1Mby1M AI Investor Forum: Mark Phillips, Founder and Managing Partner at 11 Tribes Ventures (Part 7)

Sramana Mitra: I’m sure you are seeing that category of entrepreneurs in the geographies that you’re catering to. That is a true statement. They’re benefiting from the fact that the ultralight startup trend is really taking off right now because of AI.

Mark Phillips: What does AI mean for all this? I would contend that I think the barrier to entry of getting a startup off the ground is quickly plummeting to zero. Even product differentiation is very quickly becoming something that is not a competitive advantage. You can code a new product, or you can recode some product that already exists in no time at all.

Sramana Mitra: This is the downside of the ultralight startup trend. The copycats are going to be absolutely everywhere. Too many copycats in a particular segment makes a company non venture fundable.

Mark Phillips: That’s spot on. The moat, which allows them to win becomes a couple of things. I do think leadership and the viability of the team internally is going to become critically important as these teams tend to shrink. I think we’re going to see smaller startup teams.

I think the community narrative will also be critical. Do those people who are buying your product feel like there’s part of something that’s bigger than themselves? I think ultimately, it comes down to the go-to-market. Do you have a unique niche, whether it’s a channel partnership or otherwise that allows you to get your product into the hands of customers more quickly and more inexpensively?

So, those are the things we’re largely evaluating as we look at the businesses in these geographies that we’re focused on.

Sramana Mitra: My take, if I were you, would be to look at TAMs that are smaller. Because that’s going to stay out of the reach of the traditional VCs, they will go for the billion dollar TAMs. If you can go for a TAM that is a bit smaller and can establish hypergrowth within a smaller trend, that might still score an exit. That’s the way I would Build your portfolio.

Mark Phillips: That’s a really insightful comment. We just invested in a company called NQS. It’s a software platform for trauma departments in hospitals. There’s only one product in the market. It’s called ESO; it’s a very bad product. They’re the only competitor and the TAM’s about $250 million in total. It’s a tiny TAM, but we believe that within two months, this founder with his product product can capture probably to 50-60% of the TAM.

Sramana Mitra: There you go. That’s the strategy.

Mark Phillips: Nobody else is there Sramana. So, to connect all the dots, this person – Mark Feinberg – has spent years in trauma. He understands it intimately. He knows why people need what they need solved. We’re so fired up about it. That is such a great comment and is so counterintuitive.

But it comes back to the whole point. Build what’s right for you. Find the thing that you are gifted at and uniquely equipped to win at. I think that is when success will follow.

Sramana Mitra: Okay, let’s hear some pitches now.

This segment is part 7 in the series : 1Mby1M AI Investor Forum: Mark Phillips, Founder and Managing Partner at 11 Tribes Ventures
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