If you've ever wanted to start a business, or maybe you have started a business, we've got the show for you. Today, I'm talking with Dom Einhorn, and he's the founder and CEO of Unicorn, a startup, incubator, accelerator, located in the southwest of France, which under any other conditions, other than a pandemic, would be an absolutely gorgeous place to do this interview. So I'm going to get a commitment from Dom the next time that we do this interview, I'm going to come visit him to do it live.

Let me tell you a little bit about Unicorn. Unicorn is arguably the largest start incubator in a rural setting in the world. Dom's last name, Einhorn, actually means unicorn in German.

So we're going to talk to Dom about starting a business. We're going to talk to him about this great new program he's got, which many of you may be interested in. And we're going to get the entire inside BS on what you should do and how you should do it if you've been asked to invest in a startup or you're thinking of investing in a startup.

We've got an action-packed show for you on this edition of the Inside BS Show. Dom, welcome to the show. I am thrilled to have you here.

I want to learn all about investing in startups. But before we do that, tell me, what is the Startup Super Cup? And it's gotten some really great coverage in France recently. Tell us all about it.

Well, first of all, thanks for having me on the show, Dave. Much appreciated. The Startup Super Cup is a marquee event for this region of France in the southwest.

It's an event unlike any other the region has ever seen before. And basically, what we're organizing, October 1, 2, 3 of 2021, is a summit during which roughly 800 angel investors, 80 plus funds, 100 startups, and over 100 media outlets in the targeting finance, startup entrepreneurship, and early stage ventures meet and congregate. Wow.

Okay. And explain for our audience, because there may be some people listening who don't know what angel investors are, explain the different stages of investing in a startup for the folks who are listening, please. Okay.

Well, assuming you're launching a startup and you need funds, usually the first investor you go to is yourself. Once you run out of that investor, which usually happens pretty fast if you're a startup entrepreneur, you go to your warm circle of friends and family. In France, we actually use an English term to describe the friends and family around.

We call it love money. And basically, you have an emotional bond to these people. Usually what I tell startup entrepreneurs to come and see me and trying to pitch me on an investment is, if you're young, your grandmother is still alive, show me that she has invested in you, that she trusts you enough to invest in you before you come and see me.

But that would be the second stage. You typically run out of the F and F money, friends and family money relatively quickly as well, especially if you're scaling fast, at which point you actually have to break through your warm circle and you have to cold call on people you don't know. And the most likely investor at that stage is what we would label an angel investor, which strangely enough in France, we call a business angel.

Again, terminology there is different, although we're using an Anglicism in order to describe what's happening. And that angel investor usually is a former or current entrepreneur or someone who is very much in tune with the startup ecosystem, has been there, has done that, and has the capacity of providing you with more than just money, typically advice. Along with advice comes a Rolodex, if he's been around the block for quite a few time, assuming it's not his first rodeo, etc.

So the angel investor is more like a strategic investor, ideally at least it is, that can actually, if he believes in your project, invest some money, but also invest additional resources like his network and may help you find your first clients, etc. Okay, so we all here in the US, if you're connected to business in any way or you're interested in business, we all watch Shark Tank, okay? And my kids even love, my kids are young, 9 and 12, they love Shark Tank. So we know about pre-revenue businesses.

Why is it always a good idea to go to an angel investor or any investor with a track record of success, even a small amount of success, rather than go to them pre-revenue? For a simple reason that, again, he's not just, doesn't just represent money. So if you look at Shark Tank or what is it called in the UK, Lions Den or something like that, yes, they're kind of like Hollywood versions of what really happens, right? Obviously, there's a lot, a heavy dose of Hollywood in there, but you would get a similar type of feedback in a more relaxed fashion if you're actually pitching angel investors, no matter where it is in the world. But typically, you would go to them because you're not mature enough yet to go to the venture capital guys.

And for them, you're just too early stage, they won't pay attention to you because it's just not worth the time, right? They're looking at writing much larger tickets and the tickets do get larger and larger as we've seen over the last few years. So your best chance remains with an angel investor. And that angel investor, again, even if he's not investing physically cash into your business, would probably welcome opening up his Rolodex to one, two or three of his contacts who actually may invest, co-invest or bring additional value to what it is you're trying to build.

Sometimes when you're looking to raise early cash and if you actually have a product or service that's already on the market, raising equity cash or even debt cash is maybe not the right thing to do. What if you could find two or three marquee clients and actually cash flow relatively quickly? That's the cheapest money you can get, assuming you have a product or service on the market that is sellable, right? But the right angel investor will, unlike a lot of the VCs, will actually take a more human approach to his investing strategy. Usually one of the first questions that I ask myself when I'm being pitched is, number one, do I want to do this deal? And number two, because I'm going to be joined at the hip for many, many years with this startup, would I go fishing with this person? And basically what you're trying to do is you're trying to anticipate what will happen, ups and downs.

