Jessica Alba's Honest Company gets a new CEO
E-commerce veteran Brian Lee will step aside so that a packaged goods stalwart can take the reins.
Jessica Alba's Honest Company is getting a new CEO.
Nick Vlahos, who previously oversaw the natural personal care products business at the Clorox Company, will replace Honest's CEO Brian Lee, the company said Thursday.
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Reports surfaced in February that the company's board had begun discussions with consumer packaged-goods executives and was considering replacing Lee as Honest seeks to reposition itself as a more traditional packaged goods company. Honest had been in acquisition talks with Unilever, seeking a deal reportedly above $1 billion, but the deal fell through and Unilever instead scooped up the profitable natural products maker Seventh Generation for a reported $600 million.
In February Lee told Recode, "in light of these [acquisition talks], we started realizing what it takes to become a world-class CPG organization with world-class products."
Clearly, Honest thinks it needs more traditional retail experience. Lee's background, which includes leading online legal advice site Legal Zoom and online shoe seller ShoeDazzle, is in e-commerce. Lee--who, along with Alba and the board, conducted the CEO search, the company says--will remain on Honest's board and continue to act as an advisor.
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As part of the announcement, Honest also revealed that its revenue hit more than $300 million in 2016. About 50 percent of that revenue currently comes from retail stores.
With Vlahos on board, the company plans to launch in more big box retailers including Babies "R" Us and CVS. (Honest's products are already in Costco, Target, and Whole Foods.) The company also recently launched its first major ad campaign, around the theme of "Honest Moments."
"It has been our strategy to evolve the company into an omnichannel brand and Nick's tremendous background building global CPG brands makes him the ideal person to lead us there," Lee said in a news release.
The bigger task, presumably, is to get Honest and its balance sheet in shape for either a future sale or an IPO. As I wrote recently, Honest's $1.7 billion unicorn valuation has likely been more of a curse than a blessing. As others have already noted, Honest agreed to an onerous term sheet with its investors that included a minimum IPO threshold and a deal that gives those investors their money back when the company exits--before anyone else gets anything.
Back in 2015 the company had been in talks with bankers about a potential IPO but those plans were shelved. At the time, Lee admitted that bankers didn't know whether to bring its luxury, e-commerce, or retail teams to the meetings.
Vlahos, with a solid CPG resume, sends a pretty clear message as to which teams would come to the next round of meetings.
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