#10 How Moiz Ali Built a $100m Deodorant Business with a $1k Investment

Shaan Puri:
Okay. I got to say, this was my favorite episode of the podcast. What’s you’re about to hear is an episode I just recorded with Moiz Ali. He is the founder of Native Deodorant, which is a natural deodorant brand. It’s basically a $12 stick of deodorant. My wife just bought it. She doesn’t know that I know Moiz. She bought it because she didn’t want to use deodorant that had aluminum in it or parabens, all kinds of funky chemicals that you see on the back of a deodorant stick. This is the story of how he started it from his brother’s dining room table essentially, where he was doing the packaging. He was doing the sales, the marketing, the customer service as a one man show for a very, very long time.

Shaan Puri:
Over two and a half years he built this company raising very, very little money mostly because investors were just laughing them out of the room. Like, okay, you’re starting a deodorant company? What is that? He sold it two and a half years later to Procter and Gamble for $100 million. I like this episode, not just because the story is great and the tactics that he shared are actually quite insightful, but because he’s a very entertaining guy, very charismatic. In fact, there’s a portion at the end of the episode where he is talking about how some people who didn’t believe in him and he named some names that we had to bleep out. We left the story in, but we had to bleep out the names, which is a podcast first.

Shaan Puri:
But I think you guys are going to love this episode. Let me know what you think. As always, you can tweet at me. I’m @ShaanVP or email me [email protected] Love to hear from you guys. All right. Enjoy this episode.

Shaan Puri:
Native Deodorant. You build a deodorant brand of all things. You build it from scratch, from a dining room table. You build a actually good enough business where Procter and Gamble, one of the biggest companies in the world looks at it, makes an acquisition and buys Native Deodorant for $100 million. That’s the end, but we’re going to rewind to the beginning. The beginning is what set the scene. So where are you when you have the idea for Native Deodorant?

Moiz Ali:
I’m in New York city running another e-commerce business. I’m buying like Axe deodorant from a Duane Reade at 14th and 3rd in New York city. I’ve lived in the same place for four years and so I’m really familiar with this place. I go buy it, I’m waiting in line, I flip over my deodorant and I can’t pronounce a single ingredient on the back of that thing, other than the word aluminum. I’ve been seeing this problem for the last four years since I’ve been buying the deodorant from Duane Reade. I’m an attorney, I’m not a dumb guy. I know how to read English and I cannot pronounce a single one of these words.

Moiz Ali:
So I’m like, if this product is going to stay on my body all day, every day, I put it on right after I get out of the shower, it’s on my body for 23 hours and 45 minutes and it’ll be on my body for 23 hours and 45 minutes for the next 60 years, I should at least be able to pronounce some of the ingredients in this thing. That’s really where the problem starts. Then my sister gets pregnant and she’s telling me how she’s using Dove and she’s like, “I’m really scared of Dove because I’m about to start breastfeeding, and what happens with the ingredients in my Dove and do they like get into my baby as a result of me using this antiperspirant?” So I’m like, okay, now this is not a hair on fire problem, but a problem large enough for me to solve. That’s how native starts.

Shaan Puri:
My wife is currently eight months pregnant and she started using Native and she was like, “Yeah, I just bought this $12 deodorant.” I was like, “Is it Native?” And she’s like, “Yeah.”

Moiz Ali:
Amazing.

Shaan Puri:
Then I was like, “Why did you choose to buy it?” And she was saying the same thing like, “Oh, because of the baby, I have a heightened awareness around what am I putting on my body and in my body?” She was like, “It’s paraben-free.” I was like, “What’s paraben?” What is paraben? I actually don’t even know.

Moiz Ali:
Look, the real thing that we shoot for is like, we’re aluminum, paraben and fallet free. Aluminum is probably the largest thing that where people are concerned about when it comes to the deodorant category. What it does is, aluminum acts as like a plug to block your sweat glands from excluding sweat.

Shaan Puri:
I see.

Moiz Ali:
So if you think of your sweat glands as like a duct, aluminum acts as a plug, and as a result you can’t sweat. That’s why when you use it an aluminum-based product, it’s called an antiperspirant, it stops you from perspiring. The way I always liken it is, look, if you could take a pill to make you stop urinating, would you take that pill? Doesn’t that sound so weird? If your body is trying to expel a fluid from itself, shouldn’t you let it? I’m like, “Yeah, okay, I want to go to the bathroom.” This is a bodily need. I don’t want to take a pill to stop going to the bathroom, I just want to go and pee. That’s the way I thought about sweating. I was like, look, if your body wants to sweat because it’s really hot, let it sweat. Let the deodorant absorb the sweat and block odors, but we don’t need to prevent it from sweating.

Moiz Ali:
That was like the genesis of like, okay look, we think we can create a deodorant that does the job of an antiperspirant. The other way I thought about it was look like a lot of us work in office environments where we commute in a car, we get to an office, we sit at a desk and work at a computer and using an antiperspirant every day, we’re generally not in an environment we’re going to be sweating a ton. So it’s like taking an Advil in the morning when all you need is glass of water. You’re dehydrated and so what you should be doing is drinking a glass of water, but instead you’re like, “Let me take an Advil to cure my dehydration.” Just take the glass of water. It’s a lot simpler and safer.

Moiz Ali:
So that’s the way I like using Native to an antiperspirant. It’s like, look, you’re probably working in an office job, a lot of our customers are working in office jobs. You don’t necessarily need all the effects of an antiperspirant. Aluminum-free deodorant will do the job for you.

Shaan Puri:
You say, we, but at the beginning it was just you, correct?

Moiz Ali:
That’s right. We launched the company in July 2015. I remember I bought the domain name on my birthday in July 2015-

Shaan Puri:
Why the name Native? Why that domain?

Moiz Ali:
Yeah, sure. I really liked what it stood for, which was like we want to use ingredients that were like native to the earth. We weren’t trying to say, hey, this is owned by native Americans and we weren’t trying to say, we’re a natural product and we’ll never use an artificial ingredient, because I don’t think that, that’s necessarily the case. What we wanted to say is like, look, we want to use ingredients that are native to the earth and we want to make those ingredients part of our deodorant as opposed to using ingredients that nobody can pronounce. So that was the genesis of the name, bought the name in July 2015, basically 12 days later launched the business. I was like, you know what? I think we can launch this business really quickly and see if it works.

Shaan Puri:
But what do you mean launched the business? Because how do you even have deodorant? If I wanted to launch a deodorant brand, I’d be like, okay, I guess I need to manufacture some deodorant or buy some … How did you do something 12 days later?

Moiz Ali:
Yeah, great question. Launch the website, had zero deodorants in stock, was speaking to a couple of manufacturers about using our deodorant formula and having them make it. But initially I was like, look, I don’t think this business will work out. Are people going to buy a deodorant online? Generally they’re buying at Duane Reades and Walmarts and Targets. So I was like, oh, we’ll launch it and we’ll see what happens. We had contacted some manufacturers, particularly like small mom-and-pop ones, and our first mom-and-pop manufacturer was basically making the deodorant out of their hobby room in their house, somewhere in Southern California.

Moiz Ali:
I launched the product on Product Hunt. Day one I was like, it’s late July and I put it on Product Hunt. Product Hunt has multiple pages and I don’t even realize that we’re on page two of Product Hunt. We get one sale, and I’m like, okay, this business is over. Forget about it, I’m not going to do all this hard work to sell $12 of deodorant every day. I can open up a lemonade. I’m 30 years old and I’m basically having a revenue of $12 a day.

Shaan Puri:
Right. So literally launched without a bang.

Moiz Ali:
That’s right.

Shaan Puri:
Opposite of a good launch.

Moiz Ali:
Yeah, exactly. The opposite of a good launch. One sale, had zero product in inventory. I was going to email the guy and basically be like, look, we were trying this out, it didn’t work out, we’re going to refund your order, have a nice life. Then what happens is, I’m working out of this co-working space called the Founders’ Dojo and one of my friends in that co-working space is like, “Hey, I know an employee of Product Hunt and what I’m going to do is I’m going to have him try and put you on the first page of Product Hunt again tomorrow.” Usually you’re not allowed to do that. You’re not allowed to be on Product Hunt two days in a row, but he got me an exception and I’m on the first page of Product Hunt the day after I was on the second page.

Shaan Puri:
What was the little tagline at that time, because I know that for businesses the pitch evolves. Like right now when you described it, it was like really compelling, I loved it, made sense to me. It was inspiring. Yeah, I should use products like that. But I know at the beginning our pitches like suck [crosstalk 00:08:39].

Moiz Ali:
For sure.

Shaan Puri:
Suck less.

Moiz Ali:
Yeah. Oh, it was terrible.

Shaan Puri:
What was it at the time, do you remember?

Moiz Ali:
I think it was like, invest in yourself. I’m not even sure. We had gotten-

Shaan Puri:
Financial product?

