TSP032 | Charles Michael Yim – Transcription

Posted by John Livesay in Uncategorized0 comments

TSP033 | Todd Herman – Transcription
TSP031 | Mike Edelhart – Transcription

John Livesay:

Hi and welcome to The Successful Pitch podcast. Today’s guest is Charles Michael Yim, the CEO of Breathometer. You might know about Charles from watching him win Shark Tank. All five Sharks invested a million dollars in Charles’s idea. The first time ever, especially where he was pre-revenue and then he went on to be first place out of 10,000 startups competing for Sir Richard Branson’s startup contest before he got to go his island. He has an amazing story of success from coming out of Stanford having two other previously successful startups before he started Breathometer and now taking Breathometer beyond just testing to see if you have a high alcohol content to seeing if you have bad breath and other major health implications.

He talks about the difference between Mark Cuban and Richard Branson in this episode as well as his new book coming out where he takes you behind the scenes of what it’s like to be on Shark Tank as well as his proven ten-step guide. Enjoy the episode.

Hi and welcome to The Successful Pitch podcast. Today’s guest is Charles Michael Yim who is the CEO of Breathometer. You might know Charles from seeing him win on Shark Tank. Charles, welcome to the show.

Charles Michael Yim:

Hey, how’s it going? Glad to be apart of it.

John:

Thank you. We really appreciate you sharing your wisdom, your insights. One of the things that I really notice about someone like you is people see you on TV and they think, oh, overnight success and you’ve been doing this for quite a while and you had several successes before Breathometer and I think that’s really one of the keys that investors look for is serial entrepreneurs, because you have a certain tenacity and you learn a lot and all that good stuff. Can you speak to your background a little bit? I know you were at some other companies and huge success there as well?

Charles:

Sure, what you just said, right, you can’t just become an entrepreneur overnight. It’s more of a risk and reward scenario in that, you know, once you start, it’s kind of, I’d like to think, is hacking away, sort of hacking away at it. I think when you start 50% is complete, but I think climbing up the mountain, addressing adversities, you know, driving through a certain level of perseverance and tenacity and ambition.

That’s what kind of gets you pass the line and so, Breathometer, my current company is technically my third founding company and I built and sold my last two and so I’ve had a couple of successful exits. I would say my first company is where I kind of sharpen my teeth and that’s where I made several failures and many mistakes, but the important thing is you get back up and you learn from them and you do better the next time and ideally you do it fast enough where, you know, you can still survive whether your company can – where your business can still survive.

John:
What gave you the idea for Breathometer? You obviously you were always – you know, most entrepreneurs tell me we saw a problem and we wanted to solve it. Was it all about first helping people not drink and drive, right? That was before they get pulled over by the police they have to take a breath test.

Charles:

Right, right. I mean, in terms of inspiration it really came from Jack Dorsey’s wear product. If you’re familiar with it, it’s a pin and processing product geared towards businesses. I saw a dongle and I kind of connected the dots. You know, with the smartphone I thought to myself why couldn’t I just switch out the sensor inside for a bio-sensor instead and apply towards essentially an alcohol breathalyzer kind of product, value proposition. I used it back in college and I always aired on the side of safety and so anyway, I put two and two together. Consulted with a few trusted friends. Next thing you know I had a working, breathing prototype within about three months.

John:

What I love about that story, Charles, is you didn’t have to reinvent the wheel from scratch. You actually got inspired by someone else’s startup. What a great story. I love it and say, well, how can I make this better and what’s also fascinating to me, please correct me if I’m wrong, but from what I understand is you’ve taken Breathometer to way more than just making sure your alcohol level, it’s actually helping people make sure they don’t have bad breath. Who doesn’t need that, right?

Charles:

Yeah, there’s quite a few applications that breath can apply to. I think about 6 months into it, I started collaborating and connecting and partnering up with Stanford university alma mater as well Cleveland Clinic and Cleveland Clinic by in far basically has basically the most advanced breath analysis lab that I would think, that I’ve seen at least and anyway, breath analysis as actually been a science for quite some time. A lot of consumers aren’t aware, but there’s breathalyzer-type machines in these. I mean, they can cost as much as a quarter million and up and you typically need, you know, a prescription and some extra added fees, you can have access to one, but it ranges in terms of applications.

Everything from allergens, gastrointestinal issues, asthma, it really goes on and on and for us, we start with alcohol, but then we’re venturing into true medical or digital health applications like oral health, like health and fitness, being able to detect certain levels of fat burning through one’s body, but again, all through breath, because breath has roughly about three hundred biomarkers which by at least 25% are applicable towards human conditions.

John:

So, all the people who are buying Fitbit and keeping track of their calories could also be buying your product to keep track of their fat burning through their breath analysis for ketosis and things?

Charles:

Correct and you don’t even have to worry about calorie counting anymore, right, or quite frankly how many steps you are taking. Yeah, could you pair it with a Fitbit product or some type of step tracker, sure, but if anyone really knows health and fitness, it really boils down to 80% of what you’re eating versus 20% in terms of your workout.

So, if you nail down your diet and you’re not necessarily calorie counting, but understanding how much fat you’re really burning and optimizing that, essentially that’s the holy grail, right, that’s how you really shedding pounds and staying at a certain optimal and healthy fitness range.

John:

I think that’s what’s going to be partly responsible, if not a lot, of the incredible growth that you’ve already had. What I saw was that the growth for Breathometer was in 2013 you were, let’s see here, 2014 you were at $4 million and then you project 2016 to be at $14 million, is that accurate?

Charles:

Yeah. That’s right.

John:

I mean, that’s phenomenal growth and obviously it’s not just from awareness from Shark Tank although there’s a great story there of you were pre-revenue from the video I saw, right, before you went on Shark Tank?

Charles:

Correct. We were pre-revenue. We’ve been revenue-generating for quite some time and so next will be an even bigger year. Now we’re launching our third product and we’re already working on our forth and we already have our 5th and RND phase. All different, again, geared towards different applications, not just alcohol.

John:

What’s interesting about you on so many levels is you’ve broken history multiple times. You were the first person on Shark Tank to get all five sharks to invest with you and what’s interesting is they all said you checked off all the boxes, right. You had a great product, you knew your numbers, you were a great business person, and you were doing something that was great for society, so everybody felt good about investing in that. I mean that’s quite – did you know before you went in there that you were checking off all those boxes or is that just who you are and the way you’ve done business in the past.

Charles:

Yeah, it’s the latter. I didn’t have a necessarily checklist going in there. I mean, I would say I definitely did my fair share of preparation. I definitely made sure I knew my numbers and I run a pretty tight ship so I knew my business inside out, so I was well prepared and I think as most people kind of define luck, it was a little part of luck in it, right, where when the opportunity arises, you’re prepared and so you can take advantage of the opportunity. There was a lot of preparation that I think was key.

So, in terms of product, I mean, obviously there’s bias, but I definitely feel it’s compelling and in all that I’ve experienced and of course there’s a great cause behind it, so I think yeah, there’s a combination of factors, but a good portion of being prepared and the rest kind of being a right fit.

John:

One of my favorite quotes is from Arthur Ashe who said the key to success is confidence and the key to confidence is preparation. I’d love to have you share with our listeners what kind of preparation did you do before you went to pitch Shark Tank and what do you now before you pitch investors?

Charles:

Sure. I think with Shark Tank, which was very acute to Shark Tank was, you know, I actually met with quite a few successful fellow Shark Tank entrepreneurs that have already been on the show and did well, start interviewing them, right, and understanding are these investors are actually the real deal. Can they really add value to your business? Pro-tips if you will prior to be on the show, but in terms of just what I do in general.

I mean, I’ve been in the board room several times. Again, as a third company, I overall probably closed over $50-60 million dollars in funding, VC funding, single-handedly. So, I’ve been around the valley and I think in terms of just being prepared and knowing – anticipating questions investors will ask, that’s extremely key.

John:

Yes.

Charles:

And so, I have a pretty good head on my shoulders now and I think that just comes along with, as you say, preparation and that build confidence, but in addition to that, just having the experience underneath your belt. When you’ve been around the block a few times, you know, it gets easier, it gets easier, for sure.

John:

Those questions include everything from what does it cost to acquire a customer to what’s your vision, right, there’s so many questions to be prepared for and anticipate. I want to brag about you. You closed $2 million in 2013 and now you’re going for $20 million. Is that accurate?

Charles:

That’s right.

John:

That’s…

Charles:

Yeah, we already closed a good chunk of it already. More than 50-60% and we’re closing the rest of it now.

John:

And when you go from that kind of $2 million to $20 million. That’s such an incredible growth and obviously based on huge success, do you get different questions when you’re going for $20 million than you do when you’re going for $2?

