We’ve aggregated many of the world’s best growth marketers into one community. Twice a month, we ask them to share their most effective growth tactics, and we compile them into this growth report.
This is how you stay up-to-date on growth marketing tactics — with advice that’s hard to find elsewhere.
Our community consists of 1,000 startup founders and VPs of growth from later-stage companies. We have 400 YC founders, plus senior marketers from companies including Medium, Docker, Invision, Intuit, Pinterest, Discord, Webflow, Lambda School, Perfect Keto, Typeform, Modern Fertility, Segment, Udemy, Puma, Cameo and Ritual .
Without further ado, on to our community’s advice.
Insights from Julian Shapiro of Demand Curve.
Even people who earn minimum wage can’t be bothered to refer a friend for a $25 referral fee. The most successful referral programs typically focus on app features that naturally incentivize users to invite friends and colleagues.
Yellow, the accelerator program launched by Snap in 2018, has selected ten companies to join its latest cohort.
The new batch of startups coming from across the U.S. and international cities like London, Mexico City, Seoul and Vilnius are building professional social networks for black professionals and blue collar workers, fashion labels, educational tools in augmented reality, kids entertainment, and an interactive entertainment production company.
The list of new companies include:
The latest cohort from Snap’s Yellow accelerator
Since launching the platform in 2018, startups from the Snap accelerator have gone on to acquisition (like Stop, Breathe, and Think, which was bought by Meredith Corp.) and to raise bigger rounds of funding (like the voiceover video production toolkit, MuzeTV, and the animation studio Toonstar).
Every company in the Yellow portfolio will receive $150,000 mentorship from industry veterans in and out of Snap, creative office space in Los Angeles and commercial support and partnerships — including Snapchat distribution.
TC Early Stage SF goes down on April 28, and we are getting pretty damn excited about it!
The show will bring together 50+ experts across startup core competencies, such as fundraising, operations and marketing. We’ll hear from VCs on how to create the perfect pitch deck and how to identify the right investors for you. We’ll hear from lawyers on how to navigate the immigration process when hiring, and how to negotiate the cap table. And we’ll hear from growth hackers on how to build a high-performance SEO engine, and PR experts on how to tell your brand’s story.
And that’s just the tip of the iceberg.
Today, I’m pleased to announce four more breakout sessions.
Toney is the founding managing partner of Plexo Capital, which was incubated and spun out from GV. Before Plexo, Toney was a partner with Comcast Ventures, where he led the Catalyst Fund, and then moved to GV where he focused on marketplace, mobile and consumer products. Toney also has operational experience, having served as the GM of Zynga Poker, the company’s largest franchise at the time.
Think Like a PM for VC Pitch Success
Your pitchdeck is not just a reflection of your business, it’s a product unto itself. Your startup’s success, and avoiding the end of your runway, depends on the conversion rate of that product. Hear from Plexo Capital founding partner Lo Toney about how thinking like a PM when crafting your pitch deck can produce outstanding results.
Shaw and Rubino are marketing consultants for Right Side Up, a growth marketing consultancy. Prior to Right Side Up, Shaw scaled podcast campaigns for brands like quip, Lyft and Texture, and has worked with brands like McDonald’s, Honda, ampm, and Tempur Sealy. Rubino has worked with companies across all stages and sizes, including Advil, DoorDash, P&G, Lyft and Stitch Fix.
Why You Need Podcasts in Your Growth Marketing Mix
Podcast advertising is widely viewed as a nascent medium, but smart companies know it can be a powerful channel in their marketing mix. Opportunity is ripe — get in early and you can own the medium, box out competitors and catapult your growth. Krystina Rubino and Lindsay Piper Shaw have launched and scaled successful podcast ad campaigns for early-stage startups and household name brands and will be sharing their strategies for companies to succeed in this often misunderstood channel.
