Together We Go Further
Today we’re launching Foundermark, a venture development firm. We partner with founders and executives to create and hone digital products that people love, and most importantly, that have massive commercial potential.
As part of the launch, we are announcing two products, Photodrop, and Vestly, which just announced a $4MM seed round on TechCrunch.
On a personal front, I’m so unbelievably excited to announce this next chapter. Foundermark is the collision of my life’s passion for entrepreneurship and 16+ years of experience in building, commercializing and growing digital products. The firm joins a new breed of shops, including Science, Prehype and Expa, which are pioneering new venture development models ranging from hybrid fee and equity-based partnerships to fully-incubated startups.
The Opportunity
There is incalculable revenue locked within existing digital products and many unmet user needs that, when met with the right digital products, will yield sizable revenue opportunities.
“Don’t find customers for your products, find products for your customers.”
– Seth Godin
- The timing is right for customer-centric digital product focus
Everyone now gets that Groundlink shoulda (coulda woulda) become Uber and had the most distinct advantage to do so, but they were afraid to cannibalize their business. Our thesis is that the pain/pleasure scales have tipped, and now corporations are eager to invest and grow top line v.s. overly optimize EBITDA. They realize that not only do they need to digitally transform, but that it can be done in a way that enables a graceful and profitable transition to bigger ideas. This is the reason we help exploit near-term revenue and cost-savings opportunities. It’s to help solidify balance sheets and protect P&L while investing in the next big thing (that we’ll co-develop). - It’s a massive shortcut for both parties and the risk/reward ratio is making sense
We think it’s faster to leverage an existing business’s infrastructure and assets than to disrupt that business and recreate the entire infrastructure. Let’s cut out the whole “create, destruct, create” process and save some jobs (and headaches). Further, we believe that operationalizing businesses, developing assets and solidifying infrastructure is riskier than getting to digital product/market fit with a new product. There is a formula for getting to product/market fit — sometimes it’s simple and fast, sometimes it’s more complicated and highly iterative over a long period of time, but it’s always achievable with the right people and process. In other words, creating an Uber-like user experience is a known variable for our team and we like to partner with execs that can bring compelling, but underutilized brand assets to the table. The Foundermark model enables us to attack multiple disruption opportunities with ideal partners.
Bottom line, there are significant opportunities to create digital products that users flock to, use heavily and share voraciously to unlock revenue/profit.
Our Differentiated Leverage
Commercially-minded product/market fit
We build digital products that resonate deeply with users and provide maximum commercialization and growth potential.
“Make things people want.” — Paul Graham
In other words, we achieve product/market fit, and we do it in a way that also anticipates market trends and monetization options (creating a digital product that finds the perfect combo of a company’s business assets and what users need). Capability to deliver one of those areas is rare, but ability to deliver both is highly unusual. In the near future, I plan to publish a post on the business of product that will cover the process and elements that go into developing a product that has both profitable unit economics and meaning to users. It will be a deep dive into how to achieve product/market fit in a way that maximizes financial return (the analysis process, pillars of user experience design, matching team DNA, principles, etc. to get the most profitable and scalable lifetime value/cost per user ratio).
“Do whatever is required to get to product/market fit.”
– Marc Andreessen
The short of it, many elements (a number intangible) and people need to come together to create a product experience that both delights and has scalable commercial potential. While we plan to share more on the topic in the coming weeks/months, there are a number of individuals whose product philosophies we respect. We recommend that you follow them if you’re interested in the topic:
- Andrew Chen — early growth hacker who knows you can’t get growth without product/market fit and does a good job of showing how closely growth tactics flow from/through the use case itself
- Josh Elman — does a nice job showing the intersection of areas that product management brings together
- Tomasz Tunguz — really good SaaS breakdowns
- Benedict Evans — good mobile breakdowns
- Elizabeth Yin — solid seed stage fundraising advice that hits on product dynamics
- Sean Ellis — product-centric growth
- Raj Aggarwal — solid note to Mary Meeker on the opportunity to fix mobile engagement
- Nir Eyal — gets (and teaches) how important frequency is for adoption; this is critical given mobile trends
- Cognitive Lode — nice human behavior/behavioral science tidbits
- Mattermark summaries cover a nice blend of product-driven operators and product-minded VCs like Mark Suster, Fred Wilson, Brad Feld, etc.
