How Filterbuy Disrupted a $10 Billion Industry—and What Large Companies Must Learn From It
In the wake of the Los Angeles wildfires and the unprecedented air quality crisis on the U.S. East Coast in the summer of 2024—caused by massive Canadian wildfires—the public is more aware than ever of the critical role air filtration plays in everyday life. But long before air quality became a national concern, one former Goldman Sachs options trader saw an opportunity that the industry’s largest players overlooked — pleated air filters.
David Heacock, the founder of Filterbuy, left Wall Street to move back to Alabama, closer to his grandfather, and take over a family business. He then decided to pivot that business to make air filter replacements. This was and remains a hidden but massive industry dominated in the U.S. by 3M (Filtrete), Honeywell, and American Air Filter (AAF) — all billion-dollar corporations with well-established supply chains and strong retail or enterprise presence. For the most part, the replacement air filters had been a relatively low-margin business on the retail side, with higher margins on the commercial side (hotels, hospitals, commercial buildings, etc). Pleated air filters have been around for decades and had become a mature industry.
Yet, Filterbuy grew into a $250 million company in just over a decade and became the dominant online seller of replacement air filters. Heacock did this by rebuilding the entire industry business model from scratch and creating a vertically integrated player with unmatched control over quality, prices, logistics and profitability. Operating from a small town in rural Alabama, he outmaneuvered larger competitors, deploying novel direct-to-consumer sales approaches, massive inventory coverage, and a deep understanding of supply chain inefficiencies. His success echoes previous blockbuster direct—to-consumer plays like Dollar Shave Club, which grew quickly and sold to Unilever for $1 billion. But Heacox has bigger aspirations — becoming a global air quality giant. His company valuation is already well north of Dollar Shave Club’s valuation at its peak. And rather than seek to sell, Heacox is expanding in Big Box stores and hiring enterprise sales reps to canvas large commercial clients.
Filterbuy’s rise and Heacox’s drive offer critical lessons for large corporations: scale alone is no longer a competitive advantage. Companies that fail to rethink their supply chains, distribution models, and market positioning risk being overtaken by faster-moving, highly focused upstarts. Ultimately, too, Heacock transformed the filter business into a technology business. He built a bespoke technology system specifically designed for the air filter segment and continues investing heavily in internal technology. He created a highly efficient DTC operation (which continues rolling today, even as DTC has fallen out of favor) that harnessed paid media to dominate online sales.
Founder-Led Execution Creates an Adaptability Advantage
Many CEOs of Fortune 500 companies inherit complex organizations with layered management structures and entrenched decision-making processes. In contrast, Filterbuy’s founder, David Heacock, personally built the company from the ground up, executing every key function in its early years.
Unlike competitors, Heacock directly managed:
The company’s initial manufacturing process
Development of its enterprise resource planning (ERP) system
Logistics optimization and fulfillment strategy
This hands-on approach allowed Filterbuy to iterate rapidly, adjusting its strategy in response to operational challenges. While large organizations may not be able to replicate a founder-led culture at scale, they can invest in, develop and nurture a culture of ownership and execution. Companies that decentralize decision-making—giving business units and their leadership more autonomy—can often move faster than those with rigid, top-down hierarchies. It may be challenging for large companies to counter founder advantage, but assigning greater ownership and autonomy to small teams and business units can go a long way towards this goal. Equally important, building a muscle to rapidly deploy new technologies and consistently remain on the cutting edge technically are crucial for fending off upstarts.
Here’s how Filterbuy disrupted an entrenched industry with smarter technology and logistics — and what corporate leaders must take away from its success.
Finding Gold in Boring, Legacy Businesses
Heacock had long had an entrepreneurial streak that stretched back to his teenage years, selling products online and experimenting with e-commerce. While working as an options trader at Goldman Sachs, he launched several side businesses, including a dropshipping operation for office supplies, which led him to an unexpected discovery:
Air filters were a massive but fragmented market. During his venture drop-shipping office supplies, Heacock noticed that retail customers regularly repurchased air filters. However, the industry was dominated by a few brands with inefficient distribution models.
Logistics created a significant competitive opportunity. Unlike ink cartridges, which he also considered selling, air filters were too bulky to be cost-effectively shipped from overseas. This meant that a domestic DTC model could outcompete traditional retail distribution.
The industry was resistant to innovation. Incumbents like 3M and Honeywell relied on big-box retail partnerships and third-party logistics, which limited their ability to offer customized sizes, direct shipping, or competitive pricing for niche segments. Heacock saw that by owning manufacturing, logistics, and fulfillment, he could eliminate inefficiencies and create a true direct-to-consumer air filter brand.
By 2012, Heacock decided to buy a struggling industrial supply business from his family and pivot its focus to air filter manufacturing, leveraging his background in technology, finance, and marketing. He had never run a manufacturing company. By his own admission, Heacock had a steep learning curve, buying equipment to manufacture filters and learning to operate it himself before scaling the operation to generate volume and ultimately opening multiple production facilities. For example, when extremely warm weather made it impossible for FilterBuy’s existing processes to efficiently manufacture filters, Heacock found a better production process, drove to the upper Midwest to purchase a new machine, trained on the machine, and trucked it back to Alabama — in a matter of days. As an early adopter of technology, Heacock made Filterbuy a “technology-driven” company, strongly following the precept of “every great company must be a great technology company”.
Filterbuy’s success underscores a critical lesson for established companies: size does not guarantee long-term dominance and “technology-driven” competitors are fundamentally more nimble and efficient. Large organizations, with their entrenched processes and reliance on traditional supply chains, are vulnerable to focused, fast-moving competitors. These competitors can come from their existing competitive set or from startups that move faster and more effectively to leverage technology and rethink their business models. Often they will focus on carving off specific segments of legacy businesses or industries that may be unloved, poorly understood or seemingly hard to crack. Filterbuy's rise highlights key principles that corporate leaders must understand to avoid being outpaced by disruptive upstarts or “reinvigorated” competitors. Technology enables these disruptors, helps them move faster, and allows them to quickly build efficient manufacturing, distribution and sales engines that legacy companies struggle to match unless they can shake legacy mindsets and approaches to technology.
Vertical Integration as a Competitive Advantage
The U.S. air filtration industry generates over $10 billion annually, with most major players relying on outsourced manufacturing, third-party distributors, and big-box retailers like Home Depot, Lowe’s, and Walmart. This model creates structural inefficiencies, as each layer of the supply chain adds cost and complexity. Filterbuy recognized an opportunity to gain control over these variables by owning its entire value chain—from manufacturing to last-mile delivery. By vertically integrating, the company has been able to:
Reduce costs by up to 50% by eliminating third-party markups in manufacturing, distribution and logistics
Offer 300+ filter sizes, far beyond what traditional retailers can stock, to become a one-stop-shop and a sticky destination
Ship directly to consumers (DTC) in days from four national distribution facilities, avoiding retailer-driven delays and tapping into the “Amazon Prime Effect” of super-fast delivery
Large corporations often view vertical integration as an unnecessary operational burden, preferring to outsource non-core functions. However, as seen in companies like Amazon, Tesla, and Apple, internalizing key components of production and logistics can provide long-term cost advantages in manufacturing and logistics. It can also improve quality control and increase product agility to meet market needs. Filterbuy proves again that vertical integration is not just for technology firms—it can work even in boring components of traditional industries.
Exploiting Logistical Inefficiencies to Find a Competitive Edge
At first glance, air filters seem like a commodity business. But Filterbuy identified a structural weakness in the industry: filters are bulky, expensive to ship, and difficult for retailers to stock in wide varieties. This meant that competitors were struggling to optimize fulfillment costs, making it nearly impossible to profitably ship a single filter to consumers. Filterbuy built its initial business model around solving this inefficiency. Placing four U.S. distribution centers in strategic locations reduced shipping costs and cut delivery times to under two days for most customers.
3M and Honeywell often sell filters online at a loss due to logistics inefficiencies
Amazon’s FBA fees make it nearly impossible to ship single filters profitably
Filterbuy’s in-house fulfillment model reduces costs by up to 20% per filter
Legacy corporations often dismiss the idea that logistics can be a competitive advantage, assuming that scale alone will protect them. However, in industries where shipping costs dominate margins, controlling and optimizing distribution can be the decisive factor in profitability.
Data-Driven, Technology Enabled Expansion Beats Legacy Distribution Models
Most traditional air filter companies assumed that retail partnerships were the only way to scale, relying on third-party distributors like Home Depot, Lowe’s, and specialty HVAC suppliers to reach customers. While this approach worked for decades, it introduced layers of inefficiency, forcing manufacturers to compete for limited shelf space and sacrificing margin to intermediaries. Filterbuy flipped the model on its head by first building a direct-to-consumer (DTC) business, leveraging e-commerce, customer data, and logistics optimization to dominate online sales before expanding into other channels. Rather than being at the mercy of retailers, Filterbuy created its own demand engine and is using that momentum to enter select retail and B2B channels. Along the way, Filterbuy built a technology infrastructure specifically suited to its business model, logistics approach and production capabilities.
The benefits of this technology-first approach include:
Full ownership of customer data → Unlike traditional brands that rely on retailers for insights, Filterbuy knows precisely who is buying, how often, and what they need next. This allows them to personalize marketing efforts and drive repeat purchases.
Built-in recurring revenue → Air filters are consumable products, meaning customers must replace them regularly. By selling directly, Filterbuy can remind customers when to reorder rather than relying on them to return to a retail store.
More control over margins → Instead of selling through a third party that takes a cut, Filterbuy keeps the full revenue from each sale, allowing it to invest more in marketing, logistics, and technology.
Better control of logistics leads to better sales → With superior demand and forecasting capabilities, Filterbuy could plug into logistics systems (like UPS, FedEx, Amazon and even local courier networks) with much greater precision, enabling faster fulfillment. This was a key unlock. Fast fulfillment was the number one consideration factor for online shoppers.
With a highly efficient logistics network already in place, Filterbuy could expand aggressively into B2B markets, including hotels, hospitals, property management firms, and HVAC service providers. It hired salespeople with an engine primed to feed the market, offering many of the same benefits that worked in the DTC such as rapid fulfillment. The massive catalog of 300+ filter SKUs also ensured that the sales force could sell to the largest possible base of commercial buyers — a huge advantage in convenience.
Building on this strong base, Filterbuy has been able to approach big-box retail strategically, rather than out of necessity. While many legacy brands depend on retailers like Walmart, Home Depot, and Lowe’s for survival, Filterbuy is selectively entering retail partnerships in a way that enhances brand presence, drives incremental sales, and maintains profitability—all without undermining its core DTC business. Many manufacturers struggle to maintain margins in big-box retail, where price competition is fierce, and shelf space is limited. Filterbuy avoided the common pitfalls by carefully modifying its packaging, pricing, and product selection to ensure retail remained a profitable complement to its DTC business, rather than a cost-cutting race to the bottom.
To succeed in Walmart and other big-box stores, Filterbuy adapted its product presentation to match the needs of brick-and-mortar shoppers while maintaining profitability.
Multi-Packs to Maximize Shelf Space and Value → Unlike online shoppers, big-box customers prioritize convenience and bulk pricing. Filterbuy optimized its packaging by offering multi-packs of standard-sized air filters, providing better perceived value while ensuring higher average transaction sizes.
Retail-Specific SKUs to Protect DTC Margins → Instead of offering the same products at the same prices across all channels, Filterbuy developed exclusive SKUs for Walmart. This prevents direct price comparisons between online and in-store listings, allowing the company to maintain higher margins in its DTC business while still competing in retail.
Strategic Pricing to Drive Profitability → Filterbuy priced its retail offerings competitively but profitably, leveraging its vertically integrated supply chain to keep costs lower than competitors. Rather than engaging in a price war with legacy brands, Filterbuy focused on differentiation through premium materials, better fit options, and higher-value bundles.
Unlike traditional manufacturers that depend on retail partnerships, Filterbuy treats brick-and-mortar as just one piece of a broader, data-driven omnichannel strategy. By carefully managing pricing, inventory, and logistics across all channels, the company ensures that its retail expansion fuels growth rather than eroding margins or cannibalizing its DTC business.
