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The Honest Company

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The Honest Company, Inc.
Company typePublic
Nasdaq: HNST
IndustryRetail
Founded2011 (2011)
FoundersJessica Alba, Brian Lee, Sean Kane, Christopher Gavigan
HeadquartersPlaya Vista, California
Area served
United States, Canada
Key people
Founder / CCO / Chairperson Jessica Alba [1]
CEO Nick Vlahos
ProductsConsumer goods
RevenueIncrease US$318.6 million (2021)
Decrease −US$38.7 million (2021)
Number of employees
187 (full-time) (2021)
Websitehonest.com

The Honest Company, Inc. is an American digital-first consumer goods company, founded by actress Jessica Alba. The company had $319 million in 2021 sales, and was valued at roughly $550 million as of February 2022.[2] The Honest Company has raised multiple rounds of venture capital, and went public via initial public offering in May 2021.[3][4] Honest serves the United States, Canada, and Europe.[5][6]

History

Jessica Alba, Founder/CCO/Chairperson of The Honest Company
Brian Lee, co-founder

Company founder Jessica Alba was inspired by the 2008 birth of her first child, Honor, and her own history of childhood illnesses to create a company that provided an alternative to the prevalent baby products with ingredients such as petrochemicals and synthetic fragrances.[7] She was compelled to become serious about this venture when one of her mother's baby laundry recommendations caused her to have a welt outbreak.[8]

It took Alba three years to find her business partners Brian Lee, Sean Kane, and Christopher Gavigan.[9] Alba launched the company in 2012 with 17 products.[9]

While building her company, Alba lobbied the United States Congress for stricter chemical testing of consumer products in the marketplace. [7]

In 2013, The Honest Company's sales reached $50 million.[10] Honest raised $70 million from venture capitalists in the summer of 2014 in preparation for an imminent initial public offering.[9][11] As of August 2014, the company's products were available at retail stores in the United States and Canada.[12] The financing put a value on the company of $1 billion.[7][10] Prior to the 2014 round of financing led by Wellington Management Company, the company had raised $52 million in financing from ICONIQ Capital, General Catalyst Partners, Institutional Venture Partners and Lightspeed Venture Partners.[12]

In November 2014, the company had 275 employees and was projected to do $150 million in sales. 80% of its sales were online via a monthly subscription service with the remainder being done in department stores and discount warehouses.[7][10] The company eventually totaled $170 million in sales in 2014.[13]

In July 2015, Jessica Alba announced that The Honest Company would be moving its headquarters from Santa Monica to the Playa Vista neighborhood of Los Angeles in early 2016.[14] The following month, it announced a new round of funding generated an additional $100 million of venture capital, implying a valuation of $1.7 billion.[13] In late 2015, the company acquired Alt12 Apps, the makers of popular apps such as Baby Bump, Pink Pad, and Kidfolio.[15]

In March 2018, The Honest Company announced that Nick Vlahos would replace Brian Lee as Chief Executive Officer. Vlahos worked on several Unilever brands, including Burt's Bees, Brita and Green Works. At that time, it was announced that Brian Lee would depart the company but remain on the board in an advisory role.[16]

In October 2017, The Honest Company closed a series E round of funding. After settling two lawsuits in the summer of 2017, the valuation was set at $19.60 per share down from the Series D shares sold in 2015 at $45.75. Thus, the company's value was below 1 billion.[17][18]

In April 2021, The Honest Company officially filed for an initial public offering.[19] The company began trading under ticker symbol HNST on May 5, 2021 with shares being traded on the Nasdaq stock exchange.[20] The 2021 IPO raised $412.8 million. [21]

Products and distribution

The Honest Company markets its products as safe and eco-friendly.[22] The company does not use "health-compromising chemicals or compounds", including the "No List", a specific list of products it promises to never allow in its products.[23][24] Whole Foods and Costco were The Honest Company's initial retail distributors.[10] The company began selling in Target Corporation on June 15, 2014.[25] Other stores that carried the company's products by mid 2014 included Buy Buy Baby and Nordstrom.[26] By the end of the third quarter of 2014, the company carried 90 products.[8] Its leading selling product was diapers, at the time.[9] In 2022, Honest formed retail partnerships with Walmart, Ulta, GNC, and SuperOrdinary. [27][28] In the Ulta partnership, Honest Company released it's first acne line. [29]

Criticism and Reception

In 2015, a controversy surrounding Honest's SPF 30 sunblock occurred when multiple customers complained of skin burns. These reports occurred shortly after the product had been repackaged and reformulated with reduced zinc oxide levels to improve aesthetics.[30]

