[VC Pitch] YC Founder Pitches NEA ($25B AUM) Partner in San Francisco

If you ever want to raise money from VCs, I dare you to not watch this honest discussion in Silicon Valley between a YC funded startup, Bernie, the founder of Soft and Andrew, a partner at NDA, one of the biggest VCs in the world. Andrew knew that, that he's going to be excited, not excited, and after five minutes talked to me, right? I mean, I got it. But I want to hear your person. I mean, here is lots of that. I think it doesn't all have to be serious. Check out this other clip. Like I'm German. And I think what what Germans are, they're quite literal, right? So I think how do we say this without, you're not, I'm not pretending cultures, right? Okay, and all seriousness, Andrew the VC from NEA asks incredible questions. He shares the exact framework that he uses to review this company in these early days. There's not a lot to go on other than the team. What I look for, and I'll give the nuance on this. Hi, one of my biggest takeaways from the way that Bernie gave the pitch was his vulnerability. And you get to hear Andrew's perspective of this approach. The fact that you were, first of all, super transparent with investors. I think unvarnished communications like that are the best way to build trust and like a productive, you know, relationship with all of your investors. So that's, I'm sure it felt like a low point having, you know, an investor update with that subject line. But I think you did the right thing, especially because it's without further ado, I'm Adam O'Donnell. This is a founder initiative. Let's go. And it looks like just going to more depth here about like where you are in the journey, scale of the company, you know, specifically what are you doing that's different from incumbents. I grew up in Germany and after high school, I worked as a chronic mechanic for like four to five years. And so this is how I got really into manufacturing and to the manufacturing world. And then I moved on to BMW. And I didn't like it. BMW in Germany, working unions, we cut it out. It's a bit very slow. So I decided to move to San Francisco and turned the early stage start. I really enjoyed it. And then, yeah, when you stand for it and after stand for it, I worked at Tesla. And I think a Tesla is where I got really deep in the like tooling and software tooling manufacturing tooling set of things. And Tesla is famous for being the, having built their own earpiece system. And they initially started it, building it at SpaceX. Yeah, my team was lucky enough to intact a bit more with the supply chain side and Tesla. And through that, I think we found out that Tesla is doing a great job when it comes to like real, like kind of modern manufacturing software. But the rest of the manufacturing world is really stuck with these like, that suite or equal like software from the 90s and like, like type. And this was one of our precursors to like, like just go deep and really look into it. And one thing that we found is initially in this, like procurement angle. So we saw the company last year in April. We ran through Y Combinator. And yeah, those are first like half a million dollars raised. And it was great. Y Combinator was really intense. But in a good way, and we ended up raising around like three million dollars after Y Combinator. And yeah, it's been going great. We kicked things off. We initially started with like an procurement angle, which means we help companies when it comes to quoting and RFQs by like supplier facing, right? So if I'm the procurement team at a manufacturing company, I need to constantly buy things, right? And today, most of it happens through email back and forth, a lot of like data is moving back and forth. And this is where we started. During Y Combinator, we were able to sign a customer for $60,000 in annual revenue. And I think for me, it's a big one. He was definitely like something, something big. Yeah. This shows all about unedited access to Silicon Valley. But sometimes because of confidentiality and the people involved, we can't put everything in there. But I wanted to share at this point in the pitch, Bernie was incredibly vulnerable about an investor update email that he wrote to his investors after losing a customer and some other shakeups at the company. He was so honest in the subject line in the body of the email that when I heard it during this pitch, I was kind of like, whoa, I wonder how Andrew's going to take this. But watch how fast it built trust. Check out Andrew's response. How you respond says a lot. And the fact that you were first of all super transparent with investors, I think unvarnished communications like that are the best way to build trust and like a productive, you know, relationship with all of your investors. But I think you did the right thing, especially because it sounds like, you know, the rest of the email was probably, where do we go from here? You know, how do we be constructive? This is the current state. Yeah. And we're not going to sugar code it. But like, here are the reasons to still be optimistic. Yeah. So that's, that's always the tone that I look for in companies is like very grounded, very realistic, very honest. But still, of course, looking for the path to win, right? Still looking for how do you, given the current set of facts, how do you like achieve that next phase of growth? I agree. So I think that's a, that's a great instinct. And then the second thing, which is a really great instinct is in moments like that to sort of reach out to advisors who've done it before, like that really, really helps. Yeah. I think in some cases it kind of allows you to zoom out. It prevents some of the like emotional decision making that can, you know, if you, especially if you are at a low point, and you're sort of on a reactionary basis, making a decision quickly without kind of really thinking it through, zooming out, talking to advisors. I think reaching out to advisor was a, was a great