Startup Spotlight: Unicorn Auction

Welcome to The Modern Day Renaissance Man newsletter. I, Trey Layton, write about the things that interest me, often covering topics such as startups, sports, and entertainment. If you'd like to receive these newsletters directly in your email a few times a week, go ahead and subscribe to never miss an email!

Happy Wednesday, folks.

Who said it's a slow season in the markets?

Just a few weeks ago, Elon changed his mind and decided he DOES want to go through with the purchase of Twitter, the app that the Tesla/Neuralink/SpaceX/Boring Company boss uses religiously to give us all some insight into his partially censored 2am thoughts.

Never one to be undone, Donald Trump got some good news with his own social media platform, Truth Social. The Google Play Store added the app to its platform, thus allowing hundreds of millions of people to download it.

Truth is not public officially, but an agreement is in place for the company to be acquired by the special purpose acquisition company (typically referred to as cool-sounding and easier to type SPAC) Digital World Acquisition Corp., an acquisition which would take the company public and allow retail traders to go wild on Robinhood. Even now, news surrounding the app tend to reflect in DWAC's stock which unsurprisingly rose on the news. However, investors prolly shouldn't buy that lambo quite yet.

The shell company has had to delay its acquisition plans because it has failed to reach the required 65% shareholder approval mark. The deadline to get this approval is now December 8. Since the deal was first announced, the company has lost $138 million of the agreed-upon $1 billion original price tag, and to compound the challenges, there are ongoing investigations into possible violations for illegal discussions prior to the merger announcement.

If the two companies are unable to make the deal go through, shareholders don't get left with lumps of coal, though. Instead, they will be paid out the pro rata value of their shares, and Trump and his company will be left up the creek. Or at least down the hall and to the left.

Amazingly, Musk and Trump weren't the only two billionaires making news for social media platform ownership this week. On Monday, it was announced that Ye, the artist formerly known as Kanye West, had reached an agreement to purchase the social media platform Parler, the anti-moderation alternative to Twitter.

The app soared in popularity in large part because of its devoted base of Conservatives who had begun to use the app when former President Trump began to have his tweets flagged for misleading content before becoming even more popular upon his outright ban. The app has since lost a bit of its luster because Trump started his own app, but the audience of "free speech enthusiasts" remains a devoted one.

Much like the rapper, the app doesn't come without controversy. There have been investigations into the role of Parler in allowing alt-right terrorists to plan and coordinate the Capitol storming and attempted insurrection on January 6. Given that Ye has recently been in the news for sporting "White Lives Matter" shirts at Paris Fashion Week and was recently banned from Instagram and Twitter for posting that he would be going "death con 3 on JEWISH PEOPLE."

The terms and price of the deal haven't been released, but the company has 2.8 million user and has raised just over $50 million in the private markets to date. I bet that these two lovebirds will be very happy together.

Part of my commitment to a health and fitness routine has meant limiting alcohol. I have noticed a change in my sleep quality and daily energy levels after even just one glass of whiskey. However, that ☝️ forbidden image makes me want to bust open a bottle or six.

Even so, I have always admired the image that spirits maintain as a consumer. The upscale bottling and labelling of whiskeys, wines, and ryes make consumers feel sophisticated as they drink from their fancy glasses, trying to pretend that just a few years before they weren't chugging 99¢ beer out of a stranger's shoe at a Sigma Chi party.

I've also been fascinated by the business behind the liquor industry, one often walled off from the average person because of high initial capital requirements to manufacture and distribute and high knowledge barriers to invest in rare bottles directly. It is often a sector which is passed down genealogically, so for those of us who weren't born with bourbon in our baby bottles, it can be hard to get up to speed.

Unicorn Auctions provides a platform for buyers and sellers of rare spirits to auction off the world's finest bottles in an easy to use mobile app or desktop site.

Sellers contact the website to get a free appraisal before sending the bottles to UA to be auctioned off. This ensures that transactions are legal and authentic. Buyers then get to bid on listed bottles after registering and have the verified bottles shipped directly to their door.

The company makes money by charging $5/bottle for every bottle sold and a 5% commission on proceeds as well as a 15% buyer's premium on the final sale price. The company also claims that it's not responsible for any damage that takes place in the shipping process, but it offers an insurance plan for 3% of the final hammer value, providing yet another potential form of income even if on average, 10% of packages are damaged in the mail. As with any marketplace business, being so central to the transaction itself ("close to the money") makes Unicorn's role irreplaceable to the exchange process.

Part of the luxury retail attraction lies in the experience. In addition to providing the bare minimum of information on the company's website (which adds some mystery imo), the company does provide contact information to help walk buyers and sellers through the whole process, an assurance of hospitality which enhances the experience. This even includes helping buyers and collectors searching for particular bottles to locate them, a goal which the team claims to be their "specialty."

Their social media accounts are littered with the finest bottles advertising their newest available bottles. The company only gets paid when sellers get paid, so it's in their own interests to market for you, another improvement to the process of using the platform.

Despite being around for a few years, though, there seems to be little traction. Given the highly competitive space, both on the manufacturing and on the distribution side, this is certainly concerning. Hell, any and every celeb that has been in at least one movie in the past decade has probably launched their own tequila brand by now.

Standing out to consumers from the abundant noise is a challenge which will plague all alcohol companies, Unicorn included. This is even more pronounced given the interesting dynamic taking place within the consumer demographics for alcohol.

Despite how worthless you might have thought them to be based on what the regulars at Cracker Barrel make sure to remind you, Gen Z actually drinks less than any generation before them. The trend is getting even more pronounced every year. This demo also tends to be the most technically savvy, though, something that Unicorn Auction caters to heavily with its UI/UX. The market size seems to be limited to millennials, the only group both able to change the input on a remote and have the desire (and money) to spend on bottles of vodka that is not Smirnoff.

The team is small but has experience in the hospitality space, something which will be critical to understanding the importance of making it about the process rather than just the taste. The market for alcohol is a large and ever-evolving one, and not tying itself down to a particular drink gives power to Unicorn.

Still, it's a space I'd probably avoid right now.

Have a different opinion? Shoot me an email and tell me why I'm wrong. Working on a startup and want to be featured? Send over a deck. Wanting to go on Unicorn Auction and buy some booze? Maybe drink some water instead.

Finally, if you enjoyed this newsletter and are looking for more resources to learn about the early stage startups that are shaping the future, make sure to check out StarKeys, a newsletter dedicated to highlighting the most innovative companies of the future every single week. I'm getting a lot of value out of it, and I'm excited to see what the team continues to build.

Cheers to another day,

Trey