Dot & Bo was an e-commerce company that sold home decor as curated packages, which were designed to look like sets from imaginary TV shows – think “Einstein’s Office.” Founded by seasoned entrepreneur Anthony Soohoo in early 2013, its ever-expanding customer base generated $15 million in revenue in 2014 alone.
This huge demand placed extraordinary pressure on the warehouse and shipping teams, so Soohoo hired a Vice President of Operations. His chosen candidate had an impressive CV but no experience in e-commerce operations. This lack of experience undermined the whole company, even though it continued to have solid customer growth. When Soohoo realized this, he hired a new VP of Operations. But by then, it was too late. In September 2016, Dot & Bo went into liquidation.
When that first VP of Operations came on board, his initial task was to select an enterprise resource planning – or ERP – system. ERPs manage operations, like tracking inventory and deliveries. But the system the VPO chose couldn’t handle the variations between different suppliers’ delivery times.
Because of this, the customer service team was inundated with queries about missing or late deliveries. They couldn’t keep up with rising demand, and email response times dragged out to eleven days. To make matters worse, the system was so shoddy that staff often couldn’t tell where a delivery was.
To compensate for delays, staff express-shipped orders – which cut into profit margins. At the same time, social media hype increased sales; this placed even more pressure on operations that were now hanging by a thread.
Superficially, Dot & Bo’s operational problems could be blamed on technology, but it was the VPO’s lack of sector experience that led to the company’s demise. Someone with specialist knowledge would have chosen a better ERP – one that could cope with Dot & Bo’s complex supplier model.
If you want your startup to survive scaling, you need the right senior management team in place. And that means hiring specialists over generalists – even if they have impressive experience. Remember, without the right jockey, your racehorse won’t cross the line.
If you’re not at the stage where you can afford a senior specialist, find a mid-level one instead. They’ll come with a cheaper price tag while still having the expertise your company needs to support its growth.
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