I haven’t sent this tiny list an update in awhile, but want to get back to writing more often. Hopefully you don’t mind and are still excited for updates on product and investing. No hard feelings at all if you unsubscribe, as I know this has been awhile & your inbox is valuable :)

I am now a full time investor as some of you know. I started Chapter One a few years ago, but have always thought of investing as a “weekend project” — and finally decided to do this full time. I’ve never been happier and more excited to wake up for work in the morning.

Product Club
This week was huge for the fund. We announced Product Club, an early stage product incubator that I have always dreamed of building. The feedback on the concept was insane and we are already 200+ companies who have applied.

We are building the smallest, most personalized program for early-stage "product first" startups. The program is 10 weeks and we give every team access to world class designers from Robinhood, Google, Tinder, and Squarespace for free.

There is also lots of product star power involved as mentors in the program, some of whom are Chapter One LP's. Each mentor has committed to doing a private personalized product session with each company in our batch:

• Manik Gupta (former CPO at Uber, Product at Google Maps)

• Scott Belsky (CPO at Adobe, CEO & Founder of Behance. Early advisor & investor in Pinterest, Uber, Periscope)

• Jules Walter (Product at Slack)

• Josh Elman (former VP of Product at Robinhood, former VC at Greylock)

• Merci Victoria Grace (Former Head of Growth at Slack)

• Brian Norgard (former CPO at Tinder)

• Sriram Krishan (former Product Lead at Twitter, Snap, Facebook)

• Danny Trinh (Head of Design at Zenly)

Here is the Techcrunch article on Product Club that was published on Monday: https://techcrunch.com/2020/07/13/former-tinder-vp-jeff-morris-jr-opens-up-product-club-an-accelerator-meant-to-stay-small-and-focused/

If you know any friends, teammates, or startups who are building interesting companies right now, we would love your referrals. The application is due tomorrow so please send to everyone today :)

Here is the application: https://chapterone.vc/product-club/

Chalk:
Many people subscribe to this newsletter because they want to see interesting products before anyone else.

The product I most recommend checking out this week is Chalk. They are building private communities (with live audio and messaging) and the product execution is awesome.

I launched my own Product Club group on Chalk this week and the community we have built is insane. We have 1000+ community members in 48 hours.

The rise of live audio is perhaps the most interesting trend in consumer tech. If you want to join my club and check out the product, sign up here: https://www.chalkapp.com/productclub

Promise this will be worth the sign up. Amazing product.

Happy weekend.

JMJ

I made 10 Product Predictions for 2019 on Twitter this week and the thread had a massive response. If you want to dig deeper on any topic, I recommend reading the debates within each thread. In the meantime, my predictions are as follows:

1. Instagram will become a full fledged e-commerce destination by launching the IG marketplace for buying clothes, furniture, consumer electronics, and cars. Payments will eventually be powered by the Facebook stablecoin amongst other options. Beneath the surface, Instagram is already disrupting P2P commerce and eBay.

2. AirPods will continue their dominance as the most important AAPL product since the iPhone. We will see new use cases and social networks emerge as Apple opens up the AirPods API.

3. Multiple scooter companies will run out of money as seasonality & tighter financing conditions are better understood in the spring. Uber will make an aggressive attempt to acquire the winner, which will be either Lime or Bird.

4. After failed product launches, a huge number of crypto companies will shut down & investors will question what happened to the cash. The responsible projects will return as much $ to investors as possible like Basis did before the holidays. Lawsuits between investors and crypto projects will become more common.

5. Technology addiction will become a social topic that finally receives the attention it deserves. Entrepreneurs will build products to solve this condition with online/offline solutions that target parents of addicted teenagers and kids. There are already 300+ technology addiction clinics in China treating over 23 million addicts who are primarily gamers addicted to League of Legend or Counter-Strike. In the United States, a massive company will be built in the space.

6. We will finally reach peak direct-to-consumer as Instagram ads become too expensive and consumers are overwhelmed by the number of new products they see everyday. A D2C consolidator will emerge to become the trusted curator of the space.

7. Physical security will be a growing concern for employees, students, and all citizens, as gun control makes very little progress. Security products for everyday consumers will become more necessary/popular and new products will help us feel safer at work, school, and home. Flock Safety and Citizen are two young startups in the space, with many more waiting to be built.

8. In a bear market, more tech employees will leave the Bay Area for financial & social reasons. Companies will realize that supporting remote teams is a requirement to stay competitive. ‘Remote workforce’ products focused on video & voice will be built to help team productivity.

9. Income Sharing Agreements will become a larger trend with the success of Lambda School. ISA platforms will emerge in fields beyond technology (sports, arts, blue collar jobs) as students realize that the financing model beats student debt & investors look for new investment instruments in a bear market. In one example that launched two weeks ago, Big League Advance will buy equity stakes in minor league baseball players in exchange for a small % of future income.

