Today, we build businesses in a different world. Today, technical differentiation is not required to achieve product-market fit.  I find this to be true in many markets within the enterprise space, and also when considering the consumer Internet.

What we’ve realized over the course of the last 10 years is that for many businesses, technology by itself struggles to establish a deep, lasting moat around a business. Technical differentiation does not explicitly attract and retain customers.  It’s frequently cloneable and almost certainly cheaper to clone than to originate.

If you’re an entrepreneur and you want to build an important business, consider learning from Instagram or Warby Parker.  Instagram is important because it teaches us to focus on acquiring an asset that will be difficult for a customer to emotionally or economically part with. It further teaches us to try to create experiential differentiation around how you collect and utilize that asset to benefit customers.  While Instagram built a great camera app, they were not the first, nor the only. Critically, Instagram was first to get the experience of collecting and sharing photos “right.” It was fun, cool and viral.  Warby Parker is equally as enticing.  They changed the way people buy sunglasses, by introducing home try-ons, flexibility and choice into the experience.  There’s no specific technology differentiation inside Warby Parker that drove their success.  They acquired experience-to-market fit, and that was brilliant.

A differentiated experience can create an opportunity to capture a customer’s imagination. For that, customers will frequently invest their time and mindshare using the service to manage part of their life.  This should lead to an asset they are emotionally or economically attached to.  This creates a business with a real asset, customer acquisition strategy and native retention program.  If it’s important to the long-term health of the business, the company can now invest in technical differentiation with a distinct advantage, a captive customer surrounded by a deep moat filled with all their data.

I wonder if I’ll want to write the same post in 5 years only discussing why ‘accessibility’ or ‘device ubiquity’ is a trending axis on which companies can differentiate thanks to the evolution of the ‘Internet of Things?’

Scarce Talent: the most transformational talent a business can acquire that propels it to greatness.

Traditional Talent: important team players that perform a critical, but common craft necessary to build the business.

We prefer entrepreneurial teams that are comprised of truly scarce talent. It’s our preferred investment because it’s easier to surround a founding team with traditional talent then scarce talent. Scarce talent is not readily available or easy to acquire. However, it’s the most important talent because it’s truly transformational. Here are a few characteristics we consider to be scarce. The entrepreneur:

1. Has a significant industry network that leads either to an unfair distribution advantage or an unfair asset advantage (e.g.: the accumulation of inventory or information assets)
2. Has a deep domain insight into a sophisticated industry with a strong point of view on how to monetize the insight
3. Has truly elite talent at the one craft that is most critical to make the business work. (Important: elite and very good are not the same, elite is the top 1%, there are not that many of them.)

Early stage businesses already borrow talent. Two common examples are legal talent and accounting talent. Generally, it is easier and less costly to borrow this talent until the company is big enough to require it full-time. When a founding team decides to borrow legal or financial talent, the implicit question they ask themselves is, “Does my business require this talent full-time?” The answer is nearly rhetorical, “no.”

However, I believe there’s subtlety in the question and a deeper understanding of the subtlety gives the founding team more options. The real question they’re asking is: “Does my business require this talent full time, now?” The challenge they’re facing when answering this question is to properly define “now.”

In the earliest stages of significant new product development or brand creation, a company frequently encounters a spike in the need for traditional talent resources. This spike is simply the temporary increased need for talent that does not have a long-term home in the company. It is critical that the leadership team recognize these scenarios in advance because, in the long run, the cost of borrowing traditional talent is far less than staffing up too far ahead of the curve.

Here’s an additional collection of talent I believe early stage businesses can borrow for a period of time. Important to note, traditional talent does not mean untalented, it simply means more readily available.

• Developers
• Brand designers
• Project managers
• Product designers

This may seem obvious, but the general makeup of most early stage technology businesses is very similar. They perceive the need to overweight the team with software developers and focus on getting code to market. In certain cases, this is likely to be the right call. However, in other situations, it’s a suboptimal solution. There are other ways to get code to market. Borrow the talent. There’s lots of industry momentum at the moment to value “design” and to have a “great designer” on the team. In certain businesses, it probably makes sense to have designers on board full time (it made sense for Thinktiv), in other situations; it’s simply not the right call. There are other ways to build a great UX or brand for a business. They are often more cost-effective and more impactful.

