Yanxuan, the "knock-off" marketplace, shows you why the luxury emperor is wearing no clothes

The wonderful Forerunner Ventures newsletter (new website, check it out) brought to my attention Yanxuan, an incredibly rapidly scaling marketplace by NetEase. Check out the front page (Google translated):

The concept is simple: source unbranded product from manufacturers that also produce for large brands. Use same or similar designs and much lower price points. Will they eventually get in trouble with the brands or lose some ODM manufacturers because of their claims? Possibly. But until then it feels like a scaled Chinese Everlane... and it also does $1.8 billion in revenue :)

Good life, less expensive indeed. Did you know that Prada already sources 20% of its range from China (WSJ paywall)? Chinese manufacturing isn't just cheap, it's also gotten incredibly high-quality. While Europe was mucking about with its Euro bs. 

If you are thinking about launching a Yanxuan type of business in Europe or the US, get in touch. max@sunstone.eu will find me. 

Fail_Succeed: an interview exploring how to overcome failure

A few years ago, when Harry Stebbings got started doing The Twenty Minute VC, I turned him down for an interview because I'm generally not happy to make the story about me. I like putting founders front and center. But over the years I've learned amazing things from Harry's podcast. 

So when Dom Fendius, a fairly new podcaster, got in touch about an interview exploring how successful people overcome failure - the focus of his podcast Fail_Succeed, I hesitated again but ended up saying yes. 

I was very open with Dom and what we talked about makes me feel vulnerable. I hope some of you like it.

MindTheLeader by Jenny Jung, ex-VP People & Operations at EyeEm

The startups that successfully scale in our portfolio consistently invest in leadership development. It's probably the most impactful thing you can do as a CEO. 

The problem with most generic leadership training programs is that large companies are so different from startups. That's why I was very pleased to hear that my friend Jenny Jung has started MindTheLeader, a program run exclusively by coaches and professionals with operating experience in startups.

MindTheLeader is running its first program focused on HR & People Operations professionals, offering a six month leadership training group with peer coaching, guided introspective work, and case studies. This will be a serious, senior group that comes together not just for the program but is designed to be a lasting network of peers. 

Kick off is in Berlin on June 29. You can apply here before May 31 (I've heard they're almost full). We're recommending this to all our portfolio companies with more than 50 employees. 

Open Position: VP Product, Travelperk (Barcelona)

Following its Series B led by Felix Capital and Target Global, and with participation from Spark Capital and yours truly, Travelperk is starting to scale. The company is now looking to complement its wonderful Barcelona-based management team with a VP Product. We’ll happily relocate you from less sunny places around the world like the Bay Area or London. 

The low-down:
  • Massive opportunity: $1.25 trillion annual corporate travel market
  • Incredible growth: 1,200% last year (fastest growing SaaS company in Europe, #4 in the world)
  • “Hottest startup to watch” by Forbes and Wired
  • Deep domain expertise in a team led by ex-Booking.com and Skyscanner folks
  • 5 stars on Glassdoor
But perhaps most importantly, corporate travel is a segment with historically low product innovation. A few large incumbents that are far from digitally native. High frequency/repeat rate of customers, with high brand loyalty. A quasi-zero-sum market. The ability to massively improve the experience for hundreds of millions of people worldwide. And hence a unique opportunity to build a very large, category-defining company that changes things for the better. 

Go hear to read more about the opportunity to be Travelperk’s new VP Product. The entire team at Travelperk and I can’t wait to meet you. 

Starting with the Who (and the Why) rather than the What

A few years ago, Simon Sinek's "Start with Why" re-introduced the age-old idea of purpose. We're big fans of purpose at Sunstone, so much so that the dolphin emoji is part of my fave lists (it's a porpoise!). 

I believe everyone shares the same inner purpose, but that we translate that into different outer purposes. 

For us, starting with the Who and the Why means: we believe the founders and their purpose should be our primary reasons for backing the company. The What (the idea, the market, traction, IP, etc.) is secondary.

But when founders pitch us, we also listen to their Who: the customer. How deep is their customer insight? Do they understand them intuitively? What data do they look at? What hypotheses do they test?

If you start with your Who in a pitch with me, you're very often on a good trajectory to allowing me to appreciate the depth of the work you've done on the opportunity so far. I had a great conversation yesterday with an entrepreneur I initially believed had bad "founder/market fit." Turns out I was super wrong. He had a deep, intuitive understanding of his customer despite being a different gender as well as socio-demographically and ethnically fairly distinct from them. Certainly made me check my biases (again). 

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 max@sunstone.eu. 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 Last.fm 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. max@sunstone.eu 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 SmartPay.me, 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. max@sunstone.eu will find me. I'd love to keep learning.