Care Of – Building a Personalized Vitamin ExperienceBy Aileen Zou
Care Of – Building a Personalized Vitamin Experience
Care Of is a direct-to-consumer startup whose mission is to build a personalized daily vitamin pack with honest guidance and better ingredients. I caught up with co-founder and CEO Craig Elbert as I was leaving for spring break (yes, business needs to be done before leisure).
Care Of began when Craig Elbert went out to grab some pills for his wife and himself. “I was going to get pills for myself, some Vitamin D – and also my wife was pregnant so I was getting some prenatal and fish oil pills…I didn’t know what to purchase and why,” Craig said. “And in the case of the prenatals it’s something that impacts the health of our unborn child and yet – there I was – getting advice from a clerk who was reading off of the back of the box.”
Thinking about this frustrating shopping experience, Craig realized he could use technology to provide a better customer experience, eliminate confusion and offer tailored solutions to each individual.
After graduating from Wharton in 2009, Craig first joined Bonobos, a personalized menswear site that was acquired by Walmart for $310 million in June 2017. The principles of being customer-centric, individualistic and convenient that Craig learned at Bonobos formed the foundation of Care Of.
Care Of has skyrocketed since being founded in November 2015. More than half a million people went through the “diagnostic” survey to receive recommendations and tens of thousands of users are enjoying the personalized vitamin delivered to their door every month. In July 2017, Care Of raised $12 million Series A round from Goodwater Capital, Tusk Ventures, RRE Ventures, Bullish, the co-founders of the prototyping tools company InVision, and earlier investor Juxtapose.
“Keep Up With Aileen” – Reality TV about my experience with Care Of (look out, Kardashians)
Episode 1) How to get Care Of
First, fill out a survey about goals, lifestyle and values.
Next, the algorithm then makes personalized recommendations. You may build your desired vitamin pack based on these recommendations (or not).
8 days later….receive your pack of vitamins!
Episode 2) What I like about Care Of
First and foremost, I like the fact that I am getting something customized to me. Craig Elbert notes that there are more than a million combinations from Care Of’s 30+ ingredients, and that over 85 percent of customers get a unique mix made just for them. The uniqueness makes me feel like I was getting a Birkin and, even better, it was at a Kelly’s price. On average, I pay about one dollar per day, which I think is reasonable considering the quality and convenience of the customized product.
Speaking of quality, Care Of has a particularly strong scientific advisory board comprised of leading doctors, scientists and nutrition experts. The team ensures the best quality possible starting from the source. For example, the Fish Oil is made from wild Alaskan salmon sustainably harvested from the pristine waters of the North Pacific. The natural environment and short lifespan of salmon ensures they are naturally free of pollutants and heavy metals.
Convenience is also a big selling point to me. Traveling is part of an MBA’s daily life – and I am an MBA student at Wharton. Carrying multiple bottles of vitamins is annoying, especially when I want to fill my suitcase with instagrammable clothes and accessaries! But at the same time, I need to bring vitamins to make sure my skin glows and my energy levels remain high, so I find Care Of to be the perfect solution.
Episode 3) As a consumer, what I don’t like about Care Of
Too much waste in the packaging. Yes, as you can see from the picture above, the product looks cute. But a box inside a box and one pack everyday is simply not environmentally friendly.
There’s also no definite way to tell if I’m being over prescribed. During our conversation, Craig continually emphasized the importance of “honest guidance,” which the company is very proud of. However, it is ultimately an algorithm that makes the recommendation. How can I know it’s honest? I was recommended 6 pills per day but maybe I only need 4? I don’t know. Leading to my next point…
It’s hard to measure the results. For example, I still can’t run more than 2 miles, even if I have taken fish oil and supposedly have a stronger heart. Care Of has recently launched a mobile app to help people build healthy habit and close the feedback loop. But unless the app can show me the benefits in numbers, I’m just not sure what the benefits really are.
Episode 4) Shopping the “competitors”
Other than the generic, unappealing incumbents like GNC, there are a few new generation vitamin brands, such as longevity-booster Elysium; women-focused Ritual; sugary, chewable Olly, etc. Within the personalized vitamin space, only Zenamins, a much earlier-stage Y Combinator startup, should be considered a “competitor,” though the two companies have remarkably different brand images. Comparing to Care Of, Zenamins is less premium and fun, while it is more accessible and serious.
According to Statista, in 2017, the size of the vitamin, mineral and supplement market worldwide was over $106 billion and in US was over $13 billion. Given none of the new generation vitamin brands have occupied more than 10% of the market, it is reasonable to say that everyone has its own edge and has big opportunities in this huge market. Instead of viewing them as competitors, I would rather see this market overall offering great potential.
Episode 5) Looking forward – what keeps Craig up at night?
This is what surprised me. Most direct-to-consumer brands these days have a hard time acquiring customers. The CAC (customer acquisition cost) is so high that many brands decide to sell offline. But Care Of only spends 20-30% on sales and marketing, which further proves its product superiority. Craig thinks the company is able to even reduce that to 10% over the long run. Although CAC is usually talked about with CLV (customer lifetime value), subscription businesses are often an exception, as the CLV is generally very high given the monthly renewal model.
What keeps Craig up at night is the operational end of the business. The company does its own fulfillment for quality control purpose. However, personalized, individual packaging is so complex, hard-to-automate and time consuming that it hinders scaling. On the bright side, if Care Of can master the logistics, it will be an enormously valuable asset and distinct competitive advantage.
At the end of the day, struggling to scale with demand isn’t the worst problem to have.