Tony Florence is not as well known to the public as other top investors like Bill Gurley or Mark Andreessen, but is someone who is a founder with SaaS and knows market e-commerce companies in particular – Or want He is responsible for the global technical investment activities for NEA, one of the world’s largest venture companies in terms of assets under management (it closed its latest fund with $ 3.6 billion Last year) Belongs to.
Florence has also joined to join a long list of e-commerce brands, including Jet, Gilt, Goop, Casper, Lego and Moda Operandi.
It’s because we talked earlier this week With your new e-commerce bet, Maisonette, That we wanted to ask him about brand building in an epidemic over a year that has changed the world in both fleeting and permanent ways. We are talking about how customer acquisition has changed; What does he think about increasing numbers The companies Trying to roll out third-party sellers on Amazon; And when young companies become a new attraction for customers, how can they move forward.
Note: One topic he could not comment on and is the future of a famous founder whom Florence has endorsed twice is Mark Lore, who stepped down from Walmart last month to build what he started Was Recently told vox Is a multi-decade project to create “a city of the future” supported by the “reform version of capitalism”.
Part of our conversation with Florence, lightly edited for length and clarity, is as follows:
TC: You have funded a number of different businesses that have managed to grow even as Amazon has eaten more into the retail market. Is there any sector or vertical that will not make you return to the company?
TF: You must be considerate about Amazon. I would not say that there is a particular area that you can either ignore or feel that you are completely comfortable and open looking at the scale of their stage. At the same time, there are founding principles and fundamentals that we think relate to companies that are able to compete and operate successfully.
TC: And what are these? You have endorsed Mark Lorre, Philip Krim (of Casper), Silvana and Massinette’s Lussana. Do they have anything in common?
TF: Sometimes [founders] Come to the problem systematically; They are living it [and want to solve it]. At other times, someone like Mark sees a business opportunity and attacks him. But there are similarities. These are people who are very customer focused, who are focused on good, fundamental unit economics, and who are obsessive about their people, their teams. It takes a village to build a young successful company, and all those founders you mentioned are great for recruiting world class people. There is a sense of vision and mission and culture.
When you wake up and decide to do something, most of the people you talk to want to tell you the only reason why it might not work, so it takes a certain amount of time. [wherewithal] There should be a belief around what you are doing that you are believing in it all the way, and you are about to break up without anything.
TC: Maisonette was going to open a brick-and-mortar store, but due to COVID put a pin in that plan. Will we see direct-to-consumer brands opening up real-world locations? Has the epidemic permanently changed that count?
TF: Leading to the epidemic, many young DTC companies that were experimenting with offline, direct-to-consumer brands, and even the traditional e-commerce marketplace. Some of it was out of necessity, clearly. sometimes [customer acquisition costs] Became so expensive that it actually became cheaper for them to go offline. In other cases, this was done because the customer wanted that closed loop experience, such as [mattress maker] Casper.
A lot of companies [opened these stores] It did a really good job in an implicit way. This overall business contribution is economically very prosperous by margin. It was an addition to the overall customer experience. And in many cases, it did not cannibalize anything. It only expanded [total addressable market].
We’re spending a lot of time right now, continuing to think about what enduring changes are going to happen from the epidemic, but I’d say that the omnichannel model has really started to take shape and will be successful if you look big at Walmart. And retailers like Target, so I think there will be an omnichannel dynamic for many of these companies that we are talking about. Furthermore, in the last 12 months, the cost of acquisition and the efficacy of marketing have returned in favor of these young companies. This has improved to a point where we don’t even need to think offline.
TC: I know that it had become expensive to acquire customers digitally because there was so much congestion. Did it get less crowded?
TF: There were very few platforms that could use the pre-epidemic of these companies that were not overrated. . . It was just too competitive, and this would increase the cost of acquisition. In the last 12 months, you have seen large parts of that market go away. With the decline in airlines and financial services and a lot of expenses, it has become cheaper for companies to market digitally.
TC: Nevertheless, it sometimes feels that it is difficult to maintain the momentum of the brand over time; There is always some new dress nipping at your heels. How does a brand make itself fresh and relevant in 2021?
TF: A hit is dynamic – a fad dynamic – in the consumer space, so it’s always a challenge. you [compete by] Continuous reinforcement and connection [to your offerings]. You see it in social categories, you see it in the market [where they add] Managed Services and Other Components [like] Payment, and you see it clearly that some direct-to-consumer companies continue to add new products to the mix.
You focus on the core aspects of your brand and its mission and vision and ensure that customers truly feel that way. There is a community dynamic that has actually taken place around e-commerce companies in the last four or five years. Glossier is a great example of a company that built a great community around a core set of product offerings, and it has truly grown that company beyond its core customer customer base.
There is also a relevant commerce opportunity. Goop is a great example of this; Gwyneth [Paltrow] Came together brilliantly [an effective way] To merge content and commerce, and that a lot of companies have started investing in the commerce space.
TC: Content, community and not necessarily speed, so Amazon is focusing on what it doesn’t. May I ask: Do you think Amazon needs to rule?
TF: If you’re competing with them [in the] Cloud market or commerce market, they are very formidable competitors, and you take them very seriously. They are on a scale that is just incredibly impressive. But I think you’re seeing a lot of innovation around the edges and companies that are finding areas that might or might not be focused on Amazon.
TC: What do you think about these Amazon marketplace roll-ups that we are seeing? There are at least half a dozen of them, including the Threseo, who announced $ 750 million This week. All are raising money Hand over first
TF: We have not invested in the area, although we are watching very closely. This can be a very capital intensive strategy to execute as you are buying brands and then bringing them to the platform to consolidate and grow, but for the e-commerce space is just a big long tail and This is an opportunity to consolidate.
TC: Like, an endless opportunity? How many roll-ups can the market support?
TFL I think we will see a handful of these companies on a decent scale. The question will be whether you have a greater chance of mediation [by] The companies are big successes in buying and generating synergies or something fundamental. If you are ai [and] The machine learns to serve customers better and to think better about customer acquisition, which would be really interesting. If supply chains have real economies of scale [or] Infrastructure, it will certainly be interesting.
It’s early It should be seen how it is going to play out.
Pictured above, left to right: NEA’s global managing directors, Scott Sandall and Florence, who head global tech investment activities at NEA and who work with Mohammad Makhjoumi, who oversees the firm’s healthcare practice.