Rafi Syed

Vertical Networks

Rafi Syed — Mon, 19 May 2025 18:15:21 EDT

My interest in vertical networks started back in 2014 when I evaluated platforms like Strava and Fishbrain. These platforms were great at building communities around people’s hobbies, but they’ve taken an excruciatingly long time to scale monetization. Advertisers don’t really care until you hit 100s of millions of MAUs. And subscriptions are hard to grow nonlinearly within a niche category like anglers or athletes.

Discord is probably the only example of a new vertical social graph that has taken off in the last decade, and they clearly picked an audience—gamers—that was large enough and viral enough to enable their growth (and expansion beyond gaming).

So this has led me away from vertical social networks and toward vertical professional networks. Vertical professional networks solve real problems: helping skilled workers find jobs and giving employers better hiring tools. They’re especially valuable in industries like healthcare, construction, and hospitality, where workers need specialized skills/certifications, and there’s constant turnover.

LinkedIn, built for office workers, doesn’t fit here. Deskless workers don’t need another social feed—they need something transactional that gets them to their next opportunity. Skillit (I’m on the board) is a good example. It’s designed for construction workers to showcase their qualifications and land jobs quickly. For employers, it simplifies finding and vetting talent. The platform works because it focuses on the practical: detailed profiles, clear credentials, and fast connections.

These networks also have a natural flywheel effect. Workers improve their profiles to stand out, and employers benefit from faster, smarter hiring. Better workers attract better employees, and the platform grows stronger. It’s simple, but it works.

The opportunity here is huge. Construction alone employs millions of people who change jobs regularly. Multiply that across hospitality, healthcare, and supply chain—all industries that are big, fragmented, and underserved by existing tools. I think we will continue to see large companies built here.

Saving People Money

Rafi Syed — Mon, 19 May 2025 21:52:03 EDT

Investing in consumer platforms is tough. There’s no way I could have predicted that lipsync videos on Musical.ly would scale up and turn into TikTok. Or that Secret would become a bullying-ground and die. Or that Pinterest would work. Or that Clubhouse would fail to gain traction. Consumer preferences are just fickle, and hard to pinpoint.

Instead, I look for the constants in consumer sentiment and behavior to inform my investing. Here’s an example, made crystal clear in the 2024 election: people care about their wallets. I believe platforms that help people save money will have enduring value, even if they don’t take off as fast as something social.

I’ve funded several of these direct consumer value plays including Jerry (cutting costs on auto insurance) and Martie (turning excess grocery inventory into deep discounts for consumers). People spend the most on housing, food, transportation, healthcare, and insurance. Saving even a small percentage on these recurring large-ticket items makes a big impact on someone’s livelihood.

Interestingly, neither of these companies captures the majority of their value from the consumer. Jerry generates revenue from carriers their marketplace gives business to. Martie earns large profit margins from buying inventory at liquidation prices. It’s helpful to have another participant like this—a “third leg of the stool”—who’s incentivized to accelerate your platform’s growth. Often they have deep pockets, so they don’t mind “being monetized” as much as consumers might. And their participation creates a moat that software alone can’t overcome.

I think it’s one of the few constants in consumer internet investing: software that saves people money will get adoption and virality. And I expect to see more growth here, as with AI, it’s easier than ever to automatically find these cash opportunities—scanning health insurance claims for errors, looking for rebates on past purchases, etc.

Openminded Skepticism

Rafi Syed — Mon, 19 May 2025 22:11:22 EDT

At its heart, venture investing is about making the right choices. The right founders, the right markets, the right business models. And you have to do this with very limited data.

The million-dollar question: how do you discern between the right bet and the wrong one?

Some people claim it’s about taste and vibes. Others say it’s about science—especially today as investors shift away from consumer tech and AI, toward founders who have PhDs.

This question is bigger than the current moment. It’s one I’ve grappled with throughout my career. Probably every VC has their own answer. But I always find myself coming back to what Carl Sagan had to say about discernment.

“It seems to me what is called for is an exquisite balance between two conflicting needs: the most skeptical scrutiny of all hypotheses that are served up to us and at the same time a great openness to new ideas. Obviously those two modes of thought are in some tension. But if you are able to exercise only one of these modes, whichever one it is, you’re in deep trouble.”
– from “The Burden of Skepticism”

The balance that Sagan calls “exquisite” is just that—so delicate, a VC can spend a lifetime perfecting it. Err on the side of skepticism, and you’ll dismiss a once-in-a-generation idea because it seems too hard, or too optimistic. But if you’re too open-minded, you’ll be taken in by a compelling pitch that doesn’t hold up when it comes time to execute.

