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Matt Higgins on Omnichannel Acquisition Corp. IPO: 'not all SPACs are created equal'

Yahoo Finance’s Brian Sozzi and Myles Udland speak with Omnichannel Acquisition Corp CEO & Chairman, Matt Higgins, about the company’s NYSE debut.

Video Transcript

MYLES UDLAND: 2020 has been an amazing year in markets, and it's been defined by a number of themes. One of those is the SPAC boom. This is a Special Purpose Acquisition Corp. Basically a blank-check company comes to market, then says we will buy something. Coming up later, the latest SPAC coming to market today is Omnichannel Acquisition Corp., and the company's CEO, Matt Higgins, joins us now for a conversation about everything going on in the markets here.

Matt, it's great to talk with you on this exciting day for you guys and just an exciting time for the markets in general. I'd love to talk through what you guys have set up at Omnichannel, both to you as the CEO and the board is just a really interesting collection of people across industries and what you're hoping to eventually surfaced through your search process.

MATT HIGGINS: Well, thank you for having me. It is an exciting day. This SPAC has been a long time in the making. And first and foremost, we're focusing on the consumer sector. There's been a massive disruption in how commerce is transacted. We've seen five years of e-commerce growth compressed into six months and seven months. It's been extraordinary. And as a result, the future is omnichannel.

And what that simply means is removing friction from the consumer journey. Whereas in the past the channel would dictate the experience-- if you were going on mobile, it's one thing. If you walked into retail, it's like "50 First Dates." No one at the register knows you. The future is about removing friction so that the channel recedes to the background and however you receive your goods is up to you, and that takes work.

And so the purpose of this SPAC is to identify great consumer companies that need support in moving along that omnichannel journey. And that's why I put together a tremendous team of operators that's really hard to come by in a marketplace.

BRIAN SOZZI: Matt, are you a believer in retail stores?

MATT HIGGINS: I'm sorry. Say it one more time.

BRIAN SOZZI: Are you a believer in physical retail stores?

MATT HIGGINS: I am, actually. You know, I coteach a course at Harvard Business School with Professor Len Schlesinger and I say that-- a couple of things. One, retail is not dead. Malls may be struggling. Retail is going to be reimagined.

Two, the idea of a pure-play, digitally native brand where you only exist digitally only exists for a period of time. What happens is once you discover a marketplace unto yourself, you start spending ads against it. You do paid search on Google and Facebook or whatnot. What inevitably happens, incumbents jump in. They bid up the cost of your acquisition, and you begin to eat away at your margins. Every business needs go omnichannel, and that includes retail.

And what studies show, that if you are a digital brand and you have a physical touch point, no matter what that is, your returns go down, which makes sense, right? People become more comfortable transacting with your brand. And at the same time, your customer-acquisition costs go down. Your long-term value goes down.

So I am bullish on retail. I'm actually bullish on brick and mortar because what you're seeing with Walmart and Target and what Bed Bath & Beyond has done in one year is that they actually have a leg up in this next year because they have stores that they could turn into distribution centers to handle last-mile logistics.

MYLES UDLAND: You know, Matt, we've talked to a lot of people who kind of said everything people predicted in retail has finally started to come true a little bit through the pandemic, and do you have that sense? Like in 2010 we would have said, oh, distribution is the next big thing, and it didn't happen for years. Do you feel like this is finally the moment for those strategies to be realized, and is that part of what has you guys excited with this SPAC?

MATT HIGGINS: Yeah, I do feel that. It's funny. You know, I things just take maddeningly a little bit longer to materialize. I'm not sure why brick and mortar woke up in 2020 and said, hey, I think the internet is going to be a big thing. You know, but whatever it is, it's happening. We are definitely going omnichannel.

And here's the opportunity and the gap I saw in the SPAC marketplace. Obviously it's frothy and a lot of people have launched it, but what I have not seen is a great team of operators.

There was a study that McKinsey put out actually in September that tried to identify the operator premium, and what they found is not all SPACs are created equal. When you have an operator-led SPAC, they tend to outperform others SPACs by 40%, and they actually outperform their sector by 10%. So my vision here in putting this together was put together a team of operators that can help a consumer business along this journey because it's been a chaotic year and it's not easy to go omnichannel if you're not comfortable operating at retail or digitally and what not. Put together a team of operators, and create value in the combination.

On my board of advisors and board members, we have 10 founders. We also have a level of diversity and inclusivity that reflects where America is going, where America should be going and at the same time that reflects the values of these great consumer brands, right?

78% of customers want their CEO to stand for something, and they want their company to stand for something. So the mission-driven companies do the best, and our SPAC mirrors that movement.

MYLES UDLAND: I'm curious, Matt, about the decision to go via SPAC though because, I mean, you wouldn't have any problems raising a private fund if you wanted to go buy something. Bobbi Brown's not going to have any issues going to raise a fund if she wants to go buy something. So I'm curious about the decision to finance it through a SPAC because, as you mentioned, the operators you have, you guys all have Rolodexes far-- you know, more than deep enough to get, you know, a billion dollars or whatever you would like to raise to go make an acquisition. So I'm curious about the financing thought process there.

MATT HIGGINS: That's a great question. I'm partly motivated by the fact that I think there is a place in the marketplace for SPACs. They make a lot of sense, but they need to be reimagined. They need to be operator led, in my opinion.

I think there's a hierarchy. Number one, operators. Number two, M&A experts. And number three, public-company experts that can nurture the company through that threshold, right? It's a very uncomfortable process to go from private to public. And so I am excited by the fact of reimagining what a SPAC should look like.

But it is a great question. Clearly could have raised a fund. But I think this product should exist, will exist, but could be done better.

BRIAN SOZZI: Matt, I think part of the sizzle here with this SPAC is you and your story. Eight years, I would say, running, what, financial operations for the New York Jets? You launched RSE Ventures with Miami Dolphins owner Stephen Ross, who is a big player in real estate, of course. And you're still a vice chairman of the Miami Dolphins. Really a heck of a story. How do you-- what do you attribute your success to?

MATT HIGGINS: What do I attribute my success to? I think a little bit a touch of defiance. I'm always willing to go my own way. I grew up dirt poor in Queens taking care of my mom. I have a crazy early story. Dropped out of high school, went to college seven years at night, then Fordham Law, and then was one of the first employees overseeing the redevelopment of the World Trade Center.

So I always take on hard challenges. I go my own way. And most importantly, I'm really passionate about working with my founders and all the businesses I've backed. I was the first customer of Gary Vaynerchuk. I think have a pretty good eye of talent. And then I became his partner. I've incubated companies from scratch. So I'm just really passionate about helping founders go through that journey in a servant-leadership approach and a very empathetic approach. And this is a great vehicle to do that because it's really uncomfortable to go from, you private, private to public, and I think I can add a ton of value.

MYLES UDLAND: All right, Matt Higgins, Tua time has arrived. Congratulations on that. Enjoy the rest of this season down there in Miami. Matt Higgins with Omnichannel Acquisition Corp. Thanks so much for taking the time. Hope we can talk soon.

MATT HIGGINS: All right, thank you for having me.