What got you interested in transactional consumer tech Justin Caldbeck?
Consumer technology has long fascinated me because of its incredible impact on the way we all connect with one another and get things done. I love the “Wow” experiences Social consumer applications have changed the way we interact with loved ones and friends (eg Facebook, Snapchat), celebrities and people we don’t know (Twitter, Instagram) and meet find easier ways to connect with new romantic matches ( Tinder, Hinge). Transactional consumer technology has completely changed the ease with which we do everything from get a ride (Uber/Lyft), secure a restaurant reservation (Open Table), travel (Airbnb), order food or groceries (Grubhub, Instacart) and so many other things. They make our lives easier and create magical experiences in so many ways. Those experiences are what has made me fall in love with consumer technology and love the search for the next platform that can help hundreds of millions of people live better lives.
- What are some notable companies in the transactional consumer tech space that you contributed to Justin Caldbeck? What did you see in those companies in their early stages that attracted you to them? I’ve been fortunate to invest in a number of fantastic transactional consumer technology companies. One that jumps to my mind that I invested in when I was at Lightspeed was Grubhub which is the largest food delivery platform. They had fantastic founders in Matt Maloney and Mike evans and had built a powerful platform for independent restaurants to more effectively market their businesses online. It was revolutionary at the time for consumers to find and order from restaurants near them. I also was a seed investor in Stitchfix when I was at Lightspeed, which at the time was a novel personal styling service that curated a set of 5 clothing items for people to try on in their own homes. Over time, the recommendations improved based on the feedback from the customers and the company scaled to become a multi-billion dollar public company. There were a few things that impressed me early on when I met Katrina Lake. Primarily, I was impressed with the degree to which her clients stuck around and ordered repeat boxes despite the fact that there was very little data science or operational capabilities in the company at that stage. I’m proud to have contributed a lot to that company having recruited the COO, Mike Smith (former COO of Walmart.com), VP Data Science, Eric Colson (former head of Data Science at Netflix), VP Engineering Jeff Barrett (former VPE at Opower) to the company at a very early stage (along with others) and Head of Online at Sephora, Julie Bornstein, onto the Board. I know what an impact those hires had on the company and a number of them stayed with the company through the IPO. Another company which I personally invested into was Opendoor. They blew away with the simplicity of their solution to buy or sell homes. They took a process that was onerous, stressful and full of intermediaries that didn’t add a lot fo value and simplified it in a magical way.
- Are there any investment failures that you struggled with, and what did you learn from them Justin Caldbeck? I’ve invested in many failures I think the most painful was probably a company called Sidecar that I invested in which at Lightspeed. They were the first company in the peer-to-peer taxi replacement space. Well before I invested in Uber, I had backed Sidecar when Sidecar was the market leader in San Francisco. At the time, the Uber was focused on Black cars and Lyft was named Zimride and focused on long distance ride sharing (e.g Boston to New York). The investment was very controversial because of regulatory concerns and the idea of getting into a strangers car was quite scary to many. My bet at the time was that we could execute fast enough that Uber wouldn’t want to cannibalize its core Black car business with lower priced/lower margin peer-to-peer rides. I underestimated Travis Kalanick which was stupid and ultimately very very wrong. We didn’t execute well and it was one of my early marketplace invetsments which taught me the value of focusing on a few markets to win those markets vs spreading yourself out across too many markets and losing focus.
- Do you have any tips/advice for a company that plans to pitch to a venture capital firm? What are a few do’s and don’ts Justin Caldbeck?
I think there are a few things that I might encourage an entrepreneur to think about going into a venture capital pitch. That being said, I don’t think that VC is for everyone and that there are many fantastic businesses that have chosen to bypass the VC route which I really respect. A couple of things that I think are pretty important going into a good VC pitch.
- Think through why you are the perfect person to build this business and why now is the point in time in which this company should be built
- Why is your product a “wow” experience
- Stay focused.Its ok to talk about the long term vision of what the company can be over time but its equally important to focus on the near term focused plan of attack
- Have an idea of how you’re going to spend the money and what you want to achieve with that from a metrics and team standpoint
- What was the biggest challenge in starting a VC firm and how did you overcome that obstacle Justin Caldbeck?
The biggest obstacle to starting a VC firm is that the world really doesn’t need any more VC firms So articulating to new Limited Partners why there is a real opportunity to build a differentiated firm and why you believe there is an opportunity to create a different experience for entrepreneurs is a challenge initially. For me, that opportunity was around focus when I decided to build Binary Capital. We didn’t get a chance to complete that journey at Binary but I saw enough data points when I was there to be convinced that a firm like that can be amongst the best in the world