Meet Atomic: Silicon Valley’s Coolest VC That Is Not Actually a VC

Philip Levinson, Contributor

Founded in 2012, this firm launches and funds companies such as Hims and Terminal. Philip Levinson (HKS ’12) reports.

Meet Atomic, the firm behind Hims, Terminal, Bungalow, and several other booming venture-backed companies.

Before discussing who is behind Atomic, let’s discuss what Atomic is—and what it is isn’t. First, don’t call Atomic a venture capital firm, even though they just raised a $150 million fund.

“We’re definitely not a venture capital firm,” says Chester Ng, Atomic partner.

What about an accelerator? Or an incubator?

“We’re not an accelerator or incubator either,” says Ng.

So, what the heck is Atomic?

“Atomic is a group of serial entrepreneurs starting and building multiple companies in parallel,” says Ng. “We’ve raised a $150 million fund to back these companies, but we operate very differently from a VC firm, incubator, or accelerator. I suppose the ‘venture studio’ moniker is emerging to describe our model, but put even more simply—Atomic is a company that builds companies.”

Yes, Atomic founds and funds companies, as described on their homepage. That certainly sounds pretty cool.

As a venture studio, Ng and Atomic founders Jack Abraham and Andrew Dudum don’t take pitches or inbound queries. As Ng puts it, “We spend all of our time and energy working with amazing co-founders to start companies.”

In only five years since launch and six months since closing their second fund, Atomic’s approach is already paying great dividends. One noteworthy example is the rapid success of Hims.

Launched by Atomic in 2017 with Dudum as CEO, Hims has flourished, raising $197 million from IVP, Thrive, Forerunner, Redpoint, and Founders Fund in addition to Atomic. As noted in a number of articles, Hims’ brand and ads are now ubiquitous across many media—from televised football games to social media—with Dudum stating that they shipped “more product in the first year than any consumer company has ever done.”

As with each of their companies, Atomic launched Hims with a vision and thesis followed by extensive testing and experimentation. “We started with a thesis that telemedicine could help diagnose and treat specific conditions,” says Ng. “We built a prototype to address medical issues that men face but are often too uncomfortable to go see a doctor for, such as hair loss and erectile dysfunction.”

He adds, “The demand was off the charts. Now we’ve launched Hers, to target both women and men.”

This vision-testing-iterate process is key to Atomic’s approach. But assembling the right founders and operators is also fundamental.

Nikki Pechet (MBA ’07) is the CEO of Homebound, one of Atomic’s newest companies. She speaks enthusiastically of the model.

“Atomic isn’t just an investor,” says Pechet. “They truly co-found businesses with entrepreneurs, and support those businesses as they grow.”

She points to the Atomic Business Services team that handles a number of requisite business services on behalf of founders, giving her and other CEOs more “time to actually build the business that you’ve set out to build.”

In this sense, Atomic has not just taken thesis-driven venture investing to the next level; they’ve changed the model.

“While [all] of our businesses attempt to disrupt their respective markets, Atomic is focused on disrupting the process of innovation itself,” says Founder and Partner Jack Abraham. “We are challenging the convention that successful businesses can only be formed by a process of randomness by which talented people, pain points and potential ideas collide in society. We empower talented people to solve the meaningful challenges of our time.”

Very cool, indeed. But how exactly does Atomic make this empowerment approach?

Atomic launches companies in one of two ways: “starting either with a founder or an idea,” says Ng.

Terminal is an example of the latter, an idea-driven launch in which Atomic had “an idea we just felt so strongly about. We just started building it immediately.”

Terminal was founded in 2017 by Atomic alongside Joe Lonsdale, founding partner of 8VC and co-founder of Palantir. The company has evolved in to a thriving Canada-based talent company focused on building elite engineering teams in various geographic hubs, such as Montreal or Vancouver, with the goal of supplementing and accelerating fast-growing companies in labor-constrained markets such as San Francisco. Terminal’s customers now include Eventbrite, Dialpad, and Zenreach along with Atomic companies Hims, Bungalow, and others. The company has now raised $13 million in a Series A financing from Lightspeed Venture Partners, Thiel Capital, KPCB, and Craft Ventures.

Terminal CEO Clay Kellogg (MBA ’05) talks about Atomic’s role as founder and backer: “All of our investors have been instrumental in helping our success, but Atomic is unique in its holistic approach to founder support.”

In fact, Kellogg points out that Terminal was only founded as a result of Atomic’s unique philosophy.

“In the early days of Atomic, the first batch of companies were faced with the challenge of hiring and retaining top technical talent in extremely competitive environments like Silicon Valley,” says Kellogg. “So, Atomic created and tested a novel concept: a turnkey solution to build, scale, run remote engineering teams across Canada. The success with this trial led to Terminal.”

Atomic is industry agnostic, says Ng, but he adds, “We’ve recently gravitated toward more traditional industries like healthcare and real estate, which still feel incredibly backwards in many ways.”

With hundreds of ideas tested and more than a dozen companies launched—each of which has successfully raised external funding—Atomic is just getting started.

“There are a ton of huge problems in the world that need to be solved and a ton of very talented people who want to solve them,” says Ng. “We believe that systematically marrying the best talent with the best ideas, and creating companies as a result, can have a major impact in solving these problems.”

By all early business and venture capital measures, Atomic is, indeed, having a major impact. Just don’t call them a venture capital firm.

Philip Levinson (HKS ’12) is Vice President of Marketing at EdCast, the Softbank-funded SaaS company, and Venture Advisor at FinSight Ventures. His previous articles for the Harbus were 2 Big Ways Blockchain Is Changing Healthcare (May 2018) and How Blockchain Is Changing the Energy Industry (December 2018). Follow him on Twitter @plevinson.