The Return of Taste: Why Consumer Investing Is Back and Smarter Than Ever

Why recent funding rounds like David Protein ($725M), Grüns ($500M), and exits like Rhode ($1B) and Poppi ($1.65B) mark a new era of profitable, repeat-purchase consumer brands

“I feel the need. The need for speed!” - Lt. Pete "Maverick" Mitchell, Top Gun (1996)

Silicon Valley has always been suspicious of consumer brands. Too many variables. Too much marketing spend. Not enough defensibility. For years, the smart money chased software companies with their beautiful unit economics and network effects, leaving consumer goods to private equity shops and strategic acquirers.

This was always a curious blind spot. Consumer spending drives 70% of the U.S. economy. Americans spend $18 trillion annually. Every morning, billions of people reach for toothpaste, coffee, skincare products, and supplements. The consumer economy makes the world go round.

But taste was never the problem. The problem was timing, discipline, and category selection.

Yesterday, e.l.f. Beauty paid up to $1 billion for Rhode, Hailey Bieber's three-year-old skincare company. The deal structure tells the story: $800 million at closing with a $200 million earnout. Rhode had generated $200 million in revenue in its second full year. A month earlier, PepsiCo wrote a $1.65 billion check for Poppi, a prebiotic soda brand. These weren't desperate deals. They were calculated bets on a new class of consumer company that has quietly emerged from the wreckage of the direct-to-consumer bubble.

The DTC crash was brutal but instructive. Casper went from a $1.1 billion IPO valuation to a $286 million fire sale in eighteen months. Allbirds shed 95% of its value. These companies had confused marketing with moats, growth with business models, storytelling with substance.

They weren't undone by poor taste or sloppy execution, but by flawed category selection. They chose categories with long purchase cycles, thin margins, and weak customer retention. When the cost of digital advertising soared and venture capital dried up for brands without fundamentals, their economics collapsed.

"Taste without substance is just expensive storytelling."

Today's winning consumer brands focus on "habitual consumables": products that customers use up and reorder regularly. Rhode's peptide lip treatment becomes part of a daily skincare routine. Poppi's prebiotic sodas replace regular soft drinks. Hero Cosmetics' acne patches solve a recurring problem. Olive & June transforms nail care from an occasional salon visit into a weekly ritual. Even newer entrants like Lucky Energy and Feastables are building around repeat consumption and loyal communities. These aren't lifestyle purchases. They're utility purchases wrapped in lifestyle branding.

The numbers tell the story. Hero Cosmetics hit $115 million in revenue and $45 million in EBITDA when Church & Dwight acquired it for $630 million in 2022. That's a 14x EBITDA multiple typically reserved for high-growth software companies. Olive & June sold to Helen of Troy for $240 million on $92 million in sales. OLIPOP achieved profitability before raising its recent Series C at a $1.85 billion valuation. These companies didn't just grow fast; they grew efficiently.

The new generation of consumer brands thinks like software companies. They obsess over customer acquisition costs and lifetime values. They measure net revenue retention from cross-selling and upselling. Grüns, the gummy vitamin startup that reached a $500 million valuation in under two years, ships 4 million supplements daily to customers who reorder monthly. David Protein hit a $725 million valuation in just one year. That's SaaS-like predictability in a CPG wrapper.

The speed of these valuations tells a bigger story. For years, extremely high-growth brands caught a discount in capital markets due to perceived "fad risk." Investors demanded proof of longevity before paying premium multiples. Not anymore. Rhode's $1 billion exit at three years old, Grüns at $500 million after two years, and David Protein at $725 million after one year signal a fundamental shift: capital allocators are betting on explosive early traction rather than demanding years of proof. The market is rewarding velocity over vintage.

These brands have also abandoned the "direct-to-consumer or die" mentality. Rhode had no wholesale distribution when e.l.f. acquired it, highly unusual for a modern acquisition target and a testament to the brand's pure DTC power. But its billion-dollar valuation assumes rapid expansion into Sephora and international markets. Modern consumer brands use digital channels to test and refine, then leverage retail partnerships to scale.

Strategic acquirers have noticed. Companies like Procter & Gamble and Nestlé control hundreds of billions in revenue but struggle to innovate at startup speed. They're fighting back with checkbooks. PepsiCo bought Poppi for access to health-conscious millennials who view traditional sodas as poison.

Here's the contrarian insight: the winners aren't disrupting consumer categories—they're perfecting them. Rhode didn't invent skincare. It perfected the ritual. OLIPOP didn't create functional beverages; it made them taste good. Olive & June didn't pioneer nail care; it brought salon quality home. The biggest opportunities exist in massive, established categories where incumbent brands have grown lazy. Rather than inventing entirely new behaviors, successful brands either improve existing habits or make new ones feel inevitable.

But frequency alone isn't enough. The winners combine habitual use with genuine taste and community. Rhode succeeds not just because skincare is daily, but because Hailey Bieber created a minimalist aesthetic that resonated with Gen Z. The risk of over-rotation to pure utility is real. Product and brand must still align for breakout outcomes.

The venture capital industry has rediscovered consumer goods just as they've become more like venture-backable businesses. Three forces converged: social media matured from broadcasting to community-building, supply chain democratization lowered barriers while retail consolidation created needs for fresh brands, and consumers became more intentional about daily routines post-pandemic.

The result is a new class of companies that marry the scale potential of consumer brands with the predictability of subscription software.

"They don't just build brands; they build systems for recurring revenue."

Consider the contrast: Casper sold mattresses that people buy once a decade. Rhode sells skincare products that customers use daily and replace monthly. Their unit economics are fundamentally different because their usage patterns are fundamentally different.

This isn't just a trend; it's an evolution. The consumer brands being built today are more disciplined, more data-driven, and more durable. They have taste, but they also have substance. Most importantly, they have a clear path to profitability. In an industry that once celebrated burning cash indefinitely to build brands, that might be the most radical innovation of all.

The return of taste to consumer investing has arrived. The message has been clear since January: we're back. For founders building in this new era, build for daily life, marry emotion with utility, and prove your economics early. The best investors will meet you there.