Brandless Has a New Owner, and a New Mission. Can It Save Itself?

It was a once-hot company with a bad business model, like many of its direct-to-consumer peers. Now it's back as a quieter company focused on slower growth. Is this what DTC needs?
Brandless Has a New Owner, and a New Mission. Can It Save Itself?
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This story appears in the September 2020 issue of Entrepreneur. Subscribe »

Not many people know the name Ryan Treft. That’s just fine with Ryan Treft.

“I don’t plan on hitting the speaking circuit,” he says. “I’d rather be behind the scenes.” It’s served him well so far. Treft has been behind some great direct-to-consumer success stories — stories you also may never have heard of because they didn’t get much press and weren’t awash in investor money. But they made money. Lots of it. Which was the point.

Now Treft has bought a brand many people have heard of: It’s Brandless, the onetime DTC company that raised nearly $300 million (much from the notoriously growth-hungry SoftBank) on the promise of selling cheap, everyday goods to millennials. It launched in 2017 to massive praise, and further turned its cofounder and CEO, Tina Sharkey, into a business celebrity. Brandless rose as part of a cadre of buzzy, deep-pocketed DTC brands — like Casper and Outdoor Voices — that spent heavily on growth and seemed to be on meteoric rises. Then, in the past year, the narrative changed. Casper revealed that it lost more than $60 million in each of the past three years; Outdoor Voices reportedly lost $2 million a month and parted with its high-profile founder, Tyler Haney; and Brandless went out of business.

Related: The 3-Step Strategy to Help You Determine Your Business Mission, Values and Goals

What went wrong? The general takeaway from business experts is this: When brands raise a ton of money and spend it on growth, all while discounting their product, they may boost their profiles and increase sales — but it’s an unsustainable game. Now, especially as finances have tightened during the pandemic, it may no longer be a game investors want to play.

If that’s the case, then Columbia Business School adjunct professor Leonard Sherman says good riddance. “Capital constraints aren’t an inconvenient nuisance for early-stage ventures,” he says. “Rather, fiscal discipline encourages experimentation to optimize business performance in terms of product-market fit, technology reliability, supply chain efficiency, business process stability, and business model viability.”

Nobody can predict the future, of course, but here’s a hypothesis about what comes next: DTC survives but becomes decoupled from heavy investment — or at least, investors’ expectations shift dramatically. New brands stop being flashy and become more boring —­ growing only as quickly as their revenue, and focusing on fundamentals.

In short, maybe the next phase of DTC looks like Ryan Treft. Unlike his high-­profile peers in Silicon Valley or Manhattan, he lives in the Salt Lake City suburbs. He’s shifting Brandless’s inventory and plans to make a profit while serving a more discerning audience. And how does he expect it to go? On that question, too, he sounds different from the darlings of DTC past.

“I don’t want to go out there as a hype man to say, ‘We’re going to be billion dollars or bust,’ ” he says, “because if you do that, you can go bust. And I’d rather not.”

Brandless started life with a simple proposition. It sold high-quality generic (or “brandless”) household products for $3 each — shampoo, soap, vinegar, and so on. It likely lost money on each sale, but its massive fundraising rounds allowed for that. As the years went on, though, Brandless began lurching toward new models. Sharkey stepped aside as CEO in March 2019, and the new CEO dropped the $3 tag for every product. Soon Brandless was hawking higher-­priced items like suitcases and cutting boards. Reports came that the brand was struggling to retain customers. By February 2020, it was done.

Related: 6 Decisions That Could Change Your Business

This got Treft’s attention. He got into e-commerce in 2012, after selling off a successful toy company called Zoobies. He created and sold an online furniture business, then an e-commerce fulfillment center. He helped fix the distressed DTC brand Coalatree, helped turn a pajama brand for bed wetters into a multimillion-dollar operation, and cofounded a growth marketing company called Ikonifi. Treft felt that he understood why Brandless failed and how to make it work, so he reached out with an offer. “It was a deal I didn’t expect to win the business with,” he says, but the sellers were eager. Treft, along with his Ikonifi cofounder and partners at Utah-based Clarke Capital, became the new owners.

Treft’s plan is straightforward: Brandless should be a health-and-wellness-oriented company, and it should focus on products that are economical to make, ship, and compete on. Diapers? The old Brandless sold them, but Treft says they don’t make sense. “The margins are so thin, and it costs too much to ship; they take up so much space,” he says. But essential oils? Competitors there mark up the product five to 10 times; he can undercut them and still profit.

After taking ownership in May, Treft projected that Brandless 2.0 would be ready to launch by June 22 — so he hired Brandless’s former director of merchandising, got a PR firm, and eventually had an embargoed press release sent out timed to that date. But as June 22 approached, he realized he wouldn’t be ready. He’d been moving 4,000 crates of Brandless inventory from one Kentucky fulfillment center to another — the cost savings were great — and the process took longer than expected. Also, the brand’s old digital assets weren’t well organized; his team was staying up until 
3 a.m. to manage them.

Brandless could have still relaunched on June 22, delighting its quarantined fans. The new site was ready to go, after all, and Treft has the brand’s existing email list of millions of people. He could have opened up for sales and told people to be patient on delivery. But that’s the old DTC focus on growth, and Treft isn’t interested. “Brandless prided itself on great customer service, and I want to do that moving forward,” he said in an interview on July 6, when the brand still hadn’t launched. He wanted to work out the bugs and then slowly alert Brandless’s old audience — ensuring that his new team could handle the flow of orders. 

Related: 5 Tough Steps to Save Your Failing Business

Still, when that press release went live on June 22, Brandless had to offer something. So it put up a simple page offering product bundles — basically whatever Treft’s team could get its hands on quickly. Instead of sending the items in boxes, they shipped them inside Brandless’s old line of suitcases, which Treft wanted to ditch anyway. After two weeks, most of the bundles sold out. “We’re doing thousands of dollars a day by doing nothing,” he said at the time. “So it’s looking promising.”

But of course, Treft doesn’t put much stock into quick victories. He’s a long, slow grind kind of guy — and so, as he prepared for the full relaunch of this pared-down brand (which finally happened on August 1), he says nothing has shaken him from his belief in fundamentals. “Make sure you have margin. Make sure you have really good, dialed-in marketing,” he says. “Outsource the affiliate. Outsource the PR. And let the numbers dictate how fast or slow you grow.”

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