🟣 Issue No. 9: Drunk Elephant's $1 Billion 'Clean Beauty' Playbook

📝 We now publish bi-weekly - with one issue covering a growth methodology and the second on a $100M growth story.

In this issue, we delve into how Drunk Elephant built a $100 million+ brand with clean, ethical products, a community-first approach, and a powerful brand ethos. Plus, discover the surprising health benefits of rebounding.

On the Pod 🎧

Lastest episodes:

• S9 EP54: Product Innovation Deep Dive: How to Develop a Best-Selling SKU → Kunle Campbell

• S9 EP53: The New Playbook for Scaling Health & Wellness eCommerce Brands in 2024 → Kunle Campbell

• S9 E52: From $10M → $20M: How Tiege Hanley Doubled Revenue While Staying Profitable → Kelley Thornton, CEO

• S9:E51: Ex-PepsiCo Strategist Unveils Brand Positioning Frameworks that Transform DTC Brands → Kathy Guzman

• Cutout 8: Building a Barbecue Brand that Keeps Customers Coming Back → Kosmo Khosravi

• Cutout 7: Why Community-Driven Brands Are Disrupting Traditional Markets → Oren Schauble

• Cutout 6: How to Build a Polarizing Brand that Drives $40M in Revenue → Alex Neist

$100M+ BRAND STORIES

How Drunk Elephant Became a Leader in Clean Beauty

Today, we’re breaking down how Drunk Elephant grew from an indie skincare brand founded in 2012 to a global clean beauty phenomenon, culminating in an $845 million acquisition by Shiseido in 2019. At the time of the acquisition, Drunk Elephant’s annual revenue was estimated at $100 million, with an 8.5x revenue multiple, underscoring the brand’s premium market valuation. The brand’s journey is packed with actionable insights for DTC operators, especially around product development, nailing their message, and community building—all of which powered their expansion into retail, overcoming supply chain challenges, and educating the market on a new skincare philosophy.

While Drunk Elephant’s exit playbook may not be directly replicable today, due to shifts in the investment landscape, the underlying growth mechanics remain highly relevant. According to beauty investors, the playbook for exits like Drunk Elephant's may be 'dead', but the tactics for scaling DTC, engaging consumers, and building a brand with transparency and loyalty are still powerful growth drivers today.

Let’s dive into the key growth tactics you can steal that helped Drunk Elephant become a leader in the skincare industry.

1. Product: Building for Longevity with Ethical, Clean Ingredients

Drunk Elephant's product journey began with Tiffany Masterson, a stay-at-home mom in Houston, Texas, who stumbled upon the skincare industry through an unexpected route. While selling a cleansing bar on the side to earn extra income, Masterson developed a passion for understanding skincare ingredients. Through extensive research, she realized that many skincare products contained potentially harmful ingredients that could irritate or damage skin in the long run, even those marketed as "natural" or "clean."

This frustration led her to create a product line that avoided six categories of ingredients, which she called the “Suspicious 6”—essential oils, silicones, chemical sunscreens, fragrances, alcohols, and SLS. These ingredients were common in many beauty products, but Masterson believed they were the culprits behind skin irritation and long-term skin issues. Her dedication to formulating a biocompatible, simplified skincare routine without these ingredients laid the foundation for Drunk Elephant.

Pioneering Clean Beauty:

Drunk Elephant became a pioneer in the clean beauty space, building its products on transparency and safety, focusing on long-term skin health over temporary fixes.

Tiffany’s personal experience, learning curve, and drive to develop a better skincare solution shaped the brand's ethos. Her vision was to create products that worked harmoniously with the skin without unnecessary, irritating ingredients.

Takeaway: Don’t just build a product for short-term gains—focus on longevity and creating a product that aligns with your customers' values. Ethical, research-backed products that solve real customer pain points will stand the test of time.

2. Brand: Aligning the Brand Ethos with Product Offering

Drunk Elephant’s brand was deeply intertwined with its product ethos—honest, transparent, and aligned with customer needs. The brand identity was simple: clean, straightforward, and deeply tied to the ethics behind the product. Masterson herself made sure that the product values were always reflected in how the brand communicated, ensuring transparency at every step.

Early Sephora Entry:

One of the brand’s major growth points was its early entry into Sephora in 2017. This move helped Drunk Elephant expand its reach to a larger customer base and amplify its word-of-mouth (WOM) marketing. Sephora was pushing for transparency in beauty at the time, making it a perfect platform for Drunk Elephant’s clean-clinical approach. Masterson ensured that their storytelling was tightly aligned with their product values, reinforcing their transparency message in retail environments.

