See all Y Combinator transcripts on Youtube

Speaker 1

00:05

We have to sit up straight. We have lower seats. This is not right. Admiral Rickover would not stand for this.

Speaker 1

00:13

Okay. George, Nick, what are you working on?

Speaker 2

00:18

So we are building a multiplayer programming game for teaching people how to code. So like Codecademy, but actually a game.

Speaker 1

00:25

A game, so how do you win the game?

Speaker 2

00:27

So you just beat more and more levels until you're an awesome developer.

Speaker 1

00:30

So you sort of get points somehow for it. It's competitive learning. You learn a program

Speaker 2

00:35

and you get more points. Or competitive. So there's multiplayer.

Speaker 3

00:38

Is it like write code to kill a bad guy?

Speaker 2

00:41

Yeah, so the first level you got your guy, you write code to move him around and you kill another guy. So it's like right in the middle that you're killing dudes.

Speaker 1

00:47

All right, so you're motivated.

Speaker 2

00:49

Yeah, instead of, you know, what is your name, what's the length of your name as a string, yeah, okay, that's cool, but no, I kill that ogre.

Speaker 1

00:56

Yeah. It's like

Speaker 2

00:57

what you do right away.

Speaker 1

00:58

It's not just badges. Not badges. Is it launched yet?

Speaker 4

01:02

It is, actually, we launched it yesterday. Oh. Well, the beta.

Speaker 1

01:07

Things move fast around here.

Speaker 4

01:08

Check it out. Did you launch because we told you you were gonna be in office hours actually no We

Speaker 1

01:15

just a coincidence

Speaker 2

01:16

it is so unfortunate because we didn't have time to prepare the launch went crazy. Yeah

Speaker 4

01:21

But they were I got home from the from the dinner last night and I get on a hangout with these guys and they're just At the server terminal control seeing and restarting the server because it's under so much load.

Speaker 5

01:32

How's it

Speaker 4

01:33

doing now? Not much better, unfortunately.

Speaker 2

01:35

We can only serve a certain fraction of the traffic that we're getting, and that's been going on for 24 hours.

Speaker 1

01:40

How did you start working on this?

Speaker 4

01:43

I wanted to learn to code about a year or 2 ago. I had been a semi-technical co-founder at my first startup, and I tried Codecademy, I tried a whole bunch of these, and I just couldn't stay, stick with it. It wasn't engaging enough for me.

Speaker 4

01:54

And so, these guys, my 2 co-founders were like, hey, why don't we actually make a game?

Speaker 1

01:59

So you were the original guinea pig? I was. They thought you can't keep motivated using existing stuff, we'll make a game where you can kill people.

Speaker 4

02:07

Well, you know, it wasn't just that. Our first startup, the customers kept coming to us and saying, we keep using your your company, your product, because it's like a game. And we hadn't attended that at all.

Speaker 4

02:18

And so. What was it? It's a company to teach people Chinese characters.

Speaker 3

02:22

I see.

Speaker 4

02:22

And so we thought, well, if we can do that inadvertently, what would happen if we actually made a game?

Speaker 1

02:29

So How far can you learn how to program by like how much can you teach people right because I can remember the kind of crappy Programming I did when I was in high school Where I didn't really understand what I was doing

Speaker 2

02:43

So if you look at the stuff that's on, you know top code or a hacker How

Speaker 1

02:46

can you force people to learn advanced concepts when all they really need is to have the right library calls, right? Can you make advanced concepts, produce advanced weaponry? So the software engineering part of learning to be a developer, That's something we

Speaker 2

03:02

can add later, focusing on core programming for now. Because you get motivated enough, it's like, okay, now I want to build this app.

Speaker 3

03:07

But then

Speaker 1

03:08

you have to get through different levels, right? Presumably you get more and more sophisticated.

Speaker 2

03:11

Yeah. But

Speaker 1

03:12

you could get more and more sophisticated just by writing more and more code and getting access to the right library functions without actually learning any more about programming, right? Couldn't you? How can you force them to learn more about programming in order to make more powerful weapons?

