Founder at Provenance
Anthony Choe

"When you have this tribe it's actually a good thing because it means you're not a commodity. It means you're resonating very strongly with a specific subset"

- Anthony Choe

Finding your tribe – Anthony Choe


Anthony Choe is the founder of Provenance, a growth-stage private investment firm focused on digitally-intensive omni channel brands. Provenance uses a highly analytical approach for due diligence and strategy development that is unique in the marketplace, partnering with the thought leaders in statistically-driven predictive customer lifetime value analytics to help identify and drive growth and efficiency in its investments, as well as using proprietary methods to help define a brand’s “tribe.” A value-added investor, Provenance assists its companies in multiple areas including brand development, digital optimization, retail, direct mail, and wholesale strategies.

Anthony is a veteran investor in the consumer space, and prior to founding Provenance, was a partner at Brentwood Associate, where he built the first dedicated private equity strategy for omnichannel brand investing in 2005, leading to top-quartile investment results.  In aggregate, Anthony has led investments totaling over $400 million, generating over $1.4 billion for investors, with no losses on new platform investments since 1999.

Prior to Brentwood, Anthony was an analyst at Donaldson, Lufkin & Jenrette in New York from 1994-1996, where he focused on mergers & acquisitions, high yield financings, and leveraged buyouts. He is a Phi Beta Kappa graduate of Harvard, where he graduated with a bachelor’s degree in economics, magna cum laude. In addition to his investing activities, Anthony is a guest lecturer on private investing at the UCLA Anderson School and is a member of YPO.

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The full #OPNAskAnAngel talk

Jeffery: Welcome to the supporters fund ask an investor I’m your host Jeffrey Potvin let’s please welcome Anthony Choe founder at Providence growth stage Investment Group as our investor today welcome Anthony it’s a real pleasure having you join us.

Anthony: Thanks for having me Jeffrey I’m excited to be chatting

Jeffery: Likewise I’m pretty excited about this for many reasons but the main one that really stands out for me is that we don’t always get the opportunity to dive in and chat with an investor with your level experience but also the fact that you’re in cpg and I’m a huge fan of that category uh not only because I worked in it through many many years as a kid working I love laws all the way through to working at the head office and building products and then being obviously on the on the tech side but man there’s such a tough tough tough space to really find businesses so they can Thrive and there’s so many that start up every day and they just don’t seem to get to where they need to and I I’m going to say you have all the answers Anthony I believe you have all of them and we’re excited to learn about those today so we’re going to kick this off by first love you to share a little bit about your background please go all the way back to your your Harvard days I think that’s important through all the different types of businesses that you’ve operated worked in direct director in and of course today what providence is all about and then one thing about you that nobody would know.

Anthony: Yeah for sure uh so I’ll actually go one step earlier than uh my Harvard days so uh I got the entrepreneurial bug from my father actually and uh interesting that you spent time at Loblaws because my dad was uh you know by hooker Crook in one way or the other in retail businesses his entire life uh I think the most meaningful experience he had uh you know right before I went to college was he became a franchisee of uh Texaco which was a big oil company and it was right when the gas stations were being converted from service stations to really convenience stores that had you know gas stations as kind of the front end draw and so he was considered one of the best operators in the system and I tried to understand what the heck that meant when everyone had the same draw at the front end and everyone’s gas prices were exactly the same like how do you how do you make the back of that house that convenience store actually operate better than your competition so got the bug there um even though I was uh Southern California uh raised my entire life I decided to go to the east coast and go to Harvard because I felt like if I never left California at that point I probably would never leave and once I saw brick in the sidewalk I realized this is a different place I I’ve got to see it I’ve got to experience it I’m really glad I did but I still couldn’t get that entrepreneurial bug out of my blood while I was there so uh my roommates and I we all started an on-campus Eatery and uh let’s just say the first six months were an incredible success we thought we were really brilliant and then we went away for holiday uh came back and two other uh restaurants had opened up on campus nearby and I learned very quickly the importance of having some barriers to entry around your business so uh that’s always been in my blood and uh post post Harvard uh I knew I wanted to do something that would train me to to you know learn part of that entrepreneurial journey and so I chose Investment Banking not because I love Finance per se uh it was just it was a path to learn as much as I could as quickly as I could and I didn’t mind not sleeping not eating not working out or whatever the case might be I just wanted to learn as much as I could in two years so um so I was very fortunate while I was slaving away uh on Wall Street in New York I got a call from a firm called Brentwood Associates out in LA and I’d never heard of them but I heard two things I heard LA and private equity and uh and back then it’s uh you could count on one hand how many private Equity firms were in La yeah and even though I wasn’t looking to leave New York at that moment uh I you know when there weren’t that many firms in La I felt like it was a unique opportunity to get back to uh the hometown and uh start doing what I thought would be super interesting so joined Brentwood in 1996 and uh was there for 20 years and I was very fortunate because one of the co-founders of the firm uh made me his right hand in 2006 handed the keys to the strategy to me at that point and that’s when I focused The Firm entirely on Brands selling direct to the end consumer in multiple channels and it was a really difficult strategy to explain to our LPS in 2006. so I wrote 120 page white paper deck explaining why e-commerce was going to be transformative for Brands but they in order to scale they were all going to have to be omnichannel and Omni channel is really complex and difficult so all of them are going to need help so uh the good news is that strategy turned out pretty well so or that fund that we raised around 2006. it’s about a 400 million dollar fund became a top quartile performer even though we were half deployed before the Great Recession uh Our Brands had extraordinary resilience during that time and that was kind of the proof in the pudding of both the Omni channel strategy but also the fact that brand matters and there was no better test than going through the most severe downturn since the Great Depression to prove that brand matters so we’re on our way uh by 2016 10 years later we’d become much larger uh we’re about to become a billion dollar fund um but I felt like the world had changed and to me the most interesting sweet spot of the growth curve for Consumer Brands had actually shifted smaller earlier and minority not bigger later in majority and I felt like having too much capital was going to put us further and further away from that sweet spot so I felt very strongly that we should raise a growth sidecar internally to be able to participate in the next generation of great Brands and uh everybody else wanted to keep it simple and stay focused on getting bigger and so uh at that point I said I wish you guys the best if you guys don’t want to do this then I’m going to do this and launch provenance but before launching provenance uh one of the things I did was spend about six months stitching together a bunch of data tools that we used today that I felt like were critical to really understand at a granular level what’s going on at the next generation of Brands so we do Predictive Analytics as well as layering on all kinds of demographic and psychographic information and we do that by asking companies for access to their full transaction log and customer file so we can do all this work um so uh that was a little bit of an experiment in the same way that back in 2006 uh focusing on omnichannel Brands was a bit of an experiment but it’s turned out even better than I could have hoped so we’re super excited about what we’re doing today and uh we hope to keep doing it for a long time.

