I felt honored to speak with Patrick on
@InvestLikeBest
, following giants in the investing world to talk about the
@adjacent
, consumer subs and early-stage VC!
Today’s conversation is with
@ncsh
While consumer investing has been less popular in the last few years, Nico has found a way to do it with great success
His method is to explore “the adjacent possible” and he’s become a deep expert on consumer subscriptions
I learned a ton
What a legend:
1- Invests in Apple early and starts one of the first VC firms in 1969 ($2.5m)
2- Founds the PE firm Apax Partners in 1977, now one of the largest globally
3- Starts Greycroft in 2006 at age 72 and now at 85(!) a new firm focused on the aging sector
Inspiring!
The most beautiful thing can happen at the strangest of times:
We welcomed our 1st daughter Alma to this world a few days ago. She’s now at home with us, all healthy and just the sweetest thing!
Hope she can lighten your 2020 a tiny bit too :)
Pretty unreal to make the Midas Seed List of the top 25 early stage investors globally <5 years after founding
@Adjacent
…
Thankful for all the founders who took me on and special to share it with
@pawell
who gave me the start in VC!
Last week I went back on
@twentyminutevc
after 8 years to talk about
@adjacent
publicly for the 1st time
Check out the teaser below and have a listen on Spotify if you’re so inclined:
Thanks for having me back and the kind intro
@HarryStebbings
x
never did a fund announcement for
@adjacent
as i believe the focus should be on the companies and not me/the$
so to celebrate the upcoming 1st anniversary of the 1st close on Nov 1st, an overview of the portfolio so far
super proud to be working with such amazing teams!!
1/11
VCs often having more impressive anti-portfolios (passes) than actual track record speaks to the fact that this craft is more about decision making than seeing all deals
yet most firms obsess about the latter and neglect optimizing the former
perhaps smaller N improves outcome
2019 LPs passing on
@adjacent
:
‘consumer subs don’t scale’
2020 VCs passing on our Series As:
‘There’s no $10b+ consumer sub biz’
2021
@Grammarly
raises at a $13B
‘…’
the common denominator for most of my successful investments across the 3 VC funds I worked for was that they violated the fund model at the time
(eg high price, low %, wrong stage or off focus)
for some, the fund model might just be a litmus test for the conviction to break it
investors dismissing 'niche' categories on mobile don't yet seem to grasp the scale of 1 billion+ active iPhones combined with the power of annual consumer subs
**a 1% niche at $100/year is a $1B TAM**
this is without Android, web, other adjacent rev streams
come play w me :)
Today I had my 1st ever IPO as an investor after 10 years in VC…
with a life science company!
Lucky to have met
@C_Angermayer
the year
@atai_life
was started & even more excited about the potential today
Atai Life Sciences Shares Soar After Upsized IPO
Some pretty fun milestones to celebrate this week:
1. Announced
@Adjacent
’s 3rd deal 🎨
2. Closed an awesomeee 5th one 🐱
3. LP commit to a new female GP 🧝♀️
And above all that:
Our daughter now smiles at us 😍
Have a good weekend all!!
loom investor updates are becoming my favorite
really help to reduce information asymmetry across all shareholders and convey priorities better vs text only
quick email + KPI overview + video walk through = <3
considering it for my quarterly LP updates...
1/2
When I started in VC as an intern 9 years ago, I always preferred to build relationships with the young, smart and scrappy hustlers vs the partner who is too senior to write emails. Many in the former group have now become Partners or even GPs of their own funds.
Order of priorities for (most) mobile-first sub cos:
1. Retention ♻️
2. Unit economics ⚖️
3. Scaling paid spend 🚀
The upside down approach usually leads to false positives + tears 😭
Interesting tidbit from
@Spotify
Q3 results:
We continue to see exponential growth in podcast hours streamed (39% Q/Q) [...] For listeners who do engage in podcasts, we are seeing increased conversion to Premium. Some of the increases are extraordinary
This is a watershed moment for mobile-first consumer subs,
@Duolingo
IPOs at $5-6bn with:
– a freemium subs business model
– no clear network effects
– primarily app-based
And there are a handful of still private cos that could push this to $10b+ ...
Excited that Ajay Arora, Director of Innovation | Growth at Netflix has joined
@adjacent
as an advisor.
Previously VP Product at Imgur & Audible, he also teaches a Consumer Subscription course at Stanford. Can't think of a better fit and the gang seems to agree!
