Welcome to the Bespoke Economy

Frequently Asked Questions

FAQ

• Where is the transcript for this webinar?

   Hello and welcome to Alumni Ventures and one of our big idea sessions. This one’s called Here Comes the Bespoke Economy. I’m Mike Collins, I’m the founder and CEO of AV. One of the things our clients and customers really love to hear from us is: What investment ideas do we have? What do we think is over the horizon? What do we think are trends? So we do this series we call Big Ideas, and that’s what I’m going to talk to you about today.

  
  Before we get started, just quickly on a disclosure: This is not investing advice, this is our opinions. Any solicitation for funds comes through an offering document, and you’d get that at a later point. So again, these are just the opinions of me and Alumni Ventures.

  
  So a little bit about me. I’ve been in this business—really my first job out of college in 1986 was with a venture capital firm—and then my career has been as an entrepreneur and investor, really in love with technology and innovation. So I’ve seen a lot. We started Alumni Ventures about a decade ago and we’ve built quite a business, really focused on a few pillars: really being a partner to retail investors, using the power of that community to help our portfolio companies.

  And today we’re 110 people in all the major investing hubs. We’re coming up right on 11,000 investors, almost 1.4 billion raised. One of the most active venture capital firms, not only in the US but in the world. And we were recently ranked as a top 20 VC firm by CB Insights.

  So today’s topic, Welcome to the Bespoke Economy, is really about the shadow trend of high-touch goods in the era of high tech. So let’s get into it.

  
  So what’s the idea? As AI and robotics make everything better, faster, cheaper—perhaps the most disruptive set of technologies I’ve ever seen, many of them on exponential curves happening very, very quickly—I think we’re going to see the shadow trend of human beings desiring just the opposite. And I think that’s an investment opportunity for venture capitalists and something all of us need to watch and be aware of.

  I also think we’re probably going to see backlash. I think we saw that with ChatGPT coming out and teachers saying, “Whoa.” I think that we’ve seen that with Hollywood and dock workers not wanting automation. One of the things I’ve seen over and over is there’s a big new wave of technology, but there are secondary and tertiary trends that get developed kind of alongside it.

  As the automobile was invented, we saw the invention of suburbia, et cetera. I think the bespoke economy is the way AV is thinking about the shadow trend. So that’s the main idea.

  
  And what do we mean by the bespoke economy?

  
  This is about humans seeking personal—the bespoke. I think we’re going to see countertrends, as I mentioned before, where they’re going to fight back. And I want to make the point that this is not about us not believing in AI and genomics and radical innovation in the energy space. We make investments a day at AV. A great percentage of those are on these big tech trends.

  But we’re also open-minded that there are high-touch investments that can be equally good businesses—and sometimes even better. And I’ll talk a little bit more about that.

  
  So what do I mean specifically when I say bespoke?

  
  I mean high-touch things that affect all of our senses. So one can love to get food delivery that’s been customized and delivered to your home, but on Saturday you want to go to a farmer’s market or an apple orchard, where you pick and smell and taste things. That makes us very, very human and has been wired into our brains over tens or hundreds of thousands of years.

  It really gets into fundamental humanness. I think we’re also going to see businesses that are increasingly personalized. As things become more the same, and everywhere in the world in essence has opportunities to have common knowledge and common trends, we’re going to see personalization.

  I think the resurgence of tattooing was really a bit about personalization—how I want to be a unique human being and not wear the same things everyone else is wearing.

  I think the bespoke economy is about storytelling and understanding the history and the independence and the narrative behind a brand. So stories, I think, are going to be sustainable and valued even more. So yes, I’m interested in buying this product, but I really want to hear the story behind the wine, the watch, et cetera.

  Social—human beings as they get—we’re social animals. You can get any song with a click of your finger, or you ask your AI to pull up any song kind of known to man on demand. But yet people are increasingly saying, “Hey, I want to go to a club. I want to go scream with 80,000 other Taylor Swift fans who all know the lyrics.”

  That’s the bespoke economy. I think we’re going to value more and more the creative, the unique, the artistic, the bespoke, the handcrafted. Yes, I can get the fashion everybody’s wearing—it’s on trend—but I want something personal and crafted and bespoke.

  And I think we will see a shadow trend for the time-tested and the historic and things that have been around—these reactions to what is going to happen very quickly in the way of work and knowledge and AI and creativity.

