Disruption in the Non-Proprietary World
Big ideas have turned into big companies and in turn have disrupted a handful of spaces. Many of these companies have not only changed how we shop or live or work but they have raised so much money for concepts that are not proprietary.
The cash has allowed all of them to be first to market but many are not profitable and it is unclear how winning the market with cash is how investors make money. Casper, Uber, WeWork and Blue Apron come to mind because the one that went public would have gone out of business if they didn’t raise public cash.
CPG companies have had tons of capital poured into them over the past decade. Certainly many built an incredible brand but it would really interesting to see the data behind the door. I’d like to know how much each of them have raised, how many rounds of capital, are they profitable, what are their consumer acquisition costs, what is the impact they have each made, besides direct to consumer are they carried anywhere else and where.
Some of these companies have figured out how to be profitable quickly and are scaling organically through growth hacking. They could become $100m CPG companies without raising a lot of cash and that is interesting. They are competing with companies who appear to have won the space with so much capital in them that the exit opportunity for the investors and their LP’s is yet to be seen
These companies don’t own anything that is proprietary. They have just built name brands. Some have valued these companies at prices that make no sense. If you point to the public markets it is not hard to find something that is comparable to figure out what does make sense. How much longer this type of investing will thrill the VC world is unclear. What is more unclear is how much this will thrill the LP’s.