January 31, 2023 BACK
This month, after a brief summary of the companies presenting and providing updates on Wednesday, you'll find the story of Cactivate and a profile of a Pasadena Angels member Gene Stein.
Presenting this Month:
Featured in this issue:
Cactivate, thanks to Wantao Xiao
Gene Stein, Pasadena Angels Member
Startups Presenting Wednesday,
COMPANY: Pulp Pantry
Location: Los Angeles, CA
CEO/Founder: Kaitlin Mogentale, CEO (In-Person)
A leading brand in the upcycled food movement, Pulp Pantry turns overlooked resources including odds, ends, stems and pulp of organic produce into wholesome everyday snacks
Location: Richmond, VA
Presenter: Michael Beiro – Founder, CEO
Linebird makes payloads for drones for performing hands-on work on live power lines.
COMPANY: Nested Knowledge
Location St. Paul, MN
Presenter: Keith Kallmes
Pharma and device companies depend on clinical evidence for R&D, clinical trial planning, regulatory approval, and reimbursement, but current evidence management systems are outdated and intensively manually curated. Nested Knowledge has built an all-in-one evidence management platform for these companies to gather, analyze, and visualize clinical data.
Company Updates Presenting Wednesday,
COMPANY: Your Fare
Location Christopher Monk
Cactivate is Challenging Online Marketing Agencies with AI
Prior to Cactivate, Wentao Xiao and his team were working on a social shopping startup that was hopefully going to be the next Amazon. Wentao’s days started early so he could get to school by 8:00 AM for his first two classes. At 11:30, he left class and raced to downtown Boston where he cleaned his seven AirBnB rentals, changed the sheets, replaced the lightbulbs, fixed the toilets and dealt with any complaints. At 4:00 PM he got back to Northeastern for his evening classes, which finished at 8:00 PM, when he could start working on the startup.
They were making progress. The app was live, and there were thousands of users and hundreds of vendors. His team was fearless, hardworking and dependable - the same team that’s now leading Cactivate. But in time it became clear that they were scratching an itch, not solving a pain point. It was time to pivot. They got together and talked it through. There was a problem that all their vendors had that needed solving.
All their small business B2C clients were stuck in the “growth chasm.” They had a product that was a good fit for customers, but without much sales revenue, they didn’t have the money to spend on Facebook or Instagram ads. Most small businesses spend $800 per month on marketing. A good online marketing agency would cost $6,000 a month. They couldn’t level up without the spending, and they couldn’t spend that kind of money until they got to the next level of revenue. Many of them try to do it themselves and run into two limitations: their own lack of expertise and the lack of time for constantly optimizing online marketing.
The team looked for ways to apply technology to solve the problem. Their solution was an automated ad buyer. It would consolidate data from different companies to drive the learning and optimization for effective marketing. Imagine ten small tennis shops on the west coast, each with a small marketing budget that converts a handful of sales per month. None of them has enough data to A/B test or conduct a cluster analysis of customers’ buying habits. But, merge the data from all ten of them, and suddenly you can start iterating and optimizing. Their vision was to use AI to do just that.
They used natural language processing to take all the information about a company or product and build a profile of attributes, and then the AI looks for commonalities to consolidate knowledge from adjacent products. Early on, Cactivate could outperform a typical agency a little more than 50% of the time, but now Wentao says that they can beat agencies 90% of the time, and at a tiny fraction of the expenditure. More importantly, performance improves over time.
Small businesses are tough customers, and many of them have been burned. They are typically entrepreneurs who are spending their own money, and they don’t part with it easily. So, when Wentao tells them that they can load up their ads, get started with a free trial and get better results than an agency, some of them don’t believe it. One New York t-shirt entrepreneur was ready to sign up, but he insisted on visiting them in person, just to make sure that they were real. He was ready to drive to Boston until Wentao pointed out that the gas would cost more than a month of Cactivate.
Across town in Boston is the online marketing icon Hubspot, whose former CEO likes to say, “It’s not about what you sell. It’s about how you sell.” Wentao has a different vision. He wants to live in a world where it is about how good the quality and value of your product or service is, and you don’t have to worry about how you sell it, because Cactivate takes care of that. Down the road, Wentao envisions Cactivate using AI to generate content for websites, messaging, visuals, ads, etc. Such a one-stop-shop would enable small businesses to bring their new product, plug into Cactivate and solve all their marketing challenges with a single click.
They’re a tight-knit group. When Wentao was a freshman and trying to start “Jobba the Hunt,” he looked for a partner by scanning through the class projects of a web development course. Each project had only the username connected to it, so he had to cold-email a number of people until he connected with Zhe Lu, and they got together more than 10 years ago. In 2018, Wentao used a LinkedIn Premium free trial to sort and contact every Machine Learning person in Boston. He went to 20 coffee meetings and found five prospects before Peng Wu, a PhD in Machine Learning and Scifi fan, became their Chief Scientist. And, about a year ago, after an extensive search for a full-stack developer, Wentao used an Angel List Premium free trial to search for a developer who was interested in startups. Jonathan Kim jumped at the chance to join, indefinitely deferring his graduation to come on board as the founding engineer and central hub of all development.
Their next goal is a million in annual revenue, and they’re not there yet. But they have a year of runway, and they are on track. In 2019 Wentao made the decision to quit the Airbnb business and use the nest egg he had built to launch Cactivate, and he hasn’t looked back since.
