Consign

Founders are showing themselves the door, handing the reins to corporate vets in hopes of a pivot from growth to profitability

Thursday, June 9, 2022 by Robinhood Snacks |
The RealReal’s founder heads for the exit (Michael Kovac/Getty Images for Vanity Fair)

The RealReal’s founder heads for the exit (Michael Kovac/Getty Images for Vanity Fair)

Things just got really real… Yet another CEO has stepped down to help their company step up: this week Julie Wainwright, founder of luxury resale marketplace The RealReal, unexpectedly resigned. Wainwright said she’s leaving on good terms so that TRR can find its “next generation” of leaders to achieve profitability. Her replacement faces a tough challenge:

  • Real struggles: Last quarter TRR reported a bigger loss than during the same period last year. TRR’s stock has also suffered: shares are down about 90% since its 2019 IPO.

Out with the new, in with the seasoned... Fast-growing tech companies, which dominated the stock market for a decade, are now underperforming the overall market by the widest margin since 2000 (aka: the dot-com bubble). With growth stalled at many techies, founders are turning to corporate execs who have experience generating cash flow:

  • Freshening up: Makeup and skincare dynamo Glossier recently replaced its founding CEO with a long-time Nike exec. Glossier went through a round of layoffs earlier this year as sales slumped.
  • Industry veterans > visionary founders: Profitable startups like supply-chain-software company Flexport are turning to veterans for help. Yesterday, the logistics biz announced plans to replace its founding CEO with a long-time Amazon operations exec.
THE TAKEAWAY

Growing up can be hard… and sometimes the best thing founders can do for their companies is to fire themselves. CEOs of public firms — and even midsize startups with dreams of an IPO — are responsible for maximizing profits. But the skills required to run a profitable public company aren’t always the same as the skills needed to launch a successful startup.