- The speaker introduces the concept of pitch practice, where startups give their pitches and a partner re-pitches the business.
- The speaker explains that as a seed investor, they are in a default "no" mode when it comes to investing in startups.
- The first startup, ShipperMax, is introduced as a platform that helps agricultural, energy, and mining companies hire ships.
- The speaker asks questions to understand the value proposition and potential of ShipperMax.
- ShipperMax has had 4.5 million worth of requests and recently signed a deal with a large energy trading company.
- The speaker questions the competition and market potential for ShipperMax.
- ShipperMax aims to target the neglected bottom of the market and leverage superior intelligence to compete with larger brokers.
- The speaker points out the challenges of cutting out brokers in markets like real estate.
- The conversation ends with the possibility of future discussions.

- The company is building a marketplace for shipping, aiming to disrupt the traditional broker-based approach
- They believe intelligence is the main driver in the market, and their platform can aggregate and analyze information at scale
- The team combines business experience, technical talent, and industry knowledge
- The company aims to provide a centralized platform for shipping, similar to Uber or Airbnb, but with a combination of human expertise and software
- They are still in the early stages, with a small number of customers and revenue, but have ambitious plans for growth in the multi-trillion dollar shipping market
- The company believes their expertise in commodities trading and software development sets them apart from competitors
- The potential investor is interested and requests more information before making a decision.

- The speaker discusses the importance of adopting technology in the commodities trading industry
- It is advised to always have a plan for a follow-up after a meeting
- The speaker introduces My Purple Folder, a healthcare app that provides easy access to patient data
- The app combines medical records, healthcare legal records, and prescription information
- The app aims to solve the problem of fragmented patient portals and improve the patient experience
- The speaker explains that the app can be used regardless of whether the medical facility has adopted the software
- The goal is to put healthcare back in the hands of the patient and drive down costs
- My Purple Folder serves as a central repository for all patient health data
- The app is sold to patients rather than doctors or hospitals
- The app helps patients better understand their care and improve communication with healthcare providers
- The speaker mentions a specific example of a missed message about a potential cancer screen as a driving factor for using the app
- The app is designed to provide better care and improve the patient experience
- My Purple Folder charges $99 per year per patient.

- The speaker is discussing a business model that charges $99 per year per patient.
- The business currently has 150 customers and is growing at a rate of 12% per week.
- The speaker is interested in investing but wants more information about the product.
- It is important for startup founders to clearly communicate what their product does.
- The process of refining and simplifying the pitch is crucial for success.
- The ability to reduce ideas to their essentials is a key skill in pitching.

- The speaker introduces the concept of pitch practice and being in a default "no" mode as a seed investor.
- ShipperMax is a platform for hiring ships and has had significant requests and a deal with an energy trading company.
- ShipperMax aims to target the neglected bottom of the market and compete with larger brokers using superior intelligence.
- The speaker discusses the challenges of cutting out brokers in markets like real estate.
- My Purple Folder is a healthcare app that provides easy access to patient data and aims to improve the patient experience.
- My Purple Folder serves as a central repository for all patient health data and charges $99 per year per patient.
- The app currently has 150 customers and is growing at a rate of 12% per week.
- The speaker emphasizes the importance of clearly communicating the product and refining the pitch.

During Startup School two companies went on stage to pitch Paul Buchheit. Sam Altman followed each founder and repitched their startup to Paul.

The two startups were:

Shipamax [https://www.shipamax.com/] - Jenna Brown
Shipamax helps companies hire ships.

MyPurpleFolder [http://www.mypurplefolder.com/] - Kelli Thomas-Drake
MyPurpleFolder helps patients and caregivers keep track of their medical records.

So up next, we're going to do pitch practice.

This is something that we invented by accident a couple of years ago.

1 of our speakers had to cancel at the last minute, so we just threw together this idea, let's bring up some startups.

We've never done it on stage before, But the idea was, you know, a lot of people, they've gone through YC, it's coming up to demo day, and actually they've never had a real experience like pitching an investor just like cold, someone who doesn't know anything about them.

So we got this idea, hey, let's just try it out.

Have a founder come up, give their pitch.

And just to warn you, they're usually pretty rough.

And then we have a partner, in this case, it'll be Sam, come re-pitch the business.

the office hours, except not at all helpful.

And probably maybe a little bit more brutal.

So, just to kind of give you some context, like as a seed investor, something you have to keep in mind is that the median startup is ultimately worth about 0 dollars.

And probably 95% of startups are a bad investment.

So you kind of get in a mode where you're just a default no, right?

And it's a little bit cold because People are pouring out their hearts and they're putting all their dreams into it, but 9 times out of a thousand probably.

Anyway, it's always, you have to say no a lot.

And so when you see a business, what you're looking for is like, why are you the exception, right?

So it's not good enough just to be like, oh, that sounds like a nice business.

I have to think like, wow, this is that 1 business, that 1 that I've been saying no for months, but today I'm gonna say yes.

Also, just for context, I don't know anything, so I'm not actually pretending that I didn't bother to learn anything.

So this is, I'm hearing about the business for the first time.

And we help agricultural, energy, and mining companies hire ships.

And just to be clear, I'm not talking about containers.

You need to shift 50,000 tons of coal from South Africa to Rotterdam.

So I took a position on coal in South Africa and then I'm like, oh no, I've got to get it someplace else.

I don't know anything about this business.

Today you would pick up your phone and your email and you would call 5 to 10 brokers and say, hey, I need to move this stuff.

So this is like a marketplace where right now there's these brokers and they, what do they take a big cut and then you're going to like, what's the value proposition for me as a trader?

Today you're speaking to all these different brokers.

It can take you 3 to 24 hours to get some indications back.

It can take you up to 2 weeks to actually book that ship.

With ShipperMax, we use satellite technology and navigation to cover every ship on Earth.

And we can tell you which ship can make it in time and fit the specifications and is open in seconds.

Okay, so is the idea that it's just easier for me or do I get a better price?

So there's 2 things when you think about trading.

As a commodity trader, you need to know what your delivered price is to the customer.

Otherwise, someone else can come and get that deal instead of you.

And both myself and my co-founder have lost multi-million pound deals for not getting freight fast enough.

And the second proposition is really service.

Would you rather speak to 5 brokers and receive thousands of emails per deal, or would you rather say, this is my shit, let's go?

So we launched our beta about 7 weeks ago, and since then what we were trying to do is talk to these charters, these traders, to see if they would talk to us and give us requests.

To date we've had about 4.5 million worth of requests, and last week was a great win for us because we signed 1 of the largest energy trading companies in the world.

They shift 150 million tons of products annually.

And What does that deal represent for you?

How much revenue are you going to make off of that?

So, we're still competing with other brokers right now.

The revenue potential is 15 million annually.

So we're now receiving those requests to compete on a deal by deal basis to be faster and better.

So from their perspective, you're just another broker.

They don't even know that you're like a tech company.

So the way I've started this conversation is saying like, hey, our goal is to make this much, much faster, like help us get there.

So they're giving us a go, they want smarter intelligence, and the smaller companies want better access to the market.

So today we're just saying, yeah, it's not all perfect out of the box right now, but give us a go.

Have they used you yet or did they just say, well, think about you?

No, yeah, they're giving us requests to...

We've basically been getting those requests, which was our first test to see will they give them to us, because that's actually quite a big deal, because they're telling you market information.

Does that mean that they're sending you the request, but then they're going with a different broker?

Right now, basically what our problem has been is that we need a bit more funding to get more men on the ground to help fulfill these requests, because right now some of the larger brokers have better intelligence.

So we're starting kind of from 0, and each time we're kind of getting closer and closer to actually booking that deal and beating the brokers.

So You haven't actually won any deals yet.

So how much will that deal be worth then, assuming you do get this deal next week?

So it's, our cost is just like the men, the people.

Now, why is this, why is this gonna be like a $100 billion company?

So today, like the amount that these traders spend on brokerage fees today is about $3 billion, at least at current market low rates.

The largest company today is a company called Clarksons, who make 240 million GBP per annum.

To me, that also means you have some really formidable competitors.

Are they really just going to roll over and let you take their business?

Well, no, I don't think they're going to roll over.

So I think what's interesting that's happening is that the problem with these big guys, like they are superior to the small brokers, right?

They have more intelligence and they can serve bigger clients better.

But who they can't serve is the little guys.

And they can't serve them because it's so manual with all their processes.

So basically you're thinking you're going to come in at

the bottom of the market where there's totally neglected.

Is that who you're going after right now?

No, we've been starting at the bottom of the market, but actually a lot of the big guys want to talk to us too because of the superior intelligence that we can actually leverage free data.

But I mean, if there is this bottom of the market that's totally neglected, why not, like, Because you haven't done any ships yet, right?

Why not just go find some of these guys who are super neglected?

No, we're all working with those as well.

So is this, it seems like I see a lot of startups where they're basically, the high level pitch is there's these brokers that make a lot of money and we're going to cut them out with technology and take all of the money.

But I mean just as a general form, like the most obvious for me and familiar to most of us is like the real estate market, right?

Like Redfin or someone was going to come in and just blow away the brokers.

But so far, it seems like, I don't know if I've seen any of those markets.

It seems like the brokers are very good at holding on to their position.

So the key thing in this market, I mean, there's 1 thing to say that we still have brokers.

We're enabling our brokers to be much smarter than anyone else.

And the cool thing about this market is that intelligence is the main driver.

Traders reward their brokers with deals based on intelligence because you need that intelligence to keep getting good rates.

So if you can build a platform that is the only thing that can aggregate and digest this like explosion of information at scale, You're the only person that can speak to these small companies and the big companies and mine all that data to actually serve people more effectively than anyone else.

So supposing I do believe all of that and that there is going to be this 1 tech company that just manages to displace all of the brokers.

