Tony Florence, the low-flying head of NEA’s tech practice, on the art of building household brands

Tony Florence isn’t as well known to the public as other top investors like Bill Gurley or Marc Andreessen, but he’s someone who founders with SaaS and especially marketplace e-commerce companies know — or should. He’s responsible for the global tech investing activities for NEA, one of the world’s biggest venture firms in terms of assets under management (it closed its newest fund with $3.6 billion last year).

Florence has also been involved with a long list of e-commerce brands to break through, including Jet, Gilt, Goop, Casper, Letgo, and Moda Operandi.

It’s because we talked earlier this week with one of his newer e-commerce bets, Maisonette, that we wanted to ask him about brand building more than a year into a pandemic that has changed the world in both fleeting and permanent ways. We wound up talking about how customer acquisition has changed; what he thinks of the growing number of companies trying to roll up third-party sellers on Amazon; and how upstarts can maintain momentum when even younger companies become a shiny new fascination for customers.

Note: one topic that he couldn’t and wouldn’t comment on is the future of one famed founder who Florence has backed twice, Marc Lore, who stepped down from Walmart last month to begin building what he recently told Vox is a multi-decade project to build “a city of the future” supported by “a reformed version of capitalism.”

Part of our chat with Florence, lightly edited for length and clarity, follows:

TC: You’ve funded a number of very different businesses that have managed to grow even as Amazon has eaten up more of the retail market. Is there any sector or vertical you wouldn’t back because of the company?

TF: You have to be thoughtful about Amazon. I wouldn’t say there’s one particular area that you either can ignore or feel like you’re completely comfortable and open to, given the scale of their platform. At the same time, there are founding principles and fundamentals that we think about as they relate to companies being able to compete and operate successfully.

TC: And these are what? You’ve backed Marc Lore, Philip Krim (of Casper), Sylvana and Luisana of Maisonette. Do they have something in common?

TF:  Sometimes [founders] come at the problem organically; they’re living it [and want to solve it]. Other times, somebody like Marc sees a business opportunity and just attacks it. But there are commonalities. These are folks who are very customer centric, who are focused on good, fundamental unit economics, and who are obsessive about their people, their teams. It takes a village to build a young successful company, and all of those founders you mentioned are great at recruiting world-class people. There’s a sense of vision and mission and culture.

When you wake up and decide to do something, the majority of people you talk to just want to tell you the reasons why it can’t work, so it also takes a certain [wherewithal] to have such conviction around what you’re doing that you’re kind of all in on it, and you’re going to break through no matter what.

TC: Maisonette was going to open a brick-and-mortar store but put a pin in that plan because of COVID. Will we go back to seeing direct-to-consumer brands opening real-world locations when this is over? Has the pandemic permanently changed that calculation?

TF: Leading up to the pandemic, a lot of the young DTC companies that were direct-to-consumer brands, and even the traditional e-commerce marketplaces, were experimenting with offline. Some of it was out of necessity, frankly. Sometimes [customer acquisition costs] became so expensive that it was actually cheaper for them to go offline. In other cases, it was done because the customer wanted that closed loop experience, as with [mattress maker] Casper.

A lot of companies [opened these stores] in a contained way it worked really well. It’s very accretive financially to the overall business contribution, margin wise. It was accretive for the overall customer experience. And in many cases, it didn’t cannibalize anything. It just expanded the [total addressable market].

We’re spending a lot of time right now continuing to think through what are the permanent changes that are going to come out of the pandemic, but I would say the omnichannel model has really has started to take shape and succeed if you look at big retailers like Walmart and Target, so I think there will be an omnichannel dynamic to many of these companies that we’re talking about. Also, over the last 12 months, the cost of acquisition and the efficacy of marketing has swung back in the favor of these young companies. It’s improved to a point where we don’t really even need to think about offline.

TC: I know it had become expensive to acquire customers digitally because it was so crowded out there. Did it become less crowded?

