How to Think Big with David Friedberg, Founder of Cana

Shaan Puri (@ShaanVP) sits down with David Friedberg (@Friedberg) to talk about ambition, what he learned from the founders of Google, and how he's aiming to change the world by 3D printing drinks with his latest startup, Cana. ----- * Do you love MFM and want to see Sam and Shaan's smiling faces? Subscribe to our Youtube channel. * Want more insights like MFM? Check out Shaan's newsletter. ----- Show Notes: (01:30) - Dave's background (10:30) - What Dave learned from the founders of Google (16:30) - Why many people have trouble thinking big (31:30) - Dave's new company, Cana ----- Links: * https://www.cana.com/ ----- Past guests on My First Million include Rob Dyrdek, Hasan Minhaj, Balaji Srinivasan, Jake Paul, Dr. Andrew Huberman, Gary Vee, Lance Armstrong, Sophia Amoruso, Ariel Helwani, Ramit Sethi, Stanley Druckenmiller, Peter Diamandis, Dharmesh Shah, Brian Halligan, Marc Lore, Jason Calacanis, Andrew Wilkinson, Julian Shapiro, Kat Cole, Codie Sanchez, Nader Al-Naji, Steph Smith, Trung Phan, Nick Huber, Anthony Pompliano, Ben Askren, Ramon Van Meer, Brianne Kimmel, Andrew Gazdecki, Scott Belsky, Moiz Ali, Dan Held, Elaine Zelby, Michael Saylor, Ryan Begelman, Jack Butcher, Reed Duchscher, Tai Lopez, Harley Finkelstein, Alexa von Tobel, Noah Kagan, Nick Bare, Greg Isenberg, James Altucher, Randy Hetrick and more. ----- Additional episodes you might enjoy: • #224 Rob Dyrdek - How Tracking Every Second of His Life Took Rob Drydek from 0 to $405M in Exits • #209 Gary Vaynerchuk - Why NFTS Are the Future • #178 Balaji Srinivasan - Balaji on How to Fix the Media, Cloud Cities & Crypto #169 - How One Man Started 5, Billion Dollar Companies, Dan Gilbert's Empire, & Talking With Warren Buffett • ​​​​#218 - Why You Should Take a Think Week Like Bill Gates • Dave Portnoy vs The World, Extreme Body Monitoring, The Future of Apparel Retail, "How Much is Anthony Pompliano Worth?", and More • How Mr Beast Got 100M Views in Less Than 4 Days, The $25M Chrome Extension, and More

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

• 0:00Speaker 00

  All the work we do at T P B is oriented around how do we change systems of production on planet Earth? So that we can make things using less energy, less land, less natural resources. I'm a big believer that sustainability in the 21st century does not arise from convincing consumers to consume less. I think sustainability arises from building technology-based solutions that let consumers consume more and dropping the price and dropping the environmental impact. And that's what technology allows us to do. So if you go back to the industrial revolutions, you know, of the 19th and 20th century, we built factories, right? We put all this technology in a big machine and a big facility. And we used it to make stuff over and over again. And that dropped the price for consumers because we automated it in a big factory.

• 0:44Speaker 00

  Turns out that the technology of that factory, as all technology does, shrinks, gets faster, gets cheaper, gets better.

• 0:59Shaan Puri?

  Let me brag about you for a second because you're not a very, you're a very humble guy. You're not a very brag worthy guy. When I first started hearing you talk, which was not on the All In Podcast, I went on YouTube and I heard you give a talk back when you were doing Climate Corporation. And I remember thinking, this guy's pretty smart. You were giving a talk at some school. I don't know what it was. And I started Googling you then and saw, wow, this guy's actually, he did that. And then he did some impressive stuff since then. So let me just brag on you for a second. So you were at Google 2004, 2006, some range like that. So fairly early at Google, like, I think that's like around the IPO time. That's just post IPO. Is that right?

• 1:37Speaker 00

  I joined probably seven months before the IPO. So yeah, we were, we were working on the IPO or just started working on the IPO when I joined.

• 1:45Shaan Puri?

  And then, then you do Climate Corporation, sell that for like a billion dollars to Monsanto. You do Metro Mile, which is a pretty cool insurance company that's backed. And then I think ultimately ended up selling. For a little less than it's back for to Lemonade and then then you have this thing called TPB. So the the production board and in that you're basically, what do you call it? A studio or what do you call kind of?

• 2:08Speaker 00

  Well, yeah, we're technically a holding company and our, you know, and we're a foundry. So we spend time kind of doing R and D and and research and and founding or building businesses. So we kind of call it a foundry.

• 2:21Shaan Puri?

  And I feel like people know you now.

• 2:23Speaker 00

  We do some investing as well, but really our focus is on foundry work.

• 2:27Shaan Puri?

  I want to start with this. You are known for, you know, being a sort of a scientist or a science guy. But I looked at your LinkedIn and your first job was investment banker. So where did, how did you go from investment banker to, as you call it on the all in pod, the Sultan of Science?

• 2:42Speaker 00

  Well, I went to school at UC Berkeley. My major was astrophysics. I spent some time as an intern at the Lawrence Berkeley National Lab, which is a Department of Energy physics lab up the hill from from UC Berkeley. And I spent, you know, a lot of time doing mathematical modeling of stuff in a basement and generally found it to be kind of just pretty disparaging in the sense that like you could spend years working on a project that never sees the light of day. At the same time that I was at school, the dot com bubble was kind of, you know, blowing up all around me. I mean, there was even a kid in my dorm who started a company selling DVDs online and sold the business for a million bucks. And that was such an amazing thing to happen.

• 3:25Speaker 00

  You know, I was mostly making money by playing poker and working, you know, jobs around school and getting paid for my internship and stuff. So, you know, it was extraordinary kind of seeing just in the Bay Area, the world changing because of the internet. And so I got really kind of inclined and interested in not going to grad school and really going to go work in Silicon Valley. So I, you know, I applied for a bunch of investment banking jobs. That was kind of the the hot job to get out of school where I could focus on the tech industry and learn about it. And, you know, I guess I had never taken a finance, accounting, business class. And so I guess my poker experience paid off because that's how I put that on my resume. I got a bunch of interviews and ended up getting a job working in a technology investment bank so focused on the tech industry.

• 4:09Speaker 00

  And so I got to work with lots of tech companies for a two-year analyst program while I was there and learn about business and finance and so on. So that was kind of my first foray, you know, into the world of business. I tried to start a business when I was in college. Never really talked about this publicly. Rave some money from some family members, some friends of the family, but never really did anything with it, never really got off the ground. It was, the idea was to let you buy all of your telecommunications services on a website. So you're, you know, everything from your cellphone bill to your, you know, your long distance provider, which was kind of important at the time and so on.

• 4:48Shaan Puri?

  And what did you get wrong with that? Because that's actually not a bad idea, especially during that time. Was, I don't think it was probably the idea. You just, did you not know?

• 4:56Speaker 00

  I still have the business plan. I keep it in my office. I printed it up like from 1999 or 2000.

• 5:01Shaan Puri?

  As a reminder or what?

• 5:03Speaker 00

  Yeah, as a reminder. Originally called Telebomb.com. Got bombed. I renamed it Infone Services and I registered it. I set up a Wells Fargo account. There was a whole experience of starting a business.

• 5:23Speaker 00

  And yeah, I mean, ultimately, I kind of got caught up in trying to get a job out of school and, you know, transition to focus on, you know, what's next in my life. And then, you know, before I joined Google, I started another business, which was kind of like a research Q and A site online called Kadanga, K-A-D-A-N-G-A, Kadanga.com. So I basically taught myself like PHP and JavaScript and HTML and CSS. And I programmed the whole site myself and MySQL. And I basically set up my own server and registered the domain and set up bank accounts and it actually made money. And so, you know, I advertised on AdWords and I got users to come to the website and

• 6:08Speaker 00

  ask questions and get answers and they pay for the answers. And so that actually helped me ultimately get my job at Google because I had all this experience. You know, I was coding on my own till like five in the morning and then going to work at 7 a.m. And so like building this service and building this whole site. It actually, Google had a service at the time called like Google Research or something. Forgot what it was called, but it was very similar to this. And so I got the job at Google, I think in part because of that experience.

