I am a VC at Spark Capital living in SF. For more, check out: http://about.me/katiebolin
View high resolution
My desire to create another lumascape strikes again. This time I decided to lay out all the legal startups. They were all starting to blend together, and this helped me keep them straight.
*I’m re-posting it because there are a couple of additions. Thanks John Melas-Kyrazi and Matthew Wong!
I have been thinking a lot about e-commerce companies lately. With Shopify and all the other tools out there, it seems easier than ever to start an online storefront. The trouble is always how to stand out from the competition. Are you offering something new? Are there barriers preventing others from copying you? Looking around, I’ve found four themes. Some companies fall squarely into one camp and others are a mix.
1. Proprietary Goods
e.g. The Honest Company, Bonobos, Warby Parker, Lululemon, Harry’s, Chubbies Shorts, Cotopaxi, Casper, Ringly
If you sell an item that you designed and manufactured, then it obviously makes it more difficult for others to sell it. There may still be copycats which is why it’s critical for companies in this category to build a brand. Because the brand is so important, some companies also choose to layer in a social mission.
2. Community/Marketplace
e.g. Amazon, Houzz, Etsy, Panjo, Polyvore, Ebay, Postmates, Teespring, Print All Over Me
For those that like network effects, this model is for you. Every new buyer, seller, or content contributer on these platforms makes it stronger. Communities can be organized in many different ways which is why there’s also a lot of diversity within this category. I look forward to more creative solutions to come here.
3. Subscription
e.g. NatureBox, Birchbox, Stitch Fix, Le Tote, Dollar Shave Club, Blue Apron, Plated
Subscription box companies provide a combination of efficiency and novelty. If you’re buying something (e.g. food, clothes, personal care) on a regular basis, you might as well have it automatically shipped to you - not to mention the joy in receiving packages with new products to try out. Of course, the biggest concern with these businesses is churn. If the product disappoints more than it delights, customers will quickly start canceling their orders.
4. Flash sales
e.g. Zulily, Groupon, Gilt, Rue La La, One King’s Lane
This one is tricky and arguably should have been excluded. Companies in this category have been very successful, however the appeal of a flash sales site always seems to die down over time. I believe short-lived sales can still work, but it shouldn’t be the entire business. I’m curious to see how new players experiement with flash sales.
While I’ve listed four e-commerce themes here, I know this is not a collectively exhaustive list. I certainly could have forced additional themes or broken some categories into two. Instead, I wanted to bubble up the themes I see most frequently. They each surely have their own challenges and advantages…
At this point, there have been a handful of posts showcasing startups disrupting different competitors across all product lines (e.g. Craigslist, FedEx, P&G, Honeywell, Paychex, Banks). I find these illustrations entertaining. It works especially well when there’s a website or company that covers a wide footprint of products and/or services.
I like to apply this line of thinking as walk by shops, etc. on my way to work. As an example, the Spark office is right next to a Winston flower shop which alone makes me think of Bloomnation*, Urbanstems, BloomThat, and The Bouqs. Here are some other triggers/thoughts I’ve had:
This list is certainly not exhaustive, but I encourage you to take a stroll and think about what changes are afoot!
*Spark company!
Being an investor means asking a lot of questions. In my year plus at Spark, I’ve learned that there is a real skill in asking good questions. It’s easy to ask questions with a ‘yes’ or 'no’ answer, but they don’t often help you better understand how something works or why someone decided to do something a particular way. Instead, I’m constantly reminding myself to ask questions that start with who, what, where, when, why, and how.
Sometimes the most interesting questions are just lying on the surface. They are so obvious, I don’t think to ask them. Now if something seems off, I challenge why that would be the case and hopefully I learn something in the process.
The next time I’m hanging out with friends and looking for an activity, I’m going to bring back the question game. If you haven’t played it, you basically ask someone a question and they have to reply with a question. The first person to reply with a non-question loses. This might not actually be the best practice for an investor, but it gets the wheels turning!
I’ve been an active Mint.com user for years, but its never pushed me to take the money in my checking account and move it somewhere useful. This is because Mint.com is not a financial advisor. Its objective is to drive leads.
There’s a need for accessible financial advisors, and this is where Learnvest saw an opportunity. However, from my experience, I never made it all the way through the funnel with Learnvest. I felt that for $299/year and $20/month I was better off just figuring it out on my own.
I think millenials like me want low (or no) fees and simple tools to invest. Acorns, Wealthfront, Betterment, and Robinhood have proven this. They have made investing simple. With them, I don’t need a weekend to read the fine print and figure out exactly what I’m getting (or losing). This is the new wave of consumer finance.
The one thing that is still missing in the ecosystem is a low cost financial advisor to help consumers decide where to invest their money. After all, consumers should know to max out their employer’s 401k matching program before putting money into Wealthfront. Learnvest could do this, but I’d love to see a lower cost player that will look over your shoulder and provide recommendations. I know Vanguard and Charles Schwab are working on this, but they’re biased. You also need to hit certain minimums, and I don’t believe they’ll manage to make it as super simple as the new guys have.
