Start-Up Honest Co. Faces Legal Woes

David Pierson reported in last week’s Los Angeles Times that, “When Honest Co. launched five years ago, the Santa Monica firm targeted a market uncommon among start-ups: diapers.

“But thanks to its promise of nontoxic products and the allure of its celebrity co-founder Jessica Alba, it quickly built a customer base wary of the ingredients in its larger mass-market competitors.

“Honest grew its product line as well, adding shampoos, soaps and cleaning solutions billed as safe for families as it amassed more than $220 million in funding and a valuation of $1.7 billion. With its pledge to ‘build a culture of honesty,’ the company has become one of the region’s biggest venture-backed start-ups.”

However, Mr. Pierson indicated that, “Yet a pair of class-action lawsuits and a recent report in the Wall Street Journal charging the company’s laundry detergent contained a chemical it pledged never to use risk undermining the principles that have allowed Honest to thrive.”

The LA Times article noted that, “The challenges now facing the darling of the L.A. start-up scene — which is reportedly eyeing an initial public offering of stock later this year — reveal the risk of promising customers high-minded values and a world-changing ethos while embarking on a rapid expansion, business experts said.”

Last week’ article explained that, “‘You have a dynamic here with a start-up going through rapid growth, having to please [private] shareholders and justify a crazy valuation as you march toward an IPO,’ [Jason Cieslak of global branding firm Siegel+Gale] said.

“Honest is standing by its products and dismissed Thursday’s Journal story that said its laundry detergent contains sodium lauryl sulfate, or SLS. The chemical, which is widely used in personal care products but can cause skin irritation, is included in Honest’s list of banned ingredients.”

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