Tag: Tech

The accelerating pace of innovation and what it means for startup investors

We’re living in the most innovative and fascinating period of history

We need a lot of new Mosaics

I’ve had this nagging feeling for a while.

I didn’t really know what it was, but it surely had to do with the insane scale of amazing new fields and opportunities that I have an interest in.

I find it hard to keep track of everything and especially to become an expert in any of those fields.

And then I succumbed to the idea that the acceleration of commercial-ready technology is just unmanageable for a single individual.

When the internet first showed up, it was really (I think) the only massively disruptive technology to show up after the transistor/computer.

But now, we live in the most exciting period of human and technological history and our progress is accelerating so fast, fueled obviously by the internet’s orgy of ideas, that so many more technologies have reached the phase where they can be deployed commercially and have the potential to change things as much as the internet itself.

This means that for every new sector, there is a specific community getting formed with people who are dedicating their life’s work to that specific field and developing deep insights and experience.

At the same time, there are innumerable startups being born in every field, and (from what I can remember) this represents a couple orders of magnitude more than the number of early startups in the internet, even compared to just 8–10 years ago.

With Mission and Market we’ve been lucky to invest in many of these sectors and I’ve been fortunate lately to have the time to study more in depth some of them. And to me, each one of the fields I list below represents an unmeasurable amount of opportunities.

But my brain is now tied in this constant dilemma, and I think it’s one that every VC or angel will have to come to terms with at some point:

should I try to keep track of all of it or should I just choose one and focus on that?

I don’t really have an answer yet, and for now I’m trying to keep my interest open to all of them (and new ones that keep on showing up!) but I’m not sure how long I’ll be able to continue doing that.

This goes back to the rise of the thematic / vertical VC fund, which I wrote about 3 years ago (oh man, time flies).

View at Medium.com

I think we’ll end up seeing even more of these funds and I think they will produce very decent if not above-average returns, given that now each vertical has the potential for multiple breakthrough companies.

Another point to briefly touch on is the value-add a generalist investor like myself could ever hope to bring to a very specific company in a new field.

Ron Conway and others have been made famous by their decision to focus exclusively on internet investing in the very early days (and have been awesomely rewarded for that), but now there are 10 new internet-like fields.

Will everyone who focused on one be rewarded like them? Will one field completely outdo all the others? Will investors just have to embrace all of them?

These are the questions that keep me up at night, and I hope to discuss them with many of you.

$(X) is the new internet

This is my personal list of fields that I think have a similar impact potential to the internet. It doesn’t take into consideration fields which I think have massive opportunity but not to that scale (eg. cybersecurity) or some that have already demonstrated that (eg. mobile) or some on which the jury is still out (eg. cleantech, which probably merits a discussion of its own).

Deep Learning is the new internet


The things that we’ve been able to achieve with deep learning in just a few years have been astonishing. For me, it’s definitely the most interesting part of machine intelligence.

Deep learning changes everything. It enables us to spot answers to questions that we dare not even ask just a few years ago and also create things which would have been impossible just a few months ago.

If we add other aspects of machine learning and, specifically, generative AI — the mind is blown away at every single new piece of information I gather on the space.

We’ve been fortunate to invest in Atomwise (finding new drugs thanks to DL), Enlitic (spotting lung cancer with DL) and Floyd (making it easier to run DL processes) — but there are SOOO many more that I’d like to be involved in and SOOO many more I’ve never even heard about.

I’ve also invested in a Deep Learning-specific venture fund with which I hope to get more exposure to the space — but I think DL will be so pervasive that I can never get enough exposure.

Blockchain is the new internet

I’ve recently seen a tweet by Joel Monegro of USV which clearly encapsulates my own thinking.

The blockchain is really the first major disruptive computer science technology to come around that was entirely unexpected and has the potential to change everything.

I’ve been fortunate to know about Bitcoin since early 2011 (less fortunate to turn off my mining machine right after as it was about to boil) and have been following the space ever seen.

I now own a dozen different cryptocurrencies and have read probably triple that in whitepapers describing different decentralized applications (dApps) and currencies.

I’ve made (digital) money on some and lost (real) money on others, but the level of experimentation and excitement that is seen in the blockchain space and community in unrivaled.

Many paradigms are being completely redefined by blockchain technology. Decentralization is a really big force and I can’t seem to see an end to its advancement.

