d2c is dead. here's what killed it ~ solo ep

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Hey Crew! It's just me today. No guest. Just a proper deep dive into one of the biggest shifts in consumer business happening right now.

Direct to consumer had its moment. Gymshark. Casper. Allbirds. Peloton. The playbook worked until it didn't.

Now in 2026 the rules have completely changed. And I'm going through exactly why, with real case studies and real numbers.

I get into 👇:
★ Why D2C worked between 2012 and 2021 and what broke it
★ Gymshark, Peloton, Allbirds, Casper and Nike, what worked and what didn't
★ Rhode, Feastables, Chamberlain Coffee and Unwell, the new playbook
★ Why Nike couldn't make D2C only work and what that means for everyone else
★ My thesis on what it actually takes to succeed in consumer in 2026
★ Why retail isn't a failure, it's leverage

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Transcript

the teaser

SPEAKER_00 0:00

Direct to Consumer is not over. The landscape has simply changed. For about a decade, Direct to Consumer was the playbook. So by 2021, the cracks started to form in the Direct to Consumer business model. And so to survive, brands really, really had to show a good business model and a good value proposition of long-term profitability. Beaceful was founded in 2022 by Mr. Beast, who is arguably the largest YouTuber in the world. And what's really interesting is that it was launched from day one into Walmart. So his entire business model was not direct to consumer at all. And you would think that he has a scale and the reach to succeed in that, but he went through retail. It's now more profitable than his entire YouTube and Amazon Prime media business. So if Nike couldn't make Direct to Consumer only work in retail, I would say that wholesale isn't a failure. It's really more leverage. Hi crew, let's talk about the climb, not just the peak. Today is a bit different. I will be diving into Direct to Consumer and why that whole

📖 what is direct to consumer and the boom years

SPEAKER_00 0:59

business model is changing, how it's evolved over time, and what the new playbook is. But before I dive into the details, I just want this little disclaimer to be upfront. I am not a lawyer or a financial advisor in this sense. And so everything I'm going to share today is publicly available and also with my own opinion added on top. So take that as you will, but let's dive into it. Firstly, let's start with what is direct to consumer. So direct to consumer means brand selling directly to you, the consumer. And for about a decade, direct to consumer was the playbook think brands like Casper, All Birds, um Give It a Crap in Australia. Also, Gymshark was one of the biggest, most recent direct to consumer business model that succeeded. And so in the early 2010s, if you wanted to succeed, you really had to build a following, whether it's on Instagram, Facebook, and you marketed directly to your consumer, you built your warehouse, you supply chains, and that was how you did your model. The thought of going to retail was seen as like a bit of an archaic maybe next step if we get really, really huge. But direct to consumer was the playbook that everyone played off. So today I'm gonna go through the entire, I guess, wavelength, starting with act

💸 the five things that made D2C work, cheap social, free money, millennials

SPEAKER_00 2:17

one, the boom period between 2012 and I guess 2021. Um, act two, the bust, which is post-COVID, and Act Three, the reinvention, which is 2026, and beyond. Let's dive into it. So 2012 to 2021 was the time for direct to consumer. That was the model, the playbook that everyone was working on. And there were really five things that made that whole ecosystem work at that point in time. The first, social was very, very cheap. Facebook and Instagram's cost of customer acquisition was really, really cheap. And that's when ads, you could run ads on both platforms at like a fraction, a fraction of the cost now. And also, it was a lot easier to gain followers on Instagram. At that point, if you think about it, Instagram was just popping, people were just finding out about the platform and discoverability on those apps were a lot easier than it is now. As you know, it's quite saturated and hard to build a following on Instagram or even Facebook. And so the whole idea of acquiring new customers and really building a brand and a profile was far, far easier at that point in time. The second was what I'm going to coin free money. Interest rates were really cheap at this point in time across the world. And so venture capital firms really saw it as an opportunity to really push as much cash as possible out in the ecosystem because I wouldn't go into economics, but essentially the returns in terms of investing were a lot higher than I guess was the alternative in that kind of macroeconomic um environment. And so VC funds also just had excess cash and they were able to just deploy cash at a more rapid pace than they can now, which, and I would say that we're in a very fiscally constrained environment. And the third is that um millennials really started to distrust legacy retail and there's a push to online shopping. So between 2010 to 2020, online shopping was really, really booming. That's when we really saw the growth of platforms like Shopify and other business models really start to take off. And with this, the millennials were loving being able to buy things online and have it shipped directly to their home. And so when you couple that with the rise of which I'm going to talk about, um, founders and influencers starting to have their own businesses, it was just the perfect recipe for direct to consumer, which also led me to founders as I guess protagonists. So founders started to not be the typical, you know, corporatize in the

