Austin Gardner-Smith’s Post

Exit a business for $20M, buy it back a year later for $6M - good deal, eh? Encountered several subscription box business deals a week ago, and been diving deep into the dynamics of the subscription box market - wow, what a journey! Subscription boxes are a 10-year old industry, but it’s also a complex arena with unique challenges. Here’s a bit of what I’ve learned – thought I’d share some insights that might help fellow entrepreneurs and investors navigating this space. 1. Valuation Variances: Valuation expectations can vary significantly. Understanding industry benchmarks is crucial. It’s not just about the numbers; it’s about sustainable, value-driven growth. Recurring revenue tends to command higher multiples, but high churn and inventory costs don’t equate to SaaS-like multiples 2. Operational Insights: Transition periods are pivotal. Whether it’s a leadership change or scaling operations, the continuity of expertise and maintaining operational integrity is a game changer. A $30M box sold to an aggregator in 2021 only to go into the red and bought out by the founders for 30 cents on the dollar (since the aggregator was a public company, it’s all in their annual reports). Oh, and inventory demand planning is a science and an art here 3. Customer Retention: Here’s a golden nugget – customer lifetime value (LTV) and churn rates are make-or-break metrics in this industry. Optimizing these can dramatically alter the trajectory of your business. The industry average is at least double the normal “subscribe and save” ecom churn, and way higher than SaaS churn. If a customer stays for 9–12 months, that’s considered very good. 4. Strategic Fit: community- and content-driven brands seem to be the only ones surviving and thriving in this space. #InvestmentInsights #SubscriptionBoxIndustry

Hims & Hers just reported Q2 earnings - and this company is on fire 🔥 Quick look (YoY): Revenue: +52% Free Cash Flow: + 377% HIMS continues to be the perfect application of the DTC business model, expanding margins at a bonkers rate - let’s dive into the report👇👇 1) Revenue Revenue was up 43% YoY to ~$316MM in 2Q24. This was driven by an increase of active subscribers of 43% to 1.864M - a crazy number. On average these subscribers are spending $57 per month on Hims - up 8% from $53 a year ago. AOV was up to $121 from $95, or +27% YoY The key call out here is that Hims' 52% YoY revenue growth is not only driven by increases in customer acquisition. but they are actually EXPANDING revenue per customer. It literally looks like a SaaS company 2) Gross Margin GM has always been a strength of Hims' - in many ways, its what's responsible for most of their successes. It was interesting to see a 4th consecutive quarter of flat to down GM. The company called out GM compression due to the cost structure of new offerings. 3) Marketing MER was 2.17, up from 1.96 a year ago Contribution margin of $145M represents a ratio of 35%, up from 30% last year 5 full points of contribution expansion while growing over 50%: 4) Unit economics The unit economics of Hims are what every DTC operator should be striving for: AOV: 121 COGS/Order: 18 Marketing/Order: 23 Contribution Margin/Order: 5) Cash flow This combination of unit economics + growth is why investors LOVE software - hims is doing it in a HUGE consumer market. 2Q23 Cash Flow: $16.8m 2Q24 Cash Flow: $53.6m Good unit economics + strong growth = massive operating leverage. It's like 1+1=6 As far as valuation goes - I think $HIMS is officially priced perfectly. Im more than happy to Approximately 20x FCF (3x sales) for this high of growth and upside. The stock ran up a ton, and grew into its valuation perfectly after the GLP-1 announcement. This Friday, we will be diving deeper into the $HIMS earnings report in my newsletter. You will also gain access to the spreadsheets used to create my analysis, as always! link to subscribe pinned on my profile!

Transforming Mornings, One Bowl at a Time: Oats Overnight's Path to a $100M+ Run Rate With over $20M raised from leading investors and a dominant presence on shelves at Whole Foods Market, Walmart, and Wegmans Food Markets, Oats Overnight isn't just participating in the breakfast market—they're leading it towards a future where convenience meets nutrition at a $100M+ run rate. Working together, Oats Overnight and Drivepoint have achieved outstanding successes: ✔️ A $4M boost in EBITDA, a testament to Drivepoint's strategic acumen. ✔️ The closure of a substantial $20M Series A funding round. ✔️ A near-perfect forecast accuracy rate of 98%. Read more about it below. #oatsovernight #drivepoint #strategicgrowth #financialinsights #investment #breakfastrevolution

