Energy Tech Startups

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0:10 path to building a Thunderlizard starts here. Learn more at energytechnexascom. Welcome back to

0:16 the show. I'm excited to have Patrick Waldo here with us. Patrick is an early member of the energy tech nexus, and he's working on a solution that's gonna revolutionize how we deal with all those

0:26 old school forms that we have to fill out that are a pain in the butt I mean, he's putting a new spin on the technology. So welcome, Patrick. Why don't you tell us really what Unicorn is about?

0:36 Yeah, well, thank you both for allowing me to be here and to talk to you all today. So Unicorn Forms is really built to streamline decision-making. And I think that's one of the things that people

0:47 don't think about forms or electronic signatures. They think about just the act of signing a document. I need to send out this NDA right now or I need to get information about this event. but

0:60 really the kinds of documents that we are dealing with are all about decision making process, information that you're capturing that you need to use, or get business intelligence on, talk about

1:10 railroad commission forms, or environmental safety assessments, or checklists, or anything else that you're working on. That's all information that you're capturing that happens to often be in an

1:21 eight and a half by 11 world, known as a PDF, but for us it's really a form. So yeah, that's what we're doing in this wonderful space of document management. I think the canonical example of

1:34 forms that sometimes give people heartburn is then they have to go to the DMV and they gotta fill out almost the same information and triple kit, but it's slightly different on every single form.

1:45 And it can be frustrating, 'cause it feels like you're spending a lot of time. And that's in the old pen and paper world, right? But tell us a little bit about how you're kind of improving the

1:56 user experience. but then also improving the uptake experience for the businesses. So the areas that we work in have a number of commonalities. So we're primarily dealing with some form of document.

2:08 So typically a PDF, but it could be something that's created in Word or another document editor. We're talking about lots of data. So, and the document is the primary point of data entry.

2:19 Typically there's a workflow element, meaning you need to get pre-qualified for something or there's a review and approval process So, you can't just submit the form and yay, I've got information.

2:29 There's someone on the other side that needs to read it, check it for errors, et cetera. Often folks are doing this on their phone or on a tablet and they're on the go and they need some form of

2:41 legally binding electronic signature. So, the DMV is a really good example or the post office is another good example. You need to enter a lot of information about yourself that's already known

2:50 that you've already submitted to the governments to any number of agencies You need to do this routinely, and yet. It's a complete waste of time for you because this is known information, and it's

3:01 a complete waste of time for the government on the other side because this is information that they've already reviewed and approved as well. We see this a lot in education, which is one of the

3:10 markets that we serve, and it's just everywhere. So every student needs to complete or every family, rather, it needs to complete five or 10 documents just for enrollment. And then there's

3:21 everything else, school trips, waivers, hall passes, whatever else that the family needs to fill in. And if you've got four kids, how many times do you really need to enter your emergency

3:33 contact throughout the year? And then it's not just one year, it's 13 years plus, a couple years for daycare, for example, times how many kids you have. So there are many areas where this

3:46 problem, like the DMV, is not just a once a year experience, it is like your life for the next 15 years Not a very real experience about data getting missing. Yeah, no, so

4:00 yesterday was meet the teachers, so we went to the school. My daughter is going to start pre-K and my son's going to start third grade and we went there, both of them are really excited to see

4:10 their teachers and it turns out they don't have my son's information in the database and he's not registered in the school. He's registered in a different school where he went for first grade, but

4:20 he did all of second grade in this new school, but in the system they've just registered him in another school. So yeah, it definitely resonates, you know, we've been filling out all these forms,

4:32 even though now I noticed when I was filling out the form for my son trying to rectify the error that they had made, that it a lot, you know, there was an option to say, Hey, do you want to copy

4:44 all the information from the form that you did for the sibling? Because it's the same. But I can imagine then, because obviously they have to put on the, for the after school care that they do,

4:55 you know, 'cause their school's closed at three. I have to fill out additional forms. And again, emergencies, contacts, phone numbers, driving license, all those information. So, 'cause I'm

4:59 also thinking

5:07 there's probably also security privacy reasons that they can't just share it with another organization. So how do you kind of deal with that on like, what data

5:20 do you have already connected to your name? And then what data do you have to protect and that we would have to maybe just fill out again and again? Yeah, so I think there's two things to that

5:31 story. I'll definitely answer your question. But one is, I think the emotional stress of, oh no, my child may not go

5:40 to school, right? That's a, I imagine was that stressful for you and your family? Yeah, absolutely. Yeah, maybe your kid was like, yeah, you're giving your existential like angst right now in

5:48 this moment. Yeah, but when we think about form software, It's like a foreign boring. But in these instances, it's. Absolutely critical like oh no, I need to deal with this right now. Yeah,

6:00 because this system was poorly built It was probably still tomorrow. Yeah, and school starts tomorrow. This is a right now. Why doesn't this technology work? It's 2024 So there's a number of

6:11 problems in that tech in general about why innovation is is hard to do there a Lot of it is is to deal with the VC side the investment side as well as the buyer's journey side on the schools They're

6:23 not necessarily the best tech buyers But we are a HIPAA compliant solution, and we serve at the education market. There's a couple other regulations that Regulate that the information there, but

6:37 what I think what I often remind people about with HIPAA is that it's not a cyber security regulation it's a privacy regulation and There's a lot of differences there that are I think important for

6:50 example I just want to a doctor last week who sent me a a scanned image of some form that they had created and had Xeroxed way too many times. It was like the text was blurry, it was tilted, it was

7:05 not form enabled, right? And they sent it to me from their personal email address and I was supposed to send it back to them. And then they had also said, Oh, you know, just text me your

