How Hiya Health Achieved a $260M Exit

How Hiya Health Achieved a $260M Exit Speaker 1: Welcome to another episode of Chew on This. Today we are joined by Adam Gilman, co-founder and president of Hiya Health, a direct-to-consumer kids' wellness brand built by parents who wanted cleaner, sugar-free alternatives in children's vitamins. Thanks for joining us, Adam. Speaker 2: Thank you for having me. It's a pleasure to be here. I'm really looking forward to the conversation. Speaker 1: Awesome. I'd love to know a little bit about your background, what got you into this and a little bit about Hiya Health as well. Speaker 2: Sure. So my background is I've been a serial entrepreneur basically my entire adult life at least. And I've worked in a wide range of industries, technology, marketing, digital marketing, the fitness industry, multi-site retail. And at the time that the inspiration for Hiya began, I was a new parent. My kids were one and two years old, and I was actively buying kids vitamins and feeling I'm easy about what I was getting my kids yeah i'm professionally i had experience building consumer brands and navigating regulated categories but this was obviously much more personal. And a lot of what we did, Darren, my co-founder and I, really centered around what I give this to my own kids every day. And that really dictated how we got started on that mission. But to effectively answer your question, I had been starting businesses for a long time prior to starting Hiya. Speaker 1: Very cool. No, I always love it when the entrepreneur is trying to solve a problem for themselves versus, you know, going out and trying to solve problems that they themselves have nothing, they're not involved in. I always feel like when it's personal, things flourish a little bit better. Funny story about Hiya actually. When we were first starting our brand, Obvi, which is a women's health and wellness brand, in the beginning stages of it, we had a kids line. Hiya was one of the brands that I would always look to for inspiration for, not visual identity because we're different visually, but you guys always had such great messaging, such great communication. I always loved all of your email campaigns. It's funny that everything comes full circle because this was about four or five years ago. And it's great to have you here on the show. Speaker 3: Before we get started, a quick word about today's sponsor, Flex. If you're running a business, you already know the drill. You have one tool for banking, another for invoices, another for expenses, and another for bills. Managing all of it is a mess, and it's costing time we don't have. Flex fixes that. It's the all-in-one financial platform built specifically for business owners. Banking, credit, bill pay, invoicing, expense management, AP, and AR automation All in one place. And while most financial tools are built for bookkeepers, Flex is for people like you and me. You get this powerful, free banking with 24-7 personalized support. Plus 1% cashback on debit purchases, free ACH and wire transfers, and a net 60 card which gives you 60 days at 0% interest. Start running everything from one place. Apply in the next 30 days with VIP code CHEWONTHISPOD. And you'll get a pair of AirPod Pros if you get approved. Speaker 4: Flex-based technology, Inc. Flex is a financial technology company and is not an FDIC-insured bank. Banking services provided by ThreadBank, member FDIC. The Flex business credit card is issued by LeadBank. Fees and T&C apply. See flex.one for details. Speaker 3: Now, let's get back to the episode. Speaker 1: So children's health comes with higher trust, scrutiny, and responsibility than most consumer categories, like you were saying. What changes when you're building a brand in kids' health versus a typical direct-to-consumer product? Speaker 2: Yeah, great question. So obviously the stakes are higher. Parents aren't just customers, they're guardians of the purchase decision, right? And unlike a lot of other categories, scrutiny comes from both regulation and parents in both matters. A common misconception about the supplement industry is it's not technically governed by the FDA, right? It's effectively monitored by the FDA. So it's one of the reasons why it's one of the Bright areas of hope in what's a complicated medical and food ecosystem in the United States. But it's riddled with a lot of uncertainty and a lot of really bad players. And we wanted to make sure that we were the antithesis of that. And we really focused on framing the brand around parent trust. And we did that by Choosing a reusable bottle and refill system, right? Showing that we care about the impact that we're having on the environment, but also on a deeper level, turning this opportunity for paying attention to what you put into your body as a moment of connection between the parent and the child. Obviously, saying no to sugar was a critical element and still is a critical element of what we set out to do. And even though it would have made early adoption a lot easier, we were very clear that that was something that he needed to put a stake in the ground on a hill that we will die on if you will. And we moved slower as a result, but we moved with a lot of