Welcome to Flash Feedback by Volition Capital, where we will be looking at real pitch decks from real companies and taking you behind the scenes to help you understand how an investor processes the pitch as they review it. In each episode, we will feature one pitch deck, review it quickly, and provide real-time perspectives as we walkthrough. At the conclusion of each episode, we will elevate two or three key take-home learnings that will hopefully be helpful for founders and management teams as they think about how to position and present their own businesses.
Flash Feedback Episode II: The Tree center
Larry Cheng: Let’s dive into The Tree Center. All right, let’s dive into the deck.
I want to frame our analysis of this deck with a very simple question, which is what are the two or three missed opportunities you see for Tree Center to go deeper on a couple of topics. Again, as I mentioned, this is a great overall deck and it engendered my enthusiasm, but they dipped their toe in the water on a couple of topics that I think they could have gone deeper on. So let’s look out for those missed opportunities in an otherwise very strong deck.
All right, the First page, starts out strong with your best metric. They are starting out with their revenue growth, revenue history, revenue scale. Fantastic story: five million to twenty-two million to fifty million. So that’s great. I think it’s always advisable to put your best metrics upfront. And then they talk about acreage, which is actually a new metric for me. I haven’t seen acreage in a pitch deck, so it seems to follow revenue. I think they could have perhaps put in a little bullet point on what acreage means in this business. I presume that’s manufacturing or fulfillment capacity. But, nonetheless, I think starting with your best metric home front is always a good idea.
Next problem statement, which is that the local nursery is not a great experience for consumers driving parking, lifting plants, dirty cars, etc. I always think it’s great to put your value proposition statement early because it’s fundamentally why The Tree Center exists to solve this problem, which I think many of us probably identify with. And then they come with their solution, which is a much easier consumer experience, massive selection delivered to your door, and so forth.
My only suggestion for the value prop section here is to the degree you can quantify your value, it makes it a stronger overall statement. So, if you have a selection advantage, can you quantify that? If you have a pricing advantage, can you quantify that? You know, anything that gives it more substance is great. But either way, whether you can quantify it or not, sticking your value, pop it up early is a good idea.
All right, for the next slide, this slide looks to me to be somewhat redundant. And, in reviewing the revenue and acreage history, that was just presented a few slides earlier. So, I don’t know how this is additive other than to reinforce an already strong point. So, I might have used this real estate in the deck for a more complimentary point.
All right, “why now?” I love this. By the way, I love slide titles that are just a question that is answered. And this is a great question, which is why does this business exist today? And I think they’re saying that consumers are willing to buy most things online. Shipping has become affordable. And, so, it’s not economic to do this.
And this is where I think there is a first missed opportunity. I think they could have gone deeper right here to articulate one of their stronger points, which is and this is my overall suggestion is to make the success of your business feel inevitable rather than just making a general statement by saying consumers are willing to buy everything online. I might have shown every 10 consumer product categories and shown the winners of those categories. So you could have said pet food: Chewy was the winner; you could say for furniture: Wayfair was the winner; for automobiles, Car Gurus was the winner; for collectibles and other artisan products, you could say it’s Etsy; for shoes, you could say Zappos; for apparel, you could say it’s StitchFix and so on for others. And, you could just lay out a handful of consumer product categories that all moved online, which reinforces the point being made here. But, in an additive way, show the winners are all billion or multibillion-dollar companies and then show that really the landscape products market is one of the last untapped consumer product categories of substance where there is not a distinct winner yet. And, so you can make this you can sort of engendering this sentiment of scarcity value where if you really want invest. This is kind of one of the last open categories and it’s sort of inevitable. Of course, there is going to be any winner in this place. Of course, that company is going to be worth a billion dollars or north. And you want to leave investors thinking like it’s sort of a slam dunk, inevitable business. And that’s where I think they could have gone deeper. So point number one is making the success of your business seem inevitable. And the way you can do that is by sticking it squarely in sort of a tsunami of secular trends that are going in your favor.
“Why now?” Moving on to now market size. So, I think this is a very nicely done slide. A lot of market size slides just have the high-level number, which would be the fifty billion dollar category here. But they do a nice job of segmenting into these three large categories of vegetables, herbs, indoor plants, and outdoor plants. Then they segment within it and then they segment by what they offer and what they’re not offering yet, which gives a sense that there’s more growth ahead. So I like this segmentation. It’s kind of the analysis that we would do anyway. And so they’re laying it out. And, ultimately, you’re seeing that right now they’re in this sort of 14 billion-dollar-plus market. And so I think it’s it’s well done overall.
