Yesterday, Matt and I published a post about vertically integrated and AI-first approaches to building companies that are transforming physical industries, specifically as it relates to accelerating the energy transition and mitigating the climate crisis. The article is a reflection of something that I've come to deeply appreciate about USV. We have conversations about topics that sometimes span a day, weeks, or months. Then, at some point, we are ready to share that conversation with the world and we synthesize it on the USV site.
My partner Andy said this phrase that I love: "USV is a conversation." I didn't understand it before I joined, but now I do. The conversation never ends. It may pause on a particular theme for a beat, but it picks back up and is in a constant state of evolution. Sometimes we've talked about something enough and the best way to move it forward is to invite the public to participate in it.
Another thing I now appreciate is how collaborative writing can be. After blogging here on my own for several years, it had been a while since I wrote articles with colleagues. Andy and I co-wrote a piece on healthcare. He has a beautiful way with words and an elegantly Socratic style. I learned a lot in the process of trying to meld our words together. The experience was unfamiliar and a little hard at first, but ultimately more fun than going it alone (and I think it yielded a better result, too). Similarly, Matt is exponentially more sophisticated than I am when it comes to everything climate related. I sent him a miserably shitty first draft that was a reflection of our internal conversations and emails around the topic, and he took the outline, evolved it, and filled it with substance.
This collaborative process is a continuation of the conversation, just on the page instead of aloud in the room. Sometimes it can feel hard to start it up, but once you're in the flow of it, it can take you to unexpected and important places.
One of the hallmark traits of what makes a consumer product weird is having difficulty describing the thing. That’s somewhat to be expected given the novelty of some products, particularly in this day and age when AI and crypto are enabling user experiences we’ve never seen before.
There have been several instances at USV lately where we’ve spoken with early-stage consumer companies and struggled to define what the product actually is. “It’s like a tool that makes everyone a creative wizard, but also a network where sharing things is a ton of fun!” “It’s a game, but also like a storytelling platform mixed with a group chat!” When we articulate these things to people the commonplace response is a look of bewilderment. I think that’s a good thing.
When we find ourselves using the Dre and Snoop refrain “It’s like this and like that and like this and a…” we know it’s time to take the product seriously and that the founder very well may be onto something special. An inability to succinctly articulate what a consumer experience does can actually be a positive signal. It means you’ll just have to try it out for yourself and see what it conjures.
Every entrepreneur I know falls somewhere on the spectrum between paranoid to full-blown “the world is conspiring against me” paranoid. This is no surprise because only the paranoid survive. It creeps up everywhere: will a competitor lap me? Will a key employee leave? Will I lose that partnership? I just pitched an investor, are they going to share information with people I don’t want them to? A strategic is trying to acquire us, are they just fishing for information so they can directly compete? The list is infinite. No matter how well things are going, there is always something suspect in the air.
One area where paranoia always crept in for me was when investors asked whether I thought another company was competitive. When building GroupMe and Fundera my answer always defaulted to “Yes, of course.” At GroupMe if someone wanted to invest in a group-buying company, we’d block it because we had “Group” in our name and one day we might converge. If someone wanted to invest in a SMB insurance marketplace, we’d be insulted because we wanted to be the Everything Store for SMB financial products at some point in the next 5-100 years. My feeling was that investors made their bet on us, and anything even remotely adjacent or tangentially related was a blatant affront and off-limits. If they asked, I’d block it.
Now that I’m on the other side of the table, I think about this a lot.
When starting Fundera, I actively sought to work with investors who knew about our space. We were building a
Yesterday, Matt and I published a post about vertically integrated and AI-first approaches to building companies that are transforming physical industries, specifically as it relates to accelerating the energy transition and mitigating the climate crisis. The article is a reflection of something that I've come to deeply appreciate about USV. We have conversations about topics that sometimes span a day, weeks, or months. Then, at some point, we are ready to share that conversation with the world and we synthesize it on the USV site.
