Who will lead us out of the desert?

Let’s be honest. Is this a safe space?

I gotta say DTC marketing has gotten rather BORING.

I actually felt this pretty acutely back towards the beginning of DTC 2.0 and I haven’t been able to shake that feeling until quite recently.

If you weren’t around for DTC 1.0, let me quickly recap it for you. It was awesome. Not because the businesses were awesome. Mainly they were undercapitalized and suffered from really poor tech stacks (if you see some of us with less hair, it’s because this was pre-Shopify days).  But it was an age of experimentation, before VCs poured billions into the space and routed that cash directly to Zuck’s bank account. There was doubt, real skepticism as to whether DTC brands could attract audiences and whether consumers would shift their shopping habits online. 

That doubt made room for opportunity…. If you were willing to experiment. You could try stuff. And man was it fun.

I settled in as first non-founding employee at this heretofore unknown underwear brand, Tommy John. Facebook ads weren’t a thing, so how do we scale? Well, what if we sent Howard Stern a pair of underwear? You’re joking, right? Total Hail Mary. Well, a week later there’s Howard ranting and raving about how his balls feel like they’re nestled on clouds. I mean a thousand copywriters couldn’t craft a better pitch. 

That got the proverbial ball rolling and it was off to the races. Ever had celebrities pitching you to endorse YOUR product? Well, there was Kevin Hart sans everything but Tommy John on social doing just that. And my fav story. We’d take turns answering the office phone. Wasn’t my turn that day unfortunately, but someone (shall remain nameless who, haha) gets off the phone and says “Does anyone know who Kode Bryant is?”. KO-DE??? (RIP Mamba & Gigi 😪). So many stories, SO. MUCH. FUN.

We were early. We were lucky. But we were brave.

And then the floodgates opened

DTC 2.0 promised us profitable transformational brands, but of course, it didn’t play out like that. Too much capital got funneled in at a time when the costs required to launch a brand were diminishing to zero. Awash in capital, brands outbid each other to get access to the only ride in town where the customers were, Meta. My lasting impression of ‘20 - ‘22 is of a modern day gold rush with everything, but you know, the actual gold.

As it became clear that the economics didn’t work, the money spigot got shut off. So now we’re left with:

• Too many brands on life support

• Amazon continuing to do everything they can to pull the plug on these brands

• A black box algorithm that you feed ad content into in the hopes that it somehow spits out a profitable customer

Boring, boring, boring (and exhausting, ugh!). 

My personal feelings aside, there’s nothing wrong with boring marketing if it can lead to sustainable businesses. But it hasn’t shaken out that way and it won’t if we stay the course.

And here’s why. 

We never made good on the “Direct” part of DTC

Everywhere you look in “DTC” there are intermediaries sitting between you and your consumers. And if you’re wondering where the profits went, look no further than the market cap of these companies:

In 2024, Shopify’s platform GMV was $292 billion. If we were to place a total valuation on every single Shopify brand, a 0.25x sales multiple would be more than fair in today’s climate (sadly, this is probably generous). This means that not only is Shopify valued at least twice as much as the combined value of every brand using its platform, but that Meta is at least 20x the market cap of all the brands lining up to play its game of customer roulette.

Does this sound right to you?

Maybe it’s not fair, so what? Well, the two main culprits (Meta and Amazon) add significant costs to every brand’s operations. And these costs directly result in higher prices for consumers. 

And that’s the key. These costs drain DTC brand profitability and in turn, those higher prices sap consumers of purchasing power.

Brands and consumers are actually on the same team! This is a community just waiting to be united. One where mutually reinforcing actions create a virtuous cycle benefiting both parties.

And what these corporates have yet to realize is that their take rate is this community’s opportunity

Touché, Jeff.

That’s our secret weapon. What we need is the democratization of commerce. Disintermediation of those that have wedged themselves between brands and consumers. 

We do that and value flows to the edges where both brands and consumers are.

And it recently dawned on me how we get there. 

We’re gonna part the sea between brands and consumers and redefine an entire industry in the process. 

My head’s buzzing. I’m daydreaming about commerce again. I. AM. PSYCHED.

Stay tuned….