The Wisdom Wall

“But when I think about, especially things in ed tech, where I think there's an AI element, I think like, what is AI good at doing today? Where do I think it will be in 12 and 24 months, and what does that do for the opportunity? And in most cases, I think it's compression, not expansion.”

“The challenge that we found is you actually need people to give you Mint-like access to their data, because if, if I, if all I know is your paycheck, I don't know your credit score. I don't know how much debt. You actually need people to give you a fair amount of information to make good recommendations, and what they…”

“we do a lot of hardware, and I don't know why, it always seems to take seven million dollars to get to a commercial product.”

“If it's a good business, you'll have lots of opportunity, like, it's more important to build a really good business that has the ability to remain independent until something else happens than it is to, every time I've tried to forecast, oh, so-and-so company will pick this up, I'm, like, wrong a hundred percent of the…”

“The model is more that, like, there ought to be a way for you to get a return on your money that doesn't require a gigantic IPO. There are ways through the profitable operations of the business for me to return capital. Might be capped at a three X, but there's a mechanism for you to get a return that doesn't require…”

“The thing I can't get over is everyone I've met who's tried to do a new format eventually runs into the paid acquisition monster, and it just ends up being really, really expensive.”

“I think part of the challenge for founders is there is this whole, I'm going to anchor high and get negotiated down to something I can live with. It doesn't really work that well in venture because as a founder who's raising money, your real competition is not the people on your competition slide. It's every other…”

“If you, as an investor, expect every founder you meet to be in a position to drop everything and just work on their startup for some arbitrary period of time, as a show of commitment, you're gonna end up excluding people who, for really valid financial reasons, cannot do that.”

“My conclusion has been the technology is actually the least important piece. The most important piece is finding people who have an entrepreneurial mindset, who will go out and hustle and find customers who understand how to do kind of all of the business building, and no amount of technology actually makes them better…”

“you can compete on two things, like loan quality, And price. Both of which put pressure on your ability to scale the business. Either you have to compete over lower quality loans, which will push your loss ratios up, or to win the good ones, you have to make less money. And so it's really, and there really aren't any…”

“I think most B to B SaaS things are basically commodity. They're a database with a UI on top if you really push hard enough. Like that's what they are.”

“Look, I, I think one of the big mistakes I've seen companies in our portfolio make is they take two to three million dollars, and it's very hard to have two to three million dollars and not magically have it all disappear in 24. Everyone's like, oh, don't worry. We're gonna, like, put the other two to three million,…”

“I just think single variable wearables are really hard now. I was probably more bullish on them five or 10 years ago when we didn't have as many things.”

“my big takeaway is these businesses tend to trade at two to three times top line revenue at the end of the day, and so for me the big question Isn't how do you get to 50, it's how do you get to two to 300.”

“So I always assume that there's going to be at a minimum two seed rounds for a hardware company to actually get to a place where there's meaningful traction.”

“The money in vertical sass is full stack. Like, that's the playbook, like, you do it all.”

“a good way to lose money as an investor is to fall in love with something that the founder is not as focused on as you are. So for me personally, I'm out”

“I don't believe these charge operators want five different software systems. They're gonna pick one. And if he can make it work, he has a chance to be an early winner and lock up a bunch of distribution that will be very difficult, if not impossible, for someone else to come and take away from him.”

“And these customers, their desire to digitize, at least what I've seen, is much greater than their ability to digest New technology, particularly on the workflow side.”

“The only way you can really compete with them is to just play a different game, which is organic, bottoms-up community.”

“The more automated the experience, the shittier the service was for me as a customer.”

“everyone who's tried to do generic blue collar has failed because a roofer, a plumber, and a restaurant worker are all blue collar workers, but they make radically different amounts of money.”

“Every time I've gotten excited about a platform that's fundamentally about conversations, whether it was Whale, AMA on Reddit, Quora, it, it breaks somehow. Either the conversations become so long-tailed and esoteric that they can't build an audience, or the monetization piece ends up being harder than it feels like it…”

“It's basically impossible, as you probably know, it's basically impossible to raise money For anything in music, because generally you get stuck in the morass of licensing and the labels”

“And personally, I've just found when you have a wide valuation gap between expectations on both sides, I personally have never Been successful at closing gaps that are bigger than about 50%. It just, it requires too much movement from one party, probably to a place where either I'd be uncomfortable or you'd be…”

“And I was going to say, the other thing that most of the really good Booking platforms you've been a part of, they get somehow involved in the, the workflow, whether it's collection of payments, you know, collection of information about the people, actual execution, billing, like, where do you think you can remove…”

“when I find people who know tons and tons and every detailed number about cost of acquisition, and I'm like, oh, you are a paid acquisition machine, and I actually don't like those businesses personally.”

“And the one thing I've learned about VR is I think there's a lot of apps that have been unsuccessful because they're actually not better in VR. They're actually better in any other medium in the real world, two D, whatever it might be. Having seen the demo, this is one of the first things I've seen that I'm like, this…”

“I mean, I think in food there isn't much defensibility, like McDonald's and Burger King both sell hamburgers and like, I think it comes down to like, do you connect with a brand that makes you feel like this is the, like, look, I'm in this, I drink this brand of water because I really like it.”

“having one single API for this stuff, it becomes way more valuable over time because logistics just gets more complex.”

“we do a lot of hardware, and I don't know why, it always seems to take seven million dollars to get to a commercial product.”

“we've done a bunch of FDA things. Always takes longer. Always costs more money.”

“I assume a hardware company takes seven to ten million dollars to get the thing done.”

“You can coach people on presentation, on answering questions, I think it's hard to coach people on, like, the thing they want to build.”

“VCs have been chasing the ghost of Mint for 20 years.”

“I also do think like, wow, most casual runners are happy to change shoe brands. Most regular runners in my experience do not.”

“There's probably like a, a lower floor on the places this brand can show up and still command the price point and the mental position that you're meant to.”

“I used to, before I would have said 50% going to the A. It just doesn't It doesn't happen that often in our, if you do a pre-seed, a seed, and a seed extension, you're not going to see it.”

“That to me just seems like a easier business model than trying to spin this up as something you sell directly.”

“I'm an investor in a company that makes, um, crackers, where the inputs are all regenerative. And this is mostly just a marketing exercise. They have basically a single vector message, which is we make crackers grown with regenerative practices. And the thing that was surprising to me is there is an emerging consumer…”

“The thing, the reason you end up with Red Oceans is because there's a nugget of a good idea there and everybody else screws it up.”

“My biggest dumb-dumb investments at Precursor have been where I've worked with someone for a year and not invested, and then when they raise, it's at some crazy place, and I'm like, I just worked for free and helped this person for a year. I should have put money in if I was gonna help them anyway.”

“The challenges in food, I feel like in many cases, there's less under your control with the road to distribution than there are in some other businesses that we work on where like the distribution challenges are hard, but they're largely like under your control.”

“my experience with sports teams is you can't do little things without people reading every letter of the contract anyway. So even to have done a little thing, somebody did the work to figure out, can we actually, and they're going to be at the Philadelphia Union for the whole season next year.”

“If you think about it, if you're Heinz, like, what level would they have to sell before you even pay attention or care? Fifty million dollars worth of ketchup? A hundred million dollars worth of ketchup? Like, for Heinz to divert? Yeah. It's the classic big company resource problem.”

“And I think in times like this, it's very easy to get attached To what you were doing before, but I don't think investors give you credit for persisting with something that probably won't become a big idea.”

“I just brought that up because we have a few companies in our portfolio where what they realized is the cost of fulfilling a sample was cheaper than buying a customer through digital.”

“UberX is a tough business. UberBlack is not a tough business.”

“you're going to know a little bit about a lot of customers instead of a lot. About a small number of customers, and to me, that's like the recipe for startup death.”

“You have a rather large team for a company of your stage, and I think my fear is, like, you have a team of five or six that's already a little amorphous, and, like, adding more money might actually make the problem worse, not better.”

“these are people where the existing tools for reputation and Career management, like, don't apply. Like, the LinkedIn's of the world. There isn't a reputation, resume, experience tech stack that's readily available for these people because it's a different, it doesn't fit neatly on.”

“if you're an inexperienced person who wants to exploit Facebook and Instagram for DTC, I think that's like running into a buzzsaw.”

“you can't really do much in hardware for less than five million bucks”

“and ultimately, like, your customers' problems end up being your problem when you're in logistics business.”

“I think all good consumer pitches, for me, come down to an insight on human psychology.”

“being anchored on a price that's unrealistically low can be just as dangerous to a business as being anchored on a price that's too high.”

“I think part of a good pitch is the entrepreneur needs to control the dialogue. He needs to control the flow of the conversation.”

“I think part of your job as a founder is to recognize when you're losing the room. And instead of allowing things to spin out of control, stop and like, hey, maybe I haven't been clear. Let me start over.”

