The sign of a true entrepreneur is someone who can look around and go “wait a minute, there must be a better way.” That approach worked well for Outlines‘ founders, who are tackling the unsexy but pretty serious recycling issue of shower curtain liners. The company just closed a $1 million pre-seed lead by Social Impact Capital to make sure that the giant water-splash-stopping sheets of plastic that are present in most of the 128 million households in the U.S. get sustainably recycled, rather than putting them in landfills.
“I moved to New York from London about six years ago. Like all New Yorkers I moved into like an old apartment that required me to have like a shower liner — one of those plastic shower curtains. Coming from Europe, like I was very used to a door or a plexiglass screen on the shower, or a separate shower unit. I was caught in this constant dilemma; I would pick up my shower liner, three or four months would go by it would get slimy and gross,” Outlines co-founder Luke Barkley Young explains. “I was in this really awkward position where I’d want to get a new one, but I had this plastic-guilt of throwing it away. I was used to being able to recycle everything, and I just hated this constant pain point.”
Long story short, Young and his co-founder Megan Murphy set out to solve the problem in a rather elegant way. The pair developed a shower curtain system where the top of the curtain, the weights and the shower curtain hooks are made from sturdy, long-lasting materials, and the shower liner itself is made from easy-to-recycle plastic. The company developed a business model where it can take the shower liner in return and recycle it responsibly, as it ships out replacement shower liners on a regular rotation.
The company started as a project called “Drip,” where the duo found 2,500 early adopter customers who, in addition to being early paying customers, gave a lot of feedback about their needs as consumers. After a while, the company decided that there was almost certainly a sustainable market there, and spun up the Outlines company to explore that direction further.
Of course, a single-product company rarely makes a great investment opportunity, so I pressed the founding team on what might happen next in their product portfolio.
“We haven’t decided fully on what our second product will be. What we are interested in is bringing to market links to a much larger audience. We have a couple of ideas. Things like loofahs, potty scrubbers, dish scrubbers, these things that just by the sheer nature of what they do, are possible products for us. Nobody wants to clean their dishes with the same dish scrubber forever,” explained Young. “So we are working to really understand our customer base, to determine what we should release next. We definitely hope to do that in the first half of 2022.”
On the one hand, the cynic in me is wondering “wait, we are giving VC funding to shower curtains, now?” but on the other hand, if 10% of households in the U.S. replace their shower curtain liners once every other year, that’s still 6 million sheets of plastic that need to be dealt with every year, somehow. Ensuring that it’s recycled responsibly doesn’t seem so bad. Still, I found myself wondering if a washable shower liner wouldn’t make more sense than shipping recyclable sheets of plastic around.
“First of all, shipping in general — especially in the United States — is becoming less carbon-intensive. So if you look at all the major couriers, they are adding more electric vehicles to their fleet. So carbon cost of shipping things back and forth is reducing, which is far superior to constantly shipping new stuff from the Far East where typically these plastic products are made. Also, when you do recycle in the U.S., there’s a lot more legislation and regulation around how recycling can happen versus overseas. The other point on this is when we throw items away they go to landfills. As they decompose, they actually release methane, which is a far more heavy greenhouse gas than CO2 from shipping back and forward,” Young argues. He further explains that washable solutions aren’t really an option: “Reusable, washable plastics would be a dream, but there are two problems with that. First of all, a lot of plastic-based materials that are waterproof, like polyester, when you put them in your washing machine, the friction of that actually really releases millions of microplastics. Municipal water systems just cannot get them out of the water supply. And then if you were to use a natural fiber, they’re covered in what’s called a Durable Water Repellent (DWR). Over time, because of the heat of a shower, it actually corrodes off. When that happens, your shower liner doesn’t work. So for this use case, plastic is by far the best material to use.”
The company today announced it raised its $1 million round, and I wondered what’s possible now that wasn’t possible before they closed the round.
“We just closed the round of $1 million before our launch, which was very exciting. We’ve done a ton of development up until this point, both in the product and the design of the product, the website and the entire online experience. But we’re really excited about investing in our digital tools. The first part is a part of responsible replenishment, it’s all about serving you a plan that is highly personalized to your needs. Obviously what we’re trying to do with that isn’t ensure that we’re not sending you more than you need, but you’re also receiving enough so that you’re not standing next to mold every single morning,” explains Murphy. “We are investing in that piece to make sure that we are as smart as possible, and that we’re creating something that’s genuinely valuable to you as a customer. We are also really excited about further product development. As Luke said, we are already beginning work on the second product, but this is a big category with lots of space for innovation. So we are investing in future product development, to make sure that we’re rolling out new products at a relatively quick pace.”
