Growing Lean
Growing Lean is aimed at helping entrepreneurs learn from other successful business owners who have successfully grown their business against all odds. Join our discussion to share the wealth of knowledge from people who have been in the trenches growing lean startups.
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Growing Lean
From Management Consultant to CEO: Anu Naithani's Journey to Transforming Oats into a Successful Product Line
Have you ever wondered how a single ingredient can revolutionize an entire product line? This thought-provoking question is what drove our guest, Anu Naithani, to transform humble oats into a range of nutrient-enriched products. As the co-founder and CEO of Oath Oats, Anu takes us through a captivating journey from her days as a management consultant to becoming a successful entrepreneur. We talk about her collaboration with co-founder Yuma Najawad and how they leveraged Yuma's enormous online following to give Oath Oats a head start in the market. Anu shares the impressive metrics of their success which include a 35% return customer rate and over 200,000 followers on Instagram.
Anu doesn't shy away from discussing the challenges he's faced. Breaking into a new market isn't easy, but with the right distribution partner, he's managed to navigate this new terrain successfully. We delve into the nuts and bolts of his business model, transitioning from a direct to customer only company to a blend of direct to customer and wholesale. If you're curious about how to understand unit economics and hire the right experts to fill knowledge gaps, Anu's insights will be invaluable. We also discuss his unique strategies for staying ahead of the competition, his plans for future collaborations with nonprofits, and how he's making a positive contribution to society. This discussion with Anu Naithani is not just about his entrepreneurial journey, but also about his mission to make a positive impact. Tune in to hear more about his inspiring journey.
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Welcome back to the growing lean podcast sponsored by lean discovery group. This is your host, dylan Burke, also known as Dij, to be here with Anu Nethani, ceo and co-founder of Oath Oath. Welcome, anu, thanks for having me. I'm excited to be here. Yeah, I'm glad you are here. So, to get us started, can you tell us a little bit about your background and how it led you to where you are today, and then a little bit about the business that you're in?
Speaker 2:Yeah, I'd love to. So, as you heard, ceo of Oath. Oath, we're a brand new company. It's only been a little bit over six months since we launched the brand.
Speaker 2:My background is an interesting one. I started off as a management consultant early in my career. I always knew I wanted to be an entrepreneur, but I had no idea what I wanted to do. I was interested in two things at the time. This was one of them, food was the other. Had no experience in either of those industries, but it's interesting, I used to travel on a weekly basis as a consultant and I'd always keep oatmeal with me in my luggage.
Speaker 2:So as I was going through check-in, sometimes security would open up my luggage and they'd see oatmeal spilling out of my luggage. So I became kind of a running joke in the office. Long story short, I went on to start Oath, a company based around the one ingredient Oath. We started off really small, with three skews of overnight oats and essentially there was a product I used to make at home for myself all the time, and the goal was very simple create a product so people never feel like they have to skip breakfast again. And that's what we wanted to achieve with the product Fast forward.
Speaker 2:About eight months into the company, I started looking at raising funding and during that process, I came across who's now my co-founder.
Speaker 2:Her name is Yuma Najawad online she's known as Feel Good Foodie who had been working on a project very similar to the oatmeal company I'd already started.
Speaker 2:She has amassed a following of millions of people online and a lot of it has to do with her oat based recipes, but she makes healthy-ish recipes across the board with many ingredients.
Speaker 2:We decided about a year ago to join forces and build the brand together, so we came together. She acts as the marketing vessel for the brand, the content expert, because it's something that she's been doing for 10 plus years now, and she generates a ton of content for the brand that's new and exciting across a lot of platforms. She's active on YouTube, tiktok, instagram, everywhere, and I continue to be the CEO of the company and do what I do best, which is solve for scaling the company, understanding operations for a CPG business. We're predominantly DTC e-commerce right now, which is my area of expertise, but as we grow into retail and things like that, which we're just starting to dip our toe into, we have a great team that's on board that's helping out with that right now. So we're excited to be at the phases that we're in right now. We actually just kicked off a fundraising campaign, which is a crowd fundraising campaign, which we can get into later on as we chat today.
