When Ali Kaminetsky started her first job out of college, she quickly realized she didn’t have a stylish way to pack her lunch every day. So, she created Modern Picnic, a company that makes insulated vegan leather lunch boxes for women. The first two years of the company were a success. But then, in 2020, when Apple released IOS 14, it completely changed the way D2C companies scale. Now Ali needs to convince investors she’s found a new way to build a billion dollar consumer business.
If you would like to invest in Modern Picnic, go to pitch.show/picnic
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Phil Nadel: The Pitch, day 2, pitch 2 [clap]
September 16, 2020. The day Facebook stopped serving us eerily spot on ads.
Before this, Facebook was tracking our every move on every app and targeting us for products we didn’t even know we needed.
Startups like Glossier, Allbirds, and Casper all turned into billion dollar companies by pouring VC money into these targeted ads. It’s like, for this brief moment in time, that there was a machine that printed unicorns.
That was… until Apple shut it down with their release of iOS 14. It completely kneecapped Facebook’s ability to collect data on you. And overnight, that unicorn printer got jammed. Indefinitely.
What then, should you do if you’re a founder trying to scale the next big consumer brand? How do you convince VC’s to give you money?
Sounds like a tough sell.
Today, that is exactly what’s happening on our show. Founder Ali Kaminetsky will need to convince investors she has her own path to build a billion dollar business.
I’m Josh Muccio, and you’re listening to The Pitch. Where real entrepreneurs pitch to real investors for real money.
Neal Sales-Griffin: Hey y’all, I’m Neal Sales-Griffin, Managing Director at Techstars Chicago
Jillian Manus: Hey, I’m Jillian Manus, Managing Partner of Structure Capital
Phil Nadel: I’m Phil Nadel, I’m the Managing Director of Forefront Venture Partners
Mark Phillips: Hi, I’m Mark Phillips, Managing Director of 11 Tribes Ventures
Victor Gutwein: Hello, I’m Victor Gutwein, I’m the Founder and Managing Partner of M25
The pitch for Modern Picnic is coming up after this
The information provided on this show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the business presented. Those opinions should not be considered professional investment advice.
Phil: Hi there.
Ali: This is so exciting. I've never done anything like this before.
Phil: Wow. Neither have I. All right.
Ali: Okay. Cool. Well, hi everyone. My name's Ali Kaminetsky and I'm the founder of Modern Picnic. Modern Picnic is a community-driven brand that makes insulated vegan leather lunch boxes for women. Think Yeti, but catered towards women who put style and functionality first. I started Modern Picnic completely out of a personal need. When I graduated from college, I was working in the fashion industry, bringing my lunch to work every day because of how much faster, cheaper and healthier it was. However, I quickly realized I did not have a chic functional or sustainable way to do so, and when I went online to buy myself a lunch box, I saw options for little kids and men, but none for women who wanted to look good or do good. So given the options on the market, from there Modern Picnic was born. And we launched with our first product called the Luncher, which as you can see here, chic, functionable, sustainable, clean with a wipeable interior and exterior. However, since we've launched, we've since come out with strategic product assortment all varying in price point, functionality, versatility. We've done over $4 million in cumulative sales from over 20,000 units sold, all while maintaining an incredibly lean team. We've been featured in over 350 press hits. Forbes, New York Times, the Today Show, Vogue, Oprah, Harper's Bazaar, amongst others. We've been able to work with other leading brands, such as American Express and Swell, and more recently have started expanding our wholesale and retail footprint, launching in Saks just a couple of months ago. We are currently seeking $2 million in seed capital to accelerate our growth, fuel our momentum, and take the business to the next level.
Phil: That was great. Thank you, Ali. Would you mind passing around one of those?
Ali: Yeah. Oh my god, I'd love to.
Phil: If you could pick one that goes with my outfit -
Victor: It is a little bit better than just like your normal -
Mark: I would love a -
Victor: I feel like it's a - the feeling of it feels higher quality than like a cheesy lunchbox type -
Phil: How does it work? I mean, Tell us a little bit more about what the market looks like.
Ali: Yeah. All of our products have an $150 AOV. We've got a $60 average CAC. Major way we’ve acquired our online visitors and sales is through paid ads. In terms of market size, I like to look at Yeti as a comp. Yeti is currently valued at over $9 billion, by understanding their original core audience of outdoorsmen, and leaning into it. Now who's coming in for the cosmopolitan working women? We're trying to do that.
