Telling the truth pays: Jessica Alba’s Honest Company is worth $1.7 billion

Brian Lee and Jessica Alba at the offices of The Honest Company in Santa Monica, Calif.
Brian Lee, an entrepreneur, and actress Jessica Alba at the offices of The Honest Company, Alba's start-up that sells eco-friendly baby supplies, in Santa Monica, Calif., Oct. 9, 2012. Lee has been joining with the famous to get the name recognition any new site needs to get moving, but the subscription model in online shopping may be wavering. (J. Emilio Flores/The New York Times)
Photograph by J Emilio Flores —The New York Times/REDUX

Sometimes, honesty really is the best policy.

Jessica Alba’s sustainability- and transparency-focused Honest Company is the latest member of the billion-dollar startup club. In a new round of funding, the seller of eco-friendly baby and lifestyle products has raised $100 million, according to the Wall Street Journal.

This brings the valuation of the retailer up to $1.7 billion, half a billion more than startup darling Warby Parker, another retailer that heralds truth-telling as one of its core values. Honest took just three years to surpass the $1 billion dollar mark, while it took the eyeglass seller five, according to Fortune’s reporting.

But transparency isn’t just for startups, says Mary Brett Whitfield, an SVP at Kantar Retail, the retail arm of research firm Kantar. “Certainly, many start-ups have anchored their value proposition on providing that transparency, but many larger, established retailers have introduced product lines that are designed to have the same appeal,” she explained in an email.

Nowadays, brands are expected to be transparent and sustainable, according to a report by JWT Intelligence. Not only that, they’re expected to also be “societal leaders, benefactors, innovators and philanthropists, the report states.

Like so many retailers, Honest promises to tell customers the truth about where its products come from, what’s in them, and what their impact on the environment is. On the company’s website, its “Honestly FREE Guarantee” states that the company will provide “clear, credible, transparent information. No smoke and mirrors. No confusion.”

The company even used transparency to defend its sunblock products after a social media uproar back in July, telling Today that is “has been transparent about the amount of zinc since the new formula came out in early 2015 as seen on the website and the new formula’s packaging.”

But is this turn towards transparency effective in courting customers? For younger generations, absolutely, says Whitfield. “There is definitely a segment of shoppers who believe supporting retailers and brands that reflect their values is an important aspect of shopping; and in particular, younger (Gen Y/Millennial) shoppers are more likely to feel this way.”

And when those shoppers have children, a company called “Honest” is undoubtedly going to be top of mind.

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