Heartcore’s Thesis
Over the last 30 years, computing, software, and in particular the internet have radically changed the way we live, work, and play. Billions of us carry a computer in our pocket. The majority of humanity is always on, always connected.
Who would have thought, in 1988, that there would be a website on which you could buy (almost) everything? That there would be an app on your phone with which you could message all your friends? One that would let you see and chat with your family, instantly? And still others that would reliably get you a ride, a meal, a movie, or a date?
Who would have thought that we’d have easy and inexpensive access to the most powerful computing infrastructure ever built? And that it would be totally up to us what we ran on it. That all you’d need to get started building these massive, world-changing consumer-facing services was the incredibly powerful, personal computer right in front of you, loaded with free software and limitless possibility?
This is the eternal promise of technology and, perhaps more so, of the internet: to change the equation of markets forever by putting power into the hands of the end-user, the consumers and developers of our joint human future. This is what’s behind the tremendous success of consumer-facing technology companies like Google, Apple, Facebook, Amazon, Netflix, Uber and many others: they give us “superpowers” — the ability to do things that mere decades ago looked like they were beyond “natural” human capacity.
And we’ve only just begun. Every time that technology finds a new way to help people better achieve their aims and fulfill their desires, there is an opportunity to build a category-defining consumer brand. One that lets you leverage technology to become more of who you really want to be.
We believe that these human aims and desires are universal, stable, and relatively predictable. While the tools of technology change constantly, people stay mostly the same. Functionally people want to do what they have always been doing, but better, cheaper, faster, and more pleasantly. Emotionally, we all want to belong, to be safe, free, and ideally a bit special. Humans are also all hard-wired to improve themselves and the world around them. And occasionally we just need a break and escape from the mundane. At Heartcore we have laid our thinking further in this internal framework. Each time we consider an investment, we carefully examine how the products and services offered answer these key human motivations and whether the company has the potential to become a category-defining brand.
So where do we go from here? We know that despite a majority of people being online, most of their money isn’t. In Europe, e-commerce only accounts for 9% of retail sales and less than 5% of total consumer spending. Retail is one of the categories that most easily yielded to the “end user revolution” of the internet. But major consumer spending categories such as housing, healthcare, education, or food have barely been scratched yet. In more mature categories like travel, finance, or entertainment, we are also seeing different kinds of online businesses being built — more vertically integrated, tackling harder problems, building bigger moats.
Every time a new technology matures it finds applications in various consumer markets. And thus we are actively looking for online businesses using new technological building blocks such as machine learning, cryptocurrencies, virtual and augmented reality, voice computing, brain-computer interfaces, or quantum computing that can be leveraged into building the consumer-oriented companies which will shape our joint future.
It’s a future that — as our name suggests — we care about deeply. In the West, we are seeing an accelerating loss of meaning and erosion of trust in traditional institutions such as government, religion, or even the family. We believe that brands that can capture and perhaps restore our common belief in ourselves and our human journey are poised to be significantly positive contributors to this future. Those winning a share of hearts will become core meaning providers in our lives. Organizations around which people build their identities, through which they express their belief, and perhaps grow closer to one another.
In a short 20 years, computing, software, and the internet have changed pretty much everything. We believe that the next two decades will accelerate and deepen the changes to the ways in which we live, work, and play. Many new iconic consumer brands will be built in the process. These are the companies that we are looking for. And we’re incredibly excited to spend the next 20 years looking for them.
Much love,
Team Heartcore
Copenhagen, Paris, Berlin
February 2019