Finance, healthcare, manufacturing and more industries will ask themselves how they operated without the blockchain — just as we ask ourselves today how we operated without the internet.

Synthetic biology is the new internet

View at Medium.com

The amount of innovation happening in synbio is astounding. It is finally all within reach of “normal” entrepreneurs and outside of big University research labs.

We’ve been lucky to look at many deals in the space and even invest in some.

It is abundantly clear that the future will be powered by synthetic biology. So many aspects of it that we can’t even imagine.

Materials will all be fermented or grown, as will all sort of different food elements, especially animal-based food.

It will seem just absurd that we were wasting the Earth’s resources as well as breeding and killing billions of animals every year.

The economic value of old-school industrial production that is being impacted is incalculable and we will see the new Rockefellers in this field.

Genomics (and microbiomes) is the new internet


This image should make everyone insanely excited. For the first time in history we’ll be able to understand how we’re made and why we do some of the amazing things our bodies make us do.

With RNA sequencing, and microbiome understanding, we can even monitor our bodies responses in real-time to various diseases and drugs. We’re investors in the pioneering RNA sequencing company and we’ve seen the future. It is amazing.

But it doesn’t stop at understanding.

With CRISPR-Cas9 we can actually change our DNA and impart new instructions. This is just mind-blowing. We’ve been small investors in Caribou Biosciences (thanks AngelList!) and we feel like we’re watching the future unfold.

The advances being enabled by CRISPR are still pretty incomprehensible but we are seeing more and more entrepreneurs using this tool, as well as developing parallel tools (DNA cell delivery, etc.).

It’s a new world.

Robotics is the new internet

We’ve all seen Boston Dynamics’ videos of their andro-dogoids and we’ve all been amazed / scared.

The reality is that robotics is today way more advanced than we thought. Just walk in a factory anywhere in Europe and you’ll see robotic arms and other autonomous systems.

Slowly we’re automatic all the repetitive tasks.

We routinely see videos of cars and trucks being driven by themselves.

Autonomous hardware systems are beginning to become a whole new sector with a vast amount of applications (and already many $B exits).

As software and materials become cheaper, we’re going to see many more of these companies. And when we’ll have billions of robots deployed, the opportunities for companies will be endless.

IoT is the new internet

I haven’t followed the IoT revolution as much as I wanted, but it does feel like another field which is slowly becoming a massive platform and opportunity.

I don’t think we can really understand the impact of receiving data from and being able to interact with trillions of objects in real time.

Unsexy maybe, but still revolutionary.

Voice technology is the new internet

Most of you will have an Alexa in the house by this time. We have a Google Home and even if it’s not loved by all, conversational software enables a host of new use cases and thus many new potential companies.

It feels like this is a game reserved for the big ones, but I believe there will be a wide interest from startups and we’ll see some tools that will become comparable to our best friends in the future.

Voice, like all the other areas listed here, is a completely new platform — and will see very specific apps that couldn’t be built anywhere else.

3D Printing is the new internet

3D Printing is yet another completely different area that is a platform onto itself.

It basically brings all of the advantages of the internet to physical things.

Sure, it might still be very early, but the potential is clear and massive. I think it’s really incalculable.

The ripple effects of a usable and economical 3D Printing revolution would change the world as we know it, and enable a myriad new companies.

VR/AR is the new internet

I truly think that in the next years we will spend as much time in VR as in the RW.

We’ve already seen the first few $B exits in this space and it’s just the beginning.

The promise of companies such as Magic Leap just compound this even more.

I think in 15 years we will not have computer screens anymore and will think that they were the most limiting aspect of modern life.

“Do you remember when you could only see what was on your small little screen? LOL”

Clearly opening up a new world, opens up a whole new economic paradigm too. We need everything new in VR. Operating Systems, networks, games, productivity tools, and even more of what we can do today on the internet. Sure some will be just moved over by internet companies, but many VR-native companies well be born — and they will be huge.

We can see this thanks to our investments in FOVE and Limitless, which is redefining how we create experiences in a VR-native fashion.

What am I missing?
I’m sure there are a few other fringe areas that have the potential to be platforms of massive change (microfluidics? nanotech? alternative currencies?).

Let me know where I should be looking at 🙂

Thanks to Yannick Roux for reading a draft of this post.

