Talking Shop with Investor Howard Lindzon about DTC

I first got to know Howard around the time that Twitter was taking off and the only thing that surpasses his wisdom and insight with respect to the markets is his generosity in sharing exactly what he’s thinking, and perhaps equally importantly, investing in. 

Either individually or through his fund, Social Leverage, he has had successful exits with companies such as TweetDeck (sold to Twitter), Ticketfly (sold to Pandora) and Buddy Media (Salesforce). Additional portfolio companies include the investment app Robinhood and dog care service Wag. He has written about The Death of Retail, the Birth of Retail and every permutation therein. 

This is the first of an ongoing series of interviews with leaders in the Direct to Consumer space. While Howard doesn’t necessarily see around corners, his views and perspective are invaluable for anyone interested in the future of eCommerce, DTC software, and the future consumer. 

Howard Doing What He Does Best

Let’s jump right in. What are you currently interested in within the DTC space?

Through our fund, we are invested in Narvar and Kustomer.com. We got involved in Narvar in 2016 and Kustomer in 2017. 

What do these companies do? 

Narvar is a logistics backend for delivery. The interface post-purchase. Say you’re at Nordstrom’s online and you bought something online but when you go back and check on your package in the next few days and you’re taken to some FedEx or UPS loop. This is not the Nordstrom experience. 

Narvar built it so the experience from Nordstrom post-purchase would look and feel like the brand. And from Crate & Barrel to Nordstrom they have really just won the business of post purchase.

Kustomer.com is seeking to be the next generation Zendesk. A modern platform built for an ecommerce generation.

From your perspective where is the excitement in DTC right now? 

It’s everything from Libra at Facebook to Shopify to Stripe to Venmo to Instagram to Facebook. You can’t go build a massive company on top of Instagram, but you can build a multi hundred million dollar eCommerce brand on top of Instagram and Twitter and Snapchat. What’s happening is you have all these brands that start out on Instagram and you may end up in a retail store in Soho. 

Everybody’s gunning for Amazon. It is like all these little Velociraptors nipping at them. But the eCommerce industry is so big there’s room for everybody. Amazon has state of the art software that they aren’t going to share. 

Small eCommerce like Dollar Shave Club or something we are invested in Manscape or a Mom and Pop on Spotify need state of the art customer support software and they need state of the art website design. You need to look like you’re big or the customer gets nervous. These software companies supporting the ecosystem are exciting to work with. 

So is it apt to use the age old Star Wars analogy of Amazon is the Dark Side and all the smaller software companies are like the Rebel Alliance?

They are the dark force. The consumers don’t look at it that way. Eventually every consumer is going to be screwed by Amazon. You’re either going to be working for a company Amazon is trying to eat or you’re trying to start a new business and Amazon is trying to eat you. But because of the way smartphones work, and the way social networks work, everybody kind of has a shot. 

You have to be creative. You have to understand marketing. You can’t just buy Facebook Ads. You have to know how to do everything from radio to podcasts to billboard ads. You’re gonna have to have marketing chops to rise above the din.

Do you think marketing is where it’s at?

Finally we’re back to a little more of an artistic bent. That is why you see companies like Lululemon and McDonald’s and Nike thriving. They have great marketing and do innovative and bold things and the little guy needs to keep up. 

What are you excited about?

As an investor I’m excited about software that helps the David attack the Goliath. I’m excited about being able to win best in simple ideas run by great marketers. I’m excited about how money is moving around through all this. People’s spending habits have changed dramatically. I mean once we had four seasons of clothing, I watch my kids and everything is just-in-time. 

You don’t have so much stuff. This next generation lives a lot lighter. It is a huge shift in everything. You may have more stuff in more places and less in one place. You can get anything you want within 24 hours. 

How important is the experience of purchasing? 

Purchasing is a commodity. The experience of buying is everything. Whether it’s Nike allowing you to customize your shoe or a brand knowing your size and sending you personalized collections.

It’s way more cool to buy a shoe online and design yourself. Once you’ve assembled what you want, you just want the transaction to happen. Now it’s the excitement of picking your colors and working with your brands and having them give you what you want. Personalization is the next wave of DTC.

You can read more of Howard’s thoughts on his blog at HowardLindzon.com.