DeepSummary
In this episode of This Week in Startups, guest host Mark Suster interviews Kirsten Green, founder of Forerunner Ventures, a leading consumer-focused venture capital firm. They discuss strategies for founders to stand out in the consumer space, which only receives 7% of VC funding currently. Green emphasizes the need for novelty, utility, and a 'wow' factor to capture consumers' attention and drive adoption.
Green shares Forerunner's investment framework, which focuses on understanding consumer demand, identifying gaps in the market, and evaluating the uniqueness and defensibility of the product or service. She uses the example of the Oura Ring to illustrate how the firm identified the growing health and wellness trend and backed a novel wearable technology that addressed consumer needs in an innovative way.
The conversation also delves into the potential impact of AI on consumer companies, with Green highlighting the opportunities for personalization and context-aware experiences. They discuss the shift from 'access' to 'edit' in technology, where consumers seek more curated and tailored solutions. Additionally, they explore the challenges of the exit environment and the dearth of small and mid-cap public companies.
Key Episodes Takeaways
- Consumer startups need to offer a novel, unique, and 'wow' factor to stand out in a crowded market and capture consumer attention.
- Forerunner Ventures focuses on understanding consumer demand, identifying gaps in the market, and evaluating the uniqueness and defensibility of products or services when making investments.
- AI presents opportunities for consumer companies to offer more personalized and context-aware experiences, addressing the shift in consumer demand from 'access' to 'edit'.
- Cultural shifts and evolving consumer behaviors, such as the growing focus on health and wellness, can present investment opportunities for consumer-focused VCs.
- The lack of small and mid-cap public companies, combined with the rise of late-stage private funding, has altered the exit landscape for consumer startups.
- Embracing change, growth, and flexibility is essential for both founders and investors in the rapidly evolving consumer landscape.
- Direct revenue from consumers is a critical signal of a product's value and importance, though indirect revenue streams should also be considered.
- The contrarian nature of investing in consumer startups currently could present opportunities for those willing to take the risk.
Top Episodes Quotes
- “I think that to start with, why is so little funding going to consumer businesses is relevant to state that, which is its been expensive to build consumer companies. There was this thing called social that came online. It really created an opportunity for businesses, digital businesses, to get in front of consumers and for there to be network effects and all of that. And I think it allowed discovery and propelled discovery. It has gotten expensive. It's gotten crowded, it's gotten expensive.“ by Kirsten Green
- “But I think one of the things that makes life so exciting is that, like, it is, it is always, it's always possible for it to be changing. And I think that, like, it's important to have goals, it's important to have direction, but it's also important to allow yourself the freedom to grow and change or, you know, challenge yourself to grow along the path and allow yourself the freedom to make some changes to those decisions or those paths.“ by Kirsten Green
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Episode Information
This Week in Startups
Jason Calacanis
6/7/24
This Week in Startups is brought to you by…
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Todays show:
Kirsten Green joins guest host Mark Suster to discuss Forerunner’s framework on making investments (8:33), how AI will change how consumer companies and applications are built (16:28), cultural shifts that are investable (33:38), and more!
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Timestamps:
(0:00) Kirsten Green joins guest host Mark Suster.
(2:49) Kirsten’s advice to stand out in consumer venture with only seven percent of VC dollars being allocated to consumer.
(8:33) Forerunner’s framework on making investments.
(11:16) Vanta - Get $1000 off your SOC 2 at http://www.vanta.com/twist
(12:09) The value of searching for where businesses are missing the mark, and the “wow” factor of the Oura Ring.
(16:28) How AI will change how consumer companies and applications are built
(19:46) Oracle - Take a free test drive of OCI at https://www.oracle.com/twist.
(20:50) The current state of the consumer search experience and the power of personalization that AI can bring.
(24:16) The disruptive lesson from mobile and the next level of being context aware.
(28:24) Mercury - Join 200K startups who use Mercury to operate at their best at http://www.mercury.com
(31:57) Forerunner Ventures lives within the intersection of invention and culture.
(33:38) Cultural shifts that are investable.
(36:36) The consumer shift from large to small screen.
(40:42) The importance of the mix between direct and indirect revenue.
(42:32) Discussing the relevance of “freemium”.
(55:48) What the exit environment is like going forward.
(1:02:55) What will it take to bring back the small and mid-cap market?
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Check out Forerunner Ventures: https://www.forerunnerventures.com/
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X: https://x.com/kirstenagreen
LinkedIn: https://www.linkedin.com/in/kirstengreen/
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X: https://twitter.com/msuster
LinkedIn: https://www.linkedin.com/in/marksuster/
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(28:24) Mercury - Join 200K startups who use Mercury to operate at their best at http://www.mercury.com
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Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland
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