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‘What a bunch of idiots…’ I thought to myself, tossing the remnants of my coffee in the trash.
It was 2014, and I had just heard a founder duo speak at my university’s coffee shop.
The talk was *not* a hot ticket event - all told there were around 12 of us who showed up.
Much of that had to do with the founders’ product - it wasn’t some shiny new software or social network (very hot in 2016).
It was ketchup.
The founders laid out their vision for Sir Kensington - a ketchup brand that promised a bold personality and a degree of quality higher than what was on the market. At the time I scoffed at the premise.
Sir Kensington ketchup, flanked by expansion products like mustard & vegan mayo
To me, ketchup was a commodity. Whoever could produce it most efficiently could sell it for less and obliterate the competition. I walked out of the coffee shop thinking that Sir Kensington would get crushed by Heinz & Hunt’s, who collectively owned 80%+ of the market at the time.
Three years following that talk, Sir Kensington was acquired by Unilever for $140M.
HERE’S WHAT I GOT WRONG
Looking back, here’s what I think I missed in my analysis of the opportunity.
Even in markets that are perceived to be commodities, there will be room for a premium option - so long as the market is large enough. Ketchup is a $26B a year industry, and so there’s room here for a premium option to have success.
It can sometimes be an advantage when the market is consolidated by 1-2 players. I thought the size of Heinz & Hunt’s would block any new entrants, but it created the perfect void for a new brand to carve out a small niche. If there were 100 ketchup brands all vying for attention, Sir Kensington may have been lost in the clutter.
It’s better to be different than better. Sir Kensington could’ve just said they’re the best quality ketchup, but I doubt this would have gotten them far. Instead they created their brand around a posh British mascot named Sir Kensington, who sported a tophat, monocle, and handlebar mustache in the logo. It was a complete divergence from the simple branding of Heinz and Hunt’s, and helped them stand out to consumers.
Next week, I’ll share a startup investment deal that leans into the three learnings above. I had the chance to chat with the founder and I can promise you it is not what comes to mind when you think of innovative startups.
But ‘boring’ businesses can sometimes be the best businesses, and this particular startup has one of the best indicators of success - more business than it can handle.
We’ll dive into it next week, that’s it for now!
Big investors are buying this “unlisted” stock
When the founder who sold his last company to Zillow for $120M starts a new venture, people notice. That’s why the same VCs who backed Uber, Venmo, and eBay also invested in Pacaso.
Disrupting the real estate industry once again, Pacaso’s streamlined platform offers co-ownership of premier properties, revamping the $1.3T vacation home market.
And it works. By handing keys to 2,000+ happy homeowners, Pacaso has already made $110M+ in gross profits in their operating history.
Now, after 41% YoY gross profit growth last year alone, they recently reserved the Nasdaq ticker PCSO.
Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals.
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