instinct. And clearly, I mean, it, it was a good decision. Yeah. I definitely learned a lot. Just the trust that I'm hearing. Like, because I feel like, I don't know how you put trust in like an investment decision. I mean, if it's not 100% there, then it's like, you don't do it is what I would think. But like, these opportunities as you're describing them are just like just the authenticity, the realness of vulnerability, you're not, you're like, yeah, and to have a subject like that, that's stuck out to me. And I, but any other things you have around trust building, because it seems like a reverse. I think founders want to put the sugar code to be like, I don't want to lose trust if, you know, if this bad thing just happened. But yet, I sense you being more trusting right now. I think that's exactly right. Open, honest, unvarnished, and still realistically thinking productively about path to win. Yeah. Yeah. You know, if you've lost hope that that's a totally different situation. And you can have doubt and you can, you know, talk to your closest advisors about the doubts that every, you know, founder goes through. But as long as you still believe there's a path or you can win, I think that that's the right tone to strike. And your investors should stick with you in case. I mean, early on what we're betting on is typically like a team and a market and maybe a technology or product. And obviously there was somewhat of a change to the team. But you're still intact. You're still at the company, right. And so at least half of the team and the person who's driving the technology and the product is still there. And so you might forgive a couple of the investors. You know, I would never do that. I don't take it personally, right. I mean, again, like, especially if it's like an angel, right. Like if you're like an angel investor, you're shipping in like $50,000. You just want to make sure. I mean, it's never like, I think it's never a good sign if there's a co-founder break up, right. Like it's, I don't, I wouldn't say a co-founder break is a good sign. But when you're investing in companies this early, it's a common enough fact pattern that it's, if it totally scares you that there was a co-founder change when you're investing in pre-seed companies, then you probably shouldn't be investing in pre-seed companies. Maybe ban ETF or something. It's totally different risk profile. Well, what are your, what are your concerns about the market? I mean, we haven't really dug into that. So maybe I'm just curious. Yeah, I just hear about the product and then about where you are. I think I understand the market. So the product vis-a-vis the competitive landscape and how you think about incumbents would be super helpful. I'm assuming you attach to like legacy ERPs, you're not trying to displace those guys. But yeah, tell me a little bit about how you fit in to the landscape and where you're going. Yeah, there's, there's a lot there. I mean, like, I think first things first, manufacturing is hard. Manufacturing is hard, but we don't do this because it's easy. I think the biggest thing that we've noticed since going really deep in other manufacturers besides like Tesla and BMW. I think the biggest learning here is that you cannot rip and replace an ERP system, right? Like I think typically in the life cycle of a manufacturing company, you typically only see one at max two ERP systems, right? You don't see like a switching between ERP systems. Even if everyone is frustrated, no one switches because it's so deep and like everything is in there. And maybe for the audience, an ERP system is a system of record for manufacturers. In easy terms, this is how factories keep track of inventory. That's the easiest, easiest way of explaining it. And yeah, so that was like one realization, right? Where we really clear, right? Let's don't start with building an ERP system from scratch, right? Like, want to make sure that we, like the time to value should be really short. And what we initially started with is this procurement angle, meaning procurement teams and buyers at manufacturing companies constantly need to buy material. The way they do this today is they send emails to their suppliers. Hey, send me a quote for a specific part with a specific drawing. And obviously, super inefficient, right? You send drawings back and forth. You receive PDF quotes, Excel quotes, quotes in raw email texts. Things are super messy. So what we do, we did initially, the buyers connecting to soft through Gmail or outlook, depending on their client, we just read every single email. And we just parse out all the data and make it comparable, right? We truly believe that supply chain data lives in email because this is how business is being done in manufacturing, right? That's the first thing how we plug in. I think the biggest unique insight on our end that we've learned in the last couple of months is supplier portals suck. And the piece there is supplier portals, meaning there's like a kupa, there's an Arriba, and there's other EOP systems and other even like AI systems that offer supplier portals. And I think everyone should go to a supplier and talk with them, what they will tell you is like, I don't even know my password. I don't even know where the link is for this specific random customer. Right? So what happens is they work with 50, 60 different companies, and they have 50, 60 different portals and they just hate it, right? Which is what they end up doing is they just send an email anyways. So your buyer is inserting data in your supplier portal. Yeah. Because your supplier doesn't want to do it, right? And so that is specifically two for smaller manufacturers because you don't have these power dynamics, right? Well, like if Tesla wants you to insert a quote in their portal, you got to do it because you want Tesla's business. Makes sense. Is your plan ultimately to go after both sides of that transaction or do you want to just stay either on the buy side or the sort of