Lucy Guo: Passes & Perspectives

This is the Skin in the Game VC Podcast hosted by Tom Wallace, entrepreneur turned venture capitalist and the managing partner at Florida Funders, along with Saxon Baum, general partner and head of investor relations at Florida Funders. You'll learn from the best about investing in early-stage tech companies so you too can gain the confidence and find the tools that help you succeed as an angel investor. Are you ready to get some skin in the game?

Hello, this is Tom Wallace, and welcome to another edition of Skin in the Game podcast by Florida Funders. I'm here with Saxon Baum, my partner, one of my partners.

Tom, how we doing? Great to see you as always.

Yeah, likewise, Sax. Excited about today's show. We have a really interesting guest, absolutely fascinating.

Maybe the best guest we've had.

Yeah, we've had some good guests.

Yeah, we have.

We have. So, uh, yeah, I think you might be right about that. But before that, we wanted to kick things off by just talking about what's going on in the world and what's especially what's going on in the world of tech. Sax, what do you what do you want to talk about?

Yeah, no, I'm stealing this straight from the All In pod, which is the pod that you and I love. You know, we know Calicanis.

And by the way, Jason Calicanis, who hosts that pod, has been a host on our pod.

Yeah, absolutely. I figured we'd steal something from them. Predictions for 2024. They do a long list of things. You and I, let's shorten it up a little bit. So biggest business winners, biggest business losers, and then most anticipated trend of '24. That could be tech or non-tech. Kick us off.

Okay, I'm gonna go with biggest losers first. All right. I think Apple with their Apple Vision glasses. I mean, what's it, $3,000? I don't see this taking off. You know, that's— so I think that's gonna be a pretty big loser.

So it's funny, that's the same one that I had. I had Apple for the headset because I actually just read an article yesterday that the major apps have yet to develop even an app for the headset yet. Netflix doesn't have a product that's gonna be on there. So they're struggling to get content. That's the first thing. And then the other piece about Apple is, and I know this resonates with you, Their AI products are terrible. And so Siri, we know, does not work that well. That we know for sure.

Yeah, there's no doubt about that. But my understanding is, and that may be a big winner for this year, is they are going to, that Apple is embracing artificial intelligence and quickly catching up, and that we are gonna start to see that in their products. And pray God, hopefully it won't be with Siri, that piece of shit that it is.

The question is, Can they get to, you know, where these other companies are? Because these companies have a bit of a head start, but Apple is obviously one of the most valuable companies in the world, so they have the resources to do it.

Yeah. My other big loser is Twitter.

Okay.

Or X, as Elon calls it. I just don't see this going well for Elon. I think he should stick to cars and rockets and some of his other projects. He's already lost a fortune. They have a ton of debt on this company. My understanding, the debt is for sale at like 70 cents on a dollar. So yeah, I don't see that going well.

Yeah, it's— I feel like it's sort of a dying platform. I mean, I'm not a huge user. I know you're a pretty big user. My feed is just filled with shit. So I, you know, I just— I feel like it's gotten away from the core product. It'll be interesting to see what happens. But I would agree with you. I think that X is X is on the way out.

So who's your big winner?

Big winner is Microsoft. I think that Microsoft, what I heard as of late, just surpassed Apple as the most valuable company in the world. I know that they had a huge run at the end of the year, driving a lot of the gains in the Nasdaq. I think OpenAI is just the beginning and their investment in OpenAI and what ChatGPT is doing and Sam Altman. I'm just fascinated across the board with this company and I think it's going to continue to drive substantial value to Microsoft. So Microsoft is my big winner of 2024.

You? I'm going to be a contrarian, as I like to be. And I'm going to say, I think Bitcoin is going to be a big winner. I know it ran up to $45,000, it's back to $39,000. Now that there are 11 or 12 EFTs, including Cathie Wood, who is, by the way, Cathie Wood is our keynote speaker at the Florida Funders Investor Summit. We hope to see you all at later in February. February 27th, right? Yeah, February 27th. Yeah, so here in Tampa, by the way. I do think that this has legitimized Bitcoin. I think Bitcoin is here to stay. I think it's the real deal. And I think it's going to have a good year. I'd be surprised if by the end of the year, it's not well over $50,000.

So are you hitting the buy?

I've been buying all along.

All right, there you go. And do you think the rest of the crypto market's going to follow?

Yeah, I think there's going to be some rebound there. I think we've already— I think What I'm hearing is we're going to see Ethereum EFTs coming out within the next couple months as well. So I think it's all legitimizing the whole crypto space. And yeah, I think it's— there's still a lot of dogs out there that have to go away, but the Dogecoins, but I think there is a real application. And I think when you look at Bitcoin as an investment, it's a hedge. And that if you're looking for a hedge, if everything goes— if China invades Taiwan tomorrow, and the market loses 50% overnight, which I'm guessing it would, where do you want to be? And I think gold is obviously the place people always talk about. But what can you do with gold? You can't spend it. You have to store it. It's expensive, blah, blah, blah. With Bitcoin, I think it's a hedge against all that. So I think not having 1%, 0.5%, 1% of your net worth In my opinion, in Bitcoin and Ethereum and Solana, maybe a couple of things like that. A quarter percent, some percent of your asset allocation should be there. My opinion.

