Harvard i-lab | How Are You Going to Make Money?

Category: N/A

Transcript

00:00

[Music] so um as Abby mentioned one of the

00:18

things that we focus on when I'm investing in companies is there actually their growth trajectory and how will they make money and grow to be very big businesses so that the investment we make in them justifies the ultimate goal of getting a very big return for the

00:33

founders and me as a VC for my investors and my fund and one of the often undervalued topics when folks are thinking about starting businesses is the thinking around um the business model the monetization plan whether

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you're an Enterprise focused company or a consumer oriented company and in part I think um that's a little bit of a function of the times during you know markets that are strong oh everyone will make it just build it and somehow they they will miraculously come

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in part because there have been so many interesting large um consumer oriented companies where the monetization path has been determined much much later in the life cycle I mean you can think of Twitter for seven years of their

01:24

existence they didn't have a business model some would argue that they're still innovating and figuring out their monetization um not to say that they're not Successful by any stretch of imagination quite the contrary but the fact of the matter is that that Legacy

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of you know Drive adoption has affected other areas so often times entrepreneurs tend to undermine or not think through fully um the consequences of having or not having determined the business plan up front from a monetization path with

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that in mind um I had the option of doing the slides and you know lecturing and I'm an HBS alarm and that's not what we did at least at HBS we talked about things and we started sentences with building on so my my Approach here will

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be different I think um Abby has been kind enough to identify two companies two startups that are trying to figure their monetization model and and business model so what we will do is we'll have a chat and I will play my

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daily job which is ask a bunch of questions as if I was F was considering them for funding which is not part of this Workshop but at least you get some exposure to my mindset and as a VC and then also secondly though see how I will

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probe and the sole focus is going to be about business model how you monetize how you scale etc etc and then I will open it up to you so we can talk about the differences on building a consumer business versus an Enterprise businesses and then business and then within those

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what are you know on the Enterprise side licensing versus a SAS model and how those two play out or on the um on the consumer side freemium versus ad supported versus other paths does it

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sound like a plan lovely who's going to be the first [Laughter] victim Alex

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by the way can you guys see you okay good so why don't we start by um you're telling everyone so we can catch everyone up on who you are and the elevator pitch on your business definitely well good evening everybody

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my name is Alex worth and I am a senior at the college I am the co-founder of Quorum uh and we are developing a legislative strategy platform that does Big Data analysis to the US Congress for government relations professionals so we are very much a B2B SAS business uh and

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that we've developed a piece of software and are now selling it to government relations Professionals in Washington uh and the big thing that we're trying to figure out is how do you develop a pricing structure uh around the software and assign both a specific value to the software and then figure out uh how you get people to buy not only one

04:23

subscription but then also scale it and buy multiple subscriptions and do you have an entry level price do you have one price and have that for all users do you offer discounts as you sell more and more but starting to figure out that process in the B2B sales cycle lovely so let's talk a little bit about the value

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prop and to whom so what problem are you solving and for whom so we're basically helping government relations professionals better understand Congress right now you have 535 members of Congress uh over 36,000 bills over the

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last six years 10,000 votes it's a lot of information to keep track of uh and what we're doing is using big data and algorithm to sort through that to provide information like what are the top issues member of Congress work on who do they most frequently work with as well as a suite of productivity and legislative tracking tools that help

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them better keep what track of what they're doing uh on the day-to-day lives uh which saves them time so to better tackle the issue of who's willing to pay how much and how do you scale from there to get them to buy more products um you

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you use the term government relations I will do what I would normally do so even I'm going on record I say I don't know what that means what does that mean like who who is this person really is it a lobbyist is it a non for-profit poo

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executive director that's doing it out of pure out of passion two very different wealth profiles there or some other third party definitely so we're kind of lumping it all together government relations is Washington's new word for lobbyists um but in terms of

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our specific Market it is one the lobbyists to corporate managers and the folks that oversee and hire the lobbyists that might not have as much experience with Washington and then the third is the nonprofit professionals um that are really trying with little bit resources to do it uh although the cohart of our market right now that

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we're focusing on is the lobbyists because they have the most money and also uh are an incredible amount of need because they're so stressed for time and um so then what is your typical lobbyist organization look like how many people

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how many touch points with Congress how many I'm assuming they're not all calling the congressman or the senator they're calling the aid they're calling so tell me again if there is a I will consider one lobbying firm for the purposes of this discussion as one

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entity as one Enterprise that you sell into how many touch points are there and how many of those folks would need to have access to this data so it gets a little bit complicated because you've got different sizes of lobbying firms and that you've got your smaller shops

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which are doing about $2 million a year in Revenue less than 10 people uh midsize firms with you know between 20 to 30 folks doing five to $6 million in Revenue uh and then a series of massive firms you're talking 100 to 150 people solely doing government relations work

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uh that are bringing in anywhere between 15 and $25 million of Revenue and is there an 8020 rule so if you focus purely on the large ones that are bringing 15 to 20 plus million um is that 80% of the market H it's probably

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less it's probably more like 20% of the market in terms of potential users okay um the bigger Market is the smaller firms because you get a lot of people going out and starting their own firms and is there a follower leader mentality so if the top 20 guys or a subset of the

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20% adopts you all the rest of the market follows you or is there is there such Behavior at all what's the market Dynamic so we're still figuring that out our senses there is just because once people feel like that they need this information and we're providing a whole level of information that's never been

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provided before is they don't want to be left out and they're going to feel like they're have to actually you know purchase the software so they have access to this because they need this information uh and that's also where too you know people look to the bigger firms in town who everybody knows pedesta group a and gum pollen and night um and

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say oh you know these are the really big lobbying firms if they're using it there must be something here so I our assumption is yes there is a follower mentality hence does that mean that your go to market to get the first proof points to start testing and we'll talk we'll get even more concrete around the

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monetization model but does that mean for you that you're doing a double or two-prong strategy trying to get one of the big guys to adopt you an early adopter but also trans Setter and then some of the other middle or smaller guys for validation or how are you how are

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you going to tackle it exactly like that so you know we're entirely going right now just through folks that we know of getting initial beta testers one of the things we've struggled a little bit with uh is how do you approach the big firms who you know could easily buy one subscription to the platform and we're pricing it at $ 44800 a year uh but how

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do you get them to buy multiple subscriptions and how many of the big firms should you go to before we're entirely certain of the pricing model and how to scale it because you know we don't want them to pay $4,800 a year when they could be paying you know to buy a subscription for every single person at the firm um and so figuring that out but yes very much you know we

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would love to get a series of the big firms together um to then be able to Target you know the smaller firms as well and have that validated okay so let's talk actually about the product itself and then ultimately we get to the pricing the product itself often times in the startup world even though there's

