Shelley E. Kohan (00:03.174)
Hi everybody and thanks for joining our weekly podcast. I’m Shelley Kohan and I am so thrilled and excited to welcome Carla Vernon. She is the chief executive officer of Honest Company. So welcome Carla.

Carla Vernón (00:18.722)
Thank you, Shelley I’m so excited to talk to you today.

Shelley E. Kohan (00:22.168)
my gosh, there’s so much going on. I hope we can like pack this in in 20 minutes and I do have to toot your own horn for a second. So first of all, Honest is now a publicly traded company, which is very exciting and even more exciting than that, you are the first Afro Latina CEO of a US public traded company. Now that’s exciting and sad all at the same time. You know what I mean?

Carla Vernón (00:26.072)
Let’s get it in.

Carla Vernón (00:32.47)
Yes.

Carla Vernón (00:46.478)
Shelley, I am so proud. I mean, I’m really part of a very proud lineage of leaders who fed into me and mentored me, and I’m planning to do the same for the people coming up behind me.

Shelley E. Kohan (00:58.99)
I’ve loved that and I say it’s sad because it’s 2025 and you’re the first Afro Latina CEO of a public traded company. That’s the sad part of it, but I am so thrilled for you and boy, did you hit the ground running. So you became CEO and I think 2023, right? Yeah, and you have completely transformed the business. So I’m excited to hear about this because you have returned the company to profitability and if my numbers are correct,

Carla Vernón (01:15.308)
That’s right, yes.

Shelley E. Kohan (01:27.428)
Your revenue has grown by 8%.

Carla Vernón (01:30.144)
Yes, in two years, Shelley, the team has done an incredible job of executing a really important transformation. Because we’re a publicly traded company, it’s important that we really deliver on shareholder value. So what I’m extra doubly proud of, it’s like doing some kind of Olympic feat here of a triple sow cow or whatever they call it, is that while we grew that 8 % over the last two years in revenue, we became a more profitable company.

Shelley E. Kohan (01:52.326)
I love it.

Carla Vernón (02:00.064)
our gross margins by 1,400 basis points. And I get remarks all the time. People ask me 1,400 basis points, like I didn’t say it correctly. But we went from a gross margin of 24 % to our all-time highest margin we reported recently this quarter of 40.4 % in two years. Yeah. Thank you. Thank you. I’m just proud. The team has been so disciplined.

Shelley E. Kohan (02:20.868)
What? That’s insane. my god. That’s amazing. Congratulations.

Shelley E. Kohan (02:30.288)
So tell me a little bit about this transformation. How did you make that happen? I mean, you can’t tell us your secret sauce, but kind of give us some hints into how you were able to kind of jump in and get this turnaround going very quickly.

Carla Vernón (02:42.87)
I’m so proud, Shelley, because honestly, everything I learned in my two most recent employers has been stuff that has served me well, bringing it into Honest and helping Honest sort of elevate our standards of execution. So as you know, I grew up in General Mills as a brand marketer and a brand builder and an operator. And in those classic CPG companies, you just learn a real understanding of the drivers of a business model.

And then after that, I was at Amazon. So I’ve been a retailer. So I was at Amazon for two years as vice president of their consumables categories. People probably know that more as Everyday Essentials. And Amazon is a very disciplined operator and their principles are really embedded in all the work that they do. Those are things that I’ve been able to pull over to Honest and really frame that in a way that fits Honest. So we built what we call a three pillar

transformation here and it’s got a top line focus which we call brand maximization and that’s just really about scaling this amazing brand this incredible portfolio of cleanly designed products that our consumers just need and love and then the middle is called margin enhancement that’s really about this thing we talked about about making us a more profitable company driving that shareholder value. The last pillar

sometimes my catch all is called operating discipline. And it talks about something that we’ve already just alluded to here, which is how you execute, how you show up every day to operate as a team and with real clarity and focus matters. So with those three pillars, we’ve been able to put real strategic initiatives under each one and just knock them down one by one with that kind of clarity and focus. It’s, it’s been really something that’s allowed people to execute quickly.

in this direction of transforming the company.

Shelley E. Kohan (04:45.68)
That’s amazing. And when you worked at Amazon under your categories, beauty was part of that, right? Beauty’s personal care, correct? Yeah.

Carla Vernón (04:52.246)
Yes, when I was at Amazon.

Had everything I like to tell people Imagine you’re walking into your traditional brick-and-mortar grocery store And you just think about that middle of the store the center store categories Almost all of those are the categories in consumables the stuff that you need to replace all the time, right? And so I had beauty I had household paper products. I had food beverage candy. I had baby care I have just a lot of stuff health and wellness. So I got to know so many of those

exciting aisles in the store.

Shelley E. Kohan (05:26.756)
And I definitely think the operational excellence, I mean, they run a type ship there. The other thing I noticed, which I’m sure you’ve noticed also, but you worked for some pretty kind of amazing founders. So you worked for Jeff and so he founded the company at the time, I’m assuming you were there when he was CEO, and then Jessica Alba, right?

Carla Vernón (05:46.252)
Yes, I was. Yes.

Shelley E. Kohan (05:48.78)
So tell me, I’d love to know a little bit about, so Jessica came with this idea of the company. She had a very clear vision of what she was looking for, and I believe she’s the one that started with the honest standards of clean, but tell me about the kind of like burden, or not really burden, but you you’re taking this company of a founder who’s very specific about what want. Tell me about that experience and the brand strength.

Carla Vernón (06:02.198)
Yes.

Carla Vernón (06:15.438)
Shelley, I’m really honored that founders trust me with something so important to them, right? And what Jessica and the four founders of Honest created together is remarkable and it’s so special. One of the reasons I think the board of directors of the Honest Company believed that I could really execute on a founder’s mission and continue to advance it so that it reaches its full fulfillment is because I had a lot of practice on that at General Mills. So I ran a number of

founder-built businesses at General Mills. I ran Annie’s Organic, which was founded by Annie Withy. I ran Cascadian Farm, which was also a founder-built, really important pioneering organic brand. I ran Lara Bar and have a beautiful relationship with Lara Mirrikan. Epic Provisions was founded by a husband and wife couple. Excuse me. Epic, let me start again.

Shelley E. Kohan (07:10.959)
Give it one second. Okay, go ahead.

Carla Vernón (07:14.646)
I got the opportunity to run Annie’s Organic, which was founded by Annie Withy, who, trivia, a lot of people don’t know, was also the founder of Smart Food Popcorn. So if you love things with good cheesy flavors, now you know what Annie’s products have in common. I also got to run Cascadian Farm Organic, which was a pioneering founder-built organic food brand. I had the opportunity to run Lara Bar and develop a beautiful relationship with Lara Mirikin.

Shelley E. Kohan (07:26.179)
wow.

Carla Vernón (07:44.583)
and understand what her founder vision was for Lara Barr. And Epic Provisions was founded by this husband and wife couple, Taylor and Katie. So I have really taken to heart the opportunity to understand what makes founder-built businesses so special and how you have to keep that heartbeat of the founder really thriving as you figure out though how to do what is essential in the next step, which is make that business relevant and known to

a broader set of leaders, or excuse me, a broader set of consumers. And my board of directors saw that history of that care that I put in founder businesses. And I think that that gave them the confidence that while I’d never been a publicly traded CEO before, I knew the delicate operations of.

Shelley E. Kohan (08:18.543)
Yeah.

Carla Vernón (08:39.51)
really preciously maintaining that founder vision while also figuring out how you bring that brand to the masses. So it’s been a pleasure. Amazingly, Jeff and Jessica have something in common, which was that vision was so crystal clear and it was also so new in the market. They both changed the game and they both had to have the confidence to know that even though the market couldn’t see all of what was changing and

needs and consumers habits, they could see it. So it’s been really cool to be able to carry on that legacy.

Shelley E. Kohan (09:16.057)
That’s great and kudos to the board. I’m proud of the board for hiring you because I just think it’s amazing the work that you’ve done in the past two years and the results that you’re getting. I think the product and the brand, Honest, has remained as Jessica has wanted it to remain and the other founders. So tell me a little bit about this Honest standards of clean and how are you moving that forward?

Carla Vernón (09:42.189)
Honest is a remarkable brand because its standards for clean are higher than are required by any US regulations. In fact, we even exceed the clean standards required in Europe and the EU. So sorry, let me start again. Can I just get a water? I realize I’m dry.

Shelley E. Kohan (09:58.607)
Wow.

Shelley E. Kohan (10:02.104)
Yeah, sure. You’re all good.

Carla Vernón (10:11.436)
I’m so proud of the standards that Honest Calls our Honest Standard for Clean.

we have what we call a no list. So the honest standards for clean really promise to our consumers that they can be certain that our products do not use 3500 ingredients of concern that we know can have 3500. And we know that, you know, different people have different issues, sensitivities, allergens to different things. So it’s important that we have a really comprehensive approach. And our approach is actually

Shelley E. Kohan (10:32.996)
3500?

Carla Vernón (10:47.852)
higher than the standards required by any regulatory requirements for clean formulation in the US or in the EU. And one of the ways we really ensure that, Shelley, is that our honest office is we have our own labs and we have our own in-house toxicology. We take this very seriously because in the market we want to really make sure we elevate and deliver with excellence on the most sensitive skin. And look at Shelley, one of our most important

Audiences we serve is babies. And the skin on a baby, I mean, it’s just, it’s so, which is when you think about it, it’s so precious, it’s so delicate and so sensitive. So we can meet the standards for babies. Then we know we can meet the highest standards.

Shelley E. Kohan (11:21.508)
Of course, yes.

Shelley E. Kohan (11:36.332)
that’s great. So when you came in CEO and now going into 2025, listen, the retail landscape right now is so uncertain. And a lot of retailers just don’t know where it’s headed for holiday. Can you tell me a little bit about what you’re doing in terms of navigating the current climate?

Carla Vernón (11:56.334)
Yeah.

think there are a few things. The most important thing is we never take our community for granted. So that’s what we call the people who buy our honest products. We really call them our community and try to remember that if we serve their needs, then they will make a decision to choose us and that’s important. so serving their needs in a time like this is important on several dimensions. The product quality has to be second to none. And that’s actually what impressed me

Before I came to Honest, I got to know Honest very well because when I was at Amazon, I ran all the categories that Honest is in. So I knew how Honest performed versus its competitive set and it was just always so impressive to me, even when I was on the outside. We also have to really monitor our cost structure because we know that people come to our products because they need them. So the incidence of sensitive skin needs has nearly doubled since 1997 and the

sensitive skin market is expected to reach $80 billion by 2030. That’s how much this issue and needs are growing. So we need to make sure that as we manage our cost structure, we keep our products both affordable for our community and commit our promise and our commitment to shareholders to continue being a profitable company. So there’s a lot of things we’re juggling. And I know this tariff environment adds complexity to what is

already a very competitive landscape that we’re in. But I’m really proud of my team because they’ve managed to hit our highest gross margin in the history of the company all while building a plan that could be flexible with tariffs. But we have to keep watching what the consumer patterns tell us. So far, Shelley, for our brands, what we can see in the data is that because we’ve watched that our buy rate has increased at the same time

Carla Vernón (13:56.761)
that our repeat rate has increased and the household penetration is at our highest ever as well. So that tells me when I read that consumer data that consumers are still choosing us as a choice because we meet a need but we don’t take that for granted.

Shelley E. Kohan (14:15.864)
That’s so true and it’s so interesting you bring up this skin sensitivity. well, I worked at Space NK for a while, the apothecary from London, I’m sure you know Space NK I helped bring them to the US market and it’s so funny because what I learned was that…

Carla Vernón (14:26.092)
Yes, beautiful.

Shelley E. Kohan (14:31.146)
A lot of consumers in the US think they have sensitive skin. like nine out of ten, you know, consumers believe in their mind, their perception is they have sensitive skin. So that’s grown tremendously. But what I find super fascinating about the Honest brand…

is that there’s a lot of retailers that are experiencing consumers saying, want clean, I want healthy, I want sustainable, but when they get to the store and there’s a pair of jeans that’s sustainable and one that isn’t and there’s a 10 or $15 difference that the consumers actually aren’t doing what they say they’re gonna do. What I find interesting about Honest is your loyalty is like through the roof.

Carla Vernón (15:10.87)
Yes, it is. It is. And growing. So thank you for saying that. I

also have sensitive skin. So I am in that 90. I was a child with eczema growing up and so I didn’t even used to be able to use certain skincare products, lotions, facial products. That’s why when I was at Amazon and I was running the beauty category, I had access. Shelley, I had the most expensive French creams. Everybody would send me everything. And when I would try the Honest Products, and this is me, before I was part

Shelley E. Kohan (15:41.706)
I bet.

Carla Vernón (15:46.215)
of the honest family, before I was part of the honest team, I would try the honest products and finally there were skincare products that my face was like, thank you, we love this, this is great. So I agree with you, it is really remarkable that consumers when given the choice and when facing that set of products are saying this is worth it to them, but that’s because it is such a primary need, caring for yourself, finding something that feels good on you.

finding something that takes that diaper rash away from baby, finding these beautiful household wipes or our latest product, these flushable wipes that are designed to our same standard of clean and also the highest standard of making sure that they really work in septic systems because that’s what people are very worried about as they move into these flushable wipes. Meeting all of these high bars is very important, but I grew up building brands at General Mills and so I understand the importance of

Shelley E. Kohan (16:34.948)
That’s right.

Carla Vernón (16:45.978)
A brand is a promise to a consumer. When they go to the shelf, it has to be a shortcut. Or when they go to their phone and they click it, has to be a shortcut for confidence, right? And so we just wanna keep making sure we never compromise on that so that no matter the economic conditions, we’re the choice.

Shelley E. Kohan (17:05.688)
That’s exactly right. And the other thing that I think really helped the brand is a consumer shift with young moms and the founders of Honest.

Must have seen this coming because today and when I say today in the past five years or so The moms of today they are looking for exactly the product commodities that honest offers. They’re looking for clean They’re looking for natural they’re looking for you know things that you know, I hate to say it But when my kids were small, I wasn’t as adamant about that I wish I would have been but this this whole mindset of this younger generation is really going after these quality

products that are clean for their kids.

Carla Vernón (17:48.793)
That’s right, Shelley, so I’m a mom. And anybody who follows me on social media knows I’m a mom because it was just my son’s birthday and I posted a video. Because you know, they’re always your baby, even though he turned 20, I’m posting his baby pictures. And so I think I always, when I was growing up in corporate America,

Shelley E. Kohan (17:57.395)
nice!

Carla Vernón (18:07.476)
Even though I’m Gen X, I always said I would like to be that boss that is relevant and makes the next generation of employees feel understood, right? So I, although I’m Gen X, I wanted to really understand my millennial employees. want to now understand my millennial and Gen Z employees. My kids are Gen Z also. And that helped me recognize one of the things that was so special about the founders of Honest. The four founders were millennials.

And so they were developing something that they thought big corporate America isn’t understanding the change that is about to wash up on the shore. Right. And so they knew what they needed for their families. In fact, in our history, Jessica, one of the most important things she did before she founded the brand was she went around to Capitol Hill to try to see if one of the ways she could solve this need, this growing need that she saw for consumers was to ask regulatory standards to get

Now we all know how complex it is in order to drive change at that level. So the founders then said, let’s take matters into our own hands. Maybe we’ll drive change that will cause a ripple effect in the industry and encourage every brand to raise their standards. So this was not a selfish act, right? It was an act in service of what was coming in the future. And I’m a person who just really likes to have my ear to the wind.

Shelley E. Kohan (19:13.336)
Definitely.

Carla Vernón (19:37.193)
to say, like, how are things going to be changing? Not only were millennial families going to be demanding something different, but the Gen Z families, they have more information than anyone ever had. So they can look us up. And in fact, there are lots of apps now that people can look up. I met this woman who was a cancer survivor. Amazing testimonial she gave me of her own experience with Honest. As she was going through her cancer treatment, there were so many products

in her house, her pantry and her bathroom that now her skin was just, it was too sensitive and she couldn’t use them. But the cancer treatment was so harsh. She needed that moisture. She needed things she could clean her household surfaces with that she knew would support what she was going through. And she told me that she found the Antlinus products through one of those apps because we lit up green lights on all of the criteria. And that is what we are up against now, not just meeting regulatory standards, but meeting

consumers who have every piece of information in their pocket. We can’t fake it at Honest and we don’t. That’s why we love our brand name. It’s called Honest.

Shelley E. Kohan (20:46.116)
Yep. Yeah, that’s so true. I love that. I love your analogy too. And I think you’re spot on. And I’ll tell you something scary, Carla You probably already know this already, but, Gen Alpha just entered the workforce this year and, hire some now.

Carla Vernón (20:51.128)
Yeah.

Carla Vernón (21:00.386)
Come on, Jen Alpha, bring it. We’re ready. I don’t know if we’re ready, but we better act ready.

I’ve just been listening to this guy who translates, he’s a teacher, and he translates the latest language and you know, I don’t know what anyone’s saying in Gen Alpha, but I’m gonna try to keep up. I’m gonna try.

Shelley E. Kohan (21:19.628)
Yeah, it’s great. It’s great. All right, so tell us what can we expect? What’s the growth potential out there for Honest? What can we expect from you and Honest over the next, I don’t know, year or two years?

Carla Vernón (21:31.203)
We want to keep leading the way. what I like, what we did is, I tell my teams, we go into categories, we decide where is improvement needed that we can bring both from our high standards of clean, also with our conscientious development of ingredients that meet really planet-friendly standards. I think that that’s always going to be important as we talked about to millennials, Gen Z, Gen Alpha. And listen, Gen X doesn’t want to be left

behind. We’re tired of being the forgotten about generation. You know, as we get older, that’s right. As we get older, our skin is sensitive in new ways or we become grandparents and we want to care for those babies and give them the best. Right. So we want to continue holding up this high standard and actually improving it. As I told you, that’s why I love that we’ve got our own scientists in our headquarters and our own regulatory people who are out there talking with the policy makers about

Shelley E. Kohan (22:03.741)
my God.

Carla Vernón (22:31.096)
what we hope to see is the high standard for policy and ingredient formulation. But what you’re going to see, and then you can start to see the clues of it, is we’re not just a baby brand. So I told you that we just recently launched our flushable wipes. So we do have a toddler flushable wipe that’s for the potty training moment and getting toddlers confident, right, and making that job easier for parents. But we have a gorgeous flushable wipe. It’s available online. Almost all the online retailers that you can think of.

can find it. The packaging is packaging that you love to look at on your counter, which is one of the things, honest, we specialize in. We want you to be happy to use the products and we want the products to make the experience happy overall. So we’ve launched this flushable wipe and now it’s rolling out in brick and mortar. That’s bringing our brand in front of people who may not have had babies that were honest babies like you and me, right? We didn’t, we didn’t have an honest diaper to choose, but now we’ve

Shelley E. Kohan (23:27.908)
Yeah.

Mm-mm.

Carla Vernón (23:30.916)
got this skincare, we’ve got these beautiful flushable wipes. So we can, we intend to continue bringing the brand to more places. We’re only in about 50 % of the retail physical doors that we think makes sense for a brand like ours, right? We’re a very mainstream brand, which is cool. But we also play in all of those really stores that have a high focus on sustainability and clean so we can stretch. So we want to be in all those places and you’re going to

see that growing. And then you’re going to see us pop up in aisles where it might be a new brand to the set. Yeah, it’s exciting.

Shelley E. Kohan (24:07.876)
that’s so exciting. well, that’s a lot of growth. And I have to tell you, I’m so happy you mentioned the Gen Z being a forgotten generation. When I teach my students, we talk about the different generations and I always say, I’m part of Gen X, not Gen Z, Gen X is the forgotten generation and no one cares about anything about us, which is so.

Carla Vernón (24:30.734)
Yeah, but remember, Shelley, we kind of don’t care that they don’t care. So that’s our secret magic sauce. We do have the best music. I mean, let’s admit it, the 90s, it’s the best music. You can’t get off off the dance floor. So that’s one place you will not be able to ignore us.

Shelley E. Kohan (24:34.85)
That’s true!

No question. No question. I love it.

I love it. Well, I’m excited to see this new brand that’s coming out and I’m also very excited about your distribution and You’re doing so many great things and it’s such a pleasure having you talk about us So thank you so much for being on the podcast. Is there any closing closing thoughts you want to add?

Carla Vernón (25:05.24)
You know, Shelley, at a time like this.

I don’t want us to miss talking about the importance of the people. So you and I have been joking about generations, right? And in a way, what we’ve been doing is we’ve been kind of dividing people into these maybe tribes, if you will. The only other thing I want to say that is important to me, because you did at the beginning celebrate that I am an Afro-Latina leader, is that I also think leadership is part of what’s changing in this landscape.

I think that people are seeking places they can work, where they can feel that sense of belonging, they can feel that sense of being seen. So even as we talk about making products that meet needs that might have felt unseen for people, the thing I just want to emphasize is at Honest, our logo is a butterfly.

One of the things we love talking about is the fact that there are so many kinds of butterflies. There are butterflies, different butterflies around the world, there’s different butterflies around regions, and did you know that a group of butterflies is called a kaleidoscope?

Shelley E. Kohan (26:13.248)
I did not know that. Wow.

Carla Vernón (26:14.444)
Yes, so honest, I think the beauty is not only in our products, but the beauty is in the way we want to bring forward being the kind of company that we think both employees and our community can really feel proud of.

Shelley E. Kohan (26:30.862)
That’s amazing. Thank you so much. I love that. And thank you for being on Retail Unwrapped. And I always want to thank our listeners. wow, I’m so excited for the company.

Carla Vernón (26:33.666)
Yeah, thank you. Thank you, Shelley.

Carla Vernón (26:44.13)
Thank you. It’s so great to be here.

Shelley E. Kohan (26:46.67)
We’ll talk soon, I’m sure. We’ll have you back on.

Carla Vernón (26:48.628)
I hope so.