20 VC 017: BETAWORKS WEEK: Kuan Huang, Founder @ Poncho

For your chance to win a signed copy of Venture Deals by previous guest and legend, Brad Feld all you have to do is click the Click To Tweet Link here: http://ctt.ec/d1dE3 Kuan Huang, is the Founder of Poncho an internally built company at Betaworks. A simpler weather service with a personality, delivered to you every day. Prior to creating Poncho, Kuan was a Hacker in residence at Betaworks and as he describes the luckiest engineer at Hatch Labs a mobile focused startup incubator funded by IAC. I would like to direct your attention to one of Betaworks investments on the west coast in the amazing ProductHunt, and you must check out ProductHunt’s new podcast section, which is the best discovery platform for finding new and amazing podcast episodes! In Today's Episode You Will Learn: 1.) How did Kuan get into the world of Betaworks and what was Kuan's aha moment for Poncho? 2.) What was wrong with weather apps when Kuan started Poncho? What made Kuan think there was a gap in the market? 3.) Kuan said in an interview with TechCrunch “The core objective is to have Poncho become a default part of your routine,” How has Kuan gone about to ensure that there are habit forming functions in poncho? What makes the user come back? Does Kuan prefer mass market testing or niche 100 person testing? 4.) What role does Betaworks play in the development of Poncho? What are the main value adds of being a Betaworks company? 5.) Looking back at the Poncho journey so far, what were the breakthrough moments where progress was really made? What were the most challenging elements and how did Kuan overcome them? 6.) What would Kuan advise a founder looking to work with Betaworks? Is there anything they can do to increase their chances of a collaboration? Items Mentioned In Today's Show: Kuan's Fave Reading Material: Medium, Instapaper As always you can follow Harry, The Twenty Minute VC and Kuan on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  You're listening to the 20 Minute VC and the third and final installment of our feature of one of the world's most successful startup studios, BetaWorks, who have invested in the likes of BuzzFeed, Medium and Tumblr. And for today's very special episode of Founder's Friday, we can meet one of BetaWorks' current internally-built startups in the form of Kuan Huang, the founder of Poncho, a simpler weather service with a personality, delivered to you every day. And prior to creating Poncho, Kuan was a hacker in residence at BetaWorks, and as he describes, he was an engineer at Hatch Labs, a mobile-focused startup incubator funded by IAC and Extreme Venture.

• 0:43Harry Stebbings?

  However, I would like to direct your attention to one of BetaWorks' investments on the west coast as well, in the amazing Product Hunt, and you must check out Product Hunt's new podcast session, which for me is the best discovery platform for finding new and amazing podcast episodes. Also, would you like the chance to win a signed copy of The Legendary Venture Deals by Brad Feld? Well, all you have to do is click the 'Click to Tweet' link included in the show notes on iTunes and found on the website at www.the20minutvc.com, all in letters, and when you do that, you'll be entered into the competition for a chance to win a signed copy of The Legendary Venture Deals by Brad Feld.

• 1:24Harry Stebbings?

  But before we delve into today's interview, people see law as this very structured and rigid way of thinking, opposing the obvious innovation of the startup culture. However, that is not the case with Vidar Law. They combine the best aspects of traditional legal thinking with the modern practice approach based upon the needs of today's businesses. They're used to working with startups and they love working with startups. You must check them out at www.vidarlaw.com or give my buddy Chris an email on [email protected]. That's C W E R N E R at vidar, V I D A R, law dot com.

• 2:05Speaker 01

  At the roundabout, they're right.

• 2:07Harry Stebbings?

  However, it is now time to meet the man himself.

• 2:09Speaker 01

  Then, you have now arrived at your destination.

• 2:11Harry Stebbings?

  Founder at Poncho.

• 2:12Speaker 01

  The drive was smooth and sweet, like a Twinkie, like a Twinkie.

• 2:21Harry Stebbings?

