Investing in companies that solve existing problems and have market pull increases chances of success and attracts funding.
Market pull, indicating high market demand and clear benefits, should be prioritized over a founder's expertise or team quality in investment decisions.
Companies that solve pain points, make desirable products more affordable, or provide access to previously limited asset classes demonstrate strong market pull and potential for rapid growth.
Deep dives
Market pull and the importance of solving existing problems
Investing in companies that have market pull is crucial. Companies that solve existing problems and make them easier, cheaper, or more accessible tend to have strong market pull. Examples include companies like Webflow and Zapier, which simplify complex tasks and make them more efficient. By focusing on solutions that people already want and need, investors increase their chances of success and attract funding from investors.
The value of market pull for investment opportunities
Market pull is a key factor in determining investment opportunities. Companies that offer products or services with high market demand and clear benefits have a higher likelihood of success. Whether a product makes a previously difficult task easier or offers a more affordable option, market pull indicates potential for growth and success. Investors should prioritize market pull over a founder's expertise or team quality when considering investment opportunities.
Categories of companies with strong market pull
Several categories of companies demonstrate strong market pull. One category includes companies that solve pain points and make tasks feel like magic, such as Webflow and Zapier. Another category includes companies that make desirable products more affordable, like Airbnb and Robinhood. Additionally, companies like Republic provide access to asset classes that were previously limited to specific groups. Investors should look for companies in these categories that demonstrate market pull and have the potential for rapid growth.
Market Risk and Product Led Growth
One of the main ideas discussed in the podcast is the importance of addressing market risk and harnessing product led growth. Market risk refers to whether there is a demand for a product or service in the market. It was highlighted that tackling market risk is crucial, and if there is potential for market pull, other risks can be mitigated. Product led growth, which occurs when the product itself naturally drives its own growth, was emphasized as the ultimate goal. Examples were given of companies that have achieved product led growth, such as PayPal, Venmo, and Slack, by either facilitating critical communication or settling a debt. It was recognized that product led growth is rare but highly desirable for founders to achieve significant organic growth without relying heavily on marketing efforts.
Choosing the Path of an Indie Hacker
Another key point discussed in the podcast was the choice between building a billion-dollar unicorn startup or pursuing the path of an indie hacker. It was suggested that the decision should be based on personal preferences and the nature of the idea being pursued. It was noted that the venture capital path could involve diluted ownership and a longer period without significant financial rewards. On the other hand, the indie hacker path allows for higher salaries, more control over the business, and potentially faster financial gains. The importance of pursuing ideas that align with personal passions and optimizing for a healthy work-life balance was emphasized. Additionally, the value of considering investments in smaller checks and building a diverse portfolio was mentioned as a potential strategy for indie hackers.
Julian Shapiro is back on the show today. He's been my co-host for our podcast Brains, he's an investor at Julian.capital and a writer at Julian.com. Lately, he's been super into investing. He's managed to take an overly complex thing like investing and reverse-engineer it, breaking it down into its simplest frameworks.
Follow Julian on Twitter: https://twitter.com/julian
Check out Demand Curve: https://www.demandcurve.com/
Become an investor with Carveout: https://www.withcarveout.com/
Apply to Hyper: https://hyper.com/
Read Julian's memos for founders: https://www.julian.capital/
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