Every brand goes through this cycle, although they don't all end up cannibalizing their original high-end products. You start by making gear out of the best ava

Every brand goes through this cycle, although they don't all end up cannibalizing their original high-end products. You start by making gear out of the best available materials and with high-quality construction. You sell direct to the customer and have minimal marketing spend. It's expensive because of the materials that, in the modern era, are engineered synthetics you have licence from textile companies like Gore, Schoeller, Polartec, PrimaLoft, etc. and the low volume, but at least you don't have retailers and middlemen taking a cut of your revenue. Your gear becomes more popular, starts to get mindshare within the climbing, hiking, skiing, etc. communities. But at certain point, you've sold every climber a great jacket that stands up to years of abuse. Now you have two options. First, you can start making more types of items. You go from hard shells to insulated jackets to footwear to tents to sleeping bags. You sell the guy who already likes your jacket a few pairs of gloves, pants, etc. But that also scales up your costs, because you've got to sink time and money into designing these new items and learning to properly use new materials. So how do you make more money? You increase your addressable market by putting your brand on down-market items. You don't need to do any R&D, you just replace the top quality materials in your existing products with cheaper alternatives and outsource the manufacturing to Bangladesh. To reduce prices, you stop doing quality control. Not only are you cutting your retail price of a jacket maybe from $700 to $200, your actual revenue is now going from $700 to maybe $50 because you're selling at Walmart, Target, etc., but your volume goes from thousands to millions. You still sell your original high-quality products, but they aren't making nearly as much money as the cheap stuff anymore. At some point the original owners of the company exit, sell it to a larger company or hedge fund, and the cycle accelerates further. They get rid of the high-end products and axe the R&D team, seeing it as a cost centre. It's an unavoidable part of trying to sustain your growth curve. Some companies have resisted it and simply stayed small and high-quality, but it takes a special type of founder. A good example is Western Mountaineering, which continues to make top-quality low-volume down products and refuses to branch out into selling everything and the kitchen sink with their name on it. http://www.westernmountaineering.com/about/ http://www.westernmountaineering.com/about/