#195 - A Discussion on Sam & Shaan's Recent Investments

Podcast Summary

• Learning from Angel Investors about Startup Investing: Angel investors share insights into their deals, reasons for investment, and potential risks, emphasizing that most startups fail but listeners can learn about innovative companies and how angel investors evaluate potential investments. Building relationships with founders and transparency are crucial.

  This discussion highlights the process of investing in startups as angel investors, sharing insights into the deals they've made, the reasons behind their investments, and the potential risks involved. The speakers emphasized that their podcast isn't investment advice and that most startups are likely to fail. However, listeners can benefit from learning about innovative companies and gaining an understanding of how angel investors evaluate potential investments. The speakers also shared their personal experiences, including the importance of building relationships with founders and being transparent about their investments. For instance, one speaker, who has invested around $400,000 in a company called Abstract Ops, described it as "NetSuite for startups," explaining that it helps startups manage various operational tasks, such as tax filings and employee registrations. By sharing their experiences and insights, these angel investors aim to entertain and educate their audience about the world of startup investing.

• Streamline back office tasks with ops software: Ops software simplifies HR and legal processes, creating a clear workflow and ensuring important tasks are completed. A well-designed landing page can make the software more appealing, while HubSpot's customer platform serves as a single source of truth for managing various business aspects.

  Abstract ops software can help simplify and streamline back office tasks, such as HR practices and legal processes, by providing a clear workflow and ensuring important tasks are completed. A well-designed landing page for such a software can also make a mundane business more appealing by adding personality and creating sales moments. HubSpot's customer platform can serve as a single source of truth for managing various aspects of a business, making it easier to organize and track information. Investing in a founder with a successful track record, who is hungrier and smarter than before, can also be a wise decision.

• Startup AbstractOps automates HR, legal ops, and finance: AbstractOps aims to automate business operations in HR, legal, and finance but faces challenges in product clarity and scalability

  AbstractOps is an intriguing startup that aims to automate HR, legal ops, and finance for businesses, but its broad product scope and current reliance on humans for some tasks raise questions about its scalability and ability to compete with established players. The speaker, who has struggled with back-office tasks in the past, sees potential in the product for himself and plans to try it out. However, he also expresses concerns about the company's product clarity and whether it can offer a comprehensive solution or just serve as a to-do list. Ultimately, the success of AbstractOps will depend on its ability to deliver a software-driven solution that can effectively handle a wide range of business operations and scale to meet the needs of a growing customer base.

• Simplifying Investing for Indians with JAR: JAR simplifies investing in India by offering one-click investments in gold and targeting younger demographic

  The success of an investment often lies in understanding the customer's perspective and simplifying the investment process. The example given is JAR, a Fintech startup in India that's applying the Acorns model to the Indian market. JAR's goal is to help Indians start investing at a younger age by simplifying the process. Unlike most investing apps that require users to link their accounts, deposit money, and go through a lengthy verification process, JAR offers a one-click investment in gold, an asset Indians already trust and believe in. By offering just one asset and simplifying the investment process, JAR aims to help Indians start investing earlier and build wealth over time. This strategy could be a game-changer for investing in emerging markets where people may lack the knowledge or resources to navigate complex financial systems.

• New investment platform in India simplifies saving and investing: Platform reduces barriers to entry with minimal verification and no external account linking, offers gold buying, and leverages India's UPI for modern payments and innovation

  There's a new investment platform in India that simplifies the saving and investing process by allowing users to start with minimal verification and no linking of external accounts. This approach reduces the barrier to entry and encourages people to start saving and investing, even with small amounts. The platform also offers the ability to buy gold to further incentivize users and reduce friction. The platform's success is also attributed to India's adoption of a universal payment infrastructure (UPI), which has modernized payments and enabled innovation in the Indian market. Despite some trepidation, the investor sees potential in this platform due to its team, product, and market size, as well as the significant savings potential for the average user.

• Investing in India's Fintech scene: Risks and Rewards: Despite competition and market uncertainty, investing in India's Fintech sector offers potential rewards. Building a strong reputation and having a filter for investments are crucial. One promising company is Rumor, despite its unappealing name.