Speaker 2

03:25

So you can have things like, okay, your code needs to run this fast, in this 1 you need to learn how to use recursion, This is the only method available to you in this 1. You need to figure out how to do a non-honest function passing method here. And generally, if you make the levels hard enough, which you're able to do when they have a reason to complete it, they try really hard, then you can get them to do harder and harder stuff as a natural progression of the game.

Speaker 1

03:46

Have you run beta users through

Speaker 4

03:47

this yet? Quite a few, actually.

Speaker 1

03:49

What did you learn from it? Like, what went wrong?

Speaker 4

03:51

Well, the first thing that went wrong was that we started at too high a bar, because I had worked in kind of a semi-technical role in my first startup. We assumed a whole bunch of prior knowledge that was totally untrue for our beta users. So we started out writing for loops, which we were like, oh, well, that's simple.

Speaker 4

04:08

And then we got people with no programming background and they didn't even know how to complete a line. A mere

Speaker 1

04:12

concept of formal notation is the single biggest obstacle. Correct.

Speaker 3

04:16

What's the most advanced concept you're teaching now?

Speaker 2

04:19

So far we have some dev levels where it was like, okay, you're going to need to figure out the targeting strategy for your artillery, so you're going to fire into the center of a group of dudes, and your soldiers, backed up by the artillery, have to avoid your shots, So you have to make sure that they don't chase into your line of shooting.

Speaker 1

04:35

What era of technology is this?

Speaker 2

04:37

So it's a web game and you're doing everything in JavaScript.

Speaker 1

04:40

No, no, no, what era of like combat? It was

Speaker 2

04:43

a fantasy. So you're a wizard And you're casting spells to control your soldiers and your heroes and that sort

Speaker 1

04:50

of thing. I see. How many users did you guys get?

Speaker 4

04:52

There's no Apache helicopters or anything like that. No, unfortunately.

Speaker 1

04:55

We

Speaker 2

04:55

don't have the art for

Speaker 1

04:56

that yet. Plus magic. Yeah.

Speaker 1

04:58

Alright.

Speaker 2

04:58

People keep saying do robots. We could do robots. Yeah.

Speaker 1

05:01

It's when fantasy you can make up anything yeah, right

Speaker 3

05:04

how many users did you guys get yesterday?

Speaker 4

05:06

So we we maxed out the server at 15,000 people we had 200 concurrent But we really don't know because we were actually people were just getting 404s

Speaker 3

05:14

Why not just spin up a bunch more servers

Speaker 2

05:15

we weren't architected that way we didn't think we get nearly this much traffic We just posted it to reddit. That's it.

Speaker 4

05:20

Yeah. We we posted it to reddit, and we got swamped

Speaker 2

05:23

not even the main reddit

Speaker 4

05:25

We actually people on the Reddit threads were just, they were repeated things. They were saying, oh, the hug of death, hug of death, hug of death, and 404 not working. So they were scrambling all last night to do that.

Speaker 3

05:35

Do you know if it's people that didn't know how to program before that are mostly doing this, or if it's just people that want to play a fun game?

Speaker 2

05:41

So the people that know how to program already, they're like, OK, when's it on GitHub? This is awesome. Let's get on here.

Speaker 2

05:47

We had like 20 people yesterday, oh, lurking, like, oh man, I want to help out.

Speaker 4

05:51

And when can we pull, when can we clone?

Speaker 2

05:53

Yeah, so we're thinking open sourcing in the next couple months to really capitalize on the interest. But most of the people, yeah, they're on the learn programming subreddit, they're like, I don't know any programming, this is great. And they beat all our levels, and we're like, crap, we need more levels.

Speaker 2

06:05

We're just trying to focus. Do you

Speaker 1

06:06

guys know anything about the gaming business? Like, do you know how to make games?

Speaker 4

06:10

We're learning, is the quick answer there.

Speaker 1

06:12

Okay, because there's probably certain best practices in the gaming business, and probably whatever they do would be the starting point. So if you're just wondering how much to open source, I don't know how much they open source things in their world, but whatever they do is probably the default thing to start with.

Speaker 4

06:28

Yeah, we actually, that was the first thing we did when we started the company was we realized, wow, none of us are professional game designers, let's find and talk to game designers. So we've got this kind of core group of people that are advising us, mostly just telling us when we've built sucks, but it's been very helpful thus far.

Speaker 1

06:46

Is there anything they told you that changed what you were doing?

Speaker 2

06:49

They said make robots and said people understand robots.

Speaker 1

06:53

They said make robots.

Speaker 2

06:54

Because when you have like controlling your units via code, people think okay that's natural if you're robots. When you say oh it's a spell, you're a wizard, you're adding to the fantasy and it's a little bit hard to understand. We'll see.

Speaker 2

07:05

Okay.

Speaker 1

07:05

So is it robots now? No.

Speaker 3

07:07

Oh, so that's like version 2.

Speaker 1

07:08

It's hard to change the art, right?

Speaker 4

07:10

Yeah, the art is.

Speaker 1

07:10

Yeah. All right.

Speaker 3

07:12

I know you guys are not just going to create as much content as you can while people are-

Speaker 2

07:16

Yeah, we just finished the level editor. So now the hope is we can finally turn out 3 levels a week using our awesome live coding drag and drop thing as opposed to like hard coding all the coordinates and be like, ah, does it work

Speaker 1

07:25

now? Yeah. So growth first. How many people do you have?

Speaker 1

07:28

Is it just you 2?

Speaker 4

07:30

No, we have 1 guy that's manning the servers right now. He's keeping it alive, hopefully. Scott, keep it alive.

Speaker 2

07:36

This is the same team from the first startups. We've been working together for 6 years now.

Speaker 4

07:40

How did you originally meet? So I was his roommate, and I lived down the hall for my co-founder. In college.

Speaker 1

07:47

Yeah. College roommate. Mm-hmm. Did you guys study, were you guys programmers?

Speaker 2

07:52

Yeah, so Scott and I did CS, and George is the econ film guy. And then we graduated, and we're like, oh, let's not get jobs, that's going to suck.

Speaker 3

08:00

What are

Speaker 2

08:01

you talking about? And then we did the startup, and then 3 months later, the crash.

Speaker 3

08:05

And it

Speaker 4

08:05

was like, oh, good thinking.

Speaker 1

08:06

A lot of the reason people start startups is because they don't want jobs. Yeah. Right?

Speaker 1

08:10

No, seriously, honestly, seriously.

Speaker 3

08:12

That's 1 of

Speaker 1

08:12

the pretty reasons. If we're looking at someone's application and they worked for a long time for a large company, that's actually bad to us because the best startup founders probably could not stand that.

Speaker 2

08:24

3 months that IBM did me in, it was like sophomore year, like no, no more.

Speaker 3

08:29

How are you guys going to make money with this?

Speaker 4

08:30

So it's a recruitment model, basically. The leads that we generate through the coding challenges provide us with the opportunity to qualify people before we even get in touch with a potential company.

Speaker 3

08:43

Can you possibly train these people good enough to make them valuable employees?

Speaker 2

08:47

The recruiters we talked to said yes, absolutely, companies are interested in the developers on your site and we're interested, so let us know

Speaker 3

08:53

when you have something. Recruiters famously say all sorts of crazy stuff.

Speaker 2

08:56

Yeah, they do. So that's yet to be validated. Yes, indeed.

Speaker 2

09:00

The other people in the space that we talked to also say the same thing. People running coding challenges and doing placements and dev boot camps and that sort of thing.

Speaker 4

09:07

We spoke to 1 Y Combinator company and we asked him how he had done his recruiting. He said we sent a group of qualified recruiters a spreadsheet. I said how did that turn out?

Speaker 4

09:16

He said we had 50 placements in 6 months. So I said, OK.

Speaker 1

09:23

Is it time?

Speaker 3

09:23

We are out of time.

Speaker 1

09:24

All right. Nice meeting you guys.

Speaker 4

09:26

Thank you.

Speaker 1

09:27

Thank you

Speaker 3

09:27

so much. Thank you. Thanks.

Speaker 3

09:30

Thanks. Thanks. Thanks. Thanks.

Speaker 3

09:34

Thanks. Thanks. Thanks. Thanks.

Speaker 3

09:34

Thanks. Thanks.

Speaker 6

09:35

Want to? Yeah. OK.

Speaker 1

09:36

OK, guys. You guys didn't. Hey, guys.

