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The Rise of the Political Corporation
Jeremy's Razors shows a formula for success
Identity is still the biggest theme of the 2020 decade.
One part of my prediction last year was that we’d see more companies taking firm political stances to align with customers. Jeremy’s Razors launched last week, a conservative razor brand that stands in specific opposition to Harry’s. Their website URL is ihateharrys.com. In less than a week, Jeremy’s sold 25k shaving kits and has 3x the number of Twitter followers as Harry’s.
The demand from conservative customers for brands that align with their values is real.
Watching Jeremy’s successful launch revealed two things about the political corporation idea: A formula for what works and insights on how to think about investment.
The Formula for a Political Corporation
Jeremy’s Razors leveraged three core ingredients to launch a strong politically aligned product:
A specific enemy
Celebrity leverage to lend political credibility to the brand
A product with no switching costs
A Specific Enemy
A specific enemy is the most powerful ingredient for a successful political corporation launch. Politically engaged consumers want brands that fight for them, and to fight, one needs an enemy to fight against.
Political sides create natural enemies. Any company can say we fight for the right or the left, but that’s not compelling enough. Identifying a specific enemy — another company in this case — makes the fight stronger.
Jeremy’s Razors was born out of a specific grievance against Harry’s. Jeremy’s is a subsidiary of the Daily Wire, a conservative media organization that Harry’s used to advertise with. Last year, Harry’s objected to some old content and pulled its ads, claiming “misaligned values” built on “inexcusable” views shared by the Daily Wire. That started a crusade that culminated in Jeremy’s Razors.
It doesn’t hurt that the largest razor company, Gillette, also previously waded into politics with a poorly regarded ad about toxic masculinity. I won’t hide my opinion: I’ve hated Gillette since that ad came out.
That’s the point of the political consumer. Hate is a powerful motivator to action, but it’s only useful in the political corporation when there’s an alternative worth loving. Boycotts don’t last. Procotts do.
Finding corporate political enemies is getting easier and easier. Many large companies are opining on political issues, compelled by a few vocal employees and customers. If we’re intellectually honest, that compulsion only comes from progressives, not moderates or conservatives.
The opportunity to create a political corporation exists for those who want to cater to right or left, but the breadth of the opportunity seems far greater for new right-leaning companies given the corporate landscape.
Leverage Existing Celebrity
People fight. Companies do not.
I don’t think it’s possible to build a political corporation without leveraging celebrity — existing, built, or borrowed. Modern brands are built on people and personality rather than corporate marketing.
Jeremy’s Razors was built on millions of Daily Wire followers, allowing it to scale quickly. Black Rifle Coffee didn’t start with celebrity, but they’ve built it alongside their brand. Expect other conservative brands to be built in partnership with other influencers in the space.
Mr. Beast’s burger concept was launched through a partnership with Virtual Dining Concepts (VDC). Mr. Beast brought the brand, and VDC brought the infrastructure and restaurant partners. That same model could work well to create other political corporations, provided the infrastructure layer shares the same values as the creators.
No Switching Costs
Businesses that rely on brand as their core moat are most exposed to a political competitor.
Razor businesses are built on marketing, not unique function, or network advantages. One razor works about the same as another. Anyone can add more blades to a cartridge. Other than getting a new handle that holds those blades, there’s minimal cost for customers to switch.
This means brand-reliant products like household CPG, financial services, and insurance are most exposed to disruption by a political corporation.
Unfortunately for conservatives, tech and social media companies are insulated by high switching costs.
There are significant problems with Twitter’s policing of speech. Elon even seems to be interested in doing something about it.
I very much welcome an alternative, but Truth Social as it’s currently envisioned isn’t the answer. Social platforms are built on network density and scale that results in interesting conversations and content. The scope and scale of content created by the network demands attention from users and creators in a virtuous cycle. Recreating Twitter but with freer speech policies isn’t enough to incentivize a significant enough part of the network to shift to Truth, and that means the scale of interesting content will never manifest.
For conservatively leaning tech products to succeed, particularly in social media, they can’t just be a strict recreation of something that exists only to be marketed to a political audience. The best products will be built on a unique understanding of customer problems and shaped by values that align, rather than starting with values then forming product.
If we get a free speech social network, it needs to reimagine social media built on an understanding of consumer attention first. That’s what allowed TikTok to break out against Facebook and Instagram.
Investing in Political Corporations
Political corporation startups present interesting problems to solve as an investor thinking about returns. Some political corporations, particularly those that solve tech problems, can follow a traditional venture path. Those companies may transcend the political initiation of the product to broader market adoption and deliver on the scale needed to generate acceptable venture returns.
Many political corporations may not make sense as venture-style investments given more limited exit paths and potentially different underlying unit economics from a passionate but limited customer base. The unique characteristics of a political corporation could warrant new financing or studio concepts that support the creation of these businesses with different return models.
By their very nature, political corporations limit potential acquirers. A political corporation serves as a specific antithesis to existing competitors. Those competitors are often the most natural acquirers of related brands; however, a company that leans in a certain political direction would have a hard time acquiring a brand that stands in opposition.
This means that political corporations may need to go to the public markets for liquidity.
The public markets have proven to be a friendly place for conservative companies so far. Black Rifle Coffee is one of the few completed SPACs of the past year that trades above deal price. Digital World Acquisition (DWAC), which will take Trump Media and Technology Group public (Truth Social), trades at more than 7x trust value prior to the completion of the SPAC merger. That implies a $15 billion value for TMTG. TMTG doesn’t expect to generate any revenue this year.
Political loyalties extend to equity ownership, too.
Some political corporations may make more sense to operate as private businesses run to reward owners with profit rather than exit through selling equity.
The point of a political corporation should be to enable more efficient customer acquisition and stronger customer loyalty. If political corporations can drive significantly lower cost of customer acquisition, they should be able to generate stronger profitability characteristics compared to many growth focused D2C offerings.
Some political corporations may make more sense as significant “lifestyle” brands rather than traditional venture backed D2C offerings like Harry’s or Hims.
In some ways, a business focusing on profit rather than growth at all costs is a throwback to traditional business building. Old fashioned cash flow generation may suit conservative political corporations practically and philosophically.
Crowd financing or conservative-focused funds could help match aligned investors in the private markets willing to accept more limited exit potential or a focus on capital return through cash flow.
Is the Political Corporation a Good Thing?
If major corporations feel they must take political positions, then there must be alternatives that represent different ideals. Democracy depends on free discussion and exploration of ideas, but there can be no free discussion or exploration if only one side is represented by corporations that have money, power, and influence. There can be no democracy without political corporations.