Episode #568: Scaling Physician's Choice From Startup to $250M-Logan Chierotti on Smart Growth and Supplements

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0:48 It's easy to use. Go to the prospectwizard.com get a free 30 day trial. Talk to my boy Dave Gallon. He will get you all set up and let the leads flow based on the Wizard. Go get him. This is people on Halo Talks nyc. I have the pleasure of bringing to the show Logan from Physician's Choice Supplements. We're going to talk about how to hyper grow a company but to talk about his passion and interest in the space and how to manage a business that is growing and keeps controls on it and also looks towards the future. So Logan, good to, good to have you on. Yeah, thanks Pete. Appreciate you guys bringing me on.

1:30 You got it. So our audience here is all in the helo sector, Health, active lifestyle, outdoors. A lot of health club operators, sports complexes and studios have always kind of tinkered with or kind of like touched into like hey, can I sell supplements? Can I sell you know, these products to my members either through E commerce or you know, have my own pro shop if you will and have that work and not become a, a loss leader because a lot of it just goes out the back door is not accounted for. So talk about how you got into this space. You know, what was the, the, the impetus for that and you know, a little bit of the growth story and growing pains along the way for sure.

2:11 So we started physician's choice in 2017. My background was Internet marketing, kind of like E commerce. And I've always been interested in the health and wellness space. We saw what was going on on Amazon as way to kind of like accelerate growth without holding a bunch of inventory or going straight to retail. And we took full advantage of that launching what today is like the number one probiotic brand. But we really focused heavily on Probiotics as like our core focus, gut health. And we grew the company from 2017 to today. We're doing this year we'll do like close to 250 million in revenue all through Amazon. Now we're in brick and mortar retail.

2:53 70,000 different distribution points. So we've scaled pretty fast. Nice. And have you grown it where you live or have you put distribution centers across the US and how's that kind of played out from. We have an office in Denver that's like our kind of like central marketing hub and then we have distribution centers all across the US I've put together like a really good team, I think talking about like growth and kind of like what it's taken to get here for me. And I think, you know, probably a lot of your listeners could benefit from this is like one of the things that's been most instrumental is putting together like a really high class, top of the line executive team. Yeah, I've learned from hard lessons and a lot of failure that like hiring smart people and getting out of their way has kind of like really been a key success to our growth. You know, when you take a look at going from E commerce into retail and we've got a company we invested in called Higher Dose, we got approached, but we got approached by some really big box retailers and the distribution that was kind of like dangled at us was really exciting. At the same time, kind of the, the policies and procedures, you know, scared the shit out of us actually. You know, basically like giving them stuff on consignment and then turning into like this collection agency on, on accounts receivable and then like if something gets returned, like that's on you.

4:24 And we realized like the most of the risk was basically on the, on the, the product provider, not on the retailer. So how did you get comfortable with the economics and the E commerce, you know, business model versus saying like, hey, now I'm kind of like, you know, I'm at somebody else's whim and like my customer concentration might be like inverted, you know, without me really doing anything. Just sign a smart contract. I'm like, holy. I like work for, I work for like big box retailers now and I'm like, I'm like a vendor and I'm not, I'm not really in control of my own destiny. Maybe by accident. Yeah, 100%. So at this point we actually, because to your point, we say no probably to more retailers that approach us that we say yes to because you have to be very particular about that because they will kind of make you take all the risk and kind of screw you. And it's just like you know, so our policy now is like, you know, unless it's on our terms, we just say no. And we're very particular about the retailers. We take on to your point. Like, we've always started with like E. Comm. Or distribution centers. Like we control. So I think, you know, to your listeners, like having health clubs or med spas, like, you're in a unique position because you can control that distribution versus like, it sounds really sexy. I think when people are like, oh, you're gonna get into Walmart and then you get in and it's like, okay, you have to meet these minimum velocities. You have to spend this much. Like, it's much more. There's a lot more goes into it than just like put some product in and you're good.

5:45 Um, so I think it's like if you can control where you're distributing and then like, as you grow a brand and you get bigger recognition, then you can kind of start to like dictate terms a little more. But in the beginning you're very much like sell where you can control and you can like, how's the inventory? And there's not a lot of risk on you. How have you kind of managed through? So I'm a consumer of everything that you produce and that you have out there. And I would say, even though I'm in this industry, I would say my level of knowledge is probably two inches deep and like a mile wide. Right. So a lot of it might be price driven. It might be.

