- Harry’s is doing more of horizontal integration of different consumer touch points in the whole product engagement cycle, though they did a light vertical integration by buying a Germany-based blade factory shop for $5M cash. Overall, as far as I can tell, Harry’s is trying to create the Harry’s for deodorant, perfume, shampoo.
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- I suspect they will first venture/invest in products that have a low shelf-life, on average < 1 month, similar to their blades which typically speaking have a pretty lower shelf life than let’s say deodorant or shampoo (which on average should last 2-4 months, substantially more the 1-month blade shelf life)
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- They essentially aims to create the next P&G conglomerate and then by doing so will allow real true vertical integration. The other startups I wrote about below is doing more vertical integration first then maybe horizontal direction.
- From previous email thread, “I think setting up an ‘innovation lab’ within the company to discover and create subsidiaries within the company or any company for that matter, will allow for better deployment and value creation of company’s capital. The concept of creating small, semi-independent business units within the parent company like that of Slack Innovation Fund or Nordstrom Innovation Lab or Google X Lab, might one day allow Dropbox and others to balance conflicts of interests and incentives due to semi dependency on capital provider to build the business unit.
- Risks on Capital – bigger startup (with the capital base i.e. in this case $100M+ in venture cash) investing in smaller, younger startup is not without risks as it ties the investable capital down for a longer duration (risks on return should be a factor, therefore capital isn’t perhaps used in the most efficient manner in the medium term. It’s essentially building a VC arm within a young startup.
- Also there’s the potential conflicts of interest b/c if as the CEO of the startup within Harry’s or any other companies, you know there is always a line of access to capital if things do go sour, therefore human psychology and business decision making tells us the business strategies will perhaps not be in the most optimal direction, though the word ‘optimal’ is relative so it’s something to be careful of
Chinese “venture capital” Startup
A few days ago, an experienced, well-respected individual in the Greater Seattle Area posted this on LinkedIn and I thought I might as well put some of the thoughts in the back of my mind on paper. P.S. I am looking at this from the financial market perspective and not from the technical/AI perspective.
I think fundamentally, the different corporate structure/strategy between US and Asian startups can be an attribution of this. For example, Toutiao and Meitu along with at least 30+ other decently-sized Chinese startups all have set up their own startup venture arm with the intent to nurture and therefore, better control the upstream and downstream of their product/content pipeline. This has traditionally been popular with US corporations (not startups) i.e. Qualcomm Ventures and Chobani Incubator, and has yet to be even touched by most US startups (with the exception of a few like Slack venture fund which aims to invest in apps that will provide value add to their omnipresent Slack product). In my past two years of light observations of Chinese venture financing markets, the amount of $ being thrown around is on 5x magnitude different if you look at the average $ financing size per stage round. Regardless of how much cash is being raised right now, one has to ultimately wonder if we have enough global capital to go around when the 5/10 year exit comes. Too much of a good thing in a short time frame can sometimes be a bad thing/minimal risk mgmt check & balance in place. P.S. this is not a dichotomy comparison + I’m coming from a market perspective.
Intersection notepad 