by Pete Flint, Managing Partner
As Founders ourselves, when we announce a new investment, our goal is to share what we’re learning and observing for the benefit of the founder community at large. Today we’re excited to share that alongside Greylock, Bain Capital Ventures, and NYCA, we’ve invested in Ribbon, a company that is out to transform the process of buying a home. Moreover, we believe Ribbon represents a growing breed of company type that are better positioned to become the category-defining leaders.
First, a few words about Ribbon. This is a company that is solving a real problem – buying a home is getting harder and harder for many people and the experience has not meaningfully improved over decades. Part of that is due to a lack of innovation while another part is because in many communities, Wall Street investors have swooped in, making all-cash purchases, and effectively pricing out the everyday American. Given the complexity of this market, we believe Ribbon’s “software plus” model gives them a very critical advantage.
Let’s unpack what “software-plus” means…
For some time, Silicon Valley has had a romance with the notion that software and algorithms alone were enough to innovate stale industries. The formula went something like this – target a large industry, find intersections of customer pain and market viability, and then design a modern UX that improves enough on the current option to drive conversion.
But this misses two very important points. First, consumer expectations have risen at a faster rate than the software/algorithm model alone can currently accommodate. Simply put, if machine learning will ever be able to completely replace humans, it’s not happening anytime soon. Second, just because ML in theory could replace human labor doesn’t mean it should. Though technology may be scalable, people and communities are often not. When the human is eliminated from the equation, the sociological consequences can lead to weakened communities and deteriorated cultures - IRL.
Increasingly, my Partners and I at NFX are seeing that the category defining companies are those that bring far more than software and algorithms to the table - we call them “software-plus”. These are software companies at their core, but bring other scalable assets, partners or components to the company to build next generation product experiences and competitive moats with strong long term profit margins.
By bringing additional capabilities, this not only enables a wildly better user experience, but also builds long term defensibility. I saw this close up as the Founder and CEO of Trulia which alongside Zillow (which it later merged with) transformed access to real estate information.
The ground level potential of a software-plus company like Ribbon is huge – because they can bring together software + capital + local agents, their solution removes the hassle and uncertainty from the single most important financial decision of someone’s life.
We believe companies that invest not only in homes, but also in people, will better serve our local communities and form the neighborhood connectivity that leads to higher quality, happier lives. This is precisely the vision and philosophy at Ribbon and we stand behind this consumer-first approach.
Across every single industry, consumers not only deserve better - they now demand better. We believe “software is eating the world” was just the beginning of industry modernization. In large part, the next phase of transformation will be led by software-plus startups, which are better positioned to provide end-to-end solutions and truly effect change.
Pete Flint is the founder and former Chairman and CEO of Trulia. In 2015 Pete merged Trulia with Zillow in a transaction which valued Trulia at $3.5BN, after which he served on the Zillow Group board. Previously he was part of the founding team of lastminute.com which was acquired for over $1.1BN. Today, he is a Managing Partner at NFX. Follow Pete on Twitter here.
NFX is an early stage venture firm based in San Francisco. Founded by entrepreneurs who built 10 companies with more than $10 billion in exits across multiple industries and geographies, NFX is transforming how true innovators are funded. Follow us on Twitter here.