Caitlin Strandberg is a Principal at Lerer Hippeau, an early-stage venture capital firm in New York City that invests in consumer products and service brands, as well as in B2B Enterprise market companies. Prior to Lerer Hippeau, Caitlin worked for a number of early-stage companies as well as other venture capital firms that invested in brands at various stages of their entrepreneurial journey.
In 2017, Caitlyn was included in the exclusive Forbes 30 Under 30 list for the venture capital industry. She is a graduate of Cornell University, where she majored in History, and she also holds an MBA from Harvard Business School.
Here’s a glimpse of what you’ll learn:
- The evolution of fundraising in the past decade and how brands can raise funds without giving up too much control in their company
- Common mistakes early-stage companies make when looking for outside investments
- Lerer Hippeau’s Amazon strategy for brands they invested in and how they help protect their branding in the marketplace
- Things early-stage brands should consider when deciding whether to hire internally or to hire an agency
- Why market fit is a major consideration for companies Lerer Hippeau invests in
- Why Caitlin Strandberg considers it a gift to meet founders who are looking for funding for their company
- Caitlin explains why authenticity, organic growth, and great customer experience are important when looking for funding
In this episode…
For early-stage entrepreneurs, it is important for them to think carefully about the decisions they make when it comes to finding venture capital investors. They have to think about how much equity and control they’re willing to hand over and whether their target market and projections are achievable; this also holds true once they start toying with the idea of joining Amazon. But the problem is, a majority of them have difficulty in evaluating these key areas in their business which is where companies like Lerer Hippeau come in — to help them increase their success rate ten-fold.
Caitlin Strandberg of Lerer Hippeau is an expert in venture capital investing and she is interviewed by James Thomson from the Buy Box Experts team about how early-stage brands should be thinking about opportunities to get investment while maintaining control of their company, the most common mistakes entrepreneurs make when looking for investors, things to consider before joining the Amazon marketplace, Caitlin’s criteria for selecting the right brands to invest in, and more. Stay tuned.
Resources Mentioned in this episode
- Buy Box Experts
- Controlling Your Brand in The Age of Amazon by James Thomson
- Caitlin Strandberg on Linkedin
- Lerer Hippeau
- Prosper Show
- Jeffrey Bussgang on LinkedIn
- Warby Parker
- Dia & Co
- Sweet Reason
Sponsor for this episode
Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.
The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.
Buy Box prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.
Learn more about Buy Box Experts at BuyBoxExperts.com
Welcome to the Buy Box Experts podcast where we bring to light the unique opportunities brands face in today’s e-commerce world.
James Thomson 0:11
Hi, I’m James Thomson, one of the hosts of the Buy Box Experts podcast. I’m a partner with Buy Box Experts podcast and formerly the business head for the selling on Amazon team at Amazon. I’m also the co-author of the book Controlling Your Brand in the Age of Amazon, and co-founder of Prosper Show, one of the largest continuing education conferences for Amazon sellers in North America.
Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire buy box experts you receive the strategy optimization and marketing performance to succeed on Amazon. Go to buyboxexperts.com to learn more.
Today I’m excited to welcome our guest Caitlin Strandberg, a Principal at Lerer Hippeau, an early stage venture capital firm in New York City that invests in consumer product and service brands, as well as B2B enterprise market companies. Prior to Lerer Hippeau, Caitlin worked for a number of early stage companies, as well as other venture capital firms that invested in brands at various stages of their entrepreneurial journey. In 2017, Caitlyn was named to the exclusive Forbes 30 under 30 list for the venture capital industry. Caitlyn is bringing her expertise to us today sharing best practices on how to invest and grow brands focused on online channels. So welcome, Caitlyn. And thanks for joining us today on the buy box experts podcast.
Caitlin Strandberg 1:39
Thanks for having me, James, and I’m thrilled to be here.
James Thomson 1:42
Caitlin, I’d like to start our discussion by getting your thoughts on how you’ve seen brands evolve the way that they seek outside funding over the past 10 years. We’ve heard a lot about cheap capital that’s available out there. How should early stage brands be thinking about opportunities to get investment without giving up too much control in their companies?.
Caitlin Strandberg 2:02
Sure. So I think that’s a really great question because, you know, we’ve been thinking a lot about how the consumer investing landscape has changed in the last decade. The world looks very different in 2020 than it did in 2010. And it Lerer Hippeau was one of the first venture capital firms to invest in digitally native brands and what is called DTC though we’re not really using that language anymore.
So we were the first check into companies like Warby Parker, all birds, Casper, everlean, really kind of at the beginning of you know, 2010 1112 when the benefits of kind of internet technology and mobile and social and and social networks really created a, a wide open space to launch brands, and to very quickly acquire customers, build businesses market to them in a cost effective way. That was different than anything we’ve ever seen before. So you had a completely reimagined supply chain, where you could cut out the wholesaler, you could cut out the distributor, you could cut out the retailer, you could go direct to consumer, as a channel. And many of these companies were built on that brief moment in time.
And some of the best companies in the world are also always taking advantage of market timing. And so, you know, I think in the beginning in 2010, you know, very few venture capital investors were willing to make bets on consumer products and consumer services. You know, venture capital for a long time has been traditionally tech focused and technology and software centric. But we saw an opportunity to invest behind new brands thinking the millennial consumer is going to want more in demand more and have different expectations now that, you know, their whole lives are in and out enabled, then any of the generations before.
So I would say in the early days, you know, we were making real big bets on opportunities with founders that had some relevant domain. Extra expertise, but in markets that were dominated by sleepy incumbents that just were not paying attention. So, you know, I would say it was probably tricky to raise money back in 2010 1112, around some of these ideas, it was very, very unknown where they would go and if those brands would become the ones they did today, and fast forward now that you’ve got some of these companies being even more successful, and it’s become a bit of like a hot space. You know, money has flowed into the space. So I think when you talk about, you know,
a lot of cheap capital being out there, it means that there are more investors than ever before. There are more companies than ever before, it’s never been easier to start a company. And from the investing side, it’s actually kind of easy, fairly easy to fund a business. That said, the way that we think about it is we’re investing in mission driven founders that are going after a big wide open space, not product driven companies. So for example, when we think about Joey, and Tim from Allbirds, they came to us and they pitched a story around showing the world you could create every day kind of apparel with sustainable materials. And they were very focused on climate change. Warby Parker was making sure Neil at Warby Parker was showing the world that you could get affordable, trendy, cool glasses, and a portion could go towards kind of underserved communities that needed kind of visual, you know, visual systems visual help.
And they were they were reaching this mission with a company and a set of products. And so that’s really what we funded. And I think now we’re seeing more and more companies come to us that it’s just a brand that they want to sell, it’s going to get capped, it’s going to get limited. They’re really kind of product, product businesses, or product companies, not necessarily businesses. So there’s a little bit of that and I think we’re seeing now in the market, a lot of companies, a lot of brands and products just get funded because you can do those early revenue jumps. But you kind of get stuck and you plateau when you’re trying to transition to the large scale you know, lifelong generation defining business route.
That’s a little bit how we think about it. I would say just to summarize, like, there’s a lot of capital because consumers kind of hot, you have all sorts of investors trying to put their money to work at more companies than ever before. And that’s a little bit of a factor of more technology and tools that make it easier to start and scale companies. So for example, you can get your capital from Kickstarter Angeles, you can get brand and creative done by red antler partners in spades. You can have Shopify basically be your web dev. You can do payments through Stripe, you can do shipping and logistics through flex port and then you can engage with your customers on Twilio or Zendesk if you really over weekend you could like put together a new brand and a new company and launch it and fund it.
You know, we see that with our companies. So it is easier to get capital. You do have to invest. There’s kind of jumping in but venture capital is not really just just about getting money to fund to fund the development of your product. It’s really about you know, it’s we’re buying equity in your business. And hopefully that equity increases over time. And we’re giving you kind of capital because we’re seeing that there’s an opportunity, a special, unique opportunity in the market to build a high growth and massive business at a time when you could never do it before. And so when you take the venture capital dollar, you are jumping on the train. And the commitment is you’re going to go bigger and faster and raise more money and raise more money and go for one of these billion dollar plus outcomes.
And, and a sophisticated venture investor knows that capital is a commodity, they’re hoping to give you more so things like that are you should be looking for an investor that helps you see around corners so that has seen the playbook before. has seen companies do well and struggle. They can kind of help you navigate the terrain. Moments moments, they can absolutely help you fundraise. cash is king in startups, especially with companies that are largely unprofitable for a shocking amount of time. So they help you fundraise that becomes a core part of the founder, kind of ritual is constantly raising money, constantly getting people excited about the business.
And then the third thing is you’re really looking for a coach and a cheerleader, but also someone that’s going to be direct and honest with you as you’re at that first stage of your entrepreneurial journey. Because starting a company and starting a business is very lonely, very difficult and very hard. Hopefully, you’re the co-founder that makes it a little bit easier. But there’s an awareness around that. And there’s a grace and acceptance around that when things go wrong. And so that’s how I would think about like, there’s a lot of cheap capital out there and they’re not going to give you called dumb money.
They’re not necessarily giving you the help and resources at a more sophisticated investor what’s called Smart Money could give you so that’s how I would kind of think about it. I know you asked a little bit about how early stage brands evaluate Raising money without giving up too much control? That’s a great question.
As seed investors, we are never at the place where we have control over a company. We really think that we invest in companies and brands that are founder driven, we trust we we bet on the jockey and we bet on the person and we know that the numbers are wrong, and they’re, they’re likely going to change we know that a company could pivot, we’re betting on the person that’s going to navigate kind of like the rocky waters that we know are going to come.
And ownership usually doesn’t kind of founders don’t usually get diluted and the ownership structure until much later in the lifecycle of a company. But at that point, you’ve got a board that’s high functioning, hopefully around you. They trust you as a steward and no one can do the job better than you and kind of things fall into place at that point.
James Thomson 9:52
So if we go way down scale from the types of companies that I’ll be dealing with every day, I operate in the Amazon space and there are literally 10s of thousands of these men and women who decided they’re going to be the next great American entrepreneur, they set up this, I’m going to use quote brand on Amazon. And as you say, the services are there over a weekend, you can spin up a business. If you got a couple million dollars of seed money, you can start buying inventory and slapping your brand name on something that doesn’t make it a brand. But that’s a business. Yeah. If we think about early stage brands, that really do have a proper business mission and set of products that you can say there’s more than just some guy putting a green label on the box versus a Blue Label. When you look at the types of companies you’re looking at, what are some of the common mistakes that are being made as those companies go looking for outside investments?
Caitlin Strandberg 10:51
Yeah, that’s a great question. And I think that you’re right that you know, this goes back to the kind of language I used earlier which is like product driven companies versus brands.
You know, when I think of a brand, I think of some of our greatest brands Casper, glossier, Warby Parker. dn co we have so many interesting ones where customers purchase from the brand because it says something about them and it means something about them. And whether it’s the brand stands for values that they identify with, and it resonates with or there’s some sort of cultural Zeitgeist moment or cool thing about it.
So for example, Glossier, if you’re a teenage girl or college girl and your glossier customer, like a glossy sticker goes on the back of your laptop or your cell phone as soon as it comes in the mail. There’s like some community in belonging piece where a brand is really a form of self expression and how you carry yourself and where you choose to put your capital. Allbirds are the same way. There’s a reason that all birds were like every venture capital and entrepreneurs in San Francisco A few years ago, because it meant something about you.
So when we think about a brand, we think about a company that serves a mission that resonates with consumers. And the consumers like it so much they talk about it, they share about it. They are the mechanism for organic growth versus paid growth. And then they come back again and again. And again, to repeat the purchase. When you think about building a business, you’re thinking about the margin, and you’re thinking about customers that repeat over and over and over again. So it’s not a one and done. So that’s how we think about brands and how I think about companies and how that gets separated from the American entrepreneur that starts a small business and is able to push some great products and find an opportunity. That is great. They should do that all day. I love that.
But it’s very different from the types of brands we invest in. Companies we invest in. And so I’m going to talk a little bit about when companies are seeking outside investment, I think there are a couple of common mistakes. So and a little bit of it kind of is reflective of what we look for and what we don’t so we are always Looking for billion dollar outcomes, it is part of kind of the venture capital math is you’re going to make 10 bets, one or two are going to return the fund, you know, like, five, maybe will make you a little bit more than what you put in, and then the rest, you’re gonna lose all your money, you’re never going to see it again. But the idea is those big outcomes, cover all the losses, and then you get a nice little profit off of that. But in order to do that kind of math, you have to assume that all of them will be billion dollar outcomes. So sometimes we see companies come in and say, Hey, you know, we’re going after a 1,000,000,000 billion dollar market.
