Bullish Drops GNC to Invest Quarter of a Million Dollars in Startup

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GNC: No longer Bullish
GNC: No longer Bullish

New York accelerator agency Bullish has ended its relationship with health and nutrition brand GNC in order to invest upwards of $250,000 in subscription-based vitamin supplement startup Care/of, a move that comes six months after GNC sent a letter of intent to sue Fox for rejecting its Super Bowl ad.

Mike Duda, managing partner of Bullish, which handled creative duties for GNC's Big Game spot, said the decision to drop the account had nothing to do with a badly botched Super Bowl ad deal. "It's a bet on the future versus an opportunity in the present," he said, adding that the agency has invested "over a quarter of a million dollars" in Care/of.

The week before the Super Bowl, the GNC commercial was rebuffed by the National Football League, four days after Fox cleared it in writing. Three days later, GNC sent Fox Broadcasting Co. a letter of intent, saying it planned to pursue legal action against the company, claiming it suffered "significant economic and reputational damages, lost opportunities, and consequential damages" over the ad it had initally cleared.

Representatives from GNC did not respond to inquiry for comment about the ended relationship with Bullish or the state of its legal battle with Fox.

The client switch also follows one month after GNC Chief Marketing and e-Commerce Officer Jeff Hennion resigned from his role, according to a report in the Pittsburgh Post-Gazette. The report states that Hennion's resignation was filed with the Securities and Exchange Commission, saying he has agreed to serve as a consultant for GNC for a year.

Bullish, which will act as the "brand steward" and as an advisor to Care/of, is not the only big investor in the New York-based startup. On Wednesday, Care/of announced that it has raised $12 million in Series A funding, with participation from Tusk Ventures, Juxtapose and others.

One of Care/of's advisors includes Beth Kaplan, former president of GNC, whose time at the company overlapped with that of Bullish.

"This is a business decision," said Duda. "There's only so much marketing and advertising we can do given the business realities GNC faces."

In the first quarter of 2017, GNC's consolidated revenue was $644.8 million, down from $668.9 million in 2016. The company's same store sales dropped 3.9% in the U.S., including its website sales, and domestic franchise same store sells decreased 4.6% in the quarter. Net income for Q1 was $23.9 million, compared to $50.8 million last year.

Duda said he doesn't know what will happen to GNC, but he hopes they do well. He added that the old way of thinking at agencies was to start with small brands and then land large accounts, but some shops – like Bullish – are looking at smaller companies that have the potential to scale up.

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