How Thorne Sold for $3.8B in 3 Years: Case Study

This vitamin brand just sold for $3.8 billion, but that's not the whole story. 3 years ago, Thorne, this supplement company, was struggling. They were on the brink. They were about to fail. And 3 years later, they sell for a $3.8 billion payday. It's the same company. It's the same products. So how does a company go from almost out of business to a multi-billion dollar payday? In three years, that's what we'll break apart in this video. We're going to cover the terms of the deal and how this business turned themselves around into a multi-billion dollar payday. But first, there's an important business lesson to this case study. Thorn sells supplements. Everybody sells supplements. Supplements are a saturated space, and what most people will tell you is that you should avoid saturated markets—that they're too competitive, that there's. Too many people selling the same things. But this is evidence of the fact that saturated markets are often where the money is. I mean, look at these products that I have in front of me right now. These are very saturated spaces. We have the fish oil, we have creatine, we have prenatal DHA. And I know you're wondering, Ryan, why would you take a prenatal DHA? To that I say, first of all, you're a judgmental Jeremy. And second of all, it's 2026. I might want to get pregnant one day. All of these products are saturated markets. In fact, pretty much everything that Thorn sells is in a saturated space, but they can win in that market because they do things just differently enough to stand out. I'll cover more about what that means in a second. Here's what you need to know for now. Saturated spaces are often where the most money is. You should not avoid saturated markets in your business. Instead, what you need to do is carve out your slice of that pie. You do that by being just different different enough. Now let's cover the terms of the deal. Thorne is being acquired by Procter Gamble for $3.8 billion. Now at the time of this recording, the deal is not complete, but the buyer is Procter Gamble. They're worth over $300 billion. They can afford to acquire a $3 billion supplement company. Furthermore, it's an all-cash deal, which means that it's likely going to close. It's kind of like if a billionaire walks into your neighborhood and offers to pay cash for the house next to you. It's not Final, they still got to do due diligence, but that deal is going to close. That's kind of like how this deal is being structured. Now that headline is what everyone will see: Procter Gamble agrees to buy this company for $3.8 billion. But the more interesting part of this story is not who the buyer is; the interesting part is who the seller is. The current owner of Thorn Supplements is El Cataron. El Cataron is a private equity group. That's interesting because this isn't their first supplement company. This isn't the first business that they have acquired and then resold. In fact, they have a pipeline of businesses that they either acquire or invest in and then they bring to market. And the interesting part of this story is the playbook that they used in order to grow and exit this brand. For example, Al Khateran is the owner of Kodiak Cakes. Kodiak Cakes is that popular protein pancake company. They didn't start Kodiak Cakes, they acquired them just like they acquired Thorne Supplements. They're now running the same playbook on Kodiak Cakes of growing and modernizing the business so they can sell it for a ridiculous amount of money. They did this with The Honest Company, the diaper company started by Jessica Alba. They invested in that business before it went public. So they invested in The Honest Company, they helped it grow, and then they made their money when it went public. They did this with Nutrafol, the hair supplement company. They invested in it, helped it grow, and then it was ultimately acquired by Unilever for over a billion dollars. Now they're doing it with one of my competitors, Mars Men. That is a supplement company for men that primarily sells a testosterone booster. That brand is very new, and Alcateron came in with a big check to invest in that brand. Guess what they're gonna do? They're gonna help that company grow, and then they're gonna sell it for a ridiculous payday. That's the playbook that this company runs on businesses. And that's exactly what they did with Thorne Supplements. So what can we learn from this playbook? How does a big company like Alcateron come in and help a business grow, especially a business like Thorne, which was really struggling just 3 years ago? They were a 40-year-old company. They had just gone public and they had lost more than half of their value. People were running for the hills away from this company. First, Alcateron bought the whole company. That gave them control and it eliminated them from the public stock exchange. That means that they don't have to report earnings and they're not beholden to their shareholders. They get to do what they know works to grow a company. They got to run their playbook and they got to do it kind of in secret. And the first part of that is that they brought in a new CEO. They brought in Colin Watts in 2023 to lead the transition of Thorn to being an industry leader. And basically he went back to basics. It's my belief that the reason why Thorne struggled for so long is because they had so many products. They were running an old marketing playbook and they lost sight of who their customer was. That happens when you've got 100 different products and you're running an old playbook. Colin Watts came in and said, no, no, no, we're gonna get back to basics, which means we decide who we're gonna serve. We use modern marketing and we relentlessly focus on acquiring and keeping those customers. In Watts' own words, He said that his playbook was streamlining and focusing, and in some ways simplifying our go-to-market, being really clear about who is our customer. When I work with an entrepreneur, the first thing that we do is we have to define who our customer is. We just choose who we're going to serve. If we are selling a product to whoever will buy it, we're never going to be able to nail the marketing strategy that allows us to get in front of the people who want to buy our stuff. Watts knew that Thorne was not doing that. They had raised a bunch of capital from their IPO and they had all these different products and their marketing strategy was scattered in 1,000 different directions. And Watts said, we're