We’re really excited about it, we think there’s a great opportunity. And in my mind, I’m already thinking, well, you’re unlikely to have 100% of the markets, you’re not going to be a billion dollar business, you’re probably only going to get a slice. And I think about the outcome because as an investor, it’s my job to invest money to hopefully make more money out of it.
And so I’m looking for opportunities where I can actually exit the company. I’m looking for a company and thinking it could get acquired for a certain amount. It would be attractive for a potential acquire. And so we’re looking for kind of sizable outcomes. And I have to imagine that that’s at least a billion dollars, because I know that the math is gonna work out where I’m going to be wrong.
And so if you pitch me a story where there’s a smaller outcome, that’s a very common mistake, I think you can absolutely make a lot of money. If you’re pitching companies where you’ve got great revenue, good growth, you think you get acquired for 100 million bucks 200 million bucks, I would say 85%, I think is something like 85% of all acquisitions happen under $200 million. You can do that all day and make a lot of money as an entrepreneur, and make a lot of your friends and family and angel investors very happy, but it’s just not the game we’re in. And so you have to paint a broad picture.
You have to kind of be excited about what this company is going to look like in 10 years. You have to bring me along for the ride on how that is going to play out kind of year to year and what the plan is and what levers you’re going to pull. That’s the first thing is you got to paint the big massive story and tell me a little bit about how you’re thinking about getting there. You know, outside of that, I would say relative to this conversation, we’re allergic to companies that are reliant on channels.
We look for kind of channel diversity, we look for places where you can get a diverse set of customers. And if some one thing goes wrong in one of your channels, the company is still going to have a cushion to keep moving forward and keep kind of reorienting through that. And so when I think about companies that sell only on Amazon, and the power that Amazon has, that’s a very scary proposition for an investor. Because let’s look around, there are going to be companies that you do invest in, at some point decide that it does make sense for them to evaluate whether they should also be selling on Amazon.
James Thomson 15:33
Talk to me about how you as an investor get pulled into discussions around whether one of your portfolio brands should be going into Amazon. So how they should be thinking about it so that they’re not making a major strategic mistake somewhere.
Caitlin Strandberg 15:58
Totally. That’s a great question, and I’m really glad you asked it because one question I asked in every single consumer pitch that we get is what’s your Amazon strategy? And what’s your Walmart plan? 10 years ago, not even on our radar we weren’t even getting we weren’t even asking that we didn’t care at all Amazon like, you know, but bases move very quickly. And so now he’s really he’s really become a player in a lot of different ways. Not only is he a marketplace, and a place to distribute your products, he’s also a potential acquire. He’s also potential he, but Amazon is also a potential competitor with their private label.
And so then on top of that, they’re also, you know, it’s online distribution, but it’s also an offline distribution with Amazon and Whole Foods. So they’re not just a single channel to sell your product they all have their different activities that could affect your business in a number of different ways. And as an investor and hopefully I’m good at it, I’m helping you know them see around corners and think about some of the big kinds of market trends. I’m asking them to think about, how could Amazon affect your business? And what are you going to do about it? And how are you going to think about it now relative to this conversation, especially with some of our consumer consumer products? It’s a question of, are you going to distribute on Amazon as the marketplace? What are you going to do? How are you going to think about it? And for us, it’s always a question of, it’s not necessarily yes or no. But when is the right time. And I do the way that I think about it at the seed to series a way too early to be on Amazon, I think you really have to have a clear view of your messaging, your brand identity, you need to have really, you need to have like your online channels like kind of humming and going and working. And then once you kind of feel like you’ve saturated that you developed your own brand, and you’re collecting kind of customer data in the right way that’s going to inform your product development and all of that. humming I think that’s the only time that you can think about selling and distributing on Amazon.
And on top of that, I think you need to figure out. I think we push our founders to think about whether or not you even have the right product for a marketplace like Amazon. So there are all sorts of pros and cons to selling on Amazon. So we’re in a company called pros, which is personalized hair care not going to be a good candidate for Amazon. They can’t really do personalized consumer products. glossier such an amazing brand such as incredible direct connection with their consumer on Instagram and social so much organic growth. probably not going to be a great idea.