Do you see the mass adoption or the beginning of the mass adoption of blockchain technology this year with things like healthcare and financial services? It's been talked about for the last 6 or 7 years, but we have yet to really see that. Do you think that we see some of that happen this year?

I don't think you'll see monumental change there.

Yeah, I agree.

I mean, I think it's going to happen. I think it's just happening a lot slower than we And if you think of Bitcoin as a currency that you could transact business on a daily basis, it's still not there and a ways off. So, yeah.

Yeah.

I would be more inclined to see— and contrary to the Apple Vision glasses, I do think AR and VR will make significant progress this year. And so, that'll be interesting to see what happens there with the whole Meta And, you know, that virtual reality is a wonderful tool for disrupting education and helping with education. And I think there's a— I'd like to see a lot of progress made there. But we'll see what happens.

Yeah, no, I agree. I mean, just having content via VR and AR and that digestible content that you could have all around the world. That's what is really exciting, I think. My most anticipated trend of 2024 is the technological advances in antiquated markets. And what I mean by— I'm sorry, antiquated industries. So things like legal tech, things like healthcare, things like edtech. These industries have been very reluctant to implement new technologies. I think that we are finally starting to see that they are willing, able, and want to implement technology. So I'm really excited about some of the antiquated industries that over the years have been reluctant to really start adopting technology. And hopefully, it's startups like we're investing in. It's not just the big guys.

Yeah, I hope you're right about that, especially healthcare and education. So, God knows those need disrupted in this country. And seems like artificial intelligence will feed that. My big trend for the year is— and this is from an investor perspective— I do think the IPO market's been pretty nascent. And the M&A market's been pretty quiet, dead, whatever you want to call it. I see that picking up this year. I do think the M&A market, by the time we hit the middle of the year, I would be surprised if we don't see a significant increase in M&A activity, a significant increase on our side in venture investing, because it's way off.

Yep.

Not that we have backed off at all at Florida Funders, because we haven't. But I think that'll pick up, and hopefully, the IPO market will drive that, and the opening up of the IPO market specifically for tech.

Yeah, I mean, I think that that's the big question that I have, is when does that IPO market open up? Because we had a great run in the NASDAQ last year. So tech companies are gaining value. They're not back to where they were, specifically not the high-growth kind of companies that have IPO'd in the last several years. But they're making gains. They're getting back to— I don't know if they'll ever get back to exactly where they were, but they're making gains. What opens up that IPO market, and when that opens up, I couldn't agree more. I think that that is just a complete top-down trickle-down effect down to us. The M&A market opens up, deals start getting done. You've got massive companies like Stripe and Klarna, which we're actually an investor in via an acquisition. These companies need to go public; they need to create liquidity for later stage investors.

Yeah, it'll be interesting to see if, and I think we will start to see that. I've said this all along. I do think the pendulum in terms of early-stage tech investing has swung too far in this whole thing. You got to have a path to profitability. You got to be profitable. Early-stage tech is not profitable day one. It just doesn't work that way. And SaaS software, which is a great business model, Salesforce didn't make money for the first 7 years they were in business. You're building market share. If you're sticky, and you've got a great product-market fit, you want to grow the heck out of that. And I still think that's a good business model, especially because on SaaS, you can become profitable anytime.

Yeah.

Just dial back on your sales and marketing that you're investing in gaining the land grab and gaining market share. So, I do think the pendulum swung too far with companies like, you got to get profitable, you have to have a clear path to profit. I would agree, you have to have a clear path to profitability. But if your unit economics are good, Using SaaS software, for example, if you have a very high retention rate, if you have really high gross margins, and your CAC, your customer acquisition cost is in line, and your lifetime value of a customer is good, I think you want to keep growing. I think most investors are wise enough to see that that is a good strategy. Grow 100%, 200%, 300%. If you lose money for a few years, that's okay.

Yeah, and you're— if you're growing 100%, 200%, 300%, you're gonna be able to raise more money. I think a lot of the kind of this valley of death is companies that aren't growing substantially, and they run out of cash, they can't raise more money. And I think that a lot of those companies are thinking about, okay, how much runway do we need? How do we put ourselves in a position so we don't run out of capital? But the best companies that are growing, like you're talking about, they're always going to be able to raise money.

Agreed.

That's for sure.

Agreed. As I mentioned earlier, we're really excited about our guest today, Lucy Guo. I'm going to— Lucy will tell her story here, get started with Lucy here in a second. But Lucy is all of 28 years old. Is that how old you are, Luz?

29. I'm getting old.

29.

