The Tardigrade in 2020

I want to talk about Tardigrades. If there is anything that 2020 has taught us it’s the importance of being nimble, capital-efficient, and resilient. On a recent TIG Talks episode, I was joined by Nick McCoy of Whipstitch Capital and Chris Fenster of Propeller. Nick and Chris both brought data points that support my belief in the Tardigrade.

One of the critical data sets came from the review of two distinct cohorts of brands. The first burned $1 of equity for every $1 in revenue. The other cohort burned $0.20 for every $1 in revenue. To get to $20MM, the first cohort raised $20MM, and the other cohort raised $5MM or less.

As they went a little deeper into the data, interesting differences appeared. Between the highly capitalized companies and those in the other more conservative cohort, there was almost a 7 point difference in trade spend. The former spent far more on slotting, which given the growth at all cost mindset typically embraced by highly capitalized brands, makes sense.

Another interesting difference between the two cohorts was the amount spent on SG&A. The more conservative companies spend on average 35% of revenue on SG&A while those highly capitalized averaged 61%. Just contrasting these two data points, trade spend, and SG&A, it is easy to see the weight the high-capitalized brands place upon their shoulders. For every dollar of revenue…