The pleasure of focus

On February 5 this year I wrote about narrowing my focus to consumer investing. Within consumer, I focus on marketplaces (e.g. GetYourGuide), new platforms (e.g. Dubsmash), and direct-to-consumer (DTC) brands (e.g. Lillydoo).

Since that time, we've worked internally on sharpening that investment thesis, paying special attention to what kind of consumer propositions we want to back. I hope to share some of that work in the coming weeks. We have led one large investment in a digitally native vertical brand (DNVB), are in the process of closing another, and just yesterday made a third commitment. The latter two are both seed (€250K-€1M).

Technology's ascendance over the last decade has left everyone I know distracted. There's so much going on, so many things and people vying for your attention in different ways, that it's hard to gauge what's important. And the temptation in venture is to stay horizontal. After all, I used to say, if I wanted to be focused on a vertical I'd be a founder. 

I also used to believe that since we're mostly picking founders/teams, ideas were secondary. That's probably wrong - ideas are pretty crucial. And I do think a deep understanding of the idea/market makes me a much better partner. 

But the other thing that makes me a better partner, and one that I underestimated, is being able to say "sorry, that's not what I'm focused on" to most things that come across my desk. All the while being able to spend real time on the things that I am focused on. There's a lot of beauty in reducing the noise. 

So the benefits of focus are immense, and getting bigger. I'm about to invest in my first ever company that reached out cold to me. No network introduction, no warm lead. Just an email. That's a direct result of the blogging about DTC investing that I've been doing. So I'll try and keep doing that every day (in true OKR fashion, 70% complete is a win!). 


My two-year-old daughter Charlotte and I are in Rome for the communion of my goddaughter and the baptism of her little brother. 

It’s incredible watching her start to socialize across language barriers and with the backdrop of 28 centuries of history. 

Europa my love.

We should be decelerating fashion, not adding to the collective insanity

My favorite textile brands are quality. Slowear's Incotex. Patagonia. 

I understand the appeal of high fashion and of following trends. But fast fashion (Zara, H&M) has always seemed highly inauthentic and wasteful to me. 

As we are rethinking textiles from a digitally-native vertically-integrated brand perspective, I do think we should heed Queen V:

"Buy less. Choose well. Make it last. Quality, not quantity. Everybody’s buying far too many clothes." —Vivienne Westwood 

I think simplifying wardrobes makes sense. Rediscovering utility. Making clothes reusable, repairable, recyclable. Reducing waste water and dyes (check out SpinDye). 

In my mind there's an interesting brand to be built here that takes back its old clothes to repair them, recycle them, or pass them on. And then credits the sent-in items towards new purchases. There's a Tribe to be built there, potentially a subscription business. Lot2046 is still too much Shenzen and not enough Ventura, CA.

Go check out The Real Cost of That Dress that looks at these issues in more detail. And if you're building a more sustainable textile brand, hit me up at Fashion isn't our favourite vertical, but clothes with a purpose could be. 

Vertical streaming: a thesis-in-progress

Ever since I saw Crunchyroll (yet another David Pakman investment - I'm starting to be a fanboi), I've had a gut feel that vertical streaming media would become a thing in one form or another. I was gutted that as a angel investor the firm I was at at the time (Atlas) passed on both Spotify and Deezer. But believe me, both companies looked far from obvious in the late aughts.

Perhaps vertical media streaming is really just "channels" and with YouTube, Twitch, Amazon Prime Video, HBO and, of course, Netflix, vertical is already here. But I'm not sure that's true. The move from linear to on-demand has just accelerated over the past few years. We've just seen the launch of things like Dazn for on-demand sports. My gut is there will be lots to come in both video and audio entertainment.

Two other European companies come to mind in the context: IDAGIO, a Spotify for classical music (a great vertical) and MUBI, a curated Netflix for... intellectuals that deeply care about long-tail film? Both are interesting companies that are now unfortunately slightly too late stage for Sunstone (we only really do Series Seed and A). 

If you are building a vertical streaming company, we'd love to talk to you. will find me. 

Hermès is a luxury brand, but it might just be the wrong kind (follow-up)

As you can tell, I'm learning in public at the moment. Which is a vulnerable thing to do, because you frequently look like an idiot. But I've learned not to care. Not least because:

In starting to learn about luxury, I had a delightful lunch yesterday with Anton Jurina, founder of Armed Angels, who is now running Maison Héroïne, a line of functional and beautiful bags for women. He recommended The Luxury Strategy as a good intro read. As I was discussing with my wife this morning, there's a real question whether we should be thinking about it as investing in luxury at all. Perhaps just the "modern luxury" as defined by Lean Luxe. 

