The conventional wisdom on DTC: you can't produce $1B+ outcomes. The category is too capital-intensive, retention economics are too fragile, and strategics don't write nine-figure checks for subscription infrastructure.

Danone just paid $1.15B for Huel. And explicitly cited its digital execution and direct-to-consumer capabilities as core to the deal rationale.

The business Danone bought: founded in the UK in 2014 around a simple thesis, most people eat badly not because they want to, but because they're time-poor. Complete nutrition in a bottle. DTC-first, subscription-driven, community-built. £214M in revenue in 2024, estimated £250M+ in 2025. Negative EBITDA in 2022, £18M+ adjusted EBITDA by 2024, improving every year since.

The founder story is worth noting. Julian Hearn raised $184M across three rounds but retained majority voting control throughout. He is set to walk away with approximately £400M.

A European CPG investor flagged something worth sitting with: Huel and yfood are examples of a category that worked in Europe before it worked in the US. Meal replacement was pioneered by US players like Soylent. Huel imported the concept to the UK in 2015, scaled it, and built the exit. Yfood did the same in Germany and sold to Nestlé. The conventional wisdom is that Europe follows US consumer trends. This category reversed that entirely.

For DTC subscription brands fundraising right now: you just got a significant gust of wind at your back. The acquirers are paying for infrastructure they can't build internally. If you've built real subscription economics, the strategic rationale has never been clearer.

Two San Francisco DTC brands. Same founding era. Same customer. Same pitch: quality basics without the luxury markup.

One is hunting for a lifeline. One just raised $500M at a $10B valuation.

Everlane launched in 2012 on radical price transparency: show the customer the factory cost, build trust through honesty. It worked, for a while. By 2021, L Catterton invested $85M believing the brand could more than double from ~$200M in revenue and exit cleanly. That never happened. Revenue is now ~$170M, lower than when L Catterton invested. Sales have been down nearly every month for two years. The brand tried repositioning as "Clean Luxury," then ran a campaign with jazz-pop star Laufey targeting a customer that had already moved on. Now it's raising new capital just to keep operating.

Quince launched in 2018 with the same promise, luxury quality, accessible price, but built something completely different underneath it. Not a brand. A supply chain. Quince contracts directly with the same factories producing for luxury labels and ships orders straight from the factory floor. No wholesale. No retail markup. No middleman. Critically: the factories hold inventory until an order is placed. Quince transfers inventory risk upstream to the manufacturers and only pays when a product ships.

Underneath that sits a large engineering team in Bangalore running AI-driven demand forecasting down to the SKU, size, and color level, adjusting production in real time. The result: $50 cashmere sweaters. $1B+ in revenue in 2025. Estimated $2B annualized by early 2026. Valuation went from $4.5B to $10.1B in under 12 months.

The insight buried in these two stories: Everlane sold a narrative. Quince built a structural cost advantage.

Narrative can launch a brand. It can generate loyalty and make a $38 t-shirt feel meaningful. But when the consumer mood shifts, or a better narrative comes along, there's nothing underneath to hold. A structural cost advantage compounds. Every year Quince runs, the factory relationships deepen, the forecasting model improves, the inventory risk gets pushed further upstream. That's not something a competitor can copy with a rebrand.

Somewhere right now, a retail investor who bought Olaplex at its 2021 IPO is reading that Henkel just acquired the company for $1.4B: at $2.06 a share. They paid $21. They lost 90%.

The origin story is genuinely impressive. Two chemists from UC Santa Barbara invented a bond-building formula. No VC, no institutional capital. By 2019 the business was doing $100M+ in revenue. Advent International bought it for ~$1.4B, a fair price for a real business with real technology.

Then Advent took it public at a $16B market cap. Peak beauty mania. Peak DTC multiples. Peak everything. The IPO raised $1.55B, largely from Advent selling their own shares into the offering. By 2022 they'd already pulled out nearly triple their original investment while still holding the majority stake.

What happened to the business: the brand expanded too fast into mass retail. Professional exclusivity, the thing that made Olaplex credible in salons, got diluted. Dupes flooded the market. Revenue peaked. EBITDA fell 28% year over year. The moat, it turned out, was the exclusivity. Once that was gone, the formula alone wasn't enough.

Henkel acquires Olaplex for $1.4B. The same price Advent paid six years ago. Advent made their money on the IPO. The retail investors got the crash.

The founders built something real and sold it fairly. That part of the story is fine. The lesson is everything that came after: what looked like a durable brand was actually a positioning dependent on scarcity. When the scarcity went away, by choice, in the name of growth, so did the premium.

Distribution is not just a revenue decision. It's a brand decision. And sometimes you can't get the positioning back once you've given it up.

Most consumer brands optimize for marketing. The best ones obsess over product.

That was my biggest takeaway from my conversation with Jonathan Willbanks, founder and CEO of Arterra Pet Science, and a former operator who built a leading Amazon agency scaling 100+ brands before walking away to build something very different.

The origin story is worth knowing: Jonathan extended his dog's lifespan from ~10–11 years to nearly 17 using a personalized 40-supplement protocol. Then he set out to commercialize it.

Five things that stuck:

Product-market fit beats product conviction. Jonathan started with high conviction in a powder-based supplement. The market said no. The breakthrough came from listening to customers and rebuilding around what they actually wanted, soft chews, then dental chews. Same mission, different form factor. Most founders defend the form. The good ones follow the customer.

The best products win on communication, not just efficacy. Arterra's supplements were arguably more clinically sophisticated than competitors, but hard to explain in a 30-second ad. Their dental chew worked because it could be communicated in three bullets: strengthens teeth, freshens breath, supports gut health. Same science, better packaging of the idea.

Iteration speed is the real advantage. Multiple product reformulations, new form factors, packaging changes, all driven by customer calls, retention data, and funnel performance. Not founder intuition alone.

Amazon is a demand capture channel, not a demand creation channel. Counterintuitive from a former Amazon agency founder: build brand elsewhere, then let demand spill into Amazon. Using Amazon as the top of the funnel is a structural mistake most brands figure out too late.

AI is compressing the cost of execution. Creative that used to cost $30–40K can now be generated and iterated in hours. The brands that win will use that leverage to run more experiments faster, not to cut headcount.

The meta-lesson: great brands aren't built by being right on day one. They're built by being willing to be wrong, listening to the market, and iterating faster than everyone else.

That's true whether you're building a $50 supplement chew or a $1B supply chain. The founders who build durable businesses are the ones who stay more attached to the outcome than to any particular version of how they get there.

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That’s it for this week.
If you liked this issue, forward to a friend who obsesses over brand strategy, capital flows, or exit timing.

In the Money – following the flow of capital in consumer

P.S. We love talking to brands interested in exiting in the next 3-18 months. If you know of any brands interested in exiting, or any firms trying to help port cos manage turnarounds, we'd love to share a POV.

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