#162 Jungle: Your AI Study Coach

Julian: I am a curiosity driven individual that is learning obsessed I'm a growth monster 

I’m Josh Muccio and this is The Pitch. Where startup founders raise millions and listeners can invest. Today on the show, a learning obsessed Julian Alvarez pitches his app…. for learning. So everyone can find their inner growth monster, too.

Julian: you know, I can go get a good job and live a simple happy life, but I think I would regret knowing that I was capable of so much more a life of comfort is not a meaningful life. I think a meaningful life is largely defined by doing hard things that are largely impactful. I was born to be a founder. 

The Pitch for Jungle is coming up, after this. And whether you’re watching or listening on YouTube, Patreon or your favorite podcast player. Thanks so much for subscribing and don’t forget to turn on notifications.

[break]

Welcome back to The Pitch for Jungle. Let’s meet the investors

Elizabeth Yin with Hustle Fund

 you're an A plus founder.

Charles Hudson with Precursor Ventures

I feel like I’m the lone dissenter

Ben Zises with SuperAngel

I’m not seeing anything else super revolutionary here

Kate McAndrew with Baukunst

For those who can’t see, my jaw is currently on the floor

and Jesse Middleton with Flybridge

I don’t normally like edtech, but I really like you.

[clap]

Julian: What's going on everybody? 

Jesse: Hello.

Julian: Hey, I'm Julian. 

Charles: Hey Charles. How are you? Nice to meet you. 

Julian: Nice to meet you, Charles. 

Jesse: Hey, Jesse. 

Elizabeth: Elizabeth. Nice to meet you, Julian. 

Kate: Hey, I'm Kate. 

Ben: Ben. 

Julian: Nice to meet you guys. Julian. Alright. What's up. Good morning. 

[mornings]

Julian: So, I'm Julian, the CEO and cofounder of Jungle, where we're transforming students into super learners. So one in five people in the world are students. But unfortunately for most students, studying sucks. Why does it suck? It's boring. And because it's boring for most students, they tend to lack the motivation to consistently show up. That's why many of them procrastinate and cram. In school, we're told what to learn, but we're rarely ever taught how to learn. Which left myself and many students of today to rely on ineffective study habits. At Jungle, we're solving this by making effective studying really easy and really fun. You can sort of think about it as a Quizlet meets Duolingo with AI. 

How does it actually work? So students can come and upload any study material It can be the lecture slides, a textbook, a video, and we'll transform that piece of content into a guided learning experience that has practice questions to assess their knowledge. As they answer questions, they get immediate feedback on what they got right or wrong. It's a very specifically designed learning flow based on learning science to help them go from noob to mastery as quickly as possible. So, we're at 180,000 monthly active users. We are approaching a million dollars in ARR. And we've been net profitable for the last four months. My cofounder and I we've been learning obsessed for the past decades and been building learning products for the past five years, and we feel like this is the company we were born to build. We're raising $2 million to transform the future of learning and unlock the potential of every individual. 

Elizabeth: Cool. Thank you. Can you talk a little bit about your background? Like, what were you doing before this. 

Julian: Of course. So I'm originally from Columbia, grew up in Texas, in a small border town city. I grew up being very, very ambitious myself, but that ambition was initially very self centered on myself. I just wanted to be very wealthy. Led me to want to learn how to code initially, led me to start an ecommerce business. But for the most part, I felt very misaligned. I overdosed on video games. I never read unless I had to for school. I wasn't curious at all. I felt so frustrated with myself because I had the feeling that I was capable of more, but it wasn't until college that I finally had a breakthrough. I started to get into the sort of personal development world of - basically, how do I become a better me? And I started to study the most successful people, listen to podcasts, started reading, adopting their habits, until I went to one of these like personal development seminars and experienced like a million breakthroughs. After that, everything changed. Stopped playing video games, started reading, writing, meditating, cold showers, super healthy. Everything. 

Kate: Seek discomfort sweatshirt, perhaps? 

Julian: Exactly, yes. You caught on to it. The crazy thing to me was that I changed so much and I was like, wait a second, like, where did all this potential come from? And so that curiosity sparked an obsession of how can I empower not only myself, but others to discover and manifest the unbounded potentials we have within ourselves. 

Kate: I want to push on that story a little bit and how it connects to your company. So what I'm hearing from you in that story is having a personal breakthrough about who you wanted to be. And then you going and changing all of these habits to be in alignment with who you wanted to be.

Julian: Correct. 

Kate: Right. That's a little bit different than what your company is doing. 

Julian: Yeah. 

Kate: You're not teaching people to know that they can do it. You're just giving them the tool. So my question is this: is your user the person who actually knows that they want to study, but they're struggling with how to do it? Or is your user the person that's like, studying sucks, I don't want to study, does it - like, are they motivated to study, or are they not motivated to study? 

Julian: It's a good pushback. And for me, it's like, I, I say this story more so of the background of like why I'm obsessed about this space in general.

Kate: Totally.

Julian: Learning, education, personal development space. I just see learning as a superpower in general. I do think in how it happens in education traditionally, there's a lot wrong with it. But It's not just about being a good learner and doing well in school. It's about like how do I build the good habits that I need to be a good human and show up consistently. And that's more of the behavioral science part apart from the learning science part. 

Elizabeth: I'm still trying to wrap my head around this user experience. Is it a little bit more like, I'm on the train and I'm looking to study - kind of like a replacement maybe for Anki cards or something like that? Or is it more, I'm at my computer trying to study for an exam. Like, what is sort of the use case - in studying

Julian: Yeah, so, and by the way, like, many people that love us, used to use Anki or Quizlet a lot. 

Elizabeth: Okay so that's kind of the replay, the alternative replacement. 

