A Potentially Unpopular Opinion on the Future of DTC

(2) Scalability - can you stretch the company to scale its potential? (note: this can be any combination of additional sales channels beyond DTC and/or additional relevant product categories, and/or new geographies)

Better aesthetics, usually yes. More interesting brand messaging, usually yes. But how about viable business models, scalability, and competitive advantage?

(1) Viable business model - can you make decent profits on the unit economics? (note: this means that DTC winners will, by and large, be premium-priced, with decent basket sizes, with efficient cost structures, and have repeat business with a customer rather than just one-off transactions)

Warby Parker might have started the DTC trend, but the true awakening came with Dollar Shave Club and Harry’s interrupting the somewhat ridiculous Gillette domination of razor blades at mass/retail. Would-be entrepreneurs and VC investors mistook this unique category situation (single dominant incumbent player, ridiculously high margins, small/ligh... See more

(3) Competitive advantage - do you have something unique which is hard for others to replicate? (note: brand positioning/messaging can be a feature of this, and first-mover advantage definitely helps if it gets traction, however ideally it will have novel features or capabilities that are challenging to replicate and solve an unmet consumer need)

How should we be thinking about all of these DTC brands? It’s actually through 3 fairly simple criteria that we should evaluate any type of business, whether DTC or otherwise: