In Toronto’s upscale Yorkville shopping neighbourhood, just off the stretch of Bloor Street known as the Mink Mile, a small storefront is lined with industrial-style metal shelves. Plastic tubes, glass dropper bottles and beakers of varying sizes sit in neat rows, each bearing a simple white label with the scientific name of the formulation within, as well as the key ingredients and their corresponding percentages. “Glycolic Acid 7% Toning Solution.” “Niacinamide 10% + Zinc 1%.”

It is not a lab, of course, but one of the Toronto outlets of The Ordinary, the flagship skin-care brand of Deciem, which calls itself “The Abnormal Beauty Company.” 

Toronto is the city where Deciem was founded in 2013, and the company kept its headquarters here even as The Ordinary became a global phenomenon, boosted by social media influencers and celebrity fans like Kim Kardashian. Estée Lauder, one of the world’s largest beauty companies, took notice. In 2017 it acquired a stake in Deciem, and in 2021 it became Deciem’s majority owner in a deal that included an agreement to buy the remaining 24 per cent of the company after three years. 

This month, Estée Lauder announced the close of that deal. It bought the remaining shares for US$860 million, bringing the total price, across the three stages of the acquisition, to roughly US$1.7 billion. 

“Today The Estée Lauder Companies becomes the forever home of Deciem,” said Deciem CEO and co-founder Nicola Kilner in a release announcing the news. 

Breaking norms lies at the core of Deciem’s identity. The company began as a disruptor that rejected the prices, aesthetics and values of the industry it sought to crack. It has endured its own upheavals—notably the death in 2019 of original founder Brandon Truaxe following a drug-fuelled and very public personal crisis.

Now, after its slow absorption into one of the world’s mainstream beauty empires, that identity is in question. Can Deciem stay true to its original mission? Can it retain the appeal among consumers that the “abnormal” self-designation proclaims?

Kilner and Truaxe founded Deciem in 2013, partly in reaction to a lack of authenticity and transparency they saw in the mainstream beauty industry. While the packaging of traditional skin-care items promises to improve skin using opaque language like “magic” and “elixir” and “perfecting,” The Ordinary’s products—relatively inexpensive, with most items selling in the $7-15 range—tell consumers exactly what’s inside, and how much. 

“The bottles create a lab-like visual in a bathroom cabinet,” Kilner told Forbes in 2021.

The scientific approach appealed to a new kind of skin-care enthusiast, the “skintellectual,” Kilner added. This consumer is familiar with ingredients like squalane, niacinamide and hyaluronic acid, and knows how to use them to address their unique skin concerns. 

The acquisition is part of a broader trend in the beauty industry, said Hadi Chapardar, assistant professor in strategy and sustainability at Edmonton’s MacEwan University and co-author of a case study on Deciem. Legacy beauty companies are increasingly acquiring small, innovative “disruptors,” Chapardar said. “Strategically, these types of acquisitions make sense and they happen all the time.”

Such deals appear, at first glance, to be win-wins: legacy beauty companies acquire a foothold in new consumer categories and a fresh competitive advantage, while disruptors are able to scale up their business and take advantage of the larger companies’ expansive supply chains. 

Deciem has entered new markets and strengthened its operational capabilities thanks to Estée Lauder’s investment, launching in India, the Middle East, South Africa and Japan, wrote Liz Ashford, Deciem’s head of global communications, in an email. 

“They are still Canadian, still Toronto-based, but they are just now more globally distributed,” said Chapardar. 

The acquisition has been good for Estée Lauder, too. The Ordinary is among the brands driving its organic sales growth, the beauty giant noted in a May 1 release. (There are two other brands under the Deciem umbrella: Niod and Avestan.) Net earnings were $330 million in Estée Lauder’s most recent quarter, compared to $156 million in the same period a year ago. Net sales reached $3.94 billion, an increase of five per cent, driven by stronger sales in Asia travel retail, such as shops in airports. 

“As a digitally native organization with a highly engaged following among millennial and Gen Z consumers, Deciem helps to strategically expand our skin-care portfolio,” said Fabrizio Freda, chief executive of Estée Lauder, in a June statement about the acquisition.

