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Davis Baer: What’s your background, and what are you working on?
David Renteln: My educational background is in Biology which I studied undergrad at Harvard and then as a PhD candidate at Caltech before I dropped out to be a cofounder of Soylent, where I served as Chief Marketing Officer.
Right now I’m a cofounder and the CEO of a company called Lucy. Our mission is to reduce tobacco related harm. Our flagship product is an oral nicotine product engineered from the ground up to provide a satisfying nicotine experience for adults who smoke or vape in the hopes of getting them to switch to a less harmful product. Nearly 500,000 people in the United States die of Tobacco related illness every year. Smoking is still the number one cause of preventable death, so it continues to be important that we do whatever we can to curb this tragedy.
What motivated you to get started with your company?
At Soylent we sought to make a complete and low cost food alternative. This idea came about because we were looking for a healthy and low cost way to feed ourselves. After Soylent, I realized that I needed to tackle another personal problem, my smoking habit. Well really my wife realized it. I promised her I would never smoke again and then looked around for tools to help my keep my promise.
I tried a number of products and found that, although none were ideal, nicotine gum worked the best for me. In studying the science behind nicotine, I realized that the general public holds strong misperceptions around nicotine. For instance, most people don’t know that nicotine isn’t particularly harmful. What’s truly harmful is the smoke and other chemicals present in tobacco and tobacco smoke in particular.
Together with my co-founders, John Coogan, and Samy Hamdouche, I realized that there was a great need to educate people around the continuum of risk surrounding different nicotine containing products. If everyone who used traditional tobacco products switched to pure nicotine products I believe that we would alleviate the vast majority of all harm related to nicotine consumption. Pharmaceutical old-style nicotine gums were somewhat promising but they’re not appealing to use because they were meant to be medicines. Not surprisingly, they look and taste like medicine and carry a stigma that people using them are admitting that they have some sort of problem.
Fortunately, because of our science and technology backgrounds and our experience at Soylent, we had the in-house expertise to create a new nicotine product from the ground up. Our gum has a pleasant and long lasting flavor superior to any other nicotine product on the market. Additionally, the nicotine release is meant to be slightly faster so that it more closely mimics the experience that you would have using a recreational tobacco product. This is important again because people need to actually enjoy the product in order to use it and switch from their legacy tobacco product.
What went into building the initial product?
In order to build the product we worked with pharmaceutical grade nicotine, state-of-the-art resins to bind the nicotine and time-release it in the optimal fashion. This was combined with flavor chemicals and pH buffers to create the overall experience. Essentially, we needed to get high quality nicotine, bind it tightly to a resin that would release it into the oral mucosa of the user, mask the taste of nicotine and provide a pleasant flavor, and, simultaneously, ensure that the pH environment of the mouth was more alkaline so that the nicotine could diffuse optimally through the gums.
Because of our previous success at Soylent, we were in the fortunate position of being able to invest more in the R&D for our product than other startups probably could. This was important to us because we really wanted to get the product right, knowing that the ultimate success of our mission hinged on the quality and experience of using the product.
How have you attracted users and grown your company?
Nearly 1 in 5 people in the United States uses a tobacco product, so consuming nicotine is a much more common habit than many people think. However, because consuming tobacco products is so stigmatized, most people make a concerted effort to hide their usage. Many people don’t post about it on social media or even talk about it with their close friends. Therefore, we faced an interesting problem of having a large market but initial difficulty targeting the right people.
The key to attracting and retaining customers sustainably is this: make a product that you yourself would purchase and use. Think about why you found the product useful and what demos you overlap with and start there. Then get friends who you think might benefit from the product and get their feedback. This early high touch customer development work will at least ensure that you’re starting off on a reasonable foot when you begin ramping up any sort of spend.
Additionally, actually track who and how much your early customers are consuming. Your friends may accept product from you because they want to encourage you and be on your side. However, if they’re just “yessing” you then they’re leading you down a wrong path. Encourage them to be critical but like most people in life, pay attention to their actions rather than your words. If your friend continues to purchase product or increases their order that’s a pretty solid indication that they are using and enjoying the product much more than simply telling you it’s great.
Beyond paid advertising we’ve also invested in content with a blog and a podcast in order to educate and entertain people as well as to boost SEO. Delivering good content as a company is tough and often you’ll see really boring corporate examples. Again the sanity check to do here is “Am I putting out something that I myself would want to read?”. Then think “is this something that my friends would actually to read” without someone having to hold a gun to their head.
What’s your business model, and how have you grown your revenue?
We are a direct to consumer ecommerce business. We grow our revenue primarily through marketing and engaging with customers so that we can reach more people and most effectively explain the benefits of the product.
