Last year I fell in love with Granola. Just like having a healthy breakfast, it became an everyday habit to record my video calls and, when I remembered, in-person chats (don’t forget to ask permission). I wanted to build up a picture of the world as I learnt it through meeting as many smart founders, expert operators and investors as I could. But when I got their annual roundup just before Christmas (shown here in screenshots), I realised I’d also built up a picture of me. Taken together these are the fund’s operating principles. Common Magic began in 2023 with a slow hunch that “community” isn’t a trend or a vertical but a secret hiding in plain sight for how generational companies get built. You look at Apple, Figma, Github, Stripe, Supercell, Lego, Roblox, Airbnb, Palo Alto Networks, Disney; the only thing this group have in common is distinctive ideologies and methodologies for how they engage deeply with their customers and users. I learnt this first-hand over fifteen years helping technical founders and teams build moats around their products in the form of communities and narratives. Common Magic exists to find, fund and support the next wave of generational companies building products with community at their core. As a solo investor so much of what you are selling to founders is yourself. So, while it feels grand to publish operating principles as a humble small fund, I hope these help any founder considering Common Magic for belief capital (email me sarah@commonmagic.xyz if you are). How you work is the work. So….
My favourite design principle in early 2010’s Google was focus on the user; listen, build with not for people. Running a fund is similar. There are markets that are better or worse (and my favourite; markets in motion) but, as a first round investor, the thing I weight most highly is how singular the founding team are. That’s why Common Magic is specialist generalist Something fund one taught me is that community and narrative can be core building blocks for startups in multiple domains from developer tools to consumer, robotics to enterprise AI and hardware. These show up in how you hire, build trust with customers, create evangelists and so much more. The best founders are learning machines who know a secret about an opportunity or market. They have absolute grit. Their passion and ability to communicate why what they’re building matters pulls the future forwards.
Rather than focus on today’s trends or any specific vertical, Common Magic is specialist generalist; building an intentionally diverse portfolio with a clear horizontal thread. 2. Common Magic works to build trust; trust wins you the right to be very honest. Portfolio founders told me they chose Common Magic for three reasons. The first two are thesis clarity (clarity of story creates clarity of strategy) and distinctive value-add. The third reason is personal style. I believe in building high-trust relationships. Company building is hard; you need people who will cheer for you in public and coach you in private.
Founders will and should always do what’s right for their company but you need partners around you who are truth tellers.
Can't decide if this one is flattering or not 3. Small, fast and focused beats big, slow and general Small solo funds have structural advantages that Common Magic leans into. Fred Destin once said venture firms divide into artisans and industrialists. For all the benefits a supersize brand and platform team can bring to a brand new startup, I’m an owner just like founders are owners. There’s a primacy to the solo GP — startup founder partnership because we’re both building our life’s work. Staying small means quick decisions, ownership ranges versus hard targets and investors who know their place on the cap table. [But no shade to the big funds. Small funds can believe in outlier ideas before others can; large funds supply the right capital and brand to help distinct companies scale. Plus any pragmatic small fund assumes some of their exit strategy comes from the largest funds seeking to buy earliest investors out.] 4. The secret ingredient is fun Starting something new is brave. Building something big is hard. Both steps are easier if what you’re building matters to you and you’re having fun. The grind feels lighter if you give yourself freedom to experiment and try, build with people you trust and celebrate each moment of momentum. How you work is the work. Let’s go build some Common Magic. _____ Four things this week:
Til next time, Sarah |