Mimi McLean:
Welcome to The Badass CEO podcast. This is Mimi McLean. I'm a mom of five, entrepreneur, Columbia Business School grad, CPA and angel investor. And I'm here to share with you my passion for entrepreneurship.

Mimi McLean:
Throughout my career, I have met many incredible people who have started businesses, disrupted industries, persevered and turned opportunity into success. Each episode we will discuss what it takes to become and continue to be a badass CEO, directly from the entrepreneurs who have made it happen. If you're new in your career, dreaming about starting your own business, or already an entrepreneur, The Badass CEO podcast is for you. I want to give you the drive and tools needed to succeed in following your dreams.

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Mimi McLean:
Hi, welcome back to The Badass CEO, this is your host, Mimi McLean, and today I have Madeline Lauf, and she's the founder and CEO of Begin Health. And she created this company for every family that values kid health as a top priority. She has some amazing dreams for Begin and is so grateful so many of you trust her to make the best prebiotic for your kids.

Mimi McLean:
She will help your kids poop. And as someone who had stomach discomfort growing up, she's excited to create an HMO-based prebiotic to avoid issues and boost growing immune systems. To get your top 10 tips every entrepreneur should know, go to thebadassceo.com/tips.

Mimi McLean:
Madeline, thank you so much for coming on today. I really appreciate it. And I'm excited about your company, Begin Health, because it's something that I really value, is your microbiome, and people don't talk about it enough. And I know it's becoming a trendy thing, but just having my own health issues. And I don't even know if you know I have a different podcast called Lyme 360, where I interview people every week about health, and doctors, and treatments. And this is a big part of the healing process, is making sure that your gut is working and it kind of connects to everything.

Mimi McLean:
So this is something that's near and dear to my heart. So thank you so much for coming on and I'd love to start out by just asking you how you came up with the idea and what led you to start this company?

Madeline Lauf:
For sure. Well, let's just start. I've always been super passionate about health in general. I come from rural Illinois, and admittedly, we're not super helpful in our nutrition out there and it was just growing up seeing just the over-consumption of processed foods and the fast food. And it broke my heart to see little kids that were overweight and you just can tell that they're not leading a healthy lifestyle.

Madeline Lauf:
And it was just something that I wanted to get involved with because at the end of the day, the future of America starts with our kids, and if our kids are not healthy, it's going to be a big problem. So that's what got me started in looking into health and specifically helping kids.

Mimi McLean:
And so what were you doing before you started Begin Health?

Madeline Lauf:
I've worked in tech for my full career up until this point. I started off in, I would say, the finance world right out of college and quickly realized that that was not the path I wanted to be on and wanted to get my hands dirty and actually help build companies and startups. So over that timeframe I ended up as a marketer in tech companies.

Mimi McLean:
That's great. And then you had this idea, let's do a probiotic. How did you even begin to know what to do? I think a lot of people have ideas, and it's like actually doing it and putting it in motion is the hardest part.

Madeline Lauf:
It was a nontraditional path, I would say. So my initial passion, and continues to be, is kids' health. And so actually I had spent some time living in Asia and in front of me was this massive infant formula market. There was tons of my friends and their friends were always trying to bring the American infant formulas to Asia. And it was like, what's going on here?

Madeline Lauf:
And it turned out that the American US formulas were highly coveted in Asia and abroad. And it was because of the safety issues that Asia had had prior that made the US companies really highly valued. And so actually I was like, wait a minute, they love these infant formulas over in Asia. I come from rural Illinois. We used to have tons of dairy farms around us, maybe I can create a healthier for you infant formula and sell it to Asia markets. And so actually that was how I got started.

Mimi McLean:
Which is so hard to do, because I've looked into that business. I brought all of my formula from Germany, from Europe. I didn't give my kids American formula. I brought it from Europe and it is next impossible to start a formula company in the United States.

Madeline Lauf:
Totally. And so I found that out the hard way and similarly to I think a lot of other entrepreneurs who are, we wanted to sell something better to Asia, but it turned out America. There was opportunities for improvement with the American formulas and a lot of the American parents were actually importing from Europe just like you.

Madeline Lauf:
And so they're absolutely and my opinion to this day is that there is opportunity for improvement in that market. But it's a very hard market. It's almost like you're starting a pharmaceutical company. And as a startup, you're lean, you're cash-trapped, you have to start off smaller and starting as something that requires either FDA approval or some large clinical study is just hard.

Madeline Lauf:
And so actually that was when we pivoted and I will tell you the nontraditional path that we took to even starting Begin and what it is in its present day was that we're like, "Okay, we know we want to impact kids health. We can't do formula yet, we'll do that maybe later. Well, let's try something else." And so we actually started a kids' milk company.