💪 gymshark, bootstrapped for 8 years and profitable from day one

SPEAKER_00 4:48

kind of like level 20, level 50, whatever glass house. We started to see founders as people more and as really like influencers moving into business. I would say millennials started to really build a relationship with the founder, and they will then buy products directly from that founder because of that trust and not because it was a legacy brand that they had always just seen growing up. And so there was that also shift in consumer mindset and consumer relationship with brands. Before we get into the bus, let's go through the boom and I'm going to talk through two brands who had slightly different playbooks and business models, and we'll talk about what worked, why Derek Consumer worked for them in that case, and how they evolved and if they survived or not. The first is Gymshark. It was founded by Ben Francis, who was 19, still living with his parents, and he was a weightlifter. He was always at the gym and he decided to dive into this. Um he bought a sewing machine for a thousand pounds and his grandma taught him to sew. And so he started building a following on Facebook and then Instagram. And as his following grew, he then launched Gymshark. Um, and because people knew him and knew that he was a weightlifter himself, they bought into his, I guess, expertise and his journey, and it really just took off from there. I would say that Van Francis was the pioneer or one of the earliest pioneers of influencer marketing. And what worked for him is he was profitable from the get-go because he didn't have a choice. He had very limited inventory, and for him to scale, it needed to have really solid revenue and profit to do so. And so he was bootstrapped for the first, I would say, about 10 years. So he sent products to high-profile YouTubers and then started distributing to other more famous Facebook and uh Instagram influencers and weightlifters, and then just people more broadly in the fitness ecosystem. And so, with that playbook, he actually was able to remain bootstrapped for the first eight years of his business, which is insane in today's um business landscape. But that meant that he had to be and was very profitable. In 2020, General Atlantic ended up buying a 21% stake in Gymshark, which placed the company at a $1 billion valuation, which is absolutely insane. And why did it work for Gymshark and Ben? It worked because he built a real community before community was really seen as a strategy. And what was unique about his community is they bought into him because he was a weightlifter, he was very much in fitness, and so he was designing apparel that worked for that industry. And they weren't just buying from a random big conglomerate instead, they really bought into him as a person. And so that founder genuinity and that founder relationship is what

🚴 peloton, $49B market cap to $2B and why subscription saved them

SPEAKER_00 7:40

really helped the company grow. And then he, I guess you would say, outsourced that with influencer marketing, which is now quite popular. But I would argue that he was one of the pioneers in this space. The second brand we're going to look at is Peloton. So Peloton is really interesting because they use a similar playbook to Gymshark, but they actually had a very different outcome. So Peloton was founded in 2012 by John Foley. What's unique about Peloton is that it's both a hardware and a software plus a subscription business model, which is super rare. And especially for similar brands of that time. And so what they did was they sold directly to consumers. It was seen as a very popular on-trend thing to have a Peloton in your home. And what was unique is they had the bikes, but they also had the videos and the workouts that you could have to accompany the bikes as well. And as part of that, you had a subscription model to the software and to the bike. And that really took off during the pandemic because people were at home, they had a lot of spare capital, and they actually went to IPO in 2019 and reached a market cap of 49.2 billion dollars, which is absolutely insane. And so they were, I would say, at the boom, at the peak, and they felt like they were on top of the world. Um, but unfortunately, when the lockdown started to unwind, gyms started to reopen, people started to go back to work, and they found themselves in a position of having a lot of excess stock that they could not sell. However, what helped them continue was the subscription model. So subscriptions are an entire different business model, but when people are already on a subscription, it's quite hard for them to get off because it's it needs a more of an active decision to cancel the subscription the subscription, as you would know. And so they were able to kind of stay alive as their direct-to-consumer hardware started to decline. And unfortunately, they actually experienced a reduction in market cap to around $2 billion and the stock sunk to about $5, which is quite low. And what's the lesson in Peloton? It's that hardware only doesn't really work. Peloton only survived

📉 act two, the bust, apple's tracking change and rising costs

SPEAKER_00 9:56

because of its subscription, because it had that software where people felt like they were getting return and repeat value. And it's something that we're going to keep coming to as we look at other brands and other companies that survived and that did not. So by 2021, the crack started to form in the direct-to-consumer business model. Apple introduced its app tracking transparency in about April 2021. And also paid social costs of customer acquisition jumped from 25% to about 40%. So it became very, very expensive to acquire new customers, and which meant that brands had to spend more on paid advertising to acquire more customers. And this was quite a pivotal point because not only were they having to spend more money, interest rates started increasing significantly post-COVID because we were in an inflationary period. And so, what did that mean? It meant that it was really hard to get cheap capital. And so to survive, brands really, really

👟 allbirds, $4B valuation to $39M sale and what killed them

SPEAKER_00 10:55

had to show a good business model and a good value proposition of long-term profitability. And so, which brings us to Act Two, the bus period. I'm going to talk through two companies who are, once again, very interesting, but also have very, very different business models. And we're going to talk through what worked and what didn't. So the brand that defined this area, I would say, is All Birds. They were founded in 2015 by Tim Brown, who was a professional footballer, and Joey Swingler. And the entire core product was the wool sneaker. So they set up a Kickstarter in 2016, and their goal was to hit 30k, and they hit that within five days. They became the talk in town. Obama was wearing them, VC investors were wearing them. All the Silicon Valley cool people, the tech boroughs were wearing them. It was the thing to have. And so they really took off the business model, it was very much direct to consumer. And they ended up reaching the IPO in November 2021. They were valued at $4 billion, which is insane. But unfortunately, by April 2026, they sold their IP and assets to the American Exchange Group for measly $39 million and ended up closing all of the US stores after another 50 million round. Now I can go into a lot of detail about all birds and what actually happened that led to this. But essentially, they started as direct-to-consumer, they eventually went into retail and then they closed down. And essentially, what happened? Firstly, it was brand and storytelling on their front. They really were pioneers in the sustainability ecosystem, especially in footwear. And they really tried to push positive change. And that took off at the start. Unfortunately, that model wasn't very profitable and didn't really scale. And they ended up moving into various product groups, like they moved into appearal and different types of shoes and products. And it they thought that the same storytelling and brand ethos would translate into those other categories, but it unfortunately didn't. And I would say that what killed them what killed them was never making proper profit. They scaled, in my opinion, way too quickly and didn't really focus on

