Barons of Crap
Billion Dollar Brand Club by Lawrence Ingrassia. Henry Holt and Co., 272 pages.
Tell me, has it ever happened to you? It’s 2010, and you’re a Wharton MBA student just struggling to get by. You wake up late for class, and it isn’t the first time. For your entire life, you have slept on inadequate mattresses you were pressured into buying at one of those borderline-criminal cartels they call mattress stores. You’ve barely slept in years. Then you reach for your glasses, but—ugh—they’re last year’s style! So, you toss them in the trash. You slip in some contact lenses instead, but you’re annoyed because they’re too high-quality, expensive, and last too long. You have to wait a month before you can throw them away, which is a drag. Getting ready to shave, you realize that you haven’t changed your blade in months, but you’d rather kill yourself than go to the drugstore to buy new razors, so you suffer through.
When you finally make it to class, your fuddy-duddy professor is giving a lecture about how impossible it is to break into markets with long-established brands. “None of you will ever become rich, powerful business people,” he says, “you shouldn’t even try.” You intuit that he’s wrong, because you are a problem-solver, well-connected, and/or wealthy. Huge, swollen piles of time and capital lay in your future, ready to be shoveled at any problem that comes your way.
Walking from class, you see your friend Tina jetting off to meet her dad in Jackson Hole with a rolling suitcase. “Where’d you get that suitcase?” you ask. “From a store,” she says foolishly. “You mean you didn’t buy it directly from a lifestyle brand on the internet?” you say incredulously. “It doesn’t charge your phone, or anything?” “No, it doesn’t” she says. “Wow,” you reply, forward-thinkingly.
If that story sounds familiar, then you might be a subject in Lawrence Ingrassia’s new book Billion Dollar Brand Club: How Dollar Shave Club, Warby Parker, and Other Disruptors Are Remaking What We Buy. Ingrassia, a former business editor at the New York Times, presents the pulse-deadening chronicle of a group of millennial businesspeople who managed to squeeze their way into the top echelons of the monied classes, all while leaving the lives of consumers almost completely unchanged or worse off than before.
Take Dollar Shave Club for example, the leading case study in Billion Dollar Brand Club. Michael Dubin, a graduate of the Haverford School and Emory University, was a serial entrepreneur who couldn’t do anything right. All of his business ideas failed. (Dubin’s mother later told a journalist about a corner in her basement where she kept “a number of things that we have bought and he made me invest in that he thought would be very successful businesses . . . they weren’t.”) He was unemployed after getting laid off from a dead-end marketing job at Sports Illustrated Kids, until he met a friend’s dad at a party in Beverly Hills. This dad owned a warehouse full of unsold products, including a cache of cheap disposable razors. Would Dubin be interested in selling this inventory of blades?
Ingrassia presents the pulse-deadening chronicle of a group of millennial businesspeople who managed to squeeze their way into the top echelons of the monied classes.
He would. Dubin decided to film a commercial for his new business idea, Dollar Shave Club, in the warehouse, featuring himself, a dancing person in a bear costume, and a loveable employee named Alejandra. The concept was a low-cost, direct-to-consumer subscription shave products service. Video in hand, Dubin got another friend to arrange him a meeting with Michael Jones of Science, Inc., a prominent venture capitalist firm. Ingrassia writes that at first, Jones wasn’t at all interested in Dubin’s idea. How could anyone take on Gillette? Then Dubin whipped out his laptop and played him the ad he made. “When I saw the video,” Jones says, “it hit me.” Realizing the commercial’s viral potential, Jones agreed to invest $100,000. Other venture capitalists similarly demurred, until they saw the ad. One investor plopped down $250,000.
Quickly selling out the warehoused inventory, Dubin went looking for a new supplier, eventually settling on a cheap razor producer called Dorco, a South Korean company that had produced the house-brand razors for 7/11. What Dubin realized is that quality doesn’t matter: people will buy inferior razors––and throw them away more often––if they can be ordered and delivered regularly through the internet. Eventually, Unilever bought his company for $1 billion. Dubin’s story is pretty typical: a person has an idea, gets VC funding, then sells the idea to a major corporation. The connective tissue of this trajectory, of course, is the fact that Dubin had the time to fail his way into a good business idea, friends whose dads were sitting on entire warehouses full of goods, and more friends who knew people at prominent VC firms.
The other companies featured in Billion Dollar Brand Club are so varied that it is hard to properly encapsulate what they have in common, besides their being grouped together here by Ingrassia. Some brands, like Dollar Shave Club and Hubble, found success by reinvigorating the century-old method of direct-to-consumer sales. Others broke into saturated markets by adopting just-in-time, lean manufacturing techniques, as ThirdLove did. Warby Parker and Away were initially direct-to-consumer (they now both operate storefronts), but their hallmark was a relentless focus on customer service. Some used the power of the internet to reach customers, while others spent millions of dollars on traditional advertising. One company Ingrassia includes is barely even a brand: hOmeLabs scours Amazon for products to create, then develops the product (like, say, a countertop ice maker) and delivers it to the Amazon marketplace.
If he struggles to explain what unites these various business models, one similarity that Ingrassia does point out is how well-educated the founders of each company are—and how little they each knew about the business they were getting into. ThirdLove: the founders “met in business school at MIT,” and neither “knew much about manufacturing.” Warby Parker: four guys from Wharton; no experience in eyeglasses. Hubble: “two young, bookish Ivy League graduates, [who] don’t have a clue about the finer points of making soft contact lenses.” Ampush: founded by “three friends who were roommates in the undergraduate program at Wharton” and were ignorant about digital marketing. Raden: founded by Josh Udashkin, who had a law and MBA degree, but, “like many other founders of new digital brands, knew next to nothing about the product he had decided to launch.” Intimate knowledge of a product, like that King Gillette might have had of the razors he invented, seems not only impossible but passé in the world of billion-dollar brands.
Ingrassia’s book strains to make these ventures sound exciting or original. The overriding suggestion is that all you need to succeed in business today is a viral commercial that somehow convinces people to buy razors more often (in the case of Dubin), or to rejigger the supply chain by moving production to Asia (in the case of ThirdLove) or, like Raden or Away, to add a battery to a suitcase. The only actual inventors in Billion Dollar Brand Club, the people behind Eargo (founder Raphael Michel: “I knew nothing about the hearing aid industry”), run into serious problems with their technology and by the end of the chapter have failed to break into the market. Surely, if this book was written two years earlier, it would have featured Theranos, another company that tried and failed to upend its market with faulty tech. The founders profiled in the book don’t need to know anything about their businesses because all they are doing is making minor changes that retool their sectors for the internet age. It isn’t, as the book’s subtitle suggests, intrepid entrepreneurs “remaking what we buy,” but the mass mobilization of the tech-literate teens who once came over to set up Grandpa’s TiVo.
Further, Ingrassia chronicles how all the allegedly exciting, transformative aspects of these new businesses regress to the mean. Most, if not all, of the brands that began as online-only businesses opened physical stores, including Glossier, Away, Casper, Burrow, Warby Parker, Leesa, and One Kings Lane. Even Everlane, whose CEO said in 2012 that they “are going to shut the company down before we go physical retail,” now operates multiple stores. The only “innovation” seems to be that some of these stores carry no physical inventory, so customers come in to try the product and then, inconveniently, have to order it online. Ingrassia points out a similar conundrum in the online mattress market: companies like Casper ingeniously circumvented uncomfortable commission-based showrooms by selling directly to customers online. But to reach people who wouldn’t be able to first test their product, they soon found themselves forced to rely on blogs funded by affiliate marketing, which began to extort the brands for favorable treatment.
Even the central narrative tension of Billion Dollar Brand Club––small upstarts take on the giants––sloughs off in a depressingly quick denouement: Tuft & Needle, the rare smaller brand that was not backed by venture capital, ends up selling out to Serta Simmons. In fact, almost every single brand sells itself to a gigantic globe-swaddling corporation over the course of the book. (A few examples: Kellogg’s paid $600 million for Rxbar; Procter and Gamble bought Native deodorant for $100 million; Amazon bought Ring for $1 billion; Edgewell Personal Care, owner of Schick, bought Harry’s for $1.37 billion; Bonobos sold to Walmart for $310 million; Target paid $550 million for Shipt; etc.) The scrappy, underdog story Ingrassia wants to tell dissolves almost on contact.
In the end, Billion Dollar Brand Club is Chicken Soup for the MBA Soul.
And Billion Dollar Brand Club contains almost zero analysis of what the ubiquity of this selling out could possibly mean. But the lesson is right there, whether he wants to see it or not. Corporations––who today plow record-breaking sums into stock-buybacks instead of research and development––have outsourced innovation to the wealthy or wealthy-adjacent who have the time and resources to get the ideas off the ground on their own: a squad of elite MBAs who come up with the ideas, and the venture capitalists who choose which of these ideas get funded. The businesses that Ingrassia profiles are, by the end of the book, essentially the same as the ones they were fighting for market share in the beginning. The founders, of course, have gotten fabulously wealthy, but the book never convincingly establishes the “seismic shift” it promises to document.
Instead, it’s resigned in its overuse of business book clichés, almost admitting that you cannot make these origin stories interesting. Paragraphs introducing “aha” moments often terminate with some version of the line “that got him thinking.” As in: “Cogan was buying a new supply of soft contact lenses for himself and learned that the price had gone up. This got him thinking,” or “The conversation got Dubin thinking,” or “Then [she] found herself rummaging with frustration in her lingerie drawer looking for a bra she liked. That made her think.” Every story is a shaggy dog tale where the stakes are so low as to be imperceptible, and every bout of adversity quickly and inexplicably resolves. Take this one about ThirdLove:
Even though [David] Spector has come from the venture capital world, raising money wasn’t easy. . . . [Heidi] Zak recalls that they pitched their idea to more than fifty VC companies, almost always conference rooms full of men who didn’t understand why a woman might need a better bra. Still, by early 2013, they got commitments for $5.6 million in financing.
In the end, Billion Dollar Brand Club is Chicken Soup for the MBA Soul, a reassuring collection of anecdotes that affirms, as the last paragraph of the book lovingly whispers, that there’s still “plenty of room for start-ups.” If the book testifies to anything, it’s that the best and brightest of our country’s business class have invested all of their available brain power into making once durable consumer goods disposable and continuing the atomization and dispossession of worker power by extending lean manufacturing to new realms. It’s tempting to wonder what Marx would have thought of Ingrassia’s account, an impossibly dull, granular, play-by-play of how the bourgeoisie have continued to constantly revolutionize the instruments of production, causing everlasting uncertainty and agitation, all while, miraculously, changing little of consequence for anyone else.