When Gwen Whiting sold her cleaning brand the Laundress to Unilever in 2019, it was a triumphant moment 17 years into her run as a boot-strapped founder, securing a reported $100 million exit to a giant of the Fortune Global 500.
Almost four years later, her product was recalled and taken off store shelves for nine months. Whiting now considers her decision to sell to Unilever a catastrophic mistake for her brand—and now that her non-disparagement agreement has expired, she wants to talk about it.
Whiting founded the Laundress with Lindsey Boyd in 2002 as a specialty product to compete with dry-cleaning services. They expanded from laundry to home cleaning and opened a boutique in New York’s Soho neighborhood. Rather than take on outside capital, the founders started with a $100,000 SBA loan and amassed a quarter of a million dollars in credit card debt over four years.
Part of the plan was always to secure a strategic exit. “I really believed that this business would outgrow me and would need more than myself to maximize its potential,” she says. Her top choice was an acquisition by the eco-cleaning brand Seventh Generation. But in 2016, Unilever bought Seventh Generation for somewhere between $600 million and $700 million, adding to a portfolio that includes Dove, Vaseline, and other name-brand household staples. That deal took Seventh Generation out of the running and elevated Unilever as a potential buyer.
This story was featured in The Reader, a weekly newsletter of the biggest stories from Fortune. Sign up here.
Acquisition talks
In late 2017, a Unilever executive walked into the Prince Street Laundress store and started asking about a potential acquisition. Whiting was intrigued. “They had a track record of acquiring a lot of great brands,” she says. The Laundress executives and its bankers—a team of five women—presented to 13 men from Unilever at the company’s New York office, Whiting remembers. Their pitch highlighting the brand’s 30% year-over-year organic growth on about $25 million in annual sales was a winner.Unilever’s deal to buy the Laundress closed in January 2019.
Quickly, Whiting started seeing red flags. “None of those 13 men were involved with our brand the next day,” she says. “I never saw one single person again.” The Laundress had been acquired in Unilever’s international division, so she had trouble securing U.S. resources like a new bank account. Meanwhile, her cofounder had the same 2-year employment contract she did, but didn’t stay as involved with the brand, Whiting says.(Boyd declined to comment. She has since founded a jewelry brand.) As the problems mounted, Whiting tried to get help from a senior Unilever U.S. executive. He told her her brand was too small to warrant his attention, Whiting claims. While a $100 million exit was a big deal for the Laundress, it was pennies for now-$64 billion-in-revenue Unilever. “We were just floating in a deep abyss,” Whiting says.
Rashes and a recall
Then in 2022, after Whiting had fully left the brand, Laundress customers started reporting rashes and other skin ailments. The Laundress’s Instagram account posted an alert in November of that year, warning consumers of “the potential presence of elevated levels of bacteria in some of our products.” Whiting learned about it when a friend sent her the post. The company issued a voluntary recall of products produced between January 2021 and September 2022, about 8 million units. A class-action lawsuit alleged the brand put consumers’ health and safety at risk.
Unilever now says that all products produced after July 2023 are safe to use. The company didn’t respond to requests for comment.
Founder knows best
Whiting blames Unilever for the “self-induced” disaster. But mostly, she wants to warn other founders about what can happen after an acquisition—and to trust that they know their brand best. Bootstrapping excused her from investor pressure to sell, and she caved to the big-company exit anyway, she says. Whiting now says it was a “false belief” to assume that the only way to grow the Laundress was to sell. “The reality was no one cared as much as I did,” she says. “I know what’s best, and I believed otherwise.”
“This was my brand. This was my baby. This was my everything,” she says. “To watch what I built be trashed—that’s a very personal pain.”
Most founders aren’t willing to talk about the “bad deal,” she says, whether because it’s “hard on the ego” or they need a job or they’re scared of major corporations. Whiting says she gets advised to buy back her brand now—as we’ve seen in some other examples of deals-gone-wrong, like Gregg Renfrew’s reclaiming of Beautycounter from private equity firm Carlyle—but she says she’s not interested and that the brand today is “unrecognizable” from the one she founded. She recently launched a “private members cleaning community” and product line called the Fill.
“Technically, financially, I got the good deal. But I got a bad deal for my brand and my community and my partners,” she says. “This should have been a story of wild success,” she adds. “I don’t want their mess. I’m ready for my own clean start.”
