In this exclusive Q&A, retail industry leader and serial investor Paul Greenberg reveals which companies and categories he's investing in now. Greenberg holds advisory board roles on several retail tech businesses, is a non-executive director at the National Online Retailers Association (NORA) which he founded in 2013, and was on the Australia Post stakeholder council.
In a recent LinkedIn post, you talked about driving more into angel investing in 2024. What key categories are piquing your interest right now?
I had thought about getting a little bit crystal clear about what I plan to do this year, and in the sort of autumn years of my career, but still have a lot of balls bouncing. Category-wise, my personal passion is sustainability. I'm probably not the only one in venture capital, or retail tech, talking about sustainability. But it is really close to my heart. Now, I guess the million dollar question literally is the commercial models that can arise out of sustainability. We know all about the good stuff. The more altruistic, ESG elements, but where is there profit or money to be made? Ultimately, to me, the most sustainable models are those that can be profitable, and commercially sustainable.
Can you share an example?
I can talk to you about a few of the companies I have invested in which I believe are making great progress in that area. One of them is in fashion: AirRobe. So [founder Hannon Cornazzetta] is a lovely, amazing founder. I love her business model. It is in that sort of secondary market, the circular economy. A lot of these terms still have to be defined. But I'm pretty keen to understand more about that market. We are also focused in the trade on the primary market and building brands.
Which leads me to another interesting example: I'm a non-executive director and investor in InStitchu. Two great Aussie guys [founders Robin McGowan and James Wakefield] have really built best-in-class globally in made-to-measure. Why would made-to-measure be sustainable? Because we don't throw away stuff that's made to our size. So I say to InStitchu, the reason I love you guys and why I've invested is less about being a suit business, which is great, but more about it's made-to-measure, it's just in time, there's no wastage, your customers keep the stuff for many years, it's proven.
Are there any other categories piquing your interest in investment?
The other one is rental. We haven't cracked the code for rental. And there's obviously really strong movements, mainly coming out of the US...Rent the Runway and things like that. I still think there's a long way to go in rental.
Why do you say that?
I think two big things. One is it really needs to get scale. So as a mom with two kids, I might do a bit of rental on Facebook marketplace with the Moms group. And that's great. I'm all for it. But how does it get to that real scalable size?
And then there's profitability. How does rental become a profitable business, done at scale, really using technology and low friction, and I don't think we're there yet. So there's a lovely couple who do ReleaseIt out of Sydney, so they're kind of a local version of Rent the Runway. But unfortunately, we're still not quite there yet in terms of a scalable, profitable model.
That's the exciting thing about angel investing, you're looking to see the kernel of the next big thing that really can take things to the next level.
What companies or categories are you hesitant to invest in?
It's a really good question. Usually in my life, I know what I don't like, and then I have to work out what I like. To be frank, I would avoid categories that are dated in terms of their product lifecycle. I certainly understand the need for fast fashion, because we all need affordable, fast-changing product, but it wouldn't be my cup of tea. And I think even the big fast fashion businesses are re-looking at the way they do business. So you know, I'd probably steer clear of that. I do like smaller niche retail. But in general, for some reason, I found myself more on the tech side of things than the retail side of things. So I've been a bit slow to invest in retail per se.
Although I would say this to you, one of the reasons I think I've had a bit of success is because I've spent 35-40 years in retail. So a lot of the tech that I've said that's good is tech that I wish I had thirty-five years ago, when I was in the frontline of retail and e-commerce, particularly with businesses like Deals Direct and MyDeal. So it's quite a nice lens to have to say, 'Well, I was in retail, I saw what wasn't going well, and now I'm looking for tech that can remove friction for shoppers, help merchants grow their businesses.' And if they tick those simple boxes, they generally have a good chance of getting up. But not everyone will. So I think I really use that lens. But invariably, I allocate capital towards technology versus the actual merchant themselves.
What is the ideal retail model to you?
I like direct to consumer retail. So good old fashioned DTC, where, essentially, there's an efficiency where the product you sell is the product you own. And I'm less bullish, if I have to be frank, about the traditional retail model, which is often wholesale, distribution, retail, customer. I think we're seeing that shopping centres are finding it tough going. I'm just less bullish about it.
