70mph Drone Deliveries, 125% Tariffs & What $10M Exits Really Mean | E2109

Key Concepts

• Reciprocal Tariffs: Taxes imposed by one country on goods imported from another in response to similar tariffs.
• Startups & Tariffs: The impact of tariffs on startup businesses, including potential layoffs, bankruptcies, and the need for contingency plans.
• Trump's Trade Strategy: Characterized as chaotic and unpredictable, involving counter-punching and declaring victory even when backing down.
• Singles and Doubles: Small exits in the startup world that benefit founders and employees, allowing them to reinvest in new ventures.
• Liquidation Preferences: Contractual clauses that dictate the order in which investors are paid out in the event of a sale or liquidation.
• Drone Delivery: The use of drones for commercial deliveries, focusing on Zipline's partnership with Walmart in Dallas.
• Founder Fridays: A program for founders to connect, share experiences, and provide mutual support.
• Self-Directed Healthcare: Healthcare solutions that empower individuals to manage their health through technology and data.
• AI-Powered Advertising: The use of artificial intelligence to create contextual and personalized advertisements.
• All-in-One Communication Platform: A software solution that combines chat, video calls, task management, and other tools into a single workspace.

Tariffs and Their Impact on Startups

• Reciprocal tariffs imposed by the US led to global responses, including increased tariffs from China and the EU.
• Trump threatened a 100% tariff on TSMC if they didn't build in the US.
• The situation is described as "bad and getting worse," with market volatility and uncertainty.
• Startups need to block out the noise unless directly impacted and have Plan B and Plan C.
• Potential consequences if tariffs aren't resolved include:
  • Mass layoffs, furloughs, and resizing (right-sizing).
  • Companies stopping giving guidance on earnings and revenue.
  • Bankruptcies, especially for those already in precarious financial situations.
• Land Rover/Range Rover decided to stop sending cars to America due to the 25% tariff.
• Trump initially raised tariffs on China to 125% but then paused and lowered reciprocal tariffs to 10% for other countries.
• This was predicted by Jason Calacanis, who stated Trump would "declare victory" and back down.
• The EU is making plans that pull them away from the US, potentially harming American technology hegemony.

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• Brex is used by one in three US startups.
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Startup Deals and Exits

• List (LYST), a British online fashion search engine, was sold for $154 million in cash to Zoa, a Japanese-based fashion company.
• This is considered a "singles and doubles" exit, which is beneficial for founders and employees.
• Singles and Doubles:
  • Founders and employees typically do well in these scenarios.
  • VCs may only get their money back (a "push").
  • Provides founders with "FU money" to start new ventures.
• Liquidation Preferences:
  • Investors may demand a 2x liquidation preference if the company is struggling.
  • This means they get 2x their investment back before other shareholders.
• Second and third-time entrepreneurs with a win under their belt become particularly dangerous.
• Globalization is a good thing because it provides more buyers for startups.

Zipline and Drone Delivery

• Zipline, originally focused on delivering medical supplies in Rwanda, has pivoted to commercial deliveries.
• They are partnering with Walmart in Dallas for drone delivery services.
• Zipline's drones use a tether system to lower packages without landing.
• The drones can carry about 8 lbs and travel about 10 miles.
• Deliveries are estimated to take 3-5 minutes as the crow flies.
• The drones can fly at 30-70 mph.
• Potential issues include noise pollution and public safety concerns.
• The possibility of point-to-point drone delivery in urban environments, such as from cloud kitchens to rooftops, is discussed.

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Founder Friday Pitches

Matchup 1: New York vs. Philadelphia

• Life Stack (New York): An AI calendar for health and productivity that syncs with wearables to schedule tasks based on energy levels and circadian rhythms.
  • Targets health-conscious professionals and people with ADHD.
  • Growing through organic content and influencer mentions.
• Burbal (Philadelphia): An AI-powered wellness platform that utilizes hypnosis to help people create change in their lives.
  • Focuses on trauma and creating new neurological pathways.
  • Has four components: coaching, binaural beats, activities, and AI-generated custom tracks.
• Decision: Life Stack wins due to a larger TAM and broader appeal.

Matchup 2: Los Angeles vs. Yeravan, Armenia

• Arcana (Los Angeles): A content-based advertising platform that helps developers monetize their GenAI applications without compromising the user experience.
  • Uses deep contextual analysis to integrate hyper-personalized native ads.
  • Shares ad revenue with developers.
• Tapun (Yeravan, Armenia): A brain for machinery and an environment for equipment builders to generate end-user software applications without writing a single line of code.
  • An AI platform that allows builders to deploy their custom AI models directly to controllers.
  • Claims to enable manufacturers to build machines five times faster while cutting R&D costs in half.
• Decision: Tapun wins due to its revolutionary potential and larger market opportunity.

Matchup 3: Denver vs. Chicago

• Summer West Whiskey (Denver): A whiskey brand that prioritizes easy drinking with lower proofing and smoother mash bills, targeting new drinkers aged 21-35.
  • Features approachable and unique branding.
• Mom Sub (Chicago): A child care marketplace service that matches parents with trusted neighborhood child care providers.
  • Handles background checks, scheduling, confirmations, and payments.
• Decision: Mom Sub wins due to addressing a bigger problem and having a larger market opportunity.

Office Hours with Sergey Poe of Orchestra

• Orchestra is an all-in-one communication and productivity workspace for modern teams.
• It combines tools like Slack, Notion, and Zoom into one platform.
• The biggest challenge is the go-to-market strategy in a competitive market.
• The company is fully remote, with Sergey spending time between San Francisco and Barcelona.
• The current strategy is a founders-led approach with warm outreach and comprehensive sales process.
• Suggestions include:
  • Creating a free account for startups going through accelerators.
  • Offering a landing page with free access for startups under a certain revenue or employee threshold.
• Key pain points addressed by Orchestra:
  • Channel fatigue in Slack.
  • Lack of connection between communication and tasks in Slack and Notion.
• Call to action: Check out orc.so and provide feedback.

Synthesis/Conclusion

The episode covers a range of topics, from the impact of tariffs on startups to innovative solutions in drone delivery, AI-powered advertising, and all-in-one communication platforms. It highlights the importance of adaptability, strategic planning, and focusing on customer needs in the face of uncertainty. The Founder Friday pitches showcase the diversity and potential of early-stage companies, while the office hours segment provides valuable insights into the challenges and opportunities of building a successful startup. The overall message is one of resilience, innovation, and the power of community in the startup ecosystem.