🔑 Newsletter #31 - How to bootstrap an e-commerce business?

+ Elizabeth Edwards (Founder at H Venture Partners)

Hey there! Welcome to my email newsletter. My name is Leo Luo, a student entrepreneur at the University of Michigan. I write about founder stories, trends, fundraising, and unique behaviors in the consumer startup space. 

Follow me on Twitter @_leoluo

Quick personal update - I am working on a side project in the remote workspace trying to promote more spontaneous social interactions among co-workers. Please let me know if you would be interested in a quick chat - I would love to learn more about your experience with virtual work!


↺ What you might’ve missed in the last three weeks

  • 11/22 - Story of Motion (Superhuman for web browser) + David Goldberg (Alpaca VC)

  • 11/15 - Story of Monet (Gen-Z dating app) + Jason Stoffer (Partner at Maveron)

  • 11/08 - Story of Endel (personalized sound system) + David Beisel (Partner at Nextview Ventures)

Check out all the startups and investors I have featured in the past on this Notion board.

🍽 Today’s menu

  • Startup story - Carewell (e-commerce platform for caregivers)

  • Investor POV - Elizabeth Edwards (Founder of H Venture Partners)

  • What I’ve been reading - 5 articles about startups and investing

  • Who’s ballin’ this week - 5 new fundraising/developments in B2C space

  • Jobs - 12 full-time jobs and internship postings

  • Feedback - help me to deliver better content to you


🔥 Startup Story

How to bootstrap an e-commerce business?

(Image credit: Carewell)

Home care is a massive but often-overlooked space. Over 90% of the care older adults receive is from inexperienced family members who lack the proper support and resources to consistently make good decisions for their loved ones.

Carewell is an e-commerce platform poised to disrupt the home care space by providing caregivers an easy and accessible platform to learn more about home care and purchase vetted supplies at affordable prices. The story behind the startup is quite fascinating. It started as a bootstrapped DTC business by a couple, (now husband and wife) and eventually evolved into a venture-backed e-commerce business. It was so fun connecting with Bianca, the CEO and Co-Founder of Carewell, and learning more about Carewell’s journey.

🌱 Genesis

Bianca lived in a three-generational household after moving back home from college. She was shocked by how little was available in terms of resources for caregivers when she began to care for her grandmother.

“We went to our local store and found no products similar to what we’d received at the hospital or rehab center. So I went online and came away even more in shock by the lack of options. At the time, we were using chewy.com so I thought - how is there not a chewy.com for family caregivers? After some research, I realized that the home care industry was an $88 billion industry, but had little innovation, ” Bianca explained. 

Around that time, she went on a first date with her now-husband, Jonathan, who told Bianca about an adult diaper subscription service idea he’d won a business competition with. Bianca was sold on the idea and convinced Jonathan to start the company with her a few months later. That company would become Carewell.

🚗 Product Journey

MVP (2016) - Carewell began as an adult diaper subscription business, but Bianca and Jonathan quickly realized it was not working and decided to pivot. They learned that to succeed in this business, they needed to build a high-touch and empathetic experience for their customers.

  • “They feel very little trust toward the people they do business with online because they are so frequently spammed and scammed. We were surprised by how often customers called to say - ‘oh I don't want to subscribe I just want to try you guys first. I also don't want to put my credit card information online’.

    We realized that we needed to pivot away from just subscriptions and allow people to buy one trial service and make sure they felt secure before converting them to a subscription plan.” 

Pivoting to e-commerce (2017) - They pivoted to an e-commerce model and expanded the product catalog. They made a few other important product decisions that have really helped with their customer acquisition and retention effort:

  • Build feature to build trust and provide a more empathetic customer experience (e.g. handwritten letter, family branding, etc)

  • Expand on categories that can make users come back, such as different consumable products

  • Curate and offer a range of products for each category to meet different needs of customers

(Carewell’s current product categories)

Future of Carewell - Recently, Carewell raised a $5M VC round to fuel the growth of the company. Moving forward, the vision is for Carewell to be a one-stop-shop for caregivers, the place where caregiving starts. In 2021, they are launching a resource center to provide more expert-vetted advice and guidance for caregivers around topics like financial well-being. Many exciting things ahead!!

🤔 Early Mistakes they made

“There's been plenty of mistakes. One mistake we had in the early day was to hire somebody to do the branding and the website. We didn't understand the audience well. We built a website that was very millennial-focused. It was sleek and had black buttons but customers outside of this demographic just don’t appreciate that. Our audience really just wanted somebody they could speak to, and an easy-to-use website with big font and buttons. 

After the first three months, we realized it wasn't working and started doing everything ourselves. We learned about marketing, design in Figma, web development, and then spent a lot of time on the phone with customers because we got to understand the customer and rebuilt everything in the way that they wanted it,” Bianca said.

🥾 Experience bootstrapping a startup

“Bootstrapping was not easy, but fortunately we have a 60-day term with our suppliers which allows us some time between the time that our customer pays us and our payments to our supplier to invest in marketing and other things.

Obviously, we had to stay incredibly lean - Jonathan and I didn't take a salary for the first year and took a very little salary for three years after. It really helped us to prioritize because we didn't have money to do anything. We tried to keep things as simple as possible and as cheap as possible while staying true and authentic to the brand.

It was definitely not easy, but it did give us an incredible amount of time to really understand the functions of each department and who we needed within those departments once they actually came on board and so the first thing we did when we raised money was to bring on an incredible leadership team, ” Bianca explained.

💡 Advice for other founders

  1. Be relentless to the point of almost annoying

“It's super hard to run a business, so you've got to be pounding down people's doors, and then doing what you say you're going to do. I can say that that is true for Carewell. When we first brought this idea to people within the space, they didn’t care because they had never seen anyone grow in the space. I was like ‘you will see and I am going to prove it to you’ and we did and we have continued to do so.”

  1. Have a high standard for who you work with

“It is important to have a high standard for both performance and attitude. We take that super seriously here and are always pushing each other to be better, to be kinder, and to be more empathetic in the same way that we try to be with our customers.”

  1. **Pick three goals and say no to everything else**

“You've got to really be protective of your time and stay true to the course of how you want to run your business. There's a lot of people that will give you advice and will tell you, ‘Why don't you look at this?’ and ‘Why don't you look at that?’. You might spend a lot of time doing all of these different things, but none of them might actually grow your business or service your customers better.”

Carewell’s current three goals: 

  • Improve employee and customer experience (Goal - customer satisfaction score above 90 & Google Review above 4.8)

  • Reach more customers (Goal - aim for 15% month over month growth)

  • Retention (Goal - aim for one-month retention of 35% and 12-month retention of over 20%)

Check out Carewell!!


🔥 Investor POV

Elizabeth Edwards (Founder of H Venture Partners)

(Image credit: Elizabeth Edwards)

Elizabeth Edwards is a founder and partner at H Venture Partners, a consumer-focused VC firm based in Cincinnati, Ohio. She started her career at Deloitte as a strategy consultant after graduating from the University of Cincinnati and the University of Michigan (Go Blue!). Before founding H Venture Partners, Elizabeth spent over a decade working in VC and growth equity at companies like West Capital and MAYWIC Select Investments.

She has invested in companies such as Peloton, Joy, Freshly, GoldieBlox, and more. It was so fun learning about Elizabeth’s perspective on investing in consumer brands.

💡 Advice for early-stage consumer founders

  1. Diversify marketing channels

“I always advise founders to diversify their marketing channels and run tests on lots of different platforms. What might be perceived as old tactics can turn out to be shockingly cheaper and more effective than some digital channels. I’m a big fan of direct mail, radio, and television.”

  1. Brand partnerships are important

“Brand partnerships are great for sampling and cross-selling. One example is my portfolio company Cerebelly, which just did a brand partnership with Hello Bello. Cerebelly sells baby food and Hello Bello sells baby diapers. This is a great brand partnership because they are both startups and the founders of those two companies are standing for a lot of the same things and tackling similar demographics of moms. A brand partnership works well when you have two brands of commensurate size.”

