Category: Corporations

AI Wrappers Look a lot Like DTC Brands — And That Should Worry Investors

Over the last year, niche AI startups have exploded onto the scene. Companies like Slingshot (mental health), Harvey (legal), and Jasper (marketing), Cursor (code editor) are racing to stake out territory on top of large language models like ChatGPT and Gemini. At first glance, they feel innovative and differentiated. But if you squint, they look a lot like the early wave of direct-to-consumer (DTC) brands — Casper, Warby Parker, Glossier, Harry’s and Peloton — that disrupted incumbents not by reinventing the product, but by reshaping the story, distribution, and consumer experience.

I saw this firsthand at Casper. We weren’t reinventing the mattress — foam was foam — but we were reinventing the consumer experience and telling a story incumbents weren’t telling. We addressed a lot of the pain points in the legacy purchase experience (returns, trial, etc) with novel solutions.  

The analogy here is hard to ignore.

Read More

Share this:

AI: The Disruption of Management Consulting

The big management consulting firms will have to adapt quickly to AI. The days of paying half a million dollars for a strategy deck are over. By way of example, I was curious, what is next for the food delivery sector (e.g. UberEats, DoorDash, etc) so I put together a prompt and leveraged ChatGPT. 

Read More

Share this:

The Rise of AI Shopping Agents

Back in March 2023, I wrote this article about how I was beginning to leverage AI (specifically ChatGPT) in helping me frame business partnerships. This was relatively early in the commercialization of AI. That now feels like an eternity as the space continues to evolve. Today’s post is not an overview of AI – for newbies I highly recommend LinkedIn Learning’s Generative AI for Business Leaders course taught by Tomer Cohen. Google also has a training module on Coursera for business leaders which is a good primer.  It’s easy to go down a rabbit hole trying to wrap your head around the space so my recommendation is to start with the basics and then tailor the learning to your specific field. 

I wanted to share today another use case that has been generating noise and is relevant to retailers and brand marketers – and top of mind for me given my background working in and consulting DTC brands, consumer goods companies, and retailers – the rise of AI shopping agents. 

Read More

Share this:

Newell and VF: How to Kill a Consumer Goods Giant

I’ve taken a bit of time off from blogging recently to focus on other things, but recently came across this article from the WSJ about the fall of VF Corp ($VFC) and it reminded me of other legacy brand aggregators, such as Newell Brands ($NWL), that have also struggled as of late. There is a common strategy across both companies – they chose to concentrate key decisions around marketing, product development, and sales at the corporate versus brand level. And the results clearly show that was a mistake. 

Read More

Share this:

Ad Agencies Need to Innovate to Win in Retail Media

Total digital ad revenue in the US climbed 10.8% to nearly $210b last year, despite a slowing economy and a myriad of other challenges. While the growth rate is a far cry from the 35% figure in 2021, it still shows that marketers continue to spend online to drive purchase consideration. But there was an interesting stat included in that $210b spent last year – 20% was on retail media advertising. 

Read More

Share this:

Utilizing AI to Help Build/Frame Partnerships 

One of the most difficult aspects of doing partnerships or business development regardless of industry or sector is clearly understanding why two parties should get “married.” In my experience building numerous JV’s/partnerships, one theme continues to resonate, and that is how do you construct a winning partnership where each side feels as if they have gotten equitable value. Oftentimes, initial discussions tend to be more tactical or acutely focused on a very specific asset that one side seeks access to, when the focus should be framing the outcome from inception. This entails being able to articulate clearly the ‘gives’ and ‘gets’ of a deal and not jumping right into the weeds. Jeff Bezos has said, at Amazon, before any work is done on a new partnership, the press release is written. This accomplishes a couple key things. 

Read More

Share this:

UberEats and DoorDash are Becoming More like Amazon

If you’ve used food delivery apps like DoorDash or UberEats over the last few years, you’ll notice the number of restaurants on the platform has skyrocketed. And interestingly, they all seem to be offering the same types of cuisines. As it turns out, these platforms have become a battleground for testing virtual concepts. In 2021 there were roughly 10,000 virtual brands on UberEats but today that number is now 40,000. 

Read More

Share this:

Disney: Centralization Doesn’t Always Work

As I was reading last week about how McKinsey was hired to help Disney streamline costs this year, it drew similarities to my time at Jarden when we merged with Newell in 2016.  MK is a great firm, don’t get me wrong, but I continue to see this playbook applied that doesn’t always work. Centralization is not invariably the answer, especially in businesses with strong IP and nuanced relationships.  

Read More

Share this:

Disney+: Another Unprofitable Direct to Consumer Concept

With news today that Bob Iger is returning to Disney as CEO after a roughly 3 year hiatus, it’s pretty clear that one of the main motives for this move has been the highly un-profitable Disney +, the company’s streaming arm, or as some call it, the new ‘cable’ bill. Like many companies that have legacy wholesale relationships, Disney is trying to make the economics of selling content directly to consumers sustainable. There are a lot of similarities between all the DTC brands today (Warby Parker, Casper, Away, AllBirds, Blue Apron, etc) and Disney+. 

Read More

Share this:

DTC Brands Need a Publishing Arm

Why is a publisher model appealing to brands? An emerging crop of companies with recurring revenue and large customer bases have discovered that “owning” audiences is better than “renting” them according to CBInsights and ultimately a way to reduce CAC and build more loyalty.  Over the last few years, a growing crop of financial service and SaaS based firms have been acquiring media companies – JPMorgan bought the Infatuation, HubSpot purchased the Hustle and Robinhood snatched up MarketSnacks. Make no mistake – this was a play to decrease CAC (customer acquisition cost) and drive up LTV (lifetime value).   A recent CEO said “Every company should go direct to its audience and become a media company.”  While the noise has mainly been centered on businesses with subscription economics, another cohort that would benefit from this trend are the emerging crop of DTC lifestyle brands that have been growing rapidly over the last 5-10 years.  This isn’t unchartered waters; brands have been acquiring media companies for years. Going back to the days following the Dot.com bubble, J&J purchased Baby Center in 2001 for ~$10m with the goal of providing more content to expecting moms. Flash forward to today and the pandemic has created another opportune environment for brands to snatch up media companies. Since the spring of 2020, we’ve seen ecommerce sales skyrocket, digital advertising costs increase precipitously and LTV become paramount leading to the newfound realization that paying to advertise won’t have the same ROI as owning an audience to market to.  One of the largest blights these newly public DTC companies have is that they aren’t profitable – the primary reason being the amount of money spent on marketing. 

Read More

Share this: