ACQ2 by Acquired

VC Fundamentals: Consumer Investing Master Class with Sarah Tavel, General Partner at Benchmark

Jul 7, 2020

Sarah Tavel, a General Partner at Benchmark with a rich background in consumer investing and early Pinterest days, shares her insights on navigating the landscape of consumer investments. She discusses the 'hit-driven nature' of consumer markets while emphasizing the importance of user happiness over vanity metrics in driving sustainable growth. Tavel also delves into marketplace hierarchies, critiques traditional investment strategies, and explores the evolving potential of social platforms, highlighting the need for engagement and community in today's market.

01:03:50

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Episode guests

Sarah Tavel

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Episode notes

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Quick takeaways

Consumer investing offers significant potential for massive market size and network effects, creating asymmetric outcomes and substantial returns.

Consumer investing in the consumer space is riskier compared to enterprise investing, requiring great founders who understand their space and iterate effectively.

Investing in marketplaces should prioritize creating value, fostering engagement, and ensuring a sense of belonging for participants, gradually expanding while maintaining happiness.

Deep dives

Consumer Investing: Size of the Market and Network Effects

Consumer investing is appealing due to the potential for massive market size and network effects. One reason is that all consumers are potential customers, offering tremendous scale. Additionally, many consumer companies operate in win-or-take-most markets, driven by network effects and economies of scale. The combination of a large market and limited competition leads to asymmetric outcomes and substantial returns in venture investing.

Intro

2min

Navigating Consumer Investments

15min

Streamlining Compliance and Security with Vanta

3min

Marketplace Hierarchies and User Experience

9min

Scaling Business Through User Happiness

13min

Enduring Principles of Marketplace Evaluation

2min

The Future of Consumer Social Investing

20min

Benchmark General Partner Sarah Tavel joins us for a master class on consumer investing. We start with why invest in consumer at all (given the inherent risks of its "hit-driven nature"), then deep dive on marketplace investing and wrap up with social, gaming and consumer transactional businesses. Big thank you to Sarah for sharing her immense knowledge on this topic, and to her partner (and fellow Acquired "master class lecturer" on enterprise investing) Chetan Puttagunta for introducing us and for making it happen!

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