SPEAKER_03: You said it so well before. It's just a real estate business. Yeah, you don't have to. There's nothing special about it. But what actually is special about WeWork was Adam Newman. The thing that's special about WeWork is the brand. Yes, he is their advantage.
SPEAKER_01: Exactly like Richard Branson. He stole Richard Branson's playbook.
SPEAKER_03: This Week in Startups is brought to you by Northwest Registered Agent. When starting your business, it's important to use a service that will actually help you. Northwest Registered Agent is that service. They'll form your company fast, give you the documents you need to open a business bank account, and even provide you with mail scanning and a business address to keep your personal privacy intact. Visit northwestregisteredagent.com twist to get a 60% discount on your next LLC. Lemon.io. Get access to LemonHire, a platform with more than 80,000 pre-vetted engineers that you can interview within 48 hours. Get $2,000 off your first hire at lemon.io slash hire today. And .techdomains has a new program called Startups.Tech, where you can get your company featured on This Week in Startups. Go to startups.tech slash Jason to find out how.
SPEAKER_01: All right, everybody, welcome to This Week in Startups. Some quick news up top. Producer Nick is here. What's in the news, Producer Nick? All right. All right. So we have some Adam Newman news. Yeah, this is very near and dear to my heart. This is why I'm on today because this is
SPEAKER_03: my guy. This is my guy. Yeah. I love Adam Newman. I do. And this is not like a bit. I sincerely love him. I think he built an amazing company. I think he's a great entrepreneur. I think he deserves a second chance. Call me crazy. Here we go. I saw him at the FII conference, by the way. He was in
SPEAKER_01: Riyadh running around at parties and whatever, talking to folks. Yeah. So yeah, he's like 6'5
SPEAKER_03: in person, right? He's a giant. Hard to miss. He's, yeah, feels like 6'3 or 4. It looks like
SPEAKER_01: a point guard in the NBA. Yeah. So he stirred up some craziness on X because some comments that he
SPEAKER_03: made about WeWork's bankruptcy went viral and everybody's talking about him coming back now. So before we get to that, let's just cue up what happened originally. So WeWork filed for bankruptcy earlier this week. Their recent performance was really bad. Q2 revenue, $844 million up only 4% year over year. And via Reuters, WeWork's lease costs made up 74% of its revenue in Q2. Its net loss was $397 million. And at the end of Q2, they only had $680 million in total available liquidity and only $205 million of cash on hand. Shares were down 98% year to date when they went bankrupt to a market cap of $68 million. And their SPAC valuation was $9 billion. So that overall, that was a 99.3% decline. When they went out public. Yes. Which was, they agreed upon it in 2021. And then they despacked at some point last year. Makes sense. They have these leases that just don't make sense. They signed very
SPEAKER_01: expensive leases at the top of the market using the Vision Funds money. And here we go. So I guess the question is, when you go into bankruptcy, who gets to keep the equity there? Are those leaseholders going to have a claim on them? And I wonder how all of this works out and who winds up owning WeWork. So right now SoftBank owns 70% of the company. And they admitted that WeWork needs
SPEAKER_03: to restructure its leases if it wants to survive. And if it doesn't, it's going to go out of business. So what happened was, WeWork as part of its bankruptcy filing listed $15 billion in assets and $18.7 billion of liabilities as of June 30th. So basically they need to wipe out $3 billion of debt on its balance sheet. And here's how they plan on doing that. They're going to immediately reject 69 leases. They're immediately starting renegotiations with 400 landlords. They have 777 total locations across 39 countries to about 230 in the US. And then they're going to convert or attempt to convert about $3 billion of their debt into equity with SoftBank retaining an ownership stake. Yeah, because SoftBank when they gave the last bit of money, it was probably senior debt as
SPEAKER_01: a loan as opposed to them buying shares in the company. So they do want to explain how that works. Sure. So you could invest in a company and buy shares, right? Then you can also give a loan to a company. When you give a loan to a company that would be called senior debt, right? And there's like a debt stack. And so equity comes below debt. If a company runs, you know, goes bankrupt, the debt holders basically can foreclose on the company. And this depends on how things are written, etc. So while SoftBank may have invested money for equity previously, I think what happened was in these last rounds, they gave them debt, knowing, hey, this thing could all come apart, in which case we would be the senior secured provider of debt, and then the leases would come after them. So I think that's what's happening here is SoftBank set it up. So if we work were to go bankrupt, which they probably anticipated, they took that massive risk with the debt, they take that massive risk, and then they get to take over the company essentially, when that converts, but there's a bankruptcy judge who makes sure that all of this occurs. And the people who are in line to get money get paid. And so who's most senior? Probably we work. Yeah, yeah, I'm sorry, probably SoftBank.
