My favorite startups of 2019
About a year and a half ago, I compiled a list of 14 startups that I really admired as a I was looking for my next gig. I would have recommended these companies to any friend looking for something new.
Since then, a few new startups have hit my radar, and I’m adding them to this list. These are all companies that have started within the past year, or have transitioned from seed / pre-seed to gaining serious momentum during that time.
There are no specific criteria or framework that I use to pick startups, but in general, they tend to have a few things in common:
- Great business model. I see an intuitively straightforward path to becoming profitable.
- Huge customer need. If I were the customer, I’d want to buy what they’re selling. I’d want to buy it real bad.
- Big market. If they win their market, they’ll change the world.
- Great team.
- I could see myself being excited about working on their problem every day for a long time.
- They’re a little unusual... They’re either in a market without a lot of competition, or they have a very different take on a market with a lot of competition.
Without further ado, I’d love to share thoughts on Hi Cleo, Abnormal Security, and Lambda School.
Full disclosure, I have nothing to disclose. I’m not in any way financially motivated to help these companies.
Hi Cleo is an exciting new human resources benefit. Omg, I can’t believe I just wrote that sentence. I told you I liked unusual companies :)
They focus on the non-medical side of child birth for working parents. Here’s how it works. If you’re an employee at a company that offers Hi Cleo as a benefit, you get a dedicated Hi Cleo Guide to help you and your partner with everything from managing discomfort during pregnancy to how to feed your baby his first bottle. They help you with all of the “extra stuff” from when you first discover you’re pregnant to a year after your baby is born. They’ll even provide services like pre-natal massages and lactation consultations.
It’s hard to describe how valuable this type of help is if you’ve never experienced it yourself. My wife and I recently had our first child, and these things were life savers (we’re Hi Cleo customers).
Eg, breast feeding after our first lactation consultation became much, much easier (not to say it’s ever easy…). As a result, we started sleeping a bit more! Every parent reading this just got warm tingly feelings after the last sentence.
I actually fed our baby his first bottle while on a video chat with our lactation consultant. Turns out there are a lot of gotchas when bottle feeding.
I’m squarely in the middle of the first generation where it’s normal to have two working parents who often work outside of 9–5. We need services like Hi Cleo to skip trading off family and career, and instead, get the best of both worlds.
Hi Cleo recently raised it’s Series B from NEA.
Ok, wait for it… one of the most exciting new startups in Silicon Valley is changing the game for corporate email security. If that doesn’t turn you on, I don’t know what will.
To appreciate what Abnormal’s doing, you need to know a bit about how corporate email security works today. It’s the number one cyber crime according to the FBI and costs over $12B per year. With that in mind, here’s how most Fortune 500 companies combat email fraud today.
They hire a company that manages a really big list of sources known to have engaged in email fraud. This list contains things like domain names and IP addresses of known fraudsters and commonly used heuristics for spoofing who the email is from. Think about that for a second… It’s just a big fucking list of rules. A big dumb list. That is the state of the art right now.
If you’re an email fraudster, all you need to do is come up with a tactic not on this list, and you’re going to be able to rip off companies. You’ll get caught eventually, but then you just need to come up with a new tactic, and you’re good. This is a cat and mouse game that favors the bad guy.
Abnormal works differently. It uses machine learning to detect newly created email fraud tactics. That turns the tables on the cat and mouse game. This is not the type of machine learning that’s going to get any run on Hacker News, but it is the type that I would want to buy if I were a CIO.
Abnormal has not disclosed any funding activity.
Lambda School is a coding bootcamp that takes “everyday people” and teaches them to code in order to get them technical jobs and change their career trajectory. They’re probably the 100th+ company to enter this space more commonly known as coding bootcamps.
But, at least from what I’ve seen, they appear to be the best at doing it successfully due to a series of unpopular but correct decisions. These include things like…
- Making their program nine months longs. Most bootcamps are around three months long.
- Their classes are live, not recorded.
- They only get paid, when their students get high income jobs. They get a percentage of their salaries for a fixed period of time. There is no upfront tuition cost, only the income share agreement.
On paper, it’s in everyone’s interest to make coding bootcamps as short as possible. The students spend less time in school and can get back to earning money faster. The school saves money paying teachers. Shorter is better.
But what if it’s not possible to produce a high quality programmer in three months, even with perfect instruction? What if humans actually need nine months or longer to become a professional level programmer?… Do you do the easy thing or the right thing?
On paper, recorded classes are better. They cost less to make and are more scalable. You can pass those costs savings onto your students.
But what if you need live instruction to get results?
On paper, getting paid up front is better for your business. You get the cash you need to pay for the services you need to run your business. It de-risks your business, is easier to manage financially, and requires you to raise less money from VC.
But does it align your incentives with your customers (the students)? What’s the cost of not being unaligned with your customers relative to everything else?
Will Lambda School win the market? Did they make the right calls? No idea. Only time will tell. But in general, when I see a company making decisions that look like they make it much harder to operate the business, but I can see a rationale for why they’re better for the customer, I get excited. That’s usually the company I’d want to bet on. They’ll make the problem harder on themselves but the product better for their customers.
Also, their CEO’s Twitter is one of my favorites! If you need a little positivity injected in your life, give him a follow.
Lambda School recently raised their Series B from Peter Thiel and Bedrock Capital.
There you have it. Three more to add to the list. I’ll be rooting for these guys from the sidelines!
