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Over 400 Startups Are Trying to Become the Next Warby Parker

73 points by fourmii 8y ago

jaggederest 8y ago
You really need a special market to make DTC super compelling. I think the elements are: * High margins * Repeat purchases * Low competitiveness For those, glasses, razors, mattresses all hit at least 2 of 3. I wonder why nobody has done DTC with... say shoes? Probably too much competition.
- danieltillett 8y ago
  Lots have and most have failed. One of the problems with shoes is inconsistent sizing and the way women seem to want to try on 100 shoes before buying a pair.
  - ghaff 8y ago
    You didn't phrase your comment obliquely enough apparently :-) But, yes, shoe fit and sizing can be really tricky. I've gone back and forth between shoes in a store a half-dozen times. And where shoes are a fashion accessory like jewelry, it's tricky to order online even if you can send a few things back. You can definitely get more hands-on in a store than you can online even with a generous return policy. And I know I've gotten stuff that was maybe not quite right but not bad. So I never returned. But I never wore much either.
- ghaff 8y ago
  There are niche players with a particular pitch. Xero for example. (You could argue that Nike is partly DTC in that they have their own retail stores.) In a lot of cases though, consumers want to go into a store that carries a bunch of different brands so that they can compare. Or, if shopping online, pick even multiple shoes from Zappos, try them, and return the rest. I'm not sure that shoes really fulfill any of those elements. There's probably a 4th category which is a niche/cult. Of course, that's a model for a "lifestyle business" not a silicon valley startup that is trying to scale and "disrupt."
- deleted 8y ago
  [deleted]
- pg_bot 8y ago
  As mentioned in the article https://www.allbirds.com/ https://www.allbirds.com/ Have a few friends who won't stop talking about them.
- bpicolo 8y ago
  There's a crap ton of DTC shoes: https://www.gq.com/gallery/direct-to-consumer-shoe-brands-for-men https://www.gq.com/gallery/direct-to-consumer-shoe-brands-fo... Paul Evans has tons of NYC subway ads
  - extra88 8y ago
    There's some good-looking stuff and maybe some aspects are appealing to higher-end customers but to me, shopping online for something like shoes is more about price. I don't see them beating Johnston & Murphy which has comparable or better prices and has physical stores.
ghaff 8y ago
Good article. The gist of the piece is that a lot of these direct-to-consumer businesses are trying to "disrupt" markets that the vast majority of people don't see as broken. There do seem to be some different categories of products here. One is essentially trying to create new luxury brands for, e.g. toothbrushes, that either don't exist or are pretty old-line and non-millennial. Others are trying to take business from entrenched dominant companies as in eye wear--which is what Warby-Parker did. However, as the article notes, it's not clear how many of those there are. Are high-end towels, etc. really an example of a market failure today? Probably not.
- adventured 8y ago
  > The gist of the piece is that a lot of these direct-to-consumer businesses are trying to "disrupt" markets that the vast majority of people don't see as broken. You can do interesting things with products when you remove some of the vast middle-men distributors that sit between you and the customer and reclaim margin. Whether producing a higher quality product at a lower or similar price, or producing an equal quality product at a far lower price. Plus, the big product conglomerates and retailers have an effective monopoly on traditional product access (Colgate, Kraft, Procter & Gamble, Walmart, Target, Costco, Walgreens, et al). The margin saved by removing some of the middle-men, can then be used for distribution-marketing-sales to reach out to customers in order to breach that comfortable group monopoly.
  - ghaff 8y ago
    Maybe. >A Bristle subscription would be more convenient than going to CVS when you need a new toothbrush--you'd order online, set your replacement-head frequency, and forget about it. Picking up a toothbrush every now and then--assuming you don't just get given them at every cleaning by your dentist--is so far down the list of problems that I and most people have as to be negligible. Furthermore, I doubt if middlemen markups on toothbrushes are a big problem when in fact overheads are probably far lower overall. There are clearly some things like eyeglasses that the existing market is fairly broken. But most goods simply aren't in that situation.
sytelus 8y ago