We encourage the leaders within our companies to ask themselves the question, “does my business require this talent full time, now, and am I acquiring traditional or scarce talent?” We spend time focused on the ‘now’ portion of the question, because that’s where the challenge lies. Borrowing talent typically costs a bit more per unit of work than hiring that talent full time (overseas outsourcing can be an exception) and there may be intellectual experience that’s lost when borrowed talent leaves. We spend time focused on the ‘scarce’ portion of the question because it’s important to correctly identify whether or not your need is related to a spike in the need for traditional talent. If you hire traditional talent to solve a resource spike, you risk a financially bloated, unaligned team that can be difficult to manage and impossible to build a culture around.

What’s worse, you’ll be using precious dollars on traditional talent when you could be spending them on scarce talent that radically transforms your business.

Here’s why: people ascribe biased value to a feature based on whether or not they believe it will benefit them personally.

In the beginning, features don’t count
In the earliest days of an enterprise roadmap, a product vision should be grand enough that “features” become an appendix. The primary content of the roadmap is comprised of the business value and metrics the product will deliver. As a product manager, this is what you want everyone willing to buy and it’s your job to sell it. Secondarily, it includes the major process or information changes that will occur in a customer’s business. This is what you want everyone willing to do. It’s your responsibility to understand how to influence their business processes to generate that business value you articulated. Finally, there is a high-level list of features or capabilities you believe will enable that process change that unlocks that business value. This is what you want everyone willing to build. It’s important to understand the difference between ‘buy,’ ‘do,’ and ‘build.’ Build comes last.

The same basic principles apply early in the lifecycle of a consumer product. Most great consumer businesses have two core components (aside of a monetization model) – a user base and some information asset that’s collected (photos, financial data, ‘friend relationships,’ etc.). I prefer product roadmaps that show me how the information collection strategy evolves over time and how we’re going to measure that. I’m certain there are 30 ways to collect a piece of information, I don’t really care which one works – that’s a feature. If the design and development processes are nimble enough, you’ll have multiple swings at the plate to determine which one is right.

In the early stage of product management, it’s far easier to train an audience to measure progress against a roadmap that commits to strategic metric achievement. It’s much harder to train that audience to accept feature progress as reason to continue to invest. If a roadmap does not clearly, defensible and quantifiably articulate compelling metrics, trash it and don’t bother thinking about features, they’re almost certainly unaligned.

However, as a product matures …
Users unknowingly organize themselves into different archetypes because they access and value different functionality within your platform. This makes things more complicated. If your product is a great enterprise product, it will change business processes. If it’s a great consumer product, it will change lives. Once processes and lives change, people become more selfish. They believe they want the things that will accelerate their pursuit of the future. If your reaction to this phenomenon is to try to cram more features into your roadmap, you’re going to have problems.

You can ask your customers/users what they believe their future to be. Enterprise product managers know how this goes. You receive a different answer from every customer and have to pull off the ultimate balancing act. Customers believe they are spending good money for the right to influence the product. Inevitably, 100% of your customers feel 75% happy. 75% happiness – that’s not a business I want to run.

Consumer product managers face their own dilemma. User feedback on roadmap issues works really well if you’re small or until you begin to monetize a consumer service. Once you reach either of those milestones, user psychology frequently evolves to be one of semi-to-permanent discontent. This is due to a perceived lack of personalization and the constant pressure of ankle biting startups giving your idea away for free and willing to do more for each and every unique customer. Yes, if you’re Facebook or Twitter and you’ve re-plumbed the Internet, you’ve got different issues.

So, my advice to product managers – personal bias is tremendously difficult to influence. Don’t build roadmaps around features, you’ll introduce personal bias. Leave the features in the project or development plans, as an appendix to your discussion. Build your roadmaps around a very small handful of strategic metrics that are massively compelling. Then, sell the value of transforming business or lives by achieving these metrics to your boss, your company, your customers, your prospects, your investors and the industry. You’ll disarm your co-workers and customers of their personal bias and focus them on what’s quantifiably important. In the long-run, with repeated success, features will become nothing other than swings at the metrics plate — a product manager’s slice of heaven.

Thinktiv is focused on shortening the window between idea and market. Our goal is to eradicate the “valley of despair” many early stage businesses face between funding cycles, and help to build the next generation of winners in Pittsburgh.

