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Read the articles Jessica Alba’s Triple Bottom startup raises $25 million (Links to an external site.)Links to an external site. and The bottom line of corporate good (Links to an external site.)Links to an external site.. In reference to the articles, discuss how firms incorporate the triple bottom line concept into traditional business concerns over profitability. Respond to at least two of your classmates’ posts. Guided Response: In 300 words or more, please, provide your response to the above discussion question. Comment on how customers can influence firms to pay more attention to the preservation of the natural environment. Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.
Almost two years ago, actress Jessica Alba took on a perhaps unexpected role: co-founding an LA-based startup called
The Honest Company
aimed at making and selling non-toxic, eco-friendly, affordable products for babies and their families. I
wrote about it
a while ago. Since then, looks like the company has been growing nicely and just announced a $25 million financing round, bringing total funding to $52 million since the startup launched.
The company’s genesis came about after Alba had her first baby five years ago. (She’s given birth to a second since then). To her surprise, she discovered it was really hard to find baby products that didn’t contain some kind of toxic element. She got to talking to a friend, Christopher Gavigan, author of Healthy Child Healthy World and head of a children’s health organization. Together, they hatched the idea of starting a company that would sell the type of products they wanted for their own children.
It was an ambitious plan because they decided not to sell other people’s products. Instead, they would develop and make their own non-toxic, environmentally friendly diapers, skin care lotions and the like, mostly using contract manufacturers based in the U.S. They brought on Brian Lee, an ecommerce veteran, in 2011 as CEO–he also has kids the same age as Alba’s, by the way–and Sean Kane to run operations.
Originally, the business model was to sell monthly subscriptions, as well as individual products online. Recently, the company started moving into brick and mortar retail, selling to quite a mix of stores, from
Costco
to little boutiques. It now has about 50 products, including bath/skin care items, diapers, household cleaners, sunscreen and, most recently, in response to customer requests, according to Lee, a line of supplements. Everything is made from natural, organic, sustainably harvested, pure raw materials. Disposable diapers, for example, use plant-based materials as opposed to petrochemicals.
There’s also a code of conduct for suppliers, to make sure they comply with human rights, environmental and documentation standards. The company works with 10 to 15 suppliers, according to Lee, and has turned away some that didn’t meet the requirements.
As for the $25 million round, which was led by
Institutional Venture Partners
and joined by
ICONIQ Capital
, with participation from existing investors
Lightspeed Venture Partners
and
General Catalyst Partners
, it’s slated for a few purposes. One is expanding to Australia and the UK. That, of course, means being able to meet other nations’ stricter chemical regulations. According to Lee, in the U.S., there are perhaps eight or nine chemicals banned from baby products compared to about 1,000 in the UK. The company’s products all meet that stricter standard.
Another use is opening up more distribution centers; the company now has just one location, which is in California. And it will expand into other product categories, like mattresses.
A portion of sales are donated to nonprofits aimed at helping children and families in need. So far, the recipient has been
Baby2Baby
, which provides essential baby gear and clothing to inner city families. For example, according to Lee, a leading case of children’s death in inner cities is from suffocation, because babies often don’t sleep in cribs. So, the company has donated cribs and other goods to about 30,000 families. For Lee, the expansion is all about getting to a big enough size to make a dent in the market–reaching a critical mass of consumers with products that don’t have toxic ingredients, but also encouraging customers to adopt healthier habits. That’s the main reason to go the triple bottom line, for-profit route, he says. “Running a small company is great, but we want to to be at a point where we’re selling at a mass level,” he says. “And that’s best done by having a for-profit model.”
That’s also one of the reasons why products are sold at an affordable price. “We can make a $50 shampoo, but who’s going to buy it?” says Lee. “How are you going to change the environment for future generations if you make products that are unattainable?”