Fundraising is supposed to be hard


As is running a startup

A day doesn’t go by where I don’t hear people saying that the fundraising process for startups is too cumbersome, hard to navigate for new entrants and inefficient.

I’ve raised $3.7M for my own company from top investors and invested in more than 40 companies by now, and I’ve come to form an opposing view: fundraising is supposed to be hard, and anything that makes it much easier introduces more risk in the ecosystem.

Having run a startup for a while, what I came to realize is that fundraising is actually the easiest part of running a company.

Hiring the best in class leaders, selling a half-backed solution, making a great product, navigating uncertainty, getting distribution and all of the other million tasks in the daily life of a startup founder, are all way harder than fundraising.

Additionally, most of those things have never been done or learned before by a startup founder, whose top quality should be learning fast while on the move.

Getting a warm intro, understanding how VC funds and partnerships work, what the process is like and what VCs expect of a startup founder, is the first big test to see if someone could ever even think of running a high-growth organization with big potential.

The counter argument usually used lies in the fact that VCs tend to fund people like them and people they know, but I find that to be rarely the case. In our portfolio we have entrepreneurs from a wide number of countries, races, sexual orientations, political opinions and religions. 95% of them we didn’t know before and few had friends in common with us.

Y Combinator and other very early stage efforts have leveled the playing field by giving everyone (who deserves it) an equal shot at starting a tech company. More efforts at this stage will always be very impactful as they put people who might be discriminated in different way on the same starting line, but after that meritocracy kicks in and founders need to demonstrate that they are up to the task for which they are asking other people’s money.

(edit: this has been sitting in my draft folder for a bit, and just noticed Marc Andreessen said something along the lines in his #startupschool talk).

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Startups are a sport, and Silicon Valley is the Olympics


As everyone else, during the past weeks I’ve been watching the Olympic Games, and more than the results and medals, I was really trying to get to understand the lives of these athletes.

I’m fortunate to be close friends with two Italian team members and have a very real understanding of all of the sacrifices they made during the years: 5am wake ups, long trips, no social life, physical pain, financial stress, and the like.

I also understand how they were introduced to the sport by their family, their dad having won an olympic medal himself.

Drawing a parallel between the Olympics and the startup world.

Living in San Francisco for 5 years and being in close contact with very successful founders, employees and VCs, made me realize how their lives are similar to pro athletes.

When talking to entrepreneurs and other participants in the startup ecosystem in Europe, it seems to me that not everyone really grasps the difficulty of the startup game.

I suggest trying to think about startup founders as olympic athletes.

I see many people with absolutely no experience or no specific talent / expertise claiming that they can build something of immense value, and to me, that sounds like someone watching a 100m race and saying: “I like that, tomorrow I’ll start training and in a few years I’ll be at the Olympics”.

Now, I don’t want to say that it’s an impossible game, but I would really like more people to realize what it takes. And it takes talent, grit and ecosystems .

Talent

When we watch the Olympics we tend to overestimate natural talent and underestimate the training it takes to get to that level.

When we read about successful startup people instead, we tend to underestimate both the effort and the talent that it takes to get to the top.

Zuck, Travis, Ev, Marissa and everyone else we consider at the top is a star-performer just like Bolt, Phelps and Biles.

They have unfair natural talents that they coupled with insane amounts of work and focus.

As an aside, a very, very interesting short read/listen on the mix between talent and training is provided by NPR’s Hidden Brain podcast:

http://www.npr.org/2016/04/04/472162167/the-power-and-problem-of-grit

Grit

The reality is that the people we read about on Techcrunch and the likes, are the startup world’s top athletes and the sacrifices they make to reach that performance level are very similar to athletes’ ones.

If you want to create a hugely successful and valuable company, you must put in the hours and devote your life to this goal.

On this, I suggest listening to the end of this Twenty Minute VC podcast episode with Matthew Ocko:

http://www.npr.org/2016/04/04/472162167/the-power-and-problem-of-grit

His #1 tip? “Never sleep”

Ecosystem

Some teams from specific countries almost always tend to be on the top-3 in every single Olympic (eg. fencing for Italy). That’s usually the result of a lot of smart people working together to have that one or two athletes get the medals. Coaches, support staff, federal organizations, school teachers, everyone matters — and the highest concentration of smart and dedicated people, the better the results.

