e.l.f. Beauty CEO: Purpose and Growth Go Hand in Hand

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland, the CEO of The Conference Board and the host of this podcast series. And in today's conversation, we're going to discuss how sustainability and purpose are built into e.l.f. Beauty's business strategy. Joining me today is Tarang Amin, the chairman and chief executive officer of e.l.f. Beauty.  

Tarang, welcome to the show.  

Tarang Amin: Thank you for having me.  

Steve Odland: So Tarang, our listeners span the gamut of the C-Suite, around the country and the world. 

Maybe you could just start and tell them a little bit about e.l.f., who you are and what you do, and then also about yourself.  

Tarang Amin: Sure. So e.l.f. Beauty, our mission is to make the best of beauty accessible to every eye, lip, and face. We were founded 20 years ago, or actually over 20 years ago, with a radical idea of selling cosmetics over the internet for $1. 

Now, this was 2004. Everyone thought e.l.f. was crazy, cause this is pre-iPhone. You couldn't sell cosmetics over the internet, and you certainly couldn't make money at a dollar. But that was our start. And that disruptive gene has remained with us ever since. Even though we've migrated price points, gotten into other different retail channels, that spirit of disruption is very much part of what e.l.f. Beauty is even today.  

In my background, actually, e.l.f. Really appealed to me. My background is a bit unusual. I've been in the consumer space for over 34 years, but my start was as an entrepreneur when I was 14 years old. Our family was an immigrant family in the US. We sold our house, took every penny we had, and we bought our first motel on Route 1 in Alexandria, Virginia. And so my start was actually building up our family business with my dad. As great consumer background as I've had, I say everything I learned about cash flow, economic profit, how you treat people, really came from those early motel days, building up that business with my father. 

After grad school, I found myself at Procter & Gamble. I was part of the team that relaunched Pantene in the early '90s. Took a $50 million haircare brand to $2 billion and global market leadership. I've since worked every major consumables category. I'veworked everything from food to pet, to home care, laundry, nutritionals. My first CEO opportunity was actually a company called Schiff Nutrition, which we built up and ended up selling that company to Reckitt Benckiser. 

I've now been CEO of e.l.f., gosh, 11-and-a-half years. And I guess my summation is I'm passionate about building brands. The best way I know how you build brands is you lead the innovation in the category. But what I love doing the most is assembling these high-performance teams. I always brag that in 34 years of being in the consumer space, I've never had a business we haven't grown multiples of where the category is growing. And I always attribute that to the team that we are able to assemble and motivate and operate on this high-performance team structure. 

Steve Odland:Soyou've been with e.l.f. for roughly half of its existence, and it was an innovation, a startup essentially, and an internet-only business, which was, as you said, crazy in the day. And so you built the company around the brands, the quality, the value, but also purpose. Talk about how that is all interwoven. 

Tarang Amin:So we often say we're purpose-led and results-driven, and they go hand in hand. As I mentioned, our mission is to make the best of beauty accessible to every eye, lip, and face. And the important word there is "every." So it really frames how we think about the world, sustainability, and social impact. And it always goes back to what we consider our superpowers. If you look at our superpowers, we are premium quality at extraordinary prices with universal appeal that are not only easily accessible, but e.l.f. is clean, vegan, cruelty-free and Fair Trade-certified. That's a mouthful.  

And the reason why all those things are important is because of what our community values. And so we've always been very focused on how do we best delight our community and how do we live our values to what our community appreciates?  

Steve Odland:Yeah. And so how do those values interface with the products themselves? So, what is it about your brands and the products themselves that have the values built in and therefore differentiate them from others in the marketplace?  

Tarang Amin:I'd say probably the biggest is accessibility. We don't believe you need to have a trade-off between having premium-quality or prestige-quality products and your ability to afford them. And so we make accessible products that consumers otherwise couldn't, that might cost $40, $50, that we can bring in less than $10. And really being able to democratize access and democratize beauty is a key part of what our mission has always been about. And so I would say that goes hand in hand with the superpowers I just talked about. These are values that are important to our community and are really engineered into every one of our products. 

Steve Odland:Yeah. And sustainability is the key to your strategy, as well. Talk about that.  