And she's a Thiel Fellow, which we want to hear about that. And she'll explain to you what that is. She is the— I think this is so impressive— second Wealthiest self-made female in the United States, only behind Kylie Jenner. What an honor. Good for you. That is so impressive. And I think Kylie Jenner had a little bit of a head start. I don't think that—

I don't think she's actually like— at least Kris Jenner is incredibly intelligent. I actually just had a call with her. She is, she's a rock star. Like the fact she's made her entire family into like empire is Incredible.

Yeah. Good, good. And the other thing about Lucy, she has a new company and it's called Passes, and she'll be telling us about that too. So to kick things off, Lucy, how did you become a Thiel Fellow? By the way, I noticed you went to Carnegie Mellon University, and Sacks and I are both originally from Pittsburgh, so we know how wonderful of a school that is. But tell our listeners about becoming a Thiel Fellow and what that means and what it meant to you.

Yeah, definitely. So in high school, actually, I had a mentor who was like, you're young, so you should just reach out to every single person you can because people are more willing to spend time on young people that are ambitious. So I was like, okay, cool. So I did a lot of cold emailing and I don't know how, but I managed to end up at this hacker house like my senior year of high school. And then there I met someone who introduced me to the Thiel Fellowship. And then throughout like the next 2 years of college, I guess I kept in touch with the Thiel Fellowship. And during this time I got really into hacking. hackathons. So I studied computer science and HCI at Carnegie Mellon, and I had a really good— like, I was really good at making iOS apps and making them look pretty. So at these hackathons, I would just, you know, throw up a pretty iOS app and then would win a prize at every single hackathon I attended. I collected a bunch of iPads, and then they eventually were like, hey, you should like apply to the Thiel Fellowship. And I was like, I don't really have an idea. So I just used the hackathon project I had like last built, like my most recent one, and then applied to Thiel Fellowship, and then I got it.

Great. That's what an honor. And the Thiel Fellowship, for our listeners who don't know what that is, is a scholarship that Peter Thiel— what's he give out, 20 a year? Is that the number?

Back then it was called 20 Under 20. So it was 20 people under the age of 20 years old, $100,000 to drop out of college. That being said, I think the age requirement has now gone up so you can be older and still apply. And I don't know if it's still 20 people.

And you can use the $100,000 to do whatever you want, right?

Yeah, pretty much.

Yeah.

So what'd you do with it?

I, oh, what did I do with it? Let's just say that I was a naive child and we built this app that every single college student thinks is a good idea, but it's a horrible idea, where we had college students cooking food for other college students and selling it. And we had college students making like $100 an hour. It was great, but we did have a bug on our app and I would say a lot of the money went towards towards this bug where you had the ability to get unlimited free credit, which is like not the best thing in the world. Other than that, it was like very basic living costs because that $100 grand was spread out over 2 years, right? So I was just living in a basement slash couch surfing at some point in time and using it for food and funneling credits into the app to like try to do some referral system very similar to like what DoorDash, Uber Eats does, where it's like, okay, first time you get $5 off, but We burned capital doing that too.

Yeah. Zach, you wanna—

Yeah.

So go from there to Scale AI. What was that path look like? How did you get involved with Scale AI? Uh, wanna hear a little bit about that story and, and really the trajectory of that company.

Yeah, definitely. Um, so after I decided to shut down my food app, um, because there was a lot of food poisoning issues and turns out it's completely illegal to do, um, I ended up joining Quora and at Quora I was doing product design, but really doing like both engineering and design, running a lot of A/B tests. And then there I met Alexander Wang, and then we were just like, we should do a company together. And then later I got poached by Snap, and then he ended up going to MIT. But then at some point we just wanted to build a company. So we started working on a bunch of different ideas, and then YC had reached out and was like, hey, you should apply to YC. I was like, okay, cool. So, you know, we get into YC and then we're working on a bunch of ideas that don't work. And then one day we're just like, man, we wish we could have like call a human to call the doctors for us because we were working on a healthcare app. And our roommate was like, oh, an API for humans. And when I hear that, I'm like, that sounds really controversial. Like we could throw up a landing page, throw up like a crappy API, and it's gonna be like, it'll go viral on Product Hunt. And at this point in time, I've already had a lot of experience making products go viral on Product Hunt. So we built it and immediately investors start reaching out. And the initial product was really just like me manually sending back a callback. So a Twilio call would come to me and be like, hey Lucy, like wake up and complete this task. And then how that product evolved evolved, um, was that we ended up getting Cruise as one of our first customers, and we realized that self-driving cars was a huge market because, um, they had a lot of money to spend. So, uh, we doubled down on that and ended up creating products, uh, like image segmentation, LiDAR. LiDAR was really the big hit, and it took off. And then in terms of like hiring, um, it's kind of incredible, but like our first 2 engineers that signed were just like classmates of mine. Um, one of them was my CS tutor, like CS, um, TA, and the other was my CS little. And then it kind of snowballed from there where I had, um, Contracted out, hired one of my like Keel Fellow friends. And yeah, it was just from my hackathon network. It was pretty incredible.

