#224 - The Rise of Neuro Gum with Kent Yoshimura

26:35And when you look at like, there's protein in everything now. I think that's like, it's almost like a meme at this point. But there are things in creatine as well, which has been around for like 20 plus years. It's like, what are these things that have been effective, but we haven't found the full potential of them yet, including caffeine and L-T-E-N as a combination which we use? And how do we apply that into different moments in our day versus the new miracle supplement that they're going to spend all this money on to force it into your day? You know, I go to supplies. I was only there for like maybe an hour, this most recent one, but it seems like the entire industry is moving towards that as well.

27:12Like you got the ashwagandha and KSM is doing their like new shalajit or whatever. They're trying to push some new thing. But outside of that, like everyone I saw was still existing ingredients that you know are healthy for you, but how are you reformatting it in a way that applies to your consumer? Like magnesium lotion for kids. Yeah, yeah, exactly. Or fish oil, but from kelp, you know, whatever it is. Yeah, that's pretty interesting to think about. Because I mean, yeah, I definitely feel like just new, okay, creatine, yeah, which has been around forever. And it was that kind of stuff that was, yeah, like only the gym bros used it when we were in high school, and we were all kind of afraid of it.

27:49And I remember that South Park episode where Cartman just starts taking a bunch of it, but I don't think he's working out. And he just keeps going, beefcake! It's a great episode. And like, what is it? But like this year, I also started taking creatine. And just, I don't know, honestly, I'm not that good at science, but for me, it feels like it's actually pretty effective. Like I've gotten a lot stronger because of it. I don't think I could feel cognitive effects of it, which I know are like people are talking about more now. Yeah, but you had to take like 20, 25 grams of it, which is an insane amount.

28:20Yeah, I don't know about that stuff. But yeah, I mean, I see like just people talking about that stuff in new ways. Yeah, pretty interesting to see how it'll all make its way into, you know, food and beverage versus how much kind of like... You see all the creatine drinks that supply Side West this year? I feel like they're everywhere. Yeah, which is, that stuff is pretty interesting to me too because creatine, like you can look at these charts about ingredients in their four-year CAGR that are included in, you know, food and beverage kind of stuff and like the penetration of it in different categories.

28:47creatine is very under penetrated compared to other ingredients that I hear about at that level. Like the stuff that it's in is not that like list creatine's ingredients has not yet grown like crazy. It's not in so much stuff, but it is talked about a lot by influencers that, you know, like a lot of TikTok hashtags on it. And a lot of people that I know are taking it, but they're taking it in supplement form. They're not necessarily like, I know it's coming in cereals and all this other stuff, but also there's kind of this like low limit for your daily recommended amount of it if we're not, unless we're talking about that like cognitive side where it's like, yeah, you can just have this in a clear tasteless form in the morning and just put it in whatever.

29:25Yeah. You don't need to go buy like a Gatorade with creatine in it or whatever. Because from what I understand, it's not helpful to have like more and more creatine every day. You just like hit that low amount and that's what you're good. Unlike protein where everyone's like, I just need more. I need it in everything. I need it in the air that I breathe now. Like I need to have as much protein as possible. We'll be right back. are you going to crush it on amazon this year it's such an important channel but it's so hard to do alone and most agencies are a total ripoff we can't afford five thousand dollars a month and a commission on our sales they just don't get it that's why i love our partners at daybreak they are full service meaning they do the creative work the listings the logistics and of course all the ads all with the most reasonable retainer out there i work with them personally i'm so grateful we have such a good partner to recommend out to you our community they do evaluate your product first to see if it might be a fit.

30:15So if you want them to have a look, email them startupcpg at daybreak.agency and they'll do a free audit for you. Good luck, everyone.

30:26I wonder if like companies are realizing outside of the creatine gummies where you have to take like an insane amount of them because the load size that the limiting factor on gummies, it's like how much incremental revenue can you really make by adding creatine to your product? And is it worth switching people over to that like the cereal i saw on like i forgot where it was it was like cpg wire or something but it's like 20 dollars a box it's so expensive for what it is and it's like i don't know if i'm gonna spend 10 20 dollars a box if like one scoop of creatine for me is like six cents you know for my daily intake yeah i don't know but i really am not an expert on this stuff but it is interesting and i will look forward to your upcoming creatine gum launch okay very interesting anyways obviously that's all just kind of broader supplement stuff but i mean just for me in general i see such heat coming in overall supplements i just feel like there's so much more awareness so much more interest from people in adding things into their routine which to me does feel like incremental but i guess we'll see where all of that stuff lands going forward so ken one thing i wanted to ask you because i know very little about e-commerce, honestly.

