What happened at athletic apparel startup Outdoor Voices?
Things seemed to be going so well. Last year, The New Yorker published a flashy profile of the startup, detailing its mission to redefine fitness. Through the company’s slogan “Doing Things Is Better Than Not Doing Things,” it emphasized making physical activity feel like play if consumers shunned performance and results.
Behind it all was founder and CEO Ty Haney. She raised more than $50 million in venture funding from investors including General Catalyst, Forerunner Ventures, Collaborative Fund, and Gwyneth Paltrow. In a crowded, competitive market of athletic apparel, Haney was somehow making it work and work well.
And then she abruptly stepped down as chief executive in January. She would be replaced by Cliff Moskowitz, the former president of InterLuxe.
In a new investigation by The New York Times, we learn some of the details about what happened behind the scenes of the seemingly booming startup. The report claims Haney was pushed out after clashing with more experienced male executives, highlighting a generational and gender divide within the company. From the story:
Store openings were delayed after leases were signed. A string of experienced executives, hired to professionalize the start-up, had abruptly left. An anonymous letter sent to the board of directors blamed Ms. Haney, now 31, for the exits and accused her of being “spoiled” and mercurial. The clothes were selling at discounts. The office in New York, where Outdoor Voices was based before it moved to Austin, Texas, would soon be shut down.
And a schism had opened between Ms. Haney and Mickey Drexler, the retail legend heralded for his leadership of Gap and J.Crew, who gave Outdoor Voices a halo of can’t-fail credibility when he became an investor and its chairman in 2017.
Mr. Drexler’s decades of experience and deep knowledge of the retail industry were expected to help Outdoor Voices make the transition from scrappy start-up to mature business. But his input was not always welcomed at a company built on the vision of its charismatic founder.
Haney responded to the report on Instagram, saying: “And because I stood up for myself, my vision, Team OV, and early investors I am no longer with the company I started and am labeled ‘difficult’ and ‘mercurial.’ I have experienced both gender and generational differences firsthand and these have been very tough to navigate.”
But the story raises a bigger question about whether it’s naive to think the same person can continue to lead a company as it enters new stages of growth. It reminds me of Reid Hoffman’s idea about how entrepreneurs need to evolve during the scale-up process. He told me in 2018, “In many ways, a lot of startups are like pirates, but to scale effectively, you need to transition to a Navy ship.”
As General Catalyst’s Peter Boyce said in the NYT story, “There becomes a more sustainable, thoughtful growth rate that makes sense as companies get bigger and bigger, and that’s part of a recalibration taking place in the broader environment.”
At some point, big dreams and unrelenting optimism get replaced with seasoned experience and a realistic plan for the future.
BATTLE OF THE VIDEO STARTUPS: Short-form video streaming service Quibi, which launches next month, is facing claims that one of its core technology features infringes on another company’s intellectual property, reports The Wall Street Journal.
Eko, a New York-based firm that creates interactive videos, claims that it invented Quibi’s “Turnstyle” technology and has patented it. Quibi denies infringing on Eko’s intellectual property or stealing trade secrets and has filed a lawsuit to seek a declaratory judgment. Read more.
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- Zumper, a San Francisco-based rental marketplace, raised $60 million in Series D funding. E.ventures led the round.
- SpotOn Transact, a San Francisco-based payments and software company, raised $50 million in Series B funding. Investors include 01 Advisors, Dragoneer Investment Group, Franklin Templeton and EPIQ Capital Group.
- DeepCrawl, a London-based cloud-based technical SEO platform, raised $19 million in Series B funding. Five Elms Capital led the round.
- Overhaul, an Austin, Texas-based real-time supply chain integrity technology solution, raised $17.5 million in funding. Edison Partners led the round.
- Recount Media, a New York-based short-form video platform dedicated to political news, raised $13 million in Series A funding. Investors include Union Square Ventures, True Ventures, ViacomCBS and Burda Principal Investments.