If you have any solutions on this topic, feel free to drop them in the comments.
Earlier this week, I participated in the second Product Debaters event in Boston. It was definitely entertaining, but I wouldn’t have considered it a serious debate. To put it into context, I think I would have been better prepared playing Cards Against Humanity than reading news articles.
I thought the topics were pretty good and discovered that it’s quite fun to think through what you’re answer would be - especially if you’re forced to choose a specific side. Looking back, I wish I had joined the debate team in high school.
In case you’re interested in knowing the topics or using them in dinner conversation, I wanted to share them. Here they are below - enjoy!
If you have any interesting debate questions, I’d love to read them in the comments.
I’ve been thinking about archetypes a lot lately. It’s generally accepted that there are 12 common ones, and a good brand aligns itself with one of them. I decided to hunt around the internet and compile as many good examples as I could. Here’s the collection:
Hopefully, this helps bring each archetype to life. If you had to choose, what archetype best describes you?
As an investor, I occasionally get asked what I’m looking at. Truthfully, I look at startups in a lot of different industries. There’s always a little bit of FOMO (fear of missing out) in this business. However, it is very helpful to have a thesis or focus area. The first reason is because an investor should be thinking ahead and trying to figure out where the next wave of innovation will come from. The second reason is that it’s helpful to have a purpose. If you’ve picked an area to focus, then you can be more thoughtful about where to spend your time and who you should meet. Moreover, the more you understand an industry, the better you’ll be at understanding the hurdles and spotting opportunities. The last reason is simply that having a focus will help people help you. I’m often telling other VCs about deals that uniquely fit their area of interest. If everyone knows, I’m interested in SaaS businesses, then it will be easier for them to flag SaaS deals and share them with me.
So what am I looking at? Thanks for asking :) Currently, I’m very interested in the fashion and apparel space. It’s a trillion dollar industry, and I’ve heard that a lot of the processes haven’t changed. From the consumer perspective, I certainly don’t feel like much has changed. Outside of buying clothes online versus in store, it’s not much different. I’ve written previously about how I think your body scanning could allow you to see exactly how that dress would look without even trying it on. Beyond that futuristic vision though, I also believe there are opportunities across the spectrum from sourcing fabrics to recommending what clothes in my wardrobe I should wear today.
Thus, if you know of any interesting fashion tech companies, let me know!
I was thinking about the whole hullabalu a few weeks ago about the gold and white (or maybe blue and black) dress. I specifically remember scrolling through my Facebook feed and seeing multiple posts titled “the dress that is driving the internet crazy”. I may have clicked the link, but I just didn’t get it. The dress pictured was clearly white and gold, so what was the debate? It wasn’t until later in the day when I was at dinner with a group of people when the topic came up again. There someone held up the picture and had everyone at the table weigh in. I couldn’t believe that anyone thought the dress looked black and blue. It fostered a whole debate and made everyone want to poll their friends to find out which team they were on. After everyone polled their friends and came around to how this whole thing could be possible, the excitement died down. Isn’t it interesting though how the topic itself caused people to talk to others about it? Getting consensus on the dress’ “true” color required getting another person’s judgment. I think it’s why the word spread so quickly. It’s not exactly a “network effect”, but it shares the underlying principle that an individual is incentivized to tell other people about it.
I’m sure you also remember the Ice Bucket Challenge of 2014. That impressively went on for weeks. Again, spreading the challenge with your peers was built in. This is precisely why it went viral.
As a former digital marketer, I’ve been asked how to make something go viral and have never really had an answer. There are some small tricks (e.g. make it emotional, spoof a current trend = remake your own version of Taylor Swift’s Shake it Off). However, even if your content is funny or heartwarming, you can’t be sure anyone will be compelled to share it. Thus, my recommendation is to build in an incentive to make people share it. If you can creatively do that, then you might be surprised how far it will spread.
How do people discover apps?
The most popular discovery tool is the app store itself. The featured apps and the curated category sections are your best bet. Other than that, the top charts, explore, and search sections aren’t likely to surprise you with a fun or useful new app to download.
Because many app publishers are limited by the app store’s editorial team, they turn to other channels to promote their apps. Facebook is far and away the best marketing platform. Since Facebook knows so much about you, they are able to to show you super targeted (and relevant) apps.
Outside of Facebook, most other apps are found by being promoted within other apps, by referrals, or in the media. If your app downloads are quickly increasing thanks to one of these channels, then your app is doing exceptionally well.
New channels have also opened up to address the app discovery issue. One is Product Hunt, and another is Homescreen.is. Both of these sites do a nice job serving up new apps, but it still involves a bunch of navigating and filtering.
I’m curious to see if Google will do more to promote apps in the next year. As the largest advertising platform on the web, it’s important for them to keep up on mobile. Today, apps show up in the paid results (with download option or with a text link). However, there are many searches that don’t return an app at all. I’d love to see Google re-think app discovery not just from the Play Store perspective but also for people that are actively searching for an answer that an app may solve.
Also, while I’m making requests, I’d love to be able to toggle between including and excluding games when browsing through the app store.