It’s the same with startups. Thinking about creating a massive startup outside of a solid ecosystem, while possible (as some independent or upcoming athletes have shown), is extremely hard and most definitely the exception rather than the rule.

Thinking about startup stars as olympic athletes and as myself as a training athlete really makes it easy to put in context the successes, sacrifices and ecosystems. It might be helpful for others too.

If your goal is to create hugely successful businesses (and it doesn’t have to be), then the reality is that it’s extremely hard, you need to get lucky with your natural talents and the environment you grow up in or surround yourself later in life, and put in insane amounts of work and focus.

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Takeaways from YC’s Demo Day Pitches — from an alumnus turned investor

With every new demo day I see, I notice some more recurring themes and small optimizations that could be made to the pitches.


This is because I’ve attended many demo days: first as an investor, then as a founder (W15), and finally as an alumni/investor. I know what Demo Day means for both the founders and the investors given that with Mission and Market we’ve also already invested in 18 YC companies.

The pitches are superb, especially considering they are put together in the last few days, and these are just notes on the few things that I think could be improved. I hope they can be helpful and valuable for eventual W17 participants.

0. YC is scary good

This is another stunning batch. I’m still equal parts impressed and scared at YC’s sustained quality and incalculable ROI potential.

I’m equally more impressed at the genius of YCVC’s LPs who continue to get an index of YC companies at a great price with zero effort. Kudos 👏.

1. Mismatch between founders and investors perspective

As for fundraising itself, pitching presents a unique problem in the fact that an entrepreneur only needs to create 1 pitch, but an investor needs to sit through 100+. This creates a misalignment of incentives, perspective, information, and so on.

The founder wants to explain the key things and biggest achievements, and only really thinks about their pitch. But so does every other founder.

A founder thinks that as long as their pitch is good they’re golden, but the reality is that founders should pay a bit more attention to how all their batch-mates are presenting their companies — to really get a feel of what it could be like from an investor’s perspective.

As YC’s average company quality keeps on rising, it means that getting noticed becomes harder and harder, because having a big market, great traction and a good team are now just baseline.

An investor might sit there and see dozens of high-quality pitches that check all of the thesis / sector boxes, but will probably only invest in 1–5 companies.

2. No originality

As a result from the point above, this year too, most pitches are all the same.

Numbers, LOIs, revenue potential “from just these customers”, $B market, perfect team for it, and so on.

  • What the founder thinks: this is awesome, ticks all the boxes, yay me!
  • What the investor thinks: yawn, this is the 50th I see today that says the same thing.

The problem with non original pitches is that, for me, as soon as I start to get excited about one for some reason, I’ll kick myself and say: “why didn’t you get excited about the other 30 with the same exact numbers?” “maybe this is just baseline and none are exceptional”.

There is much more to gain than to lose from spicing up the pitch and trying something no one in the batch will.

Comedy, videos, animations, personal story references, whatever would usually be a total no-go for a pitch, become fair game when pitching as one of 100 others. (There’s the classic problem of needing to be the first and only to do it, because 100 animated pitches are obviously much worse than 100 normal speeches).

3. Unrealistic numbers

I clearly remember at my first investor demo day a company announcing they would be making an insane amount (9 or 10 figures) in revenues that same year.

Now, I’m sure we’ll see such a company in my lifetime, but it is extremely unlikely that a company would be pitching for an investment in front of investors if they’re going to make that cash.

This makes me discount all of the other things the company says + a lot of what the other companies will say.

In general, it’s really easy now for me to tell which numbers are genuinely true and which ones are only the result of a super-short unsustainable hustle that is clearly pre-PMF — as much so as I almost remove from the equation traction altogether at this stage.

4. Very early companies

I don’t know if there have been a lot of pivots during the batch or if there were a lot of very young companies accepted, but I’ve found a lot of companies saying “after just 2 months” etc.

This is making it obviously amazingly hard to judge any of these and justify the valuations. Eg. “if you’ve been able to do all of this in just two months, and there doesn’t seem to be any unfair advantage anywhere, maybe a lot of other people could do that too”.

5. Stories work, big numbers don’t

I have clearly noticed that the pitches I get mostly excited about don’t start by saying: “we have X customers and Y revenue, and there are Z addressable customers”, but are the ones that take time to explain the story. They get me interested in the market, team, solution — something.

