He Went From $0 to $100,000,000 in 2 Years Selling Deodorant... | Moiz Ali

Hey everybody, welcome back to the channel.

I'm Ryan Daniel Moran.

Before we jump into the interview with Moiz Ali, I wanna give you a warning about the content in this video because this is a video that is a Q&A with Moiz Ali, the founder of Native Deodorant. And Moiz started this business and had a $100 million exit in about 18 months after starting the business. And, um, That's awesome. Like, it looks great on a headline. It looks great as a case study. It makes Moiz look like a hero. But oftentimes as entrepreneurs, when we hear a case study like that, it activates our own imposter syndrome. It activates our own doubt because someone else has killed it so much, so quickly, and we're not. And it can be tempting to listen to a case study like this and say, well, man, that guy killed it so quickly.

What am I doing wrong?

And before you have that reaction, I just want to call it out because sometimes that happens in me when I even interview some of these people on stage. And what you'll hear Moiz talk about in this Q&A is the fact that he started the business with like a few hundred bucks and that the early stages of the business were him just testing different products to find out what worked and realizing that in the early stages of the business, the reviews weren't that good, and that he stayed absolutely tunnel vision focused on doing one thing extremely well, selling a $12, a $15 product. That's the real punchline here, because the headline of this video, the catchy part of this video, is how somebody that you, you know, didn't care about before made $100 million in 18 months. And that's catchy because Of the promise of making a lot of money really quickly. The takeaway though is the reason he was able to make so much money so quickly is because he was so focused on creating something great that was in service to somebody else that ironically solved a problem that he had. Rather than hear this talk and think about what are the tactics that Moiz used to have this big exit, notice the mindset that he had going in. What's a problem that I have that I'm annoyed with in the world? How can I create something that's better in the world? And how can I do it sustainably in a way that creates value for somebody else? Sometimes the 9-figure answer is right under our nose, sitting in a problem that we are facing and dealing with right now. And our own imposter syndrome prevents us from seeing it. And so we start looking at the hack and the trick that worked for everybody else. But your 9-figure idea, your $100 million idea is probably inside of you right now. And I'd be honored to help you find it in one of our trainings or just in this content. So I wanted to share that with you before we go into this case study with Moiz Ali on how we made $100 million in zero time flat. All right, let's jump in.

Yeah, of course.

Thank you.

Welcome back.

Thank you.

So we're gonna do this one a little bit differently.

We're gonna do a blend of fireside and Q&A.

Meaning, I'm just gonna call on some of you when— so mic runners, just be ready for an hour of running around.

We're gonna do this very interactive because you sold Native in 2018, is that right?

At the end of 2017.

Okay, so you've had a couple of years to let the dust settle on a big exit.

Sure.

I'm curious.

We often talk to people who, like Sam Par this morning, had an exit like 3 hours ago.

Yeah.

Right? It's— I don't know if the wire's cleared yet. But you've had a few years now to let that settle, and you've also let it settle during a time when the industry has just gone nuts.

Sure.

Valuations are crazy. New businesses are coming out of nowhere. There's all kinds of things happening. I'm curious what your perspective is on the e-commerce industry right now, being a few years post-exit after all of this change has happened?

That's a great question, and I think the answer is twofold. 2020 was probably the best year in the history of e-commerce for anyone who was in the industry. Facebook CACs were low, people were buying everything online. You know, it was just the growth of e-commerce. There were incredible tailwinds to e-commerce. COVID kept everyone at home, so everyone was purchasing things on the internet. I think 2021 may be the first year— I've been in e-commerce since 2012, so almost a decade. 2021 may be the first year ever that has genuine headwinds to e-commerce.

Hmm.

From a valuation perspective, things are still very frothy, and people are getting multiples that were unheard of 5 years ago. But container prices, have gone from $2,000 in 2019 to $25,000 per container. Containers sit at ports and never get unloaded.

Mm-hmm.

And in the last 3 to 4 months, Facebook has struggled mightily to deal with changes to iOS 14.5, and those struggles are getting worse and not better. And I think that, you know, as much as brands have wanted to not rely on Facebook for customer acquisition. Brands sub-$10 million have and should have in the past few years relied on Facebook. That was the channel of customer acquisition. Brands that are— I'm an investor in a bunch of brands that do hundreds of thousands of dollars a month, and I'm an investor in brands that do tens of millions of dollars in revenue a month. The brands that have gotten to tens of millions of dollars of revenue a month have really been able to bear it well. Because they're diversified when it comes to things like selling through brick-and-mortar stores or, you know, or even advertising channels and outside of Facebook. I think the real hit to Facebook that happened in April is getting worse right now, and I'm just not sure what the path is to getting on the other side. That path could be multiple things, Facebook launching its own phone. It could be Facebook working on a deal with Apple so that they resolve these privacy issues. But right now, there have been a lot of headwinds, and if you've been reliant on Facebook, it's been tough.

I didn't expect you to go that way, where there's headwinds and we're not sure how it's going to shake out. Have you seen any of the brands that you're invested in or advise navigate this well? And if so, how are they doing it?

I have, and diversity is really the answer. If you're at a certain size, certainly diversity when it comes to sales channels and brick-and-mortar stores. I'll tell you, when we sold Native, we were not in any brick-and-mortar stores. I think that if we hadn't gotten into Target or Walmart or CVS or Walgreens, we would have probably plateaued in the $75 to $100 million range. I don't think we could have— there would have been a glass ceiling there that we could not break through if we didn't diversify channels. Amazon was part of that diversification and probably gave the brand a $20 million top-line boost. At Target alone, Native sells $60 million of product a year. And that's a huge diversification channel that doesn't rely on Facebook ads to drive sales. We have shelf space, and we get more shelf space, and we can work with Target to drive sales in stores. And that diversification really allows the brands that are that large to survive. I think if you're a brand doing under $10 million in revenue a year, you're gonna have to focus a lot more on retention, which is how can I keep my existing customers, and how can I get them to purchase again? And so if you're in the mattress business, you're probably— it's gonna be tough. And then I think it's a function of, can you diversify acquisition channels? And, you know, people are begging for new acquisition channels to exist. Everyone was hoping that was Snapchat, and in some ways it was. Everyone was hoping that was Pinterest, in some ways it was. But to date, there has not been a real competitor to Facebook. TikTok may be that competitor. A year from now, we'll know, but I think right now, it's too early to tell.

You've been particularly hard on mattress companies in some of your posts. You've picked on Casper a few times. What is the lesson that you are seeing that company, or just mattress companies as an example, make?

Yeah. I've been harder on Yotpo than I have been on mattress companies, but with mattress companies, it's a tough business. There's a lot of competitors. You're selling a commodity product, or virtually a commodity product. And you're trying to acquire customers online in an industry where CACs are super expensive, and you have no retention. I think when Casper IPO'd, they said that they had something like 12% of customers purchase from Casper again. Not purchase another mattress again, but just purchase from Casper again.

Mm-hm.

And so that's not a ton of people in the first place that are purchasing from you a second time, so you really have to make those first-order acquisition economics work out. I'm not sure if Casper has done that in a way that represents a meaningful, long-term, viable business. I think their market cap suggests that. They've raised $400 million, traded at $200 million valuation. I bet there's multiple people in this room, myself included, who have thought about taking that company private and sort of saying, okay, let's fix this business in a way that doesn't rely on public markets to support your market cap.

You've brought up diversification as being the way kind of through the industry changes right now. But yet I've also heard you say that when you were building Native, you were not diversified at all.

Yeah.

Right? You were just all in on one platform. And of course, the game's changed a little bit because the way you were acquiring customers has adjusted, but there seems to be a dichotomy there.

Yeah.

So would you comment on that?

Yeah, sure. That was the— part of the reason that we sold the business was that I was like, we're reliant on Facebook and only Facebook.

That was one of the reasons you sold.

Certainly, yeah. I was like, all of our chips are in this basket. I mean, look, there was some diversification. We were running some Google Ads, we were running some Pinterest ads, but we were spending $1 million a month or somewhere around $1 million a month on Facebook ads. It's a lot of money. And if things had materially changed on Facebook, if what happened in April of 2021 had happened in April 2018, there would have been a real body blow to the business. And so our diversification, or part of the exit strategy that I had was, OK, we can build this business, make it a meaningful business, find a home for it, and let it grow through channels that I don't understand as well as digital advertising, through the Targets of the world, and through the Walmarts of the world. And so that wasn't part of the strategy when I launched the business, but certainly part of the strategy when we sold the business was, We're reliant on one channel. The way to diversify is to go into brick-and-mortar stores. The way to do that is through a company that really knows how to do that well.

So what would you do if you were starting today, or you had a low 7-figure— but Ruth, I'm thinking of you right now. You have a great plant-based, high-protein pancake mix.

They're fantastic, by the way.

I loved them.

I ate all 3 bags already.

What's the brand called?

LoopTopia.

Okay, gotcha. Wow, that's good.

It's based off of some weird legume I've never heard of that works great in a pancake mix.

Yeah.

All right, so you've got like, you've got a business with a great product that is like on its way up. It sounds like you're saying the same playbook that got Native to where it is may not be the playbook that you would use today. So what would that be?

Yeah, it would probably be very similar to that playbook still, to be honest. I just don't know how long that playbook will get you, and I don't know if it'll get you to the same spot that it got Native to. So, for instance, I would diversify into— we didn't sell on Amazon before we sold the business. I would get on Amazon earlier today. Whatever gets eaten up, like, you know, in the next 6 months, I can imagine myself selling all of my Facebook stock and taking all of that money and putting it in Amazon stock. The tailwinds to, or the headwinds to Facebook are tailwinds to Amazon, because it's harder for people to discover new brands on Facebook, and so they go to Amazon where they do their shopping. So I would diversify into Amazon much earlier than we did. It took us years to do it. I would do it as soon as I thought I had product-market fit and a way to, like, genuine reviews, or when I sent out the product, I would get genuine 5-star reviews and didn't have to gain those 5-star reviews. So that's probably the first thing that I would do.

So just to clarify, are you saying that you would have started on Amazon as a platform and then pivoted over?

No, I would have still started on a direct-to-consumer channel, because it allows you to figure out, hey, do I have something wrong with my product? How do I iterate on this? And then once I thought I had product-market fit, I would shift onto Amazon.

I'm glad you said that, because Amazon can be a bit of an illusion of product-market fit, because you can game your exposure.

It's harder now, but you can show up enough to have 50 to 100 people find you and buy, and you get caught in this trap of you're not really going to break out, because you just have a little bit of a foothold in the marketplace, and you can get good reviews, and sometimes you can You can game your good reviews, and you can kind of hold on to that, but you never really break out.

Sure.

Because it's almost the illusion of product-market fit. And you're saying, if you can get product-market fit according to a cold acquisition strategy, that will translate over, but the opposite is not necessarily true.

Definitely. And like, you know, you understand repeat purchase rate when you're selling on your own website. You understand cadence of repeat purchase rate. You understand why you're getting 5-star reviews and why you're getting 1-star reviews. You can work with people to try and figure out, how do I turn this 1-star customer— how do I make this 1-star review a 5-star review? Do I just work with this person and say, hey, I'm going to send you more product because we're iterating on our formula until you become a 5-star customer, or is there something else that I need to change about my business in order to improve? I'd still start with direct-to-consumer. That's really the only communication. It's the only way you're gonna be able to communicate with a bunch of people, hundreds, or if not hundreds of thousands of people at the same time, and get product feedback. And once I had that, I would shift to Amazon much faster than we did at Native.

When you started Native, you were basically responding to your disappointment in TOMS.

That's right.

So you were just disappointed in the amount of products in the marketplace and their quality. Today, it seems like the menu of options has widened very, very quickly. So what spaces are you interested in right now when somebody comes to you with a pitch deck, or you're just looking from a consumer standpoint? What industries are you looking at now?

You know, I'm an investor in a bunch of businesses that I have no idea what they're doing. So for instance, I'm an investor in this business called Pepper. It's wearpepper.com. They make underwear for smaller-chested women. I've never tried the product, and I have no idea. And these people, the founders came to me and were so green. I remember the first time I met with them, it was funny, except that it was actually happening. We started talking about retention, and they're like, we don't know what retention is. And so I was like, okay, think about how many people purchase your product again. And they're like, that's not something we've been paying attention to. paying attention to. I'm like, that's something you gotta look at. And I'm like, this is how you should think about it. You should think about it in terms of if somebody purchased in January 2021, what percentage of those customers have purchased again? And a lot of times people will talk about retention and they'll say, 30% of my revenue this month came from returning customers. I don't know if that's good or not. That doesn't mean anything to me. What percentage of your customers from January 2021 purchased again? That's a number that will mean something to me. And so that happened like 18 months ago when I made that investment. And then, you know, we have these board meetings every month, and like 6 months ago, they were just like, Moiz, you don't understand these analytics any longer. Like, you know, they were so on top of their numbers, they were putting me to shame in every single instance. I'd be like, what about this? And they're like, we've thought about that. Here are the 3 things that we've done as a result of that. You're thinking about what we did 6 months ago. You gotta start thinking about the future. And I was like, wow. These girls are fantastic at what they do. They've grown their business, and it's wonderful to see them go from, we have no idea what retention is, to, Moiz, you dumb fucking idiot. You don't understand these numbers. Stop getting on fucking calls with us. I saw that all in 18 months, and I was like, wow, these are the entrepreneurs that I want to get behind.

That's exciting as an investor, when the entrepreneur starts to surpass you.

So much fun.

What are they looking at that's different? Different than what you were tracking when you were running native?

They were just looking at top-line growth. They're like, OK, we did $100 in sales yesterday. Today we did $200. Things are going well. And I'm like, well, did you spend more on ads? What did you do to get that extra amount of sales? Looking at retention, certainly if you have a consumable product, is the most important thing you can do. At native, our first few years of customer acquisition were incredibly profitable. In 2015, I think we were acquiring customers at $2 a person. In 2016, it was $4, and in 2017, it was like $6. And so in all of those, we were profitable, and immensely profitable. And so when our retention was bad, because initially we launched and our product wasn't very good, I was like, okay, this sucks, because every single customer service email I get is somebody yelling at me. But I still made $4 on this person, so maybe I should be okay with this email. And so I was just like, okay, we're still printing money even though our retention sucks. And once we got our retention to a place that we thought was good and turned out to be best in the category, aside from the fact that we were still printing money on new customers, the returning customers we were making even more money on because we didn't have to acquire them again. And so that was what really unlocked our business and unlocked the growth to the next level.

I want to ask you a question that someone kind of cheekily asked in one of my YouTube videos. When we announced that you were speaking here, this person said, Moiz Ali has had a $100 million exit, and he invests in all these things. What the hell is he doing at the Capitalism Conference?

What the hell is he doing at the Capitalism Conference?

Yeah, Moiz, I just want to know. Now you've had all this, what draws you back to the starter entrepreneur, or the person who's still scaling from 7 to 8 figures?

Yeah, that's a great question. I guess there's a few answers. One, conferences like this, I hope they give you energy. Whenever I attended conferences like this, I always got super pumped. And after a conference like this, there'd be dinner, and I'd be like, fuck dinner, I'm going to go home and work, because right now I've got the energy to do it. So they still give me that type of energy. And 2 is, I learn a ton when I'm at conferences like this. Those Pepper, the girls who run Pepper, taught me, or teaching me, every time we get on a board call, I'm the one who's doing the learning. I don't think they know that yet, and when they do, they'll stop, they'll start canceling those calls. But I learn a ton on conferences like this. What's working for people? What are the strategies that are working? What isn't? Is everyone else experiencing the same Facebook issues that everyone else I know is, or are there people that are immune to it, and why are they immune to it? And what's scaling? Has someone figured out, okay, TikTok ads are gonna work because the pixel's great, they're figuring out targeting? When we launched on Facebook, lookalike audiences were amazing. We were lookalike audiences only and Facebook desktop only, and we'd meet with our Facebook account reps and they're like, you dumb idiot. Facebook is all mobile now, and you're the only company still advertising on desktop. And I'm like, maybe, but it's working for me. And then it stopped working, and then we were mobile only, because what they said was right, was right 6 months after they were right, after they told me that. So they said that in June, and by December I'd seen the effects. But in June, desktop was still printing us money. And so only at conferences like this, speaking to like-minded entrepreneurs, who are in your industry or in your category, can you figure out, OK, what is working with businesses and what isn't? And what should I be doing with my life for the next 10 years as a result of that?

