 The topic we are going to be discussing now is building world-class consumer products and with me on stage is Rassan from IVP Antoine from Philly's capital and Toby from high studios who's actually building a fantastic consumer product right now My name is Jenny. I'm from back VC and I also run an Instagram account called thing testing I want to invite you all to ask questions from each other as well, but I thought I could kick us off There's a lot of interesting things happening in consumer right now Everything from personalization new experiences new challenge channels and a massive amount of exciting new brands My first question is today investors on the panel Rassan, maybe you can start Is what trending consumer tech are you most excited about right now? So I feel like there's a lot of really interesting things happening in Consumer at the moment one thing that we're seeing a lot of in the US is kind of these direct-to-consumer brands kind of jumping from kind of like pure play over-the-counter into actually like Pharmaceutical products. So for instance, we're investors in hymns. There's also Roman and keeps in the US that have actually gone to market with Men's health products like Rogaine and Viagra and Cialis So I think it's really interesting that we're actually seeing like dedicated real brands that are direct-to-consumer But actually operating in regulated industries I don't think we were talking about backstage as we're seeing a lot of like cannabis and CBD kind of entering into the mainstream as it becomes more and more Legal in the US and I think that funds are trying to figure out what to do with that, but we're seeing just so much consumer Paul What about Felix Capitel's cannabis something on the table? No, it's similar felt that one Roseanne just mentioned. I think the What's interesting today is to to see that this new emerging trends that could be considered as taboo or niche In the future in the past, sorry Which are now emerging as very very big market and very big opportunity and often these trends are emerging from a younger Population which used not to be the case actually But now they're a younger population that doesn't think it's taboo to talk about Ellos or look about sex toys or to talk about cannabis and these are becoming a very big niche And I would add to this that the what's interesting in these new trends is also is how you go to market in the sense that we coming out from a cycle where Digital was a way to go and those mainstream and now what we're looking at when you look at opportunities actually entrepreneurs that can manage The both worlds so the online and the offline side very well And it's more about finding your customers in the most efficient way in every specific market for sure Yeah, let's talk more about the offline side with Glossier later. I wanted to hear one trend I really love and I've seen a lot about is direct to consumer and obviously Toby I'd love to hear what you saw The opportunity was when you wanted to start heist and the kind of backstory of how everything got started Yeah, I mean, I think well firstly, I think the trend that we're seeing that's interesting is Something we saw ages ago we foresaw but it's the collapse of Facebook marketing And I think what that means is that ever more so this idea of direct to consumers a bit of a misnomer Because the last five years you could put whatever a commodity mattress in a box and Arbitrage Facebook adverts and you can't anymore So we've actually seen a change which is I think really fundamental that underscores our position Which is that? Consumers haven't changed just because the internet popped up Essentially people buy extraordinary products from brands they connect with on an emotional and political level And I think what's interesting when we start talking about community and different ways of going to market What we're really saying is the easy days of just being able to use a Shopify website to flog something over And we're back to brand building and it's actually no different building height to the challenges building Armani And I think we've got to stop talking about direct to consumer because Like the most direct to consumer was the Victorian grocer who knew how many sausages you wanted right like that was direct to consumer Right and the idea that we have more data on our customers and them is like nonsensical But so on the back story for heist is is I mean naturally Well, it's a bit of a weird shift because my first business was in solar energy And we were lucky enough to sell that to Ikea so you can walk into an Ikea and buy a solar system like you can buy a kitchen and Stupidly had founded it with another guy called Toby the only other Toby I know and so we did a lot of PR like self-aggrandizing shit about to Toby saving the world Etc. And the more when you just strip all of that out So you realize that actually you're building a consumer brand and I was at Bain for five years And if anybody here is a management consultant the one thing you learn is that management consultancy does not tell you how to set up a consumer brands and we became fascinated though by our time in Ikea because you start measuring brands not on a level of like Can 20% of our audience hear about us? But 800 million people a year walk through the doors of that store. It owns its category across 45 Geographies and so we started heist with a challenge like how do you create a brand that can positively change a category? And and we did that weirdly I Ended up in women's underwear because it has these two things which are fascinating on a