How do investors think about founder-market fit?

“So I think more broadly, the way I think about investing is kind of Two parts. One is team and the other is the idea. So on the team side, when we're trying to do our pattern matching across founders, I think that is the same and consistent across all founders regardless of who they are, where they are. Um, there's a certain, I guess, bar on what we're looking for in a founder. Certainly one is sort of what I call founder market fit. Like, do they know a lot about this thing, whatever this thing is, the problem, the solution? You know, their experience, et cetera. And, and like, what is sort of their nuanced insight into this problem and how they're going about it? Uh, of course other things matter too, like their frugality, their scrappiness, um, recruiting a good team together, all that stuff, all that stuff that other investors are looking for, we're looking for as well. And I think— Perhaps having backed a lot of founders, the good, the bad, the ugly over all of these years, we have like a stack ranking. And so when we are interviewing people, I'm looking for where are you in this stack rank? It's not perfect, but that's generally kind of, I think, how I think about people. And then on the other side, uh, the idea, I think this is the part that can be tricky with international, which is— I think actually the idea matters a lot. And specifically, competitive markets are really hard for pre-seed investors like us in that we're not writing big checks, so we cannot support the company forever. Like we're, we're not like the big folks who can put in $5 million and keep you alive until you figure it out. We are putting in $150,000 check and we need to know that you are going to be kind of the best people for this opportunity. I have to have seen a lot of other people chasing after this opportunity. I have to believe this opportunity is not too competitive because competition by definition drives customer acquisition costs up, right? Your customers are now evaluating 10 other players, so they're gonna think about it longer. It takes longer to really get to them either with a salesperson's time or ads or whatever it is.”

“And so, you know, you don't have like that that kind of, and not to say that everybody young is hungry, but you don't have that kind of atypical Silicon Valley young hungry group of 5 engineers that have just finished Stanford that are sitting together hacking together something to solve that problem. And so that removes a number of the typical competitors you have. If you're investing in software that sells to software businesses, then you've got a shitload of competitors to think about. But if you're thinking about HRIS or you're thinking about supply chain or you're thinking about risk management or you're thinking about call center optimization, or you're thinking about plastic reduction, maybe more plastic reduction, there's some young people thinking about that, but like there's definitely an area of kind of gray hair that kind of comes into the founders building those businesses. And so I think that does reduce some of the competition. You also have a lot of companies, like you have a lot of cottage industries in these spaces. So you'll end up with a lot of people that will build small to medium software businesses serving one vertical or serving one geography. Mm-hmm. That will be run by a domain expert who doesn't go and go for venture capital, doesn't have global domination on their mind. And so when you find a founder who has the right level of domain expertise, who has the ambition to build a really big, you know, longstanding business and is able to then attract funding through an investor like myself, then they have a real chance of taking a large chunk of the market. And over time, you know, they may choose to partner with venture or private equity to start up acquiring the small cottage industry businesses that are in there because it's cheaper to acquire their customers than it is to sell to their customers. And so I think that's one of the things that I really like about the space that I play in. There is absolutely competition, but probably a little bit less than the, the next kind of, you know, dev tools or productivity tool or, uh, consumer-facing marketplace or whatever they might be.”