Learning Everywhere You Look
The Wisdom of T-Shirts
Mark recently saw a great shirt at the MIT Rec Center where he works out. It said: “Some days I win. Some days I learn.”
We are nearly 70% invested in Fund I when you count existing investments and capital set aside for future rounds in our portfolio companies. It is quite exciting to be at this point having looked at about 800 business plans or XPLR finds to get to our soon to be 16 companies.
While there are plenty of challenges in early stage investing, we are always so impressed by the leaders of the companies. Their passion and drive is infectious and motivating. As our portfolio matures, we are starting to see what is taking hold in the market and what is challenged.
Some simple advice for all startups: experiment with pricing. If you can, try the highest price you can image with one batch of prospects, what you think is a logical price with another, and one in between with a third. You may be surprised to learn that you have more pricing power than you realize.
Listen to market feedback and deliver what prospects and customers tell you they want in your software/service. This is why an MVP is so valuable. Best to get to market quickly without a full feature set to learn what is really in demand.
Take each day as a day for learning from success or a lack of it. Both are a gift of market feedback.
—Dave & Mark
Envisions Newsletter
Learning Everywhere You Look
w/ Frazer Anderson, Analyst at Vestigo Ventures
The Empire Strikes Back
New, lower pricing for trades at your local self service brokerage firm at Schwab or E*Trade or TD Ameritrade have arrived. As of this post it is unclear if the clearing units and traditional employee players will mark down to zero for all trades.
Why has the incumbent empire struck back? They see the success of freemium models deployed by startup FinTechs. Schwab in particular has been very aggressive to match the prices of startup challengers. They did this with robo-advice several years ago. It is a smart move by an incumbent who has a great brand that stands for customer value.
It also allows the stronger firms like Schwab and Vanguard to drive business from the weaker competitors like E*Trade. Taking out $200 million of earnings is a tough thing to do in the crowded online brokerage arena. This move will allow the strong competitors to get stronger and the weak to continue their erosion.
This movie is coming to the rest of financial services. We have had our thesis that the industry needs to drive down its costs to consumers and to delight them.
This is a good example of both! The most competitive segment of financial services is retail financial advice. This type of action will not stop in this segment. It will move to banking and insurance as well. It has already been happening in asset management with the pricing pressures of ETFs on all forms of investment fees.
The startups will not stand still either. We back most that are in a B2B model to help the incumbents drive down costs so they are well positioned to be in even greater demand. Or we back B2C models that have a unique focus or differentiated approach to helping the consumer. These will continue to put pressure on incumbents to focus on their key clients and price competitively.
The winner here is the consumer. This activity drives down the cost of services, allowing them to reinvest in their financial assets. By lowering costs, we know the market expands for those not served today or served well by the industry. If you need an example of what happened when costs were lowered look no further than your cell service. Just think of the innovation that was unlocked as prices were driven down.
—The Vestigo Team
DC Comes to Cambridge/ One Kendall
Ian, Mike, Frazer, and Eben hosted Congressman Trey Hollingsworth (R-IN). He is on the House Financial Services Committee and oversees consumer data protections. We wanted an opportunity to show him our data resources and how they benefit the consumer. He was intrigued by Cogo Labs' operating model and the firm's ability to match revealed consumer preferences with product, while keeping individuals' privacy secure.
We were also able to discuss our portfolio companies Alloy and ZenLedger. They both are trying to help the industry and governments with the know-your-customer rules or tracking activity that needs to be reviewed. Representative Hollingsworth is instrumental in getting government agencies to be supportive of ethical approaches to AI and big data, which will ultimately accrue in value for US citizens.
We appreciate his visit and keen interest in data. It is clear that he is well informed and thoughtful about finding a balance between privacy and innovation.
—Ian & Mike
Portfolio Updates
Vault: The Future of Work
Turnover in employment is a natural facet of the economy. It’s also an expensive problem for employers to deal with. Departures result in productivity loss, require time to refill the position, and cause stress as workloads are re-distributed. Vault understands this issue and takes a data-driven view to solving it, which can be read about in detail here.
Vault Benefits
Interesting Reads
The Economist
Nikhilesh De
Stephen O’Neal
Apply to One of Our Portfolio Companies!
Our mailing address is:
Vestigo Ventures
1 Kendall Sq Ste B2101
Cambridge, MA 02139-1588
Add us to your address book
DISCLAIMER: The information presented in this newsletter is intended for general informational purposes only and may not reflect current law or regulations in your jurisdiction. By reading our newsletter, you understand that no information contained herein should be construed as legal, financial, or tax advice from the authors or contributors, nor is it intended to be a substitute for such counsel on any subject matter. No reader of this newsletter should act or refrain from acting based on any information included in, or accessible through, this newsletter without seeking appropriate professional advice on the specific facts and circumstances at issue from a professional licensed in the reader's state, country, or other appropriate licensing jurisdiction. This newsletter and its content should not be considered a solicitation for investment in any way.