I think about types of markets in 3 generalized ways:

1) Large and established markets. The opportunity here is to take a behavior currently happening in the market and make it some combination of easier, cheaper and faster to do. AI, for instance, makes lots of existing behavior a lot better. Examples may be the legal market where companies like Casetext (a USV portfolio co) make legal research much faster and easier to do. The taxi and black care market was an example at one point. Or new payments platforms where shifting behavior into easier, cheaper and even more fun options makes the movement of money better. This isn't new behavior but it can be, often dramatically, improved and thereby expanded. The challenge is the energy involved--time, cost, work--to compete with the existing norms. Behavior change is hard so the bar is high but exceeding it creates equity value and sometimes a lot of it. There are moments in time, including this one, where emerging technologies make the gap of where behavior is and where it can be enormous. And you get the benefit of working in known and unquestionably large markets.

2) Nascent markets. Here, the bet is on a market that currently doesn't exist becoming a new fixture of how we live. The prize here is huge and the work involved equally so. You are creating current and motion out of thin air. Sometimes there is a small or unorganized cauldron of behavior but you need to create the market around it. An example might be AirBnB. People slept on each others' couches but there wasn't a market to support the behavior. Bio-tracking may be another emerging example. The behavior was largely unsupported or impossible in a mass consumer way so building in the space requires training users on how to do it and why they care about it as well as providing excellent product to make it possible. If you succeed, some of the biggest prizes may sit in this category because you've created net new opportunity. Sometimes they require a lot of capital to get there because behavior training is very expensive.

3) Markets in motion. This is the category where I have recently been spending a lot of time and thought. I've been thinking about them as markets in motion--they aren't established and built out but they are sitting on tipping points with current moving them forward. The current may come from societal or behavior changes or needs, technology, regulation. At best, they are on the ledge of a tipping point--a market outside the main stream that's being propelled toward it. Examples here include leveraging psychedelics as treatment for mental illness, the electrification of increasing parts of our world, virtual and nontraditional schools, or owned identity built on the blockchain. One challenge is these markets are often messy. They haven't quite figured out exactly how they will work. Increasingly, they intersect areas with regulatory complexity or uncertainty. And if you underwrite them to where they are today, some of them will seem too small and stop you before you start. There's also timing risk. How fast is that current really moving? Despite all of that, the benefit of forward motion is tremendous. The energy you put in--time, cost, work--is amplified by momentum outside of what you create. Forward motion creates room for mistakes and missteps while market pull keeps you going anyway. And, if timed right, there's huge opportunity to be an early market leader.

I can think of great opportunities and companies formed across all three markets in the USV portfolio past and present. But I think we are at a moment where there's some unique opportunity in markets in motion.