WEBVTT - How the venture studio model is changing the game 0:00:00.160 --> 0:00:02.680 This week on the Business of Tech powered by two 0:00:02.759 --> 0:00:05.600 Degrees Business the rise of the venture studio. 0:00:05.920 --> 0:00:08.760 Here we've counted at least a dozen New Zealand companies 0:00:08.800 --> 0:00:13.200 pursuing this relatively new model, or new for New Zealand anyway, 0:00:13.200 --> 0:00:16.120 This sort of model of creating and funding startups called 0:00:16.120 --> 0:00:20.439 the venture studio. Unlike venture capital firmed, venture studios play 0:00:20.480 --> 0:00:23.520 a much more hands on role in the entire life 0:00:23.520 --> 0:00:26.920 cycle off a startup, from ideation to execution. 0:00:27.400 --> 0:00:30.760 We talk to the co founders of Auckland based venture 0:00:30.800 --> 0:00:34.360 studio Rift about its approach to operating a venture studio, 0:00:34.640 --> 0:00:37.520 with a particular focus on artificial intelligence. 0:00:38.280 --> 0:00:40.680 So we have all the ingredients, all those assets that 0:00:40.720 --> 0:00:43.600 you need to bring together, and then it's about taking 0:00:44.000 --> 0:00:48.360 what can feel a bit boring, sometimes a formulaic approach, 0:00:49.360 --> 0:00:52.480 and yet a lot of the times you can identify 0:00:52.479 --> 0:00:56.200 great opportunities, assemble the team, assemble the financing and then 0:00:56.240 --> 0:00:57.040 go and tackle it. 0:00:57.800 --> 0:01:00.440 I'm Peter Griffin, I'm Ben More and a look at 0:01:00.480 --> 0:01:03.320 the venture studio model of building startups coming up with 0:01:03.400 --> 0:01:06.959 two of Rift's co founders, Lucas Coelo and Chris Moore. 0:01:07.480 --> 0:01:11.520 But first, then the first half results of interdex listed 0:01:11.640 --> 0:01:17.840 spark are announced Tomorrow, that's Friday, they'll release their financial update. 0:01:18.400 --> 0:01:21.600 Sparks had a pretty rough run in the last year 0:01:21.680 --> 0:01:24.800 or so, a sagging sheer price, major cost cutting going on, 0:01:25.880 --> 0:01:28.840 a number of senior people have gone from the organization, 0:01:29.040 --> 0:01:32.200 and a move to divers parts of the business. What 0:01:32.240 --> 0:01:34.160 are you expecting to see tomorrow? 0:01:34.800 --> 0:01:37.280 What I'm expecting is an update, first of all on 0:01:37.480 --> 0:01:41.640 the restructuring. So that's something they promised at their and 0:01:41.760 --> 0:01:44.240 your general meeting last year, was that they would release 0:01:44.319 --> 0:01:48.640 more details on the restructuring, including kind of how it's 0:01:48.680 --> 0:01:52.160 going so far, what they've managed to save. You may 0:01:52.160 --> 0:01:55.800 recall their goal was to say fifty million on labor costs, 0:01:55.800 --> 0:01:58.680 which is about ten percent of their total labor spend. 0:01:59.680 --> 0:02:03.560 It was recently came out that they were cutting their 0:02:03.840 --> 0:02:06.840 management staff as part of that restructure, and how they're 0:02:06.920 --> 0:02:12.400 changing the portfolios that different managers look after, so probably 0:02:12.440 --> 0:02:16.440 a reasonable chunk there as well. So that's what they 0:02:16.440 --> 0:02:18.880 have said is that there will be more information about 0:02:18.880 --> 0:02:24.680 the restructuring at this update, but they've been pretty reticent 0:02:24.720 --> 0:02:30.120 about giving too much detail anyway, so very curious to 0:02:30.120 --> 0:02:33.840 see exactly what they do release and what they don't 0:02:34.320 --> 0:02:38.040 about that situation. So that's kind of the main thing 0:02:38.080 --> 0:02:39.960 I think most people are on tender hooks about. 0:02:40.440 --> 0:02:43.560 Yeah, they sort of foreshadowed this last year. They reduced 0:02:43.560 --> 0:02:50.160 their ebit dye guidance somewhat not a huge hit, but 0:02:50.280 --> 0:02:54.760 that's down. They reduced their dividend guidance to twenty five 0:02:54.840 --> 0:02:58.680 cents per share from twenty seven point five cents, so 0:02:58.720 --> 0:03:03.560 they're basically softening up the market for lower expectations, and 0:03:03.880 --> 0:03:05.679 you know that's been reflected in the share price. I 0:03:05.680 --> 0:03:08.519 think it's down like thirty six percent of something over 0:03:08.520 --> 0:03:14.400 the last year, even including dividends, so it's it's been tough. 