San Diego Tech News Weekly – February 4, 2022

Well, welcome. Welcome, everyone. Happy Friday, or whatever day it is. You are listening to this. Hey, Amin. Hey, Jeremy. I'm Neal Bloom. I'm a tech entrepreneur, investor, and community builder and been fortunate enough to have been involved in the San Diego startup community for quite a while and met some great people, uh, including Jonah, who jumped on board. Man. It's. It's probably been over a year now we've been doing this together where we're reading the tech news of what's happened in San Diego. Jonah, you want to give your background some of the companies you worked at?

Yeah, absolutely. No, it's. This is great. Um, so spent some time in on demand tech, so, you know, maybe seen some scooters around. Lime is back in the city. You've seen, done some work with postmates in handy. So a lot of fun with big tech on demand. And then, you know, as we grow, new tech starts to take over and we've been sucked into web3 a little bit here and that's maybe a little bit teaser or something that's coming up later. But I mean, awesome seeing you last night at the Edge Wallet at the event at Edge Wallet. Love seeing Paul grow and love seeing our tech community grow. Hopefully we can grow into crypto a little bit more. But that's just my passion lately.

Love it. Well, first and foremost, want to thank you all for listening in, but also want to ask you to help us grow this by sharing both. Now that you're. You're here, share, share a tweet that we're live here and that you can catch this every Friday. And then once this is live also on the Tacos and Tech podcast network as a podcast, please share that as well too. Helps us make sure that we are, you know, grow in the community for all of us, that everyone's informed and sharing out what's happening.

Yeah.

So without further ado, let's. So let's dive into this week's stories. First one Founders First Capital Partners is bringing a different approach to diversity investing.

This is awesome.

Talking about Kim Folsom and Founders First Capital. I've known Kim actually since 2013 in the Evo Nexus Incubator together, working on her own separate companies. She's always been in the financial education space, which is super cool that she's turned a financial education tech company. I believe she sold that last one. And now Founders first is purely an investment play, really, backing underserved founders. So a good TechCrunch story. You want to dive into the details a little bit.

Well, this one's cool too because not only did you say she's going after underserved founders, but they're taking a little bit of an interesting approach with revenue based financing, which is super cool. So it's not necessarily a loan and it's not necessarily equity. It's basically pay us back when your company's making money. But to your point earlier, I mean she's been building companies forever. Looks like founded six, raised 30 plus million and had three exits, which is pretty cool along the way. So she gets it. But revenue based finance is cool. So if a founder, they are looking for founders that are past idea, have some traction, could probably benefit from some of her experience and her network's experience. And then when they're making money.

On.

Top of, you know, what it takes to run the business, they then start to sort of pay back the loan. And so you agree on some things in advance, how much, you know what the multiple will be and then you know what sort of the cadences that you'll pay back. So kind of cool. A little bit different from what you guys are doing at Interlock and it's just a different sort of angle and way to get money into startups. But she's focusing specifically on, you know, like we said, underrepresented founders, women, people of color, LBGTQ. Plus there is veteran there, but we're starting to see some veterans rise as well. What did you dig into some of the metrics as far as you know, how Many women are CEOs of top companies or what type of funding goes to the founder she's going after?

Definitely. Which I think is really smart to look and see. You know, one, don't just throw capital where all the capital is going, look at other places because that may be on the rise. And so some of the things that she has noticed is that 8.2% of Fortune 500 CEOs are women. That's actually up over time. And so it's growing. And let's make sure that's representative of the population. 1% of women of color across Fortune 1000 companies. Companies, yeah, it's bigger CEOs, which is so. Which is just tiny and needs to change. You know, it absolutely and absolutely should from a capital perspective. Why not be involved in making that change? She also found some Great other statistics. 1.2% of 147 billion in the first half, 21 went to black founders. That's venture capital. That's tiny time. And 0.34% went to women of color.

Wow.

It's like unexcusable, to be honest, that that is a thing. And so it's a mandate for her. You know, we are measuring ourselves in this regard too and interlock and saying, are we part of the problem or are we part of the solution? But when she said, you know, when she, when she was founding in 2015, she said, look, investors want a very unorthodox model. They want to be able to bring things like bringing obstacles to an obstacle course, which I love the kind of thinking around that.

