When venture capitalist Keith Rabois got into e-commerce, he couldn’t stop buying brands. Now, everything must go.
OpenStore, co-founded by Rabois in 2021, is shutting down nearly all of the 40-plus Shopify stores it acquired, and it’s in the process of liquidating any remaining inventory by offering steep discounts to move merchandise.
Earlier this week, the company announced it plans to focus solely on growing Jack Archer, the menswear brand it bought for $837,000 in 2022. The website address open.store now redirects to jackarcher.com.
The dramatic downsizing to a single brand comes as OpenStore in recent weeks raised a $15 million funding round that valued the company at just $50 million, a fraction of its previous $1 billion valuation, CNBC has confirmed. Bloomberg previously reported on the financing round and some of the reorganization details.
OpenStore’s existing backers include General Catalyst, Lux Capital and Khosla Ventures, where Rabois is a managing director. Rabois didn’t respond to requests for comment.
It marks the latest example of the decaying e-commerce aggregator market. Companies in the space took advantage of low interest rates and pandemic-driven growth in online retail to collectively raise more than $16 billion from top names on Wall Street and in Silicon Valley with the intent of rolling up independent sellers on marketplaces like Amazon and Shopify.
Rabois was the No. 1 cheerleader on social media and elsewhere, touting the startup and its Miami headquarters. He posted on Twitter (now X) in April 2021, the “best talent i have ever worked with is joining Openstore.” About a year later, Business Insider quoted Rabois in a story saying, “We can absolutely handle acquiring a business in a day,” and that “I eventually want to get to one an hour, but that is definitely a challenge.”
As recently as June 2024, Rabois shared a post from the company and wrote, “We’re hiring! Come learn about the future of commerce online.”
By that point, the broader aggregator market was in free fall. Cracks had begun to appear in 2022 as venture funding dried up for cash-burning startups and e-commerce demand cooled with consumers returning to physical stores. Many aggregators struggled to run the brands they acquired profitably, and began selling off assets or merging with rivals to stay afloat.
Top aggregator Thrasio filed for bankruptcy and laid off staffers in early 2024. Unybrands, backed heavily by Jared Kushner’s Affinity Partners, also cut jobs around the same time.
OpenStore rolled up dozens of Shopify stores offering an assortment of hairbrushes, neck pillows, fine jewelry, skin wands and other goods.
By last year, the business had come under significant pressure. It was becoming increasingly difficult and expensive for some of OpenStore’s brands to attract and retain customers.
Last August, the company tapped the brakes on new acquisitions, and cut jobs across the company, according to people familiar with the matter who asked not to be named because of confidentiality.
Jack Archer and a selection of other brands, like Future Kind supplements, Sweat Tent portable saunas and EXO Drones, were viewed as standouts. But many of OpenStore’s other products failed to grow their sales, while they required costly digital marketing campaigns and new product development that burned through cash, the people said.
By the beginning of this year, employees in OpenStore’s supply chain division were putting together a liquidation list, said one person involved. The first step was to turn off the brand’s Shopify store, then either sell remaining inventory at a discount or donate it, they added.
“It was just way too many different brands to make them all work the way Jack Archer did,” the person said.
As part of the restructuring, OpenStore laid off more employees in June, the people said. Among the teams that were impacted was a group working on an automated customer support service, called OpenDesk, they said.
Several top executives have also departed the company, including OpenStore co-founder and tech chief Jeremy Wood and Trenton Riggs, the company’s president.
When OpenStore was getting started and scaling, some investors with limited domain expertise in e-commerce were attracted to the opportunity because of Rabois’ long history in startups and venture capital, according to a person familiar with the matter who asked not to be named in order to discuss private information. They were less enticed by the business of rolling up small online retailers, the person said.
Before his career in venture at Khosla and Peter Thiel’s Founders Fund, Rabois had key roles at Square, LinkedIn and as part of the so-called PayPal mafia, and he made notable angel investments in companies including YouTube, Airbnb and Palantir.
Rabois, who served as OpenStore’s CEO, won’t be involved in Jack Archer’s day-to-day leadership. He will remain on the company’s board, another person familiar with the matter said. The person asked not to be named in order to discuss private information.
Last month, the company named Emma Crepeau, previously growth chief at apparel company Rhone, to be Jack Archer’s CEO as it enters the “next chapter of growth.” Jack Archer, which has seen triple-digit net sales growth year to date and “strong” customer repeat rates, plans to relaunch its brand in the fourth quarter, the person said.
“We’re doubling down on what matters most: purpose-built design, modern essentials, and a community of men redefining what style can look and feel like,” the company wrote in a LinkedIn post. “Emma’s leadership will be a key part of that evolution.”
As for Rabois’ current view, he’s still finding a way to promote the company. In response to comments on X about some of the latest developments, he wrote last month, “Not a failure — 10x focus on what is anomalously great.”
— CNBC’s Ari Levy contributed reporting to this story.
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