Lessons on Innovation
Open for Business
While the COVID-19 has been a bit more advanced in Boston than other areas of the US, we are gratefully setup for success while working from home. The safety of our team, portfolio companies employees, and LPs is our top priority. We have enjoyed the spirit in which all of us have committed to collaborating remotely.
We now have a signed term sheet with our 18th portfolio company and are working with the founders to ensure that the Company is sufficiently capitalized to weather the storm ahead. They have a rock solid business model that is likely to thrive (unfortunately) if this economic malaise persists.
We have participated in informal board meetings with our portfolio companies. No panic, but a lot of questions and thoughtful approaches to potential market challenges. We know great companies gain ground in times like these; our invested capital is in good hands with our founders. Our capital reserves are above market which will serve our LPs and companies well if business growth temporarily slows down.
There is always a silver lining in times like these. Innovation that drives savings works really well as a value proposition to financial services incumbents in these markets. Many of our companies are focused on exactly that value proposition.
We know attractive valuations are available when markets reset. We will continue to find opportunistic entry points for new investments in our portfolio. We will need to be especially thoughtful about putting capital to work in this environment but seeing a business under pressure will teach you a lot.
Stay safe.
—Dave & Mark
PS. This issue covers lessons on innovation so enjoy the blog from Frazer on how to do it well. Be sure to see Dave’s interview on the impact of 5G!
We keep innovating having added a new service for our startups called HireAI. It’s a job site for engineering and data science talent that they can draw upon to fill their open roles. The first couple of test cases went very well.
World Economic Forum 2020
w/ Hans Vestberg, CEO of Verizon, and Dave Blundin, General Partner at Vestigo Ventures
Innovation on Hold?
When markets turn south and expenses are tight, established players pull in from experimentation and innovation work. Why invest when revenues are dropping and there is immediate business risk in front of you? Not an irrational question at all.
This distinguishes great companies from good ones. Great ones do not disrupt their long-term campaigns against disruption in the face of a temporary shock. Fundamentals are, well, fundamental! Customers, both individuals and businesses, expect to pay less for more delightful experiences with each passing day in financial services. While they may give you a hiatus for a global emergency, they will not change their desire for better, faster, and cheaper. In fact, their caprice is likely to reach new heights in the wake of a crisis after a period of pent-up demand.
We have engaged with innovation programs at major insurance companies, banks of varying sizes, asset managers, and distributors. From our seat at Vestigo, we are often consulted on the best way to bleeding-edge experiences to their customers. So what is critical to practicing innovation even in tough times?
The first key is a willingness to fail for small stakes. Never wager the viability of the firm. Be transparent. Understand how much discomfort your culture can accept. Communicate to your employees experimenting with internal projects and in partnership with startups that you expect some of these efforts to fail.
Aside from a catastrophic threat to the business, the only failure you should not accept is a failure to learn. What happened when you experimented? What learnings might be scalable to the overall business? Does the learning change strategic direction or resource allocation for the company?
Make it easy to be a partner with a startup. While everyone has to be careful about PII and cyber security, make the process of procurement have a fast track with less difficult hurdles for a small company to follow. Creating a sandbox in a protected environment for startups to play in is even better.
Patience is the final remedy we would prescribe to both incumbents and startups. Frustration is easy when it is difficult to measure success. Organizational paralysis is also an alluring response to emerging global risks, derailing your commitment to innovation. Do not let that happen. Today’s crisis will fade. "If you can keep your head when all about you are losing theirs and blaming it on you," you will learn valuable lessons about your business, positioning you for success on the other side of chaos. Innovation is about winning a long-term game.
—Frazer
Portfolio Updates
Long Game
Forbes mentions Long Game as one of the innovators changing the hard task of personal saving. Playing games, winning prizes, and saving while playing the game teaches good financial habits and helps make better financial decisions in the future.
Stephanie Walden
ZenLedger
Pat Larsen from ZenLedger shares the lessons he learned while raising capital. While being tenacious, it is very important to stay humble and mentally strong. Pat emphasizes that building a startup means constantly learning, juggling personal and professional responsibilities and having a great team that works well together. Pitching is an art that requires a lot of practice and an investor fit to eliminate unnecessary effort selling the idea to people who did not believe in it in the first place.
Pat Larsen
LifeYield and AdvisorPeak Integration
LifeYield and AdvisorPeak are creating the first smart tax rebalancing platform together. The platform, scheduled to be delivered in April, will simplify the allocation process and provide specific recommendations for portfolio rebalancing by generating reporting that will include the LifeYield Taxficient Score and put dollar values on the suggested changes. What an exciting opportunity for both companies!
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Interesting Reads
Steve Cocheo
Abdo Riani
Guest Contributor
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