10. With a huge number of IPO’s next year (Lyft, Uber, Slack, etc.), a large amount of $ will be reinvested into startups by new angels. The capital injection will help us discover a new platform and we will see transformational products built in voice, AR, and yes... even VR.

I watched this interview of Dara Khosrowshahi (Uber, CEO) speaking at Stanford Graduate School of Business, and it’s a very thoughtful conversation that reveals Uber’s approach to product development and strategy.

My favorite part of the interview is when Dara explains how he asks his team to prioritize ideas when pitching him products (the video above starts just before this part of the interview).

“What I like to talk to my team about is that I’m short term impatient. I want the small ideas that will take a week.

And I’m longterm patient. I’ll listen to the big ideas that take 5 years.

I don’t like the in between.

So if there is a small idea. Get it to me. Get it launched in a month. Get it launched in two weeks. I’ll take that. I’ll also take the big long terms bets.

Don’t come to me with anything in between.”

If you look at most product roadmaps and strategic decisions, they are probably full of “in between” ideas that will take months to build, without shipping. These projects are risky because engineers and product teams like to ship to production often (major dopamine release) and working on a single product for months without customer validation is a scary business risk.

If the product fails, the development period will probably feel like wasted time and the entire organization will question the overall product strategy. In retrospect, you could have reduced scope and created a simpler V1 to ship faster and learn quicker.

Conversely, you could have shown more conviction and spent your time on a longer term initiative that can actually transform your business (like Uber Eats in the case of Uber). These are the “longterm patient” projects that few of us attempt in our careers because they come with great professional risk.

Try to avoid “in between” projects when creating a roadmap or prioritizing projects at work. Short term impatient, long term patient.

An idea that can be applied to many things in life, not just product.

I’m reading eBoys: The First Inside Account of Venture Capitalists at Work this weekend. The book is a fascinating account of how Benchmark became one of the top venture capital firms in the world in the late 1990’s, while taking a deep firsthand look at their investment in eBay.

The value of eBay grew from $20 million to more than $21 billion within two years of Benchmark's investment, an increase of 100,000 percent. Business Week called it "probably the best venture capital investment of all time."

One of the most interesting quotes of the book spoke about how a young investor at a rival firm named Steve Jurvetson (Draper Fisher Jurvetson) observed failed entrepreneurs who were never able to bounce back after shutting down their startups. 

Steve’s wife was a therapist and worked with many of these entrepreneurs who never recovered, despite the fact that failure is generally pardoned in Silicon Valley.

The book astutely notes that failures in technology have existed for a long time and talks about author Mark Twain’s failed angel investment, which changed the course of his writing career and financial life:

Unable to resist investing in the high-tech sector of his day in the late nineteenth century, Mark Twain was financially ruined by his irrationally hopeful investments in the infamous Paige Typesetter; heavily in debt, he had to flee to Europe, where it took ten years before he could return with his family, recovered and solvent.

I started to research Twain’s failed investment more, as it struck me as odd that a non-fiction author raised in Hannibal, Missouri who was most famous for writing The Adventures of Huckleberry Finn was also a technology investor in 1880.

I found that the Paige Compositor was an automatic typesetting machine that Twain believed would revolutionize the publishing industry and that he invested $300,000 into at the time (now worth $6,000,000). He thought the product would enable faster and more efficient printing, and he put his family at great financial risk to invest in the startup.

The founder, Mr. James Paige, was known to be a perfectionist and spent 14 years building the product before he was ready to release the machine. By then, competitors emerged with products that were more efficient and less expensive.

After the failed investment, Mark Twain’s writing style even changed. Readers observed that he lost his wit and humor after suffering a catastrophic financial loss.

As a warning to other investors, Twain later recalled that he learned two lessons from his failed angel investment:

1. Not to invest when you can't afford to.
2. Not to invest when you can.

If you work in technology long enough, you will experience failure along the way. Failed product launches. Failed startup investments. Failed career decisions.

I have certainly failed many times throughout my career, but I’m lucky that I’m still productive after many challenging experiences at startups.

Bouncing back from failure is not a given.

I’ve observed former teammates at past companies leave the technology industry altogether after riding the startup roller coaster for too long. Some of us recover and others don’t.

Just ask Mark Twain, who lost his investment. And his sense of humor.

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You are receiving the Chapter One Journal because you signed up for Chapter One updates or emails from me in the past. Looking ahead, I’m going to be sending more frequent thoughts on technology, venture capital, and product development and hope that you find the emails to be valuable and worth your time.

I will always do my best to provide information that is worth reading, as I know you are busy and have many other things you can do with your time. -Jeff Morris Jr.