And if the answer to that question is no, I usually kind of quickly turn away and say, thank you very much. Not for me. Wish you the best.

I'm more diplomatic than Mr. Wonderful on Shark Tank, for example, which again, that's Hollywood, right? He's a nice guy. I met him personally before, and he may come through as abrasive, but he's acting when he's doing that. All right.

So let's talk about the different types of money people have the potential to raise, to acquire as startups. You mentioned debt, you mentioned equity, and then we talked about something that I work with my clients on day in and day out, and that's finding two or three marquee clients, getting maybe longer term commitments so that your cashflow is there and you can leverage that cashflow. Debt, explain to folks what debt is and the difference between debt and equity.

Some people may not know. Well, you know, debt is what you get when you get a bank loan. That's the easiest way to explain it.

So you're basically, it's an IOU, you know, someone writes you a check that may or may not be collateral. In most cases, there is collateral, but you're basically agreeing, you're saying that at some point in the future, you will repay what you've owed plus interest. Equity on the other side is you're giving away a piece of your company at a specific valuation, which you need to justify.

So you're giving away anywhere from a small percentage to a large percentage, which is negotiable, especially during the early stages of your startup. Okay. Talk really quickly about and do it is explain it as easily as you can about convertible notes, debt to equity convertible notes.

How does that work? Because sometimes we'll hear people say, hey, listen, we're going to we're going to make this convertible. When is it a good time to consider that if you're if you're looking for funds? So it's more used, I would say, in the U.S. than it is in Europe. In Europe, you typically do one or the other.

Basically, if you if you sign a convertible note, you're agreeing to either you're giving yourself the option of repaying that note as an as using a debt instrument. In the case you don't repay it, it converts into equity at some future date and time, plus a coupon, an interest rate that's negotiable as well. Right.

So it's what it's widely used. You know, it's not something we typically look for, but we've done a few of those deals. But it protects both sides.

Okay. Now, many people fall in love with their business and they make mistakes when it comes to the valuation. What do what should people do? Let's say let's say we have some revenue.

We have we have a good one year track record. We have we have revenue. How should we look to value our business? Is it a function of EBITDA, which is earnings before interest tax depreciation and amortization? Is it a function of a multiple of some sort of profit calculation? What's the best way for someone who's looking for money to value their business? It's a difficult question.

It's a challenging question, specifically because if you are an early stage startup in the digital space, you're not going to be looked upon the same way as if you're opening up a bakery. So if you're a traditional brick and mortar type of a business, you have a very mature way of assessing valuation, which is closely correlated to the type of business in the time of industry and market sector that you're operating in. You typically go, as you said, a multiple of EBITDA, in some cases, a multiple of revenue, assuming that the EBITDA that you derive from the revenue is relatively stable within that industry, relatively predictable.

The issue you're running into with early stage startups in the technology space is that sometimes the most promising ones, biotech is a perfect example, may have no revenues and nothing but expenses. So you cannot value them based upon those same metrics. At that point in time, you somehow sometimes have to throw a dart against the board and say, look, the Texans go like this, for those of you who have video, kind of like measure it by the thumb against the horizon.

What we do internally at Unicorn, because we're an incubator accelerator of technology startups, we look at the product market fit first and foremost, regardless of current revenue stream, because we've done quite enough deals to be able to predict what that stream will look like. And then we quickly look at the value that we can add to that business by getting involved, being it via cash infusion, being it via something we do quite often, media for equity, where we actually bring in an entire marketing team, an entire marketing structure to drive customer acquisition at scale, in particular with regards to mobile apps. And then we try to weigh risk and reward.

Obviously, we're saying, OK, this is what we consider to be highly undervalued assets today. Given the right resources, given the right support, this is where we believe this asset will be 12, 18, 24 months from now. And then basically at the end of the day, it still comes down to negotiation around the table or around the conversation like the one we're having today, where typically each party takes a haircut because it's give and take, because you start with a valuation, you throw out a valuation, and then you have to actually defend that valuation as an entrepreneur, knowing that on the other side of the table, you usually have an astute investor that's just going to demolish you in that valuation.

And then basically, it's up to everybody to agree or disagree as to what's a fair valuation. All right. So as someone who's looking for money, then I need to take an inventory of any hard assets, and then I need to assess the goodwill and look at my revenue stream, look at my earnings, and then that's how I'm going to put together the valuation.

Why do I see so many folks who are looking to raise money overvalue the goodwill and they don't have enough assets to really hang their hat on, and how can we correct this as we're talking to people? So what you're mentioning right now is actually the number one, you've just identified the number one reason why early stage entrepreneurs do not raise any money. The easiest way to encapsulate the problem is by saying and stating that most entrepreneurs being of the optimistic nature tend to vastly overvalue what they currently have. And that's pretty much true across the board.

