 Welcome to season two of Small Empires in Atlanta. We can edit this. I'm Alexis Ohanian, startup founder and Y Combinator partner. Over the last year, I went on a 200 event book tour and met people building small empires all across North America. Now I'm back with a new season, revisiting some of my favorite stops from the tour. A new startup has three basic choices to get funded. If you have the cash on hand and can create a profitable business, bootstrapping is one option. Bank loans are another popular method, but they require interest payments that can drain your resources. The third option, popular in the tech sector, is taking venture capital. With venture capital, a startup doesn't pay interest, but it exchanges a portion of its company's stock in return for the cash. PartPick, a visual learning startup from Atlanta, is looking to raise its first round of funding, known in the business as a seed round. It will have to court investors and sell them on its potential for explosive growth, because the early stage venture business is based on returning ten times what is invested. We're here in midtown Atlanta, just across the street from Georgia Tech and the Tech Square. I'm very excited because we're going to be visiting a startup in a co-working space that's part of an old hotel called the Biltmore. Now this is an awesome startup called PartPick, which is at a really pivotal moment that most people never get to see. They're right in the middle of raising their seed round of funding. So I was working at a big industrial distributor, and I was doing sales management there. Really shortly into my time working there, I got very frustrated because I had to fill all of the angry phone calls from customers who we'd sent the wrong parts out to. So let's just say you need to fix something. My vacuum cleaning robot? The machine that makes my vacuum cleaning robots? Yes, the machine that makes your vacuum cleaning robots. Let's say you need to fix that. It's broken, it's down, you need to find a replacement part for it. So you call Langmaster Car. You wouldn't have a part number because typically things that are coming off machines don't have anything on them, or it's been rubbed off, maybe older. So you'd have to say, oh, it's silver, it's kind of round. The people on my team would do their best to try to help you. So they would ask you certain questions, try to figure out what category it might be in. They'd use this catalog. I saw this on stage. You were holding this dead tree mass. It looked like a phone book. Yeah, and they literally use it to find things. And this is 2014. Yes, and so I started thinking about, okay, this isn't going to work for me. I'm not going to be able to survive it, so I have to come up with something to make this better. Part Pick is visual search for replacement parts, and we are changing the way the industrial distribution market sells parts. So we're talking about physical widgets, like my widget is broken, I need a new one. I don't know what it is. I'm holding it here. And this is a way to instantly take a photo of it and find out what it is and where to get it. Yes. So how did you get the next piece of motion? You're literally right now across the street from Georgia Tech. Yeah, so I really just started hanging out there. I was studying for the GMAT, and I had a friend who went there and just let me into the library. But then I started seeing these posters around campus for different clubs. Like, if you're interested, come by, different speakers, things like that. And so I started to go to those and talk a little bit about this idea I have. And just enough to get introduced to people who are in computer vision, machine learning, those departments. One introduction after another leads to me meeting my technical team. How did Juul rope you into this? It was actually very easy. Juul and I worked together when we were at Google. We worked on a side hustle, a 20% project, as they call it. And we were extremely successful. We won business awards from Google because of the work that we did. Juul is one of my best friends now, and it's really easy to work with her. And so when she had this idea, we sat down, we talked it through, and it wasn't long before we said that we're just going to solve this problem. All right, let's see this in action. Awesome. This is a thing. Is that the technical thing? I would give you 50 bucks if you were able to tell me what that was. All right. Oh, okay. All right. It's some kind of a button. I don't know. What is it? I guess we'll ask PartPic. Let's find out. So navigate to the PartPic home screen, tap on the icon, get a nice focused picture, confirm the photo. So now it's uploading into our database. You see it's searching. And within a few seconds, right now we're working at between 5 to 10 seconds. Oh, of course, a Toto tank lever. It was on the tip of my tongue, the classic TH559EDV337. I thought it was the 336. I got you. Which is a typical mistake. We allow you to search stores around you. We've partnered with National Builder Supply, so they're the first selection. You choose it, and then it takes you directly to their website, and you can purchase it directly from their site. When this technology is used as an enterprise model, it sends the correct part and other similar parts to that sales rep for them to confirm the purchase and place the correct order. Roughly how long ago did you guys really get started? We really got started actually coming out of an accelerator. Right up in New York. Yeah, so we did