Alex Fenkell, co-founder of SmileDirectClub Inc., left, listens while Kyle Wailes, chief financial ... [+]
On the first day of trading for the SmileDirectClub IPO, the performance was downright awful, with the shares plunging about 28%. But things were much better the next day. The stock rose about 12%. Despite all the volatility, SmileDirectClub was still able to raise a hefty $1.35 billion.
Founded in 2014, the company has certainly been on the fast track as it has aggressively disrupted the traditional orthodontic market. According to the S-1:
“Our member journey starts with two convenient options: a member books an appointment to take a free, in-person 3D oral image at any of our over 300 SmileShops across the U.S., Puerto Rico, Canada, Australia, and the U.K., or orders an easy-to-use doctor prescribed impression kit online, which we mail directly to their door. Using the image or impression, we create a draft custom treatment plan that demonstrates how the member's teeth will move during treatment. Next, via SmileCheck, a state licensed doctor within our network reviews and approves the member's clinical information and treatment plan. If the member is a good candidate for clear aligners, the treating doctor then prescribes custom-made clear aligners, the member has the opportunity to review a 3D rendering of how their teeth will move over time and, if the member decides to purchase, we then manufacture and ship the aligners directly to the member. SmileCheck is also used by the treating doctor to monitor the member's progress and enables seamless communication with the member over the course of treatment. Upon completion of treatment, a majority of our members purchase retainers every six months to prevent their teeth from relapsing to their original position. We also offer a growing suite of ancillary oral care products, such as whitening kits, to maintain a perfect smile.”
Because of this innovative model, the company is able to charge $1,895 for its services and high-quality clear aligners, versus the $5,000 to $8,000 that a dentist may charge. The SmileDirectClub also provides affordable payment plans and has insurance arrangements with United Healthcare and Aetna.
In light of all this, it should be no surprise that the company has been growing at a torrid pace. Note that last year SmileDirectClub posted revenues of $423.2 million, up a sizzling 190%.
So then what are some of the lessons for entrepreneurs? Let’s take a look:
Phil Strazzulla, the founder of SelectSoftware:
SmileDirect was able to decrease pricing due to a new supply chain and direct-to-consumer strategy that piggy backed off a nascent and underdeveloped Instagram ad ecosystem. This led to cheap and scalable customer acquisition. They were also able to expand the market due to their cheaper pricing and direct-to-consumer marketing that allowed for customer segments that weren't historically thinking about this type of product.
Gretchen Halpin, the co-founder of Beyond AUM:
They have removed all friction points from the process, such as:
Braces are expensive - AFFORDABILITY
Appointments are hard to schedule - EASY DELIVERY
Vanity on how braces look - INVISIBLE
Quality and results - TECHNOLOGY
Point of purchase ease: ONLINE AND STORES
Price and finances - AFFORDABLE AND MONTHLY PAYMENTS
Jim Berryhill, the CEO and co-founder of DecisionLink:
When you believe there is a huge unmet need in the market and you figure out a solution for addressing that need, you ideally surround yourselves with others who believe and understand why that gap exists, how your solution can make a big difference in the lives of your target customers and then figure out the best way to deliver that solution to them. It sounds pretty straightforward, but it takes a lot of energy, determination and persistence to make it happen. You also need to get lots of great people to help you get from the idea to the actual solution and then sell the heck out of it!
Becky Beach, the owner of MomBeach.com:
We live in a "delivery culture" where everyone enjoys food, videos, clothes, and more goods being delivered to our homes. I used InvisAlign through my dentist about 4 years ago and it cost $4,000. I had to schedule several trips to the dentist, which caused me to miss lots of work when I had a full-time job. With the SmileDirectClub, you don't need to go to the dentist every two to three weeks for a new tray anymore. The trays are sent to your door, instead.
There are plenty more openings in the market for future offerings that an entrepreneur could discover. Think of what problems exist in the market for consumers and how you could solve them.
Tom (@ttaulli) is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction.