sell side, you know, because clearly you're in a great position to do both over time, but I have to imagine starting with like an initial profile is helpful. I love the question. Because it eludes to what I want to say. I think saving money for manufacturers is great. I think if you can help manufacturers make more money, yeah, even better, better, totally. So we've seen something interesting happening. And a salesperson at one of our early customers, actually, like Keshe's company, and found out about Soft, right? He just walked into the room with a buyer, and he found out, what is this? And then they looked and I was like, I want access. So they called me, totally, they called me, they got access. And since that day, and they were using Soft to create quotes, right? And the way they were using it, I was like, okay, how do you use this to create quotes? Like, walk me through. Like, yeah, I just looked at previous pricing. Yeah. Because today was so hard for them to find previous pricing, right? And because it's so deep in the European system, and then European system also charged per seat, right? Which means it's typically restrained to only a subset of people at the companies. And, and yes, we became an operator. We looked deeper. And now we, our like actually, folks of the company right now is AA quoting, meaning we help salespeople of manufacturing companies to make more money. Yeah. That makes total sense. And then just because you mentioned it, how are you actually thinking about the revenue model? Is this, it's clearly not per seat. Give it your comment. No, I don't like it. Is it consumption based? Or how are you thinking about the revenue model? Yeah. Today, what we're doing is whenever there's a new factory, whenever there's a new manufacturer, I get them three to four weeks access to the platform. Will there in person will unload every single user white glove? And then after four weeks, we'll measure wind rate before per quota, per salesperson and wind rate after. And then through day, we'll just calculate, look, if all you salespeople is worth to use this, there's an increase in revenue. Yeah. So I think one thing that I've learned the hard way in procurement is like measuring savings on like a short time is a bit hard. Yeah. Because procurement, like the value comes over time. Whereas in like sales, it's actually like, what was the wind rate last week? And especially in like commodity businesses, where there happens a lot of quoting with speed matters, these things become really measurable. And this is where we sell into it. Awesome. Yeah. I mean, there's a huge trend towards value based pricing or at least more value aligned pricing. Maybe it's a hybrid model. But I think that it makes a lot of sense for the space that you're going after. And then there's obviously a ton of time and labor savings that you can enable as well, right? When you think about the old way of like doing CPQ and getting a quote together, it's very manual. It sounds to me like you're doing that in an automated fashion. Tell me a little bit more about that aspect of the product. Yeah. I think if we now jump, we were talking a bit more about the buying person, right? But let me talk more about the sales person. If you're a sales person that at bolts and faster and nuts manufacture in Houston, sure, we have weirdly, mainly in Houston. I don't know. Maybe we started there and there's a lot of oil and gases really big in in in taxes. Yeah. I love I love taxes. And let's let's take like a sales person at a fastener supply, right? And then every day they get around like like per sales person, like 80, 90, 100 requests from customers saying like, hey, Jared, 10 times, half inch, B7 bolt, 20 times, three quarter inch blah, blah, blah, right? Like these things. Yeah. And so how it specifically works is we just we sit on top of the email, we parse that data, we'll match it to the inventory system through the European system, right? We pull it in, we automatically create the email response plus the PDF quote, we respond, right? It's awesome. So something that would have taken them days, now taking them like seconds or minutes, and actually today, it's really funny this morning, the specifically their location of the factory, and there was a power outage, right? There was no, there was no, they couldn't do anything. Our service web running since we do auto quote sometimes, we already dial it up, we do auto quote, they're able to make revenue without anyone online. That's amazing. So they got, when they got online at 1 p.m. and they got purchase orders coming in from quotes that soft sent out in the morning. That's awesome. How are you thinking about defendability? Competitive landscape is, it was actually going to be my next question. Perfect. Perfect transition. I mean, I do think there are paths to a moat here, and I don't want to steal the pitch from you, but clearly over time, like as you land in these accounts, you get the data, you've got the flywheel, you build trust, just like switching out an ERP is a pretty high friction decision to the extent, you know, your value aligned, it's working really well. A customer's not, you know, unless they're dissatisfied, if it's working and it's totally valuable and pricing, that there's not going to be a solid reason for them to want to switch, especially if you've got a data moat over time where you've got all the historical pricing, you're hopefully capturing sort of a full closed loop flywheel. So, like, if somebody decides to make an edit because your auto canned response was not perfect, you're capturing that change and that feeds back into, you know, for future reference, for future quotes. So, there's a, if you're verticalized, like, automation and agente companies like this, there really is a data flywheel that creates a moat over time. But I'm curious to bring Andrew to my next, whenever we raise, like, I'll bring Andrew in. Exactly. But in my mind, then, the question is more about how do