There's a lifecycle for every sector, or every retailer - the great retailers in Australia from 50 years ago that are no longer here - and I think that's just normal, almost Darwinian. So I'm trying to read ahead and find out what are the next good things on the retail front. I guess my suggestion would be, if you and I were to start a retail business tomorrow, I'd say it should be global. Because we've got plenty of customers out there. Seven billion customers. It should be direct to consumer; so we should own the IP, the product, the brand, because I think that's just smarter. And I think it's a nice creative journey. It should have good value density, so we should be able to ship it. We're not going to do dining room tables and ship it to New Zealand, you know, it's going to have to be nice and high value. If it's in a small box and low value, that's also not really good, because global shipping is expensive. But customers will pay for it if there's value density there. So those are some of the things I'm looking for.
I'm an investor in a lovely business called Dog by Dr. Lisa. And I guess in pet there's a bit of fashion, isn't there? So she's a very well known veterinarian, and you'll see her on Bondi Pet Rescue. She's built this brand over the last few years. I mean, still a long way to go. But the growth has been straight up.
Lisa has just shaken her profession and she just feels that the pet category - which by the way is a great one; it's why Woolworth's have invested in Pet Stock and others - is that she wants to just build a pet brand that is ethical, quality, and backed by her own veterinary experience - she's still a practising vet. And she's a bit of a celebrity, which doesn't hurt.
I have been an angel investor in that business. So I'm not avoiding retail completely, but I like different, so I guess I'd be saying to you, let's start a global niche rather than go for world domination. There's a lovely saying: Get big, get niche or get out... and there is so much truth in that.
Through Jam Pad Investments, you hold advisory board roles. What are the key areas of focus for the fashion businesses you advise?
In my personal capacity, I'm a non-executive director of InStitchu. I'm an independent director of Woolworths with a particular focus on on the marketplace business [MyDeal], and we'll talk about that. I also have a board role at Atomos, an ASX-listed company. And I love the Culture Kings founders, Simon and Tah-nee Beard, but I'm not working with them [anymore], because the company got sold and listed in the US to A.K.A Brands.
A.K.A Brands also look after Princess Polly, another great Australian success story. Culture Kings are killing it in the US. This is American streetwear built and created in Australia, with an enormous store in Las Vegas. I was there a few months ago. Thousands of square metres of streetwear out of suburban Gold Coast and Brisbane. It's just a great story. And it's just going off. A.K.A also owns Petal & Pup, Princess Polly and mnml. I'm no longer involved with Culture Kings, but delighted to have known Simon and Tah-nee for many years. We were a small advisory board as they transitioned in that very difficult decision to sell a business that they built over 15-20 years. It's a hard one. It's quite emotional actually.
Do you have key focuses for InStitchu?
I love that business. I love the founders, Robin and James that to just two lovely, lovely guys. They've been beavering away at this for close on 12 years, building, as I say, not only some solid brand equity, but building an incredible platform, which is called Taper - which is almost like a separate business within a business. It is the most powerful SAAS platform (software as a service) that really creates a seamless made-to-measure experience.
I think like all businesses, we really have to focus in the current climate on profitability. So the guys [at InStitchu] are doing that. I mean, I think they've got a good business there but retail as we know is detail and I think they're using this time - it is a very challenging time in retail and lots of change - to really focus on what retailers call the one percenters. They are small, but effective changes that will continue to help them grow their profit line. But they're also continuing to innovate. They're trialling a very small or off the shelf range from one of their key suppliers. Although it's a showroom and it's bookings - let's say you and I have to go to an event tomorrow, and of course, that's a 14-21 day lead time for made-to-measure... is there anything off the shelf? Ready to wear? I do think it's quite a risk, because the core proposition we were saying earlier is, you can't be everything to everyone. But I think if you're right in the middle of the bell curve, and that's where they want to be, they can have a very basic range, but it's quality. It's classy, it's classic.
*Transcript edited down for brevity.