If venture capitalists could predict the future, why wouldn’t they just start their own businesses? That’s the question Hussein Kanji, founding partner of Hoxton Ventures, rhetorically asked at Disrupt 2020.
“When someone says they have predictive power in this industry and know where the future will be, I am only questioning the wisdom,” he said during a session examining how VCs seek out new markets before they even do exist. “Because if you could figure it out, you might get the idea that you would be able to put all the pieces together. Why wouldn’t you start the business?”
Instead, the key to betting on the future is learning to ask the stupid questions. “I think it̵
One of those lightbulb moments was that of Hoxton Ventures Investing in Deliveroo, the take-away grocery delivery service that competes with UberEats and has helped transform almost every restaurant into a grocery delivery service. However, Kanji reminded us that the European unicorn wasn’t the first company to attempt take-away delivery, but new technology in the form of cheap smartphones coupled with GPS and routing algorithms meant the timing was now right.
“People tried in the 90s,” he said, “they tried. Everyone forgets that. There’s a company called Cosmo in New York City that goes out of business and will be happy to get you a pint of ice cream on request. You know it never worked because they used pagers. Do you remember pagers? That’s how they ran the fleet. They couldn’t move the fleet. You couldn’t get the driver to the apartment and the driver to the store in any efficient way … The breakthrough in delivery and for the industry as a whole was that you had smartphones, you could give drivers smartphones that you could track what the driver did is good, because then you could route the logistics with a smartphone … moment the lightbulb. “
Kanji said that Hoxton’s two other unicorns, Babylon and Darktrace, included similar lightbulb moments, even though they are very different stores and markets. But you only get that moment of the lightbulb when someone walks in the door and explains it to you. “Then your natural question is… why now… what has actually changed? What is it that makes it so interesting? Why didn’t someone make that up a year ago? Usually there is almost always a reason for this. And then the harder part of the job is … do you really choose number one? “
Entering or creating new markets is often controversial – which both Babylon and Deliveroo have attracted for different reasons. Because real disruptions inevitably have societal consequences, they often raise ethical questions that the co-founder of Hoxton believes cannot always be foreseen in advance. However, when the picture becomes clearer, VCs and of course founders and CEOs should definitely take care of it.
“One of the constant criticisms in the tech industry is, I think the maturity of our industry … we act more like teenagers. And it’s great to be libertarian, it’s great to be free markets and say that the markets will do it. But you will have points of contact with many other places in society. You need to find out, and I think you need to move forward and be more responsible about … the impact. “