Durable
Earlier this week, Rhone’s cofounders announced they had bought back their shares in the technical apparel brand from L Catterton.
Maybe we’re way late with this—and everyone already knows this happened—because the buy back actually happened in July 2022. But we never saw anything about it and the public message seems worth contemplating.
The reason?
From Entrepreneur:
They wanted to reinvigorate their sense of autonomy and build the business in a generational way, not with the hope of an IPO or acquisition a few years out.
‘Our pitch was, 'Hey we have built this brand over the last eight years,'" says Nate (Checketts, Rhone’s cofounder and CEO). "'We think it can be successful in an IPO market, but we want to hold it for the long term. We believe there will be monetization down the road. You won't have control rights. We'll create an SPV and you'll have a board seat. It's an evergreen investment and a chance to be a part of a brand you're proud of.'"
A lot has been made recently of the need for brands to turn profitable (or, at least, prove they can be profitable). Less has been made of what that means.
There has been plenty written about the tension between venture funding, private equity and brand building. Some of it has been critical.
The most critical, perhaps, is Ana Andjelic’s criticism of “GMO brands:”
Just as GMO food doesn’t do anything nutritionally for humans, GMO brands don’t do anything for culture, or for their company’s long-term business. Without a connection to culture, Coca Cola is just a carbonated water and syrup. Today’s VC time horizons do not allow for the next generation of Coke legends; instead, they churn Coke Lifes.
Harsh. But it does feel like there’s some truth to the point on time horizons.
Especially now.
We’re about a year—maybe a little bit more now—from what felt like early-stage brand winter, and much of the realization now is that you can cut your way to profitability, but you still have to find a way to grow.
If the brand’s growth reality doesn’t match the inventor’s need, what’s the point of the tension?
In the Entrepreneur article, Checketts said he’s now thinking about it as a “50-year plan, not a five-year plan.”
Perhaps a longer lens for brands in this spot—and we’re not suggesting Rhone was (we have no idea)—would encourage better habits, build better foundations, and create more durable brands for the next 50 years.
Maybe it’s something that looks more like Rhone.