6:27 I'm going to say this is like a very naive consumer. It might be your packaging that I just like, it resonates with me. Like a lot of beverage companies have gotten sold recently. Like, you see the before and after of like Poppy as an example is called like nature is like mother Mother nature or something. And packaging didn't resonate then they itself like $2 billion something. But how have you kind of taken physician's choice and said, hey, like I'm gonna give you the physician choice. Obviously already is embedded in the fact that like you're an authority. And then the packaging and the pricing is kind of like that, that lead. So. So I already know. I don't, I don't question like, what's your brand? Because you, you've got named it properly.

7:09 So how, how do you think about educating me versus marketing? To me, that's a good question. I mean, we've started with price. Like our kind of like initial concept too was like we wanted to be a value brand. We didn't want to come out with like something that was just super expensive. We wanted to like give consumers value. And then what's nice is with the Internet or E commerce or even like, you know, med spas or health clubs, like you can educate the consumer more, right? Like they come into your store or they come online and you have all the marketing there so you can really educ them as opposed to like dropping your product in Walmart. That's a pure brand or commodity game. People are buying there based on price or based on packaging versus when you control the distribution channels, you can educate them a lot more. So that's why we've also chose like E Comm and you know, just a Amazon TikTok. Like those are our biggest channels for a reason.

8:03 This is Pete Moore. I want to let you in on a little secret. There's this company called Promotion Vault. And what they do is they give. Out rewards from retailers that allow you to incentivize your members without having to do zero down and one month free or giving away shakes or giving away T shirts. What you want to do is build a rewards program that lasts, that people value and that doesn't discount your own products and services. So here's the deal. There's something called Rewards Vault. The Rewards Vault is going to allow a member to set up their own profile. They are going to answer questions, you are going to get those answers. You're going to be able to target those members and you're going to reward them inside your club, inside your spa and outside of the club and outside of the spa to get them to become loyal, to get them to pay their monthly dues and to be rewarded properly for the actions. A lot of companies are cutting back on rewards. You shouldn't be. Promotion Vault, your answer, trust me, this is real.

9:07 If you take a look at supplements, you know, over the last like 20 years, Dave and I have like tinkered in that industry as consumers and also, you know, as helping people evaluate the space. The discounting that goes on with like whey protein, you know, is like buy 40% off retail or like 20% off wholesale and it's just like a volume game. And I think the differentiation probably is unknown to the consumer until you like read the label, trying to figure out like what's really in this thing. It seems to me that the probiotic space and things that may be more deemed sophisticated or innovative, like cocktails, if you want to whatever I want to call it, right.

9:51 Has kind of like has. Has somehow engendered to a higher value premium Price point. There's a question here. I'm not sure where it is yet, but how do you, how did you kind of get comfortable saying like we're not in the supplement, you know, like I'm not showing you whey protein that you get from everybody else in like a tub at Costco. I'm gonna sell it in, in the right formula, I'm gonna sell it in the right count. Yeah. Give us, give us a little bit of tidbit like how you do that. Because everyone in our industry is always like first month free, zero down. It's like don't tell something that's actually gonna have value and affect someone's life and how they feel because you should pay a premium for that. For sure. Yeah, no, it's a great question. And I think what we did was like very early on we got very intentional about just focusing on probiotics for that reason because it wasn't really like a commodity like vitamin C or pro. Right. Like every vitamin C same. And people just look for the cheapest one. I mean protein I don't want to say is all the same, but it's more or less like, you know, kind of a price driven game at this point. Yeah. So we wanted something that had more science based to it, something that we could charge a bit more of a premium and do, you know, products that had actual like clinical studies behind them or strains of clinical studies so that we knew people were getting something that you know, they would pay a little more for. But it's because there was some science behind it. So I think like looking at selling supplements, we were kind of like, we want to focus in on one area, we want to focus in on probiotics. We don't want to sell like every letter vitamin and compete with like the nature's way and like all these like price driven brands.

11:20 We want to compete with like one, you know, and there's a lot of dinosaur brands out there that are still selling supplements. A lot of spaces to be disrupted I think in this, this area as well. And when you use the term probiotic because a lot of our audience probably knows what antibiotics are. What, what's, what's like the clearest definition of a probiotic. Yeah, yeah. I think the, the easiest way to describe it is they're living organisms. So in each capsule there's like a living, you know, we have 60 billion in our main product of like the living organism of probiotics. And they're live cultures that go in and help promote the good bacteria in your Gut. So like the antibiotics will like kill a bunch of bacteria, especially if you're taking a lot of antibiotics. Like if my kids take antibiotics, we dose them up with probiotics afterwards to help restore their gut bacteria, help them feeling better. So it's really like restoring and adding good bacteria to your gut, which you know, in today's day and age, it's like we all eat and drink and do so much stuff that you're killing a lot of that good bacteria. So taking probiotics can help really just get that good bacteria in there.

