Operator-Led Venture Diligence
Test tools with real customers before investing and distributing
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 97%
Hawke Ventures uses an operator-led diligence loop rather than evaluating a software company only from its deck. Huberman describes the process as selecting a tool in a field Hawke Media knows, having the team use it, putting it on client brands, and observing whether it works and whether users like it. Only after that operating evidence does the fund invest. The relationship can then continue through distribution: Hawke Media's sales team offers the product to its client base, helping make a market for the portfolio company. The mechanism combines diligence and value creation. A real pilot tests product usefulness, customer response, and fit with the agency; the subsequent investment gains an informed owner; and the operator's existing customer channel can accelerate adoption while improving the operator's own service.
Origin
Huberman developed the approach after Hawke Media's agency work gave it a practical advantage no conventional venture fund had: a team and hundreds of active clients able to test marketing technology.
Core principles
- 01Invest only in products the operator understands
- 02Real usage is stronger diligence than a product pitch
- 03Customer access can validate and distribute a tool
- 04An investment is stronger when it also improves the core offer
How to run it
- 1
Stay inside your expertise
Evaluate products in a category your operating company understands. Use domain knowledge to distinguish a useful tool from a persuasive pitch.
Pro tip Start with a customer problem your team already encounters.
Watch out Do not claim a diligence advantage in an unfamiliar market.
- 2
Use the product
Let the operating team work with the tool before making an investment decision. Observe usability and whether it changes the work meaningfully.
Pro tip Assign the test to people who would use the product after investment.
Watch out A demonstration is not evidence of day-to-day utility.
- 3
Pilot with customers
Deploy the tool on suitable customer accounts and measure the practical response. Confirm that both the team and customers value the result.
Pro tip Choose representative brands rather than only the easiest showcase.
Watch out Do not expose clients to an unbounded or poorly supervised trial.
- 4
Invest on evidence
Make the investment only after the operator-led test supports the product thesis. Use what the pilot revealed to shape the relationship.
Pro tip Document what specifically worked before committing capital.
Watch out A successful pilot does not remove ordinary venture risk.
- 5
Activate distribution
Introduce the proven tool through the operator's sales and customer channels. Create value for the portfolio company and the core customers at the same time.
Pro tip Sell the customer outcome as part of the core offer.
Watch out Do not force an investment onto customers when it does not fit.
In the wild
Huberman says Hawke Ventures gives a prospective tool to its team, uses it on brands, and watches whether it works and whether everyone is happy. That operating test precedes the investment decision.
→ The fund invests with direct evidence of product utility and customer fit.
After investing, Hawke Media can offer a tool such as heat mapping through its sales team and active client base. Huberman describes this as becoming a market maker for the company.
→ The investor contributes customer distribution rather than capital alone.
Common mistakes
Investing from the pitch
Skipping direct usage loses the operating evidence that makes this diligence model distinctive.
Ignoring distribution fit
A good product that the operator cannot credibly introduce to customers misses the reinforcing advantage of the model.
Is it for you?
Best for
It is best for operating businesses with domain expertise, customers, and a repeatable way to pilot new products.
Not ideal for
It is not ideal for passive investors who lack direct product access or relevant users.
From the transcript
“we only invest in what we know”
“our diligence is cool tool here's a team use it put it on some Brands let's see if it works if they like it we…”
“we become a market maker because we turn our sales team into their sales team”
From the episode
Dominating the Marketing Industry ft. Erik Huberman
Erik Huberman