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AI & I · 3 min · Oct 14, 2026

Back founders whose pivot foot is technology, not a market

Matt Hartman

Founder & Managing Partner, Factorial Capital

As a Betaworks partner, he was the first investor in Hugging Face, Anchor (bought by Spotify) and Squad (bought by Twitter).

  • NQ

    Natalia QuinteroHost · Head of consulting, Every

    Ran Silicon Valley Bank's Latin American tech portfolio before Every.

About this segment

Hartman assumes every early company will pivot, so he backs technical teams who can carry their skills to a new market. Domain-expert teams tend to stay stuck in one vertical.

From “How Hugging Face’s Investor Spots Winners”, Oct 14, 2026. Watch the full episode

“The companies that have been most successful that I've been involved with are ones where the pivot foot was about the technology, not about necessarily market understanding”
Matt Hartmanat 20:46 · AI & I20:46

Takeaways

  1. Assume any pre-seed company will pivot; judge where it could pivot to
  2. Industry-executive teams usually pivot within the same vertical
  3. Technical teams can move a data insight from one industry to another
Watch 3:03 from 18:07

In this episode

Full episode

  1. 18:07Back founders whose pivot foot is technology, not a market3:03

  2. 35:23Vibe coding his own app taught an investor why SaaS still sells2:51Up next
  3. 31:01How Hartman judges an earned insight in early founders2:24

Transcript

From the transcript AI & I publishes with the episode.

  1. 18:11

    Yeah, it sounds like there's a real commitment to the scientific method in finding where the edge of science is and who is thinking about it really critically. It reminds me of how in 2025, you told TechCrunch that your mantra for investing is that to invest in software, you need to know how software works. And I'm curious how you came to that particular mantra. Yeah. I would say that's true for me.

  2. 18:37

    There are obviously people who don't code who are amazing investors. So I think there's probably multiple ways to do this. For me, I am interested in things that are newly possible because of technology, and I think understanding how what the stacks look like, understanding the technology itself, even in the era of vibe coding, where like I can, anybody can build anything theoretically. If you are, the questions you ask become more important.

  3. 19:07

    So if the question you ask is, how can I make this thing? That's different than the question of, hey, I'm seeing that there's all these local AI models. They run on different kinds of computers. What is the best way to optimize this for mine? That's more of a question that a technologist who understands the limitations of a local model and understands that there's RAM constraints would ask. I think those are the kinds of products that get built that resonate with me more.

  4. 19:34

    And I think, again, this is just sort of me, my approach is, I think there is a very good way to back startups that is market-driven. You've backed executives to understand the industry. I think a lot about your, what, in basketball, you have like a pivot foot, right? We're talking about pivoting in startups. If you keep one foot down, if you move both feet, it's traveling in basketball. I think that in the same industry, lots of companies just totally build something new, and that's fine.

  5. 19:59

    But when I'm thinking about it at the very early stage, I always assume that the company is going to pivot. And the question is, are they going to pivot towards something that I am a sort of fellow traveler and also believe in? Or are they going to have limitations on what the pivot could be? So if you backed a bunch of real estate executives to build an AI native thing for real estate, So they're going to have a fairly constrained, you know, it is more likely they're going to find, they're going to pivot to something that is still in that same market, like real estate, than a technical team who might say, the reason we're going after this is because there's a particular shape of the data that is in this industry, and maybe it didn't work, but it turns out that that shape is right in the car industry or wherever it is.

  6. 20:50

    The companies that have been most successful that I've been involved with are ones where the pivot foot was about the technology, not about necessarily market understanding of a particular vertical. And so for me, back in technical founders gives them the ability to move with where the world goes.