Insider Access: Moonshot Brands' moonshot to build the next Procter & Gamble

Moonshot Brands, Jeff, and Octie go to space. A Joe Montana sighting. Gucci and Peloton do esports. How do you say "unicorn" in Hindi? And add some kale, acai berry, and coconut water.

“Insider Access” is where I talk with founders and CEOs, as they share with us what actually happened and the why behind the most pivotal moments in their company’s history. Please see below for prior interviews.

This week, we get to feature a founder who’s shepherding in the hottest space within ecommerce: Allan Fisch, co-founder of Moonshot Brands.

This Amazon and Shopify rollup company went through Y-Combinator’s latest batch and has already raised $160M to buy ecommerce brands.

Continue to read their how and why…

Casey Armstrong: You and Craig Isakow were in Y Combinator’s latest 2021 batch and have already raised $160M from Y Combinator, Liquid 2 Capital (Joe Montana’s VC firm), Garage Capital, N49P, and Victory Park Capital. What part of your story or pitch is the single biggest factor to raising so much capital so quickly?

Allan Fisch: One of the biggest factors was that we are an experienced team of operators at scale. I think the team behind a company is always the most important contributor to raising capital. Investors need to see you have the ability to execute in a big way. 

Here are some notes about our backgrounds:

I founded and successfully exited three companies: LeapPay, Mavencare, and the ecommerce site HomeSav. 

Craig scaled Shift.com (Nasdaq: SFT) to $100M in funding, launched a private label Amazon brand featured on ABC's Shark Tank, worked for AirBnB, and deployed billions of dollars while serving in the Federal Government. 

Our CIO Jesus Sotelo created a $4B portfolio of mortgage-backed securities and launched a $1B energy fund operation. While working at Bridgewater Associates, Sotelo managed a portfolio of over $150 billion.

CA: With billions raised this year by other ecommerce rollup companies -- Thrasio, HeyDay, Perch, Factory14, Intrinsic, Win Brands, Aestuary -- what makes Moonshot different? Why are you and Craig so uniquely positioned to have Moonshot emerge as a winner in this space?

AF: One of the main differentiators of Moonshot Brands is that we were created by founders for founders.

Not only do we offer sellers a seat at the table to continue building alongside us with a wealth of new resources, but we also offer sellers the ability to continue profiting and receive significant upside from the future growth of their brands.

Unlike some of our competitors which are exclusively focused on Amazon FBA businesses, we believe in an omnichannel future. We also aren’t exclusively focused on North America and take our brands to international markets.

Moonshot Brands is investing in proprietary technology, including machine learning technology that makes evaluating, acquiring, and optimizing brands more data-driven and streamlined than ever before. We use technology and a data-first approach to grow companies that we acquire in our portfolio.

CA: From a macro lens, why do you think so many venture capital firms, investment firms, and founders are bullish on the rollup concept right now? What factors are converging to make this arguably the hottest space in ecommerce?

AF: We’re at a historical moment right now.

New brands are being born every minute on Amazon and Shopify.

The advantages that the historical winners have held for half a century, like a lock on retail distribution and big budgets for TV advertising, are quickly evaporating. Now great products truly have the opportunity to compete. 

With a rollup, you have the opportunity to utilize the data across your entire portfolio to optimize your approach, distribution channels in place to expand to international markets, and omnichannel distribution strategies that can be replicated. 

Not only this, but most brands alone can’t support the cost of retaining the greatest minds in growth marketing, operations, and supply chain management.

However, multiple brands can support top tier talent due to the economy of scope.

Currently, there is no Proctor and Gamble of the ecommerce industry and that’s what many rollups are trying to achieve. 

Lastly, buying profitable companies and optimizing them is a lot less risky from an investor perspective than building something from scratch. 

CA: Thinking of the ecommerce founder flywheel -- found the company, scale the company, exit the company, then found another -- what do you think the proliferation of rollups will do to the industry? Do you think this concept is here to stay?

AF: Combining small firms into a larger company allows them to maximize resources, cut down on operational costs, and increase revenues is a strategy that is tried and true. Especially in industries with no clear dominant players. 

Amazon and DTC platforms like Shopify have allowed brands to serve niche markets better than ever before. With the shift to online buying only accelerating, rollups are here to stay. There will always be founders that either feel they have hit the ceiling of their ability to grow their business or are simply looking for a change. We’re here to arm these brands with the resources and expertise they need to reach the next level. 

Multi-brand platforms like Moonshot Brands are providing a fast and lucrative path for founders to exit and have their legacy safe in our hands. 

The proliferation of rollups is a major plus for the ecommerce industry. Unlike the tech sector, where buyers flow like the Nile, there weren't many options for ecommerce sellers until recently. 

We know because we encountered this problem when exiting our own ecommerce businesses. 

There were private equity firms usually myopically focused on short-term profits. For founders, this can be a Faustian bargain as private equity's profit strategy often involves gutting organizations and leaving employees and customers on the hook.

Then there were traditional brand aggregators whose deals often involved barring sellers from any gains on future growth. Selling your business at a 3x multiple, only to see it skyrocket to 10x, is a founder's worst nightmare. 

Moonshot Brands is a new and better alternative. We're focused on making money by generating value long-term, not by making deep internal cuts. Unlike other rollups, we offer founder's a piece of the pie— because we believe that when we attract visionary sellers, the pie gets bigger.

CA: Similar to how music artists will write songs to position themselves to go viral on TikTok, do you think we could see something similar happen here where founders launch brands to get acquired even more quickly by companies like Moonshot?

AF: There are a lot of visionary founders that will always be excited by the prospect of starting and building something new. I think Moonshot Brands gives founders like these the opportunity to continue creating game changing products and brands by giving them the financial freedom to fund their next venture, and continue profiting from the growth of the brands they exit. 

CA: What does the ideal Moonshot brand look like?

AF: We are looking for brands with strong financials generating between $2M and $30M in revenue that truly have the potential to grow into category leaders. Refer us somebody…we pay referral fees up to $200,000!

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Prior Insider Access interviews:

• Dhruv Saxena, CEO of ShipBob: He’s created a 9-figure revenue business by building a global fulfillment platform that supports over 5,000 brands.

• Ben Jabbawy, CEO of Privy: His company was acquired by Attentive after being down to just $1k several years prior.

• Adii Pienaar, Co-founder of WooCommerce, Conversio & Cogsy: He founded WooCommerce in the 2000s from South Africa and it now powers over 5M websites.

• Alek Koenig, CEO of Settle: He raised back-to-back rounds in less than six months from Founders Fund and Kleiner Perkins…as a first-time founder.

The State of Ecommerce

What’s happening in the ecosystem? Who’s up? Who’s down? Who’s building the future?

• So you’re buying a mattress? Yeah, buying some wallpaper, maybe get some flooring, stuff like that. Maybe Bed, Bath, & Beyond, I don't know, I don't know if we'll have enough time.

• 100 Thieves is so Gucci: Leading esports brand partners with 100-year-old Italian luxury fashion house to create $2500 backpacks made from recycled fishing nets. This is 2021. This will sell out. They better have their fulfillment on lock.

• Peloton, A Game: Like Netflix, Peloton is entering the video game space with Lanebreak to compete against Alex, Ally, Cody, and Emma.

• Apple Now, Apple Later: The latest entrant in the BNPL battle is Apple, as they take on Affirm, Afterpay, Klarna, Sezzle, zipPay, QuadPay, PayPal, and others.

• Shoppertainment: In 2020, ecommerce was therapy. In 2021 and beyond, many are betting that the US will follow the APAC video trends.

• The NBA goes posh: After 75 years, the NBA opens its first store in the UK. If you can name me one British NBA player without Googling it, I’ll buy you some swag.

• BigCommerce goes to LatAm: With over 130M consumers on their marketplace, Mercado Libre welcomes their first partnership with a major North American ecommerce platform in BigCommerce.

• Fees, Raises & Robots, oh my: From their 2020 lessons learned, UPS, FedEx, and DHL are in a full sprint to prepare for the peak holiday season.

• Amazon & Shopify Rollups, A Memo: If you don’t read Web Smith, start.

Acquisitions & IPOs

Liquidity events fuel the market, drive new innovation, and create new founders with deep experience and even deeper pockets. Who’s getting acquired? And who’s going public?

• One Amazon Warehouse: ROX Financial is looking to IPO one 146k square foot warehouse in the Bay Area by offering 8,250,000 shares for $10.

• Fast Radius: The Chicago-based cloud manufacturing company backed by UPS is looking to IPO via SPAC at a $1.4B valuation with ECP Environmental Growth Opportunities Corp.

• Paytm: The Indian digital payments giant looks to raise $2.2B in an IPO. They are backed by Alibaba, Berkshire Hathaway, and SoftBank. Founded in 2009, they claim over 300M users.

• BBQGuys: Along with Weber, Traeger, and Solo Stove, the Baton Rouge-based ecommerce platform for high-end BBQ grills has agreed to go public at a valuation of $963M via SPAC with Velocity Acquisition Corp.

• Off-White: After acquiring Tiffany & Co, Fenty, Christian Dior, and Rimowa in recent years, LVMH agreed to buy a 60% stake in Virgil Abloh's fashion label.

• Etro: LVMH fund L Catterton has agreed to buy a 60% stake in the Italian fashion company, valuing Etro close to $600M.

• Bliss Point Media: Nii Ahene strikes again acquiring the connected TV ad-buying shop for Tinuiti, which should push their collective revenue north of $250M.

Following the Money

Who are VCs betting on to lead the future of ecommerce?

• Swiggy: The India-based food delivery company raised $1.25B led by SoftBank and Prosus with participation from Falcon Edge Capital, Goldman Sachs, Accel, and others.

• Bolt: The San Francisco-based fast checkout startup raised a $333M Series D at a $4B valuation led by Hedosophia. The valuation is up nearly 5x from December, as they claim 6M registered users and expect 50M people to use their checkout service.

• Lenskart: The India-based omnichannel eyewear retailer raised $220M at a $2.5B valuation led by Temasek and Falcon Edge Capital. With 750 physical retail outlets across India, they sold 8M pairs of eyewear in 2020. They aim for 50% of India to be wearing their specs in the next 5 years. There are 1.4B people that live in India.

• JOKR: The New York-based grocery delivery startup raised a $170M Series A led by GGV Capital, Balderton Capital, and Tiger Global. This round comes three months after the company started operations in the US, Latin America, and Europe.

• Delhivery: The India-based logistics company raised $100M from FedEx, giving it a valuation of $3B.

• Fabric: The Seattle-based headless ecommerce platform raised $100M at an $850M valuation led by Stripes with participation from B Capital Group and Greycroft.

• GlobalBees: The India-based ecommerce rollup startup raised a $75M Series A led by FirstCry with participation from Lightspeed Venture Partners.

• Teikametrics: The Cambridge-based Amazon and Walmart optimization platform raised a $40M Series B led by Intel Capital.

• OpenStore: The Miami-based Shopify rollup startup raised a $30M Series A at a $250M valuation led by Khosla Ventures with participation from General Catalyst, Founders Fund, and Atomic.

• Taager: The Egypt-based social ecommerce platform raised $6.4M led by 4DX Ventures.

• Octane AI: The SoCal-based Shopify storefront startup raised $5M led by Javelin Venture Partners with participation from Bullpen Capital, General Catalyst, and Boost VC.
  Fun fact: Octane AI co-founder, Octie, beat Bezos to space.

In Closing

My new marketing hero is Oberon Sinclair.

She is responsible for making us all like kale, acai berry, and coconut water. Like a modern day Edward Bernays.

I need to step my game up.

Best,

Casey