Welcome to The Weekly Explorer! Sorry for the delay this week - battling some nagging allergies this week and I am chock full of benadryl. In addition to my allergies, this week I am dying because of this perfect TikTok.
This Week's Coolest Tidbits
Charlie Munger Wisdom on Reversing the Problem Solving Mental Models
“The way complex adaptive systems work and the way mental constructs work, problems frequently get easier and I would even say usually are easier to solve if you turn around in reverse.
In other words if you want to help India, the question you should ask is not “how can I help India?”, you think “what’s doing the worst damage in India? What would automatically do the worst damage and how do I avoid it?” You’d think they are logically the same thing, but they’re not. Those of you who have mastered algebra know that inversion frequently will solve problems which nothing else will solve. And in life, unless you’re more gifted than Einstein, inversion will help you solve problems that you can’t solve in other ways.”
- Charlie Munger
What Different Generations look for in their DTC brands
Tim Armstrong (DTX Company) on the State of the DTC Market
“…break these [DTC] companies down into different categories: The DTC brands that know their metrics and unit economics, the ones that don’t know their unit economics, and then companies that have either raised the right amount of money or the wrong amount of money. When brands pitch us, they typically fit into one or two of those areas.
The companies that know their unit economics and are drilled into those economics with consumers, those are the ones that are going to be successful. And I don’t know if they’re going to be $50 million, $100 million, $1 billion or multi-billion dollar companies. But if you take a snapshot of today’s environment, you have massive corporations that have sucked up a lot of the consumer power in the world online and offline, and then you have the DTC industry, which looks like a ton of small companies across different categories. If you fast forward 15 years from now, you’re going to see the emergence of new holding companies that have aggregated a bunch of those [DTC brands], and then some of the companies from what I’ll call the old economy bridge into buying a lot of these DTCs.”
Brand Highlight of the Week
Launched in 2013 as a Kickstarter by a father-son duo, Ridge is building a consumer basics brand for men - starting with RFID Wallets, Phone Cases and Backpacks.
We’re streamlining daily life through quality products; redefining the everyday essentials—like wallets, backpacks, and chargers—with minimalist designs that don’t sacrifice function. Carry Less. Live More.
Their tagline instantly reminds me of the Amazon Basics line which is my go-to brand for tech and lifestyle basics. Can Ridge be the next Amazon Basics?
First, let’s focus on the product. Our society is becoming more and more cashless (and every fintech company is now launching a card). Despite this change in consumer behavior, our wallets have largely remained the same, optimizing for the number of pockets, and designed around their ability to store bank notes. Wallet 2.0 is designed around the credit/debit card and Ridge wants to lead the category here.
But here’s the problem, wallets aren’t inherently a luxury good. This means that most customers are price sensitive. While Ridge’s metal wallets are $75, competitors are occupying the same Amazon search real estate with a $25 price point (with more reviews and similar ratings). Amazon is the go-to search engine for basic consumer items. If Ridge decides to continue paying the Amazon tax, it will continue struggling against lower priced substitutes.
This is why Ridge is leaning heavily into influencers to elevate the basic metal wallet into something aspirational, and therefore worthy of the price tag. I would love to dive deeper into Amazon Basic in another post some day. The Amazon Basics brand is built on low prices, favorable digital shelf space, and basic products without any heavy influencer marketing spend. Would Amazon Basics have won without preferential shelf space…? Can Ridge win with the “Amazon’s Choice” tag?
The consumer basics market is highly fragmented with minimal brand loyalty. Looking specifically at wallets,
Barrier to Entry: Extremely low. Minimal manufacturing complexity.
Purchase Frequency/Repeat Rate: Low (for Men), Medium (for Women)
Average Order Value: Ridge would like this to be medium, but its generally low
Value to Weight Ratio: Low
Non Consumable, non-subscription
Who is unbundling Amazon Basics?
Must Read Links of the week
Thanks for reading! No Paraj’s Page this week because I didn’t take any pictures while in bed trying to recover from my allergies. Basically spent all my time on Fortnite and TikTok so hmu if you want the lowdown on either of those!
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