Jeffery: Oh that’s awesome I before we dive into all this one thing about you that nobody would know.

Anthony: Uh one thing that nobody would know is um starting a little over 20 years ago as a hobby I started DJing in nightclubs on Saturday nights and uh for me it was just a way to have a creative outlet and I only did it once a week on Saturday nights because I knew no matter what my travel schedule looked like during the week I would always be back home on a Saturday and I I wouldn’t miss a gig so something I still toy around with today I don’t do it in clubs anymore I just do it for my own enjoyment again just to exercise the right hemisphere of my brain and stay connected to my creative side.

Jeffery: That’s that’s a great story one of um one of uh colleague or friend in uh Beirut investor he does the same uh he literally I’ve done it a long time ago and then decided later on to pick it back up again so he went and bought everything started working on it again he loves it he’s like I’ll do weddings I’ll do anything he’s like I just enjoy the the atmosphere and going in and doing that so I love the fact that you’re talking to it being at your creative side or your creative brain to get that out and I love that that’s awesome.

Anthony: Yeah uh I hope to never stop so uh but I will probably never do it in a club environment ever again.

Jeffery: Ah it’s still fun though I think that’s the key and you’re you’re getting people interested in uh the music and and what you’re doing so your creative arts side so that’s pretty cool uh to go back to uh kind of the I think we’ll start on the entrepreneurial side and what I love about this is that as you mentioned earlier on that you had this bug to kind of do something and you went and jumped into it right away with your roommates and then you learn kind of six months in when you took the break that competition is going to come out of nowhere and what if what moat did you build around kind of what you structured so there’s a lot of learnings you can take from that are there a couple of things that you left that environment with outside of losing say money and and time but is there something that came out of it that said you know what in the future I’m always going to make sure I’m cognizant of these three things because it’s important uh even today what I learned from that short experience.

Anthony: Yeah I think the the primary lesson was I think we were very wise to see that there was an opening in the marketplace there was a need for it and the context was uh there’s an area at Harvard called the quad where there were three dorms that were clustered a little bit further afield from the rest of Campus and a little bit further away from Harvard Square so you know uh when you got the late night Munchies there was no convenient place to go and so so it was very obvious to us with at least three dorms there that you know there’d be sufficient demand so um so we’re wise to see the opening there but um not realizing the the same advantages that we had which was our dorm had uh some kitchen equipment that was being underused a space that was being underused we didn’t have to buy any of that we just had to step in and get approval uh to get it started um didn’t realize that the other three dorms had the exact same setup and so once we showed people the idea uh it was pretty easy for the other two dorms to allow the same thing to happen um but it was fun because we we decided that we weren’t just going to serve food we were going to create an environment around it so whether it was a movie night or having uh bands play or uh just kind of having it be a Social Hub of the Quad it was really fun and we achieved our goal for the first half of that year when we came back it was very obvious that yeah there’s a certain energy and a density to what’s happening so when it got spread out it didn’t have that same Social Hub sense of it and so it wasn’t that we were losing money but when you don’t have that excitement and that emotional energy that’s in the same place but the density of people that’s there it’s not the same business and yeah in many ways that feeling of you know people being excited about what’s happening whether that’s a restaurant or whether that’s a brand um you know the the same concept applies.

Jeffery: Well it’s interesting the way you take the approach that instead of looking at what were the major losses to the opportunity you looked at it from what was the game and I think that’s important because the gain here was to your point was that you learned a lot from this experience from a social side but also commercializing that once you guys came back the space became commercialized it became a business opportunity for other people to also see the Gap also see the efficiencies so they were able to dive in and pull those apart so I guess the break is probably a good thing because it let you see things a bit differently but what I really liked about that approach that you took was that also when you created this there was a gap and this is what created your entrepreneurial side is that you were sitting around saying hey there’s a lack of X maybe we should do something and one you actually did it so that’s 99 better than the rest of the world that doesn’t take that same leap of faith but you found a way to make it work and then have socialize it so that other people found the same impact so in that six months you probably learned more than people may learn in years of working in business because one you took the extra step to do it but you also saw something that others didn’t see for the 10 20 30 50 years before you which was that there was a gap that was under utilized equipment there was space so there was all of these factors that tied together to create that entity even if it was short-lived that was super impactful it changed those people’s lives for that six months and I think this goes back to a lot of the things that you’re doing today when it gets into cpg branding try but there’s a lot of things that come out of what that moment probably carried so now you kind of move forward into um which I love hearing this term because it was coined back in you know the late 90s or early 2000s which was this omni-channel experience and I’ll add in the experience side because I really think that that helps you better understand what omnichannel really is uh and and maybe you could dive into what omnichannel means to you today than it did probably when you first started because there certainly wasn’t as many uh channels back then to utilize in that experience that you had but you tried to push this forward in the last fund that you’re raising of course but what was the end goal to this Omni Channel experience that you kind of Taken and jumped into fully today.

