Rhode’s growth is phenomenal. From zero to $210 million in net sales in 3 years is a stunning success. And a billion dollar exit is a fantastic finish.
A lot has been written about the impact of the celebrity influencer. Certainly Hailey Bieber’s celebrity gave big advantages to awareness, customer acquisition and the exit. While celebrity helped, that company must have executed like hell. It’s super impressive.
But what blew me away is they did it with just 10 products.
Almost certainly there is a strong Pareto distribution of sales and products. One or two products likely drive 60% or even 80% of their net sales. I love that. They dialed in a killer product and then sold the hell out of it.
This strategy is obviously sensitive to category. Easier to do in beauty which has strong consumable and repeat dynamics and a large TAM. But this also works across all categories.
Expanding product catalogs require more capital to support the inventory purchases. It requires more ad budget to support the acquisition and re-marketing and launches. It requires more sophisticated fulfillment. It requires more suppliers. Expanding product catalogs dramatically increase the complexity of the business. And this additional complexity requires more tools and more people increasing OpEx.
But there’s also a deeper level which is quality. It’s hard to make a great product. How often do you buy something that is truly awesome? Too often, the marketing is better than the actual product. So trying to make dozens or hundreds of products across multiple supply chains as a company that is five or ten years old? It’s clearly possible to make something, but can you make that product good enough that people tell others about it? You can when you focus on one or two core products.
My point is find your hero product, pour the large majority of your time, effort and capital into making that product awesome and use that as a point of leverage in building your brand. Expand the product catalog carefully and with strong guardrails around profitability, capital and the team’s time.