Speaker 1

09:37

Wait, wait. Come back.

Speaker 3

09:38

Back for a second.

Speaker 1

09:39

You didn't realize that, but that was your Y Combinator interview. You're in the next batch. You are applying, right?

Speaker 1

09:46

Nice.

Speaker 5

09:47

Awesome job. No pressure, I guess.

Speaker 3

09:48

Nice job.

Speaker 1

09:54

We just sort of decided to do that on the fly. I mean, that was the first time I talked to them. Awesome.

Speaker 7

10:00

Hi, I'm Karen.

Speaker 6

10:01

Hey, I'm Finbar.

Speaker 7

10:02

We are making giveit100.com.

Speaker 1

10:05

What is it?

Speaker 7

10:06

Giveit100.com. No, you can look at me. OK. OK.

Speaker 7

10:10

OK. We're making a video site where you sign up, you choose something that you want to get better at, and then you share a video of your progress every day.

Speaker 1

10:19

So what would be a typical example? Like what's the most, is it launched now?

Speaker 7

10:23

It's in private beta right now.

Speaker 1

10:25

Okay, so what do you anticipate being the typical use case? Like what sort of thing would people get better at?

Speaker 7

10:30

The most common 1 right now is dancing. Dancing? The reason for that is because I made a video of myself learning to dance in a year, and I put it online.

Speaker 7

10:40

It ended up going viral.

Speaker 1

10:40

You spent a year learning to dance?

Speaker 7

10:42

I did spend a year learning to dance.

Speaker 1

10:43

What kind of dancing?

Speaker 7

10:45

Robot dancing.

Speaker 3

10:47

Okay.

Speaker 1

10:48

It's all robots today. Ron Coe, do you hear this? This is the new trend, robots.

Speaker 7

10:57

So I ended up getting several hundred emails from people who said, hey, because I saw this video, it wasn't a video of an incredible dancer, but it was someone who started off not knowing how to do it and getting better.

Speaker 1

11:08

So is this a video you put on YouTube and a lot of people looked at it?

Speaker 3

11:11

Yeah.

Speaker 1

11:12

So was this what led to the startup? Yeah. OK, so you made this video of yourself learning to dance, and then you thought if other people did something like this, it would encourage them to dance too.

Speaker 7

11:22

Yes.

Speaker 3

11:23

Ah. What sorts of things are people mostly showing themselves besides dance learning?

Speaker 7

11:28

They are- How many beta

Speaker 1

11:30

users are there, by

Speaker 7

11:31

the way? We have an invite-only beta of 50 people, and then we have- 50?

Speaker 6

11:34

Yeah, it's like 4,300 or so on a waiting list.

Speaker 7

11:38

Yeah. There's a nine-month-old learning how to walk. There's a woman who's recovering from a multiple sclerosis exacerbation. She's relearning how to walk.

Speaker 7

11:47

There's people who are learning how to write a unicycle, learning a new language, learning how to code, learning design.

Speaker 3

11:54

Why haven't you accepted the rest of the wait list?

Speaker 6

11:57

We're ironing out some kinks in the product and getting it to the stage where we think it's gonna be really engaging.

Speaker 1

12:04

Is it not engaging enough now?

Speaker 6

12:05

Well, it is. We actually have some really awesome engagement stats.

Speaker 1

12:08

Well, if it's engaging enough now, you've ironed out enough kinks.

Speaker 6

12:13

Sure, we have. I think really the major things that I'd like to see personally are the kind of social sharing features. Because when we kind of open the floodgate and have lots and lots of people come onto the platform, we want to kind of maximize on that.

Speaker 6

12:24

And, you know, if a lot of them come on and share it and then leave, like, they could have got a lot more people to come in by that point.

Speaker 1

12:30

So they're not sharing it enough now.

Speaker 6

12:32

Well, there's no way for them to share it right now because it's totally a private closed beta Like nobody else can see it,

Speaker 7

12:38

right? We really just are we're kind of just experimenting on our first batch of people getting their feedback And then we're gonna launch in the next couple weeks.

Speaker 3

12:45

Do

Speaker 1

12:45

they always make videos of their progress?