0:03:14.440 --> 0:03:17.400 And then there was all angst about them being delisted 0:03:17.400 --> 0:03:21.360 from that big sort of index Overseas, and I was 0:03:21.400 --> 0:03:23.840 expecting a big dip after that, but that was clearly 0:03:23.880 --> 0:03:28.079 sort of priced into it beforehand, so that didn't really 0:03:28.120 --> 0:03:30.080 take a massive hit. But still, you know, this is 0:03:30.480 --> 0:03:33.440 a company that still has a big market shriff to 0:03:33.440 --> 0:03:38.400 telecommunications industry, you know, forty something percent of mobile and 0:03:39.280 --> 0:03:42.920 fixed line broadband, so it is you know, still you know, 0:03:43.480 --> 0:03:46.920 the big player along with one end Z in that market, 0:03:47.000 --> 0:03:51.280 but sort of really facing a bit of an existential crisis. 0:03:51.040 --> 0:03:56.040 Absolutely, especially in like broadband and mobile as well. Two 0:03:56.040 --> 0:03:58.800 Degrees nipping at their heels along with some of the 0:03:59.000 --> 0:04:03.800 Mbenno operator that are starting to collectively take share away 0:04:04.120 --> 0:04:06.560 as they kind of use broadband as a lost leader 0:04:06.600 --> 0:04:09.720 to get people onto their other services. So yeah, that's 0:04:09.800 --> 0:04:14.280 an area where they're struggling. Interestingly, on their share price, 0:04:14.680 --> 0:04:17.040 analysts are kind of a little bit mixed at the moment, 0:04:17.120 --> 0:04:20.640 with some saying, you know, still not worth buying at 0:04:20.680 --> 0:04:23.839 this point. Others are saying, look, this is actually a 0:04:23.880 --> 0:04:27.000 depressed price for Spark. It's likely to go up in 0:04:27.080 --> 0:04:29.039 the future. Now might be a good time to buy. 0:04:30.400 --> 0:04:33.440 What to me that says is that there is a 0:04:33.480 --> 0:04:36.720 little bit of uncertainty about what's actually going to come 0:04:36.880 --> 0:04:39.640 for Spark, that there's obviously going to be a huge 0:04:39.720 --> 0:04:43.400 effort from Spark to reassess their position, try and capture 0:04:43.400 --> 0:04:46.280 back some of their core market and also try and 0:04:46.320 --> 0:04:49.960 capture new market with data centers. That's been a big discussion, 0:04:50.120 --> 0:04:52.080 so I expect we'll probably hear a bit more about 0:04:52.120 --> 0:04:55.479 their data center strategy as well, including some efforts to 0:04:55.960 --> 0:05:00.200 raise capital to co fund development of new data center. 0:05:00.320 --> 0:05:04.560 Yeah, it's been reviewing it's non core assets. So it 0:05:04.640 --> 0:05:08.360 still owns a bit of Connects, the mobile tower business, 0:05:08.880 --> 0:05:12.719 so it might divest the rest of that. And it's 0:05:12.760 --> 0:05:15.320 got quite a big IT division as well, and a 0:05:15.360 --> 0:05:20.200 few sort of units there, health, sort of tech unit, IoT, 0:05:20.320 --> 0:05:25.599 interneted things business, it's curious data business. So do you 0:05:25.640 --> 0:05:29.840 think there may be moves signal to carve off some 0:05:29.880 --> 0:05:30.960 of these units. 0:05:31.160 --> 0:05:34.880 Yeah, we know Connectsha, they're staking Connection, they're looking to sell, 0:05:35.080 --> 0:05:40.599 so that's a definite. They haven't really said yes or 0:05:40.640 --> 0:05:43.159 no on some of the other areas, but I know 0:05:43.240 --> 0:05:47.200 there is definitely some rumblings about what they're planning to 0:05:47.360 --> 0:05:51.719 actually divest. We might hear more about that at this update. 