7:17 insurance information. Well, email and text are not really encrypted channels The encryption is, let's say, rather weak. It's easy to exploit. So from a cyber security perspective, this is

7:30 probably the worst, you know, I have to enter my social security number

7:39 and send it

7:42 via email. We still have organizations who remain nameless in Houston that still use credit card authorization forms. This is something that the payment card industry has advocated against for a

7:46 couple of decades. So it's like, if people are asking you for your social security number or your credit card

7:55 And it's the same thing as just emailing it outright. So now all of the server farms have that information,

8:03 whether that's Google, on their email servers, or whether that's Amazon. So it's a very, yes, maybe they're not going to share your information, so your privacy is respected. But from a

8:15 security perspective, it's an absolute disaster. So often with these schools, it's not a security issue. It's a privacy issue They, you know, each organization can't share with the other. On

8:29 our side, we have not built this yet. It's been something that we've been thinking about from an ethical perspective. We've created a walled garden so that every - each organization can reuse the

8:40 data that's been given to them. So if you sign up for a school and then sign up for a gym later or sign up to become a member at Nexus, we will not remember data, even if all three of them or our

8:53 clients.

8:55 although that is something that we are thinking about, what really you're talking about is a digital wallet so that you can take your information with you wherever you go and that you have control

9:04 over that data. And that's certainly something that we're contemplating but how you secure that data and then it becomes more of a B2C business than a B2B business, which is a very different thing

9:16 for a startup. So you said something before, so you said that you did have HIPAA compliance inside So when the data gets ingested on the form, does that like, I don't know, if it's a block of

9:28 data, like if it's your security number or if it's your name, like is it basically a checkbox that says this is controlled and only certain people can see it? Like how does that work from a data

9:39 person perspective? That's a good point. So you know how Figma and Webflow are like pixel perfect? So we like to be security perfect So for the folks that really want to dial this in. What that

9:52 means is that we add an additional control to say this form field contains PII or PHI. And PII, that means personal identifying? Information, yes, and personal health information. So this would

10:04 be your name, your address, your cell phone number, email address, or an attachment of your insurance card or something like that. So anything that would consider protected information under

10:16 various regulations is typically PII or PHI And so while we have our standard hashing and encryption process, just like most BDBs house companies, we've encrypted the database. So I can't even see

10:32 many of the data that's in there. So this is row level, hashing and column level, hashing, for example. What we do is, so not only for all of the foreign fields that you enter, do we have a

10:44 layer of protection, but additionally within that, if you mark something as PII. we provide an extra layer of hashing and actually separate out the data so that we can't even tell at the database

10:60 level how this information is connected together. So it's like, all we know is that here's a bunch of name, last name, et cetera, and a table. It connects to this document. And so it's a

11:13 multi-level security scheme. And so all the user can see it and the control, which is their users can use it Like it's just doubly protected from a system provider basis. So if someone were to hack

11:24 in to our system, they would have to basically hack row by row, column by column, to then get like a first name, and then they would get a last name, and then they would get an email address,

11:36 and they would have to pull it all together. They wouldn't necessarily know. But that that user is connected, right? Yeah, they're not linked. Yeah, okay. So we've gotten an extra layer down

11:47 The HIPAA is not necessarily the hardest. regulation to comply with. It was actually the first one we did. The education compliance actually is far more rigorous than HIPAA, FERPA and COPPA, the

11:60 Child Online Protection Act, and then SOC 2, of course, is the gold standard. But with governance solutions like Vanta and others, SOC 2 is also becoming more turnkey. SOC 2 is a little bit more

12:13 of a policy-type COIA process. You need to make sure that you've got a cybersecurity policy, a privacy policy, and whatever else policy, in addition to your cybersecurity, how you harden your

12:26 network and your database, et cetera. But often, most companies that go through that process that have some security background, they've already done the hardening themselves. And then they just

12:39 have to make sure that all of their policies are compliant, which is, again, not what we think about when we think about what does talk to mean. because when

12:51 you go through due diligence process, you'll say, Oh, are you Sock 2? And then you say, Yes. And then it's like, You're done. It's like, Well, I've done my due diligence. I've checked this

12:58 box. It's like, Actually, you haven't opened any hood. You haven't kicked any tires. You haven't asked any questions other than, are you Sock 2, or are you HIPAA, or are you whatever? And

13:08 that's where you stop because you know from a liability perspective. Well, you know, okay, they're HIPAA, they're whatever It's on them, and I'm done, you know, so. Yeah, so maybe to bring

13:21 this back to customer perspective, this is like an enterprise grade solution in terms of the way you're protecting the data, because of who your clients are. Right. And so, I think we're talking

13:36 about the business, and we have to talk about the unicorns and the marketing, 'cause I think it's brilliant. And anyone, everyone should check it out. And please tell us a little bit about the

13:44 inspiration for the name, but also just the style. Our original name was Legal Docs Pro. Oh, that was spot on. Yeah, so yes, because when you go into the space, everything is kind of boring.

13:58 Everything is corporate blue. And our first client was actually in estate planning. And I had thought about the legal space and the legal tech space, which I've a lot of experience working in. And

14:10 so Legal Docs Pro was, I guess, the path of least resistance, the least amount of regret. It's a very forgettable name Most of the players in the space have either a Docker form in their name or

14:22 maybe sign.

