Amanda Mull, the Atlantic:
As with many aesthetically pleasing food trends that have thrived in the era of constant internet access, the value of a deluxe cupcake isn’t necessarily in its physical consumption. Instead, it’s more like an edible Gucci logo belt, or a sprinkle-topped boutique hotel with a beautifully decorated lobby bar and painfully cramped showers. These goods are the least expensive way to gain temporary entry to a particular consumer class — for example, Gucci belts cost $450, while one of the brand’s bags could easily set you back $3,500. The brand’s belts are not any better at belting than many far less expensive options, but they provide a conduit for a person of middling means to transport herself into the lavish life she wants, if only within the highly edited confines of a carefully staged Instagram photo.
Crumbs Bake Shop expanded to 79 locations in the United States before it went out of business in 2014, but the value system that enabled it remains: A plethora of subpar options is the foundation of modern shopping. Most Millennials were too young to get a foothold in the economy before it fell out from under them, and now, confronted with the precariousness of working- and middle-class life in the decade after the Great Recession, the most many can do is playact modern success for as long as possible while hoping the real thing happens eventually.
All of the faux-Eames chairs the internet tried to sell me are props for this Kabuki theater: things you buy because they’re masquerading as more exceptional than they are. Some of these products are perfectly good at fulfilling their function, but they paper over a problem of class mobility that consumer choices can’t change. The market has looked upon the people it serves and said, “Let them eat cupcakes.”
Maya Kosoff, Marker:
Until a few weeks ago, when a very different picture emerged of Outdoor Voices. The Business of Fashion reported that for all of the startup’s apparent growth and cachet — including 11 stores in cities like Los Angeles and Nashville — the company “continues to lose money on customer acquisition.” According to BoF, Outdoor Voices was hemorrhaging up to $2 million per month last year on annual sales of around $40 million. Its executives also seemed to be bailing out on a company in a tailspin. The new president Haney had managed to lure last year from Nike lasted only a few months, and Drexler left the board. The startup was able to get a new cash infusion from the company’s investors, but at a lower valuation than previous rounds. On February 25, CEO Haney sent a Slack message to her hundreds of employees: “with heartbreak, I have tendered my resignation,” BuzzFeed News reported. In the wake of her departure, she wrote, there would also be layoffs, and Cliff Moskowitz, the president of a fashion-oriented private-equity firm, would take over as interim CEO.
The news could be interpreted simply as an unfortunate isolated incident — an inexperienced founder who mismanaged her way into overspending. But for anyone familiar with the harsh realities of the [direct to consumer] model, it’s an affirmation of something much more fundamental: Once you get past all the shiny objects in the DTC category — the plump VC rounds, the sleek sans serif designs, the experiential storefronts in hot retail locations, the podcast ad blitzes — it turns out it’s extremely difficult to actually make the economics work.
I remember when DTC startups were touting that their lack of a physical storefront is one reason they were able to offer their products for less. It turns out that people want to try mattresses and clothing in person. Who knew?