How some high-profile direct-to-consumer startups have struggled to make their economics work amid rising customer acquisition costs
How venture capital became the most dangerous thing to happen to now-troubled DTCs like Outdoor Voices, Harry's, and Casper
MarkerMaya Kosoff
Context & Ripple Effects
By early 2020, the direct-to-consumer wave that followed Warby Parker had swollen past 400+ startups copying the playbook with toothbrushes, bras, and mattresses — most funded on the assumption that venture money could buy customers cheaper than they churned. The Marker piece argues that assumption broke: as Facebook-era acquisition costs climbed, the same capital that scaled Outdoor Voices, Harry's, and Casper became the mechanism forcing growth they couldn't fund profitably.
The timing matters because the correction was already visible — Brandless, a SoftBank Vision Fund portfolio company, had just shut down weeks earlier in the fund's first portfolio failure, while the category's best exits went to brands that never took much VC at all, like the $100M+ acquisitions of MVMT and Native.
First-order effects
Outdoor Voices, Harry's, and Casper are directly exposed: their venture-funded growth model depends on paid acquisition whose rising cost now exceeds what each customer returns, forcing cuts or down rounds rather than expansion.
Investors in these DTCs face markdowns and harder fundraising, since the article frames VC itself — not just ad prices — as the compounding factor behind the troubles.
Second-order effects
Capital-efficient rivals gain ground: the MVMT and Native exits showed acquirers will pay nine figures for bootstrapped DTCs, so founders and later-stage investors reprice the 'raise big, buy growth' template against the profitable-bootstrap alternative.
Distribution shifts offline and toward marketplaces — the Coresight finding that nearly half of tracked online apparel and footwear brands opened physical stores shows CAC pressure pushing even digital natives into retail rent as a substitute for ad spend.
Third-order effects
If the pattern holds, consumer startup formation rotates away from VC-subsidized brand-building toward capital-light or debt-based structures — a rotation already visible in Amazon aggregators raising $16B mostly in debt and then straining under it.
The broader lesson generalizes across categories: subsidized demand creation (grocery delivery burned $10B+ of VC on ads and promos before downloads collapsed ~90%) leaves markets that exist only while the subsidy does, pushing investors toward unit-economics discipline as the default screen.
The trend: Venture-subsidized customer acquisition is being repriced across consumer categories, shifting the industry from growth-at-all-costs brand building toward capital efficiency and profitable distribution.
Pouring venture capital, which assumes the possibility of astronomical returns, into businesses that even at their best give much more modest returns is pure vanity, thank you for coming to my TED talk (Good stuff from @mekosoff) https://twitter.com/...
It's time to stop calling your startup “The Warby Parker of X.” @mekosoff brilliantly dismantles the DTC revolution for @MRKR, as venture capital comes knocking for its investments. https://marker.medium.com/...
You should know your profit margins on the fly at a company that lives or dies by that number. You shouldn't call someone a “boomer” who knows the business inside and out. I'm sad for this company as they have a beloved product. https://twitter.com/...
many employees have been left shellshocked. Haney was pushed out just months after the difficult delivery of her first child. the board + interim CEO of Outdoor Voices are now all men. it's a wild news day... but hope you read our story! https://nytimes.com/...
This article is so damn good. But tbh, you can figure out a big piece of this answer simply by reading one word in the title... Clones. Stop cloning. It doesn't work. DTC brands have got to find deeper differentiators. 🤷♀️ https://marker.medium.com/...
“Mr. Drexler would quiz employees, expressing frustration when they couldn't calculate things like profit margins on the fly. The exchanges prompted dismissive “OK boomer"-style text messages among the workers" https://www.nytimes.com/...
New from @MRKR: Over the past few months, several high-profile venture backed startups emulating the Warby Parker model—@OutdoorVoices, @harrys, @away, @Casper, Brandless—have shuttered, contracted or have shown major signs of distress. https://marker.medium.com/...
Outdoor Voices and its founder, Tyler Haney, seemed to be the picture of success last summer. But behind the scenes, store openings were delayed, a schism had opened between her and the retail legend Mickey Drexler, and seasoned executives were leaving. https://www.nytimes.com/..…
1 EXCELLENT piece 2 all of these ‘ventures’ were ‘nice-to-have’ generational brand substitutes masquerading behind mispriced cheap growth-capital + direct-marketing as ‘innovation’. 3 Zero technology, zero new truths for progress aka “'it ain't your dad's______ “(🪒👟🛌 👖) https://t…
The shake-up at Outdoor Voices highlights the generational friction that can arise between idealistic start-up founders, the staff they hire and the seasoned executives their companies often need for success https://www.nytimes.com/...
“Investors are discovering one thing in common — that most of their money is going to expensive and ever-rising customer acquisition costs (CAC) via Google, Facebook, and Instagram.” https://twitter.com/...
I'm barely mustering the amount of disenchanted pathos required to tweet this article, about how the most ambitious, entrepreneurial leaders of our generation are running around doing fuck all with giant gobs of money https://marker.medium.com/...
“It's never been easier or less expensive to start a business, but it's also never been harder to scale one,” Blumenthal conceded, which is probably the most damning thing a co-founder of a hyper-popular company with a heavy PR presence hovering on the phone will tell you." https…
Never believed in this type of DTC model - buying customers instead of customers buying! Why storytelling, building relationships within a community, and supporting a culture are critical to the longevity of any brand. https://twitter.com/...
How Outdoor Voices, a Start-Up Darling, Imploded| “In meetings, Mr. Drexler would quiz employees, expressing frustration when they couldn't calculate things like profit margins on the fly....” Duh. https://www.nytimes.com/...