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Consumer is boring
And thats prob a good thing
Here is a truth:
Consumer is boring and it should be.
The past 3 years have been the outlier.
The past 15 years have been the outlier.
Consumer SHOULDNT change the world.
2010 DTC BOOM:
I believe this was directly fueled by VCs raising too much money.
why did they raise too much money?
High fees, higher egos.
saying you run a 1b fund is just a brag.
Sounds cooler than a 200m fund.
But really, the world would be a better place if everyone just ran 200m funds.
Average fund size per year above. It has tripled over the past 22 years.
Have the amount of good deals tripled?
“But mobile, crypto, fintech, ai”
Most value was captured by legacy players.
People raised VC dollars in the 90s.
The internet was as big a shift as mobile, the difference is google won the internet and apple won mobile.
Apple was public the whole time.
Not only was fund size bigger, more dollars were raised.
From 100b a year to almost 900 BILLION a year.
So we had larger fund sizes, and way more funds.
did the amount of good deals 3x? or 8x?
So VCs had to look for more games to bet on.
its a casino, and the craps table is full.
Maybe ill try my luck at baccarat?
But they didnt know the rules and have never played baccarat.
They got lucky with consumer/service SAAS.
people liked uber and airbnb.
but they ended up dropping SAAS completely and going straight into consumer.
Allbirds, warby, outdoor voices, away, everlane, etc
all of those investments suck ass.
we had inexperienced players
with too much money
trying to play a game they couldnt understand
in a crowded room
Those investments were always going to suck.
But here is what those dollars did:
Put consumer in the spotlight for 10 years.
Then covid hit.
That put ecom in the spotlight for 2 years.
suddenly ecom was growing as fast as mobile adoption did!
Or the internet!
Bam. Second round of VC funding.
EVEN MORE DOLLARS FLOW IN!
But we are smart this time.
I wont invest in brands. I am investing in platforms.
You cant pick winners in consumer.
Until a brand is doing 50m a year, it can all go away.
Even then, it can still go away.
I will never invest in your consumer brand.
Because consumers have infinite choice.
They dont actually need whatever you are selling.
It wont make them more money.
SAAS only works when:
Customers dont have choice
They NEED (legally, business wise, etc) what you are selling
what you are selling makes them money
Otherwise, saas gets compete down to zero.
Like how TEAMS is exactly like slack, but free.
If you got into ecom/consumer because it was cool/hot, you should leave.
The future is VERY BORING the next few years.
Most brands will struggle to comp 2020-2022 sales numbers.
Competition will stay strong from overseas sellers AND big conglomerates.
Target and walmart are bigger threats to your business than temu.
They know digital now, and wont be caught off footed like what happened in covid
Most brands will shrink, die, be replaced.
Nothing is special in consumer.
Your packaging, your formula, your ads can all be copied.
What makes you special in consumer is execution.
Make great things, learn to sell them, control your cash.
It is honestly so slow and boring, the best analogy would be farming.
Farming isnt explosive. There is no WINNING in farming.
Crops take as long as they take to grow.
And brands take as long as they take to build.
Try to rush it, you lose the farm.
Last 15 years were fake
Next 5 years are slow
Only work here if you love it
Stop trying to make line go up, work on building something worth your time
Funding is gone or will be gone soon
We arent a fundable industry
No shortcuts in farming, no shortcuts in brand building