🔑 Newsletter #28 - What's better than meditation?
+ David Beisel (Parter at NextView Ventures)
Hey there! Welcome to my email newsletter. My name is Leo Luo, a student entrepreneur at the University of Michigan. I write about founder stories, trends, fundraising, and unique behaviors in the consumer startup space.
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↺ What you might’ve missed in the last three weeks
11/01 - Story of Wellory (personalized nutrition app) + Paul Murphy (Partner at Northzone)
10/25 - Story of DanceFight (mobile competition platform) + Caitlin Strandberg (Principal at Lerer Hippeau)
10/18 - Story of Stadium Live (digital community for Gen-Z sports fans) + Jordan Cooper (GP @ Pace Capital)
Check out all the startups and investors I have featured in the past on
this Notion board
🍽 Today’s menu
Startup story - Endel (personalized sound system)
Investor POV - David Beisel (Partner at Nextview Ventures)
What I’ve been reading - 5 articles about startups and investing
Who’s ballin’ this week - 4 new fundraising/developments in B2C space
Jobs - 12 full-time jobs and internship postings
Feedback - help me to deliver better content to you
🔥 Startup Story
What’s better than meditation?
(Image credit: Endel)
The sound and audio space is booming as of late. Startups like Clubhouse and Artifact are exploring opportunities ranging from audio-based social apps to personalized podcasts. My own personal fascination lies in the power of sound. Different sounds affect me differently, whether helping me to focus while I write, or hyping me up to get through the last set in the gym.
Endel is one of the hottest startups tackling this space. The app creates personalized sound environments to help people to focus, relax, and sleep. Most recently, the team raised a Series A from True Ventures, Techstars Ventures, Target Global, Amazon Alexa Fund, and many more. I had the pleasure of speaking with the CEO and Co-Founder, Oleg Stavitsky, to get the inside scoop on Endel’s founding story.
Like many in the 21st century, Oleg has been plagued by a phenomenon commonly referred to as information overload - the feeling of being plugged in 24/7. To combat the feeling, he began a meditation practice aimed at increasing mindfulness. To date, he has been to five Vipassana retreats to reinforce his practice. Despite a deep belief in his mindfulness practice, Oleg began to realize that meditation alone might not be the answer to his initial problem. Thus, Endel was born – a solution not just for him, but for anyone struggling to reign in the effects of information overload on their mind and body.
“Mindfulness meditation is an elitist thing these days. It’s not expensive, but the time and commitment it requires to maintain a consistent practice are a luxury few can afford. The benefits are great. However, how is a nurse or a student supposed to commit to that two hours a day? They have other things to do such as exams to prepare for. With Endel, we are trying to solve all the problems mindfulness addresses, but in a very passive way,” Oleg explained.
💡 Unique Insight
Besides his personal connection to the problem, Oleg and his team noticed three trends that support the decision to work on this idea.
First is the smart speaker revolution. Airpods and other wearables follow you everywhere. The result is higher consumption levels for audio content across the board.
Second is the increasing popularity of playlists curated for focus, sleep, and study on Spotify and Apple Music. The listenership for those playlists has tripled over the last few years.
Third is a general trend happening all over the globe. People are talking about mental health issues more. Calm and Headspace are becoming increasingly popular. It is clear that people are willing to pay for digital products that help them get through the day.
🚗 Product Journey
Early Days - Oleg and his co-founders started working on Endel right after selling their last startup. They spent 3-4 months building a prototype before being invited to join the Techstars Music Accelerator program in early 2018. They launched a closed Beta with ~ 2000 users.
Identify the usage patterns and build features for them.
“In the early days, we debated the core modes for the product -a) helping people to deal with their emotions or b) helping people achieve a target cognitive state. From the Beta, we saw two main use cases emerged - sleep and focus.
We learned that we should focus on fundamental cognitive states like sleep and focus. We discovered these usage patterns and started building the rest of the product around them.”
Never release a product without A/B testing
“You should never release a feature without A/B testing it. If you release a feature without A/B testing it, a small percentage of users might start using it, but that doesn’t justify having that feature in there. You cannot take the feature away from those users that do use it; thus, you are then forced to keep supporting the feature. We A/B test every tiny interface change, every tiny feature that we have in the product.”
Current Traction - Currently, Endel has ~ 250k monthly active users and gains 150k - 170k new downloads every month. The retention rate for paying users hovers around 30%.
What’s Next - Endel is a technology that is built to help people focus, relax, and sleep. It does so by generating a personalized sound system, but the ultimate vision is to move beyond sound.
“We're building an always-on sound environment that follows you everywhere during the day - across multiple platforms. We see Endel as this tech-aided bodily function that follows you and adapts to whatever is happening in your life. Sometimes, you can barely hear it. We're super close to that right now and are live on iOS, Android, Apple Watch, Alexa and etc.
Moving forward, our vision is to engineer your entire environment. The ultimate vision is: you come back home, and our algorithm goes - ‘oh, you just had that meeting, you've been stuck in traffic, and your heart rate is about your testing average’ - it dims the lights, changes the temperature, creates a soundscape, and arranges the whole environment around you based on the context of your day.”
🤔 Next hurdle to overcome
“We are growing really fast, but 90% of our growth is organic. It is great because we don’t have to pay anything, but it is not so awesome when we are trying to raise our Series B.
Investors want to see that you are in control of your growth and that you know how to go from 200k monthly actives to 2 million monthly actives. The answer cannot just be organic growth. For us, the biggest challenge is how do we put that capital we have raised to use effectively so that we can have more controlled and sustained growth, ” Oleg explained.
👥 Advice for other consumer founders
Invest in testing infrastructure and be rigorous with analytics
“When you're building something, you just have to go with the flow. You have to vote with your vision. But when you release it into the world, please invest in testing infrastructure. If you don't do that, you have no idea what works and what doesn't.
