The problem that Scratch is solving is something that is quite near and dear to my heart. Since I’ve worked in the consumer internet space, I’ve been interested in the problem of product discovery. How do you select from the vast choice presented by the internet? How do you find the right thing in subjective, taste-driven categories? How do you shop for people when you don’t know exactly what they would want? And how do you do this all in a way that is fun, and doesn’t take forever?
This was something I thought about a lot at Ebay (12+ years ago). The beauty of Ebay was the vast selection of all sorts of products. But this selection was also the reason discovery was so difficult. Fast forward to day, and everyone buys online in a myriad of ways, and the paradox of choice has exploded exponentially.
Scratch is looking to solve this problem. It allows consumers to more efficiently find the right items in a broad range of categories through the help of curators and data driven personalization. The result is that you buy better products much more quickly through a natural, conversational process.
Already, I’ve used the service to buy plants for our office, birthday gifts, furniture and accessories for my home office, apparel, and backpacks for the NextView team. And this is just in the last few weeks!
The company is led by Matt Zisow, who we first got to know through his time at our portfolio company Custommade. He is building an amazing early team with world class operators from Tripadvisor, Wayfair, and others. We are excited to be making this investment alongside Bessemer, Red Swan, and Matt Salzberg. The compay is currently in a private beta, but is letting in new members in waves. Click here to join the waitlist, and I’ll do what I can to get you in as soon as possible ☺
I’m starting to get really interested in voice as a major computing interface. Prior to my Apple Watch, I rarely ever used Siri. But I find I’ve been using voice more and more, and my experiences with the Echo and the rise of more apps that utilize a conversational interface make me pretty excited about this new communication medium. A couple thoughts/questions.
Interface: Voice is a funny interface. It’s super flexible in some ways, but really limited in others. It’s potentially insanely convenient, but also really clunky. I think that there are two shifts that usher in the more mainstream adoption of voice as an interface (in addition to improvements in the actual language processing and AI). The first is convenience and speed. I think that consumer adoption of new interfaces like these exhibit sort of a convenience tipping point. 20% more convenient drives next to zero usage, but perhaps 50% more convenient drives massive adoption. I’m experiencing this with my watch. The delta between pulling out my phone to make a request, and making a request on my watch (and then have the request fulfilled more naturally on my watch) is getting me over the hump. Navigation is a great example of this, and is even getting to me to occasionally switch off of Google Maps to enjoy this benefit. I haven’t actually made a complete switch yet, but I can see it happening if the mapping software were better.
The second trend is that we are going to see new use cases for voice-input that will be more narrow and forgiving but way more convenient. Messaging apps and pseudo-human-powered services are making me think about this. Part of the frustration of voice is the unpredictability of it. Does it actually understand what I’m saying? How many mistakes until I totally give up on the medium? You could see voice being integrated in more constrained environments, like in a narrow app with a messaging interface where the meaning behind a response could be easier to parse. Or, if there is actually a human on the other end, that parsing may not actually need to occur. Using voice as an input to specific instructions to an Uber driver or a Taskrabbit seems like a potential no-brainer. Finally, the nice thing about Apple, Amazon, and others moving into this area is that they are training us to use semi-natural language to communicate with machines, shedding the massive negative bias that anyone who has ever dealt with voice prompts why trying to call an airline CS number can attest to.
Social: One question I have is how voice plays into messaging and social services. I’m curious how often the voice input is used in major messaging services with different demographics. I actually suspect that it’s surprisingly low, even though it’s pretty widely featured (one of only three main options on Line, Whatsapp, etc). I’m curious whether this is because voice actually doesn’t work well, or if it’s just that those apps are built so much around text that it’s unnatural to use. Or maybe I’m wrong and the use of voice is increasing on these services (if anyone knows, please tell me). I’m curious to see what types of voice-native social networks might emerge in the coming years and whether one really will exist that is reasonably separate from video, text, or photos. One big impediment to voice is that it’s super awkward as the recipient in many cases. But maybe there will be a social dynamic that is unlocked by that constraint as well.
Age: I’m curious how impressions of voice as an interface is different between different age groups. I actually think that my age group is probably going to be most negative. We find other input mechanisms too natural, and have too much of a distaste from early speech-based interfaces that we find no need for it. My kids find our Amazon Echo absolutely magical. I haven’t seen them as excited about a piece of technology since they learned how to make Netflix work on my iphone I’d love feedback here, especially from readers of a younger demographic.
I have mostly questions and no answers at this point. But it’s an area I’m getting pretty excited about.
When an investor “does work” on a potential investment, it usually means engaging in some form of due diligence.
One of my favorite VC sayings is from an investor that has said that “due diligence is something VC’s do very studiously when they want to kill a deal”.
I’ve often quoted this, half joking, half in truth. Especially in the early stages of investing, it’s super easy to do due diligence to the point where a “no” is obvious. There is always some major flaw in every company, and doing some cursory due diligence usually uncovers this. Too much due diligence creates conservatism which is poison to venture capital.
