the main traits jessica alba and i share
is that we both age well and more
recently we're also both entrepreneurs
but the story of the honest company is
very much a roller coaster and right now
we seem to be on that not so fun part of
the ride but that might change while
this video is in the editing room now
you may have noticed a pattern in the
stories and the founders that we that we
cover in this series with only a couple
of exceptions and one of them being a
sociopath you don't see a lot of female
founders with success stories just like
you don't see a lot of female viewers in
our stats funny enough the majority of
our production crew is actually made up
of women they just rarely get to stand
on on this side of the camera anyway i
met elle a couple of months ago elle is
an early stage investor with miami
angels and is passionate about
underrepresented founders in tech so she
flew all the way to our studio in costa
rica to be a guest in our channel and to
tell us a couple of startup stories that
i'm not really qualified to cover as
well as she does
thanks for the intro okay and thanks for
the team for having me uh so many of us
know jessica alba today she's a
beautiful actress business mogul and she
just does not seem to age and today in
2021 she's commonly known as the founder
of the honest company this consumer
products brand offers safe eco-friendly
products like diapers a natural line of
bath skin care home cleaning etc
essentially it's a go-to place for
household products focused on safety and
ethical consumerism back in the 2000's
jessica alba was just an up-and-coming
actress on screen she looked different
from traditional hollywood starlets and
i admired her for that
for full transparency and journalistic
integrity i am a fan unfortunately she
didn't have the best critical reception
i have a feeling the girl knew there was
more out there for her than just being a
hollywood star the early 2010s weren't
like today now a celebrity announces a
company or raises a fund and people are
banging down their doors to give them
money back then you had one lane and you
did not stray
people didn't really take celebrity
sponsored companies that seriously so
how did this hollywood actress break
through and come to ipo company welcome
to company forensics the honest company
story
the story goes that in 2008 after alba's
baby shower for her first daughter honor
she wanted to wash some of her gifts
with a mainstream detergent brand she
immediately broke out into ugly red
welts naturally this worried her about
what such exposure would happen to a
baby with even more sensitive skin this
experience shook alba she spent the next
few years researching the consumer goods
market and uncovered that many
detergents and everyday items included
petrochemicals formaldehydes and flame
retardants she even ended up in
washington dc to lobby for updated
legislation to reform the 1976 toxic
substances control act
after feeling compassion to make a
change in the industry alba decided to
start her own business she teamed up
with brian lee who had former startup
experience with legalzoom.com and
shoedazzle.com one of kim kardashian's
first companies and reports say that the
two invested 6 million of their personal
wealth to get it started before major vc
players believed in them and they were
officially incorporated in 2011. later
on sean kane and christopher gavin
joined the team they had experience with
pricegrabber.com and healthy child's
healthy world respectively this proved
to be a wise decision the co-founders
experiences supplement of one another's
expertise and jessica brought in her
mainstream audience and appeal
looking for investment
the honest company started with four
co-founders but it still needed money
and raising money for a cpg brand is not
easy
we haven't historically invested in cpg
brands because the scalability and bc
level returns are pretty hard to come by
for the amount of risk so to tailor
their pitch to vcs they doubled down on
the idea of creating safe chemical-free
non-toxic consumer goods from scratch
but without the infrastructure of say a
proctor and gamble they required a lot
more capital to garner interests from
vcs they specifically targeted the
diaper business co-founder brian lee
stated that's the only thing we pitched
it was a very strategic as we knew that
was the way to get into your home and
their strategy saw success name brand
vcs general catalysts lightspeed venture
partners and institutional venture
partners got involved as part of a 27
million dollar series a in 2012. the
diapers were successful and the company
raised about 128 million through 2014.