Speaker 3

12:47

Yes,

Speaker 7

12:47

it's video. That's

Speaker 1

12:48

how it works.

Speaker 7

12:48

We started off as a photo and video site, but then we cut out videos. We cut out photos because the videos were more interesting.

Speaker 1

12:54

So how do people make videos of themselves learning to code? Look how much faster I can type.

Speaker 7

13:01

Actually, there is someone who's learning how to touch type. But they sometimes talk into the camera, they talk about what's challenging, what they're struggling with. They'll show actual code, they'll show what they actually built.

Speaker 3

13:15

How many views does an average video get out of a potential 50?

Speaker 6

13:19

So the view counts, we're seeing about 1,000 views a day. And we have roughly between 20 and 30 of our small group of users are coming back to the website every day.

Speaker 1

13:30

20 and 30 out of 50 come back to the website every day?

Speaker 6

13:33

So unique visitors. It's not like the same 20 to 30 every day. It's like people will wait a few days and then upload a batch of videos at once.

Speaker 1

13:40

So the videos are hosted on your site, not YouTube. That's right, yeah.

Speaker 7

13:44

But we want to use YouTube. We want to piggyback off of YouTube as a marketing channel, the same way we did with MyVideo. So we'll take really compelling 100-day challenges, and we will turn it into a viral video, put it up on YouTube, and say, made with 100.

Speaker 3

13:57

It seems like that would have been really important to test during the beta, will people share these on YouTube, and do they get watched?

Speaker 7

14:03

Well, I guess our test for it is my video, which has 3 million views and was shared widely.

Speaker 1

14:08

You don't put it on YouTube.

Speaker 7

14:10

Well, the video clips themselves are on our site and that's something that you can go on every day and see the same people every day, see their clips.

Speaker 1

14:18

No, Sam was saying you should have tested putting it on YouTube specifically.

Speaker 7

14:21

Oh, the clips, the 10-second clips themselves.

Speaker 6

14:25

I mean, I think the kind of format that we have on the website, where you kind of have this gallery of 10-second clips, and you can just kind of see them all and consume them all kind of in context and in sequence is like really powerful.

Speaker 1

14:35

So you have a view with a page with a whole bunch of little videos on it. That's right.

Speaker 3

14:39

And you

Speaker 1

14:39

can see from the beginning to end the person's progress.

Speaker 6

14:42

That's the most compelling part about it.

Speaker 7

14:44

If you envision like Paul Graham, I'm Paul Graham. I am learning

Speaker 1

14:48

to like pick which startups.

Speaker 7

14:51

I'm learning to pick which startups for Y Combinator for 100 days. Then you see day 1, day 2, day 3, and then as you hover over each video it just starts playing. So you can watch it for a second or for 10 seconds.

Speaker 7

15:04

We cap it at 10 seconds because I have a short attention span and I'm building this for myself.

Speaker 1

15:09

What do you think will be the most popular things? I don't mean the most popular things by number of people who do them. I mean, what will be the most popular things for third parties to come and watch?

Speaker 2

15:19

It's really a question parties

Speaker 1

15:21

like people who are not the people who are practicing What

Speaker 3

15:25

do you what you've said you built this for yourself? What do you want to watch? Like what are you excited about watching other people learn?

Speaker 7

15:30

I want to see a good story. I want to see someone who is struggling and is against all odds, doesn't think they want to do it. I want to see Phil Libin at his 3 AM hour saying, I'm out of money, and I just got an email from this investor.

Speaker 7

15:44

And I want to see video of that, rather than just hearing him talk about it. I think like today we...

Speaker 1

15:49

I don't think he would have used your system. No, seriously, not for like starting a startup.

Speaker 7

15:54

Maybe someone in this room will.

Speaker 1

15:56

More for learning how to dance or something like that, right? But what do you think will be, I mean what specific type, what genre of stuff? Will it be people learning how to dance?

Speaker 1

16:08

Do you think that will be the most popular stuff? Or will it be babies learning to walk?

Speaker 7

16:12

I think there's some, we're seeing some things.

Speaker 1

16:13

Because the babies learning to walk part actually sounds pretty exciting. Like parents would love to be able to document their kid's progress. I'll tell you the thing, if you don't have kids, 1 of the big problems about being a parent is the memories of the current kid overwrite the memories of the more recent, of the sort of recent past.

