Venture Scenes | Take 1
VC, Startups, and Movies
Welcome to Venture Scenes, my blog about Startups, Venture Capital, and Movies. Below, I break down and comment on the industry research, news stories, funding rounds, podcast episodes, and movies that interest me the most.
The Script
Quibi Shuts Down
It’s a move that was widely predicted and seemed to be months in the making, but I will be sad to see Quibi go. For Katzenberg and for the investors that piled hundreds of millions into the company, it was a massive swing for the fences. There was something so audacious about it, something so bold and confident. It was a content company willing to bet that the go-to mode for consuming entertainment would be via your mobile phone. I actually understand the driving force behind that line of thinking, and I think someone will nail this kind of fusion between technology and content someday.
But Quibi faced seemingly every obstacle you could think of in the past six months: an incredibly crowded streaming market, a pandemic, and the meteoric rise of a flat-out addicting competitor in Tik-Tok. All of these factors contributed to its demise.
In the aftermath of Quibi, every single (and I mean literally, all of them) trade publication, newspaper, VC newsletter, and business podcasts have taken up the challenge of dissecting the downfall. There is probably an entire almanac in the making about what went wrong for the streaming service. So I won’t even attempt a deep dive here. But to me, the company’s greatest mistake was summed up quite well in this WSJ report:
“Quibi made the classic mistake of getting too wrapped up in a product vision — videos on the phone — and forgetting about the customer,” said Tien Tzuo, CEO of Zuora, a subscription-management company.
I think the company lost sight of the value it was trying to create for its consumer. They figured that by pouring money into the technology and the stars, they would ultimately drive subscriptions. Consumers would follow the money. That did not happen because Quibi did not produce a single piece of content that would convince anyone to turn off their Netflix account and pull up their phone for a Quibi show.
To be sure, that is probably not the realm of competition the company wanted to enter. But the Pandemic eliminated most of the opportunities throughout the day that Quibi could possibly shine through. No one was riding the train to work, after all.
Quibi and Apple TV+ committed many of the same mistakes. Like Quibi, Apple TV+ threw money at several A-Listers, both in front of and behind the camera. But the money did not materialize into quality content. After watching the shows that Apple TV+ and Quibi had to offer right out of the gate, it felt an awful lot like various placeholders. Decent seasons of televisions that were trying to justify their existence enough to warrant a second season. But there was no House of Cards, which launched Netflix as a streaming company. And to launch a streaming company that has legs under it, you probably need to invest the time and energy to create a bonafide hit. That, or you need to launch that streaming company upon a stack of excellent IP. Quibi had neither.
So we bid farewell to Quibi. To be honest, I will miss the ads on TV where they shrink the TV format down to an iPhone and turn that iPhone sideways. It was a fascinating experiment that tried to forcibly alter the way consumers devour streaming content. But somewhere along the way, the streaming service forgot that audiences are not primarily captivated or addicted to the technology you use to deliver that content. In the end, they just crave a good story, well told.
Fred Wilson on E-Commerce and Retail
My point is this. Retail will come back after the pandemic. There are many reasons why we like to go into places and shop and drink and eat with others. I think we will enjoy that experience more than ever once we can do it again. But we will do it differently and more efficiently than we used to do it because we all learned some new tricks during the pandemic. And that is a good thing.
Fred uses the Toast example in his blog post on retail, but I think it’s also essential to take a step back and look at the two generations that will fuel the resurgence in physical retail moving forward. I think Millennials and especially Gen Z consumers still place a premium on being able to experience the in-store shopping experience. They will be a massive reason that physical retail will not die in the wake of COVID.
Millennials are still highly devoted to experience-related purchases. Now that experiential retail is on the verge of becoming mainstream, I think this will stoke healthy demand from the Gen Y cohort in the future. If you are unfamiliar with experiential retail, here is a list of potential uses that outline why it has the potential to be a massive slice of the retail experience in the future (that article was initially cited in a great piece by Trends.co).