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a lot of disruption and Innovation we think about analogies and there are a good way to convey your business even though they're not a good way to define your business but to convey your business and also to not reinvent the pieces that don't need to be reinvented

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so when you think about your business is it it here I go the Lexus Nexus for for the Congress or for lobbying is it um Reuters is it Bloomberg for that

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vertical what is that so A very simple an algae to put it is exactly as the Bloomberg terminal did for Wall Street in bringing a whole series of quantitative information uh and Analysis we're doing a similar thing to Washington uh of instead of just putting the qualitative reporting out there

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actually bringing the quantitative numbers of saying you know how many bills did a member work on on an X specific issue area uh or how many percentage of their bills actually got out of committee and that's information that you can tabulate by hand right now but that nobody's done and so it is going to be a bit of a shift just like Bloomberg's introduction to Wall Street

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was in terms of really naring in having all that information at your fingertips but what that does for the purposes of this discussion now that he's framing it's taken an existing business model and applying it to a new vertical so to speak so all of a sudden we all have a

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frame of mind as to aha okay this has been done before the willingness to pay we have yet not determined it is not the when Bloomberg machines first came to Market they cost 30,000 a machine right the day Hardware is much more um

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commoditized and the software piece and the data piece that's where the value lies in but at least we have now framed the ah okay we have some data points or existing business models for other verticals that we can turn around and apply we will have to modify them to to

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address this Market but we have something to work with so then the question is is the software piece replacing um manual labor is there an assistant in these firms or an entrylevel person or an intern that is

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informally trying to collect this data some specific parts of it um so there's specific things that people look at that are being manually collected right now or you know for example a really simple one is building a legislative scorecards so the AARP the Sierra Club the NRA all has their legislative scorecards my

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members an A through an f and what they do is they sit there and actually hand score every single vote uh and we can do that with a computer in about 30 seconds um and so that is where it is replacing the manual labor and uh the assistance and the legislative assistance of these firms you know see it as a huge time

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saer because that's what they're doing on a daily basis so right there and then you could make the argument not only does this drive revenue for the firm um but also it's a say a cost saving piece so if you assume that the average assistant is40 to $50,000 and again I

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could be wrong it maybe 60 whatever that price point is right there and then and you've said only part of it so you can make some determination but you can see that you can just replace that function charge the same amount and deliver the the product in 5 seconds or whatever the amount of time is that's another data

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point to start thinking about pricing so then let's talk about do charge per module or do charge per subscription or per seit as the term used to be um because you did use the term SAS and um SAS has become very very sex sexy these

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days I have two-thirds of my companies that are focused on Enterprise that um go that have approached the choice of Licensing versus um a SAS model and have gone with the letter it is a model that folks need

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to understand well because it's very Capital intensive so um while it's beautiful you charge up front you collect up front it's recurring you get them one you get the customers ones you retain them over time

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next year you don't have to worry about that first $2 million that you did this year because it's just going to repeat itself you just have to build on top of that it has all those appealing factors it also requires a lot of investment up front CFOs in a lot of companies are

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wise and up and saying wait a minute used to be that I would have to pay a license for the software and out paid over 12 months or out paid 90 days late and they still do 90 days late but way out there today I have 10 vendors all of which are SAS players all of which are

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asking me to pay it up front why in the world would I do that and then with SAS models you reach profitability but then to grow you have to invest so you deep down um in start and go cash flow

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negative then you reach profitability then you go so it's a it's an scurve you're still moving that direction but it's dipping and up and dipping and up so it's not just it's a beautiful business model but it's one that requires understanding and on average at

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least for SE for Venture backed companies it's a model that requires over the time of a business and again don't there's never a this is how it's always done but generally in all of my statements there is a disclaimer there's always exceptions but generally it

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requires 20 to $30 million and um inside Ventures which is a later stage um growth fund has published quite a bit of work around um SAS if you folks are interested in that back to you so um on that piece though

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um you have some data points are you thinking about charging having 342 I don't know modules in the product and charging for that horizontal if you want the full platform you get a discount if not you get these pieces at these S card prices that could be

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subscription or you get everything but it's on a you know per seed or per sign on P point of view or a combination of the two if you can think of it as a matrix so we've been working to figure that out um our current thought right now is doing it per seat um partially

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because we want to say look we're going to provide every tool that you need and you know we're not going to sit here and hold tools from you that can save you lots of time uh We've also heard from folks that you know in terms of buying other software it's like kind of buying a car and that oh you can add this on you can add that on uh and are a little concerned that that might delay the

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sales cycle to a point where you're sitting there going back and forth about adding features and discounts uh and so are not opposed to kind of segmenting um the product and providing different features but I have taken the approach right now of doing it at a per seat um basis and saying you know you get everything that we have at that one

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price so here's some things to consider and that's perfectly valid I think some things to consider an pered basis is realistically how many folks will actually be utilizing this will the top lobbyist or the CEO of the firm touch it

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probably not someone will hand him or her a piece of paper but will so and so try to map out how many individuals because and then when are you going to call it an Enterprise license enterprise-wide license so it

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may be that up to I'm going to make stuff up up to five seats is individual or it's you know you have two seats as a bundle five seats and then an Enterprise wide um license unlimited and if you're charging I'll round the numbers out so I

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can't I avoid demonstrating that I cannot do arithmetic um let's say for two seats you do 5,000 for five seats volume discount you do 10,000 and for Enterprise wide you do 30,000 if that's the case that's what you go to business you that's what you

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go to market with and then I think you will have some Channel conflict because on the one hand to drive adoption you're going to need the non for-profits or that are not as wealthy as the lobbyist with all the corporate backing um which

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are basically entities that need the tool but can't afford the tool so the way we see that in the market and the reason why you may first of all you have to ask the question do I want their business and there are plenty of instances when you say no thank you but often times you say yes for from the

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point point of view of driving adoption and awareness in the market of not leaving money on the table if you can have it and also forgetting your algorithms and your software trained in the case of if you're also taking inputs and data from them or also just on the delivery of the content itself so there

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is value but if you go with that be very careful about cannibalizing your markets because how are you going to deal with these guys who can't afford it one approach is to offer a light version of your product so that you're disabling

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certain functionality and offering it at a lower price but again be very careful when you do that because you don't want the big guys to start um buying that product that is not your goal does that make

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sense can may I open it up to you folks for questions because I've been talking or or you for me oh come on please can you give me like a better idea of

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like the different size um um like lobbying groups like what are they doing now to kind of like fill this void that you have like you said that there's some there's some like degree of manual tallying but I mean how does this go beyond what they're doing right now like what are they doing now and then what you're offering how do they go beyond

