Investing in Design

My friend and colleague Kent Goldman wrote a great post yesterday about our recent investment in HotelTonight and how designing for “mobile first” is a competitive advantage in a few of our other portfolio companies. I agree with him and it got me thinking about the rise of design as a source of competitive advantage in the start-up ecosystem more broadly.

Design creates innovation (even in the most common elements)

I see the rise of design thinking in all sectors of internet-enabled businesses. The rapidly evolving building blocks of the web, modern programming languages, open source projects, and cloud -resources, are pushing the cost of getting to launch toward zero. (X)aaS platforms are compressing the innovation stack and reducing engineering pre-requisities at a similar pace. The dramatic reduction in the cost of a development cycle has spawned the lean start-up and with it, a new appreciation for consumer feedback and iteration. The question entrepreneurs have to answer is no longer  “can this be built and by who?” but, “should this be built and for who?”  This is design thinking.

At the core, design is an inductive language, moving from individual need to possibility and every start-up should have a native speaker on their leadership team. Designers listen to individuals and identify simple narratives. Problem solving is driven by insights and understanding, product testing through rapid prototyping and iteration, iteration, iteration. The agile principles of the lean start-up are key tenants of a great design process and this confluence makes me believe designers will be the most critical talent shortage for start-ups within the next 12-18 months.

When I started working with designers at AND 1, design was a foreign language for me. My first design briefs included a generic description of the consumer and the commercial constraints of the product (price etc). They were requirements documents or product specs, not design briefs. The products did not do well and I will never forget the feedback from the design team on my product direction:

Not visual. Not emotional. Not personal. Not helpful.

The design team hammered me to look at more than what the kids were wearing on the court, but also what they were buying, what moved them and what they aspired to – cars, motorcycles, architecture, song lyrics, ads, movies and tv shows – and focus on understanding the motivations, not the actions. In this transition, I understood the power of inductive thinking and became obsessed with observing the individual in order to translate day-to-day actions and underlying motivations into the visual and emotional language of design. I started looking for the “damn factor” in everything and working to see mid-summer snowballs before they melted. This practice has stayed with me and I continue to see design as the language of innovation and get excited when an entrepreneur is a native speaker.

In my role at First Round, I am starting to meet entrepreneurs who are building design-focused companies. They have a deeply personal relationship with the consumer that drives their products to be dramatically better than alternative solutions and I love this. As a global design hub for fashion, architecture, furniture, art and media, New York is a fantastic place to build a design-centric company. If you are investing in design in your start-up, I hope we can connect.