  Investing in India's Fintech scene comes with risks due to the high competition and uncertainty of the market. However, the potential rewards are significant, as India is experiencing a wave of innovation and there's a high likelihood of producing multiple winners. The speaker, who has made two successful investments in India, plans to continue betting on the country due to his personal connection and the opportunity to build a strong reputation there. Additionally, the low cost of customer acquisition in India can be misleading, as not all Indian companies can become great. The speaker emphasizes the importance of having a filter and doing thorough research. One investment the speaker is particularly excited about is Rumor, a company in the Fintech space with a currently unappealing name. Despite initial reservations, the speaker has come to believe in the potential of the company and plans to support it. Overall, the speaker advises caution but encourages continued investment in India's Fintech sector.

• Revolutionizing Home Buying with Rumor's Community-Driven Auction Platform: Rumor's community-driven auction platform fosters real-time communication between buyers and sellers, creating a more interactive and transparent home buying process. The founder's background in business and military service adds credibility, and the potential for missed opportunities in traditional bidding processes is addressed.

  Rumor is revolutionizing the home buying process by creating a community-driven auction platform for buying and selling homes. This is not just another home buying website; it's more interactive and transparent. The founder's background in starting and growing a successful business, combined with his experience in the military and real estate, makes him an intriguing figure in this industry. Rumor aims to solve the issue of missed opportunities in traditional bidding processes by allowing real-time communication between buyers and sellers during the auction. The platform also fosters a sense of community, as evidenced by the comments section where potential buyers can ask questions and receive answers from the owner or agent. With its unique approach, Rumor has the potential to disrupt the real estate market and make the home buying process more accessible and engaging for everyone.

• Future of buying and selling houses online: Speaker envisions a future where selling houses online with control over bidding process and potentially higher selling prices and lower fees becomes the norm, despite risks and skepticism

  The speaker believes that in the future, buying and selling houses online will become the norm, despite current skepticism. He envisions a platform where sellers can have control over the bidding process and potentially receive a higher selling price, while paying less in fees due to the involvement of real estate agents. The speaker's investment in the company, along with the fact that competitors have also invested, adds to his confidence in its potential success. However, there are risks, such as the possibility of raising too much money or the new behavior of buying and selling houses sight unseen not catching on. The involvement of prominent figures like Adam Neumann, despite past controversies, is also seen as a positive sign.

• Calculated risks on non-obvious ideas lead to significant returns: Diversify portfolio with some seemingly illogical bets for outsized returns. Accurately estimate construction costs to keep projects on budget.

  Successful investing often involves taking calculated risks on non-obvious, contrarian ideas. The speaker shares his experience of investing in a real estate venture and how having a diverse portfolio with some seemingly illogical bets led to significant returns. He emphasizes the importance of not having all investments be clear, good ideas, as the most outsized returns come from non-obvious, low valuation opportunities. Another key takeaway from the conversation is the importance of accurate cost estimation in construction projects. The speaker shares a story about meeting a data scientist who worked at CloudKitchens and struggled to accurately estimate material costs for their building projects. He learned that to cost out a construction project, you need access to a cost estimator or a resource like the Blue Book of Building and Construction Costs. Material costs can vary greatly, and accurate estimation is crucial to keeping projects on budget.

• New API solution for real-time material pricing in construction industry: 1 build offers faster, more accurate cost estimations, eliminates need for cost estimators, and provides a marketplace for suppliers, making it an attractive investment with a large market size and limited competition, but faces challenges like industry resistance and high valuation.

  There's a significant problem in the construction industry regarding real-time material pricing, leading to the creation of a new API solution that aims to provide accurate and up-to-date cost estimates for construction projects. This software, called 1 build, offers various benefits to construction companies and contractors, such as faster and more accurate cost estimations, eliminating the need for cost estimators as a profession over time, and providing a potential marketplace for suppliers to sell their supplies directly to builders. With a large market size and limited competition, 1 build has the potential for substantial growth, making it an attractive investment opportunity. However, potential challenges include the industry's traditional resistance to digital transformation and the high valuation of the company.

• Effectively managing and utilizing large amounts of data creates value: Businesses that manage and utilize large data effectively can create significant value and are worth investing in

  The innovation and value in many businesses come from their ability to collect, organize, and make accessible large amounts of data. The example given was a company that organized construction material data into SKUs and provided real-time price information through an API. Another example was ConvertKit, a Mailchimp competitor that caters to bloggers and grew steadily with a steady revenue of $28 million. The founder was raising funds at a 7x multiple, and the speaker expressed interest in investing. The key takeaway is that businesses that can effectively manage and utilize large amounts of data can create significant value and are worth investing in.