“You're, like, into, you're deep into lost cause territory. I mean, like, you're halfway through, like, if it were a normal meeting in my office, you would be... Like, it would have, it would have been so far, like, we don't have enough time now.”

“Like, that's not a winnable argument as an entrepreneur. What was a winnable argument was he could have told us a lot more, but let me tell you about the actual value that I'm delivering for both sides of the marketplace.”

“Everything that people tell you is hard. Once you figure out how to do it, it's totally a competitive advantage.”

“So I think the natural order is that all of these formats need to be under big umbrella brands so that they can stick around.”

“You just learn so much more about who your buyer is. Why they buy. All the questions you had. Who's your buyer? How often did they buy? We didn't talk about repurchase, right? It's like, this is all stuff that you... And you can't know with retail.”

“And typically I see a slightly lower burn, even just adjusted for a head count in non Bay area, non coastal cities.”

“the path for most of the marketplace investments I make, The path to getting big is really simple. Like I can see it. I'm like, okay, we do this one thing. We're just gonna do it a thousand times more often than we do it today. And it tends to be doing the same thing to a greater degree.”

“I think redundancy is valuable for retailers because, because you remember these networks are, they, they stretch and they grow. You might, you might hit a point where all the Postmates people are out delivering lunch.”

“because I think cult brands grow without really loud marketing.”

“I always think every founder has one, maybe two superpowers.”

“this is not like a software marketplace winner-take-all market, like these categories just end up with a bunch of winners, and which is why I think you keep seeing, whether it's nail polish or makeup, you keep seeing new companies Born on Instagram, born on social media, rocketing to huge sales volumes in fairly short…”

“Valuation is purely driven by negotiation and standards in the industry. So I think I've had founders come into my office and pitch me and say, hey, we have a hundred K in revenue. And we think that means that we're worth ten million dollars. And I would just say, well, you might be, but I wouldn't pay that…”

“Like your job is to be in on the first institutional role these companies raise. And like you, the answer doesn't have to be, you'll do it a hundred percent of the time, but you should move the slider.”

“When you're in between milestones, pretty much the only people that will fund you are existing investors. Otherwise, most people will just say, like, it's just too risky. I'm just going to wait until you clear that threshold.”

“It certainly raises the burden of proof. Like, you were given a million, and this is what you did. Now I have to believe that two million will be invested differently than the original million.”

“Willingness to pay is highly variable domestically, but internationally you could charge significantly more for this product because those people generally aren't eligible for financial aid.”

“And at 1500 dollars today, I don't think you can actually deploy your own salespeople to go after individual schools because the ACV per school is too low.”

“I find that, like, when people don't pay themselves, the external money issues sometimes creep into, like, company decision making in a way that's suboptimal, so I generally, I also think it's, the goal, the startup should be able to support you financially, and so having a burn rate that actually reflects, like, what…”

“The fact that it was six, I was like, well, this is what you get for six. Like really good people and like not a lot of data.”

“I think the other thing is I've spent a bunch of time looking at this, and I think, to Elizabeth's point, I think most of the discrete problems have been solved, but the podcast producer's problem isn't a discrete problem, it's a workflow problem”

“I don't think it's actually that important if the cumulative time savings is meaningful and that you're good enough at all of the individual components.”

“Every company we have that's scaled, we have an incontinence brand focused on sort of the other Stage of life. You end up being multi-channel in the mix of D to C, B to B slash wholesale and retail. Every company ends up with a different formula, but that seems to be the magic, getting that from the right, for your…”

“So I always assume that there's going to be at a minimum two seed rounds for a hardware company to actually get to a place where there's meaningful traction.”

“I'd like people to be in the very, very high thirties to low forties going to the A. It's just hard with seed, with everyone doing two seed rounds. I used to, before I would have said 50% going to the A. It just doesn't It doesn't happen that often in our, if you do a pre-seed, a seed, and a seed extension, you're not.”

“The money in vertical sass is full stack. Like, that's the playbook. Like, you do it all.”

“going from steps or activity to vitals, it's like, it's, it's, it's real R&D and engineering.”

“You just gotta take a point of view. And you can't just be like, there's like seven different things, like, you just gotta take a point of view.”

“when we lead, the three things I usually try to think about are like, what's a price that I think would pull in the other people who we need as investors? What amount should we commit to sort of like help catalyze the round? And then like, what else can we do to help you find the capital you need? Those are always the…”

“The school, I was like, they spent a significant amount of money on student acquisition. Because if you think about it, there's some number of schools that are well known, and a significant number that are very high quality institutions that are just not as well known. They don't have the same brand”