20VC: Why The Current VC Financing Mechanism For Consumer Brands Is Broken, Why The Infrastructure To Power Emerging Brands Is Broken and What The Re-Platforming of Retail Means For The Next Decade in Consumer with Adam Pritzker, Chairman & CEO @ Assemble

Adam Pritzker is the Chairman & CEO @ Assembled Brands, a holding company providing working capital and financial services to emerging brands. In October 2018, they raised $100m in development capital from the prestigious Oaktree Capital Management. As for Adam, he is also a co-founder of General Assembly where during his tenure, prior to its acquisition by Addecco Group, he served as Chief Creative Officer, Chief Product Officer, and Chairman. For his entrepreneurial endeavors, Adam was featured in Forbes’ 30 Under 30, Vanity Fair’s The Next Establishment, Inc. Magazine’s 30 Under 30, and Business Insider’s Silicon Alley 100. In Today’s Episode You Will Learn: 1.) How Adam made his way into the world of startups with the co-founding of General Assembly and how that led to his founding Assembled Brands and financing the future of brands? 2.) Why is Adam optimistic about the current state of the consumer brand and retail environment? How does Adam respond to Alex Taussig @ Lightspeed's suggestion of the "re-platforming of retail"? How does Adam approach the changing demographic of consumer spend? What does this mean for both the brands and the channels they use to acquire customers? Does Adam believe we are in a consumer bubble today? 3.) How does Adam think about the lack of free and open distribution today for consumer companies? Are the traditional channels now too expensive to acquire customers on? How does Adam advise consumer founders on the saturation rate of marketing channels? How can they foresee the ceiling ahead of time? 4.) Adam has previously stated that Instagram is the new QVC, what did he mean by that? What type of consumer brand is Instagram best suited for? Why does Adam believe that in many cases the venture financing method is suboptimal and wrong for these scaling brands? What can founders who have taken VC funds and now seen it was potentially a mistake do? 5.) Why does Adam believe that the "infrastructure to power emerging brands is broken"? How can the current stack and infrastructure for brands be improved? What metrics should consumer founders really hone in on today? What sort of metrics suggests a brand is VC backable vs is not VC backable? How does Adam think about the ability of the consumer brand space to provide venture returns at scale? Items Mentioned In Today’s Show: Adam’s Fave Book: (1.) The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure. (2.) The Upside of Stress: Why Stress Is Good for You, and How to Get Good at It Adam's Most Recent Investment: Felix Gray As always you can follow Harry, The Twenty Minute VC and Adam on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  We are back for Founder's Friday here on the 20 Minute VC with me, Harry Stebbings, at H Stebbings 1996 with two Bs on Instagram. And today, we're back in the world of consumer, and I have to say, I just love what our guest today is building, and I think it's such an interesting model. And so with that, I'm so excited to welcome Adam Priska. Adam is the chairman and CEO at Assembled Brands, a holding company providing working capital and financial services to emerging brands. As for Adam, he's also the co-founder of General Assembly, where during his tenure, prior to its acquisition by Adecco Group, he served as Chief Creative Officer, Chief Product Officer and Chairman. And for his entrepreneurial endeavors, Adam was featured in Forbes 30 Under 30, Vanity Fair's The Next Establishment, and Ink Magazine's 30 Under 30. And I do also want to say a huge thank you to Scott Belsky, Edgar Lee at Oatry, and

• 0:45Harry Stebbings?

  Mimi Chun for the fantastic question suggestions today. I really do so appreciate that. But before we dive into the show today, a lot of what we do on the 20 Minute VC is talk to experts, pick the brains of founders and investors who tell us which trends to watch out for, offer tips on fundraising, and teaches how to excel at any company stage. There's no playbook for building a great business, but we can certainly learn from people who've done it before. Beyond listening to this podcast and talking to mentors and advisors in your own network, it's important to have resources you can turn to when you're tackling a new challenge. Stripe has built those resources for you. Whether you'd like to learn how to run a pricing experiment or build a knockout landing page, Stripe gives you the information you need to start, run, and scale a technology company. Their guides are often written by or feature people like Elag Gill, whom we've actually

• 1:28Harry Stebbings?

  had on this very podcast, and you can read one of my favorite guides on scaling engineering organizations and many more on stripe.com/20vc, that's T W E N T Y V C. And speaking of incredible products, Intercom was founded in 2011 by four startup veterans who were simply frustrated by the lack of visibility they had into their customers at their previous ventures. They set out to build a suite of messaging-first products that would help make internet business personal. Fast forward to today, and Intercom has built a platform and suite of messaging-first products that help internet businesses accelerate growth across the customer lifecycle from acquisition to engagement and support. And you can convert more website visitors, onboard new signups to become active customers, and then support your customers in a really

• 2:10Harry Stebbings?

  Personal way. What's more, you can do this all at scale with their powerful automation technology. And over the past eight years, they've totally reimagined what a business messenger can be, which is way more than simply live chat and more than thirty thousand businesses, including new Relic, Atlassian and Shopify use Intercom to connect with a billion people worldwide. And finally, I've always been a big history man, and so I want to talk about Cooley, the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley's formed more venture capital funds than any other law firm in the world. With fifty plus years working with VCs, they help VCs form and manage funds, make investments and handle the myriad of issues that arise through a fund's lifetime. So to learn more about the number one most active law firm representing VC-backed companies going public,

• 2:52Harry Stebbings?

  simply head over to Cooley.com and also go to Cooleygo.com. But without further ado, I'm now very excited to hand over to Adam Priska, chairman and CEO at Assembled Brands.

• 3:08Speaker 01

  You have now arrived at your destination.

• 3:12Harry Stebbings?

  Adam, it is such a pleasure to have you on the show today. I've been so excited for this one. A huge thanks to Brad Hargreaves and Scott Belsky for the intro, but thank you so much for joining me today, Adam.

• 3:20Speaker 02

  Thanks for having me, Harry.

• 3:22Harry Stebbings?

  Not at all. I'd love though to get started by discussing a little bit about you. So tell me, how did you make your way into the world of startups? And what was that realization for really the broken nature of brands today and the start of Assembled Brands?

• 3:34Speaker 02

  Sure. I mean, I've always been interested in entrepreneurship. My parents, aunts, uncles and cousins are all entrepreneurs. And I think of entrepreneurship as a trade and that was a trade my family was in. So it felt like a very natural career to pursue.

• 3:45Harry Stebbings?

  I do have to take the opportunity to ask, you've obviously backed and founded General Assembly. And tell me, what were the biggest takeaways for you from that learning experience? And maybe how do you think it affected your mindset today with Assembled Brands?

• 3:58Speaker 02

  Sure. You know, with regard to General Assembly and Assembled Brands, both are companies whose mission is to empower entrepreneurs to pursue the work they love. In one case, people developing digital products, in another, Assembled Brands, people developing physical goods. And so if there's one learning I carried from one company to the next, it's that during a gold rush, you want to sell picks and shovels. And you know, because Assembled Brands started by actually Developing brands, developing goods. Our group really understands the consumer journey from the founder perspective and the buyer perspective and the end consumer perspectives. And our goal is really to fill the gap for brands that are growing distribution by offering things like capital and data and a network to promote success. And so when we're building assembled brands, we created this proprietary methodology called the ABC formula,

• 4:43Speaker 02

  the Assembled Brands Capital Formula, that uses data to understand how deep a brand's relationship is with its consumers. And that data allows us to extend capital that is less dilutive than what private equity or venture may require and beyond what banks are willing to do. And, you know, finally partnering with assembled brands offers these consumer goods companies an advantage because they can access the intelligence derived from that data and it leads to better and faster results.

• 5:09Harry Stebbings?

