Online dollar store Hollar has been on an incredible roll. As reported in Recode yesterday, the company, founded in 2015, just raised a $35 million Series C valuing the company at around $200 million.
Along with the news of the Series C funding, it was announced that the company was looking for a new CEO to replace the incredibly talented David Yeom. While many on the outside may question that decision, I would posit that stepping down from a company on a rocket ride like Hollar reflects incredible humility and self-awareness.
My story is very similar to David’s. We are both growth marketers that ran venture-backed ecommerce companies – Hollar has raised $83 million, my previous company raised $104 million. We both built cutting-edge robot-driven, automated fulfillment centers – Hollar uses inVia Picker and we used Kiva Systems. We are both growth marketers at our core and decided to replace ourselves as CEO after leading ecommerce companies on a meteoric rise.
Like David, I left my role as CEO of Acumen Brands a couple years after raising over $100 million of venture capital. It was the hardest decision I’ve ever made, and despite the poor performance of the company after I left, it was the correct decision.
Replacing the CEO of a venture-backed company is tricky business fraught with gotchas. Before I tell my personal story, here’s a few historical examples of CEOs who successfully fired themselves:
- Reid Hoffman famously stepped down from the CEO role at Linkedin a couple times, ultimately finding an incredible replacement in Jeff Weiner.
- Moz.com’s founder Rand Fishkin publically stepped aside as CEO after a bout of depression and anxiety, successfully replacing himself with Sarah Bird.
- Andy Dunn willingly stepped down as CEO at Bonobos, only to quickly return to the role. This proved to be the correct decision, as Dunn was able to architect a great outcome selling the company for $350 million to Wal-Mart.
Now back to my story.
Though my ecommerce company grew to nearly $100 million of annual revenue under my leadership, it was apparent to all parties, including myself, that I was not qualified to lead the next phase of growth. The company’s business model shifted dramatically, and I was clearly the wrong leader.
Adding to the difficulties, I’ve never been a traditional CEO, nor did I assume the traditional CEO responsibilities advocated by Fred Wilson and others. I was a skilled growth hacker and marketing technologist who helped architect an incredible ecommerce platform that enabled our highly successful Google and Facebook strategies.
In fact, my outsized success as a growth hacker quickly led to being over my head as a CEO. In a period of 6 months, one of our stores, Country Outfitter, acquired 11 million email subscribers and accumulated 8 million Facebook fans. Revenue grew from $100,000 in June of 2012 to $14,000,000 in December 2012.
On the back of that overnight success, my company raised over $100 million of venture capital. I was excited at the time, but in hindsight I was a living, breathing example of the Peter Principle, having risen to my own level of incompetence.
Let me explain.
With the success of Country Outfitter, what started as a marketing technology company that operated dozens of ecommerce websites, quickly morphed into a vertically integrated cowboy boot retailer. Our country lifestyle brand approached $100 million of annual revenue and dwarfed all our other stores by an order of two magnitudes.
Prior to founding Acumen Brands, I never even owned a pair of cowboy boots… and good lord, do I hate country music! And so there it was – we had a CEO well versed in marketing technology and ecommerce software who knew absolutely nothing about selling western wear. While I was a world-class expert on click arbitrage, email marketing, and ecommerce software, I was woefully underqualified to run a vertically integrated cowboy boot company.
This newfound incompetence made me anxious, depressed, and highly stressed. So stressed, in fact, that my immune system became compromised and I contracted an extremely rare, debilitating illness.
Shortly thereafter, I stepped down from the role of CEO and left control of the company in more capable hands (at least on paper.) Unfortunately, even under better-qualified leadership, the company failed to execute its new vertically integrated business model. It was eventually sold to a publicly traded competitor and has thrived in their hands.
Despite the failure of my successors to scale from our solid base, my decision to leave was almost certainly correct. There are things I’d do differently regarding the transition, but all-in-all it was the right decision for both the company and for my career. By leaving, I gave the company a fighting chance.
After stepping down, I returned to my personal sweet spot. I started a successful ecommerce startup studio and looked for my next company to run as CEO. Through that work, my anxiety went away, and my health returned. Instead of doing a job for which I was woefully unsuited, I returned to a role where I was quite competent and extremely happy.
I invested my time (and money) towards building a startup ecosystem in my hometown of Fayetteville, Arkansas by founding or co-founding a dozen ecommerce startups through my venture studio. These startups have raised nearly $20 million in follow-on funding, have already created over 200 jobs and one nice acquisition.
More importantly, I found my next CEO gig, co-founding Engine, an ecommerce platform featuring our team’s ecommerce growth hacking prowess built directly into the platform. I feel like my role as CEO of Engine is a perfect fit for my skill set, and I think it’s unlikely I’ll ever step down as CEO of Engine. But who knows – I hope to keep the same self-awareness and humility if Peter and his dreaded Principle ever show up in my office again.
If you’re a venture-backed ecommerce CEO who is over your head, reach out and say hello… I’d enjoy the conversation! (john at engineinsights dot com)