The TPF Q&A: Sumeet Shah, VHS Ventures

A new thing.

We’re trying something new at The Loop by Three Point Four Media. In addition to our biweekly musings, we’re launching a biweekly Q&A, talking to people we like or admire or want to be or maybe all of the above about their lives, their work, and their universe. We hope you enjoy. And no, we’re not sure if this is the right use of biweekly.

We’re starting the series with Sumeet Shah, founder and proprietor of VHS Ventures. Sumeet is the smartest person we know in consumer investing with an infectious positive energy and an unmatched ability to bring people together. When he says “we should get coffee once a month,” he not only means it, he follows through on setting up a meeting.

Sumeet @ local basketball venue.

Three Point Four Media: We met because I was writing a story about the sneaker resale market and someone said I needed to talk to you because you knew more about Nikes than anyone they knew, more about the resale market than anyone they knew, and more about consumer investing than anyone they knew. That’s a decent description, although I think it also sells you short. How would you describe yourself?

Sumeet Shah: Hah! I remember that story well. I guess... as a person who is eternally curious about the world of consumer, the world of product, and the world in general.

Has that always been the case? You studied biomedical engineering (BME) at Columbia, which is not exactly the consumer world.

I've been working in the consumer world for my entire career. It is an evolution from my first job. 

I graduated from Columbia in 2008, and I wanted to go into the business side of healthcare. If you ask anyone who was a BME at Columbia, they’ll say that’s a masochistic choice, but it is what it is. I joined Gotham Consulting Partners (GCP), a firm that caters to private equity-backed companies. The global financial crisis was in full force, so our team spent the first year trying to save as many sinking ships as possible. 

We started to notice an evolution in how young brands were growing. GCP had been generalist, but we pivoted to focus on consumer companies. I gained incredible operational experience. Meanwhile, on the venture side of the equation, you had companies like Warby Parker, Birchbox, Harry’s, Peloton, Uber, Lyft, Oscar, Casper, Dollar Shave Club, and Bonobos raising their first rounds of capital. I became an unexpected go-between for consumer private equity firms and consumer venture capital firms. I met lots of consumer funds in 2011, culminating in a lunch with Mike Duda of Consigliere Brand Capital (now known as Bullish) and Andrew Mitchell, an early investor in companies like Warby, Birchbox, Harry’s, and Peloton. 

In 2013, I moved into the startup world and in early 2014, Andrew asked me to join him as senior associate at his new firm, Brand Foundry Ventures. I did, and worked on 20 deals across two funds. I stepped away in 2017 to do some side work, got pulled back into the venture space with Swiftarc in 2019, then helped relaunch Clearco’s New York partnerships team in 2022.

I’m looking for the right balance of doubles and triples… I'm not in the moonshot and strikeout business.

People would occasionally ask me if I wanted to raise my own fund. I was hesitant, but eventually I put together a thesis in 2022 and launched VHS Ventures the following June. We focus on seed stage investments across the world of consumer products and infrastructure. We are about to close our 20th and final deal in Fund One, and raise our second fund to write even larger checks.

How much has the world of consumer changed since you've been investing? How much has the thesis that you started VHS with changed?

In my opinion, over the last 15 years there have been three phases to the consumer sector. 

First is the rise of direct-to-consumer in the early 2010s (Warby, Birchbox, Harry’s, etc). Those companies built solid staple brands with careful, almost step curve-type growth. Valuations were reasonable. Later-stage investors wanted to come in and make larger bets or acquire these companies. That was a consistent engine. 

In the mid- to late-2010s, we started to see a switch. Non-consumer investors, unsophisticated in the space, funneled money into lifestyle brands. The founders of those companies were, and are, great, but the money had the wrong mindset: grow at all costs. They were throwing money into marketing and forcing their way into people's daily lives. It was inauthentic. Valuations were completely out of reach. A lot went bankrupt during Covid, and investors moved on to the next thing—AI, I guess? Those investors love to say that consumer is a terrible space for investing because of their experience. Sorry, but you’re one of the biggest reasons the industry ended up in a tailspin.

A great homepage.

Now we’re starting to see a return to foundational growth. That centers our VHS investment thesis. I see two kinds of staple bands: retention-driven ones and acquisition-driven ones. By retention-driven, I mean products that become part of a person’s daily life. Acquisition-driven brands sell stuff that you only purchase once every couple years, but you feel a sense of ambassadorship in them. I was talking to a company that makes fire pit tools. That’s hyper-specific, but it's a great opportunity for ambassadorship. Those are the kinds of staple brands that get me excited.

At VHS, I’m looking for the right balance of doubles and triples. Maybe a double becomes a triple, and a triple becomes a home run or a grand slam. But I'm not in the moonshot and strikeout business. 

As someone who emails people back quickly, I’m amazed by your response rate. How much of your success is due to your ability to email quickly? A lot of mine is. 

Hah! There’s a great venture investor named Ryan Darnell who once asked me if when I’m on vacation, my response time goes from five minutes to like an hour. 

My cadence is very quick. I also try to be concise and short. I very much care about being as productive as possible. When there are opportunities where I can respond or address issues quickly, that's great. I know I could be a little more mindful sometimes. But I want to make sure people are comfortable having conversations with me. 

If I can make a connection or help in another way, I want to do so. Investors have a lot of keys, and a lot of them tend to hold back. To me, that mindset is so silly. Adam Grant talks about building a system of looking to help without expecting things in return. I believe in that idea. The universe always returns the favor in some way.

Serendipitous things don’t happen if you don’t throw stuff out in the world. You have an ability to bring people together. VHS hosted a holiday party at District One, and I’ve never been anywhere that people were so eager to introduce themselves. Not in a transactional, networking way but in a friendly one. As a shy person who is scared of everyone, it was nice and relaxing—and from a nominally business development perspective, refreshng.

It's not easy to build a community like that, but—especially with a shift change happening—there will be a desire for people to be more authentic and transparent about who they are and what they need. You shouldn't be afraid to ask for help. There are so many different ways that people block themselves. Only a handful of the cortices in our brain are dedicated to positive energy, to joy. Sometimes, your brain is working against you in terms of happiness. 

I do like to exude as much positive energy as I can and create positive environments. It goes back to the idea of eternal curiosity. Transparency and eternal curiosity are some of the best character traits, not just as a founder, but as a friend and as a partner. So many people I admire have a desire to keep learning and keep evolving. 

I have had some very dark days. I openly talk about my battle with depression. I wear it on my sleeve, and I talk about it as much as I can because I know there are a lot of people who are stuck, too. If I can find ways to get people to open up, learn more about what they're doing, and give them a sense of comfort, that's what I care about the most. 

What mattered most to me about the holiday party is that we had opportunities to introduce people to other types of communities. It’s the District One team learning and meeting the startup community, and everyone learning about the Opportunity Music Project, a nonprofit I’m proud to sit on the board of. Or founders meeting each other. I get excited about putting good people in a room and all of us having an opportunity to learn.