you land grab, right? How do you go to market land these accounts in the first place so that you can get that flywheel going to begin with? And so, that's why my question was on competition. I mean, there's, you know, from legacy folks who maybe aren't as sophisticated on the, you know, agentex side to a handful of newer, you know, startups going after the category. There are some players in the space, so I'd be curious to get your take on competitive landscape and how do you, how do you land these accounts? Yeah. I think it's a very good question to be, to be really honest, I think this, like, sales angle of things is also new to me, right? Like, it's, I don't have a, like a 10X answer to that. But it definitely keeps me busy and is something that I think a lot about. And I think what my head is right now is that luckily, like if we stay with fast enough suppliers, they're incredibly well connected. Yeah. Incredibly well connected. And I think there's one thing if you've ever been to a manufacturer's website, every single manufacturer that we work with, they have a button, it's called Request for Quote, on their website. Yeah. And if you actually talk to these factories, only 45% of their quotes are coming through the button. Like, if they would remove the button, they would even notice it. Like, there's like, there's a month, there's a couple of months where they don't get a single one. They only typically get one from like automated marketing campaigns. We're not going to buy fast orders. They just buy some random bot found a button and like submit it a form. So, um, like, that, that is like the state of school, right? But like, I think there's an insane opportunity to not just like increase the conversion rate from like, look, you get 50 Request for Quotes and will help you like win more because we can like respond faster. You'll increase win rate. I think you can go like, go early in the funnel and look like, okay, how many quotes are coming in? All right, so why are only that many quotes coming in? I mean, I think there's a company called owner.com. They did something very similar for restaurants, right? So I think for the mid cap, like smaller manufacturers, I think there is an incredible opportunity to give them the entire package of like, not just like increasing win rate. It's more so, all right, look, like we just, we know how to build software like we can handle your website. It's actually pretty straightforward, right? And then there's a lot of things that you can do there as well. Awesome. I don't want to like give it away too much. No, that makes sense. That's so good. I'm watching our time. But before you, before we transition and he and I just talk about the pitch, I want to like, just an interesting question is, if you only had one more question that you could ask to make a decision either to have another meeting and move to a passive investment, what would that be? Only one. Only one. That's challenging. So if I only had one, and I want to condense everything down to one question, it would be, tell me what you expect to happen at the company over the next five years. Well, you got to answer this now. I love that. Yeah, that tells me everything about what your head is. Yeah, tell me the questions. It's cheating. But it's cheating. But it sounds like you understand it's rooting and understanding where the things are now. I'm basically asking, like, what is your, what is your high level vision? What's the strategy? What traction you expect to get over the next several years? We said one question. I love it. Fun raising. When are you fun? Like, it's all of those questions. Yeah. So I was cheating. No, but it's still helpful. That is funny. Got me. I think, to answer the question is, I think over time, I think I feel very passionate about the person that is using a tool. Simply because for the last 20 years, they've been getting emails and a lot of their customers. They've never seen them in person. They only know their name, but they've never smelt them in person. Never. They've been only knowing them for, like, responding emails and sending PDFs back and forth. And in now, since we're able to, like, free up a lot of time for them, and I don't want to say that we are getting rid of their jobs. It's more so we help them to spend more time building that customer relationship. Because if you talk with up and coming manufacturers, their best revenue hack is grabbing dinner with customers and building relationships. You need to grow existing accounts. We have one customer, they're supplying to Raytheon and they grew that account by 10, 15, 20x over the last couple of years because they've been truly doubling down on the relationship. All the big guys, they have 10 to 15 to 20 suppliers, but if you turn out to be a really good supplier, they're willing to give you a lot more business, because they have so much business. So if I were to ask these questions and answer this question, it's like, I want to help salespeople to get away from the groundwork to actually double down on relationship. That's an answer to that. Yeah. That's a big addition. It's definitely adventures. You know, one aspect of it, for sure. Maybe we should keep going a little bit more. Maybe we do another five minutes here. I know because we got a little bit of a late start. But like just the more that we can focus on like the questions that you would need to make an investment decision, I really think that's going to help put that pressure on. A couple like nuts and bolts questions. And I'm happy to answer them separately. I like that. Yeah. Exactly. Tell me about your fundraising plans. Are you raising how much? What's the timeline? Yeah. So with the white combinator, we raised three million dollars and we're not raising right now. Okay. But yeah, I think we're good for now. I think the team right now is I still write, I think 80% of my time I still write code. Probably shouldn't do that. So yeah, just this morning. We just added the first