Estée Lauder, Deciem Head To Court
● Lauder filed for injunctive relief in Canada, seeking to have Brandon Truaxe removed as the head of Deciem.
As early as Friday morning, Deciem founder Brandon Truaxe may be out of a job.
On Friday, Deciem and the Estée Lauder Cos. Inc. are heading to a 10 a.m. hearing in the Ontario Supreme Court where a judge will decide whether or not to sign Lauder’s request for an injunction that would remove Truaxe from his roles as chief executive officer and board member at Deciem. The hearing could also be extended and adjourned.
Lauder, which owns 28 percent of Deciem, filed the injunction forms Wednesday afternoon, asking for co- ceo Nicola Kilner to be appointed the sole head of the company. Earlier in the week, Truaxe publicly called for Deciem’s
closure. According to court papers, he also sent out an e-mail blast Monday firing Kilner and chief financial officer Anand Khanzode.
On Instagram, Truaxe said, “This is the final post of Deciem, which will shut down all operations until further notice, which is about two months…Please take me seriously…Almost everyone at Deciem has been involved in a major criminal activity, which includes financial crimes.” Lauder’s injunction also asks the court to approve hiring PricewaterhouseCoopers LLP to investigate the alleged financial crimes, on Deciem’s dime.
On Tuesday, stores started closing. Followers of Deciem — there are 374,000 on Instagram — have seen much of the drama unfold publicly on the Internet. The business, founded in 2013, has built a cult following for its multiple brands of affordably priced, scientifically named products, like The Ordinary Vitamin C Suspension 30% in Silicone, $6.80, and Niod’s Lip Bio-Lipid Concentrate, $60. Deciem even has a fan-run Facebook group — the Ordinary & Deciem Chat Room — with more than 57,000 members. Up until recently, the vertically integrated business’ biggest problem was making enough products to keep up with demand.
But this year, things changed.
Truaxe, a former computer scientist who speaks in fast-paced, declarative blasts, has always had a quirky personality, say many who have met him. He was known for striving for radical transparency (hence the product names) and for speaking freely, sans filter.
At one meeting with WWD last fall at New York’s Plaza hotel, Truaxe launched into his thoughts on luxury.
“The thing about luxury, when I say it’s not about price points, what I mean is it doesn’t matter if it’s cheap, expensive, affordable, not affordable — luxury ultimately has to exclude one thing — and that is being taken for an idiot,” Truaxe said. “Like, love this atmosphere, hate this coffee. It is horrific, it is actually one of the worst coffees I’ve ever had in my life. But you’re not fooling me — I’m accepting that I’m basically paying rent for the environment.”
At that point, Truaxe and Kilner were in town to talk about the brand’s launch online with sephora.com in the U.S. and Canada. It was a big deal, as the launch represented Deciem’s first major move into the U.S. market, and underscored Sephora’s willingness to experiment with different price points. The Ordinary, Deciem’s lowest-priced offering, was planned as the first of several Deciem brands to launch with the prestige retailer.
“The U.S. is going to become our biggest market, there’s no question about it,” Truaxe said at the time. “Sorry — unless it’s a complete failure.”
Shortly after it launched with Sephora, Deciem pulled out of the retailer, citing payment issues. In Instagram comments, the brand suggested it had plans to launch into Ulta Beauty, which sources have said was potentially slated for early 2019. A spokesperson for Ulta Beauty said Deciem is not launching there.
Truaxe’s erratic behavior started earlier this year. He pulled out of a WWD Digital Beauty Forum, sending Kilner in his place instead, and started posting erratically on Instagram. The posts were comprised of internal e-mails, an announcement that he was changing his title to “worker,” and discontinuing a line of products, Esho, that the company had been working on with a doctor based in the U.K. Behind the scenes, he’s sent spurts of e-mails, occasionally copying editors on mostly incoherent notes to employees, the investor community and Lauder executives.
This week on his personal Instagram account, Truaxe has posted shaky videos showing his interactions with hotel employees in Amsterdam. In one, he appears with a five o’clock shadow, and says his room has been broken into and requests a different room. In another video, posted 14 hours later, he’s sporting a full beard and asking hotel employees to call the police. Thursday morning on the Deciem account, he unveiled Lauder’s lawsuit.
In court papers, Lauder alleges that Truaxe’s actions, both on social media and as the head of the company, are “causing irreparable harm to Deciem’s business, and chaos and confusion for Deciem’s employees, customers, consumers, suppliers, landlords and other stakeholders.”
“This is not only causing irreparable harm to the Estée Lauder Cosmetics Limited’s investment in Deciem, but it is harming Estée Lauder’s reputation because Estée Lauder has an equity ownership in, and therefore an association with, Deciem,” Lauder added.
Beauty executives and those in the industry were hesitant to talk on the record about Deciem, but all questioned Truaxe’s recent behavior, and expressed concern. Similarly, public meltdowns are unheard of in beauty, but they have happened in fashion — John Galliano was ousted from Dior after a video of his antiSemitic rant surfaced in 2011, for example.
Industry insiders noted that even with Trauxe’s outbursts, and even if he is removed from the business, it’s likely Deciem has enough scale to survive.
The business is said to have hit the $300 million sales mark over the summer and hits on several key trends in beauty — transparency and value.
One source noted that shutting down the stores is likely to have a bigger impact than the Lauder suit. “If [the consumer] can’t go and buy his product, they will move onto the next shiny object. We all know there is no shortage of new, shiny objects in beauty.”
Stephen Kaplan, Deciem’s former cfo who quit after Kilner was fired in February (she rejoined in July), said in an e-mail that he is “not surprised” by current events. “I hope that Estée Lauder can install a competent management team, and with this in place, I believe that Deciem can continue to be a very successful company.”
Inside a Deciem store.