Does Your Company NEED to Exist??
About 18 months ago I had an unsettling epiphany: being a venture capitalist can be really boring. I know. I know. This is a first world problem, but it’s my problem nonetheless. And I also recognize that this post is a little self-indulgent.
I love all of my founders, and I’m fully committed to helping each of them bring their visions to life. Truthfully, I love some of their missions more than others. Regardless of my personal passion for their missions, I give each of them all that I have.
My professional fulfillment bar is high since I am comparing my current VC gig to my life as an entrepreneur and the founder of two startups with successful exits: Spinner and Grouper/Crackle. I loved my mission at Spinner, 150+ channels of almost every genre of music imaginable delivered to the world. I also loved my initial mission at Grouper, mass market darknet to share personal media with friends and family. When Grouper became Crackle (a public video-sharing site), I fell out of love.
I knew when I jumped into venture that I would be tested in many ways: could I advise vs mandate; could I be passionate on the sideline vs being in the game; could I find amazing founders to back; could I identify great opportunities; would anyone want my money and my help. It’s still early but I believe I have answered many of these questions at least to my OWN satisfaction. Still…..
Eighteen months ago I looked around my clean, sunny Cow Hollow Freestyle office and knew I needed to shake things up. Short of starting a third company, I had to find another way to rediscover my passion for tech investing. I decided to change my attitude and my investment criteria: No more me too startups (not #metoo), no more pure execution plays and no more ad tech (no offense to our handful of ad tech investments).
I NEED to invest in startups that NEED to exist. They need to exist because successful execution of their missions makes them indispensable to their customers. These are products/services that customers can’t live without. Uber/Lyft, Android/iOS, Amazon (commerce, Kindle, AWS), Google (docs, gmail maps and search), Salesforce, Etsy (for makers), Slack, Airbnb (for owners), Facebook, Whatsapp, Soulcycle, Wechat (for China) Walmart (offline), Sephora/Ulta, Strava, Patreon, Juvo, LinkedIn, YouTube (for creators), Oracle, Adobe, Workday. Creating and justifying this list would make for a compelling post on its own, and I am sure many of you will challenge my selections and have many more of your own.
Defining “impact” is a massive work-in-process for me, a little more abstract than I would like and perhaps more subjective than I realize. All of the companies listed above (compiled with help from my friends) are dramatically impactful, yet none of them deliver on social good in the classic “save the world” sense. They make their customers lives easier, happier, more fulfilled and/or more productive. They define categories and if their products and services were to disappear, well, their customers would scream.
All of these companies have dramatically impacted their customers’ lives and NOW NEED to exist. However, SAYING that I am going to invest in companies that 1) need to exist 2) I am passionate about and 3) are going to make a ton of dough is a helluva lot easier than actually DOING it. In fact, I only invested in one company in all of 2017 that met these criteria. Fortunately, my Freestyle partners and LPs are in violent agreement with this investment thesis and have no near term plans to show me the door.
While I work on my skills at identifying these need-to-exist billion dollar startups, I have found one segment that particularly merits my attention: Healthcare, where Freestyle has already invested in 8 companies. Healthcare is a massive market with unparalleled impact and is totally f’ed up (but more on that in an another post, when I have at least graduated from healthcare investing University). Until then, you can find me airing my solipsistic process on Medium and https://twitter.com/Joshmedia.
This story is published in Noteworthy, where 10,000+ readers come every day to learn about the people & ideas shaping the products we love.
Follow our publication to see more product & design stories featured by the Journal team.
