Report: SoftBank-backed Brandless gets a new CEO amid turmoil at the company

Brandless, a direct-to-consumer purveyor of food, beauty, and personal care products, says that every item it makes is non-genetically modified, kosher, fair-trade, gluten-free, often organic and, in the case of cleaning supplies, EPA “Safer Choice” certified. Beginning with its 2012 launch, items were also priced at $3 across the board.

That changed in January, when the company added baby and pet products to its stable of offerings, some of them at a $9 price point. But according to a new report in The Information, that’s far from the only change afoot at the company. Instead, the outlet paints a picture of a company that sold 40 percent of its business to SoftBank for a stunning $240 million before it had found its footing,  and where things have been sliding downhill since.

Indeed, while cofounder and longtime CEO Tina Sharkey suggested to Bloomberg that SoftBank loved Brandless’s uniform price points, its messaging to customers, and that Brandless was focused on a “highly curated collection” in contrast to Amazon’s everything-store ethos, Brandless has steadily been losing customers since the round closed  — a lot of them, according to The Information.

Specifically, it says that analysis provided to it by Second Measure, a company that analyzes anonymized debit and credit card purchases, found that Brandless had 26.5% fewer customers last month than it did in May 2018.

We’ve reached out to both Brandless and SoftBank for more information. (Brandless’s earlier backers include Redpoint Ventures, New Enterprises Associates, GV, and Cowboy Ventures. It has raised $292 million altogether, shows Crunchbase.)

SoftBank declined to comment and we’ve yet to hear back from Brandless. In the meantime, The Information says it has talked with numerous former employees who cite quality control issues as one of the company’s biggest challenges over time — from silicone serving spoons that detached from their handles, to glass containers that arrived broken on customer’s doorsteps and, in some cases, sliced their fingers.

They also recount inventory challenges, including buying too much perishable inventory and not buying enough of popular items. And they note that some of the inventory for sale on Brandless in its early days came from  Beach House, a company that was founded by Ido Leffler, an Israeli entrepreneur who’d cofounded Brandless with Sharkey.

A bigger revelation by The Information is simply that Sharkey stepped down as CEO in March, which Sharkey had quietly revealed in a Medium post titled “More Goodness.” A source familiar with the situation says Sharkey made the decision, approaching the board about replacing herself and moving exclusively into a co-chairman role. The Information cites its own source, who seems to echo that Sharkey was not pushed out, but said her decision stemmed from tensions with SoftBank, which was pushing for Brandless to turn a profit.

Indeed, its new report reveals that Brandless recently appointed a new CEO to replace Sharkey: serial founder John Rittenhouse, whose LinkedIn profile says he began the job last month. Rittenhouse spent several years as a C-suite executive at Wal-Mart nearly 20 years ago. He has since cofounded two beverage industry companies, VinAsset and the business-to-business software firm Fortera.co. A source tells us he was introduced to the company through New Enterprise Associates.

The Information report offers other interesting details while leaving open the question of whether Brandless is going through the growing pains of a young company that raised too much capital too soon, or its problems run deeper. Either way, the bet is looking like a troubled one for SoftBank, and at a time when it reportedly has other, seeming major challenges with which to contend.

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