How do you get a $100M offer without running a process?

Today, I'm excited to bring us who took it from zero to 50 million weekly rides. But I didn't expect like people to be like angry at me for like not making enough money. And I was like, "Dude, this is crazy." Like how much credit do you get as a founder or do you actually like earn yourself and The short answer is not a lot. How did you get that money? Like what what was the narrative? What was your process? Mhm. That's a good question. So, what would be the kind of parting advice to the founders out there that are looking to to raise capital? One thing that I think is pretty universal is Everyone, welcome back to Fundraising Demystified. Today, I'm excited to bring us the former head of China for Uber, who took it from zero to 50 million weekly rides. Also the founder of Forma, who sold this company to Snap. Uh welcome to the show, Ben. Hey Jason, thanks for having me. No, I'm excited to have you on the show today. Uh your background's super impressive. And yeah, from what I can understand and what I know about you, you know how to do growth. And I would love for you to share the backstory uh of your early days at Uber and what you did to basically take it to the scale that it was and ultimately selling that division of Uber for $7 billion. So, Uber um by the time it entered China, um it was working in US and I think in Europe at the time already. So, um there was a little bit less of product market fit issue cuz we knew that people wanted to order cars through their smartphones. Um that did not exist in in China yet. So, I was the first employee for Uber China. Actually, three of us started on the same day. And uh the idea was can we bring something that seems to work in other markets and bring it to China. At the time, a lot of tech companies have tried to enter China. Um, you know, I think at this point it's well known that most of them do not succeed. And so, of course, there were many doubters uh for Uber as well. And kind of there was it was actually 3 years from like kind of cradle to the grave there, actually. And the first year we had a small team working insanely hard and basically nothing was working. Uh we were working like 80 hours a week. We were going to bars, handing out flyers, um negotiating with taxi and limousine companies and car rental companies to get cars. And at the end of the first year, I think we were still doing something like 100 trips a week. I don't remember exactly how much, but it was just very, very few. Um and um in the second year, we went from zero to I think like 40 million trips a week. And that was crazy and the wheels were like falling off. And then in the third year, I think we were like 40 to 50 million. It was like pretty much like flat. And I you know, that's actually kind of what led to our exit of China. Um So, that's kind of like it was kind of like three completely different stories. And I think that kind of encapsulates the idea of like when you don't have product market fit, you can try really hard and nothing's working. Uh it wasn't for lack of trying. We tried really, really hard. And then when we found something, it just like was a complete spark and then took off. What like that that's such a massive inflation. What was What was the something? Yeah, so um we knew from um the US that like Uber X was the big unlock for supply, right? So, initially Uber started with Uber Black. It was like really nice black um black cars like town cars and like SUVs. And we're very expensive. Um and that was working pretty well. And then the huge unlock is when they added Uber X, which was peer-to-peer. So, regular people like you and I could um drive on Uber. Right? And so, it was a supply constrained problem for a really long time. There were enough drivers. And so, when anybody could become a driver, you know, there was just way more um supply on the market, and there was a key thing that we always wanted was like the 4-minute ETAs, like we could get to somebody within 4 minutes. And that was kind of like the sweet spot for a magical experience. Um so, in China, because of regulations, we we also started with something like Uber Black, went with rental car companies, limousine companies, and there also was not very much supply. The The thing is, we weren't sure how to do the peer-to-peer thing for a very long time. Um I still remember there was a guy on my team who found this like obscure document from the Ministry of Transport. So, it was an official Chinese uh government document that said we recommend ride-sharing during the Spring Festival, which is um their like New Year, cuz um everybody goes back to their like old hometown, and there's like crazy traffic, so they are suggesting um ride-sharing, but not for profit. And so, he's like, "What if we tried that? What if we said, 'Hey, we um recommend nonprofit ride-sharing um to get around town, you know, beyond just Spring Festival?'" And so, there was this kind of Ministry of Transport document. It was not like a law or anything. It was just like a an opinion, but we did have some like a little bit of uh of a of a shield. And I still remember like everybody up my chain hated it, and there was a call on and Travis, who was the CEO at the time, uh was on a call, and he was the only guy who was like, "Man, this seems kind of interesting. Why don't we try it?" And everybody else hated it, and I was in Beijing, and we had three other cities. Nobody else wanted to try it, and so, we did did an experiment in Beijing, and it just completely took off. And then obviously very quickly we um brought it to the other cities, and our competitors uh eventually copied us as do you think you tried? Like, how many like different channels do you think you tried before you had that one big explosion? Well, I mean, at the at the end of the first year at that time, maybe we had like 10 or 12 employees full-time, probably all working like 80 hours a week. I don't know how you like count distinct different things, but we tried a lot of offline stuff, a lot of online stuff, online ads, offline ads, going through schools, you know, handing out flyers. Um uh partnering with uh like BD partnerships um with big companies like Samsung or whatever and like little companies that are just local companies. I don't know. I think we've turned we turned over a lot of stones. Um most of which did not move the needle. Um so yeah, we tried a lot of stuff. And so out of curiosity, like you're basically doing, you know, venture you were in finance, yeah, prior to to this role. Like Yep. How did you make that that leap and and get into that position to to make such a massive impact? Um that's a good question. I I think there are a lot of young people who are in VC who are always like, "Oh, I want to join a startup and you know, actually get my hands dirty." Um and uh So I think a lot do, right? And so I'm certainly not the only one to have made that transition. Um there are others who just never never make the transition and that's that's fine as well. Um I think one thing that Uber was very good at was they were very good at getting people who are not from startups um who are like smart and motivated and willing to learn. Um