0:00:05 AI video completely taking over our social feeds in the span of a week, which is absolutely insane.
0:00:17 VO3 was sort of like the chat GPT moment for AI video, where we were suddenly seeing all of these VO3 generations blowing up with millions of views.
0:00:25 It feels like between this and VO3, like a world of possibilities has been opened up for AI storytelling, especially in video form.
0:00:29 Yes, it’s an exhausting time for AI creatives. It’s great, but exhausting.
0:00:39 The median ARR, annualized revenue run rate, is now $4.2 million at month 12 for consumer startups.
0:00:41 Consumers are back.
0:00:43 In today’s episode, we have a takeover.
0:00:49 Justine and Olivia Moore, twin sisters, creators, and partners on the A16Z consumer team.
0:00:59 They’re diving into everything happening in the fast-moving world of consumer AI, from the explosion of AI-generated video content across your feeds, to the tools powering the next wave of creative startups.
0:01:07 You’ll hear them demo Google’s new VO3 video model, break down major upgrades to voice tools like ChaiChiPT and Eleven Labs,
0:01:13 and walk through how Justine used AI to create an entire frozen yogurt brand, complete with logo, product shots, and a storefront.
0:01:20 It’s a fast-paced look at what’s new, what’s working, and where things are going next for creators, builders, and consumer AI companies.
0:01:22 Let’s get into it.
0:01:30 As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice,
0:01:38 or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund.
0:01:43 Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast.
0:01:50 For more details, including a link to our investments, please see A16Z.com forward slash disclosures.
0:01:55 I’m Justine.
0:01:56 I’m Olivia.
0:02:00 And this is our very first edition of This Week in Consumer AI.
0:02:06 So we are both partners on the investing team here at A16Z, and we are also identical twins.
0:02:06 Very confusing.
0:02:09 Extremely confusing, but should be fun for a podcast.
0:02:17 And we’re excited to chat about some of the cool things we saw in the wild world of consumer AI this week, starting with VO3.
0:02:24 Yes, and things are moving so quickly that it feels like we went from exciting but maybe not super realistic AI video
0:02:30 to AI video completely taking over our social feeds in the span of a week, which is absolutely insane.
0:02:30 Yeah.
0:02:34 I’ve been following AI video for a few years now.
0:02:38 You probably remember, I’ve been an early user of all these models.
0:02:38 Yes.
0:02:45 And I have wanted them to work and to make cool things that everyday people would like for so long.
0:02:57 And I would say VO3 was sort of like the chat GPT moment for AI video, where we were suddenly seeing all of these VO3 generations blowing up with millions of views.
0:03:03 Channels only featuring VO3 videos getting hundreds of thousands of subscribers within days.
0:03:05 What’s actually different about VO3?
0:03:05 Yeah.
0:03:07 So I should give the overview first.
0:03:11 So VO3 is Google DeepMind’s latest video model effort.
0:03:18 So they released VO2 late last year, which was the first sort of breakthrough in showing that you could get really high-quality video,
0:03:24 like a consistent scene, consistent characters, physics, like things that just looked good.
0:03:27 And VO3 is the next iteration of that model series.
0:03:33 And what’s very different about it is it generates audio natively at the same time it generates video.
0:03:41 So you can actually prompt it with a text prompt to say something like a street-style interview where a man and a woman are talking about dating apps.
0:03:48 Or you can be even more specific and say something like a street-style interview where a man walks up to a woman and asks her,
0:03:50 what dating apps are you on?
0:03:52 And she replies, why are you asking?
0:03:54 And then gives him a suspicious look.
0:04:00 And so you no longer have to go to another platform to do an audio voiceover or anything like that.
0:04:05 You can get a full-featured talking human video with multiple characters in one place.
0:04:09 It feels like a real unlock to me as someone who’s been following AI video less closely
0:04:16 and that people are now able to generate in one prompt a full vlog, a full talking head video,
0:04:19 something that looks like a podcast in one go.
0:04:24 And I think that’s why we’ve seen things like the Stormtrooper vlogs completely blowing up on TikTok and Instagram.
0:04:25 Yes.
0:04:29 So the interesting thing about VO3 is it’s limited to eight-second generations only.
0:04:35 And it doesn’t generate audio if you start from an image to video, only if you start from text,
0:04:40 which means that it’s really hard to have longer than an eight-second clip with character consistency
0:04:46 unless in your text prompt you’re referencing a character that the model already knows.
0:04:52 And so that’s why we’ve seen all of these hacks of all the viral vlogs featuring like Stormtroopers or a Yeti.
0:04:53 Because you can’t see their faces.
0:04:54 They’re covered by a mask.
0:04:55 Yes.
0:04:57 Or the Yeti, the model knows what the Yeti looks like.
0:04:58 Or a Capybara.
0:05:03 If it’s not a human face, I think we’re less sensitive to little changes between the eight-second clips.
0:05:09 And so you have people generating minutes-long videos that look like a consistent vlog character.
0:05:09 Yeah.
0:05:10 They’ve been super fun to watch.
0:05:13 And then how do you actually use VO3?
0:05:14 It feels like there’s been some confusion.
0:05:15 Yes.
0:05:20 So when VO3 first came out, it was only available on the Google AI Ultra plan.
0:05:21 Okay.
0:05:21 Very confusing.
0:05:24 Through Flow, Google’s new creative studio.
0:05:27 And you had to be on the $250 a month plan.
0:05:29 So there was a lot of hype, a lot of FOMO.
0:05:32 Now the model is available via API.
0:05:32 Okay.
0:05:40 So what that means is a bunch of consumer video platforms like Hydra or CREA are offering access to VO3 on their $10 a month plan.
0:05:49 Or some of the more developer-oriented like API platforms like Fall or Replicate are offering generations where you pay per video.
0:05:52 It’s priced around like 75 cents per second today.
0:05:52 Okay.
0:05:54 So it’s still pretty expensive.
0:05:54 Yes.
0:05:57 You have to be careful about how you prompt it, but the results are amazing.
0:06:02 And then what do we expect next, either from Google, from creators?
0:06:03 Like what does this mean for AI video?
0:06:04 Yeah.
0:06:10 I think on the creator front, we’ve already started to see this explosion of basically, I think what people have called faceless channels.
0:06:19 So this idea of like now you don’t have to put your own face behind a camera or on a screen to be able to talk about a topic or film a vlog or something like that.
0:06:27 You can have a fully AI-generated character essentially telling your story or acting out your narrative for you, which is huge.
0:06:38 And I think like people are using it to tell extremely funny jokes, have these narrative storylines like Greg, the incompetent stormtrooper who’s crashing all of the missions, things like that that people are getting really invested in.
0:06:43 In terms of from the model providers and the companies, VO3 is clearly very expensive to run.
0:06:50 So I would imagine Google will want to train the next model that’s even bigger and is able to generate longer videos.
0:06:55 But we’ll struggle with things like coherence and we’ll also struggle with, honestly, the pricing of the model.
0:07:03 Hopefully, we’ll see more sort of condensed, optimized, distilled models that are able to do similar things at a lower cost.
0:07:06 Okay, so there was a lot of news last week.
0:07:07 So this got kind of lost.
0:07:11 But I heard there was a big update to ChatGPT’s advanced voice mode.
0:07:11 Yes.
0:07:14 They announced it on Saturday, which was an interesting choice.
0:07:15 Weird time to drop.
0:07:15 Yeah.
0:07:18 I think they actually dropped the improvements last Thursday or Friday.
0:07:23 It was first only for all paid users and now I think it started rolling out across the broader user base.
0:07:27 But essentially, they made advanced voice mode a lot more human.
0:07:35 The really interesting thing was ChatGPT was the first one to do what I would call kind of real-time consumer voice where you could have like a conversation.
0:07:38 And this was like last September in the ChatGPT app.
0:07:44 But then they didn’t really improve the product or the model that much, at least from my perspective.
0:07:52 And we saw Sesame and other open-source providers come out with arguably better and way more human-like models.
0:07:54 We saw Gemini.
0:07:57 We saw Grok launch voice products that were much more realistic.
0:08:03 So I think it was kind of a question mark for a lot of people what ChatGPT was doing with consumer voice.
0:08:05 And so what makes it better now or what were the main upgrades?
0:08:08 We should actually just maybe talk to it and see.
0:08:09 It’s live demo time, folks.
0:08:12 Hey, ChatGPT, are you there?
0:08:13 Hey there.
0:08:15 Yeah, I’m here and ready for the demo.
0:08:16 What can I help you with today?
0:08:20 Did they make some improvements to your voice over the last week?
0:08:22 Yeah, they did.
0:08:27 They’ve been rolling out some updates to make my voice sound more natural and expressive.
0:08:28 I’m glad you noticed.
0:08:33 Yeah, I can hear like your voice may be in flex upwards when you’re approaching a question.
0:08:39 Or sometimes you’ll say um or uh or something that sounds like a mistake but actually makes you sound more human.
0:08:41 Exactly.
0:08:46 Those little touches are all intentional to make the conversation feel more natural and relatable.
0:08:49 It definitely makes things a bit more fun and engaging, I think.
0:08:50 Very cool.
0:08:51 Amazing.
0:08:52 Yeah, it’s crazy to hear.
0:08:56 It’s always wild when a voice model like coughs.
0:08:56 Yes.
0:09:01 Or even funner things like taking on an accent or speaking in another language or things like that.
0:09:07 But then also I think just the pure realism of the voice that that demonstrated is also extremely impressive.
0:09:13 It’s so funny too because when advanced voice mode first came out, my feeling was like, wow, this is amazing.
0:09:14 This is incredible.
0:09:15 This is so human-like.
0:09:18 But then like a month or two later, Notebook LM came out.
0:09:25 And that was the first real voice experience that put in those ums, ahs, pauses, other things that are so human-like.
0:09:27 And it felt like such a huge upgrade.
0:09:31 And then when you use advanced voice mode, you’re like, this is not that advanced anymore.
0:09:34 And so now it’s finally there, which is super exciting.
0:09:36 From advanced voice mode to basic voice mode to advanced voice mode again.
0:09:38 To, it’s advanced voice mode again.
0:09:38 Yeah.
0:09:42 I think one of my questions then has been like, what took them so long?
0:09:43 Right.
0:09:53 Because they’re on the cutting edge of so many models, and yet it feels odd to me that it took maybe six plus months for them to roll out improvements that we saw from other model companies much faster.
0:09:53 Yeah.
0:10:00 I honestly think a big part of it might have been when they first released advanced voice mode, if you remember all the controversy around her.
0:10:08 And was this going to be a companion that replaced humans, and some of what people would think of as kind of scary implications of that?
0:10:09 Right.
0:10:14 It seemed like that maybe spooked them a little bit, and so they didn’t want to put anything out there that sounded too human.
0:10:15 Yeah.
0:10:18 I mean, that and then also, I mean, OpenAI has been super busy.
0:10:34 This has always, I think, been the question about the frontier, largely LLM labs, which is like, how do they balance priorities between the North Star of like text-based AGI, then what they’re doing in video with Sora, all the image stuff they did, which we’ll talk about a bit later with the 4.0 image model.
0:10:34 Yeah.
0:10:37 Reasoning, all of those sorts of things.
0:10:37 Yeah.
0:10:37 Totally.
0:10:44 It reminds me a little bit, actually, of one of the other, I say big tech, like OpenAI is now big tech in some ways.
0:10:44 Yes, it counts.
0:10:48 But the other big tech consumer update this week, which was the Apple Developer Conference.
0:10:49 Yes.
0:10:51 And all of the things that they announced around AI.
0:10:52 Or didn’t announce.
0:10:53 Or didn’t announce.
0:10:53 Right.
0:11:00 And the fact that I think that people have been so far somewhat disappointed by Apple Intelligence, which is their bundled set of AI features.
0:11:01 Yeah.
0:11:07 I think we’ve all been waiting on like the AI version of Siri or some kind of true personal assistant on mobile.
0:11:07 Yeah.
0:11:12 So I had this the other day where I asked Siri, okay, tomorrow’s Monday.
0:11:13 What Monday is it of the month?
0:11:17 Because SF Street Clean, I had to know if it was going to be the second Monday of the month.
0:11:19 And it said, I don’t know that.
0:11:21 Can I search ChatGPT for you?
0:11:25 And I was like, Siri, how can you not answer this basic question?
0:11:34 Well, okay, it does seem like from a lot of Apple’s updates that they put out, they’re kind of outsourcing a lot of the true AI features to ChatGPT just running on your phone.
