Press commentary on the explosion of digitally-native brands and what it means for the entire ecosystem. Read the full article

On the amount of funding invested in digitally-native brands:

According to an October study by retail research firm Loose Threads, more than $1 billion VC dollars have been pumped into direct-to-consumer brands since 2008.

“There’s a correction coming,” said Loose Threads founder Richie Siegel. “Consumer brands have been flooded with money, and there are arguably egregious valuations on these companies. Money creates expectations. You combine high expectations with time, and investors want a return in five to eight years. It takes a minimum of 10 years to build a brand, so there are mismatches across the board.”

On the composition of digitally-native brands:

“If you actually look at what most of these digitally native brands are, they’re marketing companies. The product is fine. They’re not very deep product companies,” said Siegel. “You can tell by who they hire and the makeup of their teams. It makes sense because it’s the internet and its expensive to find customers and you have to be really good at doing that. But that’s not a longevity game.”

On optimizing for longevity:

“In this space, it’s not all doom and gloom. My main focus is on how you build these things in a way that lasts. There a lot of people trying to take shortcuts,” said Siegel. “A community is just customers who have something in common. A network exchanges value.”