Uber kind of had a system like Travis had a way to convince smart people to like figure stuff out. And he really really prioritized problem solvers um and less about experience. Like he famously hated MBAs. I mean I mean he hired tons of MBAs as well, but like it was just a way of him talking about it to be like, "I don't really care what your background and experience is. I care about your willingness to learn and try stuff and keep trying." And I think that was one of his superpowers. He we hired so many people from banking, private equity, venture capital, consulting who had no prior um operational experience. And to be honest, not everybody worked out, but a lot um, did. And Travis was willing to give um, I mean, Travis has a lot of uh, well-documented uh, shortcomings. Um, he has also a lot of uh, strengths. I think also pretty well-documented strengths as well. And one of them was he uh, was always willing to give somebody a chance. Like when I joined Uber, I was pretty junior, right? Um, and on the call, there were like really we hired really senior people in China, like a VP from Tencent. He was the GM of Shanghai. I was not even the GM of Beijing yet. Um, I got promoted after after uh, we did this test. Um, and so everybody hated it. And they even said it on the call. They're like, "This is a terrible idea." And Travis was like, "I don't even know if it's a good idea." He's He wasn't like, "I'm going to go bat for Ben." right? He's like, "Okay, you can do this other thing in Shanghai. Do this other thing in Guangzhou um, and Shenzhen and we'll see." So, um, I think that type of mentality from the founder was very good. It gave people the courage to speak up and have ideas even if they are like really junior. Um, or or if they're senior too, right? I mean, senior people also have some good ideas, but uh, so I think yeah, they we had the culture of giving people a chance and letting the best idea um, win and not be too focused about, you know, pedigree or um, experience. So, um, so yeah, I I think I think Travis gets the credit for that. Haha. Well, you know, hire the great people and great people like executed. Uh, so taking that experience from the sea land to operating experience at probably one of the highest levels at at Uber, what led you to Forma? And for the audience's sake, tell tell them a little bit about what Forma is or was. Yeah, Forma was uh, um, an attempt to solve the photorealistic clothing try-on problem, which is uh, a pretty old problem since like Clueless uh, came out in the '90s and probably before then, uh, everybody's wanted to try on different clothes uh, virtually. And every couple years there's a new technology breakthrough and everyone like, "Well, now we can really solve it." And that one for us was deep learning. And deep learning did help a lot, but it actually did not fully solve the problem. So we can actually talk about that later if you're actually interested. But the idea was this is a very big market, you know, really strong need. There was this new technology wave that we were surfing and we're like, "Yeah, we can use this new technology to tackle this great big market." Right? And that was the kind of idea. Um I mean, spoiler, it was it's still not solved to this day. So so we did not solve it. But but your original question was how do I get there? I was not a born founder. I think there are born founders. I think Travis at Uber is one. There's I mean, there's a lot of famous born founders like Zuck or or Bezos or something. Where you can't really imagine them working for other people for at least for very long. Um I was not. So I started my first company I think in my early 30s. I had to take a It took me a lot of time to get the confidence and interest. Um my route was kind of weird, you know, I'm an immigrant child. So I was supposed to go to med school and like settled on engineering. Um didn't even occur to me to start a company. Um so just took me a little bit longer to like get there. Um but I think through the Uber experience I started to build more confidence and realize that like some of these awesome companies that you hear about or see they are indeed awesome, but there are um a lot of things that are like lucky and I think there are a lot of things that you can do if you are put in those situations. So I was also very lucky to be part of Uber. You know, and certainly in China from from ground zero. And so I built a lot of confidence like, "Oh, I can do a lot of this stuff that looks like magic." But if you're spending like 60 hours a week doing something for like months, um yeah, you can do a lot. So, that that was one of the things that took me some time to like experience myself. I didn't have that like built-in confidence um from like birth or whatever. Um but through the experience um at Uber, I was like, "Oh, I think I can do it." Um and I think a really important part is I think I enjoyed doing it, which I did not know uh before that. Well, you ended up raising about 7 million from like Founders Fund and GSR. Like and then you got acquired by Snap. So, I know you kind of downplayed what you did at Farm in terms of like you didn't solve the problem, but sounds like you had an outcome. Yeah. Um it walk walk us through that journey of like setting the the tone for raising money and how you ran that process. Right. Actually, now I'm I I think I realized I misremembered. I I think we raised 13 million. We raised uh seven seven and a half million in the second round and like five five and change in the first. Sorry, that's uh I I I forgot about that. So, uh So, um the company, I would say from a financial perspective, was pretty successful. We raised two rounds of financing from great investors. We sold the company for over 100 million bucks. It was 3 and 1/2 years. So, uh everybody made money. Um investors, uh employees. So, you know, it's pretty happy story, I guess, um from from that perspective. I would say though from a product and technology perspective, we did not solve either. So, from my perspective, we more or less failed. Um and and so if I if I actually take a step back and my co-founder and I spent a lot of time thinking about like how much credit do you get as a founder uh uh or do you actually like earn yourself? And the short answer is not a lot. Uh there's just like so much luck in um building companies. Um you know, of course you need to have some level of like effort and intelligence and, you know, decision-making. Um but there is so much luck. Like, we sold our company 6 months before uh J Powell started raising interest rates. Which, obviously, we had no idea, right? Like, I've no clue. Um, I would say we should get a little bit of credit in terms of like intuiting that like the value the value that they were going to um buy us for was much higher than uh what we thought we could raise for or what our company was worth at the time. So, I kind of like had some intuition that this was this this deal was too good to like pass up and like keep going. Um, so I think that's where we get like a tiny little bit of credit, but most of the credit is still like we're in a zero interest rate environment. You know, Snap stock was sky-high as were a lot of