intention. And fixing mistakes later in the kids health category isn't really an option, right? So while there are a lot of changes we've made throughout the arc of our company, those few decisions We're set out from the get-go and we've remained fully committed to that every day since. Speaker 1: Wow, that's great. It kind of brings me back to my childhood when we all grew up on those Flintstones vitamins that everybody grew up on. And I feel like that's as far as innovation came at that time. And to see what you guys have built in the children's space is amazing because I think Just like you were saying, there's a lot of scrutiny that goes into that. You can't make mistakes and then apologize for them later. You kind of have to get it right the first time to earn that consumer trust. So I totally get that. How do you balance speed and growth with the responsibility that comes with wellness products for children? Speaker 2: So speed is really only valuable if it doesn't create Future rework or regret, right? So while we iterated very quickly in terms of our messaging and our creative strategies, and we had a lot of behind the scenes iteration in terms of our operational and supply chain efficiencies, but we were not overly concerned with speed. We were overly concerned with getting it right and making sure that We didn't over promise or didn't do anything that was going to come to bite us later on down the road, because we had big visions for the company from the get go. We believed that we had the opportunity to make a really, really big impact on children's wellness and health. So when you take a longer view, you're a lot less concerned about. Speaker 1: When you guys were starting out, were there any sort of competitors that you were looking at as far as inspiration goes or were you kind of the first that was doing it right in a sense? Speaker 2: We did not really look at any competitive offerings. If anything, they were the foil for what we were looking to do. One of the things that I haven't spoken to yet is we were very focused on creating a brand and a brand aesthetic that spoke to the millennial parent. Because the brands that existed at that time, Smarty Pants included, was the category leader at the time. It didn't really make a lot of big changes from the Flintstones. It was a little bit updated, but not to the extent that we updated it. Focusing on a brand that spoke to both the parent and the child. Speaker 1: Absolutely. Even when you're packaging your whole experience with that, it's different than what everybody else has. It's actually kid-friendly. It's an offering that I feel like a lot of brands missed out on, especially when you are marketing towards parents, but you know the end consumer is that child. What's going to get them excited? So I think you guys did it perfectly. Speaker 2: Yeah, and sometimes less is more, right? Don't have a lot going on with our branding. It's very minimal and simplistic. We used color to really let ourselves stand out. Speaker 1: No, 100%. It's beautiful. In wellness, trust isn't built through claims. It's built through consistency. So what actually earns parental trust over time? Is it ingredients, transparency, or experience? Speaker 2: I think ingredients and transparency Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. Speaker 1: He is a licensed financial professional both in the U.S. Speaker 2: Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Speaker 4: Accounts carried by National Financial Services LLC. Speaker 2: Member NYSE®, a Fidelity Investments company. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at www.profile-financial.com From the ground up rather than from the top down is getting an understanding of how toxic the ecosystem has become and serving as a resource to parents, not necessarily even about the things that we were selling, meant that we were looked at as an expert advisor as well. Fear-based framing, I think, is something that can be effective in the short term, but quietly erodes your credibility. And that was something we worked very hard to stay away from. The only exception being our first ad when we came to market was me walking through the vitamin aisle at Whole Foods and me pointing out the options that existed. Shaming anybody, but just encouraging people to take a look. Speaker 1: Yeah. Speaker 2: But overall, I believe that trust is not going to be what you say. It's what stays true over time. Speaker 1: Yeah. Speaker 2: That's really what we focus on. All of them matter. I think transparency, ingredients and education matter more so than experience. You can put really crappy product inside of a really pretty packaging experience and that might work for a short period of time but not over the long term. Speaker 1: Where do you see brands accidentally breaking trust without even realizing it? Speaker 2: I mean really it's kind of the antithesis of what I just said in that I think brands that rely very heavily on fear-based claims over time erode trust. It's no different in political campaigns and political advertising. It can be useful in certain instances and for short-term Pops and popularity and consumer acceptance, but it definitely comes back to bite you in the