363 - Creating a Category Leader: The Absorption Company's Rise to Erewhon's #1 Functional Health Brand

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1:18What is going on DTC pod today we are joined by the co founder and CEO of the absorption company Zeke Bronfman. Zeke, super excited. Been looking forward to this episode for a while. You know, obviously big into wellness and have seen you guys kind of popping up everywhere all over social, starting to be in retail as well. Places like Air One, Sun Life, stuff like that. So, you know, had been really looking forward to do this show. But yeah, I would love to learn a little bit more. Why don't you just tell us? So we've got a little bit of background about yourself and, you know, how you started running the absorption company.

1:58Zeke Bronfman:Absolutely. Thanks for having me on. Really excited to be here. And I can start just giving you a quick overview story of how my co-founder Nate and I came to be building the absorption company. So it all sort of starts when the two of us met when we were in college. And both of us were very passionate about health and wellness space. My co-founder Nate's a type one diabetic. So he's really been cautious about every single thing he put into his body since the day he was four years old and had a very quick feedback loop for every single thing he ingested. And so was incredibly knowledgeable about the food, you know, supplementation, wellness space, you know, far above anything I ever knew.

2:34Zeke Bronfman:And when we were in college, we actually founded our first business together as a better for you beverage brand that we scaled over several years, ultimately sold in 2022. And after selling that we were thinking about we wanted to do next. And Nate had been taking, you know, 15, 20 supplements a day as long as I'd known him. And he'd gotten me on maybe five or six of the ones he recommended the most. I definitely was not taking his full regimen. And after a while, both of us started to feel pretty frustrated that, you know, we were taking all these pills every day. We were spending a huge amount of money every single month on all these supplements, but we weren't feeling any better.

3:03Zeke Bronfman:And we actually weren't feeling any different at all. And we really couldn't understand why. And so we started asking all these doctors, we started doing all this research. And pretty quickly, what we learned was the reason we weren't feeling any better from these supplements we were taking was because the supplements themselves weren't designed for our body to absorb them. And so we actually weren't getting the nutrients into our systems. And we were wasting 84 % of the active nutrients in these supplements that we were paying 100 % for. And no wonder we weren't feeling any better. And so as we started to learn a little bit more about this, what we realized is this wasn't just a problem that was affecting us, you know, just on average, 16 % of most supplements actually absorb.

3:41Zeke Bronfman:And as a result, you know, 77 % of Americans are taking a supplement every single day. But over 90 % of us are still deficient in key nutrients. And I think that's one of the craziest stats that really stuck out for me. Almost all of us are already taking supplements, and yet we are all still suffering from nutrient deficiencies. And so as a result, what that means is the supplements don't work. And the reason those supplements don't work is the supplements don't absorb. And so we built the absorption company to solve that problem and to create the most bioavailable, most absorbable supplements on the market.

4:11Zeke Bronfman:And that is why every single thing that we do at the absorption company is focused on this idea of improving the bioavailability, the absorption of supplements for our consumers. And we really believe that the next frontier in health and wellness is this idea of bioavailability and absorption. In five, 10 years from now, nobody is going to be asking how many milligrams should I take? They'll be asking how many milligrams do I need to absorb of any given supplement or nutrient. So that is the future that we are trying to usher in. And we believe that we are the category defining brand in that space.

4:40Yeah, I mean, I think it's super exciting. And I think to your point about just like general consumer awareness, like with supplements, right? Like people are always thinking about, oh, here's how much and which one has more ingredients, but it doesn't really matter if your body doesn't absorb it. And I mean, like what you just mentioned about the food matrix that you consume, these things in is so important, right? Because when When you get a supplement, a lot of times it's just a powdered format of a high concentration of whatever it is you're getting. But that's not the natural food matrix that that supplement comes in.

5:15So to expect your body to absorb it the same way, it often doesn't happen. And there have been a ton of studies around absorption and the type of food matrix that specific ingredients need to be in to be absorbed. So I think you're right on the money. And I think you guys set yourself up with a really cool platform for this because, you We all know the wellness space is booming, but it's also hyper competitive. Right. So I think, you know, being able to understand like where you're putting your flag in the sand, what your brand is all about is is super important in today's market. And it's really cool to have that understanding.

5:48So why don't you take me back to, you know, you guys have been around for a little bit now, still a relatively young brand. How did the brand come together once you kind of understood that, hey, you know, this is the company we want to build. Here are the products that we want to develop. Take me back to what, you know, building the company, like what did it take like pre-launch? What went into it before you guys were available for sale?

