CEO and Co-Founder of OK Capsule - Dr. Andrew Brandeis

Andrew, it's good to see you again. Last time we talked, I realized I could build my own brand of supplements, as I'm a big fan and have been taking them forever. I was excited for this discussion. Can you give us a brief introduction to your work?

I'd be happy to. Thanks for having me. I run a company that provides private label personalized supplements for businesses looking to sell to their customers. Many brands don’t manufacture their supplements but market them. We're part of the supply chain, making it simple for companies to modernize their offerings by personalizing supplements for the end consumer.

So, if I want to start my own brand or am a customer looking to do so without dealing with manufacturing or the supply chain, your solution is very appealing. You handle the complexity behind the scenes, which is interesting.

Uh, interesting that you are providing this solution, but let's go a bit back. How did things start? What were you doing before, uh, starting your company?

Yeah. Um, so I worked in San Francisco, I had an urgent care center and I'm a, I'm a naturopathic doctor. So my degree is ND. Um, and I worked with four MDs, medical doctors, in the Mission in San Francisco and we had an urgent care center and it was great. I was learning, um, like the sort of traditional medical, urgent care, pharmaceutical approach from them, and they were learning the sort of more integrated and holistic approach from me. And to be fair, we all brought a lot of both to the table, right? Like, it was a great group of clinicians to work with. 

One of the things I saw when I was practicing medicine, there was that pharmaceuticals tend to work really well for acute illness. If you break something, if there's something infected, right? If you need something to act quickly, pharmaceutical, and I'm generalizing, but pharmaceuticals tend to be really good for that. Supplements, on the other hand, tend to be effective for more chronic conditions that people sort of have to deal with, um, on an ongoing basis and I'm generalizing.

There's definitely crossover, but that's kind of what I saw when I was practicing. And then I noticed a big sort of like a user experience problem, which is that I could prescribe, like, one pill for you to, you know, sleep at night and you just take this one tiny little pill, or I could prescribe, uh, three or four or five different supplements that I knew if you took morning and night every day for, like, three weeks, you'd be sleeping better.

And then you wouldn't need the pills anymore, but it's a really bad user experience to expect a consumer to open like five bottles, two or three, two times a day, you know, like it just the supplements. I learned that they really work if you take them and, you know, consumers like they, they have the best intentions, but don't necessarily follow through unless we, as the manufacturers or the CPG people, make a great experience.

By having the idea, how do you make the business? How did you start? Did you look for a co-founder? What was the starting point?

The journey was kind of fun. Being in San Francisco, I was around all these entrepreneurs. My patients were VCs and founders, and I've always been an entrepreneur. I don't think I ever really wanted to grow up and be a doctor. I wanted to grow up and do a million things, and being a doctor was one of them. I had a startup before this one, where we allowed doctors to search for any diagnosis and see how other doctors would treat it, sort of crowdsourcing treatments for doctors.

For example, if you are a doctor and you use a physician's desk reference to look up how to treat a urinary tract infection, it's going to tell you this antibiotic or that antibiotic, but there were no references that were saying, what about cranberry? Or what about D-mannose? Or what about some of these other less pharmaceutical options that might be available?

So I wanted to build that reference and decided to crowdsource it amongst doctors. That was called Share Practice, and that was my first venture-backed foray into this world, just building products. My mind is always churning on how to solve big problems. After Share Practice, as I'm aging, I wanted to do everything I can to maintain my health, and for me, supplements are a really big part of that.

I remember one day I was looking in my medicine cabinet at home, filled with supplement bottles and a little bit of pharmaceuticals, pulling out the things I wanted to take that day. My wife was doing the same. We were doing this every day, and one day, I've got a little respiratory infection, so I want to get my immune supplements, and we're like, there's got to be a better way to do this. It's ridiculous, it was 2019 at that time.

I wanted a way to make it really easy for me to get the supplements I want to take into a pack for me. When I looked around, there were one or two companies that were selling supplements with an interface for it, but they were very mass market, the quality wasn't necessarily there, the array of supplements I would want to take wasn't there. So I just saw this gap between having the technology to personalize a convenient experience for me, but the market wasn't quite there.

I didn't want to be a consumer-facing brand, because in the supplement industry, there's a lot of brand loyalty associated with the transparency and quality of the supplement.

I didn't want to compete with the companies that I thought were doing a good job. I still wanted to take their supplements; I just didn't want them in bottles anymore. So I wanted to build a tool to get all those brands that I already liked onto my platform rather than building something to compete with all of them. It's more of a picks and shovels model, in the background. That's where the idea came from, really trying to solve a personal use case for me.