And what VCs backed you in Scale AI?

And how did that come about? Yeah, so Accel did the Series A, and then Index did the Series B, Founders Fund did the Series C.

And then you were only there for 2 or so years, right? What happened there? Why did you decide to leave and move on to do your next thing?

Yeah, I would say just overall, um, wasn't super excited about enterprise. It wasn't for me. Um, I wasn't super excited about like labor wage arbitrage, et cetera. Um, and I have always been a consumer person, like I think like through and through, and I felt like my learning was being halted to some degree. So, uh, I had talked to like our investors and, um, they ended up thinking that I would be like a good investor potentially. So, um, they gave me like $500K in scout money to invest with and, um, got into a bunch of dope companies, um, and ended up being able to raise my own venture fund soon after. And then had like the highest performing fund for vintage year 2019, which was cool. And then started an incubator program that was supposed to compete with HF— compete with Y Combinator called HF Zero. And during HF Zero, I got the itch to do another company. So here I am.

What's the, what's the core differences that you see between being an investor and an entrepreneur? I mean, which side do you prefer? You went from founder to investor, now back to entrepreneur. What's the major differences there?

Yeah, I would say it's a lot of breadth versus depth, and it's less emotional as an investor. I would say, like, as an investor, my default state was, like, usually a 7, 8 out of 10. My companies are doing well. I was happy, but I didn't feel, like, necessarily responsible for the success of the companies. Like, it felt good that, like, my— I was good at choosing, but that was really it, right? Like, the founders are really building the company and Versus I like, I love being hands-on building a company and like every single success I have, it feels more meaningful because like me and my team are actually the ones that are directly impacting the numbers, the creators, the success stories, etc. So it's definitely different. I think in both jobs you really get to work with the smartest people around. Like it was actually really inspiring being a VC because every single person you were meeting wanted to change the world, right? They were like a little crazy, thought that they could build a multi-billion Which is just like incredible, incredible, because you have to be crazy.

We deal with a lot of those.

Yeah, and I love it because I think that like the chances of building a multi-billion dollar company are so small, and only a small fraction of the world really thinks they're going to be able to do it. And like your entire job is meeting the small fraction of the world, um, and you're just constantly meeting the most ambitious, intelligent people around. Um, I think that it's definitely been different. I'm not constantly meeting those people when I'm building the company, but I get to work with the smartest people around, so which is very fun as well.

What side do you prefer?

I think I prefer building, at least at the moment. Maybe when I'm, you know, 40, 50, I'll go to VC again. But at the moment, I'm enjoying building.

And the VC fund that you started, tell us a little bit about that. And then is that on ice now? Are you still actively making investments?

Yeah, so with Backend, HF Zero is still active. Backend Capital, we are currently doubling down on current investments, but we're not making new investments. So all new investments I've made recently has been from my personal angel money. But the entire concept of the fund was that we're going to invest in the best engineers because engineers kind of have the ramen effect. And I saw this when I was building where you can just live on ramen indefinitely. And like, as long as you persevere and don't give up, like, you'll eventually come up with something. And this is actually like, like the Thiel fellow that I mentioned I had hired for Scale early on. He spent like a decade getting something to work and then he eventually got something to work. And now it's like incredible what he's built. And you see founders like, I think this happened with Honey too, where they eventually found something that worked, right? And I think that engineers have the best chance of making this happen because they can have literally zero burn because they could build everything themselves. So like my favorite founder pair is like engineer founder, design founder, because they're like unstoppable as long as they don't give up.

I want to go back to briefly Scale AI. And the reason I want to go back is because with everything that's happening in the market right now with artificial intelligence, specifically GenAI, we're seeing this revolution and it's amazing what AI is touching. Tom and I talk about this all the time. Every one of our portfolio companies is using some sort of artificial intelligence at this point.

Absolutely.

What are you seeing now compared to when you started Scale AI from an AI landscape? Is it completely different? Would it have changed the way that you guys thought about Scale AI? How do you kind of think about then versus, versus now and the whole AI landscape and what excites you around AI right now?

I mean, the models are definitely getting better, um, and the business is booming right now because like Scale AI is really the picks and shovels of the AI world. So, um, we do all the labeling, right? And as we label, like, we can make our own models better, which is cool because, um, you can imagine that like, let's say when we were initially like doing self-driving car stuff, for example, um, we were labeling 100% of the images. And then like now it's a much smaller percentage, um, and we can like automatically guess the labels. And now there's so many new businesses delving into AI and they need specifics to train their models. And Scale can provide those humans to train those specifics while making our own AI models better. But I'm really, really excited. Like, LLMs have obviously gotten incredible at the moment. Hopefully we can do math soon. ChatGPT is like very bad at math still. But yeah, it's really—

I'm sorry, Lucy, I thought you were done. How are you using AI at Passes? How's it affecting your present business? Oh, tell, tell the, tell the audience what Passes is first.