Stats and Attitude
From left to right: Wentao Xiao, Jonathan Kim, Peng Wu, and Zhe Lu - the Cactivate team.
Tikun Olam in Action
By the time he reached age 60, Gene Stein had had a successful 34 years at the Capital Group, his only employer since business school in Cambridge, MA. But, up to that point, he hadn’t earned a nickname. Sure, he had been Chair of the US Equity Investment Committee, Chair of the North American Management Committee, and Vice Chair of the Capital Group Board of Directors, but the team he was dining with at a business dinner in Silicon Valley didn’t know much about his background. He was the new guy in this younger group.
When the young bucks started challenging each other to push-up contests, the older members of the crowd started taking bets. Gene was conspicuously quiet. The instigator of the contest had just pushed out 59 when one of his wagering colleagues challenged Gene: $10 for every push-up beyond the current mark. Gene must have been smiling, because what else could have made the challenger think that this mild-mannered, understated finance guy could push out 60 push-ups? Gene took his position, started slowly, methodically cranked out 60 push-ups and then stopped, looking like he could keep going indefinitely, and collected his $10. His new nickname was established: “the push-up guy.”
Way back when he would have only been a “push-up kid,” Gene grew up in L.A., where his parents owned a liquor store and food market along the lines of a Trader Joe’s. As a teen, he spent three summers working the cash register during the night shift, crossing paths with multitudes of interesting people. After his engineering degree at UCLA, Gene went straight to HBS, where he quickly developed an interest in finance. He was a natural, and he fostered his fondness for finance with an internship on Wall Street.
During the Vietnam War, being in the ROTC meant that you could pick your branch of the military. Gene chose the U.S. Public Health Service, the branch headed up by the Surgeon General. During those two years in Washington D.C. he met Mindy, with whom he has just recently celebrated his 50th wedding anniversary. After his two year stint at the PHS, Gene went back to finance where he found the last company he would work for: Capital Group.
Gene started as a financial analyst and became a portfolio manager in several of the American Funds mutual funds. If you charted his progress, you’d see a zig-zag up the pyramid: up and over, up and up and over, up some more. Eventually he filled a number of leadership roles, and it was very financially rewarding, but more than that, it was an organization full of smart people working hard and being nice to each other. Great leadership has an impact, which Gene observed in the many companies he covered during his career, but he also observed it firsthand in Capital Group. Long careers aren’t unusual there, and for a good number of employees, Capital Group is both their first and last job. For many like Gene, it was their last job.
That experience obviously affected Gene’s investing philosophy with the Pasadena Angels. Gene looks for leadership that demonstrates competence and integrity.
Gene has long had a love for music and for the human voice. One of his loves is opera. He and Mindy underwrite the Los Angeles Opera’s Young Artist Program, which gives talented young performers voice, acting, language and career training, and it provides them with performance opportunities. But Gene’s love of music inspired him to go a step further, and seven years ago he decided to take up the cello. Gene takes regular lessons and even goes to cello camp in the summer with kids from all over the country. The first time he went to cello camp he was grouped with the other beginners - the six and seven year-old kids - who proceeded to learn faster and play better. For a man with a lifetime of achievements and the nickname “the push-up guy,” it was a bit humbling.
Gene’s most important endeavor right now is his focus on early childhood development. He and Mindy have been making grants and funding programs to help children for over 20 years. Babies are born with only about 25% of their brains formed, but by the time they reach age 3, they have developed 75-80% of their cerebral structure, which is why it’s so critical for them to have good stimulation, nutrition, play and attention. By some estimates, a quarter of the world’s population doesn’t get enough during those critical years, which is why Gene and Mindy fund more than 35 grantees and employ two part-time staff on efforts to improve childhood development.
And Gene’s personally involved in early childhood development with his own grandkids. Gene and Mindy’s three children are raising their own families in San Francisco and Princeton NJ, where his eight grandchildren see their grandparents regularly on Zoom, in person and on beaches like the one below.
87.5% of the grandkids with Gene and Mindy (12 week-old was not yet present at the time).
November '22: Everyset (EB, Ebrahim Bhaiji) and Richard Chino
Oct: C360 Technologies (Evan Wimer) and Kenji Funahashi
September: Woody Sears (Autio) and Mike Krebs
July: Open Sesame (Steve Lyons) and James Schaefer
June: HavenLock (Alex Bertelli) and Anil Jha
May: Discotech (Ian Chen) and Gary Awad
April: Sashee Chandran, Seatrec and Susan Marki
March: Yezin Taha, Spine Align and Jamie Bennett
February: Phoenix Gonzalez, Repurpose and Marcus Filipovich
January: Ksenia Yudina, BeTheBeast and Larry Uhl
November '21: Roy LaManna, TotSquad and John Keatley
October: Dr. Chorom Pak of LynxBio and former president Al Schneider
September: Luk Network, Brandon Cavalier and Nancy Dandridge
July: Electrum, Jose Gomez and Julie Pantiskas
June: Ready, Set, Food, Dr. Mirianas Chachisvilis and Joseph Pitruzzelli
May: MagicLinks, Christopher Hussain and Janice Orlando
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We hope you enjoyed this edition of the Pasadena Angels Monthly Newsletter. Any suggestions for future pieces, questions or comments? Please email me at email@example.com
Dave de Csepel
Chairman, Pasadena Angels