OK Capsule’s Funding Rounds and How it Evolved From six kinds of customers at the beginning, evolving into businesses

You have the idea, how do they choose? How did you start from there? Did you decide to raise funding as the first step because it's a very expensive business to run, or did you bring people on board? What were your first steps?

My first step, which may surprise you, was based on advice from an investor friend. He suggested getting a handful of Letters of Intent (LOIs) from potential customers to see if they would be interested. I reached out to six companies, ranging from standard supplement companies to a DNA test company that wanted to sell personalized supplements based on their DNA results, and everyone was interested.

With six LOIs, I approached previous investors from my last startup and their friends and family. It was pretty straightforward to show real business interest in this solution. That's where I started, and then we got a proof of concept going and were able to raise a proper seed round.

What learnings did you take as an entrepreneur in terms of fundraising? What can founders learn from you?

Dr. Andrew:  The answer has changed over the last few years due to the current economic environment. It used to be easier with just a great idea, team, and vision. Now, a good pitch deck with a clear narrative, problem definition, target customers, and unit economics is crucial. Many founders treat their deck like a mandatory task, not a tool. The more you pitch, the more refined your narrative becomes, because you're telling a story to investors.

Your deck should express your vision clearly. I also invest, and often I ask questions that I feel should have been addressed. Founders should incorporate feedback into their deck continuously until it answers all potential questions. Too many entrepreneurs don't refine their narrative, which is essential for successful fundraising.

I think you mentioned that you did that when it comes to fundraising, you found the six kind of customers at the beginning. Would you say that the type of customers you had at the beginning are the type of customers that you have today, or did it change over time?

No, it definitely changed over time and I wish I could go back and tell young Andrew all the things he should have known then. But at the beginning of our company, we were taking any customer that would sign up with us. I was pitching friends, I was pitching every business. I wasn't asking businesses what their goals and intentions were. I didn't ask if they had a corporate strategy that included a personalized product, right?

We were just taking everybody. And over time, we realized there are sort of five categories that make sense for us. There's like digital health companies, probably a lot of your type of customers, companies that want to leverage some sort of data. Like, maybe it's my Fitbit data, or maybe it's my DNA and then take action based on those results. Right? And supplements is a great example for a DNA test company. Say, "Hey, we've got some research that based on your DNA, you likely need to take A, B, and C." Cool.

So that's like the digital health category. And then there's just e-commerce in general. There are companies that may or may not be selling supplements at all. And if they are, they're in bottles and they wanted to sell a pack. Right? So not just like a sleep pill, but a whole sleep pack because they recognize that you kind of have to take three or four things in large quantities to really move the needle.

And we haven't really made any headway there. And there's the healthcare practitioner channel, and that one sort of fell into our laps. We just had an email campaign that was going after a lot of different companies that we thought would sell supplements. And we ended up getting a pretty good clinic that is like kind of our bread and butter customer now. So we were trying all these different verticals and we realized that what we call the prescriptive influencer has the most control over the end consumer making the decision to purchase.

So what I mean is if you go to an e-commerce website, you may or may not be convinced that you want to buy a sleep pack or an energy pack or whatever. If your healthcare practitioner is saying, "Hey, you need to take this adrenal support pack because you're tired all morning long," the customer, the patient, is going to buy that. And we didn't realize this when we started the company. I wasn't thinking this was a healthcare practitioner model, but we've found the most stickiness in that vertical.

And so once we learned that, we're like, "Okay, well, we should get more of those types of companies on our platform because it seems like a really good model for us."

What technologies are there, like CGM devices that measure glucose continuously, and I've seen lactate ones entering the market that measure more dynamically, along with sweat sensors. It seems we are moving towards a world with more biomarkers and parameters measured more dynamically. What's your opinion?

The role of the doctor will change significantly with this new technology. A doctor's effectiveness is limited by their knowledge and experience, but we are limited in the biomarkers we can analyze and make recommendations on. The technology coming allows us to look at many biomarkers quickly, using small amounts of blood or sensors in the skin or wearables. It's amazing. Then, putting all that data into a model that understands it, you could get a really interesting recommendation. 

I wonder when that recommendation will become more interesting than what a doctor can make. We might not be there today, but we will be, maybe in five years or thirty years, but it's definitely coming. I'm convinced computers will surpass doctors soon, if not already.

So, as a normal consumer with access to all this data about myself, what do I do with it? Most patients, about 80%, just wanted me to tell them what to do. They weren't interested in understanding the details; they just wanted a recommendation. Then there's 20% who are curious and want to unpack it. There's an opportunity to create tools for that 80% that want a recommendation better than what their doctor can provide, more conveniently, without the waiting room, paperwork, and insurance.

The FDA has safeguards, making it difficult to replace a doctor with a health recommendation. For example, you can't claim on a label that melatonin will make you sleep because that's making a health claim, and you have to go through the FDA's process to make such claims. But this model will have to change too, because there will be too much data. Technology will surpass the FDA's capabilities. At some point, the FDA may become less relevant than commercially available tools for everyday people.

There's a regulatory framework to navigate, but I believe technology will win, making better recommendations. It might be a bumpy road, but we can put safeguards in place to avoid recommending dangerous actions. I think technology could probably do a better job than human brains.

If I want to start my own company today and recommend sleep, I have sleep recommendations for people and want to create my brand. What's the process to create and source these supplements? How does this change if I'm using OKCAPS?

That's a good question. What is your value proposition? What's your key differentiator from other sleep brands? The audience's key differentiator is tech, monitoring something, and making a recommendation based on that.

If you have your key differentiator and know why your sleep thing is a good idea, you normally find a contract manufacturer. You can hire someone for this. You need to find a quality contract manufacturer you can qualify, understand your qualification criteria, then formulate something with them, which takes time and expertise. Then you typically have to purchase a minimum order quantity (MOQ), which tends to be in the hundreds of thousands of pills.

So you have to put out the cash upfront for that and wait for that inventory to get produced and shipped to your 3PL. And now that inventory is sitting there expiring while you're trying to sell it. That's the traditional model. Our model is very different. I wanted to be a customer of this model, I thought about how we can take on all that risk in inventory and waiting on inventory and formulating stuff and consolidate it and spread it out among a lot of clients. So working with OK Capsule, say your eCommerce platform or Shopify, you install our Shopify app.

You have access to about 60 or 70 high-quality products available on demand today, ready to go with no minimums, no upfront costs, and you can start selling those products tomorrow on your platform. And because our Shopify app allows for personalization, our tech interface would allow the sleep brand to connect the value proposition, say, data from an Oura ring to an individualized order for that customer.

And now every customer can get a unique sleep pack to them, or they could choose to have a generic sleep pack. So the key differentiators in our model are no cost and inventory for our clients, and there are no long lead times. We handle all the quality, all the FDA regulations. So the business can focus on what they're good at, and we do what we're good at.

How would you describe the culture in the company today?

It's a mix of a tech company and an understanding of a tech startup, understanding build, measure, learn, minimum viable products. Some folks understand that. And then we have the quality folks who everything is by the book, have a process and an S.O.P. and we have to follow the S.O.P. and can't deviate from the S.O.P. We support, if you're going to fail, do it quickly. You're going to fail. So get it over with as fast as possible and learn from it.

Don't make the same mistake multiple times, make a mistake, it's fine, learn from it, move on. And we value feedback. Everyone feels safe to give feedback because I want the feedback. I want to learn. I want to know how I can do better because if I'm doing better, the company will do better. And all of that stems from conscious leadership.

So it's a methodology to follow and it allows people to recognize the responsibility they have in a particular situation and own it. Like, okay, this is how I screwed up. This is on me. And then I make up over here. This is what I think about. Instead of blaming someone else. So there's a framework for it and I think it makes a very healthy work environment for us.

If we project a hundred years into the future, what are the things that we are going to be looking back saying, this was totally wrong?

The way in which we're using pharmaceuticals today is a bit misguided. I want to see more pharmaceuticals, but intervene higher up in the physiological chain. Right now, a pharmaceutical tries to augment the most downstream symptom, which tends to have consequences and side effects. I'd like to see medicine modifying things upstream, decreasing the downstream consequences. Sugar, the way we look at sugar today is, I want to say criminal.

It's illegal to sell opiates and purposely get people addicted to your drug. That is bad. But isn't that the same exact business model for Coca Cola? Sell an addictive drug, get people hooked on it, and profit from it. At some point, we're going to wake up and realize sugar is really bad. It was never fat in the 80s or 90s; it was sugar. And removing sugar would be a huge leap forward. Our future ancestors are probably shaking their heads.

Clean air and water are also going to be critical. In major metropolitan areas, the air quality is poor. Our future ancestors are going, what are you guys doing? You can't breathe that stuff in. It's really bad for you. So, what can I do now to prevent the bad thing later? It's a lot easier to prevent something than it is to treat it.