Brad's Brief - Building DTC Companies, 2021 Preview, Hindsight Depression, and Brands
Hey everyone,
This past week I was fortunate enough to receive the first dose of Pfizer's COVID vaccine. The shot was painless. I had a sore arm for about a day, but no other side effects. Hopefully this is the first step on the road to normalcy. 💪
I've got some great stuff to share with you this week so let's get to it.
Brad
What I'm reading
You Can't Buy Brand by Andrew Oved
VC-backed DTC businesses try to short-circuit the process of brand-building when, in fact, it takes many years to build a consumer brand that is long-lasting.
As a direct-to-consumer product company, VC money can be a double-edged sword. You have excess cash to spend on growth, But, the way you spend that money can either enhance or detract from your brand. In too many instances, companies start taking shortcuts during high growth periods. They let hiring standards slip. They take shortcuts in customer support. If a company takes VC money and only focuses on growth, they will inadvertently ruin their brand. Andrew Oved argues that long-lasting brands take time and that founders should not be concerned about slower growth early on so long as they are executing towards a strong brand vision.
The Hindsight Depression by Lyn Alden
Lyn Alden is one of my favorite writers about macro economics. She put out her January Newsletter on 1/9 and it's filled with great analysis as usual. This newsletter provides some historical context about the Great Depression, goes into detail about the current economic situation in terms of how it relates to that depression, and gives an overview of recent portfolio changes and ways Lyn is continuing to position for the macro environment. I highly recommend giving this a read if you are interested in macro at all.
Here are my favorite quotes:
The biggest difference in terms of policy choices between the Hindsight Depression (2010's) and the Great Depression, was the response time for the bank recapitalization and money-printing. In the early 1930s, it took about 3 years to do, while in the late 2000s, it took only months. As a result, during this second go-around, less private deleveraging was allowed to occur, fewer banks failed, asset prices were more quickly reflated, and money supply kept going up with no dip.
Besides the dollar specifically, most fiat currencies are debasing vs hard assets, due to interest rates that are below the prevailing inflation rate, along with rapid growth in the broad money supply.
In order to maintain global currency reserve status in the post-Bretton Woods system for the past 45-50 years, the United States has undermined its middle class to a greater extent than most other developed countries, by rendering its manufacturing sector uncompetitive and running persistent trade deficits. This resulted in more outsourcing than most other developed countries. The problems became acutely painful to many people over the past decade.
What I'm listening to
The 20 Minute VC - Bill Gurley and Howard Marks: What Happened in 2020? What can we expect looking forward to 2021?
This year, the FED jumped in before things got scary and people were willing to sell for less. FOMO took over from Fear of Losing Money. The buying opportunity just hasn't been there.
This is a quick hitter from two heavyweights in the macro and VC world.
Howard Marks is co-chairman and co-founder of Oaktree Capital Management, a leading investment firm with more than $120 billion in assets. Bill Gurley is a General Partner at Benchmark Capital, one of the most successful funds of the last decade with a portfolio including the likes of Uber, Twitter, Dropbox, WeWork, Snapchat, StitchFix, eBay and many many more.
They discuss the year that was 2020 and how the FED created FOMO back in the Spring through its massive liquidity and spending programs. They also discuss investing through cycles, interest rates, globalization, and the impact of regulatory capture on the future prospects of the USA.
The North Star Podcast - Nik Sharma: Building DTC Companies
So what we started doing was the complete opposite. We just said like, forget the whole pay for influencers. Let’s just bring them together and have a good time. And we’ll host a couple of dinners. We’ll get drinks together. We’ll get to know each other on a personal basis. And let’s look at them, not as influencers, but actually content creators. So how can we leverage some of the things that the reason they’re influencers or they have a following in the first place is because they’re really good at one thing that they do or really good at leveraging a platform, right?
This podcast is two hours of pure value. I listened to this one twice. Nik Sharma is the founder and CEO of Sharma Brands and an advisor to companies like Judy and Cha Cha Matcha. He is known as a Direct to Consumer (DTC) expert. Nik and David dive deep into the marketing strategies for DTC businesses. They touch on things like "The Brag Bar" on landing pages, managing relationships with influencers, and the importance of great merch.
What I'm watching
Just a YouTuber - Peter McKinnon
Peter McKinnon is my favorite YouTuber. His rise to stardom is refreshing. His personality is so raw and comes across as super authentic in his videos. It's just Peter being Peter. This video is the culmination of his journey and it choked me up a little bit.
Motivating Quote
...really successful people feel the same lack of motivation as everyone else. The difference is that they still find a way to show up despite the feelings of boredom.
James Clear in his book Atomic Habits
Resurfaced through Readwise
Tweet of the Week
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