Read more about how we’re thinking and where we’re investing here.

When we look at investment opportunities, we need to consider the type of market that the potential investment is in. How much room is there for a market leader or leaders? Is it winner-takes-it-all or winner-takes-almost-all? Is there room for multiple potential winners? <i>Winner takes all</i> These markets are driven by network effects and only one company will win in the space. Examples of these winners include <a class="zem_slink" title="eBay" href="http://ebay.com" rel="homepage">eBay</a> (auctions), <a class="zem_slink" title="LinkedIn" href="http://www.linkedin.com/" rel="homepage">LinkedIn</a> (professional networking), and <a class="zem_slink" title="YouTube" href="http://www.youtube.com/" rel="homepage">YouTube</a> (video). When these markets first emerged on the scene, there were dozens, if not hundreds, of companies vying for market share. Yet, only one dominant product survived. <i>Winner takes almost all</i> This market trend is happening across the enterprise where adoption is driven by end users, and not dictated from above by IT departments. In this case, a company or tool can emerge as a clear category leader, as word of mouth among satisfied users accelerates adoption across colleagues, departments, and companies. As a result, the tool can grab a large market share in a certain market segment or vertical. Think <a href="http://www.mailchimp.com">Mailchimp</a>, <a href="http://www.dropbox.com">Dropbox</a>, <a href="http://www.hightail.com">Hightail</a> or <a href="http://www.unbounce.com">Unbounce</a> for horizontal solutions or <a href="http://www.goclio.com">Clio</a>, <a href="http://www.getjobber.com">Jobber</a> or <a href="http://frontdeskhq.com">Frontdesk</a> for vertical products (disclosure some of those are portfolio companies). In particular, we see a winner takes almost all dynamic happening in vertical SaaS plays where word of mouth can quickly travel within one industry. For example, lawyers from different firms may work on the same case and spread exposure of favorite tools. <i>Multiple winners</i> When markets are not subject to network effects (or there’s minimal network effects/word of mouth), multiple winners can emerge. Today this type of market is mainly in commerce and enterprise IT. <b>The bottom line</b> As an entrepreneur, you need to understand what kind of market you are in order to create effective growth and fundraising strategies: <ul> <li>Growth strategy: Let’s say you end up being #2 in your market. While second place might be an enviable position for some, it’s essentially worthless in a winner-takes-all market. For this reason, you’ll need to be as aggressive as possible in the first few months after a category emerges to try to lock in the top spot before it’s too late. On the other hand, such an aggressive tactic doesn’t make sense in an e-commerce environment where there can be multiple winners. In this situation, you’re better off adopting a more conservative approach and ensuring you’ve reached product-market fit and nailed unit economics before accelerating.</li> <li>Fundraising strategy: You’ll need to understand your market’s dynamics to know how much money to raise and how quickly. For example, in a winner-takes-all or winner-take-almost-all market, there’s a window to aggressively fundraise while the category is still open. However, once a category leader emerges, it will be hard to attract investors.</li> </ul> Of course, all of this is made even more complicated by the fact that it’s not always clear what the exact category is. For example, do <a href="http://www.lyft.me/">Lyft</a>, <a href="https://www.side.cr/">Sidecar</a>, <a href="http://www.hailocab.com">Hailo</a>, and <a href="https://www.uber.com">Uber</a> all belong to the same transportation category or do they each define their own category? As an entrepreneur or investor, you’ll need to analyze the market and its current players to know how much room (if any) is left.

Ever since my friend <a href="https://twitter.com/albertwenger">Albert</a> and his wife <a href="https://twitter.com/susandanziger">Susan</a> have started to homeschool their kids, I have been thinking about the best ways to make custom learning more accessible to kids, families, and adults alike. Albert and Susan have taken an innovative approach to homeschooling (if interested, you can read more about their experiences <a href="http://continuations.com/tagged/homeschooling">here</a>).  They recently devised the idea to <a href="http://continuations.com/post/55079888702/looking-for-guides-tutors-for-our-children">hire individual guides</a> for each of their three children. Part concierge, part program manager and part learning specialist, these guides are responsible for creating a learning program tailored to each child. Guides need to explore the child’s specific areas of interest (which means finding and coordinating time with skilled experts and arranging field trips), as well as building the child’s basic skills in reading, writing, presenting, researching, and analyzing in pursuit of their interests. In this way, the guide doesn’t necessarily have to have specific expertise in the child’s areas of interest, but they need to be able to coordinate access to the right tutors, experts, and resources. This goal is to give each child a fully customized education that encourages them to grow and learn by pursuing the topics that mean something to them. Running this level of a homeschooling program is no easy feat. Parents need to find and select the right guides; the guides need to coordinate the right tutors and experts for each child. On an individual level, it can be extremely costly and time-intensive. But what if there were a distributed school that followed the same principles? For example, a school or learning platform that gave parents easy access to available guides and tutors for their kids to create a custom education. This school could be tied to a physical space, although it’s not necessary. It would be a mix of online and offline teaching. It could offer existing courses from other institutions if there was a fit. And to make the program more affordable, a guide could be shared by 3-4 kids, and specialized tutors could be shared as well. The prospect of such a custom learning experience makes me very excited and I hope that somebody will build a distributed school soon. Our family would be one of the first customers. &nbsp;

<span style="line-height: 1.5em;">At version one, we are big believers in the vertical SaaS opportunity. Small to mid-sized businesses have long been underusing technology. A mobile-first approach, combined with a laser-like focus on a specific vertical, can create the right toolset to help SMBs achieve huge productivity gains (</span><a style="line-height: 1.5em;" href="http://techcrunch.com/2013/03/23/narrow-focus-is-helping-verticals-win-enterprise-software-but-it-challenges-remain/">I wrote about this</a><span style="line-height: 1.5em;"> nearly a year ago for TechCrunch).</span> That’s why I’m excited to announce our new investment. <a href="http://www.goclio.com/">Clio</a> is the leader in providing legal practice management software in the cloud. 80 percent of the legal market is made up of solo practitioners and small firms. These professionals have little support staff and no IT department…meaning they’re typically overwhelmed with all the administrative parts of their business.  That’s where Clio comes in. They’ve moved all of practice management to the cloud, including time tracking, invoicing, case management, client contact, etc. Over the past two years, I’ve been sitting on Clio’s board for ActonCapital (<a href="http://www.techvibes.com/blog/vancouvers-cloud-based-legal-management-platform-clio-raises-6-million-in-series-b-2012-01-30">who led Clio’s Series B</a>). Over that time, I’ve been incredibly impressed with the ambition of the two founders, <a href="http://www.crunchbase.com/person/jack-newton">Jack Newton</a> and <a class="zem_slink" title="Rian Gauvreau" href="http://www.crunchbase.com/person/rian-gauvreau" rel="crunchbase">Rian Gauvreau</a>, as well as their amazing customer and product focus. While the legal industry has been slower to keep pace with technological advancements, it’s definitely ripe for disruption – and smaller firms are quicker to adopt new tools than larger ones. Clio now joins fellow vertical SaaS companies in the V1 portfolio, including <a href="https://frontdeskhq.com/">Front Desk</a> (scheduling/client management) and <a href="http://getjobber.com/">Jobber</a> (field service). Leading this round is <a class="zem_slink" title="Bessemer Venture Partners" href="http://www.bvp.com/" rel="homepage">Bessemer Venture Partners</a>, with <a href="http://www.crunchbase.com/person/trevor-oelschig">Trevor Oeschlig</a> and <a class="zem_slink" title="Brian Feinstein" href="http://www.crunchbase.com/person/brian-feinstein" rel="crunchbase">Brian Feinstein</a> joining Clio’s board. I’ll be remaining on Clio’s board for Acton and am looking forward to helping Jack and Rian build an even more impressive company and product. Please join me in officially welcoming Jack, Rian, and their entire team to the version one community. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://www.virtual-strategy.com/2014/02/05/clio-revamps-its-look-and-rolls-out-suite-new-features">Clio Revamps its Look and Rolls Out a Suite of New Features</a> (virtual-strategy.com)</li> <li class="zemanta-article-ul-li"><a href="http://business.financialpost.com/2013/09/27/clio-takes-law-conferences-to-cloud-9/">Clio takes law conferences to Cloud 9</a> (business.financialpost.com)</li> <li class="zemanta-article-ul-li"><a href="http://business.financialpost.com/2013/11/26/silverbach-joins-clio-as-part-of-aggressive-growth-strategy/">Silverbach joins Clio as part of aggressive growth strategy</a> (business.financialpost.com)</li> <li class="zemanta-article-ul-li"><a href="http://blogs.wsj.com/venturecapital/2014/03/25/vancouver-startup-clio-raises-18m-to-help-lawyers-cut-inbox-clutter/">Vancouver Startup Clio Raises $18M to Help Lawyers Cut Inbox Clutter</a> (blogs.wsj.com)</li> </ul>

Virtually every start-up dreams of becoming a platform at some stage. After all, it is the most powerful position in the ecosystem. What has been the one rule to becoming a platform? Develop a killer app that gets you to scale: and then open up the platform once your reach is attractive enough for other developers to develop specific apps for your platform. This game plan has worked for consumer (<a class="zem_slink" title="Faceboo" href="http://www.facebook.com" rel="homepage">Facebook</a>, <a class="zem_slink" title="Twitter" href="http://twitter.com" rel="homepage">Twitter</a>) and enterprise (<a class="zem_slink" title="Salesforce.com" href="http://www.salesforce.com/" rel="homepage">Salesforce</a>, <a class="zem_slink" title="Shopify" href="http://shopify.com" rel="homepage">Shopify</a>) apps alike. But recently, we have seen a new breed of platform emerging: platforms that are targeted at developers. Their mission is simple: solve the pain of integrating all the cumbersome and fragmented legacy systems, by providing an easy-to-integrate-with and easy-to-manage frontend for developers. For example, we see horizontal platforms like <a href="http://www.twilio.com/">Twilio</a> that replaces all the telecom hardware with an API for phone, VoIP, and messaging. There’s <a href="https://stripe.com/">Stripe</a> and <a href="https://www.braintreepayments.com/">Braintree</a> for payment processing, and <a href="https://www.lob.com/">Lob</a> for printing. This is what <a class="zem_slink" title="Garry Tan" href="http://garry.posterous.com" rel="homepage">Garry Tan</a> has called the <a href="http://blog.garrytan.com/the-api-ization-of-everything">API-ization of everything</a>: “Where there is paper to push, a call to answer, or a purchase to approve, there is an API coming to replace it.” In addition to these horizontal platforms, there are also very interesting vertical players emerging: <a href="https://spout.co/">Spout</a> for finance, <a href="http://rets.ly/">Rets.ly</a> for real estate, and <a href="https://clever.com/">Clever</a> for education. While horizontal developer platforms are usually built around features, vertical platforms are usually built around data. The traditional platform approach (i.e. Facebook, Salesforce) is still alive and well, but it feels like we are on the cusp of tremendous innovation in the field of developer platforms as the web is evolving into being entirely programmable.

It’s often said that a CEO should focus on three key things: <i>Do I have the right people on the team? Are those people working on the right thing? And is there enough cash in the bank to keep the lights on? </i> The right investor should help a founder with all three of those questions: 1. <i>Do I have the right people on the team? </i> The best investors are instrumental in helping founders recruit the perfect team. For key positions, they should jump in and pitch a candidate to join a portfolio company. Secondly, investors should spend enough time discussing hiring priorities with the CEO, as well as help craft target profiles for senior-level hires. 2. <i>Is the team working on the right things? </i> An investor should serve as a critical sounding board during strategy discussions...Do we have the right strategy, are we focusing on the right priorities, are we growing fast enough (or maybe too fast), and when should we expand into other verticals or geographic territories? In those discussions, the best investors are great listeners and rather ask the right questions than provide all of the answers. 3.  <i>Is there enough cash to keep the lights on? </i> Making important early introductions to follow-on investors is one of the best ways to make sure that a portfolio company will be in a good position to rase the next round of financing. Great investors have a large network to pull from and make very specific introductions. When I first started out as an investor fresh from operating my own start-up (<a href="http://www.abebooks.com">AbeBooks</a>), I often focused on helping founders figure out operational details and processes. I’m sure I was somewhat helpful in these cases. But after years of experience, I’ve come to realize that I would have provided more value and my time would have been better spent by serving as the best possible sparring partner in these strategic matters. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="https://www.versionone.vc/investors-need-actually-use-portfolio-products/">Investors need to actually use their portfolio products</a> (version1v.wpengine.com)</li> </ul>

When developing a business model, every software and app start-up eventually faces the same core question: Should we focus on monetizing customers or driving usage? For consumer apps, this question has been answered (or mostly answered): the best approach is to offer a free service to help attract and retain users. As <a href="http://avc.com/a_vc/2012/07/in-defense-of-free.html">Fred Wilson put it</a>: “When scale matters, when network effects matter, when your users are creating the content and the value, free is the business model of choice.” After you reach enough scale, you can start monetizing in such a way that won’t introduce too much friction to the user experience. For example, one could argue that native advertising like Google Adsense or Twitter’s sponsored tweets actually add value to the service. Consumer apps can also choose the freemium path to monetization and upsell customers to premium subscriptions - <a href="http://www.themediabriefing.com/article/spotify-publishers-freemium-lessons">Spotify</a>, <a class="zem_slink" title="Skype" href="http://twitter.com/skype" rel="twitter">Skype</a>, Ancestry.com, and <a class="zem_slink" title="Dropbox" href="http://www.dropbox.com" rel="homepage">Dropbox</a> are some good examples. Likewise, free is the way to go for mobile apps. As this <a href="http://www.businessinsider.com/chart-of-the-day-paid-apps-are-dead-2013-12#ixzz2uFfTNzyd">chart</a> shows, paid mobile apps are virtually dead - your mobile app will either need to be ad-supported or have in-app payments. <b>But what about enterprise apps?</b> The monetization question is much tougher for enterprise products. While free rules the consumer world, it can be a different story in the enterprise… <ul> <li>Offering an app/service for free can send the wrong message. Here, free can be equated with low quality. Business users and managers might worry a <a class="zem_slink" title="Free product" href="http://en.wikipedia.org/wiki/Free_product" rel="wikipedia">free product</a> isn’t sophisticated enough for their needs or they might not like to have ads in their enterprise product.</li> <li>While <a href="https://www.versionone.vc/can-enterprise-saas-products-be-viral/">viral growth and network effects</a> exist in certain enterprise settings (for example, communication and file-sharing products and in industries like legal), network effects are typically more limited in a B2B environment compared with B2C. That means that a free strategy won’t deliver the same payback in terms of ramping up your user base as it would with consumer products.</li> <li>Free isn’t necessarily sustainable with B2B. Acquiring business users may prove too costly, forcing start-ups to raise incredible amounts of money to finance aggressive sales and marketing efforts for a free app.</li> </ul> In the enterprise, freemium models generally work in two situations: <ol> <li>You target a large enough user base</li> <li>The product becomes more valuable over time…either through a network effect like with Skype or Dropbox or because of data lock-in as with Evernote.</li> </ol> <b>When free won’t work: How to implement paid subscriptions in the enterprise</b> If you’ve determined that a freemium model just won’t work for your product and users, there are a few things to keep in mind to maximize your chances of success with a paid subscription: <ul> <li>The most popular strategy is to offer a free trial in order to encourage sign-up. The exact length of the trial period varies, although 30 days is the most common. Just make sure you give the customer enough time to adopt, get used to, and hopefully come to depend on the product. Also, be flexible in terms of extending the period if it will lead to a more successful evaluation and sale.</li> <li>Choose a pricing model that encourages usage within the company. For example, if you have one core feature that drives usage and adoption, then make that free or include it in the base package. Likewise, if you need a certain number of people to adopt your software, be flexible around the number of seats that represent the threshold for each tiered pricing level.</li> <li>Make sure that your “paywall” doesn’t create any friction when it comes to sharing data with other players in the industry or within the organization. Enabling collaboration will not only make the tool more useful but might also generate viral growth. So make sure your service offers some kind of easy sharing and a free read-only option.</li> </ul> While free services dominate the consumer world, that model is not necessarily going to work for enterprise apps. Make sure to evaluate monetization strategies within the context of your specific product, and not someone else’s.