Madeline Lauf:
So we were building a better for you kids' little milk that was ready to drink, that was for on the go parents that just served the key nutrients that kids tend to be deficient in today. And so we built that and you would not believe, I just came up against every no in the world when it came to investors.

Madeline Lauf:
No, but what about this? But what about that? It's too expensive, it's too this, too that, to the point where we actually ran out of money and we could not continue that path. But we had learned a huge learning in having built that product, that learning was that the parents that were most excited about that product actually were the parents that had picky eaters.

Madeline Lauf:
And so when we started digging in there like, "Oh, well tell us more about that." It turned out that those parents were struggling with constipation as a issue that eating was essentially leading to the constipation. We're like, "Well, what are you doing for it?" It's like, "Oh, well, we're also taking a daily laxative."

Madeline Lauf:
And that was the huge eye opening beginning to what Begin Health is to its present day, was that the kids were suffering from constipation at astronomical rates and it's only becoming worse. And the only solution on the market was a chemical. And so that was when we decided to pivot for our third time and launch Begin Growing up Prebiotics, which essentially addresses this challenge.

Mimi McLean:
That's a great story. Now, were you working at this point or did you stop working completely and focus on this?

Madeline Lauf:
I was always working on Begin. It's just, it took different iterations.

Mimi McLean:
So this whole time you had already stopped working. You're like, "I'm doing this?"

Madeline Lauf:
Oh yeah. I was all in. I was all in. So it was a very much a, continue, you have to keep plowing through, you're going to come up against roadblocks. In my opinion, I feel like if you want to succeed in business or seeing your ideas through, you just have to keep pivoting essentially until you find the one that works.

Mimi McLean:
And then who helped you formulate? Did you do that on your own? Did you find a dietician? How did you do that?

Madeline Lauf:
So that was one of the things that I'm very passionate about, is everything that we do is very science-based and working with the leading experts that we can find. I was very fortunate to work with a leading scientist, a PhD in nutritional biochemistry that had worked with kids' products and had been in the industry for a long time, also registered dietician. And so she was the one that was responsible for helping us initially formulate. And then we had a panel of pediatric gastroenterologists, pediatricians and academics weigh in on that formulation.

Mimi McLean:
That's great. And then where are you distributing? Are you going direct-to-consumer? Are you going to doctor's offices or into grocery stores or?

Madeline Lauf:
We're start off as a direct-to-consumer business, and so far we've been launched for one year on our platform alone. And we are now just starting to look at other distribution channels, looking at a major retail partnership this year, potentially getting on Amazon, there's other platforms where parents live. We would ultimately love to be in pediatric offices since so many visits are constipation-related and that just takes a little bit more time and energy. But hopefully that down the road will absolutely be every pediatric doctor's office.

Mimi McLean:
Do you have to keep it refrigerated or no?

Madeline Lauf:
No. We always say the difference between the prebiotics and the probiotics, the probiotics are the live bacteria, prebiotics are the food for those live bacteria. So it's not unstable at room temperature. So no need for refrigeration. It can be hot or cold. You can bake with Begin. So there's many more use cases, I would say, than just probiotics alone.

Mimi McLean:
Oh, that's great. And then I see that you made it onto the Forbes Next 1000 list. So I just wanted to talk about that, congratulations. And what does that mean as far as like, did you get asked? Did you submit it? How does that work?

Madeline Lauf:
We are super fortunate to be identified as a Next 1000 company. I would say that it took us a long time to get here, but it's really awesome to finally see the impact that we're having on this category see some recognition. And quite frankly, it was one of those things where our team just identified the opportunity and we got selected.

Mimi McLean:
That's great. And then as far as funding, because you talked about how you did different iterations to get to where you are now and you talked about having funding right off the bat. Can you talk about that process? Like obviously it must have been a seed round or friends and family round, and how hard was that and any advice that you have for that for people who are listening?

Madeline Lauf:
I was super lucky that our first check-in was a really awesome accelerator called Village Global. They honestly invested on the back of a napkin of the idea, which was at the time infant formula. And they were really taking a bet on me as an entrepreneur and we were lucky to have that initial funding. It's essentially like an accelerator that as an early partner and helps you get off the ground.

Madeline Lauf:
And so that was our first check-in and we did end up going out full or a precede round. And quite frankly, I mean, I was pretty open about it, we fell flat on our face. We struggled. We raised some initial funding for that initial idea. We didn't even know that we need a lot more money basically at the time.

Madeline Lauf:
And so once we really figured that out, it's like we had this round of funding, but it wasn't enough to get to that next milestone. And so that was essentially like when we had to face some really hard dark times, because at the end of the day you need funding in order to build ideas. We're a consumable company, it's not a software company.

