Going Beyond Stuff - Part 1

The rise of creator-productization is leading to companies making similar mistakes and copycat products.

Can we aim higher? Can we move from snacks to systems?

Hey friends,

Welcome to our weekly Going Direct newsletter! We hope you enjoy.

The Creator-Product Trend

An increasing number of creators and celebrities are venturing beyond their core content businesses to launch brands, physical products, and services. It’s logical - if you have hundreds of thousands or millions of people following everything you do and they are asking for specific things, you are in a pretty interesting position to offer them these things.

It also makes sense that the most common products seem to be things like chocolate, cosmetics, drinks, snacks, and spirits. These types of products:

• Are easier to make.

• Fuel our vices.

• Present well on social media.

• Are lower consideration purchases.

In other words, they are great for one-click impulse purchasing 📲.

But, consumers have endless options for these types of products and competition for their eyeballs and wallets is fierce. Unless you aim to disrupt a category, create a new category, or have a massive audience and platform (think Kardashian/Jenner or Mr. Beast); it’s pretty much a race to the bottom.

What we really want to see more of is: creators involved with companies and products that solve real problems.

Some Common Mistakes 🛑 

Below are a few common mistakes we see creator-centric businesses make:

Copycat products

We are seeing an increasing number of companies offering copycat products that have little differentiation. We find ourselves saying, “So What?” much more often. In most categories of physical goods, the real value tends to accrue to less than a handful of companies. In new or emerging categories, the 1-2 companies that spend years creating the category tend to capture a substantial chunk of the market while everyone else starts piling in. A good rule of thumb - if you can count 5+ companies making more or less the same product, it becomes very difficult as a new entrant to compete and gain traction (caveat - this is not true 100% of the time).

Relying too much on creator audiences

Companies that have direct access to an audience of millions of people can often drive significant sales from them in the early days. But, if customers do not love the product or service they won’t come back. It’s that simple. The product needs to stand on its own independent of any creator. We see many companies and products with creator involvement start off strong, then level out fairly quickly.

Broken cap tables

Having the right team and appropriate ownership structure is critical for any venture to succeed over a period of time. We often come across companies where individuals have meaningful ownership stakes even though they have no daily involvement or have not made a financial investment. This almost always leads to problems down the road and creates arguments among founders and makes it difficult to raise money from investors.

Creators spreading themselves too thin

We are seeing more creators get involved in ventures that are not a natural extension for where they are going with their own brands and lives. They start wearing too many hats. The company and team needs to be designed so the creators can remain focused on what they do best. Creating content and building their communities.

Going Beyond Stuff 🪀 

The number of companies being launched by and in partnership with creators will continue to accelerate. The result will be more options for consumers and businesses to choose from. While we can appreciate the next hard seltzer and sour candy strip just like the next person, we need to go beyond stuff. To build something special, there are no shortcuts. If you want to sell a mushroom-inflused gummy - go out into the fields, meet the foragers, build direct relationships, and create a product without chemicals that work for our bodies, not against them.

Go beyond the product development consultant and contract manufacturer. Purchase direct from your suppliers, sell direct to your customers, and enable more direct exchange.

If we focus on building products and creating systems that solve real problems, the creator economy can unlock direct distribution at scale in deep, meaningful ways.

Now, on to a few mini case-studies.

Alienating half of your audience 👽️ 

Emily Ratajkowski’s female swimwear brand Inamorata won’t probably live up to its potential because the majority of her audience are men.

 🍿 Synopsis: Supermodel and influencer Emily Ratajkowski often posts pictures on social media in a bikini. It helped her gain 32M followers. So she thought, ‘people are massively following me for my bikini posts, I should launch my own swimwear brand.’ In 2017, she launched her swim and beachwear brand Inamorata. Inamorata’s goal was to bring back the vintage look of the 70s, 80s, and 90s for all body types. Comfortable pieces that can be worn all day. Within a couple years, the brand expanded into accessories, jewellery, and lingerie. Despite being launched in 2017, it does not seem like the brand has gained much traction or been able to build a loyal following. Several product categories have since been removed from the website.

