The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:06:37 · Luke Harries
[00:06:37] S1: I mean, Fella was a wild journey. It's me and my friend, Richie, and we just wanna do a start up. So we applied to YC. We got into YC actually with an AI developer tool, and we quickly realized we were trying to do, like, browser based automation where you automate tasks on people's behalf. So, you know, you're sending an email and it, like, auto completes it. But this was back in 2019 before LLMs were really a thing. The transformer paper had just came out, but, like, GPT three didn't even exist. So we're going to YC. We tried building prototype, and we're like, oh, this just isn't gonna work. And a brief detour is as we realized this wasn't gonna work, COVID hit. And we were there trying to brainstorm the next billion dollar idea whilst also seeing this, like, impending wave of what everyone thought was a killer virus crossing across the world. So we set up a COVID testing clinic in San Francisco. We were, like, one of the first people to realize COVID was gonna hit. We're following the largely on Twitter. And so we're like, okay. How do we actually set up all this testing? So we set up a drive through COVID testing. We were very European. We were like, of course, we're gonna do it not for profit. And, like, this this is a pandemic. We found a company which... AutoMYC, which was doing testing of, I think, sepsis. They decided to pivot into COVID testing. We distributed all their first tests. And one key lesson which is probably a bit niche is, like, don't do beta tests for pandemic testing because we set up this drive through clinic. We just posted in Bookface saying, like, hey. We're doing the first, like, 100 tests for free. Just come through. We want to check all our operations came out. And we accidentally ended up with an entire car park full of San Francisco tech billionaires rocking up in, like, their Lamborghinis and Ferraris to get, like, the first COVID test. So that was a lot of fun. But we were like, okay. You know, not for profit. The pandemic was hitting. It turned out the company we partnered with took a different approach. You know, they were some of the first people to do these testing, did incredibly well. One of the fastest companies ever to a $100,000,000 in revenue, and that company became Curative. Fred Turner, incredible founder, and is now building one of the largest health tech companies in Texas.
00:08:46 · Harry Stebbings, Luke Harries
[00:08:46] S0: Absolutely fucking nuts. Yeah. I remember we had we had we had the Hirox founders on. [00:08:51] S1: Yeah. Hirox? Yeah. [00:08:52] S0: Yeah. And they made money by turning a coffee shop into a COVID testing center Wow. In COVID, because, like, Hirox [00:08:58] S1: was Yeah. [00:08:59] S0: Yeah. Yeah. Planning, and it was for not... They didn't do not for profit, and it was, like, a fantastic business for them. Yeah. Yeah. That is absolutely nuts.
00:09:06 · Luke Harries
[00:09:06] S1: So we did that detour, and then we were like, we do actually want to build a big business. So we started exploring different directions, and Richie had really struggled with, like, binge eating, his mental health. I think we actually spoke to you at the time about some of this stuff. And so we were just going really deep on this kind of men's binge eating, men's weight loss space, and we set up a digital CBT clinic around how do you help people who are struggling with these eating issues. But the tricky thing with digital CBT is it's great for lots of people, but it really only lasts about six weeks from a business point of view. You can help them get to a great place, but we wanted to have, like, a much bigger impact and build a much bigger business. And so that's when we were exploring, like, okay. What are the health tech business models which can really grow and really make a lot of sense? And it seemed to be kind of you needed a hardware piece or a medication piece, and we're like, none of these quite make sense until we read the GLP one paper the day it came out. So this is semaglutide, and we're like, wow. This is, like, the biggest thing in medicine since penicillin. So we, like, race. We set up a clinic. We're like, how do we help people get access to this fantastic medication which reduces people's body weight by 15%? And we managed to get to about 300 k of revenue, which was great, and then it kind of flatlined. And this was the first company I'd really started. I was still pretty young. And truthfully, I think I was just too impatient. I was like, oh, we're only on, like, 200 k a year of revenue. I want to have, like, much bigger impact to technical product. I think we probably need to, like, pivot b to b. And Richie was like, no, Luke. I think we just need to, like, focus as is. Like, the wave will come. And so I stepped back, joined PostHog, kinda moved on. But Richie has done an incredible job, and that company is now doing over $30,000,000 a year in revenue, helping thousands of patients. So that's been really cool, but, like, big lesson for me is, like, commit for the long term, be patient. And Ozempic had a much, much bigger wave after. We were actually quite early on.
00:10:59 · Harry Stebbings, Luke Harries
[00:10:59] S0: Fucking nuts. Also, importance of market timing. Yes. Like, if you'd done Valor five years before and Noah's hand pick... [00:11:06] S1: Oh, yeah. It wouldn't have been a thing. [00:11:07] S0: There's no business there. [00:11:08] S1: Yep. [00:11:08] S0: I totally get you. Fascinating. Dude, I have to then skip to another bit that you said there, which is that you were in the lake when he was pitching you with Matti, this is for ElevenLabs. And it's like, we're gonna be everything for one. This sounds bad. Like, I like a tight ICP where we can market to, we know which channels we're selling to, we can craft a product for them. How has a horizontal product offering worked so well when it is completely counter the narrative that we're always told?
00:11:35 · Luke Harries
[00:11:35] S1: I 100% agree. And actually, when I worked for PostHog, part of the magic was you have one ICP, which is a product engineer, and you're selling multiple products into it. So you're selling product analytics, you're selling session recording, feature flags all in. And each new product you add, it gives you another entry point. It enables you to, like, integrate the products to do completely new use cases, which couldn't be done before. We don't have any of that in some ways. And so with ElevenLabs, because we have the best AI audio models, so turning text into speech, speech into text, for making sound effects, for voice cloning, voice isolator, this is like a very horizontal foundational layer, which we sell as an API. So that's kind of your first product, the developer product. And then you can sell that API at scale. So you can sell it to enterprises. You can build around workflows during conversational AI. So that's fantastic. But then because the team is super ambitious, you know, Matti and Peter literally want to build a bigger company than Google. They want to build something absolutely massive. And then they see, oh, we could actually build this to build a reader app for your phone to read articles. So that's now a product. Then we're also building a creative platform. So this text box, which anyone can type in text, that's now creating whole audiobooks and voiceovers. But the interesting thing is it's actually really working for us. And I think the reason we've managed to get it working is because we've started with these incredible audio models. All these people come naturally to us. We've then been able to raise money, hire incredible founder type peoples who really own these individual products and grow them. And so, yeah, it's definitely not the norm. I'm not sure I'd recommend it, but for ElevenLabs, it seems to be working really well.
00:13:13 · Harry Stebbings, Luke Harries
[00:13:13] S0: When I listen to you, it sounds fantastic. Yep. I'm also going, woah. Woah. Focus. Like, reader apps, communities. How would you advise founders on focus when it comes to product expansions? [00:13:24] S1: If I was to advise people, it would be choose your one ICP and build all the products around it to have them compound. However, that's not actually what we're doing. Instead, we're building discrete products, and the way we then tackle that is we basically shard the company. So we have a consumer app focused team, which has an entire growth team with a growth marketer, with paid ads, with community. We have creator growth with their own paid ads, affiliates, and so forth. We have developer marketing, which is standalone. And so all [00:13:54] S0: of these sharded teams have their own growth elements to them? [00:13:57] S1: Yes. Yeah. Exactly. [00:13:58] S0: So there's not a horizontal growth team which sits on top of them?