  As these things get disrupted over a short period of time, I think we’re going to see the bespoke economy really be valued, and that’s going to create great opportunities for individuals and for companies and for society.

  
  This is something we’ve seen before. Just a couple of quick examples, just so you get what I’m talking about.

  The Industrial Revolution—the last I would call mega trend—moving from farm communities to industrial centers. Today I’m in a 120-year-old mill building. The mills are long gone. It’s full of tech companies and service businesses, but it reminds me every day about the power of the Industrial Revolution.

  The whole city I am in today was really built by that Industrial Revolution. But at the same time, that was simultaneous to the rise of the Arts and Crafts movement. So things that were handcrafted—quality—grew as a shadow trend to the Industrial Revolution.

  There were many, many more examples. Again, being contemporary—the rise of vinyl, the resurgence of vinyl records—where people want to hold it and read the liner notes and look at the album cover and with all the messiness and imperfections of a record player. That’s an example of the bespoke economy.

  Again, we’re seeing this in other areas: slow food, locally sourced, farm-to-table. Again, apple orchards—it’s fall up here in New England and they’re packed—where people want to just go out, see their food, taste their food, feel their food, be part of the earth and the farming process.

  So I think we’re going to see all of these things continue—and frankly, even get more powerful as the pace of technology increases.

  
  We’ve seen trends and innovations before—I’ve seen them in my life. I think the difference this time is the rate of change. The rate of change.

  Just take one of the more recent ones: when we moved to mobile and the advent of the iPhone. It really happened over five or ten years, where it went from, “Oh, that’s an expensive, clever, cool phone” to “It’s a billion people walking around with a pretty powerful computer and communication device in their pocket.”

  I think we’re seeing these changes not on annual cycles, but on a quarter cycle. So one—four times as fast, if not more. The issue there is human beings struggle with change, and they don’t like it, frankly. And they ignore it or they dismiss it or they rally against it—especially within a generation.

  So a lot of technologies really only get fixed generationally, where the old people basically just retire, throw up their hands, and say, “Not for me.”

  We’ve seen this actually in college basketball, where there’s a spate of coaches that are just quitting who say, “Kids these days—they all want NIL money. They transfer every year. And I don’t like it. I think it’s bad. And so I’m going to take my ball and go home.”

  And there’s a class of new young coaches who just grew up in this world and say, “Okay, this is the world I live with, and I have to recruit my football or basketball team every year.”

  So the speed of change here is of note. And I think we have to understand that as the main wave of technology goes super fast, the disruptions happen super fast.

  And I think what we can anticipate is the physics of this—with the shadow trends, and this is just one—and the backlash trends are going to also be super powerful.

  So equal and opposite reactions—I think we can anticipate.

  And one of our investing ideas here at AV is really this idea here, which is: We’re looking for businesses that have a great tech core and a great high-touch bespoke wrapper, if you will.

  And you can kind of build that two ways. You can have a great technology company and ask: How do I build something personal and human around the top of it? Because our feeling is, if you don’t do that, it’s going to be a commodity and very competitive—and likely taken over by the bots.

  Or you go the other way, which is: You’re a bespoke business and you have to really build a strong tech engine underneath it.

  So again, the engine and the body of the business—we’re calling a hybrid.

  So I think that this is something that we look for both on the tech side and something we look for on the bespoke side.

  
  So just some high-level, quick ideas on parts of the economy where this is maybe just easier to get your head around, but we think it’s going to happen really in every business, in all segments
  of the economy. 

  
  So on one hand, I think we’re going to see—this is just one facet—which is a kind of meal kit delivery business. These are the Blue Aprons, etc., of the world. Home delivery, Whole Foods—you go into Whole Foods these days and half the store is people filling out carts for delivery. I think we’re going to see that continue.

  More personalization, more “any food anytime,” customized to your taste, customized to your biology.

  At the same time, I think we’re going to see a combination of high-tech robotic farming, automated kitchens with high-touch experiences—like supper clubs, for example, or eating communities and things like this—where people are able to build a social community around food.

  Again, I think there’s going to be innovations on both sides of the ledger. Fast bites, slow bites—pretty clever. I think that was written by the AI as a title, but it’s a pretty good one.

  And obviously we’re investing. Here’s just some examples of things that I think reflect both the high-tech and high-touch nature of where we think the world is heading. So food is one.

  Two, clothing and fashion, right? Fast fashion—I think going to continue to be algorithmically bespoke.

  Craftsmanship—I think we’re going to see 3D printing. I think, again, in the same way our food is going to become whatever you want, customized to your body, customized to your fabric preferences, your colors, your mood—real-time, infinite apparel options.

  At the same time, I think we’re going to see this idea of clothing that has story. Clothing that has customization, personalization, history behind it. Craftsmanship.

  Just one example here is Bezel, which creates a really interesting marketplace for mechanical watches. And yes, an Apple Watch basically gives you whatever you want—and way more than time—but there’s something about the story, the history, the aesthetic of a mechanical watch that has many, many people still valuing them.

  And so I think as things go forward, we’re going to see more people wearing a mechanical watch and wearing some kind of health monitor or communication device. And it may not be on your wrist, but I do think that jewelry is not going away.

  Alright, creative work—whether this is coding—Whether this is writing, creating visuals—I think we are going to see more and more tools that allow every individual to become a more creative person. We’ve already seen that with music. A lot of the breakthrough musicians now have started out kind of on their own, doing their own music, distributing it directly.

  And I think we’re going to see more and more of all of these creative works. And this is something where, again, I think in a bespoke economy, people are going to really value storytelling, history, the earth—all of these high-touch aspects.

  And this is, I think, a great area where we’re going to see kind of a high-tech core business with a high-touch wrapper around it and a very bespoke wrapper around it.

  So creative work, which is a huge industry.

  Social events—humans wanting to get out and be with other human beings. I think we’ve probably passed peak recluse with COVID and everybody just wanting to stay home and watch Netflix and have food ordered in.

  I think we are starting to see people craving hybrid work environments, wanting to get out socially, developing third spaces. I think we’re at the beginning of a new wave of people looking for that balance of customization, high-tech entertainment with social behavior.

  Again, beautiful weekend here in New England—the biggest issue was all the trails were packed—because people want to get out in nature to walk, to hike, to be with other human beings. I think this is going to do nothing but continue.

  And I think whenever a trend happens, there’s an opportunity for us to help build great businesses.

  An example of that is—among our portfolio—a fantasy football technology platform called Sleeper, which again is software and technology and it is fantasy sports.

  But at the heart, it’s about the social connections. And it was a social-first investment we made way back in Green D1.

  The company’s done amazingly well because we identified early that it was really a way for people to connect with their friends. It’s really popular, especially among young men—men of every age—really connecting in fantasy sports.

  My son’s been in a Sleeper league for eight, nine years now with his high school friends. They continue to maintain—even though they’ve gone on into their life—the social connection that’s facilitated by that technology.

  It’s really, in my view, part of the bespoke economy and allows them to communicate, allows them to exchange—giving each other grief, have contests, put money on the line—all of that kind of stuff that they love to do. So social.

  Okay, homes. Again, we’re getting at really kind of core stuff—food, shelter, clothing. I think there’s a big movement toward redefining neighborhoods and communities and homes.

  I think we’ve hit peak McMansion and suburbs and three cars. I think we’re going to see more customization, more personalization.

  We’ve seen the small home movement. I think we’re going to need to build a lot more housing in this country and in the world, and I think there’s real technologies to do it in a way that is high-tech and high-touch. So it’s not all cookie-cutter, but yet it’s cost-effective.

  So I think we’re going to see things in the design of neighborhoods, of homes, the way we outfit those homes—with high technology but also high-touch things.

  I think there’s again going to be a whole generation of new companies created about homes for the next generation. And “how we live” is even probably a broader, more appropriate definition.

  
  I could go on, but just a few more. I think the future of education—I think we’re going to look at a world where everybody’s going to have their personal AI tutor. It’s going to be adaptive, it’s going to understand what you’re interested in, where you are in your learning journey, how you learn best.

  But I think you don’t want to do that by just being in a room alone. That’s not what most parents and most kids want. They want to be with other human beings.

  And there’s a lot that goes into what has historically been our educational system that is not about the information or the ability to analyze information. It is about: how do you get along with other human beings? How do you deal with a bad roommate in college? What’s the credentialing?

  So I think we’re going to look into education getting redefined with increasingly kind of a bifurcation of the learning and the experiential stuff around the learning.

  Travel again, I think, is going to be a very robust area. But I think it’s going to become more personalized and more high-touch.

