The Reluctant Unicorn
I never wanted to be a unicorn. In fact, I didn’t even think of myself as an entrepreneur until I turned 40 and, like many women, decided to unite an innovative idea with a career-ful of experience and the desire for flexibility to spend time with my children into a start-up company.
Prior to this, I’d spent nearly 20 years climbing the corporate ladder at well-known consumer product companies where I honed my brand strategy and finance skills. I also I developed a strong interest in corporate sustainability, especially during my time with Seventh Generation in the early 2000s when corporate social responsibility was still nascent and Seventh Gen was a leader in the movement.
In 2007 when I set out to start my own natural personal care products company, I made corporate sustainability an integral part of my business plan. In fact, I authored a manifesto that I called The True Promise (to correspond with the name of my company, TrueBody), which included this Statement of Purpose:
In a world of increasing complexity, where our everyday decisions have impacts far beyond our personal domains, TrueBody provides products that clean our bodies and that are healthy, effective, ecologically benign, and affordable; and we are doing so in a way that creates and sustains a sound, vibrant, sustainable business ethic, and workplace.
There was a lot more to The True Promise than just this Statement of Purpose, because I wanted to make sure that my core values and guiding principles were baked into every aspect of launching and growing this business from the beginning. Corporate sustainability was not something I’d get around to once the company was established. I had my eye on the triple bottom line before the company ever had an actual bottom line.
Implicit in the core values of The True Promise was my vision for how I intended to raise money for the company. I dreamed up an idea I called “A Million Moms” where I imagined going out to the millions of moms who would want my healthy, all-natural, affordable products for their families, and who would also like the idea of supporting a mom-entrepreneur.
I’d offer them $1 per share to invest in my company. I thought the idea was brilliant…
I’d get the $1 million I needed to launch and grow the company, and by engaging my future customers as investors I would build a loyal audience for my products.
This was 2007, and Kickstarter didn’t exist yet. Indeed, the term crowdfunding had only been coined the year before and was far from the common usage it enjoys today, so it’s not surprising that when I ran the idea past my attorney and financial advisor, they kind of smiled patronizingly at me.
I imagined they wanted to pat me on the head as if to say, “Isn’t she cute?” Outwardly, they simply said, “You can’t do that.” My attorney elaborated that, technically, I could try, but it would require so much legal work, not to mention registering my offering with the SEC, that I’d probably spend as much or more in legal fees than I would actually raise.
“Get together a pitch deck,” he told me, “and go raise money the traditional way from angels and venture capital funds.”
And so I did.
I launched TrueBody in August 2008 and launched my first significant capital campaign at a pitch competition in October 2008. Does that timing ring any bells? Remember the Great Recession? The fall of 2008 was right about the time that Americans were starting to feel like that proverbial frog in a pot of water who thinks, “Hey, it’s getting hot in here.” It was an unfortunate time to be pitching angels, to say the least. They were certainly open to meeting with me to learn about my deal, but their checkbooks were locked up tight.
While I spent many hours over many months presenting to angels who were intrigued (but not enough to write a check), I never gave up on my Million Moms idea. The concept was not completely original, I have to admit. Ben & Jerry’s had done something similar back in 1984 with their Get a Scoop of the Action campaign that raised over $750,000 from 1,200+ Vermonters with a minimum investment of $126.
I even managed to get a lunch date with Jerry Greenfield (yes, “the” Jerry)
…who referred me on to Chico Lager, the CEO of Ben & Jerry’s at the time of their Vermont-only stock offering, to ask advice and guidance on a similar campaign for TrueBody. It was Chico who gave me a cold hard dose of reality when he pointed out that Ben & Jerry’s had been around for six years and was a household name when they ran their campaign. He echoed the advice of my attorney when he warned, “Trying to do this as a start-up would be more trouble than it’s worth.”
So I went back to hunting for angels and, in the end, I did raise $1 million, but it took all of four years to do it. The money came in fits and starts which meant I was constantly fundraising while also trying to grow sales and manage the company. An unfortunate casualty of this protracted capital campaign was my adherence to my own True Promise.
The longer it took to raise money, the less choosy I became about investors.
Instead of focusing solely on the small but growing number of angels committed to impact investing, I cast a wider net, with the naive idea that I could convert investors to the notion of patient capital for a sustainable business as they came on board. After all, I had as an example my former manager, Jeffrey Hollender, co-founder of Seventh Generation, who’d attracted millions of dollars in private capital while saying he’d never “sell out.” (Seventh Generation did eventually sell out to Unilever in 2016…six years after Jeffrey had been forced out of the company.)
In the early days of my fundraising foray, I’d included The True Promise in my offering documents, much to my financial advisor’s chagrin. I did eventually humor him and toned down the “touchy-feely stuff” in my pitch deck, but I also pursued — and achieved — B Corp status which formalized legal language for stakeholder (vs. shareholder) privileges into TrueBody’s articles of incorporation. However, after too many unproductive conversations with individual investors and numerous pitches to angel groups to no avail, I finally caved in and started talking with a couple venture capital funds that surprisingly showed interest in my natural products (i.e. non-tech) company.
These two VC funds, one in Vermont and the other in Cambridge, MA, became the lead investors on a deal that closed on July 9, 2010.
I remember the precise date of the closing because it was my daughter’s seventh birthday, and after two years of constant fundraising I had no energy left to be excited about finally closing this investment deal, let alone to plan a birthday party.
I did manage to muster enough energy to take both of my daughters and their grandmother to the lake for a picnic, swimming, and ice cream…after I confirmed the wire transfer from my attorney’s escrow account, of course.
