1Mby1M Virtual Accelerator Investor Forum: With Shripriya Mahesh, Founding Partner at Spero Ventures (Part 2)

Sramana Mitra: Let’s talk about some of the companies that you have invested in. In particular, as you describe their stories, talk about when they came to you or when you found them, what was it about them that convinced you to write these checks?

Shripriya Mahesh: Venture, as you know, is about exceptions. I’m going to talk about mission-driven companies as well as companies that have fallen outside of those bounds. I’ll start with Skillshare. At the time when we met them four years ago, they raised what would now be called a series

A. They did have product market fit. Skillshare is a learning platform that allows any creator to learn to help them with either their career or with their lives. It’s a marketplace where anyone can teach and anyone can learn. Unlike other marketplaces, it’s a subscription model.

You could subscribe either annually or monthly and you can listen to and watch as many classes as you want. I’ve taken classes in languages and arts. I’ve watched Matt Cooper in his accounting class. It’s anything to help a creator learn and expand their toolkit.

When Skillshare came to us, they already had $5 million in revenue. In a very competitive market, they had raised less money than their peers to get to as much or even more traction than any of them. Given my eBay background, I loved the marketplace model.

Predicting what people want to learn about is a very hard business, but allowing people to determine what they want to teach and learn is much better. We also loved the subscription model more than the per class model. There are models where you pay hundreds of dollars for class and you never finish it because two videos in, you may realize that it’s not something that you want to learn.

Bringing that freedom and the joy and lightness of experimentation to adults is what Skillshare did. We loved the business model of how they were thinking about it. We also love the team. We love Michael Karnjanaprakorn, the founder. We thought that it was a great founder-market fit. Those are some of the reasons that we invested in Skillshare.

In the past four years since we invested, Skillshare has grown 10x their revenue and users. They have just grown really fast. Matt Cooper joined as COO and then became CEO when Michael decided to start another company called Otis. He has done a fantastic job.

When you look back four years in, it seems like everything is up and to the right. It wasn’t because no company is up and to the right. In the day to day, it’s always a roller coaster. It had its roller coaster moments, but it’s all about how the team deals with those moments and the team dealt well with those moments. That’s one example. 

Sramana Mitra: Before you go on to your next example, I have one question. This is trying to draw lessons from the marketplace model. We are seeing a lot of subscription marketplaces. Could you elaborate a little bit on the business model? Is it a subscription on one side or both? What is your analysis of the evolution of the marketplace model? 

Shripriya Mahesh: Skillshare happens to be a marketplace on the viewer or the learner side. The teacher comes in and creates as many or as few classes as they want. Marketplaces hold a special place in my heart because I think it’s such an efficient marketing mechanism. It just sets the market price to what you are willing to pay.

We are seeing more and more spaces. It’s a hard model to get off the ground because getting started is the hardest part of the marketplace, but once you get to a certain amount of scale there are network effects that go with it. Every new viewer makes the marketplace more valuable to the teacher and every new teacher makes the marketplace more valuable to the viewer.

When each new class makes it more valuable to the viewer, it then makes it valuable to all other teachers. The network effect is a fantastic upward trajectory. It keeps reinforcing itself. I’ve seen many takes on it, but not that many have been successful.

In crowded markets, I have seen models where they plateau. One of the things about marketplaces is, your conversion has to be high. That’s when you can truly get the network effects. If you put newer inventory, does the conversion keep up or does the conversion drop dramatically? That would mean that your demand side isn’t scaling with your supply side.

There are so many nuances to marketplaces. There are so many innovations that I hope to see entrepreneurs make. It’s a tough model to start with, but if you are able to step scale on both sides – one increases and the other catches up – it’s a great model. 

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Shripriya Mahesh, Founding Partner at Spero Ventures
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