A sisterhood of ‘clean beauty’

Renfrew had already started and sold one company — a wedding e-commerce site — before becoming “obsessed” with the chemicals in skin care products, she told The New York Times in 2018. Beautycounter, which she founded in 2011 and is based in Santa Monica, California, helped popularise the idea of “clean beauty” — promising never to use an extensive list of additives, including formaldehyde and synthetic fragrances.

She called on a community of ardent promoters, most of them women, to sell to their families, friends and neighbours. Not only did they hawk sugar scrubs, cleansers and creams, but they also sold the idea of selling by recruiting others. And they got a cut of all the sales in their networks.

The brand took off. At one point, Beautycounter counted 60,000 sellers, first referred to as consultants and, after Carlyle bought the brand, as advocates.

Renee Hill, who lives outside Nashville, Tennessee, started selling Beautycounter products in 2016, just a few weeks before the birth of her fifth child. She introduced her mother and close friends to the brand. Over time, she personally recruited about 40 people, who then brought in others and expanded her network to 400 sellers, giving her a yearly income in the low six figures.

Hill had been approached about other multilevel marketing gigs in the past but had turned them down. Beautycounter’s clean beauty promise felt different, she said.

“It made it really easy as well to not feel slimy about offering somebody a network marketing opportunity,” she said, “because I felt so passionately about what we were doing and how we were doing it.”

Renfrew treated the independent sellers as a crucial part of her team, sharing details about the business and personal ones about herself, too. They even joined Renfrew on trips to Washington, where they lobbied for more regulation in the personal care industry. The sellers were motivated: In 2020, the company, which became profitable the previous year, hit $US395 million in sales, according to two people familiar with the financials.

Going mainstream

Almost as soon as Carlyle bought the brand, however, sellers started to leave, and Beautycounter sales started to drop. It was a shocking reversal for the company, which had seen sales grow sharply month after month for years.

The board, which was controlled by Carlyle and included Renfrew, grew concerned and decided to bring on a new chief executive with expertise in the mainstream beauty industry.

Marc Rey, who had held senior roles at L’Oreal USA and Shiseido, took over in February 2022. He split his time between Miami and the Santa Monica headquarters, where Renfrew, who was given the title of chief brand officer, was based.

A few months into Rey’s tenure, the company dropped a bomb: Top sellers would be subject to a new compensation system that drastically reduced their commissions.

In multilevel marketing companies, a big chunk of the profits goes to sellers rather than to investors or back into the company. Ahead of the sale to Carlyle, to make Beautycounter more profitable, Renfrew outlined a plan to change the compensation structure by no longer giving sellers a commission from their recruits’ personal purchases, three people familiar with the discussions said. That structure was not unusual for multilevel marketers.

Renfrew wanted to tell the sellers and give them a year before the plan went into effect. But the company announced the change in April 2022, and it took effect two months later.

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When Hill, the seller in Tennessee, received her monthly cheque in June, it was more than 60 per cent less than the previous month’s. She spent the next few days calling around to people in her network and was distressed to hear that some of them, too, were being hit.

“It’s one thing when you’re impacted,” Hill said. “It’s another thing when you bring your entire network of people that have looked to you and trusted you for leadership to see them impacted.”

That July, Rey held a Zoom call with sellers who collectively brought in tens of millions of dollars. He told them that he would “go to bat for them,” according to a lawsuit against Beautycounter, Carlyle and Renfrew that was later filed in Minnesota by sellers.

Still, according to the lawsuit and three people on the call, Rey took a dismissive tone, telling the sellers not to overreact to the changes. Sellers sent one another texts with messages like “WTF,” as they tried to keep the shock from showing on their faces.

Even more alarming to sellers, according to the lawsuit, Rey attacked the founding ethos of the company. The sellers, he said, should stop emphasising “clean beauty” because it was no longer “sexy” or a clear differentiator in the beauty industry. Instead, Rey said, the new “sexy” was “the environment.” (Rey was not named as a defendant in the suit.)

Jennifer Shawgo, a plaintiff in the suit whose network of more than 1000 sellers had generated $US35 million in sales over the years, was shocked. “We’re like, ‘But that’s why we’re all here,’” she said.