Tarang Amin:Yeah, so again, we are very much driven ?by, "What is our community value?" And we were one of the first mass beauty products that actually became vegan and cruelty-free. And the reason we did that was important to what our consumers valued. 

As we look forward, two of the key attributes that consumers are increasingly—particularly our consumers, we're the number one brand among Gen Z, Gen Alpha, and millennials. And when you look at that generation, they care about what are the ingredients in their products, what is the impact that you're making from a sustainability standpoint? So we're very much focused on those, as well, because that's what our community values.  

Steve Odland: And so do you tend to skew to Gen Z?  

Tarang Amin: We do, we're the number one brand, I think, in the Piper Sandler survey that kind of tracks teens and their preferences. We're their number one brand with a 35% mindshare. I think the second brand on that list has maybe a 9% mindshare. Sowe're quite strong with Gen Z, as I said, also the number one brand among Gen Alpha and millennials. And sustainability is something that they very much care about.  

Steve Odland:Yeah, and anyone who knows cosmetics knows that there's quite a price range and a value range. You started at a dollar. I think you're a little higher than that. But the whole point here is that it's not only sustainability and accessibility, but it's also great value products.  

Tarang Amin:That's right, and that'sa really the core of what we're known for. Like today, our average unit retails at about $6.50. That compares to other mass brands around $10 and prestige is well over $20. Soit's an extraordinary value, but I think that sometimes people pay attention to the price point. What's actually even more important is the quality we're able to deliver at those prices. 

Steve Odland:Yeah. Now this whole ESG world and DEI world has been under a little bit of a backlash. Some of it's political, of course, but the whole point of ESG is purpose. And that's how you identifye.l.f. Beauty, as a purpose-driven organization. It was built around sustainability, built around citizenship, taking all of your various stakeholders into account.That's an incredible balancing act for you. How do you keep all of that in balance so that you're satisfying all your constituents?  

Tarang Amin:I think our first value is delighting our community. So what we always anchor on is, what does our community value? 

And one of the things we're quite intentional about early on is we wanted our company to reflect our community. So our team is 74% women, 76% Gen Z and millennials, 44% diverse. Even our board of directors is 67% women. 44% diverse. We're one of only five public companies in the US that can say that. And again, the intention is we want our team to reflect the community that we serve. And if we do that, then that's who we are, and that's what we've always been about.  

Your corporate strategy is built around all of these values, and sustainability and purpose are really your North Star, I guess, in your corporate strategy. A lot of people think that it's either/or, right? You're either purpose-driven or you've got this strategy to build shareholder value. You've got all of that interwoven into a fabric that delivers, shareholder value, delivers results, but delivers it in a way that is balanced, that is sustainable, that is purpose-driven. Not many organizations are successful at interweaving all of that successfully.  

For us, that's always been a little bit perplexing for me, of how people try to separate out the two. We are purpose-driven and results-driven, and they go hand in hand. In our third quarter, we reported our 24th consecutive quarter of both net sales growth and market share growth. They go hand in hand. SoI've never understood this debate of you pick one or the other. That is actually how we deliver the results we have: By having a team that reflects our community by delighting our community, and that's how we win in the marketplace and continue to be the strongest-growing beauty brand or beauty company out there. 

Steve Odland:Yeah, and that's why I wanted to hit it, because it is really at the core of this ESG backlash, which is that you've got certain investor groups saying, no, you really need to focus on ESG and sustainability. You have others saying, yeah, you need to do that, but you also need to deliver results. 

And so therefore there's this backlash against ESG, whereas the way that you're doing it is the right way. It brings it both together and says, no, it's not either/or, it's both. You have to do both, and you can do consistent with your values and your customers. And you've done so that you are a model for all these people are wallowing in it. And really, congratulations to you and your team for all of that.  

Tarang Amin: Thank you.  

Steve Odland:So have you had to shift your messaging or shift your strategy at all, given the external landscape?  

Tarang Amin: No, we haven't. We haven't. We've seen a number of companies that have backtracked or had to shift some of their messaging, but for us, authenticity is the key.That's what consumers trust e.l.f. in. We are who we are. We're all about accessibility. We're about inclusivity. We're about the values that we hold that are important to our community. So for us, no. We've stayed the course and, in fact, we've actually doubled down on those initiatives.  

