Chapter 1: What lessons have been learned from two decades of consumer tech investing?
So you spent a decade at Battery where you're a general partner, then you spent five years at Accel as a partner, and then seven years at Forerunner.
So you've been really investing in and around consumer for two decades. What lessons have you learned about consumer tech and how to invest in space? These markets are just so much bigger than they are in other categories. So the biggest thing is that the startups that we're investing in are ultimately solving everyday needs for millions of Americans.
And so there's usually some catalyst that creates this opportunity. It might be some underlying foundational new technology. It might be some change in the business model. Sometimes it's even cultural or regulatory that opens up the opportunities. But I think people have misnomers about these businesses.
There's a general assumption that to play in a consumer space, these businesses are fads or that they're capital intensive. I mean, you're solving people's everyday needs to ultimately create a recurring use case that drives real long term value. And if you look back to a company like Google, as an early example, they raised their series A of $25 million.
So it's a very large A for the time, but they never really raised another round after that until they were already profitable. If you look at a company in my portfolio named Fora, which is one of the first AI-powered services companies to reach a billion dollars in transactional volume, they recently raised a Series C from Thrive, but they hadn't even touched the Series B dollars yet.
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Chapter 2: Why are consumer startups viewed as misunderstood in the investment landscape?
So I think there's this general understanding from the whole Zerp era that these companies are capital intensive and that they're ultimately more product-driven versus technology-driven. Mike Moritz famously coined this term specifically for his consumer, the seven deadly sins. So you have like Uber Eats and DoorDash for gluttony. You have Instagram for vanity.
To what extent do you feel that that's true today, 2025? There's definitely lower hanging fruit when you're when you're solving for the seven deadly sins. But I would say in some ways the lines are blurring.
So if you take a really key trend right now, which is around longevity or people spending their own dollars to drive their own health, you could argue that's a much more core need and something that doesn't play off of the seven deadly sins. But also health is the new wealth. And so in some ways there's a vanity metric to be doing some of these things. Yeah, absolutely.
It's always important when we look at these companies, take the education category, for example. It's hard work getting a degree, teaching yourself a language. And so we are ultimately playing against the seven deadly sins.
The companies need to be that much more effective with how they drive the product mechanics, with how they build a community together, because in those cases, you're you're running uphill.
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Chapter 3: How is AI reshaping consumer products and services?
But the most successful businesses, something like a Duolingo, they're able to accomplish that. They're almost able to take this long-term feedback cycle and turn it into kind of short-term rewards, which is the gamification of these kind of more worthwhile pursuits than the seven deadly sins. 100%.
There's a view that Instagram, Facebook, all these companies were kind of part of this deterministic wave of, you know, somebody was going to create a photo sharing app. Somebody was going to create a social network. To what degree do you believe that's true? I definitely believe that's true. A lot of these companies started with some intrinsic need.
They were usually not the first ones to solve, but ultimately came up with the right solution at the right time. And so if you think about Facebook, they were solving this natural human desire to connect. And they were able to do so in a way that once you had cloud servers and once you had more internet connectivity was just possible online.
You know, better than if you had to pick up the phone and call someone long distance before. If they hadn't done it, I believe someone else would have come along and solve the problem with the scale that they did. You got to remember, they were not the first mover in that category.
There were companies like Friendster, there were companies like MySpace, and each of those had their own, you know, degrees of success.
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Chapter 4: What are the misconceptions about capital intensity in consumer businesses?
When you invest in consumer, is there any way to invest free traction? Is there a way to say, well, this entrepreneur is going to build something special in this space before they've actually gotten traction? So these days, there is less interest in some of these consumer companies.
And so that gives me the ability to look at seed investments or even pre-seed investments that actually have a live product. It might be a smaller sample set, but you can see that level of user engagement before you invest. But I've also been the first investor in several companies before they even launched.
And in that case, what you're really looking at is what problems are there and do they have a really unique understanding of how to solve those problems. So I'll give you an example from the Forerunner portfolio. We were early investors in HIMSS and invested in a pre-product there
And that was a category where you had Andrew who really understood some of the changes going on around how people were circumventing their doctors or just the medical professionals to try to solve their challenges on their own. They had a unique legal structure behind the scenes where they could both have a medical office as well as be a technology company. And so that unlocked capabilities.
that previously weren't there. And then you combine that with a really special founder.
