ECOMMERCE: There will be a whole new generation of great brands created in the coming years. There are many great investors leaning into these opportunities, including us. But I’d suggest that founders in these categories look for modest valuations and bootstrap as much as possible. Loot Crate bootstrapped its way to 600,000 subscribers and $100 million in revenue — you can too. Leverage Kickstarter or Indiegogo as much as possible — Misfit got its start on Indiegogo and ultimately sold for a quarter billion dollars.
BRAND: It took me a while to finally “get” Snapchat. In fact, it wasn’t until earlier this year when my agency’s founder kept sending me random snaps from Comedy Central’s Discover Channel that I finally Googled, “how to use Snapchat” like an old person so that I could figure out how to appropriately respond to her. Yes, I was part of the 1% of Millennials that wasn’t actively using Shapchat, but thanks to my boss’ love for Key and Peele, her refusal to get cable TV, plus my cousin’s random cat videos, I decided it was finally time to become better acquainted.
ECOMMERCE: Both brands are longstanding international status symbols at the forefront of the fashion industry - each featuring distinct and exceptional product lines. But where they differ greatly is in their digital commerce offerings. Burberry is a luxury brand that really gets it right. The brand’s digital experience is perfectly aligned with its image and persona - creating a sleek, chic, modern and cool feel. The couture brand uses bold visuals throughout its site, with a dynamic homepage that integrates interactive elements and visually stunning photography that instantly captures the attention of any consumer.
ECOMMERCE: Like MeUndies, many companies started considering Snapchat as if it were TV by producing narrative-driven series. While every snap can be seen as a story in some degree, Paul Marcum, president for agency Truffle Pig (backed by Snapchat, WPP and DailyMail), believes that Snapchat requires “a different approach and a different level of brand presentation,” meaning that brands have to be agile and develop content quickly. “The biggest challenge on Snapchat is to make everything look as effortless as possible,” said Marcum.
BRAND: Nike already anticipates that there will be excess inventory going into the first fiscal quarter of 2017, and excess inventory means deep discounts, which ultimately hurts profits. As for basketball sneakers, though the sales dip is only 1 percent, according to UBS, basketball accounts for 12 to 14 percent of the company's business—so 1 percent is nothing to sneeze at. There's also the rise of luxury sneakers to consider.
ECOMMERCE: One of the most significant statistics outlined in the infographic reflects the potential impact of video in the sales process. According to the statistic, using product videos on ecommerce sites can increase product purchases by 144 percent. That’s a huge difference. But if you think about the growing popularity of online videos, it makes sense. Especially in an ecommerce environment where buyers don’t have the opportunity to pick up products.
THE INFORMATION: The past six months have shown that building compelling bots is very challenging. Completely automated bots aren’t ready for prime time and hybrid services with human involvement cost a lot to develop. How developers can make money from bots also hasn’t been clarified. But I’m still bullish on the shift to bots. In light of great hype and quick disappointment in most places, the hype-cycle backlash has already started.
MEDIA: There are two types of geofilters: community filters and on-demand filters. Community filters pop up when you step into a new city, onto a college campus, into a park, or even a neighborhood. They generally cover a larger area and stick around forever. On-demand filters are typically used for events, including weddings, birthday parties, concerts. Those cover less space and last a shorter period of time, but are also much easier to submit and get approved.
Whiteboard: converting eCommerce metrics to investor-speak
Today's top article on The Laws of Retail Physics is an important article. There is truth and clarity in it, even if there are a few points that I'd contend. Warby Parker ($115M raised) has fewer exit opportunities than most. Casper is at the cusp ($56M raised) of the same sorts of limitation and Bonobos has blown past them both with ($128M raised).
One of the laws of retail physics that we observe in the startup world's second tier markets like Vegas, New Orleans, Columbus, Dallas, Atlanta, Louisville is that you should raise as little as possible. This typically means that achieving cash flow positive must be in the cards, early on, to be a sustaining business.
In between the two American coasts, DNVB's have to operate for short-term profitability. Series A and Series B rounds are raised to achieve this goal. This is often done by reverse engineering investor metrics into workable, efficient eCommerce marketing and branding plans. Data driven brand managers / CMO's are rare but they exist at the healthiest eCommerce brands.
"The CEOs of DNVBs obsess over creating the perfect Facebook ad featuring photogenic models, but they really need to spend more time honing their financial model in Excel." ~ Micah Rosenbloom, Partner Founder Collective
This is probably the most important quote. It's what a few companies have done really well. Often, the ones that do have raised < $10M in total capital and have 60+% gross margins with a financial model that leans upon omni-channel, Net Promoter-driven organic sales, and a honed-in digital ad strategy that drives quarterly growth with minimal risk. These are the few that will achieve a 3-4x multiple at exit.
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