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Thrasio - Amazon Brand Aggregator
Thrasio is a next-generation consumer goods company which was the fastest US business to reach unicorn status as a profitable company.
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Founded by Carlos Cashman and Joshua Silberstein in 2018, Thrasio is a digital consumer goods company with headquarters in Walpole, Massachusetts. It acquires Amazon 3rd-party private-label businesses, integrates them onto its proprietary platform, and grows them through its own expertise. The brands become part of Thrasio’s ever-growing portfolio and develop through marketing, product development, supply chain management and wholesale expansion.
As of November 2021, Thrasio has raised $3.4B in capital with the latest Series D round resulting in a valuation of up to $10B. It has acquired more than 200 brands and expanded its workforce to more than 1,000 employees. It has also received several accolades as the best startup to work at, according to 97% of Thrasio employees. To date, the company has acquired about 5 organizations, with its most recent being Lifelong Online on October 4, 2021. The company also has operations in the UK, Germany, China and Japan.
Business Overview & Products
Thrasio's core business is buying other businesses, namely Amazon FBA brands. It buys these brands from 3rd party sellers on Amazon who are looking to exit the platform. Thrasio looks for brands between $1M and $100M revenue. The main criteria include everyday products that are private label. They need to have a steady demand, stable search volumes, and consistent ‘search phrases’ (their names do not change over time). They also need to have a really good standing on Amazon, with at least 500 mostly positive reviews or an average rating of 4 stars.
Thrasio does not go for the following type of goods: ever-changing tech goods, fashion, fads, or anything that carries any kind of founder risk.
How It Works
Thrasio conducts thorough research and looks for the best-selling everyday products on Amazon according to the above criteria. Once it determines that the brand has the potential to grow, it is purchased from small business owners. For owners that are incapable of growing their business at its true potential, Thrasio presents a viable option. It pays these owners upwards of $1M for their business and then grows them as part of its own portfolio.
Once a brand is identified and locked, the acquisition process is straightforward. A deal is drawn up with a signed Letter of Intent, after which Thrasio deep dives into the brand’s financials and explores the seller’s Amazon account. Once this due diligence is completed, Thrasio makes its payment and the seller transfers his assets in a span of 7-14 days. The LOI closes within 30-32 days. The agreement is structured so that earnouts are included for sellers. Such an agreement allows sellers to continue to profit as Thrasio grows their business. Typical earnouts increase the size of the total payout to sellers by an average of 37%.
After the purchase is completed, brands are put through Thrasio’s so-called ‘Conveyor Belt’ – a 500+ checkpoint process used to grow the acquired brands. The Conveyor Belt basically analyzes and integrates the newly acquired brand into Thrasio’s portfolio. It consists of a core team of employees who work through a 500+ point checklist of best practices in an average of 34 days. Tasks are then assigned to relevant specialists in the supply chain, marketing and other departments as needed. This process ensures that as Thrasio takes over a new brand, all the processes going forward are optimized.
Business Model & Pricing
Thrasio has been profitable since its inception in 2018. The model it follows is an acquisition entrepreneurship template, where the startup acquires Amazon sellers’ businesses and scales them up. It also follows a multi-brand and multi-product strategy.
The company determines the value of a brand under consideration through the following process:
Start with the seller's last 12 months carried profits and add back the seller's salary to get the seller's discretionary earnings.
On that number, a multiple is agreed upon (usually a 2-4 valuation multiplier), determining the price Thrasio would pay its sellers.
As Web Retailer further highlights, “Current purchase prices for Amazon FBA businesses are typically at 2x-4x of the last twelve month’s EBITDA. Thrasio is currently behind nearly 40% of these transactions in the US. The ultimate selling price depends on business size, IP rights, market size, growth opportunity, and the 3 Rs (reviews, ratings, and rank).”
In less than 4 years, Thrasio has completed more than 150 acquisitions, raised more than $3.4B in capital and grown to more than 1000 employees. It was reported to be managing around 14,000 products. Thrasio’s latest funding round of $1B will facilitate itself to buy more companies as well as to expand internationally. It is currently on a rate of buying 1.5 businesses per week.
An article sponsored by Thrasio highlights that while the startup is currently focused on its success within the Amazon platform, it is looking to expand to other marketplaces and retail distribution. It also has goals to build bigger economies of scale, in some cases even developing technologies to replace some of Amazon’s components. According to TechCrunch, these include “sourcing for products, analytics both to source the more interesting companies to buy up as well as to market those products once under the Thrasio wing, even its own fulfillment technology.”
Companies acquired by Thrasio typically see a 156% increase in profitability. Its business model has received considerable applause from the startup community. The success has meant that many startups around the world have cropped up building businesses by replicating Thrasio’s model. The model is especially gaining traction in India.
Carlos Cashman: Founder and Co-CEO of Thrasio. As an experienced entrepreneur, investor, and manager, Carlos has started 15 companies in his life, and been a part of several more startups, venture-backed and non-venture backed.
Joshua Silberstein: Founder and Co-CEO of Thrasio. Joshua Silberstein is a seasoned operator and entrepreneur with 20+ years of experience successfully building companies – as a founder, investor, board member, and CEO.
History and Evolution
Thrasio was founded in 2018 by Joshua Silberstein and Carlos Cashman. The name Thrasio was derived from an Amazon warrior in Greek Mythology named "Thraso" which translates to "confidence."
The company came into existence because the founders identified an untapped opportunity. Traditionally, the exit routes available to small business owners at Amazon have only been passingly lucrative. An owner looking to sell their business could sell them directly to an individual who would fund the purchase with a loan or personal financing. This method did not involve in-cash transactions and contained the risk of a buyer pulling out. The other method was to list the business with a broker, who would facilitate the sale with a buyer and take a percentage cut. This method had the downside of unreasonably high commissions charged by brokers.
However, with the establishment of Thrasio, the founders presented a new kind of model which keeps the sellers content by providing them with a fair, fast, and profitable exit strategy. The process of acquisition is very transparent and expresses all expectations from the startup. The terms of the deal are well-perceived by sellers because Thrasio pays well and even shares post-sale gains through their earnout arrangements. According to the founders, this is in fact the company’s very secret to success and core value – the relationships they build with their sellers. The other value they highlight is the synergies they build with their own teams.
Since its inception, Thrasio has gone through the following stages:
It was founded in 2018.
In April 2019, Thrasio obtained $6.5M in seed funding and in December, it raised $20M in Series A funding. A few months later, it raised $75M in Series B funding.
In July 2020, Thrasio reached $1B in valuation after raising $260M in a Series C funding round. In November, former Amazon executive Tom Szkutak joined Thrasio's Board of Directors. He was Amazon's Chief Financial Officer for over 13 years (2002 to 2015).
In Jan 2021, $500M was raised in debt financing. In February, $750M was raised in a Series C round. Another Series C round in April brought $100M. In September, a debt financing round brought $650M. In October, $1B was raised in a Series D funding round which brought the company’s valuation up to $10B. Finally in November, a secondary market round ensued which raised $6.5M.
In December 2021, CEO Carlos announced company rebranding and site redesign, along with a new vision for the future of consumer goods and retail.
By April 2020, Thrasio’s valuation had increased 32 times compared to its seed round valuation in April 2019. Since 2018, its gross revenue has surged from $0 to over $200M.
SalesTech indicates that Thrasio has been selected as the #1 Best Small and Medium Workplaces in Retail in November 2021. According to 97% of Thrasio employees, working at the global startup is a great experience.
Thrasio has to-date made 3 investments, namely in Zeenk (as a lead investor), Dwarfs and Yardline.
According to Forbes, third-party sellers on Amazon are mostly small and medium-size businesses. They generated roughly 60% of Amazon’s product sales in 2019. Other interesting facts highlighted in this article include:
There are over 2 million third-party sellers worldwide.
In the US alone, these businesses sold $3.4B items via Amazon in the span of 12 months (ending in May 2020).
Over 30,000 of these sellers in the US each generate at least $1M in sales a year, relying on Amazon for logistics
Suggested Next Reads
How To Make Millions for Bezos’ Billions (Forbes, November ‘20)
Thrasio SuccessStory (SuccessStory)
Thras.io Business Model in A Nutshell (FourWeekMBA)
Meet The World’s Largest Buyer Amazon FBA Business (Web Retailer)
Fortune and Great Place to Work Name Thrasio the #1 Best Workplace in Retail (Sales Tech Series, November ‘21)
Thrasio, the Amazon aggregator, raises $1B in fresh funding at a valuation of up to $10 billion (TechCrunch, October ‘21)