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Chapter 5: How do incentives drive venture outcomes rather than talent?
And so that was one where we ultimately had comfort getting in early before they were launched because we had confidence that their solution, A, they were going to be able to deliver it and B, once they delivered it, it was going to be pretty special.
In a lot of other verticals in tech, a lot of early stage investors are focused on the team and the problem, not necessarily the current solution. The idea being that they'll iterate their way into a good solution. Does that work for consumer? And what are the nuances when investing to consumer?
Consumer is a little bit different in that you need to look at the alternative that people already have available to them. I think about a company like Uber, and when they got launched, it was both this really magical experience
that they were able to offer where you pushed a button and then that kicked off these set of chain reaction events behind the scenes in order for a car to ultimately show up. But Uber would have not remotely been successful if they started out in New York where the yellow cab system was pretty darn good. You need to remember what the taxi system was like in San Francisco.
You would call, you would sit on hold for maybe 20, 30 minutes. They would send a car and then 50% of the time that car would pick someone else along the way and never show up. And so I look at the delta between what is available today and what can this new company offer as being important, as opposed to just looking at it in a vacuum where you're solely looking at that new solution.
Facebook, same, famously started in Harvard. If it had just started as a generalist software, if it did a generalist social network, or if it hadn't used real names.
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Chapter 6: What challenges do early-stage investors face in the current market?
You know, we imagine these companies as they are today, but we forget that they were at some point kind of these two year old companies. And if that, you know, taken on a 10 year old competitor, a 10 year old market, they may have never lived to kind of be these these large conglomerates. People forget about, I would say, two things related to Facebook.
The first of which is that, yes, they were live originally at Harvard. But so many students at Harvard had friends at these other universities that they wanted to connect with. And so when they launched the other Ivy League schools, they would get to over 90 percent penetration within those schools within a couple of weeks.
And that was largely because the pent up demand, because the friend networks weren't local just to the college you went to. You had high school friends that were now at all of these different schools. And they were very deliberate about how they expanded from one university to the next. People also forget that for a long time, you needed a .edu email address to even access the site.
When I was tracking the company down in 2004, unsuccessfully, unfortunately, I had to get a .edu email address from my old college in order to even be able to access the product. And that meant that the company actually tapped out at around 4 million users for some period of time. The growth slowed and flatlined. And so there were some questions about it.
But what people didn't understand is there was still so much pent up demand for people outside of colleges that it was really about Zuck being very deliberate about when he moved into new areas and the way that he ultimately moved into those areas.
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Chapter 7: How can AI agents enhance consumer experiences today?
When we last chatted, you said that we were in the toy phase of AI. What did you mean by that? It's been a couple of weeks since we chatted and I would even argue that we're starting to move out of that. So much changing so quickly.
But if you think about the early cases when ChatGPT first came out, I remember when the first thing I did would be write like a silly song and have it sung in a pirate voice or something like that. There was a lot of this playing around because it was so different than what you would experience with any other product online. But from there, people started moving into more serious queries.
There's obviously a lot of usage in and around education, maybe less monetizable, but people using AI for more serious endeavors. You now have more people asking AI questions about more monetizable events, which you could see from an advertising platform would have real intrinsic value going back to these platform model companies.
But at the end of the day, it takes a couple things for AI to really move out of this toy phase. And I look at it in two ways. The first of which is trust from the user to be able to share more about both their existing preferences as well as their existing third party profiles.
So how does AI not just give me a recommendation, but actually go ahead and execute that recommendation with my dollars? So I'm trusting the system with my hard earned cash. But also the second thing is that 85% of purchases still take place in the offline environment.
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Chapter 8: What is Tactile Ventures' vision for the future of consumer investing?
And so when you think about an Uber, when you think about a DoorDash, an Airbnb, those tools are ultimately connecting the digital and the physical world in a clever way. And a lot of the companies that I'm most excited about are the ones that can do that leveraging AI, where you're ultimately not just taking budget from other digital spend, but you're helping people in their offline world.
And that's when I think it will really emerge from this toy phase into something that is a serious contender.
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You referenced these AI agents that basically go on and do these complex tasks on your behalf. What are some early use cases for AI agents? How do you see them being used today? I think that final step is still a little bit lacking.
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