Nivi: You don’t want to build a brand around a specific market thesis, right?
Naval: You don’t want to build a brand around the transition from X technology to Y technology—because when that transition is complete, so is your brand. You also don’t want too narrow of a brand or a brand in a space that doesn’t materialize. If you have a cleantech brand that’s focused entirely on solar and solar doesn’t arrive on schedule, then your entire area of expertise is shot.
Top VC firms rarely specialize
When you’re starting out, there’s pressure to specialize because of your expertise and network and because you may want to raise capital. But if you look at the top VC firms, they’re rarely specialists; they’re usually generalists. Even when they specialize, they specialize in something like “being weird.” Take Founders Fund for example: They do a lot of deep-tech deals and weird deals, but they don’t specialize further than that. They don’t say, “We’re synbio only.” Or, “We’re AI and machine learning only.” You have to resist that urge, because very often these trends don’t materialize.
Mistimed or unrealized markets cost investors a lot of money
I’m old enough to remember when cleantech was a wave that cost Kleiner Perkins a lot of money and Java was a wave that cost investors a lot of money—because cleantech took longer than expected and Java never turned out to be a massive market.
With cleantech you could argue that getting into Tesla or SpaceX forgave everything. But it also means that you missed everything if you didn’t get in those deals; if you weren’t in the Elon Musk mafia.
You don’t want to be too narrow. At the same time, it’s hard to stand out if you’re too broad. Then you’re back to, “I’m a good person who does coffee. Let me invest.”
It’s best to build a brand around your unique capabilities, platforms and assets, but not around verticals.