And then, yeah. So Passes is like Salesforce for creators. We view creators as small businesses. We wanna turn them into large businesses. So this is everything from like turning your fans into super fans all the way to like finance tools. I would say like how we're integrating AI currently is we're working on essentially like, like we don't want fans to interact with like pure AI versions of creators for like many reasons. A lot of it is like it not being authentic. But we do want to help creators better interact with fans. So this means like maybe auto-generating responses, but they still have to review them before sending. It means remembering certain things about a fan. So for example, it's like, okay, cool, like you're not gonna remember on your own that like that fan is from Nebraska, but like we can automatically take notes for you and tell you that like, hey, you're like that fan that you're talking to is from Nebraska and like you can point out things in their day slash their profession, etc., to really make them feel more special. I think the future of the creator economy is that creators are going to be selling their likeness. So I would say like that's something that we're really interested in working on because we have like thousands of images, video, voice note data, chat data, etc. And like we can really partner them with brands or just like with consumers and deepfake images, deepfake videos, etc. So like you can have like Justin Bieber, for example, give you a happy birthday video cameo for a much more affordable price.

And you yourself, I mean, Passes, just so that I can put my spin on it, Passes is a platform, like you said, for content creators. You're in that world of content creators. I mean, I would say you yourself are an influencer with your tech background and everything that you've done throughout your career and just really well known around the kind of digital ecosystem. We talked about this before, you and I have, but Can you share with the audience really how you've set up your lifestyle to be very much so integrated in with Passes and how the content that you're creating does potentially help the business?

Yeah, I would say that I haven't necessarily set up my lifestyle. I think the business happened because of my lifestyle.

Got it.

Where I was friends, like pretty much all my friends are, you know, DJs, creators, etc. And I saw all the problems that they had. I saw that like they had like millions of fans and those fans wanted these one-on-one interactions. But they would be like stuck into other inbox of their Instagrams or TikToks, right? And there's only so many that they could respond to. But in order to like really make money, like if you take like MrBeast, he makes tons of money from Feastables. If you take Logan Paul Prime, etc. But like in order to even sell these products, you have to have super fans. And having fans is not the same as having super fans. And the best way to get super fans is to feel like you're being able to give these one-on-one interactions. So really ended up Just creating a CRM system. Like CRM systems are really big in tech where, you know, people are doing it for sales, emails, etc. I was like, okay, cool. We can create a CRM system for creators. And we ended up creating the best CRM system and we can make every single message feel super personalized to each fan, which is really cool. And yeah, it's definitely like my online presence has helped in a sense that it's easier to reach other creators. Like there's network effects and creators that normally would have charged like anyone else 6, 7 figures to be on a platform. They just joined to like support me or they trusted like their friend who was best friends with me. So then I was able to just get them on for free.

What are some of the bigger creators that you have on the platform at this point?

This is interesting. So I would say like the biggest creators by following count does not necessarily equal the most money. Sorry, my cat just destroyed something, I think. Anyways, so I would say like in terms of following count, we have like Blac Chyna and Emma North, um, Andrea Botez, et cetera. And they all do really, really well. But I would say like our top creators, the ones making like $400K a month, um, they're like your middle of nowhere creators, um, that like, you know, they have like 200,000 followers. They live in the Midwest. They're like your dental hygienist, your firefighter, um, your like girl that lives on a farm, um, which is really incredible to see.

So why do you think that is? I mean, why are these sort of middle of the road creators really the ones that that are making the most money?

I think it could be relatability, um, where they feel like fans feel like it— like the personalized interaction, or what feels like it must be personal, is actually personalized. Um, I think that it's— they feel more relatable to that person. Like, you know, they have real jobs, etc. Um, so they feel more connected. Um, which, like, the whole experience of superfans is that you feel connected to that person. Like, Alex Earl is a really good example.

I was just, I was just about to say that. It's too funny.

Yeah, Alex Earle is like, uh, like people feel like they're her best friend, right? I think she said that before. Um, I think that these like creators with 200,000 followers, because they are so relatable with like their lifestyle and their jobs, these fans feel that for them. Um, so—

My question on the creators, and I've spent a bunch of time on Passes, Lucy, just checking it out. It's not something that people in my generation really, really do, but I've enjoyed it, but I've I'm following a magician right now and trying to learn some magic tricks. Are most of your creators bringing their audience with them, or do they come and you almost help create the creator, if you will?

Yes, I would say they are bringing their audience with them, but we have products coming out. We actually had a product that came out in the past that we got rid of because we're redesigning it that got creator or got fans to spend on a new creator. Like 40% of our fans spent on a new creator when we launched this So now we are redoing it to be better, and we're going to be bringing audience to creators soon too.