Rey denied saying the sellers were overreacting. Nor did he say the company should stop emphasising clean beauty, he added, but rather he said it should differentiate the brand in other ways as well.

“At a time when a lot of brands claimed that they were clean,” Rey wrote in an emailed statement, “I did state that it was important for us, as a brand, to also explain” that the company tested for safety and was socially conscious.

The pressure from the independent sellers pushed the company to drop the new compensation plan. But in the meantime, some sellers tried to make up for lost income by working with other multilevel marketers. They were stunned when Beautycounter sent them warnings that a nonsolicitation agreement prevented them from recruiting any of the people they had brought to Beautycounter, according to interviews and another suit filed by sellers against Beautycounter in California.

In the California suit, plaintiffs said these agreements had been included in policies and procedures that they could see only after agreeing to the “terms and conditions” to enroll. They argued that the sellers “do not sign them, have no opportunity to negotiate them and, in many cases, have never even seen them until Beautycounter attempts to use the nonsolicitation restriction against the consultants.”

At the top of the company, things began to spiral. In July 2022, Sammons, who had been Renfrew’s closest contact inside Carlyle, left the firm. (He eventually started a private equity firm with Kim Kardashian.)

By the end of that year, Renfrew left the business and resigned from the board. Carlyle put in an additional $US65 million in late 2022 and early 2023.

With Carlyle’s blessing, Rey spent more than $US10 million upgrading the company’s outdated technology and hired consultants. He made a deal with Ulta, one of the largest beauty retailers, to sell Beautycounter products.

Still, even though sales of prestige beauty products in general rose 14 per cent in 2022, sales at Beautycounter continued to fall. In May 2023, Rey was asked to resign, too.

Mindy Mackenzie, a Carlyle executive and Beautycounter board member, stepped in as interim chief executive and started cutting staff and external consultants.

With a burst of hope for the holiday season, the company rolled out a new website in October 2023. It was the culmination of the millions that Carlyle had spent to upgrade the technology. But even that effort was troubled. The site often crashed, and its once user-friendly parts — like the way it would repopulate addresses and loyalty rewards information — stopped working.

The company’s demise

In January, Beautycounter’s top salespeople attended a conference at the Four Seasons Resort Oahu at Ko Olina in Hawaii. The mood was darkened by the website meltdowns and the stream of departures; Beautycounter had roughly 35,000 sellers, almost half as many as when Carlyle bought the brand, one person familiar with the company’s financials said. But then Renfrew surprised the gathering by announcing that she had returned to run the company. Carlyle had wooed her back to boost sales and morale. The audience cheered.

What they didn’t know as they celebrated was that Carlyle would soon walk away from the business.

Carlyle had been looking for a buyer since August. In mid-March, Carlyle handed the business over to its lenders, Bank of America and JPMorgan Chase, which would be in charge of selling what was left. For Carlyle, that meant effectively giving up on a $US700 million investment, valuing it at zero.

In April, the company went into foreclosure, and Renfrew bought the rights to the Beautycounter name and other assets from its lenders for several million dollars. A few weeks later, she stunned the sellers when she announced that it would take months to restart the company.

She and a team are working to resuscitate the clean beauty brand by the end of the year. But even if she revives the company, she might not be able to count on a loyal and enthusiastic sales force. Some former sellers blame her as well as Carlyle for the demise of the company — and their livelihoods.

Hill, who is a plaintiff in the California suit, stopped selling Beautycounter products in July 2022. Soon after, a letter from the company warned her not to recruit sellers in her network to new multilevel marketing companies. She acquiesced to that demand and has struggled to build a business with two other direct selling companies.

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At Beautycounter, she was her family’s main breadwinner, bringing home $US177,000 a year; she’s now earning $US19,000, according to the suit.

“There’s a lot of damage that has been done,” Hill said. “I don’t believe I could ever step back into that space.”

Carlyle is getting out of the space, too. In addition to exiting Beautycounter, Carlyle, under a new chief executive, said it would no longer invest in US consumer and retail companies.