The path to the TAM in your pitch deck starts at seed with a "killer wedge."
It's not a GTM strategy or PMF, but it sets the direction for both.
It's a critical point that's worth thinking through deeply. NFX has been doing a deep dive into this strategy.
Our findings below:
A startup's success will ultimately hinge on its ability to think long term while keeping up a frenetic pace. Learn how to keep an eye on the long term, even while you're sprinting to stay alive.
1/ Seemingly overnight, everything changed. It was 2008 & I was running Trulia.
We not only faced a recession but a catastrophic meltdown in our core market.
I quickly learned how to survive —& thrive— in a downturn. Today I'm sharing 28 things we did.
Not all revenue is equal. Every $ of revenue is more valuable if it's:
- Low churn
- Paid upfront
- High gross margin
- Not concentrated on a few customers
- Resulting from a business w/ strong network effects
In my experience, if you're a Founder of a company that reaches scale, there are 2 phases you go through:
1) Founder phase - build a great product & find product-market fit
2) CEO phase - build an enduring, sustainable organization at scale
I first heard
@Billbrowder
speak over 15 years ago at Stanford and was immediately captivated and followed his work ever since. Fortunate to meet him a few years back.
Red Notice was gripping and tragic. Excited to dive into Freezing Order, his latest book.
When I was building
@trulia
, we lived by a counterintuitive truth: *The team is the product.*
That guided us as we grew to 1,000+ people & $3.5B acquisition by
@zillow
.
Today I'm making public my playbooks for building a top team.
We just announced NFX Fund II at $275 Million. We're doubling down on seed stage - the most important stage. Today we're sharing our plans, & why the more interesting story isn't about a fund at all.
It's about "Why" we're doing NFX.
Truly honoured and delighted to receive to an OBE from the Queen! What a wonderful surprise. 🙏🎖🇬🇧
Such a privilege and thrill to help entrepreneurs to build their vision and change the world... and feeling so fortunate that I get to receive a medal for doing that!
Congratulations to
@NFX
General Partner
@peteflint
for receiving an OBE for Services to entrepreneurship in the prestigious Queen's Birthday Honours list. It's *our honor* to work with him at NFX 👏🎖️🇬🇧
VCs so often misunderstand market opportunities. It's not the size of the market it's the importance of the problem and the durability and scalability of the solution.
The most interesting marketplace startups right now tend to be ones that are using technology to increase the value of the product or service being offered by the supply side of the marketplace.
1/10 It’s easy for Founders to assume all the big marketplace opportunities are taken. But it's 100% wrong.
I'm seeing a new marketplace type emerge that I call Fintech-Enabled, where the platform has financial services built-in.
Here's a tear-down of why this is a huge deal:
I'm thrilled to announce
@NFX
's 4th General Partner, Morgan Beller (
@beller
). She is the co-founder of Libra & Facebook's
@novi
wallet, held key roles
@Facebook
&
@Medium
, and was a Deal Partner
@a16z
. Most of all she's an amazing & super talented person.
Everything
@NFX
is designed to help pre-seed & seed companies win.
We’re your first investor. We lead deals. We typically invest $500K-5M and have capital to follow on.
At $450M, our latest fund is for the next generation of category-defining startups
The worst part of being a VC is saying no to incredibly talented individuals and of course sometimes getting it wrong. When I was a founder I was rejected many times by most of the “top” VC brands and while never fun, it always inspired me to up my game.
If tech adoption typically happens with young people first, and young people's single biggest expense in life is rent, then the residential rental space is potentially the mother of all markets.
The concept of first-mover advantage is too simplistic. What's important isn't whether you're earlier / later than competitors. It's more about who enters the market closest to when there's a critical mass of enabling technologies, economic impetus, and cultural acceptance.
Our new $450M Fund is exclusively for pre-seed & seed. We invest across all industries, but with particular focus on:
1) Businesses with strong network effects
2) Proptech, Marketplaces, Crypto, Techbio, Games, & Fintech
3) US, Israel, Latam, & Europe
Nearly every marketplace is now trying to get closer to the transaction
@Airbnb
@Opendoor
@DoorDash
.