So, as I watched a nice pile of investment capital finally hit TrueBody’s bank account, how did I rationalize with myself the fact that I’d strayed from my True Promise? Part of me really did believe I could evangelize these so-called vultures to my mission, but in all honesty, a more insistent part of me was simply exhausted, demoralized, and yes, I admit it, desperate. By this point I’d invested way more of my savings than I’d ever intended in order to make payroll and keep the lights on.
You might ask, “Why didn’t you lay off people sooner and just walk away?” There’s no simple explanation. For one thing, TrueBody had a $50,000 business loan that I’d had to personally guarantee, which meant I was on the hook to repay it (or stand by as the lender repo’d my home). That was certainly an incentive to keep going. But more than that, I still believed to the core of my being that TrueBody had a shot at making it.
The one easy part of my job in those early years — and the part that gave me immense joy — was introducing my brand into to an ever-expanding network of retailers and watching sales grow.
In the first two years, I landed my two biggest accounts — Whole Foods and Fred Meyer (a division of Kroger) — fairly easily while adding regional grocery chains and numerous independent natural foods stores on both coasts of the U.S. Plus, I was starting to receive ecstatically happy fan mail from consumers. I couldn’t give up yet because I believed there was still so much promise in TrueBody. I was fully in the sway of the quality that is so important to entrepreneurs and yet so dangerous; what some have called pathological optimism.
Pathological optimism: that compulsive confidence that is oh-so-necessary to launch a start-up, and yet there’s the dark side when it becomes a blind faith that keeps you in the game perhaps just a little too long.
I now look back on July 9, 2010 as the date when I took my first steps as a reluctant unicorn. Fairly quickly, I realized that my dream of growing a sustainable business was falling victim to investors’ expectations for rapid growth and a quick exit.
Despite the safeguards I’d put in place with B Corp status and my right to appoint a majority of board seats, I lost control of my company nonetheless. My plans for an expanded product line were immediately overruled by the VC-appointed board members who focused solely on driving sales — no matter how hard I tried to remind them that the sales forecast I’d shared in my pitch deck was built entirely on the addition of at least three new products within the next 12–18 months.
I knew from 17 years in the consumer packaged goods industry, that a robust “brand block “of multiple products was necessary to gain distribution in bigger, more sophisticated grocery chains and mass merchandisers. I had launched TrueBody with one product, followed by a second minor line extension in 2010, but the brand really needed 5–6 products to get the attention of retailers like Target, CVS, and national grocery chains. New product development would, of course, take time and money but in the long run, the pay-off would come in the form of significant distribution gains and increased sales as I landed accounts with hundreds of doors instead of just individual stores and small regional chains.
In hindsight, I have to wonder if those domineering board members could not — or would not — follow my proposed growth plan because it came from the lone woman on a board full of men.
It didn’t seem to matter that I was the only person in the room with highly relevant experience and proven skills to grow a consumer products company, presumably the very qualities that had motivated them to invest in me in the first place. I got the sense that some of them were vicariously living out fantasies of entrepreneurship as they made absurd suggestions for how to grow a consumer brand. For example, one guy seriously suggested changing my award-winning brand and package design — that had been out on the market for several years and proven to be the most effective marketing tool on my limited marketing budget — into something that looked exactly like most of the competition, i.e. not all distinctive or eye-catching. Fortunately, I was able to overrule that one.
Over the next year, I quietly kept new product development going through a serendipitous connection with a highly qualified “intern.” She was a Spanish citizen with extensive product development and business experience derived from many years with large European consumer brands. Her compensation came in the form of TrueBody’s (non-monetary) sponsorship of her visa application so she could temporarily relocate to the U.S. while her kids attended a ski program in Vermont. With her help, TrueBody laid the groundwork for formulations and contract manufacturing services for three new products that could be introduced rapidly when/if funding ever became available. My dissimulation on the company’s R&D activities turned out to be a wise move when, in late 2011, TrueBody got “called up to the show” for a presentation to the Kroger national category buyer.
If successful, it would mean a tipping-point rollout of TrueBody to all 3,000 of Kroger’s stores.
The short version of what happened next is this: I presented my two current products and mock-ups of three line extensions to Kroger in April 2012. The buyer liked what she saw, and said she’d plan to bring in the full TrueBody line with her next category review…the following year. This was the straw that broke the VC investor’s back. He knew the company would need additional funding to keep going until the Kroger launch in 2013, so he pulled the plug saying, “You can try to keep going, or try to sell the company, or just shut down. It doesn’t matter to us. We’re out.” And that was that. Within six months TrueBody was closed.
That was seven years ago, which has given me plenty of time for a post mortem and some soul-searching on this whole experience. The verdict I came to was this: TrueBody died a pre-mature death due to chronic underfunding plus a lethal dose of the wrong kind of capital. I’ve come to terms with my own complicity in the decision to take on venture capital, and freely admit that I certainly made some rookie mistakes along the way, but the biggest one was straying from my True Promise when it came to investment capital.
In hindsight, I realize that I fooled myself into believing I could dress up my work horse company to look like a unicorn, a realization accompanied by a fair amount of guilt because it means I was dishonest; first with myself and then with my employees and investors.
That dishonesty was not intended or even discernible to myself at the time, but I’ve had to own up to it over the years and find a way to forgive myself, and move on.
The best way I could move on, I decided, was to find a way to help others to not go through what I did. So, in true pathological optimist fashion, I became a serial entrepreneur. I took what I learned from my TrueBody experience and explored financial innovations for patient, neighborly, accessible capital that would be better fit for “lifestyle” businesses like TrueBody. These innovations eventually became Milk Money, and The Initiative for Local Capital, and a book, Moving Mountains: The Power of Main Street Americans to Change Our Economy.
And I’m not done yet.
