20VC Building a Game Changing Consumer Startup and Hunting His 4th Unicorn with Jim Scheinman @ Maven Ventures



Harry Stebings hosts Jim Scheinerman, an industry veteran and founder of Maven Ventures, on the 20 Minute VC podcast. Scheinerman, an early pioneer in social networking with Friendster and Bebo, has also contributed to billion-dollar ventures like Tango and NBCI. At Maven Ventures, he's building a portfolio with significant holdings in startups such as AngelList and Wealthfront. He discusses the importance of timing and luck in consumer startups, the potential of AR/VR as the next major platform, and the challenges of scaling in the saturated social space. Scheinerman also shares insights on his investment philosophy, focusing on vision, team, and market opportunity, and introduces his latest investment in Homemade, a platform connecting chefs and local communities.

Summary Notes

Introduction to Jim Scheinerman

  • Jim Scheinerman is the founder and managing partner at Maven Ventures.
  • He has a history in social networking, being an early employee and head of business development and sales at Friendster.
  • Jim transitioned to Bebo in 2005 as the first employee and board member, leading to its unicorn status.
  • He has also invested in other unicorns like Tango and NBCI.
  • His portfolio at Maven Ventures includes AngelList, Wealthfront, Altspace, and more.

"And joining us today, I'm thrilled to welcome a master of the industry, Jim Scheinerman... Now at Maven, he is building an incredible portfolio with holdings in the likes of angel list, Wealthfront, alt space and many, many more."

The quote introduces Jim Scheinerman as a significant figure in the venture capital industry with a successful track record and an impressive investment portfolio.

Jim's Early Career and Entry into the Internet Industry

  • Jim was present in Palo Alto during the rise of the internet, which he recognized as a world-changing phenomenon.
  • Prior to his tech involvement, he ran a multimillion-dollar revenue business in retail, using pre-internet technology.
  • Jim attended law school and practiced law for a few years in Palo Alto, which brought him closer to the burgeoning Silicon Valley tech scene.
  • He joined CNET, a prominent internet company, and helped spin out Snap, an internet portal designed to compete with early giants like Yahoo and Lycos.

"I was very fortunate to be in Palo Alto when the Internet happened... my first Internet company that I joined, it was something that was part of what I saw that was going to be something that was absolutely necessary for me to get involved in."

This quote explains how Jim's geographical location and foresight into the potential of the internet led him to pivot his career towards technology.

Jim's Experience with Internet Portals and Snap

  • Jim recognized the strategic importance of controlling the internet's starting point, leading to his involvement with Snap.
  • Snap was an internet portal with a high-performing search engine, which competed with the likes of Yahoo, Lycos, and Excite.
  • The company was acquired by NBC and became NBC Internet, which went public and reached a $6 billion valuation, marking Jim's first experience with a unicorn company.

"We spun out a company called Snap... we wanted to compete in that space... And then in 99, we got acquired by NBC and we became NBC Internet. And we went public. And overnight we were a $6 billion company."

The quote details Jim's journey with Snap, from its creation to its acquisition and subsequent IPO, highlighting a significant success in his career.

Jim's Role in the Social Networking Revolution

  • Jim met Jonathan Abrams, the founder of Friendster and a pioneer of social networking.
  • As an early tester of Friendster, Jim saw its potential to change the world and joined as one of the first employees.
  • Despite Friendster's ultimate failure, Jim's experience there led him to join Bebo with founders Michael and Zochi Birch.
  • Bebo's successful sale to AOL for almost a billion dollars marked Jim's second unicorn achievement.

"I joined friendster and that really was 100 billion dollar idea... But fortunately I got to meet Michael and Sochi Birch, the founders of Bebo, through that and join them to launch Bebo. And that was a really nice ride for three years. We sold that in 2008 to AOL for almost a billion dollars."

The quote recounts Jim's involvement with Friendster and Bebo, emphasizing the significant impact of social networking and his successful exit with Bebo.

Current Perspective on the Social Media Landscape

  • Jim and other VCs are cautious about investing in the social space due to market saturation.
  • Maven Ventures focuses on identifying the next consumer platform for social opportunities.
  • Jim is particularly interested in AR and VR as emerging platforms that could revolutionize social communication and media.

