Minna Song (EliseAI) — From Crazy Early in Conversational AI to $250M from A16Z | Ep 57

Minna Song - Elise AI

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[00:00:02] Minna Song: I'm very glad actually, that wedidn't raise before that. I think, honestly, Ithink we would've.

[00:00:05] We, we would probably not be here if we hadraised too early

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[00:00:09] Jason Yeh: This is Funded, a show wherefounders who raised millions in venture capital share the gritty side of whatit actually took to get that money in the bank.

[00:00:16] I'm Jason Yeh. Nottoo long ago I was trying to get my ideas funded and back in the day I was a VClistening to founders pitch me for money.

[00:00:25] Building one of thefirst vertically focused conversational AI platforms. Seems like a surefire wayto get investors interested today, but back when Minna Song was first pitchingEliseAI years before ChatGPT was even released, it wasn't the slam dunk youmight imagine.

[00:00:42] Despite being adeeply capable technical founder with a CS degree from MIT, Minna ran into thesame wall. So many great founders do early on. In the early days, investorsdoubted the market size, weren't sure about the founding team, and questionedthe CEO's abilities. Even Minna had to figureout at that point, banana convincing people that AI was banana.

[00:00:59] Convincing people to back AI before it was trendy wasmuch harder than expected, and even Minna had to figure out.

[00:00:59] Banana. Convincing people to back AI long before it wastrendy was harder than expected, and even Minna had to figure out when it wastime to lean on others for support. Fast forward to today and Elise AI ispowering some of the industry's large banana banana. Convincing people to backAI long before it was trendy was harder than expected, and even Minna had tofigure out when it was time to lean on others for support.

[00:00:59] Fast forward to today, and Elise AI is now powering someof the largest operators in healthcare and real estate with its conversationalAI and automation platform. Even more impressive, they just closed a $250million series A led by A 16 Z along the way. There were many things thatshowed that fundraising banana, the path there was.

[00:00:59] Banana. Convincing people to back AI long before it wastrendy was harder than expected, and even Minna had to figure out when it wastime to lean on others for support. Fast forward to today and Elise AI is nowpowering Banana. Banana. Convincing people to back AI long before it was trendywas harder than expected, and even Minna had to figure out when it was time tolean on others for support.

[00:00:59] Fast forward to today. And Elise AI is now powering someof the largest operators in real estate and healthcare. With its conversationalAI and automation platform,

[00:00:59] banana convincing people to back a banana convincingpeople to back AI long before it was trendy, was harder than expected, and evenMinna had to figure out when it was time to lean on others banana, convincingothers to banana, convincing people to back banana. [00:01:00] Convincing people to back AI long beforeit was trendy was harder than expected, and even Minna had to figure out whenit was time to lean on others for support.

[00:01:08] Fast forward totoday and EliseAI is now powering some of the largest operators in real estateand healthcare. With its conversational AI and automation platform. Even moreimpressive. They just closed a $250 million series E led by A16Z. The path there was filled with situations that banana.The path there was filled.

[00:01:23] Nah, the path there was filled with momentsthat remind us just how hard fundraising can be, even when you're deeplycapable and onto something big. Minna surprised me with a lot of the things sheshared about company building and fundraising, but before we get there, I hadto learn a little bit about what Minna was like long before she ever raised apenny.

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[00:01:48] Minna Song: As a kid, I was really interestedin math and science. Those were always sort ofthe, I was a great student, so, um, but I liked to study math andscience the most in, um, high school, actually, I was, my sort [00:02:00] of superlative that I got was most likely to remember the most numbers, most, mostlikely to remember the most amounts.

[00:02:02] Why can't I say this? Yes. Uh, yeah, most, uh,most likely to remember the most digits of pie. Um, so definitely was sort of,uh, very interested in math clubs and things like that.

[00:02:09] Jason Yeh: do you think that, is thatinfluenced by your parents? Like were they scientists, were they entrepreneurs?What did you look up to growing up?

[00:02:17] Minna Song: I don't think that was reallyinfluenced by my parents. I think it was just where I. Sort of naturallygravitated towards the more logical side of, uh, of studies. Um, my father wasan entrepreneur his whole life. My mother and my father actually ran a restauranttogether when I was very, very young.

[00:02:36] But then my fatherwent on to, um, he was sort of a craftsman, so he, he made a lot of things outof leather, for people and, um, that my mother became a, a teacher. So I thinkmy family definitely influenced me in that. I think some of the hardest working,working people, but on the math and science, my sister's very different fromme.

[00:02:55] She's very, veryartsy likes crafts. Uh, similar to my father [00:03:00]actually.

[00:03:00] Jason Yeh: Man. Uh, I'm so glad I asked thisquestion because I would've. I would've put your upbringing in a box. Honestly,I, I would've like, I looked at your, your LinkedIn, which is super impressive.MIT computer science. I think you did a stint at of Cambridge for computerscience Asian, like, I don't know.

[00:03:20] My, my thought in myhead was, I know I, my, both my parents were science PhDs. I studied computerscience, and so my thought was that was gonna be your background and there wasgonna be this really interesting shift to. I don't know, entrepreneurship lateron, but it, it sounds like you had some entrepreneurial, influences when youwere a kid. I'm curious when you saw that in your head where you're like, well,I mean, I love math and science, but this is what adults do, so this isprobably what I'm gonna do. Or did you think that you were gonna go to advancedstudies in science, be a researcher? Do you, do you remember what you thoughtyou might do?

[00:03:58] Minna Song: Ithink for a while I. I, I really thought I was gonna be an [00:04:00] engineer for a really long time. Actually,I, I really liked electrical engineering, so I actually started college as anelectrical engineer. I hadn't coded before my freshman year of, of MIT, andthen once I took my first.