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with them let me repeat the question for I'm assuming for your um recording so the question is what is what Market pinpoint are you truly solving and how exactly are you solving it what is is your product is that correct yeah um so

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right now you know it really depends on the firm for the smaller firms a lot of it is you've worked on the hill so you just know what's going on and you read Playbook every morning and you read The Washington Post and you know which members might be good and which members might not be good on it so for those people it is introducing a new kind of

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way of saying all right let's give you another different profile of members um that's more comprehensive that has got all these specific metrics to it uh and then for the bigger firms they're the ones that are actually keep keeping track of you know the different vote scores and the different tallies uh and they're doing that all by hand right now

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and so especially in two in trying to keep track of you know 535 members they're going to every member's website every morning and checking you know are there new press releases are there new bills that this member is doing you know they're walking around the hill trying to catch up on what's you know going on uh and so what we're doing is simply putting that all at their fingertips of

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saying you know we'll scrape it straight from the Library of Congress and then you know put it on the platform so you don't have to go try to find it and you can be aware of all the information all at one point and presumably you're pitching it as an understanding of what's going on in

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Congress but I think it can as I listen to you talk it could probably you could have a whole other area to pitch to these firms around getting business from corporations and this could be part of their um marketing materials because they're now aware that hey so and so

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Congressman has supported this many bills for or against I don't know pick a topic and done that it becomes part of their page to be driving Revenue which is why I find this tool interesting because often times when you're selling you ask yourself is it a what am I

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selling and what problem am I solving is it a nice to have tool is it a very nice to have but they can still live without it or is it a musthave and the closer you are on the must have scale the more you can charge for it clearly the other thing that um I

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touched a little bit about on the SAS topic but the other thing to consider with SAS businesses is retention SL churn and customer acquisition cost and lifetime value of the customer so I just thrw a bunch of terms again I said the beauty of um SAS

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businesses is the reputability of the subscription and then oftentimes the successful collection up front of cash if you are very good at managing that and that's a really important and key factor the ability to collect in a timely fashion because your customers become your financing tool in that

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regard um but it also presumes that you are able to have very high retention rates 90% plus otherwise you're undermining the value of having a subscription business an early focus on churn or the reverse of it retention is

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really really important and then once you start having enough data points I don't know exactly how far long you are in your sales process um the ability to track the lifetime value of your customer over the customer acquisition

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cost the C Rio how quickly do you recover what did you spend what's your Marketing sales that per customer to acquire that one additional Mar uh customer so on the margin and how much money are you extracting from a revenue

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point of view from that customer if any of you were considering Venture funding we often as a sort of I should say I although I think there are plenty of other people out there I often look for a rule of thumb of about 5x coverage um I have one company that's

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21x they're totally an outlier and they're the joy of my heart but 5x or above um where um we're looking good we you know you're looking good and all of a sudden you're interesting there's something because what it means is it's

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not an arbitrary number what it means is that there is enough business that's being generated to justify your exist existence and you can probably scale from there so that's another metric SAS businesses are very very metrics oriented and unlike other businesses

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where sometimes you can't measure concretely here it's all about execution and tracking and you know tweaking is appropriate do you have any other metrics that you'd recommend looking at in addition to that of of tracking so um

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for for your business so yeah I would look at so top um starting from the top I would look at bookings Billings and revenue bookings basically sales how you know you sign the contract you um and

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you're calling that a booking and I would look if you have multi-year contracts I'd also look at 12month booking or annual bookings versus the total value of the booking because if you one year get a three-year contract and let's say the three-year contract is

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$3 million and so it looks great and the next year you get um three customers at a million dollars so it's also three million it's not exactly the same thing because what you've gotten is one

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customer with a big with a big check next year those guys will not pay you anything else you'll recognize the revenue because of Gap but that booking is cold it's much better to begin getting more customers that you can grow than just one customer you want to be

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able to um def to to draw that distinction um or or let me say differently you have one customer that has three Mill that is bringing $3 million this one year and next year you have five customers at a

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million if you can get big customers get big customers because it's one effort but you also have dependencies but to be able to um this draw a distinction between those is very very important so you look at it as an annual contract value and you look

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at it as total bookings if you if in fact your contract value is more than 12 months or your deals are more than 12 months in duration so that's bookings buildings is your ability to collect cash so you build so that's actually the difference between the two the third

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piece is revenue and that's just Gap when have you you know earned and realized for those of you who have some sort of um account background so the ability to recognize your Revenue otherwise is deferred those are three um just given the lifetime value

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calculation the lifetime value over C so implicit in there is the C calculation churn retention um average price point but you look at that I hope to got in any way in any in any business and then I think the ability to upsell um and

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renewals so um because again you may if you and renewals both in terms of the number of the percent change of the number of customers and in dollar value because you may say year over year we got from a dollar point of

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view 100% renewals but if you look at the customers let's assume you have 10 you might have lost all nine is just that the 10th guy that stayed with you overspend so much that it may you know that company made up for the other nine so you got to get granular and that's

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why you look at up sales as a separate line and then renewals both on a dollar perspective and from a customer perspective I hope I'm explaining this but um go ahead Yeah you mentioned before the 20 to 30 million as a general rule yeah and again I'm sure there will be

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plenty of exceptions to that but yeah that's yeah I'm just curious how that breaks down maybe this is a hard question to answer but how that breaks down in terms of I mean is that sales St is it um account Executives to support your clients is it marketing dollars how does you have a general sense for how that kind of break down by the way the

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20 to 30 million is the capital that goes in over outside Capital that goes in over the typically over the life of the business and it is really really hard to even that statement is so generalized that you I'm sure people can drive trucks through it but um the in the

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early days is probably so if there is a seed round of a million million and a half which once upon a time we used to call a series a but um in the Sid round you're probably just working on proof of concept getting you know the beta of the product and getting

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that going with your series a financing you're probably really advancing and it depends is your series a financing 5 million is it 10 million there's a big difference there what I have found from experience no matter how big or how small it is somehow companies manage to last right for 17 and a half months with

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that month there's something magical about that 18month Mark but um but more on product Less on sales and then as the product to sort of toward the if there is an 18mon window of capital that you

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have gotten probably somewhere in that middle in the nemon mark and again these are very general guidelines um you're probably adding to your sales team and to your marketing team um and then as you raise your series B it's all about

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scale so press on the gas and higher salese and fire them even faster than you hired them and we can talk about that at some other point um f if this is going to sound really bad but if you have a funny feeling in your stomach

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that someone is not right that person is not right and and the I'm digressing but the most dangerous people are the what I call the B players because they're good enough they're just not Stellar the F

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players you feel bad but you fire them you just know the a players they more than justify themselves and your existence the in between players are a problem so especially when it comes to sales and you've got to be meticulous in

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that regard also because to tied back to your business model depending on your sales cycle if you have a one- month sales cycle the guy or gal was hired 30 days to kind of figure out the Del lay of the land another 30 days to start making their first pitches by 60 day by

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the day 60 they should start being productive is the terminology and if you see that month three they're not being productive you may or may not give them time and they're gone they they eat what they kill their existence depends on that if you have a nemon sales cycle it's really hard to tell because it

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takes nine months to sell a million dollar installation for example in that case you need to have many many many Milestones of tracking progress and it requires an amazing salesperson I think your head of sales and your technology whether it's your VP of engineering or

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your um or your CTO are critical but back to your question after the series B it's about scale so investing in sales investing in marketing so you do some real evangelizing I think people often make a mistake of um delaying that portion and marketing is severely

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severely undervalued and I think that's dangerous um marketing should be your Leen so it is the beginning of your sales um and then the if you get to a siries c it's again about expanding multiple offices

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it's about heading often times a head of Partnerships head of you know bizdev starting to do your Corp Dev type stuff it's all about land grabbing and um and then either an exit an acquisition or hopefully an

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IPO did I answer your question okay go ahead and then we should we should probably swap go ahead please I was you know you mentioned that he should possibly introduce a light version of this product wouldn't that

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affect the credibility in this case of this product because he's basically going to be the first one on the block with anything like this so he potentially could set the standard of so the devil is always in the details

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right um so I called it a light product to convey the notion that it will not have the full function it that all the lobbyists will get he could call it a he could call it a social product or a non for-profit product you could give it

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some other name and make it more tailored what I was trying to convey is avoid the mistake in my opinion the mistake of offering the same product with the same functionality and having

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one entity pay 50,000 for it and one entity pay 500 and I'm drawing from a real life example I have one portfolio company um that prior to my investing I love the technology but literally they had customers who for the same product

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were paying $50,000 a year and $500 a year and that's just a major messing up not to use any Prof profanity so um think through that and I can and these were smart people who made those mistakes and the reason they made those

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mistakes is because it's a land grab often times so your biggest barrier to entry becomes your execution and so go go go at all costs and you you noted that right you said we don't want to give it away to the big guys for 4,800 the product for

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$4,800 so how do we think of that and I actually didn't address that one way to think about that is to give them an early birth pricing uh or first adopter pricing because they are taking a risk they're King making you if they're the biggest or the second biggest firm and by the way you're often better off going

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after the second biggest because they have a chip on their shoulder but being the second but um to give them a competitive Advantage you make it plenty clear in your contract you're getting this pricing this year and next year is going to move to XYZ and you're we're

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get you're getting it it's a one-time deal because you're betting on us and that's another way to kind of mitigate the um conflict okay lovely was this my pleasure awesome [Applause]

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so we're going to repeat this for a different business and see how it goes so your name and what the company does awesome um so I'm Lindsay Hyde I'm a recent graduate from HPS I just graduated in May and I'm the founder of bark stop which is a chain of dog daycares that are offered as an amenity

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in luxury Urban apartment and condo buildings whoa okay say that again I'll say it more slowly Dog Daycare and we go in as an amenity so we're brought in by the building owner um to be offered to the residents of a

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luxury apartment and condo buildings okay in urban environments so what I heard is from for the purposes of this discussion it's a B2B for C play yes so you sell into a business but the ultimate beneficiary is the consumer is the consumer exactly got it okay and how

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far along are you and how are you thinking about monetizing yeah so we're very early we're in the process of partnering with Boston area developers to secure some letters of intent on on their buildings Boston as many of you have probably seen the cranes downtown we're seeing a lot of luxury buildings

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come online so it's a good time to be working in the urban luxury space um and in terms of pricing so the way that amenities work that we're finding with developers is they come in and they offer it to us for either free or reduced rent on the space what is really nice about a dog daycare offering is

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that we can go into basement spaces and so we can take what developers typically have as unused space um and turn it into a really exciting asset for them and then in terms of the cost the customer so the residents actually pay for the service so it's a $40 a day offering uh

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we're planning to offer it as a subscription service just like child care so you'll come in and you'll either have a full-time option which will be $800 a month or a halftime option and so let's walk through the um life cycle of the business so step one you get this

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Lois um going um and this partnership going um step two who is selling to the ultimate occupant of the building is it the landlord saying hey and one of the services I offer is blah blah blah it is you okay so that's good because what it

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does that's good or bad it's good because what it does is it takes the hus of you trying to ident you the random company until you're well until you're the care.com of whatever of um animals um don't have the credibility to go into

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a stranger home and say hey please TR me with your pad by the same token it also means that your sales process has been interested to a third party whose day job is not your business so how do you think about that tradeoff yeah so what we're finding About Pets in these

36:43

apartment buildings is that because so many people are wanting to bring their pets into urban environments um is that property developers are really getting out and selling pet amenities as differentiators um and so they're viewing this as a way to say come and choose my pet friendly building with this great amenity um as one way of

37:00

selling the building as a whole okay so have you run the unit economics on this um do you want to talk a little bit about that or do you want me to kind of lead you through it lead me through it that would be great okay so $800 is the what the consumer sees on their bill yep what's the Rev split

37:17

between you guys and the landlord so we come in like I said as an amenity and so the space for us is typically free right but no I mean they're paying $800 to the landlord are what portion are you collecting they are actually paying it to us so we're doing all the billing the

37:32

full amount interesting I want property and I'll tell you I know the property developers are telling us that this is how the economics work for these types of businesses um and so we're come you know as we're going give a couple of years let's see how the recession

37:47

changes so I would run the i' would run the numbers the other thing okay so you've started this business it has to be a no business business is Recession Proof but you have to think about the good times and the bad times right the other the other piece to think about

38:03

here is how big is this market and how are you going to monetize it so how many by unit economics what I mean is in a building with x amount of units X percentage of the occupants have pet

38:19

pets of those X perent are dogs like gu you're specializing in dogs right dogs right um and for those on average we can charge for this radius this much if we expand we' have to bring the price and we can't price differentiate or you can I don't know so it's going to come down

38:34

to the lowest common denominator do those multiplications what's your Market opportunity how big can you get yeah so by the way did that make sense what I just went through okay yeah so we're seeing on a per site basis we're modeling it at 4,000 square feet um and the limiting factor for us there is you