<p dir="ltr"><span style="line-height: 1.5em;">A few weeks ago when Boris wrote about </span><a style="line-height: 1.5em;" href="https://www.versionone.vc/overcome-decision-paralysis/">overcoming decision paralysis</a><span style="line-height: 1.5em;">, I shared a comment that I make important decisions by evaluating my choices based on how they align with my core values. For years now, I have been encouraging nearly everyone that I meet to take some time to reflect on his or her values for this exact purpose (among many others).</span></p> <p dir="ltr">People often talk about the importance of leading a value-driven life or business, but what exactly are values? They are at the core of our happiness, the source of our inspiration, and foundation of our close relationships. They serve as our compass and guide our decision-making.  They shape our character both in our personal lives and at work.</p> <p dir="ltr"><strong>The importance of values in building a company</strong></p> <p dir="ltr">Values don’t just help you overcome decision paralysis. Living and leading with your values, as well as being mindful of the values of others, is helpful on many levels when building a startup. For example:</p> <ul> <li dir="ltr"> <p dir="ltr"><em>In finding your entrepreneurial purpose</em>.  When you live and work in the Valley, the entrepreneurial spirit is contagious. I often meet engineers who have the drive to be a founder of a company but are stumped about what exactly to build.  In these cases, I encourage them to brainstorm pain points that they have experienced as well as reflect on how solving these problems aligns with what they value.  If you are building a surface solution that doesn’t resonate deeply with or inspire your core being, you will quickly lose your passion to build your startup.</p> </li> </ul> <ul> <li dir="ltr"> <p dir="ltr"><em>In building a product</em>. Many startups today understand the importance of staying lean and creating a minimum viable product (see our list of <a href="https://www.versionone.vc/resources/">resources</a>, under “Lean Startup”). But how do you stay focused on the priorities amidst a long list of features you want to implement? One effective method is to think about your users’ values. Create a persona for each user type – outline their demographic information, roles, personalities, and most importantly, their motivations/values.</p> </li> </ul> <ul> <li dir="ltr"> <p dir="ltr"><em>In hiring</em>.  Yes, it’s important to find the right technical talent. But you also need to hire people who are aligned with your company’s values and passions. Otherwise, you’ll be stuck with high turnover rates and hefty recruitment costs as employees choose to leave because of lack of fit.</p> </li> </ul> <ul> <li dir="ltr"> <p dir="ltr"><em>In developing people and culture</em>.  Free meals, gym memberships, etc. are perks, not culture. Great leaders constantly communicate their vision to their team. These leaders know that shared values lead to greater ownership and accountability, and ultimately more creativity and innovation. For instance, PayPal’s president, David Marcus, was <a href="http://venturebeat.com/2014/02/12/paypal-marcus-memo/">criticized last week for chastising employees in an email</a> for refusing to download the company’s app. However, David’s intent was to cultivate PayPal’s culture by strengthening their collective purpose and passion, while encouraging those who are less engaged to “go find something that will connect with [their] heart and mind elsewhere.”</p> </li> </ul> <ul> <li dir="ltr"> <p dir="ltr"><em>In sales / fundraising</em>.  Learn what your customers and investors value and appeal to these values with <a href="https://www.versionone.vc/good-story-key-to-pitch/">good storytelling</a>. That’s the best way to make an impact.</p> </li> </ul> <p dir="ltr"><strong>Identifying <em>your</em> values</strong></p> <p dir="ltr">Years ago, while doing my PhD, I was introduced to an exercise designed to identify your core values. This was such a transformative experience that to this day, I continue to recommend it in some capacity to nearly everyone I meet.</p> <p dir="ltr">To figure out what your personal or your startup’s values are, begin with a long list of values (as an example, see the bottom of this post).  Start by selecting all that you care about, and then narrow them down to 10, then down to 5, and maybe even 3.</p> <p dir="ltr">My personal values are compassion, continuous learning, and freedom, while my professional values are leadership, positive change and optimization.  Knowing myself in this capacity made the decision to work in venture capital an obvious and right one for fostering my development and growth.</p> <p dir="ltr">What are your core values?  Did you learn anything new or surprising about yourself in this process?</p> <p dir="ltr" style="text-align: left;"><strong><span style="line-height: 1.5em;">List of Values</span></strong></p> <div dir="ltr"> <table align="center"><colgroup> <col width="135" /> <col width="129" /> <col width="148" /></colgroup> <tbody> <tr> <td> <p dir="ltr">Accountability</p> </td> <td> <p dir="ltr">Excitement</p> </td> <td> <p dir="ltr">Peace</p> </td> </tr> <tr> <td> <p dir="ltr">Achievement</p> </td> <td> <p dir="ltr">Fame</p> </td> <td> <p dir="ltr">Persistence</p> </td> </tr> <tr> <td> <p dir="ltr">Adventure</p> </td> <td> <p dir="ltr">Fairness</p> </td> <td> <p dir="ltr">Personal Expression</p> </td> </tr> <tr> <td> <p dir="ltr">Aesthetics</p> </td> <td> <p dir="ltr">Family</p> </td> <td> <p dir="ltr">Play</p> </td> </tr> <tr> <td> <p dir="ltr">Affection</p> </td> <td> <p dir="ltr">Flexibility</p> </td> <td> <p dir="ltr">Pleasure</p> </td> </tr> <tr> <td> <p dir="ltr">Authenticity</p> </td> <td> <p dir="ltr">Forgiveness</p> </td> <td> <p dir="ltr">Power</p> </td> </tr> <tr> <td> <p dir="ltr">Autonomy</p> </td> <td> <p dir="ltr">Freedom</p> </td> <td> <p dir="ltr">Purposefulness</p> </td> </tr> <tr> <td> <p dir="ltr">Balance</p> </td> <td> <p dir="ltr">Friendship</p> </td> <td> <p dir="ltr">Quality</p> </td> </tr> <tr> <td> <p dir="ltr">Beauty</p> </td> <td> <p dir="ltr">Fun</p> </td> <td> <p dir="ltr">Reason</p> </td> </tr> <tr> <td> <p dir="ltr">Career</p> </td> <td> <p dir="ltr">Faith</p> </td> <td> <p dir="ltr">Recognition</p> </td> </tr> <tr> <td> <p dir="ltr">Caring</p> </td> <td> <p dir="ltr">Happiness</p> </td> <td> <p dir="ltr">Relationship</p> </td> </tr> <tr> <td> <p dir="ltr">Challenge</p> </td> <td> <p dir="ltr">Health</p> </td> <td> <p dir="ltr">Religion</p> </td> </tr> <tr> <td> <p dir="ltr">Change / Variety</p> </td> <td> <p dir="ltr">Honesty</p> </td> <td> <p dir="ltr">Resourcefulness</p> </td> </tr> <tr> <td> <p dir="ltr">Collaboration</p> </td> <td> <p dir="ltr">Honor</p> </td> <td> <p dir="ltr">Respect</p> </td> </tr> <tr> <td> <p dir="ltr">Commitment</p> </td> <td> <p dir="ltr">Humor</p> </td> <td> <p dir="ltr">Responsibility</p> </td> </tr> <tr> <td> <p dir="ltr">Communication</p> </td> <td> <p dir="ltr">Influence</p> </td> <td> <p dir="ltr">Safety</p> </td> </tr> <tr> <td> <p dir="ltr">Community</p> </td> <td> <p dir="ltr">Inner Harmony</p> </td> <td> <p dir="ltr">Security</p> </td> </tr> <tr> <td> <p dir="ltr">Competency</p> </td> <td> <p dir="ltr">Innovation</p> </td> <td> <p dir="ltr">Self-Worth</p> </td> </tr> <tr> <td> <p dir="ltr">Competition</p> </td> <td> <p dir="ltr">Integrity</p> </td> <td> <p dir="ltr">Sex</p> </td> </tr> <tr> <td> <p dir="ltr">Connectedness</p> </td> <td> <p dir="ltr">Intellectual Status</p> </td> <td> <p dir="ltr">Social Justice</p> </td> </tr> <tr> <td> <p dir="ltr">Contribution</p> </td> <td> <p dir="ltr">Justice</p> </td> <td> <p dir="ltr">Social Status</p> </td> </tr> <tr> <td> <p dir="ltr">Cooperation</p> </td> <td> <p dir="ltr">Knowledge</p> </td> <td> <p dir="ltr">Spirituality</p> </td> </tr> <tr> <td> <p dir="ltr">Courage</p> </td> <td> <p dir="ltr">Leadership</p> </td> <td> <p dir="ltr">Stability</p> </td> </tr> <tr> <td> <p dir="ltr">Courtesy</p> </td> <td> <p dir="ltr">Learning</p> </td> <td> <p dir="ltr">Strength</p> </td> </tr> <tr> <td> <p dir="ltr">Creativity</p> </td> <td> <p dir="ltr">Leisure</p> </td> <td> <p dir="ltr">Success</p> </td> </tr> <tr> <td> <p dir="ltr">Dependability</p> </td> <td> <p dir="ltr">Location</p> </td> <td> <p dir="ltr">Support</p> </td> </tr> <tr> <td> <p dir="ltr">Dignity</p> </td> <td> <p dir="ltr">Love</p> </td> <td> <p dir="ltr">Team</p> </td> </tr> <tr> <td> <p dir="ltr">Discipline</p> </td> <td> <p dir="ltr">Loyalty</p> </td> <td> <p dir="ltr">Tolerance</p> </td> </tr> <tr> <td> <p dir="ltr">Drive</p> </td> <td> <p dir="ltr">Mental Stability</p> </td> <td> <p dir="ltr">Trust</p> </td> </tr> <tr> <td> <p dir="ltr">Economic Security</p> </td> <td> <p dir="ltr">Order</p> </td> <td> <p dir="ltr">Truth</p> </td> </tr> <tr> <td> <p dir="ltr">Environment</p> </td> <td> <p dir="ltr">Organization</p> </td> <td> <p dir="ltr">Wealth</p> </td> </tr> <tr> <td> <p dir="ltr">Excellence</p> </td> <td> <p dir="ltr">Partnership</p> </td> <td> <p dir="ltr">Wisdom</p> </td> </tr> </tbody> </table> </div>

<span style="line-height: 1.5em;"><a class="zem_slink" title="PayPal" href="http://www.paypal.com" rel="homepage">PayPal</a> President <a class="zem_slink" title="David A. Marcus" href="http://en.wikipedia.org/wiki/David_A._Marcus" rel="wikipedia">David Marcus</a> recently stirred up the hornet’s nest with a memo </span><a style="line-height: 1.5em;" href="http://venturebeat.com/2014/02/11/paypal-chief-reams-employees-use-our-app-or-quit/">scolding employees</a><span style="line-height: 1.5em;"> for not installing and using the PayPal app. In part, the email read: “Everyone at PayPal should use our products where available. That’s the only way we can make them better, and better.” (you can read the complete text of the email </span><a style="line-height: 1.5em;" href="http://venturebeat.com/2014/02/12/paypal-marcus-memo/">here</a><span style="line-height: 1.5em;">). </span>While Marcus’ memo touches on numerous high-level debates like passion vs. paycheck, there’s one important message for start-ups, managers, employees, and investors alike: Eat your own dog food. Investors, really? Should an investor really be expected to use the 10, 15, or 20 products in his or her portfolio? I say absolutely. After all, a great product is the basis for a successful company and an investor who doesn’t understand, know, or use the product is most likely a sub-optimal sparring partner and advisor. A PayPal spokesperson further clarified the message of the memo: “We really want to be driving the best customer experiences that are possible. And part of that is having every employee be the customer and utilize our services wherever you can, and if you see a problem, highlight it and tell people to get it fixed.” As an investor, using a portfolio company is easier when dealing with consumer apps and companies. For example, I’m a regular, sometimes heavy, user of <a class="zem_slink" title="Frank &amp; Oak" href="http://www.frankandoak.com" rel="homepage">Frank &amp; Oak</a>, <a class="zem_slink" title="Indiegogo" href="http://www.indiegogo.com" rel="homepage">Indiegogo</a>, <a href="http://www.indochino.com">Indochino</a>, <a href="http://en.escapio.com">Escapio</a>, <a href="http://www.clarity.fm">Clarity</a>, <a href="http://www.smore.com">Smore</a>, <a href="http://www.tindie.com">tindie</a>, and <a href="http://www.twenty20.com">Twenty20</a>. My wife uses <a href="http://www.julep.com">Julep</a> and <a href="http://www.chloeandisabel.com">Chloe &amp; Isabel</a>. It’s naturally tougher to be a user for business apps, particularly vertically-focused apps. For example, <a href="http://www.figure1.com">Figure 1</a> is a photo-sharing app for medical professionals and <a href="http://www.goclio.com">Clio</a> offers practice management software for lawyers. And I’m neither a doctor nor a lawyer. In these cases, the investor should at least sign up for the service to get a high level impression of the workflow and user experience. As a start-up founder, you should make it a priority to include product presentations in board meetings or schedule separate sessions to go through the product demos. At the end of the day, the more hands that touch your product, the greater the opportunity to improve the user experience. And you don’t necessarily want to trust the opinion of advisors who have never used or tried your product. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://venturebeat.com/2014/02/17/another-lesson-from-david-marcus-email-internal-communication-no-longer-exists/">Another lesson from David Marcus' email: 'Internal communication' no longer exists</a> (venturebeat.com)</li> </ul>

There are more start-ups being launched than ever before, while at the same time there are more ways to reach an audience. As a result, consumers and companies alike are being bombarded with marketing messages…whether it’s in a social media newsfeed, in an email inbox, or through content marketing. Cutting through that noise has become really difficult. At the same time, the marketing strategies have become more complicated to excel at, particularly for small start-ups with minimal resources. There’s always been an inherent tension in marketing: on one side, the creative, free-thinking, “sudden genius” that builds a brand over time, balanced by the data-driven approach that relies on metrics like conversion rates and methodical a/b testing. Like the Yin and Yang, one cannot exist without the other. But both camps have dramatically changed over the years – which makes today's marketing so complicated. <i>First, on the creative side…</i> <i></i>Consumers today expect to have a different relationship with brands and businesses than in decades before. Social media essentially gives consumers a megaphone and they expect a two-way dialogue. Perhaps more importantly, consumers are looking to connect with the human side of a business, and only want authentic stories and messages from their brands. All of this requires a new tool set: marketers need to dig deep to become <a title="A good story is the key to any pitch" href="https://www.versionone.vc/good-story-key-to-pitch/">authentic storytellers</a>. <i>On the data-driven side…</i> Just a few years ago, metrics folks mainly focused on search engine marketing (including both paid and organic) – with the single mission of appearing higher in rankings and getting noticed in a search engine’s results. Today, there’s a whole new landscape. With social media, there’s an explosion of micro-targeting opportunities. For example, marketers can hone in on new moms of a certain age or married men who drink coffee and own a dog. Likewise, mobile has introduced a completely <a title="Mobile is eating the web" href="https://www.versionone.vc/mobile-eating-web/">new distribution platform</a> with a very different set of rules than traditional search engine marketing. <i>The bottom line</i> It’s difficult to find the right talent to fill both the creative and data-driven roles, much less to find the Yin and Yang in the same person. Few CMOs in large companies would consider themselves to be strong in both disciplines. As story-telling <i>and</i> hard-core data-driven marketing become more important and more complicated, we are looking for founders that are great in both disciplines, or at least recognize that both camps are necessary to gain attention and relevance with today’s audience.