Jillian: Have you seen anybody try to copy this?
Ali: Yeah. So we're the first to market in this space.
Ali: We've seen some companies start adding lunch boxes to their mix like Dagne Dover, for instance, they added a lunch box, but it's not like what we're doing. You know, different customer base. Theirs is neoprene; it's more sporty looking, while ours is more, you know, just a different style.
Jillian: So talk about the hard costs.
Ali: So our product margins are excellent, at over 80 to 90%. Gross margin goes down - it's still incredibly strong - at around 60%, which will only continue to be strong as we grow and scale.
Phil: You said your average price point's like $150?
Ali: 150. So -
Phil: And your cost is only 15, 20 dollars?
Jillian: And where are these manufactured?
Ali: They're manufactured in China. We did a brief stint in Indonesia but ultimately, the money that we were saving on tariffs was offset by it being further away and the cost of goods sold being higher. And the quality wasn't as good.
Phil: Are you - you said you've just recently launched in Saks. So has it been all direct to consumer up until now?
Ali: Yes. So we started as a direct to consumer brand, in an effort to prove the concept, build the brand equity, but most importantly, tighten up our supply chain. We bootstrapped this company for a couple of years. I was shipping out of my parents' garage. So even if we had the opportunity to sell to Saks, we wouldn't have been able to operationally fulfill it, so this is our first year that we're leaning into it. And we're really excited to be talking to Nordstroms, Bloomingdales and we currently work with Dillard's and we'll be hopefully launching with Bloomingdales in Q1.
Neal: Well, speaking of your parents' garage, what's your background? Can you elaborate a little bit more about how you got here?
Ali: Yeah. Of course. So I went to Lehigh University where I studied supply chain management and marketing, before supply chain was such a buzzword. Right after graduating, I went on to work at Macy's. It was at Macy's where I got such a great foundation into the retail industry, but it was also at Macy's where I came up with the idea for Modern Picnic, and I think it's worth noting I was 22 years old when I came up with the idea for Modern Picnic and was able to successfully launch a company within two years, highlighting my ability to make things happen for not only myself, but most importantly, the company.
Jillian: So did you go through the Macy's -
Ali: EDP program, yeah.
Jillian: You did? That's an incredible program.
Ali: Oh my god. I mean, I definitely credit it for learning everything. Like, retail math and our pricing. Like our margins are strong. I learned, you know, costing structure and really like buyer wholesale relationship, which now, like, we're starting to do more. So it was - it's really amazing program.
Victor: Can you talk a little bit about your core customer archetypes? Like who you kind of see as your, you know, ideal customer, who's buying the most?
Ali: Yeah. So the Modern Picnic customer is - the majority of our customers are 25 to 34 year old working women living in cities, all at the mid to high discretionary income, really valuing that attainable luxury element of our product. One thing I think is worth noting is Modern Picnic has done a really good job capturing the eyes of the GenZ demo, shown by our pretty massive TikTok following. We actually have like millions on there, which is crazy. But really, like the Modern Picnic customer's so much more dynamic than that, whether she's a new mom who needs a way to store her breast milk, a vegan who cares about what her products are made out of, or a healthcare worker who simply does not have time to leave in the middle of the day to get food, Modern Picnic is for her. We've also seen women who just buy our products because they like the silhouette of the bag and want to use it as a bag, which is totally fine too.
Neal: I'd love to invert that a little bit. Just to understand, like, what have you learned about the customer experience afterwards? And what product changes have you made based on those insights?
Ali: Yeah, So our Luncher, we launched with - and that's really, like, to fit one meal plus a drink, like a snack. We're getting people telling us, well, I'm a nurse and I have long shifts and I need to carry breakfast, lunch, dinner and more. And so then we're like, okay, meet the large Luncher. Then we were getting some people saying, well, I really don't want to carry two bags. I want to carry my laptop with it and but I also want a lot of space. And we're like, we got you. Meet the tote. Then we were getting some women saying, like, hold up. I don't bring lunch to work. I don't do that. But, I do like to bring snacks. And so we're like, okay, meet the Snacker. So every product have been incredibly intentional. One product - and it - really passionate about and think there's a lot of money being left on the table is with food containers. If we're speaking households alone, safe to assume that every kitchen in the United States has a cabinet with food containers. If we could capture a slice of that market, that's massive. So right now, sitting next to two prototypes of food containers. I have a supply chain ready to go, the factory lined up, I have the packaging ready. Everything's ready to go. We're just waiting for
Neal: Except $2 million.
Ali: Except we're waiting for more funding to come through to go into production with it.
Mark: I thought your comp to Yeti was really interesting, cos Yeti's become just a cool brand, but it started for outdoors. Can you share a little bit about your vision. Obviously, you continue expanding bags. Is there a broader vision?
Ali: So the product I'm really excited about is hard shelled coolers. So right now, there's a massive miss. You can get a Yeti hard-shelled cooler, they're the best in the business, super masculine, super rugged, super expensive. On the opposite end of the spectrum, you can get an Igloo cooler from your local CVS that's cheap, but there's nothing beautiful or functional about it. Nobody is even touching hard-shell coolers for the woman who caters towards style and functionality and so we set out to change that. It's gonna be white lacquer, gold detailing. And it's gonna be a hard-shelled cooler that women want in their Instagram photos. That you want on your boat. That you want to bring to the beach with your friends. And it's gonna be amazing.
Jillian: So Yeti has this. They have pink ones, they're doing a whole female branded line. I also know that there are a lot of these on Etsy. And so I'm just interested why that is the next product?
Ali: So Yeti built a $40 million business off of one cooler that came in four different sizes. After that, of course, they expanded and accelerated and they're coming out with everything under the sun. So it's a massive market and multiple can play in this space. And right now, women sometimes don't want to buy something off of Etsy. They want something more elevated, and more functional and more durable. But also, the Yeti brand, they've cemented themselves into ultra masculine, rugged, outdoorsy. And they have a women's line, but we're gonna do it in just a different way.
Mark: And what do you expect over the next couple of years about the breakdown in revenue between direct to consumer, as well as these partnerships with great stores like Saks.
Ali: Yeah. So right now, it's so heavily like skewed towards D2C, just because we just started this year. Right now, it's like 95/5.
Mark: Of course. Yeah.
Ali: Next year, we're projecting it to be more like 80/20. While like direct to consumer we expect to always account for the majority of our revenue, we do have that three-dimensional distribution strategy, ecomm, wholesale, and retail.
Victor: So what have you seen as far as customers coming back and purchasing again or purchasing, you know, you start with your hero product and then go to the larger or smaller ones?
Ali: So our returning customer rate is actually above industry average. Year to date, it's at like a 23%. This answers the question, well, how many of these do people need? And the answer to that is, well, clearly given our target demo and given our price point, she might not need more, but she wants more and she's coming back for more. On the flip side, our returned product rate is very low. Less than 5%.
Damn, Ali knows every single number, and she knows her customer inside and out. Seems like she has everything investors would want. But will that be enough to get a consumer deal done in The Pitch Room?? That’s coming up after this.
Welcome back to THE PITCH ROOM. Ali’s pitch for her stylish lunchboxes so far is going smoother than expected. But the investors are going to want to know what the CAC is going on here. And… CAC, if you don’t know, was born out of investors’ love of acronyms that sound like insults or curse words. For example: get the [CAC] OUT OF HERE YOU [CACKIN CACHOLE].
Okay. Whenever you hear CAC in this episode, just think: cost of getting a new customer. Here’s Victor.
Victor: So you're $4 million lifetime to date. What does that look like each year starting in 2018, you know, a couple thousand maybe, and then how did it grow?
Ali: Yeah. So we bootstrapped the company and then in 2020 we raised a friends and family pre seed. We raised $900,000 and that allowed us to pretty easily triple the business from $600,000 in sales in 2020, to 1.8 million in 2021. Just goes to show, with a little injection of capital, what we can do. So..
Victor: And what have you done this year then?
Ali: This year, we're on track to doing just over 2 million. We were on track to doing 3.7 - 3.8, doubling the business again. But this year, we've scaled back our ad spend by 80% in an effort to preserve burn, extend our runway, but we're still seeing top line growth, which is crazy
Victor: Do you have a good CAC estimate for what it was before you scaled back?
Ali: So right now, our year to date CAC is around like a 57. Last year -
Victor: $57 per customer?
Ali: Yeah. Last year was a bit higher. We were ..
Phil: I was gonna say it seems like your unit economics are really good for physical product; surprisingly good. So if you're covering your CAC and making money on the first purchase, why scale back ads?
Ali: Last year when like post-IOS 14, when that happened, we saw CAC increase. And that's when our focus on diversification of marketing really took suit, and we started pulling from Facebook. Not even in an effort to preserve burn at that point, but more so to just like -
Victor: Yeah. Every D2C brand had to do that at the same time.
Ali: Facebook has forever changed and so we're never gonna go back in there full force. That's why we're focusing on wholesale expansion and we’re really gonna lean into that. And then product development, want to bring these food containers to market, and we'll be launching the food containers with Amazon and then some of our retail partners as well. So continuing to focus on efficiency and get to profitability which, if we can raise the money, we're on track to being profitable by Q2 of '23.
Phil: It seems - so, the numbers last year sort of weren't sustainable. This year they are, but as you ramp up ad spend. You're exploring some new acquisition channels or you will be, and you'll figure out what your - what your CAC is from those and try to make it sustainable going forward, right?
Ali: That's correct.
Ali: Especially with like wholesale support, And then also introducing new sales channels. We haven't even skimmed the surface of what we can do on marketing. Like, forget about like paid ads. Like paid ads are working but like we're not spending that much money on it. So first and foremost, like we gotta inject a little bit more money into it. But then also, like we haven't even touched influencer marketing or TikTok ads. We have millions on TikTok, organically. We're not paying any money. So it's like, what if we put a little money behind that. So there's so much - wild posters. So we did our first wild poster campaign a couple weeks ago in the city -
Mark: What is that?
Ali: Yeah. So we basically had these signs, like plastered over the streets of New York, and they were cheeky and bright and they said like, yes, it's a lunch box. We had a hundred posters. What if we could do 100,000 posters? You know, there's things like this that are like - we're not even touching. But then things that we are touching that we haven't even like - we're doing it at such small scale and like I know what's working and what's not working and where we need to inject capital, and also where we need to test into. We just kind of need a chance to do so, cos we've laid this cool brand, we've laid a really strong foundation, we bootstrapped the company, built it into a multimillion dollar business, and now we just need to fuel the growth and the momentum.
Neal: Yeah. I'm really encouraged by, you know, what you've done and where you're at. I have to say, I'm out for just a couple reasons. I think I have some reservations regarding focus. So one thing that was a little unclear to me was reconciling this notion of no one is in the middle of this space of building these hard shells for women. One, as I think about that among all the other products you have, hearing that Yeti's doing something similar, that brings me pause. But at the same time, it seems like you're clearly on the track to win. So I - you have my support. I'm excited to see where you go with this.
Ali: Yeah. Thank you so much.
Victor: I’m also not going to be an investor here. I think that overall, DTC as an industry has not figured out how to scale. Like the new channels, now that they can't spent VC dollars on Facebook on Google spend, they - you are experimenting, just like the whole, you know, basically all of Shopify's venture backed brands are experimenting. You know, right now, knowing that there's basically a flat growth year, as a venture capitalist I need - I just can't invest in flat businesses and then the idea is that you're going to find a more scalable way - I haven't seen that across other DTC companies yet. I don't know if you'll get there. I think there's a chance. But it's kind of a lot to believe in. But I also worry about the long - like the long plan from market size, just because this feels more niche than what I've seen from other brands that have gotten to that kind of billion dollar mark. I think, the archetypes I think are a little too narrow for me to be confident to invest in this at this point. I do think it's encouraging though that you can maybe raise a relatively small amount to get to - it seems like you have your own destiny in your hands. Maybe you don't ever get to 2x in year over year, but you get to 50% growth year over year, you're profitable, and then you own the bulk of this company. That's kind of the vision I see for that, and also probably a lot of DTC companies kind of in the market right now.
Phil: I have to say that I'm just - I'm really impressed by you. I feel like you know your target customer so well, you know your product really well.m I’m struggling with the economics of it, and the idea that, you know, you're going to figure out going forward what those customer acquisition channels are. But if the wholesale channels take off, that could help, but it's hard to say whether that's going to work. So for me, I'm going to pass. I really am impressed with you and that's what's kept me in it this whole time, and thinking about it, thinking about it, because I'm just - I just feel like you're really in touch with this brand and this customer, and you know this space well, and if anyone can make it work, it's you.
