Live Office Hours with Kevin Hale and Dalton Caldwell Video Lecture | Startup School Online by Y Combinator - Entrepreneurship

Hey, how's it going?
We're going to get started, yeah,
I'm Dalton, I'm a partner at Y Combinator.
And we're going to be
doing office hours today.
>> Yeah.
>> Yeah.
>> A couple things to note I know
that a couple of live office hours
happened beforehand.
We're going to try to spend a little bit
of time even after these to talk with
the different companies.
20 minutes for office hours is not
a normal time period that we'll do stuff.
So we're going to try to
do it as fast as possible.
Apologies in advance,
we might interrupt you,
just because we know
how short the time is,
just to get as much information out of
you for us to communicate, as well.
All right, thanks a lot.
I think.
>> Yeah.
>> [LAUGH]
>> How're you doing?
>> Good.
>> Kevin.
>> There you go.
>> Dalt, how's it going?
And then I think you'll
need to use the mic, right?
Yeah, the handheld mic, yep.
>> So, just very quickly introduce each of
yourselves, like your name, your role with
the company, and then name of
the company and what you guys are doing.
Yep, I'm Shrudy,
we're with Hub House and just.
>> Kerry and I'm the CTO.
>> I'm the CEO.
>> And then what does Hub House do?
>> So Hub House we provide
co-living spaces for professionals.
So if you're new to the area,
you've just gotten here and
you want to rent a room out in
a house with a curated community and
you want to be set up,
you can move into one of our rooms.
>> And then,
what does co-living exactly mean?
>> Co-living means living
with a group of people.
So, basically shared housing.
>> How many people?
>> Our houses are five to ten people.
Some co-living spaces can range up
to thirty, but ours are five to ten.
>> And then is it characteristic?
That you're sharing a bathroom
with a bunch of other people also.
>> Not necessarily, some are some don't.
>> Got you, and then how are things
going for you guys so far?
>> Pretty well, so
we launched 18 months ago.
We are now at 220 tenancies across over
a dozen cities in the bay area and
Los Angeles.
>> What's the occupancy rate for this?
>> We currently have
a occupancy rate of 94%.
Most of the vacancy rate comes
from our launch vacancy.
So our vacancy rate, not including the
first two weeks and the last two weeks,
is about 2%.
>> 2%?
So when you say 94%,
how many people does that
mean in 220 properties?
>> Sorry, so 220 tenants total.
>> Tenants.
>> Yeah.
220, yeah, that includes, so
we have more rooms than 220.
>> We have about 220 rooms.
>> We lived by 220 rooms.
>> So in terms of the timeline when did
you first start, like you said 18 months
ago but what did that look like
the very first tenant I guess?
>> Yes.
So first thing is we got a house and I was
actually, we both still lived in our help
houses, but
I moved into our very first help house.
And then we got a bunch of tenants,
and the first few houses was
very much a learning process.
We're trying to figure out
what works what doesn't, and
try to create this back bone for
our co-living spaces.
[INAUDIBLE]
>> It took about, I think,
seven houses in the first three months.
>> Okay, and so,
do you guys take on a lease?
What are the terms of
the lease that you take out?
It's just a standard one year
lease then it goes month to month?
>> I see, yeah.
So we do one year to two year leases for
each of our houses and
we continue with one year to two weeks
>> Do you need any special
permissions from the actual owner
of the property to do this?
>> Mm-hm, yeah.
So we are completely
upfront with the owners.
We have them know exactly what we're
doing, we sell it as a benefit.
We act as a property adviser to the owners
>> Mm-hm.
>> And we guarantee them rent every month,
even if the house is completely vacant.
>> And then what's the margins
that you get currently?
>> 30 to 40%.
>> 40%.
So let's take a typical property, like one
house that has how many rooms, on average?
>> Six.
>> Six rooms, and then how much
are you paying rent on that house?
>> So roughly $6,000.
>> $6,000, okay.
And then you guys will make 40% on top
of that usually through renting out.
>> So if I'm a property owner,
why is this a good deal?
You said an advisor,
I don't really know what that means.
Why am I like, wow, please, have a bunch
of people coming to my house and
maybe it's going to depreciate a lot.
>> Yeah, so most of our property owners
have pretty large properties which
are hard to rent out.
So we're able to quickly rent out
a house which maybe rents for
$6,000 to $8,000, $9,000.
And instead of having to deal
with a typical roommate situation
where you have to deal with six or seven-
>> But
the landlord doesn't care about that,
as long as they get paid.
>> Exactly.
>> This has been going on a while,
the landlord is like I don't care.
As long as the rent shows up, whatever
you guys are doing, not my problem.
>> Well, so at the end of the day
as a landlord, you want one check,
you want to make sure your
house is taken care of and
you want to make sure you have
professional people living there,
and you don't want to
have to deal with it.
So we take care of all of the hard stuff.
If there are any property problems which
come up, we advice them on what to do, but
at the end of the day all you're getting
is one check on your is one check and
you'll carry anything from us.
>> So what's your greatest regret,
how are things going right now,
you said you're doing pretty well, like
is revenue increasing monthly or weekly?
>> Yes, so over the, so
we just raised a round,
and after we raised we've kind of scaled
back and we've been growing out our team.
>> Why would you scale back?
>> [LAUGH] We wanted to hire a team and
we wanted to make sure our
processes were going well.
Sorry.
>> We were working about like
80 100 hours each of us and
we were kind of reaching that limit
of what we could do without a team.
>> So just to go back, so
what is the rate of growth right now?
>> About 8 to 10%
>> 8 to 10% a month.
>> Yeah, and we're growing.
So before that we were
doing about 15 to 20%.
>> How fast are you
adding on new properties?
Is that pretty much your bottle neck,
finding supply?
>> Right now,
our bottle neck is operation.
So we want to make sure that each of our
houses is launching smoothly and well.
So that's.
>> So right now, you don't have
a playbook for launching it?
How many properties do you have?
>> We have 40 properties.
>> 40 properties and
you feel like you still want.
Why do you feel like you don't
have a playbook after 40?
>> We definitely, we do have a playbook.
So we do have a step by step
process that we go through.
But we've just gotten our team on and
we're building out our tech and
training so
that we're able to scale sustainably and
provide a fantastic
experience to each customer.
>> So, when you say you want to build
out a team to build tech and training,
can you just dig into that a little bit?
What do you need the team to do?
>> So we now have a team.
Until December, I was the only full-time
person working, and in December,
Carrie came on full-time.
Carrie was working as a co-founder
before that but he came on full-time and
then we had one employee in December.
So the past few months we've hired on a
property manager, we've hired a person to
help out with partnerships, and we want
a second developer to basically help us
build out the tech to automate a lot of
these manual processes that we're doing.