not going to do that anymore. We choose who our customer is and we're going to go get them. And that was the starting point of their turnaround. The second part of the strategy is that Watts focused hard on direct-to-consumer acquisition. Before Alcateron acquired Thorne, the marketing strategy that they were using was mostly through influencers and physicians. You couldn't find the products in stores, you couldn't acquire them on Amazon, and they had no acquisition funnels. Watts changed that. He knew who his customer was and he went after acquiring them as aggressively as possible. But it wasn't just about acquiring those customers, it was about keeping those customers. And so Thorne released their retention strategies, which got people to keep the product on auto-ship and offered them discounts in exchange for them being auto-subscription customers. Now, if this sounds basic, you're right. This is basic basically the playbook for building a multi-million dollar, or in this case, a billion dollar company. Here's where it gets interesting. At the time, Thorn was not a multi-billion dollar company. They were a $100 million company for sure, and that's a nice-sized company, but that's not a business that usually sells for billions of dollars. What Watts did is he sprinkled in some of the modern marketing playbook, and that means carving out your audience and creating D2C acquisition and encouraging those people to stay around for as long as possible. It's basic marketing 101, but Thorne wasn't doing that before the acquisition. So they bought this company with a good product base and a loyal customer following, sprinkled in modern marketing, which allowed them to scale the company into the multi-billion dollar range. There's one more thing that Thorne did extremely well, and that is that they refused to discount the brand. A lot of entrepreneurs, especially in the supplement space, will drop their price Do flash sales, do whatever they have to do in order to acquire the customer. And Thorn said, "Nah, we don't do that. We focus on having the best product possible and now sprinkling in modern marketing to acquire the customer and being the best service to our core group of raving fans. If we do that, then we don't have to discount." And as a result, they were able to maintain really strong margins, which helped them scale. Instead of trying to be the cheapest, they just tried to focus on acquiring their core raving fans, and that is what allowed them to carve out their. Slice in the supplement vertical. If they did not know who their customer was, they would not have been able to carve out that slice. But because they focused on the more educated consumer, the person who was persuaded by influencer recommendations, or the person who was persuaded by double-blind studies, that was their target audience who was willing to pay a premium and willing to stay around for a long time. They focused on getting that slice. So even though they sold plain old fish oil, they stood out to the people who wanted the highest quality fish oil. It is because they knew that customer and served them relentlessly that they were able to carve out their slice of the giant supplement pie. It wasn't about what products they sold, it was about what customer they targeted. And that customer was a loyal raving fan who was willing to stay on auto-ship for a very long time. And if you do that, then you can build a really healthy company that sells for a life-changing amount of money. So here are the lessons that we can learn from this acquisition that will impact your business. Number 1, follow the money. If there are acquisitions happening in a vertical, there's probably money to be made there. This acquisition is not the first supplement sale that was in the hundreds of millions or billions of dollars. If we look at the last several years, Nutrafol sold for $1 billion. Groon sold for $1.2 billion. Onnit sold for hundreds of millions of dollars. Ali sold for hundreds of millions of dollars. There's money in supplements. If you see brands selling for 9-figure or 10-figure amount of money, you might want to pay attention as that being some sort of industry that you might want to go into. Everyone else will tell you not to go into saturated markets, but you can do that if you follow the playbook that Al Khadron followed. That's lesson number 2: choose the customer that you most want to serve and that you want to do an awesome job for. And in doing so, you will call them out in your marketing and get them to be loyal raving fans of your brand. Number 3, Thorn grew by doing less. I would argue that the reason this brand got stuck is because they were launching tons of products, going in a myriad of different directions, managing way too many supply chains. And that's why they sort of stalled out for about a decade. Number 4, retention. Is just as important, if not more important, than acquisition. Thorn was not the best in the world at acquiring customers, but they were very good at keeping their customers. Now, this is just basic math. If you can keep your customers for longer and they keep paying you, then you're ultimately going to profit more in the long term than someone who takes in more customers but can't keep them. There is something very wise about spending more time keeping your customers than trying to get as many customers as possible. If your retention strategy is broken, it doesn't matter how many customers you get. Thorne was among the best in the industry at keeping the customers that they had, and that made them worth billions of dollars even though they were not the best at acquiring new customers. Now there's one more takeaway from this case study, and this actually shocked me. When Alkateran bought the business, it was doing about $300 million a year in top-line revenue. That's cool, But at the time of the exit to Procter Gamble, the business is doing on pace for about $650 million. That's a little bit more than a doubling of the business. That's great growth, but it doesn't explain why this company will sell for $3.8 billion. Alcateron bought this business for $680 million, so they doubled sales, but they increased the value by more than 5 What that means is that the value of this business was not just driven by the increase in sales. It means that there were other things that were driving up the valuation of this business. Those are the things that you need to know as you're maturing a business and maybe thinking about selling a business in the future, because