14:25 And at a certain point, it was April Fool's Day. I just got really tired of the name for some reason. It just kind of was eating at me. And I was just talking to my wife and some of my friends and

14:37 I was like, what is the wackiest name that I can think of? Because I just can't live with Legal Docs Pro any longer. I'm done with it. It's dead to me. It's so boring. It's not who I am It's not

14:47 my personality. And basically the name of unicorn forms came up and it had a ring to it, it rhymed. And I was like, all right, that's, I guess I'm done here. And

15:03 I released some branding with the sort of elves or the people that you see on the website. I worked with an artist to do this. Aaron Wilson is an amazing artist out of New Orleans. You can check

15:14 them out on Instagram. I like to highlight that because we actually give attribution on all of our stickers to the artists that we work with because we like to support our artists. Not to say

15:24 graphic designers aren't great, but working with an artist who does anime and graphic novels and all that kind of stuff. It was a very cool experience to say, Here's the pain point that I'm trying

15:33 to solve. How do you create this world? So our first process was really creating this world of this 1970s office that we're all still living in. We're talking about labeling things When was the

15:44 last time you went to. staples and bought a label with like that little arrow. Yep, yep, yep, yep. Or when we think about envelopes, right, when we're sending something, where we have this

15:58 world in our mind that just doesn't exist and it hasn't existed for decades. And yet we're overwhelmed by this paperwork burden. According to various studies, one well known by IBM says that

16:14 document inefficiencies costs the US economy and corporations trillions of dollars every year. So this is this kind of hidden waste. Some of the big e-sign players do reports on this every single

16:25 year. And so one of the first images we created was this paper stack of sadness if you've seen it. So it's this sort of big paper stack with a series of desks and it's kind of toppling over. But

16:37 because I'm not really a marketing person, I'm a technical product guy I didn't know that you're not supposed to market sad. things. For me, I was like, yes, this is the problem. This is the

16:47 pain point. Yeah, nailed the assignment. And while people liked it, they really wanted to this kind of happier version, which was a little bit of an afterthought, the images that you see online

16:58 are some people in like birthday party hats, which was actually a little detail within a larger, it was this guy at this fax machine kind of copying things in these elves kind of making a ruckus and

17:10 causing problems. It's kind of like a Remlins idea. And but one of the rules that we started with was that there can't be any unicorns. Exactly. Yeah. So, and it was going with that April Fool's

17:24 Day theme, right, that we're going to do this winking and odd, obviously unicorns very ubiquitous. Everything is unicorn startups are unicorns. You, of course, and Nexus are making fun of

17:34 unicorn startups all the time and saying we need to create thunder lizards totally you. Like it started out as an April Fool's Day joke. kind of also poking fun at this idea of a unicorn. It's like,

17:44 well, a unicorn can also be a form, but also saying that, well, really, if you want to reach the unicorn, this sort of magic thing, it's whatever you have in your mind, right? Every sector

17:57 that we talk to, whatever that magic is, if you had a magic wand and you could solve any problem today, what would it be and why? This is the classic product manager question. So everyone says,

18:07 well, for me, it's enrollment, or for an energy company, it might be those stupid railroad commission forms, or it might be, oh, I'm a lying person out in the field, and I just can't mash my

18:17 finger on my phone to fill in this security checklist or whatever it may be. So each person has this idea of what the magic is, and that's what we're trying to provide. And so with a kind of wink

18:31 at an odd, it's, yeah, the unicorn is there, really, it's you. You're the one doing the work and creating the magic for your organization, you're the admin, you're the person on the line. So

18:41 we're trying to tech-enable those folks to rise them up rather than us be that prancing person at Burning Man, for example, they talk about sparkle ponies at camp. These are

18:57 people that are typically very traditionally attractive, but also contribute nothing to the camp. So when I think about a lot of the other unicorns - Oh, that's my goal on my side. Yeah, that's

19:06 all right.

19:08 Keep going. But what do you think about a lot of the unicorns that are out there, you know, how much are they actually contributing, right? They've got all this sparkle and shine and glitter,

19:16 but we're far more spiritually aligned with the thunderous lizards of the world. Nice. So yeah, so there's a lot of thought that went into this, it's kind of like the FedEx logo, the arrow,

19:27 right, that you see in the logo, classic visual wit. This is a little bit more metaphysical. It's like, yeah, people will come up to me at conferences and say, oh, I love the unicorns in your

19:37 branding, and they're not there. They're not there, it's the gnomes with the - It's just a wicked nod, yeah. Yeah, and I think that the important thing here is, and so we used the product, the

19:48 interaction feels like magic, which I think also kind of speaks to the unicorn motif where there is something a little unbelievable that like these things kind of connect well, they work well from

19:59 an interface perspective, and it was just, you know, products that delight do feel like magic, and I think that's something that you've captured well and the brand reflects it. Just only get the

20:11 clock for time. I do want to get back to, you talked a little bit about railroad commission and kind of other use cases. So where do, you know, other than the fact that we're driven by regulatory,

20:21 where do you find most people are using the product? Is it to fill out government forms? What are the other kind of use cases that you see in energy? Yeah, so I wish I could announce this today on

20:32 the podcast, but we are in the works of signing a letter of intent with a green lending outfit. which I'm very, very excited about. This is going to be using AI to streamline some of the problems.

20:44 So the basic use case is that many contractors, like for heat pumps, take something super simple, don't necessarily do all the paperwork or provide the paperwork to their customers to then capture

20:56 those carbon credits on their tax forms at the end of the year. And so there's basically hundreds of thousands of dollars, millions of dollars that are going unclaimed because people are not aware

21:08 of it or often at the contractor level, there's like one or two admins. So they just don't have the time to do everything and they're often not necessarily tech enabled. There's billions of dollars

21:19 going out into solar right now. So the money was just released at the state level or to the states and I believe April or so. There's a number of different funds that are coming out right now. And

21:33 the states are having a hard time setting up. their bidding process, because there's just a lot of money and they need to go through it when I talk to some of these installers or the solar companies.

21:45 It's like they have a relationship with the government and they'll say, Hey, we'd like to do this thing. And they'll say, Great, put together a proposaland we'll figure it out. It's a little bit

21:55 Wild Wild West out there, it seems at the moment. And what we're trying to do is to provide a streamline process so that you can use the data in the application to then weigh or qualify that

22:07 application, whether it's good or bad. 'Cause again, we're really a data company that happens to live in this eight and a half by 11 world. And so I see, when I talk to this early adopter, they

22:21 see immediate use cases where, according to their studies, 10 of most solar installs are, sorry, 10 of the budget for a solar install is just admin and project management. And so obviously we're

22:37 not working on the project management side, but a significant part is the administration. So if you get a permit to work in Texas and now you need to do the same project or a similar project in

22:50 Oklahoma, well guess what? It's the same information, just different forms, different PDFs by the government. So this is again, that hidden challenge. And what we see as part of the digital

23:04 transformation is, well, what the world really cares about is more solar installs, or more wind farms, or more decarbonization and whatever format

23:17 that you wish, that you want to support. But if a significant chunk, whether that's 10 or 25, and again, we'll dial in these numbers as we do our study, are going to admin, you see this in the

23:30 nonprofit world, everyone wants to support services, but not the admin So great, but we know. just in terms of general with government funding, that so much of it goes to the companies, to the

23:44 administration, to overhead, to profit margins, and all of that is maybe fine and good, but we see our technology as enabling the installer to do more installs, which means that they can earn

23:58 more money on the install, spend less money on the overhead, and the world is better because now we have three times the number of solar installs rather than our current process, which is just

24:10 completely inefficient. No, I love that, because that's like focusing on the value add, right? And not focusing on all the admin work that we do, that we've made laborious time consuming over

24:23 the past couple of years, and then there are new regulations and new protections that come, that just add to that burden of that overhead cost.

24:34 I guess what I'm understanding is that you're not only helping, for example, this new client of yours, not only just qualify, you know, which one of these projects should we go forward with by

24:45 making that data accessible that's going to go in the forms, but then also making it repeatable so that when they're applying for a new loan, for example, or a new application, they can, they can

24:58 reuse the information, but then also how that links to credits or how that links to your taxes at the end of the day. You know, having moved back to the US. and doing my taxes here compared to

25:13 when I was living in Norway where the government knew all the information on you, like they know all the banks that you own, they know like where your money is and all that just appears

25:22 automatically in your in your tax return and all you have to do is just like check to make sure everything is there, right? So it's just you know how do you do that with especially in relationship

25:36 to anything that our government does, right? Because there you have a lot of bureaucracy and you have a lot of insufficiencies. So

25:47 have you looked at working with the government on such projects? Absolutely, and so we did a Navy SBIR application that we ended up not winning. So we're a new portfolio company at the Capital

26:01 Factory and we did their defense academy, which is great. So just sort of early stage startup here learning how to navigate the bureaucracy. And we have some great advisors who have done DOD

26:14 projects and other projects. But I think it's best rather than going straight for like the Navy, a big behemoth, start at the local level city governments, the state level, things like that.

26:25 Really the, so I've spent 15 years building regulatory-compliant solutions, analytics, business intelligence. primarily in food and beverage as well as pharmaceuticals and cosmetics and many other

26:38 consumer package goods areas. The key problem that I see is really a data engineering problem. And I know we're living in this world of AI right now, which is very cool. LLMs are not something

26:51 that can solve absolutely every single problem, although they are very exciting. But decision trees are very simple. You don't need a nuclear farm, just a power database

27:06 in a data center just to do a decision tree. This is something that you can do on your laptop, very simply, very elegantly. And so we don't need to throw out the baby with the bathwater on machine

27:15 learning that has been tried and true over the last 40 years. So when I talk about data, especially in like the government spaces, because often they're using PDFs, this is a tagging and labeling

27:28 problem. So you've got this name, you've got the social security number, and maybe we as humans can read the form and we can recognize that this is a name and this is a address and this is an SSN

27:40 or whatever, under the hood, if you open up the field properties, it's just that field is a random set of letters and numbers, right? So whoever implemented that PDF some whatever government

27:53 contractor didn't give any kind of human readable field name. So to discern this, so like when you go into a PDF and you can actually like type in and fill in you're talking about within that field

28:04 that it has a label in it that's kind of hidden that not everyone sees and usually it's been configured poorly, or whoever built that PDF. This is like the weird magic stuff that Adobe does. Or it

28:17 doesn't do. Doesn't do, it doesn't do, it like should do. And for the rest of us who just use reader like it's invisible to us. But this is something that's kind of baked into like the nature of

28:27 PDF. Right Are you ready to lead the decarbonization charge? Nexus is your platform for growth, offering unique resources and expertise for energy and carbon tech founders. Join us at

28:39 energytechnexiscom and

28:41 start building your Thunderlisset. So it's visually apparent because there is a, some text that says first name. And then there's a field. So we as humans think that the text that I see on the

28:55 screen and the field are connected. They are visually connected, but they're not connected from a tech perspective So

29:02 what the computer reads is I have a hundred fields. Here I have like ABC one and ABC two and DEF one and whatever else. So from an interoperability perspective, it's basically impossible. And so

29:19 your next solution is to do like a computer vision, OCR type thing. And then you basically throw away all of the fields that were previously created And then you recreate your own fields. And

29:31 that's what government contractors do in very narrow spaces. They'll say, this is what's called intelligent document processing. So this could be true for really like a material safety data sheet,

29:42 you know, if we're going back to our energy context or a lab test or I've got all this data that happens to be in a PDF that I need to parse and extract and tag and label. Often it's easier to hire

29:57 a group of people somewhere in the world to literally retype things. And that's, I think, one of the dark secrets about our world of AI that we're walking into is that the tagging and labeling of

30:10 the data that enables all of the magic of the AI to happen is typically done manually, sort of in a back office somewhere. That's how they create the training set. That's how they create the

30:22 training sets. And there are other ways to do this, of course. But what we're trying to do is to say, All of these documents could be tagged and labeled at the beginning, right? So I've got a

30:34 first name, I've got a last name, I've got, so these can be human readable labels that have understanding. I mean, family names, surname, last name, great. These are synonyms, they all mean

30:45 the same thing. That's a problem of mapping, right? I've got this field, it kind of looks like this, I've got that field, it looks like that. So if we can reduce this problem from a

30:58 challenge of mapping random data to other random data

31:03 at an infinite scale to, hey, everyone's got first names, everyone's got last names. This is where we're talking about an ontology where all of these terms have specific meaning. And this is what

31:16 allows so much to be so powerful in our work because we are allowing the user to basically create an ontology of their data set, which is something that none of the. Other, at least from a B2B

31:30 productivity perspective, none of the solutions do that. They provide just more random numbers and random letters and fields that are intended to integrate with your CRM to send out a contract. But

31:42 again, if you're the government and I'm getting this DMV form and I need to use it on this other DMV form, none of these other solutions are going to allow you to do that because they have no

31:53 ontology baked in. Yeah. So you mentioned a little earlier that you're doing capital factory. So I want to shift gears a little bit and talk about your fundraising journey. Yeah. And we know that

32:04 the grant, unfortunately, you shared, didn't articulate, but it sounds like from catching up with you, you've really started that journey for, I guess, raising your next financing. So share

32:16 with us what it's been like and tell us about the capital factory. So there's such a good program. Oh, they're a wonderful program. I feel like over the last couple of months I've been on a rocket

32:24 ship just learning It's been previously, we were finalists at Code Launch, which was also an amazing opportunity, and we did an accelerator called StartEd, which was, again, focused on the

32:36 education market. But, so we raised 700 to 50K in our pre-seed round, which was great. That was really over the last couple of years or so. And where we're going is to raise our seed round, and

32:53 the current problem that I think many startups see that are maybe in this productivity space, or even other startups that I talked to, is that we've kind of shifted a column. So, the criteria for

33:08 what used to be a seed company is now, or sorry, a series A company is now put on a seed company. So, when I talk to VCs, they're already looking for a company that's got one to two million in

33:20 revenue, which is not where we're at. Yeah, so we're making revenue. We've been revenue positive since our first year, actually, which is great. I like to say, we started with500,

33:31 so thank you to the Houston Film Commission for believing us in those very early days. We do all of their film, TV, music video commercials that are shot in town. It's not technically a permit,

33:45 but for all intents and purposes, it gives them the right to shoot on their production on city property And it also helps contribute the data analysis of the creative economy, how they, which

33:58 hotels, which catering companies, et cetera, come to town. But, so yeah, so we are raising our seed round. And just to talk a little bit about the shifting, so I think the shifting of like the

34:11 requirements has as much to do with just the macro economy, high inflation and kind of venture capital in some ways being a little tighter than where it was cash in the system. And I think this

34:25 elucidate's one of the funny challenges of being a founder. It is the ball's constantly moving. And you think you're aiming for one position, and you're like, OK, we're going to be all set.

34:34 We're going to be ready for that series A. And then you get there, and you realize you were thinking of where people's mindsets were literally nine or 12 months before. And it feels like the rug's

34:43 been pulled out from under you. But that's just the reality of where a market moves. If you think about that as a very dynamic environment And so even for me, one of the things I struggle with is

34:55 entrepreneurs will come in and say, who should we talk to to raise money? I'm like, I could not tell you what's in the mind of investors because it shifts so fast. And so half the challenge is

35:04 just getting out there. But yeah, keep teaching us about kind of that capital factory experience. Yeah. And totally agree, the ball shifts or the goalpost shifts every six months or so it seems.

35:16 I feel like if we were a 2017 company doing this right now where we were at, we would be golden.

35:24 Right, but it's just a lot harder this time around, which I think is ultimately good for the startup because it means you need to focus on things like unity economics, which is something that the

35:33 capital factory talks about all the time, right? What's your value proposition? What's your pitch? What's your market? What's your TAM and Sam and Solomon and all of that. But at the end of the

35:43 day, what I've seen investors do is they look at the first part of your deck and then they look at the end of your deck, right? What's this idea? What's the market? Okay, what's your traction,

35:53 right? How are you, what's, do you have a repeatable sales process? What is the cost of customer acquisition? What's the lifetime value? What's the, you know, what are your growth metrics?

36:04 You know, what are your predictions over the next six months or so? And how is that based on data that's not just an Excel simulation, but on your actual performance to date? Yeah, have you come

36:15 across magic number? No, so I'm not a SaaS person,

36:21 It's like revenue growth over churn, and if you hit these like, and there's like a lifetime customer value in it, and there's like a magic number where you want to target four. And if you hit that,

36:30 it's like the ratio is the right where your acquisition cost of a new customer pays for acquiring new ones in a very quick fashion. And it's just one of, I don't know why they don't have a better

36:41 name for it other than magic number. They should call it like unicorn numbers. Okay. That's like a pipeline coverage ratio. Something like that It's the numbers like 35, so basically for every

36:52 deal you close, you need to have 35 in your pipeline. Slightly different number. Because that's good for forecasting. Yeah. But it's just funny how these like little metrics for especially SaaS

37:00 businesses can drive more than anything else from an investor perspective. Oh, yeah. Yeah. Yeah. Yeah. So like gross profit margin. Yeah. So for a B2B SaaS company, your gross margin needs to

37:11 be like 80 or 90, right? That doesn't necessarily mean But how you get to that number is. really about, okay, we can let go of the developers. We can kind of cut costs everywhere. How much does

37:29 it actually cost to run this software as it exists today outside of sales and development and future road mapping? So I think as,

37:37 this is a problem that founders often, and myself included, find themselves in, is that when you're raising money in your mind, you've got seat count. In order to achieve this road map, I need

37:50 this number of developers, this number of sales and marketing people, this number of whatever. The VC isn't thinking about that at all. They really couldn't care less. Some part of it is, well,

37:59 what are the uni economics? How many people do you actually need to do this? And if you really need two people, well, then you're gonna get two people, and that's it. Often we think, oh, yeah,

38:11 I need to raise3 million, 10 million, or whatever it is, because you see this in the blogs, and you see what everyone else is doing, But what do you actually need? This is an answer that the VCs

38:23 really want to hear about. And if your answer is seat count, that's not an answer because it's not based in union economics. And so, or your performance to date, what they care about is your

38:36 growth metrics. Where are you going to go in terms of sales and how much money do you need in order to hit that revenue or that profit margin? And then how are you setting them up as the current

38:47 investor for the next round of investment? Which is, again, often us as founders are like dogs chasing the postal truck. It's like, great, we found the postal truck. And it's like, well,

38:59 great. There's actually three or four more postal trucks ahead of you. How are you going to chase after those postal trucks? But because we're just scrambling and grinding every single day, we

39:08 don't necessarily have the time to think all of that through. And more and more, especially the savvy investors, or asking those questions. And so I think we as founders really have to go back to

39:20 fundamentals, which is what the capital factory is all about. I see this as a, or from what I understand, the Kool-Aid that they're passing around, which is a pretty tasty Kool-Aid, but they

39:31 want to be a counterpoint to the Silicon Valley model, which is throw a bunch of money at the problem, let it burn, and then you will get market share because we've thrown enough money to solve

39:44 whatever problems that you have in your way Here, I think it's more about, again, if we're a Texas economy and you create a10 million company, you're bringing in Texas jobs, you're contributing

39:57 to the Texas economy, you've done great work, you've solved a problem,

40:03 and that's good for the state, it's good for the capital factory, and not every startup needs to be a billion dollar company. And in fact, the VC model, the numbers just show that You know, all

40:18 the time, I mean, the number of startups that get funded versus how many exit that actually 3x the return of the fund is very few and far between. So everyone has their kind of, you know, back in

40:32 the envelope numbers, but in the over the course of 10 years for that fund, one company needs to 3x the fund and then maybe two or three get average or above average returns and then the rest fail

40:45 for lack of a better term So then the question is, do you

40:52 need to fund raise? Do you need to fund raise from a VC, right? Does everyone need to do that?

40:60 And so I guess where are you in that journey with yourself? I mean you've done the series or pre-seed and now when you come to the series you realize, okay they want one million in revenue.

41:13 You know what kind of conversations are you having with yourself and the team now in terms of like, yeah, where do you go or if you do need investors, where do you find the right investors who are

41:23 not always looking for the same kind of outcomes? Excellent question. So this is the question that really the capital factory has helped me answer, which is look to angels, look to family offices,

41:35 look to some private equity groups, for example. There's a couple groups that

41:40 are taking more of like a VC studio model, for example, that do commercialization strategies first.

41:48 So you basically sell into their existing portfolio. That means for me as the founder, I've got one client that I need to sell to and then they're really a channel partner, right? So they're

41:58 distributing my software to their portfolio. So that makes the sales process a little bit easier, which means I get those traction, the revenue traction, the metrics, et cetera, that the VCs

42:08 want to see But what that means is that I'm going to be raising a lower dollar amount. So I can raise 250K right now and hire a couple of BDRs and do very well. I can raise 750K, maybe do a little

42:23 bit more on the roadmap side if I can talk to a group about where we need to go and convince them, et cetera. So that's the kind of range that we're talking about in terms of what we need right now.

42:36 And the timeline is really the next six to 12 months. So I need to deploy this capital over the next six to 12 months to then create a company that is on the path or achieving one to two million in

42:50 ARR to then raise that seed round. But to your point, six to 12 months from now, well, maybe the goal post has moved again. Or maybe if the Fed cuts interest rates as we're all hoping that they

43:02 do, we are getting closer to the free money era and then all of our problems will be solved. And then you'll get a great unicorn valuation. That's what might happen. But I think something you said

43:12 that was interesting, You went on and first started to talk about how you're thinking of like development costs and headcount and that was your initial concept of fundraising and then what you just

43:22 said here was your focus is on hiring BDR, which I assume is a business development representative, which is a sales and marketing function and so when you think about like where your head was at

43:31 before versus now, it sounds like the fundraise is 90 sales focus, not necessarily development focus, is that like an evolution in your thinking? I think it's the evolution of my strengths and

43:45 weaknesses as a founder and I think when you're in the founder seats, you're kind of looking in the mirror every single day, which can get a little bit intense sometimes because I'm one of those