Moiz Ali:
Yeah, exactly, and we got no photo. We didn’t take any photos at the time because we didn’t have any products. So we got some guy to like 3D render the image of what a Native Deodorant bar would look like and that’s the image that we have associated with Product Hunt. On our website we have a hero image, and the hero image is just a bathroom. It doesn’t even have a photo of Native Deodorant on it because no Native Deodorant exists at this point. But on that second day we get like 50 sales and I’m like, you know what? Maybe this can be a real business.

Moiz Ali:
As a result of now we have like 51 sales, we got 50 sales day two, one sale day one, we contact our manufacturer and we’re like, okay, we’re going to buy a hundred of these things, ship them over.

Shaan Puri:
We have a tangled history with the guests that you’re going to talk about. You mentioned Product Hunt, we had Ryan Hoover on the podcast. You mentioned Founders’ dojo. I think earlier when we were talking, Sam was on the podcast earlier and your brother was the first episode of the podcast. Actually to this day, the highest listened podcast.

Moiz Ali:
Oh, good for him.

Shaan Puri:
He told a story on the podcast, which was that at some point you guys were like ordering deodorants off Etsy and you’re just testing deodorants. You were like put one under one arm, the other under the other arm and like go run around the block and see which one worked better. Was he full of shit or was this real?

Moiz Ali:
No, that was definitely real. Before I launched Native, I was like, okay, you know what? I want a natural deodorant that works, so does my sister because she’s pregnant. So I started testing every deodorant I could find. I tested like the Tom’s of Maines of the world, the Schmidts of the world, the Etsy deodorants of the world, and I was just like, look, these products aren’t cutting it. I’m not sure if it’s my personal body chemistry or what it is, but yeah, we were testing natural deodorants left and right. From Etsy and from every store you could possibly imagine.

Shaan Puri:
Got you. So you order that first batch-

Moiz Ali:
Order that first batch-

Shaan Puri:
50 customers.

Moiz Ali:
Yeah, I’m living out of like Solomon’s … I moved to California during that time period basically, moved to California, living out of my brother’s apartment, order a hundred units, start packing them on the dining room table. I get like you lined boxes delivered to the house. I get a bunch of crinkled paper delivered to the house. What’s wonderful is my brother is the messiest person in the world. When I moved in, he had a birthday cake from like three birthdays ago still in his refrigerator. I moved in and I’m like, “I can’t live like this, you’re too much of a pig. I can’t live like this.” And then I was like, you know what? This is perfect, because I’ve got all this crinkled paper and all these shipping boxes and all this stuff floating around here and it’s making a huge mess, and my brother’s the only person in the world who wouldn’t [crosstalk 00:11:08]. Yeah. He doesn’t even notice the mass because he’s just like living in a pigsty himself.

Moiz Ali:
So we’re shipping these boxes out. We shipped 60 out and then sales start dropping because we’re offering [crosstalk 00:11:19]. Yeah, and I’m like okay. In my last business, we built the entire business on PR. I start contacting all of these reporters and I’m like, “Hey, do you want to write about Native?” And they’re like, “No.” They said, “Deodorant? Let’s take a chill pill over here. This isn’t that compelling.” This is in 2015. Today there’s a new natural deodorant that launches every day, in 2015 we’re basically one of the few guys out there. So we start running a bunch of Google Ads and we haven’t fundraised, so it’s all my own money. I spent-

Shaan Puri:
How much money? Yes. It sounds like you’re going to answer that. How much money did you decide like, I’ll put into my testing and figuring out if this is real budget?

Moiz Ali:
Yeah. I’m the cheapest person in the world, so I probably spent like a grand launching the business. The first $500 was to buy products and the next $500 is to buy Google Ads and I’m buying Google Ads and I’d spend $500 and I get like $100 in sales and I’m like, this is not working out well.

Shaan Puri:
I found a way to burn money.

Moiz Ali:
Yeah, exactly. This is like, my mom would be so upset at me right now. She’d be like, “Go quit this business tomorrow.” So I’m like, okay, Google Ads aren’t working, so we start advertising on Facebook and like pretty clearly we get some product market fit on Facebook. Facebook ads started going well, and what happens is I created this Excel spreadsheet where every day I tracked every single ad I had, the click through rate, the CPA, the return on investment, and I started doing that every day starting, probably August 2015 or maybe September 2015. That’s really how I started getting good at Facebook ads. I was tracking every single ad we ran on a daily basis.

Shaan Puri:
I’m going to guess, company got acquired, companies much larger, lots of people in the company. Do you still get hands on with the Facebook ads?

Moiz Ali:
Definitely. Yeah, absolutely. Yeah. That was our bread and butter and I really enjoyed it and it’s something I’m good at and it’s not just a job for me, it’s something I really enjoy. In fact, I was at Facebook’s headquarters like two days ago talking about Facebook ads with a bunch of their execs and it’s great to understand what products that they’re launching, how they’re thinking about the business. It’s insane. But in any case, so we’re like running these Facebook ads. We see a ton of product market fit and then our manufacturer scales from 100 units a week to about 500 units a week.

Moiz Ali:
She calls me up and she’s like, “Moiz, this is a fantastic business. I used to be selling products at a farmer’s market and now I’m making 500 deodorants for you a week. They’re charging me about $6 a unit, so it’s pretty expensive.” And I’m like, “Okay, great. I’m glad this is working for you.” And she’s like, “We’re going to scale this business. We’re both going to hit home runs with this business.” And I was like, “Great. I really appreciate your commitment to this.” Two days later she calls me and she’s like, “My son is sick. I’m out. Forget it, I’m not making any more deodorant.” I was like, “Are you kidding me? We had a conversation 48 hours ago and you were in, 48 hours later you’re out.”

Moiz Ali:
That was really jarring, and I’m like, okay, you know what? We’re selling 500 units of deodorant a week, which is a few grand in revenue and it appears to be working well, but like it’s a few grand in revenue, you’re out, how do I replace you? I don’t really want to be making these deodorants in my apartment. At some point, well, Solomon, he doesn’t even have pots, we’re not going to be able to make this over here. So I’m like, okay, maybe this business is over. Then I go on vacation with a girl that I was dating at the time. We go to the Dominican Republic or something.

Moiz Ali:
We get back, I’m a little bit more like patient now, I call the manufacturer and I’m like, “Okay look, how about you make 500 units a week for the next four months? Then afterwards I’ll pay you a few thousand dollars bonus?” I think it was a five grand bonus. I’m not entirely positive. I was like, “I think I’ll pay you a five grand bonus and then I’m committed to finding another manufacturer in that period of time.” She’s like, “Okay, that sounds fair and reasonable and so let’s do it.” So she starts making the 500 a week again. In the meantime I’m Googling and I’m like, who makes deodorants? I’ve got a formula I want to make, who can I get to make this?

Shaan Puri:
All right, quick break in the action to talk about Hustle Con. So as you guys know, this podcast is published by the Hustle. They send out a daily email newsletter with the best news of the day, everything you need to know about tech, but that’s not all they do. I’ve been two or three times to Hustle Con. It’s a conference. It’s happening December 2nd and 3rd in Oakland. They rent out the Paramount Theater, which is really amazing venue. I saw Chris Rock there and Jerry Seinfeld there and I guess Hustle Con is happening there. They have a stacked lineup of speakers. When I went Adam, WeWork was talking. Let me look at the list for this year, founder of Hyms, the founder of Madison Reed, Strava, Comm, [Method and Ali 00:15:43], Lime, a bunch of CEOs and founders of multimillion dollar companies and startups that come on stage and share insights about how they did what they did, how they got started.

Shaan Puri:
Hustle Con is very different than a normal conference. Normal conferences are stuffy. You see a lot of people in suits, shallow networking going on. Hustle Con is very different vibe. You meet a ton of people who are guests in attendance, but also the speakers are very approachable so they are not only sharing good insights on the stage, but you get to meet them afterwards and that’s a really cool experience. So highly recommend coming. In fact, I’m bringing out the editor of this podcast to come because I just think it’s a really great opportunity. He’s 19, 20 years old, this is an amazing way to get in the mix. If you’re thinking about starting an idea, a business or you want to do that someday or you’re doing it right now, either way, listening to speakers tell their stories, being in the audience amongst a bunch of other like minded people, that is a really, really good way to get amongst it.

Shaan Puri:
That’s my genuine recommendation for Hustle Con. They gave me a promo code. Let me give this to you guys so that you can get a discount if you do want to get a ticket. The promo code when you check out is, MYFIRSTMILLION, all caps, all one word. Again, that’s, MYFIRSTMILLION. That’ll give you 50 bucks off a ticket to Hustle Con and you know what? If you are listening to this and you want to go to Hustle Con and you can’t afford the tickets, I will buy four tickets for guys myself and I will send you to Hustle Con. You’ve got to figure out your travel to get there, but I’ll buy your tickets to the conference itself. Email me, [email protected] Happy to give this as a gift to anybody because I think that going to Hustle Con, it can really like change the trajectory of your business, life. One meaningful relationship or one key insight while you’re there, that can make it worth it. That’s been my experience with conferences in the past. Okay, you guys know the deal. Hustle Con, December 2nd and third, try to get there if you can.

