You always are bundling or unbundling. You can’t stand still," Jim Barksdale, former chief executive of Netscape, had once said about ways to make money in business. The bundling and unbundling theory argues that we continuously move from blended to individual products, back to new forms of blending and then to individual again. It’s happened in software, music, cable, and internet. Now it’s happening in retail.
Trying to build a large consumer product company was near impossible for a scrappy little startup. It was capital intensive and highly dependent on the distribution chain that would take years to build and with very low margins. It was a big boys’ game. Today, the retail market has been disrupted and democratised by e-commerce and direct-to-consumer (D2C) companies.
Globally there have been some successful companies that have built large businesses by being internet-first brands. Brandless, Casper, Warby Parker and Honest are some outstanding businesses that have challenged the monopoly of large consumer brands that had lasted for decades. As these are D2C companies, they also have huge amounts of continuous feedback they get in real time which they use to find their product market fit quickly. This is unlike the traditional model where because of the number of times the product changed hands in distribution, it was near impossible. D2C poster-child Dollar Shave Club which was acquired by Unilever for a billion dollars unbundled the razor category away from the CPG leviathans by maintaining end-to-end control over the manufacturing, marketing and shipping of products. Nearly all my investments last year were in the D2C space, most of them are growing. And may I add, most importantly, the good old fashioned profitable way. I see a future where there will be a D2C brand for almost everything.