UChicago Founder Rejects Citadel to Sleep on the Floor
An Interview with bellie's Oliver Drazsky
Oliver is UChicago ‘24 graduate and the co-founder of bellie, a CNVC 2024 finalist.
This interview is lightly edited for clarity.
Diego Scanlon: Oliver, welcome to Windy Founders. I always start off with a question that is definitely vague and broad, but it’s intentionally that way, so interpret it however you want. What led you here, and where is here?
Oliver Drazsky: What led me here was my own experience with digestive issues: I had this syndrome that really impacted me a lot in ways, in ways you don't even want to publicly talk about. So just to scratch the surface. And there are many people who are suffering from these issues, but I found a way for myself to not suffer anymore. I feel I have a responsibility to help the people who have yet to reach their own improvement. So “Where is here?” is a tale of suffering culminating in suffering less and helping other people not suffer. UChicago and bellie and everything else is a vehicle to that end, more so than that being the end itself.
Note: bellie is a gut health supplement and drinks brand commercializing new ingredients for sensitive digestion.
bellie at UChicago and CNVC
DS: We’re on the UChicago campus, but it’s been almost a year since you’ve graduated. I know that experience was a while ago and a million things have happened since then, but I’m hoping we can talk about that period of time for a moment, starting with CNVC, which you did right before you graduated. Why did you decide to do CNVC? Is that when you started taking bellie seriously?
Note: CNVC is an undergraduate student startup accelerator at the University of Chicago.
OD: No, it's not. I took bellie seriously before CNVC. In fact, I was going to go full time even without CNVC. CNVC is phenomenal for business development. You learn how to think, how you're supposed to think, but more importantly, you also meet incredible angel investors advisors, coaches. For example, we’re now friends with a few of the angel investors who were at the CNVC finals, who have now become friends. They've introduced us to a bunch of other people, and resources, and thought frameworks that have been incredible. Everything we've been given from that network has been incredible.
It’s one thing when somebody does a true and tested path of banking or consulting or whatnot. It’s a completely different thing when you meet somebody who started their own company, they took the leap of faith, they built it to a billion dollars, sold it, and now they just advise and do their own thing. You want to know what their thought process is, you want to access their thinking, which you can’t unless you’re blessed with the opportunity to speak with and learn from them. So CNVC opened up this whole world to people who've done exactly what you're trying to do, and they're gonna give you so much insight. So I would recommend everybody do CNVC because it's just a great business development tool, but if you take it really seriously, it becomes a great life tool too.
DS: One of the arguments for taking investors that come from a finance or consulting background (non-operators) versus former operators / startup founders, is that the latter can be a bit prescriptive, “this is the way I did it, and that way is the right way, so you need to do that.” Have you had experiences like this?
OD: Not at all. As a matter of fact, the opposite. I will regularly ask our angel investors for advice and they just say, “Oh, I trust you.” So it hasn’t been prescriptive at all. In fact, I’ve noticed that VCs have been prescriptive because they have all these frameworks of “we have to invest in this category” or “the founders need to have half a million ARR or a million ARR in these categories. But angels will just say, “I like this person. I I think they have the right conviction and the right passion, and I’ll be there for them if they need help, but I trust that they can go to great lengths.”
I think there’s also an interesting discussion about investing in founders who are college students versus industry veterans. If you’re an industry vet, people invest in you because of what you’ve done and what you know now. If you’re a college founder, they invest in you because of what you can know or what you could discover in the future. So they’re looking at you as this untarnished vessel that can grow; you’re literally a seed that can spread very far.
Vanity of Retail vs D2C and VC vs Bootstrapping
DS: Related to that question of investing in college founders, I was speaking to another founder who recently dropped out of college and is of college age / should be in college right now. He was talking about how he doesn’t want to come across as a college founder because he’s aware it might affect his valuation. Is that merited? What do you think of that?
