Podcasts   //   February 27, 2020

Hatch founder Ariane Goldman on the inevitability (and the dangers) of the DTC funding spree

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The direct-to-consumer model didn’t exist when Ariane Goldman started her first clothing brand in the mid-2000s. But by the time her second company, Hatch, launched in 2011, “the only way to really start the business was DTC,” Goldman said on the Modern Retail Podcast.

Hatch makes clothes to be worn at all stages of pregnancy — and before and after too — sold both online at stores in New York and Los Angeles.

“The genesis was really what didn’t exist out there. I was pregnant with my first daughter and looking for something to make me feel better,” Goldman said. “Why wasn’t it there? If I needed it, there must be millions of other women that need it too.”

The company landed $5 million in Series A funding last year, but Goldman is wary of the inordinate amounts of cash being stuffed into the DTC market.

“Why are these great ideas all of a sudden being beaten up by inflation and numbers and greed?” she asked. “Sometimes I find myself wondering what it’s all worth if you’re not actually building something.”

Goldman talked about the advantages (and inevitability) of going DTC, what she learned from her first clothing brand and Hatch’s expansion into beauty products.

Here are a few highlights from the conversation that have been lightly edited for clarity.

Is the DTC landscape the new dot com bubble?
“I think it’s definitely fair to compare the two. They’re very different, but in terms of these big blowouts and these gigantic valuations going to nothing, it’s just devastating. So that’s very similar. What happens to those brands? What happens when that balloon pops? Why are these great ideas all of a sudden being beaten up by inflation and numbers and greed? Sometimes I find myself wondering what it’s all worth if you’re not actually building something. When you put numbers and dollars behind it and you’re just stepping on that gas, it feels like you’ve taken your eye off what really matters.”

Press coverage is still critical
“The [New York Times’] Style section wrote a piece on the brand and the fact that I was actually doing something out of the box. And even though the Times doesn’t necessarily drive conversion, it drove some sort of spark that started to connect the brand and the universe. And from then on transactions slowly and surely started to come through. One thing leads to the next, and I was having a chance to tell my story. What also really helped at the beginning was organic social love for the brand and product placements. It’s easy to be the coolest kid on the block when there’s nobody else on the block, and there really aren’t a lot of players in this space. Celebrities and their stylists very quickly gravitated towards Hatch.”

Going direct-to-consumer gives you brand control
“I just don’t trust the middleman, or the middlewoman, so to speak. When you’re bringing a brand to life, customer connection is number one. To put that control in the hands of turnover of staff in a department store just didn’t make me feel like anyone was going to be able to tell the Hatch story, and really complete the experience and that hand-holding that does allow women to spend more and feel better because somebody’s telling them ‘this might look good on you in a couple of months when your body changes.’ I had had a retail experience with Twobirds, my first line, where I wholesaled to a very big box retailer. And I got an amazing, big order, and it was the greatest day of my life. Then when they wanted to RTV (which is return to vendor), it was the worst day of the brand’s history so far. I had that experience and learned from it. In starting Hatch, that wisdom allowed me to make my own game, and wholesale was not part of the original equation. The irony is now, as the business is offering more and these different channels are really important, wholesale is coming back a little bit. And it’s cool, because it’s on my terms, and now I know how to play it. These wholesalers are now smarter than ever and being partners, where they don’t have all the power.”