'Fake it till you make it' - the fastest way to validate your brand
You are not a product of your potential, but of your environment
“This business has so much potential.”
– said every startup founder since the discovery of fire.
In reality, if over 90% of startups fail, you'd be a smarter gambler saying, "This business is probably going to die." At least then, you’d be right more often. But hey, that’s no fun, and what investor wants to write a check to someone with that kind of attitude?
While potential and success are defined differently in many cases, one thing’s clear to me: great products and great businesses are almost agnostic of each other in the early days.
Does building a great product improve your customer’s experience? Probably. But founders chasing “greatness” in product aren’t necessarily any more immune to the hamster wheel of marketing engines or the brutal grind of trying to build a successful business in the landscape of e-commerce. So what’s the best way to play the game?
You’re a victim from the beginning
When you start your brand-building journey and you've sold your investors on the product (or better yet, bootstrapped it yourself), you’ll quickly be staring down a few options to fund growth. At some point, marketing will top that priority list, whether it’s PPC or Amazon. B2B and wholesale might be a close second. And some form of outbound awareness, like influencer seeding will probably sneak in too.
Whichever path you choose, you’re at the mercy of that ecosystem.
If it’s B2B, get ready for harsh payment terms, tough MOQs, and risky cash flow until your units are sold. If it’s marketing, you’re a victim of the auction and the algorithm. Meta and Google - prime examples, will largely control who sees your product, what you pay per click, your CPMs, and how scalable your brand can be. You’re shoved into a category with hundreds of other brands, flushed out to hopeful shoppers, and given very little visibility into who’s engaging outside the usual demographic details.
But here’s the challenge: every brand in your auction has completely different unit economics, price points, USPs, and buying cycles.
So if I’m selling a $20 t-shirt, but I’m bidding against brands selling $5 tees and $100 ones, my auction gets broad, competitive, and expensive. A $2 CPC and $50 CPM might make sense for a premium brand with high AOV and cash to burn - but not for mine. Even if my product is better quality and delivers a better experience, Meta doesn’t know how to translate product quality or customer experience, it’s relying on your creative to do that. But naturally, everyone’s communicating that same message.
And then, when the dust settles, you might realize you need to find an ecosystem that actually works with your unit economics.
The bigger question now is this: how will that change with AI - and are incubators or fake products a smarter way to gauge which products play ball best, assuming all else is held constant? Wait, is that even legal?
The Fake Incubator Method
A product-focused incubator is a group that deploys small amounts of capital and resources to test and validate potential product ideas before scaling, often by launching multiple experiments to see what gains traction - ChatGPT
Now, while any family office or VC could just park their money in the public markets and probably outperform their D2C investments, human behavior means we’re always searching for the ‘new new thing’ to quote Michael Lewis. So the birth of incubators became one of the lower-risk, high-validation methods to test whether a product has real product-market fit - by deploying the smallest amount of capital possible to launch an MVP (Minimum Viable Product). With those early results, you get a solid read on whether the product (and everything supporting it, such as the site, funnel, design, audience) can work online, based largely on your cost to acquire a customer.
But here’s where things get interesting.
Pre-AI, you still had to design, develop, and manufacture a small batch of product to verify it was real. Even done scrappily, it took time, money, and energy. But depending on how this sits with your moral compass, that’s all about to change.
Today, founders or investors with a handful of ideas can launch what appears to be a brand and a product, in a matter of days. AI tools give you just enough to build a complete D2C experience minus the physical product. So what happens if we have a few ideas for brands we think might be good businesses? Well, we could do the slow, and capital intense way, or launch five fake products, each with its own name, branding, and website.
Every touchpoint in the customer journey would be AI-generated: the product images, the UGC reviews, the copy and the landing page. We refund every order that comes through the door in Shopify, and at the end of our test for each brand, voilà we have a winner - a product that fits and validates our theory. Imagine a world where we could do this en masse, with dozens of product concepts at the same time. Who would know the difference? Suddenly we’ve gone from a time and capital intense process that takes months, to maybe just a few days.
It’s a murky outlook with a silver lining
As it stands, I won’t be the first to say the future for D2C brands looks uncertain, at least for 2025. On one side, you have every tool imaginable to streamline workflows, eliminate human error (and arguably the humans themselves), and accelerate growth, all thanks to technology. Yet in the same lane, merging like an 18-wheeler on ice, you’ve got rising tariffs, a shaky economic backdrop, and a dip in consumer sentiment, giving us 2022 flashbacks all over again. So what can we expect?
In a previous article, I wrote that it's never been easier to build a business—but never harder to build a profitable one. That was several months ago, and since then, I feel that take has only become more true. AI has handed founders, and, arguably, investors the ability to launch brands (or at least things that look like brands) at lightning speed with minimal resistance. And yet, ad platforms are getting more expensive to rent real estate from, digital auctions are more crowded than ever, and cost of goods is creeping up. We’re now stuck in a e-commerce hamster wheel where we’re left with very little alternatives other than social media to validate our theories.
I’d argue today’s D2C ecosystem is a great example of a modern day monopoly. Amazon is 50% of all online sales in the US last year, Facebook and Google still dominate, and any threat to that roster is either acquired at a premium or squashed under a new policy. The exciting part, maybe even the silver lining, is that monopolies eventually stir conflict in governance.
When survival is on the line, founders are forced to look elsewhere, to build alternatives. And historically, we do just that. So in that light, I think the next year will bring a wave of alternative spaces and emerging platforms that D2C founders will start exploring to reach new audiences.