Surviving D2C’s Boom and Bust

Chris Wichert is an investment banker turned direct-to-consumer entrepreneur.

His luxury shoe brand, Koio, launched in 2015 and quickly scaled. Then the pandemic hit. By late 2022, he says, the D2C hype and funding had collapsed.

He slashed costs, stabilized cash flow, and successfully exited the company. In our recent conversation, he shared his story of boom, bust, and survival.

Our entire audio is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: Give us the rundown.

Chris Wichert: I co-founded Koio, a luxury footwear brand, in 2015. We exited the brand six months ago, and I helped with the transition. I’m now advising other consumer brands on how to reach profitability and stay there.

I’m from Germany. I started my career in investment banking, then moved to the U.S. for my Wharton MBA, where I met my Koio co-founder.

I live in Brooklyn, New York.

Bandholz: Did Wharton help with the launch?

Wichert: Not directly, but the Wharton School connections were conversation starters for raising money. We moved to New York after graduating.

Our first financing round, about $1.5 million, came 12 months after our launch. The money got us started, but it also set us up for the wrong path. Building a luxury D2C brand with a high average order value requires patience. You have to keep investing to eventually see the compounding effect after five, six, seven years.

We ended up raising close to $20 million over a decade. It was a mix of venture capitalists, family offices like the Winklevosses, and other D2C entrepreneurs.

We used the money initially to fund inventory and build our team. Our first hire was for operations. Our second was for marketing.

We learned quickly that selling a $300 shoe requires a strong brand and credibility. It takes a lot of investment in media outreach, pop-up stores, and retail. Our sales increased when people saw our shoes in person, tried them on, and felt the leather. So we went into retail and digital early on as a dual strategy.

We experienced great growth for the first five years. Our biggest raise, $10 million, came in 2019. But the pandemic wiped out our retail business. We had five stores at the time. Plus, our use case was gone. Our shoes were dress sneakers for dates and nice occasions.

By late 2022, early 2023, the D2C hype and funding had collapsed. Valuations plummeted.

That forced us to make big changes. We were losing roughly $3 million per year with no growth. The company was way too complex and costly. Our SKUs had expanded from men’s dress sneakers into boots, loafers, and slip-ons, for men and women.

We interviewed around 100 customers. We learned that the product expansion was detrimental to the brand. Our messaging was unclear.

We went back to the core items. Then we cut 70% of our New York team, which was painful. We closed the office and transitioned to remote only. We also closed unprofitable dropship accounts and stores. Then we rehired certain remote roles internationally.

Over the ensuing 12-18 months, we reached break-even profitability.

By then, neither my co-founder nor I wanted to keep running the business. We had an obligation to our investors and remaining employees to end the company in the best possible way.

So, I reached out to many people in D2C, especially footwear and apparel brands, to explore an exit or merger. That process was cumbersome.

It took almost two years, but we got a competitive process underway and spoke with several interested parties. We found a trustworthy acquirer who owns several brands and closed the deal with him in August of last year.

The transition lasted just six months. My co-founder and I remain shareholders. We believe in the company and wanted to ensure operational and brand consistency.

We also wanted to integrate our employees into the workflow.

Bandholz: You’ve pivoted to an advisory role.

Wichert: I’ve built a great network of consumer-brand entrepreneurs over the years. I love the industry and want to share my knowledge and experience.

I’m now working with founders across different consumer categories, such as skincare, footwear, eyewear, watches, you name it.

Bandholz: How can people reach out?

Wichert: Learn more about our shoe company at Koio.co. I’m on LinkedIn and X.