🚀 Interesting consumer trends that Elizabeth has seen recently

  1. Naturally sterilizing products 

“There have been a lot of disruptions with COVID. We have seen many long-term trends reverse course. For example, we saw a long term trend for essential oils and non-toxic cleaning products, and then we saw a reversal to bleach and things that sterilize and sanitize. When a long term consumer desire meets a different set of needs, we naturally came up with the thesis that we need to be looking for things that are natural, non-toxic, and still sterilizing.”

  1. Productization of beauty

“I'll just pick on sheet masks for a second here. Sheet mask adoption was accelerated by the pandemic because you could not go out and get a facial and there was more focus on self-care and glowing skin as opposed to cosmetics. However, at the same time, we saw a bit of a backlash for sheet masks when it came to sustainability because single-use beauty products started to come under scrutiny with consumers and investors looking at their environmental impact. Our portfolio Kinship is in this space. This is a company that provides clean skincare and is sustainable. Their masks are not single-use.”

👥 Most interesting founder she has met with recently

“I would say that the most interesting founder I've met with recently is Robin Berzin, who is the CEO of Parsley Health. Parsley is applying a holistic care approach to health. They look at genetic and lifestyle factors to find the best way to treat a root cause. It’s such a common-sense approach, but no one is doing it. 

She is fascinating because she’s taken something that is incredibly complex and built a suite of technologies and products for managing healthcare, and their outcomes are just absolutely incredible. She is impressive because she is also a practicing MD so part of her time is actually spent in patient care.”

🤔 Elizabeth’s contrarian view

“I like brands that go after consumer groups that are ignored, undercapitalized, or misunderstood. For example, I love the incontinence space (aka adult diaper). 95% of VCs are white men and they're not necessarily thinking about the needs of women in their 60s or 70s all day long. So I love brands that are speaking to audiences that are big, ignored, and misunderstood because those generally are pretty powerful opportunities.”

📚 Books that have impacted Elizabeth the most

“I love biographies, especially biographies of other founders. I think my one piece of advice for any founder or investor is to read the biographies of other founders and investors because you'll have so much more empathy for yourself.

One biography I like is Leslie Blodgett’s Pretty Good Advice. She is a self-made billionaire and the founder of Bare Minerals. She talks about goal setting as a founder, her history before she started the company, and some key learnings she had along the way.

Two other biographies I like are Ray Dalio’s Principles and Stephen Schwarzman’s What It Takes. I love the beginning of those two books. At the beginning of their books, they talk about raising their first couple of funds and how difficult the journey was despite being smart and accomplished. They came out of that process feeling so much humility and empathy for other founders.”

Feel free to reach out to me if you are an early-stage founder that is currently fundraising right now. I would love to help and pass on the deck to investors in my network!

👨‍💻 What I’ve been reading


🏀 Who’s ballin this week


😍 Jobs & Internships

Full-Time:

  • Apply - Better Place Forest - Growth PM (SF)

  • Apply - Village Global - VC Associate (Remote)

  • Apply - Jazz Venture Partners - VC Associate (Bay Area)**Due on Monday

  • Apply - Insight Venture Partners - VC and Growth Equity Onsite Associate (NYC)

  • Apply - Scale AI - New Grad Product Ops Manager (SF)

  • Apply - Notion - Product Specialist (SF)

Internships:

  • Apply - Jam City - Product Management Intern (Bay Area)  

  • Apply - Rally - Sales and Marketing Intern (Remote)

  • Apply - West (Venture Studio) - Full-Time Strategist Intern (SF)

  • Apply - Mailchimp - Summer Product Marketing Intern (Atlanta)

  • Apply - Curated - Content Strategy Intern (Boston)

  • Apply - Nylas - Summer PM Interns (Denver)

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RIP Tony Hsieh