Articles - September 17, 2018
Base10: Automation for the Real Economy
We believe that humans come first. We believe that automation is here, is real and can be a force for good. We believe that more than $4 trillion of the economy will be automated over the next decade, and for that to go well, we must support founders whose work encourages people to embrace change rather than fight against it.
Let’s face it: No one wants to lose their job to a robot. However, everyone wants to be great at what they do. Technology can help but we need the right kind of automation, led by the right kind of founder.
We are not seeking founders that only see the world through a technology-first lens. We are looking for those that have in-depth knowledge about the problems their industries are facing. We are seeking founders who are authentic about serving their industry and helping to move it forward.
Today, we are announcing Base10, a $137 million early-stage venture fund, to invest in and support these founders.
The Anti-AI Fund
It is not about AI. AI is just a tool in the path to automation and, like any tool, its effectiveness depends on who uses it and whether it is used wisely.
For the past 10 years, my co-founder TJ Nahigian and I have been starting, working on and investing in companies that, often powered by AI, are seeking to automate large sectors of the economy such as: transportation (Lyft, Lime, Cabify, 99 Taxis), food delivery (Instacart, Rappi), logistics (ShipBob, Shipwell, RoadSync) or human resources (Workday, Identified, Jobr, Wonolo, Reflektive).
Below are a few lessons we have learned over the years that we are integrating into our approach at Base10.
- Solve problems that are actually important for 99% of people: Eating, going to work, moving around the city, finding a place to live or getting rid of trash are really big deals for most of us. The next deep-learning algorithm is a really cool thing (mostly for those of us that are nerds), but unlikely to have an immediate effect in the things that matter every day, such as food delivery, transportation, real estate or waste management.
- Founders that truly understand their industry and are authentic about helping to move it forward: Many AI-focus founders love playing with Machine Learning models in their labs. We believe the best AI-Focused founders will show up to a construction site and ask “How can I help?” They will go grocery shopping for clients, drive a cab or clean a client’s house before writing any code. We are looking for this kind of founder: Willing to listen to the actual problems of the people they are trying to empower and capable of articulating back how automation is going to help someone be great at what they do.
- Sustainability is as important as efficiency: The robots are not coming tomorrow. Multi-Billion dollar industries don’t tend to disappear overnight. Change takes time and good change is sustainable. Great founders think about how their companies will impact not only their users but everyone around them and think like this in 20 year horizons.
- Good Data > Great AI: Your AI can only be as good as the data you are collecting. And the data you are collecting is a direct function of how many people are actually excited about using your product. We love great algorithms and we can help with that but in all honesty, that’s the easy part.
When we hear some of our VC colleagues talking about the all-importance of Machine Learning models and the imminent threat of the killing robots, we are disappointed. We believe Silicon Valley is overstating the importance of AI and understating the importance of sustainable automation. In doing so, we believe they are doing a disservice to the whole economy and missing the big picture in a big, big way. We started Base10 to take a profoundly different approach to Automation.
Founders that know a bit about investing
I am an entrepreneur turned investor. TJ is an investor turned entrepreneur. Funnily enough, TJ and I met four years ago when I chased him down to become a seed investor in his company, Jobr. His seed round was closed, so it took me a bit to convince him to let me invest, but, “I am not leaving your office until you take my money, I will actually sleep here” did the trick.
Over the last decade, we have started four companies and we have supported 70+ entrepreneurs. When a founder takes an investment from Base10 the money itself is secondary to the value that we really bring: You are hiring us to become members of your team and we will act as such because we really, really know what is like.
In order to best serve our entrepreneurs, we’ve kept our portfolio of companies small and focused. So far we have invested in:
- Grin & Yellow, which are automating Transportation
- Shipwell & RoadSync, which are automating Logistics
- Wonolo & Reflektive, which are automating Human Resources
- The Pill Club, which is automating Pharmaceutical Delivery
- Tokensoft, which is automating Asset Holding & Management
- Ethos Lending, which is automating Mortgage Origination
- Maven, which is automating Social Commerce
Open-Source Venture Capital: Research & Partner Program
We know automation. We have seen it succeed and fail. We know what playbook to apply from team structure to go-to-market, automated customer service or data collection systems.
We don’t know everything about every sector, but lucky for us, we work with others that do. That is why we have established the Base10 Partners Program, in which we work with industry focused funds and investors like: Fifthwall in real estate, Owl in education or Bessemer in SaaS to conduct deep research and form an opinion on how automation is going to affect a particular industry. We learn a lot by working with some of the most knowledgeable and enthusiastic experts in the world.
The open-source model is a decentralized software development model that encourages open collaboration and, as a result, everyone benefits from what everyone else knows. Wikipedia or GitHub are successes of the open-source model.
We are a small but very focused fund, taking a collaborative approach to venture capital. We believe in transparency and we are making our research publicly available on our Insights page, which will include our list of interesting companies to watch in every industry we research.
We are also expanding our partner program to include large Corporates or Family Offices that have industry expertise and are interested in understanding how automation is affecting their field. If you are interested in being part of it, contact us!
The Diversity Question
In a Silicon Valley struggling with its lack of diversity, I am proud to be many things: Hispanic, American, European, African, black and white. I have been in Silicon Valley for the last decade, but grew up in Africa and Southern Europe. As we were wrapping up our fundraising for Base10 Fund I, I was honored – but sadly not surprised – to learn that we are the first black-led VC fund to cross $100m for its debut fund. It is a milestone, but also a responsibility to make sure we make the case for a more diverse Silicon Valley, which likely will be one that actually focuses on problems that affect 99% of us.
Now Is The Best Time to be Alive
We are absolute optimists in the long term (and manic perfectionists in the short-term!). There are many, many problems out there but honestly, there is no better time to be alive. We have unlimited faith in humanity and in the fact that life will be better for everyone 10 years from now.
We could not be more excited to build on what we have started and to earn the right to be part of that positive change.
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