  Kuan, welcome to Founders Friday. Thank you so much for joining us for this very special episode of the Beta Works Week.

• 2:28Speaker 02

  Excellent, excellent. No, it's my pleasure.

• 2:31Harry Stebbings?

  Now, can you kick us off by giving us a little background about yourself and your career before Poncho and how the aha moment for Poncho came about?

• 2:40Speaker 02

  Sure, yeah. So before joining Beta Works, so my, I got into startup world probably around 2008, 2009. My friend and I, we worked, the first project we worked on was, was an iOS app that helped people to identify birds in the field. We received the money from MacArthur Foundation. So we basically spent a lot of time building product and getting, I think, thousands of schoolteachers, students to use the app. So, so that was, we had a lot of fun, but neither one of us had any idea about how to make money. So we managed to spend a lot of money from MacArthur Foundation, build a great product, people loved it. It

• 3:23Speaker 02

  was featured in the App Store back then as well, but we didn't know how to continue that as a business. So after, after that, I joined Hatch Labs. So Hatch Labs, that was around 2010. Hatch Lab was an incubator founded by IAC. I don't know, are you familiar with IAC?

• 3:44Harry Stebbings?

  Yeah, yeah. But for our listeners who aren't, maybe give a little background.

• 3:48Speaker 02

  Sure. Yeah, so IAC is like a, it's like umbrella company that owns lots of internet companies like Vimeo, Daily Beast, Ask.com, Urban Spawn, City Search. So they started, started this incubator called Hatch Labs. The idea was to building startups inside IAC. So I joined them. I was the first hired engineer. So I helped them recruit and build business and also doing some due diligence for certain startups they were also investing. And then I started a company there with a new partner Kai, and we built a mobile app

• 4:30Speaker 02

  that simulates casino experience. And then the way people use the game, play the game was they, they watch video ads to get token to play the game. And the game is like a slot game. So when they win, they actually get cash. Cash rewards. So that's how we did build it. And we raised the money um from I A C and. I think within a year, slightly more than a year, we sold it back to I A C. And after that, I joined Beta Works. So that was two thousand thirteen. I joined Beta Works as one of hackers in residence. Um I think back back then, there were like four, five of us. Joined at the same time, we happened to be available during that time. And some of us, um.

• 5:13Speaker 02

  Um s- I think um all of us have built a company before raised the money. Some of us have already sold company. So you know, it's not our our first time building companies. So we were given like. Three to five months to build a company that we want to start. So I worked on Poncho. And then we, and took like two and a half months, working with somebody at Beta Works, um build it and launch it. So that's how, you know, I start Poncho and I've been working on this for like two years.

• 5:44Harry Stebbings?

  And why did you decide to start Poncho? What was it about weather apps or weather software that wasn't right? That made you think there was a gap in the market?

• 5:53Speaker 02

  Yeah, uh that's a great question. So cause back then, I basically, I was not interested in weather at all. Although there were like hundreds of weather apps out there, I. I was still using the default I I O S uh weather app. Cause for me, I just thought weather is super boring. I wouldn't, I wouldn't have thought about doing anything uh. In in a weather space until I met the partner at the Beta Works, Sam. So Sam is really interested in weather space. And you know, we would look at the market cap, the the like how big the market is, how many people are using weather channel. Um and then you look at the innovation there, it's like, okay, it's a huge market, but the innovation is is horrible. People go to like, back then, people go to weather dot com.

• 6:35Harry Stebbings?

  Hmm.

• 6:35Speaker 02

  And they're looking for weather. The first thing they said was, so where the heck is weather? So. So it's it's obvious there's something missing there. So I start thinking, okay, if I wanna build something in the weather space. The first thing I wanna do is I wanna build something I personally want to use. So I start thinking, okay, so how do I actually, what the problem I had? So first of all, I always forget forget to check weather. Like I I never really remember to check weather. And start thinking, okay, so how I got weather when I was, I was at school. So I grew up in China, so I went to college in China, and my mom was actually my weather service.

