Afleveringen
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In this conversation we unpack their journey of building a “lifestyle business”. Some takeaways:
— Chris and Brendan emphasize the importance of patience, focus, and long-term thinking in building a sustainable business. They challenge the notion that raising large amounts of venture capital is necessary for success by finding that being profitable allows for more long-term focus and creative risk-taking. Compounding growth over time can lead to significant results, even if initial growth rates seem modest compared to venture-backed peers.
— After the buyback, there was a shift in company culture towards greater ownership and cost-consciousness among employees. They introduced profit sharing and later reintroduced stock options to align incentives with long-term growth. They stress the importance of building a team you enjoy working with and taking risks on people with growth potential.
— Wistia focuses on solving big problems in large, growing markets rather than chasing short-term trends. They’ve learned to be patient with new product initiatives, looking for early qualitative feedback before expecting significant revenue. The company balances short-term metrics with long-term vision, understanding that meaningful growth often takes time.
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— Shift in Funding Landscape:
There has been a significant shift in the funding landscape, with a decrease in year-over-year growth rates for SaaS companies. This change underscores the need for venture capitalists to adapt and explore different investment opportunities. We do our best to highlight the importance of diversifying investment strategies in venture capital, emphasizing the need for alternative paths and approaches that deviate from the conventional SaaS-focused model prevalent in the 2010s.— Importance of Exceptional Founders:
The conversation points out that exceptional founders who want to do something differently are crucial. It emphasizes the value of supporting founders who are not just following the standard playbook but are instead looking to create something unique.— Zigging When Others Zag:
Delian shares the strategy of investing in areas that are less popular or overlooked by the majority. This approach is not dissimilar to indie.— The Need for Support Systems:
Whether it’s external support systems or family, founders need support systems to endure the grueling situations you encounter when building a generational company. Contrary to conventional wisdom, having children can allow you to get more done faster by clarifying the truly important over the urgent. -
Zijn er afleveringen die ontbreken?
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Product-market fit requires both customers willing to pay and stay. It’s not just about initial sales, but also retention. Early-stage sales should focus on research and understanding customer problems rather than immediate revenue generation. Founders often skip this crucial research phase.Abstract solutions require focusing on specific problems rather than leading with the technology itself. To create urgency, you need to demonstrate how a problem is growing or intensifying for the customer. If a problem isn’t being measured or managed, it’s likely not a priority.Early adopters are often those early in their buying journey who are willing to experiment. They buy into the founder as a subject matter expert rather than expecting a fully-built product. Successful startups often start by focusing on a specific niche before expanding horizontally. Being highly specialized allows you to understand customer problems better than they do.Invalidation is a healthy part of the startup process. If you’re not invalidating assumptions, you’re likely not learning or going deep enough. Sales feedback is valuable for positioning and refinement, but product vision should come from founders or product leads. Salespeople should not drive product vision. Demonstrating expertise by setting boundaries on what your product does (and doesn’t do) can actually increase customer confidence.
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— Capital has no insights
Eric argues that venture capital alone doesn’t solve business problems, and having more capital doesn’t necessarily lead to better outcomes.— Compounding value vs. negative value
The importance of building companies that compound positive value over time, rather than scaling prematurely and compounding negative value. Funding should primarily be used for experimentation and scaling proven business models, not for scaling unproven ideas, because it’s easy to compound negative value if you’re not paying attention to the right things.— Vanity metrics vs. intrinsic value
The industry often focuses on vanity metrics like growth rates and valuations, rather than building long-term intrinsic value and durable businesses. The venture capital industry’s incentive structures often encourage behavior that may not be in the best interest of building sustainable businesses. It’s important to maintain a long-term perspective on building value, rather than getting caught up in short-term growth or fundraising cycles. In many tech businesses, there are often diseconomies of scale rather than economies of scale as companies grow.— Playing the game on your own terms
CEOs and founders are ultimately responsible for making disciplined decisions about resource allocation and scaling. While entrepreneurs can’t completely ignore the “game” of venture capital, they should focus on building value on their own terms rather than getting caught up in comparisons or unrealistic expectations. -
Some takeaways:
— There’s a significant gap between the hype around AI and its actual implementation in businesses. Many companies are still in the experimental phase, with few AI solutions in production. The main barriers to AI adoptions are technical challenges, cost considerations, and lack of expertise. We’re still very early in realizing AI’s promise.
— AI adoption was slow, then immediate. In a pre-ChatGPT world, the focus was on convincing companies to care about data science and machine learning. Post-ChatGPT, there’s been an explosion in demand, with companies actively seeking AI solutions.
— Most companies are still in the proof-of-concept stage. There’re limited production-ready AI use cases, which hinders adoption. But with major cloud providers (Microsoft, Amazon, Google) aggressively pursuing AI strategies, that’s bound to change. There’s constant evolution in model performance and capabilities. Companies need to view AI as a continuous investment, similar to cloud infrastructure, rather than a one-time project.
— Tribe’s approach to AI implementation is what made it such an interesting investment for indie. Their focus on education to help companies understand AI's potential, and emphasis on quick, cost-effective proof of concepts to demonstrate value, means they’re positioned to continue rapidly growing. As a services business, they’re able to help companies balance cost with value creation, navigate rapidly evolving AI technologies, and future-proofing AI investments.
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A few takeaways from this conversation:
— Early crypto applications were challenging to use and primarily attracted tech enthusiasts and speculators. Over time, the technology matured, making applications more user-friendly and broadening the user base. While there’s still a long way to go, the maturation of the technology also led to a shift in focus from speculative gains to building durable and sustainable businesses.
— A significant issue in the crypto space is the short-term focus of many projects, prioritizing quick liquidity events, like token generation events (TGEs), over long-term business building. This emphasizes the importance of founders who are serious about building lasting companies rather than those looking for quick gains.
— Market cycles heavily influence behavior in the crypto space. Bull markets attract a lot of attention and speculative projects, while bear markets tend to wash out less-committed participants, leaving behind those genuinely interested in the technology. smac notes that bear markets often lead to better quality projects and more serious builders.
— Events like the FTX collapse and the Silicon Valley Bank (SVB) crisis reinforced the importance of self-sovereignty and distrust in traditional institutions. Compound's belief in the growing importance of self-sovereignty extends beyond financial institutions to healthcare, education, and data institutions.
— Compound looks for founders who are serious about building their companies and have a long-term vision. They value founders who are thoughtful about their projects and not just looking for quick liquidity.
— How crypto can be applied in areas like distributed energy and healthcare data. We also highlight the potential of decentralized physical infrastructure networks (Deepin) and decentralized science (DeSci) as promising areas for future investment.
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When you end an essay with a line like:
"Majoring in computer science today will be like majoring in journalism in the late 90’s.”
You’re bound to ruffle some feathers. In the case of Chris Paik’s “End of Software” essay, not only were feathers ruffled, but the entire farm was flustered. And then the pitchforks came out…
Given the violent response to the piece, both positive and negative, we approached Chris with the idea of adapting the Jimmy Kimmel “Mean Tweets” skit to address some of the critics and dive into the nuances of such a bombastic proclamation. What we ended up with was an incredible, and occasionally comical, deep dive into his thinking and observations around the innovation that’s emerging at the intersection of software development and Artificial Intelligence.
Some insights from this one —
The cost of creating software is approaching zero, which will fundamentally change its nature. Software is shifting to a new phase where it will be created on-demand to serve a specific intent and then disappear. This is similar to how content creation and distribution costs went to zero with the internet, enabling ephemeral user-generated content.People are lazy and want software that routes them directly to what they want with minimal effort. Platform providers that can best deliver on user intent will monopolize the market, just as social media platforms monopolized attention.Solving the discovery and distribution challenges amidst this coming explosion of near-zero cost software will be the source of the biggest future opportunities and venture returns.While AI will make average software more accessible, it will also shift the curve to enable the creation of revolutionary new software that is better than what exists today. -
This is really one you should watch on our YouTube. Like, all of them are. But this one has Will going to a White Board.
What if we could know whether the business idea you can’t shake is worth pursuing? What if we could ensure that we're pairing the right ideas with the right capital sources to ensure the best possible outcomes? Will Quist, from Slow Ventures, is on a mission to answer these question and more for founders with subject matter expertise and high opportunity cost.
To that end, he’s designed the Slow PhD, a program that embraces the idea that "Important companies and successful businesses can’t be hacked, forced, or faked.” Through a rigorous engagement process and step by step opportunity analysis, Will hopes to target more of the right people at the right opportunities with the right sources of capital behind them.
There has been a decoupling of awesome products from awesome companies and awesome companies from awesome venture capital investments. Just because a product is great doesn’t mean it will make a great company or require venture capital. A lot is knowable early on about a company’s prospects.The abundance of venture capital in recent years may actually be a bug, not a feature, for founders. When capital was scarcer, getting funded was a stronger signal that an idea was worth a founder’s opportunity cost to pursue. Now, founders are sacrificing a lot of their valuable time without enough diligence.Venture capital should be used to fund experiments to test novel hypotheses about how the world works that could be wildly valuable if true. The experiments should generate clear true/false signals without requiring too much capital. This gives optionality to pursue bigger opportunities if the initial hypothesis is validated.If founders become better “investors” in their own companies by deeply understanding their business model, capital efficiency, and growth levers beyond just building great products, it could lead to more efficient allocation of capital and better venture outcomes overall. But truly great venture-scale companies may still be constrained more by the supply of innovative ideas than the supply of capital.
This conversation was an attempt to give a preview of the PhD program and explore ideas around its perimeter. Take aways from this one— -
My friend, Michael Dempsey, Managing Partner at Compound, and I have an ongoing thread about the intersection of indie ideals and his areas of focus in deep tech. Most of these conversations happen over meals or online, so we decided to dive in a bit with the cameras on.
Our conversation was as fun as it was wide ranging.
I’ve watched for years as Michael has built Compound into a research focused, thesis-driven firm that has moved from the edges to the center of some of the hottest investment areas today. We get into details behind his early conviction around AI juggernauts like RunwayML and Wayve, to new themes they’re exploring in crypto and biology.
Some quick takeaways and highlights to look for —
There’s a trend of deep tech startups pursuing overly ambitious “narrative rotations” by constantly expanding into new areas, which Michael aptly calls a “Ponzi scheme of ambition.” This is driven by the need to justify raising large amounts of venture capital.His bias towards building one big business in a massive market rather than narrative expansions. For shelling point investments, like SpaceX and Palantir, the focus is on owning and expanding a principle or market over time, rather than narrative rotations.Compound’s approach to investment themes that are considered “too early or too ridiculous” with no real customers yet, and funding those contrarian opportunities.The value of developing specific year-by-year theses on how certain sectors will play out, acknowledging that 80% may be wrong but aiming for the 20% that are very right. You only really need to be right twice per fund. -
We invited our friend, Reggie James, to help unpack what's happening in hardware and break down what's behind many of the recent negative viral product review videos currently hitting the internet. Reggie is a longtime friend to indie and prolific advisor to many of this new crop of hardware startups in market and in development. He cuts right to the point with strong opinions and spicy takes that may not be obvious to the casual observer. You'll also hear a view on technology and culture that extends far beyond any single device.
In this one, we touch on —
The disconnect between the world of venture capital/tech startups and the reality of many creatives/builders who don't view capital as a tool for building. With AI enabling code generation, this group could potentially produce venture-scale outcomes without relying on traditional funding.The tech industry has struggled with effectively communicating and branding themselves, especially after the era of Steve Jobs and Apple's lifestyle branding. This has led to insular narratives and misunderstandings around emerging technologies like crypto and AI.Physical products and hardware still hold importance for branding and communicating a clear lifestyle/use case, unlike software companies that often neglect this aspect. Successful hardware brands like Teenage Engineering have a distinct identity tied to their products.Devices like Humane's are attempting to break people's "addiction" to smartphones by offering an alternative that frees the user's hands and gaze, challenging the narcissistic nature of current mobile devices.Niche hardware products like USB Club's file-sharing network cater to specific communities (DJs, designers, etc.) and could enable new economic models by tying hardware to digital networks and data storage.There is a potential cultural shift happening around the perception of manufacturing/trade jobs, with younger generations being more open to these paths instead of defaulting to universities and white-collar work. -
One of the most frequent requests we get is to hear directly from indie founders. Today's conversation is just that. And we did it in style. James Nord, founder of Fohr, has had a front row seat to indie having been one of the very first investments we made. In turn, I've had a front row seat for their growth from hundreds of thousands in revenue to 10s of millions.
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I had the opportunity to know Christina Cacioppo early in her time at Union Square Ventures. Always whip-smart and ever curious, we found ourselves drawn to similar founders and edges of emerging markets. When her time at USV ended, we lost touch. She moved from NYC to San Francisco, took a job at Dropbox, and carried on with her post-VC life.
Fast forward a few more years, and she’s leading one of the fastest-growing SaaS businesses as the co-founder and CEO of Vanta. A few weeks back, we got to reconnect for a long overdue catch up at Vanta’s office in San Francisco. Initially scheduled for 30 minutes, our conversation expanded into nearly two hours of lessons learned, hilarious anecdotes, and a genuine reconnection between two old friends.
Although Vanta is not an indie portfolio company, you’ll quickly notice Christina’s indie-aligned approach to starting and scaling Vanta. From her quick product iteration, to early paying customers that led to early profitability, and intentional decisions around how and when to best capitalize the business. We cover it all. I’ve watched a bunch of Christina’s past interviews and feel like this one gets closest to the intensely whip-smart and soulful person she is.
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A few weeks back, we had the unique opportunity to sit down with Tom Preston-Werner, co-founder and former CEO of Github. We met in a church he recently renovated into an incredible event space and rolled the cameras to capture our wide-ranging conversation. Over the better part of an hour, we covered his early years, the founding and scaling of Github prior to its acquisition by Microsoft for $7.5B, and so much more.
