Elaine Russell launched Chicago-based online store Heirlume in October 2013 to help men buy fine jewelry for women. But as the holiday shopping season got underway, the founder and CEO realized that her premise had a major flaw: It ignored women, which made up half of its potential customers. Russell fixed the strategy and last month hired Danielle Langone, a former political marketing and public relations consultant who transitioned to retail consulting, to replace her as CEO. Russell explains why sometimes the best person to take a startup to the next stage isn’t the founder.
Q. How is the business doing?
A. We did have a great holiday season last year. We’ll build on last year and see how this holiday season goes. We have a negative working capital business model. That has allowed us to become profitable from a very early standpoint. It just comes down to growth.
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Q. Why did you hire a CEO to replace you?
A. My experience is product development, Web development, and e-commerce, and I came up with Heirlume and built the product and launched it. I really felt like it needed more expertise in public relations, social media and marketing to drive the company forward, which is Danielle’s expertise.
Q. Why not hire a CMO?
A. I wanted to work a bit less than what I’ve been working these past 18 months. I have a 2-year-old and another child due in a couple of months. I didn’t want to be the person that held back this company that I put all my blood, sweat, tears and money into. To have someone like Danielle’s expertise and time will give it the best shot.
Q. How involved will you be over the long-term?
A. In the near term, that will probably be a bit more as Danielle gets up to speed with everything. But I’ll always be a resource for her as an investor, shareholder and advisor. Over time, Danielle will become the majority owner. It depends on performance in addition to time.
Q. How did you identify and fix the customer-profile issue?
A. When we first went to market, our website and all of our marketing efforts were targeted at men. I thought it would be closer to 80/20 male and female. What we started to see very quickly was a lot of women shopping on our site. But we closed our eyes to it, which was the wrong thing to do. We kept focusing purely on marketing to men until we talked to our customers about how they were making purchases. We learned how important the female was in the buying process. It was really a telling moment. Our members and customers are about 50/50 male and female. That caused us to redesign our website, rebrand and change a lot of our marketing approach. We created gender-based marketing.
Q. How did that affect sales?
A. We haven’t been public about our revenues. Since we made the shifts in target market, we have gone from having a $200 average order size to about $400 to $450. Our sales conversion rate has doubled.
Q. What’s the most valuable lesson from this experience?
A. Just because you have an idea and a specific way that you think that idea is going to work in the market, once you launch you really need to listen to customer feedback and understand your customers. Being agile and able to move on that feedback is extremely vital. If you don’t, you will find yourself with a product that nobody really wants.
Q&As are edited for length and clarity.