If you haven't seen it, check out Ben Evan's presentation The End of the Beginning. When we pivoted Heartcore Capital to "Europe's consumer-only VC", we heard quite a bit of "but isn't consumer dead?"
Ben nicely makes the point that given the ubiquity of connected devices and high-bandwidth networks, we're really only just getting started.
The internet significantly lowers transaction costs, particulary those needed to search for and purchase products and services. We have much greater visibility today on what exists for a given "job to be done", whether it's eating, traveling, playing, working, or dating.
Combined with low friction to trial and adoption - all you need is a credit card and sometimes not even that - older and much more oligopolistic consumer spend categories like housing or healthcare are poised to change dramatically.
All of this is good news for consumers. When competitors and substitutes are "only a click away", competitive pressure increases. And hence product innovation cycles are more rapid, service gets better, prices drop, and consumer surplus overall increases.
The internet has put the "end user" in the driving seat of purchase decisions. No longer are we beholden to what an existing supply chain has decided to put in front of us. And hence value chains across the economy are being rethought from the point of view of this new, powerful consumer.
In this new world, great product - as in, a great offering including price and distribution - wins.
In the words of Bill Campbell, the Trillion Dollar Coach:
"Great product wins. Great product is the result of great execution. Great execution is the result of great teams."
At Heartcore we care a great deal about product. We think product is how small companies beat big companies, how they build brand, how they create the momentum needed to first survive and then thrive.
Great product doesn't "just happen." And while we believe a visionary founder is a necessary condition, we don't for a second believe that this one person is sufficient. Great product is the outcome of processes, sometimes well and often less well defined, of people coming together with an overarching goal of not compromising the end consumer experience.
This quality of execution necessitates great teams. Such teams are constituted of individuals that are both technically proficient at their respective domains (design, coding, product management, marketing) but are able to internalize the overall vision and then collaborate to make it a reality.
If you've ever worked with people who are very, very good at what they do (rare!), you realize that incredibly talented people that also work well in a group setting are even more rare. Thankfully, very good people like working with other very good people. Unfortunately, very good people often don't work well with fairly average people.
This takes management. At a startup, you can be much less tolerant to the genius-but-a*hole personality than a large company like Google. So your job as founder is recruiting the genius-but-also-pleasant personalities. One tip: some great people mellow with age and experience (or at least their personalities crystallize and there are references).
Building great product is much harder than it looks. The complexity of building software has both decreased due to open source and frameworks and increased because of competitive pressure. A big advantage of Silicon Valley here is the depth of the talent pool that has participated in or managed large software projects.
Until a few years ago, Europe has had a dearth of great product people. We probably still have less than a few hundred. The same is true for designers and, depending on what it is that you're building, programmers.
A thing we tell our founders early on in the journey with us is to move their view from "building the machine" to "building the machine that builds the machine." In other words, design your organization in such a way that it self-perpetuates execution quality. Who do you need that you can delegate product to without worrying? Marketing? Customer support?
That's the type of people you need to attract to your team early on. To speak with another VC cliche: they need to get on the bus before there even is a bus. That is, in my view, a key element of being a great founder and one that I pay more and more attention to when looking at very early stage companies.
"Great product wins" is the 11th of Heartcore's foundational principles. You can find links to the previous posts here: