🚨 WTF is happening to Ecom?!

Hello!

Return of the Chief Plug Officer.

Ready to get plugged in?

Here’s the 0.1% of marketing information today:

• 🔌 VC E-com Businesses = S*** Coin?! 💩

• 🔌 Reddit Wants That E-Commerce Money 💡

• 🔌 LVMH’s $500 Billion Chess Move 🏆

🔌 VC E-com Businesses = S*** Coin?!

What did people spend a lot of money on that has no value in 2023?

It’s not just frog JPEGS and Moon Coins.

It’s also a venture-backed e-commerce business.

What is happening?

A lot of companies have raised more than they are currently worth!

Ben Cogan did an amazing write up on LinkedIn:

Businesses under 1x money raised:

“Rent the Runway (Clothing rental). Raised: $683mm. Market Cap: $173mm. 0.25x Market Cap/Raised

- Smile Direct Club (Teeth aligners): Raised: $1.739B. Market Cap: $155mm. 0.09x Market Cap/Raised

- Allbirds (Footwear): Raised: $506mm. Market Cap: $187mm. 0.37x MC/R

- Blue Apron (Food): Raised: $692mm. Market Cap: $38mm. 0.05x MC/R

- Honest Co (Eco-friendly products): Raised: $916mm. Market Cap: $155mm. 0.17x MC/R

- Grove Collaborative (Bathroom products): Raised: $969mm. Market Cap: $87mm. 0.09x MC/R

- Boxed (Wholesale club): Raised: $700mm. Market Cap: $1mm. 0.00x MC/R

Businesses under 2.5x money raised:

- Warby Parker (Eyewear): Raised: $535mm. Market Cap: $1.22B. 2.28x MC/R

- Figs (Scrubs): Raised: $656mm. Market Cap: $1.1B. 1.83x MC/R

Businesses over 4.5x money raised:

- HelloFresh (Food): Raised: $746mm. Market Cap: $4.44B. 5.58x MC/R

- Wayfair (Furniture): Raised: $705mm. Market Cap: $3.85B. 5.46x MC/R

- Hims (Telemedicine): Raised: $513mm. Market Cap: $2.41B. 4.70x MC/R

The biggest winner is HelloFresh, which is worth about 5.6x as much as it raised.”

Why is this happening?

1. Bull market valuations - Everyone was adding an extra 0 to their valuation.

2. Rising interest rates - There’s no more free 0% money :(

3. Rising acquisition costs - iOS 14.5 + Covid fatigue.

4. Supply chain problems - Global fallout due to covid and US-China-Russia relations tightening.

What happens next?

Lots of awkward conversations.

Let’s say you gave 50% of your company for $50 million — valuing your company at $100 million.

If your company is now valued at $20 million, the investors will often have a clause that gets them their money back first.

So if the founder sold for $20 million — they could theoretically walk away with nothing!

This happened to FanDuel. They sold their company for $465 million — and the founders got $0.

🔌 Reddit Wants That E-Commerce Money

Do not sleep on Reddit.

It almost disappeared a few years ago.

But it’s the Dominoes Pizza of social networks – it’s compounding aggressively every single year.

This graph is WILD.

It’s never been more popular.

Eric Seufert announced on Twitter that It looks like Reddit is about to build an E-commerce advertising product 👀

Everybody wants some e-commerce advertising revenue.

PS. Do not sleep on Apple’s advertising business.

🔌 LVMH’s $500 Billion Chess Move

LVMH (Louis Vuitton, Moet, Hennessy) is the most valuable company in Europe - $500 billion!

Bernard Arnault, the chairman of LVMH, is the current richest man in the world at $206 billion.

What are split shares? - It’s when a company increases the number of shares in a company. So if they did a double split and you owned 1 share, you’d now own 2.

It’s standard practice.

LVMH are refusing to do this because it’s off-brand.

“Desirability is proportion to value… LVMH shares are also a luxury product!”

And with marketing chess moves like that, it’s why their business looks like this:

🔌 Daily Ad Plug

BMW (1965)

If you enjoyed this, forward this email to a friend or click the button below.

George Mack

Chief Plug Officer 🔌