But the bigger growth runway for retail lies in the Gen Z cohort. In August, Mckinsey broke down the Gen Z consumer with great detail, and this is a quote that stuck out to me:
Gen Zs, on the other hand — they want to shop across both types of channels all the time. So they might go online while they’re at school, look at something there, then decide they want to go to the store for fun, enjoy the experience. They see something; they haven’t made a purchase yet. They get home; suddenly they see an Instagram ad for their new favorite beauty brand, and they hit “shop now,” and they purchase through Instagram. But that shopping journey touched on brick and mortar, it touched on e-commerce online on their laptop, and it touched on mobile. It’s a holistic experience.
Because this is a generation that is always connected and always on their phones, they are essentially always shopping. They are the savviest consumers in the history of commerce, and they are capable and willing to make purchases through any channel. But what is seemingly profound for the future of retail is the fact that Gen Z prefers to shop in physical stores, even more so than Millennials. This makes sense when you think about it — Millennials saw online shopping as the great innovation of their retail experience, and many of us have simply adapted that channel as the norm or preference for how we buy. But according to certain surveys, 81% of Gen Z consumers prefer shopping in physical stores, and 73% like to discover new products in stores. Interestingly, half of Gen Z sees the process of physically going to a retail store as a method to “disconnect” and to get away from social media.
So millennials will continue to value experiential retail experiences, and Gen Z shoppers are seemingly brick and mortar evangelists. I think when looking at it through the lens of Gen Z and Millennial consumers, the future of retail is quite bright.
Mckinsey on What’s Ahead for Restaurants
But, when it comes to third-party delivery players, there’s no doubt that customers are going there. And we are firm believers that you should be where the customer wants to be. But I think the important thing for brands to think about is, what role do they want aggregators to play in their end-to-end customer experience? And if they are partnering with aggregators, how do they still maintain or drive the customer experience that they want?
It’s hard to recount a time where a single industry was beset by more long-term adversity and challenges. 70% of all restaurants in the United States are independent, and a distressingly high number of them are in danger of going out of business by the end of the year. For many restaurants to survive the coming year, they are going to have to partner with some form of third-party apps.
While a certain number of lucky mom-and-pop spots around the country can potentially support an in-house delivery system, the majority of them cannot. But, I think there are options for restaurants that do not require them to shed 30% commissions on every sale to Grubhub and Doordash. I plan to explore those startups in the coming posts.
As numerous think pieces and viral stories have showcased, the vast majority of independent restaurants will not be able to survive if third-party aggregator apps are their only lifeline throughout the COVID-19 crisis. Moving forward, restaurants and smaller retail shops need to do all they can to own the customer relationship, the data, and the quality of the outcome when it comes to delivery. Unfortunately, third-party apps do not allow for that.
Startup Close-Up
The sharing economy, by all measures, is in the midst of exponential growth. In the wake of the financial crisis of 2007–2008, the sharing economy arose as technology enabled the creation of marketplaces for underutilized assets just as people were seeking much-needed sources of income, which caught many incumbents in various industries by surprise. PwC forecasts that the entire sharing economy will reach a market size of $335bn by 2025. The number of sharing economy users in the United States was roughly 74mn in 2019. The number of sharing economy users is projected to rise to 86.5mn by 2021 (Statista). The adoption of new technologies such as smartphones, mobile internet, payments, online reviews, and GPS location services has driven the moonshot growth rates that numerous startups in the sharing economy experienced in the 2010s.
And what’s more, the types of goods and services that are successfully adopted into the sharing economy is constantly evolving, with no shortage of examples. Nearly every industry is at risk of disruption from the sharing economy. BofA estimated that the potential global sharing market could one day grow to $2 trillion and that a total of $6 trillion of Global GDP is at risk of disruption from the sharing economy. According to industry databases ( such as Justpark), there are roughly 900 sharing economy companies currently or recently operating in the United States (although that number is likely underestimated based on its confined definition of the sharing economy). Help with chores, borrowing boats, parking in idle driveways, and countless other goods and services have developed into startup businesses hoping to become the “Uber for X.”