brand side It's like Dallas in the 1980s like the most one of the most important themes We're dealing with is women in society and obviously I would never lecture anybody on that But this is this is you know, you've only got to look at Brett Kavanaugh proceedings Whereas this is a dominant social problem and theme and then the other is that there's a total lack of innovation And if you have this where the brands are outdated and the products don't innovate You have this amazing opportunity as a consumer brand to build something that's really different So what we do is we use really deep technology to reinvent basic products So we use laser perforated industrial membranes to create a spanks variant But instead of compressing all of you it just compresses in a non-linear way certain parts of you So essentially it spanks but feels really comfortable But from our point we just see we're back to the age-old thing of trying to build products that are better than this The next question I really wanted to touch upon it already is this aspect of building brands because it seems that in a World with with these companies there's the most defensible part of them is the communities the movements and the brands that they're Building you mentioned quickly can we quickly go back to how did you identify what the story would be as I guess two guys building products for for women How did you how did you go about that and identifying what what the story would be that would catch up on and build the movement around Underwear like with difficulty. I mean like I clearly don't wear underwear and I don't know much about women And if you add those together, it was a pretty shitty place to start I think we had this clear vision that the product innovation Could unlock a much better wearing experience And then I think we built the brand over time and I know that sounds like everybody wants you to be perfect on day one But in reality, I didn't know a huge amount about polymer physics until the last years We were now using lasers to help us redesign bras and I had no idea how you could do that Two years ago. So you kind of evolve into your mission a bit And we actually started with the most banal boring product which would take a pair of tights Like can you use technology to reinvent a pair of tights? And you know that was our initial brand was kind of helping us do that Antoine you have a super interesting portfolio with a lot of companies that have a kind of a content-driven strategy behind them Goop and high snobiety. Did I say it right? Stobiety High snob business of fashion, etc How what is it in these models that you did you spot and see and want to invest in? It's it's funny because Actually, I think whether unfair advantage to to back these companies because these three companies you mentioned being good Bof or ice No, but our companies that were built ten years before when we invested in the company So during this time they had really the opportunity to build this community in a very authentic way With no money raised from any venture capital money or any other source of money So these guys when they started the business didn't know that they will be Trying to be a very scalable and very big business. They were just doing something. They were extremely passionate about so being green f talking about women lifestyle or Imran talking about the world of fashion or or David talking about sneakers or streetwear stuff that he was passionate about during university so The situation here is us has been quite focused and thematic when we saw this company that we just as users were loving it we Reached out and we were at the state these entrepreneurs were at the stage in their path in the journey where They actually stumbled on to something that could be much bigger and they were now looking for support to help them get into the next face So when you think about the group what's about starting to be more transactional start selling their own branded product rather than third-party product When it's about BoF was about to start leveraging this customer base by issuing premium content or classes around fashion world and With ice no variety we what we aim to do a next year is to launch a more transactional site to the website to Leverage this very strong appetite around sneakers and streetwear So I think the challenge today though is looking at companies that don't have these eight or ten years of Community and that manage in six months or a year or a couple of years to build a strong community the strong emotional Relationship with the customers and that's hard to do today What what is it that you have to find in those companies then is it If there isn't the content or engagement it's what we call customer love So it's it can be so it can be for content So it would be the engagement around content But it's about loving the product and on the entrepreneur side being obsessed about Customers loving your product and being in these early days where you don't have money You can't spend money a splash money on Facebook or Instagram or other source You don't need to have a lot of customers what you need is to have very engaged customers that repeat where there's a word of mouth And this is crafted This is maybe the women selling the sausage to their customer every day that know exactly what they want to buy But it's exactly the same thing. It's it's not it's nothing related to the digital space per se But it's this obsession of your having happy customers I have a lot of customer love for one of your portfolio companies was an glossier And I thought maybe we could