No Conflict, No Interest: Investing in

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TL;DR We invested in Article, despite a founder being a GP, and we’re glad we did.

In our first blog post in a long time, we thought we would take the opportunity to play our version of “where’s Waldo”. Have a look at the above photos and see if you can spot the similarities. On the left is the founding team of and on the right is the VFF team. If you haven’t spotted it; we’re both run by the same overlord — our pre-eminent sofa tester and personality reader — Indy. In all seriousness, the above photos caused some people major heartburn when the VFF team made the decision to invest in

At VFF, our commitment to founders and investors alike is to source the very best investments and to support those founders in a way that we believe is grossly under-served in the early stage venture market for BC companies. One just happened to be co-founded by VFF partner — Fraser Hall.

We come from the contrarian school of thought where we’re firm believers that non-consensus forecasts, when right, deliver the best returns.

A core component in forming non-consensus forecasts is having an edge in both information and your analytical ability. In the private markets securing access to high quality deals is a third dimension that can’t be forgotten. When dealing with an investment that includes a conflict of interest, you have 2/3 nailed: access and information. The tricky part is removing your inherently optimistic founder biases from your analysis. We don’t profess to have a solution for solving behavioral and cognitive bias’, but we believe that having an edge in 2/3 factors to deliver above market performance is something that shouldn’t be ignored.

From the outside looking in, it’s convenient to trivialize Article’s business model. Many describe the business as a furniture retailer using e-commerce as their distribution channel. Some, second-level thinkers, get to the points of differentiation on design, delivery, price that roll up into a consumers perspective on the Article brand. Here’s our take:

Everything starts from the mission statement “Delivering remarkably better furniture experiences”. That is the message that informs all aspects of the company’s vertically integrated supply chain. When you appreciate how that permeates through the business model, you start to realize the amplification that has on traditional forms of “moats”: supply-side (economies of scale/scope) and brand, notably:

  1. Article Is Defining Customer Expectations — Not simply reacting to expectations set by other retailers (i.e. the “Amazon” effect for many categories). This mindset of never being complacent, never feeling like the job is done, is usually dressed up as “continuous innovation”.
  2. Dolphin Diving Approach To Capital Allocation — The company experiments in a true lean manner, adhering to the best practices of the scientific method: hypothesis, experiment design, output analysis and decision making. This form of validation has been popularized by the Lean Startup movement, however, seeing it in practice, at scale, is remarkable. By indoctrinating this approach, Article has challenged the conventional wisdom that a growth and profitability trade-off exists. It is a form of capital efficiency and discipline that is frequently lost by over-capitalized startups.
  3. Customer Experience Ownership via Vertical Integration — While the rationale for vertical integration is well known, the furniture category has largely abandoned this model. Article has the ability to control the customer experience end-to-end.
  4. “Tough” Problem Focus — The problems of moving large, often delicate, products across oceans and into a customer’s home are not trivial. From damage rates to overcoming “trust” hurdles in a considered purchase category — the team focuses on designing solutions to problems that move the needle on delivering remarkable to consumers.

We are privileged and proud of our position as a non arms-length investor in Article. To the team at Article; Congrats on building a self-sufficient enduring company that challenges the conventional wisdom of many. As the founders of Article would want us to say — this is just the beginning.

The VFF Team

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