LAS VEGAS — Brian Lee builds companies.
The serial entrepreneur has started LegalZoom, ShoeDazzle and more recently Honest Co., the latter of which was the brainchild of Jessica Alba and is now valued at about $1 billion and rumored to be mulling an initial public offering.
While the IPO wasn’t a topic of discussion during Lee’s keynote today at the Shoptalk conference here, he spoke to everything from influencer marketing to dealing with negative press and how Honest is scaling its business.
The company, started four years ago as means of selling diapers and wipes to a new generation of moms, has quickly grown, recently moving into new headquarters in Playa Vista, Calif., which has been labeled Silicon Valley South by some for the tech companies it has attracted, such as Facebook and YouTube.
“When we first started the company we had a great focus on babies and mommies because we knew that was the way into people’s homes,” said Lee, who serves as Honest’s chief executive officer.
It began with 17 products ranging from diapers and wipes to baby shampoos and washes and has swelled to an offering that now totals about 100 products. Last year saw the launch of Honest Beauty.
Honest started as an e-commerce company and didn’t think about selling off-line until a few smaller boutiques in Santa Monica, Calif., asked to carry its products. Around the same time it was also contacted by Costco about selling there. The company internally grappled with the question of distribution and was at first hesitant on its future in wholesale.
“We came to this moment where we said we’re not an e-commerce company,” Lee said. “We’re a mission-driven business. We should not care how our products end up in that home.”
That could also mean physical locations sometime in the future for Honest.
“It’s not currently in the road map for this year but we always thought it would be a great idea to have an Honest Co. experience location,” Lee said, adding such concepts could have organic cafes or playgrounds for kids. “That’ll come down the road; we’re not ready for that.”
What is on tap this year is looking at where the company can grow and expand existing product lines, Lee said, “driving deeper into the categories we think we have a right to win.”
He pointed to a call from Target in which the company was told it had the number-two shampoo at Target stores after Aveeno, which has multiple offerings. It was suggested Honest, which at the time had one offering, could have more shelf space if the brand had more options to sell. So Honest developed more stocckeeping units and took more shelf space.
“The whole offline retail is new to me,” Lee said. “I’m learning this as a guy—I’m an e-commerce guy. I didn’t even know that Target didn’t like Wal-Mart.”
What Lee knows well is the power of the influencer. Alba being a cofounder in Honest helps. ShoeDazzle was launched with Kim Kardashian. LegalZoom grew with the help of Robert Shapiro.
“What I realized very quickly was every time [Shapiro] went on to CNN or any other media outlet, we would get more orders so we knew that the influencer thing kind of worked when it came to media traction,” Lee said.
Having a celebrity or other influencer attached to a company can be a double-edged sword at times, especially when it comes to negative press. That’s something Honest has had to grapple with in more recent times with legal complaints being filed, some of which seek class action status, and alleging deceptive advertising among other things in relation to certain ingredients used in some of its products.
Having Alba as a founder can lead to lots of clicks for either better or worse, Lee contended, and said the company’s response to negative press was the right one for the business.
“We just keep very focused on the overall mission of the business,” he said. “With a company like Honest Co. or any hypergrowth company, you’re going to get a lot of scrutiny. We understand that.”