43:56 kids that's like, well, if I put my head down to it, I can do OK better than most or whatever, but when you're a founder, you can't do everything. You have to delegate. I'm the technical

44:07 product guy I wrote the original back ends, the original, you know. prototype in the front end before, you know, delegating that to a team. And so building product and creating roadmaps is

44:18 something that I can just do without really thinking. So that's where my strength is. And so as a result, the product, as you experience yourself as a user, is pretty darn good. Yeah, yeah. So,

44:29 but on the marketing and sales side, that's something that I am less good at. And as a CEO, that's what you have to be really good at. I'm very good at opening doors. For example, starting a

44:40 conversation, getting people excited about the vision, less good at closing. And I think a lot of founders run into this problem, right? Because, again, they're that visionary. They're good at

44:51 opening the doors. But closing is an art of repetition, of diligence, of reminders, of follow-ups. And that's where a BDR, or a scheduling company, or other folks can be very, very helpful to

45:05 get you to that close because. the VCs really couldn't care less how many amazing conversations you've had, right? And oh, look at all this opportunity, I talked to XYZ, they're gonna look at

45:17 how many do you actually close and what is your rate of closure? And so if you as a founder are always talking to the future, which is one of our natural instincts often, and then you realize, oh

45:27 wait, my numbers look bad because I'm talking too much about how many conversations I'm having, but if 90 of them don't close, you're not doing a good job. It's funny you remind me, literally

45:40 yesterday, I finally had some free space, and I sat down and looked at the end of our funnel, and I just started calling people, and we got two conversions last night, just they needed that

45:50 prompt of just getting it over that. It wasn't even a convincing, it was a reminder. Oh, you gotta push the button to send the check, right? And it matters so much, but I think one of the early

46:01 conversations we had, we had talked about when was the right time to bring on a representative,

46:06 One of the challenges of being a first-time founder is, if you don't understand something, you want to kind of hire experts to bring them in, but they realize you have no money.

46:15 But a lot of times the challenge is figuring out when to delegate and what to delegate. And I think it's, personally, I think it's important for a lot of founders to know and understand what pieces

46:24 they are good at and what pieces are kind of mature enough to hand off. 'Cause a lot of times, like it was very clear in our conversation, you're kind of the expert in the customer use cases,

46:34 their needs And really understanding kind of what's going on for the customer and that's sometimes hard to transfer to staff that are kind of guns for hire. And as much as we love them, BDRs are

46:48 there about commission. So if they

46:52 don't have kind of an easy product to just hand off and sell, they're gonna get frustrated. They're gonna go find something else that gets them that better commission later And so there's always a

47:05 challenge in knowing when you know enough to say, okay, this is stable, this is good. You got one job to do and it's close. Yep, yep. And so how is, it sounds like now is the time where you

47:15 feel like you've matured that. Absolutely. And I think part of the problem is about assumptions, right? So you as a founder, it's all clear in your mind. Well, but no one is in your brain,

47:26 right? No one's an oracle that can read your mind, right? And so often with the buyer's journey, you've got this maybe ideal set You're having all these conversations. People are responding,

47:39 hopefully, if you're doing OK. And then you have to, as the founder, really go through that buyer's journey with the customers and figure out, is this smooth? Is this easy? Is this hard? Is

47:52 this what actually gets them there? So you need to learn a little bit of that sales function and what actually works before you can bring on that gun for hire I found this problem early on with our -

48:06 or marketing efforts, whether it was paid social or cold email, that was like the 2017 to 2020 playbook, right? And it worked very well. But over the last two years, because of the AI, you know,

48:21 you know, especially over the last year, pushing out marketing content or whether that's the pandemic or whether that's, that we're all working from home, we're all, you know, working remotely.

48:32 There's been a change towards thought leadership content, which was an SEO play maybe five years ago, but before you had other tools and techniques like social media that were very, very effective,

48:44 whereas now if you spend1, 000 a month on social media, you're just burning money and not getting any results. At least in like a B2B

48:53 SaaS-type company, you need a big budget in order to make paid social really work. And so we needed to get creative on how we actually found leads and when you're in that. cold start problem,

49:07 which is what every first time founder is

49:12 in, and you talk to the guns for hire, they're maybe good at a startup that is making one to two million and they need to get to 10 million. Well, you've already got through that zero to one

49:22 problem. But when you're in the cold start problem, how do you get into gear? Right? Maybe you've got through your personal relationships, those early adopters, and you're, hey, that was easy.

49:36 Well, obviously it's easy because they've already done their due diligence. They know you. They've known you for maybe a period of years, whether that's personally or whether that's professionally,

49:44 or maybe it's an introduction from someone in an ecosystem. And that's how you get your first customers. But that's not how you get your first market. How you get your first market is figuring out

49:55 all of the channels, kind of one by one, figuring out what works, what doesn't work. So we found that conferences actually worked pretty well to get leads. But

50:05 That's not sustainable. It's not how you're gonna get to the growth metrics the VCs want. So really it's you have to go through the process of figuring it out and realizing that maybe your early

50:18 wins are because of your personal relationships and that can't transfer to the open world of the web where now you have to go to market and your gun for hire doesn't know how to do it. Yep, yep,

50:31 yep. So you're in a no win situation where you as the founder are missing information, there's an information gap, the gun for hire, whatever they do, it doesn't really matter. They might be

50:43 very good at their job in a certain context, like you're trying to get to 10 million or whatever. I've met folks that are like, Yeah, I take companies that from 10 million dollarsto a hundred

50:52 million dollars. It's like, Great, have you ever taken a companyfrom 250K to a million? And they're like, Oh, no, that's too hard. And it's like, What are you talking about? You just like,

