E291: Incentives, Not Intuition: How VC Really Works

15 snips

Jan 27, 2026

Brian O’Malley, founder of Tactile Ventures and longtime consumer and tech investor, explains why consumer startups are misunderstood and ripe again. He discusses how AI is moving past toys into real products. He explores incentives inside VC, why humans still matter in AI workflows, and how early-stage investors win by offering founders time and preparation.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

Consumer Products Can Be Durable, Not Faddish

Consumer startups often solve recurring everyday needs that create durable long-term value rather than fleeting fads.
Many consumer businesses are less capital-intensive than presumed and can reach profitability before large later rounds.

INSIGHT

Seven-Sins vs. Durable Utilities

'Seven deadly sins' products have easier early adoption but lines are blurring with durable use cases like health and longevity.
Successful companies gamify long-term pursuits to create short-term reward loops and drive retention.

ADVICE

Back Founders, Not Just Products

Invest early when you can validate founder understanding and unique capabilities, even pre-product if the founder and structure are exceptional.
Seek evidence of user engagement or structural advantages before writing a check.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

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.

Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.

Sponsor:

AlphaSense is the AI-powered market intelligence platform trusted by 85% of the S&P 100, helping investment professionals make faster, more confident, data-driven decisions. Built for hedge funds, asset allocators, private venture capital firms, and investment bankers, AlphaSense uses advanced AI and powerful search across premium proprietary content to surface the insights that matter most—before the market moves. Elevate your research and stay ahead of the competition. Visit https://www.alpha-sense.com/howiinvest/ to learn more.

Stay Connected with David Weisburd:

X/Twitter: @dweisburd LinkedIn: https://www.linkedin.com/in/dweisburd/ Weisburd Capital: https://www.weisburdcapital.com/

Stay Connected with Brian O’Malley:

LinkedIn: https://www.linkedin.com/in/brianpomalley/

Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

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