By JOE CASTALDO
Tuesday, December 18, 2018
Shortly after Nicola Kilner was appointed CEO of Deciem Beauty Group in October, she wrote an email to hundreds of the Torontobased company's employees. "It has been a hard week," she began.
A few days prior, Deciem founder Brandon Truaxe posted an unsettling video to the company's Instagram account ordering all operations shut down and threatened in an e-mail to fire anyone who didn't comply. The company's 30-odd stores were closed for roughly 11 days until Estée Lauder Cos. Inc., an investor in Deciem, went to court in Ontario to remove Mr. Truaxe from his chief executive and board roles. The remaining two board members appointed Ms. Kilner, who has been with Deciem since it launched five years ago. "I never saw a day I would be sending such a note without Brandon by my side," she continued in her e-mail about the leadership changes. "Yet here we are."
Deciem is hoping to move past a bizarre, painful year. Ms. Kilner, 29, is concentrating on store openings, product launches, retail partnerships and improvements to the corporate culture. "I'm really putting the focus back on making our people feel valued," she said in a telephone interview from London, where she's based. "In the past, it's something we weren't as good at."
Ironically, the turbulence has elevated Deciem's profile higher than ever. November was the strongest month in the company's history and the store closings in October boosted online sales. "Customers did definitely stock up," Ms. Kilner said.
Deciem, founded in 2013, has developed a cult following. The company makes beauty and skin-care products under a variety of brand names, the most popular of which is "The Ordinary." Launched in 2016, The Ordinary line features inexpensive skin-care products with the same ingredients found in higher-end products. Deciem generally avoids charging the large markups that are common in the industry, and invests less in marketing than its peers. Estée Lauder bought approximately one-third of the company in 2017.
Deciem has opened stores in Britain, Australia and South Korea, in addition to 10 in Canada. Ms. Kilner is hoping to build on that network. At least eight stores are slated to open in 2019 in cities such as Edinburgh and Chicago, and Deciem is scouting another seven locations in Europe and the United States. With approximately 600 employees around the world, the company is opening a new head office in Toronto's Liberty Village neighbourhood next spring, along with a new production facility. It has more than 50 products in development, including a line of lotions and shampoos for babies under a new brand called Hippooh.
The pace may be ambitious, but Ms. Kilner said Deciem's insistence on doing everything in-house - from product development to manufacturing - provides the company with an advantage, allowing for more control over its goods and costs than some of its competitors.
That model was key for Mr. Truaxe, 40, in the beginning. A former computer scientist who studied at the University of Waterloo, he had already founded and sold one beauty company before he met Ms. Kilner, who was then working as a buyer for a British retailer. She was taken with his enthusiasm and his vision for a new beauty company called Deciem. Ms. Kilner left her job and later became co-CEO.
As the company grew, she handled Deciem's operations outside of North America while Mr. Truaxe controlled product development, branding and even the fragrance that wafts through the stores. They were a tight pair. "Brandon is my calling," she once wrote on Instagram.
The beauty and fashion industries are places where eccentricity is often viewed as a mark of genius, but Mr. Truaxe's behaviour began causing alarm earlier this year. In January, he cancelled Deciem's marketing plans and took over the corporate social-media accounts, unilaterally terminating a product line and ending a business relationship. He wrote lengthy and incoherent e-mails to staff and posted confusing open letters to Deciem's website, alleging his investors, including Estée Lauder and Vancouver-based entrepreneur Pasquale Cusano, were aligned against him. He fired employees seemingly on a whim.
Ms. Kilner herself was let go in February.
(The chief financial officer departed around the same time.) "Things changed to a place that didn't feel comfortable for me," she said, declining to go into detail.
She travelled with her husband while rebuffing multiple job offers, unable to let go of Deciem. "I felt like a fraud to work anywhere else," she recalled. "I never saw a life without Deciem in it." So when Mr. Truaxe asked her to come back over the summer, she did.
The situation had further deteriorated.
At one point, Estée Lauder became concerned Mr. Truaxe was suffering from "an extremely severe mental-health episode," according to an affidavit from Andrew Ross, the firm's representative on Deciem's board. Mr. Cusano took legal action against Mr. Truaxe, alleging he used corporate documents with a forged signature and attempted to oust him from the board.
Mr. Truaxe's unilateral shutdown in October, along with allegations he posted on Instagram that "almost everyone at Deciem has been involved in major criminal activity," proved to be a breaking point.
"Truaxe has exhibited increasingly erratic, disturbing and offensive behaviour," Mr.
Ross wrote in an affidavit, "beyond all boundaries of rationality or reason, to an extent that it has become prominent international news." A lawyer for Estée Lauder alleged in court that Mr. Truaxe's behaviour was the result of a combination of mental illness and drug use. The court later issued an order preventing him from stepping foot in any Estée Lauder office and requiring him to stay at least 300 metres away from the residences of Mr. Ross and Leonard Lauder, the billionaire chairman emeritus of the New York-based firm.
Mr. Truaxe remains a one-third shareholder in Deciem through a company jointly owned with Mr. Cusano.
Mr. Truaxe did not hire a lawyer to contest the order separating him from his company, although he still can. (He did not respond to an e-mail seeking comment.)
Three days before the court hearing in October, Mr.
Ross phoned Ms. Kilner to confirm she could step in as sole CEO. "It was something I said 'Yes' to right away," she said. "I felt like the next-best person to protect what Brandon's vision was."
One of her first actions was to fly to Toronto to reassure employees, and she has worked to restore retail partnerships. Mr. Truaxe walked away from an agreement with Sephora earlier this year, but the beauty retailer will once again feature Deciem products online in Canada and the United States starting next month.
Stephen Kaplan, who left his post as CFO earlier this year, recently returned as chief operating officer.
Deciem is also trying to sell a private jet Mr. Truaxe purchased at some point. (Mr.
Ross previously raised concerns about the cost.)
Ms. Kilner is expecting her first child this month, and doesn't anticipate being away from Deciem for long. She plans to work from home and resume her monthly trips to Toronto in March. What Deciem may have lost without its founder is not something she wants to dwell on, although she was careful to say the company is more than one person. "I truly believe that Deciem is my baby as well," she said. "It's important that we protected our baby."
Pedestrians pass a Deciem Beauty Group location in Toronto on Monday. Looking to bounce back from a painful year, Deciem is focusing on new store openings, product launches, retail partnerships and improvements to its corporate culture.
CHRIS DONOVAN/THE GLOBE AND MAIL