Being very rigorous about your analytics is also important. You cannot release a product into this world without implementing a proper analytic system. You should wake up and go to sleep with those numbers.”
Stay true to the vision
“We never compromised on the long-term artistic aspect of the vision, which sometimes makes it really hard. You have to be flexible about how you get there, but the high-level vision should be your guiding star.”
Check out Endel!
🔥 Investor POV
David Beisel (Partner at NextView Venture)
(Image credit: David Beisel)
David Beisel is a founder partner at NextView Ventures, a pre-seed and seed-stage VC that invests in technology-driven companies that are redesigning the everyday economy. He has invested in companies such as thredUP, Attentive, Hatch, and many more.
Prior to founding NextView, he served as the Vice President at Venrock, an early-stage VC initially established as the venture arm of the Rockefeller family. Before that, he was a co-founder at Sombasa Media, which has since been acquired by About.com.
😍 B2C trends that excite David
Telehealth & the consumerization of health
“The pandemic is pulling the future forward for Telehealth. There are many established horizontal platforms, but there is an opportunity for condition-specific telehealth offerings. We are an investor in a company called Form Health, which does medically assisted weight loss. They assign you a nutritionist and an MD, who can potentially prescribe you medication as well.
On a little less of a serious note, we're also investors in a company called Dear Brightly, which is empowering people to purchase prescription-strength retinoids for skin online. These are companies that allow people to access health and wellness online via the D2C model”
“I think we still have quite a bit further to go in terms of e-commerce adoption. One of our best-performing portfolio companies is Grove, which is a recurring, subscription-based e-commerce platform for sustainable household CPG items – everything from paper towels to cleaning products.
As you might suspect, people are buying more of those products online. We don't think that’s a temporary displacement, but rather, people realizing this is actually a better way than going to Target to buy these products.”
Products and services that address the aging of America
“We have an aging population, and the next generation has the responsibility of taking care of those individuals. There is a myriad of issues that come up with that, everything from buying adult diapers to dealing with finances. We are investing in companies addressing those types of issues.
One of our companies is Carewell, an e-commerce platform for caregivers to find trusted home health products. The foundation of their service relies on a group of personal “caring experts” who are trained & experienced guides that answer questions and advise customers towards the right product choices.”
💡 Advice for early stage consumer founders
Integrate distribution and marketing into the plans from day one
“Founders are usually very product-driven. They identify a problem that needs to be solved. Often, though, distribution and the marketing of that product become an afterthought, or ‘I'll hire a marketing person later’. The key to consumer success is to integrate distribution and marketing into the plans and even sometimes into the product from day one.”
Founder just needs to do just three things right
“A founder’s job is really just three things - hire great people, get customers, and don’t run out of money. I think it's very easy to get distracted at the seed stage with all the other things that are going on, such as a potential business relationship with a big company.
In the beginning, you want to aggregate talent and bring in great people. Then, you, as the founder are responsible for getting those early customers and you can’t hand that off to someone else. I also think fundraising is a core function of the job. The founder needs to ensure the company is capitalized appropriately - not raising too much money too early and never running out of money.”
👥 Most interesting founder David has met recently
“We like investing in authentic founders. Bianca from Carewell is definitely one. She started Carewell because she experienced the challenge of becoming a caregiver firsthand. Bianca bootstrapped the company to a place of doing 200k in revenue before she brought in outside venture money. She’s raising VC because the business is already working - she has a grand vision of where she wants to take the company and venture money is a way to accelerate the process.
She's a first-time founder, but she's done an exceptional job of seeking other experienced founders to bring in both as informal and formal advisors to help her on that journey. I think she has the right balance of confidence, has realized that she can learn from others, and that she's going to be successful.”
📚 Book that has impacted David the most
“Look Homeward, Angel is a coming-of-age novel about the human condition and how we approach the world. The key takeaway for me is cliche but true - it is about the journey rather than the destination.
Part of the reason I am doing venture is that I want to be at the beginning over and over again. I didn’t want to work my way up to the top of a big venture firm that already existed.”
Feel free to reach out to me if you are an early-stage founder that is currently fundraising right now.
I would love to help and pass on the deck to investors in my network!
👨💻 What I’ve been reading
Breaking Into & Thriving in VC (Cowboy ventures)
Ty Haney Speaks Out About Outdoor Voices' Missteps (Female founder & regret raising VC)
The New Wave of “Consumer to Manufacturer”
Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and The Art of Gambling (Tim Ferris Show)
7 Weirdest Ideas That Made People Multi-Millionaires
🏀 Who’s ballin this week
Podcastle raises $1.75 million seed round to create next-gen podcast platform
Edgard & Cooper bags $26M to expand fresh pet food business
Udacity raises $75M in debt, says its tech education business is profitable after enterprise pivot
Sony is reportedly close to buying anime streaming site Crunchyroll for nearly $1 billion
😍 Jobs & Internships
Apply - Lean In - Chief of Staff to the CEO (Palo Alto)
Apply - Metropolis - Launch Project Manager (LA)
Apply - Greycroft - Associate (NYC & LA)
Apply - Attentive - Product Designer (NYC)
Apply - Airtable - UX Researcher (Bay Area)
Apply - Forerunner - VC Analyst (Bay Area) - due today!!
Apply - Uber - Summer MBA Strategy Intern (SF)
Apply - Wistia - PM Intern (Boston)
Apply - TikTok - Content Partnerships Intern (LA)
Apply - Strava - Product Analytics Intern (Bay Area)
Apply - Asana - Data Science Intern (SF)
Apply - Reddit - Summer Product Design Intern (SF)
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