Right, right.

It's already been hard for underserved founders to get to where they've gotten. They've obviously had to do it and tried out of the box thinking just to get to where they are because there's obstacles. And so back by backing these people, you're backing people who not just run through walls, but will figure out complex ways how to get through them. And so that's pretty good conviction, I would say in that regard. Obviously time will tell. Multiple years it takes to see a return on investment. But she's obviously having, tracking traction from the fact that she's backed, I believe it's hundreds now of companies. She's done both revenue based for other companies, but then she has raised capital. So they've now raised the Series a back in March 2021 to fund their operation and grow their team even more. So obviously that's traction from their regard that they're, that they've got a model and it's working. Take us through how they work.

Yeah, I wanted to do that. I was kind of going to ask you a question too. Is like, you know, sometimes it's an interesting strategy to say, hey, what's every. Let's, let's look over here where some of the other groups are not looking. And so maybe the competition is a little different. But again, the deal structure has to be different too. And what can be a little complex is marrying this type of deal with maybe a traditional fundraiser. So if you wanted to work with them, you know, past idea phase, making some money, remember you're doing revenue based financing, meaning you're paying back based on your revenue. So you should have something there that you can grow into. Founders committed. I think that should be true for anything. But you know, there are a lot of times where it's like, hey, you know, that's a full time job and my side hustle is starting to do well. It's kind of hard to deploy capital to someone, you know, in that phase. It's like go, go dive in headfirst and let's go. And then they basically loan the company money with a promise of paying back at a multiple. So their range is like kind of 1.3 to 2x on top of what they loan you. And then that then comes out of, let's say, 2 to 5%, 2 to 10% of the revenue on top. So they just take a small piece and say, hey, this is going towards that, that, that 2x. Let's say in this example that we are going to be paid back. They don't exchange equity. They help the business and then actually are in a pretty good position to now understand what the business is doing, how they're doing, and can probably help them raise some money down the road because they're, they have an intimate understanding of how this company is operating. I like this model. I think it's super cool. And it definitely touches on some other businesses that may not be a perfect fit for, you know, for venture, maybe some more retail type businesses, you know, but I think they can probably play in the high tech space too. It's just, it just touches a different interlocking circle.

Yeah, no, I like it as well. And obviously the majority of businesses are not venture backed. So she's playing in a much bigger pool of total audience and total businesses. But look, loans are out there as well too. So it'll be interesting to see how she continues to differentiate. And I think she's shown that so far. She can so keep it up for Founders First Capital.

Are you watching? So as we move to the next one, are you watching Facebook stock lately? And kind of the big bad company who kind of grew almost too big. They're growing themselves to death. It was just an interesting term, Facebook.

So our next story is going to be about a local company buying assets from Facebook. But yeah, Facebook has had like 25% drop. It was the largest drop in stock, I think, in one company of all time. This week, I think is what I saw. They erased $200 billion in market valuation from their earnings call earlier this week. So maybe they're about to shed some assets.

Yeah, I was going to say the reason they got themselves into this mess a little bit is they're so big they can't go acquire themselves out of this problem. TikTok's kind of nipping at their heels, if not overtaking them, and everybody's into that. And there's actually a quote by Mark Zuckerberg which was really interesting is people are now more interested in content from strangers than from their friends, which is a really interesting transition you know, it's, it's influencers or whoever else you're seeing, and they're kind of stuck. So anyways, they tried to, you probably heard they tried to get into Libra a while back and, and create their own stable coin, which would have been an insane move if you think about it. There's like 2 billion people on the Facebook ecosystem. So could you imagine just using that, like Facebook pay or whatever. You could go, you could go, you know, country free. You could just send it across the globe. But they would have a pretty huge amount of power if they had that control. So, yeah. Do you want to take us into silvergate Capital moving into kind of, I don't know, I guess this is their windfall, right?

