The Warby Parker clones are imploding
marker.medium.com
marker.medium.com
None of the above apply to mattresses or suitcases. (It more-closely applies to razors.) There is limited fat to trim that would overcome incumbents' economies of scale and distribution advantages.
An Uber for home cleaning was never going to work because it is tough to commoditize inviting someone into your home and both the cleaner and the user have an incentive to cut out the middle man as soon as a solid working relationship is established.
An Airbnb for massage therapists was never going to work because there isn't a huge supply of people who are capable of providing the service but are unable to find customers themselves.
An Uber for delivering food works because no one cares who delivers the food and because it is a service that almost anyone can perform.
Eh, I've started using Helpling in Singapore (on-demand home cleaning service) that seems to be quite stable/successful.
Of course, I doubt they're Uber-scale profitable, and I don't know how much capital they're burning (if any), but there definitely seems to be business value there.
That's an oxymoron, Uber are massively loss making.
We always politely decline because of the layer of perceived security Rover offers with their insurance.
This conversation actually made me curious what the actual value of that insurance is.
According to this source, at retail prices dog walking insurance costs 500$ a year for comprehensive coverage, or about 40$ a month: https://www.petsits.com/petsittinginsuranceusa
Rover takes almost 40$ in service fees for one weekend of boarding my single dog!
I appreciate the value of insurance, I kind of appreciate the Craigslist+ role they serve, but at the point where more than 25% of my payment is never making it to the sitter... Rover is just burning my money to fund a bloated payroll and lofty valuations
Platforms offer a way for individuals or small businesses to get started in a new sector without doing a lot of marketing for themselves. It's a bit like being part of an alliance.
I am not arguing for the continued domination and rent-seeking practices of Silicon Valley middle-men corporations. I'm arguing that the existence of any online bazaar/marketplace and the ability to search and compare, makes for excellent dynamics.
To go even further, I advocate for an emerging alternative that has been termed 'Protocol Cooperativism':
Instead of monopolistic rent-seeking platforms, it focuses on open source economic protocols that allow full negotiation between peer to peer users. Check out Ceptr.org, MetaCurrency and Holochain. It provides the frame and framework for ever evolving protocols (comprehensive versioning tech).
I'd think "an Uber for creative work" is at least prone to the same incentives to cut out the middleman.
There's really no way for them to stop it. It's all just about if they want to deal with invoicing and other stuff themselves or go direct. Many don't want to bother. But every wall they throw up makes it more likely people will jump off after that initial aquisition.
But many of these jobs ARE just one shots. Tho I usually go back to the same folks who did good work and communicated well with later tasks.
In the case of creative work, it's arguably less hassle to let Fiverr handle things than to sign into a bunch of one-off contracts, and reserve "cut[ting] out the middleman" for cases where someone has consistently delivered work to your standards (or, on the other side, has consistently paid well) and there's a desire to make for a more long-term arrangement than one-off jobs.
People eat carryout often - sometimes every meal/dinner. Just pitch the service as "call Ma for dinner" or somesuch
Things are at least a little better now, in that at least the DTC companies have a clear set of options that get sold at reasonably clear price points.
I've found that one of the most time-efficient heuristics for getting a quality product for these product categories is simply "buy whatever Costco is selling".
Costco explicitly commits to never making more than 12% on anything they sell. It’s a major part of their brand and part of the reason people trust them.
If anything, that sounds like an average, which doesn't tell you anything as they could be screwing you on mattresses while losing money on hot dogs and rotisserie chickens to even it out to a 12% gross margin.
“Costco has stated that the highest margin they will take on a non-Costco brand is 13 percent and they strive to keep it closer to 10 percent.”
https://www.esquire.com/food-drink/drinks/a35749/costco-the-...
And why the arbitrary 12%? Why not 15 or 21?
I didn’t like it and I returned it without issue.
Although I agree with your statement, no one tried to solve the actual problem with purchasing a mattress: finding a mattress that fits you well. The process changed from trying many mattresses in a uselessly-short[1] in-store test (with almost no information about what you're buying), to buying a "One size fits most" item for a product where that doesn't actually exist[1] – and without even trying it.
[1]: From "Choosing the Best Mattress: An Experiment in Testing Whether Individuals Choose a Bed That Leads to Improved Sleep," https://www.rti.org/sites/default/files/resources/rr-0016-11... : "The mattress that individuals chose as optimal before the randomized, controlled phase of the study did not predict either the actigraphically determined best mattress or the best mattress as determined by reported sleep quality." Lots more in the paper.
