Expand Your Brain Trust Outside the Team
Unfortunately, there is no playbook for 145% tariffs. However, while the magnitude of the moves in April 2025 may have been shocking; in truth, the consumer sector is regularly punctuated by disruptive events, forcing companies to react and respond.
Between 2020 and 2025, bookended by a global pandemic and global trade war, the U.S. consumer sector experienced:
Pandemic-driven behavioral shifts and digital transformation:
COVID-19 triggered the collapse of traditional retail foot traffic, accelerated e-commerce adoption by several years, normalized remote work, and reshaped spending toward home goods, casualwear, fitness, and suburban living. Retailers scrambled to develop omnichannel models and curbside pickup, while digital marketing and personalization became critical survival tools.
Supply chain disruption and inflationary pressure:
Global supply chain breakdowns — from semiconductor shortages to port congestion — created prolonged inventory imbalances and elevated input costs. These shocks, combined with the largest inflation spike in 40 years and labor shortages, forced rapid repricing, margin compression, and growing consumer price sensitivity.
Capital and credit environment volatility:
Massive fiscal stimulus fueled temporary consumer spending booms early in the decade but was followed by aggressive interest rate hikes and tightening credit conditions. Consumer affordability for big-ticket categories (autos, housing, durable goods) deteriorated, slowing demand and pressuring retailers' financing models.
Shifting societal expectations and technological disruption:
Rising emphasis on ESG, brand authenticity, and circular economy models (like resale and recommerce) altered consumer loyalty patterns. Simultaneously, advances in generative AI reshaped consumer engagement, marketing, and service strategies, creating new winners and losers based on technological agility.
Investment performance has mirrored this volatility. Discretionary consumer stocks over the last four years (’21-’24) have experienced swings of +24%, -37%, +42%, and +30%, respectively. Private equity portfolios showcase similar extremes, characterized by some winners, but too often, many losers. When compared to a cross- sector average, consumer funds are carrying 35% more of their holdings below basis. (1)
The good news is that the long-term performance of the US consumer sector remains strong. Since 1999, within the S&P500, both consumer discretionary and consumer staples have outperformed all other sectors.(2) However, these volatile periods disproportionately influence long-term success: although crises made up only ~11% of quarters from 1995–2020, performance during those crisis quarters drove about 30% of a company’s long-run relative total shareholder return.(3)
Facing short-term volatility and long-term growth, what can consumer companies, and the investment firms that back them, do to create durable, sustained performance? Is it too hard—should we just throw in the towel? That is a choice some may make. We have a different view: double down. Understand the characteristics that enable businesses to persevere. Look beyond specific sectors and identify deeper secular trends. Understand the physics of growth and investment that drive real returns on capital. And ultimately, support businesses that combine these characteristics into resilient business models that can navigate short term volatility.
The results are worth it: studies show that high-resilience firms enjoy dramatically better outcomes, including nearly double the long-term survival rate of their low-resilience peers.(4) Resilient businesses absorb shocks, recover quickly, and even thrive in altered conditions.
TNN’s Collaborator Network
One of our most powerful tools to increase the resilience of our portfolio is our Collaborator Network. It’s based on our foundational belief that best solutions don’t come from a single team—they emerge from diverse expertise across industries, functions, and experiences.
Our “Collaborator Network” is a dynamic community of professionals—seasoned leaders, entrepreneurs, and experts-- who contribute at every stage of our investment process. From innovation and data analytics to marketing and supply chain, we bring together the best brains in the business to tackle complex problems and expand the power of our team.
Why it Works:
The most successful investments require deep expertise that often stretches beyond what any one firm or team can offer. Additionally, given the unpredictable nature of volatility in Consumer, often the answers to today/tomorrow’s questions aren’t found in the existing playbook.
We’ve designed our Collaborator Network to help increase our ability to make sense of emerging dynamics and develop new answers, purpose-built for the most pressing questions. It has four key characteristics:
Diverse Perspectives
We actively recruit Collaborators who are proven experts in their field, intellectually curious, and naturally accretive to our network. Then we bring Collaborators together in combinations that help us formulate a uniquely valuable perspective. As an example, when Kizik wanted to enhance its operations to accommodate its hyper growth (1000% in 3 years), we assembled a team consisting of the CTO of U.S. Special Forces, a D2C supply chain/logistics expert and a CEO of a highly-innovative consumer company to triangulate on a recommendation. The team generated a solution that was as creative as it was practical. It provided quick, meaningful impact for Kizik, and set the company up for resilient, profitable growth.
Still in the game
Our Collaborators aren’t full time; and that’s intentional. Things are changing so fast in the consumer landscape, we believe it’s critical we work with experts who are on the cutting edge of their given discipline. Therefore, we’ve structured our Collaborator Network with experts who are wrestling with and solving the most up-to-the-minute problems on a daily basis.
Operationally Efficient
Because we started The Newcastle Network from scratch, we were able to build a highly efficient Operating System that leverages the latest technology to facilitate seamless interaction, data capture and analysis.
Our Collaborators are plugged into our Operating System across the investment lifecycle-- identifying patterns of emerging opportunity, helping inform investment themes, sourcing great companies and working together to help our portfolio company CEOs create value.
Incentivized Participation
To ensure everyone is motivated to help as much as they can, we’ve created an economic pool for Collaborators. We track every Collaborator’s contribution in our OS, and we ascribe a value to every contribution based on its impact. This approach motivates Collaborators because they know their time is valued, impactful, and rewarded.
The Result?
In 2024 alone, we logged over 300 collaborator contributions. As the CEO of one of our portfolio companies said recently:
“We considered other PE firms that talked about their access to seasoned operators, but Newcastle is different. They don’t just provide access, they create impact. From Day 1, the Collaborators have been our secret weapon—they’ve made us better, faster and smarter, We’re punching far above our weight and we’re doing it efficiently. I honestly can’t imagine going with a different model.”
Pete Maulik,
Partner, Domain Team
Pete is a respected thought-leader, a frequent keynote speaker on innovation, and an active lecturer at business schools. View profile.