Moiz Ali:
I call some guys up or there was a guy in Chicago, I’ll never forget. I called him up, it was like an hour long conversation and I probably said five words, he talked the entire time. He’s like, “Yeah, so we’ll make your deodorant.” I’m like, “You don’t know anything about my needs, and you spoke for 59 minutes and 55 seconds. I don’t think you’re the right guy.”

Shaan Puri:
Red flag.

Moiz Ali:
Yeah. Terrible red flag. Finally we find a contract manufacturer that’s like, “Yeah, we a low minimum order quantity, a low MOQ,” I think their MOQ is 80. So I was like, great, we want more than 80. I’m not going to bankrupt the business. I don’t have to mortgage my house based on this. So she starts making 500 a week for us in this tiny, like 800 square foot manufacturing facility in the United States. Things start going well. We launch, in July 2015 we were doing a couple of hundred dollars in revenue a month. By January 2016, we’re probably doing around 75k in revenue a month and things are starting to scale well.

Moiz Ali:
Then the beginning of the summer hits in 2016 and May 2016, and somehow all of our deodorants start melting. I go to our shipping facility, which is located in San Leandro. It’s like these two guys called Fulfill Co, nicest guys in the world. I call them all the time. They’re a small business, I’m a small business, easy to talk to the owners. I go over there, they’re like … It’s probably an hour drive. I rent a Zipcar and I go over there. I’m just looking at our deodorants and I put my finger in one of the deodorants because it like looks weird and it turns out it’s got the consistency of lotion, you can just put your finger all the way down to the bottom. I’m like, holy shit. [crosstalk 00:19:00].

Shaan Puri:
How many units are we talking here?

Moiz Ali:
We probably have a couple thousand units, which is a lot of money at the time because we’re not doing a ton of sales.

Shaan Puri:
That’s a lot of lotion.

Moiz Ali:
It’s a lot of lotion. Yeah. It’s no deodorant and a lot of lotion. Our manufacturer at the time, the woman who ran it didn’t fly. She randomly had driven up to San Francisco to have a meeting with me the day beforehand. So like all of this is just like works out randomly. I call her up and I’m like, “Hey, are you still in San Francisco? I want to have another meeting because I think there’s a problem with the deodorant you just shipped me.” She’s like, “Yeah, I’ll come by your office later this afternoon.” She comes by and I’m like, “Here, I brought a few of the deodorants,” and she’s like, “Holy shit, what happened to these?” She sees it immediately, she calls up her facility and she’s like, “Stop making deodorants. We’ve got a problem here.”

Moiz Ali:
And I’m like, okay, well maybe this business is over again. we moved to a new manufacturer, what are we going to do here?

Shaan Puri:
Are you the type to get down on it? When stuff like this is horribly, awfully wrong, some people go inwards, they get very quiet and some people get angry, some people get sad. What’s your reaction?

Moiz Ali:
I’m like all three of those. Anger is the number one thing for sure. I’m fuming, but I think for like the first hour I’m just like, forget it, this isn’t worth it. I think, every time I have a major problem like that for the first hour, I’m less like, this isn’t worth my time anymore, I’m quitting.

Shaan Puri:
Right. Of course, right away.

Moiz Ali:
Yeah, exactly. Divorce right away. Then like hour two comes along and you start getting determined and you grit your teeth and you’re like, wait, I’m better than this, I’m going to fix this problem. I’ve got something that’s working for me, this is not going to stand in my way. I don’t care what it takes, I’m going to fix this problem. So at hour one, I’m like, forget this business. Hour two, I’m like, nothing can stop this business, we’re going to succeed.

Shaan Puri:
Which could be like, thank you. Thank you. Bring it on.

Moiz Ali:
Yeah, exactly. Yeah, I’m like, problem, don’t worry about it, you’ve got the best problem solver in the world right here.

Moiz Ali:
What had been happening is that over the course of the last eight months, like last four months since this woman had been making deodorant for me, we’d gotten a lot of customer feedback basically saying our formula was mediocre. There were a lot of problems that we were trying to solve for. People were like, “Look, it does a great job at absorbing wetness and blocking odor, but it’s really flaky, it’s hard to apply.” Men in particular were like, “Look, I’ve got hair under my arms. This pulls the hair under my arms out and they’re sticking to the deodorant.”

Moiz Ali:
So for a while we’d been attempting to make a better deodorant, like a better formula, and I’d been sending out samples to people and our best customers who are communicating with me, and I’d be like, “Hey, what do you think of this formula? Is it any better than the formula that you actually paid for?” We had done hundreds of these formulas. At home, I would rub the formulas on tee shirts, throw them in the washer, the dryer and see if they stain shirts. I have a thousand of these stained shirts. Solomon’s like, “You’re running the washer and dryer every day, what’s going on over here?”

Shaan Puri:
You’re not a scientist or biochemist, how are you even figuring out the formula? Whenever I listen to a guest tell these stories, I think to myself, could I do this business? I think there’s a lot of things that are relatable, because you started this with … Essentially, no, you didn’t have to be a programmer, right?

Moiz Ali:
Yeah, that’s right.

Shaan Puri:
E-commerce site. That’s great. You didn’t make this stuff yourself. You found a manufacturer just by Googling, who the heck makes deodorant.

Moiz Ali:
Yeah, that’s right.

Shaan Puri:
But then when it comes to figuring out the right formula to prevent flakiness, that’s one where I’d be like, well I don’t even know what’s … I don’t know what to do there. So how were you figuring this out?

Moiz Ali:
I remember starting the business, I told one of my friends from law school I’m starting this business and her husband was like, “What the hell do you know about deodorant? You know nothing.” And I was like, “Yeah, you’re right, and in the next six months I will be an expert on deodorant.” Really what happens is like you email all of these customers. The customers are like, “Hey, here’s the problem.” Customers will even do diagnoses, and they’re like, “Hey, I think it’s because of this.” And I’m like, “Oh wow, great. Thank you for doing the science that I was supposed to do,” but in reality here’s a little easier because, one working with our contract manufacturer, they did have a chemist and two is easy to diagnose the problem because with deodorants you want to balance the amount of powder and the amount of oils you have in that deodorant to make a product that absorbs wetness, blocks odor, but still glides on really easily.

Moiz Ali:
Sometimes we’d make a bad batch of our deodorant and we’d be like, oh how did this batch turn out? Because like, oh we forgot to add this amount of oils. So we take a look at it and we’re like, we forgot to add oils and its way more flaky. So you’re like, you know what? It’s the oils that make it glide well.

Shaan Puri:
How frequently were you going to the actual manufacturer and also it sounds like it really paid off that you weren’t just using a Chinese manufacturer that’s hard to speak with, hard to work with and doesn’t guarantee quality.

Moiz Ali:
Definitely. One, we’ve never used a Chinese manufacturer. All of our deodorants are made in the United States for two reasons. One, you’re right, it allows us to have a really flexible supply chain. Two, it allows us to have faster demand creation. When we give them a purchase order, they’re able to make it much faster. Three, I would be scared as hell using a Chinese deodorant, that is something I don’t want to do. I don’t know what quality control looks like over there, and it may look great the day I go over there and terrible the next day, and we didn’t want any of that kind of stuff.

Moiz Ali:
But the whole point here was, we want to avoid the Doves of the world and in order to avoid Dove antiperspirant, make it in the United States with ingredients you know where they’re being sourced from and you know what they are.

Shaan Puri:
Okay. We’re going to jump back into the story, but one more tactical piece. I build products that are like software. Software, it’s pretty easy to iterate, it’s pretty easy to AB test. We can send one visitor of app to see one experience and the other visitor to see another experience, very easy to do that sort of thing. Can you talk tactically about how you iterate with a physical product?

Moiz Ali:
Sure. I’ll talk tactically about how we did it at the beginning first and then how we do it today. In the beginning, what we would do is, we’d send out samples to our best customers who were vocal and be like, “Hey, I love your deodorant. I’m going to be a customer, but I wish it did this.” And we’d say, “Hey, we’re trying to solve your issues.” I remember we were doing this, I was like, “This is version seven of the deodorant we produced and this is version eight of the deodorant we produced. You don’t know what’s in them, we’re giving you free samples, compare it to the one that you purchased from us and tell us what you like more.” That’s the type of feedback that we would do early on.

Shaan Puri:
That’s unusual, right? I’ve bought deodorant my whole life. I’ve never had anyone from the deodorant company ever reach out to me, spoke to them. They never sent me different variations. So this must have been unusual for people, I guess.

Moiz Ali:
Yeah, I guess that’s true. The way I think about it is, if you buy deodorant from Target, you buy an Axe deodorant from Target, you’re never going to contact the manufacturer. If you buy it directly from us, we were following up with every customer. If you purchase from us, 20 days after you purchased from us, I sent an email to every single customer saying, “Hey, how do you like this deodorant? Do you like it? Do you hate it? If you like it, leave a review on our website. We’d really appreciate it. If you hate it, please reply back to this email. There’s a human being on this side of the table and we want to make this product better.” That’s how we got feedback from consumers.