Casper basically became the modern version of the opaque mattress store.
https://www.sleeplikethedead.com/bed-mattress-review-home.ht...
I bought a Spa Sensations mattress back in 2010, and that's actually just Walmart's label on a Zinus mattress. (They even call it "Spa Sensations by Zinus" now.) Phenomenal mattress, super cheap, has lasted me forever. I suspect that many of the DTC vendors were doing the same and being a little less overt about it (so they could pocket the markup).
If I had to buy another mattress right now, I'd just buy direct from Zinus, as it looks like they have a reasonable retail presence in the US now.
Based on the data, I think we can conclude that opacity and user hostility are insufficient criteria for a DTC play. (Unless consumers are willing to pay a premium for the removal of said opacity and hostility.)
I think the DTC companies mostly can't build the moats needed to make that kind of money. So I think a reckoning is overdue. But once key players can no longer subsidize each sale, we'll find out for sure where the store-vs-DTC balance is.
My personal guess is that plenty of people will keep buying DTC goods, and that many categories will be more than competitive with brick-and-mortar competitors. So I expect DTC mattresses will be a good business, even if none of the current big players survive the culling.
Buying a foam mattress on Amazon sounds like inviting some sort of toxic mess of outgassing junk into your bedroom. No thanks.
DTC at a 40% discount from "I can buy it walking into a show room staffed by a dozen salesmen in a Manhattan shopping district" is not enough of a discount. Make a discount 85% of that every damn day and we can talk.
Who is this startup, and can they help me identify what I love about my current mattress so that when it's done, I can buy one much like it?
The site I like best these days for purchase decision support is Wirecutter. Here's their mattress guide, which seems sensible to me: https://thewirecutter.com/guides/buying-a-mattress/
I would love if they stated doing more in-depth pieces about different niche markets.
My personal favorite part is that you don't have to do this mental math of "the frame is this much, then pick lenses you want depending on your budget, etc." The price of the frame is the only thing you pay, all the fancy lenses and such are free, whether you need them or not (in case of sunglasses). With frames being noticeably cheaper than other brands and lenses being free (usually the bulk of the cost of prescription glasses), they are welcome to put their hand in my wallet.
The only reason I don't shop there much anymore is because of LASIK. Back then though, I had about 4 different frames from Warby Parker, and those were my favorites, despite previously wearing the usual "known" eyewear brands (and that's even without factoring in the cost).
P.S. There are some extra charges for lenses in rare scenarios, like if you have a very very strong prescription, they charge you a bit extra if you want to make the lenses thinner. Still not comparable to traditional glass brands though in terms of how much it costs.
P.P.S. There are other affordable online eyewear places, but I have been appalled with the quality and look of those. A couple of friends of mine tried Zenni Optical before, and those frames felt flimsy and they didn't look good at all imo. Warby Parker seems to have found a really solid niche between "cheap and flimsy" and "overpriced brand name eyewear", which is "the quality and looks of premium eyewear, but with a much more reasonable pricing".
I prefer smaller, traditional wire frames because that's what I've always worn (and at this stage in life that's unlikely to change). Unfortunately, wire frames seem to be out of fashion and no-one seems to have a good selection.
Furthermore, I have a fairly strong prescription and with my current frames, the lenses are about 8 mm thick at the edges, and my frames are the smallest I could find. The larger the frame, the thicker the lenses end up being. I could go with a higher-index lens material, but then chromatic aberrations become way too distracting, and I'd rather have a thicker lens than deal with that again.
P.S. Those "rare" scenarios you refer to are not that rare. My mother gets her glasses from WP, and they end up costing several hundred Canadian dollars, about the same as Costco. My mother's prescription is also not that strong or unusual; like most or a lot of old people, she is both near-sighted and far-sighted, and while bifocals might be an option, most people seem to prefer transition lenses (I think that's what they're called).
Wish I could find glasses with ear hooks. They only make them for kids now.
That, along with the other severe distortion brought on by a -10 diopter, is why I mainly wear contacts now.
I still have high-index lenses, but ones with a lower index of refraction and therefore a higher Abbe number. I don't remember specifically which material I have, but I think it might be high index 1.6 (index of refraction) with an Abbe number of 42. Chromatic aberrations are minimal enough with these lenses that they don't bother me much anymore (although still present).
For comparison, crown glass and CR-39 plastic have Abbe numbers of about 58, but will result in much thicker lenses at stronger prescriptions. Regular high index plastic lenses have the some of the worst Abbe numbers, and the higher index you go the worse it gets (Abbe of 32–36), but lenses can get very thin with high index 1.74. More on this at [2].