My partner Andy said this phrase that I love: "USV is a conversation." I didn't understand it before I joined, but now I do. The conversation never ends. It may pause on a particular theme for a beat, but it picks back up and is in a constant state of evolution. Sometimes we've talked about something enough and the best way to move it forward is to invite the public to participate in it.
Another thing I now appreciate is how collaborative writing can be. After blogging here on my own for several years, it had been a while since I wrote articles with colleagues. Andy and I co-wrote a piece on healthcare. He has a beautiful way with words and an elegantly Socratic style. I learned a lot in the process of trying to meld our words together. The experience was unfamiliar and a little hard at first, but ultimately more fun than going it alone (and I think it yielded a better result, too). Similarly, Matt is exponentially more sophisticated than I am when it comes to everything climate related. I sent him a miserably shitty first draft that was a reflection of our internal conversations and emails around the topic, and he took the outline, evolved it, and filled it with substance.
This collaborative process is a continuation of the conversation, just on the page instead of aloud in the room. Sometimes it can feel hard to start it up, but once you're in the flow of it, it can take you to unexpected and important places.
One of the hallmark traits of what makes a consumer product weird is having difficulty describing the thing. That’s somewhat to be expected given the novelty of some products, particularly in this day and age when AI and crypto are enabling user experiences we’ve never seen before.
There have been several instances at USV lately where we’ve spoken with early-stage consumer companies and struggled to define what the product actually is. “It’s like a tool that makes everyone a creative wizard, but also a network where sharing things is a ton of fun!” “It’s a game, but also like a storytelling platform mixed with a group chat!” When we articulate these things to people the commonplace response is a look of bewilderment. I think that’s a good thing.
When we find ourselves using the Dre and Snoop refrain “It’s like this and like that and like this and a…” we know it’s time to take the product seriously and that the founder very well may be onto something special. An inability to succinctly articulate what a consumer experience does can actually be a positive signal. It means you’ll just have to try it out for yourself and see what it conjures.
Every entrepreneur I know falls somewhere on the spectrum between paranoid to full-blown “the world is conspiring against me” paranoid. This is no surprise because only the paranoid survive. It creeps up everywhere: will a competitor lap me? Will a key employee leave? Will I lose that partnership? I just pitched an investor, are they going to share information with people I don’t want them to? A strategic is trying to acquire us, are they just fishing for information so they can directly compete? The list is infinite. No matter how well things are going, there is always something suspect in the air.
One area where paranoia always crept in for me was when investors asked whether I thought another company was competitive. When building GroupMe and Fundera my answer always defaulted to “Yes, of course.” At GroupMe if someone wanted to invest in a group-buying company, we’d block it because we had “Group” in our name and one day we might converge. If someone wanted to invest in a SMB insurance marketplace, we’d be insulted because we wanted to be the Everything Store for SMB financial products at some point in the next 5-100 years. My feeling was that investors made their bet on us, and anything even remotely adjacent or tangentially related was a blatant affront and off-limits. If they asked, I’d block it.
Now that I’m on the other side of the table, I think about this a lot.
When starting Fundera, I actively sought to work with investors who knew about our space. We were building a
for SMB loans, and we were relatively new to this world. If an investor had previous exposure to SMB lending it was a plus. Two of our first investors, First Round and Khosla Ventures, had invested in OnDeck Capital, a direct lender that would become an important partner and customer of ours. This was a positive signal to me - they believed in the space. Another one of our investors, QED, had invested in another SMB lender that became an early partner and customer of ours. In no way did I view this as a conflict, it was a positive differentiator.
But once we had an investor’s money, something changed for me. Whenever they’d try to make a new investment in a direct lending company (similar to the aforementioned ones), I’d attempt to block it, claiming it was competitive. This was irrational behavior. If it didn’t matter before, why would it matter now? I remember when one investor told me he made an investment in a direct lender without asking for my permission beforehand, I was absolutely livid. All I could see was red when he explained their new investment. (The company ended up becoming another important paying customer of ours, and the founder became a friend of mine whose next company I invested in.)