RV’s are an idle asset class that seemingly fit the requirements for successful adoption in the sharing economy. This is another trend that was accelerated by the pandemic — as stir-crazy Americans have sought the open road and campsites as vectors of escape and recreation. RV sales were up 17.3% in August YoY. Millennials, in particular, have taken to the RV market, which is not surprising at all. 75% of them would prefer to spend their money on an “experience” rather than purchasing and owning possessions (according to an oft-cited study done by Eventbrite). RV’s check both of those boxes — they are an experience unto themselves. And, the ownership of one does not make sense for many people, except of course for these guys:
Finding the right good to utilize in the sharing economy can be extremely challenging. There are many obstacles that must be overcome in order to instill a sense of normalcy. After all, most people balked at the idea of renting out their house or a room in their house to complete strangers via AirBnB. Many people thought Uber could be a “sketchy” platform given it would not be a taxi driver escorting you around town at late hours of the night, but rather a regular citizen with a Camry. So when an idea comes along that really resonates in the sharing economy, it is worth talking about.
Mic-Check
“Startup” remains one of my favorite podcasts of all time. There is something so absolutely fascinating about listening to a company grow from literal inception to the size that Gimlet ultimately became. If you have a passion and obsession for glimpsing the inner workings of early-stage startups, it’s an excellent show, and I have a strong feeling that “Creator Stories” will contain many of the elements that I loved about “Startup.”
For one, it has veteran podcaster Colin Keeley onboard, who has been documenting the early-stage Chicago tech scene on his podcast “Tech In Chicago” for the better part of the last five years. Colin is a natural behind the mic and always creates insightful content when he interviews a founder or VC.
But aside from the talent in front of the mic, I think Avocado is going to be a fascinating startup to watch. It comes at a time where the push to zoom has exhausted many students and professionals around the world, and audio as a medium has never been more popular. Podcasting alone is a $72bn TAM (according to BofA) and will continue to grow, in my opinion, especially as the boomer generation increases its adoption. A 2019 report by Deloitte highlights some of the demographic differences in podcast adoption, but it also proves that there is an incredible opportunity to target older generations who still want to continue their education. I believe Avocado represents the best option for them to do so.
To summarize Avocado’s value proposition, if you are attempting to learn a topic, you could probably do so by listening to 100s of hours of podcasts. Or, you could purchase an audio course through Avocado, which will give you a much more targeted and streamlined educational experience, and thus, a better ROI. As Colin and Brent point out, podcasts are incentivized to stretch the length of their episodes because of longer episode=more advertising revenue. I think as more and more of the country develops Zoom fatigue, and as the audio course market continues to grow, Avocado could truly skyrocket in growth.
Finally, the founders highlight in their first episode the burgeoning opportunity in the wellness space. I am really looking forward to listening to the founders speak to that segment in the coming episodes. To me, this seems like the biggest potential growth opportunity for Avocado. I think enterprises investing in mental health and wellness will look to audio courses as the medium of choice. Per a report done back in April by Trends, this was a massive market even before COVID. And given the profound effect COVID has had on anxiety levels across the country (and the world) I think employers are going to continue to double and triple down on mental health services for their employees.
Movie Rec
Terror grips a small mountain town as bodies are discovered after each full moon. Losing sleep, raising a teenage daughter, and caring for his ailing father, officer Marshall struggles to remind himself there’s no such thing as werewolves
I don’t really know how to explain this movie. It’s honestly one of the most scattershot and all-over-the-place films I’ve seen in a very long time. I watched it with the hopes of seeing a classic creature feature, with a snowy landscape and “ominous overtones”. What I found was a genuinely moving family drama, a razor-sharp comedy, and an engaging detective story all rolled into one hour and twenty minutes. It should not work — but somehow it does. This is Jim Cummins second film, and the quality of it has convinced me to go back and watch the first movie he did, Thunder Road.
If you are in the mood for a spooky, but not too spooky movie for a Halloween movie night, this is a solid choice.