For disruptors, though, being acquired has its hazards. The company’s entry into the mainstream could interfere with its iconoclastic image—the very quality that made it attractive to customers in the first place.

“One of the risks is that the acquirer disrupts the organizational routines of the startup,” said Chapardar. “Fortunately this didn’t happen [to Deciem].” It helped that the acquisition took place gradually over several years, he added.

Estée Lauder started off by purchasing a one-third stake in Deciem back in 2017. At the time, Truaxe said in a release that he was “so truly honored, humbled, excited and emotional to have the support of such a remarkable partner on our path to driving innovation in beauty.”

Within months, though, the company’s leadership was spiralling into chaos, as Truaxe began to exhibit erratic behaviour. He fired Kilner from her post as co-CEO and sacked Deciem’s U.S. team without explanation. 

He also reportedly took psychedelic mushrooms in front of staff and was arrested in Britain after authorities found crystal meth in his hotel room. 

Tensions came to a head when Truaxe announced on Instagram that the company would halt operations and close down its stores, falsely alleging that nearly everyone at Deciem had been involved in criminal activity, including financial crimes. 

In October 2018, Estée Lauder successfully sued to have Truaxe removed from his post as chief executive, and Kilner took the reins of the company.

Truaxe died suddenly at age 40 the following January after falling from a condominium building in Toronto. Police regard the death as non-suspicious.

“We never expected to be in a Deciem without Brandon, and we are still processing what happened to the person we deeply loved,” Kilner noted on the company website. “Together with many of our founding team, we remain committed to putting innovation, function, and design at the heart of everything we do at Deciem.” 

In 2021, Estée Lauder increased its stake to 76 per cent, and made its commitment to purchase the remaining shares. With that, the company had a controlling interest in Deciem, prompting observers to wonder whether the small Canadian company would be swallowed by the American colossus. 

No, Kilner said. The company would remain “firmly rooted” in Canada; the headquarters, lab  location and production facilities would not move. 

Metrics that Deciem shared with The Logic suggest that, so far, she’s lived up to the promise. The number of staff at the Toronto office has risen marginally since 2021, from 890 to 915, and production has gone up, with the order fulfilment rate rising from 67 to 96 per cent, Ashford said by email. 

Critics of the deal also questioned whether Deciem would be able to maintain its unique image while keeping prices low. 

Small indie beauty companies can lose their way after being purchased by legacy players, observed Kelly Dobos, cosmetic chemist at the University of Cincinnati and longtime fan of The Ordinary. 

Take Paula’s Choice, a popular skin-care brand founded by Paula Begoun. After British multinational Unilever PLC acquired it in 2021, prices rose, and customers accused the company of abandoning its core mission and values.  

“I think a lot of the old, hardcore fans of Paula’s Choice have started to come out and speak negatively about the brand and the direction that it’s going in,” said Rob Stead, skin-care enthusiast and owner of YouTube channel Mad About Skin.

Dobos doubts that Deciem will meet the same fate. The acquisition could actually help the firm keep prices low as it expands, she said, because it will be able to take advantage of Estée Lauder’s vast supply chain and relationships with suppliers.

Yet Deciem’s own circular, environmentally friendly supply chains were part of what made the company special in the eyes of its clientele, said Chapardar, whose research focuses on the intersection of strategy and sustainability. The firm offers, among other things, an in-store program that lets customers recycle empty product containers from any beauty brand.

Since 2019, The Ordinary has also run an anti-Black Friday campaign. Instead of marking down products on the biggest shopping day of the year, the company shuts down its stores to protest consumerism and wastefulness.

But Charpardar hasn’t seen an equally innovative campaign from Deciem since, and wonders whether the company can keep breaking new social and environmental ground while seeking an increasingly mainstream clientele. As companies grow, he said, many lose their “courage.”

For now, at least, Kilner and Deciem’s new corporate parent sounds committed to preserving the company’s original ethos. 

“Our founder Brandon set out to disrupt the world of beauty, and this thinking has been embraced by ELC over the past seven years of our partnership,” Kilner said in the June release. That support, she added, has let Deciem stay true to its “founding values of transparency, quality, and authenticity.”