Laura Modi, co-founder and CEO of infant formula startup Bobbie, is on a mission to transform an industry that she says has been stagnant for decades, and shift the culture around how parents feed their babies.

Modi, a former Airbnb executive, came up with the idea for Bobbie after the birth of her first child.

“I remember walking into a pharmacy buying infant formula and hoping that they would give me a bag that you couldn’t see through it, because I felt so embarrassed about the product that I was buying,” Modi recalls in a new episode of the “CNBC Changemakers and Power Players” podcast with CNBC’s Julia Boorstin. 

Modi was named to the inaugural CNBC Changemakers list in 2024.

It wasn’t just the emotional aspects of the consumer transaction that motivated Modi, but the fact that the product itself was an indication of a market resistant to change.

“Granola bars have changed, bags of chips, sodas, but yet, a product as important as infant formula was still the same as what I had 40 years before that,” Modi says.

Infant formula is a big market, and a classic example of a market where incumbents have not been incentivized by competition to innovate, according to Modi.

A report from the Federal Trade Commission in 2022, when a nationwide shortage of formula occurred, highlighted the risks of what has long been seen as a duopoly market. The two companies that dominate infant formula production in the U.S. are Reckitt and Abbott, with a combined market share based on government contracts estimated at nearly 70% in 2022 (that is down from over 80% in 2008). The market share is estimated to be even higher when including non-government sales. Nestle and Perrigo also have been prominent formula providers — Perrigo bought Nestle’s U.S. and Canada-based formula business in 2022, and has a co-manufacturing relationship with Bobbie.

It was Abbott’s formula manufacturing shutdown in 2022 after a recall that led to renewed focus on the market concentration risk.

“I think we all took for granted that this is a commodity. It’s infant formula. It should just be available,” Modi says. “When the president was saying, ‘America can’t feed babies,’ you start to unpack it.”

Bobbie, which Modi co-founded in 2018, has quickly gained traction by focusing on product quality — in April, Bobbie introduced the first and only USDA Organic Whole Milk infant formula manufactured in the U.S. — and a mission-aligned business philosophy, including a campaign featuring celebrities advocating for paid family leave.

“Don’t sell the product,” Modi says of the marketing message. “Fight for paid leave and at the end of the segment or at the end of the ad, why don’t you put up a phone number to get people to call their representative so that they can explain why paid leave is needed, why we need to fight for the Black maternal mortality crisis, why child care costs are through the roof. We look at the issues that surround what that parent truly cares about, and we say, ‘Let’s get it billboard-grabbing attention on the issue that someone wants to fight for,’ versus the product itself. If you have the best product, they’re going to come to you,” she adds.

Bobbie’s initial products hit the market in 2021 as the first direct-to-consumer, subscription-based infant formula in the U.S, and are now available from Target to Costco to Whole Foods.

Executing on a social mission hasn’t come without being drawn into politics. Modi recently was on the receiving end of backlash from some customers after she joined a federal roundtable with some of the biggest manufactures of baby formula organized by the government and was photographed with controversial Secretary of Health and Human Services Robert F. Kennedy, Jr.

“Yes, it happens to be that the current administration comes with some polarizing perspectives, and when I received the phone call to say you are being invited into a roundtable conversation around the future of your industry, and the rest of the CEOs of the infant formula space, who all happen to be men, will also be in that room, you better believe I took that invite, and I took that invite because if I didn’t my voice and the voice of mothers and the voice of our community or the next generation, was going to be missing from that table,” Modi tells CNBC. “The overall intention is to improve the industry, regardless of who’s in seat.”

Balancing advocacy with the realities of running a startup and raising four children requires discipline. Modi says she relies on a nightly “personal and professional check-in,” which consists of her rating her day on a scale of one to five. She also tells CNBC about the pretty “strict” shared calendar the family keeps for every member.

In an industry where supply chain resiliency became a major national news story, Modi says it remains integrally linked to her biggest challenge. Bobbie began producing formula at a major manufacturing plant in Ohio it built from the ground up last year, a move Modi says is critical for safety and stability.

“The biggest challenge is this is a highly regulated, really pharmaceutical grade product, and while it sits on the shelf in many ways as a consumer packaged goods product, you won’t be able to go into a store and find any other product that is essentially the alternative to something that the human body makes as the sole nutrition for the youngest audience,” she says. “We have moved very fast, become the fastest-growing infant formula company. This is a decade of nurturing, nurturing the safety of it, the quality of it, continuing to invest back into it.”

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