Escape the Spreadsheet
Discover more from Thursday Threads
Escape the Spreadsheet
the shift to underwriting product
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:
Product foundation
Feature velocity and org strength
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.”
#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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