Earlier this afternoon, Gilt Groupe named a new CEO to replace founder (and current CEO) Kevin Ryan. Michelle Peluso, formerly the president and CEO of Travelocity, will take the top slot at the flash deals site beginning in February. Ms. Peluso, who currently serves as the chief marketing and Internet officer at Citigroup, is also the only outside member of Gilt Groupe’s board who isn’t an investor. She joined the board in October 2009.
“There aren’t that many people that you would trust to become CEO of a company that you’ve spent five years building and that has a thousand people,” Mr. Ryan told Betabeat by phone. “She’s always been my first choice. But in the process, midway through, you can’t say ‘Oh my God, I really want Michelle,’ because she hasn’t said yes yet; we haven’t made an offer yet.”
The news comes on the heels of swirling rumors that Gilt was looking for an IPO-friendly CEO to replace Mr. Ryan. At the time, a source close to the company told Betabeat that it was never Mr. Ryan’s intention to stay on as CEO. Mr. Ryan will continue working closely with Gilt, returning to his previous role as chairman, but shift his focus to other fast-growth companies in the AlleyCorp network: Business Insider and 10Gen. Ms. Peluso will be the third CEO in four years, following Mr. Ryan and Susan Lyne, who stepped down to the chairman spot in 2010, swapping roles with Mr. Ryan.
“So I actually approached Michelle a year ago. One of things I do is that I’m thinking about recruiting all the time,” Mr. Ryan said, noting his attempt to hire away a woman in charge of suite sales for the Jets after attending a game seven months ago. “Fast forward, she works at Gilt City today.”
Gilt has had a fair amount of difficulty expanding its business in recent years. Its forays into full-price menswear and travel didn’t pan out, with its travel vertical Jetsetter now for sale for around $50 million. Back in January, the company laid off 90 employees, closing Gilt City offices in six different markets.
Mr. Ryan said that part of Ms. Peluso’s appeal is that “the managing team really likes her.” During the search process, he interviewed former employees of hers who said the same thing. “That was important to me,” said Mr. Ryan, who let go of Jetsetter CEO Drew Patterson back in May.
Another factor in Ms. Peluso’s appointment was her experience with different-size companies. “Here’s a hard thing when you look for someone in this spot. You want someone who has entrepreneurial energy and focus and moves quickly. At the same time, we’re not a 20-person company, we’re a 1,000-person company and with global operations. So you need to have that big company structure and thought process, but not slow you down–and that’s a weird hybrid,” he said. “I’ve interviewed people from big companies and I’m like: oh my God, they’re going to be a disaster here. They’re gonna wanna take too long on everything. And yet people can be too sloppy if they just come from startups.”
In contrast, Ms. Peluso had sold her travel company Site59 to Travelocity for $43 million in 2002. Her startup was “sort of like a Jetsetter, actually,” Mr. Ryan said. “The unusual thing is that they made her the CEO of Travelocity, which is a 5,000-person company!”
Was Ms. Peluso’s marketing background ideal in light of Gilt’s expected IPO road show? “The most important thing is that you run a good company,” Mr. Ryan insisted. “Because you can be a terrible presenter, but if you show up and you have great results, you know public investors will love you. Second thing, you’re right though, is being able to present well.”
In January of this year, Mr. Ryan had predicted an IPO for Gilt in the fourth quarter of this year or 2013. That timetable has been delayed. In an interview with AllThingsD, Mr. Ryan mentioned Zynga and Groupon’s performance in the public markets with some distaste. He told Betabeat that because Ms. Peluso won’t join until next year. “She needs to be here a couple months before we can make the decision and say go,” he said, predicting an IPO by either end of next year or the end of 2014. “If I had to refine it, I’d say end of 2014,” he added.
“Look no one loves the prospect of going public for all the obvious reasons,” Mr. Ryan acknowledged. “On the other hand, it’s inevitable that any company I’m in–if they get really big–either they sell or have to go public. You need to get liquidity at some point.” However, he added, “It depends on your alternatives. I think in Gilt’s case going public is the best option. If someone walks up tomorrow and says, ‘Here’s $10 billion,’ I’ll call you up and say, ‘Guess what? I got a better option!”
As for the impending sale of Jetsetter, everything is on schedule, Mr. Ryan said, with binding bids due in the next two weeks of December. “You never quite know whether you get zero bids or five bids,” he said. “But so far the right things are happening, and that would close in the first quarter.”