NFX’s James Currier: Where unicorn ideas come from and why founders ‘have to keep pivoting’
Are you a seed stage? founder who is building a unicorn?
NFX founding partner James Currier would like to save you some time: startups that grow into multi-billion dollar companies have three basic forms of defense.
- Network Effects: Your product becomes more valuable as more people use it.
- Onboarding: Integrate your services so deeply that customers “can’t boot” them.
- Data Loops: Collect, process, and act on data in real time.
“Really, it’s just big business that changes the world and has a big impact that could be worth a billion dollars or more,” he said on TechCrunch Early Stage last month. “That is what we are investing in. And what I’m talking about today is just for people who want to build that kind of business.”
After giving a presentation he had previously shared at Harvard Business School, Stanford, and MIT, Currier outlined the mental models unicorn founders adopt and offered candid advice for early-stage entrepreneurs.
“Don’t take chances in the market: find the things people want and just do a better job. That is the most common way to reach a unicorn company.” James Currier, Founding Partner, NFX
“This idea that it is 99% sweat and 1% idea is not correct, because the right idea has power,” he said. “The right idea at the right time will attract the right talent, it will attract capital; It’s fine, it will attract the press, which will then attract more talent, more capital”.
Pop culture and tech journalism exalt founders who are aiming for the moon, “so most people think about having ideas,” Currier said, noting that unicorns like Lyft, Meta and Alphabet just “copied” existing companies. In doing so, they traded market risk for execution risk, which is much easier to manage.
“Don’t take chances in the market: find the things people want and just do a better job. That is the most common way to reach a unicorn company.”
According to Currier, who was an angel investor in Lyft, DoorDash and Patreon, NFX reviews about 8,000 offers each year, but only invests in about 30. “Sixty-five percent of the ideas we see are in what we call a sort of ‘dead zone’: this area will waste your life energies if you chase bad ideas”.