Lee Jacobs is an entrepreneur, investor, and cofounder of Edelweiss. Based out of San Francisco, his personal mission is to help entrepreneurs be the best versions of themselves and believes that fully self expressed entrepreneurs can have a tremendous positive impact on the world. Lee provides capital and coaching to entrepreneurs through his venture capital fund Edelweiss, where he is responsible for business development, recruiting, and sales. The fund is focused on investing in early-stage tech companies with a history of resilience. Lee founded Edelweiss with a group of other angel investors Brian Balfour, Elaine Wherry, and Todd Masonis. Together, they have supported great companies like Blue Bottle, Whistle, Kettle and Fire, Gametime, Pipefy, Dandelion Chocolate, among others. For a view of their portfolio go here.
Work With Edelweiss
To Lee Jacobs, Edelweiss is unique because of its emphasis on empathy. Lee and Edelweiss want to see founders with a deep understanding of the challenges consumers face and a willingness to help solve them. Founders should not just be motivated by money, but by their mission—the desire to do business while doing good in the world. Many of the startups that Lee Jacobs takes an interest in are helmed by driven individuals who have experimented in the startup sphere for several years and have persisted. Even if these founders have faced challenges, Edelweiss looks for passionate people who are scrappy and willing to do anything to reach their goals. Many of the fund’s investments have been in people who they have been watching and working with for several years; entrepreneurs that have proven themselves as sharp and determined. Edelweiss looks forward to more future investments over the next few years, including in itself.
Lee Jacobs also places a heavy emphasis on supporting immigrant founders. A large proportion of successful companies have originated from foreign entrepreneurs with the drive to succeed in the American startup ecology. Getting out of one’s comfort zone is the spirit of entrepreneurship, and these determined individuals have worked hard to make their mark in a new country.
Before coming to Silicon Valley, Lee Jacobs attended the University of Pennsylvania, where he studied sociology. Ultimately, when building businesses, it is important to understand how those businesses fit together, and sociology is the key to knowing how people function in such a space. Consumer trends are fueled by the nuances of human behavior, and Lee keeps an eye out for new innovation opportunities based on the cultural ebb and flow.
In this blog post, Lee Jacobs— investor, Entrepreneur, and Founder of Edelweiss.vc— shares insights on how early tech startup founders can healthily relate to competition. The information will enable early startup founders to focus on building a product customers will love, grow their business fast, and make a positive difference.
As legends go, Scott Cook, founder of Intuit, was approached at an event and asked (and I’m paraphrasing), “Are you worried about other companies that are doing accounting software?” — He responded, “No, I’m not worried about them. When I think about our competition, this is what I think of—” He picks up a pen and paper before continuing, “This is my competition.”
The point was that the existing status quo of how people were doing their accounting— filing things using pen and paper— was his competition, not other accounting startups.
The nature of the best early tech startups is that you focused on creating an emerging market. Because of this, if there is another startup competing with you, then it is likely there are a ton more customers out there that haven’t heard of either of you— you’re both living in obscurity, and you’re both competing to capture as much of the market opportunity you can.
I don’t mean to understate the importance of competition— competition is real, and you need to understand the landscape your startup is operating in. However, focusing too much on the activities of your competitor can derail your efforts— especially in the earliest stages of a company’s life.
The most common reason early-stage startups fail is a lack of execution— providing a great value proposition, getting new customers, improving your product, and growing your customer-base quickly. Startups should focus on delivering great customer experiences, differentiated value propositions, and sustainable growth channels.
In this blog post, I share three things to consider as you are thinking about competition.
1) If Your Competition is Copying You, They are Likely in Trouble.
A founder once approached me stressed out and worried because their competition copied their landing pages verbatim. “I can’t believe they are doing this! I’m really worried. Everytime we do something they do immediately do the same thing!…”
I could relate. When I was growing Colingo, I had the same experience— another company was literally copying our landing page word for word. I remember being really upset. I thought to myself “Oh man; these guys are copying everything we’re doing! What are we going to do? How are we going to be different?”
In retrospect, I find my concern humorous. The reality of building an early stage company is you often don’t really know what you’re doing, you’re trying out a bunch of stuff and running several experiments, you’re learning as you go. The truth is that If we didn’t know what we’re doing and someone else was copying us— they are likely more confused than we were.
If someone is copying you, they need to understand why you do what you do, change what they are doing, and execute and learn faster than you. Your competition probably doesn’t fully understand the why behind your decision-making, why you created the value proposition you did, why you’re pricing your product the way you are, and why you are choosing your distribution channels.
Without understanding the ‘why’ and just copying it, the competition likely doesn’t really have a real feel for what the customers want— they’re just blindly following.
2) Be Transparent with Your Strategy
Many people are afraid about sharing their ideas because they think their idea is precious, but the reality is— ideas are cheap and execution is really expensive. It’s unlikely your idea is truly novel. The reality is— it’s going to change. So, don’t be too guarded about what you’re doing.
I encourage early-stage startups to be pretty open with people about what they’re doing and why they’re doing it— share your strategy. In my view, you end up gaining more by talking to other people about what you’re working on since you get other people’s feedback. If you’re really open to their feedback, you can learn much faster.
When you do this, you can also attract a lot of brilliant people to help you. For example, if I don’t know something, I’ll go and find someone who is smarter in a particular field to help me. I find and collaborate with people who are experts in areas I am not, and ask them for their input. For example, I often find myself talking with investing partner Brian Balfour about the intricacies of growth.
The more you’re open about what you’re doing, the more likely you’re going to get valuable feedback from good people— this is much better than holding onto the idea and not getting feedback about it.
A good metaphor for this is open-source software. Open-source software is publicly released and a broad set of developers can collaborate and improve the code— by making it open to the community, the software improves exponentially.
Startups are learning machines— they should be learning as fast as they can. When you learn fast you can more likely find a move to make things work. I believe it was Paul Graham from Y Combinator who originated this idea that startups are ‘learning machines’ and founders as an extension of their companies should always have a growth-mindset— learning fast, iterating fast, and always leveling up. On my close friends Tracy Lawrence, CEO of Chewse, is an excellent example of this.
However, what if you are still afraid to share your strategy? I recommend playing out the worst-case scenario in your head, then deciding how likely this is. The scenario is as follows:
- Someone hears about what you are doing.
- They decide they want to stop what they are doing and do exactly what are are doing— a big leap (and likely implies they lack conviction in their ideas)!
- They have to understand why you’re doing what you’re doing.
- They actually have to do it— and fast!
Even if all of the above comes true, by the time all of this happens— you will be much further along than they are.
3) Competition Can Matter— Often Only On Sand Hill Road (and South Park)
Fundraising is an essential part of an high growth early-stage startups life— this is one of the areas I help our companies with. Investors evaluating your company often ask about your competition since most investors can only invest in one company going after the same opportunity and want to know which one they should choose.
Additionally, it is likely that an investor has met your competition or knows someone who has invested in your competition. The likelihood is that these investors have seen most (if not all) the companies competing in your space.
The reality is: competition does matter when you’re talking about fundraising because VCs can be myopic, and since their frame of reference is investable companies instead of the actual market—they tend to overstate how much competition matters.
- What kills early-stage companies is ineffective execution— focus on selling your product to new customers, serving your customers in the best way, and recruiting the best people.
- Be open with what you are doing and learn fast— share your strategy with others, listen to their feedback, and get help from people who are smarter than you.
- Competition does matter but don’t overcompensate for them!
I hope you enjoyed this post! More to come…
Around two years ago, I spoke with a portfolio CEO who started his company at the same time I started Colingo. Though eight years had passed, he told me that his business wasn’t yet working. This conversation made me reflect on how seemingly so many of our peers have had incredible financial success. Feeling a bit bad for myself, I expected him to share my sentiment.
Instead, he looked at me and said with a straight face, “I don’t worry about that at all. I know I am going to succeed.”
He meant it. I left the conversation wondering how he could work on this business for eight years with no success and still believe in himself. Today, he is one of our most successful founders.
I recently met Ajay Ramachandran from Happiness Ventures and I was struck by his business model. At Happiness Ventures, Ajay aims to invest in happy entrepreneurs, as he believes that they have historically been the most successful. Five years into early-stage investing at Edelweiss, I reflected on what I have learned and found that Ajay really crystallized an idea that had been a foundation of my investing to date. I share Ajay’s basic philosophy, but rather than happiness, I have decided to call it optimism.
I never really believed dramatic stories of companies on their last legs saved by a miracle from the founder. But this scenario can happen! I can think of two situations where companies were literally weeks away from death and somehow a founder has pulled a rabbit out of a hat and sold the business for great outcomes.
I do believe the best companies are started by people that have a generally optimistic outlook. As a mentor of mine constantly reminds me, quoting Ben Horowitz from his book The Hard Thing About Hard Things, “There is always a move.”
Obviously, it is insanely hard to start a business, and most companies do fail. Of course you aren’t going to be always be cheerful, but I think it takes a belief that there is always a move even when there may not be.
The number of immigrants that make up the leadership of CEOs of Fortune 500 companies has been well-documented. Based on my experience with foreign founders, I am not surprised. At Edelweiss we have invested in a number of immigrant founders and have been consistently impressed by them. I thought I’d share a few of their stories in a series of posts to illustrate why our attention is always piqued by folks coming from abroad.
Alessio Alionco- Pipefy
When I first met Alessio, I came into our meeting a bit skeptical. I hadn’t done any enterprise software investments and workflow wasn’t something I woke up dreaming about. Five or so minutes into our conversation, I was pretty sure Alessio had made a mistake with his English when he told me that 60k companies were using his software. After realizing he was not, I perked up. It wouldn’t be the last time Alessio surprised me.
In the three years that I have known him, Alessio continues to impress me with his sheer determination and grit as he takes on challenge after challenge. His spirit is inspiring and has created a company culture that others want to be a part of. Last year, Alessio decided to go surfing with a very important executive candidate. He ended up severely injuring his leg, leaving it very badly broken. Apparently, Alessio was extremely calm and composed on their way to the hospital and a few hours later (pre-surgery) he was back on Slack issuing commands. It was this resolve and bravery alongside his considerable experience that landed Alessio the hotly contested candidate position for Pipefy.
Often, I think how impressive it is that Alessio just showed up in Silicon Valley from Brazil’s 8th largest city without a strong command of English and is now on his path to building a big company (read more about Pipefy’s Series A). Alessio’s journey to SF makes my trip from my relocation from Philadelphia in 2010 to SF look like nothing.
Our view at Edelweiss is that immigrants make particularly savvy entrepreneurs because they take little for granted. Moving to the United States is a risk and starting a business an even bigger one. Entrepreneurship requires that founders constantly confront their comfort zones and I can think of no better way to do that than by starting a company in a foreign land.