Speaker 1

16:33

No, like, I'm so sad. I can't really remember what my four-year-old son was like when he was 3. I see three-year-olds and I think, oh yeah, I remember when he was like that, but only vaguely because my God, I got this four-year-old like jumping up and down on the bed in my mind, right? They're very, if you wait until you have kids.

Speaker 6

16:54

I mean, I think there's going to be a number of real killer categories, which will be very interesting. The children 1 is certainly very, very compelling. When you see this kid crawling, learning to open a door, and then his parents hold his hands and he's taking baby steps.

Speaker 1

17:07

And you'd have videos that implicitly have these structure of sequences, but they're not organized that way. They're just on your iPhone in chronological order. They're not like the series of the kid trying to say some phrase or something like that.

Speaker 3

17:27

How good are the users at sticking with the whole hundred days of making a video every day?

Speaker 6

17:31

So good question. So out of all the users that we have, there's an average of around 18 videos uploaded per user. So I guess we have some people who actually are kind of earliest implementation of the product was send us videos via Dropbox every day.

Speaker 6

17:47

So we have some people now who are actually up to kind of in the 80s. So there's a guy beatboxing who we've got him from day 1 through to day 85, I think, and he's pretty awesome. What is beatboxing? Beatboxing, yeah.

Speaker 6

17:59

So.

Speaker 1

18:01

Yeah, exactly.

Speaker 7

18:02

My day 1.

Speaker 1

18:03

Yeah, exactly like that.

Speaker 6

18:04

So he like starts off and he's like not very confident, not very good, but you really see like over time the amazing improvement in him and that's like what we're trying to get at.

Speaker 3

18:12

Are people like encouraging each other to stick with it? Is the point of this that the community will make you be more likely to

Speaker 5

18:17

stick around?

Speaker 6

18:17

Sure, absolutely. So that's definitely part of it as well. So we have these kind of commenting and kind of propping features where people say, oh this was a really awesome day.

Speaker 6

18:25

Actually, I think like our most commented on and most kind of liked video, we've got somebody learned to unicycle And 1 day she uploaded a video where she had kind of a bad fall and kind of fell over. And everybody was like, oh, that looks really sore. But keep at it. Keep going.

Speaker 6

18:36

You're getting there. You're really

Speaker 1

18:37

making it. Can people make their stuff semi-private?

Speaker 7

18:41

Yeah. There's a feature to make all your videos private, because a lot of people, they don't want to share when they're going through it, but maybe once they're good they're...

Speaker 1

18:47

Or they want a group of their friends to be able to see it, like it's their kid.

Speaker 7

18:51

Yeah, that'd be an interesting thing for us to implement.

Speaker 1

18:53

You know, the kid thing, the kid walking is very different from someone teaching themselves how to unicycle. Don't be, don't like over-optimize too early. Like let it grow into whatever it's gonna grow into.

Speaker 1

19:05

Maybe it'll end up being kids are the big thing. Or maybe not, who knows? But be empirical about it, and don't wire in some outcome too early. Is it time?

Speaker 6

19:16

Thank you, guys.

Speaker 1

19:17

All right, you guys.

Speaker 3

19:18

Thanks. You're good.

Speaker 5

19:20

Good, well done.

Speaker 3

19:21

Bless you. Thank you. Thank you.

Speaker 1

19:24

Thank you. Guys. Sounds pretty good to you.

Speaker 1

19:29

Hey, Ryan.

Speaker 3

19:30

Hey, Paul.

Speaker 6

19:30

Hey, Ryan.

Speaker 5

19:31

Hi, Sam.

Speaker 1

19:33

You don't know how odd this is for us. This is the brother of someone we funded in the past. And except for having a beard, he seems identical.

Speaker 1

19:38

It's very disconcerting.

Speaker 5

19:42

Hopefully that's a good thing.

Speaker 1

19:44

Yeah. He meant yeah. All right. What are you working on?

Speaker 1

19:50

It says, oh, that's your username. What's the startup?

Speaker 5

19:52

It's called Flexport. We're the first licensed US customs brokerage built around a modern web application. A

Speaker 1

19:57

customs brokerage?