NYC seed start. And so over the last year since the accelerator, we've really just been kind of under the radar somewhat. I've done a few competitions to kind of get some money to keep us going, but just really been focused on solving the core problem. There's just so much work that's had to be done over the past year with the technology to get us to a point where we can actually implement with our first customer. Wow. You've been running for the last year based pretty much entirely off the funding you got from that accelerator and then prizes here and there. Well, we actually also got about $100K from two family friends. And then I've taken on jobs, done different things along the way to put more money into the... Sure, but no one's really getting a salary. No one's getting a salary consistently. So yeah, we've kind of had to do what we had to do to keep it going. So, without further ado, the winner of 2014 TechCrunch Disrupt Enterprise Disruptor category from Accenture Open Innovation is... Parkpik. You all had that great outing at TechCrunch. And TechCrunch Disrupt was your first trip to the Valley with the company? Yeah, it was. It was our introduction to Silicon Valley. What was it like? I was really, really nervous going into TechCrunch. I didn't know how we would be received. We're coming as a team that looks quite different than most of the teams of people that are attending TechCrunch have probably seen before, so that's one thing. And then coming with a solution for an industry that most people haven't even thought to come up with a solution for. Everyone's trying to make the next app for sharing cat photos. There you go. So they're not really thinking about repair. So, you know, I really did not have any clue how we're going to be received. But it turned out amazing. I think it's very clear when people start a company from personal frustration because you can describe the problem and your solution very, very clearly. So that's very nice. We got so much support and people were just rooting for us and saying, you guys did great, love what you're working on, you know, how can we help? So it's been pretty cool. So I stayed out in California about a week after TechCrunch to take meetings. So we were able to secure probably about 15 meetings while we were out there. Fundraising is such a waste of time, right? Meeting with investors is not doing the most important thing for your business. That's actually running your business. But it's a kind of necessary evil. And it can feel like Groundhog Day because you're answering the same questions over and over again, saying the same things over and over again. But you have to do it with the same energy and conviction every time because the investor needs to believe in you. And founders are going to hear no more often than yes. But it could be a matter of tens of meetings with angel investors or I've seen as many as over 100 before a round gets done. We're in a nondescript office park about 20 minutes outside of Atlanta. We're visiting National Builders Supply, which is going to be the first pilot customer of PartPick. And I hear there are a lot of toilets inside. Every toilet should have remote control. Wow, nice warehouse. This is it, this is home. This is Kevin. Hi, Kevin. I probably talk to Kevin more than I talk to my wife. Were you guys back in kindergarten, were you all scheming this whole empire? I would have schemed a different empire. I'm very familiar with Toto Toilets. I've got a couple. Very big fan. Ten years ago, we would literally drive down to the factory and if somebody bought one online, we would go pick it up and then drive it back in my Toyota Tundra and put it on a pallet or put it in a box and ship it out. It was the definition of just in time. So a few toilets and your Toyota Tundra has become all of this, right? Our business traditionally was much easier because people would type in brand names that they recognized. Growey, Hans Growey, American Standard. And they would type in the Sweet, the Toto Drake. And you could take them from this manufacturer-Sweet-species relationship and introduce them to a result set that had context to what they were looking for. Now that we're expanding our product line into industrial supplies and rough plumbing, the search terms are much more ambiguous. They're not branded at all. So I'm at home, something's broken. If you're at the house... Let's pretend I'm handy and I'm trying to fix this myself. Sure. So this is broken. It is a copper macaroni? Yeah. Is that the technical name? Yeah. They call it a Copper 90. But if my mom would not call that a Copper 90, then I don't... She'd probably call it a Copper Macaroni. So that's what's changed the game for us. We have to figure out how to take these physical attributes and put them into some type of schema or hierarchy that our web catalog will understand. And this is where PartPick comes in. That's where PartPick comes in. Clearly, I mean, it seems like something software or technology should be good at solving. But how did you get involved with PartPick? With 10 years of search term analysis under my belt, I knew that it was going to be a bear, right? And knew that current technologies within text analysis just weren't going to work. Met Jewel at Georgia Tech. She showed up at one of the events that we were talking about, e-commerce and digital marketing. She was like, hey, I used to work at McMaster Car. I had this idea whenever I was in the call center. I was like, look, that's exactly what our situation is. And so