Speaker 1:Okay, amazing. And so you said you started about eight months ago. Right, so can you run us through the initial startup process? Okay, yeah, basically what you did, how you did it, you know it's inspired these people.
Speaker 2:We were really ambitious. So, you know, when you men, I came together, we were just like you have three SKUs right now that are amazing, but we had ideas for bars and granolas and things like that. So we were ambitious. We actually launched, relaunched the brand let's call it eight months ago with 12 SKUs. So you know a lot more than we were doing previously, but it's been great. So you know, we went through the product development process. We had a great manufacturer to bring us to the point of zero to one. We were able to launch all those SKUs.
Speaker 2:Our marketing plan was pretty heavily predicated on UMNA's following that she had online and you know their desire to get a product from her finally after so many years. So the marketing plan was was very highly, you know, based on that and as a D to C commerce first company, you know we obviously layered that with things like paid media, email marketing, google, seo, all that type of stuff, in order to make sure that when she's speaking to her audience, we're getting the best bang for our buck, sort of say. So that was kind of leading up to the launch. As we've launched the brand, the feedback has been amazing. The community has been amazing. You know, we've we've Accumulated a following on Instagram of over 200,000 people.
Speaker 2:We've had thousands of customers purchase our products already. We have a 35% return customer rate, which is, you know, phenomenal for a D to C e-commerce brand. You know more than one in every three people, and we continue to acquire new customers, but they they come back for more. We have subscription programs that people can get you know their favorite products and subscribe to them and automatically get it to their door every six weeks or eight weeks or however often they choose to, and we've now started to get significant interest from retailers as well.
Speaker 2:So we should be launching in our first national retailer here in the next two to three months, which would have over 70 stores across the US. So we're excited about that. I've always known to be a successful brand and in the CPG space, you need to do everything really well. You need to do your native website Well, amazon really well, wholesale, you know, and retail really well. So we're just the plan was always to phase things out. We're actually jumping into retail even sooner than we thought we would, but it just seems like such a lucrative part of the business that it makes sense for us to do that now.
Speaker 1:Okay, amazing, and we briefly spoke before we started recording about how low your custom acquisition cost is. So can we talk about how you achieve that with the greater economy?
Speaker 2:Yeah, yeah, so we're. You know there's other examples of this. There's early examples with George Clooney and Casamigos. There's newer examples with Mr Beast and Feastables, but we're seeing the creator economy, in terms of creator owned brands really start to take off.
Speaker 2:Now we double down on that, you know, as founder of the brand was, you know, number one and she has a great following. But as we saw that her organic content is essentially helping us acquire customers for free, we decided to double down on that with other creators. So now we have a roster of creators spanning fitness, lifestyle, food, you know, do it yourself home a lot of spaces on on the internet, and they are owners in our company. So they are equity holders in the business. We don't pay them per post or for a partnership or anything like that, but they're so bought into the company that they're willing to produce content for us and syndicate it across their platforms for free. So essentially, you know, I wouldn't call it free customer acquisition because these people are still equity holders in the company and that is valued at something. But it allows us, at a very small stage of a company, to work with very large creators that have massive audiences and acquire their customers for essentially nothing today.
Speaker 1:Okay, 100%, and do you plan on keeping it that way, or are you going to look into paid advertising?
Speaker 2:Yeah, we're still doing things like paid ads, but a lot of it has to do with retargeting, right? So if someone interacts with a creator that we work with but they don't actually go through the conversion process, we'll go back and we'll retarget them with the paid ad and make sure that you know we're in their minds and convincing them through that funnel again and eventually capture them as a customer. So we'll definitely continue to do things like paid advertising. But our dollar of paid advertising is taking us further than a traditional DTC company's paid advertising dollars taking them. So that's just kind of how I'll put it.