TF: There were very few platforms that these companies could use pre pandemic that weren’t oversaturated . . . it was just very competitive, and that would bid up the cost of acquisition. In the last 12 months, you’ve seen big parts of that market go away. With airlines and financial services and a lot of the spend going way down, it’s become a lot cheaper for companies to market digitally.

TC: Still, it feels at times that it’s hard to maintain a brand’s momentum over time; there’s always some new outfit nipping at its heels. How does a brand itself fresh and relevant in 2021?

TF: There’s a hits dynamic — a fad dynamic — in the consumer space, so that’s always a challenge. You [compete by] continually reinventing and adding [to your offerings]. You see that in social categories, you see that in marketplaces [where they add] managed services and other components [like] payments, and you clearly see it in the way some of the direct-to-consumer companies continue to add new products to the mix.

You focus on the core aspects of your brand and its mission and vision and make sure that the customers really feel that. There’s a community dynamic that has really occurred the last four or five years around e-commerce companies. Glossier is a great example of a company that built a great community around a core set of product offerings, and that has really propelled that company beyond its core customer customer base.

There’s also a contextual commerce opportunity. Goop is a great example this; Gwyneth [Paltrow] brilliantly came up with [an effective way] to merge content and commerce, and that’s something a lot of companies in the commerce space have started to invest in.

TC: Content, community and not necessarily speed, so focusing on what Amazon does not. Can I ask: do you think Amazon needs to be reigned in?

TF: If you’re competing with them [in the] cloud market or a commerce market, they’re a very formidable competitor, and you got to take them very, very seriously. They’re at a scale that’s just incredibly impressive. But I do think you’re seeing a lot of innovation around the edges and companies finding areas that Amazon maybe can’t focus on or isn’t focusing on.

TC: What do you think of these Amazon Marketplace roll-ups that we’re seeing? There’s been at least a half of dozen of them that already, including Thrasio, which announced $750 million this week. All are raising money hand over first.

TF: We haven’t made an investment in the area, though we’re watching very closely. It can be a very capital intensive strategy to execute on because you’re buying brands and then bringing them onto the platform to consolidate and grow, but there’s just an enormous long tail to the e-commerce space and this is an opportunity to consolidate that.

TC: Like, an infinite opportunity? How many roll-ups can the market support?

TFL I do think that we’ll see a handful of these companies get to decent scale. The question will be whether you’ve got more of an arbitrage going on [by] buying companies and generating synergies or there’s some fundamental bigger breakthrough. If you could use AI [and] machine learning to understand how to better serve customers and think about customer acquisition a little bit better, that would be really interesting. If there are real economies of scale to the supply chains [or] baseline infrastructure, that would certainly be interesting.

It’s early on. It remains to be seen how this is gonna play out.

Pictured above, left to right: NEA’s global managing director, Scott Sandell, and Florence, who is the head of global tech investing activities at NEA and who works alongside Mohamad Makhzoumi, who oversees the firm’s healthcare practice.

#casper, #ecommerce, #glossier, #goop, #jet, #maisonette, #marc-lore, #marketplaces, #nea, #tc, #tony-florence, #venture-capital

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Leonardo DiCaprio takes a stake in Struck Capital to fund the future of LA’s tech ecosystem

Leonardo DiCaprio is making a significant commitment to the Los Angeles-based investment firm, Struck Capital, as part of the actor’s commitment to building LA into a tech development powerhouse.

It’s part of what Struck Capital founder Adam Struck called a vision of making Los Angeles “a leading hub for innovation to save the world.”

Struck Capital, which is currently investing out of a $55 million second fund, would not disclose the size of DiCaprio’s stake, but said that the investment is significant.

“Los Angeles has a creative and innovative spirit like nowhere else, and I’m excited to be investing in the next generation of entrepreneurs and business leaders in my hometown,” said DiCaprio, in a statement.

DiCaprio has already made a number of investments in startup companies that have done very well for the Academy Award-winning actor. Two investments, the mattress retailer Casper and the meat alternative manufacturer, Beyond Meat, are now both publicly traded companies. In fact, Beyond Meat was one of the best performing public offerings of the last year.

