Rhode

Rhode sells a deliberately short list of skincare and, since 2023, a few colour products: a peptide serum, a barrier cream, a peptide lip treatment, then lip tints, a cream blush, a cleanser and a handful of others, all priced under or around $30. It launched on 15 June 2022 with three products — the Peptide Glazing Fluid and Barrier Restore Cream at $29 and the Peptide Lip Treatment at $16 — on rhodeskin.com and nowhere else. For its first three years it had no retail partner, which is unusual for a brand of its size and is the first thing to understand about the model. Every sale went through its own site, at full retail price, to a customer whose email address it owned.

The demand engine is Hailey Bieber. The brand is named after her middle name, the products are the ones she visibly uses, and the phrase that sold the first serum — glazed donut skin — was hers before it was a trend. Rhode spends on pop-ups, product seeding, packaging that photographs well and limited editions rather than on conventional advertising, and it treats launches as events: a flavour or shade that sells out, a waitlist, a restock that becomes news. The phone case with a slot for a lip treatment, launched in February 2024, is the cleanest example of the method. It turned the product into an accessory held up in every mirror selfie, which is a distribution channel that costs nothing per impression.

The model changed on 4 September 2025, a month after e.l.f. Beauty completed the acquisition, when Rhode launched in every Sephora store in the United States and Canada. That trades the margin of a direct-only brand for the reach of the largest prestige beauty retailer in the world, and e.l.f. has said plainly that the move into retail dilutes gross margin. The bet is that the reach is worth more than the margin given up, and so far the numbers say it is: about $390 million of net sales in the year to March 2026, up more than 80%, and about $160 million in the three months to June 2026 alone.

Rhode's moat is a person, and I want to be precise about what that does and does not protect. Skincare has almost no barriers to entry: a contract manufacturer will make a competent peptide serum for anyone, and the ingredients in the Glazing Fluid are not a secret. What a competitor cannot make is Hailey Bieber, who is the brand's face, its creative director and the reason a lip treatment is news. e.l.f. says so itself in its annual report, where she is described as essential to the brand and her retention is listed as a risk. That is honest, and it is also the definition of a narrow moat. A brand whose advantage walks out of the building every evening is only as durable as the contract that keeps her coming back.

The second layer is the system she sits on top of, and this part is more transferable than it looks. Rhode kept the range very small, so every launch was an event; it sold only on its own site, so every sell-out was visible and every customer was reachable by email; and it turned products into objects people photograph, so the customers did the advertising. Glossier ran a version of this in 2014 and lost the edge when it grew. Rhode ran it with a much smaller range and a much more famous founder, and so far it has held. The third layer is new and belongs to the parent: e.l.f.'s Sephora relationship, its supply chain and its international team, which took Rhode from one website to North America, the UK, Australia and 19 European countries in about a year.

I call it narrow rather than contested because the evidence is unusually strong for a brand this young: net sales up more than 80% in fiscal 2026, an earnout that is running ahead of its targets, and unaided awareness that management says is still only in the high single digits, which means the growth is not yet coming from people who already knew. But narrow is the honest ceiling. The aesthetic Rhode named is now the category's default look, the celebrity-founder playbook is crowded, and the brand's biggest asset is not something e.l.f. owns outright.

Two allocators to judge here, and they made very different kinds of decisions. The founders made the first ones with little outside money: Rhode was funded primarily by Bieber, with One Luxury Group as a strategic partner, and I have found no record of a venture round. They spent on a tiny range, on packaging, on pop-ups and on product seeding, and they refused wholesale for three years while the brand was small. That kept the cost of acquiring each customer low and kept the founders' ownership high, so that when they sold, the money went to them rather than to a cap table. Bieber has said she would not sell for less than a billion dollars, and she got a deal with that number on it.

The second allocator is e.l.f., and its decision is the more instructive one. It paid about 3.8 times trailing sales, mostly in cash borrowed on a term loan, for a brand whose value rested on one person, and it protected itself with an earnout that pays up to $200 million only if the brand keeps growing. Fifteen months later the earnout is running ahead of target, Rhode was about a third of group net sales in the June 2026 quarter, and e.l.f.'s organic business has slowed — core consumption fell to low single-digit growth in early 2026 and the company has cut prices on some products. The acquisition is therefore doing two jobs at once: it is a good investment in its own right, and it is covering for a parent whose core brand has cooled. The second job is the one I would watch.