How Hailey Bieber Did It

And now, onto today’s big story!

The news that Hailey Bieber’s beauty brand Rhode will be acquired by E.l.f. Cosmetics in a deal valued at $1 billion has captivated the internet since breaking last week. TikTok and Instagram instantly flooded with videos of people attempting to explain how, with so many celebrity brands out there, Bieber’s actually exited for a ten-figure sum — a feat yet to be achieved by any number of stars, including the Kardashian-Jenners, Scarlett Johansson, Harry Styles, and Selena Gomez, to name a handful.

Rhode’s sale isn’t just a feat for a celebrity brand — it’s a feat for a beauty brand in general. “Most of the brands that have gone to market the last year and a half or so just have yet to sell,” said Puck beauty correspondent Rachel Strugatz, who broke the Rhode story. “It was interesting that this was the one, and that it happened so fast.”

Bieber isn’t running the brand without help. Rhode’s CEO is Nick Vlahos, who served previously as CEO of The Honest Company, fronted by Jessica Alba, taking it public in 2021 at a $1.4 billion valuation.

I have always enjoyed Strugatz’s analyses of the beauty business (prior to Puck, she covered beauty for The Business of Fashion). I asked her to stop by Back Row to explain both how Bieber did it while so many other celebrities have stumbled with their brands (Meghan Markle, ahem), and why this deal has captivated the internet. Our conversation has been edited and condensed for clarity.

Earlier in Back Row:

I saw a tweet about how Rhode is an example of mediocrity leading to massive success. What’s your take on that? How much was luck versus strategy?

Sure, some of it is timing. But most celebrity beauty brands are the side gig — it's not the founder's main job or purpose. With Hailey, I think it's very clear that this is her main focus and this is her priority, and she never lets her foot off the gas.

I also think that she has really excellent partners helping her run the business. When I was writing a story about the success of Rhode early last year, I learned that during the pandemic, Hailey wanted to go more into food and lifestyle. And based on her YouTube series, the most engagement she got was when she talked about beauty products. She used data to really dictate what she was going to create. It sounds really simple, but I watched and read a lot about [Rhode founding] partner, Michael D. Ratner, who talked about how they gleaned all of this data. That's how they've powered the brand since, and they just do it better than anyone else. They hit every single trend.

And what about the products themselves? How much do those matter versus marketing and conquering the algorithm?

It's actually quite difficult to make a bad beauty product at this point. A really successful beauty brand is really effective marketing. Glossier's products didn't reinvent the wheel in any way. They literally came out with Vaseline, it’s just that they called it Balm Dotcom and used pretty pink packaging and spoke to customers in a way that brands had never spoken to them before. Glossier was literally a color and font. That's not a bad thing. But the formulas don't actually matter that much.

The Rhode acquisition has been a really sticky story — people are just obsessed, which is sort of surprising because how often do brand acquisitions get the internet going like this? How do you explain it?

Obviously, Hailey is an extremely famous person, so celebrity brand deals get outsize attention. Also, while there have been other brands that have been perhaps equally or more influential when it comes to creating trends or changing culture with respect to beauty, many haven't actually exited. Rhode is unique in the sense that it's actually an exit.

I looked into this, and some big celebrity brand success stories, when it comes to selling or going public, include: George Clooney’s Casamigos Tequila, which sold to Diageo in a deal that was worth up to $1 billion; Ryan Reynolds’s Aviation Gin (I mean) which also sold to Diageo for $610 million; The Honest Company went public at a $1.4 billion valuation (though its market cap is now about $560 million). Some stars have sold stakes in their brands — e.g. Coty bought 51 percent of Kylie Cosmetics for $600 million, valuing the brand at $1.2 billion. Rihanna’s Fenty, which she co-owns with LVMH, is huge with an estimated $2.8 billion valuation, but hasn’t ben sold or gone public.

The second reason why I think people are so fascinated with this deal is because beauty M&A has been really quiet lately. While there are a handful of very attractive, healthy beauty brands in the market now, none of them have secured the sort of deal that Rhode has.

When were beauty mergers more active? What brands sold?

During Covid, Unilever acquired Paula’s Choice [in a deal reported to be worth $2 billion]. There were outliers in 2023, like Aesop [acquired by L’Oreal for $2.5 billion] and Creed [acquired by Kering for €3.5 billion]. But even before Covid, Shiseido bought Drunk Elephant [for $845 million]. Going back further, Estée Lauder acquired Too Faced [in 2016] for $1.45 billion. L’Oreal acquired IT Cosmetics [also in 2016] for $1.2 billion.

When I think of Rhode, I think of those trends associated with Hailey, like strawberry makeup or glazed donut nails. How much does that stuff matter when it comes to creating a valuable brand?

In many cases, I think she's taking existing beauty trends or looks, and giving them really catchy names. And she has very creatively invented new ways of repackaging the same thing. That's kind of what she does with her actual products as well — none of them are really new from an innovation standpoint. Lip gloss and lip liner have existed forever. But the thing that she does differently is that she creatively names these products in a way that differentiates them from everything else out there.

I’m looking up the liner now. It’s called “Peptide Lip Shape”? (Why is everyone so into peptides?)

Before 2022, no one knew what the hell a peptide was. So she was able to differentiate her lip gloss by calling it a “Peptide Lip Treatment.” Once that took off, she was able to extend the peptide narrative into colored lip glosses and then into lip shapers. She's doing what [founder] Emily Weiss did with Glossier, but in a more modern, 2025 way that resonates with younger people today.

Have other celebrities with beauty brands not done this?

Fenty, Kylie Cosmetics, and Rhode are, I'd say, three celebrity beauty brands that were each revolutionary in their own way. While Rhode stands out and Rhode wins because of its marketing and the way that it communicates with its customers, Kylie was innovative because of the way that Kylie sold and distributed the brand. It was a [direct-to-consumer] celebrity beauty brand, sold online, that adhered to a drop model. Fenty’s point of differentiation was that, before Fenty, only traditional legacy beauty brands had the breadth of complexion offerings, while indie brands and startups never really were able to provide the same sort of foundation or concealer shades as a Mac or an Estée Lauder. So Fenty really pushed brands to do better and change the entire way that the industry approached formulating complexion products.

Rhode’s strategy seems similar to what Kylie did with her lip kits. I remember when those launched and sold out so fast and were kind of a sensation. Did Kylie walk so Hailey could run?

I give Kylie all of the credit in the world. What she did a decade ago was novel. And she was and is responsible for a lot of the celebrity beauty brand boom that has resulted. As I wrote last week, what was really interesting to me is that Glossier walked so Rhode could run. It feels like Glossier was the inspiration and probably precursor to Rhode.

I’ve seen some news reports and social media post about how “Hailey Bieber is a billionaire now.” Can you fact-check that statement?

I framed the Rhode sale as a “billion dollar deal.” That said, the terms of the deal — and this is in the most simple sense — included $800 million at closing, which includes $600 million in cash and $200 million in stock, with the remaining $200 million a performance-based earn-out, based on Rhode’s performance over the next three years.

A lot of people have ownership in this brand. Hailey owned a very healthy portion of this brand, but so do various investors and her business partners. Hailey is obviously incredibly rich as a result of this deal, but she is not [getting a $1 billion check].

And why would E.l.f. have its eye on Rhode?

E.l.f. is one of the most interesting beauty brands out there. It's managed to stay relevant with whoever the new young beauty consumers are. It seems like they have a best-in-class leadership team. What sets them apart is that they're a huge public company that is able to operate like a startup, which is highly unusual. They're extremely agile and fast, and that's generally not the case when you reach a certain scale.

Do you know how much money Rhode raised?

No. And it's not public. But this deal would never have gotten done if Rhode was not a extremely profitable, financially healthy business.

So they never got over their skis, in terms of raising too much money or hiring too many people to the point where it would be hard to become profitable?

I can say with certainty that they did not.

You can read more from Rachel Strugatz over at Puck and follow her on Instagram.