#PathTo100mSubs
Not an investor, but the fact that
@Calendly
*which is based in Atlanta* is approaching $50m ARR with only Seed funding makes me happy 😃
Would take that over unnecessary markups / dilution in many cases
@adjacent
🔭
Today is the 3rd anniversary of the 1st close
@adjacent
!
A good time to share some more about the gang that is now 34 companies across 11 countries:
[continued]
**TLDR: Growing fast**
@BeReal_App
is on an absolute tear and will replace FB/Insta for millions (as it has for me)...
They currently have 26 open positions you should seriously consider if you want to be on board the next mobile consumer rocketship 🚀
there are many moments of self-doubt as a solo GP...
BUT THIS WEEK WAS AWESOME =)
1 past investment became a unicorn
@OwnBackup
🦄
2 Seed announcements
@withopal
&
@CutbackCoach
😻
3 new
@adjacent
cos that I worked on for many months 🚀
Def worth it for moments like this! 🎢
+1 the
@adjacent
consumer thesis:
i. willingness to pay for subscriptions has increased drastically
ii. AI improves product (retention), decreases cost (content + code)
iii. 5B+ active smartphones now accessible through app stores
I think consumer is coming back
Active thesis: lots of things with marginal long term cohort retention (<20% d90) could possibly become viable 40%+ long term retention (asymptotic) with LLMs doing heavy lifting making consumer scenarios much more compelling
the
#1
reason for VCs passing on the Seed
@withopal
was fear of Apple…
so it’s fun to see v3, built on top of the recently opened up Screen Time API, featured in the US AppStore
reminder to invest in tomorrows market, not today's:
3 years ago we led the Series A for a SaaS co with a very small TAM: $120m based on our bottoms-up calculation
the CEO just told me they are now north of $40m ARR – and far from 33% penetration...
plus, almost no competition
I am blogging again! Inspired by
@chrija
's classic SaaS KPI dashboard, here is a simple mobile subs metrics dashboard for early stage consumer software subscription companies:
Mobile Subs Dashboard v1
Pls check it out, share and leave comments for v2 :)
I remember negotiating the Seed deal for
@PointNineCap
with
@gronager
and
@jony_levin
while walking along the High Line some 3 years ago... Amazing to see their growth and a great EU-to-US success story! 😊
@Chainalysis
raises $30 million from
@Accel
it’s rare, but the shared joy of a seed company breaking out after years of iteration/pain makes the founder/investor relationship special at the early stage vs post product/market fit
My younger brother (almost 14) didn't want to go see Skywalker Rising with me today as he thinks Star Wars is boring and I came home to him watching a YouTuber play a Flixbus bus driver simulation driving from from Saarbrücken to Paris in real time
¯\_(ツ)_/¯
I deleted Facebook this year and Instagram is next:
1 A friends post
2 Sponsored
3 Cartoon I follow
4 - ♾ Suggested 🤮
We need a subscription based social network that is not incentivized to drive engagement !
If you are building this, would love to support
@adjacent
🤗
2/2
It always stroke me as odd that the very people who's job it is to spot the long term potential in companies pay so little attention to the long term paths of the best junior people in their industry.
Naturally, exceptions apply to this rule and I am trying to be one too.
I was guest
#57
on
@twentyminutevc
and when
@HarryStebbings
asked me for advice afterwards I recommended to stay in school… really glad he didn’t follow my advice 😹🙌🚀
Podcaster-turned-VC Harry Stebbings raises two funds totalling $140m via
@siftedeu
tldr what i look for in early-stage cos:
1– Small N, high E: Small cohorts of enthusiastic users with high engagement
2– Obsession: Founder/s intrinsically driven by their mission
3–
@Adjacent
: Emerging category w mainstream potential
some good examples in my bio :)
Such a striking data set showing 'time spent != value' on mobile:
[1] Meditation and 'solo' apps score much higher than
[2] Social apps and gaming time sucks
+1 for subs being more aligned with consumers' interest than ad-driven apps which optimize for time spent/stolen...
As a visitor to London, using the
@RevolutApp
contactless card to ride the Underground is an awesome experience. 10x better than having to get an Oyster card 🚊💳👌
Three of my posts on consumer subs as screenshot essays:
1- SaaS vs Consumer Subs [2016]
2- Consumer Subs ABC [2018]
3- Ceilings in Consumer Subs [2020]
h/t to
@ericstromberg
for the format !