The Twenty Minute VC

Nico Wittenborn: Consumer Subscription Apps; Using Evolutionary Biology to Invest; Solo GP's | E1017

Nico Wittenborn is the Founder of Adjacent, one of the best early-stage firms created over the last 5 years. Before starting Adjacent, Nico spent over 3 years at Insight Partners in New York and before that learned the craft of venture from some of the best in early-stage, Point Nine, where he spent over 4 years. Nico’s portfolio across funds includes the likes of Revolut, Chainalysis, Oura, RevenueCat and PhotoRoom to name a few. ----------------------------------------- Timestamps: 0:00 Intro 1:22 Nico Wittenborn: From Insight Partners to founding Adjacent 8:35 Consumer Subscription Apps 24:22 The State of the VC Market Today 29:22 Deep Dive on Adjacent 48:27 The Rise of Solo GP’s 55:21 How I Use Evolutionary Biology to Invest 59:56 VC Market Predictions 1:10:29 Life Advice from Nico 1:16:46 Quick-Fire Round ------------------------------------------ In Today’s Show with Nico Wittenborn We Discuss: 1.) From Selling Mobile Phones to Leading Early-Stage Investor: How did Nico first make his way into the world of venture with Point Nine? What did Nico learn from his time with Point Nine and Insight? How did his time at each impact how he invests and runs Adjacent today? What does Nico know now that he wishes he had known when he started investing? 2.) Is Consumer Subscription Even a Good Place to Invest? With Calm ($2BN) and Duolingo ($6BN) as the market leaders and there only being two of them, is consumer subscription even a good place to invest? How does Nico pushback that retention for consumer subscription apps is so bad? What do many not see about consumer subscription retention numbers? How does Nico respond to the challenge of high customer acquisition cost and navigating challenging platform shifts in advertising, when investing in consumer subscription? What will the consumer subscription landscape look like in 5 years time? 3.) Adjacent: The Fund, The Strategy: Why does Nico believe if your fund model relies on $10BN outcomes, you are in trouble? How large is the latest Adjacent fund? What does the portfolio construction look like for the fund? How much diversification is the right level of diversification? How many companies per fund? How does Nico think about capital concentration on a per-company basis? What are Nico’s ownership requirements? How have they changed with funds? What is it about Nico’s structure which enables him to be more collaborative than others? 4.) Nico: The Investor: Lessons: How does Nico reflect on his own relationship to price? When does he pay up? When does he not? What has been one of Nico’s biggest misses? How has that changed his approach? Why does Nico not really compete with the large multi-stage funds? Why is Nico deliberately trying to reduce the amount of companies that he sees? 5.) The Future of Venture: How does Nico analyze the rise of solo GPs? What are the biggest pros and cons of the model? Why does Nico believe the large generalist funds are in trouble? Who is set to win and who is set to lose in the next 10 years of venture? Which seed firm would Nico invest in? Which Series A firm? Which growth firm? -------------------------------------------- #NicoWittenborn #Adjacent #HarryStebbings #20VC #venturecapital #consumersubscription #business #investing

Nico WittenbornguestHarry Stebbingshost

May 21, 20231h 29mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

Nico Wittenborn Bets Big On Consumer Subscriptions And Solo GP Model

Nico Wittenborn, founder of Adjacent, explains how he applies an “adjacent possible” evolutionary biology lens to identify emerging markets and category-creating consumer subscription apps. Drawing on experience at Point Nine and Insight, he argues that mobile consumer subscription businesses are still early, with Calm, Duolingo and others only now reaching maturity since App Store subscriptions began in 2011. He defends the model versus SaaS by highlighting cash efficiency, high margins, and cohort behavior, while acknowledging higher first-year churn and channel volatility. Nico also dives into his solo GP fund construction, views on pricing and ownership, the future of venture, and how family, identity, and values shape his investing choices.

IDEAS WORTH REMEMBERING

5 ideas

Use the “adjacent possible” to spot where new categories can emerge.

Nico looks for technological, behavioral, or social shifts that logically enable the “next step” in evolution (e.g., transformers → OpenAI → ChatGPT subscriptions; meditation mainstreaming → Calm), then backs companies that can build categories on top of those shifts.

Consumer subscription apps can be strong businesses despite high initial churn.

He expects ~50% or more churn in year one, but sees cohorts flattening afterwards to resemble SMB SaaS; if CAC is paid back in year one and the market is large, the stacking of retained cohorts can produce durable, high-margin revenue.

Design acquisition so CAC is repaid in the first year, ideally via annual upfront plans.

Adjacent companies target recovering CAC from the initial annual subscription payment; this reduces risk from higher churn and makes these businesses surprisingly cash-efficient compared to enterprise SaaS with large salesforces.

Optimize paywalls aggressively but thoughtfully, using frequency and trials.

Data from infrastructure tools (e.g., Superwall, RevenueCat) shows the single biggest driver of conversion is how often users see the paywall; frequent, well-designed paywalls plus free trials can lift conversion without necessarily degrading user experience.

Diversify acquisition channels early to avoid platform risk.

Nico sees overreliance on a single channel like Facebook/Instagram as a major existential risk; founders should exploit what works but deliberately invest in additional channels and organic loops before it’s too late to transition.

WORDS WORTH SAVING

5 quotes

“I consciously chose an area to focus on that I believed in strongly… If in five years there’s not more companies that we can point to, probably I was not as right as I think I am.”

— Nico Wittenborn

“Once somebody is a habitual user of the product, typically they just don’t decide to rip it out of their life.”

— Nico Wittenborn

“You write an app, you put it on the App Store, it’s in 200 countries, you charge annual upfront, and with a seed round you get to tens of millions in revenue. That’s crazy.”

— Nico Wittenborn

“For me, true venture is thesis-driven and early-stage.”

— Nico Wittenborn

“Kids are a very smart invention by nature, a forcing function to make us think long term.”

— Nico Wittenborn

Application of the “adjacent possible” concept to tech investingEconomics and dynamics of consumer subscription apps vs. SaaSCustomer acquisition, churn, and paywall optimization in mobileAdjacent’s fund strategy, portfolio construction, and seed/A focusThe rise, benefits, and limits of the solo GP modelVenture market structure, mega-funds, and future exit pathsPersonal drivers: upbringing, family, and long-term orientation

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