non-tech person to the team and yeah, she's she's incredible. And she found us through Google. She's supplied to manage at Apple. And amazing. Yeah, she reached out to me. I ignored her first because you get a lot of like emails of people, right? Like all the time. And then she's like, no, I really want to talk. I was like, okay, let's talk. And then I talked with her last Wednesday. She flew out the next day to San Francisco for like a few days. Like work trial. She took off two days PTO. She's an insane to me. And yeah. And then so she she'll start very soon. And then that's like in terms of like runway we're fine for now, I think, but that's awesome. And tell me about traction. Where are you today? Yeah. So in terms of traction, I think we definitely have like a handful of customers and manufacturers that we work with. And yeah, so awesome. I know that's a tough one. That's the traction on YouTube. We can chat later. No, back to the question around fun raising. When a founder says they're not raising, would you still meet with a founder who's not raising? Absolutely. Yeah, I want to answer that. But I think like the thing where I only go for it because like, like, look, we're not we're not looking. I'm not looking for mommy, right? Like I'm looking for like the they need to get it. Yeah. And like, you're looking for like, like this comp, like building this company will take time. Right. Like, it manufacturing is really hard. So I'm looking for someone that is like excited about the space, but it's also like genuinely a good human. Because they need a call and be like, look, co-founder left. Yeah. How are you? Totally. How's your day? I love that. Right. So like, it's like, it's a different, it's a different type of things. And like, you don't, I think, especially in the next round that we're raising, it's not going to be like a pre-seed round. It's going to be like more like a more mature round that I think these relationships take time. 100%. I love that. Yeah. Couldn't agree more. Probably my favorite time to meet founders is when they're not raising because it's a much more authentic conversation. You're not like in the midst of an artificial deadline imposed by a process. We can actually talk about the big vision. And then we can stay in touch between now and the next race, get to know each other, build a relationship, and like mutually assess all of the things that you just mentioned, which are totally the right characteristics. What would that frequency look like though, since he isn't raising? Like, after this meeting, I'm just curious from his perspective, like after the meeting right now, like you're interested, would it just be like, hey, once a month, I keep me on your advisor newsletter? Like, what's the best experience? So what the way I think about it is I want to be sensitive to your time because you have very, very limited time. And so to the extent that you have a newsletter that you push out quarterly or monthly, that's a very nice way for you to passively keep me posted on the company's progress without having to actively dedicate time to it. Because like you said, you're writing code, you're doing founder-led sales, like keeping a cohort of VCs up to speed is probably not the highest and best use of your time between fundraisers. So I keep that frequency like relatively sparse. And that's very intentional to the extent. You want to chat more or you have questions or there are specific things that like I can be helpful on, especially as you think about, you know, investor and capital raise type questions. I'm always happy to chat. So I would say from a cadence perspective, it's like either once a quarter or once every other quarter is a good cadence to catch up. And then if you have questions, like if you're like, hey, I would like a neutral third party opinion on how to react to my seed investor who said they want to pull out. What do I do? You've probably seen that before. How do I respond? That's a great type of catalyst for reaching out. And I would love to add value and give thoughts on situations like that. And hopefully it's also valuable for you because you can kind of trial run what it would be like to have me on your board. So I think those, especially because it's a neutral third party, like it's a little bit of a different dynamic if you're asking, you know, an existing investor who knows the angel that wants to pull out, you know, like that's a little bit of a different conversation that somebody who's completely neutral. So that's probably the cadence. That's so you know. I'm curious what just kind of an unhinged question like what's your biggest concern or the biggest thing that you're trying to avoid with a VC? Like that you don't want on your cap table because I think we kind of hit on that. And it's just interesting to know like as a founder, what would you say? I think there's like, I'm a first-time founder. I think I'm still like learning a lot here. I think I like got into startup like six or seven years ago. So like all of my friends have found, so I heard a lot and learned a lot. I think over the time, but I think one of the biggest things that I personally look out for is being valued in terms of time, right? I think there's a lot of VCs who are, I mean, they can't see. I think like if that would be a VC, right? I would try to get as much founder time as possible, right? I think it's just really important. It's like the currency almost of like is information in a sense. I think the industry is like an information industry. And I think that there's like like ways of doing that that are like founder-friendly and ways of doing that that are not founder-friendly, right? I think if you know that you're not going to invest of the first meeting, might not be the best time to just keep chatting. You want the quick no? I think the no is actually the best answer here because like it just like just saves you time. Exactly. Like you need to focus. You don't have time. I think like VCs that are not like they only going to invest if they're like a high kind of like they're really convincing. Like if they're like really determined to do this, then they're going to invest. Then they typically can tell that after like meeting, right? After like Andrew knew that that he's going to be excited and not excited after five minutes talking to me, right? I mean, but I want to hear you for someone. I mean, here's lots of that. I think like, you know, like you have the same thing and I think like and there's I think there aren't people out there who like they they still then want to capitalize on it and they still like take more time and more time and I think it's the worst thing that can happen especially to a solo founder because like if I'm here right now, like, like nothing is happening right now. I know like Connor and Islam, they're amazing. I know they're grinding that crazy right now, but like I know that I need to be out there. Totally. I'm curious you respond to that because he's essentially saying like like you you know in your heart, but you're saying something else. Well, there's two there's two assumptions there. One of them I fully agree with the other one is like maybe the time respect piece. Like I think it's much better and probably of, you know, a better relationship if I am super respectful of your time. So if the answer is going to be no, we try to get there fast. If the answer is I want to learn more, I want to do that without taxing your time. Exactly. And when you're not raising, that's why this is my favorite time to meet founders. When you're not raising, that's a very authentic conversation. It gives me a chance to get to know you over a longer period of time. And like we talked about before, I can hopefully passively stay in touch. You know, I can read your investor newsletters. You know, if you have questions about ad hoc things where it's not just you keeping me updated for the sake of keeping you updated, but you actually can get some value out of the conversation because of a specific question. Those are great opportunities for us to connect and we kind of can accomplish multiple things in one in one phone call. The place where I'm more dubious is like, I really think it's not a full decision made in the first meeting and certainly not in the first five minutes. The one decision that I'm trying to make after a first meeting is simply, do I take another meeting? And that's the question. That's the only decision. Yeah. That's the question. I'm not talking about the investment. I'm talking about like the question of like, do we want to take another meeting or not? Totally. We're on the exact same page. Yeah. It's just that question. Are we taking another meeting or not? And it has to be a good use for both of our, if it's just a good use of my time because I'm trying to get educated and it's a waste of your time. Yeah. I would never take that meeting. It's not fair. It's not fair to you. Yeah. And I think like a big one, a big one for me is also where I constantly try to be better is like, like I'm German. And I think what what Germans are, they're quite literal. Right. And so I think, how do we say this without that? You're not, you're not pretending cultures. We want that. But it's not a thing like where you're going to go is that I think. And if someone is making a promise, I'm like, hey, I'm going to interview you to this person. Right. And I come home and I have the entry mail. That's very impressive. I think that's that's something very impressive that I personally value a lot. It's when you say you're in a decent area. When someone says like, hey, Bernie, I can interview to this person. And then I send a blurb and they forwarded immediately in the day, the next day, I have the interim inbox. That's like so, so, so powerful because it showed me that this person has been respectful to their network and to their friends and to their colleagues in the past. The fact that Andrew's connection will respond within 24 hours to him means that Andrew is being doing his job. Right. And it says so much about Andrew. Right. So there's two things. And there's like, Andrew is doing his job because he's keeping his word. And he has been doing that in the last 20 years because otherwise this person wouldn't have this one extra month. Yeah. Well, and I think you're doing your job in that case by sending the blurb at the beginning. Yeah. Yeah. Yeah. Send them up. Actually, that's for a dozen things without really thinking it through. But if you send the blurb, that person has you thought it through and you actually cared about the request you had. Yeah. And then to your point, if I respond right away, that means I'm following through. And if that person then responds and takes the intro, that sends you, you know, a strong subtle reference as well. Exactly. Exactly. It's like always a reference when, when things are coming through and I appreciate things coming through because there's a lot of things. Yeah. Andrew to this and this and this. And then where is it? Yeah. This is, I feel like the end of this got really interesting. And this is one of my favorite interviews. Bernie's about to leave the room. But before he does, to be fair to him, I asked Andrew to share what he's going to talk about behind the scenes. And then we go in a little bit depth. But check out what Andrew says to Bernie while he's still there right before he leaves. So first impression, I love what you're doing. I love the category. I do think there's a data flywheel here over time. So when you asked about moat, I was like, I wasn't even asked that question because I genuinely think to the extent you can land a bunch of accounts, expand within those accounts, and service them well, there's a natural moat that gets created over time. So I really like that aspect of, of the business. And I, I like the fact that you're not raising right now because all these other things that would sort of create false pressure and, and cause