It is time to Build…Introducing dvˣ

The era of blitzscaling and hyperscaling appears to be coming to an abrupt halt, or at the very least a massive re-think. One of the key ingredients of the blitzscaling era was massive spending on growth with the argument that, “a point of market share today costs less than a point of market share in the future, so spend aggressively today to capture that point of share.”

Instead of being accretive, massive spending on growth before solving unit economics is largely proving to be a value destroyer, and not just in private market portfolios, but in newly public companies as well. Selling dimes for nickels doesn’t create durable, long-term businesses. Eventually, financial physics wins.

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“Selling dimes for nickels doesn’t create durable, long-term businesses. Eventually, financial physics wins.”

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For the past couple of years, a question has been continuously on my mind: “What if you could create a company that created great companies?” In venture, the model is betting on 1 great company in 20 investments. What would it take to get 7 of 10? What would it take to create a platform that could fundamentally change the velocity and success rate of startups?

Finding an answer to that question led me on a journey to learn from incubators, accelerators, venture studios and startup foundries as well as drawing on my experiences as both an entrepreneur and scaling rapidly growing companies.

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“What if you could create a company that created great companies?”

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dvˣ = exponential change in velocity

Today we’re introducing a platform to change the velocity and success rate of startups. The name comes from a concept at the heart of my 6th company, TrueMotion. ‘Delta v’ is engineering speak for change in velocity. We want to do this exponentially. The DVˣ platform provides the infrastructure to build game-changing companies with less capital, driving the entire start-up execution process from concept development to initial product build to team formation, investment, launch and then to scale.

To create this platform, we first re-examined the venture model. Of the many experts I spoke with, two with long-term track records of successfully hatching companies stood out: Mike Speiser at Sutter Hill and Noubar Afeyan at Flagship Pioneering. At Flagship, Noubar and his team have achieved 22 IPOs since just 2013. Mike and his team at Sutter Hill have created juggernauts like Snowflake, Prism, Pure, Helix and Clumio. Both have inverted the venture model — getting five to seven out of ten successful investments versus only one in a typical VC fund.

I also looked back at the experiences I’ve had as a serial entrepreneur as well as at scale with both Tesla and Lyft. Before Tesla, Lululemon and Lyft, I was lucky to be the founder or on founding teams of six businesses that scaled from zero to significant revenue and profitability. The first five had great outcomes and the sixth is growing rapidly.

At their core, successful, long-term durable businesses share a common trait: a commitment to Perfect Product (think Tesla, Lululemon, Apple). Perfect Product finds long-term product-market fit and benefits from long tail-winds. But, a non-obvious benefit of Perfect Product is the go-to-market benefit: customers rave, thus creating no-expense organic, referral, earned and viral growth.

Tesla and Lyft showed me first-hand the stark contrast between a business with both product-market and go-to-market fit (Tesla) and one with product-market fit that didn’t yet have go-to-market fit (Lyft). While Tesla grew 10x in three years from $2B to $20B in revenue run-rate without a single dollar spent on paid marketing, Lyft spent billions of dollars in paid marketing and pricing subsidies to both drivers and passengers to achieve less than 1/10th of that growth.

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“…a non-obvious benefit of Perfect Product is the go-to-market benefit: customers rave, thus creating no-expense organic, referral, earned and viral growth.”

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My co-founding partners and I are excited to bring this insight and experience to the world of entrepreneuring through DVˣ Our model is anchored on these key foundational principles:

• High Impact ideas, rigorously researched up front — A key criteria for the companies we build is that they will have a positive impact on the world. We will work primarily on our own ideas, but will welcome select entrepreneurs onto our platform.
• A commitment to Perfect Product — The products we introduce will initially be developed by our own engineers. We will build breakthrough products people love.
• A commitment to achieving both Product-Market fit and Go-to-Market Fit before pulling hard on growth levers. Successful durable, long-term businesses have to find a combination of both product-market fit and go-to-market fit. In other words, it’s not only product-market fit, but CAC/LTV and unit economics that also have to work. Our growth levers anchor on a deep understanding of unpaid growth. Our growth team has the experience to leverage organic, viral, referral and earned growth strategies.
• World-class teams with deep operating chops — Our replicable process for creating businesses will enable us to launch and scale companies efficiently. To do so, we depend on top talent and winning teams. The talent on the DVˣ team includes some of the most creative and accomplished entrepreneurs and operating executives on the planet. We have revolutionized industries beginning with an operating insight. Our ability to simplify and execute separates us. And, our operating teams participate in portfolio economics which provide an unmatched employee value proposition neither ‘single-shot-on-goal’ startups or larger technology companies can offer.
• Permanent capital — We are not a fund. We are not on the two year treadmill to prematurely fund growth in order to achieve a markup to raise the next fund. Instead, we and our investors are taking the long view. We’re owners and we’re building durable companies. Our capital will fund the seed stage and hopefully most if not all of the Series A.

In addition to those core ingredients, the founding partners of DVˣ are a team of experienced scalers. Jon McNeill, Henry Vogel, Karim Bousta, Sami Shalabi and Michael Rossiter have led and help create over a dozen companies, 20,000+ jobs, and billions of dollars in value, returning over 9x to investors.

And, we have changed the planet — both at the early stage and at scale. We’ve been lucky to work with and build incredible teams, and be a part of some of the most significant companies and global brands including Tesla, Lululemon, Google, Lyft, GE, Symantec, and eBay. Each of those businesses experienced critical moments when they bent the curve and changed the velocity of the business.

The DVˣ platform already has its first four businesses underway. We closed our first round last week and we’re grateful for the support and confidence from investors including the leaders of some of the world’s top performing venture and private equity funds, as well as some of the most accomplished founders and scalers globally. In turn, we’ve started building the teams to lead talent, research, engineering and growth.

We’re building a repeatable process to create and scale breakthrough businesses that have a positive impact on the world. Starting today.

Marc Andreesen is right: It is time to build.

Introducing DVˣ.