So just like responding to emails,
responding to tenants with property
management inquiries that come in.
There's ways to automate
a lot of those steps.
>> We do look at ourselves like a market
place, but it's not a true market place
because we are not connecting
the landlords with the tenants.
And so we do have the supply and
demand factors of it.
We found that it tends to go back and
forth between-
>> That doesn't make any sense to me,
I don't understand that.
>> Which part?
>> It's two parts.
>> Yeah.
>> Still, right?
And you're connecting them together, so
I don't see why you-
>> So
the tenants never deal with
the landlord specifically.
And so we're not connecting
landlords with the tenants,
we have to make the deal with
the landlord themselves.
>> Right, but it's one ecosystem of
supply, and one ecosystem of demand and
you're bringing them together.
Regardless of how the connections
happen it still works that way.
>> Yeah.
>> What I'm trying to figure out is how
does this sort of win.
And the thing is like, do you feel like
part of co-living is this movement,
people are realizing I want to work and
is a lot of nicer if I could
work with a bunch of other people, but the
places where I want to work, I take it,
you're mostly are in the Bay Area, right?
>> Yeah, and we're in the Bay Area and LA.
>> Then,
it's really expensive to get places.
And so for the places where I'm trying
to get in there really quickly,
I might not have enough
capital to move in.
So the co-living is
a way to step into that.
So I'm trying to think is do
you have a reliable, Source and
supply for people with this,
let's say this is a really big trend that
you're going to be able to go on board.
And I'm trying to figure out is,
at what point do you feel like you
are ready to add on new properties?
And at what rate do you add on properties?
>> So, we're picking up approximately
four to six houses a month.
>> Four to six a month.
>> Yeah.
>> Okay.
And then how long are they vacant for,
like how long does it need to
get the house up and going?
>> So, the time from when we sign a lease
to the time the first person moves in is
about two weeks.
The time from when we launch the house to
when it's 100% full is another two weeks.
So, about a month before it's
completely up and running.
>> So, we've seen a lot of
people work on this idea, and
it seems like you can get about as far as
you have gotten, which is really great.
But because you actually have to take on
the lease and because you have had costs,
sometimes these can look much more like a
real estate business than a tech business.
And so,
I think what I kind of want to get at is,
are there ways that you
cannot hold the leases?
Is there a way you could make this much
more efficient from a capital basis?
Because right now, this is basically
a real estate business, right?
And it sounds like there's
some tech in there, but
I haven't really gotten from you.
That tech is like the differentiating
factor that will make, it sounds like it's
a lot of operations work to sign
leases and then get people in units,
which is like pretty traditional
residential housing type business.
So, how are you thinking
about what lets us get huge?
What are your thoughts along those lines?
>> So part of that,
there is a good ideal attack.
I do agree that it is not the key
differentiating factor that we have.
Some of it is different and we automate a
lot of the operations that are happening.
>> What are those for, like, hey,
the faucet is broken, can someone fix it?
And you open a ticket?
Is that how you mean?
Can you tell me what it is?
>> So, more along the lines of
automatically finding houses to go-and-see
using some different method,
Automatically posting.
And so, we have a constant in-stream of
probably about 100 tenants reaching out to
us a day that's being automated by tech.
A lot of the inter operations going
between that is operated by tech.
None of that's very, some of it's unique,
some of it's not so much unique.
I'd say the bigger differentiating
factor which we haven't mentioned yet
is the community factor that
we built into it which is
a lot of people come because it's cheaper
and it's a place that they need quickly.
But we have a very strong community
element and create an infrastructure
in each house, so people are actually
forming these really strong bonds.
>> How do you make that happen?
>> So, part of that is we
set up monthly dinners and
we give them format of these
are things you should go over.
And we throw events every month for
the entire community.
And so, we're actually
connecting these people and for
that reason we've had a continual growth.
While we started with month-to-month
leases, we've moved up.
Since then, our average day length has
been a continual process upwards since
the beginning and still going.
>> Quite honestly,
I feel like this really comes down to cost
like people want to move into cities,
in places where it's highly desirable but
property is not abundant.
And they are trying to figure out, how can
I get to these in a cost affordable way?
So, co-living is a way of
sort of make it happen.
Can advertise all this community stuff.
It's stuff that you can tell the people
but it's no different from an apartment or
condo complex.
It's like hey,
we have these community stuff.
We have a pool room.
We have these monthly dinners or
barbecues.
It doesn't sound any different because no
one says we don't have the community here.
We don't do anything nice for the people.
We make sure there's a bunch of ****
people here living inside of it.
You don't sound any
differentiated from it.
So, all I can think is this is pretty
much, it's either a land grab,
that you have more great
properties than anyone else.
And then on boarding feels so
simple and easy.
Basically, it's like someone contacts you.
On average,
how long before they're moved in?
Is that a month?
>> No.
So it's, I mean,
it's as short as a week or two.
But I think the difference
is that the houses access to
rooms isn't easily accessible right now.
Access to rooms in single family homes
with prior to communities, the only way
you can get access to these is through
Craigslist or by setting it up yourself.
So, we're unlocking a whole new market.
>> The whole thing is you build the brand.
>> A debt house is still a thing, Anybody.
Debt houses.
We're we looking at that house,
yeah, okay, cool [LAUGH].
Yeah okay so, clearly there's
people that want to do this.
And okay so, it sounds like we have
about five minutes left, so what
are the things your thinking about that
can make this as constructive as possible?
Because like just to summarize, sounds
good, you’re making money like good job.
What might be tough is,
what's the move to make this huge?
And let me give you some options.
Sometimes people that are working on
the startup idea decide to actually
buy the properties,
because then you can renovate them.
Then you actually own an asset and
it becomes, almost again,
like a real estate business and I've seen,
that's kind of we work a model, right?
So, I've seen that happen.
On the other hand, you can try to make
this as asset light as possible or
maybe you're not taking any of
the obligation of the leases, right?
And then you can grow really fast and
somehow have a special deal with the
landlords where you can just grow really
fast and then your true marketplace
because you're not holding any of
the liability that right
now you're holding.
Or you can again, maybe you've found the
just right compromise between the two, so
this is sort of where I would think
about from a long term perspective.
Do you have thoughts around where
you see this going in a year or two?
>> So, the latter is probably
the direction we're going to go.
The reason why we have it is just because
it hasn't really been a problem until now.
But in the future as it does
become more of a problem,
we do want to shift more of
the liability to the property owners.
>> Got it.
One quick question while we're on that.
Is there any insurance
implications to this?
What kind of insurance
do you have to take out?