stocks. Um, yeah, so Timing means a lot. Yeah. Like, I know you, you know, again, downplaying what you have achieved on the tech side, but you still were able to convince and pretty impressive investors that this was worth making a bet on and it sounds like everyone came out on top, but you know, how did you get that money? Like, what did you raise two rounds? Yeah. What was the narrative? What was your process? Hm. That's a good question. So, the first round was led by GSR, a firm that I um met a long time ago. Back when I was a VC, I was on boards with with Richard from GSR. We already really liked each other. Um, he tried to recruit me many times to his companies, uh to GSR itself, to be a VC again. He was the primary backer of Didi, which was uh our primary competitor at Uber China. That's fun. They tried to coach me many times to leave Uber China to go to Didi. Um, which financially speaking would have been the better move uh in retrospect, but uh that's neither here nor there. Anyway, so I had a deep relationship with GSR already, and so they were like it was kind of a package deal of like me coming in with the my co-founders. They were looking for a CEO. They kind of had a CTO already. Um, and so that was like relatively easy. That was like relationship based, which um, for better for worse a lot of these things are. Um, and then the second round was from Founders Fund. Um, so Scott Nolan was one of my classmates at Bain, um, which was my first job out of college. And Keith Rabois uh, actually invested in another clothing try-on company uh, I think a couple years before ours. And um, I remember remember the pitch to to Keith. I I was like, well, we don't need like even the clothing creation we were just doing from a single photo cuz I think the last com- company they were doing 3D scanning on like all the clothes. And I was like, this is like kills any margin and we're like, no, we just take a single photo from like an e-commerce site that already exists. And we create it into a clothing try-on. So he's like, oh man, this is like half the equation just solved. Um, so I still remember uh, that pit- and he's like and then he calls his friend Scott, his co- worker whatever, his colleague Scott, who knew me. And so that came together very quickly as well. So in both cases it happened to be like relationship based, which yeah, I don't know. I think it's kind of annoying for a lot of people including myself. Um, but you know, sometimes you do need to have some of these relationships um, in place. But I would say it was like a lot of stuff was getting funded. We had a very very strong team and um, the market need was like very acute and uh, commercially speaking like clothing is a great market to be in. Very lucrative, very high margins, a lot of waste. Um, so it was a good market, strong team, tech wave, um, great economic conditions. So I would say the deg- the the degree of difficulty wasn't very very high for that one. Um, whereas like in this environment I think I mean depending on what you're doing like it could be much harder to put put pull this thing together. Well, I think the the lesson here for for our listeners is the idea of just like catch the wave. Yeah. Oh, totally. Don't fight the wave, catch the wave. And yeah, it doesn't always work out, but yeah, it's a lot easier. So, after we're talking to and and my co-founder and I talked about so much about how much credit do we get, and we found out we we decided that was not very much. I bought myself and and my co-founder both have a giant um reprint of Duke Kahanamoku, who's like the first um guy who popularized surfing in Hawaii. Um it's like I I like I was literally right next to me. I see I look at it every single day. It's a giant poster, and he has one right next to his desk. And we're like, you have to be surfing the waves. Like you can build your surfboard all you want, right? And then you can build the best surfboard in the world, and there's just no waves, like what are you what are you doing? Right? So, Um it's so simple. But it is it's so hard for so many founders to realize that. And to be I run into so many founders who get frustrated, like, "Oh, no one's investing in us." It's like, are you on a are you on a wave? Are you catching a wave? Are you like the shiny object you know, that everyone's chasing? Or are you going against the grain? Are you kind of like building in something? And you again, there's all kinds of stories of those ones working out, but there's a lot more stories uh people catching a wave and having a successful outcome. Um I feel like some founders are masochists and love Yeah, and but you do hear stories about founders who are just like contrarian, and then it all worked out, but like that's that's pretty hard, right? If you're paddling where nobody's paddling, yeah, a wave could pop up there, right? And you may you might be a genius and spotted things 10 years in advance. But there's just so much risk, right? And like even if even if you're right, if you're too early, it's also you're also going to lose money. Um So, and there's a lot of different types of waves, right? There's like fundraising waves, there's like technology waves, there's product waves, there's just distribution waves. So, there are multiple different waves that you can surf. Um So, you you got to have something you got to have some um kind of wind at your back or whatever whatever the analogy is, some like wave pushing you. Um And I think another thing also uh as a founder myself, I could say it's it's very hard to chase waves as well as a founder because you like the wave might be really short-lived. Right? So, that that's another reason to like not just chase waves cuz if you just paddle over there and that wave just like kind of like dies, you're like, "Well, I just killed myself paddling over here and then the wave died and then I'm like then I have to like paddle over to this other wave and then that one might die and then you you kind of be like a dog chasing your tail um at some point. So, it is pretty hard. That's good that's good good kind of check uh for anyone to kind of be looking at what what waves or what target markets they want to pursue and also some are so crowded. It's like you're going to get knocked off. Yep. Yeah. That's Yeah, that's a good point. Everybody if everybody's there, I don't know. Like, are you going to be able to out-surf everybody? I mean, probably you can out-surf a lot of people though. Yeah, you you better be pretty good. You're likely having trouble raising money or selling your company. Personally, I've had four exits and I've raised over $145 million. If you want a free coaching session with me, just like, subscribe, and leave a comment down below letting me know what you think of today's video for a chance to win a free coaching session with me. I'll select three winners every single month. You just have to like, subscribe, and leave a comment down below for a chance to win. Now, onto the video. Let's transition to the the Snap acquisition. Uh you know, so three-year run, but how did Snap get into the picture? Were they following you all along? Were there other contenders in the acquiring you? Did you run a process? Did you hire