• 6:33Shaan Puri?

  So when you were doing that, you were like, okay, listen, today, I think you've built companies, I'm just gonna use round numbers, you know, you can correct me if I'm way off, but you've built companies now that I think in aggregate have, are worth more than two and a half billion dollars. Now, if I went and I told you when you were building Kodaga or you're, you know, you're in college and I said, you know, hey, that could, that's something that could happen, would you have been surprised? Like, was that even an ambition of yours? Were you even, would you have been shocked that that's even possible? Or were you like, oh, it all worked. My plan could have worked if I had told you that that's how it played out?

• 7:07Speaker 00

  Um, no, I don't think I would have thought about it in that framework. Probably would have been disappointed if I think about it.

• 7:17Shaan Puri?

  Why?

• 7:18Speaker 00

  I still am generally. I mean, I feel, I guess, you know, maybe ambition is, you know, an expectations I set for myself probably greater than, than what I've experienced. But I would say that, you know, my intention wasn't-

• 7:33Shaan Puri?

  Stay on that, stay on that for a second. So you're saying you're a college kid and you had expectations of yourself that grand? Do you remember kind of what you were thinking back then?

• 7:41Speaker 00

  Um, not specifically. I mean, I just feel like when you're young, you have kind of unbounded ambition. I mean, you don't know the realities of, you know, when you build stuff and you face challenges and you face hiccups and, you know, everything from team to technology to markets and all the issues that arise as you navigate your way through complexity and uncertainty. You're naive in the sense that like the whole world can and should be different. So we should change the whole world and let's go fix it and make it different, make it better. And, you know, that blind optimism is where a lot of energy comes from that I- I think drives great entrepreneurial success stories. Ultimately, you know, there's friction and rubber hits the road and. Um, you know, uh, in retrospect, I think a lot of what's gone on in my life and my career is probably

• 8:26Speaker 00

  understandable um in hindsight, but you know, blind ambition gives you unlimited um of vision and I think uh, you know, if you're not um. If you're not challenged along the way, uh, you know, that that that can and should persist. Um, you know, but I I would say that my my orientation was never about starting a bunch of companies or making a bunch of money. It was um, you know, much more about kind of impact and um. And so, you know, and solving big problems and having great breakthroughs and seeing those breakthroughs really change the world. And that's still, I think, really core to to my sense of of energy and things that I do.

• 9:03Shaan Puri?

  And when you were at Google at a time, Google was very ambitious. And uh, I think I've read or heard basically like Larry Page is kind of a fan of yours. I think he's invested in T P B and it sounds like you were there and you were doing corp dev there. So so you were doing a kind of different role. What was, give me a Google story. What was it like at that time? What was it like around those founders? Give me a sort of a a story around ambition or or your time at Google.

• 9:28Speaker 00

  Well, um, so I joined Google, uh, there was uh, just under a thousand people, I believe. And um, you know, we all kind of worked pretty close together. There was like two buildings or three buildings um that that were the main buildings at campus there at sixteen hundred amphitheater. And um, you know, so when I joined, uh, there was three of us that started this corporate development group, which was really like, what's the strategy and things we can acquire and invest in and grow the business? And had pretty kind of free rein to to look at things. And I really focused on kind of the advertiser or business side of Google. So I wasn't interested in consumer products. I was more interested in like, what's our business?

• 10:09Speaker 00

  And so, you know, in that context, I worked on all sorts of ideas of like, how do we take what we offer advertisers? Which at the time was really just AdWords. And how do we think about other media? We can make advertising available to those advertisers. So, you know, can we? Do print ads, can we do radio ads, can we do TV ads? Can our advertisers use AdWords as an interface to access media across all these different properties and channels? So I did a few acquisitions and found a few companies, one was called Dmark that we turned into kind of this radio advertising business. So you could go to AdWords and click on audio ads and create an audio ad and then publish it to actual radio stations. Then it would play in-stream in radio stations and you could see the impressions and all this stuff.

• 10:50Shaan Puri?

  That's not a thing now, right? That didn't, that didn't end up becoming part of that.

• 10:53Speaker 00

  It stayed for a long time. There ended up being a really nasty lawsuit with the founders and a very difficult set of circumstances that arose after the acquisition. I mean, I'll tell you this story now, given how many years it's been. I think that was fifteen, sixteen, seventeen years ago, holy shit, seventeen years ago at this point. But, you know, I had real issues with negotiating with the founders and doing the transaction. And, you know, we thought it was such a great plug and play for Google. These guys went out and all DJs and radio stations buy these servers that they put into the, um, the radio station and they, and they put the MP3 files of the ads on the servers at midnight every night.

• 11:34Speaker 00

  And then when the DJ says, okay, time for radio, for ads, they press the play button and it starts playing the ads off the server. So what these guys did is they bought the company that has all those servers for like four million dollars and they connected it to the internet. And they set it up so that advertisers could remotely create dynamic content and fill in the unsold ad spots on that server every night at midnight. And so they were buying what's called remnant inventory and making money on it. And so it was brilliant, but for the four million dollar acquisition and not a lot of technology development thereafter, you know, they were trying to sell the business to us for a hundred million dollars. So they thought it was worth a billion. I mean, the whole thing was crazy how we negotiated the deal. So it ended up being like effectively a fifty million dollar, seventy-five, seventy-two million dollar upfront cash payment, a fifty million dollar milestone payment if they hit a bunch of technical milestones.

• 12:19Speaker 00

  And then up to 1.2 billion dollars in earnouts based on the advertising revenue generated from all these stations. And so that earnout structure was the only way I could really bridge the gap on the deal. I had to go talk to Google's board about it. We eventually got them to sign off on it. And the whole thing ended up being like a really ugly. Negotiation and I didn't want to do the deal and I told Eric Schmidt, I'm like, "Look, I don't think we should do this deal. I don't think these guys are going to work out for us. I think it's going to be ugly." And Eric said, "We have to be in radio. It's a $60 billion market. Push the whole thing through despite my push against it." We did the deal and sure enough, we ended up in this nasty lawsuit that lasted for years. I wasn't around for all that, but you know, I think eventually it all went away and audio ads kind of died

• 13:02Speaker 00

  down. So that was the sort of stuff. I also worked on Google Analytics. So I pitched Larry and Sergey early on on the idea of like, "Look, our advertisers should be able to have analytics on their webpages to see, you know, how people are converting and why and why not." We didn't have a conversion tracker at the time or anything. So, you know.

• 13:18Shaan Puri?

  Tell me what that means. I pitched Larry and Sergey. So like, you know, Larry and Sergey are the founders of Google.

• 13:24Speaker 00

  So I work with an amazing person named Megan Smith. She's really well-known in Silicon Valley. She was Obama's CTO. She's an incredible personality and a tour de force. And Megan was really my mentor at Google and kind of showed me how I can just walk into Larry and Sergey's office and walk into Eric's office. She's like, "Let's go talk to them about this." And I'd be talking to her about that. She's like, "Let's go see what Eric thinks." And she dragged me over to Eric's office and he'd be like sitting there on his computer doing emails and she'd like barge in and be like, "David's got this idea. Let's talk about it." And then like, sit down and you know, like, and so she really kind of showed me that we can and should have this kind of dialogue with these execs because our job was to really help push and think about things that we can take Google, you know, what direction we can take Google. And so, you know, I really had, I think, great

• 14:08Speaker 00

  mentorship there. And so I, you know, was in a meeting with Larry and Sergey saying like, "I think we should be in analytics and we should offer advertisers the ability to see stuff." And I met Wesley Chan, who was a product manager at the time. And so Wesley and I kind of started working together after that because the first thing Larry and Sergey said to me was, "That's evil. Third-party cookies are evil." We don't want to track users across different webpages. And, you know, because then they'll know that we're tracking them. And so it was fairly prescient at the time that Larry and Sergey saw that this might be kind of an evil, or viewed evilly by kind of consumers down the road. And they were absolutely right. I mean, that's what's going on in the EU and with Apple and Facebook and all the cookie tracking and so on that's being kind of taken apart right now.

