SmileDirectClub: Closing the Gap with Affordability - [Business Breakdowns, EP. 22]

By Colossus

Today, we will be breaking down SmileDirectClub, the oral care company known for its affordable clear aligner treatment. SmileDirectClub was founded in 2014 as a direct-to-consumer alternative to metal braces. It has since expanded to serve over 1 million customers in both the US and abroad.   To help break down the business, host Jesse Pujji is joined by current CFO Kyle Wailes.   In this breakdown, we discuss how SmileDirectClub differentiates itself relative to metal braces and clear aligner competitors like Invisalign. We touch on the company’s DTC roots, how they have expanded TAM in the oral care market, and what growth opportunities the business plans to pursue moving forward.   I’d highly recommend pairing this episode with our previous breakdown on Invisalign. It’s fun to contrast the two business models and their respective histories. There are so many fascinating details about the clear aligner industry.   I hope you enjoy this breakdown of SmileDirectClub.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. -----   This episode is brought to you by Canalyst. Canalyst is the leading destination for public company data and analysis. If you enjoy our exploration of what makes a company tick on Business Breakdowns, Canalyst should be the foundation for your quantitative analysis. For more information, go to canalyst.com/breakdowns.   -----   Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Show Notes [00:02:38] - [First question] - What is SmileDirectClub and their current scale [00:03:56] - Their economics and revenue over the past year [00:04:59] - What SmileDirectClub is from a consumer perspective  [00:07:19] - The core insight that lead to founding the company [00:08:55] - Early bets that paid off in the long run as they scaled [00:10:00] - Differences between clear liners and traditional braces [00:11:28] - Market size and cases that need servicing annually [00:13:21] - Invisalign; Direct to consumer model and unit economics   [00:15:57] - Customer acquisition funnel and diversified marketing approach  [00:20:17] - How shops became the major form of how they provide treatment [00:24:02] - Navigating the pandemic and reflections on 2020 [00:26:25] - Lessons learned and value unlock from a monthly subscription model [00:28:44] - Thoughts on the market size today and opportunity for the future [00:29:47] - Prioritizing international sales and market penetration [00:30:39] - Lessons learned from executing in international markets [00:31:42] - Competitors in this space and their vantage points [00:33:29] - How SmileDirect competes with Invisalign [00:34:55] - Their prior history with Invisalign and being an early investor [00:35:46] - How the market may play out in the next five to ten years [00:37:07] - What SmileDirect will have to get right to win over the next decade [00:40:10] - Why metallic solutions and braces have survived this long [00:42:44] - Their biggest risks over the coming decade that may threaten their growth [00:43:42] - Navigating legal risks and challenges faced with SmileDirect’s disruptive nature [00:45:39] - Lessons for builders when studying SmileDirect’s story [00:46:31] - Lessons for investors when studying SmileDirect’s story [00:47:07] - Resources for learning more; smiledirectclub.com  

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