‘Reminded me to be more human than ever’: DTC founders face leadership strains as crisis drags on

For Patrick Coddou, CEO of direct-to-consumer razor startup Supply, the worst week was in mid-March.

During what Coddou describes as “hell week,” Supply reported its worst day of sales year-to-date. It was a great time for Coddou personally — later that month, he and his wife welcomed a baby girl. But, that also meant he was down a co-founder, as the pair run the business together. So, he had to regroup with the company’s remaining four part-time employees and figure out how they could tweak their marketing message to get out of this sales slump.

“It was really a rally of the troops moment,” said Coddou. “The other thing I wanted to do, not comfort but let my employees know we are in a unique place in which my payroll isn’t high, and I don’t foresee even if things slow down significantly having to lay anybody off.”

In order to cater to consumers who are stockpiling right now, Supply offered a limited-time promotion in which for customers who bought a new razor or a starter kit, the company would offer them a free year’s supply of blades. The company also ran more messaging encouraging customers to support small businesses like Supply. A week and a half after reporting its worst day of sales, Supply reported its best week of sales since Black Friday.

For many direct-to-consumer founders, it’s been six weeks of extreme highs and lows. Like Supply, some of them have recorded simultaneously some of their best and worst sales days within those same time periods. But even companies that have reported record sales haven’t been immune from having to lay employees off. As a result, many DTC founders are finding themselves having to navigate situations that they never have been before, and are having to learn new ways of leading.

Founders who are normally tight-lipped with employees about certain financial metrics have to be more transparent than ever before with employees to reassure them that the business will survive. As everybody is getting used to managing via Zoom, some founders are warming up to the idea of hiring more remote workers once the business climate improves.

All CEOs, no matter the type of business, are finding themselves in a similar boat right now. But DTC culture is unique in certain aspects. DTC founders have a reputation for being on the younger side — at Modern Retail, we’ve joked that DTC brand stands for “we sell in stores and wholesale but our founder is under 35.” So, many of them have never been through any type of recession.

What’s more, many of these DTC brands, especially the venture-backed ones, also had growth goals that were becoming even more difficult to make before the coronavirus thanks to rising customer acquisition costs. Now, they’ve had to throw those goals out of the window as they have no idea what consumer behavior is going to look like in the next month, let alone the next week.

“We used to forecast by the month and by the quarter, and right now we are forecasting by the week,” said Aaron Luo, the CEO of luxury bag brand Caraa. “I grew up in a very Type A investment banking type of world,” he said; before the coronavirus outbreak, most of the conversations with his 30 employees centered around KPIs and results. “This has reminded me to be human more than ever.” Now, as his entire team has shifted to working remotely, he’s finding that whenever he has a free block of time, he spends as much of it as possible checking in individually with his employees, checking in to see how they and their family and friends are doing.

But, no amount of personal connections with employees, can make tough news any easier to deliver. Leslie Voorhees Means, CEO of DTC custom wedding dress company Anomalie, said she did have to make layoffs in March, though she declined to say how many employees she had to layoff. Even though Anomalie’s sales have been growing, she felt she needed to “explore all options” for cost-cutting. As a venture-backed company, she wanted to extend Anomalie’s runway for as long as possible, as she didn’t know what the fundraising environment will be like for the rest of the year.

When she broke the news to Anomalie’s remaining employees she said she tried to stress that the layoffs were done, “with the intent that we did not have to do it again.”

“I wanted to protect the team from any financial stress around, what’s our runway, how much time we have until we run out of money and these unit economics and all of these financial metrics,” Voorhees Means said. “What we’ve found is the team is actually feels less stressed if they are more clued into everything — and we’ve been, as a leadership team, just more and more open about those metrics.”

Voorhees Means said that the coronavirus has also led Anomalie to change how it sets KPIs. Normally, Anomalie sets one growth goal for the month, and may set multiple goals for each department. Now, Anomalie sets KPIs on more of a two week basis, and the management team drops more reminders about growth goals in Slack, to ensure that everyone is laser focused on the goals.

“I think [this crisis] has affirmed my leadership style — I’m introverted, I’m an engineer, I’m methodical and more organized…I’ve never thought of myself as very charismatic,” Voorhees Means said. “I think actually during this time, leaning into what your strengths are and what you are good at helps — so, for me, it was doubling down on being really organized and making sure people understood how they could succeed.”


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