I am in market for new glasses and I looked at Warby Parker. I have to say I am not impressed at all. The choice is very limited and buy cycle is too long. When people need glasses, they usually need now. Bezos understands the value of instant satisfaction, these guys don’t. There are easier tech solutions they could have used like try it out on your photo (which companies like Zenni have implemented quite well but they have same issues). These guys insist on sending you frames which don’t arrive for a week and then you order and then someday you receive glasses. When I walk to local LensCrafters, I can walk out with a pair in couple of hours. Their website is also nightmare to browse through but it might make perfect sense to them. As a customer, I don’t care about their business categories of try at home or not. I just want lots of choices and I want them now. Amazon has truely spoiled me. They are indeed doing good level of PR in publish-for-pay websites like inc.com, however.
- ghaff 8y ago
  >When people need glasses, they usually need now. I'd substitute sometimes for usually. If you've broken your only pair of glasses then you do indeed need something now. But lots of the time, people just want new frames, or decide to get sunglasses, etc. You may underestimate how many people see glasses as a fashion accessory rather than a utilitarian device you wear to correct your vision. >They are indeed doing good level of PR in publish-for-pay websites like inc.com, however. If anything, it seems more like a PR pitch for UPenn though there's plenty of skepticism in the article as well. I thought it was an interesting piece. You do realize that writers don't just sit in an office with their computers turned off and have ideas for stories pop into their head? I'm sure someone pitched a story here but I don't know why you'd assume there was a payoff involved. It seems a pretty balanced piece.
  - jurip 8y ago
    Even if you need to get glasses that better match your prescription or your glasses are getting scratched but are still usable, you might not need them now. I've worn glasses for almost 30 years and I've never been in a rush to replace them. At least around here it usually pays to wait for sales; it's easy to save a couple of hundred euros if you can wait for a while.
a-dub 8y ago
Oh man. The subway ads for this shit are so annoying. At least there was comedy value in the sketchy lawyers and plastic surgeons. If I see another ad for a boring ass household sundry that has been "reimagined", I think I'll puke. Moreover, who buys this shit? If I had a bunch of overpriced bath towels that I bought from one of these DTC things, I'd be terrified of the idea of a guest seeing them and recognizing them.
- stolson 8y ago
  You know, it's crazy but things like Brooklinen slowly worm their way into people's heads that they need this kind of stuff. I'm sure that they're nice sheets, but I just hear more and more "I've heard they're really great quality/convenient/etc" and the actual anecdote where they got this is several degrees removed. The ads just look nice.
throwaway413 8y ago
Off-topic, but I’m really curious where the jury stands on the Ombraz Kickstarter. They make these sunglasses with a strap instead of arms. So far when I’ve showed them to people, I’ve gotten extremely mixed responses. https://ombraz.com https://ombraz.com (I am not affiliated.)
- ghaff 8y ago
  I'm not sure why I wouldn't get normal glasses and a good Chums strap for them. I suppose these are theoretically more secure but I've flipped while kayaking and I've never had trouble losing glasses so long as I had a retainer. The idea is interesting on paper but a good retainer strap seems a lot more versatile.
harshaw 8y ago
It's hard for me not read this article and see a metric f-ton of hubris. If the depth of your thinking is that you are the Uber of X, the warby-parker of Y, you are so screwed. If you've been around startups - the key is some kind of very early customer feedback loop; Customer Development from the lean startup process, the working backwards process from Amazon, etc. Adding VC money on top of this seems like fuel to a group of founders who haven't really considered that their model is not sustainable. And the VC's don't fundamentally care - they just need some small percentage to succeed. One key quote from the article is "that CAC is the new rent". That's a nice way to view D2C. And let me tell you the last time I was doing D2C our CAC was $500 and you had to spin a pretty good yarn to make the lifetime number add up.
- cylinder 8y ago
  These people are such brilliant visionaries that they thought they best use of two years of their 20s/30s was to borrow $200k to go to business school and get an MBA. Wow /s
toss1 8y ago
From TFA: "To one frequent DTC investor I spoke with, though, any young DTC company's moving into retail early in its lifecycle is a red flag that it might be overspending on online marketing. 'Because if it's working online, why all the retail stores? Why not stay online and scale over time? I could see one or two stores as PR plays, but why take on all the overhead, the cost of the build-out?'" The answer? Customers have a severe lack of imagination. I've found this in several different fields, even among smart customers (except those whose expertise is in the area of what you're selling) -- you really have to show and let them see and feel what they're going to get. Once they've seen it, they'll go online for a better price, but using permanent locations, popup stores, or other IRL interactions could be key for many of these DTC startups.
- bpicolo 8y ago
  Seems silly to judge on that considering brick and mortar is still like 85% of retail sales. Permanent locations are crucial for a lot of different consumers for a lot of different products (especially fashion). I buy clothes way more living in NYC than I ever did when I was living in a rural area because of the local choices.
deleted 8y ago
[deleted]
choperius 8y ago
Most of the DTC stories I hear seem to be very US-centric, including most of the companies mentioned in this article. What are successful DTC companies coming from outside of US?
tuna-piano 8y ago
Why is it that some small high growth companies in non-tech industries get tech-type valuations and prestige, while others do not? It feels like companies like Warby Parker can use a certain style for people to think they’re super innovative- when in reality they’re just normal boring delivery/sunglasses/sheets/etc with none of the characteristics of real tech companies.
- ghaff 8y ago
  >with none of the characteristics of real tech companies You mean they sell an actual product? OK. That's glib. But it's often not clear what many "real tech companies" are actually selling that has consumer value at the end of the day. At least sunglasses and sheets are something that people value and use.
  - goatherders 8y ago
    I dont its glib at all. And I agree with you. The notion of a "startup" is all marketing and message anyway.
  - tuna-piano 8y ago
    I'm mainly thinking many companies in the tech industry can earn huge profits due to (1) It's easier for software companies to achieve huge global scale than physical companies and (2) Potentially amazing economics. Marketplaces, network effects and high fixed low variable costs = Winner take most. The sunglass/sheet/etc market is not winner take most.
UtilityDave 8y ago
Optician here with some relevant experience regarding the opthalmic space, recognizing that isn't primarily what the article is about. For the most part glasses still have to be custom made to some extent. That process has been getting more sophisticated (smarter edgers, free form surfacing everywhere) and faster processing times. But getting the formula right on mail order is hard. First you have limited information about and from the patient. You have a PD (pupillary distance) and all of these services, that I have seen only collect a binocular pupillary distance. The lenses have to be, at the very least cut to shape to fit the frame selected with the optical center of the lens moved so it sits over the pupil of the wearer when they are in the "gaze posture" appropriate to the glasses That is to say if they are distance glasses the pupils will be looking straight ahead, while using the glasses, but the person's eyes may be 3mm narrower than the frame selected, so before grinding the lens that 3mm must be taken out of the "middle" If one eye was in two and the other was out eight though (very uncommon) you have a reject pair. If the glasses were of high power and one eye was out 1 and the other eye were out 2, if we were over 14 diopters of correction we fail quality. But not because the glasses, how they fit the patient's face 2000 miles away.
- mikestew 8y ago
  Hey, UtilityDave, all of your comments are dead on arrival (I vouched for all of them, as they seem well within guidelines). You might want to email the mods to get that fixed, as the only sin it looks like you've committed is not using your account.
  - UtilityDave 8y ago
    I mostly want to try to spread more information about this sector of the economy, it is interesting, and I really wish there were more competition. Right now there are competitive garden walls if you want to use Zeiss, essilor, rodenstock, and Hoya lenses it is a nightmare to keep everyone current, and lab networks are very difficult to use for end user opticians let alone patients. If you want to disrupt opthalmic dispensing Start by making good EHR for offices with good product and lab network integration. None of the big boys have gotten that or lims with solid legacy support going yet.
goatherders 8y ago
There is nothing on earth that would convince me that my toothbrush is an extension of myself. Nothing.
oldgradstudent 8y ago
Most of them will probably fail. Still, I thank them for funding my favorite podcasts.