SPEAKER_03: You're right, right, right. WeWork put out a statement, they said 92% of the company's lenders had agreed to convert their secure debt into equity. And WeWork will continue operating its non US and Canada locations as normal, but it's restructuring a bunch of leases, I guess the most expensive ones were in the US and Canada. Yeah, so here's where it gets a little crazy. Of course, we just mentioned Adam Neumann put out this statement, Jason, I'll let you read it. Well, I thought this was great. And the way he released this, I guess, is he didn't go through
SPEAKER_01: the press, he just, I guess, send out a press release with, you know, a little bit of a raw press release, let's just say, it has been challenging for me to watch from the sidelines since 2019, as we work has failed to take advantage of a product that is more relevant today than ever before. It's a bit of a run on sentence. There's some grammar issues there, which leads me to believe that he actually wrote it, that he actually wrote it. Yeah. So like,
SPEAKER_01: if you were to just look at it, it's a run on sentence, it should be two separate sentences, you know, or at least some commas go on there, you restructure it. Neumann statement continued, quote, I believe that with the right strategy and team, a reorganization will enable we work to emerge successfully, again, not a well written sentence a little bit kludgy. So this would be, I think, him saber rattling that maybe he wants to come in and play some role into this because he's saying, Hey, I have the right strategy, I have the right team. So the bankruptcy judge or to SoftBank when this thing goes private, do you think Masayoshi San wants to bring him back or merge it with his new company? That would be the ultimate crazy is after their incredible breakup. You know, if what if Newman comes back and says, I want to own the we work brand, I've got this other flow thing going, I've got money from Andreessen, I can get some money from the Middle East region, and I have my own money. And maybe he cuts a deal with Masa to come back. And that would be unprecedented and crazy, except Steve Jobs did it. Board fired him, and he came back. So this is, you know, and everybody here in Silicon Valley has the this archetype of the Steve Jobs come back in mind. And so Adam Newman has been running the Steve Jobs playbook. He left, he started a competing adjacent company with flow. It's a real estate company. It's not dissimilar
SPEAKER_03: residential, not commercial, right? residential, not commercial, but it's residential for nomads
SPEAKER_01: who are workers. So it's work from home. So how is that different? You know, you're still working in a space. It's just you're working and living. And remember, we work had started we live. So is it different? It's exactly the same vision, just starting with residential working backwards, to work, as opposed to starting with work and working backwards to residential. So I would argue it's the same thing. It's space. That's hip for young people. And you try to make a margin on the space by buying low, making it well designed and selling it for a higher price. And parties
SPEAKER_03: are actually accepted and not frowned upon because you're you're not at work, you're at your residential space. Absolutely. If you're at work, you know, in the era of buttoned up work and
SPEAKER_01: keeping things professional. The beer was always an issue, right? They had beer kegs that was always and tequila shots and everybody put in tequila was the recipe for disaster at work is people
SPEAKER_01: drunk. summer camp people, you know, maybe having too much fun, you know, treating it like Burning Man. So yeah, by the way, I know someone who worked at we work now, in like the 2017 2018 era,
SPEAKER_03: and he said, was a woman and she said it was the most fun time she's she's like, I will never
SPEAKER_03: enjoy working at any place ever as much as I enjoyed working at we work. You know, there you
SPEAKER_01: can have a lot of fun at work. It's just at work, you can build up liabilities by having too much fun. And this is where like professionalism really matters. So
SPEAKER_03: it's funny to talking to her like she is almost like an Adam Neumann acolyte. She loves him. She's like he was the best he treated us so well. Do you think Uber people feel about Travis?
SPEAKER_01: I was just gonna make that same analogy. Yeah. And listen, if Dara goes for another five years, buys back 20% of Uber stock hits, you know, 250 billion dollar valuation and cloud kitchens becomes worth 100 billion, which is on the track to do I would guess. And then all of a sudden, those become one company and Travis comes back return of the king style. I like it. I like it. I always like the redemption story. I'm with you. Our friend Eric newcomer did some digging around Newman, I think in his newsletter. What did he have to say?
SPEAKER_03: Yeah, so he spoke to a couple of anonymous sources. One person who he called a source familiar with the matter told him that real people with real money asked Adam Neumann if he was interested in getting involved in a group that's going to participate in the restructuring. A former WeWork executive that he talked to again, anonymous said, quote, texted him this, I think Adam Neumann comes in and buys the company. He's well capitalized. And given that the board is now almost exclusively restructuring specialists, they will take care of all the big problems, getting out of leases, making the company significantly smaller across the board, establishing a sustainable business model, etc. Yeah. And then you bring in the hype, man. Yeah. Yeah. And then he was also told that Newman's non compete with WeWork just ended in October.
