Before 2014, adult orthodontia was fairly straightforward, albeit expensive and time-consuming: you visited an orthodontist office, often several times, to be assessed, fitted, and treated over the course of six months to a few years. The process typically costs anywhere from $5,000-$10,000, which may or may not be covered by insurance.
Direct-to-consumer orthodontics company SmileDirectClub entered the scene that year. Founded by childhood friends Alex Fenkell and Jordan Katzman, the service was perfectly timed with the rise of a burgeoning D2C industry made up of companies like Dollar Shave Club and Warby Parker.
Consumers wanted convenience, they wanted home delivery, and they wanted the price benefit of cutting out the middleman.
“We looked at the traditional market of Invisalign and it was this price point that really wasn’t achievable for a lot of people,” says Fenkell. “We also looked at the convenience factor.”
“The thought was, if we could bring an affordable invisible aligner to help people straighten their teeth at a reasonable price and done from the home, there was a real opportunity to improve access to care and truly help people.”
The pair combined the D2C subscription model with a teledentistry platform that lets potential customers be evaluated and monitored by real orthodontists or dentists from all over the country. A customer orders a sub-$100 impression kit, sends it back, and is provided with a personalized treatment plan and invisible braces for care at home.
They were able to lower the price point of the entire teeth straightening process to less than $2,000.
SmileDirectClub received initial funding from Detroit’s Camelot Venture Group, an investor group that helped seed 1-800-CONTACTS and Quicken Loans, and expanded quickly. The model allowed for fast scale, with little competition in the early years.
Amidst the growth, Fenkell and Katzman felt they couldn’t reach their full potential in their hometown of Detroit. They needed technology and healthcare talent, and an affordable place that was easy to attract the large employee base they planned to build.
They found what they needed in Nashville, a healthcare hub and emerging startup city. The company employs over 4,000 employees between its downtown Nashville headquarters and manufacturing facility right outside the city.
Last month, they announced their intention to hire another 2,000 in the Tennessee capital over the next few years.
“There are great university feeder programs here from Vanderbilt and the other schools in the area,” says John Sheldon, SmileDirectClub’s CMO. “When we do have to import talent, it’s easy to import talent here. The city is growing exponentially.”
The team investment is necessary to keep up with the fast pace of business growth, says Fenkell. The five-year-old SmileDirectClub makes up 95 percent of the at-home invisible aligner market, with over half a million individuals served.
Oh, and they’ve hit unicorn valuation and then some, with their last funding round putting them at a $3.2 billion valuation. Investors include Align Technology, the owner of Invisalign, which now own almost 20 percent of the company.
Rumors abound about an IPO later this year.
A new way to smile
One of the more interesting aspects of the SmileDirectClub story is how, after disrupting the industry so thoroughly with the message of at-home care, they’ve spent the last few years investing in physical space.
SmileDirectClub currently operates more than 200 “SmileShops” across the U.S. and Canada (and soon, Australia) where customers can walk in for their teeth assessment. Some of these are in stand-alone storefronts, others in co-working spaces or pharmacies.
In the shop, employees called SmileGuides walk the potential customer through a 3-D scan, in a 30-minute process that costs nothing.
“We have seen a nexus of the business migrate to starting by talking to one of our SmileGuides,” says Sheldon. “It’s kind of unsurprising now, in retrospect, because you’re talking about a treatment that is expensive for our customer and is a pretty intimate product — you’re going to put this piece of plastic in your mouth for six-plus months — and that’s not something people take lightly.”
It’s worth noting, says Fenkell, that the physical SmileShops don’t change the overall company mission: convenience and affordability. The shops only replace that initial at-home impression kit, while the remaining steps in the at-home care process remain the same.
“It really goes back to our original mission of access to care,” he says. “Whether that means being located in your neighborhood CVS, a downtown storefront, one of our SmileBuses rolling through your cities, it’s about being where our customer is and offering whatever option is most convenient for them.”
That convenience will continue to increase with last week’s announcement of a partnership between SmileDirectClub and CVS, which will put SmileShops in hundreds of the drugstores. They are also in trials with Walgreens and Fenkell claims will double their physical footprint in these pharmacies this year.
Five SmileBuses — mobile dental clinics on wheels — patrol the country, bringing orthodontia to remote rural areas and popular events.
The affordability aspect of SmileDirectClub’s mission is also getting a lift with another partnership announcement, this time with UnitedHealthCare. For the first time, customers covered by the insurer will be able to claim SmileDirectClub’s services directly on their dental health plan, rather than having to submit for reimbursement post-treatment.
“Depending on your coverage, you could be getting invisible aligners for less than $1000,” says Fenkell.
With this continuous expansion, SmileDirectClub is well on its way to becoming (some would claim, already is) a household name. But, though they’ve found booming growth in their home of Nashville, Sheldon says they don’t get the same uptick of press or attention that companies in the larger tech hubs see.
“Whenever we see lists of unicorn companies, we’re like, wait a minute, we’re ten times bigger than all of these guys, and growing fast. We do think it may be because we’re not on the coasts,” he tells Hypepotamus.
The good news for SmileDirectClub, and their customers, is that attention from the coasts appears to not have been necessary for success.