Jake Saper, the son of serial co-founders, has been obsessed with entrepreneurialism from a young age. His origin in venture capital started at Kleiner Perkins, and he moved on to become a partner at Emergence in 2014, where he became a Kauffman Fellow. He serves on the boards of Textio, Guru, Ironclad, DroneDeploy, and Vymo, and his self-described “nerdy love” of frameworks has only grown over the years.
When It Comes to Fundraising, Timing Is Everything
There are some shockingly common timing mistakes founders make that can turn an otherwise successful fundraise into a failure. We’ll talk through how to avoid them and how to sequence efforts from the time you close your seed to ensure you find the right partner (at the right price!) for Series A and beyond.
Conyers has been in the communications industry for 15 years, currently serving as the senior director of Corporate Communications at Postmates . Before Postmates, Conyers served as a VP at Brew PR, working with clients like Automattic, NetSuite, Oracle, Doctor on Demand and about.me. During that time, she also found herself on BI’s “The 50 Best Public Relations People In The Tech Industry In 2014” list.
The Media Is Misunderstood, But Your Company Shouldn’t Be
With the media industry in a state of flux, navigating the process of telling your story can be confusing and overwhelming. Hear from Postmates Senior Director of Corporate Communication April Conyers on how startups should think about PR, and how to get your message across in a hectic media landscape.
Early Stage SF goes down on April 28, with more than 50 breakout sessions to choose from. However, don’t worry about missing a breakout session, because transcripts from each will be available to show attendees. And most of the folks leading the breakout sessions have agreed to hang at the show for at least half the day and participate in CrunchMatch, TechCrunch’s great app to connect founders and investors based on shared interests.
Here’s the fine print. Each of the 50+ breakout sessions is limited to around 100 attendees. We expect a lot more attendees, of course, so signups for each session are on a first-come, first-serve basis. Buy your ticket today and you can sign up for the breakouts we are announcing today, as well as those already announced. Pass holders will also receive 24-hour advance notice before we announce the next batch. (And yes, you can “drop” a breakout session in favor of a new one, in the event there is a schedule conflict.)
So get your TC Early Stage: San Francisco pass today, and get the inside track on the sessions we announced today, as well as the ones to be announced in the coming weeks.
Undisclosed influencer marketing posts on social media should trigger financial penalties, according to a statement released today by the Federal Trade Commission’s Rohit Chopra. The FTC has voted 5-0 to approve a Federal Register notice calling for public comments on questions related to whether The Endorsement Guides for advertising need to be updated.
“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” Chopra writes. “The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability.”
Currently the non-binding Endorsement Guides stipulate that “when there is a connection between an endorser and a seller of an advertised product that could affect the weight or credibility of the endorsement, the connection must be clearly and conspicuously disclosed.” In the case of social media, that means creators need to note their post is part of an “ad,” “sponsored” content or “paid partnership.”
But Chopra wants the FTC to consider making those rules official by “Codifying elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19.” He cites weak enforcement to date, noting that in the case of department store Lord & Taylor not insisting 50 paid influencers specify their posts were sponsored, “the Commission settled the matter for no customer refunds, no forfeiture of ill-gotten gains, no notice to consumers, no deletion of wrongfully obtained personal data, and no findings or admission of liability.”
Strangely, Chopra fixates on Instagram’s Branded Content Ads that let marketers pay to turn posts by influencers tagging brands into ads. However, these ads include a clear “Sponsored. Paid partnership with [brand]” and seem to meet all necessary disclosure requirements. He also mentions concerns about sponcon on YouTube and TikTok.
Additional targets of the FTC’s review will be use of fake or incentivized reviews. It’s seeking public comment on whether free or discounted products influence reviews and should require disclosure, how to handle affiliate links and whether warnings should be posted by advertisers or review sites about incentivized reviews. It also wants to know about how influencer marketing affects and is understood by children.
Chopra wisely suggests the FTC focus on the platforms and advertisers that are earning tons of money from potentially undisclosed influencer marketing, rather than the smaller influencers themselves who might not be as well versed in the law and are just trying to hustle. “When individual influencers are able to post about their interests to earn extra money on the side, this is not a cause for major concern,” he writes, but “when we do not hold lawbreaking companies accountable, this harms every honest business looking to compete fairly.”
While many of the social media platforms have moved to self-police with rules about revealing paid partnerships, there remain gray areas around incentives like free clothes or discount rates. Codifying what constitutes incentivized endorsement, formally demanding social media platforms to implement policies and features for disclosure and making influencer marketing contracts state that participation must be disclosed would all be sensible updates.
Society has enough trouble with misinformation on the internet, from trolls to election meddlers. They should at least be able to trust that if someone says they love their new jacket, they didn’t secretly get paid for it.
As sales increase, most founders tend to double down on what already works to keep growing. But few consider expanding laterally — taking a business model or product that already works and bringing it to a new geographical market. After all, it can seem like a risky move at first, as customers often differ drastically culturally and socioeconomically across borders.
Despite their core differences, people around the world inevitably share many of the same pain points in their daily lives and while doing business. Sure, you might not be able to tap into your domestic relationships, keep your existing go-to-market strategy or even reuse your messaging while entering a new market. But that’s why expanding internationally is hard and something few founders can do well.
When I first started Deltapath, we focused primarily on the U.S. market. But since 2001, we’re now serving customers in 94 countries.
Each time my team expands to a new market, we consider four primary factors before we launch. These considerations will help you avoid costly hurdles and allow you to achieve the best results possible without having to reinvent the wheel with every new launch.
On the same day that a data ethics advisor to the UK government has urged action to regulate online targeting a study conducted by pro-privacy browser Brave has highlighted how Brits are being profiled by the behavioral ad industry when they visit their local Council’s website — perhaps seeking info on local services or guidance about benefits including potentially sensitive information related to addiction services or disabilities.
Brave found that nearly all UK Councils permit at least one company to learn about the behavior of people visiting their sites, finding that a full 409 Councils exposed some visitor data to private companies.
While many large councils (serving 300,000+ people) were found exposing site visitors to what Brave describes as “extensive tracking and data collection by private companies” — with the worst offenders, London’s Enfield and Sheffield City Councils, exposing visitors to 25 data collectors apiece.
Brave argues the findings represent a conservative illustration of how much commercial tracking and profiling of visitors is going on on public sector websites — a floor, rather than a ceiling — given it was only studying landing pages of Council sites without any user interaction, and could only pick up known trackers (nor could the study look at how data is passed between tracking and data brokering companies).
Nor is the first such study to warn that public sector websites are infested with for-profit adtech. A report last year by Cookiebot found users of public sector and government websites in the EU being tracked when they performed health-related searches — including queries related to HIV, mental health, pregnancy, alcoholism and cancer.
Brave’s study — which was carried out using the webxray tool — found that almost all (98%) of the Councils used Google systems, with the report noting that the tech giant owns all five of the top embedded elements loaded by Council websites, which it suggests gives the company a god-like view of how UK citizens are interacting with their local authorities online.
The analysis also found 198 of the Council websites use the real-time bidding (RTB) form of programmatic online advertising. This is notable because RTB is the subject of a number of data protection complaints across the European Union — including in the UK, where the Information Commissioner’s Office (ICO) itself has been warning the adtech industry for more than half a year that its current processes are in breach of data protection laws.
However the UK watchdog has preferred to bark softly in the industry’s general direction over its RTB problem, instead of taking any enforcement action — a response that’s been dubbed “disastrous” by privacy campaigners.
One of the smaller RTB players the report highlights — which calls itself the Council Advertising Network (CAN) — was found sharing people’s data from 34 Council websites with 22 companies, which could then be insecurely broadcasting it on to hundreds or more entities in the bid chain.
