Welcome to The Business Academy. Happy 4th of July to all of you who celebrate. The US is an amazing place. I'm very grateful for it.

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Have you heard of Native Deodorant? It's one of behemoth Proctor & Gamble's fastest-growing brands.

Native Deodorant was founded by Moiz Ali in 2015.

When Moiz started the business someone asked him "What do you know about deodorant?"

Moiz: "I know nothing today. But in 6 months I'm going to know more about deodorant than anyone in the world".

I've met Moiz. He's one of those few people in the world who seems like they can create a reality just through the words they speak.

He's incredibly confident in the things he says. He's whip-smart. And he backs up the things he says with extreme action.

Starting a business is confusing. There are a million things to do. So where does Moiz start?

First, he found a provider on Etsy that was selling healthy deodorants and decided to white labels their product. This Etsy seller had solved the healthy ingredient problem but had a poor brand.

Moiz was going to provide a healthier deodorant and build a valuable brand around it.

He tested everything. He would ask for changes in the make-up of the deodorant and then he would test it with him and his brother. They would put on the deodorant, then run around the block to get sweaty. And they would see which sample worked better.

In one year Moiz grew the business from $50k per month in revenue to $1 Million per month in revenue.

One element that stands out to me about Moiz story is he refused to grow the team. He was focused on keeping a small elite team who could run the company. At $30 Million per year in revenue, he had only 8 full-time employees

Apparently Native deodorant is on track to do over $1 Billion in sales this year for Proctor & Gamble.

Some things playing in Moiz's favor

• he picked a great product, here are some reasons
  • it's relatively cheap to ship (it's light and small)
  • people regularly need to replenish their deodorant because it runs out, which means you have guaranteed repurchase from loyal customers
• this was the earlier days of Facebook ads when there was less competition and therefore prices were lower

Moiz caught lightning in a bottle and sold the business for $100 Million just a few years after starting the business.

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🔑 One great read...Joel Greenblatt's Greatest Investment (link to article)

In 1999 a world-famous investor and a deli employee found the best bank of the decade. This is their story​

Some explainers for this article...

In the article, he talks a lot about ROE. If you're not familiar with the concept, here it is explained very simply:

Imagine you have a lemonade stand:

• You get some money from your parents to start the lemonade stand. This money is like the "equity" or "stockholders' equity" for a company.

Now, let’s say you use this money to buy lemons, sugar, and cups, and you start selling lemonade. At the end of the year:

• You want to know how well your lemonade stand did. Specifically, you want to see how much money you made compared to the money you got from your parents.

ROE works like this:

• It shows how much profit you made for every dollar your parents gave you. If you made a lot of profit with a little money from your parents, that’s good! If you made a little profit with a lot of money, that’s not as good.

Using the numbers from the table in the article:

• In 1999, the ROE is 9.05%. This means that for every dollar the company’s owners put in (equity), the company made 9.05 cents in profit that year.
• In 1998, the ROE was higher at 10.90%, meaning the company made 10.90 cents for every dollar of equity.
• In 1997, the ROE was even higher at 11.79%, meaning the company made 11.79 cents for every dollar of equity.

So, if you were looking at these years, you could say the company was a bit less efficient in 1999.

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have a great week,

Sieva

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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