Atomic II: $150M to Start Companies to Solve the World’s Problems
There is a lot that is broken in the world. Traditionally, we have trusted governments to work on our behalf to solve common problems. But today, governments don’t always have the right talent or incentives to solve all of the challenges that we face. Part of what makes this world great is that companies can emerge to lead the charge of change, creating competition and economies of scale by inventing products that help address our needs in a scalable way at increasingly lower costs, and sometimes even for free.
Unfortunately, companies haven’t yet been formed to solve all of the problems that we face. While technology has made access to information free, costs in important areas like healthcare, real estate and education have been increasing at rates much higher than inflation. All of this is leading towards a debt load on the next generation unlike any we’ve seen before.
The technology deployment age
At Atomic, we believe we are transitioning from an age of technology development to an era of technology deployment into the traditional industries that touch all parts of our lives.
In the first wave of the internet during the late 1990s and early 2000s, it cost roughly $10M just to launch a web business. By the early 2010s, the emergence of cloud computing platforms like AWS dropped the cost of building websites and apps to roughly $1M and enabled relatively small teams to accomplish a lot. Now, as we approach 2020, we are in an era where most of the important technologies are available for free as open-source repositories or available through easy to use and well documented APIs. In this new era, we’ve experienced firsthand an ability to prototype and test an idea for less than $100K or 1/100th of the cost just 20 years ago.
We believe the focus of the technology industry should begin to shift from a singular focus on developing new technologies to deploying technology into previously impenetrable and important parts of our lives. Critical industries like healthcare, still depend on phone, fax and paper based systems.
As entrepreneurs and company creators, it’s our responsibility to figure out ways to apply today’s technology to traditional industries and everyday problems with the goal of driving down costs and increasing the quality of life for all.
From idea to distribution, at scale
Today, creating a great company isn’t just a question of having great ideas on how technology can be deployed, it’s the ability to meaningfully scale those ideas to reach society.
We have transitioned largely from an era where products can grow virally, to an era of “paid distribution” where new products must “pay the toll” that gatekeepers like Google, Facebook and Apple require to get in front of customers. In this ecosystem, well-architected sales forces and customer acquisition machines are the difference between good ideas and a great business.
At Atomic, we’ve focused on developing technologies, processes, teams, expertise and playbooks to rapidly test distribution, unit economics and scalability of ideas as early as possible — ideally, before writing a single line of code. With a growing list of over 500 potential ideas of companies to start, we’ve mastered running tests that cost us only $25–100K per idea. This rapid, efficient testing enables us to quickly kill flawed business ideas that otherwise might have consumed millions of dollars and years of the lives of talented employees.
For venture capitalists who invest with us, this means much lower risk per dollar invested in our companies and accelerated scaling since distribution playbooks built from one company can be applied to another. For co-founders and employees, this means a much better risk adjusted return on time and energy during a critically productive period of our lives.
With this strategy, we have already created companies in healthcare like hims which has reduced the cost of treatment for many conditions by a factor of 20; in housing like Bungalow which has reduced the price of rent by 25–50% through co-living; and in engineering like Terminal which enables companies to access critical top engineering talent at half the price of the Bay Area by recruiting from global offices.
With over a dozen companies born from Atomic, we are hitting our stride, continually forming new ideas based on white spaces we observe in the industries we operate in and from pain points across our portfolio.
Disrupting the industry that disrupts industries
Atomic itself is also an ambitious endeavor. While each of our businesses attempt to disrupt their respective markets, Atomic is focused on disrupting the process of innovation itself. We are challenging the convention that successful businesses can only be formed by a process of randomness by which talented people, pain points and potential ideas collide in society.
Our view is that while the traditional company creation process has produced amazing outcomes, it is a little bit like winning the lottery in powerball. While we as a society love to glorify the lottery winner, we believe it’s better to not waste money playing and instead invest resources systematically. Especially in this era of technology deployment, it is more rare than ever that the right problems are colliding with the people who are suited to solve them. We believe that there are tremendously talented people throughout the world being dramatically under utilized simply because they are working on the wrong problem or stuck clocking in and out at a large company. This talent is not assembling efficiently enough to solve problems that matter and as a result most people in our society don’t ever come close to realizing their full potential.
At Atomic, we empower talented people to solve the meaningful challenges of our time and aim to become the best in the world at not just idea generation and validation, but also execution by pairing the right talent with opportunities they were born to tackle. And, because we start our companies from scratch it means we can afford to share much more of the pie with those who help build and invest in our businesses. We love the opportunity to create life-changing wealth for our teams — wealth that can be later used to re-invest in improving our world. Many of those we’ve partnered with have already made 7, 8 and even 9 figures within just 1–2 years of joining us. We hope to continue to be a vehicle for producing outsized returns for all of the amazing co-founders and investors we get the chance to partner with.
As with any industry that gets disrupted, the incumbents will inevitably resist change and insist on old truths as being the “only way.” We expect to be ridiculed, spoken out against and misunderstood as all disruptive innovators have been in the past. With our new, larger $150M fund exclusively for backing our companies, we have the ability to invest tens of millions of dollars into each of our best ideas and teams without the permission of the establishment. We believe Atomic will be entering into a golden age as a result.
When we started Atomic 5 years ago it took us on average 2 years for our companies to get to their first $1M in annual recurring revenue. In this past year, it’s taken the most recent several companies we’ve co-founded just 1–4 months to reach that important milestone.
We aspire to build the largest and fastest growing companies our industry has ever seen, proving that there is a new and improved process of company building; a better way to assemble society’s limited resources of talent and capital toward inventing a better and brighter future for us all.
We’re proud of the caliber of investors who have joined us on this mission with Atomic Fund II; from institutional LP’s such as top endowments, foundations, sovereign wealth funds and family offices to luminaries like Marc Andreessen, Chris Dixon, David Sacks, and Peter Thiel. We hope that you’ll join us too.
Thanks for reading.
Founder and Managing Partner of Atomic