The Upsides—And Downsides—of ‘Over-the-Top’ Digital Disruption

How Dollar Shave Club and Elon Musk Perfected the D2C Model for Building Brands, Until it All Came Crashing Down

Dollar Shave Club’s ‘Over-the-Top’ Ad Launched the D2C Movement

I walked into my B-school class one day in 2012 to find my friends huddled around a laptop, snickering. “You’ve gotta check out this video,” one of them said, waving me over to watch a YouTube clip.

“I’m Mike, founder of DollarShaveClub.com,” the video began. “What is DollarShaveClub.com? For a dollar a month, we send high-quality razors right to your door. Yeah, a dollar! Are the blades any good? No. Our blades are f**king great.”

The irreverent ad went on to mock a market-leading razor blade brand (read: Gillette) for its over-engineered technology and bloated prices that paid for Roger Federer’s endorsement rather than a superior shave.

It might be the most brilliant and cost-effective marketing campaign ever done. For $4,500 in production costs, the ad has garnered 28 million views on YouTube to date.

It used “over-the-top” language to break through, going “over-the-top” of traditional distribution channels—TV ads and brick-and-mortar retail—to sell direct-to-consumer and disrupt the most powerful CPG brand advertiser in the process.

This was ground zero for the eventual rise of the D2C movement: the ad that would launch a thousand B-school product epiphanies.

The Dollar Shave Club example is over-the-top digital disruption at its finest. And to date, I don’t think I’ve seen anything else come close. The company used its viral fame to grab a foothold in the Gillette-dominated razor blade market and carve out enough market share to generate ~$200 million in revenue and get acquired by Unilever for a cool $1 billion in 2016.

These are the upsides of over-the-top disruption.

Over-the-Top Disruption is the Story of Digital

Dollar Shave Club isn’t just the story of one plucky challenger brand. It’s emblematic of the primary mechanism by which most digital disruption happens.

Over-the-top disruption, the defining model of the digital era, is represented by the new media value chain that I described in detail in “The Creator Era is Here: Feb. 11, 2024 – Current”.

Digital’s low barriers to entry have enabled a D2C model that’s upended the businesses of traditional gatekeepers and middlemen. The conversation of course begins with “over-the-top” streaming services, and their disruption of linear TV broadcasters. Digital news and media brands obviated the need for printing presses and physical distribution. And D2C brands like Dollar Shave Club bypassed traditional retail. This model even explains how digital-era politicians like Barack Obama and Donald Trump (speaking of “over-the-top”) surmounted their respective party establishments, going D2C to win voters.

Over-the-top disruption begins with identifying and serving an unmet customer need. Dollar Shave Club put its finger on the pulse of what many consumers had already intuited—that spending $20 on a package of razor blades was ridiculous. DSC figured out a way to deliver most of the product value while cutting out most of the costs in the existing value chain, including TV and traditional retail, to pass that value onto the customer. The key to executing this strategy effectively was distinctive branding, from its over-the-top commercial to its bright orange color palette.

When executed well, over-the-top digital disruption enables a brand to break through, sell direct-to-consumer, and own the relationship with their customer. The downside is that this method is hard to scale, as evidenced by an ecommerce landscape now littered with the rotting carcasses of once-hot D2C brands.

In fact, it’s now the established brands like Nike and Lululemon driving faster ecommerce sales growth than digitally native brands, per EMARKETER data.

Tesla is the Ultimate D2C Brand, and Musk the Ultimate Over-the-Top Disruptor

Perhaps the best—and certainly most consequential—example of executing the D2C playbook is Tesla. In the most “old model” of all industries, auto manufacturers had always been heavily reliant on traditional gatekeepers like TV advertising and car dealerships.

Tesla and Elon Musk were unafraid to defy convention, famously eschewing advertising in favor of earned media and building their own showrooms to bypass traditional dealerships.

As the most valuable car company today, the strategy has unquestionably worked. And it worked because Tesla had distinctive branding while addressing an unmet customer need for high-performance, environmentally-friendly vehicles that signaled status.

It also worked because of Elon Musk’s unparalleled ability to garner attention, primarily by playing cheeky provocateur on his favorite social media channel, Twitter. Musk became a master of vertical integration, completely collapsing the value chain. He went D2C to his followers (and ultimately, customers) to drive interest and demand in the most disruptive auto brand in more than a century, becoming the world’s richest man in the process.

Those were the upsides of Tesla’s and Musk’s over-the-top disruption.

Then Musk Went Really “Over-the-Top”

There’s a fine line between genius and insanity, and it’s hard to argue against the genius that Musk exhibited on his and Tesla’s rise to the top.