talk about the brand building story there as well And and especially in the later stage where you you invested in the BNC around if I'm right. Yeah, definitely I mean, yeah, I mean, I think there's there's so much in common with what you're talking about I mean, I think customer love is really at the core of all of these consumer businesses And frankly there are some dark like some consumer businesses that are not good matches for the venture capital model And I think that's because you end up spending a lot of dollars on promotions and discounting to try to kind of speed up The customer life cycle and you never actually build that love and that's what's actually valuable in these businesses And frankly, it's also distribution like what you guys were saying about Channels and yeah, like Facebook is gonna have way more data on the traffic that you buy from them than you do And so you have to do other things and so an offline I guess no offline as well And you know, I think You know, it's funny because people ask a lot about glossier like because it seems like this overnight success but it was like an overnight success like eight years in the making because Emily started into the gloss like the the blog About eight years ago, and she like it was a part-time job like I was her side hustle She woke up at like four in the morning and posted for a couple hours and then went to work And then turned that into a business Kirsten green from for when our funded that and then she Layered the brand on top of it But you know those first four years of the business she was learning a ton about our customers a ton about the market What they actually wanted in what? You know what what they weren't getting and You know, I think that that kind of love and community from the beginning is the foundation upon which everything else is built and you know lately the business has been going more and more offline because you know, frankly I think that digital marketing is overpriced right like I think people are willing to play a premium for it because you can Track it but that doesn't mean that it's actually more valuable than a store or out of home or television Like we see a lot of brands actually doing remnant TV in a very cost-effective way But I think about like real estate is cap, right like Glossier has two permanent stores. They just opened a brand new New York flagship. That's amazing. If you're in New York You have to go see it. It's like the stairway to heaven It's like the museum of Glossier and then they also have a store on Melrose Place in LA But they did this pop-up in San Francisco that was incredible And they like, you know covered the city for a month and that activation is really valuable And and it's actually way more impactful and way less noisy and frankly like way less Competitive than if you tried to you know plaster Instagram with your ads I also think that Glossier was really lucky and that they kind of came of age in a period where you could actually build a brand on Instagram I frankly think that that time is over right like Instagram used to be a chronological feed now It's an algorithmic feed and how often you show up even if your organic followers is completely dependent on how much you pay And so you just can't break out that way anymore You really have to be thinking about different channels that you have leverage and control over You also opened a store in London recently, right? What was the offline? Thinking that you that you wanted to reach through the store. Listen, I think we did what everybody else did which is You know, I mean, I don't use Instagram. I don't use Facebook our customers do but for some time of the day And you want to be able to to reach them in different cost-effective ways And you want to also give them a different way of experiencing the brand and I think we saw it was like the most valuable thing we've done And it also just gets you this this thing about data is always an interesting one because Online you actually you don't have that much data Sure, you can look at gender and you can look at, you know, the various like quite deep segmentation tools the Facebook offer you but you don't have that opportunity to talk to someone and I think that's just an amazing thing for us It's like I stand in the shop and I talk to customers and I'm kind of learning a lot from it So it's been like a really a really interesting thing and the question we have is how do you scale that and what are the models And how do you make that work? You can see people at Warby called it really early and they went into they called demise of Facebook very early They went into retail really hard and that seems to be a model that's working And then the other model that's working is something like Glossier where it's you know Two stores is an in really small number of shops for such a big brand and They've done experiential pop-ups really powerfully And so now we're all kind of grappling back with the questions that people had 50 years ago of like how do you build a band through retail? And that's you know, it's interesting. I don't think we've figured out clean answers. I don't know if your portfolio has Totally, I mean, I think a lot about like the death of malls in America, right like actually the town I grew up in there's one of these malls that was like one of the very first malls and now It's like a wasteland and some photographer went in and took these like horrible post-apocalyptic pictures of it And frankly, I think it's because malls were optimized for supply, right? Like you can have a ton of stores. They all look the