KC Underweight Deals: The Not So Unique Bum Cleaner

Key Stats:

Summary

This week we are delving into Bum Butt Wipes & Container due to our concerns around market position, competition, price point, and so on that give us pause as we consider the investment opportunity.

Below you will see our detailed explanation as to the red flags that have hindered this deal from being one we would suggest. And we have also provided one other useful investing tip this week down below.

Bum Butt Wipes & Container: Raising on Razitall

Bum Butt Wipes & Container is being developed by Mark Hayes, an individual who claims to have invented toilet wipes for adults that was ultimately taken by Kimberly Clark, now one of the market leaders in the category.

Business Concerns

30 years later he is back at it again trying to create an auto release container and wipe kit for adults that he would plan to sell on a subscription model. There are many concerns we have regarding this business.

• Lack of differentiation: Ultimately, there is nothing new or novel about the wipe product that is being developed outside of the container that can dispense wipes automatically. Finding a way to compete alongside the likes of Kimberly Clark, Unilever, Procter & Gamble and so on will prove challenging. Each and everyone of these brands has positioned at least a portion of their product line to adult tailored products including sophisticated packaging, scented products and new materials based on changing consumer demands in this space.
• There is also a plethora of female care wipe products that have come to market as well both amongst the large brands like P&G and from more specialized care lines such as Vagisil, Summer’s Eve, Natracare, Always and several others. The market positioning for Bum Butt Wipes just does not seem defensible enough to win in this saturated market of competitors with deep pockets.
• Price Point: A price point for a battery powered dispenser and at home delivered wipes is likely to fall outside the range of $3 to $7 based on the count of wipes purchased. Creating a higher cost product for the adult wipes market seems misaligned with consumer needs and wants. This has very much become a commoditized market and one in which paying extra likely leaves you sitting on the shelf rather than being sold
• Market positioning: There is a world where a product like this with an auto dispenser could be created by an innovative tech company like Dyson. If Dyson were designing this type of product you could imagine them creating a warmed auto dispenser for wipes that could be sold to high end hospitality venues.
• In fact, I would think there would be a market for a premium product in this category if it were tailored to venues (e.g., restaurants, hotels, casinos). Unfortunately the design is not anywhere near that grade and frankly it does not feel as though it is tailored to adults either.

Source: Razitall

I give credit to the team for valuing the company at $715K and offering over 30% equity to potential investors, which is on the low end of valuations you will see in the equity crowdfunding market. It shows that they are aware of the potentially small market opportunity this can reach.

However, this investment comes with the added challenge that the product has yet to be developed meaning that there will be an R&D investment cycle and then an additional commercialization cycle.

It is just too many barriers and challenges that will require more follow on investment to get this item to market. Ultimately, it feels more like a gimmicky consumer product, rather than the makings of a long term sustainable business.

Extra Tip:

One other note this week, Dablr is currently raising on StartEngine and has just a couple days left. Although the team is building a useful product in a hot market (the gig economy), we do not think this is the best investment opportunity in this space right now.

Dablr enables locals to offer up their services for various chores you might have around the house and set a price. They are currently in Chicago and looking to expand to NYC with their offering. The team consist of 2 high school students and they have started to see some very early traction, but are still finding their way.

To be clear, we are very bullish on the opportunity for marketplaces that enable the gig / freelance economy. It is estimated that the number of freelancers in the US will grow from 4 million participants in the US to over 9M by 2021. Thus there is still room for more competitors in this space outside the likes of Thumbtack and Upwork, two companies that have a sizeable share of the gig economy right now.

However, we think if this is a space you are considering investing in there might be another company worth checking out that we think is better positioned to win and have an outsized return over the next 5 years.

That company is Moonlighting currently raising on Republic. We will be diving into this company in the next couple of weeks. Quick items to note are the team has much more experience managing and leading high-growth tech companies, traction has been fantastic with over 600K registered users and the roadmap for growth is consistent with what we look for as we consider future valuations / acquisition opportunities with 5 to 10X returns.

My chat with Jeff Tennery, the Founder & CEO yesterday left me feeling energized and confident in their ability to execute as a truly differentiated offering in the gig economy space.

For these reasons, rather than say we underweight Dablr, we are more pressing our readers to consider another investment in the space because of the identified potential for Moonlighting.