For folks exploring new products/pivots, you should also check out how to approach an MVP (minimally viable product) from Harvard Business Review. It’s getting old, but still good.
Industry Focus
Content/data-driven media plays
We love content and data. There are so many unbelievable opportunities to package and repackage content and data streams into new use cases. We often like to partner with media companies, talent agencies, market research firms, etc.
Specific interest areas within media include:
- Content and communication are major digital drivers for engagement and financial margin — data, information, videos, chats, etc. (these are still the atoms, and we are just repackaging them to suit user consumption behavior)
- Lots of new messaging opps ranging from bots and concierge to games and interest-based discovery; in general messaging as a mechanism for data and content delivery
- Structured user-generated sentiment data to identify new people to market to
- As we become more and more connected, one-on-one asynchronous casual gameplay
- There is a sizable new discovery opportunity in movies, experiences, fashion, etc. that matches persona, timing and need more closely with fitting products and services
- In general, as digital drives the cost of certain utilities cheaper, businesses may shift to media models; prosumer and professional products may have an edge here in the future
- Niche marketplaces with a priority on digitally distributable (non-physical) products and services
- Making real world activities cheaper, more magical and/or more efficient with sustainable business models
- There continues to be room for native mobile apps that are high frequency button press utilities, entertainment, etc. despite cost of distribution challenges
- Building tools and data streams that anticipate further fragmentation and conduits to leverage that data
- Places where social/communication isn’t fully leveraged as an enabler or a model driver — this ranges from utilities in discovery and marketplaces to journalistic content and casual gaming — mobile that rides infrastructure
Despite what would be considered high digitization of the media industry in the chart below from CB Insights, we see a ton of opportunity to increase revenue and introduce new products that fit consumption behavior. Further, some of the areas with low digitization could become very interesting when applying an ad, subscription or in-app purchase model.
We use these interest areas, proactive research and new discoveries to run lots of experiments. We will often use these experiments to develop features or build them into full products. As we run conduct research and experiments, we will share findings.
Who We Work With
We only take on new ventures that we believe in
- Founders that have strong subject-matter expertise in a compelling market (see the aforementioned opportunities that intrigue us)
- Execs, typically C-level, who are in a position to digitally transform their business that:
– Have content, data, creative talent and/or significant reach
– May be cutting expenses to make EBITDA targets (ready to cannibalize dated products)
– Intend to build an internal lab, or have a lab that has yet to produce commercial wins (a quick video on the challenges of innovating from within follows; if you have trouble viewing due to browser settings, here is the direct link on YouTube)
- Late-stage private equity partners that want to architect a product-driven (digital) turnaround
- Early-stage VCs that have identified a compelling market and have backed a strong team, but have yet to achieve product/market fit
How We Partner
Find and execute on the big idea together. This may be immediate & direct or require some twists to get there (e.g. we help drive near-term financial results to reinvest in the transformative idea).
- Co-develop a digital business
We act as co-founders, using our full lifecycle talent to define, design, build, commercialize, grow and even run the digital business long-term - Take advantage of immediate digital revenue and cost-savings opportunities
We identify opps, vet, prioritize and assemble a performance-driven project team comprised of your staff and our digital analysts, strategists and makers to quickly solve problems that have significant ROI - Transform culture
We hold innovation workshops/challenges to inspire organizations to become more customer-centric, leverage company assets, and most importantly, identify and define digital opportunities where the business can grow revenue
However we get to that co-development point, Foundermark is your digital co-founder along the way. Think of us as an extension of your research and development team, but with the commercial chops to identify digital business opportunities and get profitable unit economics by tracking, analyzing and acting on key usage metrics.