bankers? What was the experience? Yeah, it's a great question. So, they actually reached out to us pretty early on. I I still remember uh he wasn't even one of our investors, but one of my good friends and and now our investor in my new company, but uh Dustin at Wonder was like, "Hey, would you like to talk to my friend at Snap? He's interested in what you're working on." I usually don't really like to talk to people outside the company. I find that to be distracting. I don't even know why. I was like, "Yeah, sure. I'll just meet Krish." And he introduced me to a couple of the um BD folks at Snap. They're like, "Oh, this is super exciting. We want to do this, too. You can build a lens within Snapchat. We have this API." I think they were trying to do like developer relations, so they were trying to get developers to build new lenses. But then like uh it was kind of hard to work together uh with them. We were very, very small company. We didn't have anybody to like manage this relationship and um we were just one of I don't know, hundreds of developers that they talked to. So, we're kind of going back and forth for like a while and we ended up never doing anything um uh together. But we at least had the relationship and um I subsequently found out that they were trying to do the exact same thing for a long time with a much bigger team and we were way farther ahead. Uh we had like I think four researchers and they had I think something a couple dozen. I don't know exactly how many were like dedicated to this. Um and I think basically they were trying to uh uh learn about us, compete with us, and it took 18 months, but eventually they actually just acquired us. So, I don't know exactly what the like discussion was, but my guess is it was some version of like "Hey, this team is way smaller and way ahead of us. What's going on?" And then the team internally was probably like, "No, we can like we can beat them." And then they're like, "Okay, let's like let's do it." And then, you know, 12 months pass and we're even farther ahead. And they're like, "Okay, what's going on here? We have to pay a premium to acquire um a stronger team." Um and uh anyway, that's my version. I don't I don't know if that's actually what happened. Did Did you just take the inbound offer and then move forward? Did you guys bring it up? called me many, many times. I kept saying no and they were like, "Oh, what's your number?" and stuff like that. And I guess maybe from their perspective I was playing hardball. From my perspective, I was like, "No, I I don't want to sell. It's only been 3 years. It's too soon." And at some point um yeah, their their offer was uh Okay, to be fair, yeah yeah, I to be fair, if if our company was doing way better, I would have turned it down, right? Maybe maybe it would have been worse. But it's not like our company was doing very like it's not like our product was killing it. So, it's probably good that it wasn't because you wouldn't have sold it and the market would have tanked. Yeah, I would have said I would have said no and then the market would have tanked and would have had to fundraise, you know, with like zero or little revenue. So, um, that's where that's where we're like there's just so much luck, right? And anyway, so our company wasn't like crushing it, right? And um Yeah, and I would Yeah, which is something I talked about which is is something I talked to founders often and it's like if you have the means to walk away Oh, yeah. your evaluation goes up. So, much That That That's a really important point. And another thing that I would do deserve some credit for is we were extremely frugal. And when uh we were acquired, we actually had like I think 18 more months of runway. So, we were not in any dire position at all. Right. So, we we had like there was there was no like the we we had some leverage, right? As a smaller company you don't have that much leverage. But, I had the leverage of saying, "Oh, I just continue operating, right?" So, go ahead. Keep burning whatever 50 engineers, researchers worth of you know salaries to lose to us. Right? Yeah. I can just keep going for 12 or 18 months. I have a really small team. My burn is really low. Um I found that to be really really helpful. If you have no alternatives and you're like, "Man, I'm going to not make payroll like next month." I mean some people like that. Like the pressure makes makes you do some some cool stuff, but you're not in a very good negotiating position and whether they know it or not, they'll like they can sense um that. So, we always had the walk away um like leverage. It's like, "Oh, we don't need to sell." So, um I think that helped a lot. No, that's smart. And And basically you didn't bring you didn't run a competitive process. You didn't bring any other parties to the table to basically sell. hotly debated and we brought in some like M&A consultants, um which I don't know if that's a good idea or not. Um but they felt like you need you need acquirers who fall in love with you. So, just like going around like going on a bunch of dates. Um they thought like it was a waste of time. Especially they're like you you need leverage, right? But your leverage is just to keep operating as a independent company. So, they're like that's that's leverage enough. Um but if you're going to go like try to talk to Facebook and Amazon and Shopify and whatever, it's going to take you a bunch of time and then you're going to tell everybody your story and you might have pissed off the the one party who already loves you. So, we decided not to run a process. Um I don't know in retrospect if that was the right I mean unknowable if that was the right call or not. Um But if I run a process with much more time, maybe Zorp would have ended up selling. Yeah, you would have you would have probably killed 6 months and then market would have collapsed and so it was actually probably the best advice. Uh yeah, I I mean it's unknowable. Maybe that would have multiple bidders and sold for 200 million. I don't know. But we'll never know. But everyone made money, so yeah, it wasn't a bad decision, but um I would say uh even on your driveway comment of everybody made money, not all the investors were supportive or happy about the acquisition. Yeah, they they didn't they didn't get their they didn't return the fund. Yeah. And the IRRs are great, but like I mean I had such a good experience with my investors, so I I don't want to I don't mean this negatively at all. This is the cold hard fact that like for Founders Fund making like a three or four X in like a year, the IRRs are great, but like dude, that doesn't matter. Yeah, it doesn't move the needle. Yeah. Yeah, it's small talk. Founders don't understand that math. Like the founders are like, "Oh, this is great." But like to investors, it's like sucks. No, I totally and I totally understand it. Um But Founders Fund was always so so so supportive and and great. So, I mean, I had such a good experience with them. Um I can't say that's the case with all investors, but oh, the other thing is when I when I sold the company, I was like, "Oh man, like everybody made made money. Like good job. We're like lucky." And and then we were a little good, a lot lucky. And then not even all of our team and the investors were like happy. I was like, "Man, this is crazy." It's like you do all this work that like not like I got into this for people to be like, "Oh, thank you, Ben." or anything. But I didn't expect like people to be like angry at me for like not making enough money. And I was like, "This is Like, sorry you didn't make even more money. Um but yeah, don't get into this thinking that people are going to be like, "Oh, thank you so much." Like "You're my savior. You're amazing, man." I I don't think people I don't think that is our, but I mean, I was a little bit surprised on the negative side to be like, "What the I can't believe people are complaining to me." It's a crazy. Yeah, and I've I've seen that we we had a deal blow up back in my day with um an acquisition because our our board got greedy. They're like, "No, billionaire or bust." Like, that's not in the cards anymore, guys. Like, billionaire or bust is I don't want to bust. Right, yeah. Bust sucks. Yeah, bust sucks, yeah. It doesn't mean anything to you and your check, but uh it means a lot more. Uh yeah, so yeah, that I totally feel you there. Um but speaking of the money side of things, we were talking offline a little bit about your QSBS Oh, yeah. acquisition. Um so, let me just warm this up for the audience if they're not familiar. So, QSBS, qualified small business stock, that's what it is. Right. Um basically a way to get up to 10 million tax-free, and there's all kinds of like structures uh in the sale of your stock if you had it for 5 years, it's corporation, there's other criteria. Um but basically tax-free proceeds up to 10 mil. So, walk us through what you what you did there and what you earned. Right. So, it's a it's a program designed to encourage entrepreneurship, right? Which is, you know, I think maybe not everybody supports it, but I think pretty well supported. Um you know, America's very entrepreneurial. I think it's an idea is to encourage people to start small businesses and incentivize it, which is great. And so, when we sold to Snap, I think our company was about 3 and 1/2 years old. And so, for QSBS to be eligible, you have to hold for 5 years, uh which also makes sense, so you don't just do like a quick flip. Um and so, we're like, "Okay, cool." So, then it's only been 3 and 1/2 years, but you can just hold on to cuz we did a uh a stock swap. And so, we're we're like, "Okay, we just hold on to Snap stock for just 18 months, and then um then you can sell the Snap stock or whatever, and it'll all tax-free. So, I was like, "Okay, cool. Like, 18 months is not that long. Um, I don't know, like, we got paid like other money. We got paid like cash and like we were we had jobs and stuff. Um, so we're like, "We're we're fine with money for now." Uh, the savings is pretty significant. So, let's just hold on to Snap stock. Now, in that time, uh, J Powell, uh, increased interest rates as he should have probably even, um, earlier than that. And, uh, the stock market started to tank, right? And, um, when that happened, the smaller caps, uh, were hit harder and I think Snap, uh, well, initially it ran up like another 30 or 40% and I was like, "Oh my god, this is like even better deal." And then it dropped like peak to trough I think it's like 90-something percent, um, uh, in in terms of their share price. And it just fell like so fast that like I didn't even have time to react. Um, I mean, I guess I did, but I did not have time to react. And basically I just rode the roller coaster all the way down. Um, so I did I, uh, I saved money on taxes. Uh, uh, which I did succeeded in that goal. And I just lost like a a way more money in the stock, uh, dropping. Um, so I I don't know exactly what the learning is here because if the stock like went up even more, then like, man, it would have been great and I would have kicked myself for um, paying the taxes, um, early. But, um, but yeah, I mean, I try to tell myself not to live my life doing like tax optimization, which is why I still live in California, for example. Um, but that was like pretty it seemed like a easy thing that I had like a 30-40% cushion, um, on the on the tax basis and then just dropped so much. Um, so yeah, that that that kind of sucked. But, anyway, I'm I'm already very lucky person in life. That part, I don't know. Um, not the luckiest. Um, I I guess it goes down to the famous saying like a bird in the hand, you know, just like if you got it, just take it and and run with it and Yeah, but we had made the exact same decision if I was in the same we had birds in the hand, right? We got paid some cash up front and then we had RSUs that we were selling. So, I mean, I still like we're still very lucky. We still made um um my um Yeah, we Yeah, but anyway. I don't know I don't know exactly what the learning is for for other founders, but um but like we we we even looked into like hedging and like buying like other products or options or something and and if I could found out then um that could be like tax evasion or something really strong uh penalties for for that. 2-year call option or something. Yeah, something like that or trying to do Yeah, uh and so we looked into a lot of that type of stuff. Um cuz I I mean, yeah, those seemed like it was too bad if you know, something bad happened. So, we ended up doing nothing and then yeah, it was just it was didn't work out. Well, that's fair. Um and yeah, I didn't It's a fascinating story. Just again, like every And again, every situation is always different with every deal. Like this deal It was very often It's very rare that uh similar deals occur. Like it's totally And this is why I almost never give advice because like I barely even understand what happened to me and much less can I understand somebody else's situation. So, I I can I share stories like this. I love sharing stories with with Jason with you and your audience. Like stories is great. Um but this is not advice. At least not for me. Well, so the acquisition a couple years ago, you know, you stayed a little bit. How long did you stay at Snap? So, I was I had it I was supposed to do like a 4-year vesting, but um the stock dropped so much. Uh the the the remainder was like not very much anyway and the AI wave this generation of the AI wave which was you know, transformer based was so exciting um and I was working on it at Snap uh a little bit as well. Um that my co-founder and I just got the itch and we're just like oh, we got to jump in the water now. To the surfing analogy, we're like, well, we're kind of on this like cruise ship. I mean, Snap is not the biggest cruise ship, but it's it is kind of a cruise ship and it's pretty fun. And we're like looking at a bunch of other like surfers surfing like oh that's pretty we're like criticizing them we're like oh that surfer is kind of sucks. This surfer looks kind of cool. But we're just like sitting on a boat, right? So we're like eventually we couldn't resist and so we just like we're like we got to get in the water. I don't know what's going to happen. We need to feel the waves. We need to get into it like what's direction we can go in and at the very very very least it'll be more fun. So