How First Day’s Founder Alice Li Built a 9-Figure Kids Vitamins Brand From One SKU

22:22Matt Bertulli:Then why start with gummies? And then give me the most extreme end of the other side of that. So if gummies are like a hard place to get a large amount of active ingredients into somebody, what is the best form factor to get actives into somebody? So from my perspective, because we really wanted people to actually take the product and feel better. If you don't want to take it, then there's no point buying and making the product. And so that was really the number one thing that we were trying to solve for is I guarantee you every one of us knows more or less what it takes to be healthy. Right. You eat more salads.

23:01You exercise a little bit more. All of us know that. And yet none of us do it.

23:07Matt Bertulli:Yeah. And that's because it's really hard. It's unpleasant. No one enjoys it. And so how do you make being healthy something that you actually look forward to and that's fun and joyful? And that's through things like the form factor and experience. And on the flip side of what you asked, it's probably a powder. Right. Yeah. Powder is like the thing you can do. Yeah. Yeah, exactly. Like I would. Yeah. It would be so much easier for my life. I'm still waiting for something. But then people won't do it. No, that's just it. It's messy. It's disgusting. Yeah. It clumps up. There's like a textual and taste issue.

23:39Yeah.

23:39Matt Bertulli:Yeah. Yeah. It's really just like, yeah, I'm so happy you said that. I don't know a whole lot about the space, but I'm very curious and like how all of it works. The science of it's super fascinating. When you started with gummies, like how quickly did you realize like we're going to do you just do gummies or do you do like a whole bunch of more factors? As of today, we just do gummies, but we're launching actually a new form factor that I'm excited about. OK. Yeah. Do you want to talk about it or do you want to save it? Ask me in nine months. Oh, we'll save it then. It'll be a little bit sooner than that, but the main thing is actually the scientific limitations I just talked about.

24:14We wanted to find another form factor that let us tackle problems that moms and parents were already telling us about, but that were fundamentally impossible in a gummy format. And we also had to find a format that was still fun because that's a big part of the brand. The number one thing when you talk to a first aid customer that they say about us is it's fun.

24:33Matt Bertulli:Yeah. And so. Your colors are fun. Yeah. Everything about it is like the packaging is great. Yes. And so that was really important and we had to find the right intersection of those two things. Okay. Did you bootstrap the company at the beginning? Tell us how you finance this thing. So we launched in 2019 with our very first queue, the Kids Multi. Grew pretty quickly, so grew to multi-million run rate within a couple of months, which was grueling and horrible. I thought about quitting every day, which you guys probably also relate with. still do yeah is that on your own website yes d2c and then i raise a very small amount of capital so less than a million dollars and i think in the years since we've generated so far 180 times that return on capital wow and so i've i've always wanted to build a business that could stand on its own and a brand that could live beyond me.

25:34And so having the company be profitable and be able to scale quickly, even though it's nine figures now, was really important to how I wanted to run it.

25:43Matt Bertulli:So you raised a little bit of capital and then that was the only capital you ever raised. Yes. And then you've been building it. I mean, that's basically bootstrapping. Under a million bucks is not a lot of capital. At the scale that you're at, it really isn't. Okay. So, And then how do you think, like, do you think you'll get to a size where, like, another level of investor or another way to capitalize the business has to come along? Like, I'm really just asking the question from, like, every category is different. Like, some companies like HexCloud, you guys went a long way with, like, zero, it's iCapital, right?

26:14Matt Bertulli:But then there's certain categories where I've heard, like, they're actually just really expensive to build in. Yeah. At certain scales. When you look at multi and supplements, this whole space, what's possible from a scale perspective on just profit? Is unlimited a possible area? I'm asking because I just don't know enough about the category. I'm very curious. So margins in supplements are so high. It can be really profitable. and so I think one that attracts a lot of bad actors like people who just want to make a quick buck but it also means that if you're structured and thoughtful around how you want to build a company you can build it this way we've had a lot of interest but I never felt like it was the right time yeah because it never felt like I could really like it opened something that I couldn't do already yep and so that's kind of what i was asking yeah yeah you know is there an unlock that comes with capital in your space but it doesn't sound like it sounds like it sounds like what you have is just like the typical founder of a great business it's like if you're growing and you're profitable and you're enjoying yourself like that's the way to build a business as opposed to saying oh i'm building this thing for like 50 of the people you meet are just thinking about how to build a business for exit yes that's okay that's just what they want but yeah you're building a business that it was nice to hear you say that that'll outlast me you know it does and if someone else owns it that's great but more importantly it's um it's a sustainable business that gives you the option to hang out as long as you want because that's the way we look at our business it's like well we don't have to do anything and those are the those are great that's a great place to be yeah hell yeah what what you said that it was really hard like so when you launched you got you scaled up really quickly but you hate like it was awful what about what about it was awful like that sounds great like if i'm launching a brand i get to millions of dollars in a few months like that's great well i was 25 spending thousands of dollars a day on facebook ads not seeing a great return uh at the time and wondering if i had quit my nice cushy corporate job for no reason and made a huge mistake and was just pumping what felt to me like at the time, like, you know, my life savings and all of those things into the business without knowing if it was going to work.

