[man 1] There's a lot of nervous anticipation.
I'm a nervous wreck.
If you think about the top of the mountain, it's too high.
You gotta just think about one little thing at a time.
[woman 1] It's important to me that this app succeeds
because every day we hear from people
about how much it fundamentally has changed the quality of their life.
[man 2] My goal is to be able to create products
that billions of people are able to use.
And if we're able to change communication and behavior,
that's gonna be so exciting.
[Zane] You have four advisors down there.
It's about making sure they understand how passionate you are.
You have 60 seconds on the escalator
to get them to choose to be a part of your project.
You'll know because at the end of your escalator ride,
they'll either go green or red.
If you get four reds, you go home.
But if you have at least one green,
you'll get to continue your pitch and tell the story of your app,
in the hopes of partnering with one of the advisors.
If that happens, you'll spend the next six weeks honing your app
for a chance to earn a share of over ten million dollars
in venture capital investment
and featured placement on the App Store.
[pulsing techno theme]
[bell rings]
[man] Please hold-- Please hold 20 seconds.
[Zane] How are you guys? Welcome. Poncho is the name of your app.
So you're personalizing the weather.
[Kuan] We're Poncho. We've got you covered.
Oh! "Poncho, we got you covered!"
-You get it. -There you go, man.
[Zane] What?
-I'm Ashley D'Arcy. -I'm Kuan Huang.
-We are Poncho. -And we are Poncho.
[Kuan] I was born and raised in China.
And when I was at college, my mom was my weather service.
She would remind me to bring umbrella or bundle up.
So it was very personal,
rather than what most people get today from a weather app,
which is just numbers.
[Ashley] As a poet from Brooklyn, New York--
[chuckles] There's not a ton of jobs out there for poets.
And I never thought that I would end up in tech.
But Poncho has provided the perfect format
for the kind of writing that I do.
[man on PA] Okay, guys. Here we go. Big smiles.
In 3, 2, 1. Action.
Ever wish you knew ahead of time that it was gonna be a bad hair day
or a nice morning for a run?
Well, look no further.
We're Poncho! We've got you guys covered!
[all laughing]
Poncho is a cat from Brooklyn
who sends you funny, personalized weather forecasts.
It's like being friends with the weather man.
So instead of just giving you charts and numbers,
he's giving you a forecast
based on what he knows about you as your friend.
We want to make Poncho
the global weather personality for the mobile generation.
Who wants to be friends with Poncho?
[whispers] Poncho's cute.
[tense, pulsing music]
-Hey, Poncho guys. -[Ashley] Hey.
-[will.i.am] Can we see your app? -[Ashley] Yeah. Let's do it.
-I'll show you... -Let's meet Poncho.
...the way it looks the first time you go through it.
So there's this conversation that happens between you and Poncho.
This is the personalization part.
So he asks you what you want to know along with your weather.
I have allergies, I'm worried about bad hair days,
and I have a dog that needs to go out in the morning.
That's so New York, the alternate side parking. I love that.
[Ashley laughs] Yeah.
So you do that one time,
and then this is what you see when you open the app.
So we have severe weather warnings.
If there's anything going on that you really need to know about,
that's the first thing you see on your screen.
And then we have an entertaining forecast here
that balances information and a little bit of editorial content.
And then you have your forecast here.
We have the actual weather, as we call it,
which has a 24-hour forecast,
a five-day forecast,
and then here we have a little bit of commerce integration.
Do you have people currently shopping from the app?
We just deployed it.
We're gonna probably get stats within one or two weeks.
-Okay. -[Gary] Where do the lines blur here
between utility and media company or content play?
We think of ourselves as a media company.
We want to deliver you the information that you need,
but we have a fun time doing it.
How are you guys introducing the AI into a weather app and--
Is it a chat bot?
-Yes. Great question. -Yes.
Basically, during a text message conversation,
you can call out Poncho within that conversation.
And give me the state of the union.
Help me with how long you've been out,
what's the state of the business.
We start with e-mail back in 2013.
And then we expand to app.
And we also, um, Facebook Messenger app with a chat bot.
How much have you raised already?
We raised two million from a few VC on the East Coast.
-So where's that money been deployed... -At what valuation?
...and why are we here now, and how much are you looking for?
We hired engineers to build the NLP AI machine learning engine behind Poncho.
So people can actually start more and more conversations with Poncho.
Kuan, what about the numbers?
You've got a lot of learnings from this last two, three years.
I want a real sense of where you're at.
So for e-mail, we have 60,000 daily active,
based on the weather.
-Bad weather, we have more. -Yeah.
On text message, we have...
25,000 people getting text message every day.
On the app front, we're looking at 10,000 to 20,000 daily active.
So how are you going to get people--
Like, people are more likely than not gonna just put in "weather."
Right now, most of our growth strategy is outside of the App Store.
We grow from e-mail, text message, and chat bot.
How much more money are you looking for?
We're looking two to five million.
-Two to five million more? -[Kuan] Two to five million more.
We want to hire more engineers.
Can you show me just how heavy the AI part is?
Not right now. That's what we're planning to do.
There are so many things coming around the corner in a couple of months,
you better have that tech
to be able to compete with something that is cute and fun and lovable.
