2015 end of year review
It seems that the year has flown, so it’s worth looking back to see what was achieved in 2015.
When we started Diet Chef we never thought it would get to the scale it has. It has massively out performed our expectations both from a customer perspective and financially. We were faced with a very tough decision in 2015 either to sell Diet Chef as we had a (great) private equity investor that required an exit or buy the company ourselves.
There were many hours of discussion on this, but standing back from things, most diet companies have been around for over 15 years and none of the macro economic factors would suggest that there is any likelihood of a company like Diet Chef disappearing overnight. So funded by a large chunk of debt we have bought out our existing investors and plan to keep Diet Chef for the longterm.
That doesn’t mean there hasn’t been changes, most of the infrastructure investments we have made (people, systems and geographic) have been reversed over the last 6 months. We are back to a controllable cost base and our plan for 2016 is about growth. This is coming from two areas – acquiring more customers and making the ones we have happier!
There was a drive for profitability over the last 12 months which was the right thing to do if we were seeking an exit with third party, but we lost a lot of our customer focus in this drive. This has been reversed and the customer has become king again within the organisation and our drive is all about making the customer experience better and allow our customers to self serve as much as possible.
In addition we have launched another brand (Diet Now) that allows customers who cannot afford Diet Chef to be able to buy a product from us. As we have grown our costs of marketing have grown, so getting more bang from the buck on our marketing spend is pretty important. Our market entry strategy for this is very much like Diet Chef in the early days. Test, learn, listen to customers, iterate!
So I am very excited to be hitting the 2016 diet season ahead of expectations and with most of the important infrastructure issues fixed.
Investments – Private
It’s been a bit of a rollercoaster of a year on this front. As you have followed I love investing in really early stage tech or consumer businesses. I was looking at a very health return on Fanduel based on they’re recently reported $1b valuation, but the power of TV (more on that later) has put them into the regulators crosshairs. I am sure this is nothing more than a blip, but pushes any return off for a bit (not that I am really worried about this, it’s a great business led by an outstanding team)
TVsquared continues to go from strength to strength. An amazing team with tons of experience are making it look easy to grow quarter on quarter (significantly!) with more depth into existing customers. I think this could be another significant investment but really the time to ramp up the sales organisation to cope with the demand. (see here)
Flavourly continues to grow and has significant cash resources following its successful crowdfunding last year. Like all businesses it is dealing with the growth factors in terms of physical space, staff and product. Looking very promising in 2016!
I am currently looking for one investment for 2017, same characteristics, ideally consumer focused with an international market opportunity.
Investments – Public
Have disposed of some of the investments in my portfolio in 2015. Mainly Lloyds Bank, Tesla & Nestle which I have reinvested fully in Amazon. I am currently sitting on a large position in Amazon and Alphabet (formerly Google) both have had exceptional performance (49% and 51% respectively). Electronic Arts is up 19% (thanks DJ for the tip), The only loss for the year is Jardine Matheson Holdings, down 14%, it’s a very long term hold so no plans to sell any of these stocks in 2016. Remember that this is not a short term investment strategy.
The outstanding investment for me this year is Amazon. They are growing both in terms of traditional retail, but also AWS (Amazon Web Services) is a significant growth driver. I love the fact that Bezos has a very long term view and is re-investing in the business for growth and efficiency (Amazon Logistics, Cargo Planes, Same Day Delivery) all to improve the customer experience.