Moiz Ali:
Today what we’ll do is we’ll actually run those AB tests along huge swathes of the population. So we’ll send the Shaan’s of one world baking soda that’s milled to a certain particle size and Sams of the world, a baking soda that’s milled to another particle size. We’ll monitor your reviews six weeks after you purchase and your repeat purchase rates 12 weeks after you purchase and say, you know what? The Sams of the world are buying again more frequently than the Shaan’s of the world, and as a result, it must be that the formula that we sent to the Sams of the world are better. That’s how we can monitor, what is the best baking soda particle mill size that we should have?

Shaan Puri:
That’s amazing. Is that standard? Because I’ve never heard-

Moiz Ali:
It’s definitely not standard because we have this direct relationship with consumers that allows us to monitor repeat purchase rates and have a direct line of communication with them. Been really phenomenal for us because things like baking soda particle size are unique and you have no idea what’s better … In a laboratory versus in a consumer setting you’re going to have very different results. So that’s how we AB test formula changes today.

Shaan Puri:
That’s amazing. You guys are sending different versions of Native Deodorant formulas to batches of people, cohorts of people and then you’re able to see these guys’ repeat purchase rate is at 28% versus this one at 21%, therefore we believe this formula is better.

Moiz Ali:
That’s exactly right. Yeah, but we’re doing tiny changes, changes that won’t even influence the ingredient. We’re like, “Hey, look, do you think we should put in 1% of this ingredient or 1.05% of this ingredient?,” To see what’s better.

Shaan Puri:
Nerdy deodorant stuff-

Moiz Ali:
Yeah, exactly. We’re getting into the weeds as much as possible.

Shaan Puri:
Right. Okay. All right. So we’re going to hop back in. Rewind to that part of the story where deodorant, lotion, oh my God, we’ve got to fix this and you guys are you starting to troubleshoot. So this is like near death experience number two-

Moiz Ali:
Definitely.

Shaan Puri:
Take it from there.

Moiz Ali:
We talked to our manufacturer and we’re like, “Look, first we’re not sending out any more of these deodorants that are lotion. We’re either going to refund the customers and close the business or do something.” What happened is, we had been working on a different deodorant formula to fix for consistency, and so we’re like, “Look, we think we have good feedback on here. We don’t have as much feedback as we would’ve liked.” We still had a bunch of samples that we’d send to customers and hadn’t followed up with them yet. So we’re like, “Look, push is coming to shove. We’re either going to close this business or to switch formulas. Let’s switch formulas and see what happens.”

Moiz Ali:
We switched formulas basically because we have to and we think it’s supposed to be better and we start shipping that out. We email all the customers and we’re like, “Hey, look, your product was supposed to ship out today. We had a problem. It’s not going to take two weeks to ship out.” Customers are irate just absolutely irate and I don’t blame them. Deodorant is not something you can really go without, like toothpaste, I need this, so I’m going to go get another product. They’re irate, but a lot of them are really kind and they’re like, “Hey, we appreciate the honesty. We’re willing to be patient for it.” Two weeks later we start shipping it out. This is May 2016. We’re probably doing around 100k revenue at this point.

Moiz Ali:
Immediately we see our reviews go up. The quality of our reviews has gone up significantly. Six weeks later we start seeing repeat purchase rates go up as well. We can monitor the cohorts and early on we get a really good indicator that repeat purchase rates are going to be substantially better with the new version of our formula as compared to the old version. So we’re like, you know what? Maybe this terrible experience has led to something really good, a much better formula. Then May 2016, we’re doing 100k in revenue a month. I’m still the only employee at that company.

Shaan Puri:
I was going to say, how many people are there? You’re saying, we, but we is me-

Moiz Ali:
Just me doing 100k in revenue a month or something like that. Just me at the company. I’m doing the customer service, have a really good idea of what the problems are at the company, doing the operations. I’m talking to the manufacturer all the time, doing Facebook ads to understand product market fit.

Shaan Puri:
Let’s talk money for a second. This podcast is called My First Million. It’s called My First Million because when I was growing up I wanted to have a million bucks.

Moiz Ali:
Yeah, who doesn’t?

Shaan Puri:
Who doesn’t? Exactly. In Silicon Valley there’s a lot of people that who will thing to do is say, “I’m here to change the world.” I’m down with changing the world for sure, but let’s be clear, if I’m starting a business, I’m trying to make money.

Moiz Ali:
Definitely.

Shaan Puri:
I’m not afraid to say that. My whole startup career was around how do I build a business that makes money for me, for my investors, for my employees? In order to do so we’re going to have to make an amazing product that customers love, otherwise, why would they give us their money? So I like to give my listeners an understanding, because a lot of the people who are listening to this podcast right now, they’re commuting to work. They work at a nine to five job. They have aspirations of either leaving that job and going and starting a startup, or they’re doing a startup that’s not quite taking off. They hear you say, “We’re only at 100,000 a month in revenue,” and they’re like, “Oh my God, I wish I could get to 100,000 a month in revenue.”

Shaan Puri:
So let’s talk money for a second. Before you started the business, were you already doing well financially? Were you comfortable? Where were you at before? Let’s start with that question.

Moiz Ali:
Sure. I was an attorney in New York for a couple of years and during that time I had basically paid off my law school student loans. One of law school classmates and I left our jobs back in 2012 to start e-commerce business. We sold that business for a seven figure sum and we hadn’t raised any money. So I would say I was comfortable certainly, but like, wasn’t going to be able to say, okay, you know what? I’m going to retire for the rest of my life. I was in a position where I was like, okay, I bought myself a couple years of not having to worry about rent and not having to worry about food or vacations, but I hadn’t bought myself 50 years of not having to work.

Shaan Puri:
Right. So now you get to this 100,000 a month of revenue, and it’s taken the business about how long at this point?

Moiz Ali:
It’s taken about 10, 11 months.

Shaan Puri:
11 months. Great. what does that mean for a deodorant business? You make 100,000, but margin wise, what were you able to take home at the end of that when you break even? Were you better than that? How were you doing at that time?

Moiz Ali:
We were selling $100,000 of deodorant a month. The deodorant was costing us a lot of money at the time because we didn’t really have any economies of scale. I was the only employee and I wasn’t taking a salary, but I’d say on a $100,000 in business, I’m guessing, because I don’t really remember. I’d say the company probably made about $8,000 in net profit selling $100,000 of deodorant.

Shaan Puri:
You and your brother are very business savvy. You’ve invested in, I don’t know, 80 plus businesses-

Moiz Ali:
Yeah, something like that.

Shaan Puri:
Something like that. You’ve started multiple businesses. What was your mindset around this? Did you think, man, this is going to be a big business? Were you like, this is just a fun project? I guess, how were you thinking about it when it was at that stage because 100k a month is good revenue, but you’re only taking home 8k maybe. It’s not clear at that time and there’s not a whole bunch of other examples you could go look at, other big different businesses that were startups. So how did you think about this business?

Moiz Ali:
Definitely. I think the first like four months of the business I was like, look, let’s launch this business. I’m bored. I don’t have a job. Let’s see what happens. When I launched the business pretty early on, I thought that there could be product market fit and I was like, you know what? We’re seeing good return on investment when we buy ads on Facebook, not necessarily on Google at the time and even on Pinterest we’re seeing a good return on investment. The problems that we have are, we have a low repeat purchase rate, a good product but mediocre and a decent review average something like four stars.

Moiz Ali:
So I was like, look, if we can improve our product, we really have something. I saw a product market fit with the product, but I also saw that there was a larger opportunity if we could just make our product better.

Shaan Puri:
Why not hire people? I think a lot of people like to rush to hire people. I’m anti hiring people. I want to maximize these earnings per capita in my company.

Moiz Ali:
Yeah, definitely.

Shaan Puri:
How did you resist that? What was your thought process around that, because you’re doing it as a one man show?

Moiz Ali:
Sure. In Silicon Valley, a bunch of people raise money, we also raised money to be clear. We raised about $50,000 in November of 2015, like a few months after we started, and then another $250,000 in about April of 2016.

Shaan Puri:
This was friends and family or this was-

Moiz Ali:
These were both outside investors that I had just met. Somebody introduced me to them and both of them invested and so we had about $300,000 in the bank account plus the $1,000 I kicked in, so probably about $301,000. So we’re like, we’ve got some cash but not a ton of cash. I didn’t hire anyone for a couple of reasons. One, was super busy trying to run the business. If you’re doing marketing operations and customer service, that’s a full time job. On Saturdays I would spend the entire day, basically I’d go to a workshop cafe and crank out a bunch of customer service like inquiries, so people got responded to within 24 hours. So one, was really busy and then two, I was afraid that the business wasn’t going to survive much longer. I didn’t want to hire someone and then fire that person three months later because the business was collapsing and four, I wasn’t sure I could afford them.

Moiz Ali:
Sure, we had $300,000 in the bank account, but we had $8,000 in net profit. If I hired someone between employment taxes, their salary and benefits, we’re certainly giving up that $8,000 and so I was like, I don’t know how long we’re going to be able to afford this person. The future of the business doesn’t have a … We don’t have a ton of profit right now so I don’t know how long I’ll be able to afford you.

