Invest in How Ecommerce Responds to Post-Pandemic Shopping.
Popups were catching on prior to Covid, with brick and mortar all but decimated, watch as Ecommerce stores popup (literally) in every neighborhood.
So, I just plugged back in — only to see the world on fire 🔥 needless to say, I immediacy unplugged and wrote this email completely offline.
Housekeeping notes, I’m super excited to share that I hit a career milestone this week by adding M1 Finance as a new sponsor. I’ve been using the app for years and had a great interview with its founder Brian Barnes. I knew the moment I heard the pitch that M1 was going to be a force. I’m (probably) not even allowed to say this per our deal, but M1 is the reason my family lives in a new house. I followed Coatue (lots of Tesla) and a few other hedge funds to the glory land… and, while my experience (208% returns) is not typical…
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For my newbs; every week I breakdown a startup pitch with the added hook that you don’t have to be a rich guy to invest (if you don't know what that means, click here).
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Side Note: for a long time I’ve been working towards a “human-free” work experience. I enjoy starting, investing and growing companies, but I also love to be with myself (and family). So, the closer I get to financial freedom, the happier I am. When I stumbled upon the story of Emmet Peppers $30k to $70m Tesla/self-made hedge fund; I was ALL IN. I’ll spare you the spiel, I interviewed Emmet on my Pod and let’s just say, if you have an hour to burn… and you think you’re not rich enough or lack the education/experience needed to make money investing, think again!
Here’s my convo with Emmet Peppers 👉 https://spoti.fi/3hQzdni
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Let’s dig into the Popshop pitch 👇👇
Popshop created a web and app-based platform that allows brands to launch their online store and/or book vacant retail space for their physical store right from the palm of their hands.
I know what you’re thinking. Covid decimated the commercial real estate market. And you’re half right. Well, actually, I’m not sure of that. A lot has and will change in real estate. Many have focused on the losses retailers have suffered, and re-attributed growth in online shopping. But, few have talked about the evolution of online. Popshop to me represents the future of online — retail popups. Temp spaces ‘that bring digital experiences to life’ was already a thing pre-pandemic, but post-Covid, this is 100% going to be basic and somebody needs to automate that.
Meet the Founders
Watch my full interview with Popshop’s Founder and CEO Nathan Franco here 👉 https://youtu.be/-SM9PJzUeGQ
Nathan Franco is Popshop’s co-founder & CEO. Prior to this, Nathan was working in his family’s retail business where he developed first-hand knowledge of the ins and outs of the retail industry. After college, Nathan began his career in real estate investment and development and would continue this path for more than a decade…working his way up to VP of Acquisitions and Development of a mid-sized NY development firm — acquiring more than $1.5 billion in residential and mixed use properties across the East Coast.
Ok, Nathan and his co-founder are young and hungry. But, also very much experienced in the pain points they’re attempting to solve for. This makes this opportunity more high risk than others, but also more nimble. What I like about Nathan is that he was born into entrepreneurship and more or less took that nature into a digital nurture. We don’t talk about this much, but some of the best startup training grounds are the kitchen — there’s something about the exercise that is teaching your parents (especially those that own a small business) how to leverage a digital world. Nathan did that. That’s what I like most. I will always bet on the people that solve their own problems first.
1.6K brands in the community, including Goop, Marc Jacobs, and Stance
$3.15M in booking volume to date
855+ retail spaces across 5 countries and 90 cities
15% booking fee (80% gross margin on transactions)
They grew during a pandemic in the most disastrous retail environment ever. If that doesn't prove demand, I’m not sure what does. The market is quite large (140B+ serviceable market) and it’s my opinion that like the pandemic effect on Zoom, the post-pandemic is the opposite; people will do ANYTHING to get out and experience life again. Problem is, once we can leave the house where do we go if half the businesses are closed?? Answer: popups. And, currently very few commercial managers are positioned to deliver these experiences at scale. Enter Popshop. A single app for retailers, managers and Ecommerce sites to find a way to meet demand.
The popup shop has become a staple of modern retail. Ecommerce brands have found that it often helps to have a physical showroom for their goods — even if that store is open for only a weekend.
Popshop hopes to capitalize on that trend by creating a platform for brands to book short-term retail leases.
