After spending 15 years focused on investing in consumer and retail companies in the public markets, I was struck with the feeling that there must be something more. Don’t get me wrong, it felt great investing in a stock and watching it go from $10 to $14 a share and reaping that 40% return.
But I felt there was something more.
There must be a way to use my years of experience investing in the consumer sector for a greater contribution. I learned a lot from my time dealing with large public companies and c-suite executives. I learned the difference between growing at any cost and growing in a profitable / scalable manner. I learned the importance of leadership and how that can shape the direction of a business. I learned to understand that balance sheet (and cash requirements) was as, if not more, important than the P&L for a business at any stage. I saw what disruptive companies can do – remember when WMT announced they were moving into drug or when they hit 10% grocery market share and people said it would never get more? I do. I saw what disruptive technologies could do to create a massive competitive advantage that can last years. There is a reason that Domino’s Pizza has outcomped its peers by 2-3x over the past 8 years and that it has almost 2x the sales productivity of its closest competitor – massive technology innovation and investment. I have seen first hand the power struggle between the consumer, the brands and the retailers.
I wanted to find an opportunity where I could harness that experience to add value to businesses, while at the same time adding value to myself. And I don’t mean financial value to myself (although it would be nice if that aligned) but purpose-driven, emotional and intellectual value that only can come from giving back and helping others grow.
Then I was introduced to CircleUp.
CircleUp’s mission is To help entrepreneurs thrive by giving them the capital and resources they need. It is written on the wall, discussed at weekly meetings and emphasized in everything we do. What a noble mission for a company, and what a perfect opportunity for this next stage of my career.
What excited me about CircleUp is threefold. 1) Focus on small emerging brands; 2) Emphasis on using data to assist in investment decision making; 3) Use of data to help entrepreneurs thrive.
Focus On Small Emerging Brands
If my experience with large consumer brands and retailers has taught me anything, it is that there is a significant need for small emerging brands. There is a battle raging between the large incumbent brands and the retailers who sell their products. These brands have barely innovated in the past decade, instead driving increased earnings and shareholder value in a different way – usually through raising prices, cost cuts (the anti-innovation) and pushing back on retailers. And while these CPG companies are trying to push back on the retailers, the retailers struggling, with increased competition from 800 pound gorillas like Wal-Mart and Amazon (Whole Foods) and and recent growth from deep discounters like Aldi and Lidl. Competing on price is almost impossible against either of those cohorts, and competing on service (convenience, delivery, personalization, etc) is very expensive. It is early days, but we have begun to see retailers focus on smaller, differentiated brands to drive customers to their stores. Differentiated products typically yield a higher price point, and higher profit dollars for the retailers, causing them to be less reliant on the larger brands. We are still very early in this revolution, but I expect this to accelerate meaningfully in the next several years. For the sake of the retailers, it has to.
Using Data to Assist in the Investment Decision Process
Before joining CircleUp, I was an investment professional at Citadel, which is known to be one of the most data driven investment businesses in the world. I have seen how successful using data can be when investing in the public markets – driving meaningful edge when used correctly. The idea that data was not broadly utilized in the private markets was surprising to me…..until I learned a bit more about how data was not readily accessible. Which is what makes Helio so powerful. It is differentiated product. It is the aggregation of hundreds of data sources streamlined and analyzed by a team of dozens of engineers and data scientists to develop early insights into interesting investment opportunities. It gets me very excited to think about how my experience using data to prioritize investments can be coupled with this differentiated data offering.
Using Data to Help Entrepreneurs Thrive
Time and time again when speaking with entrepreneurs, I have heard that they were data starved. Most retailers weren’t willing to share the most basic data like market share, price positioning, or benchmark sales velocity. Some distributors weren’t even willing to share in real time what retailers the product was going into. The idea of arming the entrepreneurs with data to better make business decisions is really powerful. What sort of inventory requirements are needed at Costco vs Kroger? What does “Every day low pricing” really mean at WMT – a 5% discount to grocery? 10%? 15%? What is best in class for SKU innovation in a sub-category? What is the best packaging to drive brand score and repeat customer purchases? We can help entrepreneurs answer these questions and so many more with the data we have. And we are learning more everyday.
I would be remiss not to mention the quality of the team CircleUp has as a key factor on why I joined. I am thrilled to be working alongside a group of this caliber that is so focused on a singular mission. These are smart, hard working experts in their fields, all energized by the same mission. It is a mission I am passionate about and it is a mission I look forward to achieving.