same It's very easy to deliver inventory to them You can have this like very scalable experience, but it's it's shit for the customer, right? Like it's not special. It's not experiential like it's the same everywhere It doesn't matter if you're in Cleveland, Ohio, or you know in San Francisco like it's the mall is the mall And and also connect that there's a fundamental thing about retail Which is there is a finite number of shops on a high street or in a mall So you optimize to get the highest percentage of football like tacitly or thing right and the problem We face the problem those brands face and the reason why like all of those Arcadia brands are collapsing It's because optimizing for the middle doesn't work in a noisy digital driven environment So that intersection of retail and online is causing havoc totally and I think also like with modern retail You want it to be unique right like you want it to go be somewhere where like somebody is Makes the track to go there they go they take pictures on social media They get super excited about it and you can't like you that does not scale right like specialness like that you can't have You know 500 doors that all look the same and you can't expect them to do it every Saturday either right Let's you quickly to be a question before I want to cover also the difference between brands built in Europe and US But before that a question on an essential part of building a consumer tech product, which is funding How should a founder here in the audience think about funding in this space? What should they look for in their investors? Well, so we are just beginning a funding round now So I am like clouded by that feeling of self-hate that begins any investment process I Listen, I think that we've obviously all companies are different and all environments are different I think the thing that we're very keen on is just trying to invert this ridiculous asymmetry where you know You guys have money. So we're nice to you once every 12 months and you send, you know People want people come to us and say this is our process. It's two meetings Then a yes or no, and you're like, well, you know what actually screw you What about my yes or no and so we've actually inverted it all these investors There's a very typical thing of saying, you know, we like to help and I don't think that in two meetings Where I tell you about the business I can know whether you can help so we've done We've tried we flip flipping this round and we've just done it and saying this is the process I don't care that you went to Oxford and then Morgan Stanley like I want to know What do you know about consumer brands and how do you think about the challenges? We're facing and it's been fascinating like we've seen some VCs like throw themselves at the process and a bunch of them Just be like I'm really sorry. That's not how we we that's not how we do time management on our way But I think for any founders out there the single question is capitals are real commodity But if you can and there's now enough money out there that if you've got a good business It will get funded But the real question is how do you work out whether the people on the other side of the table? Like both figuratively and literally Can help you with the myriad of challenges because like heist is a two-year-old business, right? I mean we have so much that we don't know and don't understand But trying to work that out the current model doesn't allow for founders to get to know VCs very well I think it's like the biggest issue with the industry because it shouldn't be an asymmetric relationship Economically, it's a really symmetric one and we both need each other. We both prosper from each other But it's and I think the US guys are much better at being open to that stuff than European funds Antoine, that's a nice transition I think You're right that I mean talking about Europe and US and talking about brands in Europe and US This these two things to think about is how the investors behave in these different markets and and how easy or not it is to scale a business in Europe versus us We launch our business we launch our brand our platform Felix is out of Europe because as a lifestyle focus fund We do generally believe that a lot of the themes we're going after If you think about food about travel about wellness our themes where Europe as a older heritage in this and as a holder DNA even the US and hence you have entrepreneurs that can emerge out of these Categories with Maybe a more passionate eyes around product around how around customer customer basically yeah About how to reach out to consumers how to have this kind of perfect product It's maybe us being a bit idealist about this, but we do generally believe about that After you have to be realistic about our world of venture capital the dark force and so on but if you want to scale fast You don't have the same magic that you have in Europe That you have in us and also it's fair to say that our US colleagues as a more of a more Bold approach and also more capital in order to do bets, but in Europe is more difficult to do I mean if you take him as an example Hems is a company that from scratch was fueled with a lot a lot a lot of capital To build a category which was unproven. It was kind of new market that Listen, we don't talk about air loss so far. We don't talk about erectile dysfunction But actually we now I'm gonna start talking about it and we're gonna put it in your face And it's not gonna become taboo and everything's gonna be fine and it is the right thing to do for sure but I Have to say that it would