This past week felt like a blast from the past. Three funding announcements made me look twice and double-source the information to ensure it was correct. Daydream raised a $50M Seed, Waabi raised a $200M Series B, and Zepto raised a hefty $665M funding round. At a time when funding news is sparse, and check sizes are smaller, this is big news. I want to focus today on Daydream which I feel is exciting and maddening.

Daydream is trying to create a new form of personalized search. Enabling customers to experience women’s and men’s fashion in a new manner. What does that mean?

Daydream fundamentals

Let’s discuss the known details. The founding team includes talent who have held leadership roles at Google, Microsoft, Amazon, Nordstrom, and Farfetch. They have experience related to artificial intelligence, technology, and online shopping. Julie Bornstein, co-founder and CEO, has over 22 years of experience in the apparel sector. She has worked for Nordstrom and Urban Outfitters. Sephora, Stitch Fix, and THE YES. THE YES was acquired by Pinterest due to its vast business relationships for an undisclosed price. Whether THE YES returned capital to its investors is another question.

The company has raised funding from Forerunner Ventures, Index Ventures, GV (Google Ventures), and True Ventures. It is worth noting that Forerunner Ventures and True Ventures were investors in THE YES. Daydream raised interest from Index Ventures and GV. To be clear, if you are building a consumer-focused company, these are some of the best investors.

It is also worth noting that Daydream has offices in Seattle, WA, and New York, NY, a difference from THE YES, which was based in San Francisco. Why is this important? New York is close to Fifth Avenue, where most brands have operations, and its tech operations are out of Seattle, WA, which is a tech hotspot. Software engineers are available as Google, Amazon, and others have offices in that city.

Why this makes sense now

The Daydream website showcases an experience based on user input, which generates results based on trained data. The company claims to have close to 2,000 brands in its catalog through partnerships with multi-brand and mono-brand retailers. I find this interesting because the relationship could be affiliate-based, in which Daydream generates a percentage of revenue from sales. Does this imply that Daydream is a next-generation search engine that will drive traffic to brand/retailer websites and have nothing to do with transactions?

Also worth noting is that the apparel sector currently does not have a market leader. Yes, the annual Amazon is the largest seller of apparel posts, but customers do not have a starting place to look and purchase apparel. Apparel brands are currently feeling the heat from Shein, but they have to be available on a variety of channels to generate sales. They are also competing against secondary marketplaces such as The RealReal, ThredUp, and the eBay consignment service, where customers can purchase pre-owned goods. Daydream likely will only be interested in new apparel and won’t be competing against secondary marketplaces. So, a reimagined platform to help customers find new apparel is a net gain for women’s and men’s fashion.

Over the years, I have learned that good entrepreneurs have an exit target in mind when they start their business. As Bornstein sold her last company to Pinterest, it would seem that the target here is Google, which, to be honest, has regressed with commerce. This company will not be sold to Amazon as it is not a transaction-based operation but an advertising platform that leverages a search engine to drive consumers to brand/retailer websites.

The challenges this company will face

The last time a fashion platform had ambitious goals, we must talk about Spring. The company tried to reimagine the apparel shopping experience. It started being mobile-only and then steadily moved to offer a desktop and an app solution. Spring had an all-star roster of talent available to them (I am biased here, but I am lucky to call a few of them friends), and ultimately, they ended up being at the mercy of their brands.

Brands are interested in sales and revenues and not in reimagination. I know that sounds harsh, but it’s the reality. How Daydream handles that, trying to create a vast catalog that offers customers a variety of results based on inputs, will be a tightrope the company will have to walk. When they start working with brands directly, another question is: Do brands understand that their catalog may be available on a new platform that has not negotiated commercial agreements?

As we have witnessed with Google AI overviews, generating relevant search results is challenging. How will they balance relevancy with commercial interest? Relevance with generative AI is new ground, but brands will want to be found based on specific inputs. Something like “Show me the best little black dress to wear to an event” contains subjectivity.

Blessing meet curse

Daydream does not have legacy data it can leverage like Google and Amazon, which is both a blessing and a curse. The curse relates to intent data, there is no point showing customers products that they are not interested in. How Daydream solves that will be part of their secret sauce. The blessing is that they are starting with talented and experienced developers who have learned their trade at some of the largest technology companies in the world (hello, YouTube).

I hope they are getting accurate catalog data, which sadly is not the case most of the time. The technology that will power their search will likely have to look at metadata generated based on large volumes of training data.

In summary

Brand operators and executives in the women’s and men’s fashion sectors should be interested in Daydream. I would ensure that my products are part of this new opportunity. I can hear many of you groan and say, “Why would you want to do this?” What if Daydream drives traffic in a unique manner and helps your direct competition? This is a first-generation solution looking for a unique result in a sector that needs all the help it can get. Sign-up your product data feed to help the platform learn and build results that change how we shop for apparel.

Agency executives write down the name Daydream and check on it regularly. I recommend that you sign up to be part of the beta. Why? You will want a front-row seat to see how this goes. If your business works with women’s and men’s fashion brands, make them aware of this new opportunity and become part of the catalog. Secondly, try to engage with the Daydream team as they seek brands to join them. Some brands must be persuaded, but what is the downside here?

Private Equity investors, you own a large set of apparel brands. Most claim poverty and lack the budget to market their products to consumers. This new search experience should be an opportunity you should utilize. Secondly, if you own an agency, ensure that they know about this opportunity and that your relevant assets are looking to join this first iteration of a new fashion search engine.