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Nick Brown

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27
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2018-08-06
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2018-08-06
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1
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  1. “We invested in a fitness app called FitPlan. You know, the reason we did that was for several reasons. I think we're fascinated by the intersection of media and technology with fitness. And so you have your pelotons that are creating physical product, you have your soul cycles that are creating classes, and then you have companies like FitPlan that are really building content that allow you to be better at all of those things. And I think what's most exciting to us in particular about this business is that it is leveraging social media influencers both for the creation of that content, but also for the marketing of that content. And so you'll take Michelle Lewin and you'll build a 20, 30 minute fitness video around her and that content will be rich in its nature, but you'll also be able to”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Yeah, I do think so. For me, what's most interesting about Amazon is how efficient it's made us. I would say there are a lot of products that I buy for my home on repeat that I have no problem buying on Amazon. And I think in a way, it gives you a greater ability of time. You know, I go on Amazon and buy a toothbrush and a toothpaste and all of the household items that I may need that I don't have a huge emotional attachment to, although there I'm sure lots of people that have an emotional attachment to their toothbrush as well. And that availability of time gives me an opportunity to visit the glossier showroom. It gives me an opportunity to spend a little bit more time on holiday. It gives me an opportunity to take an extra workout or fitness class. It's the price disruption, but it's also a real creation of time. And I think with that extra time, the consumer is able to do things and enjoy the fun.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “I mean, we're definitely seeing a world that's dominated by Amazon. I think that's for sure. We're definitely seeing a consumer funnel of I start on Amazon for just about every purchase that I make. And I don't think that's going to change. So that either means that we need to build meaningful businesses that stand apart from that, or we need to build businesses that are leveraging and growing off Amazon in the right kind of way and probably a combination of both of them. So I think if re-platforming means a world that is dominated by Amazon, but where there is still opportunities for brands and businesses to grow off their own channels, off physical channels, off online channels, off other third-party wholesale and partnership channels. If that's a re-platforming of a legacy industry, then yeah, I do think we're probably going through one.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Yes, I'm strapped in and ready. To kill a mockingbird. It's obviously a classic American tale of growing up and is a beautiful story. But I think the reason why I love that book in particular is because just about everybody's read it, just about everybody remembers when they read it, and just about everybody has read it again. And so it's an interesting story that I think everybody has multiple attachments to throughout their life. And it's a fascinating way of sort of learning about someone and what they think and who they are.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Once that happens, we lose a little bit of the froth and we can sort of get back to simply building great, exciting, meaningful businesses and brands for the next 10, 20, 30, 50, 100 years.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Entrepreneurs and businesses and teams that are doing exciting things that may make sense within a larger organization. And then I think there's already kind of happened, but I think that the final view of any business that's a product business is going to be that it is a retail brand or a retail business that it is tech-enabled, not a tech business that happens to sell product. And you may be able to use data to be more thoughtful about your decision-making processes. You may have a better read on reoccurring revenue because you've got a real sense of who that consumer is. And as a result of that, these companies may trade at higher multiples than legacy retail companies do. But they probably won't trade at tech multiples. They'll probably trade somewhere in between. And I think we're probably 80% of the way there in terms of people learning that and realizing that.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Well, I think you're going to have a moment in time when a lot of these businesses need to show that they have the unit economics that allow them to be profitable. And I think if they're not able to show that, they're going to have a hard time continuing to grow and continue to raise capital. So I think you'll have probably a tier of companies that have been funded with venture capital off the wrong kinds of unit economics or unit economics that aren't really scalable or workable kind of fall out of the ecosystem. So I think you'll see that happen. I think you'll probably see more mid-market M&A. I think we're already seeing a lot of companies being acquisitive in this sort of food and beverage space, certainly in the beauty category. I think we'll probably see that across the board where you have legacy retailers needing to buy growth and finding brands and”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “This word plus doesn't make a huge amount of sense at all in 2018. We're going to build one brand that every woman, regardless of size, can enjoy and be a part of. So I think both of those are examples of really authentic Me, I'm immensely immensely bullish for the next 10 years on D2C brands built with the foundations of kind of a celebrity distribution channels that they have existed. Amazing. We all need more lip kits. We do, but the concern for me is that they won't raise venture funding because I'm not quite sure. One final question before we move into the quickfire round, and it's kind of more of a meta futuristic question being how do you foresee the next 24 to 36 months in the evolution of directors?”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “So it definitely works when it's authentic. It definitely works when it almost feels obvious. So I think in the case of Goop, this is a platform and a business and a brand that Gwynneth lives and breathes. And she's lived and breathed it well before Goop started. And actually the business started as a byproduct of her living and breathing all of those things. And so there was an authenticity to it and it made sense for people to visit Goop to buy the types of products or read the types of stories that Gwynneth and her editorial team were putting together. I think similarly with Good American Chloe Kardashian was the right person to really start to pioneer this skies inclusive movement to say, you know, we really shouldn't have some of our product and the plus size floor and some of it in our contemporary floor. We really should re-examine how we think about plus the idea.