So 2 follow-up questions to that.

One, it sounds like for you, even after being through it a couple times, the fire still burns. The itch still itches.

Yeah. I was having dinner with somebody yesterday, and they were like, you've got more money than I do, and money doesn't even affect my life that much. What are you doing still starting businesses?

And I was like, that's a great question.

But the reality is, making money is really, really fun, and more fun, I think, than it is having it, or probably spending it. But that's the journey that I really enjoy, and I figured that out about myself, and now I'm chasing that.

Yeah, I completely get it. And so, you said, sometimes you ask the question, what am I doing with myself for the next 10 years?

Yeah.

Once you have had a 9-figure exit, Is it harder for you to answer that question than when you were starting out just trying to make something happen?

No, yes, it's much— it's, uh, I have no idea how to answer that question any longer, and I, I don't know how I would go about trying to figure out how to answer that question. Because before it was a lot of like, okay, I want to make money so I can buy a nice house, take care of a family, you know, go on vacations. And now I sort of have the money to be able to do that, But there's still, like, Peter Thiel tells this story where he's like, he sold PayPal, and he's like, after I sold PayPal, I got really depressed, because I ended up going from having 200 emails a day, like, the CEO of eBay would be emailing me, asking a bunch of questions, to the only email I'd get would be 20% off at J.Crew. And that's basically, that's so true. Like, I sold a business before I sold PayPal, native, and I felt the same way. I was really depressed, because I was like, I went from people caring about, people wanting to hear back from me, to nobody ever emailing me. And I don't think it matters who you are. Once you sell that business and you're out, you're out. And whoever you were then, you are not any longer.

Yeah.

And so, you've got to go and find that passion, and for me, that passion is building businesses, and so that's what I like to do. Money or no money.

Money or no money.

Yeah. And that's, like, I guess having money or not having money, I still like to build businesses. And, you know, everyone's like, oh, I wish everyone could have money so that you realize that it's not all that it's meant, like, you know, you think it is before you have it. That's so true. I really thought that was a lie. I was like, people are lying. They just have money. They don't want me to have it. They were not lying, and that's really disappointing. Yeah.

The house and the car, like, once you have crossed all those things off the list, the marginal utility of dollars—

Is very low, yeah.

Is low.

Like, you've either got to have a much bigger dopamine hit in order to—

Sure.

And it's hard to keep topping what you did.

Yeah.

Or there has to be something else that is driving the interest and the obsession to keep you focused. So what is that for you?

Yeah, I mean, it's not like, I don't want a private plane and I don't want a yacht. Those aren't the things that drive me. It's like building businesses and getting to hang out with people who have that passion. The first business I started, everyone wanted to leave at 6:00 PM, including me, 'cause it wasn't going very well. But at Native, no one felt that way, 'cause the business was going well and it felt like we could take over the world. And it felt like nothing could stop us. We'd have a product manufacturing issue, and we'd get over it. We'd have a scent that everyone hated. Nothing could stop us. And that was what was really amazing about the business. It just felt like we were the Roman Empire and invincible. And that's the feeling I'm chasing.

You had a team of 6?

We had a team of 8 when we sold the business.

That's awesome.

And then you got acquired by Procter Gamble.

Yep.

Which has a team of like—

197,000.

OK.

Right. I know that because I called up Capital One one day, and I was like, I want to increase our credit card limit from $40,000 to like $60,000. And they're like, tell us about your business. And I was like, my business is owned by Procter Gamble. They have a, you know, they're higher rated credit than the US Treasuries. And they're like, okay, how much business, how much revenue does Procter Gamble do? And I was like, $66 billion. And I heard this woman typing in these numbers in her computer. And then I was like, she's like, how many employees does it have? And I was like, 197,000. She's typing this in. And I was like, so can I get the, like, the extra $10,000? And she's like, no. The system says you are not approved. And I'm like, this is, you know, Procter Gamble has a $300 billion market cap. I'm asking for a $10,000 credit limit. And she's like, no, we can't do that. I was like, okay. What, you know, what can you— how do you respond to something like that?

What was different? I mean, it's just such a different experience having a team of 8.

Yeah.

Scrappy and young, and things are flying around all the time. to like the biggest infrastructure.

Yeah.

And you being a cog in the wheel essentially.

Yeah.

Big organization.

Yeah.

I imagine that the, the business you're excited to build next is more on the native side.

Definitely.

So what about—

anyone who's worked at P&G for a day would be like, yeah, I'm interested in the other thing.

Help us understand the difference there.

Uh, sure.

Yeah.

I'll, uh, I've got a bunch of great examples. So the first is when we were acquired by P&G, we were selling our formula of Native deodorant, which we'd iterated on ourselves. And we don't know what we're doing. I was a lawyer before. I don't know how to make deodorant. And so 3 P&G chemists came up to me and they're like, we've been working on this aluminum-free deodorant that we're gonna put in Native. It's gonna be way better than Native's formula. Your repeat purchase rate is 50% now. It's gonna be 75%. And I was like, what do I know? I've been doing this for 2 and a half years. These 3 guys have PhDs and have been working in deodorants, formulating deodorants for probably 60 years between the 3 of them. And so I was like, great, let's do this. I want a higher repeat purchase rate. We create this new formula. We start manufacturing it. We start selling it. And what we do is I've got a little bit of caution, so I'm like, we're gonna A/B test your formula against our formula. So we're gonna send out your formula to 5,000 new customers and our formula to 5,000 new customers, and we're gonna monitor the reviews and repeat purchase rates. So it'll take us about 8 weeks to get feedback on this. Within like 4 weeks when reviews are due, when we start sending out emails asking for reviews, it's clear our formula's destroying their formula. And I'm like, what the fuck happened here? You've got 60 years of experience. I can't even, I don't even know, I know what's in our deodorant, but I'm not a chemist, and I certainly don't understand the chemistry behind it. It just works, and people tell me it works. You guys actually understand chemistry, I think, and don't know how to do this. And that was what was shocking to me. I was like, we've got a bunch of scrappy people who have no idea what they're doing, but were willing to think outside the box, and test ingredients, and be satisfied with the outcome. These guys want to run their process and say, hey, we've got a bunch of chemists that have come up with the best formula. Here it is. Let's go sell it.

This is such a trite question, but there is a perception that once you have the kind of success that you have, that there's like, you never leave the mountaintop.

You never leave the mountaintop.

So what's a bad day like for you now?

Oh, these days?

Yeah.

Oh, I have bad days. Well, let me tell you a couple more P&G stories.

Oh yeah, please.

To answer that question. There was another time where my manager at P&G was like, show us all of your Facebook ads and let us comment on them. And I'm like, I've spent— I personally ran all of Native's Facebook ads until basically the moment I left the business. And so I've spent tens of millions of dollars on Facebook ads, and there's a decent chance that I run an ad and I'm still wrong. But this guy who's telling me, hey, I wanna change your colors on this Facebook ad, I'm like, first, I've run tests and this is the color that works. So I don't know why I would change it just because you're saying it. And second, you've never spent a dollar on this thing.

Mm-hm.

Why, where are you coming up with this authority? I wouldn't lead troops into battle just by, I wouldn't join the Army and be like, great, I'm qualified to lead troops into a war. I need to learn, and that's what you're doing in this situation. And he's like, no, you need to change your ads this way. And I was like, I don't have any desire to move up within the P&G organization, and that was a real blessing, 'cause I was like, you guys have an amazing organization, and to be honest, I'm a huge P&G shareholder. I think what they're doing is incredible, and they do have genuine innovation. Aside from the deodorant issues, created Swiffer and Tide Pods, and I do admire that. But I was just like, you can fire me if you want, 'cause whatever, you've already paid me a bunch of money, so I don't mind. I'll figure out something to do tomorrow, but I'm not gonna change my ads the way you want them. These ads work because they work, and I've tested them, and I've put money behind them, but I'm not gonna make a bad decision because you want me to make a bad decision because you don't like this color. So there was a bunch of that at the, like, you know, Sort of within 18 months of me being there, and that was a little rough.