<p dir="ltr"><span style="line-height: 1.5em;">When it comes to putting together your pitch deck and preparing for an investor meeting, there are countless articles and advice you can refer to. For example, we have a list of articles on our </span><a style="line-height: 1.5em;" href="https://www.versionone.vc/resources/">Resources page</a><span style="line-height: 1.5em;"> (see under “Pitching”). And one of my favourite blog posts is Tomasz Tunguz’ “</span><a style="line-height: 1.5em;" href="http://tomtunguz.com/pitch-deck/">7 questions a startup should answer in their fund raising pitch</a><span style="line-height: 1.5em;">.”</span></p> <p dir="ltr">These types of articles do a great job of telling you <em>what</em> to cover, but they don’t necessarily dig into <em>how</em> to deliver your message. And let’s face it. Bullet points alone rarely inspire; it’s the way your pitch flows and how you unveil information that gets your investors and customers excited.</p> <p dir="ltr">Each day we connect with multiple entrepreneurs. Without a doubt, the ones who stand out are the ones who share a great story. We are more engaged when we hear a narrative of events as opposed to a list of facts, because we immediately decode the words into something meaningful to us.</p> <p dir="ltr">If storytelling can make or break a conversation, pitch, or demo, how do you make sure you are telling your story in the most compelling way possible? Here are a few tips:</p> <p dir="ltr"><strong>1. Tell your organic story</strong></p> <p dir="ltr"><strong></strong>Fifty start-ups may have a relatively similar business model, so what makes you and your team unique? As investors, we want to hear the back-story: how is it that you came to the idea for your product and startup? For example, were you looking to solve a pain point that you experienced firsthand? That’s a great validation of both the need for your product, as well as your understanding of the space.</p> <p dir="ltr">In addition, tell us why you and your team will be the ones to solve the problem and transform the industry. Why are you passionate about this space? What do you know that others don’t? And what have you and your team learned along the way of building your startup?</p> <p dir="ltr"><strong>2. Know your audience</strong></p> <p dir="ltr"><strong></strong>Entrepreneurs often tell me that, “Every VC wants us to modify our deck and see different metrics.” That’s true: every investor will have their own focus and interests and a good storyteller knows how to cater the story to their audience.</p> <p dir="ltr">Do some homework on each investor beforehand to see what makes them tick. I personally like data and one can easily find that out after spending a few minutes on Google or LinkedIn. If you can’t find any details on the investor ahead of time, start the meeting by letting the VC tell you about him or herself. Then, use your improv skills to describe your product in a way that s/he can personally relate with it.  Don't make the mistake of assuming that the investor has experience with the pain point you are trying to solve.</p> <p dir="ltr"><strong>3. Why, how, and what</strong></p> <p dir="ltr"><strong></strong>There are 3 elements to your story…why, how, and what. “Why” is your motivation and vision. “How” is your plan to achieve the vision (aka, your roadmap). And “What” is the product itself. Great storytellers touch upon all 3 parts. It’s the “Why” part of the story that will inspire investors, teammates, and users, while the “What” grounds us to the reality of the goals at hand.</p> <p dir="ltr"><strong>4. Find the balance between features and pipe dreams</strong></p> <p dir="ltr">Imagine an idea spectrum where on one end, the story is too small and on the other end, it is too big. You don’t want to paint too narrow of a picture where you’ll be perceived as a collection of features and specs instead of a company. On the other hand, good investors won’t take you seriously if you offer a naïve pipedream instead of a realistic goal.</p> <p dir="ltr">A good storyteller can strike a balance by illustrating that their current product is an MVP with many opportunities to grow into the overarching vision.</p> <p dir="ltr"><strong>5. Nail your one-sentence pitch</strong></p> <p dir="ltr">Conciseness is important. By the end of the pitch, investors should be able to describe your business in one sentence. You can accomplish this by crafting one sentence, key message, or tagline and weaving it throughout the presentation.</p> <p dir="ltr">Be as original as possible. You don’t just want to be the stoppers that plug the holes of a leaky bucket. You want to be a new bucket. In addition, be cautious of using the “We are X for Y/This for That” taglines (i.e. “AirBnB for Boats”), since it’s hard for us to get excited about these comparisons. If you haven’t already read it, check out <a href="http://www.avc.com/a_vc/2014/01/this-for-that.html">Fred Wilson’s recent blog post</a> about this.</p> <p dir="ltr"><strong>6. Open and close strong</strong></p> <p dir="ltr">As all good stories go, a pitch needs a strong opening to capture the audience’s attention right out of the gate. Come out with a lot of energy in the first few seconds. Most importantly, you’ll want a strong closing to bring everything around full circle. So much of investing is rooted in intuition. Think carefully about what you want the investor to feel as he or she leaves the meeting. Then, be sure your closing point does everything it can to foster this feeling.</p> <p dir="ltr"><strong><span style="line-height: 1.5em;">Final thoughts</span></strong></p> <p dir="ltr">The perfect pitch doesn’t come naturally to anyone; it’s planned, practiced, and tweaked. Practice telling your story several times in front of different friends and colleagues. See which aspects resonate and where you start to lose their attention. When it comes to adjusting your pitch, use your best judgment: you want to be flexible and open to feedback, without straying too far from your vision.</p> &nbsp;

It happens to the best of us. Faced with a major decision (be it business, financial, life), we’re unsure of which way to go. Worried about making the wrong decision, we wait, do more research, seek more input…basically do anything besides make the decision and act on it. In many cases, the more choices we have, the more likely we are to freeze. As an entrepreneur or investor, you can’t afford to freeze. I generally pride myself on being able to make very quick decisions based on both data and gut, but sometimes there’s just no conclusive evidence or gut feeling to guide the way. Here are four techniques that I have used in order to get past this paralysis: 1. <i>Let the decision sit for awhile: </i>Sometimes you just need some extra time for an idea to percolate, and after a few days or weeks, the right path will become more clear. 2. <i>Talk to somebody: </i>a small comment or bit of advice from someone else can often solve the puzzle in your head. In other cases, just the act of talking about the situation out loud provides an instant revelation of what to do. 3. <i>Pro-con list: </i>I’ll admit that this is probably the least effective method for me, as a decision is often not just a simple list of reasons for and against. But for some, the process of writing out the pros and cons helps distill their thinking. 4. <i>Minimize your regrets: </i>Here’s the principle that I’ve really started to embrace. Ask yourself the following: <i>If you look back at this decision 10 years from now, which path will you most regret not having taken? </i> For example, think about the decision to stay on a safe career path vs. starting a company that has a huge potential upside but also very high risks. Rather than just focusing on minimizing risk, I like to take the approach of minimizing potential regrets when faced with a hard decision. What do you do to overcome decision paralysis?

<a class="zem_slink" title="Marc Andreessen" href="http://blog.pmarca.com/" rel="homepage">Marc Andreesen</a> famously said that “<a href="http://online.wsj.com/news/articles/SB10001424053111903480904576512250915629460">software is eating the world</a>.” Now it looks like mobile is eating the web. Back in 2010, <a class="zem_slink" title="Mary Meeker" href="http://www.crunchbase.com/person/mary-meeker" rel="crunchbase">Mary Meeker</a> and <a class="zem_slink" title="Morgan Stanley" href="http://www.morganstanley.com/" rel="homepage">Morgan Stanley</a> predicted that within the next five years, “more users will connect to the Internet over mobile devices than desktop PCs.” We’ve arrived at that milestone. The shift from desktop to mobile, whether smartphone or tablet, is happening across a variety of activities. For example, as of January 2013 <a class="zem_slink" title="Facebook" href="http://https://www.facebook.com" rel="homepage">Facebook</a> has <a href="http://www.cnn.com/2013/01/30/tech/social-media/facebook-mobile-users/">more mobile users than web users</a> – as more and more people are checking their Facebook updates on their mobile device and skipping the desktop version entirely. Likewise in 2013, <a href="http://www.rjionline.org/research/rji-dpa-mobile-media-project/2013-q1-research-report-1">news consumption</a> on mobile devices surpassed desktop, and <a href="http://www.internetretailer.com/2013/10/01/its-official-mobile-devices-surpass-pcs-online-retail">consumers now spend more time</a> interacting with online retailers on smartphone and tablets than they do on desktops and laptops. Like any platform shift, this mobile wave obviously has major implications for any business. Here are four key trends that companies, whether web-first or mobile-first, need to be aware of. <b>1. Don’t just adapt for a smaller screen, but re-think UX</b> Most web-first companies have completely underestimated the radical change that mobile brings about. Many still think that mobile is simply an extension of the Web. After all, it’s human nature to view something new within the context of what we already know. That happened when we moved from radio to TV, print to web, and web to mobile. <a href="http://www.lukew.com/presos/preso.asp?29">Luke Wroblewski</a> speaks about this in a great talk (discussion of shift from one media to another begins around 10:30). Every new medium needs a new way of thinking. A mobile device is not just a smaller or less powerful version of a desktop computer. It’s an entirely new form of media that’s unique to itself. For example, it’s always on; it’s always with us; and it offers more interactivity than ever before. Businesses need to invent new use cases and applications that make full use of the new platform, rather than just copying existing models from the web. <b>2.  The risk of unbundling</b> Albert Wenger discussed the <a href="http://continuations.com/post/29475650606/facebooks-real-mobile-problem-unbundling">risk of unbundling</a> as it relates to Facebook: “On my phone another app is just a button push away and there is relatively little that fits on each screen.  So it is just as much effort to go to another part of the Facebook app as there is to go to a different app altogether.” This means that each mobile app is continually competing for attention with countless other apps. It also means that one large platform/app doesn’t necessarily enjoy a monopoly, as users can just as easily opt for six best-of-breed point applications. <b>3. Distribution strategies are different</b> For companies looking to build a presence via mobile apps, there’s the matter of discoverability. Strong product market fit is often no longer enough to get to a large user base, instead "<a href="http://www.avc.com/a_vc/2012/11/what-has-changed.html">you need to master the "download app, use app, keep using app, put it on your home screen" flow and that is a hard one to master</a>." And many distribution strategies that worked on the web (like long-tail SEO), simply don't work in an app ecosystem. <b>4. Customer support opportunities</b> Considering the fact that more than <a href="http://ovum.com/research/the-future-of-customer-service-in-a-mobile-world-smart-connected-interactions/">50% of inbound customer service calls</a> will be made from mobile devices by 2016, mobile presents a big opportunity to rethink the customer support experience. From a pure voice-call standpoint, it doesn’t matter whether a call originates from a landline or mobile device. However, mobile devices give companies even more ways to reach out and assist their customers. Customer service apps can provide a level of interaction not possible on a landline - including the ability to use video, send photos or instructions, chat, and voice. But companies need to think beyond what has been done before, and invent brand new experiences for mobile. While the rapid pace of mobile adoption has caught many businesses off guard, there’s a big opportunity for start-ups to rethink a product or vertical in a mobile-first way. There’s also an <a href="https://www.versionone.vc/re-imagining-the-mobile-use-case/">opportunity to provide the infrastructure</a> for traditional web companies to move to mobile. More than half of Version One portfolio companies are either mobile-first or mobile-only companies, so it’s safe to say we’re excited about seeing the next generation of mobile businesses and experiences. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://theamazingweb.net/2014/01/01/the-mobile-moment/">The Mobile Moment</a> (theamazingweb.net)</li> <li class="zemanta-article-ul-li"><a href="http://moz.com/blog/whats-the-future-of-mobile-search-and-seo">What's the Future of Mobile Search and SEO?</a> (moz.com)</li> </ul>

