Ep 638: Life After the $260M Exit: Hiya's Adam Gillman on USANA, Target, and Going Global

0:00It's capitalizing upon the trust that we have built with our customers. We are a values-driven brand who takes every single thing that we do very, very seriously.

0:13Adam Gillman:Where were those biggest level-ups that you needed to experience to get to the exit? First and most important is figuring out the single SKU phase. So the idea behind the single SKU phase is... Are there any decisions you can think of that ended up creating a ton of enterprise value, but at the time weren't the biggest impact? The number one is focusing on...

0:45Adam Gillman:Most brands treat brand protection as a legal expense. EskGo says that's backwards. If unauthorized sellers are undercutting you on Amazon, Walmart, and TikTok shop, that revenue is already walking out of your business, and plugging those holes is cheaper than buying new customers to replace it. I had their founder Mario on the pod recently, and it was eye-opening. If you're a brand over 5 million a year, by their math you're losing 15-25 % of your marketplace sales to copycats and rogue sellers undercutting you. Esco will run you a free brand audit report. Their legal team maps your whole footprint, names the unauthorized sellers, and hands you the exact dollar figure you're losing right now.

1:23Adam Gillman:Back in under two business days with no sales pitch. If you're clean, they'll tell it to you straight. They say one supplement brand they worked with was down$162 ,000 a month to foreign infringers and they helped claw back$131 ,000 of it. Grab your free brand audit report at esqgo.com slash free dash audit. That's esqgo.com slash free dash audit. The links in the show notes. I want to thank you for taking the time to come on the D2C podcast today. I've been following your story with Haya and as a father, always looking for great vitamin options for my child. So that's how I kind of first came across what you're doing there.

2:05Adam Gillman:and then just your story of your incredible D2C exit that happened in 2024. Is that right? Yeah. Very end of 2024. And you're still leading the company, correct? Yes. Me and my co-founder, Darren, are both still at the helm. Very cool. What's changed building the company for owner operators and then exiting? What are some of the biggest things that have changed for Haya and for your role there? Um, so the biggest thing that's changed has been figuring out the next level of growth, right? Just like anything in life, in business, I have a saying I say all the time, which is what got us here won't get us there.

2:48And we built an incredible DTC first business and what I believe to be the number one brand in the category. We are now in this very important transition period where we're figuring out how to capitalize upon this brand that we've built and spread the mission to more people through different channels, new products, and new markets.

3:17Adam Gillman:Very cool. What's the biggest, like, I guess you probably had a lot of those trenches in a way of that idea of like, what brought you here is not what's going to get you there. Where were those biggest sort of like level ups that you needed to experience to get to the exit maybe, but even before you exited, what were those big growth trenches? The first and most important is figuring out what I refer to as the single skew phase. So the idea behind the single skew phase is you want to make sure that you have a use case and marketing message that is resonant with a lot of customers at favorable acquisition and unit economics.

4:06So that was the first and not hardest, but most important step. And figuring that out was the first kind of hurdle, if you will. from there you start to expand into becoming a multi-skew brand and when you're in the phase of being a multi-skew brand it's figuring out the right acquisition strategies to make sure that what you're doing is accretive rather than cannibalistic for lack of a better description Third, and it didn't necessarily happen in this order, is marketing channels, figuring out how to continue to scale with rising CACs. I do believe it's generally a rule that your most efficient acquisition economics are going to come in the earlier days.

5:01The larger reach that you're trying to have, the more that your CAC is going to go up. And it took a lot of tinkering, both from a product strategy standpoint and marketing

5:14Adam Gillman:strategy standpoint, to make sure that we were set up for success as we continue to grow and reach more customers. And that would be a balance of retention and acquisition, I imagine, too. your owned audience, making sure you're maximizing them through email, SMS, and additional products, I guess. And was that one of the main levers you sort of pulled when it came to combating rising CACs and continuing to scale? Yes, without a doubt. So our LTV numbers are very strong. And the main lever that we pulled upon was getting our existing customers to buy more products, as well as using new products to reach the customers that did not resonate with the products that we had previously.

6:05From a retention standpoint, we are and always have been a subscription-first business. So the beauty of subscription-focused business models is, yes, you do have to account for your churn, but in terms of mapping out from a financial standpoint what your financials are going to look like, it's very easy to do when you are a subscription-first business in comparison to somebody who's relying on one-time purchases and all the different outreach tactics to get somebody to come back and buy more. So for that reason, we were most focused on product expansion and what we could do to get our customers to want to stay with us over a longer period of time.

6:56Adam Gillman:Just a quick one before we get back into it. I want to know how deep are you planning to discount this Q4? Most brands are guessing. So we're building a benchmark report called Beyond the Discount. If you run a D2C brand, we want your data. The survey takes five minutes and your answers stay confidential. Every brand operator who completes it is entered to win a thousand dollar gift card. We're expecting a few hundred entries. So these are probably the best odds at a grand you'll ever see. The link to the report is in the show notes. It closes August 23rd and we award the prize August 24th. All right, back to the show.

7:32Adam Gillman:So you launched with a multivitamin during the single SKU phase, it was a multivitamin that you launched with? Yes, we launched with our multivitamin in March 2020. And that was our only SKU for the first two and a half years of our business. From there, we expanded into a probiotic and then ultimately a sleep support product. And then beyond that, we started releasing products on a pretty rapid and regular cadence, anywhere from three to six months, we would come out with something new. But those first two and a half years, we're really oriented around that single SKU phase. And then when you introduce new products to a subscription, is it a matter of getting them onto new subscriptions where it's like, okay, you've got a sleep product subscription as well?

8:21Adam Gillman:Or were you integrating the products into the existing subscription? That's what I was saying earlier is it's a combination of both, right? So first and foremost, it's capitalizing upon the trust that we have built with our customers. We are a values-driven brand who takes every single thing that we do very, very seriously. We're focused on using best-in-class ingredients. We're focused on efficacy. And we're focused on educating our customers so that they understand how to make better decisions for their family's health. That's not an easy thing to do. It's very hard. but when you do it, your customers are going to feel comfortable expanding the extent to which they are investing in your brand as it relates to solving the different problems that their children are facing in their life's journey, right?

9:19That's a very big component of it. The second component of it is every family's needs are different. Every child's needs are different. A child could be a wonderful eater and is very well nourished and eats their fruits and their veggies and balanced meals and isn't necessarily really in need of a product to fill the gaps like a multivitamin is about. But they could have a really hard time going to the bathroom. They could have a really hard time getting healthy sleep. So that's where meeting the customer where they are is a big part of that SKU expansion strategy. So it's a combination of new offerings to existing customers and new offerings for new customers that either already knew about you, but for whatever reason, didn't pull the trigger because they didn't need that product or they didn't know about you, but you're reaching them in a way that's more relevant to what their needs are.

10:13Adam Gillman:And when it comes to the sort of storytelling or the product education, the product category education, I imagine in the case of a vitamin, it's about absorption and about the quality of the ingredients you're using, the efficacy and the absorption that you actually get from these good products versus some of the lower quality ones. Where did that kind of education, where did you basically find the best connection for that kind of education? Was that mainly through email drips and retention after the fact? No, it was in our more top of funnel oriented strategies. So out the gate, we came swinging at the existing players in the space, which at the time was very overly indexed towards the gummy form factor.

10:57And there's a lot of issues with gummies as a vessel for vitamins, most of which people are not educated about. One of the biggest problems is deterioration of the vitamin content itself because of how porous they are and how easily they absorb air, which effectively kills a lot of vitamin and mineral content in supplements, which is why most of the products we take as adults are encapsulated in some form factor. The other issue, and this is the one that we led with the most, was sugar content. Our Our belief system has always been that we believe there's kind of a sugar crisis in this country.

11:45We now know that since the 80s and 90s where there was this big push for nonfat products and what the cost of that was, which was oftentimes filling things with sugar, which might not have fat but are very caloric and very bad for the body and ultimately turn into fat and cause a whole other range of health issues that we could spend hours talking about in and of itself. So we really focused on sugar content as the enemy, if you will, and educating people around. Our kids are not having issues getting enough sugar. That's one thing we could probably all agree on. So the fact that one thing that's supposed to be good is covered in sugar and is basically candy in disguise was a big part of what we messaged.

12:37Adam Gillman:Do you blame Mary Poppins for her line, a spoonful of sugar helps the medicine go down? What was she even thinking? I've never thought of that before, but I guess Mary Poppins is the problem. I'm glad we've put our finger on the issue here. So what do you sweeten the vitamins with? It's different by product, but monk fruit was a big thing that we focused on along with a lot of other no calorie natural sweeteners. Here's a question. If you had to build another$100 million company tomorrow, are there any parts of the Haya playbook that you would intentionally not repeat? I think it's a lot easier with higher AOV products to build businesses with more favorable unit economics.

13:22That being said, there's a trade-off, right? The higher the purchase price, the longer the purchase decision typically takes. but for me especially having such an acute understanding of what the acquisition environment looks like in meta today and a lot of other channels cacks are very high um i'm sure most

13:45Adam Gillman:companies that you speak to talk about that and the best cure for a high cack is a high aov interesting are there other areas that you think are sort of ripe for innovation in that vein in that higher AOV vein? Ripe for innovation. Can you be more specific? Just sort of like, I think you take vitamins in a way, you look at that category and you innovated, right? You innovated the sugar content issue. The form factor of your product too, the packaging is very unique and probably stands out quite a bit. Are there other categories that you think are that you could do the high of vitamin play a little bit for?

14:24generally speaking what was so core to our success for that brand was the fact that this is a product that made a lot of sense for it to be taken on a daily basis and fulfilled on a monthly basis and therefore subscription didn't feel like an afterthought it felt like a byproduct of what it was to properly make use of the product that's effectively a long-winded way of saying i'm a massive fan of subscription-first business models. But with a very important caveat, and this is what a lot of people speak to me about when they ask me about Haya, is

15:05Adam Gillman:you guys built such a wonderful subscription-based business. How do we do the same thing? The answer is, well, it needs to make abundant sense as a subscription-oriented product, which means it needs to be something that they're taking on some type of routine cadence and believe that it makes sense for them to be taking it on a routine cadence. So a makeup brand that wants to have a subscription-oriented product, somewhat logical. Skincare, where it's part of a daily routine, much more logical. Those are the areas where I'm typically looking first. Is this something that can logically be structured around the consumer making use of it on a routine cadence where they're going to want to and need to refill it so that you can have a recurring revenue business model.

16:00Adam Gillman:You can't kind of tack it on there, just say, you know, add a subscription to it. If it doesn't actually make the product experience better with vitamins, it is, you know, that's really the whole value of vitamins is that you take them over time, I guess, right? They need to be taken over time. And you generally speaking, don't see the effects until you are taking them for an extended period of time. Compared to medicinal products, right, where it's very, I take the pill, I feel better type of interaction and the window is a lot shorter. It's either immediate or a matter of days or weeks. When it comes to supplements and wellness, you need to do it over an extended period of time in order to get the benefits.

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17:55Adam Gillman:These channels are only getting pricier and thinking our numbers are fine is costing your brand more and more by the day. Stop benchmarking against your own data and start benchmarking against real data from other brands. Go to triplewhale.com slash benchmarks and see how you stack up. Looking back on the business, are there any decisions you can think of that ended up creating a ton of enterprise value, but maybe at the time weren't the biggest impact on your KPI or your CAC at the time? The number one is focusing on your brand. Most people today are hyper-focused on performance and either don't know how or don't think they need to build a brand that stands for something through the customer's eyes and through their hearts, right?

18:46So eyes being visually appealing, hearts being their messaging, their values resonate with me. If this were a person, This is somebody I'd want in my life, right? And where the real beauty occurs is when you do both. And what we made a decision on very early was we are going to build a beautiful brand experience so that customers are wowed by that package coming in the mail. And what we did there, it's not terribly complicated, right? We put together a simple, more premium bottle than your standard plastic tub, which is how most products are sold. And we added a decorative experience and sticker pack to that package so that it was something that was very different.

19:42It was something where the child was naturally drawn to it and they were interacting with something that was healthy in a way that felt more natural to them, i.e. through play. And because it turned into basically an art project of a child, it was something the parent was proud to put on their counter. I don't know very many supplement brands that you want on your counter versus inside of the cabinet. And we were always focused on, we want this to sit on your counter, not inside of your cabinet. That was the most important thing that we did.

20:16Adam Gillman:And that really answers the eyes piece of it. What else did you do for the heart piece of it that you mentioned? like really helping people have a connection to the product? I think that the most important and most impactful thing was education, right? We were focused on providing value to parents, regardless of whether or not they ended up purchasing our product. So we knew, and I think this gap has closed a lot over the past five years, thankfully, but we knew that parents were just misinformed. Parents did not have enough information to make educated decisions about their children's health.

20:51And while there's a lot of overlap in terms of the things that are good for adults and work for adults, there's a lot of areas that aren't. And there's a lot of areas that are actually counter to what makes sense and is, generally speaking, the right direction to go in for adults. and focusing on providing that value and educating the end consumer around it, knowing that we weren't asking for anything from them, we were, again, just trying to provide value, is the type of interaction that I think naturally resonates with all people. We all appreciate when somebody does something for us, not expecting something in return.

21:30And I think that's just a solid value for human beings to have. And when people do that for you, you remember it.

21:38Adam Gillman:And it's anytime you can change someone's frame on a product too, right? Like you were mentioning sugar being the bad guy or whatever in how you market it or lack of absorption or the air issue that you mentioned. So I think it always helps to have the reframing of a category. And if you're the one that helps them reframe, that's going to create affinity for you, right? Completely. Are there any beliefs that you had going from zero to like, say, 10 million that might have held you back post 100 million? Not that I can think of, but my inclination in terms of how to respond to that question is we were never really focused on that, right?

22:20We weren't focused on we need to get to X. we were focused on how do we build more compelling products that have more staying power that people want to use over a more extended period of time? And how do we message that in a way where customers understand why we are the right decision for them to make? It was a really obsessive process for us to always be looking at that. And the byproduct was higher revenue, extremely rapid growth. A different way of saying it is focusing on the inputs rather than the outputs.

22:58Adam Gillman:What were the biggest growth years and what drove that growth? Was it meta ads? Was it just getting really good at meta ads to start? So our biggest growth years were 2023 through 2025. We had extended periods where we were growing 25 % month over month. And we had a pretty diverse marketing strategy. I would say that the most important element of what we did was not necessarily where the most dollars were, but it was really oriented around influencer, right? And today that doesn't sound that novel, right? Everybody knows how important it is. Most large brands or even upstart brands know that it's so important that they need in-house teams oriented around it.

23:45That wasn't really a thing six years ago, or only certain companies were paying attention to it six years ago. And by focusing on the other voices that were authoritative on the categories that we were playing in and building trust with them so that they could pass that trust onto their audience was really, really powerful. At the same time, it's very hard to do at scale and over time. So we had to throw a lot against the wall and spend a lot of money on experimentation. And then whenever we found winning audiences and winning creators, developing deep and integrated partnerships with them so we could work with them over extended periods of time.

24:34We have a lot of influencers that we've been working with for three, four years. And that is kind of the backbone of everything else that we did because it supported our paid media strategies. It supported our podcast and newsletter strategies in that not only were people reading the sales pitch oriented, reading or watching or listening to the sales pitch oriented side of our marketing message, they were also hearing about it in the ether in the community square, which today is social media.

25:11Adam Gillman:How important have, so I'm just looking on your page now, you've got the Barbie partnership, a Hot Wheels partnership. How important have those sort of brand partnerships been to the brand's growth? They've been important. Parents in particular love nostalgic brands that they remember from when they were children that they can then share with their children. And it's not just Barbie and Hot Wheels. We also have an integrated partnership with Disney. And it's been really powerful for us. And it's also a really fun kind of creative moment, right? And that because of these unique packaging concepts that we're creating in partnership with these properties, a lot of existing customers would literally repurchase what they already had just because they wanted to have it because they loved the look of it.

26:00Adam Gillman:And the stickers really aid with that as well. It just becomes like an extensible, like it sort of, it makes the partnership have even more impact in a way when you're able to have this sticker aspect be part of the product experience, really personalizes it for the person who owns it. Exactly. So when we did a partnership, when you look at most Disney implementations of licensing in the wellness space, it's basically just an image of some type of Disney property on their existing package. We wanted to recreate the whole world and the whole experience every time we did it. So it's not just the bottle was different.

26:44Every single aspect of that customer experience when you bought Barbie was Barbie oriented. When you bought the Marvel Avengers pack, every single aspect was oriented around being a Marvel Avenger. And not only did our partners love it, but the parents loved it as well. I oftentimes talk about the parents when it comes to the purchase itself because we play in an industry where our customer is not our consumer, right? The person making the purchase is the parent because they think it's cute and they think their child will enjoy it. So it's a delicate balance you have to play to make sure that you're appealing to both just the right amount.