Our Process
This is an obfuscated overview of our process — research, develop and commercialize
1. Research — Identify, vet and prioritize digital opportunities
Maximizing commercial potential, leveraging company assets and filling a market need starts before product definition
2. Development — Define, design, develop and deploy
Customer-centric and disciplined approach to rapidly build products that achieve product/market fit
3. Commercialization — Optimize, commercialize and grow
Highly iterative data-driven approach to optimize usage and growth mechanics for maximum commercial potential (best ratio on unit economics; lifetime value/cost per user (LTV/CPU))
Our 3 Core Principles
Anything can be solved; end users first and create value
As unknowns in these models remain, we’ll rely on the following core principles to guide the way:
1. Anything can be solved…anything
We programmed our Slack bot to scold people that use the word “can’t”
- Ideas are endless, execution is hard, time is expensive
While ideas are endless is an affirmation of anything can be solved, it’s more about our philosophy that trends are constantly shifting, creating new opportunities in unexpected spaces, and it’s also a reminder of those involved in our mission to not get overly attached to a specific idea - Never give up; persistence pays
Our difference is that we are willing to do the hard stuff (we execute) - Ship fast; be iterative and data-driven
Intuition is important and we listen to it during the process, but we favor a data-driven and iterative process, meaning ship fast/early and use actual user feedback to decide on next moves
2. End users first; build things people want
Everyone wins if we make end users happy; adherence will help us select the right concepts to pursue and create experiences that have maximum commercial potential
- User experience is the difference
User experience is the difference between a good idea failing and a bad idea working. Fill user needs/wants via high frequency use cases inline with known human behavior. While UI elements could be the subtle difference between product/market fit or not, whizbang for the sake of sizzle is inefficient. - Be something
Everything to everyone is…nothing to no one. Build up, in fact, build way up, but you must tear down to the most critical elements and then refine those. People care less about your thing than you think. You have seconds to show people what’s in it for them. You have to power through the fear that you’re missing the one thing that will resonate with users because it always becomes 2, 3 & 4. Deliver a clear and compelling use case, refine it into the perfection of simplicity and fight bloat. We only work with partners that champion this focus. - Details matter
We’ve beaten out a dozen competing apps with the same use case because we had a better caching process and matching algorithm that we obsessed over for weeks before we wrote a line of code. It was something that wasn’t obvious on the surface, but ended up being the difference.
3. Create enormous and enduring value for all involved
We are grateful for the opportunity to work in the best industry on Earth, solving interesting problems with the most talented and driven people around. Give more than you receive and financial benefits will follow as a natural by-product.
We focus on digital product, the place where we add the most value, and we partner on the rest
We maintain our focus and support where needed to protect the product/market fit and give partners the rest. This creates more value for everyone and benefits the ecosystem.
- ‘A’ talent
Be the absolute best at something so you can benefit others. By nature, ‘A’ talent are givers. They’ve become great at something and it serves an even greater benefit to others. - Win-win
Create so much value for others that you never need to think about the return. We are successful when the founders and executives we help are successful. This also applies to our business model, where we get breakout wins only when our partners get breakout wins. Therefore, we pick our spots.
The aforementioned principles help us focus on onboarding only the best talent and selecting the right opportunities.
The Mission
Interest in a diversified set of properties
Our mission is to own a significant interest in a diversified set of profitable and scalable digital ventures. By partnering with founders and executives, we can combine our product specialty and full digital business lifecycle know-how with the subject-matter expertise of our partners to build these disruptive digital businesses together.
The Movement
Together we go further
We think of this mission as the start of a movement where digitally-native startup talent gets maximum leverage of their skills by partnering with businesses. The infrastructure of an existing business introduces the constraints that drive real innovation, and the assets to accelerate time-to-market and growth. And vice versa, the opportunity for executives to leverage their often compelling, but underutilized brand assets by tapping into the startup industry’s best maker and growth talent to generate new or increasing streams of revenue is 1+1=3.
Startup maker/growth talent + executives with compelling assets = significant progress and revenue/profit growth
Irrespective of how these models evolve, by working hand-in-hand with executives and founders that have deep expertise in their respective fields, together we get to disproportionately expand our collective knowledge…and just maybe, be the start of something bigger, a movement where two typically contradictory things (innovation/digital/makers + tradition/structure/operators) come together to accelerate progress for all involved.
If you are motivated by our mission and share our principles, say [email protected].
Dan