When <a href="http://jelly.co/">Jelly</a> launched a week ago, it was amazing to see how quickly the app got traction – over 100K questions were asked during the first week. Certainly, Jelly’s high profile team (co-founder <a class="zem_slink" title="Biz Stone" href="http://twitter.com/biz" rel="twitter">Biz Stone</a>, and individual investors like <a class="zem_slink" title="Jack Dorsey" href="http://twitter.com/jack" rel="twitter">Jack Dorsey</a>, Bono, and <a class="zem_slink" title="Al Gore" href="http://algore.com" rel="homepage">Al Gore</a>) helped spark widespread speculation and buzz leading up to the launch. In addition, Jelly leverages users’ existing social graphs on <a class="zem_slink" title="Twitter" href="http://twitter.com" rel="homepage">Twitter</a> and <a class="zem_slink" title="Facebook" href="http://https://www.facebook.com" rel="homepage">Facebook</a>, so it immediately overcame the cold-start problem most platforms and marketplaces face when trying to build a user base at the beginning. However, digging deeper into the quality of engagement during Jelly’s first week reveals some potential problems with this rapid ramp-up. Only 25% of questions posed ever received an answer. The daily active user count has been trending downward as the media buzz surrounding the initial launch tapers off. And, the number of people asking questions has outpaced the number of people answering them – pointing to a potentially unbalanced marketplace. You can find more data about <a href="http://blog.rjmetrics.com/2014/01/14/jelly-data-an-outside-looking-in-analysis/">Jelly’s first week from RJMetrics</a>. <p style="text-align: center;"><img class="aligncenter" alt="" src="http://blog.rjmetrics.com/wp-content/uploads/sites/4/2014/01/rjm-jelly-hourly-activity.png" width="684" height="405" /></p> When an app’s user base ramps up so quickly, there’s no time for a community to form or for the product to mature. Immediate primetime is often a real risk for both. Jelly’s users are still trying to figure out how to make use of the service beyond identifying spiders or asking “What does the fox say.” And the very public nature of this launch may turn off casual users before its power users have a chance to hash out the most meaningful use cases. At a time when growth hacking is top of mind for everybody, the Jelly experience reminds me of the value of growing slowly during the early stages of a product. A closed beta and/or delaying the push into existing social graphs might be two strategies to go back to. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://blog.rjmetrics.com/2014/01/14/jelly-data-an-outside-looking-in-analysis/">Jelly Data: An Outside-Looking-In Analysis</a> (rjmetrics.com)</li> </ul>

As someone who is still relatively early in his investing career, I often think about what qualities set successful investors apart from the rest. Good investing doesn’t just happen. And while luck may help at times, it’s not the answer. Here are few key ingredients that I consider important for being a great investor: <b>Live in the future</b> <a href="http://paulgraham.com/startupideas.html">Paul Graham</a> advised start-ups to “Live in the future, then build what’s missing.” Once you’re living at the leading edge of a rapidly changing field, you’ll see things that are missing…challenges or frustrations that need to be solved. And, once these problems are solved, they’ll seem very obvious in retrospect. This same advice applies to investors as well. You can only create above-average returns if you invest in companies that are ahead of the mainstream. <b>Have a well-defined investment thesis</b> <a href="http://www.avc.com/a_vc/2013/04/return-and-ridicule.html">Fred Wilson once wrote</a>, “So many folks in the venture capital business are sheep that just want to follow the herd. They are momentum investors purchasing highly illiquid investments. That is a recipe for disaster.” In order to not follow the herd, you need a strong set of convictions to serve as the foundation for making bets, and then following through on them. For Version One, I’ve created a map of what particular areas we should focus on and where they’re going over the next few years. Then, I can evaluate each potential investment within the context of this map/thesis. <b>Stick with it</b> Not every investment is going to be wildly successful right away and one of the <a href="http://www.avc.com/a_vc/2013/12/sticking-with-the-struggling-investments.html">hardest things to do in the venture capital </a>is hence to stick with a struggling investment. However, if you’re going to be successful as an investor, you need to realize that once you are in, you’re in. There’s no turning back, or ignoring a flailing start-up until it just goes away. Of course, it’s much easier to stick with your guns, if you’ve made the initial investment based on your own core principles/investment thesis, rather than simply reacting to market trends and current momentum (point three). <b>Be both a cheerleader and a critic</b> There will be times when your portfolio teams need an enthusiastic backer and a quick pep talk. Then, there are other times when honest, sometimes even harsh, feedback is necessary. I think an investor needs to be a start-up’s biggest cheerleader and their most honest critic. You can’t just be one or the other: praise without honesty are just empty words. Yet, a constant focus on the negative won’t generate the results you want either. <b>Remember who runs the company</b> Successful investors are usually active investors; they show up at board meetings, respond to emails and phone calls from the founders, and constantly think about the company and the ways they can help. However, the exact level of participation is a delicate balance; an investor should never cross the boundary of getting <i>too</i> involved. At the end of the day, the entrepreneurs run the company; the investor is an active bystander. Founders make the ultimate decisions; investors can only advise. Those are the five essential ingredients that I’ve been thinking about lately. If you have other thoughts, share them in the comments below… &nbsp;