One thing real quick: I don't think everybody in the audience knows who Alex—what's her last name? Alex Earl. Earl at the girl at the University of Miami. She's right. Yeah.

Somebody tell the audience just so they don't. Yeah. I mean, she she's in you know fill in the blanks, but she's the the it girl these days on on social media. She actually dates one of our investors, Braxton Barrios, who's a who's a player for the Miami Dolphins. Miami Dolphins. And to Lucy's point, she's very relatable. I mean, that's why people have really gravitated.

She started this while she was in college, right?

Yeah, she started in college. And now she's, she's very involved with the podcasting world and has her own pod that has done—

I've heard the applications at the University of Miami have skyrocketed. I fully believe that.

That's true.

Speaking of Miami, tell us how you ended up in Miami. As all of us know, COVID was very, in a lot of ways, was a good thing for the state of Florida. Obviously, none of us like COVID, but where most of the rest of the world shut down, we really didn't. And we had a lot of capital move into Florida during that time. And people like Orlando Bravo and Peter Thiel and folks like that came here and even SoftBank and opened offices and started investing, which was great for Miami and all Florida. But we also Talented entrepreneurs, founders like you, Lucy, that came from San Francisco here and decided to stay. Tell us about how that, how that came about in building a tech company here in Miami versus building your last company in San Francisco.

Yeah, definitely. So I ended up coming here because I got very bored during COVID and when outdoor dining was shut down in LA, I was having coffee meetings in my hotel, and that just felt weird. So I was talking to Keith Rabois, and he was like, oh, I'm gonna move to Miami. I was like, you know what, I might as well just go check Miami out. So then I brought a suitcase, I go to Miami, and then the next thing I know, I'm meeting Francis. And I kind of just say I moved already, even though I didn't fully move. And at that point, I'm like, you know what, I might as well move. So I just stayed. And then in terms of building a tech company out in Miami, so initially, um, I was actually in VC, and my goal was to bring a bunch of engineers to Miami. So I was throwing these hackathons and engaging both the existing community in Miami, but also bringing like 5,000 engineers and like having the— like the goal was to bring 5,000 engineers to Miami and we would like bring engineers from like all over the country to compete in this hackathon. It's called Miami Hack Week now. Jadon runs it now and it's going great.

Differences between Miami and SF. Obviously there's geographical differences, but what have you seen from a tech talent standpoint, from an investment standpoint, the major differences between the 2 cities?

So I would say out of the Miami tech companies that I do know, I think that the Miami tech companies here are incredible. I mean, like Founders Fund invested in a bunch of them. I think that we still have a lot to build realistically in terms of getting like more tech talent. I'm really not sure where they're going. Like, I know there's a lot of incredible tech talent in Miami, and I know this because like I used to go to these engineering meetups and you would meet like Netflix engineers with a total comp of like $500K a year. Uh, it did feel like a lot of tech companies in SF were just paying more, um, for remote engineers. So I think that, um, something that Miami needs to work on, um, and I think this is going to just come over time, is we're going to get a lot more angel investors when we have like exits from, um, like you've already seen Open Store, right? Like Open Store is now, um, they're like new founders starting new companies. Um, as we have more new companies and more startup culture, um, more exits, you're going to get more angel investors and more capital ecosystem, and we get more capital in ecosystem, Miami's gonna thrive more. But yeah, I think, I think right now we need more capital.

And how many— I'm sorry, how many of your— how big is your engineering team at Passes, and how many of those folks are in Miami?

We're 3, and 2 people are in Miami.

Say again, I'm sorry.

Oh, we're 3 people, but 2 people are in Miami.

Okay. Yeah, I mean, it's interesting. We always talk about the organic growth of an ecosystem, and that's what happens. I mean, great companies are built, Those companies exit, create liquidity. A lot of individuals make money. They reinvest in the community. They start their own businesses. I think that we're really at the beginning of that new phase in the state of Florida. I mean, you have companies like Passes, like Lula. Then you have really big companies like ReliaQuest and Know Before here in Tampa. You know, when these companies exit, we're going to see that organic growth. But I think we're very early in this. I know Tom, you know, you built your tech companies here over. Over the last several decades, but you were one of few, right? Now, there's more people like you that are out there building their companies in the state of Florida.

Yeah. And the other thing is you can just build a company a lot faster now.

Yeah, absolutely.

I mean, we build a company pretty much, me and my business partner, every 10 years we build a company and exit. Now, you don't necessarily— we always tell our founders, you need to be signing up for 10 years, but you can do it faster. And certainly, you can do a lot more in that 10 years than we could, we could accomplish 10 years ago. But so are you in Miami to stay, Liz?

Yeah. I mean, I love Miami. And for us, especially, I would say Miami ties with LA as number 1, number 2 in terms of the creator economy. So we're always going to need a presence in Miami.

Yeah, Miami has really become kind of the go-to place for the influencer creator world. I mean, I think it probably even has surpassed LA. When you look at kind of the middle tier, I mean obviously the the top so A-list celebrities are still in Los Angeles, but Miami really has just grown substantially in that sense.

