‘You have to sequence your efforts’: Prose CEO Arnaud Plas on growing a company with profitability in mind

Customizable beauty brand Prose is one company that has bucked the trend and reached meaningful profitability. The company has made nearly $500 million since launching in 2018 and estimates it will bring in $160 million this year. What’s more, this year the company is on track to be profitable, after hitting profitability last May as well for the entire third quarter of 2023.

At the Modern Retail Commerce Summit, held last week in New Orleans, Prose co-founder and CEO Arnaud Plas spoke about how he’s been leading the company to reach these major milestones. “That has been a journey,” Plas said.

Prose hasn’t sacrificed growth in order to hit its profitability targets. For example, the company has expanded into new areas. “A major step with a spirit of reaching profitability [was] we launched skin care in 2023,” Plas said.

While expanding into new categories is expensive, the thesis behind Prose was to build a vertically integrated and automated production system and then add more products to grow revenue. “The key was really: How do we automate production and customization?” Plas said.

By building out its own New York-based manufacturing, and figuring out how to automate parts of it, Prose was able to lower its production cost over the years while also charging a premium for offering customized products. It took many years, but Plas believed that if the brand could streamline its production enough while launching into new areas, the financials would work out.

“If we were able to execute this, there would be a pretty high and significant value creation for the company,” he said.

But brands can’t go all in on growth at once. And perhaps that’s the biggest lesson from Prose’s evolution so far. “The reality is that when you want to be profitable, you have to sequence your efforts,” said Plas.

Here are a few highlights from the conversation, which have been lightly edited for clarity.

How Prose built out its supply chain
“The key was really: How do we automate production and customization? Since the very beginning, while we started in a kitchen manually in Times Square, we knew that there would be, at some point, a machine that would do [production] in a more automated way — and that would drastically reduce the costs. Our goal was really to bring the cost back to like $1. We knew that people were ready to spend $5 to $10 or more for personalized products — and [for] the incremental cost on the supply chain side, the target would be to be at $1. If we were able to execute this, there would be a pretty high and significant value creation for the company. So we knew that was the goal.”

Not going all in at once
“The reality is that when you want to be profitable, you have to sequence your efforts. Because, if you layer all your initiatives that are not profitable, then you get very unprofitable. So you need to sequence and you need to start with the right initiative so you can get some oxygen in your P&L.”

Finding ways attract new customers and keep them loyal
“For us two things have been game-changing in the last five years. One was launching the subscription — it doubled the repeat business. And [second], the introduction of a trial offer — being super aggressive in your first dollar. But it only works if you have greater retention. We’re at like 70% first repeat within six months. And you need a subscription with a pretty good frequency. Of course, if you’re on a single-order model where you have to be profitable in your first order, this thinking doesn’t work. But if you’re in a subscription business, you need to almost give your first order for free.”