Fact
Why API companies are great bets: impossible to rip out once ingrained
Rahul Vohra explains his thesis for investing in business-infrastructure API companies like Clearbit and EasyPost: once an API gets ingrained in a company's stack, it becomes next to impossible to remove, creating durable lock-in.
“Some of my personal investments that have done the best have been companies like Clearbit, which is a rather well-known API for data enrichment, everything from an IP address to an email address. To EasyPost, which is an API for really super simple and rapid shipping. API companies are particularly interested because— interesting because once they get ingrained in a company, they're next to impossible to rip out.”
Steal thisBuild or back infrastructure APIs that embed deep in customer workflows so switching costs make them un-rippable.
Idea
Productize 'Stripe Home': a branded new-tab homepage for every company
Shaan pitches turning the internal company-homepage that firms like Stripe (Stripe Home), Amazon (Phone Tool), and Clearbit built for themselves into an out-of-the-box, design-led product. Any engineer could enable a branded new-tab homepage bottoms-up, showing new hires, announcements, and org data — and he'd invest to get it built.
“anytime some, anytime you see several companies building the same in-house system, for themselves, that's something that you could export out and can be given to any company out of the box, uh, as an easy-to-use thing. And this is something that literally you just win on design.”
Steal thisWhen multiple companies build the same internal tool, productize it as an out-of-the-box offering and win on design.
Story
Shaan's missed mastermind portfolio: Calm, Clearbit, Product Hunt
Shaan regrets not blindly investing $10K in every founder in his early mastermind groups, which included Calm, Clearbit, Product Hunt, and Zola Electric. The lesson: don't count yourself out as a player.
“if I had just written checks to all of them blindly, I said, you know, like with no judgment, I'm just writing the same $10,000 check and all of you guys, you know, Calm was in that, in that crew.”
Steal thisIf you're already in the room with great founders, be willing to write checks; don't count yourself out as an investor.
Story
The mastermind portfolio Shaan didn't invest in
Shaan realized that the founders at his early SF mastermind dinners — Calm, Clearbit, Product Hunt, Zola Electric — would have been a phenomenal portfolio if he'd blindly written $10K checks to each. He'd done the relationship-building right but didn't yet think of himself as an investor.
“Clearbit was in that crew. Product Hunt, Zola Electric, which is the biggest solar company in Africa. Like, so that portfolio would have done amazing. And so, I looked back and I was like, man, I did the first part right, which is what you're saying. You know, I just spent time with interesting people and added value to them through sharing sharing ideas, insights, whatever, helping, being helpful. But then the lesson I learned was, why wasn't I investing? And to me, I kind of asked myself this and I thought, because I wasn't thinking of myself like an investor.”
Steal thisIf you already sit at the table with great founders, start thinking of yourself as an investor — don't count yourself out.