0:11:34 Yeah.
0:11:39 And I think a similar story, it seemed like when they rolled out those AI-powered notification summaries.
0:11:40 Yes.
0:11:43 Where they would group like three or four sets of notifications into one.
0:11:43 Yeah.
0:11:46 And they got a little jumbled and people got upset.
0:11:48 And it seems like that spooked Apple a little bit.
0:11:51 And they keep kind of retrenching on the timeline of releasing AI Siri.
0:11:52 Yeah.
0:11:53 So we’ll see what happens.
0:11:59 They were, at least in the announcement yesterday, leaning into things like updates to Genmoji and call transcription.
0:12:03 I think the coolest thing I saw was real-time translation of calls and FaceTimes.
0:12:04 Yes.
0:12:05 Across languages.
0:12:09 I’ve been surprised we haven’t seen more on that because that feels like a really natural and obvious use case.
0:12:10 Yeah.
0:12:16 Especially, I think, did Google, I think Google might have done a real-time translation, but I haven’t seen a ton of adoption yet.
0:12:25 I did see for the first time a viral Gen Z TikTok featuring Genmojis, which I’m surprised it took that long to hit because Gen Z loves Genmojis.
0:12:27 It’s holding out hope for those to make it really big.
0:12:28 Yes.
0:12:29 Okay.
0:12:32 And before we get too far off voice, should we talk about 11v3?
0:12:32 Yes.
0:12:40 So 11 Labs, the text-to-speech company, actually broader AI voice company, released their third-generation model called 11v3.
0:12:45 Also last week, I believe, maybe last Thursday or Friday, it was a very busy week on the voice front.
0:12:55 And what makes 11v3 really special is it does a bunch of stuff with voice that you used to have to do via speech-to-text-to-speech.
0:13:03 So before, if you wanted to have a character that was crying while talking or had some sort of emotion or even had, like, a weird inflection,
0:13:10 you would have to record yourself saying it like that, upload it to 11, and then they would translate it into the AI voice.
0:13:21 And now they essentially take all of the weird inflections, emotion, even accents, and they turn it into text prompting through these things called tags.
0:13:28 So basically, the 11 interface is an editor where you can take a sentence that you want the character to say,
0:13:37 you pick your voice, you write your sentence, and then you can tag it, like, sadly, or resigned, or whispering, or something like that.
0:13:39 And you can do sound effects, too, right?
0:13:39 That is huge.
0:13:42 Okay, so I made this one.
0:13:43 And what’s the prompt on it?
0:13:45 Oh, it’s a text prompt.
0:13:47 It’ll say, hey, y’all, my name is Austin.
0:13:49 I’m coming to you live from our family farm in Fort Worth.
0:13:53 Then he’s going to walk through milking a cow, and someone’s going to interrupt him.
0:13:53 Great.
0:13:56 Hey, y’all, my name is Austin.
0:13:59 I’m coming to you live from our family farm in Fort Worth.
0:14:05 Today, I’m going to walk through what it’s like.
0:14:07 Austin, are you faking an accent again?
0:14:08 It’s not faking.
0:14:09 I was born here.
0:14:09 It could say.
0:14:11 If everyone knows, you don’t talk like that.
0:14:16 So my favorite thing about that is it showcases a couple of things about the model.
0:14:18 It can do bad accents.
0:14:19 It can do terrible accents.
0:14:20 It can do great accents.
0:14:22 That was two different characters.
0:14:27 At first, I prompted the Austin character of having a thick Texas accent.
0:14:29 Then I prompted the cows mooing.
0:14:33 And then you can also prompt interruptions, which is really cool.
0:14:37 So a tag is literally like starts talking and gets interrupted.
0:14:42 And then the next character that comes in, you can say cuts the other character off.
0:14:49 And so for narrative storytelling, for ads, marketing, anything, it makes it sound like a natural conversation, which we’ve never had with AI voice before.
0:14:58 Yeah, it feels like between this and VO3, like a world of possibilities has been opened up for AI storytelling, especially in video form.
0:15:00 Yes, it’s an exhausting time for AI creatives.
0:15:03 It’s great, but exhausting because there’s just way too many fun stuff to test.
0:15:11 I think Eleven’s actually doing a competition now where they’re soliciting the best examples of people using V3 from all around the world.
0:15:13 So I’m going to be very curious to see.
0:15:20 We’ve made all sorts of fun stuff, but how the professional narrative builders and storytellers are using it.
0:15:23 Because I think we’ve just scratched the surface of what’s possible here.
0:15:23 Amazing.
0:15:30 Okay, so you put out some data last week about AI revenue ramp and how fast companies are growing.
0:15:32 Let’s chat through the main takeaways from that.
0:15:40 Yeah, so basically the methodology here, or maybe even back up, the purpose here was I think we all have this idea in mind.
0:15:45 Or maybe we have that idea because we’ve heard it a billion times that, like, we’re in a new era of growth now.
0:15:48 Thanks to AI, companies are scaling faster than ever before.
0:15:49 Right.
0:15:53 But my question was, like, what does that really mean and how fast is that?
0:15:54 Is it 20% faster?
0:15:57 Is it 50% faster than what we saw pre-AI?
0:16:01 So we are blessed to get to meet tons of companies here every day.
0:16:03 We meet dozens of companies a week.
0:16:11 So we went back and essentially just pulled all the data from companies we’ve met in the Gen AI era, which I would say is the last 22 to 24 months.
0:16:12 Right.
0:16:16 And we looked at once they started monetizing, how fast are they growing?
0:16:27 I would say pre-AI, if you’re a B2B startup selling to enterprises, if you got to a million dollars in ARR in the first year, that’s, like, amazing, best in class.
0:16:28 That was, like, the rule of thumb.
0:16:29 I remember that as the known metric.
0:16:30 Very exciting.
0:16:37 If you were a consumer startup, you would not make money for three, five years, maybe longer.
0:16:37 Yes.
0:16:43 The whole idea was to build up a user base and then probably monetize them directly via ads.
0:16:46 Or transactions for, like, a marketplace, maybe.
0:16:47 Yes, down the line.
0:16:51 And there were counterexamples to that, some subscription companies, but that was definitely not the dominant model.
0:16:51 Yeah.
0:16:58 That has fully shifted in the AI era, and most companies are now making money directly from consumers via subscription.
0:17:10 What we found was actually pretty surprising, which is that the median ARR, annualized revenue run rate, is now $4.2 million at month 12 for consumer startups.
0:17:13 The bottom quartile is $2.9 million.
0:17:14 Yeah.
0:17:16 And the top quartile is $8.7 million.
0:17:17 Wow.
0:17:23 So, like, a median company, median B2C company in the age of AI is getting to $4 million ARR after a year.
0:17:23 Yes.
0:17:27 And the best-in-class companies are getting to $8 million in a year.
0:17:27 Upwards of $8.
0:17:28 Almost $9.
0:17:31 In the pre-AI era, like, we never would have seen anything like that.
0:17:38 And the even more surprising thing is those numbers are twice as high as the B2B benchmarks in the AI era.
0:17:45 So, consumer companies are actually ramping revenue faster, which, again, is like a total reversal from what we saw before.
0:17:48 I think there is a couple reasons why this was happening.
0:17:53 First, it’s like, why have consumer AI companies adopted subscription?
0:18:02 They were kind of forced to because especially in the early era of models, they were so expensive that you as a company had pretty high costs of goods sold.
0:18:02 Right.
0:18:05 The inference costs, you mean, of running the model.
0:18:09 Historically, software, the benefit was, like, there was no marginal cost.
0:18:09 Yes.
0:18:10 So, you made an app.
0:18:12 There’s no additional cost to serving the next user.
0:18:14 In AI, that is actually not true at all.
0:18:14 Yeah.
0:18:19 Especially if you’re running inference on a model, it costs you cents.
0:18:19 Yeah.
0:18:22 Maybe even dollars for each query.
0:18:25 So, each user could be costing you dozens of dollars a month.
0:18:25 Yeah.
0:18:25 Absolutely.
0:18:28 So, a lot of companies had to at least try to charge.
0:18:28 Right.
0:18:34 And it turns out that these new products that are AI native are so powerful that consumers are willing to pay.
0:18:34 Right.
0:18:42 So, we also ran some additional data analysis that shows that, on average, consumer AI startups are charging $22 a month.
0:18:42 Wow.
0:18:50 Across the average user, which, again, is, like, more than double what they were able to charge pre-AI for subscription companies on average.
0:18:50 Right.
0:18:52 And do we have theories?
0:19:02 I mean, on the creative tool side, what I’ve seen is, like, for people who weren’t creative, AI tools allow them, like, I can make photos or images or art for the first time.
0:19:03 I can make videos.
0:19:04 I can make animations.
0:19:08 And then for creative people, like, we have a cousin who’s a creative.
0:19:14 They can genuinely use this to supercharge their workflows and do their job a lot faster so they’re willing to pay for it.
0:19:14 Yep.
0:19:17 Have we seen examples of that outside of creative tools yet?
0:19:18 It’s a good question.
0:19:21 We’ve seen some of it around companion apps, I would say.
0:19:21 Right.
0:19:21 Yes.
0:19:27 Where, again, the products are just so powerful to have a friend with you 24-7 that people are excited to pay.
0:19:31 We’ve also seen this around categories like language learning.
0:19:42 teaching your kid how to read, other things that previously you’d have to pay a human being, I don’t know, $50 an hour, if that, to get access to, that now $22 a month with AI feels pretty cheap.
0:19:43 Totally.
0:20:00 I mean, I’m even thinking some of the things I’ve seen monetized well are in, like, nutrition or coaching, where for the first time, thanks to vision models, you can take a picture of what you’re eating and have a vision model pull out how many calories are in this, how much protein, and then at the end of a day or a week can summarize insights about what you should
0:20:02 be eating more or less of.
0:20:02 Yes.
0:20:08 Which is something that pre-AI people, like, I don’t know, you could take a picture and upload it to a forum.
0:20:08 Yes.
0:20:09 But, like, it was not casted.
0:20:14 Or you have to find a nutritionist, wait weeks to book an appointment, maybe get a referral from your doctor.
0:20:15 Like, it would take forever.
0:20:16 So it’s really exciting.
0:20:20 I think it’s monetizing people who never would have paid for that before.
0:20:20 Yes.
0:20:26 And then people who would have paid for it are switching over to the AI version or they’re willing to pay even more, which is super exciting.
0:20:35 The other thing that I think people have questions about or maybe doubts about would be, like, okay, great, they’re growing fast, but they’re not retaining a lot of users.
0:20:37 We did some analysis on this, too.
0:20:48 There’s definitely a lot of tourism, we call it AI tourism behavior in terms of free users, which means you get a lot of hits on your website, essentially, and most of those users don’t stick around.
0:20:48 Yeah.
0:20:59 But if you look at it on a paid user basis, so once you actually subscribe, consumer AI companies are retaining at the median pretty much just as well as pre-AI consumer companies, which is really exciting.
0:21:07 I feel like what we’ve seen, especially on revenue retention, which is fascinating, is, like, you might have more tourists, so you might have more people who subscribe and then cancel.
0:21:16 But then for the first time, you have, like, real sort of upsell activity in consumer subscriptions, whereas you’re not just paying $10 a month for the app.
0:21:18 You’re paying $10 a month for the image model.
0:21:28 But then if you love it and you run out of credits, you’re paying another $10, $12, $50 for additional credit packs before the next month of your subscription starts.
0:21:35 And so that means you see revenue expansion opportunity now in consumer that we only used to see in enterprise.
0:21:46 Or, honestly, in games, what they call, like, monetizing the whales, the people who are the really high spenders, which is, to me, one of the most exciting things about consumer AI products right now.
0:21:46 Yeah.
0:21:54 And we’re seeing, I would say, companies convert consumer revenue to enterprise revenue way faster than they ever did before.
0:22:02 Like, companies like Canva previously took five, six, seven-plus years to really move from consumer prosumer to enterprise.
0:22:02 Right.
0:22:05 And now we’re seeing companies like Eleven Labs is a great example.
0:22:05 Yeah.
0:22:10 Where someone might start using it as a $10 a month plan to make their own fun videos at home.
0:22:11 Yeah.
0:22:13 Make voiceovers for their fun videos at home.
0:22:17 And then, turns out, they work at some big entertainment company.
0:22:17 Yes.