me to make a decision within complete information, those melt away when you're not raising right now because I get to see what did you say you were going to do over the next year? What's the vision you're building towards? And then when we talk, you know, any year or whatever the timing is when you raise in six months, then I get to see, you know, the slope of that line and not just a single point in time. This pitch went well. See, most pitches aren't really a pitch. They're an honest discussion with two professionals. Bernie's not trying to get money. Andrew's not trying to necessarily buy equity. They both want to get to know each other around the topic of this business. Are they both passionate about where it's going? And do they both see like a long-term future together? And I love just the realness of this conversation. This was like literally very minimal editing, like 1% editing. And the rest is just as authentic conversation with the first time that they got to know each other. So I'm excited for you to hear what Andrew says now that Bernie's out of the room. It's it's really cool. Check it out. First time that that's not been actively raising, which what are your thoughts on? I thought it was really interesting. I love the fact that he's not raising. It's such an early stage in the journey and they're going after a big and interesting market and there are incumbents that are active and adjacent in this category. There are a couple other startups that are also adjacent in the category. So it's a perfect time to meet. He's not raising. We can stay in touch over the next six to 12 months. My guess is he'll raise again in a year and we'll be in a great, you know, position to have a prepared mind conversation when he does go out to raise. I love it. When you evaluate the due diligence process, what's the framework that you're going to apply? And like maybe if you can highlight the ones that you're like, I really want to dig deep on this, if you were to when they are ready to raise. Yeah. I mean, look at this stage of company, I'm first and foremost looking at the team. And we always do our references on team and people as part of any investment. So we would naturally do our references. And in nine times out of 10, it'll validate exactly what, you know, we heard from the current CEO. So that's sort of how I would evaluate that piece of it. I think team at a stage like this is the first and foremost, what what we're looking for. After that, you know, you have to have framework digging into the market. So what is the category they're going after? What is enabling them at this point in time to go do something new and add value to customers, solve a business need in a new or better or different way? How big is the market? How rapidly is it growing? Who are the competitors? How are we going to differentiate or position relative to those competitors? All of that stuff falls into this market bucket in the framework. And only after I've evaluated those two things, do I really dig into like the nitty gritty on product and the specific strategy? Because that's quite valuable, right? If the feature set needs to change a little bit to differentiate or respond to a competitor or respond to a customer need, like those are things that can change pretty easily. I mean, it takes engineering and development time to add features or reorient the product. But great teams will be responsive to those things and they'll make changes as needed. So I dig into all three, of course, but that's the order for a company at this stage. That's good. And what's your biggest concern about a market like this? Like is size come to mind? We didn't get into the scope of the vision and the scope of the market he's going after. So I don't have a great sense for are these small and medium-sized components manufacturers? Is that just the first market or is that kind of the overall end market? I have a feeling it's more just the first market because there are a lot of adjacencies you can expand to from there. And when you think about what this product does, it doesn't need to dramatically change from a interface workflow or tech stack perspective to go capture other similar things. And manufacturing is absolutely massive. So I'm not particularly worried about TAM in this case. That's really interesting. Like how are you evaluating AI for each deal? Or is it just like it's a mute point? Because every company is doing it. But how are you evaluating it with this one? Yeah. So look, I think it is table stakes at this point. Just like every company you need to have an internet strategy. Every company needs to in some way shape reform be an AI company or have an AI strategy. And in a category like this, I think the answer to why now is very clear. You have a technology that allows you to deliver value that just wasn't possible before. And so automatically responding to requests for quotes and doing the whole CPQ process and taking all the historical data, which is lives in unstructured emails and PDFs and text documents and semi-structured inside the ERP, etc. Taking all of that and leveraging it to very rapidly solve the customer pain point, which is responding to these 80 to 90 requests that they get every day. And therefore unlock new sales. Like that is only enabled by AI. And so I think there's a very compelling why now. So to your question, I think every company needs an AI strategy. And in this case, this company has like a particularly compelling, you know, why now. And that why now is the AI strategy. It just all lines in that. I love that. What is there a trend that you've noticed that's like helpful and as they grow? Yeah, I mean a broader trend is the rise of like these vertical AI platforms. These guys fit, you know, into one of the bigger and more important categories that is going to be transformed by AI. And it's the value proposition of adding revenue for your customers, enabling their, you know, more rapid growth and turbocharging labor. It's our