-This is great. -We have that tech.
-We have natural language processing-- -You gotta show me that.
[Ashley] Yeah, we just don't have it in the app yet.
-See? But then you ain't built it yet. -Well, I think--
So that's the reason why I'm staying red.
So, you guys?
Are you still in, Gary?
[pensive instrumental music]
Kuan, can I ask you a question?
-Three years, two million bucks. -Mm-hmm.
And what you were saying with the two to five million,
your opening line was "more engineers."
-Well, I-- Actually-- -You know, to me that's concerning.
And I think the classic mistake of a lot of tech-driven companies
is they don't realize they're in the consumer business--
And the answer to things are more tech, more tech.
'Cause you're gonna make some incredible message bot
that nobody cares about.
Because if they don't know about it, you're dead.
Guys, I'm really sorry, but I have to be out.
[Jessica] I think it's adorable,
and I think my kids would have fun starting their day with Poncho.
I'm just concerned how you're gonna get my kids on it.
In terms of...
I just want a little bit more specifics around marketing
and around exactly focus on what it is that you're doing.
So that's why I'm out.
[Gwyneth] This is really a lifestyle app.
I mean, I think you could probably do it a little bit better.
I think there has to be a little bit more thought around
how to make it less obvious--
-the commerce piece. -Gotcha.
And I wanna know how much more illustrated it can be,
and there probably needs to be some honing around
what are the next steps.
[pensive instrumental music]
But I think it's really a great idea.
And I think I can definitely help you with that.
[Gary] Yes!
So would you like to have me as your partner?
-Yes! -Absolutely. Thank you.
-[cheering] -Thank you.
[Gwyneth] All right. Awesome.
-Thank you very much. -[Gwyneth] Thank you.
[Ashley] You're the one we wanted. We're so excited.
-[Gwyneth] I'm so impressed. -[Gary] Good luck.
-[Kuan] See you soon. -[Gary] Bye-bye, guys.
-[Ashley] Yes. -Yes. Awesome!
[mock grunting]
Nice job, Gwen. I think that has a shot.
I think they have a shot, too.
[Zane] While Poncho was able to impress the advisors,
not all developers were as lucky.
Pundit is a voice messaging app
where you can record entertaining messages
and add things like audio filters, background tracks, and more to your voice.
[high-pitched voice] Hi, Mary. Did you get trashed last night?
Oh, my God. It's so funny.
Get 50 million users, and I promise you Zucks will take notice.
Thanks, guys.
Guardian Circle is a personal safety network.
Ask your friends, family, and neighbors to become your guardians in the system.
Help me build the new 911 for the 21st century.
I just feel like it's really hard to make something that sticky.
-Thank you so much for coming. -Good luck to you.
Whenever we have to buy something,
we are forced to shop with static, drab photos
with no human touch.
Popshop Live brings today's desired experience to online shopping.
Now everyone who has a product
can start their reality show on Popshop Live
and sell directly to a global audience.
[stammers] I just don't have the heart for it.
Seriously, we wish you all the luck.
Thank you for coming.
-[bell rings] -[sighs]
[man on PA] All right, everybody. We are moving on. Thank you.
Has it reached a tipping point now for us as people
whereby we need our phones to tell us to stop
and to take a moment and to reassess and to reboot?
People just have more and more stress.
Especially younger generations.
You know, average US adults, 70% of them are stressed.
It's eight out of ten millennials.
So for some reason, whether it's the environment,
whether it's student debt, whatever, but--
Stress is just more prevalent.
-I'm Jamie Price. -I'm Julie Campistron.
[together] And we're the cofounders of Stop, Breathe & Think.
[Jamie] People are incredibly stressed
and give themselves very little time
to wind down and get in a calm place.
I have a law degree, but instead of practicing law,
I went straight into investment banking.
So I was in New York.
And I just felt like I was missing something bigger.
[Julie] I've been in the Internet space for about 18 years.
I was the head of marketing for Yahoo Music.
But I quit my job last year to further something that I was passionate about
and that I felt really could help people and have a positive impact.
[man on PA] Okay. Here we go. 3, 2, 1. Action.
[Jamie] Anxiety, stress, and depression are on the rise.
We're cofounders of an award winning app
called Stop, Breathe & Think,
which allows you to check into how you're feeling
and try short meditations tuned to your emotions.
With zero marketing, we've had over 2.2 million user downloads.
-And our vision is to create... -Wow.
...the number one emotional wellness brand for millennials.
Anxiety, stress, and depression are pervasive,
and every day we hear from users
about how taking five minutes to stop, breathe, and think
is completely changing their lives.
And this is what inspires us to take the app to the next level.
[tense, pulsing music]
[chuckles] All right, ladies. Looks like I've saved you for a few minutes here.
-Thanks. -[Gary] You're welcome.
So before we get into the app, uh,
why don't you tell us a little bit about yourselves?
I was an investment banker and just realized I was missing a sense of meaning.
So I left my job.
And that's when I met a Tibetan Buddhist lama,
and he started teaching me how to meditate.
And he asked me to help him figure out
how to try to communicate it and teach it.
So I immediately said yes and joined him
and been working on that ever since.
Maybe we can just do a quick demo,
because I think it kind of speaks to how it works.
