Venture capital firms often have a front-row seat to the next “it” thing in sectors like retail.
They see the life cycle of countless start-ups, as they move from angel rounds to Series D fundings and, if things go well, initial public offerings.
Shoptalk’s VC-focused session revealed a few pearls of wisdom from Sequoia Capital, Bessemer Venture Partners and Lightspeed Venture Partners. Some of the most noteworthy:
Look for Sloth
“One of the best things to invest in is sloth,” said Sequoia Capital’s Alfred Lin, who quickly decoded that as convenience. “Making things faster and more convenient has always been good business for e-commerce, any commerce company. Basically because consumers are relatively lazy.”
How to Connect Millennials and Gen Z
“Going direct-to-consumer and building the personal relationship is really where the opportunity is,” said Aileen Lee, founder and partner of Cowboy Ventures. “The end consumer, and especially Millennials and Gen Z, want to feel respected. They want to feel like they have an emotional connection.” She believes retailers have the opportunity to reinvent the shopping experience and make it more personal, more delightful and more resonant from a brand perspective, she said. “It’s not just coupons and shelf space. What do you stand for?”
Understand the Influence of Social
“With Gen Z, you see plummeting TV consumption,” said Jeremy Liew, partner at Lightspeed Venture Partners. “You see social, plus YouTube. This is the mechanism by which they spend the bulk of their time. With influencers, they feel they have a two-way relationship — there’s that level of trust.” He pointed to examples that are more powerful than endorsement deals: A social share from Jessica Alba about a great baby product free of toxic chemicals, or Rihanna showing off her favorite product, it feels more authentic than seeing a magazine ad. “It’s a new relationship,” he said.
Lin agreed. “Influencer marketing is not new, but it’s gotten much stronger now,” he said. “I recommend that if you’re a founder in the audience, you should start experimenting with channels now. It’s already late. Some are already capturing it, and you’re behind.”
A Brand’s Values Matter
“After the shooting and the gun violence, Dick’s Sporting Goods stopped selling assault rifles,” noted Lee. “Brands, how they handle mistakes [or express] what their values are, it gets amplified on social media like never before.”
Don’t Use Valuations as Goals
“It’s a problem to tag valuation as milestones,” said Kent Bennett, partner at Bessemer Venture Partners. If the valuation dips, it can send morale south as well. Wayfair, for example, “never talks about stock price,” he said. “They always talk in terms of their 10-year mission.”
Remember, Retail Existed Before Amazon
“Before Amazon, there was Walmart,” said Lin, “and there was not as much angst about Walmart. There’s always been intense competition. You should be afraid of all the other start-ups in the space as well. But if you’re [too] afraid, you won’t start the company. You’ve started the company. Now go fight.”