In that respect, I particularly enjoyed the extremely different perspectives that people had on Facebook. Lover of all things beautiful Charles Nouÿrit, founder of, said "Hermès has always been there and will remain a luxury brand for ever", stressing the importance of status signaling and identity seeking that is the traditional domain of luxury brands. Alexandra Depledge, who I've wanted to back for a while but who seems to have gone off VC totally after her experience founding and selling Hassle (!), put it as succinctly as I would have liked to have done it:

"Unless you are accessible and authentic today, you are writing your own demise."  

I mean, we should just print and frame that as part of our direct-to-consumer/DNVB investment thesis. We're seeing it first with "millenial" brands, but the older crowd will catch on soon. Just look at this chart by McKinsey - there is no more discernable difference between the "silver surfers" we invested in at Audibene and the rest of the market. Except for social media:

80% of luxury sales are digitally influenced. By 2025, a good 20% of the luxury market ($74 billion) will be online. And the digital touchpoints are growing: already consumers *are* the channel: the volume of chatter dwarves the brands' official communications.

Chanel has 700 official posts on Instagram, but 48 million hashtag mentions (Source: Instagram 2017). It's silly to think they can continue controlling the conversation in any meaningful way. The Cluetrain has well and truly left the station.

Right now our thesis is that the trends we see in the broader "new consumer economy" are as relevant for luxury as they are for mass market or premium goods:

1. Consumer preference is fragmenting, with clear preference emerging for smaller and local. 

2. Distrust of big brands is growing, with millenial consumers actively distrusting scale and seeking out purpose-led brands.

3. Online has killed the moat of shelf space, with direct-to-consumer distribution backed by an online conversation dramatically reducing the costs of starting out (and hence the "Cambrian explosion").

4. Continued hyper-growth of natural, organic, wellness, eco-conscious, meaning-making brands.

If you're founding a direct-to-consumer DNVB along those lines, we'd love to chat. will find me. I'd love to keep learning.

Hermès is not a luxury brand

We own a lot of Hermès. Bags, sneakers, lots of beautiful scarves. We have a full Balcons du Guadalquivir set of china (it was wedding gift). I have some of their cuff links, ties. I've bought those enamel bracelets as a gift. The more I think about it, the more we've bought or received as gifts. It's hard to go wrong with those orange boxes as a gift for my wife. Those Twily scarves... John Lobb chelsea boots (they're owned by Hermès). I estimate we own a few tens of thousands of Euros of Hermès stuff.

And yet, when I walk into an Hermès boutique, they make me feel like crap. Maybe it's because I'm wearing jeans and sneakers. Maybe it's because they hire to maximize snootiness. Maybe in retail once you work at Hermès, you've made it and you get to look down on everybody, including prospective customers.

It's a consistent brand experience. It's been the same in their store in St Tropez to their store in Houston. From their boutique in "the German Hamptons" Sylt (probably the worst) to the one at New Bond and Conduit in London. They suck at making me feel welcome.

I used to think this was a "CRM" problem. They didn't know who I was. I mean, once you see how much Hermès stuff I own, you'd realize I was a high-value returning customer. Ideally if I walked into the store, they'd realize that and drop the attitude. And you know, once you give them your address and tell them about your interest in a Birken or whatever else they artificially limit access to that year, they do kowtow to the cash.

But on reflection, that's the problem. The entire customer experience is contrary to the brand. Hermès wants to stand for craftsmanship and for beauty. And what they end up standing for is the subordination of the human to money. Instead of beauty, it's just... ugly.

A brand that is built on the unrelenting reference to deference to the sublime fails at the very moment where it has the potential to share that feeling with people. Instead it says: you are nothing.

Interbrand ranks Hermès at #32 with a brand value at $14 billion. As the world becomes more aware and more conscious, I'm short folks like Hermès unless they wake up to what's happening with consumers. Because this isn't a 1% or not issue. It's a broad, fundamental change in how consumers think about luxury.

It's becoming less about status signaling. Less about artificial exclusivity. Less about a big fat H on the belt. And much more about the core product and its surrounding services, transparency, purpose, environmental consciousness, inclusion, tolerance, optimism, ...

Lean Luxe wrote about the definition of modern luxury early last year. Part of that is rethinking the brand as a holistic customer experience. It's an equal relationship that is built with the customer. A brand is a conversation between people, not a half hour of being shouted at in a sensory deprivation chamber and then sold something because of a perceived feeling of lack.

So I'm sorry for picking on Hermès in particular. But even relative to folks like Louis Vuitton or Chanel, their customer experience has always been particularly horrible. And I'm happy that we're getting to a place where that's no longer seen as acceptable and where "luxury" is being redefined by digitally-native, vertically-integrated brands (DNVBs).

If you're working for Hermès and you'd like to build a better brand, come talk to us ( will find me). 

The dark side of direct-to-consumer brands: selling you crap with some pretty pictures

The DTC thing for me isn't just a well calculated pivot to a new opportunity as a venture capitalist. It's also a personal, visceral, emotional experience. I'm finding more and more brands online that I love trying out. Take Cotopaxi. Faherty. Farer. Lillydoo. All brands I had never even heard of until last year - all brands that are driven by purpose, that care about more than just making the sale, that understand the customer experience as a holistic journey together.