73 points by fourmii 8y ago

You really need a special market to make DTC super compelling. I think the elements are: * High margins * Repeat purchases * Low competitiveness For those, glasses, razors, mattresses all hit at least 2 of 3. I wonder why nobody has done DTC with... say shoes? Probably too much competition.

danieltillett 8y ago
Lots have and most have failed. One of the problems with shoes is inconsistent sizing and the way women seem to want to try on 100 shoes before buying a pair.
- ghaff 8y ago
  You didn't phrase your comment obliquely enough apparently :-) But, yes, shoe fit and sizing can be really tricky. I've gone back and forth between shoes in a store a half-dozen times. And where shoes are a fashion accessory like jewelry, it's tricky to order online even if you can send a few things back. You can definitely get more hands-on in a store than you can online even with a generous return policy. And I know I've gotten stuff that was maybe not quite right but not bad. So I never returned. But I never wore much either.
ghaff 8y ago
There are niche players with a particular pitch. Xero for example. (You could argue that Nike is partly DTC in that they have their own retail stores.) In a lot of cases though, consumers want to go into a store that carries a bunch of different brands so that they can compare. Or, if shopping online, pick even multiple shoes from Zappos, try them, and return the rest. I'm not sure that shoes really fulfill any of those elements. There's probably a 4th category which is a niche/cult. Of course, that's a model for a "lifestyle business" not a silicon valley startup that is trying to scale and "disrupt."
deleted 8y ago
[deleted]
pg_bot 8y ago
As mentioned in the article https://www.allbirds.com/ https://www.allbirds.com/ Have a few friends who won't stop talking about them.
bpicolo 8y ago
There's a crap ton of DTC shoes: https://www.gq.com/gallery/direct-to-consumer-shoe-brands-for-men https://www.gq.com/gallery/direct-to-consumer-shoe-brands-fo... Paul Evans has tons of NYC subway ads
- extra88 8y ago
  There's some good-looking stuff and maybe some aspects are appealing to higher-end customers but to me, shopping online for something like shoes is more about price. I don't see them beating Johnston & Murphy which has comparable or better prices and has physical stores.

ghaff 8y ago

Good article. The gist of the piece is that a lot of these direct-to-consumer businesses are trying to "disrupt" markets that the vast majority of people don't see as broken. There do seem to be some different categories of products here. One is essentially trying to create new luxury brands for, e.g. toothbrushes, that either don't exist or are pretty old-line and non-millennial. Others are trying to take business from entrenched dominant companies as in eye wear--which is what Warby-Parker did. However, as the article notes, it's not clear how many of those there are. Are high-end towels, etc. really an example of a market failure today? Probably not.

adventured 8y ago
> The gist of the piece is that a lot of these direct-to-consumer businesses are trying to "disrupt" markets that the vast majority of people don't see as broken. You can do interesting things with products when you remove some of the vast middle-men distributors that sit between you and the customer and reclaim margin. Whether producing a higher quality product at a lower or similar price, or producing an equal quality product at a far lower price. Plus, the big product conglomerates and retailers have an effective monopoly on traditional product access (Colgate, Kraft, Procter & Gamble, Walmart, Target, Costco, Walgreens, et al). The margin saved by removing some of the middle-men, can then be used for distribution-marketing-sales to reach out to customers in order to breach that comfortable group monopoly.
- ghaff 8y ago
  Maybe. >A Bristle subscription would be more convenient than going to CVS when you need a new toothbrush--you'd order online, set your replacement-head frequency, and forget about it. Picking up a toothbrush every now and then--assuming you don't just get given them at every cleaning by your dentist--is so far down the list of problems that I and most people have as to be negligible. Furthermore, I doubt if middlemen markups on toothbrushes are a big problem when in fact overheads are probably far lower overall. There are clearly some things like eyeglasses that the existing market is fairly broken. But most goods simply aren't in that situation.