Slides from a CAN media pack refer to “budget conscious” direct marketing opportunities via the ability to target visitors to Council websites accessing pages about benefits, child care and free local activities; “disability” marketing opportunities via the ability to target visitors to Council websites accessing pages such as home care, blue badges and community and social services; and “key life stages” marketing opportunities via the ability to target visitors to Council websites accessing pages related to moving home, having a baby, getting married or losing a loved one.
This is from the Council Advertising Network's media pack. CAN is a small operation. They are just trying to take a small slide of the Google and IAB "real-time bidding" cake. But this gives an insight in to how insidious this RTB stuff is. pic.twitter.com/b1tiZi1p4P
Brave’s report — while a clearly stated promotion for its own anti-tracking browser (given it’s a commercial player too) — should be seen in the context of the ICO’s ongoing failure to take enforcement action against RTB abuses. It’s therefore an attempt to increase pressure on the regulator to act by further illuminating a complex industry which has used a lack of transparency to shield massive rights abuses and continues to benefit from a lack of enforcement of Europe’s General Data Protection Regulation.
And a low level of public understanding of how all the pieces in the adtech chain fit together and sum to a dysfunctional whole, where public services are turned against the citizens whose taxes fund them to track and target people for exploitative ads, likely contributes to discouraging sharper regulatory action.
But, as the saying goes, sunlight disinfects.
Asked what steps he would like the regulator to take, Brave’s chief policy officer, Dr Johnny Ryan, told TechCrunch: “I want the ICO to use its powers of enforcement to end the UK’s largest data breach. That data breach continues, and two years to the day after I first blew the whistle about RTB, Simon McDougall wrote a blog post accepting Google and the IAB’s empty gestures as acts of substance. It is time for the ICO to move this over to its enforcement team, and stop wasting time.”
We’re reached out to the ICO for a response to the report’s findings.
Online commerce accounted for nearly $518 billion in revenue in the United States alone last year. The growing number of online marketplaces like Amazon and eBay will command 40% of the global retail market in 2020. As the number of digital offerings — not only marketplaces but also online storefronts and company websites — available to consumers continues to grow, the primary challenge for any online platform lies in setting itself apart.
The central question for how to accomplish this: Where does differentiation matter most?
A customer’s ability to easily (and accurately) find a specific product or service with minimal barriers helps ensure they feel satisfied and confident with their choice of purchase. This ultimately becomes the differentiator that sets an online platform apart. It’s about coupling a stellar product with an exceptional experience. Often, that takes the form of simple, searchable access to a wide variety of products and services. Sometimes, it’s about surfacing a brand that meets an individual consumer’s needs or price point. In both cases, platforms are in a position to help customers avoid having to chase down a product or service through multiple clicks while offering a better way of comparing apples to apples.
To be successful, a company should adopt a consumer-first philosophy that informs its product ideation and development process. A successful consumer-first development resides in a company’s ability to expediently deliver fresh features that customers actually respond to, rather than prioritize the update that seems most profitable. The best way to inform both elements is to consistently collect and learn from customer feedback in a timely way — and sometimes, this will mean making decisions for the benefit of consumers versus what is in the best interest of companies.
Did you notice a recent change to how Google search results are displayed on the desktop?
I noticed something last week — thinking there must be some kind of weird bug messing up the browser’s page rendering because suddenly everything looked similar: A homogenous sea of blue text links and favicons that, on such a large expanse of screen, come across as one block of background noise.
I found myself clicking on an ad link — rather than the organic search result I was looking for.
Here, for example, are the top two results for a Google search for flight search engine ‘Kayak’ — with just a tiny ‘Ad’ label to distinguish the click that will make Google money from the click that won’t…
Turns out this is Google’s latest dark pattern: The adtech giant has made organic results even more closely resemble the ads it serves against keyword searches, as writer Craig Mod was quick to highlight in a tweet this week.
