G’Day Sellouts,

What happens when a brand boldly tackles taboo topics?

This week, we dive into one that’s mastered the art—and profited big time.

Read on to learn how.

Most exciting, starting today, I'll be sharing quick summaries of must-know changes in the landscape before our main story.

If I missed something, or you want to know more about what one of these topics means for you, tell me at [email protected]

Main Story: How Hims & Hers Split For Billions

A few years ago, I watched a fascinating case study unfold in the DTC healthcare space.

A company called Hims had built a billion-dollar brand targeting men's health – and then launched a completely separate brand for similar services.

Why go through the trouble? Well, they needed a wider audience to continue to scale.

That meant similar services catering to women and girls. They had three choices:

1. Expand to other demographics under Hims, leveraging but watering down the main brand

2. Change their billion-dollar brand to something wider and inclusive, like Theirs, gambling their existing business on a new customer segment

3. Invest in a new sibling brand and use Hims to bootstrap its growth.

This is the perfect case study on how to expand a powerful DTC brand without destroying it.

The Power of Distinct Branding

In 2017, Hims was created for men to talk about traditionally stigmatized health issues like hair loss and Erectile Dysfunction (ED). Their marketing was cheeky, approachable, and distinctly masculine.

This kind of micro-targeting should be the goal of any DTC startup brand: find a gap where big brands fail to meet the customer.

Big healthcare providers often don't do men-targeted marketing to build trust.

Hims filled this trust gap and grew rapidly through telehealth services.

Then they faced the perennial problem of scaling in DTC: what do you do to expand audiences when your entire brand is laser-focused?

Hims chose to create a fully separate brand dedicated to women’s needs just before the biggest opportunity in telehealth history: COVID-19.

The Burden of a Hot Market

Offering telehealth services during the COVID-19 pandemic gave telemedicine rocket fuel, but that came with severe risks for players like Hims.

Big providers including CVS entered this market and crushed DTC telehealth providers just as the pandemic cleared, reducing demand.

Providers like Teledoc (TDOC). GoodRX (GDRX), and Amwell (AMWL) have all seen significant market cap drops from their COVID-19 peaks.

As of last Wednesday, HIMS has grown its market cap over 32% since its peak in the same period.

That doesn’t mean it’s smooth sailing, though. In the latter half of last week, Amazon launched a direct rival and the entire health sector took a tumble.

These setbacks would be a significant blow to a smaller brand with a lower customer base.

Hims is hanging in for the fight. What set them apart from telehealth competitors?

One of the smartest moves they made was creating Hers.

A Masterclass in Adaptation

While men needed to be convinced it was okay to care about their health, women faced the opposite challenge. Hilary Coles, one of Hers' co-founders, explained, "Men have been told for years that it's weird to want to take care of yourself. As women... we've been inundated."

Early in their growth, the Hims team realized their largest scaling opportunity would be to reach out to women.

By creating separate brands, each could speak authentically to each audience separately:

Hims: Cheeky, humorous, focused on breaking taboos

Hers: Empowering, knowledgeable, focused on accessibility

Both Hims and Hers grew into brands with:

• Distinct identities

• Direct, meaningful messaging to their target audiences

• Deeper trust with customers

• No brand confusion

CEO Andrew Dudum has attributed Hims (and Hers) success to trust, which starts from a trustworthy brand and is reinforced by effective products.

Key Takeaways for Your Brand

1. Consider Your Audience Psychology

If different customer segments have fundamentally different needs or mindsets, they also need separate messaging – and probably separate brands.

2. Scale in proportion to growth

Don't launch a single brand (or many small brands) to try and capture the entire market at one time. Focus on nailing one segment before considering how to reach others.

3. Be Authentic

Sometimes it's better to create a new brand than to force-fit new offerings into an existing one that was built for a different purpose.

4. Laser Focus on Clarity

Separate brands allow for clearer, more focused marketing messages that resonate deeply with each target audience. Even if your total audience is smaller, the bigger impact can more than make up the difference.

5. Earn Trust Through Specialization

Being a specialist in one area is usually more valuable than being seen as a generalist trying to serve everyone.

Until next week,

Luke