This Week in Startups
00:32:31 · Jake Newfield
[00:32:31] S2: Hi, I'm Jake Newfield, co founder and CEO at Hermetiq. Because of agentic coding, tools like Claude, Cursor, and Codex, coding and creating code is no longer the bottleneck that it was a couple of years ago for companies. The bottleneck is now the build process, which is the process of compiling, verifying, and testing code. And this is a massive problem, right? Because every company from the AI labs down to AI native startups, that is becoming the bottleneck for their software development process. And we are solving this today for one of the top AI labs who's paying us $2.40 ks to provide analysis into their over 2,000,000 builds per day that they run, which is 4,000,000,000 build events. And we're solving this at the protocol level, the protocol being the RBE protocol, which is implemented by Bazel. So we're doing to Bazel what Databricks has done with Apache Spark, thus becoming the data layer between builds and the AI agents themselves. So the data that these AI agents can use to automate builds. My co founder and I worked together previously. So Tim was a senior engineer at Apple, leading a team over there. He was the chief architect at Lucidworks. My background is more sales product, Columbia Business School MBA, sales at Salesforce and Cloudera, and product management at Akamai. And we're taking on a big market. We see a $25,000,000,000 market opportunity that we aim to tackle. We've raised $2,200,000 to date, including Launch dot co and Niranjan Tulpule, who's a VP of Developer AI Google and Gokul Rajaram, and several other partners. And that is the under two minute pitch.
00:34:13 · Jason Calacanis
[00:34:13] S0: I know a lot of you out there listening are wanting to start your own company. So if it's finally time for you to make your dream into a reality, you can't find a better partner than our pals over at Northwest Registered Agent. Northwest Registered Agent is now offering free identity services. That means a free domain name, open source web hosting, a business email and phone number, and everything else that's going to make your new startup look and feel like a professional company, all with no purchase required. And this is free done right. They're not passing your data along to any third party vendors, and they're never going to sell it. So if you have an idea you can't get out of your head, or if you're already building something amazing, get started with Northwest for free and upgrade as you grow. Learn more at northwestregisteredagent.com/twistdomain. Love it. I love it. So tell me, what are the most common questions you've gotten from investors? We track this as well, Lon. So even before AI and note taking, I had my team transcribe on the video, like, the next day. We would take from the TriCaster, this is ten years ago, the TriCaster output. They would go back to the office. They would carry the TriCaster back, and they would transcribe the questions and the answers. Then... And sometimes we'd pay a transcriber a dollar a minute, whatever, and we would workshop with the founders like, Hey, how good was the question and the answer that they gave? Jake, what's the question you get over and over again from investors here?
00:35:43 · Jake Newfield
[00:35:43] S2: Question I get over and over again, Jason, is why the heck would one of these AI labs be paying for your product? You guys are a startup. At the time they started paying for us, we're a two person startup, barely any funding. So why don't they just build it themselves? This is a critical path issue for them. And the reason I give I have two answers to that. One is kind of the theoretical philosophical answer, which is for the same reason that these AI labs don't want to build their own data lake and they use Databricks for the data lake, the same reason they don't want to build their own single sign on product, they use Okta or something. Whether you're talking about Google and AI Lab, whatever, just because a company is big and successful doesn't mean they want to build everything under the sun, because that takes resources away from core stuff that they're building, which in the case of the labs is LLMs. What do these labs care about? They care about building the best LLMs. They don't want to get into the real estate business or building data pipelines for Bazel data. So that's the philosophy of it. It's strategic misalignment for them to build it themselves. But then there's the reality of it, which is that they are paying us. So beyond me saying, hey, I think this is what they should do and might do because of these reasons, that's philosophical. The reality is we get the wire every month, which validates
00:36:56 · Jason Calacanis, Jake Newfield
[00:36:56] S0: that Yes. All right, listen. This is one of the great lessons of entrepreneurship. When you get a lighthouse customer, you lean into it and you say it upfront. Always start with what's strongest. You want to build credibility. Investors, Jake, you know this, are very busy. They see a lot of companies. The issue for investors now is not that there is no companies to pick from, it's they have a limited amount of time and the signal to noise ratio is absurd. It's absurd for me. And I have typically 10 associates, researchers and analysts working for me at any given time. I overstaff my programs with the revenue from the media company in some cases or other things so that I can spend more time with founders and find these great companies. But if you start with, hey, we hit our first quarter million in revenue, and we have a Lighthouse customer. We have a second Lighthouse customer. Now you're immediately going to get the meeting. Period, full stop. Lighthouse customer, if the investor invests at your stage, if the investor invests in your category, like, you know, marketplace, software, dev tools, whatever it happens to be, you're just getting the meeting. What founders then do is they try to do everything else to try to get the meeting. Sometimes you wanna do less in your pitch and spend more time on just getting a great customer and having that customer speak for you. Now, you don't have a testimonial from that customer yet, right? Do you have like a quote from them? [00:38:35] S2: I don't, yet. I will.
00:38:37 · Jason Calacanis
[00:38:37] S0: So that's the, like, the next piece is like, you get a quote from them and they explain why they're using the product and you put that into the pitch. And don't take it from us, take it from McDonald's. McDonald's said, Hey, before this, we were screwed. Now all of our problems are solved, you know, whatever it happens to be. And you can just ask your customer, hey, would you write this like a Yelp review? That's how I kind of say it to them. Hey, can you write a review of the Launch Accelerator? Jake, I'll ask you to do this when you graduate, if we did a good job. Hey, can you write us like a Yelp like review? It could be one sentence, it could be 10, but, you know, something in that range between one and ten sentences of, you know, what we meant to you. It could be casual. And so this is a perfect pitch because you have the Lighthouse customer. It's not because you do fancy graphics. It looks good. It's not because you're the greatest presenter in the world. You're a strong presenter. You're confident. You're crisp. You have all those qualities. But it's... It really is about that lighthouse customer. So I guess then my question becomes, can that lighthouse customer pull in another ship to your port, and can you get customers two and three? And how close are we with customers two and three? They don't have to be as good as the lighthouse customer, but that would be then what some investors might say to you is, This is really impressive. We really want to see what happens when you have the next two 6 figure customers, 5 figure customers per year. So how are you doing with that?
00:40:01 · Jake Newfield, Jason Calacanis, Lon Harris
[00:40:01] S2: Yeah, we're working on that. Perfect. I think we're close. [00:40:05] S0: I mean, just incredible job. Tell me candidly, what has the reception been pre having a Lighthouse customer post having a Lighthouse customer? [00:40:16] S2: Yeah, definitely helps a lot. Everything you said, Jason, it validates what we're doing and the pain we're solving, and I think every investor is scared, rightfully so, that startups are building something which tomorrow could get eaten up by one of these labs. As an investor, I think it's a scary time to be VC because there's no moat anymore, or not the same way they used to be. So an open AI anthropic tomorrow could go create something that one of your startups has, and the investor loses all their money. And so for us to be able to say, hey, not only are they not creating what we've built, but they're paying us for it, I think it shows investors that we're doing something valuable enough that if the companies that everyone's scared of, if they're paying us to do something, I think it's a good signal that we're doing something unique and valuable. [00:41:07] S1: Jason, unpack this a little bit for us in terms of moats, like how would you answer a question for an investor like that?