And the two investments highlight themes of consumer innovation and sustainability that are a through-line across the startup commitments DiCaprio has made public, according to CrunchBase. Other investments include the lab grown diamond manufacturer, Diamond Foundry; the tea company promoting sustainable rainforest preservation, Runa Tea; recycling technology developer, Rubicon; the sustainable meal prep company, Love The Wild; and Magnus, an app that bills itself as a Shazam for art. DiCaprio is also investor in the Los Angeles-based ethically and sustainably focused financial services firm, Aspiration.

“He sees this as a way to support LA,” said Struck of DiCaprio’s commitment.

In addition to his commitment to the fund, DiCaprio will be making co-investments alongside the Struck Capital team. In fact, the actor has already investment in Raptor Maps, a company that uses drones to analyze the productivity and operations of solar farms.

“He chose us because he already appreciates our mandate,” said Struck. And while the firm may not be an impact investment fund by design, Struck said the company’s deals focus on financial inclusion, sustainability, and technological innovation as first principals. 

“I think, fundamentally, if a business is mission driven, they’re most likely going to acquire higher enterprise values and retain more talent,” Struck said.

Struck is now the fourth largest dedicated seed fund in Los Angeles, and has nearly $150 million in assets under management. Its portfolio companies include: Sendoso, ScratchPay, Mythical Games, and Brainbase and has backed and exited a number of later stage companies like Mojo Vision, Postmates, Nutanix, Latch, Grab, and Wunder Mobility.

“Alongside the team at Struck Capital we’re creating a community, where the next generation of LA’s leaders can grow their business, learn from one another, achieve their visions, and improve our world,” DiCaprio said in a statement.

#actors, #aspiration, #beyond-meat, #brainbase, #casper, #diamond-foundry, #economy, #finance, #impact-investing, #leonardo-dicaprio, #los-angeles, #louisiana, #mojo-vision, #nutanix, #postmates, #raptor-maps, #sendoso, #shazam, #struck-capital, #tc, #venture-capital, #wunder-mobility

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Red Antler’s Emily Heyward explains how to get people obsessed with your brand

If you’re currently building a startup, you know what product you want to build. But do you know if people are actually going to notice you? That’s the question I asked of Red Antler co-founder Emily Heyward during our virtual TechCrunch Early Stage event.

In case you’re not familiar with Red Antler, Heyward’s branding company has worked with some of the most iconic startups of the past decade, such as Casper, Allbirds, Brandless and Prose. She knows her topic so well that she just wrote a book on branding called “Obsessed.”

Let me break down the key takeaways of her presentation and responses to questions from our virtual audience — we’ve embedded a video below with our entire conversation.

Branding matters — anybody can launch a startup

It has never been easier to launch a startup. If it’s a software company, your infrastructure will be managed by a cloud hosting company. If you’re selling consumer goods, you can find manufacturing partners more easily than ever before.

“There are fewer traditional gatekeepers standing in your way. You don’t need to be able to afford a national TV campaign to get people to notice you and to hear about you. It’s a lot easier to get it out there and start selling directly to people,” Heyward said.

The result is that there are many companies competing in the same space, launching around the same time. Casper isn’t the only online mattress company anymore for instance. Brand obsession can set you apart from the rest of the crowd.

#airbnb, #brand-marketing, #casper, #emily-heyward, #graphic-design, #growth-marketing, #product-management, #red-antler, #startups, #tc

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Nuggs rebrands as Simulate with new cash, a new CTO and an expanded line of faux-meat foods

Nuggs, the alternative-meat company founded by serial entrepreneur Ben Pasternak (who previously co-founded the social media app Monkey), has raised $4.1 million and gotten itself a new name and a new CTO as it looks to move beyond chicken nuggets.

Now called Simulate, Pasternak’s startup is readying the launch of new products including spicy nuggets, a “chicken burger product” and, eventually, a hot dog, that required a branding change to befit its newly broadened ambitions in the ultra-competitive industry out to reform consumers’ carnivorous impulses.