whenever Jewel said, hey, if I have an image, I could figure out how to model it. I was like, well, I have the products and I have the search terms, and I can introduce those to the person that is looking for an item if you could help service that translation layer. And if Jewel's willing to step out, we're going to give her the room to let the market decide if what she's building has utility. So now this is officially fundraising mode? This is, yes. You've been traveling a lot lately, going to different cities. I actually spent a couple days in D.C. and then went up to New York and just got back from New York. We've had a few follow-up meetings with some firms that we're really hoping invest. We've had a few commitments for folks who want to join but just don't want to lead the round. Those are the worst. Those are the worst. You know what that is? We're real talking now. Those are investors who lack conviction. I could use another word, but it's so incredibly frustrating as a founder because it's like if you believe in me now, what should it matter? You shouldn't need to wait. And it's the classic because they're the same investors who are like, I'm not a herd investor. No, I don't. But it's infuriating as a founder. Anybody who knows the visual recognition industry, this is a truly difficult problem to solve. This won't be solved with $130,000 from friends and family around. This issue takes true investment. Where is the biggest pushback coming from? Yeah, so I'd say the most common thing I've heard is we like to see paying customers. But even to get started with a large corporation like the ones who are coming to us requires a team that's being paid. It requires a lot. So that's the message I'm trying to get across to investors is just like, when these large companies come on board, we have to be able to support what they're asking for. And with me here and other people in different places, it's kind of impossible to be able to say, okay, Home Depot, we can have this huge operation ready to serve you. You know what I mean? Another thing is just location. We are headquartered out of Atlanta. We're proud to call Atlanta home. But when we talk with investors, we oftentimes get the question, are you going to be headquartered in Atlanta? Will you move out to Silicon Valley? The idea that a startup needs to be close to an angel investor is kind of ridiculous. A startup needs to be wherever it will be most successful. It's smothering to think of an investor who wants to be really close to you in order to have weekly meetings. No, no, no, no, no. I mean, most investors actually think that they're smarter and more helpful than they actually are. If you're in manufacturing and you're doing a lot of sales with manufacturing companies that right now aren't scaling because you have to do them in need space, be close to those manufacturing companies. There is a huge, a major world-class tech university, a bunch of actually great schools in the area, a city with massive, massive companies, right? There are wealthy people here. There are investors here. What's it like trying to fundraise here in Atlanta? It's hard. It's hard. And, you know, ideally we'd be able to be based in Atlanta, be funded in Atlanta, use Atlanta resources. You know, because most of our team is actually from Atlanta, we have a lot of ties to the city. And so that would mean a lot to us if we were able to come from Atlanta, be based in Atlanta, all that great stuff. But it's just not really the way it's worked out. Because Atlanta has seen successes in certain industries, so like information security, email marketing, so like Pardot. What I'm seeing is that investors will invest if you have information security startup, but for something like us, it's a little bit, you know. Why haven't you relocated the company? That's a question that we get all the time, that we've been getting over the last couple of weeks since TechCrunch is, why are you based in Atlanta? Why do you have loyalty to Atlanta and it seems like Atlanta isn't being as loyal to you? And that's a great question. Honestly, you know, yeah, that's a hard one. [♪ music playing and Industrial distribution really centers out of, you know, the South, the Midwest, a bit in the East Coast. So we have access to our clients. Home Depot is headquartered in Atlanta. Delta is headquartered in Atlanta. And our first client, our first pilot customer is headquartered in Atlanta. And there's a number of others that we've been in conversations with over the past few weeks that have offices or innovation labs in Atlanta. We've already started to generate a good strong pipeline of talent from Georgia Tech. Georgia Tech is arguably the best signal processing engineering school in the world. And we've been able to secure top talent from Georgia Tech, and we would like to continue investigating what that relationship could look like as we continue to recruit and build out our team. So Silicon Valley investors, what do they risk by sleeping on secondary markets like Atlanta? You go into an investor meeting and one of the first things they love to say is that we don't invest in the product. We don't invest in the technology. We invest in the people. And we're really looking for smart people. Smart people live everywhere. You know, smart people don't just live in Silicon Valley. Smart people don't just live in New York. But smart people live everywhere. And hungry people live everywhere. So if you're really truly dedicated to the value of a person and to that talent, then