Ken Bubeck’s long-term plan has been that his startup, Ithos Global, would be acquired by a large company. That plan came to fruition this month.
Raleigh-based Cordance — which just changed its name from Permanent Group — acquired Ithos in late January with a plan to accelerate growth.
Ithos has about 45 clients, and the goal is to double that over the next year. There are nearly 30 employees currently, and Bubeck expects that to increase by 50% over the same time period.
Troy-based Ithos has developed subscription-based software to help cosmetics companies more easily manage regulatory compliance and store information in one central location.
The Business Review spoke with Bubeck about the deal and what it means for Ithos going forward.
How did this partnership come about? It was definitely part of our long-term strategy. In the beginning of 2021, we set out to see if we could get some interest. We weren't really out looking until then. The more we talked to investors and private equity businesses, the more we realized how much people really wanted something like what we had. We went through a few evaluations during 2021.
Permanent actually found us. They were looking for companies that had niche areas, and everything we did was very much in a niche. We were in the cosmetics space primarily, we had great customers, we were growing like crazy. All the things kind of came together all at the same time for us. These guys are about high growth, and they wanted to find somebody like us to try to figure out how we can really accelerate.
How has growth looked until this point? Once we got to the profitable stage, which was about four years ago, our compound annual growth rate has been 30% a year. Last year was a little bit under, primarily because we were spending so much time trying to get the transaction done. But we still had a solid annual growth rate.
Where does the need for your product come from? Countries are constantly modifying their regulations to fit their populations – in Indonesia, halal is very important to them. The market trends are for cleaner products, products with less chemicals, products that aren't going to hurt people's eyes and skin. There are organizations that are constantly criticizing companies that they deem as having unsafe products. The requirements just keep growing and growing every year for everybody.
The majority of our companies are U.S.-based trying to expand internationally. But we also have been growing our collection of international clients that are trying to get their products into the U.S. The United States is realizing that their regulatory frameworks aren't as rigorous as other countries', so they're trying to improve them. What's interesting is that the FDA, which is supposed to be the governmental body to help people with regulations, has not really done much over the last few years. They've been focused more on food than cosmetics, so states are taking it into their own hands, which makes it very difficult for anybody who is trying to bring business into the U.S.
Why has there been so much opportunity serving primarily small companies? Generally, bigger companies might have 20 people doing compliance. These smaller companies can't go out and hire expensive regulatory executives to handle that, so they come to us because we're a full-service organization. We can help with the product compliance information; we can help them with the consultative work that they need; and we also help them get their products registered internationally.
The whole thing with social media is these celebrities build up large followings, and then a lot of them develop their own cosmetic line. When cellphones really started to expand and people started taking selfies, there was a major spike in the cosmetic industry because all the young people wanted to glam up for the pictures. That kind of leads itself to TikTok and everybody getting that social media exposure.
Interview has been edited and condensed.
