Health:Further

In this episode, hosts Vic and Marcus interview Rohit Banota, discussing his journey from working at Procter & Gamble to founding Jump Accelerator, a platform that empowers women-led beauty startups. They explore strategies for building profitable, sustainable brands, emphasizing the importance of understanding customer wants versus needs, creating loyal superfans, and developing effective funnels. Rohit shares insights on how beauty has evolved into a wellness-driven industry, the challe...

Show Notes

Rohit Banota Bio:

Rohit Banota is the founder of Toronto-based, Jump Accelerator focused on offering "profitable growth, fundraising and network" to women-led, early-stage beauty & wellness brands. He is a P&G alum, with over 20 years of experience in consumer packaged goods, with health and beauty brands.

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What is Health:Further?

Every week, healthcare VCs and Jumpstart Health Investors co-founders Vic Gatto and Marcus Whitney review and unpack the happenings in US Healthcare, finance, technology and policy. With a firm belief that our healthcare system is doomed without entrepreneurship, they work through the mud to find the jewels, highlight headwinds and tailwinds, and bring on the smartest guests to fill in the gaps.

If you enjoy this content, please take a moment to rate and review it.

Your feedback will greatly impact our ability to reach more people.

Thank you.

Welcome to Health Further.

We have a guest episode today.

Rohit Banota.

Uh, Rohit, thanks for joining.

So, uh, as we get started, why don't, uh, maybe give a quick background.

You have a really interesting background out of Procter Gamble and now really helping, uh, women led entrepreneurs.

So talk about your personal background.

Perfect.

So I grew up in, uh, India in a small town called Sundar Nagar on the foothills of Himalayas.

Uh, and in the morning my folks would send me to get freshly baked bread and I would see the big giant radiant ball of sun rising from behind the mountains.

And that was my first rendezvous with beauty.

Now a cherished memory.

What a sight it was.

That's how I got in.

You know, like I knew that something about beauty, about patterns appeals to me.

That's how it all started.

Post my engineering from one of the best engineering schools in India, I started working with AB in BIF.

I worked in sales and trade marketing and then moved to P& G and worked in beauty and grooming for over five years.

I was promoted three times in a span of four years.

Uh, I managed brands like Olay.

I also managed professional brands.

And from there, I came to do my international MBA from Queens at Queens in Canada.

Uh, there was a marketing project, an industrial natural cleaning brand aspired to launch a pan in North America, consumer brand.

And they gave the product to the entire class.

I presented, they offered me the job on the spot with the some bonus, which I spent during my MBA itself.

So I had no choice, but to go and join the startup, right?

So I started with R and D, everything.

Right from conception to launch, we launched the brand across 1, 000 stores in Canada.

And there I used to meet when I would go to these shows, I would meet these beautiful women launching health and beauty brands and shows.

They started giving me these small projects here and there.

And I understood the big gap between, you know, P& G.

Then with the startup, I worked with still had some money because they had a setup.

And then, you know, let's say an indie beauty founder, or, you know, somebody who had no backing, uh, you know, and then I, I would contrast, and that is how I started developing my frameworks as to what, how can these people succeed?

That's when I launched Jump Accelerator.

It's, you know, it's Toronto based.

Uh, we are focused on women led early stage beauty brands.

We offer profitable growth, fundraise and network, and the profitable growth solutions are zero risk, 10x ROI, short term and long term and 100 percent doable.

So everything that is a challenge for the startup founder, most of them are bootstrapped, right?

So the, whatever we provide to them works independent of whether they have the money or not.

The speed might change, you know, might vary.

So, yeah.

You have money, you can do it faster, but there are certain fundamentals for an innovation to diffuse into the market and if you work on those sooner or later, you will succeed.

The extent can vary, you know, the, the extent to which you will succeed can vary, but you will move in the right direction.

Yeah, that's, uh, that's all about me.

Yeah.

Excellent.

So that's one of the reasons I wanted to have you on is that I think, um, in, in beauty and wellness, and we see it a lot in healthcare, often there's a, there's a founder or an entrepreneur that, that sees a need and they haven't really started their whole life trying to do, uh, you know, a new startup to make a lot of money.

They see a need and they really want to solve a problem out there.

And so they jump in and often they have to learn a lot along the way.

a lot of the lessons you teach, a lot of the service that you offer through Jump Accelerator, well, you have customized them to beauty and wellness, uh, for the CPG, uh, market.

A lot of them are applicable across many different types of startups, really kind of getting that, uh.

product designed for the customer, but also getting awareness, getting known, getting the customers to understand you.

So talk about like what the ideal ideal entrepreneur looks like when you meet with them.

And what's the first thing that you try to help them with?

Where do you start?

That's a brilliant question, you know, I'll come to what, who is the ideal entrepreneur before that I'll just answer the second question that you asked.

What is the first thing I tell them is this, I asked them, Hey, your customers love your product.

They say yes.

And I say, why aren't you a hundred million beauty brand then?

And they say, yeah, that's what I think about every, every morning, every night, people who try to love it.

Right.

Then why aren't I becoming bigger?

I'm succeeding.

That's it.

So there are two elements to a startup success.

One is the innovation relative advantage you have over the others.

Founders can, you know, overplay the advantage that they have.

Uh, I can go into detail, but there's a spectrum of problems.

Like either you're offering just higher quality, what's the existing solution.

That's a very tough game because you have to constantly communicate to acquire new consumers, or you have a new solution for the same problem.

Not that, you know, at least you attract those consumers easily who are fit with that solution.

And the last is disruptive, which is like an unsolved problem, right?

So that is where the need thing comes.

The second is, which was in, in the message that I give to the con, the, you know, the founders when I speak to them, the problem is they don't have awareness.

So their funnel doesn't have top, you know, the awareness is not there.

But that's not the solution because getting awareness, you have to spend millions and millions and millions of dollars.

It's a top down funnel.

It will never work out.

Even the VC led brands make that mistake.

So all three growth engines have to fire, you know, new consumer acquisition, whether it's organic or paid, your loyalty and the advocacy.

That's how you can create a healthy marketing funnel and that's the gap.

Once you fix the relative advantage, the only thing that is between you and your success, do you, can you create a profitable funnel?

So you shouldn't start at top of the funnel.

You should try to start as much as possible at trial, uh, you know, like you can get the product directly in the hands of the consumer, for example, so short on your funnel.

There are seven steps, awareness, consideration, you know, purchase, repurchase, uh, you know, loyalty and advocacy.

I missed trial in between.

Uh, and there are leaks.

Glossier, a beauty brand, which is like over a hundred million dollars in 2020, it was.

And it has still not gone way beyond 120.

That's another topic.

They had only 9 percent awareness in 2020.

Imagine PNG's Olay has 80 percent awareness.

And you will see 100 ads in, you know, maybe in two hours.

You know, if you look at all the, you know, you're following any TV series or something.

So no matter how much money you spend, that's a losing game.

This is what the founders don't get.

So you've got to, you've got to find six, six profitable superfans so that you have the margin of the money to invest back into the funnel.

And you've got to shorten that funnel.

I think that's the secret of that.

Founders miss.

So they start with their, their, um, maybe people that want to try it and then become customers and then advocates.

You said something that went by quickly, like start with a certain number of superfans and build from there.

Is that right?

Yeah, that's you're right.

So, uh, you know, they, most of them can be early adopters.

They can be mainstream consumers.

So six, six profitable superfans.

So I'll go to Y Combinator as line, but they have distilled it down to, you know, the perfect four or five words.

that a startup founder should only be obsessed with make something that people want.

Everybody's trying to give consumers what they need.

You know, that's a, that's a fundamental mistake people make.

So I'm talking right now about the innovation.

So there are two things, innovation or the brand or the product and the funnel.

So let's start with innovation.

They try to, but consumer needs this too.

They need that too, right?

They never try to figure out what is it the consumer wants.

People don't buy what they need.

You know, I need to get up at 6 a.

I need to do meditation.

I need to take a cold shower.

I need to do, I won't do all of that.

There's certain things.

So the route to need solving a need is through what people want.

So that is the first, if you don't do that, you cannot even go to trials or, you know, you cannot attack the funnel.

You got to first make your product desirable.

So, you know, because educating consumer and changing consumer behavior is very, very, very tough.

And we have a limited time.

People run out of time.

Entrepreneurs, founders, VCs, et cetera.

So that's the first thing.

And then once you have that, then you can create a story.

Then you can find a channel to access those six profitable superfans.

Problem with marketing agencies is they will say your target consumer is 50 plus 40 plus 25 plus and 100 million women in America.

But where do I find those first 1000 or 10, 000?

Where does she live?

Where does she, where can I meet her in the evening and give her my product and tell her my story?

Right?

So we have to find out which, who are those six ex profitable potential super fans.

Where can you access them?

First, you got to identify them.

Then you want to be able to access them and tell them a story very intimately or get them to try your product, right?

So that's what I mean.

So you start from there, use them as an ambassadors, and then you build from there instead of just, you know, throwing spaghetti on the wall with the traditional top down marketing funnel.

Yeah.

Because that's going to, you'll end up spending.

Millions of dollars and not getting the results that your marketing group told you they might be able to get just, it's a hard game, right?

It's a very hard game.

And you, so for example, I speak to every month, I speak to 10 to 12 founders who have been to the biggest beauty retailers are present in their wellness, beauty health, and they all would have told me at some point or the other, you know, you don't make money in retail in the first one year, you make it in the second year.

And then they call me in the second year, they're still not making money.

So what will happen eventually?

They will fail, they will get delisted, right?

Why not, why not start from the end game?

Why not see can, so the, the best way to go to that end game is which VCs don't, not all VCs would agree, especially when they identify the brands.

Is to be have a profitable business and use the money to speed it up.

So, you know, I see VCs coming in, you know, no disrespect.

I love a lot of VCs.

I absolutely love them.

And in their criteria, they always go on stage and say, you know what, we're not worried if you are profitable or not.

See, you are not worried, but they should be worried.

What if they don't get funded?

If they don't get funded, you know, what will happen to their business, right?

So, uh, I think this now there's a bit of consensus, you know, as a category has evolved that we need to have sustainable, profitable ventures, right?

Yeah, I think that makes a lot of sense.

And I think Marcus and I will both agree with you that it is, uh, it's really important for the founder to have his or her own like, uh, autonomy.

And the best way to do that is to generate more cash than you spend on a daily, weekly, monthly, annual basis.

There are VC firms, usually ones that have much bigger fund than my 8 million fund that really don't mind if you're burning cash, because that just means you need the VCs more and more all the time, but for the entrepreneur, it's empowering to, Maybe you want to raise money to grow your business faster, but you don't have to raise money.

And that's really an empowering position to put yourself in.

And it starts with, it starts with the first profitable customer.

Right.

And then the second one and sort of, uh, talk about a little more of the want versus need, because I think that is really strikes me as true and in health care.

A lot of times I'm thinking about solving a patient problem or a physician or nurse or someone, um, but I'm not sure I get into their like motivation or like what they're hoping to achieve today.

And I may fall into that trap myself.

So talk a little bit more about that need versus want.

That's a great, uh, you know, I think you have honed down on the perfect, uh, you know, issue that the founders face in the startup space, they're not able to distinguish between need versus want.

So.

You know, let's say you have not interviewed or you have, you have not been in the shoes of the consumer.

More than 60 percent of the brand startups fail, the Harvard research study says, just because they never identified the right need.

And by that, I mean, the consumers did not want the product, right?

So the problem is people, this, this whole thing of, I needed this product for myself.

Right.

