Chairman & Chief Executive Officer at Assembled Brands, Adam Pritzker

Adam Pritzker wants to help “small companies proliferate” to meet the consumer demand for new brands.

Pritzker is founder, chairman and chief executive officer of Assembled Brands, a holding company that provides working capital and financial services. Those services — based on his experience as a retail operator and culled from the needs of brands the company has built or invested in — are helping Pritzker “stitch together” an infrastructure for the brands his company works with.

“I felt that there was going to be a real proliferation of niche brands…and that there’s going to be a need for [an] infrastructure for those brands, and we really want to figure out how to be that infrastructure or ‘stitch all those pieces together’” so product designers can focus on the creative process, he told attendees of the WWD Retail 20/20 forum in New York this month.

The ceo explained that his firm’s experience in creating a retailer and in developing brands — one in home and two in fashion — helped shape the services Assembled Brands developed to fix its own problems. From those experiences came solutions that the company now “can go to customers and say we developed these brands, these are the issues that we had and ‘Do you have these issues because if you do, are you interested is these services?’”

On the second floor of a building in SoHo is a showroomlike space Assembled Brands calls an apartment, but it’s actually the retail space Pritzker says allows the company to see how its umbrella brands build relationships with customers and interact with them. And it did it on the second floor not only because the lease was cheaper but also as an experiment to figure out a way to make the showroom discoverable — something that is easier to do through social media.

According to Pritzker, the company has 10 brands under its umbrella, and will “probably by the end of 2019 have around 100. We’re scaling very quickly. We have about 10,000 brands in our pipeline now.”

The ceo said his team is scraping data from the Internet on the brands they are tracking with an eye on social media following, types of engagement brands have, and how many doors they are in at wholesale. Revenue ranges from $1 million to $20 million, although a few are $50 million, and they range from “negative EBITDA to a positive $1 [million], $2 [million] or $3 million in [earnings before interest, taxes, depreciation and amortization],” Pritzker said.

The company has also worked with talent agencies whose clients are influencers that want to build brands, as opposed to just licensing out a name. In those instances, Assembled Brands might take an equity stake in the fledgling firm. In other instances, it provides working capital, and sometimes will hold warrants as well.

He doesn’t think venture capital is the right type of funding for start-up brands, and that banks are relying on the wrong metrics, such as asking for collateral and thinking price-earnings to value a business.

“The metrics that one uses today have really changed: lifetime value of a customer; units per transaction. We take that data and we use it to benchmark all the brands we look at,” he said.

In addition to working capital, the company helps with brand development, focusing on sourcing and manufacturing and — with the influencer start-ups — helping to figure out “how to create the content to feed this voracious social media cycle.”

Pritzker also said working with brands allows it to build a network of manufacturers globally for its own businesses as well as recommend others to.

The Assembled Brands model that Pritzker is aiming for is the Y-Combinator model known for its acceleration of start-ups, such as Airbnb and Dropbox. “There’s no network like that in the consumer goods and products space. That’s what we want to build, [one] that offers know-how, education, a network of people who can help you build your brand,” the ceo said.

Pritzker also emphasized to attendees that one “can’t build a business if you have negative gross margins.” He also pointed out twice that pop-ups that don’t have repeat purchases are burning money wherever they open up a location. “If you don’t have a great product, you don’t have a lifetime value. It’s important to have a repeat purchaser, [someone who will] buy once, and then buy again,” he explained.

Pritzker also said enterprise companies are starting to become more like consumer brands. “So you have to start with a consumer brand mind-set. You’ve got to build the intangible brand equity and then you can think about monetizing it,” he advised.

The ceo concluded: “I also have faith and hope I am a small part of the story of people stitching all of this infrastructure together and driving the costs down so that there can be this continuous proliferation of small brands. I really do believe in this sense of discovery of new brands.”

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