Is there a more competitive consumer market than dietary supplements? This is the question I asked Damian Soong, the co-founder of Form Nutrition, a plant-based protein and food manufacturer and seller that launched in 2017.
“Of course it was a crowded room,” he told me. “But the salespeople all did the same thing. A crowded space can be daunting for an entrepreneur, but it can also be an opportunity for uniqueness. “
Soong’s company mainly sells direct to consumers in the UK, where it is based. He and I recently talked about starting the business, nutritional products, bootstrapping, and more.
Our entire audio conversation is embedded below. The following transcript has been edited for length and clarity.
Eric Bandholz: Tell us about Form Nutrition.
Damian Soong: We are a UK based seller of our own herbal nutritional products. We started in March 2017. Around 70% of sales are in the direct customer segment and 30% in wholesale.
My background is diverse. I studied engineering. I worked in the financial district of the City of London. I did an MBA. But I’ve always been interested in nutrition and exercise. Dietary supplements have appealed to me as a consumer and user.
Around 2015 I started getting interested in the vegan field and the plant-based movement. Vegan protein and veganism weren’t just a trend. Great importance was attached to health, sustainability and animal welfare.
I tried all vegan proteins back then. They tasted terrible. Sure it was a crowded room, but the vendors all did the same thing. A crowded space can be daunting for an entrepreneur, but it can also be an opportunity for uniqueness.
My friends thought I was crazy when I told them about starting a protein powder company. But for me it was a challenge and an opportunity.
Band wood: I believe in bootstrapping – building sustainable businesses that can scale with their own profits. You also booted your company.
Soong: Yes. My co-founder Natalia Bojanic [brand director] and Pete O’Donoghue [head of operations] and I financed the launch myself. It was a small amount of money. We did everything in-house with a couple of friends (a freelance designer and a developer).
After about two years, however, at the end of 2018, we took over a small investment from a multigenerational family investment house here in London. We chose them because they had a great network and were patient with capital. You were awesome.
We used the money on a little bit of everything, including providing a cushion and emergency supplies.
But every business is different. Some are much more capital intensive.
Beardbrand is in some ways similar to my company. We design both products and then outsource manufacturing.
We, Form Nutrition, have negotiated good conditions with low minimum order quantities in order to save money. So our suppliers have helped fund our business. Bootstrapping is my default mode.
Before Form Nutrition, I ran the Hydrachem manufacturing company for 13 years. We made water purification products. Manufacturing is tough business. Every penny counts. You cannot afford to be frivolous with money. It is ingrained in me to be careful with every single issue.
Band wood: Scarcity can force creativity. Cash flow creativity is something that nobody talks about. If you get a term of 30 or 90 days and could sell this product beforehand, you will not lose money. The easy way is to buy a bunch of products, pay an arm and a leg, put them on the shelf, and then try to sell them. But the creative juices begin to flow with scarcity. Ultimately, it makes our business a lot better.
Soong: Law. I think I learned that from manufacturing. You buy raw materials. You sit in the camp for a while. Then make something that can take a week or two. Then you sell those products and wait for payment. Before you know it, the time to get the cash for the raw materials can be six months or more. So you are doing everything you can to shorten this cycle.
Many founders do not fully understand accounting. One of the most valuable things I’ve learned is how to read a balance sheet and create the three main reports: balance sheet, income statement, and cash flow summary. A deep understanding of accounting isn’t exactly glamorous, but it is powerful when you understand what is affecting your bank account.
Band wood: I’ve always been very conservative with my finances. With a little cushion on the bench, we can seize (and reject) opportunities. Change subject, are you planning to sell to retailers?
Soong: Here too, around 30% of our sales come from wholesale channels. In the UK we mainly sell to larger retailers such as Selfridges, Harrods and Planet Organic. But not much US yet. We start thinking about it. We are in the equinox [fitness clubs] and Sunlife Organics [natural foods] in Malibu, California, but nothing of massive volume. It is coming.
Band wood: What about fulfillment? Do you work with an external logistics service provider?
Soong: We have our own section in a third warehouse. The workers are employees of the warehouse, not us, but they are assigned to our account. We have our own printer in the warehouse. Each order is printed on special postcard paper.
The warehouse is about a two-hour drive here in the UK. We only visit them twice a year or so.
The UK is much smaller than the US We can easily ship anything in the UK for next day arrival. If someone orders by 5:00 p.m., we can deliver the goods the next morning. It’s more difficult in the US. Shipping from the UK to the US usually takes a day or two, especially to New York City and LA where it can be quite quick.
Band wood: How much of your sales come from the US?
Soong: It’s about 15%. We started in the US at the beginning of Covid. It wasn’t the best timing in terms of physical interactions. This year should get better. For example, we hope to have storage space in Miami by September.
Band wood: Do you also serve consumers in continental Europe?
Soong: We had quite a few European customers. But Brexit was a disaster for UK companies shipping to the EU. It’s still possible, but it’s much more cumbersome, expensive, and slower.
We’re trying to keep as much of this business as possible. We don’t make any money with it, mainly because of the shipping. We are building a warehouse in Poland to fulfill European orders. That will lower our costs.
Band wood: If you change direction, you’re sponsoring a clubhouse room.
Soong: Yes, we have a weekly Form Nutrition series on health and wellness. It was interesting. I was blown away by the number of people in the rooms.
Our first room had about 800 people. I was very impressed with the quality of the audience. We’ve talked at length about fasting, I think that was it. The questions at the end came from PhD students, researchers and well-informed consumers – of very high quality.
Success at clubhouse requires finding your niche. There’s a lot of junk in there – get rich quick, Bitcoin, whatever. But there is a knowledgeable crowd for special interests like nutrition.
Band wood: Where can people follow you and buy your products?
Soong: Our website is FormNutrition.com. All of our social handles are @formnutrition as well. Personally, I’m on most social channels as @damiansoong. I’m most active on Twitter.