- Society Brands is an e-commerce aggregator company that was built for and by founders. This is the story behind the company.
Society Brands is an e-commerce aggregator company that was built for and by founders. The company has been expanding rapidly by acquiring six brands initially while also building infrastructure for further expansion. To learn more about the company, Pulse 2.0 interviewed Michael Sirpilla, co-founder and CEO of Society Brands.
Michael Sirpilla’s Background
Sirpilla was born and raised in Canton, Ohio and that’s where he currently resides with his wife and three kids.
“I’ve been an entrepreneur for the past 13 years. I’ve built a few multi-million-dollar wholesale agencies and helped scale a population health management company from $0 to over $100 million in revenue within a 5-year period of time. I grew up in a retail family and have always been around consumer products,” said Sirpilla.
How The Idea For Society Brands Started
Sirpilla told me that due to the pandemic, they noticed a large shift in consumer spending from brick & mortar to e-commerce.
“I asked myself a simple question, ‘In 10 years from now, will there be more or less products bought online than there are today?’ The answer to me was obvious the trends will persist as e-commerce continues to take market share from physical retail stores,” added Sirpilla “I began looking online and saw that there are millions of small e-commerce brands and I realized it’s the most fragmented market I’ve ever seen. It was then that I decided to start Society Brands and build out our founding team and business thesis.”
And Sirpilla said that the company focuses on high-value products that everyday consumers are able to afford. You can buy a screen protector for your cellphone from Power Theory or a wobble chair from Active Chairs for a child that has a hard time paying attention in school.
To build up the company, the first aspect was to put together an incredible team.
“We needed strong capabilities in the areas of M&A, marketing, product, operations, technology, finance, legal, and several other categories,” explained Sirpilla. “It was critical that I got the right people around me to help execute the business vision. After that, we tested the market and shared our story with hundreds of e-commerce brands to see if they were interested in selling their business to us.”
Society Brands is focused on 6 categories:
1.) Sports & Outdoors
2.) Home & Kitchen
3.) Health & Personal Care
5.) Evergreen Apparel
6.) Consumer Electronics
With every acquisition that Society Brands looks at making, strong customer feedback is key in order for them to move forward.
“The beauty in acquiring brands that have a large presence on Amazon is the customer transparency the platform gives us. Before we look at acquiring a company, we do due diligence on their customer reviews,” Sirpilla said. “Today at Society Brands, we have hundreds of thousands of customer reviews across the six brands we own and operate. The average product rating for those reviews is well over 4 stars.”
Evolution Of Society Brands’ Technology
Society Brands’ technology has evolved into what is considered one of the most sophisticated operating platforms available for e-commerce aggregators. And Society Brands’ President Justin Sirpilla and Chief Technology Officer Ross Salupo oversaw the development of a platform that enables the company to analyze their brands’ performance and make data-driven decisions at an aggregate level. When you’re a highly acquisitive company like Society, you need to be able to integrate your acquisitions into an operating platform. We’ve successfully done that and I’m thrilled with what we’ve built.
What have been some of Society Brands’ biggest milestones?
“We’ve acquired six brands that are currently trending at a 30% annualized EBITDA CAGR. We’ve realized well over $1.5 million in synergy captures and we’ve integrated all of our brands into our operating platform,” replied Sirpilla. “One of the brands we’ve acquired has almost doubled their EBITDA within less than a year of ownership. That was done by strong organic revenue growth & margin expansion opportunities by moving the supply chain to Mexico.”
The company has raised $220 million of capital to date. And Sirpilla believes that the company will be a 9-figure revenue business in the near future.
Total Addressable Market
What is the total addressable market that Society Brands is pursuing?
Sirpilla noted that there are over 2 million third-party sellers on the Amazon platform and over 1 million Shopify Storefronts. And Society Brands could get to a multi-billion dollar valuation and still only own less than 0.1% of the addressable market. E-commerce is a very large market where we believe it has room for many winners.
Distinguished From The Competition
Most acquirers of e-commerce brands do not have the desire to keep the founders on post-acquisition. And if you think of a typical e-commerce entrepreneur, most are youthful in nature and would not be ready to retire after they sell their company.
“Because of this, we ask them to stay on with Society as Brand President and be part of an ecosystem of like-minded founders,” Sirpilla commented. “Another thing that differentiates us is our deal structure. Other acquirers normally offer cash at close and an earn-out if their brand continues to grow. With Society, we offer cash at the close but also roll over equity into Society Brands’ parent company. This creates a tremendous amount of alignment with the founders. Eventually, when Society has a liquidity event, the brand founders will be able to enjoy a ‘second exit’ because of their rolled-over equity.”
Society Brands is focused on sustainable M&A growth and will continue to do 15 to 20 acquisitions per year.
“We believe we’re building a multi-billion dollar company and hope to build relationships with brand founders that last a lifetime,” Sirpilla disclosed. “We will likely do an IPO eventually but it’s not about the destination for us, it’s about the journey. We’re having a ton of fun on the journey right now. As long as we stay focused and execute on our mission, I’m confident the results will speak for themselves.”