Anthony: Yeah so Omni channel has been talked about yeah you’re exactly right Jeffrey for probably 20 years at this point and the reality is in the in the early days of it for at least the first 10 it wasn’t really Omni Channel it was multi-channel so you had silos of ah maybe I’ll have my e-commerce operations but it would operate very separately from your retail operations or your wholesale operations everything was extremely siled but uh that that was the beginnings of the first step towards becoming truly Omni Channel and uh but I think today we’re much closer to that um and we see it in all of our companies and what allows you to be more truly omnichannel is understanding how the customer migrates uh from from various channels and it’s really true the customers don’t stay static um and you have to be everywhere that the customer is and you have to understand how that’s happening so um so that was foundational to the launching provenance and what was also foundational was getting Brands to trust us that if we have access to the data we can help you unpack what’s actually happening at the had an omni Channel level so I think the first time we we really had a complicated exercise to do this with was uh with a apparel brand called Marine layer and Marine layers based in San Francisco we invested in it in 2018 and it was doing about 35 million in Revenue at that time uh they were they were Scrappy and they had retail stores their own e-commerce they had no wholesale back then but um you know they were doing it at a break even level and they were very religious about not not wasting money in in any way which we philosophically very much align with um and we’ve first started talking to them they said yeah we’re about to do an omni Channel analytics exercise and I said great that’s fantastic what are you looking for and I said we’re not quite sure yet but we we think we need to do it and we said well fantastic that’s what we’ve actually been set up to do so why don’t we take that off your plate uh if you give us access to your data uh give us a few weeks with it and we’ll come back to you and show you what’s happening and so we showed them a variety of different things but we were able to map out that omni-channel Journey how what the lifetime value of the customer was that started retail first and then became an Ecom customer or somebody who started Ecom first and then became a retail customer or um you know any direction or any single Channel we could map out the lifetime value of the customer in any one of those Journeys and but what was probably more important than mapping all that out uh was helping them understand who their tribe was and so one of the things we showed them was that they have a very distinct distinct tribe of consumers and when we say tribe what we’re talking about is a very specific psychographic profile and um so we showed them a variety of things about what’s very unique about their tribe and uh when we first showed them this that and this is the reaction we get from every company it’s it’s uh it’s almost comical now how how similar the reaction is um everybody’s a little bit disappointed because they they look at that tribe and their first reaction is well what about all the other customers what about all the other consumers across the U.S we want to access and be relevant to them too and said don’t worry your tribe is large enough that it won’t impact your ultimate scale but trust us when you have this tribe it’s actually a good thing because it means you’re not a commodity it means you’re resonating very strongly with a specific subset and um and you want to stay true to who that customer is and when we scale we’re to stay focused on that subset of consumers and we’re just gonna it’s gonna help us be more efficient in building each one of our channels by staying true to who that tribe is and you know sure enough we’re now five years into the journey with them or getting close to it um we’re like four and a half years into that Journey you know by the end of this year we’ll probably be 4X the size of where we were in 2018 and very profitable that tribe is exactly the same as it was four years ago we’re just reaching more of them and that’s the foundational piece for why we do what we do um is uh in the consumer space you’ve seen it Jeffrey that there’s an incredible amount of brand fragmentation in every category of consumer spending doesn’t matter whether it’s food Beauty apparel home you name it there’s way more Brands today than there ever used to be and so what our whole hypothesis was categories are getting fragmented not into subcategories but into tribes and different tribes are gonna you know appeal to different types of customers and so therefore we think it’s a permanent state of fragmentation and so I think the end state of Brands is just going to be smaller than it used to be so it’s going to be hard to build the next Ralph Lauren where you’re multi-billions of dollars of Revenue [Music] um yeah it’s the next generation of brands has to be much more tightly focused much more specific about who they’re trying to appeal to um and a lot of that’s driven by the fact that barriers to entry have never been lower and uh but what we like to tell Brands is at the same time barriers to Excellence have never been higher because being truly omnichannel is incredibly difficult and you have to put in the hard work to to make it on the channel and just to bring it back to the Marine layer example one of the uh the exercises we went through in uh yeah a few years ago and really started to bear fruit in 2021 was when we truly tied together all of our inventory and could really service every channel from wherever we had inventory we were able to grow our Revenue by 32 million dollars that year and grew our inventory by under three million dollars to support that we just became more efficient with it and that’s the power of being truly omnichannel but it’s it’s not easy to get there you have to do a lot of work to to truly make it happen.

Jeffery: Wow this is pretty exciting so taking the omnichannel approach for say an early stage brand so take the companies doing five to ten million they they find they’re finding their tribe they’re figuring out who they are what is some of the advice that there’s going to be a lot of pitfalls people are trying to Source differently they’ve got operations working in different uh States uh they’re bringing product in say from China or Mexico wherever it might be and they’re trying to really level the playing field so that they can get their product out to Market their brand is probably not in the best spot we all think it is but just like everything your team changes a lot early on and all the way through your business your brand will shift all the way through that time as well so what are some of the advice pieces that you would say you know what focus on this make sure you master this piece first then start to Branch out and the example I’ll share is that in some of the companies that we invest in or operate in they come out with say seven products they’re like we’re going to Marco at seven and um maybe there should be three or two or maybe it’s one for today let’s just figure out who your tribe is first because the Seven’s great but that’s hard to get shelf space but there’s a misunderstanding of what that actually means or is that even possible so are there a few things that you could share that would really kind of help people understand this Omni Channel approach and when they should be executing on this and what should they do before they get to that stage which means what should they be doing before they get to you.

Anthony: Yeah for sure that that is an awesome question so we like to chat with companies well before they’re ready for for our stage so maybe I’ll start with what our typical stage is so we usually like to get involved with Brands somewhere between the 20 to 70 million dollars of of Revenue level that’s how we Define the growth stage of a brand uh and for us that’s we jokingly refer to it as the awkward gangly adolescent phase where you’re not a startup anymore but you’re not a mature business anymore you know what the DNA is going to produce but it’s not a fully formed adult yet that’s the that’s the part that we embrace One Step before that is when you’re really trying to figure out you know whether it’s product Market fit pricing brand positioning all those things um at the five million dollar stage usually there’s a couple things that happen one is we always like to say that almost every brand starts with a hero product the brand become you become synonymous with you know one great thing that you’re producing and word Word of Mouth starts the spread that’s how you build your reputation that’s how you get started but everything about what your brand is over the Long Haul is a function of what you do next after that original hero product where you decide to go from a product perspective or a channel perspective or above has everything to do with what you’re doing there after that initial hero how do you build the the assortment what direction is the assortment going because uh you’ve captured people’s fancy and you’ve captured their attention and they’re now watching what you’re doing next and that Evolution will Define your brand for years to come so there’s no one right choice for every brand uh for some folks it’s to stay very tightly assorted with a a limited focus and just own a handful of products that they do better than everyone else for others it’s to broaden the assortment uh there’s a brand Halo that allows them to do a lot more and they don’t necessarily have to be best in class at every new product that they introduce but um you know the brand values and principles allow people to enjoy lots of different things for them so that’s number one is what you decide to do after you find that initial hero product because usually you have to have something resembling a hero product to get to that five to ten million dollar Revenue stage uh the second thing we always like to tell Brands is once you’re in that zone five to ten million you can identify your tribe and that tribe stays locked in at that even at that scale it becomes incredibly difficult to appeal to a tribe that’s different than that so we’ve actually done free work for a company that we were never invested in but we tracked them from 5 million in Revenue to 25 to 125 they would expand their product assortment they would expand their channels and every time they did that they would say surely our tribe has changed at this point let’s say uh trust this it hasn’t but we’ll do the work for you just to prove that it hasn’t and once they got north of 100 million of Revenue they stopped asking us to refresh the analytics because they realized what we were telling them was true that their tribe stayed exactly the same so I think it’s really important for Brands to know what that tribe is at an early as early a stage as possible because once you do that all your choices in the future become much clearer like what you’re going to do what you’re not going to do what products are going to resonate and which ones are what values are going to resonate so for example um lots of Brands lean into sustainability which we we strongly support um but in many cases we see that the customer base doesn’t actually care in other cases we see they care quite a bit and the company isn’t talking about it enough about how much they care as well so that was one of the things we showed Marine layer was that um they have a customer base that cares passionately about the environment and sustainability and they were doing lots of things that were benefiting that so they were using some of the most sustainable Fabrics on the planet they were trying to use as many sustainable processes as they could cost efficiently but they weren’t talking about it at all so we said whether or not you do this deal with us we strongly encourage that you start talking about your values here because it’s clear that it’s part of your value system your customer wants to hear that from you so three months after we closed the deal with them they launched this program called respawn which recycles old garments back into new Yarns new fabrics and ultimately new garments and you know they that first holiday season when they launched it they had budgeted to get 10 000 t-shirts back uh to be recycled they ended up getting 140 000 back and forty percent of the respondents to that program were entirely new customers so clearly what had happened was it resonated really strongly with that that tribe that tribe started to tell their friends about it and their friends started participating in it and um and it kind of took on a life of its own and so this is what we mean by tribe and really identifying it and you know staying true to that tribe it’s not like Marine Lair was just invented these values these values were already embedded in what the how they were operating but uh it makes it very clear what they should do and shouldn’t do from a strategic perspective so um so yeah I can go on and on about different examples of of staying true to your tribe as you as you grow but it just allows you to focus in ways that um that you don’t have to worry about if you’re chasing Pam so we always like to say uh you have a tribe not a tam so don’t try to go after the entire Market if you stay true to your who your most loyal customers are you’ll grow beyond what you think is possible.

Jeffery: I like it this is great so to go back to the you mentioned a couple terms values Persona oh sorry I threw Persona in there because all of this kind of wraps around that whole ideal of what is the Persona of the customer you’re going after I think if you define that Persona that’s what’s going to open up this tribe right and you’re trying to figure out yourselves who that Persona is but you’re utilizing data in order to do that so you’re kind of doing a little bit of um I’m sure there’s a lot of market analysis but you’re really diving into who that consumer is why they’re buying how many times do they buy and there’s probably eight million other kpis and metrics that tie into that which help you build this Persona and it makes me remember back in my love lost days when uh we were doing building out the e-commerce online platforms uh for Joe and Joe Fresh and a few of the other platforms and we had this major Persona of who the main buyer was and we got in front of all the management and Loblaw’s company and we said hey this is the Persona she’s a female she’s you know 42 has three kids it does X Y and Z and we’re launching uh perfumes in the market and we’re going to launch clothing and everybody’s like clothing who wants to buy their clothes from loblums and you know they set the target for a billion in five years and man they blew that out in three so why was that the case and they came up with this um ideal value to what this Persona was and what the Persona was of this person was I’m shopping but I need other things and I can’t get those other things because I have kids I gotta go somewhere else so maybe if we layer them in there I can layer them into my receipt and then it’ll just look like I did a grocery shop so I spent 300 dollars today on groceries so don’t be upset but here’s all of the value that came from it and I got the kids clothes and I did all these other things so that was what tied into bringing in all of these other elements into the product and they were bang on to say that this was the Persona of who they’re going after and don’t worry about anybody else just focus on that and that made a massive difference because even if it was only 20 of their uh customer they generated 60 of the value that was going through that shop every day so I’m assuming that’s what you’re trying to really pull from.

Anthony: Yeah that is 100 correct so uh so yeah uh personas are what we’re helping create four Brands uh I think what’s different about how we do it is you know the the more traditional way of creating personas is by doing surveys and you know you always survey work if you’re doing it the right way is you have to be incredibly disciplined about who you’re sampling if is there a sample selection bias that’s coming from response bias or other things and uh the data that we’re layering on we’re typically able to attribute it to probably you know 70 of the customer base at a very specific level so it’s not everyone but it’s the vast majority of consumers and that’s why I think it ends up being pretty accurate and um and so when we’re talking about Persona creation we uh With Our Brands we say you know the the Persona that we’re helping Define based on who your individual customers are it’s almost like your unique fingerprint or DNA of your brand and every brand is slightly different there can be lots of similarities in uh you know types of consumers you’re trying to reach uh but that unique mix is your unique fingerprint so let us help you identify what that means and um you know two stories that come to mind we uh last year we invested in an eyewear business called Caddis so I happen to be wearing uh canis right now it’s kind of uh premium it started as premium readers for my generation which is Gen X and we’re a very brand savvy generation but nobody markets to us anymore uh yet we’re at the peak of our disposable income and wealth curves and so uh Caddis is just trying to you know capture that customer that ain’t quite dead yet doesn’t feel quite dead yet in fact quite the opposite and um is resonating with them in any event when we did this analytics exercise for them the the founder was uh very much came from a brand environment having worked at Burton Snowboards Patagonia like he bled brand and the reason why he chose to partner with us is after doing this analytics exercise we described the brand to him and what we think thought it meant and he just stared at us saying you were the first party that has ever articulated my brand to me better than I could do it myself how did you guys do that we just said well we can see who your tribe is and when we know who your tribe is we know why you’re resonating with them and what you mean so that was just our interpretation of it so um so yeah for us we kind of view it as you know medicine has evolved in many ways the practice hasn’t but the technology has so you know in the old days of medicine you could you’d walk into your you know Primary Care Physician’s office would he’d have his you know rubber mallet and stethoscope and ask you where does it hurt and otherwise there was no conversation well we kind of make the analogy that we’re kind of starting this process with a full body MRI scan and we’re showing you certain things that you may not even feel or recognize yet but you should be aware of because they may become issues in the future uh to us this just makes sense because if we’re trying to give the best advice possible to our companies generic advice today is not worth a whole lot we’re giving very specific advice that’s very tailored to each one of our companies based on who their tribe is and so all of our growth strategies for our companies are very unique they’re not all all following the same growth plan um and the only way we feel confident about giving very specific advice is if we have very specific information and data so that’s that’s one piece of it I think the the other piece that requires this level of precision is that you know one of the things that we’ve noticed in aggregate is that um we we’ve seen many tens of millions of underlying households in the U.S and what’s a little bit surprising for a lot of people but it’s not surprising to us is that 18 of households account for 63 percent of the brand spend and it very much mirrors discretionary income and and so you know most brands are targeting that 18 percent and you have to be very specific about which 18 you’re starting with and you’re carving out mind share from because they have a lot of choice and if you’re not laser focused on my brand is this but it’s not this if you’re not true to your tribe you’re gonna end up missing everyone you’ll miss the mark on everyone so um so yeah we always like to say um trying to be all things to all people will result in meaning nothing to everyone and that’s the kiss of death today so it’s better to be smaller more narrowly focused especially on that tribe and then you have a chance to win.

Jeffery: I love it and it’s uh it’s so true and I think just to add into some of the um details that you shared I think a lot of that Persona kpis it comes down to a lot of different details and those could be I think you mentioned some of them like if they are ESG based it’s really diving into the brand what does the brand represent and what are those that represent to the people that are buying it and what are the commonalities between all of the people that are buying that brand that you can then take that back and say look you have to stop talking about ESG when your brand isn’t representing that to your consumer and they’re the ones buying it so we need to change that around to people that enjoy the beach or enjoy sports and this is the market that’s really focused on you so let’s dive into that more and build that out so if that’s how you’re going to build the nest egg or the group of buyers that you have and keep catering to them because everybody else you’re trying to cater to is fitting outside the Spectrum and yeah you’re getting some auxiliary sales but they’re not bringing enough value to where your core is and that tribe is really going to Define this over the next three to five years if you can really hone in on this Persona and this will save you money on marketing operations uh trying products that you don’t need to try because they’re not going to get sold very well under your brand so we can say you know what don’t go to a CBD it’s not going to help you uh your consumer is already shopping for that and buying it so focus on this area you are.

Anthony: 100 correct that is exactly it’s about growing efficiently it’s not growth at all costs it’s not profit at all costs it’s trying to find that right balance of continuing to reach more and more of that tribe and yeah that’s that’s the message we’ve been preaching which you know in the last 10 years I think the the world has gone from guardrail to guardrail on you know 10 years ago was prophet in ebitda at all costs then over the last decade it migrated to growth at all costs ebitda be damned and now it feels like the investment landscape is searching for well what are we solving for is it growth is it profitability which one is it and that’s the question we all often get asked by Brands is which one do you care about more and we just say yes we care about both it’s about how you balance that and balancing that while staying true to the tribe as you grow if you do that then you can grow efficiently and if you’re chasing uh growth at all costs and are unfocused about who you want that growth to come from I can almost guarantee you’ll be highly inefficient about getting there which I don’t think works today anymore.

Jeffery: Agreed and what I like about that is that you’re saying that the pendulum swings very far on all angles and if you don’t find your tribe early and this goes to early stage investing if you can find that tribe and you mentioned the five to ten I think you can find that in the 500k to the 5 million range is that once you start to find that buyer and really Define that Persona you’ll modify a little bit to get to the five to ten million but that you’re so close to hitting that that this will actually take away from you doing all of this extra work and all these extra verticals of marketing that aren’t really hitting you find that one person or find that one tribe or group that’s going to make a difference and my last question to this and I think we could talk for days on this stuff because I love data and I love the whole concept of what you guys are doing this is how much of an impact on omnichannel does uh I I guess two things when the brand is trying to figure out what their footprint is how important is omnichannel exp the experience of Nami Channel how important is that to them early stage versus later on so would you say that it is a 10 right away start working on this start figuring it out and this layers into brand so the big question for me is when take flow hydration there were a company that we early States invested in they were all about brand and this is what I loved about them you know they innovated so this part B to this is innovation how much Innovation really changes that Persona and when they went and took the plastic and turned it into cardboard that really changed the game and then they said you know what we’ve changed the game but we’re going to add in one other element which is there’s no brand owning this category and you mentioned that before that the brands are all Antiquated everywhere and there’s not a real category leader and they said we’re going to be the leader in brand so we’re going to Define this so that’s what they went to Market with and yeah sales were different slower whatever but then boom they started to get in everywhere because people started to resonate with it they said we want you in our store and then every store started to pick them up so the brand got picked up because they had that section for Innovation but they also had this real compelling story of how bran made a difference in this category that had thousands of water bottles and thousands of everything they defined it so they made that change so in that omnichannel experience they were able to really focus in but they made brand the number one piece to that even early on so it’s that type of recommendation that you would say if you’re going to get into this think about all these things before you start but here’s kind of the stages you have to go through to get to this real winning omnichannel experience.

Anthony: 100% uh that is such a beautiful story about the importance of brand uh in our view brand has only become more important not less so in the last 20 years since China has joined the WTO um anybody has access to anything at a commodity level if you’re if you’re a smart consumer you can you can tap into Alibaba and you can buy unbranded stuff direct from the manufacturer at a fraction of the cost why hasn’t that taken off yeah there are business models that have been built around this concept of brand doesn’t matter anymore people just want the cheapest commodity for the lowest price possible give that to me I don’t I don’t want this baloney Iran brand it’s quite the opposite uh uh consumers want brand uh because brand at the end of the day is an emotional connection with that end consumer and uh you know where we are on Maslow’s hierarchy of needs we’re at the Pinnacle at this point for the vast majority of consumers in the U.S where most of our basic needs are taken care of at this point and so a brand has to be that Pinnacle of the pyramid which is the self-actualization piece which is do you represent what my value system is and what I stand for are you a reflection of me as a human because that’s why I’m going to lean into your brand and the brand is part of representing what I am as a human and uh that’s really what it comes down to and if you don’t have that resonance nobody has any attachment to what you’re doing and so we think brand has only become more important because in many ways that’s all that’s left so um focusing in on your brand what you stand for what you don’t who your tribe is who it’s not uh that’s all that’s left in our view and you know consumers the consumer space has had an interesting ride over the last 20 years because of the potential commoditization effects of you know bringing China you know into our supply chain you know at a scale that was inconceivable before so now that that has primarily run its course we see what the end product is and the end product is Brands all that’s left so that’s why we choose to focus on the things that we do uh having said all that you know you also want to make sure that consumers are willing to pay that brand premium and there is a margin profile that works for various categories and uh that got forgotten a little bit over the last 10 years because a lot of people were just focused on the top line and um so for many brands in the last 10 years we’ve just seen that yes you grew really fast because you were priced unsustainably maybe you should have grown a little bit slower charging a little bit more for what you’re doing and that would have been a truer test of do people actually care about what this brand stands for so I think uh a lot of that is coming to roost today and um you will probably see some Brands go by the wayside because you know once you’ve trained the consumer that your product isn’t worth that much it’s hard to untrain them on that later 10 years later uh so you got to make sure you start on that process early and if it’s not worth it to Consumers you’re better off knowing that early.

Jeffery: Now that’s well shared that’s a great great last point before we uh we kind of move into the next segment but um Anthony that was uh very well shared thank you great stuff great stuff uh okay we’re going to jump into the um our 60-second rant uh we’re gonna I guess the excitement level on my side is that I love this new segment so we’re going to jump into this real quick it’s the way it works is I will give you 60 seconds I’m gonna time it and you have 60 seconds to go on a rant and then I’m going to come back with uh maybe one or two comments and then you finalize it up but 60 second rent on anything and anything that you want to jump into

Anthony: Yeah well I kind of alluded to it earlier which is the question of what matters more growth or profitability uh I I as a capital provider I cannot stand the binary option of one or the other to me in consumer for brands that send the test of time the the equation has always been you start with high growth and over time that growth rate moderates and it turns into high profitability at a bigger scale that’s the answer so it depends upon what when where and how you are in your life cycle should you be pursuing growth should you be pursuing profitability and you don’t know the answer until you understand the unit economics of the business extremely finally to know when you should be making that change because no brand can sustain even 50 percent growth rates forever the wheels come off operationally you get beyond your tribe all kinds of things happen where there is a natural rate of growth at different stages for every brand.

Jeffery: I love it that was with 60 seconds that’s a great rant my my rebuttal to that would be how much does venture capital change the way this process that you just talked about who operates because they need to be in and out with their money paying off their investors within seven years they need high growth so at the end of the day their goal isn’t about building a sustainable business that can go and turn into a Nike or to an Adidas their goal is that they need to make their money and be out in seven years and they need your brand to go from a hundred thousand to a hundred million in seven years so it is about growth how do you counter that with saying let’s just build businesses that last longer and you don’t have to exit from and is there a whole different way of looking at that.

Anthony: Yeah uh well look we we favor high growth too um so uh it’s just the definition of high growth should change as you achieve more and more scale it shouldn’t just be a singular number because you know growing from 2 million to 4 million at 100 is very different than trying to grow from 200 million to 400 million it’s the percentage is the same but the operational complexity of doing that is monumentally different so what I would say on the The Venture side is is that um the expectations for growth probably need to moderate a little bit which probably means valuations need to moderate a little bit at the early end in the Quantum of capital that Brands need on the early end needs to moderate a little bit and um and to make all that math work efficiency is a critical part of you know making a sufficiently high return for early stage Venture investors to you know see their desired return in seven years do I think it’s possible absolutely but it can’t you can’t throw money at it and hope that growth will solve that problem later you have to be dialed in about you know the right amount of capital for the right stage of the company for the right expectations so I think that means that what we’ve seen is that the the folks who are still writing checks in the consumer space on the early stage Venture side are the ones that have been doing consumer for a long time and not just in the last five years.

Jeffery: It’s great and you’re right moderation or moderate moderating your um dollars in and your expectations you know the pendulum swings pretty far I think in this case it’s saying let’s slow it down and you know you’re right you need to get to seven years but maybe the first two three years uh you’re taking a different approach and then year three to five you’re taking a much different approach and then maybe five to seven is where you start to really see the big bump in scaling because you’ve taken a slower approach to get to year five so instead of just trying to throw money at everything to grow then maybe take the process in and understanding the strategy the personas the value and then when you do try to double down your business is ready for it and you can be able to manage that uh upside that’s going to come to you especially when you get to seven to ten years as well.

Anthony: I could not have said it any better myself Jeffrey that’s exactly.

Jeffery: It done I’m hitting the red button perfect record and shared I like it all right

Anthony: um well that that went by pretty fast uh I I felt like there were times where I was talking way too much Jeffrey so sorry if I

Jeffery: No no you’re good we still got a bit more to go we got to jump into the rapid fire questions so yeah we’re gonna jump into those real quick and then we’ll uh we’re almost there man we’re getting really close um

Anthony: Okay

Jeffery: All right so why don’t we’ll uh we’ll jump into the rapid fire questions just because we did spend more time chatting and there was obviously a lot of great content there so why don’t we jump into uh the business side uh the way it works you pick one or the other so you’re coming in obviously investor you choose which one works best for you and your team all right first question founder or co-founder

Anthony: Uh I don’t know that I have a preference but I think our portfolio reflects more founder as opposed to co-founder

Jeffery: Okay uh unicorn or a four year 10x exit

Anthony: Four year 10x

Jeffery: okay Tech or cpg

Anthony: Well it’s an easy one for me I’ll take the consumer all day long

Jeffery: I love it uh nfts are web 3.0

Anthony: Um that’s a good one uh in the near term nfts okay

Jeffery: Ai or blockchain

Anthony: AI
Jeffery: First time founder or a second third time founder

Anthony: First time

Jeffery: First money in or series A

Anthony: In today’s world first money in okay uh

Jeffery: Board seat or Observer

Anthony: Board seat No Doubt

Jeffery: Save or convertible note

Anthony: Convertible note uh

Jeffery: Lead or follow

Anthony: Lead

Jeffery: I love it favorite part of investing

Anthony: I’m sorry say that again

Jeffery: Favorite part of investing

Anthony: Uh it’s never the same any given year

Jeffery: Number of companies invested per year

Anthony: Two to three

Jeffery: love it uh I’ll say the verticals of focus but you can just reiterate what those are

Anthony: Oh for us uh yeah everything but food and beverage really

Jeffery: Okay two qualities of business needs in order to stand out to you

Anthony: Brand unit economics

Jeffery: Love it now I’m going to just a couple quick questions what piece of advice would you give to business Founders nine out of ten times

Anthony: Seek input from many angles continuously

Jeffery: What tech will Define the world in the next five years

Anthony: AI

Jeffery: Who is your hero and Mentor or why and why

Anthony: Oh gosh my father uh my father because uh is it okay if I don’t make this a rapid fire answer

Jeffery: Yes yes yes

Anthony: Um when I was in high school it finally dawned upon me what he was doing was not easy because he would typically take buy failing businesses turn them around sell them in two to three years wash rinse repeat so when I was in high school I asked him two things I said dad now that I’m old enough I understand a it’s not easy to do what you’re doing so two questions one is how do you know you can succeed in turning around a business in which you’ve never had any prior experience and B how do you push your chips all in when you’re trying to feed a family and so his answer to the first question was Anthony it’s about good management the types of companies I’m buying are really simple and after I buy them I spend the first year really understanding how they work I stopped doing the quote unquote stupid stuff that they were doing that I could see from the outside looking in after that first year I learned how to grow the business and I spend the next two to three years growing the business once I’ve understood it from the inside so he said it’s just about good management and the second piece was he said uh it what you’re really asking is about courage and risk and said the way I view it I came into this world with nothing and I’m gonna leave with nothing so everything to me in between is just upside so if you’ve done your homework and you believe in the opportunity why wouldn’t you do it that’s when I first sat back and said actually that is the right way to look at it so hell yeah that’s don’t be afraid of failure uh if you’ve done your homework why wouldn’t you do it.

Jeffery: I love it you’re the advice your father provided is uh gold that is uh fantastic totally agree with that what is your worst investment

Anthony: Worst investment uh gosh let me go back a fitness club chain in 1999 that was a very Regional localized Fitness chain that was the first investment that I owned uh as my idea and trying to get it off the ground and I was 100 right on the macro that Fitness was going to become a mainstream activity um and uh it was a hundred percent wrong about the horse we chose as the platform asset.

Jeffery: fair enough fair enough all right last question what’s your favorite investment well last question in this segment

Anthony: Uh I don’t know that I have a favorite because they’re all like children to me I love them all equally but I think probably one of the most informative ones for me was a company called the Oriental Trading Company uh which uh did in February of 2000 so Jeffrey you’re probably old enough to remember the bus that happened uh in March of 2000 so yes I spent a lot of time looking at a lot of e-commerce businesses like e-toys and e-parties and all kinds of stuff that were popping up all over La I couldn’t make heads or tails of them because I couldn’t wrap my head around losing that much money uh to try to build a company or a brand so Oriental Trading company was kind of the opposite which was uh I knew that most of the e-commerce companies were burning all their capital on building one-to-one fulfillment infrastructure and customer files but certain catalog businesses had both of those things and all they had to do was put a website up so uh bought Oriental Trading Company uh it was doing 300 million and 40 million of ebitda uh in six years we grew it to 650 million uh of Revenue and 100 million of ebitda and uh that’s where I learned all the principles around quantitative marketing um and lifetime value and return on investment because it was a highly quantitatively driven Enterprise uh where uh let’s just say we were mailing at our Peak 300 million catalogs a year and so it had to be a quantitative exercise but lots of those principles that I learned back then are informed the whole Omni Channel approach that I’m using today.

Jeffery: I love it that’s awesome all right super quick fast personal questions most famous person that pops in your mind

Anthony: Michael Jordan

Jeffery: First brand that pops in your mind

Anthony: ESOP

Jeffery: Book or movie

Anthony: Book

Jeffery: Superman or Batman

Anthony: Superman

Jeffery: Fortune cookie or birthday cake

Anthony: Birthday cake

Jeffery: Five minutes with Bezos or Oprah

Anthony: Oh I’ll take Bezos

Jeffery: Mountain or Beach

Anthony: Beach

Jeffery: bike or run

Anthony: Bike

Jeffery: Big Mac or chicken McNuggets

Anthony: McNuggets

Jeffery: Trophy or money

Anthony: I’m sorry

Jeffery: Trophy or money

Anthony: Trophy

Jeffery: Beer or wine

Anthony: Uh neither I’m allergic to alcohol

Jeffery: Fair enough Ted talk or book reading

Anthony: Ted Talk

Jeffery: Tick Tock or Instagram

Anthony: Oh uh I’ll say tick tock

Jeffery: Facebook or LinkedIn

Anthony: LinkedIn

Jeffery: Favorite movie and what character would you play

Anthony: Favorite movie The Matrix uh

Jeffery: I love it

Anthony: what character would I play I don’t think I’d be Neo I think I’d be Morpheus

Jeffery: Oh nice nice all right cool favorite book

Anthony: I’ll have to come back to that one I’ve got a lot so I’ll have to come back to that one

Jeffery: Okay uh favorite sports team

Anthony: Dallas Cowboys

Jeffery: Nice what is the meaning of success to you

Anthony: Uh meaning of Success is Not external it’s internal um it’s uh doing what I believe I’ve been put on this planet to do while in a flow state where it’s happening through me uh and I’m just a conduit.

Jeffery: I like it and what is your superpower

Anthony: Uh being a jack of all trades uh being the master of no field but being reasonably competent and lots of different areas

Jeffery: I like it it’s the Swiss army knife uh you’re uh you bring a lot of value and a lot of great stories and a lot of insight in a lot of different areas in your past and your experiences certainly dictate that well Anthony I’m going to say it’s been a real pleasure getting the opportunity to dive in and chat with you as I mentioned we could probably talk for hours there’s so much great material and we didn’t even get to touch on supply chain operations there’s so many things that tie into this whole data analytics side of investing in in cpg Brands and and uh the Omni channels so and building that tribe but I want to thank you again for all of your time and the way we like to end the show is like to give you the last word so anything you want to share to the investor Community to the startup business ecosystem we turn it over to you to share and please share how people can get in touch with you as well.

Anthony: Yeah for sure so uh well first I’d like to share uh what book that I skipped over so uh I have a lot of favorites but the one I’ve been recommending the most recently is the rise of Superman and uh it’s about achieving flow States in all aspects of your life and I strongly recommend that to anyone who cares about performance and yeah optimization and anything that they’re doing regardless of what the field is including business uh so I wanted to not leave that open-ended um in terms of recommendation uh I don’t want to be arrogant and say that we’ve got it all figured out I think we have our lens on how we view the evolution of the consumer space um I think it’s a somewhat unique lens and um you know it’s certainly not the only way to invest in the consumer space there’s lots of good consumer investors different approaches different philosophies uh but if if the if understanding your tribe and their omnichannel behavior is is though the way you think you’re headed down um please give us a shout we’d love to chat so I’m best reached at uh my email is

Jeffery: Awesome Anthony again privilege thank you very much for all your time today this was awesome thank you.

Anthony: Okay thanks Jeffrey okay talk to you soon all right.

Jeffery: Okay that was a great insights that Anthony provided and there’s a few things that really stood out I really like the fact that even in his early start startup phase when he was uh back in University days that they were looking for The Gap finding what the demand was uh figuring out the value of what they were doing and when they took that break kind of how things fell apart the competition becomes very crucial at this stage as well and that they commercialize the space they opened everybody up to turn something that wasn’t there into a business opportunity and then of course through the whole thing that Providence does and it focuses on the Persona of the customer and figuring out who the tribe is and once you understand that that’s such a big deal because it allows you to hyper Focus your investment and your time and your business to where you need to focus on getting those customers and I think understanding that makes such a big difference in growing your business and of course in this omni-channel experience you also have a brand that becomes so important so when you’re building this new company doesn’t matter if you’re in Tech or cpg or whatever vertical or alignment you’re in is that brand is huge brand makes a big difference because that’s what helps people resonate with you and then how you kind of move that into the next stages which is um understanding the Persona of each of your customers or the one customer on how you can gain the most in the future so well shared the great book to rise of a Superman another thing to take a look at but Anthony that was uh that was fantastic so thank you everybody for joining us today if you enjoyed the conversation please feel free to share with your friends subscribe to our YouTube channel and or please follow us on Spotify apple and or Stitcher podcast platforms feel free to share an audio or video clip around our show and we may include it in one of our future podcasts you can find us at marketing or on LinkedIn at support supportersfund your support and comments are truly appreciated please visit us at and or startup events at thank you and have a fantastic day.

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