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A company you’ve never heard of that’s secretly everywhere

The Grape-Nuts shortage of 2021 is officially over.In late 2020, cereal lovers were alarmed to find the beloved brand absent from store shelves -- a result of supply chain woes and unexpected demand. On secondary markets, Grape-Nuts fetched >$100/box.Now, Post Holdings says the dark days are behind us. The company is offering a rebate to any Nut-head who splurged above the MSRP.

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The Hustle

The Grape-Nuts shortage of 2021 is officially over.

In late 2020, cereal lovers were alarmed to find the beloved brand absent from store shelves — a result of supply chain woes and unexpected demand. On secondary markets, Grape-Nuts fetched >$100/box.

Now, Post Holdings says the dark days are behind us. The company is offering a rebate to any Nut-head who splurged above the MSRP.

Secret powerhouse
The Hut Group warehouse

The direct-to-consumer powerhouse you’ve probably never heard of

Chances are “The Hut Group” doesn’t ring any bells.

But there’s a very good possibility you’re among the hundreds of millions of folks who shopped on one of the company’s websites last year.

This little-known name is, in fact, a multibillion-dollar kingmaker quietly powering the direct-to-consumer (D2C) efforts of some of the world’s biggest brands.

COVID-19 pushed many major brands into D2C

Most consumer goods giants are set up to ship pallets of product to mega-retailers.

Pivoting that operation to D2C — which requires sending 1 or 2 items to your door — is a logistical nightmare. Established companies that want to do this typically have 3 options:

  • Sell through a 3rd-party retailer, or on Amazon
  • Build their own D2C operation from the ground up
  • Outsource the operation to a D2C firm

That last one is where The Hut Group comes in

The firm’s platform, THG Ingenuity, handles everything from website creation to warehousing, marketing, sales, and shipping.

In 2019, Ingenuity sites served 1k+ brands, saw 610m+ visitors, and shipped 80m+ products. Last year, their ~$7B IPO was the largest debut on the London stock market since 2013.

Among THG’s clients? Coca-Cola

When the pandemic shuttered regular sales channels like stadiums and theaters, the soda maker’s revenue fell by 28%.

To help hedge losses, it tapped THG to launch an online store, which finally made it possible to order a Coke subscription without ever getting off the couch.

The D2C outsourcing market may hit ~$156B by 2023

That’s great news for THG, which sees gross margins of 82-99% on its software, according to the company’s investment prospectus.

Century-old brands like Nestle, who had almost no D2C presence 10 years ago, estimate D2C will make up ~10% of sales by 2022.

Now, they’re THG clients, along with P&G, Walgreens, Disney, Microsoft, and other D2C-challenged titans of industry.

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  • Unicorn alert: Pacaso, a second-home ownership startup led by former Zillow execs, raised $75m at a $1B valuation. The crazy part: it launched less than one year ago.
  • Chip shortage worsens: GM is suspending production at a Missouri plant in response to the global semiconductor chip shortage. This follows another production pause in Kansas, and issues abroad in Brazil, Mexico, and South Korea.
  • Text me your order: Yum Brands is buying Israeli-based order-via-chat startup Tictuk Technologies. To date, the company has run successful tests at ~900 KFCs, Pizza Huts, and Taco Bells in 35 countries.
  • GameStop update: $GME shares dropped ~34% on Wednesday after the retailer held an uninspiring, 20-minute earnings call.
  • Weird local news: A Girl Scouts troop leader in Pataskala, Ohio, has been accused of stealing $12.5k in cookie sales and event fees. “She was literally caught with her hand in the cookie jar,” Ohio’s attorney general said in a statement.
chart graphic

Some serious newsletter drama is brewing at Substack

While ~30k media jobs were cut in 2020, Substack — a popular email newsletter platform for self-publishers — has continued to grow.

Today, the Y Combinator- and Andreessen Horowitz-backed business has 250k+ paying subscribers. Its top 10 writers make an estimated $7m in annualized revenue.

But per Vox, some Substack writers are taking serious issue with how (and why) Substack pays certain writers.

