Our SMB Thesis
Why and how to back long tail entrepreneurs
This week I published my SMB thesis deck outlining how specifically we’re backing these companies (and we’ve been aggressive here).
TLDR: Everyone wants to be an entrepreneur and entrepreneurial culture is changing; real world jobs and SMBs are becoming high status But at the same time, PE is squeezing skilled labor (& customers) across the economy. So the best people are are looking for a way out and a ladder up.
If the last generation’s story of entrepreneurship was monopolist technology companies with “gig workers” or standardized labor, the new way to make money at scale is helping people be entrepreneurs / build real businesses.
It’s time to double down on platforms powering, orchestrating, and catalyzing long-tail entrepreneurship in the real economy.
Giving entrepreneurs the tools, resources, and systems to make money is a massive opportunity for startups:
Tools (vSaaS, fintech, etc) to improve profits, streamline operations, and put operators in charge of their destinies.
Orchestration & aggregation (marketplaces) to put growth on autopilot while business owners focus on what they do best: serving their customers.
The system (biz-in-a-box / franchise) for entrepreneurs to become business owners quickly with support, structure, and services.
In this new world, markets will get more competitive and efficient with more + better opportunities for ambitious people to make money and build equity truly on their own.The economy will look more bi-modal: large consolidated mega-corps on one end and a legion of distributed small businesses and sole props on the other. And entrepreneurship won’t just mean binary swings at behemoth monopolies
Software and systems for SMBs can replicate the benefits of scale and consolidation without sacrificing independence: profits, competition, and growth in a more decentralized economy.
And beyond the vertical framework, I’m really bullish down five ideas to help small businesses succeed:
CRM/marketing: become the customer and revenue hub and ad network built on first party data. Finding customers is the biggest challenge for SMBs.
Hiring: Headcount is the biggest expense and labor churn is death. Finding better talent faster and keeping it longer makes or breaks the business.
PEO/benefits: benefits are the 2nd biggest expense. SMBs and sole props get crushed by insurance and benefits providers. It’s a barrier to entry.
Procurement: build a network of networks (GPOs or group buying) and wrap procurement in financing, sourcing, and inventory management.
Creators x SMB: use existing audience and expertise to drive customers and revenue downstream. The next Ray Kroc will be a youtuber.
Read the full deck here for tons of info of what to do, how, and what to avoid. Feedback very much appreciated.
I Read
Inside the Murdochs’ Succession Drama
This is just straight from the pages of HBO
The Online Right Is Building a Monster - by River Page
The right’s increasingly extreme rhetoric is eventually going to freak the hell out of ordinary people, just as the left’s crazy ideas did. Then what happens? A backlash. I’ve seen how this process plays out. I witnessed the rise of left-wing extremism on Twitter, and the repression of right-wing views. It got to the point when leftists had no one to fight with but each other, which meant that insane positions had to be staked out at every point in order to identify enemies within the ranks.
The Stuck Generation - Brad Hargreaves
Most stuck companies will carry forth indefinitely as zombies: too small to sell for a decent multiple, too unprofitable for a PE takeover, too stable for a recapitalization. Management teams will turn over, founders will leave, and the company will trudge on as a perpetual motion machine of mediocrity. At some point, perhaps, the board will finally decide they have better things to do and will take a bargain-bin offer.
Keep in Touch
I’m planning a ton of events over the next couple months ranging from intimate dinners to larger conferences:
SF SMB dinner
NY “age of inbound” dinner
NY SMB min conference
If you want to get involved or get on the list for future events, sign up here.
bueno