Speaker 2:Because of those creators, we will continue to pursue the creator strategy, probably continue adding creators to our rosters, especially as we launch new products, as you can imagine. You know our products right now are very family oriented but we have a very adjacent audience. That's a fitness heavy audience. So as we create you know we're working on a high protein version, high probiotic version of our overnight oats as we create new products that target new segments, we'll find new creators to fit that segment and make sure that we have the right target audience through that creator. So we'll definitely continue working in that manner. But as we enter new channels, like wholesale, for instance, we'll definitely reassess. You know what part of our entire revenue is made up by e-commerce and you know, put an effort into each channel accordingly.
Speaker 1:Okay, amazing. And what of the? What challenges have you faced bringing your product to markets and how have you overcome these challenges?
Speaker 2:A lot, man. You know we've. I said so. I alluded to this earlier. I said we were ambitious in launching 12 products.
Speaker 2:Sometimes, you know, hindsight is 2020, I think we should have started a little bit smaller a number of skews the more skews you have, the more potential errors you have in production, the more logistical errors that you have in order fulfillment. When a product goes out to a customer, it just adds the complexity of the business. So, as we thought about, you know, the products that we have today and that we launched with, a big challenge was, you know, production issues. We had one or two skews that had quality control issues in production, whereas if we had launched a smaller number, we probably wouldn't have faced that, because we would have been able to put a lot more rigor around a smaller number of skews. So you know, those were things that were issues, but we've learned through them. Now we found the right manufacturing partners to make sure that we don't face those in the future, or invested in our current manufacturing partners to make sure they have the right you know, call it equipment or whatever it's required to make sure that production issues like that aren't taking place.
Speaker 2:So you know that was on the I'll call it more of the operational side, but we've also had growing pains where you know we've alluded to this before as well that we entered an environment that is, right now, so capital constrained from funding and venture capitalist perspective that we weren't getting a lot of the time's valuations for the company as we were raising funding that we wanted to. The valuations, you know, to fund the business in early 2022 were amazing, but 2023 has been really difficult from a fundraising perspective and it's why we decided to crowdfund this round of fundraising. We're using a platform called Start Engine, which is great because it allows people like you and I you know, the average person, non accredited investor to invest in a company, for for us it's as little as $350 and we knew our community is so strong that we'd see people pouring into that, and we've. It's been only two days and we've raised a little bit over $30,000 now, so it feels like it's going in the right direction, but I don't want to speak too soon or, james, anything.
Speaker 1:No, definitely sounds like you're on the right track and I'm excited to see where it comes. Thank you, sorry where it goes. Do you think your products will ever be available in South Africa?
Speaker 2:I hope so. My goal has always been to have the products available everywhere. It's easier said than done, because you want to tap out one market before you start figuring out the logistical and investment required to expand into a new market For us in the very immediate future, and I mean in the next like 60 days. Canada is on the roadmap. I'm Canadian, so I've always wanted to make sure that our products are available in Canada. We wanted to launch in Canada on day one and I was pushing for that, so I was a little bit bummed out when we couldn't. So that's first on the roadmap. But the nice thing is and people contact us about this every day is there's companies now that you can work through that manage all of your logistical expansion from geography to geography. So it's not, like you know, we would have to open up a new warehouse or an office in South Africa or anywhere else in order for us to expand into the region. It's just finding the right distribution partner to do it. So long answer to your question. I'd love to be everywhere.
Speaker 1:Okay, 100%. I think that's a great goal to have, yeah, and so what for you and your business? What are your metrics of success? How do you measure that? Obviously, besides revenue and profit margins, what are your metrics of success?
Speaker 2:Yeah, that's a good question. So I mean I won't go through your normal DTC metrics like, obviously, customer lifetime value, average order value, things like that are all important. Out of the typical metrics, like some of the ones that I just mentioned, for me LTV and return customer rate is the most important. We're not necessarily profitable on a single order. So if you come to our website today and you order one time, like yeah, we might make a few bucks off of you, just where our margins are and shipping costs and everything like that. So where it really becomes profitable for us as a customer is if we spend a little bit of money acquiring you today and you become a customer that stays with us for the next two or three years because you love our products so much. So for me the LTV is really important. And then obviously what plays into LTV is average order values. The more we can get you to spend, sort of say, the more we can get you to love our products, the more you know you can be a parent and feed those products to your two kids, the more you're going to go through and the more you're going to order, right? So those to me are really important.
