by Slow Upload Team

An exploration into individual- and creator-first companies: how they are built, underwritten, and financed. From the Slow Ventures Team, Sam Lessin, Megan Lightcap, and Caroline Cline.

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In the late 2010s, the world became aware that many direct to consumer companies – which promised higher margins by eliminating the retail and wholesale middlemen – were encumbered by a different operating expense in the form of customer acquisition cost, or CAC. So born was the phrase “CAC is the new rent.” A pithy description of the realities of a DTC company’s P&L, it illuminated the fact that expenses were not actually reduced but rather reshuffled within the SG&A line item. Unlike rent, which is somewhat fixed and comes with natural friction to scale, direct marketing dollar deployment was frighteningly easy and inherently uncapped – a feature for the dealers and a bug for the users.

Since then, direct marketing has only become harder due not only to increased competition, but also to key changes in iOS privacy standards that make attribution (or, ad efficacy) difficult. In response, brands have sought a new ‘unlock’ and are again reallocating SG&A dollars; this time, in favor of supporting a broader customer journey, inclusive of awareness and education in addition to conversion. A key component of this strategy is content. Both owned and user-generated, we are seeing a torrent of deliberate content across formats and mediums, all in service of capturing the consumer’s attention. In other words, every company is becoming a media company. Slow Ventures included 🥲.

But when it’s as easy as hiring a gen z intern and using the right AI tools (note: we have yet to figure this out), content becomes a purchasable good in the knife fight for consumer attention. If not already there, we are moving into a world where content is the new CAC (direct marketing). So then, if content is table stakes, what should “brands” really strive for?

We believe they need to resonate deeply with a part of their consumer’s identity. Good attachment is having consumers wear your brand merch, great attachment is finding that your name is on the interest section of their resume. John Fiorentino, a serial consumer founder, perfectly articulated this concept on a recent episode of Invest Like the Best:

“What actually sticks in a consumer's head and heart the most [is] basically like being their best friend. And when you look at these media properties, there are $100 billion properties, but when you interact with them, it feels like you're interacting with a long lost best friend that you are familiar with, and it never gets old.

…you have to create a character. You have to create a world. You have to create a story. You have to create a game. You have to create a physical experience. You have to create merchandise. And you need something at the core of that where you're guiding that customer through the experience 24/7.”

If you’re reading this newsletter, you already know who we think is uniquely positioned to capitalize on this. Creators not only have deep audience relationships, but also a license to world-build that many consumer brands with limited product(s) don’t. In this opportunity space, consumer attachment translates to LTV – and when loyalty is the cheapest form of marketing, we bet that creators as businesses will be more compelling…every time.

An exploration into individual- and creator-first companies: how they are built, underwritten, and financed. From the Slow Ventures Team, Sam Lessin, Megan Lightcap, and Caroline Cline.