We are doing 3 things to help:

1. We’ve invested in a space where aligned entrepreneurs can freely work on their ideas. 
We are creating a hive—a buzz of activity by loosely connected groups with great ideas and great insights. From our experiences here and in Austin, we believe strongly that by cohabiting, individuals and businesses can thrive from the micro-meetings at the coffee machine and the hey-look-at-this phenomenon of the desk drive-by. This space will be open next week and we will be announcing an opening party to kick it off. Oh, and we aren’t charging anything for it. No cash and no equity—you just get to sit here—for free. Want to learn more? Tweet me.

2. We are supporting grassroots leadership development through market-relevant content programs.
 We are endorsing people like Kit Mueller and his organic growth approach to the startup community of Pittsburgh. Together with Kit and others, we believe the entrepreneurs need to hear from more folks in more communities about how businesses form, how they succeed and how they fail. We need to develop a more specific regional point of view around early stage innovation for the Mid-Atlantic. We need to recognize how our region invests capital, and build entrepreneurs that understand how to win in that environment.   It doesn’t help to align our entrepreneurs to the conditions of markets we can’t access. We also need to celebrate any exit—success or failure. The simple fact is, regardless of whether it was a smash hit or an abysmal failure, an idea that reached the end is something to learn from. We’re building this content now. Let us know if you want to help.

3. We are starting a cashless program to fast track the transformation of early stage ideas into investable business opportunities. 
One at a time in 30-day sprints, we will be working with early stage businesses to create an investable opportunity, by compressing the “Born Winner” model in our Playbook into a 4 week program. The process will vary per business to ensure that we respond to their specific goals and needs, but generally we will cover four phases: (1) Company Strategy & Vision, (2) Product Strategy, (3) User Experience and (4) Branding and Marketing Strategy. The result will be a set of artifacts that substantiate the business as a legitimate and valuable investment.

We are launching this Born Winner program with an award-winning Pittsburgh startup called Thoughtful Husband. Why did we pick them? Aside from the fact that 6 respected judges (Audrey Russo, Jay Srini, Adam Kelson, Andrew Moore, Jay Katarincic and Mickey McManus) picked them as the winner from the latest crop of Startup Weekend businesses, we like them and we think we can help. They submitted no forms and competed against no one. We just talked, liked one another and thought we’d try to build something together. Sounds risky? Of course it does. That’s venture and that’s where the fun is.

Oh, and we believe that all that we are doing needs to be documented and shared, so we’ll be publishing our activity on our website. Point your browsers to Thinktiv Pgh and come back periodically to monitor our progress.

If you want to know more about any of the above, drop us a line.

There are two primary reasons to publish a new version.

1. We need more specific messaging to address market growth.
One of our marketing challenges is to effectively walk the line between being an investment firm and a services firm. It’s not the simplest message to take to market. Andrew Chen recently blogged about this and said:

“The reason why it’s useful to target big markets is that there’s pre-built demand for your product category. This makes growth and customer acquisition much, much easier. When customers understand your product category, then your job can be to define why it wins versus the competition, rather than educating your customers on why need it in the first place. The negative is that you have a bunch of direct competition and an already established axis for how people will evaluate your product’s desirability.”

I don’t have concerns about our market size or the existence of demand. However, Andrew nailed it. Our job is to convince our customers why our approach wins versus the competition. And, we do have direct competition and an already “established axis” to compete against. Traditional investment firms tend to say we do not count and design agencies and technical shops provide niche offerings that can be simpler to consume, on the surface. This marketing dynamic is challenging enough in our hometown market of Austin and our primary remote markets, “the right coast and left coast.” However, as we’ve expanded into new markets such as Pittsburgh, it’s become even more challenging.

Pittsburgh is very important to us. There’s a wonderful talent base, and three of the four partners in Thinktiv are graduates of Carnegie Mellon. In fact, Paul Burke is one of the co-founders of the company, a transplant who chose Pittsburgh as his home and relocated from Austin to Pittsburgh to start our offices there.

We’ve discovered a vibrant startup technology ecosystem in Pittsburgh. We’ve also observed that its full potential is suppressed by a lack of supportive capital and business acceleration alternatives. That’s not to say there are no quality resources available in the city. There are a few great ones, such as Innovation Works. However, there aren’t enough and many of the ones that exist do not move at appropriate speed or with the required level of innovative thinking. The signal entrepreneurs in Pittsburgh receive from the capital/startup community is a very different signal than we see in other geographies. We know this is true because we talk to Pittsburgh entrepreneurs and capital firms every day. This means there is a very different “axis” in Pittsburgh that our investment approach and services are evaluated against. Prior to our messaging overhaul and new site, our marketing function didn’t perform particularly well for these conditions.