"What we need is the next platform to arise in consumer and then there'll be massive opportunity once again for new social communication platforms or social media or whatever we're going to call it in that phase."

This quote highlights Jim's forward-looking investment strategy, focusing on the next technological platform that will enable new opportunities in social media.

AR and VR Investment Thesis

  • AR and VR technology has matured, offering unique experiences that were not possible before.
  • Consumer adoption is heavily influenced by timing; previous ventures may have been too early.
  • Altspace, an AR/VR company, is believed to change the landscape of social networking.
  • AR/VR communication platforms are considered the next big shift in how people interact.
  • In the future, traditional social networking methods may seem outdated compared to VR experiences.

"Couple of years ago? We've been looking at AR VR for a while, but it was too early. [...] But have you ever tried the VR?" "It's amazing. If you try the best VR experiences today, they're like nothing that you've ever experienced before. [...] this is going to change the, you know, I think Altspace is going to be the company to do it, but somebody's going to."

The quote explains that although AR and VR were previously considered premature for mass adoption, current VR experiences are groundbreaking. Altspace is highlighted as a potential leader in revolutionizing social networking through VR.

Barriers to AR/VR Adoption

  • The success of new technologies often depends on the existence of a suitable platform for businesses to build upon, as seen with the iPhone.
  • Previous mobile devices did not provide an ecosystem conducive to scale, unlike post-iPhone era.
  • The hardware quality and affordability of AR/VR devices are critical for widespread adoption.
  • The vision includes a future where AR/VR devices are commonplace and significantly alter social interactions.

"So you needed a platform where consumer companies could actually build their business on and where the platforms want that to happen. [...] Once that happens, and there is hundreds of millions of those devices or billions of those devices out there, there's going to be a massive shift in how consumers, how we, I should say, like how we interact with each other."

The quote emphasizes the importance of a foundational platform that supports business growth and consumer adoption, drawing a parallel with the transformative impact of the iPhone. It suggests that once AR/VR devices become widely available, there will be a profound change in interpersonal communication.

Consumer Software Landscape

  • The consumer software space is challenging, with few apps achieving sustained massive traction in recent years.
  • Maven Ventures invests early in companies with the potential to become multibillion-dollar enterprises.
  • The firm focuses on areas they are passionate about and where they can add significant value.
  • Despite the difficulties, there are still opportunities for groundbreaking consumer technology companies.
  • Maven Ventures also explores esports, drones, and consumer health tech as areas of interest.

"Well, listen, I mean, I completely agree with Fred, and he's not the only one that Mark Andreessen's on record recently know when it comes to consumer software, consumer startups, we don't know. [...] With that said, there's amazing. It's. We're still at the very early stage of consumer adoption and technology, and they're going to be companies that are going to change the world, like Facebook, over the next couple of years, over and over and over again."

This quote acknowledges the difficulty of succeeding in the consumer software market as echoed by industry veterans like Fred Wilson and Mark Andreessen. However, it also conveys optimism about the potential for new companies to emerge and have a global impact, similar to Facebook.

Drone Delivery and Consumer Health Tech

  • Amazon's exploration of drone delivery has sparked interest in the potential of this technology.
  • Maven Ventures believes software startups will be the most successful in the drone space.
  • The firm is actively looking at companies involved with drone delivery.
  • Consumer health tech is another area of excitement, suggesting potential investment opportunities.

"I love it. They started people thinking about it. I'm not sure Amazon's the one that's going to necessarily be often. We always believe that it's the software startup that's going to actually be successful. We're looking at some companies in that space."

The quote reflects enthusiasm for drone delivery as a concept and predicts that software startups, rather than large corporations like Amazon, will lead the charge in this domain. Maven Ventures is actively scouting companies that could play a role in shaping this emerging market.

Innovation in Consumer Health

  • Historically, innovation has been more prevalent in enterprise health rather than consumer health.
  • The potential for consumer health innovation is now recognized due to the ubiquity of smartphones.

"A lot of innovation on the enterprise side of health, but not on the consumer side." "And now the consumer side is so potentially lucrative. I mean, everyone is essentially a consumer with 3.2 billion smartphones."

These quotes highlight the contrast between the past focus on enterprise health innovation and the current recognition of the untapped potential in consumer health, driven by widespread smartphone usage.

Scaling Consumer Health Companies

  • Scaling consumer health companies has been challenging due to the necessity of working with hospitals and insurance companies.
  • This dynamic is changing, albeit not as quickly as desired.
  • Expectations are for massive consumer companies to emerge in the e-health space.

"Impossible to scale a company that way. And that's changing, right?" "I think there'll be massive consumer companies that are going to be built in the consumer e-health space."

The first quote reflects the past difficulties in scaling consumer health companies due to dependencies on larger institutions. The second quote expresses optimism for future growth and the emergence of significant consumer e-health companies.

Success in Consumer Apps

  • Notable companies that have scaled include Snapchat, younow, and musically.
  • Scaling a new consumer app is challenging due to the maturity of the market and the dominance of existing players like Facebook and Twitter.

"It's going to be really hard to scale another consumer app in the mobile just, it's just mature." "The big players that have a monopoly like Facebook and Twitter, are not opening their platforms anymore."

These quotes emphasize the difficulty of scaling new consumer apps in a mature market dominated by established companies, which are not as open to new entrants as they once were.

Evolution of the Mobile Space

  • The mobile space has developed significantly, but smartphones and mobile distribution remain critical.
  • Growth and viral marketing are essential for consumer startups.
  • Opportunities still exist to build companies through mobile distribution, despite challenges.

"These smartphones are amazing and I live on my iPhone like we all do." "If you built a product that people love, and ideally that's even better." "There's still ways to build your company, working with some of the bigger players."

The quotes reflect the ongoing importance of smartphones in daily life, the necessity of creating loved products for growth, and the potential to leverage existing platforms for distributing new mobile apps.

Business Building Beyond Fundraising

  • Maven teaches startups to focus on building a business, not just fundraising.
  • Key elements include having the right vision, team, culture, and marketing.
  • Luck and timing play a significant role in the success of a consumer company.

"You teach startups how to really build a business and not just fundraise." "It's about 80% right. You have to do all these amazing things, have the right vision, have the right team, have the right culture, have the right marketing."

The quotes underscore the importance of foundational business-building elements that Maven emphasizes to startups, beyond the act of fundraising, while also acknowledging the significant role of luck and timing in achieving exceptional success.

Vision and Team Importance

  • A "vision worth fighting for" is crucial for startup founders and must address a significant market opportunity.
  • The vision must be compelling enough to change consumer habits, which is a significant hurdle.
  • A strong team is equally important to the success of the startup.

"The vision worth fighting for is just as important to us as the team." "It has to be a big market opportunity." "If I have to learn a new habit, it better be something so great that I need to do or so much better than what already I can do."

These quotes highlight the necessity of a compelling vision that captivates both the founders and the market, supported by a capable team. They also point out the challenge of changing consumer habits unless the new product is significantly better than existing alternatives.

Critique of Bitcoin's Accessibility

  • The complexity of obtaining and using Bitcoin is seen as a barrier to its widespread adoption.

"Bitcoin is ultimately set up for a fault. Because I think the barriers to entry from blockchain and from bitcoin in terms of getting wallet and coins at the moment is too difficult."

This quote presents a critical view of Bitcoin, suggesting that its complexity and the difficulty in acquiring and using it could hinder its long-term success.

Investment Philosophy and Strategy

  • The speaker highlights a preference for investing in companies that bring something new and innovative to the market, rather than those making incremental changes.
  • They express admiration for companies like WhatsApp and Snapchat, which introduced significant improvements and new ways of communication.
  • The speaker appreciates businesses that address problems people didn't know they had, akin to Steve Jobs' approach.
  • They mention specific investments in groundbreaking sectors, such as self-driving cars and Neighborly, a marketplace for investing in local bonds for school construction.

"But the great companies that we love to invest in, Snapchat created a new way for people to communicate. The reason that took off is because that didn't exist before and it spoke to people like it solved a problem."

This quote emphasizes the investment focus on companies that pioneer new solutions and address unmet needs, leading to significant market impact.

"We're an investor in a self driving car company. That's interesting. That's going to change the world."

