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Seems like a lot of drama for 4-year old luggage company that has a couple dozen products, some accessories and a podcast. Yet they got 100 million in their las

Seems like a lot of drama for 4-year old luggage company that has a couple dozen products, some accessories and a podcast. Yet they got 100 million in their last round of funding and have a "valuation" of 1.4 billion according to wikipedia. What's wrong with just building a business that makes stuff, selling and marketing it, hiring people as needed, making a decent profit, and per-chance innovating? But giant globs of venture capital money for luggage, LUGGAGE?

PedroBatista 7y ago
The problem with that is you wouldn't get 100 million. This is a merry-go-round of printed money and the game is to get yours before the ride stops.
- seibelj 7y ago
  Very well put. Governments are in a race to inflate their currencies, and the dollar being the global reserve makes it uniquely positioned to decrease the wealth of the entire world every time another dollar is printed. My only recommendation is to buy assets, but who knows which assets are in a bubble! Maybe it’s all of them.
papito 7y ago
I would just like to point out that Sikorsky, the company that makes the damn Black Hawk helicopter, was sold for $9 billion. These valuations are not rooted in reality.
- lbotos 7y ago
  I do agree that valuations are inflated. Also, I think that the total addressable market for luggage vs. a Black Hawk are very different.
  - dyeje 7y ago
    You're right, and the market for the Black Hawk is better.
    - adaisadais 7y ago
      Totally right. Especially when one of your clients (US military) has a $693,058,000,000 budget.
    - seattle_spring 7y ago
      I guarantee Away used some ridiculous number to cite their audience. Something like "The 500 TRILLION dollar GLOBAL travel market."
  - sailfast 7y ago
    “Rotary and Mission Systems, which makes Sikorsky helicopters and ships, ended the year strong with quarterly net sales up 14 percent to $4.35 billion from $3.81 billion.“ Quarterly. That’s a lot of luggage. Also you can’t easily replicate a Blackhawk from the same factory and slap a badge on it. Unsure of the margins, but there seems to be plenty of wiggle room, and contracts run into the 10s of billions for major buyers like Saudi Arabia. https://www.reuters.com/article/us-lockheed-results/lockheed-martin-revenue-beats-outlook-strong-for-2018-idUSKBN1FI1I2 https://www.reuters.com/article/us-lockheed-results/lockheed...
    - smartbettor 7y ago
      Why Sikorsky is not worth a lot of money money Sales were up 14% year of year... which is meh compared to tech companies. In 2015 they made $51 Million for the entire year. so their margins are tiny. crappy business to be in - but consistent. https://www.bizjournals.com/washington/blog/fedbiz_daily/2016/01/lockheed-martin-gives-glimpse-of-sikorsky-s.html https://www.bizjournals.com/washington/blog/fedbiz_daily/201...
      - papito 7y ago
        Sure, but a lot of these companies are not even profitable. The HOPE of massive profits seems to be worth more than the proof that a business can be in the black. And Sikorsky, honestly, could probably have higher margins, but they are in the business where billions disappear on boondoggles.
- austenallred 7y ago
  Not sure how the valuation of a company that makes helicopters and sells them to governments is related to a company that makes luggage?
formercoder 7y ago
It’s also quite possible to raise money on non-VC terms. Say 80% of profit until recoup + 10% CAGR hurdle then 5% of profit. Away obviously takes some capital to get going which a founder may not have but this structure doesn’t enslave you to a unicorn valuation.
dreamcompiler 7y ago
Apparently if you build a low-tech commodity product you can get a $multibillion valuation as long as you have a charismatic millennial for a CEO and an overly-excitable charismatic VC. I'll bet you could even do it by leasing buildings, chopping them up, remodeling them, and subleasing them as coworking spaces!
- wastedhours 7y ago
  It's very easy to get a valuation, as this evergreen piece from Basecamp always elegantly shows [0] [0] https://signalvnoise.com/posts/1941-press-release-37signals-valuation-tops-100-billion-after-bold-vc-investment https://signalvnoise.com/posts/1941-press-release-37signals-...
rchaud 7y ago