be much more difficult for him to come out of Europe with so much capital and be able to Scale that fast in a year time with the support of great funds around saying listen We're gonna put 100 million and you're gonna make it happen This is a challenge we have today I think the the the talent and the quality is there and the the the relevancy with disrupting traditional lifestyle segments, but we're not there yet in terms of The beauty of a US market and the US demographic and the boldness of the US investors Yeah, I mean I think like to both of your points right like in the US There's so much. There's so many venture dollars and their commodities, right? Like there's so much money and like frankly like good companies are the rare Like are the rare asset and and so I think that that also fuels a lot of behavior, right? like I think that the idea, you know hymns is going after a massive category and There's a telehealth business. That's the foundation of it and that TAM is so large and Everybody's funds are so big. They're willing to put big dollars behind something that could be really really big And so I think yeah, you see that boldness and risk-taking and a lot of it comes from the financing environment Yeah, how is it then do you have the same take on talent and the heritage brand in Europe as Antoine mentioned? And are you looking to invest in in Europe for this reason? Yeah, I spend a good amount of time in Europe I haven't made any brand investments. We haven't made any brand investments yet But I completely agree with you and it comes to I mean I was just thinking about this is your thing I like most of the things I'm wearing are European brands, right? like I think from kind of like a positioning and quality point of view it's really spot-on and and I Frankly, I think we're gonna see more and more of it It's more of a longevity play because I think that you know the US is also like especially the West Coast our proximity to China We're very good at getting cheap stuff in off the You know over the Pacific and selling that but that's not how you create customer love, right? That doesn't endure So I'm excited to see kind of what comes out of Europe, but I think it's just People going after big bold bets is why we're seeing so much out of the US And I don't think you can discount the single media market that reaches like there's so much luck and not luck There's so many great brands who do great things But whatever, you know, you just seeing the businesses build on the back of almost fast company articles Whereas we've got the same market, but there are 27 countries and 27 media markets 27 languages and You know, it means that, you know, you don't get those huge PR boosts in the way that you can do in the States Definitely for early traction makes it what's your take on on us or Internet of internationalization overall? No, I mean, I think we're all seeing the same. I think obviously Brexit is a bit of a curveball On both societal and business levels, but I think you know, we recognize that You know was for example, we've got a really thriving German business, but there isn't a German VC pool out there So we're like every brand we're looking at we have to crack the US and that has to be our next move And you know on many levels we try and do France or Germany first because all the actually Nordics where we get we have quite a Compensation But you just can't make that play your every penny has to go into cracking the US I know actually I think it's really interesting like I have a friend in general or general Alanix retail group and she's done a lot of brands like Cezanne and Joe and the juice that have now come to the US and I mean obviously Joe in the juices retail But Cezanne has a US store, but we're really kind of like seeing these brands Skip over, but it's it's private equity fuel Not not venture fueled and it's interesting when people like all birds is a brand I think it's amazing and they've done an incredible job but it's interesting watching them open like UK stores and seeing whether that huge halo of PR and noise that drives these ridiculous retail experiences in New York where you like you fight to get a pair of shoes Interesting as they take the first steps to move into European markets Whether that translates the same way because we're all having to do it the other way around so it's you know You know, it's kind of fascinating. We're beginning to become properly international brands. Yeah, I mean one of I Don't know if it's a sad thing or not But out of these results what is sad is to see European brand emerging from a specific country in Europe and Being more focused now about going straight to the US where I've been trying to crack the Europe I mean Cezanne was is the kind of an exception Of this as they really managed to scale across Europe and after go to US, but now there's a real Strategic decision to make as am I gonna try to crack every 27 countries or straight go to the US with a differentiated approach and Actually, we see and the problem before is that the venture capital The European firm in the venture capital were a bit reluctant to say go straight to the US because of a risk and so on and Europe is closer is here to manage logistic and so on But now there's a really emerging trends of going straight to thinking straight about the US for sure. Yeah I am personally Incredibly bullish on Europe and building brands out of here. So I'm hoping to see a lot come out from here We are out of time. Thank you so much everyone for participating. Thank you to slush and See you at the I guess after party