• 14:52Speaker 00

  But we showed them that like, look, if an advertiser can get analytics, they can see an incredible improvement in conversion efficiency, which means that the user is having a better experience on the webpage. So rather than the user getting frustrated and leaving the website and wasting their time, if the user is happy, the user will buy more, they will convert better, and the internet is a better place. One of our guiding principles at AdWords was like, our advertisements should be so good, and the advertiser's website should be so good, that 100% of the time when people are looking at search results, they click on the first ad, and then 100% of the time they don't come back. So the bounce back rate is zero. And that shows you that you've shown the perfect ad that's even better than organic search results, and it's such a good result that the consumer stays there all the way and never comes back and searches again.

• 15:36Speaker 00

  So that's kind of the guiding principle. So everything is all about how do you improve the quality of the ads? How do you improve the user's experience when they go to the advertiser's site? And how do you get the advertiser to pay for that value? And so analytics ultimately turned into, you know, we found a company called Urchin. I took Wesley to SES, Search Engine Strategies. We walked around, we met a bunch of analytics companies, we met, had four of them come in and talk to us. And we picked Urchin and convinced them to join, convinced Larry and Sergey to do the deal. Within a year, I think we had shown, through Hal Varian, who was our chief economist, we had demonstrated that Google Analytics increased AdWords revenue by half a billion dollars. Because so many advertisers were using it to improve their websites and make the conversions better, that they were spending more on AdWords.

• 16:20Speaker 00

  And so you could kind of economically show the benefit of analytics. And that was like a $25 million acquisition. So it turned into a great product. I mean, I don't know any webpages that don't have, you know, Google Analytics on them.

• 16:30Shaan Puri?

  You're like, where's my bonus?

• 16:34Speaker 00

  It was all good.

• 16:34Shaan Puri?

  The, yeah, I mean, if you can, if you can show that, all right, I'm buying a visitor. It takes me, it costs me a dollar to get the click, but now that I can improve my funnel so that that customer is worth more to me, I can convert more of those customers and I'll spend more, right? Like that, that makes a lot of sense.

• 16:49Speaker 00

  And the customer is happier because people are going to a webpage that gets them what they want as opposed to going to a webpage and getting lost in the content and not clicking through and buying.

• 16:57Shaan Puri?

  Dead end. So, and my last Google question, you know, when we got acquired, I got acquired by Twitch, uh, which is like a kind of part of Amazon. And I remember like the first or second meeting where it was like, you know, all the kind of execs in a room. And as a startup founder, I remember always feeling a little bit, not like imposter syndrome, but sort of always curious, like this is how I lead the company. I have no idea how anyone else does it, right? Even my founder friends, I don't actually get to see them in meetings. So I really had no idea what they were doing. And my first meeting at Twitch, I remember looking at Emmett, who's somebody I really respect, uh, who was kind of my boss, he's the original founder. And he was sitting there and like, there's whatever 20 people in the room and somebody presents like this six page paper.

• 17:38Shaan Puri?

  And I remember, uh, he was like done reading it and like half the time of anybody else. And then he had like scribbled down some questions on it. And then the first question he asked like cut straight to the heart of a thing. And I remember just thinking, oh, this, this is what it would be like if my brain was twice the size, like, oh, I could read twice as fast. I could get to the heart of the issue, you know, twice as fast. And I was just so impressed by him. You know, I think that great, great leaders in some ways almost feel like aliens, uh, they sort of can, they have some superpowers that, that others don't. And, uh, what was it like with the Google founders? Do you like, were they just normal people to you? Or did you notice any special traits or sort of abilities that impressed you at the time or made an impression on you?

• 18:17Speaker 00

  No, I mean, look, um, you know, the culture is set at the top and, um, the team that Larry and Sergey built around them, uh, you know, remain some of the most important and impactful people in Silicon Valley. Um, you know, Susan Wachiki, Soler Kamangar, um, Erz Hotsol, Erz is still SVP of Engineering there. He built all of the data center infrastructure, which by the way, I don't think a lot of people realize. Um, is probably the core advantage of Google. Um, or was originally like.

• 18:47Shaan Puri?

  Tell me about this. My, my co-founder, who's super technical of my past company, he used to say that he goes, people don't ever talk about this, but it was Google's server architecture or their choices that like allowed them to win. What did that mean? I never got his answer.

• 19:00Speaker 00

  Yeah. So, so, so if you go back to 1999, 1998, right? Um, in order to search the web, you had to have what are called web crawlers. So these are servers that are going out and scanning all the web pages on the internet. And then indexing servers and then your web servers, which are, you know, your indexing servers take all that data and classify and organize it and figure out what, you know, what, what's the search term that each webpage can represent? And then, and, and what's the ranking that would, that would show up? And then finally is these web servers, which is the, the website, you know, serving, um, servers. So when you go to google.com and do a search. And so, you know, in order to search the web extensively and to have a high refresh rate. So how much of the web can you search? You have to have more servers. In order to search it more frequently, you have to have more servers.

• 19:42Speaker 00

  So at the time, everyone was using kind of Oracle servers that cost like 3,000 bucks. And they had a pretty case and they had purple on them and they use a lot of power and they looked really nice and they would last forever. You know, all this kind of nonsense claims. And so Google set out to basically build a really cheap web server or really cheap web crawling server and indexing server. So they built their own servers by taking commodity hardware and basically bread boarding this thing. So taking super cheap RAM, super cheap hard drives, jamming them all on, not even putting a case or a cover on it, using super cheap power supplies.

• 20:14Shaan Puri?

  No purple.

• 20:14Speaker 00

  And then they said, they said, look, if no purple, no casing, and they made them redundant. And they're like, look, we'll make lots of these. We'll be able to search more of the web. We'll be able to have a higher refresh rate. And we'll be able to index stuff better and have a bigger index than anyone else because we're making it so cheap to do this. And so their cost was like 150, $200 instead of $3,000. Their servers broke every couple of months, but guess what? It was so cheap to make it. When it broke, they threw the thing away. And so it didn't matter. They didn't need to have a five year server. They didn't need to have a high performance server. They didn't need to have the fastest CPU. And in fact, when I joined Google, they had a team that was working on a 10,000 port switch. So, you know, and, and, and they were making their own ASICs to do that, their own chips. And so the, the depth that the hardware engineering team went into and the data center

• 20:57Speaker 00

  and infrastructure engineering team went into at Google to create a full stack of technology that was advantaged from the ground up. Meant that they would always be able to search more of the internet, always be able to do it better, always be able to do it faster, always be able to have a higher refresh rate. And that advantage, and then they made their website super simple, and they didn't have to sell ads against it because it costs so little to run the website. And so you add all that up, and they create this huge advantage, this huge structural moat. More people come, the network effect, more people show up. They've now got more people that they can sell ads to. They can now reinvest in building more servers, search more of the web, and so on and so forth. And then, you know, the AdWords architecture was just perfect. It was an auction. And so advertisers would bid for search terms. They wouldn't do paid insertion or paid inclusion, which was big at the time.

