Let's raise the bar together - Europe should be competitive in DTC brands

I'm writing this at 35,000 feet from the confines of a Wifi-enabled SAS Airbus. I just watched Blade Runner 2049 which was visually uh-mazing but sadly didn't have a Tears in the Rain type moment... C-beams glittering in the dark off the Tannhäuser gate. Totally improvised nonsense but some of the strongest scifi poetry ever. 

I know I said I bleed blue and gold, but really at my core I'm not big on patriotism. On the other hand, I also don't believe in no nations, no borders (or sumsuch nonsense) because I'm not an anarchist and I actually enjoy the freedom that comes with security. I grew up as a Third Culture Kid in Canada, Germany and the UK, so I really have no home and few roots. Except cyberspace, really, but even that place has changed beyond recognition in the last 15 years.

As I was leaving Schengen, the new automated gates scanned biometric passports and took portrait photos. That did feel pretty Blade Runner and had me wondering how long I'll feel comfortable in Europe. It does feel like we're continuing to surrender freedoms on the continent.  

We're about to start our descent into Newark and going through my notes I'm struck by how massive the DTC segment has become in the US over the last few years. That Inc article mentioned 400 active companies. I don't quite understand why it should be so much bigger in the US than in Europe... once again. This isn't really out of a sense of patriotism as much as healthy competition. 

We have such a strong history of building luxury brands. That said, my theory is that many European companies have been competed upwards - meaning they've become luxury brands not necessarily by choice but because they couldn't keep up with the commoditization of their markets. They retrenched to what they were good at (making pretty stuff in small batches). 

When I compare companies like Horizn Studios and Away, part of Europe's losing ground again is a continued lack of access to capital. We just don't have the funds that do a fast-follow $10-25 million in an early-stage company. We desperately need a set of more aggressive, conviction-driven Series B investors in Europe. Which requires doubling or tripling the $6 billion or so invested in European venture per annum. 

But there are other reasons as well (this will probably get me in trouble): often European management lacks experience - domain expertise, prior entrepreneurship, strong corporate experience, etc. Or they don't have great advisors (there are some truly awful advisors in European venture). Some European companies - compare e.g. the European shaving startups to DSC or Harry's - also just seem to be OK with making decidedly worse product. And others yet seem strategically inept or much more shortsighted than their US competitors. I often also sense a pervasive lack of optimism and a lot of risk aversion. When in doubt, Europeans prefer to run lifestyle businesses. 

So I guess I'm here to remind you that we owe it ourselves to stretch. Reach higher. Raise the bar. If you and I don't do it, who the heck will? 

If you want someone to coach you on the journey of reaching your full potential, we're very much looking for aggressive DTC teams in Europe. We're fine if you're still in stealth or looking for pre-seed. All we ask is that you have an idea or part of the supply chain figured out. And the desire to build a really, really big company with us. 

Just leave a comment or send me an email to max@sunstone.eu.

4 responses
What interests me is that Europe can happily spend 41% of a 20-trillion USD equivalents GDP on 'social protection', but if they were to spend only 0.1% on venture that would literally double the capital pool in Europe. I'm not at all opposed to social spending but I think that putting some money into venture might assist those governments to pay for that spend in the future
To be fair, they are a very active investor - most of European VC wouldn’t exist without the EIF. That said, I agree that more is necessary. France is doubling down.
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