Limited Supply

S6 E2: From Billions to Bankruptcy: How SmileDirectClub and Dollar Shave Club Fell From Grace

Nov 15, 2023

This podcast episode dives deep into the downfall of SmileDirectClub and Dollar Shave Club, discussing the challenges they faced, including bankruptcy, debt crisis, and failed acquisitions. The hosts also touch on topics like high cost per acquisition, the effectiveness of marketing strategies, and concerns about future growth of e-commerce brands.

46:00

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Quick takeaways

Smile Direct Club's bankruptcy was caused by the negative impact of COVID-19 on their telehealth orthodontist business, leading to $900 million in debt.

Unilever's acquisition of Dollar Shave Club failed due to a lack of innovation, failure to expand product offerings, and ineffective utilization of Unilever's distribution network.

Deep dives

The Challenges Faced by Smile Direct Club

Smile Direct Club, a telehealth orthodontist business, faced significant challenges that led to its bankruptcy. The company initially experienced rapid revenue growth, going from $20 million in revenue in 2016 to $750 million in 2019. However, the COVID-19 pandemic negatively impacted its business, as many customers were hesitant to visit the company's Smile Shops for dental procedures. With $900 million in debt and a $63 million judgment against them, Smile Direct Club struggled to raise additional funds and ultimately declared bankruptcy.

Unpaid Debts of a Bankrupt Company and the Cost of Advertising

02:49

The Crazy Things About Smile Direct Club

02:19

Al Catterton's investment strategy and comparing Alo yoga and Viori

02:09

Introduction

2min

Water Tasting, Hotel Stories, and E-Commerce Woes

3min

The Bankruptcy of SmileDirectClub

15min

Challenges of High Cost Per Acquisition

3min

The Effectiveness of Lower Funnel Marketing and Brand Recall

2min

The Rise and Fall of Dollar Shave Club

15min

Concerns about the Future of E-commerce Brands in 2024

4min

Lululemon, Mirror, Dollar Shave Club, SmileDirectClub, WeWork... In this day and age, it’s insane that businesses can literally disappear overnight. Except for maybe that last one… because honestly, we all saw that one coming.

This week, Nik and Moiz are giving all the dirty details straight from the bankruptcy files of Dollar Shave Club and SmileDirectClub’s legal filings. They’re diving deep to break down the dismantling of these once-promising e-commerce brands, dissecting how SmileDirectClub went from a $9 billion evaluation into nearly $900 million worth of debt and detailing how the acquisition of Dollar Shave Club from Unilever fell apart.

And later, they guys touch on other topics, including Alo Yoga's rumored fundraising efforts and the challenges faced by e-commerce brands in 2023.

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00:00:00 - New York's E-commerce and Marketing Updates

00:02:15 - Smile Direct Club vs. Dollar Shave Club

00:07:55 - Smile Direct's Bankruptcy and Debt Crisis

00:23:15 - The Challenges of Spending Billions on Facebook Ads

00:23:48 - Unilever's Regrettable Acquisition of Dollar Shave Club

00:33:05 - Roan Buys Out Investors for Growth

00:34:51 – Alo Yoga Seeks $10 Billion Valuation

00:39:34 - 2024 Outlook for E-commerce Brands

00:42:09 - Google Pricing Transparency and Charitable Business Ideas

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