This article is part of our Confessions series, in which we trade anonymity for candor to get an unvarnished look at the people, processes and problems inside the industry. More from the series →
The rise of the founder-influencer has been commonplace in recent years, especially for direct-to-consumer brands. As founders grow their brands they at the same time tend to use social media to post how they’ve done something or what their path to success has looked like online and, in turn, grow their own personal brands.
When that helps to boost brand growth that’s something DTC investors can appreciate. However, when it seems like brand founders are more focused on their own personal brand over the brand growth that can be a tricky situation for investors to navigate. In the latest edition of our Confessions series, in which we trade anonymity for candor, we hear from a DTC investor on what it’s like to work with founder-influencers and why it’s a difficult balancing act.
This conversation has been edited and condensed for clarity.
The DTC space has seen sunnier times. There are zombie brands, fire sales and quiet closures in the DTC space right now. How does that impact working with founder-influencers?
[It can be difficult] when you have the founders talking about how great things are all the time, constantly bragging that they’re crushing it over and over and over, trying to be a B2B influencer, and then their company fails. I understand that as the CEO part of their job is to be optimistic, but there’s a point where that just crosses over into a straight up fraud and lying, in my opinion. So those people, [it ends up hurting their own] brand within the community for people that matter.
The marketing playbook of DTC brands has changed significantly. Influencer marketing is more important so it’s easy to see why the founder-influencer would be appealing, at least for efficiency. Do you think DTC brands need to go the founder-influencer route to be successful?
It’s increasingly common, but there have been lots of DTC brands that are successful that clearly don’t need to [founder to become influencers]. It’s like, yeah, you have stuff to sell. Or you’re trying to leverage [your own personal brand] because this might not work out. Or things clearly aren’t as good as they need to be because if they were, you wouldn’t be spending your time [posting content]. I don’t believe the altruistic, ‘Oh, I’m just here to share my learnings.’ You’re trying to sell something.
When is it beneficial for there to be a founder-influencer?
There are categories like beauty and health and wellness where it can help the brand. [When] there’s a real business case to be made [that someone has authority and is using that to help build the brand] there’s some validity to it for certain companies. I get it. But it is still odd to see where [the founder-influencers focus their] time.
How so?
Well, I think it kind of snowballs their ego in my experience, where they get that dopamine hit of seeing themself [in marketing and on social media getting] likes, comments, shares. They go on podcasts, their ultimate goal is to be on Shark Tank. If it helps the brand, sure. If it doesn’t work, I don’t want [them] to keep doing it. But ultimately, they’re the decision maker and they’re going to do what they want.
Given how difficult the DTC space has been, it seems like maybe being an influencer as well as a founder can almost be a backup plan.
I think that’s part of it. It’s totally valid like, ‘Hey, if this doesn’t work out, I have this to fall back on. I don’t know what I’m going to do, but I’m going to have way more options if I’m a celebrity.’
So, ultimately, if being a founder-influencer isn’t helping the brand, but they’re still focused on building their own personal brand regardless, that can be tricky to navigate.
[It can be] when the founder, co-founder, CMO or whatever is trying to be and or is the B2B influencer. The thing about being an investor is you get investor updates. So you see when the company’s doing well or not well. When it’s not doing well privately in an investor update, and then publicly [the founder-influencer is] talking about how great it is and living some influencer life, it’s incredibly frustrating. You’re like, get back to work, you have this problem, go fix it and especially don’t lie about it. That is annoying. Then the investors that are in the same group chat, they all text each other and they’re all like, ‘Hey, are you seeing this shit?’ And they get really frustrated.
A different private and public narrative is obviously one issue. Are there others?
Part of it’s just the frequency. If you’re spending a lot of time creating content, that’s time you’re not spending doing something else. That’s the tradeoff. If an employee that tweeted about marketing all day, I’d be like, ‘Hey, you should actually do some marketing. That’s your job.’ And that opportunity cost, and just being mindful of it is what’s frustrating.
Does that hurt the founder-influencer in the long run in getting other investments if the company doesn’t work out?
I know matter of factly that people will not invest in those people again. They’ve written them off. They played the short-term game, and they will lose in the long run. Every other investor I’ve ever talked to says it’s OK that businesses fail. It’s going to happen. It’s part of the game. All of them tolerate it, they get it. That said, on this topic, when I’m talking to them, what inevitably comes up is, well, they failed because [they were focused too much on their own personal brand], and they did it in this way, and I don’t want to invest in that type of person who has that type of blind spot.
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