How I’d Approach General Assembly Again as a VC: 9 Key Lessons
I first met Jake Schwartz, CEO of General Assembly, seven years ago, when I was a young VC at Maveron. In the ensuing years, I saw Jake evolve from an enthusiastic first-time CEO to the mature, poised leader who led General Assembly to a successful acquisition by Adecco Group.
General Assembly was a true crash course for me on every element of venture investing — from founder dynamics to business model to fundraising and exits. As there were so many times we said, “if only we knew….,” I want to share my top-nine learnings during our 6.5-year journey with Jake and team at GA.
Learning Trajectory of the CEO is More Important Than Where They Are at the Start. Jake is naturally smart, curious, financially savvy and mission driven. That said, at GA, he had to learn to be a CEO. Now why was he able to do it? He has a classic growth mindset — open to mentorship, able to listen and learn and to take feedback well. With any first-time CEO, it’s important to observe whether the CEO is scaling in the way the business needs — if they fall behind, the business is in trouble. In this case, Jake very quickly became a grizzled operator and strong leader of people. In looking at new businesses I now dig all the way back to high school in learning whether a CEO has the ability and curiosity to always be learning.
Independent Directors Matter and Ideally Should Be Put into Place Early. When it’s time to make that panicked midnight phone call, often a great independent director is the perfect outlet for a startup CEO. General Assembly brought on strong independent directors — first, Richard Barth, CEO of KIPP, who served a critical role in helping the team work through interpersonal issues and organization building. We also brought on David Bradley, founder of Corporate Executive Board and The Advisory Board, who was crucial in helping Jake think through building an enterprise business. General Assembly would have been a less valuable business without the contributions of Richard and David.
Moats Matter as Much (or More So) than Brand. General Assembly built the first real consumer-facing education brand in decades. Jake and team boldly said they would be an alternative to grad school and they quickly expanded across the US and the globe. But it turns out it’s not that hard to hang a shingle and launch a “coding class.” GA’s programs were higher quality but local competitors just kept nipping at our heels and driving up the cost of customer acquisition. It turned out there were no moats at all in the coding school market — that made driving significant sustainable economic profit in the coding boot camp market difficult.
But Brand Can Create A Moat. When General Assembly started focusing on selling next-gen skills training to enterprises, it was clear none of its smaller competitors could compete with General Assembly’s brand and global footprint across N America, Asia and Europe. Big corporate clients like L’Oreal and Booz Allen wanted GA, as the market leader, to train their employees. So, ironically, the consumer business turned out to be hard economically and competitively intensive, but opened the door to build an incredibly lucrative and defensible enterprise business.
If You Launch a Big New Product in a New Market, the Founder CEO Has to Drive it. For years, General Assembly had a moribund enterprise business. The Board constantly asked why it existed and Jake always said, “there is something there, we just need the right leadership on it.” Hiring smart “experienced” B2B executives wasn’t the answer — they weren’t entrepreneurial enough. It turned out the right leadership was Jake. From the moment he started focusing 80% of his time on the enterprise business in early 2017, he grew that piece of the business from 15–50% of revenue.
Without the Right Tech Product People, Opportunities are Squandered. For years, we had a bloated product organization that cost us millions in investor capital, and still struggled to launch online and hybrid courses in a broad way. If we were able to offer digital options earlier, we could have taken deeper advantage of our market leadership position. Once Jake made the call to bring on a senior product head in Shiren VIjiagingam, product started to get built faster, and they’ve seen great results ever since.
A Marketing Problem Is Usually Really a Market Problem. At the Board, we kept saying that growth would be reaccelerated by bringing on great marketing talent. We did bring on a terrific CMO but it turns out that the marketing challenge was really a market problem. If you think you need new marketing leadership, you might instead need to reassess your competitive positioning.
Companies Get Bought Not Sold. For years, Jake built relationships with potential acquirers in the form of partnerships, customer relationship and interactions. He positioned GA for the sale — a strong outcome like this doesn’t come about as a result of outbound outreach by an investment banker.
When There are Multiple Founders, Clarity of Role Matters. It’s exciting to lock arms and start a business together. Once the early days pass and product market fit is achieved, as an investor I now look for role clarity amongst founders and make sure that the CEO has the authority to call balls and strikes.
Throughout all the ups and downs, Jake and team showed the guts, perserverence and strategic foresight needed to build a highly valuable business. Thank you to Jake, his co-founders Brad, Matt and Adam, and the entire GA team — it was a privilege to be part of this ride and you will always be a part of the Maveron family.