So the first thing the app kind of prompts you to do
is to check in with how you're feeling.
Mentally and physically.
And then what emotions you're dealing with.
So right now, I'm excited,
but I'm also pretty darn nervous.
And basically recommends short meditations
that are based on those emotions.
That emotional check-in I did at the beginning,
-we have six million of those. -Yep.
So people are really using that feature to check in with themselves.
And we've seen that really helps them get into the practice,
because anybody can relate to how they're feeling.
Not everybody can pick a meditation from a big meditation library.
-Can you play one of them? -Sure.
[woman's voice] Relax, ground, and clear.
[sitar and tabla music]
Close your eyes and rest your hands on your knees.
Bring your awareness to the touch of your body on your seat.
Feel the weight of your body on your chair or cushion.
Let go of all of the tension in your body.
[inhales] I could use this thing.
This is a real space.
[music continues]
So how are you now?
You can do a check-in post meditation
and again kind of talk about your emotions.
So how long has this app been out?
We launched in January of 2014.
What's your current demographic?
Eighteen to 34 is over 50% of our audience
and 70% female.
And how many daily active users do you have?
About 20,000.
-A day? -Yeah.
-[Gary] And monthly? -200,000.
Julie, Jamie, what's the business model against this?
-Subscription. -Okay.
How so? Right from the get or freemium? Give me some details.
Yeah. The app was, again, born out of a nonprofit.
So all of it was free.
And we actually two weeks ago just launched our subscription.
So we kept everything that was free, free.
It was really important for us that the basics of the practice
were available to all.
'Cause accessibility for us is really important.
This is a big issue.
Making sure everybody can understand
how this can impact them for the better is really important.
And then we basically developed a whole new set of content and features
that are subscription based.
But what would keep the other companies that are already out there,
that are well funded and have millions and millions--
Jess, you know what's interesting? These guys are one of the leaders.
Which I think is super interesting.
And they don't-- Your competitors don't have that check-in, right,
where you say "I'm sad"--
And I think it's hard to retrofit.
It's more of a three-minute, five-minute--
And also it's so specific.
[Gary] They just have real success.
What are you looking for in terms of finance?
What's going on here?
We think that we need between three and five million as a Series A
to kind of fuel the marketing plan and really get out there with the brand.
-That's what we're gonna be looking for. -[Gary] Thank you. I, uh--
I swiped right, but just a couple weeks ago,
I made my biggest single investment
in something that, after I listened to it,
I feel is close enough.
I was looking for the angle to not make me feel conflicted,
but it would really be wrong for me to mentor you
when that's what I've signed up for already.
And I've given my word, so unfortunately for me, I'm out.
[pensive electronic music]
[Jessica] Um--
What I like about this is
I think Headspace is doing a really good job for that core consumer.
I agree.
But I think this is tackling a different consumer.
Every school should be teaching this.
I'm actually gonna change to green.
-And I invested in Headspace. -[Jamie] Thank you.
Thank you.
So are you guys interested in taking Jessica as your--
-She was our number one choice. -A hundred percent.
Then that makes it easy. Congratulations.
-[Jessica] There you go. -I can't believe it.
[Julie] Thanks, Gary, for keeping us alive.
Like, wow, what a trouper.
[indistinct]
[Jamie] Thank you.
All right. Thank you guys so much.
Oh, my God.
Great, great app.
You got a great one.
[man on PA] Thank you, guys. We're gonna take a stage five.
Stage five. Yes.
-[Zane] Hi. How you feeling? -You make me calm for some reason.
-That's my job. -You make me surprisingly calm.
-That's good. I'm pleased. -You have this very welcoming demeanor.
-Thanks, Jon. -[laughs]
I'm Jon Steinberg, and I'm the founder and CEO of Cheddar.
I've done a lot of live TV.
I do two to three hours live every day of my life.
I just felt like if I put young people on the air,
in a dynamic environment,
and I covered the most interesting stuff in the world,
that I could create
the best business news and technology media company in the live space.
Period. End of sentence.
My philosophy of journalism is not to give the people what they want.
It's to give them what I want.
-[man on PA] 5, 4, 3... -[bell rings]
...2, 1. Doors.
Hi. I'm Jon Steinberg.
I was president and chief operating officer of BuzzFeed
-from 2010 to 2014. -Wow.
My company is Cheddar, like the cheese.
It's a live news and entertainment network
that covers the people, companies, and technologies transforming our lives
and delivered on an iOS platform.
We're now live six hours a day
from the trading floor of the New York Stock Exchange
and a glass street-level studio in the Flatiron Building.
Hundreds of thousands of people watch us live every day
on Facebook, Twitter, Sling TV, Amazon and other platforms.
But our app has lagged.
It is the worst part of our experience.
We're looking for an advisor to work closely with us
to make the best app available to all of our possible users.
[tense, pulsing music]
[Gary] Nice. That's pretty good, Jon.
Why don't you go into the app, and then I think we'll start?
This is the app. It's very rudimentary.
We have the full shows in here.
Here's Sallie Krawcheck, who's one of the top female leaders on Wall Street.
She's dope.
It's just a consumption experience right now.
Very, very bare bones. Needs to be rebuilt from the ground up.