Speaker 5

19:58

Yeah, whenever you import a product from another country, you have to clear it through customs. What does a customs brokerage do? Collect tons of documents and organize them and file forms with U.S.

Speaker 5

20:08

Customs to clear your goods to show that this is a legal product and you pay the right taxes,

Speaker 1

20:12

et cetera. Is it 1 of these things where dealing with the government is so awful that you need like a specialized group of people whose whole job.

Speaker 5

20:19

Which is also a guild of licensed.

Speaker 1

20:21

Oh, they have to be licensed?

Speaker 5

20:23

Oh, yeah, heavily licensed. It takes years to get the license.

Speaker 1

20:25

So the government trusts them. Yes. They're not going to lie.

Speaker 1

20:28

Correct. Right. So The government can kind of rubber stamp the paperwork.

Speaker 3

20:32

You have to

Speaker 5

20:33

do an FBI background check as well to get the license.

Speaker 3

20:35

I see. And what do you actually do? You file forms for this employer?

Speaker 5

20:39

Yeah, so based on what the product is, there could be like 120 different forms you have to file. So we have to take what the product is, determine which forms are needed, fill those out for the customer, file them electronically with the government.

Speaker 1

20:50

So there are existing customs brokers, right? And you are gonna, somehow you're gonna take, you're gonna be an instance of software eating the world?

Speaker 5

20:57

Yeah, exactly.

Speaker 1

20:57

Like you're gonna eat customs brokers?

Speaker 5

20:59

Yeah.

Speaker 1

21:01

So what do you do? Like is it somehow scalable if you write software? Like what do you do differently than an existing customer?

Speaker 5

21:08

Well, first of all, we don't use a fax machine. Well, unless the customer really wants to.

Speaker 1

21:12

All right.

Speaker 5

21:14

So yeah, It's an online dashboard to allow you to organize all these documents and help you understand which documents are needed And then we actually collect those documents for you instead of asking you to go get it And then we'll file it

Speaker 3

21:25

so I can just come to a website type in what I'm importing and Have it come in the US and you'll take care of everything else.

Speaker 1

21:30

Yeah Will the Will the experience for users be as simple as a customs broker? Or are they going to have to do a little bit more work?

Speaker 5

21:39

No, no, way less work.

Speaker 1

21:40

Less work?

Speaker 5

21:41

Oh, absolutely. I mean, we do the work for you.

Speaker 1

21:43

But doesn't a human's customs broker like Sort of interview out of people what they're importing like the person says they're importing clothes

Speaker 5

21:49

We're not removing the human elements that we're pairing you with a licensed customs worker We have customs workers on staff, and it's a locations tool that like enable it's sort

Speaker 1

21:56

of like uber

Speaker 5

21:58

Yeah, I haven't used that analogy. It's kind of like teleporter for products instead of for people.

Speaker 1

22:03

OK.

Speaker 3

22:04

Yeah. Yeah. How much does someone pay a broker to import, like a million dollars of goods?

Speaker 5

22:09

It's usually not dependent on the value of the goods, but it's like between $100 and $300 per shipment. And there's 30 million shipments that enter the US every year and are filed with a customs entry.

Speaker 1

22:19

30 million.

Speaker 5

22:19

Yeah, and then that's just tip of the iceberg. So really, I mean, the logistics.

Speaker 1

22:22

How many of them use customs brokers?

Speaker 5

22:24

Yeah, use a customs broker.

Speaker 2

22:26

I mean, you can have a,

Speaker 5

22:27

if a big company will have a customs broker in staff.

Speaker 1

22:29

Yeah, I would think, like Apple

Speaker 5

22:31

probably doesn't use

Speaker 3

22:31

a customs broker. At a certain

Speaker 5

22:31

scale, yeah, you hire a customs broker. We'd like to make it so you don't have to hire a customs broker because our software is easier to use than maintaining that division of your company.

Speaker 3

22:40

Do you have customers now?

Speaker 5

22:41

Yeah, we have 3 customers right now.

Speaker 1

22:43

That are importing stuff.