Julian: Yeah. Yeah. Yeah. In many ways. 

Ben: And how big are those businesses for context? 

Elizabeth: Well, Quizlet is huge. 

Julian: Yeah. Quizlet is like, over a billion dollars. And they did it almost entirely on just flashcards. Which is pretty crazy. There's like over one and a half billion students in the world. 

Ben: One and a half billion? Out of the eight billion people? 

Julian: Yes, one in five. 

Ben: Interesting. 

Kate: So your numbers are really impressive. I'm curious how you've acquired the 180,000 monthly active users. 

Julian: A lot of, a lot of grinding. Uh, no. So our two core distribution channels are content. So TikTok, Instagram content. We initially did like influencers. But now we've been creating, having our own creator program where we pay people to create their own accounts. They create like 12 videos a week. In three months we've gotten 76 million views from that program alone. So, doubling down there. And the other is Google Ads. In the last three months we've spent $105,000 to make $108,000. So, 102% ROAS on Google Ads. But maybe most importantly is the product led growth initiatives. We had 144,000 people sign up in December, and 40 percent of those people came through word of mouth. So I think both are important, not only to where we've gotten, but where we'll go in terms of continuing to scale this to the next level. 

Jesse: Can you talk a little bit about what's under the hood? What, what's unique about what you built? Machine learning and sort of some version of AI has been applied to education for a long time. Duolingo does this around how they create habits and it sounds like a great model for you to follow and sort of how they've created some of that. What about what you've built do you feel is sort of defensible long term, what do you own versus what are you using, you know, open source off the shelf? Just help us understand sort of what's the IP here.

Julian: Yeah, 100%. So there isn't like crazy moats in gen AI. We have prompts for the most part and some fine tuned models. Of course anyone can copy a prompt, but we've already iterated our prompt over a hundred times in the span of less than two years. In many ways, the sort of moat defensibility question, I think mainly comes down to like who the team is and how fast you move and how much you experiment. And we, for example, run like 50 to 100 experiments a month. We run experiment hour every Monday. My co founder, he recently got us like Christmas gifts. And I'll actually show you this. He got us this little hat called experiment mode. And so every Monday when we do our experiment hour to like see how experiments went and go hard, we wear this little hat to manifest this mindset of like - I think the best founders are the best experimenters.

Jesse: Yeah.

Elizabeth: Hundred percent.

Julian: Thinking like scientists is what really matters. 

Kate: How are people paying you? Are they paying you per test, per textbook that they upload? Are they paying you monthly recurring? Like what's the business model there? 

Julian: For sure. It's freemium. We have a free version and then two paid plans. The middle tiered plan is $8 a month, the highest tiered plan is $20 a month. Free version just gives you, like, basic free limits. You can generate 15 times a month. The middle tiered plan just gives you unlimited generations, and the highest tiered plan gives you unlimited feedback. We find that around 30 to 40 percent of people get the highest tiered plan, and 40 percent of people get an annual plan, which gives us a lot more revenue up front. Like we've been making over 100 grand every month for the last three months. 

Jesse: When did you launch the company again? 

Julian: Uh, a little less than two years ago. 

Jesse: Okay. I mean, your, your progress and focus on these metrics is very impressive. I have a couple other consumer brand companies that have crossed over that a hundred percent ROAS and it's like an amazing moment for you. And so I hope you and your team are very proud of that. To spend a dollar and get more than a dollar back is an exciting thing. can you share about your cofounder and the rest of the team, their background? 

Julian: Yes. So, I'm the CEO, but mainly operate as the CTO right now. My cofounder, he's the CPO, and he basically leads design, product, and a lot of the marketing initiatives. But he's super cracked. He designed the whole platform himself, which I hope to show you the product sometime soon. It's beautiful. He previously founded his own learning based company and he was at Masterclass as well. We have two other engineers. And then we have other supporting roles like Google Ads person, illustrator, and other things like that.

Elizabeth: How do you know your cofounder? 

Julian: We met because when we first moved to the Bay three and a half years ago, we lived together. And it only took like six months of living together till we both left our previous startups to co-found this one. And from there, it only took three months to go all in. 

Ben: What does success look like to you? 

Julian: I would frame it in like the two angles that really matter for our product, which is can we create the best effective learning method possible? Like be able to go from like not understanding something to understanding something as quickly as possible? But the other angle is like, how do we make it super fun? And I think like, if we can get people to come back consistently and build habits around learning and studying every day, that's really what matters, so. Of course, like, revenue is always like a core thing we look at. The other core metric we look at is the average number of questions answered per user, per week. This number is currently at 60, by the way. The last metric we look at that really matters to our success is the number of power users we have every month, which we define as someone that answers 100 questions or more. Currently, in December, that number was 21,000. The month before, it was at 11,000, and it's consistently been going up.

Elizabeth: Can you talk a little bit about your paid retention? 

Julian: Yes, for sure. So, the churn on our paid subscription is 12 percent during a semester, and then around 19 percent during seasonality moments like summer. 

Kate: I'm really excited about this, just to be transparent. I also know absolutely nothing about the competitive landscape, which terrifies me, right? Because one of the things I love is that people actually know if it's working, right? They have a problem, they have to take a test. If they're not getting the grades that they want, but they start using your tool, and they start getting the A's that they need, well, guess what? They're going to keep using it. In some ways, you're, you're a painkiller for people because they have to, they have to take the test. That's not avoidable. It's not like, does Johnny want to read faster, right? It's a different - in a different learning journey where there's a lot of pressure. So I actually really think that's phenomenal. What are the other things that that user could use? You're a med student, you have to study for the test. What else might they turn to today?