🛏️ casper, losing $300 per mattress and why new categories aren't a moat

SPEAKER_00 13:15

the fundamentals and the unit economics before scaling to such a large scale. And I I would argue that to do direct consumer really well, your unit economics need to make sense. And in their case, it just didn't make sense. The second brand I would say is Casper. So they were founded in 2014 and they were known as the mattress in the box. So you might remember the ads. In Australia, we had a different brand that did something similar more recently. But at that point in time, if you wanted to buy a mattress, you had to go to a showroom and lay on different mattresses and see what worked and what didn't. What Casper did was they would send the mattress directly to you in your home. You would have 30 days or 90 days to test it out. And if you decided that you didn't like it, they'll pick it back. There was no commitment that you had to keep that mattress. And so it was really cool and exciting, and people really jumped on that bandwagon. And so they they just skyrocketed. They hit their two-year revenue target in two months and ended up raising $340 million in VC capital, which is absolutely insane. They also IPO'd in February 2020 and um they also took private equity as well. If you've made it this far, we are basically friends. Watching on YouTube, hit the like and subscribe button. Listening on Spotify, Apple Podcasts, wherever you're streaming podcasts, hit the follow and like, and so that you can tune in for more next week. Their real innovation, as mentioned, is their 100-day free trial period, um, which for a lot of consumers removed the worst part of mattress shopping, that awkward having a sales associate watch you try different mattresses. And once again, the millennials they were in love with just being able to online shop. And so having a new category being made available online was new and exciting. And so people just wanted to try it out. The thing is, the math didn't make sense because the challenging part is after someone had trialed a mattress, if they decided that they didn't like it and it was returned, they had to get rid of that mattress. It couldn't be sold anymore. And so Casper was then bleeding money. It later came up that post-IPO filing, they were losing over $300 per mattress sold because of returns. And so over time, this unit economics compounded and didn't make sense. And that in addition to other factors meant that um they essentially kind of wind winded down. And I would argue that the lesson here is that creating a new category isn't necessarily a moat and like it's just not enough anymore, especially in 2026. There is no such thing, I'd argue, as a billion-dollar mattress ecosystem. That kind of business model is very traditional. You're not going to get repeat customers buying a mattress all the time, every year. People tend to buy a mattress for several years, if not, you know, 10 to 20 years

👟 nike goes all in on D2C and has to walk it back

SPEAKER_00 16:10

of use some people. And so that type of unit economics didn't work because it would have been continuously A, expensive to find new and new customers who want to buy a mattress, and B, if the returns are so high, it just doesn't work. Lastly, I'm going to talk about Nike. Nike, Nike, tomato, tomato, however you say it, I'm not sure. But Nike, a very, very interesting case because if any company would succeed in direct to consumer, you would think Nike would. In 2017, Nike announced that they were going to take what was called a consumer direct offense, and they were going to go full out on direct-to-consumer. And so they were in retail stores like in Australia, Footlocker, and um in America, many others, and they decided that their entire business model was going to be direct-to-consumer. And they did that. And at first there were reports that it was doing really well, sales were increasing, and in about uh 2023, it started to decline. And by 2023 to 2024, their sales actually started to stall. And what was happening was because they moved solely to direct to consumer and they were very much working off their Nike brand value proposition, everyone knows them. What happened was up-and-coming brands like Hoker and on started to eat up more and more market share. Why? Because both brands were in retail, they were focused on getting and acquiring new customers and being visible and everywhere. And because of that, they started to acquire more market share. And by March 2024, Nike publicly admitted that they were starting to rotate away from a solely direct-to-consumer model and they were going to bring back the retail arm as well. And what that shows, I think, is that at the end of the day, consumers need to see you. They need to be constantly reminded of you when they're going to shop in person. Because what's also unique about this time period, which I haven't mentioned, is that post-COVID, a lot of people were going back to in-person shopping. Millennials were obsessed with online shopping, but the new Gen Z are loving in-person shopping a lot more. And because of this, it's really hard to spend the money that you need to spend to achieve the visibility and the constant ability to always be in people's minds in using paid advertising. But if you're visible all the time and someone who wants to buy a shoe, an athletic shoe goes to the store, if you're not there and you're not one of the options, you won't receive that purchase. And so yeah, Nike actually realized that to continuously grow and to succeed, they needed to find a balance between direct to consumer and retail as well. So if Nike couldn't make direct to consumer

🎯 my thesis, what it actually takes to win in consumer in 2026

SPEAKER_00 18:57

only work in retail, I would say that wholesale isn't a failure. It's really more leverage. Before I now get into Act Three, the Survivors, I want to provide you with my thesis. And it's basically that in 2026, customer acquisition is so expensive that to succeed in consumer, brands need to either already have an audience and a loyal, strong audience, or be building in a category with an inbuilt

💄 rhode, the gold standard and why Hailey got it right

SPEAKER_00 19:24

repeat purchase. Ideally, I'd argue that to succeed, you need both. And without these two core structural advantages, the math just doesn't work. And I think if you got to receive these investments or business advice, you'd probably hear the same thing. So I'm going to talk about four brands in this section. I'll focus on two and just touch on the other two. The first being Road, the gold standard. It was founded in 2022 by Hailey Bieber and very much a skincare and lip product brand. And what's really interesting with Road is they were a direct consumer for the first three years. And Hailey Bieber also launched this with a core set of products and didn't expand too quickly over time. And why? Why did it work? Firstly, Hailey is well loved. She's got a huge following, and also she's very actively in the beauty ecosystem. So she was not trying to promote a product product that wasn't really her. A lot of her followers and fans had seen and heard her talk about beauty and watched her try different products. And so it just seemed like a natural evolvement. It didn't seem like she's trying to make quick cash from them. It just really it was Haley and it was the right brand and value proposition for her. And so she was direct to consumer for three years. And then by 2025, she hit the very exciting acquisition by E.L.F. Beauty for a billion dollars. And by September 2025, Road was launched into Sephora in the US and Canada and has since launched across the world, most recently this year in Australia in Sephora as well. And what's interesting is that though Road started as direct to consumer and succeeded really well for three years, that business model isn't continuing and they've actually now pivoted to retail now. And I think what this shows is that A, direct to consumer works when you have really good credibility. But B, when you look at long-term sustainability, having that retail experience is very, very pivotal because once again, you're in people's faces. Women, men, you go into Sephora, you look at the options, you want to buy um a blush or a lip gloss, whatever it is. If Rhodes' not there, you won't

🍫 feastables, straight to walmart and $250M revenue by 2024

SPEAKER_00 21:43

automatically remember Rode, especially because once again, Gen Zs, um, especially the young Gen Z's don't have credit cards. And so they're going to Sephora, they're going to Mecca. And if you're just not there, you're missing an entire segment of the market that have a lot of capital and want to spend. And so, yeah, I think it's very interesting that Road made that pivot and says a lot about other brands as well. The second brand I'm going to talk about in this act three of Reinvention is Feasibles. So Feasibles was founded in 2022 by Mr. Beast, who is arguably the largest YouTuber in the world. And what's really interesting is that it was launched from day one into Walmart. So his entire business model was not direct to consumer at all. And you would think that he has a scale and the reach to succeed in that, but he went through retail. And why? I would argue that it's because of the product. So Ficibles is a chocolate brand. And chocolate brands, there are many chocolate brands that are direct to consumer, but to work, chocolate and um, I guess sweets are usually really good add-on products in grocery stores. So if you think about when you're in the checkout, what do you see near you when you're waiting in the checkout line? Chocolate, lollies, uh gum. Those are really, really good add-on products. And if people don't know your brand, your chocolate brand already, and there's not something unique about your brand, and also it's not something that people will buy repeatedly, like a subscriptions-based thing, you really need to be in people's faces for them to want to buy you. And I think it's really smart and unique that even though Mr. Beast has such a big reach and audience, he went straight to retail. And how are they performing? It's actually performing really well. It's now more profitable than his entire YouTube and Amazon Prime media business. And the figures that have been floating around the internet is that um the revenue in 2022 was 33 million. By 2023, the revenue of feasibles was 96 million, and by 2024, 250 million. And they were projected to reach 520 million in 2025, which is absolutely insane, especially for um a non-direct-to-consumer business model. And so I would say the lesson from this is to match the channel to the product. They obviously really thought deeply about the fact that this is a chocolate product. And it probably helps that his co-founder was Jim Murray, who's the former president of IRX Bar. And so Jim Murray knew a lot about this space and um really realized that that a direct-to-consumer business model wouldn't work here. And so I would argue that the core types of brands that work really well for direct-to-consumer, more like skincare products,