Ali: Yeah I know thank you.
Mark: Yeah - well said, Phil. Ali, you're a force. The fact that you dropped ad spend so much and you still have topline growth. It's genuinely super inspirational. So I hope you hear that and take that away. I'm going to pass as well. It's really just a question of fit for our fund. And I think Victor articulated a lot of the direct to consumer challenges that we've seen as well. So I just want to encourage you to also, you know, it's a pass for me, even though that's a no, you have a ton of different options in front of you of how do you grow this brand, because it is you. Right. You're personifying it, and that's a really cool thing to see, and I think the control you have over the business gives you a ton of optionality. So thank you for sharing this with us. I really appreciate it.
Jillian: So first of all, I love the fact that you know your numbers cold. Every single - I mean, that is not - not one point that you stumbled on any of that, and that's so refreshing. I look this fanatical customer that must have a product. But I'm not quite sure I'm seeing the repeatable customer, I'm not - it's kind of a nice to have not a need to have. And that's silly of me, because the nice to haves are some of the most successful products, especially in your generation. This has such a cool factor. And I love female founders and I'm trying to just struggling in my head to figuring out who to introduce you to or how to help you, because you're good. You're really, really good. I just, for me, I understand, the cute factor of it. But I'm not understanding the broader sale here. And I'm sorry about that because you're such a -
Ali: No, I'm sorry. Oh my god. I don't know what -
Phil: What's happening. What's happening? Tell us about -
Ali: I've been pitching for over a year - like, for a year. I like, I don't know what's - I think, yeah, I don't know. I'm like so off brand. I'm like never like this. Oh my god. I can’t even believe myself.
Jillian: No, no. Ali -
Ali: No, no. This is all such good feedback. And like, I, yeah. I totally get it. Like, what you were saying about the growth and maybe we don't need to grow 300%. I totally get it. And such -
Mark: And it has to be said, our opinions don't define you. Right? Like, and you know that. And I want you to hear that everyone, I feel the same way as Jillian and Phil, like who you are as a founder is exactly the type of person we want to invest into. Right. So whether it's this, whether it's the next thing, but like who you were born to be, like, you're in exactly the right spot.
Victor: You're a successful business. I just don't think you should feel forced on the venture capital track right now. It's not the year for that.
Ali: Yeah, no, we've definitely had more luck with angels than with VCs, which is like totally fine with me.
Jillian: Thank you, Ali.
Mark: Thank you, Ali. It was so great to meet you.
Mark: All right. Thanks, Ali.
Ali: Thank you.
Neal: Thank you.
Jillian: So, you know, women, female founders, you know, it's very hard because women really take it so personally, And that is such a - such an awful - it's ..
Victor: Her pitch was incredible.
Jillian: It was incredible -
Mark: She was the best pitch yet.
Jillian: Absolutely. She was the most impressive, she knew every single number. I've never seen that from a founder. She went through all the training, she knew everything cold
Neal: I'll admit, though, I was a little confused with the Yeti thing.
Jillian: That dropped off a cliff.
Neal: Yeah. But Jillian, without your perspective on that, I would have been a little lost. I would have taken her at her word, I would have not actually understood what else was out there and that one of the major players already had an existing competing product, even though she had said otherwise.
Jillian: And they're expanding it too.
Neal: So that was - that for me was a trigger, to like dig in and have a little hesitancy around focus.
Phil: Josh is in the house.
Josh: Hey friends.
Jillian: That killed me.
Victor: I know. I'm not even that empathetic and I was kind of sad.
Jillian: That's good to know.
Mark: We like transitioned very quickly back to the business, but I think anyone that feels like defined by a decision of a venture capitalist, like, our opinions don't mean anything.
Neal: Oh yeah.
Neal: It's hard for people to understand in this line of work, we are wrong most of the time.
Jillian: Yes. That's exactly right.
Neal: That's just how it goes.
Mark: 80 to 90%, yeah.
Jillian: That's exactly right.
Josh: Here’s why it’s so hard. You pour your heart and soul into the company so it does feel like it's you.
