Correcting Conviction

We invested in a pre-seed company with deep conviction around the market, a wedge with which we wanted to build a new product for that market, had clarity that the current alternatives were missing the mark and that a massive new category awaited us if we got the core right. 

And we were right - an early product quickly got users, word of mouth, WoW growth, supported by paid acquisition the top-line numbers were growing too - we unleashed the product roadmap for a quarter beyond which we said we’d laser focus on growth only. 

All seemed to be right - as right as it can get in the early days based on our experience across 100+ pre-seed bets we’ve taken. 

But we hit a roadblock when we started to focus on growth with the product fully built out for our V1. We had decent retention numbers but they were stalling. It felt like paid processes were holding the bottom. On speaking with users - several of whom we’d spoken with earlier too - we started seeing different nuanced signals which were invalidating our core thinking…and supporting the retention problem. 

The founders were phenomenal because they not just initiated this investigation but were brutally honest about the truth we may be uncovering - this is a rare trait. 

After weeks of thinking more, discussing findings and going back to our founding stage hypothesis and assumptions, we concluded that we were wrong. 

It was terrible for everyone and for many reasons… because we were SO clear of the market opp. 

But we concluded that it was not worth iterating. There were structural issues that we’d not want to underwrite. It would be incredibly hard to build a large company even if we were lucky in finding a wedge or something. 

We just lost faith in our core hypothesis - and as a team we accepted it. 

My key takeaway from this was the “process of correcting conviction” - if you are a high conviction founder or a high conviction investor, you know how hard it is to let go of your conviction. It was an incredible learning experience on “correcting conviction” and why it is key for us as an early-stage investor and, while we stumbled through this one, we learned how to do it better.

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