I think that, as consumers of news,
we have a real trust issue.
It's incredibly difficult to establish that trust.
So how do you plan on solidifying your position?
Covering international affairs and politics, there's no margin for error.
We don't have a team to do that.
We're a long way from doing investigative journalism.
Right now, we cover a story, we ask people their opinions,
the stakes are relatively low for damage.
How much have you guys raised, and how much are you guys trying to raise?
We've raised 13 million dollars to date.
We'll do two million dollars in revenue this year,
doing a whole new form of native advertising.
And I'm looking to do a big round in Q1.
With that said, I'm open-minded.
I want one of you guys involved, and we could do--
-What's a big round mean? -Twenty million.
-And you've made two? -Yes.
By the end of the year, we will have booked two million dollars.
We have four large advertisers we work with today.
Who in the hell came up with Cheddar, 'cause that's some hip-hop [bleeps].
It's some hip-hop [bleeps].
I named it Cheddar because I've always loved cheddar cheese
and thought that it was funny.
And the Jay Z line, "I check cheddar like the food inspector"--
Like I love that line, and it rattled in my head.
This a tech play or is this a content play?
-It's a media company. -[Jessica] Content. Media.
-It's a media company. -So media company.
It's heart. It's art. It's truth.
-It's culture. -And culture...
-Yes. -...in your positioning.
So we live in this world of, like, B to B.
And, like, B to C.
Like, business to consumer.
There is no P to P, which is people to people.
Mm-hmm.
[Gary] I think it's time to wrap this up
and see if we can make something happen here.
Jessica, are you still green?
I think this is fantastic.
But I kind of feel like there's other people
that are just gonna probably do better for you, what you need.
I'm gonna be out.
Okay.
This is--
You built an awesome company, and you're about to build another one.
And first mouse to cheese usually gets killed by the mousetrap.
-[Gary laughs] -But you're not the first mouse.
Right. I'm a late mouse.
My thing is, do you believe it's gonna work?
Of course I believe it. With every ounce.
'Cause I believe the things that I do are gonna work.
Your gold boots work for sure.
When they up your ass, 'cause I'm about to kick it.
-[all laugh] -But what I'm saying is...
I'm staying green.
[Jon] Good. Thank you, Will.
I think news is at a very interesting inflection point.
There's a lot of talk about news on Facebook being discredited,
about news being so biased.
So I think there's a huge opportunity for a big one here, so I'm gonna stay in.
I think that, out of all the four mentors here,
we cross over with the biggest similarities,
and the things that I bring most to the table
you've got at least on third base.
And for that reason, I'm out.
-Okay. -All right. Gwyneth and Will are in.
Who are you going with?
I see so much that each of you could bring, and, uh--
I'm getting a lot of excitement, interest,
challenging, debate, passion from you, Will.
I'm an energetic guy, and I need an energetic advisor to collide with me.
So Will, I'd be honored if you'd be my advisor.
-[Gary] All right. -Oh, cool.
-[cheering] -Hug it out. Hug it out.
[will.i.am] Woo-hoo.
[Gary] Gettin' that chedda.
[Jon] Thank you. So excited.
Such a cool company.
Thank you, guys. See you, guys.
-[bell rings] -[man] All right. Advisors are clear.
[Zane] With six weeks until their final pitch to the venture capitalists,
the developers move on to an accelerated incubation phase.
Their goal: to make their businesses bulletproof
before they ask for funding.
Jon meets with Will to discuss Cheddar's strategy.
-How much are we trying to raise? -We've raised 13.
So how much are we trying to raise with Lightspeed?
Five to ten from Lightspeed.
Overall, you're trying to raise 20 million.
That's right.
So how do you vision me helping?
I want you to push the creative style and look and feel of how it should be.
-Guide the design. -Guide the design, yeah.
I want you to tell me, "The colors are all wrong.
It should look like this. You should lay it out like that.
You need more of this type of content."
I want you to, like--
When I look at your album covers, even the way your logos are--
I want you to stylize this for me, help me a bit with that.
Jeremy Liew, who's the lead partner at Lightspeed,
bought a piece of Cheddar in the beginning.
But the app has not gotten a new UI.
And I'd like to be able to show Lightspeed a few ideas that are truly radical.
The first thing I would need is
-just wireframes for my guys to-- -Yeah. Okay.
How much freedom do we have?
I don't know. How much freedom do you think you should have?
-Not too much. -Okay.
Because in an app, too much freedom doesn't always bring the best ideas.
I like pressure. I like--
I'll give you the constraints to what we need it to do.
All right, great. We have some work to do.
We got some work to do. Good.
[Zane] Ashley and Kuan arrive to Goop headquarters,
where they tell Gwyneth about a new growth strategy
for their weather app, Poncho.
If you had to tell me in a nutshell, like, "This is who we are,
this is what we're trying to do, and this is what we believe"--
Like, what is your mission statement?
The mission statement, basically, we want to help you to start your day
in a very entertaining way.
Okay.
Poncho's your friend, a trustworthy friend.
And he will-- If you need help, you will go to Poncho.
That's sort of our mission statement for consumers.
Think of all of the ways
that somebody who's waking up first thing in the morning
can be served content, product, information.
