20 VC David Tisch @ Box Group on The Future of Consumer Mobile, Developing Pattern Recognition and FOMO



In this episode of "20 minutes VC," host Harry Stebbings interviews David Tish, managing partner of Box Group, a prominent New York seed investment firm with a portfolio of over 120 technology companies. Tish, who also co-founded the mobile shopping app Spring with his brother Alan, shares insights into his journey from internet-obsessed kid to influential investor and startup co-founder. He reflects on the dynamic New York startup scene, the importance of building strong teams, and the challenges and opportunities in the mobile consumer tech space. Tish emphasizes the significance of patience and consistency in venture capital, discusses the role of pattern recognition in investment decisions, and highlights the value of empowering entrepreneurs. He also touches on the potential for innovation in mobile technology despite the difficulties of breaking through in a market dominated by established players.

Summary Notes

Introduction to David Tisch and Box Group

  • David Tisch is the managing partner of Box Group, a prolific seed investment firm.
  • Box Group has invested in over 120 seed stage technology companies.
  • Notable investments include Vine, Sunrise Calendar, Warby Parker, Harry's, Oscar, Meerkat, and Zadie.
  • David also co-founded Spring, an app for brands to sell directly to consumers on mobile.
  • He co-founded Techstars New York City and served on Mayor Bloomberg's advisory Council on Technology.
  • Matamart provided data for the episode's discussion about Box Group's portfolio.

"Now, therefore, I'm thrilled to welcome David Tish. Now, with David's incredible career, it's tough to think where to start. He's the managing partner of Box Group, one of New York's most prolific seed investment firms, with investments in over 120 seed stage technology companies."

This quote introduces David Tisch and highlights the breadth and success of his career, particularly with Box Group's extensive portfolio of seed stage technology companies.

David Tisch's Background and Path to Investing

  • David Tisch describes himself as having been a "nerd" who was interested in coding and the internet from a young age.
  • His first exposure to the internet was through AOL, sparking a lifelong fascination.
  • David's career path included law school and working in real estate finance and mergers and acquisitions.
  • His interest in the emerging startup scene led him to leave his career in law and real estate to start a company.
  • After a failed startup attempt, he joined KGB, where he gained experience in hiring, building, and working with engineering organizations.
  • David joined Techstars to launch and run the New York program, marking his transition to a full-time investor role.

"I was a nerd my whole life, and I able to code when I was a kid and then lost my way and sort of stopped programming computers but kept using the Internet. And so I've had an Internet obsession, I think, from the day I got my first modem, which was a 2400 bod modem, and used AOL, and it sort of grew from there."

This quote provides insight into David's early interest in technology and the internet, which later influenced his career in startups and investing.

Development of the New York Venture Scene

  • David Tisch has observed significant growth in the New York startup scene.
  • He notes that New York lacks a "destination company" like Apple, Facebook, or Google that started in the city and became a worldwide phenomenon.
  • The emergence of such a company would solidify New York's tech ecosystem and attract more talent.
  • New York is a magnet for smart, creative, and aggressive talent across industries, but it lacks a technology anchor to draw in tech-specific talent in large numbers.
  • Major West Coast tech companies have set up product offices in New York, contributing to the talent pool.

"New York's, New York's my home. It's where I grew up. It's a place I'm going to raise my kids and live for the rest of my life. And so I'm passionate about this city. It means a lot that just overall that I'm connected to this city."

This quote emphasizes David Tisch's personal connection to New York and his vested interest in the growth and success of its startup ecosystem.

The Role of an Anchor Company in New York's Startup Scene

  • New York's startup scene is thriving without an anchor company, but there is a desire for one.
  • An anchor company can attract a significant number of engineers and other tech talent, benefiting the local ecosystem.
  • Employees from an anchor company can eventually contribute to the ecosystem by starting their own ventures or joining other startups.
  • The presence of West Coast tech companies' product offices in New York brings more talent to the city but may also hinder the development of a New York-based tech giant.

"Does it need it? No, right. There's incredible companies being built here. So I think on one hand, you could easily argue it doesn't need it. Does it want for it? I think so."

This quote reflects the nuanced view that while New York's startup scene is robust, the presence of an anchor company could still provide significant benefits.

Future Prospects for New York's Startup Ecosystem

  • David Tisch believes it's not systematic changes that are needed for a rocket ship company to emerge from New York.
  • The emergence of such transformative companies is rare and not something that can be expected or assumed to happen regularly.
  • The focus should be on celebrating the incredible companies that are currently being built in New York.

"I don't think there's anything systematic. I think these are once in a couple of decade style companies. So it's insane to expect it to happen or assume it's just going to happen."

This quote suggests that while it would be beneficial for a major tech company to emerge from New York, it is an infrequent occurrence and the current startup landscape should still be appreciated.

Disruption of Core New York Industries by Technology

  • Technology has significantly disrupted traditional New York industries such as finance, fashion, publishing, and media in recent years.
  • New York City serves as a test case for new ways of running urban environments, leveraging technology to adapt to global urbanization trends.
  • The unique breadth and depth of New York's industries make it difficult for other cities to match its level of diversity and innovation.

