Thank you!!! Just, thank you- for taking the time to help others. I am always inspired by your writing and podcast. It can feel very lonely trying to create something new and valuable, you give me energy to keep the faith:)
Nicole - Thanks for the kind words! That means a lot. I'll keep at it. Let me know how you think we can make it better and if you have any ideas for topics you think I should tackle.
Hi Mike, very compelling writing as always. Man, I can't stop thinking about this idea around "why now"!
I really think that building a venture strategy around investing only around inflection points makes total sense. I mean, you have definitely proven that it works -- not only the idea but actually executing on it.
But even if it's a valid investment strategy to only invest in inflection points, I must say I don't agree with inflection points being a definitive pre-requisite for a successful startup. As I mentioned before I really do believe there are people who are able to see the world -- (as it lies before them, not as it's changing in front of them!) -- and identify dislocations and anomalies and transform that potential energy into kinetic energy.
Do you think your airbnb example really stacks up to passing "the specific thing" as you describe it? I don't think that "a critical mass of people had become comfortable shopping online and trusting reviews" qualifies as a specific thing. The GPS for Uber, 100% agree, but this, no.
Validating if your theory holds (as a ground truth, not only as a portfolio strategy) should be easy enough through reverse engineering. I asked ChatGPT to produce a random list of technology companies that were less than 10 years old when they exited for >1bn. It came back with this:
Mojang - founded 2009, exit 2014, $3bn.
Supercell - founded 2010, exit 16, $9bn
Twitch - launched 2011, exit 2014, $1bn
Slack - launched 2013, exit 2019, $20bn
Beats Electronics - founded 2006, exit 2014, $3bn
Kiva Systems - founded 2003, exit 2012, $800m
Mobileye - founded 1999, exit 2017, $15bn
Aruba networks - founded 2002, exit 2015, $3bn
Dollar Shave Club - founded 2011, exit 2016, $1bn
AppDynamics - founded 2008, exit 2017, $4bn.
Eyeballing that list, do all of these come back with an obvious "specific thing" to you?
I think in most cases, we would find they will...although I can only say for certain with Twitch since I worked with them and not the others.
One of the things that's tricky about the inflection stuff is that it can be hard to see it at the time. For instance, the Airbnb guys might have *benefitted* from inflections (some at the beginning some later) without realizing it or doing anything pre-meditated about them.
So - the thing I'm trying to do (which will come up with more clarity later) is help founders stress test their ideas on a go-forward basis. It's my view that timing may be the biggest risk factor (and determinant of success) of all of the many variables. So the reason I like to suggest to founders that they think of something that's new and specific is that it forces them to be tough-minded about the bets they are making around the timing issue. In other words, it can be a useful thought experiment to ask "before I cross the Rubicon and commit my next 5-10 years to this, how can I test whether I've thought about whether I can empower specific people in a specific new way right now or very soon?" It's still possible to win without doing this...there are lots of ways to win. But most founders I spend time with want to come up with ways to increase the odds and find better ways to ask better questions than lots of startup frameworks suggest. Am I making sense?
I liked this concept. I would add that one of the inflection points was the price of the imaging chip itself used in the iPhone. Today you can buy a fully diced, mounted and tested HDMI CMOS sensor for just a few dollars. That itself has spawned startups like GoPro and has been a big part of making drones a viable product.
Thank you!!! Just, thank you- for taking the time to help others. I am always inspired by your writing and podcast. It can feel very lonely trying to create something new and valuable, you give me energy to keep the faith:)
Nicole - Thanks for the kind words! That means a lot. I'll keep at it. Let me know how you think we can make it better and if you have any ideas for topics you think I should tackle.
Hi Mike, very compelling writing as always. Man, I can't stop thinking about this idea around "why now"!
I really think that building a venture strategy around investing only around inflection points makes total sense. I mean, you have definitely proven that it works -- not only the idea but actually executing on it.
But even if it's a valid investment strategy to only invest in inflection points, I must say I don't agree with inflection points being a definitive pre-requisite for a successful startup. As I mentioned before I really do believe there are people who are able to see the world -- (as it lies before them, not as it's changing in front of them!) -- and identify dislocations and anomalies and transform that potential energy into kinetic energy.
Do you think your airbnb example really stacks up to passing "the specific thing" as you describe it? I don't think that "a critical mass of people had become comfortable shopping online and trusting reviews" qualifies as a specific thing. The GPS for Uber, 100% agree, but this, no.
Validating if your theory holds (as a ground truth, not only as a portfolio strategy) should be easy enough through reverse engineering. I asked ChatGPT to produce a random list of technology companies that were less than 10 years old when they exited for >1bn. It came back with this:
Mojang - founded 2009, exit 2014, $3bn.
Supercell - founded 2010, exit 16, $9bn
Twitch - launched 2011, exit 2014, $1bn
Slack - launched 2013, exit 2019, $20bn
Beats Electronics - founded 2006, exit 2014, $3bn
Kiva Systems - founded 2003, exit 2012, $800m
Mobileye - founded 1999, exit 2017, $15bn
Aruba networks - founded 2002, exit 2015, $3bn
Dollar Shave Club - founded 2011, exit 2016, $1bn
AppDynamics - founded 2008, exit 2017, $4bn.
Eyeballing that list, do all of these come back with an obvious "specific thing" to you?
I think in most cases, we would find they will...although I can only say for certain with Twitch since I worked with them and not the others.
One of the things that's tricky about the inflection stuff is that it can be hard to see it at the time. For instance, the Airbnb guys might have *benefitted* from inflections (some at the beginning some later) without realizing it or doing anything pre-meditated about them.
So - the thing I'm trying to do (which will come up with more clarity later) is help founders stress test their ideas on a go-forward basis. It's my view that timing may be the biggest risk factor (and determinant of success) of all of the many variables. So the reason I like to suggest to founders that they think of something that's new and specific is that it forces them to be tough-minded about the bets they are making around the timing issue. In other words, it can be a useful thought experiment to ask "before I cross the Rubicon and commit my next 5-10 years to this, how can I test whether I've thought about whether I can empower specific people in a specific new way right now or very soon?" It's still possible to win without doing this...there are lots of ways to win. But most founders I spend time with want to come up with ways to increase the odds and find better ways to ask better questions than lots of startup frameworks suggest. Am I making sense?
I liked this concept. I would add that one of the inflection points was the price of the imaging chip itself used in the iPhone. Today you can buy a fully diced, mounted and tested HDMI CMOS sensor for just a few dollars. That itself has spawned startups like GoPro and has been a big part of making drones a viable product.
I like this one a lot! I'm gonna have to remember that one.