[00:04:12] Python class. I was,uh, I was addicted. It was much faster than electrical engineering. And I, I, Ireally loved the pace. I think I'm, I'm just a, I'm a New York person at heart,even though I didn't grow up here. I like shipping things very, very quicklyand um, and it wasn't actually, yeah, I wasn't planning on becoming anentrepreneur.

[00:04:31] Until my really, mysenior year of college, um, I just thought I would sort of go and, and be asoftware engineer in industry and probably would've worked at startups. But,um, I think that was what the path I was thinking. But yeah, we never reallysort of had a full-time, real job after college.

[00:04:48] Jason Yeh: Yeah. I think this is one of thethings that was also very. Surprising for me or just like, I, I was justcurious where this came about, which was, when I look at at least your [00:05:00] LinkedIn, it's like, you know, study MIT,Microsoft, uh, while you're at school and then it kind of goes directly intoentrepreneurship.

[00:05:09] So it does soundlike you had this, well, I think I'm gonna start building companies right outthe gate. Um. probably have a, a tonof o other opportunities to tell the sort of genesis story of Elise. but thisis kind of where I really like the conversation and, and framing our chat Yes.

[00:05:30] About your companyYes. About you and what you do. Um,but within the context of deciding to raise capital. Right. So first thought or my my first line ofquestioning is a little bit more about. As a lease was starting, as you werethinking about working on a lease, did you know that this was gonna be acompany that you'd need to raise capital for?

[00:05:50] Or was it like,well, we're just gonna start, you know, bootstrap and then see what happens.Um, because you, you, you know, we'll jump to the end. You've raised an amazingamount of capital [00:06:00] for this companyto date. but maybe the beginning was something different. Uh, do you rememberwhat that thought was?

[00:06:05] Minna Song: think MIT really had this culture,like it's a very entrepreneurial school. there's a lot of founders, a lot ofpeople aspire to be founders. They have a lot of founders come and speak atvery in various classes. and you know, I think they really frame the, Heroicfounder route as the one that bootstrapped.

[00:06:22] And so in my mind,the right thing to do was, was actually to bootstrap and raise as little as youpossibly can. I think that's actually the very wrong way to think about it. ButI also think the similarly, how much money you raise is not a sign of success.

[00:06:38] by any means. Andso, we actually didn't raise for the first two and a half years we're veryfortunate. My co-founder and I, we are both technical. We We both, we both studied. We met because westudied computer science together, at Cambridge when I did one year exchangeprogram out there.

[00:06:52] That's how I methim. And. We were very fortunate because you didn't have to, you don't have toraise a lot of money if you [00:07:00] can sortof build the product yourself. So we were both selling, we were both building,but it was very obvious when we needed to raise money. So two and a half yearsin, we had signed several customers.

[00:07:11] Uh, we were at thepoint where we actually signed up the first and second largest apartment ownersin the country and. It was just really the two of us and we had just sort ofstarted hiring our first person and we knew that just to handle tens of billionsof, of. dollars worth of real estate assets.

[00:07:32] over a hundredthousand apartments running on our platform. We needed to build a team tosupport these massive customers and, and all of these, residents. So that'swhen it was very obvious we needed to raise. I'm very glad actually, that wedidn't raise before that. I think, honestly, I think we would've.

[00:07:48] We, we wouldprobably not be here if we had raised too early. Uh, it was just very earlywith, with ai.

[00:07:54] Jason Yeh: yeah. I love that comment, and Ijust kind of want to push you on that thinking a little bit more because [00:08:00] I've had similar thoughts for differentcompanies. I've heard this uttered before. Tell me more about that. Like yougot all the way to your seed round, you've gotten all the way a series E, butyou just said, if we had raised earlier, we might not be here today.

[00:08:16] Like what, what goesthrough your mind when you, when you say that?

[00:08:18] Minna Song: Yeah, I think people have toremember it was a very different time, right? Conversational ai, AI agentsmakes so much sense right now because it's very popular. this was 2019, right?This was before Chachi BT came out. And, uh, we're also a vertical SaaScompany. So this is also when investors weren't they weren't excited aboutvertical, vertical SaaS or vertical ai.

[00:08:39] So, uh, I think we really raised because we had a tremendousamount of traction. I don't think we could have raised, uh, you know, at a. We,we, we, I dunno how to describe this. Um,

[00:08:40] I mean, it was like a, it was actually a pretty, pretty,uh, uh, low valuation, uh, our first round because of all these reasons andbecause we were first time founders. But,

[00:08:40] Jason Yeh: Sure.

[00:08:40] Minna Song: um,I just think in general. Having a lot of traction set us in the rightdirection. I think if we had hired too early, we wouldn't have learned what weneeded to as founders, you know, we would've maybe delegated too much of theresponsibility to other people that we hired.

[00:08:55] It's very similarmistakes that early founders make when they raise too much money. I think itwas the right [00:09:00] time to do it for us,um, and it created a lot of discipline and I think it, it kept us in the weedsfor a really long time in a healthy way.

[00:09:08] Jason Yeh: Yeah. I think like one of thethings I see and experience myself in a, in an earlier startup is you, let'ssay you did raise before you had signed all those clients, like. It kind of cangive you the wrong signal of, of, oh, you know, we already know what we'redoing. And, and like you said, you can over hire inter direction over hirebefore you like, learn exactly how you should steer the ship.

[00:09:30] So it's a, it's avery good comment to make and one that I, I think, especially for people thathaven't actually either been through the grind of like it out and then raisingor fallen off the cliff because they did the wrong thing, that comment can. Behard to understand and so I'm glad we spent a little bit of time around that.