I've worn contacts several different times, but not only could I not get used to removing them from my eyes, I didn't like how much they worsened my close-up vision, and you can't just take off contacts like you can glasses.
This[1] comment by @mindslight on HN last year was a big help. In the end, I did have to switch providers when Costco didn't have any other material options (I got my glasses from Zehrs Optical in Canada). I payed about $325 altogether, but there was some sort of deal on so I don't know how it would be normally.
[1] https://news.ycombinator.com/item?id=19315769
[2] https://www.2020mag.com/article/does-material-abbe-value-inf...
I found a style of frames I really like and now I just keep buying them in different colors so all my lenses are interchangeable.
At Costco you can try and choose the frame directly and at the end walk away with higher quality glasses for the same price. Same with contact lenses - you can’t buy same brands of contact lenses cheaper even online.
(A theory certainly could be that customer acquisiton was cheaper when Warby Parker was started and there were fewer direct to consumer businesses, it was more novel).
If the difference between companies that succeeded and failed was just "do they have a good product at a good price" there wouldn't be much to write about!
Add $100 for labor and you arrive at a mattress that that is about $900. That’s about the floor for a mattress most people would be happy with.
The 100% foam mattresses are much cheaper (less labor, cheaper materials) and many people are happy with those, but not all.
It's most definitely not as simple as "cut them, and roll them for shipment."
Fortunately a mattress seller became famous at the time in Germany for breaking the monopoly here and getting all the hate from the lobby. You know what he did? He sold the same mattresses everybody else sold but significantly cheaper. The margin was just ridiculous.
After being "banned" and not being supplied shortly after he started, he came up with his own mattress. 100€. Just foam. We had it for ~5years now and I never slept so good before. The mattress have been tested as the best mattress on the market for many years here in Germany so it wasn't just us.
I know the US market is different because people seem to value ridiculous sizes and design over health and usability but this is what actually helps this scammy market to rise to those ridiculous prices.
What's the brand from the guy with the good 100 EUR mattresses?
My old school mattress was like $700 and is fine. I’m a huge fan of IKEA, and have bought everything from furniture to a kitchen from them. But their mattresses are garbage.
Cheap foam is why (what can you expect for $200?!). My parents got a 100% foam queen-size mattress more than 30 years ago, and it's still in very good shape with full-time use. They flip and rotate it every month or so, which probably helps a lot (most mattresses today aren't supposed to be flipped). I think it cost about $1000 in 1989 (about $1800 today).
Purple and Casper are both only five years old yet I bought a Casper-like queen sized mattress in 2011 from overstock.com for like $300.
It's not as universal as Luxottica, as I said, but it's pretty widespread.
This led to a lot of people having favorite hacks. E.g., a friend bought his mattress from a hotel company. His theory was he was probably paying a little more, but the incentives were better, so he trusted the hotelier more.
Who is this Mattress Powerhouse? From whence they came?
I think online eyewear sales and awareness have been spiking over the last 5 years, and they have serious product market fit. You tell anyone about the existence of online eyewear and the price and they are sold. Luxottica is winning based on market ignorance at the moment IMO, it's only a matter of time.
[0] https://www.statista.com/statistics/256664/sales-of-the-lead... [1] https://www.marketwatch.com/press-release/zenni-optical-cele...
The only downside I have with online glasses is you making adjustments to the fitting of the glasses. Your eye doctor will usually do this for you when you buy glasses for them, but online glasses require you to do it yourself or go into a store (if they have one). With that said, still not a big enough negative for me to go back to buying from my eye doctor.
The problem with DTC mattresses specifically (and DTC cars, for that matter) is the logistical hell on Earth that is actually getting that product "direct to consumer" (the products themselves are pretty huge and heavy), the higher pricetags (a mattress or a car is considerably more expensive than even a pair of eyeglasses, let alone razors or soap), the inability to reasonably handle returns or repairs, and the inability to "try before you buy" like you can in a brick and mortar store or a dealership.
Tesla worked around some of these problems by having actual physical storefronts/showrooms and service centers (which in turn caused issues in states like Texas that disallow auto manufacturers from owning/operating their own dealerships). The only DTC mattress company I know of that has physical storefronts (at least where I live) is Sleep Number, and it's one of the incumbents.
The unit economics of most of these companies just don't add up.
Well, the mattress comes rolled up in a box, but obviously cannot be put back in the box. It was impossible for the FedEx guy to fit it anywhere in his truck.
No problem they said, find a local charity and donate it, we'll issue a refund. In the end, I didn't even have to give them a proof of anything, and they sent back the money, no question asked.
