Brandless

What did it do?

Brandless was a company that sold food, beauty, personal care and household products made under its own label directly to consumers online. At first every product or product bundle cost $3; the company argued that it saved customers money by eliminating the cost of branding. In 2019 it also added an optional subscription service.

Why did it shut down?

The company entered a crowded market full of new brands offering products of similar quality and price. In 2018 a $240 million investment from SoftBank Vision Fund was announced, but according to a TechCrunch source, less than half of that amount ever reached the company. After founding CEO Tina Sharkey left, senior management changed several times within a year. In February 2020 the company laid off about 90 per cent of its staff and ceased operations; the board said the business model was not sustainable.

The story

A website that opened in July 2017 put an unusual question to the consumer goods market: why pay extra for a brand? At Brandless everything from organic snacks to beauty products cost $3, and the packaging showed what was in the product rather than a brand name.

The company was founded by two entrepreneurs who met in Mill Valley. Tina Sharkey, founder of iVillage and former CEO of BabyCenter, was experienced in online communities, while Ido Leffler, founder of companies such as Yes To and Yoobi, was experienced in consumer products. In mid-2016 Sharkey became CEO and Leffler chairman. In November 2016 it raised $16 million in a round led by Redpoint Ventures; by launch it had taken a total of $50 million from investors including New Enterprise Associates and Google Ventures. The company drew a great deal of attention at launch and was named on Fast Company's list of the most innovative companies of 2019.

According to TechCrunch, it was announced in July 2018 that SoftBank Vision Fund had invested $240 million in the company, valuing Brandless at just over $500 million. It was a surprising move for such a young business. Then the leadership was shaken: Sharkey stepped down as CEO in March 2019; according to reports by The Information, there had been friction with lead investor SoftBank. The finance director became interim CEO, and the new CEO who arrived in May 2019 quietly left in December. According to a TechCrunch source close to the company, less than half of the announced $240 million ever reached it.

In February 2020 Brandless laid off 70 people, about 90 per cent of its staff, and halted operations; only 10 remained to fulfil outstanding orders. The board said the business model was not sustainable in the highly competitive direct-to-consumer market. CNBC recorded Brandless as the first SoftBank Vision Fund-backed start-up to go under. The company's assets were bought in June 2020 by Clarke Capital Partners and Ikonifi, and the brand reopened under its new owners that same summer.

Brandless shows that a strong idea and a big investment announcement are not enough to build a lasting business in a market full of products that are hard to differentiate.

Lessons for founders

• Memorable pricing such as a single price point can back you into a corner when product and shipping costs change; plan a flexible price structure from the start.
• Differentiation is hard for unbranded or private-label products; track the repeat purchase rate from the first months.
• Announcing a large investment and actually having the money in the bank are different things; base your cash plan on receipts, not commitments.

Sources

1. Brandless (Wikipedia)
2. SoftBank-backed Brandless to lay off staff, shutter operations (CNBC, 2020-02-10)
3. SoftBank-backed Brandless shuts its doors for good (TechCrunch, 2020-02-10)

This section is compiled from public sources (Wikidata, news archives and company announcements). Figures are given as they appear in those sources; unknown fields are left blank. If you spot a mistake in an entry, you can send us a correction.

Is something in this entry wrong? Request a correction → Method