Reason #1 Why Your Consumer Startup will Succeed

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This post is the first in a series of ten posts about the 10 key reasons your consumer startup will succeed.

I speak with hundreds of aspiring consumer entrepreneurs and review thousands of executive summaries and pitches each year. From all this activity, certain patterns emerge that remain consistent with successful consumer startups. In the following 10 blog posts, I will list the top 10 reasons consumer startups succeed. Note that all seem necessary, but none on their own are sufficient.

#1 Vision Worth Fighting For

The question we always ask founders at our first meeting is: What is your vision worth fighting for? It’s a loaded question and we’re listening closely on several levels:

We want to hear what they are planning to bring into the world that is worth all the time, effort and money required for success. We are also listening carefully if the founders are passionate about this vision. If they don’t have the passion, then they will likely give up when the going gets tough. And, the going gets tough most of the time with startups.

We also want to make sure that the market opportunity is one that would justify a venture investment. There are many great consumer startups solving important problems that would make great businesses but could never scale to a billion dollar business. There’s nothing wrong with growing a successful consumer business addressing a smaller market, it’s just not the right type of startup to seek a VC investment.

Perhaps most often overlooked by founders, is the question of whether there are existing solutions that are good enough that already solve this problem. We often hear from founders that while there are one or more products that have millions of customers already in the marketplace that are solving this problem, these founders will claim, those products don’t work and their new solution will be so much better. You’ll hear some investors say that the new product would need to be 10X, 100X or 1,000X better. They might be right, but almost always, these startups will fail.

We prefer to invest in startups that are solving novel problems, that have discovered a secret that others haven’t noticed yet. We love investing in companies when after they launch, people say, “that’s a great idea, so obvious, why didn’t we think of doing that.” Building a new consumer habit is one of the hardest things a consumer startup founder will need to achieve, and if there’s already existing solutions to the problem that are “good enough,” that almost always spells doom for the nascent venture.

To sum up, Key to Success #1 is the the founders’ ability to clearly articulate their “vision worth fighting for,” which is a great idea that addresses a big market opportunity and that solves an important consumer need not already being solved by some other existing product. We’re also heavily biased to working with founders building novel consumer products that we’re proud of bringing to the world.

Welcome

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I am excited to announce the official launch of my personal blog for Maven.  I’ve been writing and blogging informally for many years and look forward to building a community of engaged readers curious about consumer startups and investing.  This first post is a brief synopsis of my career along with a few hints about what I hope to write about.  When you have a moment, feel free to watch my recent interview on Zana about consumer startups and growth hacking.

About Me and Maven Ventures

I’ve spent the last 20 years of my career as an entrepreneur in one capacity or another – a founder, executive, angel investor, attorney, mentor capitalist and venture capitalist. As an angel investor, I invested in and worked hands-on with about two companies a year, helping them raise outside funding and acting as an interim COO. I did that for five years and 50% of my investments have already been acquired by companies like Google and Intuit.  It worked so well that last year, I decided to launch the Maven Ventures Fund and Maven Ventures Growth Labs incubator in Palo Alto to scale the operations.

Prior to launching Maven, I was fortunate to play an early role in three ‘Unicorn’ ($1B+) exits/valuations: Bebo ($850M sale to AOL), Tango ($1B+ valuation) and NBCi ($6B IPO). I plan to use my blog as a place to share some of the many lessons I’ve learned over the years working with these companies, as well as other startups and entrepreneurs. My amazing Maven team & I evaluate over 2,500 startups each year for our 15 investments. In fact, it’s harder to get into the Maven Growth Labs than it is to get into Harvard or Stanford.  We meet so many great startups each day that I continually see many of the same patterns, problems, and roadblocks, and I will use this as an opportunity to share my learnings with you to help you on your journey.

A bit more about Maven: we are an incubator and Micro VC fund focused exclusively on consumer internet and mobile startups with hyper-growth potential. Since we work exclusively with early-stage (Seed or Series A) direct-to-consumer businesses with hyper-growth potential, we focus on what we know.  A third of our investments are part of our in-house incubator, so the founders work in our office and we spend time hands-on with them to shape their mission, vision, marketing, and early growth. To deliver impact to our incubator and portfolio companies, we’ve enlisted a group of 20 incredible growth mentors who spend time hands-on with the startups we invest in.

I look forward to sharing more about Maven, our mentors, my past experiences, and emerging consumer tech trends through this blog. Welcome!