Speaker 5

22:45

Yeah, we're trying to, we actually have a waiting list of like 300. The biggest oil company in the world signed up. We were a little scared of like creating an energy crisis, so we told him to hold off for a bit.

Speaker 1

22:54

We have a super tanker approaching the port of San Francisco right now.

Speaker 3

23:00

So How did you get those customers?

Speaker 5

23:03

So I was in the industry for like 12 years, and I know a lot of importers.

Speaker 1

23:08

Are you currently a customs broker?

Speaker 5

23:11

Personally, I don't have a customs worker license. I have a customs worker that works for me.

Speaker 1

23:15

I see.

Speaker 5

23:15

And they're kind of teaching me everything.

Speaker 1

23:17

So you guys, have you already been doing the manual version of this?

Speaker 5

23:21

So over the years, I've probably imported about 1,000 containers and cleared them through customs. Okay. My companies that I've worked with, worked for my brother's company is 1 of them.

Speaker 5

23:31

I used to work for my brother.

Speaker 3

23:34

So, yeah.

Speaker 1

23:34

So, you do know how to do this yourself?

Speaker 5

23:37

Yeah, sure.

Speaker 1

23:38

Why has no 1 done this before?

Speaker 5

23:41

Well, why the existing companies haven't done it before is kind of obvious.

Speaker 1

23:45

If you

Speaker 5

23:46

go to a customs broker convention, it's

Speaker 1

23:47

like, what's up? We're just

Speaker 5

23:48

a person by 40 years, probably. Yeah. Why no startups have done it?

Speaker 5

23:53

Well, first of all, I mentioned it's highly regulated. It's hard to get the license. And actually, until recently, it wasn't possible to clear a shipment except at your local port. So if you built a software startup to do this, you could only help people importing into the port of Oakland, unless you had an office in every port.

Speaker 5

24:07

Really? In 2007. Well, you're

Speaker 1

24:09

not doing the clearing though, aren't you just matching them up with a customs broker?

Speaker 5

24:13

No, no, we are a licensed customs brokerage. We actually do the clearance and file it electronically with customs.

Speaker 1

24:18

Okay, so you guys are kind of the customs broker of record.

Speaker 5

24:21

Yes We

Speaker 1

24:22

know it's not quite like uber.

Speaker 5

24:25

Yeah. Yeah, I didn't quite get that analogy to be honest

Speaker 1

24:34

You have the same mordant sense of humor as your brother, too. Office hours with him are always a little bit prickly. All right.

Speaker 3

24:45

So how are you going to get all of the importers to switch to this?

Speaker 5

24:51

Presumably they have

Speaker 3

24:51

these long-standing relations with their customer brokers. Yeah, and

Speaker 5

24:55

the importers to a large degree have this figured out by definition. They've been doing it. They know how to import goods.

Speaker 5

25:01

But every time you import a product into the U.S., it's public record, that product. And my last company actually sells that data. We aggregate every time you import something. We've collected 300 million of those shipping manifests and sell subscriptions to access it.

Speaker 5

25:15

So we know every single importer in America.

Speaker 3

25:18

So you have the customer list.

Speaker 5

25:19

Yeah, we have every importer in America in a database.

Speaker 1

25:22

Wow, that's very convenient. Wow. So how far along are you?

Speaker 1

25:29

Have you got sort of this beta version that

Speaker 5

25:33

kind of works? Yeah, there's like the MVP product. It's a web app.

Speaker 5

25:36

You can sign up for it. We're not taking new users right now, but

Speaker 2

25:41

that's just

Speaker 5

25:41

a matter of me wanting to feel like everything's super tight and nice user experience.

Speaker 1

25:45

But it has the functionality.

Speaker 3

25:49

How many shipments have you done with your first 3 customers? How many inbound shipments have you done?

Speaker 5

25:54

So the first clearance is happening in November. So we've got these guys lined up ready to go. But the first shipment, actually the government shut down 3 weeks ago, stopped us from, they won't take a new broker, the guy whose job it is to onboard us was furloughed.

Speaker 5

26:06

But he was back in his office and I filed the forms on Monday.

Speaker 6

26:11

I was

Speaker 5

26:12

hoping to have that done and be able to come up on my YC app and say, hey, cleared our first shipment already.