0:22:18 And they bring it in there to work.
0:22:22 And then they convert to a really high ACB enterprise contract, which is super exciting.
0:22:26 I mean, I feel like we even saw that in the very early days of consumer AI.
0:22:26 Yes.
0:22:35 I remember our friends at ad agencies or entertainment companies would tell us that they were using MidJourney to mock things up or even using the images in their final work products.
0:22:41 So it was like a true enterprise use case, but growing bottoms up, which is a fascinating motion.
0:22:42 Yeah.
0:22:43 It’s exciting.
0:22:43 Consumers are back.
0:22:46 All right.
0:22:46 Awesome.
0:22:48 We’re moving on to our demo of the week.
0:22:54 So one fun fact about us is that we genuinely love, at least for me, it’s probably my number one hobby now.
0:22:55 Yeah.
0:23:00 Trying out all of the AI creative tools, especially, but also AI, like consumer products more broadly.
0:23:08 Figuring out how to make cool things and then sharing the workflows to other people whose number one hobby is not doing this and who do not have ours.
0:23:14 So this week, we are going to talk about brand creation and ideation using AI.
0:23:28 I made this new frozen yogurt brand called Melt that I iterated on with ChatGPT, then I took to Ideagram, and then I took to Kriya to kind of do the final touches and to make these really cool product photos and even store photos.
0:23:29 Yeah.
0:23:38 And I think that the initial idea about this was seeing Flux Context come out, which is the new image editing model from Black Forest Labs, which is hosted on Kriya.
0:23:49 And Flux Context, you can kind of think of it like the GPT-4O image model, where you can upload an image and then you can say, you know, make this Ghibli style was the viral example.
0:23:56 You can also say, like, take the person from this photo and put them in a new environment or take the logo and change it slightly.
0:23:57 Yeah.
0:23:58 Add or remove objects.
0:24:03 I’ve seen it described as kind of like Photoshop, but with natural language prompts.
0:24:03 Yes.
0:24:05 Like you can edit with words for the first time.
0:24:16 And I think that is what makes it different than the 4O image model, which is the consistency to which it retains the item or the character or whatever is much, much better.
0:24:17 We’ll show some examples here.
0:24:28 But basically, if you’re taking a photo of yourself and uploading it to GPT-4O and saying, like, put me in a podcast studio, you will likely end up looking completely different in the new photo than you did in the initial photo.
0:24:28 Yes.
0:24:30 Or maybe some similar features, but quite different.
0:24:34 Whereas this model does an amazing job at maintaining consistency.
0:24:45 And so that sparked this idea for me of, oh, that means that this can actually be used for, like, brands, new product photos, or other sorts of marketing collateral because the logos and the products can be consistent.
0:24:46 Awesome.
0:24:48 And you know I’m a huge Froyo fan.
0:24:51 I feel like Froyo has gotten an unfair shake in recent years.
0:24:54 It’s kind of seen as the little kid thing.
0:24:59 And so I wanted to make a cool, hip, modern, 20s New York Froyo brand.
0:25:00 Okay.
0:25:12 I went back and forth with ChatGPT on this idea to land on the name Melt, which I love, and to land on the branding of, like, this is sort of what the font of the logo will look like, and then this is the color of the packaging.
0:25:21 And then I took that prompt for the logo to Ideagram, which is an image generation and sort of editing canvas.
0:25:27 And it’s super good, I think, at logos, typography, anything sort of product or word related.
0:25:34 And I had it generate this photo of this Froyo cup that is floating in the air with the Melt logo and branding.
0:25:44 Then I downloaded that photo and I took it to CREA, where I used the Flux Context new editing model to run all different kinds of scenarios.
0:25:53 So what’s really cool about that is you can upload the photo and then you can say, take this Froyo and put it sitting on a counter at a trendy restaurant.
0:25:55 Put it in the hand of a woman at a park.
0:26:01 Or even make the Froyo cup instead of blue, make it white and give it a pink border.
0:26:05 Make the Froyo itself purple if they’re having, like, an Ube Froyo special.
0:26:05 Yeah.
0:26:12 And then I think the next step, which I didn’t do here, I kind of stopped at the product images and I actually made an image of the store, too.
0:26:15 I took the logo and I superimposed it over a store I generated.
0:26:17 I know, it’s like you want to go there.
0:26:19 But the next step even further would be video.
0:26:20 Yes.
0:26:28 So my idea is to take all of those sort of product shots, take it to VO3 or Higsfield, which does really cool special effects stuff.
0:26:28 Yeah.
0:26:30 And have the Froyo cup in action.
0:26:31 See how good the model.
0:26:33 And have it actually melting over the side.
0:26:33 It has to melt.
0:26:38 I’m very curious to see, do the models understand the physics of Froyo?
0:26:42 Like, if it tosses the cup in the air, how does the Froyo land?
0:26:42 Yes.
0:26:46 Does it kind of plop like we all know Froyo would in real life?
0:26:46 Yeah.
0:26:49 And obviously, this was just like a fun experiment for me.
0:26:52 I’m not, unfortunately, actually going to be starting a Froyo brand.
0:27:05 But it sort of makes you start thinking about, like, why, if you work at an ad agency, for example, and you were mocking up a deck for your client about your latest campaign, why would you not use something like this to show them what it might look like?
0:27:07 And you did it in, I mean, less than a couple hours.
0:27:14 And honestly, the branding does look more exciting than a lot of kind of professional brands that we see out there.
0:27:22 And so it makes me think about the next generation of entrepreneurs are going to be completely AI-assisted in a lot of these assets that they’re putting together.
0:27:25 And I think they’re going to be able to make full-stack AI brands.
0:27:28 There’s also products where you can design with AI.
0:27:29 You can make ads with AI.
0:27:37 Like, I think there’ll be no reason for any person not to have their own product line, small business, open a store if they want to.
0:27:40 Like, AI is assisting with these kinds of things, too.
0:27:40 Totally, yeah.
0:27:53 I think we’ll see brands that are, like, logo, product photo, maybe even product itself designed by AI, vibe-coded slash vibe-designed website or mobile app, and then kind of drop-shipped to the end consumer.
0:27:59 Social media ads also generated with AI and avatar that holds it up for you and sells it on TikTok.
0:28:02 Yeah, it’s promoted by AI influencers who are VO3.
0:28:03 They don’t actually exist.
0:28:13 I think that sort of thing is going to be really fascinating to see because it kind of, like, you no longer have to know how to work all of these technical tools that you had to be able to use.
0:28:15 Like, even Photoshop, there’s so many buttons.
0:28:17 It’s, like, very complicated.
0:28:25 And now you can just ask for what you want in a text prompt, get something generated, and iterate on it until you end up with something that you really love.
0:28:26 Amazing.
0:28:27 Which I think is crazy powerful.
0:28:28 Awesome.
0:28:33 Thanks for listening to the A16Z podcast.
0:28:39 If you enjoyed the episode, let us know by leaving a review at ratethispodcast.com slash A16Z.
0:28:42 We’ve got more great conversations coming your way.
0:28:43 See you next time.
0:28:48 you

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0:01:20 What if you could take that dream vacation?
0:01:22 Or take that idea and go start that business?
0:01:25 What if you could grow your career or your company?
0:01:31 When it comes to your finances, your business, your future, LPL Financial believes the only question should be, what if you could?
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0:01:50 Welcome to Office Hours with Prop G.
0:01:55 This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind.
0:01:57 What’s happening?
0:01:58 Today is a little different.
0:01:59 We’re coming to you on a Friday.
0:02:03 And starting next week, Office Hours will drop every Monday and Friday.
0:02:04 Every Monday and Friday, starting next week.
0:02:05 That’s right.
0:02:06 Twice a week.
0:02:07 Twice the questions.
0:02:08 Twice.
0:02:12 The very good or very bad or somewhat in the middle advice from Prop G.
0:02:19 If you’d like to submit a question for next time, you can send a voicemail recording to officehours at propgmedia.com.
0:02:22 Again, that’s officehours at propgmedia.com.
0:02:23 The questions have been outstanding recently.
0:02:30 Or post a question on the Scott Galloway subreddit, and we just might feature it in our next episode.
0:02:31 What a thrill.
0:02:32 First question.
0:02:35 Hey, Prop G.
0:02:37 Love the pod.
0:02:40 Thanks for all you do in support of young men.
0:02:46 As a mom of two young boys, it’s really opened my eyes and changed the way that I parent them.
0:02:51 My question today is more so looking for some advice.
0:02:59 We just got the news that our company is going back in office five days a week.
0:03:06 I’m a little bit jarred because I’ve been fully remote for the last five years since COVID.
0:03:17 And I guess I’m just looking for some encouragement, some upsides, because I have a longer commute now, less time with my kids, and I’m just feeling a little discouraged overall.
0:03:23 But I know that you’re in support of in-office time, so make me feel better.
0:03:28 Anonymous, I think remote work is a disaster for young people.
0:03:31 Pre-mating, pre-mentors, pre-friends.
0:03:34 I think it’s a fantastic place to find friends, mentors, and mates.
0:03:35 Yeah, I said it.
0:03:40 One in three relationships begins at work, and most of them are, you know, 99.9% of them are consensual.
0:03:46 We have a tendency to immediately distill everything down to one big blob and think this is the right thing for everybody.
0:03:57 I think if you’re a care, what I’ll call a care worker, and I think that should get its own classification, you’re taking care of young kids, aging parents, or you’re having some health struggles yourself.
0:04:14 I think that corporations, smart corporations, should offer the benefit the same way they might offer a great, you know, parental leave program or great health benefits to say we are a caregiver organization and that we go out of our way to try and facilitate remote work for people who need to be home more.
0:04:18 And also, they’re going to make less money, and I think that’s fine.
0:04:23 I think that tradeoff is worth it, and there’s a lot of people such as yourself that I think would willingly make that tradeoff.
0:04:26 So, I’m not here with a message of hope.
0:04:33 It sounds like you’ve probably already gone to the organization and said, look, is there any way I could go to two or three days back in the office?
0:04:41 For them to go from zero days a week and with someone with small children to five days a week, that seems a little rough in my view.
0:04:43 And I want to be clear.
0:04:47 I think in office, I think the office is a feature, not a bug for young people.
0:05:02 But as we age and we collect dogs and kids, and especially for those who are on the sandwich generation that are caregivers, I think it’s in society’s best interest to encourage companies to give them more flexibility such that they can be at home providing that caregiving.
0:05:11 I apologize I don’t have anything more inspirational or no silver bullet here other than to say five days a week is a lot if from zero to five.
0:05:20 And you may want to think about and always be on the lookout for an organization that offers you circumstances that are a better fit for your specific situation.
0:05:21 Appreciate the question.
0:05:26 Question number two, our second question comes from Reader532 on Reddit.
0:05:41 They say, Prop G, from teaching the upper crust at NYU to your podcast, much of your advice for young people is aimed at how to improve their personal brand, how to climb ladders, how to become well-educated economically, and secure ballers in society.
0:05:47 But millions attend lower-tier colleges, and half of those graduate in the bottom half, and two-thirds of young adults don’t go to college.
0:05:55 A vast majority are just trying to navigate having a job, working for a paycheck, and might not possess that extra gear to thrive.
0:05:57 Serious question, what advice do you have for the mediocre?
0:05:59 Mediocre is a weird word.
0:06:00 I call this the unremarkable.
0:06:04 I was unremarkable growing up, didn’t do well academically, didn’t test well.
0:06:07 But back then, America loved the unremarkable.
0:06:15 And one of the things I would argue is the wrong trajectory for America is that higher education in America is about helping the bottom 90,
0:06:20 not identifying tax breaks and programs to make the top 10 percent, the top 1 percent.
0:06:29 And I feel like higher education is leading this downfall by deciding that we are there for the children of rich people or for the freakishly remarkable.
0:06:32 And I can prove to every one of us that 99 percent of us are not in the top 1 percent.
0:06:39 So in terms of – the first is, I think, as a cultural zeitgeist, we need to stop shaming people who don’t go to college.
0:06:47 I go to parties where someone will say – inevitably, parents say, well, I don’t know if you heard, but, you know, Bobby’s home from Tulane and is dropping out.
0:06:54 And we all speak in hushed tones like the family has done something wrong or that Bobby is mentally ill because he decided he didn’t want to finish college.
0:06:57 And I don’t think that’s the right approach.
0:07:00 I think a lot of kids are just not cut out for college, especially a lot of young men.