📣 Game changing announcement 📣 Stamped & Repeat have officially joined forces to become an unbeatable retention weapon To the lifecycle & retention marketers.. 💡"work smarter not harder" is what this tool is all about by allowing you to automate & enrich workflows designed to move someone to their next order, ultimately giving you more time to deliver on retention outcomes To the brands eager to give each customer the *most* personalized, frictionless experience in channel.. 🔁 Repeat is a truly unique tool that boosts repurchase rates by delivering personalized messaging at key, high-leverage moments ie. primed for cross-sell, primed for subscription upsell, due to replenish, about to lapse & ready for sample upsell Together Stamped & Repeat gives you the power to proactively drive customers into the repurchase cycle through a combination of: 🌟 social proof in reviews 🏆 incentivizations through loyalty 🤓 hyper-personalization with Repeat Quietly it's been an incredible experience joining forces with the Repeat team, now it's time to get loud... stay tuned 😉 Read more on the merger details below & if you're eager to learn more on Repeat & the no-brainer use cases shoot me a DM 💪

Exciting news to share today: Stamped is joining forces with Repeat! I got introduced to Kim Stiefel and Sarah Wissel back in February, and it felt like a perfect fit right out of the gate. Repeat had evolved out of the needs of their own CPG brand, the product immediately clicked for me from the first demo, and most importantly - I've never heard customers talk about a software company the way Repeat's did when I got to speak to a few of them. That's a function not only of how much the Repeat team has put into those customer relationships & the core product, but also how big of a need Repeat is addressing in the personalization space. Back when I was at Away, we had an A+ retention marketing team. I had an awesome team of 7 on the data side, and much of their time went toward partnering to drive marketing outcomes. We were growing topline fast on the back of a balanced ads + brand acquisition strategy. We had an expanding product set meant to boost LTV in an otherwise low-repeat luggage category (backpacks, accessories, duffels, etc). And we had a big valuation that was predicated on that LTV story expanding. Basically, we had all of the people and motivation in the world to figure out how to maximize re-engagement and repeat business. And still, it was incredibly difficult to actually deliver the personalized experience that we knew we needed to. Like any other company, the product catalog was optimized for website merchandising, not marketing. 5 versions of the same sku labeled v1, v2, v2a, v3, vSummer2019 so you could connect it to small variations in the product development cycle. Basic email marketing tools were too simple & non-dynamic, and the earlier versions of Customer Data Platforms were taxing to build around. Personalizing the timing and featured products in a message based on a customer's attributes and purchase history generally meant spider-webbed branching logic & brittle dynamic templates. We managed to drive some pretty good outcomes mostly by throwing an army of very talented marketing + data people at it - but even a comparably high-growth DTC brand in 2024 is probably operating with 25% of the headcount that we were given changes in the funding & macro environment. And most of the problems above have gotten marginally better, if at all. This is what Repeat has been obsessively solving. Cutting through this messiness to surface the right product(s), at the right time, in a user-specific way, automated across email, SMS and cart. Given all the work we've already been putting in at Stamped to surface targeted user-generated content and individually tailored Loyalty incentives, this combination moves us into a great position to deliver genuine personalization across the board starting today.

Motive went from less than $1M to $60M in ARR within 6 months. Arc multiplied their bank opening volume by 15X overnight. Some companies plan for or anticipate rapid expansion. There’s another side to hypergrowth though: forced scaling. How do you prepare for the unknown? Better yet, how do you capitalize on an opportunity when your product and customer needs align? 🗞 We asked two SaaS leaders who have been through it: John Gleeson & Basile Senesi. 👉 https://lnkd.in/gZx63UrQ

New product launches drive over 25% of total #revenue across industries, but most new products fail in the first year. Get the infographic to focus your #product #investments on the concepts customers respond to most. https://hubs.ly/Q02VhbSD0

Been struggling with product pricing? Pricing for product-led growth can be trickier than it seems. Many companies face challenges with their pricing strategy. Check out this insightful article breaking down the most common pricing mistakes. It's a quick read but packed with valuable insights. #productledgrowth #pricingstrategy #commercial #business

The Probability of selling to Existing Customers is 3x higher than selling to New Prospects. And Cross-Sell Motion increases overall profitability of the Business with higher LTV and lesser CAC. We have put together a set of tactical measures that business leaders follow in terms of Cross-Sell Motion. #RevOps #GoToMarket #RevvolutionAI

Are you tapping into the potential of incremental revenue yet? 💸 Incremental revenue is the additional income generated from new strategies or initiatives beyond your current operations. Swipe through to discover how focusing on incremental revenue can help you grow your small business ➡️ #businessgrowth #revenue #strategy