Makes sense. I'll return to my previous question in a second, but first, I'd actually like to know, now that you've seen both sides of that, you've seen the chaotic startup, you've seen the big infrastructure, now you're sitting in the investor's seat. You've invested in a bunch of companies, you advise a bunch of companies. It gives you a great contrast between between the two. So what are you betting on when you're coming at it from an investor standpoint?

Good question. There are instances where most investors will be like, we bet on the people and not the company. I think there's some truth to that, but I think about product a lot more than I think other people would think about product. If Mark Zuckerberg was like, hey, we're going to start urinating in bottles and sell this to customers, I'd be like, I don't think that's a good idea. I'm going to pass on that investment, although you're Mark Zuckerberg. And so I really, I think that I focus more on product than I think a lot of other investors do. That's not always the case. And generally, I think, especially with e-commerce, you should be able to find some product-market fit before you're raising a ton of money. And that doesn't have to mean that you've actually sold $250,000 worth of merchandise. But some people will be like, here's this idea I have. I want to raise money. The first thing I say is, why don't you start a website, which will cost you virtually nothing, and run some Facebook ads, or do whatever advertising strategy you were hoping to do to try and get some product-market fit and show that this business will be successful? I was having brunch with somebody who works at a company called Figs. And if you're not familiar with Figs, Figs is basically a screen reader. scrubs that nurses wear on a daily basis, except they're much nicer than traditional scrubs. And he was like, the way they started, the girls who started this business were, like, 2 of them were at lunch one day. One of them was a nurse, and the other used to work at Levi's. And she was like, your scrubs look terrible on you. Why don't you give them to me, and I'll hem them so they look much better on you? And so that happened, and she hemmed the scrubs. And when the nurse went back to the hospital, all of the other nurses were like, those scrubs look great. I want those as well. Can you get your friend to hem mine, and I'll pay her to do that? And that's how the business was born.

Mm-hmm.

There was product-market fit before that business was born. With Native, we sold the first 50 units of deodorant before we ever had a single stick of deodorant in our hand, and the first 250 before we actually got the sticks, actually. And so we knew, I knew the business would work, or at least I thought the business would have some sort of legs. Before I even spent money on products. And I think in e-commerce, it's one of those rare industries where you can do that. And so if you're launching something new, test it out before you spend a bunch of money. And when I'm investing, and people are like, I've got this idea, I wanna raise money, and I'm like, what have you done to show that either the idea is good, or you work, and you're not just lazy? And when people are like, well, here's my deck, I'm like, okay, this is where I pass, because you haven't put in enough effort. But other than that, I'm an excited investor, and I tend to write checks more often than I probably should.

Understood.

Now, it's my understanding that you acquired some business in the last year or so. I haven't heard you make much mention of it. Are you sharing this story yet?

Yeah, I acquired an Amazon business that was based in Florida, where all good things come to an end. And this business was run by an entrepreneur that was probably in her 50s or 60s and had a bunch of wealth already. She was a wonderful human being and a good entrepreneur, but she was like, look, I don't want this business to be a huge bit— I don't want to spend my time, I don't want to spend 80 hours a week on this business. And I was like, great, I want to spend 80 hours a week on your business, so why don't you let me do that? So I bought this business.

What attracted you to this? Like, this seems very random, Moiz.

Yeah, it is random.

I, I first, I sold Native deodorant for $100 million.

Then I bought an Amazon-based business from a woman in Florida.

That's right. Yes. That's when you put it like that. It seems random.

So there's something else going on in this story. Tell us about it.

Well, you know, we bought the business and like, you know, she was like, I don't want to spend 40 hours a week or 80 hours a week on it. And the day I bought the business, 3 of the top 5 selling products on Amazon were out of stock. And I was like, how did that happen? And she's like, I told you, I don't want to spend that much time on the business. And I was like, well, great answer. And so I put in charge a guy that I'd worked with in my past to run the business, because I didn't want to operate the business either, it turned out. Like, within a week, I was like, oh God, this is hard.

Are there any Amazon sellers in the room that just feel totally vindicated right now?

Super.

Oh, if Moiz couldn't figure it out.

Amazon is such a different—

I'm going to be OK.

Amazon is a very different channel than direct-to-consumer. And if you're good at both, hats off to you. That's really incredible. I was like— there were inventory issues. There was contract manufacturer issues. There were shipping issues. There was personnel issues. There were issues all over the board. And so bought the business, and I'd worked with this guy in my past at my first ecommerce business, and I tried to recruit him for Native for years, and he was in business school. And I was like, don't worry about business school. You're going to learn everything you need over here.

Yeah.

And he was like, no, no, no. So finally— one of the benefits of having sold Native is that there's a little bit more credibility now. And so I was like, look. You should run this business. I know you're going to be good at it. We've worked together in the past. There's money to be made. I know there's money to be made. I've looked at the business, and here's the clear path to doubling revenue. And I thought I was just doing a sales pitch, and he agreed to take over the business, and he has doubled revenue. And I was like, oh, wow. I thought I was just selling you on all these dreams that would not come true. And sure enough, he made all of those dreams come true. So he runs the business entirely independently. We have a board call once a month, and he's great at it. And he'll call me up, and he'll be like, hey, I've got a container that's priced at this much. Is this market? Or, I have a container stuck in the Port of LA. What should I do? Or he'll be like, my Facebook ads suck. And I'm like, let me help you there. But it's pretty hands-off.

So you acquired it, solidified it, and brought somebody else in to run it.

Yeah. I solidified it. By solidified, that's a very generous term you're using. I spent a week and a half being like, oh my God, let me get somebody else to run this business.

Was the intent to build it and scale it, or was it more of just an opportunity that you decided to solidify?

I think it was more the latter. I don't want to spend all of my time building an Amazon business. I still want to figure out what I want to do with my time. And so I was like, this is a great opportunity. I do wanna understand how Amazon works, and there's a bunch of people out here that have had a ton of success on Amazon, and I don't know how the Thrasios of the world make a fortune, and so I was like, maybe this'll help me learn that.

I'm sorry. We can have lots of fun conversations.

Yeah, I would love that. But really, that was what it was, and then I was like, wow, this is— I remember that week being like, God, what an idiot I am. But it turned out all right.

So it's interesting because I can hear you kind of dancing around this question of wanting to replace the excitement that was Native, wanting to replace that excitement. And so you've planted these seeds in— you bought a bunch of real estate, you're investing in a bunch of companies, you bought this random Amazon-based business. And it feels— it sounds to me like the itch hasn't been scratched.

Definitely, yeah. It's a midlife crisis, but instead of Ferraris, I'm buying businesses.

Probably have a better ROI doing it that way, I would hope.

Maybe.

So that's interesting. It's interesting to me because I think most people in your position would just buy something and stick with it, almost as a distraction And hoping and praying that they get passionate about it. But it sounds to me like you are walking into it and being like, this hurts, I'm just gonna bring somebody in for this, and waiting for the pitch on the next one.

Yeah. I hope that's not the case, because that sounds like I'm setting myself up for disaster. So I appreciate you saying that, because I'm gonna be on the lookout for it in the future. Really, I just thought the Amazon business was a good opportunity and a good product. price, and a person who would not mismanage the business, because I think mismanage means that you can't do it. It's just that she didn't want to do it, and that's perfectly fine. Not everybody has to try and build a $200 billion business. You can be like, I've got kids, and I've got a good life, and I want to spend time with those kids and go boating and all of that kind of stuff. And so I thought it was a good opportunity for me to learn and a good opportunity to buy a business at a good price, and a good opportunity for— the other thing I thought about now is I'm like, Can I buy businesses and hire CEOs to run those businesses? Am I good enough at attracting talent, retaining talent, and hiring talent to hire CEOs? I think right now the answer is yes, but I've only done it once, and it was with somebody I knew for a decade before I hired them. So I don't know what the answer to that question is, but I agree that that itch of me starting another business has not been scratched, and I hope it will be soon. I just don't know what it'll be, but I am trying a bunch of things, but like not, you know, I'm dipping my toes in the water and not jumping in just yet.

Yeah, got it.

We have more to go through, but I want to turn it over to the audience for— we'll do 2 questions. So mic runners are here. We'll go to Jeff.

Hey, how's it going, Moiz?

Hey.

So I guess I'm curious. One of the things I'm really into is equity crowdfunding because it's basically like direct-to-consumer capital markets. Do you know what equity crowdfunding is?

You're doing equity crowdfunding? Yeah, I know what equity crowdfunding is.

What are your thoughts on that in terms of like a capital structure and raising capital for direct-to-consumer brands?

Have you already done it or you're thinking about doing it?

I do it right now professionally.

What do you mean you do it professionally? You're the crowdfunder.

I raise money for companies.

You help raise money for— okay. I'm not a big fan of it, is the honest answer. And I was hoping it wasn't your job, but now I'm glad that's how it is.

Why not?

But I'm not a big fan of it, not because I don't like the idea of your best customers supporting you, because I think everyone loves that idea. And that should happen. That's a great way for your customers to evangelize whatever it is you're selling or making. I think the hard part about it is that right now it signals to the market that you don't know Nobody's willing to invest money except people who don't know how to invest money. And I think that's my fear. If I saw a business that had crowdfunded, I'd be like, why couldn't you raise $250,000 by going to the Ryans of the world, or the Moises of the world, or any of the other venture capitalists in the world whose full-time job it is to raise money? What is it that they didn't see in you that I am seeing in you, but you had to go the crowdfunding And look, I'm sure there have been businesses that have been successful doing it and that are successful doing it. It just— I still think that it's a market signal that you're unable to raise money from, I don't know, better capital, for lack of a better word. And that gives me a little bit of heartburn.

Can I change your mind?

Yeah, you can change my mind by changing all of the other investors' minds. Then you'll have convinced me.

I would like to hear what—

Yeah, I'd love to be proven wrong.

Do we got time? I mean, I don't want to take up—

What— I'm curious your response to Moiz's analysis.

Do you think that it signals to the market that it's bad? That this company's bad?

I think there's a lot of problems in equity crowdfunding. If you look at the European and Israeli crowdfunding market, it's way more sophisticated. Better infrastructure, cleaner valuations, but especially like OurCrowd out of Israel, probably like the best crowdfunding portal that there is. So Beyond Meat was an OurCrowd company. I think it's a great option for companies that are looking to build a path towards IPO because it allows you to build a retail shareholder base and tell your story in advance of the IPO. It allows you to meet your shareholder bases.

Like there's a lot of really cool ways it can be done.

I think in the US it's What stage are you looking at when you're talking about that?

So you can—

Because I know you're talking about very early stage, right?

You're talking about seed.

He's talking about early stage too.

I'm usually looking for companies that have traction at some point so that there's a vehicle that can take in growth capital. So I'm usually not doing pre-seed stuff. So I'm doing stuff that's gonna be typically in a $7.5 to $20 million round. And a lot of times it's stuff that VCs probably aren't going to fund because they're just not an enterprise SaaS company.

And that is your concern, is it not?

Well, my concern is that nobody— yeah. I mean, VCs don't just fund enterprise SaaS businesses. They fund everything. They fund Native, and they fund Drybar, and they fund Sweetgreen. Look, it's not like I'm like, oh, you're not a VC enterprise SaaS— you're not a SaaS company? No problem. I'm not going to put money in this. I'm like, I just don't know why— how come everyone thinks you're not going to make money is the problem.

Well, so I've seen it go both ways. So I've seen it where VCs will follow on because of the crowdfunding round as confirmation that customers like your stuff enough to become shareholders in your business. I have a deal right now that's backed by 4 VCs, and they're going to come specifically to my platform because they want to build— it's a real estate It's a prop tech company, and they want to use it as a way to both raise capital and acquire customers at the same time. So that's what we do with them.

So I want to interject here because this is very close to like, should you run Facebook ads or TikTok ads? And it's like, the question is not that, it's how do you acquire customers? And in this case, it's like, is it better to raise like to VCs or is it better to go the equity crowdfunding route? And it's like, there is no wrong answer to I'm curious for you, Moiz, if you were to do a raise for your next project right now, how you would go about it, because you did not raise a ton of capital. I think you raised some.

Yeah, $500K.

$500K, right? And I think one of your investors, you even gave their money back because they didn't want to be in, if I'm remembering that correctly. But how would you do it now differently than previously?

How would I raise money now? I wouldn't do it. I would not go to crowdfunding.

What would you do? What would be your approach?

I guess it would depend on the business. If it was a brick-and-mortar business, I'd say, okay, who are the people who have invested in Sweetgreen? Let me contact them and see if they'd be interested in raising money for this brick-and-mortar business. If it's a fintech company, there's fintech investors. If it's an e-commerce company, there's e-commerce investors. If it's a real estate company, there's real estate investors. There are people who are like, look, I just understand this, so I tend to focus on this kind of stuff. And so those are the people that I would go to.

Yeah, fair. All right, let's do one more. Way in the back.

We're going to do one more afterwards. This girl right here, because she raised her hand really high. OK, we'll hit a late.

Sure.

So we're working on something I'd love to get your feedback on as an investor. So we're looking at creating a, for lack of a better word, online institute where we train and certify ecommerce operators. One of the things I'd love to get your feedback on is this. Is that a bottleneck for you as an investor if you— I'm sorry, would that accelerate more investment from people like you if you actually had a pool of people who had been trained and certified to run 6, 7, and even 8-figure ecommerce companies?

Your actual focus is training the operators, not the entrepreneurs. Is that correct?

Well, we are— okay. The owner I think there's only so many owners, right? What we, what we noticed, and this is why I like feedback, is it seemed like there's a bigger pool of people that, for example, investors who want to deploy capital, but they're reluctant to do it because there's not enough.

But you're specifically training operators, right? Not founders, correct? And so your question is, if a certified operator is on board of a company, does that make an investor more likely to want to part with their dollars?

Yeah.

Is that correct?

Yeah.

Okay.

If— okay, I misunderstood your question then. Your question is not would I hire people who've been certified, but if this business has somebody who's certified, am I more likely to invest?

I'm sorry, no, more like this is some feedback I've gotten from other investors. This is why I want to get your feedback, is I've talked to some investors, they said, we have the capital, we even found a product, our reluctance is that we don't have somebody to run the business. Kind of your comment earlier, I don't have a CEO to run this business.

Yeah.

So we had a community of people that we've already trained and certified. My partners built 2 companies to 9 figures and multiple 8-figure companies. So now what we're looking at doing is training the next wave of people.

And then, look, I mean, if you can train really good entrepreneurs to like, you know, it's all a function of like, who do you have in the pool of talent that you're training? If they're fantastic people, great. Of course. It turns out that you're running the Harvard Medical School of e-commerce entrepreneurs. Of course, people are going to come and try and hire those people. I think the real question is just, how do you maintain that level of integrity and talent over the long term? Generally, even in an e-commerce business, you hire people, the first people you hire are really passionate and love what they do, and as you continue to hire people, fewer and fewer people have that passion.

And I would add to that, I think it is extremely helpful for there to be a pool of that talent, for there to be a group of people who might be qualified for that. I would personally would not give any more credibility to somebody who is certified at running businesses than somebody who had run a business that didn't work out, but they were the operator and they learned from it. I would not see one as better than the other, but I genuinely would like to have a resource to go find those people who are trained in that.

And there's a business in the marketing space, just like you were talking about, called Market Hire or Marketer Hire. I'm not sure which one it is, but they basically do that. They're like, you have an e-commerce business, everyone needs marketing people. Our marketing people worked at Casper and— wow, it's me ragging on mattresses again— and a bunch of other mattress companies come and hire them. And so that exists. different verticals of the e-commerce space.

Yeah, stage 2 is basically to create a marketplace, but stage 1 is we got to get enough people. I mean, it's a chicken and egg problem, right? You don't have enough people, you can't create a marketplace. So the big picture is to create a marketplace of the e-commerce talent, basically.

Great. All right, Alaya, let's go over to you. You can just shout it out.

Okay, cool.

Hey, my question is, I'm a little different than most people here in that I create virtual courses and curriculum for schools and organizations. I have a physical product idea that I was getting designed, created, but someone gave me the advice to stop. They said, if you have this, this idea, this is going to cost a ton of money to develop. They said, if you develop it on your own thinking you'll be better off with investors, they're going to say, cool, you created this, now go out and sell it and come back a year and give us the results. So their advice was to stop having it designed, stop having it built, and go to investors now with the idea and the pitch deck and the passion for this company.

So I think So that's a great point.

I'm still stuck in between whether or not that works. So I was hoping to get you guys' feedback on where I'm stuck with this product. It's going to take me a good amount of money to develop.

I need a little more data.

So could everyone hear? The question is basically, should I raise money before I've developed the product or after I've developed the product? The rationale being that if it's after I've developed the product, investors are going to be like, go sell this product and prove that you can sell it. If it's before, maybe they'll give me money to help me develop it, all that kind of stuff.

Is that a fair summary, Ali?

And, you know, what's crazy is Pinterest did something like this, which is they raised a fortune, probably like several hundred million dollars, right before they launched their ad platform, because they're like, if these ads don't work, we're going to need several hundred million dollars to figure out what to do next. And if they do work, great. We have raised this money, but at least we've got the buffer of several hundred million dollars. dollars. I would say 2 things. I'd say, it's a physical good? Great. Create a website, start selling it right now. You don't even need to design it, or you just need to create a photo of it. Don't actually make the product. See if you can get sales. If you can get sales, you'll be able to think about the economics and say, okay, should I go to investors right now and dilute myself more? Because right now, people are going to say, I'm not going to give you a $2 million or $5 million valuation on this business, you don't have anything. You just have this idea and a deck. But if you had the product and had sales, you could earn a higher valuation, or you could be like, you know what? This business is going to make sense. I got great sales data, great initial feedback. Maybe I should wait, spend my own capital, develop the product, start selling it. Instead of raising at $5 million, raise at $20 million.

Aliyah, I heard your question a little bit differently. I heard you ask, I'm going to raise money. Should I raise it on the underlying business that is already working or on the extension product line that I'm launching?

Is that—

That is another factor in it.

Because my answer to that would be 100% raise it on the underlying business, because what you said was you're kind of concerned that if you raise it on the extension, on the new product line, line, and it doesn't work, your focus might be drawn away from the primary business and distract you from the thing that is actually the foundation of everything, because you feel like you need to justify to those investors that they made a good decision. But if you raise it on the underlying foundation, the new product line could fail, and you could do something completely different that you can't even foresee right now, and they're still backed by the underlying business rather than than the thing that didn't work out the way that you wanted it to.

Wow, Ryan's a great listener. I didn't hear any of that.

Moiz, there's been a theme in your talk today that I haven't quite heard you, or I haven't heard it before, which is, in a way, a lot of your work at Native was getting to lightning in a bottle. It was like uncovering the lightning. It was in chipping away at making the thing convert so well that you could spend an infinite amount. It was chipping away at making it so good that your reorder rate was high enough to justify you going really aggressive.

And I've heard that, like, when Derek and I have spoken, we've talked about that.

Magic Spoon, we had them on the podcast, the same exact way. It was about chipping away at getting liftoff rather than focusing on the platform or the strategy to make the thing liftoff. I don't know if I'm hearing you differently or if you're saying it differently, but I would like for you to comment on that a little bit more.

Yeah, I think there's a lot of noise in the world, and I'll tell you, we raised $500K, including from the founders of Thrive Market, Seventh Generation, the guy who runs Facebook Messenger, a bunch of people who are really bright. And no one knows your business or thinks about your business as often as you think about your business, and so generally, you gotta do what you think is right. And for me, that was ignoring a lot of noise. We were a deodorant business that sold only online before we sold our business. Of course, we thought about, launching other categories like toothpaste and body wash and bar soap and shampoo and all of those things? Of course we thought about that. Of course we thought about diversifying acquisition channels outside of Facebook and trying to figure out, hey, do influencers work? In 2017, everyone was like, influencers are the way to go. Of course we thought about launching into brick-and-mortar stores, and our investors were constantly like, hey, when are you gonna launch another category? In fact, one of our investors, I remember being He said, you will not be able to sell this business until you prove you can replicate it with another product category. And I was like, all right, well, what do I know? But I'm going to try not— I'm going to not listen to you and see if I'm right. A lot of the business is sort of saying no to people who you think are smarter than you. And that no includes, like, say no to me all the time. Like, everything I said could be completely useless to all of you. But say no and listen to yourself. You're working on your business. Somebody asked me when I was running my business, they're like, have you thought about influencer advertising? I was like, I live and breathe this business. I think about it the morning as soon as I wake up and right before I go to bed. You think I haven't thought about what you just thought? Influencer advertising? You think I haven't thought about that? And I'd just be like, of course I've thought about that. I've got to focus on what I think is going to make the most bang for my buck. And that is going to be, how do we get a product that's better and increase our repeat purchase rate? Because if we can increase that 5%, it's way better than making our Facebook ads 2% better right now. How do we get more people to buy 2 units instead of 1 unit? Because if we can get 2 units sold, our AOV goes up, our profit goes up, and we can spend more on ads, or we'll be more profitable. And so I sort of ignored all of this other noise that was going on. And I was like, this is what I'm good at, and this is what I'm going to do. In fact, my father, I was having a conversation with him a couple days ago, and I've been investing in a bunch of single-family homes. And he's like, here's this commercial building that's for sale outside of Minneapolis. We should go take a look at it. And I'm like, this dog doesn't learn new tricks. I'm like, what I have is a strategy that's working for me and making money, and so I'm just going to continue to reinvest in that. strategy until I feel like there's cracks in it. I feel like people don't do that often enough. If you have something that's working, don't listen to me because I suggested you focus on TikTok ads. You have something that's working, triple down on it, and don't listen to anybody else. Nobody knows your business better than you do, and there's no one's opinion that you should trust more than your own.

It goes back to what Mickey harped on for over an hour, right? tapping into that and building from there. Isn't it a beautiful theme that is building throughout today? I love that everyone is talking about it from a slightly different lens.

Moiz, did you have, before or after Native, did you have projects that burned out and fizzled out?

So many. In fact, a great story is that, yeah, I love, I'm glad you asked that, 'cause I feel like a lot of people will only talk about success.

Yes.

My failures are way more fun. I started this company that I wanted to build to be Kayak of home loans. So if you've ever applied for a mortgage, it's a dumb process where you've got to send in bank statements and all of this kind of stuff. And I was like, why do I need to send in a bank statement? I don't even get bank statements at my house. Just connect to my Bank of America profile and pull everything you need, and connect to my Gusto account and pull everything you need. And so initially, I built all the software for this. I called it Zenlen, Z-E-N-L-E-N Inc. I started running ads, and I was like, I hate this business. I don't like being in the fintech business. I don't like being in software businesses. I don't like any of this. And so 2 months into it, we'd gotten some leads for mortgage brokers. I stopped running the business and started Native instead. And I was too cheap to reincorporate. And so Native was run— Native was owned by Zenlen Inc. And P&G bought Zenlen Inc. And today, there are like 15 subsidiaries that P&G has put under Zenlen Inc. And I'm sure one day someone's going to be like, where is this name from? This doesn't make any sense from a CPG perspective. And it was because it was a kayak for home loans. And that's how the entire thing got started.

Did you have any projects that legitimately just failed? Like, that one you just didn't like doing, and it ended up being Native, so it's still a happy ending. Did you have any that just burnt?

Yeah. I mean, there are other ones that I tested for about a hot second where I'd create a landing page, put it up on Product Hunt, and see if anybody liked it that failed. There was one that I really liked this idea of. It's sort of like Fast Checkout and Shop Pay now, which is you just put in a URL of the product that you want to purchase on a website, and they do everything. They check you out of the whole thing and apply the best coupon code. I wish that still existed.

Yeah.

But before I started my first business, I was trying to create a location-based app business. This was back in 2011. And I had this meeting. So I had started— I hired some engineers in India to work on it. And I had this meeting with Mark Suster, who's actually a big investor in LA. He runs a fund called Upfront Ventures. At a random meeting with him, like a friend of a friend set us up, and he's like— I remember this question very clearly. After I was done pitching it, he's like, how honest do you want me to be with feedback? And I was like, brutally honest. He's like, stop working on this right now. And I remember I was virtually on the edge of tears. And he saved my life, actually, because I thankfully did not work on that. Started another ecommerce business, got my feet wet in ecommerce, sold that business, and took all of those learnings and developed Native. And so there's a bunch of failures in my past, and those failures made it so that I could succeed. And you just got to keep throwing darts at the board until something sticks. And the hard part is having the courage to be like, fuck, I failed a 5th time, but I'm gonna get up and do it a 6th time, and not, you know, work for the man.

