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XBeautycounter Gets a Billion Dollar Makeover from Carlyle Group
Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
Counter Brands is getting a billion-dollar makeover, and joining the unicorn club.
The parent company of Beautycounter, which makes eco-friendly skin-care products and cosmetics, is being acquired by the massive private equity firm, The Carlyle Group, executives at the companies announced Tuesday.
Equity funding for the deal came from Carlyle Partners VII, an $18.5 billion fund that focuses on U.S. consumer, media and retail companies – part of the $246 billion overall fortune Carlyle manages.
Beautycounter was founded by Gregg Renfrew in 2011 and last year raised at a $400 million valuation in 2018, according to Pitchbook data.
Renfrew told dot.LA co-founder Spencer Rascoff in an interview recorded in December that she started the company after seeing young friends around her be diagnosed with cancer or suffer from infertility.
Beautycounter founder Gregg Renfrew
"I started to wonder what was going on, why were things going so wrong for the Earth and why were things going terribly wrong for human health?" Renfrew said. "The one thing that I over time became aware of is that we were all being exposed to toxic chemicals and that there is a direct link between environmental health and physical health and our exposure to toxic chemicals."
Renfrew became "obsessed" with trying to remove all chemicals from her home, but she had trouble finding cosmetics that were both free of toxins and effective.
"I thought, why am I asked to compromise my health in the name of beauty?" she wondered. "And I thought I could start a brand that actually stands for health and performance simultaneously."
Renfrew grew up in New York City and still has an affinity for the city, but she says she is happy to have started Beautycounter in Santa Monica.
"When you think about clean living – whether that's focusing on the environment, sustainability, healthy food, healthy skincare or cosmetics – you see so much happening in Los Angeles," she said. "We are so well ahead of the curve on so many things that are happening."
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Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
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Five Takeaways From Snap’s Poor Earnings Report
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Social media giant Snap’s tough year continues.
The Santa Monica-based company reported disappointing financial results on Thursday as the second quarter “proved more challenging” than it expected. The photo-sharing app now plans to “substantially” slow its hiring as it grapples with declining demand for its core advertising business, Snap said in a letter to shareholders.
Snap earned $1.11 billion in revenue from April through June, narrowly missing Wall Street’s expectations. But those estimates were already scaled back after Snap warned in May that this would be a rough quarter. The company also reported a net loss of $422 million, compared to $152 million during the same period last year.
“Our financial results for Q2 do not reflect the scale of our ambition,” the letter said. “We are not satisfied with the results we are delivering, regardless of the current headwinds.”
Here are a few takeaways from Snap’s poor earnings report:
Snap blames the economy and Apple (sort of)
Snap said economic headwinds like inflation are disrupting the digital ad market. Marketers have generally slashed their ad spending lately amid fears that the economy is headed toward a recession. Snap’s sales grew just 13% during the second quarter, a decline of 25 percentage points from the previous quarter.
Advertising spending “is among the very few line items in a company's cost structure that they can reduce immediately in response to pressure on their top line,” Snap CFO Derek Andersen said during the company’s earnings call. “We see this dynamic within our business as advertisers have lowered their budgets.”
On top of that, Snap is still grappling with Apple’s decision to restrict how users are tracked on mobile devices. Beginning in April, Apple allowed consumers to opt out of tracking by software apps, making it harder for them to effectively target users with ads. The social media firm is working to improve its ad measurement tools to show clients their campaigns are effective—without the availability of users’ personal information.
Although Snap didn’t call out Apple by name, its shareholder letter said recent “platform policy changes” have “upended more than a decade of advertising industry standards.”
The Rise of TikTok Doesn’t Help Either
Snap’s disappointing quarter can’t be blamed entirely on the economy or Apple’s privacy policies. The social media app noted it facing “increased competition,” too.
Snap is contending with the rise of TikTok, the Culver City-based video sharing app that was the most visited website in the world last year. TikTok is expected to generate more ad revenue than Snapchat and Twitter combined this year, Insider Intelligence researchers have predicted.
“Competition—whether it's with TikTok or any of the other very large, sophisticated players in the space—has only intensified,” Andersen said.
Snap has responded with a TikTok clone called Spotlight, which similarly lets users swipe through short-form videos. The company said users’ total time spent on Spotlight grew 59% year-over-year, and the number of monthly Spotlight users jumped 46% to reach more than 270 million.
Hunting For New Revenue
The vast majority of Snap’s revenue comes from advertising, leaving it particularly vulnerable to disruptions in digital marketing. Now, the company is trying to diversify its revenue streams to build a more resilient business.
Snap recently launched a paid subscription plan, called Snapchat Plus. The $3.99 per month service gives users “exclusive, experimental and pre-release features,” including early access to Snapchat’s new web browser version. If successful, that could bring in money directly from consumers instead of relying so much on advertisers.
The company wants to push further into augmented reality-driven e-commerce, too. Snap has already experimented with this, letting people virtually try on clothes with their smartphones. More than 250 million people have used AR shopping Lenses, the company reported Thursday. “We intend to focus on translating this AR engagement into AR revenue,” the shareholder letter said. Other revenue opportunities include Spotlight and monetizing its Map feature, the company said.
A Hiring Slowdown
With its revenue growth slowing, Snap announced Thursday that it will “substantially” lower its rate of hiring. In doing so, Snap joins other tech firms that have either slashed staff or paused hiring amid fears of a looming recession.
The company also announced Thursday that it signed long-term contracts with Snap’s co-founders, CTO Bobby Murphy and CEO Evan Spiegel, to serve in their respective roles through at least January 1, 2027.
Still Growing In Popularity
Snap’s outlook is considered gloomy for good reason. The company declined to provide a financial forecast for the current third quarter because “forward-looking visibility remains incredibly challenging.” The social media firm did reveal that revenue growth is “approximately flat” from a year earlier at the moment.
The bad news sent Snap’s stock sinking more than 26% in after-hours trading, where it sat at $12 per share as of 3:22 p.m. PT.
But it’s worth noting that the audience on the Snapchat app is still growing. Daily active users increased 18% year-over-year to 347 million. “The continued growth of our community increases the long-term opportunity for our business,” Spiegel said in a statement.
The problem, for now, is finding a way to monetize that community. (Disclosure: Snap is an investor in dot.LA)
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Mattel Hires Former Scopely Executive To Lead New Gaming Efforts
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Mattel has poached a big one. Former Scopely executive and gaming industry veteran Mike DeLaet will join the El Segundo-based toy giant as its global head of digital gaming next week.
DeLaet officially joins Mattel July 25. In his new role he'll be responsible for leading Mattel’s renewed push into digital gaming (read: not hardware or physical games, most likely), including licensing the company’s beloved characters and self-publishing video games.
DeLaet’s been in the gaming industry for over two decades. He got his start managing Sprint’s gaming business long before it was folded into T-Mobile. Before working at Scopely as senior vice president of strategic partnerships, DeLaet founded Los Angeles-based indie developer Rogue Games, which last year inked a partnership to bring its games to Netflix. The streamer has its own ambitions for conquering the mobile gaming sector — and squeezing more value out of its IP — through game development. Netflix has garnered over 13 million downloads across 24 mobile titles so far, led by two “Stranger Things” games.
Mattel’s got a rich history of turning its beloved characters into video game IP. Some of its past games that came out in the early 2000s for the PC and Xbox 360 still enchant fans – look no farther than the enduring love for the “Barbie Horse Adventures” series co-published by Activision in 2003.
Mattel is betting that DeLaet’s experience growing Scopely’s mobile gaming business and helping the company become one of Los Angeles’ most valuable startups can help the iconic toy maker find a new winning formula. His relationships with other big publishers and developers like Sony, Google, Apple and Xbox don’t hurt.
“I’ve had a fantastic Scopely experience working with some of the most talented people in games, and I am so proud that I had the opportunity to help build one of the largest mobile-first game brands in the world,” DeLaet said in a LinkedIn post Thursday.
“This is a phenomenal opportunity to help Mattel grow its gaming business while touching millions of customers with the plethora of brands they have grown to love,” DeLaet added. “Mattel has also been a great partner to Scopely for many years, and I look forward to connecting all the dots between Scopely and Mattel.”
Mattel has already ported He-Man into a “Roblox” game, and under DeLaet’s leadership will seek out more partnerships that combine classic toys with newer games that are a hit with Gen Z. It’s unclear if this means we’ll get a reboot of “Secret Agent Barbie” for mobile any time soon, but fingers crossed.
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Here's What To Expect At LA Tech Week
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.
The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.
From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.
DoorDash’s Founding Story: Stanley Tang, a cofounder and chief product officer of delivery giant DoorDash, speaks with Pear VC's founding managing partner, Pejman Nozad. They'll discuss how to grow a tech company from seed stage all the way to an initial public offering. Aug. 19 at 10 a.m. to 12 p.m. in Santa Monica.
The Founders Guide to LA: A presentation from dot.LA cofounder and executive chairman Spencer Rascoff, who co-founded Zillow and served as the real estate marketplace firm’s CEO. Aug. 16 from 6 p.m. to 9 p.m. in Brentwood.
Time To Build: Los Angeles: Venture capital firm Andreessen Horowitz (a16z) hosts a discussion on how L.A. can maintain its momentum as one of the fastest-growing tech hubs in the U.S. Featured speakers include a16z general partners Connie Chan and Andrew Chen, as well as Grant Lafontaine, the cofounder and CEO of shopping marketplace Whatnot. Aug. 19 from 2 p.m. to 8 p.m. in Santa Monica.
How to Build Successful Startups in Difficult Industries: Leaders from Southern California’s healthcare and aerospace startups gather for panels and networking opportunities. Hosted by TechStars, the event includes speakers from the U.S. Space Force, NASA Jet Propulsion Lab, Applied VR and University of California Irvine. Aug. 15 from 1 p.m. to 5 p.m. in Culver City.
LA Tech Week Demo Day: Early stage startups from the L.A. area pitch a panel of judges including a16z’s Andrew Chen and Nikita Bier, who co-founded the Facebook-acquired social media app tbh. Inside a room of 100 tech leaders in a Beverly Hills mansion, the pitch contest is run by demo day events platform Stonks and live-in accelerator Launch House. Aug. 17 from 12:30 p.m. to 3 p.m. in Beverly Hills.
Registration information and a full list of LA Tech Week events can be found here.
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
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