There's something strange about the recent design change to google search results, favicons and extra header text: they all look like ads, which is perhaps the point? pic.twitter.com/TlIvegRct1
— Craig Mod (@craigmod) January 21, 2020
Last week, in its own breezy tweet, Google sought to spin the shift as quite the opposite — saying the “new look” presents “site domain names and brand icons prominently, along with a bolded ‘Ad’ label for ads”:
Last year, our search results on mobile gained a new look. That’s now rolling out to desktop results this week, presenting site domain names and brand icons prominently, along with a bolded “Ad” label for ads. Here’s a mockup: pic.twitter.com/aM9UAbSKtv
— Google SearchLiaison (@searchliaison) January 13, 2020
But Google’s explainer is almost a dark pattern in itself.
If you read the text quickly you’d likely come away with the impression that it has made organic search results easier to spot since it’s claiming components of these results now appear more “prominently” in results.
Yet, read it again, and Google is essentially admitting that a parallel emphasis is being placed — one which, when you actually look at the thing, has the effect of flattening the visual distinction between organic search results (which consumers are looking for) and ads (which Google monetizes).
Another eagle-eyed user Twitter, going by the name Luca Masters, chipped into the discussion generated by Mod’s tweet — to point out that the tech giant is “finally coming at this from the other direction”.
They're finally coming at this from the other direction:https://t.co/XYkHjVrE8X
— Luca K. B. Masters (@lkbm) January 21, 2020
‘This’ being deceptive changes to ad labelling; and ‘other direction’ being a reference to how now it’s organic search results being visually tweaked to shrink their difference vs ads.
Google previously laid the groundwork for this latest visual trickery by spending earlier years amending the look of ads to bring them closer in line with the steadfast, cleaner appearance of genuine search results.
Except now it’s fiddling with those too. Hence ‘other direction’.
Masters helpfully quote-tweeted this vintage tweet (from 2016), by journalist Ginny Marvin — which presents a visual history of Google ad labelling in search results that’s aptly titled “color fade”; a reference to the gradual demise of the color-shaded box Google used to apply to clearly distinguish ads in search results.
Those days are long gone now, though.
— Ginny Marvin (@GinnyMarvin) July 25, 2016
Now a user of Google’s search engine has — essentially — only a favicon between them and an unintended ad click. Squint or you’ll click it.
This visual trickery may be fractionally less confusing in a small screen mobile environment — where Google debuted the change last year. But on a desktop screen these favicons are truly minuscule. And where to click to get actual information starts to feel like a total lottery.
A lottery that’s being stacked in Google’s favor because confused users are likely to end up clicking more ad links than they otherwise would, meaning it cashes in at the expense of web users’ time and energy.
Back in May, when Google pushed this change on mobile users, it touted the tweaks as a way for sites to showcase their own branding, instead of looking like every other blue link on a search result page. But it did so while simultaneously erasing a box-out that it had previously displayed around the label ‘Ad’ to make it stand out.
That made it “harder to differentiate ads and search results,” as we wrote then — predicting it will “likely lead to outcry”.
There were certainly complaints then. And there will likely be more now — given the visual flattening of the gap between ad clicks and organic links looks even more confusing for users of Google search on desktop.
We reached out to Google to ask for a response to the latest criticism that the new design for search results makes it almost impossible to distinguish between organic results and ads. But the company ignored repeat requests for comment.
Of course it’s true that plenty of UX design changes face backlash, especially early on. Change in the digital realm is rarely instantly popular. It’s usually more ‘slow burn’ acceptance.
But there’s no consumer-friendly logic to this one. (And the slow burn going on here involves the user being cast in the role of the metaphorical frog.)
Instead, Google is just making it harder for web users to click on the page they’re actually looking for — because, from a revenue-generating perspective, it prefers them to click an ad.
It’s the visual equivalent of a supermarket putting a similarly packaged own-brand right next to some fancy branded shampoo on the shelf — in the hopes a rushed shopper will pluck the wrong one. (Real life dark patterns are indeed a thing.)
It’s also a handy illustration of quite how far away from the user Google’s priorities have shifted, and continue to drift.
