AG1 CEO Kat Cole on hitting 10,000 retail doors, launching AG1 Pro, and using AI agents to keep OpEx flat as revenue scales

Speaker 3: We are.

Speaker 1: Completely agree.

Speaker 3: Cheers, Walter.

Speaker 1: Have a great rest of your day. Goodbye. Let me tell you about Railway. Railway is the all in one intelligent platform provider. Use your favorite agent to deploy web app servers, databases, and more while Railway automatically takes care of scaling, monitoring, and security. We got a lightning round because we went overtime with Walter Russell. Me, we got Kat Cole, the CEO of AG One here with us for the second time. Welcome back to the show. How are doing?

Speaker 10: Hi. I was enjoying listening to the cocoon era and the pleurocrats and the history lesson. You in the cocoon era?

Speaker 1: Are you expanding and spreading your wings, spreading your Butterfly. Butterfly. Is this what's

Speaker 10: era. We have, you know, just continued the march to meet customers where they are, launching additional products, new versions of AG one. We launched AG one Pro with creatine and HMB for gut and muscle support. It's been a sellout success. We can't keep it in stock. I think that is a real indication of the momentum coming from GLP ones and people wanting more gut and muscle support, but also the longevity movement. Women, men, all ages from younger to older are really gravitating toward these more advanced foundational formulas. We launched gummies, one of the few NSF for sport certified gummies, like one of the most honest gummies out there that's clear about what's in it and third party certifying the label claim. And this week, we continue our march from Costco and Target into Walmart, Kroger, and Harris Teeter. We'll be at almost 10,000 doors, brick and mortar retail by

Speaker 3: the end

Speaker 8: of this year.

Speaker 1: Is AI good for you? Because people are asking about their health, getting more ideas, and AG one has been around for so long that you're the first thing the model reaches for as an example? Or is... Are there new challenges because people are gonna be vibe coding their own formulas and buying raw ingredients by the ton and mixing up their own vitamin mixes. I don't know.

Speaker 3: Yeah. I've got a humanoid back at home that's just mixing, making...

Speaker 1: I mean, you talk to some software people in San Francisco and they're like, yeah. I will actually, you know, make my own my own CRM. So, you know, maybe people Yeah.

Speaker 10: Look. The answer is yes

Speaker 1: to both. Okay.

Speaker 10: There's there's definitely, continued lowered barriers to entry to make a thing, market a thing, stand up a site. But for us, being sixteen years in and actually having more peer reviewed and published human clinical trials and, a lot more documented research over the years on both our ingredients and our finished formula, What's interesting is we're moving from just the marketing era where the hype, the fear, the spin, the influencer helped get you to try something, now to the agentic search era, which is actually pulling and referencing those peer reviewed studies. So we're seeing more people saying, oh, I was searching which multivitamin or which gut health product has the most clinical research and AG1 popped up and people will say, I didn't know it was a gut health product. And actually several of our peer reviewed and published studies are about the outcomes, the beneficial bacteria, the short chain fatty acids, etcetera. So on a... On the pure customer education and clarity side, you all were talking about trust, with your previous guest. I think it's a good thing because people can cut through the noise, but we've also all had the experience where depending on how you ask the question, you get one answer and then you correct it and it says, oh, that's right. You're right. Here's a different answer. So our multi million dollar, multi year investment in scientific human trials, peer reviewed, placebo controlled and randomized, takes a while for that to provide a real ROI because not everyone knows how to read these studies. Not everyone wants to go deep, but they do want to understand who to trust and what to trust. And the agentic search

Speaker 9: Sure.

Speaker 10: Is providing a connection between a customer's questions and the actual evidence that a brand or a product has.

Speaker 3: Yeah. So many brands don't have any... Specifically in health and supplements, they have they have no substance. Right? So there's, like, there's an ad, there's a landing page, there's some product details, but, like, the next five questions that you might ask to assess the product, there's actually not... They'd like... There's no answers. Like, you can ask as many questions as you want. You'd probably have to sit down with the founder and try to tease some of the stuff Totally. Because a lot of it is just not online. And the the honest truth is that a lot of it is just, you know, they went to a co manufacturer and the manufacturer said, here's the product that we make. We promise that it doesn't have Yeah. Too much of these things in it. And then the brand says, we'll take we'll take 10,000 of them. Thank you. That's like... That's...

Speaker 10: It's interesting It's interesting as we bridge into retail and we we launched for fifteen years with just d two c, then launched on Amazon. We're having absolute banger Amazon Prime days, which is rad, right now. So it's great. Right? But right as we are continuing to expand our portfolio and innovate with Costco, who we launched with first, and innovate with Target, and now launching where we're America Shops, which is also Costco, Target, Walmart, Kroger, Vitamin Shoppe, etcetera. And the very thing that drives retail velocity and repeat is the same thing that drives sticky d to c high LTV customers, is great experience, great recommendation, but is demand... The actual demand generation that is increasingly coming from agentic search, so what we were talking about, social commerce, TikTok shop, tribe, others. They're they're not just transaction platforms, they're discovery platforms. So when you put together social commerce as a platform for discovery, agentic search as a place for research, customization, and understanding the truth of a product if you... You know, if the questions are asked in the right way and if the brand has their information published, that isn't only good for d to c or for a brand. It's what retailers want. All the retailers are telling us, they're saying it in their earnings calls, we want brands that have real demand driven by modern tools in in today's approach to demand generation and content. And so it's been really fun having multiple channels now with these incredible retailers as a place to drive return on the investment into new ways that people can discover our product, which then drives more return on the now five years of additional human clinical trials that we've been making, that are the right thing to do. They provide trust and confidence in the product. They're certainly a great pillar to stand on when someone has questions about the product. But now increasingly, they're actually... The science is the marketing. Sure. The science is the search result and that drives pull through to multiple channels.

Speaker 1: That's fantastic.

Speaker 3: How how efficient do you think AG one can get? Like, do you think you can... Is there a path to to 10 x ing revenue while, you know, one and a half x ing headcount? Like, how are you thinking about, you know, these new new tools and and just with how much consumer brand... Like, how competitive the market is and how much you need to... Theoretically, you wanna be spending every incremental dollar on demand generation. Absolutely.

Speaker 10: And look, the more overhead, the more fixed cost or carrying cost you have, that's a dollar you don't have to invest in. Not just demand generation, but also innovation and research. And so the opportunity that we started about 2.5 ago bringing in agentic tools into the business to not only manage costs, yes, can keep us from having to invest in and hire more people, it also makes the people we have far more efficient. We started with customer service and agentically enabling the customer interaction experience, not all of it, but the things that make sense. Then moving it into our supply chain traceability sourcing. AI has been an incredible enabler to efficiency and speed in traceability of raw materials and ingredients. And then using it for science. We have an incredible partnership with UC Davis using their AI tools to help us understand interactions and chemistry and future more complicated formulations more easily. And so when you add that with the more obvious and commonly talked about, agentically enabled marketing, whether it's content creation, content iteration, content publishing, conversion testing, you see all kinds of tools coming up helping companies go faster. The reality is we can and will continue to operate in a more lean structure so more of those investments can be made in product innovation, human trial research, and go to market.

Speaker 3: What's your honest review of AI customer service tooling today? You don't need to name the... Your your partner, but I've been amazed at how bad some customer experience Yeah. Solutions are today even though you've had this massive progress in other domains like coding. I haven't been, like, feeling the acceleration where if I'm chatting with a brand about an issue that I'm having, like, it just doesn't feel like there's been that much, nearly as much progress as I would expect or or hope, but I'm curious how you see it.

Speaker 10: I'd say it's been fantastic for what we needed. So as a... Up until our retail launch, we were primarily Right? 90% subscription, massive d to c business. So a disproportionate amount of our customer interactions were about the order, the shipping, the transaction. That is beautiful for agentic replacement. It's very technical and fact based. So our customers have given us higher customer service scores, higher ratings on the interactions, but we limit the tool to those. When it gets into, hey, I have a question about my experience or a recipe or how to mix this or things that might creep into more nutrition and medical territory. There's some AI enablement, but we have a very clear cut off and escalation process of when this needs to be much more human and real time. And that's how we've navigated it. So I'm super thrilled and so are our customers with the interaction with agentic customer service, but that's because we're not using it for things that, to your point, I don't think it's quite ready at scale for.

Speaker 3: Fantastic. Last question on that. With the hope... Hopefully, a lot of continued progress. Do you think that the amount that you're spending on customer service, let's say, in five years will be similar to today because you get the benefit of of sort of increased capabilities? Or like a, you know, big company would have historically, you sort of need to scale customer service linearly with revenue and it's sort of like a fixed percentage of revenue. I like... Because what I'm wondering is, like, in the same way that you can basically keep OpEx flat, you know, a lot of brands are keeping OpEx relatively flat. Like, how how will CX fit into that?

Speaker 10: Yeah. I mean, for us, I would see OpEx being flat to down both because we can control costs and operate more efficiently to your previous question, but also more efficiently drive profitable revenue with these tools. So just the way the math maths is more advantageous and allows those investments in things like research and innovation and marketing. But there's another aspect to still... Even as we're expanding into retail and there are many incredible stories of brands that were D2C native that beautifully expanded into retail and you go from being a 100% D2C to one third brick and mortar retail and then to half brick and mortar retail. And when our customer experience starts to get spread Sure. Across maybe a Walmart that has an a g one seven count, a Costco that has an a g one forty count or a g z, and our subscribers that have access to the full breadth of the experience. Customer service, I would redefine it as customer experience and retention. So we may not spend less on an absolute dollar perspective, but instead of it being answering people's questions and fixing problems, it's going into rewarding their loyalty, providing benefits of membership, actually creating a better customer experience, whether it's better frothers, shakers, AI tools for nutrition and education. So we will spend less on traditional customer service and get incredible operating leverage because of AI tools, but we'll reinvest that into a much better customer experience so people do stick with their routines with the most trusted products that they're choosing to buy and try.

Speaker 1: Well, thank you so much for coming on

Speaker 3: the show. Well said.