New York Jessica Alba has become famous as an actress, and as an entrepreneur, the 40-year-old is currently preparing to write another success story. Your start-up “Honest” is set to debut on the US technology exchange Nasdaq these days. The company specializes in sustainable baby and cosmetic products and is valued at more than $ 1.5 billion in the planned IPO. The shares could already be traded in New York on Tuesday.
Alba’s ambitions are part of a trend: more and more stars are using their popularity to build companies. It is no longer just men like George Clooney or Dwayne “The Rock” Johnson who sell their own tequila, for example. It is mainly women who, as entrepreneurs, reach hundreds of millions or even billions of dollars.
This applies to Alba as well as to her colleague Gwyneth Paltrow with her lifestyle company Goop or to Kylie Jenner from the Kardashian family, who at the age of 21 was considered the youngest billionaire in the world – at least until Forbes magazine gave its own rating Had to correct $ 900 million.
Jessica Alba uses her fame and 39 million followers on social media to market non-toxic baby diapers, wipes and cosmetics from the “Honest” brand. When the first of her three children was born in 2008, she tried to create a non-toxic environment for her family and turned her personal efforts into a company called “Honest”. Founded in 2011, the brand prides itself on banning more ingredients than the EU.
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Alba shows a talent for self-marketing: six years ago she summarized her experiences with “The Honest Life” in a book that promptly became a bestseller. She will soon be featured in a documentary series on the Disney + streaming channel. In the self-produced series, the actress travels the world to show what family means in different cultures. The daughter of a Mexican-born US soldier and a Canadian mother also links her own medical history to the brand. As a child, she suffered from severe asthma and multiple pneumonia.
Second IPO for “Honest”
The way to the stock exchange was by no means without hurdles. Alba made a lot of mistakes and wasted money, as she admitted in an interview with Handelsblatt two years ago. The current IPO is also the second attempt for Honest. Six years ago, the entrepreneur backed down when complaints about individual products increased.
As good as the name “Honest” may be: Those who call themselves honest are examined particularly critically. In 2016, the Wall Street Journal found sulfates in Alba’s detergents in tests, which are actually on the company’s own exclusion list. “Honest” blamed the suppliers they trusted.
Alba herself wrote on the homepage that she was “extremely disappointed” with the article, which was full of “misrepresentations”. However, Honest has been sued elsewhere for misleading advertising. The cases never went to court because the company paid for settlements. In one case it was $ 1.55 million.
Since then, Alba has been controlling the supply chains more closely and has also changed its business model: In the first few years, the start-up mainly relied on subscription solutions in order to send its products to customers on a weekly or monthly basis and thus generate recurring income. Today, the majority of orders come from large retailers such as Amazon, Target oder Cosco.
Honest: Profits are a long time coming
Last year, thanks to the corona pandemic, Alba’s company was able to increase sales by 28 percent to $ 300 million. The bottom line is that Honest, as with so many candidates on the stock exchange, is not making a profit: As the prospectus of the Securities and Exchange Commission for the IPO shows, Honest has closed every quarter with a loss since it was founded. After all, the company was able to more than halve its loss from $ 31 million to $ 14 million last year.
Alba herself has made a decent cut as founder, creative director and chairman of the supervisory board: With bonuses and stock options, she got a salary of $ 2.3 million last year, according to the SEC prospectus. Her fixed salary was $ 500,000, and it is expected to rise to $ 700,000 in the coming year.
With the IPO, in which not only investors cash in, but also new shares are issued, Alba’s stake will drop from 6.56 percent to 6.1 percent. This block of shares will be worth nearly $ 100 million at the targeted share price of $ 14-17.
Meanwhile, Alba doesn’t want to stop acting. She sees only a few parallels between the two worlds, as she once told the Handelsblatt. However, the experiences from her film and television career helped: “As an actress, I developed a certain resilience, which has helped me a lot as an entrepreneur,” she said, “as an actress you get 3,000 refusals before you are accepted. If you are looking for investors, partners and specialists, it is very similar. ”It is important to learn from your mistakes as quickly as possible.
Fame as a success factor – and a risk
With this resilience, she led Honest all the way to the stock exchange. This sets her apart from her colleagues: Gwyneth Paltrows Goop has not yet placed any shares in the markets, and Kylie Jenner also sold 51 percent of her shares in “Kylie Cosmetics” to the cosmetics company Coty.
Since then, investors have complained that Coty paid too much and that the company was nowhere near as much as it always claimed. But Kylie has cashed in, and Coty needs Kylie. Because the brand stands or falls with its founder and its 229 million followers on Instagram.
If the face becomes a brand, the founders’ departure could be fatal. It is therefore no wonder that the prospectus for the US Securities and Exchange Commission describes the founder Jessica Alba not only as a “globally recognized business leader, entrepreneur, advocate, actress and bestselling author”, but also as a risk: “Our ability, our competitive position to a large extent depends on the services of our senior management and key people, including our founder, creative director and current chairman of the supervisory board, ”it says.
More: dm heir Kevin David Lehmann is the youngest super-rich in the world.
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