- Checkfront, a Canada-based tour and activity software, raised nearly $10 million in Series A funding. Framework Venture Partners led the round, and was joined by investors including PenderFund Capital Management and Conconi Growth Partners.
- Rivet, a Salt Lake City, Utah-based healthcare revenue cycle management software, raised $8.25 million in Series A funding. Menlo Ventures led the round, and was joined by investors including Lux Capital and Pelion Venture Partners.
- Superwise.ai, an Israel-based AI startup, raised $4.5 million in seed funding. Capri Ventures and F2 Capital co-led the round.
- Kaleidoscope Group, a Minneapolis-based company that has developed a software platform for the management of private scholarships and grants, raised $3 million in funding. Investors include Rally Ventures.
- Wanted, a New York-based startup that enables talent to anonymously receive job opportunities, raised $1.8 million in pre-seed funding. Investors include Partech, Hoxton Ventures and Kima Ventures.
PRIVATE EQUITY DEALS
- DXC Technology (NYSE: DXC) agreed to sell its U.S. State and Local Health and Human Services (State & Local HHS) business to Veritas Capital, for $5 billion in cash.
- Eureka Equity Partners recapitalized LegalPartners, a Houston-based alternative legal services provider focused on outsourced team-based legal solutions. Financial terms weren't disclosed.
- Kaho Partners will acquire Kenny’s Great Pies, a Smyrna, Ga.-based manufacturer of branded and private label pies and pie fillings. Financial terms weren't disclosed.
- Marlin Equity Partners acquired Lifesize, an Austin, Texas-based company focused on video collaboration and meeting productivity solutions, and combined it with Serenova, an existing Marlin portfolio company. Financial terms weren't disclosed.
- CIP Capital invested in 3Pillar Global, a Fairfax, Va.-based developer of digital products. Financial terms weren't disclosed.
- BlueCross BlueShield Venture Partners made an investment in emids, a Franklin, Tenn.-based provider of healthcare technology expertise in consulting services. Financial terms weren't disclosed.
- Jaguar Growth Partners acquired Brilliant (Shanghai) Enterprise Management Consulting, a China-based warehouse, distribution and logistics property company.
- Offen Petroleum, a portfolio company of Court Square Capital Partners City, agreed to acquire the business assets of Bosselman Energy, a Grand Island, Nebraska-based fuel distributor. Financial terms weren't disclosed.
- Jefferson Capital Systems acquired Canaccede Financial Group, a Canada-based company that purchases performing and non-performing consumer receivables from financial institutions. Financial terms weren't disclosed.
- IXL Learning acquired Vocabulary.com, a New York-based educational destination for improving literacy through vocabulary building. Financial terms weren't disclosed.
- PepsiCo is nearing a deal to buy Rockstar Energy Beverages, a Las Vegas, Nevada-based maker of energy drinks, for $3.85 billion, according to The Wall Street Journal. Financial terms weren't disclosed. Read more.
- Prudential, a U.K.-based life insurer, is planning an IPO of its U.S. business, Jackson. That comes as shareholder Third Point has called for changes. Read more.
- Unity Technologies acquired Artomatix, an Ireland-based, software company that uses AI and neural networks to streamline 3D artistic workflows in studios worldwide. Financial terms weren't disclosed. Artomatix had raised approximately 10.8 million euros ($12.3 million) in funding from investors including Enterprise Ireland, Suir Valley Ventuures, Boost Heroes and Disruptive Technologies Innovation Fund.
- Amplitude acquired ClearBrain, a San Francisco-based predictive analytics startup. Financial terms weren't disclosed. ClearBrain had raised approximately $3.2 million in funding from investors including Harrison Metal and Pear Ventures.
FIRMS + FUNDS
- New Enterprise Associates, a Menlo Park, Calif.-based private equity and venture capital firm, raised $3.6 billion for its 17th fund, according to The New York Times. Read more.