>> So, we do have a pretty comprehensive
insurance policy to cover our properties
if our tenants do damage anything up to
like if the tenants burn down the house or
something, they are covered.
And then we are also asking our tenants
to get renters insurance on top of that.
>> If your problem right now is like
operations that you're recruiting,
trying to find people.
What is your pitch to people to get
people on board to say like come and
do this startup.
Because it's not many people's
dream to be I'm going to work
on basically the new form of
apartment complexes or dorms.
Basically get dorms for millennials.
>> So, I think the biggest piece
of our company is our community.
So, each of our houses almost like
a family-like environment and
people can really buy into that.
>> Mm-hm.
>> I think a lot of people out here don't
really have access to that and around
universities some people have access to
debt houses, but most people move out here
are lonely and don't really know people.
So, being able to offer this sense of
community and the friendships that form
within our community is
the biggest pitch that we make.
>> And so, you think that's the long-term
defense, you think it's the community?
I'm just trying to make sure I understand.
So, you're saying look,
we're going to have the best community and
the best brand for community, and
that's what will attract people?
Because again, with this kind of business,
it's very easy for new interns to come in.
So, if we used example of Airbnb,
anyone can make an Airbnb clone.
But what they actually have is
network effects where, just like eBay,
[INAUDIBLE] Because they
have the buyers and sellers.
What's the equivalent here?
It is the community?
Is that what you're saying?
>> So, it is branding.
A lot of that.
>> Yeah.
>> And we do have an,
Because it's not just a community in the
house as we connect all the houses to each
other as well.
So, we do have a bit of
a network effect there.
>> Okay.
>> I do think branding is
the defensibility part.
The other key part that,
Mentioned to me in the past is most of the
competitors can do one or two things well.
So, Canvas was a previous company
who did something very similar but
they had very low motion on it.
And they did the community aspect really
well, people loved staying in them, but
the operations was awful.
And then there's other companies that
do the operations very, very well.
And many people have come to us and said,
everybody talks about community but
you're the only ones with it.
And so,
we feel that what we have is different but
we are also good at operations.
And so, that's the part that we are trying
to scale and trying to hire for
tech to turn it more and
more into a tech business.
And to take all the lengthy processes
that are taking operations,
like we're hiring for
more engineers right now.
And making that as
automated as possible so
we can do less of the actual, To sign
the releases and the direct things there.
>> I think all the community stuff's for
good.
It's tough for you to focus and
prevent churn from happening.
But for the conversion, my feeling is
your bottomline line is probably supply.
So whatever it is you need to do
to relieve yourself on what allows
us to save we want to
take on more properties.
Because really what you have set up is
your liability is that first month's rent,
then you take on that which is pretty
decent source of capital liability,
so if you can figure out how can I turn
around where I sign a house, right?
And I could turn around,
I think you also put a safety,
like a security deposit also?
>> Yeah.
>> So it's almost two months' worth of
rent that you're taking on before
you can have it covered back.
And how long before you have that?
>> So it's about a month, about a month-
>> It's going to be about two, no,
it's going to be about four months
before you cover both of them,
before you cover two
months' worth of rent.
>> Well, we collect back security
deposits from our tenants.
>> Great, and
then I think that's all it comes down to,
you need to figure out how to do all
the community stuff up ahead of time.
But everything that allows you to say,
I want to take as many properties
as possible, and
figure out how to jump start them.
And get people into the houses or homes
very, very quickly without losing quality.
And so the whole thing is like
what is that exact playbook like.
And you want to almost time yourself, it's
like, okay, we identified our property,
how long does it take?
What is our checklist that's very,
very reliable for
us to determine if it's viable or not?
Go in there and figure it out and
that's what part of the tech is going to
be, seeing how much can we do online.
And then the second part of it is
going to be we send someone down there,
they do a very quick assessment.
And you have a team that quickly turns
around the place, takes the pictures,
put the listing up there and
gets it out to people.
So that's the supply, and your demand is,
it's just like being very
proactive on getting the demand.
So that a lot of the people tends,
you get the testimonials,
you send it out to whatever university,
wherever people.
When your looking for housing is to
make sure that they think like halfhouse
is the first place they go before
considering moving to a new city.
I want halfhouse to be there even if its
transitory it's like I want to go there,
be there for maybe one to two months and
maybe I'll change into something better or
some percentages say like
I just want to stay here because this is
the kind of community I want to be with.
Imagine most people are going
to eventually graduate,
no one wants to live in
a co-living forever.
Some people might, but that's actually,
I think, the thing I most worry about,
co-living, kind of like co-working spaces.
The thing I always get nervous
about in terms of brand erosion
is that it's not an easy
way to turn people out.
And the thing is, in places where you go,
where great people will graduate,
what ends up being is, it slowly starts
rotting with people who can't leave.
And it's like, I don't have anyone
else that loves me enough or
wants to live with me.
And looks like online forums,
it looks like co-workers in it.
It's just like people don't want to
be in those spaces anymore,
because it's all filled up with people,
who like,
never left and
they start looking scruffy, etc., etc.
I could use just like one of those places.
But what you want to really pay attention
is like how do I figure that out.
How do I make sure that this stays fresh?
How do I make sure that people
who might be creating rot will
not poison the rest of that house?
>> Yeah, to paraphrase, these kinds
of businesses, churn kills you.
And the founders never realize
that they have high churn until,
you may be like we really have great
churn, everyone always says that.
And you don't have enough data yet.
But over the long run,
sometimes things can creep up on you, and
if all of a sudden you start to have
high churn, you have a hook for
all these leases, these can get tricky.
This is,
a lot of the food delivery type start ups,
there's a whole class of
things that don't work.
And they're like, we have positive
margins and we have low turn and
we have great,
they all say the same things.
But if you really dig into them,
the secret hiding in their numbers that
the founders don't want to admit to
themselves is that actually
churn can get you and
if you have hard costs like warehouses,
not for you but for other people.
If you have all these hard costs,
and then you have some down months,
you have to pay your rent every month,
you can't get out of it.
>> If community is everything, then
the tools you want to think about also
are like the equivalent of what
you might see in moderation tools.
We have to build all this stuff to work,
we're calling communities at scale.
So how does that work for within homes and
houses, who do we have to empower within
our community to make them sort
of work and carry things onward?
Lots of great real life communities
have grown to be really big,they have to
be really careful how
they sort of set that up.
So there has to be this delicate
balance that you're actually
going through right now,
I need to achieve growth and revenue but
also need to make sure
the community is taken care of.
So the moment you choose
this way above this,
then there’s this sacrifice, but the thing
is you have to figure out how to get these
to work in tandem in a way
that doesn't break everything.
And hopefully this trend, and this is the
other thing that I always worry about that
this is trend that just
might break over time.
Just people start, cities and governments
are building enough housing that basically
people are able to find cheap housing on
their own, they just live by themselves.
>> From your perspective what do
you think the biggest risk is?
What do you, is it higher operations
people, you know what I'm saying?
What do you think is the, in the future,
let's say it didn't work.
Like man, it was this reason,
if you had to guess [LAUGH],
what do you think that is?
>> We definitely do run a risk that if the
market crashes, rents could just crash.
And we are locked into
one to two year leases,
which is why we try to restrict
it to one or two year leases.
>> Yeah.
>> [INAUDIBLE]
>> Yeah,
I think I would agree that
that's number one risk.
The other part is not being able
to continue to scale because
operations costs are not able
to be automated in a valid way.
>> Yeah, and for your own edification,
I think a good thing to do would be
to amortize all of your costs for
operations and your time when
you're calculating your emergence.
This is a classic thing people do is like,
we do food delivery and
we have positive margins.
And it's just that they sell a burrito for
ten bucks and
it just cost them seven bucks to make it.
But if you include delivery costs,
if you include support costs,
if you include returns,
if you actually bake in all this stuff,
they're definitely not
positive market [LAUGH].
And so I think in your case,
just for your own edification,
try to bake into some of these costs
you have from an operations basis.
>> 80 hours
>> Yeah,
you gotta put those into
your margin calculation.
And that will just help you know that
you're actually building a great business
versus, you're just like leaving out some
of the cost in your margin calculation.
>> All right, we are out of time.
>> Cool.
>> Thank you so much.
>> Thank you, appreciate it.
>> Thanks.
>> Hi.
How's it going?
>> Good.
How are you guys?
>> Good.
Okay, so what's your name?
>> My name is Ash.
>> Hi, Ash!
>> Shea.
>> Hi, Shea.
How's it going?
>> Good, nice to meet you.
So we are Lambda Intelligence.
I'm CEO and
we built an API that allows developers to
extract product information out of
digitized receipts, so receipt images.
And turns out there's huge volumes of
data that's locked up in these receipts.
>> Okay, before you go into your
back story, can you, really quick.
So who's the customer?
>> So we're actually selling
to mobile app developers.
So we've got a mobile app developer
who we just signed a contract with.
They're our first customer but they're
paying us 2,000 bucks a month right now
for processing product information
out of receipt images.
>> Okay.
So you guys offer an API to be able
to take receipts and
just give structured information back?
>> Exactly.
>> And can you give me one more use case?
Like why does this developer need this?
>> So,
the core piece here is not just the OCR,
but it's also mapping the shortened
product descriptions and
the prices to the actual product,
the full product Name, description, brand.
All that type of structured information.
>> But what does their app do?
So why would I want to download their app?
What do I get to do with it?
>> So they're a loyalty card vendor.
>> Okay.
>> Yeah, so
they're using this to better their app and
better target themselves
to their customers.
So that's why they need
this product information.
>> So, I always get nervous with
API companies, because basically,
API is like the bottom rung of
infrastructure for like software project.
And so they tend to want to be like
commodities ultimately in the end.
And so the great API companies
are going to be like okay if we're going
figure out to do this as cheaply as
possible because it's eventually going to
become a commodity.
Then which one's are going after
markets that are super super huge.
So that's what I'm very interested
in who the customer is,
your like mobile app developers
that need to read receipts.
How many of those
are there at the ecosystem.
>> That's actually a good question,
there are only 200 mobile app developers,
but the second side of the business
that we are focusing on is that
brands are really interested,
deeply interested in this kind of data.
So, while we're in talks with one
of the top brands with craft, and
they've expressed interest in
getting this type of data from us.
>> So, okay, so
you're real customer is CPG company.
Exactly, yeah.
>> So you have a multi step process.
You're like.
Are you giving the API way for free?
>> No.
>> No.
>> Why not just give her for free?
If the real customers is giant CBG
companies, why not just be like, mobile
developers, we have the really great
OCR receipt reading thing have added.
And then, because you have the best
data collecting all that information,
then you're able to actually
close this enterprise.
>> I mean,
that's kind of our plan going forward.
Right now,
we're able to get some revenue off of.
Just providing this OCR API
to our mobile app vendors.
And so
that's kind of our way of bootstrapping
>> I think it'll just slow you down.
The thing is, how bootstrapped are you?
Are you going to run out of money?
We are completely bootstrapped right now.
>> I see.
>> Yeah, and right now,
they're paying us $2,000 per month for
processing their receipts.
This is on track to scale up to $15,000.
>> Sorry just, you process the receipts,
what are you point out
of the product data?
Why are they giving you, that's a lot
of money for app developer to give you.
What is the thing that they can't build
themselves that you can build that's super
useful to them?
>> So the thing that we got is that
we build a bunch of scrapers, and
we've got some partnerships in works
>> So are they e-mail receipts,
are you scraping their e-mail, are you
going to, what are you scraping exactly?
>> We're scraping receipt images, so
people take photos
>> Okay the user.
>> Like physical receipts
>> Photographs a physical receipt, and
then the app developer calls your API
use it like a GIF, and then you OCR it,
and then you're like okay
this what this thing says
>> Yup
>> Exactly
>> And then you structure it them, okay.
>> So that it's not just the receipts,
but the discounts.
>> And they need that to do loyalty,
okay, so
I'm just making sure I really understand
exactly what your API does, okay.
>> Yes.
>> Do you get it?
>> Yeah, I do get it,
it just makes me nervous.
Because, what if your
real customer is a CPG,
it's like what's a real business model,
like how much data do you need to collect
for craft and say we'll even look at this?
>> So.
>> I know it's gotta be a lot.
>> Yes,
they want a million receipts a month.
Got you.
So, all the mobile app developers
that potentially need this, how much?
>> So.
>> because I feel like
the people who most need to
track receipts are going to be
people who are tracking expenses.
It's the only app I use that I
take a picture of my receipt.
Nothing consumer related do I do that.
>> And there's loyalty stuff.
But going along this line of thinking.
So if your real customer's a CPG,
and this is sort of, everyone can
extrapolate from this in the audience.
But maybe you should be building the
receipt tracking app that does loyalty.
It seems like you're trying to use
this API thing as like a shortcut and
it's going to be hard.
You're like, well we don't really know
how to get a million receipts, so
let's just build an API, and
like other people will get receipts.
And that kind of sounds like wishful
thinking, unless, and again,
it's great that you have this first
customer, so congrats on that.
So get a million receipts.
Are they going to have a million receipts?
>> So they're on track.
So, they want us to do half
a million receipts right now,
so they're getting us close.
And so, we'll need to work
with a couple of others.
>> They're actually processing that many?
>> They're getting that many.
