🎢 #40 - Marketplace and the next-gen beauty retailer
🎢 #40 - Marketplace and the next-gen beauty retailer
+ Anne Dwane (Partner at Village Global)
Hey there! Welcome to my email newsletter. My name is Leo Luo, a student entrepreneur at the University of Michigan. I write about founder stories, trends, investor POV, and unique behaviors in the early-stage consumer startup space.
All my previous posts can be found here.
Follow me on Twitter @_leoluo.
🍽 Today’s menu
Startup story - Apothecary (the next-gen retailer for skincare products)
Investor POV - Anne Dwane (Partner at Village Global)
What I’ve been reading - 5 articles about startups and investing
Who’s ballin’ this week - 6 new fundraising/developments in B2C space
Jobs - 12 full-time jobs and internship postings
Feedback - help me to deliver better content to you
🔥 Startup Story
Marketplace and the next-gen beauty retailer
(Image credit: Apothecary)
Personalization is one of the hottest trends in the consumer world. A few weeks ago, I talked to my mentor, Paul, from Red Sea Ventures about how the trend is especially salient in the beauty industry (check out our conversation here). Companies like Prose are forever changing the game.
This week, I am writing about another emerging player in this space, Apothecary (backed by 500 Startups) - an AI-powered skincare consultation service that streamlines the product discovery journey. Apothecary is a three-sided marketplace that helps skincare consumers to find the most suitable skincare products through its community of beauty creators and a quiz. Creators make money and brands acquire new customers. I had a really fun time connecting with Christine, the Founder and CEO of Apothecary, to learn about her entrepreneurship story.
🌱 Genesis & Pain Points
“I stumbled into this space because I was a frustrated consumer myself. Growing up, I've had eczema and hormonal acne. Thankfully, I had an amazing dermatologist mom and she helped me with prescription medications from Retinoids to Accutane, but ultimately, I had to find over-the-counter skin care products for everyday skin maintenance. The number of choices in the market was overwhelming.
Looking into this problem a little more, I realized that a lot of consumers like me go to creators for product recommendations. However, creators are either in the 1%, have millions of followers and get direct sponsorships from brands, or are in the remaining 99% that don’t make much and monetize mostly through affiliate marketing.
We feel that there's a huge problem with attribution leakage. Content creators play a big hand in recommending products and bridging the gap between consumer and brand, but they aren’t necessarily being credited monetarily.”
🚗 Product Journey
MVP (January 2020):
The MVP was built on Shopify where users could take a quiz to get skincare product recommendations. There were around 200 users during this MVP phase.
“After the quiz, they had the option to buy a $35 trial kit with three products. 9.5% of those who took the quiz converted and purchased the $35 trial kit. Out of those who purchased a trial kit, 42% of them purchased a full-size version of the product they sampled, which is really compelling for brands because we have data on what kind of skin they have and what they're looking for. That’s why sampling is so much more targeted and sticky,” Christine elaborated.
During the experiment, Christine validated that a) people preferred to get a trial kit before buying the full-size product and b) the personalized approach increases conversion for brands.
(Apothecary MVP)
Product Iteration (Summer 2020 - now):
Christine found the MVP to be somewhat bulky as it was completely built on Shopify so they decided to move on to their own custom Web App that integrates with the Shopify API.
“It was a much better solution for us for inventory management, and from there, we decided to focus on creators first. They had the biggest need, and if we had the creators, they would bring the consumers and the brands. Thus, it was clear to us that what we had to focus on was building that creator community.”
Current traction - the creator community has been growing 250% MoM since the launch.
🤔 Challenges along the way
1. This is a novel idea for creators
“I think there's education that needs to happen with creators because they have never seen a model like this before. They usually say - ‘what do you mean I can make two to three times more money per month and have access to all these top brands that I've been dying to work with for months. It's too easy’. Also, for a lot of them, this is not their full-time job. While they spend many hours on their skinstagram daily, they don’t operate like this is their livelihood because, in the past, it never could have been.”
2. On-boarding can be time-consuming
“On-boarding creators onto the platform is relatively time-consuming - it's about one hour per creator. It’s been a little bit harder to scale but we have been working with a part-time team in the Philippines to help speed along that process.”
3. Finding a technical lead as a non-technical solo founder
“I was a non-technical solo founder and I struggled a bit in the beginning. Then, I realized I am a relatively young first-time founder so why don’t I look for someone who’s more experienced. I think between January to June, I jumped from engineer to engineer but I just couldn’t find the right fit.
Finally, I met Jason, who's now our tech lead. He graduated from Berkeley and worked at Facebook and a few other e-commerce startups. We just understood each other and clicked instantly. It was really an incredible hallelujah moment to find the technical partner to take this to the next level.”
🚀 Vision
“We want to be the next-gen retailer for beauty. I think this is a golden age for Sephora, but I also think there is going to be a slow transition to a new kind of retailer that speaks with younger audiences, especially post-pandemic with all the new indie brands that have been gaining market share in the past several years. The market is shifting toward consumers who identify as skintellectuals and want to learn more about what ingredients are actually helping their skin.”
Check out Apothecary!
