Gamechanging Insights No. 15:
Michele Romanow in Conversation with Candice Faktor
At Gamechanger, we are interested in force functions within industries and how they impact companies and entrepreneurs creating the future. Force functions can take many forms, and the COVID-19 pandemic has been the most recent one.
Force functions usually occur more gradually over a span of years, but the COVID-19 pandemic was one that occurred in under 12 weeks. Founders are grappling with a new reality which they could not have predicted, industries are bifurcating rapidly, and consumer trends are leaping ten years ahead of schedule.
Michele Romanow, Founder of Clearblanc and Dragon on Dragons’ Den, is a force function herself! She provided us with profound insights around the future of e-commerce, the future of funding and innovation, and her mental models for creating, leading and thriving as an entrepreneur.
1. The Future of e-Commerce: It’s 2030, not 2020
At Gamechanger, we believe that the COVID-19 force function will transform retail and e-commerce indefinitely. Candice reflected that the pandemic has forced all businesses to have a virtual presence unlike ever before—previously, a businesses’ front door was always a physical one, but now your front door must be a virtual one. A business’ virtual toolbox can no longer be at the back door, side entrance, or backyard shed, so to speak.
Michele emphasized that the COVID-19 force function has made “2030 become 2020” as trends leapfrogged a decade. She noted that e-commerce went from 14% to 30% penetration rates in just over 12 weeks, as a percentage of retail sales in the US due to COVID-19.
In-store shopping won’t come back easily given the high risk involved in retail transactions with physical proximity.
With rapid penetration rates, Michele stressed that e-commerce has successfully overcome many misconceived barriers quickly—older generations are easing into online shopping and big-box stores, like Home Depot, are delivering hard to transport items to front doors with contactless delivery.
2. Future of Funding and Innovation: Empowering Founders
Many early-stage entrepreneurs and companies are experiencing one of the most difficult fundraising environments imaginable, where meeting someone for a simple coffee has suddenly become impossible. Clearblanc was founded to put founders first, and empower them to a much greater extent in tough markets, and this one is no different.
According to Michele, entrepreneurs are facing the following difficulties right now: first, they are not able to meet investors in-person,, and second, the reduced number of pitches which is effectively driving up their valuations inadvertently.
Michele and Andrew founded Clearblanc on the thesis that entrepreneurs that build repeatable and predictable businesses should not have to give away their most valuable source of capital (equity) at an early stage for repeatable expenses, such as social media ads spend, inventory, and COGS. Instead, Clearblanc engages in non-dilutive revenue share agreements where they provide capital upfront, take a % of monthly revenues until the capital is paid back plus interest.
Clearblanc’s model is also predicated on providing fast capital. Clearblanc performs their due diligence and deal structuring using data science; they provide a 20-minute term sheet powered by AI which offers principal and terms in the time a pitch takes.
Ultimately, the model gives the power back to founders. They want new companies to have a competitive financing option and founders to own a significant share of their companies at later stages. Michele emphasized that this is ever more important in recessionary times where incumbent companies, like FAANG stocks, tend to win because they have so much power over entrepreneurs.
3. Michele’s Mental Models
Michele is prolific for sharing her wisdom and advice with entrepreneurs on social media and Dragons’ Den. She shared her mental models around creating, scaling, and thriving during the current climate of uncertainty.
3.1 Creating
Michele offered the following advice for those creating:
Try thought experiments around what you would do if money and time presented no barriers. It can be incredibly powerful and allows you to unleash your imagination.
Categorize tasks as important versus urgent and focus on the important ones; the more time spent on working on important, but non-urgent things, the more time you are able to put towards building your future purposefully.
Inform your decisions by planning versus doing with a focus on doing; instead of spending so much time doing customer research, just test and test, and test! Customers never knew they wanted an iPhone until they tried using them.
3.2 Scaling
Michele emphasized that it can be incredibly difficult to manage and scale businesses during the pandemic without the natural collisions and creativity that happens at the office. Here’s her mental models on scaling:
Embrace the duality between personality types in a work from home setting. If you’re an introvert, you have probably become more productive because there’s less socializing to worry about. If you’re an extrovert, it might be more difficult because you’re away from office social circles.
Part of remote working is learning how to work around your personality type, and it will show your ability to be successful no matter the circumstance.
3.3 Thriving
To thrive in lockdown and work from home environment, Michele highlighted the importance of getting away from your cellphone at times and spontaneously writing down your thoughts in a notebook. This gives you the opportunity to synthesize and dissect what you’ve learned without distractions.
4. Focus on Youth Entrepreneurship
Michele is very passionate about the future for young entrepreneurs. She shared profound advice young entrepreneurs and her thoughts on education.
Just build a business. The reality is we don’t have the same distractions we otherwise would this summer. The world just did 180 on what it needs right now. Use this time to figure out how to test a business and put out some content.
Show your GSD (“Get Shit Done”) degree and start iterating. For Michele, 80% of the things she puts out fails, but the more you actually produce, the more likely you’re going to get that 20%; it’s all about building that muscle
Michele concluded that she is a big believer in the power of innovation and the power for us to figure out how to transition back to normal life post COVID-19. As an optimist, she believes that we will find the perfect technique that allows humans to come back together in a much lower risk way. We hope you enjoyed these insights from our session with Michele Romanow.