Shaan Puri:
What was your schedule like? You’re saying Saturdays is customer service day. When you are the one doing operations, marketing and customer service plus everything else that goes in, all the little things that go into a business, how were you organizing your time and your day? Are you like, I work 18 hours a day kind of guy? Tell us about your schedule.

Moiz Ali:
Yeah. I was waking up and going to work. I’d work until 7:00, 8:00 PM. Early on in the business, probably the first four or five months I was doing all the shipping as well out of my apartment. I’d go home at 7:00 PM, turn on Netflix and while I was watching Netflix I’d be packing boxes and shipping them out.

Shaan Puri:
Right. So you were Michael Scott, you were Dwight [inaudible 00:35:14].

Moiz Ali:
That’s right, yeah.

Shaan Puri:
You were Daryl in the warehouse.

Moiz Ali:
That’s right? Yeah.

Shaan Puri:
You were the whole office.

Moiz Ali:
And Toby being like, yeah, this is a terrible company. It’s a long day at the beginning. We get to June, we got a higher repeat purchase rate, better reviews. In June of 2016, so about 11 months into the business, we hire our first employee and she’s helping doing customer service. I’m like, great, I need so much help here, because customer service is endless and I can’t like reply … It’s just taking up so much of my time.

Moiz Ali:
So she comes on board. We do 250k in revenue that month. So we’ve basically doubled the business between May and June. The customer service inquiries have gotten to be even more than she and I can handle it together. I thought I was done with customer service, we doubled the business and it turns out she and I are both doing customer service all day. We hired another person, the third person to join the team and he’s doing customer service. I was like, great, this is wonderful, now I can really stop doing it. By November 2016, we’re doing $1 million a month.

Moiz Ali:
We go from 100k in May to 1,000,000 in November and now we’ve got a bunch of customer service people including the just crazy customer service. We have these things called power hours where we’re like, everybody does customer service and it’s not entirely their fault, a lot of it was, we were not able to keep up in terms of production with the demand that we had, because we didn’t expect a 10X of business over the course of five months. So our manufacturer is running behind. If you buy the deodorant on a Wednesday, it probably gets made Friday and shipped to you the following Wednesday. We don’t know what’s going on. The business is growing really quickly, but we can’t keep up with it. I certainly can’t.

Moiz Ali:
I’m like, well, I have to do customer service, I have to make sure that I’m trying to produce more deodorant. I’m trying to run our advertising and I have no idea what our business will look like a year from now.

Shaan Puri:
What caused the business to grow from that 100k a month to 1,000,000 a month? That’s a huge jump. Was it just spending more on ads? Obviously the formula is getting better, so obviously the product is getting better, but is it just like that? It’s a million little things getting better? Or was there a breakthrough or a point of emphasis that really was high level?

Moiz Ali:
Those three things. One, word of mouth is growing a ton. It’s small. It’s hard to have word of mouth when you’re doing 50k a month, it’s a lot easier to have word of mouth when you’re doing 250k, 500 a month, so that’s growing a ton. Two, we’re spending more on ads because we understand product market fit and we understand that we’re profitable when we spend money on ads. So we’re spending more money on ads. Then three, we have a higher repeat purchase rate, which was the most important things.

Shaan Puri:
Like compounding that.

Moiz Ali:
Yeah, exactly. This is a huge snowball effect. I remember in like, January 2017 we’re doing just over $1 million dollars a month and I was like, by December of 2017 I want to do $1 million in repeat purchase revenue a month and we hit that $1 dollars in March.

Shaan Puri:
It sounds like focusing on repeat purchase was a key insight that obviously if you’re in DTC businesses that’s known as a good standard, but if you’re new, that’s something to hone in on. Did you know that at the start? Did a mentor telling you, “Hey, repeat purchase rate is the thing to key in on.”

Moiz Ali:
I think it depends on the product here. If I was selling Casper mattresses, I would be concerned about new customer acquisition because how many mattresses is someone going to buy? You know what? I bet Casper is doing a really good job with repeat purchase rate, but when you’re selling a consumable like deodorant, the whole point is that people are brand loyal and once they find a deodorant, they’re going to stick with it for a really long time. I used Axe deodorant from like, probably 12 years old till I was 30 years old. 18 years. So for me, I was like, look, if we’re producing a deodorant, we need to make sure that people love it and they don’t just churn and go back to their Doves and Degree’s of the world.

Shaan Puri:
Why were you able to charge $12 for a deodorant? Is it still $12 by the way?

Moiz Ali:
It’s still $12. It’s $12 at Walmart, $12 at Target and $12 at our own site. Really, the way we did it is, I worked backwards. Early on, a deodorant costs us about $6 to make, it cost us $3 and some change to ship, and then in cost us another dollar 50 for random expenses like the box and like a card in there and a bunch of other expenses. We were looking at an all in cost of like $11 and some change. So I was like, look, I can’t lose money on every deodorant I make, I’m not brandless so I have to charge $12 otherwise we’re going to lose money on every single order. So that’s really where it came from.

Shaan Puri:
A normal deodorant, Axe, or Old Spice or whatever, what’s the … I almost don’t even think about it. I just pick it up off the shelf. Typically it’s three bucks? What is it?

Moiz Ali:
Three to $4 is like a traditional price.

Shaan Puri:
When you were going into this more, if I was your friend at that time, I would’ve been like, “Hey bud, are you sure you’re going to be able to 4X the price of deodorant? Are we sure that’s a good idea?”

Moiz Ali:
Yeah. Really what happened is by the time people started asking that question, I was like, we’re doing $1 million a month, so I think we’re okay. But I do remember we had this one question from an investor. At some point we tried to raise more money and the investor was like, “The entire natural deodorant industry is something like 30 million a year. So why would anyone be interested in investing in a category that only has $30 million a year run rates?” And I was like, “If the natural deodorant industry is $30 million a year, we’re the entire natural deodorant industry, we’re doing $30 million a year at this point.”

Moiz Ali:
I think from our perspective, we were like, look, there’s a lot of external factors that say we should not be doing this. Yeah, $12 deodorant is really expensive. The entire natural deodorant industry when we launched was Tom’s of Maine, which was $30 million, and we’re just like, I think this is a product that people want and need and let them tell us that we’re doing something wrong and we’ll try this anyway. That’s how it worked out. By the time people were telling us it’s a $30 million [inaudible 00:40:45] market, we were doing that much revenue.

Shaan Puri:
You’ve said the phrase, customer service, a bunch. People were playing the drinking game at home, taking a shot every time you say customer service, they’re dead. A lot of people like, we just got acquired by Amazon. Amazon has this phrase, customer obsessed, is what Jeff Bezos says. A lot of people say that, but I think you guys are doing some things specifically that your actions back up your words. Some little things like, first the stories you told about reaching out to customers two days later saying, what could we be doing better? Sending them different formulas to try out, working with them. But also right when you sign up you get a funny email from you guys. Talk about some of the things you guys have done on the customer service or customer obsessed side.

Moiz Ali:
Sure. One of the goals, one of the values that we really have is to try and build a human business. We want you to know that when you communicate with us there’s a human being on this side of the business and it’s not some corporate entity and you’re not going to get one of those Comcast like responses where people are like, “I don’t care about this, let me transfer you to some other customer service representative, they’ll deal with that,” and they’ll transfer. When you contact us, a real human being who sits in our office responds and then we try and build a really human element in a few ways.

Moiz Ali:
One is when you order from us, we send you this over the top order confirmation email and over the top shipping confirmation email. When you order from us, we say, “Hey, we’re popping bottles of champagne and this is fantastic.” And when we ship the order, we say, “Hey, look we’re writing your name over the Golden Gate Bridge. We’re putting a sign in our parking lot that says, world’s best customer with your name and photo on it”. It’s really over the top, meant to be playful, so you know that the brand that you’re purchasing from subscribes to your values as well, which is we don’t take this too seriously, but at the same time we’re really [crosstalk 00:42:35].

Moiz Ali:
Yeah. This is deodorant, so we know that this isn’t product that is going to make a huge impact in your life. This isn’t like having a kid, but at the same time it’s important that you use a deodorant that works and you’re buying from a brand that really resonates with you.

Shaan Puri:
You hit the scale that really matters. Now, you’re doing $1 million a month. This point, any nonbeliever at this point has to be thinking, okay, there’s something real here. The company size at the time was still pretty small. How many people were at Native at this time?

Moiz Ali:
There’s probably about five employees.

Shaan Puri:
Wow. You’ve got this business on your hands and you ultimately decided to sell. What was the thinking around that? Why decide to sell when the going is good? I’m going to ask you how you sold it, because as I’ve learned selling a company is both art and science. I’m curious to hear how it all went down, but why decide to sell in the first place?

