Like other investors, we at NextView have a number of frameworks which we use to evaluate decisions on making new investments. All early stage venture firms essentially look at some weighting of team, market, product, and traction. In the past, we’ve created and published a flowchart on how we think through these factors. And additionally, my partners and I use other, more differentiated, lenses like asking if a startup has an “unfair distribution advantage.” But there is one criteria which we employ here at NextView which has become fundamentally ingrained in our partnership’s culture:
Is it JDCC?
JDCC stands for “Jaw-Dropping customer value through a Competition-Crushing business model.”
Jaw-Dropping (JD) customer value means that a product or service is 10x better, cheaper, or more convenient for some segment of customers. Customers who experience this kind of product can’t help but talk to other people about it, whether it’s friends & family in the consumer segment -or- other business partners & peers in the B2B space.
And if JD means you offer a product that people unquestionably desire, then the complement of a Competition-Crushing (CC) business model means that the company structure that has the potential to endure. Attributes here can include cash efficiency, strong margin structure, and increasing returns to scale through accumulating advantage. The startup doesn’t just offer a product that people truly want and can’t get elsewhere, but that the business model itself provides an undisputable reason why the company can and will win.
Asking “Is it JDCC?” has become a mantra here at NextView over the past few years after we were introduced to the concept by one of our portfolio CEOs. My partner Rob wrote a more extensive blog post on the topic about 18 months ago, and even since then the phrase has been become even more embedded into who we are. Go (re)read that post.
For example, when you enter both our New York and Boston offices, we have a huge wall display which celebrates the founding teams of our portfolio companies and how they’re creating things which make the world better everyday. And in each mural you’ll find an “JDCC” oh-so-subtlety included in the landscape.