In March 2016, it was reported by The Wall Street Journal[31] that Honest's liquid laundry detergent product contained "a significant amount" of sodium lauryl sulfate or SLS, a synthetic surfactant that the company claimed it would "never consider for use in anything. Period."[23][32] Honest's detergent is sourced from Earth Friendly Products (EFP) which did not test for SLS. EFP in turn purchased untested chemicals from Trichromatic West which also did not test for SLS.[33] EFP had removed its claims of SLS-free product from its own website in late 2015.[34]

In April 2016, Good Morning America reported that The Honest Company was being sued for representing its infant formula as organic even though this product contains 11 synthetic substances prohibited under federal law in organic products.[35] Honest Company stated that the infant formula had been FDA approved and certified USDA Organic in accordance with the National Organic Program. In December 2016, The Los Angeles Superior Court entered judgment for The Honest Company, dismissing the complaint permanently.[36]

Responding to the lawsuit over ingredient claims, Honest leadership said they are focused on delivering products that match their promise to consumers.[37]

Honest Beauty

On September 9, 2015, the company opened the Honest Beauty brand as a separate entity with its own website and logo.[38] Its products are derived from botanicals free of parabens, phthalates, petrolatum, sulfates and chemical sunscreens. On September 25 of that year, the brand opened a pop-up retail shop in The Grove.[39] The brand began selling the beauty line at Target in spring 2017.[40]

Honest Beauty is the only planned set of products slated for the company's 2019 debut in Western Europe (Germany, France, Spain, Italy, Poland, the Netherlands, and Austria).[41] Honest Beauty launched its European line in the summer of 2019 via an exclusivity deal with Douglas stores. [42]