If they put boy brow on Amazon, it’s gonna be fairly brand diluted because their brand is so outsize and they have such a rabid following. All birds is another example of high elements of brand equity. They have retail locations, it makes sense that those goods are saturated and their online sales continue to kind of develop and grow before they kind of make the play. for Amazon that said we have companies like Soylent which is distributed on Amazon which is a kind of meal replacement product. We have a company called Brahma which is Luchini green beans, where they are doing incredibly well on Amazon.
And that’s because they’re a unique product. They have a strong brand, they’re able to take advantage of search. So if anyone’s searching for Soylent or meal replacement or Luchini beans, or like hummus or high protein snacks, these things are going to come up. And then on top of that, when you think of those like food products, they’re really limited to distribution in stores. And so sometimes you can’t control where you go on the shelves, sometimes you can’t control some of the creatives. So this is a way where they can actually control more of that touch point with the amazon customer.
And so we always kind of think of the pros and cons there and if the business is kind of right size and a fit. We’re one of the few investors that invest in the cannabis industry. So we’re investors in two products. Next one is called Sweet reason which is a sparkling, carbonated sparkling water with CBD in it. Very good. And we’re in another company called Primo, which is CBD infused personal care. So like lotion, bath bombs. You can’t sell CBD or cannabis on Amazon. But that’s not even an option. So there are all sorts of things that we think about and places that we guide our companies. I would say like, there is a real fear in the venture world and a startup world of Amazon’s power though, you really have to be careful and always do the math and be their friend or foe.
James Thomson 20:36
So let me ask you this, some of the brands you mentioned that may not have an active presence on Amazon, some of that product will leak on to Amazon anyways by way of various people who get their hands on products. But the bigger issue I see you having, at least in the short term is as these products develop their own customer base, there will be opportunity for new entrepreneurs to come along and make money To versions of those products, and when the Amazon game going after customers who would otherwise be buying the brands you represent off of Amazon, but now they’re buying knockoff or I shouldn’t say knockoff but but maybe two brands that are participating aggressively with Amazon. How do you think about helping your brands to protect that space they have done so well to build off Amazon when someone else is trying to take the same type of space from the amazon customer?
Caitlin Strandberg 21:30
Yeah, I think that’s a great question. You know, there’s a great example of a company that has happened to in our portfolio. So this kind of famously happened with a company called all birds which I mentioned is that I’m wearing my tree runner sneakers right now. I’ll show you because we’re on video.
So Amazon has legitimately an all birds knock off the wool shoe that they’re famous for. And I Yeah, I think all birds is trying to get up or down or there’s some sort of like trademark issue or something we definitely encourage, if companies have a trademark or anything like that to, to do, you can within the bounds of your rights to kind of fight things like that it’s really important to keep to keep those protected. But Joey from Albert’s took a very interesting approach. So Joe, he wrote an open letter, published it online and said, Hey, Amazon, we’re very flattered that you liked our shoe and you like the design of our shoe. We’d be more flattered if you also copied our sustainability practices. We’re happy to give you our outsource, you know playbook for using sustainable materials. But that’s what our shoe stands for. And that’s what we’re all about, and you’ll never be able to touch that. And I think that that’s a real brand moment for a company where Amazon would not say it necessarily does not have society as a key stakeholder and in their mandate, but all birds does and consumers care about that. And Consumers care about social impact. And climate change is the biggest issue of our time. And consumers will spend behind that. And even customers seeing that are new consumers seeing that it pushes them deeper in the average ecosystem. And it also helps them acquire new customers. And so that customer that’s going to purchase on Amazon, this purchase is likely going to continue.
But that’s not going to be a customer that allbirds is excited about, or wants routes. And so yes, there’s a little bit of leakage and a little bit of loss there. But, by and large, we see consumers want brands, and they want products from brands because it represents who they are and what they want. They’re always going to be commodity products. And you can’t really do too much about that. But we think that customers will go to either retailers or they’ll go to owned and operated websites, or they’ll kind of interact and transact on Instagram to purchase the products that resonate with them.
James Thomson 23:50
So one more question on Amazon, and then I’ll leave Amazon aside here for the rest of the discussion. I’m curious what when companies come to you and they’re asking Amazon Questions. One of the biggest issues we have as an agency working with brands is that typically they come to us with very little knowledge of how Amazon works. And yet it looks so simple. And so yeah. Do you run into situations where you’re having to advise portfolio companies on how to think about whether they should hire people internally, whether they should hire agencies, or what they should do to be able to bring up to speed enough institutional knowledge to be able to participate in weight on Amazon, if in fact, being on Amazon is part of their strategy?