Mimi McLean:
At least you need inventory and branding.

Madeline Lauf:
We need to have some formulation work, we need to have initial sampling. It takes money. And I think that's what's different from a consumer company than say a tech company, software company. It takes a lot longer also. It's not something you can just build over the weekend, or even over a week or more, and then not only that, but then it takes time to get feedback and make sure that this is the product you want to build.

Madeline Lauf:
So we went through all of that and we really struggled for funding. We were so fortunate that we had some key angels that basically kept us afloat while we reiterated a few times. And ultimately I think the biggest difference when it came to funding was it was so much harder to raise money off of any idea. It happens, but it's just harder. And things really changed once we were able to truly show the impact that we were having on kids, on families.

Madeline Lauf:
And quite frankly, I think at the end of the day, business is business, and investors want to invest in a business that's taking off. And so once we were able to really show that revenue growth, the retention metrics that are just incredible for our business, we were able to more successfully raise more funding.

Mimi McLean:
Now, what would you say is the hardest lesson that you've learned to date?

Madeline Lauf:
I would say the hardest lesson is just you have to figure out a path when it seems like every single path has been closed. And there still needs to be a way and you need to continue to just believe that the thing that you believe is true and just keep marching towards that. And I think it can get really dark, it can seem like you're alone, it can seem like everybody in the world's up against you and nobody wants the thing that you envision. And even then you still have to find a path. And I think that's the hardest lesson, was that you just have to keep going, even when it feels like it's time to stop.

Mimi McLean:
It's true. I think like a grit is probably one of the number one aspects when I've asked a lot of CEOs, what do you think makes you different than other ones or businesses that have this interest sticking it out and having that grit and just being able to adapt to whatever is thrown at you to keep changing until you find. Listening to your customers, I think too is huge. That's what we were talking about earlier today with somebody else.

Madeline Lauf:
That's the piece that you mentioned, is the adaptability. It's like you believe in this thing, but you have to also be serious with yourself and say, "Hey, maybe this thing's not working in this way. If we want to keep pursuing this, we have to be adaptable." And I think that's the key word here.

Madeline Lauf:
I love the quote by, I think it was like Darwin, when it wasn't that the strongest or the smartest survived, but it was the most adaptable, it absolutely applies in business, where it's like, you have to be adaptable. And if the thing's aren't working, fine, you cut your losses and you keep going, and you find a new way. But you have to find a way, and I think that to me is the key learning.

Mimi McLean:
I agree. I don't know if you know who Tai Lopez is. Do you follow him at all?

Madeline Lauf:
I'm not sure I do. No.

Mimi McLean:
He's an influencer. He's a digital marketing guy and now he's done so well with digital marketing and now he's gone and bought companies. For example, he bought RadioShack and Dressbarn. And so he is taking these bankrupt companies. I think he might even bought [inaudible 00:16:23] but I'm not positive. I know he definitely bought RadioShack. And he buys them and he is going to spin it because it's all a digital, that's a brand name. So now you're going to spin it and do the whole digital world. He did a whole talk on that, what you're talking about with the adaptability and Darwin.

Mimi McLean:
But with that being said, because you're a direct-to-consumer, what did you do? Because it's so hard to get eyeballs to come to your website and it's extremely expensive. I mean, did you use Google Ads? They don't just come. I have friends that call and be like, "Okay, I'm going to do this," and then when the website's done, "I know a lot of people." I'm like, "No, no, no, no, no. You have no idea. It's so much harder than you think to get followers on your social media and to get eyeballs that actually hit pay." Any advice that you have to that, how you got customers?

Madeline Lauf:
I so believe your first 100 customers of course are your hardest customers you will ever get, assuming your product is great, because they'll eventually come back. But the first 100 are, it's like, you know you almost have to personally be selling every single one of them. And we were really lucky because the problem that we are addressing is so rampant in this population. Kids are struggling to poop. It's a problem and it's almost everywhere.

Madeline Lauf:
What we were finding was that we were in a ton of the mom groups on Facebook. And so the minute that someone would type in, "My child is struggling. I'm at my wits end. I can't find a solution." And I still actually to this day do this, I will personally DM you and tell you, one, "I understand the trouble you're going through, which by the way, I struggled with my entire life. And so I'm very empathetic to that problem. And it's very intuitive problem to me too, as I've been trying to solve it my entire life." But it's just honestly you go find your customer and you sell them on your own. And so we did that through the Facebook platform.

Mimi McLean:
But the Facebook groups, don't a lot of them have rules about-

Madeline Lauf:
They do.

Mimi McLean:
... approaching people for selling and posting about your company?

