Moiz Ali: How To Scale A Massive Brand In 2022

Hey everybody, welcome back to the channel.

I'm Ryan Daniel Moran.

Before we jump into the interview with Moiz Ali, I want to 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 that's awesome.

Like, it looks great on a headline. It looks great as a case 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 wanna call it out because sometimes that happens in me when I even interview someone. 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 or a $15 product. That's the real punchline. line 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 he 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.

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

So 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.

And I'm curious, we often talk to people who, like Sam Par this morning, had an exit like 3 hours ago. I don't know if the wire's cleared yet. And 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. 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. It was just the growth of e-commerce. There were incredible tailwinds to e-commerce. COVID kept everyone 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 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. 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 even advertising channels outside of Facebook. I think the real hit to Facebook that happened in April is getting worse right now, 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? 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. And I think that if we hadn't gotten into Target or Walmart or CVS or Walgreens, we would've probably plateaued in the $75 to $100 million range. I don't think we could've— there would've 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. But at Target alone, Native sells $60 million of product a year. 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 going to 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 going to 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, and 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 What is the lesson that you are seeing that company or just mattress companies as an example make?

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. 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. And I think their market cap suggests that. They've raised $400 million, traded at a $200 million valuation, I bet there's multiple people in this room, myself included, who have thought about taking that company private and 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 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, like, the game's changed a little bit because the way you were acquiring customers has adjusted. But there seems to be a dichotomy there. So would you comment on that?

Yeah, sure. That was like, you know, 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've been a real body blow to the business. And so our diversification, or part of the exit strategy that I had was, okay, 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 I'm thinking of you right now. You have a great— 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. So you've got a business, a great product that is 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. You know, I would do it as soon as I thought I had product-market fit and a way to, like, you know, 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 game your good reviews, And you can kind of hold on to that, but you never really break out 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. And You know, 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? And so I'd still start with direct-to-consumer. That's really the only communication. It's the only way you're going to 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, 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 are you 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. You know, I've never tried the product, and I have no idea 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. So I was like, okay, think about how many people purchase your product again. They're like, that's not something we've been paying attention to. I'm like, that's something you got to 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. Like, 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. 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 got to 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, Timoys, you dumb fucking idiot. You don't understand these numbers. Stop getting on fucking calls with us. And I saw that all in like 18 months, and I was like, wow, these are the entrepreneurs that I want to get behind.

Yeah, that's exciting as an investor when the entrepreneurs start to surpass you.

So much fun.

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

They were just looking at top-line growth. They're like, okay, 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 people, like, you know, 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 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.

Yeah.

And he invests in all these things.

Yeah.

What the hell is he doing at the Capitalism Conference?

What the hell is he doing at the Capitalism Conference?

So Moiz, I just wanna know, like, now you've had all this, what draws you back to like the starter entrepreneur and like 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. Like, whenever I attended conferences like this, I always got super pumped. And like, after a conference like this, people would like— there'd be dinner and I'm like, fuck dinner, I'm gonna go home and work because right now I've got the energy to do it. So, so I like— they still give me that type of energy. And 2 is like, I learn a ton when I'm at conferences like this. Those Pepper— the girls who run Pepper taught me or teaching me, like 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 start canceling those calls. I learn a ton at 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 TikTok ads are going to work because the pixel is great, They're figuring out targeting. You know, 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 'cause what they said was right. was right 6 months 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, okay, 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? 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?

Yes, it's much— I have no idea how to answer that question any longer. And 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, go on vacations. And now I sort of have the money to be able to do that. But there's still— Peter Thiel tells this story where 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. The CEO of eBay would be emailing me asking me a bunch of questions to the only email I'd get would be 20% off at J.Crew. And that's basically so true. I sold a business before I sold Native, and I felt the same way. I was really depressed because 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. 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 everyone's like, oh, I wish everyone could have money so that you realize that it's not all that it's 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.

I mean, once you have 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, A much bigger dopamine hit in order to— and it's hard to keep topping what you did, 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 PM, including me, because it wasn't going very well. But at Native, no one felt that way because 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 in 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.

Okay, that's awesome. And then you got acquired by Procter Gamble.

Yep.

Which has a team of like—

197,000.

Okay, right.

And 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 higher rated credit than the US Treasuries. And they're like, okay, 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 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 extra $10,000? And she's like, no, the system says you are not approved. And I'm like, 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, 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 Scrappy and young, and things are flying around all the time, to the biggest infrastructure, and you being a cog in the wheel, essentially, of this big organization. I imagine that the business you're excited to build next is more on the native side.

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

Help us understand the difference there?

Sure. Yeah, 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 going to put in Native. It's going to be way better than Native's formula. Your repeat purchase rate is 50% now. It's going to be 75%. And I was like, you know, what do I know?

I'm—

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 you know what we do is I've got a little bit of caution. So I'm like, we're going to A/B test your formula against our formula. So we're going to send out your formula to 5,000 new customers and our formula to 5,000 new customers, and we're going to 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 is destroying their formula. And I'm like, what the fuck happened here? You've got 60 years of experience. I can't even, like, I don't even know, you know, I know what's in our deodorant, but like, you know, I'm not a chemist and I certainly don't understand the chemistry behind 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, you know, we've got a bunch of scrappy people who have no idea what they're doing, but we're 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 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, you know, 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, you know, I run an ad and I'm still wrong. But this guy who's telling me, hey, I want to 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. 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 because 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, they've created Swiffer and Tide Pods, and I do admire that. But I was just like, you can fire me if you want because 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 going to change my ads the way you want them. These ads work because they work, and I've tested them, and I put money behind them, but I'm not going to 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. What a rebuttal, Tim. 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 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 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 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. 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. 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 want to 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?

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

Yeah, it is random.

First, I sold Native deodorant for $100 million.

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

That's right. Yeah, 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, I bought the business and like, you know, she was like, I don't wanna spend 40 hours a week or 80 hours a week on it. And, you know, 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. And so I looked at—

Are there any Amazon sellers in the room that just feel totally vindicated right now? If Moiz couldn't figure it out, I'm gonna be okay.

Amazon is such a 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 were contract manufacturer issues, there were shipping issues, there were personnel issues, there were issues all over the board. And so I bought the business and I put like, I'd worked with this guy in my past at my first e-commerce 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 it'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 want to 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 will 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, Of wanting to replace the excitement that was Native, wanting to replace that excitement. And so you've planted these seeds and you bought a bunch of real estate, you're investing in a bunch of companies, you bought this random Amazon-based business. And 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 them and be 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 going to be on the lookout for it in the future. Really, I just thought the Amazon business was a good opportunity and a good 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-dollar 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 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 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 over here. We'll go to Jeff.

Hey, how's it going, Moiz?

Hey.

So I guess 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 are you 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 feel bad not saying that.

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 to crowdfunding to do it? And look, I'm sure there have been businesses that have been successful doing it and that are successful doing it. 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 your response is to that.

Yeah, I'd love to be proven wrong.

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

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. There's a lot of really cool ways it can be done. I think in the US—

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 gonna fund because they're just not an enterprise SaaS company.

And that is your concern, is it not?

Well, my concern is that like 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. It's not like I'm like, oh, you're not a VC enterprise, 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. 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 proptech 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 to VCs, or is it better to go the equity crowdfunding route? And there is no wrong answer to this. 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 still.

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.

Fair.

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

We're going to do one more afterwards. This girl right here, she raised her hand really high.

Go ahead, Moiz.

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 e-commerce operators. And 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.

So 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 noticed, and this is why I like feedback, is it seems 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—

You're specifically training operators, 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? Is that correct?

Yeah.

Okay.

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. I've talked to some investors, they said, we have the capital, we've 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.

Look, I mean, if you can train really good entrepreneurs to— it's all a function of who do you have in the pool of talent that you're training. If they're fantastic people, great. Of course, if 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. If you're able to maintain that level of talent, of course, people will come to you.

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. 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, like, 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, uh, wow, it's me ragging on mattresses again, uh, and a bunch of other mattress companies come and hire them. Uh, and so that exists in different verticals of the economy.

Yeah, 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.

Great.

One more way in the back.

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 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, afterwards, let's hang out. I'm going to text your boss and quit for you right now. Because 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 going to get a lot harder to do it then than it is to do it now. 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, okay, I'm gonna 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. 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 want to 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 going to 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 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. 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 and 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 the 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 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 because 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 a successful business, and they wanted to work and jived with me well. So all of the problems I had got solved by the business.

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 story.

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—

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 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, you know, you know, like I have a Native backpack still and people will stop me in the airport and be like, is that the deodorant? And I'm like, yeah, it is. And like, they use it and sometimes they'll pull it out. And I'm like, this is amazing. We created something that, you know, somebody at this airport has. I never thought that that would happen 7 years ago.

Yeah.

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.

And now a quick word from Jared, one of our members in the 1%.

I was bankrupt and crippled to making $1 million in a year. And then I grew that business and kept growing it. So like my whole world changed financially very quickly. It was amazing how fast it was able to transition and like turn once things got rolling. Ryan and Capitalism.com pretty much taught me everything I knew about ecommerce and specifically branding was the biggest thing that I think Capitalism really does well and they focus on teaching their students about building a brand and just teaching business to people. Like everything he teaches is stuff that he's done, you know, it's not like from theory that you're gonna learn something, it's like all stuff that he's done. So I think the biggest thing that capitalism.com helps you with is that you're getting to learn from somebody who's done the exact thing that you want to do, which is the most important thing in the world. Like that's That's how you fast-track your results. So if you want like the fast lane and to get your results really quickly, you go to capitalism.com and you have them show you what to do so you don't make all the mistakes and you get there really quickly. And it was the best money I ever spent because I went from bankrupt and crippled and all this other stuff to a million-dollar-a-year business in one year, which is exactly what he teaches.

And I was like, holy crap, this stuff works.

So I was a— it was a very healthy exit. it and was able to let me focus on many other things in my life and not have to worry about that stuff anymore.

If you found value in this podcast and you're ready to go deeper, here are 3 resources where we can help you. One, you can grab my book, 12 Months to $1 Million, on Audible or Amazon. It has over 1,000 reviews and it's the playbook to building a 7-figure business. Second, you can join our community of entrepreneurs who are following a plan to build a 1% net worth by building businesses and investing the profits. You can get plugged in at capitalism.com/one. And third, if you're looking to go deeper and build a 7-figure business that you can sell, you can work closely with us inside the Capitalism Incubator, and you can get on the waiting list and find out what we do over at capitalism.com/inc. That's capitalism.com/inc.