6:11Zeke Bronfman:Yeah. So a couple of different elements that sort of all had to come together and all sort of work in sync to build what ultimately became the absorption company. The first element is that Nate and I met our other co-founders, Ian and Nikki. Ian and Nikki have been actors for many years and they had been taking dozens of different supplements every day is recommended by their trainers and nutritionists to keep them in tip top shape for the various shows and movies they were in. And after many years, they went to have their first kid and they got a bunch of blood work done, realized that the supplements they'd been taking not only weren't helping, but actually were causing a huge amount of harm because many of the nutrients weren't absorbing.

6:46Zeke Bronfman:And if you're only absorbing about 16 % of the nutrients, well, that other 84 % doesn't just disappear. It actually gets stuck in your body and causes toxicity and causes harm on your liver and your kidneys. And so they got these results back and realized that they had to build a better for you supplement business. And we met them a couple years later, as we had started working on this, and they had had this vision as well. And so we all decided to partner together and build this together. And so that was sort of the first element that to come together. The next is the actual technology and the product itself.

7:16Zeke Bronfman:And so we were lucky to partner with an amazing researcher who had developed this technology, had four different patents on the technology to be able to have a proprietary tech that improves the absorption and the bioavailability of key nutrients. We have since then also found dozens of other technologies that we work with. And so we are the absorption company. That means that we do everything to maximize bioavailability absorption. And so for different nutrients, different nutrients absorb in different ways, we use different technologies to maximize their bioavailability and absorption. But a big part of this really started by finding that first technology that allowed us to have a real differentiator within the space.

7:53Zeke Bronfman:The next piece, I would say, is sort of bringing the brand to life. And so started building out a team, started doing the branding work, built a website, built our packaging. And then we started building a community. And I think that's sort of the most critical of all of it is that these brands only work if people care about them and if people actually want to share them with their friends. And so we needed to build that community, which we did by launching a private Instagram page and telling people we were working on something. They could follow us kind of behind the scenes if they wanted to learn more, which meant that we had to literally manually go in one by one and accept all these followers.

8:28Zeke Bronfman:And we got over 100 ,000 people to follow this private Instagram page before we launched the brand. We did a pre-fail just for this audience before we ever launched. And it went pretty viral within this small gated community. We sold out within 12 hours or our entire pre-launch supply. and that sort of gave us this little boost of a really strong built-in core consumer community before we even launched the brand. Okay so a lot to unpack there the first question I have like that's awesome in terms of the community building side of things I think so many people when they're thinking about launching they're like how do I bring this product to market how do I grow a following so what did that look like I know like you were saying like Ian and Nikki they do have sort of followings.

9:12But what did it look like to grow that account? How much of it was, you know, your partners kind of like driving traffic to it versus like the word of mouth from the community? How do you take a private account that's built around a concept from zero to 100k? Because that is no small feat in of itself, right?

9:28Zeke Bronfman:Yeah, 100%. A big part of that was absolutely driven by Ian and Nikki and their large following. I mean, a big part of it was driven by this idea of exclusivity. If we had kept that as a public account, we would have had, you know, probably more page visits, but we would not have been even close to the level of followers, comments, engagement, and level of kind of like committed community. And I think that that was sort of the key insight is that, you know, celebrities post stuff all the time that doesn't get a lot of engagement or traction. And what allowed this to sort of catch on and connect with our audience is that we created this level of exclusivity.

10:04Zeke Bronfman:And we created this club that you were a part of, which not only made you more want to stay a part of it, it also made you more want to share this with your friends because you had access to something that you could kind of bring them into as well. And so that really just started snowballing from there, where people would share with their friends and bring other community members in. And we only did this for maybe a month and a half, two months before we ultimately launched the brand for a wider community in mid-February. But it was a really, really strong starting point. We've since seen that audience has really stuck with us.

10:38Zeke Bronfman:They're probably our highest lifetime value cohort of all of our consumers ever. Yeah, it's super cool, especially because, you know, you've got a bunch of different tailwinds going on. You've got, obviously, a lot of brands are trying to grow really fast on social through organic and getting the algorithm to push them. But like, also you guys kind of bucked that trend a little bit and went the other way. But, you know, if you think about it, it's like if it's kind of smart because it's like if someone lands on the page and they want to see the content, well, they got to follow and then they're sticking around.

11:07Right. So it's just it's just kind of interesting that you're flipping that kind of mechanism on the head. Talk to me a little bit about what, you know, the MVP of the product look like. Like right now, I think one thing that you guys have done, obviously, from a conceptual point, the absorption company, super recognizable, but also the branding packaging, I think is super standout. So talk to me a little bit about that. Was this MVP that you like launched to the private community? Was it, you know, had you gone through all the branding? Was it in the final form that we're like seeing today? Or was there an earlier MVP that eventually evolved into what we see today?

11:45Zeke Bronfman:Yeah, it's evolved slightly. We've made copy tweaks, we've kind of updated some of the order of the front of pack. But broadly speaking, it's pretty much stayed the same. I think that mosaic that is sort of very foundational to our brand is an element that was really core to us from the very beginning. And I think both brings to life the scientific nature of our brand. You know, those actually are the ingredients that are in each of our products, as well as sort of alluding to the periodic table, which we've gotten a lot of. And so it feels scientific, feels legitimate, it, but then also creates a very branded moment.

12:23Zeke Bronfman:It doesn't feel just overly clinical, overly sciencey. It actually feels brand lifestyle forward, which gives something that people can relate to and feel a connection to in the brand. And that was really what our challenge was to the agency is how can you feel both scientific, trustworthy, incredible, while also being able to emotionally connect and sort of stand out as a differentiating brand. And so that was what we were really going for. And I think that one of the things we've gotten a lot of positive compliments on is the packaging. We are launching some innovation. And so it's been a really interesting experience seeing how does that packaging expand innovation.

12:57Zeke Bronfman:And so we actually just came out this week with our magnesium glycinate, which is our first new product that we launched since our course use. And the magnesium glycinate is capsules, it comes in a pill bottle. And so how did we extend the packaging from, you know, these initial boxes to the pill was a really fun experiment. And I think it came together beautifully. And as we launched the rest of our innovation lineup, they all fit together really well with the existing SKUs as well. So it's really exciting to see how that packaging evolves as we grow as a brand. Awesome. And then talk to me a little bit about, you know, sales and product form and all of this sort of stuff.

13:34So where did you guys first do your sales? Was that direct? I know you guys are on Amazon, you guys are in retail, like, walk me through the mix and how you guys started to scale up from from a selling perspective.

13:48Zeke Bronfman:So most of our business is a DBC subscription business. That's where we see really the, you know, highest lifetime value of our consumers. That's where we're really trying to scale the business as much as we can and see the bulk of our revenue today. Amazon and TikTok shop are both really fast growing channels for us as well. that we're spending a lot of time really scaling. And then our retail strategy is to really focus on what we call strategic retailers. We've turned down some of the major national retailers. We're not interested in that kind of partnership at this time, though eventually we will be not any channel brand.

14:24Zeke Bronfman:For today, what we're really focused on is being in the right types of accounts where our consumers go every single day where they already trust that account and they're going to discover us in a state of need, not amongst a sea of a thousand other brands. And so we're in Erewhon, we're the number one selling brand in our category. We're in Happier Grocery and Clean Market and Remedy Place and Earth Bar Equinox and Sun Life Organics and the One Hotels and Luke's Local in San Francisco and a ton of these really great kind of high visibility accounts where we meet our consumers where they are. And that's really in our minds more of a marketing channel than it is a kind of revenue channel, though it is a very, very high margin, great channel for us as well.

15:04Yeah, talk to me a little bit about that, because I think what you just said is super spot on, right? As a brand grows, like there is a time and place for everything. And sometimes, you know, brands get over their skis going and trying to scale retail too fast. And all of a sudden, you know, it can wipe out a brand that isn't ready for that sort of scale yet. Walk me through the thinking and like the logic behind what you just sort of mentioned about, you know, we'll have the time for like mega retail, but maybe that isn't right now. Yeah, absolutely.

15:32Zeke Bronfman:And it's something that as a founder, it's really hard, obviously, to say no to a big national retailer trying to place a purchase order. It goes against almost every instinct to sort of turn that down and say, you know, we're going to stick to being direct to consumer. But I think that it's 100 % the right choice. And I think it's the right choice for a couple of reasons. First of all, the margins at retail at scale are way worse than the margins direct to consumer. And so as an early stage business, having that margin to play with makes a huge difference, being able to reinvest in marketing, support the business.

16:04Zeke Bronfman:The second part to it is that the ability to support a brand at retail, especially if you're going to do a national launch, something like that, requires a huge, huge investment and you only get one shot. And so if you don't get best in class velocities right away and you're still figuring out exactly what your product is and you're launching new innovation, you can't make any mistakes. And so being direct to consumer, not that it allows you to make more mistakes, but it allows you more of a buffer zone to sort of figure stuff out as you're scaling as a new business, figure out who your consumer is, figure out how to reach that consumer and really start to grow profitably before you think about going into retail.

16:42Zeke Bronfman:And the last thing I would say is that, you know, in most categories, I probably wouldn't recommend launching as a direct to consumer only business. But I think the supplement category is a unique one. And I think it's unique for a few reasons. First of all is it's a really high gross margin industry. It's a really high kind of recurring revenue industry where there's a lot of subscription purchase. And this trip actually makes sense. You're not forcing people into an unnatural subscription. And then the third is it's really cheap to ship. And so it's very easy to actually build as a DDC subscription business.

17:12Zeke Bronfman:Amazon is the largest supplement retailer in the world. And so through Amazon and through direct to consumer, I think there is a huge opportunity to really build scaled supplement businesses. And if we look at our competitive set, you know, we look around and see dozens of businesses that are doing north of$100 million a year profitably that have not even touched retail yet. And so our philosophy is that, you know, you can't win on every channel all at once. And so we want to focus in on a couple, do them really, really, really well, and then move on to the next. And so we've started with DDC subscription, we started with Amazon, we've layered in TikTok shop, we're going to win on those channels.

17:48Zeke Bronfman:And then once we do, and once we have the right products, the right brand awareness nationally, we'll then go to real mass market retail and scale the business from there. Awesome. Yeah, I think that's super spot on. And, you know, I have so many questions, but let's start with questions around some of the platforms you mentioned. So I know you said D2C supplement selling online. So talk to me a little bit about your D2C motion. You know, are you, well, first of all, what are you guys using for subscriptions? Like, do you guys have a, like what platform do you guys use for subscriptions? Oh, nice.

18:24And how's that been?

18:25Zeke Bronfman:It's been great. We actually just switched to them relatively recently. Aiden, the founder is a good friend and they offer a really great service. We've been super happy with them. I'm less sort of, you know, day-to-day, obviously managing the weeds of the account there, but they've been a great partner. Awesome. And then talk to me a little bit about, you know, what you mentioned about, you know, you can scale, you've got higher LTV, recurring purchases, all of that for subscription. What has your, you know, what is driving traffic look like for the DTC side of things? Are you guys running paid?

18:59Are you doing influencer and affiliate? Like what does that mix look like to drive performance?

19:04Zeke Bronfman:Yeah, for us, it's mostly paid, we don't do a huge amount of paid influencer, we have a lot of organic influencer, which does drive a lot of traffic. We also have the benefit of our celebrity co founders, Ian and Nikki going a lot of podcasts, which drives a huge amount of organic traffic. And then I would say we layer that in with the kind of organic influencer with paid, which mostly is meta, but we do spend on TikTok, we do spend on Google, we spend on YouTube. and so that mix is always something that's evolving a little bit and that's really the bulk of our traffic and we don't overcomplicate things you know we obviously have organic marketing as well so we do events and you know we do campaigns and different things that definitely drive traffic but I would say we don't try to overcomplicate in terms of our paid budget we really try to focus in on the things that work scale those channels get them to be really really profitable once we are spending you know a few million dollars a day we can start to think about having a huge diversification.

19:59Zeke Bronfman:But for the time being, we're more focused on just helpfully acquiring as many customers as we can, making sure those customers stay with us for a really long time and are really happy with their experience. Yeah. And I think that's something that we hear time and time again for businesses that are like really successfully scaling. It's not like trying to burn the ocean with all these different channels and managing all these different things. It's like find a couple of things that really work, find compounds, find channels that compound and with each other, right? Like that amplify each other.

20:28And then, you know, slowly add in once you unlock growth in those. So the last question I have on the growth side is you mentioned TikTok shop being like a successful channel for you guys. What's your experience been with TikTok shop? How have you guys found success there? You know, I've spoken with a lot of founders, some who have found tons of success, others who are like, oh my God, I did all this thing and they've, you know, and then like I did this one thing and now I'm kicked off or, or whatever like that. So what's your experience been on TikTok shop? And how have you gotten to get it to work?

20:57Zeke Bronfman:Yeah, well, I'd say about TikTok shop is it's not for the faint of heart. And you have to really want to win on TikTok shop. And you have to really dedicate resources to it. You know, it's not meta, where you're just going to sort of, you know, have an agency do some paid ads, you can sort of scale some stuff. That is not how it works on the TikTok shop side. TikTok shop, the ads have not been super profitable for us. The LTV is not great. The CAC is super high. What has been super effective, and this is something we're learning more and more about every single day, is basically two things. It's affiliate and it's TikTok lives.