The Supplement Industry Is Broken and Ritual Is Rebuilding Trust From Scratch | Ep. 409 with Kat Schneider Founder & CEO of Ritual

0:07So, Kat, it's great to have you, not only because of the accomplishments that you had, which we're going to go into, people are going to be so inspired by today, but also my wife incredibly loves your products and she is, she's a tough critic. Like it takes a lot for her to really like our product because she looks at the branding side, the marketing side, the product, not just the actual product and how it works. But she loved Ritual. When I said you were coming on, she's like, oh, that's amazing. So Kat, I was recently at this consumer packaged goods event. And what I noticed is out of the hundreds of people there that were exhibitors, they all told me they were solving the exact same problem.

0:51And I was like, how is it possible that there's so many companies solving the same problem. Are there no more problems to solve? Or do you think people are so hyper-focused because maybe they see a recent exit of another company and they're like, oh my gosh, I want to be like that company? Wow. So much to respond to. Thanks to your wife. She seems like a skeptic. We have a community of skeptics. So that's my favorite kind of person. I would say there's so many problems to solve that people aren't solving. And it actually makes me quite sad that people are trying to solve the same problem because I started the company when I was four months pregnant, couldn't find a prenatal vitamin I trusted and saw the opportunity of women's health being so underfunded, underserved, understudied, and such a lack of people building products still in the category.

1:50So I, you know, I see the opportunity in this space for so many problems to be solved, whether it's trying to conceive pregnancy, postpartum, perimenopause, menopause. And it just I guess it pains me if everyone's solving one single problem. Well, it seems like a lot of people that make whether it's a company that does supplements or a company that does a protein bar, their their focus is the exit, which I find interesting. They just want to build something to exit. You, though, I mean, over 10 years, you've done over$250 million in revenue in one year alone. That has not been your focus. No. My vision is to build a long-lasting, iconic brand that stands for something and stands for the test of time.

2:42To me, the exit is the afterthought. I will say we are venture-backed. So there are demands and pressures as well to build value. But ultimately, you know, building a mission driven company, we're trying, we are building one of the most trusted brands and platforms for women's health. That gets me excited. That's why I'm doing what I'm doing 10 years later while, you know, raising three children and growing this thing. I've read that an investor in the beginning told you that you can't have a business and kids at the same time. Other incredible women like yourself who've been on the show before have talked to us about sacrifices that they've had to make.

3:30You, though, I think you've broken the mold because you did it. You were pregnant, I believe, when you started the company, which is very, I mean, that really breaks the mold. So how do you think about that phrase from this investor now 10 years later? So I walked into an investor's office when I was four months pregnant and I was raising money for the first time. And granted, I had been a venture capitalist before and I knew I had a fantastic network. I still had a hard time raising money. Walked into this guy's office and he said, you know, you can start a family or a business, but there's no way you're going to do both.

4:12And I was shocked. But I also used that as fuel and motivation to build this business into a nine-figure business fairly quickly, raise three kids and continue to raise three kids and just really show that you can build something that you're deeply passionate about that has an impact on the world while you're also, you know, building your family. And I think these things are so intertwined when you're trying to solve problems for women. We call our customer the chief health officer. She's making a lot of the purchase decisions for her household. And I know her because I am her. And so many decisions that I've made as a CEO stem from being a mom and having gone through some of the challenges myself.

5:03More recently, we're on the heels of actually announcing our postnatal clinical results. When I was thinking about creating a postnatal, which is something you take after you've given birth, people were telling me also that that was something that was a small market? Why are you getting into that? And when you look at the scientific studies, we saw that that's actually the area, that's actually the period of time where women have the, you know, the lowest nutrition and have the highest demands nutritionally. Why aren't we building something in this space? And that led us to create a product in that space.

