Learning from others

I typically read startup news in the morning - funding announcements, blog posts, and twitter discourse on companies, trends and topics of the day.  I don't know if this is useful or not for me.  But, I enjoy it.

Last week, I saw this tweet and thought it was both insightful and hilarious

I think there is wisdom in Hicks' observation. I'd generalize to say the primary objective of any early stage company is to try enough hypotheses to find one that works.  The broader the hypothesis, the harder it is to iterate quickly, hence his insight that building infrastructure is easier than the full 'idea' itself.

Successful startups are emergent, not planned.  And, some entrepreneurs increase their chances for finding success by developing a compelling initial hypothesis.

Today, three funding announcements seemed to provide an occasion for looking at what I admire in new ventures.  I don't know anything about these companies other than what is presented by them on their website.  My limited information provides a useful constraint (h/t Andy Weissman).  

Oath -  raised capital to expand an 'intimate community and medical support' for mothers.  

• I love how clearly defined their audience is.  The largest words on the entire website say "Onboarding for Motherhood."  No ambiguity about who should be their customer. I know immediately who I can recommend the service to.
• I love the clear theory of change - "Health happens in a Community."  I have no idea if that is a well supported hypothesis or not but it makes sense intuitively, and more importantly gives me a clear view into what the customer experience will be ('oh, I'll be joining a community').
• I imagine having a richly defined audience and clear theory of change for how to provide progress to that audience helps the founders recruit and manage talent.  Talent will self select to the mission, and once on board will more easily understand the strategy of the business (increase indicators community success), saving time and frustration for everyone involved.

Oath reminds me that a compelling mission to serve a well defined large market provides tremendous advantage when gathering resources and vital early momentum.

Wander -  raised money to scale an existing network of 'perfect Wander owned smart homes for your next workcation, vacation or anything in-between.'

• I love how Wander in unambiguously high end.  The positioning competes with existing offerings like Airbnb on a different dimension. Airbnb will win on location availability and price options, but Wander is making a clear commitment to customer: 'if you book here, you remove doubt on quality of the house,' which is something Airbnb hasn't done well ever.
• I love how Wander fits in an existing macro trend.  Covid opened up remote work in new ways. There are now thousands of digital nomads looking to explore new locations. Wander rides these tailwinds, and directly embraces it with the 'workcation' language.
• I love the economics (here, totally speculating, as I said, have only seen the page).  Wander can buy the properties with significant leverage, charge customers significant premium for the high end location and build, and then offload appreciated properties over time.  Digital marketplace economics with leverage to high end property markets.  Over time, they should split out their ownership structure to the venture investors that want to own the software type risk/return and the real estate investors that just want exposure to geographically diverse luxury properties in attractive vacation markets.  That later product may not exist yet today, and will be attractive to investors.

Wander reminds me to look for opportunities left open by large successful companies, compete in a different dimension, and stay in markets with large natural tailwinds, not headwinds.

Daffy -  raised capital to help donors 'make giving a habit.'

• I love how the business uses technology to brings an existing financial product (here a Donor Advised Fund) to a wider audience at a lower cost.  This is the same strategy pursued successfully by robo-advisors (not coincidentally) and index funds before them.
• I love how the team is using social science research to design the product for better customer behavior.  The site highlights the use of commitment devices, goal setting and other tools that come directly from recent research on habit formation.

Daffy reminds me of the opportunity to look at what products and services are today only enjoyed by a few because of high costs, which would make the world a better place if technology lowered that cost and widened the market dramatically.

All startups are risky. I have no idea how these three companies will fare going forward. In all likelihood, any success that does come will be from changes and iterations made by the team at some point after today, not by the features identified above.  

But, these features have all contributed to each of them making it to today's funding announcements.  And that was yesterday's goal.  One step at a time, give yourself the best chance of making it over the next hurdle.