It's for this reason I bookmark the 37signals blog section "Bootstrapped, Profitable and Proud" [0], which is a set of posts about small companies who are just out there selling stuff. No VCs, no term sheets. Just small business, like the ones we're told America is built on. It honestly gets tiring reading about the latest "unicorn" company that's valued at a billion plus despite grossing nowhere near that and never making a profit. [0]: https://basecamp.com/bootstrapped https://basecamp.com/bootstrapped
- staticassertion 7y ago
  But not every company can easily bootstrap. And of those that can, much of the time it's a lot faster if you take some money upfront. Nothing wrong with either approach imo, but the ridiculous valuations are a separate and, yes, exhausting problem. I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know.
  - Lukeas14 7y ago
    I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know. Because the founders get to keep more ownership of their company. If I take an investment of $100 million at a $1 billion valuation I own 90%. If the valuation is only $500 million I only own 80%. Why the company needs such a huge investment is a fair question but the insane valuation makes sense.
    - staticassertion 7y ago
      > Because the founders get to keep more ownership of their company. At first that would be the case, but as the valuation drops (and becomes more realistic) wouldn't the founder lose shares, and the VC would gain more control due to non diluting shares?
      - smartbettor 7y ago
        No. but the investors would remove the founder.
deleted 7y ago
[deleted]
hammock 7y ago
Away is not a traditional business in the way you are thinking. They are one of those digital-native, DTC Instagram brands that resells Chinese goods with great marketing. Their product happens to be bigger ticket and higher margin per unit than most of these types (which are often apparel), so it gets more attention.
michaelbuckbee 7y ago
They're a Direct To Consumer (DTC) Lifestyle brand. If you sort of wave your hands and say "whatever" to that description what it means is "profit" compounded by "profit". DTC cuts out all the middle retailers' profit points. "Brand" lets them charge a premium for their product on an ongoing basis. You can buy a very comparable piece of luggage off of AliExpress [1] for about half [2] of what Away is selling theirs for, which means that at volume Away is probably getting a 3x to 4x markup. The profit of branding. If you're looking for something to compare Away to, look at Lululemon (revenues of $3.7 Billion in 2019). I'm sure they're nowhere near that currently, but the venture capital bet is that there's at least a 1/10 shot of them reaching that sort of level. 1 - https://www.aliexpress.com/item/4000472391335.html https://www.aliexpress.com/item/4000472391335.html 2 - https://www.awaytravel.com/suitcases/bigger-carry-on/navy https://www.awaytravel.com/suitcases/bigger-carry-on/navy
- Spivak 7y ago
  I feel like it's a bad form to infer a markup based on the price of a lower quality dupe. Like would you compare a Canada Goose jacket with it's dupe at Hollister and say they're "comparable"? https://www.canadagoose.com/ca/en/victoria-parka-3037L.html?cgid=shop-womens-parkas&tmpcolor=61 https://www.canadagoose.com/ca/en/victoria-parka-3037L.html?... https://www.hollisterco.com/shop/us/p/cozy-lined-thermore-parka-38274824?categoryId=167288&seq=02&faceout=model https://www.hollisterco.com/shop/us/p/cozy-lined-thermore-pa...
  - crispyambulance 7y ago
    There's always going to be knock-offs, but perhaps it would be better to compare Away to, say, Travel-pro? [https://thewirecutter.com/reviews/best-carry-on-luggage/ https://thewirecutter.com/reviews/best-carry-on-luggage/] It's not like Away is an artisanal product that's going to be used for decades. It's just half-decent luggage with a fresh look. It's OK as a product, but the aspirations of their leadership and investors is WAYYY oversized.
  - samlevine 7y ago
    I'm sure they're quite nice jackets, but they're a flex. You're telling the world you can drop a grand on a jacket. Nothing wrong with that, or enjoying a great jacket in the process. But it's clearly a signal of wealth.
tlb 7y ago
Even old-school manufacturers like Samsonite raise money, get acquired, get spun out, go public, and acquire competitors [0]. Many billions are involved. Why should business be boring? [0] https://en.wikipedia.org/wiki/Samsonite https://en.wikipedia.org/wiki/Samsonite
throwaway55554 7y ago
There is too much cash in the economy and not enough places to park it. Otherwise, this would just be another simple luggage company.