Charles:

Certainty you do. Definitely, right. You know, especially when you have a company that changes from, transitions from pre-revenue to revenue, right. At that point, you know pre-revenue is more about product validation and ultimately product launch and assessing the risk points of the company in terms of at least being able to at least ship the product, right. Then when you’re in the second phase where we are is series A, it’s user acquisition cost.

Like, how much does it cost to bring on a user. What’s the LTV and lifetime value of the customer? What’s the cohort analysis look like? So, how long are you retaining your customers and how long are they staying with you, right, and are they happy? Are they satisfied and if they’re not, you got to quickly address them, right, and then additionally what’s your roadmap and do you have the team that can support that? Do you have the engineering? Do you have the product? Do you have the financial assets or foundations to be able to support something like that? What are the markets you are targeting? Who is truly your demographic? Who is your customer at the end of the day, right, so you need to know quite a bit more about your product or products and your customers and then mechanics and foundation of your business, because at that point you no longer an infant.

You’re not like a toddler and I would say we are in the transition and the interesting phase where we’re a toddler now, but we’re massively transitioning to become a true teenager. So, there’s different certain level of expectations based on a lot of growth stages that you’re in and there’s always good and bad with that, right.

There’s going to be natural pain points, there’s going to be grown pains and so scaling a business, hiring quick enough, but hiring quality individuals that can truly add value to the business, finding the right investors, support partners, and dealing with distribution, international scaling, localization, regulatory. We’re a medical company at the end of the day, so we have to deal with the FDA, so there’s complaint regulations we have to address, legalities, right.

So, there’s a ton of stipulations that we have to go through and you know, it’s just a complete different set of questions from where we once were first airing on Shark Tank. So, it’s a different ballgame and just to remind you, you know, we are truly a Silicon Valley company at heart. When I say Silicon Valley, what I refer to and what that means to me is that we’re very much a technology company and we’re a combination of both hardware and software and I think Shark Tank, if at all, gave us a considerable boost, but you know, we’re an atypical company in terms of how we’ve gone to where we’ve gone and kind of the momentum we’ve built so far.

John:

Can you speak a little bit about the team? I saw on your LinkedIn profile, you know, you have some of the same people from your previous successful companies working with you again, so obviously there’s great synergy there when you have your team following you and you guys have a shortcut. You know, they know what you expect from them and vice verse and that’s so important for investors is who is the team and you mentioned it. Anything you can do about how you find your good team? How you keep them from company to company?

Charles:

Yeah. That’s a great question. I think repetition is pretty key, right. You need to be able to treat your people and your team members well. I think there’s a certain level of mutual respect there. I think naturally it’s going to lead to basically a kind of, I would say clan, if you will. A group of you that kind of go from one company to the other and creating success at one place and then hopefully repeating that, right, making that a recurring situation.

So, yeah, I think it’s a lot about that. It’s just great teamwork, team synergy and treating each other with an equal amount of respect and I think that naturally occurs and the second part of that, just team building. You know, I think that’s probably one of the most important assets or talents that one founder can have when you’re building a company, because if you for instance don’t know certain aspect or you don’t have an in-house expertise on it on a particular topic for a business, maybe you don’t know, but you could hire someone that does, right. So, you can hire, believe it or not, a lot of way out of your problems as startups. So, if you don’t know it, bring someone in-house and they’ll figure it out for you.

John:

So, we’re going to tweet that. I love that so much. The teamwork is built on respect and collaboration, which is really what you’re saying is collaborate with people who have skills maybe you don’t have and then everything is stronger than it was before. It’s really fantastic insights. Let’s talk about not only – do all five Sharks engage with you equally while you have that many investors?

Charles:

No, I think it’s more on an as needed basis. When I first got funding and it was from all five at the very beginning, it was yeah, pretty much all five cylinders pumping at the same time. It’s pretty tense, but once you start scaling to a series A and when you establish a rapport and built up the relationship, you know, it’s more on an as needed basis and we’re no longer that little tiny company that we once were, right.

So, now it’s basically on demand kind of basis more so than anything. We have now institutional investors that are involved, you know, hence why we have a much larger round and in addition to that we have a formal board now, which is very different, so I’m not the only one just kind of calling the shots. I have a legitimate board that come from the institutional investor side that help kind of mandate policy and make decisions with me.

John:

You know, we haven’t even gotten to your other big accomplishment which is winning first place out of 10,000 other startups with Sir Richard Branson. Congratulations on that. So you have Richard Branson and Mark Cuban backing you. I would think that’s quite a nice calling card for investors. Tell us a little bit about the Sir Richard Branson experience?