I'm not one to worry about other's businesses, but at that moment I felt like I was part of a very big scam that I didn't fully understand. This was 3 years ago.
Basically mattresses are highly inconvenient to ship back once opened so it's cheaper for them to just say keep it and have a likely happy customer than make them go through the hassle of getting it back to the company only to have it burned or donated anyways
I don't know much about the business side of things but asuming the $290 on marketing and the $270 on admin don't scale less than linearly (preferably much MUCH more flatlined), then the $160 loss could be closer to a $300 profit. Even if you lower the sale price by $299 (extreme scenario), you still get a dollar in profit.
At the end of the day, I think the product has to be consistently good enough and the branding will "stick". I imagine the goal is to gain enough market share.
I'll share an anecdote: I bought an InstantPot for a decent discount a few years back on Black Friday. I've personally "sold" at least three since to people I know. I'm sure the cheaper brands are likely almost as good as InstantPot but for me to take a chance on them, I'd need to trust they have a no questions asked return policy.
After being a Zenni customer for years, Warby Parker's prices seem really high. I've tried their glasses on at one of their retail stores, and I don't see much of a difference in quality.
Then there are customers who only need a trial (or a small amount of information "what is it") before they come on board.
Finally you get to tough sells: people who already have a good enough alternative - why would they want to pay the same amount as someone who had no systems in place? The marginal benefit to them isn't as high.
As you expand out from your original customer base, each new ring of customers is more expensive to acquire. This is the situation Casper, Blue Apron, and many others face. Meanwhile, their competition has also ramped up - providing other alternatives (which might fit niche customers better)
VCs have been playing the loss leader game...thats why the metrics always go to growth. Hey we grew x% this week/month/year, they never mention how the "growth" simultaneously leads to bigger losses. Instead its always, we can turn off the growth whenever we want and then is pure profit.
It seems like it makes no sense and this could never work, but they don't need to make a profit, they just need big growth numbers, a cult like buy in of the brand, and then unload it on the public while cashing out.
If you actually believe Kalanick cashed out his shares at an overvalued price, go short Uber and make tons of money. That said, you're probably wrong.
I work for a direct to consumer lifestyle brand company but I've never thought or heard anyone mention Warby Parker in any conversation about us or our business model.
I know there are others like CostCo but I'm not a member and didn't feel like bothering with all that.
I've purchased from Zenni and 39dollar in the past. They're cheap and decent for the most part, but I couldn't just try on frames or easily get my script updated. WP has a physical store nearby where I could do just that and still buy cheap frames/lenses.
I have crappy eyesight and need to buy high index lenses, so I'm already out a couple hundred bucks regardless. No need to also spend that on molded acetate frames.
After Luxottica bought Ray-Ban and cannibalized their quality, introducing flimsy hinges and cheap plastic temples and lenses, they also started printing "Ray-Ban" not only on the temples but also the lenses. Yuck. Some people apparently love to display brands on their fashion no matter how cheap the quality is, but to me it makes it look cheap, tacky, and out of date (since in the time it takes for a brand to dominate in the way that Nike or Oakley and others do, they're already unfashionable).
As much as I hate the idea of giving money to Luxottica, I'm more than willing to pay a premium for nicer lenses.
My brand name frames were $200. Lenses were more than $300 on top of the frame price.
It's not just the frames.
I walked into a WP store in the last couple of months and asked.. alas, I was told something different.
Costco is touch and go though. I've had problems with their coatings in the past(AR crazing, AR watermarks). I also had to give up on their prescription polarized after a couple pairs in a row had bad stress marks. I'll probably have to pay full price to get a pair of Rx polarized sunglasses that are free of defects.
not bad enough to return, but enough to annoy me. things like small scratches or poor fitting service (the employees at my local costco locations are spotty. some are good, others are terrible and i’ve had scratches or over bending). i tried polarized lenses and they came out terrible. at least the glasses are cheap enough that i don’t mind tossing them.
i recently got custom glasses from https://www.topologyeyewear.com/ and the fit and lens quality is the best i've ever experienced. very pricey though.
is there anyone else with asian bridge problem that they have a good solution for?
not affiliated, just a happy first time customer.
Just to lay out another option.
They use their sweet sweet monopoly money to pay doctors for floor space inside their offices. Usually the glasses salesperson isn't even on the doctor's payroll, they're Luxottica employees.
She went online, bought a pair, they didn't fit well out of the box when they arrived. WB has a local shop in the city (we live in outlying suburb). Place was packed on a Saturday afternoon. I was thinking, "Oh man, this is going to take an hour."
