Illustration: Aïda Amer/Axios

Brandless, the SoftBank-backed e-commerce startup that originally sold all of its products for $3, confirmed yesterday that it will shut down.

Behind the scenes: Sources say Brandless had sought a buyer, via a bank-led process, but was unable to garner any bids.

  • The company had enough cash to last the year, but its board concluded that the business model wasn't viable long-term and that the best option was to return some money to investors, pay vendors, and provide severance to the 80 or so employees who will lose their jobs.

The company announced nearly $300 million in total funding, including a $240 million Series C round in late 2018 led by SoftBank Vision Fund.

  • But Brandless never really raised that much.
  • The Series C round was tranched, with SoftBank only investing around $100 million upfront and committing to fund around another $120 million if certain milestones were met. That final tranche never came.

The big picture: This isn't really a story about SoftBank Vision Fund, beyond how it reflects the firm's belief in the supremacy of capital and structural misalignment of staff incentives. SoftBank was in the car when Brandless went off the cliff, but it didn't set the GPS.

Brandless was primarily felled by a thesis that never panned out — that there were young consumers who craved a digital middle ground between dollar stores and malls. People who were price-sensitive, cared somewhat about quality, but not about brands. Walmart for hipsters. Trader Joe's for millennials.

  • It's unclear if this cohort really exists. Brands do matter to people. And, when they don't, there's no particular reason to pick Brandless over the top/cheapest choice on Google or Amazon.
  • Brandless also suffered from a lack of focus and quality, offering everything from spatulas to pet food to candy, to blenders. Doing everything, but none of it particularly well.

There should be no gloating here, even among those who were waiting for a SoftBank Vision Fund portfolio company to outright fail. Lots of people are out of work, other investors lost money, and countless hours of work will go without reward.

Instead, let it serve as a reminder that core ideas and execution remain paramount for startups. Fundraising, no matter how big the numbers, are just an enabling tool.

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