I see this, again, I get 50 to 80 decks on average a day, and I see it happening, I don't know, 95 to 98% of the time. So that's a problem. The reason why I'm saying it creates friction with the potential investor is that if you are the investor, if you're the actual check writer, and your first hook point is a negative one, like I'm trying to get you interested in what it is that I'm building, I'm trying to get you to buy first mentally and psychologically and eventually financially by having you write me a check.

And my first comment is, the bar is this high, you're quickly going to turn me off. Along with that valuation aside, usually these crazy valuations that we're seeing at early stage are driven by the fact that the way an entrepreneur or most entrepreneurs tend to value their businesses is predicated upon grabbing imaginary market share from a market that sometimes doesn't even exist. So the typical pitch that you'll see is the market we're breaking into is $100 billion market, and over the next three years, we're going to grab magically out of thin air, a 5% market share, and hence we have a run rate from zero to 5 billion over the next three years.

I got news for you, it doesn't work this way. So if you really want to convince in an authoritative way an investor and build trust, the first thing you have to do is you have to be a little bit human and say, look, Mr. Investor, this is what we're setting out to do. Obviously, as you know, nine startups out of 10 fail, typically within the first two years.

Okay. We believe that we will not be a niner. We believe we're going to be the one.

Here's the reason why. Obviously, we're going to face many challenges, etc. But do not overstate what you intend to do.

You may think it is a selling point, but it's the biggest turnoff you'll ever put forward when trying to convince an investor of doing business with you. Yeah. No, I've seen it.

I've seen it myself. I've seen it myself in people who come to me with a good idea and they want me to help them market it or pitch it. I have yet to find a pitch that I would invest in, so I don't help them pitch their investment.

It's interesting. Some of the elders, my father is still alive, he's 81 right now. I remember one of the first digital marketing campaigns I was working on in 1995.

I was living in Santa Monica at that time in California. My dad, who knows nothing about digital marketing, comes to me and goes, son, can I have a word with you? I'm like, sure, dad. I'm working right now.

I want to talk to you about your work. He was looking at the product I was trying to market. That's now in French.

He was telling me, I'm translating it literally, son, you can dope up a donkey as much as you want. He's never going to win a horse race. In other words, no matter how hard I tried with that product that I tried to market, it just would never work.

Ultimately, in hindsight, he was right. Yeah, yeah. One of the things that I have my clients do when they start to enjoy some success is acquire some assets.

I work with a lot of professional service firms. The first thing I tell them, we talk about exit strategy for them. Professional service firms are notorious for having terrible, there's no exit strategy.

You die at your desk or your partners take over and they basically continue to pay your salary until you die. That's the exit strategy. I tell them, look, buy your office.

Acquire as many physical assets as you can and think about how you can take those assets and dispose of them as an exit strategy for you. Because as a professional, goodwill only has so much value unless you create your own market for the exit strategy. When you work with folks who come to you or when folks pitch you, number one, how important is the exit strategy? Number two, have you found people who have done a really good job of setting themselves up so that they've created an exit strategy where you say, man, this person really knows what they're doing? Yeah.

It's a tough situation to be in. I would say that overwhelmingly startup entrepreneurs in the digital space, they don't have an exit strategy for the simple reason that they are very passionate, sometimes overly passionate about what they do and they just believe they're going to do it for three lifetimes in a row. That's clearly the opposite of an exit strategy.

What we try to do is we're trying to teach them that you prepare for an exit from the start, especially if you want to raise money. Because the investor may not be as passionate about what it is they're doing, but still passionate enough to invest in you because he believes in you. You want to give that investor light at the end of the tunnel.

In some cases, again, for most startups we work with, specifically engineers, they have no clue about what that even represents, even though they may have an amazing product or service. There comes a lot of education, a lot of consulting that comes into play, giving them these options that they have to eventually merge and be acquired by another company, maybe sometimes even on a Rolodex. We have our first incubator that's going to be going public in Canada and in Germany within the next three to four weeks, we hope, in the augmented reality, virtual reality space.

But that needs to be explained to them because they don't understand the public markets either, for most of them. In terms of hard assets, I'm probably the exception to the rule. Yes, even though I like hard assets as well, I'm actually in my late career, I would say all of my assets that I've acquired in the last 25 years have been soft assets, meaning intellectual property assets, web assets, mobile assets, etc.

I'm actually just, as you mentioned, for example, we're expanding into 2,500 square meters, roughly 26,000 square feet of additional space. We just negotiated with the city of Staline, southwest of France, for the takeover of two large buildings, formerly the unemployment office that we will be replacing with employment. That in itself is starting to get a lot of ink right now, because there is still a little remnant of the unemployment office that's actually being relocated so we're dismissing them so we can actually put some employment in place there with startups coming in.

But we are physically acquiring that space versus leasing it. Yeah. Talk a little bit about, you mentioned there soft assets.