PedroBatista 7y ago

The problem with that is you wouldn't get 100 million. This is a merry-go-round of printed money and the game is to get yours before the ride stops.

seibelj 7y ago
Very well put. Governments are in a race to inflate their currencies, and the dollar being the global reserve makes it uniquely positioned to decrease the wealth of the entire world every time another dollar is printed. My only recommendation is to buy assets, but who knows which assets are in a bubble! Maybe it’s all of them.

papito 7y ago

I would just like to point out that Sikorsky, the company that makes the damn Black Hawk helicopter, was sold for $9 billion. These valuations are not rooted in reality.

lbotos 7y ago
I do agree that valuations are inflated. Also, I think that the total addressable market for luggage vs. a Black Hawk are very different.
- dyeje 7y ago
  You're right, and the market for the Black Hawk is better.
  - adaisadais 7y ago
    Totally right. Especially when one of your clients (US military) has a $693,058,000,000 budget.
  - seattle_spring 7y ago
    I guarantee Away used some ridiculous number to cite their audience. Something like "The 500 TRILLION dollar GLOBAL travel market."
- sailfast 7y ago
  “Rotary and Mission Systems, which makes Sikorsky helicopters and ships, ended the year strong with quarterly net sales up 14 percent to $4.35 billion from $3.81 billion.“ Quarterly. That’s a lot of luggage. Also you can’t easily replicate a Blackhawk from the same factory and slap a badge on it. Unsure of the margins, but there seems to be plenty of wiggle room, and contracts run into the 10s of billions for major buyers like Saudi Arabia. https://www.reuters.com/article/us-lockheed-results/lockheed-martin-revenue-beats-outlook-strong-for-2018-idUSKBN1FI1I2 https://www.reuters.com/article/us-lockheed-results/lockheed...
  - smartbettor 7y ago
    Why Sikorsky is not worth a lot of money money Sales were up 14% year of year... which is meh compared to tech companies. In 2015 they made $51 Million for the entire year. so their margins are tiny. crappy business to be in - but consistent. https://www.bizjournals.com/washington/blog/fedbiz_daily/2016/01/lockheed-martin-gives-glimpse-of-sikorsky-s.html https://www.bizjournals.com/washington/blog/fedbiz_daily/201...
    - papito 7y ago
      Sure, but a lot of these companies are not even profitable. The HOPE of massive profits seems to be worth more than the proof that a business can be in the black. And Sikorsky, honestly, could probably have higher margins, but they are in the business where billions disappear on boondoggles.
austenallred 7y ago
Not sure how the valuation of a company that makes helicopters and sells them to governments is related to a company that makes luggage?

formercoder 7y ago

It’s also quite possible to raise money on non-VC terms. Say 80% of profit until recoup + 10% CAGR hurdle then 5% of profit. Away obviously takes some capital to get going which a founder may not have but this structure doesn’t enslave you to a unicorn valuation.

dreamcompiler 7y ago

Apparently if you build a low-tech commodity product you can get a $multibillion valuation as long as you have a charismatic millennial for a CEO and an overly-excitable charismatic VC. I'll bet you could even do it by leasing buildings, chopping them up, remodeling them, and subleasing them as coworking spaces!

wastedhours 7y ago
It's very easy to get a valuation, as this evergreen piece from Basecamp always elegantly shows [0] [0] https://signalvnoise.com/posts/1941-press-release-37signals-valuation-tops-100-billion-after-bold-vc-investment https://signalvnoise.com/posts/1941-press-release-37signals-...

