Why Did I Invest in the Company Pose?

Posted on Jan 18, 2011 | 86 comments

Why Did I Invest in the Company Pose?

What a sweet feeling it was last week to see the launch of the photo sharing site Pose, whose application targets shoppers of apparel.  If you don’t know it and own an iPhone (soon Android) please check it out.

What I’d like to do is tell you the story of how the investment came to be, what my thesis is / was and share some thoughts on macro trends.

I always try hard to make this blog a place where you can learn lessons rather than an advertisement for portfolio companies.   I hope you’ll excuse me when I do the latter in combination with the former to try and explain how I see macro trends and help you think about the mind of a VC.

The Team – I’m on record as saying that 70% of my investment criteria are team related.  I’m also on record as saying I invest in lines & not dots.  If you haven’t read the post the thesis was that I care way more about watching the trajectory of your performance as a team (or individual) than I do about how good you “pitch” on the first day you come to see me.

Pose is no different.  I first met the founder of Pose, Dustin Rosen, when he was a junior person with an LA-based venture capital firm called The Mail Room Fund.  The MRF was a committed fund of Accel, Venrock, AT&T and William Morris (one of LA’s largest talent agencies).

Dustin was junior but I’m not hierarchic so we spent a bunch of time together.  I learned that he was originally with William Morris as a junior talent rep but wanted to be more in the business of helping digital startups.  The guys who ran the MRF – Richard Wolpert & Paul Bricault – are guys I hugely respect so anybody that they chose as part of their team already had a degree of “social proof” that they were smart, disciplined and achievement oriented.

I later learned that Dustin was an undergrad from Wharton.  My wife is an MBA from Wharton and she always tells me that “the really smart people are the Wharton undergrads” so I had a positive bias going in.

Despite working for one of the top 2 talent agencies in LA, despite having had VC experience, Dustin chose another route.  He wanted to be an entrepreneur.  He quit the MRF and quietly amassed nearly $100,000 in angel investment to build a company.  The people who invested were all the people who knew Dustin the best – obviously a positive “signal.”

Still, I didn’t chase the deal.  I registered it in my background consciousness.  Great guy, I wonder WTF he’s up to?

He waited to pitch me until he had a strong sense of what he wanted to build.  He researched his market, he thought hard about how he thought it might ultimately monetize, he built a prototype and he created a very compelling vision for where he thought his market would head.

The Deal – I instantly loved the idea for the application, the market and Dustin’s vision.  I will describe this in a moment.  I asked him to present to my partners.  They loved his vision, too.  Our firm invested at a very early stage in retail brands including CostCo, Dick’s Sporting Goods, Ulta, Starbucks and many more.  I point this out because they instantly got why Pose resonated with both consumers AND the retailers.

Boom.  Within 48 hours of meeting him we had a term sheet agreeing to fund $1.6 million (his seed / A round money) and a commitment to take the entire round.

I have a philosophy that my goal is to maximize the potential for success in a company rather than maximize my individual ownership in any single deal.  So while I was ready to take the entire investment I was also willing to share.  I contacted some of my favorite VCs and told them I was willing to fund the entire round but also willing to split it.  I gave them my thesis on the team & market but also told them it was obviously up to them to decide whether they were equally passionate.

My first two calls were to True Ventures & Founder Collective.  When I was an entrepreneur I had a term sheet with True Ventures (my second company) and thought highly of them.  I still do.  I wanted a smart NorCal investor who had done more mobile investments than I had and Jon Callaghan had very relevant relationships & experience.

Jon also loved the idea, the market & Dustin.  The other “first call” went to Founder Collective.  I had spent a great deal of time talking with Eric Paley, one of the founders, as he & I share a common philosophy on company building (we’re both ex founders).  I figured it would be a great outcome if we could get both East Coast money and somebody who viewed startups and the world in a similar way that I did.

I also have tremendous respect for Chris Dixon who is part of Founder Collective.  And despite an occasional debate about whether one should take “super angel” or VC money for an early stage deal (usually said both in jest and in intentional competitive positioning) – I would gladly have Chris involved in anything I’m working on.  In his blog posts & our in-person debates I find myself thinking 98% of the time – I agree with him or he’s got a more insightful perspective on this topic than I do.

I have other VCs that I love to work with but through a combination of desired geography, no known competitive investments and also Dustin’s preferences we settled on these two.

While my investment decision was committed and independent of their decision making – I was delighted to learn that they were both interested as well.  If they said “no” I would have owned a larger stake, but with them saying “yes” I knew I had people that I greatly respected around the table who would help in the inevitable times where we’ll hit bumps in the road.

The Market – OK, enough of your blah, blah, blah about team / co-investor love fest – what really jazzed you up about this opportunity?

I’ve long been a believer in technology that “captures” new media types: photos & video.  I am on record as saying that my opinion is that Web 2.0 was driven largely by the massively reduced cost of media capture through mobile phones with cameras, the Flip Video, the rise of digital SLRs and now the capture of videos through mobile devices.

I said as much in my post about The Future of Social Networking

    “And importantly Web 2.0 ushered in the era of “participation” – we all know that.  But less considered is the fact that the success of the Web 2.0 companies versus the Web 1.0 ones were enhanced because they coincided with hardware that allowed us to capture more content instantly – namely images and video – otherwide Web 2.0 might have been a lot less differentiated.  Suddenly we were all creating blogs on Blogger.com, Typepad & WordPress.  We started uploading images of ourselves to our blogs.

    But the masses didn’t want to blog.  They wanted to publish pictures of themselves & their friends, share them, communicate with others, stay connected, have common experiences, find people to date, etc.”

And they still do.  And the devices for capturing images are getting easier & more powerful.  The applications for uploading and sharing the photos are obviously more viral and visually compelling.  I think we’re in the second inning of photo & video capture.  Let’s be honest – the majority of images are still snapped and left stranded on mobile devices.

I recently sat on a panel at a Qualcomm VC day with Rich Wong–  who I consider one of the best thinkers in VC about the mobile sector – and Jeff Clavier,  a friend and VC whose opinion I also greatly respect.  We were asked about what areas of innovation in mobile interested us.  I laid out my vision for image capture & sharing.

Jeff was obsessed with Instagram at that time as nearly every Silicon Valley VC seemed to be (and still is).  Rich shared common views that the explosion in media creation will only continue to accelerate.  I wanted to shout out loud that we had been working on Pose for the past 9 months but, oh, stealthy CEO’s.  Gotta respect their wishes 😉

I know this all sounds kind of obvious.  But let me say that when I invested in Pose there was no such thing as Instagram – at least not as a live product.  There was no live product called Path.  We clearly knew that Dave Morin was working on Path because he chose to invest in Pose also!

Here’s the deal.  Most of us want to share information with our friends and our colleagues.  We also want to discover what our friends, colleagues and people we respect are saying.  That’s why companies like Twitter have been so successful.  The things we share come in the format of text, images & video.

I’ve always  been interested in what people want to share and why.  And I’m a big believer in vertical use cases (in additional to more generalized platforms for sharing content).   Shopping for apparel (and other items like furniture) is an obvious use case the appeals to a large market segment.

Instagram has broad appeal and I can see why people love it.  But I also believe that while they can be a broad sharing platform there won’t be one photo sharing app for every occasion.  That’s dumb.  At Pose we have a very solid use case around people wanting to use Pose to take pictures of what they want or what they bought.  We’re very much a “mobile first, web second” app as outlined by Fred Wilson.

I don’t want to give away all of our future strategy but imagine a world in which the system and your friends know what you have and what you want.  Imagine  a world in which the system knows what items go well with what you bought or what looks good on you.  Imagine a world in which you could look at whether retailers have other colors, sizes or similar outfits.  Imagine if you could tag items and ask to be notified when they go on sale.

What if you could instantly poll your friends on whether you look fat in an outfit.  Or whether a color palette goes with your skin.  Or whether this end chair would go well in your living room.

And imagine more broadly – your clothing, furniture and other accessories in a private, semi-private or public closet.    Imagine not only your own clothes but being able to discover what other people are wearing, what other people think is hot, how other people have accessorized their outfits.

The Future

Who knows.  We’re in the awesome romance stage of having shipped a beautiful product with our typical minimum feature set and learning how people actually want to use it rather than our hypotheses.  I know we will be retailer friendly rather than becoming the lost-common-denominator comparison shopping engine.  We believe there is so much value in helping consumers with discovery, sharing, the feedback loop, recommendations, inventory management and much more.

But right now I’m just super proud to see what Dustin and his team have created and to watch where it goes.

  • http://bothsidesofthetable.com msuster

    No, I would not. True & Founder Collective both spent time with the management team. It couldn't work any other way.

  • http://davidfishman.tumblr.com/ David Fishman

    Or you just need connected consumers that are willing to collaborate! Other “optimised” challenges are incentive based loyalty issues which must both be solved on retail + consumer sides. This can be a delicate and difficult process to manage.

  • JoeYevoli

    Got it. Didn't think you would, or that it's acceptable. However, I've

    seen this happen and it made me uncomfortable. Wanted to make sure I wasn't

    off base.


  • http://bothsidesofthetable.com msuster

    Thanks, Hong. I'll keep that in mind for the next one. I'm in NorCal often so let's do it up North. Or if you find yourself in LA ping me.

  • http://bothsidesofthetable.com msuster

    I think you take the photo and then determine what to do with based on what your intent was when you took the photo. As solutions get more sophisticated this will become more obvious. If I'm trying to build a virtual closet, wish list or find out if I look fat in these jeans – having a platform that is built for these use cases will be more practical than a broad sharing platform in that way that Quora is more useful for structured questions than Twitter. Both serve important markets. And we believe in both broad based and focused solutions. Thanks for the question.

  • http://bothsidesofthetable.com msuster

    I know Tereza very well and would love to see her succeed. I disclosed my investment 6 months ago to her long before she ever shared with me what she was working on. It's clear there will be some overlap but my sense is that our different visions will end up moving us into different markets. And I'd route for both to succeed. I met the Fashism founder and thought she seemed smart. But we didn't talk about the business because I had already invested in Pose (which I disclosed also to her before we started speaking).

  • http://bothsidesofthetable.com msuster

    see above

  • http://bothsidesofthetable.com msuster

    LOL. Actually we have a comprehensive back-end data strategy but I don't want to give away too much at this point.

  • http://bothsidesofthetable.com msuster

    My firm has a 20 year history in investing in companies in the retail sector. We have tons of ideas on monetization and believe this could be a big business. You're wrong about low barriers to entry but to disclose why you'd have to know more about out technology development than I feel comfortable sharing at this point. If you're interested in this space I'd just say, “stay tuned.”

  • http://bothsidesofthetable.com msuster

    Thank you for the feedback. I'm sure the Pose team would love any feedback you have. We're 100% focused on user experience right now.

  • http://bothsidesofthetable.com msuster

    No comment 😉

  • http://bothsidesofthetable.com msuster

    For sure, Mark. No immediate plans to be there but when I next go I'll reach out. I'll also mention it to Dustin. Thank you.

  • http://bothsidesofthetable.com msuster

    cool. I'll check it out. Thank you.

  • http://bothsidesofthetable.com msuster

    Yes, the truth is that for now the easier marketing angle is to focus on the photo. But our plans are much, much broader. Good insight.

  • http://bothsidesofthetable.com msuster

    Thank you. re: line leading up to dot … no. It is something that has to be experienced. It's why I'm a fan of building relationships early.

  • http://bothsidesofthetable.com msuster

    Thank you. We've had those EXACT debates as a team. You're hitting our key issues. We need to build a product that allows multiple use cases. One might be a personal collection of what you want & have and a goal to just see recommendations for accessories. Another might be just sharing with your sisters. Another might be with your social network. Another might be with a crowd. You might like to ask an expert advice. You might like to just see what other people rate highly. We need to accomodate many use cases. It's why I think focused apps like this will be useful even in a world of broad-based apps like Instagram.

  • http://bothsidesofthetable.com msuster

    Thanks. And yes, I love Tereza, too. I think we can both exist and will solve different problems.

  • http://bothsidesofthetable.com msuster

    he he he. I was saving that for a separate post. It's a great story.

  • http://bothsidesofthetable.com msuster

    Thanks, Paul! Go Tritons. Good thing we didn't go to UCSC, right? Bananaslugs! For real.

