Hollar, a Los Angeles-based startup that’s trying to reinvent the dollar store for the smartphone age, has commenced a search for a new CEO, multiple sources told Recode.
The company’s co-founder and current CEO David Yeom confirmed the search, which he said he is leading with the help of an outside firm.
The exact reason for the leadership change is not totally clear. In an initial conversation with Recode, Yeom said the move was the culmination of regular talks with his board of directors about making sure Hollar has the best possible talent in place at all levels as it grows through different phases.
Yeom is a first-time founder, having previously worked as a vice president of marketing at The Honest Company. Recode has learned that Hollar recently raised a previously unannounced $35 million series C round of financing — setting it up for a new stage of growth. The new investment valued the startup at around $200 million, including the new funds, according to PitchBook.
During Recode’s initial interview with Yeom, he seemed to suggest that the idea to replace him originated with Hollar’s board of directors. But after Hollar investor and board member Jeremy Liew of Lightspeed Venture Partners told Recode the decision was Yeom’s, the founder’s tune seemed to change.
“We have a very open dialogue. Nothing is off limits,” Yeom said the second time around. “But there was never, ever a point where Jeremy, Danny [Rimer] or Eric [Feng] ever said to me, ‘We should get a new CEO.’”
“No one forced me to do anything,” he added. “If I wanted to say, ‘I’m good as is; we can pause and stop the search altogether,’ it’s totally within my discretion.”
Hollar has raised more than $80 million from venture firms including Lightspeed, Index Ventures and Kleiner Perkins Caufield & Byers, as well as an Asia-based investment group that led the last round but is not revealing itself.
Yeom said it’s painful to leave the top role but that he’s self-aware enough to know what’s best for his company.
Whatever the exact impetus, Hollar is focused on hiring a leader that is “the very best ... at taking a business that hit series C phase and being able to take it to a billion-dollar company,” Yeom said.
It doesn’t seem to be a coincidence that two of Hollar’s board members — Liew of Lightspeed and Brian Lee, the former CEO of The Honest Company — have also sat on the board of The Honest Company, which went through a similar CEO change last year when Lee was replaced by a long-time Clorox executive who had much deeper experience in the consumer packaged goods industry.
Yeom said he will stay “very, very active” in Hollar and will remain its co-chairman along with Lee.
Hollar sells the type of goods you’d find at dollar stores — think everything from party favors to cleaning supplies — at prices that often come in at $1, $2 or $3. While brick-and-mortar discount chains like Dollar Tree and Dollar General have had success over the last few years, venture investors believe there’s room for a new company like Hollar to build a big business in this space by focusing exclusively online. The vast majority of Hollar sales are made through the company’s mobile app.
The startup is trying to make the economics of shipping low-priced items work by setting an order minimum of $10 and by offering free shipping on orders over $25, which pushes customers to spend more. As such, the average order totals around $30, Yeom said. The startup also sells some items, such as a set of glass bowls, under its own brand name, which helps boost profit margins.
Yeom said Hollar had more than one million orders last year, which would work out to roughly $30 million in gross annual sales — using the average order value quoted above.
But for goods that Hollar doesn’t warehouse itself, the startup only counts a fraction of each $1 in gross sales as revenue. Said another way, the company’s revenue number is smaller than its gross sales number.
Hollar is one of a group of venture-backed companies in the e-commerce space that is building a business with mainstream America as its target customer base, rather than wealthier coastal audiences that are sometimes what venture capitalists and tech entrepreneurs know best. Some of the biggest exits in the e-commerce category in recent years have come from companies like Stitch Fix, Dollar Shave Club and Zulily, that have prioritized this type of mass appeal.
This article originally appeared on Recode.net.