Values Reinforce Mission

e.l.f. has such a strong commitment to ethics. Can you define what that means for you as the leader and how do you practice that every day?

Well, for us, go straight to our mission of the best of beauty made accessible for every eye, lips, and face. It's an inherently inclusive mission, and as part of reinforcing that mission, we have a set of values as a company that are pretty much plastered in every wall we have, as a company with every employee when we first start. One of those core values is do the right thing, and we try to keep it plainspoken as possible, people know the difference between right and wrong, we will always choose the tougher right versus the easier wrong, and creating that culture, creating that expectation is one of the key ways we do that, and being able to reinforce that, even when things don't go right, to be able to talk why we lived our values and why we decided to do what we did. I'm going back to the core values of the company and reinforcing that with every individual.

Can you give us an example of that? You just brought up something very interesting, even when things go wrong, it's an important lesson in what happened here? Can you give us an example of when something like that did happen and how was it handled?

Sure. So, much of our manufacturing is done in China and we have an incredible team there, it's one of the ways we deliver the best combination of cost, quality, and speed as a full multifunctional team with great expertise across more than just sourcing and R&D, and quality, all these different areas and systems. I remember getting a call one day from our general manager in China who herself goes and does different audits or visits different suppliers, and she noticed one of our suppliers was making false eyelashes with some materials that looked like they came from North Korea which is on the ban list for the US, and so this was a supplier that was less than 1% of our business that even in big environments we already rarely went and kind of visited less than 1% of suppliers, and as soon as she found out, she gave me a call, our general counsel, we decided right away that we would alert the authorities, OFAC, kind of customs, here's what we found, here's what you're doing about it, how we are able to mitigate against that, create a system that really ensured kind of proper compliance, and I remember at the time, there were some people said, gosh, do you really need to report something that's less than 1% of your business and it was a prior kind of production? And it was a prime opportunity for us to say no, these are our values, our values are do the right thing, there are regulations in the US that don't allow anything with North Korea, and even though it was one subcomponent of a product that was very small, it doesn't matter how small or how big it is, and because we did that and we worked with the regulatory authorities in the US, a statutory fine for something like that could've been well into the many tens of millions of dollars, we were able to both resolve that, but more importantly, reinforce and use that as a teaching moment with all of our employees in terms of what we are doing with quality, what we're doing in terms of compliance, where we do, and I think they're called out for kind of being a good not only corporate citizen but one that can help the entire industry that we are in in terms of the way we want to operate.