Caitlin Strandberg 24:34
Yeah, absolutely. I mean, Amazon is a very, very complicated channel to understand.
And I think that we always encourage our companies to seek out experts that do what they do best. And that would complement kind of your approach your strategy, I think, in the Amazon instance, you absolutely should hire third party, you actually absolutely should hire agencies understand the playbook of how Do it well, and how to distribute well, because we know that on Amazon things really matter, it really matters to be on the front page. It matters to have great customer reviews, it matters what creative and ads you do. It doesn’t, it doesn’t make sense to me or the founders that I work with that you would spend so much time energy and effort getting your own website, right and a B testing, copy and AV testing pricing, that you would just kind of abandon that iterative mentality when you’re going on the behemoth channel, which is Amazon, right? It’s something like 50% of us, kind of eecom sales happen on Amazon. And it’s a big moment of discovery. And you want to get it right.
And so we absolutely encourage folks to kind of go to go to, you know, even buy box experts or consultant agencies that do it really well. And, you know, I think if you think long term, one thing we do is if it’s such a core part of your business, we encourage our companies to hire experts in house. So this is something that has evolved over time. But really, if it’s cool Do your business and quarter the revenue structure. It’s always better to have it in house and then outsource but you often need to work with consultants for a little while until you figure out what exactly you need to hire for.
James Thomson 26:12
Let’s let’s shift gears here a little bit. I want to get some perspective from you around. What was your big turning point when, in your experience working with brands, you realize that you were good at doing what you do? Looking at Mason brands and saying, Yeah, I can pick I can pick more winners than losers. Now, how did you get to the point that you said, this is, this is what I want to do. I’m good at this and darn it, I’m gonna keep doing this.
Caitlin Strandberg 26:43
I’ve never, ever had a mentor but I appreciate that though. That Uh, yeah, that’s actually I’ve never had that moment. I think one of the things I love about Larry Hippo and the seed stage investing that we do is you never know, and you don’t know until, you know, six, seven. Eight years after an investment if a company is a real winner or not, you start to get signals in the first maybe three years, you start to get a sense based on like revenue growth, but like you never really know.
And it’s like that portfolio. Kind of like 10 companies. for example, I think everyone’s going to be a winner, and then most are not. And so, what we look for, which we think we’re good at, is we look for founders that have found a market fit, they’ve come out of somewhere that they’re building So Emily Weiss at glossier worked at Vogue, Neil from Warby Parker was an early employee at a company called vision spring, which is very similar to Warby Warby Parker. In terms of social mission and Philip Kramnik, Casper had a mattress company in college like these, these people didn’t just come up with a category that they were deeply ingrained in it and knew it better than anyone else. And so, you know, we look for founder market fit, we look for people that will run through walls to do the business that to build a business that they want. They’ll bring us along for the ride but we don’t make or break businesses, we look for big markets, where there’s some obvious opportunity and then we just, we just try to be there for founders and whatever they need. And sometimes they, they crush it and they’re amazing in their category to find, but we don’t know. So. So that’s kind of like that’s the answer. They’re you’re really betting on the jockey and and you try to help them with whatever they’re doing. So it’s really we’re looking for signals, but it’s a long game where you can’t really be sure.
James Thomson 28:29
Can you tell me when you look at all the different types of people you’ve had the opportunity to work with? Some of these people will have mentored you through the process. What was some of the best advice that you’ve been given by professional mentors in order to be able to do what you do today?
Caitlin Strandberg 28:44
I’ve been very fortunate that I’ve had a lot of great advisors and mentors, particularly in venture. I think it’s this kind of an apprenticeship type business. But mine has come from a number of different places, whether it worked with them or not, I think You know, when I was starting in venture, the thing I think of every day is I had a one of my bosses, this guy Jeffrey, who’s the founder of Flybridge, which is a venture firm based in Boston. And here in New York. He always reminded me that when I was taking a meeting with the founder, it was one of the more important meetings that they were having that day, they were trying to raise money for a company. And this is something that they think about every single day, every single moment, and that it was a gift for me to be sitting across the table and to be learning about these topics and meeting this person and thinking about the future, and that I was serving them. They were not serving me. And I think this idea of learning about what other people are most passionate about, and the moments of like, in moments like a company pitch, and just really understanding how special and how much of a gift that is is something that’s really carried with me. It’s a great job. It’s a really cool job. I get to meet amazing people all the time. Unfortunately, I have to say no to opportunities and sometimes I get to say yes, opportunity. But I think it’s like really, it’s really, it’s really incredible to remember what is an investor, what role an investor plays, and in these relationships and what someone is really sharing with you. So that’s probably like the best piece of advice that I kind of think about all the time, I think entrepreneurship and founders, they are doing some of the best work in the world, the life changing, mind bending, worked, and they’re sacrificing a lot to do it and to bring these great products and, and, and services into the world. And so I’m just kind of like, grateful to be around it and a part of it.