Three years ago, I used the term "fintech-enabled marketplace" to describe this trend.
Today, I have a new operating playbook for these marketplaces.
If there is any upside to the
#CoronavirusOutbreak
perhaps it is that people will realize that being a school teacher is a really hard and important job and we should pay and respect them much more. 👩🎓🏫
This week marks 10 years since Trulia's IPO.
Time for a bit of personal reflection.
10 things I’ve learned as a founder, as a CEO, after going through an IPO, a merger, and now as an investor.
👇
Real estate touches everything we do. It's the economics of physical space.
It shapes our lives by defining the environment in which we live and do business.
In my career, I've seen two major shifts in the real estate industry. Now, another is here.
Paths to ownership of real estate are expanding. What “ownership” even means is also expanding.
Here's my belief of where this is headed. Meet Real Estate 3.0.
It’s now becoming clear to Founders, operators, and investors why
@NFX
has been active in LatAm.
Today,
@AnnaPinol_
and I share part of our LatAm Thesis, with observations from ~5 years of investing in the region and insights for many more years ahead.
1/Almost 100 years ago, the labor market hit 25% unemployment, and now it's collapsing again.
But this crisis will be different.
Today I'm sharing 4 trends that will empower labor marketplaces to get people back to work quickly, efficiently, & at scale:
In startups, timing is everything. The truth is, for all practical purposes, being ahead of your time is often the same thing as being wrong. Consider the timing of your idea, not just the idea itself.
What many people didn't see when I led
@Trulia
from idea to IPO to a $3.5B merger w/
@Zillow
were the 5 key mental models I had to adopt so I could evolve from being a "Product Founder" to a true CEO.
Today I'm making them public for Founders everywhere.
Update on what we're up to at NFX. Really excited about our team and path ahead: NFX Launches $150 Million Fund to Transform How True Innovators Are Funded
1/ Post 2008 I was able to grow without eroding our cash position. Startups today must make cutbacks to survive. Yet startups rarely cut their way to success — they need to grow.
Today I'm sharing my guide on the new rules of Growth vs. Profitability:
As a board member, if I see a board deck with all the good things going on at a company and no negatives, it tells me that either the team can't see the problems they face or are unwilling to communicate them.
Founders with a healthy dose of paranoia are much more exciting.
No matter how strong your founding team, if you enter a market to early you could be stuck waiting for a day that never comes. Enter too late and you're fighting an uphill battle against incumbents with greater scale. That's why timing is everything for startups.
Excited to announce that
@NFX
is co-leading a $4MM seed round in
@WorkbyCore
, a construction labor marketplace working to transform hiring for the world's largest industry, alongside
@GVteam
w/ participation from
@robhayes
&
@Caterina
Wow - has it really only been two years since we "launched" NFX properly! Lots to be thankful for - working with an amazing crew at
@NFX
and a remarkable group of founders and companies. cc.
@JamesCurrier
@GigiLevy
“Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.”
💪
@JeffBezos
Founders who are fundraising today face increasingly daunting hurdles. So we just made the NFX Fundraising Checklist available to all Founders, everywhere.
These are the 13 top proof points to Series A, but it applies to all early-stage fundraising.
What many don’t appreciate about tech and VC migration from the Bay Area is that this is not a zero sum game.
Migration of talent, ideas and capital will ultimately unlock much opportunity today than concentrating it.
That’s a great thing. There are only winners here.
Be careful with early success as a startup.
When you start feeling invincible, there's a danger of losing your paranoia and making unforced errors that benefit the competition.
Don't let it get to your head. Play the long game.
I try to end every day with inbox zero for the simple reason that once I let a backlog start to build up, it quickly snowballs out of control. I try to reply to every email within 24 hours as a result.
Wonderful
@NFX
family gathering in Sonoma this past weekend with the incredible NFX team that make it all happen with their partners, kids and dogs. 🙏 ☀️ 🌳
There are only 2 types of companies:
1) those that look to increase prices of their products over time (Google Ads, Netflix) and
2) those that look to decrease prices over time (Amazon, Uber).