SPEAKER_01: That's interesting information. I always discount former executives. There are, you know, hundreds of former executives that we work, who knows what they know. But you know, speculation is fun. It makes total sense. Who else wants to run the business? Right? That's the issue. You need somebody who wants to run the business and then who better to run the business than the former founder? And who's going to make it more exciting? You know, Elon always says like, fate loves irony, like, the most entertaining outcome is the most likely and most probable this is the most entertaining outcome. So as a Yeah, you know, media sphere, right blogs, social media, we kind of steer towards the most entertaining outcome unconsciously. Right. And this is like a really interesting theory of media. Okay, Trump's crazy, you know, larger than life. He's the most entertaining and then people all of a sudden, you know, despite what happened on the insurrection or whatever you you know, Trump. It's like the whole country is like steering towards Oh, but it's more entertaining when he does stuff. Yeah. And it can be very dangerous. I think it's like some primordial thing where, you know, when there's an accident on the highway, we all look at it and slow down. Yeah. makes no logical sense to slow down and look at an accident. You're not going to see anything you haven't seen before. Just a bunch of wrecked cars, right? You've seen it 1000 times. It's terrible, but everybody slows down to see it. We can't not look at the train right now. And so this is like a train wreck. This is like Shakespeare, it's drama. So we as humans are drawn to the drama conflict equals drama, drama equals engagement. So here we have it, massive conflict, massive attention. And then it steers towards that outcome, because all the energy starts going towards that outcome. Just like Elon buying Twitter, right? It was like this major controversy, this conflict, conflict, conflict. And then all of a sudden, he owns Twitter, boom. And then since he's owned it, right, all this conflict going on, and this drama, and you know, it starts growing and you know, becomes super important again. I also feel like this is the most entertaining outcome. Definitely. Starting a business used to be such a painful process, you needed to get a lawyer, there were tons of fees, it was a mess, but not anymore. Just check out Northwest registered agent, they're going to help you form your company fast, remember, speed matters. And then they're going to get you the docs you need to open a business bank account instantly. Then they're going to provide you with mail scanning and a business address. And they're going to do all that keeping your personal privacy intact. Northwest can form LLCs, corporations and nonprofits. And here's why founders love Northwest, there's no hidden fees, there's no upselling, you can call them or cancel at any time. And Northwest has the best of both worlds solution. It's simple and self serve. But they can be hands on if you need help with their amazing registered agent service. Northwest provides everything you need to start and maintain your business and they're giving twist listeners a 60% discount for just $39 plus state fees, they'll form your LLC corporation or nonprofit. So visit Northwest registered agent comm slash twist today, Northwest registered agent comm slash twist.
SPEAKER_03: I feel like in this whole last like year or so of the entire crypto industry coming down and like the Goodfellas theme song with dokwan and SPF. I feel like cut to that Newman unfairly kind of gets grouped in with those people. And maybe he did do some things on the margins that were not great, right buying the buildings with his own money leasing them out to we were owning the trademark and leasing it out for a couple million dollars a year for like personal those are that's angle shooting. Yeah, that's not crime. So an angle shooting is you're not breaking
SPEAKER_01: the rules of poker, you're just trying to find a little angle on the person, right? So an example of angle shooting in poker, and people look at angle shooting as like a little smarmy. So owning the IP and then selling it back is a little angle shot, right? Obviously, or owning the building and then leasing it back. Is it against the law or not? No, but it's an angle shot. So in poker, if you're like, start talking to the person like, hey, you want to chop the pot? You know, we're both all in before I turn my cards, if you want to split it? Yes or no. And so that's an angle shot, right? I'm trying to get information from you, then you say, Okay, I'll split it. You say, Okay, well, it's not binding. Or you just are trying to get information from a person, you know, and you take some angle shot. Another angle shot might be this guy did this in a poker tour and over and over again, he would throw out like three chips, you know, $3,000. And he would say, all in. And then what is it the $3,000? Or is it
SPEAKER_01: the all in? And it turns out the all in is what matters, not the thing. So you can kind of make a mistake on purpose in order to like bait people into hand that's angle shooting. So he was he's a bit of an angle shooter. But he's not there knows he built a real business. He is an incredible marketer. And he knows how to throw a hell of a party. And people young people like to party now you could disagree with it. But that was actually Richard Branson's brand was to be a little kitschy to be a little cheeky to be a little sexy. I mean, the name of the brand virgin was meant to elicit a response from people about virginity and, you know, sex and everything. So you know, I think to and to a much lesser extent, Adam Neumann has that Richard Branson showmanship in him, right? I just think he gets roped in unfairly. Like I don't think anything that he
SPEAKER_03: really did. And he also built a huge business. And the another thing I see getting thrown around all the time is like, oh, he cashed out, you know, 700 million dollars at the peak. Yeah, he wasn't selling those shares to retail investors. He wasn't no, no, no, no, this wasn't a spat. This wasn't like, yeah, you know, some crypto bag being sent to, you know, or some NFT
SPEAKER_01: drop from a celebrity. No, this may be sold at the SoftBank. You know, these are the most sophisticated investor arguably in the world. Now, you may disagree with his betting style. But to say he's not amongst the most sophisticated in the world in the history of investing, would be crazy. He's one of the he was the richest man on the planet for a while. He's a sophisticated person. So 100% agree with you. Congratulations to Adam Neumann for still being the mix. Let's just all keep in mind, it's not a technology business, a real estate business, it has very slim margins, it's never going to be some hundred billion dollar company, it's gonna be a couple billion dollar company with a 10% margin, it's never going to be some great epic company. But it might be a fun company, just like Virgin, you know, air or Virgin Atlantic, you know, was a fun company, you know, Virgin Airlines may be a terrible business, but it was a fun business. And, you know, it was motivating for him to do it. It's just not a tech business. That's where I think people get the sugar in on the comeback. You're in on the return of the
SPEAKER_03: whole it. Hell yeah. 100% excited. This week in startups is team Newman, baby. Totally, totally. You know what, it's more entertaining for us. I mean, it's fantastic.
SPEAKER_01: What if he makes it work? You know, the thing he did was he bought really crummy office space, C level office space, jazzed it up, convinced people to come to the Tenderloin or some terrible area in, you know, that's a little bit dangerous on the fringe and did the arbitrage. He's just got to get back to that by the lowest possible real estate, which by the way, you're gonna be able to do right now. And so a good time, a great time for him to come in. It's very similar to the time he started. Was it called green desk? The original? Yes, it was green desk. Good memory.
SPEAKER_03: Yeah, it's just like the green. It was really like for people who it was like environmentally branded originally, and they had some place in like Williamsburg, some little building in Williamsburg, and he sold the green desk to that real estate person and then left to do we work. I
SPEAKER_01: remember like the whole that that was an angle shot, right? He's just like, let's just sell this back to this guy. And then we'll start a new brand and make it even bigger. So Congrats, Adam Newman. It's super entertaining. It doesn't really have much to do attack. But great. He should go buy all these crummy buildings in San Francisco or these great buildings in San Francisco that have no leases and are selling 25 cents on the dollar. Like if somebody gave him I'm not kidding here, like $10 billion to go buy real estate and figure it out after he would probably be one of the best stewards of capital if you put some controls in place like an actual board. Yeah, that's what the 2.0 should be. Whoever enables him this time around should just have proper governance. Don't let him run amok. And then have some good people around him to make sure he doesn't, you know, go for like, we'll scale this sign any lease and we'll figure it out later. We'll figure it out later is not a plan. A plan is a plan. That's always, I think, the lesson of the SERP environment. Like, you got to be very careful if you can thread that needle. People say, Oh, Travis and, you know, Uber were, you know, subsidizing VCs were subsidizing the rides, whatever. They had a plan. Trust me, who was a plan. And there was a plan in China. And there was a plan for the US. And the plan in China was always, let's go for the gold. If we get the silver, we stay. If not, we sell and we own some percentage of DD. That was the strategy. You know, Travis explained that strategy to me because I said, Hey, this is we're losing a lot of money in China, what's going on? It's like, we're gonna go for the gold. But if we don't get it, we'll go for silver, which is owning part a large part, a meaningful part of that company DD. And that's exactly what happened. And it worked out great. So I think you just have to have a really good plan here. I don't think we work had a good plan last time around too much money to a material guy. No controls with no
SPEAKER_01: controls this time, give them the money, but have there be an investment committee that he has to bring each deal to, and the investment committee says yes or no, that would be what I would do, I give him a $10 billion facility, he can buy as much real estate as he wants. He just has to it has to pass the sniff test with this board. And that board, you know, makes them jump through a couple of hoops to get approval to buy those things as opposed to him just going bonkers and starting a school. Remember that he started school, he got the weight machine, he started it surfers, like, no bueno there. That's same thing that happened with SPF, right? There was no controls, no board, and he just bought whatever he wanted, invested in bought politicians bought celebrities, invested in tech companies invested in crypto projects, he didn't care. That was from that was designed from the start. He was that was he SPF was Machiavellian to me, he was like,
SPEAKER_03: ends justify the means and the end is like saving the world. So I can do whatever I want. Basically, question is like SPF is like, a poor man's like Lex Luthor on that side, right? Of the like Legion
SPEAKER_01: of Doom. Okay. But it's Adam Neumann. Part of the Legion of Doom? No, what? Or is he like an anti hero who's just difficult to get along with in the Justice League? You know, like an x man who's kind of like Deadpool is the last thing you'd ever say about Adam Neumann is that he's difficult to
SPEAKER_03: get along with. I think that is his one. Is he or good? Is he part of Justice League or Legion of
SPEAKER_01: Doom? Or is he an independent contractor? I think he kind of falls in that independent gunslinger Boba Fett area. You know, what I would say about him hire or the business. You said it so well
SPEAKER_03: before. It's just a real estate business. Yeah, you don't have to. There's nothing special about it. But what actually is special about we work was Adam Neumann. The thing that's special about we were is the brand. Yes, he is their advantage. Exactly like Richard Branson. He stole Richard
SPEAKER_01: Branson his playbook. You make it a party, you make it sexy and make it fun. You make it a little out of control, a little dangerous shots, whatever virgin you go on a virgin flight, you know, maybe the flight attendants male and female are a little more attractive. And maybe they're having drinks with the customers. Like, I've been to Necker Island a couple times not to flex I was invited. But when a couple times for birthday parties or whatever, and I can tell you they recruit the staff at Necker Island, based on like how much fun they are. And they're partying, you know, doing shots, having a great time dancing. They're they're into it. You know, it's it's like whatever the Branson comparison is a good one. I like that. It's really solid. I think Yeah. So
SPEAKER_01: congratulations. Shout out to Adam Neumann come on the pot anytime. All right. All right. And what's what we got in the back half of the show? Josh Kohler from driver doc up next. Great. Awesome. So next, more of these founder interviews. So we'll get a little news in the show a little interviews in the show classic twist episode. Enjoy everybody. See you next time. Bye. If you've ever had to hire developers, you know, it is a giant headache. Are they built from the startup grind? How do you know if you hire the wrong developer, man, maybe they drag your whole team down. Maybe they take you down some rabbit hole and you don't know what's going on. And then not only are you back to square one, you might be behind the eight ball, right. But if you hire the right developer, that could be a game changer. Let me introduce you to lemon hire. It's a platform that helps you find qualified senior developers who want to join your team. Lemon hire pre selects vets and matches tech candidates with high growth startups. So founders can focus on building their vision. Here's why you can trust lemon hire. They got 80,000 pre vetted engineers and you can interview any of them within 48 hours notice you pay nothing until you started onboarding lemon hire is going to replace any of your hires for free in the first 30 days. So just go to lemon.io slash hire H I R E to get a special offer just for twist listeners $2,000 off your first hire. That's right to grand off at lemon.io slash hire le mo n.io slash hire higher with confidence at lemon.io slash hire. Alright everybody, I just had john from motive on a few days ago. And today we've got another founder building in an old, slow, incumbent industry, you know, those industries that really need technologies. In this case, we're talking about trucking. Josh Kolar is the CEO and co founder of driver doc. This is an all in one digital management platform for trucking companies. Basically, here's the problem. 97% of trucking companies, they got fewer than 20 trucks. This is a fragmented market. And the smaller companies they rely on paper, let's be honest, facts, manual processes. So what is driver doc do? Well, they provide tools for the invoicing, the document management and all that kind of stuff. Josh, welcome to the program. Thank you so much, Jason,
SPEAKER_00: thank you for having me. I appreciate it. Okay, so you're in Nebraska, we've got a lot of friends in
SPEAKER_01: Nebraska. And you came up with this idea to help trucking companies get more efficient in this fragmented market. Explain to everybody. And by the way, we're excited to be investors in the company. We love these boring businesses that really need technology. They're laggards in some cases, but they're important businesses. And that means if they are laggards, man, the distance between when they're getting a fax and paper and using smartphones and AI, that's a big jump, right? It's like they're skipping three steps. So tell us, how did you come up with the idea for the company? What does it do? How's it going? It came out of necessity, from my background and
SPEAKER_00: experience in the industry itself. I've got 15 plus years of experience at some of the largest transportation providers, UPS, Union Pacific, and Warner Enterprises. And so these are top tier transportation companies. And so getting to see a lot of the pain points, firsthand experience, and then building around some of these companies to solve some of these pain points, gave me an understanding that truly this industry, like you said, is lagging and is just unsilowed. You think about what I got to see with UPS, very closed system, all the way from the drivers and their truck having digital communication, think you used to sign for packages. Now the Amazon experience has changed the game. It's now a photo in your house. And so it's that core concept of when I was at Union Pacific and Warner, we're still engaging with drivers, we're still relying upon paper, and we didn't have the Amazon experience. And that's what this industry wanted. And so I took a leap of faith and said, hey, I've got the expertise, I've got a network that I believe can help me achieve this. And so in 2019, left the corporate industry space and decided to start to research and design essentially the starting point to do bill of lading digitization for this space. To recap there, you're working in the industry,
SPEAKER_01: you got a lot of insights, you got a lot of frustration, you decide you're going to become a founder. Yes. Now when you become a founder, you look for an opportunity to build a product that delights users and either saves them time, saves them money. Yes, or makes them laugh and entertains them. I always tell people, those are the three categories, people forget that last one. Now, I don't think bills of laden are going to make people laugh or cry necessarily, I'm sure they might at moments. But really, this is about saving time and saving money, correct? Yeah,
SPEAKER_00: to kind of give you the concepts there of payment terms, right? If you start with the payment terms in the space in the industry, or anywhere from 4560 days. And so this bill of lading document, yes, it tells you what's being put into like a trailer container. But in most instances, that was the support that the freight actually got delivered. And because that wasn't being done digitally was being exchanged by hand was causing anywhere from seven to 10 days delay in getting paid. So you think about, yeah, 3045, you know, 60 day terms, go ahead and throw another seven to 10 days on that. And that's that's a huge issue. So that's the first piece you built was the ability
SPEAKER_01: to take a smartphone out, take a picture of a bill of lading, digitize it and turn it into, you know, essentially a smart contract or smart document, if I'm correct. Yeah,
SPEAKER_00: yes. And so that's what really took us to the point of you had to have a way to digitize it, we had to have a way to go back now and show it to some of the larger transportation providers, and some of the larger shippers, that use case that you just described really became paramount over the last six to 10 months for us to go show to the likes of a Warner to go show to the likes of Union Pacific and show them that we know their pain point, but also give them a tangible tool that can be used for them, but also seen as something they can provide to their customers, we gave them a tool that they could see themselves and grow bigger into it.
SPEAKER_01: How do you get into these trucking companies and make money because it's super fragmented, and then you're introducing some new technology, how do you get in there and get them to adopt this? Or is it just bottoms up, you tell people like, hey, this app's out there for free, go ahead and use it, it's all it's a tool that's available for I could see the both ways of doing and you can just put the tool out there and say, hey, there's a free tool out there. And then you know, oh, if you want to play multiplayer mode, or you want to have the pro features, then upgrade. So what's your go to market strategy here? And how's that going? We really looked at it is it's a tool for
SPEAKER_00: the driver. Another part of the entry point was every one of those documents today, even if there was a scanning app, was all going back to someone's disaggregated email inbox. And so part of this was offering a portal into the back office of the company, which created organization. And then truly the API integration capability to take the document and put it directly upstream for them to use it next into their core systems. There are some, I guess, legacy apps that manage
SPEAKER_01: all of their stuff. So you're just helping with that first step of getting off of Korea. Correct. And then do you eventually target those legacy apps and try to replace those? How do you think about, hey, I'm gonna start up with a limited amount of resources. Yes. You know, I can charge for this app or this processes, but I, I suppose it's probably 10% of the process. There's another 80 or 90% to go. How much is what you're currently doing? And then tell us about the big vision here and how this becomes, you know, 100 million in revenue. You nailed it. It's 10% is what we're
SPEAKER_00: saying is it's light OCR capabilities. It's light integration capabilities to take that document and put it upstream. The next part of this is truly, we think of like the next 20, 30% is getting accounts receivable automation, billing automation, as we start to think about what they do with that document in that process upstream. So instead of people doing, I look at my T like my system of record and I look at this document, it's bringing both of that together and automating that person process today. Okay. We're back with another
SPEAKER_01: segment of pitch it to JCal brought to you by the fine folks at dot tech domains. Dot tech domains is giving twist listeners the chance to show off their startups on this week in startups. So go to startups.tech slash Jason to apply. It's only one rule. You need to have a top tech domain name to get featured this week. We have a great pitch from net AI dot tech net AI dot tech is building an AI powered analytics platform that'll help mobile providers analyze the traffic data on their networks. People in the industry call this deep traffic analytics. Basically, net AI tech serves mobile providers in two ways. It helps them increase capital efficiency and better monetize 5g revenue streams and it optimizes their infrastructure so they can provide faster and more cost effective services makes a ton of sense. Then you got billions of 5g devices coming online over the next decade or so. So here's your call to action. If you're interested in getting featured on this week in startups like net AI tech was just featured go to startups.tech slash Jason and apply today that startups.tech slash Jason and fill out the form to apply and make sure you get a dot tech domain name. It's a beautiful domain name. It makes you look serious feels like you got a great domain. So when you see what open AI is doing with multimodal, hey, you can take a picture, you can get text as an output, you can give text, get a picture, all this different stuff. Yes. And you know, you built this before that was available. Now all this is available. So how much faster can this be done with AI right now? And what do you do just throw away the existing code base and just say, you know what, we're gonna start over with AI and just do this by hitting some language models? How do you think about the introduction of AI and multimodal to all this AI is a great thing. So I think for us, I don't think we have to necessarily throw everything away.
SPEAKER_00: Because there's business inherent business logic that the AI doesn't know. And can't know yet. And so I think it helps us accelerate the innovation. And instead of like focusing on some of those things that are like rudimentary and should just happen, we can focus on what I'm calling the other truly 40 to 50% of the platform, which is increasing it instead of just that transportation company getting value. You've got a shipper that is producing the bill of lading document, and they actually want it digitized. So instead of, yeah, like the paper being handed to the driver and the driver scanning, we are going to focus on increase adoption and participation from the shipper so that the data becomes digital into the core process. So that's where I see is like AI is just going to be our best friend to help replace where our focus has had to bend. And now it's truly pivoting from that thought of just one company, but getting all parties involved.
SPEAKER_01: And now there's some standards around bills of laden. I know like, there are some organizations that want to standardize all this stuff kind of like you do an open source or an HTML or RSS. So where is the industry at standardization and publishing standards in the same way, you know, really simple syndication, OPM, now, podcast syndication, you know, HTML recipes, all of this semantic web stuff exists. Yeah, my understanding is in the industry you're in, it's kind of nascent.
SPEAKER_00: Yes. So think of it as like you've already, we've already said this industry is very lagging and disheveled and fragmented. Think of like industry adoption, right? And that part of a lift for that thought. And so truly, when I went out out of the corporate world, in 2019, I started partnering with FreightWaves and Bitta, which is blockchain and transport alliance, to help facilitate and think about how those bill of lading standards would come about. The reality is you throw a pandemic in there and everything else, everybody essentially kind of switched where they were focusing. Speeda had a couple years, two, three, four years, and we're seeing three industry standard boards and groups of bodies come out, which is driving this use case of electronic bill of lading. That's a heavy lift, right? I mean, that's what is that a billion dollars to try and force an industry to adopt a standard like that? No, they're coming out of necessity because these companies because of the pandemic. So part of our lift is actually been taking off us. And so part of our, we're calling it our bill of lading chain of custody model. We've now have this, essentially what we're going to say is going to change the game and allow all parties to really see all the events around a digital document. We're going back to now those standards groups, and we're getting them to essentially certify us. So tell me about people
SPEAKER_01: tracking what's in freight. I know, like there's a big trend, put your air tags in your luggage, you know, we all do that as consumers. Some people are doing that they ship something that's important, they'll throw an air tag in it or a tile before that the people who are shipping stuff using some sort of standard to track the location of it. How does the industry look at that? I remember one of the airlines was like you cannot, they tried to ban air tags, and they realized how dumb that was. It's like banning air pods or something like it's it's going to be built into everything. So it's kind of ridiculous. And it actually works for everybody. If you know where your luggage is, it's exactly the question you have to ask. And less customer support you have to do. So I'm curious, has live tracking of packages kind of been incorporated into this yet? Or it's not there yet? Yes, it has. So that was our two core value proposition was the digitization
SPEAKER_00: of the freight documents, the bill of lighting and shipment visibility. We started with visibility around the sense of a driver and being having the app, whether it's on a cell phone or a tablet, their physical truck, you know where they are. So that's great. There are six packages in the back
SPEAKER_01: from six different senders, and they all get dropped off, maybe one of them gets knocked off, falls off the truck, back of a truck, anything can happen, you never know. So how do you get that real time visibility? I guess are there beacons that people make? Yes. So that's a sensor play.
SPEAKER_00: And so that's what we're learning as we're expanding the thoughts of the platform is, you have the transportation companies that truly move the physical goods, you have then shippers that are actually putting in that technology, whether it's a sensor, or fr IDs, or those types of things that are being put on the package level. And that's where as we think about going back to the platform and adding that other participation, we're expanding our ETA not just from the physical driver, but it to include it to the physical goods itself. Yeah, it seems like a great idea. So you're
SPEAKER_01: now building the business, you're building it in Nebraska. Yes. Talk to me a little bit about building a startup in the heartland of America. Yeah. What's it like? Because obviously, the cost of living there is a 10th or a third of living in New York, Manhattan, or San Francisco, I'm sure, an apartment, probably 500 or 1000 bucks, I take it. Yeah, one bedroom in Nebraska. Yeah, quality of life is absurdly high. So is it an advantage? A disadvantage? What's the pros and cons for people out there listening wondering where to put their startup where to live and grow their family? That's a great question. I think of it is I don't think all startups are equal.
