(Bloomberg) -- Brandless Inc., a direct-to-consumer personal care and packaged goods company, is closing down. Brandless will stop taking orders and cut about 70 employees, less than two years after SoftBank Group Corp.’s Vision Fund said it would invest $240 million in the startup.
“I’m proud of what we created at Brandless,” Interim Chief Executive Officer Evan Price said in a statement, adding that it had become to difficult for the company to compete in the direct-to-consumer market. “I'm confident the next great brands of tomorrow will be built from this experience.”
The closure marks an embarrassing failure for SoftBank, which is struggling with other investments made by its $100 billion tech fund, including Oyo, Uber Technologies Inc., and most notably, WeWork. SoftBank bid up the valuation of WeWork parent company We Co. to $47 billion before a failed attempt at an initial public offering sent its value plummeting and forced the Japanese conglomerate to bail out the co-working startup. Uber, another major investment, is trading below its IPO price and faces mounting regulatory pressure from governments, although it has said it expects to turn a profit this year.
Brandless’s board had been evaluating its position for several weeks and ultimately decided to shut down and use the remaining cash for severance for employees, according to a person familiar with the matter who asked not to be identified discussing private information. The company is cutting all of its staff except for about 10 employees, who will say on to fulfill outstanding orders, handle customer questions and the like. The news was earlier reported by tech site Protocol.
The Brandless website will no longer accept orders starting Monday, although all existing orders will be delivered and customer service will remain available.
In a statement, Brandless’s board said “the direct-to-consumer market is fiercely competitive and ultimately proved unsustainable for their business model,” but added that employees’ work on sustainability and health products “moved an entire industry forward.”
Brandless started shipping consumer staples, mostly at prices around $3 apiece, in 2017. SoftBank invested the following year after its chief executive, Masayoshi Son, inspected an array of its products—from olive oil to eyelash curlers—flown to Tokyo for his perusal. At the time, the Vision Fund was stunning Silicon Valley with investments like $2.5 billion into India’s Flipkart and another $2.25 billion into General Motors Co.’s autonomous vehicle business, Cruise.
The Vision Fund paid out about $100 million of its promised investment into Brandless up front, according to a person familiar with the matter who asked not to be identified because the details of the deal were private. But a promised second tranche never arrived as the company struggled to hit targets while building out its own warehouse and distribution network. Co-founder Tina Sharkey stepped down as CEO last spring, and the company pivoted to selling CBD, or cannabidiol, products, which tap an ingredient in cannabis to help lessen anxiety and promote better sleep.
The CEO who spearheaded that plan, John Rittenhouse, stepped down in December.
(Updates with the amount SoftBank invested in Brandless in the penultimate paragraph. )
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