Since Pasternak first began pitching his direct to consumer chicken nugget replacements a bit over a year ago, the company has sold 1 million pounds of nuggets. Over the next week, Simulate’s frozen nuggets will make their debut in around 30 Gelson’s supermarkets in California. The company has plans to release its chicken patty within the next few months and a hot dog replacement, DOGGS, in the fourth quarter.

Pasternak began to rebrand earlier this summer when his company launched the second iteration of its nuggets in June.

In addition to his new brand, and new investors including Lerer Hippeau,<span style=”font-weight: 400;”> AgFunder, Reddit co-founder Alexis Ohanian; former Whole Foods chief executive Walter Robb, and model Jasmine Tookes; Pasternak also has a new chief technology officer. 

Bringing Thierry Saint-Denis, the former senior director of research and innovation at Danone, on as CTO is a coup for the company. As a business Nuggs seemed to be more of a marketing play backed by a savvy founder and a frozen food giant that wanted to make a play for the burgeoning market for meat substitutes and replacements. Now, with Saint-Denis, the company brings on a developer of food products that have reached nearly $1 billion in sales who holds over 14 patents related to functional ingredients, probiotics, and enzymes. 

With the new executive in place, new and previous investors like McCain Foods, Rainfall Ventures, Maven Ventures, NOMO Ventures, MTV founder Bob Pittman, and Casper founder Neil Parikh are now backing a company with a bit more technical heft behind it.  

Not that Nuggs wasn’t improving its product line over the past year. Pasternak touts the company’s iterative approach to product development, embodied in its different “release notes” as the company toyed with different formulations.

That software driven approach may also yield other sales options, like a subscription service, Pasternak said. “We have seen this core community of people obsessively purchasing the new versions. We are looking at launching some kind of beta testing subscription thing shortly.”

#alexis-ohanian, #bob-pittman, #casper, #chief-technology-officer, #co-founder, #cto, #initialized, #lerer-hippeau, #tc, #whole-foods

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Casper winds down European operations and lays off 78 people

Mattress company Casper is shutting down its European operations and laying off 78 people as it focuses on “achieving profitability,” according to a statement by the company. The layoff impacts 21% of its corporate workforce globally.

In the statement, the company said that it is winding down European operations to “concentrate on the strength of the North American business.” The pull out will result in more than $10 million in annualized savings, per the company.

The company also noted that Casper’s CFO and COO, Gregory Macfarlane, will be departing from the company on May 15.

Casper said it will give impacted employees in both North America and Europe severance, extended medical coverage, career coaching, and new job placement support.The company did not immediately return a request for comment.

In the months since its lackluster IPO and troubled public market debut in February, the company has struggled amid the COVID-19 pandemic. Last month it announced it will shut down all retail locations and furlough all retail employees.

Ahead of going public, Casper hinted at some struggles. The company cut its valuation by more than 50% by lowering its expected price range from between $17 to $19 per share to between $12 and $13.

Casper was one of the recent tech unicorns to make it to the public market, and might be for a while given an increasingly tumultuous economic environment. Tech unicorns have not been immune from the massive number of layoffs seen around the world right now. GetAround, Knotel, Sonder, ZipRecruiter, TripActions, and Bird are all among the second wave of unicorn layoffs.

As reported by Crunchbase News with data from layoffs.fyi, 46 percent of all reported layoffs for private companies come from unicorn companies. Roughly 36 private unicorn companies have laid off staff since the COVID-19 outbreak, according to the data.

It’s worth remembering that amid these massive layoffs, it is likely that employees in satellite offices will likely be affected. Casper is a clear example of this, as the New York-based company cuts its Europe team.

The company is throwing up warning signs ahead of Q1 earnings, which it will report on May 21, 2020.

#casper, #casper-sleep, #coronavirus, #covid-19, #employment, #europe, #getaround, #layoffs, #mattress, #new-york, #north-america, #personnel, #tc, #tripactions, #unicorn

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