[00:09:48] Minna Song: Yeah, and I think immediately whenyou start reporting to somebody or feeling the, you know, you know, even ifthey can't fire you as a CEO, right, or you know, they don't have control over [00:10:00] over your company, you still feelobligated to. Sort of do what you tell them you're gonna do when it's justyourself and your co-founder and your employees.

[00:10:09] You guys are in theweeds together and, and you adapt. And I think actually consistency can bequite dangerous. Like the need to be consistent is very dangerous because itmeans you're not taking in new information and, and learning and changing thepath of your company. So I think in that, you know, maybe that seems sillybecause it's just like a psychological, something that makes you think thatway.

[00:10:30] It is strong.

[00:10:31] Jason Yeh: Perception is reality. And I, Ioften think that, so we could say like, oh, it's just psychology. But honestly,like the perception of what happens is, is so important, especially, you know,as you've learned it in startups and fundraising.

[00:10:43] Minna Song: So much is, I think so much of theoutcome of a company is what forcing functions do you have,

[00:10:49] Jason Yeh: hmm. Yeah,

[00:10:49] Minna Song: and investors can be a, a quiteinfluential one.

[00:10:54] Jason Yeh: so I, I actually want to like gointo this next. This next chapter ofthis conversation, [00:11:00] touching on alittle bit what, what you described, which is like, you know, our, our firstvaluation wasn't amazing. We, you know, we weren't super happy with it. Um, and the, the, I find that in fundraisers,whether it's your very first round or a series E $250 million series E, there'ssomething that you have to convince the investors of, right? And it's gonna bedifferent at different stages. It's gonna be different for different founders.I wanted to read you something that I read from a, a series A announcement. Andso this will like bring us back to maybe your first round, but, Meese foundedby Mina Song and Tony Stoff in 2017, Meese uses machine learning to fill thecommunication gaps between prospective renters and apartment operators. Meeseis an AI leasing assistant that handles the most redundant and tediouscommunications prospective residents in an informed manner, which sounds like. [00:12:00] A announcement for a company that justlaunched in, you know, 2024 or 2025, like, like you said, conversational ai,people thinking about these like things, let's have these conversationalthings. mean, it is incredible, incredible to me that in 2019 or 2017,somewhere around there, this is what you were working on. But like you said.That wasn't a thing. No one could point to like that actually being a thing.And in fact, you, you know, you're using the language machine learning, whichwas, you know, the pre ai you know, and so I'd like to talk through thisbecause what you have to convince investors of or that sticking point is, isoften a thing that people don't realize will come up. Do you remember the conversations you were having as, ashaving, as you were going to raise your first round and what you felt like youneeded to convince investors of whether it's, you know, I won't lead thewitness because it changes and, and I'll tell you, we'll go throughit a little bit more, but. Relatively less known venture capital firms, but allof a sudden in 2023 it's like point 72 Sapphire, Alex Emman, Andreessen. And solike there, there's a shift that happens. Let's, let's go back to thebeginning. Do, do you remember what was like a [00:13:00]frustrating thing that you had to convince investors of?

[00:13:01] Minna Song: Yeah, I think, uh, it was marketsize, right? 'cause we were a single product. We were a point solution in anindustry that, uh, is one of the, the industries that spends the least in r andd out of any other industry, real estate. And so people, you know, people werelooking for. The next Twilio or the next platform play.

[00:13:24] And, uh, if I couldsell to, you know, 0.1% of this massive market type of pitch, right? Um,whereas we today serve one in every eight apartments in the us that's sort of not the sort of penetration. Andwe have a lot more to go and we, we wanna grow a lot. That's not sort of thepenetration numbers that people believed, you know, when they, when they hear aseed stage company pitching, you know, everyone's meant to be very.

[00:13:46] uh, skeptical ofwhat sort of penetration you can get. And, um, over time they've different, youknow, investors have seen us make progress and, and believe it and, um, believewe can keep growing. But yeah, I think at the seed stage, that's a, that's anormal thing for [00:14:00] investors to think.Um, but, but yeah, it was definitely,definitely an interesting thing and, and a lot of people didn't know about ai.

[00:14:05] So, you know, uh,it, the still, the impression was there are, you know, AI will never replace.What humans can do, right in. If you think about what housing is, housing isour largest expense as people. And so if you think about that, that's ourlargest contract value. And so if you're, if you put an a, a technology or youknow, a robot in doing the job, that is a very high value contract per person.

[00:14:34] Um, they just feltthat that wasn't a replacement for what a human could do and that peoplewouldn't buy into this. Um, but. Lo and behold, residential real estate housingis, is one of the fastest adopting industries of ai, actually. Um, and I thinkit was largely because we were, we were so early and, um, we were able to sortof educate the industry over time to do that.

[00:14:54] So definitely, um, acouple points that made it, you know, made, madeit sticky during the first few pitches, [00:15:00]but, um, I think over time peoplehave. Fallen into the, the thesis that that generally fit exactly what we'redoing. You know, vertical ai, sticky industries, um,you know, having, uh, AI agents that can really think about, um, not just software budgets, but how do youstart thinking about how does this recreate or reshape labor?

[00:15:21] Jason Yeh: so the, your earliest investors,you were able to convince them around size or ai, like was, were, were peopleleaning into, I can't imagine that people were like, oh yeah, ai, like I, Iwant to go after. you know, it doesn't look likeyou have, you have more real estate specific, or I think you havelike more real estate specific investors early on. what do you think thetipping point there was?

[00:15:40] Minna Song: So our first round was actuallyled by an angel group called Golden Seeds, and we already had lots ofcustomers. So our, uh, several of our first customers were interested infunding us, but they weren't going to sort of lead the round because they weren't,they weren't typical tech investors. So it definitely helped [00:16:00] that the lead investors saw that.