Moiz Ali:
What would happen is that somebody came knocking on our door in about February of 2017 indicating that they wanted to purchase the business and we’re like, look, I’d never heard of them and I’m like, “Hey, we’re growing. I don’t know who you are. I think this isn’t serious.” It turned out that this was a privately held company doing $1 billion in revenue and it was very serious. So that really kickstarted the process. They started knocking on the door and like the knock became loud enough that we couldn’t ignore it any longer and that’s when the process got kicked off.

Moiz Ali:
It turned out that they were lot less serious than I anticipated. I went out to meet with them and they’re like, “Okay, great. Send us all of your financials and your information.” I sent it out in June of 2017. They don’t even reply back for like 90 days afterwards. They’re just radio silent. I follow up with them and I’m like, “Hey, is this still going on? If it’s not, no problem. Just give me a heads up because at this point we’ve started a process and we’re talking to a bunch of other parties.” I don’t say all that. I just say, “If you’re not interested anymore, no problem, just let me know.” But just radio silence, like being ghosted from an ex or from a Tinder date is what’s happening.

Shaan Puri:
Do you think they were just picking your brains to get the numbers from you and then they were like, “Great, thank you very much?” Or they were just bureaucratic internally?

Moiz Ali:
I think there was like a little bit of a brain drain going on and I think that it was also just like they have their own business and they’re like, you know what? Maybe this is too small. We’re a billion dollar business. Maybe the right person internally was like, we don’t really care about this business. I think it was a bunch of factors but at some point we started going our own way and we’re like, okay, because you knocked on the door so loud, we started our own process and we’ve got all these other suitors. They ended up coming like a month before we sold the business. And they’re like, “Okay, yeah, we’re interested again.” I was like, “No I’m not going through this again. We’re really far along in the process with a bunch of other guys and you guys don’t have the credibility to continue doing this.”

Shaan Puri:
So you’re selling the business. Do you feel like you know how to do this process?

Moiz Ali:
Definitely not. Look, there are so many different emotions that happen all of the time when you’re trying to sell a business. I was really thankful that my brother was there with me. He had just sold his business. He had hired a banker and gone through the transaction and knew what to expect. So we start this process ourselves. We create a one page document that’s like a teaser, we send it out to a bunch of potential acquirers. It doesn’t even have our name on it. They say, yes, are you interested? They’re like, yeah, we’re interested in this business. Or, no, we don’t care about the deodorant category, get out of here.

Moiz Ali:
The guys who are interested sign an NDA and we send them a book, let’s say probably 120 pages long, telling them all the information about our business. This is what our financials look like. This is how many people we have. This is where our businesses growing.

Shaan Puri:
The banker put together, or you put that together?

Moiz Ali:
The banker and our team put that together. So a bunch of people have this book and then what happens is that they send us letters of interest where they’re basically like, yeah, we are interested in this business, if they are, if they’re not, they just go away. But if they are interested in the business, having looked at our financials, they say, “We’re interested in this business. We think that we would purchase this business between, 10 million and $20 million,” or something to that effect. Then what you do is you say, you know what? These are the guys who I think are really serious about this. If some guy’s offering you 10 to $20 million and you’re doing 40 million in revenue, probably not worth the conversation.

Moiz Ali:
We take a bunch of these and I think there’s 12 suitors at the time, maybe 14 and so we say, okay, everyone come to our office in San Francisco and have a conversation with Moiz.

Shaan Puri:
This is like the Bachelor, you’re [crosstalk 00:46:53] roses and you invite them all to the party.

Moiz Ali:
Yeah. I’m not sure if they have the roses or I have the roses. I still don’t know. But yeah, we invite them all to the party and they’re here and I talked to them. Some businesses will send out one guy who’s like the head of the North America and P&G will send out like … We were squatting in my brother’s office. He has a large conference room that can probably see it like 18 people. P&G sends like 25 people and I’m just like, “This is standing room only here, we didn’t expect this and don’t expect me to pick up the tab for lunch.”

Moiz Ali:
So we go through this process with a bunch of these guys and then what we say is like, look, if you’re still interested in this business, here’s all the diligence that you’d need in the business. Here’s all of our contracts. Now we’re a two and a half year old business, we barely have any contracts. We have probably three material contracts, no change of control provisions. There’s very little data in the data room and we say, “Go through all the data, here’s the draft merger agreement, mark it up, give us an offer and you should be ready to sign that. You should be ready to close that offer the day you give it to us.” Look, that’s really aggressive, incredibly aggressive. We’re basically like, “Look, we’ve got this awesome business. You want it, there’s a bunch of you guys, there’s one of us …”

Shaan Puri:
12 of those guys in that room are paid to do a 90 day diligence process-

Moiz Ali:
Yeah, exactly.

Shaan Puri:
Now, what am I doing here?

Moiz Ali:
Yeah, that’s exactly-

Shaan Puri:
A job here.

Moiz Ali:
We’re super aggressive about it. During that process, a couple of the guys drop off for one reason or the other. A couple of guys realize, “Hey look, we’re not going to be aggressive enough. We think that are going to be better strategic fits for this business and it’s not worth our time to put in an offer.” A couple of guys just get scared at the price. I remember one potential acquirer was looking at one of our competitors and they were like, “Your competitor’s selling for $5 at Target. How are you …” At this point the entire business is online, we sell deodorant and only deodorant. We sell it only through our own website and we sell it only in the United States.

Moiz Ali:
One of the things that we sell is like the sizzle. We’re like, look, P&G, do you know how to sell into target? So, imagine how Native would do at Target. Do you know how to make other products with the word Native on them? Help us do that, and we can make this a bigger business. Do you know how to sell in Canada? Great. This is going to be a bigger business. So we sell that sizzle-

Shaan Puri:
That’s strong, I like that.

Moiz Ali:
Yeah, that is really strong. A couple of guys are like, “You know what? Your competitors are selling for $5 at Target, you’re not going to be able to sell next to those guys, so we’re out or we drop our price by half.” Then push comes to shove and P&G hasn’t done a deal in like 10 years. This is the first acquisition they’re making in 10 years. Our banker’s like, “Look, I have no idea how these guys operate. I know how Unilever operates and I know how these private equity firms operate, but P&G, nobody’s seen them in the world in 10 years.”

Shaan Puri:
[crosstalk 00:49:30] Viagra just to do a deal like this.

Moiz Ali:
Yeah, exactly.

Shaan Puri:
They’re not used to this.

Moiz Ali:
Yeah, exactly. Look, I don’t even know how to get a reference on P&G to see if they’re serious because no one has seen them in the market.

Shaan Puri:
At this point had you put out a price yourself, like this is our target.

Moiz Ali:
No.

Shaan Puri:
You’re letting everybody-

Moiz Ali:
We’re letting everyone come in with theirs.

Shaan Puri:
What did you internally think about this? Are you dreaming about a certain number? How are you internally think about the price?

Moiz Ali:
Great question. I’m not sure. There are times where I’m like, okay, a month closes and I’m just like, we generated 4,000,000 in revenue this month, add another zero to that price buddy, add two more zeros. Then there’ll be like one bad day where I’m like, you know what? We had this like hiccup because of operations and something happened and now I’m like, I’ll take anything, somebody come in and give me anything. It’s like a roller coaster and the roller coaster isn’t even week to week.

Shaan Puri:
It’s hour to hour.

Moiz Ali:
During diligence people are asking for random … There was one company that asked for every email that we’d ever sent out, a copy of it. The open rate, the click through rate and the revenue generated from that email. I’m like, “Look at this point, we have a million customers, we send out millions of emails a month and you want this from the beginning of the time that we launched the business?” They’re like, “Yeah, that’s just to make the first board meeting really productive.” And I was like, “The board is going to go through emails?” Because even I, I look at that, but I don’t look at that on like a quarterly basis.

Moiz Ali:
So you’re up at 2:00 AM preparing these things for them and there’s like a bunch of these acquirers so there’s a bunch of them. The guys who are most interested in the business ended up dropping out during the acquisition conversations. I was like, “I don’t know why you did that.” All of these things are happening and usually it’s like a roller coaster. The company that you thought was going to marry you, gets up to the altar and they’re like, “We’re out of here.” You’re just like, “Oh my God, who’s going to marry me now?”

Shaan Puri:
I remember when we were going through the process just now, because it is pretty fresh on my mind it’s just a couple months ago, there are these moments where you’re having a conversation and certain things, it’s like they say something and in your head you’re like, this is the moment I need to say something, and whatever I say right now is going to really actually swing the way this whole process is going. And there are these key moments that are just happening over a coffee or on the phone or whatever. Do you remember any of those kinds of conversations or key moments along the way?

Moiz Ali:
Yeah, well there’s two. One was with everyone, which was an issue we had with our trademark, and I’ll get to that in a second and two, I remember one guy who is like the CEO of the company was trying to judge my marketing ability. He’s like, “If your brand was represented by a celebrity, who would that person be?” I was like, all right guys, this is one of those things where you think either I’m intelligent or I’m an idiot. I remember I hadn’t even thought of this but I was like, “Michelle Obama.” And he’s like, “Okay, you got it right.” He’s like, “That’s a good answer.” And I was like, great.

Moiz Ali:
But in reality we had a trademark issue until we sold the business. This was a serious part that delayed the transaction with everybody and that I think made it harder for us to sell the business. We simply didn’t own our trademark until five days before we sold the business. We bought our trademark on like … We sold the business on November 8th, on November 3rd we purchased the trademark and that was the one thing that we still had to do in order to sell the business. P&G was like, “We will not buy this business until you own your own trademark,” which was completely fair of them and we were negotiating with the person who owned the mark-

Shaan Puri:
Simultaneously.

Moiz Ali:
Yeah, exactly. In order to get that.

Shaan Puri:
I feel like a deal is not close to being done, it’s not real until the deal almost falls through. That’s like the test. [crosstalk 00:52:59] it’s not a real deal. Michael Birch was sitting where you’re sitting a couple of weeks ago and he sold Bebo to AOL for 150 million bucks. I didn’t ask him this on the podcast, but I’ve asked him this before. I said, “Was it smooth? How did it go?” He was like, “I just let the bankers do their thing. It was such a big transaction that there’s all these lawyers, all these bankers, it’s not pleasant, but we got to the very end.” With Bebo, which was a social network, they started getting sued by the music companies at the 11th hour.

Moiz Ali:
Oh God.

Shaan Puri:
The music companies knew, hey, these guys are about to sell, we have all the leverage in the world right now to just go ahead and sue and they’ll have to pay. They have to settle because they want to close the deal. They go and sue and I think it’s like a $15 million settlement is like needed or whatever. So Michael goes to the investors, the VCs, and he’s like, “Hey,” I might’ve got the numbers wrong, but it’s something like 10, 15 million bucks. He goes to VC’s. He’s like, “Hey, look to close this deal we really need to just settle this issue and then we can go sell this company. These guys are not going to go away unless we do this.” And they were like, “Yeah, you’re right. You really got to settle with them.” And he’s like, “We got settle here.” And they’re like, “No, I think you’re going to settle with them.”

Shaan Puri:
So he ended up, basically out of his own share, had to like settle with these companies in order to settle the lawsuits to get the deal to close. Of course he holds it against those VCs to this day.

Moiz Ali:
Definitely.

Shaan Puri:
But these are the crazy stories that happen at the end of the deal, right when you think you have it.

Moiz Ali:
That’s really terrible because I never felt it wasn’t a, we, with my investors. They were all like super happy and super excited about getting the deal done. If one of our investors had been like, “I don’t love this and I’m going to try and vote no and fuck this up,” I would have been devastated and felt there was a knife in my back. So I don’t know who those investors are [crosstalk 00:54:46]. He should mention their names everywhere he goes.

Shaan Puri:
Yeah. That mindset, your brother’s told me about this. He like, “My brother Moiz, he’s great. He does a great job, but if you flip the temper switch, he has this retribution streak. “If you wrong me, I will publicly right the wrong.””

Moiz Ali:
For the next 50 years I’m devoted to that.

Shaan Puri:
An example of it.

Moiz Ali:
Yeah, sure. I’ll give you an example right now there’s this company called (beep). They said no to us because I was like, “Hey, I want to launch this refillable deodorant,” early on when we were launching the business. I was like, “Yeah, we’re launching this refillable deodorant,” and they were like, “No, this is terrible. Get out of here.” In the last six months, I don’t even remember what, but they invested in a refillable deodorant company and I’m like, well, I see that you’re doing a refillable deodorant, now, it’s not such a bad idea, huh?

Shaan Puri:
You reached out to that-

Moiz Ali:
No, I didn’t even say anything. I was like this like stands by itself. You know that you’re doing this and I know that you’re doing this, but do what you got to do. But you had the opportunity four years ago.

Shaan Puri:
I also heard the sort of, once you get to Procter and gamble, obviously they have a much tighter view of a risk tolerance around Twitter and some of some of your tweets. How’s that been for you since joining the mothership?

Moiz Ali:
Basically what happened was (beep) sent us this letter and so I tweeted it (beep) and I was like, “If you’re wondering when I decided to destroy your business, it was when you sent me this letter, before I was like, you guys are a nut and I don’t care about your tiny business and I’ll let you exist, and now it’s personal. My life’s mission is to make sure that you regret sending this letter. Every morning you should wake up and you should be like, fuck, I sent that letter and now my life is fucked.” (beep) called someone at P&G and they’re like, “You have to take down these tweets.” And I was like, “Why should we take down these tweets? We should show how competitive we are. When people come after us, we like go after them 10 times harder.”

Moiz Ali:
Like Donald Trump is always like, “We’re building this wall 10 feet higher.” That’s basically what I was like, “You’re coming after us, we’re building this wall 10 feet higher.”

Shaan Puri:
Where did they cover him? Where did that strategy or mindset come from? Is it like at an early age, were you doing this with your brother, like competitiveness with him or where is-

Moiz Ali:
I think it came from him. I think he just does a better job of hiding it. Yeah. He’s just more charismatic than I am. So he says it and everyone’s like, “Oh, you know what? Solomon’s like funny and this is good and good humor.” When I say people are like, “Moiz is vicious.” He’s just more charismatic so it comes off nicer, but he’s got it himself for sure.

Shaan Puri:
I love it. Okay, so the offer does come through, Procter and Gamble was serious, take it from there. How did it end? How did it feel and where are you guys at now?

Moiz Ali:
Yeah, sure. I think one of the issues with these types of companies is always about like with the deal is like deal certainty. How comfortable are you that the other guys are going to close or try and do something at the 11th hour? Because if you say no to all of these other companies and then your deal doesn’t get consummated, you come back and you’re like, “Hey, do you want to do a deal?” They’re like, “What’s wrong? Why did the first acquirer not end up buying you? I’ve got the leverage here.”

Shaan Puri:
Damaged goods.

Moiz Ali:
Yeah, exactly. There was a lot of deal certainty with P&G. They were fantastic partners throughout this all. They came out to San Francisco, we met with them, we went to dinner with them, they made the offer, they came back again before the deal signed and they’re like, “This is how it’s going to be post acquisition. This is how you’re going to report to us. This is how we’re thinking about the business. How do you feel about it?” And I was like, wow, you guys aren’t trying to hide anything or be at … You guys are just genuinely nice Midwestern people who are honest and mean what you say.

Moiz Ali:
That gave me a lot of comfort going into the deal and that was wonderful. As soon as we bought the trademark, I basically knew the deal was going to … There was only five more days, but I knew the deal was going to close. Since then we’ve grown the business a ton. We’ve launched into Target and to Walmart. We’re the number one selling natural deodorant in Target, the number one selling natural deodorant in Walmart. Native coconut vanilla is the bestselling deodorant skew at Target over the last 52 weeks, and we haven’t even been there for 52 weeks.

Shaan Puri:
One question on this … It’s not flavors, what’s the-

Moiz Ali:
Scent. Yeah.

Shaan Puri:
I saw this something like a pumpkin spice latte scent.

Moiz Ali:
Yeah, definitely.

Shaan Puri:
Is this just like your marketing genius or what-

Moiz Ali:
Yeah, it’s super fun, because basically we’re like, look, why are we taking this stuff too seriously? You can use a cent for a season and you don’t have to go through the entire deodorant stick before you can get rid of it. The same way that you’re not like … If you open up a diet Coke because you want to treat yourself, you don’t have to drink the whole thing, or you don’t have to have an entire Snickers king size bar. So we’re like, look, why don’t we launch these really fun scents? They work and they’re effective. They’re good for PR and hopefully you find out about the deodorant through Native pumpkin spice latte and then you’re like, “This is a great deodorant. I don’t want to smell like pumpkin spice latte in April, maybe I should buy the coconut and vanilla scent.”

Shaan Puri:
This is what I love about businesses and startups is, if you’re Procter and Gamble, you’re not afraid of Unilever. You should be really afraid of the Moiz at his dining table thinking up pumpkin sized latte scents and getting PR and really getting this thing off the ground. One or two people in a bedroom-

Moiz Ali:
Definitely.

Shaan Puri:
Who are actually the threats to these like giant multibillion dollar companies because you have creativity and you have nothing to lose.

Moiz Ali:
Yeah, exactly.

Shaan Puri:
Fresh perspective, and like all the things you’ve told me so far, just fall into those buckets. I’m listening to this, I’m taking one thing away, is like, do not be afraid and do not conform to the practices of the industry. You didn’t know anything about deodorant. You went in with basically no money, no staff, no nothing, and you figured it out. What do you think is the message for the next you, who maybe doesn’t have this confidence today? What is your message to that person who’s thinking about an idea like this?

Moiz Ali:
Yeah, it’s really, look, stop listening to other people and start listening to yourself. I remember when we were growing the business, people were like, look, you’re not going to be able to sell this until you launch a second product outside of deodorant that really is a home run again, so you can prove this is a repeatable model. Other people were like, “Hey, you need to do influencer advertising. This brand is not going to have any legs and no one’s going to care without influencer advertising.” Other people were like, you need to launch pop up stores, like the Allbirds and the [inaudible 01:00:50] ways of the world. That’s the only way to do this.”