<p dir="ltr">As the year comes to an end, it’s a natural time to pause and reflect on what we’ve done and where we’re headed.</p> <p dir="ltr">2013 was busy for Version One. We made 3 new investments: <a href="http://figure1.com/">Figure 1</a>, a photo-sharing network for medical professionals; <a href="https://upverter.com/">Upverter</a>, a cloud-based hardware engineering platform; and one unannounced investment. These new investments bring the total number of portfolio companies to 14. We also participated in 6 follow-on deals this year to further support our portfolio.</p> And in 2013, Version One got its first analyst, with the <a href="https://www.versionone.vc/introducing-version-ones-new-analyst-angela-kingyens/">hiring of Angela Tran Kingyens</a>. This not only doubled our size, but also bolstered our physical presence in Silicon Valley. We now have Boris in Vancouver and Angela in Palo Alto. <p dir="ltr"><strong>Today and tomorrow</strong></p> <p dir="ltr"> Here’s a snapshot of where Version One stands today:</p> <ul> <li>Out of our 14 total investments, 10 are seed and 4 are Series A.</li> <li>Current portfolio companies are spread out amongst e-Commerce (<a href="https://www.frankandoak.com/shop">Frank &amp; Oak</a>, <a href="http://www.julep.com/">Julep</a>); SaaS (<a href="https://frontdeskhq.com/">Front Desk</a>, <a href="http://getjobber.com/">Jobber</a>, <a href="https://tophat.com/">Top Hat</a>, <a href="https://grouptalent.com/welcome/">GroupTalent</a>); Marketplaces (<a href="http://clarity.fm/home">Clarity</a>, <a href="http://www.kinnek.com/">Kinnek</a>, <a href="https://www.tindie.com/">Tindie</a>, <a href="http://twenty20.com/">Twenty20</a>, one unannounced); and Platforms (<a href="http://www.talentbuddy.co/">Talentbuddy</a>,<a href="https://upverter.com/"> Upverter</a>, <a href="http://figure1.com/">Figure 1</a>)</li> <li>We remain geographically agnostic; 8 portfolio companies are located in Canada and 6 in the U.S.</li> </ul> <div align="center"> <p dir="ltr"><img alt="" src="https://lh4.googleusercontent.com/PKwu0NN3zb19tJ6bkLGYH-nv0DjFi0o0e3_F1HUzbd2sirQSU_W7QYNh54keaATaeWCRroe8_MWiPHXVfDpVVRI1B8ljP2DFCGI8vbByFs8baeI5D46O9hV_mw" width="623px;" height="304px;" /></p> </div> <p dir="ltr">Moving forward, we will continue to focus on e-Commerce, SaaS, marketplaces, and platforms, but there are a few areas that we are particularly excited about.</p> <p dir="ltr"><a href="http://figure1.com/">Figure 1</a> represents our first healthcare investment and we’re very bullish about this segment. Healthcare has always been a conservative sector, but it’s primed for some <a href="http://venturebeat.com/2013/12/11/the-health-tech-booster-shot-bringing-health-care-into-the-21st-century/">dramatic changes</a>, especially behind the scenes as technology and the cloud will help providers work smarter, faster, and more collaboratively. The right tools will bring together professionals, as well as patients, to generate faster and more effective diagnoses.</p> <p dir="ltr">There’s also a massive opportunity for <a href="http://gigaom.com/2013/06/30/alibaba-is-just-the-beginning-how-b2b-marketplaces/">B2B marketplaces</a> to replace paper-centric, error-prone supply chains for small businesses. New B2B startups can improve on earlier versions by lowering the costs of transactions and helping identify the right suppliers and products.</p> <p dir="ltr">Other specific areas of interest include <a href="https://www.versionone.vc/bitcoin-observations-thoughts/">Bitcoin</a> (more as a protocol/platform than currency), mobile SaaS, and machine learning. Above all, we are looking forward to working with great entrepreneurs looking to change their industry or the world.</p> <p dir="ltr">Finally, thanks to our network of supporters (our LPs, our colleagues, our partners, our portfolio companies, our friends, and our followers) for a great year.  We wish you all a wonderful holiday season and best wishes for 2014!</p> <p dir="ltr">-Boris &amp; Angela</p> &nbsp;

A few months ago we started spending more time on the healthcare vertical and got extremely excited about the amount of innovation that we were seeing. It felt like the healthcare industry was at a similar tipping point than education a few years ago. Yesterday we published a guest post on <a class="zem_slink" title="VentureBeat" href="http://venturebeat.com" rel="homepage">VentureBeat</a> outlining <a href="http://venturebeat.com/2013/12/11/the-health-tech-booster-shot-bringing-health-care-into-the-21st-century/">our investment thesis for the health care vertical</a>. At the core, we believe that "consumerization" - the direct adoption of  innovative software products by health care professionals and patients - will be driving the future healthcare delivery: <blockquote>The “consumerization of healthcare” will help move data and conversations from the doctor’s office into the cloud, where they are now visible and useful to countless other healthcare professionals working on similar cases. The right collaborative tools will bring together professionals, as well as patients, to generate faster and more effective diagnoses. Solutions will include platforms that enable the secure sharing of medical records, as well as large public knowledge-bases that can crowdsource symptom diagnosis and treatment.</blockquote> Based on this thesis, we think that some of the big winners in this space will include companies that can unlock this data and knowledge in large networks of users: <blockquote>The companies that will win big in this space are those who can successfully connect people (doctor-doctor, patient-patient, doctor-patient) in a large, secure, and regulatory-compliant network. In addition to unlocking data, platforms will incorporate analytics and machine learning in the backend in order to add actionable insights and predictions to the data dump.</blockquote> We <a title="New investment: Figure 1, a healthcare photo sharing app" href="https://www.versionone.vc/new-investment-figure1/">recently announced our first healthcare investment</a> (<a href="http://www.figure1.com">Figure1</a>, a safe photo-sharing app for healthcare professionals) and we are looking forward to making more investments in this space in the upcoming years. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://venturebeat.com/2013/12/11/the-health-tech-booster-shot-bringing-health-care-into-the-21st-century/">The health-tech booster shot: Bringing health care into the 21st century</a> (venturebeat.com)</li> <li class="zemanta-article-ul-li"><a href="https://www.versionone.vc/new-investment-figure1/">New investment: Figure 1, a healthcare photo sharing app</a> (version1v.wpengine.com)</li> </ul>

I often see two entrepreneurs executing on similar opportunities, but with two very different capital efficiencies. First, there’s the aggressive one who spends money very quickly, building a large team, buying early growth through aggressive marketing and sales, and hoping for a large upround in the next financing round. Then, there’s the bootstrapping entrepreneur who hires carefully (sometimes too little, too late), trying to get as much runway with the current money as possible and build a “real” business. Finding the right balance between investing in growth and focusing on capital efficiency is one of the toughest challenges for entrepreneurs and early-stage start-ups. It can be particularly tricky as investors are usually <a href="http://www.paulgraham.com/growth.html">looking for growth</a> and evaluating start-ups as defined by growth. Here are a few observations and pieces of advice to help you navigate which spending model is best for your start-up: 1. Don’t invest in marketing and sales until you have found product-market fit: <a href="http://www.stanford.edu/class/ee204/ProductMarketFit.html">Marc Andreesen</a> once categorized start-ups as before product-market fit (BPMF) and after product-market fit (APMF). When you are BPMF, you should be doing everything you can to get to product-market fit…whether that’s changing out your people, tweaking the product, moving to a different market. However, there’s no point in spending on marketing and sales at this point; until you’ve found the right product for your market, you’d simply be wasting your money. 2. Revisit product-market fit from time to time: Don’t assume that what worked in the early days will continue to work for years to come. External changes in the market can impact your product-market fit, as may your own growth path. For example, as a SaaS company scales and targets larger enterprise customers, its initial product-market fit may no longer be as strong. 3. Evaluate your market: is it winner-takes-it-all? If you’re targeting a winner-takes-it-all (or almost all) market, then focusing on saving money makes no sense. You’d be sacrificing market leadership. Think about it. Nobody remembers <a class="zem_slink" title="Ryze" href="http://www.ryze.com" rel="homepage">Ryze</a>, or Spoke as <a href="http://reidhoffman.org/linkedin-pitch-to-greylock/">early LinkedIn competitors</a>. But if you’re operating in e-commerce or other non winner-takes-it-all markets, then you don’t have to be overly aggressive in the early stages. In this case, you can take your time to fine-tune your model before aggressively scaling up. 4. Get your metrics under control: Putting the “pedal to the metal” makes the most sense if you understand your LTV (lifetime value) per customer and CAC (customer acquisition costs). As you scale, you should also have early warning systems in place to see if your new customers and acquisition channels are performing at least as well as the previous ones (weekly LTV/CAC cohorts are the best measure for this). <strong>Final thoughts</strong> As an investor, nothing is more impressive than meeting an entrepreneur that has built a great business in a short amount of time and with very little money. Being frugal and knowing how to spend money is one of the most important entrepreneurial traits – as long as it doesn’t come at the expense of growth. Jeff Bezos/Amazon is probably the best example where the right balance of frugality and growth is engrained in their DNA. &nbsp;

Over the years, we’ve seen web and mobile technology disrupt business, education, legal and many other fields as professionals adopt products that help them work more effectively and efficiently.  While the healthcare industry has always been more conservative, it is now primed for change. At Version One, we have been looking intensely for investment opportunities in healthcare, believing that the leaders of this disruption will be companies that are able to connect people (doctor-doctor, patient-patient, doctor-patient) in a large, secure, and regulatory-compliant network in order to democratize medical knowledge and increase access to care. Today, we are thrilled to announce our first investment in this space:  <a href="http://www.figure1.com">Figure 1</a>, a safe photo sharing app for medical professionals.  The product is a mobile, crowdsourced platform where healthcare professionals can upload, tag and discuss images (for example, images of surgical procedures or rare medical conditions). Doctors may already share images with one another while in the same office or medical facility, but Figure 1 now offers the medical community a way to collaborate and communicate around images, no matter where they’re located. It breaks down traditional information silos which is key to improving patient care and medical education.  The app already has users across Canada, the US, and the UK. Figure 1 was founded in early 2013 by a super talented team:  Joshua Landy, a critical care physician; Richard Penner, a mobile developer; and Gregory Levey, a JD/MBA. We are co-leading this investment with <a class="zem_slink" title="Rho Ventures" href="http://www.rho.com" rel="homepage">Rho Canada Ventures</a> and are joined by several angel investors.  We are really excited to be a part of Figure 1’s journey going forward! To learn more, visit <a href="http://figure1.com/">figure1.com</a> or follow <a href="https://twitter.com/Figure1app">@figure1app</a> on Twitter.