sytelus 8y ago

I am in market for new glasses and I looked at Warby Parker. I have to say I am not impressed at all. The choice is very limited and buy cycle is too long. When people need glasses, they usually need now. Bezos understands the value of instant satisfaction, these guys don’t. There are easier tech solutions they could have used like try it out on your photo (which companies like Zenni have implemented quite well but they have same issues). These guys insist on sending you frames which don’t arrive for a week and then you order and then someday you receive glasses. When I walk to local LensCrafters, I can walk out with a pair in couple of hours. Their website is also nightmare to browse through but it might make perfect sense to them. As a customer, I don’t care about their business categories of try at home or not. I just want lots of choices and I want them now. Amazon has truely spoiled me. They are indeed doing good level of PR in publish-for-pay websites like inc.com, however.

ghaff 8y ago
>When people need glasses, they usually need now. I'd substitute sometimes for usually. If you've broken your only pair of glasses then you do indeed need something now. But lots of the time, people just want new frames, or decide to get sunglasses, etc. You may underestimate how many people see glasses as a fashion accessory rather than a utilitarian device you wear to correct your vision. >They are indeed doing good level of PR in publish-for-pay websites like inc.com, however. If anything, it seems more like a PR pitch for UPenn though there's plenty of skepticism in the article as well. I thought it was an interesting piece. You do realize that writers don't just sit in an office with their computers turned off and have ideas for stories pop into their head? I'm sure someone pitched a story here but I don't know why you'd assume there was a payoff involved. It seems a pretty balanced piece.
- jurip 8y ago
  Even if you need to get glasses that better match your prescription or your glasses are getting scratched but are still usable, you might not need them now. I've worn glasses for almost 30 years and I've never been in a rush to replace them. At least around here it usually pays to wait for sales; it's easy to save a couple of hundred euros if you can wait for a while.

a-dub 8y ago

Oh man. The subway ads for this shit are so annoying. At least there was comedy value in the sketchy lawyers and plastic surgeons. If I see another ad for a boring ass household sundry that has been "reimagined", I think I'll puke. Moreover, who buys this shit? If I had a bunch of overpriced bath towels that I bought from one of these DTC things, I'd be terrified of the idea of a guest seeing them and recognizing them.

stolson 8y ago
You know, it's crazy but things like Brooklinen slowly worm their way into people's heads that they need this kind of stuff. I'm sure that they're nice sheets, but I just hear more and more "I've heard they're really great quality/convenient/etc" and the actual anecdote where they got this is several degrees removed. The ads just look nice.

throwaway413 8y ago

Off-topic, but I’m really curious where the jury stands on the Ombraz Kickstarter. They make these sunglasses with a strap instead of arms. So far when I’ve showed them to people, I’ve gotten extremely mixed responses. https://ombraz.com https://ombraz.com (I am not affiliated.)

ghaff 8y ago
I'm not sure why I wouldn't get normal glasses and a good Chums strap for them. I suppose these are theoretically more secure but I've flipped while kayaking and I've never had trouble losing glasses so long as I had a retainer. The idea is interesting on paper but a good retainer strap seems a lot more versatile.

harshaw 8y ago

It's hard for me not read this article and see a metric f-ton of hubris. If the depth of your thinking is that you are the Uber of X, the warby-parker of Y, you are so screwed. If you've been around startups - the key is some kind of very early customer feedback loop; Customer Development from the lean startup process, the working backwards process from Amazon, etc. Adding VC money on top of this seems like fuel to a group of founders who haven't really considered that their model is not sustainable. And the VC's don't fundamentally care - they just need some small percentage to succeed. One key quote from the article is "that CAC is the new rent". That's a nice way to view D2C. And let me tell you the last time I was doing D2C our CAC was $500 and you had to spin a pretty good yarn to make the lifetime number add up.