Critical for start-ups to figure out which one they need to be to define strategy.
The biggest marketplaces have non-commoditized supply sides and focus on must haves not nice to haves.
✈️ 🏨 The biggest travel marketplaces sell beds not flights
🚘 🍔 The biggest gig marketplaces sell food, not rides.
DoorDash just flipped Uber's market cap 🤯🤯🤯
Not going to pretend I thought this would happen back in 2015 when $DASH was <$1B and $UBER was $50B
Onwards & upwards 🚀
$AMZN next
Was in London for less than 24 hours and stumbled upon the turning on of the Regent Street Christmas lights. Looking forward to the holiday season to brighten our hearts and our homes.
Startup CEOs, Founders and teams. If you’re working at a startup today, this will likely be among the most challenging climates you’ll face.
But there is also an abundance of opportunity in this moment if you can think differently, act quickly, and keep your head up.
🧵👇
The best startups don't have linear growth, they have exponential or geometric growth.
Founders build the machine and then the company shifts its focus to building the machine that builds the machine.
Most first-time CEOs I talk to report feeling imposter syndrome when they become leaders of a big company. It's tempting to cope by acting like the "stereotypical CEO", but you should try to resist that impulse. Authenticity builds trust and makes you a more effective leader.
Rules of thumb if you're an early-stage startup:
1. Find product-market fit *before* spending aggressively on growth
2. Once you have product-market fit, you need 3-5x annual growth
1/ Behind every iconic company is a radical, risky idea. But we've seen less of these as the startup ecosystem has grown.
Today, I'm sharing a framework for Founders to evaluate startup risk, so that they'll be able to strategically take more of it.
Thrilled to announce we are promoting Anna Piñol to Partner at
@NFX
.
Known for her genuine nature, founder-first approach, global supernetwork, and operational expertise, Anna is someone you want in your corner. We sure do.
Congrats,
@AnnaPinol_
!
The next generation of marketplaces will be FinTech-Enabled Marketplaces.
👫💰🏪💰👫
If you’re building a marketplace with fintech components, or a platform to enable such marketplaces,
@NFX
would love to hear from you.
Check out our thesis below 👇
A downturn is the best time to position your company for growth. Your large competitors will likely be knocked sideways and unable to react. Your small competitors will be short on cash, hibernating, and unable to match your moves.
A downturn is the best time to position your company for growth. Your large competitors will likely be knocked sideways and unable to react. Your small competitors will be short on cash, hibernating, and unable to match your moves.
In 2003: I had just come over from the UK to attend Stanford GSB and was figuring out what my next startup would be...
In 2023: I went back to GSB this week to give a talk on my experience building Trulia from idea to IPO.
Behind-the-scenes takeaways and tactics: 🧵👇
Marketplaces usually suffer from disintermediation as a result of failing to provide sufficient value for the take rate they are charging, or because participants find it more convenient and have greater confidence in interacting directly than through a marketplace medium.
Sharing insights about starting and scaling companies today
@StanfordGSB
and investing
@NFX
. Lots of enthusiasm this year about AI and Climate amongst current students.
There’s much to learn by studying marketplaces
@Uber
@Zillow
@Airbnb
@Amazon
.
But every marketplace is different, including your own.
Today I'm making public my framework for building your own marketplace expansion playbook.
As a Founder/CEO, you need to be constantly learning and evolving.
If a startup aims to be a learning machine, then the CEO needs to be the standard-bearer of that philosophy.
For some startups, your product-market fit just evaporated. Prepare & plan for a worst-case scenario and be delighted when you exceed it. Above all, your primary objective is to not run out of cash.
Early on in a startup, everyone wears many hats. But as the team grows, you have to define roles with more granularity. Most Founders don't plan ahead for role specialization, and that can slow down your scaling efforts when growth takes off suddenly, as it often does.
Market dislocations create a temporary mismatch between supply & demand. This enables nimble marketplaces to aggregate a new set of supply or demand to build liquidity quickly.
I saw this first hand in online travel after 9/11 & online real estate in 2008.
Crisis=Opportunity
🚀 Wow - 5 years flies by. Just getting started
@NFX
.
👉 Actively investing today in exceptional founders at the pre-seed and seed. Get in touch.
🙏 to my incredible partners, team and all the
@NFX
founders!
3 things I learned about speed scaling Trulia from startup to IPO:
1. Don't be a bottleneck in the way of your team getting thing done
2. Make employees area of responsibilities very clear
3. Use scalable tools and comms to quickly give everyone the most context possible
Excited to announce
@NFX
's recent investment in SESO's $4.5M Seed round.
Labor is critical to America's food supply, there are massive shortages & inefficiencies.
Terrific team, vision & group of investors
@foundersfund
&
@zebulgar
Face on Time Square from the organizers, deserves a share.
I'm excited to speak next week at The Marketplace Conference!
Speakers include CEOs and CXOs from many great marketplaces. Come join! 10% discount code "autotechfriend".
Marketplaces are a never-ending balancing act. As an early-stage Founder, how do you know what to focus on?
I recently spoke with
@Thumbtack
co-Founder & CEO
@mlz
to compare notes on our highest leverage lessons for building billion dollar marketplaces
Proud to announce today that
@NFX
co-led a $12.5M Series A in Modus.
Modus is a PropTech startup that is transforming the home closing process by digitizing title & escrow services, making them simpler & more secure.
Here's why we invested:
Congrats to
@LaHausCom
on their $35M Series B.
@NFX
started working with the team after they graduated from Stanford and led their pre-seed.
It's been an incredible journey in a few short crazy years to market leadership in Mexico, Colombia and beyond!
Huge congrats to
@ericwu01
@rabois
@chamath
and the team at
@Opendoor
for their impending public listing.
It's been a remarkable journey and just getting going.
Flashback to 10 years ago when Eric Wu and I first worked together, as told by
@karaswisher
Great trip meeting incredible entrepreneurs in Mexico City 🇲🇽. Such great talent and opportunity there and across LatAm. So excited about all the
@NFX
companies
@LaHausCom
,
@zubaleoficial
& Melonn and others that I met and so many more I didn’t have a chance to meet…. Yet!
Paypal nearly died several times. The '08 recession could have ended Trulia. Yet...both emerged stronger from it. How?
Today PayPal co-founder
@davidsacks
(
@craft_ventures
) & Trulia founder
@peteflint
(
@NFX
) share tactics to survive + thrive in a crisis.
As a CEO, you have to seek out the people within your company who will give you honest, straight feedback. Understand that if people have the courage to critique you, there are probably more who feel the same way but aren't voicing their opinions.
Labor marketplaces will be critical to getting people back to work quickly, efficiently, and at scale. Because of this, labor marketplaces being built today are going to have an enormous economic and societal impact.
@immad
Hi Immad - check out from
@NFX
- a free tool that does exactly this.
It's an NFX community project that we support, so always looking for feedback from users on what they'd like to see on the platform.
20 yrs ago this week I was part of a team that took a company public at the height of the dotcom boom.
It was a remarkable time and an incredible learning experience as a 25 yr old.
Although I learnt so much more navigating the collapse than the boom.
Opportunities for startups in the enormous global real estate industry. Beneath the surface, a powerful wave of capital + startups are set to redefine an industry. See why and where
@NFXGuild
is investing in PropTech:
Today, my friend April Underwood (
@aunder
) and I discuss her inside stories & lessons from leading product
@Twitter
and
@SlackHQ
.
Founders rarely get this kind of access to how product & growth decisions are made at these iconic, category-defining co's:
Whenever a new enabling technology appears, it allows new marketplaces to arise that couldn't exist before.
SEO + Search: Trulia, Zillow, Indeed
Mobile: Uber + Lyft
AI will have the same effect
The potential of AI-first marketplaces here + below: