Introducing Ghost — a B2B marketplace to solve for >$1T of excess inventory
By: Rick Zullo, GP & Co-Founder @ Equal Ventures
Back in 2020, our team started to see a seismic shift in brand/retailer balance sheets as supply chain constraints and demand forecasting challenges mounted, resulting in unprecedented levels of excess inventory and returns. The theory was that we could see up to $1T of excess inventory a year if these challenges were left unaddressed, resulting in losses of as much as $761B a year. We called this the Inventory Apocalypse (see more on our work here).
Turns out that this challenge was far larger than we could have ever imagined as those conditions were amplified by changes in D2C advertising performance due to iOS updates, leaving brands with a scarce set of options.
They could:
1) Discount their products on their digital channels, subsequently cannibalizing premium paying customers and eroding their pricing power while nonetheless risking negative contribution margin orders, or
2) Watch inventory loads build up to the point that they needed to be incinerated.
Neither were ideal. Warehousing space was getting more expensive and selling out-of-season inventory was nearly impossible to turn a profit on once you accounted for the cost of advertising, fulfillment and returns (all of which had increased). These options were destroying brand equity and crippling profitability. Even incineration waned as a viable alternative, with apparel emerging as one of climate’s leading offenders, risking tremendous backlash for brands. The conditions were starting to look bleak for brands and it was clear that a solution to address the impending inventory apocalypse was needed to enable brands to navigate this challenging landscape.
Enter Ghost — the leading B2B marketplace for excess inventory.
Last Fall, Ghost Co-founder Josh Kaplan called me. Josh and I were classmates in business school and he reached out to talk to me about an idea that he and his Co-founder, Dee Murthy, were working on. Dee needed no introduction. I had been a Five Four customer for years and virtually everyone in the world of apparel has come across Dee at one point or another. Dee had successfully bootstrapped Five Four into a multi-brand holding company with nearly 9 figures in sales and had recruited Josh (a serial entrepreneur, former investor and leading operator) to run one of those brands prior to starting Ghost together. Needless to say, they knew the category.
Josh prefaced the conversation saying that he was headed on his honeymoon in two days, but wanted to give me an early look. He explained that he and Dee had seen inventory levels start to pile up for them and many of the peer brands that they collaborated with, and felt there was an opportunity to help these brands manage and liquidate their inventory. I barely let Josh finish the sentence before saying I needed to meet with him and Dee the next day and asking them to read our research deck in advance. 5 days later, I flew out to LA to have dinner with Dee and convince him to sign with us for his seed round (Josh was on his honeymoon, but I called him to make the sell as well). The company wasn’t much more than an idea at that point, but rarely do you have the opportunity to back such an amazing team, pursuing such an incredibly large market opportunity with such impeccable timing. I simply couldn’t wait — I knew I wanted to be in business with them. We co-led the round with our close friend (and Equal Ventures LP) Nihal Mehta of Eniac Ventures and I joined their board.
Within 6 months, Ghost had demonstrated a multi-million dollar net revenue (NOT GMV) run-rate and was profitable. The company had cemented a take rate and demonstrated significant gravitational pull on both sides of the platform. Simply put, it has been amongst the fastest cases of product-market-fit I have ever seen. While we pride ourselves on our research, this is truly a testament to Dee and Josh. They are simply incredible founders, possessing uncanny understanding of the market and the ability to transcend digital and physical worlds. They represent founder-market-fit for this business as well as any two folks on the planet and that was evident in how quickly they have hit the ground running.
As Ghost went out to raise its Series A, the Nasdaq pulled back >20% in the first 3 weeks of their process. Unfettered, Dee and Josh garnered significant interest from an amazing cadre of investors, with our friends from Union Square Ventures ultimately winning a highly competitive process. We’re thrilled to partner with Rebecca Kaden and the amazing team at USV once again (read more in TechCrunch here). Rebecca is one of the foremost experts on brands in the market today and understands the power of network effects as well as anyone out there. We’ve seen her contributions firsthand with SmartHop and David Energy, and feel she is an invaluable asset to early-stage companies.
We couldn’t be more thrilled to double down on Ghost with this financing. This milestone is just one in what will be a very long journey for the company, but we feel that the team, timing, traction and trajectory provide an incredibly bright future for the Ghost platform.
The team is hiring aggressively, so if interested in joining one of the best companies in the retail landscape today, please apply!