[00:16:01] Our customers wereusing our product, and they weren't just using our product. They, they, theysaw the future of it. So that really helped. And then we did have a few realestate companies or real estate focused VC firms, join the first lead, thefirst few rounds. And I think that was similarly because, you know, theyunderstand the, the size of the industry where maybe a generalist VC didn'tunderstand it until our, uh, really our series C.

[00:16:27] Jason Yeh: Yeah, think it's really. Cool toshow that sort of effort and how much traction you had to go convince people.Because whether it's a sticking point of, Idon't know, industry, uh, market size or team execution or whatever,it's very hard to say. It's very hardfor every investor out there to say no to real traction and real customerssaying like, we want this.

[00:16:46] Right. and so it, itseems like that was an amazing push through. Um.

[00:16:52] Minna Song: Yeah, I think it's, um, you know,everyone always says it only takes one. You just need one investor to say yes.That was really hard for [00:17:00] me to. tostomach because in a sales process, right, if, especially when you're sellingvertical, where all customers, all the customers you sell to basically havevery similar needs 'cause they're the same type of business.

[00:17:12] If something's goingwrong in a pitch and they say no, you should retro every single pitch. Right?And 'cause it, it really should land, our products should land with everysingle customer. And so. But it getsexhausting during fundraising. Um, where, where, yeah, it's true. Some peoplejust have preconceived, investors have preconceived notions, they have certainmandates, they have certain, you know, thesis that, a thesis that they have toinvest on.

[00:17:36] And, um, that reallydidn't make sense from kind of my gut feeling of how I should raise funding. SoI spent probably too much time thinking about. Whyis every sentence, you know, not every sentence, but, you know, howdo I handle every single objection and help tell the story of our businessbetter? But I mean, even so even in, our series E round there's still peoplethat, even though they see the growth of the company, it's just not within whatthey're meant to, to fund.

[00:17:59] So, um, [00:18:00] it should be fine, but it's stilluncomfortable.

[00:18:01] Jason Yeh: It'sso funny, my, I would love to go, uh, in a separate conversation, one of mythoughts was like, oh, I'd love to ask her about her business and being atechnologist, a SA scientist, if you will, and then moving into a very salesled organization, obviously like you have. Real product and you're buildingamazing technology on the backend, but you know, these, these products are soldinto, into these buildings, right?

[00:18:01] They're sold into these people in the real estateindustry, and it's, it's a interesting thing to see someone with you and yourco-founders backgrounds such a, like a, a natural attraction to sales. But, youknow,

[00:18:01] Minna Song: Oh,I would not say a natural attraction.

[00:18:01] Jason Yeh: Well,I, it seems like it's a problem for you. It seems like it's an engineeringproblem for you, which I've actually heard this mindset before where it's like,yeah.

[00:18:01] It's like, yeah, where are the problems? How does the,how does the push go? Where are the objections? How do I fix this? I think it'sa fascinating set of things to talk through, but gonna stay, keep us on, um, ontopic here, because. I think that the tone and the things that youhave to do change, um, after youraise this first $2 million, because then you start getting into a cadence of,of raising, you know, essentially annually and like bigger and bigger amounts.

[00:18:16] It looks like you'rereally, really hitting your stride. I, I do want to kind of ask you at a highlevel, like where did the shift go in these rounds of like, okay, well now. Nowwe're, we're not, we're less like maybe credentialing ourselves, maybe lesstalking about, you know, whether we can actually get these people to buy. Isthere a common theme around each round where, what, like, what the stickingpoint was, or maybe even this most recent round, like not everyone is gonna belike, hell yeah, I want to fund this. And, and there's gotta be something thatyou, you need to push through or really convince people of. any quick thoughtson, on what those things were?

[00:18:53] Minna Song: Actually our last three roundswere. More or less, we didn't run [00:19:00] abig process for each one. So we had inbound interest or they were, we had verystrong inbound interest or they were kind of fully preempted rounds. So that'swhy they sort of, I guess, came every year we actually didn't need to raise,which is the best time to raise is when you don't actually need the money.

[00:19:17] Right. You have themost leverage at that point. and it takes the least amount of time. So, I mean,our Series D closed, it was preempted by Sapphire, maybe a weekend. It wasreally a, a, a weekend of work. And then our series E uh, was actually preemptedby insiders. Um, and then we did wanna go out to a couple investors and, uh, see who else that we had just sort ofknown and had built a relationship and, Had several offers. Um, I think we hadfive offers in total, and then just sort of picked, um, Andreessen as the lead.I think that whole process took about three weeks till we were fully signed in,in [00:20:00] a term sheet. And I like to keeprounds. I don't love fundraising. I'm not the, I'm not, it's like sales, but onsteroids.

[00:20:07] Um, and you know, I,I, I always say this, we have 52 weeks in a year. Spending three weeks is asignificant amount of time, let alone some, you know, I hear stories of peoplespending six months, that's absolutely insane to me. I wanna get back to workas quickly as I can. And, um, and it still felt like a distraction, even beingthree weeks.

[00:20:27] So, but it is muchfaster if, if you're taking it when people are really like hot and ready to,uh, to fund you. So, um, yeah, that's why they've been fast.

[00:20:36] Jason Yeh: no, that's amazing. And And I, there, there are a couple additional things thatI'll ask and, and we can

[00:20:38] Minna Song: Sure.

[00:20:38] Jason Yeh: Closeit around there. Um, but even in, even in preempted rounds, or evenin rounds where people are like excited valuation a sticking point?

[00:20:43] Is that somethingthat you've, you felt like was a challenging part evenin these weekend, even in these weekend fundraisers or. When youhave the momentum that you do and like the excitement around the table, are youable to say like, look, I know what's fair. This is [00:21:00]what's fair, this is where it's going to be, and allow yourself to, to drivethat process?

[00:21:03] Or is it, does it,did it still feel like the VCs were kind of like holding back at that point? Doyou remember those?