Julian: Yes, so, I'll comment on one thing and then I'll answer the question. Part of the reason I think it's so great for us to be like building this for students is because they have the clearest need around learning and they have the most measurable way to see how the learning is going. I think we can potentially bring this product to people beyond students. And that's something for us to explore, but it's a harder space in general because the need is not as clear and it's not as measurable. So that's something that makes students really unique and powerful as a starting point. Now, for med students in specific, we actually, like, we're kind of niched down for, like, about a year on med students, and one thing that's really important for them is clinical case questions, right? Like, John's 45, he has these sort of medical issues, like, how would you diagnose his disease? And so, we did this for medical students, specifically for them. And what was interesting is that we noticed this ended up being super valuable for everyone else. Like law students, for example. Dental students, same thing. And it's also the higher levels of learning that end up leading to a more effective experience overall. 

Kate: So I'm very excited about this. Like, I'm leaning very far for - I'm gonna physically leaning forward. I'm gonna physically lean forward. 

Julian: I feel it. 

Ben: I mean, Julian's exceptional. Yeah, I mean, an incredibly talented engineer.

Kate: I wasn't expecting this first thing in the morning. I feel like I would be very interested in diving into diligence quickly and fast tracking this with my partners. And we would look to lead this. Well, actually, what's the financing history? How much have you raised? What was the previous price? 

Julian: We raised a pre seed, uh, like 600k and it was at an 8 million post. 

Kate: Okay.

Elizabeth: What are you looking for here in terms of valuation? 

Julian: We're just kicking off the seed round right here, right now. So, kind of just open to offers, whatever, whatever you think it's worth, make an offer and we can discuss.

Kate makes an offer, after this.

Julian: We're just kicking off the seed round right here, right now. So, kind of just open to offers, whatever, whatever you think it's worth, make an offer and we can discuss.

Kate: Yeah. So just to speak about how we work. So we typically lead pre seed. So we, we would have been in that 600k, but I'm really excited about this and, you know, pre seed is flexible. 

Ben: I always say it's all about exception cases. 

Kate: Yeah, thanks Ben. Um, but I would look to lead this with something like 1.25 million at a 10 post, just because that's often where the valuation threshold is for us with the deals that we like to do. Now, the deals that we like to do tend to be earlier than you. They don't have the traction that you have. And so that price might not be what you're looking for. 

Julian: Right. 

Kate: But for me, I wouldn't want that to be a barrier. Right. So we can flex our check up to 2 million. That's our biggest investment We always do a full partner pitch before we make any decisions. But I'm, I'm very excited. Again, I would want to do it at, at 10 post, but it's not, you know, that's not a hard line in the sand. I'd be open to having a conversation about it. 

Julian: Okay. Love it. Appreciate the interest. Yeah. Excited to chat more and show you the beauty of the product. 

Kate: I'm also just sitting here thinking about like SAT prep. 

Julian: Yeah, yeah. 

Kate: Like Kaplan, I mean those businesses are huge. It's like -

Julian: In education, it's hard to make money, but where the most money usually goes is to test prep. 

Kate: Yeah, yeah. 

Julian: So it's something we haven't gone to yet that I think we could potentially do really well in. 

Jesse: We've - I'll start, Julian, by saying I normally don't like EdTech, but I really like you and I actually think what you've done is quite impressive, as I said earlier. And I like that you're going to the consumer. So when I don't like EdTech, it's usually you need to partner with the educational institutions and all that.

Kate: Same.

Jesse: So, so I, I appreciate that. There are a lot of companies that we've backed in, in the consumer EdTech, like Codecademy and OpenEnglish, so we, we know the category well. I'm curious if you - what you would learn from others in this space. If you look at, you know, Duolingo seems to be kind of the gold standard of retention. And so when you look at that landscape of all the dead bodies in edtech and then the one or two winners, what are maybe one or two of the like big takeaways you have that you're applying here or you'd like to apply here? Maybe you're not there yet. 

Julian: Yeah, hundred percent. Yeah, great question. Firstly with Duolingo, the greatest lesson there is that this can be done. Duolingo is a $15 billion dollar company and growing and they did it almost entirely on language learning.

Jesse: Yeah.

Julian: So, that's really impressive, and we take so much inspiration from Duolingo. Read, like, everything that they put out, basically. We just launched streaks, for example, like a week ago. It's already had a 20 percent boost. 

Jesse: My son loves that. He gets so upset when he doesn't get to get on Duolingo and keep his streak, so.

Julian: It's just simple, silly stuff that can often make a big difference. But basically Duolingo has a huge playbook that we're learning a lot from. It's like, hey, success leaves clues, just like, do a lot of what they do, but don't just copy blatantly, like, it has to be meaningful. Like, I - we think gamification -

Kate: He's very good. You're really good.

Julian: Yeah. 

Kate: Yeah, you're extremely impressive.

Julian: I appreciate it. Yeah.

Elizabeth: I echo those sentiments. I do want to push back, though, on this analogy, because we have definitely seen a lot of study tools. There have been so many over the years. And the big problem is sort of that hurdle of even if you create a really good experience, you're not a student forever. Duolingo's audience, arguably, they're not like all student students, right? So they have crossed sort of that threshold into mainstream audiences continue to learn something. In your case, like your setup is largely catered towards the use case of studying for this exam or whatever it is. Like something very specific of I have this task I want to do.

Julian: Yes. 

Elizabeth: How do you kind of cross that threshold into, all right, I've graduated from med school. Why do I continue using this? 