The tricky part is, experience in venture capital can thumb the scale. Failed investments make you more skeptical, when really what you need to do is stay open. The obvious counterpoint is that success makes you overconfident. But success can even do the opposite. Once you have track record to protect, you may find yourself wanting to avoid risky bets.

The best investors avoid these traps. As science evolves and vibes shift, they stay open-minded and skeptical over a long career arc.

Solo

Rafi Syed — Mon, 19 May 2025 22:40:14 EDT

There are now 75M+ gig workers in the US, a tremendously large and growing population with specific challenges and needs. Gig workers today have to navigate multiple tools and platforms, combined with their own gut sense of opportunity, to manage working life. This line of work has moved from a side hustle into a full-time job combining work across an average >3 platforms, plus other income sources, per gig worker. At Bow, we believe consumer software platforms are needed to facilitate this new way of working.

Tools like Rippling and Papaya are on fast growth trajectories with their modern HRIS systems for W2 workers. They provide quick onboarding, easy visibility into earnings and tax implications, and simple payroll regardless of where a worker’s based.

The answer for gig workers is Solo. Solo is a software platform for gig workers, providing a suite of tools to manage their working lives. Key modules include schedule planning/optimization, pay guarantees, tax planning, income/expense tracking, smart worker profiles, and certification/document management. There are plenty of opportunities to expand the platform with new offerings like financial services (e.g., checking, savings, cards, credit building).

The vast majority of Solo’s strong growth is organic: gig workers want to refer other friends who are also gig workers. Network effects are poised to catapult Solo’s growth further. As their user base expands, Solo captures more data, making earnings optimization and prediction more accurate. They gain leverage to negotiate stronger deals for their workers (e.g., insurance). Finally, they become an attractive way for gig platforms to source new workers.

When Uber rose to prominence in the early 2010s, I evaluated many companies building software for Uber/Lyft drivers, and concluded that there was too much platform concentration. Since then, Uber has grown tremendously, and yet the platform concentration has diminished—Solo integrates with dozens of different gig platforms today and is expanding their coverage. This was a big shift over the course of a decade.

Perhaps the most counterintuitive aspect of Solo is that it is the gig workers themselves who pay for the platform. Many platforms start with free and monetize with ads, financial services, or never get there—the fact that Solo has been worth paying for since the beginning is a testament to the utility their software provides.

We are thrilled to work with Bryce and Keith!

Martie

Rafi Syed — Mon, 19 May 2025 23:20:03 EDT

In a time of economic uncertainty, platforms that help consumers save on life’s essentials—like housing, healthcare, and groceries—are becoming increasingly indispensable. Grocery, in particular, is both high-frequency and emotionally sticky, yet there’s still no dominant online player offering meaningful discounts in a brand-safe way. That’s what makes Martie such a compelling opportunity.

Martie is the leading online destination for overstock goods, offering a sustainable and profitable solution for brands looking to move excess, short-dated, or discontinued inventory. Through working with over 3,500 top brands like Kind Bars, Skippy, Kitchen Aid, and Dyson, the platform attracts savvy, high-intent buyers who come for a great deal (everything is 30–70% off)—but stay to discover new brands.

What’s especially interesting is how the company is growing not only through strong consumer retention and word-of-mouth, but also through vendor-led growth. For brands, Martie isn’t just a liquidation channel, it’s an opportunity to get products into the hands of eager, curious shoppers who could become long-term customers. This dynamic has opened the door to monetizing the vendor side of the marketplace: brands are promoting their presence on Martie to their own audiences (creating $0 CAC for the platform), and many are now paying for added value like reporting, sampling, and co-marketing programs. In other words, the vendor becomes both the inventory source and a demand generator.

The win-win-win model—consumer, brand, and platform—has proven successful in other verticals. Jerry, for example, showed how savings that beat the default (like Amazon or Instacart) become a value prop that spreads virally. iBotta and Honey (acquired by PayPal) also built massive businesses by creating savings mechanisms tied to brand relationships. Martie is doing something similar—except with physical goods, deeper discounts, and real margin.

Despite the $100B+ liquidation market being well-established in offline retail via players like T.J. Maxx and Big Lots, there’s no true digital equivalent. Martie is beginning to fill that gap—building not just a discount platform, but a new ecosystem where value, discovery, and efficiency align.

