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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With a reported deal in the wings for Joby Aviation, electric aircraft soars to $10B business

One year after nabbing $590 million from investors led by Toyota, and a few months after picking up Uber’s flying taxi businessJoby Aviation is reportedly in talks to go public in a SPAC deal that would value the electric plane manufacturer at nearly $5.7 billion.

News of a potential deal comes on the heels of another big SPAC transaction in electric planes, for Archer Aviation. If the Financial Times‘ reporting is accurate, then that would mean that the two will soon be publicly traded at a total value approaching $10 billion.

It’s a heady time for startups making vehicles powered by anything other than hydrocarbons, and the SPAC wave has hit it hard.

Electric car companies Arrival, Canoo, ChargePoint, Fisker, Lordstown Motors, Proterra and The Lion Electric Company are some of the companies that have merged with SPACs — or announced plans to — in the past year.

Now it appears that any company that has anything to do with the electrification of any mode of transportation is going to get waved onto the runway for a public listing through a special purpose acquisition company vehicle — a wildly popular route at the moment for companies that might find traditional IPO listings more challenging to carry out but would rather not stay in startup mode when it comes to fundraising.

The investment group reportedly taking Joby to the moon! out to public markets is led by the billionaire tech entrepreneurs and investors Reid Hoffman, the co-founder of LinkedIn, and Mark Pincus, who launched the casual gaming company, Zynga.

Together the two men had formed Reinvent Technology Partners, a special purpose acquisition company, earlier in 2020. The shell company went public and raised $690 million to make a deal.

Any transaction for Joby would be a win for the company’s backers including Toyota, Baillie Gifford, Intel Capital, JetBlue Technology Ventures (the investment arm of the US-based airline), and Uber, which invested $125 million into Joby.

Joby has a prototype that has already taken 600 flights, but has yet to be certified by the Federal Aviation Administration. And the success of any transaction between the company and Hoffman and Pincus’ SPAC group is far from a sure thing, as the FT noted.

The deal would require an additional capital infusion into the SPAC that the two men established, and without that extra cash, all bets are off. Indeed, that is probably one reason why anyone is reading about this now.

Alternatively powered transportation vehicles of all stripes and covering all modes of travel are the rage right now among the public investment crowd. Part of that is due to rising pressure among institutional investors to find companies with an environmental, sustainability, and good governance thesis that they can invest in, and part of that is due to tailwinds coming from government regulations pushing for the decarbonization of fleets in a bid to curb global warming.

The environmental impact is one chief reason that United chief executive Scott Kirby cited when speaking about his company’s $1 billion purchase order from the electric plane company that actually announced it would be pursuing a public offering through a SPAC earlier this week.

“By working with Archer, United is showing the aviation industry that now is the time to embrace cleaner, more efficient modes of transportation,” Kirby said. “With the right technology, we can curb the impact aircraft have on the planet, but we have to identify the next generation of companies who will make this a reality early and find ways to help them get off the ground.”

It’s also an investment in a possible new business line that could eventually shuttle United passengers to and from an airport, as TechCrunch reported earlier. United projected that a trip in one of Archer’s eVTOL aircraft could reduce CO2 emissions by up to 50% per passenger traveling between Hollywood and Los Angeles International Airport.

The agreement to go public and the order from United Airlines comes less than a year after Archer Aviation came out of stealth. Archer was co-founded in 2018 by Adam Goldstein and Brett Adcock, who sold their software-as-a-service company Vettery to The Adecco Group for more than $100 million. The company’s primary backer was Marc Lore, who sold his company Jet.com to Walmart in 2016 for $3.3 billion. Lore was Walmart’s e-commerce chief until January.

For any SPAC investors or venture capitalists worried that they’re now left out of the EV plane investment bonanza, take heart! There’s still the German tech developer, Lilium. And if an investor is interested in supersonic travel, there’s always Boom.