you should look elsewhere and find ways of bringing out that hunger and that entrepreneurial spirit in places where there's not a big tech community. In our own very small way, we're just mimicking the model that was established 20 years ago whenever we test PartPick. Quickly get it out there. See what works. If it works, float it to the top. Help tell other people that it's working. Get the resource investments, both human resource and capital resource, involved to let it rise to the top and then be a reference point, a testimonial to make it easier to sell to the next guy. That system, everyone is on board with. Right now, I honestly, I do not sleep much. And people say that like, oh, I'm grinding and I'm not sleeping. No, really. I'm holding down a lot right now. How many hours are you sleeping a night? It's hard for me to sleep. Even if I, if like, okay, I've accomplished all the tasks I need to for today, it's just like impossible to rest well. It's hard because I feel pressure because it's like this is my big vision and I really want to see it come to light. But now that I've brought other people on too, and this is now our big vision and everyone wants to see it come to light. And it's not just me. I feel obligated to my family, my little brothers, for example. They think that to be successful, they have to become really good at sports or they want to become a doctor because that's success. But they don't see actually how does it look to go from, oh, I just came up with this idea and now we have hired 100 people and now 100 people can feed their families. As their big sister, I want to be the person who can be kind of that role model for them. There is something a little, I don't know, unconventional about starting a company and especially the role model that you can play not just for your siblings, but frankly for a lot of people, right? Because you said earlier, you don't look like a lot of the people on stage at TechCrunch Disrupt. Yeah. Why is that important to you? I feel that I'm up for the challenge. I can just see it. I can see it, which I think is kind of half the battle. I'm envisioning like this actually can be a billion dollar company. I can see that. We're just at that edge. We're just almost there and we just have to keep going. I feel like there is a million people that think I can't and I've heard probably hundreds of them say it to my face. Really? Yeah. But for every person that has something discouraging to say, there are literally a million people that I do make it that I can be a role model to and that to me is motivation. And there are four little boys that look just like me who I really, really want to show. At the end of the day, it seems like this is everything is here. Everything is in place. All the basics that investors should be looking for are there, right? I mean, what is the thing that drives you? What is the thing that keeps you pushing forward that makes it so clear to me that you're never going to stop? I just really believe in what we're doing and what it can be. I just feel like I haven't done everything yet. I haven't done everything that I can do. I have more things that I can pull out of my bag. You know, I can take out loans. There's more that can be done and I believe in it so much that I will keep pressing until, I don't know what's the breaking point. I don't think you have one. I'm not sure, but there's experiments I want to run. Like sometimes, to be honest, I feel like maybe it's me. Maybe it's like the way I come off to people or maybe my conviction is a little strong for folks. So I think, well, maybe I should just hand it to someone else to pitch it or to go into meetings with. This is not too far down on my list of potential things. And see how it goes with that. Well, I know you're not quitting anytime soon, Jewel. And I'm looking forward to saying 10 years from now at the NASDAQ launch of the IPO that I met her way back when. That would be cool. For all that technology has done to lower the barriers of entry to starting a company, there are still societal and structural barriers that potentially stop us from benefiting from the ideas and the talents of some of the best founders. Fortunately for all of us, there are founders like Jewel who will stop at nothing in order to see their businesses become successful. And she will no doubt inspire many more founders just like her to take up the charge and become entrepreneurs. And look, after spending some time with her and being here in Atlanta, I certainly would not bet against Jewel. And for that matter, I wouldn't bet against Atlanta either. PartPix certainly isn't the first company to help customers replace broken or missing parts. But by taking advantage of our mobile world, PartPix is poised to stand out amongst the competition. By using mobile solutions, small businesses can level the playing field with larger competition. One of the biggest steps is to build a mobile-friendly site. Stick with a simple layout and avoid excess images that slow load times. Another great way to connect with customers on the go is to send text reminders of sales or appointments. Utilizing apps like Foursquare is a great way to promote your business and offer special discounts to customers who check in at your store. And if you're looking to really take advantage of your mobile opportunity, build a mobile app, which can help you deepen relationships with your customers and mobilize the way you do business. For more business advice, visit the AT&T Business Circle. Oh, hallelujah.