DTC Brands, Genghis Kahn, and the Mongol Army
By Kevin Simonson, CEO/Co-Founder, Metric Digital
Darren Herman from Brain Capital (who has also held senior leadership positions at a variety of private and public companies in Silicon Valley) authors an awesome newsletter called Operating Partner.
The following article was originally published in a recent issue, and we’ve been given permission to share it here as well. We highly recommend you add it to your list of subscriptions and you can click here to subscribe. Enjoy!
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The rise of DTC, specifically retail, is like the rise of Genghis Khan’s Mongol army coming out of (seemingly) nowhere to take down China, the Middle East, and Eastern Europe, showing that a fast, lean team will take down an empire, at least temporarily.
All the major successful DTC brands to date share what made the Mongol empire under Genghis so successful and their takedown of the empires of their time, the big corporations of their time.
Before we look at the similarities, DTC didn’t invent anything and the Mongols didn’t invent anything, they just took what existed and made it better and/or were better at using it.
Allbirds didn’t invent the shoe and the Mongols didn’t invent how to attack other people.
Let's look at the similarities:
- Speed: DTC brands and the Mongols figured out that speed, in everything, is the best advantage. DTC brands used the internet to reach potential consumers faster (mainly through Facebook and Instagram) better than their competitors. They figured out how to get more inventory and cut manufacturing lead times faster by going directly to the source. They figured out how to ship products faster directly from themselves (not 3rd parties). The Mongols moved more people, faster than any army ever by a long shot. They sacked more cities, faster, than anybody before them and then moved onto the next one faster than any army before them.
- Execution: DTC brands, like the Mongols, used existing technology better than their competitors. DTC brands did this with advertising on platforms that did not require a broker and had a low barrier to entry (Adwords, Facebook, Influencers, etc.). The Mongols did this by taking the technology they had seen from existing societies, a major one being gunpowder (which they took from China) and used to wage war from Japan to Hungary. The Mongols use of the horse and the bow are other examples of being the best at using a thing that already existed and was available to everybody. For example, soldiers could live off their horses by drinking a mixture of their horse's blood and milk, independently for days on end (and they did) without having to slow down (wait for supplies and/or carry it). And you thought your team was lean. The bottom line, they out-executed their competitors at the existing technology.
- Decision Making: DTC brands, like the Mongols, let people on their teams make key decisions without a ton of oversight but had accountability in their culture. This is a really big distinction that is often overlooked, but with legacy/larger brands there is usually a lot of bureaucracy, which slows down decision making and can discourage risk-taking. Genghis was one of the first military leaders that gave full decision-making power to his generals, which was unheard of in a military state at the time, and they were incredibly successful. Also, they would have gotten killed for making mistakes, not fired, so that’s a big motivator.
- Communication: DTC brands, like the Mongols, were better at communicating faster than legacy/large brands. Not only do DTC brands have smaller teams, but they also use better tools for communicating faster. Communication tools like Gchat before Slack, now Slack, Google Drive… A lot of large brands are still using outdated tools to communicate. The Mongols had the fastest horse riders to deliver communication and also had a communication system so they could change tactics in the middle of a battle quickly, which is something other forces at the time could not do.
- Lack of Ego in Leadership Roles: DTC brands, like the Mongols, took the talent from people who could help them, regardless if they were from the enemy. Good large brands do this too, but it’s worth noting that Genghis would take somebody he just fought and give them a job if they had some skill that made his army better, recognizing that his ego (in this area) was less important than building the dominating army (DTC brand) he wanted to build. You could also illustrate this point with the ego point to point out DTC brands weren’t afraid to try brick and mortar but did it in their own ways, such as Bonobos Guideshops and Popups.
- Public Relations: The last point I’ll end with regarding why DTC brands are the Mongols of large brand empires is with respect to how DTC brands waged psychological warfare, aka PR, in a new and better way to help them win. To be clear, large brands have been and still are good at PR in their own way (most recently Popeye's), but DTC brands using the things I discussed previously (speed, decision making power, technology) dominated early. The biggest example here by far is Instagram influencers, which DTC brands had the first-mover advantage on. DTC brands understand that we live in an age of outrage and capturing eyeballs and use that to their advantage over larger brands, which have more (perceived) value to lose from making mistakes.
If you’ve made it this far, thanks, but also you know that the Mongols didn’t sustain their dominance forever. What happened?
TLDR: They stopped doing the things that made them great in the first place.
I’ve worked on brands that have been acquired by much larger empires and seen this happen first hand, mainly with respect to point numbers 1 and 2, speed and executing well.
Want to talk more about DTC? Love to chat. Connect with me on Linkedin.
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