Sramana Mitra: It’s great to hear your enthusiasm. I’m married to a European. I love Europe. We spent a lot of time in Europe and London. I do see the energy change in London as well, which is a negative energy change. It’s kind of sad.
Overall, I do think that the momentum in Europe has improved and that’s a very good thing. What do you feel you as a counterpoint of the unicorn mania that we’ve seen in the Valley or in the US over the 2014 to 2016 timeframe?
I was just talking to an Indian investor. In India, that trend has really died down in 2017. But it went crazy for the 2014 to 2016 period. India basically copied the exact unicorn mania phenomenon as Silicon Valley. What is your read of how Europe has processed or parsed the unicorn mania?
Alastair Mitchell: It didn’t hit nearly as big in Europe. It’s stayed a little bit more true to its roots. I’ve seen some very big companies coming through. I think it didn’t hit quite so much the same way. I think in early stage we’ve definitely seen a significant growth in valuations and investments, but I think it hasn’t quite hit the hype in the mania.
I think the reason for that has been not because of the quality of the companies, but I think simply because there hasn’t been the size of the later stage funds yet with the power to grow these companies. I think it ‘s a good thing because I think if you look at the companies coming out that aren’t genuine unicorns. They’re doing hundreds of million of dollars in revenue and are profitable. They’re on an IPO track. They’re in the public market to be valued as a unicorn and not just some crazy private valuation.
Sramana Mitra: Which is great and is what you want.
Alastair Mitchell: Exactly. That’s exactly what you want. It’s not like there aren’t any. Since there aren’t those huge mid-to-late stage funds with enormous funds to deploy, the valuation is sensitive. There are some examples. There’s one outlier. I think they have their own challenges to grow into that valuation and prove that they can back up on the vision.
The interesting thing also is that Europe is a bit lucky in that the trend often takes a couple of years from US to hit Europe. By the time it hit Europe, Europe was able to see the negatives of that. The fact that those valuations were happening but with crazy terms just didn’t benefit any one.
Sramana Mitra: It’s good that it didn’t derail the progress of the ecosystem. I think that the truth is in India, it derailed the progress of the ecosystem. So what are your parting comments to entrepreneurs in our audience who might be interested in working with you?
Alastair Mitchell: Find the big problem. Find that million-dollar problem. It’s not always evident early on, but keep on until you figure that out and then iterate and iterate through it as quickly as you can until you have got a perfect product-market fit. Don’t just think that sales is product-market fit.
The biggest thing that we see is that you can grow in a local company with a local business here and get to think that you have product-market fit, but you don’t. It’s because you sold a very localized problem or you may be a well-known founder and can get early press and local guys.
But if you land in a very big market like India, the US or China, you would struggle because you are relying on the quality of your local network and execution versus your ability to solve a big problem in a beautifully elegant way and to capture customers in a very cost-efficient way. Focus on the big problem and then focus on that really effortless product-market fit to allow you to grow very fast.
If you feel you’re pushing the boulder uphill and if you feel you’re growing linearly even in the very early stage, then you haven’t got that. It’s magical when it happens. Honestly, we never really had product-market fit in Huddle. Look for effortless product-market fit. If you’re frustrated with the quality of advice you’re getting and you want a VC to match your ambition with an operating team and figure out product-market based on sales and marketing and execution, and build the best product, and hire the best tech team, then come talk to us.
If we can’t help you because you’re a bit too early, we can help you still. We can find you some investors that may be very early seed investors and we’ll come invest in you as soon as you hit that late stage Series A. If you talk to any of our founders who worked with us, they’d say the same thing.
Sramana Mitra: Awesome. Thank you, Alastair, for sharing your perspective. I’m sure it’s very helpful for our entrepreneurs to learn about what you like to invest in and how the ecosystem is shaping up.