Category Killers: Aftermath

yayoi_gagosian1I published the Category Killers post last year after spending a few months digging into companies like Warby Parker, Casper, and others to understand whether there could be best practices gleaned from their early-stage growth.

Here is what happened after I published it:

  • I met with and hopefully was able to help several startups in this space; this tells me new companies are being launched in the direct to consumer space, which I’m all for
    • Toothbrushes, pet food, furniture (x2), diamonds, candles, and more
  • Casper launched their line of pillows and other products, expanding from just mattresses. This validates my thinking that these category killer companies keep a broad vision (e.g., sleep company rather than mattress company) to enable content marketing and product expansion
  • Dollar Shave Club sold to Unilever for $1B. Some VC’s I have spoken to are hesitant to invest in direct to consumer e-commerce due to historically low (2-3x) multiples. However, the DSC represents a 4-5x revenue multiple. What gives? The trick may lie in valuing these types of startups as lifestyle brands (e.g., LVMH) rather than e-commerce
  • VC’s consistently asked whether e-commerce was my main area of interest given my post. The answer is “No”. I am passionate about companies that improve consumers’ lives, and direct to consumer e-commerce is just one of those avenues. I wrote the post to help entrepreneurs starting similar companies (check), and to show investors I can develop thought leadership about an industry. As an aspiring venture investor, I wanted to demonstrate passion for the industry and show my writing and analytical abilities.
    • Areas that I like include marketplaces (e.g., Handy, Beepi), Virtual Reality (e.g., Alchemy Learning), Drones (e.g., Drone Racing League), Space (e.g., SpaceX, Planetary Resources). However, I find it difficult to stay on top of all of the industries given the number of news sources available to us these days. If you have tips on how you can set up industry-specific news channels, I would love to hear about it.
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