[00:21:09] Minna Song: Yeah, no, I think, um, when wewere preempted. if it's a competitive process, you get, uh, you know, at leasta fair valuation. Right. And so we were, I mean, we were able to sort of justask for what we wanted and what we thought was fair or, you know, and talk to a few investors, you know, talk toseveral investors and see what, what we think would be, would be market.

[00:21:31] I think you can.Quadruple the time that you spend on a fundraise and optimize for the highestvaluation. But I actually don't think how, how we think about valuation isalways in the best interest of the employees.

[00:21:44] Jason Yeh: Hmm.

[00:21:45] Minna Song: If you are raising a, a, you know,way too high of a valuation, um, it's just not.It's not fair for the employees, right?

[00:21:51] Their strike pricesare really high. you introduce a bunch of risk for taking a down round and, youknow, that could add on a bunch of, uh, to the pref [00:22:00]stack that, um, o overall can help hurt the employees. And so when we thinkabout it, we're like, we want something fair that fits our company. We're notgonna, you know, especially because we didn't need the money, no one ever gaveus something that we were like, that's insanely low.

[00:22:15] Or we just go backand we say. That's not what we're we're doing, and they change their tune very,very quickly. But, um, I don't think it's. don'tthink it's the right thing to do to optimize for the highest valuation.Actually, lots of employees, um, I'vehired or talked to said this is exactly what happened at their last company,and they had no upside because of it.

[00:22:32] They've never grew,grew into a valuation, and their, their equity never, never grew. And, I thinkwe're, we've been fortunate that we've just kept growing and our valuationshave kept, have kept growing in a, in a very healthy rate.

[00:22:44] Jason Yeh: Mena, that's like a cool reframingof. a concept of not overvaluing yourself. Um, but I've never heard anyonearticulate that of like. We actually think about it from our employee's pointof view, like we want this to be meaningful to them. Like we want them [00:23:00] feel like how on earth are we gonna beable to grow into this?

[00:23:04] And, you know, doesour equity stake have upside? And so not too,you know, it's not too dissimilar to thinking about yourself oryou're thinking about your investors and you know, the, the up round in thenext round. But I think when you reframe that in terms of. How your employeesare gonna win alongside of you.

[00:23:22] I, I think thatmakes you make certain decisions and I, I really like that. I'm definitelygonna share that with more people. when it comes to the last three rounds,preempted rounds, I think. Preempted roundsprobably have less of an opportunity to have these like gut punch moments, butcertainly in your, in your first couple rounds, maybe in your first round, likeespecially that frustration of like, how can I not, like, why can't I takeevery objection, fix them, go to the next. And, and, you know, make sure thatevery call after that works. Um, do you have any memories that cometo you of like, hardest times fundraising, hardest times with investors? Any,any gut punch moments where you're like, man, I'll never forget that. 'causethat felt like crap.

[00:23:43] Minna Song: I think maybe I've blacked themout. No, I mean there were some definitely strange moments. One investor we talked to, I dunno, I'm sure, I'm sureI'll think of a bunch just as I, as we talk through them, but, um. Weare generally known, uh, by investors as being extremely capital efficient. Uh,it's somewhat of a product of.

[00:23:59] One, [00:24:00] we have a very high talent bar in thecompany, so we've been sort of slow to hire because we've, we've just been verypicky about who joins our team and we're, we're, we're, we're actually prettysmall in terms of headcount compared to the revenue. And, one, one investor said to us that our salesdeficiency numbers were, incredible.

[00:24:17] They said it was,the word they used was inspiring, but for that reason, they actually rejectedus. 'cause they were like. Maybe you're too efficient and maybe this is anexecution problem. And, uh, uh, uh, Ithink it's, it is partly they also didn't understand vertical SaaS. VerticalSaaS tends to have a little bit, uh, it hastends to be more, more efficient.

[00:24:34] And how you, you'vegrown, a lot of what we've grown through is, is word of mouth because we arehighly penetrated, especially in the enterprise side of the, the housingmarket. So. 29 of the top 30 operators use our product now. Um, and so they alltalk and they all ask what each other, they're, they're all using.

[00:24:53] And so there's someefficiencies that's created just because it's a small network and everyone'stalking to each other or moving [00:25:00]companies between each other, which doesn't happen necessarily in horizontalSaaS companies. So that was a weird one.

[00:25:05] Jason Yeh: Minna is about to share a prettywild story that shows just how unpredictable, unscientific, and frankly unfairthe venture world can be.

[00:25:15] When we get back thestory...

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[00:26:18] Minna Song: I one time had somebody, um, maybe I won't tell that story.

[00:26:20] Um. Uh, one time. Well, okay, we'll tell it, we'll decideif we want to cut it. It's not that big of a deal, but, um,

[00:26:20] (AD BREAK)

[00:26:20] Minna Song: onetime, uh, somebody made us, uh, they actually, they sent us a termsheet. The valuation was low. This is very, very early on. Um, maybe it was aseries, series B and After they sent us a term sheet, we told them, Hey, thisvaluation is, is quite low compared to what other we're seeing in the market andwhat other investors are offering us. And then they gave me a presentation, um,for about 40 minutes of how they, they value.They determined that valuation and it was sort of based on the profiles of.

[00:26:47] The founders, butthat's a weird thing because I can't change the profile where I, I'm married tomy co-founders. So that was one, one of the things, how married co-founders,um, their, their, the rest of their portfolio. I [00:27:00]don't know. It was the age of us and we were pretty young founders, so it wasjust a kind of a bizarre thing 'cause it wasn't something I could reallycontrol.

[00:27:08] Um, but, you know,that was their side of the story, so, uh, so if they wanted to share that, fairenough.

[00:27:14] Jason Yeh: All right. Great example of, I'mglad you told that story too. Just great example of like. The weirdest thingshappen. This is not a science and like you can't, you can't fix it the way youcan fix other processes. And

[00:27:27] Minna Song: Yeah, I mean, that's not anexecution thing. That's like, I'm not gonnabecome older or I'm not gonna, you know, uh, find a new co-founder. Right? So,hey, I mean, I was 40 minutes, I was really thinking I could get, do some workand, but, um, but it was, it was interesting.

[00:27:29] Jason Yeh: what about on the. What about on the more positive side ofthings? Obviously fundraising is one of those things where even if you spend,like you said, two weeks on it, it just feels like a waste of time. It justfeels like you're not focused on the thing you should be focused on. any memoriesof like it getting done where you're like, ah, like do you celebrate afterthese rounds?

[00:27:48] Are you able tolike, take a step back and kind of appreciate that marker? Obviously who know,like, know that fundraising isn't a celebr, isn't. You know, you're not tryingto get there. [00:28:00] But, um, do you haveany positive memories from, from finishing out, especially this past, like,honestly monumental fundraise $250 million led by Andreessen.

[00:28:08] Minna Song: Yeah, we, uh, we do celebrate. Weactually have a tradition that we as a company go to the Cheesecake Factory. Soit's a little weird of a tradition, but, uh, we started at our seed round andwe did it every, we were just three people then, but we've done it every roundsince. And, you know, we were, uh, probably 300 people when we closed our, orclose to 300 people when we closed our series E.

[00:28:32] Uh.

[00:28:32] Jason Yeh: Square? Are are you in TimesSquare.

[00:28:34] Minna Song: No, they don't have a CheesecakeFactory in Times Square. They have one in Jersey City and they have one in likedeep Queens. And so we've gone to, we'vegone to both of those and, uh, it's hard because they really don't let you rentout the restaurant. It's just not their, their policy. But, um, But we, we ended up like convincing them torent us out, most of the restaurants last round because we really just took theentire place over.

[00:28:56] so we, we didn'tknow if we could actually accomplish it and we're like, oh, maybe we [00:29:00] can get cheesecake delivered, but it justwouldn't have been the same. So fortunately we kept up the tradition andhonestly, cheesecake Factory, we, they should have sponsored us.

[00:29:10] Jason Yeh: That's, we're this to them. thelast thing I wanna ask is like, I love your background. I love the things thatyou've learned and, and been able to accomplish here. Um. So I always likeasking people based on your experiences and the things that you, you've gonethrough, is there any sort of advice that you like giving founders, um,especially when it comes to fundraising, but in company building overall?

[00:29:34] Is there somethingthat you're like, man, I, I just wish people had told me this before I gotstarted. I.

[00:29:38] Minna Song: so. This is more of a personalthing. Um, I don't know if this is really relevant to most founders I've spokento, but, but maybe it will resonate with somebody. When I was, when we werestarting the company, you know, we were both software engineers and we starteda company because.

[00:29:57] We wanted to bring aproduct into the world that changes [00:30:00]how things are done. I didn't start the company thinking, oh, this is going tobe a big company and I'm going to lead people someday. So I, I don't know if I,if I would've been turned off by that, that concept, but, um, I don't think Iwould, was naturally like.

[00:30:16] The desire was tolead 300, you know, a company of 300 people. But I've learned it over time andhave done it in my sort of own way, which maybe doesn't match the sort oftraditional, charismatic, people leader that, uh, you see on, on, on tv ormaybe the ones that are really great at fundraising and love doing that.

[00:30:34] Um, so I don't know.It, it's been an interesting learning of like what it, what it means to leadpeople. And I think it actually isn't the same. I don't think it's for, for usit's not, you know, being a motivational speaker. It's, it's, you know, being, uh, The one responsible for the success of thecompany and for, for all of the employees livelihoods and all the money, the,you know, over 400 million that people have invested in us.

[00:30:59] And even [00:31:00] more than all of those things beingresponsible for our customers' businesses and for the future of the housing andthe, the future of the healthcare market. Um, That'swhere I've sort of worked on being a leader, uh, in, so, I think other things,I mean, when it comes to fundraising, I think ifyou're not natural at, you know, if you're, if it's not a naturalability for, you get a lot of help because some people are just phenomenal atputting pitch decks together.

[00:31:26] And, you don't haveto do that all alone. It's. You know, plenty of people will go and listen toyou for three minutes and rewrite everything that you've done. So that wasreally helpful. so I've, uh, I know Adam Newman, who's a phenomenal speaker,obviously, I was talking to him about our company and.

[00:31:48] He asked me to pitchhim. It was a sort of an elevator pitch, and then he pitched it back to me and,uh, it was, it was. It was just jaw.I was, my jaw was dropped and I was like, you have, you have pitched in like [00:32:00] three seconds better than I have everpitched in my whole life. And there's just, there's people that are like that,that can, can really help you form a story.

[00:32:08] 'cause especially Ithink engineering founders, I, I don't think in stories, right? I think in verylogical it wor this works, this doesn't, here are our problems. You know? I amjust so in the weeds of the business that sometimes I, it, it is, it is completelydifferent to be outside of that and how do you communicate that story tosomebody else, um, in a really quick, quick fashion.

[00:32:31] So I just, yeah, I'dprobably just get, get help. It would be my, my biggest thing.

[00:32:36] Jason Yeh: Those are, I mean, especially formaybe your peers or people that grow up with a more engineering mindset or, orare the technical leaders of their companies. both of those pieces of adviceare great as like. I think a lot of people don't realize that even, even whenyou get to like 10 people, so much of building a company is, is leading peopleand, and, and being responsible for [00:33:00]them.