You can learn more about Outlines at LivingOutlines.com.
Without a clear ask, your pitch deck is useless
You’ve brushed off your Keynote skills, you’re giddy that you’re finally going to be able to start paying yourself a living wage, and you are excited to start pitching your startup’s next round of funding to your investors. It’s heady times, for sure, but hit the other pedal there for a moment, friend — you may be forgetting something.
After working with hundreds of founders on raising money — including the fantastically popular Pitch Deck Teardown series here on TechCrunch+ — there’s one slide that almost every founder gets woefully wrong. The slide is often referred to as The Ask. Or, as one investor friend calls it, the “what is my $10 million going to buy me”? slide.
The Ask is a sensitive topic to a lot of inexperienced entrepreneurs, which makes sense. Trying to right-size a funding round can be a little overwhelming, and there are a thousand different ways of building a startup. If you were successful in raising $8 million, you can do things one way. If you raised $12 million, you could perhaps launch more features of your product a little faster, or experiment more, or go after an additional market earlier. You know that. Your senior staff knows that. Your investors know that. But regardless, you need a Plan A.
What do those key metrics need to look like in order to raise not this round of funding, but your next one?
What do you need to do?
A lot of founders will tell you that they are trying to raise enough money to survive for the next 18 months. That’s probably true, but that will be true regardless of how much money you raise. A better approach is to think about what you need to accomplish to raise your next round of funding, and then work backward from there. This is probably a combination of metrics and milestones.
Metrics are the measurable parts of your business that grow and evolve over time. One of the best metrics you have is revenue, but there could be many others: the number of sales, average order value (AOV), monthly or annual recurring revenue (MRR or ARR, respectively), customer acquisition cost (CAC), customer lifetime value (LTV), daily and monthly active users (DAU and MAU), retention rate (usually expressed by its inverse, churn rate) and much more. What do those key metrics need to look like in order to raise not this round of funding, but your next one?
Milestones are also measurable parts of the business, but instead of tracking them over time, they tend to be binary: You’ve either hit a milestone or you haven’t. For startups, this could be key hires; finding the perfect, experienced CFO that can help take your company public is one major milestone a lot of companies at some point need to hit. Product launches (coming out of beta), launches in particular markets (launching only in California) and localization (launching your app in Spanish and French, for example) are also important milestones. Financial milestones are also common; the first time you make a single dollar from any customer is a huge shift in the business. When a customer, on average, starts to make you more money than it costs you to acquire them is another. For earlier-stage companies, completing a customer validation phase by talking to, say, 100 potential customers is a milestone.
When you’re raising money, you will be mapping out a set of milestones that you need to hit in order to validate your company. In addition, you’ll set a number of trigger points for metrics — hitting $1 million ARR, having 5,000 daily active users or finding a combination of customer acquisition channels that means you can acquire customers at a reasonable blended CAC, for example.
So let’s examine how to put together a great “ask” slide by ascertaining what it takes to determine how much you need to raise, how to create a specific set of goals and how to bring it all together in a coherent whole.
Tech doesn’t get more full circle than this
Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.
Tech innovation is a cycle, especially in the main character-driven world of early-stage venture capital and copycat nature of startups.
The latest proof? Y Combinator this week announced Launch YC, a platform where people can sort accelerator startups by industry, batch and launch date to discover new products. The famed accelerator, which has seeded the likes of Instacart, Coinbase, OpenSea and Dropbox, invites users to vote for newly launched startups “to help them climb up the leaderboard, try out product demos and learn about the founding team,” it said in a blog post.
If it sounds familiar, it’s because — in my perspective — Y Combinator is taking a not-so-subtle swipe at Product Hunt, a nearly decade-old platform that is synonymous with new startup launches and feature announcements.
Y Combinator doesn’t necessarily agree with this characterization: The accelerator’s head of communications, Lindsay Amos, told me over email that “we encourage YC founders to launch on many platforms — from the YC Directory to Product Hunt to Hacker News to Launch YC — in order to reach customers, investors and candidates.”
The overlap isn’t isolated. As Y Combinator makes a Product Hunt, Product Hunt is making an Andreessen Horowitz. Meanwhile, a16z is making its own Y Combinator. Not to mention Product Hunt has investment capital from a16z and formerly went through the Y Combinator accelerator.