• 21:42Speaker 00

  They said that's evil. So we'll show ads really clearly and cleanly on the side. And if users want to click on an ad, they know they're clicking on an ad, and otherwise they're searching the internet. And it just created this unparalleled moat. And so the hardware advantage that Google built from the beginning, I think, was really core to their point of success. And so, sorry, going back to your question, look, Larry Page is one of the most impressive individuals you'll ever meet. It's really sad he's not more public. Because I think Larry could offer a lot to the world in the way he thinks and the way he talks about things. He always takes a bigger point of view and a bigger picture perspective on things. You know, when people would suggest products or ideas, he wouldn't get into the technical details and the near-term roadmaps. He would always zoom out 100x and be like, "Why can't we do X?"

• 22:26Speaker 00

  So, you know, "Why don't we search all the world's books?" was one of the things they proposed doing in 2003, which was a crazy concept, but they actually went and then did it, right? And no one would have done that if not for that suggestion, that audacity of perspective. And so they always pushed and challenged every team to think bigger, to think more grand, to think more aggressively. And I think that's a common trait with great leaders in technology businesses, is, you know, and same with coaches on sports teams, you know, your team is only as good as you challenge them to be. And so they'll, you know, if you're not challenging your team and you're asking them, "What do you think you can do?" They're only going to achieve a fraction of what's possible.

• 23:09Speaker 00

  Great coaches and great leaders need to kind of, and technology leaders in particular have this unique ability to, I think, understand the technology and leap several iterations forward to speak to the team about where we're headed, and then bring the timelines in. And that makes for, you know, an incredible sense of urgency and outcome.

• 23:26Shaan Puri?

  And why do you think most people don't do that? So, thinking big, that sounds easy enough to understand, sounds fun to do.

• 23:34Shaan Puri?

  You know, I could hear that advice. Why do you think that's hard advice to follow in practice?

• 23:38Speaker 00

  It's a really important question. So, one of our principles at TPB is dare to dream. So, it's all about creating that audacious perspective. You know, how big can this be? How big should we be? And what happens when you set a big goal? Like, let's say I have to go climb to the top of a mountain, and I can't see the path from here to the top of the mountain. There's 100 permutations or 1,000 permutations on how you might get up that mountain. And you don't know which path is going to work. Most people that are smart have been successful. And most people that have been successful are not used to not succeeding. And so, the orientation at that point is that success is all about doing something and getting an action that you expect out of what you just did. And so, you want, you are inclined naturally as a smart person,

• 24:23Speaker 00

  as a successful person, to only do things that you know what you're going to get as an outcome. And guess what that does? That limits your horizon. So, then you end up saying, "I'm not going to take the more circuitous, challenging route or path that might get me to the top of the mountain. But I can see that this particular path gets me, you know, a quarter of the way up the mountain." And that may not, and you might know, however, that that means you're giving up going to the top of the mountain. But at least you know for sure that if you do X, you're going to get Y. And I see this all the time. I see this all the time at businesses where the teams end up compromising on their big vision. And they compromise on the moonshot because they're more likely to succeed

• 25:04Speaker 00

  and they feel more comfortable taking a shorter range, narrower horizon, and minimizing the opportunity set significantly and saying, "I'm just going to go do this because I know if I do X, I'm going to get Y." And that feels comfortable and I know it's going to happen. And so, they minimize the dare to dream. Circumstance. And then they always say, well, you know what? We'll come back and dream big later. But guess what happens? Let's say you're thinking about, um, I'll give you a very specific example because this relates to the business we're announcing this week, Cana.com, which is our molecular beverage printer. But early on, there was a hard push to say, look, we know restaurant owners will buy this device. I don't know if every consumer is going to buy this device. It might be too expensive. It might not taste good enough. Consumers are so, you know, fickle. If we make a device for restaurants, we know that there's an economic advantage.

• 25:49Speaker 00

  There's an ROI enterprise-based sale. Let's go sell in restaurants. And we'll make a bigger device so it can hold more. And we don't have to worry about shrinking and getting all the technology into a tiny form factor that fits on a kitchen countertop. The problem is, if you do that and you start selling to restaurants, you've now significantly minimized the opportunity to go into the consumer channel. Because you now have a customer and the customer is the restaurant. And the restaurant is going to say, I want this feature and I want this feature and I want this feature and I want you to do this for me. And all of a sudden, your whole team is going to be inundated with product and feature requests that focus on that much smaller, much narrower market. You're going to end up going deeper and deeper into that market. And you're going to lose out on the opportunity to go build for the big market, to go build for the 100x market that can actually change the world and improve the, you know,

• 26:33Speaker 00

  the problems that we're trying to address with this business. And so, you know, I've seen this at many different businesses where taking on a lot of technical risk, taking on a moonshot project is often foregone. And you end up, you know, trading into a much smaller pie and a much smaller opportunity. And then you often miss out on that bigger opportunity. And so, I, I, I think it's really important for entrepreneurs to continue to dream big and find aligned capital and aligned shareholders to let you dream big and shoot for those bigger, higher risk opportunities. Because if they work, they're 100x big.

• 27:05Shaan Puri?

  I couldn't agree more. I can think of two examples in my own career where I'm guilty of that, where we did that. And I was just talking to a company I invested in that they pitched me this amazing self-driving car, uh, you know, single person, single passenger vehicles that were electric and self-driving. It was this really fantastic vision of what the future might look like. And I feel like, you know, in many ways, they've made a lot of progress, but also. Uh, it's, they did the restaurant thing. Basically, they found a customer who showed them a near path to like some validation. And in doing that, they sort of beat down the vision and sort of tried, tried to cram the vision into it. Okay. Some of the vision doesn't fit here. All right. It's just gonna get sort of left behind.

• 27:45Shaan Puri?

  And we'll just do this one thing that might actually net, net be a much smaller overall opportunity and smaller impact. Uh, of this really hard technical thing of you're going to spend your whole life doing this. Well, you know, why not go for the one that, that actually might work? This also isn't limited to technical. Have you heard the, the Airbnb, uh, Brian Chesky's thing, like the 12 star experience? Have you heard this?

• 28:05Speaker 00

  No, maybe, uh, but it doesn't ring a bell.

• 28:08Shaan Puri?

  You'll, you'll like this. So, so basically he sat down his team and he's like, okay. You know, we're in the hospitality business. We want to give our, our guests a great experience, a five star experience. He's like, so first let's just define it, right? Like what's a, you know, just humor me. What's a one star experience? It's like, ah, you get to the house. It's locked. You know, there's cockroaches outside, you know, you can't get in, you're out in the cold, blah, blah, blah. He's like, be vivid about it. So he made them sort of explain really what that one star experience would feel like. Then he's like, all right, give me a three star experience. Give me a five star experience. And then the team gets, gets excited. They say, oh, five star experiences. You know, you get there, uh, it's easy to get in. The place is nice. It looks just like the photos. And, um, you have a great stay. Everything works. Nothing breaks. And, um, you know, on the way out, you know, the, the host leaves you a nice little gift basket. So, so you enjoy yourself.

• 28:53Shaan Puri?

  He's like, awesome. So what's a seven star experience? And now the team's sort of like, you know, you see everyone tighten up. It's like, they didn't expect that. They already had. They thought five was the max number of stars that you can have. And he's like, so give me more. And they're like, well, I guess you could get there and. There's somebody at the airport to pick you up. And they're, they got your name on a sign. He's like, yes, yes, give me more. And so they started to define a seven star and he kept pushing it nine star, 10 star, 12 star. And they get to this ridiculous extreme of like. You know, you get there, not only do you have the stay, they say, hey, you're going to be up at nine AM tomorrow. I got something special for you. Somebody picks you up. They take you on an adventure surfing outside because they're an expert and blah, blah, blah. And then that type of thinking is what gets you to do Airbnb experiences, which is like the local kind of like activities to go do.

• 29:38Shaan Puri?

  Which wouldn't have really otherwise been in a, uh, you know, go book a place to stay, a place to sleep, like type of website necessarily. And so you can do that on user experience and customer experience, just as much as you can do on the technical side. Um, I think that pairs pretty well with your framework there.

