Building a Multimillion-Dollar Brand on Family Values: The Story of First Day

0:00If it doesn't work, consumers eventually stop taking it because consumers are smart. And if they're paying for a product where they ultimately feel like, okay, I actually don't know if it's doing anything for me, eventually that's no longer something they're willing to purchase. Hey everyone, welcome to Shopify Masters, your companion for starting and building a business. I'm your host, Shuang Estersham. What does it mean to build a company around your values? For Alice Lee, her goal was clear. She wanted to start a company that would help prevent nutritional trauma, so future generations are no longer affected by an earlier generation's lack of nutrients or food.

0:44First Aid was inspired by a personal story, and the emphasis on family is clear in the marketing, product development, and even the business model. Alice is here to share how she's been able to redefine the vitamin category and build a near nine-figure brand along the way. Alice, so happy to have you here. Of course. Thank you so much for the invite. It's honestly an honor. Very excited to dig into all things First Day. I would love to start at the beginning of the company because you said that you wanted to build a company founded around values instead of investors. So talk to us about embracing your set of values from the get-go and how do you define those values for First Day?

1:31I think for us, it wasn't just to build a big company. You know, I had a career in consulting before this. So I was really familiar with sort of the daily grind of work. And what I really felt was critical over the next few years of my career and what I really wanted to try also when I was young and it was very low risk for myself was to build something that could actually do some good in the world. So for me, you know, as a Chinese American, my grandparents survived the Great Chinese Famine that happened in the 1950s, where 40 million people passed away from starvation and was the largest famine in human history.

2:14And even my parents growing up in China experienced a lot of adversity, like they could only eat me once a year at Chinese New Year's. And as I've seen them age, I really saw that lack in a critical time in their life continue to impact them as they age. And so not only did I want the mission of the company and our products to help people with their health, but also just to be able to create an environment and a culture within the business where kindness will be rewarded, where you could also have people be really good at their job, but it didn't have to be a compromise between that and honestly, just like a good work environment.

2:56It's about being a multiplier of each other. Like, how do we be a guardian of each other? How do we think about being considerate, about actually adding leverage to someone else's time and protecting them and thinking about where we are as a whole team versus just yourself or thinking, oh, this isn't my job. Like, I'm not going to do it. Or actually, this is someone else's responsibility. In a small company, that doesn't really exist. If, you know, we all think that, it'll never get done. And so these are things that we really try to enforce, not just as something that goes on the wall or something that happens in onboarding, but we get bonuses and raises based on these values.

3:38We talk about it every time we're in person because we're a remote first company. And it's a really big part of actually what makes us who we are and I think a big part of why we've been able to be successful. I love the fact that you touched on your family history and also the personal need for creating this company because the vitamins category, it is a very established industry with large players. So for any new entrepreneur thinking about starting a company there, they might feel really intimidated. So why was it so important to create First Day and also tie it back to the inspiration that you draw from your family?

4:21That's such a great question. I think there's two sides to that. There's that personal aspect of wanting to give back and to create an entity that would be able to grow and be profitable and not just help our customers, our team, but also leverage our profitability to give back to communities. So, so far, we've already donated, you know, over$2 million of product, especially during COVID. That was such a critical time when a lot of parents couldn't get enough because of job loss or because of other access issues. And then I think on the other side, as a business person, I was really ambitious and I I wanted to create something that didn't exist and to also fill a gap in the industry where, you know, when you look at supplements, it's literally an industry known for snake oil.

5:10And so a lot of that has to do with, I think, some of the legacy history of the lack of regulation. And also it has to do with a lot of the challenges today with marketing claims. So within supplements, you know, there are a lot of companies today that are advertising effectively miracle cures or who are really trying to overpromise what this sort of product can do. And there's so much incredible science that's been established, that's been validated by scientists and doctors and academics that isn't used in the products, but it also doesn't mean that it's a substitute for all types of medicine.

5:46And so, you know, there's so many ways to help people be healthier without actually, I think, having to sacrifice that part of the business. yeah and entering an established industry like vitamins where there's big players and you might be intimidated about the competition that already exists what were some things you did to actually kind of speak to those who might be skeptical to think that we might not need another supplement or vitamin company just to start i'd love to reframe that as well because the great thing about entering a really crowded market that's already really large is, you know, people will buy, you know, that people are already spending money.

6:31And so it removes part of the challenge of actually creating a market and creating demand because it already exists. Vitamins are a hundred billion dollar market worldwide, and people just really care about their health and about, you know, supplementing it in that way, in a way that's very accessible, that's great for their daily habits. And so that's the first part, like every big market that exists, whether crowded or not serves as a big opportunity. And so that's the first thing. I think the second part of it is, you know, how did we really approach that and build success, even though there was a lot of competition, it's really commoditized, you know, consumers really see these products as frankly interchangeable a lot of the time.

7:14And I think a big part of that for us was one, actually creating a product that was really different. We looked at what is really the underlying secret health crisis that is causing these issues in people's lives. So for example, for our multivitamin line, we based it around something called vanishing nutrients. So over the last 60 years, with the industrialization of agriculture, global warming, soil depletion, you actually see nutrient loss in fresh fruits and vegetables of up to 87%, which is frankly unbelievable.

7:52And so we actually built that product line to specifically target that and resolve that. And because we designed it that way, it was so much more efficacious that consumers could actually feel the difference. And that's really powerful for lifetime value. It's really powerful for brand building. So starting with a good product is really key and understanding, okay, what is really the opportunity and the gap in what everyone else is doing. I love the fact that you saw something that might have been a challenge to others, but for you, it was a welcomed opportunity, which I think is very important, especially for this category, because there are so many regulations.

8:30And for anyone else, they might have pulled back from the idea, but you kind of dove really deep into research and really thoroughly understanding this category. Are there any tips for other founders who might start on their research journey? How did you tackle educating yourself in this field? One of the very first things that I did was I cold emailed actually hundreds of academics in the space, Harvard, Yale, MIT, Stanford, and only a handful ever replied back to me. But having those conversations with them and two of them actually became really incredible advisors who just donate their time because they're so passionate about the mission we have.

9:14Speaking to experts in the space really helped me educate myself and then continue to connect with other potential partners like suppliers and asking them really great questions. I would have this whole list of, you know, five to 10 questions I would ask every co-manufacturer I spoke with. And at the beginning, you know, to choose our first co-mans, I probably talked with 80 across the U.S., North America, and then some internationally as well. And every time you talk to someone, you just gain a little bit more knowledge and your questions get a little smarter. You know, you understand a little bit more of the background.

9:50And so a lot of these resources are frankly free and available. You just have to tolerate a little bit of rejection and grit in order to get there and to get to the people who are willing to help. we have so much to get into especially around your approach to marketing and appealing to the customer profiles for first day before we get there i would like to take a moment to thank you our listeners for tuning into the show we also have a youtube channel where you can watch some of our favorite in-person interviews so subscribe for more from shopify masters So, of course, the inspiration behind First Day was your family's history.

10:36And you also have this great appeal to families and making products for kids. Why was that so important to First Day's mission? So there's, I think, two different pieces to that. One is moms control 80 % of household spending. And so if you can build a good relationship with her as the main household purchaser, which is true, you know, even today in the modern world that we live in, she just wants a brand that she can really trust. And she'll come back to you again and again because she's so busy. She's completely swamped. And so there's this really incredible power about finding the right buyer for you and then figuring out, okay, what is the share of wallet I can occupy?

11:22what does she really care about and how do you expand? So for our customers, actually, almost all of them purchase for multiple members of the family. And that's really incredible because it means that they really trust what we're doing in terms of science and what we're doing for wellness. And that also makes growth so much easier because when you're a direct consumer business, there's a lot of additional costs in terms of customer acquisition, in terms of fulfillment that may not come for a retail first business. And so the more that you can build that lifetime value with the customer and that loyalty, the easier it will be for you to continue to grow at a 50 to a hundred percent.

12:01You're over your pace, which is what we've been able to maintain. And then the second piece of it is, you know, when you think about also who needs the most help, it's also that really busy parent. I think that aspect of social good of, hey, like how do you help people who have so much impact on the others in their life and how do you help support them? Amazing. And I think it's also really incredible to see how the website for First Day was built as well. It's a very easy experience, but also it's intertwined with education about different products that's very approachable and digestible. So how did you make sure that the site was kind of created with that in mind?

12:49It has evolved a lot since we launched in, I think it was the middle of 2019. So it's been a little bit, but at the start, what we really did was we pulled together a bunch of websites that actually we really admired and where we knew that the business was doing well. It was growing or it was profitable. And so pulling together all of that inspiration, we then built a wireframe and had a good friend who was a designer just do a very like quick and dirty sort of illustration and mock-up and design for us. And then we actually built it using Shopify, like, you know, drag and drop apps. So we didn't even have to know any coding, which is part of, I think, what's really incredible about just the ease of using Shopify is how quickly can you get that up.

13:34Over time, we've evolved that to integrate a lot of our learnings from marketing, from customer surveys, from running like very deep A-B tests and having that data-driven approach so that we can also back up some of our hypotheses with real data and conclusions and pressure test them that way, because it's so important to try and prove yourself wrong. And that's also changed because, you know, at the start, within the first six months, we're a couple million run rate, which was incredible. But now we're, you know, nearing nine figures. And so there's this big shift in how we think about the brand, how even our understanding of what matters to the consumer has changed.

14:16And that's all been integrated into how we want to redesign and evolve it for scale. It's truly amazing. And I want to pick up on the fact that you mentioned, you know, now First Day is a nine-figure brand. And it's something that you were able to build on values and you're able to create a model that is profitable. So talk to us about balancing having a value-based company, but that's also self-sustaining, profitable, and now a nine-figure brand. It was a very challenging journey, as I'm sure you've heard through all of your many interviews with other founders. I think at the beginning, there was so much pressure to actually make it sustaining as soon as possible because I really wanted the unit economics of the company to be sustainable and to be profitable and to be able to scale by itself.

15:13And so, you know, at the beginning, I had very specific thresholds of what I wanted to aim for in terms of our P &L, in terms of, okay, we're running this marketing test. What does success really look like? How rigorous does that have to be? And so having that discipline up front, I think to not be satisfied with anything less and to tell yourself, like at the time it was really like, okay, we have to hit this. There's not really any other option. I think that just enforced a certain level of discipline. And then going back to values and culture, I actually think when people feel trusted, when they work in a really great environment, because the reality is we probably spend more time at work than we do with our families even nowadays, is when you have that environment and then you combine that with rigor, you combine that with analytics, logic, all of the things that can make an e-commerce and digital first company successful, you don't actually have to compromise because that sort of culture, I think, enables people's best selves.

16:20Like one thing I talk to the team a lot about is how do we help everyone on the team fulfill their full potential? Because that's not just going to make their career, their life better, it's also going to make the company more successful because both of those things go hand in hand. And I think there's this false dichotomy that sometimes can come into play where you feel like, you know, it's one or the other. And actually people tend to thrive when it's all integrated together. Where they feel happy and fulfilled doing the roles that kind of relate to the things that they care about. And I feel like, you know, you talk about unit economics and also building a sustainable business model from the beginning.

17:07I believe you also set some milestones for yourself to see if the business can be viable. Can you share some of those milestones and what you set in the beginning? Yes. So after we launched the brand and started testing on specifically at the time, Facebook and Instagram in 2019, I gave us six months to get to a point where, okay, the unit economics were sustainable, where I actually did analysis on contribution margin, COGS, fulfillment, all of the, I would say like the fundamental aspects of what are core cost components to a business. And then I set those targets for us to achieve on our marketing platforms for customer acquisition.

17:51And then also combine that with tracking on lifetime value to make sure that we weren't getting surprised on the backend. So that was one piece of it. The second piece of it was actually scale and growth. I knew I wanted to create impact and impact naturally comes with scale as well. And so I wanted to be able to spend and acquire a certain number of customers every day. And so what I told myself is, okay, I want to be at least a million run rate. And so that combined with the profitability metrics was really what I wanted to get to after six months. And luckily we hit it with, I think, a month, a month and a half to go.

18:30So it was before the deadline, but it was definitely starting to add a lot of pressure towards the end where I was genuinely wondering, okay, you know, we've now invested a lot into inventory. I've spent a lot of my time on this because we also spent time developing the product and developing the brand before we launched it? Is this actually going to work? And I think that's part of the doubt that every founder has to fight through. And frankly, even now at our current growth and scale, I still feel that way. The job continues to evolve and challenges always come for businesses. And it's really like every six months, it's a brand new job.

19:08And so, for example, as we were thinking about omni-channel and retail, I started reading a lot of books about retail. Or, you know, as we thought about Amazon, I started tapping into my friends who were Amazon first brands, which is very different than being a direct-to-consumer first brand or even a direct-to-consumer brand that successfully scales an Amazon. And so, you know, thinking through those different lens and constantly challenging myself and frankly, trying to prove myself wrong and trying to identify my own blind spots is probably the best way I've found to try and stay on top of it.

19:44And I haven't been always successful, but it's definitely helped. And I guess like speaking to entering the arena of retail, because I think, you know, speaking to the direct to consumer market, it might be a different profile. Those who might be more open and welcoming for new brands, they're willing to take a chance on first day. I guess like how are you thinking now that you're in the arena of legendary competitors and industry giants? How do you think you'll be able to convince someone to go out of their routine and give first day a try? I think the way we think about it is how do we accelerate our development as a team, as a company, as a brand, and our products so that we can be a household name, right?

20:32That means how can we become accessible where customers want to purchase? So direct to consumer in the supplement space is estimated to be only 10 % of the market. So 90 % is in retail, on Amazon, and in other places. And so capturing that and really being relevant to the broader population means that we have to be able to use this foundation that we have on direct-to-consumer that gives us intimacy with our customers, better customer analytics than frankly, probably most other channels or any other channel. And we leverage that to be more successful than brands who have entered those channels, other channels ahead of us.

21:17I think the other piece of it is understanding that you need to expand beyond where you started. So, you know, at the beginning, we really thought that because we were so science backed, we would be targeting like a coastal elite type of mom, someone who's highly educated, shops at Whole Foods. And what we found when we grew is that actually the product was touching a really different segment of lives than we expected. Back when my phone number was actually the company's customer support number, I would get calls from a grandmother in Georgia who bought the product for her grandson because she felt like it really helped him in school and it made his life better.

22:03And one time she called me and was actually crying because she ran out of budget for the month. She was saving the last$30 in her social security so that she could buy this for her family every month because you felt like it was so impactful. And that really just taught me that, you know, our assumptions about who our customers are and what they want aren't true a lot of the time. And so, you know, especially for us, health is really a universal need. And so maybe we started out by appealing to, let's say, parents who are really struggling because their kids have, you know, attention challenges at school.

22:45But now maybe we're appealing to a different sort of parent who actually is comparing us against a broader set of vitamins where we're actually compelling them to switch from something like, you know, a smarty pants or an Ollie because they simply didn't understand the space and they didn't understand the science. And so expanding that messaging and that brand identity is going to be critical as we think about, okay, you know, these segments are where we got that initial start and that initial loyalty, but that's not what's going to get us, you know, the next million customers. What really appeals to them?

23:19Like how are other brands doing that? How are they speaking to them and how do we do that better?

23:29And yeah, and how do you, you know, evolve the brand reaching new customers without changing the brand too much while still maintaining those same brand values. Yeah, it's a lot to take on. And I think like looking into the future, how are you leaning on those initial set of values that you've set for first day when you're thinking about new products and different projects that you want to expand into? The core principle that we build all of our products on is we never want to release something just because people are buying it or just because competitors are doing it. And so it really has to be the intersection of three things.

24:13One is it has to solve a problem that really matters to families because there are some products out there that solve problems that families that you don't really care about. And then the second piece of it is it has to be clinically backed. We have to be able to feel comfortable putting our name on something that we feel like will really work. For example, apple cider vinegar gummies were very popular for a long time and actually still very popular now. We looked at the science because the space was growing so quickly and we frankly just couldn't justify it to ourselves because one, there weren't very many clinicals on it, even on just taking shots of apple cider vinegar itself.

24:55And two, in a gummy format, And another part of how we think about product design is basically compliance, right? The hardest thing about health, it isn't knowing that you need to be healthier because all of us already know that. Ideally, we would eat a lot of salads every day, but we don't. But it's actually how do you make that healthy habit as enjoyable as possible so that people can actually do it? Because if they can't do it, it doesn't matter how good the product is. And what we found was that when you try to put ACV into a gummy, you can't condense enough of it for it to actually maintain some of the areas that probably made it efficacious in some of the few studies that exist.

25:36And so when we evaluated that, that was actually vetoed based on, you know, the lens of clinical efficacy. And then the last thing is we actually have eight requirements that we put every product through to make sure that we can really stand behind the ingredients, what's in it, you know, the sugar levels, all of those things. And so in order for us to actually produce a product, it has to pass through all of those. Wow. Wow. And I totally get that because I feel like, especially looking at the amount of social media that talks about apple cider vinegar, it might be just like so easy to reach someone, but because it doesn't fit the efficacy and the values, you have to let some of those ideas go, which is a tough balance that you have to go through, I bet, for so many decisions that come up.

26:28That's completely true. And I think something that we've seen is while some of those companies that play on fads can grow really quickly for even, you know, let's say five plus years, if it doesn't work, consumers eventually stop taking it because consumers are smart. They're smarter than I think a lot of companies think they are. and if they're paying for a product where they ultimately feel like, okay, I actually don't know if it's doing anything for me and it's expensive and I have to go out of my way to buy it. Eventually that's no longer something they're willing to purchase. You can get someone to buy, I think almost anything once, but the quality and whether that product fills a need in their lives is what determines if they come back.

27:16And the longevity of brands is actually based on that loyalty over time. Well, I'm so glad that we have this conversation and I'm very much looking forward to all the ways that First Day will grow while keeping the values close to heart. So thank you so much for being here, Alice. Thank you so much. It's been really a pleasure and Shopify has been such a core part of our journey. That's Alice Lee, the founder and CEO of First Day. Shopify Masters is produced by Megan Coyle and Gogo Zoger. Our engineers are Miku Betlam and Matt Shorts. Our managing producer is Benjamin Gottlieb and I'm your host, Schwang Esershan.

27:57Check out our YouTube channel for more interviews. The link is in our description and we'll see you next time on Shopify Masters.