We were out of there in 15 minutes. Her glasses were adjusted quickly and she was happy with the results. I was impressed with the quick service and the ability to buy online and they go to a local store and get them adjusted for free.
I'm glad I didn't order online, because compared to the glasses I usually buy, every WP frame felt super cheap and flimsy vs. my existing glasses (which I got, I think, at Pearl).
FFT.
LensCrafter's is owned by Luxottica, which becomes apparent when you see how/what they try to push you into.
> Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns.
The same story keeps playing out, doesn't matter what industry.
The growth might not always be sustainable, the business model might not always make sense, and that's fine. VCs are looking for 1 in 10 of them to be successful.
I've been shifting money to Patreon campaigns, but I don't know well that will work for them.
I don't know how much money it takes a podcast to support itself but I imagine it's still heaps cheaper than, say, your average billboard or 30-second TV spot.
A higher-end podcast with a real engineer, research assistants, producer, etc. could easily double or quadruple that figure. Some podcasts are undoubtedly cheaper, being done in somebody's spare time, but most of the ones I listen to (and I listen to a lot of them) involve significant research.
Casper is a mattress company, not a tech company. The same can be said for Warby, Away, Allbirds etc.
I think it is likely for the ad revenues of Facebook and Google to slow their growth in response to VC financed commodity companies throwing around ad dollars.
Casper is a mattress marketing company.
People are learning the only differentiation between these companies and older brands are slick copy, whitespace, and sleek colorways.
At no point in the past, and at no point in the future, will a VC be put off by the fact a business is just a thin, shiny new veneer over an old model. If there's profit to be had and a founder who can take it that is all VCs want.
This is a good thing. It's how markets work. If it ever became impossible to disrupt a market because VCs decided it was too boring the startup world would fall apart. No incumbent business should be allowed to rest. Innovation is everything, even when that "innovation" is just better marketing.
https://www.linkedin.com/pulse/potentially-unpopular-opinion...
This is a good podcast on it by Ben Thomson and James Allworth:
https://exponent.fm/episode-182-scale-scale-scale/
The key takeaways are attack super high margins, do something that is harder in the real world, scale as fast as possible without paying too much rent to “Facebook/Google/Instagram/Influencers” to establish yourself.
> There are now more than 400 DTC brands
So a sample size of n=5 is sufficient to define an industry-wide trend? On top of that, those 5 examples are not very convincing - see below.
> How could [Away] possibly be able to meet the expectations for investor returns?
No actual figures, just a theory that Away couldn't possibly be a good investment because it has only one product.
> Away now has many adjacent venture-funded expansions in the works
In the very next paragraph, the author debunks the basis for her earlier skepticism.
> Harry’s... cut a $1.37 billion deal to be acquired by Edgewell. Edgewell backed out of the deal after the FTC sued to block the sale... Particularly in the wake of the Casper IPO, it’s difficult to imagine Harry’s ever wanting to expose its numbers in an S-1.
All of Harry's criticism is based on a competitor's performance and a buyer backing out of a deal after it was blocked by the FTC.
I don't know if the DTC companies will do well, but I certainly didn't learn anything useful from this article.
Are we near the beginning of an anti-VC wave in public opinion?
Seems pretty expensive given very few clicks would result in any sale
These three things really hinder online eye glass purchases.
I'm not actively rooting for the VC world to implode on itself, but based on the way they behave they're absolutely not spending their own money. I want legislation in place that will prevent VC firms from investing in a project / startup unless they've put a certain percentage of their own money at stake.
Maybe at that point we'll start seeing a lot less "pump and dump" and a lot more efforts toward building sustainable businesses.
For $60 shipped, these[0] ones are made in France and have Hoya lenses. I know nothing about lenses, but Hoya seems to be respected from a quick google.
I think they are out there, just not being aggressively marketed by VC-funded lifestyle brands.
But hey, there's a startup idea. You just need to make pince nez fashionable by getting some retrosexual hipsters on Instagram to adopt them. Then, profit?
For some reason I associate wire-framed pince nez glasses with eugenics, not sure why. I'm sure that's just me, but maybe run a focus group just to be sure.
[0] https://www.ebay.com/itm/Reading-Glasses-Filao-Pince-Nez-Ace...
I did not realize what "DTC" was until I read this article, and it's pretty much every single ad I see if I install Instagram on my phone and scroll through it. Dozens of brands that I've never heard of selling sustainable shoes, protein cereal, etc. Just a bunch of weird, esoteric, lifestyle products that you can't find at a normal store.
Obviously, there are other factors but these DTC brands provide a very blunt perspective on whether digital advertising is effective (most of these companies don't manufacture, they are just advertisers).