  I mean, we're going to get into kind of the infrastructure stack of that kind of data and then also the interplay between brands and VCs. But I would love to start today, Adam, with maybe more macro specs on and discuss often cited as the doom and gloom of retail and consumer brands. But when we chatted before, you presented a slightly different view than the media suggests. Let's start with that. Why are you optimistic about the current state of the consumer brand and retail environment?

• 5:33Speaker 02

  Yeah, it's a tale of two cities. On one hand, consumer spending is stronger than it's ever been. And on the other hand, retail closures are escalating rapidly. So in 2018, more stores closed than opened. And Amazon is clearing out retailers. At the same time, consumer spending is growing. And so what that means is, is that the survivors have more business. You know, millennials have more disposable income than the previous generation, but they have different spending habits. So 90 of the 100 largest brands lost share in 2018. And so consumers are shifting to these niche brand innovators. And typically, those new emerging brands spend more money on inputs like ingredients or materials and use channels like Shopify and Amazon Marketplace for distribution.

• 6:15Speaker 02

  You know, and they also sell through more traditional offline wholesale and direct channels as well. I'd say the friction for emerging brands is really access to the right kind of capital. So for example, Assembled Brands co-founded a brand called K H A I T E. It's a woman named. Catherine Holstein and it grew faster than we expected and it needed more capital. I've raised hundreds of millions of dollars in my career, but factors which are banks that will provide loans against accounts receivables, so orders from retailers wanted a personal guarantee and would only fund thirty percent of our retail orders because we sold to small boutiques and nobody would touch the direct to consumer inventory. So assembled brands looked at the data and could tell you how long it would take to sell through that inventory and at what

• 6:56Speaker 02

  markdown price if necessary. So our group ended up financing Kate off of our own balance sheet. And as we talked to other founders, for example, a guy named Robert Nod in LA who has a shoe brand called Grand Voyage, he was always sold out. He had an incredibly loyal following of men, but he was constantly out of inventory. So we gave him a line of credit to buy more inventory. And the story played out. Another guy, Brian Richards, started a company called Kid Made Modern and he borrowed small amounts of money from a lot of different people and still didn't have enough capital to operate. It was taking too much time to manage and it was a headache for him. So AB took out all the other credit investors and became a one stop shop for inventory receivables financing and a term loan. And his DTC business is up four hundred percent

• 7:40Speaker 02

  this year. So there's a very long tail of products out there. I'd say it's a gold rush.

• 7:44Harry Stebbings?

  I mean, there's so much media on Pat now and it's like a kid in a candy shop that I have to resist in terms of the financing element because we are going to touch on it later. I do have to ask, as we said, stay on the macro and the fragmentation maybe of consumer preferences into these more niche brands. We had Alex Towsing at Lightspeed on the show and he said that we're seeing a replatforming of retail. I'm super interested. How do you respond to that? And maybe where do you see the growth of retail over the next decade? Is it this kind of incredibly fragmented niche brand experience? How do you view that?

• 8:14Speaker 02

  I think it is. I mean, at assembled brands, you know, we incubated and operated these emerging kind of mobile first brands for the modern consumer. We built distribution across online and offline channels. We developed all the creative content for campaigns. We did video, editorial, e-comm and social. We did all the financial planning and analysis to build inventory forecasts, benchmark key metrics and underwrite. Why I say that is because it really allowed us to map out the value chain as it existed. Before and it exists today. And really what we learned is that as retail is replatformed, it will only get easier to start brands and organize all the pieces of the value chain to get product to market quickly. And you know, we can talk about infrastructure a bit later.

• 8:54Speaker 02

  From our point of view, what the replatforming of retail has disrupted their traditional financing mechanisms for brands. And that's the gap we're filling. And it's an important point to hit on, even though it's a little technical, which is traditionally a store would make a purchase order. That brand would use the purchase order as collateral for a factor or a bank. The brand would take the money from the factor or bank. They would go make their goods. They would sell them in a store and they would rinse and repeat. With marketplaces like Amazon, social platforms like Instagram and econ platforms like Shopify, the buyer is now individuals, not stores. And factors and banks don't know how to underwrite that scenario and we do.