• Considering an Investment in ConvertKit: A Growing Email Software Company: Speaker invests 5% of net worth in ConvertKit, a stable and growing email software company with a net revenue increase of 34% and a revenue churn rate of 3.8%. Founder's long-term vision and ethical business practices make it a safe bet.

  The speaker is considering investing in a stable and growing company, ConvertKit, which specializes in email software for independent creators, bloggers, and newsletter folks. The company's net revenue is up 34% with a revenue churn rate of 3.8%, and the speaker believes it could be worth over $200 million based on its growth potential and market demand. The speaker is confident in the company's founder, Nathan, who has expressed his intent to grow the business for the long term. The speaker currently has 95% of his net worth in index funds, but is allocating 5% to this investment opportunity. Despite the potential risks, the speaker sees the investment as a safe bet due to Nathan's trustworthiness and ethical business practices. The speaker also suggests that ConvertKit could expand into the ClickFunnels market to reach more customers and increase revenue.

• Creating a World Fair with 50 Million Attendees: A High-Risk, High-Reward Proposal: The proposed world fair with massive attendance and earnings faces significant challenges, including competition from established events, and the risks may outweigh the potential rewards.

  Cam's proposal to create a world fair with 50 million attendees and potential earnings of over $1 billion is an ambitious project with significant challenges. Although the idea has the potential to generate immense economic activity and revenue, the degree of difficulty in executing it is at an unprecedented level. Additionally, there are established events like the Olympics and conferences that may serve as competition. Despite the competence of the person behind the idea, the risks and challenges outweigh the potential rewards, making it a less attractive investment opportunity.

• Creating large-scale events for profit might not be feasible: Passion and making a difference, not profit, often drive large-scale initiatives. Starting small and iterating is a successful approach.

  Creating large-scale events or initiatives, such as a world fair or an Olympics, for the sole purpose of making a profit may not be feasible or successful. The examples given, like Ted Turner's Goodwill Games and the Summit, did not generate substantial profits. Instead, individuals who pursue such projects often do so out of passion and a desire to make a difference, even if the financial returns are not significant. Patty, who founded Web Summit, was able to build a successful conference business by starting small and iterating, which might not be an option for larger-scale initiatives. The individuals behind these projects often face unique challenges and require immense resources and vision to bring their ideas to life. While some may view these endeavors as impossible, others see them as opportunities to exceed expectations and leave a lasting impact.

• Building a community of talented individuals in unconventional startups: Investing in unconventional startups with strong communities can lead to significant returns, even if they seem risky. Attracting and retaining a talented community is crucial for their success.

  Successful startups require a community of talented and like-minded individuals, and investing in such projects, even if they seem unconventional, could lead to significant returns. The example given is a startup city project called Praxis, which aims to build a new city with a curated community of cool kids and entrepreneurs, offering them sovereignty and equity in exchange. The project's founder is recruiting the community, while another investor handles the real estate development. The investor, who is intrigued by the project's potential, has put a small amount of money into it and encourages others to join his rolling fund on AngelList. The success of this project, and others like it, hinges on the ability to attract and retain a strong community, making it a worthwhile investment opportunity despite its unconventional nature.

• Discover and invest in startups on AngelList: Learn about startups, apply, and invest through AngelList. Stay informed with their memos and consider taking writing classes like Power Writing and Sarah's upcoming class for improved content creation.

  AngelList is a platform where you can discover and invest in startups. To get started, you can simply click "learn more" on a company's profile and then apply. Once you have an opportunity, you'll be notified and can choose to invest or not. Additionally, subscribing to AngelList's memos is a great resource for staying informed about potential investments. During the conversation, there was also mention of Power Writing, a class that's gaining positive feedback. The speaker shared their personal experience of putting effort into creating good content and was pleased to hear that it was well-received. Sarah's class is also anticipated to launch soon, and it's receiving positive buzz as well. Overall, AngelList is a valuable resource for those interested in investing in startups, and the importance of quality writing was emphasized as a crucial skill in this space.