I hope you all enjoyed my kick-off of "The stock market sucks" on Friday. Every once in a while you need to vent some anger, but now we are back to our long term thinking and investing ways.
Two more things:
1. A special shoutout to Los Angeles Chargers RB Austin Ekeler for single handedly carrying my fantasy team this week once again.
2. I literally chose today's meme just because I thought my mom would think it is funny.
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Hyperice: A $700M Journey
If you turn on any professional sporting event these days, you will likely see a player on the bench or sidelines using the Hypervolt repercussion gun (pictured above!).
Who is the company behind this massage gun? What are they worth? How the heck did they become entrenched with so many professional sports leagues.
Today at the Crossover, we have all of the answers for you!
The company behind the Hypervolt is named Hyperice. Hyprice was founded by Anthony Katz in 2010. Anthony loved sports, but as he entered his 30’s, his body no longer recovered like it used to. He decided to look into how athletes keep their bodies fresh and discovered that icing, ice baths, and consistent massages were the keys to the fountain of youth.
What he quickly learned was that when it came to icing, there was no device or contraption that made it easy for athletes to wrap themselves with after a workout, practice, or game. Rather, they would often hold an ice bag or use saran wrap to wrap the ice to their body – quite the look!
Anthony decided to build several prototypes of a contraption that looked cool, was easy to use, and achieved all of the benefits that good icing provides. Believe it or not, Anthony’s friend was training the late great Kobe Bryant at the time and arranged for Anthony to show him a couple of his prototypes. Long story short, Kobe loved it and the contraption started spreading around the league to the likes of Lebron James (the greatest basketball player of all-time), Kevin Durant, and so many others. Hyperice was off to the races.
The more entrenched Anthony got into the professional sports scene, the more he realized that there was a real opportunity in the space to help athletes in their body maintenance and healing process.
The company started creating a variety of products including:
2014: Viper, the world’s first vibration foam roller ($149-$199)
- 2015: Ball, the first vibrating stretching ball ($99-$149)
- 2015: Raptor, percussion gun (precursor to Hypervolt)
2016/2017: Venom, heating pad contraption ($149-$299)
- 2018: Hypervolt, first portable percussion device ($129-$399)
Specifically, the biggest breakthrough for the company was the Hypervolt due to the fact that it was the first product to make it down to the consumer level which led to an explosion of sales. In 2019 alone, the company did over $100M in revenue.
Hyperice used the momentum and success to do its first acquisition: Normatech. Normatech is a popular leg recovery device used by the greatest athletes in the world ($1,499). Now, Hyperice was behind almost every key recovery device in the game.
In October 2020, Hyperice raised a $48M Series A @ a $700M valuation. The round was led by Main Street Advisors and S.C. Holdings and also had participation from some serious professional athletes like Patrick Mahomes, Naomi Osaka, Anthony Davis, Chris Paul, and many others.
A couple golden nuggets from the news release regarding the funding round was that they projected revenue of over $200M in 2020 (more than 2x 2019) and were “highly profitable.”
About 9 months later, Hyperice made its next big move, acquiring Core, a mental wellness company. There are two components to Core: A suite of meditation apps and experiences via digital app as well as a hand held device that uses bioinformatics to track your breathing and help you improve your choices on your mental health journey.
This officially marked Hyperice’s next chapter as they move into the mental wellness and recovery space as they look to become a health tech mind & body global juggernaut.
1. Famous Friends: The first and most obvious takeaway is to be friends with people that are friends with Kobe Bryant. When I introduce myself to people, the first question I will ask is whether you have a friend that is a star NBA player. It is just good for business. Kidding. Maybe.
In all seriousness, a big lesson that Hyperice’s journey exemplifies is the value of strong connections and the power of a professional athlete. This specifically has me thinking about Crossover Portfolio Pick Lasso, the compression gear company.
