Venture capital founder explains how the pandemic has changed consumer habits

Harley Miller, Founder and Managing Partner at Left Lane Capital, sits down with Yahoo Finance Live to talk about the company’s success in investing in consumer technology, the outlook for venture capital in the late pandemic, how the pandemic has changed consumer and investor habits, and web3’s relationships with cryptocurrencies.

Video version

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Rachel Akufo: Welcome back to Yahoo Finance Live, everyone. Our next guest just got a Christmas present. [INAUDIBLE] He closed a $1.4 billion fund to invest in consumer technology on his 33rd birthday. Well, let’s get Harley Miller, founder of Left Lane Capital and managing partner. Happy belated birthday and thank you for making us all feel like we’re behind.

So we’ll get to that box. We’ve seen that Left Lane has now raised around $2 billion since its founding in 2019 and covers a wide range of sectors – FinTech, gaming, and everything in between. What did the road to this point look like?

Harley Miller: Well Rachel, thank you so much for hosting me and my belated Christmas wishes. No – nothing to be congratulated with regards to raising capital or investing capital. I think we have a different mission than that – but I appreciate the sentiment. The trip was – it was a long one. I’ve spent about 10 years at a different company, polishing my career, learning how to be an investment professional, and focusing all my energy and resources around this thriving internet and consumer technology opportunity.

This was true with the advent of smartphones, such a ubiquitous new opportunity for mobile commerce that was transforming consumer spending, both at home and in the workplace, in the real economy. This is what I have dedicated my entire career to. And finally, we found the confidence to leave two and a half years ago, three years ago to start our own company.

Left Lane’s purpose was designed for this specific opportunity, in a world of investors or more generic investors who have rotated excessively toward institutional programs, which were a great asset class and business model. But when we look at $30 trillion in consumer spending in the Western world, it gets far less interest from investors than other sectors. This is where we put our focus and efforts. And we’ve made some massive investments across many of the categories and sectors that I’ve described. I am happy to go into it.

Rachel Akufo: Yeah, so what was your experience like when you were at Insight Partners, how did that shape the direction of Left Lane Capital, some of the changes you’ve seen in the VC space or changes you still want to see?

Harley Miller: We appreciate everything we have learned. I mean, they’ve really allowed us to have the freedom to build our track record, follow the world, get an entrepreneurial face and make a lot of investments. So, I think we learned a lot from spending time there. But when we left, we wanted to do something different. We wanted to create our own niche, our own lane, for example, right. And so the work ethic, the determination, the presentation, but at the end of the day, with this respect for entrepreneurs in mind, I think that was an important part of our journey.

Building investment professionals from the ground up. We hire a lot of younger people and really try to raise them to be professional venture capitalists. And we take this training incredibly seriously and are incredibly proud of our 25 Left Laners on the team. It is truly the lifeblood of the company. And I think that resonated with the institutional specialists who eventually blessed us and got us into the industry.

As you’ll admit, we’re aging relatively modestly relative to planet Earth, but we’ve been doing this for our entire careers. And so I think this was a unique location that allowed us to enter the scene. And I think we’re part of that next generation of asset managers in venture capital and equity growth. And we–we don’t gloat about this, never take it for granted any day, and work day in and day out to perfect and refine this craft.

Rachel Akufo: And you talked about some of these underrepresented sectors, which weren’t seeing a lot of venture capital inflow into them, how did you manage to identify that? And why do you think you’ve historically not seen more investment in this space?

Harley Miller: I think a lot of venture capital, historically, has been people who lived in the coast or grew up in the coast, and that’s what they kind of got to know. So you may have a positive or non-positive bias, based on one’s own experiences. And myself, I grew up in a middle-class suburb of Pittsburgh. Many of my partners did as well.

I think we have this consideration of the common consumer type deep in a bell curve or populist graph, right. And I think that’s the curiosity with which we treat the world. We look at the world through combinations of opportunity and think about large industries that are still largely offline, highly analog, and what is ripe for digital disruption or the first digital solution.

As a simple example – it may seem obvious in hindsight – we invested in a company called Jack Pocket, which is a mobile lottery platform. This is an $80 billion per year North American market that has been digitized by 1% or 2%. And so, despite the COVID phenomenon, a lot of these categories, from gaming, to financial services, healthcare, food, and education, are still in single-digit penetration from an offline to an online world, despite common misconceptions. likely. This is the genesis of our thesis.

It’s nothing new. This is what we’ve been doing for the past decade. The difference is, when I spoke with Insight and with us, this is the entirety of our professional purpose for existence. We designed our entire organization, platform, and resources, from top to bottom and from side to side dedicated to it. And as far as I know, there aren’t many other highly specialized companies that focus on the Internet and consumer technology opportunity.

Rachel Akufo: So when you look at how the pandemic has really shaped the temporary eruption of the pandemic, how has that affected consumer spending and consumer behavior? And then when you bring it forward, things like Web 3.0, broader adoption of cryptocurrencies, how do you see your company positioning itself?

Harley Miller: Sure, I’ll give the commentary first only the last couple of years, because it’s been noisy, to say the least, isn’t it? I think when you look at the general public, or families, or workers, or an individual, some of their scarce resources are time and, admittedly, wallet. I think people realize that, and you’re entering into more turbulent times. Naturally, this will attract spending towards digital first solutions that can be more flexible and beneficial in terms of cost and delivery of a service or product, as well as convenience.

So we have a company in Vienna, Austria, for example, called GoStudent, that has built one of the largest online marketplaces to offer high-quality, affordable, reliable, one-on-one virtual private lessons. It is now present in 30 markets across the western world, including North America. Whether it’s in an upscale or downmarket, parents and kids alike will always need high-quality, affordable, and convenient private lessons. I believe now more than ever that this is true.

And so I think that’s something that we’re looking for, companies and categories that are going to survive both through the good times and the bad. And in the end, we’re thinking about waiting periods of 5-10 years. Thus, things that can traverse the markets up and down.

Regarding web 3 and cryptocurrency, I heard the previous part. I think you were all laughing a little bit about these $10,000 digital sneakers. I don’t have a horse in this race, per se. I think I want to be a funder and student of consumer behaviour. I think it is our duty as asset managers, as venture capitalists, to understand what is long term for it, versus what will be little or ephemeral in nature. As much as this is the latter, we need to understand this, acknowledge this, and not over-rotate and pour a pool of money into investments that may not exist or may look different in several years.

But the things that we think are really permanent patterns in behavioral adjustments in consumer spending are something we pay attention to. So we look at a lot of companies in this field. We have invested in companies that are in crypto or the web3. We have invested in a large company called iTrustCapital, out of Long Beach, California, which is the largest self-driving crypto IRA trading platform that allows people to invest with an IRA or 401(k) in a tax-advantaged manner in currencies. encrypted. So you kind of do it the Left Lane way, so to speak.

And I think — not to go in the shadows, but I think the line in the sand, the point of demarcation between Web 3, native coding, and Web 2.0 will start to get more replaceable, so to speak, or inherently blurry, if that’s fair.

Rachel Akufo: Well, we will definitely be on the lookout for it. Obviously a lot of people – a lot of interest was born there. We thank you for your ideas. Harley Miller is there, Founder of Left Lane Capital and Managing Partner.