Edition 27: Crash & 🔥

DTC Bubble - Politics & the Human Condition

Kamil Rextin

Jan 13, 2020

Here’s a great story of $40,000 & a failed startup idea. There’s lot of gold in here but the key point for me was creating value for all stakeholders aka the ecosystem.

Bram Kanstein @bramk

I don’t know who wrote this, but this might me the best startup post-mortem I have ever read 👏👏👏 tjcx.me/posts/i-wasted…

tjcx.meI wasted $40k on a fantastic startup ideaWhen good ideas make bad business

I have a few of my own crashes & burns under my belt but here’s one that was published back in 2013. The actual company crashed & burned a few years before that.

Ranee Soundara @naynerz

Nothing pisses me off more than Lowest Common Denominator (LCD) Marketing: +tactics over strategy +lazy branding +minimal comms +ads without optimization +no real conversion goals +vanity metrics +too much content, no ROI +hours spent on low ROI activities list goes on...

I think this is the marketing playbook now - everyone is looking for the quick wins to justify their jobs / marketing spend without taking into consideration the longer term benefits of investing in marketing. It’s not marketers at fault all the time. There’s lots of bad marketers but also there’s a lack of understanding what marketing actually fucking does!

I usually pay attention to what DHH says. He’s a smart man. But ads as a business model are not evil. There’s still some caution and fear-mongering around using ‘targetted’ ads post FB/elections. But let’s be honest, without ads, a lot of the internet as it is won’t exist today. Ads let people blog, keep the services running that we rely on (free email, search, blogs, newspapers, music, videos, etc) - how many folks out of the billions who use the internet can / would or could afford to pay $5/mo for 100’s of services. I know for a fact that a lot of folks in Pakistan (rural like where I am originally from) would not have access to nearly the information they can if the internet was paywalled. Ads let us have a free & democratized internet.

Are ads themselves evil? No. Is Facebook using 2FA via phone number then using that to target folks with ads a shady practice? Yes. Is it downright evil? No. But I can’t point fingers because I make my living on the internet & 20% of it is running ads on the internet. It’s become the cultural zeitgeist to talk about privacy.

In some ways, I feel like by taking away ads & putting the internet behind the paywall - we are enforcing elitism on what otherwise should be free (via ads) & available to everyone.

DHH @dhh

If you're a podcast listener, you can do better than Spotify as your player. No need to reward a company that's doubling down hard on targeted ads with your ears. For iOS, checkout @OvercastFM. For Android, @pocketcasts. And if you're making a podcast, @TransistorFM ✌️❤️

Here is the Spotify podcast article.

Spotify also hinted at taking this technology and applying it outside of its exclusive shows. “This is just the beginning,” says Dawn Ostroff, Spotify chief content officer. That means it’s possible the company will take on big ad networks, like Midroll, to sell ads for other shows and share in the revenue

I did cover this before it became official in a previous edition.

How can I end without talking about DTC & Casper's IPO?

Yes, the biz model is lopsided & there’s probably a handful of factories churning out these mattresses in a box and other DTC products. I still think DTC itself is a bubble - but is all Commerce over the internet DTC? Is this the same ‘bubble’ as drop shipping with better branding? Send me your thoughts or twitter!!

But I am guilty of arm analysis. The fact is, its incredibly hard to build a company & take it public & I have never done it ever & likely never will (who takes an agency public right?) but here’s some commentary from Twitter (LinkedIn was very quiet or I don’t follow the right folks):

Jeff Richards @jrichlive

Evergreen tweet on IPOs: I’m not a Casper investor. And it’s 🤪 to read the hot takes. But - I personally applaud any company that can get to an IPO. It’s really, really f’ing hard to do. Investors can decide whether they want to own your stock, but thank you for taking a shot...

Jason Stoffer @jstoffer

S-1 drops from @Casper - interesting positioning as a sleep economy business v a mattress business. Includes CPAP machines, medical diagnostics and pet sleep in that definition. Notes to follow

Post M. @Post_Market

The internet has both created and destroyed vast profit pools for B2C businesses. Mattresses are a solid case study: the industry has been squeezed by a) price transparency & b) lowered barriers to entry. Tuft & Needle was founded in ‘12, w/ $6k and grew to $100M w/ no VC funding

Some interesting listens/ reads:

Sales / Sales Ops:

Amrita @AmritaMathur

'Prospect has been unresponsive' an unacceptable reason for losing deals. Frequently seeing this as a lost reason alludes to the rep being unable to create a sense of credibility, urgency, challenge the prospect or position product as a strategic solution. Agree or disagree?

Facebook & Commerce:

Jon Lax @jlax

@michaelmiraflor Marketplace and Pages have been working on commerce since 2015. Shopify are a partner with the ability to connect Shopify catalogs to Fb pages. The headline is click bait worthy but not accurate.

Jeff Chang📈 @JeffChang30

CAC is not a constant. It’s a function of: 1. Time 2. Spend amount 3. Competition 4. Market saturation And more

Biggest takeaway

Sales is about Customer value creation not revenue.

Preorder Susan’s book! If you don’t who who Susan is - she wrote the blog post that triggered the changes at Uber & around the tech industry among other places