YouSaid · the spoken record

Nico Wittenborn

lines on the record: 87
first: 2023-05-22
most recent: 2023-05-22
sittings or episodes: 1
sources: podcast

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“But Hey man, it happens. I think most regrets that we have as investors are the companies we didn't invest in And so, what does it mean? Does it mean that we have to see more companies? It usually means we have to be better at making decisions on the companies that we see. So I think one of the differences, obviously, of our approach is you have this and a platform and huge network and you have a lot of volume. I try to stay away from volume consciously. This is the first time I talk about adjacent publicly for you. And the reason for that is that I actually am very mindful of my capacity. And this is both time, but specifically mind space for making these decisions because I think that every investor has a bigger regret portfolio of anti. And so it's not about seeing everything, seeing more. It's actually about seeing better in the small end, I think. And so to your question, did I not pay up and regret it? I honestly, nothing comes to mind. I'm not sure if that means it didn't happen or just that I didn't obsess about it enough afterwards. I think I'm willing to break my”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah. I'm not saying I would have at all. I'm just saying I think this is exactly where insight and alpha and so on so much comes from, understanding not what it looks like today, but what it could look like in 10 years, right?”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is, I think, core of what I think we should be betting on as early stage investors, which is the relative development of these markets. The way that a growth investor looks at it is at the static, right? They need to understand the size and the benchmarks and make it fit their formulas, and then it has to add up and make sense. These is driven investors need to understand the magnitude of change in a specific segment or demographic or behavior, and then bet on that.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“They have a preference. In the same ballpark Serving founders long term, we will only be successful if the founders that we work with are happy with how we collaborating with them. Does it mean that there is some tension sometimes between what you require and your fund model and what the founders require or want? Yes. But I think that the start of a partnership ideally is being open about your limitations or the things that you need to be feeling good about this and then finding the common denominator. I cannot say in this scenario specifically, but the way I would approach it is think about what I would like, then really understanding where they're coming from and they're optimizing for and then trying to fit that together as good as possible. And that might not always be possible, in which case you're going to have to make a decision if you go with what you perceive to be better for the company or for you. But I would say long term, I would decide to choose for the benefit of the company.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“One piece of advice that Jeff Hoing, the founder of Insight gave me after working with me at Insight for a while, was that his only comment was, don't be so cheap. And you can take that to the extreme and become too generous. At the same time, I believe in being fair without being cheap or generous. And so the way I approach it usually is that I have a conversation with the founders about what is reasonable from both ends and then try to find a solution. And it hasn't happened yet that didn't work. What does it mean? Does it mean sometimes I'm too generous? Maybe.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think there are some firms that don't want to collaborate. And if you say that, you don't want to collaborate. That is fine. I've consciously decided to keep my fund at a size where I can do that. And I think there's other funds out there that believe in small funds and that are willing to do that. Can it change with the macro yes? And is it possible that somebody will start to ask for more? Yes. But then that usually, I think, also would go hand in hand with valuation expectations going down, dilution expectations going up. So maybe it fits the formula again. But I can only talk about how things are today. And from where I see them, it is possible actually desirable by a lot of founders, by me. And I just have to be early to those companies so that I can play a part in forming how the round comes together.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“I have the relationship with the founder. But also, it's a company that will benefit from the attention of a USV partner. And I can't give the same.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“The way that I've approached it so far is that at seed you don't need a board, I think, because you're chasing product market fit. Most of the time I'm in your way. The best thing I can do is share learnings from the other companies, be a strategic thought partner, and then make introductions to other founders that have faced similar issues or solved things that you're facing right now. And so that's my role. And then there's some financing related things and stuff like that. But that's really how I see my role. And so then from A, I think it makes sense to have a board. Since I'm usually not the one that leads the A, I give myself an option to be an observer on the board, which will be exercised if it makes sense. But I'm also very happy to let people decide how they want to structure the board. I think there's people that invested A that are very good. For example, I love USV. I collaborate with them. One of the series A that I co-led recently was with USV. And I was very happy to have them take the board seat. Yes, I want to learn, and I have an observer, so I can dial in if I want. I do that usually because I also learn from it and I want the information.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but I still am somewhat disappointed. I mean, I like when people invest in my companies, right? I don't want to discourage people from it. I don't depend on it because usually I structure around in such a way that we can get to casual positive with a lot of those companies or with the partner fund that they have such long runway that that is an option or there's a lot of time to prove the next round. But I think that it's a bit of a, I guess a critique that I would have about VCs is that they criticize the model until it breaks out and then they fight for it. So for me, true venture is venture that is thesis driven and early stage. And I know there's different ways of playing it. I know that there's different stages and different skills required. I am the first one to say I shouldn't be on a public company board. So I actually structured, we can talk about this as well, but I structure my work with the companies such that I'm involved early on and I'm happy to step out once the scale that I'm not that suited for anymore. So I don't have any ego about being on the board. I actually deflect boards.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Because people don't like consumer subscription until it does tens of millions in revenue. Yes. Because you don't like it when you don't understand the dynamics and you don't see this exponential growth. Once it goes from a few million to tens of millions within a pretty short period of time, you forget about it.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so my position currently is I made this graph, which is probably the simplest positioning graph, that if you added whiteboard here, Put it on the wall now, but I tried to lead at seed and I tried to co lead at A. And so what that means is that three quarters of the fund are seed within early and late seed. And then the A's that I'm doing, I usually collaborate with other funds on them. And so I like that part of the strategy because my fund is small enough so that I can do it so that I can get on my ownership target and another fund can get on the ownership target. At the same time, it enables the founder to have more money so that they have longer runway, which typically now I plan for three years. And it also means that they should be a pretty significant step up in valuation we talked about this, right? I think seed and A are very good spots for this model from B depends, right?”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“The double digit ownership, and I am getting it on the same side, it is probably still a bit too early to say that the hit rate is the same. It's 2025 companies. The tech size goes between one and seven.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the fund is, I never announced the funds, and I'm inclined not to do so, but I'll give you all the other things of the model, and you can work back from that. So the model is that I have somewhere between 20 and 25 companies in a fund. The majority of that is seed. Seed for me is a little more flexible than how other people think about it. I also don't care about the label so much. Some of the seeds I've done and some of the A's that I've done were at the same valuation. Those labels are arbitrary to me. And so I just try to get my ownership on those 20 to 25 companies, which with the current fund I'm investing in it's 10% for the last six months it's actually been 11% because the macro is starting to come down maybe also I'm becoming more bold I don't know but it's 10 for the average of this fund the first fund was a little different because I erred on the side of proving that I can be in good companies so there were some companies where I have less desirable ownership they're great companies the hit rate I think is quite high in the first fund but with fund two I wanted to prove I can go”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. And so putting yourself in a position where you need that to deliver real returns for your fund is one very difficult to get high multiples on the LP dollars. Two, from where I sit in the early stage, it has always been true. You were surprised by the upside and you choose to invest in something that has a reasonable chance at becoming big enough to make sense. But then in the outsized scenario that it becomes very big, this is the optionality asymmetry we shoot for. So I think there's more surprising positives in aiming lower and being surprised than in wrong data points or like wrong decisions by saying it cannot get this big and then not investing.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't see them that much. And I think the reason for that is that I'm active in an area that is not that hot. I like it. I don't really think that these firms think of these companies as moving the needle for their billion dollar funds. And I think that this is one of my opportunities, operating under the assumption that you need $10 billion outcomes to move your fund is a very hard one. Especially in this macro, but generally. And this has different reasons. One, $10 million outcomes are very rare. They have been more frequent in the last three years, but a lot of that is not true anymore, right?”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Seed and then the rest is A. So I also do it if it makes sense and if it's not a crazy price, right? But oftentimes I think, okay, we invest, we build the company, we get to the significant level, we only raise follow-up on funding if we really see those next chapters and these next levels of acceleration. Otherwise, let's not raise too much too early, right? Like I'm not the one that chases high valuations. I'm actually the one that says let's keep the options open.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“I believe that seed is the best in terms of upside potential, downside risk and expected future dilution. I operate under the assumption that I have multi-billion dollar exits, not $10 billion exit, right? That is reflected in both when I come in and then how big my fund is, which is reasonably small and consciously so, because I want the strategy to work, even if it's a $2 billion exit, it should return the fund once, twice, maybe three times, depends on how early I got in. And so I think that's why I choose seed. And I think the reason to expand more strongly to A would be that we have more confidence that the outcomes get bigger and we have some portfolio that warrants diversification across a number of investments. I think that there's a limit to how late you want to raise capital with these companies. That's a mismatch that I have with some of the multi-stage funds, right? Because for me, if I invest at CET or A, I do seed NA, right? It's like, I would say 70, 75%.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“It's also not as dilutive if you are in the seed and then it steps up to where some of the follow on rounds for those companies were. And so I think the seed is a great spot to invest in these companies. And I think that the cash efficiency is a good starting point. But then it usually is only the first surface area of your product, right? Take photo room. It's a pro consumer product. We started on mobile. It's successful not just in the US, but also in emerging countries. Now we're bringing the same product to web, to teams, and we have an API that people are paying 600 digits for a year. So we start with mobile subscription, but it evolves into much more than that, right? Because the underlying technology is what's interesting. And mobile is just the first step to get started. It can become much broader over time.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“You should do that, right? Like you take advantage of a channel when it opens up, but then you try early enough to invest in diversification of that. And it is possible. It is not the case that there is only one channel. There is a few channels, and it's hard to crack the next one, but I've seen companies do it. You can do it. It's hard. You have to have discipline so that you don't do it when it's too late, but it is possible. And I think another aspect of this is interesting also, I think you touched up on Photo Room, is, and this is, I think, sometimes also how I misunderstood is that people reduce my thesis to an app with a subscription. And I talked a lot about this because it is a big core of it. I think it's just the easiest way to get started. You write an app, you put it on the app store, it's in 200 countries, you charge annual upfront, often with a seed round, you get to tens of millions in revenue. That's crazy. What other companies do you have where a seed round gets you to tens of millions in revenue? I don't know. There's other challenges to the business model, but this is not one of them. It's a very cash efficient way to get started.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Do you want to move No, I think that is one of the major risks to manage because you cannot be dependent on only one channel.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah I think that's a philosophical question. I can tell you the data as a company. So I invest in the best in class subscription companies, but I also invest in the infrastructure for them, right? So revenue cat, SuperWall, UXCam, Runway. So there's companies I work with that are powering these companies. So in a way, it's a proxy bet for me on the thesis, but there's also a lot of synergies, right? And so what SuperWall is doing is optimizing paywalls. And so one of the learnings that we have from that is that the number one indicator for driving conversion is how often do you see the paywall, right? And so it's very common sense. And you can err on the side of being annoying, which you want to avoid depends on what your strategy is, but usually you probably avoid that. But showing the paywall does not necessarily mean you have to convert. And so most of these are structured in a way where you have a free trial, you are being shown the paywall often, but there is a certain amount of pre-usage that you have. But the more often you show it, the higher the conversion will be. And then paradoxically,”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“One, we are surprised by how little sensitivity we see for really good products because the willingness to pay for those products is increasing quicker than our ability to.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“There are some tools that you use. I have a couple of things to say about this. But the first is you give a discount on the annual. And so the monthly, and sometimes a weekly, actually, I'm seeing some really interesting data now about weekly as well, which we can talk about later. But the annual discounted for somebody that gets enough value from the product in the Western world also depends on Geo, right? One of the advantages is you're in 200 countries. Once you go into the App Store. But in the Western world, most people today, I think this is like a big part of the thesis that I think is underestimated is our willingness to pay for a product that drives value. Yes, for some people, it will be expensive, but the price increases that we have seen since, let's say, Corn launched to what it charges yearly today and what it will charge in five to 10 years. I think it has a similar trajectory to what we've seen with SaaS companies and their ability to extract value as people are realizing what type of value they're deriving from the product.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the annual sub is paid up front. So usually it's like eight day of download or with a delay of seven, eight days.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's what I hope for. But it doesn't always happen, and obviously there's phases of companies, and there's also no silver bullet. Acquisition will change over all the journey of the company. The point I wanted to make about KEC is one, it pays back within a few days, right? So it's a”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“That is a good question. The guideline I give is 50%. And this is mostly for not forgetting about it. Does it mean that there's companies that sometimes have 60, 70, 80? Yes, and sometimes you also want to do that for a period of time if the unity economics are very good, right? If you can make very good returns on the acquisition spend, why do you not take advantage of it? If you have like a 4-5X, you can do it, then you just scale it up. But you want to see some component of the product, whether it's an actual feature within the product, whether it's just I call it the power experience, where it's something that you show people, right? Like your aura, sleep story or whatever, there's something built into the product that accelerates paid. And I think it's really working when you see that the organic scales in lockstep with the paid. So even though you increase paid, your percentage of organic stays the same 50-50 because there is some kind of reinforcing factor.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Immediately. And then the other 50% actually look like SMB SAS. If the market's big enough, that is actually a pretty solid model, in my eyes. And so what I push back on is one, yes turn is bad, but it gets better over time. It's not 50%, 50%, and then your turn, but it's 50% and then actually flattens out. So in those stack over time, even though there's a big churn in the beginning, they start stacking over time. So if the market's steep enough, you can stack them to a pretty high level. Second, KEC, actually, I think is one of the benefits of this model that you don't have to hire a huge ass sales force to sell your product into the market that burns a lot of money, but you actually have flexible stand, usually also a lot of organic.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“And if not, then I made the wrong decision based on two early data points. But it's 50. And I have companies that have 80 or 90. And there's usually some nuances to that. They're rare and they often come bundled with a hardware component or a specific type of service or product that is just not as volatile as maybe a health could be. So yes, we have those companies. They're rare, but you have to find them, similar to how SaaS companies, great on paper, but there's a bunch of shit companies. And so you got to find the good ones, sure. But the way that we steer them, and this now touches KEC, is usually we always, the companies I work with, this is the adjacent companies that I'm talking about, we steer acquisition so that we recover the KEC with the first year. So every time you get a yearly subscriber that pays back your CAC, you don't overspend very rarely. You have really have to have a good strategic reason to. But what that means is if you lose 50% of your subscribers, but they pay for themselves.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“I love to tell you my view. Obviously, hearing these concerns of that and think about that. So first, I want to again just emphasize that I arrived at this model through SAS, right? So we went from the first four or five years of my career, I learned early stage SAS investing from 0.9. And then I learned later stage SaaS investing from inside, which are probably two of the best firms in this area, right? And so what does make a SaaS model good? SaaS model is great because it is high margin revenue recurring from day one and global in terms of the distribution. All these three things also apply to these mobile companies, right? The difference as you point to is that we have a higher turn true is a problem. However, the insight that we've had with some of the first companies we invested in is that the churn is usually high in the first year. And then from the second year on, it looks very much like SMB SAS churn. Once somebody is a habitual user of the product, typically they just don't decide to rip it out of their life, right? So if you look at year one, say you lose 50%.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I don't want to argue the opposite. There are downsides and there are benefits. And I'm happy to talk more about both. But I'm just saying this is a new model. Our willingness to pay for software on a subscription basis was pioneered by the Netrix as a Spotify's. And this is something that happened before some of the episode dynamics on the EPSO. But the first models that emerged later that have the software”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, something like that. So the app store launched subscriptions in 2011. This is 12 years ago. So the first companies that were started around this model, like the Con, which was 2012, which is 11 years ago, they just get to the level of maturity. Back to what I was saying about M.9 and Insight, I realized that there's much less benchmarks and companies to point to. But I think they're emerging just now. The time to get to scale in this model has just been achieved. And if you look at USV, their first fund just wrapped after 18 years, right? And so I think that we are seeing the emergence of these benchmarks. And I started thinking about these companies in 2015. And so I understand that from the outside, looking in and being obsessed with SARS and comparing it one-to-one and looking at the differences, which there are downsides of this model.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Let me start by talking about the time of getting these companies to scale, right? So you're saying that there's very few data points for good companies. The ones that we consider good are multi-billion dollar companies, right? So how long do you think it takes for a company to get to maturity, let's say from founding or seed? Like, let's say IPO level or major acquisition.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“20 billion. Yeah, it's pretty wild. Worked with Insight and was leading Series A's mostly for them, both in enterprise software and then some of the consumer subscription companies that we're going to talk about. And in 2019, I decided to leave and start adjacent, where I'm now at the firm that I founded, and which is an early stage fund that is investing across both Europe and the US.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Valuation, evaluating, riding deal memos. So that's how I got started with 0.9. The next step, because this was when we actually talked last June 15. And so this was the year that we invested, probably I started leading my own deals that year. So it was like three years after I joined. And then in 2016, I was recruited by Insight and moved to New York. There I ended up being for, I guess, 2016 to 2019, investing a little later than 0.9. It was early stage seed and inside the biggest venture fund out there.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“Got back to me and came to visit a town close to where I was studying in Germany, and I had a conversation with him. He liked what I did with the iPhones. I actually just had invested in a company called Vier Kaufen that was that model, but on a bigger scale, venture funded. I was just one person. And so I think we hit it off and he offered me an internship. I worked with him for a couple of months and then continued working for them part-time as I finished my studies in 2011, 2012. And then when I graduated university, they decided to spin out this fund. And Christoph, who was an LP in the fund, joined as a co-founder. And they started 0.9. And I was the young kid that was around and lucky enough to be the first person, work with them long term. And so they were still raising the first institutional fund, which was the one after the six million euro seed fund as part of Team Europe. And I was just thrown in trying to help them wherever I could, sourcing.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“So I started my journey in high school in the first step towards investing, which was I imported iPhones from the UK, unlocked them, refurbished them, resold them, which then really opened my eyes to entrepreneurship one, and two, some of the money I made invested in Apple stock in 2008-9, which I guess taught me two things. One, you can make money online. Two, if you believe in something and you put the money behind it, then that can work out for you. There was very little money and I actually took it out pretty soon after for vacation with a girlfriend. At the time that this was happening was at 2008. And when I started studying, I read about a group in Berlin called Team Europe, a company builder pretty similar to Rocket, smaller. They built a livery hero, a couple of other outcomes. And they add a small seed fund on the side with 6 million euros. And that was managed by Pavel, who was later one of the founders of 0.9. And so I reached out to them, sent them a cold email, asked if I could do an internship. This is in 2010.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the next few years will be pretty difficult for most firms. I think the big ones have become too big. Operating under the assumption that you need $10 billion outcomes to move your fund is a very hard one. This is the first time I talk about adjacent publicly for you.”
2023-05-22 · The Twenty Minute VC · 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent · IDENTIFIED FROM THE TRANSCRIPT · source