Thread by @jstoffer

1/ Souring on consumer as a result of
@Casper is like calling SaaS unattractive due to Domo. There'll be many consumer unicorns over the next decade. @maveron put together our 10 Lessons from Consumer Winners and Losers of the Past Decade link.medium.com/X84IQrFXb4

2/ Many of the best brands start by fostering obsessive brand love within niche, early adopter communities and then moving toward mainstream

3/ Brands starting in niche communities take longer than mass market brands to begin to scale and cannot authentically accelerate their early growth path with outside capital

4/ Brands can no longer attain hyper-growth using digital Facebook and Google advertising. From 2010–2016, the number of ad units grew exponentially as the world shifted to online and digital platforms. At that time, brands such as @Zulily @Chewy scaled at an unprecedented pace

5/ The best brands need to learn to thrive in a multi-channel world. Customers demand the brands they love be available online and in real life

6/ VCs expect their winners to return 10–25x+ within a ten-year fund cycle. Only the most exceptional consumer brands can achieve this bar. However, there is a lot of wealth to be created for brands that grow to $50-$250M in equity value in a capital efficient way.

7/ Capital cannot accelerate growth for (most) consumer brands; forcing higher growth wastefully consumes capital. The best consumer brands create strong venture scale returns and grow > 50% a year in the 5–10 years after reaching $50M in revenue

8/ Twenty-two years after its founding in 1998, Lululemon is worth over $33 billion, and, with $3.3 billion in revenue, is still growing 23% a year.

9/ Rarely does it make sense to raise significant capital for a consumer brand early. The best examples are if there are high R&D costs, like
@Peloton @ImpossibleFoods. Some of the best consumer brands, like Supreme or @YETICoolers waited for years before taking outside capital

10/ Category determines your ceiling as a brand. @Allbirds @rothys have more in common with Vans and Nike than they do with Casper, Away or Warby Parker.

11/ A brand’s category determines its ability to extend its reach over time, its multiple and its potential acquirers. Nike & Lululemon customers have given them license to launch adjacent categories. There are fewer logical adjacencies in categories like eyewear and mattresses.

12/ You have no strategic value without EBITDA. Neither public market investors nor strategic buyers want to be saddled with the burden of unprofitable consumer brands.

13/ Revenue multiples are for SaaS companies. Consumer brands are valued on EBITDA multiples. The best consumer companies are valued at 20–30x EBITDA — this changes over time but does point to the potential of what brands like Warby, Away & Glossier could expect with a great exit

14/ Finally, be careful about raising too much capital at too high a price — you could end up spending many years catching up to an inflated private market valuation and put your business at risk if you do not achieve your growth targets.

15/ Recent unheralded consumer wins: @yeti $3B; @Itcosmetics $1.2B; @Casamigos $1B; @goldengoosedb $1.4B