Grove Collaborative’s Pre-Post-Mortem

🧠 The Takeaways

Grove Collaborative is finito. Let’s learn from their carcass what not to do.

1. You can’t be a brand + a retailer. Pick 1 and stick with it.

2. Cutting Marketing with falling sales = ⚰️

3. Bad Narrative. No one will buy you.

+ Coco May Update.

LBAB! Community - How was May for Coco?

Momentum transferred into results. More brands are starting to use and get more out of Coco AI.

Product: 

We onboarded a new dev and spent the month working on our most important integration and feature of the year: 

1. Klaviyo integration

2. Automation Flow Builder.

This summer is going to be full of more massive releases for us.

Growth:

We exceeded our sales forecast to the point that we caught up on missing deals from prior months. We’re having conversations with more and bigger brands, and it’s incredibly exciting.

Team:

We officially ended the transition with the original team this month. Now, it’s just me in the weeds with our dev team cooking. It’s exciting to be back in such a lean org. But I’m wearing a lot of hats. 

Financials:

We’re into normal payment cycles. Consistently making payroll and on the path to have a very successful holiday ‘25. My goal now is to reinvest as much as we can into product and growth and have a killer product by holiday.

Still hoping to start paying myself consistently later this summer.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

Grove Collaborative, the eco-conscious cleaning biz, has pivoted into a “what can we shove in a box?” subscription service that’ll be delisted from the NYSE by the end of the year.

• Share price: $1.13

• Market Cap: $45m

• L5 Performance: -97%

• P/E Ratio: N/A

Falling sales, no profit, and no direction of where to go from here. This biz is dead, and they’ve put themselves in a tough situation for a buyer to salvage this brand/marketplace/who knows what to call it.

Financial Summary

TLDR Analysis: Disaster of a P&L

• Falling Sales for the 4th yr in a row. ⚰️

• SG&A is 51% of the biz. 🤮

• Losing Less money, but still too much. 🤢

With $24m in Cash & Equivalents and $27m in Current liabilities (with falling sales), Grove is toast. 

It’s fallen and it won’t get up. This is what the death spiral looks like.

Let’s Pre-Post-Mortem This Biz

Here are the 3 mistakes that lead to Grove’s death.

1) Be a Brand or a Retailer.

Grove used to be the new age, good for you, eco-conscious DTC cleaning product biz. That trend peaked during COVID, so they had to figure out where to grow next. 

But pivoting into a full-blown marketplace?

So many successful brands fall into this trap. Honest Co is another one. 

“Consumers love our products so much they’ll love our recommendations as well.”

IT 👏 NEVER 👏 WORKS 👏.

• Consumers buy from brands because they align with product taste.

• Consumers align with retailers because of service propositions.

You can’t be both. Some retailers are able to white-label their products.

Brands can’t make the pivot to retailers.

The models are too different. Where you need to invest is too different. The skill set is too different.

If you’re a brand, stick to being a brand. If customers stop buying your current products, make another hit product. Don’t sell others.

Takeaway: Be a Brand or a Retailer. Not both.

2) Don’t burn seeds in a famine

In 2021, when Grove went public, they spent $107m on Marketing (28% of Rev).

In 2024, that number was $10m (5%).

During the same period, Sales fell from $383m -> $203m. Its valuation -97% during the same period.

When sales aren’t going well, everyone’s first instinct is to blame/cut marketing. This couldn’t be a worse idea. 

Grove is the perfect example of the death spiral that causes.

Every year for the past 4 years, Grove reduced their marketing budget, and you already know what happened to their sales.

At the same time, their SG&A has held fairly flat at ~50% of Rev. 

Everyone gets the ick when people talk about cutting SG&A, but a 54% gross margin biz should be able to spend 20–30% of Rev on Marketing + 10–15% SG&A.

Takeaway: SG&A should be the first place to cut. Not Marketing.

3) Who’s going to buy this now?

Grove is now a “has-been brand,” current Marketplace, with great Gross Margins and terrible net margins. 

I have no idea who would want to acquire + integrate it.

If it were still a brand falling on tough times, I could see a conglomerate like Unilever or P&G scooping them up and pumping them through retail. 

(What should have always happened with this brand.)

But now, as a Marketplace with falling sales, I can’t imagine anyone wanting that burden.

Literally the only value of a marketplace is the ability to sell other brands’ products. If you can’t sell, you don’t provide any value in the market. 

1. Consumers clearly aren’t interested.

2. Brands won’t want to be associated with you.

There’s no enterprise value there. The obvious next move they need to make is cut SG&A enough to get to break-even and live long enough to figure out what to do next.

But it’s going to be a long, brutal path from here.

Takeaway: Clear Narratives make more money.

Final Thought

All of these God awful decisions are because Grove went public too early and at too high a valuation. I don’t know if Grove in its current model would have crushed during the same time period. 

But it’s hard to imagine it was worse than this.

Eco-conscious, good for you brands faced serious headwinds coming out of 2021. But if they didn’t have quarterly reporting and public market growth expectations, they could have taken more time and thought on how to navigate those tough waters.

This flail of a Hail Mary is a nightmare, and I can’t imagine they would have done it so violently and poorly as this if they were still a private biz.

I’m not going to rehash the insanity of the 2021 valuations bubble again. 

The more important point here is that Founders should be more excited about going long on their consumer brands for 20+ years. 

To create real lasting value that doesn’t implode in 18 mos. Consumer brands require decades to shift a culture, nail the supply chain, and have the proper financing to be cash machines.

These sprint-for-7-years-and-dump plays don’t work in Consumer.