and sam altman sold loopt for ~funding and change. people have successful second acts after failed first ones. you get valuable experience running a startup even if it doesnt have a good outcome. encourage you to not have such a cynical view of things.
i should also add that something like (i cant be bothered to research exact number but its there) 4 out of 5 MANGA CEOs are now MBAs lol and arguably they're all pretty good at their jobs. techies randomly shitting on business school is so last decade
"Business people tend to like giving business school people jobs" isn't exactly a new insight, and doesn't say anything about whether they're actually qualified for them.
The whole subscription box industry consists of undifferentiated companies with zero moat. Look at any category: beauty products, men's grooming products, wine, watches, etc. and you'll see a bunch of companies that all look the same selling the same stuff.
On top of that, the first thing people cut when they have money problems are luxury subscriptions they don't really need.
I don't know why anyone would invest in any of these companies.
I think early subscription boxes also sent out the surplus merchandise that was good, but not successful in the market for whatever reason. That era is gone.
Picking on the razor companies, you can get similar, name-brand blades with Amazon Subscribe and Save at a similar price. There's no business there.
I'm using a coffee subscription right now, but it's specifically for small quantities of a variety of beans. There's a bit more of a curation element to it, and they do repackage the beans. It's not something Amazon would do, but it's low volume, and a competitive space.
Lululemon was able to figure out how to market a premium product that can fetch far more profit margin than razors to wealthy clientele.
The opposite, marketing lower priced items because they have a lower price limits profit potential unless you have some technological advancement that really drives down cost.
Actually the model really doesn't make much sense in long run. You are essentially the one starting race to the bottom. And if others join in, you together end up at the bottom. Which I don't think is optimal for anyone participating.
> Which I don't think is optimal for anyone participating.
There are 'visionaries', who want 'to change the world' and there are people who knows what they can start a business, make it profitable and then move on with profits.
Hayley Barna moved on in 2015.
If your choice is to 'change the world' then of course it's not 'optimal'.
I kind of disagree there. Lululemon make high quality clothing and there’s a lot of quality differentiation in the fashion market. Razor blades on the other hand… meh.
In a similar vein, buying an electric razor that is more functional (different lengths, can also be used for hair and other grooming) that lasts years. A razor subscription sounds extremely wasteful.
Usually it's called a trimmer around here. Because you use it to trim the bushes, hehe.
But stupid jokes aside, I used razors (for my face) only in my teens and early twenties, after that I moved to trimmers and occasional 'canadian lumberjack' look out. Trimmer are good enough for the face, armpits and most of the bush. At this rate I measure the lifetime of (disposable BIC) razors in years.
I thought the idea was great and I subscribed to Harry’s at one point. The premise was that I wouldn’t have to think about razors any more and would always have them. That seemed like a good deal to me.
There's a brand (can't remember the name) that sells for a similar price on Amazon Germany. I can't stand them. Switched to feather hi (more expensive, yet still cheap compared to multi blade razors) and am happy now.
The kind I got were Derby Extra [1], and it looks like I was wrong about using up half of them over 3 years. I only used 1/4 (one-half of two packs), which comes to only a little over $1 per year.
They've been great for me, and have been the first and only brand of double-edged safety razor blades I've tried, so I have no point of comparison with other brands.
I have switched to leaf since I wanted to use actual blades and not waste so much plastic. Works quite fine. Unfortunately we in EU pay almost double price compared to the US.
I think coffee is quite a different market because it expires on a much shorter timeline. Being able to acquire, roast, and ship if a roastery, or roast, acquire, (drop-)ship if an aggregator, all in the space of <1 week is a bit of a moat. That requires reasonable logistics, close business relationships, and some level of operational ability.
In contrast, these box companies can buy stock that is months or even years old. I see it as a similar model to Poundland (Dollar stores?) – buying old or distressed stock for pennies on the dollar and reselling with margin. Timelines are much longer, batches are larger, there's just a lot more room for error on logistics, business relationships don't have to be as close.
That’s not really a luxury subscription, and is often signed up for in 12 month contracts because it works out cheaper. I know many people who’s mental health would substantially decline if they couldn’t go to the gym.
The fact that SVB just went under disproved your point. Without a moat a company is relegated to ways of making money that at some point in time become unsustainable (i.e. when interest rates change) and then go under. As opposed to companies with strong moats that defend their free cash flow (i.e. Apple).
It doesn't disprove it at all, because I'm certainly not arguing that not having a moat is a strength. It almost sounds like you are arguing that having a moat makes a company indestructible.
Were there markets where they weren’t using UPS/FedEx for delivery? I’m in a semi-major metro and every time we’ve used HelloFresh it’s always been delivered by UPS at my standard delivery time (1-2pm).
Exactly. And almost everyone I knew who got discount boxes simply decided what recipes they liked and then bought the ingredients from the supermarket for half the price.
That model is more sustainable than aggregators of (say) dog walkers. Everyone found a dog walker they liked through the app, then hired them directly.
