#7/2020

“The human brain is a complex organ with the wonderful power of enabling man to find reasons for continuing to believe whatever it is that he wants to believe.”
• Voltaire

News

Blue Apron, the meal-kit company that was once valued at $2 Billion is trying just about everything to raise cash (fortune.com)
  • Turns out, the model of ordering meals with one click is easily replicated, marketing spend is high, and the act of cooking itself is still time-consuming. Meanwhile, consumers continue to dine out or order delivery.
  • Other meal kit makers such as Plated (acquired by Albertsons Companies) and Chef’d have shuttered their doors.
  • Opinion: As I wrote in an earlier newsletter - On paper the model looks great, but in the end it does not benefit the targeted customer so much as he has other options. The only still high valued company in this space is german HelloFresh.

Outdoor Voices founder Tyler Haney is stepping down as CEO as growth slows (techcrunch.com)
  • Outdoor Voices is a D2C activewear brand that raised $64.M from investors such as GV, Drexler or General Catalyst. It has annual revenue of $40M USD and net losses of $2M per month ($24M annually). Higher cost came with 11 opened retail locations.
  • The transition follows a previously unreported capital injection from Outdoor Voices’ investors at a lower valuation than previous rounds. It says the company tried raising new funding late last year but “had difficulty.”
  • Opinion: D2C retailers are realizing that D2C is a channel — not a business model. That means it is not infinitely scalable. Also it was largely dependent on Facebook ads and Facebook decided to show less of them due to declining user engagement, thus limiting supply of ads while demand was quickly growing.
  • Similar to D2C bankruptcies last week, a lot of investors made a mistake of not including possible competition for paid ads in the business decision.

Reading

The Body Shop will start hiring the first person who applies for any retail job (fastcompany.com)
  • New philosophy called “open hiring”. No interviews, no background checks, no drug tests. When there is a job available, the first person who answers three yes-or-no questions gets the job.
  • In 2018, the Body Shop’s distribution center saw turnover rates of 38% in November and 43% in December. In 2019, after they began using open hiring, that decreased to 14% in November and 16% in December.
  • They said things like, ‘I’ve been struggling to find a job. This is one of the only places that would hire me, and I’m not going to mess this up,'

Marketplace 100, a ranking of the largest and fastest-growing consumer-facing marketplace startups and private companies (a16z.com)
  • Four startups account for 76% of consumer spend. Travel, food, and groceries are the largest categories, by a lot. Emerging categories are diverse: from celebrity shout-outs to car washes.
  • The fastest-growing companies are growing 3x to 5x YoY.
  • Opinion: The rankings seem surprising for me. For example Boatsetter (#76, boat rental marketplace). that was raising Series A for 3 years in 3 parts is higher than Vinted (#94, used fashion). Vinted raised 4x the amount of capital and is a unicorn. On top of that Vinted has lower margins, and thus should have higher GMV for the valuation.

Does Enterprise SaaS Need a Same-Store Sales Metric? (kellblog.com)
  • Retailers drive growth in two ways: Opening new stores and by increasing sales in the current stores. Opening new stores is great, but it’s an expensive way to drive new sales and requires a lot of up-front investment. That’s why they look at same store sales.
  • Enterprise software (with a long sales cycle) is similar, it has established sales reps with their own pipeline and new sales reps that require a lot of up-front investment.



Graph of the week: Youth behavior trends in the US from year 1991 to 2017

In case you are interested in helping us with evaluating some companies and industries or you just want to discus any of these articles, feel free to reach out to Roman from Presto Ventures at roman@prestoventures.com or Linkedin.

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