mailman. That's amazing. I let that in because our podcast studio happens to be where we also park our car, our garage. I think the value prop of enabling, you know, your customers more rapid growth and turbocharging the sales people's productivity. I mean, I think it's I think it's a fantastic use case. And it's a trend that we're seeing across different verticals. And I think this is a really important vertical. Yeah, that's good. With this founder, what's the biggest like when that you notice with him or the startup? Well, I think his background, like the founder market fit here is stellar. You know, he came from Tesla where they built their own, you know, their own ERP. And so he understands, you know, what's possible relative to incumbent legacy systems. He understands where things are going. He clearly has deep customer empathy and has embraced this like customer first work ethic where he's spending significant time in factories and trying to really understand how to add value. And it sounds like he's being quite responsive to customer needs. I mean, this whole idea of handling both sides of the CPQ process. That came from a customer. And so I think it's quite indicative that he's willing to like listen to their perspectives and build for what they actually want. That's good. I want to get down to the constraint questions because I love that. And we're I think we have time for like one or two more. But what is the biggest thing that you've seen that correlates over your 11 years of investing to a successful startup like that you would notice in these early days? In these early days, there's not a lot to go on other than the team. What I look for and I'll give the nuance on this high level is resource magnetism. And what I mean by that is the ability to attract the capital, the customers and the talent that you need to accomplish your specific mission in your domain. And so it's not a catch all resource magnetism looks very different if you're a highly technical founder that's going after you know AI for manufacturing versus if you're building you know a consumer social network or something right there's there's very different versions of what that looks like. And so it's domain specific you need to be able to attract let's just think about the talent piece. The talent that's going to unlock a company like this looks very different is going to resonate with a very different type of CEO or founder than the talent that's going to go after something in you know direct to consumer products or something it's it's just it's very domain specific. So that's kind of the main thing I look for and that incorporates or I should say encapsulates storytelling ability and encapsulates the vision it encapsulates like the founder market fit the credibility of their experience. I mean it just rolls a lot into that one you know that one domain. That's that's so good. What's the most frustrating thing that a founder does in an early stage in a first meeting with you are like just the biggest I don't do this. Let me think on that. I love that. I'm thinking about it for a second and then. The biggest frustrating thing that a founder might do in a first meeting. You know I maybe I'm too like open minded like I love I don't have I don't have a great answer to to that honestly. But no I think that's good. The founders are also so different like in successful founders all are so different and a lot of them have strong opinions on things are strong personalities. So I think the you know one of the traits of a VC like that one important trait that VC should have is being like open minded. So I don't want to write people off just because you know they they step over one imaginary line because because the next generation might look different most likely totally and you're like I don't so it's less about all these don'ts and more about the the common trends that you're looking for. Yeah that's the the last question is if I was a founder trying to reach out to you could you help me imagine a perfect cold email that would just get your attention and have to be real and have to be true. Yeah well it wouldn't be a cold email. There you go. You know it's funny when we chat at the first time we talked about this too. It would be a warm introduction through a you know portfolio company founder or through like a mutual friend or contact somebody who's you know opinion I think is very credible especially in the in the category so that's how. That is the best answer you're like well firstly it would be stopped trying that. It wouldn't be a cold email. Yeah you know and again this goes back to being respectful to founder time. If I gave advice on you know here's how to send cold emails you know and founders go off and spend a bunch of time crafting amazing cold emails. I just like I don't think that's going to be a great use of their time. You're not going to answer the emails that's the point because the odds are much lower right and so I think a founder's time is much better spent you know finding those those those targeted introductions from trusted people to investors that are likely to understand and rock what they're doing and be a potential fit like that targeted approach is going to much better serve the founder than spending you know hours and hours crafting and sending cold emails that are going to have a very very low response rate. That aren't adding any value to the actual business you're building. Exactly. Exactly. That's thank you. Yeah man. So much fun man. Boom I'll enter right there. What an episode. Thank you Andrew. Thank you Bernie. Reach out to me on LinkedIn if you have any feedback of course check them out their LinkedIn will be in the description but don't cold outreach to Andrew. Maybe there's a better way myself or someone else that they've invested in. Once again this is a founder initiative. We're focused on helping founders hit product market fit get funded faster and stay up to date. Thank you so much for listening. Boom.