So far, so good. But this new brand craze comes with a dark side. As Ana Andjelic commented for Lean Luxe last year, "for every new brand that takes the long view on customer service..., there are countless more where the customer relationship ends at the moment of sale." The Atlantic followed up with a pretty good piece in January about The Strange Brands in your Instagram Feed

Fraudulent ecommerce has been a thing from early on (see these amazing online shopping fails on Bored Panda), but the Cambrian explosion of brands really underlines: read the reviews. Watch the unboxing video. Generally you get what you pay for. And if it's too good to be true...

Disclaimer: I'm an investor in Lillydoo and an advisor to Bored Panda. 

Build community first - a startup strategy neglected to Europe's detriment

I've previously written about how customer experience is the #1 dimension of differentiation for digitally native vertically integrated brands (DNVBs). Which is why it's baffling to me that the "community first" strategy seems to be largely neglected in companies we see in Europe.

Starting with building an engaged audience first can be a huge boon:

- It helps you truly get to know your customers. DNVBs depend massively on this intimacy. Over time you can use data to monitor every interaction, but in the beginning you need to learn qualitatively. Talking to hundreds of potential customers means building the intuition you need to nail product and voice over time. And this is really your moat - no traditional brand that is disconnected from its customers by the channel is able to do this. 

- Building a community first means having built-in distribution later. A lot of the DNVBs we see in Europe are too dependent on paid acquisition. Margins may be high and lifetime values much higher than in retail ecommerce, but continuously paying 30% of your LTV in CAC makes your business much less profitable than it could be. Building community focuses you on organic or even viral acquisition. 

- Hiring outstanding talent is really what turns a great founding team with a great market opportunity into a category-defining, multi-billion dollar company. Recruiting from inside a community that is already passionate about your vertical means people will come to work for you with a spring in their step every morning. Your dreams are their dreams. That's how magic happens, especially at the early stages.

- A community passionate about a vertical will forgive many, many missteps as founders try to build a business. The engagement is emotional - this is true connection and support. It's hard to overstate how helpful this can be as founders invariably screw up along the journey. 

- The authenticity of a community with the founders as leaders at its center will drive enterprise value: both when you're raising from angels and VCs, but also when you're considering an exit. Community is a moat from a finance pov as well. 

- And beyond all that - it's truly scrappy: much cheaper to start with just content than trying to make a product and sell it right away. 

Building a community can work across all social platforms: Instagram is the most obvious one for DNVBs, but it can work on Facebook, Pinterest, Twitter, Snap or even through good old email and text. 

I currently recommend trying this path rather than relying on desk research or cloning a US competitor perceived to be doing well. 

The fastest growing verticals in direct-to-consumer brands - aka fantastic new companies and where to build them

Annual consumer packaged goods (CPG) online sales in key categories are up ~30-40% year-on-year (in the last year where I've been able to find data, 2016), growing around 2x faster than total ecommerce sales. 

While supplements are the category leader online by value, pet care, cosmetics, and facial care all surpassed $1 billion in ecommerce sales in 2016 in the US. 

The fastest growing categories were pet care, laundry & dish, and cleaners, all growing at >50% yoy. 

Among the fastest growing retailers are folks like (subscription) and Drs. Foster & Smith, a testament to the attractiveness of the pet vertical. 

Here's the full report by 1010data.  

Brb, looking for new brands that make pets happy. 

Retail goes full circle

As we approach full hybridization of brands and retail, and a concordant hyperfragmentation of the marketplace (good read by @namratalpatel), I'm fascinated by the apparent "full circle" of retail.

If you go back to the very beginning, retail was about relationships and communication. At first it was bartering, then it was town markets. Both of those were primarily about the relationship and communication between people, rather than what was being traded. It is only with the onset of industrialization that retail stopped being about this relationship and started being primarily about the product. With chain retail - malls, department stores, big box stores, and finally Amazon - the product took center stage. Mass production and mass marketing moved the relationship of retail into the background. 

And thus we ended up being shouted at. Brands became shorthand for trying to replace the meaningful relationship of commerce. Communication was top-down, one-way, one-size-fits-all. And they tried to make identity about ownership. 

No longer. Technology is enabling a move back towards relationships and communication, but in a scalable way. Part of that is the way we speak to consumers when we're being "authentic." And part of it is looking at data and trying to anticipate what people want on an individual basis and then providing that to them. A happy coincidence is that people are starting to care more about experience than ownership. 

Part of our DTC thesis is thus that the strongest dimension of competition for the new connected brands ("DNVBs") is a transformational relationship with the consumer

As foot traffic is starting to fall even in traditional European markets where Amazon isn't as strong, I can foresee the death of the current form of physical retail. But I can also see how retail is changing for the positive. By being more about the person than the thing. Which is really at the heart of what we want to invest in.