0:05:52.360 --> 0:05:55.599 They might not update on that, because sometimes what will 0:05:55.600 --> 0:05:59.279 happen is they will just get their earnings out of 0:05:59.320 --> 0:06:03.880 the way, update on some more of the directly related 0:06:03.880 --> 0:06:06.440 fiscal stuff, and then update later on some of the 0:06:06.480 --> 0:06:10.279 other plans around investment. That is, unless they've already made 0:06:10.480 --> 0:06:14.480 the deals and they're announcing that they have sold x, 0:06:14.600 --> 0:06:17.160 Y or z. That might happen at this earnings. I 0:06:17.200 --> 0:06:19.760 think what's really interesting is if you look at Deleeperfonseca's 0:06:19.760 --> 0:06:23.240 column from last year that was on Business Desk, and 0:06:23.400 --> 0:06:27.880 he talks about Spark trying to kind of figure out 0:06:28.160 --> 0:06:32.800 what it is now. Is it a tech company or 0:06:32.880 --> 0:06:36.920 is it an infrastructure company, because those are two quite 0:06:37.080 --> 0:06:40.520 different things, and how does it balance those in these 0:06:40.560 --> 0:06:44.480 times of difficulty, So well worth a background read if 0:06:44.480 --> 0:06:45.080 you're interested. 0:06:45.360 --> 0:06:48.680 Yeah, and it's interesting that a lot of the restructuring 0:06:48.760 --> 0:06:52.560 is in this sort of enterprise and government sections of 0:06:52.920 --> 0:06:55.839 the business. And on the face of it, it looks like 0:06:55.920 --> 0:07:00.080 Spark had been laying the groundwork for really smart, DIVERSEI 0:07:00.120 --> 0:07:02.760 vacation in recent years, with the likes of Curious, the 0:07:02.880 --> 0:07:05.960 sort of AI and data division. It's got its IT 0:07:07.040 --> 0:07:10.360 division as well, which is doing more sort of cloud 0:07:10.440 --> 0:07:16.160 and digital transformation stuff, so you'd think like and they 0:07:16.160 --> 0:07:19.600 published that report which we had Jolie Hodson on the 0:07:19.760 --> 0:07:24.280 podcast about last year looking at productivity, the productivity gap 0:07:24.320 --> 0:07:28.000 in New Zealand, the need to embrace advanced technology, so 0:07:28.200 --> 0:07:30.600 sort of doing that with a focus on IoT and 0:07:30.680 --> 0:07:33.760 health tech and the like. It just hasn't translated. And 0:07:33.800 --> 0:07:36.120 I don't know if that's a that they got the 0:07:36.160 --> 0:07:40.360 market wrong or if it's a just bad execution, but 0:07:40.880 --> 0:07:44.000 more than any other talco. They were sort of saying, 0:07:44.040 --> 0:07:46.280 we want to be about more than supplying speeds and 0:07:46.320 --> 0:07:50.480 feeds which have low margins. There's lots of competition, we 0:07:50.520 --> 0:07:52.280 want to do more, and they've sort of been not, 0:07:52.480 --> 0:07:55.800 you know, slapped back on that, which is sort of disappointing. 0:07:55.840 --> 0:07:57.800 I don't know if it's them or if it's us. 0:07:58.520 --> 0:08:01.560 Yeah, yeah, it's a big question, I mean, and that's 0:08:01.600 --> 0:08:03.520 that was one of the things that analysts have been 0:08:03.520 --> 0:08:07.600 talking about a lot, is like is this just the 0:08:07.680 --> 0:08:09.760 ups and downs of the macro environment or is this 0:08:09.840 --> 0:08:13.200 a fundamental shift in how things are operating. 0:08:13.440 --> 0:08:16.800 So check out Business Desk on Friday, there'll be full 0:08:16.800 --> 0:08:20.000 coverage off the Spark results. Just before we get into 0:08:20.040 --> 0:08:23.440 our featured interview, an update on last week's story about 0:08:23.560 --> 0:08:27.520 being AI Ben. You went in depth into this listed 0:08:27.920 --> 0:08:31.840 tech company and the travails it's been experiencing. Some really 0:08:31.840 --> 0:08:37.080 interesting discussion resulted from the podcast, including on LinkedIn what 0:08:37.280 --> 0:08:38.359 were people saying. 