A small group of students visting from Europe dropped by OATV HQ last week to talk startups, entrepreneurship and venture capital. It was a lively and candid conversation. At one point they asked why so many of our investments were either consumer facing services or commercialized open source projects. As you’ve come to expect from me, I chose to answer their question with a story.

In the mid-80s my dad started his own law firm. It was a small shop to begin but grew to a pretty good sized firm with offices in Portland and Seattle. As they grew the firm added more and younger partners. By the mid 90s those young partners were using a technology at home that they wanted at the office- email. I recall my dad not wanting anything to do with email. The cost was too high, the impact  to worklflows was too dramatic and it was probably just a passing fad anyway (this from a man who’s early technology bets included betamax and laser disc players). As the drama over email played out, I remember being struck by the passion it evoked from the partners who wanted it in the office. The pitch for a new email system wasn’t coming from a slick systems integrator or software salesperson, this was coming from employees and owners within the firm. They’d been getting value out of email in their personal time and wanted that same value while they were on the clock.

I shared this story as it illustrates for me an important theme I try to keep in mind as we evaluate broad market trends, emerging technologies and specific investments.

In their early days, the most disruptive technologies aren’t making their way into organizations through the front door. A salesperson trying to convince my dad, a non-email user at the time, to bring email in house would have been a waste of time. But there was a pull from within the organization from those who used it at home, so they ended up sneaking it in the back door.

As of late, we’ve been attracting more and more entrepreneurs working on large scale problems related to government, healthcare, fitness, sustainability and core internet infrastructure. Many of their go to market strategies center of getting initial buy in from insurance carriers, hospitals, local governments, or the C suite. Though this may end up leading to a decent business, I don’t believe these top down approaches will deliver on the disruptive force these markets so desperately need. 

Disruptive technologies are subversive. They have cult-like followings. Their “business cases” aren’t clear at the outset. Trying to sell disruption from the top down is a losing proposition.

So, back the the question from my new friends from Europe as to why we tend to invest in consumer facing services or commercializing open source projects. History suggests the technologies that deliver the most disruptive blow to the status quo come into organizations through the back door.  And, those are the kinds of technologies and companies we’re the most interested in being a part of.