The Confidence Co's Lexi Aiassa is disrupting the digestive space

In 2019 I launched Startup Standup here on LinkedIn. I had been a mentor to a lot of entrepreneurs that came to me for advice on raising money and just general startup tips. It was baffling to see that women had a really hard time raising money - especially when their business plans were on par (or even better in many cases) than male-founded companies.

In an effort to get the word out and learn from each other, the concept of Startup Standup was born. In Season 3 we'll hear from seven tenacious founders who are navigating the funding stage - whether it's Lexi who is still completely bootstrapped or Neha who pivoted her company and is ready to secure that next round of institutional funding. Make sure to click subscribe so you don’t miss an episode!

I'd love to hear what you think and if there are any other female founders I should get to know. Oh yeah, and let's all support these phenomenal founders! :)

Enjoy,

Marc 

Meet Lexi

This week I'm talking to fellow Italian and food lover, Lexi Aiassa. Lexi is determined to help people build a better relationship with their gut – without having to stop indulging in the foods they love. Her company, The Confidence Co, is disrupting the digestive space with a premium digestive enzyme blend that proves confidence comes from within, starting deep inside your gut.

We chat about what it’s like growing up in an Italian household (hint: lots of food!), the gaps in the wellness industry, and how to showcase a big vision while still just having one product. We also dive deep into the numbers and talk through which metrics are most important to highlight when having a subscription model.

 Lexi launched The Confidence Co at the beginning of the pandemic and, just a year later, she’s ready to take it to the next level - take a listen!

Lexi Aiassa: Hi, how are you?

Marc Lore: Good.

Lexi: So nice to meet you. My name is Lexi, I am CEO and Founder of The Confidence Co. My professional career here is outlined on this slide but I think it's truly my personal story which is the most important and is the reason why I started the Confidence company and it exists today so I'm going to go into that. I grew up in a large Italian family - spaghetti, pizza, rich foods all like cheeses, we like to eat the Italian stuff.

Marc: I totally get it - I'm Italian on both sides.

Lexi: Perfect.

Marc: I definitely understand the crazy five-course dinners for sure.

Lexi: Yes, and they're so good, they're irresistible. It didn't stop me eating them, let's just say that regardless, but the resulting digestive issues came from that diet were also considered normal in my family. As a young adult, my issue became more problematic. I started having upset stomach, yeast infections, fatigue, skin irritations, and issues. Frankly, I thought I was alone but the more I talked about it, the more I realized that I wasn't alone in my problems and no one really knew how to solve them.

I started taking things seriously and I approached a GI doctor and naturopath and I learned a lot about natural remedies, one which was digestive enzymes. It opened my eyes to a whole new world of preventative medicine that I hadn't actually been exposed to before. The problem then became that I was out to dinner, in New York City, with a massive pillbox which looked like this sticking out of my purse. I would carry so many of them and my friends would be like, "Can I get one?"

This became my story. I thought if these enzymes are so effective why don't people know about them? Why isn't there a product that is built for the modern customer? Sleek, portable, and fun, and confident. I decided to take a deeper look into the problem myself. According to a recent study, a quarter of consumers globally suffer from lower digestive issues. In half of those cases, consumers claim that this is a moderate or even severe impact on their overall health. That is a really big number. There are about 5.5 billion people over the age of 14. Meaning, there are nearly 690 million people who need gut confidence.

Marc: Can I ask you a question?

Lexi: Please.

Marc: These digestive enzymes do they need to be different for different types of people? Maybe some people have trouble digesting fat, while others have trouble digesting protein, other people carbohydrates? It seems like you put this together as one enzyme for anyone but is that the case?

Lexi: That's a great question. Originally, when I came up with the idea, I was like, "All right, I'm going to need to have a ton of different enzyme blends for the vegan and the carnivore and all those different types of humans." To be honest, once I learned more about enzymes themselves, sure, that could be a decent fixed for like a small portion of people, which would be if people are just vegans only or if they are carnivores only.

I think, ultimately, by creating one premium one that checks all the boxes from doing the due diligence of creating different formulas based on different types of diets, that's how we came on to the, "Okay, this one right here checks all the boxes that we covered on all the diets that we thought were interesting. This specifically could cover bases for everyone." With that said, it doesn't mean that there aren't line extensions that could essentially be in the future for people maybe who are specific with their diet.

Marc: How would you assess what type of enzymes are missing? Is there some sort of test you can do? Is it merely a survey? How would you understand if somebody has a hard time digesting carbs versus proteins, for example?

Lexi: The beautiful thing about digestive enzymes is, obviously, digestive enzymes already exist in your gut lining. The digestive enzymes that your body creates, usually, there supposed to be a sufficient number for the amount of food that you're putting into your body, but naturally, a lot of us, based on just diet variation of what we're eating, don't necessarily have the sufficient number of enzymes in order to be able to counterbalance with the foods that we're eating.