The way we're thinking about commerce is--
What are things people would use on a daily basis?
So a toothbrush is one of those things.
And the way we introduce that is not just, "Buy this stuff."
It's more, like, "How often do you change your toothbrush?"
Then we can recommend product based on the answers.
Contact lens, toilet paper, anything that on a daily basis people use.
We think that's gonna be how we start the commerce angle.
In order to raise venture capital money,
the number one thing the VCs are gonna ask you is about growth.
We have to figure out monetization.
Otherwise they're not going to invest in us.
Period.
So, yeah. Kuan is ready to get into commerce...
-I like it. -...and for me, from a content side,
I'm just hesitant.
I don't want it to feel spammy.
I want people to share these in private messages.
I want it to feel at home.
-So, I just wanna make sure-- -But this is why if you--
Why the way in which you contextualize things is everything.
Because if you're just, like, "Buy a toothbrush"--
It's, like, "What is this?"
If somebody feels like they've learned something,
and you've added something to their lives,
and that you've taught them something that they can tell a friend--
-Yes. -It's huge.
-Mm-hmm. -It's huge.
And then the transaction is just a transaction.
It's actually adding something to their lives,
as opposed to, like, pushing something at them.
[Gwyneth] She's not a salesman.
So I empathize with her reluctance to adopt that part of the business.
But an ad sales business is a great way to keep the lights on.
I love their concept,
but I think they still need more clarity around what the business actually is.
[Zane] Jessica invites Payal Kadakia,
founder and executive chairman of ClassPass,
to discuss Stop, Breathe & Think's priorities before the VC pitch.
Stop, Breathe & Think--
Our mission is to help the world find peace of mind every day.
-Okay. -We've also been in discussions with--
How do we extend the brand to other types of audiences?
So right now, this is very strong with 18 to 34,
although we also have 15% of teens.
There's a huge opportunity with parents and kids.
And we already have a brand that's pretty playful,
that has kind of that lighthearted tone of voice.
The emotions really make it youthful.
And that flow of checking in with how you're feeling
and then getting activities seems very well adapted to kids.
My kids, they've asked several times,
this week even,
if they can do the sleep meditation.
And my eight-year-old was, like, "I don't want you to do it with me, Mommy.
I just want to download it on my app so I can do it by myself."
And I'm, like, "Okay."
That's awesome.
It's engaging. They're in.
-That's great. -And they're into it.
Do you think if we did the kids direction and the adult direction,
do they have to look the same?
I think they would have to feel connected.
I would like to see them really focusing in on children.
I don't think that you lose the parent
or the adult.
I think you just have to address children.
One of the things we were kind of also thinking of is--
What we want the takeaway to be when we pitch is really...
If you're convinced that this is a huge market,
which, obviously, we're convinced of,
and there are so many signs pointing to it...
Yep.
...we're just such a perfect, like--
Right. You have to convince the person it's gonna be you guys.
-Exactly. So-- -[stammers] Exactly.
It's really, like, "Wow. These two girls are gonna figure it out.
They're not gonna stop until everyone in the world is meditating." Right?
[Payal] Jamie and Julie have done an incredible job
in really getting customers engaged with their app.
And really, they-- It's coming from their heart.
Emotional wellness is gonna be the next big frontier.
[Payal] But going into a VC meeting is like going into war.
Whatever comes at you, you have to be prepared for.
But you shouldn't be surprised.
And that's gonna come from you being very well rehearsed, prepared,
and knowing your business inside out.
[Zane] With just two weeks until the VC pitch,
Gwyneth arranges a meeting for Poncho with Alex Chung,
founder and CEO of Giphy,
to discuss their monetization plan.
[Ashley] We have been working with this idea
of making content around product recommendations.
Do you want to grow revenue?
It's really hard, because if you start making revenue,
your startup's gonna be valued at a multiple of the revenue,
and in retail, probably 1X, 2X.
Which is not what you want your startup valued at.
Because you have way more possible reach,
and your brand can be so much bigger than that, right?
So you don't think we can actually use monetization to fund our growth?
You need to be a magnitude bigger in some dimension.
You need ten times more users or you need ten times more revenue, right?
It can't be like, "We're gonna do all these things,
and by selling toothbrushes, we're gonna get more users."
But if you're selling toothbrushes,
where you're gonna make ten cents a toothbrush?
You have to sell, like, a billion toothbrushes.
[all laughing]
You're not gonna be able to pull that off
with just a couple million dollars in funding.
Hearing Alex say that a revenue plan might be a distraction,
I'm stressed about it.
It's been a driving force in redoing the app,
and our entire plan has been about monetization.
So now getting this feedback from Alex right before the VC pitch
makes me just feel overwhelmed.
[Jamie] How many of you have ever felt nervous,
like butterflies in your stomach?
My tummy is like, "What's happening?"
How do you handle it?
We have a prototype of a kids' app that we developed in two weeks.
I feel frustrated.
How do you think doing something like this can help you?
Getting this prototype in the hands of kids--
It's was very obvious. They are stressed.
And we really hope that we can get feedback
in time for the Lightspeed pitch.
It's definitely going to be, you know, a lot of work.
Hey. Jon. How are you? Thank you for working on this.
-Yeah. -Jon.
[Jon] I'm pretty excited to see these designs from Will.
And I'm hoping that they're good,
because we don't have a lot of time to go back to the drawing board.
[man] So the new home page would look like this.
-Your live video. -[Jon] Yup.
Will's design team has a number of good ideas for the app
that would make it more streamlined and visually stimulating.
We're down to crunch time here.
And if we don't show Lightspeed a dramatic improvement,
I'm not gonna be able to push for the higher price I want on the company.
He talked about monetization.
And he thought that would be a distraction from us growing users
and making Poncho an icon.
Just one week ago, we were talking about monetizing Poncho.
And now, we're about to pitch, and--
It's not even part of our deck.
We basically think of ourselves as The Today Show for the mobile generation.
Right.
It's a risk, but having the reassurance from Alex,
who's worked with Lightspeed and has a super successful company,
we're pretty confident about it.
It's a bigger play, I think, ultimately.
Go big or go home.
-Yeah. -[Kuan laughs]
[Zane] Having worked with their advisors for six weeks,
the developers arrive
for their final pitch to Lightspeed Venture Partners.
Lightspeed was the first investor in Snapchat
and currently has over four billion dollars under management.
[chattering]
I think as they start to question you,
and you feel pushed up against a wall,
instead of answering so quickly, take it in.
Because you're gonna have pushback. You're gonna have challenges.
That means they're interested.
[Julie] We are feeling a little bit overwhelmed and nervous.
We've come such a long way in such a short amount of time.
If Lightspeed didn't see the opportunity and didn't give us that ability
to really accelerate our reach and accelerate our growth,
that would be incredibly disappointing.
[Jessica] Here we go.
[tense, pulsing music]
[Jessica] Hello, everyone.
This is Jamie and Julie
from Stop, Breathe & Think.
[Jamie] We are an award-winning platform
that delivers an emotional wellness experience
to our users every day.
And it's our vision to help the world find peace of mind.
Meditation is one tool,
but thinks like yoga, acupressure, or journaling
with cognitive-behavioral therapy
are all invaluable in supporting an individual on their path to peace.
So we offer that variety of content
in a way that no one else does beyond meditation.
It came from trying to teach teens to meditate.
-That's awesome. -So--
Kids are very close to our roots.
And we had definitely in mind to do at some point an offering for kids.
And a few stars have aligned that have really accelerated that timeframe.
One of them was Jessica's passionate plea for us to do something.
We are planning an MVP very specific to kids.
I can show you what the prototype of that looks like.
This is very much taking cues from how the main app works today.
But it's obviously a lot more kid-friendly,
where you're doing the check-in with the emojis.
You're getting...
-kids-adapted activities. -That's cool.
And then you can do your check-in after.
You have kind of instant gratification, for you guys who have kids.
They want to have the sticker right away.
As they're going through this, I just want you guys to know.
My eight-year-old wants to get points.
Like, she's sitting there in her room, doing as many of these as possible.
We're super excited about this part.
To be clear, is that a separate app for you guys,
or is that gonna be inside the main Stop, Breathe & Think app?
Separate, but we're gonna be promoting it from the main app.
[Nicole] And what's your ask, Julie?
So, we're looking to raise five million dollars.
It's really to fuel a growth plan, right?
We have a great product,
we have a unique vision that we started executing on.
And there's nobody really specifically targeting this.
This is not a big departure from where we are.
It's where you started.
-Right. Exactly. -That was what I said.
How many people are in the company?
-Eleven. -Eleven.
How many engineers do you have?
[clicks tongue] We have five.
One engineer on the kid meditation.
Everybody else is on the main app.
Okay. So by definition, your priority is the main app.
One of our hesitations to take everything and put it 100% there
is that we have this really robust audience
of 18- to 34-year-olds
that also have an incredible need to be addressed.
So it's a little hard to think about dropping that 100%.
That being said,
you've put a quarter of the resources on the kids' app.
If you want it to be successful, it's hard to do it with one engineer.
It's just hard to prioritize in a company as small as you guys are
and do more than one thing at a time.
Yeah.
Yeah. As a start-up, you live and die by how you prioritize.
The kids' app idea seems to be a massive opportunity.
And when that app comes out,
I'm gonna be putting my five-year-old on it for sure.
But at this early stage, it's not a compelling investment opportunity.
Therefore, we won't be investing at this time.
But we'd love to stay in touch.
And I think everyone on our team believes in your vision of the future.
-Thank you so much. -Thanks.
[Alex] Thank you so much. Appreciate it.
[Nicole] Thank you, Jamie. Thank you, Julie.
I think I-- I felt like I could have done a better job.
[Jamie] We're not backing down at all.
I think the feedback is really encouraging.
And I think we'll be able to work with them down the road.
[woman] Stand by. 5, 4, 3 seconds, 2, 1.
Action.
[tense, pulsing music]
-Hey, guys. -[Alex] Hey, Jon.
-[Jon] How are you? -[Aaron] Good.
So I'm Jon Steinberg. I'm the founder and CEO of Cheddar.
So, guys, just some context here.
As you know, we've been investors in Cheddar for a while.
I got the latest from Jon
at the board meeting last month.
They're facing a critical decision at this point.
And since it's a big decision,
I'd love to get your input.
