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Escape the Spreadsheet

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Escape the Spreadsheet

the shift to underwriting product

Spencer Peterson
Feb 16
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Escape the Spreadsheet

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ARR multiples are overrated & overused!

Some thoughts on the new alchemy moment in venture: underwriting durable, compounding products

And escaping the excel spreadsheet…

Three product principles for investing beyond excel:

  1. Product foundation

  2. Feature velocity and org strength

  3. Surface area 

More on each…

#1 Product Foundation: What is the core utility / atomic feature? How novel is it? What does this unlock downstream?

Generally, point-solution SaaS never has a compelling product foundation. Mega platforms always do…

→ at Flock Safety, this foundation is the data it captures via a suite of hardware & software products. 

The more data Flock collects, the more crime it solves – and the more valuable its platform becomes. 

Flock contributed to 6%+ of crimes solved in ‘22.

Flock’s solar-powered, computer-vision camera

#2 Feature Velocity & Product Org: Dead simple. How often do new, quality products ship? How strong is the team?

For the best companies, in our experience, product is led by one/multiple founders to Series B+.

This is harder than it sounds: entrepreneurs are pulled in many directions with scale.

→ at Vercel, founder/CEO Guillermo Rauch has driven product from its NextJS origins to recent enterprise feature sets. 

His product influence (even now, post-Series D) has enabled Vercel to transcend its market. 

Users frequently describe Vercel as “magic.”

Twitter avatar for @anthonynsimon
Anthony Najjar @anthonynsimon
Cronitor Status Pages are now up to 20x faster. @vercel is magic 🪄
Image
10:50 PM ∙ Dec 16, 2022
82Likes8Retweets
Twitter avatar for @brextonpham
brexton @brextonpham
Wow, @vercel feels like magic
5:22 PM ∙ Apr 22, 2022
106Likes7Retweets

#3 Product surface area: What comes next, and what’s on the horizon after that? How much TAM can we eat? 

This effectively evaluates the aperture, which I wrote about being the most important concept in investing last week.

→ for Rippling, the aperture is shocking: it has already displaced competitors with $250B+ EV in aggregate.

Additionally, Rippling just launched Global Payroll/EOR and Spend Management. Both products are chasing respective $100B+ EV opps. 

It’s an all-caps-BIG opportunity!

Rippling’s Global Payroll product; the company has 25+ SKUs

→ I’d be remiss not to also highlight OpenAI, an N-of-1 company, which we believe will disrupt how software is fundamentally built, purchased, and used. 

This company has more aperture than any private technology company – and it’s not particularly close! Fittingly, it gets a lot of attention on the internet:

OpenAI’s chatGPT product *rocketed* to 100mm+ users | twitter: @kylelf_

I believe aperture is the most important concept in investing.

It’s thus crucial to escape the spreadsheet and understand the foundations, velocity, and aperture of a product — and the team building it. 

Though eventually, the results show up in the spreadsheet too (:


Summary of select Bedrock portfolio aperture stories:

  • Flock: LPR → complete crime-fighting OS

  • Vercel: host Next JS → cohesive, magical platform for front-end devs

  • Rippling: payroll & HRIS → all tooling that touches workforce

  • OpenAI: GPT → foundational LLM for software/internet


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