“When Google introduced ads, they were clearly marked with a label and a brightly tinted box,” says UX specialist Harry Brignull. “This was in stark contrast to all the other search engines at the time, who were trying to blend paid listings in amongst the organic ones, in an effort to drive clicks and revenue. In those days, Google came across as the most honest search engine on the planet.”
Brignull is well qualified to comment on dark patterns — having been calling out deceptive design since 2010 when he founded darkpatterns.org.
“I first learned about Google in the late 1990s. In those days you learned about the web by reading print magazines, which is charmingly quaint to look back on. I picked up a copy of Wired Magazine and there it was – a sidebar talking about a new search engine called ‘Google’,” he recalled. “Google was amazing. In an era of portals, flash banners and link directories, it went in the opposite direction. It didn’t care about the daft games the other search engines were playing. It didn’t even seem to acknowledge they existed. It didn’t even seem to want to be a business. It was a feat of engineering, and it felt like a public utility.
“The original Google homepage was recognised a guiding light of purism in digital design. Search was provided by an unstyled text field and button. There was nothing else on the homepage. Just the logo. Search results were near-instant and they were just a page of links and summaries – perfection with nothing to add or take away. The back-propagation algorithm they introduced had never been used to index the web before, and it instantly left the competition in the dust. It was proof that engineers could disrupt the rules of the web without needing any suit-wearing executives. Strip out all the crap. Do one thing and do it well.”
“As Google’s ambitions changed, the tinted box started to fade. It’s completely gone now,” Brignull added.
The one thing Google very clearly wants to do well now is serve more ads. It’s chosen to do that deceptively, by steadily — and consistently — degrading the user experience. So a far cry from “public utility”.
And that user-friendly Google of old? Yep, also completely gone.
Lately, the venture community’s relationship with advertising tech has been a rocky one.
Advertising is no longer the venture oasis it was in the past, with the flow of VC dollars in the space dropping dramatically in recent years. According to data from Crunchbase, adtech deal flow has fallen at a roughly 10% compounded annual growth rate over the last five years.
While subsectors like privacy or automation still manage to pull in funding, with an estimated 90%-plus of digital ad spend growth going to incumbent behemoths like Facebook and Google, the amount of high-growth opportunities in the adtech space seems to grow narrower by the week.
Despite these pains, funding for marketing technology has remained much more stable and healthy; over the last five years, deal flow in marketing tech has only dropped at a 3.5% compounded annual growth rate according to Crunchbase, with annual invested capital in the space hovering just under $2 billion.
Given the movement in the adtech and martech sectors, we wanted to try to gauge where opportunity still exists in the verticals and which startups may have the best chance at attracting venture funding today. We asked four leading VCs who work at firms spanning early to growth stages to share what’s exciting them most and where they see opportunity in marketing and advertising:
Several of the firms we spoke to (both included and not included in this survey) stated that they are not actively investing in advertising tech at present.
In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases.
Interactive characters — fictional, virtual personas capable of personalized interactions — are defining new territory in entertainment. In my guide to the concept of “virtual beings,” I outlined two categories of these characters:
Today’s discussion focuses on virtual influencers: fictional characters that build and engage followings of real people over social media. To explore the topic, I spoke with two experienced entrepreneurs:
Salesforce turned 20 this year, and the most successful pure enterprise SaaS company ever showed no signs of slowing down. Consider that the company finished the year on an $18 billion run rate, rushing toward its 2022 revenue goal of $20 billion. Oh, and it also spent a tidy $15.7 billion to buy Tableau this year in the most high-profile and expensive acquisition it’s ever made.
Co-founder, chairman and CEO Marc Benioff published a book called Trailblazer about running a socially responsible company, and made the rounds promoting it. In fact, he even stopped by TechCrunch Disrupt in San Francisco in September, telling the audience that capitalism as we know it is dead. Still, the company announced it was building two more towers in Sydney and Dublin.