I think so. The big news is that Silvergate is buying cryptocurrency assets from Facebook. What was originally was Libra, now known as DM Association. Silvergate, a local public bank, is buying them out. They're buying it in 50 million in cash, which feels small, and 1.2 million shares of stock as well. So for Facebook, it's the crypto ip, the back office tech and the compliance software that was running or is running the stable network. Stablecoin network. You gotta imagine for how many stablecoins there are out there. Facebook should have been able to figure this out. But to be honest, like you said, they're a behemoth. They have targets on their back at all times from regulation, which probably. And based on all the additional regulation that's going on for them around just social media, maybe it's too much to also take on this nebulous area that's crypto. But Silvergate, I don't know if people have been following them for a while, but they have been one of the biggest backers and bankers of the crypto industry, really catapulted them to a whole new level about four to five years ago because of that, they went public, they had a great IPO and have been doing really well because they were willing to take the risk on crypto when most of the banking industry has not and still hasn't, to be honest. Almost like the cannabis world. So cool to see that local, local, local bank is willing to do this. What do you, what do you think comes with this?

It's, it's really interesting. I mean, a testament to that is like their Stock went up 15% like on this news, which shows you kind of how people are viewing them. But it's a fair point. I mean, there are a number of stable coins, but I think that them, I think they're going to have a lot of it. Much easier time getting this pushed through because they're already very regulated, kind of as you had mentioned, they're public company, they're a bank. So if they're able to just take this tech and kind of roll it into their own stablecoin, they might be able to put this into the market a lot quicker and a lot easier. Libra had already signed up Shopify, Lyft and Uber to kind of play in this ecosystem. I don't know if that transitions over, but they're obviously interested in the ecosystem, the structure. Unsure if it's more Facebook specific or if the stablecoin, which one of the two pieces is the draw for those three big Goliath brands? But this is going to be really interesting to see. But I just love that it's in San Diego. It's up in UTC Evo Nexus used to be out of that building. It's a beautiful building. I remember seeing that bank all the time when I was there. So kind of cool.

And obviously they have some big vision. Right. And they're willing to take some interesting risk. I think we should get the CEO on the podcast. So we'll do some outreach and get that on because that's got to have some interesting conviction on the space. So good one to see. So some Facebook assets here in San Diego. Love it. By the way, Facebook has taken office space officially in San Diego too. And so they will be having a presence here as well. That more to come on.

That's a presence and less of an asset being acquired.

Yeah, exactly. What if they take space in the same building as Silvergate? That'd be funny. Anyway, let's go to the next story, which is a great story about talent moving to San Diego, moving a company here, Carlsbad's prima donna, which runs a nail bot. Literally a nail. A nail printing bot, which is kind of cool. Powering new creative expression. Yeah. So Business Journal article, Love the story here of a startup San Diego EIR entrepreneur in residence. Pre is the founder and CEO of this company. She moved her company here from Louisiana or. Well, she moved from Louisiana. Is that where the company was based?

I think it went Louisiana up to Silicon Valley.

Feels right. She's got to be intelligent. Yeah, I don't remember either. She will be. She's. We're recording a podcast with her in the next few weeks, so we'll get the full story. But it's an intelligent manicure bot that both prints epic nail designs and you can use your phone for a screen to design and upload the designs itself. This is kind of cool.

Are you thinking take us through a.

Little bit more about them?

Yeah. I mean are you thinking that now we're going to print our NFTs on our fingernails? Like maybe that's coming. That'd be kind of interesting. But they're actually, you know, they're rising. They've got a couple of accolades that are pretty cool. TechCrunch Disrupt Battlefield finalists Amazon elects the fund and all rise female founder represent winner Founder made founder of beauty winner. I mean the list is pretty long but it's just a really clever idea on something that was fairly common. You go to a nail salon and get your nails done. But now this might be something that is either was headed in this direction and the pandemic accelerated or maybe people just wanted a little bit more creative expression and getting some art on their fingernails. I mean I've seen some impressive nails lately but this is just going to take it to the next level. The space is huge. I mean they're saying the global nail care by 2027 is estimated to be over 11 and a half billion dollars, which seems massive. It's going to be pretty cool.

Yeah. Interesting. And I've been watching San Diego's kind of beauty tech scene grow. Interesting to watch this Lawless Beauty, one of the bigger name brands from Annie Lawless. She was co founder of Suja Juice makeup brand that's been doing. So we've got some packaging companies here that are doing clean beauty packaging in the CPG space. So Verity that we invested in at Interlock focus on clean beauty. And then there's actually a number of other makeup lines that have been started in San Diego as well too. So kind of interesting to watch the founding, kind of the founders of Beauty come together here. We'll make sure we connect pre on that as well. But Pre, welcome, welcome to the community. Love to see you here and grow and do well. And I think she's based in Carlsbad. So another good north county company.

