anstosa

Ansel from PSL here. You're exactly right. The entrepreneurs we work with want the best shot at a winning idea. Just because we decide to kill an idea doesn't mean we don't end up finding something else in the same area to work on together. It also doesn't mean they can't go do that idea by themselves if they disagree. PSL does not hang onto any rights whatsoever after killing an idea.

It's also worth noting that only half the companies we end up spinning out were generated by entrepreneurs. The rest (including XYLO) are generated and validating in-house before we even seek an entrepreneur to partner with.

Ansel from PSL here. PSL Studio has raised $28.5M. PSL Ventures has raised $85M. We have spun out 20 companies over 4 years. 6 of which are in the 50 Seattle companies to watch in 2020 (https://www.builtinseattle.com/2020/01/21/50-seattle-startup...) and of the early-stage venture backed companies who raised money in 2019, over 12% where PSL companies.

We specifically avoid "creative" ads. We know how to make ads more effective but that's for when we have a business we're trying to grow, not for when we are trying to determine if there's a business at all. We want to distill a very specific value proposition and target demographic in each ad. If the value prop resonates, they will click and they will convert regardless of ad "creativity". If we were just trying to juice numbers, we wouldn't learn anything whether and which value propositions are effective.

- Ansel from PSL

Brainstorming and validation rarely starts with a perfect idea. It starts with some about of demand, an unsolved problem or an inefficient market. We start to dig and as we talk to potential customers we get a better understanding of the problem and pivot accordingly. Sometimes we end up unearthing a great idea, sometimes not. It's worth remembering that finding billion dollar business narratives often involve some amount of market creation or expansion. It's not just "can we capture enough of the market that exists". It's "would customers pay more for a better experience?", "would more people become customers if the process was easier? Or cheaper?".

- Ansel from PSL

Yes due to how the economics of traditional venture funds work, in order to achieve the returns that limited partners expect, investments are made in companies with unicorn potential. Some will do well, most will fail, sometimes one will actually become a unicorn but because you don't know which is which you need every at bat to have a path to a home run.

This means that if your business is the right shape, VC is a fast way to raise a tremendous about of money.

But that's NOT to say that every company can or should raise a tremendous about of money. There are less traditional VCs, angel investors, debt, and other financial vehicles that can help businesses succeed. There are tons of examples of companies worth hundreds of millions of dollars who raised little or no money to get there (Webflow and Atlassian are two top-of-mind examples).

- Ansel from PSL

We have spun out 20 companies over the last 4 years which we are confident meet this criteria using this methodology. All are venture backed (led by investors other than us) and still operating (except for 1 which sold to Nike last year)

- Ansel from PSL

Ansel from PSL here.

Absolutely. Because we're venture-backed and are spinning out venture-backed companies, we are limited to billion dollar ideas. It's not uncommon for us to kill great ideas that could "only" make tens of millions of dollars.

We're hoping through blog posts like this and other means to be able to share more of them because we want those companies to exist, we're just not set up to create them!

Ansel from PSL here.

That's not quite right. Ad pricing is a marketplace like any other. The "demand" in the marketplace is demand by advertisers to get in front of any particular set of eyeballs. The price will be high if many advertisers are interested in the same group of people (and low if not). Price is an important metric for determining customer acquisition cost but you can't use it to infer customer demand. You instead use impressions, click through rates, and conversions rates to do that.