1/ This Tweetstorm is for people that like data. Data engineers, data scientists, data enthusiasts. People that don’t like data should not read this. You should watch a cat video on Facebook, and probably shouldn’t read my stuff on Twitter.
2/ There is a secret industry that is 3x the size of tech and has an outrageous amount of data in it. The data has been shown to be predictive of success and it is out there in the wild - just waiting for you to gobble it up.
Sing it loud…..CPG.
Sing it loud…..CPG.
3/ First- what’s important to realize is that the business models in CPG are largely standardized. Meaning if I’m selling shampoo, dog food or water, the margins are different but the business model is basically the same.
4/ Make product, sell product (through offline/online retailer, or by yourself). The business model is volume x price. It’s that simple.
5/ There is no concept of giving away your ice cream for 5 yrs for free and then hoping to charge for it. No one has ever required that you buy a 5 year subscription to the granola in order to eat it. I can't get shampoo for free if i will just accept ads on the front of label
6/ Because the business models are basically the same, it's the same game of chess over and over. That enhances the value of the data I’ll talk about now. Data that is everywhere, data that will help you describe the current performance and predict future performance. 
7/ Let’s talk about key levers to look at in evaluating a consumer brand. Financial performance (mostly revenue and growth), brand intensity with the consumer, product uniqueness, distribution (breadth v. quality; online v. off). Lots of stuff from here:
8/ Here is what is amazing- all of those metrics have data to evaluate them, not gut feel. And that data is out there- ready to be pulled together and used.
9/ This isn’t tech where we need a VC w/ 10 yrs of exp to predict a) can CEO recruit a great product team, b) can product team build a product that will be revolutionary, c) can team sell the product effectively, d) can this all happen without getting leapfrogged? Lots tea leaves
10/ In consumer, the data is there to look at. You don’t have to guess performance, you can just look and see the data. And that data is highly correlated w/ future success (take my word for it now- in the future we’ll release data proving it)
11/ DISTRIBUTION- try googling your favorite small brand. Then look at what comes up- it will be hundreds (or thousands) of hits talking about where it is sold. Turns out when it launches in @WholeFoods, brand wants public to know it can be found in WFM) and WFM wants you to know
12/ Extend that out- you can begin to get a really good pic of where brand is sold offline & online. Let’s be clear- knowing that a brand is in WFM isn’t helpful. You need to know which stores- are they in 4, 40 or 400 WFM? And do they have 1 SKU, 5 SKUs? What are price points?
13/ Now extrapolate that data (location data, price pt, # of SKUs) across hundreds of thousands of brands, tens of millions of SKUs and tens of thousands of retailers, every month.
That’s a lot of data. It is also most of the revenue equation in CPG.
Now we’re cooking with gas
That’s a lot of data. It is also most of the revenue equation in CPG.
Now we’re cooking with gas
14/ BRAND- Unless you’re focused on private label, great CPG co's have brands that resonate with consumer. They’ve nailed value prop and are communicating effectively. In today’s market, consumers looking to express their individuality through brands they buy.
15/ Think about ways you would want data to know if the brand has an intensely positive relationship with the consumer. This isn’t enterprise tech, where vc would survey 20 big customers. The consumers surface their feelings pretty clearly- social, blogs, awards, reviews, etc
16/ Together they tell a story about the relationship the brand has with consumers. Now track that over time for 1 company and see how it changes. Then see how it compares to every other company in the category.
17/ PRODUCT- If you look at the last 200 most successful exits in consumer, they had two things in common. 1. a brand that had intensity with the consumer and 2. a product that was unique in a way that mattered to the world.
18/ @kind bar is a great example here. In 2004 everyone thought snack bars were overcrowded. They missed that most bars didn’t look like real food. Kind Bar saw hole, and the importance of it. Put whole nuts in product and placed in clear wrapper so everyone could see it is real
19/ Doesn’t sound that interesting huh? Well it is a $4 billion company and has raised less than the average Series B co. in Silicon Valley.
nytimes.com/2017/11/29/bus…
nytimes.com/2017/11/29/bus…
20/ OK so here is the bad part. Or good part if you like hard problems and barriers to entry. But maybe bad part if you’re lazy.
Finding, compiling, cleaning, making sense of and combining this data is an offensively hard task.
Finding, compiling, cleaning, making sense of and combining this data is an offensively hard task.
21/ The data primarily comes from hundreds of sources. Here is a summary:
medium.com/@ryancaldbeck/…
medium.com/@ryancaldbeck/…
22/ Combining the data takes entity resolution technology that even Amazon hasn’t figured out yet
circleup.com/blog/2018/05/1…
circleup.com/blog/2018/05/1…
23/ But if you can nail that data above, it can be used for some pretty amazing things to help entrepreneurs to thrive.
24/ Investors can find companies more efficiently, evaluate them with less human bias, understand how they compare vs. a competitive set more fully
Or it could be the foundation for a systematic private fund.
Or it could be the foundation for a systematic private fund.
25/ Retailers can identify winners to work with using data instead of gut.
Strategics can be more confident about M&A. Entrepreneurs can use to develop and execute growth strategies.
This data is going to be harnessed. Those that leverage it will win.
Strategics can be more confident about M&A. Entrepreneurs can use to develop and execute growth strategies.
This data is going to be harnessed. Those that leverage it will win.