  And I think we’re going to have a thousand points of light here with how people want to travel and see the world and experience the world.

  And then the same thing in kind of health and fitness. I think we’re going to move into a new generation of personalization and bespoke. I think there’s more data coming—portfolio company, one of ours, Oura (the ring).

  But also things that are fun and communal and where there are people involved, I think, are really, really important.

  So again, I think high-tech, high-touch—and then highs—we’re going to see all of that as an important part of our investing future over the next decade.

  
  Just reading the chat here. Are we in an AI bubble?

  Okay, so I’m recording this kind of in the fall of 2024. I think investing in AI is always, in venture capital, tricky. I think there are things that are going to very quickly become just features of the next generation of model.

  So you have to be very careful here about—this happened with the iPhone—which is, “Oh, I’m going to develop a weather app. That’ll be super valuable.” But at the end of the day, there was nothing really proprietary about the data, and it just became kind of a feature of your phone. So really tricky to create an app.

  At the same time, what you saw with the iPhone is somebody created something that was more complicated and hard and difficult—like Uber—and it was really delivered from an app and it was app-enabled. That wouldn’t have existed without an app and an iPhone infrastructure, but they figured out the regulatory environment, they recruited and figured out how to compensate drivers and build critical mass.

  So it was more than just software.

  So I think the same thing is true here. You’re going to have to figure out and discern the difference between what’s going to be a feature of the big AI models and what’s a sustainable, disruptive business.

  So at the end of the day, it starts with a problem and a solution and doing something hard, and then you work backward from that. If that’s an opportunity, is this the right team? Is this the right price?

  So I just don’t like these declarative things, which is: it’s a fad, it’s a bubble, it’s hyped, it’s under-hyped.

  Our job is to look at every individual situation uniquely, and that’s what we try to do.

  Talk to me more about these hybrid models. What do you look for?

  Yeah, I mean this is the art of picking the right team. This is looking at—stepping back and saying—what is the problem that’s getting solved here? What is the customer hiring this product or service to do? How can I deliver that?

  There’s been a trend in Silicon Valley for the last 10 or 20 years probably to make things that are just high-tech and, “How can I get—it’s the Google model—how can I get this all in software with no people, dealing with the public?” And it’s just engineer-driven businesses.

  Which—if you crack it—it’s super scalable and creates a huge amount of value. I just think it’s pretty scary unless you get super scale and you can basically use capital as your moat, which some of these guys have now.

  I think that’s a very hard place to be thinking about starting a business right now. So again, I like the idea of hybrid businesses—people who really understand a customer set, have access to proprietary data, have a brand, have customer relationships that are enduring, network effects, flywheel effects.

  Those kinds of things are what we look for in kind of hybrid models.

  But I think we’re fairly unique in viewing the world that way. I think a lot of people are kind of stuck in like, “Oh, I was a SaaS investor. That made me money. I’m going to be a SaaS investor going forward.”

  Good luck with that.

  What else do you look for in good investments?

  I don’t think we’re terribly outside the norm here. I think we really value three things. We value the team and the team–market fit, if you will. Like, is this the team—the right team—to solve this problem? Is this pain point big, and are people willing to pay for it?

  Is there the potential for a really good business model here?

  Again, things like moats, things like flywheels, network effects—you look for those things that give you a real competitive advantage that’s enduring.

  I also think, in these days, you’re looking for who are their capital partners. We put a lot of stock in who the lead investor is and: Do they know the space? Do they really work well? Do they have the capital to help support the company as it grows and scales? Are they going to be good partners to this team?

  I think we’re looking through the dimension of geometric technology changes. Is this company going to be threatened by these evolutions, or are they going to ride that wave?

  So again, those are a few of the things we are sensitized to.

  So yeah, I think we’re about out of time for today. Those are really good questions. Thank you again.

  We love sharing how we view the world. Feel free to share this.

  If you want to talk to us—we’re high-touch. We like to talk to people. We have events.

  We too like to be around other people with our entrepreneurs and our customers. So feel free to hop on and talk to one of us.

  Also, check out our website. We have a lot of good information there. We also have a lot of good content. So if you go to our Learn section, you can listen to podcasts, interviews with our portfolio companies, read and listen to other things like this.

  With that, I’ll let you go. I appreciate—Your time today. Thanks.