SPEAKER_00: And I think, as you think about placement, right, it really is industry determinant. And I think, why Nebraska, like as I went to launch it made sense is there's roughly 1000 transportation companies just in Nebraska alone. Oh, yeah. And as we think about there's a class one railroad Union Pacific, and class was top top 10 top 20 trucking transportation company Warner Enterprises here. And then down the line, you've got several others that follow suit as a top 40 or top 50 transportation trucking company as well. And so with companies like that, here in the backyard, not only was it a beneficial point to start to give us people to help us think through some of the initial software, but also to give us essentially a platform being in the middle of the country. We can get to most anywhere. What's the impact of Uber and what they're doing
SPEAKER_01: in freight and then Amazon and what they're doing in freight? I wonder if those are having some dramatic impact yet. My experience includes running brokerage departments at both Union
SPEAKER_00: Pacific and Warner Enterprises. And as I thought about very uniquely what my business model would be with software and not a traditional brokerage model. That's what was interesting about like you said Uber freight is they went in on we want to be the people that have the load board more towards spot freight, like transactional business freight, which that's about 20% of the market depending upon the current economy. And so I wanted to support and build software for the 80%. And there's much more traditional standard contract business in transportation. And so I saw that as a better play. If you look at what they've had to do to even show some financial benefit and outlook with the acquisition of like Transplace and 3PL kind of 4PL like that, they're having to pivot in a way that I think they weren't necessarily maybe wanting to. And to get to a financially stability capability in this industry. What happened with Convoy? Yeah, that's good. That's good. Same deal. They came out as one of the first digital brokers. And so if you look at that, the brokerage model is you might get 20% margins until you don't. And we're in a high inflation economy and rates are very low and have been remained low. And so as you look at that business, truly margin got squeezed out. Basically got squeezed,
SPEAKER_00: they got exposed and they didn't have enough runway. Yeah, it was mismanaged. Obviously, they were going for growth, they didn't
SPEAKER_01: raised over a billion dollars, but they obviously didn't manage it well. So it's bad cash management. But you're saying it's a being a broker is not a great business to be in. And here's why is I love the butterfly effect. And I look at other areas of transportation over
SPEAKER_00: the last 30 years. So if you think of the airline industry and the railroad industry, hundreds of those companies, and then after deregulation and after what you call standards and autonomy into those spaces, now there's six, right in each kind of category. And so that's my play. And that's why the Bill of Lading White is very important is there's data that's highly sought after right now by autonomous trucks, manufacturing companies that we're talking with. If you think about like the government use case of some of these things, if you're going to send a truck down the road, and someday it's not going to have a driver, the D o t wants to know what's in it and how much it weighs. Because the driver was responsible for those things. Previously, there was a human
SPEAKER_01: who had some culpability that like there wasn't, I don't know, something God forbid a bomb on the truck. Exactly. They had they got the truck, it was locked, there was some sort of tag, and then they would untag the lock. So there was some sort of human being you could say, Hey, what's going on? You were supposed to be responsible for this package from point A to point B. Now it's nobody's responsible. Super dark. All right, listen, continue success. Thanks for letting us invest in the company. We're super excited to see where you take it. Just focus on those customers. delight them, save them time, save them money, everything will work out. And yeah, keep listening to your customers. Make sure you do those listening labs and everything. This is and then product velocity, right? If you do those two things, I find things tend to work out really well for startups. Talk to those customers, get them on a zoom, get them on a phone call, or from a $25 gift card for Starbucks, whatever their jam is. And listen deeply look for other product opportunities. And then of course, you know, that product velocity has got to be there. So make sure you got a team that moves fast and is committed to shipping product fast. And if you think it's going fast, see if you can go faster. Yeah. All right. I love that. Continued success. Josh, everybody check out driver doc.io driver doc.io. Yeah, I'm going to try to introduce you to the companies I'm investing in. You all want to know what I'm investing in what I'm interested in, man, you know, these boring legacy businesses, you get in there, you advance them, they really appreciate it. They'll pay a pretty penny for that automation. And then with AI happening, I think this, you know, SaaS plus services plus AI is going to be just an extraordinary network effect. And you got a really good shot here at making some noise. So congratulations, Josh and the team at driver doc.io and we'll see you all next time on This Week in Startups.