cylinder 8y ago
These people are such brilliant visionaries that they thought they best use of two years of their 20s/30s was to borrow $200k to go to business school and get an MBA. Wow /s

toss1 8y ago

From TFA: "To one frequent DTC investor I spoke with, though, any young DTC company's moving into retail early in its lifecycle is a red flag that it might be overspending on online marketing. 'Because if it's working online, why all the retail stores? Why not stay online and scale over time? I could see one or two stores as PR plays, but why take on all the overhead, the cost of the build-out?'" The answer? Customers have a severe lack of imagination. I've found this in several different fields, even among smart customers (except those whose expertise is in the area of what you're selling) -- you really have to show and let them see and feel what they're going to get. Once they've seen it, they'll go online for a better price, but using permanent locations, popup stores, or other IRL interactions could be key for many of these DTC startups.

bpicolo 8y ago
Seems silly to judge on that considering brick and mortar is still like 85% of retail sales. Permanent locations are crucial for a lot of different consumers for a lot of different products (especially fashion). I buy clothes way more living in NYC than I ever did when I was living in a rural area because of the local choices.

deleted 8y ago

[deleted]

choperius 8y ago

Most of the DTC stories I hear seem to be very US-centric, including most of the companies mentioned in this article. What are successful DTC companies coming from outside of US?

tuna-piano 8y ago

Why is it that some small high growth companies in non-tech industries get tech-type valuations and prestige, while others do not? It feels like companies like Warby Parker can use a certain style for people to think they’re super innovative- when in reality they’re just normal boring delivery/sunglasses/sheets/etc with none of the characteristics of real tech companies.

ghaff 8y ago
>with none of the characteristics of real tech companies You mean they sell an actual product? OK. That's glib. But it's often not clear what many "real tech companies" are actually selling that has consumer value at the end of the day. At least sunglasses and sheets are something that people value and use.
- goatherders 8y ago
  I dont its glib at all. And I agree with you. The notion of a "startup" is all marketing and message anyway.
- tuna-piano 8y ago
  I'm mainly thinking many companies in the tech industry can earn huge profits due to (1) It's easier for software companies to achieve huge global scale than physical companies and (2) Potentially amazing economics. Marketplaces, network effects and high fixed low variable costs = Winner take most. The sunglass/sheet/etc market is not winner take most.

UtilityDave 8y ago

Optician here with some relevant experience regarding the opthalmic space, recognizing that isn't primarily what the article is about. For the most part glasses still have to be custom made to some extent. That process has been getting more sophisticated (smarter edgers, free form surfacing everywhere) and faster processing times. But getting the formula right on mail order is hard. First you have limited information about and from the patient. You have a PD (pupillary distance) and all of these services, that I have seen only collect a binocular pupillary distance. The lenses have to be, at the very least cut to shape to fit the frame selected with the optical center of the lens moved so it sits over the pupil of the wearer when they are in the "gaze posture" appropriate to the glasses That is to say if they are distance glasses the pupils will be looking straight ahead, while using the glasses, but the person's eyes may be 3mm narrower than the frame selected, so before grinding the lens that 3mm must be taken out of the "middle" If one eye was in two and the other was out eight though (very uncommon) you have a reject pair. If the glasses were of high power and one eye was out 1 and the other eye were out 2, if we were over 14 diopters of correction we fail quality. But not because the glasses, how they fit the patient's face 2000 miles away.

mikestew 8y ago
Hey, UtilityDave, all of your comments are dead on arrival (I vouched for all of them, as they seem well within guidelines). You might want to email the mods to get that fixed, as the only sin it looks like you've committed is not using your account.
- UtilityDave 8y ago
  I mostly want to try to spread more information about this sector of the economy, it is interesting, and I really wish there were more competition. Right now there are competitive garden walls if you want to use Zeiss, essilor, rodenstock, and Hoya lenses it is a nightmare to keep everyone current, and lab networks are very difficult to use for end user opticians let alone patients. If you want to disrupt opthalmic dispensing Start by making good EHR for offices with good product and lab network integration. None of the big boys have gotten that or lims with solid legacy support going yet.

goatherders 8y ago

There is nothing on earth that would convince me that my toothbrush is an extension of myself. Nothing.

oldgradstudent 8y ago

Most of them will probably fail. Still, I thank them for funding my favorite podcasts.