The speaker is highlighting their interest in transformative technologies with the potential to change the world, indicating a forward-thinking investment strategy.

"We're an investor in a company called Neighborly, which is building a marketplace where people could invest in bonds to build their local schools."

The speaker showcases their investment in socially impactful ventures that aim to strengthen communities and have the potential for significant growth.

Literature and Entrepreneurship

  • The speaker discusses the book "The Boys in the Boat" and its connection to entrepreneurship.
  • They draw parallels between the story of the Olympic rowing team and the journey of a startup, emphasizing vision, drive, coaching, and persistence.
  • The book is recommended for its inspirational narrative that mirrors the challenges and triumphs of building a startup.

"It's a story about people, especially on the leadership, who had a vision they could take these group of boys who had no business being at any kind of level, forget about competing in the Olympics, but just beating the Harvards and Yales and the princes at the time."

This quote illustrates the speaker's admiration for the book's depiction of visionary leadership that transforms underdogs into champions, drawing a parallel to successful entrepreneurship.

Learning from Missed Opportunities

  • The speaker reflects on past investment opportunities that were missed, such as Waze.
  • They discuss how these experiences led to learning and adapting their strategy, resulting in a new investment in a company called Sunshine.
  • Sunshine is described as the "Waze for weather," using smartphone technology and community involvement to provide accurate weather data.

"But finally last year we invested in a company that we call the ways for weather. It's called Sunshine, and it's for the first time in human history, using your smartphone, passive device and a little bit of community. We have accurate weather data for 48 hours."

The quote shows how the speaker's investment firm learned from missed opportunities and applied that knowledge to identify and invest in a new venture with innovative technology.

Information Sources and Influences

  • The speaker mentions reading Mattermark, Strictly VC, and TechCrunch to stay informed.
  • They express respect for multiple venture and angel investors, considering some as mentors.
  • Warren Buffett is admired for his success, consistency, focus, and humility, qualities the speaker seeks to emulate in their own investment practice.

"I would say, are Mattermark, strictly VC and TechCrunch, probably three."

This quote identifies the speaker's go-to sources for industry news and insights, emphasizing the importance of staying informed in the venture capital field.

"I greatly admire Warren Buffett. And the reason is for these qualities. Number one, he's successful and consistent. Number two, he has a focus and he sticks to it. Right. And number three, he's humble."

The speaker outlines the reasons for admiring Warren Buffett, highlighting attributes that are valued and aspired to within their own investment firm.

Latest Investment Decision

  • The speaker discusses their most recent investment in Homemade, a company enabling home chefs to sell food to their community.
  • Homemade is notable for being the first investment from the speaker's fund two and their first non-Silicon Valley investment.
  • The founders of Homemade demonstrated vision, perseverance, and passion, which aligned with the investment firm's criteria.
  • The speaker sees potential in Homemade to build a billion-dollar company around the concept of home-cooked food and community.

"It's a company called Homemade. Like homemade food. It's a first in a lot of ways. Number one, it's our first fund to investment. Number two, it's our first non Silicon Valley investment."

The quote details the significance of the Homemade investment, marking a milestone for the investment firm and illustrating their willingness to invest outside their usual geographic focus.

"This is a vision that we had as soon as I saw Airbnb. We missed that one too. But I thought an Airbnb for food idea was a big idea."

By comparing Homemade to Airbnb, the speaker indicates their belief in the potential for platform-based businesses to disrupt traditional industries and create significant value.

Show Promotion and Engagement

  • The host encourages listeners to sign up for the podcast newsletter and follow them on Twitter for updates.
  • They invite feedback and promise to respond to emails, fostering engagement with their audience.

"And if you enjoyed today's show with Jim, then head over to the twentyminutevc.com and sign up for our newsletter so you never have to miss an episode or update from us."

This quote demonstrates the host's effort to build a community around the podcast by offering ways for listeners to stay connected and informed.

"We always love to hear your feedback. So shoot me an email at Harry at the twentyminutevc.com again, all in letters and I'd love to hear your thoughts and respond to every email."

The host shows a commitment to audience interaction, encouraging listeners to share their thoughts and promising personal responses to foster a sense of connection.

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