Well, it sounds like you've gotten comfortable at cutting things, that you've gotten comfortable at cutting them before they become your life, and as a result, give yourself more swings of the bat in order to connect. Is that true?

My ex-girlfriends would agree with you. But yeah, I think that's right. I'm just like, okay, this business, I'm not feeling it. I don't have the energy or motivation to make this successful, or I've started it, and I do have that energy and motivation, but I don't think that it will be successful.

Yeah.

And I'm willing to be honest with myself and say, hey, this isn't working out for me, whether it's because of the business or me. And as a result, it's not a good fit for me.

Is that terrifying to cut those? Those are my scariest moments.

To cut parts of—

Yeah. There's a part of me that is like, if this one isn't the one, there's never going to be another one. This one has to work. You get one-itis over your business.

No, I've cut so many that I'm very comfortable with that.

That's a muscle that gets built.

That's at least rejection where you're— or a form of rejection where you're You're like, I'm used to this. And you're like, yeah, there's a 2 to 4 week period where you're like, God, what am I going to do with my life? I suck. But then you get over it, and you're like, OK, I'm going to do something again.

Interesting.

And so I think that there are 2 forms of failure, I think. One is the form that exists where you're like, this business clearly isn't making money. I'm losing a bunch of money. There's no path to it making money. I've got to close the doors. There's also, and maybe failure is not the right word here, there's some form of business businesses that you start, and you're like, I understand what this business could have been. I made a bunch of mistakes, or I was learning a bunch of things. I got into the wrong product category, but the next time, it'll be much more successful. And I think that's what happened with me, and I was blessed with the ability to exit my first business really early on. We sold it 18 months after I started it, and so it allowed me to start another business and take all my learnings, and apply it to that new business. I think the hard part is what happens if you're sort of stuck in that business where you know that you've learned a lot, and that you should be doing something differently, but it's working. You're making $200,000 a year, or you're making $100,000 a year, or $500,000 a year, but you're like, I've learned enough, and I know this industry well enough that I think I could 10x that, but are you willing to give up that one? That's the hard part, I think.

Yeah.

And that's something where I think I would I'll take a couple of questions from the audience in a second, but I want to ask, is that easier to do once you have $100 million?

Is it easier to do—

To accomplish?

I'm going to say yes, because I don't understand the question. I think it's probably easier to do with capital.

When that mentor or advisor of yours told you, stop doing this business, that was even before the whiskey business.

Yeah, that's right.

Did it hurt more?

Was it harder to get that because you had not had a big win yet?

Definitely. It was also hard because I was like, maybe I'm not cut out for this.

Yeah.

And the reality is, it's just a numbers game, and you've got to keep throwing darts at the board, and something will work. So, like, you've got to fight that feeling, and you also have to be honest with yourself and say, hey, this isn't working. I've got to stop doing this. And I think that's really hard to do, and I think it's even harder to do when you're like, I've got a little bit of success. That business, the whiskey business, it's called Caskers. We sold it for $7 million. It was bootstrapped, so it was a great exit, but we were probably making— we were at a $500,000 a month run rate, but it was Q4, and that's when everyone buys this kind of product, but our margins were like 10%. And so, there were ups and downs, and there was no path to that becoming a huge business unless there was a fundamental shift in And fortunately, I was able to get out to be able to take everything I learned. In fact, the developer I found in Caspers works with me today. So, like, you know, you get to learn those things.

Yeah, I'm really glad you said that, because I think most of us in this room can relate to that feeling of, well, maybe I'm not cut out for this if this one thing—

like, can anybody besides me relate to that? So I guess, I guess what we're learning is if you've ever had that, you're right on pace with Moiz Ali.

Perfect. You're on pace with every entrepreneur in the history of entrepreneurship. There's nobody who's like come out of the woods.

AJ, have you ever felt that way?

All the time.

I thought he was gonna— I genuinely thought he was gonna say no.

I thought you were gonna say no too when I looked over. You seemed to have a lot of confidence. I was like, oh, this guy's got it.

All right, let's, let's take 2 from the audience. Let's go to Chad.

Hey, Moiz.

Question. You had gone ahead with investors at one point. What was the advantage in your mind for that versus going towards debt? Maybe speak from a growth standpoint, because a lot of the investors I've spoken with, they look at the growth of my company and they're like, yeah, you're doing good. Inject some capital. But it's not capital necessarily I would need to the next level because debt That's an interesting question. So why didn't we go with debt instead— why did we go with equity instead of debt? Good question. I mean, we raised the $500,000, like the first $300,000, which is really what we raised, came before we were doing about— or when we were doing about $100,000 a month or less in sales. So we really didn't have any profit to be able to pay down debt, assuming this isn't like conventional venture Convertible capital. debt that converts into equity. This is like genuine term loans. So if we're talking about genuine term loans, you know we know we maybe had seven thousand dollars a month in profit. Like what is someone going to loan us if we've got seven thousand dollars a month in profit? And the things that exist today, like Clearbank, didn't exist back in 2015 or 2016. So we didn't have that opportunity either. I think the other there that's part of the answer. The real answer though is that I was green and had no idea what I was. I moved out to San Francisco, and everybody was raising money, and they were like, get a TechCrunch article, and that's how you know you're being successful, or that's how you know you're on the path to success. And so I was like, let me raise money like everybody else. I've never done this in the past, and it must mean that other people believe in my business, and it's a good business, and this is the right thing to do. And so we did it, and the guy who wrote the first $50,000, he wrote the check in November 2016, In November 2017, we gave him more than $1 million back. And when I handed him back that check, I was like, wow, maybe we shouldn't have raised money. But yeah, so for me, it was really just because I was green, and I didn't have a better answer.

Did you say maybe you should or should not have raised money?

Well, when I gave him $1 million, he gave me a $50,000 check, I gave him a $1 million one back. I wasn't feeling too smart at that point. But that's part of the nature of business, and that's what happens. And I actually love the guy. I called him and told him we were selling the business, and he's like, my wife just had a baby today, but this is the best news I've heard all day.

Wow.

And I love that human being. I didn't feel that way, actually. I didn't feel bad about it. But look, we chose equity because that's all I knew, and I didn't know any better. And my business was so young that debt really wasn't an option. If I were in your shoes, I would think about what I want to do with my business in the next 5 years. Do you see the path continuing where you can pay down this debt, but the money will help you accelerate your business, and you're still going to be running this business? Great, no problem. Debt is perfectly fine. Do you feel like Facebook has changed, or the operational costs have changed dramatically? Dramatically, such that your business will not be as easy or there won't be as many tailwinds as there have been in the past? If so, debt might be a tougher option because you're going to have to pay down that debt or somebody will claim your business. And so it really depends on how you see the next 5 years of your business and what you want to do.

I had a conversation with Trevor Blake about this inside of our incubator a few months ago, and he said that the only reason that he takes on equity investors is for the strategic relationships, and that debt is there to fund operations, but the investments and the relationships on the equity side are what make it worth it for him. Do those things answer your question, Chad? Great. I saw Kirthan's hand in the back. Go ahead, my man.

Yo, what's up, Moiz? So I know you've told the story and I'm probably gonna be answering a question— asking a question you've answered so many times, but this is personal to me as I'm also from a similar area as you, from Silicon Valley, where so many people raise like gazillions of dollars where they don't even have like $2 in revenue, as you've mentioned before. And—

I can't believe you said Silicon Valley and not India there, by the way.

Holy—

But go ahead.

I like that. And my question is, you decided not to do any of that in a world, in a small world where nobody does what you do or nobody takes the strategy that you took. And everybody, I'm pretty sure so many other founders you know were kind of like, for the lack of a better word, shitting on you for it if I'm If I'm saying it right. And how did you just keep your head still in the game, so focused, without being affected by any of your other entrepreneurial friends, if I may ask?

Yeah, great question. And I think I was certainly impacted by them. I think it'd be crazy to say that I wasn't. I'd walk into their offices, and I'm like, this is a stunning office. 80 employees here. And you walk into my office, and our, like, the first office we ever paid for, I printed out a sign that said Native on a computer, like an 8.5 by 11 sheet of paper, and stuck it up on the door, and I'm like, that's our sign. And our office looked crappy, and we had no employees, but we were making a lot of money. And I didn't understand how all these other guys were hoping to make money, And now I do. I think now I have a better understanding of that. Those guys are betting on very different horses than I was betting on. And at some point, there was enough cash that the business was generating where I was like, this horse is a good horse, and I want to stay on it. And so I think I just got comfortable with it. I think the other thing that I did that would be helpful if you're in the same shoes is just surround yourself by like-minded people. I think about all of the trailblazers ahead of me in e-commerce. Andy Dunne made digitally native vertical brands a thing. He built e-commerce as DTC businesses know it today. And that's a really amazing thing. And when I was doing it, there were a bunch of other people who were bootstrapping businesses that I would hang out with. And one was this guy Jake from from MVMT Watches. Jake built a $100 million watch brand, sold it to Movado, and he'd also never raised any cash. And so, I remember the first time we ever got brunch together in LA, we chatted, and I felt like this weird friendship with him already, 'cause we were both like, we don't have a lot of employees, we are making money, are we doing this right, or is everyone else doing this right and we're idiots? Mm-hmm. And I think today, I would say that no one, there's no one right path. No one was an idiot in that situation. We did what we thought, we did what we were comfortable with, and what we thought would generate the best outcome for ourselves. And there are businesses like Dollar Shave Club that raise a bunch of money, have beautiful offices, a ton of employees, and that generate meaningful outcomes for those founders and investors as well. There's not one right or wrong answer. But I do encourage you to hang out with people who are running businesses like you are, because it's going to make you feel a lot— safer isn't the right word, but give you a lot of comfort in the fact that you're not the only one out there building these businesses. But it was really my brother. I moved to San Francisco because my brother was out there. He'd raised $40 million from Andreessen Horowitz, get an entire floor in this beautiful building. You walk in, there's this beautiful sign that says this tiny co, and for a long time, we just had a tiny conference room out of there.

Hmm.

And it was weird, and people would be like, what are these idiots doing in this conference room? They come here early, they leave late, but I don't know if they're— they get a bunch of packages. I don't know what's going on here. We had a great outcome, and at the end, they were like, okay, you can build businesses out of conference rooms as well. And so have faith, because those businesses exist. You just gotta surround yourself with like-minded people. Yeah, and it'll happen.

How did TinyCo do?

They did well. They sold to the guy— they actually— it was the second company my brother started, and the second time he sold it to the same acquirer. They just had rebranded and had a new CEO, and the CEO was the guy who founded MySpace, Chris DeWolfe.

Wow.

So, you know, it was a great exit for them. But it was an even better exit for us, and we were working in the conference room all the way in the back that had no windows and no air conditioning and no light. And afterwards, my brother was like, people are now coming up to me being like, what was going on in that conference room that they had such a fantastic outcome, and we had the rest of the floor?

Let's do one more, and then I'm gonna close with one question.

One more.

Way in the back. Hey, Moiz.

I can just kind of be loud too. We'll see. I'm hoping you can talk a little bit— I'll bring the volume down a little bit. I'm hoping you can talk a little bit about your transition from being a lawyer in your career to starting in your first couple entrepreneurial ventures, the reason for that. I'm an operator at one of the roll-up groups right now, and they're paying me pretty well. It's fun to be from the the agency level into a private equity group, and it's cool, but I want to build something big myself in the future too. And it's kind of like what you talked about of kind of having difficulty cutting at some point. I like what I do, but I know I want to make that jump at some point. What was that transition like for you?

I would say, look, afterwards, let's hang out. I'm going to text your boss and quit for you right now. 'Cause there's no better time to do it than this moment right now. It only gets harder, and I certainly don't know your personal financial or family circumstances, but if you're sending kids to college, it's gonna get a lot harder to do it then than it is to do it now.

Yeah.

And if you've got a big family and are growing it, or have medical issues, or all of those bills that pile on top of us as we grow up, it just gets harder. and harder. And so the best time to do it is right now. So I will text your boss for you. But for me, I was living in a studio apartment in New York City, and I didn't change the quality of my life, and I lived a lifestyle that I could easily afford. And so I was like, I can go for a year without making money, and it won't really be that bad. And I think, if anything, that was back in 2012. So a decade ago. If anything, things have gotten so much easier to do it today, because if for some reason you try and do your own thing for 3 years, and God forbid it doesn't work out, and you're like, OK, I need money now, and I need to work for somebody now, no problem. People have become much more accepting of that today than they were in 2012.

Mm-hmm.

So really, I would encourage you to do it now, because it gets harder. And you're not going to get as wealthy as you want to be or even as successful as you wanna be without doing your own thing. There is a pride of ownership that exists only when you're doing it yourself. Even if you became CEO of whatever aggregator you're working for, you will not feel as happy as you will starting your own thing. So from a financial perspective, from a happiness perspective, those are the reasons I'm gonna give your boss. But let's do that. I'm serious about it.

Moiz, I wanted to close by bringing up a point that you said you were trying to make as you were preparing for today, that you were struggling to make, but the ultimate takeaway being something along the lines of, solve your problems once you have a lot of money. Would you explain to me what you— what point you were trying to drive home?

Yeah, it was really solve your problems by getting lots of money is really what I was going after, but I really think it's that A bunch of people in this room are like me, I hope, or maybe not. But a bunch of people are like, we want financial success. We want pride of ownership. We want to feel successful. And the only way to do that is to build businesses. And continue working on your business and trusting your gut. That's how you're going to get there. And I promise you, the joy of building that business will far exceed any joy you have from that financial outcome. This is the part where you will always look on these times as the times where you were doing something incredible, and so enjoy it. But you solve your problems by becoming rich, but not with the money. You solve your problems by building a good business, by hiring great people, by being successful, and by having pride of ownership. When you have that financial outcome, to the aggregators of the world, You'll feel great about it, and you'll go on a shopping spree, and you might buy a nice house or something, but building a business will really be the memories that people remember you for, and that are written when you die, that are written in your obituary.

So do you mean that your problems are solved not once you get rich, but in the process of becoming rich?

Your personal— my problems were solved that way, which were, I wanted pride of ownership. I wanted to do something where I'd, I wanted to do something that I was passionate about. I wanted to do something that I loved. I wanted to surround myself with people that I loved. When I ran Native, there'd be people who were good employees, and I would hate them on a personal level, and they would just leave 'cause they're like, we're not getting along with Moiz. Everyone who worked at Native was somebody I personally loved. They loved the brand. They wanted to make it a successful business, and they wanted to work and was like, jived with me well.

And so all of the problems I had, So in other words, instead of making the money or waiting for the money in order to solve the problems, it is by addressing the problems in the context of business that leads you to the financial outcome.

That's right. And at the end of that, you have the same problems again. That's the scary part.

Tell me more about that, those same problems.

Well, you know, you feel the same way where you're like, I want to surround my— I want to be passionate about something. I want to surround myself with people that I really care about, that are also passionate about the thing that I'm passionate about. I want to delight customers in really amazing ways.

And I want to— It's that desire for the same things.

Yeah, that's right.

You're calling them problems. I'm hearing them as desires.

Yeah, that's right.

You still have the desire to be in business with people that you enjoy being around and that you like serving. You still enjoy solving problems. There's still a desire. desire to build something that gives you a pride of ownership. And it just so happens that by following those desires, that everything else is added onto you as well.

That's right. And, you know, I'm sure there's a subset, subsegment of the entrepreneurship, you know, category where people are like, I just want to be rich and live on a beach. But I think a bunch of the people here are going to be like, I really want to build things that are amazing. And it's a really special feeling. I have a Native backpack still, and people will stop me in an airport and be like, is that the deodorant? And I'm like, yeah, it is. And they use it, and sometimes they'll pull it out, and I'm like, this is amazing. We created something that somebody at this airport has. I never thought that that would happen 7 years ago.

Moiz, I love hanging out with you, man.

Thanks so much for the time. This was fantastic.

Give it up for Moiz Ali.

Thank you very much.