[00:33:00] Which earlier,earlier parts of our conversation show that you're really focused on that,which is amazing and I do love this idea that. You don't have to do it byyourself. Like you don't have to like muscle through and solve the problemsalways. There are gonna be people better than you at certain things, especiallywhen it comes potentially to storytelling and fundraising. and so hearingsomeone capable as you, who I'm sure solves problems in their sleep, say that,there are things that I'm not great at and I was able to get, you know, bits ofhelp here and there to short circuit the process. It's, it's great pieces ofadvice.

[00:33:33] Minna Song: And there are actually, there arenot many areas of your company that you can get help on because, so forexample, I believe that consulting often fails because, you know, I think a lotof people believe this because really you need somebody in the weeds of yourbusiness, but actually for pitching, that's exactly what you don't need all thetime.

[00:33:51] Right. Because youneed somebody who can step away and say, here's how I'm hearing this, assomebody who's brand new to your business. So it's actually [00:34:00] probably one of the areas where it'seasiest to find help. So that's another consideration.

[00:34:05] Jason Yeh: Amazing. Well, I'll, I'll leave youhere and say like, this has been one, an amazing conversation. Two, like verycool to pull back the, the curtain on seemed to be like a wave ahead of itstime startup, uh, that now just like leading the industry for housing providersand now more recently healthcare providers.

[00:34:24] So able to help.Multifamily single family management, but also healthcare providers is, is likea very cool vision of the world.

[00:34:33] ​

[00:34:33] Jason Yeh: That was my interview with Minongco-founder and CEO of EliseAI, the leading provider of conversational AI andautomation platforms for the real estate and healthcare industries. When we come back, I'm gonna talk a little banana. Bananaup next. Banana up. Next banana. Up Next, I'm going to do banana.

[00:34:44] Up next I'm gonna debrief everything I heard banana. Upnext I'm going to debrief the most interesting parts of this story, the thingsthat I think shouldn't be banana up next banana. Up. Next, I'm going to debriefsome of the more interesting tidbits that you might have overlooked. Banana. Upnext I'm going to debrief some of the more in banana.

[00:34:44] Banana

[00:34:44] I banana Up. Next I'm going to debrief some of the moreinteresting and insightful tidbits that you might have overlooked in thisepisode.

[00:34:44] Banana. Up next in the debrief, I'm going to banana,banana up next. In the debrief, I'm going to pull apart some of the moreinsightful details that you might have overlooked in the interview. Banana upnext. Banana up. Next banana up next. And after the break, banana up. Next I'mgoing to debrief B banana up next in the debrief banana.

[00:34:44] Up next in the funded debrief, I'm gonna pull apart someof the details that you might have overlooked that I think are extremelyinsightful.

[00:34:44] Banana up next in the debrief banana. Up next in thedebrief, I'm gonna pull apart some of the more insightful parts of thisinterview that you might have overlooked.

[00:34:44] Banana. Banana. When we come back for the debrief, I'mgonna pull apart some of the more insightful details that you might have.Banana. Banana. When we come back for the debrief, I'm gonna pull apart some ofthe more insightful details of this interview that you might overlooked.Banana. Banana. When we come back for the debrief, I'm going to pull apart someof the more insightful details of this interview that you might over Banana.

[00:34:44] Banana when we come back for the debrief. Banana,when we come back for the debrief, I'm gonna pull apart some of the moreinsightful details of this interview that you might've overlooked.

[00:34:51]

[00:34:52] Jason Yeh: The founders I see that do best incompany building and fundraising have a secret weapon. Their secret weapon is acommunity of people, [00:35:00] of experts, ofpeers in the startup industry that they can ask for help from at any time,guide them through processes like fundraising. I wanted to make that easier foreveryone else to have access to by building the adamant fundraising program andcommunity.

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[00:35:52] Jason Yeh: All right, in today's debrief forthis episode with Minna Song, I'm going to break things down that I wrote downas I was talking to Minna, [00:36:00] uh, bymyself. A lot of times I like bringing my producer on to chop it up and askquestions from the beginner's mindset from someone who's outside of venturecapital and startups.

[00:36:10] But I thought thisepisode was really insightful. Wanted to focus on a couple details that I thinkwill be really valuable to pull apart for anyone listening. So have my noteshere. Uh, the first thing that. We didn't dive into fully and, and, um, it's probablymaybe not uncomfortable, but just annoying to even talk about.

[00:36:28] But we touched alittle bit on her early round and her early round. She mentioned she, shebriefly mentioned she didn't get an amazing valuation. Um, the lead investor,there was an angel network called Golden Seeds. Golden Seeds focuses from theirwebsite, it says they focus on. Female founders, they have different locationsaround the country.

[00:36:51] Um, it can be veryhard to get people excited about your idea early on, especially when whatyou're doing is isn't in the [00:37:00]zeitgeist and possibly you don't fit the profile of what everyone wants toback. And in this case, she was doing conversational AI before AI was really athing that people thought was accessible.

[00:37:12] They more used theterm machine learning, which I think she used in her description. But, uh,conversational AI didn't make sense. They didn't think, uh, this is a bigenough market they didn't think people would buy. And to be honest, uh, shedidn't fit the profile of the type of founder that would get this done.

[00:37:31] Um. When you buildenterprise SaaS companies, you gotta be great at sales. You have to have asales, uh, personality. Maybe, um,you could probably tell in the interview that Mina is a soft spoken woman who,who doesn't give off that hard charging sales vibe. She's also married to herco-founder, which for some people.

[00:37:52] It can be a red flagor something that they just don't like backing because there are stories aboutthis. I'll, I'll tell you a quick side story though. In the firm that I was [00:38:00] at Greycroft, uh, we had a, a massive win early on in the firm's, uh, life side. Um,early on in the life of the, the fund, uh, backing a husband and wife team, thefounders of Buddy Media, uh, Mike Laro, um,and.

