#TECHTOPIC
Since Warby Parker launched a decade ago, there has been ever-increasing buzz around ‘direct to consumer’ or DTC brands. In late 2015, venture capitalists (VCs) like Charles River Ventures were pushing an increase in consumer product investment, echoed by a CBInsights report in early 2016. Looking back from today’s vantage point, all of the top DTC brands CB highlighted in that report have been acquired (Bonobos by Walmart, Dollar Shave Club by Unilever, etc) while all of the pure software plays are still standalone businesses.Hmm... Even in 2018 & 2019, DTCs were still being billed as pure success stories.
And now, in the shadow of the WeWork freefall, we see chaos in the DTC ranks. Brandless went out of business a couple weeks ago because apparently, brands do matter. Casper had to downgrade its IPO price and the stock fell sharply in the following week of trading -- because the public markets realized that selling mattresses is not a tech business. And now the FTC has blocked Edgewell’s proposed acquisition of Harry’s (acquisitions being the main success vehicle for DTCs) because it would eliminate their biggest independent competitor.
And why do you think the economics were off with DTC brands? Check out the ‘actual DTC value chain’ image in this article and you’ll see that all the expected profits from “going direct” were gobbled up by Facebook & Google...so tech (software) wins again. Maybe brick-and-mortar is coming back?
#LISTENING
Hands-down favorite podcast right now is Pivot with Kara Swisher & Scott Galloway. They are absolutely crazy, but I love their discussions of tech, valuations, politics, more tech, business models, etc. My other automatic download is Levar Burton Reads, aka “The Best Short Fiction, Handpicked by the World’s Greatest Storyteller.” And I recently discovered PocketCasts and it’s changed my life. The highly customizable filters are ah-mazing for super-curation of my podcast queues. (I can’t believe I just kept hoping Apple would fix their terrible Podcast app.)