• 29:53Speaker 00

  Totally.

• 29:54Shaan Puri?

  So let's talk about Cana. This is cool. So I heard this. This is actually when I think I reached out to somebody on your team. I said, I want to, I actually didn't want you on the pod. I said, I want to make a drink. And so let's, can I explain it in simple terms of what I think it is? And then you correct me.

• 30:09Speaker 00

  Go for it.

• 30:10Shaan Puri?

  All right. So you basically made a printer, like a home printer, but instead of printing out, you know, sheets of paper with ink on it, you could print out a drink, any drink. So like, for example, my wife is vegan. She doesn't drink alcohol, never has drink, you know, a drop in her life, but she loves, you know, certain types of teas and coffees and things like that. And so she could take her favorite tea and have it like exactly the way she wants it. So, you know, like, one of the reasons she loves Starbucks is because she can go in and say, I want a light ice oat milk, you know, decaf with no sugar, blah, blah, blah. And she can customize her whole drink. So similarly, we're going to have a device and, you know, if I fast forward 10, 15 years, I don't know, you tell me the timeline, but we're going to have a device in our house

• 30:55Shaan Puri?

  that we can just push a button and it'll dispense the drink we want. It'll print a drink for you that is exactly the drink you want. And that same machine that she's going to use for her teas, I can go use for a, you know, lime, you know, Gatorade like drink that I could print out, or I might even be able to print a drink that, you know, somebody creates, somebody on the, on the internet just creates a recipe, and then my printer can just print that recipe out, and I can try that drink at home. And so instead of shipping, you know, cans of beverages, or going to a store where there's beverages on a shelf, and then I drive it home and I put it on my shelf, instead of that whole process, we just combine the water that we already have in our homes with

• 31:37Shaan Puri?

  a like, kind of like a printer cartridge of flavors, and you can print whatever drink you want. So, all right, tell me, tell me if I butchered it.

• 31:43Speaker 00

  You did great. I love the use cases. Those are perfect and awesome. So that was great. And I think that's exactly right. I mean, you know, the big discovery, the big kind of aha with this business is based on the idea that 99% of beverages are water, or maybe water plus sugar, or maybe water plus alcohol. And only 1% of all beverages is the chemistry that makes the flavor, the smell, the color, and the texture of the beverage. And that 1% is all that we really need to turn water into all these different beverages. So the chemical-

• 32:24Shaan Puri?

  Literally water into wine.

• 32:26Speaker 00

  Water into wine. Cana, by the way, is the town in Galilee where Jesus turned water into wine. That's the name. Little-known fact. Now becoming a better-known fact. But friends that went to Sunday School, by the way, tend to know that. But basically, if you take a wine, wine has about 500 of those flavor compounds. That's all the stuff that comes from the grape and the skin and the, you know, the branch and the leaves and the oak and all this stuff. And it turns out that of those 500 compounds, chemically speaking, only about 30 to 40 really matter to your sensory palate. So your nose and mouth can only really pick up and really cares about the 30 to 40 compounds.

• 33:08Speaker 00

  The same is true in coffee, in tea, in juice, in soda, in liquor, in beer. So all of these beverages are 99% water, or water and sugar and alcohol, and 1% are compounds where you might have hundreds of compounds in the organic state, but you really only need a few dozen of them. And when you look at the chemical composition, it turns out that that few dozen compounds can be very overlapping from one beverage to the other. Only a few tweaks of a few chemicals can change a white wine into a red wine, or, you know, chardonnay into a soft blanc. And so the idea is like, let's get those compounds, those ingredients, into a cartridge, just like an inkjet printer where you might have CMYK, right, four colors. And we could have 80 compounds, and we think that with 80 compounds,

• 33:52Speaker 00

  we can recreate all the beverage flavors that make up, you know, everything from an OJ to a Gatorade, to a beer, to an iced tea, to an iced coffee, to a margarita. And so that's the idea with the business. And so, you know, Cana.com's just launched, right? So we're gonna be- We spent about three years on this project. First was all the chemical work. So, you know, does the chemistry make sense? Can we actually decompose all the beverages? So we've, at this point, used what's called a GCMS, or a gas chromatography mass spectrometer, to analyze what are the molecular components of literally thousands of beverages.

• 34:29Shaan Puri?

  It's like a 23andB for drinks.

• 34:31Speaker 00

  Yeah. Yeah. And like, this is really scanning the world's, or digitizing the world's beverages. And so we've got all the sodas, all the bottles of wine, all the liquor, all the tequila, everything you can come up with has gone through this device. And then, based on that chemical composition, we've built software that uses heuristics or master combinations to try and reduce the number of compounds down and create a common overlapping set that we can recreate all the beverages.

• 34:57Shaan Puri?

  So, give me the origin story. So, were you just sitting around one day and you're like, you know what? All these drinks are 99% water and then just 1% is the differentiation. Why don't I do, like, how does an idea like this even come into your brain? What do you see? What are you reading? What happened? Where did the epiphany happen?

• 35:13Speaker 00

  Well, a couple of things. One is, I had a good sense for that for a while. I was at dinner with a professor from UC Davis back in late 2019 or so. And, um, and so, or 2018, 2019. And so, he was telling me about this research paper published by the scientist in Germany at the Technical University of Munich. And this, the scientist runs a flavor science lab. And he was, he basically took a glass of wine and he reduced it from 500 compounds down to like 37 or 40 or something, and gave it to a consumer, a sensory panel, and they couldn't tell the difference between that wine and the original wine. And then he did it with another wine, another wine. And he's kind of made these declarative statements that he thinks we could recreate all beverages with just a few dozen compounds.

• 35:58Speaker 00

  And so, that was kind of, I said to the guy at dinner, I'm like, why don't we just make the StartDirect replicator for beverages? Like, we could just print any beverage if we could just get those few dozen compounds to people's homes. And so, there's a guy working with us as a scientist in residence at TPB, which is a foundry. We run kind of R&D programs internally. And if we feel confident that the R&D yields an opportunity, we'll build a business around it. So, in this particular case, we said, hey, Lance, why don't we read these papers, try and recreate these experiments, and see if we can come up with a good orientation around, is it really feasible that we can create thousands of beverages using just a few dozen compounds? That they make economic sense? That we could put them in a flavor cartridge and turn this into a machine?

• 36:39Speaker 00

  And so, you know, after about a year, year and a half, we actually, you know, convinced ourselves that this is going to work. We separately ran a chemistry program, analytical chemistry program, as well as a hardware program. And, you know, we had spreadsheet models that showed that the math could work and that we could actually make this device. And we had a bunch of different technical challenges on how do you actually dispense, right, you know, micro liter and sub-micro liter volumes of these flavoring compounds into the water stream. You got to make sure you can do the whole thing in 15 seconds or 20 seconds because otherwise consumers are going to get annoyed. It's got to taste incredible. You can't, you got to have high precision. It's got to be cheap. You got to make it really cold. I mean, all the product that, you know, we had all these PRDs we were trying to iterate on. And then we yield our kind of estimated cost model and then we had to prove the tech worked.

• 37:24Speaker 00

  So, you know, very iterative cycle for the last three years to get to this point. So we now have fully working prototypes of the Gen one of the device. We're going to production on the Gen one of the device and hope to ship early next year. And so we're starting pre-orders today. For $99, you can reserve a fully refundable $99 reservation fee. And the first 10,000 orders are $4.99 for the device and $7.99 after the first 10,000. So that's the setup.

• 37:55Shaan Puri?

  So let me just, let me do two things. I want to first ask about the kind of like, what kind of drinks am I going to be able to get out of this? Just what the average person wants to know. And then secondly, I want to talk about the impact of that because I, my sense is that if you're making the device, if you're making what you, what you eat and drink in your own home, like literally you're producing it in your own home, you cut out a bunch of trucking, storage, packaging, stuff that doesn't need to happen, that might actually help the environment. So I want to talk about the environment in a second. But let's first do, do the fun stuff. So the drinks. Okay. So I got water in my house. And you can, your drinks are going to be, you have a way to basically cool down the water or, and can you like carbonate it or what are the limitations here?