Notes

  1. ^ "Annual report for year ending December 31, 2021".
  2. ^ "Jessica Alba opens up about building her $550 million The Honest Company: 'There were no expectations for me to be successful'".
  3. ^ Blakely, Lindsay (4 November 2014). "How Jessica Alba Proved Her Doubters Wrong". inc. Retrieved July 20, 2017.
  4. ^ Huspeni, Andrea. "Jessica Alba's Startup Nabs $25 Million in Funding". Entrepreneur. Retrieved July 20, 2017.
  5. ^ "THE HONEST COMPANY". Tower Equity.
  6. ^ "The Honest Company". Pagan Research.
  7. ^ a b c d Harlow, John (November 19, 2014). "Jessica Alba to float $1bn eco-friendly product company". The Australian. Retrieved November 10, 2014. [dead link]
  8. ^ a b O'Conor, Claire (June 15, 2015). "How Jessica Alba Built A $1 Billion Company, And $200 Million Fortune, Selling Parents Peace Of Mind". Forbes. Retrieved October 28, 2017.
  9. ^ a b c d Blakely, Lindsay (November 2014). "How Jessica Alba Proved Her Doubters Wrong". Inc. Retrieved November 10, 2014.
  10. ^ a b c d Chapman, Lizette (August 26, 2014). "Jessica Alba's The Honest Co. Raises $70M, Preps for IPO". The Wall Street Journal. Retrieved November 12, 2014.
  11. ^ Lorenzetti, Laura (August 26, 2014). "Jessica Alba startup The Honest Co. raises $70 million as it heads toward IPO". Fortune. Retrieved March 10, 2015.
  12. ^ a b Johnson, Zach (August 27, 2014). "News/Jessica Alba's The Honest Company Valued at Nearly $1 Billion Two Years After Its Launch". Eonline. Retrieved November 12, 2014.
  13. ^ a b MacMillan, Douglas & Rolfe Winkler (August 13, 2015). "Jessica Alba's Startup, Honest, Valued at $1.7 Billion". The Wall Street Journal. Retrieved August 13, 2015.
  14. ^ "Honest Co. moving headquarters to Playa Vista". LA Biz. Bizjournals.com. July 28, 2015. Retrieved July 29, 2015.
  15. ^ "Jessica Alba's Honest Company quietly acquired BabyBump, Pink Pad app-maker last year". Mobihealthnews.com. February 8, 2016. Retrieved February 8, 2016.
  16. ^ Thomas, Lauren (March 16, 2017). "Jessica Alba's Honest Company just got a new CEO". CNBC. Retrieved March 17, 2017.
  17. ^ Korosec, Kirsten (October 5, 2017). "Jessica Alba's Honest Co. Cuts Its Valuation in New Funding Round". Fortune. Retrieved June 4, 2018.
  18. ^ "The Honest Company Closes Series E Financing: Round Led by Fidelity Management & Research Company along with Other Existing Investors". Business Wire. October 5, 2017. Retrieved June 4, 2018.
  19. ^ "Jessica Alba's Honest Company files for IPO". CNBC. April 9, 2021.
  20. ^ "Jessica Alba's Honest Company Rallies in Debut". Yahoo! Finance.
  21. ^ "The Honest Company first quarter 2022 results miss the mark". Cosmetics Business.
  22. ^ Greenfield, Rebecca (September 9, 2014). "How The Honest Company Nailed The Formula For Eco-Friendly Products". Fast Company. Retrieved November 10, 2014.
  23. ^ a b Moran, Gwen (September 9, 2015). "Jessica Alba's Honest Company Just Launched a Beauty Line". Entrepreneur. Retrieved September 16, 2015.
  24. ^ Zarya, Valentina (August 14, 2015). "Telling the truth pays: Jessica Alba's Honest Company is worth $1.7 billion". Fortune. Retrieved September 16, 2015.
  25. ^ "Jessica Alba's The Honest Company Will Launch at Target". Target Corporation. June 1, 2014. Retrieved November 13, 2014.
  26. ^ Chesters, Laura & Maria Tadeo (August 28, 2014). "The Honest Company: Jessica Alba's diaper business valued at $1 billion ahead of IPO". The Independent. Archived from the original on 2022-06-18. Retrieved November 13, 2014.
  27. ^ "Honest Co. Hopes Retail P'ships With Walmart, Ulta, GNC Will Reverse Sales Slump". PYMNTS.
  28. ^ "The Honest Company Launches at Walmart to Expand U.S. Distribution". yahoo finance. Retrieved 9 August 2022.
  29. ^ "EXCLUSIVE: Jessica Alba's Honest Beauty Launches at Ulta Beauty Stores, Introduces First Acne Line". Women's Wear Daily.
  30. ^ Kroll, David (August 3, 2015). "The Failure Of Jessica Alba's Honest Company Sunscreen Explained". Forbes. Retrieved August 5, 2015.
  31. ^ Ng, Serena. "Laundry Detergent From Jessica Alba's Honest Co. Contains Ingredient It Pledged to Avoid". The Wall Street Journal. Retrieved March 10, 2016.
  32. ^ "honestly FREE guarantee". Archived from the original on February 2, 2016. Retrieved March 11, 2016.{{cite web}}: CS1 maint: bot: original URL status unknown (link)
  33. ^ Sherman, Erik (March 11, 2016). "Jessica Alba's Honest Company Brand Is Burned: Keeping a promise to customers takes more than wishful thinking". Inc. Retrieved March 15, 2016.
  34. ^ Ng, Serena (March 14, 2016). "Maker of Honest Detergent Changed Its Claims: Earth Friendly Products removed marketing claims about sodium lauryl sulfate from its website last year". The Wall Street Journal. Retrieved March 15, 2016.
  35. ^ KIM, SUSANNA (April 28, 2016). "Jessica Alba's Honest Company Sued Over Organic Infant Formula". Good Morning America (ABC). Yahoo News. Retrieved May 1, 2016. The Honest Co. is falsely representing its Premium Infant Formula as 'organic' even though this product contains 11 synthetic substances prohibited under federal law in organic products," Katherine Paul, associate director of the Organic Consumers Association, told ABC News. "This is unacceptable.
  36. ^ O'Connor, Clare. "Court Dismisses Honest Co. Baby Formula Suit As Organic Group Files Appeal". Forbes. Retrieved July 20, 2017.
  37. ^ "Jessica Alba reveals her vision for bringing 'wellness' to the masses". Fortune.
  38. ^ APATOFF, ALEX. "Jessica Alba Launches Line of Beauty Products for The Honest Company". People. Retrieved July 20, 2017.
  39. ^ Medina, Marcy (August 19, 2015). "Jessica Alba Launches Honest Beauty". Women's Wear Daily. Retrieved September 16, 2015.
  40. ^ Brookman, Faye (22 March 2017). "Target adds Jessica Alba's Honest Beauty to its merchandise mix starting March 26". Los Angeles Times. Retrieved July 20, 2017.
  41. ^ Blakely, Lindsay (May 29, 2018). "Jessica Alba's Honest Company Bets Big on Makeup". Inc. Retrieved June 4, 2018.
  42. ^ "Honest Beauty debuts in Europe". Cosmetics Business.
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