yeah, so we left after I think like 2 and 1/2 years or so. Um I snap. So walk us through what you're doing now. So we we raised money saying that hey we're going to do something based on this new generation of AI technology like generative AI. We do not have a specific idea we want to commit to yet. So we have multiple ideas that we're going to build. But building is much cheaper now so we're going to build multiple products. So our first product was like AI dating app called Volar which was a PR like darling for a while. But that was we built that in 2 months and we were like just testing um like testing stuff. Um We actually brought in a CEO for that one of the first PMs of Tinder to be the CEO and and we basically gave him almost all the equity. Uh but then he ended up deciding he didn't want to be a founder which another lesson is like you can never convince somebody to be a founder. So we ended up having to shut that down which is fine. Um and we also built a second story called voice story which was much more personal. It was like a voice journal. So I'm a journaler. Uh Like most people probably journal way less than I would like. And the idea was I could just like talk to this journal that uh it would be purpose built for journaling purposes and it would like encapsulate every story with like an image and like a summary etc. And that you could like talk to um And so that was a very cool product that that I really liked. Um and then we had a small number of users who really, really liked it as well. Um and we ran into the same problem that, you know, frankly every product run runs into or service is how do you get distribution and like marketing? And I think that's like the hardest part in the, you know, in this AI world where there's just like so much content out there is how do you break through? And so we're like um and we tried like influencers and ads, those worked as expected. There was not really any alpha there. So we we had this thought like many founders probably do, which is let's control our own destiny and build our own TikTok channels so that we can uh reach our audience directly. And let's tell the stories of like our top users of how they're using Voice Story and like, you know, maybe it can be relatable to other people, etc. And uh that kind of worked, right? So we started doing that and then uh it was working and then uh we actually realized that TikTok videos started doing really, really well. And like every day we're like, "Oh, what about this TikTok channel? And what about this other one?" And then we just kept doing them and you know, one thing led to another uh at this point I think we've launched like 300 channels. I think we actively operate something like 50 channels. Um we've posted like 15,000 videos. We've done like, I think 200 million total views. Uh I think like 65 million in the last week. So that gives you a sense like a third of them were in the last week. So the the the growth is like exponential. Uh like there's going to be some ceiling on this. Like I'm not expecting this to continue going exponential forever. Um doesn't feel like the ceiling is very close. Um so everything we do is like AI generated. Um and there's a lot of like terrible stuff that's AI generated. Um most stuff is actually pretty hard to do. Uh but there are certain pockets that are uh like pretty high quality and good enough. And I think over time, you know, there'll be more and more uh types of videos that are better. Um but yeah, so yeah, our whole thing is like scalable content that is good enough quality um to meet the demand. Um So, I want to take a step back. After you left Snap, you and your co-founder basically were like, "We're going to do something in AI." And you mentioned very quietly that you raised money. You talk about that like you raised Okay. It was basically just a team team only. And so so so so So, Dustin at Wonder uh was the guy who introduced me to to Chris at Snap. So, he was the guy who initially uh connected me to the eventually the company that acquired us. Um he was also an advisor to my company. He had done like a kind of a fashion startup uh long time before Forma, actually. So, he had some um some learnings for us. I just liked Dustin and I was an investor in his fund uh as well. So, anyway, we we also had a relationship uh built over time. And he was like, you know, every month while at Snap, he's like, "Well, anytime you leave, you know, I got a check for you." So, uh I really appreciated that. And as part of fundraising, I think most founders know, getting that first check in is like the most critical. You need to have somebody uh you know, investors are herd animals uh for a good reason. Most are herd animals for good reason. Um So, once you have like someone who's willing to take a bet on you, there's much much easier to get all the other um investors on board. So, I always really appreciated that from from Dustin. And so, I took his money. I didn't do I didn't really go around and fundraise. Um I brought in like uh I think everybody in uh this company was an investor or at least a shareholder in um my first company. I guess except like some Snap people. I guess they weren't shareholders, but um but they were all just kind of like friendlies. Um So, I mean, that's one of the benefits of being a repeat founder is you have made money for some people. So, I didn't really have to go out and uh fundraise. Um But now I'm like, since then I've had to go out and fundraising and gone gone through the uh the painful process of doing road shows and getting turned down by pretty much everybody. Um Well, let's talk about that. So, so how much did you raise off the get-go? And then what's kind of been the recent story? We've raised a little over 2 million and the idea was I actually had an offer for like 10 million right off the bat. Um I felt like with AI we didn't need to have too much money and and inevitably if you have a lot of money you'll you'll spend it and we're like insanely frugal. I asked her once my VC in my last company was like, "You're the most frugal CEO in my entire portfolio." I was like, is that a compliment or criticism? Anyway, um but either way I was like, "I don't need the dilution. I don't want to like we don't even have the idea yet. This feels like beyond what we need." And it was also a new VC that I didn't know very well. Uh so anyway, we're like, "Look, we only need a couple million bucks. Uh founders won't take salary and then we only need like two or three other employees um that we already know very well. Our whole team is like from our first company and And Snap. Um And so we didn't need to uh raise a lot of money. Um I think there's pros and cons to that. So, I think the pros is like we've been very very very capital efficient. We haven't not we have not over hired. We've been forced to make difficult decisions like shutting down products that we should. Um I don't think that there's anything that we wanted to do that we couldn't do. Um so I don't think we're like under capitalized. But I mean we still are feeling the heat, right? Like there's you have like a year's worth of of runway left. And starts you start to be like, "Okay, I kind of need to raise money