Hitch

Rafi Syed — Mon, 19 May 2025 23:25:52 EDT

There are roughly 11 billion trips each year in the 50–350 mile range in the U.S. Nearly 90% of them are taken in personal vehicles—not because of people’s affinity for driving but due to the lack of an affordable, convenient alternative. Mass transportation, like bus and train travel, is a pretty poor experience in the US and route coverage is limited.

In Europe there are good public transportation options, or you could hop in a BlablaCar. I’ve been fascinated with why Blabla doesn’t exist in the US—there are many reasons from density to culture.

Hitch, a marketplace connecting riders and drivers for intercity rides, solves many of these problems in an elegant way. We love technology solutions addressing operational challenges to deliver a much-needed consumer experience.

Hitch operates a rideshare service for intercity transport: consumers who want to travel from Austin to Houston (a 3-hour drive and one of Hitch’s first routes) open the Hitch app, book a specific departure time, and show up to a neighborhood location or select door-to-door travel. It’s just like booking a ride with Uber, but much cheaper. Or like booking a seat on a bus—but with far more convenient pickup points and departure times, made possible by not relying on expensive, high-capacity assets.

Hitch has grown impressively from inception to today, with 400K members in Texas and Florida, and a projected run rate of 120K rides/year. For riders who take more than 2 rides, retention is over 90%(!).

We believe Hitch has the potential to reinvent this segment of transportation for the US in just the same way that Uber and Lyft changed intracity transportation. It provides a 10x better service at a similar price to alternatives, all booked from your phone—Uber and Lyft’s offering at the start was as simple as that. We’re thrilled to have a seat on this ride with Kush and the Hitch team!

GoodRec

Rafi Syed — Thu, 22 May 2025 13:27:16 EDT

In today’s AI-girlfriend world of online connections, people crave authentic offline experiences. They want to share a passion or activity in person—just look at the success of run clubs with the younger generation as a way to meet friends or date.

Humans have always connected through sports—Vivek is famous for saying that the arena is the new town square and cathedral. Even though I am an avowed non-sports fan, watching him and the Kings build downtown Sacramento into a welcoming, walkable, gathering place (with the arena as a centerpiece) has been inspirational.

So when we were introduced to GoodRec, a marketplace for pickup sports that’s making it easier to get outside and play, the idea clicked.

For sports like soccer and volleyball, GoodRec organizes the facility for the games, finds a “host” player who brings the ball, and gets bookings for the player slots to guarantee a full/good game. They’ve hosted over 100K games to date—a testament to them solving some of the highest friction points in getting people on the field. It’s a win-win-win model: a trifecta where the players, facilities, and GoodRec all benefit. The “managed” nature of the marketplace (vs. an open marketplace for games) ensures that games are guaranteed and high quality.

One of the most powerful dynamics in GoodRec is the organic growth, with about two-thirds of new players referred from existing players. Retention is impressive, too, especially once players get hooked on the platform past the first game. The stellar 4.9 Google and App Store reviews are testament to the customer response. People really do love sports?!

We see a lot of opportunities here: whether it’s exploring subscription models (game packs/leagues), allowing recurring groups, gamified matching based on skill levels or interests, and expanding to other sports. Not to mention the social elements.

I’ve been impressed by founders Lewis and Midori, who bootstrapped to $1M gross revenue in their first 9 months. All games were in NYC while they lived in London, staying up til 3 AM each night to fill games and run operations. By the way, they have an insane founder-market fit—they have collectively played in 100 games on GoodRec to date!!

SnapMagic

Rafi Syed — Thu, 22 May 2025 13:31:02 EDT

Underpinning everything in software is a huge hardware industry—representing hundreds of billions annually. The market for selecting, designing, and purchasing these electronic components is dominated by a handful of incumbent players. Breaking into this space, and about to do some very interesting things, is SnapMagic: a search engine for component designs used by 2M engineers each year and growing.

SnapMagic’s secret sauce is its large-scale repository of high-quality, vetted electronic component design information (symbols, footprints, and 3D CAD models), which makes it faster and easier for engineers to find what they need for their product designs. SnapMagic earns revenue by digitizing demand generation. They make money from suppliers who pay each time their component design is downloaded (similar to how fees are collected for ad placement in search engines). Building the largest ever search engine for electronic components and having an incredible head start is exciting to us—this platform has real virality and network effect.

Now, SnapMagic is expanding into design—with an AI Copilot that auto-places PCB components based on the desired functionality. This is the kind of AI application I love—it eliminates mundanity, rather than trying to replace creative thinking, and it could only be built by SnapMagic, since they own the proprietary dataset necessary for great outputs.

