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0/ “What do you mean when you say you’re a ‘consumer investor’?”
I get asked this surprisingly freq, and my definition of “consumer” is broader than typical, so here are the 10 key things that define my professional interests/identity – my consumer investment philosophy
I get asked this surprisingly freq, and my definition of “consumer” is broader than typical, so here are the 10 key things that define my professional interests/identity – my consumer investment philosophy
1/ I’m passionate about (1) human behavior (why ppl think/do/buy what they do) and (2) brand building (how entities create their public identity/trust & derive value from it); investing is just a way to work w/ the coolest cos & ppl playing in that sandbox of behavior & brand
2/ As a consumer investor, I’m thus interested in anything that depends on direct consumer behavior/motivations (buyer need = user need) and brand building. That’s products, marketplaces, social, gaming, media, health & wellness, personal finance + much more
3/ As a result, I take deeply consumer-centric approach to evaluating new investments. Why does this category matter? What are the diff consumer segments? What makes them tick? What specific need does the product/brand meet? How easy is to meet those needs elsewhere? etc.
4/ I believe that the best brands combine functional needs and emotional needs. They have top quartile (better) + differentiated products in their specific category, and they deliver significant meaning beyond those products’ functional features
4b/ Let’s use @onepeloton to illustrate meaning beyond product: it can be personal satisfaction (“getting fitter”), community association (“part of a tribe”), identity signaling (“I’m the type of person who cares about fitness”), motivation (streaks, PRs, “it’s already here”) etc
5/ Being a consumer investor might seem frivolous but at its core it deals w/ what ppl care about on daily basis, whether it’s food, shelter, health, security, pleasure, entertainment, human connection, identity, fulfillment/achievement + much more. It’s deeply human.
6/ Great product + brand meaning/emotional connection are a necessary but not a sufficient condition for success; great unit economics, stellar distribution, customer acq arbitrage, well-designed customer service, and rockstar team w/ growth potential all matter just as much
7/ ABCD = Always Be Consumer Diligencing. I don’t understand how anyone can invest in a product (physical or tech) w/o trying it out, and more imp, w/o meaningful data on target customer trying it out. I roll my eyes at VCs who judge whole cat. based on wives’ opinion. Do better.
8/ Revealed consumer preferences > stated consumer preferences, which is why I invest exclusively in post-launch businesses (beyond that, I’m stage agnostic – seed through growth).
There is no better market test than the market itself.
There is no better market test than the market itself.
9/ I strongly believe that consumer investment diligence magic happens at the intersection of deeply human-centric approach and smart use of data. I believe most investors don’t maximize the benefit of either and very few use both well.
10/ Diverse teams are harder to build & manage but they also tend to build better products & serve customers better bc they have fewer blindspots (market need, product dev, marketing, fulfillment, cust service). Not that diversity needs a biz case –it’s how I want to invest /FIN
