The Exchanges

Q That's funny. I've never thought of the opportunity cost of time associated. Yeah, no, absolutely. A fascinating point, but I do want to finish, Nick, on your most recent publicly announced investment, and tell me, why did you say yes?

A 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 SoulCycles 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 you know, I think what's most exciting to us in particular about this business is that it is leveraging a 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 leverage her fifteen million Instagram followers in order to get traction and eyeballs and viewership, and I think it comes back to our question of, how do you use influencers in the right kind of way, How do you break through noise in interesting and creative ways? And how do you find new opportunities for how you market businesses? And I think, you know, fit plan is a pretty exciting example of how you do that.

AI assessment note: “the reason we did that was for several reasons.”

Q who said on the show, actually, don't buy marketing inventory, create it yourself. Kind of, I think, a brilliant example of that. I do want to discuss one element of founders that you've backed before, which is celebrity founders from Goop to Good American. I'm intrigued. What What's the role of celebrity founders for consumer companies, and when does it work, and maybe when does it not work so well?

A Well, 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 Gwyneth lives and breathes, and she's lived and breathed it well before Goop started, and actually the business was 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 Gwyneth and her editorial team were putting together. I think similarly with Good American, Khloe Kardashian was the right person to really start to pioneer this size-inclusive movement to say, you You know, we really shouldn't have some of our product in the plus size floor and some of it in our contemporary floor. We really should re-examine how we think about plus. The idea of 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, clear visions of the founder or the founder's That very much connect with the product and the brand that they're creating. But it only takes you so far, right? I mean, it takes you probably from zero to two. It puts you on the map. It gives you an early voice. It helps build a c…

AI assessment note: “It definitely works when it's authentic. It definitely works when it almost feels obvious.”

Q No, absolutely. I mean, you mentioned that you touched on the interplay between wholesale and physical retail. Jumping aside element in the schedule, I am really intrigued, especially kind of with the rise of DNVBs, digitally native vertical brands. How do you think about this, and how it kind of fundamentally interplays into the growth of an online brand today?

A Yeah, so we actually have a number of businesses that have benefited enormously through wholesale partnerships. We're 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 we're 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 to back, they have to have proven that they're able to create traffic to their own sites, 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 …

AI assessment note: “I think the right wholesale partner can be an extraordinary opportunity in how these companies think about growth”

Q Not at all. I'm thrilled to have you here, but I do want to discuss with a little on you. So how did you make your first foray into the very weird, but also very wonderful world of venture, Nick?

A Yeah, so I graduated university or college in And I was a banker for a hot second. I worked at JP Morgan in their consumer healthcare 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. And 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 that had happened prior, which was the whole liquidation era of Guild Group and Rulala 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, uh, Dave and Neil at Warby, and Michael Praceman 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, an…

AI assessment note: “joined 14 West Venture Partners in In 2010, late 2010”

Q You said that largely, uh, growing on kind of organic channels. I listened to Katrina Lake on a Recode talk recently, and she said that they spend about eight percent of revenues on online marketing. I'm intrigued. What do you think is kind of largely but acceptable, and how do you think about kind of a healthy balance of organic to paid?

A Yeah, I mean, every, every business is different, and so, you know, 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 five 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 paid, just because, you know, 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 into a little bit more of a brand bucket. But I would say somewhere between five and 20% 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.

AI assessment note: “we tend to look at between... somewhere between five and 20% of monthly net sales”

Q who said on the show, actually, don't buy marketing inventory, create it yourself. Kind of, I think, a brilliant example of that. I do want to discuss one element of founders that you've backed before, which is celebrity founders from Goop to Good American. I'm intrigued. What What's the role of celebrity founders for consumer companies, and when does it work, and maybe when does it not work so well?

A Well, 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 Gwyneth lives and breathes, and she's lived and breathed it well before Goop started, and actually the business was 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 Gwyneth and her editorial team were putting together. I think similarly with Good American, Khloe Kardashian was the right person to really start to pioneer this size-inclusive movement to say, you You know, we really shouldn't have some of our product in the plus size floor and some of it in our contemporary floor. We really should re-examine how we think about plus. The idea of 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, clear visions of the founder or the founder's That very much connect with the product and the brand that they're creating. But it only takes you so far, right? I mean, it takes you probably from zero to two. It puts you on the map. It gives you an early voice. It helps build a c…

AI assessment note: “Well, it definitely works when it's authentic. It definitely works when it almost feels obvious.”