Yep, I agree. And our number three creator lives in Miami.

There you go. Who is that?

Yeah, can't say, but she is phenomenal. She's very smart. She went to UPenn. She's a firefighter, big fitness girl, and. It does very well, like solid 6 figures a month, but like higher than you think in the 6-figure range.

That's great. One of the things as investors at Florida Funders, we love to see female founders. And I think the latest stats I've seen on this is roughly 15% of all the early-stage tech companies in the country, in the United States, are founded by Females. So you're roughly 50% of the population, but only 15% of the founders. You're a wonderful role model for young women. I have a daughter. My girlfriend has a 16-year-old daughter who's Asian. And, you know, what a role model you are for other young women. Tell us about that. How's that feel? And do you get a chance to, to talk to a lot of young potential entrepreneur, female entrepreneurs and encourage them in that regard?

Yeah, I've always tried to do that. And whenever people send me a cold email, I like try my best to hop on a call if they want mentorship, etc. Because I know that really did help me when I was younger and I probably wouldn't be here today without all the people that, you know, were supporting me starting from even high school. So yeah, like It does feel good, and I always tell them, like, I think a lot of people— what's the best way to say this? So it's— I think the world is just unfair, and the best advice I can give to women is like, hey, life sucks. It's unfair that, like, you have to achieve more to get the same recognition. But the good news is that, like, once you're past that hump and you have, like, a giant resume full of, like, great accomplishments, then when a VC looks at you— like, VCs all want to invest in female founders. They just have higher bars for female founders. But when you meet that bar, you're more likely to get an investment too. And life just is not fair. But just work hard and like, it'll all be worth it.

Great message.

Are you seeing more female founders?

I would say yes.

Yeah. Yeah.

I mean, I think we are too. I mean, Tom, we've been doing this for 7 years or so. I definitely think the numbers would show we see more female founders come through our process at this point.

And would like to see more.

100%. We would love to see more.

We're big fans of female founders. We've had quite a bit of success with our female founders that we've invested in. And we feel that way about other minorities too. I mean, we'd love to see more African American founders, more Latin founders. And so we embrace diversity for sure.

What's next for Passus, Lucy? Where do you see this next few years? What's the 5-year crystal ball kind of show for Passus and yourself?

Yeah, so obviously we want to get to millions of users, which would be cool. I think a good accomplishment for us is if we could essentially take over like what a current talent manager generally does, which is mostly just get brand deals. The good ones really help with like wealth management. So some things we're building out this year are just more revenue streams, which we'll continue to build out over the next 5 years, but also tools to manage their wealth and like a lot of interesting fintech things happening at Passes, which I'm super excited about.

Yeah, that's interesting, using your platform as sort of an all-encompassing tool for these creators. So instead of having to go to multiple different places, they have one trusted source, one single pane of glass that they can really run their, their whole business around, right? Because an individual is really a business. I mean, that's, that's what it's come to be. Yeah, we were listening to, to a pod about, about Jimmy, about MrBeast. And that's how he thinks about things. You know, it's— He's got a huge team, But it's really him. I mean, he's the one and it's— he is the business. So that, that whole idea is something that's very new for, for the world. And it's extremely interesting.

Yep. We're super excited about it. I think like the number one question I get asked nowadays is just like, how do I grow my wealth? I think we're in a really unique position because we are like 80 to 100% of a creator's entire income. And we have more monetization data than anyone else because like TikTok and Instagram focus on breadth, but they don't have any way to tell like Are your fans super fans? Because like spending money is very different than a like or a comment. So we have like real engagement data that makes us, I think, a better talent manager than talent managers themselves.

Are you seeing that content creators on your platform are making more overall than they would on, let's just say, an OnlyFans?

Yeah, I would say so. I think that it's just a different tooling. That being said, I think if they want, like, we aren't really competing with OnlyFans. So it's really, really hard to say. OnlyFans, because they're like so focused on not safe for work. It's like if you wanted to do any like content, even if it weren't nudity, but you were planning on doing more not safe for work content, you would just go on OnlyFans. Um, versus for us, like the only creators that are coming from OnlyFans to Passes are ones that are like reborn Christians.

Interesting. Because I know initially, I mean, some of your thoughts were this was going to be an OnlyFans competitor, but clearly you've gotten much further past that.

Yeah, yeah. We realized that like We can't be an OnlyFans competitor if we're trying to go safe for work. And then also just a much larger vision becomes a lot harder to execute. For example, like brand deals, right? A lot of the problem with going on OF is that you— brands don't want to work with you anymore because they're trying to protect their image. And we can't do that like full 360 that we want to do if we were to go not safe for work.

You guys had a nice acquisition that happened at the— in the middle of last year. Do you see M&A being a big part of your strategy moving forward? Because I know there's been a lot of consolidation in the creator space.