28:44And I actually set myself a goal at around six months post-launch where I told myself, okay, I'm going to give myself six months to build the underlying unit economics. it's like can i get cost of customer acquisition to be something that makes sense and also prove some level of scale so that i can tell myself i'm not wasting my time and torturing myself for no reason i still remember the first two hundred thousand dollar purchase order we made for inventory because we were on the verge of going out of stock and i i slept like two hours that

29:20Matt Bertulli:night like i i just you know so is this uh you know the cash cycles and supplements hard like when you have to buy it like you to prepay or buy a lot long before you get it yes it's gotten a lot better over the years as actually private equity has entered an industry and created more supply on the manufacturing side but at the time gummy vitamins were so hot there was so little capacity six out of every 10 manufacturers i talked to just straight turned me away because they weren't accepting new clients. Oh my God. Yeah. And so it was a really unusual environment because usually suppliers don't have that much leverage over brands.

29:57But at the time it was, you know, a hundred percent prepay. And on top of that, it would take eight to 16 weeks depending on. Yeah. So it was, it was not ideal from a cash conversion cycle standpoint.

30:11Matt Bertulli:Tell me about the, the cost of customer acquisition thing. So like you gave yourself time to figure out, you know, like, what did you do to drive CAC down where you were like six months later, I'm gonna do this. I'm gonna keep going. At Hexclad, Applovin has been our highest-spending new channel since the start of last year, mid-seven figures and growing. It almost wasn't. My team was skeptical. So I stepped in to push them. First, I had them pull data on the overlap between Meta and Applovin customers to find out if the platform was really just retargeting. Then we ran multiple holdout tests.

30:46The results, 90 % new customers, 53 % higher ROAS, 36 % higher new customer ROAS, 27 % lower new customer CAC. The numbers were just bang on. If you create an Apple of an account and launch on day one, you're going to get$1 ,000 in free ad credit, plus another$5 ,000 when you spend$5 ,000. Audio on vertical videos, unskippable ad units, new reach for new customers. Check it out today. go to 9operators.com slash applovin. You're going to get our guide to new channels, recordings of our live expansion events with us and 25 of our friends. 9operators.com slash applovin. Back to the show. It was really understanding what spoke to the mom.

31:33Matt Bertulli:Okay. So, at that point, I had never done media buying. I had never done video editing. You know, I didn't learn any of that in consulting. No kidding. But you learned how to swag. Yeah, exactly. You learned how to swag. Yeah, so I could do some basic but probably somewhat wrong contribution math. It's just so not confidence-inspiring. I'm never hiring a management consultant. If your company is run well, you probably don't need one. Yeah, yeah, exactly. So I had to teach myself all those things and how to do copywriting. and as I said I wasn't a parent and and to really understand like the mentality of the sort of person that was actually watching our ads and the better I became at actually fine-tuning that and grabbing their attention and talking them through the product and helping explain why this mattered which wasn't you know all the things that you would think from a scientific standpoint it was more how does it matter to their life similar to what i was talking about then it started to work um and i'm also very lucky because the vast majority of our ddc business is subscription yeah so 85 of it well is recurring and so it's that really helps with investing for the future and actually being able to run it in a really capital efficient way did you realize that you needed to go subscription early on?

33:06Matt Bertulli:Like, were you like, this is the only way the model works? I think I was more lucky than smart, which is actually better to be. But the very first product page I built already had subscription as an option. And the natural opt-in rate then was in the 50s. Now we've actually improved it dramatically. And so the organic behavior from consumers was they actually wanted something subscription oriented, which makes sense for a product that effectively has a dose. Yeah. And as a daily. Yeah. And it makes sense. Yeah. Would you consider yourself a good marketer today? I think I'm a terrible marketer.

33:43Matt Bertulli:Whoa. Really? My team sometimes disagrees with me, but I actually think marketing is - I don't know. I've talked to you. I think you're a pretty good marketer. I don't know. I feel like I had to teach myself what the business needed from me in order for it to survive and then thrive. But marketing doesn't come very naturally to me. Yeah. Like I'm, I'm very quantitatively oriented, which is actually helpful in today's like e-com world of analytics. But a lot of what, you know, I think we as a team and as a brand became good at were things that I had to like force myself to be good at because that's what it needed from me.

34:23And I think probably the thing I was really good at with the business and I still try to lean in on is I'm good at adapting with the business. Like businesses often outgrow their founders. And I don't think mine has outgrown me yet.

34:38Matt Bertulli:Oh, wow. So we'll see if it does. I think it's very self-aware of you and great that you're saying that. I think that's really great. You guys are actually very similar. You don't know each other that well. We rode the bus together. Oh, so you know a little bit. It was very intimate seating. Yes. Oh, yeah. He was like nice and close. He's a numbers driven like models. But like I think from a marketing, not a creative marketer, but like will understand the models really well. Yeah. Right. And then some people are like on the other side of marketing, which is like they're just idea factories. Yes.

35:11And you honestly, in order to make a really strong e-commerce and omnichannel brand thrive, you need you need to be able to meet in the middle across ideas and analytics.

35:21Matt Bertulli:When did you jump from Justy's C to going into retail? Because we were talking earlier and you're in a whole whack load of Targets. When did that happen? When did you make your first jump into retail? So we had been turning down four different retailers for a long time, including Target and Walmart. We didn't feel like we were ready, actually, which I understand is a rare reaction from a founder. Yeah. that I it's so good when it comes to retail yes because you only get one chance to launch and frankly I want it to be the best launch ever and I want it to be perfect and so we really need to build up in my opinion like more scale and more resilience as a team and as a brand in order to execute against that well and last year we felt ready and so we spoke with Target and Walmart and they were both incredibly supportive and I felt very lucky because it's It's rare that brands get that opportunity.