[00:38:14] That became apattern that great craft was completely comfortable with. It's, it's, if thedynamics are right, then that can go really, really well. But if you arepitching and early on and, and people don't think you're sexy, you might nothave a lot of options and you might have to go with. And, um, a firm that not a lot of people know about, youmight not have a com have a competitive dynamic, and you might have to raisemoney at a lower valuation, which is what happened with Minong.

[00:38:42] And so my, my onetakeaway from that is, um, try to begreat at telling the story. Um, tryto be great at making people attach in their mind why you're gonna be able toget this done and run a process so that you can have a more competitivedynamic. Um. Not saying that thoseare the [00:39:00] things that could have savedMinna from a low valuation early on, but I, I,I, I assume that some of those things were holding her back andit's, it's hard to hear and unfortunate, but of course she's doing great now,which I'm excited to hear.

[00:39:13] Um, next, I, I think one of the comments thatwe briefly touched on was. Uh, she was surprised that fundraising wasn't sales,even though I thought, oh, she was like enjoying sales. She, she kind of said,no, I didn't really enjoy sales, but sales feels much more like a scientific.Mathematical problem that you can break down as in, you know that you have asolution for their problem.

[00:39:39] And so every saleshould go through as long as you execute the sales process the right way. It'slike she's like, it frustrated her that she couldn't retro, as in do aretrospective and see what went wrong during a sales call, see what went wrongduring a fundraising call in order to fix the communication along the way.

[00:39:58] Some of that, that some of that just isn't [00:40:00] fixable. At least from that discreet,measurable, uh, way that sales is, is like, oh, they brought up this objection.I didn't have a response to that. In some ways it's did the story capture them?Did you deliver it in a way, uh, that made them lean in? Was this VC actuallyjust interested?

[00:40:21] Was the VC having abad day? Or you know, were they excited? Were they not excited? Do you have aprocess running? A lot of these much more subjective elements, storytellingelements, softer elements that make it. A closecousin that make fundraising a close cousin to sales, but notexactly the same. And so I thought it was a, a really important thing to callout because a lot of people who are experienced in sales or understand thatprocess might come over to fundraising and expect it to be a one-to-one match,something that they could just brute force over power, analyze, and get right.

[00:40:54] And it's not exactlythat. And I think the, the extension room there that I thought [00:41:00] was, was also an amazing thing to call outin the debrief was she's extremely capable. She knows how to do certain thingsand obviously she can learn how to do almost anything. And yet at some pointshe's like, I learned how to do sales.

[00:41:14] I got good at sales,I got good at leading sales. Um, butwhen it came to fundraising, she was like, you know what? Turns out, likestories are important, I don't think in stories. And so getting someone whoknows how to do that better was an, an extremely, uh, effective use ofresources and time saving on her part.

[00:41:34] And so, whether it'sfundraising or something else in your business that, you know, um. Someone could do it better, someone canteach you how to do it better. I'd highly recommend you, you look, look forhelp around that. Um, in, in thiscase, I, I also agree that fundraising is one of those things where veryspecialized people can help you with decks.

[00:41:53] Very specializedpeople can help you with strategy. Very specialized people can help you thinkin stories that might be more compelling. [00:42:00]And the last thing that I'll include in this debrief, um, I just thought was avery cool reframe of something that's common. And we were talking a little bitabout, okay, she's pushing her company for the, the fundraising is coming, thecapitals flowing.

[00:42:17] People are, um,preempting her rounds. And when she thinks about like what is right and whatshould she do in terms of setting valuation, negotiating the right way. Shesaid, well, look, I, I really want to think what's best for my employees,right? Um, and that means looking ata valuation that will help employees join, um, have options that are priced ina way where there is still upside, where that she can keep growing and that shecan make that meaningful for her employees.

[00:42:48] This is no differentthan in terms of the output and what she has to do. This is no different thanwhat. Founders think about when they're like, well, I wanna make the mostmoney, or I want [00:43:00] minimize delusion,or I wanna do right by my investors. I need to do these things, uh,functionally, a lot of the things come out the other end the same way, but Ijust love that she's like, well, I don't wanna push it too high because I wantto make sure that my employees are taken care of.

[00:43:14] I want to make surethat I can get a step up in the next round so that my. Employees who gotoptions before. See that step up. See, see the momentum. I don't want toovervalue so that we can get to a great IPO or we can get to a great exit thatgets everybody, um, money from theoptions that they have. I think it's just a great way to approach buildingcompanies.

[00:43:35] Great, great way tobuild a team and great way to push everyone in the same direction. Rowing theboat. Altogether, um, something that I think more founders could, uh, take noteof and follow. So, really appreciated that concept from Minna. Really, reallyappreciated her time. I thought this was a great episode and, and really justan amazing story.

[00:43:57] that's the debrief.

[00:43:59] Thanks [00:44:00] so much for listening. If you have anyquestions about today's show or maybe you're raising capital yourself and wanthelp problem solving, you can find me on social. I am at ja, that's J-A-Y-Y-E-Hon almost any social platform, and you can email me at jason@fundedpod.com.

[00:44:17] I also have anewsletter where I share tips, strategies, tactics around fundraising. You canfind that and all the other ways that I support founders in their work tofundraise more effectively and efficiently at my website. That's A DMN t.com.Short for adamant. You can find me there and figure out if there's anythingthat I can help you with.

[00:44:39] This episode wasproduced by Sam Cunningham. Thanks also to Abby Garcia from Adamant and thanksto our amazing guest Minna song for sharing such an amazing story with Eliseai. And one last thanks to our great sponsor, Gunderson Detmer, the leading lawfirm focused on startups and venture capital.

[00:44:58]

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