We don't really see it being a big part of our strategy, but you never know. That one was just at such a cheap price that we had to say yes.

And Tom, you and I were talking about this before. We think that M&A is going to be on the rise over, over the next year. And really the way that I think about it is companies that aren't performing, companies that can't raise money but have a good tech stack and have good employees, there's going to be acquihires put in place. There's going to be, there's going to be acquisitions that are going to happen for that technology. Is that what happened with the acquisition that you guys made?

Uh, no, actually, we only ended up getting, um, like it was a referral agreement essentially where they would refer creators to Passes, but we didn't end up buying the technology or hiring any of the team members.

Interesting. Lucy, I got to ask you about your family. Your, your, your parents, your background. Tell us about, uh, you grew up in California. Did you grow up in California?

I grew up in California. My parents immigrated from China. Um, they were incredibly smart, you know, like they grew up with a very humble lifestyle. And by that, I mean, they did not get enough nutrition for their health. So they're like working on their health right now. Um, but they like immigrated to America with no money and then both became electrical engineers. Um, and then I guess met grad school, maybe. Uh, my dad has his PhD, my mom has her master's, and then, uh, my mom was always like a startup person and my dad was big tech, big tech company. Uh, but then, you know, they had me and then, um—

Are you an only child?

Uh, no, I have a little brother too. Okay. Uh, he's also, he's an engineer at DoorDash right now. And then my parents, um, like lost, or they got laid off, lost all their money at some point. Um, and they just invested in stocks and Who knows how they're doing? They're doing okay. They're doing okay. I like, it's my job to support them. So here we are.

Well, they must be very proud of you.

Yeah.

Yeah, I'm sure they are. Great story. Great story.

One last question. Uh, what is your core platform? Obviously, Passes is the company, but for you and content creation, your distribution, what's your, what's your core social platform that you use?

I would say it's X if I'm trying to reach tech people, and it would be Instagram otherwise.

Got it. Got it. Well, Tom, anything else?

Well, uh, you wanna ask her about trends? Any trends that you wanna talk about?

Yeah.

Any trends for '24? Tom and I, as we, uh, we kicked it off, we talked about some of the trends that we were looking forward to. What about 2024? What trends are you excited about?

I would say it's really cool to see how AI is being integrated into quite literally everything. I'm most excited probably around AI outside of the creator space. Obviously, I'm excited about AI being integrated into legal because lawyers are really expensive and AIs can eliminate a lot of that cost, I think. And like, I don't think that they're gonna like charge— like, I think they'll actually charge less just because they can handle more cases and they themselves will make as much money still. And this is just like every single company, every single person, like at least every single successful company goes through through legal issues at some point in time.

From your lips to God's ears.

We need less lawyers. I think every business person agrees with that.

Everybody would agree with that. That is universal.

Lucy, this has been great. Thanks for coming on. And we want to wish you continued success. No doubt that you're going to continue to be successful. And we're very excited to have Passives as a Florida Fund Company that we've invested in. And we'll be watching, and any way we can help you, let us know.

Well, and if you're looking for the creator demographic of Tom's age, he told me before the conversation that he was wide open for passes. So we can get him on there.

I'm not even kidding, we actually want VC content there. So yes, please.

Let's go. All right, that's awesome. Appreciate it, Lucy. It was great to see you, and we'll see you soon.

Thank you, Lucy.

Bye, talk soon. Bye.

That's good.

Yeah. Should we do a wrap-up or no? I'd like to. Do you do this? I usually say if you're an investor, you know. Yeah, we can do that. Okay. Well, thanks for joining us today. That was another fun podcast here at Skin in the Game. By the way, the reason we call it Skin in the Game is that Florida Funders, we, the founders and partners in Florida Funders, all invest alongside our investors. So, and we like to see founders have skin in the game, which most of them obviously do. But if you're a founder and you're looking for funding, you have a great idea, you're a startup, go out to floridafunders.com. We have a very simple, what is it, 5-minute application process? Get you started in our process. And you never know, we've got money and we're looking for great founders and companies to back. And if you're an investor and you're interested in Florida Funders, want to get more involved, Our whole portal, our website at floridafunders.com, is set up for investors. We have deals up there all the time that you can look at and learn more about investing. And so please reach out to us and join us on our journey. We'd love to have you.

Yeah, the only other thing that I would add is this year we started the Skin in the Game Pod Instagram. So we're going to be posting on Instagram all of our pods as well as reels. So if you see us Throw us a like, throw us a follow. Our goal this year is to really grow this pod to be something really special. So, uh, thank you all for being a, being a listener.

All right, thank you.

Thank you.

Thanks for spending your time with Skin in the Game VC today. If you want to learn more about investing in early-stage tech like a venture capitalist, be sure to visit the Florida Funders website at floridafunders.com. Join our angel network at no and get access to Florida Funders VC-vetted investment opportunities in the next great breakout tech companies.