"We want you to have something people can react to..."

Casey:

One of Groove's prerequisites for the startups you target is a minimal* viable product, and you say ‘past concept stage with a working prototype or proof of concept.’ So I'm curious, what do you expect founders to bring to the pitch? Like, what might that proof of concept look like?

Reed:

Um, sometimes it's, you know, it's like a demo or, you know, screens. We can access it and kind of see how it works if we desire to do that. But in most cases, the pitch, they're mostly talking about it.?

What have they built so far? How does it work? And then in some cases, where they're not there, they're talking about what they're planning to build and the functionality that they desire to build into it. That's how to answer the question on the product side.?

But I think the same thinking around an MVP could be applied to the business model, where it's like, you haven't built the scalable version of your business model yet, but you have shown that your pricing is approximately correct and that people are willing to pay you for this solution to their problem.?

And so when we say MVP, I think that's just a good signal of, like, we don't want to see your idea on a napkin.?

Yeah, we want you to have something that people can react to, some prototype that gives us indications that your assumptions are true to some extent and that we can trust that you're going to be successful in filling in the rest of this.

Casey

That makes sense. And when you mentioned the pricing and the willingness to buy, so would you say that they're coming with evidence of product market fit?

Reed

Sometimes it depends on the stage of the investment, a lot of times not.

But then in which case, in most investments that we're looking at, we're looking at the team and trying to understand do they have any sort of realistic chance of getting to product market fit? And that's going to come from experience in the category, experience as founders, experience as operators of similar business models. You don't already have to be there, but if you've never started a company before and you don't have any sort of traction we can look at in answering that question around assumptions, you better have the previous experience in your background to suggest that you can. Otherwise we don't have any indications of your success.

We just had this conversation two days ago. And these are founders that I know and I trust. We desire to support them at some point in this journey together, but they were too early and working in a category that's different than their previous startups. And it's like, I know you're capable of starting companies, but you don't really have any sort of business here.

And they also didn't have any product or any sales or anything else that kind of could overcome the lack of experience in the space.

Casey

And what would your advice be to go get experience in that space if they really wanted to pursue that idea?

Reed

Go answer the key assumptions of your model or some of them, as many of them as you think you need to. And it usually comes down to the key assumptions. Are you the right people for this? Is there a market here? Can you access the market? Are people willing to change their behaviors to do your thing versus what they're doing currently at the core of it? That's kind of what every company is up against.

*Failed to check if this word choice was intentional over 'minimum'.