Julian: So there's two ways to do this. Either you go earlier or you go later. If you go earlier, it's kind of like, can we build a better product for say, high school students or middle school students, or maybe even elementary kids. Cause if you get them earlier on in the life cycle, well, yes, students eventually graduate, but you know, they're there for like 10, 15, 20 years. And then we could also go later. And it's kind of what I alluded to, like, how much of what we're building, what potential does it have to go beyond students? If we can build the best way to process information and solidify it into knowledge that's not just valuable for students, it can be valuable for anyone. 

Elizabeth: Well, I think this is where I'm going with like - let's say beyond school learning, there's all kinds of learning. So I would argue, for example, Anki - because it's just simple flashcards. Like for example, my husband's an avid user of Anki, but he uses it to remember people's names or how many kids somebody has or whatever it is. It's not even about like an academic learning. So there are many things you may want to learn or remember. Down the road, like, where do you think this could go? 

Julian: Yeah, for sure. So, the idea of like, an AI tutor or AI coach, right? AI tutor, we've heard it, like, okay, someone that's infinitely knowledgeable can help you. One, what if we added a personality, made it really fun, but two, what if we made it more of like someone that proactively reaches out to you and is also a coach and is checking in on you and has context on when your exams are, when things are happening and can reach out and be like, hey, I saw you had an exam yesterday. Like how'd it go? What got in the way? How are you feeling about it? Or you have an exam Friday? How are you feeling about it? Now you're not just helping people learn, you're helping them introspect on like their goals and how they're doing and building these habits into them. 

Jesse: I - I like everything you're saying. I would urge you right now to stay very focused on what is working.

Jesse: Yes.

Jesse: But I, I love - I, I love where you're going with it. And I love what you're prompting. I mean, I can imagine you in the future, you know, you connect to every API within my phone or on my desktop and you could say like hey, did you want to learn the names of the last people at your meeting. You know, whatever. That may be a real use case for this and - but I think it sounds like what you're doing today is working. What are the goals over the next, you know, kind of year or two for you on the metric side? What does $2 million, where does it take you? What do you need to hit 

Julian: Yeah, yeah. In the next year, we want to get to 8 million ARR. Pretty ambitious, 10xing, basically. In order to get there it really comes down to, on the distribution side, taking our creator program from like, 30 to 250 people creating 3,000 pieces of content a week. I think it consists of, Google Ads, scaling that from like 30k in spend a month with the ROAS to like 100 to 150k. And on the product side, I think it'll really come down to the fun and the effective side of things. And the brand narrative, right? Because we think that, like, power of brand and the brand narrative and the illustrations, animations, characters, like, it really makes a big difference. 

Jesse: People love the Duolingo owl. 

Julian: They love it. It's crazy. 

Jesse: On the icon. It's like, breaks the internet every time they do something cute with it around the holidays. 

Kate: Cute sells.

Jesse: Yeah, it does sell. I'm excited. I, we have two ways that we invest. One is sort of a, we call it like more inception, pre seed, it's called Next Wave. It's a team of entrepreneurs and executives. It's more like getting a dozen amazing angel investors all in at one time with you. But it also brings Flybridge and, and our team. And that's a $50,000 check we can commit into whatever the round is. And I'd like to start by saying, like, I'd like to commit to that. 

Julian: Great. 

Jesse: This is also something that I could see us leaning into as Flybridge, where we normally lead pre seed or seed rounds, kind of one to two million dollar checks. We can co lead, so. We don't have sharp elbows. 

Kate: We can talk. We can talk. 

Jesse: We don't have, we don't have super sharp elbows. We're friendly. And so I, I'd like to do the diligence with that. And so in that case it would be, you know, we'd take the two million and we each do a million or, or whatever it is or, But I'd like to, sort of say we'd like to do the 50k and be the first commitment into this 2 million that you're raising. 

Julian: Thank you. 

Jesse: At some reasonable post, 10, 12, somewhere in there. But yeah, I'm pretty excited about what you're building. 

Julian: Nice, thank you. 

Kate: I would love to do diligence together. 

Jesse: Let's do it. 

Charles: I feel like I'm the lone dissenter. 

Kate: Ooh, Charles, spicy. 

Charles: So I'm out. For two reasons. One, I keep doing the math. You kind of need to 200 X this business for it to get to the zone of what works. And I just think that's going to be hard. Not because you're not amazing. I was in an EdTech company that was like hit by the chat GPT Chegg wave and what that did for people's perception of the opportunity in study tools. Now you - Chegg has a bunch of other challenges with that business that you don't have. Sometimes the first million people behave really differently than the next five to ten. And I, I was like, okay, you probably need to 200x the business and the incremental, each incremental marginal learner you add, I think it's gonna be tougher. I think it's really hard to jump from the study use case to the non-study use case if the product is constructed as a study case. So, what I'm really saying is, I think this is a 50 to 75 million dollar ARR business led by an amazing founder that gets pretty close to the bar that I want to see, but I have a hard time seeing how you clear it. I'm sure when they air this episode, they'll be like, Charles was really dumb, he just didn't see it. But when I think about, especially things in EdTech, where I think there's an AI element, I think like, what is AI good at doing today? Where do I think it will be in 12 and 24 months, and what does that do for the opportunity? And in most cases, I think it's compression, not expansion. So, I think you're running at a really fast rate, you're doing all the right things in experimentation, I think you can kind of stay ahead of the pack for a while, but it just wasn't clear to me that there was an opportunity to get to that scale. 

Julian: Gotcha. No, thank you for your interest. I think it's a valid concern and it's a huge challenge for us to confront and I think something like ChatGPT helps us more than it hurts us because it makes people more aware of AI and its capabilities and it leads people to search more like AI sort of generated questions, flashcards, stuff like that. 