[caption id="" align="alignright" width="300"]<a href="http://commons.wikipedia.org/wiki/File:Bitcoin.png"><img class="zemanta-img-inserted zemanta-img-configured" title="The bitcoin logo" alt="The bitcoin logo" src="http://upload.wikimedia.org/wikipedia/commons/thumb/5/50/Bitcoin.png/300px-Bitcoin.png" width="300" height="298" /></a> The bitcoin logo (Photo credit: Wikipedia)[/caption] I recently started to spend some more time on the <a class="zem_slink" title="Bitcoin" href="http://en.wikipedia.org/wiki/Bitcoin" rel="wikipedia">Bitcoin</a> ecosystem and while I have not yet fully wrapped my head around all of the opportunities and challenges (or even developed an investment thesis), I wanted to write down some early thoughts and observations. <strong>Thoughts on the current ecosystem</strong> The recent <a href="http://www.wired.com/business/2013/11/bitcoin-one-thousand/">Bitcoin rally</a> might be just the tip of the iceberg, as the crypto-currency may rise to even higher prices driven by destabilized national currency systems, greed and speculation, as well as illegal activity (i.e. the best way to get money out of China). Simon Winder has an interesting analysis <a href="http://simonwinder.com/2013/11/bitcoin-how-high-can-it-go/">how high Bitcoin can go</a>. While the majority of mainstream attention has focused on Bitcoin as a currency, Bitcoin may have a more interesting future as a protocol (see Albert Wenger’s post <a href="http://www.usv.com/posts/bitcoin-as-protocol">“Bitcoin as a Protocol</a>”). At its core, Bitcoin provides a digital ledger that’s continually updated and synchronized in real time. Any participant can make an entry in the ledger, recording transactions from one participant to another participant. In this way, Bitcoin provides an unalterable framework for Proof of Ownership that can be used not only as currency, but also in a range of interesting applications like voting, property, contracts, domains, and securities. It is still very early days for the platform but the two biggest opportunities for Bitcoin seem to be right now: <ol> <li><em>Disrupting traditional institutions that we used to rely on for trust-related services</em>, such as banks, registrars, etc. The app <a href="http://www.proofofexistence.com/about">Proof of Existence</a> uses the Bitcoin network as an ultra-secure notary service. But imagine even broader use cases (as <a href="http://startupboy.com/2013/11/07/bitcoin-the-internet-of-money/">outlined here</a>) such as:</li> </ol> <ul> <ul> <li>A will that automatically unlocks (without attorney intervention) when the heirs agree that the parent has passed away</li> <li>A wire escrow that goes through when any arbiter agrees that the seller sent the goods to the buyer</li> <li>A wallet that is socially secured by friends or family</li> <li>A crowdfunding project that pays out after reaching various milestones, based on the approval of the backers</li> </ul> </ul> <p style="padding-left: 30px;">2. <i>Drive down transaction fees</i>: This <a href="http://www.scribd.com/doc/186246343/DigitalCurrency-Comparison">infographic</a> compares the cost of sending $1K from the U.S. to Europe (for example, as a down payment for a vacation rental). Here’s the breakdown on transaction costs: Bitcoin - $15, Credit card - $50, and bank wire - $40-80.</p> <strong>The future of Bitcoin</strong> Numerous questions are yet to be answered surrounding Bitcoin’s future as a currency and as a platform. The speculative and volatile nature of Bitcoin currency might be good for the short-term as it has generated tons of awareness in the mainstream media. However, will this volatility ultimately hurt the adoption of the overall Bitcoin platform in the long run? Bitcoin might only succeed if people start using it for daily transactions and a high volatility of the underlying currency would hurt that adoption. Likewise, will heavy-handed regulation make it hard for Bitcoin start-ups to survive in the U.S. and will there be new Bitcoin ecosystems emerging outside of the Valley? We’ve already seen several new start-ups setting up shop in Canada to escape U.S. regulations, including the <a href="http://www.vancouversun.com/100K+traded+through+Vancouver+Bitcoin+week+with+video/9145774/story.html">world’s first Bitcoin ATM</a> in Vancouver. I also wonder if the virtual/crypto currency space is a winner-takes-it-all market, or will we see many other alternatives emerge? Already today there’s Litecoin, Peercoin, and Primecoin, to name a few. Will we see numerous virtual currencies co-exist, perhaps segmented along geographical/regional or industry/markets? In a <a href="http://simonwinder.com/2013/11/bitcoin-how-high-can-it-go/)">recent post</a>, Simon Winder compared Bitcoin to <a class="zem_slink" title="Friendster" href="http://www.friendster.com" rel="homepage">Friendster</a> – a first mover, but imperfect. The question then is, who will be <a class="zem_slink" title="MySpace" href="http://myspace.com" rel="homepage">MySpace</a>, who will be <a class="zem_slink" title="Facebook" href="http://https://www.facebook.com" rel="homepage">Facebook</a>? &nbsp;

The most successful online marketplaces today facilitate relatively simple transactions. There’s <a class="zem_slink" title="NASDAQ: EBAY" href="http://www.google.com/finance?q=NASDAQ:EBAY" rel="googlefinance">eBay</a> and <a class="zem_slink" title="Etsy" href="http://www.etsy.com/" rel="homepage">Etsy</a> for buying/selling goods, <a class="zem_slink" title="Airbnb" href="http://www.airbnb.com/" rel="homepage">AirBnB</a> for short-term accommodations, and Uber for local transportation. While reputation mechanisms (i.e. user reviews) play an important role on these platforms, the price tags involved are typically low enough that customers are ready to deal with strangers over the web. But, it can be a different story when someone is looking to spend $10,000 vs. $100. There’s an enormous opportunity for marketplaces to emerge that handle high-value, complex transactions. However, to find success, they’ll need to make customers feel comfortable reducing the high-ticket purchase and/or complex deliverable to a few clicks. Today, we already see marketplaces for more complex transactions… for example booking a location and photographer for your wedding (<a href="http://www.weddingful.com">www.weddingful.com</a>), hiring a web designer to create your next mobile app (<a href="http://www.ooomf.com">www.ooomf.com</a>), or finding short-term rentals for pop-up stores (<a href="http://www.storefront.com">www.storefront.com</a>). However, many of these sites currently work more as a lead generation engine than an actual marketplace and / or the platform needs to act as a hands-on broker to facilitate these transactions between participants. To realize the full potential of the opportunity, marketplaces for complex transactions will need to move virtually all of their transactions online by taking care of a few things: 1. <i>Provide more information upfront: </i>If you’re buying a book online, the <a class="zem_slink" title="International Standard Book Number" href="http://en.wikipedia.org/wiki/International_Standard_Book_Number" rel="wikipedia">ISBN</a> and a rough description of the condition is usually enough information for you to feel comfortable making the purchase. But what about booking a wedding photographer? In this case, you’d want to see his/her portfolio, numerous reviews for previous clients, and possibly a write-up of the photographer’s approach and style. 2. <i>Standardize traditionally unique transactions: </i>Professional services companies are increasingly looking to create boxed offerings that include pre-defined scope, pricing, duration, deliverables, results, and other relevant parameters. The “<a href="https://www.versionone.vc/who-will-win-the-growing-online-to-offline-sector/">productization of services</a>” helps speed up traditionally lengthy sales cycles, and enables customers to complete complex transactions in a few clicks. 3. <i>Provide more help to the inexperienced buyer: </i>In many cases, buyers will be considering certain purchases for the very first time. In these cases, a marketplace will need to help guide buyers through the decision-making process. For example, oomf offers a <a href="http://howmuchtomakeanapp.com/">project planner/cost calculator</a> to help first-time buyers understand how much it will cost to make an app. 4. <i>Reduce risk: </i>Just like online retailers have found success via free shipping/free return models, transactional marketplaces also need to reduce risk for the buyer – such as by offering full money-back guarantees with purchase. We still have a long way to go before complex transactions will completely move online, but I’m optimistic that some savvy companies will figure it out. In the meantime, consumer trust in the Web and online transactions will continue to grow. We don’t know who the major players will be, but this will be an interesting space to watch.