SoftBank-backed Brandless shuts its doors for good

It was a roller coaster ride — a short one.

Brandless, a San Francisco-based e-commerce company that made and sold an assortment of “cruelty-free” products in beauty and personal care, household, baby and pet categories, has shut its doors less than three years after officially opening them in July 2017.

In a statement provided to the news outlet Protocol, the company cited a “fiercely competitive” retail market. As part of its shut-down, the company will reportedly lay off 70 employees, with 10 staying aboard to resolve outstanding orders and presumably figure out how to sell its remaining assets.

The company’s short run won’t come as a complete surprise to industry watchers. In July of 2018, Brandless announced that SoftBank’s $100 billion Vision Fund had invested $240 million in the company in a deal that valued Brandless at a little over $500 million. It was a surprising development, given the company’s relatively nascent business.

As has happened across numerous companies backed by the Vision Fund, including Wag and more recently WeWork, it also meant an executive shake-up. Indeed, by March of last year,  CEO Tina Sharkey, who’d co-founded the company with Ido Leffler, resigned from her position, saying she was moving into a “more focused role” as the board’s co-chair.

At the time, Evan Price, Brandless’s then CFO, became the company’s interim CEO. In May, John Rittenhouse, the former COO of Walmart.com, took the job. His plan, according to Protocol, was to get more of Brandless’s products into brick-and-mortar stores, but by this past December, he’d quietly stepped down and left Brandless. (Sharkey, meanwhile, left the company’s board last fall.)

Impacts

Certainly, the development undermines SoftBank’s already shaky reputation for savvy deal-making. Though in fairness, Brandless did enter into an industry that has grown cluttered with new entrants, many of them with a good story about the quality of their products but also in heated competition with products that taste and perform similarly to many others on the market in similar price brands.

It’s also worth noting that of the $240 million in SoftBank dollars announced in 2018, less than half that amount ultimately made it to Brandless, says a source close to the company.

According to a report last year in The Information, SoftBank, eager to see Brandless turn a profit, was providing some of its promised funding to Brandless via installments and was holding back a large chunk of capital until the company met certain financial targets.

Because that didn’t happen, SoftBank wound up investing $100 million altogether, and, according to Protocol, Brandless’s board, including Price, Leffler, SoftBank managing director Jeff Housenbold, Redpoint’s Jeff Brody and Colin Bryant of NEA, decided to close the company while still able to provide severance packages for employees.