One of the things about intellectual property, and this is kind of the second point that I make to my clients all the time, is that intellectual property most often will add value to a business. In fact, in some cases, the intellectual property provides almost all the value of the business. In your case with digital startups, I would think that people who jump into that space think to themselves, okay, we are in this sector.

Our goal has to be, instead of becoming the next Facebook, how are we going to be acquired by Facebook? How are we going to be acquired by Microsoft? How are we going to be acquired by someone who has something complementary to what we do? How important is that thinking when you're trying to raise money? The person who comes to you, do you want them to be predisposed to that idea or are you willing to nurture them and warm them up to that? I'm more inclined to nurture them and warming them up because I'm not a trend chaser. I think that trend chasing is proven very often to be a flawed strategy. I've seen so many startups that, for example, try to identify friction points of Facebook, Google, etc., not knowing that internally they have 10,000 people working on actually solving those issues with a lot more resource than you will ever have.

We can all quickly identify problems and come up with solutions, but don't think that those big behemoths don't actually think the same way. They're much more aware than you will ever be, but the friction points they have internally, and they're solving them with iterating 50, 100 times a day. If you look at the Google search algorithm, it changes 50 to 100 times a day.

If you think actually you can devise a better algorithm, good luck, but that's not something I would be chasing after. It was Jeff Bezos who was asked about this specific topic, which trend are you chasing? His answer was categorical. He said, I'm not chasing any trend.

In fact, what we're working on internally, what we're focusing on at Amazon is what does not change, because that's predictable. For everything else, you need a crystal ball. So what doesn't change? Well, people, even during COVID, will eat, they will wear clothes, they will consume a certain number of items, and what we, Amazon, do is we bring it to them on a platter faster, more efficiently, cheaper, with better customer service than anyone ever has done before.

So that's real tangible value, and I think part of the intellectual property of what we're seeing is that the intellectual property sometimes becomes the product, because it encompasses all of those services along with the brand, so that when you actually think of Amazon, quick delivery, efficient, no hassle returns. In some cases, we don't say to Amazon yet, but we say to Google, and if we actually today say, go on the internet and search for it, people will actually look at you in a straight way. Google it.

That's the verb. So sometimes when we bring in startups, that's a little game that we play. I will ask them, assuming you're successful with your startup, what verb will you represent three years from now? Because that's a good exercise, because that will basically challenge them intellectually to come up with a proactive term, which is a verb, an action-oriented term that will tell them which problem they will solve.

Because one of the biggest problems that I also see in the space today is when I started as a technology entrepreneur in the 90s, it cost an arm and a leg to start. In 1998, my monthly bandwidth bill was $8,000 a month, and I was using 800 times less bandwidth than I'm using today, and it's almost free today. One example.

Another example, 1999, 2000, if you wanted to launch an e-commerce website, you needed to host an Oracle server license. It was the only kid in the block. That server license would cost $32,000 US per license per server.

So unless you had raised a half a million dollars, you had no point being in business. You couldn't even survive more than three or four months. Today, that's no longer the case.

So the startup entrepreneurship has vastly democratized and demonetized. As a result of those two factors, today, anyone can launch a business on a smartphone. That's the good news.

The bad news is everyone, the brother and their sister and their cousin is your competitor. And because it is so cheap today to launch a business, many businesses launch that never should be a business in the first place. Vanity businesses, right? And we're coming back to basically what the business does.

A real business that has longevity solves a problem and provides a concrete solution to that problem. And many of the startups that we see in particular in the digital space today don't do any of it. They actually create a problem and then intend to solve it themselves.

They do both. And that's not a recipe for success. All right.

Let's talk a raise money. One of the things that I've had limited experience in this, but one of the things that I've told clients who've come to me and they want help with a pitch deck or they want help organizing themselves so they can go pitch to raise money. One of the things I tell them is treat this just like you treated your customer acquisition process.

Do your homework first. Find the ideal investor for you and then customize your pitch for that ideal investor. Don't create a broad pitch that is designed to go and hit everybody.

And don't spam people by sending out hundreds or thousands of pitches via email so that you think that maybe one will hit. What is the right approach? Are we on the right track with that methodology? I think you certainly identified the wrong approach. Usually I cannot tell people what it is they should be doing, but with relative certainty you can tell them what they should not be doing.

You just identified that. So everybody wants to be treated with respect. So if you're sending a blanket message, be it via email, via Facebook, via LinkedIn, I see a lot of them on the receiving end of it myself, where somebody requests you out of the blue and you don't know who it is, there's no introductory message or the introductory message says hi, or you can clearly see it's a cut and paste from another message, ignore.

We have now the capacity more than ever before to hit the ignore button. If you go back 20, 25 years, you'd be sitting at a dinner table, a telemarketer would call, you'd pick up the phone because you couldn't filter it because you think it's your mother calling. So you'd actually have to pick up the phone, say hello, and then try to get rid of that guy.