• 9:34Harry Stebbings?

  I mean, listen, I totally agree with you there on the broken nature of that archaic financing mechanism for those brands. I do have to ask though, because there has been maybe a VC realization as to the opportunity around millennial consumer spend and these brands that have risen around it with billions of dollars being pumped in. So I have to ask, and it's a contentious one. Are we in a consumer bubble, Adam?

• 9:55Speaker 02

  It's a great question. I would say millennials are a cohort that's increasingly online. So Amazon did $7.5 billion of sales on Black Friday. Amazon has about $100 billion in retail sales and represents about 40% of the online market. So if my math is correct, that means there's about 250 billion worth of goods being sold online. If you assume there are, say, 20,000 small brands doing between 1 and 10 million in revenue, that means the total addressable market is between 20 and 200 billion. So the market is really big and growing. So who finances that growth? You know, as I described before, banks and factors can't because there aren't purchase orders when the buyers are individual customers. So founders go to VCs. And the problem with VC financing in the manufacturer consumer goods space

• 10:37Speaker 02

  is that the growth expectations exceed the reality of prudently growing a physical inventory base. So you know, to a hammer, everything looks like a nail and tools serve a particular purpose and may not be applicable to particular situations. You can open a bottle of wine with a hammer, but I wouldn't recommend it. And so, you know, venture capital is a specific tool that works miracles for certain kinds of businesses. But the rule is that there are millions of small businesses that grow more slowly over a longer time horizon and need a lower cost of capital, especially if they're capital intensive and need inventory. And the unfortunate thing about retail is that you incur costs before you generate revenue. You know, secondly, I would say raising money from VCs is not only dilutive. It takes too much time and you get too many no's.

• 11:21Speaker 02

  So, you know, we can sign an NDA, get your QuickBooks, get your Google Analytics, get your Shopify account information and tell you how much working capital you need in 24 hours.

• 11:30Harry Stebbings?

  See, I'm totally with you there again in terms of many brands being a misfit for the venture community. I do automatically think though, what makes one brand a brilliant fit and has that kind of high intensity of growth versus one which maybe doesn't have such high intensity of growth and isn't able to meet that VC consumer expectation? What is the difference between the two, Adam?

• 11:49Speaker 02

  Yeah, there is obviously a certain category of consumer goods that work for venture capital. They tend to have very few SKUs and have a strategy in which they underprice the incumbent by selling direct. And those categories might include mattresses, razors, eyewear and beauty. But again, I would say those are rare birds. Those are the exceptions to the rule, not the rule itself. And so aside from those types of companies and categories that have very few SKUs that underprice the incumbent by selling directly, I'd say the others are not as good candidates for venture capital.

• 12:24Harry Stebbings?

  No, I think that makes total sense. I do want to kind of move one layer beneath though, to probably my biggest nerdy passion point, which is the channels that these brands distribute through. We started to touch on kind of the changing consumer there with the shift to millennial and the distribution channel obviously changes as a result. So first, how does the shift in consumer spend in millennial shift the fundamental distribution channel usage of brands in retail today, do you think?

• 12:47Speaker 02

  Yeah, so adding channels adds complexity. You have online, offline, direct and wholesale. So you can think of that as an X and Y axis, right? Online, offline, direct and wholesale. You then have all of the attendant technologies like Shopify. Google Analytics, QuickBooks, HubSpot, that you have to link up on the backend of your business to see what's going on. You then have all of the creative and quantitative marketing required to sell your goods. And then product development and manufacturing, and that can actually all be pretty hard to coordinate. And the problem is that no one is consolidating the information from those distribution channels, crunching the data and spitting out a financing formula to provide a bespoke working capital solution. So the long tail of brands have the people, they have the product, and they have the consumer demand.

• 13:29Speaker 02

  What they don't have is the short-term capital, the benchmark data to improve their business, and the network of vendors and founders to thrive, and that's what we're providing.

• 13:38Harry Stebbings?