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “That have real courage, that can stand by their views, that can stand by their conviction. And if you don't have that, you're probably not left with much else. So that's probably, for me, the sort of single most important and unifying trait that I see among the successful entrepreneurs that Natalie and I have backed.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “The majority of the transformative businesses in these sectors were built by merchants. I would say today they tend to be built by really strong marketers, really strong brand and creative individuals. But I think that the character trait that they most often share is probably courage. I remember hearing Mark Andreessen say that years and years ago, and I just started working, and I didn't pay a ton of attention to it, not because I didn't think it was important, but because maybe I hadn't seen it up close and personal. And one of the things that social media has done is it's given the consumer a real voice to be responsive on how they feel about a brand and how they feel about product and how they feel about the people behind those products and the values that those companies stand for. And I think because of that, all of us are under a microscope. We really need founders.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Than they do sort of product merchant in nature. And I think that's probably for a few reasons. One, that's probably because the market is so crowded with product today that it's actually hard to find pockets of opportunity from a price standpoint. You know, a lot of that has actually been done or been built out. So that probably happened. And there's also, you know, there's never been an easier time to launch a business, right? You know, a lot of these platforms have allowed people and entrepreneurs to start businesses without a huge amount of capital. And so because of that, I think because a lot of those walls have been brought down in terms of how quickly people can start these businesses, you tend to see the stars being the founders that can do something creative in terms of how they sell that product or how they get in front of the product. You know, that's a long-winded way of saying, I think one generation ago”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “I think looking back, and you can certainly talk about this within the beauty and in the apparel space, maybe a little bit less so in the kind of wellness and food and beverage space, but you can certainly talk about it in fashion and beauty, is I think if we rewind 15, 20, 30 years from now, most of those businesses or a lot of those businesses were started by really strong merchants, really strong merchandisers. So people who looked at the market as a whole and said, here are pockets of opportunity from a product, from a pricing angle that I am going to build a business around. And I think especially you saw a lot of businesses within the contemporary arena build businesses off really, really strong merchants. I think today the traits that I find with most of the founders tend to be a little bit more marketing and brand in nature.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Into a little bit more of a brand bucket. But I would say somewhere between 5 and 20 percent of net revenues going to overall marketing and, again, not to be too specific, but I would say we tend to get more excited by businesses that are spending more than half of that spend on more brand related marketing than paid-related marketing.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Yeah, I mean, every business is different, and so stitch fix, which is now over a billion dollars of sales, is going to have a different look at a marketing spend at a company that's in their first two months of trading. But I think for us, we tend to look at between this is a wide range, but it gives you a range of somewhere between $5 and 20% of monthly net sales going to marketing. You know, it changes, I would say, in the early days of a lot of our businesses, you see a bit of a push towards pay just because the way in which, as all of us know, the way in which Facebook has set up its business, you get the best consumers or the easiest consumers to find first and then harder, harder, harder. Oftentimes companies that we're backing will skew a little bit heavier towards Facebook early on, and then as they become slightly more meaningful in size, they'll move that paid bucket.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “And on a category are these people that we believe have the right character traits to build a multi-hundred or a billion dollar business in the space? And are they focusing on a category or a point of disruption that we as partners at Imaginary believe is timely and an interesting opportunity for us to back? So kind of that fusion of background of entrepreneurs and sector of choice. And then on the later stage side, it's hard. I mean, sometimes you see the beginnings of a brand really early on. Other times it takes a lot longer. I would say the things that we're focused on were very focused on repeats for these businesses. So getting a real sense of whether or not this is a product that people are going to continue to want to buy.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Well, we've actually gone, and I think a lot of funds of our size call it kind of sub $100 million funds have made a very deliberate choice to move earlier. There's a lot of competition for deals. Companies that are founded by exciting entrepreneurs in intriguing spaces are able to raise a meaningful amount of cash before they launch. And then if they take off, you know, they often almost skip the traditional Series A and go straight to a larger Series B. So I think we probably started the fun thinking that we were going to be a little bit more Series A and B focused, will not be focused. We were going to start the fun being a little bit more series A focused, and we probably moved a little bit closer to the seed arena over the last nine to 12 months of investing. Sometimes we'll invest in businesses before we see anything. And that's really an instinct on a founder.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Is that if we're thoughtful about how these companies are capitalized, if we're thoughtful about the state at which we enter into the businesses, and if we're thoughtful about how we're valuing these companies, that based off the growth trajectory of a number of the businesses that we've been a part of, that we have the opportunity to be quite successful and to see returns that are consistent with the types of returns that a traditional venture investor would think of, which is everybody has a different interpretation of that, but let's call it kind of 10x plus upside.