Modern Retail Podcast · with Kevin Lavelle, Rachel Drori, Joe Kudla, Jed Berger · November 21, 2019 · 24 min
Summary
This episode compiles insights from successful founders on the realities of building and scaling DTC brands. It highlights the often-overlooked downsides of venture capital, including pressure for unrealistic growth and the risk of "torching cash." Founders share their cautious perspectives on VC funding, emphasizing the importance of sustainable growth and strong unit economics over rapid, externally-funded expansion.
Key takeaways
Venture capitalists may reject businesses that cannot demonstrate 10X revenue growth within 12-18 months, forcing founders to critically assess their growth projections.
Beware the "cycle of torching cash" where readily available VC money can lead to unsustainable spending and a lack of financial discipline.
Prioritize building a fundamentally sound business with strong unit economics and realistic growth expectations to avoid VCs dictating terms and compromising your vision.
The role of the CMO and marketing functions needs to evolve, focusing on measurable impact and strategic accountability within the organization.
Sustainable brand growth is paramount; avoid over-reliance on external investment that can lead to rapid burn rates and diluted ownership.
Making Marketing is making some changes. Starting with our very next episode, we'll be the Modern Retail Podcast, bringing you conversations with people innovating in retail, including the oh-so-buzzy world of DTC.
But before that, this episode rounds up a few highlights from Making Marketing's interviews in the past year:
Kevin Lavelle, the founder of menswear brand Mizzen and Main
"I’ve spoken with a couple VC firms. We had positive feedback, but one VC said she couldn’t see how we could [make] 10 times our revenue over the next 12-18 months, so they’re not interested. And it stuck with me. She was absolutely right."
Rachel Drori, founder of the subscription frozen food company Daily Harvest
"I have such issues with what I call the cycle of torching cash. What’s happening is that there’s so much VC money out there — anybody can raise — and then they can throw money at their problems."
Joe Kudla, founder of athleisure brand Vuori
"If you go straight to the VC community pre-revenue, they’re going to dictate terms often terms. You don’t want a VC running your business."
Jed Berger, CMO at Foot Locker
"I think that it’s an interesting time, and in many companies, there needs to be a redefinition of the role of the CMO, or marketing within the organization, or how it reports, or what its accountabilities are. The marketing industry is in for an evolution."
Venture capitalists may reject businesses that cannot demonstrate 10X revenue growth within 12-18 months, forcing founders to critically assess their growth projections.
What does this episode say about finance & fundraising?
Beware the "cycle of torching cash" where readily available VC money can lead to unsustainable spending and a lack of financial discipline.
What does this episode say about founder & leadership?
Prioritize building a fundamentally sound business with strong unit economics and realistic growth expectations to avoid VCs dictating terms and compromising your vision.
What does this episode say about brand & content?
The role of the CMO and marketing functions needs to evolve, focusing on measurable impact and strategic accountability within the organization.
What does this episode say about dtc strategy?
Sustainable brand growth is paramount; avoid over-reliance on external investment that can lead to rapid burn rates and diluted ownership.