• 7:13Harry Stebbings?

  As she is for most of us, yeah, mothers are brilliant in that way.

• 7:18Speaker 02

  And and the the most interesting thing is, like, my mother, she only. Told me the weather when she thinks I need to know, so.

• 7:28Harry Stebbings?

  When you need a raincoat or something.

• 7:30Speaker 02

  Yes, so so she she knows my schedule when I was at school, so she would know, okay, Thursday night. I'm gonna study late in the library, so she would call me if the temperature is gonna be low, she would call me to bundle up. Right, every time I I I went back home, I I I live lived on campus, so every week I went home. Um, she would check the weather for me for for the following week, if it's go to rain, she's gonna bring me a number. If not, then she won't say anything. So that's sort of the inspiration. So I was thinking, maybe. The future of weather service is a weather service you never need to check, the weather comes to you when you need it. That's the that's how I started. Um, and then, uh, like, in the past, um, like, two years, the thing has been iterating many times.

• 8:14Speaker 02

  And then we sort of come to this place where we we this this weather service, first, it's it understands your daily routine. So it understands when you wake up, when you leave work, so we send the weather forecast to you. Instead of you try to remember when to check weather, that's first. Second, the weather is really, really boring, so we wanna make it really fun. So our weather forecast is not about just, oh, it's fifty degrees, it's the wind's speed is twelve miles per hour, it's all about the personality. It's like in old days, how people get the weather from T V, which is you have a weatherman, explain the weather to you. A weatherman usually either very good looking, or they have beautiful voice, or they have great, great, crazy, sometimes personality.

• 8:56Speaker 02

  So so it's like, for example, in in the States, Al Roker is probably a very famous weather personality. Um, so we sort of like, okay, let's build a a weatherman on the internet. Doesn't need, people wanna check weather, and then let's add more personality to it. So that's how Poncho has been operating. And a week spent to um, cover more. Besides weather, we also tell people about transit, okay. Um, in New York City, the subway system is kind of crazy. Sometimes the train is running fast, sometimes the train will be stopped, running late. We also let you know at the beginning of the day.

• 9:32Harry Stebbings?

  And you said in an interview with TechCrunch recently, or maybe not recently, but in the last year or so. The core objective is to have Poncho become a default part of your routine, so. Is that how you've gone about making it a habit-forming function by learning your daily routine? Is that how you intend for to keep user retention?

• 9:53Speaker 02

  Yes, so so weather is very interesting thing, like weather also checking like transit up transit updates. That's the thing you don't check every hour, but like for most people, you you only do that, like. At the beginning of your day, when you're about to leave home for work. Or and at the end of the before you head home, that's the two moments you actually check this information for most people. It's not like Facebook, Tinder, you check in a way have like five minutes.

• 10:22Harry Stebbings?

  Yeah.

• 10:23Speaker 02

  So that's very usual, like special thing about weather and and transit stuff. So that's why I think it's very important to to understand people's daily routine and get information there when they need to know, when they need it.

• 10:36Harry Stebbings?

  And when you started out, did you test it on a mass market? Or did you go for a much smaller niche market and try and get much more concentrated feedback?

• 10:45Speaker 02

  No, we definitely start with like focusing on very small niche market. First was the beta works community. Um, so, you know, for people who work at beta works, they're more like, um, very tech savvy, internet savvy people, all of them have, um, smartphones. Then we expand to New York City, uh, which, you know, lots of people who live in New York City, they actually. Like first, the weather in New York City is really ridiculous. In especially in spring, you will see the see the weather, like temperatures swing from. Like like like forty degrees to like sixty degrees. So it's a big range and as you will see, like March, it could be snowing in the beginning of the month. And then get really hot one week later and then start raining again.

• 11:28Speaker 02

  So it's crazy. So so we start with the Beta Works community, then go to New York City, then expand to more and more regions. Right now, we have a poncho service in around fifteen states. Uh the population we're covering in the states right now is around sixty percent.

• 11:43Harry Stebbings?

  Wow, that's fantastic.

• 11:44Speaker 02

  Yeah, so we definitely start with a very small niche market and expand, then we learn. And weather is a very special thing, it feels very local. So the weather forecast we write for New York City is different from how we describe weather in Seattle. Cause for example, if it's raining in New York City, people would be like, oh my god, it's raining, I hate rain. Versus in Seattle, it rains almost every day. You never ask people to bring their umbrella.

• 12:08Harry Stebbings?

  And you mentioned there about the Beta Works community. So what role does Beta Works play in the development of Poncho? And what are their main value adds?

• 12:18Speaker 02

  So I I consider Beta Works as not only just an investor, but also a co-founder. So they're really involved in product development. My first thing is they they as you know, when you run a startup, there are lots of things like. H R, managing payroll, finance, or like legal stuff. These are things you, as a founder, you don't really wanna deal with. Especially you have a very tiny team, you don't wanna deal with that. So they will take care of that for you. Second, building when building a company, they are like, they they're really involved in terms of building product, they how do you go to the market strategy. Um but that work has lots of experience in in like building super early stage companies. Cause for many early stage companies, you face a very lots of similar problem.

• 13:03Speaker 02

  They've been there, done that, they have done, they have seen hundreds of companies being through that stage, so.

• 13:09Harry Stebbings?

  What do you think the similar problems are?

• 13:11Speaker 02

  Well, I think the first of all is how do you get the product to market as fast as you can. How do you only focus on one or two things that really matters. How do you focus on a few simple key metrics that help you to get to next step. So so the like the other thing like is um companies, early stage company phase. And also then you when you grow from one person team to three people team, to ten people team, twenty people team. These are like, how do you scale out, not only just scale a product, but also how do you scale up an organisation. You will face lots of common, you know, challenges and the beta works have lots of expertise in that.

• 13:50Harry Stebbings?

  And what's been your biggest takeaway then or learning point from working with beta works.

• 13:56Speaker 02

  Uh, I think I think a lot most of the experience I have are very positive. Um, I think first of all, you just need to be like, you need to have this hacker's mind. Like you know you will not be able to get everything right. You know you will not be able to get everyone who install use your first service and continue using. You've got to figure out what are key play key audience you're focusing on. And then you really, really, really put all the resources you have and and focus on these people.

• 14:26Harry Stebbings?

  And how do you identify that key audience, what do you look at in the metrics.

• 14:32Speaker 02

  I I I think like like now for like for example, for lots of early stage company, I think. In the first, when you launch something, the first month, what you really focus on is the engagement. How many daily active, weekly active you are really looking at. Because if you launch something and then, you know, you you maybe you get a featuring app stuff for whatever reason. Um, you get ten thousand people use your service and then within three days, there's only a thousand people using it. Then you know something's really missing there versus you might at the beginning you grow pretty slow, you might only get. I don't know, two thousand people using the service, but over this four, five months, you still have like eighty percent of people still coming back. Then you know you have something sticky.

• 15:13Speaker 02

  So once you saw, once you figure engagement retention, then you start going to scale. Okay, how can I grow faster. Um, that's kind of the approach Poncho has taken.

• 15:23Harry Stebbings?

  And moving back to beta works, what is the kind of deal that you have going with them and the startups in there have going with them. They invest uh cash for equity, is that how it works.

• 15:35Speaker 02

  Uh so so so Beta Works are different, like, I think they have different slightly different models for different companies. Poncho came out of Beta uh Hackers in Residence, so. The company came out from that program, well, not really program, but. Came out from that opportunity to basically have, uh so they basically invest, take equity of the company. You know, bigger share of the company and then and the team and me, we all get equity of the company and then Beta Works. Um they basically get much more involved than like a traditional V C investors. Um so from hiring to building product to launch, getting P R, they actually really, really, you know, very involved.

