» HADOUKEN « the challenger brand landscape feels more like boiler room everyday
So, okay, I don’t want to be a traitor to my generation and all, but I have some really bad news for Millennials looking to make a buck in the digitally native economy: the ship is sinking, friends.
I know, I know! As a 35 year-old coastal elite HENRY consumer, I’m supposed to turn a blind eye to this unfolding reality. I’m supposed to “cop off the timeline.” I’m supposed to celebrate those amateur “makers” who couldn’t find a suitable product — by golly — so they just decided to make (the proverbial) “it” themselves. I’m supposed to fall under the spell of white brick walls, concrete floors and succulents that has become the canvas for any brand spending 2x its revenue to acquire customers in a bid to someday woo an investor into a 10x multiple exit.
Three years ago, I laid the foundation for what is now my calling card: I’m super short on the DNVB challenger economy. The signs are everywhere. Take, for instance, Casper’s joke of an S-1 filing, or the fact that legacy brands are finally becoming privy to the DTC playbook. Couple that with the skyrocketing customer acquisition costs. Finally, add in some whimsical articles about how we lost an entire generation of Ivy league MBA-holders trying to create solutions to problems that don’t exist, and baby, you have a stew goin!
I hope you saved room for dessert: the growing mainstream consensus that venture firms are becoming exceedingly concerned by these (mostly) DTC brands’ failure to show any ability to turn a profit (even after 9-figure multi-round funding cycles). Dumping all this money into unprofitable companies hoping that they will one day turn a profit is akin to funding Buster Bluth’s 10th academic degree hoping that he will one day stop “learning” and actually get a job.
Where is this all going, you ask? To those with good old fashioned supply chains, strong wholesale partners, organic customers, efficient operations, low cost of goods and experienced leadership. Like most everything in life, we are exiting a cycle. Before we enter the next one (and this may take years — it’s never clear what the next venture trend will be, especially with a potential recession looming in the balance) smart money will flow in two directions: to conservative, tried-and-true profitable businesses and to risky ones where the upside has yet to be truly baked into the price. Cue CPG. Cue DeFi. Cue bonds and treasuries. Cue B2B software solutions.
It is widely reported that Millennials have short attention spans — 8 seconds, actually, which is famously 1 second less than the attention span of a goldfish (corny as it is, this one S L A P S on the trend forecasting/futurology circuit: TED Talks, SXSW panels, Trying-Too-Hard Con etc.). In that vein, as a generation, they collectively have difficulty remembering a time before the DiSrUpTiOn aT aLL CoStSsSz consumer economy began. What’s not reported, however, is Millennials’ ability to bypass this evolutionary design flaw: their ability to voraciously consume and appreciate long form, that is, as long as the content truly rocks. Three hour podcasts on insanely deep topics like astrophysics or the merits of stoicism in a 21st century society? Sick. Seventy-three hours of fantasy riddled with more twists than a Six Flags theme park? Let’s go! An entire subreddit devoted to oddly beautiful patterns found in datasets? Yeeeeaaah buddy!
What I’m saying is that when the dopamine from the street drug commonly known as “DTC” wears off, I’m confident that smart Millennial creators, entrepreneurs and investors will hit the gym and take care of themselves again. They’ll flock toward strong businesses with good fundamentals, to evenly hedged business that are not (1) overexposed to platform risk, (2) paying astronomical amounts to win your attention or (3) bloated with unnecessary and/or hifalutan personnel. They’ll spend the time, put in the work, apply themselves, buckle down and do all sorts of other things Boomers are famous for saying.
Or, in 21st century pop cultural terms, they’ll sit through The Irishman because sometimes you want more than an Instagram Story.
