1Mby1M Virtual Accelerator Investor Forum: With Jason Stoffer of Maveron (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Jason Stoffer was recorded in September 2014. 

Jason Stoffer, General Partner at Maveron – a consumer-only venture capital firm that has had a successful track record of investing in e-commerce ventures ranging from eBay, Shutterfly, and Groupon to the more recent Zulily, as well as education ventures – discusses e-commerce opportunities.

Sramana Mitra: Let’s start off with e-commerce. I know you have invested in other things. We’ll discuss your other investments and your investment thesis in more general terms as well. To begin with, let’s talk about a couple of your e-commerce investments. What is your current thought process around the industry?

Jason Stoffer: First, I’ll look at the macro environment. Our e-commerce sales are growing 15% year over year while at the same time, a lot of traditional retailers are suffering. You see decline in sales in places like Abercrombie and Barnes & Noble. You see Nordstrom’s online sales increase significantly. You see Home Depot saying, “We not going to open any more physical stores. We’re going to be focused on growing digital.

It’s an amazing environment and an amazing time for e-commerce. We’re a consumer venture capital fund looking to invest in people who are building big enduring brands. The question is, where are the places where you can invest in young companies that could potentially be a billion-dollar brand. We bucketed it into two areas.

The first area is e-commerce company selling products from multiple third-party brands. This is your modern-day equivalent of a Nordstrom or a Macy’s. Those would be a business like a Zulily. We break this world into two parts. One is you are shopping with intent. I want to buy a dehumidifier. It’s very hard to compete with Amazon in that regard. The other part is, you’re more like a shopping mall where you’re walking Nordstrom and you don’t really know what to buy.

You want to be surprised. You want to discover things. You could either have great personalization types of businesses like Zulily where they’re displaying items which they know you will like based on past behavior. You can have a business like Wayfair. If you compare looking for furnitures in Amazon versus Wayfair, Wayfair just has a much better user experience. What we are looking for are folks that are winning through better curation and better personalization.

The second bucket of e-commerce businesses we’re looking for are people creating their own proprietary brands. The next generation of big retailers is going to start online and move to multi-channel over time. Online is just a much more capital efficient way to reach early adopters and understand whether your brand concept has the ability to emotionally connect.

Over time, you’re seeing e-commerce businesses like Bonobos moving offline because you do need to meet your customers where they are, and be multi-channel. As a starting point, a lot of the next great brands are going to choose launching online as opposed to launching via the traditional routes.

Sramana Mitra: I am completely in agreement with you on the potential for brand building and building really sizable brands using online as the first channel to go to market. It’s much more cost-efficient. It’s much more doable. It’s much more boostrap-able. To get to financing, you have to show some traction and some formulation of your ideas into some sort of a business.

To get to that point, it’s much more cost-efficient to do that using online channels. You have invested in several e-commerce businesses. You have discussed Zulily. Zulily has come up in our previous session with Gus Tai. I believe Trinity and Maveron are both investors in Zulily. That is a company that has really done a great job of merchandising and curation.

That’s something that I feel is lost on people a little bit. At least in e-commerce, the way it has been looked at for a long time is everything was about price. Everything was about logistics. When you’re talking brand and discovery, that curation and merchandising is really at the heart of building a brand.

If you’re doing multi-brand retail online, it’s all about curation and merchandising. Even if you’re doing your own brand, it’s all really about merchandising that brand in a way that appeals to people.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Jason Stoffer of Maveron
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