1/ I was so happy to see @DelRey cover this topic and with so much depth.
recode.net/2018/8/29/1777…
recode.net/2018/8/29/1777…
2/ There are wonderful things about the tech press-namely giving attention to innovation (which spurs more innovation & invst). The tech press matters- a lot.
But I also think too often they get seduced by large funding rounds. Talking about raising $100m is, very oddly, sexy.
But I also think too often they get seduced by large funding rounds. Talking about raising $100m is, very oddly, sexy.
3/ Raising big rounds is dilution. It is a post-money trap. It is a narrowing of options for exit. It is added pressure to grow- by Any. Means. Necessary.
And yes- sometimes it might also be a possible indication that company has some traction.
fortune.com/2018/08/23/ben…
And yes- sometimes it might also be a possible indication that company has some traction.
fortune.com/2018/08/23/ben…
4/ Loved that Jason covered what is happening in d2c with a unique lens in this piece. It wasn’t the typical “let's talk about who has raised the most because that is what counts” piece from some other publications.
5/ This identified that the successful d2c companies today are being built in a much more capital efficient way. That’s great for great investors, the founders and the team members that build these companies. It’s bad for clowny investors who want to “put money to work”.
6/ What is also happening is that consumer preferences are becoming more granular (personalization of the consumer). Winners will be more prevalent in consumer today, but the outcomes will on avg be smaller. 
7/ Wait (says half of Silicon Valley)... how can this be true? I keep hearing about this mayonnaise company that sells mayonnaise online and they have raised like $200m? That’s an exit right?
No. That's dilution. Really- try to name some.....
No. That's dilution. Really- try to name some.....
8/ TON of exits in CPG, but they don't need $50m in growth equity to get there. That's the point. Name some that raised a lot AND had successful exit. That list gets real short real quickly. Well maybe we’re just in the first year of d2c??? Oh wait- we’re in year 20.
9/ More exits, in a huge market, but the avg outcomes will be smaller? Huh…….almost seems like that means you should make a lot of smaller bets, and avoid writing $50-100m growth equity checks into one consumer co?
10/ I deeply hope entrepreneurs read this piece. His example of Honest Co. is spot on. They will eventually have an exit- but it’s been brutal because they raised about 10x more than they should have along the way.
12/ Now 3rd party in d2c like have caught up and are allowing d2c capital efficiency to look a lot more like CPG than tech. Think <$10m to win instead of $100m+.
13/ I am optimistic that over the next few yrs more of tech press will move away from the funding rounds and more towards covering success by other, more important metrics. Native was a massive success. Massive.
14/ $100m exit doesn’t sound interesting to most in Silicon Valley…because most in SV are used to raising $95m to get there.
15/ Mostly grateful to Jason for helping to educate entrepreneurs, investors, team members etc. on this market. d2c has some wonderful characteristics – but VCs need to recognize that if the co. is raising huge rounds that’s a real bad sign.
