Venture Capital Founder Explains How Pandemic Altered Consumer Habits

Left Lane Capital Founder and Managing Partner Harley Miller sits down with Yahoo Finance Live to talk about the company’s success in investing in consumer technology, the outlook for venture capital in the late pandemic, how the pandemic has changed consumer and investor habits, and web3’s ties to cryptocurrency. .

video transcript

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RACHELLE AKUFFO: Welcome back to “Yahoo Finance Live”, everyone. Our next guest received a great birthday present. [INAUDIBLE] closed a $1.4 billion fund to invest in consumer technology on his 33rd birthday. Well, let’s bring in Harley Miller, the founder and managing partner of Left Lane Capital. Happy belated birthday and thanks for making us all feel like failures.

So let’s get to this bottom. We have seen that Left Lane has now raised around $2 billion since its founding in 2019 and covers a wide range of sectors: FinTech, gaming, and everything in between. How was the road to this point?

HARLEY-MILLER: Well Rachelle, thank you so much for having me and I appreciate the belated birthday wishes. No, he doesn’t deserve any congratulations around raising capital or deploying capital. I think we have a different mission than that, but… but I appreciate the sentiment. The trip was… it was long. I spent about 10 years at a different company, honing my craft, learning how to be an investment professional, focusing all my energy and resources on this burgeoning internet and consumer technology opportunity.

This was right on the heels of the advent of smartphones, as this ubiquitous new downstream mobile commerce opportunity was transforming consumer spending, whether at home or in the workplace, into the real economy. And that’s what I’ve dedicated my entire career to. And finally, I found the confidence to leave two and a half years ago, three years ago to start our own firm.

Left Lane was created specifically for this specific opportunity, in a world of more general investors or investors who have rotated too much into enterprise software, which has been a great asset class and business model. But when we look at the $30 trillion of consumer spending in the Western world, it gets far less attention from investors compared to other segments. And this is where we dedicate our focus and efforts. And we’ve made some phenomenal investments in many of the categories and sectors you described. And happy to get into it.

RACHELLE AKUFFO: Yeah, so what was your experience like when you were at Insight Partners, how did that shape the direction of Left Lane Capital, and some of the changes you’ve seen in the venture capital space or changes you still want to see?

HARLEY-MILLER: We appreciate everything we learned. I mean, they really allowed us to have the freedom to build our track record, go after the world, face entrepreneurship and make a lot of investments. So, I think we learned a lot from spending time there. But when we left, we wanted to do something different. We wanted to carve out our own niche, our own lane, proverbially speaking, right? And so the work ethic, the determination, and the freedom, but ultimately having that regard with deference for entrepreneurs, I think was an important part of our journey.

Truly building investment professionals from the ground up. We hire a lot of young people and really try to raise them to be career venture capitalists. And we take that training incredibly seriously and we’re incredibly proud of the 25 Left Laners that we have on the team. It is really the soul of the company. And I think that’s what resonated with the institutional allocators that finally blessed us and anointed us in the industry.

As you acknowledged, we’re relatively young on Earth, but we’ve been doing this for the entirety of our professional careers. And so I think it was a unique positioning that allowed us to enter the scene. And I think we’re part of that next generation of asset managers in the venture capital and growth capital space. And we… we don’t wallow in it, we don’t take it for granted on any given day, and we work day after day to hone and perfect that craft.

RACHELLE AKUFFO: And you talked about some of these underrepresented sectors, where you weren’t seeing a lot of this venture capital flow, how did you identify that? And why do you think you haven’t seen more investment in this space historically?

HARLEY-MILLER: I think a lot of venture capital, historically, were people who lived on the Coast or grew up on the Coast, and that’s what they identified with. Therefore, it may have a positive or negative bias, depending on one’s own experiences. And myself, I grew up in the middle class suburbs of Pittsburgh. Many of my partners did too.

I think we have that regard for the common consumer deep in the bell curve or histogram of the populist, right? And I think that is the curiosity with which we approach the world. We look at the world through opportunity sets and think of huge industries that are still largely offline, very analog, and ripe for digital disruption or digital-first.

As a simple example, it may seem obvious in hindsight, we made an investment in a company called Jack Pocket, which is a mobile lottery platform. That’s an $80 billion a year market in North America that was digitally penetrated by 1% or 2%. And so, despite the COVID phenomenon, many of these categories, from gaming to financial services, to health care, to food, to education, are still in their single-digit penetration from an offline world to an online world, to Despite perhaps the popular misconception. . And that is the genesis of our thesis.

It’s not new. This is what we’ve been doing for the last decade. The difference is that when you talked to Insight and us, this is now the entire professional purpose of our existence. We have designed our entire organization, our platform, our resources, top to bottom and side to side dedicated to this. And to my knowledge, there aren’t many other companies that are highly specialized and focused on that Internet and consumer technology opportunity.

RACHELLE AKUFFO: So when you look at how the pandemic has actually shaped the tentative emergence of the pandemic, how has that shaped consumer spending, consumer behavior? And then as you move forward, things like Web 3.0, broader adoption of crypto, how do you see your company positioning itself?

HARLEY-MILLER: Sure, I’ll offer the comment first on the last few years, because it’s been tumultuous, to say the least, right? I think when you look at the general population, families, workers, or an individual, right now some of their scarcest resources are time and certainly their wallet. I think people are aware of that, as you go into more turbulent times. Naturally, that will shift spending toward digital-first solutions that can be more flexible and advantageous in terms of cost and delivery of a service or product, as well as convenience.

So we have a company in Vienna, Austria, for example, called GoStudent, which created one of the largest online marketplaces for high-quality, affordable, and reliable one-on-one virtual tutoring. It is now available in 30 markets across the Western world, including North America. Whether in a high-end or low-end market, parents and children alike will always need quality, affordable and convenient tutoring. And I think now more than ever that’s true.

And I think that’s something we look for, companies and categories that will persist in good times or bad. And, ultimately, we’re looking at waiting periods of five to ten years. And so things that can go through bull markets and bear markets.

Regarding Web 3 and crypto, I heard the above bit. I think everyone was having a little laugh about the $10,000 digital sneakers. I don’t have a horse in that race, per se. I think I want to be a supplier and a student of consumer behavior. I think it’s up to us as asset managers, as venture capitalists, to understand what has longevity versus what is going to be a little capricious or ephemeral in nature. And to the extent that it’s the latter, then we need to understand that, acknowledge that, and not over-rotate or invest a bunch of money in investments that might not exist or might look different years from now.

But the things that we think are truly permanent patterns in behavioral adjustments in consumer spending are something that we pay attention to. So we’re looking at a lot of companies in the space. We have invested in companies that are crypto native or Web 3. We invested in a great company called iTrustCapital, out of Long Beach, California, which is the largest self-directed IRA crypto trading platform that allows people to invest with their IRA or 401 (k ) with tax advantages in cryptocurrencies. So how to do it the left lane way, so to speak.

And I think, not to go off on a tangent, but I do think that the line in the sand, the demarcation point between Web 3, crypto-native, and a Web 2.0 enterprise is going to start to become a little more fungible, if you will. , or inherently blurry, if that’s fair.

RACHELLE AKUFFO: Well, we will certainly be keeping an eye on it. Obviously, a lot of people, a lot of interest generated there. We appreciate your knowledge. Harley Miller there, founder and managing partner of Left Lane Capital.

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