#adam-goldstein, #airline, #baillie-gifford, #canoo, #chargepoint, #co-founder, #corporate-finance, #e-commerce, #economy, #evtol, #federal-aviation-administration, #finance, #fisker, #intel-capital, #investment, #jet-com, #jetblue-technology-ventures, #joby, #joby-aviation, #lilium, #linkedin, #lordstown-motors, #marc-lore, #mark-pincus, #private-equity, #proterra, #reid-hoffman, #reinvent-technology-partners, #software-as-a-service, #spacs, #special-purpose-acquisition-company, #tc, #the-adecco-group, #the-financial-times, #toyota, #transportation, #uber, #united-airlines, #vettery, #walmart, #zynga

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Marc Lore leaves Walmart a little over four years after selling Jet.com for $3B

Marc Lore, the executive vice president, president and CEO of U.S. e-commerce for Walmart, is stepping down a little over four years after selling his e-commerce company Jet.com to the country’s largest retailer for $3 billion.

Lore’s tenure at the company was a mixed bag. Walmart instituted several new technology initiatives under Lore’s tenure, but the Jet.com service was shuttered last May and other initiatives from Lore, like an option to have customers order items via text, was also a money-loser for the Bentonville, AK-based company.

“After Mr. Lore retires on January 31, 2021, the U.S. business, including all the aspects of US retail eCommerce, will continue to report to John Furner, Executive Vice President, President and Chief Executive Officer, Walmart U.S., beginning on February 1, 2021,” Walmart said in a filing.

Walmart has continued to push ahead with a number of tech-related initiatives, including the launch of a new business that will focus on developing financial services.

That initiative is being undertaken through a strategic partnership with the fintech investment firm, Ribbit Capital and adds to a startup tech portfolio that also includes the incubator Store N⁰8, which launched in 2018.

“Reflecting on the past few years with so much pride – Walmart changed my life and the work we did together will keep changing the lives of customers for years to come. It has been an honor to be a part of the Walmart family and I look forward to providing advice and ideas in the future,” Lore said in a statement posted to Linkedin. “Looking forward, I’ll be taking some time off and plan to continue working with several startups. Excited to keep you all up to date on what’s next.”

 

 

 

#alaska, #e-commerce, #ecommerce, #financial-services, #jet-com, #linkedin, #marc-lore, #retail-ecommerce, #retailers, #ribbit-capital, #tc, #united-states, #walmart

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Air taxi startup Archer is partnering with automaker FCA on production of its electric aircraft

Archer, a company that’s looking to develop an airline of electric vertical take-off and landing (eVTOL) aircraft for sue in urban transport, will work with automaker Fiat Chrysler Automobiles (FCA) in a new partnership to benefit from the latter’s expertise in engineering, design, supply chain and materials science. Archer aims to start production of its eVTOLs at scale beginning in 2023, with an initial unveiling to occur early this year.

The new team-up will see FCA provide input that contributes to the design of Archer’s eVTOL cockpit, as well, another area where the automaker has ample expertise, since it has designed spaces for drivers for many decades in its automotive business. Archer’s aircraft will be powered by an electric motor, and will be able to fly for up to 60 miles at top speeds of 150 mph. The Archer eVTOL is designed to be quiet and efficient, with efforts from the FCA collaboration going towards lowering the cost of its manufacturing to make high-volume manufacturing achievable and sustainable.

Ultimately, Archer is looking to FCA to help it realize efficiencies in its process that can make bringing its eVTOL to market a sound business that can also be accessed affordably by end users. Palo Alto-based Archer is looking to ultimately scale production to the point where it can produce “thousands” of its eVTOL aircraft per year, for use in future air taxi services serving cities globally.

Based in Palo Alto and led by co-founders Brett Adcock and Adam Goldstein, and including industry executives like Chief Engineer Goeff Bower, who previously served int hat role at Airbus’ Vahana eVTOL initiative, Archer launched out of stealth earlier this year with backing from Marc Lore, current President and CEO of Walmart’s ecommerce business (he was co-founder and CEO of Jet when it was acquired by the retailer).

#adam-goldstein, #aerospace, #airbus, #airline, #chrysler, #companies, #ecommerce, #engines, #evtol, #fiat, #fiat-chrysler-automobiles, #manufacturing, #marc-lore, #mergers-and-acquisitions, #palo-alto, #startups, #supply-chain, #transportation

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