Vancouver-based, home-improvement product e-commerce company BuildDirect will have a new CEO following the abrupt departure of co-founder, president and CEO Jeff Booth.
BuildDirect spokeswoman Katie Kernahan told Business in Vancouver in an email that Dan Park is the new CEO and that Booth "resigned"
"Jeff’s resignation is not a reflection of his belief in the vision for the business, or the team," she told BIV in an email late in the afternoon on October 27.
"We will continue to operate business as usual."
Booth, however, wrote a lengthy post on LinkedIn to provide background to what he called a “regrettable” departure that is “effective immediately.”
He attributed his departure to his decision to have the company take on debt.
That post reads:
“Creating something great, almost as a rule, requires a harrowing journey that will test your deepest convictions. In the business world, crossing the chasm, translating a promising idea into a mainstream business, has become a rite of passage: something all game-changing companies must go through. But that doesn’t make it any easier when you’re experiencing that moment firsthand. When you’re hovering over the abyss, sometimes you don’t see the other side. It’s scary. The company I founded in 1999 has been living this story, and I’d like to share what I’ve learned.
Every great business has at one point walked along the edge of its own destruction, and the survivors’ stories have become legends. Amazon was a giant-stakes, new supply chain that lost $2.8 billion in the six years before it earned its first profitable quarter. It wouldn’t have survived those years and the dot-com crash if founder Jeff Bezos hadn’t held fast to his grander vision, or if investors had bailed or balked at loaning $2 billion to cover its losses.
FedEx got so close to the line in its first two years that CEO Fred Smith hit the Las Vegas blackjack tables to win enough cash to keep it running. Apple so desperately needed a reset in 1997 that Steve Jobs turned to arch-nemesis Microsoft for a bailout.
Nothing worth building is easy and the process of changing an industry is hard. You will experience some incredible highs and some really dark nights. I know this personally.
The transition from an ecommerce to platform
We had an interesting ecommerce company. Then we blew it up … on purpose. Most people who looked at BuildDirect a few years ago would have seen us as a successful online retailer of home improvement supplies. Indeed, our company was doubling our sales every year.
But we were victims of our own success. Customers wanted to buy more from us, but we were failing them because, much of the time, we didn’t have the inventory to make the sale. We had tried for years to solve this problem but just couldn’t keep up with the growth. So at the end of 2013, I went to our board and told them our only way forward was to change almost everything about how we did business. If we didn’t, we would stagnate and fail. If we did, we might be able to create something exponentially more valuable.
Our idea was to open our platform — our onboarding of new products, our predictive data about what would sell best, our logistics network for delivery, everything — so our suppliers could understand demand, quickly adjust their inventory accordingly and give customers what they wanted. In short, we’d get out of the way and put our suppliers in the driver’s seat. What was once proprietary, we would give away. Ultimately, this would mean wider selection and better results for the customer.
Pivoting a business – learning and finding the right product market fit as a start up is what makes it successful. Pivoting a business that has reached half a billion dollars in market capitalization and is growing quickly is a completely different thing. The very things that make the former business successful, slow the transition to the new.
We launched the platform with Home Marketplace in February 2016 — and it took off like a rocket — only to fall victim to its own runaway momentum. Suppliers loved the platform and added products to our site faster than we could have imagined. We went from 6,000 products, or SKUs, to more than 150,000 very quickly. But parts of the technology required to handle this growth were still in development. As a result, customers couldn’t easily discover the products they needed on our site. Meanwhile, suppliers had great information, but they didn’t yet have the tools to adjust their offerings to account for it.
We were part way to building the platform we envisioned, but completing it would take a lot more money than anticipated. Terrifyingly, there was no way to turn back.
Crossing the chasm
Elon Musk’s famous analysis — “Being an entrepreneur is like eating glass and staring into an abyss” — comes to mind when I think back on those months. The pressure at that point in the journey was horrendous. You lose believers. Investors, suppliers and members of your team find their firmest convictions pushed to the limit. Some relationships I thought were rock solid crumbled.
People had reason to doubt. Our once-growing revenues had stalled. Suppliers who had been with us for years saw their products buried under the avalanche of new offerings on our site, and customers couldn’t easily find the products they needed. It’s much harder to hold faith in a grand vision when every new data point warns of disaster.
As this problem intensified, I made a fateful decision to bring more debt into the company to try and get to the other side of our technology build.
A new reality
With that capital infusion in place, we continued to push through. The path was right, but it just needed to be finished to provide the value we imagined.
Our suppliers rallied behind us. Great employees dug in, bringing our team together and focusing on solutions under very trying circumstances. We had a lot of people determined to make things work no matter what — and we needed every one of them. Seeing their commitment and passion made me realize that, regardless of the outcome, this was all worthwhile.
Then, as the technology caught up to the demand, things began to coalesce. Revenue started to grow again — this time without the same cost. Incredibly, this chasm we were crossing — together, my whole team and I — we were making it. It was working. After so many years, the dream of creating the simplest and most trusted solution for home improvement was within our sights.
Unfortunately, though, there were new hurdles. Trying to pivot from a legacy business model to a new one takes time, and I felt the weight of old expectations holding us down as we tried to sprint forward. In addition, the partners and debt we took on to finance our technology came with certain realities. Their understanding of growth is different; their timelines for return are different; their appetite for risk is different. In the end, I made the decision to take on debt to fuel our company at a pivotal point in its history. It felt like a last resort at the time. Today, that decision has created an unforeseen roadblock in how I lead BuildDirect from this point forward, specifically how to maintain our vision and how to protect the investment of staff, investors and partners who have believed in our company for the better part of 18 years.
For that reason, I am regrettably leaving BuildDirect effective immediately.
Have there been lessons learned and things I would do differently? Yes, too many to list here today. I do know this: I accept responsibility for the situation we’re in today.
This journey has been more exciting and more terrifying than I could have ever imagined. It’s also been life changing. I have had a front seat view of how fast technology is changing the world. I set about to help change an industry and the job of trying to do that has changed me. The entire process forced me to take stock repeatedly, doggedly: What did I value most? How could I ensure a win for the people who believed in the company, even if it meant walking away with nothing? And what would I do if it all went to zero — could I live with that?
In the end, I realized that the things in life I value most — family, friends, integrity — aren’t contingent on business outcomes and can’t be taken away from me no matter what. Framed this way, all the challenges and risks of running a business become eminently more manageable. In this formulation, the riskiest proposition of all is to lose sight of who you are. To betray yourself is the only way to truly fail.
To all those who have been a part of this – I have much love and admiration. Thank you and I wish you my very best.”