My favorite businesses.

Drawing inspiration from all the entrepreneurs around us.

One of the coolest parts of the last five years working in VC has been the ability to walk around any city and think about all of the people, stories and entrepreneurs who built that block. It opens your brain to the world of the impossible. In NY it’s your local dry-cleaners, your local coffee shop, the cute boutique. There are entrepreneurs all around us.

On my last blog, I focused on the problems in my life as a starting point. The next question I asked myself was what do I naturally find interesting? One of the more challenging aspects of a corporate job (I know I know, cry for me) is that your time isn’t your own, and business objectives come first. Meaning, the things I find interesting and what my firm finds interesting aren’t always going to be the same.

I started answering this question by thinking about the books I’ve read, and how I’ve invested over the past five years. I read 30 books a year, easily tracked by Goodreads. I have an investing account at Chase and am able to go in and look at what I’ve done over the last five years. I was quickly reminded how much time I spent looking at LVMH in 2021, which led to learning everything I could about LVMH and other luxury brands like Hermes. I was also reminded how much I love hospitality books having read Setting the Table by Danny Meyer and Unreasonable Hospitality by Will Guidara a few times each.

Has anybody every asked you what you consider to be “smart” as an adult? It’s a word I sincerely dislike, but gets used quite often. For those wondering, I wasn’t a good student in high school, albeit always smiley and optimistic, and wasn’t tagged as one of the “smart” kids. What smart means to me is someone who is able to draw insights from various contexts, and apply them to each other.

What is Luxury?

Luxury is a weird thing. Historically, luxury was defined as something rare, expensive and refined.. It was something accessible only to certain classes - Louis Vuitton started off selling trunks for monarchs. Our world has fundamentally changed since those days that one Louis Vuitton started making trunks for Napoleon III’s wife.

In fact it was only in 1987, that Louis Vuitton merged with Moet and Hennessy creating what we know today as LVMH. The deal was worth (ha) 3 million euros and since then, many more luxury brands have joined the group. Today, luxury is different. It is simply a product packaged, sold by massive global corporations. What used to be a status of quality, is now a status of class. The best example is from the “Stealth Wealth” trend. Loro Piana became the signature stealth wealth brand. Who owns Loro Piana? LVMH.

Most of the luxury brands that were once family businesses have been purchased by LVMH or their competitors. What people want today - whether consciously or subconsciously - is the social proof that they belong to a certain class.

This is due in part, to the growth of wealth since the late eighties. Regions that historically hadn’t been wealthy, were seeing and understanding wealth for the first time. Brands understood the psychology and power they hold over the average consumer and suddenly it wasn’t just the wealthy that owned luxury goods, but the middle class. I sincerely believe the other part is due to social media - the constant need to show a specific type of life, requires luxury goods.

LVMH is a brilliant, brilliant company and trust me if I could meet anyone in the world right now it would be Bernard Arnault. However, the business that I found never compromises on quality but consistently has those 60%-80% gross margins is Hermes. To me that’s true luxury.

Hermes started in 1837 and pretty much applies the same model today that it did then. The company has about 7,000 artisans all of whom are trained on the famous saddle stitch. Hermes products are handmade with 76% of its objects manufactured in France.

I’d like to take a moment to think through the business ramifications of some of their decisions. Other luxury companies have taken to outsourcing their manufacturing to China. Some of the manufacturers, are the same manufacturers that produce many other brands we know that are not luxury. However, those companies are still able to build their brand, sell that $3000 bag, and keep more money in the business. What Hermes says is that they will always optimize for quality and they have true scarcity with their bags; a Birkin bag can only be purchased if you have a good relationship with a Sales Associate at Hermes, and if you spend enough money there. If you walk in off the street to buy a Birkin bag, you won’t be able to.

What I appreciate about the LVMH model, is their obsession with the customer. They know their customers and can anticipate what they want and need. What I appreciate about the Hermes model is their ability to be unapologetically themselves - focused on their brand, experience and the quality.

As I started to think through my own business, I noted down each of these points as priorities.

Hospitality

Another huge source of inspiration for me is the hospitality business. I like the idea of a business where the initial reaction is “oooof tough business” and the entrepreneurs ability to put the noise aside, focus on their work and become the successful outliers and not the average statistic.

Danny Meyer is the owner of some of NYC’s favorite restaurants - Gramercy Tavern, The Modern, Union Square Cafe. He also founded the beloved Shake Shack. Will Guidara started off working under Danny Meyer, and became a successful restauranter in his own right owning restaurants like Eleven Madison Park, and The Nomad.

Many of their principles are ones that resonate deeply with me and at the core study how you treat people. They’re how you host people for dinner, how you host special events, birthdays, weddings, and how you treat people in general. I actually learned this point from my last boss and forever mentor. He is able to treat everybody from the guy he’s buying shawarma from, to senior executives at a corporation with the same respect. Similar to Danny Meyer, my boss also honed in on what everybody’s strengths are and when I wasn’t always aware felt free to bring it up (as well as my weaknesses!).

Each line of both Setting the Table and Unreasonable Hospitality has become a source of inspiration. Both Meyer and Guidara focus on the experience of each individual customer, irrespective of how busy of a night it is at their restaurants. They invest in their company, in their employees, in their customers and in their product. They also focus on the constant change, growth and perseverance you need both as an entrepreneur and also as a manager. One of my favorite positions that Guidara coined is called a “dreamweaver”. Their whole role was to help staff create excellent customer experiences. They also discuss the ability to be both profit oriented and creative, and even if they often conflict that most success comes in finding ways to dance between those lines.

These books and entrepreneurs highlight the importance of creating a positive, individual lasting impression. After the last time I finished Unreasonable Hospitality, I connected with Will Guidara on LinkedIn and he has someone who goes through his inbox and responds to each message. How cool!

My aspiration is that I’ll be able to be “smart” and draw from luxury, and hospitality as well as all of the entrepreneurs I see when walking around the city. There is something I can learn from each of these experiences.