Business models: franchises and AI services

Why have consumer startups fallen out of favor and why might that be the biggest opportunity of the next decade? In this episode, I talk with Brian O’Malley, founder of Tactile Ventures, about why consumer investing is deeply misunderstood and how AI is unlocking a new wave of products that improve everyday American lives. Brian shares lessons from two decades investing at Accel, Battery, and Forerunner, why incentives—not talent—drive venture outcomes, and how the best consumer companies blend technology, business models, and human behavior. We also explore why AI is moving out of its “toy phase,” why humans still need to stay in the loop, and how early-stage investors win by giving founders something large platforms can’t: time.

Highlights:

• Why consumer investing has declined despite driving most historic IPO winners
• The difference between “seven deadly sins” products and durable everyday utilities
• Why consumer companies are often less capital-intensive than people assume
• How to invest in consumer startups before traction exists
• Why AI is leaving its “toy phase” and moving into real-world applications
• The power of human-in-the-loop models for trust and adoption
• How incentives inside VC firms shape decision-making and returns
• Why large venture platforms struggle as they scale
• How Tactile competes with mega-funds by showing up earlier and more prepared
• The rise of AI-powered services and digitally native franchises
• Why the best early-stage investors act like “the second-and-a-half cofounder”

Guest Bio:

Brian O’Malley is the founder of Tactile Ventures, an early-stage venture capital firm backing founders who combine emerging technologies with new business models to solve everyday problems for Americans. Before launching Tactile, Brian spent more than 20 years investing in consumer and technology companies as a managing partner at Forerunner Ventures, an early-stage partner at Accel, and a general partner at Battery Ventures. He has partnered with founders behind companies spanning travel, commerce, healthcare, and financial independence, and previously helped build multiple startups that were acquired by Motorola, Oracle, and IBM. Brian is a frequent writer and contributor to Fortune, Forbes, and LinkedIn, and a regular guest on leading investment podcasts. He is a graduate of the Wharton School at the University of Pennsylvania.

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Disclaimer:

This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Capital. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) Introduction (1:39) The seven deadly sins and inevitability of consumer tech solutions (4:15) Investing in consumer tech pre-traction and understanding alternatives (7:13) Facebook's strategic growth and the transition from toy to serious AI applicationsse (11:39) Early use cases and the challenge of near-perfect AI performance (19:10) AI versus cardiologists and generational trust differences (22:12) Views on large multistage VC platforms and growth incentives (28:16) Aligning incentives in large firms and complexity in venture incentives (39:56) Marking valuations and incentive biases (40:58) Tactile's new fund and interest categories in AI and consumer applications (45:27) Differentiating against large firms and value of early-stage investor involvement (50:14) Unique aspects of Tactile VC and building a successful investment organization (52:02) Closing remarks