And so that's one of the reasons
>> Okay, along this kind of thinking.
And they're cool with us, right?
because sometimes what's tough with an API
company is if you're doing something and
then it's really straightforward
how you're monetizing it.
You're kind of a middle man and eventually
people like to squeeze out middle men.
Right, and so maybe they're like hey this
is really valuable, maybe the app that
you're selling the API to also wants to
sell CPGs, you see the tension there?
>> Yeah, yeah.
>> Yeah we see that, and
actually we've done research and
CPGs are buying lots of data from third
party companies like Oracle, Data logics.
>> Yeah.
>> Experian,
they are spending millions of
dollars to get this type of data.
And what's interesting is that this
data is more aggregated in HR,
it's mostly transactional.
And what we're getting out is product
level data that we're focusing in which
we know like brands really want
>> So that makes sense, but
I think just my scale perspective,
like my understanding of
what data brokers want for ad targeting
is like tens of millions or hundreds.
The scale that you need to build
a data business is much larger.
Have you seen anyone even with millions.
Even for millions they give you small.
>> So the closest ones I've seen
the people doing this is they're offering
companies for free.
So grocery stores,
electronic stores, retailers.
They see for free e-receipts.
They say like, we offer this technology,
here receipts for free.
And then what they do is they take all
the data, and what they have is like,
it's good for those customers,
it's good for the retailers,
because they're getting information
they wouldn't have otherwise about them.
Their customer base.
Then they resell the data, as a data play.
The CPG.
And even bigger retailers.
And so the whole thing,
it's a race to the data.
>> So if it's I closed this company,
they're doing half a million receipts.
Well okay, maybe this is easier than
I think, then what's the barrier for
you closing more people?
>> Right and
I think that's something that we're
actively trying to go after more
of these kind of data sources.
And so
the more data sources that we can get,
obviously that improves the value of our.
Yeah so how's that going.
You said there's like 200,
so have you emailed all 200?
>> So
we've emailed about 100 of them so far.
>> And, what have you learned.
>> So our response rate
has been about 25% so far.
And we've learned that the current mobile
app under that's providing us this data.
Like them others are also interested,
and they're willing to
share their data because they
are experiencing similar problems.
>> You've have all of these.
>> You had 25 people respond to you,
why are they not customers?
That's actually the question
I'm interested in.
>> So, we actually only launched
our private beta with this mobile
app center about a week and a half ago.
So we're still super early on this, and so
we've got a list of meetings next week.
>> Got you.
>> And so one of the reasons why
they're not customers yet is because
our sales cycle is a little bit,
I think probably at least a month or two.
>> That's still pretty good.
>> Yeah, so,
>> But
I mean these aren't really enterprise
prices that you're charging.
>> Right.
>> Okay.
>> I think for API,
the biggest thing is for any API is,
you have such a long cycle, because
you gotta meet with someone on CTO,
you have to have someone actually try the
thing, are people going to be invested?
Is it meeting at the right time, right?
So it's like the time that someone's
developing the app and need to work on
the feature, is that the time that they
sort of need your product or service?
So it's really a matter of you need all
cylinders going at once to have as many of
those people try, because you don't know
at what point and all of a sudden there's
a Proper next is in the sale that actually
close or usage to actually happen.
When you talk is like craft,
how much are they're willing to pay.
>> So
they were looking at 20 cents a receipt.
>> 20 cents a receipt for
a million receipts?
>> Yeah.
>> Okay, so fascinating.
>> So one thing, this is just like
a general purpose piece of advice,
it's like when your dealing
with large corporates,
they employ lots of people in
the business development world.
And their job is to meet with people
to find innovative stuff all the time.
And for every deal that they actually do,
and for every contract they execute,
they probably get 100 startups.
And so we meet with a lot
of startups all the time.
That have similar things where, from
their side of the table, you just ask for
something crazy, like,
go get a million receipts, and
then we'll look at it and maybe we'll pay.
But I doubt they're saying
that in writing, right?
Did they send you a contract?
>> No.
>> Okay, well, so you can give people
these impossible tasks just for fun and
see if they come back with it.
But if they do come back with it,
that doesn't necessarily mean they're
going to do the deal with you.
And so we're always talking to startups
that they believe the best case scenario,
and it's so good to be optimistic,
so I get why.
But they believe the best case
scenario that, you know, hey,
this huge Fortune 500 company is going to
do a deal with my two person start up and
they're going to give
us a million dollars.
And, man, just that really, usually, to
pattern match here, usually, you have to
stair step up and you start with smaller
customers, that say yes more quickly.
And it's for smaller dollar amounts,
and you have to do that for
quite a while before you're
able to get one of these deals.
Sometimes people call
them silver bullet deals.
It's like a deal that makes your start up,
where you go from zero
revenue to a million.
Somehow the universe makes
those things rarely happen.
[LAUGH] And so I think in your case
one negotiation tactic here maybe
is to be like hey, we don't have million
receipts why don't we start with a pilot,
we do have, whatever.
>> Half a million.
>> How about that, let's start with that.
Let's just get this going and
let's do our first data drop, and
let's get this on paper.
And what you can do when you're
negotiating with these kind of people is
to try to like, if they are saying,
come back with this really hard thing, and
then maybe I'll say, yes.
Move them down to something you can do,
to something that's more minor, and
then try to get it in writing.
And once you get something in writing,
it's so
much more likely they'll do the deal
because talk is cheap, man.
Anyone could say, we'll give you
a million dollars if you do whatever.
But to get someone that works at
a corporation to put something to paper,
they're either come up with an excuse why
they can't or they're actually serious.
And think about how much better
that would be for you as founders,
if you had somebody writing,
then you'd know this is real.
And that can give you so
much more confidence that you're
going down the right direction.
So that's always something
I would suggest.
This goes for everybody that we're dealing
with these big organizations is try to get
anything to write.
You have five minutes.
>> The thing I don't like about
this kind of code is inefficient.
One you're working on a commodity level,
data processing that's being set up.
And then, you have to do one thing before
you can do the other thing, all right, and
it's a two-step process.
And there so many additional risks.
So to me it's always,
I'm trying to get this other thing,
how do I make that go really, really fast,
to proof out in this sort of nature?
So that's why first instinct is like,
you should just make this free.
If your mobile developers really want
this everything comes down to like,
you having as much data as possible, then
you make sure that you get as much data as
possible as quickly as possible, and
that means like giving it, doing it and
doing it at a scale that other people
won't be able to sort of compete.
because I firmly believe down the line,
that this technology for
OCR processing for receipts and stuff,
that's going to be fairly common.
>> Maybe this is a dumb question, but
is there a reason why, like, expensify and
all the receipt tracking
things aren't just doing this?