5:41And now we're releasing a study actually showing the impact that nutrition and postnatal vitamins have on the quality of human breast milk. So I have this thing where I won't wear a shirt if the fabric makes my skin feel off. Doesn't matter how good it looks, scratchy seam or weird thread, it's coming off. So most basic brands are out for me before I even try them on. That's why Quince has been a game changer. High quality essentials that actually feel amazing against your skin. Breathable European linen, soft organic cotton without the luxury Marco. The first time I put on one of their linen shirts, that was it.

6:17No scratchy seams, just soft and easy. Linen pants and shirts start at just$34. The tees are ridiculously soft too. And everything at Quince is priced 50 % to 80 % less than similar brands. They work directly with ethical factories and cut out the middlemen so you're paying for quality, not brand markup. Elevate your summer wardrobe. Go to quince.com slash founders for free shipping on your order and 365 day returns now available in Canada too. That's quince.com slash founders for free shipping and 365 day returns. quince.com slash founders. Kind of groundbreaking and very groundbreaking and also impactful, not just for what we're, what we're creating, but women's health, generational health at large.

7:06So when you asked me about, you know, exit versus building, I mean, think both are important but why i'm doing this a decade later is is things like this that i'm getting to actually impact outcomes um and generations of of people which is really exciting it always seems to me and i always find this interesting that the people who are not something always say there's not a big enough market for it like i'm a man i don't have the need for vitamins that are prenatal or postnatal because I personally can't take them. So I think that there's no market for it. It's like when a movie is successful, they're like, there's never, I am this person and the movie is directed to people that are not me.

7:53So I say, oh, that movie will never be good. But the movie does great. I feel like we go through this trap a lot. And I wonder, is it because the investors are a certain type of person, so they're just not seeing it? But I think we've heard this before. What are your thoughts on that? I think we went through this, you know, a decade ago when I was fundraising, when people were telling me that pregnancy was niche, postpartum was niche, menopause was niche, and yet it made up the collective women's health experience and something that I only, you know, went through, you know, that I continue to go through and see with my own eyes and why I'm building in this space.

8:34But I think what we're in this really interesting moment in time culturally where niche, even though I don't consider those things niche, niches are actually what drive cultural change and community and marketing. Like some of the most successful companies today will be focused and started around niches because that's how you start by building community. And that's also how marketing engines are working these days. So it's a really interesting time. People often tell you to not not focus on a niche, but I would would absolutely focus on the niche if I was starting something today. I guess what is considered niche is could be mass.

9:18So that's what I'm taking away is you could think it's niche. It's really, really big, but it's considered niche in the market, maybe because other people haven't focused on it yet. so it's just up yeah you're at the forefront totally i think that people have an instinct to go really big and wide right away but when you're starting a company going more narrow is actually narrower is actually so much more impactful for us we started with a multivitamin one single product one way to buy it one price point and people were like why aren't you launching all of these other things at once. But we started with one thing because it helped us build the trust around our consumer, like your wife.

10:04And we earned that trust. And only later on did we launch a prenatal vitamin because people were like, oh my gosh, you stand for transparency of science and sourcing. I know where my ingredients come from with you guys. I feel safe. And then I trust the science. When are you going to put out a prenatal vitamin? And only then should we kind of expand the circle right around where we started. I think the instinct is to not go niche and that's, and then you don't stand for anything. I like that you have to stand for something. What do you normally put out products driven by what your customers are saying?

10:41Because I think that's what I'm hearing. And I find that to be, I mean, that's, that's the best product market experience that you can have. You don't have to go and have like a room of people where you ask them questions. If your existing customers tell you, I want X, Y, or Z, you know that there is a demand and your existing people, I imagine, are cheaper to market to. Like you're saying, you can't market to everyone unless you have a trillion dollars budget. But are you finding it much easier when you launch a new product that you're using what basically the testimonials or information from your existing clients?