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “I have always said that if you are in the business of making your own product and selling that product online, you are a retail company that is tech enabled, you are not a tech company. And I think if you are building your own product, it's very, very hard to argue that you're going to have the same kind of network effect that a platform business might have because your growth is going to be contingent on how quickly you can build inventory and how quickly you can move that inventory and how quickly you can sort of innovate on physical product and how quickly you can be thoughtful and disruptive on marketing. So you obviously see companies in this category grow at an extraordinary pace, but I'm not totally sure it's the same kind of network effect that a traditional consumer tech investor would think about. So that's kind of one piece. For us, our view.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Think we're finding that tacks are going up. That's not going to change. So the price of online acquisition is going up. That's not going to change. Traffic is super expensive. And I think a lot of brands have found that they're able to achieve a real velocity of growth in a more profitable fashion by partnering with the right types of wholesale businesses.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “To back, they have to have proven that they're able to create traffic to their own site, that they're able to tell stories and narratives around product that are able to get people excited and motivated and intrigued by what they're building. And they have to do that through their own channels and through their own means. And so oftentimes as a byproduct of that, we tend to see companies that are a little bit further along in their life cycle starting to pull on the wholesale lever. So for some companies, that's at 5 to 10 million of revenue. For some companies, it's 50 to 100. I wish I had a crystal ball that told me when was the right opportunity to start pulling that wholesale lever. I don't. I'd probably be more successful if I did. But every opportunity is different. Every partner is different. The needs of these brands are different. And I also, to your earlier point on sort of Facebook and some of the paid channels.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “So, we actually have a number of businesses that have benefited enormously through wholesale partnerships where investors in a size-inclusive denim brand that's actually moved into other categories called Good American that's worked with Nordstrom. We've worked with Nordstrom, with other businesses that were invested in like Reformation and Everlane and Universal Standard. And so I think the right wholesale partner can be an extraordinary opportunity in how these companies think about growth. I also think most of these businesses tend to start as largely coastal businesses and so they'll nail California, New York parts of Texas. They'll have a harder time reaching that middle of the country consumer. And oftentimes if you structure wholesale partnerships correctly, you can actually get in front of a customer that may be in an area that knows less about you. I think the difference is that at least as we think about the entrepreneurs that we want”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Well, you know, bubble is a funny word. I think we are in probably the end of the bubble of brands or direct-to-consumer businesses that are purely building their businesses off paid channels. And by pay channels, I mean mainly Facebook and mainly a little bit of Google. I think that era is done, the era of I'm going to pick a category, I'm going to create the Warby Parker of X or the Everlane of Y, and I'm going to raise a bunch of capital and I'm going to fuel the growth of that business by gaming the Facebook algorithm. I think that bubble is actually probably over. I think you see maybe a few examples of that still, but I think for the most part people have kind of learned that building a brand or building a physical product business is something that's a lot more complicated from a marketing perspective than just any one or two of those things. So I guess that probably answers part of it, but I think that the fundamental”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “It's such a good question, I think, and I was thinking about this before our chat, I would say a brand is anything that stands for something with the consumer. And I think a brand today is something that probably is able to establish an emotional connection between a consumer and a product or a service. It's the ability to see that interplay between how a consumer thinks about a business and bringing out that emotional response from that consumer”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “In opportunities that were online, the sort of commerce element of it was something that I kind of ran with over time. And the rest was history. I was there for seven years and I think I stayed, frankly, as long as I did because I was given this wonderful lens to think about the evolution of retail, the beginnings of direct-to-consumer brands, changes that were happening in wholesale and physical retail through a number of different investments. And I was very lucky that the partnership let me take ownership over those fears and really build out a portfolio that I was quite proud of.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “That had happened prior, which was the whole liquidation era of guilt group and rula and outlook, was beginning to pass. Those companies were still very much present. But I think the tides started to change in that moment and you began to see the beginnings of direct-to-consumer brands and innovation in retail outside of the kind of race to the liquidation bottom. And that was when I first met Dave and Neal at Warby and Michael Praisman at Everlane and some of the great entrepreneurs that have kind of defined this era. So kind of moved around a little bit, saw a lot of stuff, met a lot of different people, and joined 14 West Venture Partners in 2010, late 2010. And the group, which was really just getting off the ground at that moment in time, was managing capital predominantly for one family office. We didn't have much of a mandate at that point in time except to invest.”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “Yeah, so I graduated university or college in 2008, which was probably just about the worst time to graduate from school. And I was a banker for a hot second. I worked at JPMorgan in there, consumer health care retail group. And I had done it for sort of summers prior, and I had sort of thought that that was my calling and realized pretty quickly that it wasn't my calling. So I left after about nine months, which for anybody that has been a banker knows is quite premature. I started consulting for a few different family offices. I took about 12 or 18 months to really figure out what I wanted to do. And this was kind of 2009, 2010. So I think a few things were happening. The first was, I think people were starting to realize that New York was becoming a real center for venture and for opportunities. I think that the wave of e-commerce”

    2018-08-06 · The Twenty Minute VC · 20VC: 3 Core Considerations When Investing In Physical Product Co's, Are We In A Direct-To-Consumer Bubble & Why Many Sub $100m Funds Are Moving Earlier and Earlier with Nick Brown, Managing Partner @ Imaginary · IDENTIFIED FROM THE TRANSCRIPT · source