1, staff experience and actually growing businesses.

2, very experienced brokers on team, as well as people have been on the trading side of this market, as well as deep technical talent.

And I think you need all those things, and it's very difficult.

People in this industry generally don't know anything about technology.

It's a very old industry, and people who understand technology generally don't understand the niche things that you need to care about when shipping 50,000 tons worth of commodities.

So it was more my co-founder than me on the commodities.

And he was shipping, I don't know, tens of thousands of tons of fertilizer.

the first time I met Jenna and heard about the business.

So I'm going to try to repitch it, but I will probably get all the numbers and secret plans for the future wrong.

Hopefully it will still be illustrative and helpful.

And I'm going to treat this like I would treat a meeting with an angel investor that I was trying to get to write me a check.

So I'd love to tell you about what we do.

And maybe I can just start with kind of who we are.

So we are building a marketplace for shipping.

It's 1 of the biggest markets people don't think about.

And it hasn't moved forward much with technology.

So it's still, if you need to ship something, you call around, you call a broker who then knows a bunch of ships.

They try to find 1 somewhere in the world that can take what you need.

And then you pay them, and they ship it for you.

Everyone thinks that the market has become really efficient, because they've read the box, and they know about containers, and they think, this is a solved problem.

But still, more than half of all cargo doesn't get shipped that way.

And there's been no winner that's emerged for a Uber-like shipping experience, where basically you click a button, you say, I need to ship from here to here, you get a rate, you get a boat, and it goes.

So that's what we're building, and the standard broker fees are like 15%, and so we think this is a really large market.

I'd be happy to tell you about more details of our approach, but is this something that at a high level seems interesting to you?

Yeah, if you're going to make a lot of money, it is.

Well, I'd love to tell you why we're going to make a lot of money.

Not only is this a giant market, broker fees on cargo shipping is $150 billion a year market.

But there is a natural monopoly in that, like any other marketplace, the people that have cargo want to go where they can get the cheapest rate and the most options, and the people that have boats want to go where the most people that need something shipped are.

And So, even though no 1 has brought software to this industry yet, and it's been this sort of network of people calling, you know, brokers calling around to ships they know.

Why haven't 1 of these existing brokers just eaten up the market?

why does any industry not adopt software?

I think there's a great quote I heard recently that it is harder for existing companies to get good technology people than it is for good technology people to learn about other industries.

And this is why startups have an opportunity.

Is that the only way that you can eat the industry then?

I mean, it's just naturally fragmented if you don't have software, is that your theory?

Well, yeah, I think it's like any other industry.

It's like Airbnb couldn't have worked without software.

You just had people call around and find vacation homes that happened to be free, or you had to call taxi companies before Uber and find a cab that was free.

The magic of software is just that any of these industries can become centralized on 1 platform that gives everybody a central experience.

And in these large markets, these platforms tend to be winner take all or winner take most and create super valuable companies.

So my fear with these kinds of businesses is always just that anytime tech people go in and they say, oh, we're going to change everything, but then they show up and the customer says, I've been doing it this way for the last 30 years, I'm going to do it until I'm dead.

1 of the secrets that we've learned as we've been working on this business and we're very new, we're only 7 weeks old, we still have a lot of things left to figure out.

But 1 of the things that we've learned is most people are either all humans or all software, and that that approach doesn't work.

This is just like Pound or how PayPal dealt with fraud.

So we're actually going to have a bunch of brokers that customers can talk to on the phone like they're used to, but we'll give them software that makes them 100 times or 1,000 times more efficient.

But you're totally right, and the reason other people have failed doing this is they don't understand this, and they just have a pure software platform.

And it really is the combination of humans and software together that makes this still work with customers that have been doing it for a long time, but have the advantages of a software company in scale.

We haven't been able to raise any money yet.

In that 7 weeks, we've been able to get 50 people that have sent us jobs.

We don't yet have enough infrastructure in place to fulfill those but we expect to actually book 3 boats next week and we'll make our first 10000 dollars of revenue And we think we have a path from that just over the next few months on our existing contacts and what we know coming.

What we know is coming in our pipeline to get to $100,000 in revenue.

And that's not GMV or anything like that.

That's actual profit that we're going to keep.

Well, as I said, I think 1 of the key insights here is that we're going to be humans and software together.

We're going to be brokers and a platform.

So our biggest expense by far will be paying the brokers salary and commissions.

But again, I wasn't joking when I said I think we can make them 100 times more efficient with software.

You would not believe how broken the industry is today.

It would pain you to watch how 1 of these brokers works.

So we think there's still substantial economics for us there.

Where do you see the business in 5 and 10 years?

Well, the charter market alone, the broker market alone is about $150 billion.

Yeah, the shipping market is in the trillions.

Again, it's 1 of the largest drivers of worldwide GDP.

But, you know, like, we're pretty ambitious.

We think this is a big market and that there is a natural monopoly.

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Pitch Practice with Paul Buchheit and Sam Altman at Startup School SV 2016