Prediction Held up AI assessment confidence: 95% certainty 5/5 debate potential 2/5

Brown: Online customer acquisition costs for DTC brands will continue to rise

Nick Brown · 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 · Aug 6, 2018 · at 11:03

Nick Brown is Managing Partner at venture firm Imaginary. He discusses rising digital marketing and customer acquisition costs for consumer brands.

0:00 / 0:07exact quote · 7.3s
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“I think we're finding that tax are going up. That's not going to change. The price of online acquisition is going up. That's not going to change.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

More from Nick Brown

Opinion
Brown: The era of building DTC brands purely on paid ads is over
“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. T…”
Nick Brown Aug 6, 2018 ▶ 7:08 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
Prediction Not checkable as stated
Brown: Imaginary expects 10x venture returns from disciplined physical product investments
“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 trajec…”
Nick Brown Aug 6, 2018 ▶ 12:55 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
Prediction Not checkable as stated
Brown: DTC brands lacking profitable unit economics will fail to raise capital
“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 gr…”
Nick Brown Aug 6, 2018 ▶ 24:36 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
Insight
Brown: DTC physical product companies are tech-enabled retail, not tech companies
“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.”
Nick Brown Aug 6, 2018 ▶ 12:01 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
Assertion Not checkable as stated
Brown: Hot pre-launch startups often skip Series A and go straight to Series B
“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 …”
Nick Brown Aug 6, 2018 ▶ 13:58 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
Insight
Brown: Imaginary prefers consumer brands spending over 50% on brand marketing
“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.”
Nick Brown Aug 6, 2018 ▶ 17:40 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
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