💡 Investor POV
Anne Dwane (Partner at Village Global)
(Image credit: Anne Dwane)
Anne Dwane is a partner at Village Global, a network-driven VC. Since graduating from Georgetown University and Harvard Business School, she has founded venture scale tech companies and served as a public company executive. She has over 20 years of experience managing P&Ls, scaling operations from startup through IPO (led two companies to acquisition by Monster and Chegg), building high-performance teams, and creating services valued by tens of millions of users.
It was really fun chatting with Anne and learning more about Village Global and her advice for early-stage founders.
💲 What is Village Global’s Model
“We launched with a network-driven approach to venture. It manifests on different levels. First, most of our first checks are written by scouts. We call them network leaders, and these could be very established angel investors who are able to write big checks or they could be people that have an excellent deal flow, good judgment, and are helpful to founders. The whole notion of the scout programs is exciting because it enables new players in the ecosystem to invest in the smartest entrepreneurs they know around the world and across sectors.
The other unique element of Village is that we raised our money from very successful founders like Jeff Bezos, Bill Gates, and Reid Hoffman. They still love the early-stage game and realize that being in a network of founders is both helpful from the business perspective and the return perspective.”
***I am a big fan of their podcast Venture Stories by Village Global. Highly recommend!
🤔 Common Mistakes Early-Stage Founders Make
1. Prioritize quantity of customers over quality of customers
“The most common mistake is to prioritize quantity of customers over the quality of customers, and in essence, acquisition over retention and engagement. We would rather a company figure out what causes a customer to be delighted and stay, tell their friends, and to engage frequently rather than to say ‘wow we have tons of users using the product but are unsure about 30-day retention.’
Superhuman built a waitlist which enabled them to really work on product market fit and retention before opening the floodgates. Another example is Calm. They didn’t prioritize paid acquisition until they really understood the product.”
2. Fall too deeply in love with the product
“Very rarely do you actually figure out what customers want and I don’t think great businesses are built as much as they are discovered. However, it is important to have a plan. You have to have a hypothesis instead of just throwing everything against the wall.
One of my favorite quotes for founders is - if you don't have a plan, everything looks like progress. Say your goal is to have 10 customers in a week. You measure yourself. This goal and the metric help you to create a feedback loop, and you can ask two questions after - what should we change? Or you ask, is it the wrong goal?”
🔑 Key learnings from the operator days
1. Leadership is about making more leaders
“The best thing a leader can do is to make more leaders - they support others in doing more and being more. Whereas, management is about addressing complexity and creating systems. As a founder, you might come up with the initial idea, but the quicker you can make your whole team aware of what the needle movers are in the business and what the bottlenecks are, the better and faster the organization can rise.
There is a great quote from Antoine de Saint-Exupéry - if you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”
2. Have a goal in mind after raising a round
“For a venture-scale business, it is helpful to think about goals and metrics [either qualitative or quantitative] that cause an inflection point in the valuation of the company and enable you to raise money at a higher cap. When I reflect back on my career, the minute I had raised one round, I would have my targets in mind because it’s better to be focused and then change goals than to take on too many things.”
👨💻 What I’ve been reading
Investing in Clubhouse by Andrew Chen
The value chain of the open metaverse
Our Stack at a $10M Fund
A Bootstrapped SaaS Journey to 10K MRR (great article with many actionable insights!)
Roblox: An IPO in Memes
🏀 Who’s ballin this week
Doorvest lands $2.5M Seed round to simplify real estate investing
Finesse sews up $4.5M Seed to predict latest fashion trends
ByteDance foe seeks $5.4 billion in biggest tech IPO since Uber
‘Slow dating’ app Once is acquired by Dating Group for $18M as it seeks to expand its portfolio
Clubhouse announces plans for creator payments and raises new funding led by Andreessen Horowitz
Three-dimensional search engine Physna wants to be the Google of the physical world
😍 Jobs & Internships
Internships:
Apply - Vice Ventures - 2021 Summer Data Analyst (Remote)
Apply - Bolt - Software Engineer Internship (SF)
Apply - Lerer Hippeau - Summer Associate (Remote)
Apply - Descript - Business Development Internship (SF)
Apply - Amplitude - Product Design Intern (SF)
Apply - Plaid - New Business Associate Intern (SF)
Full-time:
Apply - Touchdown Ventures - Analyst & Associate (Remote/Philly)
Apply - Great Jones - Operations Associate (NYC)
Apply - Coda - Growth Sales Associate (Mountain View)
Apply - Faire - Business Operations (SF)
Apply - ff Venture Capital - Associate (Remote/NYC)
Apply - Triplebyte - Growth Engineer (SF)
🙏 Feedback
If you have reached this far, could you please take 30 seconds to fill out this quick survey? It will help me to improve the newsletter and deliver you more interesting content in the future. Means a lot to me ♥️.
**P.S. I have adopted many of your suggestions in the past (e.g. having more bullet points, changing the order of the content, creating an archive for all previous posts, etc) so I hear you!
↺ What you might’ve missed in the last three weeks
01/24 - Story of Public (Social investing app) + Karan Mehta (Investor at Octopus Ventures)
01/17- Story of GIST (social e-commerce app) + Steve Sloane (Partner at Menlo Ventures)
01/10- Story of Shuffle (TikTok for podcasts) + Paul Strachman (Partner at Red Sea Ventures)
Check out all the startups and investors I have featured in the past on this Notion board.