A Beauty Brand Disaster & Venture Studios

$700 million down the drain and a startup-creation framework

Author

Sammi Cohen
July 13, 2024

Hello to my favorite readers in the whole world! Hope you’re having a beautiful & restorative summer so far. I wanted to call out some changes to the newsletter (we are still very much in the early days, so there will be more updates to come as this keeps growing)!

This newsletter is called Social Currency because it combines my two favorite topics: 1) the “SOCIAL” element: social media, entertainment, culture, and 2) the “CURRENCY” element: financial news, startups, venture capital, etc. From here on out, I’ll be adding at least one section on a “currency” topic, and will likely expand upon this even more in the future. Hope you like it, and have a fabulous weekend! xx

Biz & Culture: News of the Week

When the private equity firm Carlyle bought Beautycounter in 2021, the skin care brand that people sold at kitchen tables, everything changed. The products were distributed through independent sellers in a multilevel marketing model (MLM) that has been used for vitamin supplements, cosmetics and Tupperware. Within three years, Beautycounter was shut down (and Carlyle lost everything they had invested). They’ve since announced that they will no longer invest in U.S. consumer and retail companies.

After coming under fire for its lack of inclusive sizing and alleged “toxic” work culture (and have you seen the HBO documentary?), Brandy Melville, the Gen-Z retailer known for its affordably-priced staples, is experimenting with a new concept store in Santa Monica. The offerings in this store are a bit more elevated and it seems like they’re targeting a more mature customer.

In the second quarter alone, U.S. creator startups raised $692.7 million, up 68% from a year earlier and more than double the amount raised in the first quarter. VCs have been less willing to invest in the creator economy in previous years, but it looks like all of this is starting to change. It’s definitely possible that AI has reinvigorated interest in this space, so we’ll see if this continues to grow once the AI bubble pops.

Blade is the NYC-based company behind the private helicopters. Per the Blade site, this is bus is an “elite travel experience with standards akin to private aviation for trips to the Hamptons.” And since the launch, I’ve seen so many posts about this bus on my Tiktok feed. With dating apps on the decline, this luxury bus has a potential (unexpected) upside: finding your next partner?

Driscoll’s is the world’s largest berry company and the berry market in the US is worth about $9 billion annually (up 40% over the past 5 years). In order to capitalize on a new product segment, they had to figure out how to breed, produce and sell its most flavorful strawberries and raspberries. These berries are called “Sweetest Batch”, and you can expect them to cost more than your standard berries.

Startups & Financing: Venture Studios

Lately, I’ve had a ton of people ask me about the different funding models for startups (bootstrapping, angel investing, venture capital, etc). I’d love to explore this topic further in this newsletter, so you can expect to see more funding conversations and more exploration of how entrepreneurs actually get the money to start working on their ideas and build companies.

The chart above walks through a less-common funding model, venture studios. Venture studios create startups by incubating their own ideas or ideas from their partners (versus investing in pre-existing companies that exist outside of the studio). The team within the studio builds the minimum viable product (MVP), then validates the idea by finding product/market fit and early customers. If the idea passes a series of “go/no go” decisions based on milestones for customer discovery and validation, the studio recruits entrepreneurial founders to run and scale those startups. Examples of companies that have emerged from venture studios include Overture, Twilio, and the most famous alum, Moderna (built by Flagship Pioneering).

Etsy: The “Human-Touch” Retailer

Chartr

People know & love Etsy as the marketplace for sourcing everything from artisan candles to bachelorette party favors. Last year, they did $2.75 billion in revenue, but the number of buyers on the platform has basically plateaued since 2020. Over the past few years, Etsy has faced a handful of issues, ranging from a sellers strike in 2022 and customers have claimed that the platform has lost its artisan/crafty touch which made it so popular in the first place.

And many US-shoppers are now opting to source their products from cheaper companies such as Shein and Temu, which obviously have very different value propositions to the customer (smaller artisans vs. mass produced/very cheap goods). In order to combat this, Etsy has rolled out new policies for their sellers. They’ve announced that sellers will have to fall into one of these specific labels:

  1. "Made by" (handcrafted)

  2. "Designed by" (original designs produced by a third party)

  3. "Sourced by" (items that enable buyer creativity)

  4. "Handpicked by" (vintage)

Over the years, Etsy has seemed to lose it’s “human touch” element, with more leniency on what types of products can be sold on Etsy (opening the door to drop shippers and ultra-mass producers). I'm happy that they’re making these changes - after all, this is what separates Etsy from every other major player in the online marketplace ecosystem.

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xx Sammi

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