The 'Mattress Test' for the Value of Any New Business
How does venture capitalist Ben Lerer decide which opportunities are worth investment? Lerer follows the inevitable path of disruption, targeting areas of the world that have not yet been disrupted by the internet but soon will.
Ben Lerer: Probably the easiest way to think about how we think about opportunity is any area, any sector, any business that has not yet been totally disrupted by the existence of the internet will be. And so as we meet people who are starting companies, one obvious place to focus on is what has changed about the way that business gets done in that category since the internet has existed and since sort of the world has gotten smaller and smaller and smaller with each passing minute; what has changed and what could change that hasn’t? And so I’ll use a great example of a company I invested in recently. It’s a mattress company and it’s a really — it was a really easy investment for me to make because as I spent time with the founders of this business, the thing I kept going towards in my mind was shopping for a mattress totally sucks and the way that I would shop for a mattress today is basically the same way that I would shop for a mattress five years ago or 10 years ago. Maybe I’ll go online and read some reviews but I don’t trust the places that sell me mattresses. I don’t really understand the difference between them. Lying down on one for 10 seconds at a mattress store does not tell me if it’s going to be a comfortable, good mattress for me long term.
And for us, before we identified that there was — that the solution that this company we invested in — that they had the right solution, what we had first identified is that there was a problem and that the business was solving a real problem. And I think that as we look at companies you always want to make sure that the founders are building a product that solves an actual problem that exists. Make people’s lives better with what you’re building and generally you’re heading in the right direction. You see lots of people starting companies because it’s cool to be an entrepreneur. And a business could exist to do something. The idea between a business could exist and a business should exist — there is a gap between those two things and if you ultimately think about who you’re servicing and if there’s a market where you’re going to make someone’s life significantly easier, that’s probably a pretty good direction to go in. And so I don’t know that we — when we think about investing at LHV we say, "Well we think healthcare or we think financial technology or we think media or we think commerce." We think all of those things. But within those big sectors, there are lots and lots and lots of solutions to problems that need to be invented. And so as long as we stay diligent about making sure that the companies we invest in are truly solving problems, I think we’re going to win more often than we lose.
How does venture capitalist Ben Lerer decide which opportunities are worth investment? Lerer follows the inevitable path of disruption, targeting areas of the world that have not yet been disrupted by the internet... but soon will. Lerer seeks out sectors with glaring problems, major holes that need to be filled. By projecting the path of eventual disruption, savvy investors can make prescient decisions ahead of the curve. They're also able to identify startups set on solving real problems rather than existing for the sake of existing.
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Quoth the parrot — "Nevermore."
By his mid-30s, Edgar Allan Poe was not only weary by the hardships of poverty, but also regularly intoxicated — by more than just macabre visions. Despite this, the Gothic writer lucidly insisted that there was still a method to his madness when it came to devising poems.
In an essay titled "The Philosophy of Composition," published in 1846 in Graham's Magazine, Poe divulged how his creative process worked, particularly in regard to his most famous poem: "No one point in [The Raven's] composition is rerferrible either to accident or intuition… the work proceeded step by step, to its completion with the precision and rigid consequence of a mathematical problem."
That said, contrary to the popular idea that Edgar Allan Poe penned his poems in single bursts of inspiration, The Raven did not pour out from his quivering quill in one fell swoop. Rather it came about through a calculative process — one that included making some pretty notable changes, even to its avian subject.
As an example of how his mind worked, Poe describes in his essay that originally the bird that flew across the dreary scene immortalized in the poem was actually… a parrot.
Poe had pondered ways he could have his one word refrain, "nevermore," continuously repeated throughout the poem. With that aim, he instantly thought of a parrot because it was a creature capable of uttering words. However, as quickly as Poe had found his feathered literary device, he became concerned with the bird's form on top of its important function.
And as it turns out, the parrot, a pretty resplendent bird, did not perch so well in Poe's mind because it didn't fit the mood he was going for—melancholy, "the most legitimate of all the poetical tones." In solving this dilemma in terms of imagery, he made adjustments to its plumage, altogether transforming the parrot — bestowing it with a black raiment.
"Very naturally, a parrot, in the first instance, suggested itself, but was superseded forthwith by a Raven, as equally capable of speech, and infinitely more in keeping with the intended tone," Poe explained in his piece in Graham's. "I had now gone so far as the conception of a Raven — the bird of ill omen — monotonously repeating the one word, 'Nevermore,' at the conclusion of each stanza, in a poem of melancholy tone…"
It was with these aesthetic calculations that Poe ousted the colorful bird that first flew into his mind, and welcomed the darker one that fluttered in:
In there stepped a stately Raven of the saintly days of yore;
Not the least obeisance made he; not a minute stopped or stayed he;
But, with mien of lord or lady, perched above my chamber door—
Perched upon a bust of Pallas just above my chamber door—
Perched, and sat, and nothing more.
Then this ebony bird beguiling my sad fancy into smiling,
By the grave and stern decorum of the countenance it wore…
The details of the poem — including the bird's appearance — needed to all blend together, like a recipe, to bring out the somber concept he was trying to convey: the descent into madness of a bereaved lover, a man lamenting the loss of a beautiful woman named Lenore. With that in mind, quoth the parrot — "nevermore" just doesn't have the same grave effect.
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If you'd like to read more about Edgar Allan Poe, click here to review how his contemporaries tried to defame him in an attempt to thwart his success.
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