☕ chamberlain coffee, why a big audience doesn't save a brutal category

SPEAKER_00 24:40

um, products where there is a subscription and something where people will need to come back to buying and things that don't require one-off purchases because, as I would talk about, the customer acquisition costs are just so high, and the cost to constantly be in a consumer's face for them to remember to buy from you is just too high, where retail gives you that visibility, that that reach that is really, really hard to get with paid advertising. The third example I'm going to give is Chamberlain Coffee. So you would argue that Emma Chamberlain had the same advantage or the similar advantage as Road Beauty, but what actually happened is that they had they've had very widely different outcomes. So Chamberlain Coffee was founded in 2019 by Emma Chamberlain, who has about 12 million YouTube subscribers and 16 million Instagram subscribers. And Chamberlain Coffee started as direct-to-consumer mail order from the first day. And it stayed largely with that business model until 2022. However, in 2023, they started pivoting into retail and they expanded in Whole Foods and Albacons in the US. They started off with 1,000 stores and had about a $20 million revenue and have since really ramped up their retail as well. What's interesting is that when it first launched, it did really well. She was getting a lot of sales and then it started to dip, which is why they then moved to retail. And why is that? I would argue that it's because of coffee. So the whole coffee industry is very saturated and very, very competitive. And to do well, you need to have an amazing brand that is very, very distinct, and to do well in direct consumer, that is so amazing and distinct that people want to keep going to buy from you directly. You can argue that um you can do a coffee subscription model, which exists. I would have to look into how well that's working. But to succeed, she had to pivot into retail. And so I would say that the lesson here is that your audience as an influencer or or a person in the media with a large full and following doesn't immunize you from categories that have really difficult economics. And I would I would argue that coffee has one of the really one of the hardest economics to land. It's very brutal, very, very high competition, low margins, and big, big brands that have been around for a lot longer. And so though Emma had the following and had the audience to succeed, she really needed to be where people were naturally shopping so that there would whole foods or wherever and they would see the coffee

💪 unwell by alex cooper, never D2C and why that was smart

SPEAKER_00 27:27

and then buy it. And not having to rely on paid advertising where they'd have to see her multiple times and see her coffee multiple times to then go to the website and then order. There are just so many more steps with that online approach that you don't have as much with in-person retail. The last example I'm going to touch on is Unwell by Alice Cooper, who once again is very well known with her Koh Hadadi podcasts. Um, Koh Daddy is number one globally among women, and she launched on well in 2025 in Target stores. And so it's very interesting that from day one, it was never direct to consumer, it was through retail only. And she actually partnered with Nestlé to do the manufacturing and distribution, and within a year it really grew quite quickly. She then expanded into a protein line, an energy line, and then rebranded to Unwell Beverages. What's interesting is that she obviously thought about this well and had a really good team that thought hard about how this business model would work. And I think it was a very smart move to never try Direct to Consumer because not only is it really expensive to set up properly in terms of the supply chains and the mechanisms, the advertising and the customer acquisition costs just did not make sense. And so I think if someone like Alex Cooper, with the reach that she has, decided that direct to consumer couldn't work well

🔮 where D2C goes from here and what founders should know

SPEAKER_00 28:53

for her brand, I think that speaks a lot about the more every everyday brands and the mom and dad stores. I would argue that direct to consumer in 2026 is really, really hard to nail. I don't think it's all doom and gloom. I would say that direct to consumer is not over. The landscape has simply changed. Customer acquisition is really, really expensive. And I think in 2026, to succeed, you need an audience that's already built or a category that is new and exciting or that has a repeat customers in build. Ideally, you need both. And my thesis is that between 2018 and 2021, there was a huge wave of direct-to-consumer. That was the time it worked well because millennials were obsessed with online shopping. It was the new wave. Shopify was really taking off, and a lot of businesses were pushing towards that business model. And also money was cheap. However, the whole build on Instagram and grow a platform and then just market to your followers has largely gone. People are moving to in-person and people are moving to in-person shopping again, and retail is now really important and a good opportunity to be visible and to be everywhere. And to I would say, like almost also expand your service area of luck. I think a a core-only direct-to-consumer business model isn't visible anymore. So if you're interested in building direct-to-consumer now or you're exploring what business model will work for you, I hope that these examples give you some food for thought. And yeah, that's it for me. Hope you enjoy it. I'll see you next week.