rchaud 7y ago

It's for this reason I bookmark the 37signals blog section "Bootstrapped, Profitable and Proud" [0], which is a set of posts about small companies who are just out there selling stuff. No VCs, no term sheets. Just small business, like the ones we're told America is built on. It honestly gets tiring reading about the latest "unicorn" company that's valued at a billion plus despite grossing nowhere near that and never making a profit. [0]: https://basecamp.com/bootstrapped https://basecamp.com/bootstrapped

staticassertion 7y ago
But not every company can easily bootstrap. And of those that can, much of the time it's a lot faster if you take some money upfront. Nothing wrong with either approach imo, but the ridiculous valuations are a separate and, yes, exhausting problem. I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know.
- Lukeas14 7y ago
  I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know. Because the founders get to keep more ownership of their company. If I take an investment of $100 million at a $1 billion valuation I own 90%. If the valuation is only $500 million I only own 80%. Why the company needs such a huge investment is a fair question but the insane valuation makes sense.
  - staticassertion 7y ago
    > Because the founders get to keep more ownership of their company. At first that would be the case, but as the valuation drops (and becomes more realistic) wouldn't the founder lose shares, and the VC would gain more control due to non diluting shares?
    - smartbettor 7y ago
      No. but the investors would remove the founder.

deleted 7y ago

[deleted]

hammock 7y ago

Away is not a traditional business in the way you are thinking. They are one of those digital-native, DTC Instagram brands that resells Chinese goods with great marketing. Their product happens to be bigger ticket and higher margin per unit than most of these types (which are often apparel), so it gets more attention.

michaelbuckbee 7y ago

They're a Direct To Consumer (DTC) Lifestyle brand. If you sort of wave your hands and say "whatever" to that description what it means is "profit" compounded by "profit". DTC cuts out all the middle retailers' profit points. "Brand" lets them charge a premium for their product on an ongoing basis. You can buy a very comparable piece of luggage off of AliExpress [1] for about half [2] of what Away is selling theirs for, which means that at volume Away is probably getting a 3x to 4x markup. The profit of branding. If you're looking for something to compare Away to, look at Lululemon (revenues of $3.7 Billion in 2019). I'm sure they're nowhere near that currently, but the venture capital bet is that there's at least a 1/10 shot of them reaching that sort of level. 1 - https://www.aliexpress.com/item/4000472391335.html https://www.aliexpress.com/item/4000472391335.html 2 - https://www.awaytravel.com/suitcases/bigger-carry-on/navy https://www.awaytravel.com/suitcases/bigger-carry-on/navy

Spivak 7y ago
I feel like it's a bad form to infer a markup based on the price of a lower quality dupe. Like would you compare a Canada Goose jacket with it's dupe at Hollister and say they're "comparable"? https://www.canadagoose.com/ca/en/victoria-parka-3037L.html?cgid=shop-womens-parkas&tmpcolor=61 https://www.canadagoose.com/ca/en/victoria-parka-3037L.html?... https://www.hollisterco.com/shop/us/p/cozy-lined-thermore-parka-38274824?categoryId=167288&seq=02&faceout=model https://www.hollisterco.com/shop/us/p/cozy-lined-thermore-pa...
- crispyambulance 7y ago
  There's always going to be knock-offs, but perhaps it would be better to compare Away to, say, Travel-pro? [https://thewirecutter.com/reviews/best-carry-on-luggage/ https://thewirecutter.com/reviews/best-carry-on-luggage/] It's not like Away is an artisanal product that's going to be used for decades. It's just half-decent luggage with a fresh look. It's OK as a product, but the aspirations of their leadership and investors is WAYYY oversized.
- samlevine 7y ago
  I'm sure they're quite nice jackets, but they're a flex. You're telling the world you can drop a grand on a jacket. Nothing wrong with that, or enjoying a great jacket in the process. But it's clearly a signal of wealth.

tlb 7y ago

Even old-school manufacturers like Samsonite raise money, get acquired, get spun out, go public, and acquire competitors [0]. Many billions are involved. Why should business be boring? [0] https://en.wikipedia.org/wiki/Samsonite https://en.wikipedia.org/wiki/Samsonite

throwaway55554 7y ago

There is too much cash in the economy and not enough places to park it. Otherwise, this would just be another simple luggage company.