VC Post | BCV | TLQ 0.3

Brand New World. Old Rules. Six Months Later.

Bain Capital Ventures’ Scott Friend expands on his post for TLQ 0.1 with a fresh optimism inspired by disruptive new models of DTC brands with strong network effects, defensibility, and winner-take-most characteristics. 

BY Scott Friend | Managing Director | Bain Capital Ventures

The entrepreneurial ecosystem continues to produce terrific new direct to consumer products and services of all types. And the early stage investment ecosystem continues to have interest in these opportunities, providing the fuel for great product centric founders to conceptualize and launch their brands.   Some of these newer brands are achieving breathtaking levels of growth and are able, as a result, to raise later stage venture capital funding to continue to fuel their rapid ascent. 

While Bain Capital Ventures and I have sat on the sidelines for most of these growth stage financings of D2C brands, we continue to lean-into disruptive new models that we think have unusually strong network effects, defensibility, winner-take-most characteristics, or all three. These new models include categories like next gen-urban mobility, subscription services for borrowing (vs. owning) all your apparel and accessories, and solving the conundrum of truly personalized shopping for apparel online.

I’m hopeful that public market investors and strategic acquirers alike will increasingly recognize the long-term sustainability of these winning concepts, the compelling unit economics, and the likely share impact vs incumbents they will have over time. When they do, I have no doubt we will see the winners being valued in ways that change the thinking around the attributes necessary for creating long-term value for consumers and shareholders.

And I’m looking forward to that moment!  

Scott Friend has been with Bain Capital Ventures since 2006 after selling the company he co-founded, ProfitLogic, to Oracle. Scott’s areas of investment interest are in disruptive new consumer products and services, retail related technologies, and data and analytics focused application software. Scott was named to CB Insights’ Top 100 Venture Capitalists list in 2017 and 2018.

Original post from The Lead Quarterly 0.1

Brand New World. Old Rules.

Bain Capital Ventures’ Scott Friend explains why many of today’s digital-first, direct-to-consumer brands face familiar challenges and may want to rethink their approaches.

BY Scott Friend, Managing Director, Bain Capital Ventures

There’s a new world in retail unfolding before our eyes. Today’s newest brands born online that sell their products directly to consumers – dubbed digitally-native vertical brands, or DNVBs—have upended old rules of e-commerce.

This fresh crop of household names – Away (luggage), Casper (mattresses) and Primary (kids clothing), to name a few – bypass traditional retail channels, speak directly to consumers, enjoy fat margins and have unlimited growth potential.

OR SO THE INCREASINGLY CONVENTIONAL WISDOM GOES.

Driven by the successes of millennial-friendly digital-first brands such as Dollar Shave Club, venture capitalists  have ploughed money into this so-called new generation of consumer product companies. Between 2012 and 2016, for example, direct-to-consumer (DTC) brands alone raised $2.5 billion.

The truth is, however, that many of today’s newest DTC brands face challenges not unlike the last generation of consumer-focused product companies. And the success of this new generation is no more predictable than that of brands born 15, 20 or even 30 years ago.