Reflecting on this, it seems hypocritical to feel this way and I’ve tried to piece together why that was the case. When the investment in Fundera (which actually felt like an investment in “me”) followed an investment in a direct lender, I felt validated, as if the investor made a previous mistake and was course-correcting by supporting us. But when the opposite happened, I felt betrayed, like the investor believed they made a mistake and we weren’t good enough. My feelings were real, but my assumptions were wrong. This was not an indictment of me as a person or a loss of belief in the potential of the company itself. It was an action reflective of a growing conviction in the space and a desire to deepen its financial investment in a theme they believed to be important. This was not supporting a competitor, it was strengthening a complement.
I think this will always be a sensitive topic and a tricky area to navigate. Some investors can be very helpful if they have exposure to a space and know the relevant players and industry dynamics. It’s easy to try to present making investments in an adjacent company as a logical and potentially beneficial thing to an entrepreneur, but investors should be empathetic and recognize that entrepreneurs have real feelings and are inherently paranoid about this. I don’t think investors should ask for permission, but they should always ask a Founder's opinion and factor it into their decision-making. At the end of the day, they’re only left with their reputation. For entrepreneurs, it’s important to internalize that these investment decisions are not a critique of them as a person or their business (unless the VC deliberately invests in a direct competitor, then they are asking to be written off). In fact, these actions can be a way of doubling down on your future. It’s hard to separate feelings and perception from intent. These situational dynamics are important and can get messy very quickly. There’s no substitute for putting yourself in the other person’s shoes.
for SMB loans, and we were relatively new to this world. If an investor had previous exposure to SMB lending it was a plus. Two of our first investors, First Round and Khosla Ventures, had invested in OnDeck Capital, a direct lender that would become an important partner and customer of ours. This was a positive signal to me - they believed in the space. Another one of our investors, QED, had invested in another SMB lender that became an early partner and customer of ours. In no way did I view this as a conflict, it was a positive differentiator.
But once we had an investor’s money, something changed for me. Whenever they’d try to make a new investment in a direct lending company (similar to the aforementioned ones), I’d attempt to block it, claiming it was competitive. This was irrational behavior. If it didn’t matter before, why would it matter now? I remember when one investor told me he made an investment in a direct lender without asking for my permission beforehand, I was absolutely livid. All I could see was red when he explained their new investment. (The company ended up becoming another important paying customer of ours, and the founder became a friend of mine whose next company I invested in.)
Reflecting on this, it seems hypocritical to feel this way and I’ve tried to piece together why that was the case. When the investment in Fundera (which actually felt like an investment in “me”) followed an investment in a direct lender, I felt validated, as if the investor made a previous mistake and was course-correcting by supporting us. But when the opposite happened, I felt betrayed, like the investor believed they made a mistake and we weren’t good enough. My feelings were real, but my assumptions were wrong. This was not an indictment of me as a person or a loss of belief in the potential of the company itself. It was an action reflective of a growing conviction in the space and a desire to deepen its financial investment in a theme they believed to be important. This was not supporting a competitor, it was strengthening a complement.
I think this will always be a sensitive topic and a tricky area to navigate. Some investors can be very helpful if they have exposure to a space and know the relevant players and industry dynamics. It’s easy to try to present making investments in an adjacent company as a logical and potentially beneficial thing to an entrepreneur, but investors should be empathetic and recognize that entrepreneurs have real feelings and are inherently paranoid about this. I don’t think investors should ask for permission, but they should always ask a Founder's opinion and factor it into their decision-making. At the end of the day, they’re only left with their reputation. For entrepreneurs, it’s important to internalize that these investment decisions are not a critique of them as a person or their business (unless the VC deliberately invests in a direct competitor, then they are asking to be written off). In fact, these actions can be a way of doubling down on your future. It’s hard to separate feelings and perception from intent. These situational dynamics are important and can get messy very quickly. There’s no substitute for putting yourself in the other person’s shoes.
