In this episode, I speak with Tyler Sosin, founder of Villain Capital, a new fund focused on investing in vertical software businesses. Having grown up in the venture business for 17 years with storied firms Menlo Ventures and Accel Partners, Tyler brings a unique - and perhaps contrarian - perspective to venture investing. With Villain, Tyler's ambition is to help vertical focused founders efficiently scale their start-ups into dominant franchises that can compound their growth and relative market share over decades. The name of the firm, Villain, was inspired by a quote by Harvey Dent, a character in the Batman film The Dark Knight, who said to Batman, “You either die a hero or see yourself live long enough to become a villain.”

Highlights:

• The power of vertical software and markets that start small but grow big
• Characteristics Tyler looks for in early-stage founders
• Misconceptions around TAM and the overlooked upside in niche markets
• Why customer lock-in and annuity-like business models matter
• Thoughts on growth at all costs vs. compounding sensibly
• Lessons from past investments like Flywire, Carta, and Indio
• What venture gets wrong about market sizing and competition
• How Villain balances elements of both VC and growth equity
• The underestimated strength of founders who’ve been burned before

-- Guest Bio: Tyler Sosin is the founding partner at Villain Capital and a board partner at Menlo Ventures. Tyler has a degree in International Relations from Stanford University and lives in New York City.

Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.

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-- Stay Connected: X / Twitter: David Weisburd: @dweisburd

LinkedIn: David Weisburd: https://www.linkedin.com/in/dweisburd/ Tyler Sosin: https://www.linkedin.com/in/tylersosin/

Links: Menlo Ventures: https://menlovc.com/team/tyler-sosin/

-- Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

(0:00) Episode preview (1:37) Peter Thiel's perspective and the role of market power (5:12) Identifying potential villain companies in early stages (8:26) Successful strategies in product bundling and market control (12:44) Venture capital approach to small markets (19:11) Balancing growth and sustainability in startups (24:56) Historical impact and profitability of tech giants (27:37) The importance of collaborative thinking and networking in VC (31:03) Herd behavior and innovation in fund management (34:53) Vertical software companies: PE and growth equity interest (37:23) Debunking market size myths in startup success (42:36) Storytelling and scaling in startup growth (44:15) Strategies for expanding market reach in growth companies (48:56) Career advice from Tyler Sosin's perspective (51:00) The Thiel fellowship's influence on young entrepreneurs (51:40) Closing remarks