Being a successful early-stage investor is about a lot more than simply identifying trends. A successful VC needs to think several steps ahead. For MaC Venture Capital founder Marlon Nichols, it’s an ability that’s helped him spot big names like Gimlet Media, MongoDB, Thrive Market, PlayVS, Fair, LISNR, Mayvenn, Blavity and Wonderschool early on.
Nichols joined us on TechCrunch Early Stage to discuss his strategies for early-stage investing, and how those lessons can translate into a successful launch for budding entrepreneurs. Success involves not only a solid team and great ideas, it also requires the willingness and ability to change and adapt to an ever-changing world.
Getting ahead of the trends
Anyone can identify trends once they’ve broken, but a successful investor needs to see several steps ahead of the pack. This ability helps VCs know where to focus their attention and, eventually, how to weed out the snake oil from the true value pitches.
For us, that means taking a look at emerging behavioral trends and shifts in culture. What we’re looking to understand is where people and companies are going to spend their time and money – not only today, but in the future. So we do research to see if there are supporting factors for this thing sticking around and being successful. If that answer is yes, then we can dig a bit deeper. (Timestamp: 4:33)
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Diverse from day one
We’ve long understood that a diverse workforce is an important part of creating products that can appeal to a wide range of users. But often, diversity is an afterthought.
That’s going to determine how diverse the firm or the entity ultimately becomes. There have been a bunch of studies that show that the first ten people within an organization is going to basically represent what the organization is going to look like going forward. If we believe all of the research that’s been done for decades that diverse perspectives, experiences, backgrounds, racial makeup, gender, etc. matter when you’re designing and building and growing products and companies, then you want to make sure that originating team is pretty diverse. (Timestamp: 13:37)
FOMO no more
Fear can be a motivator. But is it a good one? Are concerns over missing out on an opportunity ever a good reason to invest?
I think FOMO is a part of life, and it shows up in in every aspect. We try not to have that drive our decisions. I think fear is a terrible way to make decisions in any aspect of life. We try to make the decision based on what is the ultimate size of this opportunity. Are these founders uniquely positioned to build this company? Are they driven by something more than just trying to make a lot of money? (Timestamp: 18:54)
Change is the name of the game
No one wants to pivot, but change is an essential part of life and business. This is especially true in the early stages of running a business. The ability and willingness to embrace change is an important part of what Nichols looks for in early-stage founders.
One of the character traits that we look for is a deep level of humility and curiosity. If you’re not super curious and you can’t look around you and see what’s happening and take on advice and shift in strategy, then you’re going to fail. If there’s one thing that’s true in this world, it’s that change is always going to happen in everything. If you’re not flexible enough to accept that and change course as needed, you’re not going to win. (Timestamp: 35:01)
You can read a full transcript of the interview here.
You can also check out other sessions from Early Stage here.