Smile Direct Club’s Downfall

SmileDirectClub approached us in early 2020 with an offer to acquire SoftSmile. We declined.

The latest SmileDirectClub news is they filed for bankruptcy on September 29. 2023.

Bankruptcy is not the end—many stellar businesses have weathered it. However, this bankruptcy is particularly consequential for the aligner industry. It is yet another cautionary tale of Icarus, who flew too close to the sun and did not have good enough technology to support the flight. But, SDC was audacious enough to challenge the status quo.

Their valorous goal deserves recognition, but their failure also offers valuable lessons.

1. Fortune favors the brave

The founders of SDC, backed by exceptionally astute investors, have been remarkable. They disrupted the orthodontic market, directly challenging its main players, and captured a market share that was unimaginable for most dental producers.

In a single year, SDC sold more aligners than most other brands combined.

They understood consumers don't want to spend excessive time with doctors and seek out lower costs for aligner treatments.

They seized this opportunity and proved that a business solving this market demand can succeed. Perhaps they, or someone else, will eventually achieve this.

2. Price matters

SDC demonstrated that a competitive price point can drive more people to seek orthodontic treatment. Current pricing is prohibitive for most of the U.S. population, let alone less affluent markets.

Businesses offering competitive prices for aligner treatments will capture a larger piece of the cake.

3. Orthodontic treatment necessitates orthodontists 

Running a profitable business is one thing; delivering healthy, beautiful smiles is another. Treatment efficacy cannot be compromised for any reason.

In this industry, patient well-being comes first, followed by doctors, and then profits. This lesson is crucial for anyone claiming to provide patient care - do not ignore doctors, do not ignore biomechanics.

As I always say, we are at the dawn of the aligners market growth. We will see many bankruptcies, liquations, litigations, and consolidations.

SDC was the first to go to consumers.

Who knows, maybe with some refined business model and better technology, there will be more successful examples.

Regardless of the outcome, it is a fact that the market requires disruption, it needs a reliable solution and more affordable pricing because many people today need orthodontic treatment.

SDC was brave enough to give hope to the market. I am confident it is not the end. The hope is still there.