• 16:16Harry Stebbings?

  Um hum. And when you look back now at the the Poncho journey that you've been on. What were the breakthrough moments where you where you really picked up and achieved and then what were the most challenging?

• 16:28Speaker 02

  Well, I think the the um I like to start with the challenge. So for ch- like the particular challenge for Poncho was how do you go from one New York City. And scale to other regions with limited resource. That's both, cause uh cause for Poncho. Every day we have actually real human being write these forecasts. It's not really automated by any machine or algorithm. So so if you, let's say you, we start with New York City, all we needed was one, you know, editors. Not in order to cover the entire country. How can I do that without hiring a thousand editors?

• 17:02Harry Stebbings?

  Um hum, yeah.

• 17:04Speaker 02

  Right. Second is before I was only dealing with the weather in New York City. Now how do I deal with the weather across the entire country? So so basically that was actually also, uh it's a big challenge for us. So I was I was lucky enough working with data scientists and Beta Works. We built a pretty. Um awesome technology. What it does was basically it monitors the weather across the United States. And then we can group regions have a similar weather pattern together. So our editors only need to write one message for locations that have a similar weather patterns. So um for example, in New York State. There are twenty six hundred locations that has the weather forecast.

• 17:46Speaker 02

  Then we we can group these locations into probably twenty or thirty groups. Based on a similar weather pattern. So our editors only need to write twenty messages to cover these regions.

• 17:57Harry Stebbings?

  Absolutely, yeah, that makes sense.

• 17:59Speaker 02

  So that actually really helped us to scale much faster. So we can go. For example, our last expansion, basically, we were able to expand to six states all at once. And I only needed at one or two more people to the editorial team.

• 18:13Harry Stebbings?

  And how are you planning to monetize Poncho then?

• 18:16Speaker 02

  So for us, I think we we are not really focusing on monetization right now, but I think. Potentially, we first we understand, that's why, one of the reasons I really wanna. Understands people's daily routine is that we can offer you something that's truly tailored to. A user. For example, if it's going to rain, we can offer you to buy an umbrella. We can call an Uber ride for you. You know, if it's cold, we can. Recommend what to eat, uh what recipe you should you would need to make. Some food you feel warm at night.

• 18:45Harry Stebbings?

  Um.

• 18:45Speaker 02

  Um, we also know the weekend weather, so we can recommend you what to do. So I think it will be like. A blend of commerce and advertising that's tailored to this person's specific needs, cause we have data about you.

• 18:58Harry Stebbings?

  And and having been at Beta Works for a while now, what would you advise a founder who's looking to work with Beta Works? Wha- what can they do to increase their chances of success at getting in?

• 19:09Speaker 02

  Um, the number one thing I would highly recommend is you need to be a hacker, like hacker's mind, how to get things done fast. Uh, get things out fast. I think that's the number one thing I would recommend.

• 19:21Harry Stebbings?

  And then, what, how would you say a non-technical person should learn to to code or learn technical skills? In today's age, we have so many platforms and languages, people get quite daunted. What would you recommend to a complete beginner?

• 19:34Speaker 02

  Uh, I assume you're talking about people who want to build a technology product.

• 19:39Harry Stebbings?

  Yes, absolutely.

• 19:40Speaker 02

  So, so I know people who who build products, they're just sending emails. It's editorial product. They don't need to really know how to code. So um like I assume we're talking about technology startups. So I think there are lots of tools out there you can learn. How to code. You don't need to be uh an expert. All you really need is can I learn enough technical stuff to help me. To build a prototype, a a prototype that's good enough to prove my concept.

• 20:08Harry Stebbings?

  Absolutely.

• 20:09Speaker 02

  And then I think you can, once you have something get other people excited, then you can use that to pitch. Either investor or your potential technical co-founders, you know, I think that's what I would suggest.