Moiz Ali:
Other people were like, “You have to fundraise, what are you doing? This isn’t a real business until you’ve got some cap, like millions of dollars in your balance sheet.” And I was like, “You are all probably right, and I don’t have the time for any of this stuff. We have a business that’s working and so give your advice to somebody else. I know what’s working in my company and so I’m going to keep doing that. I don’t want any of this advice. I appreciate the advice. I’m not going to take any of it.” Right. It’s really hard to be like, hey look these other people that have a lot more money than I do, and that have a lot more experience than I do are going to give me advice and I’m going to reject it and I’m okay with that.

Moiz Ali:
You have to have a lot of independence and be okay with living and dying on your own intelligence. For me, what gave me a lot of confidence was, things were working early on and so when people were giving me this advice I was like, “Look what’s working for us is working. We’re going to double down on that instead of doing anything that you suggest.” For us we had a great safety net of like success already or like momentum. If you don’t have that, trust your gut, nobody’s going to be able to come into your business, talk to you for 20 minutes and give you an amazing idea that you haven’t thought of.

Moiz Ali:
People would be like, “Have you thought about influencer advertising?” And I’m like, “I only live and breathe this business every day, from morning tonight, what a genius idea. Tell me more about this.” I was like, “Yeah, I’ve thought about that but we just did $1 million a month and we’re going to try and do $2 million a month, next month. So I’m focused on that and don’t really have the time to contact influencers on Instagram.” Just got to trust your gut and like listen to yourself. Other people’s advice can help you get through the rough patches and I think our investors did a great job of that. But ultimately like it’s up to you and you live and die by your own merits.

Shaan Puri:
I love it. What was it like when the deal closed, day off, money hits the bank, this is my first million. Yeah. People want to know what changed? What did it feel like? What did you do? Did you start balling out of control? Tell us you started balling out of control a little.

Moiz Ali:
Sure. Yeah. Let me tell you the story of one of our investors. I’m telling all of our investors will selling the business. It’s a couple of days before we actually close the deal. Our first investor, this Chinese guy named Waco, doesn’t speak a ton of English and the nicest guy in the world. I text him and I’m like, “Hey, I got to chat with you. Do you have a few moments today?” And he’s like, “Is this urgent?” I was like, “Yeah, kind of. I need you to sign documents in like the next 24 hours.” So he’s like, “Okay, great. Call me.”

Moiz Ali:
I call him up, I was like, “We turned your 50k to $1 million.” And he’s like, ‘Fuck, this is awesome.” He’s like, “All these people in China told me I didn’t understand American consumers. I’m going to go back to them and show them this deal. Fuck them.” I tell him, “I need you to sign these docs in the next 24 hours.” He’s super excited. At the end of the call, he’s like, “I asked you if this was urgent via text message earlier because my wife just gave birth to my first kid, but this is the best news I’ve gotten all day.” I’ll never forget him saying that.

Moiz Ali:
Anyway, we closed the deal, money hits the bank. We haven’t raised a ton of money at that point. We’ve raised about $500,000 so like 97% of the company is controlled me, and my family’s in town to help celebrate, which was really fun. We’d go to this Thai restaurant for dinner, which is really fun. But what’s shocking is like how little life has changed. I still live in the same apartment. I still have no car, I still rent, very little of my life has changed despite the financial windfall. One of the things I realized afterwards, all these people are like, oh, being rich is not that great and I’m like, no, fuck you, you just say that because you have money, you can’t appreciate it. You dumb idiot. I’ll be able to spend it really well.

Moiz Ali:
Then you’re like, you know what? The journey of the friendships I made with all the employees that I have and like most of the team is still there, when we were building Native and we … The month that we sold the business, we did like $1 million in net profit, which was insane. $1 million in net profit. I was like, if a bus hits me on the way to work, I’m still going to get to work because I love this job. There were so many great things that were happening with the business and it was that journey that was really amazing and the thing that I really appreciated. Even today, I’m still running Native on a day to day basis. It’s like the people that work there and how devoted they are to the business. That’s amazing.

Moiz Ali:
Seeing a bunch of people sit down and they’re like, “This is a problem. How are we going to solve this? How do we delight customers?” We had this contest internally to make another email funny and very human and I was like, wow, these people care, understand the business and want to make this company better. I have no idea how they got that way. I have no idea how they were motivated to do that, and they’re that way and it’s really fun to see that and that meant so much more than the money. That’s still surprising to this. Even when I say today, I’m like, this guy’s an idiot, and that’s myself saying it, but it did.

Shaan Puri:
I trust you when you say it, because there’s a lot of people that say that I’m like, okay, you don’t have to say the politically correct thing around me, it’s cool to just be like, “Hey, money is amazing. Yeah I do this, this and this, this changed. But when you’re saying it, I believe you, I believe what you just said because I think you’re wired like me and that you thought it would be X and it is good, but man, why is a lot actually has made a bigger impact on me.

Moiz Ali:
Yeah, it just makes me happier. Being in the team makes me happier. Now when I go to restaurants, one of the best thing is I’m just like, I’ll order whatever I want. I don’t care if it’s on $14 or $22, I’m like I don’t care, I’m taking the $22 one because I want shrimp tonight. That’s definitely something I do. I try to spend a lot more time with my family so I go and fly and visit my family more often because I’m less worried about where the next paycheck is going to come from, and I’m less worried about the cost of airfare.

Moiz Ali:
It’s not like nothing has changed but it’s not like there’s a Lamborghini sitting in my garage or I own a car. It’s just like things are easier when it comes to doing what you want to do, but at the same time you realize what you want to do is build those businesses and that’s like an amazing, amazing high.

Shaan Puri:
If you were 21 today, starting from scratch, you have the intelligence you have today, you have the knowledge about the world you have today, but you don’t have the resources and you have all the time and exuberance of a 21 year old. If you were 21 today, what business would you want to go start? What space would you want to go into?

Moiz Ali:
That’s a great question and I think that can be answered in a bunch of different ways. If I had no resources, I would say start drop shipping something, find something on Alibaba that you can purchase and sell more in the United States on Amazon or some something else and arbitrage that difference. I’ve seen so many people do that and so many people do that well. That’s a great way to get your feet wet into e-commerce and understand what’s going on without having any personal capital at risk. If you’re more ambitious and you’re like, look, I can quit my job and I want to do something, I can tell you for me, I can never start a new business until I quit my old one.

Moiz Ali:
I would say, look, e-commerce is amazing. You don’t need a developer. Everything is really cheap out of the gate. Figure out product market fit and be obsessed with your consumer and you will find something that works. Even if you would have to go through a bunch of products and you’re like, do you know what? I tried to sell them shampoo or I tried to sell them a toothpaste and that didn’t work out, now I’m trying to sell something like deodorant, go for it. Be obsessed with consumers and and the biggest problem that I think direct to consumer businesses have is that the founders disconnect themselves with customer service. Then you’re just like these CPG giants where you’re like, “I don’t have a direct line of communication with people who use my product every day.”

Moiz Ali:
We have that direct line. 1,000 people email us every day and we’re like, “Hey look, this is what they’re thinking today.” It gives us incredible insight into what we should be making and how to fix our product. So I think e-commerce is amazing. I would do that again, I love e-commerce. If you don’t have any resources and don’t have any technical knowledge, you can still do e-commerce. The one feedback I’d give if you chose that category is, do not disconnect yourself with the consumer.

Shaan Puri:
I love it and if I’m listening to this and I’m like, this guy is awesome. I want to talk to this guy, I want to send him my ideas, I want to send him my company right now. How should they get in touch with you and really who should get in touch with you? Who do you want to hear from?

Moiz Ali:
Sure. Look, if you’re in eCommerce and you’ve got some legs under you and you’re thinking about raising money or looking for an advisor or just want to bounce ideas off of, please reach out to me. I love when people have gotten skin in the game. I think the hardest part for me is to have conversations with people who are still, I used to be a lawyer, who are still lawyers and they’re like, “I’m thinking about doing this.” I’m like, “Look, if you’re thinking about doing this, quit your job. If you want to do this, quit your job. That’s the biggest telltale sign that you’re in. If you’re not in don’t go around asking everybody.” [crosstalk 01:09:09] “Should I do this? Should I do this? Should I do this? Do it or don’t do it. That’s your own call.”

Moiz Ali:
That depends on your personal financial situation, how old you are and how much energy you have and all bunch of things. But if you’re in and you’re like starting a business and it’s got some traction and you’re like, “Hey, how do I start scaling this? How do I get from that 100k to $1 million, happy to answer any questions. Happy to talk to you. You can find me on LinkedIn. Certainly on @moizali on Twitter. Love talking e-commerce. You and I are in this room on a Saturday. I had a bunch of e-commerce calls earlier today. This is what I like to do on the weekends.

Shaan Puri:
I love it. All right man. This is fantastic. Thank you so much for coming on.

Moiz Ali:
Thanks for having me.

Shaan Puri:
(singing)