We talked to and learned from product leaders, investors, and founders to understand some of the keys to identifying promising technology as part of "How to Hack Angel Investing" – a part of our efforts to democratize access to capital, investing, and information.
As a product designer at heart, design and branding is one of the first things Peter Green, Head of Product at Republic, notices when evaluating new products and technology. Whether it's a post on Product Hunt, a screenshot in a tweet, or a pitch deck from a startup, first impressions are key.
"Great founders are able to deliver the impression that the vision, product, and company, is already big. I want to think to myself, 'Wow, how is this company just starting out? This looks so put together!' Not only is this a good look for potential customers and users, it also shows competence in the founders' abilities to build something viable and long-lasting."
The product's overall appearance, including the pitch deck, the website, and ads, should come together to create an immediate understanding of what the product does, and what the value proposition is. If it can't explain either of these coherently to potential investors, it likely won't be able to explain either of these coherently to customers.
Providing an understanding of the problem and solution is really key here. As an investor, you should have a great understanding of how this benefits the startup's target market.
All of this includes a set of skills ranging from marketing presentation to understanding how to provide and build something of value, both of which are critical to scaling successful products and technologies
Once you understand the value proposition, it's time to get a feel for how it works. This is one of the more tangible parts of the technology evaluation, focusing on the feel of the user experience (UX) rather than the look.
A popular term in Silicon Valley is "MVP," or "Minimum Viable Product." Rather than build the minimum required, founders should seek to build the "Minimum Delightful Product," or "MDP," which is the minimum necessary to gather useful user feedback, with thoughtful effort into crafting something functional, yet beautiful. Equally as important is the founders’ abilities to execute on customer feedback and data to iterate on their product, in an effort to reach minimum delightful status.
Marc Hedlund, CEO of Mint-competitor Wesabe, credits his company's eventual demise to settling for something viable, rather than building something delightful — something his competitor, Mint, focused heavily on.
“Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could; we completely sucked at all of that.
It was far easier to have a good experience on Mint, and that good experience came far more quickly.”
One of the core components of a successful pitch and business opportunity is the unique value, often defined as the problem it's solving for users, but the terms is rarely defined any further than just "solving a problem in an interesting way." Tim Ferriss encapsulates this meaning into "Why now?'
"For Uber it was simple: mobile phones were becoming ubiquitous and they had GPS. In fact, another company had already tried to help you order a cab via SMS messages a year before Uber came on the scene.
Their “why now” was simply “text messaging,” but that, frankly, wasn’t enough. Without advanced mobile CPUs (central processing units) to power big beautiful touch screens with military precision GPS (global positioning system), there would be no Uber."
Don't fall into the trap of using this to chase trends in technology. Sure, investing in AI and crypto can be sexy, but shifting your focus from thinking about the technology, to thinking about the problem it's solving allows you to understand the unique value in a greater context.
Adam Draper, 4th-generation venture capitalist, and investor in the "wildest SciFi Tech investments," like exoskeletons, jetpacks, rockets, holds the belief that innovative solutions require innovative technology, though using innovative technology doesn't always create innovative solutions. Focus on investing in companies that leverage both innovative solutions and innovative technology to provide the most unique value for the end-consumer.
Big businesses solve big problems. You shouldn't be looking to invest in "Band-Aid" solutions. Sam Altman, CEO of Y Combinator believes it's easier to start a hard company than an easy company, so when you invest, look for the founders tackling big, challenging opportunities.
"This sounds super counter-intuitive but, if you're going to build a really big company, you got to convince people to come work with you, to pay attention to you, to write press articles about you, to care about you, to advise you.
If you are starting a nuclear fusion company, a lot of people want to help with that. I think, especially for the companies that end up breaking out, this is really important.
This thing that is so interesting, people proactively want to help you for free, want to come be part of your team, whatever. This is something to look for."
Find the startups that have big potential for impact, and show strong signs of ambition and determination to change the world. At first glance, does the product convey the idea as something that could transform everyday life for a sizable amount of people? Or is it a Band-Aid solution, one that people could live without, or won't need to rely on?
Some investors are even taking it a step farther, crafting their thesis around startups dedicated to combining profit with a purpose. Obvious, for example, invests with a "#WorldPositive" approach. "These types of businesses have sustainable positive impact," they say. "Their profits further their purpose, and their margins drive their mission."
There's nothing more rewarding than investing in world-changing technology. Remembering to ask yourself these questions before investing can mean the difference between investing a unicorn, and investing in a dud. Does the product convey the problem and solution succinctly, and upfront? Has the startup put careful thought and consideration into their design? Is the user experience delightful? Is the "wow" moment as spectacular as you'd hoped? If yes to all the above, it might be worth considering. Remember to place an equal amount of importance on the other 3 Ts!
Hope you enjoyed this deep dive into Tech/Product. Want to get an overview of the 4T’s? Watch the recap of our webinar.