The Rise, Fall, and Rise Of Jessica Alba's Honest Company

By on February 9, 2021 in ArticlesEntertainment

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Back in 2014, we were lauding actress Jessica Alba for achieving a billion-dollar valuation on her The Honest Company. That's quite an achievement and we were just counting down the time until we could officially declare Alba a billionaire. You know we love a good self-made billionaire story at Celebrity Net Worth. The Honest Co. originally set out to make eco-friendly baby products like diapers, healing balm, wipes, and rash creams. They have since expanded to make products for the entire household, including shampoo, laundry detergent, glass cleaner, stain removers, multi-vitamins, sunglasses, toys, and much more. The company has raised more than $530 million over seven rounds of funding.

Then, just three years later, The Honest Company no longer had that unicorn $1 billion valuation. A funding round led to just $75 million in venture capital and valued The Honest Company below $1 billion. There were controversies over some not so natural ingredients in the company's supposedly eco-friendly products. But Alba and her team weathered that storm and today, The Honest Company is on an upswing again. Let's look at the rise and fall and rise again of The Honest Company.

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Alba was inspired to create The Honest Company in 2008 by the birth of her first child, Honor. She was also motivated by the illnesses she had in her own childhood. She wanted to create a company that was an alternative to baby products with ingredients like chemicals and synthetic fragrances. She got very serious about this mission when one of the baby detergents her mom recommended caused her to break out in a rash. She went out and found her business partners Brian Lee, Sean Kane, and Christopher Gavigan and launched the company in 2012 with 17 products. The FDA has banned few than 12 harmful chemicals in household products, whereas Europe has banned more than 1,300 chemicals that have been determined to be unsafe for household products. Alba decided her company would not put any of those 1,300 chemicals in its products. Alba even ended up lobbying Congress to reform the 1976 Toxic Substances Control Act.

The Honest Company's first year saw tremendous growth with $12 million in revenue in 2012. By 2014, the company had $150 million in revenue and that coveted $1 billion valuation in 2015. The rapid growth of The Honest Company was fueled by big funding rounds and a laser-like focus on brand building and social media outreach. Co-founder Brian Lee, a veteran of LegalZoom.com, ShoeDazzle.com, and Warby Parker, had experience with online-only companies in the past and The Honest Company launched originally as an e-commerce-only option. They launched a subscription based diaper deliver service. This allowed them to get into the homes of their target customers easily. Of course, Alba's fame and social media followers were also a big part of the company's early success. In 2014, Target, Buy Buy Baby, and Nordstrom had started carrying The Honest Company products in their stores. By the end of 2014, the company had 90 products.

After hitting the $1 billion valuation in 2015, the company ran into a few snags. In 2015 there was a controversy over the company's SPF 30 sunblock. Multiple 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 being sued over its infant formula's claim that it was organic when in reality 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 started being carried at Babies R Us and CVS. Amazon started selling Honest Company products in the summer of 2017. Then, the 2017 round of funding valued the company at less than a billion dollars. Brian Lee stepped down as CEO and Alba hired a new CEO, Nick Vlahos, the former COO of The Clorox Company. Vlahos had also worked for Burt's Bees, which has a similar company mission to The Honest Company. The company also scaled back on the production of some of the newer products. Alba and her team refocused the company on its core products: childcare, beauty, and lifestyle.

Another change occurred when they brought research and development and quality assurance in house. This gave Alba complete oversight on how their products are manufactured. The company doubled down on the diaper delivery business – which is responsible for 75% of the company revenue.

A 2018 funding round saw private equity firm L Catterton taking a minority stake in The Honest Company for a $200 million investment. That money helped The Honest Company strengthen its supply chain and global reach.

Today, the Honest Company is back on track with its mission of providing eco-friendly products and is reportedly eyeing an IPO that could come any day now and would value the company at $2 billion.

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