The CQ: Normalizing Founder-CEO Transitions
Sometimes, stepping aside is a sign (and celebration) of success.
The CQ is Forerunner’s weekly newsletter covering the most pressing consumer trends and analysis, as well as business-building insights from our investment team. Subscribe now to get the latest edition in your inbox every Saturday.
Buzzing at the Forerunner Office…
Normalizing the Founder-CEO Transition
Many founder-CEOs seem to be looking for successors. Julie Wainwright, Founder & CEO of TheRealReal, announced this week that she would be stepping down from her position after 11 years. Ryan Peterson, Founder & CEO of Flexport, said he will soon be passing the CEO torch to Amazon veteran Dave Clark. Late last month, Glossier’s Founder & CEO Emily Weiss anointed Chief Commercial Officer Kyle Leahy as the company’s next Chief Executive.
Founders do so much for their organizations. From the seed of an idea, they dream up the product, create the DNA of the company, and then execute an expansive vision of what it can be and how it will matter to consumers. They go from doing absolutely everything—concepting early product(s), raising capital, recruiting top talent, defining brand values, choosing the packaging, leading PR, championing culture—to learning how to let go, little by little, as success empowers them to bring on worthy leaders to take over each critical aspect of the business.
After meeting and working with countless founders over the past decade, we’ve heard firsthand how hard it is for them to let go. But doing so effectively is absolutely essential to being a successful leader. The adaptable, do-it-all skills involved in founding a company or leading an early-stage team are different from the structured, process-oriented skills necessary to scale the infrastructure of a company to support thousands of employees. Some people can flex into the evolving roles required at various stages of growth and leadership, and some are uniquely-suited for one stage of the business over others. One size does not fit all, and it’s not only understandable, but productive, to consider how a founder’s role can and should evolve as the company hits new inflection points.
With the past few years of blitzscaling, demanding founders to evolve their CEO roles faster than ever, we fully expect more of these announcements to come. A good founder grows a company into a brand and a movement much bigger than themself; a great founder knows when they’re no longer the best leader for the company’s future. We should normalize that transition and meet it with celebration and appreciation; this outcome, in fact, is often the culmination of their success.
This Week’s Top Consumer Insights
A Recession Seems Inevitable
By Jenna Birch, Head of Content & Communications
The latest CPI report echoed what many consumers were already feeling—that inflation isn’t slowing down. In May, prices rose 8.6% YOY, including 6% on the core index that excludes food and energy; these figures were both higher than expected. The University of Michigan’s consumer sentiment index also hit a record low, and the Dow Jones shed 800 points on Friday as a result.
According to CNBC, 68% of CFOs expect a recession to hit in the first half of 2023. Over three quarters expect the DOW to fall below 30,000, which is ~9% lower than it is today.
After months of a booming growth, challenges in the job market are starting to show. Roughly 17,000 workers from 70 tech startups were laid off during May, representing a 350% jump from the month of April.
Consumers starting to pull back spend? Target warns that its profits will decline, because the company has more inventory than demand. The retailer plans to cancel vendor orders and offer discounts to clear product.
“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,” insists Len Kiefer, Freddie Mac’s Deputy Chief Economist. Compared to the recent pandemic housing boom, home purchase applications have fallen by 40%. Dealing with another impending period of economic stress, millennial home ownership is already behind the generations that came before them. At age 40, 60% of millennials own their home vs. 64% of Gen X at the same age vs. 68% of Baby Boomers.
Just 51% of Gen Z is interested in pursuing a 4-year college degree—a 20% drop from only two years ago. Watching millennials deal with the burdens of student loan debt, they may end up following in their grandparents’ footsteps by learning a trade or technical skills.
Likely due to inflationary pressures, a declining number of patrons claim to “always” tip. Just 73% of consumers say they always tip at restaurants (vs. 77% in 2019), 57% always tip for delivery (vs. 63% in 2019), and 43% always tip for rideshares/taxis (vs. 49% in 2019).
After expanding from music to podcasts, Spotify is now gunning for a slice of the audiobook market—potentially introducing an ad-supported model to an industry that relies on subscriptions and single-book purchases.
This fall, Apple will allow users to go password-free with “Passkeys” authenticated via Face ID and Touch ID—sort of like a password manager using Apple’s own tech, with all info stored on personal devices instead of on servers.
In an open letter to the U.S. Senate, 200+ CEOs and business leaders wrote to demand action on gun control. As if the loss of life was not cost enough, they also point out the $280 billion per year that taxpayers, employers, and communities spend to recover from gun violence.
“Remember that 85% of the worldwide retail marketshare is offline. And if we believe at some point that that marketshare is going to flip—and we do, we believe it will flip over a long period of time—then the companies that have great customer experiences like we do are going to do all right. [To us], great customer experience means you have great, broad selection, low prices, and very fast delivery that’s reliable to customers. And if you look at different downturns, should we have one at some point…customers change their habits. They tend to be pickier about what they buy, when they buy, and who they buy from. And they often pick the partners and companies that they trust that have great customer experiences.”
—Andy Jassy, CEO of Amazon, at Bloomberg Technology Conference this week, detailing why he thinks Amazon’s retail business will still grow in a downturn
✨ Ask Forerunner ✨
Have a question for a Forerunner investor or founder? Click here to ask it. The best questions will be answered in future editions of The CQ.
Modern Retail interviews A-Frame Founder & CEO Ari Bloom on the company’s intentional approach to everything from products to price points to the partnerships. Meanwhile, A-Frame COO Avantha Arachchi lands a spot on Fast Company’s Queer 50 List.
Chime is once again a member of the Forbes’ Fintech 50.
Faire Co-Founder & CTO Marcelo Cortes and THE YES Founder & CEO Julie Bornstein rank among Business Insider’s Retail-Tech Power Players.
With its new Abbot Kinney location, Ritual is part of a wave of wellness brands redefining the physical retail experience.
Work at a Portfolio Company
Partner Integrations Manager, Curated—Curated humanizes online shopping by connecting customers with passionate experts. Partner Integrations works both cross-functionally and with external partners to implement tools and technologies.
Partner Success Manager, Catch—Catch is on a mission to unlock more rewarding relationships between merchants and their customers, starting with changing the way we pay for things online. As a member of the partner success team, you’ll own a portion of the brand portfolio, building relationships and driving growth with a focus on KPIs.
Software Engineer, Kale—Kale’s mission is to empower people to translate their social value into economic value. As a Kale software engineer, you will work in a product team with other talented engineers, product managers and product designers.
There are 1,310 other openings on our jobs site. Check ‘em out.
Tell Us What You Think!
How can we make The CQ even better? We want to hear your thoughts on our content—love, hate, or meh. Take our CQ Reader Feedback Survey and let us know what you think. 📣🤔