Charles:

Yeah, so Richard Branson, it was more of his version of Shark Tank, if you will, and it’s an opportunity for the community to basically, I would say add fuel to the fire, so if you already had something going like Breathometer did at the very time we entered the competition, it basically acted as a catalyst and expedited our growth. So, we were exposed to a lot of investors. That’s kind of what lead to our series A and a lot of basically partnership opportunities as well. You had a lot of opportunity to interface with Richard Branson himself, his team, was able to go on his private island, Necker, so that was pretty cool. I’ve been twice since.

So, it’s just a phenomenal opportunity to meet great people, really exposed the brand to a great community and there was just nothing but kind of give, give, give and take, take, take in terms of just a mutual exchange and so, yeah, overall it was a great experience and probably had equally as difficult if not more difficult odds in terms of coming through, but pleasantly surprised took first place. It was an amazing ride.

John:

I bet. What advise did Mark Cuban and Sir Richard Branson give you? I would assume they have different points of view and since you’re one of the few people who is fortunate enough to able to know them both. I would love to her your insights and how they compare.

Charles:

Yeah. I can tell you what I was able to take away from each so far. I think what I get from Mark Cuban, you know, he’s a very much of an entrepreneur/investor type that is all about building a business, right, doing the grind and just getting things done, right. I definitely got that from him. At the end of the day, he just wants to make sure that you’re doing your best and you’re building a real business.

I think what I get from Richard Branson is creating authentic genuine value. We have for instances a potential application for lung cancer and he was really just focused on that. He’s like, great you can build businesses, a lot of people do build businesses, but if you really have a lung cancer application, I mean, you talk about really saving lives and so I think what I got from him was just kind of the bigger picture in that contributing back to the community, contributing back to the world. Doing something great while building something that you’re passionate about. That’s the winning formula there, right.

John:

Building something great while making a difference in the world. We’re going to tweet that out. That’s a great line. I love it. It’s really helpful and as if that’s not enough, you were also going to be an author. Tell us about your upcoming book.

Charles:

Yeah, so I’m writing a book. It’s going to be three parts and my inspiration was from the show because, you know, after airing on the show now I’ve been apart of five episodes and soon to be airing on a spin-off show Beyond The Tank as well. I’ve developed a public personal, if you will, so I get approached quite a bit in public and I have parents coming up to me saying hey, you inspired my kid to start his on business and blah, blah, blah or they want to learn from you and so anyway it got me thinking in that, hey, maybe there’s something to hear and that inspired me to write a book and the title may be something like Making of a Shark, you know, meaning that if you kind of take some of the tips that I provide, you know, perhaps you can build something of your own and so anyway it’s three parts.

It’s part one kind of my bio background. It’s kind of brief background of me and how I came to be as a lemonade stand kid to a full entrepreneur. Part two is kind of my behind the scenes behind Shark Tank and then Richard Branson’s tech challenge and part three where I think the majority of value in the book is kind of my ten step guide, if you will, of how to come up with an idea, how to validate the idea, go to product discovery whether it be product or service. You know, get investment for it whether it be crowd funding or personal investors and then taking it and releasing it to market, right, and then eventually scaling it.

So, this is kind of a proven formula, if you will, that I’ve done personally with my last three companies so I know what works, but I broken it – I’ve distilled it down to very simple points where any average consumer, someone from middle America can pick it up and read it and go run with it, right. So, it’s my way of just kind of give back. I think it’s great if you’re successful, but if you can give back a little bit, that’s when the win is and so I’m being repped by one of the top agencies in Hollywood, they’re called APA, yeah, so they’ve done Kim Kardashian, they’ve done Restaurant Impossible. They’ve done, you know, Gordon Ramsey, they’ve done a bunch of stuff and so, anyway, they’re repping me at this point. So, once we pick up a publisher then I’ve already started writing a book, so we’ll probably launching then in the next I would say 8-9-10 months.

John:

How exciting. It sounds like a great content. It’s got enough celebrity hook, the behind the scenes with two major people with Mark Cuban and Sir Richard Branson and then the actual meat and potatoes. One of the things that jumped out at me when you were describing the book which I want to pre-order the minute it is available is the idea, so many people have so many ideas, how do you know or any tips you can give us in advance of your book, how do you know that this is the right idea to really pursue? Do you test it with crowd funding or do you test it with consumers or check out the competition, what’s your criteria for knowing that, this case, you know, Breathometer was going to be the right idea?

