How Kat Schneider built female-focused vitamin startup Ritual – Business Insider
On Tuesday, female-focused vitamin startup Ritual announced that it was launching a men’s daily multivitamin in its latest attempt to upend the $123 billion vitamins and supplements market.
Founder and CEO Katerina Schneider told Business Insider that the company is also planning to expand into supplements for children and teenagers, a major evolution for the five-year old startup, last valued at $125 million.
Trained in applied mathematics and economics at Brown University, Schneider started Ritual after her experience shopping for prenatal vitamins left her with more questions than answers.
She is relying on her analytical background to guide her company through the minefield that is the sparsely-regulated world of vitamins and supplements at a time when the coronavirus has put health misinformation in the spotlight.
A slim, gender-neutral hand holds a small capsule between two manicured fingers. Set against a pale yellow backdrop, the transparent capsule gleams like a miniature work of art. But female Instagram users over 18 will recognize the image as one of the app’s most ubiquitous ads for the vitamin startup Ritual.
The brains behind the company and its calming aesthetic belong to Katerina Schneider, its founder and CEO. She has spent nearly five years building a brand tailored for an Instagram audience, with a healthy dose of female empowerment in its marketing messages, educational material, and product formulas.
Schneider was a mathematician, business development exec, and then venture capitalist before she started Ritual as a personal mission and raised her first funding round against the odds — she was a pregnant woman in the mostly-male world of venture capital. Schneider took a cold plunge into the huge vitamin and supplements industry as a tiny challenger to giant, entrenched corporations, and within about three years clinched a $125 million valuation for her startup.
Ritual broke into the market in 2016 with its flagship daily multivitamin for women, and followed up with a prenatal multivitamin in October 2018. A year later, in November 2019, the startup released another multivitamin designed for women over 50 years old.
So it might come as a surprise when Schneider’s company rolls out its latest offering on Tuesday — a daily multivitamin tailored for men. Such men’s products already fill drugstore shelves, many from mundane brands like One-A-Day and Centrum. But the men’s vitamin market also abounds with performance-enhancement claims for supplements such as GNC MegaMen Healthy Testosterone, as well as conspiracy theorist Alex Jones’s Infowars product line, which purports to include an ingredient called Horny Goat Weed.
All this is a far cry from the serene atmosphere of purity that Ritual projects, with its crystal-clear bottles and transparent vitamin capsules that boast “clean” nutrients such as vegan-certified Vitamin D3 derived from lichen.
For some startups, a plunge into such a widely different customer base would call for a separate and sweeping marketing redesign targeted at men. But Schneider, Ritual’s founder and CEO, told Business Insider that she doesn’t plan on relaunching the men’s vitamin with a new, macho-branded ad campaign.
Schneider said men aren’t necessarily the key target audience for the marketing of Ritual’s new multivitamins for men, as counterintuitive as that may seem. Women tend to be the main purchasers in a family, and especially so when it comes to health and personal care products, Schneider has found. So in the end, the marketing message didn’t have to change all that drastically.
“Many women have some sort of man in their lives, whether it’s a father, son, or husband, and the collective health of their family is a bigger priority than their own,” Schneider said.
The $123 billion dietary supplements market has its share of skeptics. With little regulatory oversight, the vitamins and supplements market has earned a reputation as a magnet for exaggerated, and sometimes even dangerous, health claims. Recent scientific studies, for example, have found that taking daily multivitamins does not improve health in the general population or reduce strokes. With the coronavirus pandemic raging, health claims on social media are facing ever greater scrutiny.
To succeed in its next phase, Ritual’s ability to balance credibility and trust with its Instagram allure will be put to the test more than ever. Beyond the men’s multivitamin, Ritual also plans to launch a multivitamin for teenagers, and another for children, as early as the fall of this year. Schneider sees an opening for women to take on the entire family’s health with a single monthly subscription from Ritual.
Schneider is relying on her analytical background to guide her company through the minefield that is the sparsely-regulated supplements industry. Trained in applied mathematics and economics at Brown University, Schneider, who goes by the name Kat, spent her earliest career days working up analytical models for investment banks on deals such as capital raises and acquisitions. Now she’s trying to help address the heightened health concerns for both women and men during the coronavirus crisis, but in an environment rife with misinformation.
Ritual says it is seeing “strong demand” during the coronavirus crisis, but didn’t say whether demand has increased or decreased. So far, Ritual isn’t revealing financial details that would show what inroads it has made into the supplements market.
As a private company, Ritual doesn’t disclose its revenue or customer numbers. The company says it is selling a bottle of multivitamins about every 16 seconds, based on average paid invoices per day. Almost all of its sales are in the US for now.
The startup was valued at $125 million when it raised $25 million in a Series B fundraising in mid-2018, according to Pitchbook data. All told, Ritual has raised roughly $41.5 million in venture funding since Schneider incorporated the company in 2015. With nearly 70 employees, Ritual hasn’t had to impose layoffs during the coronavirus pandemic, the company says.
If nothing else, Schneider is embarking on her new initiatives with careful deliberation. “Move fast and break things” may be the sure route to success for some startup founders, but Schneider has been trying to making a case for “Take time and build it right.”
Two of Ritual’s early investors told Business Insider that Schneider’s skeptical approach will be an advantage as she steers the company’s marketing machine towards a more gender-inclusive strategy after having leaned heavily into the by-women, for-women messaging over her company’s first four years.