0:07:08 But if you look at what’s happening – if you look at LinkedIn profiles in Germany and in the U.K., 11 percent, the title is apprentice.
0:07:15 I think we need more of an apprenticeship culture such that the vocational trades return.
0:07:17 And by the way, this is not trying to reshape the economy.
0:07:25 The economy has a lot of – I think there’s something like it’s either 4 million or 7 million open jobs for vocational work.
0:07:27 And these jobs pay good money.
0:07:36 I just read that a junior – juniors in high school who take this one class in auto shop are making $55,000 to $70,000 even if they don’t complete their senior year of high school.
0:07:50 I think we need to stop fetishizing the college degree, put more pressure on colleges to lower their costs, and think more about programs that create more on-ramps for young people.
0:07:56 Again, the number of people who have apprentice on their LinkedIn profiles in the United States is 3 percent to lift up young people.
0:08:05 I also think it’s a series of economic programs, whether it’s a tax holiday for young people, getting rid of capital gains tax exemption, or mortgage interest rate tax exemption.
0:08:12 There’s no reason why people renting or making their money from salary are less knowable than people who own stocks or own homes.
0:08:14 That’s just a transfer of wealth from young adults.
0:08:17 We need to stop the transfer, give young people more hope.
0:08:20 I would increase minimum wage to $25 an hour.
0:08:24 Like Lincoln said, God must have loved the common man.
0:08:25 He made so many of them.
0:08:52 And also, I think that we need, I don’t know, kind of more respect, if you will, for people who get up, work to live, not live to work, move to a lower cost region, and lead good lives, have their sport, have their church, or not have their family, and don’t aspire to be ballers professionally.
0:08:53 I think that’s okay.
0:08:56 What I would argue there was a lot of young people are unrealistic.
0:09:04 They talk about wanting to be an influencer or make millions of dollars or have huge cultural relevance, but don’t really want to work that hard.
0:09:05 And then they talk about the issue of balance.
0:09:12 And what I’ve found is that if you want to be in the top 1% of anything, you pretty much got to devote 10 or 20 years to it and little else.
0:09:31 So I think we need to stop shaming people who don’t have college degrees, do a better job of creating aspiration around those jobs, recognize that living a good life, modest means, getting up, taking care of your family, being a good partner, being a good citizen, that there’s real honor in that.
0:09:37 And if you don’t start a tech company or get options worth hundreds of millions of dollars, that’s okay.
0:09:48 Because my sense is that young people are not only suffering from this incredible transfer of wealth from young to old, fomented by old people who figured out a way to devote themselves more money over and over and over.
0:09:51 Average 70-year-old is 72% wealthier than they were 40 years ago.
0:09:55 Average person under the age of 40 is 24% less wealthy.
0:10:01 But give young people a leg up economically such that they have more opportunity.
0:10:06 I think all of these things add up to falling back in love with what you say is the mediocre.
0:10:09 But I think it’s the unremarkable who built this country.
0:10:17 And I think we need to do a better job of nodding our head to how important the middle class is and the 99% of us who are not in the top 1%.
0:10:19 Appreciate the question.
0:10:21 We’ll be right back after a quick break.
0:10:29 Support for the show comes from Shopify.
0:10:32 There’s nothing small about running a small business.
0:10:37 It’s an all-consuming, nonstop hustle, and every decision can have unimaginable consequences.
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0:10:41 You should embrace the daunting unknown.
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0:11:22 Sign up for your $1 per month trial and start selling today at shopify.com slash prop G.
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0:11:33 It won’t take long to tell you Neutral’s ingredients.
0:11:40 Vodka, soda, natural flavors.
0:11:47 So, what should we talk about?
0:11:52 No sugar added?
0:12:03 Support for the show comes from Groomz.
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0:13:18 Welcome back.
0:13:20 Our final question comes from Reddit.
0:13:23 User HollywoodKid350 asks,
0:13:28 Hey, Scott, as a European, if given the chance, would you move to the U.S. right now?
0:13:32 So I moved to London three years ago.
0:13:38 And a lot of people will naturally say, well, good, you know, a lot of my friends have progressed as well.
0:13:39 It makes sense that you left.
0:13:42 Or America right now is such a shit show.
0:13:43 I can see why you left.
0:13:44 I want to be clear.
0:13:49 The reason I moved to Europe was not because of America or anything wrong with America.
0:13:56 It was because of the prosperity I recognized because I was so fortunate to be born in America.
0:14:03 I’ve recognized such incredible prosperity because of my brilliant decision to be born in America.
0:14:05 I’ve always said a lot of my success is not my fault.
0:14:10 It afforded me and my family the opportunity to do something for my kids that I think is just a gift.
0:14:12 And that is to give them three or four years overseas.
0:14:21 My parents are from here, so I’ve always felt a calling, always thought of myself as sort of the kind of guy that would live abroad for a few years and feel as if I’m running out of time.
0:14:22 So, boom, moved to London.
0:14:23 And it’s been great.
0:14:25 I am planning on moving back.
0:14:29 One, because I absolutely love living in America.
0:14:34 And two, because I think it’s time for people who are worried about what is going on in America to return home.
0:14:36 Not to leave, but to return home.
0:14:43 And so, to your question, I’ll never miss an opportunity to virtue signal, would I move to the U.S. right now?
0:14:45 Yeah, I would.
0:14:55 If you’re already sort of tracking and moving into the latter part of your career and maybe in a little bit more of the spending part of your life, I would say stick in Europe.
0:14:58 So, a lot of it’s your situation, your opportunities, and where you are in your life.
0:15:08 But generally speaking, if you’re just an economic animal, I advise getting to the biggest city in your nation, getting to the biggest city in your continent, and then trying to figure out a way to get to the U.S.
0:15:11 Because the U.S., you just don’t count the U.S. out.
0:15:15 I am divesting out of the U.S. in terms of the stock market just because I think it’s overvalued.
0:15:31 But I’m bullish on America just because I think the agility, the risk aggressiveness, the rule of law, the universities, the DNA, the opportunities in the U.S. are just absolutely unrivaled in terms of professional opportunity and economic upside.
0:15:34 And even if it doesn’t work out, I don’t think you’ll regret it.
0:15:39 I think very few people think, well, I fucked up moving to either America or Europe for a few years.
0:15:48 And I think more people from Europe and other countries that move to the U.S. decide that their prosperity is so much greater, the upside is so much greater, they decide to stay.
0:15:51 In sum, in sum, come to the U.S.
0:15:55 Okay, that’s all for this episode.
0:15:59 If you’d like to submit a question, please email a voice recording to officehoursatprofgmedia.com.
0:16:01 Again, that’s officehoursatprofgmedia.com.
0:16:09 Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit and we just might feature it in an upcoming episode.

0:00:04 This PE teacher started a $150,000 side hustle.
0:00:09 In this episode, you’ll learn the fun, unique business he chose, how he got his first customers,
0:00:14 and how he’s scaled it to a pretty serious income stream all on the side.
0:00:20 From foampartyallstars.com, Tim Karstensen, welcome to the Side Hustle Show.
0:00:20 Hey, Nick.
0:00:21 Thanks for having me.
0:00:23 I’ve been listening to your podcast for quite a while.
0:00:24 Love it.
0:00:27 And I thought, why not come on and tell our story here?
0:00:28 What a cool example.
0:00:29 I guess I just gave it away.
0:00:31 It’s a foam party business.
0:00:32 Let’s stick around.
0:00:37 We’re covering the startup costs, the marketing tactics, the pricing and delivery, all that
0:00:37 good stuff.
0:00:44 So you might be able to borrow Tim’s idea or a similar local service and spin it up in your
0:00:44 own town.
0:00:46 But I got to start off at the beginning.
0:00:48 Like, out of all the side hustles, why foam parties?
0:00:49 How’d you come up with this?
0:00:49 Yeah.
0:00:57 So I’ve been an elementary PE teacher for the past 18 years and always in my summers off,
0:00:59 I have either another job or another business.
0:01:05 I used to teach and coach in the summers, driver’s ed, stuff like that, which has its own stories.
0:01:06 Yeah, yeah, yeah, yeah.
0:01:07 I got the whole summer off.
0:01:08 I might as well take advantage.
0:01:09 Yeah, yeah.
0:01:15 So in 2022, in the summer, I was kind of looking for something else.
0:01:21 And at first I stumbled upon the bounce house business and I kind of did a deep dive on that.
0:01:23 But for me, it was a little too saturated.
0:01:29 I found out that the floor for insurance in the bounce house business is pretty high when
0:01:32 you’re just starting out and it’s hard to make money in the beginning.
0:01:33 Oh, okay.
0:01:34 Interesting.
0:01:38 Do you find like you’re going to need a lot of inventory, multiple bounce houses, like
0:01:41 to make the insurance pencil out for somebody like starting in that space?
0:01:46 Even if you had one or two bounce houses to start, your floor for insurance might be, let’s
0:01:51 say, $5,000, $6,000, which, you know, if you’re renting out a bounce house for a couple
0:01:54 hundred bucks, it’s going to take a while to get that back.
0:01:58 I found some people that were doing bounce houses down there in the Southern states, Arizona,
0:02:03 Florida, California, Texas, were also doing foam parties for kids.
0:02:09 And I think it was a party rental Facebook group that I stumbled upon that.
0:02:12 And I thought, oh, okay, that’s interesting.
0:02:14 Foam parties for kids.
0:02:18 I mean, I remember when I was in college, I went to a foam party, but I don’t think that’s
0:02:19 not really a kid’s thing.
0:02:24 So, you know, it picked my interest and I was like, okay, I’m good at working with
0:02:26 kids, 18 years teaching, you know, elementary PE.
0:02:31 And then I, you know, looked around here, around the Chicagoland area.
0:02:36 And I found out at that point, there was only one other place and they were about 50 miles
0:02:37 north of me.
0:02:40 So that was really the only competition I could find.
0:02:42 So I thought, okay, this looks doable.
0:02:43 Okay.
0:02:43 Okay.
0:02:44 And maybe we should pause.
0:02:46 Like, I kind of have a vision and I’ve been on your website.
0:02:50 Like, it’s just like kids running through walls of bubbles, like, you know, sometimes
0:02:51 up to the shoulders in bubbles.
0:02:53 And like, it just looks like a lot of fun.
0:02:54 Yeah.
0:02:56 Cast that visual of like what we’re talking about here.
0:02:56 Right.
0:03:01 We play kid-friendly music, even hire a voiceover artist to do like a countdown to the foam
0:03:05 party, you know, like a New Year’s Eve countdown, get them excited.
0:03:08 There’s rules of the foam all over the speakers.
0:03:13 And we have these giant, we call them foam cannons and they shoot foam around.
0:03:17 You can pretty much fill up like a 30 foot by 30 foot area.
0:03:21 And depending on the size and the age of the kid, you could keep it low if it’s a little
0:03:25 kid or you could bury them up high if it’s a teenage type kid.
0:03:27 It totally depends on the situation.
0:03:32 But the kids just like dancing around and frolicking around with their friends and enjoying
0:03:33 it, exploring it and things like that.
0:03:38 So it sounds like it was born from this research of looking at the inflatables business, the
0:03:42 bounce house rental side hustle and saying, oh, it’s interesting.
0:03:46 As I’m on the websites of some of these other service providers, here’s something else that
0:03:46 they offer.
0:03:49 Like maybe we could just spin up only that part.
0:03:52 There’s got to be lower liability or something like that.
0:03:54 And maybe that might make sense.
0:03:54 Yeah.
0:04:00 Since it was kind of a novel idea to me and I ran it by my wife who shut down my bounce
0:04:01 house business idea.
0:04:03 And she said, that’s interesting.
0:04:04 Tell me more about that.
0:04:05 OK, OK.
0:04:10 From that point, I was like, OK, well, I might have an OK from my wife, which is good.
0:04:11 We have three young kids.
0:04:16 So she’s an angel and stays at home with the kids a lot when I’m out doing phone parties.
0:04:21 So I kept looking into it and looking at the, you know, the competition that was there.
0:04:26 And then I found a Facebook group of phone party providers around the country and studied
0:04:29 every post that I could from from that Facebook group.
0:04:30 There’s a Facebook group for everything.
0:04:31 That’s crazy.
0:04:32 Yeah, there really is.
0:04:37 And they kind of lay it out in the Facebook group, how to start things and how much success
0:04:38 they’ve had for a lot of the people.