  So I love that, but I am going to push back on you, Adam, because it, as I said, it's one of my biggest passion points and concerns. And it's the element of kind of a lack of free and open distribution today for smaller brands with large incumbents, often big gaming companies, and then also big retailers who are able to spend big, especially on kind of ad channels, be it your social channels, and really kind of push the message there. Am I right to be concerned by this kind of lack of free and open distribution? How, I mean, how do you think about it?

• 14:05Speaker 02

  Yeah, I wouldn't overestimate the competition. If you have a great product, if you have great service, if you delight your consumers, you've got a winning formula. I would say it's hard to compete if you have a commodity for a very broad audience. There are more niches to go after than ever and more product innovation than ever. And broad channels can be used to reach niche communities of like-minded people with authentic differentiated products around the world instantly. I would say there's not much room to make a mistake without burning a lot of money. So being capital efficient is a critical part of creating value. And, you know, as a several brands, our goal is to look at your data, tell you how much money you can raise, at what rate you can raise it, and when you need to pay it back. And additionally, we can benchmark those metrics and connect you with vendors along the way to improve your company.

• 14:46Harry Stebbings?

  I have to ask, this is too interesting for me. How do you think about pricing when number crunching on their data? How does one address the topic of pricing, given kind of all the differing inputs that you have in terms of data?

• 14:57Speaker 02

  Well, I think there's a process of price discovery. And the bigger problem tends not to be the price, but understanding the lifetime value of the customer and the cost to acquire that customer. So when you're thinking about pricing. Usually people get cost wrong and they obviously get the price to cost ratio. The cost can be higher than what you're selling the good for. And that's when you're literally lighting money on fire and that happens more than you would think. And so you need to know things like if you're a shoe brand, what is the average number of SKUs you should have? What is the average product development cost for those SKUs? What is the average marketing spend per SKU? And optimize your business that way because there really are right numbers.

• 15:39Harry Stebbings?

  Another, and I'm sorry for playing devil's advocate here, Adam, I promise you, you can get off the stand soon. It's another big concern though is for me, those that maybe do really go aggressive on social and online channels. It's kind of saturation rates of marketing channels. Once that low hanging fruit has already been attained, you know, often companies burn money inefficiently on channels that potentially tapped out. How do you think about kind of saturation rate of marketing channels and approach it today?

• 16:04Speaker 02

  It's a great question. I mean, I would say brands don't have to grow forever. They can get to thirty or forty million in revenue and generate profit, which is why they're not great VC investments. But that doesn't mean they don't deserve capital. The biggest mistake I see is when founders fail to realize this and grow at all costs by overspending on marketing channel in excess of the first sale or worse, the lifetime value of the customer. You know, as I said before, that's literally lighting money on fire. You have to look at the business on a regular basis and know when to cut growth. And you want to be aggressive, but not stupid. You can measure demand and you know, once assembled brands is financed your business, we can look at those underlying metrics on an hourly basis and tell you how you can safely grow and how much capital you need to do it or whether you need to cut.

• 16:45Harry Stebbings?

  Again, I have to ask, how does one know when to cut growth? Is it when kind of conversion rates are not converting like they did before? Is it when you know, there's a loss of customer quality or customer service? How do you think about the right time to maybe have more conservative growth mindsets?

• 17:00Speaker 02

  Yeah, I mean, it's when your costs remain the same, but maybe your revenue dips. So you're, you know, you get squeezed and you know, maybe you've got too many people on staff. Maybe you're doing too much product development and R and D. And there are a number of different things in which your costs stay the same, but the revenue you're generating goes down for whatever reason.

• 17:18Harry Stebbings?

  Yeah, absolutely. We can't discuss distribution channels without speaking about the holy grail of distribution today, which is Instagram in many brands' cases. When we chatted before, I loved this analogy that you gave me. You said Instagram is the new QVC, too tempting. What did you mean by that, Adam?