11:19For us, it goes both ways. So one of the most successful launches we ever put out, which was our symbiotic plastic to pre-pro postbiotic. And what we saw was we had hundreds of thousands of active subscribers that we built out through the years. And they said, number one for us is gut health. Put something out in the gut health space and we'll adopt it. And so when we put that product out in market, it did$30 million in sales in the first year, which obviously would be so hard if you, you know, were just in retail channels. But because we were direct to consumer, it was the best example of being a digitally native brand with really sticky, loyal customer base.

12:04And so that was a really good example of, you know, listening to our customers, I would say. Where I don't listen to our customers, sometimes people don't know what they want until they know what the science is. You know, I think one example of that is our choline product. Choline only became an essential, choline only became an essential nutrient recently. And so consumers weren't even aware that that was something that they needed during their pregnancy. And we were the first company to really launch this natal choline. We worked with our advisor from Cornell. She's a leader in the space. And she did a study that showed adolescent brain development all the way to age seven from people that were taking choline during their pregnancy and that impact on future generations.

12:53So we're like, we have to put this product out. Even though people weren't asking for it, it was a new category in some ways that we created. And that was so hugely successful. and I think outside of ritual, I can think of a lot of examples and especially in the supplement space where people are first to market in an ingredient or a space that the consumer doesn't even know they want or, you know, there's almost no demand for at all. But because the ingredient is so novel or because the ingredient has such an impact on health, people are really drawn to it and it becomes really successful. I mean, people have built nine-figure businesses around these, like single ingredients, really.

13:35It's really fascinating. I can deeply appreciate the fact that you're doing a lot of health studies for women. My grandmother suffered from postpartum depression. Sadly, at that time in the 40s, she was put into a mental institute and she never left until the day she died, sadly, in New York, where they did like experiments. And going to visit her was quite a sad experience because I was like traumatized as a kid going to this place and visiting her and I felt so bad because she seemed fine but obviously back then they didn't understand women's health what are you seeing and what do you think the impact can be that you can have on women's health I'm sorry to hear that it's something that is I have this thing where I won't wear a shirt if the fabric makes my skin feel off doesn't matter how good it looks scratchy seam or weird thread it's coming off so most basic brands are out for me before i even try them on that's why quince has been a game changer high quality essentials that actually feel amazing against your skin breathable european linen soft organic cotton without the luxury marco the first time i put on one of their linen shirts that was it no scratchy seams just soft and easy linen pants and shirts start at just$34.

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16:59It's incredibly personal to me as something that I went through myself, which is really challenging. And I think there is more awareness around that today. Thank God. So I think that there's so much we can do. We know that women's health is underfunded and understudied. We know that women's health issues are dismissed. And when we look at the studies that people are consuming online when they see a health influencer or someone, you know, peddling their goods to women, the studies are actually run on men or animals. And so it's really important as a consumer, by the way, whoever's listening, both men and women, that when you are taking health advice from somebody, that you are looking at the credibility of the studies that are done and making sure that the studies and the claims that people are referencing reflect who you are as a person, right?

18:04Women are not small men. And then the reverse is also not true. So we're in this crazy world right now where, you know, CPG is having a moment, but supplements have gone from 4 ,000 to over 100 ,000 supplements in the last 30 years. There have been no major updates to regulation, and we have to be careful. And so the two areas that we're really focused on as a company is the deep investment in science and women's health, having our own human clinicals on every single one of our products. and that means on the finished product and advancing that. And the second is around safety, actually advocating for health protective measures when it comes to things like heavy metals.

18:47So long answer, I'm really passionate about women's health and the clinical studies behind that. I mentioned the postnatal study earlier. We also just peer-reviewed and published a study on our prenatal vitamin showing the impact of methylated folate as compared to a control group of folic acid and just the importance of methylated folate on reducing unmetabolized folic acid, which was pretty groundbreaking in the scientific community. Gets me excited. I can go on and on, probably not for this audience, but I love talking about science and clinical studies because there's just not enough of it in a category that desperately needs it, especially around women.

