A Q&A with Nutraspire founder and CEO Jonah Lupton. The Wilmington, North Carolina-based startup, which was founded in the spring of 2013 by the serial entrepreneur, launched this past fall with a proprietary line of nutrition products.
SUB: Please describe Nutraspire and your primary innovation.
Lupton: Nutraspire is a nutrition company providing a full lineup of products such as vitamins and supplements for individuals at every fitness level. Six months ago I started Strivved.com, which sells 6,000 nutrition products and supplements from the 125 largest brands. I quickly realized that my profit margins were horrible and the markups coming from my distributors were insane. This is when I decided to create Nutraspire as a brand with high-quality products at reasonable prices and sell directly to the customers via Nutraspire.com, thus cutting out the middlemen.
SUB: Who are your target markets and users?
Lupton: Our target market is enormous. It’s almost impossible to narrow it down other than to say it includes every person currently taking or planning to take vitamins and supplements. According to recent research data, approximately 60 percent of Americans take vitamins and supplements, representing a $25-to-$30 billion market.
SUB: Who do you consider to be your competition, and what differentiates Nutraspire from the competition?
Lupton: In a market this big, there’s plenty of competition. There are dozens of well-established supplement companies, however almost every one of them sells to consumers through the traditional retail business model. There are also a few companies that use the MLM model, but honestly their products are ridiculously expensive because they’re paying 20-to-40 percent commissions to their reps. For the foreseeable future, I’m planning to keep Nutraspire products available online-only. We are also exploring the affiliate model but only to the point where we can keep our prices very reasonable.
Before starting Nutraspire I did plenty of market research and it’s remarkable how similar most products and formulas are across different brands—yet the prices can vary greatly. Many of the big supplement companies spend millions of dollars advertising in magazines, sponsoring the big fitness shows and paying the top fitness personalities big money to promote their brand. So basically when you buy something from BodyBuilding.com or walk into a nutrition store, you know where your money is going—you’ll be paying a premium, but not paying for better quality, just for better marketing.
There’s no reason anybody should pay $45-to-$60 for products when they can buy those same products from Nutraspire at 25-to-40 percent cheaper because we’re cutting out all the middlemen. Walking into GNC or Vitamin Shoppe might be necessary in a pinch, but you’re going to pay a premium. Just think about all the overhead expenses those retail stores are required to build into their prices. In the near future, we’ll allow our customers to set up auto-ship so they never have to think about it or worry about running out of supplements.
SUB: You recently launched the site to the public. Why was it the right time to launch?
Lupton: There wasn’t any specific reason behind the timing of our launch. I started working on Nutraspire in April, 2013, and it took approximately five months until everything was lined up and ready-to-go. Finding the right manufacturer was the most time-consuming aspect. For the most part, everything has gone relatively smooth and as expected. I did want our products to be available heading into year-end for holiday shopping as well as early 2014 when everyone starts creating their New Year’s resolutions. Clearly, returning to the gym to lose weight and get back into shape is always number one on most lists. The next two-to-three months will provide some great opportunities for us to get the Nutraspire name into the market through aggressive marketing and promotions.
SUB: What was the inspiration behind the idea for Nutraspire? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Lupton: I’ve been lifting weights for the better part of 12 years, although I’ve taken some significant time off to rehab injuries. Using supplements to enhance my workouts and get better results has always been important to me. I’ve always dreamed of one day starting my own supplement company, but it wasn’t until recently that I really got serious about it. I left the investment world in 2010, and to be totally honest I should have started Nutraspire back then, but it’s never too late to pursue a dream.
Basically the idea of starting a supplement company has been festering in my head for many years but it wasn’t until 2013 when my supplement expenses started surpassing $500 per month. This is when I finally said “enough—it’s time to start a company with great products at great prices and a more efficient distribution model.”
Over the past few months, we have begun sponsoring 16 fitness competitors and models through Nutraspire. They have been very supportive and have really helped create valuable buzz this past month. Everyone on the team is responsible for creating content, which means posting on social media, blogging at Nutraspire.com, making workout videos for YouTube and doing professional photo shoots for our marketing materials. Currently 75 percent of the team are active fitness competitors in the NPC or IFBB and compete in one-to-four shows per year, which brings additional attention to Nutraspire.
SUB: What were the first steps you took in establishing the company?
Lupton: I started off by researching some of the largest supplement companies in the market and which products were the best sellers. Then I tracked down some former employees of those companies to get any insider information they would give up. Then I began speaking to different manufacturers, trying to determine who the best long-term partner would be for Nutraspire. Then I started crunching numbers to determine how much it would cost to build up an adequate amount of inventory, as well as my overhead expenses, marketing expenses, and profit margins per product. Then I set up the legal entity, bank account, website and all the other little details required. Since this was my first supplement company, it was definitely a valuable learning experience.
Due to the fact I’ve learned so much the past six months from launching Strivved.com and now Nutraspire.com, I might be setting up a consulting company to help other individuals launch their own nutrition or supplement company. I’d probably charge a small fee up front as well as take a small percentage of equity, and possibly even provide a portion of the startup capital needed.
SUB: How did you come up with the name? What is the story or meaning behind it?
Lupton: I spent countless hours trying to come up with the name. It’s important to me to have a ‘.com’ domain, as well as the matching Twitter, Facebook, Instagram, and YouTube usernames, which is getting extremely hard these days. The name ‘Nutraspire’ is the combination of ‘nutrition’ plus ‘aspire’ because we want our brand to be more than just great products. We want to motivate and help our customers aspire to be the best they can be.
SUB: Have you raised outside funding for the company to this point?
Lupton: I have not raised any outside funding yet. Nutraspire is currently bootstrapped; however I will entertain an outside investment if it will allow the company to develop new products, drive our manufacturing costs down, and scale the company faster.
SUB: What have the most significant challenges been so far to building the company?
Lupton: The two biggest challenges have been finding a reliable manufacturer and marketing a new company in a market that is already saturated with supplement companies who are spending huge amounts of money on advertising.
SUB: How do you generate revenue or plan to generate revenue?
Lupton: We’re selling consumer products through ecommerce with decent margins, so every order generates revenue and every order is profitable to the company—obviously some more than others. Nutraspire.com has been live for approximately four weeks, the average order is around $50 and the average profit margin across our product line is around 50 percent. However, that’s before any overhead expenses and not including some of the discounts and promos we’ve been running to generate buzz. I’m hoping to keep our profit margins after overhead and expenses at 25-to-30 percent.
SUB: What are your goals for Nutraspire over the next year or so?
Lupton: I want to make Nutraspire a household brand name in the supplement industry. I want to continue developing and releasing new products with new flavors to give our customers everything they need to reach their health and fitness potential. The supplement industry is full of overpriced and overhyped products. Nutraspire will always put the customer first and only sell the highest quality products at the best prices anywhere. I would rather keep our prices lower than the competition and grow through word-of-mouth and social media as opposed to pricing our products higher and dumping tons of money into marketing. We will also continue sponsoring more fitness competitors and models. Perhaps our strategy changes in the future, but for now this is what we’re going with.
My financial goals for Nutraspire are as follows:
2014 Q1 and Q2 = 25 percent monthly revenue growth;
2014 Q3 and Q4 = 20 percent monthly revenue growth;
2015 Q1 and Q2 = 15 percent monthly revenue growth;
2015 Q3 and Q4 = 10 percent monthly revenue growth.
If we’re able to execute on these numbers it puts 2014 annual revenues around $400,000 and 2015 annual revenues around $1.5 million. I’d be very content with these figures, although we’ll always strive for more.