A $200M valuation, TV commercials, and billboards: A closer (critical) look at how Hims is fast-tracking the modern luxury playbook.

NEW YORK — Tech-scale growth rates and expectations seem to be the name of the game for a certain grade of modern luxury upstarts today. Look at this as both a positive and a negative.

On the one hand, it’s thrilling to see an increasing number of compelling, new brands enter the marketplace. But you should also feel somewhat worried watching a growing portion of them take on a hoard of cash — often multiple rounds — and hit sky-high valuations just based on fundraising totals alone.

Without naming names, you have to wonder if the value is real. And though we’re pulling for most of these guys — and truly view the movement as something to celebrate — you do have to ask whether investors, in getting in at current valuations, might end up disappointed at the final return.

You could look to Bonobos as a great example here. Not to denigrate Andy Dunn — he’s a respected figure here who’s set a positive example for newer DNVB entrepreneurs. But the numbers do, in fact, matter. Bonobos, now nearly eleven years old at this point, is a pioneer DNVB. Yet it still sold to Walmart for just $310M in June 2017. That might sound decent enough, but after pumping in close to $128M into the business, investors were surely expecting a higher figure there.

Most new brands today, give or take, are around five years old, and there have certainly been some fast growth winners in there. You know these names well. If you’re a Lean Luxe reader, the rapid rise of companies like Allbirds, Away, and Glossier, for instance, shouldn’t be news to you. These brands are case studies in modern luxury upstarts that’ve scaled rapidly, raised money on several occasions (increasingly so of late), and are now starting to dip a toe into the permanent retail waters.

Which brings us to Hims. Frankly, we’ve yet to see any brand arrive in last several years that’s fast-tracked the DNVB playbook in the manner Hims seems to be doing at the moment.

Like new peers Keeps and Roman, Hims specializes in men’s wellness. It’s applying a Glossier-esque, visuals-heavy branding scheme to men’s hair loss and erectile dysfunction products. Yet if you’ve never heard of the company until now, or have found yourself surprised at suddenly seeing it everywhere, it’s not that you’re not out of the loop — Hims actually launched just before Christmas. It’s since been extremely aggressive in getting in front of its core consumer in a multitude of ways, both with press and through advertising and marketing.

That it’s come out of the gates particularly strong shouldn’t be too surprising in itself. For one, it’s got the same modern luxury and DNVB pedigree that the brands above all boast: It’s backed by strong consumer-focused VCs (Forerunner among them), and its founder, Andrew Dudum, is himself a serial entrepreneur, investor, and Wharton grad. (Take note: Most prominent DNVB founders are either Stanford or Ivy League grads, whose business programs are becoming DNVB factories in their own rights.)

Second, Hims also belongs to a new class of health and wellness brands that are bringing modern luxury standards to unsexy categories like vitamins and supplements (Ritual, Care/Of, Elysium), and healthcare (Forward, Maven). As these standards progress beyond apparel and accessories, these types of categories are where the most growth will be found.

In a vacuum, nothing about the above sounds all that strange. But we’d like to point out some key details in Hims’ timeline that has us slightly worried:

• November 2017: Hims launches to the public, already with $7M seed. Kind of a large figure for a seed, but nothing (too) crazy here.
• Early March 2018: It snaps up $40M in a Series A led by Thrive Capital. That figure in itself wasn’t what made us sit up straight so much as both the timing of it (Hims has only been selling products for around four months, and these products takes several months to fully evaluate), and the valuation that came with it: The round values Hims at over $200M (more on this below).
• Late March 2018: Hims debuts a TV commercial, and takes out a billboard in Times Square. Clearly, they’re putting that money to work, and hitting up TV and billboards far earlier than anyone probably anticipated.

$200M! After just four months of business. For context, when Bonobos sold for $310M to Walmart, it was ten years old at that point. Even Warby Parker didn’t reach this valuation until after nearly three years of operation. Similarly, Glossier is valued today at around $390M, but it’s also three-and-a-half years old, and it took Soylent around two plus years to hit a valuation of $170M.

Additionally, only a handful of DNVBs (Away, Parachute, Warby) are doing TV commercials, and it’s taken them several years to commit to doing so. Meanwhile, it’s taken Hims just four months.

In Hims’ defense, the move towards TV and billboards has something to do with the rising costs of acquiring customers on Facebook and Instagram. Several brand founders have told us that the ROI on these platforms has been nearly halved from a year ago (one founder described it as having “plateaued”), and we’re seeing more brands explore alternative — and decidedly old school — routes to reaching customers: catalogue mailers, TV, subway ads, and even billboards.

Even so, no modern luxury upstart has reached this type of valuation so quickly, and by investing heavily in targeted social media campaigns, TV, and expensive billboards, CEO Andrew Dudum and team seem to be doing everything they can to ensure the company lives up that lofty number. Particularly since logic would suggest that no acquirer would pay that particular figure for it today.

The big takeaway: With this figure now weighing heavily this early in Hims’ lifecycle, it’s hard to know what the end game really is for the brand. Still, they’re making one thing crystal clear: There’s certainly a DNVB playbook at this point.

The formula is simple. You develop your brand with Gin Lane or a similar agency, you land VC cash from Forerunner Ventures or someone like them, you used that cash to invest heavily in buying customers on Instagram and Facebook, and then watch the adoring press — and revenues — roll in. This is the well-worn path that Warby and plenty others have been walking for years, so if you pump your brand full of VC capital like a fattened goose, Hims is showing that you can achieve (for better or worse) tech-level valuations in no time at all.

Of course our concern here could turn out to be unfounded when it’s all said and done. Still, you do have to wonder what the competition, Roman and Keeps, are thinking right now. Not that this is a zero sum game, but they’ve got to be sweating as they watch Hims, flush with all this VC cash, aggressively corner the market in the newly established modern men’s wellness space.