• 17:34Speaker 02

  Yeah, Instagram, I'm as bullish as ever. I mean, I think it's up to marketers to figure out how to best leverage Instagram, looking at the product and connecting with influencers. But it's an incredible channel for social discovery of niche products. I consider Instagram, as I think many do, an e-commerce platform.

• 17:49Harry Stebbings?

  I totally agree with you there. Can I ask one that I struggle on myself, actually, when I look at kind of brands' Instagram pages? What is it that attracts you, excites you, engages you, that you find a really positive indication or symbol of the company's meaning and embodiment, so to speak?

• 18:04Speaker 02

  I think, you know, obvious metrics like engagement with the Instagram posts themselves. But I think what is so amazing about Instagram is that it really speaks to this new cohort of consumers. I kind of liken it to music, which is people today like to discover indie bands. They like to share that with friends. They like to go to small venues as opposed to some giant outdoor arena. Now, there's a giant outdoor arena too, but I think people would rather see that same band in a smaller venue. And therefore, that band would play a number of shows at a smaller venue to meet the needs of the customer. And so I think what Instagram, like Spotify, does is empower that social discovery. And the best sign that a brand is doing well is what I would guess I would call organic referral.

• 18:48Speaker 02

  So if people are seeing the content, they're commenting on the content and they're sharing the content organically.

• 18:54Harry Stebbings?

  Totally, and I think Halo Top actually is an incredible example of that, where they absolutely nailed that with their ice cream, which is one of my favourites, I hasten to add. I do have to ask though, I'm absolutely fascinated by the kind of the rise of micro-influencers and often the much better follower efficiency that they have than maybe some of the much bigger influencers. How do you view the next few years of micro-influencers, Adam?

• 19:15Speaker 02

  Well, I think that speaks to what I was saying to you before about how things are getting increasingly niche. You know, people really want that sense of discovery, a sense of intimacy and a sense of refinement. So the more intimate and refined That influencer is, the more interested people are going to be in discovering that influencer, who might match those niche desires of the consumer. So I think, again, this longer tail of brands of influencers is going to get longer.

• 19:44Harry Stebbings?

  Totally agree, and I'm super excited for it, I have to say. But I do wanna, before we move into the quickfire, I'm discuss two elements that we've slightly touched upon, but not delved into, being kind of fundraising and infrastructure. If we start on the latter with the infrastructure element, when we chatted before, you said to me that infrastructure to power emerging or niche brands is broken. You gave me so many cliffhangers before this. What did you mean by this kind of broken infrastructure?

• 20:06Speaker 02

  Well, I would say it's getting better. The industry used to be straightforward. You made samples, showed them to stores, you got purchase orders from those stores, you use those purchase orders as collateral to get money from the bank, you made the goods, you sold them in the store, rinse and repeat. With the introduction of e-commerce distribution, the business got more complicated because you're adding channels. So as you add channels, distribution becomes more fragmented. The technologies you need to stitch together are more fragmented. Your marketing channels are more fragmented. And you've got your factory base, of course, and the product development you've got to do. So what's really needed and what's being built is the software and systems to link all of the parts of the supply chain together seamlessly.

• 20:48Speaker 02

  And as that happens, there will be more and more niche brands selling to a global consumer base immediately. And it's getting easier and it's getting cheaper every day.

• 20:56Harry Stebbings?

  Totally agree, and kind of another reason, almost maybe to push back on VC dollars. I do have to ask, in terms of kind of the VC dollars themselves, again, you said VC is not the right asset class to underwrite small brands. So again, why is that? And what's the kind of core thinking behind this? And one that I'm super interested by, given the last few years, what advice would you give to a founder who's taken VC money as a brand and now is realising that they maybe can't reach the growth heights that their VCs have set them?