The strategy is more than a tongue twister, it’s a signal on what institutions think is important to offer these days (and why they’re starting to borrow more than sugar, or deal flow, from their neighbors).
For my full take, read my TechCrunch+ column, “YC makes a Product Hunt, Product Hunt makes an a16z, a16z makes a YC.”
In the rest of this newsletter, we’ll talk about Coalition, Backstage Capital and Africa’s temperature-fluctuating summer. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter or subscribing to my blog.
Deal of the week
Coalition! Built by a quartet of women operators in venture, Coalition is a fund meets network that is trying to get more diverse decision-makers onto cap tables. The two-pronged approach of fund and network helps Coalition cover multiple fronts: Founders can turn to the firm for capital or the network for advice at no further dilution. Aspiring investors and advisers can turn to the firm to begin building out their portfolio, and LPs can put money into an operation that is committed to broadening diversity on cap tables, known to have economic benefits.
Here’s why it’s important: Coalition co-founder Ashley Mayer, the former VP of communications for Glossier, explained a little about the building philosophy behind the new company.
Mayer explained that she and her three co-founders saw the value of taking a “portfolio approach” to careers, basically going deep on their respective operator roles while also angel investing and eventually scout investing. Three of them previously worked in venture but left it because they missed the experience of operating. Now, they’re trying to scale a way for people to keep their day jobs and build beyond it. Coalition co-founder and Cityblock Health founder Toyin Ajayi said that “as one of few women of color leading a venture-backed company, I feel a deep obligation to hold the door open for others.”
When do layoffs matter? Trick question — always
This week on Equity, we spoke about Backstage Capital laying off a majority of its staff, weeks after pausing any investments in new startups. The workforce reduction, which impacted nine of Backstage Capital’s 12-person staff, was due to a lack of capital from limited partners, per fund founder Arlan Hamilton.
Here’s why it’s important: Backstage Capital has invested in over 200 startups built by historically overlooked entrepreneurs, while Hamllton herself has invested in more than two dozen venture capital funds. Despite having impact, no single firm can be immune from the difficulties of venture (or growing in an environment full of macroeconomic and cultural hurdles). Below is an excerpt of my story.
Without more support, it becomes difficult to close shop on new investments, bring more assets under management and bring more follow-on investments, Hamilton said.
“Somebody asked me, ‘why don’t you have more under management?’” she said during the podcast. “You gotta ask these LPs, you gotta ask these family offices, you gotta ask these people who ask me, ‘how can I be helpful,’ and I say ‘invest in our fund,’ and I never hear from them again.”
Africa charts its own course
TC’s Dominic-Madori Davis and Tage Kene-Okafor wrote a story about how the downturn is playing out in Africa, essentially answering why we should all be tuning into the continent’s activity this summer.
Here’s why it matters: Africa’s venture capital totals weren’t too shabby in the first quarter, but investors think that it may just be a reporting delay. If most of the deals were finalized before high interest rates, the war and inflation, experts say, we may see an economic downturn soon start affecting developing markets. The story doesn’t stop there; I’d read more to see what Tiger Global tells us and how August is shaping up to be a key month of movement.
Across the week
Seen on TechCrunch
Seen on TechCrunch+
Until next time,
Google will start erasing location data for abortion clinic visits
In the aftermath of the Supreme Court’s decision to strip federal abortion rights in the U.S., many people are questioning how the apps they use every day might suddenly be turned against them.
As concerns mount over the endless well of data that tech companies built an entire industry around, Google is taking at least one step to mitigate some potential harm related to location tracking.
The company announced Friday in a blog post that it would remove location history data about some “particularly personal” places from a Google account shortly after someone visits. Locations that will have their data deleted include “medical facilities like counseling centers, domestic violence shelters, abortion clinics, fertility centers, addiction treatment facilities, weight loss clinics, cosmetic surgery clinics, and others,” according to the blog.
Google also noted that Fitbit users who use the device’s companion software as a period tracker currently must delete those entries one by one, but an easier way to “delete multiple logs at once” is on the way.
The change to location history will go into effect in the next few weeks, emptying one potential bucket of data that law enforcement could demand from the company. Google notes that its location history feature is off by default for people who use its services, but if you’re not sure about that, it’s always worth double-checking what personal information you’re actively sharing with tech’s data brokers — particularly now.
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