But it now seems he’s crossed over to what looks more like the “insanity” side of the ledger. Maybe becoming the world’s richest man corrupted his thinking. Maybe it was being surrounded by too many sycophants who failed to check his worst impulses. Maybe it was his obvious addiction to social media.

Whatever the cause, Musk is now encountering the downsides of over-the-top disruption.

It’s because he took the D2C playbook he had so successfully co-opted and—rather than calibrate it to forge a more durable brand—decided to put it on steroids instead.

It wasn’t enough to be provocative—he had to go “over-the-top” with his rhetoric. It wasn’t enough to have toadies in the board room—he had to court legions of them on social media. It wasn’t enough to fire off the occasional tweet—he had to go out and buy the company.

Musk has made Twitter (now X) irrevocably worse through a series of bad, ego-driven decisions. He killed a strong, distinctive, and approachable brand in favor of a sterile, monosyllabic one. He told advertisers—the ones who contribute the majority of Twitter’s revenue—to go fuck themselves. His flurry of ill-advised product decisions amplified the voices of racists and antisemites, alienating large segments of users along the way.

His impact on Twitter’s usage is clear, and it isn’t pretty. According to data from GWS Magnify, Twitter US app usage hit a peak in November 2022—the month Musk officially took over the company—and it has been trending downward ever since. Monthly active users and daily active users both reached lows in March 2024 that the platform hasn’t seen in 3 or 4 years, when usage was still on its way up.

This comports with other recently reported data from Sensor Tower which similarly identified November 2022 as the high-water mark before hitting the skids.

Musk responded to that report by sharing his internal analytics showing the opposite. But this self-serving view almost certainly doesn’t filter considerable amounts of bot traffic—which is frankly ironic for someone so critical of bot traffic prior to the acquisition.

Twitter is Unraveling—And It’s Not Because of Threads

Like Musk’s apparent descent into insanity, Twitter too is unraveling before our eyes. A social network’s rise is predicated on network effects, which foster a virtuous cycle of growth that exhibits exponential growth characteristics and becomes self-sustaining on the way up. The same effects can be just as powerful on the way down.

That’s exactly what appears to be happening to Twitter right now. The network is fraying.

Not only is Twitter seeing declines in its DAUs and MAUs, but the ratio of the two is getting worse. In November 2022, it peaked at 49.3%, per GWS Magnify. Since that time, it’s declined to 45.7% and looks to be deteriorating quickly.

One might begin to wonder if Musk rival Mark Zuckerberg is getting the better of him as unhappy Twitter users migrate to Threads. But there’s not much evidence to support that, with DAUs of Threads comparatively tiny.

Twitter’s unraveling appears to be primarily its own doing, and it may soon reach a tipping point where the deterioration of network effects begins to accelerate. We could be witnessing the beginning of the end of Twitter and its eventual relegation to the dustbin of history alongside MySpace and Friendster.

The Downsides of Over-The-Top Digital Disruption

Twitter and Elon Musk are now experiencing the painful downsides of over-the-top digital disruption. It could all have been avoided, of course, by evolving beyond the over-the-top strategy.

What all D2C brands must learn is that what got them from Point A to Point B won’t get them from Point B to Point C. At some point, brands must mature if they want to endure.

Unilever learned this lesson the hard way with Dollar Shave Club, eventually selling its majority stake to private equity in October 2023 for an undisclosed sum after admitting the brand failed to meet expectations. The over-the-top strategy worked well enough to grow the brand to a few hundred million in sales, but a brand predicated on being cheap lost its edge once it had to rely on traditional media and retail distribution to grow. Despite the brand’s attempts to mature, it found there was nowhere for it to go.

Rather than cultivate his brands for long-term growth, Musk instead doubled down on the over-the-top strategy. This of course only accelerated Twitter’s and Tesla’s descent.

Musk may finally be coming to this realization, albeit too late. He went on an apology tour in Israel, chastened by the backlash to his antisemitic provocations. His Twitter controversies have metastasized and may be contributing to Tesla’s recent struggles, with alienated users refusing to buy Teslas.

To bolster demand, Musk has even resorted to paid advertising on major media channels—including on Meta!—according to data from Pathmatics. The ad spend remains a pittance compared to other auto brands but nevertheless represents a departure from his previous ideology.

These are the acts of an increasingly desperate man trying to undo severe damage to his brands.

Musk had reached the pinnacle of business. But for him, it wasn’t enough. He couldn’t help but peer over the ledge to see what was waiting for him on the other side of over-the-top disruption. And he’s dragged two of the most consequential companies in the modern era down with him.

Over-the-top disruption is an incredible mechanism by which the brands that break the mold can break through—with a select few even able to break the system.

But those that fail to calibrate their over-the-top strategy only end up breaking themselves in the end.