James Thomson 30:38
thank you. Let me ask you. One closing question. When you look at all the experiences you’ve gathered from doing what you do, and meeting with hundreds and hundreds of entrepreneurs, what single piece of advice would you give to an entrepreneur today? Who’s looking to build a successful brand?
Caitlin Strandberg 30:55
Well, there are a lot of things.
James Thomson 30:59
There’s not just one Secrets, one secret to the whole process?
Caitlin Strandberg 31:02
Yeah, yeah. I mean, I mean, there are a lot of things. So I’ll maybe give you a quick taste of what I look for in evaluating a business. And it really shows that you’ve kind of like hit onto something. So outside of the team being amazing, and being thoughtful and engaging and coachable. And having some differentiated advantage in the market that they’re building in, I think I look for a couple things. So I look for a brand and a vision that just can’t be replicated. And that means it’s authenticity that means it’s like very authentic to the consumer. You see a lot of brands that just don’t really connect and we do a lot of investing in Gen Z now with companies like parade and studs, which are great kind of new businesses and there’s just like an authenticity and a connection with the brand and that kind of really jumps off the page that’s that can’t be manufactured. I think there’s also a maniacal focus on great customer experience. That is often Look, customers now get kind of inundated with all sorts of different touch points with brands. But if you can create a great customer experience, and you get people to love it and talk about it, then you get this third unlock, which is like so critical in consumer companies, which is organic growth, word of mouth, organic growth.
We have offices here in Soho in New York City, which is just fabulous, because I do a lot of very cool walks. And recently, actually, yesterday, I had a colleague that was that was walking around the neighborhood, and she overheard one of these two girl groups talking about one of our companies that it opened up a location, maybe two or three blocks down, and they were very excited to go to studs and get their ear pierced and they couldn’t wait. And like that type of chatter, I think just shows that you really hit on a product market fit and underserved market. And that you know, one person talking about it can lead to 10 new customers and you’re always looking for those unlocks.
And so finding a brand and a product and a customer experience that really lends itself to your customers or culture being very excited about Got it, and talking and sharing about it. That’s what separates like good from great. And so I think that kind of focusing on those pieces in those signals as momentum kind of upstreams, or slipstreams really are our key. And I guess if I were to say one more thing, especially along this Gen Z trend, in the past, it was totally great to have a great product at a competitive price with all the competitors and you had this great brand on top of it.
I think those days are over. We’re thinking a lot about what kind of a triangle where your products and what you’re selling need to be competitively priced with the competition. So you can’t be too high, you can’t be too low. The quality has to be good, doesn’t really have to be great. No product really has to be great, but it has to be good enough that it’s not kind of below the competition, but then there’s this third part of the triangle where it has to do good for the world. You’d like sustainability or social impact. Thinking about safe spaces and inclusivity and diverse, like diversity, clean products,
mental health and wellness. Like there are so many. And climate change obviously is the biggest one that I’ve hit on, you need to build a company that’s, that’s got all three of those corners. And if you’re building a new brand in 2020, you have to do good for the world. And that has to be authentic to how the business operates and kind of where the money flows. It’s just not going to be successful because modern consumers now and the new consumers coming to market with discretionary spend, are insisting that that’s a part of the companies that they support. And it can’t be marketing. It has to be a true core piece of the business.
James Thomson 34:38
It has to be authentic. Caitlin, I want to thank you for joining us today. And those of you interested in learning more about Caitlin’s firm, please visit Lerer Hippeau at lererhippeau.com. Thanks again Caitlin.
Caitlin Strandberg 34:55
Thanks so much, James.
Thanks for listening to the Buy Box Experts podcast. Be sure to click subscribe, check us out on the web and we’ll see you next time.