• 20:21Harry Stebbings?

  And then if it's okay with you, we're gonna move on to a quickfire round now.

• 20:25Speaker 02

  Um hum, yeah.

• 20:26Harry Stebbings?

  So your favorite book and why?

• 20:28Speaker 02

  Um I actually go to Medium right now, uh medium dot com, read lots of articles there and also I use uh Instapaper. Which is a Beta Works product. My favorite thing is their weekly digest. They basically recommend articles I should read. Based on what I use use to read or what I saved in the Instapaper. Cause I save lots of articles about tech, but about investment, about the general trend of internet.

• 20:55Harry Stebbings?

  And then when I say successful founder, who's the first person that comes to your mind?

• 21:00Speaker 02

  Ah you know what, there are so many, but I think lately Elon Musk, that's what. This this person being talking about in the media a lot, Steve Jobs, I guess.

• 21:10Harry Stebbings?

  Yeah, no, absolutely. Two incredibly brilliant men. Um and then what purchase under a hundred dollars has made the biggest impact on your life?

• 21:19Speaker 02

  Well, that's the, I I think it's coffee and whiskey.

• 21:25Harry Stebbings?

  We're being very honest here. Uh and then the day in the life at Beta Works, what's your day like?

• 21:30Speaker 02

  Uh mostly they are like roller coasters, you are jumping between. Um like, you know, things and things, for example, especially for startups, sometimes we have, you know, big press release. We have to, you know, really look into is our servers strong enough to hold the traffic. Sometimes we have a mistake in. In the system or in the product we have to fix. People, you know, sending emails saying, okay, hey, I'm not getting emails, not getting text message, can you fix it? Sure. So that's kind of the day. It's not not a day is is same.

• 22:04Harry Stebbings?

  And then what's your career highlight so far?

• 22:07Speaker 02

  Uh, I guess Pouchel.

• 22:11Harry Stebbings?

  Creating Poncho and it going right.

• 22:12Speaker 02

  Poncho, yeah.

• 22:13Harry Stebbings?

  Mm hmm.

• 22:14Speaker 02

  The highlights.

• 22:15Harry Stebbings?

  And then finally, the next five years for you and for Poncho, what's in store for us?

• 22:20Speaker 02

  To be honest with you, for the next five years, I don't know. For the next year, I can tell you is that we will launch our I I O S app in a month. Um, and we want to cover the entire country in a couple of months and then hopefully we can expand beyond the United States.

• 22:38Harry Stebbings?

  Fantastic. Well, Kuan, thank you so much for joining us on this very special episode. Thank you so much.

• 22:43Speaker 02

  Thank you.

• 22:44Harry Stebbings?

  Absolutely fascinating to hear the life of an internally built beta work company. Thanks so much to Kuan for sharing his amazing journey at Poncho with us on this very special episode of the Twenty Minute V C. Do not forget, if you'd like the chance to win the incredible venture deals by the legend Brad Feld, all you have to do is click the click to tweet link in the show notes and on the site at W W W dot the twenty minute V C dot com and you'll be entered into the competition for the chance to win Brad's amazing book. But before we leave you today, it has struck me that many startups neglect legal aspects of their business due to fear of fees. Well, V D R Law believe that concerns around fees should never keep you from hiring a top quality attorney for your business.

• 23:29Harry Stebbings?

  That is why they use fixed fees and alternative fee arrangements to ensure that the finance never gets in the way of hiring the best lawyer for you. So get in contact with them and let them help design a program that is right for your business. To do this, head over to W W W dot V D R Law dot com or drop my good friend Chris a line at C Werner at V D R Law dot com. That's C W E R N E R at V D R V I D A R Law dot com. And thanks so much as always for your continued support. We really do appreciate it. And we look so forward to seeing you in the next episode of the Twenty Minute V C.