Entering Walmart from a Position of Strength → Filterbuy launched in 505 Walmart stores in 2023, marking its first significant move into brick-and-mortar retail. Unlike legacy competitors, which rely on retail distribution to reach consumers, Filterbuy did not need Walmart to survive. Instead, it leveraged its existing DTC success to negotiate terms that ensured profitability.
Retail as a Complement, Not a Replacement → The strategy is not about shifting the business to retail but rather meeting customers where they prefer to shop. Some consumers will always prefer to purchase in-store, and by selectively expanding into retail, Filterbuy captures both online and offline buyers without diluting margins.
Retail Presence Reinforces the Brand → A presence in Walmart’s high-traffic stores significantly increases consumer trust in the Filterbuy brand. For many shoppers, seeing a brand on retail shelves legitimizes its credibility, making them more likely to purchase directly from Filterbuy’s website in the future.
Speed of Execution and Technology Chops Matters More Than Industry Experience
Heacock had no manufacturing experience when he started Filterbuy. Yet, by applying first-principles thinking, he was able to outmaneuver competitors that had dominated the industry for decades. The company’s ability to learn quickly, adjust operations, and scale efficiently has been a core driver of its success. Many large companies overvalue industry tenure and undervalue adaptability and understanding of how technology can enable and drive disruption. In contrast, companies that prioritize execution over experience—such as Amazon, Tesla, and Netflix—often dominate industries by challenging outdated assumptions and experimenting with new business models.
The Implications for Large Corporations: Be Great at Technology, Move Faster
When David Heacock started Filterbuy, he had no background in manufacturing or supply chain management. Yet, by applying first-principles thinking and leveraging technology at every stage of the business, he was able to outmaneuver legacy competitors that had dominated the industry for decades. The company’s ability to rapidly learn, iterate, and scale efficiently has been a defining factor in its success.
Many large corporations overvalue industry tenure and underestimate the power of technology-driven execution. In contrast, companies that prioritize innovation over experience frequently disrupt industries by challenging outdated assumptions, using data to drive decisions, and deploying technology to increase speed and efficiency.
Filterbuy’s rise is a wake-up call for incumbents in a wide range of industries. Established corporations often believe that scale, legacy relationships, and brand recognition will protect them from disruption. But when faster, more agile competitors use technology to rethink supply chains, distribution, and customer success, legacy advantages quickly become liabilities.
Filterbuy’s success highlights four critical questions that corporate leaders must ask:
Are we over-relying on legacy distribution models? Filterbuy built its own direct-to-consumer engine before entering retail on its own terms. Are we still locked into outdated wholesale and retail models?
Are we ignoring overlooked market inefficiencies? Logistics, pricing structures, and fulfillment costs were all hidden inefficiencies in the air filter industry. Where in your business is technology-enabled optimization being ignored?
Are we optimizing logistics, or simply following existing processes? Supply chains have changed dramatically in the last decade. Are companies still outsourcing key operations that could be improved with vertical integration and data-driven logistics?
Are we hiring based on experience or prioritizing technology understanding, execution and adaptability? The ability to leverage automation, advanced analytics, and digital commerce strategies is more valuable than simply hiring executives with industry tenure. Are companies recruiting for speed and agility—or maintaining rigid hierarchies?
In most industries, disruptive competition is not a question of if but when. Large corporations that fail to rethink their cost structures, logistics, and channel strategies risk losing market share to faster-moving, technology-first companies that recognize these opportunities first.
The lesson is clear: corporate size alone no longer guarantees long-term success. Instead, the future belongs to companies that execute faster, leverage technology intelligently, and continuously optimize their operations. Those firms that fail to adapt will be outpaced—not by sheer competition but by their own reluctance to evolve.
Note: This article was based on insights from the excellent Business Breakdown podcast interview with Filterbuy founder and CEO David Heacock. I strongly recommend that you listen to the interview for more insights.
Anthony Bay is the CEO and Founder of Techquity. www.techquity.ai He formerly led product groups at Apple, Microsoft and Amazon in senior executive roles, has been CEO of earlier stage companies, and has served as a director or chairman on multiple boards of public and private companies.
Alex Salkever is a partner at Techquity. www.techquity.ai An award-winning author, he has served as the CMO at multiple startups and technology companies and was formerly the technology editor of BusinessWeek.com