📚 Learnings: At first glance, you would say that this is the perfect business opportunity for her, right? 30 million people already follow her because they like her provocative swimwear pictures photos. If she creates her own line of swimwear, chances are that those 30 million people also are going to like it. Well, here is the problem. Over half of Emily’s followers are males. And males don’t buy female swimwear. It’s a classic mistake we see many celebrities make. We call it celebrity-market fit. Celebrity-market fit means that the product should fit the personality, content, and audience of the celebrity. In Emily’s case, a swimwear brand definitely fits with her personality and content, but is not relevant for the majority of her audience. Based on her follower profile, it seems like Emily is well-positioned to offer a swim and beachwear line for both women and men (think Kooples for swimwear).

👀 Learn More: check out an interview below with Emily about why she launched the brand:

Launching a liquor brand while you don’t drink alcohol… 🍸️ 

Jennifer Lopez is known for her healthy lifestyle and rarely drinks alcohol. She received a lot of backlash when she launched her ready-to-drink cocktail brand Delola.

🍿 Synopsis: Jennifer Lopez excitedly announced the launch of her latest brand Delola, a ready-to-enjoy cocktail that is available in three different flavors. But many of her followers were left confused, given that Lopez has often said that she doesn’t drink alcohol. Many also brought up the fact that Jen’s husband Ben Affleck, is in recovery from alcohol addiction and has been to rehab multiple times. And it wasn’t long before others echoed the accusation that Lopez had only put her name behind the brand to make money. “Another celebrity glamorizing alcohol to make money. This one is even weirder, you literally don’t drink and have a husband in recovery.” - one follower wrote.

📚 Learnings: With more celebrity-backed products coming to market, fans are starting to push back against things that do not make sense to them. The product needs to fit the celebrity’s lifestyle, otherwise, it doesn’t feel authentic at all. And in the case of Jennifer Lopez, Delola clearly does not fit with her persona. Lopez could have used this opportunity to pave the way for sober people by creating an alcohol-free alternative. Why not launch a line of mocktails? Regardless of ‘Jenny from the Block’s’ involvement, only time will tell if Delola’s ready-made cocktails can stand up in this crowded market.

👀 Learn More: Check out Jennifer Lopez’s response to the backlash she received on launching Delola.

Going from $200M in annual sales to bankruptcy ↘️ 

Celebrity-founded baby brand Hello Bello filed for bankruptcy after hitting $200M in sales.

🍿 Synopsis: In 2019, Kristen Bell and Dax Shepard, who are married, launched Hello Bello, selling a range of affordable, all-natural baby products, from diapers and wipes to sunscreen. The reason, Bell and Shepard said, “Celebrities like them shouldn’t be the only people with access to premium childcare.” It started as a big success. The company brought in about $200 million in gross sales by the end of 2021, roughly doubling its total from 2020. Bell and Shepard’s combined 18 million followers were critical to the brand’s early success. It allowed Hello Bello to go direct to their audience and bypass traditional marketing methods. But, the company started to struggle due to supply chain issues and lower margins selling through retail. By 2023, DTC dropped to about 40% of overall revenues. According to court papers, the combination of increased production costs and lower margin sales via Walmart and Amazon hurt the company and were factors in its bankruptcy.

📚 Learnings: Having celebrity co-founders doesn’t guarantee sustained success. Supply chains don’t care if you have well-known celebrities or creators on your cap table. Further, it is difficult to maintain profitable unit economics when selling a more affordable product through traditional retail. Companies must build in enough margin of error to handle external events that may impact their businesses.

👀 Learn more: check out this bankruptcy announcement that talks more about the supply chain issues of Hello Bello - Read Here.

Have a great week and remember to Go Direct!

Build with love,

Jordan & Scott