I typically post in Spanish (I prefer to be one of the top blogs in Venture Capital in Spanish than being the blog number 8735 in English), but I kind of feel that this post is interesting enough for the english speaking community as well, so here it is,
We just launched Greentizen, and was thinking about it in terms of Painkillers vs Vitamins, and got depressed, since it clearly doesnt attack any real pain, but I then asked myself which pain do twitter, apple, Zynga deal with? I then realized, is not about Painkillers vs Vitamins only, its also about antidepressants:
One of the favorite phrases in the VC industry is: “we only invest in Painkillers, not in Vitamins”, meaning that VCs like to invest in startups with products which attack some painful problem, and not products who improve anything.
This is still a kind of axiom in the industry, but looking at the companies that have been growing the most in the last years facebook, Zynga, Apple, Twitter, which pain do they kill? What problem do they solve?
What is the pain that causes people buy an Iphone or an Ipad?
I´ve never heard anybody tell me: “I really need a phone with touchscreen “ or “I desperately need a tablet” before Steve Jobs showed them. I neither heard anybody saying: “I need a virtual farm to grow virtual groceries”, or “I need to tell everybody about my life in 140 characters”, and for sure not “I´m really eager to throw angry little birds to bad pigs”
But, are these products Vitamins? Do they improve anything? maybe they do, but if I have to choose a parallelism with the pharma industry I would say that they are more like Antidepressants. These are all tools that help humans to deal better with problems like boredom, low self esteem , shyness, etc.
So, from now on the phrase should be: “we do not invest in Painkillers nor Vitamins, we invest only in Antidepressants…… or Viagra (the sex industry is always profitable 🙂 “