OD: Everybody’s unique, everybody’s eclectic. They have their own path. So I’m not sure if it’s merited or not. If they’re a startup founder that dropped out, they’re probably doing something really right. So I can’t say from my perspective that it’s not the right move. But what I can say is that if you are going down the VC path and you're constantly beholden to valuation and how other people perceive you, I think that at some point in your life, you're likely to stop caring about that, for a variety of good reasons. So caring about it now might just be delaying the inevitable. I mean this as: why not just focus on running a good, profitable business from day one? There are millions of VCs you can find, and one’s that don’t care about your age or college association. But it’s, again, not up to me to say if it’s merited or not; I can’t be the judge of that.
I want to draw a parallel here of retail versus D2C.
Consumer retail is really sexy: you get Whole Foods and other stores, but your gross margin is only 50%. Distributors take cuts around 30%. You have to do frequent discounts that cut into your margins even more. The retailer takes a cut. So you’re largely not profitable for 4, 5, 6, 7 years. But again, retail is very sexy because you’re on the shelf and everybody knows you, and everybody talks about you. The opposite side is a D2C brand like Vuori, who's killing it. They’re doing billions, not millions, in D2C sales, but not many people know about them. If there was a retail brand doing billions in sales, you would definitely know about it like an Olipop or a Poppy. But since they’re a D2C brand, a lot of people don’t know about them because their targeting is very stratified: they’re targeting a certain subset of the population over and over again. And once you figure out what clicks, you just reinvest more and more in that population. So the scale factor is much better. Retail scaling is slower.
I'm drawing a parallel there because VC and bootstrapping is a very similar story. If you go the VC route, everybody knows you. It's very sexy, “ We raised this much!” Okay, boom. Now you own 10, 20% of your baby. And there's a class of founders that really don't care about that and they just want to exit as soon as possible. And I've met them and they say, “I just want to be rich.” And getting a big payout is part of that ethos, the authority of it. But then there's others that say, “Look, I just want to consolidate, control, grow a profitable machine, and then scale and be very selective with the type of funding I get.” I thought that parallel was interesting.
DS: I know that you’ve raised money, so have you decided which camp you want to be in, or is that something you figure out later down the line?
OD: So we have decided, but I can't disclose too much. We have a very specific path now, and we've outlined our fundraising strategy for the next year.
Saying no to Citadel and sacrifice
DS: What I remember as one of the big moments of CNVC was when you shared that you would not be accepting an offer from Citadel to focus on bellie. Saying that, but more importantly actually following through with it, shows very strong conviction in yourself, the idea, your team. Can you talk us through the thought process of turning away that offer, and any fears, concerns, or excitement you had?
OD: I totally understand the reason why somebody would be interested in this. I worked for that company for a year, part-time during the school year and during the summer. And my health was very bad. So to me, I didn't care about the role or about the money anymore. I just wanted to find a fix. It wasn't even a question of, “Am I going to say?” There was no fear at all. I resolved to the idea that things will work themselves out. I realized I have to find a solution. This is my purpose in life, my calling, and I’m going to actualize it.
For many of the people who might be reading and who are interested in entrepreneurship, you have to realize that if you're at UChicago and you're a 20, 21, 22-year-old founder, you are at the cusp You are so educated, so lucky, so blessed, and you have incredible resources, incredible networks. It's hard to see it because you hedonically adapt to your circumstance. You think you're not actually in such a great position, but you are. You could even take a sabbatical and still be fine. Sam Altman recommended that to founders, and he took one before OpenAI. You're so smart, you're so creative. You've just been educated at a great institution, so taking some time to think and process everything is not a bad idea. You can also jump in straight into IB and consulting – that’s also great.
But you might care about other things, like, “How much do I want to break the mold?” which might cause you to ask, “How comfortable am I breaking the mold?” And I think in the position of being a student at UChicago, you should be more comfortable breaking the mold than anybody else; you are uniquely positioned to do that. So for a potential founder who’s starting something, I wouldn’t say start something because you feel like you have to, because there’s this sex appeal of entrepreneurship – it’s not real. Start something because you’re really passionate and because you feel that it has to be made. You can ask yourself the question, “If someone paid me $10 million or $100 million, would I act differently?” If someone paid me that amount of money, I would be doing the exact same thing. I would just hire more people to help me scale it faster.
There’s a risk, but this is the time to take that risk.
DS: I’m realizing the next question that I had written down is definitely biased because I was going to ask what other sacrifices, in addition to the Citadel offer, have you had to make – but this question incorrectly assumes that you see Citadel as a sacrifice. So I’ll scratch the Citadel part, but maybe I should also not be so quick to assume that you believe sacrifice occurs in the first place. But are there things you feel that you’ve had to sacrifice?
OD: You sacrifice your old identity, that's probably the biggest thing. When you look at yourself two years ago versus now, you realize you're such a different person and that change isn’t always intentional. Okay, you don’t go out to party, you don’t go out to eat much. I don’t sleep on a bed, I sleep on a floor mattress because it’s cheaper and I don’t want to allocate myself a salary just yet. But I don’t necessarily see those things as sacrifices.
So I would say you do lose your old self for sure, but you don't realize it's happened until it's happened. For some people, that might be frightening. Some moments you’ll say, “wow, I'm very, very different from a few years ago.” And that might lead you to think that because you’ve changed so much in the past two years, you’ll change even more in the next two, which is more frightening.
Peaks and troughs of motivation and ego and validation
DS: In the super early days of bellie, I remember going to one of the tasting or feedback events you held with an RSO on campus. I remember sitting there, in a Harper classroom, and it was either cold or snowing outside, and I’m waiting there for a bit, and I’m wondering to myself “Where is this guy? Why is he late to his own event?” Then I see you walk in with a massive suitcase packed with heavy glass bottles of bellie, and lug it onto the table. And I remember in that moment completely forgetting that you were late, and just thinking to myself, “damn, that guy just carried a heavy-ass suitcase across the cobblestone quad at 8pm on a Tuesday while it was snowing to get some feedback on his product.”
OD: (laughs) Thank you.
DS: So related to the question on conviction I just asked, it seems that new things in life are often exciting and give you a lot of energy, like the kind that allowed you to pull a heavy suitcase through the snow. But it also seems that as time goes on, that excitement and energy might die down. Has that been the case with bellie, and if so, how have you navigated those periods to keep going?
OD: Yes, this is always the case with founders. YC talk about it as a syndrome – after YC, the excitement plummets because at YC, you have the excitement of your first customers, you’re fundraising and meeting all these people, you’re building product, your building relationships, then it goes quiet. It’s definitely real. You have to go from business development to operating, and that’s a big change.
By business development, I mean that in environments like CNVC or YC, you optimize so hard on fundraising, on creating the pitch, on refining the brand for the eyes of investors. But after that, you have to optimize the brand for customers. And in the case of CPG, the retail sales cycle is over a year long. So you'll pitch, but you can only pitch people in one window per year. Once you pitch them, you only find out if you're approved six months after the pitch, and if they say yes, then it might take another six months to be slotted.
For example, we pitched a retailer in October and had a very good outcome where they approved us the day of. But we couldn’t talk about it, and there was nothing in writing for months. So for a long time, we were perennially panicked, and asking ourselves if this is real or not. We just found out that our launch date will be in August, but there’s so much time between when we pitched in October and finding out when our slot date would be – almost half a year where we’re just waiting. And I just had to wait. I'd pitched everybody I could pitch. I'm time gated. So what do you do in those periods of time? This waiting actually informed an additional product launch, which I can talk about later, because I was so impatient. I didn’t want to be dealing with the bureaucratic cycle of B2B, so let me do this D2C angle and just start selling, gathering data, and launching hard on that.
So that’s the way we dealt with the down time. It’s hard to say it’s the best way to do it, but you do need coping mechanisms. But you also don’t want to be doing busy work. I think a lot of founders will get stuck up in work that seems important, but isn’t. Every decision you make should be furthering some end. And detach yourself from the validation you get from other people. You get an award, you’re on a list, obviously it’s an honor, but at the end of the day, that’s not driving the business forward. It’s just driving your ego forward and you have to be very careful. You want to be calculated, systematic, and humble.
So in the periods of deflation, which always happened during or after an accelerator, especially after YC or for UChicago students that go through CNVC, you just need to have grit. And I think that it's difficult to isolate a common denominator for founders because they're all idiosyncratic, but I think the one common thread there is grit: just no matter what, I have to do this.
DS: Before we go to the next question, you talked about how you’ve seen yourself change a lot in the past two years. Maybe now you're looking forward and seeing that you're gonna change in the next two, too. And then you just mentioned ego. So not at all a targeted question, but have you caught yourself realizing that your ego at a certain moment might have been big, or that it wasn’t what you wanted, and therefore had to readjust?
OD: I did have a readjustment, but not in the traditional ego sense. I’m very grateful that we have these advisors and mentors that can elucidate the path, but when you’re, as I mentioned, going through a program like CNVC, you’re indexing on fundraising, business development, and the brand’s presence. But then afterwards you actually have to index on operating a good business. I think every founder, I would hope, goes through that transition. After we raised our targeted amount, I had to deactivate the business development side of things for the operating side, but that wasn’t an inflated ego or anything like that.
But social validation is a real thing that happens. And it can be difficult to get out once you get caught up in its web. But you have to break free. Definitionally, as a founder, you're trying to break the mold. And if you live in the realm of social validation, you're not gonna break the mold. You have to be very careful to keep pushing forward, trying to make a difference, and sticking to the value proposition of the brand.
Collecting honest feedback in CPG
DS: Back to your suitcase story. I tasted bellie for the first time that night, and since we’re being honest, I remember not really liking it. And you asked us for feedback through an anonymous Google Form, and even though it was anonymous, I remember saying that I liked it. So I lied, I’ll admit it. And maybe not everyone lies, especially when you have incentives like anonymity, but this anecdote makes me think of how often CPG brands, but honestly startups in general, may run into problems when trying to validate the quality of their solution, in your case, taste. And this question is different from validating messaging, problem, value-add. Can you talk about how you’ve approached gathering feedback on bellie, and if you’ve changed your mind on the matter?
OD: So let me preface, you always have to iterate and improve. The same way that in tech, you add new features, in CPG, you always reformulate, even if it’s slight adjustments. “Oh, the texture could be maybe slightly thicker so that the flavor lingers on the mouth.” So we’ll add a bit of protein protein compounds to get it lingering on the tongue a bit more. Flavor scientists exist for a reason. What you saw that day was one of our earliest test patches, and those test batches are necessary for continuously improving.
I do want to caveat, however, two things. One, you have to get data from your target audience. A lot of people, because they're in college, think that college opinions matter to the business, and they do if you're selling to college students, but most CPG brands don't. So for us, the real tactic is going to a store and sampling people that fit our positioning. Our positioning is that there's no product that's suited for people with gut sensitivity, be that IBS, IBD, celiac sensitivity. So we formulate the product to be tasty and good for those people without hurting them. And who really matters are retailers, so when they try the product, do they like it? And if they like it, they take you, and that matters more than what the college taster says about taste. So you always have to be testing and sampling at these stores because that's where your target audience is. So get into Whole Foods every single day and sample. And even if Whole Foods wants you, continue to sample to get more data so you can optimize and tweak flavor before launch. As I said, you have a 12 month period from pitching to getting slotted. That's plenty of time to reform as reformulations take a couple of months.
The next thing I want to caveat, and the next point I want to make, is that in CPG specifically, optimizing for flavor is simultaneously the most and least important thing. It's the most important thing because flavor drives repeat. If they like the product, they'll come back to take it again. But it's the least important thing in that your positioning has to solve a problem. When we look at Simple Mills, the reason Simple Mills has been so successful is because they solved the problem for people who can't tolerate gluten, they create delicious gluten-free product lines. It's super simple, it's clean, it makes sense, and it's a very strong positioning statement. Your differentiation can’t just be flavor.
So CPG brands need to have a very strong positioning statement that works. Product attributes are a part of the strategic positioning, but they're not the position themselves. So while bellie being stevia free, caffeine free, and carbonation free, are good product attributes that contribute to it being good for people with sensitive digestion, it’s not actually the positioning itself. The positioning is drinks for sensitive digestion. So I’ll often speak to founders who tell me about their product attributes – healthy, tasty, high in x, low in this – but that needs to be threaded into a positioning statement.
So these three things are very important for CPG: constant reformulation, strong positioning, and optimizing for target demographic.
Pivoting
DS: At UChicago, bellie was known as the pre-biotic soda specifically for people with IBS. But it seems like you may have pivoted into a supplement powder. Is this a pivot?
OD: It's not entirely a pivot. After the CNVC, we really strengthened our positioning of the drinks because back then, like you said, it was the soda for people with IBS, but now we're drinks for people with sensitive digestion. And that might seem like it's not that different, but it really is. As we were selling in stores in Chicago, we were always sampling and getting data, and we realized that out of 20 people that come into the store, maybe only one has IBS, but 10 out of the 20 have some sensitivity or some dietary protocol. So broadening the demographic, but keeping it bounded, was very helpful.
Now, as for the supplement, we wanted to go omnichannel for a variety of reasons. bellie started because of the discovery of certain bioactives that really helped me, and we determined that there’s great potential for us to commercialize these compounds. One way to do that was the drink. And the ethos, these bioactives, can be brought to people in other ways, like a powder. So there was a natural bifurcation. The risk there, obviously, was spreading yourself too thin, which is why you have to vertically integrate to make sure it works out.
So at the time we were at an impetus, in that period of time pre-launch on the drinks, because launching in college is not actually launching. Like I mentioned, I was impatient with the sales cycle for the drinks. The supplements enabled us to have a lot more control over our own destiny. For supplements, the timeline is much quicker. You can create good ads, control ad spend, and if you have profitable ads, you can reinvest and your margins are higher. The flexibility and the freedom is much higher in the D2C realm, and that’s evidenced by what we’re still going through with slotting the drinks with retailers.
We’re still waiting for some things like slotting fees. For example, say you get into a major retailer. You’d think it’s a great success until they give you pages of deduction on your invoice, and charge you $100k slotting fee just to sell in the store. As a small brand, you have to front this without any notion of potential success. You don't know if you're gonna sell through it really well yet, but you have to front that cost anyway. So our strategy does adjust for that, but it's a multi-year plan.
For a realistic example, say we get three big retailers for the drinks this year. Can we afford that? How much will we have to raise to accommodate fronting those costs? How much will the initial purchase orders look like? Is this gonna be a $50,000 purchase order? How many of those are free fills because that slashes our margins? So there's so many variables to look at systematically, and ways selling the supplement powder can help us with that.
The future and end
DS: How does the future scare you? (Thank you, Matteo from Prind, for this question)
OD: It doesn’t. I’m scared of some global things. But as for the business, I don’t have fear. Whether you’re religious or not, you have to have faith. Obviously, some days you’re afraid, and I certainly will have anxiety about certain things. Sometimes there are plans that don’t work out as intended, and that can be anxiety inducing, but that’s not fear. That’s a heuristic. You have to find a way to not get anxious. I deal with that sort of stuff by creating very systematic pathways for everything – if this happens, this is what we do – and try to cover every base and every pillar.
DS: What’s the end goal?
OD: My end goal is to start a few things in the gut health space. When you're a startup, you're small and trying to put a dent into things. Eventually, your company gets big and you can start moving the chess pieces in a much more powerful way. I fully intend to do that with gut health. bellie is a mechanism for helping as many people as possible with this great science, and eventually the next step is institutional deliverance of gut health: a foundation, a scholarship, and some angel syndicate or collective that exclusively invests in gut health, be that medtech, consumer, or some other space. After that I can die.
DS: Anything else you want to share?
OD: I think the world can be very beautiful and good, but you carry a responsibility to be part of that good and that beauty. Don't let the world compress you. Try to exhibit your own force against the world positively.