Q No, absolutely. I mean, you mentioned that you touched on the interplay between wholesale and physical retail. Jumping aside element in the schedule, I am really intrigued, especially kind of with the rise of DNVBs, digitally native vertical brands. How do you think about this, and how it kind of fundamentally interplays into the growth of an online brand today?

A Yeah, so we actually have a number of businesses that have benefited enormously through wholesale partnerships. We're 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 we're 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 to back, they have to have proven that they're able to create traffic to their own sites, 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 …

AI assessment note: “the right wholesale partner can be an extraordinary opportunity in how these companies think”

Q Not at all. I'm thrilled to have you here, but I do want to discuss with a little on you. So how did you make your first foray into the very weird, but also very wonderful world of venture, Nick?

A Yeah, so I graduated university or college in And I was a banker for a hot second. I worked at JP Morgan in their consumer healthcare 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. And 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 that had happened prior, which was the whole liquidation era of Guild Group and Rulala 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, uh, Dave and Neil at Warby, and Michael Praceman 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, an…

AI assessment note: “joined 14 West Venture Partners in In 2010, late 2010”

Q We do, but the concern for me is that they won't raise venture funding because I'm not quite sure how they need it. But I do have 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 direct consumer brands?

A 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 continuing 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 You know, 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, you know, we're already seeing a lot of companies being acquisitive in the 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, you know, needing to buy growth and finding, you Brands and entrepreneurs and businesses and teams that are doing exciting things that may make sense within a large organization. And then, you know, I think this has 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 hav…

AI assessment note: “a lot of these businesses need to show that they have the unit economics”

Q You said that largely, uh, growing on kind of organic channels. I listened to Katrina Lake on a Recode talk recently, and she said that they spend about eight percent of revenues on online marketing. I'm intrigued. What do you think is kind of largely but acceptable, and how do you think about kind of a healthy balance of organic to paid?

A Yeah, I mean, every, every business is different, and so, you know, 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 five 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 paid, just because, you know, 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 into a little bit more of a brand bucket. But I would say somewhere between five and 20% 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.

AI assessment note: “somewhere between five and 20% of monthly net sales going to marketing”

Q Absolutely. I think very much seen in the likes of Glossier, but now we have the nomenclature nailed down. We've seen an explosion in DTC brands and funding for the space subsequently. So I do have to ask, are we in a direct consumer bubble, do you think, Nick?

A 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 paid 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 difference to me of today versus 10 or 15 years ago is, you know, it used to be that if you were someone that had excitement or vision around creating a brand or creating a product or around even just disrupting a category, you You went about disrupting that by going through wholesale or physical retail. That was the way in which you did it. I think most entrepreneurs today, especially with how available capital is to start a business, are actually thi…

AI assessment note: “I think we are in probably the end of the bubble of brands”

Q Alex Tausig said from Lightspeed that we're seeing the replatforming of retail. What's your take on this and the future of retail specifically?

A 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, you know, I think if replatforming 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 platforms, 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.

AI assessment note: “If that's a re-platforming of a legacy industry, then yeah, I do think we're”

Q No, that nails it, but you did team me up so nicely there, and I just can't not ask. You mentioned kind of insertion point. When do you think is the right insertion point for you, and when do you feel there's Tangible defensibility that you'd like to really get involved and insert yourself at that moment?

A Well, we've actually gone, and I think a lot of funds of, of our size, call it kind of sub a hundred million dollar 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 fund thinking that we were going to be a little bit more series A and B focused. Well, not B focused. We were going to start the fund being a little bit more series A focused, and we probably moved a little bit closer to the, the seed arena over the last, you know, nine to 12 months of investing in You know, sometimes we'll invest in businesses before we see anything, and that's really an instinct on a founder and on a category. Are these people that, you know, we believe have the right character traits to build a multi-hundred or 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 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, sometim…

AI assessment note: “made a very deliberate choice to move earlier”

Q there. You did also say two words which were kind of very poignant because they refer to a question that Jason Stoffer at Mavron asked. You mentioned character traits. In terms of those character traits, and we're jumping around here, but what the heck, what are the commonalities that you find in founders building the consumer brands today, and maybe how does this compare to prior generations of retail founders?

