Archive for February, 2021

Improving VC to VC Meetings

Posted on February 23, 2021. Filed under: Uncategorized |

It used to be that I stayed in sync with other investors in the venture market over coffees, walks or meals. Meetings were longer and more organic, if less frequent or prescriptively scheduled. Who I spent time with was largely based on what city I happened to be in, what I was thinking about at the moment, or with whom I just wanted to see and catch up. There were many natural prompts that would act as the impetus to sync with investors I care about irl. I borrowed that word “prompt” from Diana Kimball Berlin, who recently joined Matrix after building one of my favorite products ever in Quip. I think it’s a perfect word for what’s been lost in the age of Zoom.

In the absence of natural prompts, I’ve come to schedule reoccurring syncs for the people with whom I want to stay in touch. If I have a good conversation with a new investor, I’ll suggest we sync every 4 weeks or 8 weeks or whatever makes sense and I’ll send calendar invites going out months. It’s not my natural flow, I prefer to be more fluid, but it has been effective in collaborating with new people and deepening those relationships in the face of constraints.

Something I’ve observed in these syncs, however, is that everybody has a different style and intention coming into them. For some people, it’s just about our relationship with each other. For others, it’s about sharing ideas and thematic work. Some want to talk about market dynamics and what they’re experiencing on the field. Others want to share or receive potential investment opportunities. Personally, I value and appreciate all of those conversations. I gravitate naturally toward some more than others, but I’m flexible enough that I tend to let the other person define the time.

The downside of this approach, is that you can waste 10-15 minutes of a 30 minute sync in mutual discovery of what would be most valuable to the other person. When Chris and I do our partner meeting at Pace, we create an agenda in advance. There’s a lot of unstructured time and conversation, but it keeps us on track and ensures that we cover the things that are important to each other and the firm. This morning I started to wonder, what if I created a standing agenda for all of my investor syncs? VC to VC communication rarely comes with a written agenda. In fact, I don’t think I’ve ever seen it done before. Nobody has ever sent me a note in advance and said, here’s what I want to cover in today’s catchup. So I thought I’d try it. Here’s my proposed agenda for all my VC to VC syncs. I’m gonna send it to people and see if they’d be open to try it:

30 minute agenda (more time on 1, 2, &3 if we have a full hour together)

1) General catch up, personal life updates, etc. (5 mins)

2) Things you are thinking about (5 mins)

  • themes/theses/ideas
  • inspiring signals/products (what’s caught your eye)
  • Skip market dynamics even if you have been thinking about them (VCs can wast an entire hour complaining about valuations or behavior of other VCs or whatever)

2) Things I’ve been thinking about (5 mins)

  • themes/theses/ideas
  • inspiring signals/products (what’s caught my eye)
  • Skip market dynamics

3) Investments (You) (5 minutes)

  • recent investments you’ve made
  • things you are actively considering
  • things I should consider or look into

4) Investments (Me) (5 minutes)

  • recent investments I’ve made
  • things I’m actively considering
  • things you should consider or look into

5) Help (this one is borrowed form Julia Lipton at Awesome People Ventures, who is the first VC who has ended a meeting with me by asking “is there anything I can do to support you?” (5 mins)

  • anything I can do to be helpful to you (i know, i know…what a cliche)
  • things you can do to be helpful to me

This might suck and people (myself included) might hate it, but I’m gonna try it for a few weeks and see if I can’t improve the quality of my reoccurring meetings.

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A mind-blowing business model

Posted on February 11, 2021. Filed under: Uncategorized |

I’ve been thinking recently about the interchange business model. It’s pretty insane to me, that if you originate a new checking account / debit card, Visa or Mastercard will pay you 1-2% of every dollar your consumer spends on said card. Originate a credit card…the numbers get even larger. That is a sick business model IF you are able to retain that consumer for a long period of time. Something that’s become apparent to me is that it is easier than ever to spin up a new card and start taking spend away from a consumer’s previous bank/card. Banking infrastructure is highly rentable, as is payment processing and ATM infrastructure. The competition at the top of the funnel for this type of origination is fierce…and just as easily as you can pull a consumer to “your” debit card, the next new bank / personal finance app / whatever can pull that consumer from you. There is a lot of innovation happening at the top of the funnel…people building better mousetraps to acquire new users…and the lowest CAC seems to win in the near term. The more interesting question is how do you keep participating in that consumer’s spend 12, 24, 36 months later?

In my mind, you have to provide perpetual value, beyond a nice brand and interface, in order to justify that spend staying with you. Credit products are an obvious answer, to the extent that you can underwrite a loan that the next service can’t. Rewards and cash back is an age old approach…but to me that is a race to the bottom. Ideally, you would justify your existence by providing a value that is deeply integrated into the spend itself, and that does not contemplate erosion of your margin over time.

I find myself asking, beyond credit or rewards, what experiences can you deliver to a consumer that would keep them spending with your card despite the onslought of new top of funnel competition trying to poach that spend away. One interesting lens, is to think about the delta in data fidelity between what an application can deduce from Plaid, and what an application can deduce from owning the card on which you’re spending. Can you deliver ongoing insights at that position that you couldn’t without the spend. Can you get more granular on budgeting, anomaly detection, etc? I find myself asking, what type of experience could you deliver to a consumer if rather than merchant level spending data, you had SKU level data on which to build your experience. One potential architecture that’s interesting is pairing a debit card with a chrome extension that grabs SKU level data on every transaction you make across the web. Interestingly…if you could achieve penetration with that architecture, in addition to interchange fees form the card, you could also capture affiliate revenues from those transactions.

I’m sure there are a ton of other ideas that innovate less on customer acquisition, and more on unique retention mechanics, and to the designers of those experiences I believe goes the long term prize. If you are one of those designers, I’d be interested in leading your Series A. jordan@pacecapital.com

P.S. I’m equally interested in more horizontal layers that index the interchange business model and the rise of online top of funnel points of origination. Who is building tooling between the consumer’s transaction and the point of origination’s monetization that indexes this entire class of businesses? I think payment processing and white label banking infrastructure are obvious answers, but I wonder if there isn’t more stratification inbetween those two points…what can be abstracted away? How can you ease the pain of the next incremental point of origination to participate in this model?

P.P.S. I’m still learning about this stuff, so if I have anything wrong here, please reach out and let me know.

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    About

    I’m a NYC based investor and entrepreneur. I've started a few companies and a venture capital firm. You can email me at Jordan.Cooper@gmail.com (p.s. i don’t use spell check…deal with it)

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