Jesse Horwitz - Selling Naked: A Revolutionary Approach to Launching Your Brand Online

IN THE PAST, if you made stuff and wanted to sell it, you had to go through gatekeepersbig-box retailers, department stores, neighborhood convenience stores, retail pharmacies. You played by their rules. You submitted to their understanding of customers. You relied on their shelves to help establish consumer relationships.

Not anymore.

A new crop of companies is selling branded merchandise and services directly to consumers, striking deals with suppliers or manufacturing goods themselves, and saving consumers money. Theyre eliminating the middleman and putting themselves out there naked, so to speak. Youve probably heard of some of these companies. Theres Dollar Shave Club. Casper mattresses. The Honest Company. And ours, Hubble Contacts.

My co-founder, Ben Cogan, and I recognized the potential of this new way of selling and thought that we could make a nice business selling naked on a subscription basis. No brand had sold corrective lenses directly to consumers before, and we believed doing so would simplify the process. So in February 2016, with a few friends, we decided to test whether people really wanted a more consumer-friendly contact lens brand. Our approach, borrowed from Harrys, the shaving subscription company where Ben was working, was to promote a mock product through Facebook and other social media platforms. Harrys had created a simple pre-launch site, which it shared on the hosting service GitHub. On one page, Harrys described its new business offering and asked interested visitors to leave their email addresses. On a second page, Harrys provided visitors who submitted their email addresses with a custom link to share with their friends on Facebook. To entice participation, they dangled freebies for each successful referral. We created a site like that, asking thirty of our friends to share the campaign. Then we sat back and waited. Ben and I were amazed to log more than two thousand signups over a four-day period, including everyone from a major CEO to a New York City cabdriver. With this experiment in hand, we approached a group of enthusiastic investors and in May 2016 raised $3.5 million in seed funding (just slightly overshooting our initial $500,000 goal).

Following this initial test, we ran a second set of experiments, collecting consumer email addresses through Facebook lead ads (the kind of easy-to-fill-out forms that pop up as you scroll through your timeline on your mobile device) and connecting these potential customers with a network of optometrists who had agreed to work with our lenses. Our early success had caught us off guard. We didnt have a website or branded packaging yet, or much of anything else. We followed up by sending prospects basic, unformatted Gmail messages, dumping leads into the bcc line, and using stock photos in the ads themselves. We just wanted to see whether people would show up and pay for an eye exam in exchange for two months of free lenses. It turned out they would, and on the strength of that knowledge, we went back to investors. In October 2016 we landed an additional $3.7 million in funding at twice the valuation we had received just a couple of months earlier.

Hubble finally went live on November 1, 2016. During the first several months, our team continued to experiment, tinkering in particular with our advertising. Which photos connected most with consumers? Which channelsFacebook, Instagram, search, television, direct maildelivered the highest return on our marketing dollars? Should our ads send consumers straight to our landing page, or should we drive them through a blog or quiz first? Some of our experiments failed, but others succeeded. Within a year, we grew from three thousand new subscribers per month to forty thousand, logging $20 million in revenues.

We continue to experiment. What shipping speed will help us best manage the trade-off between affordable shipping costs and speedy delivery? What new products or product extensions might we sell? What tweaks might we make in our sites messaging or user experience? Now that Hubble sells in multiple countries, including Canada, the United Kingdom, the Netherlands, Germany, and Spain, we have geographically distinct test labs for our experiments. The data we accumulate allows us to refine and optimize our business as it grows.

Ben and I were hardly the first to bypass the middleman and hawk our wares directly to consumers. Avon and Mary Kay Cosmetics were doing this before I was in diapers, and although their playbook differed from Hubbles, it really worked. During the 1990s, TV infomercials launched Proactiv and a thousand QVC and Home Shopping Network products, bringing in billions in revenue. More recently, hundreds of digital businesses have popped onto the scene, selling everything from kitchenware to hipster couches to stem cell storage. Breaking with their peers, a few traditional consumer marketers have also experimented with selling direct-to-consumer, hoping to exploit the underlying innovation that companies like mine have harnessed: using the data yielded by customer interactions to optimize their marketing.

As these players recognize, selling naked is not merely the latest marketing fad, but the leading edge of a revolution in how consumer companies market and sell their wares. Because consumer companies have traditionally relied on retailers to sell their products, they havent been able to access data about the behavior of individual consumers in specific commercial transactions. These companies have long identified broad classes of customers and targeted them with advertising (which they prayed would work), but they havent understood consumers as individuals, and theyve certainly never personalized their pitches nor tracked and refined marketing efforts on an individual basis. As a result, theyve often taken what media expert and Tatari co-founder Philip Inghelbrecht characterizes as a spray and pray approach: Give me a million dollars and let me see [how it goes]. Ill tell you in three or four months. Lets cross our fingers.

Digital companies that sell direct-to-consumer, whether giants like Netflix or smaller start-ups like Hubble, operate differently. They establish an ongoing feedback loop with customers online, collecting data during the sales process and then using sophisticated algorithms (either built themselves for traffic they own or rented from partners like Facebook and Google) to target consumers individually and in real time. These platforms allow direct-to-consumer marketers like Hubble to show the right online ad at the right time to the right person, so they can create and maintain productive relationships with millions of consumers all at once. As a result, each dollar these marketers spend goes further. They can track the consumer behavioror lack thereofthat their marketing actions trigger, and tweak or optimize those actions.