Dietary Disruption: Startup Takes on Lucrative Supplement Market

By Bill Snyder

The last time many people on the campus of UC Berkeley were paying attention to Will Smelko it was 2010. Then 22 years old, Smelko was the ASU president and he made news by vetoing a resolution urging the University to divest from companies supplying military-related equipment to Israel.

Now, he and fellow Cal Class of 2011 grad Ronald Chang have founded and are running a nutrition-focused company called Ora Organic. It sells a line of about a dozen protein powders, food supplements, and sprays, and boasts about their all-natural, plant-based ingredients.

“For me the personal and the professional converged,” says Smelko, who credits a bout with heart palpitations and extreme fatigue with sparking his interest in food supplements. Much of his diet is vegan, but Smelko tries not to be doctrinaire. “I’m a flexitarian. I’ll sometimes eat an egg or wild-caught salmon if my body needs it,” he says.

“My takeaway is that the nutrition and food we have here is broken.”

Smelko and Chang met while still high school students in Southern California and got along so well they decided to room together when both were accepted to Cal. “I’m a food guy and I come from a family of restauranteurs,” says Chang, who has cooked professionally and now fills the role of Ora’s chief operating officer.

Heart disease and strokes plagued the members of Chang’s family who moved to California from Taiwan. Relatives who stayed in Asia didn’t develop those diseases, which he blamed on poor U.S. diets. “My takeaway is that the nutrition and food we have here is broken,” he says,

Because he loves food, much of Chang’s time is spent in a test kitchen, tasting the thousands of combinations of ingredients that fill Ora’s capsules and bottles of powder. There’s no reason for supplements to have the awful taste generally associated with vitamins and the like, he says.

“We’re trying to blur the line between food and supplements,” Smelko said.  

Smelko and Chang came off as friendly and California casual during an interview, but their company’s marketing has a sharp elbow. “Hold on to your Kombucha, honey,” says a smiling actress in a funny, but pointed video on Ora’s web site. “But have you actually thought about what’s in your (supplement’s) capsule,” she asks, before running down a list of unappetizing and unnatural substances she claims that Ora’s competitors stuff into their products.

Whether it’s the advertising or the quality of Ora’s products, the company appears to be doing reasonably well for a youngstartup.  Based in San Diego, Ora registered sales of about $500,000 in less than a year and its products are sold online and in stores in about 20 states. The company was founded two years ago with $150,000 in funding from angel investors, including former vice chancellor of UC Berkeley, Frank Yeary.

Ora was featured on Shark Tank, sort of a reality TV show for startups and entrepreneurs, and Smelko turned down an offer from a venture capitalist to take an equity stake in the company. “We’re not just taking money from anyone who offers. We want investors who believe in our mission,” he said.

But the company subsequently raised $1.2 million from angel investors and is on track to reach profitability in the near future, Smelko said. Is an IPO in the offing? Too soon to consider that, replies Smelko.  

Ora’s products include a line of powders (in three flavors) for fitness, two probiotics for “gut health,” and sprays for “brain health.”

There’s plenty of competition in the $37 billion supplement industry. So what makes Ora special? “We are the only ones where every ingredient is plant or food based,” Smelko said. Ora’s rivals would disagree. Many products on display at a typical health food store make similar claims, and given how lightly the dietary supplement market is regulated, there’s no easy way for a consumer to verify those claims.

A 2013 study by Canadian researchers found that the ingredients of many popular supplements were often diluted or even replaced by fillers such as soybean, wheat, and rice, as reported by the New York Times. Other researchers have found that some herbal supplements contain undisclosed amounts of walnuts, a serious danger to people with nut allergies.

Even more elusive is evidence that claims of health benefits are reliably true.  One area, memory supplements, was the subject of a market review by the Food and Drug Administration in June. The audit found that more than two dozen advertisements for those products touted claims in violation of federal law regarding deceptive advertising. (Ora, which sells a brain-health supplement, was not mentioned in that report.)

It’s not only the efficacy of memory supplements that’s at issue. Researchers at Kaiser Permanente’s Center for Health Research asked if vitamin and mineral supplements could aid in the prevention of cardiovascular disease and cancer. Their conclusion: “Two trials found a small, borderline-significant benefit from multivitamin supplements on cancer in men only and no effect on (heart disease).” Ora’s founders acknowledge the shortcomings of their industry, but say they go to great lengths to be sure that their products, which are manufactured by contractors, contain exactly what they’re supposed to contain.

According to Chang, Ora uses two independent agencies—QAI (Quality Assurance International) and CCOF (California Certified Organic Farmers)—to certify the company’s ingredients. “They vet the entire supply chain all the way down to the source farm and how it’s grown. All of our products are third party tested and most are Kosher certified,” he said.

Chang is also careful not to sound too boastful about the benefits of his products. Supplements, he says, “are just that: supplements to a healthy diet. You only take them when you need them.”  

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