This For That
My partner Brad, who is the conscience of USV, said something in one of our recent monday team meetings that has been rattling in my brain ever since. It was a throwaway line for him. He probably doesn’t even remember it. But I do.
We were talking about some investment opportunity and one of us turned to him and asked him what he thought. He said, “I generally can’t get excited about anything that is this for that.”
What he meant by “this for that” is Airbnb for boats, or Snapchat for emails, or Dropbox for videos.
What Brad is talking about is derivative works. There is nothing wrong with them, of course. But he was saying that it was hard for him to get excited about them.
If you are going to do a “this for that” investment, the first thing you need to make sure is the iconic company (this) is not going to go after this other market (that) themselves. Then you need to make sure the other market (that) is very large. And finally, you need to make sure that the founders are doing the startup for the right reasons.
Nic and Jeff, the founders of Edmodo, were tech administrators in local school systems. They were frustrated with the tools teachers were using to distribute information to their students. So they built a new way to do it, influenced by Facebook for sure, but different in some important ways.
Alex and Eric, the founders of SoundCloud, were musicians and sound engineers. They were frustrated by the tools that were available to them and their friends to put the sounds they were making out onto the Internet. They may have been influenced by YouTube (I honestly don’t know that they were), but their drive to make SoundCloud was most certainly to scratch an itch, just like Nic and Jeff.
The worst kind of “this for that” startup is one where you can tell that the founders have no intrinsic desire to build a solution for a recognized problem, but instead they are opportunists being influenced by the latest hot startup. We certainly try to avoid those sorts of things and comments like Brad’s certainly helps us do that.