38:50

have to have a certain number of square footage per dog right to be able to kind of meet all the right compliance standards so for 4,000 feet we can serve about 4 45 dogs on any given day okay so we're looking at Topline revenue of let's call it $500,000 because it makes the math easy from that but you're

39:05

assuming full occupancy if we assume full occupancy and which you can't right so what is the realistic number that you can assume on the occupancy side have you tested it so we're talking with daycares which I think is the comparable So Bright Horizons is the comp that

39:21

we're using they're saying for us to model at about 80% occupancy wow um so that which you know seems to be comparable in the um like I said in the daycare business the reason we think that's right is because people don't have a lot of other options if they're once they've signed up with you as a care provider that's what their plan is

39:38

for their dog so if they're going to be gone for 12 hours a day the other alternative is to find a different care option right right so we're believing it's a highly sticky business but in that view I think the state I think the stickiness is probably there but the Step that I think it's getting

39:54

undervalued is your ability to actually acquire that business because often times you know you're referring to aert to the yappies let me just be blunt who are working right the folks who stay at home um yis or not or elderly they

40:12

probably that's their companion they're not going to come to you unless they have an emergency in which case they will be in the oneoff category right my hunch and this is purely a hunch not a business judgment is you will see a lot more behavior um that mirrors that day

40:27

carees for where there is an emergency drop in like um a lot of Enterprises a lot of companies have for their employees the so many days a year the Emergency Care One than more than Bright Horizons but remains to be seen

40:43

yeah questions thoughts anything or questions for me from you let's open it up yeah so one question that I had and the reason I thought it would be real interesting to talk to you is we do have this capacity constraint right so we can only serve so many dogs on this Square so one of the questions we've how else

41:00

can we M right what are some other ways we should be thinking about that space utilization than revenue from subscriptions well I mean there are certain thing take a since you're taking a book out of um daycare take a book out of what children and parents so I'm a

41:17

the mother of a 15-month-old who is Breaking the Bank like nobody's business and um if you look at what's H how they target especially firsttime parents like myself it's add-ons so you could sell stuff mhm toys dog food so there's a

41:36

Commerce piece and the Commerce piece you can um now you've entered the direct consumer which is not going to mirror your so not going to mirror your other sources of revenue and will create some conflict it is a very different model to

41:52

go to your consum to go direct to Consumers versus the btb 4C so if you're going to make that choice make it very carefully and you've got to think it through but some just off the cuff some of the areas is more product and the product can be so physical product

42:09

whether it's food whether it's um luxury toys if they're very much into their pets whether whatever it may be um and you can do those in The Honest Company style I is a subscription a bundle that you get every month to mirror the

42:25

subscription behavior that you driving with the other piece or is oneof purchases and then of course I've left out the obvious because I don't know much about animals whether can you have also have cats can you have birds like what animals go with what not my domain

42:40

expertises you can tell but that's another if you have underutilization issues because you're constraining constraining yourself to one species I never thought I'd say that but can you open it up to more to more species that's that's the other um the other

42:56

piece of the Tom areas that I can think of right off the top of my head and then if you really want to stretch it but you've really exited your business content you know activities getting socializing of owners with pets so they

43:13

can play and all that so again you can um emergency care for the evening so because you're probably doing business hours what happens if someone is gets sick all of a sudden back to the overnight emergency etc etc MH what we

43:29

often do in Venture also is um if we're nice enough and I try very hard to be we open up rolodexes there is someone that you can introduce her to she used to be Leo played Leo's function at the Rock Center and she had a side business um

43:47

that was pet um management and Care awesome I and I'm blanking on her name but you know who I mean I cat you up but because this girl was doing it very successful and she quit this role to do that full time awesome

44:04

great go ahead what percentage of your revenues do you anticipate would be from people going away for a week or two and wanting to you to keep their dog yeah it's a great question so the way that we're modeling it right now is just on daycare um and the reason for

44:20

that is because of how the permitting works so the permitting for downtown is much easier on a daycare model than on a what called a kenneling model which is the overnight care um in the longer term you could imagine us adding that boarding component um but right now we're not modeling that

44:39

in no it is it is we carry the liability insurance so we're carrying $2 million of liability insurance that Travelers is underwriting for us um and you know the big place for us with liability is actually with our employees uh because you've got to carry the appropriate workers comp in case someone gets bitten

44:55

or something like that yeah yeah that's an interesting question because I think um you you can never have enough insurance but you also have to make the cost versus benefit um of insurance and when especially when you are a new

45:11

business you don't want to overspend but very careful get insurance because yeah if you don't or if you don't have the right amount your business can go under on one occurrence that had it occur had it taken place a year later it would have been an un event yeah

45:28

especially if it's Mission critical go ahead are you you're right now in downtown Boston you said that's where we're targeting is downtown Boston so you're you're thinking of expanding in the in the future or and and where and how easy do you think it would be it's the question yeah yeah yeah uh so I'd be curious to get your take on that too one

45:45

of the things that's exciting about working with property developers is that many of them develop multimarket so the vision would be that we'd partner with one of the big luxury developers and then expand within the markets that they serve um it'll be major Urban metros though right so probably the top 20 major Urban metros in the US we believe

46:01

there's some potential for international as well uh particularly in Europe the Pet Care space is even bigger than it is in the US so it's about seven billion in the us annually bigger than that in Europe and so we think there's some potential there as well yeah so I I I would agree with that

46:16

I think let me start with the last piece which wasn't your question but in Europe though you have an aging population so it's the companion Factor so I bet you the ratio of the elderly with pet is disproportionately higher than in the US so will does your there's one thing and

46:33

not that you're making that mistake but often times especially when I see business plans and pitches people will say the market is 20 billion sure the market may be 20 billion but the addressable piece that you're solving is 500 million or 50 million and I'm at least as a VC I'm not interested for a

46:48

lifestyle business go right ahead it's plenty big probably so like you said and forgive me for using this as an example like Europe is much bigger sure it's much bigger but what's the piece that you are going to solve what are the European you know Urban concentrated working rushing

47:06

people who just have to drop their pet for the daycare piece it might not mirror the US market right but I do agree with you it has to be highly dense um sort of high income and highly dense areas where there is a Cultural Association or interest in having pets

47:22

having pets absolutely that's thank you the and what's interesting about the urban population with pets as it's growing so about 60% of people 25 to 35 own pets wow yeah so maybe I should give in my husband's request go ahead hi I had a

47:38

question so if your service is located in this facility or in this apartment complex are your customers only people tenant of that apartment or could any other apartment people come to your off it's a great question and in the ameni space it's actually done both ways so

