20VC: Why Consumer Brands Must Embrace Physical Retail To Avoid Inflated Online CACs, How To Alter Fund Strategy When Investing In Consumer Retail & Why The Era of The 1,000 Store Brand Is Over with Brendan Wallace, Founder and Managing Partner @ Fifth Wall
Posted on 6th May 2019 by hstebbings1
Brendan Wallace is the Co-Founder and Managing Partner @ Fifth Wall, the fund with the core thesis being the physical world around us is colliding with technology. Within their portfolio is the likes of Lime, OpenDoor, Clutter, ClassPass, Lyric and Hippo just to name a few. As for Brendan, before co-founding Fifth Wall he co-founded Identified, a data & analytics company focused on workforce optimization that was acquired by Workday in 2014. Prior to that, Brendan co-founded Cabify, the largest ridesharing service in Latin America. If that was not enough, Brendan has been an active angel investor having led over 60 angel investments including Bonobos, Dollar Shave Club, Lyft, SpaceX, Clutter, Philz Coffee and Zenefits.
1.) How Brendan made his way from founding the largest ridesharing platform in Latin America to changing the face of early stage real estate and consumer retail investing with Fifth Wall?
2.) What is really going on in retail today? Is “retail apocalypse” a fair term to give to the landscape today? What formats does physical retail no longer work for? What is it perfect for? How does Brendan think about the distribution of physical retail for emerging brands? Will they need 1,000s of stores or is the 1,000 store brand era over?
3.) Why do digitally native brands fundamentally need retail? How much of consumer US spend relies on physical retail still today? When do these DNVB’s need to expand into physical retail? From speaking to DNVB CEO’s what are the most common challenges they face when making the expansion?
3.) How does expanding into physical retail change the game in terms of customer acquisition for DNVBs? At what point do DNVBs hit the invisible asymptote where acquiring customers through traditional online channels is no longer efficient? How have Amazon impacted the CACs for DNVBs in recent years?
4.) Given the consumer retail focus of the fund, one would expect a lower loss ratio, is it right to assume the lower loss ratio? How does Brendan think about portfolio construction with the fund? How does reserve allocation differ when investing in physical retail vs pure software plays? Is Brendan concerned by the lack of downstream capital in the physical retail space?
5.) How does Brendan assess outcome potential when comparing physical retail to pure software plays? Why des Brendan believe we will see a ton of intermediate outcomes? How does this change the type of entrepreneur that Brendan looks to back with the retail fund?
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