[Aaron] Looking forward to hear it.
Great. So thanks, guys.
I'll take you through everything and give you an update.
And, Jeremy, even some of this stuff will be new to you.
So let me start with telling you guys about where we are at Cheddar.
We are living in a post-television era.
There are two possible visions of the future.
The first bet is this.
In the future, young people are going to watch
appointment on-demand programming
from people like Amazon, Netflix, and HBO.
We've already seen this big shift go with binging and whatnot.
The other bet is that ambient programming--
all of this live news, sports,
views into things that are happening in the world,
the stuff that you watch
while you get dressed or bathe your kids or eat dinner--
that will get rebooted for an entire new generation
under the age of 60.
And that is effectively the bet that we have made with Cheddar,
that there will be this whole other type of programming,
and we believe that we can be the leader in it.
Tell us about the ask.
I think we've done-- [stammers]
We had an incredible amount of progress. We've got a lot more progress coming.
I think it's the time now to raise a $20 million round.
-Twenty million dollars is a big ask. -[Jon] Yeah.
But, Jeremy, we needed a better sense
of culture, style and sentiment around the app.
Our app was terrible.
And we needed to rebuild the app from the ground up.
And Will has been unbelievably helpful.
His team came up with almost exactly
the same insights we had around the app.
This will be live in the App Store in a matter of weeks right now.
And I want the investment partly because
we don't start now till nine o'clock in the morning.
We need to start at 6:00 or 7:00 a.m. in the morning, Eastern Time, right?
That requires a whole 'nother crew, a whole 'nother control room.
Because we have to be able to swap people out.
So is your goal to get to 24 hours a day of programming?
To do that, we need to get a little bit bigger.
But we really need to get to eight to ten hours
by the end of the year.
Talk about how you guys go find and groom your talent.
There are so many structural problems in this industry
that create so much opportunity.
All of the anchors are old,
and they're never leaving their seats
because they want one more year of ten to $20 million.
What that creates is spectacular young people
who work at CNN, Wall Street Journal, Bloomberg, CNBC,
who went to work there because they had aspirations to get on air.
And you know what percentage of them get on air?
Zero percent of them get on air.
So it's not even like you've just got a bunch of hungry young people,
and everybody wants to be on TV.
People who belong being on TV are not getting there
because nobody will retire.
So Jon, you're saying that these people that you're hiring
have had no experience being anchors previously.
Exactly.
And it has mostly worked,
and we have had some failures.
And we've recently hired an acting coach.
And we don't mind being bad in the beginning.
Everything we do in the beginning is terrible.
So it gets progressively better,
and we have an openness to doing that.
So it's not just in the early days.
Every single time that you bring in a new anchor,
they are going to have no experience,
and, in your own words, they will be terrible.
Will that not annoy customers?
Maybe it'll annoy them a little bit in the beginning.
How do you make money here?
What the consumer really wants is a bundle.
They want to get Sling TV and have Cheddar in it.
The cable networks were charging 20 cents or 30 cents
per subscriber to be in the base bundle.
And what I said to them is, "If I take nothing,
I keep 100% of the branded content revenue
that I put into the show.
So let's talk about the numbers that you have now.
Today, we're at north of 12 million views a month.
[Nicole] I am skeptical on a couple of different areas.
They are not 24 hours,
and I wonder when they will get there.
There's a lot that's happening today
that we just don't know the outcome of.
We don't know what these new OTT platforms
are gonna do for his volume.
We don't know what some of these new advertisers are gonna pay up for in 2017.
How do we figure out a way to learn more?
Are you worried about price discovery?
Or are you worried about whether or not the company will be successful?
I think there are still some unknowns
of whether or not it will be successful as well.
[pensive instrumental music]
Well, we've come to a decision.
Roughly, what's our burn right now?
We lose about $400,000 a month now.
So given how much is gonna happen over the next six months,
I think what's best for the company
is to kick the can down the road on price discovery
for six months.
You can get some of these distribution deals done.
You can launch the app.
And you can create a lot of value.
If six months at $400,000 a month--
Call it two and a half million dollars.
We at Lightspeed would be prepared to bridge
a two and a half million dollar convertible note into the company.
The only wrinkle in this is
Comcast Ventures and Ribbit have been spectacular partners as well.
Legally, they're entitled to their portion of any round that we do of any kind.
Could we split it three ways, or get them close, something like that?
My greed exceeds my fear greatly.
I definitely don't want to be cut back.
How about if you do a million and they each do 750?
You are the lead.
Seems fair that you do a million and then they each do 750.
It seems like that gets everybody happy, I think.
[tense instrumental music]
-Let's do it. -[Jon] Awesome. Thank you, guys.
Thank you so much, Jeremy. Thank you so much.
-[Jeremy] Great. -Thank you so much.
[Jon] Thank you. Thank you so much.
The next few months are a sprint.
We need to launch the new app.
We need to close a lot more advertising revenue,
and that will give us the milestones,
with this additional money that Lightspeed investors are putting in,
to get to a point six months from now
where we can raise money for the company at a giant price.
I don't even know half of what I said, but I'm just glad it worked out.
[tense, pulsing music]
-[Alex] Hello, hello. -Hello.
Hello.
I'd like to introduce you to Ashley and Kuan.
Hey, guys. How are you?
-Hi. -They're the founders of Poncho.
Thanks for the introduction, Gwyneth.
I'll introduce you guys to Poncho.
He's a cute cat who lives in Brooklyn.
And he sends you daily informative and entertaining messages
to get your day started right.
We started with weather,
and now we're expanding into
a few different pieces of bite-sized content
in a way that would allow people to engage with Poncho endlessly.
A sort of vehicle for normal people to interact with AI.
So here is an example of a conversation.
We realized people come to Poncho when they're in a bad mood often,
and they're frustrated.
So we let them just scream along with Poncho.
-This is awesome. -[Kuan] Thank you.
-Good. That's what we want to hear. -I need this in my life.
So we want to bring that kind of exciting, fun experience to the lock screen.
-Cool. -To the lock screen?
Yes.
-Hmm. -Hmm.
Interesting.
We want to raise five million.
So there's one big thing we think is happening on mobile right now.
People wake up in the morning, they look to their phone.
The first thing is not an app. It's the lock screen.
So we think Messenger and the notification
are the first places where people are discovering new content.
This is becoming more and more obvious.
I'd love to understand a little bit better about who your core customer is.
Also how they're responding to these characters.
Our core users are people the age of 24 to 35.
It skews a little bit female.
Okay. What percentage is female?
Slightly more than 60%.
That's interesting.
Popular culture is always led by young women.
That's been the case
whether it was the early adopter base of Facebook or of Snapchat.
Seeing that your user base skews towards young women
suggests that there is at least some resonance
with taking this in the direction of popular culture.
I think that we can't underestimate the power of upliftment in our day.
-Yeah. -Especially right now.
And Poncho is delivering upliftment, delight.
It's one of those things-- Like, when I introduce it to my daughter,
I think she'll fall in love with it,
and then it'll be like one of those things where they just get obsessed.
That's a really interesting idea. [stammers]
Your current audience space is in that sort of 25 to 35 group.
Do you think that there's the kind of opportunity
to kind of orient them towards a slightly younger demo,
that 15 to 25 group that Gwyneth is talking about?
Yeah. It works really well,
because they're much more comfortable just chatting with a bot...
-Yeah. -...than the older audience.
[Jeremy] It's a native messaging generation.
-[Aaron] Right. -Absolutely.
-And also it's a judgment-free friend. -100% percent.
Which, I think in this day and age of social media,
and so much feedback, both negative and positive--
This is a really fun, safe space for kids.
[Alex] Totally.
So you started talking about the weather,
but it sounds like now you're talking about
a really different way in which people use Poncho.
What's your current burn?
We're looking at 110,000 a month.
So the 100k a month burn is a little over a million a year.
Five million lasts quite a long time here.
What's the plan for the rest of the capital?
We're thinking this year and next year will be the time
where we're gonna see an acceleration of people
on these new platforms: messenger platform, voice platform.
We see the demand will increase for the content entertainment.
How much have you guys raised to this point?
We raised two million seed round last April.
How much of that money do you have left?
A few months left.
Did you hit your projections from when you raised money last time?
Well, we-- [stammers] Growth wise, no. Not really.
Okay.
[Alex] I had used Poncho when it launched,
and I really do buy in to this digital cup of coffee...
in the morning.
-I actually like the core idea. -Yeah.
I'm just worried we're not seeing really usage here.
Guys, I'd love to better understand how you plan to make money here.
Right now, we are focusing to get people--
There's gonna be plenty of ways to make money--
If you get scale.
[Jeremy] I think that there's a big idea here.
Messaging. Lock screen.
There's a new generation that are native to those platforms.
And that new apps that are native to those platforms
will resonate better with that new generation.
You message with your friends.
A lot of the bots that we've seen
are built on utility
and not on personality.
The whole point of friends is that friends have a personality.
And so I think the mindset of the team here
to build a very distinct personality around Poncho
tells me that they understand this generation,
they have a unique insight into the opportunity.
That's interesting to me.
We've heard your ask for five million dollars.
And just frankly, we think, given the level of traction,
that number is high.
You guys didn't execute against what you thought you were gonna do.
So that's a challenge.
[tense instrumental music]
We've come to a decision.
You certainly didn't have the breakout, out-of-the-gate success
that some apps have.
But what we're prepared to do
is to offer you an extension of your seed round.
We're prepared to lead the round in the amount of two million.
Do you accept our offer?
-Yes, we accept. -Yes.
Great. Okay. Excellent.
Thank you so much. We're excited to work with you.
-[Gwyneth] Thank you. -[Alex] Yeah.
I am super excited about what you guys are doing.
[Ashley] We're excited, too.
It's so nice to meet you.
It's been a long time coming, you know.
We've worked really hard for this, and this is what we wanted out of it.
Now it's finally happening, and I'm, like-- I don't know.
Still processing.
I'm so happy for you guys.
Me too.
Should we go get some champagne?
-Yeah! -Is it too early?
[Gwyneth] It might be.
It's five o'clock somewhere.
[Zane] You've heard their stories.
Now's your chance to get your news from Cheddar
and weather reports from Poncho.
Download these and all of the apps in this episode
on the App Store now.