Was looking for a teacher through one of those aggregator websites. Found someone near my location, but the website needed my card details to get the teacher's contact info. Ended up googling their name and contacted them directly.
same thing I do with elance - find a freelancer that you like, pay them once thru the app, hire them directly going forward (In my case at the same cost, but the freelancer gets to keep 100%) - everybody is happy, except the middleman. - I pay the same, freelancer gets to keep the fruits of their labor and now I have a happy vendor.
The aggregator business model can actually work if you're not greedy. The costs of operating the platform should be near zero once it's built, so even the revenue of first-time bookings, at scale, should be enough to sustain a small but profitable business.
There were a load of these companies but the market has really shrunk. Blue Apron was the big one that basically disappeared. Hello Fresh is the one that I think "made it". They've IPO'd, and I suspect they've found a format that is sustainable given their longevity compared to the other companies.
HelloFresh have outlived many others but they aren’t long for this world either. They’re still spending huge amounts of money on marketing which isn’t converting to long term customers.
There’s definitely a market for these type of food boxes but it’s a much smaller market than HelloFresh etc. require to sustain the size of company they’ve built.
The all have the same issue: you tied up with what ever meal you are given (regardless if you've chosen them or not). Those are perishable goods. It means that you cannot just drop one meal without incurring waste. Their recipe are not very varied either, which can lead to some less than desirable meal (some are even borderline terrible).
I have tried pretty much all the major offering in the UK in the last 3 years. There need to be something more flexible than that. The big store could easily already make meal kits from their stock for specific recipes that would compete with Hello Fresh and the like.
Huh, without thinking too much about it, I'd assumed that all of these services (except the HelloFresh-type ones; I know they're still around because they continue to saturate ~all podcasts) had gone under years ago.
The fact that this company was founded by a couple of Harvard Business School grads, and that they and their investors didn’t immediately see this as a gimmicky and unsustainable business model, tells you everything you need to know about business schools and the world of venture capital. It’s mostly smoke and mirrors and quasi-Ponzi schemes.
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[ 2.7 ms ] story [ 126 ms ] thread> in 2021, the brand was acquired for $45 million
I wonder what the founders' payout was.
Solving for the economic fitness functions of the world requires compute, capital, and labor investment. Mental models alone are shallow.
On top of that, the first thing people cut when they have money problems are luxury subscriptions they don't really need.
I don't know why anyone would invest in any of these companies.
A belief that they would form lifestyle habits.
I was able to cut rideshare pretty quick when they stopped subsidizing rides.
I'm using a coffee subscription right now, but it's specifically for small quantities of a variety of beans. There's a bit more of a curation element to it, and they do repackage the beans. It's not something Amazon would do, but it's low volume, and a competitive space.
Unlike taxis, there isn't a blitzscaling story here, either.
The opposite, marketing lower priced items because they have a lower price limits profit potential unless you have some technological advancement that really drives down cost.
There are 'visionaries', who want 'to change the world' and there are people who knows what they can start a business, make it profitable and then move on with profits.
Hayley Barna moved on in 2015.
If your choice is to 'change the world' then of course it's not 'optimal'.
But stupid jokes aside, I used razors (for my face) only in my teens and early twenties, after that I moved to trimmers and occasional 'canadian lumberjack' look out. Trimmer are good enough for the face, armpits and most of the bush. At this rate I measure the lifetime of (disposable BIC) razors in years.
The problem was the razors just sucked.
Cartridge razors are such an enormous waste of money by comparison, and I can't even imagine needing a subscription for them.
They've been great for me, and have been the first and only brand of double-edged safety razor blades I've tried, so I have no point of comparison with other brands.
[1] - https://www.amazon.com/dp/B0032Q41LS
In contrast, these box companies can buy stock that is months or even years old. I see it as a similar model to Poundland (Dollar stores?) – buying old or distressed stock for pennies on the dollar and reselling with margin. Timelines are much longer, batches are larger, there's just a lot more room for error on logistics, business relationships don't have to be as close.
Except their subscription to the gym.
I know people whose mental health would suffer if you took away their beach house or private jet. That doesn’t make those things not luxury items.
HelloFresh could only offer me 'whole of day' delivery slots, not even choice of AM or PM so I dropped that subscription before I ever saw a box.
https://www.hellofresh.com/recipes
There’s definitely a market for these type of food boxes but it’s a much smaller market than HelloFresh etc. require to sustain the size of company they’ve built.
https://ir.hellofreshgroup.com/websites/hellofresh/English/3...
I have tried pretty much all the major offering in the UK in the last 3 years. There need to be something more flexible than that. The big store could easily already make meal kits from their stock for specific recipes that would compete with Hello Fresh and the like.
That aside it was an interesting exercise of the combinatorial optimisation problem at scale.
They would get free snacks from companies, sell them to customers as a subscription, and only had like 20 interns doing all the work.
Lots more available from Axios & others:
https://12ft.io/proxy?q=https%3A%2F%2Fwww.axios.com%2Fpro%2F...
https://beautymatter.com/articles/bankruptcy-may-be-in-birch...