• 38:37Speaker 00

  Yep. It's, it's chilled and carbonated, optional, obviously, in the device. You don't need to worry about any of that.

• 38:42Shaan Puri?

  Or you can go hot.

• 38:44Speaker 00

  Uh, we don't do heating, so we don't do hot beverages in Gen 1. So, just to be clear, you're not gonna have hot coffee or hot tea. Uh, but there is cold brew, there is iced teas, flavored iced teas, all that. There's a whole variety of stuff there. Um, but the idea is, uh, there are three cartridges. So there's the master flavor cartridge, you put it in. It should last anywhere from one to three months, um, before you need to kind of replace it. Uh, there's a sugar cartridge, because a lot of beverages, people wanna have sugar. And so there's a separate cartridge for sugar, it should last about a month. And a separate cartridge for alcohol should last about a month. Um, and you don't have to buy cartridges, they're free, they auto ship to your home, and you just put them in when they arrive. The device senses when you're running low, and we send you a new cartridge.

• 39:24Speaker 00

  We charge per drink, so, um, the price per drink is gonna be 25 to 50% on average cheaper than what you would pay in retail for that same beverage. Um, so, uh, you know, at the end of each month, your card or your account is charged for the beverages you consume, but you don't need to go to the store, you don't need to buy cartridges, you don't need to deal with all the nonsense, we take care of all that. It's really supposed to be hassle-free. And then, the idea is there's beverages that range from morning till night. So, iced coffee, iced tea, um, sparkling, you know, soda, uh, juice, um, uh, hydration or energy drinks, there's, um, uh, hard seltzers, cocktails, wine.

• 40:04Speaker 00

  Um, and so there's a range of kind of add-ons and features, like, there's caffeination, there's nutrient boosts, so you can actually have vitamin boosts, there's electrolyte boosts, and so you could have low alcohol hard seltzer, you could have low sugar juice for your kids, you could have, um, you know, add caffeine, have an extra boost of caffeine, or low caffeine, uh, iced tea. So, there's all this variation around what you can do ultimately from a personalization perspective. And as a user, what you're gonna experience is literally hundreds or thousands of brands available to you on this device. And they're all gonna be new brands, so we're not yet revealing who the brands are. Uh, I think we're, a few of them will start to announce this week.

• 40:45Speaker 00

  But if you think about where this goes, as a consumer today, you really have a very limited number of choices when it comes to brands because there's only about 150 slots in a retail store for wine, beer, coffee, tea, juice, soda. And so, you know, Minute Maid, Coca-Cola, Pepsi, 7-Up, these are nameless, faceless corporate brands. In the future, you're going to have your own brand, right? So you and your podcast can make a branded beverage, put it on Cana, and your followers can buy your beverage, and it can be your favorite blueberry hard seltzer, or your wife's favorite tea, and she's kind of, you know, and so you guys can build your own brands at a cost of nothing to you. And so I think that the future is a lot like what we saw in media where people are consuming TikTok and YouTube and Netflix. And, you

• 41:30Speaker 00

  know, there's a long tail of content. There's a long tail of things that are associated with individuals now and influencers. I think the same will happen in brands.

• 41:38Shaan Puri?

  Yeah. So basically, just to kind of explain that again, because I think it's an important point. So you're saying, you know, the same way that if you wanted to, you know, watch TV or listen to the radio, there was just this fixed number of slots. And so they, you know, when there was three channels, well, they would show the most general thing that would appeal to like, kind of the common denominator type of audience. And then when we got cable, we got more channels. So now you got a fishing channel and a golf channel. But, you know, those are still pretty broad, actually, when you compare it to YouTube, where it's like, I can watch somebody who just likes to binge eat food. And like, that's just what I want to watch right now. I can watch a guy who, you know, some CrossFit thing that may not have made it onto ESPN, ESPN2, ESPN3, or ESPN, you know, like it would have never made it on

• 42:22Speaker 00

  You can't binge watch chess matches on ESPN, but you can on YouTube, right? So you're now watching way more media than you would have otherwise, because you love chess matches.

• 42:32Shaan Puri?

  And this podcast is a good example. Not only does it give the consumer more choice, it gives the creator a way to just push a button and try their hand at it. And if we're good, like, okay, we kind of sucked at the beginning, and now we're good. Now we get a few million downloads a month. Well, that's great, because we, it was permissionless. Nobody had, we didn't have to go audition anywhere and get selected in order to be on stage. So what you're saying is the same thing's going to happen in drinks. So the consumer's going to have this infinite selection of like flavors that fit their needs. So the low sugar, orange juice, You know, whatever that sparkling, whatever that's going to be appealing to that person. They're going to be able to to print that beverage, even though it may not be sold on the on the shelves. Cause it's not the not like kind of mass popular drink choice.

• 43:17Shaan Puri?

  And the other thing is me and Sam have already started brainstorming. Sam wants to do a root beer. I'm interested in more of like a sparkling water sort of thing, a non alcoholic, refreshing thing. So, so we're, you know.

• 43:27Speaker 00

  Let's do it. You got you guys want to do it?

• 43:29Shaan Puri?

  No, I'm serious. Yeah, we want to do.

• 43:30Speaker 00

  Yeah, so come to Redwood City. Try the device and we'll get you guys set up and you make your own brand.

• 43:35Shaan Puri?

  And that's the question, right? We were, we were not and people got started DMing us because they were like, yeah, dude, we were totally. Cause we were, we like to make up fake name brands on the on the show. We were like, oh, Southern Sam's root beer. And then, you know, Sean's, you know, whatever motivates. I like to, I said this idea, I said, somebody should make a brand of water that's just called Lucky Water. And just, it's just a little, you might have good luck if you drink this water. So I would have Lucky Water, right? Placebo water and just say there is no, this is a total placebo, but hey, it never hurts. And, and so.

• 44:04Speaker 00

  You could put a hint of something in there, just a hint.

• 44:06Shaan Puri?

  Well, it's gonna have some flavor, but the, you know, the luck is why. So anyways, that's my drink. And so, but the question was, is it going to taste the same, right? So for example, I lived in China for a bunch of years and you would get these sodas. And there's this phrase for expats living in China called NQR, not quite right. Where it's like, it almost tastes like KFC, but like it doesn't taste like KFC. And that was a common problem when they tried to export these kind of flavors to another country. So I know you're kind of biased, but give me the, you seem like you're a pretty honest guy. I don't think you're trying to sell stuff.

• 44:37Speaker 00

  No, I mean, we're pretty technical about so, so, so here's an important point. And I made this point earlier today. So it's fresh on my mind. There's a difference between taste and flavor. Flavor is the sensory experience that you have, you know, biochemically and biologically. As you experience a, a bunch of chemistry in your mouth. Taste is how you psychologically or how your brain interprets and finds that appealing. So we've all heard stories about taking expensive wine and cheap wine and blindfolding people and giving it to them. They can't tell the difference. I can give you really cheap two buck chuck in a two Michelin star restaurant. You taste it and you're like, oh, my gosh, this is amazing, you know? Fantastic. I can give you really expensive wine in a McDonald's and you kind of chug it down, right? And so.