Charles:

Yeah, speaking of which, right, like you hit a lot of the main points. Again, it’s essentially you need to one, validate the idea, right, and that can be done through crowdfunding, secondarily you need to do research, figure out what the market size is like, you know, is there a predicate device, is there a market, and so the third part of it is what truly is the potential penetration or traction of it. So, anyway, those are kind of three of some of kind of the primary characteristics or profile requirements, but if you see and recognize a potential, then at that point it’s a matter of execution. So, yep.

John:

Great. I also know that you are involved with the Stanford StartX Accelerator program, which is another way of giving back obviously. You must hear a lot of great pitches just to get into those accelerator programs is extremely competitive, almost like trying to get on Shark Tank, right, the number of people who apply and the number of people who get in. I’ve recently been the pitch mentor at StartFast in New York, so I know that experience, but I would love to hear your insights as what’s it like working with the Stanford Accelerator?

Charles:

Yeah, so like you said, it’s a tough accelerator. I entered, applied, being a Stanford alumni and that’s one of the main requirements, but aside from that, you need to have a legitimate idea or product or service. Anyway, if you are selected, like you said it’s tough, then you can go to the acceleration program. So, we did that and we did well. We gained a Chief Medical Officer. We got funding from Stanford University, so that was nice and now we’re working with them on the essentially respiratory side of things.

So, moving forward, I now, like you said give back. I’m actually now a mentor for the Stanford StartX Accelerator personally. I do get exposed to quite a few pitches. I think my two cents there is a lot of people get really caught in the, hey, I’ve got a cool idea and it sounds really cool and what if it was this, what if it was that, I think my advice there is I always and this is in my book again, that you should think about when you create a company or product or service for that matter is always look through the lens of a problem-solution framework, so what I mean by that is your target should be are you solving a real problem, right, and if you are and you have an innovative and a legitimate solution, you will have more than likely built a product or service that can provide real value and if you do that’s when you have a basis for a company or a business, but I find too often that, you know, I would say beginner entrepreneurs that just go out in the world wanting to create something but in actuality they’re just creating something that doesn’t mean that they’re generating or I should say, create a business, right.

John:

Right. I mean that’s incredible valuable. Who do you help and what problem do you solve are two of the key questions that I think startups need to have in their head before they ever get to an accelerator let alone an investor and be able to say this isn’t just something that’s fun, it’s actually solving problem. So, in addition to your upcoming book, are there any other books that you’d like to recommend to startups?

Charles:

Yeah, that’s a good question. I am a big fan of Guy Kawasaki. That’s actually how I broke into the startup world. He has a book called Art of The Start that’s pretty big for me. Let’s see, I think Eric Ries has a pretty good book. It’s called Lean Startup. He kind of gives you an idea of how to run lean and mean and kind of the fundamentals of running a startup and surviving and then there’s also Tim Ferriss, right, 4 Hour Work Week.

I’m a big firm believer in working smart and obviously working hard, but working smart goes a lot further than working hard, so believe it or not, I run this company and probably in the middle of launching another company and it’s just juggling the two axes where if you can get your current company or the company you’re working on to a stable state, a manageable state where you know you have senior management and at that point it’s self-significant and you are really delegating responsibilities, then potentially you’re at a point where you can actually start something else and make the best use of your time and staying active, right, it’s all about a juggle act and it really comes down to how good you are at multitasking and so I think that’s pretty key.

John:

I love it. How can our listeners follow you, be sure they know when your book comes out, Twitter, LinkedIn, what’s the best way to keep track of, you know, you have a blog or anything that you want people to read?

Charles:

Yeah, so I’m pretty active on social media. I have a pretty significant following, especially after airing on Shark Tank and what have you. So, I am quite often pretty active on Facebook. You can find under CharlesMichaelYim. I technically go with my middle name as well. On Instagram, Twitter, I’m always under CharlesMYim.

So, you can follow me on there. Otherwise, you know, there’s always constantly I’m always in on the news or on TV with Squawk Box and CNBC and then potentially CNN soon and what have. Shark Tank and now Beyond the Tank. So, you can follow me on TV as well and I’m constantly involved in blogs whether it be TechCrunch or Mashable or Venture Beat.

John:

Fantastic. Charles. I can’t thank you enough for being on the podcast today and sharing your wisdom. Congratulations on all your success. We’re looking forward to your new book and watching you on Beyond the Tank and other shows as well.

Charles:

Cool, awesome.

John:

Thanks again.

Charles:

Thank you.

TSP033 | Todd Herman – Transcription
TSP031 | Mike Edelhart – Transcription