Leadership Summit 2026: Honest Company CEO Carla Vernón on Leading with Focus in Turbulent Times

**SPEAKER_2** (0:02)
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**Adi Ignatius** (0:28)
Welcome to the HBR IdeaCast. I'm Adi Ignatius.
What would you do if you were tasked with taking over a company facing shrinking margins, limited cash, and increasing pressure from Wall Street to generate profits? The Honest Company was founded by Jessica Alba with a mission, and it's been a big disrupter in the household and personal products industry. But when Carla Vernón was brought in as CEO in 2023, she faced an uphill battle to turn the brand, two years after its IPO, into a profitable, long-term business. Vernón, our guest today, drew on her decades of consumer products experience at places like Amazon and General Mills. She set out to build trust, create a shared language for change, and help employees embrace new ways of working. She spoke with me at our recent HBR Leadership Summit. Here's that conversation.
You know, when somebody comes in from the outside to execute a turnaround, there's always a lot of urgency, there's always a lot of uncertainty. When you came into The Honest Company, how did you decide strategically what your initial priorities would be?

**Carla Vernón** (1:42)
Well, let me step back and just tell people a little bit more about the honest products and why the brand is so special and why the turnaround had to be so nuanced. So we are a household personal care company, as you mentioned. We make a lot of products for families with babies, including diapers and wipes.
We also make personal care products that people now use in more areas of their house for a wider audience. But all of our products are held to a really high standard of clean. There are 3,500 ingredients we do not allow in our products because we want to make sure that they are great for people with sensitive skin and great for people who are really trying to remove some of those things from their lifestyle.
So that's a really specific type of company and brand to run. And as you said, it's very purpose driven and mission driven.
And so when I came in, the company was just exiting that really early founder, that stage of exiting the founder building stage and into the public offering phase. And we were very low on cash. We have less than a quarter cash in the bank. Gross margins had been declining over time. And the business overall sales had been relatively flat.
With all of that ahead of me, what I first turned my attention to was profitability. Because we are a publicly traded company, we'd have very inconsistent results with Wall Street.
And one of the things that Wall Street started thinking about for recent IPOs just through the pandemic and after was top line growth is not sufficient. They needed to be healthy businesses both on the bottom and the top. And so I looked at the circumstances and figured out where could we address some of that improvement in the profitability structure immediately to gain that credibility with our investors.

**Adi Ignatius** (3:25)
Yeah, so that sounds like a very good place to start. But as you say, it's nuanced. I mean, you have employees, you have customers who really bought into the mission, who probably were skeptical of somebody who said, I'm here to fix the bottom line. So, how did you navigate that?

**Carla Vernón** (3:43)
I'm so thankful that in my career, as you know, I came up through General Mills. I also worked at Amazon. And in those experiences, I got the chance to get to know founder-built brands very well. At General Mills, I ran a number of the founder-built brands, things like Annie's and Lara Bar and Cascadian Farm and Epic Bars, and got to know the importance of caring for a business that was built for purpose, and that the employee base comes to because they believe in the mission and they believe in the unique products. That's one of the reasons, I think, why I was a very natural fit to come to Honest and say, we can do both of these things at the same time. But I think one of the things you asked about was this notion of trust.
And one of the things that I've learned is, trust is earned through repeatedly doing what you say and sticking to your word and becoming predictable. We know that from Wall Street Investors, it's really the same for employees. So I tried to lead through transparency. Our brand is called Honest. So it's a really good North Star for us all the time. And I was always trying to be very clear with our employees every step of the way, that this was not to take out any of the heartbeat of the brand. This was to make the brand strong enough to be built, to last for a long time.