Kate: Part of what I love in your strategy that I have been thinking about with your - first of all, I love your customer acquisition strategy. It is not easy to crack 76 million views period. I love the fact that you found a way that you can turn the knob on that. And part of what I love about it is the creators will teach you things about your product that you don't know yet. 

Julian: Yeah, they're all students. 

Kate: Right, they're all going to be making content and experimenting with what this can be applied to. And I bet your strategy is hidden in their TikTok videos.

Julian: That's interesting.

Kate: Right? And I would pay a lot of attention to what are those creators doing that you didn't expect them to do? And I would look at that as a phenomenal data source for your go to market potential. 

Julian: That's cool. That's a really good insight. 

Elizabeth: I think, unfortunately, I'm going to be in Charles's camp. So I absolutely love you and your experimental nature. You're an A plus founder. and you will be successful. Like, you will make a lot of money. You already are, etc. I think the issue with the VC business is it's ultimately a middle man or middle woman business,. We have to believe that the outcomes can be super big. Not just big, but super big. And I echo the same concerns as Charles. One is in AI in general, and you said this yourself, there really is no moat in many cases. Honestly, a lot of people learn with ChatGPT now you just upload - I do as well. Like I upload all these PDFs. I'm like, teach me about this. I think in this initial inning, people pay you because you have a much better user experience catered to this particular experience. But, why I brought up the question of where does this go from here, you have to get beyond the student experience. And I think to Charles's point, it's sort of a double edged sword in that like what got you here or what makes you successful here is the fact that your user experience is very catered to this, but to get to the broader audience, you have to get beyond that, and so this is where it creates sort of some conflicts in what you want to prioritize, and then that ultimately kind of limits the user base if you can't get beyond that. So, so that's the thing that I'm struggling with, because the user experience is such that it is structured to help me as a student learn better and get better scores on tests or whatever. And I, I've been really just struggling sitting here thinking about, well, what are the different ways that they could get into a more general use case. But then have people not think, oh, I'll just go to ChatGPT for that general use case. But it was really great to meet you, Julian. And I know you're going to be successful. 

Elizabeth: I'll ask you to be an LP.

Julian: Coming soon. 

Ben: Love it. Just to round it out, I think you're clearly a top 1% or better founder. I think you will be successful. For me, this is a category that I just don't feel that I'm educated enough to even evaluate properly. And I think it might take me a little bit too much time to get smart on the space. And if I had unlimited capital, this is a bet that I would make. But just needing to be really careful. This is just a, a category, EdTech, that I'm less comfortable and sort of smart on. So, it'll be my loss, but I think you'll certainly make this successful. 

Julian: Thank you. Thank you so much, Ben. Appreciate it. Maybe you'll shoot yourself in the foot in the future, but we'll see. 

[laughter] 

Jesse: All right. 

[applause]

[thank yous] 

Josh: I was just going to ask, like, what did you guys think of that founder? But you guys just talking about how - top 1 percent, love this founder. 

Charles: He was really good. 

Elizabeth: 50 to a hundred experiments per month.

Jesse: Yeah. That, that to me, culturally, I found him to be exciting. I may be imposing my own views of where the business can go, which is why I'm excited about it. There is a chance that he unlocks something as exciting as Duolingo for some other categories, if you will. And if he does that, then it will be worth it. I completely agree in the, like, study tool in this area, it's not - he could probably get a million monthly active users, maybe even more, and some percentage of those pay. But I think that's sort of the, the risk we take at this stage, is that that we're saying he could do -

Ben: Hundred percent. He's a special founder.

Elizabeth: You're backing an amazing founder. Like I was on the fence -

Kate: He knows how to sell. And to be deeply technical, to be able to speak to those metrics, the numbers like that, but also to have - he wore a sweatshirt that supported his personal story. He brought the prop for the hat because he knew he was gonna talk about that meeting. He brought us into who he is before telling us what he does. Like founders who are great know how to sell. And that guy knows how to sell.

Ben: This is not gonna fail because he's not gonna get the capital to do it. So that's one less risk. Because he will be able to raise the next round. 

Jesse: We've heard what now 12 or 14 pitches this season, he's the only person who's mentioned ROAS right? It's that kind of thing and being north of 100% is -

Josh: ROAS is return on ad spend.

Jesse: Return on ad spend, yeah and this is what booking.com is famous for. Their ROAS is like 1.1 always and they run a thousand experiments a month and that is just every dollar pays back a dollar and ten cents.

Charles: They're what, the second biggest spender on, Alphabet? 

Jesse: Oh, yeah, yeah, they're, they're -

Charles: One or two every year. 

Jesse: Yeah, one or two every year. And with these metrics, that's kind of my point, they may find this ability to just spend on these creators and ultimately be able to grow without raising twenty or a hundred million dollars, but maybe five to ten. And that would be fine, you know, after this two million, they may decide to raise a bit more. 

Josh: We've been tracking this one for about a year. And he first came to us and we were like, cool idea. But, meh. 

Jesse: I could see that. 

Josh: It was when he started sending us traction updates.

Jesse: Yeah. No, I was going to say, it's a consumer thing, right? So it's like you need to show that you have figured out some really strong, early, like initial, repeatable traction model. The fact that he's done that with $600,000 raised in a category that I would argue is, you know, to the point we all brought up, like, I use ChatGPT or Perplexity, I do exactly what you said, and I say, teach me this thing, give me 10 questions, quiz me, and it does all of that, right? Like, I, I, that's possible. 

Josh: Well cool. I hope you guys get this deal.

Kate: Yeah. 

Josh: This was a fun one. This was an introduction from Kavitta - 

Charles: Yeah, yeah, yeah. 

Josh: - at Nectir -

Charles: I could see that. 

Josh: - which we invested in two seasons ago. Actually, last time we were in Miami. So. Great pitch, guys. That was a lot of fun. Great work. 

[thank yous]

Julian walked out of the pitch room with not one but TWO offers to lead his round! One of which came with a 50k starter check, which he did not turn away.

When we come back, the most access we’ve ever had to a diligence process. 

We’re going deep into the Jungle, after this.

BREAK

Welcome back. When Kate said, “I want to fast track this”, she wasn’t kidding. A week after the pitch, Kate and her analyst at Baukunst got on a team call with partner Axel.

At The Pitch, we’ve always taken you behind the venture curtain, but this call is taking us behind the second curtain: the internal conversation between two general partners. 

Kate: So I want to chat through the things that struck me about the team and the business. They sent their data room, which I think I forwarded around 

Axel: very well organized data room. 

Kate: It really is. Yeah. So the thing that landed for me most was founder quality. He's young. I don't know how young, but he's young, but he has that hunger to him and even if you look i've now been looking at his LinkedIn profile Like he's making content like this guy is hustling which is not really, necessarily related to quality, but it's just a data point. So what I noticed in him throughout the arc of the pitch, like this guy knows how to sell and sell subtly. He was incredibly deep on the data about the business, like any broad question was answered with, let me tell you about this particular metric. And he's like following the data, right? That's the attitude. 

Axel: So for the meeting, if he's so good with data, let's have him dive in. And it's not all going to be pretty, but just have him go deep.

Kate: I agree. The like interesting potential detractors were a couple of things. Number one, ChatGPT, just getting equally good at this and eating their lunch? Like, is there an option for something vertical? And are students gonna pay both for ChatGPT, which has broad applicability and a verticalized app for studying if ChatGPT is good enough? So I think that's like one potential threat. The other interesting question is market size. Like there's no lack of students, but if you look at the big winners in the space a la Duolingo, they're capturing like the lifelong learner, you know, not just the med student or the college student. 

Axel: Well, is there enough LTV, right? Because learning a language is one thing, getting, you know, test prepped is different. 

Kate: And just to say, like, I was like freaking dreaming about going and eating Kaplan's lunch. Like, think about SAT prep, LSAT prep. 

Axel: That was one of my questions because that's a totally established market but it's notable by its absence in his -

Kate: I know. I want to talk to them about that. Like, why not go after that? um

Ally: There's a lot of money in that. 

Axel: Yeah. But it's also so grazed over, so it may be every SAT prep question that can be asked, somebody has written already, right? I'm exaggerating, so I'm not sure if the auto generated approach is actually applicable for such a narrow domain. 

Kate: Well, and I think, to me, the question is, you know, one of the questions that I had is, like, is there a big enough market in the hardcore studying space? Or do you need to move into lifelong learners? I think that's a question. And then you have this, like, summer churn problem, right? Like, so I think you basically have to get people to pay for the semester or for the school year or And pay the annual rate, otherwise you're going to churn people out every summer and you're gonna need to reacquire them. So that was one of the questions that I wanted to ask them about their chart and how they're thinking about that.

Axel: It's EdTech, right? So do we want, you know - 

Kate: It's EdTech, but you're not selling to schools. 

Axel: I don't know, there's sort of this cringy, um, feeling I have. I can't help it. 

Kate: I hear you. Right. Potentially the Achilles heel of the whole thing is the maturity and valuation, right? So they raised an I believe, 800k pre-seed. This is a 2 million dollar seed round. Their pre-seed was at 8 post. So on the show, I was like, we would be interested in doing something like I can't remember what I said a million or a million and a half at ten post And you can tell on his face that like ten post was like not gonna get it done You know and I was like, whatever like we're pre-seed investors I'm gonna say 10 post. But my guess is this gets done at 12, 15 and it's like at 12, 15 and that makes sense given where they're at the fact that they did a pre-seed but also just like the data. And I don't, I mean, I'm not gonna fawn and like put a high price on it, but I just want to give that context that like, he's got a network, he's going to be out there pitching won't be the only like horse in, in the race. And it like, he's going to be expecting more of a seed type valuation. 

Kate: So just keeping that in mind. 

Axel: Okay. 

Kate: Okay, good. He's coming into the office tomorrow, so we'll get a sense for him and I think we'll just have him run through the pitch. Yeah. 

Axel: Sounds good.

The next day, Julian and his cofounder David pitched the Baukunst team IRL, and it went great! Baukunst promised a decision within the week. At the end of the meeting, Kate told the Jungle team that they wanted to see an operating plan for the business.

So, they got to work on that. In the meantime, they jumped on a diligence call with Jesse. 

and – 

Jesse: Rebecca is just joining now. Hi, Rebecca. 

Rebecca: Hi, I'm going to be in transit for like 5 minutes. I'm going to turn off my camera and then I'll come back on. 

Jesse: Okay. Rebecca is a partner at NextWave New York, which is our pre-seed vehicle, New York City founders. She's done a bunch of things in her career, maybe most useful here is she was, um, helped to build and and found Flatiron School, which is like a big EdTech company, if you will, we work actually acquired it. She reminds me that she actually made WeWork money and that's that was good. Um, unlike other people-

Julian: Someone had to do it, 

Jesse: Somebody had to do it. And so has a similar bias to being negative about ed tech as I do. And then I shared with her what you're doing and the same way that I think I reacted where I was like, ah, this is actually quite interesting. She kind of said the same. So, help me understand the, the, this round, like, on specifically the acquiring customers, what do you want to be at? By the time you. Use this capital and say 12 to 18 months. Like, what do you want acquisition to look like? What are your goals? What would be success? 