Today we have built in filters in everything that we do. So the key becomes, as you mentioned Dave, the key becomes to how you differentiate yourself and how you properly build hook points for a specific target audience. The best way and the most efficient way to engage a prospective investor is by spending a few minutes reading his profile on LinkedIn and then catering a custom message as to why he's of interest to you and why you should be of interest to them.

So give him that little ounce of respect and it will pay off in spades. Write a custom message, your conversion rate will go from zero to 10% plus, you can all try it. If you're pitching anything, if you're raising money, if you're selling a product or service and you're using LinkedIn for outreach, just do that little strategy.

Pick 100 potential targets and now fully customize his message and set them aside as one batch and blanket the same message to 100 people and compare apples to apples and you'll see exactly what I'm talking about. Talk a little bit about when people get in front of you, what is the best way for them to start their pitch to you? Do you want them to lead with the emotional connection that they have to the business? Do you want them to lead with the emotional connection their customers will have to their product or service? Do you want them to lead with the numbers? What is the quickest way to get you to sit up and go, hmm, this is something I need to pay attention to? Coming back to the hook points, I think everyone reacts differently to certain hook points. If I'm pitching a CFA, a financial analyst, I'm not going to use the same hook point as if I'm pitching a salesperson or marketing guy.

You got to have a little bit of knowledge about personas there, knowing that not everybody fits the same mold and that you need to have, for the five different personality profiles, you should have a different approach. I'm probably not the perfect example. I'm half French, half German.

I'm a little weird when it comes to that where I react to different things depending on what day I get up and how I get up. You're analytically passionate. That's right.

Long story short, you still got to be able to hook me. Assuming everybody were the same, which they're not, we got that out of the way, what you still need to do instead of just saying, hey, we're the best thing since sliced bread, forget about that strategy. It doesn't work regardless of who you talk to or you'll attract a very, very bad investor that will be on you for the rest of your life and haunt you in your daydreams and at night.

What you really want to do is you want to craft two or three strong sentences, bullet points. Call it your elevator pitch. It's actually pre-elevator pitch that make you stand out from the rest of what this potential investor has seen.

Concrete example. Let's say you are in FinTech, financial technologies as a startup. Obviously, big buzzword right now.

Or if you even mention cryptocurrency or Bitcoin, Lord forbid. People are like, the mind is spinning. What should I be looking at? But let's say you devised a new mobile wallet or a new mobile app that really addresses a pain point currently in the marketplace, making payments more seamless, whatever it may be.

The first thing you need to do is you need to realize that this investor may have been pitched by other companies in the same field. Don't assume that they don't know who they are. I see that very, very often.

Like, okay, Mr. Dumb Investor, we're the only solution. No, you're not. Email quickly back two or three sentences.

Sometimes I ask him, what makes you different from this and this and this company? So at least show that you've actually analyzed the market, respected investor, assume he's astute, even if he's not. And then quickly identify again what makes you different from the rest of the pack. Rule number one of PR, be different.

Dog bites man is not news. Man bites dog is news. So you be that man who bites the dog and then you will get the attention.

Yes, you will turn off some investors, but there's no way around that. But you will likely turn off the wrong kind, which you wouldn't have wanted to work with anyway. So if you actually take these creative hook points and you really try to, what we call attract, engage and convert, those are kind of like when we run marketing campaigns, those are the three high notes that we want to hit.

You cannot engage without attracting first. So first you have to break through the ice and get someone's interest. You have to use one sentence to get that done.

Because in the world of YouTube, Facebook, we're scrolling through feeds. You have three seconds or less to be noticed, or at least noticeable. If you go beyond that, you're already lost in the shuffle, right? Because you're not the email, the sole email that person received today.

If you're using Facebook, if you're using Instagram, using Twitter, whatever it is you're using, you're clearly not the only message that a person will see. But sometimes when people are crafting these marketing campaigns, that's what they think, or at least that's what it appears to the recipient of that message. Nothing is standing out, boom, scroll, scroll, scroll, not interesting, right? So yes, hook, but at the same time, try to build baskets of prospects if you can, knowing that, okay, this is clearly a type A personality kind of guy.

You're not going to talk to the type A guy the same way you'd be talking to an engineer. He's going to be much more focused on metrics, on fundamentals, on numbers, right? And then try the path of least resistance. No one says that if you're raising money, you should have a cross section of the entire population, right? If you have a product, you're in the sales business.

If you have a product that improves sales, go after the sales guys. They're the easiest ones to sell. Don't try to convince an engineer, because you're going to be on the phone for three hours debating features versus benefits, right? Because he's buying the features and not the benefits.

So those are some ground rules that I would recommend everybody to follow. That's great. That's fantastic advice.

Thank you. How much are you, when you invest, how much, and allocate it for us percentage-wise, how much investment is in the person? How much investment is in the product? How much investment is in the process, right? Where are you, and I'm assuming that it's a personal style for investors, how much is allocated to each of those buckets? So are we breaking it down percentage-wise or we're just talking the general terms? I mean, you could give us a percentage, but it's going to be general anyway, right? I'm assuming that it's variable depending on what you're looking at. So the first investment is clearly in the person or the team, ideally in the team.

