Cleaning Startup Valued Above $1 Billion Inks Deal With Target
(Bloomberg) -- Stuart Landesberg’s bet on eco-friendly cleaning products really paid off during the pandemic.
Covid-19 convinced Americans to care more about hygiene, and that helped Grove Collaborative, the company Landesberg co-founded and now heads as CEO, boost 2020 sales to more than $250 million. With products from major brands like Clorox selling out, the company’s subscription model played well with consumers.
By December, the startup had raised another $125 million in a Series E funding round from investors including Morgan Stanley that boosted its valuation to $1.3 billion, according to researcher PitchBook. The company, which pledged to stop selling any plastic by 2025, became a public benefit corporation last month.
And now Grove is expanding into brick-and-mortar retail for the first time with a deal to sell its products through Target stores nationwide starting this month. It will be a big test of the five-year-old brand’s appeal and could be coming ahead of an initial public offering.
Bloomberg recently spoke with the 35-year-old CEO about Grove’s push into stores, and what comes next.
You started Grove in 2016 at a time when few companies or consumers had sustainability on their radar. When was the ‘aha moment’ that made you realize this could be a viable business?
In 2021. For the first time in the company’s history, I can tangibly feel the pull of consumers. They’re getting to the place where they’re starting to demand the kind of change that we seek to bring to the industry.
Via subscription, Grove sells third-party brands, such as Method and Seventh Generation, and its own items, like dishwasher detergent and hand soap. That model has gotten you to a unicorn valuation. And now you’re switching gears and selling through Target. What does the deal say about expectations for green cleaning products?
I get really excited about what that means. If we continue to expand our access, other people will have to follow us.
There is an argument to be made that shoppers might say they care about eco-friendly products, but do they really shop that way? How do you convince them green is good?
It’s not about making a sacrifice for sustainability. We never compromise on efficacy. A good marketing message can convince someone to try a product, but only a great product can convince someone to change their habits for life.
What was a big takeaway for you in 2020?
We’re at a really interesting place in the industry, where the mainstream consumer and the sustainability-conscious consumer are merging. Efficacy allows that to happen. And things like our partnership with Target are key steps along the way.
You're valued at $1.3 billion, and the Series E is done. You won’t comment on a potential IPO, but speculation is mounting after Honest Co. filed. Why should a potential investor consider Grove?
For the same reason investors are excited about clean energy, electric cars and plant-based meat. The best investors in the world are forward thinking—it's obvious where society is going. It’s hard for a lot of incumbents to do the innovation to transition from plastics because the existing business model is so profitable.
Editor’s note: This interview has been edited and condensed.
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