• 21:23Speaker 02

  That's a really difficult situation to be in. Again, I think in certain categories, venture works really well. But overall, no, I don't think VC is the right source of funding for capital-intensive businesses, which have a cash cycle, in which you incur costs before you generate revenue, or in which you incur greater costs as you scale your. Inventory, you really need working capital and that's what assembled brands provides. So if you've taken venture capital and you've needed working capital, what's happened is you've taken on an enormous amount of dilution and you're going to really disappoint the venture capitalist and their limited partners. So I mean, you can't really go back in time, but I would say you probably need to restructure your cap table at some point.

• 22:02Harry Stebbings?

  No, absolutely. It's that super interesting thing that I think we will see or not if it plays out over the next few years with a number of these brands. But I do have to ask one final thing and kind of with my VC hat on, yeah, we've seen a lot of M and A exits from the brand space with the likes of your Bonner boxes, your Birch boxes. A lot of them considerably smaller than traditional VC requirements in terms of exits. Do you think we will see these mega venture returns in the space? Or do you think we'll continue to see much, much smaller, much more niche exits as we have done so far?

• 22:32Speaker 02

  Definitely the latter. The media happens to like to cover the former. So there are amazing exceptions to the rule and those are just wonderful stories. I think the reality is those are again, exceptions to the rule. These smaller exits, you know, if you own 70 or 80% of your company and you financed working capital properly and you sell for $50 million, that's pretty good. You're making a lot of money. And again, it's all relative. But I would think the latter approach is probably a more prudent one to take and a more sure way to make money.

• 23:02Harry Stebbings?

  No, I totally agree. And I think people so often forget the elements of dilution and just how eight rounds of venture funding can leave you with four or five percent. So totally with you on that element. I do though, want to move into my favorite element, Adam. You've listened to the show before, the quickfire round. So I'm going to say a short statement and you give me your immediate thoughts. About 60 seconds per one. Are you ready to roll?

• 23:22Speaker 02

  Ready to roll.

• 23:23Harry Stebbings?

  So I'm flying to the West Coast next week. What should I read on the way and why?

• 23:27Speaker 02

  Well, I'd like to give a pairing, if that's okay. I recommend The Coddling of the American Mind by Jonathan Haidt and The Upside of Stress by Kelly McGonigal. And they relate insofar as the core thesis is that people should strive to be anti-fragile and to get stronger with stressors and therefore invite adversity and stress into their lives. And hate explores our culture where kids today are getting increasingly fragile due to social isolation from technology. And McGonagall really gives a recipe of how to weather adversity and stress with a growth mindset. And so I think it's a really interesting kind of pairing of books to look at our culture today.

• 24:03Harry Stebbings?

  Adding to the Amazon wishlist as we speak, but what emerging consumer brand do you most respect? And most importantly, why?

• 24:10Speaker 02

  There's a brand I really like called Uhuru Design, U-H-U-R-U Design. They were founded in two thousand and four and Uhuru began as a high end custom furniture company with a focus on this kind of timeless and sustainable design. And over the past fifteen years, they've built their contract division out through these high profile projects and hospitality and restaurants and workplace sectors. And I just think it was a really interesting development of the business to go from this direct to consumer, this enterprise offering. And they're also really leading the vanguard of new American design. I mean, their piece has been placed in the Smithsonian, the Brooklyn Museum Permanent Collection. So really interesting company and an interesting group of founders.

• 24:50Harry Stebbings?

  Biggest concern for the world of consumer brands moving forward?

• 24:53Speaker 02

  Well, here you know, I mean, I'm incredibly biased. I would say there's a scarcity of financing options right now. Uh, there's a lack of benchmarks, meaning brands are flying blind in terms of what they're building. And I'd also say there's no I R L community for craftspeople making physical goods the way there are I R L communities for people building technology products.

• 25:12Harry Stebbings?

  Paid versus organic, it's the big question, but what's the right ratio?

• 25:16Speaker 02

  It depends on the size of your brand, but organic referral and repeat purchasers are the best sign to have a great product or service, which is to say designing wonderful products and delighting your customer always wins. I mean, I'm definitely a very product oriented founder, so maybe that's not a very good answer, but I think it really does always start with the product. And if you've got a great product and you're delighting your customers, they will tell their friends and then their friends will buy from you. And that is a really virtuous cycle.

