Life Update & Hot Startup Markets

*This post was originally written as an email for a group of my friends on 11–21–2017. I was just beginning to search for my next gig after traveling the world for 9 months.

Friends,

What’s up? Happy Thanksgiving!

For those of you who haven’t heard, I returned to SF a couple weeks ago after spending eight months traveling the world. Life did not suck :)

I’m actively “horizon scanning” for startup opportunities, and a number of you have expressed an interest in what I’ve learned so far. Without further ado, I’m happy to oblige.

Today, I’m focusing on what I’ve found to be the hottest markets in Silicon Valley right now. They are: real estate, healthcare software, developer tools for data insights, and crypto currency.

This list is purely based on my first-hand observation of scanning close to 100 startups. It’s not a rigorous or exhaustive examination of VC funding. Of course, there are startups working on many things outside of these themes.

While I mention specific startups in each of these markets, I’m not endorsing any of them because I haven’t researched these startups in enough detail to endorse with confidence. However, I consider them all worthy of attention and worth exploring if you like their mission.

Okay, let’s dive in…

Real Estate

This shouldn’t be a huge revelation. Zillow/Trulia and Redfin have successfully IPO’d in recent years with market caps in the billions, but in my opinion, they were just the tip of the iceberg. While they’re hugely impressive companies, they haven’t mad a big dent in some of the things that are fundamentally broken with real estate, such as fee structure, length of the transaction, convenience/stress of the transaction, and transparency. I think the last cycle of startups made a small dent in solving these problems, but the next cycle or two will make a huge dent.

OpenDoor has opened the floodgates for real estate. I’m a fan of OpenDoor in general, but I think its consumer impact will be far greater than its own financial success, and it could be extremely successful financially. The reason being is that it has paved the way for lots of other startups to get into the space, especially startups with enormous capital requirements. It feels like there’s a lot of VC OpenDoor FOMA right now, which I think is mostly a good thing in this case.

Side bar, I just closed on my first rental property and have done quite a bit of research in this space over the past year. If you’re into real estate investing or would like to learn more about it, hit me up anytime. I love talking about it.

Real estate startups of interest: OpenDoor, Offerpad, Knock, Blend, Roofstock, RealtyShares, Cadre, Homelight, Spruce, Achieve (Wei’s company)

Healthcare Software

When I was last looking for startup opportunities in 2010, there was very, very little innovation happening in healthcare software (I’m only considering software, not drugs). At that time, I wanted to join a healthcare startup because I was leaving a three year stint in healthcare management consulting, but I didn’t see anything I would bet on. Tbh, I saw a lot of self-righteous startups with terrible businesses, and EHR startups going after incentive dollars from the federal government and building shitty software. It’s a totally different story in 2017.

There are real businesses being built around different aspects of healthcare. It’s not just a feel good / social good play, even though many have feel good / social good missions that you’d all get behind. While the best healthcare startups are all working on very different problems, based on my observation, they have one thing in common. They are built in pockets of free markets that exist within healthcare.

Call me a raging libertarian or capitalist if you want, but if you actually look at individual healthcare startups and evaluate their market opportunities, this is the one constant I think you’ll find. Bill Gurley has a great podcast on this idea, which he refers to as the “consumerization of healthcare.”

One last thought on healthcare. The healthcare startups I tend to like are built for everyone, not just health nuts who go to the gym twice a day. They address larger markets, so they have higher potential economic outcomes and social good outcomes.

Healthcare startups of interest: Grand Rounds, Lyra Health, Honor, Flatiron Health, Solv

I’ll end healthcare with a question. I’ve been keeping my eyes peeled for a startup focusing on AI for medical imaging. I’ve seen probably a dozen startups in this space, but none that were especially impressive. If you know of any, could you please send a note my way? I’m super interested in this space.

Dev Tools for Data Insights

This one should feel familiar for TellApartans, especially the platform eng team. These are startups that focus on making data insights faster, more accessible, and more flexible to obtain with less overhead for the customer. All of TellApart’s customers had this problem, even though TellApart didn’t focus on addressing it. This class of startups is essentially “platform-ifying and simplifying” the more mature technologies that turn big data into useful information for humans. These products are typically built for the customer’s dev team. They’re dev toolkits, but the end goal is that once they’re properly integrated by the dev team, other stakeholders (e.g., marketing, biz ops) become the end user.

Another thing I like about this space is that it seems to have moved past what I’ll call the Red Hat / Cloudera problem. They’re not selling professional services on top of an open source technology. They package open source technology (e.g., kafka, spark) into customer-oriented solutions. The former is less scalable because it’s more like a big consulting business. The latter is a product/platform business.

Dev tools for data insights startups of interest: Databricks, Segment, Ascend.io, Incorta

Crypto Currency

I don’t think this one needs any introduction at this point. I’ll just say this. I’m a big fan of crypto currency in general. I’ve held bitcoin for a while, but I’m not a big fan of joining crypto currency startups right now because most have a lot of external risk built into their path to success.

There are are two exceptions, Coinbase and BitPay. Coinbase has a huge lead in owning the end customer demand because they’re the best wallet by far. I’ve looked at and used a lot of bitcoin wallets, and Coinbase is the only one that has put its “big boy pants on.” I.e., it’s the only one your parents could figure out how to use. BitPay has a similar lead on the merchant side to process crypto currency payments. They both operate across different types of crypto currency (e.g., Bitcoin, Ethereum, Bitcoin Cash), so to them, it doesn’t matter very much which horse wins that race. That removes a lot of external risk from their path to success.

Startups of interest: Coinbase, BitPay

What’s Next

Did you like this email? Great, let me know what you liked.

Did you want to see something else covered? Okay, let me know that too.

Did I miss a startup in one of these markets that you love? Ship it.

Over the following weeks, I may send out additional updates based on your feedback.

Most importantly, if you’d like to learn more about what I’ve been up to, or just catch up, let me know. If you’re on this list, I’m definitely excited to catch up with you, and my schedule is flexible at the moment :)

PS, you can check out what Sara and I did on our adventures around the world on our blog and Instagram.

Cheers,

Craig