The idea is sound. Obviously, the pandemic has had an enormous effect on retail, prompting consumers to conduct more of their shopping online and forcing physical locations to adopt new practices such as delivery, curbside dropoff and contactless checkout. Many experts predict these changes to continue well after the pandemic has ended.
The shift to Ecommerce actually benefits Popshop. As retail brands (both new and old) conduct more of their business online, they’re going to be less inclined to multi-year leases for brick-and-mortar shops. Brands will, however, be looking for more flexible, short-term leases that allow them to make a splashy impression in the real world. (It’s telling that Amazon, the brand that has come to define Ecommerce, has embraced physical stores as a way to broaden its brand appeal).
There are other tech companies offering similar solutions, such as Storefront in Paris, which has raised just less than $9 million to date; Barcelona-based Go–PopUp, which has raised $1.1 million; and PopUp Shops out of Houston.
Popshop has the advantage of being based in New York City, the commerce capital of the world, making it easier to forge deals with high-profile retail brands and commercial real estate firms that handle some of the most sought after retail space in existence. That Popshop is already working with brands such as HBO, Steve Madden, Target and Goop is early proof the team can execute, too.
Terms & Takeaway
Invest in PopShop here 👉 https://bit.ly/38hEWzs
Security Type: Crowd Safe
Valuation Cap: $10,000,000
Investment Goal: $1,070,000
Raised (as of publishing): $94,645
Minimum Investment: $100
Here's what I like: PopShop, to me, is the future of malls. I don’t talk much about my pre-startup life. But, I once managed a few million sq ft of strip mall space and what I struggled with then (and others do now) is occupancy — as a value, not a clause filler. How do I maintain foot traffic with money to spend? Btw, that was in 2006. It’s still an issue, pandemic or not. Let’s put it another way. What do you like about Instagram? It’s a constant stream of new experiences and shopping options… That is what this is. Only, IRL. The founders are hungry, coachable, and experienced, but not so experienced that they’ll make the same mistakes. The market is massive and so is this solution if they get it right.
Here's what I don't love: Here’s where I let a little air out of the balloon. Having worked extensively in the real estate space (full disclosure: I’ve spent the past 2 years advising one of the largest SFRs in the country) it’s a rich daddy’s game. Money and opportunity are sparse. Add to that, PopShop is building a Tri?-sided marketplace and that scares the shit out of me. They can build the sweetest app ever, get every Ecommerce site to play ball and have property owners turn a cold shoulder, or the opposite, sign all the properties and not get the brands (to-date, they’re getting the brands) and still fall short. I hate businesses that do not control their own fate.
I’ll (un)happily invest in founders that give it their all and come up short. I cannot live with investing in things I know should, but won’t, work. Now, I’m not saying this is the case for PopShop, but I do think it’s pretty important to mention that a LOT of rich assholes have a vested interest in lessees ‘making it work’ and if they don’t get the buy-in, it all ends right there.
Lastly, worth a mention, this is why WeWork got so damn far. Charlatan (and entrepreneur) Adam Neumann convinced property owners they needed him to adjust to the future — and to be clear, if he started today, he might be right — this is what Nathan is doing, only he’s telling the truth.
Who should invest and why: The deal is fair. They’re early and if I were investing via my hypothetical rolling fund, I would ask for better terms than a $10m cap, but it’s far from overreaching. The market is massive, he and his team are the right people to go after it. But, it’s also not a steal for us investors. So, here’s the rub. Do you believe the narrative? I do. More importantly, do you believe in Nathan? Cause, I would buy into him starting a popsicle stand. He just has that energy I love. So, should you invest? Idk. There’s a lot of risk, but also a lot of reward.
If Covid subsides within 9-12 months (the world doesn’t turn into Running Man), and PopShop continues to double their business, sustainably; they will achieve qualified financing at a value far higher than $10m — and given the billions being thrown around by the likes of BlackRock and others, it’s likely they get acquired with a fat multiple. So, if you already invest in real estate this is a no-brainer, if not, and RE is new to you, look at this like a long shot that has a better than average shot of not being a total loser!
As always, startup investing is super high risk, anything can happen. So, don't invest money you can't afford to sink in cement... 🏢💸
Invest in Popshop here 👉 https://bit.ly/38hEWzs
Questions? DM me on Twitter @kitun
Disclaimer: It goes without saying, but this information should not be constituted as financial advice, my investing opinions are my own and all diligence is the responsibility of each individual investor.