Investment Notes: Encour - Why I'm All In
Until last month, I was a Partner at a venture capital fund. In this piece, I explain how I evaluated the decision to build something new, and why I'm all-in.
Over spicy margaritas last month, I told a fellow investor that I’m leaving my job as a Partner at a venture capital fund. She gasped, loudly enough to draw some stares. “Jessy! How can you leave a job that’s your whole identity?”
She was teasing, but the joke contained a grain of truth. Many people will be wondering something similar - why would I leave a dynamic job at a well-regarded venture capital fund I had helped to build?
Being an investor at AfterWork Ventures was an enormous privilege. Our fund invested in 30 companies, built a community of tech enthusiasts, and met thousands of innovative founders. Joining the firm as its first employee was – and remains – one of the best decisions I’ve ever made. Leaving was a decision I agonized over.
But after spending years discerning whether founders were doing their life’s work, I started to doubt whether being an investor was my own. Eventually, I found the courage to take a leap of faith, and leave to build something new.
As an investor, I’m used to evaluating investment decisions rigorously. Here, I share how I evaluated the opportunity to start a new business, and why I’m all in.
What am I building?
Right now, Encour is a strategic communications agency that emboldens clients to command the narrative. In the future, my ambition is to scale a global professional services company that is a trusted advisor on all forms of communication:
External communication with customers, partners, or the public - via press coverage, events, or social media.
Internal communication with people within organizations - via emails, town halls, or hiring campaigns.
Investor communications with shareholders, prospective investors, creditors, and analysts - via fundraising materials, investor reports, or board meetings.
I’ve seen how communication can alter a company’s trajectory. Great communication can attract customers in droves, pique the interest of top talent, and whip investors into a frenzy. Butchered communication can sow dissent, destroy trust, and precipitate downfalls.
Since soft-launching last month, I’ve worked with three clients and delivered two campaigns.
I’m particularly proud of my work with Slice - an Aussie Fintech that helps customers access travel. We leveraged the announcement of their Seed round to build their awareness and credibility, and share the founders’ inspiring stories - which involved bootstrapping the business to 70,000 customers, surviving lockdowns which saw 95% of revenue evaporate overnight, and their Hail Mary decision to launch in the US during the pandemic. Slice has already seen the campaign increase engagement from channel partners, travel agencies, and prospective candidates.
The market for professional services is enormous
In the US alone, the professional services industry is worth US$2 trillion annually – five times more than the B2B software industry. McKinsey, one of the most prestigious professional services firms, reported US$16 billion of annual revenue in 2023 with only 45,000 employees. This works out to a whopping US$356,000 per employee.
So why has venture capital historically shied away from seeding new professional services companies? Traditionally, services companies have been viewed as less scalable. This is because revenue is tied to labour, and so scaling revenue requires adding more workers. Human teams are harder to scale than lines of code! Although services companies have good margins, they’re capped by human capacity - compared to SaaS, where the marginal cost of serving each additional customer can approach $0.
With a hybrid AI and human workforce, services firms can scale quality outputs
With the advent of generative AI, it’s now possible to add leverage to a business without adding headcount. For example, you can recruit business development bots via Relevance AI, who book sales meetings on autopilot. Lorikeet’s bots can work in your customer support team to resolve support tickets, and Springboards’ bots can even enhance the creative process by turning creative briefs into press releases or video scripts.
However, these companies face stiff competition. As foundational models improve, the outputs generated by specialized bots will become less differentiated. Over time, it’ll become harder to sell AI bots at a premium to the cost associated with pinging the underlying AI model.
When the dust settles, I believe a certain kind of company will emerge victorious: companies that can deliver high quality outputs using hybrid teams, where AI agents work alongside brilliant humans to amplify their ingenuity.
Pairing machine intelligence with human EQ
In this article about The Emergence of AI-Powered Services Firms, Forerunner Ventures identifies a ‘Goldilocks Zone’ for building AI-enabled professional services companies:
“First, any eligible category should pass a simple Goldilocks test: the bulk of the core workflow must be highly automatable, but higher stakes elements like the sales, support, and service quality must benefit from the judgment and relationship skills of people”.
While this framework may be correct for AI’s current capabilities, I believe it fails to imagine a future where AI is capable of higher-order tasks.
Instead, I think hybrid teams are most unstoppable when the core work in a given industry is ‘barbell shaped’ - where significant value is created by work that AI can do better than most humans, but significant value is added through work that very talented humans can do better than AI.
For communications, this is the barbell:
Work that AI can do better than most humans:
Scan the news daily, unearthing new trends - anticipating cycles to ‘newsjack’ before they crest
Scan social media, understanding how to resonate with a given community, and identifying who has authority and influence
Turn an major announcement into a personalized messages for every stakeholder - customers, employees, and investors
Work that the best humans could do better than AI:
Hold high-trust relationships with clients and with media professionals
Spot tension in a room and use empathetic communication to diffuse tension
Strategically sequencing communications to build a feeling of momentum and trigger FOMO
Challenges I foresee
As AI continues to improve and raise the bar globally, there will be a huge premium on humans who can outperform AI in certain tasks. This talent won’t be easy to attract - and it won’t come cheap.
A powerful talent engine is one that can take ‘diamonds in the rough’ and polish them into something dazzling. This is the challenge that most excites me - building a honeypot for ambitious people and becoming a launchpad for brilliant careers. I’ve made my first hire, and will be building a team of Associates over the coming months.
Why me?
As a young child, I loved sitting on my gongong’s lap, dreaming up fantastical stories.
But when my family immigrated to New Zealand, my frolicking imagination became imprisoned in my incomprehension of the English language. Where creative writing used to be my favorite subject, but I came to dread the daily writing task at school. I had so few words; so few ways to give expression to the dramatic scenes playing out in my mind.
Two decades on, I’ve found my words. I’ve also been afforded many platforms - I’ve headlined conferences, published op-eds in prestigious publications, and built a large audience on social media. Learning how to communicate well has been a huge accelerant for my career. It’s convinced people to take a chance on me - to trust me, work with me, and invest in me.
Why now?
Communicating in a resonant way has always been a superpower - but never more so than right now.
In a world where AI tools can generate vast quantities of fairly good, but insufficiently distinctive, content it’s becoming harder for companies to cut through. Customers’ inboxes are becoming inundated with ‘personalized’ emails, and they’re becoming more discerning about what’s human.
As a result, outbound sales motions have become hopelessly embattled. In this evolving terrain, being able to cut through the noise and resonate with customers has become more crucial than ever.
Through Encour, I hope to help companies win by commanding their narrative - not for the sake of sharing feel-good stories, but to pave a path towards successful endings.
I cannot wait for this next chapter. If you’d like to follow along and receive regular content about strategic communication -
If you’re a company who’s interested to explore how you can gain an unfair advantage via effective communication, let’s talk!
With gratitude to Sean, Abhi, James, Jethro, Jamie, Maxine, and Hunter for reading early drafts and providing invaluable feedback!
Interested to see where that barbell thinking is going to go. Feel it’s not a barbell though… perhaps more of a matrix of linked nodes (some AI; some human; but def matrixed)…. as a barbell that’s a ton of weight to be lifting alone. Subscribed to see where you go. Have fun, watching with interest.
I'm fascinated to know the story that sits behind this: "Eventually, I found the courage to take a leap of faith, and leave to build something new".
I have so many questions around it. How did you find it was communication that was your calling? How do you discern communication as being the core part of what you can provide the world rather than a complimentary skill used in your other core offering (investment)? and then the big decision to make that switch?
Congrats on making the move, wishing you all the success :)