So, for example, uh, the number one reason people stay loyal to a brand or a product is when it delivers results.

That's obvious.

But the number one reason to get to deliver for someone to get results from a product, people don't talk about that.

There's only one thing and that is how to use the product.

It applies across categories, beauty, MacBook, you know, iPhone, whatever, if you know exactly how to use it, you will get the desired results because the, who created the product was not an idiot.

Right?

The only thing is you did not make it so simple and amazing.

To use which aligned with the way consumers would want to use it.

That's what Steve Jobs did with iPhone, for example, right?

It's so intuitive.

So you're not, you cannot play against what the consumer wants.

You know, for example, if you, if, if you want to open a convenient store, if you want to be a convenient brand, you need to be present in convenient store.

You cannot say that I'm a brand that is convenient to buy, and then you're not present in convenience stores.

For example, you might choose some other channel.

That's so obvious, but you'll be surprised.

A lot of brands will do that.

The, the gap they've seen pricing is totally based on the brands that are found very conveniently, but then they go and place it in channels which are not that convenient, right?

So the consumer won't even find it.

But the underlying, the, the core is they don't understand the consumer.

They never give the product into the hands of the consumers and ask them questions.

You don't have to ask.

The Steve Jobs fallacy is, uh, I know I, you know, slightly move from one, one, one sentence to the other.

Steve Jobs fallacy is one of the reasons that people are not able to distinguish between need and want.

They think consumer does not know.

I know what she needs.

First of all, Steve Jobs was Steve Jobs, right?

Just because we have used iPhone, we have seen his movies, doesn't mean that we are Steve Jobs.

You might not have a number on your car plate, doesn't mean, you know, you're going to become Steve Jobs, right?

So, you know, you, when Steve Jobs says all of this, He never said that I do not interact with the consumer.

He did.

He would speak to the consumers.

He would try to think like a consumer.

So you'll be surprised beauty found as a woman.

She has a makeup product.

She has been there in the business for 10 years using makeup for 30 years.

I am a man, I know nothing about makeup, but we do the consumer interviews, the surveys, deep dives, question, you know, deliberate on strategy.

And then she gets to know something she had never known because she never thought from the way consumer is.

So there's brand soul, your intent or your product or innovation, why you created something is your soul.

But there is a brand reputation, meaning how the consumer is using it, what she thinks about it, what it means to her, right?

How she's using it, what kind of results she's getting, the features she loves, what she doesn't love, etc.

You have to understand all of that and then get deeper into her psyche.

I have a process which comes from PNG where you get into the emotional, you know, enemies that haunt that consumer.

If that makes sense.

That is taking a slight towards brand from product, but you can at least do it at the level of the product.

You can try to understand, for example, everybody says, you know, and this is, this is the biggest problem I see in beauty right now.

Okay.

I launched, I launched six products and I want to launch four more because the consumer needs it.

Otherwise they won't get the perfect results.

Otherwise it doesn't deliver results.

But the problem is she's not going to use it.

It doesn't want 10 products.

Right.

So she, you have to give that many number of products, such a routine that she would want to do rather than what you think she needs.

Like, you know what I mean?

No, no.

So keep going.

Keep going.

I want to really hear your process about how you build what I would call is build empathy with the potential customer and really try to see the world from their point of view.

It seems like you maybe have a process to help with that, that I'm interested in learning more about.

Yeah.

So I, we usually do deep dive interviews focused on, so you need to do 360 degree research.

So whether it's surveys, then, you know, the reviews, testimonials, then you do interviews, then you go deeper into those interviews.

You can divide the interviews into two different tiers, like the first level, and then you select certain to go deeper in those interviews.

You don't say you don't, you don't make the typical mistakes.

Right.

Okay.

You just ask questions.

So the typical entrepreneurial problem is, and the solution to that is slow on strategy, fast on execution, but entrepreneurs always do it in reverse.

When it comes to strategy, they decide in one hour, when it comes to execution, they take one year, right?

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What is Health:Further?