Venture Studio Interview with David Tisch

In this week’s episode of Venture Studio, we welcome back one of our favorite guests, David Tisch, who runs Box Group, an early stage venture investment fund based in New York.

The last time David was on Venture Studio (see Episode 1 of the podcast), he had just finished the first class of Tech Stars New York and had recently started angel investing through Box Group.

Since then, Box Group has become one of the most prolific New York-based seed investing firms, having backed over 150 companies including Warby Parker, Blue Apron, Class Pass, Harry’s, Handy, and Spring, which David co-founded. Box Group has some notable exits including Sunrise, Vine and Behance.

In this episode, David talks about why investors get so much press coverage these days, what it means to “add value” as an investor, how and why he co-founded Spring, and why the NYC ecosystem continues to move in the right direction.

 

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I Just Met Defy Ventures’ New Batch of Entrepreneurs and They’re As Impressive As Ever

Last night, I renewed my commitment to Defy Ventures by volunteering as an executive coach at an event hosted by WIX in Chelsea.  There was a small presentation, then speed dating-style resume review, business ideation and thorough business-related Q&A.  I left feeling inspired and reinvigorated about tackling some of my own challenges.

I wrote a bit about Defy Ventures in an earlier post here.  More about Defy can be found on their website here

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Startups are Disrupting Every Line of Business at Consumer Banks

“There’s only two ways I know of to make money– bundling, and unbundling.” Former Netscape CEO Jim Barksdale famously said that on his way out of a meeting during Netscape’s IPO roadshow in 1995.  Over the last few decades, large US banks have been making lots and lots of money through consolidation, cross-selling and economies of scale – bundling.  However, the banks are under attack from startups looking to unbundle all of that profitable bundling.

In addition to the other macro changes that have supported the startup culture over the last 5-10 years (reduced costs to start a company, release of the iPhone, more VC funding, etc) the financial crisis of 07/08/09 gave rise to two specific changes that planted the seeds for financial services entrepreneurship and resulting unbundling of the consumer banking industry for the coming decades:

  • Smart, resourceful, motivated people left the traditional financial services world. Between 2008 and 2012, there were dozens of rounds of layoffs in the financial services world, with many firms cutting tens of thousands of workers. Others voluntarily chose to leave Wall Street during this hectic period. When the dust settled, hundreds of thousands of financial services professionals were displaced. Many of these displaced people intimately knew how the legacy systems worked (or didn’t work) and are now building on the next generation of great financial companies. These are very smart people. Some will build companies that compliment existing infrastructure, others will build companies designed to fundamentally disrupt and replace pieces of the existing system.
  • Interest rates have been near 0% for six years (and counting). Six years is an eternity in the startup world. One of the most defensible sources of competitive advantage for banks is the ability to create net interest margin – borrow low, lend high. In this extremely low interest rate environment, however, banks’ rate advantage is compromised. Customers simply don’t expect interest income today, so startups paying out 0% interest aren’t really at a disadvantage. Low rates certainly will not last forever, but for now, the banks are vulnerable.

This slideshare reviews the core lines of business of a consumer bank – banking, lending, and wealth management – and highlight risks and new competitors to those businesses.  Big thanks to Tom Loverro who inspired this report with his awesome post on this subject from late last year.

Shyp on W2 v 1099