The Honest Company

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. The Honest Company has raised multiple rounds of venture capital, and went public via initial public offering in May 2021. Honest serves the United States, China, Canada, and Europe.

History

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. 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.

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

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

In 2013, The Honest Company's sales reached $50 million. Honest raised $70 million from venture capitalists in the summer of 2014 in preparation for an imminent initial public offering. As of August 2014, the company's products were available at retail stores in the United States and Canada. The financing put a value on the company of $1 billion. 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.

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. The company eventually totaled $170 million in sales in 2014.

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. 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. In late 2015, the company acquired Alt12 Apps, the makers of popular apps such as Baby Bump, Pink Pad, and Kidfolio.

In March 2017, 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.

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.

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

Products and distribution

The Honest Company markets its products as safe and eco-friendly. 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. Whole Foods and Costco were The Honest Company's initial retail distributors. The company began selling in Target Corporation on June 15, 2014. Other stores that carried the company's products by mid 2014 included Buy Buy Baby and Nordstrom. By the end of the third quarter of 2014, the company carried 90 products. Its leading selling product was diapers, at the time. Under Vlahos, Honest Company has expanded the brand’s internal laboratories and R&D team and opened a fulfillment center. In 2022, Honest expanded and formed retail partnerships with Walmart, Ulta, and GNC. In the Ulta partnership, Honest Company released its first acne line. In the fall of 2022, Honest Company partnered with SuperOrdinary to launch in China on the e-commerce platform, Tmall Global.

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.

In March 2016, it was reported by ''The Wall Street Journal'' 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." 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. EFP had removed its claims of SLS-free product from its own website in late 2015.

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. 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.

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

Honest Beauty

On September 9, 2015, the company opened the Honest Beauty brand as a separate entity with its own website and logo. 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. The brand began selling the beauty line at Target in spring 2017.

Honest Beauty was 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). Honest Beauty launched its European line in the summer of 2019 via an exclusivity deal with Douglas stores.

In 2021, Honest Beauty redesigned its brand packaging to be made of sustainable and recyclable material. At the same time, it launched the Daily Defense skincare collection for use against environmental factors like pollutants.
In 2022, Honest Beauty launched a sensitive skincare collection with a four-step daily skincare routine for sensitive skin.

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{{DEFAULTSORT:Honest Company, The
Benefit corporations
Charities based in California
Companies based in Los Angeles
American companies established in 2011
Retail companies established in 2011
Corporate social responsibility
Ethical consumerism
Jessica Alba
Online retailers of the United States
Subscription services
Companies listed on the Nasdaq
2021 initial public offerings