• 45:23Speaker 00

  Taste is a function of the overall sensory experience when you have a product, when you engage in a product. And so, you know, a big part of what we're trying to get right is that experience being more than just the flavor we have to get right, right? But you have to make sure that there's something to substitute for the affinity you have with a brand. So you have an affinity with KFC or Coca-Cola, and so there's some benefit of that being ingrained in your mind. You taste something, it's good enough, you're like, "Okay, cool." And so what we do from a flavor perspective, so that's number one, is there's a whole digital experience on the device that we think is really important. Brands no longer are static. It's not just a logo. Brands are visual, right? So there's a video or some audio that comes through as you're exploring, as you're trying

• 46:08Speaker 00

  stuff through the device. And then flavor, it's really straightforward. Our chemistry team prints beverages. We take the best in the market for that category, so we'll take Sprite Lemon Lime Soda, we'll print one of our Lemon Lime sodas, and we have a sensory panel where we bring in consumers, they blind taste, and we score stuff. And then we get iterative feedback on what's working, what's not, and that allows us to craft formula. So, you know, that is a big part of our analytical chemistry process, is the sensory feedback that we do blind. And so we don't graduate formulae, we don't say that these ingredients work until and unless we hit and exceed best-in-market comparables. By the way, really interesting statistic, you'll see that things like cold brew coffee,

• 46:52Speaker 00

  which is a really interesting one, because it's so complex and can be so different, just like dark chocolate. You can take like Starbucks and Blue Bottle, and one group of people will passionately love Starbucks, and one group of people will passionately love Blue Bottle. And so, you know, you'll see that we will score really well with one group with one of our formulae, and really well with the other group with another one of our formulae. And so this goes to the point earlier. If you take a Coca-Cola, it's got 44 grams of sugar or whatever in it. That's what Coca-Cola decided was gonna be the lowest common denominator. That's how they get the biggest audience to buy Coca-Cola. But it turns out, some people would buy more Coca-Cola if it was 20 grams of sugar. And some people would buy more Coca-Cola if it was 60 grams of sugar. So if Coca-Cola had a 20 gram, 30 gram, 40 gram, 50 gram, and 60 gram version of Coca-Cola,

• 47:37Speaker 00

  they would sell a lot more in aggregate of all those versions than if they sold just the 144 gram sugar. And so sugar is a terrible example because it's evil and awful, but we all love it. Um, but you know, like my point is-

• 47:48Shaan Puri?

  Malcolm Gladwell has a TED Talk on this. You've seen that one? Malcolm Gladwell has this TED Talk about the, the perfect pasta sauce. It's got, like, has millions of views. Yeah, yeah, you gotta listen to this thing. So Malcolm Gladwell goes on and like in his style, he goes and he tells this great story about this, this guy that gets hired by Pepsi and by Coke and then gets hired by Prego, I think it is. He's like, "We want the perfect pasta sauce. What is the perfect flavor for, for consumers?" And he discovers there is no perfect pasta sauce. There are only perfect pasta sauces. He's like, "Some people want the chunky one and there is a perfect version of the chunky that will appeal to the most people there." And then some people want the one that's this and, and that's why you see the aisle today. And there's like the, the one that's super garlicky and then there's the one that's super chunky

• 48:29Shaan Puri?

  and then there's one that's not chunky because those people feel very passionately that chunky is better than non-chunky. It's not close for them. And then the, you know, another group of people will feel the exact opposite. And so, but they're limited in, in some ways because they're, those are still, well, they're, they're only gonna bottle five of these or seven of these or 12 of these and then put them on shelves, which can only hold whatever, seven variations. Whereas you're not limited by that in the same way that YouTube's not limited by the number of channels on your TV.

• 48:54Speaker 00

  That's right. Exactly right. And I think that's where, it's not about, are we better than Coca-Cola? It's that can everyone find a product on Cana that they like more than Coca-Cola?

• 49:05Shaan Puri?

  And you can't use their name, right? So what are you gonna do? Are you like Schmokka Schmola? Like, how are you gonna, are you licensing your brands?

• 49:11Speaker 00

  No, we're not using any of those brands. It's all new brands. So your Lucky Water is gonna be a brand. We're gonna get that done. And so you'll find hundreds of new brands available on Cana that you don't find on the store shelves and um

• 49:24Shaan Puri?

  And you're gonna have like your house brands, basically, of the popular things yourselves to see?

• 49:28Speaker 00

  We may, yeah. I'm not interested. Like, I'm more interested in finding partners that are gonna be passionate promoters and wanna, you know, be creators on this platform. So I think that's where I'm most interested. I think we're gonna have to seed a bunch of stuff ourselves, but um, you know, I think it's likely gonna be the case that folks that wanna be creators are gonna be bringing brands to market through the device.

• 49:46Shaan Puri?

  Well, you know, this has happened with alcohol, right? So like The Rock, I think is, I think

• 49:50Speaker 00

  Exactly.

• 49:51Shaan Puri?

  He sold, I don't know how many, hundreds of thousands of cases of his tequila. Like, The Rock is gonna be a billionaire, not from wrestling, not from movies, but from

• 49:59Speaker 00

  Same with 50 Cent, same with George Clooney. I mean, all these guys have They've all got beverage brands. And by the way, they all You have to be huge. And that's the thing. So only 3% of beverage brands that launch um, and get retail space actually make it to 10 million in sales. And so, you know, if you're someone with less than 100 million followers, you've only got 3 million followers, you're a great YouTube creator, people know you, they love you, they're passionate about you, you're never gonna go make a beverage brand. It's gonna cost $5 million to do that. You gotta go make, formulate it, you gotta make packaging, you gotta make a logo, you gotta box it. Then you gotta go convince retail stores to carry it. I mean, the whole process is like an insurmountable process, generally speaking. You have to be huge like The Rock to get that. And, you know, there's probably 90,000 times more people in that middle

• 50:43Speaker 00

  that are really influential, have a lot of followers, aren't as big as George Clooney and The Rock. And so they could make a brand that doesn't require any investment, that doesn't require any capital, they don't have to take any risk. Um, and look, if it's digital, it's permissionless, right? So if it works, great. Like, they've got um, a nice revenue stream.

• 51:01Shaan Puri?

  And you give a share, so let's say, I don't know, what do you think the average drink's gonna sell for? Like a dollar or less than a dollar?

• 51:07Speaker 00

  So it ranges from, you know, 29 cents for like a sparkling water, like a flavored water, like a La Croix competitor.

• 51:13Shaan Puri?

  Yeah.

• 51:13Speaker 00

  Um, up to um, 299 for kind of like a really nice cocktail. Um, you know, you'll find that like a mojito or mimosa will be like a dollar 99. Um, generally the price will be about 25 to 50% less than the store.

• 51:27Shaan Puri?

  Right. So let's say I'm selling my, my 30 cent uh Lucky Water. What is the, is there a standard out of the box, like an app store, like 30% cut type of thing? Or what is the, what is the business model? Cause, cause this will let more people do the rock thing. This will let people like me do the rock thing where we can just

• 51:41Speaker 00

  That's right.

• 51:42Shaan Puri?

  formulate a drink, sell it virtually, digitally into everybody who has a printer. It's now available and then we get a small income stream, royalty stream coming through this.

• 51:50Speaker 00

  Yeah. By the way, the royalty stream for like someone like 50 cent or something is gonna, was like two to 6%. You know, so they're partici- uh, on net, right? And so there's a very um, different kind of model there. We offer a much higher share of revenue. Obviously, you know, this is a, a very difficult business to operate. So we've got to get cartridges made. We got to get them to people's homes. We auto renew. So there's a whole services component. So, you know, we've got a pretty good pitch today for brand partners. Um, you know, we haven't launched um commercially, so I'm not going to kind of commit to what the number is going to be. But I, I, I think it's a really, really compelling opportunity. Um, and they're all going to be, you know, real, they're, they're going to own their brand.

• 52:32Speaker 00

  So if they want to take that brand and use it elsewhere, it doesn't have to be exclusive. We don't own the brand. It's your brand.

• 52:37Shaan Puri?

  Right.

• 52:38Speaker 00

  So you could take your brand Lucky Water and if it takes off and you've got 10 million people that want to buy it in stores, go launch it in stores. You know, it's your brand. Um, so yeah, I think it's a platform for letting people kind of create and ideate and um, and you know, see if they can develop value there.