A You know, I think looking back, and you can certainly talk about this within the beauty and in the apparel space, maybe a But you can certainly talk about it in fashion and beauty is I think if we rewind 1520, 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'm 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 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 …

AI assessment note: “today the traits that I find with most of the founders tend to be”

Q Absolutely. I think very much seen in the likes of Glossier, but now we have the nomenclature nailed down. We've seen an explosion in DTC brands and funding for the space subsequently. So I do have to ask, are we in a direct consumer bubble, do you think, Nick?

A 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 paid 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 difference to me of today versus 10 or 15 years ago is, you know, it used to be that if you were someone that had excitement or vision around creating a brand or creating a product or around even just disrupting a category, you You went about disrupting that by going through wholesale or physical retail. That was the way in which you did it. I think most entrepreneurs today, especially with how available capital is to start a business, are actually thi…

AI assessment note: “I think we are in probably the end of the bubble”

Q product companies that you've backed. Rebecca Caden at USV Now stated that there's a lot of skepticism around physical product companies being venture businesses these days with Amazon scale, fragmentation of market, etc. But Building the fund with imaginary, what makes you so bullish that there aren't really venture scale returns above the often cited one or two X multiples on revenue that come with physical companies, so to speak?

A 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 know, 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, would think about. So that's kind of one piece. For us, our view 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, you know, everybody has a differe…

AI assessment note: “if we're thoughtful about how we're valuing these companies... let's call it kind of 10 X”

Q Alex Tausig said from Lightspeed that we're seeing the replatforming of retail. What's your take on this and the future of retail specifically?

A 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, you know, I think if replatforming 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 platforms, 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.

AI assessment note: “if that's a re-platforming of a legacy industry, then yeah, I do think”

Q You mentioned Amazon there. Kirsten Green said on the show, Amazon does more to make the market than destroy it. Would you agree with that?

A 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 are, 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 of a lot of these product businesses as a byproduct of that.

AI assessment note: “Yeah, I do think so. For me, what's most interesting about Amazon”

Q No, that nails it, but you did team me up so nicely there, and I just can't not ask. You mentioned kind of insertion point. When do you think is the right insertion point for you, and when do you feel there's Tangible defensibility that you'd like to really get involved and insert yourself at that moment?

A Well, we've actually gone, and I think a lot of funds of, of our size, call it kind of sub a hundred million dollar 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 fund thinking that we were going to be a little bit more series A and B focused. Well, not B focused. We were going to start the fund being a little bit more series A focused, and we probably moved a little bit closer to the, the seed arena over the last, you know, nine to 12 months of investing in You know, sometimes we'll invest in businesses before we see anything, and that's really an instinct on a founder and on a category. Are these people that, you know, we believe have the right character traits to build a multi-hundred or 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 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, sometim…

AI assessment note: “we probably moved a little bit closer to the, the seed arena”

Q there. You did also say two words which were kind of very poignant because they refer to a question that Jason Stoffer at Mavron asked. You mentioned character traits. In terms of those character traits, and we're jumping around here, but what the heck, what are the commonalities that you find in founders building the consumer brands today, and maybe how does this compare to prior generations of retail founders?

A You know, I think looking back, and you can certainly talk about this within the beauty and in the apparel space, maybe a But you can certainly talk about it in fashion and beauty is I think if we rewind 1520, 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'm 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 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 …

AI assessment note: “traits that I find with most of the founders tend to be a little bit more marketing and brand”

Q product companies that you've backed. Rebecca Caden at USV Now stated that there's a lot of skepticism around physical product companies being venture businesses these days with Amazon scale, fragmentation of market, etc. But Building the fund with imaginary, what makes you so bullish that there aren't really venture scale returns above the often cited one or two X multiples on revenue that come with physical companies, so to speak?

A 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 know, 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, would think about. So that's kind of one piece. For us, our view 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, you know, everybody has a differe…

AI assessment note: “returns that are consistent with the types of returns that a traditional venture investor”