Founder Natasha (formerly a R&D engineer and product marketing engineer at National Instruments) has successfully led the business to break-even in very little time, with downloads growing exponentially since launch and a strong enterprise customer base. With the Copilot launch coming up, 2025 will be a year to watch, as SnapMagic grows from a search engine to a platform unlocking new productivity gains in component design.

Skillit

Rafi Syed — Thu, 22 May 2025 13:31:57 EDT

At Bow, we’ve been pursuing companies building “verticalized LinkedIn for deskless workers” for some time. We’ve seen it play out in hospitality and medical/nursing, so we were instantly interested when we learned about Skillit, a hiring platform for construction trades. Construction is a top 5 labor pool in the US, and it’s not going to be disrupted by AI any time soon. There are over 9M workers today, with a labor shortage of over half a million, a trend that’s only worsening. And this doesn’t factor in the 50–100% churn companies see in their labor force each year.

Skillit is proving essential to construction firms because it acquires workers, validates their skills and credentials, and then presents them for hire in exchange for a platform access fee. This is the LinkedIn model—workers fill out profiles, and employers get access to recruiting tools—but highly specialized for construction. Specialization allows Skillit to amass rich data on the worker side of the platform (e.g., assessment scores, base pay preferences, and prior job experiences), which makes the platform that much more powerful for recruiting.

There’s a strong marketplace network effect at work here, too. Since Skillit workers pass interviews at 2X the rate of candidates from horizontal solutions, construction companies tend to consolidate their hiring to the platform over time. Workers want to be on the platform with the most hiring—and companies want to hire from the largest platform. So the flywheel spins.

Of course another thing to love about the company is that AI is not going to build you an arena or a datacenter—skilled workers have to do that—so its underlying customers are probably more helped than hurt by the AI boom. But, this type of verticalized platform needs to put the best of AI in customers’ hands in order to win, and Skillit does that by solving a chronic pain point for recruiters with its scheduling agent, Sam. Sam eliminates 90% of scheduling work, freeing recruiters up to focus on hiring. Typically, out of 100 craft workers contacted, only 17 reach a phone interview, and just 3 get hired. With Sam, that jumps to 70 interviews and 14 hires.

We’re thrilled to be working with founder/CEO Fraser as the team builds the de-facto platform for hiring construction skilled trade.

Asking Questions

Rafi Syed — Thu, 22 May 2025 21:19:34 EDT

My startup investment thesis:
Invest in bad ideas that get better the more questions you ask.

Stay away from good ideas that get less interesting the more questions you ask.
— John Andrew Entwistle (@jaentwistle) January 12, 2025

Seeing this post I was reminded that venture capitalists are really only good at one thing: asking questions.

The first few conversations with the founder/team are critical. It’s not just about the pitch—most founders are excellent storytellers. What’s more important is the discussion.

The VC’s primary tool is curiosity, and the founder’s response leads the way. Can they read the room and anticipate the questions that are coming up? Do their answers provide detailed insight on the business/market/team/product/solution?

My favorite thing is being surprised—when I go into a meeting skeptical, and the team ends up expanding my view. It’s a thrill that keeps me coming back. And to me it represents the essence of the job.

Things are no different as a board member, by the way. I often say that my number one job (other than getting out of the way as much as possible) is to audit the founder/CEO’s thinking. This is usually best done by avoiding diatribes, sharing relevant anecdotes, and, mainly, asking a lot of questions.

Enduring Companies

Rafi Syed — Mon, 30 Jun 2025 15:58:27 EDT

For perhaps the first time in history, companies that reach scale today and get to employee numbers in the high hundreds (not the multi-thousands) can stay at those sizes while growing revenue dramatically — this keeps coming up when I talk to entrepreneur friends and portfolio CEOs.

Compare this to large companies — the reason they stagnate and lose the ability to innovate is not that they can’t hire great talent (they have the bankroll to do that). Rather, there’s simply too much bureaucracy.

As companies grow beyond a certain size, they get bloated with middle managers and new hires. They just can’t rapidly introduce new products or stay at the forefront of the ecosystem anymore.

The 2022 markets exposed this problem for everyone to see. This chart from Brad at Altimeter lays it out:

As we all know, the new paradigm is small and nimble — using AI and software to scale the product without scaling the team. Three reasons that immediately come to mind:

Each function can be a bit smaller in and of itself due to heavily leveraging software and tooling instead of people growth.
As you need less headcount, you require less managerial oversight. You don’t need as many middle managers, or as much help onboarding and training new employees.
You end up building a company of strong individual contributors. Critically, they stick around because the culture doesn’t get stagnated by bureaucratic overhead.