• 52:54Shaan Puri?

  And the

• 52:55Speaker 00

  It's almost like, it's like merch, right? Like, I mean, just, you know, monetize your, yourself.

• 52:58Shaan Puri?

  The, the device costs, is it 4.99 or is it going to cost 4.99? That's the preorder kind of

• 53:03Speaker 00

  For the first 10,000 orders. So once we hit 10,000, the, the price is going up to 7.99.

• 53:07Shaan Puri?

  And then is this the like kind of Tesla Roadster model where you think that, you know, where do you want to drive this down to? What do you think is the thing you need where this actually is not just my, you know, cool thing in my house? When people come over and I can do a magic trick? Like, when does this become standard where it's not a magic trick? Everyone's got one.

• 53:23Speaker 00

  So it's a great question. You know, there's about 35 million Keurig's installed in the world. There's like three and a half, four and a half million Soda Streams. These devices have prices that range from like 70 bucks up to 299 for like a nice Nespresso. And then, you know, so 299 maybe gets you kind of a 10% market. You know, 199 gets you 30%. I don't know the number because part of what we're doing is we're not just a single product and a single day part. So Nespresso, Keurig, Soda Stream, one product, one day part. So will people pay more for more day parts? Uh, will people pay more for more variety for lower? And hopefully our prices are going to be lower than what you pay for some other alternative products.

• 54:05Speaker 00

  So the value we can provide to consumers, I think, will ultimately dictate how the market expands as a function of price.

• 54:11Shaan Puri?

  Right.

• 54:12Speaker 00

  And, uh, and then form factor. So, so, you know, can we get it smaller? And then, uh, heating, can we add heating to it? And so, you know, there's a bunch of features on the roadmap and then the trade-offs on price. Uh, so, you know, if we add heating, it costs a lot more, it's going to get bigger. Can we make a technology leap where we can actually get everything to be smaller and add heat? And drop the price. And, you know, as we go from Gen one, we're calling this our Gen one device, the Cana one, to Gen three, we really think Gen three ends up being kind of like, it's got everything for everyone and it's an accessible price point for the mass market.

• 54:45Shaan Puri?

  And I don't know if you're fully out of time, uh, but I did want to give you a chance to do talk environment for a second. If you, if you have it.

• 54:51Speaker 00

  Great, thank you.

• 54:52Shaan Puri?

  Probably pretty major or like at least one of the big drivers for you here.

• 54:56Speaker 00

  Pretty much all the work we do at TPB is oriented around how do we change systems of production on planet Earth? So that, um, we can make things using less energy, less land, less natural resources. Um, I'm a big believer that sustainability in the 21st century does not arise from convincing consumers to consume less. I think sustainability arises from building technology-based solutions that let consumers consume more and dropping the price and dropping the environmental impact. And that's what technology allows us to do. So if you go back to the industrial revolutions, you know, of the 19th and 20th century, we built factories, right? We, we put all this technology in a big machine and a big facility. And we used it to make stuff over and over again, and that dropped the price for consumers because we automated it in a big factory.

• 55:41Speaker 00

  Turns out that the technology of that factory, as all technology does, shrinks, gets faster, gets cheaper, gets better. And so theoretically, technology like what exists in a factory, a technology that's better than what exists in a factory to make beverages, can be put in your home. And so, you know, the idea is how do you decentralize manufacturing? Because it takes about 600 liters of water to make a single liter of wine. It takes about 40 liters of water to make a liter of orange juice. And we take all of this water, and by the way, orange juice is 93% water, 7% sugar, only 1% is the flavor compounds, right? Wine is 88% water, 11% alcohol, less than 1% flavor compounds. So, you know, how do we, so we've taken all this water, grown all these crops that basically turn into water,

• 56:26Speaker 00

  put them into glass and plastic and cans that we use carbon dioxide to make. Then we put them on trucks, which use carbon dioxide to go to warehouses, that then go into stores, then go into your home. And then you store them in your home, and you're basically drinking water. And every industrialized home has water. It's about half a billion tons of CO2 that are put into the atmosphere every year to make bottled cans and beverages. It is about bottled and canned beverages. It is about 400 trillion liters of water that are used in the whole production cycle of bottled beverages. And consumers are spending 2.3 trillion dollars a year on this archaic, insane system of centralized manufacturing to use a ton of energy and a ton of carbon and a ton of land

• 57:11Speaker 00

  to just move water into your home when you already have water in your home. 120 million acres of farmland that could be reduced and returned back to the natural ecosystems that we would stop using to grow all this stuff. So that's our long-term incentive, right? The incentive is can we take that carbon out of the atmosphere? Can we reduce the waste on water? Can we return the land to natural ecosystems? And at the same time, make a cheaper and better experience for consumers by decentralizing manufacturing and putting these devices in homes and giving people better options. And so that's why we're so excited about this. You know, I think, I think we, we have an opportunity to do something that has an impact, but also hopefully gives consumers something that's better than what they have today.

• 57:51Shaan Puri?

  Yeah, I don't know if you're hiring, but this is one of those companies where I would look at and I'd say, wow, that'd be a cool place to work if I was out there in the job market. Because you have hard tech problem, you have a device that if it works, it's going to be like a household name. Everybody's going to know it. It's going to be like a Netflix or an iPod or something. It's going to be something that everybody knows if this actually pulls it off. I mean, you're on some Willy Wonka shit, you know, you're basically creating this magical device that lets you create whatever you want, you know, your own little candy, your own little beverage in your home. I think that's, um, it's pretty inspiring and, uh, and you know, to do that while also having a big impact on the environment, right? Like most people would look at that environmental supply chain you talked about and say, how do we make this

• 58:35Shaan Puri?

  20% more efficient at this step? How do we make the trucks emit a little less carbon dioxide, right? How do we, how do we just reduce this by 15%? And what you've done is said, why are we doing this in the first place? Why don't we eliminate the whole chain? So why are we using all this water? And all this plastic and all this fuel just to move water from here to there and add a little bit of flavor to it, right? The what and even, even worse, when there's already water piped into people's homes. So we already built the, the core infrastructure, the pipe into the home with water. All we gotta do is sort of like at the, at the last, last mile, not even last mile, sort of like the last two feet of counter space just converted into the product people want. So I think it's pretty awesome.

• 59:13Speaker 00

  Yeah. And like all the refrigerator space and energy to run the refrigerator to store all that stuff and like the, the, the stuff in your, in your cabinets. Yeah. So that's exactly right. I mean, you nailed it. Like, that's why it's so awesome. So yeah, we are hiring and we got great offices. So, and people go to work in the office and so.

• 59:31Shaan Puri?

  That's a perk nowadays. You can see humans if you work with us.

• 59:35Speaker 00

  Yeah.

• 59:35Shaan Puri?

  You know, I'm gonna go out.

• 59:36Speaker 00

  Come and meet people I R L.

• 59:38Shaan Puri?

  I think, you know, climate, climate corp is cool. The insurance companies are, and it's not that cool, but you know, I guess it makes money. This is cool. This is going to be your, your biggest thing. Hopefully this will be the thing that, you know, college version of you would be like, all right, that was, that was sweet. Not, not underwhelmed by that one.

• 59:53Speaker 00

  As long as my, as long as my kids are proud down the road, I'll, I'll be happy. So that's all good.

• 59:56Shaan Puri?

  All right. Tell people where to go to, uh, so cana.com go, go, is that where?

• 1:00:00Speaker 00

  Cana.com, C A N A dot com. And, um, yeah, you can check out the product specs and the, the product video and, and, uh, sign up. For a $99 pre-order reservation.

• 1:00:10Shaan Puri?

  Thanks for coming on, man. I really appreciate this. I'm a fan of yours.

• 1:00:12Speaker 00

  It's been awesome to chat. Yeah, it's been a great chat. I think you really, really nailed it and I appreciate you, you listening. So that's been great. Thank you.