I much prefer getting a glimpse of the vision and mission rather than a sterile recount of numbers.

6. Defensibility

As the startup market gets more and more crowded, something I worry about a lot is how defensible a technology, brand, market positioning, or whatever really can be.

It seems to me this is not addressed enough and sometimes might cause me to judge a company too quickly because I’ve either seen many other companies do the same thing or worry it can be replicated by great and fast companies in adjacent markets.

Imho, these would be wisely invested seconds.

7. no UA

I still don’t think I’ve heard from one company how they acquire customers. We certainly didn’t explain it in our pitch, and I regret it. But in today’s environment that is the #1 thing I think of and the easiest reason to dismiss something “cool, but how in the world are they going to consistently and profitably acquire customers at scale?”.

I know 2.5 minutes isn’t a lot of time to give a full picture of company, but 20 seconds to tell me about an edge acquiring customers can make all the difference.

Note:

  • I unfortunately wasn’t able to attend live this year, so I watched all presentation videos online (thanks YC!). I must say that I have really enjoyed the confort of watching the videos from my own couch at my pace, researching the company and the founders online at the same time, while stopping and resuming. I also had the privilege of having my two partners at the event who could ask the questions that came up and round details which made it the perfect setup. I highly suggest it.)

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How meditation killed my creativity and made me more stressed


Meditation and mindfulness are all the rage right now in SF.

Yesterday a friend said she now wants to meditate 2 hours per day.

A day doesn’t go by without an article on why mindfulness is the only thing that can save our race or a post by someone detailing their morning meditation ritual.

People are even starting to go on meditation retreats.

To be fair, the pitch for mindfulness is actually pretty great:

  • reduce stress and anxiety
  • make better decisions
  • increase focus
  • increase creativity
  • live longer
  • decreased blood pressure and hypertension
  • lower cholesterol levels
  • better sleep

That seems like a bargain for something that’s entirely free (unless you, like yours truly, want to spend $12.95/m to listen to a former buddhist monk with the best voice in the world) and only takes 10 minutes per day.

And so I started.

I downloaded Headspace and Calm.com, read about the best practices for meditating, and started my pursuit of mindfulness.

Meditate 10 minutes a day, extra meditation when feeling particularly stressed, mindfulness and being present in everything you do, feeling the food in your mouth, the water on your skin, the breeze, the city noises, etc.

Doesn’t that sound like a fucking dream?

And then just a couple of weeks ago, it hit me: meditation fucked me up big time.

After months meditating, I noticed something completely different about myself.

I’ve always been used to have my mind race with ideas, thoughts, to read as much as possible on every subject, just trying to learn learn learn and then regurgitate everything back into idea form.

I used to listen to audiobooks on my commute and have my mind racing with ideas on how what I was learning could impact my life and my business.

I used to get to bed and start thinking about a million different things until I was so exhausted that I’d pass out.

I used to get my best ideas and thoughts under the shower, in those 10–15 minutes where you don’t have anything else to do than think.

But: “no!”, the inner mindful voice said.

That’s all going to kill you. You should be mindful all the time and live in the present.

During the commute, just enjoy the breeze and the view, the people, the noises.

When going to bed, feel the weight of your body and clear your mind of any thoughts.

When taking a shower feel the water on your skin and relax, be aware of your body.

And so just like that, all the moments when I used to race with creative ideas and thoughts, got killed.

I was now left with no time to actually think.

The creativity that is generated by just thinking, and reading, and thinking, and trying to see how what you read can apply to other parts of your life, now just got completely lost. This led to a very stressful state, which was made even more stressful by the fact that I did not know what I was stressing about! My life did not change much, and I was even meditating!

Sure, I have a kid, and a startup, and a fund, but that had been the case for a while.

Now, I’ve stopped meditating and feel great.

My mind races with new ideas constantly and I’m both more creative and focused when I need to focus.

Look, maybe I was just doing it wrong, but maybe, just maybe, meditation is not for everyone.

Maybe it’s for people who tend to stress really easily about minor details.

Maybe it’s for people who don’t get energized by thinking a lot about new ideas.

I don’t fucking know.

But in that form, it definitely not for me!

That being said, if you think I have obviously been missing the whole point, done it completely wrong, or am just a soul that can’t be saved.. I’m all ears here and on Twitter!