Victor: Your baby's ugly that’s what you just said.
Jillian: Yes. Say that again.
Neal: She's incriminating you, bro. Don't do it.
Jillian: I would put her in any other company, truthfully. She's that good.
Neal: I mean, she's got - she's doing great with this one.
Victor: Two or three years, she sells this for 50 million to - and then she's on to her next thing.
Jillian: Yeah. And she comes back and she says, stuff it.
Victor: Or she's sitting in your chair.
Josh: She's sitting in your chair and she backs the next generation of D2C companies.
Jillian: You want to invest in this generation. That's what we're trying to do here.
Ah, CAC. I knew going into this pitch it would be a hard sell. But I really thought Ali could pull it off. I just didn't realize how hard it would be.
I, like Ali, left feeling deflated. And wondered if maybe these investors weren’t the best fit for this pitch.
When we come back. We catch up with Ali and meet an investor who’s still cutting checks in consumer companies.
Welcome back. Ali crushed her pitch. She’s one of the most badass founders we’ve had on our show. Every answer was like Steph Curry draining another three pointer. Swishhhhh
So I’m not going to lie, when all the investors passed. It just felt wrong.
When we reconnected a few months after her pitch, I wanted to know how Ali felt.
Josh: How were you feeling when you walked out of the room?
Ali: A lot of different emotions. It was like nothing I've ever done before and so it was really exciting and we were disappointed that we didn't get an investment at the time.
Ali: But looking back on it, it's like, wow, everything really happens for a reason. But, it was definitely an exciting experience for sure.
Josh: Everything happens for a reason. What do you mean by that?
Ali: Well, just our fundraise in the fall, it felt like nobody was really writing checks, especially to early stage consumer businesses like ourselves. And so what we decided in the fall was, you know what? Let's just pause the fundraise and go back to basics and really kind of focus on efficiency and profitability, and let's trade top line growth for bottom line efficiency. Let's focus on preservation of cash and being hyper efficient and carving out a path towards profitability. And rather than just like outreaching, cold outreaching to these investors every single day and kind of hitting this wall, let's just focus.
Josh: Sure. Yeah. So you went back, you focused on the business instead of growth at all costs. It's like profitability at all costs. So, what’s happened since then?
Ali: Oh my God, so much has happened since then. It's like a different, like life. So since we left you guys, we have locked in Container store. In store and online and with a new product that we're launching with them. We're also launching with Nordstrom. And we're also working on getting set up with Bloomingdale's.
Josh: This is all since November?
Ali: Yeah, I know. We've been busy. But also since we last spoke we were on Good Morning America.
Good Morning America: So we make these vegan leather insulated lunch boxes so you can put your food inside and bring it wherever you go and no one would ever know you’re carrying a lunch box. [duck]
Ali: I got connected to their online team in January through a friend. And who knew someone worked there and talked to her about Modern Picnic and she was like, I think this would be really great for an online test. And I was like, thank you so much. Like, I so appreciate that. , I really think we should do an on-air test.
Josh: Uh huh
Ali: And she was like, well, you know, like we typically like to start our brands online first and like then see how it goes. I was like, I totally get that, but like, trust me, we belong on air. And she's like, okay, I'll talk to my team about it. And so they actually came back a week later, and we're like, so actually, like we have this special segment coming up for Women's History Month and it'll be a special one where you can be on air with the product and we need confirmation in like by like today it was craziness.
Ali: They were like, okay. we're picking you up at four 30 in the morning and I was literally doing my makeup at three 30 in the morning, or I don't know if that's the morning, three 30 in the middle of the night, and it was crazy. We did like what we do in a month, in like a day.
Josh: in sales.
Josh: So they're one of the main threads in the pitch room was how this like VC dollar to Facebook ad spend funnel that takes direct to consumer brands like Modern Picnic from 2 million in sales to a billion dollar company like that is broken. The investors, they just want to see this like systematic approach to churn out billion dollar companies. It, it kind of bothers me a little bit because I'm just like that, like, aren't you investing in the person building it and trusting that they're gonna figure out ways to grow the business, like there are hundreds if not thousands of D2C businesses that are not getting funding from VCc anymore because of that.
Ali: Yeah. In situations that are uncomfortable, like iOS or you know, not being able to raise capital or whatever it might be, whatever kind of like roadblock you're going through. Like it forces you to like be creative and try something new and go back to basics. And what's worked for us is we're like, okay, let's take that money we just pulled from Facebook and let's invest it into trade show. Let's go to Atlanta, let's set up a booth. Let's go to Codery, let's set up a booth. And with that, I mean, oh my God, like we saw like a 10 x at Codery from like what we invested versus like what we got out of it. And that's just a first order with some of these like stores around the country now. And so there's obviously gonna be a repeat purchase rate, but like that's a way more efficient use of our dollar. That doesn't mean that we're not gonna run Facebook ads, we're just gonna run at a way smaller scale and we're gonna supplement and fill the funnel elsewhere.
Nothing can keep Ali down. There has to be a VC willing to back this founder, right?
Christie Pitts:Backstage was one of the first investors in the company, and the growth has just been tremendous.
That’s Christie Pitts. Christie’s been a friend of the show, for several years now. She’s also a general partner at Backstage Capital, which is known for backing underestimated founders.
Josh: Let me tell you about Allie's pitch on our show. She crushed it.
Christie: I am not surprised whatsoever.
Josh: She is a force.
Christie: That's Alie.
Josh: But each of the investors, you could feel the like pain in the room because they're like, ah, but the Facebook ad thing doesn't work anymore.
Josh: we can't just pour money into these companies to turn them into billion dollar valued companies.
Christie: Wait, everybody passed?
Christie: Oh my goodness.
Josh: Nobody invested.
Christie: Oh my God. Okay. All right. *sigh*
Josh: But you, why did you choose to invest in this? Like despite everyone, everyone else not investing in D2C anymore.
Christie: So Ali is a really impressive founder and we are betting that the founder can see around corners. For as long as I've been in business, there have always been events that occur that are outside of founders control. There's so many reasons why a startup fails. And it could be something like Facebook ads or like the new ad-pocalypse or whatever it's being called., and from my experience, these are not the reasons why startup fails., startups usually fail for other reasons. Like maybe they don't find product market fit, or they have personnel issues like conflict with their co-founder. You know, there's so many different things that can go wrong. And so at least when I'm looking at making an investment, I try not to pin too closely to something like the adpocalypse. All you have to do is look at Allie's track record to see that she's gonna be able to sell and move product.
Christie: And so she's gonna be, she, and she's gonna do that successfully regardless of the business environment. And she's also innovative. She's solving a problem for her customer who has money and feels overlooked. Those, to me, those are two much bigger things that weigh in her favor than maybe a change that Facebook or Instagram has.
Josh: Yeah. I guess my, the, my theory is like . Just cuz Facebook ads don't work doesn't mean there aren't gonna be huge brands built in the next 10 years. It just means they're gonna be built differently.
Christie: That's right. And modern picnic is huge on TikTok. Is Tik TikTok gonna be legal in the us? Who knows? Modern Picnic will still be huge. Like that's, that might be too optimistic, too glass half full. But that's more of how I like to approach it, because I think Ali has demonstrated already in the business that she diversifies across different channels and she's bringing something new to the market.
Christie: The other thing I would say is history is being made every. And that is something that's very hard, a hard line to walk as an investor because you can point to what's happened in the past, but it's our job to predict and influence the future. And sometimes we are wildly right, and sometimes we're wildly wrong, and more often than not, we're wrong.
Josh: That actually brings me into a question. One of the investors in the room saw what Allie was doing and said it was just too niche. He didn't see how it was gonna get to a billion dollar outcome.
Josh: Why are you laughing?
Christie: Women are niche? Working women are niche? Really?
Josh: Oh sh*t.
Christie: Is that, is that what I'm supposed to be taking away from that skier? Women who eat are niche? I'm sorry if I'm being, if I'm being a little bit extra on my reaction here, but come on.
Josh: I don't think you're wrong. Yeah I'm feeling like the pitch fund should invest in this.
Christie: Mm-hmm. You saw Ali pitch, you heard. I respect all of the investors that are on the show, and you heard what their concerns are. And at the end of the day venture capital is asset management and given the size of The Pitch Fund and the opportunity here, I, I agree with you, but I have a conflict of interest. I'm an investor in Modern Picnic. But yeah, I mean, like, you can, you can easily see how creating the business case to make the investment when you're managing a relatively small amount of capital. Understanding what Allie has done so far and what her plans are, it's, it looks like a great deal to me.
