After 5 years and 10,000 hours of professional seed investing at Index, I’ve had time to reflect on the craft of seed investing – and in particular, seed investing from within a venture fund. In many ways its the same as what independant angels and micro-VCs do; and in important ways, it’s different. With the aim of making a venture seed practice the best it can be, we’ve laid out a distinct philosophy, here, “Pre-Venture: Doubling down on Seed.” I’m proud of an approach that does right by founders and is complimentary to the early stage community.
One of the most interesting trends in Silicon Valley is not a technology but what is happening in startup culture. There is a new breed of startup being born, one uniquely driven driven by purpose and mission.
Organizations driven by mission – NGO’s, 2.0 Silicon Valley startups, even corporations with a mission statement – are not new. Yet these startups are new. They have unique characteristics. Originating from the values and methods of the Millennial generation – passion, technology and doing good – they will reorder our world by use of new technique.
Here are the principles:
- Good product: Craft product that betters our world.
- New platforms: Use technology to reconfigure an industry or birth a new one.
- Purpose over profit: Honor the mission as primary, and view profit as an enabler, the result of doing everything else right.
Early beacons of this movement include Etsy, Kickstarter, Patreon, GoodEggs and Science Exchange. Together as a theme, I like to call such companies, “Platforms of Purpose.”
Many will opt for a B-Corp status, but this movement is more fundamental than one legal construct. These companies will be one of the most persuasive trends of our generation.
Here is why:
- Mission-driven companies are superior. The ethos of mission compels a better product. It attracts the quality employees who craft with commitment and resilience. It gives a brand depth, meaning and difference. It draws in loyal customers. In the long run, it makes you more profitable.
- Global values will shift. Meaning, passion and mission are the primary reasons Millennials work. As our generation becomes 75% of the global work-force within the next 10 years, our values become the norm.
- Platforms can now solve vital problems. The world is now a network. Deficiencies in health, education, food, transportation, goods, services, finance, entertainment, communications and politics, can now best be solved by platforms, led by founders of purpose.
Business models, pricing and distribution are typically replicable and fleeting, while product and brand are more enduring and defensible. Built an exceptional product and brand.
Exceptional products include seamless design, delightful user experience and simplicity, but also importantly value and uniqueness. It is both form and function. Build something beautiful and of immense, unique value.
Exceptional brands include the power of narrative, the softness of stunning visual identity, naming and positioning, and the richness of values and mission. They are also something people love, remember, and recommend. In silicon valley speak, this is nothing more than product/market fit and net promotor. Craft something people love, remember and recommend.
Product and brand are hardest things to do well, but also are the most valuable.