What Happens After Founders Step Aside

The brand new chief government of Savage X Fenty isn’t a musician, actress or international style icon.

However Hillary Tremendous’s resumé — which incorporates management stints at Guess, American Eagle Outfitters and Anthropologie, the place she’s credited with rising the model’s digital enterprise and launching plus-size style — is full of the form of less-glamorous abilities a younger style model wants. (Tremendous was introduced as CEO final month; Rihanna will stay Savage x Fenty’s government chair.)

The transition from iconoclastic founder to seasoned government is a well-recognized a part of the life cycle of many style and sweetness firms. Nevertheless it’s been taking place extra recently: the upheaval of the pandemic, the DTC boom-to-bust and a turbulent financial system have satisfied entrepreneurs at hand over the reins. Along with Savage X Fenty, founders of The RealReal, Glossier and PrettyLittleThing have stepped apart in roughly the final yr, amongst different firms.

What occurs after an iconic chief departs might be tough to foretell.

Generally it’s clean: Jeff Bezos’ 2021 handoff to his successor, Amazon veteran Andrew Jassy, has appeared to go off with out a lot of a hitch for the previous couple of years. Different occasions it’s bumpy: Katrina Lake exited the CEO role at Stitch Fix in 2021, solely to briefly return 17 months later after her successor didn’t reverse sliding gross sales. Some are a little bit of each — Ralph Lauren hand picked former Hole and H&M government Stefan Larson as his successor, however the two clashed and Larson was out in beneath two years. Patrice Louvet then took the helm, a job he’s held for a comparatively clean six years.

What separates the nice transition from the dangerous, consultants say, typically hinges on a number of key elements: the circumstances across the founder’s departure, and whether or not the brand new CEO brings new abilities to the desk quite than merely making an attempt to copy the founder’s magic. And if the founder does keep concerned — frequent at start-ups the place they nonetheless have a majority stake, with or with out the highest job — what position they play.

It’s too early to say which path Savage X Fenty is on. Rihanna could now be free to ship extra of her star energy, fashion acumen and artistic imaginative and prescient to the model, consultants say. Or, a brand new government crew — each of Savage x Fenty’s co-presidents seem to have moved on together with Rihanna — may set the enterprise on a much less beneficial trajectory.

Right here, BoF unpacks what occurs when founders step apart.

Why do founders go away?

Founders usually go the baton when an organization is at a transition level, whether or not it’s an preliminary public providing or an acquisition, or a tough patch that requires a tough-to-execute pivot to flee.

When founders go willingly, the transitions are usually extra profitable, mentioned Simeon Siegel, managing director and senior analyst specialising in retail and e-commerce at BMO Capital Markets.

“When the concept comes from them … it tends to be probably the most seamless,” he mentioned.

As a rule, founders keep on too lengthy “as a result of the enterprise they’ve created is their child,” and “they’re intent upon remaining utterly in management,” mentioned Mark Cohen, director of Retail Research at Columbia Enterprise College.

Rihanna’s resolution to step apart at this juncture — the model’s annual revenues are estimated to be near or approaching the hundred-million mark and the corporate is rumoured to be readying for an IPO at a $3 billion valuation — is extra “proactive” than lots of her counterparts in style and retail, mentioned Karen Harvey, founder and CEO of enterprise consultancy and government search agency Karen Harvey Consulting Group.

And naturally, not all departures are completely voluntary.

When a enterprise is in peril, an organization’s board, buyers or executives could put stress on a founder to depart. That may come within the type of an ultimatum, or a softer pitch that leads the founder to recognise they “not have a want to take care of the myriad of points” that include turning a flagging enterprise round, Cohen mentioned.

Glossier founder Emily Weiss stepped down final yr amid flagging gross sales and protracted roadblocks in its DTC-only enterprise mannequin. The RealReal founder Julie Wainwright additionally departed in 2022 after the corporate’s inventory had fallen by greater than 80 p.c.

Generally founders go away abruptly and unexpectedly: In June 2020, Reformation founder and CEO Yael Aflalo stepped down from the corporate days after allegations of racism surfaced on social media from previous staff. In 2019, Steph Korey, CEO and co-founder of baggage start-up Away, resigned after allegations she created a poisonous firm tradition. (She returned in 2020 earlier than resigning for a second time that very same yr.)

How can manufacturers plan a profitable handoff?

Ideally, firms purpose to discover a alternative who brings completely different abilities than the founder — quite than making an attempt to copy the customarily one-of-a-kind attributes and circumstances that made the enterprise initially profitable.

“The vital factor is to not rent somebody to do precisely what [the founding CEO] had been doing,” Harvey mentioned.

Usually which means swapping a visionary entrepreneur for somebody with a confirmed observe report for scaling a enterprise, she mentioned. The brand new CEO is commonly tasked with creating technique round geographical growth, hiring and retention, value financial savings and carving out new capabilities or departments.

At Glossier, for instance, Emily Weiss grew her weblog right into a thriving cosmetics model. However when gross sales started to slide, she was succeeded by Kyle Leahy, who had expertise at Cole Haan and Nike. Underneath Leahy, Glossier has entered wholesale for the primary time, amongst different strategic pivots.

When Patrik Frisk changed Underneath Armour founder and CEO Kevin Plank in 2020, it was after a stretch of stagnant revenues and a string of damaging headlines about Plank’s management fashion, together with allegations that gender discrimination and different office toxicity ran rampant on the model. Frisk, a Swedish-American businessman, was introduced in as a traditional operator, having beforehand been chief government of footwear group Aldo and president of VF Corp.’s out of doors division.

How can founders keep concerned?

For style firms specifically, it’s typically unwise to utterly dispose of the magic the founder introduced. Even when the incoming CEO is a whip good operator, their style retail acumen may very well be simply as essential as their strategic abilities, Harvey mentioned.

“With out style, and with out a little little bit of that merchandising acumen, it virtually by no means works,” mentioned Harvey.

Firms ought to strike the fitting stability between “a monetary match” — a essential issue when a enterprise must scale — and a “cultural match,” which might be vital instantly and for the long run, Siegel mentioned.

A founder’s post-transition position normally comes right down to how intently they’re related to a model’s identification. Ralph Lauren served as chief government of his eponymous model for practically 5 many years, however now as chief artistic officer his remit is squarely targeted on the imaginative and prescient and artistic course.

In Rihanna’s case, “it’s exhausting to think about that what [she] brings to the model, she’s going to cease bringing to the model,” Siegel mentioned.

Essentially the most distinguished argument in favour of founders remaining in management is that nobody fights tougher for his or her firm’s success than a founder, he mentioned.

In some instances, founders who hold up the CEO hat could give themselves a brand new or area of interest title that enables them to function the “artistic mind” whereas a enterprise operator oversees monetary efficiency and strategic targets.

Retaining a founder round — for artistic or different causes — could be a dangerous method, nevertheless. Founders who stay on board as an government chairman or in different high-level board positions can proceed to train management over a enterprise — in some instances, their authority trumps that of the brand new CEO.

“Founders will typically maintain onto their unique considering, and will have a preciousness about sure issues that really hinder progress,” Harvey mentioned. “Generally they don’t imagine anybody else may do what they do.”