But as I mentioned in my last post, I’m trying to think more deeply about this these days. We talked about this as a team recently, and the opposite idea emerged. The point of “doing work” as a VC isn’t due diligence. Even the phrase “due diligence” seems to connote a CYA mentality around the work. Uncover all the bad stuff so you don’t make a stupid mistake.
But I’m realizing that being diligent as a VC is quite different. It’s about truth seeking. Or, put differently, identifying changes in markets, technologies, user behavior, etc before it’s obvious to everyone else. But this takes work. Gut alone won’t get you there, because these developments are non-obvious.
The idea of “doing work” to make you more open-minded, not less. Something best done studiously to see opportunities that others miss. There is a place for some due diligence. But more so, I think truth seeking is what “doing work” as a VC is all about.
I find that almost all startups look much worse beneath the surface than they first appear. I think this is particularly true of stuff with hyper-growth or really impressive top-line numbers. It’s also particularly true as founders have become more adept at telling their stories and communicating what they’ve done and what they plan to do to investors.
One of the things that you learn to do pretty quickly as an investor is get beneath the surface. You learn to pretty quickly uncover the hidden tells, or soft assumptions of a business or of customer data. As the venture market has gotten more efficient, many (if not most) investments get priced to the point where there is almost always heartburn around a decision. This is why for every great company, there are many investors that could have had a chance to invest but did not, at least at some point in the company’s early life.
I used to think that the antidote to this was semi-blind conviction. Some investors just believe, and choose to ignore some facts in favor of others. That’s the skill and gut of the business.
But after some recent reflection and conversations, I am questioning that belief. Actually, I’m starting to think that the antidote to this is actually getting FURTHER beneath the surface one additional layer.
As a seed stage investor, we see A LOT of potential investment opportunities. You see a lot of patterns repeat themselves, both across companies today and across companies over time. It’s ridiculously easy to draw on personal experience or do a couple calls to knowledgeable people around a sector or opportunity and kill a deal. “It’s been done before”, “these companies have a hard time succeeding because of X”, “top line numbers are great but engagement is too low”. There are lots of easy things to identify.
But I’m realizing that the best investors actually push harder for deeper truths. Those cursory, beneath the surface objections are not so much deal killers, as they are magnifying glasses through which to push deeper into the merits or strengths of an opportunity. Doing the work allows one to form a strong, non-consensus opinion that a few diligence calls or cursory assumptions can’t. It’s less about gut, it’s actually about being more diligent and more inquisitive. Actually, it’s also not just about doing due diligence. It’s about committing to using products and really trying to figure out what’s happening, or really trying to figure out how markets are changing and what old assumptions are on the verge of no longer being true.
The question then is how to handle your time. As a VC, you want to see more opportunities, not less, and the more time you spend on any one, the less time you have to see the next opportunity or to support your portfolio companies. Almost no one would say that the secret of VC is to spend more time and effort evaluating investments, and less time looking for new ones or working with companies.
But, I think that actually might be something I try to do more in the coming months. Chance favors the prepared mind, after all.
Dave, Lee, Jay, and I are really excited to announce that Tim Devane has joined our team! Tim is a Principal with NextView and is our first team member based full-time in New York.
Since the founding of NextView, we’ve been excited about the New York market and a big chunk of our portfolio is New York based. We’ve been fortunate to partner with some great entrepreneurs and invest in terrific companies like TapCommerce, Sunrise, and TripleLift, and bring on some great NY based advisors like Mark Josephson and Stephano Kim. Although we are excited about what we’ve done so far, we also know that there is nothing like having a permanent presence to be able to have the impact that we want to have in such a vibrant tech community. So bringing on someone full-time in NY and deepening our engagement in the NY tech market was a no-brainer.
As the first new addition to our investment team, we went through a deliberate process in bringing Tim onboard. We will always be a small, tight-knit team, so each member of the firm has a huge influence in the way we operate, make decisions, and collaborate with founders. Our goals in recruiting for this role was to find someone who:
1. Already shared our ethos (authenticity, behaving like an invited guest, hunger, participation in the community, and blank-canvas thinking).
2. Is a “native” of the New York Tech community
3. Will be a great investor
Tim has literally spent his entire professional career in New York Tech, joining Betaworks out of Wesleyan and then spending time operating at Bit.ly and Epic Magazine and investing at Red Sea Ventures. And while many people love startups and are excited about VC, Tim embodies the competitive hustle, entrepreneurial empathy, and optimistic curiosity that we think founders love to see in their investors. We also heard fantastic feedback about Tim from some folks we really trust, which was a huge confidence builder as well.
Welcome Tim! We are really looking forward to partnering together to continue building our firm. If you want to follow Tim online, check him out on Twitter @tdevane or his blog http://tdevane.tumblr.com/