The startup world is a funny place. Every now and then a company that perfects a new business model or carves out a new space which then translates into hundreds of companies using the learnings of that company to doing the X for Y model that most often doesn’t work. Today we are announcing our investment in Supply.co a DTC shaving company that we struggled with for a bit because on the surface it may seem like “just another shaving company” trying to replicate the success of Harry’s or DollarShaveClub which more or less pioneered this whole business model.
The premise of the DTC model specifically for the wellbeing category is two folds
1- Convenience, you don’t have to worry about refills. Its just one less thing to think about
2- Price, by getting off the middle-man and going straight to consumers, those companies were able to offer a more competitive price because their margins allowed them to.
But as more and more DTC brands started to emerge, the price value proposition is starting to decay. Of course it comes as no surprise this is driven by the bolstering increase in instagram/fb ad prices. Basically in the span of 6-9 years DTC brands have cutoff one middle man (distributors) and replaced it with another (Facebook) and this is exactly what the founders at supply.co have realized. Instead of optimizing for price like Harrys or DollarShaveClub they have decided to optimize for the experience. Millennials have been voting with their wallets day in and day out on how much they value experience and quality. Apple, Beats and Sonos are perfect example of that.
And given our new Middleman only cares about maximizing costs per click selling a 100$ razor vs a 10$ one gives you the luxury to be able to outbid everyone else eyeing the same customer. And if you build an out-of-this-world product that people are just in love with and raving about all the time then we are certain that people are willing to fork over the extra $$$ if they believe its worth it.
Supply.co is the start of a new wave of DTC companies, one that brings the mojo back into building exceptional product and we are honored and humbled to be part of it!