Is there a more competitive consumer market than nutritional supplements? I asked that question to Damian Soong, the co-founder of Form Nutrition, a maker and seller of plant-based proteins and food products, which launched in 2017.
“Certainly it was a crowded space,” he told me. “But the sellers were all doing the same thing. A crowded space can be daunting as an entrepreneur but also an opportunity for uniqueness.”
Soong’s company sells mostly direct to consumers in the U.K., where it’s based. He and I recently discussed launching the business, nutritional goods, bootstrapping, and more.
Our entire audio conversation is embedded below. The transcript that follows is edited for length and clarity.
Eric Bandholz: Tell us about Form Nutrition.
Damian Soong: We’re a U.K.-based seller of our own plant-based nutritional products. We launched in March 2017. Roughly 70% of revenue is direct-to-consumer, and 30% is wholesale.
My background is varied. I studied engineering. I’ve worked in the City of London financial district. I got an M.B.A. But I’ve always been interested in nutrition and working out. So nutritional supplements have appealed to me as a consumer and user.
Around 2015 I became interested in the vegan space and the plant-based movement. Vegan protein and veganism were not just a trend. There was much focus on health, sustainability, and animal welfare.
I sampled all the vegan proteins at that time. They tasted terrible. Certainly it was a crowded space, but the sellers were all doing the same thing. A crowded space can be daunting as an entrepreneur but also an opportunity for uniqueness.
My friends thought I was crazy when I told them about launching a protein powder company. But for me, it was a challenge and an opportunity.
Bandholz: I’m a believer in bootstrapping — building sustainable businesses that can scale on their own profits. You’ve bootstrapped your company, too.
Soong: Yes. My co-founders Natalia Bojanic [brand director] and Pete O’Donoghue [head of operations] and I funded the launch ourselves. It was a small amount of money. We did everything in-house with a couple of friends (a freelance designer and a developer).
However, after about two years, at the end of 2018, we took a small investment from a multi-generational family investment house here in London. We choose them because they had a great network and were patient with capital. They’ve been fantastic.
We’ve used the money for a bit of everything, including providing a cushion and contingency.
But every business is different. Some are much more capital intensive.
Beardbrand is similar to my company in a sense. We both design products and then outsource the manufacturing.
We, Form Nutrition, have negotiated good terms with low minimum order quantities to conserve cash. So our suppliers helped fund our business. Bootstrapping is my default mode.
Before Form Nutrition, I ran a manufacturing company, Hydrachem, for 13 years. We produced water purification products. Manufacturing is a tough business. Every penny counts. You can’t afford to be frivolous with money. It’s ingrained in me to be careful about every single expenditure.
Bandholz: Scarcity can force creativity. Cashflow creativity is something that no one talks about. If you could get 30-day or 90-day terms and sell that product before then, you’ve got no cash loss. 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 start flowing with scarcity. Ultimately, it makes our businesses much better.
Soong: Right. I think that’s something I learned from manufacturing. You buy raw materials. They sit for a while in the warehouse. Then you manufacture something that might take a week or two. Then you sell those products and wait for payment. Before you know it, the time to receive the cash for the raw materials could be six months or more. So you do everything you can to shorten that cycle.
A lot of founders don’t fully understand accounting. One of the most valuable things I’ve learned is how to read a balance sheet and how to create the three primary reports: balance sheet, income statement, and summary of cashflows. A deep understanding of accounting is not glamorous, but it’s powerful when you understand what impacts your bank account.
Bandholz: I’ve always been very conservative with my finances. Having a bit of cushion in the bank allows us to pursue (and turn down) opportunities. Changing the subject, do you have plans to sell to retailers?
Soong: Again, roughly 30% of our revenue is from wholesale channels. In the U.K., we sell mainly to larger retailers such as Selfridges, Harrods, and Planet Organic. But not much U.S., yet. We’re starting to consider it. We are in Equinox [fitness clubs] and Sunlife Organics [natural foods] in Malibu, California, but nothing of massive volume. It’s coming.
Bandholz: What about fulfillment? Are you working with a third-party logistics provider?
Soong: We have our own section in a third-party warehouse. The workers are employees of the warehouse, not us, but they are assigned to our account. We have our own printer at the warehouse. Every order is printed on a special type of postcard paper.
The warehouse is about two hours away by car here in the U.K. We physically visit them just twice a year or so.
The U.K. is much smaller than the U.S. We can easily ship anything in the U.K. for next-day arrival. If someone orders by 5:00 p.m., we can deliver the goods by the next morning. In the U.S., that’s more difficult. Shipping from the U.K. to the U.S. is normally one or two days, especially to New York City and L.A., where it can be quite quick.
Bandholz: How much of your revenue comes from the U.S.?
Soong: It’s around 15%. We launched in the U.S. at the beginning of Covid. It wasn’t the best timing in terms of physical interactions. It should improve this year. We hope to have warehouse space in Miami by September, for example.
Bandholz: Do you also serve continental Europe consumers?
Soong: We had quite a lot of European customers. But Brexit has been a disaster for U.K. companies shipping to the E.U. It’s still possible, but it’s much more cumbersome, costly, and slow.
We’ve trying to hold on to as much of that business as we can. We’re not making any money on it due, mainly, to shipping. We’re setting up a warehouse in Poland to fulfill European orders. That will bring down our costs.
Bandholz: Changing directions, you sponsor a Clubhouse room.
Soong: Yes, we host a weekly Form Nutrition series on health and wellness. It’s been interesting. I’ve been blown away by the number of people in the rooms.
Our first room had about 800 people. I was very impressed by the quality of the audience. We were talking in-depth about fasting, I think it was. The questions at the end were from PhDs, researchers, and well-informed consumers — very high quality.
Success on Clubhouse requires finding your niche. There’s a load of trash there — get-rich-quick, Bitcoin, whatever. But for specialized interests, such as nutrition, there’s a knowledgeable crowd.
Bandholz: Where can people follow you and buy your products?