Why aren't they,
why can't the CPGs get access to
the receipt tracking data things?
>> I mean what we've seen so far.
>> Uh-huh.
>> Is that a lot of the accuracy levels in
receipts is still pretty low.
>> Interesting.
>> Especially because you
can get at the direct OCR,
that's pretty good at this point,
but it's going from that OCR.
Kind of piece to an LP piece
that a lot of companies either
are really good
>> Do you actually need a skew is that
what you're saying?
>> Yeah.
>> Is that they can get pricing data, but
they don't have the actual
skew to map it back?
>> Exactly, that's exactly what it is
>> Okay.
>> And it's one of those things like,
this is a problem that I
actually solved When I was a cofounder
at the healthcare company,
we had lab reports that we actually
had to match to individual
SNOMED lab codes, and so I did that there.
And so we were able to do it for
40 million patients.
>> That's great.
So here's something to think about when
you're at this stage is like you
think about what are my strengths,
what are the things that we can do
really well that no one else can do, and
what are the areas where we're on the same
level playing field with everybody else.
And so, I feel like what I'm getting from
this conversation is that a lot of your
strengths is in this technology.
>> Yep.
>> And it is in the fact you
can build this amazing new OCR.
And it sounds like you've been trying to
find what the best possible market is.
And, so, by doing a bunch of customer
conversations you ended up saying,
hey you know what CPGs have money.
And we can use this technology
we already know we're good at.
And, so, I would think of your core
strength as being the technology and
on the CPG side, until you have
your first thing in writing.
That's still in the question mark.
It's not not a strength, but you don't,
it's not like it's in the bag,
in a way that it sounds like you have
this technology and works today.
That's in the bag, like,
you can take that to the bank.
And so,
thinking about what your strengths are and
then maybe being open minded
to how you monetize it.
because it could be, until you get this
right, until you lock in this risk that
this may not be the best possible
market for this technology.
>> They call it being promiscuous.
>> Yeah,
be open minded to ways you can use this.
Like other people may be like, hey,
you don't need a million receipts.
We'll give you money today for
this other like semi-related.
Like it could be really close
to what you're doing or
it could be a little farther away,
we don't know.
But you have something really special,
and you have.
>> How long ago did you talk to Kraft.
>> So
we talked to Kraft about three weeks ago.
>> Great, and then is the deal
closed with the half million?
>> No we are in relatively early
conversations but they've.
>> So you're.
>> With Kraft.
>> With Kraft and that's with Kraft yeah.
>> No, no I got you, but
the deal closed with the app developer.
>> Yes the deal is closed.
[CROSSTALK]
>> If you actually
have data for half a million.
>> Yes, we have data.
>> That's awesome.
>> Okay,
you should go immediately back to craft,
because we currently have-
>> Let's do a pilot.
>> Half a million.
Would you guys be interested
in doing a pilot,
sign a letter of intent said, start
looking at the data we provided to you.
You guys can check if,
is that what you're looking for?
because that will help you know that
you're delivering something on time, and
then like have them sign a letter.
A letter of intent, all it's going to
say is just like, okay and then if we.
You know, you're going to initially look
at this data, tell, we'll work back and
forth to see like,
is this what you're looking for,
is this going to be the format you want?
And then when we have a million receipts,
we'll can start
think-talking about pricing.
>> because like you can just put numbers
on this, I would say, when a startup
says we're in discussions with a customer,
the close rate on that is like 10%.
>> I discount the 0 and
>> Well, let's just say between 0 and
10 percent.
It's very low, verses if you get an LOI,
then I'd discount that to like 50%, cause,
maybe even 60%.
>> 25%
>> What's that, 25?
I guess I'm more optimistic, and
then once you have a signed contract,
then obviously 100%.
But like we,
from our side of the table We've seen so
many people that are in discussions
with all these great sounding deals.
And we're like, can you get it in
writing and then they go try and
get it in writing and they're like, nope.
So that's such a good test at this
stage and it doesn't cost you anything.
>> Absolutely.
>> The other piece of advice is,
I think Don talked about in terms
of what you have in the bank,
in terms of what you're good at.
Another way of thinking about it is that,
like, that is the default for
your business.
The default is the technology,
the OCR, it has to work,
it has to work better than, Anything else.
You have to do this other thing,
usually in a start up, that is going to
actually determine whether you'll grow and
be really successful.
That is going to be sales.
That is what you have
to work 10 X harder on.
So, this thing you're not very good
at you actually have to spend,
ironically, a lot more time on
it to make your company better.
And so yes to the sales,
you are going to talk to all the rest
of those mobile developers, and
try to get them all in to discussion and
close them and get the deal.
But also you've got craft going on,
but also you should talk to
as many other CPG companies also while you
see, is there a market beyond these guys?
Is it similar sort of pricing?
What do I need to understand?
What needs to be delivered?
Because I'm actually basing everything
that I'm going to give the CBG companies
on what craft is it said.
So it's really like by the end of the next
two months it should be you've talked to.
You figured out how to talk to all the
other mobile developers and you've talked
to like 50 other CPG companies at the very
least, and that's almost all your time.
It's almost no programming or coding.
It's just developing the language.
Do I understand what is the process for
closing these deals,
which is actually going to make me money.
We're out of time, guys thank you so much.
>> Thank you so much.
>> Thank you
>> Thank you
>> Hey how's it going,
I'm Dalton
>> Hi, Kevin Cool.
So we are working on Commaful, a place
where people share and read short stories.
We found a new format that's
a little bit like a picture book,
so there's a little bit
of text on each page.
Then there's a background image
that relates to the text and
you tap through to flip through
the pages of the story.
People share anything from poetry,
fiction,
as well as random blog posts about what
they're doing in their daily lives.
Currently we get about 100,000
monthly uniques, and mostly teenagers,
currently using this site.
>> How many stories have been created?
20,000 have been created total,
about 1,500 a month.
>> So,
let's say I'm one of your active users.
What format do I consume this in?
Is this a mobile app, is this a website?
>> RIght now it's all mobile web.
>> So, okay, 100% mobile web?
>> Yes.
>> Okay.
And what's the breakdown
of what devices they're on?
>> It's about half and
half on IOS and Android.
>> Okay.
And then,
what's the geo location of those folks?
What countries are they in?
>> It really leans towards IOS in America,
and then the rest of the world on Android,
so [INAUDIBLE] exported.
>> Okay, so 60%
>> IOS US.
>> Yes.
>> Cool,
and then what are the countries
that are non US?
>> Philippines is a pretty popular one.
>> Okay.
>> UK, India.
>> UK.
>> UK, India, okay.
>> And
then what would be the breakdown say of
the Philippines on that one, 10 20%?