0:04:43 And that was kind of my my guideline for how to get things started and just kind of went
0:04:47 from there, you know, started up the business, thought of a name, phone party all stars.
0:04:54 And, you know, did all the starting business stuff, got the logo and the websites, did that
0:04:57 myself, which I don’t know if I had to do it again.
0:05:00 I might have had a professional to start out with that instead of spending so many hours
0:05:02 on something so basic.
0:05:05 But, but, you know, you learn, you learn.
0:05:06 That’s OK.
0:05:07 Everybody starts somewhere.
0:05:11 I think everybody has that struggle of like trying to make a website, make it look a certain
0:05:12 way.
0:05:15 And yeah, that’s that’s like an entrepreneurial rite of passage.
0:05:16 Exactly.
0:05:16 Yeah.
0:05:20 You know, you might save a little money, but you’re spending a lot of time sometimes.
0:05:21 That’s the trade off.
0:05:23 You got away in that situation.
0:05:26 So building the website, do you have any equipment at this point?
0:05:29 Like, or we kind of like, oh, I want to wait and see if we get any bookings.
0:05:30 Like what’s going on here?
0:05:31 Yeah.
0:05:40 So I bought my first phone party set up right around when I had the website go live after
0:05:43 I, you know, get all the business stuff, you know, registered with the state and everything
0:05:44 like that.
0:05:53 And then in, in January, I sent out some postcards to kind of get the ball rolling and as a way
0:05:56 to have people know that we exist.
0:06:03 And we ended up getting quite a few responses and bookings from that, which was awesome.
0:06:06 And since it’s wintertime, people are like, could you come by in May?
0:06:07 Like they’re planning ahead.
0:06:11 And so you don’t necessarily need to have the stuff like ready for that weekend.
0:06:12 Right.
0:06:15 So these aren’t like the, the private birthday party type of things.
0:06:23 These would be interests from daycares, summer camps, park district, churches, schools, things
0:06:27 like that, who book farther in advance than a typical birthday party would.
0:06:27 Okay.
0:06:32 So you build up your own mailing list of the daycares, summer camp, and then you put out kind of a
0:06:34 really targeted mailing just to them, just to those offices.
0:06:35 Right.
0:06:35 Yeah.
0:06:43 So I’d found pretty much any daycare, summer camp, park district, library, elementary school
0:06:51 within about 35 or 40 miles, I made a list and I sent the same postcard to all of them.
0:06:56 Now I kind of break it up with individual marketing for the different types.
0:07:02 So I might, I would send a different postcard to schools than I would to churches or libraries
0:07:03 and things like that.
0:07:08 But back then it was just the one postcard, Vistaprint, send it all.
0:07:13 Hope we get some responses and definitely worked to get the first few responses.
0:07:13 Yeah.
0:07:15 How many, how many did you send out?
0:07:19 I want to say maybe 700 total.
0:07:19 Okay.
0:07:20 Okay.
0:07:24 So, you know, you’re putting a little bit of money into it at that point.
0:07:24 Yeah.
0:07:29 Casting a wide enough net to kind of know if you are shooting completely blank after 700
0:07:31 and maybe, maybe the messaging needs, needs some tweaking.
0:07:33 Might be time to turn it around, right?
0:07:33 Yeah.
0:07:38 So, and at that point I thought, well, if I needed to, if, if it wasn’t going to work,
0:07:42 I could sell the equipment back and I wouldn’t really be all that much of a loss.
0:07:42 Yeah.
0:07:43 Relatively low risk.
0:07:45 What did the equipment cost?
0:07:51 The foam cannon itself, I use a professional grade model that cost at the time about $2,500
0:07:52 for the cannon.
0:07:58 And then I would say for other things that are in the foam party setup, we have these barriers
0:08:05 like PVC and some vinyl with our, our marketing on their barriers to keep the foam from coming
0:08:08 back at the person shooting the foam.
0:08:09 And okay.
0:08:11 I’m picturing like a medieval, like a shield.
0:08:11 Yeah.
0:08:13 In case the wind shifts.
0:08:18 So it’s, it’s kind of like a little wall about four feet high, maybe with our marketing on
0:08:19 the front that they see.
0:08:23 And then it keeps the foam from blowing back at us and getting on our equipment.
0:08:28 And then just little things like, well, we have a five by five tent with our branding on
0:08:30 it that just kind of makes it look professional.
0:08:37 And then a lot of little things like tools that you might need and hoses and electrical cords
0:08:39 and speakers.
0:08:40 Yes.
0:08:46 So you just need a water source and, you know, BYO bubbles basically.
0:08:49 And then in this, this professional cannon at a bare minimum.
0:08:50 Right.
0:08:50 Yeah.
0:08:55 So we, we do need a water source, uh, just a regular hose hookup works.
0:09:00 And then, uh, an electrical outlet, a regular outlet works, uh, if it’s just for one foam
0:09:05 cannon, if it’s multiple foam cannons, or if you’re not close enough to an outlet, then we bring
0:09:10 a generator in that situation for most of like the smaller events, daycares, summer camps
0:09:11 and stuff like that.
0:09:13 It’s just one, one foam cannon.
0:09:20 And so, yeah, I started off with one, got a few bookings before I even did any foam parties,
0:09:26 even though I had some booked, uh, I bought a second setup and it just kind of kept on rolling.
0:09:27 What did the postcard say?
0:09:28 Was there pricing on there?
0:09:33 Was it just like, you know, booking now for, you know, summer 2023 or whenever it was.
0:09:36 It said like, we bring a foam party to you.
0:09:42 And then it said like, foam parties are great for, and then I tried to hit summer camps, daycares,
0:09:48 school events, church events, library, summer reading, kickoffs, block parties, birthday parties.
0:09:55 And then it says like foam party packages include, you know, foam cannon, a foam party leader.
0:09:57 Which is you showing up and leading the thing.
0:09:58 Right.
0:09:59 Which at that point is just me.
0:10:01 I’m the only guy that’s, uh, that’s available.
0:10:02 Okay.
0:10:04 And then, you know, book now at our website.
0:10:10 Uh, we did have pricing on our website for, for basic, like, you know, one hour, one cannon,
0:10:15 or, uh, we also do something called glow foam, which is, looks like the foam is glowing in
0:10:16 the dark for night events.
0:10:19 So we had pricing for that on the website, not on the postcard.
0:10:20 Okay.
0:10:21 What’s it cost to get you to come out?
0:10:24 For a one hour, like a birthday party, it’s 375.
0:10:29 And then most people just, okay, we’ll book you for an hour and then you kind of clean up,
0:10:32 tear down and hopefully you’ve got another one booked for the afternoon.
0:10:32 Right.
0:10:33 Yeah.
0:10:37 So for birthday parties, which is a lot of what we do on the weekends, birthday parties and
0:10:42 block parties, uh, we usually just an hour, which we found is a good amount of time for,
0:10:43 for the kids.
0:10:47 Uh, if you’re doing two hours with the same group of kids, you know, they kind of lose
0:10:48 interest.
0:10:49 That’s, that’s fair.
0:10:50 It’s opposite of an upsell.
0:10:54 A lot of times it’ll be, you know, we want to do two hours for this birthday and it’ll
0:10:58 be me saying, well, we found that one hour is a good amount of time.
0:11:05 And, but, and also if you, uh, do a foam party on a grass surface for two hours, uh, your,
0:11:09 your chance of mud is, is a lot higher than one hour.
0:11:14 You don’t generally see any kind of mud, but I try to warn people this ahead of time.
0:11:14 Okay.
0:11:15 Yeah.
0:11:17 There’s other, other logistics involved.
0:11:17 Okay.
0:11:18 Right.
0:11:23 And it does feel weird to try to, you know, almost, uh, you know, reverse upsell, uh, you
0:11:25 know, you sure you want to do two hours?
0:11:30 I try to do that just to make it the best experience for, for the kids and the parents.
0:11:31 Yeah, that’s fair.
0:11:35 And then, and then it just dissolves, like it just evaporates away and, or you hose it
0:11:36 down.
0:11:41 The foam generally dissipates within, uh, 20 minutes to a half hour, um, depending on if
0:11:47 it’s on grass or, or, you know, asphalt concrete, what, um, that will change it a little bit.
0:11:52 And if it’s windy out and things like that, we can hose down the grass, but really it doesn’t
0:11:53 really make much of a difference.
0:11:56 You wouldn’t even know it was there after, you know, an hour or two.
0:11:58 So, I mean, it’s just wet because it’s mostly water.
0:12:05 Uh, we use about a hundred and 125 gallons of water for a one hour party for one cannon.
0:12:09 So, you know, that in a concentrated area, you can definitely tell that it’s wet.
0:12:10 All right.
0:12:13 So, so you send out all these postcards, 700 postcards.
0:12:17 You start to get some inbound inquiries through the website.
0:12:19 People start calling you, Hey, we want to book this thing.
0:12:21 What kind of questions are they asking you?
0:12:25 Cause you’re like, you know, you’re presenting all the confidence of like, yeah, we’ll bring
0:12:26 the party to you.
0:12:29 But like never having done it before, like what kind of questions come up that now you know
0:12:33 the answer to, but at the time you’re kind of like, uh, yeah, we could totally do that.
0:12:39 Tim’s answer to those initial inbound inquiries plus his first paying gig coming up right
0:12:39 after this.
0:12:46 Yeah, it was definitely a kind of a fake it till you make it type situation where, you
0:12:51 know, you try to be prepared, you know, by researching what other people have done around the country,
0:12:53 but you’ve never really done it before.
0:12:57 So you’re kind of going on the fly and, you know, just being honest.
0:13:01 And if they ask you a question and you don’t know the answer, just let them know that you
0:13:03 will get back to them as soon as you can.
0:13:08 But with the daycares that we initially got, uh, most of the time it would be like, all right,
0:13:09 we have 125 kids.
0:13:11 Like how long do we need a phone party for?
0:13:13 How much is it going to cost?
0:13:14 Is it going to ruin the grass?
0:13:16 Which is normal question that we get.
0:13:17 And then do they get wet?
0:13:18 Do they need a towel?
0:13:20 Do they need a change of clothes?
0:13:22 Does it sting their eyes?
0:13:24 This is a question that we get a lot.
0:13:25 The answer is no.
0:13:26 Got it.
0:13:26 Got it.
0:13:27 All right.
0:13:29 Let’s fast forward to, to party number one.
0:13:33 Then you go and you set this thing up for the daycare or wherever it is.
0:13:36 And it goes off without a hitch.
0:13:38 It goes, there’s, you know, kids crying and screaming.
0:13:41 Like, you know, anything could happen at this point.
0:13:41 What happens?
0:13:42 Yeah.
0:13:44 It’s definitely a learning process.
0:13:49 I mean, I, I, I set it up at my house and, you know, did a party from the kids and the
0:13:49 neighbors.
0:13:50 So that’s right.
0:13:51 I have a trial run.
0:13:51 Yeah.
0:13:52 Right.
0:13:53 Which, which was smart.
0:13:56 Cause that would have been not good if, if I didn’t.
0:14:01 However, my first party that I had booked was actually kind of higher on the difficulty
0:14:02 scale.
0:14:08 It was a school event and it was a two foam cannon glow foam party.
0:14:13 So that is actually much trickier.
0:14:19 So glow foam, there’s a special additive that you put into the foam that makes it glow.
0:14:21 Looks like it’s, you know, glowing UV glow.
0:14:27 Uh, once, uh, once, once it gets dark out, but you also have UV lights that are, that are
0:14:32 hanging from, uh, your tents, uh, which, you know, there’s a lot of, a lot more cords to
0:14:33 deal with.
0:14:45 It’s just, it’s trickier, especially for a, you know, the water containers fast enough with
0:14:48 one water source and two, two cannons.
0:14:53 And, you know, with a huge crowd, I mean, there was a couple of hundred kids there, which looking
0:14:57 back, I would have wanted more than two foam cannons if, if I knew there was that many kids,
0:14:59 but I was just happy to be there at that point.
0:15:06 I showed up and the setup took way longer than it should have spent probably an hour and 15
0:15:10 minutes setting up, which now would be half that for a two foam cannon.
0:15:12 But yeah, it went well.
0:15:14 You get better as you go along, you get more reps in.
0:15:14 Yeah.
0:15:15 Oh, absolutely.
0:15:16 And it went well.
0:15:18 Uh, the kids loved it.
0:15:19 It was definitely a learning experience.
0:15:25 And, you know, each one that you do, you kind of pick up something or might, you might do
0:15:25 something wrong.
0:15:30 I think that one as well, their water source at the school, there was like a pebble somehow
0:15:32 stuck in the water source.
0:15:38 So then I had to run 250 feet of hoses to the next closest water source.
0:15:43 And yeah, so one of those things, you know, they, they didn’t check it beforehand, but which
0:15:47 now I tell people to do, but back then didn’t have the experience.
0:15:48 So, okay.
0:15:48 Yeah.
0:15:54 So learning, learning curve, learning process and a non-zero amount of equipment involved
0:15:58 between the cannons and the speakers and the tents and the hoses and everything else.
0:15:59 It’s helpful to know.
0:15:59 Yeah.
0:16:00 Basically packed.
0:16:06 We, we have a minivan, we fold all the seats down and I could fit two foam setups in the
0:16:08 minivan, but I mean, it’s jam packed.
0:16:14 It’s like, like you probably way too much stuff in there, but yeah, you’re not seeing out the,
0:16:15 at the rear view anymore.
0:16:15 Yeah.
0:16:16 No, definitely not.
0:16:18 Okay.
0:16:22 So you get these initial bookings from the postcards and hopefully some positive feedback
0:16:25 from those and, and maybe some word them out.
0:16:29 But like what happens after that in terms of driving additional traffic?
0:16:34 Cause it is, you know, maybe you can, well, we’re going to book you every year and there’s
0:16:38 some level of recurring revenue here, but it’s, it’s a lot of times it’s got to be kind of
0:16:42 a one and done thing for, uh, you know, onto the next, uh, onto the next gig.
0:16:43 Yeah.
0:16:48 So on a daily occurrence, it’s a one and done thing and onto the next gig, but we definitely
0:16:51 have a lot of recurring, um, customers.
0:16:57 Uh, we found that once we started doing some of the daycare locations, some of the larger
0:17:03 chain daycare locations, once you do one or two and get your foot in the door and you show
0:17:05 that you do a great job, the kids love it.
0:17:11 You’re easy to work with then, you know, it might not happen the same year, but the, the
0:17:16 following year, you know, if we had three of a chain daycare, then the next year we had
0:17:23 12 and, um, it just kind of snowballed in that way, especially with a lot of the larger daycares,
0:17:24 you know, we did a good job for them.
0:17:30 And, um, you know, the following year they would all rebook and then they would tell some of their
0:17:34 neighboring daycares of the same chain and they kind of snowballed in that way.
0:17:34 Okay.
0:17:35 Okay.
0:17:40 Now the other half of the business, I would say is birthday parties and block parties for
0:17:44 that we marketed with Facebook ads.
0:17:53 And, uh, also we, I posted a lot in every neighboring Facebook group that I could find, um, with, you
0:17:58 know, good pictures and an explanation of what a phone party is.
0:18:00 And there was a very positive response with that.
0:18:05 I even use my wife’s, maybe I shouldn’t say this on the air, but I use my wife’s Facebook
0:18:11 account to go into the mom’s pages and I would post from her account since, you know, they don’t
0:18:18 really always allow males to post, but since it was under my wife’s account, I was able to post.
0:18:23 So it would be like city name moms would be like an example of a group that would exist.
0:18:24 Exactly.
0:18:28 And there’s a lot of them for birthday parties, especially 98% of the time.
0:18:35 It’s the mom that is booking the party and the dad, when you get there is asking, are you going
0:18:36 to kill his grass?
0:18:38 But the mom books the party.
0:18:39 So that’s like the target market.
0:18:41 When I run ads, I run the ads to moms.
0:18:43 I really don’t run it to dads.
0:18:46 Yeah, it’s interesting.
0:18:51 We’re seeing all sorts of creative, you know, birthday party, like especially elementary school
0:18:51 age.
0:18:54 You can go to the bounce house place is a really popular one.
0:18:55 You go to the arcade.
0:18:59 We’ve had a couple where our kids have been invited to go.
0:19:01 It’s like a video game truck.
0:19:06 Like a guy shows up in his F-250 and behind it is like this pretty good size, like horse trailer,
0:19:11 but he’s got like a couch in there and like this wall of TVs and he’s got like every console
0:19:14 imaginable as like, it was a pretty cool setup.
0:19:19 And I don’t know how much it costs, but again, it’s like, you know, upfront cost for him in
0:19:24 the setup and then just, you know, do two, three parties a day and it’s slowly, you know, recoup
0:19:24 that.
0:19:28 And after a while, you know, so you maybe got to buy new games every now and again, after
0:19:29 a certain point, it’s all gravy.
0:19:29 Yeah.
0:19:30 I’ve heard of those too.
0:19:31 Those actually look cool.
0:19:35 I would love to check one of those out, but not my business, but it would be cool.
0:19:37 I think, uh, you know, my kids would love it.
0:19:41 The other one that somebody sent me this, it was like a Nerf party rental and it looked like
0:19:44 they were, you know, maybe they would do kids parties, but it was more like corporate team
0:19:49 building where we’re going to set up this like pretty intense, like, you know, with, uh, you
0:19:52 know, inflatable pylons and like almost like a paintball arena, but like, well, could it
0:19:53 come to you?
0:19:54 We’re going to have a Nerf war.
0:19:55 Yeah.
0:19:56 Those look fun too.
0:20:01 I saw this, a similar thing with almost like a Nerf war, but it was with water, water guns.
0:20:05 And somehow on the vest, it registered when you got shot with the water and a similar
0:20:06 type thing.
0:20:08 Oh, like a full on like laser tag type of setup.
0:20:09 Yeah.
0:20:10 I thought that was cool.
0:20:13 So yeah, people, uh, you know, people spend money on this stuff.
0:20:15 It’s an interesting place to play.
0:20:16 And, and I, I think you’re right.
0:20:17 Like, okay.
0:20:22 Especially if there’s a franchise or a chain daycare, well, I got my toe in the door with
0:20:22 this one.
0:20:27 And now you can see how that would snowball and you can see how it would turn into recurring
0:20:27 revenue.
0:20:31 We’ll come back for our field day next year and, and we’ll, you know,
0:20:32 reserve that almost in advance.
0:20:33 Well, let’s pencil you in.
0:20:33 Let’s get on the calendar.
0:20:34 Yeah.
0:20:38 It was, it was hard initially with some of the chain daycares to get in because a lot
0:20:41 of times there, you have to go through their corporate office.
0:20:45 You have to file certain paperwork and like nobody who seems to want to give the, you the
0:20:47 paperwork, they say, Oh, you’re not a registered vendor.
0:20:48 It’s like, Oh, I’ll be a registered vendor.
0:20:50 Just send me the paperwork.
0:20:50 Yeah.
0:20:50 Yeah.
0:20:51 Show me how to register.
0:20:52 Exactly.
0:20:56 So, but once you break through that and you get registered, then it’s like, okay, you know,
0:21:01 people see you do a good job and then it kind of has snowballed for us at least.
0:21:05 And we see the birthday party thing snowball word of mouth wise too, where it’s like the
0:21:06 kid goes to the phone party.
0:21:09 The kid goes to the video game truck rental party.
0:21:10 Well, I want that for my birthday.
0:21:10 Right.
0:21:14 And so this kind of like starts to, uh, starts to spread and then the moms text the other
0:21:17 moms to be like, well, who was the, you know, Timmy really wants the phone party.
0:21:19 You know, who, who did you use?
0:21:19 Yeah.
0:21:27 And in the end, I think really our best marketing is seeing our, our phone parties because, you
0:21:32 know, a lot of times you might see pictures and you might think, well, that’s kind of weird.
0:21:33 I don’t know that maybe that would be fun.
0:21:34 Maybe it wouldn’t.
0:21:39 But then if you see it and it’s kind of like, okay, that’s the kids are really enjoying this.
0:21:39 That’s pretty cool.
0:21:45 And then we have built into, uh, again, we hired a voiceover artist that does like a
0:21:46 promo for us.
0:21:50 Like, Hey, if you want to have your own phone party at a daycare or a school or a birthday
0:21:55 party, you come get a postcard or come get a business card from your phone party leader.
0:21:57 And, you know, and then the next song goes.
0:21:59 So that’s another way that we market.
0:22:04 This is just, it’s like built over the, over the loudspeakers, like into your party playlist.
0:22:05 Exactly.
0:22:08 Like a, you know, a 25 second commercial for our own business.
0:22:10 Uh, during the phone party.
0:22:15 Uh, and that usually drives, you know, several parents over to say, Hey, this is really cool.
0:22:17 Like how much do you charge or can you come to here?
0:22:20 Or so it’s, it’s, it’s been effective for sure.
0:22:23 Now, would you go, would you go all the way into Chicago?
0:22:26 It looks like you’re kind of out in the burbs a little bit, but if I, if I search phone
0:22:28 party Chicago, you’re there on the first page.
0:22:29 Yeah.
0:22:35 So we, we don’t go out to Chicago too much sometimes, but basically if, if we’re not booked around
0:22:37 us, then yes.
0:22:39 Uh, we do some like block parties out there.
0:22:40 Block parties are big.
0:22:41 To be honest with you.
0:22:46 I, I, I really need to change up my, our Google business profile and add Chicago in, but I’m,
0:22:47 I’m worried.
0:22:50 Cause I know sometimes if you change certain things, you can get suspended and I don’t want
0:22:51 that to happen.
0:22:52 Yeah.
0:22:55 Like expand the service area on the little map back.
0:22:55 Right.
0:22:57 So I’ve kind of been on the fence.
0:23:00 And if you don’t have to drive that far, like then that’s, that could be an advantage too.
0:23:04 If it’s a big enough party, like there’s a kid’s museum that we’re doing that’s like an hour
0:23:07 and a half away, but I mean, they’re doing four hours of multi-canon.
0:23:09 So it’s like, yeah, we’ll come to you for sure.
0:23:13 If it was a kid’s birthday up there, it would probably be, no, I can refer you to somebody else
0:23:15 that does phone parties in your area.
0:23:15 Got it.
0:23:20 Are you going to franchise the thing and go, go nationwide and be like, oh, I’ve got a, sure.
0:23:20 Yeah.
0:23:21 We’ve got a guy in that area.
0:23:25 There are a couple of places around the country that are starting to franchise their phone
0:23:26 party business.
0:23:28 I’m not planning to do that myself.
0:23:33 Still have the teaching job, but yeah, there are some that are starting to do that.
0:23:33 Fair enough.
0:23:35 That’s going to be the next private equity roll up.
0:23:37 So we’re going to acquire all these different companies.
0:23:38 HVAC and then phone parties.
0:23:39 Right.
0:23:40 That’ll be the next trendy thing.
0:23:41 I promise.
0:23:41 Yeah.
0:23:41 All right.
0:23:47 So Facebook ads, Facebook groups targeting the local neighborhood groups, the mom groups.
0:23:49 It is just kind of like an introductory post.
0:23:50 If you’re not already a member there.
0:23:54 Hey, we’re, I’m Tim, you know, I’m from this nearby town.
0:23:55 This is what we do.
0:23:57 You know, look at all these happy, smiling kids.
0:23:59 Is there any offer or call to action?
0:24:01 It’s more just kind of like, Hey, you know, if we’re here when you need us.
0:24:02 Yeah.
0:24:07 I don’t really do like an offer as in like a discount offer, but I usually just say, you
0:24:12 know, for party packages and info, go to our website and then kind of leads them there.
0:24:15 And then we have more information on our website.
0:24:17 And then if they have questions, they’ll usually email or call.
0:24:18 Yeah.
0:24:18 Got it.
0:24:23 Is there a like calendar availability, like for somebody to just click and book or it’s
0:24:25 like they go through like a request.
0:24:28 The pricing is on there, but like they got to fill out a form and there’s a little bit
0:24:31 of confirmation that needs to happen for the date availability.
0:24:35 We don’t have like an instant availability option.
0:24:41 We have a form to fill out with, you know, where the phone party is at, how many people
0:24:45 are going to be in attendance and, and things like that.
0:24:49 And then they send that to us, get it to my phone and email immediately.
0:24:54 I say on there that I’ll get back to you with, with availability within 24 hours.
0:24:56 It’s usually way quicker than that.
0:24:59 I, you know, try to set the bar low and beat that expectation.
0:25:01 And then they’re like, Oh, that was quick, you know?
0:25:05 But if we had a full calendar of when we’re available, especially in the beginning of
0:25:07 the season of like, wow, these people are always available.
0:25:09 They must not be too much in demand.
0:25:15 So, you know, which seems crazy, but it’s kind of a, something that people think about it.
0:25:15 Yeah, that’s fair.
0:25:16 I didn’t think about that.
0:25:21 And then sometimes it’s a little bit complicated with the schedule because now that we have nine
0:25:25 phone party setups, we could technically be doing nine phone parties at a time, but most
0:25:30 of the time we’ll have, you know, employee that’s not available that day, or you got to drive
0:25:33 from this party in the Southern suburbs to the Northern suburbs.
0:25:34 And you got to take all that into account.
0:25:37 So it’s hard to just make it a one size fits all calendar.
0:25:39 So I kind of do that manually.
0:25:41 Nine phone party setups.
0:25:44 More with Tim in just a moment, including how he’s grown his team.
0:25:46 So he doesn’t have to run every party by himself.
0:25:51 In the smart way, he was able to fund some of that new equipment coming up right after this.
0:25:54 Nine phone party setups.
0:25:56 So clearly there was demand for this.
0:26:00 And I imagine you started to get the inquiries where you need to be two places at once.
0:26:02 I’m turning down money here.
0:26:03 So there we go.
0:26:04 Buy setup number two, number three.
0:26:09 And you got to replicate yourself too, to go have somebody else deliver the experience.
0:26:10 Yeah.
0:26:15 And to be honest with you, I think replicating myself and learning to delegate as has been
0:26:18 one of the lessons that I wish I had learned initially.
0:26:22 Although at some point when you’re starting out, you don’t have the luxury of that.
0:26:26 You don’t necessarily have the money to pay people to do the actual phone party, the actual
0:26:27 job.
0:26:30 And you just need to be the jack of all trades.
0:26:37 Now I’m trying to still trying to work in progress, more so eliminate myself from the,
0:26:40 you know, regular birthday parties where we might have four or five at a time.
0:26:47 And I usually will only go to the larger multi-canon events unless I’m needed in an emergency or
0:26:47 something like that.
0:26:53 But, you know, I also have to man the phones and emails and, you know, invoices.
0:26:58 And if it rains on a Saturday and we have 10 parties, I’m going to be on the phone all day
0:27:02 because, you know, well, now it looks like 60% chance.
0:27:02 I don’t know.
0:27:03 Let’s keep you posted.
0:27:04 Okay.
0:27:07 Now in my area, it looks like 30% chance.
0:27:12 And, but, uh, you know, so it’s, it’s, uh, it luckily it doesn’t rain that often, but it
0:27:13 throws a wrench.
0:27:14 I didn’t even think about that.
0:27:17 It was just like, you just have to postpone or what do you, what do you do?
0:27:20 So you, you can do a phone party in the rain.
0:27:21 Don’t do it.
0:27:23 Obviously if it’s lightning anywhere in the area.
0:27:28 So we have a lightning apps where it alerts us if there’s lightning anywhere in the area.
0:27:32 It’s not fun for the person doing the phone party if it’s raining, but for the kids
0:27:35 they’re wet anyway, so they don’t, yeah, they don’t care generally seem to care.
0:27:41 Um, I would say a lot more people end up just doing the phone party in the rain as opposed
0:27:46 to rescheduling or canceling, especially with birthday parties, because they might not be
0:27:50 able to reschedule with, you know, invitations going out a month or two in advance.
0:27:52 So a lot of them will just say, let’s just do it.
0:27:57 And we go ahead with it as long as there’s no lightning or anything like that.
0:27:58 Yeah, that’s true.
0:27:58 Yeah.
0:28:01 It’s, it’s, you’re, you’re, you’re committed.
0:28:03 You’re up to like, you know, hope for good weather that day.
0:28:03 Yeah.
0:28:09 How long was it before you needed to expand to the second set, the third set and, and hire
0:28:10 additional team members?
0:28:15 I think I might’ve even gotten the third set up before we even did any parties because
0:28:21 it’s a very seasonal business around us, especially because we’re in, in the Midwest Chicago suburbs.
0:28:27 So it really doesn’t get warm enough to, to do a phone party until at least late April, even
0:28:29 then it’s kind of spotty depending on the day.
0:28:34 So, you know, when you start marketing in January, you kind of get a feel for, you know, how many
0:28:42 bookings you have and, and I realized that I need to just reinvest these, uh, deposits into
0:28:44 some more phone party equipment.
0:28:44 Oh, okay.
0:28:49 This is going back to some of the initial postcard mailings where they would, they would book it,
0:28:50 they would put down a deposit.
0:28:54 So you’re, you’re collecting some cashflow right away and then, okay, we’ll take the balance
0:28:57 upon delivery or, you know, a day of.
0:29:01 And so you could, you could pay that forward into like, oh, there’s clearly some demand here.
0:29:03 We’re getting multiple inquiries for the same day.
0:29:09 And I didn’t want to be stuck where, you know, turning away too many parties, which I mean,
0:29:16 as much as I try not to, it still happens for various reasons, but I tried to expand as quickly
0:29:20 as possible and to be able to keep up with the demand that I was seeing.
0:29:26 And it’s just kind of kept expanding, you know, for the last couple of years that I’ve been doing
0:29:26 it.
0:29:31 A lot of the people that run phone parties for us are teachers that I know since they
0:29:35 have summers off at, you know, the schedule aligns with their schedule.
0:29:41 And then sometimes college students that are home for even a larger timeframe than the teachers
0:29:41 are.
0:29:42 So.
0:29:42 Okay.
0:29:43 Yeah.
0:29:44 Here’s, here’s a fun summer job.
0:29:46 Come hang out at this phone party, be the DJ for a little bit.
0:29:47 And it is fun.
0:29:49 I’ll be, I mean, I love running the party still.
0:29:53 I try to step back from doing as many as I did last year.
0:29:59 I did almost a hundred myself, which I, again, I enjoy it, but I have three young kids at home
0:30:02 and I also have to answer the phones, emails and everything.
0:30:06 So more of a, you know, work on your business, not in your business type of thing.
0:30:12 I feel like I’m best served to just train the people that are running the phone parties and
0:30:14 try to step back from doing as many myself.
0:30:15 Yeah.
0:30:16 And it’s great.
0:30:19 It’s not, you know, phone parties by Tim, it’s phone party all-stars, right?
0:30:23 So you have set it up in such a way where you don’t need to be there.
0:30:29 And I imagine most of the people calling don’t, don’t expect the owner of the business to show
0:30:29 up.
0:30:32 They expect you to have a team in place or a team member come and do it.
0:30:32 Yeah.
0:30:37 Unless they had me the first year where I did, you know, a majority of them almost not a
0:30:42 majority, but a large, large chunk than they might, but no, I think people understand and
0:30:43 it’s gone well.
0:30:47 I’ve met a lot of great people and you know, there’s been ups and downs.
0:30:53 We’ve had a couple of events where the foam cannon broke and it was no fault of ours,
0:30:57 but you know, it’s, it’s not a good feeling when you’re, you know, you have the countdown.
0:30:58 All right.
0:30:58 Are you ready?
0:31:01 Five, four, three, two.
0:31:05 And then just, oh no, like nothing comes out.
0:31:08 Like, oh boy, kids are chanting.
0:31:09 We want foam.
0:31:12 That’s, it’s not a good feeling for that reason.
0:31:17 I usually bring a whole backup set in my own car just in case, but it’s happened a couple
0:31:17 of times.
0:31:20 And I don’t know, six, 600 plus parties that we’ve done.
0:31:22 So right, right.
0:31:23 Have some backup and redundancy.
0:31:25 If you’ve got two, you got one.
0:31:26 If you got one, you got none.
0:31:27 But yeah, that’s okay.
0:31:28 Time out.
0:31:29 Put a pause in that.
0:31:30 We’ll be, just give me 15 minutes.
0:31:32 We’ll set up the other one and we’re good to go.
0:31:33 Yeah.
0:31:33 Yeah.
0:31:36 I’m going to run my car or just have it with you.
0:31:40 But yeah, it’s happened a couple of times, not fun, but the people have been, twice it
0:31:42 was at a daycare and they were very understanding.
0:31:47 I was just like, you know what, I’m just, I’m going to, can we find a day for me to come back
0:31:49 and I will, I will do it for free.
0:31:53 Cause this is obviously, you know, don’t want to do anything for free, but inconvenience
0:31:54 them.
0:31:54 Yeah.
0:31:58 But you got to preserve that reputation and keep customers happy.
0:32:02 That’s one of the things that I’ve noticed here is like dozens and dozens of, you know,
0:32:04 positive five-star reviews for foam party all-stars.
0:32:10 You do anything specific or proactive to collect those after a, a party gone well?
0:32:16 Um, you know, I just send, uh, an email, uh, which I should also be sending texts to be
0:32:18 honest with you, but I, I send a email.
0:32:21 Thank you for having a phone party with foam party all-stars.
0:32:26 If you felt you had a five-star experience, you know, please click this link and leave us
0:32:26 a review.
0:32:32 If you have any, I don’t phrase it this way, but if any negative feedback, you know, please
0:32:35 email the owner, Tim at this email and, or call.
0:32:39 And we’ve really only had one that got back to me and said, Hey, I wanted to say some, there
0:32:41 was some stuff that I wanted, wasn’t a hundred percent happy with.
0:32:44 And it was good because I was glad that they brought it to my attention.
0:32:49 That was one that one of my workers was doing and I would never have known, uh, it was nothing
0:32:54 major, but just, you know, it’s good to be able to give feedback to the, uh, the worker,
0:32:57 even though I’m not there and I didn’t get a negative review out of it.
0:32:58 Yeah.
0:33:01 I can collect some, if you felt you had a five-star experience, here’s what you can do.
0:33:02 Yeah, exactly.
0:33:03 Exactly.
0:33:07 And if you have some constructive criticism, um, we’d, we’d, we’d love to hear it too.
0:33:07 Exactly.
0:33:08 Cause that’s, that’s how we get better.
0:33:09 All right.
0:33:13 So we have several different varieties of foam parties.
0:33:16 Sounds like most of the time we’ve got other people going out to deliver those.
0:33:19 Now the website says we could accommodate up to a thousand participants.
0:33:20 That’s a lot of foam.
0:33:22 Is that all nine cannons going at once?
0:33:23 Well, now we can.
0:33:24 Yeah.
0:33:25 I mean, we, yeah, probably.
0:33:31 And that, that would be more so for like a community event or festival, which, you know,
0:33:35 we’ve partnered with a few neighboring towns and, and done community events that are, that
0:33:36 are larger.
0:33:41 Uh, we’ve also a lot of fun runs that either through an elementary school or a park district.
0:33:46 Some of those get pretty large where we are bringing a lot of cannons to those.
0:33:51 And then the kind of the niche glow foam, different colors of foam we can do.
0:33:56 And then, uh, even have gender reveal on there, which we don’t get a lot of interest for.
0:33:59 Uh, I should probably just take it off the website, but definitely intriguing.
0:34:04 And I think it would be cool, but it’s, it’s a lot of money for colored foam for your gender
0:34:04 reveal.
0:34:11 Well, I saw one the other day was like college bed parties, which was not what I thought it
0:34:12 was going to be.
0:34:17 Once I clicked on it, it was like you decorating your bed with like a blanket for the school
0:34:21 that you got accepted into and a bunch of pillows and sweatshirts and stuff.
0:34:27 And it’s like, Oh, could you blast off cannons in, in purple and gold for, for Washington
0:34:27 Huskies or something?
0:34:32 Maybe the gender reveal thing, maybe there is a something to that or, or something similar.
0:34:34 I saw that same thing actually.
0:34:40 And there’s also along a similar vein of bedding, but, uh, there’s like kids sleepover parties
0:34:45 now where they set up like elaborate tents and set up, I think mostly indoor, but I think
0:34:46 might be outdoor too.
0:34:51 And like a company actually comes out and decorates it with your theme and, you know,
0:34:52 Taylor Swift sleepover.
0:34:54 And I mean, it’s kind of amazing.
0:34:55 Yeah.
0:34:55 Yeah.
0:34:55 Yeah.
0:34:55 Yeah.
0:34:58 It’s like a party in a box, like a prepackaged type of thing.
0:34:59 Yeah, definitely.
0:35:04 I mean, one of the risks be like, well, is this just a, do I go in all in on this business
0:35:07 that like happens to be a, an 18 month fad and then it’s over?
0:35:12 Like, do you see any of that with, with phone parties or is it like, yeah, I think this is
0:35:12 here to stay.
0:35:13 You know what?
0:35:15 I’ve always had that in the back of my mind, especially starting now.
0:35:18 Like I was kind of skeptical, like, is this really going to be a thing?
0:35:21 But it honestly seems to be picking up traction.
0:35:27 I have more competitors now, definitely, which honestly I’m on good, good terms.
0:35:31 And we actually refer parties to each other if we’re fully booked, you know, if I know they
0:35:32 do a good job.
0:35:32 Yeah.
0:35:34 Caught it on the upswing.
0:35:34 Yeah.
0:35:39 So a lot more competitors, but our sales are still going up from where we were last year,
0:35:40 which went up from the year before.
0:35:43 So I would say it’s definitely a growing trend.
0:35:47 And I know I don’t want to knock on bounce house, but I’m an elementary school teacher
0:35:49 and our district, we can’t even do bounce houses anymore.
0:35:52 There was an injury at another school or something like that.
0:35:56 So a lot, a lot of daycares are the same way where they’re risk management.
0:35:59 I mean, people say that phone parties are fine, but bounce houses are not.
0:36:01 Honestly, I think both are safe, but that’s just me.
0:36:03 Yeah.
0:36:05 The insurance for the bounce house thing was too expensive.
0:36:07 What’s insurance costs for phone parties?
0:36:08 Yeah.
0:36:08 It’s not bad.
0:36:10 Just for a 1 million, 2 million policy.
0:36:14 It was, I want to say about 12, 1300 bucks.
0:36:15 It’s not too bad.
0:36:16 It’s like an annual premium.
0:36:17 Right.
0:36:18 Yeah.
0:36:19 We can tolerate that.
0:36:20 We can make that back in a few parties.
0:36:21 Absolutely.
0:36:21 Yeah.
0:36:23 That’s, that’s reasonable.
0:36:27 The 5,000 for the bounce houses, that was a little much, but.
0:36:28 Right.
0:36:34 I mean, it’s all, it’s all kind of this equation of, well, what’s my pathway to break even here?
0:36:39 And I love the, we’re going to make some investment in marketing in these postcards, but we’re going
0:36:40 to collect the deposit up front.
0:36:44 Even if it’s going to be several months, we can use the deposits to buy the equipment or pay
0:36:49 for the equipment and kind of a creative way to, to go about it and see if there’s any,
0:36:50 any demand here.
0:36:54 Well, I mean, especially starting out, you know, my wife and I both have W2 jobs.
0:36:55 We’re doing fine.
0:37:00 So for me, it was more like, you know what, if I see the opportunity here, I need to go,
0:37:02 you know, strike while the iron is hot type of thing.
0:37:07 You know, I need to expand as quickly as I can.
0:37:11 And I don’t want to hold back, you know, just because I don’t want to spend the money
0:37:13 if I know that we’ll make money on the back end.
0:37:16 Have you gotten the kids involved in the business at all?
0:37:21 So my kids are, uh, my youngest turned four, so four, five, and seven.
0:37:26 So they have been to a ton of phone parties, but it’s funny.
0:37:27 They still like it.
0:37:31 And like, I’ve, they’ve done at least 20 because every time, you know, it’s like, Hey, uh, you
0:37:34 know, the girl scout troops coming over, let’s do a phone party.
0:37:37 Um, my, my wife’s like, Hey, they haven’t done a phone party before.
0:37:39 Let’s bring the baseball team over.
0:37:40 And it’s like, yeah, sure.
0:37:40 No problem.
0:37:42 But they still enjoy it.
0:37:47 So to me, it’s like, maybe this has some staying power if they’ve done this so many times and
0:37:48 they still like it.
0:37:49 So, okay.
0:37:49 Yeah.
0:37:54 They’re a little bit young to hire them to run the DJ booth or set up the equipment, but
0:37:59 it’s cool that they’re exposed to this, uh, entrepreneurial side of mom and dad.
0:38:00 Yeah.
0:38:00 Not quite yet.
0:38:05 I need to talk to my accountant about, you know, can I start up a, uh, Roth IRA for them,
0:38:08 you know, type of thing, but we’ll see.
0:38:08 Yeah.
0:38:12 You know, a couple of years, it’d be hauling equipment for you and yeah, absolutely.
0:38:13 Get them paid.
0:38:13 Yeah.
0:38:17 I mean, they’re in some of the promotional pictures since, you know, I’ve done a lot of
0:38:18 phone parties with them.
0:38:22 So I think it would probably be legal, but I need to consult with my accountant.
0:38:24 Yes.
0:38:26 Child modeling contracts, licensing rights, usage rights.
0:38:27 Exactly.
0:38:28 Exactly.
0:38:28 Yeah.
0:38:31 We’re going to do social media for you and maybe there is something to that.
0:38:37 Any big surprises along the way or, you know, you know, disaster stories aside from the things
0:38:39 not working, but anything else that stands out?
0:38:45 It’s been surprising and this isn’t maybe not the best answer, but just the amount of great
0:38:46 people that I’ve met along the way.
0:38:48 I didn’t think it would be that way.
0:38:51 I thought it would be like a lot more negative experiences.
0:38:58 And when things have gone wrong, people have been very understanding and I didn’t expect
0:38:58 that.
0:39:03 I thought it would be more cutthroat type thing, but I’ve definitely learned a mistake that I’ve
0:39:07 definitely learned is the old adage, like hire slow, fire fast.
0:39:13 I’ve come to find out not through many people that have worked for me, but just a couple that,
0:39:19 you know, if somebody’s, you know, showing when they first take the job that they’re not doing
0:39:24 things the right way, not showing up on time or there are any kind of issues, you need
0:39:25 to take care of that right away.
0:39:31 Otherwise, it could have the potential to kind of take your brand down with you and your company
0:39:31 will suffer.
0:39:35 That was definitely, you know, an issue, especially the first year.
0:39:39 Again, that kind of led to me as the owner stepping in and doing a lot more parties than
0:39:46 I probably should have needed to, but you got to kind of rescue things if, if nobody else
0:39:46 is available.
0:39:46 Yeah.
0:39:52 It’s on you to pick up the slack, but yeah, if, if people aren’t performing early on, given
0:39:56 the guidelines and the expectations, like you have to think like the first couple of weeks
0:39:57 on the job is going to be their best foot forward.
0:40:01 If it’s not going well, it’s like, oh, how are they going to be in three months?
0:40:02 Exactly.
0:40:05 Don’t think that they’re going to turn it all around.
0:40:08 Like if there’s, I mean, obviously give them a chance.
0:40:09 Mistakes happen.
0:40:15 However, if you see some pattern of something, you need to cut ties quickly.
0:40:19 You know, otherwise, you know, that with a new business, one bad Google review.
0:40:20 Now we haven’t really had any, luckily.
0:40:21 Yeah.
0:40:24 So it’s like, it’s super fragile early on, right?
0:40:25 It’s like the reputation is everything.
0:40:28 You end up getting somebody upset.
0:40:28 Exactly.
0:40:34 Is there a revenue target you’re shooting for this season or where, where do you want
0:40:34 to take this thing?
0:40:38 Is it, does it become a full-time thing aside from the teaching gig?
0:40:38 Definitely.
0:40:44 We’re going to try to hit 200,000 this year, which is cool.
0:40:47 I mean, especially because it’s basically May through end of September.
0:40:51 So it’s kind of jam packed in just a few months.
0:40:52 Yeah, that’s great.
0:40:56 I think we should be able to get there, but that’s the goal for revenue side.
0:41:02 And then while simultaneously trying to kind of remove myself from doing as many of the
0:41:03 day-to-day parties.
0:41:06 So those are my, my main goals for, for foam this year.
0:41:11 I’ll probably keep doing both jobs for at least the foreseeable future and then just kind
0:41:12 of see where we’re at.
0:41:16 The one thing that could cause me to step back from one or the other, just my kids are getting
0:41:21 to the age where they’re starting to be in t-ball, soccer, dance classes.
0:41:25 And I want to make sure that I’m there to be able to see all of that.
0:41:30 I don’t want to be the dad that is off to work instead of seeing all their, their things.
0:41:30 Right.
0:41:31 Yeah.
0:41:34 You’re like, that was, that was the whole point of this to have extra time freedom down the
0:41:34 road.
0:41:35 Right.
0:41:39 So that’s where the kind of the rubber meets the road with that decision with me, but for
0:41:42 the foreseeable future, going to keep doing both.
0:41:47 It’s definitely challenging to, to balance both with the young kids, but doing the best I can.
0:41:48 Yeah.
0:41:52 I think it’s really cool what you’ve built in the example that you set and saying, well,
0:41:54 my income doesn’t have to be fixed.
0:41:59 You know, we could start this thing on the side and, and grow it in a kind of organic and
0:42:00 low risk way.
0:42:02 So I’m pretty excited by that.
0:42:05 So foam party, all stars.com is where you can find Tim.
0:42:09 If you’re in the Chicago area, go book him for a party, do him a favor.
0:42:10 Foam party, all stars.com.
0:42:14 Let’s wrap this thing up with your number one tip for side hustle nation.
0:42:19 If you see an opportunity to open a business, go do it.
0:42:25 Sometimes I think I am sort of a paralysis by analysis type of person, although it might
0:42:29 not seem like it from when I said that I keep kept reinvesting in the business.
0:42:33 But if you see the opportunity to open a business, go do it.
0:42:39 There are so many resources, whether it be listening to people on side hustle nation that have already,
0:42:44 you know, entered the same niche or Facebook groups where people are running the same type
0:42:46 of business or YouTube videos.
0:42:52 There’s a YouTube video to describe how to do every step of opening a business.
0:42:55 I have no formal background of business.
0:43:01 You know, I’ve sold on eBay and Amazon a little bit, but, and I was able to learn everything that
0:43:04 I needed to know, obviously with some trial and error along the way.
0:43:07 But if you see an opportunity, definitely take it.
0:43:12 Well, I think it’s a really cool case study on the marketing side, going back to your 700
0:43:13 postcards, right?
0:43:18 We talk about, you know, the dream 100 strategy was like, well, and some people kind of struggle.
0:43:18 Well, I don’t know.
0:43:20 I don’t know who my dream 100 customers would be.
0:43:26 You were able to come up with 700 potential customers within a, whatever, 35 mile radius.
0:43:29 It’s like, they’re out there and they don’t know you exist yet.
0:43:32 So you got to go get on their radar and be front and center about it.
0:43:34 And I thought that was really cool.
0:43:40 And then the other takeaway that I wrote down was kind of intentionally be the business owner
0:43:40 here.
0:43:45 And you’re going to have to go in and pick up the slack if something falls through, but like
0:43:51 trying to, from early on, hire other people to go deliver the product to be on the fulfillment
0:43:52 side.
0:43:57 So you can be the marketing arm, the administrative arm that you need to be to kind of position
0:44:02 the brand and move it forward and go out and, you know, land bigger and bigger events and
0:44:03 continue to grow that way.
0:44:04 So I think it’s really cool.
0:44:06 Again, phonepartyallstars.com.
0:44:07 You can find Tim over there.
0:44:11 Your free listener bonus this week is my local marketing checklist.
0:44:15 We talked about a few local marketing ideas inside this checklist.
0:44:20 You’ll find 10 proven ideas to get more lead flow to your local business.
0:44:24 You can download it there for free at the show notes for this episode, sidehustlenation.com
0:44:30 slash Tim, which is shocking after 650 episodes that Tim was available.
0:44:30 I don’t know.
0:44:31 I’m sure we’ve had another Tim, but who knows?
0:44:36 Sidehustlenation.com slash Tim, or just follow the show notes link in the episode description.
0:44:37 It’ll get you right over there.
0:44:40 Big thanks to Tim for sharing his insight.
0:44:44 Thanks to our sponsors for helping make this content free for everyone.
0:44:49 Sidehustlenation.com slash deals is where you’ll find all the latest offers from our sponsors
0:44:50 in one place.
0:44:51 That is it for me.
0:44:53 Thank you so much for tuning in.
0:44:57 If you’re finding value in the show, the greatest compliment is to share it with a friend.
0:45:02 Fire off that text message to that friend of yours who might appreciate a little money-making
0:45:03 phone party in their day.
0:45:07 Until next time, let’s go out there and make something happen, and I’ll catch you in the
0:45:09 next edition of the Side Hustle Show.