Our new website is more specific around the services (talent and financial) we provide. It highlights why they’re important and how they can create massive differentiation for entrepreneurs and value inside of an investment firm’s portfolio. Our goal with this new messaging is to make it easier to acquire new customers and portfolio companies for Thinktiv in Pittsburgh and to advance our pursuit of developing startup communities and deal flow in other geographies.

2. It’s time to publish our Playbook.
It’s taken us years to develop our Playbook. I’ve written before about our destruction of processes that are traditionally silo’d and what we’re doing to recreate them. The reason we did that is because we’re maniacally focused on the business cases that sit above all innovation opportunities. We’ve got hundreds of customers under our belt. If you look hard enough and apply the appropriate lens of simplicity on a data set that large, you can start to pattern match. That’s what we’ve done with our Playbook. It’s only five plays. Each one has a different set of inputs, methodologies and outputs. They are important to us and we believe they’re important to the market. We believe it’s critical to focus on what a business can become and not what progress it’s made to date. This is what our Playbook helps us do, focus on what a business can become and then apply appropriate assets to get it there. In some cases, this means talent, lots of high-end talent. In other cases it means providing financial capital through simple, transparent processes. In many cases, it means a mix of the two, and this is where we’ve always tried to differentiate.

I think our new messaging approach will help people better understand Thinktiv and that is an important of the next wave of our growth!

It was a killer event and exactly what Pittsburgh needs all the time. We got so rolled up into the excitement, we converted our office to pack in the 200+ impassioned attendees and visitors who came to see the pitches on the last night. Up 30% in attendance from last year, the weekend produced 13 unique business ideas and again revealed the community of entrepreneurs that are quietly percolating beneath the canopy of the Pittsburgh business community.

Where did they all come from? Their day jobs. “They each gave up a hundred bucks and their weekends to work,” to quote Kit Mueller, the events organizer. Why did they do it? It was an opportunity to be a part of something bigger, to test their business ideas with their fellow entrepreneurs, to see a potential alternate future for themselves. Why are we fired up by that? Because it provides a clear signal that there is a community of motivated talent and a brewing pot of excellent ideas here in Pittsburgh, ready to be catalyzed into thriving new businesses.

The companies were diverse and substantive. Local ad platforms. Social commerce businesses. Specialized peer-to-peer networks. Mobile applications. We have our favorites, but that’s unimportant right now. What is important is that we’re building momentum among a talented community of innovators who want—more than anything—to be part of building a ‘next generation’ of businesses in the region. That’s a fire waiting to start. A pot waiting to boil.

We’ve seen this before, most notably in our other hometown of Austin, Texas. Over the past five years, we’ve played an instrumental role in the growth of that now-thriving startup ecosystem, where we’ve fueled the launch of hundreds of products and businesses that now employ thousands of people. We see this future for Pittsburgh. Over the next few weeks (and from here on out), we’ll be rolling out new programs that will help strike the match and add fuel to the fire. We’ll also be launching a new office with space to welcome entrepreneurs who are taking the plunge into building those new businesses. We are geeked about all of it. Stay tuned.

And special thanks to @kitmueller, @KaceyRaeWherley, @DaveCristello & @Jvesci for organizing and operating such a smooth event. Anyone I forgot to mention? Lemme know.

A little over a year ago I realized the way in which we performed our acceleration services was sub-optimal – borderline broken. Our results, or market performance, were satisfactory, sometimes very good. The issue was, companies tended to love the outcome of working with us, but they didn’t love the experience working with us. We work very quickly and that creates a pressure “to get to right answers” at an alarming pace. There’s a degree of subjectivity to determine whether an answer is ‘right,’ and we weren’t very good at digesting the chaos that could be caused by taste differences between key stakeholders. This caused companies to perceive our initiatives were rushed, complicated and emotional.

Prior to 2011, projects would slow down as they progressed and we’d either have to execute herculean efforts to complete on time or we’d have to simplify and minimize the amount of impact we knew we could have in order to fit inside timing and financial constraints. We had spent time optimizing our services approach to try to improve, but it was clear to me we had to throw the whole thing out. It was all destined to regress towards average as we scaled and “if you ain’t first, you’re last.”

I approached Justin Petro in the winter of 2010. I wasn’t more than a few minutes into explaining my thinking when he said, “yes, I’m with you.” We realized we had one of those rare opportunities to ‘pivot’ an aspect of our business while continuing to meet our growth goals.

We agreed on several things:

1. Thinktiv needed a user experience that would delight the market as much as our services benefit the market
2. We needed to continue to push the envelope on providing right answers that create winning outcomes
3. We had the opportunity to engage our entire company in building a critical element of our business. We felt we could enable everyone to feel the same sense of ownership that Justin, Paul Burke and I have felt for the better part of 4 years. (As much as we love our customers, this was the most exciting aspect to me).

To get started, we decided to dig into one critical portion of our services model first – our brand creation practice.

Building brands is challenging in early stage markets. Most executive teams aren’t experienced with the impact a brand can have. They frequently think about it as ‘a logo’ and tend to compare their business’ brand to the largest brands they have a relationship with. Their comparables have an entirely different set of challenges than an early stage brand.

We know an early stage company needs to find brand-market fit just as it needs to find product-market fit. In the case of brand building, “being right” means finding brand-market fit and that includes building a visual and semantic brand system that can scale and provide competitive advantage to the business it represents. Equally as important, company executives need to love it, and attach to it.

We needed scale
We felt a key to achieving a superior Thinktiv user experience and increasing win-rate in market would be to rebuild our brand practice to generate 10x the ideas, 10x as fast. So, we decided to make crowd sourcing a strategic pillar of our thinking. We wanted every person at Thinktiv to put his or her best ideas forward for every brand we needed to build. There are ~12 members of our design team and we wanted each to be able to invest in their own creative process to produce 3-5 explorations. This meant we could create ~50 brand concepts we could evaluate for each company. That’s a lot of alternatives to consider, so we needed to come up with a methodology for reducing and refining the set in short order.

We needed quantifiably better answers
We invented and optimized a scoring scheme and married it with a democratic process for assigning scores to brand explorations. Everyone participates in the scoring process. We decided to make both the brand exploration and quantitative voting processes anonymous in order level the playing field amongst all team members. We also introduced directed discussion and refinement cycles to get from 50 alternatives to 3-5 ‘winners’ we felt would be important and memorable in market and that our companies would love.

We needed much deeper market awareness
In order to execute the strategy, we needed to seed our new process with guidelines for each market we’re trying to win. These guidelines include maps of the competitive landscape, financing ecosystem, and critical competitive product capabilities and brands. The guidelines also include some suggestive messaging strategies we could use in market and details about the end consumers. There’s also subjective and emotional content we capture from our customers that acts as influence (customers have to love what we build). This guideline ended up being about a 15-page PPT template we create early in our commercial discussions. The best part about the creation of this guideline is that it requires the cross-disciplinary skill sets we pride ourselves on blending. The Thinktiv team working on finance strategy must contribute, our product development team must contribute, the program management team must contribute and of course, the design team as well. Whenever we find strategic deliverables that necessitate our cross-functional team, we know we’re at an advantage.

We needed new leadership
The final piece of the recipe turned out to be a conductor for our new train. It’s a role at Thinktiv that can be staffed on a project-by-project basis utilizing the entirety of our cross-disciplinary team. We haven’t tried it yet, but I bet one of our technical team members could run the brand venture acceleration process. The responsibilities of the role include the assembly of the guideline deck and the overall administration of the process for a particular initiative.

We’re about 8 months into our venture acceleration process for brand. The results are fantastic. For a given project, we can create 50 brands in three days and refine to 3-5 ‘winners’ in under a week. Here are a couple examples of brands built using our new processes (note: some of these examples also benefit from product processes that have been similarly reinvented).

1. Burst
2. OnPulse

Dozens of people can contribute to this and it scales beautifully. We don’t save a significant amount of time from an overall workload perspective. However, we’ve drastically increased our time-to-market velocity and we’re coming up with even better answers because we’re utilizing a lot more intellectual horsepower per unit of work. Critically, every person on our team is getting exposure to our full portfolio of companies. I believe this is tremendously beneficial to their long-term careers and it’s beneficial to our customers that reap the benefits of all the exposure.

Brand creation is just one of large handful of processes we utilize to create competitive advantage for our customers. Now that we see the results of using our venture acceleration framework, we realize they’re all broken, to a degree.

We’re about half way through the quest to completely disrupt and rebuild our own demand generation, design, product, capitalization, and development processes. It’s somewhat painful to consciously regress on several critical metrics in order to achieve a better outcome in the long run. Within Thinktiv, I’m the farthest away from the processes on a daily basis, but it allows me to see how much more effective we’ve become.

More importantly, a business built on the backs of premiere design talent finally has a great user experience.

Aside of the more tactical aspects of the role here is a list of three things I look for and three things I look to avoid when I’m evaluating product talent.

Top 3 Must Have’s for a Great Software Product Manager

1. World-class, accurate pattern matching
   The best product minds I’ve met base much of their initial strategic product thinking on pattern matching to existing models. They’ve cognitively captured, sorted and archived a huge collection of product models that span many disciplines. As they’re assimilating these models, they focus on a deep understanding of the customer acquisition strategy and the data assets the model produces. Additionally, they have a unique ability to rapidly recall and combine models and align the results to their current challenge. In the end, they can accurately evaluate and discard strategies that are likely to fail and strategies that are more likely to succeed, in extremely short order.
2. Focus on acquiring the customer, first, second and third
   The greatest product thinkers I know spend nearly all of their initial time thinking through how the product will natively and necessarily drive customer acquisition. This is more than assuming that ‘viral features’ or ‘sharing’ will be slotted into the roadmap. This is a ruthless exercise in user growth and maturation models, capability conception and derivative asset evaluation. If this seems impossible to do before the product is largely defined, then it should be clear why great product minds are both scarce and expensive.
3. Massively Influential
   The best product managers I’ve met are the most compelling speakers I’ve interacted with. Product management is an exercise of influence without authority. But, more importantly, great product managers compel an entire organization of great thinkers to align to an outcome that requires them all to see beyond a set of choices they do not yet understand (I think I stole that from The Matrix, but it’s true).

Here is my list of Top 3 Must Not Have’s for a Great Software Product Manager

1. Must not be passionate about emerging technologies or methodologies
   The best product managers I know do not receive high marks for their software development expertise. While they may have been a developer early in their career, they are unencumbered by technology and no longer take great joy in being a deep technology expert. In fact, the best product minds I know feel as though technology gets in the way of their innovation processes and therefore, they tend not to invest deeply in it. I believe they feel the same way about software development or program management methodologies. There is a class of technical product managers who ‘get off the blocks’ faster with their products, but tend to run out of steam as they are over focused on technology at the expense of more important initiatives. I don’t like to place bets here unless an individual is clearly on the path to abandoning their deep development roots.
2. Must not be over-exposed to the domain
   This is likely to be a controversial entry on my list. Product managers that have deep domain expertise too frequently become de-sensitized to some of the most important characteristics of the market they are trying to win. These characteristics include:
   • The innovation groundswell that exists beneath the surface of every valuable market
   • Changing dynamics of the user community

   Additionally, the best product minds I know love working from the underdog position. It’s a critical part of the challenge, “to do something that’s never been done before.” Conversely, deep domain experts frequently fall into a “been there done that” malaise. I don’t like taking risks on deep domain expertise in this role; I prefer to place a bet on a hungry newcomer.

3. Must not have more than one agenda
   Great product managers cannot have more than one agenda. They do not serve two audiences; they do not answer to two bosses or attempt to appease two distinct points of view. They set out with one and only one agenda – to correctly identify or win the next challenge. Product managers that try to do more than one thing have catastrophic failure rates. It’s easy to screen for this, great product managers tend to have their own recipes for inventing and commercializing a product and they’ll walk you through those recipes.

Now, if only they grew on trees.

• We provide and recruit capital to infuse into our portfolio companies throughout their development
• We believe that a capital program of any type benefits from a deep focus on in-house talent, and that it is increasingly the key to earning quality deals

This post is focused on the in-house talent issue.

Our team has expanded and our deal flow is different than it was 12 months ago. We’ve been pulled beyond the early stages of technology investing into growth capital opportunities and private equity plays. We’ll end up seeing close to 200 deals this year. I regret we haven’t been able to grow our talent base quickly enough to participate in more of these deals than we’ll be able to.