0:08:38.720 --> 0:08:42.720 So on your posting of that episode. The CEO of 0:08:43.320 --> 0:08:48.320 Callahan Innovation is Stephane Korn. He is an AI expert 0:08:48.400 --> 0:08:52.000 from way back, and he posted talking and specifically about 0:08:52.000 --> 0:08:57.040 their project Treehouse and this idea of APIs as a 0:08:57.080 --> 0:09:01.360 way for AI agents to enter operate, which I I thought, well, 0:09:01.880 --> 0:09:03.600 you know my perspective, I thought, it's a much more 0:09:03.600 --> 0:09:08.760 efficient and effective way for machines to talk to each 0:09:08.800 --> 0:09:12.600 other rather than open Ay's operator approach where it tries 0:09:12.640 --> 0:09:17.280 to navigate websites that are designed for humans. Now, Stephane 0:09:17.320 --> 0:09:20.280 Cortan had an interesting take on that where he basically said, 0:09:20.320 --> 0:09:23.559 one of the reasons that APIs don't really work is 0:09:23.720 --> 0:09:28.040 for competitive reasons, which was something I didn't really think about. 0:09:28.080 --> 0:09:30.000 So what was your take on some of the reasons 0:09:30.000 --> 0:09:30.880 that they might. 0:09:30.720 --> 0:09:34.960 Not Well, sitting behind the website, there's a database, and 0:09:35.040 --> 0:09:37.200 for a travel company, it could be all their dynamic 0:09:37.240 --> 0:09:39.040 pricing and all that sort of thing. So they've got 0:09:39.080 --> 0:09:40.840 to be really careful that they don't give away this 0:09:40.920 --> 0:09:44.199 sort of the secret source to their business model, so 0:09:44.760 --> 0:09:48.160 they hold that information very closely to them. I don't 0:09:48.160 --> 0:09:53.319 think it precludes them from issuing API access. For instance, 0:09:53.520 --> 0:09:57.640 an Uber would really like the idea of being integrated 0:09:57.640 --> 0:10:02.000 into a messaging app if you can pull in information 0:10:02.120 --> 0:10:04.680 from Uber saying there are drivers available, it's only going 0:10:04.720 --> 0:10:08.040 to be five minutes. You know that's possible via an API. 0:10:08.160 --> 0:10:10.120 So I think there's some level that they could do. 0:10:10.200 --> 0:10:13.439 But I think Stephann is right. The reason why we 0:10:13.640 --> 0:10:18.160 just haven't seen open ai really go big on its 0:10:18.400 --> 0:10:21.439 operator platform this is the AI agents it's now building 0:10:21.960 --> 0:10:24.520 with an API sort of ecosystem for that, is that 0:10:24.559 --> 0:10:26.400 a lot of companies are sitting back going do I 0:10:26.440 --> 0:10:29.360 want to give you that level of access? So open 0:10:29.440 --> 0:10:33.120 ai has just forged ahead and they're basically screenscraping all 0:10:33.160 --> 0:10:36.040 of that information off websites. It means they can move fast, 0:10:36.600 --> 0:10:38.920 and they're hoping that everyone will go, I need to 0:10:39.000 --> 0:10:42.560 have operator because it's so good, my customers want it. 0:10:42.679 --> 0:10:45.719 So let's do something a bit more substantial here with 0:10:46.000 --> 0:10:49.560 with APIs. So I think that will come, but there's 0:10:49.600 --> 0:10:53.800 definitely a competitive tension there in giving a lot more 0:10:53.840 --> 0:10:55.679 fundamental access to these websites. 0:10:56.160 --> 0:10:58.760 Yeah, and I think one of the concerns might be 0:10:58.840 --> 0:11:02.760 if you look at how deep Seak used distillation, for example, 0:11:02.800 --> 0:11:06.240 to train its model off open ais model, there's actually 0:11:06.240 --> 0:11:09.800 if you have AI running things really rapidly, and you 0:11:09.840 --> 0:11:13.480 could do a whole bunch of API calls to travel company. 0:11:13.800 --> 0:11:16.760 You could start to see how they're pricing actually works, 0:11:17.200 --> 0:11:20.440 and kind of use AI agents that might not be 0:11:20.600 --> 0:11:24.360 exactly what you might want to be accessing your API. 0:11:24.640 --> 0:11:27.160 So yeah, you know there is a possibility there all 0:11:27.280 --> 0:11:31.360 that could potentially be mitigated through careful you know, management 0:11:31.400 --> 0:11:33.840 of the agents and what they're able to do and 0:11:33.880 --> 0:11:35.640 things like that in the future. But that's why I 0:11:35.720 --> 0:11:38.560 kind of said in the last episode as well. It 0:11:38.600 --> 0:11:40.880 has potential, but there's a lot of things that need 0:11:40.920 --> 0:11:43.720 to fall into place in order to make it work. 0:11:43.920 --> 0:11:47.920 It's not