12:22 Got it. Is the easiest way to put it without getting too. Yeah, no, it's helpful. And then, and then when you marketing this, whether it's through, you know, any of your social channels, which I've, I've seen many are you is your audience, you know, your wife is your audience, you know, people like you, like how do you think about, you know, who you're marketing to and what that, what resonates with them? Because I feel like a lot of people in our industry just market so mainstream like these med spots. Like I need to talk to somebody who's got a problem that I could solve and that might not be the person you think it is for sure. Yeah. And so what we've done, we now we have that narrowed down. Like now we know our audience is people like myself that are like health ins, fitness and advocates and then women that like take care of themselves and are smarter than us men on taking care of themselves. So that's like prime. But in the beginning we were marketing very broadly to everyone and it just like wasn't, it wasn't working well. So like over time we've really dialed in and like done more research on like who is our audience, which with social channels is much easier to do. Right. Like you can put out some broad advertising and start to see who converts and then you just keep narrowing down on like those people that are actually converting and buying as opposed to like trying to sell to everyone is just like a loser's game, I think.

13:37 And with the so many stocks have kind of lost their luster publicly on all the AI and what the take is going to be on that and how quickly that's going to go into people's data scientists action items. But have you seen the ability for you to take some of those statistics and now quickly figure out who your customer is or what your conversion rates are and trying to hit that lever harder? More and more we are. Yeah. I mean there's becoming like more. I mean there's just more data available now. So it's still, you know, not easy. But we're like figuring out every week we're getting better at that. You know, we're not like fully using AI probably to its capabilities yet as it's like we're still trying to figure out what the right tools there are, but we're trying.

14:28 Yeah. And then from a subscription business standpoint at that, 250 if you want to disclose or just give some broad strokes, you know, are you getting people on monthly probiotic drops directly from the company? Yeah, I'd say like about 40 to 50% of that is subscription based. So like another thing that I like about the supplement business or even you know, health clubs, med spas, like things where it's like subscriptions start to compound on each other over time. So it's like, I think it's a long game that a lot of people like quit early because they don't realize that like you know, year one we lost a ton of money. Year two we were barely making money like now year seven and we're doing really well. But it took seven years of like compounding subscriptions like you know, that really accelerates business growth in my experience. I think, you know, to your audience that's charging people subscriptions or they have people, it's like you got to stick with it and like build that over time and find a way to keep people on.

15:23 And just kind of rapid fire questions here at you. So you know, feel free to hit pause on that. But everything you're saying is prompting something else. You know, as you take a look at, you know, e commerce in general and you think about your company and after seven years like there was this guy we interviews like my, my software company is a subscription based billing company is like we're a 38 year overnight success. You know, it takes a while to kind of get embedded. You're at year seven now. What are some of the things that you like I, I have the right to do versus maybe I, I want the right to do. You know, like you go for into the supplement game, you could, you know, deeper in and say hey, I'm gonna take away protein. I'm gonna like mix a whey protein with a probiotic. Maybe I have the right to do that, maybe I don't. How do you think in your own brain about you know, where I could drive this and what's the benefit of it and like the risk return I guess. Okay, that's a good question for us. Like I said, we've been really focused on gut health. So now we're like, okay, we have the right to move into like the fiber category and some of these, like adjacent categories that are very much like probiotic based.

16:34 But we still don't feel like we have the right to move into like protein or like creatine because that's just like, not on brand for us. So we're, you know, focusing on adjacencies at this point because we've gone really deep in probiotics and like, really hardcore, like, science based gut health. And so now we're looking at like, you know, my CEO said something the other day that I thought was a great quote, which is like, fiber is the new protein. And so we think, like, that's going to be. Fiber is going to be a really interesting category. We're coming out with a really cool fiber product that's all clean ingredients, that's really effective. So for us it's like, okay, what are the adjacencies, digestive enzymes that we can move into as opposed to like trying to break into like whey protein or creatine or some of these other things that just are like, really far off for us. So I like to go like a mile deep in our businesses where it's just like, stay focused. Not trying to, you know, not try to win at everything, win at what we're good at.