I found that digestive enzymes are actually a common thing given by naturopaths and even most forward-thinking Western doctors for people who are aging, but there's a lot of people now in our community, especially mine, that are having digestive issues. Why not get it from the root core and start putting these into your diet initially in order to be able to prevent any of the long-term diseases that could essentially come later from having undigested food.

Marc: That's where you could, when talking about line extension because I was thinking about this for you, like, "Take this enzyme if you're going to have a steak dinner." Or, "Take this enzyme if you're having pasta," because one's carbs, one's protein. Anyway, I don't want to digress too much off because I want to get to the whole deck, but I couldn't help myself but think about where you could take this and how big this could be.

Lexi: No, I appreciate that. I completely agree with you. I think it's really just the beginning. I appreciate that you think that I have a bigger vision because I do.

Marc: Again, getting back to the deck, if you do, I always liked, especially if you're looking to raise venture capital and I know you had some questions about that and whether you are, and I always would recommend, yes, you go for it, by having sharing a deck that is your big vision upfront for what this could be and how big it could be. Then separating that big vision from, "Okay, this is how I'm starting. That's where I want to go. I'm starting with enzymes for these reasons, because this is a good place to start and it's good." However it is, but my plan is to go to phase two and phase three, and phase four, and this is the bigger vision. Because you could get someone so interested in enamored with the big vision. They could say like, "If I gave you $10 million now, can we go and start attacking that vision sooner?" That sort of thing.

I think it's very hard to raise venture capital when you're a single-product company this. You can definitely raise angel and you could raise money, but if you really want to create this into a really big company and I'm sure you have big goals for this, that you would. By the way, even if the slide is only a couple of slides and the vision and then you got into the rest of the deck, I still think it's helpful that investors know that you're thinking much bigger and that there's a real white space here. Sorry to interrupt.

Lexi: No, it's fine. It's all really good things. I'm glad that you're stepping in. Post-COVID-19 consumers are expected to focus much more on preventative health and will pay attention to healthy nutrition. That's the link right here that we have between gut health and immunity. That will provide a further boost because of COVID-19. Yet, there are legacy brands that have outdated packaging messaging, and also focus on much more reactive remedies.

We have the Confidence Co. We are a brand focusing on creating modern supplements that promote optimal digestion, and we're creating a community of confident humans who understand that confidence starts within the gut. Our goal is to make gut health a habit, and we want to address these common issues by providing solutions to restore gut confidence and have people reclaim their gut.

Marc: I love the packaging.

Lexi: Thank you. For our launch products, we've created a premium digestive enzyme supplement, which you've tried with clear messaging and a form factor that's fleek and portable. What people are saying, so far we've had overwhelming positive feedback which has been really great. I wanted to add some of this in here. Some of the biggest people and our biggest users happen to be people who have IBS.

They've always been searching for solutions. It's one of the most overly diagnosed things from Western medicine. People come in, they said they have digestive issues and they have no real solutions other than taking an antibiotic to potentially maybe take away some of the bad bacteria but no real actionable steps towards, "Hey, maybe you should incorporate some really great nutritious fibers foods into your diet so on and so forth."

When people come to us, we want to educate and provide good approachable solutions for them to add to their everyday life to make things more comfortable. Earlier, we talked about the size of the digestion problem, but if you want to get more granular, the digestive health of the market is approximately $8.5 billion globally. The digestive enzyme market which we launched our first product in and it lives in, is projected to be $1.5 billion globally with a half-billion dollars in North America alone by 2025. These are all projections but there is a massive opportunity here.

So far, our customer lives in the 24 to 45-year-old who make more than 50K a year. 90% of them shop online, 82% invest in health and wellness and 74% want brands to embrace wellness as their mission. For customer acquisition strategy, we have organic, we have paid, we have influencers, and we have a podcast that's going to be launching this month actually.

We've done some PR, our customer acquisition strategy and PR has been really great. I think the most notable article that we had came out last month and we were featured in forums as one of the best health and wellness company supplements of 2020 and their gift guide. For paid marketing and lifetime value, we're currently hovering on a CAC of between $17 to $20 for first-time purchases.

For lifetime value though, we have $84 of the lifetime spend over a customer base on subscribers. Obviously, this is really new. We launched in May of this past year. We're a relatively new brand. A lot of those numbers and the percentages that we have currently are obviously still new and we're learning a lot of new things about our customer.

Marc: Lexi, the $84 that's expected lifetime revenue from a customer based on the repeat rates you're seeing now?

Lexi: Correct.

Marc: What would be the lifetime profit?

Lexi: Lifetime profit? Right now, this is what we're seeing on people who are subscribers. Probably we need to get a little bit more granular on the actual profitability but this is 2020 in review which I think is kind of the question that you really had. This is since May 1st of this year. Currently, our average order value is hovering around between $38 to $39. Right now, we have 376 subscribers, but that's obviously on the up. Our total sales since May has been $119,000 or $120,000 with recurring revenue of close to 10,000.

Marc: What is recurring revenue here?

Lexi: That is subscriber revenue.

Marc: Is there a membership?

Lexi: As a subscription, yes. You get 15% off for subscribing on a monthly basis.

Marc: How much is it monthly?

Lexi: It's $2,550 for the subscriber and then it's $30 for your single purchase.

Marc: I see. Okay.

Lexi: For projections and these are pretty conservative, but for now, that's the numbers that we projected.

Marc: If you're 17% EBITDA margin and you said lifetime revenue of a customer was, what, a little over 80?

Lexi: Yes.

Marc: You're talking about $13 to $14 of lifetime EBITDA per customer.

Lexi: Okay, that will make sense. That sounds like it makes sense, yes.

Marc: Okay, the only concern is the cost to acquire is higher than the lifetime EBITDA. This I think is really important you asked the question I think about that CAC versus LTD and the most important metric. Yes, I do think that one of the most important metric is the CAC the cost to acquire customer versus the lifetime value meaning lifetime profit with customer. I'd like to see the lifetime profit of a customer be three to four times the CAC. That's probably $20 to get a customer, you'd want to see about $80 in profit and that has 17% EBITDA margin means you need to get like, I don't know, $450, $500 in revenue?

Lexi: Yes.

Marc: Or is it a lifetime of a customer? If you're getting subscribers and they're paying $25 a month, then that's basically, less than two years you've got it. I think the math can work here. I think you have to just lay it out in a way that's a little bit more clear. The other thing that I would say just about the deck listening to the whole pitch whether I think to do that I think the deck is tight. It's the right lens. It looks good. The presentation is solid. You jumped right into your story and your background out of the gate. I knew what this was because you sent it to me.

It's not always the case that somebody looking at it will necessarily know right out of the gate what exactly this is. Even if people know it already, I think it's always the very first slide show a picture of the enzyme packaging and basically, in the simplest way you possibly can, explain what exactly is the business. We have manufactured a digestive enzymes that does X, Y, Z and that's it. We sell it direct to consumer through a website. Or if you sell it in the store that you would say that but they can do X. That just says, okay, at level sets what we're talking about.

Then I think you can tell the story of your background and just how this idea came about. I think it had some nice color. I think that's fine. You probably also, right after that, want to talk about the bigger vision that you have for this. Not the vision I necessarily set which is all different things, but even the vision you share here which is you have other products that you're launching. A second product, the third product, the size of the market.

I'd want to know, really early on, how big are you thinking here? Tell me that upfront. Now, my vision I would just go right into it. You tell your stories and say my vision for this goes beyond just a single project that just of enzyme. My vision is to do X, Y, Z. How big you're thinking.

Lexi: I was going to probably end with that and I probably should just lead with it.

Marc: Lead with it right after your story so that people then want to pay attention like, "Wow, she's thinking really big here." I shouldn't be thinking about this as just a single product that just depends on company because that's not that exciting. If you paint this vision of how big you're thinking and then put some numbers around it early in terms of like, you have to give us the details of the market but just given the size of the market, this could be a billion-dollar business. Just upfront then like, "Okay, now I'm really going to pay attention because it's really early stage and have a lot of potential, great."

Then I think you can go into a little bit more background like you did about the market, about the competition. I also think we didn't really cover here so much the customer value prop. Like, hey, we offer you can buy direct, you can buy subscribe. Here is the price, there's just the price-value relationship to the customer, I think needs to be covered earlier on.

Lexi: Yes, talking about like when I'm covering lifetime value and talking about why there's an incentive-based on price differentiation for subscription too here, definitely.

Marc: Yes, that's a slide earlier on about just the product value prop. Then later I want to talk about LTV there. Then later in the deck, as you do, you talk about the customer repeat rates, how much revenue is seen from subscribers and non-subscribers. It's still early, but here's what you estimated you think it's going to be. If your price applies to 17% EBITDA margin, here's that lifetime profit we think we can get from our customer. Look, that's four times the CAC, we're feeling really good.

Then the other thing to cover on the marketing CAC side, I'd want to know where are you spending money right now to get that CAC. Is there an opportunity to spend more to get the same CAC? Have you done any tests? Do you know you can spend 10X what you're spending today and the CAC stays the same or does the CAC triple when you 10X your spend? That's a question that somebody would really be thinking about and you'd want to hit that head-on. Feel like you've got everything covered end-to-end. You've got somebody to talk to, you've got a plan, that doesn't really seem to exist in this area.

Lexi: Yes, there are a few companies, I feel there's parsley health and there's a few companies who are trying to do things that. Whether or not I feel like they've been super successful yet. I'm not totally sure. I find out for them just to get a good understanding of-

Marc: -that's exactly what I do. In all my research, that's where I landed. That's where I finally got to do these tests. I think they're aiming to be holistic but it's not a tech company. I think doing it as a tech company, we do with a really cool front-end product and I think it could be really cool. I would definitely have the scientist in here in a little bit about why you're unique when you compare to the competition and how you break down the market size, for sure. Yes, this has been great. Hopefully, that's been helpful.

Lexi: Thank you so much. You've been super helpful and it was just really nice to meet you. Thank you.

Marc: Same here. Okay, Lexi, bye.

Lexi: Bye.