• 25:42Harry Stebbings?

  Kirsten Green said on the show, Amazon does more to make the market than to destroy it. Would you agree?

• 25:48Speaker 02

  Completely, putting aside political arguments for regulation. I'm an Amazon fan. I mean, it's a fantastic distribution channel and obviously they're clearing out stores. But I think what Kirsten is pointing to is that they're also Providing an incredible marketplace for emerging brands and we have a lot of brands in our group that sell on Amazon Marketplace and do so extremely successfully. The problem is that because marketplaces don't buy goods like stores used to, brands need financing and they don't have it.

• 26:13Harry Stebbings?

  The future for TV is a distribution channel. Super interesting one there.

• 26:17Speaker 02

  Yeah, I mean, I can't say TV specifically, but I would say the future of screens as a distribution channel is certainly bright. As I said, I'm extremely bullish on Instagram, on Shopify and Amazon in particular.

• 26:29Harry Stebbings?

  Finally, tell me, what was the most recent investment from Assemble Brands and why did you get so excited, say, about that project and brand?

• 26:36Speaker 02

  Felix Gray, David Roger created a glasses brand with lens technologies that do things like reduce eye strain from screens and increase melatonin for sleep.

• 26:45Harry Stebbings?

  Well, Adam, it's been so much fun. As I said, Scott told me it would be wonderful to have you on the show. It's more than lived up to expectation. So thank you so much for joining me today.

• 26:52Speaker 02

  Thank you so much, Harry. I really appreciate the time.

• 26:57Harry Stebbings?

  What a guest. And what can I say? Super excited to see the next years for Assemble Brands. And if you'd like to see more from Adam, then you can find him on Twitter at Adam Pritzker. Likewise, it'd be fantastic to welcome you behind the scenes here at the 20 Minute VC. You can do that on Instagram at H Stebbings 1996 with two Bs. It'd be great to see you there. But before we leave you today, a lot of what we do on the 20 Minute VC is talk to experts, pick the brains of founders and investors who tell us which trends to watch out for, offer tips on fundraising and teach us how to excel at any company stage. There's no playbook for building a great business, but we can certainly learn from people who've done it before. Beyond listening to this podcast and talking to mentors and advisors in your own network, it's important to have resources you can turn to when you're tackling a new challenge. Stripe has built those resources for you.

• 27:40Harry Stebbings?

  Whether you'd like to learn how to run a pricing experiment or build a knockout landing page, Stripe gives you the information you need to start, run and scale a technology company. Their guides are often written by or feature people like Elag Gill, whom we've actually had on this very podcast. And you can read one of my favorite guides on scaling engineering organizations and many more on Stripe.com/20VC. That's T W E N T Y V C. And speaking of pillars of your organization, Intercom offers a new and better way to acquire, engage and retain customers. They've built a suite of Messaging first products from chatbots to a totally reimagined business messenger that modern internet businesses use to accelerate growth across the customer lifecycle from acquisition to engagement and support. Over the past eight years, they've totally reimagined

• 28:22Harry Stebbings?

  what a business messenger can be, which is way more than simply live chat. Today, Intercom is used by the world's most forward-thinking companies. Check this out, including 84% of Y-combinator companies that use a messaging or live chat tool use Intercom. They now have over 300,000 customers, including larger companies like New Relic, Atlassian, and Shopify, and smaller companies like Airtable and Coda. And finally, I've always been a big history man, and so I want to talk about Cooley, the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley's formed more venture capital funds than any other law firm in the world. With 50-plus years working with VCs, they help VCs form and manage funds, make investments, and handle the myriad of issues that arise through a fund's lifetime. So to learn more about the number one most active

• 29:04Harry Stebbings?

  law firm representing VC-backed companies going public, simply head over to Cooley.com, and also go to CooleyGo.com. As always, I so appreciate all your support, and I cannot wait to bring you a phenomenal set of episodes next week.