Julian: Yeah, for sure. So, we want a 10 X ARR by the end of the year in the next 12 to 18 months. Super ambitious, basically to put us at 8 million ARR. I think. Yes. The distribution side of things, scaling Google Ads, scaling the content program. But I do think the way we're going to get there is not with distribution, but rather with product led growth, we're very focused on trying to unlock viral growth loops in the product. Our current bet and hypothesis is that. The viral growth loops are probably at the intersection of social and gamification related features. Another place it could be is programmatic SEO. This is how Quizlet grew to as big as it is. So, yeah, there's several things there that we need to tinker a lot more on, but we're only going to get to 8 million in ARR within 12 months if we're able to crack viral growth loops. 

Rebecca: Yeah, I'm thinking if you're spending 30 to 40k a month on Google Ads and that's working, you should be building content that's SEO'd. That captures those campaigns organically, and then I'm thinking, what is your moat once you've captured that? Have you thought about moat in that way? Like, if you make these marketing investments. And find some organic growth. Can you keep those users? 

Julian: Yeah, I do think like product wise, the retention is one of our biggest areas of improvement. And I think one of the main ways we'll be able to crack that is gamification. Duolingo is a $15 billion company. I think the main thing they figured out is motivation, show up consistently. And it's this sort of thinking that like, your product can be great, but if people don't show up consistently or at all, it doesn't matter how good your product is. That's why we were so bullish on that as an area. It's not just about, like, making the studying fun and enjoyable. It's about helping them build consistent motivation about consistently showing up. And I think that obviously benefits them and us at the same time. And SEO is an area we haven't really done that much in, and I think it's huge. And it's going to be one of my focal points to focus on and improving. That could turn out to be perhaps the biggest growth pillar of all.

Jesse: Any updates since we talked around the fundraise, I know you had just kicked it off during the pitch. So, so anything that's happened since that. 

Julian: Yeah, we met with Kate and her team in person. Uh, it was really great, super fun, spent an hour and a half with them, we're moving forward to kind of like final, what seems like final diligence step of the process with them. Next week, they said they, like if things go well, could even give us a term sheet by end of week. So they move really fast. And then, yeah, currently also starting to get into like mid to later stages of diligence with an EdTech fund. Looks like there's good speed and interest in the round. 

Jesse: Great. We'd like to invest in, in this round as, as it stands now, for sure. I'm stand by my commitment. And then, you know, absolutely it could be, could be in this raise or the next is a larger check. 

Julian: Cool. Thank you for that commitment and following through on it. That sounds great.

Jesse: and Josh, I, I can't remember, did you guys also commit to this? Round I can't remember on the show. 

Josh: Yep.

Jesse: Okay. All right. Cool. 

Josh: I don’t know if we said it or not to you, Julian.

Julian: You didn’t! I'm hearing it for the first time. So that's great. 

Jesse: So it turns out The Pitch Show is also committing. 

Julian: Let's go.

Josh: Way to rope me in there. 

Jesse: I'm here adding value Julian. This is what I do. 

Julian: What a tank.

Thank you for that Jesse, The Pitch Fund is in for 100k alongside Jesse’s 50k check. But to secure the lead, Julian and David had one more meeting with Baukunst, to go over their operating plan.

Axel: I will put myself on mute for a second and camera off and just grab a snack. 

Kate: Excited to kind of dive in today and kind of go through with what we call the, you know, operating plan, which is really just an opportunity for us to get inside your heads of how you're thinking about running the business.

Julian: Yeah. Yeah. We can dive into it. Time to operate. 

David: A lot of what we did is, like, took a lot of our roadmap and things around, like, what are these core categories of things that we want to be focusing on, such as, like, motivation, which is, like, all the gamification stuff, question quality is a big important thing, scheduling stuff, like these exam dates and things, and, like, kind of mapped that over the next six months, and also modeled out, like, based on the things we know we need to do, like, what are the hires we need to make, and then, we kind of ended up taking our, like, one year ARR goal and then kind of working backwards from that and modeling, like, if we're gonna be at two million ARR in May, like, what would actually have to be true to get there, basically?

Kate: Can I ask a question? Where did the 8 million number come from? Like, why did you pick that as your revenue goal? 

Julian: 10x from where we currently are today. It's like a hard, high, ambitious goal, but feasible. 

Kate: So I would think about it slightly differently. What you first want to do is create a product that has really great fundamental metrics. Right? Like you're able to acquire a user, retain them, get them to do all the things that you want them to do, get them to share it, right? And you kind of debug what does the product of user interaction need to look like in order to create the qualities of the flywheel before you try to significantly grow revenue. That's how I think about it. That doesn't mean that growing revenue isn't important. But my, what I see right now in your business is you guys are early in product development and you're experimenting with product development. And so setting like a 10x revenue goal is to me, would be less important in this year when really what you want to do is get your conversion from feed free to paid set. You want to get your like churn numbers low you want to do all of the Things that show like we have a sticky product that people love and we know how to acquire the kinds of users that stick and so once we have those metrics locked in then we're gonna go 10x revenue and like my sense is that you're not there yet which is okay But there's a little bit of a tail wagging the dog. That's my first impression from like what I'm seeing on the revenue line and what I'm seeing on the product development line. 

Julian: Yeah. I do see a risk in focusing on like the revenue goal, like 10xing it. Because, for example, like right now, Our growth is pretty solid relative to our retention. And so if we set a 10 X revenue goal, we may feel like we need to go like way harder on growth where maybe what's actually going to make the bigger difference is improvements to retention or virality. 

Kate: Yeah. Like if you have a bucket with a hole in it, but you have a really like. You're like spraying a fire hose at it, like you're going to get water in the bucket. But it's better to fill the hole! So like, I'm not saying you have a leaky bucket, but I think like actually what this phase is about is debugging the business model. 

