i that's what that's one of the better ideas that's come out of this podcast i would build that you if someone wants to build that content yeah you should build that i think that is a great idea and i would target forget the ai just mailchimp for internal companies has the feedback do is you can crawl all the most successful emails of all time which is there's days for that like for example my company i have how much fucking have we probably sent half a billion emails i could i could i have all that saved on s fuck i would work with send and be like hey let's talk about those and naturally smart museum do you have that proprietary dataset set that nobody else has they haven't built out years and years and years of emails that are so much how big it checks you write yeah let's awesome talk offline yeah you can be in that book of business i'll talk my book for me let's let's talk real quick i start to just check this out for at my company we've created all these sales training things and i've written all these long blog post and like no one's gonna fucking read this did i send your how to write better your writer guide what's it called your copy guide or your writing guide i don't i sent that to people on my team for many years i've been doing that really yeah you also have this tweet that i love that's basically i don't like you didn't do this but you stole from somebody i think it's like it's like a paragraph it's like look at these sentences oh it's every sentence has five words through so i've been preaching that shit forever it's how to make your writing sense so that is something where you can just do a grammar release style analysis over the over somebody's email and be like hey suggestion break it up this way because now look i punch your email ways because a lot people don't this there's so here i'll tell you sign keep sentences below twenty five words average paragraph you want to be three or four sentences you need to vary up your your sentence in a certain way if there's a commas up put a period instead you know what no adjectives or no adverbs no adverbs like there is totally map behind this i mean i would love to get better at because again it's not i also want it's not a skill you get from talking you can talk a lot and get terrible writer because none of these rules rock obvious at least to me they're not obvious come out of right and you have you're not realistically most people even when they read this and like oh yeah that's cool yeah that paragraph is better how do i yeah how do i use it to get better after this i wanna buy that company and yeah the it in this way and make way more money yeah hemingway should be built into your email client it should be built in right that's the problem with hemingway anyways it's a separate standalone app yeah check out text because that's where they live now you can see they talking his book already i thought like constantly like out so far this is the most this is gonna be the most lucrative episode for me and this is like the great founder fit for you is like i like how will send better email okay anything else that we should talk about before we go we we're sort of over time i think we are yeah we're we're we're we we're at the hour anything else that you loved no listen these are all really good one of his notes says a microwave but does it be that that's fine that's my what wish i so so this so smart enough i stole this from my mah homie far and his instagram story yesterday he goes guys i could got it a microwave that doesn't beep at the fucking end because it is so annoying that microwave start beeping being at the end just a silent guy as far as that so he both more weed so he he actually has a great a great little start i'll bring it up actually it's it's still sort related to what you were talking about earlier i was bring it up then so he was like he's looking into homeschooling and we might actually bring him on and do a office hours with him because he needs some help like coaching in his business but he's young he's interested in homeschooling he wishes that he was homeschooling and he's like more people need to be homeschooling you're gonna so he's like okay homeschooling is on the rise i think it's at like whatever let's call it three percent which is bigger than you'd expect but why isn't it bigger and so his philosophy was it's not bigger because if you ever tried to start a home as a parent all this like complexity of like oh i file this paperwork and every state has different rules and then i gotta take a photo of my kid every day blah blah so he's building stripe atlas for homeschooling push button you spin up your home it's compliant in your states and it sets you up to for success in two minutes and so like the idea a lot we're gonna bring them him we'll do an office much y'all how money's he raised yeah episode for me to just from his couple friends and family raised selling that some the only problem is gotta deal with are you home no alright you gotta deal with fucking people like wait like how you checked if he's said yes you answer you wanna still say i don't wanna deal with like no respect to people who are homeschool school but like that'd be dope if we just had a huge homeschool audience it's like he fighting into parents are just having the kids listen ill with vegans right like i'm not against vegan ism i just don't wanna like hang it's like i love going to an improv i just don't wanna hang out with a bunch of nerds you do in front you know what i mean i like the same the end of the episode like empty the clip of like you know controversial opinions hold on before we go alright where should people find you how do they follow you you follow me on twitter at z c k so it's was nice and shorts z c k z c k a good handle yeah join twitter i don't like twenty twenty ten when he was fourteen first business like embryo the joint twitter for not a good handle and honestly you mean listen you you'd get me i talk out in touch and i love when people dm me you're starting a great business particularly listen the spaces we're talking about i'd would love to hear from you alright thanks for coming thanks for listening just remember don't shake anyone's hand coronavirus like or unsubscribe then unsubscribe and subscribe again and record this under your iphone you can do it by swiping as if you're gonna to turn wifi on and off send sean or me on twitter a video of us and ask any question and we'll answer it