Do you love your Warby Parker glasses? Do you love how you never had to leave the house to find the right style of frames for your face? I do, and I actually love leaving the house. At Inc., Tom Foster examines how the direct to consumer (or DTC) movement started, and talks with some of the entrepreneurs trying to tap the market.
Many new DTC startups are hatched by digital natives at the University of Pennsylvania’s Wharton School, which educated such innovators as Elon Musk and Warby Parker’s co-founders. The list of product categories that entrepreneurs are trying to give the Warby Parker treatment is enormous: bras, sofas, napkins, and razors. Like everything in the capitalist jungle, not all of these companies will survive. But the ones who become the next Warby Parker, now worth $1.75 billion, could become tomorrow’s legends at Wharton.
The appeal of the DTC movement goes like this: By selling directly to consumers online, you can avoid exorbitant retail markups and therefore afford to offer some combination of better design, quality, service, and lower prices because you’ve cut out the middleman. By connecting directly with consumers online, you can also better control your messages to them and, in turn, gather data about their purchase behavior, thereby enabling you to build a smarter product engine. If you do this while developing an “authentic” brand─-one that stands for something more than selling stuff─you can effectively steal the future out from under giant legacy corporations. There are now an estimated 400-plus DTC startups that have collectively raised some $3 billion in venture capital since 2012.
If Wharton has become the spiritual center of the DTC startup movement, David Bell is its guru. A tall and tousle-haired Kiwi who comes off more like an edgy creative director than a professor, Bell has advised the founders of and invested in most of the DTC startups with Wharton roots. An expert in digital marketing and e-commerce, Bell first got a taste for investing when Jet.com founder Marc Lore (another Wharton alum, now at Walmart) invited him to put early money into his first startup, Diapers.com. When the Warby Parker founders were still in school and conceiving their company, the professor helped them refine its home-try-on program, arguably the key to getting people to purchase glasses online.