Axel: I of course agree with everything Kate said, a few other things. I am looking at this, I feel I'm flying blind because I don't see CAC, I don't see churn and so I would want to understand what do we know here about especially churn and CAC and maybe channels, how we acquire customers and who stays, who churns.

David: I love both of these perspectives. I can go into a bit of that. Our churn fluctuates between like 12 and 19 percent. 

Axel: per month? 

David: Per month, yeah. 

Axel: Of the whole user base?

Julian: Yeah, I think the retention for like all users, this is where we have the greatest opportunity for improvement. The biggest opportunity for retention for us is in day one through day seven. From there on it's more stable. 

Axel: I mean, if you have basically two thirds of the people not using it anymore after 30 days, they're gonna churn. 

David: Yep.

Axel: So it seems to me, before you do any kind of operating plan, you have a beautiful, large, set of customers. You want to totally dive into this and understand what's working and what's not, right? Because it actually makes no sense to acquire additional users or grow revenues. If you're going to lose two thirds of them after a month anyway, or maybe after two months, right? Because they're not, don't stick around.

Kate: I feel like the phase of the plan that you're in is heads down, operating, acquiring cohorts in order to test features and retention, you're not in a scaling revenue moment yet. 

Julian: Okay. Yeah. 100%. We have like awareness that retention is like not good, but at the same time it's like there's a sort of perception that like, oh, we have to continue growing. Like it always feels stressful if you like plateau or maybe like dip a little in revenue. So I think that that adds stress, but. It's not really a growth problem. It's more so like, uh, a retention problem. 

Kate: When people talk about revenue, they're missing at least 50 percent of the story, which is there's revenue and then there's revenue quality. When you have a bunch of revenue that's, that's churning. Any investor worth their salt is going to look under the hood at your metrics and be like, this is bullsh**. There's a delta between how people talk about their businesses and what really makes a solid company and the bottom falls out sooner rather than later. Right? Some people can raise their way through it and they just raise, raise, raise, raise, raise, raise, raise, but then it falls out around series B. But it's not a good path either way.

Axel: By tomorrow, I can start a company today, tomorrow, have a, have a, whatever, ten million dollar run rate if I sell a hundred dollar bills in Harvard Square for ninety dollars, right? It needs to make sense. 

Kate: But this isn't bad. Like, none of this is bad. It's in many ways. It's age appropriate, right? Just to say it's not like, Oh, there's like, this is bad news. It's just like, Oh, you're early. You're debugging the business. That's what you're supposed to be doing. But I think that it's like realizing that that's what you're supposed to be doing and not worrying about chasing revenue yet. Like, that's how you're going to ultimately build the thing that's successful. If you try to do both at the same time, you're just gonna miss on the chance to really get the product right. 

Julian: It was great. Appreciate your guys perspective. 

Kate: Cool. Alright, well it was fun. 

Axel: Thank you.

Well, they did get their answer within the week. Baukunst passed on Jungle. Kate said to Julian, quote, “We think the product maturity is more in line with a pre-seed raise vs a seed raise. Since you raised your pre-seed at a relatively high cap ($8M), we didn't know how to square this circle.” 

It’s a jungle out there, folks.

We’re happy to be on the cap table though! Terms for this round were set at $12M. 

We’ll catch up with Julian in our season finale… If you want to watch the finale live on YouTube with other fans of the show, RSVP at pitch.show/party. The chat was a lot of fun last time!

No offer to invest in Jungle is being made to the listening audience on today’s show. But you can join our private investor community on Substack. Where you’ll get access to the deals we’re doing behind the scenes. So, if you’re an accredited investor, you can apply to join at thepitch.fund. Next week on The Pitch…

Therese: What I see in my patients every day is fear. You cannot do a strep throat test at home or on a video visit with your doctor. So my team and I created CurieDx. We're a mobile app that predicts diseases like strep throat using a smartphone image and AI. 

Elizabeth: I definitely resonate with this How do you even get like a clear picture in someone's mouth? 

Therese:That was the first thing that we solved for. 

Therese: You cannot unsee what I have seen.

[laughter]

Therese: In our data collection. 

Jenny: So you have to go through FDA, meaning that you're considered a medical device? 

Therese: Yeah, We're looking at a de novo pathway.

Jenny: So that's going to be shorter and less expensive. 

Therese: The opposite. 

Elizabeth: it just feels like you are spreading your energies across a couple of channels

Therese: I recognize that

Elizabeth: All in parallel, in one raise. 

Paige: if this is the raise that you want to do, don't change your mind at this table because you're being asked to. 

Elizabeth: I disagree with that. I think every founder should come in with multiple plans 

Charles: I disagree with that. 

That’s next week! Season 13 is available to watch on YouTube and Patreon, OR listen on your favorite podcast player. Applications are open for season 14 of The Pitch! So if you’re raising capital for your startup, or plan to raise in the fall, you can apply to pitch. You don’t even need a deck, just fill out our quick form at pitch.show/apply

We’ll see you next Wednesday, in the PITCH ROOM.

This episode was made by me, Josh Muccio, Lisa Muccio, Anna Ladd, Enoch Kim, and Jackie Papanier. With deal sourcing by Peter Liu, John Alvarez, and Phoebe Sun.

Thank you to Kavitta Ghai from Nectir from season 11, for introducing us to Jungle.

Music in this episode is by The Muse Maker, Breakmaster Cylinder, Baleen, Marlon Gibbons, Memory Palace, Bossfight, Indigo Jewel, Joya, and Peter Jean and the Runaway Queen.

The Pitch is made in partnership with the Vox Media Podcast Network.