January 19 0 648

Moiz Ali: Building, Scaling, and Selling His Online Store to Procter & Gamble for $100 000 000

Today we are sharing an interview with Moiz Ali, an online marketer, and e-commerce entrepreneur. Moiz is the founder of Native Deodorant which was acquired by Procter and Gamble for $100 000 000.

In this interview held by the team at AW conferences, Moiz Ali explains why he switched from being a lawyer to an online marketer, how he got into e-commerce, and how he was able to build, scale and exit his e-commerce brand for a 9 — figure paycheck. A lot is covered in this article and we hope you take a bunch of tips from it.

How did you get started with your career after studying law at Havard?

I remember in the year that I was graduating from Harvard law school, my brother Suleman had just sold his first company (Tiny Co) and so the news of my graduation got overshadowed immediately. He was an entrepreneur and his business was very relatable. He was making free-to-play mobile apps and games for iPhone and Android. He used to talk about numbers and I was always interested to hear that. Things like, how many monthly active users do you have? How many daily active users do you have? What drives revenue and what doesn't? And to me, that was always way more interesting than the stuff that I did as a lawyer.

Working in law was never interesting. My brother and father would always talk to me and they'd ask, "Why are you working for other people? You know we should be working for ourselves. You're never going to become a billionaire working for other people". Finally, Steven Abt, one of my law school classmates who I was always talking to about starting our own business left being a lawyer and joined me to start an online business back in 2012. We founded Caskers which was an online store for liquor which was followed by Native.

How was it being an online marketer and e-commerce founder in Silicon Valley? How was it when it comes to getting backed up by different investors, and life in the Silicon Valley startup cocktail parties?  Weren't you the odd man out in Silicon Valley?

It felt really embarrassing because other people were raising money which made us look clueless.

People thought what we were doing was wrong and not sexy but that wasn’t the case at all. All of our investors were really happy and I was really happy as a shareholder. About Silicon Valley life, I wish more founders would focus on their own returns rather than focusing on building the next big thing and raising money.

How did you deal with the external pressure at Silicon Valley? How did you keep your eyes on your course and not get affected by that environment?

Yeah, the honest answer was I was completely affected by that. You know I come home from those cocktail parties and question myself, "I’m doing everything wrong? Or, should I be raising money?"

We had conversations with a bunch of VCs in San Francisco because I thought what we were doing might be on the wrong path. So I tried to see if we could and get that $10 000 000 cheque. Certainly, we could have, but you’ve got to look at what is important to you. For me, I wanted to be able to exit this business and have a good exit for everyone involved. I didn’t want to work there for the next 25 years while going through the ups and downs of the economic cycle and I needed to have independence.

What gave me that faith was often just the increasing size of our bank account. We started out with $500 000 in cash. We also raised $500 000 from investors over the life of the business. When we sold the business, I think we had $10 or $12 million in cash. Our bank account was going up and I owned the vast majority of that bank account. So I knew whatever we were doing was right. How could we be having $12 000 000 after two years as opposed to $500 000 two years ago? How could I be wrong about this? And so that really gave me a lot of confidence. I like to say that what I was doing was right, everyone else was wrong.

Has there been a shift in the way e-commerce is pursued in Silicon Valley? Especially when it comes to funding?

Fundamentally, VCs have gotten smarter about this. They're like where are our exits? You know Brandless didn't have a good exit, Outdoor Voices had a rough time and I think that was pre-COVID. In pre-COVID, we realized that direct-to-consumer businesses like e-commerce may not be the same type of venture-backable business as other types.

I think today VCs are like, "How is this business resilient, and what is the exit strategy for this business?" They hardly fund a business where founders aim to figure it out 15 years down the line. That's not okay for anybody anymore. They're gonna ask when will the business exit and what is the genuine path to profitability? They need to see the exit in the coming 2 to 5 years and not the next 5 to 10 years. I think that COVID has probably moved some businesses 2-3 years ahead.

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For you Moiz, the term exit is kind of it's dialed into your name and personal brand. You even referenced that you were positioning Native for an exit very early on. Where did that mindset come from? Was it through being a legal associate or?

I guess from my perspective I had seen my brother's business, TinyCo going through a bunch of ups and downs. TinyCo raised $18 000 000 and went on an amazing trajectory but all of a sudden, it struggled to maintain its momentum. They went through rounds of lay-offs, raising debt and there was a lot of stress involved with my brother. There were a lot of questions like "Is this business gonna work out or is it not?" It took him a few years to turn it around and make it a really successful business again.

So from my perspective, I knew that I may have to go through that but at the same time, I don't want to raise $40 000 000 and still have to work my way out from under $40 000 000.

