Middle Market Company of the Month

Building Better Bodies

 

As the United States becomes more health-conscious in the face of rising obesity rates, many people are getting smarter about what they eat. They’re looking for nutritional food options that help to achieve their personal growth goals. And if there’s one middle market company that knows a thing or two about growth, it’s Vertex Body Sciences.

Between 2009 and 2012, Vertex Body Sciences, based in Columbus, Ohio, grew over 10,000% to almost $12M in revenue. Just last year, this middle market company was not only named the 19th fastest growing private company in America by Inc. Magazine, but was also the fastest growing company in all of Ohio and the fastest growing within the food and beverage industry.

In April’s Middle Market Company of the Month profile, Vertex Body Science’s CEO Todd Williams tells us about how they’re transforming the “better for you” foods industry through an intense focus on the customer and internal efficiencies.

Q: Tell us a little bit about what motivated you to start your own company.

A: After starting off college in Texas and a stint with the military, I enrolled in Ohio State’s sports medicine program. While I was there, I made up my own apprenticeship for strength training which allowed me to work with the medical staff. I also had an entrepreneurial background. My father had his own business, my grandfather had his own business, and my great-grandfather had his own business. Entrepreneurs – that’s just who we are. I knew I had an interest in going into the fitness industry. You can really find your way when you’re directed by your passion and combine that passion with making money.

I first started a training studio company called Body by Todd, which I still have. I began franchising them in the mid-90s and we did quite well. We sold over 100 of them. Through that, I started training a lot of celebrities. I also got on NBC here in Columbus and did shows twice a day for about seven years. I started training celebrities all around the country too. Most of my clients were busy professionals and executives. As I was doing that, I started finding that clients had various nutritional problems and couldn’t’ stick to their diets. They had money to pay for the convenience; they just didn’t have the solution. So I said here’s a nutrition plan to follow. They would get it and they still wouldn’t follow. So I said alright I’ll make the food for you and package it; you just eat it. I was doing that just for my studio and the network of studios that I had franchised and licensed. More or less I was using it as a test market, seeing what clients liked and what they didn’t like, for several years.

When Vertex Body Sciences started in 2006, we were selling about $100,000 or so in products to clients in a given year. We didn’t even have a website yet. So then I decided to sell it outside of Columbus. We launched the same product in a lot of the big cities in Ohio. Then we said let’s go into Pennsylvania, let’s go into Indianapolis. When we went into New York, I remember that we did an email campaign on a list we bought in Syracuse and we had this one $89 product and it sold 680 units. I knew then that we were on to something. Then we sold a lot in Manhattan and other big cities. So that’s when the growth hit. We just started going into all these cities around the country and went from $116,000 two years earlier to $11.8 million in orders.

Q: Were there any other catalysts that led to your exponential growth?

A: A lot of it has to do with being entrepreneurial. You have to have these instincts that allow you to see opportunities and how you can exploit them. You’re going by your gut, you’re looking for opportunities, you’re watching people, etc. I would do a speaking engagement at a medical expo and people would constantly come up to me and ask about their diet – they essentially didn’t know what to do. For years I trained Les Wexner (CEO of The Limited) and his wife. I would give him a diet and give him advice. Many executives like him don’t know what to eat because they’re spending their time doing other things and they don’t have the expertise.

That’s where I saw a huge opportunity to simplify and provide food solutions for busy professionals on the go. My TV personality clients would say “I need to lose weight quick; sweeps week is coming up” and so I’d come up with a fast nutritional plan. The rest of my executive clients eventually said “hey can I do that?” and I thought well this type of quick, convenient, easy-to-understand solution is wanted so I stuck with it. It had to do with seeing a “want”.

Q: With the rise in health-consciousness over the past decade, there are many players who try to provide the best nutritional products to the market. What do you think Vertex Body Sciences does better than anyone else out there?

A: We’ve positioned our company to exploit e-commerce and social media. We’re quickly creating, testing, and selling products based on the feedback we get from consumers online and in our studios. We’re almost more of an internet technology company. We stratify, segment, and really get down in the details of our consumers. A lot of companies say “we’re targeting health conscious people”. But it’s really in the details: knowing the buying triggers of people, what they want, when they buy, why they bought from us, and what their background is. Is there an image that they want to go back to? Did they play sports in high school? Are they going to be more intense about their appearance? So we have all these indicators that really attempt to explain who our consumer is.

There is another differentiator too: Taste. When you taste most health foods, it just doesn’t have the right mix. The after-taste isn’t great; the texture is not good, etc. We’ve spent years getting our food and beverages to not only taste just like the normal food you love but to also have the health qualities that others don’t.

Q: So it seems like you’re able to rapidly respond to any changes in the market because you are so connected with your customers?

A: Yeah and it’s all about doing the work. It’s conversing with people on Facebook. It’s listening to what people are saying through feedbacks, questionnaires when they buy a product, and a number of other things. It’s what most people don’t do though. There’s really nothing new under the sun. It’s just very effective marketing that speaks to the needs of the customer. You can spend millions of dollars on marketing and still miss the point of what someone wants. It’s more about effectively, from a grassroots level, being able to connect with your consumer.

Q: What kind of investments are you making in innovation, either to make your own operations more streamlined or to gather customer insights a little bit more effectively?

A: Up to this point, I’ve been putting most of the money we make back in the business so we are debt free. We’ve invested in a marketing platform that allows us to connect all the information we have in one place. Now our database information connects with our point of purchase information and with our call-in information; it’s all in one place. We’re actually developing an even more advanced platform right now as we speak. And, our website is being optimized for mobile devices.

We’re also investing in new manufacturing equipment for our juices so we can be more cost-efficient. 

Q: What are you doing to foster growth for your current employees and how do you approach recruiting new talent?

A: Over time, the company’s needs are going to change. For instance, we’re becoming more of a sales and marketing culture and less of an operational culture. That being said, we had a lot of people with an operational mindset so we really had to invest the time and effort into training them on what’s needed to move to the next level.

Intellectual growth is key. The rest is training people. Be clear on what’s required for growth, and teach them how to adapt and act fast as things that change. People are typically resistant to change, but you can’t be when you’re growing quickly.

Q: If you were to offer words of advice to other middle market executives experiencing this type of rapid growth, what would you say?

A: I would say focus on sales and efficiency. It seems like the common denominator among companies that are struggling, especially at the lower end of the middle market ($10-50M in revenue), is they overleveraged themselves and they’re not focusing on their customers. They’re using leverage as replacement for sales and connecting with the customer. If you’re heavily connected to your customer you can focus on their needs which increases sales and means  you don’t need to leverage yourself as much and take that financial risk.

From an efficiency standpoint, it comes down to the people you hire. With rapid growth, it’s easy to get overwhelmed and start throwing more and more people at problems.  In the end it’s more about quality over quantity. Make sure the talent you bring in is a match and you have systems in place to evaluate candidates. Also watch your industry benchmarks. Make sure your revenue per employee is at industry standards and that you don’t veer away from those types of metrics.

Q: What do you see as the next great frontier for Vertex? Where do you see the company in five years?

A: Right now I am focusing on our current ratios, debt ratios, return on assets, and profit margins so we’re attractive to larger companies if a potential acquisition opportunity should come along. Not only does this help me stay disciplined with the numbers but it also increases the value of the company.
I also want to angle it more as an internet company than a typical food and beverage company that makes products and puts them into grocery stores. We’re expanding our promotional efforts to drive more business through e-commerce. Five years from now I see us being valued in the hundreds of millions and being in high demand.

To find out more about Vertex Body Sciences, visit vertexbsi.com


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