31:37In that Shark Tank pitch from 2020, you were talking about 20 to 30 % repeat rates on Amazon and your website, like people coming back to purchase, which I think is actually very good. Although it sounds like you're like, wait, what about the other people? Almost like in baseball, if you hit like 20, 30 % of the time, that's really good. Can you just explain for maybe other people who are at my low level of knowledge about this, what does that really mean? What is a good benchmark for something like that? Yeah, you know, I think it's like while the 20-30 % repeat customer rate is good, the way we look at it is how are we building a brand advocacy as a whole?

32:10And how are people who take our product, like how can we calculate back into them from an LTV to CAC ratio model as we continue to scale the business? So this is something that every econ company says, but there's different calculations for it. What is the payback period on the amount you're spending and how much are you willing to invest to make sure that customer, until that customer pays themselves back on that initial acquisition? Okay. So just to baseline that for everyone, like LTV, lifetime value of a customer, CAC, which is your customer acquisition cost. Basically, like you want LTV to be as high as possible, which means that when you get a consumer, they are coming back and purchasing you a bunch of times.

32:49And it also has to do with how much they actually buy. And then the customer acquisition cost is the cost of your marketing to actually get them to come and make a purchase. So basically, like the math has to work out whatever it is, whatever your repeat rate is, whatever your average order value is, and people coming back and how much they buy and how often they buy and everything. It just has to make sense for you overall as a kind of growth model. Yeah. But with that being said, you know, like, as the company's matured over the last five years, a lot of our focus has gone into new customer acquisition as a whole, beyond just LTV.

33:18So while the repeat customer rate is a good metric to go by, when it's too high, we know there's something wrong because it means we're not getting enough new customers. And the majority of our revenue is being built by just retargeting and retention. I'm sure you've read like how brands grow, but the biggest thing that they talk about on the majority of big brands being able to grow is incrementally building new customer acquisition through different channels by creating availability and creating level of positioning that allows them to go to where your product is available. So for us, TikTok was one of those, PR was always one of those media appearances.

33:57We still do obviously a lot of Facebook ads and things like that, but these last few years have been focused on how do we maximize availability for consumers that we're targeting so that we could get them at least once and then continue to grow our business that way. And then we could always retarget them as long as our brand equity continues to grow. You know, speaking of getting your product to be more available, I want to ask you about retail in a second. But just because at the level that you're at, you are one of the D2C Amazon kings that, you know, certainly of people that we've had on this podcast achieving the most success in that.

34:29Do you have any tips for early stage brands that are hoping to get on that same journey as Neuro, like really cool tactical stuff or strategy that you think might be interesting for brands to know about? Yeah. So a lot of people fall into the trap of giving all their money away to Facebook, Meta, Amazon. I think there's some crazy stat. 80 % of money being raised by VCs just end up back in those three companies. And for us, there's always like, how do you have more novel ways of making sure your brand equity stands out wherever you are? So that could be as simple as getting PR out into the world and educating consumers in like specific niche demographics that a product like yours exists.

35:13All the way to, I guess, pushing for Shark Tank, getting partners that are aligned with your vision so you can get that initial pop. And from there, how do you leverage that brand equity you built through someone that already has equity or a credibility source that has equity to continue amplifying your brand? And I don't know if that's like a direct answer on a tactical perspective, but it's something we've been able to leverage well to say hey neuro as this new product that requires education in a new format is taking over an already existing category of goods that have a similar effect but doing it in a better way and now you know i'm gonna keep quoting books but in crossing the chasm right like that's how you start crossing the chasm for a lot of these people getting them away from different resources getting them away from different categories and associating them more so with your brand itself.

36:08Yeah, I like that advice. I do wonder if everybody would have as much success with it because it seems like that definitely was the right strategy for you and you hit some things that probably drove tons of awareness with new segments of consumers that wouldn't have found out about you through other mediums. But I think the brand that you've built and the use cases you're talking about are very interesting to people. So that kind of PR stuff I feel like would be especially helpful. But there also are probably plenty of brands where like you're not going to get PR hits. What you're doing is not so novel and interesting.