Madeline Lauf:
So our trick was if we could find them on Facebook, either A, we would say, "We will DM you," or we would actually find them on Instagram. There's so many times I refound the person from Facebook in Instagram and then DMed them on Instagram and said, "Hey, I'm sorry you're struggling with this, take a look at Begin."

Mimi McLean:
Would they be like, "How did you find us?" Or no?

Madeline Lauf:
Sometime like, "Hey, I saw that you're a parent posting..." You have to be scrappy. It's like I found you-

Mimi McLean:
You never got in trouble though, or kicked out of a group?

Madeline Lauf:
No, I really didn't. No. That was honestly the way we got our first 100 customers. I was lucky also we had one of our customers who was so excited about our product and a mom too helped really bring in a ton of other parents because parents trust her because she's a mom and this was solving the problem for her. And so that early customer testimonial was really helpful too.

Mimi McLean:
Now, have you joined any affiliate programs like ShareASale or anything like that to-

Madeline Lauf:
Yeah, we have one. We haven't really worked too much on that. I am a huge fan of the affiliate program because from a digital marketing perspective and cost perspective, we found that the cost of customer acquisition is so much lower when we do have an affiliate program, because it's just getting our name out there and someone who recommends it in comparison to the ads platforms. When we first launched on ads, it was like $100 to acquire one customer. And so it was just like, that's not sustainable. So we're looking at adding more of the affiliates into our mix.

Mimi McLean:
Especially because you don't have to pay for them until they actually get a sale, right?

Madeline Lauf:
Exactly.

Mimi McLean:
Have you spent a lot of money on advertising and stuff like Google Ads and Facebook ads, or have you found that worthwhile?

Madeline Lauf:
So far we have found success on the paid platforms. We are always looking to diversify and not be so reliant on ads. Our number one also is just word of mouth. And once Begin works for your child, which the majority of the time, the parent is so excited to recommend this to all the parents that are also struggling. And so that we find that parent to parent feedback or recommendation is so powerful, especially as an early company. So now it's to the point where it's like people hear about and they're coming to us, which has been a big change just in the one year that we've been in business.

Mimi McLean:
That's great. That's great. What advice would you give to any other CEOs or entrepreneurs that are listening for lessons that you've learned over the past couple of years?

Madeline Lauf:
I have two, but the number one lesson that I always read from Startup 101 books was that they're like, "What is the pain point that you are solving? And are you addressing that pain point in a way that they know no longer have that pain point?" And that was a very painful lesson for me to learn. Because when I first started my company, I set off obviously to do infant formula. But when I pivoted, I was like, we'll get there if we do this kids' milk.

Madeline Lauf:
Well, the kids' milk was really fun and cute. To me, there's still nothing on the market that's like it, and it was really fun. Building a fun kids nutrition product. But fun does not mean that there's a pain point. And what is the pain point? And is it already being solved elsewhere?

Madeline Lauf:
In this case it was like, well, you're competing against milk generally, and the milk aisle. You're competing against maybe the plant-based milk. There were other things that were solving that problem, but that wasn't even a problem. You have to convince someone that they needed this milk that was healthier for you. Whereas when we pivoted, the learning was that we needed to address a pain point that was very clear. And in our case there was a pain point.

Madeline Lauf:
There was crying, screaming, emotional, physical, physiological challenges that families were facing and that they needed to have that resolved. And our product was built to do that. And I think that was the difference with, "Here's a healthier for you." You want to be a great parent, have a healthy snack versus a, "We are solving the thing that's making you cry and scream."

Madeline Lauf:
And I think that's the big lesson that I now share with everyone. And again, it feels so obvious. But it was a painful lesson for us that you solve a pain point and that's how you're going to build a big business.

Mimi McLean:
That's true.

Madeline Lauf:
So that's my first learning or thing that I would share with everyone. It's make sure you know the pain point that you're solving. And two is don't give up. It's going to be hard. And yes, some of the days are hard and dark and it seems like there's nowhere else to go get funding or there's always a way, you just have to keep going. And I cannot iterate that enough. And to me that's the difference between successful entrepreneurs and the ones that ultimately just don't make it work out is that you just can't stop.

Mimi McLean:
That's true. Well, thank you so much. This has been amazing and I wish you the best of luck.

Madeline Lauf:
Thanks Mimi. I appreciate. Take care.

Mimi McLean:
Take care. Thank you for joining us on The Badass CEO. To get your copy of the top 10 tips every entrepreneur should know, go to thebadassceo.com/tips. Also, please leave a review as it helps others find us. If you have any ideas or suggestions, I would love to hear them. So email me at Mimi@thebadassceo.com. See you next week and thank you for listening.