DTC Briefing: How startups are recalibrating their C-suites
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. To receive it in your inbox every week, sign up here.
While fears of a recession are leading some venture-backed tech companies to cut costs, a number of retail startups have been adding to their executive teams over the past few months.
Lemon Perfect, a beverage brand backed by Béyonce Knowles-Carter and other celebrity investors, brought on a president and Chief Revenue Officer on Friday: former Coca-Cola executive vice president Jim Brennan. Function of Beauty brought on a new Chief Marketing Officer, L’Oréal veteran Marianna Trofimova at the end of June. And cowboy boot brand Tecovas announced a flurry of new executive hires last month, including the appointment of former Deckers Chief Operating Officer David Lafitte as its CEO.
Many of the startups that are growing their C-suites are at a similar inflection point; they’re at least a few years old — sometimes older, if they’ve been bootstrapped — but are all at the point where they are no longer selling through one retailer or one website. Now that they’ve proven out traction, they’re looking to dramatically expand their product assortment, and the channels they sell through. In turn, they’re looking for executives who have experience growing multiple parts of a business efficiently.
Here’s how Brennan, who previously served on Lemon Perfect’s board before coming on as president and CRO, described what his priorities will be for the next year: “We have proof of concept on the brand… people are coming back now and repeat purchasing.” Now, he added, “we’re being strategic from a geographic standpoint, from a channel perspective and then building out different packaging opportunities.”
Lemon Perfect did $21 million in sales last year, and Brennan said that will more than double this year. The company’s products are now available for sale in roughly 25,000 points of distribution, including in Amazon and through grocers like Publix and Fred Meyer’s.
As president and CRO, Brennan said his primary role will be to “manage the whole revenue of the company” – that means overseeing the company’s 50-person plus sales team. But that also entails overseeing the company’s strategy around pricing, developing new bundles like variety packs or packaging for club retailers like Costco and figuring out what groups of retailers make sense for Lemon Perfect to go after next.
Mark Chou, founder of consultancy Bradhurst Ventures, told me that he is seeing more DTC startups hire what some might refer to as a chief revenue officer or chief commercial officer, who are essentially overseeing “driving the business forward, and managing demand generation.” Essentially, it’s about making sure that the company is able to grow efficiently.
“It can encompass any number of things depending on what exactly the scope of the company’s distribution is,” he added. Away’s Chief Commercial Officer Laura Willensky, who joined the company last spring, described her job in an interview with Retail Brew as ensuring that “Away’s business, product strategies and customer expectations are aligned with — and deliver against — the company’s financial goals.” The company recently unveiled a significant new product expansion, a new line of bags and backpacks designed for outdoor activities.
DTC jewelry brand Catbird has an opening for a Chief Revenue Officer role that will essentially “be the right hand to the CEO for demand and revenue generation.” In the job description, Catbird said it’s looking for a CRO that has “a successful and tenured record of leadership, profitable revenue generation, e-commerce growth, digital marketing, brand building, customer acquisition and database management in a consumer goods environment.”
Not every fast-growing startup is reshaping their C-Suite in the same way. Some startups, like Thinx and Glossier, are bringing on new CEOs entirely as retail expansion becomes a greater priority. Others, are creating more specialized VP and executive-level roles, with retail and supply chain expertise being big areas of focus. Tecovas, for example, brought on a new Chief Marketing Officer, Chief Product Officer, Chief Supply Chain Officer and a senior vice president of retail over the past year, in addition to its new CEO.
But put together, profitable revenue generation has become much harder for DTC brands over the past couple of years, for a laundry list of reasons: packaging and shipping getting more expensive, customer acquisition costs swinging wildly on channels like Facebook. In turn, many of these startups are looking for seasoned retail executives, who have experience building brands both offline and offline, to steer the ship over the coming years.
Whether experience will be enough to ward off the many headwinds retail startups are facing right now remains to be seen. While many of these companies were encouraged by record e-commerce growth during the pandemic, the key test will be how in-demand their product and brand remains over the next couple of years, as they evolve beyond their hero products and new competitors enter the fray.
These new hires, unsurprisingly, put a positive spin on their longterm potential. As Lemon Perfect’s Brennan put it, “We feel really good about where we are going in this space, even in a tough environment… We feel like we have a great long-term plan to meet the growth for the Lemon Perfect company.”
What I’m reading
- CNBC reported last week that Tonal was cutting 35% of its workforce as it prepares to go public. It’s the latest startup to announce such cuts amid a looming recession.
- Nike has opened a new store concept in Seoul, South Korea. The brand describes the new space as a “remixed expression of sports retail culture that blurs the line between physical and digital.”
- Thingtesting has a deep dive into hair supplement brands. Many say they can help with hair loss — but there’s no vitamin that will stop balding from happening just yet.
What we’ve covered
- Lalo is the latest DTC brands to partner with West Elm. The baby and toddler product company unveiled a new product collaboration that’s part of West Elm Kids.
- The era of free returns is ending. Now, more brands and retailers are adding strings to their return policies.
- Shopify just completely its acquisition of fulfillment startup Deliverr, and its CEO of the logistics group, Aaron Brown, spoke about the company’s growing back-end ambitions.