>> 15%.
>> 15, okay.
>> Yeah.
>> Who's your most popular story teller?
>> So there's a girl in LA, and
she basically writes kind of
fourth wall fiction stories.
And she already had an audience
before joining Commaful, and
she brought a good chunk
of her audience over.
>> And so, what does popular mean?
Does she have like, do you guys
have like a thing like subscribers?
>> Yeah.
She has about 700 followers.
That's, so we have people
with more followers than her.
However, she gets the most
likes on her stories.
She gets the most engagement.
>> How often does she publish?
>> Probably a couple times a month.
>> Couple times a month got you.
>> And sorry,
I just want to really picture it, so
and then once you publish it, what is her,
you said there's a few things people can
make what is the thing that she makes?
>> Fiction stories?
>> How long are they usually?
>> They take about 3 minutes to read,
they're about 1,000 words.
>> Cool would you say there's
any similarity between this and
some of the apps that are taking
off right now that are like?
Collaborative fiction,
what's the name of one of them?
Just like [INAUDIBLE]
>> Hulk Tact.
>> Yeah, yeah, yeah, those are,
I've seen those, is there?
If you squint added it all,
does it look like any of those?
>> It's a very different model,
those are built as games, so,
there's a subscription
model built in to them.
However, we have very similar users so
many of the target users use both or
if they're conscious about
the money they use Commaful.
So that's kind of the similar audience but
different play.
>> So, do you have in-app purchases?
Do you have anything analagous to that?
>> Currently, no.
>> Got it.
>> [INAUDIBLE]
>> Well okay.
Sorry. I'm just trying to think
of how those companies work.
>> Do you see this as How do you
see what's the big version of this?
What's the metaphor that you think of?
>> Metaphor wise we see
this as kind of how
these teams interact
with the written word.
So you see Instagram and
Snapchat as it's very,
very visual creatures,
very short form types of content.
However the written word really
hasn't seen much change.
And as a result, a lot of the stories that
you can only tell in word that you can't
tell through a Snapchat or
an Instagram, kind of get lost.
And for us, we want to be the bridge for
this new generation to the written
word on these types of stories.
>> These stories are like permanent,
so they exist in the space.
>> Are there some stories from
a year ago that are still
super popular as per
the permanents question?
They still get hits, I wouldn't say
they blow up or they get us consistent,
huge amounts of traffic.
But it shows up on search sometimes,
sometimes it still
resurfaces with sharing.
>> Twitter.
>> Do you have a sense of what percentage
of your users come from SEO?
>> Very few, we get 700 clicks,
I think, per month.
>> What are the most
consistent sources of traffic?
Like what you said,
it's the author's promoter, it says hey,
post it to Twitter and Facebook and
then that drives traffic.
>> It's pretty much all of it.
>> This is what success looks
like to me in this sort of space.
It really comes down to is you build a
platform that allows people to get famous.
Pretty much it,
because I think there's like 3 drivers of
desires by most people and
it's like money, like sex and like power.
>> Yeah, that make sense.
>> Right, there's only three.
>> Right, three.
>> And so that influences like the
>> Biggest thing.
So does your platform allow
people to get really popular?
Do they generate stuff that
lots of people want to see?
And until you hit that,
the thing's dead in the water.
So it's like what do I do to bring and
onboard the very best storytellers?
The very best people?
And ideally it's like you guys are
constantly generating these stories and
they have to be really really great.
But also it's like hopefully,
your community is generating.
And then are you able to
promote them better, so
they can even promote themselves?
Something has to happen there and
that's your only goal.
You can try to monetize, etc.
But I think it really comes down to is
this the platform where it's if I use this
or I want to tell stories on here, because
people actually read or experience them.
It's like, someone's image of what
you saw from the whole thing is like,
what do you do next?
I don't know,
that becomes the really hard part.
Sometimes you end up raising a bunch
of money and it doesn't work out.
But the whole thing is you have to at
least get to the point where like,
it's a platform that gets
people really popular.
So everything has to do with like,
looking at what is somewhat popular and
saying, how do I multiply that?
How do I replicate that?
Is there about portion of that
where people would see those and
they start making things from themselves?
So it's like I would go and
just figure out how do I get it?
Let me see here.
Best story I've heard within
the WC community was Twitch.
Basically, they launched
stream platform and
what they had tried to do is, some people
already streaming gaming on YouTube.
They contact all the top
streamers on their ends and
said like, what do we have to do to
get you to come to our platform?
And they did whatever they wanted because
they knew that it's a parallel curve for
content, right?
So only a handful of people
are going to be the most popular.
And so that gives you the best head
start and they built whatever features,
they like super nice to them etc.
And so where are the very best story
tellers for your sort of format and
I would think it's like creative people
who have been really good at Snapchat or
Instagram and
say look you want more than this.
We can offer this to you and
you have to figure out what do they
most want and then built those.
Have you started doing that.
>> So the last while, we know a lot
of top creators that are able.
>> What is a top creator.
>> So someone who has 10,000, 50,000.
>> No, I want you to go find
people that are like the top one.
>> I see.
>> You have to talk to them.
And figure out,
what would it actually pay.
>> So like, the bestselling authors,
the million followers, plus.
>> Could you start pulling
people off Tumblr?
because Tumblr-
>> That's actually most of our traffic.
>> There you go.
So
when we say social media is most of
our traffic, like 80% is from it.
because Tumblr,
Yahoo is really not taking care of.
And you can pull the top Tumblr people,
right?
>> Yep, so we actually are friends with
almost all the top Tumblr creators.
>> Yeah.
>> What we've been thinking about is
critical mass.
>> Yeah.
>> And we think
that there's a certain point.
We want to spike everything with all
of the users coming together at once.
where you hit this critical mass point and
theoretically, supply meets demand.
>> I would not even think of it like that.
That's too complicated.
It's mostly it's just like
all the popular kids, and
I'm just going to systematically
talk to all of them.
>> Just land grab, get as many.
>> As many as you can and you,
because what you are looking for
is inspiration and
you don't know what it's going to be.
You don't know who's going to be the one
that like, makes the platform take off.
You don't know what is the piece
that they're going to make.
So you need just a lot
of lightning striking.
So, hopefully people will go like,
holy crap, what's this new platform.
>> I agree with that, I mean,
like, look: I think that
founders that are working on consumer
internet stuff, undercount how many
social things get to your scale and
then top out.
They think everyone knows the story
of Snapchat and Facebook and
they know about things like that.
But man, even back in the day,
there were a lot of Facebook competitors,
like hundreds, and
a lot of them had millions of users.
>> Right.
>> Right, tens of millions of users.
>> It's not meaningful.