Yeah.

Let's take through our last big story of the day. Smart carts. This is a really cool story about the San Diego airport who has been piloting a smart cart company. The bigger story really here is about how San Diego airport has been so forward leaning in incubating technology. So they actually started the innovation lab program about five years ago. They took the commuter terminal. So terminal, I think it was just called the community terminal, the one that's got the giant painting on the side of Charles Lindbergh. They closed it down one day but left it in total operation and said every year we're going to let a class of startups come through and or not even just startups. Companies from start all the way to big tech too come in and test new innovations on an existing airport. So everything from how like they left even parking, so testing even parking tech all the way up to the ramp and the stairs, right up to loading on a plane. And so they've had many classes and cohorts of companies come through, including one I invested in called at your gate that have tested and tried airport tech if that is a thing. And you can think of things from like entertainment in the airport. So cre Guitars have tested a stand where you could literally pick up a guitar and play it while you're waiting for a plane on demand delivery. Which I think you know a little bit about that space Jonah of getting delivered right to the plane itself. Like when you step off pilots literally have coffee waiting there for them. And to you know, this intelligent tracking or this Copenhagen based company called Intelligent track Systems who are bringing this smart cart to the airport. You want to take us through what this technology is?

It's really kind of interesting. It's kind of cool.

So they. We may have lost Jonah. Jonah still there. Okay. May have lost Jonah. Can someone give me a thumbs up if they hear me? I mean Sasha, Chad, can you give me a thumbs up if you can still hear me? Hmm. Okay. You guys still hear me? Awesome. We just lost Jonah. No worries. He's talking about the carts. These intelligent carts that are super interesting not just for being able to walk you through navigation wise but also for ability to really have a whole new ad space and have almost act as like a platform for other technology on top of as well too. Imagine maybe it starts actually you know, have its own motor and can move things for you move, you know, can go and move your. Your carry on somewhere. Super interesting. It's cool to see that San Diego airport is is incubating new ideas like this obviously has more applications just than just an airport. But this is one of the few incubators that at the government kind of gov tech level or major transportation level, they're trying out new things. So super cool to see uh, the smart cart idea at the airport. We'd love to hear from you. What are you seeing tech out there that's interesting. Feel free to jump into our Twitter thread about this. Two quick shout out stories we wanted to do. Jonah, are you back? Oh, you can't hold on one second. I'll make you a co host but in the meantime want to give a quick shout out to Tusimple. We talked about them last week on this show. These are the autonomous trucking company that is actually has autonomy level 4 autonomy where it is trucking cargo between Phoenix and Tucson right now. And we mentioned last week they have been approved to actually have no one in the truck. So that's kind of interesting. But now we, we've seen that they've signed on a whole new partner with Union Pacific. So you probably see them all over the sides of railroads. They're a major freight company and they've signed a deal with Tusimple as well. Got to imagine just any option, go for any option these days when cargo and freight is so disrupted and sitting outside ports and the supply chain's a mess. So super cool to see San Diego, another Santa company doing this autonomous trucking, but now with a new partner at Union Pacific. Junior Are you back? Maybe not. Probably from those random San Diego booms happening all week. Maybe, maybe not. The booms, they've been crazy. We hear them all the time in north county from Kent, Pendleton, when you just kind of assume, oh, Pendleton's doing war games again. They've always claimed like those booms could, could be actually not just heard 50 miles away, but actually amplified in specific weather, which is fascinating to me. That actually could be louder because of, I don't know, low cloud level and that kind of stuff. No, I don't think so either. Well, cool. Well, that's. Is that our show? Is that everything we have? Yeah. Thanks so much. This can be heard again, I think if you listen back on the spaces itself as well as it'll be on the Talkers and Tech podcast network this weekend. Join our Twitter thread and let us know what you're hearing and what you want to hear us talk about next week. So send us anything you're hearing about. And without further ado, have a great weekend. Cheers, everyone.