Being Early

It rained in London on Monday January 30, 2017. I remember the grayness of the winter morning, and needing an extra coffee. My focus was on bringing energy to a long day of meetings with some of the leading institutional investors in the city.

We arrived the night before on a redeye from San Francisco, to raise capital for one of the first ever data driven venture capital funds. Our company, CircleUp, had recently pivoted - from a marketplace to a direct investor and we needed to raise $100M to make the business work. Our approach was unique - we hired amazing data scientists and data engineers to aggregate and structure large data sets in order to provide insight on which small, private companies would be the most likely to grow big.

We eventually closed that fund, raising $125M from some great investors from around the world. The fund isn't done yet, but it has performed well. It is now managed by a large multi-asset manager, with the investment professionals moving over to that firm. That is because we sold CircleUp in 2023. We sold for less than we should have for an idea that was right, but too early.

There is a truism in VC investing - being early is the same as being wrong. That's right, but also incomplete. Startups have a limited window to build. You either need to break out with big success and scale in that window, or you lose team and momentum.

In that winter of 2017, we had energy and incredible talent within our organization. Even after the pivot, we were recruiting great people, building strong relationships with customers and investors, and operating with confidence.

By 2019, everything was harder. Nine years is a long time for a startup to maintain hope. To keep grinding. To keep telling a story about what will happen, not what has happened. I know that now, in a way I did not appreciate then. After Covid hit in 2020, the company was not able to execute the way we needed to, resulting in the sale a few years later, after twelve years of building.

I'm reminded of that day in London this week because Lesser Evil, a small popcorn company, just sold to Hershey's for $750M. When we stood in front of those large institutional investors that day, Lesser Evil was a centerpiece of our story.

We showed investors 3 popcorn bags, and asked which one was the better investment? The obvious point was they had no idea. We then shared the fact that there are 900 popcorn companies in North America.

Then, we made the reveal - we created a system to see through all that noise. Our technology, called Helio, aggregated and scanned through billions of hidden data points - customer reviews, sales data, ingredients, packaging, distribution points - to create a composite view of a category. We could link that data to likelihood of future growth (which we had proved was the best predictor of having a successful exit in CPG). We made the point that Helio gave us an unfair edge in a wildly inefficient market. Instead of walking through the aisle of ~50 brands in the grocery store snacks aisle, we would target a single company. On that day in London, we told every investor that would listen that Lesser Evil was the one to watch.

Eight years later, the great outcome for Lesser Evil and its investors is one of many data points I see now with mixed emotions. We knew we had something special back in 2017, six years before LLMs would bring some of the data techniques and analysis forward for widespread adoption.  

Had we persevered, had we been able to keep the team together, to keep iterating around our key insight and improve, I believe we could have built something special. I believe our ambition was right and we had an incredible team. The way I understand it all today is that we were early, and we didn't make it to the finish line. The challenge of managing through a nine year build to get there was simply too hard. I'm proud of so much in those twelve years, but that is a hard truth to accept.

And, it could be positive thinking. No one has yet followed this path even after all the tools released in the past few years. The opportunity is still out there. I, for one, think it is as compelling as that cold winter day eight years ago, and hope someone will build it.