36:41And you might just waste all the money on PR that you could have used just to acquire customers. I know. I totally agree. I think PR could go many different directions. We've experienced that before because there's no like attributable revenue directly to a PR hit. Right. But at the end of the day, it's like it goes so many different ways because I've also spoken on another podcast about is the main goal at the very beginning, getting exposure as much as possible. And then you focus on bottom of funnel stuff later, which is marketing one-on-one, I know. But it's like, if you could be top of mind for the majority of customers in whatever way it is, by for us, it was like redominated on TikTok.

37:20And that was our big top of funnel push over these last few years. Prior to that, it was media and the PR stuff we were just talking about. How are you then breaking down all the attributes of your product and positioning and the messaging and retargeting them in the right way so that you at least hit them on what they want when they want it? And that takes somewhat of a science. And for Facebook and a lot of these platforms, it's all algorithmically done for you. But there are ways to be able to target people at very specific moments as long as your positioning is on target, is hitting them at that exact moment.

37:56But yeah, it's always a bit of a dilemma. I think the thing that I hate seeing is like, I feel like for new founders, you've come up with this product and you're like, I need to get PR because everyone in the world, of course, is going to want to write about this. And when they do, everyone's going to want to buy it because this idea is so incredible. And I mean, honestly, most of the time, I'm like, all right, calm down. Like this, you're number like 38 on the list of 50 on BuzzFeed, yeah. Yeah. And like, even if that happens, I feel like your product is well-suited to that. People are going to find it intriguing and then they're probably going to want to try it.

38:27I don't think that's true about every product. I hope that people are honest with themselves or can try to be, because the PR person, like maybe they will be, but maybe they're just like, okay, great, pay my retainer. I'll get some hits. And like, they don't really know if it's going to sell through or what the impact is going to be for the business. And then, you know, you can also get plenty of awareness, but if it doesn't lead to sales, you may have a tough time raising money when you run out of that. Those funds. So anyways, good for everyone to keep that stuff in mind, but obviously it worked extremely well for you guys.

38:57You know, on a more boring front, like the way we operate our business from just an annual operating plan like system is what are the tempo moments that we could hit on a monthly basis or a quarterly basis, which like if you're an Amazon business, Prime Day is a pretty big day for you. So what are the plans that you're doing to activate around very specific moments throughout the year where you know you're going to get amplified exposure and spend and people are in that shopping moment that you're really tapping into that mindset. So I do think just like a pure business perspective, it's like, how are you planning against big activations throughout the year and really building your firepower for those times versus what I see a lot of like, and I did this myself, you know, everything feels important at the very beginning.

39:42And you feel like you need to do everything to get the exposure, to get all these audiences. But there are moments when people will buy And that is your opportunity to really start building at least one cohort that could expand into so much more, whatever activations that you do. I mean, you guys are getting to be a big brand. So it makes sense that you're thinking about it that way. I feel like that is how the pros do it. Like I worked at Mars Chocolate, had M &Ms, and they would have, you know, you'd have your kind of yearly calendar left to right. And then the big occasions like back to school, like Halloween, all that stuff.

40:15and then the big campaigns that were going to hit around them that needed to be reflected in everything that you're doing. You need to have the big commercial going on TV. You need to have your promotions lined up. You need to have your in-store displays that are going to hit around that time. But really like specific campaigns, I feel like you see the really sophisticated marketers do it that way. Obviously hard to do that as a small brand where you're just really even trying to like get a promotion to actually happen and be planned. But you're like the only person doing it. That's very good that you guys are thinking about it that way.

40:45That sounds really smart to build up those moments for you. So now I know like still you guys, just so much of your revenue and growth comes from online and TikTok and all that stuff. But I know you're also making big strides in retail. What has that been like for you? What are the learnings for you on that end? What are your goals? How do you think about it? Man, like, so you probably see with our packaging, I'm going to criticize ourself right now, but we're going through like a big branding exercise that is launching pretty soon. but our colors on our box are associated with our flavor so this you can imagine the scalability of that once you start expanding into more and more functions becomes impossible like it's going to get so convoluted so something you don't have to necessarily worry about when you have like an entire educational funnel and a flow on d2c but when you're going into retail the consumer needs to understand exactly what they're getting the second they see your product on the shelf and And having to re-approach the way we're activating on shelf, especially when we're not a household name yet, although we're getting there, is a pretty critical piece of how we had to rethink everything from a marketing perspective, a brand perspective, messaging perspective.