19:29No, I think, I mean, there's no long answers here, please. I love that you're sharing this because I think what happens and what I've seen, a lot of people just white label or private label a supplement. They private label a lot in the CPG space. And it's basically the exact same product that 50 ,000 other people are also buying. And the only difference is their marketing, where you're taking a totally different approach and creating groundbreaking products. What did it take, though, to get to this point where you can do that? It's actually the reason why from the beginning I raised venture funding.

20:06I wanted to start from the ground up, like you said, creating groundbreaking products. Forget the noise in the market, but what do we need? I think that's where we started this conversation. It's like, what do people need? What should they be creating that is a need and is not a copycat out of everything else that's out there that people actually don't need. And so for us, it was starting from ground up, like what are the nutrients that people are actually lacking in their diet? It wasn't 40 plus things in a typical multivitamin. We identified nine nutrients with scientists like omega-3s that were in typical multivitamins, a higher dose of vitamin D3, K2, MK7, magnesium.

20:50And it was a totally different formulation. But then we also looked at the sourcing, what forms, where they came from, and also the delivery technology. How is it actually delivered to the body? And we have six patents now on the delivery technology, which is groundbreaking in the category. I don't really know that many brands. I don't actually know any brands in our space that have that many patents on how things are being delivered. So that was overlooked as well. And then we had a clinical study on the multi. We partnered with a university, like how is this actually working in the body? So it was a blank slate.

21:27We've committed over $5 million to human clinical studies. We formed a team of scientists, over 20 scientists from lots of different careers and academia. So our chief scientific officer is ex-faculty at Harvard Medical School. And I just wanted to do things differently and actually, you know, continue this route of building what's needed. And I think that's actually what's here to stay versus how do we build this thing to a sale? And even though people might not need it, let's not trick people into taking supplements. Let's actually be part of their lifelong relationship and their health. And not to be long-winded, but if I can earn her trust during pregnancy and I'm the most trusted supplement brand, then I can be with her for the rest of her life.

22:21And when she's going through perimenopause, which a lot of our customers are that have been with us for a decade, you know, we hope to be, we hope to help her through that journey as well. Doing all the things that you've done, getting to this place, what have you had to sacrifice? There's a lot. I mean, there's so many sacrifices every day. There's, you know, I think there's, as a female founder and mom, I think there's only a couple things you can really focus on in a given day or week. And I try to, one thing that I've thrown out the window is guilt. I have this thing where I won't wear a shirt if the fabric makes my skin feel off.

23:06Doesn't matter how good it looks, scratchy seam or weird thread, it's coming off. So most basic brands are out for me before I even try them on. That's why Quince has been a game changer. High quality essentials that actually feel amazing against your skin. Breathable European linen, soft organic cotton without the luxury Marco. The first time I put on one of their linen shirts, that was it. No scratchy seams, just soft and easy. Linen pants and shirts start at just$34. The tees are ridiculously soft too. and everything at Quince is priced 50 to 80 % less than similar brands. They work directly with ethical factories and cut out the middlemen so you're paying for quality, not brand markup.

23:49Elevate your summer wardrobe. Go to quince.com slash founders for free shipping on your order and 365-day returns. Now available in Canada too. That's quince.com slash founders for free shipping and 365-day returns. quince.com slash founders. Trying to not feel guilty about what it is that I'm sacrificing in a given moment and actually like zooming out and feeling good about the overall situation. So there's an interesting, you know, there's an interesting framework to look at this that I've seen, which is pick three things. Is it your family? Is it your health? Is it your work? Is it your friends?

24:33and, you know, is it your friends? And then one of those things is going to go away this week. And just figuring out what are those three and just being really intentional about it week to week, day to day. And then, you know, some of those things will pop back. So I would say for me, I've been really focused on my health. I've been really focused on the business. And I've been really focused on my family. And those are my top three priorities. And I've tried to incorporate friendships and other things. But I would say I don't go out very often. And I say no to a lot of things. I don't go to networking events because those are the top three things that matter to me.

