Entrepreneurs often face challenges. It's a way to avoid having your ideas and business models quickly copied by established companies. To explore this issue, I would like to share an example of Him.
Founded in 2017, Hims is a direct-to-customer (DTC) healthcare company that provides 24/7 online physician consultation and drug delivery services. Hims started with the treatment of hair loss and sexual dysfunction in men and has now expanded to include cardiovascular health, mental health, and weight management. In 2021, Hims was listed on the New York Stock Exchange. It had been less than five years since the company was established.
Earlier this year, Eli Lilly and Novo Nordisk launched a weight loss injection, but demand was so high that it quickly ran out of stock. Seizing this opportunity, in May, Hims launched a compounded product called GLP-1, which was sold at only 15 to 20% of the price of major brands, and there was a rapid rush to buy it. To address shortages, U.S. regulations allow manufacturers to produce drugs under certain conditions to replenish the market.
This brings me back to my opening question. How should Hims stabilize itself in a highly competitive market and even challenge traditional pharmaceutical companies?The company's success can be attributed at various stages to three strategies: first-mover advantage, branding, and reverse positioning. This is probably due to flexible usage.
First mover advantage: Seize the opportunity to enter the market quickly
With limited resources, startups must quickly achieve product-market fit and acquire their first customers at an early stage. Hims' founding of the company coincided with the liberalization of e-health regulations in the United States, allowing doctors to consult online and write certain types of prescriptions. At the same time, patents on several drugs for sexual dysfunction and hair loss have expired, allowing other companies in the industry to introduce lower-cost alternatives.
Hims took advantage of these opportunities and rapidly expanded into areas typically ignored by the traditional medical industry. Sensitive issues such as sexual dysfunction and hair loss are particularly suited to telemedicine services. This allows doctors to avoid the potential embarrassment of face-to-face consultations and also meets consumers' privacy needs. These strategies enabled Hims to attract a large number of young customers and quickly establish a strong market base.
Branding: Strengthen your market position and build brand influence
With its successful market entry, Hims has further strengthened its brand position. From the website design to the product packaging, Hymes uses a simple, modern style with pastel colors to make cold medicine more approachable and appealing. At the same time, Hims is making what was once an embarrassing medical product more consumer-friendly by presenting it in a humorous and elegant way in its advertising (e.g., using a cactus as an analogy for sexual dysfunction). We have successfully transformed it into a gentle everyday health care product. .
Reverse positioning: overturning tradition and redefining market rules
During the expansion period, Hims used a reverse positioning strategy to redefine the rules of the market. “Reverse positioning” refers to a situation in which a start-up company offers a superior business model that is fundamentally different from that of an incumbent company, leaving the incumbent company in a dilemma. If you don't copy the new model, you could lose customers and fall behind. However, copying it can have a negative impact on your existing business.
Traditional weight management services often require tedious in-person counseling sessions, high prescription costs, and complicated insurance procedures. Hims' direct-to-consumer model of providing consultations and products over the internet is a direct challenge to traditional healthcare providers of in-person visits and insurance claims, putting strong pressure on traditional businesses. For example, Eli Lilly introduced an affordable weight loss drug vial in response to competition. However, most traditional companies maintain a conservative attitude towards new models in order to protect established models. This attitude creates more opportunities for new startups.
Gaining a foothold in the market, Hims acquired specialty drug company Nivagen Pharmaceuticals in September of this year. By incorporating some of Nivagen's products, Hims continues to strengthen its competitiveness through a variety of strategies. At the end of the day, the true winners in the marketplace are the entrepreneurs who always have the courage to challenge the status quo.
Matt Cheng is the founder and general partner of Cherubic Ventures. Matt is a Taiwanese venture investor, serial entrepreneur, company advisor, and former junior tennis player. Prior to founding Cherubic, Matt co-founded China's Tian-Ge and Taiwan's 91APP, both of which went public with market capitalizations of over $1 billion. Matt is also a corporate advisor to Wish and Atomic VC, and an early investor in Flexport, Calm, and Hims & Hers.
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