In this episode, CJ sits down with John Connolly, Managing Director at Spectrum Equity, to explore the evolution of consumer investing. They discuss how investor sentiment toward consumer companies has shifted over the past 15 years and why traditional SaaS metrics like net dollar retention (NDR) don’t always apply in this space. John explains what signals indicate a strong consumer business, whether brand or product wins in the long run, and how consumer companies have adapted their monetization strategies over the last decade. Plus, John shares the story behind Spectrum Equity’s investment in Teachers Pay Teachers and the craziest thing he’s ever done to land a deal.

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NetSuite provides financial software for all your business needs. More than 40,000 companies have already upgraded to NetSuite, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you're looking for an ERP platform ✅, head to NetSuite https://netsuite.com/metrics and get the CFO’s Guide to AI and Machine Learning.

Planful is a financial performance management platform designed to streamline financial tasks for businesses. It helps with budgeting, closing the books, and financial reporting, all on a cloud-based platform. By improving the efficiency and accuracy of these processes, Planful allows businesses to make better financial decisions. Find out more at www.planful.com/metrics.

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TIMESTAMPS:

(00:00) Preview and Intro

(02:32) Sponsor – Subscript | Rippling Spend | Vanta

(06:04) The Evolution of Investing and Defensibility

(08:50) Cooling Investor Appetite for Consumer Businesses

(10:13) Efficiency Metrics for Consumer Businesses

(12:24) How To Navigate Retention and Churn

(14:12) Sponsor – Tropic | NetSuite | Planful

(17:47) When Churn Is Necessary

(19:15) Increasing TAM in Consumer Businesses

(21:13) The Most Important Metric: Funnel Health

(24:08) Celebrity Partnerships as a Competitive Mode

(25:05) Why Brand Is Even More Important in B2C Than B2B

(26:25) The Strongest Brands John Has Invested In

(28:23) Changes in How Companies Monetize Over the Past Decade

(29:52) Using the Supply Side To Bring You Demand

(34:02) How COVID-19 Wreaked Havoc on Consumer Trends

(38:11) Evaluating Consumer Businesses

(39:04) The Craziest Thing John Has Done To Win a Deal

(40:56) How To Pitch to Bootstrapped Founders

(43:00) The Revolutionary Teachers Pay Teachers Marketplace

(46:18) Wrap