The 365 Flywheel

As a holding company for eCommerce brands, 365 Holdings leverages a dynamic Flywheel concept. They acquire market-based brands, drive growth through advertising and media strategies, invest in R&D, build a strong in-house team, optimize margins through shared services, and strategically allocate capital to accelerate the flywheel with new acquisitions.

March 9, 2021

“What exactly is it that you do again?”

“We’re a holding company for eCommerce Brands”

….blank stare…

After having the conversation above many times with friends, family, and acquaintances I realized that we have a somewhat non-traditional business model that may be very obvious to those of us deep in the organization but that can be a bit confusing to the outside world.  In searching for ways to better explain our business model I settled on the FlyWheel concept popularized by Jim Collins.

Here is the 365 Holdings Flywheel:

Sometimes the events depicted in the Flywheel don’t occur in perfect ordinal fashion but the model is directionally correct.  The major elements are as follows:

  1. Acquire Brands - We don’t start eCommerce brands - we buy them from owners looking for the “best second home for their baby”.  Our focus is on market-based brands, that is to say, brands defined by the market they serve not by the products that they sell.  With our durable capital model our goal is not to “flip” these assets but to give them a permanent home for sustainable growth.

  2. Drive Growth - We drive growth in our brands through two main strategies: Direct Response Advertising and building our brands into Media Companies.  eCommerce has a secular tailwind accelerating it.  We simply execute best practices across marketing channels to amplify this growth.

  3. R&D - We have bought both brands that are healthy and those that are distressed.  In both cases there is work to be done.  Whether we are re-platforming the company into best in class eCommerce technology, or simply doing market research and product development, R&D is an ongoing process for each of our brands.

  4. Invest in Team - As the 365 Platform and the brands within it grow our team must grow as well.  With our vertically integrated model and focus on shared services we hire in-house, on-site, full-time employees.  We don’t use contractors, outsourcers, or agencies.  We recruit first for cultural fit with our core values and then we invest in our team through our in house training programs, leadership development program, and our profit sharing plan.

  5. Drive Margin - Thanks to the scale of our team our brands can benefit from organizational capabilities that are much broader than any one brand could afford on its own.  We couple this with our sourcing, procurement, and supply chain process to drive margin within each brand.  Over time our costing methods improve and we can optimize our brands by segment, channel, and even by SKU.

  6. Capital Allocation - We budget and forecast annually and this drives the internal performance management of our P/L.  Over time as we seek to reinvest internally through capital budgeting projects that drive our four internal levers in the flywheel.  As acquisition opportunities come our way we augment our capital budgeting with these opportunities to add a brand to the family that will let us accelerate our Flywheel.

Influences: Jim Collins, Chris Powers at Fort Capital, Jeff Bezos at Amazon

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