Member Exclusive   //   February 20, 2024

DTC Briefing: Why brands are rethinking their C-suite expansions

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

As some e-commerce startups kick off the year with layoffs or restructuring, multiple C-suite executives are getting the ax. 

Figuring out who to add to the C-suite is one of the most critical decisions a founder can make. But, if a founder makes the wrong hire — or, adds an executive too early — it can be a costly mistake in more ways than one. Making the wrong executive hire could result in a startup expanding too quickly into the wrong area, lowering company morale and causing other talent to leave. 

One of the startups that appears to be rethinking the makeup of its C-suite is luggage brand Away, which last week announced that it was laying off 25% of staff. While Away did not publicly say which executives, if any, were included in the layoffs, CEO Jen Rubio said in an interview with Inc. that the company was reorganizing its executive team, and hinted that Away perhaps expanded its C-suite prematurely. “We’re reconfiguring the traditional exec team structure in order to promote better decision making,” she told the outlet. 

Recruiters, investors and consultants said that the biggest mistakes they see startups make when it comes to executive hiring often boil down to a mismatch between what they think they need for that role, and what experience the candidate brings to the table. Additionally, many of the people interviewed for this article advised companies to think and act like a startup longer than they think is necessary. That is, many startups think they need executives with prior experience at a big, $100 million-plus company, because they feel like they are starting to become a big company. But a scrappier hire might be better because, ultimately, startups still need someone who can be more hands-on. 

“If you get it [executive hires] wrong, it can really sidetrack or sometimes destroy the business,” said Mike Jones, co-founder and managing director of venture fund and startup studio Science Inc. 

Away isn’t the only company doing a major executive shuffle. Earlier this week, Instacart also announced that it was laying off 250 employees, including its COO, CTO and chief architect. But, Instacart plans to backfill only the CTO role. “This will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives,” Instacart CEO Fidji Simo said. 

Jones said that when founders are looking to, say, make their first big executive hire or two outside of the founding team, he advises them to think through a few questions first. 

“What are the critical skillsets needed for this company to be successful? What skillsets are needed internally? And then, what skillsets are not covered by the founder or the founding team?” Jones said. That will help a company determine what talent gaps it needs to hire for first.

Some of it will be sector specific. For example, Jones advises CPG startups highly prioritize finance experience, given that there is a lot of complexity within CPG businesses related to cash flow, warehousing and supply chain. 

Taryn Jones Laeben, founder of advisory and investment firm IRL Ventures, said that one of the biggest mistakes she sees startups make is hiring C-suite executives too early, “before they are really clear on what their longer-term strategy is, and oftentimes before they have true product-market fit.” 

While it varies depending on the brand, Jones Laeben said that, generally, she thinks about a brand having product-market fit when they are north of $20 million in revenue or are in the process of raising a Series B. 

Jones Laeben said that startups should wait to make some key executive hires until they get to this later stage. At that point, they will have a better idea of what their channel distribution will look like, as well as their future product roadmap.

She gave the example of a company that hires a chief commercial officer at a time when the leaders think most of their growth will come from DTC. Then, over the next year or two, the company realizes it actually needs someone with more wholesale experience. “That is an example of, very often, where things can go awry,” she said. 

Anish Shah, CEO of executive recruiting firm Ruckus, said that one of the big mistakes he sees startups make when hiring for executives is that they “think they need big company folks because they are becoming a big company now.” In 2021, for example, Away hired its first-ever chief commercial officer, Laura Willensky. Before coming to Away, she held the title brand president at Talbot’s, and also worked at Victoria’s Secret and J.Crew. But, Willensky left the company as part of a round of layoffs in 2023, and Away did not rehire for her role.

“That thought process ends up being wrong almost every single time,” he said. That’s because even as startups get bigger, they still need people who can be more hands-on. And by their nature, big retailers “are not hands-on organizations.” 

What startups need to realize, Shah said, is that what most executives are good at is overseeing a big team. That entails “hiring people below them, delegating, assigning them goals, and managing upwards.” So when deciding whether to hire a dedicated CMO or not, part of it comes down to a matter of whether or not a company has a big enough marketing team that warrants hiring a CMO to manage it. 

When interviewing for executive roles, Shah advises startup founders to “specifically grill them on things that people one or two levels below them were doing, and see if they know the details.” That will give the founder a good idea of how hands-on the executive can be. 

Ultimately, it is up to the founder or CEO to determine what executive titles they want to dole out. Some executive titles are created specifically to woo a certain person that the founder wants to recruit. 

But, it’s critical for founders to think deeply about when to expand the executive team, especially as profitability and SG&A costs are being more closely scrutinized. Jones Laeben said that early-stage brands could envelop multiple responsibilities under one title if they feel like they are not ready to add a bevy of new names to the C-suite. The title of chief growth officer, for example, could encompass marketing responsibilities, as well as channel expansion duties.

“I would say, broadly, the days of hiring a full C-suite — where you have one discreet C-suite leader for each function — that is a pretty antiquated approach now,” Jones Laeben said. “Aggregating functions under really capable C-suite leaders who have the range is going to be the trend.” 

What I’m reading

  • Wish, a discount shopping site once valued at $14 billion, has been sold to Southeast Asian e-commerce firm Q0010 for $173 million. 
  • Fresh off of its first Super Bowl ad, Poppi is reportedly being eyed by Coca-Cola and other potential acquirers, Bloomberg reported
  • Retail Dive has a look at 11 digitally-native brands that could file for bankruptcy this year. 

What we’ve covered 

  • How brands like Jolie and Lululemon are fighting off copycats through “dupe swaps.” 
  • DTC workwear Brunt enters wholesale for the first time, partnering with 23 retailers that are geared toward trade workers. 
  • Three years after Apple’s iOS 14 update, brands like Prose and Natural Life sound off on how Meta advertising is working for them now.