ultimately where you will make the most money is when you grow your business and have a ridiculously fat exit. That's what changes your life. So what are the things that impact the valuation of a business rather than just sales and profit? Is leadership. Al-Qataran knew that the old leadership team was not going to bring this company into the future, and so they brought in new people and a new playbook in order to modernize this brand. The second is the growth trajectory. Previously, this brand did not have any growth trajectory, and nobody wants to buy a company that is failing. But Al-Qataran knew what to do, and as a result, they were able to create a growth story around this business that made them attractive to multiple potential buyers, ultimately partnering with Procter Gamble for $3.8 billion. And the third is timing. When Alcateron came in and bought this business, there were a lot of small companies that were just getting crushed in the wake of the COVID crash. Interest rates were going up, new sales were going down, valuations were cratering. So Alcateron saw an opportunity. Today they now have a growth story and a leadership change, and the timing is just better. Now they were able to create a bidding war from multiple different potential buyers, ultimately partnering with Procter Gamble. Those 3 factors impacted the valuation of this business just as much as the fact that sales had doubled. And these are the factors that a lot of entrepreneurs miss when they are going to sell a business. They just say, this is my profit, I'm going to attach a multiple to it, and that's what I'm going to sell for. No, there are a myriad of other factors that can get you more at the closing table, and if you know how to implement them, it can mean millions of dollars in additional payday when you go to sell a business. To close this out, let's talk about speed because Elkhadron came in and had their multi-billion dollar payday in 3 years, but the brand was over 40 years old. So how do you get the end result of your big payday in 3 years instead of 40 years? Now, first of all, there's something very, I guess, poetically beautiful about a business that you're gonna grow and compound and slowly grow over many decades. And when you play the long game, you don't have to grow fast. You can have 20% compounding returns and build a ridiculously awesome, profitable, valuable company. But if you want to go the fast route, there's 2 things that we can learn from this case study. Number one, you can buy a brand and implement the playbook to grow it and then have your big payday. That's what El Cataron does, and that's what they did with Thorn. You don't have to start a business. You don't have to come up with a product. You don't have to invent anything. There are plenty of neglected brands in big markets that you can buy given the right time and the right opportunity. And if you implement the same playbook that Al-Qadran used to acquire customers and treat them really well, you can turn that losing brand into a profitable winner. The second option is that you can use that playbook on your own business to make it grow faster. What is that playbook? That playbook is choosing who your customer is, creating the best product possible for them, acquiring as many of them as possible, and keeping them for as long as possible. It's simple, it's basic, but that's the playbook to growing a business as quickly as possible. And specifically, if you can spend more than your competitors to get your ideal person to stay with you for as long as possible, you're probably gonna elbow your way to the top. That is how a company like Groon's can go from zero to a billion-dollar exit in 3 years. That's how a company like Mars, one of El Khadraoui's investments, can go to a 9-figure valuation in less than 2 years. For most people, they're not eyeing a billion-dollar exit or even a 9-figure exit. They just want to have a 7-figure business they can sell for a life-changing amount of money. If that's you, that's where we specialize at Capitalism.com. We help entrepreneurs build brands, get to 7 figures, and then position themselves for a multi-million dollar payday. And you can download the playbook that we use to build brands to 7 figures over at Capitalism.com/100K. It's going to look like choosing the customer that you most want to serve, Acquiring as many of them as possible, and being really good to them so they stay with you as long as possible. That's the playbook. And of course, the specifics change based on the industry that you're in and the goals that you have. That's what the playbook looks like. And if you want to download that so that you can implement it into your business, you can get it for free at capitalism.com/100k. I love the supplement space, and I love case studies like this because it sort of shows you how simple it can be. This is a company that does not have any innovative, great products. In fact, their products are kind of the same as everybody else, but they had a very core group of people that they wanted to serve, and they did a really good job serving them. And the, the buyers of this business, the investors, Al Khadran, did not change much about the business. They just modernized the playbook. There are a lot of people who will see this transaction and they will say, oh, the big private equity, the big money people, they're gonna come in and they're gonna water down the quality. Let's run away from this brand and buy from somebody else. I see it from a different perspective. I see that when a business comes in and does an excellent job at serving their customers, that it invites the big money to come in and help them serve even more people. I'm going off script now, but there was this case study a few years ago where Primal Kitchen sold to Heinz, and Primal Kitchen was a healthy food company that people said, oh, now Heinz is going to come in and pollute it. And that's not what happened. The big money came in and made the good products more available to more people. That's the beauty capitalism. If you do a good job of serving your customer, the big money has to come in. The companies serve even more people. It's a beautiful thing. And I think that's what will happen with Thorn as well. All right. I help entrepreneurs build multimillion-dollar brands and have really big exits. If you need help, go to capitalism.com/100k. My name is Ryan Daniel Moran, and I'd love to help you build your version of Thorn. Thanks for watching. I'll see you guys on the next video.