Built the first mainstream direct-to-consumer teeth straightening brand. Grew revenue from $146M to nearly $750M in two years. Partnered with CVS and Walgreens to reach 70% of Americans within three miles.
What Changed
Align Technology copied the model then sued when forced out. Product quality issues surfaced — customers lost teeth, signed NDAs to get refunds. The business relied on 17% subprime lending to customers who stopped paying when the economy tightened post-COVID.
Where it Landed
Chapter 7 bankruptcy. $900M in liabilities. 10,000 customers abandoned mid-treatment. Financing arm kept billing people after shutdown until NY Attorney General intervened. Assets sold to Smile Set.
The Principles
1.
Financing your own customers creates fake growth. When you loan money at 17% to subprime borrowers, revenue looks great until they stop paying.
2.
Product quality isn't optional in healthcare. 1,200 BBB complaints and 17,000 NDAs to silence unhappy customers signals the core product doesn't work.
3.
Dual-class shares protect founders, not investors. The Catsman family controlled 66% of votes — $1.35B in public money had zero say as the company collapsed.
Builder's Takeaway
If you're building on consumer credit, watch for:
•
Revenue that only exists because you're financing it yourself
•
Regulatory capture by incumbents using state licensing boards as weapons
•
Dual-class structures that let families spend your money without accountability