And, that’s something I’ve learned. I believe the ‘talent recipe’ is the key to accelerators and incubators today – and will be a key to venture capital firms of tomorrow. Here is an example. One of the things I increasingly hear is that our methodology of talent acquisition and deployment provides a much different advantage than a ‘mentor network.’ Two friends of mine in Austin are part of 3+ mentor networks associated with other incubators / accelerators – on top of their full time jobs. When I ask them, they tell me they spend minimal time at most in these programs working with the companies.

The point of this isn’t to criticize mentor networks. I believe there are quality acceleration programs built using mentor networks. However, given that we want to build the ability to deeply influence our portfolio companies and provide long-term tranformational impact, a mentor network didn’t seem to be the right talent recipe. The questions we asked ourselves were:

• What’s the long-term value of the mentor network itself?
• Is it really a sustainable advantage for early stage businesses and equally importantly, for the accelerator?

We never found good answers to these questions, so we never built one.

Our talent recipe is to build a focused, multi-disciplinary team of experienced, high-end domain experts in design, customer acquisition, technology and market-alignment. This allows us to invest in identifying target outcomes the same way an investment bank or private equity firm would. Then we focus on how to get there in an ongoing series of 90-120 day initiatives. Executing these cross-disciplinary strategies has meant innovating the notion of what it means to build a business. We’ve reconceived our brand creation, product design, MVP definition and customer acquisition processes to arm our team with the ability to create winning outcomes for our customers while transitioning as much of our institutional knowledge as possible.

Building and balancing our talent recipe is very hard. However, our customers and capital partners place tremendous value in our talent recipe and believe it’s the critical thing we offer that other investment programs and firms don’t. The growth of the companies in our portfolio validates this.

I see evidence with Andreessen Horowitz and Google Ventures that some of the largest, most successful VC firms are embracing the idea of infusing their programs with in-house talent. Some of the more notable accelerators continue to innovate here as well, like 500 Startups and this post earlier this week by Christine Tsai.

I believe accelerators, incubators and venture capital firms need to push the envelope and conceive of and operationalize their own talent recipes. I like the fact that we’re ahead of the curve here.

• There are social rules, like those AngelList applies to identifying and filtering startups for angel-investors.
• There are co-working rules, like those applied by Y Combinator to relocate businesses into rich mentorship networks.
• There are financial rules, like those applied by Capital Factory to simplify and standardize the earliest stages of venture financing.
• There are also thematic rules, like those applied by 500Startups – “startups are born from usable design, customer-focused metrics, and online distribution.”

Each of these programs has had a profound impact – at least in their respective locales, or, in many cases, domestically or globally. And, there are many others like them.

One of the themes I believe we will see develop more rapidly as these programs mature is specialization. There will be specialization around industry, specialization around investment thesis (even at these smaller investment sizes), specialization around business genre (ie: geo-local, fin-tech, etc.), and others.

We are a specialized accelerator – we engineer outcomes for targeted investments. We’ve spent 5 years building a tightly integrated network of financiers and distribution partners. It’s composed of Fortune 50 executives, VC firms with like-minded philosophies and high-net wealth investors that are motivated by our thesis and trust our ability to execute our model. Our model, specifically, is to invest our dollars and team members deeply into our portoflio companies and integrate them immediately into a massive network of the largest distribution partners in the world that sit atop the most valuable ecosystem our customer can impact. We work with our capital partners (the Thinktiventures Network) and distribution partners to engineer a winning outcome for our portfolio company from the earliest stages of its development. It’s become effective enough, that for the right business, which aligns with the financing and distribution networks we’ve built, its outcome is nearly pre-ordained. This explains our specialization, it’s our network of experience building businesses targeted explicitly at our financing and distribution network. Not every business is right for our model, because our financing and distribution network is targeted.

It’s been amazing to watch this mature over the last 3 years, as we’ve focused so heavily on building these networks. What we’re trying to achieve is to enable our portfolio companies to break away from the chains of ‘failing fast.’ We don’t believe that’s a mandatory cultural or operational component of an early stage business. We’d much rather engineer a winning outcome from the start by aligning strategic financial capital, premiere talent, disruptive technology and world-class distribution. When we’ve done this successfully, we’ve generated massive businesses in short time periods.

In my next post, I hope to discuss some specific characteristics of our financing and distribution network to illustrate where I believe our strengths and opportunities for growth are.