long term. Cutting corners on staying true to the values that you claim that you have as a company. So, one of the reasons why it took us three years before we launched a second product, or close to three years at least, was because we were so committed to making sure that everything stayed true to that brand promise. Speaker 1: I love that. Speaker 2: When you're running a company, it's very easy and very attractive to cut corners. And any entrepreneur can understand why people do it because it's very hard not to. But I would say those are the two biggest things that a road trust. Speaker 1: No, that's very like what you said about, you know, you guys stayed true to your product for two to three years before coming out with a second product. You see so many brands that have this kind of shiny object syndrome where they see a trend and let me release this. Let me release this. You guys probably could have come out with A kid's protein powder in two months after you launched your first product and ran with it. But then you also see those brands losing who they really are. It's like, what are you? Are you an Amazon store of a bunch of different products? And I know we've been, even with our brand, when we were first starting out, we were just releasing a ton of products. And at a certain point, we're like, all right, we're just throwing things at a wall and seeing if it sticks. And that's not the right way to go. So we eventually did some ski rationalization and got back to our core. But that's a great call out. Speaker 3: We're taking a quick break to talk about today's sponsor, Flex. Have you ever thought about how much cash is sitting tied up right now just because a vendor payment was due before you were ready? 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Speaker 3: Now, let's get back to the episode. Speaker 1: Let's move to subscription because this is really cool. You guys have an amazing subscription business and I think that's one of the things that people aspire to have when they start a brand but they don't realize how hard it is to build that subscription business. They think, oh, okay, people just sign on and they'll just stay and it's really not how it works. So Hiya has built a great subscription business, not a one-time purchase. What makes subscription feel helpful instead of annoying? Speaker 2: It needs to remove friction, not a trick to create obligation. So the product, a different way of stating that is the product needs to make sense to be on A recurring subscription basis and a lot of people try and fit things into the subscription monthly box that don't make sense. Speaker 1: That's right. Speaker 2: I think that's the biggest and most important thing. You want it to be a situation where really you're just providing predictability and relief for the customer rather than feeling like it was a gotcha moment. Yeah. I would say that that's that's pretty much it. Speaker 1: Yeah. So what signals tell you a customer is subscribing because they want to not because it's hard to cancel? Speaker 2: Well, we make it quite easy to cancel. We've always had a really lax refund policy. For any reason that you want, you can send your product back and we'll refund you in full. Speaker 1: Do you think that's helped you in the long run? Speaker 2: Without a doubt. Because a lot of people Phase out, not for any other reason than the timing wasn't right or that particular product didn't work for them. So when you treat them well, they remember that. We also really obsessed over understanding why people were canceling. So one of the things that made Hiya really unique was we have one-to-one human customer service. So whenever anybody wants to cancel, we have an opportunity to really understand why. And we took that data to heart and made a lot of product changes and optimizations over time. Speaker 1: That's great. Speaker 2: It improved our retention rates. Speaker 1: I see so many brands that make it so difficult for people to cancel subscriptions. Personally speaking, if it's hard for me to pause or cancel a subscription that I'm on, maybe this month I can't afford it. It's not that I don't want to be on this subscription. Maybe it's not feasible for me right now, but if you're going to make it that much harder for me to even get off of it, I'd probably never get back on. Speaker 2: Yeah, and by the way, that process, this is a good call out, that process of really getting an understanding of why people were canceling. One of the biggest reasons that came up was that A particular parent's child did not love all of the flavors that were mixed in the pack. And we ended up, and it was a challenging operational undertaking, but offering customization with packs. So if you texted customer service and said, My kid doesn't like the red and the yellow. They only like the green. We could only send you the green apple vitamins and that ended up creating a really amazing protective moat for us. Something that the really big competitors that we were up against couldn't replicate. Speaker 1: I can only imagine the logistics that goes behind that, must be a logistics nightmare. But that's awesome. Speaker 2: It's not anymore. But it's one of the things I'm proudest that we