Investor David Frankel Looks for Founders Who Grew Up Inside an Industry
He says time inside a pharmacy or a trade gives founders an edge they do not fully see.
20VC with Harry Stebbings · The AI Boom Will Create Enormous Roadkill: Who Wins & Loses? | David FrankelDavid Frankel, a longtime seed investor with Founder Collective, a firm that writes early checks to startups, was explaining how he chooses founders when he volunteered his current obsession. "I love to find nepo babies," he said.
To many people who hear that phrase the usual way, Frankel noted, nepo baby means a trust fund kid living off family money. He said he means something very different, people who grew up inside an industry and absorbed how it really works.
His example was T.J. Parker, who worked in his father's pharmacy when he was 14, 15, and 16. Frankel argues Parker had more edge in that business than he knew, because he had lived its daily details.
He puts Mikey and Georg in a similar group for voice, music, and audio software, along with Martin Camacho, who had been chief technology officer at Kensho. Frankel says Kensho is where they did that artificial intelligence work, and that work was all they did.
His clearest case was Evan, the founder of Rebar, a startup that prepares heating, ventilation, and air conditioning bids for new commercial buildings. Frankel says more than a hundred thousand American mechanical engineers do that blueprint and quoting work, many earning at least $100,000 right after graduation. Evan had worked for his uncle's company, which had been rolled up with other companies in a private equity deal, and he was told to go find artificial intelligence software for the job. He found no such software and started Rebar himself. Frankel says Evan had watched his uncle in the business since he was a kid, and, in his words, "there was nothing else he was going to do."
Frankel said he is talking about "folks who've been in a vertical and have lots of edge in that vertical."
Questions people ask
What does Frankel mean by edge?
Frankel uses it to mean lived familiarity with customers, workflows, and problems. For Parker, Frankel points to teenage years in his father's pharmacy. For Evan, Frankel points to years around his uncle's heating and cooling business.
Does Frankel think these founders know they have an advantage?
Frankel's view is that they often do not fully see it. He says Parker had more edge than he knew, and he describes Evan's path as almost inevitable after growing up around the business.
Does growing up in an industry guarantee startup success?
No. Frankel presents it as an advantage, not a guarantee. He argues it helps a founder know which problems matter, but a startup still has to build a product and win customers.