soonish, right? Maybe not like today, but in the next 6 months you probably want to raise money." Um So yeah, so the way I like raise money now is I try to like talk to investors and ask them for intros and advice and then hopefully one of them is like, "Well, this is so exciting that I want to lead your your round in um a financing." I would say now uh uh there's certain pockets of of um startups that are very easy to raise money. Um I think consumer is very hard. And so um like not only do you need to have traction, you need to have like real revenues. And so that's very different than with my my last company and certainly since like kind of the Web 2.0 era where you know, you just get high balls first and then worry about money later. Um and the reality is there are so many startups that have really real revenues that like if I were an investor, I would also be like, well, I'm looking at companies with 10 million revenue like every day. Like why would I invest in your company that looks cool but like has literally zero revenue. Um yeah, I'm just going to go to the other company that has 10 million revenue. No, um so it is a it's a little bit harder have perfected. Like so many founders don't realize it's like it's not that you're a bad investment, it's just there's better investments. Yeah, or perceived to be. It's not We don't know if it's better, but it's perceived to be. Perceived to be an easier safer bet to go with the company that has more traction or whatever the criteria might be. And um you know, just so many founders just don't know what's happening on the other side. Like they've never been an investor, they don't really know how much deal flow is like they see it. A 150 deals a month. Like and you're just one of those. So you have to be the best of the 150 Yeah. To get a check in some cases. Right, right. I don't know how much you want to get into like the VC uh inside baseball stuff. I mean, I don't know how interesting that is, but there's a lot of weird stuff going on um that everybody's acting um at least in their minds rationally. Let's put it that way. So to to your mind maybe like you're like, oh, why are they doing this other stupid company? But there is some reason, right? Um I want to know, yeah, what's your what's your inside baseball look? I just think like VCs like like most um people or work people who work, uh their number one priority for almost all VCs is is to keep your job. Right. And now making money is a way to keep your job. But another But like making money is hard, right? So, it's easier to just do for most people just to follow what other people are what other investors and like smart investors are investing in. Um Yeah, I mean, investors don't know either, right? Like almost I mean, Keith was is one of the best investors of all time and he would say all the time like I don't know, right? He would say like this is my opinion and but you should decide. I'm not I'm not on the ground. I'm not in the arena. He would say that all the time and this guy is one of the best investors of all time. Right? So, so like investors don't know, right? They also don't know. So, what are they doing? They're using heuristics. They're looking at trends. Um they're like trying to assess the founder uh quality. But anyway, like the I think the VCs like they're they're a lot of them are in the AUM game, right? Cuz they get guaranteed fees for raising more money. So, what you what you what you want to do? You want to invest a billion dollars in OpenAI or whatever Jony Ive's like iOS startup or whatever cuz you can deploy a billion dollars at a time. You collect two and 20 or whatever. You get 2% guaranteed, right? From your LPs. You And then you get the upside of the 20% if you if if you make money. So, everybody's trying to kill themselves trying to get into OpenAI and like SpaceX and whatever these like big companies are. Um and then there's very few who want to like take a risk on um a smaller company. And and and now like the reality is there hasn't been that much money made in consumer in the last like 10 years or so. Like TikTok is probably the like the last big one. That's not even a US company. Um so, there's just not that much money, right? And so, yeah, like can you make money? Like as a founder, I don't feel like there's any reason why consumer Well, there are reasons. Like distribution's pretty hard. But I still feel like uh consumer still can produce big outcomes. But from an investor's perspective, you know, in the last 10 years they haven't made that much money and a bunch of people made money in SaaS. So, guess what? They're probably going to deploy a lot more money in like enterprise SaaS um stuff. So, anyway. I I can go on forever about this, but I mean, I'm for me it's like I want to work on things that when I wake up, I feel excited to do it. Um nothing nothing personally against SaaS or or anything else, but like I don't find that to be very fun for myself. And I feel like life is short. So, um like consumer to me is fun. And then uh you know, hopefully I I actually think that actually increases the likelihood of us making money is if we're having fun, then uh we're going to be more more motivated to work and we're going to be able to find um interesting things that other people who don't think it it's you know, as fun um might not be able to find. Whereas if I try to do SaaS, I don't find it that fun. What are the chances that I'm going to just like outcompete another person who actually really enjoys SaaS? Like I'm probably not going to be able to to beat them. So, um But it's one of those important things that I have conversations with founders all the time. It's like what what do you really want as a founder? And like so many people, you know, don't recognize that key motivation factor of like, you know, what actually brings you to want to go out and hustle and basically suffer every day. I mean, you you got to keep going. You got to keep going, yeah. So, um I I it's very hard, right? So, and I think it's uh I mean, just in general, too, right? Not just for founders. I think in the world now we're we're moving somewhere in the spectrum from scarcity over to abundance in general. Obviously, there's many um examples of scarcity, but when we start moving towards abundance, knowing what you want becomes the hardest part. Right? And that's why everybody's just scrolling Instagram because I don't know what I want. Instagram does a pretty good job just like showing me stuff I kind of like. Um I do it, too. Right? Um because trying to figure out what you want is where you Sorry. I had to delete Instagram cuz it's it's too good. No, it's crazy. It's like, yeah, because it's so easy. It's like, do I sit here and try to think really hard what I want and take accountability for wanting it? Or do I just like go through this Instagram feed, which is like pretty good, right? Or TikTok, right? Um and you know, 99 times out of 100 it's easier just to go, you know, flip through something. So, um So, yeah. I think that's a hard question to answer for everybody, but if you can find out what you want, I think that's a superpower because you're going to do it for longer. It's not original. A lot of people have talked