impossible that the network effect might turn out 0:11:48.040 --> 0:11:51.840 to make this API marketplace somewhere that companies need to 0:11:51.840 --> 0:11:55.440 be in order to get their business out there into 0:11:55.480 --> 0:11:59.160 the world. But on the other hand, yeah, there is 0:11:59.240 --> 0:12:01.640 a lot of trains, a lot of changes that will 0:12:01.640 --> 0:12:04.160 need to occur in order for it to find that 0:12:04.200 --> 0:12:06.160 market for Yeah, so we've gone. 0:12:06.040 --> 0:12:10.280 From bigless incumbents like Spike to the earliest stage startups, 0:12:10.600 --> 0:12:13.640 and we're focusing in this episode Ben on the idea 0:12:13.679 --> 0:12:17.520 of a venture studio. I'd heard the concept before, really 0:12:17.520 --> 0:12:20.760 in the Silicon Valley context, but it's the first I 0:12:20.800 --> 0:12:23.840 really heard of a local venture studio. Was the Auckland 0:12:23.840 --> 0:12:28.200 Company previously unavailable. It had some really big success with 0:12:28.280 --> 0:12:32.960 the startup track Suit, which is like a brand tracking startup. 0:12:33.080 --> 0:12:37.240 It raised around twenty two million dollars from venture capital 0:12:37.320 --> 0:12:39.960 firms in early twenty twenty four in a series A 0:12:40.080 --> 0:12:43.959 fundraising round that valued it at over one hundred and 0:12:44.000 --> 0:12:47.040 fifty million dollars. But it started with a small amount 0:12:47.040 --> 0:12:50.240 of seed funding and the expertise of the people at 0:12:50.280 --> 0:12:52.240 previously unavailable. 0:12:52.000 --> 0:12:54.439 And then it turns out a number of local companies 0:12:54.880 --> 0:12:58.320 are now pursuing this model, no surprise after a success 0:12:58.400 --> 0:13:02.400 like that, among them a New and Improved Ventures, super 0:13:02.480 --> 0:13:07.120 Bowld Ministry of Awesome, Paloma Ventures, Edition Group, and Rift, 0:13:07.200 --> 0:13:09.280 who we are talking to on the podcast today. 0:13:10.240 --> 0:13:13.520 The three co founders are familiar with building products and 0:13:13.600 --> 0:13:15.920 have a little cash to play with after they sold 0:13:15.920 --> 0:13:18.240 a pretty successful IT consulting firm. 0:13:18.640 --> 0:13:21.800 That's right. So Chris Moore, Lucas Coelo and Ben morew 0:13:21.960 --> 0:13:25.640 All ran Rome Digital together, which sold for around forty 0:13:25.679 --> 0:13:28.600 five million in twenty twenty one, and after a bit 0:13:28.640 --> 0:13:30.800 of a break, they decided to put their expertise and 0:13:30.960 --> 0:13:34.359 money to use building and seeding companies of their own. 0:13:34.280 --> 0:13:37.800 And so Rift was born. Let's go to Ben's interview 0:13:37.960 --> 0:13:41.480 with Rifts Lucas Coelo and Chris Moore talking about the 0:13:41.559 --> 0:13:45.040 venture studio model, their company Rift and air approach to 0:13:45.080 --> 0:13:47.040 building AI products. 0:13:52.840 --> 0:13:55.440 Hello, and welcome to the Business of Tech. Thank you 0:13:55.480 --> 0:13:58.360 so much for joining us. We're here to talk about 0:13:58.600 --> 0:14:02.120 Rift AI. That's your guy project that you've been working 0:14:02.160 --> 0:14:06.000 on for a while. Now you're out here pushing out 0:14:06.000 --> 0:14:09.440 this studio venture studio model in New Zealand, which is 0:14:09.440 --> 0:14:13.360 a reasonably well known model now internationally and is starting 0:14:13.400 --> 0:14:16.040 to pick up pace in New Zealand as well. So 0:14:16.679 --> 0:14:18.839 why didn't you introduce yourselves to start with? 0:14:19.160 --> 0:14:23.360 Yeah? Cool, Lucas co founded a Rift Ventures before that, 0:14:23.920 --> 0:14:26.680 Ravens in about eight years ago, and before that it 0:14:26.720 --> 0:14:30.160 was heavily involved in the startup scene in Brazil, the 0:14:30.200 --> 0:14:31.720 startup in design and technology. 0:14:31.760 --> 0:14:38.400 Seeing Chris so I was a co founder in Rome Digital, 0:14:38.400 --> 0:14:43.360 which was a product design studio. Actually the missing third 0:14:43.360 --> 0:14:46.080 party here is Ben who's also part of Rift. So 0:14:46.600 --> 0:14:49.480 we've pulled together kind of the same team that we 0:14:49.560 --> 0:14:53.120 had previously. Then we exited that in twenty twenty one 0:14:53.200 --> 0:14:58.480 to a ten billion dollar US listed company, took a 0:14:58.480 --> 0:15:00.560 bit of time off and took a bit of the 0:15:00.600 --> 0:15:03.160 cash and then got the old team back together and 0:15:03.520 --> 0:15:05.480 kicked off rift of the inches go. 0:15:05.760 --> 0:15:08.760 And that story we talked about, we've talked about before. 0:15:08.920 --> 0:15:11.160 I've got a story up on business Desk that listeners 0:15:11.360 --> 0:15:14.160 can read if they want a bit more background. How 0:15:14.200 --> 0:15:16.960 does it work with a venture studio? Are you guys 0:15:17.400 --> 0:15:19.600 developing the products? Are you investing in the products? What 0:15:19.640 --> 0:15:20.440 does it actually mean? 0:15:21.640 --> 0:15:24.160 In summary, there are a couple of entities within sort 0:15:24.160 --> 0:15:26.680 of the studio model. We have the studio itself that 0:15:26.760 --> 0:15:29.200 produces the ideas. So we have a backlog of ideas. 0:15:29.200 --> 0:15:34.000 Were always fishing for ideas, even within our immediate sort 0:15:34.000 --> 0:15:37.640 of team. Our team now it's composed at about eleven people 0:15:38.800 --> 0:15:44.880 with doing engineering, design, growth, marketing, and we always sort 0:15:44.880 --> 0:15:48.320 of have a large backlog of ideas. Ideas are free 0:15:48.440 --> 0:15:50.920 right that we keep adding ideas in there for us 0:15:51.000 --> 0:15:54.080 to take a look at. And one thing that we 0:15:54.160 --> 0:15:55.840 have is kind of like sort of like a playbook 0:15:55.880 --> 0:15:58.520 on a few of the criterias of how we evaluate 0:15:58.600 --> 0:16:01.520 ideas in order to turn them into opportunities, move them 0:16:01.600 --> 0:16:05.920 up onto the pipeline. And that's when we start doing 0:16:05.920 --> 0:16:08.760 a little bit of a desk research, understanding more of 0:16:08.760 --> 0:16:13.160 the vertical that that idea plays in the industry, sort 0:16:13.160 --> 0:16:16.600 of the product can look like, and then we start prototyping, 0:16:16.720 --> 0:16:20.840 testing and see what sort of products or or companies 0:16:20.920 --> 0:16:25.040 Mike can come out of that. So, for example, last 0:16:25.080 --> 0:16:28.760 year our backlog of ideas had about one hundred or 0:16:28.760 --> 0:16:32.320 something ideas. It's ideas that from the time of Rome 0:16:33.440 --> 0:16:37.840 ideas that were sall online from other companies doing in overseas. 0:16:38.520 --> 0:16:42.160 We also did some vertical sort of days or weeks 0:16:42.160 --> 0:16:44.640 that we're going to speak with people within a certain vertical, 0:16:44.760 --> 0:16:47.320 for example health tech to understand sort of their problems 0:16:47.400 --> 0:16:50.360 and what things could we tackle, problems could we solve 0:16:50.400 --> 0:16:53.280 there with with sort of the heavy sort of II mindset. 0:16:55.160 --> 0:16:58.200 And then from quite a few of those we we 0:16:58.280 --> 0:16:59.960 did a first sort of like a hot or no 0:17:01.040 --> 0:17:04.480 quick rating on those ideas, thinking about what is the 0:17:04.520 --> 0:17:07.639 competition locally? Can we build this in New Zealand? Is 0:17:07.720 --> 0:17:09.760 there an entry way here that we can build this 0:17:09.920 --> 0:17:13.720 fast in order to expand with the product later on? 0:17:14.000 --> 0:17:17.320 The future sets are later on, especially because of a 0:17:17.440 --> 0:17:20.080 little limited resource of of inentro studio. Do you want 0:17:20.080 --> 0:17:23.680 to grab something that is too grandios or too expensive 0:17:23.680 --> 0:17:26.600 to bute that requires millions and millions of dollars to 0:17:26.640 --> 0:17:28.360 but so it needs to be something that we can 0:17:28.960 --> 0:17:31.280 uh that can we can buy a big chunk off 0:17:31.600 --> 0:17:36.640 with our with our limited capability at least at the beginning. 0:17:37.640 --> 0:17:40.879 And then from that we tested it about. We prototype 0:17:40.960 --> 0:17:44.000 like design and researched about ten of them a little 0:17:44.000 --> 0:17:47.080 bit deeper, and that resulted into a few of the 0:17:47.080 --> 0:17:50.080 ones that we have today. So after we take the 0:17:50.320 --> 0:17:54.920 products through the through the validation process, and that might 0:17:54.960 --> 0:17:59.640 be do we get customers, do we get some early 0:17:59.680 --> 0:18:04.320 custom there's interest, what is the the is it feasible 0:18:04.320 --> 0:18:08.320 to build? After we do that process, we take them. 0:18:08.400 --> 0:18:12.080 We also have a fund inside Rift, so Riff the 0:18:12.119 --> 0:18:15.399 studio and Rift the fund. So we have our first 0:18:15.400 --> 0:18:19.280 fund called Rift zero. Now where did the first close 0:18:19.359 --> 0:18:24.080 last year? And we take those opportunities into the fund 0:18:24.160 --> 0:18:28.679 evaluate with a pretty brecorous sort of criteria, evaluate like 0:18:28.720 --> 0:18:33.199 if someone pitching to us and if it passes or not. 0:18:33.359 --> 0:18:37.000 We also invest in all those opportunities as well. That's 0:18:37.000 --> 0:18:41.359 why we say that they graduated from the studio and 0:18:41.400 --> 0:18:44.760 we spin them off as portfolio companies instead of being 0:18:44.840 --> 0:18:47.560 just experiments. So it's it's both. 0:18:48.040 --> 0:18:51.560 Yeah, it's it's quite interesting because obviously the traditional startup 0:18:51.600 --> 0:18:54.240 method is you raise a fund and then you go 0:18:54.280 --> 0:18:59.760 and look for talent or startups to invest into. And 0:19:00.040 --> 0:19:03.800 my fund might have a specific focus on a vertical 0:19:04.040 --> 0:19:09.680 or a stage or whatever you like. So how is 0:19:09.720 --> 0:19:14.240 that discussion with kind of LPs to say, not only 0:19:14.240 --> 0:19:16.800 are you trusting us to do what's right with your money, 0:19:16.840 --> 0:19:19.879 you're trusting us to develop the tech that's going to 0:19:20.000 --> 0:19:22.280 bring you the return on investments. So you're starting, you're 0:19:22.320 --> 0:19:24.760 pitching startups, and you're pitching a fund at the same time. 0:19:25.480 --> 0:19:26.960 How does that conversation go. 0:19:28.440 --> 0:19:31.760 Yeah, I mean it's a more complex conversation than a 0:19:31.800 --> 0:19:35.880 standard VC. You know, when a VC is raising funds, 0:19:35.920 --> 0:19:38.440 they just say, look, we're going to invest in these areas. 0:19:38.520 --> 0:19:41.440 We don't know what the companies will be, we believe 0:19:41.440 --> 0:19:44.240 that we'll be able to find them as a studio 0:19:44.280 --> 0:19:47.560 and as a fund. Rift zero also has an investment thesis. 0:19:47.600 --> 0:19:50.520 It has four different areas that it's looking at. We 0:19:50.560 --> 0:19:54.359 are mainly an AI driven fund, looking at how AI 0:19:54.600 --> 0:19:57.919 is used in the companies as well as the products themselves. 0:19:58.359 --> 0:20:01.320 So looking at how we can stretch the But those 0:20:01.320 --> 0:20:06.879 four areas are across productivity, security, compliance, health and finance 0:20:07.800 --> 0:20:11.840 as for getting people to sort of understand like does 0:20:11.960 --> 0:20:15.840 Rift have that capability and skill. You know, we spent 0:20:15.880 --> 0:20:20.560 the last ten years building companies and products for a 0:20:20.600 --> 0:20:24.320 lot of startups and corporates. So we built companies for 0:20:24.640 --> 0:20:28.920 X fifteen, which is CBA's accelerator program. We built them 0:20:28.960 --> 0:20:33.080 for Westpac Ventures, we built them for ASB, B and Z, 0:20:34.400 --> 0:20:38.520 the Warehouse Group, Mercury Energy, sky City. You know, we've 0:20:38.560 --> 0:20:41.440 been doing this type of product building for ten years 0:20:41.600 --> 0:20:44.359 as a group and before that. We also have that 0:20:44.440 --> 0:20:47.399 personal experience of building companies in Silicon Valley and in 0:20:47.440 --> 0:20:53.240 the UK, in South America. You know, for us, the 0:20:53.320 --> 0:20:56.879 building and the technology and all those parts aren't really 0:20:56.960 --> 0:21:01.399 the risk. Adventure Studio is there to de risk things 0:21:01.840 --> 0:21:05.320 around repeatable process which we have from time at Rome 0:21:06.200 --> 0:21:09.560 skilled entrepreneurs that we have within the studio as well 0:21:09.600 --> 0:21:12.760 as within our wider network. You know, we would have 0:21:12.800 --> 0:21:15.600 had about two hundred and fifty employees come through Rome 0:21:15.760 --> 0:21:17.320 at the time when we sold it, we had one 0:21:17.400 --> 0:21:20.879 hundred and fifty, So it's a large network across Australia 0:21:20.880 --> 0:21:25.639 and New Zealand, Singapore as well as reach into the US. 0:21:25.880 --> 0:21:28.280 So we have all the ingredients, all those assets that 0:21:28.320 --> 0:21:31.199 you need to bring together, and then it's about taking 0:21:31.640 --> 0:21:36.000 what can feel a bit boring, sometimes a formulaic approach, 0:21:37.000 --> 0:21:40.080 and yet a lot of the times you can identify 0:21:40.119 --> 0:21:43.760 great opportunities, assemble the team, assemble the financing, and then 0:21:43.840 --> 0:21:46.800 go and tackle it. It's actually more similar to how 0:21:47.480 --> 0:21:52.560 Silicon Valley startups are funded. Someone sees an idea or 0:21:52.560 --> 0:21:56.280 an opportunity, they assemble the team, they assemble the capital, 0:21:56.359 --> 0:21:58.680 and then they go and target and tackle the market. 0:22:00.080 --> 0:22:02.280 In the past have seen a lot of New Zealand startups. 0:22:02.280 --> 0:22:04.479 It's kind of they've been in the market for a while, 0:22:05.400 --> 0:22:07.919 scraping along a little bit of friends and family funding, 0:22:08.040 --> 0:22:10.120 and they just happen to hit an inflection point where 0:22:10.119 --> 0:22:13.960 the market needs the product they have. This style is 0:22:14.320 --> 0:22:17.879 quite different, I mean. 0:22:18.080 --> 0:22:20.919 And that's one of the questions as well that I 0:22:20.960 --> 0:22:24.960 was interested in, which is, you know, you have the capability, 0:22:25.000 --> 0:22:27.800 and you have the processes, and you have the experience 0:22:27.840 --> 0:22:31.080 and the talent, but the X factor, the key thing 0:22:31.280 --> 0:22:34.800 is finding the right place to apply those and that's 0:22:34.800 --> 0:22:37.960 something that's talked about significantly in New Zealand. We have 0:22:38.080 --> 0:22:42.840 limited resources in this country, we have limited capital, and 0:22:42.880 --> 0:22:45.320 so we need to be quite specific about how we 0:22:45.400 --> 0:22:51.080 are targeting our solutions. So how do you think through that? 0:22:52.800 --> 0:22:56.760 Yeah, I think it's the what I was saying before. 0:22:56.960 --> 0:22:59.640 Like when we're looking at the vertical just for example, 0:23:00.359 --> 0:23:03.840 a product that we have like chain, we start thinking 0:23:03.880 --> 0:23:07.080 about the first idea, remember that was there on the 0:23:07.119 --> 0:23:15.040 backlog was AI power job management software tool. There are 0:23:15.080 --> 0:23:17.720 a few of them, a few of them are very successful. 0:23:17.800 --> 0:23:19.919 Every once in a while they get acquired by larger 0:23:19.960 --> 0:23:24.240 companies that which means that sometimes the customer service is 0:23:24.280 --> 0:23:27.639 not what it used to be. And therefore, especially on 0:23:27.800 --> 0:23:30.600 the SMBs, they start looking for all right, so the 0:23:30.640 --> 0:23:32.800 prices went up. What else can I start using it? 0:23:32.800 --> 0:23:36.959 It might be interesting to have something that, especially with 0:23:37.200 --> 0:23:40.560 vertical AI businesses, you're always trying to look into, let's 0:23:40.600 --> 0:23:44.200 look at automating things that they're not properly automated on 0:23:44.640 --> 0:23:47.280 sort of the traditional job management tools, and let's start 0:23:47.960 --> 0:23:51.840