The biggest endorsement that a professional athlete can make is not necessarily where they invest, but rather if they use a product for their body. With Lasso, some of the greatest football players in the game wear their compression socks like Earl Thomas and Zeke Elliot. If that isn’t a big endorsement, I do not know what is and it continues to reinforce my confidence that Lasso is onto something.
2. B2B vs. B2C: Additionally, in the VC community there is often a preference to look at B2B companies vs. B2C. Hyperice, just like a Liquid Death, is another example that there are serious opportunities in the B2C space. With the right operators, it might even be easier to execute in the B2C space vs. B2B.
4. Lululemon Acquisition?: There are not many more fun activities than playing acquisition matchmaker. I think Lululemon should consider a Hyperice acquisition. The obvious reasoning here is the fact that $LULU & Hyperice’s brands are very similar -- high quality, athletic, cool & slick, and geared towards a higher socioeconomic status.
A second reason is due to Lulu’s push with Mirror, their at home workout system. I think many of Hyperice’s products could be an extraordinarily easy item to bundle with the Mirror and customers would love it.
Finally, Lulu has been growing their relationship with the NBA as they recently signed an endorsement deal with Utah Jazz guard Jordan Clarkson & NBA coaches started wearing custom Lulu sweatshirts (as you can see in the picture above with the great JB Bickerstaff!). What better way to continue building a relationship with the league and players than being affiliated/owning some of the most beloved medical devices throughout the league.
1. ARK'S Updated Bitcoin Take
- ARK Invest shared a very interesting chart this past week breaking down the price of Bitcoin compared to that of Meta, Amazon, and Netflix
As you can see, Bitcoin has outperformed every blue chip asset since 2016 and has also dropped less than Meta & Netflix from their all-time-highs
- ARK also believes that the longer bitcoin trades at support (between $18,814 and $23,460), the bigger the eventual breakout will be
2. Patience Being Exercised
As the times in the markets have become less certain, VCs are taking more time before backing ventures, specifically from Series A to Series B
- Interestingly, time between Series A to B to Series B to C is over 100 days longer likely due to the much more clear and certain trajectory that a venture in B to C has
Also, interesting to note that seed to Series A is right around Q1 '19 levels
3. Venture Capital & SaaS
- When looking at the US SaaS space, it is clear that we are going to be seeing a big pull back in the number of deals funded as well as capital invested
With that being said, from a dollar invested perspective, SaaS capital invested is projected to be close to 2x 2020 levels
- US VC deal amount in SaaS is projected to be 3,777 vs. 4,632 last year and total money invested is projected to be $72B vs. $98B the year prior
Here are some jobs that I’m curating in finance and tech. Use this link to submit a role to be featured if you’re looking to hire.
Senior Lead Analytic Consultant @ Wells Fargo
Great opportunity here to serve as the Senior Lead Analytics Consultant for the Enterprise Root Cause Analytics Team. If you have experience with SQL or any other stats tool check it out.
Sr. Product Manager @ DriveWealth
Interesting opportunity for someone to help DriveWealth with their efforts for international expansion for their Europe and Asia Pacific business entities. If you know someone that would be interested, make sure to send this job their way.
Principal Product Manager (AI/ML), @ ForgeRock
ForgeRock, the recently Thoma Bravo acquired identity management platform, is looking for someone to ensure that their product is up to par and firing on all cylinders.
- Incredible celebration by the Minnesota Vikings
This email from Stripe CEO Patrick Collison to his employees announcing layoffs is a must read
- Absolutely savage tweet by the Jets social media team
- Steph Curry is not human
The bad times at Tiger Global continue...
Thanks for the read! Let me know what you thought by replying back to this email.
Disclaimer: The Crossover is not a professional financial service. All materials released from The Crossover are for educational and entertainment purposes. The Crossover is not a replacement for a professional's opinion. Contributors to the Crossover might have positions in the equities in the The Crossover Portfolio or mentioned in the newsletter.
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