I mentioned our board stats earlier, where we're one of only five public companies that have two-thirds women, 44% diversity. But the fact is we don't want to be one of only five public companies in the US out of nearly 4,100. So we believe business has a role for societal good. And so we have an initiative called Change the Board Game, where we served up core facts in terms of just how homogenous many of America's corporate boards are.  

And we are proactively championing greater diversity and greater inclusion on boards. We sponsored 40 different candidates through the National Association of Corporate Directors Accelerate program to help qualify them for board service. We've done provocative campaigns that really call out the lack of diversity. And the important thing, this is something that our community appreciates. We had one campaign that—picture a billboard that has a bunch of pictures of a bunch of white guys on it. And the headline is, "So many dicks, so few of everyone else." And the basic facts that we uncovered were, there are more men named Richard, Rick, or Dick on America's corporate boards than entire populations of underserved populations. Twice the number of Hispanic women, almost the same as black women. And so our whole point is that there's nothing wrong with being a Richard, Rick, or Dick, but let's make room for others, and let's have a positive stance there. 

So I would say no. We are more committed than ever to make sure that we continue to live the values that have built this business.  

Steve Odland:Yeah. Now, innovation has really been core since your founding, a little over 20 years ago. Innovation started with, let's go through a channel that really is not a channel yet. And that's internet-only. That was unique, going to directly to younger consumers. And soit's really infiltrated all of your DNA, whether it's product development or packaging. Talk about how you leverage innovation and technology to drive sustainability.  

Tarang Amin: Yeah, I'd say there's three areas that we are really focused on. 

The first is that value proposition. This unique ability of delivering better than prestige quality at an extraordinary price that makes it accessible to every consumer. That's really the heart of our innovation engine is, how do you deliver that level of quality at prices people can afford?   

And the second is in formulation. If I think about the FDA in the US only excludes 11 ingredients from cosmetics products. We don't include 2,500 ingredients in our formulation. And the reason whythat's important is our consumers are very conscious of what are the ingredients in their products. 

And the third is in packaging. Cosmetics tends to be pretty packaging-intensive in terms of amount of componentry, amount of package materials. Sowe've been on a mission to reduce that impact that we've had. We've got millions of pounds of packaging that we've eliminated over time, which not only is better from an environmental standpoint, but also improves the value proposition that we can deliver. 

Steve Odland:We're talking about e.l.f. Beauty, sustainability, and purpose. We're going to take a short break and be right back. Welcome back to C-Suite Perspectives. I'm your host, Steve Odland, CEO of The Conference Board, and I'm joined today by Tarang Amin, chairman and CEO of e.l.f. Beauty. 

So Tarang, before the break, we were talking about innovation and how that has driven the business. You are not only a US brand, but you're one of the fastest-growing global brands out there, consumer product for sure. And trying to align the values and purpose with all of the various constituencies, but also all of these different countries and nationalities and cultures, is very complex. How do you balance all that?  

Tarang Amin: I think for us, it's about living our values and our overall mission of making the best of beauty accessible, and we see that resonates across the world. Every market we go into, we're already a top three brand in any new market that we go into because the reality is, we're quite strong in social media. And a lot of that feed is consumed outside the US. And so there's already pent-up demand for e.l.f. well before we get into a particular country.  

And what we find is the same values that our consumers in the US appreciate—that premium quality, extraordinary prices with clean formulations that are vegan, cruelty-free, and Fair Trade-certified—actually resonate around the world. So for us, it's making sure that we're consistent in what we are delivering to consumers, regardless of what country they're in.  

Steve Odland: So outside of the US, do consumers think of e.l.f. as an American brand, or do they think about it as a local brand?  

Tarang Amin: Both. We are definitely an American brand. Our roots are in the US, and people know us as an American brand. 

 A great story on that is, I remember when we were launching the brand with Douglas in Italy. It's a premium retailer in the Italian market. We said, how much should we customize this brand for the Italian consumer? We don't even have any Italian employees. And they said, not much. Italians like hot American brands. 