>> And the problem, the thing that's
tricky about consumer internet,
if you're not going to monetize by
charging your users is the only way you
can ever bill an ad business.
because you need hundreds of millions.
And so, think about Tumblr itself,
they had trouble with their ad business.
Remember, they were the winner.
For every Tumblr, there were like
ten other little blog sites,
which it sounds like you guys are experts.
So you remember them, right?
There were other want to be Tumblrs that
had decent, even LiveJournal, itself.
LiveJournal was the original Tumblr.
But that, the point I'm
making is I agree with Kevin.
If you're going to do
this kind of business,
you usually want it to grow as fast as you
can, and get those economies of scale.
Otherwise, you can get stuck in the
hundred thousand to million user range and
then top out.
And then what?
I know the founders of a lot of those
types once and those are rough.
>> I feel like you want
both a bunch of users and
then a bunch of different stories.
I think again, what are the top things
that people have done on Tumblr,
recreating it on your platform?
What are the top tweets, stories that's
like series of small pieces of text and
then we've to tell them on your platform.
>> Twitch thing.
Just ask them, what would it take for
you to move everything over from Tumblr?
What features do we need to build for you
to take everything from your Tumblr over
here and then put up a Audio's Tumblr
blog post and then point to your site.
And then if you just did
that systematically that was
the Twitch playbook,
I think that would work.
I think now is the time to
raid the Tumblr users, yeah.
>> One of the most popular things we have
is that it's a two-directional thing, so
we will take concepts from Tumblr and
post it on comments.
And we have an export function.
Every social site has a different
preferred format, so on Tumblr,
we export as a photo set.
So if you share on Tumblr,
it automatically generates a photo set and
fits on Tumblr.
But Facebook is different.
Twitter is different.
>> It's tough to look at all the people
making the little stories on medium too,
and steal all of them as well.
>> [INAUDIBLE]
>> So the whole thing is figure out,
talk to the top storytellers.
Talk to the top people who are on
all those different platforms.
Figure out what it's going to
take to bring them over.
Or start moving some of that
stuff over automatically and
just showing it off to the community.
>> Yep, right.
>> What steps what people really like,
what goes around.
>> Because consumers are different
I think a lot of times people out
on the audience world.
They hear these consumer things which
just get big, get big, get big.
And now this what we're telling you,
but just for everyone else, an alias.
That's not the case when you're doing B2B,
this is not like one size fits all.
You're launched,
you have consumer Internet.
You have 100,000 MAU.
Okay, you've made it this far,
you've got to power through here or else.
If you end up stalling out, then what?
You don't have enough
users to really monetize.
And that's, we've just seen a lot
of people stall out at this stage.
So in your case, yeah, you gotta grow.
>> Yeah, we are in the problem
solving position here.
>> Yeah.
>> Well, you need to generate whatever it
takes to give people the word of mouth,
about your thing.
Is it's like, if I make,
if I'm a really good creator
I tell the stories on this platform,
I can get really big.
>> And one other piece of tactical advice,
I would look at SEO.
Usually, the way you get really huge,
I built a consumer site.
I got it up to 25 million MAU,
and SEO was a big part of that.
And the way you do something like Cora
where you get hundreds of millions of
MAU is SEO.
So I would try to start tracking that.
[CROSSTALK]
>> Helps us get back links,
help us rank some of those stories
that I normally wouldn't write.
>> We almost,
we're pushing currently right now yeah.
>> Ok, good.
>> That's the sort of thing,
it doesn't cost anything and
that'll just get the fly wheel spinning
for you to hit that escaped velocity.
>> Five minutes.
>> Any questions for us?
>> I think the biggest challenge for
us, obviously,
is getting from our 100,000 to 10 million,
like that's the next big phase.
You've already kind of gone
over different strategies.
I'm curious what other companies have you
seen through going through IC who have
successfully gone from
that 100,000 to million.
>> It's still parallel.
It's always parallel for those kind of
communities, so the top ones brings almost
all of the traffic
>> Which is why I'm saying everything
you have to do is like how do I bring
on celebrities onto the platform, or
I turn people into celebrities.
>> And along those lines,
here's the pitfall.
Don't pay them, don't pay them.
I've seen people try that,
that is not paying for
traffic when you don't have revenue,
is like.
>> They need to love it.
>> And once you pay them,
they also expect to be paid.
>> That is exactly right.
My understanding is
Instagram never paid anyone.
Snapchat never paid anyone.
All their clones sure did, but
that's, you know what I'm saying?
YouTube wasn't really paying for
traffic but all the want to be
YouTubes that were trying to raise
money were paying for traffic.
So whatever you try, don't just
take what he's saying, like, yeah,
we're just going to pay some
celebrities and you know.
>> Right, right.
>> [LAUGH]
>> It's not
a cost-effective way of growing.
>> Yeah.
>> Yep.
>> I think if you have the dev cycles,
I don't know if you do but
I would consider a mobile app.
One advantage from a retention perspective
is that you could do push notifications.
>> Yes.
>> And
that way if someone is
subscribing to something and
you do a push notification to their
followers, then you're ensuring a much
more, a tighter feedback loop then
maybe you have more on mobile web.
>> Definitely, so the mobile app
>> How's your e-mail?
What are you doing with e-mail?
>> So because they're teens,
email has been pretty tricky in terms
of getting high response rates.
We tried messenger bots so we get some
instant response right there, and
still nothing huge or significant.
>> I would keep experimenting with those.
because again,
you're asking what the people done.
You have to reach out and touch people for
them to not forget your thing exists.
Think about it like there's
a million apps out there.
Everything is competing for attention.
>> Right.
>> And
if you think about tools like Facebook,
it's basically a weaponized
attention grabber, right?
They have thousands of people working on
making sure that you're constantly looking
back at it right?
Like very smart people that's all they do
all day is try to steal your attention.
And you're competing with them for
attention.
So I think just doing some really basic
stuff like continuing around email,
if chat is the right thing to do.
Make sure people remember you exist and
they are a member of your community, and
that they should go check
out some new stories.
Otherwise, its going to be tricky.
One experiment you can do I've heard
someone give this hack before,
is go create a Facebook account with
a fake email and don't add any friends.
And, look at how many emails it sends you.
I think it sends you 50?
I'm exaggerating, but the point is, they
realize that if you don't add any friends,
that you're going to have a bad time,
and that you're useless to them.
And so, they're very aggressive
about emailing people.
They know they've turned you.
So anyway, if you have users that
you know, are you going to turn or
way past turning.
Well, just remind them that you exist.
That's best practices too.
>> Guys, thank you so much.
>> Thank you, appreciate it.
>> Thanks a lot.
>> Thanks.
Okay, cool.
Well I think that's it for us.