I'm not a big fan of lone wolf entrepreneurs, right? Because ultimately, if you want to build a successful startup, you have to prove to me that you actually, if you haven't built a team yet, that you're capable of building a team, because once you scale, that venture is going to quickly graduate beyond you, Mr. Entrepreneur, right? So the first buy-in is at that level, at that core level. Do we believe in the team and do we believe in their capacity of pulling this off? If the answer is yes, and everything else checks out, then there's an investment into that team where usually we bring them into the incubator, okay? And we give them a number of resources to check the other two points that you mentioned. Clearly, they may have a process already, but in most cases, that process can actually be improved, sometimes significantly.

More the case for low-tech kind of, in low-tech environments, because in the tech space, they're pretty good at actually figuring that out, using the right tools to accelerate. And then the product, the service, so case in point, we're bringing in right now within the next few weeks, we're already incubating it remotely, a startup from Normandy that has devised an AI algorithm for professional runners, competitive runners. There are 650 million competitive runners in the world, and they all get injured, and they all have another thing in common, is they are not perfect runners in terms of posture.

What this app does, this platform does, is you record a 10 to 15 minute video of you running, you upload it to the platform, the AI will analyze the position of your head versus your shoulders versus your knees versus your ankles, the right angles, and make a calculation and compare you if you're a sprinter to God, Usain Bolt, who, by the way, is not at 100 either, he may be at 92, and then gives you a score. I own the local rugby team, so we did it with one of the props of the rugby team, he checked that at 34. Pretty low score, but large margin for improvement.

But tremendous application, tremendous market, so here we're putting a lot of emphasis on improving the actual product, on how to make it scientifically correct, because as we're working through these processes, the startup was founded by a couple of high performance athletes, professional athletes, track and field runners who are now retired, and they have their own network of runners, and that network has its own network, etc. So we know, number one, that it's done by the pros, they're actually doing sessions already at the tail end of the customer acquisition journey, where the AI calculates your standard deviation from a perfect runner, and now you may need help, all the way to professional coaching session, which they're already doing. So they've already proven at the granular level that the product is validated in the marketplace, product market fit, that people are craving for it, even at the premium level.

So that was very, very interesting to us. Now it's a matter of thinking a different way. We come in with the idea of taking it from the 50 or so beta users that they have currently, and we want to scale this eventually to 1 million plus users, using ASO, App Store Optimization techniques, etc., etc., make sure that the app ranks number one for running app, etc., etc.

But first and foremost, we identified what you had mentioned, a great team, we decided to invest in that team. Second, we looked at product market fit, showed us an early proof of concept, so we're investing a lot in the actual technology, which will help us scale this and eventually bring on tens of thousands of runners. And last but not least, they've already proven they can monetize it, even at the premium level.

So for us, that's the ideal makeup, ideal anatomy of a deal we want to support. Yeah. I want to talk a little bit about France and why you're in France, but I just have one more question along these lines.

You mentioned a premium product and you also mentioned differentiation. As an investor, what is the most durable differentiating factor? What is the differentiating factor that you see when you look at it and you go, you know what? It's going to be hard. This is true because I see people who tell me they're different all day long.

How are you different? I got 30 years of experience. Well, I can walk down my street and find people with 30 years of experience. How are you different? Well, we're fast.

Somebody's going to be faster. Don't tell me you're fast. What is the most durable form of differentiation? I would probably call it sustainability because today, if you're an attorney, if you're an accountant, if you're pretty much anything, with the merger of 5G augmented reality, virtual reality and AI, which are becoming rapidly one technology, you're about to be out of a job, for lack of a better term.

How do you differentiate yourself? I think one thing is trust and credibility, which are very much human and will remain human until we reverse engineer the human brain, which is still a little bit out, but not much further than 10 to 15 years for those of you listening. I think that, again, here you would need to focus on what makes you unique, what makes you different, and what cannot be replaced by technology tomorrow or between now and the time you intend to retire if you intend to make a living from it. I think a lot of people tend to forget the authority and the credibility that comes with a product or service or a brand, including a personal brand.

What you're seeing, where you're still seeing durable, sustainable success is in people. Take Joe Rogan and his podcast. Anybody could say, well, there's a million podcasts, which is true.

There's a million people covering the same topics as you, Mr. Joe Rogan, etc., etc., and he will answer, yeah, but I'm still number one, and I have the largest follower base ever. Then you really have to look under the hood as to why. Why? He's got amazing authority, amazing credibility.

As a result of that credibility, authority is built up over a long period of time. He's able to attract amazing talent onto his show, etc., etc., etc. Another example would be Uber, Airbnb.

What makes them so unique when you and I could buy the exact same software off the shelf for $5,000? That's what a lot of people are saying coming to you. I'm launching the next Uber for this, Airbnb for that, etc., and I'm just shaking my head in disbelief, because you actually believe that by actually having the shelf, you'll be able to replicate what they've done. That proves to me that you haven't understood the dynamics of those platforms.

Platforms are the most difficult business to build. You need amazing balance between supply and demand, right? So Uber, if you have nothing but drivers and you have no writers, it's worthless. The other way around, it's worthless.

How are you going to acquire one and the other? How are you going to keep the balance between the two? What's your customer acquisition strategy for both? How sustainable is it over a period of time? How are you going to react when your next-door neighbor opens a competitor in your local area or a big player comes into the national marketplace to try and replace you and displace you, right? But that's typically not how these people think. Again, you're a sales guy. I'm somewhat of a sales guy.

Nothing happens until a sale happens, right? So you can craft, and we see this very, very, very often with young startups. They close themselves into four walls and they tinker around, et cetera, et cetera, without ever trying to actually make a sale. How about you go out in the marketplace and you make sure that people actually want to buy what you intend to build? And if they really want to do this, the perfect test is try to sell it before it exists.

That's the test that we use internally for any kind of new technology, any kind of new tool that we're developing. If we're unable to pre-sell what it is we intend to build, we won't touch it because we know it's not going to be validated, right? So the value proposition to your end user, to your client has to be so compelling, and you have to have whatever it is, marketing copy that gets the job done or salesmanship that they actually buy into the concept before it exists and write you a check for it. If you can do that, you're on the right track.

I'd say. All right. Tell me about France.

Why is France great for startups? So why is France great today for startups? And it wasn't yesterday. It's kind of like how I would describe it. There's been a dramatic shift since the election of Emmanuel Macron, the French president in 2017.

If he had asked me to move to France in 2016, I would have told you, you're out of your mind, Dave. Socialist governments, more roadblocks you could possibly ever imagine, starting a business, et cetera. And that dramatically changed with the concept that Macron and his administration launched in 2017 called the Startup Nation and the label La French Tech, which you may have heard of.

So it sounds like a neat little label, but it's a very powerful label that the country is promoting to the outside and both internally. There are regional chapters of French Tech, both in France and in foreign countries. I'll give you one example of what it does.

If I want to hire an engineer from outside of France, which I've done multiple times, I can use that French Tech label and obtain very quickly a talent visa passport, it's called, and have that engineer in my office within the next two weeks, roughly speaking. Wow. Very quick, right? Unlike some issues that you guys have experienced in the US, where people who have lived and worked in San Francisco for 25 years go home for a funeral in Egypt and have never been to Egypt before because grandmother died, tried to go back to the US and they basically shut the door in front of the house, you got to go back home.

Well, I'm home here. No, you're not. Go back home.

So that's one thing. In terms of investment, if you are a foreign investor, there is a French Tech investor visa. There's actually two formulas.

Formula number one, you invest 300,000 euros into a French Tech company, whether one of ours or anywhere else in France. You will be granted a visa on the spot for yourself and your entire family for four years, renewable of one expiration, knowing that after year five, you can ask for French citizenship. Wow.

So visa plus your equity in the business, right? You're buying into. Option number two, if you invest 30,000 euros and you have a master's degree, same benefit. Wow.

Right? So what you're seeing is you've seen a lot of investment pouring into France. You've seen friction points that have been removed in terms of actually registering a business. There's a new form and called an SAS, which is a simplified share company translated literally where before you needed to do all kinds of paperwork, 17 different processes, et cetera, et cetera.

That's been vastly simplified. And then last but not least, I think that the cost of doing business, especially in a place where we are in a rural space versus a big city, we're not, we're not in Paris, right? But if you calculate it, for example, the rent per square meter or per square foot and sell out where we are versus London, it's 50 to one. So if the internet is the great equalizer and you're raising money, what makes you more appealing to pay $50 per square foot or do you pay $1 per square foot? Right.

Right. The lower the overhead, the better. A hundred percent, because the easiest money to raise is the one that you don't spend, right? That stays right in your pocket.

So I think the cost benefit ratio is also higher than in most parts of the world, knowing that you're in a mature economy and not a red listed, blacklisted economy where yes, it may be cheaper, but ultimately will cost you a lot more. Sure. Sure.

Talk about an incubator accelerator. What does an incubator do exactly and who is a good fit? What type of business is a good fit to become a part of an incubator? So we take the U.S. approach in France to incubation and acceleration, meaning that we don't take on ideas, we take on projects. So if you come to us with an idea and everybody somehow believes that their idea is the best, the best ever, that's of no interest to us.

So you have to actually be able to validate your concept. You actually have to have a product or service on the market that's marketable, that's sellable before you come to us, and then we'll start listening to you. So incubation stage is, as its name indicates, the same incubator as you find in every hospital in most countries around the world where babies have trouble breathing, maybe, right? You want to actually make sure that you give them the right kind of support to put them into an incubator.