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18:21 Forward to helping you augment your products. And services to meet the demands of your members. And hey, let's get people happy, healthy and sweaty. And the recovery should be just as good as the workout. When did you flip the hat from I own the business to I'm hiring a CEO? That was probably three years ago. We started to get bigger. We started to get you Know, our team got to, like, around 50 or 60 people, and I realized, like, I'm really good at, like, an idea guy and, like, coming out with, like, what works, what doesn't. Like, big picture marketing, but, like, I'm not a great manager and I'm not good at, like, managing large groups of people. So I was like, I need someone to come in that's really good at that and, like, managing the team. So it's like recognizing your weaknesses. Right. Like, I'm not. I think a lot of, like, founders or, like, business owners have a hard time doing that, and the faster you can do it, the better. Yeah. Yeah. Did you bring an outside capital or. Or have you been running this on your own? I've been running on my own. We took. I took some money off the table as like, a secondary into my pocket a couple years ago, but we still.

19:27 I still control the business. Yeah. So. So what. What is your official title now if you have? Yeah, I guess founder and the guy that's annoying. My marketing team. Right, right, right. And you see, you. You made a reference before bringing on other. Other people that. That are really smart onto the team. We just did another podcast with the guy who's talking about, like, you got to pay up for talent. And if you. If you. If you recruit and you hire the right people, you know, they're basically going to be like tenured employees because they're not going anywhere because they know that this was the right fit for them and vice versa. As you went through the growth of the business, how did you kind of sequence on your own? The reason why I'm asking this, because I think most people do not do this properly. Like, what. Who do you hire? At what point?

20:20 You know, some people hire like a coo and they should have hired a chief marketing officer, you know, because they didn't have enough revenue, you know, revenue growth until I kind of support an operation. So how did you kind of think about that? I've always kind of looked at like, yeah, revenue generation is like the number one thing for our business or anybody. Like, if you can't get money in the door, then, yeah, you shouldn't be hiring, like, you know, doing like, brand study, like, just like, stuff that's like, you know, or hiring like an HR person if you can't get money in the door. So, yeah, for us, it was like, marketing was a skill that I had and that I was good at. So I was able to get money in the door, but I wasn't able to control, like, what was happening. With that money or I didn't like, know what was going on. So for me, hiring a CFO and like a high level finance person early on was really important and then started to build a team around that. Like, my weaknesses was kind of where I like brought in the team. But I think like a lot of founders I talk to these days are like, they're like so stingy with equity and they're like, I don't want to give anyone. And it's like from my experience, like you give away a little bit of equity to these top level people and like you said, they're bought in forever, right? Like, they're like, you know, they're so, so bought into your business that you know they should be adding way more value than the equity you're giving away.

21:24 So I think it's like people, you give away a little equity you hire for your weaknesses, you get a team of like rock stars in places. Like, I trust my team to do a better job than I do at this point. Yeah. What do you think happened in your past that created this self awareness? Most people don't have this. Right. You like, learn the hard way and it's like, you know, like, like a friend of yours, like your wife, like, you know, your mother. And like something, like something's in your brain that's like, hey, like, I have a good. When I look in the mirror, like, I'm good with like, I know who I am, what I'm getting bad at. And like, you gotta. I'm not, I'm not trying to be a therapist or anything. Opportunity to be like a lot of. Because a lot of people I meet with, I'm like, dude, like, you should not be like, you should be like SVP of marketing and hire someone to run this business and be much better than you and you actually get to work and like be happy. You know, I think it was just overtime. Like, you know, this is my fourth business and the other, you know, three I've had.

22:22 I've just like had a lot of hard learning lessons. I thought I was like the big one to be the big CEO and like the big boss. And then I was like, slowly over time I realized, like, you know what I'm really good at, what I'm good at, and like, I'm going to get out of my way and like hire people that are better than. Because there's always going to be people that are smarter than you at different things. Right. We're not all the best at everything. Yeah, let go your ego. People have a hard time letting go. Ego, I think. Yeah. Yeah. So in closing here, besides the self awareness and. And learn it earlier, understand it early from. From an oshapor. What. What else. What other, like, takeaways would you have either, you know, for your younger self or for people listening here, regardless of what business they're in? You know, maybe some of your lessons or like a quote that you live by or something. Yeah, I mean, one quote, I'd say all the time, which is very, like, mundane, I guess, but I. I think it's just relevant, is if it was easy, everyone would be doing it.

23:15 And that's my experience with business, is like, everyone wants to quit their job and start a business, and then they realize, like, damn, this is way harder than my job and easy everyone will be doing it. So it's like my biggest business lesson over, you know, last 20 years has been like, you got to keep going. Like, everyone wants to quit, like, you want to stop, like, it's going to get hard. You got to dig in, you got to grind. And, like, even the founders, like, I think discipline and, like, not giving up are probably two of the biggest skills in business that'll take you really far. Great. Appreciate some of the words of wisdom here and love what you're doing. You know, we use this term Halo health, active lifestyle outdoors. So welcome officially to the Halo sector. Yeah, thanks, guys. Appreciate it.