This alignment between brand and product allowed Drunk Elephant to scale in a way that felt natural to their community, without compromising their values.

Takeaway: Ensure your brand is tightly aligned with your product offering. If transparency and ethics are part of your product DNA, let that shape how you build and communicate your brand. This authenticity can lead to organic WOM growth and stronger customer loyalty.

3. Market: Building a Community-First Approach

Drunk Elephant thrived by adopting a community-first approach, leveraging the power of word-of-mouth (WOM) and organic influencer engagement. Instead of simply relying on influencers to promote their products, they focused on making the product itself the centerpiece of WOM success. Influencers were genuinely excited to associate with the brand because the products delivered real results, naturally generating buzz.

Drunk Elephant built its community by partnering with micro and mid-tier influencers who believed in the product’s efficacy and were advocates of its clean beauty message, particularly around the dangers of the “Suspicious 6” ingredients. These weren’t just paid spokespeople—they were real users who had experienced the product’s benefits firsthand. The authenticity in the WOM, fueled their organic growth, reflecting the community flywheel model highlighted by McKinsey. She directly responded to customer queries and encouraged feedback, creating a strong foundation of trust, helping early adopters spread the word about Drunk Elephant’s clean beauty philosophy.

In my book on E-commerce Growth Strategy, I talk about how community-driven approaches can create lasting success. Drunk Elephant capitalized on this by focusing on UGC and influencers to drive community engagement and spread the brand message.

Word of Mouth Power: Drunk Elephant’s success wasn’t purely luck—it was also about great timing and their pioneering spirit. The brand filled a gap in the market with clean beauty products that worked. This combination of product efficacy and community-driven marketing made WOM the cornerstone of their marketing success.

Read more about how Drunk Elephant’s WOM strategy became central to their growth on Fashion Monitor.

Takeaway: Build a community-first approach around your product. Focus on organic influencer partnerships and let your customers spread the word through authentic reviews and user-generated content (UGC). If your product truly delivers, your community will drive growth for you.

4. Profit and Loss (P&L): Optimizing Growth Through Performance-Based Marketing

A crucial component of Drunk Elephant’s strategy was how they managed their P&L, focusing on leaner operations by investing in commission-based influencer partnerships and limiting internal staffing expenses. Rather than hiring a large marketing team, Drunk Elephant relied on performance-based influencers and affiliate commissions to drive sales. This replaced traditional advertising expenses and allowed the brand to scale more efficiently.

1. Lower Headcount, Higher Commission Spend: Instead of a large internal team, Drunk Elephant paid commissions to micro and nano influencers, tying marketing spend directly to performance. This lowered fixed overhead and allowed them to adjust marketing spend based on actual sales results.

2. Affiliate Marketing & Influencer Partnerships: By using affiliate marketing as a core driver of growth, Drunk Elephant tied its costs to performance, ensuring that each dollar spent on marketing delivered measurable returns.

In 2024, brands should prioritize generating user-generated content (UGC) and influencer-generated content (IGC) at scale. Aim to start with hundreds of pieces of content per month and ramp up to thousands as your brand grows. There's a clear correlation between UGC creation and topline revenue growth. Many brands are leveraging TikTok Shop affiliates to generate UGC, then repurposing the most successful pieces across Meta and YouTube ads for wider reach and engagement.

Additionally, AI offers operators new ways to reduce headcount by automating content generation, customer service, and optimizing workflows. By integrating AI tools alongside a strong focus on UGC, brands can drive efficiency, lower costs, and boost profitability while maintaining a community-first approach.

Wrapping Up: Product-Brand-Market Fit in Action

Drunk Elephant’s rise to a $845 million exit wasn't just about clean beauty—it was about mastering the product-brand-market fit. They built an ethical product that resonated with consumer values, created a brand that reflected that mission, and cultivated a community that spread the word.

While their exit playbook may not be replicable today, the growth strategies that drove Drunk Elephant’s success—product integrity, brand alignment, and community-driven marketing—are still highly relevant for today’s eCommerce brands.

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HEALTH IS WEALTH

Life Changing Power Of Rebounding

Rebounding, or jumping on a mini-trampoline, is a low-impact exercise with numerous health benefits. It engages your core, improves balance, and stimulates lymphatic drainage, which is essential for detoxifying the body. According to NASA, rebounding is 68% more effective than jogging for cardiovascular health.

The up-and-down motion helps flush toxins from the lymphatic system, improving immune function. It’s also gentle on your joints, making it suitable for all fitness levels. Research shows rebounding can also improve bone density, making it an excellent option for long-term health.

Takeaway: Rebounding isn’t just for fun—it’s a powerful way to boost your overall health and fitness in a low-impact, efficient manner.

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