One slightly unusual aspect of our ecommerce platform is the need to age verify our customers, as we obviously don’t want to sell a nicotine product to anyone who is underage. These added verification steps reduces our margins, but it’s ultimately worthwhile because we want to be responsible.
We try to employ best DTC e-com practices all geared towards optimizing the conversion rate of a customer to purchase and ensuring that we’re continuing to provide them value so that we retain them. One thing we’ve learned on the physical product side of things is to try to steer people to purchase an optimal amount of the product. I think there is a natural intuition to want to increase the cart size of a customer at checkout, however, we’ve found that if you give a customer too much product then it can pile up and they’ll churn because they get frustrated because they have too much and so sometimes getting them to purchase less initially leads to longer term retention and a more realistic use case for the customer.
I would take pricing very seriously and not price your product too low initially. You always end up having more hidden costs than you think and you’ll have the opportunity to drop prices over time as you scale. This is probably more pertinent for physical products since we have significant costs to produce each unit.
What are your goals for the future?
We plan to release new flavors and new form factors of nicotine products in the future, with the goal of always providing the safest and most effective vehicles for getting tobacco users to switch. In order to do this we will need to continue to invest in R&D to ensure we’re doing everything we can to push the envelope from a technological progress standpoint. We’re also continuing to invest in quality and regulatory compliance, since we are in a highly regulated industry. The latter is something many companies will push off at an early stage, but then often finds that it comes back to bite them later, with significant consequences. If we are successful in our mission and can quantifiably verify that we have greatly contributed to people switching away from harmful legacy tobacco products then we will feel extremely fulfilled.
What are the biggest challenges you’ve faced and obstacles you’ve overcome? If you had to start over, what would you do differently?
Challenges for the businesses that I’ve been involved in typically are related to inventory management, marketing, and engineering. That’s why at Lucy each cofounder has an extensive background in each of those categories.
We sell a physical product, so we need to ensure that it’s produced frequently enough and in enough quantity to satisfy demand but also not so much that it creates cash flow constraints, or even worse, expires. At Soylent, we once had a year-long backlog of orders due to manufacturing bottlenecks, which was incredibly frustrating for us as well as our customers.
On the marketing side, optimizing your CAC is essential for driving growth of your business. Attribution (ie knowing what marketing effort caused customers to purchase) is an ongoing guessing game, and still not a science. It’s more straightforward with paid social, but I believe it’s unwise to rely solely on one channel (e.g. Facebook) as your primary engine of growth. So you’re eternally testing different creative, messaging, and delivery methods to get your marketing out to the public’s eyes and doing everything you can to determine what worked best and why. I’ve wasted a lot of money over the years on things that didn’t work, but I’ve also been fortunate and had a lot of initiatives work out well.
On the engineering side of things we’re always trying to get more output and engineering cycles out of whatever size dev team we work with. Product management is really an art, so prioritizing and getting teams to work in sync for optimum efficiency is key. Fortunately, there is a wealth of books and articles about this side of the business with significant enduring wisdom.
Have you found anything particularly helpful or advantageous?
What I found to be most helpful in both Soylent and Lucy was having a scientific background. That knowledge helped me sort through research concerning different properties of ingredients that we would put into Soylent. It also helped very much when I sorted through the different papers that discussed the effects of nicotine on the human body depending on the method of administration. This is critical because there is a lot of misinformation in the popular press about these topics, so public perception differs greatly from scientific consensus.
This is a really banal and basic piece of advice but…waking up really early (5:30am) as frequently as possible for me is just a keystone habit. If you’re waking up early you don’t waste time at night when you’re likely to be tired and on auto-pilot just surfing the internet etc. You wake up and have time to workout, plan out the day, and work on a few things before people start contacting you.
What’s your advice for entrepreneurs who are just starting out?
I think the number 1 rule that I’ve found in business is that you should do everything you can to overcome Hofstadter’s law, which for those who don’t know is: “It always takes longer than you expect, even when you take into account Hofstadter’s Law.” In other words, everything in life takes longer than you would like, so you need to do everything that you can to shorten the cycles of iteration for your business. All that requires is a smart and consistent project management system and a motivated and talented team. Easy right?
YCombinator has a ton of free resources, such as blog posts that describe a consistent philosophy of cultivating a bias towards action. It’s intellectually an easy concept to grasp but emotionally very hard for most people to absorb. Sam Altman has a great startup school course. Steve Blank has written a ton of books around how to succeed in the startup world. All of these are worth going through multiple times.
Where can we go to learn more?
Check out our website at www.Lucy.co or a blog post I wrote about the origin of the company. For those interested in our podcast, it’s called How To Sell Drugs.
I’m happy to respond to any questions that people would care to ask below in the comment section.
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Founder Interviews: David Renteln of Lucy was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.
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