Erin and Sara Foster from Oversubscribed Ventures talk consumer, culture and creators | TC Disrupt24

The Fosters' Journey in Tech and Entertainment

• Erin and Sara Foster, along with their business partner Phil Schwarz, participated in a panel discussion at TC Disrupt24, where they discussed their ventures and experiences in the tech and entertainment industries. (19s)
• Erin and Sara Foster were early figures in entertainment to take on significant roles at a tech company, serving as co-creative heads at Bumble. They were involved in launching Bumble Biz and Bumble BFF, aiming to educate consumers on using the app for networking and friendships. (1m30s)
• Whitney Wolfe, the founder of Bumble, invited Erin and Sara to join the company, recognizing their influence over a predominantly female audience and their potential to merge entertainment with tech. This opportunity was a pivotal moment for them, despite initial skepticism from others. (2m40s)
• The experience at Bumble taught Erin and Sara the importance of understanding equity, consumer acquisition, and identifying what actions significantly impact a company's success. They learned to quickly assess what moves the needle in business and the importance of having substantial equity to generate profit. (3m16s)

Collaboration with Phil Schwarz and Corone Capital

• Erin and Sara Foster have collaborated with Phil, whom they met while working on a project at Tinder aimed at increasing the platform's appeal to women. (4m7s)
• Phil, who is now a partner at Corone Capital, has worked with Erin and Sara on various ventures, including Bumble and Mirror, a fitness company. (4m40s)
• Erin and Sara decided to start a fund and chose Phil to be a key part of their operation due to their complementary skills and expertise. (4m50s)
• Corone Capital, an early-stage fund, assists Erin and Sara by handling tasks that are challenging for first-time fund managers, such as due diligence and back-office operations. (5m15s)
• The partnership between Corone Capital and Erin and Sara Foster is seen as a model for future collaborations between venture capitalists and talent, with each party bringing unique strengths to the table. (5m39s)

Launching Oversubscribed Ventures

• Erin and Sara Foster have a diverse portfolio, including a successful podcast, a relevant clothing brand, and a popular TV show on Netflix, all of which contribute to their engaged audience and consumer-facing assets. (6m59s)
• Erin and Sara Foster launched a venture fund due to the necessity of managing significant deal flow and real allocations, which they couldn't support with personal finances alone. (7m20s)
• They found fundraising challenging, especially as first-time fund managers, and learned from their mistakes during the process. (8m32s)
• The fund is intentionally not massive, and they were selective about their limited partners (LPs), choosing not to take money from friends or family to avoid awkward situations. (8m43s)
• Erin and Sara Foster approach their venture fund with a unique perspective, embracing their personalities and humor, and acknowledging that they do not fit the traditional mold of fund managers. (9m32s)
• The venture fund, named Oversubscribed Ventures, focuses on consumer and tech companies that amplify consumer businesses, aligning with their audience's interests. (10m12s)

Founders, Fame, and Focus

• Founders should focus on building their business rather than their personal fame, as being overly concerned with personal branding can be a distraction from the core business objectives. (10m37s)
• Whitney Wolfe is noted as an early founder who became famous alongside her company, which has influenced other founders to focus on their public personas. (11m7s)
• Successful consumer businesses require founders to lose their ego and concentrate on the product and company rather than personal recognition. (11m45s)

Instinct, Creators, and Market Saturation

• Instinctual decision-making is highlighted as important, as demonstrated by hiring decisions made based on gut feelings rather than strict formulas. (11m55s)
• Research indicates that two-thirds of consumers prefer buying from creator-founded products, which presents a challenge for average founders trying to enter the market. (12m18s)
• While having a creator or celebrity endorsement can be beneficial, it is not a guaranteed recipe for success; authenticity and genuine connection with the product are crucial. (12m59s)
• Achieving relevance and customer acquisition in business has become more challenging despite the prevalence of social media, possibly due to market oversaturation. (13m36s)
• The decreasing cost of starting a company has led to increased competition, making it challenging to capture consumer attention. Companies need to initiate conversations about their products to build relationships with consumers. (13m56s)

Oversubscribed Ventures' Ecosystem and Investment Philosophy

• Oversubscribed Ventures' value lies in its ecosystem and flywheel effect, which connects various consumer touchpoints like clothing brands, podcasts, and TV shows. This interconnectedness helps in generating deal flow. (14m29s)
• A great product is essential, as no amount of marketing can replace it. Building lifetime value requires delivering products that consumers love and return to. (15m27s)
• The idea of making something go viral is seen as unrealistic, and there is skepticism towards founders who focus on this. (16m0s)
• In the TV industry, there is a tendency to chase trends, but by the time a product is developed, the trend may have shifted. It's important to focus on telling the right story rather than following trends. (16m13s)
• The focus of storytelling should be on telling the story one knows best, without worrying about audience reception or planning for popularity. This approach is similar to how founders should focus on their strengths rather than trying to predict trends. (17m2s)

Evolving Landscape of Celebrity Endorsements and Venture Capital

• There has been a shift in how founders view celebrity involvement in their companies. Previously, founders often sought to give significant equity to celebrities, believing it would guarantee success. However, this mindset has changed, and founders are now more cautious about giving away equity without tangible benefits. (17m45s)
• The impact of celebrity endorsements has evolved over the past decade. While a single post from a celebrity like Kim Kardashian could significantly influence consumer behavior in the past, this effect has diminished over time. Founders now need to focus on building a strong foundation and finding partners who can provide real value. (18m31s)
• Oversubscribed Ventures aims to support consumer-focused companies by connecting them with valuable resources and expertise. The firm helps founders navigate challenges in marketing and creating conversations around their products, leveraging its experience in building marketplaces and subscription businesses. (19m14s)
• The attention economy is an important aspect of modern business, and Oversubscribed Ventures offers more than just business advice and capital. They provide connections and opportunities that can help founders gain visibility and relevance in the market. (19m49s)

Investment Strategy and Portfolio Companies

• Erin and Sara Foster discuss their approach to integrating founders into their ecosystem, emphasizing a hands-on and tactical involvement that differentiates them from typical celebrity funds. (20m1s)
• They highlight their investment in a company called 831 Stories, which aims to become a major player in the romance novel industry, similar to A24 in film, and mention leveraging connections with platforms like Netflix to adapt these stories into TV shows. (20m27s)
• The Fosters emphasize the importance of building long-term relationships with founders, noting that the success of initial funds is crucial for raising subsequent ones, as founders from the first fund will provide feedback on their experience. (21m37s)

Building Brands and Engaging Customers

• They describe their strategy for maintaining customer engagement and loyalty, particularly with their brand Favorite Daughter, by actively listening to customer feedback and incorporating it into their business decisions. (22m4s)
• The Fosters share insights from their experiences, including learning from others before becoming founders themselves, and address the pressure faced by students to succeed quickly, as discussed during a talk at Stanford. (22m34s)

The Path to Founderships and Learning from Setbacks

• There is significant pressure on young people to become founders with billion-dollar ideas, but not everyone will create the next big tech company like Facebook. It is important to work at great companies and for great founders, and if an idea comes along, that is a bonus. (23m14s)
• Erin and Sara Foster did not initially set out to become founders; their company emerged from years of experience in various fields. They emphasize the importance of learning from early failures or setbacks in business. (23m35s)
• When launching their fashion brand, Favorite Daughter, they initially faced rejection from Shopbop despite having a prior relationship. However, a year later, Shopbop reached out to them because Favorite Daughter had become the most searched brand on their site that they did not carry. (24m35s)
• Sara Foster shared her experience of starting her writing career at 29 and being fired from her first job, where she was told she was not a good writer. Despite this setback, she found success 12 years later, illustrating that success can come later in life and be more meaningful. (25m43s)

The Importance of Founder Involvement and Strategic Partnerships

• A financial partner from Centric Brands provided a reality check, indicating that the business was not performing well, which prompted a realization that constant creativity and involvement are necessary for success. (26m25s)
• Founders must be deeply involved in their companies, as success requires daily attention and creativity, and even seemingly successful companies face internal challenges. (26m54s)
• There is a common belief that owning 100% of a business is ideal, but the decision to take on a financial partner was beneficial, as it allowed for shared responsibilities and growth. (27m56s)
• Despite advice against it, partnering with wholesale partners like Nordstrom proved advantageous, significantly impacting business growth. (28m17s)

The Role of AI in Creativity and Business

• There is skepticism about AI's impact on creators, with a personal admission of not using AI tools like ChatGPT, and a belief that AI cannot replicate human creativity derived from personal experiences. (28m30s)
• There is a discussion about the potential and limitations of AI, particularly in creative fields like scriptwriting, where AI-generated content is often not of high quality. (29m29s)
• The speakers have not yet invested in AI through their fund, although they have considered several AI companies. They acknowledge the need to eventually embrace AI technologies. (29m42s)
• There is a belief that AI, such as ChatGPT, cannot replace the unique human experience, especially in creative endeavors. The quality of AI-generated content is expected to improve, but it currently lacks the depth of human-created art. (30m23s)
• AI could be beneficial in practical applications, such as improving user experiences in e-commerce platforms like Shopify, particularly in reducing product returns for lifestyle brands. (30m53s)
• The focus of their investment strategy is at the intersection of consumer and technology, which may or may not involve AI, but this is where their primary interest lies. (31m17s)