LTV-Driven DTC Startups Like Casper and Away Harmed Late-Stage Investors
Alex Lieberman · The Dangers of LTV · Mar 13, 2024 · at 21:50
Host Alex Lieberman discusses Bill Gurley's critique of LTV-driven growth and applies it to the rise and fall of venture-backed direct-to-consumer brands.
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“By the way, this essay was written before the DTC boom, but this is the story of so many direct-to-consumer companies, whether it's Away Luggage, Casper, Warby, et cetera. Ton of money was given to these brands early on to spend a ton on paid marketing. The early investors, like the seed investors, probably made a lot of money, but then in later rounds that these direct-to-consumer businesses raised to continue spending on marketing, Those investors got screwed over because at some point when the public markets or later stage investors were looking for profitability, these companies realized that if they pulled back on marketing, that they couldn't just get profitable, that they started to churn through their customers, that they didn't have kind of the creative marketing strategies to actually acquire customers organically through word of mouth, and they realized that They had to keep spending.”
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