Speaker 2:And then I have, you know, some. We have to now think about shareholders and things like that. So for me, to make sure that our shareholders are satisfied and we're moving in the right direction as we go through capital raises and increase valuation and every raise is super important for me, and that's that's kind of more of an internal metric. And then the last thing is, I think just our people in general and this isn't necessarily a metric, but just just something that I think, as a CEO of the business and now we have over 10 employees kind of stays in the back of my mind is to make sure that people are feeling empowered to make decisions that are, you know, being compensated more on an annual basis as the business continues to grow and things like that. So that is really important. We're actually just about to start working with a nonprofit that delivers healthy package foods to American homes that are currently in food, and a food desert is a place that just, you know, income wise or you know radius wise isn't have access to healthy food.
Speaker 2:So that's a partner we're excited to work with, because one of the reasons we picked oath was because we wanted the business to be more than just about serving customers. We wanted the business to be about serving people we normally wouldn't be able to because of, you know, cost as a barrier to entry of our products.
Speaker 1:Okay, that's, that's great. I love that. And I was just thinking also, what differentiates you guys from, from your competitors? And the reason I asked is because, in terms of consumer brands, I mean create a creator brands like Feastables, for example. I've heard that Feastables obviously doing really well because Jimmy Donaldson has a massive, a massive following and it's estimated that is revenue is just going to increase for the next five years. But I've been reading articles about it that his products not too different from Hershey's in terms of taste. It's just his brand that's getting it out there. So once that initial like hype plays out, there's been estimates that that his revenue is going to drop. So that's what my thinking is with creator brands like, like this. So what sets you apart and how you're going to stay on top of things?
Speaker 2:Yeah, good question, and I'll use, you know, feast of Walls as an example. Feast of Walls is really attached to Jimmy. You know they. Every product has his brand on it. The website is all about him. His collaborations on specific products are based on, you know, other streamers or YouTubers that he collaborates with and things like that.
Speaker 2:We created a brand that was kind of standalone from all of our creators. If you go on our website, we have a page where we talk about Yumna, but our product brand, our product name, our product packaging has nothing related to any of the creators that we had in the mix. So we wanted to make sure that when we create a brand, it can stand alone, regardless of creators, regardless of anyone. That's a part of the company. So that's like the first point, just to address the creator perspective and how we continue and wish to continue growing.
Speaker 2:Your first question around product and differentiation. There's a lot of overnight oats, granolas, bars and things out there, so we entered a very competitive space, but when we created our products, we were really diligent in the types of ingredients that we use. So you know, you see products out there that are masked as healthy, but a lot of times they contain sugars and they contain other things like that. All of our products are naturally sweetened, so we use things like dates and maple syrup that are lower on the glycemic index. So what you're getting in terms of caloric rich content is really good from a nutritional perspective from our products, versus what you'd see as other products on the shelves. Now it's a difficult thing to communicate that, but we try our best to do it. In addition to that, some of the products that we're working on right now are going to be truly unique in the market. You know, our overnight oats are already kind of unique. It's a dry mix of overnight oats that you just cold, soak in milk overnight and they're already flavored, so you don't need to add any of your own ingredients or anything like that. So it's super quick, easy to make and easy to consume.
Speaker 2:We're going to be going with let's call it a nutrient enriched version of those overnight oats. Essentially, what we want to do is figure out what are the nutrients that, for now, americans, or people in general, are most efficient in. Vitamin D is a big one. Omega 3 is a big one. Probiotics is a big one.
Speaker 2:I want to display some of the pills that people have to take in the morning and replace it with a whole food. So if someone can have an overnight oats batch that's made by us, that has all the vitamin D that they need in a day, all the Omega 3s that they need in a day and all the probiotics that they need in a day, and they don't have to reach into a cupboard and take four or five pills in the morning in order to get those nutrients, that's what I would love to do. It gets us into a market and a space where we're competing against supplement brands as well, because we're trying to displace them, but it also allows people to feel like they're eating a whole food and getting the nutrients that they need from it, rather than having to worry about a bunch of different supplements.
