Startup Spotlight #22: 3 Ways to Scale
Today's startup recently made the leap from B2C to B2B. But why?..
Project Overview
The Desire Company aims to “educate shoppers through expert-driven content.”
This expert content is delivered through four types of videos:
• Product recommendations tailored to specific activities, such as which yoga mats are best for practice.
• How-to guides demonstrating how to use specific products, like preparing a smoothie quickly and easily with a particular blender.
• Educational classes comprising a series of videos on a single theme, such as dog training, showcasing a variety of products from the same brand.
• Brand founder stories where creators share the journey behind their products and explain why they stand out.
The overarching goal of every video is to highlight a brand’s products in real-world scenarios, leveraging the personal experience of experts.
Unlike the thousands of influencers flooding the internet with bubbly (and often b.s.) endorsements, The Desire Company emphasizes genuine expertise. Their contributors aren’t social media stars but bona fide professionals.
What sets The Desire Company apart is the quality of its experts:
• 93% hold relevant degrees, certifications, or credentials in the areas they cover.
• 95% have over five years of industry experience, with 65% boasting more than a decade.
• The expert pool is intentionally diverse, spanning ethnicities, ages, genders, communication styles, and even religious affiliations, ensuring relatable voices for various target audiences.
The Desire Company handles the entire video production process, from brainstorming ideas and scripting to selecting experts, filming, and editing. It also offers a proprietary platform to embed the videos as widgets on web pages, tracking views and customer engagement with products through online clicks and offline QR code scans.
Clients can publish these videos anywhere — on their websites, social media, ad campaigns, or even in physical retail locations. Pricing for video creation is customized based on client needs.
According to the company, their videos:
• Increase average time spent on brand websites by 62%
• Lead to 12x higher sales lift
• 25% increase in AOV
The startup collaborates with major brands like HP, Sonos, Linksys, Best Buy, and Bose. Recently, they secured additional funding, raising their valuation to $97 million, on top of $19.4 million raised in prior rounds.
What’s the Gist?
The Desire Company has made a significant shift since its last funding round in late 2023, when it raised $8.36 million. While the essence of their work remains unchanged, their business model has undergone a dramatic transformation.
Initially, The Desire Company operated as a B2C platform offering honest product reviews from experts. Their revenue depended on commissions from the sales of featured products, contingent on affiliate deals with brands. To ensure transparency, experts were given a mix of products without knowing which ones were tied to commissions, allowing them to base their reviews solely on personal preferences.
Now, the company has pivoted to a B2B model, producing the same types of expert-driven videos but funded directly by brands using their products. This shift necessitates working with experts who are willing to vouch for specific products without jeopardizing their professional reputation.
The pivot aligns with the rise of “retail marketing” — advertising placed not in traditional outlets but directly on retailer websites and in physical stores. This form of advertising targets consumers at the critical moment of purchase decision-making, encouraging last-minute changes or impulse buys.
Retail media is booming. In 2023, Amazon earned $47 billion in advertising revenue on its marketplace, a sharp increase from $12.63 billion in 2019. At Instacart, ads account for 30% of revenue, and while order volumes remain flat, advertising income continues to climb.
This rapid growth far outpaces earlier trends in search and social media advertising. While search ads took 14 years to grow from $1 billion to $30 billion and social ads took 11 years, retail media achieved this milestone in just five years.
By embracing the retail media wave, The Desire Company has positioned itself to capture a slice of this expansive and growing market.
Key Takeaways
At first glance, B2C markets might seem more appealing, offering millions of potential buyers and the promise of scaling to millions in revenue. However, reaching and converting these consumers often requires significant time, money, and resources.
In contrast, a B2B approach offers more tangible opportunities for revenue generation. Large deals with fewer clients can lead to quicker and more sustainable growth, using fewer resources. For any startup considering a pivot, exploring B2B models could unlock faster and more efficient paths to profitability.
Another intriguing avenue is retail media. This could involve producing branded content for companies to use across various channels, from their websites and social media to retail partnerships. Such content can range from straightforward advertisements to expert-driven tutorials like those created by The Desire Company, or even entertaining, shareable media.
Consider Hive3, a startup that facilitates AI-driven ad creation competitions among designers, or Catch+Release, which licenses unscripted viral videos from creators for brand use. These models illustrate the creative possibilities within retail media, and both startups have already secured significant funding.
The growing demand for retail media signals a corresponding need for diverse types of ad content. The next major innovation may come not from creating this content in-house but by building scalable platforms where others can contribute and monetize their creations. For startups eyeing this space, now is the time to act.
Company info
The Desire Company
Website: https://thedesirecompany.com/
Last funding round: Undisclosed, 29.05.2024
Total funds raised: $19.4 million over 3 rounds