47:54

typically if it's people within the building that's where you get to not having to do this rev share if it's people outside of the building that's where you're starting to look at Revenue share with the building owner and the reason for that right is because you're using their property and plant um to run your business and then there is the

48:09

sanity or the reality check question for people who own pets they that's a plus but for people who don't own pets do folks have an issue with having 45 dogs or whatever it is on their basement it's a great question there was actually you

48:25

know there's data for everything right so there was a a survey that was done by apartments.com about the value of pet owning building so two interesting points one is that property developers have said that it is now considered untenable to have non-pet friendly buildings because the demand is so

48:41

strong um but even in buildings even people who did not own pets but who lived in pet friendly buildings almost 80% of them said they felt like the environment was better for having pets around uh so what we're finding is that even people who don't own pets by choosing to live in a pet friendly building you're a statement about your

48:58

interest there's a difference between a pet friendly building and a and a building where there are 45 dogs in a basement being cared for yeah absolutely so and again I don't know the answer and if I knew the answers to all the business questions I assure you I would

49:14

have retired but that's these are when let's say you were pitching me for money right when I think about it that's one of the risks that I have to figure out I don't know if I can get my head around it but diligence hey is it the same thing to be in a pet friendly Environ versus to be in a building where there

49:30

is a pet caring business yeah yeah any more questions go ahead uh what are you projecting um the cost uh being of each one of these centers yeah so if we you know say that

49:46

it's 500,000 on Top Line we're looking at what's falling to the bottom line of that it being about 130,000 um so we're looking at about 30% margin major major cost to the business is the Staffing right so um and there and that's a challenging piece of it because you're talking about hourly

50:01

employees in potentially High turnover types of positions and so the question is how do you really create in my opinion I think the way to do this is to create a really sticky culture um so that we're using kind of the Starbucks model to say how do we make these jobs that people are excited about and really

50:16

feel passionate about even though they're not particularly wellp paid and I think that's a critical point because I miss a fundamental question around this business this is not a software business this is not a build it once and apply it many many times to scale this

50:33

is a Services business and services especially when they're dependent on humans scale as much as human scales which is 24 hours in a day per human per da d d da so from that perspective all of a sudden she had the right Focus

50:49

right she's looking at the bottom line the margin because that ultimately it's about the profitability it's about the everywhere it's about Top Line but when you're in Ser in Services businesses you really got to look at the margin and and you know how you POS the question around

51:05

scaling the business if you're starting to do other products or if you're offering content other pieces that all of a sudden you develop once you sell many times then that margin starts to improve yeah and by the way when you're

51:20

in the early days and again I think this is probably a leftover from the 1990s but in the early days don't focus on profitability and starting and starving your business focus on growing your business but truly growing your business you know losing money in perpetuity is

51:36

not a justification for existence but I think you're in the investment phase whether you're bootstrapping it whether you're doing seed money whether you have um Venture money whatever it may be first focus is to start getting your proof points then

51:53

growing get executing and gaining market share sh ultimately you start focusing on break even and cash flows and that's particularly true in the tech and software businesses in services like I said you've got to be meticulous from day one and if you notice I started

52:09

looking at unit economics and all that because it's the nature of the Beast yeah did we have another question uh you were speaking early about an slay Revenue I wanted to know if you had thought about offering dog training so I live in a y building in DC and for for

52:26

those Consultants that are not around a lot they don't train their dogs particularly well and so there's a lot of yipping during the day um so I was just imagining that that could be something that would be of value to that particular Market yeah ABS I think that's totally spot on and a great utilization of the space right so I the

52:41

way that I've been thinking about it which I'd be curious to get your take on is you know how do we take this square footage that we have right we're programming it with daycare 700 a.m. to 7 PM right so then we've got a lot of time potentially both weekends and evenings that we can program that space with so what else are we doing in there

52:58

to help generate that bottom line I think dog training is definitely you know part of that um there are probably other things as well grooming seems like a natural extension as well um could we do a members only dog park for example within there I think there are some

53:13

really interesting uses of the space that could be yeah and then you could really expense veterinarian services on staff or emergency drops and those could potentially actually become premium services so they could be your $300 a drop type of service all of a

53:30

sudden where back to your question on the margin boy does that look good looks yeah looks good um and to the point about yipping during the day which I'm glad somebody brought up this is actually one of the points of alignment with the property developers so property developers are saying we have to be pet friendly right because that's how we get

53:46

tency and we hate it because the dogs bark all day they chew on the walls they damage the apartments and so by having an amenity like this we're solving a problem that tenants like you have which is is like stop the dogs barking uh but also we're reducing the overall damage in the apartments and so that's one of

54:02

the reasons the property developers are excited about it good well I'm sure you're all here because you have because um you have your own business idea by the way sir I thought you had a

54:17

question okay lovely um let's open it up to you you know for your businesses and any questions that you may have around what you're considering what's top of mind and make it about anything if you think I could answer it I'll go for

54:35

it go ahead go uh yeah so we are I'm Jason this is bilios we're running uh an online it's not really SAS because it's not software but I'd say it's kind of subscription as a service where essentially employer branding for workplaces so if you're thinking about um where you might want to work we help

54:52

companies kind of showcase um to somebody who's think about working there what what it might be like so using visuals so think about photos videos getting sort of them inside from sort of behind a computer screen and so companies are willing to pay um at least initially we're really young but we've

55:08

had a couple clients say I want to pay but I think the value of our service kind of becomes more valuable over time as we attract more job Seekers to our website so right now we're focused on Boston and so it's a small Market um we don't have millions of unique visitors to the site but we plan to over the

55:24

years right so that value will increase the more eyeballs that are coming for an employer because more job Seekers are seeing it so I'm curious to get your take on how you think about and maybe this is just simply kind of doing that early bird pricing we were talking about but you know how do you think about pricing something like that that

55:40

essentially the more popular you get the more visits you get the more valuable that monthly fee becomes to an employer to pay you does that make sense so the way I based on what I just said the way I think about it is um you're

55:56

trying it's a Marketplace or a network um so you're trying to drive a network effect and you have your own I'll use the term platform because it sounds better platform um with a with you know nextg type profiles of employers so

56:13

using rich media is effectively to give an insights View and so on the one hand you have the employer which is the paying Source on the other hand you need the audience so it's a little bit and I earlier during my IR hours I had someone else was talking about a Marketplace

56:28

marketplaces are very very difficult to get instigated because it's not like a Instagram or Tinder or something where it's hard enough to drive consumer traffic or downloads in my example um and in your case to drive traffic to the

56:44

side that piece is hard enough and there are entire businesses that are doing that you're now adding the complexity of also needing to acquire Enterprises as part of the platform and getting them to be ultimately your customers so to get it to get the engine going is quite

56:59

difficult once you get it going and you have sort of a v you know a virtual cycle um then then it takes off I don't think about pricing the way you thinking about it um and again

57:14

you've given it a lot of thoughts so forgive me um for jumping the gun with 30 seconds but the way I would think about it is the more people you get the more critical mass the more employers will want to purchase your product or

57:30

you know PCH buy your subscription so because rather than focus on increasing the price of the 10 employers that you have on the site focus at least initially on whatever critical mass and growth you're seeing on the job Seeker

57:46

side to drive from 10 to 50 employers and then you can always add more capabilities to the site to drive higher pricing do you know what I mean so go for land grab rather than extracting the maximum out of your existing or any

58:02

given first early adopters go ah follow up just a follow yeah yeah um so I mean part of the challenge is we don't want to it's like the penny Gap right like just getting them to even pay something is is is a challenge and we don't want them to get too used to necessarily paying nothing right and all of a sudden

58:18

we flip the switch when we maybe have you know hundreds of thousands or millions of users in year two or three how do you that's kind of why we're me that's a wrong way to think about it no it's not it's a very very common Challenge and I have a strong bias

58:33

against free trials because by virtue of calling it a trial I don't know what it is about the mentality trials they don't even turn them on so think about who your constituent is you're selling into the HR department now is it you know markets of their Cycles it's a good time

58:49

to sell there is you know how work day and a bunch of those companies 10 years ago disrupted the HR space we're going through that cycle day again it's I see it in HR and I see it in sales enablement so timing is Right willingness to pay x amount is there so

59:06

check the box and check the box but keep in mind that you're overhead you're selling into the overhead Department of an Enterprise you're not Revenue driving right so there are boundaries to that I think don't do free trials do pilots

59:21

that automatically turn into subscriptions because there is this mentality on the one hand you want them to adopt the platform on the other hand you want to train them that they will eventually pay so but free trials they don't turn on paid Pilots or Pilots that

59:38

automatically turn into a 12-month contract carry a different meaning so for example you could say three-month pilot then unless you proactively cancel it it's a 12-month um additional 12 month contract all of a sudden you've

59:53

gained a customer and a 15-month customer not a three TW or 12 month customer that's one possibility go ahead is that that's yeah well if you take it one step further and I mean a lot of these online services or apps these days they are

00:09

pretty much free because otherwise people wouldn't even use them what what's your take on that in terms of if you're in that case almost purely relying on your size and then eventually maybe advertising those sort of things from a VC perspective perspective so

00:27

very good question and it Go gets to the cracks of what I was hinting at at the beginning um of this chat on what we have seen in the consumer space in this in instance in the example that was just given by Jason and vasilis right um the

00:44

the payer is not the consumer is still free to the consumer they just have the challenge of acquiring the consumer and that's no small feed the money whatever the willingness to pay is coming from the Enterprise so they have kind of at least in this first go have an approach for how they're going to make money in

01:00

the consumer space Facebook Twitter and the likes trained consumers and even before then the wal Garden Notions right well before Google with the Yahoo and the W Gardens if if we're old enough to remember all those but um we were

01:16

trained that content on the web digital was generally free without subscriptions but it was monetized with ad models so if you look at Tinder if you look at Pinterest what I as a VC look at in that

01:31

instance if I am looking at a consumer deal is the growth in customer acquisition or consumer acquisition so there a whole whack of um of metrics in that regard so let's say it's an app right number of

01:47

downloads active within those downloads I will look at Varity coefficients I'll look at how much it gets shared i' look at usage I mean you get really really meticulous and really deep in a different way in that instance and know by the way the bar keeps moving if three

02:04

or four years in this space getting 100,000 downloads you were made today that number looks more like a couple of million for a c i mean it's because it has been because the barriers to entry are so low you and I can probably overnight not even knowing how to code

02:20

probably could I don't know if you not code but I certainly don't I took one class and did miserably Abby I need help um but we could probably start you know launch an app God help us it' go nowhere but nonetheless so the barriers to entry are so low so the bar for Rising above the

02:37

Clutter is very high and so those are some of the metrics then you worry about the business model later having said that most of the time what that business model is it's advertising supported it could be rich

02:53

media it could be in the fashion of I'm sure everyone goes to like CNN.com where you're forced to watch a video for a 20 30 seconds you you know display has been severely commoditized but they still exists or you can have a ground swelling

03:08

sentiment from the point of view of consumers I'm done with advertising and I'm done with all the tracking and all the cookies because unless I'm unique wherever I go if I looked at this XYZ product the display ads follow me because I've been dropping cookies on the step of the way then all of a sudden

03:25

you see emerge and for you know maybe people have been hiding but if you haven't been reading the news in the last couple weeks loo is a new social network and we thought we were done that promises no

03:40

advertising they are trying to ride this wave and making the bet that they can do premium so you want your to protect your data dear consumer and you don't want to be bugged by advertising you have to pay so they're trying to change 10 to 20 um

03:58

years of free mentality by riding this wave will it pin out who knows right now it's very hot to get in so we're all you know following the herd mentality so the but the major models are transaction for Consumer advertising

04:15

supported and premiums and premiums are tricky I hope I answered your question yeah more or less the only other the only remaining question I have is so from the if what you said a little earlier the VC would also come in possibly a little bit later once you already have some of these download

04:32

downloads and not necessarily initially not all vs are created equal right so um seed stage VCS are the first money that comes in and they take a bed

04:47

but my point was that because there are so many offerings out there unless there's something amazingly disruptive unique and very evident from day one you want to see traction you always want to see a little bit of traction even if it

05:04

is just a few people to validate it even for the seed guys but when you see some points of validation that Target my claim is has moved and it's moved higher and higher and higher because there's so much clutter and it's hard to tell it's

05:19

much harder for me to tell today whether an app will succeed than it was 3 years ago by the sheer number of apps out there and the low barrier to entry go ahead I was just wondering if

05:35

you have a business that works both ways uh you have a product that's B2B but there's also a social social network attached to it so you could either sell it as a software as some users would use it as a software but there's a social

05:51

network that surrounds it so you could monetize it normal way through ads and stuff like that what would you try to develop first they gather clients through the B2B or gather or users through the social network um Let me let me make sure I

06:08

understand the question so I don't just give you a rambling answer so the idea for this business would be that your business a you're selling to business B and there is a transaction that takes place in the form of either a license or

06:23

subscription but then you also think that you just want to go to market and sell that product on social networks or you want to advertise on social networks no no no basically by so this is education based imagine that I sell to a

