Welcome! Intro to VCMO

“A demand innovation mindset forces the brain to fully immerse into real problems with a well defined market and reimagine the outcome.”

_{*DISCLAIMER: I AM NOT PAID BY COMPANIES MENTIONED HERE UNLESS OTHERWISE STATED. COMPANIES OF WHICH I OWN EQUITY IN WILL BE DISCLOSED IF MENTIONED FOR FULL TRANSPARENCY. OPINIONS SHOULD NOT BE TAKEN AS OFFICIAL ENDORSEMENTS OR INVESTMENT ADVICE.}

Perhaps it’s my obsession with combining technical things with human creativity, becoming a startup founder from being a record producer and musician came naturally to me. I thrive in ambiguity during the earliest phases of product building.

Builders have increasingly more access to marketing playbooks, open source dev tools, and no-code solutions, and companies like Clubhouse or Quibi can gain massive traction early on by doing the ‘right’ marketing things, but crumble in an instant.

It’s not enough to point to a general lack of product market fit, or a lack of network effect, or that the team failed their growth hack experiments. In order to win, founders and funders need to look past the hype, past superficial vanity metrics.

This is the genesis of VCMO! 

VCMO is a weekly venture memo delivered to your inbox, focusing on one new deal at a time through a demand innovation framework.

Can we truly value early stage demand?

Predictions are projections backed by data and there are repeatable patterns that can be used as reliable frameworks.

Applying 10+ years of data as a product founder, startup advisor, and operator, I developed a framework that combines Demand Innovation and Application Economics to assess quantitative and qualitative demand, helping founders build highly valuable products and brands to serve existing markets and needs.

Framework Summary

1. Demand Engineering: True demand is engineered through problem obsessions and lived experiences (founder-market fit), to uncover new opportunities and needs

• Our brains are naturally drawn to Supply Optimization, ideas to improve existing solutions. It often leads to over emphasizing market problems and forecasting outsized market opportunities. (How many times have you heard, if we can just get 1% of XY market, we’d be ____)

2. Demand Drivers: Behavioral variables that if improved by 10x will have a high success rate in driving lasting user adoption and applicable changes 

• Time: Saving time or increase efficiency

• Humanity: Facilitate connections, relationships, communications

• Fun & Gamification: Retained engagement, stimulation, or entertainment

• Maker: Enablement of creativity, productivity, and wealth…

3. Application Economics: A finite supply of applicable day-to-day usages as users and customers 

• All users (/customers) have a fixed stack (set amount) of products in their daily lives. Human behavior does not change or modify easily.

• Differentiate ‘Must Haves’ and ‘Nice-to-Haves’ — identify critical paths of user daily routines.

4. Macro vs Micro Opportunities

• [MACRO] Products that solve problems in the market vs [micro] Products that improve upon existing products
  ** EXAMPLE: [MACRO] Live streaming solution for all gamers and creators (Twitch) vs [micro] mobile-native content optimized for both landscape and portrait viewing (Quibi). 

• [MACRO] primary market application vs [micro] an application subset
  ** EXAMPLE: [MACRO] Peer to peer money transfer (Venmo) vs [micro] Splitting bills during social meals (SPLYT)

5. Cost of Adoption (/Switching): High adoption cost leads to low adoption

• Cost of adoption is determined by whether a product is adaptive, additive, or positioned to be a replacement.
  ** EXAMPLES: End to end solution (zero sum game), Integrative product (part of an ecosystem)

6. Law of Diminishing Value: Value ≮ Growth

• Early stage product is only viable if its value proposition increases proportionally to its own growth

  • *(Positive) Early growth of Facebook facilitated connections and re-connections.

  • *(Negative) Early growth of Clubhouse facilitated less reliable content from non-experts.

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