Ritual changed the ingredients for its multivitamin for men, who fall behind women in their daily intake of fruits and vegetables and so are lacking many of the micronutrients women get purely from their diets. That conclusion is in line with Schneider’s market research, which found that men value exercise over diet when evaluating their overall wellness, and could explain many of the hyper-masculine marketing and product options currently on offer for men.
The formula for the planned children’s multivitamin is tailored for “picky eaters,” to fill in the nutritional gaps that result when they leave healthy food servings on their plates. The kids’ product will be a chewable gummy rather than a capsule, the company says.
“He told me I could start the business or have a family, but I would have a hard time doing both”
Schneider’s guiding philosophy of transparency in ingredients, artful design, and an unshakeable reliance on her own judgment remain central to the company.
“My parents taught me from a very early age to make my own way — my mother didn’t know English and ended up going to business school and working on Wall Street,” said Schneider, whose family left the Soviet Union as refugees and moved to the US when she was 4 years old. “I’ve been around entrepreneurship and business my entire life.”
Schneider was a former business development consultant to the CEO of Shine, and later the global lead of innovation at Universal Music and senior business development consultant advisor to its CEO. She mulled hard before leaving her last job at a venture capital firm to found Ritual, her passion project. When she finally took the leap, she hired a scientist and later rounded up an advisory board of researchers to help develop her multivitamin formulas.
Still, she faced a tough slog trying to secure funding as a pregnant woman in a heavily male venture firm environment with few women investors.
“There was push back there. I went into one well-known investor’s office to say I’m starting this company, and he told me I could start the business or have a family, but I would have a hard time doing both,” Schneider recalled. “It was really depressing for a second, but it taught me to prove him wrong and show other women they could start companies and have families and kids, if that’s what they want.”
Not all VCs turned a deaf ear.
“She told me she was leaving her fancy VC job and starting a company, which is not an easy decision or lifestyle,” Founders Fund’s Singerman said of Schneider, who had impressed him when they met a few years earlier. “I backed her immediately.”
Getting into the weeds to create a multi-billion dollar community
Ritual’s multivitamins are priced at a premium. A one-month supply of Ritual’s Essential Prenatal multivitamin goes for $35, while CVS currently advertises 100 tabs of its own prenatal supplement for $10.79.
But Ritual positions its multivitamins as more than just another item to toss in a drugstore shopping basket with the toothpaste and tissues. Its marketing follows the pattern seen more often in the fashion and cosmetics industries, by making the consumer feel like she’s joining a community of people who share the same values and sense of style.
There’s a big community. Online sales of dietary supplements have grown by an average of more than 17 percent a year in the United States, IBISWorld reports. The research firm estimates that US online sales will total $18.3 billion this year.
In 2019, the global market for dietary supplements reached more than $123 billion, according to data firm Grand View Research. That encompasses not only vitamins but also categories including omega fatty acids, fibers, botanicals, proteins, and amino acids. However, vitamins make up nearly a third of the market.
Schneider works with scientists on her team to evaluate research, design multivitamin formulas, and study the supply chain for the nutrients packed into her multivitamin capsules, her supporters say. Ritual shares summaries of this information with customers on its website.
“She looks through research and is able to get into the weeds,” Ritual’s chief scientist Dr. Nima Alamdari told Business Insider.
“The products we are launching meet all her standards as a perfectionist, but it took us two years longer to roll them out than one would have thought it would,” Green told Business Insider.
Such delays can come at a cost in such a competitive market. But on the other hand, it was this thoroughness of Schneider’s that roped in the early staffer who would become her top lieutenant.
In 2016, Liz Reifsnyder was ready to pack it in and move back to New York City from Southern California when she strolled into a local açai bowl spot to meet an entrepreneur that one of her connections found interesting. Reifsnyder had no serious expectations of working for Schneider’s company.
She herself had never purchased vitamins or supplements as an adult.
Schneider pulled out her laptop and impressed Reifsnyder with her knowledge of the science behind her plan.
“She basically walked me through the product, which was the multivitamin for women, and the vision behind it and the mission of the company, but she also went into deep, deep detail in the formula,” Reifsnyder recalled. “I was really compelled by that.”
Hours later, Reifsnyder walked out convinced that she had to be a part of Ritual. She signed on as Ritual’s vice president of operations and strategy, and one month later, Ritual launched its flagship women’s daily multivitamin. Reifsnyder is now the company’s chief operating officer.
A second in command for the next stage
Schneider has been able to rely on Singerman’s help to meet the challenges of growth. Singerman said he has advised her about negative press and difficult staff decisions such as letting employees go. Green has been working with Schneider to delegate more, and lean heavily on Reifsnyder as second in command as the company enters its next stage.
“I admire her partnership with Liz,” Green said. “They yin and yang off of each other where they each have a strong view of things but still have that trust between them. For Kat, it’s a balance of holding the vision of her company, but letting other people have a role in it, too.”
Singerman said bringing on Reifsnyder was a pivotal step for Schneider. “She has struggled with finding the right person on the team,” Singerman said. “The main thing she did right was get Liz. That was a huge win for her.”
Reifsnyder’s role has evolved to fill gaps as the company and Schneider evolved. Schneider handles product development, brand, and creative strategy, while Reifsnyder handles operations, custom ecommerce platform, and growth.
“We definitely since day one have had a good symbiotic relationship, and found a balance that works really well,” Reifsnyder told Business Insider.
The challenge before Schneider now is to win over a new customer group in a new market, with even bigger competitors in her sights.