06:40

university okay so with the users that I gather at a university and the data generated with that I can do a million things one is what I'm selling which is a which is B2B because I'm selling to the university even though it's B2B for C because it's for the student

06:56

but with the data that I generate and with a whole lot of other things I can build a social network around so I could monetize and other people that are not from the University and cannot use what I'm selling to the university can join the social net so let's assume I'm going

07:12

to give a crazy example probably has nothing to do let's assume that you're offering virtual classrooms to the university and so you're saying you're selling it to the university university is using it for teaching but then you're extracting a lot of data from what what the students are making up saying and

07:27

you think you can build a whole social network around that um a couple of I don't know the right answer a couple of thoughts though around it one is focus especially in the early days is critical almost

07:46

Singularity is better than multiple pieces Founders often have big Visions for what their business will grow into and than God for that because if you were shortsighted it'd be very incremental but it's critical to take that big vision and parse it out so that

08:04

you're singularly focused on succeeding in one piece before you extend so if I so my gut reaction is let's stick with my example of the classroom succeed in selling the universities and getting

08:22

that adoption going and once you've gotten critical mass that way add that social networking piece unless that social networking piece is critical to your core business because the behavior is different go ahead oh five minutes so

08:41

um so and it's I was meeting with someone today again during my office hours and she said I can do this this that and that no no no no no Focus if you're going to do 10 things you're going to fail the odds is an entrepreneur the Entre rurs have a few

08:56

experiences one is the highs are low high and the lows are really low but secondly you're ever Optimist and God bless you for that even in the darkest of hours you have that and that's why you do what you do the third thing is you want to conquer the world but the

09:12

odds from day one are stacked against you I don't care what business it is and how you mitigate some of the odds being stacked against you and that risk is by being focused simple focused this is question about you you know the focus that you're talking about

09:28

um so basically what you know my friends and I we created is um is the event platform for college students looking for social events on and around campus so we've seen that being a big problem you know finding things that happen you know social events so shows concerts parties anything on your campus and then

09:44

you know different bar events or Pub events and then um so that's that's kind of the user base right so people going to the um app and we're developing a web platform to find these events and then we allow local businesses to advertise to them right so restaurants and PBS so

10:00

you know with that Focus you know should we be for let's say an angel investor you know is it or any you know investor is it important for us to you know really get that user base first or see um you know an increase in revenue from the local businesses

10:15

so at scale what you will have to have proven is that you're the most you are the app or the solution that your demographic demographic college kids use for event

10:31

Discovery period by that I mean you've got to really draw that audience and then you've got to have a path to monetizing and if that monetization is advertising from local guys they're typically small businesses

10:47

so if I were evaluating your business I would worry a little bit about the dependency on small businesses and in fact I'll would say well let's see what for square has done in that regard or again going back to the discussion with Alex around the analogy right to answer

11:02

your question so at scale for an angel investor You' got to show that you know how to get piece a and piece B then it's Focus where do you start and I think you have to prove that the product you have solves the pro solves the problem and you have users then if the audience is

11:19

there and you've succeeded you can start to figure out how to monetize this is advertising the right path is it local businesses the right you know advertisers or is it something else so show that you have thought about it to

11:35

your angel or whoever you're pitching but then and that you know you need both pieces because ultimately you need to make money but you first have to have an audience to prove that you have a viable interest a viable product that you're selling a product for go ahead and I guess so at what point you know um do

11:52

you say yes we are the number one solution and how how are you able to um you know what metrics I guess when you arrive trust me you will know but uh so for example um Rap Genius now it's called genius.com they went they do

12:08

lyrics for um for music they annotate annotate lyrics for um started with rap music um they had a million in the first few months 10 million in the first year I think they're in year three they have 30 million uniques believe me they don't

12:25

ask that question they kind of know but good rule of thumb look at the growth right if you start with 5 10,000 people and then you're going to 50 then you're going to 200 oh wow you're on to something and and by going I don't mean over the course of a few years I mean

12:40

over the course of a couple of two three four five months which goes back to when you and I have had multiple disc or one discussion but intense one around um marketing do not Marketing in your case is your business exhaust all the channels to drive

12:57

traffic to drive engagement to drive repeatability to drive reality and it's a science as much as an art and do not underestimate it right I'll take one more question and then we're done go ahead so this is a

13:13

little bit different from from the other um internet based businesses so I'm I'm I'm trying to found a company in in life sciences so in in medical devices um and you s something that was very interesting and I'm I'm having a little bit of a strugg always a first time go

13:29

ahead which was you said don't focus on the profits or trying to yeah don't focus on the profit try to focus on the growth if that if I understood that right now for medical devices how do you I mean growth is going to come after I finish my clinical

13:44

trials and so on forth but I thought you know for my investors the same scaffold that I'm going to use for medical devices so the scaffold that regenerates um isues can I use that same scaffold early on as a life science reagent

14:00

product before I get to all my medical uh to theic clinical trials and sell it as a reagent product for laboratory scientists to use it so I can start getting some money in there in the first one or two years and not wait for five years right

14:18

so I don't know much about life sciences and medical devices so I've made my disclaimer there are businesses and what's interesting about medical devices is that you have a hardware component then you have the clinical trials then you have if you have to bfda approved

14:34

all all that so the life cycle is 101 15 years what I have seen as a by standard it is not an area I invest in is oftentimes companies get acquired before they generate a dollar of Revenue in your business so kind of like very very

14:52

different but kind of like I said you know Twitter and the consumer pieces they they often times get acquired for Instagram outlier or not they still hadn't figured out their business model and then God did they get acquired so think about the business model but do not compromise your business or what

15:08

your investors have backed which is goal X to get the medical device to do whatever you eloquently said and I can't repeat to the tissue regenerate it um if that is the case first of all they're educated in the space so they will know that this is not about generating

15:24

Revenue news in year one 2 three my guess is they will look at your clinical trials and there are Milestones that they will track to evaluate your performance if you find it necessary that you need

15:39

to generate revenues along the way be very very very careful about extracting that piece almost running it as a separate p&l and not distracting you from the business that you have been funded or you've started a new working

15:55

on because there's an opportunity a fundamental opportunity cost especially if it's a space where people are racing and the first guy is the guy that makes it out the door and that's it he or she become their product becomes the default solution little money today may not

16:11

necessarily justify the opportunity cost of you know the race or whatever so don't be tempted by that if there is a natural way where you can hire two people they run it as a separate p&l they it's highly profitable it throws cash that you reinvest here it doesn't

16:28

distract I'm assuming you're the CEO it doesn't distract from your daily activities of driving the business for by all means but often times that's not the case Okay Abby oh thank you so much my pleasure

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