51:03 you can say you can make 90 million dollars. you know, over the course of five years, but you can't make 500K in two years. You know, they're like, no, that is not what I do. They need that

51:13 playbook. Yeah, they need to playbook, yeah. Yeah, and you gotta build it. So we're coming up on time a little bit. I'm gonna give you a chance to take a breath. Let's usually talk about

51:23 Houston at this stage, but we've had so much fun. I think what we'll do is we'll ask you to share your favorite hidden gem in Houston, and then we'll go on to closing Oh, yes. Oh, in terms of

51:36 just places? Places are part of the innovation ecosystem, or so it makes Houston special for starting a business. So basically, I'm a little bit odd in the case of that I wasn't actually an art

51:48 history major in college that kind of got into tech. So I don't really read like an engineering person, even though I became a programmer, et cetera. So all of my favorite things in Houston are

51:59 all about like the art scene here I still like nazuo is my favorite bar. if you've ever gone there, most people have it because it's just this wonderful little place. What part of town is it in?

52:11 It's on Main Street. Okay. Yeah. And hopefully I haven't ruined the hidden jam because it's sort of the artist's haunt. But yeah,

52:20 so I love hanging out with the art scene. The orange show, for example, is another one of my favorite places, the Art Car Parade So one of our members is the president of the art of the orange

52:32 show now. So we got, we like them a lot. Yeah. Yeah. It's such a, and I think that's actually something that's missing in the Houston ecosystem. When you look at, not necessarily to compare

52:43 Austin to Houston, but when you think about what makes a creative city, when you think about like New York or you think about, you know, San Francisco even or Washington DC or Chicago, it's

52:53 density, right? There's a density of traffic There's a density of people. People are running into each other all the time and whereas in Houston, 45 minutes to an hour and you're still in Houston

53:05 and there's different ecosystem everywhere in this town and so we lack that density and also we lack that interaction with the artist side of the city. I mean we have some of the best museums in the

53:20 country. Most folks that come to Houston, you know, do you know what the number one tourist attraction is in Houston? I have no idea No, it's the Galleria. It's a Galleria. Because if people

53:31 come here for work and then they buy stuff for their partners and then go home, right? And yet we have the finest opera in the country, the finest ballet, the finest symphony, you know, the

53:42 Museum of Fine Arts is absolutely incredible. So I think we need to bring more of the, you know, STEM is great, but we absolutely need to bring the arts into the creative ecosystem, especially

53:55 when we talk about startups in town, because it's just incredible what those partnerships can do to get of their tunnel vision as engineers, as founders, as whatever, and to think of the world and

54:09 to see the world and in a different way, which is what we as innovators are supposed to do. So I would like to see more of the arts. But yeah, so that's my favorite part of town, absolutely. And

54:20 especially, I think actually Houston is way more creative than Austin is, so give a little shout out to Houston The food scene is definitely better here, absolutely.

54:33 But because there's that lack of density, it's kind of hard - you get these beautiful pockets in town with all these different communities, whether that's cultural, whether that's food, or whether

54:46 that's art scenes, or whether that's startup scenes. And bringing it all together is, I think, the kaleidoscope of Houston is what I think is the most beautiful. Yeah, and I like connecting kind

54:57 of the artistic side with like the innovative side of the city and how that important that is. to allow people to be innovative and create new businesses is like also allowing them to be creative.

55:08 And that could mean a lot of different things.

55:12 What would you, do you have a call for action for our listeners as we're closing in now? You know, how can they find out more about unicorn forums? What's a good way for them to start digging into

55:23 it and start using it? Yeah, so visit our website unicornformscom, one word. Reach out to me on LinkedIn, again, on Patrick Waldo And really, we're trying to get more users. We are in the

55:34 process of, especially after getting into the capital factory, it kind of perked a lot of years. We were also pitching at the showcase competition at Collision in Toronto, which was very exciting.

55:44 I got to pitch in front of 40, 000 people. So it's been a really busy couple of months. I'm very tired, but it's very good. But really, we want to see more traction in our hometown. So we want

55:57 to, whether that's our free tier, I don't particularly care I just want. Not, and it's not really about feedback, right? It's not, this isn't a beta product, the product works, you're using

56:07 it, you like it. A lot of folks are using it and they, I'll say they love it.

56:13 And because we solve a particular problem very, very well, and so whether that's contracts and agreements and electronic signature or is the more advanced regulatory kind of gnarly stuff that we're

56:25 really, really good at or those government forms, we want folks to come in to the product, to use it, to get a benefit out of it for us to solve their problem, for them to love it and refer their

56:37 friends. So, really that often starts with either signing up for a free tier. We actually, all of the eSign companies on the market, over the last couple of years, have removed their free tier,

56:48 if you're not surprised. Corporate profits are up everywhere. While removing, you know, the freemium days are over, right? It's, you know, they wanna get instant conversions and they've got

56:59 that market trust and that's great, That also creates an opportunity for us as a startup because people need, they might not have the volume or they might not have the need for a bigger solution.

57:11 So they can come use us. We offer two templates with unlimited electronic signatures as well as two contracts a month. And if you refer a friend, you get an extra template. So what that means is

57:25 if you refer a handful of friends, you've basically got the highest tier of whatever the other e-sign or form solution that you're looking at for free. And so we're trying to get, again, folks

57:38 into the platform, using it, loving it, telling their friends. And yeah, we just want everyone to use a local product, support the Houston ecosystem, support the Texas ecosystem, and come on

57:49 board. Well, thanks for being here. Yeah, thank you all.