DTC POD: $100M+ Businesses in Controversial Industries: John Coogan, Co-Founder of Soylent and Lucy

In this episode of DTC Pod, we’re joined by John Coogan, co-founder of Soylent, the famed Food and Beverage company that pioneered meal shakes. Soylent was founded on the principle of creating products for high-performing knowledge workers - a solution that was equally nutritious and convenient.

Now John is the Co-founder of Lucy, a business that creates innovative nicotine products with a cleaner formulation.

He serves as an EIR at Founders Fund, the legendary VC firm founded by Peter Thiel — and also has a YouTube channel of 400K subscribers where he breaks down stories of some of the greatest founders from Silicon Valley and beyond.

Join us as we discuss John's insights on scaling production, growth tactics, and utilizing social media and content creation as powerful tools for brand building and retail adoption.

• 3 Big Lessons from John

  • 1. Focus On Winning Channels & Key Negotiations

  • 2. Leverage Customers & Data For Successful Pivots

  • 3. Leverage Regulation To Build Moats

• DTC Job Positions!

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3 Big Lessons from John Coogan

1. Focus On Winning Channels & Key Negotiations

When building a brand, know your unfair advantages and lean in to your winning channels.

Find Your Omnichannel Leverage: Lucy didn’t have an unfair advantage in retail, but their products form factor and attributes played perfectly for DTC — lightweight, easy to ship, and recurring purchases. This gives them an edge when it comes to omnichannel competitiveness.

Don’t Always Show Your Hand: With a ton of early demand, the Soylent team disclosed exactly how much they needed to deliver ($3 million worth of orders). The co-packer knew their hand, so charged them exactly $2.9 million to get the deal done. If at all possible, make sure to speak with multiple partners if you want to optimize for competitive pricing.

Think Revenue Per Pound: Soylent was tough to ship.. about $30 for a 10-pound box, of which $10 went to shipping. Rather than burn 30% of the margin on shipping, Lucy fits a similarly priced product into a package that’s well under 1 pound and perfect to store and ship.

2. Leverage Customers & Data For Successful Pivots

Pivoting your business model is something most entrepreneurs have to deal with at some point, but more often than not these do not end up in success. Here’s a few ideas for how Soylent nailed a successful pivot:

Solve Your Own Problems: As the team was struggling with an existing YC funded startup and burning through some of their last capital, they thought about all the ways they could reduce spend — and one of the recurring big line items was food. So Soylent essentially was borne of the thought experiment of how much money could you save by reducing all food consumption to it’s simplest macro-nutritional forms.. something that resonated with customers.

Look For Early Product Validation: For Soylent, the insane number of people eager to receive updates or purchase products right from the concept after his co-founder Rob wrote a blog post about how he quit eating for 30 days (and replaced all food with Soylent meal shakes) showed how there was demand for a health product that resonated with the silicon valley programmer customer archetype.

Survey Customers & Utilize Data to Inform Decisions: From an initial email list of 10,000 prospective fans, 93% of respondents said they’d even be willing to share DNA and blood work for customized products — this was hard data indicating how much people wanted this new product.

3. Leverage Regulation To Build Moats

Understanding and complying with complex regulations can be tricky, but could also ensure defensibility of your business. John’s approach with Lucy provides a clear blueprint for navigating this space:

State-by-State Strategy: Lucy's go-to-market approach underscores the importance of being nimble and knowledgeable about different state regulations. Each state has different tax implications and product categorizations, and this complexity isn’t something every startup can easily navigate.

FDA Approvals: A key aspect of bringing nicotine products to market involves convincing the FDA of their positive public health impact. For Lucy in particular, there was a rigorous pre-market application process in order to adhere to such regulations & compliance.

Time Market Entry Strategically: For Lucy, there was a transitional period in the nicotine industry, in which things shifted from a relatively unregulated environment to one with increasing oversight. Their entry strategy took advantage of this timing to establish a defensible market stance before barriers skyrocket. This way, they could leverage incoming regulatory hurdles to future proof their business.

DTC Job Positions!

Join Kettle & Fire as a Shopper & Trade Marketing Manager

Job Description: Kettle & Fire seeks a Shopper & Trade Marketing Manager to develop omnichannel strategies to boost sales, improve shopper experience, and fortify retail alliances.
Responsibilities: Collaborate with sales and marketing teams, manage budgets, analyze performance, and foster cross-functional alignment to drive brand growth.
Salary: Very competitive salary, monthly budget for local fresh food and gym membership, and optional health, dental, and vision insurance.

Join Tommy John as Senior Manager, Digital Marketplace (Amazon)

Job Description: Oversee the Amazon business strategy, manage day-to-day operations, and collaborate with internal and external partners to drive growth. Experience with FBA and FBM required.
Responsibilities: Develop marketplace strategy, optimize sales and marketing, manage inventory, and lead promotional events. Collaborate with cross-functional teams to enhance the online presence and sales.
Salary: $120,000 to $130,000, comprehensive benefits, flexible PTO, hybrid work environment.

Join Tiktok as a Strategy and Operations Manager

Job Description: Join TikTok as Strategy Operations Manager, leading go-to-market strategies, data analysis, and cross-functional collaboration to drive creative industry trends and monetization opportunities.
Responsibilities: Lead strategic planning, data analysis, and cross-functional collaboration to drive TikTok's growth and revenue through go-to-market strategies, market analysis, and creative monetization initiatives.
Salary: $129k-290k, based on candidate’s qualifications, skills, competencies and experience, and location.

That wraps up this week’s newsletter!

As always, reply any time with thoughts, questions, reactions, or ideas for future issues. And don’t forget to follow us on Twitter to unlock new episodes of DTC Pod each week!