In our case, we do that for startups. They are our babies to make sure there is sustainability and durability to what it is they intend to do, assuming they check every single point that we're looking for. So it's basically taking on, in our case, early stage technology startups and giving them the tools that will help them succeed.

In some cases, they are very light on finance, on legal, on accounting. We provide that. For others that actually have those boxes checked already, they may be light on graphic designs, development, engineering, et cetera, et cetera.

We provide that as well. And then assuming everything checks out, you go through the incubation period, which for most businesses in our sector represents a period of six to 10 months on average. You may ultimately gravitate and graduate to the accelerator.

And the point of the accelerator is to take what we've built together and put an exclamation point on it and an exponential on it. So let's say during incubation, you validated your product or service. You've acquired a handful of customers that have actually purchased your product or service.

Now it's time to accelerate that business. And instead of having five clients, take you from five clients to 50, to 100, to 1,000. So that's the point of acceleration.

Acceleration is very heavy in our scenario, very heavily geared towards new customer acquisition, identifying, building out customer acquisition funnels in the digital space. And that's where a lot of consulting comes in, a lot of handholding in terms of what you should be doing, what not, having a professional team that's been there and has done that. Yeah.

No, that's a great, that's a great explanation. All right. Let's go back to specifically the startup super cup.

What is the criteria to apply to be a part of that? Who are you looking for to enter into the startup super cup? So the tagline for the startup super cup is where startups meet capital. All right. However, you're not going to attract any startup without the capital.

So we've been focused on capital first. We've leveraged our Rolodex, our connections. You can go to startupsupercup.com and register on there.

The first newsletter goes out tomorrow, and we try to kick it off with a bang. And you'll see that the pedigree of the people will actually, we'll be presenting from the speakers to some of the key attendees to the moderators is absolutely top notch, Davos-like, right? So it's very, very, very high end. The intent is to bring a thousand people together over a three day weekend, October 1, 2, and 3 of 2021.

800, we're eight months out from the event, 800 have registered as of today. Wow. Pre-registered.

Lots of media coverage, both in France and outside. I can't name the names, but you'll see every major financial news outlet, every outlet covering the startup ecosystem, et cetera, et cetera. Angel investing, VC, private equity, they will all be here.

The concept is to have a competition over a three day weekend where 100 startups pitch their wares to the investment community. And then you will have a jury that makes a decision for 50% of the success. And then you have a popular vote at the same time.

So it's a 50-50 between the pros and the layman who will then decide the grand prize winner and winner by specific category, which we've identified on the website already, fintech, cybersecurity, agritech, et cetera, et cetera. So that's, again, over a three day weekend with a lot of action, podcasters, financial news outlets, startup bloggers, YouTube influencers that cover the startup industry, et cetera, all of which will be present at the event. That's amazing.

I would imagine just attending, you're going to be able to bolster your opportunities because you're going to meet people you wouldn't have access to anyway. Attending and entering is going to be a great networking opportunity, going to be a great educational opportunity. And who knows, you might have a shot at winning, right? No question.

And the grand prize, we try to be a little different because we're in a rural area. So one of my colleagues happens to be a former world champ in chainsaw sculpture. So it would be, it will be a wooden unicorn that will be sculpted on premises during the super cup by the world champion, the chainsaw, the chainsaw massacre world champion, basically.

That's fantastic. True to the unicorn name, it is unique. It is completely unique.

That's it. That's fantastic. All right.

So startup super cup.com. We're going to put that in the show notes, startup, super cup.com. That's where you can go to find out more. And then is there a, um, is, is there, are there any types of requirements in order for people to enter? What do people need to know? What do they have to prepare in order to get a lot of that information is on the website already. More will be added in the, in the weeks to come.

Anybody who has any questions, I'm easy to find on LinkedIn. I'm the only Dom Einhorn there. D-O-M as in Mary Einhorn E-I-N-H-O-R-N.

Feel free to send the request out and, uh, I will, you know, refer you to the right person on our team that handles, uh, whether you want to speak, exhibit, pitch, right. Be, be welcome. We'll help you out.

All right. Well, Dom Einhorn, I really appreciate you joining us today. It was a pleasure having you.

It was really educational. I got a lot out of it. I'm sure our listeners got a lot of it too.

I want everyone to check out startupsupercup.com. If you are starting a business, if you have a business right now, and you want to raise more money, if you want to learn and grow and take a trip to France, because by the time this comes around, hopefully we'll all have gotten vaccines. Go to startupsupercup.com, startupsupercup.com. Dom, it's been a pleasure. Thanks for joining us today.

Folks, we'll be back here again tomorrow for another edition of the Inside BS Show, where we take an inside business strategy, share all the insider business secrets, and cut through the inside BS to help you become more successful. Until tomorrow, here's hoping you make a great living and live a great life.