41:58That is interesting. You know, people who know a lot more about marketing than I do, which is most people, I'm not a big marketing expert, said to me at times like, yeah, it's hard for you to own a lot of colors as a brand. That can be really difficult. to even own more than like three colors for people to associate all those with your brand. But then you also see now some brands doing that, though. If you look at Poppy, for example, that really has a lot more colors, and that is kind of what defines them. And I mean, I agree with you about the colors and matching and stuff. And I mean, even like Orbit gum, right?

42:29You have the like pink one, you know, kind of more like bubble gum-ish flavor. And then like the green one, the mint. But I can see what you're talking about because you guys do have multiple product lines. You have the gum, the mint, and you have different package sizes and formats, and you have the pouch, and you have the stick packs. Like, I think with Poppy, it's a little bit easier because they could lean on their brand marks a little bit, and they have such strong brand blocks that they could own, even with all those colors, that you know that it's flavor-oriented. Because it's not like one drink is for energy and focus, and one drink is for probiotics or whatever it happens to be.

43:07I mean, they do like Poppy. I know Chris Hall and Stephen Ellsworth super well, but they're like a master class. And how do we own that shelf by dominating with the loudest colors possible versus someone like us would be how do we get our neuro blue as a brand block to stand out all together and like a school of fish mentality way? Yeah, again, it's not like they don't have different things that they have to communicate aside from the flavor. And you do because you've got your calm and clarity neuro mints, you've got your sleep and recharge mints, and then you have energy and focus mints. So it's not just about the flavor, it's also about the functionality that's different.

43:47And you really have to like kind of read the label to understand all those. So I know that that is a challenge and also can be like when you're demoing product and you're trying to hit people with the like two second line about what it is. Like you're like, no, no, I need like a second to explain all these different things to you. So I know how that goes. OK, so speaking of that retail, because, yeah, I worked at Mars and, you know, Mars Wrigley. They have all the gum space also. But like checkout, I was always really interested in just how competitive and expensive checkout is. this is something that probably is not so familiar for brands that aren't in checkout, but like that in checkout, when you negotiate your annual plan with a retailer, there might be a percentage of spend that you just have to give them for checkout space.

44:30Cause you know, they know they can sell that to a lot of people who are very interested in the high turns you can get from that part of the store. So what's it been like going and negotiating for that space? And also So the big boys, the big CPG legacy companies don't love people coming on their turf and taking share away. You know, a lot of like very aggressive salespeople trying to hold on to their bonuses there. What's that whole thing been like trying to get that space been really competitive? How people reacted? Yeah, I mean, we try to negotiate slotting fees into like ad fees. So being able to like, hey, we'll spend this much instead of like the slotting fees to make sure we retain our space.

45:07But I'm trying to remember what the retailer was. But we got cash lane there and we're doing 11 units per week per store, which is pretty freaking healthy, even at checkout. And we still got kicked out after three months. Somebody paid them a lot of money for that space. Might have been a corporate initiative. They might have even had like a bonus on kicking you out, like whoever that sales rep was that managed to buy that space off you. Isn't that crazy? There's definitely some mafia undertones in the checkout space. But, you know, thankfully with a lot of other partners that we have, like the convenience stores and things like that, I feel like it's less aggressive because the cash register checkout lane is a lot wider, a lot bigger.

45:51But once you get into grocery, I feel like it's just like a vicious, vicious space, which is funny because like that's not even where people really shop for gum, like in general. Oh, interesting that you say that. Those are like my memories of buying gum are always being like with my parents, at least as a kid, because a lot of I mean, maybe neuro gum isn't obviously as much of a kid product. But at least when I was buying like, yeah, go with my babysitter or my mom or something at the grocery store and like, oh, can I have some gum? You know, it is terrific impulse section. I mean, do you know Julia Adams?

46:20Which she does work at Mars Wrigley also. I don't know. I'm not sure, but they do have like 70 ,000 employees. Yeah, fair. She is on the marketing side, but, you know, she's an advisor of ours. And one of the things that she was talking about is like the biggest change that Mars Wrigley did that increased their revenues was just making their gun pack bigger. So instead of like a five pack, they made like a 24 pack. And so it's all about like how much space can you really start taking up in that impulse set and then pushing other people out to minimize their presence as much as possible. Yeah, that's what they say.

46:51If you can't beat them, buy their space, kick them out. Right. But you guys have a lot going in your favor. I also I remember seeing a clip of Joe Rogan talking about NeuroGum, right? Like this must have been an ad that got served up to me. But it was like him sitting with NeuroGum on his table during a podcast and talking about it. He's like, I don't know. I just have this and it gives me much more like energy or clarity or something. And I can do my job better. I can do better on my podcast and stuff. That must have been a huge moment for you guys. Yeah, I mean, funny enough. So Shark Tank happened.

47:25And then a few weeks later, Joe Rogan happened. So we were just seeding a bunch of people product. And, you know, I think we seeded Joe Rogan around like 2018 or something. We had no idea he was taking the product. And then out of nowhere, he started talking about it. And since that moment, he's probably mentioned us like 40 something times, just naturally, organically. And that's probably one of the most impactful things that's obviously ever happened to our business. That's amazing. Although it kind of makes me wonder how I can chew gum and podcast at the same time. because I feel like that would ever, I don't think anyone wants to hear me smacking around gum while I'm doing the audio here.

48:01My microphone, I think is too good, but he obviously is quite a big audience. So I guess he knows how to make that work. Yeah, it's funny though, because everything reaches a saturation point. And even with like the Joe, I think he mentioned this last weekend, you know, and we didn't see it, like a pop or anything. Okay. Well, what about like, I know you work with a lot of other people out there in that community and athletes and DJs, creators, all that. What's your strategy around all that? Yeah. So we have our brain pillars and how do any of these people overlap with our brain pillars while also building an incremental audience against that?

48:32So similar to what I was saying earlier, how do you get that core audience and then be able to cross the cabin just a little bit for certain parts of that cohort to that maybe taking other energy products and guiding them into your funnel? So with Steve Aoki, for example, we know the nightlife scene, the DJ scene is a bunch of people that, you know, want to stay up all night. So how do we position ourselves with him on a performance basis, but as people start taking it, they transfer it into their lifestyle habits. With Yuki Tsunoda, from a credibility standpoint, there's only 20 F1 drivers in the world.

49:06And that's like one of the most intensive sports for focus. So how do we gather that audience, apply really that positioning that he has to over and then, you know, drive incremental revenue growth it's funny because at at supply side i was visiting a booth of another company that does cognitive claims on stuff and they had an f1 simulator and like a data point like based off f1 drivers their performance per lap increased by 0.3 seconds or something which i mean would be substantial actually if you're a driver like you take any clicks of a second yeah but i guess yeah people do associate that with just like the highest levels of concentration and mental acuity exactly and like everything is just credibility game and how do you leverage that credibility game into whoever you're messaging to like we don't expect them to be f1 drivers you know or we're not expecting to target drivers necessarily but how do you back things into uh your brand messaging that you want to promote you know it's a funny thing like i've thought about caffeine especially and like why people take it and what is the thing that they're like hoping to feel more from and even i used to ask people who are drinking a Red Bull, like, hey, why do you drink that?

50:16And they're like, you know, for like energy. And then I would ask them like, OK, what in there do you think gives you the energy? And actually, a lot of them didn't even really know it had caffeine in it. They're just like, I don't know, like sugar. But yeah, the reason why people take that is pretty interesting. And then also like, how do you really verbalize the thing that they're trying to get to? And I feel like it's just this like mental clarity. Like they want to be more like themselves and less groggy and just more capable of like how they usually are, you know, and just not feel bad at all.

50:49What do you think? So what's funny is like we used to put 40 milligrams of caffeine more forward on our packaging, especially like if you go to like a Casey's, we're like people are definitely going to be more conscious about the caffeine amount that's in our products. And it was just a hypothesis that we want to test. We realized that no one knows exactly how much caffeine that they're taking across any of the products they take, but they know exactly how it makes them feel. So exactly to your point, it's like, as long as we can be energy and focus forward, and we have everything else backing that, like whether it's like the media activation, similar to what Red Bull does, or the claims that we have from like the scientific studies, that usually pushes 80 % of people towards trying our product more so than, hey, this is a, you know, it's a better deal than taking jet alert or no-dos.

51:38It's so interesting. And by the way, there are some products out there that have a lot of caffeine in them that you really don't know about. Like, you know, those buy the AI infused drinks or whatever. Okay. So nobody sued me for this. I don't think on the front it says anything. I don't believe it says on the front anything about caffeine. It just says like super antioxidant infusion or something like that. Guess how much caffeine is in one of those bottles? That has caffeine. Just guess. Like 120 milligrams? Okay. It's 80. Which that's a full cup of coffee, but like my sister would buy her kit.

52:12I was like, what? Did you look at the back of that? Well, do you remember the whole like a Panera Bread lemonade scandal? Like that was crazy. It's wild. It's a wild world out there. And it's like, oh, I feel like really good from this. this infusion. Like there's, yeah, that's caffeine. There's a lot. Yeah, it's caffeine. It's a cup of coffee. Yeah. Remember like Exeteran. You know, Exeteran has like 20 milligrams of caffeine per pill. Like that's what's helping your migraine go away most of the time. Even just knowing that makes me feel like it'll work better. All right. Yes. Let's get some of that.

52:42Let's do it. Get this headache gone. Okay. So just as we're wrapping up here, Kent, I'm very excited for you in this journey. I think just because like you guys just seem like such good guys. Everyone go watch the Shark Tank and just see like how lovely Kent and Ryan are as people like you just seem like some of the nicest people, honestly, in this industry, which, you know, so I don't know if you'll I feel like you're going to answer this question. Well, just really humbly, but I just want to know, what does it feel like when you were that person pitching on Shark Tank or even just in the early days before it was going that well to now at the point where you're running a hundred million dollar brand?

53:20What does that really feel like when you stop and think about it? I mean, the hardest part is to stop and think about it. Like, because it's funny because a lot of the conversations I have with early team members are always around. It's like the culture has remained, but everyone feels like we've gotten like more professional now. Like that's the word. They're like, wow, we're so professional now with everything that we do. And as I look back on Ryan and I's journey through all this, having an understanding for us that we don't know everything. as startup founders. And there's people that are way more experienced than us.

53:57And kind of honest about that, I think has helped us more than anything. And not really taking that fake until you make a route that a lot of people tell you to do. So I don't know, there's still so many things I don't know. And I lean on so many of my teammates that have way more experience than me. And awesome to not only like feel myself and the team leveling up, but really seeing, I guess the company as a whole, like adjusting to each other and leveling up in different ways. It's surreal. A lot of luck, obviously, as well. I like that answer a lot. It's a beautiful answer. And it wouldn't be the same for everybody.

54:32I think there are some people who should fake it till they make it like that might work for them. I feel like that very open, thoughtful, honest model works because that's who you are. And that like works really well for you. I just think it also ties back into this, like, really understand yourself and your strengths and how you like can leverage those. And that may be I don't know, I'm like a big energy, positive, hype kind of guy. And that's a thing that I really try to lean into and I feel like has really helped me to grow the things that I've been trying to grow. Everyone has their style and their strategy.

55:04And I feel like a lot of life is learning how to really lean into that and use it in a really authentic way. All right. I'm going to close us out here, Kent. But I really want to thank you for coming on the podcast. I have really enjoyed this discussion and learned a lot. And do you mind just as we close out here, what's a great way for everybody to support Neuro and follow along with you guys in your journey? Yeah, find us on Instagram and TikTok at NeuroGum, N-E-U-R-O-G-U-M. And you see us in stores, make sure you buy us so we can get our velocities up. That's right. All right. Get them, find them in that checkout space.

55:41It cost them some money. So make sure, get in there. All right, cool. Thank you so much, Kent. I look forward to having you back in the future and we can hear more about this retail journey that you guys are now on as well. All right. Thanks a lot. Hope everyone enjoyed. Bye, everyone. All right, everybody. Thank you so much for listening to our podcast. If you loved it, I would so appreciate it if you could leave us a review. You could do it right now. If you're an Apple podcast, you can scroll to the bottom of our Startup CPG podcast page and click on write a review. Leave your company name in there.

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