What Went Wrong with Ecomom?

 
 
 

Three weeks after the suicide of celebrated entrepreneur and Ecomom founder Jody Sherman – and a week after the subsequent liquidation of his company — PandoDaily founder Sarah Lacy brings to light the poor strategy decisions made by Ecomom in its final weeks.

Ecomom, an e-commerce website focusing on eco-friendly, sustainable products for women and their families, had a surprisingly unsustainable business model. Lacy notes that “higher-ups” in sales and marketing bet heavily on the volume they could move. To meet the aggressive goals, the company offered slews of discounts, to the point that Ecomom was frequently losing money for a given sale.

Sound familiar, Jos A. Bank?

The discount-culture was essentially bankrolled by the $5 million in seed money the company had raised from investors – including Tony Hsieh’s Vegas Tech Fund. The strategy was also at odds with Sherman’s vision of forming long-term relationships with e-commerce customers.

Rumors of a final, major purchase by the sales and marketing team that led to a $1 million line of credit also swirl around the company’s demise, although there is no confirmation on what the purchase was.