First, let’s talk about Substack’s business

In the era of the creator economy, Substack claims to put the writer first. It does this by being:

  1. Reader-supported, not advertiser-reliant: Its model has proven that subscribers are willing to pay for quality, differentiated information.
  2. Absent of newsfeed: With Substack, you sign up for emails from your favorite writers covering topics you care about most.
  3. Tech- and design-forward: The interface is easy to navigate, and the platform has a built-in payment system, allowing writers to focus on content.

As a result, its success is eclipsing incumbent writer platforms like Medium.

So, what’s the beef?

Writers like Jude Doyle, Annalee Newitz, and Emily VanDerWerff have aired public grievances about Substack’s sponsored writers:

  • Certain writers are paid large amounts: Critics say this makes Substack more of a curated media company rather than the tech platform it claims to be.
  • Substack doesn’t disclose which writers it pays: Several dissenters argue that this goes against journalistic tenets of transparency and disclosure.
  • Some sponsored writers are allegedly transphobic and/or alt-right: Writers have started calling out high-profile Substack recruits like Glenn Greenwald, Matthew Yglesias, and Graham Linehan.

The anti-Substack movement is certainly divisive: Some folks, like writer Lindsay Gibbs, question using the platform while others buckle down on free speech.

Talk about a writer’s block.

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What happens when a startup is named a “Most Fundable Company”?

Smart people — like you, you wily little minx — invest in it.

Perfitly joined an elite group when they were named a “Most Fundable Company” by Pepperdine’s Graziadio Business School (that’s no small feat, considering over 4,500 other companies applied).

What makes Perfitly special? Three words: Ecomm game-changer.

Their AR/VR-AI platform lets online shoppers try on clothes in 3D before buying, solving the two costliest problems in ecommerce (high returns and low conversion).

A pilot program on Target’s website shows stunning numbers:

  • 64% reduction in returns
  • 80% increase in conversions

Now, validated in the deployment at Target and with ecomm continuing to blow up (to the tune of $95B and 10% annual growth), now is the perfect time to invest.

Check out Perfitly’s SeedInvest page right here and get in ahead of the crowd.

Invest in Perfitly here →
Food Tech
produce on a laptop

The cold storage real estate market is booming, thanks to online grocery sales

If you’re an online grocer, pandemics are an incredible opportunity.

In 2019, ~5% of groceries were purchased online. That number hit 10% in 2020 and could reach 12% by 2025.

The hunger for online grocery services is feeding demand for new real estate development…

Cold food-storage warehouses are hot

Companies are whipping up plans to build tens of millions of square feet of urban-centered food warehouses designed to efficiently serve home deliveries.

But keeping food cold doesn’t come cheap:

  • Americold invested $461m in cold storage facilities in 2020.
  • Provender will spend billions constructing facilities across the US.
  • Lineage — fresh off a $1.9B funding round — expects 21 new developments this year, up from 10 in 2020.

Altogether, the cold storage construction market could be worth $18.6B by 2027, up from $7B in 2019.

The grocery space is innovating like crazy

UK-based grocery chain robotics company Ocado recently saw sales jump 40%. Ocado builds autonomous food packing warehouses designed for home delivery.

In London, Ocado is rolling out micro-warehouses for delivering groceries within one hour via refrigerated electric and pedal-powered vehicles.

Across the US, Ocado is partnering with Kroger to open 20 automated fulfillment centers as companies like Amazon expand their own grocery offerings.

Ocado CEO Tim Steiner says he views Amazon as “a very small competitor.” We’re still waiting on Bezos’ diss track in response.

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Try route here →
Chart of the day
Search popularity for Cinnamon Toast Crunch

On Monday, 41-year-old comedian Jensen Karp posted a startling find on Twitter: He’d discovered several sugar-coated shrimp exoskeletons in his box of Cinnamon Toast Crunch cereal.

His series of tweets went viral — and Google search interest in “Cinnamon Toast Crunch” skyrocketed.

In a response, the folks at General Mills assured the public that there was “no possibility of cross contamination with shrimp.”

The origins of said crustaceans are still unclear. But it’s not General Mills’ first brush with seafood contamination: Per the New York Times, the company had to trash a shipment of blueberries back in 2011 after it was found to contain shrimp remnants.

But hey, it could be worse: Kellogg once got heat after a video surfaced of a man peeing on Corn Flakes at its Tennessee factory.

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