25:10If and when you exit ritual, you potentially could have a over billion dollar exit. I'm just making that up. No public information has been given to me. I'm just totally making this up, just doing my own math in my head. You could potentially have a billion dollar exit. Maybe this propels you to even be a billionaire, or maybe you are already. I'm not sure. But how does that make you feel? It doesn't. I mean, for me, I'm actually an immigrant. So I was born in Ukraine. I was a refugee, lived in a welfare hotel when I was little in Brooklyn. My dad became an entrepreneur, and so I've always wanted to be an entrepreneur.

25:52And I'm not very materially driven. So I think on the financial side, to me, and I hear this all the time, it doesn't really change how you feel or you live. Our family lives a really, I would say, more or less modest life. We bike around LA. You know, we use our bikes all the time. And I think it probably stems from how I was raised. What is exciting to me to eventually have a, you know, hopefully, I don't know, cut that far. But I think what's exciting in general to have some kind of, you know, scorecard of what the business is worth is what it shows to other female founders what they can accomplish and that they can dream big.

26:46and I think also from my girls. They are the ones that are asking me if they can start something one day. Right now they're selling their pottery on the street. They're very entrepreneurial hustlers. But one day I know that they might want to start something and I think having a number associated with it is kind of cool because I think it allows and shows an example for a future generation of women. It's like if you see it, you can be it. so you are the see it person so they can be it what's the first thing that you sold because i remember uh making cds like downloading music onto cds i used to sell cds in school and then i used to sell like chocolate that i would get for i don't know i like resell chocolate i don't know then i had like a paper route and uh i think when you're like most entrepreneurs i always find it funny to hear like what was the first things that they remember selling so I didn't sell anything but I provided my services I was washing cars and shoveling snow that's that was like what I did and then eventually when I was in college I ended up being a math tutor I studied math and in college and I tutored people in math while I was dispatching vehicles so I was like double I was double dipping.

28:10Sorry, Brown University, if you hear this. So because it was like I could do both at the same time. So I was getting paid twice. I think Brown would be proud of you. So I don't think that I don't think they'd be too worried. See, you can't you can't take the hustle out the entrepreneur. It's like I think you're just born it. You can tell in the beginning who's got that drive in them that's going to commit 100 percent of themselves, their life to something. I know you have a book as well. Help yourself. Why write a book? I wrote a book and it's honestly been a decade in the works. I've met with so many doctors and wellness leaders and chefs and nutritionists and you name it and been through my own wellness journey for decades.

28:58As this industry has gotten so complex, it's been so hard to navigate for so so many people and I just wanted to simplify and provide guidance of what I've learned and show people that it can actually be pretty simple and health is pretty intuitive and it's not just taking supplements but it's how you know how much water you're drinking how much you're moving what kind of food you're eating and it's part it's part cookbook I wrote it with a good stuff friend of mine and part a lot part lots of parts of science we worked with a scientist as well so kind of demystifying the the trends from from what is real well it seems that health is wealth is really like a phrase that a lot of people stick to I hate so many people I know are really focused on health.

29:57And even young people like in their 20s who have many years left ahead of them are really looking at how I can be healthy and remain healthy. And we might live to 152, 250 years old. Who knows, right? So if you're going to do that, you might as well be healthy. But my wife and I wrote this book here called Unlimited Possibilities. And the whole premise is unlimited possibility is a breakthrough moment in your life that you never thought possible. What was an unlimited possibility moment for you? So that moment that you broke through, even though earlier in your life, you never thought it would be possible.

30:32That's really hard. That's a really hard question for me. I don't know if I have an answer because I still feel like I'm in the process of breaking through. and I think my biggest Achilles heel and I just started working with a CEO coach for the first time in a decade. I probably should have started 10 years ago is like very hard for me to feel like I've achieved something because I'm always on to the next. So it's a very hard question for me because I'm always like, oh, we made 100 million. Now we need to do 200. We did 200. Now we need to do 300. Or we've published three studies. Now we've published two more.