about this, right? But you you're going to be able to go for longer than other people who um don't have as much fun doing it. And in the game of startups, I think survival is like number one, right? You got to survive. You got to keep going. Um and if you're having fun, then even better, right? Cuz then you're able to play around, and that's where actually a lot of the interesting things uh come about is when you mess around and do something that may seem silly or whimsical to others, but you like take it seriously. Um and have fun doing it. I think that actually increases the likelihood of you actually having the outcome um that you want. So. Mhm. That's what we're trying to do for ourselves. perspective. Um and just for, you know, to to wrap things up here, you know, what would be the kind of parting advice to the founders out there that are I'd say in consumer, you know, to be specific, looking to to raise capital. Figure out distribution? No, I mean, everybody knows that. Uh I don't like to give give advice, but I one thing that I would I think is pretty universal is uh think about what you want and enjoy doing. And if you're able to find that and stick to it, I think any outcome will be fine. Like I actually think you're more likely always like to preface that with like have realistic expectations. Don't always shoot for the billion-dollar outcome and that. Yeah, you can have millions. You can have a good outcome, but Right, but yeah, yeah, right. Um Yeah, I would say if you if the thing that you want is to have a billion-dollar company, I don't know. I think that's like pretty hard to I think that's too hard to want because it there's too many factors that um factors to do. I I think like think about what you want to do every day, and that way if your company becomes a billion dollars, that's great. In fact, I think it's more likely that your company will become a billion dollars, but even if your company doesn't become a billion dollars and becomes a hundred million or ten million or just completely fails, personally, I would say I'm not going to regret that if like every day I woke up and had a good time for 5 years and let's say I was unlucky or I was not very good and the whole thing just like crashed and cratered to zero, but I worked really hard and had a fun time doing it. I I don't think I'd regret it. And if you if you flip it around and be like I chased the billion dollar what I thought was a billion dollar opportunity, but every day I woke up and I hated my life, I think even if I got there, I'd be like, wait, now I have a billion dollar company and I hate I've hated my last 5 years of my my life is short, right? I don't want to hate my life for 5 years. Um and then most likely you're not going to make it. You're not going to make it and so you're going to hate your life and your company's probably going to be dead because you hated your life. Um that just seems like a miserable way to live. So, um That's all I can say. No, it's impressive. Um so, I guess from here, what it would be very interesting for the audience cuz you just kind of dropped a very interesting note that you got to 65 million views. You're pumping out AI video content that's like in that, you know, Goldilocks stage of a fishy with AI that's still good. Um what what's the URL? Like what's the are the Oh, man. I I like I I'm not trying to be dodgy. I don't know how to say that. I have like 50 I actually have 300 channels. I have 50 of them that I'm operating. So, there's no one uh centralized thing and it's very foreign to me as well. It's like confusing to me. Like how do I describe this to other people? How do I even like get people to support me? I don't even know how to do that. So, um So, I'm I'm I'm like actually not trying to dodge your question. This is actually a problem that we have is how do we get people to watch uh our videos more? Uh I I the answer is I don't know. Uh I'm working on it. Uh We did catch you in the afternoon, you know, it's it's been 1 week and you exploded with growth. So, you know, won't put you in the hot seat yet, but if we do figure out a way to share a link between this recording and the posting, we'll put it in the description for people to check out and you know, reverse engineer how you figured this out. Uh I I appreciate uh that. Maybe I'll give you a couple of our bigger channels that people can just look at and then you can when you see it, you'll be like, "This is crazy." But then look at the view count and look at the look at the metrics. Like it's 100% genuine, no purchased likes or views or anything. And it's ongoing. It's not like we're not just doing like one-off uh Of course, we love viral hits, of course, uh like anybody else. But our whole goal is to have like ongoing channels and and IP and characters that um people like. So, um I can share some of those links uh later. I'm I'd be very interested in checking that out as well, so um maybe after after the call you can shoot those over. Um but then uh and what would be the best way for someone to learn more about you? Would it be like LinkedIn, email? I'm uh yeah, I guess LinkedIn. Um I guess. I'm not very public out there. Um that's intentional. Um Yeah. I I I feel like I don't I don't I don't I don't like to give advice. Um I don't you know, because I don't know anything. So. Uh So yeah, I guess uh LinkedIn would probably be uh the best way. I mean, I guess I exist on on Twitter uh as well, but I don't I don't I'm not very active. Um but if somebody like finds somebody to introduce me to them, I'm I'm generally pretty open to meet founders. I love encouraging founders. I don't like to give advice, but I love to encourage founders, tell them to keep going, try to help them find uh joy and things that help them keep going. I think that's like the biggest thing that I can do. Um that I if I can, I can pass on like a little tiny little bit to other founders is you know, help them find a little joy in what they're doing. That would be um that's what I've always appreciated from from other founders. Uh so if I can do that, that would be great. Well, appreciate all the guys, the stories, and uh for coming on the show, Ben. And look forward to getting this out to our audience. Awesome. Thanks, Jason. Thank you for watching today's episode. As a reminder, I'm your host, Jason Kirby. I have built and sold multiple companies with over 135 million in transactions as either a founder, operator, investor across multiple industries. I'm currently the managing director and founder of thunder.bc, where we help companies and founders at all stages navigate what capital to raise and who to raise it from and help to improve companies' odds of raising the capital. If you need help, reach out to us at help.thunder.bc. If you liked today's show, please share with your friends, give us a like or comment down below. As a reminder, this show is published weekly. To get notified of new episodes and our newsletter, be sure to go to our website at join.thunder.bc. And if you sign up today, I'll send you a few freebies on how to negotiate a term sheet, how to get a free list of relevant VCs, and much more. That's it. No more shameless plugs. Thank you, and see you next week.