Back in 2014, we were applauding actress Jessica Alba, who received a billion dollar valuation on her honest company. This is quite an achievement and we were just counting the time until we could officially declare Alba a billionaire. You know that we like a good self-made billionaire story in celebrity net worth. The Honest Company is originally set to make environmentally friendly baby products such as diapers, healing balms, wipes and rash creams. He has since expanded to create products for the entire household including shampoo, laundry detergent, glass cleaner, stain remover, multi-vitamins, sunglasses, toys, and more. The company has raised more than $ 530 million on seven rounds of funding.
Then, just three years later, the honest company no longer had a billion dollar valuation. A financing round led to just $ 75 million in venture capital and valued the honest company below $ 1 billion. There were disputes over some natural ingredients in the company’s alleged eco-friendly products. But Alba and his team faced that storm and today, The Honest Company is on the rise again. Let us see the rise and fall of honest company.
Alba was inspired to form The Honest Company in 2008 by the birth of their first child, Honor. She was also inspired by illnesses in her childhood. She wanted to create a company that could substitute baby products with ingredients such as chemical and synthetic fragrances. She became very serious about this mission, when a detergent recommended by her mother caused her to have a rash. She went out and found her business partners Brian Lee, Sean Kane and Christopher Gavigen and launched the company in 2012 with 17 products. The FDA has banned more than 12 harmful chemicals in household products, while Europe has banned more than 1,300 chemicals that have been determined to be unsafe for household products. Alba decided that its company would not add any of those 1,300 chemicals to its products. Alba also lobbied Congress to reform the Toxic Substances Control Act of 1976.
The first year of Honest Company saw tremendous growth in 2012 with revenues of $ 12 million. As of 2014, the company had $ 150 million in revenue and was valued at $ 1 billion in 2015. The Honest Company grew rapidly through large rounds and focused laser-focused on brand building and social media outreach. Brian Lee, a veteran co-founder of LegalZoom.com, Shudzl.com and Warby Parker, had experience with online-only companies in the past and the Honest Company originally launched as an e-commerce-only option. He started a subscription based diaper delivery service. This allowed them to move easily to the homes of their target customers. Of course, Alba’s fame and social media followers were also a big part of the company’s early success. In 2014, Target, Bye Bye Baby, and Nordstrom began placing Honest Company products in their stores. By the end of 2014, the company had 90 products.
After hitting a $ 1 billion valuation in 2015, the company ran into some tremors. In 2015, there was a dispute over the company’s SPF 30 sunblock. Many people complained that it burned their skin. Then, in March 2016, the “Wall Street Journal” reported that Honest’s liquid laundry detergent contained a significant amount of sodium lauryl sulfite, a synthetic material that the company said it would never use in any product . In April 2016, “Good Morning America” revealed that the honest company was claiming its infant formula was organic when in fact it contained 11 synthetic substances banned by federal law in organic products. That complaint was dismissed by a court in December 2016.
In the spring of 2017, Honest Company products were launched at Babies R Us & CVS. Amazon began selling Honest company products in the summer of 2017. Then, the 2017 round of funding gave the company a value of less than a billion dollars. Brian Lee stepped in as CEO and Alba hired a new CEO, Nick Vallahos, former COO of The Claroox Company. Valhos also worked for Bert’s Bees, which has a similar company mission, The Honest Company. The company has also increased production of some new products. Alba and his team rebound the company on its core products: childcare, beauty, and lifestyle.
Another change occurred when they brought in-house research and development and quality assurance. This gave Alba full insight into how their products are manufactured. The company doubled down on the diaper delivery business – which accounted for 75% of the company’s revenue.
In the 2018 round of financing, private equity firm L Catterton took a minority stake in Honest Company for an investment of $ 200 million. That money helped the honest company strengthen its supply chain and global reach.
Today, The Honest Company is back on track with its mission to deliver environmentally friendly products and is reportedly eyeing an IPO that could come any day now and would give the company $ 2 billion in value.