"You see technology penetrating so many different components of what used to be the core New York industries. Right? Finance, fashion, publishing, media. These are industries that are deeply disrupted by technology only in the past handful of years."

The quote emphasizes how technology has recently transformed foundational industries in New York, highlighting the rapid pace and breadth of this disruption.

Vision for Box Group

  • Box Group was named after David Tisch's first investment in Boxy and was not intended to be a large investment entity.
  • The vision for Box Group is to take a long-term view, focusing on consistency and patience due to the lengthy investment timelines in venture capital.
  • David Tisch emphasizes the importance of creating perspective in the venture capital industry, which requires a departure from the minute-to-minute excitement to a more strategic, long-term approach.
  • The principles of patience and consistency were influential in David Tisch's early venture career and continue to guide Box Group's investment strategy.

"I think the vision is to be consistent and patient and to take a much longer term view of our world, mainly because the investment timelines that we invest on are so ludicrously long that the minute to minute of being a VC is not all that exciting."

The quote outlines the overarching vision for Box Group, focusing on the necessity of a long-term perspective in venture capital given the extended nature of investment cycles.

Challenges of Pattern Recognition in Venture Capital

  • The feedback loop in venture capital is complex, and adapting to successful companies' strategies is challenging due to the time it takes to develop accurate pattern recognition.
  • David Tisch is wary of assuming too quickly that one has mastered pattern recognition in the venture capital industry.
  • Building pattern recognition is difficult because of the lack of reliable data and the limited insights into companies, especially those outside one's portfolio.
  • The job of a venture capitalist involves interpreting a vast array of signals to identify successful patterns in company growth and management.

"But if you talk to the people who've been doing this forever, who are legends, what they say is that takes a really long time to develop pattern recognition."

This quote highlights the difficulty and time required to develop pattern recognition in venture capital, a skill that is highly valued and takes years to hone.

Time Allocation in Managing a Venture Portfolio

  • The role of a venture capitalist is to work with entrepreneurs, providing support as needed, rather than taking credit for a company's success.
  • Companies that are growing rapidly often need less assistance from seed-stage investors compared to those facing challenges.
  • The value added by venture capitalists may vary greatly and can include making introductions, offering advice, and being available to discuss difficult issues, often taking the form of a supportive friendship.
  • Time allocation between supporting portfolio companies and sourcing new deals is responsive and tailored to the unique needs of each entrepreneur.

"So what we try to do is be helpful. And what does that mean? It means every single person, every single company, every single stage of that company is different in terms of what the entrepreneurs want or need or ask from you."

The quote reflects the adaptive approach of Box Group in supporting entrepreneurs, recognizing that the needs of each company and founder are distinct and require a personalized response.

Differentiating as a VC Fund in a Competitive Environment

  • Differentiation as a venture capital fund is challenging in a market that claims to be founder-friendly.
  • Box Group aims to be transparent and honest in communication, focusing on the chemistry between the investors and entrepreneurs rather than overstating the value added by the investment itself.
  • David Tisch believes that the relationship between investors and entrepreneurs is crucial, as successful investments often lead to long-term partnerships.
  • The investment process at Box Group is flexible, with no strict timeline for investing, allowing for a deal-by-deal approach that accommodates the unique circumstances of each potential investment.

"There should be some chemistry that an entrepreneur feels with us and we feel with them. And so there are companies that we'll pass on that are probably going to be great companies, but we just don't have that chemistry with an entrepreneur, and I think vice versa."

This quote stresses the importance of mutual chemistry and alignment between investors and entrepreneurs, which is a key factor in Box Group's investment decisions.

Investment Decision Timelines

  • BoxGroup makes investment decisions based on various timelines, influenced by how early they get involved with a startup.
  • Some investment decisions require multiple interactions with a team before approaching a decision.
  • Other deals may require a quick decision due to the advanced stage of the funding round.
  • The market dictates investment timelines more than the investor's preferences.

"There are other deals that we'll get an introduction to super late in the process. They have 1.9 out of $2.1 million in their round closed. And so we know normally going into that, we got about 60 minutes here to make a decision."

This quote highlights the pressure to make swift investment decisions when introduced to funding rounds that are nearly closed.

Fear of Missing Out (FOMO) in Investments

  • David Tisch experiences FOMO regarding deals he doesn't see more than the ones he passes on.
  • Reflecting on past investment decisions helps identify and correct mistakes.
  • Due to the long-term nature of investment results, it's challenging to judge mistakes until much later.
  • The investment market is dynamic, and strategies evolve, complicating pattern recognition.

"I have a big FOMO about not seeing something that I have been thinking about for a long time that I would love to see."

This quote expresses the concern of missing out on investment opportunities that align with long-term thoughts and interests.

  • BoxGroup's portfolio has a significant weighting towards mobile consumer tech.
  • David Tisch acknowledges the challenges in the mobile market, such as distribution difficulties and competition from large companies.
  • Despite these challenges, he believes there is still potential for innovation in the mobile space.
  • Success in mobile now requires launching a finished product that immediately impresses users.

"You have 3 billion people that are looking at this thing, an absurd amount every day that are opening it. I think the number was 249 times a day."

The quote emphasizes the widespread use of smartphones and the opportunity for mobile apps despite the competitive landscape.

Spring: A Mobile Shopping Experience

  • Spring is a mobile platform offering a mall-like shopping experience directly from brands.
  • The platform aims to provide a seamless shopping experience with a single mobile interface.
  • Spring offers features like free shipping, returns, loyalty programs, VIP, personal shopping, and customer service.
  • The company's vision includes building great technology and services to enhance the shopping experience.

"We're a mall on your phone. So if you want to go shopping on your phone, click spring. We deliver over 1200 brands directly to your phone."

This quote describes Spring's value proposition as a mobile mall, emphasizing convenience and direct brand interaction.

Encouraging Entrepreneurship

  • David Tisch initially advised against starting a company due to the inherent difficulties.
  • Upon further discussion, the potential opportunity in the idea for Spring became apparent.
  • Tisch's initial hesitation reflects the respect for the challenge of entrepreneurship.

"No, I just told him. He came and he said he had an idea. I go, please don't. Right. Because starting a company and building something is the hardest thing in the world."

This quote captures the initial reluctance to endorse the start of a new venture, acknowledging the challenges entrepreneurs face.

The Opportunity for Innovation in Consumer Experience on Mobile

  • David Tisch identifies a significant opportunity in developing a new category for consumer experience on mobile devices.
  • The problem they aim to solve has not been effectively addressed by current market solutions.
  • The excitement stems from the potential to create something that is not fully realized yet.

"I look at the opportunity that we're attacking, and it's so exciting to me. I think there's just nothing out there that's solving this problem in the way that we're trying to solve it and to build, again, what I think is a really important category in the consumer experience on your phone, which just hasn't been fully built out yet."

The quote emphasizes the untapped potential in the mobile consumer experience space and the speaker's enthusiasm for creating a new category within it.

Building a Strong Team for Startup Success

  • David Tisch credits the success of Spring to the quality of the team built by Alan, the leader of the company.
  • Emphasizes the importance of every team member in the early stages of a startup, as each person carries significant weight due to limited resources.
  • Highlights the ability of the team to solve problems, build software, and develop the business side effectively.
  • Describes Alan's leadership style as reserved, thoughtful, and empowering, which has allowed his team to achieve remarkable things.

"And so what Alan's done is build a great team around him and given them the ability to solve problems and build software and build the business side out."

The quote underscores the critical role of team building and empowerment in a startup's success, as demonstrated by Alan's leadership at Spring.

Personal Insights: Reading, Career Highlights, and Productivity

  • David Tisch shares his personal reading habits and preferences, stating he rarely reads books from front to back but enjoys watching television for learning.
  • Recounts finding his partner Adam as a career highlight, emphasizing the importance of alignment and collaboration.
  • Mentions using an app called Captio to streamline his productivity by quickly sending notes to his email, which serves as his to-do list.

"I watch an extraordinary amount of television, and I think it's an underrated way to learn."

This quote reflects David Tisch's belief in the educational value of television and his unconventional approach to learning.

"Probably finding my partner Adam when he joined at Techstars and realizing that we were going to work together for a long time because we just clicked."

The quote highlights the significance of finding a compatible business partner in shaping one's career trajectory.

"There's a little tool I use called captio, which sounds stupid, but it's an app. It sits on the front sort of primary spot on my home screen, and it just opens up a window. You type something, you hit a button and it sends that to yourself via email."

David Tisch shares a specific productivity tool that he finds indispensable for managing tasks and information flow.

Investment Philosophy and Recent Ventures

  • David Tisch discusses his investment strategy, emphasizing the need for continuous excitement about new ventures to maintain energy.
  • He shares his recent investment in Nucleus, a company creating a home intercom system, highlighting the product's potential to simplify family communication by reducing reliance on phones.

"I think the key to being an early stage investor is that every day and every company you invest in, you need to be more excited about than the last one. Otherwise, it's hard to keep your energy up."

The quote captures the essence of David Tisch's approach to investment, where sustained enthusiasm is crucial for success.

"Nucleus is building it sounds crazy, but an intercom video screen intercom system for houses that lets you call from one room to another...it allows you to call out as well."

David Tisch describes his excitement for Nucleus' innovative home communication system, which he believes can redefine how families interact within the home.

Acknowledgments and Future Episodes

  • Harry Stebbings expresses gratitude to David Tisch for his participation in the podcast.
  • Harry Stebbings promotes the 20 Minute VC platform and teases an upcoming episode featuring a rising star in the venture capital industry.

"What an amazing episode that was with David. And I would like to say again, a huge thank you, Tim, for giving up his time today."

Harry Stebbings concludes the episode by thanking David Tisch for sharing his insights and experiences, highlighting the value of the discussion.

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