In the dynamic and often chaotic world of startups, a pervasive narrative born in Silicon Valley dictates that disruption, aggressive market education, and pursuing “unicorn” status are the only paths to success. However, in a recent candid conversation, Jeff Mahony, a seasoned investor with a distinctly contrarian philosophy, which includes layer-1 blockchain
His insights offer a refreshing and pragmatic guide for founders and investors seeking genuine value and sustainable impact. Mahony’s approach prioritizes real utility, organic growth, and, crucially, the often-underestimated financial power of diverse perspectives.
Don’t Educate, Elevate: The Futility of Forcing Behavior Change
For many entrepreneurs, the allure of disrupting an industry often means trying to fundamentally alter consumer behavior. But for Mahony, this is a glaring red flag.
His first, non-negotiable criterion for engagement with any business is simple: “If you have to change people’s behaviors, then I’m not interested.”
This goes against the grain of much innovation hype. Mahony argues that attempting to force new behaviors is an expensive uphill battle that rarely pays off. Instead, he seeks ventures that align with existing, growing behaviors. He points to his involvement in a rapidly growing dating app that, rather than striving to keep users perpetually engaged on the platform, has the singular premise of “getting you off the dating app.” This seemingly counterintuitive business model provides immense value by helping users find a relationship, making it an honest service to the community.
“If you have to go through that educational process, that’s an expensive uphill battle that usually all that happens is you stage it for somebody who came in after,” Mahony said. He’s looking for solutions that “smoothly fit into the hands of those folks that you’re trying to help,” providing an elevated experience without requiring a seismic cultural shift.
This pragmatic approach underscores a belief in organic adoption over forced market re-education – a costly and often futile endeavor in the long run.
The Problem-Solution Imperative: Beyond Academic Curiosity
Mahony’s skepticism extends to ventures that lack a clear problem-solution fit from the outset. He’s dismissive of what he terms “academic programs” that come to market without a defined niche.
He cites many blockchain projects as prime examples. While acknowledging that some blockchain solutions have utility and merit, he argues that many “didn’t come to market with an actual niche that they were trying to solve.” Instead, the last 15 years have been spent “trying to squeeze something speculative out of the technology,” a desperate search for utility after the fact.
“To be a pundit of something without rationale is a foolish path,” Mahony said. For him, every investment must stand up to rigorous “zero-based thinking.” Would you make the same decisions if you had to start over today? What’s the problem you’re trying to solve? These fundamental questions are a cornerstone of his investment strategy, ensuring that ventures are built on genuine need rather than speculative curiosity.
Beyond the Unicorn: Building on Bedrock, Not Sand
Pursuing unicorn status – a billion-dollar valuation – is a siren song for many startups. Yet, Mahony views it with profound skepticism, calling it “pure luck.” He parallels it to creating a video and hoping it goes viral – an unpredictable outcome driven by chance, not strategy.
“I believe in building on a solid framework – on bedrock, not sand. Create something sustainable,” Mahony said. He focuses on genuine service businesses, recognizing that “value presented will always be returned to you.” He points to the success of companies like
This contrasts sharply with the common startup practice of spreading so thin that you’re doing a mediocre job in pursuit of massive scale. Mahony advises startups to “retract… create a beachhead that you can do something amazing in that you can own.”
This measured approach to growth focuses on excellence within a defined space, trusting that genuine value will ultimately attract broader recognition and sustained success.
The Financial Imperative of Diversity: More Than Just Ethics
One of Mahony’s most compelling and often misunderstood philosophies revolves around diversity, equity, and inclusion (DEI). While many champion DEI from an ethical or moral standpoint, Mahony offers a clear, financially driven rationale that should resonate with any bottom-line focused investor.
He posits that if a product is designed by a homogenous group – or as this author likes to say, “five white guys from Stanford” – it will likely subconsciously cater to a limited demographic, perhaps “400 million trouser wearers globally.”
However, by assembling a truly diverse team – “a man, a woman, a disabled person, a deaf person, blind person, a Black person, a Latinx person” – the product will inherently be designed with a broader range of perspectives, making it suitable for a much larger market, potentially “6.3 billion consumers” around the world.
This problem is illustrated with a stark, real-world example: a soap dispenser company failing because its sensor
This merit-based approach acknowledges that while talent is “equally distributed,” as Mahony often states, opportunity is usually not. By providing opportunities to diverse individuals, you uplift the individual and enhance the product deliverable, avoid costly missteps, and open up vast new markets.
True innovation, he argues, often stems from the unexpected connections made when individuals from disparate backgrounds and experiences come together. As Mahony states, “There’s no new problem. Somebody else already solved this. They just might not be in your vertical.”
The Harsh Realities of Startup Life: Why Mahony’s Approach Matters
Mahony’s pragmatic philosophy becomes even more critical when viewed against current startup success rates. The entrepreneurial journey is fraught with peril. According to
- A staggering 90% of startups fail overall.
- 10% fail within the first year, and a significant 70% fail during years two through five.
- The single biggest reason for startup failure (34%) is a lack of proper product-market fit, creating a product nobody wants or needs. This directly validates Mahony’s “don’t try to educate the market” stance.
- Running out of funding is another critical factor, highlighting the need for sustainable business models over risky, capital-intensive behavioral change efforts.
- In specific sectors, the failure rates can be even higher; blockchain and cryptocurrency startups, for example, have a higher-than-average failure rate. This resonates with Mahony’s earlier critique of ventures without a clear niche.
These grim statistics underscore the value of Mahony’s contrarian wisdom. By focusing on real problems, existing behaviors, sustainable growth, and truly diverse teams, entrepreneurs can significantly mitigate the common pitfalls that lead to failure.
A New Blueprint for Business
Mahony’s investment philosophy offers a compelling blueprint for navigating the complexities of the modern business landscape. By prioritizing genuine utility, fostering organic growth, and embracing diversity not as an ethical mandate but as a financial imperative, he champions a path to success that is both sustainable and profoundly impactful.
In a world increasingly obsessed with fleeting trends and speculative valuations, Mahony reminds us that actual value lies in solving real problems for real people, with the right team to see it through.