after proving themselves in one category
they expanded their product offering to
everything from soap kitchen cleaner
detergent nipple balm multivitamins and
even nursery furniture it's not every
day that cpg brands can get so much vc
conviction and backing but the team
showed they knew how to market a product
and replicate that strategy to other
products within the non-toxic product
universe after all jessica alba as a
committed founder was better publicity
than any marketing team could purchase
rise to success
the honest company capitalized on
consumer trends it was a first mover in
the now popularized concepts of
conscious consumers and influencer
marketing back in 2014 this was not your
table stakes jessica alba went on late
night talk shows like jimmy kimmel to
promote the honest company and alert
consumers of the dangers of existing
products the honest company didn't just
arbitrage an opening in the market for
safe and natural home goods instead they
helped expose the gap to which they were
immediately able to slide in and provide
solutions there was a lot of competition
from brands like johnson johnson and
jergens
but still the honest company was able to
carve out its own niche the brand's
foundation was that home and kids
products should be safe affordable and
eco-friendly the company explicitly laid
it out in its guiding manifesto called
the honest standard in fact jessica albo
published the new york times
best-selling book the honest life and
she became synonymous with the brand now
that's the type of marketing that even
money can't buy the company discovered
that parents were willing to pay higher
prices for the peace of mind of having
safe brands
still the products weren't outrageously
out of most consumers is price range but
if you promise to be honest people will
take you up on that
scandal and lawsuits
the honest companies saw consistent
growth they even began to explore an
acquisition by unilever however
eventually unilever went for seventh
generation for a rumored 600 million
dollar buyout instead but the honest
company didn't slow down and after their
series d they had a 1.7 billion dollar
valuation gaining its unicorn status and
while the company seemed invincible it
ultimately raised a down round in 2017
and lost his unicorn status
what happened
unfortunately what brought them immense
success also made them vulnerable to a
series of scandals as a result the
company placed a huge target on
themselves being known as honest they
failed to live up to the promise of
being honest tests of the startups
liquid detergent found sls sodium lauryl
sulfate
a cleaning agent common in many
mainstream brands in fact sls was a
chemical that the honest company
previously criticized this goes to show
don't start a witch hunt unless you're
completely innocent while the company
disputed the claim it still couldn't
catch a break with honest sunscreen it
was being accused of being ineffective
in preventing unhealthy exposure to
harmful uv rays which is kind of the
purpose of sunscreen most damaging was
that the lawsuits targeted the claims
that honest misrepresented its products
as natural in particular they called out
some of their most profitable items like
honest hand soap onis dish soap on its
diapers and honest multi-surface cleaner
the company also recalled baby wipes out
of an abundance of caution after it
detected mold in some packages the
company also recalled this baby powder
in january over concerns it could cause
skin or eye infections that goes to show
labeling yourself as honest creates
enormous hurdles and consumer
expectations
the rebranding process
after all the scandals and the massive
down round in investment many were ready
to write off the honest company as a
failure and another story of a failed
celebrity backed company to regain
customer trust the company had some
major rebranding to do in march 2017
after a big shake up to the leadership
the honest company announced that clorox
veteran nick vlajos would replace brian
lee as ceo this move showed the company
choosing to go in a direction with a
seasoned corporate executive taking the
helms as the company grew also the
company stated that it made internal
changes by bringing in in-house r d and
quality assurance this way the honest
company would have complete oversight on
the manufacture of their products vlajos
the new ceo was honest about the changes
to grow they had to be consistent which
meant ditching businesses they couldn't
win so instead the honest company
focused on their most significant
revenue drivers including diapers baby
products and beauty product lines while
all this was good and great jessica
alba's squeaky clean image was a major
differentiating factor throughout the
scandals the company mostly managed to
divert blame from alba herself
and honest survival
it was jessica alba who ultimately saved
the brand alba hasn't graced our silver
screens in a significant role for a very
long time but for years she built the
brand as a beautiful honest and
authentic girl next door actress all the
women who grew up watching jessica alba
started to have families of their own
and regarded her as a trustworthy source
so association with the brand remained
positive as it waited for the storms of
the scandals to subside heck the honest
company's origin hasn't been marketed as
jessica wanting to make a quick buck or
having a lifestyle that's impossible to
achieve instead it came from jessica's
struggle to find safe products and even
going to congress to try and make a
change people perceived alba's intention
as honest this wasn't a faceless
corporation instead consumers ultimately
ask themselves can they trust jessica
and that answer proved to be yes
ipo and today
after rebounding from what might have
been a slew of nail in the coffin
scandals the honest company filed for an
ipo in april 2021 and during the lead-up
to the ipo jessica alba launched a
youtube channel and a tick tock account
she also made the media circuits again
putting her once again at the forefront
as the face the company saw immense
growth their s1 stated that they grew
revenue from 235 million in 2019 to over
300 million in 2020 during the pandemic
the company went public in may 2021
while it's priced at 16 a share the
stock price has jumped around in the
last couple of months it dipped to
almost half its original value the week
before we shot this video so the markets
have not been kind to the honest company
but they have proven to be in a position
to overcome difficult times it's easy to
dismiss the honest company as a fluke
success and jessica alba as just a
pretty face to the company but the omnis
company did succeed when so many
celebrity back companies failed one big
reason is that alba was a compelling and
intelligent founder that lived and
breathed the company's core values she
understood market trends and then worked
tirelessly to build the honest company
so yes jessica alba has a very pretty
face but she also created a legacy that
extends way beyond the silver screen i
could go on and on about how much i
admire jessica alba and appreciate the
story of the honest company but can the
honest company bounce back again what do
you guys think
let us know and comment below
[Music]
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