It also promoted Bret Taylor just last week, who could be in line as heir apparent to Benioff and co-CEO Keith Block whenever they decide to retire. The company closed the year with a bang with a $4.5 billion quarter. Salesforce, for the most part, has somehow been able to balance Benioff’s vision of responsible capitalism while building a company makes money in bunches, one that continues to grow and flourish, and that’s showing no signs of slowing down anytime soon.
The company just keeps churning out good quarters. Here’s what this year looked like:
It wasn’t that long ago that digitally-native, vertically-integrated brands (DNVBs) were the talk of the startup world.
Venture capitalists and founders watched as Warby Parker, Casper, Glossier, Harry’s and Honest Company became the belles of the D2C ball, trotting their way towards unicorn valuations. Not long after, the “startup studio” was unmasked as the elusive unicorn breeding grounds (think Hims). Today, there’s yet another buzzword that’s all the rage and it goes by the name “D2C Holding Company.” And it’s not going away anytime soon.
In 2017, DNVBs were a game-changer. Different than e-commerce, DNVBs sell products online directly to consumers and maintain control and transparency through each stage of the production and distribution process, all without the involvement of middlemen. This allows DNVBs to determine where and how their products are sold and to collect customer data that helps optimize their marketing strategies.
DNVBs have exploded over the last decade, growing sales and venture capital funding at a rapid pace. These brands use digital engagement strategies to create stronger relationships with consumers, which — when implemented alongside captivating content — contribute heavily to brand success by increasing customer LTV and creating compounding unit economics.
In the last three years alone, more DNVBs have launched than in the entirety of the previous decade.
While this growth is encouraging, the problem is that these DNVBs are raising so much venture capital that in order to meet the return requirements of their investors, they need a significant purchase offer or IPO valuation. With more than 85 percent of acquisitions happening below $250 million in purchase price, strategic acquisitions offers that meet investor expectations are few and far between.
This ultimately creates a state of startup purgatory where DNVBs have no choice but to take a downround to find a lifeline — sorry, Honest Company — making it difficult to develop disciplined operational habits and achieve sustainable growth. With these challenges becoming more glaringly apparent in recent years, there came a need for a new approach to D2C at large. Enter the modern D2C holding company.
Today’s version of the holding company model takes what companies like Procter & Gamble and Unilever did in the 1950s and modernizes it for the existing D2C market. Instead of taking a siloed approach, brands pool resources, operational costs and institutional knowledge to accelerate growth and achieve profitability at a faster rate.
DNVB darlings Harry’s and Glossier are great examples of this. Harry’s diversification efforts have been centerstage as the company works to grow beyond men’s grooming to include personal care for men and women, household items and baby products. In May, Edgewell Personal Care, which owns brands like Schick, Banana Boat, and Wet Ones, acquired Harry’s for $1.37 billion. Glossier is also working to diversify its portfolio, with the launch of Glossier Play, a younger, more colorful sister brand to its original.
For DNVBs to successfully pivot to a holding company model, they will need to prioritize 1) diversification to satisfy customers’ short attention spans, 2) a data-first mindset to deliver the best possible customer experience, and 3) operational and capital efficiency to not only stay afloat, but thrive.
The landscape for D2C holding companies is just starting to take shape, but here are some of the key players who have adopted this approach and are finding early success:
A startup that’s built cross-channel growth marketing platform — used by businesses to capture customers across whatever digital media they happen to be using — is today announcing funding to do some growing of its own. Iterable — which uses email, push and in-app notifications, SMS and other sources to interact with users and deliver them targeted, personalised marketing messages — has closed another $60 million in funding, a Series D that it’s going to use to continue scaling its business into more markets (it’s recently expanded in Europe with a London office), and with more hiring.
