After months of turbulence, San Francisco-based DTC Brandless has shut its doors. This comes less than three years after launching and a $240 million investment from SoftBank in July of 2018 that valued Brandless at a little over $500 million.
WHO: Brandless was launched in July 2017 by Tina Sharkey and Ido Leffler as a brand built for profit and purpose. Brandless made hundreds of better-for-you, everyday essentials, including organic, non-GMO food, clean beauty and personal care products, nontoxic cleaners, and home goods offered at simple fair prices. Brandless also created and curated original digital content ranging from recipes to life hacks and spotlights on people doing good in the world. Brandless partnered with Feeding America, the nation’s largest network of food banks, in order to support those affected by the daily hunger crisis in America.
IN THEIR OWN WORDS: “Two years ago Brandless set out to create a new standard in the wellness and sustainable products industry, and we couldn’t be more proud of what they created and the hundreds of thousands of customers served,” the Brandless board said in a joint statement. “While the direct-to-consumer market is fiercely competitive and ultimately proved unsustainable for their business model, the work the Brandless team did to elevate better for you, better for the planet products has moved the entire industry forward.”
“I’m proud of what we created at Brandless and the hard work and dedication of everyone on the team,” said Brandless’ CEO (former CFO) Evan Price in an email to Protocol. “Brandless set a new standard in the wellness and sustainable products industry, and while we weren’t able to compete competitively in today’s DTC market, I’m confident the next great brands of tomorrow will be built from this experience.”
“The era of growth at all costs are over,” said Dara Khosrowshahi, CEO of SoftBank Vision Fund-backed Uber, following his company’s earnings report last week. SoftBank’s Vision Fund itself is floundering, as key executives leave the firm, and its fund sequel, the $108 billion Vision Fund 2, is “far short” of its funding goal.
- In total, the company raised around $290 million from investors according to PitchBook.
- In August 2018 Brandless raised $240 million in Series C funding, led by the SoftBank Vision Fund, valuing the company at $500 million. Existing investors NEA, Redpoint Ventures, GV, and Sherpa Capital also participated in the round.
- According to Protocol, SoftBank had set up its investment in Brandless so that it would only deliver all of the cash when certain markers were hit; because that didn’t happen the total investment was only $100 million.
- In March of 2019 facing cash constraints, the company laid off 13% of its staff and Brandless CEO and co-founder Tina Sharkey resigned saying she was moving into a “more focused role” as the board’s co-chair.
- Evan Price, Brandless’ then CFO, became the company’s interim CEO.
- In May 2019 John Rittenhouse, the former COO of Walmart.com, became CEO with the plan to pivot Brandless’ business into more high-ticket items and use his background to get Brandless’ products into stores. He said at the time that he would get Brandless profitable by 2021 and that it would be a billion-dollar business by 2023.
- Price points were clearly an issue. It is difficult to profitably sell a product for $3 online. The company abandoned the $3 price point, added products at $6 and $9, and recently featured a wide variety of price points including CBD products at $60+. The goal was to raise the average order size, but clearly it all happened too late.
- After just six months, in December 2019, Rittenhouse stepped down as CEO and left the company.
- Sharkey, who had remained on the board, quietly left last fall.
- After a month of meetings in the wake of Rittenhouse’s departure, the Brandless board, which included CEO Evan Price, Brandless co-founder Ido Leffler, SoftBank’s Jeff Housenbold, Redpoint’s Jeff Brody, and NEA’s Colin Bryant, decided it was better to shutter the company’s business operations while it still had time to give employees severance packages, according to a spokesperson.
- The company will reportedly lay off 70 employees, with 10 staying aboard to resolve outstanding orders and presumably figure out how to sell its remaining assets.
Photo: via Brandless