A competition slide, here, laying out their direct Internet pure-play competitors, as well as the incumbents, and I think this is a good slide. What I would have wanted to see here is just some of the scale of what these companies are at. I mean, they talk about fast-growing trees at 50 to seventy-five. But how much is Home Depot and Lowe’s here generating in this market? It’s always nice when you’re investing in the business to have a clear target of who you’re going against and who you want to beat. And in that sense, they might have framed it as Home Depot and Lowe’s and maybe made some comment or some do some research on why the Home Depot – and those experiences – are ultimately beatable. They probably need to steal share from hope to deepen those. And, this is your chance to say why you think you can do that.
Now we have a visual of the product. This is nice packaging. I like that they showed it. This also shows that this is a direct-to-consumer brand, not a third-party business. So they’re branding their products. And it certainly looks better than the traditional nursery experience. And, they’re demonstrating that there is a mobile and sort of Internet aspect of the business. I like the fact that they’re pointing towards, again, near-term expansion into other categories of plants in terms of vegetables and indoors. But, in a nice visual here.
All right, a little bit on Unit Economics, I think this is the second area where they could have gone deeper. And it’s a bit of a missed opportunity to explain why. Overall, I actually think these metrics are strong. I think where they could have gone deeper, and I’ll make this as a general statement, is if you have trend data that is that supports your narrative, that is a stronger data point to use instead of an individual point in time data. So, use trend data instead of moment-in-time data. So, for example, if the customer acquisition cost is stable or declining and that’s the way it’s been for two years, I would show the trend line on that because it lends credence to the notion that your CAC is unavoidable as an investor. If your average order values are going up, you know, show the trend line. If your gross margins are going up, show the trend line rather than a single data point. You want to make the investor feel that while there’s a lot of volatility, some of the core metrics of this business are rock solid over time, going in the right direction, and that makes it ideal for them. So, again, this is a perfectly good slide. I’ve seen many like it to the degree that the trend line history here is strong for the narrative. I would have shown that to make this an even more compelling slide. So take home point number two is when the trend line supports your narrative. Show the trend not just in individual data points.
Here is a growth plan to one hundred million of revenue. This is actually a great slide that I don’t see a lot of times. I do think it could have been framed even better. So, this is where my third opportunity is. But they’re talking here about how they can expand to the West Coast. They can expand additional categories, they can expand their inventory, and obviously, expand acquisition channels for reach. And so I think they’ve done a nice job of laying out what the growth levers are. And what I would have just suggested is to quantify the impact. So point number three is this: show that your business has many growth levers that can drive significant revenue expansion. And, so you want to leave the investor feeling like they don’t have to hit on all of these growth levers to win, but if they do, it’s a huge home run. And if they hit on most of them, it’s still a huge home run. So it doesn’t feel like you’re single-threaded and that there are one or two growth levers and you have to nail them or else the business isn’t going to work. And so I think they’ve done that here. My suggestion would be, is just to quantify it. So, if you expand to the West Coast, what would that have meant to revenue this year? Would it have doubled or tripled if you had more inventory and you could afford that with capital, what would that have meant for revenue? Would you have been able to do 50 million, 100 million this year instead of, you know, twenty-two million trailing? If you expanded into additional categories, what would that have done to revenue? So you want to feel make the investor feel like, yeah, I did twenty-two million last year, but had I addressed all these growth levers it would have been one hundred million dollar business last year. And, with your capital, we’re going to pull on these levers and that’s why it can be a multi-hundred-million-dollar business going forward, not even just a hundred million revenue, but north of that. And, so, a really good topic here. I would have just said quantify the impact in some way and it would have really driven the point home.
Here are the founders. The first thing I notice about this slide is that they don’t have traditional titles, which is which we’ll discuss on the next slide. But, you see some strong e-commerce experience, some domain experience, which is always great if you get to the next slide. It’s interesting because Klint, Chris, and Jonathan have put themselves together. And so it does align the question of who is running the company. So, that begs some explanation and then you don’t see names underneath it. So it makes it actually look like this team is yet to be built, which may, in fact, be the case. And, so overall, I’m not sure that this slide helps because it begs the question of leadership structure and it begs the question of how deep the team is. But that’s neither here nor there. I think if you want to show the broader team it better to show up when it’s built out and when it’s not.
All right, back to financials, this historical revenue growth we’ve covered, but here’s also the order account over time. What I do like about this slide, they’re showing two plans going forward. They’re showing an internally funded plan and a VC funded plan. And it completely makes sense that these two are not the same. And so I like the fact that they’re making that delineation for us. And, I like the fact that even without us, the company is projected to grow pretty aggressively. So, good framing here.
And then lastly, they talk about the overall investment they’re looking to raise. If you look at the bottom point here, it says Bootstrapped, profitable, found her own growth north of 300 percent. Those are great points. They happen to fit very well with Volition’s overall focus. And, I would say that could have even brought been brought right up-front.
But overall, that is that’s The Tree Center’s deck. And, as you can see, I think it’s very clear and a job well done.