Notes: Goldman Sachs Growth Equity Panel

By Laurence Huang (CC’22, Venture Fellow 2020–21, Director)

Thank you to all those who joined Columbia Venture Partners and the Columbia Economics Society in our panel with Christopher Egi (Harvard ’18) and Beatriz Cabrita (Yale ‘19), venture capital and growth equity investors at Goldman Sachs’ Merchant Banking division. I would also like to give a special thanks to Beatriz Cabrita and Christopher Egi for taking the time to share your insights and experiences with the audience.

If you missed it, don’t worry! Here are some of the key takeaways from the panel.

Summary

  • The two startups you should be keeping an eye out for: BentoBox and Splice

  • One trend you should be following: the Creator Economy

  • Books, blogs, podcasts and more

Startups

BentoBox

BentoBox is a restaurant website builder founded by Krystie Mobayeni that has raised a total of $23.6 million since its inception in 2013. In its most recent Series B round led by Threshold Ventures, it raised $16.4 million, with investors such as Bullpen Capital, Haystack, and Female Founders Fund participating. BentoBox’s core value proposition is helping restaurants manage their unique online and digital presence, facilitating everything from reservation booking to online delivery. While the former and latter are offered by services such as OpenTable and DoorDash, respectively, the problem that founder Krystie Mobayeni identified was the lack of control that restaurants have over their digital user experience, or in her words, “restaurants have lost that direct relationship with their guests,” which she believes is the “most important thing in hospitality”. The pandemic has only served to highlight this. With millions forced to order food online for months now, many have come to appreciate the fact that restaurants offer more than just things to eat.

BentoBox facilitates the relationship between its customers and their customer’s clients in three main ways. Firstly, its emphasis on design. It stands to reason that the same attention to detail that restaurants put into their interior decor, which can be the difference between being ignored by pedestrians and having them line up outside, should translate into their digital identity. Secondly, BentoBox’s bundling of features, which include the integration of online delivery, selling event tickets, and the handling of catering transactions, offers a healthy alternative to the one-size-fits-all approach of the incumbents that currently dominate the sector. These features also help increase restaurants’ top line by driving revenue through online orders and physical on-site experiences. And thirdly, BentoBox’s subscription-based business model is a major selling point for restaurateurs, who have for years complained about the squeeze that delivery services have placed on their already thin margins, helping it accelerate customer acquisition. BentoBox’s care for its customers can be seen in several initiatives its’ launched through the pandemic, such as digitising dine-in ordering, building out a donation feature at POS (point-of-sale), and its launching of Restaurants.Love, a food delivery marketplace which preserves the vendor’s individuality.

BentoBox is used by over 5000 restaurants in all 50 states, and with digital adoption set to rise amongst the 600,000 restaurants in the United States alone, the future looks bright.

Splice

If you have dabbled in music-making (like I have), you’ve probably heard of Splice. Splice, which was sourced by Christopher for Goldman Sachs, is a music creation marketplace founded in 2013. It has raised $105 million in funding to date, including a $57.5 million Series C funding round last March. The platform, founded by current CEO Steve Martocci, who previously founded the messaging app GroupMe, has been backed by the likes of Union Square Ventures, True Ventures and Lerer Hippeau. Its core offering is a library of royalty-free samples and loops which anyone can subscribe to for $7.99 per month. While this simple business model seems intuitive, Splice’s secret sauce, which has attracted superstars such as Justin Bieber and Lil Nas X, lies in its unique approach to the creator economy. Key to its sucess is how it incentivises content generation and decreases the cost of song making.

Splice’s ever growing library is the product of individual musicians uploading unique sound recordings and loops. Musicians are compensated based on the popularity of their loops (i.e. how many times they’ve been downloaded), which then incentives them to upload as many high quality recordings as they can, increasing the quality of the library content. On the other side, aspiring musicians and professional producers alike, attracted by easy and cheap access to the unique library of sounds, subscribe to the service. This contributes to a virtuous cycle where more subscribers increase the number of downloads, causing more musicians to upload more content, which then drives more subscribers to join the platform. As with many startups in the creator economy space, coronavirus has been a massive tailwind to the platform’s adoption. A report by Midia Research suggests that nearly 70 percent of artists used lockdowns as an opportunity to spend more time writing and making music. This upsurge made its way to Splice’s bottomline, which reported last year that it saw a 50 percent increase from pre-quarantine activity, with over 1.1 million sound downloads per day since March. This massive growth in downloads meant that Splice was able to pay out $11 million in royalties to musicians in the first nine months of 2020, offering a lifeline to many artists who have seen a major revenue source — live performances — disappear due to social distancing rules.

Christopher, who makes music himself, told us that Splice’s vision for the future is one in which the lack of desire to make music is the only thing stopping you from doing so. Making music, with the wide variety of loops that Splice offers for every conceivable instrument and type of sound, might be possible, even for someone as tone deaf as me.

Trends

Creator Economy

With TikTok’s surge in popularity, and subsequent takeover of culture, increased attention has been brought to bear on the creator economy. Broadly defined, the creator economy describes the subset of the larger economy composed of individual creators generating revenue from making and distributing online content. Adam Davidson, a staff writer at the New Yorker and cofounder of the podcast Planet Money, describes the creator economy as a shift in the type of self-expression that the economy rewards. If success in the traditional modern economy is largely defined by how well you conform to external metrics (i.e. fulfilling work to extrinsically imposed requirements), success in the creator economy is dependent on your unique intrinsic and acquired qualities, or the persona that you present to your audience.

But “creators” have always been around. As noted by Julia Maltby from Flybridge Capital Partners, what has changed is the democratisation of the creation tools and distribution channels once reserved for professional actors, journalists, authors and musicians. In the past 20 years, society has transitioned from the 100 cable channels on TV, to the 30 million channels on YouTube, and from the top hits on radio to the 25 million artists on SoundCloud, or the 500,000 active podcasts on Apple. We have reached a point where digital content consumption has not only become the norm, but all-encompassing, and with this scaled audience comes the ability to monetize one’s creative content en masse.

The creator economy is complex and rapidly evolving but, at the highest level, it can be broadly divided into two groups: entertainment-based, knowledge-based. The former encompasses famous TikTokers and your run-of-the-mill influencer, while the latter covers everything from instructors for online course provider Udemy to newsletter writers on Substack. From these two groups, you derive the ecosystem of companies that support the creator economy: content sharing platforms (i.e. YouTube), marketplaces (i.e. Medium), and SaaS creator tools, (i.e. Kapwing and Substack). General content sharing platforms such as TikTok, Instagram, and Twitch tend to be entertainment-based while marketplaces such as Medium and Outschool tend to be knowledge-based. SaaS creation tools, which includes the subscription service Patreon and tipping service Ko-Fi, can be used by both types of creators. These companies can also be differentiated by the monetization methods employed by creators. For example, creators on YouTube derive their revenue primarily from advertisements while writers on Substack charge a monthly subscription fee.

Due to the consolidated market share large incumbents such as TikTok, Youtube, and Instagram have over the content sharing platform of the creator economy, SaaS tools and marketplaces, which lean towards knowledge-based creators, seem to be a promising area of growth, especially in light of the Covid-induced disruption that traditional on-site education has experienced. As SaaS tools enable higher quality content generation and creators find more ways to monetize their content, new types of work centered around the “passion economy”, a phrase coined by Li Jin, managing partner at early-stage VC firm Atelier Ventures, will open up and achieve greater scale.

Li Jin, The Passion Economy and the Future of Work

Recommendations

Books

  • Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley by Antonio García Martínez

  • The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google by Professor Scott Galloway

Newsletters

Podcasts