“This is about being prepared because of the uncertainty in the wider market,” said co-founder and CEO Justin Zhu said in an interview. “We are not sure what might happen next year.” The bigger trend in marketing tech is around consolidation and the building of “marketing clouds” by large players like Adobe and Salesforce, so it’s notable that Zhu said that while Iterable is continuing to grow — it has the startup’s focus will be on remaining independent and turning profitable.
“It’s about getting to breakeven and then beyond that,” he said.
This latest round, a Series D, is being led by Viking Global Investors — the huge investment firm and hedge fund that has backed the likes of Facebook and security firm Druva, but also a range of biotech and pharma companies — with participation from previous investors CRV, Index Ventures, Blue Cloud Ventures, Harmony Partners, and Stereo Capital.
The company has now raised $140 million in total. Zhu described the valuation as a “very healthy increase,” and while he is not talking specific numbers, Iterable’s Series C came in at $275 million post-money, according to PitchBook, which makes this latest round definitely higher than $325 million. (We’ll keep trying to get a more specific number.)
A lot of marketing startups have their beginnings in the world of — no surprises here — marketing, which is to say that of the people who have had direct experience in dealing with the pain points of how legacy marketing products work, some of the more enterprising go on to found companies to try to solve those problems.
Iterable has a bit of a different origin story in that its founders come from technical backgrounds. Zhu co-founded Iterable with Andrew Boni six years ago, but before then, both of them cut their teeth as engineers, at Twitter and Google respectively (and they are both young: they started the company while in their twenties, and this is only Zhu’s second job out of university).
It was at Twitter that Zhu identified a gap between the amount of data that a company has on users, and how it’s not used as well as it could be to grow that company’s business, especially when that business is not already a tech company — and sometimes, even when it is: Twitter has yet to sign on as an Iterable customer, but Square, the other business led by Jack Dorsey, is.
“There are a lot of great ideas and things that became experiments at Twitter,” he said, “but I noticed that only a very few companies — the biggest, most qualified technology companies — could execute a variety of different growth marketing efforts. Many most likely don’t have the right people or experience.” As Zhu describes it, there are not that enough people building significant innovations in how marketing works, because they lack the technical chops to do so (they instead come from development and marketing backgrounds).
That challenge further has become a little more complicated in more recent times, for another reason, which is that we’re in a moment where it feels like marketing is the bad guy. The rise of stronger data protection and privacy rules, for example with GDPR in Europe, plus consumers’ wider awareness and subsequent have led to a collective rejection of too much tracking of their online activity.
The idea with Iterable — as its name implies — is that you’re given a platform to iterate, to try out lots of different approaches across a range of different platforms, leveraging data that you already have and can use, or that you are able to get from users as part of the campaign, to build out your relationships and engagement, to see what works and what definitely does not.
This can either be to bring in more eyeballs and visitors (in the case of a company that, say, offers ‘free’ services and makes money on advertising), or more straight sales by way of offering discounts, insights on offers for things you might want or other incentives to buy things.
The company’s customer list includes companies like Zillow, Priceline Care.com and Fender, which speaks to how it targets companies that span not those who are digitally native businesses (but not necessarily the newest of the pack), but also those that are legacy companies that need to figure out how to leverage digital channels better to continue connecting with more, newer, and younger audiences.
There are upwards of 7,000 companies in the wider space of marketing technology today, Zhu estimates, which speaks to just how much more activity we’re likely to see in this area: the big fish will eat the tastiest smaller fish, while other fish will not manage to grow and will disappear.
But equally, we’re also seeing an interesting evolution, where paths are emerging for the most promising of the lot to carve out independent places for their particular services, independent of the biggies (en route to becoming biggies themselves, perhaps). For example, the data warehousing startup Snowflake — covering one of the big components that martech efforts need to work — is now valued at around $4 billion and is showing no signs of slowing down.
That’s a path that Iterable wants to follow, too, with this round to help it get there.
We live in the world of ‘best of breed’ coming together, which for us is about partnering with the best analytics and data warehousing companies,” Zhu said. “There are many options today that don’t entail getting acquired by a bigger player.”