put into place. Speaker 1: Yeah, no, that's great. Let's talk about storytelling without that fear-based marketing, right? Kids wellness brands walk a fine line between education and fear. So how do you communicate health benefits without leaning on that scare tactic? Speaker 2: Really great question. I spoke earlier about the importance of education. So it should really focus on empowering, not alarming them. So the more that you can just give them the information that they need, whether or not it relates to the product that you're selling, the better. I also think parents don't want to be reminded of the fact that they're failing. They just want clarity and truth. Speaker 1: Right. Speaker 2: Uh, and really focusing on the positive outcomes that come from paying better attention to your family's wellness rather than the catastrophic outcomes. Speaker 1: Yeah, no, I love that because. You know, there's so many brands and like we were talking about earlier, even in politics, we rely on this fear-based marketing, but that's more of a direct response tactic than a retention tactic. It doesn't make the parent feel good if that's all you're relying on. And I love how you said, you know, you're looking to empower them versus, you know, scare them off or make them feel like they're not doing their job. So kudos to you. Thank you. Speaker 2: Thank you. Speaker 1: So let's talk about founder-led brands and just long-term thinking here. Hiya was built by founders who are also parents with long-term families in mind. How does being the end user change the way you made trade-offs as a founder? Speaker 2: I think just inherently you feel those trade-offs really differently when your kids use the product. Speaker 1: Yeah. Speaker 2: So that was one of the biggest elements. We didn't look at shortcuts as being theoretical. Everything that we did was slow and calculated and made sure that The first gatekeeper was always us and our families. Speaker 1: Yeah. Speaker 2: And if it could pass that, we felt confident that it could pass everything else. Speaker 1: Yeah. So were you always just, you know, kind of giving these samples to your kids and asking, how's it taste? Speaker 2: Yeah. And that's still the way we do things today. Speaker 1: That's great. Speaker 2: Have a lot more families as part of the team. Speaker 1: Yeah. Speaker 2: Our focus group is our own children. Speaker 1: I love that. And would you say that your kids were picky about what they liked and didn't like before you started giving them these vitamins? Speaker 2: Well, they're still picky. My kids like every Hiya product. Speaker 1: Yeah, okay. Speaker 2: And it took time to figure out what worked for them and what didn't. And over time, as their understanding of the importance of paying attention to what they put in their bodies mattered to them, they were more willing to take things that they didn't necessarily like. Speaker 1: Yeah, that's great. All right, let's talk about scaling without losing the soul. As brands scale, systems matter as much as values. What parts of the business need structure early so growth doesn't create chaos later? Speaker 2: Quality control and feedback loops are the most important. So making sure that your product integrity remains the same, whether you go from making 100 units a day to 10,000. Right. The feedback loops are really important because it's what allows you to see if something you did is misdirected. So it's the reason why we have stayed really true to the DTC strategy because it allowed us to maintain those one-to-one connections that you lose in retail and Amazon and things of that sort. Those are the two biggest ones that come to mind. The other just obvious one is Being a mission driven company and making sure that every single person that's there believes in the mission and. We won't sacrifice it for anything. Yeah. And we've worked really hard to build a supportive, empowered culture within the company. And it comes up pretty often where somebody gets an idea to do something that I might take a look at it and think it looks great. And somebody else on the team who is more understanding More intelligent on that specific product category or active ingredient can flag it and let us know why. Speaker 1: Yeah. No, that's great. And just to go back to the feedback loop, do you guys have some sort of community in place where people, you know, so like for us, we have a we have a Facebook community, and that's where we send people. We have about 200,000 women in that Facebook community. They're just chatting with each other all day. And that's where we go to get our feedback from, whether it's sending surveys, polls, just reading through all the posts, whether they like things, don't like things. Is there a certain platform or base that you use to kind of gather a lot of that feedback? Speaker 2: So we're very big on serving customers. We're very big on asking them to provide us feedback on a regular basis. I'm jealous of the community that you've built. We were never able to do that. I think that that's an incredibly powerful thing to have. So our feedback has really been a lot more one to one rather than community based. But I think both are incredibly powerful. Speaker 1: Yeah, I agree. How do you think about systems that protect brand quality as you scale? Speaker 2: Systems do need to adjust over time. We have a saying that we use constantly at Hiya, which is what got us here won't get us there. Speaker 1: I like that. Speaker 2: We are always looking at how to improve our systems, how we might need to shift our systems based on changes that are occurring. So I guess the simple answer to that question is we build systems, we believe in systems, we obsess over them, but we audit them regularly. Speaker 1: Got it. Now that makes sense. So Hiya later brought on a strategic partner to support the next phase of your growth. How do founders know when bringing on a partner is the right move? Speaker 2: I don't think any founder ever really knows or at least the founder that really loves the company that they've built. There are a lot of founders and people who build companies with the singular goal of building something that's going to be attractive to the market to get a high multiple and I have absolutely nothing bad to say about those people. It's a strategy. For us, this was something that we were very emotionally tied to. My kids have grown up with this brand. And I've grown with this brand. There's so much that we all had emotionally invested. The first thing was making sure that the values and incentives aligned. That's not easy and a lot of people are overt and saying that they won't. A lot of people are covert and make you feel like they will when you don't believe them. So that's a challenging process that requires you at some point having to let go and take a leap of faith. We also looked at it as is this partner going to help us expand our mission. And with us on the company that we partnered with the answer was an unequivocal yes and we've aligned with them. From I would say the second meeting we had. The first meeting was a lot of posturing and question asking on both sides. But once we got comfortable, we saw how similarly we saw the world on the category. Speaker 1: That's amazing. Now, was it emotionally hard? Now, you built this thing from day one. You had this baby. It's kind of like your baby, right? Is it emotionally hard to let go of? And how hard was it? Speaker 2: Very hard. Speaker 3: Yeah. Speaker 2: The thing is, there's some blessing in the process and that it takes time. So it's not like you flip a light switch and that's different. You have time to prepare. But it was a lot easier because we felt it was the right thing to do. We knew it was something that would Flourish more with the partnership rather than with it. Speaker 1: No, that makes sense. We ourselves brought on a strategic partner about a year ago and we ran the business for five years, just us bootstrapped. And like you said, there's no right time and you never really know if you're going to make the right call on this. It's kind of one of those things you just kind of close your eyes and you either have to do it for some sort of Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. Speaker 2: Yeah, one of the great dynamics of our partnership was both sides knew that we could not do what the other side does. So because of that, they've given us a Effectively complete control because they believe in us. So it's really important that that dynamic is established and we had the luxury of just this is a company that. We built a massive business over the course of close to 30 years, I believe, or it might be slightly over 30 years for you, Sana, that was focused on MLM model and also being very big internationally, way larger internationally than they are in the US. So we saw us as puzzle pieces fitting together, not encroaching upon each other. Whether you're looking at your life or you're looking at business, our lives are determined by the little things that we do every day. And the collection of those little things that we do over day, over time, turn into massive change. But the key there is time. You have to have the patience to let the compounding do the work. That's the most important lesson that comes to mind. Speaker 1: Well said. Speaker 2: I also think that, particularly as you grow and go beyond. Your founding team, which was. Effectively, three of us, it was Darren, myself, and Abe, who was our chief creative officer, to leading a much larger team. Speaker 1: Right. Speaker 2: And what I've learned in previous failures where I don't think I was a strong leader, that Leadership is really about creating environments where good decisions can happen. And that means being really clear about what your culture is about, being really selective about who you let in, and then giving the autonomy to let each person shine. And when you can do that, and it's not easy, but when you can do that, magic happens. Speaker 1: No, very well said. I think letting go. And letting other people shine is one of the hardest things an entrepreneur can do. Especially just because I'm somebody who's, you know, I used to be a control freak. I wanted every I wanted to live and die by my own hand. And you just can't build a big business like that. You know, you said you had three co founders, I also have, you know, it's a team, it was a team of three. And no matter how many hats you wear, there's going to be bandwidth issues there. Eventually, you have to let go. You have to trust other people and you'd be surprised how much more they can do than you expect them to do. I think we sometimes go into this thinking we're the masters and we know everything and nobody else can replicate what we're doing when in reality, if you empower the right people, just like you said, it can be magical. Speaker 2: Yeah, and I'm really grateful that with Hiya, I learned from all those lessons and got the chance to see that actually come to fruition. Speaker 1: 100%. What did earlier ventures teach you that directly shaped how you run Hiya today? Speaker 2: I think discipline is An important element of life and in business. Whenever I do interviews, a common theme that always comes up, and this is something I talk to Everybody on our team about as well as I see tons of parallels between life and business and the importance of Doing the things, you know, you need to do even when you don't want to do them. Yeah Always the difference between success and failure. Unknown Speaker: I love that. Speaker 2: Um, I think humility and vulnerability are really important um Particularly as it relates to company culture, being able to admit when you're wrong, rather than having an ego too big to let people feel like mistakes are okay. Yeah. And just being slow with your decisions. We live in a business environment in a world where decisions are made so quickly today. Technology, all the gifts that it's given us and we live in the most amazing world imaginable today. But one of the negatives is our nervous system is constantly overloaded. And it really brings us away from our ability to make wise decisions rather than emotional ones. And the best way to solve for that, not the only way, but the best way in my experience is slowing down when you make decisions. Speaker 1: Now, interesting. And you're completely right, because I feel like everybody's so overstimulated these days, and you feel like You can find me on Twitter at ChewOnThis. motivation can only get you so far. You got to be willing to do the thing you don't want to do. And that the that's discipline. Yeah, at the end of the day, because at a certain point, there's going to be no motivation. Oh, yeah. Yeah. Speaker 2: I don't care who you are. The motivation can't be there all the time. Speaker 1: Yeah. 100%. Speaker 3: Before we wrap up today, one last thing about today's sponsor, Flex. Most business credit cards give you 30 days. Flex gives you 60 at 0% interest on every eligible purchase. That's up to 2.8x longer to keep cash in your business before you ever pay a dime of interest. And it's not just the float. The FlexCard is built around your business, not just a generic credit limit that has nothing to do with how you operate on a day-to-day basis. They look at your cash flow and transaction history and give you a limit that actually matches your growth. On top of that, you're earning up 1.75% cashback on every eligible purchase, with no caps, no restriction. Pay early, earn more. It's that simple. You get one card with 60 days of breathing room and unlimited rewards. If you're still running your business on a standard 30-day card, you're leaving both cash and cashback on the table. Apply in the next 30 days with VIP code CHEWONTHISPOD and you'll get a pair of AirPods Pro if you get approved. Speaker 4: FlexSpace Technology Inc. Flex is a financial technology company and is not an FDIC-insured bank. Banking services provided by ThreadBank, member FDIC. The Flex business credit card is issued by LeadBank. Fees and T&C apply. See flex.one for details. Speaker 3: Now, let's get back to the episode. Speaker 1: So we are on our final Chew. Adam, this was great, man. Thanks for joining us today. So great brands often reflect how their founders live. What advice would you give founders trying to build something meaningful and sustainable today? Speaker 2: I spoke about this earlier, but I guess I feel the need to underline it. Values and your mission are going to be tested. And that's kind of the point of the process. Staying true pays off in spades in the long term. If you don't stand for something, you don't really stand for anything. Speaker 1: I like that. Speaker 2: And we've always been big believers in that. Build for people that you respect. Look at your customers as actual people with actual lives and actual families that they worry about just like we do. I think that's true in every business, really understanding the needs of your customer and how to solve their problems. Rather than just figuring out how to commit them to buy the product. If it still makes sense in 10 years, you're probably on the right path. So if you can look at yourself doing these same things 10 years from now, and the more succinct version of this is ask yourself if the tomorrow you is going to be proud of what you're doing today. Speaker 1: Love that. Speaker 2: So those are three things that I live my life by and that's been instilled into Hiya by all of us. Speaker 1: It's amazing. Chew on that. If you want more from us, follow us on Twitter, follow us on Instagram, follow us on TikTok, and check out the website ChewOnThis.io.