Speaker 1:Okay, 100%. Yeah, that's great. It's not such an awesome product and I love your belief in it. I honestly think it's going to do well and I'm hoping it does well.
Speaker 2:I appreciate it. It's very exciting. Thank you.
Speaker 1:Thank you.
Speaker 2:Yeah, so one of the biggest changes we've already seen is that during COVID, people were getting a lot more used to shopping online rather than in store, so it's why we saw the birth of many D to C only companies. Now we're seeing a shift away from that a little bit, where people are moving back in store shopping as well rather than just online, which is why D to C only companies aren't really doing that well anymore. They're not profitable. They may be able to grow revenue well and you know we're talking about festivals during this call. They started off D to C because of Jimmy's audience, but now feastables is revenue is 95% plus in store in target 711, walmart and places like that rather than online. So that's a big shift. I think you know majority of D to C companies can't thrive only being a D to C business. They have to meet the customer where they are or where they want to be met, whether it's Amazon, at a local grocery store or on their website. So that's a big shift in the industry and I think that's going to kind of be how the industry operates over the next few years.
Speaker 2:For sure, operationally and obviously I think about this as an executive Growing top line revenue isn't effective enough now as a business, both in order to raise capital and to be a successful company. You know we used to see VCs, you know, part with a ton of capital just because of very aggressive revenue goals even though profitability was negative for several years. Now, especially and I can only really speak to the CPG space in the CPG space the requirements for capital raising, gross margin requirements and EBITDA requirements are really really really strong. So you know you have to be a positive or have to have a line to profitability relatively quickly as a brand, whereas previously you didn't. So I think one on the customer segment, you know, around D to C and wholesale, and two operationally and raising capital. Those are the two biggest shifts I've seen over the past six months and I think is going to continue, over the past year, over the next year or two, that are going to impact companies in this space.
Speaker 1:Okay, 100%. I'd love to continue chatting, but we are running out of time here. But before we yeah, before we hop off, what advice would you give to other business owners looking to succeed in your industry? Maybe not necessarily food, but like direct to consumer products or that type of thing? What's your advice for other business owners?
Speaker 2:I'll give a simple piece of advice on this industry specifically, and that's to know your numbers, unit economics, what you need in terms of contribution margin and what those fixed costs are that you're contributing to really important.
Speaker 2:And then more of a generic business comment. That I think has been a big learning for me, especially when you start a company and you're doing everything because you have to Eventually once you're growing past a certain point. I think, as an executive, learning about what you're good at and what you're not good at, and filling the gaps with experts to do the things that you're not good at, is really important and it's been really helpful for me. I have, I know what I'm good at now, and we've hired team members to do things that I'm not so good at way better than I could ever think of doing it. It allows me to take things off of my plate because I trust them to do great work in those segments of the business and you know I am able to focus my time on things that one I enjoy. Into that I'm strong, and so I think that's just a general comment for an executive in any company.
Speaker 1:Amazing. Well, thank you so much, anu. I appreciate your time and your insights, and I look very forward to seeing where this business goes. I'm super excited for you.
Speaker 2:I appreciate it. Yeah, I'm hoping we get a chance to talk again soon.
Speaker 1:So just last thing before we hop off what is the best way for people to get in touch with or follow Anu Netani?
Speaker 2:If they want to follow your journey and your business. Yeah, I'd say you know the brand Oath Oats at Oath Oats, oath OATS on all platforms. You know Instagram, tiktok, facebook, linkedin. For me personally, definitely following me on LinkedIn would be the best place to get in touch, especially just following my interaction with the business as a whole, and, yeah, I would say those are probably the best platforms to go on.
Speaker 1:Okay, 100% Well. Thanks again. I really appreciate your time and your insight with super inspiring Thanks.
Speaker 2:Dylan, I appreciate it. Talk to you soon.
Speaker 1:Awesome.