Sure enough, the day we launched, there were lines down the block at every one of the Douglas stores. And the only debate we had with them is they told us—one of our items is a power grip primer. It's the number one SKU in color cosmetics across both mass and prestige. They said, but the Italians don't use primers. It's that first layer you put on before you put on makeup. And we said, look, we're a test-and-learn brand. Why don't we put it out there? And if it doesn't do well, we'll sub it out with another SKU.  

Sure enough, when we launched, not only were we the number one brand with Douglas Italy—I think our gondola is right next to Chanel, we very much belong there—but power grip primer is their number one SKU. So apparently Italians do use primer. They just didn't know they needed it. And you have this great combination of people already knowing about the brand and our key items, even if they didn't exist, that entire category didn't exist in the Italian market. And again, it's the number one item across all of Douglas.  

Steve Odland: And being an expert at internet marketing, e-commerce, as we used to call it, you guys are in touch. You're communicating through social media and electronic means. It shrunk the world in every way—supply chains, but also the world's consumers look more alike than they do different, regardless of nationality. And you're really marketing to that and championing that.  

Tarang Amin: And I think a key part of that is also having a two-way dialogue with your community. My chief marketing officer sometimes traumatizes me by dragging me on to TikTok Live. And she'll say, all right, you've got the boss here. What do you guys want? And our community is not shy of what they want. They'll say, I remember about a year ago, I did a TikTok Live and they said, "Hey, there's this prestige item out there, these bronzing drops. We love 'em, but we can't afford $40." 

And I'll look at the chat field and I'll say, "OK, yeah, I got it. You want some bronzing drops." And there'll be like another hundred comments. "No, we want them now, Boss Man. We want those bronzing drops."  

Now I'll leave, as I said, a little bit traumatized from that TikTok Live, and I'll call up my head of innovation and say, "Oh, please tell me we have that in our pipeline." and she'll say, "Yeah, we do, but it's 18 months away." And I'm like, "I can't go on another TikTok Live and hear the community ask for this again." And we move that launch up. Within six months, we had them out there. And so I think that's a key part of our entire proposition is being very open to what is it that our community wants and delivering that. And that in turn drives tremendous brand love.  

Steve Odland: You mentioned a few minutes ago how packaging-intensive the category is and all the work that you've done there. If you think about beyond just packaging, your entire supply chain is different than your competition in the category. Responsible sourcing, transparency. Talk about your strategy in that whole area and why it's important.  

Tarang Amin:Yeah, so we do have a unique supply chain. Traditionally in cosmetics, you either manufacture yourself or you use third parties, and ours is a hybrid model.So we partner with like-minded suppliers who are willing to make the investments necessary to advance our business. And so our suppliers have adopted our lean manufacturing techniques to eliminate waste, improve quality as we've gone through. It's our quality people in those facilities, really focused on quality assurance versus quality control.  

We're also the only beauty brand that's Fair Trade-certified because we felt, just as these values, it's important how we treat our community. It's also important that the impact to our workers, that they're in facilities that treat their workers, that we measure the environmental impact, that we make continuous improvements. And so very much, that partnership approach is very much present, and it'sprobably thereason whywe're the only cosmetics company, I think, 85% of our products are made in Fair Trade-certified facilities, very much lives the values that we believe in.  

Steve Odland:Yeah. And I think a lot of companies would love to have that, and they scratch their heads and say, "How do you do that? So talk about some of the challenges you faced and how you overcame that to get everybody aligned. 

Tarang Amin: ?I feel it's been a journey. I go back, and I say, we saw that consumers felt cruelty-free was important. We set out with our suppliers. I'll say, OK, how do we get out of, for example, our brushes, animal fibers to synthetic? And we worked on that together. And so I, I'd say the key word here is intentionality. 

Listening to your community, seeing what they want, and then working together to be able to make sure that happens. Same with Fair Trade-certified. Fair Trade was not present in the beauty industry. And so we partnered with Fair Trade USA and said, all right, let's create an entirely different standard by how do we measure these facilities? How do we make sure the worker conditions are right, that we're paying attention to the environmental footprint of our manufacturing process?  

And so, the intentionality of we can do, we feel we can do anything we set our minds to, but we need to take that intention and put the actions against it. 

Steve Odland:I think this is an important point, cause a lot of people look at where they are and you know where they'd like to be, where you are and they go, "Wow that's just a bridge too far." And they give up on it rather than understanding. You didn't get there overnight, you didn't snap your fingers, you did it one step at a time. And you got there over a long time. And you got there by integrating this business strategy with your values and everything.  

To people who are listening who may not be all the way to e.l.f. Beauty standards, it's OK. You can get there. You just have to do it intentionally. You have to want to do it, and you have to start taking the journey. And I think that's what you're saying.  

Tarang Amin: Absolutely. And I think for us the first step is always we measure any initiative we're doing by our community's values. Is it something that our community appreciates? Is it something they want? And then let's use continuous improvement. Let's start. You got to start somewhere, and then how do you improve upon that year after year? And that'swhat's gotten us to where we are.  

Steve Odland: You used a word right there a minute ago m that you measure things, and that's also something that people assume that, in sustainability and in this world, it's either/or, and it's not. Because you can achieve all that, but you have to measure it. And measuring the impact of what you're doing is important to e.l.f. Beauty, as well. Talk about what milestones do you use, and how do you track the progress?  

Tarang Amin:Yeah, so I'd say back to this false debate of "it's either purpose or it's results." We start with results. So we measure our results, as I mentioned, 24 consecutive quarters of not only net sales growth, but we're the only cosmetics company, out of a thousand, or cosmetics brands out of a thousand, that have grown market share 24 consecutive quarters. 

So first it starts with, what are your overall business results? Then we look at the sub-metrics: Are we making progress across each of the core areas that matter to us? So I look at our value proposition. Are our value scores increasing? I look at our quality. One of the things I'm most proud of is 10 consecutive years, we've taken up our quality scores every single year. We look at, obviously, the impact on what we're doing. If I look at our lightweighting and packaging reduction goals, if I look at overall product scores, we look at each of those things, but it starts first and foremost with results. What we're doing, does it actually show up in both the top and bottom line?  

Steve Odland:So looking ahead to coming years, what's next? It sounds like you're there, you've done it all. You've hit all your metrics, 24 consecutive, how do you keep going, and how do you motivate everybody to do this continuous improvement when you're at the top?  

Tarang Amin: We are never done. And the whole point of continuous improvement is you're always trying to get better. And one big enabler for us is we're also big believersin ownership. Sowe're unique in the beauty space in that we grant equity to every single employee every year. And we're not shy about talking about meaningful wealth creation. We want to align the interests of our employees with that of our shareholders in terms of the long term. So everyone has a piece of the pie and something at stake, and so very motivated to continue to make improvements, continue to delight our community. And that's really what our focus is.  

Steve Odland:Yeah. And had you quit at the top, you would've quit 20 years ago. That's what it is. And it'sreally hard when you set a sales record or you achieve the best or the top or better on any metric. It’s motivating yourself, as well as your teams, to go beyond that. And I think that's really core. You don't talk about it, as such, but I really think it's core to e.l.f. Beauty's long-term success.  

Tarang Amin: Absolutely. In fact, it's funny. I've been CEO 11-and-a-half years. Every time I get a new candidate, I tell him, "Oh my God, you're joining us at the exact right moment because we're just getting started." And I fundamentally believe that.  

And often what we hire for is culture. We hire for people who are humble and hungry. Who have an incredible curiosity that we feel can continue to learn, continue to make us better. And as long as we have that mentality and have an entire company full of employees who want to get better, who want to learn, who want to see how we can make things better, then that is incredibly energizing.  

Steve Odland: So just in closing, then, for our listeners who would love to help create their own purpose-driven change in their organizations, what advice would you give them? How do you start?  

Tarang Amin:I'd say the first step is always, are you being reflective of what your community's values are? Are you giving them and delighting them with what they want? So I always start first, obviously having been in the consumer space for over 30 years, to start with your "Who are you trying to serve, and what's important to them?" And once you know that, then take it one step at a time. Say, "OK, here's what you do."  

When we first started, we didn't know how to be cruelty-free. We didn't know how to formulate without 2,500 ingredients, but we started somewhere, and we kept making improvements as we went along. But it's always been that focus on, "Who are you serving, and how do you best serve them?" 

Steve Odland: Tarang, thanks for being with us today and sharing the story of e.l.f. Beauty and all your success.  

Tarang Amin: Thank you. Thank you for having me.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.