THE JOURNEY YO REMARKABLE RETAIL

Steve helps organizations understand and respond to retail disruption by creating customer-centric, memorable and profitable growth strategies.

$20 Bills For $15 Files For IPO

On Thursday $20 bills for $15 announced that it is preparing to debut on Wall Street through an initial public offering. The company said it has applied to list its Class A common stock on the Nasdaq exchange under the ticker symbol CASH.

The news comes amid growing concerns that other so-called digitally native vertical brands (DNVB’s) have found it difficult to achieve profitability as they grow. DNVB darlings Warby Parker and Allbirds, which both went public last year, have seen their valuations cut in half in recent months as their operating losses continue to mount.

The original idea for $20 bills for $15 came to Alfred E. Neumann and Miguel Abramovitz when they were roommates at Tufts University. As Neumann remembers it: “Dude, we were just sitting around one Saturday night talking about how expensive things were. And Mickey comes back all like, bro, you know what costs too much? Money. Money costs way too much.” In that moment the two recognized they were on to something transformative and launched a basic version of their website $20billsFor$15.com in early 2018.

Despite immediate consumer interest, an initial run at a so-called “friends and family” investment round was a failure. “I literally went to everyone who came to my bar mitzvah and got turned down by every single one of them,” Abramovitz said with obvious and deep frustration that would likely take 3-5 years of therapy to work through. “I remember one of my uncles saying to me ‘what are you some kind of idiot? The more you sell the more you lose, and that’s before overhead! You’re just another Instacart and WeWork wannabe.’ And when I replied ‘exactly’ he stormed out of the room muttering to himself.”

Undaunted by push back on the underlying economics of their concept, the co-CEO’s forged ahead and soon traffic to the $20 bills for $15 website exploded. As Neumann remembers it, “we had just crazy retention and NPS scores. We definitely felt like we could build this incredible flywheel.”

Soon the brand’s “money costs too much” radio ads became a satellite radio staple, helping fuel its hockey stick-like growth. But the nascent enterprise soon found itself struggling to keep up with demand. “It seemed like we were running down the street to the ATM like every 20 minutes to fulfill orders” recalled Abramovtiz. “But we just remembered the page from our pitch deck showing that the market for “extreme value currency” was literally infinite and that kept us going.”

In 2019 Neumann and Abramovitz turned to famed venture capitalists Softbank and Benchmark to fund a $10 billion Series B. The company used the proceeds to underwrite its growing operating losses. They also set up a direct product sourcing arrangement with Deutsche Bank. “That was a real game changer for us., said Neumann. “We worried whether they could meet our growing need for more and more product and they were, like, hey, don’t worry comrade, we got you.”

In 2020, the company was ready to do what other disruptor brands before them had done: make a foray into brick & mortar retail. Deemed “The Cashery,” $20 bills for $15 take on brick & mortar is unique. As Neumann describes it “we wanted to go beyond merely being transactional. We wanted to give customers an authentic, sustainable experience where they can connect with their peers in an uplifting community setting while enjoying a cocktail or espresso.”

So far the company has opened “Casherys” in New York’s SOHO neighborhood, on South Congress in Austin and on Melrose Ave, in Los Angeles, but has plans to open dozens more. Abramovitz described an initially arduous process to identify the most promising sites by leaning on famed consulting firm McKinsey & Co. But ultimately they decided to take on choosing new store locations themselves. “Yeah, eventually we just said ‘ah fuck it.’ Let’s just go find the Apple and Warby Parker stores and open up within 100 yards.”

While the company’s stores have seen immediate success, the company’s foray into artificial intelligence has not gone according to plan. Taking a page from brands like Stitch Fix, $20 bills for $15 hired nearly 50 data scientists to use machine learning and other advanced predictive analytic techniques to better target consumers that would be interested in getting a $20 bill for $15. As CMO Natalia Kontentizking observed “after months of running different models and pressure testing different assumptions we learned that, with the exception of die hard Donald Trump supporters, everyone was a great prospect.”

Despite its multi-year record of success, $20 bills for $15 has its share of detractors. Some claim the company’s negative gross margins are unsustainable. Others argue it needs to get more aggressively into private label. But noted retail apologist Stephen Douglass (aka “The Retail Nostradamus”) takes issues with that criticism. “Sorry, but the future of shopping is about authentic, immersive experiences that are repeatable and ideally take place while wearing a VR headset. Concepts like cash flow or EBITDA or positive return on investment are irrelevant in a post-crypto world. What could be more experiential than getting a crisp $20 bill at a steep discount? Rinse and repeat is what I say, eh?”

The company also has its fans on Wall Street, which has long-favored rapidly growing companies with no discernible path to profitability. Over a Hello Fresh supplied lunch of harissa chicken on a bed of saffron infused quinoa, long-term Wall Street analyst Ryan Scozzi told us he’s impressed by the company’s highly reliable earnings forecasting. “They sell $200 million, they lose $50 million. They sell $2 billion, they lose $500mm. I like investments I can understand.”

For now Neumann, Abramovitz and team are enjoying the ride but eagerly await the IPO, which is tentatively scheduled for April 30th. As Neumann sums it up “brother, we just need that cash. So much cash. Like, literally as soon as possible.”

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"The Store Operations Council enjoyed every minute of Steve Dennis's presentation on retail's future. He always keeps it real and speaks the language of retail experts."

Cathy Hotka

Principal

Cathy Hotka & Associates

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