Yahoo Finance The $60k gamble that became a $5 million collagen business
Josh and Izaak Woodley and childhood best friend Lachlan Arter don’t look like who you might expect the founders of a successful, hyper-female-targeted collagen powder business to be.
“I think people do find it very strange when they realise it’s our brand, looking at it on face value,” said Izaak Woodley, one of the three founders of The Collagen Co.
The Aussie brand, born during the pandemic and celebrating its first birthday, is blazing a trail in the ingestible beauty market. Using a social media-only marketing strategy, the $5 million beauty start-up sells sachets of top-quality collagen formulated for glowing skin, nails and hair, as well as improving overall wellbeing.
The three mates from Melbourne have come far from where they first began. Behind the success of The Collagen Co is the failure of the trio’s first business, ProWater, a long, drawn-out first business attempt that began in 2017 to flog protein water through gym fridges.
The venture attempt imploded when they were left with 10,000 bottles of the protein water stranded in Malaysia, where the product was manufactured. On the day that 40,000 units of ProWater was supposed to be shipped from Malaysia to Australia, a phone call from the Department of Agriculture revealed beverages containing protein from overseas weren’t permitted to be imported into the country.
“We’d put it on trolleys and we’d wheel it around,” Izaak recalled. “There’d be people coming past on the street, and we’d ask, ‘you want some drinks?’ and they’d say, ‘yeah, okay’.”
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From unsellable to sold out
But from the ashes of ProWater arose the crucial building blocks that would eventually become The Collagen Co.
If you don’t know the brand already, you may soon; the growing company has just secured Frostbland as a distributor, following in the footsteps of cult favourites Bondi Sands and Alya Skin. The distribution partnership means Aussies could soon see The Collagen Co products on their local supermarket shelves, with the founders aiming to have products in 1,000 stores across the next 12 months.
And if it weren’t for the initial failure of ProWater, the fast-growing collagen start-up would have never been born.
“COVID was almost the best and worst thing that ever happened to us,” Izaak said. “[It] ruined our business, but it kind of spawned the The Collagen Co, which seems to be a blessing in disguise.”
LESSONS LEARNT: The failure that had to happen
Though the COVID-19 pandemic led to the swift demise of ProWater, the trio were gaining valuable insights all the while, from target demographic to distribution to marketing.
In trying to flog ProWater, it became apparent very quickly that interest in the product was due to a key ingredient.
“The majority of the retailers and everyone we’d be pitching ProWater to were very interested in the collagen aspect of it,” said Josh. “It opened us up to quite a broad range of people, both males and females.”
From all the research the trio had already undertaken to develop ProWater, the founders had a science-backed understanding of the minimum amount of collagen you need per serve in order to make a difference.
“Collagen isn’t just collagen. There are different qualities, different products with different molecular weights,” Josh said.
While collagen is now often associated with beauty products, it’s the most abundant protein in the human body, and works as the scaffold to provide strength and endurance. It’s all throughout our bodies (bones, muscles, blood), and it’s responsible for healthy joints and skin elasticity.
ProWater contained 15 grams of collagen, which is the minimum amount research has shown is required to see real improvements in muscle mass and body composition. “So we made sure when we were developing it that we were using the best collagen … and people are going to get results quickly.”
It’s this scientific grasp of the collagen protein that the founders believe sets their products apart from the competition.
According to Josh, there were three key pain points customers face when it comes to choosing collagen products: ‘dosage’, taste, and quality.
The founders were seeing other ‘collagen’ products flogged with as little as 5 grams, and knew from experience that their ProWater customers had reported “a lot of quick results” from 15 grams.
Their journey with ProWater also taught them that even highly effective products of amazing quality would ultimately fall flat if customers didn’t enjoy it.
“If the product doesn't taste good, people aren't going to come back,” said Izaak. “If they can’t get it down each day, it’s going to have issues.” The founders worked with thousands of samples to make sure that the final product tasted amazing.
And regarding quality, the trio knew that it would have to be top-shelf as well as effective in order to deliver results and keep customers coming back.
And in a rapidly growing global collagen industry that is projected to balloon to $1.13 billion by 2027, The Collagen Co founders plan to stay ahead of the competition by inventing different ways of consuming collagen, such as integrating it into baking. The website’s blog features recipes that integrate its collagen into desserts like brownies, mini pavlova, and choc caramel slices, many that are penned by nutritionists.
The $60,000 gamble
After the ProWater bust-up, most aspiring entrepreneurs would have given up – but the trio felt had nothing left to lose.
“It was our last ditch effort,” said Josh. “This is all we’ve got left … We had no more savings, we had no more money.
“Let’s just give it a red hot crack, and if it doesn’t work out, at least we can say we gave it everything. It was definitely a good decision, because it’s paid off for us quite well so far.”
Giving away thousands of bottles of ProWater had left them with virtually nothing left in the bank. The three were determined to run and own their own business.
When the government’s Early Access Super scheme rolled around, they seized the opportunity and plundered their own nest eggs. Each of them took $10,000 out of their super accounts, and then once more when the second tranche opened up.
“It was just by sheer luck that the time we were launching the brand was on [either side] of the financial year. We were able to get another ten grand out of our super,” said Izaak. “From there, we put all that money into The Collagen Co.”
Success is its own beast
While the eCommerce business has found success and a growing loyal customer base, the small business owners – like millions of others – are still working out the teething pains.
“Cash flow is always a problem, managing growth,” said Josh. “We were constantly chasing our tails in terms of waiting for a certain [volume] of sales so we can buy some more – but then we have to get [even] more this time.”
The brand is growing bigger and bigger every month, but supply and demand is a juggling act, added Izaak.
“It’s a continual battle – fuelling the demand for the product, and having the supply to fuel the demand.”
Global shipping delays are also wreaking havoc for parcel delivery services and eCommerce businesses alike, making production and packaging of the product a constant challenge.
The trio are also looking forward to growing and adding more to their team later this year or early next year.
“In terms of expanding, we will start to look at hiring a team in key roles,” said Josh, noting there was a difference between working in the business and on the business.
And the Frostbland relationship will hopefully catapult the brand once it hits retail stores, added Lachlan. “That’ll build credibility, and we’ll take the brand from there.”
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