Here's Proof Your Startup Needs HR
The founder of Thinx has lost control of the period-underwear company largely because of one serious blind spot: human resources.
As the startup expanded and pulled in tens of millions in revenue, then-Chief Executive Officer Miki Agrawal never developed HR policies or hired an HR manager.
Agrawal is out as CEO as of earlier this month, soon before Racked published a story in which current and former Thinx employees complained of low pay, sparse benefits, and erratic behavior by management. Suddenly a company that had touted itself as a champion of feminism stood accused of mistreating its largely female workforce.
In a personal essay she posted Friday on Medium, Agrawal called HR a "problem area" that she "didn’t take time to think through" and cited the lack of an HR apparatus to explain the absence of competitive benefits and pay. She didn't address employees' complaints to Racked about her management.
Thinx may be overdue for an HR manager.
"My gut would say: If you’re getting up to 25 employees, you should seriously look at hiring an HR person," says Jon Decoteau, a divisional director at the Society of Human Resource Management. Thinx employs around 35. "You’ve got to get the organization to meld and the CEO to start operating it as a company, as opposed to a project that they incubated at their house, in their garage."
"If your business depends on keeping good people and keeping them productive and happy, you need someone whose job it is to do that," said Charles Gray, who runs the startup HR consulting firm Gray Scalable. He recommends that startups hire internal HR managers before they hit 50 employees. "And by HR person, I mean someone who is the advocate for the employees. You can go to your manager, your friend, or the founder, but those people aren't the employee advocate."
Agrawal founded Thinx in 2014 with her twin sister Radha and with Antonia Saint Dunbar. The company marketed its absorbent, washable underwear—which come in styles from boy shorts to thongs and cost between $24 and $39 a pair—as alternatives to tampons. It raised an undisclosed amount of funding in late 2014, garnered buzz with lots of press and bold advertisements, positioned itself as proudly feminist, and shot out newsletters to customers with the subject line, "This Week in Feminism."
The narrative began to shift last year, when Agrawal's feminist bona fides came into question. "I only started relating to being a feminist, literally, right when I started my company,” she told New York magazine. “Every time I thought about the word feminist, I thought about an angry, ranty … girl." Critics charged that her company was co-opting feminism as a marketing gimmick. In response, Agrawal doubled down. "Less than five years ago, feminism was considered angry and ranty," she later told the Ringer. "The fact that the word feminism and marketing [have] been used in the same breath has actually showed me progress."
Then came the chatter about Thinx disregarding its employees' needs.
Startups neglect HR for a variety of reasons. Founders get busy; growth gets prioritized. "I didn’t put HR practices in place because I was on the road speaking, doing press, brand partnerships, editing all of the creative and shouting from the rooftops about THINX so we can keep going," Agrawal wrote.
Startups often ignore HR until it's too late. They may fear that HR, and the corporatization it symbolizes, will threaten the culture they say has led to their success. But without HR baked into its culture, a company can end up with deeper issues.
Snapchat created an HR department only after offensive internal emails from its CEO were leaked to the press. Uber didn't make its first HR hire until 2014, by which point it had 500 employees, which Decoteau says is way too big. It has since weathered multiple HR-related scandals—in particular, recent accusations of widespread sexual harassment and discrimination. (Uber President Jeff Jones resigned over the weekend because of internal turmoil.)
But with a dedicated HR manager, managers learn how to resolve issues with their teams. "You need someone who can respond to employees if they say we're all thinking of leaving because our benefits aren't competitive," said Gray. "Someone who is responsible for the health and well being of the employees." Gray also advises that startups consider compensation analysis to align salaries with the competitive market. He also helps with management training.
Thinx is now hiring its first HR manager and is "putting in much more rigid HR practices," Agrawal wrote in her essay Friday. The company has not yet disclosed specific policy changes. "The respect we have for our employees is of utmost importance to us, and we are actively working to improve our corporate culture," a Thinx spokesperson said Monday. "Miki Agrawal is no longer CEO, and we are working to put new leadership and policies in place so we can continue to grow and thrive. We will update our community when there is more to share."
The company should, of course, adjust the pay and benefits it offers its employees, said Gray. But he also suggests Thinx "recognize and take ownership of the problem and then take some dramatic steps to reverse it," including interviewing employees and managers to get to the root of the problems. "I would try to fix it top-down," he said. "You can ultimately do all sorts of ground-level things, like improve benefits, but none of those matter if the leadership doesn’t change."