36:23And I think it meant a lot that they really saw, I think, what the brand stood for. And Target, frankly, just made an offer we couldn't refuse. And they're such an incredible emerging brand partner.

36:37Matt Bertulli:Yeah. And it's been an incredible launch. So we're nationwide now. The products are doing incredibly well. We're number one kids vitamin, number two teens vitamin. well um we're expanding our assortment lots of exciting things very cool there uh we have the privilege of speaking with hundreds of founders pretty much every year i i can count on like one hand the number of people would turn down a tartar or walmart uh you'd be on one of them yeah you're still not in it correct that's glad it's still not in any mass retailer except for the costco right and we're not on this we don't stock the shelves no we actually do your inventory it's your demo is like yeah it's a very small list of people that can resist the uh the siren and oh yes at some point i think it makes sense it does for everyone yes you know d2c is just when is amazing but at the end of the day omni channel is like you have to go where the customer is yes and if at some point you are talking about some kind of transaction maybe it's an ipo yeah the market will want to see that you're omni channel yes so it but it's great to not be in a hurry It's great to be patient and it's great to have options.

37:51Yes, I agree. I think it's very different by vertical, but for our space, if you think about not my business, but where consumers are actually buying these products, it's 50 % retail, 40 % Amazon, and only 10 % direct consumer.

38:07Matt Bertulli:I did not know that. It's 10 % DTC. It's 10 % DTC. I mean, I'm like saying to myself, I just want to go buy some. I'm like, I would immediately just go to Amazon if I didn't tell her. You know, just immediately go down and buy it. You're right. Like a lot of consumables in our house are being delivered by Amazon boxes. Yes. And that's actually part of what's really exciting to me about this inflection point that the brand is in because only 10 % of families prefer to purchase direct-to-consumer, but we're 80 % direct -to-consumer, which means purely from channel distribution, we can still 10x the business.

38:45Yep. And so even though we're nine figures, I feel really excited about the future. We had an incredible retail launch. There's still so much opportunity. I don't feel the business slowing down at all, which is, I think, very, frankly, not what I anticipated at this scale. In the early days, I think I dreamed of being this size, but you never really think you're going to do it. You never know. Yeah.

39:08Matt Bertulli:Yeah. So you launch in Target. Give yourself a grade. a scale of one to five, five being awesome, one being terrible. How did the execution of a launch in Target? How did you guys do? It's your first time in retail. That's a lot of doors. Yes, it is. And we did it with a team that was that only really new direct consumer. So very different operationally and mechanically. I would say probably on financial performance, four out of five. I'm personally pretty happy with it. I think the only thing that actually would have made it better is if the business itself were larger. Like brand-wise, you think?

39:54Yes. So we know from Meta that 80 million households nationwide have seen the brand name first day. Wow. But if that number were 150 million, I'm sure retail performance would be even better. And so that's one piece of it. I think operationally, I would say three out of five. A lot of things were new to the team. I don't think anything was truly outcome changing, but there was a lot of learning as we go, which we also expected. And it's why we waited so long and also why we launched with just one partner, because we had gotten a lot of feedback that we should we should say yes to multiple offers from the retailers themselves.

40:36Yeah. Who were saying, oh, I don't mind you. You're also working with so and so. and we ultimately decided it would just be too much for the business. Sure. It's a really great decision on so many levels. Number one, you can only do so much. Yes. Everyone wants to do everything, and you can only do so much. But also, I was talking with Mike Beckham about this yesterday, and you really should just stick your toe in the water and learn, and then just go a little bit deeper and learn, because you don't want to mess it up. It's way different. Just like the complexities of D2C. and all the tactics and hacks of DTC, it's the same exists in retail.

41:18And if you're not native to it, any little thing could go wrong and that could become a really big thing.

41:27Matt Bertulli:Your sphere of influence in retail is actually, I think, smaller than in DTC. It's very small, actually. So much is out of your control. like a you know some really nice 17 year old is placing your product on the shelf right in a town you've never been to so uh and the retailer relationships really matter and they're not uh they don't like it when you make mistakes so i think you really need to protect like how they see the business and how much you can support them and how much you lean in which i think we've been really lucky because it's just been an incredible outcome and we're really excited about what the future looks like but you know like I know brands where they didn't handle one conversation well with the buyer which I think sometimes is on the brand like sometimes you people do do inappropriate things in the meetings but it can really ruin the trust between like a brand and a retailer because so much of these things are judgment calls for buyers, right?

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43:29Matt Bertulli:Do you would you consider yourself are you more of a like a strategy person or more of a like just do things and execute like how like like the what to do versus like just how to do it. I think I think for most of a company's life cycle success is dependent on 99 percent execution and one person strategy strategy is almost useless. What's the 1 %? Where is it valuable? I think things like business model structuring. As you think about margin. You guys, man. I mean, it is amazing. I wish I would have known all this when we were riding the bus for an hour and a half next year. Because I say this too.

44:13There's just so much randomness in everything. And when you're a quantitative person, you really realize how random things are. Right. So and you just have to be OK with the rent. Like so what you said about how much of it is really strategic. No, it's execution because the randomness comes at you and then you need to execute. Yes. Right. Yes. I think, you know, there's an incredible book written by the former CEO of Snowflake, who's also like a serial professional CEO. but he actually talks about this in the book about how everyone puts so much emphasis on strategy and i think part of it is because it's the easy and the fun part well it's easy to write about yeah it's it's the dreaming part it's the vision part um and it's easy to talk about but the actual doing is really really hard and the level of how you execute really matters because you can do the same thing but do it way better and one is only one of those scenarios is going to work and it's really hard to tell the difference uh in a lot of times and so i think um i think often strategy is

45:27Matt Bertulli:glorified yeah everyone has a plan until they're punched in the mouth oh yeah that's the best quote ever you know when we were talking tiktok shops yesterday all that was playing through my head you know my number one takeaway that was oh yeah this is just another channel that is incredibly mundane you need to send a bajillion messages to a bajillion creators and that's boring but that's the execution part yes and the actual pieces like what those those two guys did a lot of it i'm like oh they just summarized the whole thing in like four moves but the fourth move i'm like oh god that's a lot of emails yeah it's like oh okay now you need to send out a million emails yeah each step is very hard that's where it falls down it's like right there it's i don't even know if I'm willing to do that.

46:09Yeah. Yeah.

46:10Matt Bertulli:So how has your, as a brand, so like, I guess, let me start with yours first. I just want to finish on the product because my wife is highly skeptical of gummies. Yes. I've heard this from multiple people. How do you get around that? Because you've talked about like, there's only so much ingredient in the gummy. Yes. But my wife is skeptical of it because she's worried about like, is it candy? You know, like, does my kid only want to eat it because she thinks it's candy? Am I building the wrong sort of like, I don't know, muscle in my child? How do you convince skeptical mothers to give their kids gummies?

46:42Yeah. Three ways. One is the ingredients in the gummy matter, not just from an active standpoint, but actually how you get it to gel. So the two most common ingredients are pectin and gelatin. So gelatin is what's used in a Haribo gummy, and it's distilled from animal bones. and pectin is basically what's in oranges apples fruit jams that causes that texture and pectin is less sticky on the teeth and so dental health is a huge thing yep and so effectively there are differences even within how gummies are made and i think one thing that we're really good

47:22Matt Bertulli:at is actually educating consumers to change their behavior and so that's one thing another thing is I think sugar levels are often a concern. But you can work really hard to reduce the sugar level. So for our products, one gummy has the same sweetness and amount of sugar as two grapes. So if you think about your child eating fruit, which I think most parents think that's great, it's really not that much if you manage and optimize that. And then the last thing is, and this is just my personal perspective on health, And this is how I act in my own life regarding nutrition. But it doesn't really work to basically take all treats and delights away from your life.

48:10Like we're all going to eat things that are unhealthy at some point. It's just a question of how much. And I think moderation is actually the best way to be healthy. Like how do you teach your kids, you know, it's okay to eat that cupcake or a piece of candy because it tastes good. And there's a really good evolutionary biological reason why it tastes really, really good. But also it's not something that you should be eating every meal or every day. And I think it's that almost like first principles thinking or habit building that's more important for improving your family's health. Because speaking for myself, you know, growing up, my parents didn't think eating carbs was very good.

48:53And now I love carbs. Yeah. And so, you know, children also end up leaning into those things that they weren't allowed when they were little.

49:01Matt Bertulli:You look at the last like 50 or 60 years of health. And I swear to God, every claim has been refuted. Yes. And every pyramid and every everything. It's like, it's all wrong. That's right. I feel like I can't eat salad anymore. You know, I'm like, I'm waiting. Yeah, the microplastics and salad. Yeah. Microplastics. It's like I saw a video that kale's bad for you. I'm like, do kale is not bad for us. What's happening here? you know like somebody's not yeah there's some ads i keep getting this ad on on x like don't men shouldn't eat blueberries like i keep and i haven't really i haven't clicked on it i'm like this is what i mean you're right turn and i think this is like a hard part of your category is there's so much pseudoscience and some of the people peddling it have huge audiences yes you know like you could get like a mom can receive a thing it's like this video's got 20 million views on it like that's got to be right like that's just that's a solid you know piece a signal.

49:50Matt Bertulli:And then you're sitting here building a brand. You're like, okay, now how do I produce something that refutes that? Did you see a video of me yesterday? That's basically what was happening. So how then has the, as you just switching to like the sort of marketing side of this, as the brand has like grown and gotten bigger, how has sort of like channel mix and marketing changed over time? I think the biggest impact on that has actually been probably platform level changes which you guys have talked a lot about on the podcast um you know we find that we need to effectively redefine creative strategy and execution every year and it's just that's infuriating yeah uh it is but you know uh we like the the thing about the space is it's so competitive and there's very little barrier to entry and so the protections that you can have are really only science and brand because literally anyone can look at a product and copy it it's very easy in the space and so i think that's why that educational piece is so important for us and also why we're actually very anti-fad um i think a lot of the trends happening in health are not necessarily rooted in frankly what's what's true to scientists or academics or doctors.

51:16So as one example, there's so much conversation about protein right now.

51:21Matt Bertulli:Yeah. And it's an incredible category. It's like eight, nine billion dollars on its own. Yes. Just protein. Yes. And it's growing very fast. Yeah, exactly. And it's hugely tied to weight loss and GLPs. And now it sort of has its own halo. So I think it's really interesting that, for example, the CDC has actually reported that 90 % of Americans get too much protein. Really? Yes. It's it. The Italians everywhere are like, told you so. Yes. Get some pasta. Yeah. Yeah. And so I think there are things that become true culturally or become, you know, something that's talked about on TikTok or Instagram or in the news.

52:03and it becomes really trendy, but also it sometimes doesn't last. I think protein is actually going to be a lasting trend because there's some fundamental changes happening. But there's a more, I think, rigorous way to approach it where you're taking all the facts into play, right? Like, hey, most Americans, it may not be 90 % anymore because of GLPs, but most Americans definitely get a lot of protein. That's just 100 % true. we eat a lot of meat and now we're eating a lot of supplemented protein too. But there are interesting deficiencies happening that do impact protein. So how do you address it in a way that's more true to how the scientists are thinking about it, to the combination of what may help you actually feel better, which I think is what's potentially really powerful.

52:54Matt Bertulli:I'm listening to you talk and what makes me think, for some reason I'm going here, but in agriculture. I'm afraid. No, no. I'm a big food person. So in food and ag, monocropping is really bad. Soil depletion, huge issue. And it turns out in nutrients, what I'm hearing is you can't mononutrient yourself either. So you can't just over-index on protein and be okay. What you're saying is there's a whole bunch of things that probably make the efficacy of protein much more efficacious, right? It's like if you don't have these things, you're taking all the protein. Yes. It's not good. That's exactly right.

53:31And the reality is even though science and biology and medicine have advanced a lot, we actually don't really understand most of how the human body functions. Like if you only took effectively a solution made up of all the things that we know are critical to human functioning, you would actually become like, you know, vitamins, protein, like macronutrients. You would probably still get pretty sick pretty quickly and you would not feel well. And it's because there's a lot of things in food that we don't understand that interacts with all of it. And so that's like my other challenge with the supplement industry is often products are marketed as a replacement for something.

54:11Matt Bertulli:Yes, that's totally true. Like as a replacement for eating vegetables. Yeah, you don't eat vegetables, just take this thing. Yeah, exactly. Like if your kid only eats beige food, just, you know, just give them this thing and everything will be perfect. And the reality is some products can help, but it's actually still not a replacement. And I personally find it challenging when brands are out there marketing things like that because it's really appealing to consumers because they want an easy fix. We all do, right? But it's not actually true. I'm curious to get both of your answers on this, actually.

54:46Matt Bertulli:How much time between product marketing and like just call it operations, if you were to put a percentage on each one and if you look at a typical week, where are you spending your time? I'm listening to you talk about product and it sounds like you know a lot about the product. But how do you allocate time across all of those things? Right now, it's pretty evenly split. But I think that's because we're building up some new structures within product and how we develop products. I don't have a head of supply chain at the moment. So that's also why I'm spending more time there. Historically, I've actually spent the most time in brand and marketing.

55:21Because as a consumer brand, marketing is the engine of the business. it's sales so um it's not especially in a category this crowded with so little consumer understanding if you don't have good marketing even if you have an incredible product it can be really hard to

55:40Matt Bertulli:break through the noise okay jason how where do you put your time now so there's like a few different buckets there's there's marketing finance operations product and overall strategy Like those are the five areas. That's the way I look at it. And I probably, product is the one that I probably spend the least on, but it's also just my purview. Just like my, it's just been, it's just the way like the distribution of work has, I've been getting more involved in the execution of product lately because it just becomes more and more important at our scale. But I kind of look at the world in those five categories.

56:22And marketing, finance, ops, and strategy, those four are really like my day. And then it's more on the product side. It's just walking around, asking lots of questions to the teams and pushing people. I just heard that one pretty easy product was delayed. And it was just really frustrating to me. And I'm like, this doesn't need to be delayed. We're trying to make it perfect. And it's actually really excellent already. and perfection is the enemy of not only good, but certainly excellence, right? Of progress. So it's like, just go. And so that's really my role in a lot of respects at the company.

56:57That's how I look at it. Yeah. Because we've built out a really big team now. I mean, not so much big, but really an excellent internal team at our scale. And I think it's a job as like a senior leader to just like take the pulse, get things moving and move on to the next one and ultimately define the strategy.

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57:54Most brands are live within a few weeks and new staff can be live before lunch. Learn more about ShipHero at shiphero.com backslash titans. I spent the last roughly 18 months building out a C-suite.

58:10Matt Bertulli:Okay. Even though I've actually been trying for much longer than that unsuccessfully. they're such hard hires but now we actually have a really strong c-suite and it's completely transformed my role um and so it's it's very different working with people who are true leaders and executives they already have a very strong pov on strategy they have a very strong view on cultural values which i think is a part of what you're talking about with like driving velocity and helping the team understand even though we're at this scale the most important thing is to get it done, you know? Um, and yeah, yeah.

58:48Matt Bertulli:Uh, has there been a stage of growth that you've actually found most difficult? Like, can you look back at all of them? I think the early years were probably the hardest for me. I'm a big external validation sort of person and there's no data. You have no idea if what you're doing is correct. You talk to 20 incredibly successful founders and all of their advice is completely different on how to build your business. There's no one way. And you're just like, well, I've never done this before, but I guess I got to pick because I'm the only one who's picking and you have to make a bet. Yeah. And that adjustment was hard for me.

59:24Matt Bertulli:You actually, I didn't realize this, but you had a co-founder in the business. Yes, I did. And now that person is no longer in the business. Yes. Can you, just for people, like I've actually gotten this question, it happens often, right? Where you have like people start and not everybody finishes. If you're willing to share, like, I'd be curious to think, like, how did you guys come to this like point where you're like, OK, this just doesn't make sense anymore? I think one, P and I are still incredible friends. I was actually just talking with him this week, which is great. And I feel very lucky.

59:54And we were friends before we started the business together as well. But I think it it came to a point where our working styles were incredibly different. And at the time, we had a 50-50 split in the business. And so, and there were only two of us. And so you couldn't, like no one could veto anyone else. And it was very consensus driven. And the way that he and I would actually both describe the challenge is if you imagine a spectrum from one to 10, where one is gut instinct based decision making, which can be really powerful, versus like 10 is hyper logical, like quantitative. you need to break it down and it needs to be really thorough he was a 1 and I was a 10 and so it was really hard for us to agree on things and I think ultimately it started to become very hard for both of us and I'm really lucky because he's a great person and it was very amicable and friendly and he's been an amazing shareholder but it was challenging to operate the business that way and I don't know if you guys feel this way but I hate consensus-driven decision-making.

1:01:08Matt Bertulli:Oh, my God. I think it's like the enemy of companies making good decisions. Jake, again, love language. I mean, we have to get to know each other better. You're saying so many things that are right on. And I always talk about decision-making in terms of Kahneman and Tversky, the fathers of behavioral economics. And Daniel Kahneman wrote the book Thinking Fast, Thinking Slow. So, you know, it's system A and system B. It's like lizard brain versus, you know, prefrontal cortex and really like being analytical in how you do things. And even just like the daily interactions with your employees. Right.

1:01:50You can see who is a system A person and a system B person. And it's like I just I just feel like the more you can be you need the system A is like the creativity. It's like you need that person. And if you look at like the really successful founders who we meet. Right. You are a management consultant, right? And then there's like the other people who are just like, oh, screw it, we're making this, you know? And we're just gonna figure, right? And we're just gonna figure out. And like they both work. I think the latter, I think Alice's profile works better at scale. And the fact that she was able to actually get to where she is now, like not being the super creative, but being having an idea and being analytical and being able to execute.

1:02:38I think those are the businesses. At some point you need that to really make a business.

1:02:42Matt Bertulli:The best ones have both. Like when you've got like two co-founders, two or three, whatever, but like you've got one in each. You complement each other. Yeah, that like complimentary skillset is. But if you're looking to hire great people, I think really good junior investment bankers are amazing. Spoken like a true former junior banker, by the way. I was a senior banker. This is one of them. No, seriously. I think that those kind of work, like management consulting, banking, like these are like basically professional leaders, right? Like they do such, and if they work hard, they're in, like they do mundane crap.

1:03:20Matt Bertulli:They're great people. I'm with you on that. I actually like, I totally agree. It's like you just did that, that comment. It's very hard to do that job, you know? So like you could put that person somewhere else. Like when I started working at Hexclad, I got to be honest with you, it was easy. I mean, it was just so much easier than everything else that I'd done. Everything else was punishing. We sell a product that people love and value. You wake up every day and you're like, wow, this is great. People love what we do. This is amazing. It's a lot when I have. It's just so much. So you take someone that's had the beat down of management consulting or iBanking and you put them in this consumer world and they're awesome.

1:04:03Matt Bertulli:And that's why you're awesome. Meanwhile, you talk to people who've been in consumer a long time. That's like, oh God, consumer. Speaking of shareholders, so you raised a little bit of money. Yes. Was it from one person, multiple people? It was from a venture fund in Austin, actually. Okay. But it was started by two former founders. Okay. One of whom had sold his business for 300 million bootstrapped. And so he was, over time, he became my main contact because they split up the portfolio that way. And it was just an incredible source of learning from someone who had been there. So you had a rare kind of investor that was actually useful beyond the money.

1:04:46Yes. And it was actually something that I had looked for in that process because I felt that someone who was an operator would just, understand I didn't want to be on this fundraising treadmill like I didn't want to be pushed to hit certain numbers just for the sake of getting to the next round no matter how much it costs the business and they really got that and they were really supportive and they also understood businesses aren't perfect in fact they're incredibly messy and very ugly sometimes and you know when he sold his business it was a thousand employees um and talking to him taught

1:05:29Matt Bertulli:me a lot as you i don't know if this is something you bring up with him but um and you're looking at your business now like obviously execution number one but you still have to spend some amount of time on like what the next moves are you mentioned the whole protein glp1 thing Are you concerned or excited for the, I guess, the downstream effects of what those things are doing to, I guess, like broad health, broad nutrition? And how do you think about that over the next decade? Yeah. My personal opinion or my business opinion? Give me both. Yeah. Yeah. My business opinion is actually how I feel about it is irrelevant.

1:06:09It's here to stay. It's going to drive a lot of consumer behavior over the next couple decades. And it's dramatically changing consumption behavior and also how people think about health. And so for better or for worse, it's something that the business really needs to think about. And also something that is really on our family's minds, which ultimately is what matters to me. I don't, frankly, my opinion is irrelevant in that sense. personally i actually think it's a really interesting stage for society uh so much of chronic illness is tied to obesity oh yeah and it's an incredible help and so you know when you think about medical outcomes at a population level they should theoretically dramatically improve um and you know i think the more tools that people have the better it is yeah right like It's just like as a consumer person, I just think of how it, number one, it will change consumer behavior, particularly like what we put in our mouths.

1:07:15Matt Bertulli:Yeah. And then number two, like the second order effect is like it's going to change the physical layout of stores. It is. Like the size of a grocery store might actually just totally shrink, right? Or what's in them. Like the, was it like, I think when I was a kid, it was like 90 % of your average grocery store was effectively like processed and packaged food. We thought that was healthy back then. Right. Yeah. The recommendation from nutritionists was TV dinners are complete, right? Complete. Yeah. Yeah. Completely shit. Yeah. In hindsight. I grew up on those. That tells a lot, Jay.

1:07:50Matt Bertulli:Okay. So as you build the business, you've built this team. Are you a kind of founder who actually has a hard time letting go of certain things? Do you like to stay in the weeds on things? Like you're building a C-suite. Are you like a, I'm going to trust right away? or does it take you time to get there? I think I prefer to build up trust over time because it's easier to give more leash than to give a lot of freedom and then get back and then everyone's really unhappy. And so when someone's new reporting to me, that's how I prefer to operate. Over time, I want everyone to have a lot of autonomy because for me, I want to be the dumbest person in the room.

1:08:28I want whoever is on the team, who's a specialist in that area, to be 10 times better at it than me. And so that means, frankly, they should be right more often than I am. They should be debating me. They should be challenging me. That's how we make the brand better. And so in that sense, it hasn't been hard. I do think what is hard for me is actually the coaching aspect of it because every member of my C-suite is older and has more experience than me. and so and i think this is very personal to me because they're amazing but sometimes i i really struggle to like coach them you know um even though yes i do know the company better and there are probably some skills where i'm stronger than them um but that's been something that's been

1:09:19Matt Bertulli:harder for me yeah it's the uh most comp one of the most common pieces of advice when you're building a team is like you always want to be the dumbest person in the room yes but nobody ever follows it up with like what happens when you are the dumbest person then it's like as the as the founder or ceo you're like well what do you do now go home uh so i totally get it well there's that look there's a yells you always have people you always have value you're always gonna have value to add and you know it's nice to say oh i surround people you know surround myself with people smarter than me the truth is you're surrounding yourself with other smart people Yeah.

1:09:55Right. Yeah. But, you know, some people are smarter than you on other topics, but there's always going to be topics. Right. And moreover, you did not get to where you were to the point where you can hire these people. There's no way for you to say, oh, they're just smarter than me. You just have to have the they're just the belief system. Yeah. You just, I mean, I see this all the time because everyone has it. You know, people like to talk about things like imposter syndrome or is this like, you just have to have like the strength to believe. It took me till I was probably 50 years old, 55 now, to like genuinely believe in like my ability and capability to where I'm, where I can literally, I'm sorry.

1:10:37I'm just, I'd have no problem going toe to toe with anyone at anything in business anymore. But it took me a long time. I wish I would have gotten there sooner. There's like that level of confidence that you objectively should, you know, be able to do that.

1:10:55Matt Bertulli:I think that comes from two places, though. I don't know if you agree with this. I'd love to get both your opinions. But like, I think that as you get bigger and you build a team like that, right, where they are very capable and very smart. And they also, they're confident. they're like when they speak they're really good they're really good at convincing you to do something but there's really two things that sort of founder or like founder like founder-ish people like even CEOs right president CEOs you can bring uh context and permission to anything so like you're coming in it's like let's say I'm talking to my head of finance that person's job is finance all day long but you come in with like complete context so it's not just history of the business It's like context today.

1:11:34Matt Bertulli:Yours is very wide. And then the second thing would be you're entirely permissionless. So like what I do with my time is I browse my company and I look for areas where I can go and invade. Right. And all I'm doing is I'm going into something for a period of time, because if I'm there, they now move without permission to do anything. Yeah. And you're like the king of context, because as the founder and the person who built it and ran it, I think that was so well said, you know, and right. Right. Sometimes I know things. Have confidence like Jason. It's Thursday. Thursday is my smart day.

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1:13:03Matt Bertulli:Okay, so let's go to, I want to talk about this, like, I even think I've heard you say this yesterday, that it's like something is always going wrong. Yes. Which I think we would all agree with, like every day, something is always going wrong. Every hour. Every hour, and at scale, the somethings increase in frequency. And in impact. And in impact. Because a 1 % error at scale is really bad. Yeah, it's funny, you know, you should never chase 1 % wins when you're small, but when you get bigger, all you're trying to do is avoid 1 % losses. How do you deal with like firefighting now in the business?

1:13:39I try to let the team do it instead of me.

1:13:41Matt Bertulli:Okay. The way I think about it is I hired really good people who should be able to take care of most problems and I'll continue getting escalated through the ranks. And if it gets to me, it must be a really big problem, like either a business life-threatening problem or something that could only be decided at my level. Like either there's too much context or it's cross company or there's there's something about it. And so what I find is for better, for worse, only the worst problems come to me. And it gets those problems actually get more challenging as the business grows, because you're hiring better people.

1:14:22Your teams are more autonomous. And I think that often for me decides what I need to focus on more than the reverse.

1:14:34Matt Bertulli:Was there, is there been a time, like when was the last time you thought the whole thing was going to fail? Don't say yesterday. Not yesterday. We were hanging out yesterday. Yeah, yesterday was a good day. I was hanging out with you guys. I think I've been very lucky with the business in a lot of ways, even though we raised a little capital. like you know i've talked with founders who have told me you know their company might be three years old and they say there's been five moments when i thought that the company was going to run out of money and i couldn't make payroll and i had to delay it and we had a hundred you know a thousand dollars in the bank or what have you and i've actually never had that moment but i have had a lot of moments where it's like oh man like we messed this up and i didn't see it at the time but now I really see it and now I have to deal with the consequences and they might be multi million dollar consequences which is not fun yeah and so I think that probably happens frankly like once or twice a year and actually speaking of one percent mistakes the cost impact of those mistakes are larger right so like a mistake that we might have made five years ago it's like okay oh shoot we're out 50k yeah now it's okay i lost two million dollars in the business and so i think while the the frequency of it actually happens less it's still pretty consistent and i think actually that will stay true as long as we're growing quickly because you're entering a new phase every six to twelve months of scale and you need to rebuild systems and processes and understand how to operate differently i think if we're growing 10 or 20 percent year over year i i've never actually grown at that pace but yeah my feeling is that it would start to get easier because you've built things that work for the next year and that like the cycle of change now now slows down and so you get more breathing room but if you're growing 50 to 100 year over year everything is urgent all the time and the thing that worked three months ago now no longer works And so that's probably, I think, what's driving it for us.

1:16:45Matt Bertulli:Yeah. You wind up, when you double a company, you kind of wind up rebuilding it. It's a new company. Yeah. It's a new company in a lot of ways. Yeah. In our research, give me a sense for like unit volume that you sell. Yes. So I actually just checked this morning. We've sold half a billion gummies. Holy hell. Yeah. And how many, again, ignorance in consumables. Do you think in terms of units or do you think in terms of families and homes that you're in? Both. I think when I run the business, I think often from the financials, actually, because the business is very capital efficient. And so that's always been important to me.

1:17:28I think in terms of impact, I think in terms of families. Like our company mission is to help a billion families become healthier, whether through the products, whether through donations. we've donated millions of dollars of product or through actually funding scientific research in the future because one thing I think about is when I first started the brand, I talked with a lot of academics in the space. And one thing they told me is there's actually very little funding for nutrition, even though it impacts so much of health. So as one example, one third of cancers are actually tied to lifestyle nutrition.

1:18:07But because there's nothing to patent, there's no one, like no one's going to own eating more vegetables. And the cycles to see the impact of nutrition is, it's so long. It's over decades. And research cycles are usually five to seven years. And there's really interesting studies. Like, for example, taking a really easy supplement of folic acid reduces risk of stroke by more than 30%. Wow. But because no one's making enough money, no one's funding these things. And so I think there's a lot of things that you can do for human impact. And that's one of the things I'm really excited about for the business is how do you effectively leverage capital for that way?

1:18:48Because when you think about a nonprofit, their number one issue is actually fundraising. It's like a constant cycle. 90 % of their leadership does it. But if you have a business that's successful and self-funded and profitable and has impact through its customer base, through its size, you can start to do some of these things a lot more easily. And that would be my dream for the brand. Yeah. And it's always been like really successful people become philanthropic, right? And there's another thing that Mike and I were talking about yesterday. And if you can use your business and what you've built, and that kind of gives you philanthropic points.

1:19:27It's like, okay, we're driving our business here, but we've learned this with it, right? And we can go. I think that's awesome.

1:19:34Matt Bertulli:Yeah, business as a service area for impact is actually a great idea. It's controversial to some people, but I think it's – I don't know why. Like a business is an entity. We treat them like people, but we don't want them to behave like people. So it's just such a weird hypocrisy that we do. There's a Supreme Court joke there. There's so many, right? But believe me, I thought a lot about this one. Looking back at the entire journey so far, first day, when you left being a management consultant, if you could go and talk to that person right now. Is there something you know today that you would like, listen, young Alice, you are really going to need to know this.

1:20:14Get to know Matt and Jason. They're going to teach you a lot of things.

1:20:19Matt Bertulli:Yeah, network value. It turns out it's... Just send a lot of cold emails to them until they finally beg you to stop and just take a call. Which just goes right back to copywriting. Everything comes back to copywriting.

1:20:32Matt Bertulli:Okay, so we like to finish these with this thing called Titan 10. We ask questions. You give us the gut reaction answer to those questions. I'm going to lock you, not lock you. I'm going to strand you. Lock sounds aggressive. I'm going to strand you on a desert island, and all I'm going to give you is a piece of paper. Okay. Three numbers and a piece of paper. This is all you get to know how to run your business. What are the three numbers? Top line, bottom line, payback. Awesome. You also get to bring a book, but it can't be about business. A book of resource for entertainment. Like, what are you bringing to pass the time, but it's not about business?

1:21:11I love Lord of the Rings because I'm a complete dork. This tracks. Yes. It's such a great way. I'm a Lord of the Rings fan. I love it. It's probably Jason's favorite, too. Yeah. Did love the movie. Yeah. But it's great because hobbits are so useless. They're the most useless group of living things. In all of Middle Earth and they're tasked with saving. Yeah. Sometimes you just got to rise to the occasion.

1:21:37Matt Bertulli:There's something incredibly humorous about it. What is your, give me a contrarian belief about business that like a lot of founders would be on the other side of? I don't think the product idea matters. Oh, man. I'm going to get my hate mail for that. Single most important word in leadership. it respect because you can be feared and so respected and loved and respected and it will work what's the single most important word of business longevity not from a biohacking perspective but from how do you build something that lasts cool let's have fun best meal of the day and why you're a nutrition person you can't say vitamins dessert dessert there we go i love dessert all right that's a good reason too it's just awesome uh most overrated growth tactic right now i think hacking media buying okay then most underrated just really good consumer psychology copywriting.

1:22:41I love it.

1:22:43Matt Bertulli:Alice, you crushed that. That's the pod.