  • http://bothsidesofthetable.com msuster

    Spot on. Wish more people understood this. I say that about Facebook Places all the time. Which is why there is room in the market for FourSquare.

  • http://bothsidesofthetable.com msuster

    Of course. Time will tell.

  • http://bothsidesofthetable.com msuster

    I think a lot of people will! Let's see.

  • http://bothsidesofthetable.com msuster

    Thanks, Adrian. Given the positive feedback here I'll try to talk more about the behind-the-scenes decision making on other deals.

  • charliecrystle

    Agreed. I'm intrigued by the diversity in what's effectively photo-sharing.

  • Chuck Job Lang

    Hey Mark, I just wanted to say I really enjoyed reading this and I'm excited to be part of the pose team. I can't wait to see what the future holds.

  • http://www.scottshapiro.com scottshapiro

    good question! i'm working for facebook in palo alto but I'd love to be back in LA at some point.

  • http://bothsidesofthetable.com msuster

    Thanks, Chuck. And we are certainly delighted to have you. I get nothing but amazing feedback from Dustin on your contributions. Believe it or not, your name comes up frequently! Congrats on a wonderful V1 of the product. Can't wait to see what comes next.

  • sbmiller5

    Mark, not sure how Pose recognizes their products (or if that is left up to the viewers) but I'd recommend checking out a recent techstars company Omniar (http://www.omniar.com). Pose could use their API allowing 3d visualization to recognize products and make it even easier for users.

    Let me know if you'd like an intro to their CEO Carlin.

  • Rob Marques

    Great point, but the problem with a “Hot or Not', crowdsourced arena is you are soliciting feedback from people who don't necessarily share your tastes and preferences, sort of nullifying any relevance of their feedback on your desire to say, purchase a blouse or end table. One needs the feedback, but still be able to make decisions that reflect their individuality, lest we create a vanilla experience/existence.

  • Russell Killgo

    Mark, this may be well known to everyone on here, but I'm new to this. I have a great idea for a website and my team in place to make it happen. We have had debates over which we should do first, the website or the mobile app. In the end we will have both, but we are totally sure if it's better to have the website to generate interest and then do the app or to get the app out first and then build from the momentum and introduce the website once the name has gotten out there. Thanks.

  • http://www.logicalconsensus.com Lucas Dailey

    I wouldn't say “nullify”, but it certainly adds more effort to understanding the collective response. If a woman is trying out a new dress, and gets the response “yer hot,” she might rightly think “Hm, this dress appeals to meat-heads. Perfect for a night out with the girls pretending we're in our 20's again!”

    In some ways it could be a net positive by getting responses from a broader diversity of perspectives.

  • http://twitter.com/du_ro Dustin Rosen

    Likewise, I would love to meet Greg from Karmaloop. I will reach out on my next trip to Boston. Thanks a lot, Dustin – POSE

  • http://markgslater.wordpress.com/ markslater

    ping me mark (at) getabl.com and i'll arrange.

    best of luck with the venture

  • http://notesfromtheninjabunny.tumblr.com/ Emily Merkle

    Sweet, sweet, hallelujah….

  • Fredrik Weisner

    At Street Media 7 (sweden) we built this service pre iphone as a fun side project back in 2008. It was thus based on mms photo sharing, web and sms-notifications. We never prioritized our resources to scale up this effort before other projects. I believe in pose 100% and its great to see someone has turned this concept into reality!! A vertical approach to sharing around a specific existing user behaviour is the way to go for these kinds of services, in order to get them off the ground. / fredrikweisner

  • http://www.wac6.typepad.com William Carleton

    Mark, I'm another Seattlite. We don't know each other in the analog world, but sometime I'd love to chat with you about monetization in this sector that would flip the normal paradigm of eventually exposing user data and patterns to advertisers and vendors. What you describe about Pose could well present an eventual opportunity to leverage suppliers to expose their inventory, price points, etc., instead of having the “exposure” run the other way (the track the leading social networks, unfortunately, seem to be settling into). Don't expect you to comment on Pose's monetization plans of course, just speaking in general terms. IMHO the commercial web has yet to disintermediate an advertising model predicated on 20th Century inefficiencies that no longer exist and that does not need to be honored anymore.