This week, Kate Clark called me to chat about BeReal in the wake of the 500 million Euro acquisition. I shared with her a few thoughts about the M&A market opening up in consumer tech, which has been frozen over since 2022. In the past 10 days alone, we've seen sizeable acquisitions of Tabular (Databricks), Champion (Hanesbrands), Bitstamp (Robinhood), AlphaSense (Tegus) and BeReal (Voodoo). Why did this happen and what does this mean for the future? Well, as I shared with Kate, a few reasons: 1) public company growth has slowed down. As Chetan Puttagunta from Benchmark shared, "there are no public software companies projecting to grow revenue 30% or more in the next twelve months." 2) private companies have for the last 18+ months tried to adjust cost structure with varying degrees of success. There's a group of companies that have gotten closer to profitability, still growing nicely with an attractive user base, these make for viable M&A candidates. Other profiles: AI talent grab, compelling product that can lead to long term margin expansion in the combined entity. 3) these late stage private companies face a harsh fundraising environment. Large money managers that entered the venture market in the ZIRP era have shifted some their focus away from late stage growth / pre IPO rounds to asset classes (i.e. fixed income, private credit) where the risk adjusted return is better with rates where they are. The alternative to face the public markets may also not be a viable option. 4) while there are more favorable conditions for M&A today than the last 2 years, these deals may not look as pretty as the headlines suggest. Regulatory headwinds from FTC are inevitable, and wouldn't be surprised if we see more performance earnouts as part of the deal package. 5) I'm optimistic for more M&A activity, and believe it's directionally net positive for the overall ecosystem. M&A activity has the ability to encourage a new set of entrepreneurs; getting even a taste of an exit can be powerful. Even more, I'm bullish on consumer tech. Consumers are still buying, still adopting new technology, and have proven to be resilient. If you're in the early stages (seed + Series A) building in consumer, don't be a stranger and drop me a note. And! Any feedback and thoughts on M&A and markets are always welcome :) Full Information article here: https://lnkd.in/gJJkCVd4
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YC is an incredible institution, and has served as an important early partner to some of the most impressive consumer teams - Airbnb, DoorDash, Coinbase, Instacart, Rappi, GOAT - among others. Batch composition (sector, geo, themes) tends to be a good general reflection of the attitude of the Valley. Unsurprising AI dominated in this recent batch. Of U.S. co’s, 154 (79%) mention “AI” in their business description. Only 14% of the batch were building consumer facing companies. We’d love to see more :) At Maveron, we’re super excited for companies to have internal AI workflows and tools to run more efficiently, we also remain very excited on consumer AI applications to deliver more personalized healthcare, more personalized education, more efficient marketplaces, and functions we haven’t even dreamed up yet. More stats + thoughts from my teammate Hunter below 👇👇👇
Last week, Natalie Dillon and I attended YC Demo Day. Compared to prior batches, we noticed a smaller-than-usual cohort of consumer companies. What can we learn from this, and why are we so optimistic about the future of consumer? A few stats: 1/ ~14% of the YC W24 cohort were U.S.-based consumer companies. That's a smaller percentage than typical. 2/ ~80% of U.S.-based companies leveraged AI as a key part of their business model. This is a proxy for both i) what YC is on the lookout for, and ii) what founders are excited about building. 3/ Among consumer companies, we saw the most interest in areas like gaming, music/entertainment, and AI -- notably less in healthcare and education. What does this mean for consumer companies and for consumer-focused funds like Maveron? We typically see at least one consumer unicorn in YC per year; there is no reason to believe the W24 batch won't perform in line with this, despite the cohort being relatively smaller than normal. There also appears to be an opportunity for more healthcare and education companies to thrive in the YC ecosystem. We also expect that, over time, several companies in this batch may pivot from enterprise to consumer (or serve both).
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Crocs and Stanley are independently incredible case studies on how to revitalize and resurge a teetering brand. They share a common thread: both were turned around by the same individual, Terence Reilly. I dug in to learn from Terence, sharing a few lessons from his playbook.
Case Study: The turnaround of Crocs and Stanley spearheaded by Terence Reilly
Natalie Dillon on LinkedIn
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🛒 🛍 Coupang acquires luxury retailer, Farfetch for $500M, let’s understand what happened here Farfetch is an online luxury fashion marketplace headquartered in London. The company was founded in 2007 by Portuguese entrepreneur José Neves, and publicly launched 2 weeks after Lehman Brothers collapsed in 2008. Farfetch has the ambitious goal to be the global technology platform for luxury fashion, connecting creators, curators and consumers. It raised a total of $1.6B in funding to do so. As Imran Amed, CEO of Business of Fashion wrote “It was a simple, powerful idea that instantly made sense to me. Some of the best fashion boutiques around the world, despite having a powerful eye for curation, were not able to fund, set up and manage their own e-commerce operations to scale their businesses beyond their local markets — and Farfetch could help with that.” Neves went on to build a robust two sided marketplace, connecting shoppers across 190 countries to over 3,200 brands, boutiques, and department stores through a single internet storefront. Farfetch charges a 25%+ commission per sale to its boutique partners. Fast forward to 2018 when Farfetch made FTCH happen. The company went public under the ticker FTCH ending its first day of trading with a $5.8B market cap, reaching a ~$25B market cap at its peak in 2021. Along the way cracks emerged, some macro and some self inflicted. Farfetch faced a slowing luxury goods market. Farfetch got bogged down in high overhead costs, debt load, and inability to demonstrate profitability. Farfetch acquired 15 companies from 2015 - 2022 including luxury physical retailer Browns, beauty retailer Violet Grey ($44M), sneaker reseller Stadium Goods ($250M), New Guard Group ($675M) meaning that Farfetch now operated brands like Off-White and Palm Angels, including design, manufacturing and physical retail. A lot to digest. Which brings us up to this week’s news: Farfetch facing bankruptcy secured a lifeline from Korean based e-commerce company Coupang - together with Greenoaks (highly respect this firm) - agreed to lend $500 million, buy the assets and delist Farfetch. WHY The acquisition allows Coupang to enter the luxury e-commerce sector. Bom Kim, CEO of Coupang, shared “Farfetch is a landmark of the luxury landscape and has been a transformative force in demonstrating that online luxury is the future of luxury retail.” While luxury market still lags other consumer sectors in online penetration, South Koreans may well be the earliest adopters to online luxury given their highly online behavior and luxury spending propensity. In 2022, South Koreans became the world’s largest spenders per capita ($325) of luxury products. The same year, Hermès, Chanel, and Louis Vuitton—made around $2.98 billion in sales in Korea, with the latter becoming the nation’s top-performing brand. Intrigued to see how the Farfetch and Coupang integration unfolds. Curious to learn what others think in the comments below!
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Chobani Acquires La Colombe for $900M, let’s get into the backstory 🦅 Founded in 1994 in Philadelphia, La Colombe is viewed as a leader in the 3rd wave coffee movement, and operates 32 cafes across the US. 🏔️ La Colombe was founded by Todd Carmichael and JB Iberti. Carmichael attended University of Washington, and was the first in his family to go to college. At 18, he started working at Starbucks, then a small company. ⛵ After college, he lived in Europe working odd jobs. While living on a sail boat he wrote the business plan for what would become La Colombe. 🏛️ In 1993, he went all in on La Colombe. Carmichael signed a 50 year lease (!!) for $1,500 a month to operate its first cafe in Philly. 13 years later, La Colombe opened its second cafe in Tribeca. 🧊 In 2014, the cold-latte-on-tap system was introduced in their original cafe in Philly. Sales in that store jumped 17.5% in the first week it was introduced, consumers couldn’t get enough of it. The same year, PE firm Goode Partners invested in La Colombe. The cold-latte-on tap system soon became a hallmark of all of its cafes, and cold beverages quickly made up 50% of its sales by 2016. 🔎 Carmichael obsessed figuring out how to take this barista worthy cold latte from his cafés to store shelves. 🍦 Drawing inspiration from his son’s love for whipped cream, specifically the nitrous oxide found in whipped cream aerosol cans, Carmichael began working on a completely new can. The award winning can has a proprietary one-way valve at the bottom of the can that compresses a nitrous oxide gas into the drink upon opening. The technology creates the textured foam that gives the draft latte its distinctive cafe style quality. 🤝 By 2015, La Colombe caught the attention of Chobani founder, Hamdi Ulukaya, who bought out Goode Partners to become majority owner. ⚡ In 2016, La Colombe launched its first canned draft latte on Amazon with a 10,000 batch. It sold out in 60 minutes. La Colombe found lightning in a bottle. 🛒 Now you can find La Colombe ready to drink products at Whole Foods, Wegmans, among many other retailers. La Colombe's RTD line has 3x'd in the last five years and is believed to grow the $5 billion US RTD coffee category. 🌱 In 2017, La Colombe became one of the first specialty coffee roasters to work with Oatly in the US. By 2018 they introduced Oatmilk draft latte, and hit $90M in overall sales. By 2019, Oatmilk represented 55% of on tap sales. 💰 Fast forward to the news of this week. Chobani is acquiring La Colombe for $900M in a deal involving $44M of cash on hand and a $550M loan the company said was oversubscribed 3x. Bev giant Keurig Dr Pepper, which invested $300M for a 33% stake this past July, now has a minority position in Chobani. Meanwhile, Chobani is buying out Ulukaya himself; he had been La Colombe’s sole investor until Keurig came along. 👏 A big congrats to the La Colombe team, given their history of innovation excited for what's next!
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📝Latest survey on teen tech use by Pew Research Center 🧑💻 YouTube dominates, 9/10 teen use YouTube 💻 70% of teens use YouTube daily 🃏 63% use TikTok 👻 60% use Snapchat 🤳 59% use Instagram, jumps 70% for 15-17 yrs ✖️ 33% use Twitter / X versus 71% in 2014-15 🎡 46% teens use internet "almost constantly" 📈 On par to survey last yr, but 2x 2014-15 results 📱 1/3 use YouTube, TikTok, SNAP, IG, or FB constantly 👧 Teen girls (22%) use TikTok constantly vs boys (12%) ☯️ No gender difference usage on YouTube, IG, FB
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Early Stage Investor at Redpoint Ventures
1mo💃🏽💃🏽💃🏽