Josh: Well, and the fact that she's about to turn profitable, makes it feel like this thing's not going to zero.
Christie: Who knows? Josh! Don't say that out loud! Touch wood.
Josh: Oh, okay! too soon!
Christie: I might have said that about Silicon Valley Bank a couple months ago.
Josh: Oh gosh. Yeah. Don’t get me started on that.
Christie: But that's, that's part of the ride. That's why this job is one of the best jobs in the world
Any early stage investment you make is a risk, but sometimes the risk is worth it, for the right founder. That’s the bet we’re making in Ali. The Pitch Fund is investing in Modern Picnic.
Josh: Would you also want to do a syndicate that lets listeners invest?.
Ali: Yes. So that is like what I'm most excited about.
Ali: Because we are a community driven brand, and so to give other people the opportunity to, you know, start dabbling in investments regardless of size, is so exciting and important to kind of like democratize access to investment opportunities and capital and start investing in companies they believe in.
If you're interested in investing in Modern Picnic, go to pitch.show/picnic
Next week on The Pitch…
Elizabeth Yin: just to be very direct, there have been a number of folks who have tried this type of approach.
Jenna Sereni: Yeah, that’s a great point. I actually was a part of creating the model that influencer marketing is today, so I always like to say first, I'm sorry. Second of all, we learned a lot, we're going to burn it to the ground and start fresh.
That’s next week in The Pitch Room. See you on Wednesday!
The Pitch is me, Josh Muccio, Lisa Muccio, Kerrianne Thomas, Anna Ladd, and Enoch Kim.
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Investor on The Pitch
Neal Sáles-Griffin is an entrepreneur, teacher, and nonprofit leader. He co-founded the first beginner-focused in-person coding bootcamp, and ran for mayor of Chicago in 2019. He's currently the Managing Director of the Techstars Chicago accelerator as well as the Techstars Rising Stars fund, and is an Adjunct Professor at Northwestern University's McCormick School of Engineering where he teaches entrepreneurship.
Investor on The Pitch
Victor is the founder and managing partner of M25, the most active venture firm in the Midwest. He grew up in rural Indiana before moving to Chicago to study economics at the University of Chicago. Victor built a vending machine business and a scooter company, before cofounding UChicago’s first student-run venture fund. A Kauffman Fellow (Class 22) and former leader in Hyde Park Angels, Victor founded M25 at age 23 in 2015 and quickly grew it to become the go-to preseed/seed VC firm in the Midwest.
Investor on The Pitch
Mark Phillips is the founder and managing partner of 11 Tribes Ventures. Prior to that, Mark was a strategy consultant focused on M&A between corporations and growth stage startups. He actively supported clients throughout the due-diligence and post-merger integration processes on deals totaling more than $750M.
Forbes Next 1000 List-Maker, Ali Kaminetsky of Modern Picnic, disrupted the cooler industry in 2018 when she created a lunch box created for the cosmopolitan working woman. The chic, functional, sustainable, vegan leather lunch box has been celebrated in the news over 300 times, including publications such as Forbes, Vogue, Harper’s Bazaar, Oprah, The Today Show and more. Since its launch, Modern Picnic has grown into a multi-million dollar business with roots in charity, women’s empowerment, and their commitment to creating innovative, multifunctional products.
Investor on The Pitch
Jillian Manus is Managing Partner of an early-stage Silicon Valley venture fund, Structure Capital. Branded “Architects of the Zero Waste Economy," they invest in underutilized assets and excess capacity. She was named one of the top 25 early-stage Female Investors by Business Insider in 2021. Jillian serves on numerous corporate and non-profit boards, these include: Stanford University School of Medicine Board of Fellows, NASDAQ Entrepreneurial Center Board of Directors, Fuqua School of Business at Duke University.
Investor on The Pitch
Phil Nadel is the Founder and Managing Director of Forefront Venture Fund and of Forefront Venture Partners, one of the largest syndicates on AngelList. He has started and sold several companies and has invested in more than 200 startups with several exits.
New to The Pitch? Start with episode 101 to hear Josh Muccio pitch investors on his own show.