I wanted my business to be lean and more successful early on, and that's sort of where I was coming from. But at the same time, I was also coming from the fact that I wasn’t sure if I could raise $18 000 000. People weren't gonna write me an $18 000 000 check early on for selling deodorants online. A lot of people don't believe in that and so my business had to be profitable early on. We were generating a ton of cash. We were able to pay our employees. We didn't have to worry about that kind of stuff. At some point, I was also like, "Okay if someone gives me $30 000 000 or even $10 000 000 in funding, what am I gonna do with all this money?." We were operating the business as successfully as we could, we were tapping every marketing channel available at that time. So, I couldn’t figure out a way to spend an extra $10 000 000, and where it would take us to?

What an incredible position to be in. So obviously you've said it and it's clear you started off lean. What was your staffing structure like? What was outsourced? What did you rely on the most in that sense to have on-hand staff and then where was outsourcing done?

Very little outsourcing. We had five customer service agents working in our office and we did outsource a little bit of that as well. But in reality, the five guys that we had were answering the customer’s questions. All paid advertising happened in-house. Not only did advertising happen in-house, but I also handled all Facebook and Pinterest advertising by myself. I spent over $30 000 000 myself on Facebook ads and I was incredibly hands-on on that. In fact, there was nobody else on the team that touched a single Facebook ad the entire time we ran the company independently before being acquired. We were a very hands-on team.

Impressive! Where did that media buying skill set come from? Did you learn from Youtube or were you learning secretly in Facebook ad buyers groups?

No, it took a lot of trial and error. When you spend $500 of your own money on Facebook ads and it doesn't go well, you're like, "I'd better learn this because I just lost $500." I could have gone to a really nice dinner or gotten a bunch of great Jordans but I lost $500 over an hour or like over a day. And it all went to Mark Zuckerberg and I better learn how to do this and it took a lot of trial and error.

What was your media buying strategy? Can you share some insights on how you approached ad buying?

It was nothing crazy. We were just diligent about it and I think not having an agency removed a bunch of agency costs that you'd ordinarily have. I looked at the ads consistently. We really tried to use user-generated content early on, back in 2016. We got customers to record videos in their houses about using Native Deodorant and we used that for Facebook ads. We had a ton of reviews which we also used in our Facebook ads. I guess we were doing things that people are doing today. We really emphasized reviews and user-generated content.

What were some of your go-to methods to make sure that you can have customers coming back?

So for the first year and a half of the business, I emailed every single customer personally to know what they don't like about our product and how we can make it better. There was this software service called Trello that I used for emails and data analytics. It has a feature for Cohort analysis that helps you understand when your consumers are buying, when they're going to buy again, how many are buying and so much more data. It really helps you understand early on whether you're creating a great product or not.

So when we were selling our business, we knew every number that was going up; our revenue, our data, and our customer numbers were getting better every month. Our customers were spending more money out of the gate and they were spending more money over their lifetime. The customers who would buy in the current month were more valuable than those who would buy in the previous month, and that rarely happens for businesses.

We're selling a really low AOV product, so we could not have afforded to pay for new customers every single time so we had to rely on customers coming back to our business. We went from a 20% repeat purchase rate early on in the business to more than 50% by just working on our products and working on customer retention strategies.

Incredible! Did you ever build in referral programs or like celebrity ambassadors of the product?

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We did that really late in the game. I think we did that when we were about $1 000 000 revenue a month. I remember talking to a referral service asking them when we should do that and they were like, "We think we should start building when you’re generating $100 000 per month." Well, we were 10x that so it was a bit late but we started anyway.

Referrals generated 4% of net revenue generally. It wasn’t insignificant, but it didn't move the needle. It wasn't like going from a $10 000 000 business to a $30 000 000 business on the back of just our referral program. And so I guess it was nice but it wasn't critical.

You entered the deodorant industry and completely disrupted it. What are the signals that you look for before entering into an industry?

I look for an industry where I think that incumbents have not been innovating in some time. And that's a ton of places. So for me, I look for places where whenever I'm trying to buy things, it's harder than it should be. I remember with deodorants, I wanted to use a natural deodorant. I did research and there was not a single brand that I discovered that offered natural deodorants. That's really how Native Deodorant got started.

What’s your advice for people who get stuck in the analysis paralysis mode before launching a business even when the market is there. What's your advice for some people who just overthink it, get in their head, and can't actually get to market?

I think they should just go and launch everything. They should go launch today and stop making excuses for not selling and getting real revenue. Create a landing page and start selling products, even if you don't have that product made already, you can pre-sell it. If you can get it made in the next week, great. If you can't, then refund everybody and you'll have an understanding of whether this will work or not.

Go launch your product and see what happens. When we launched our first deodorant and we had a 20% repeat purchase rate, what we realized was that there was a market that was interested in the product and that we could sell the product online. The $12 price point worked but initially our product was not good enough to build a huge business. What we did was fix that product.

So we launched by selling a product that we were ultimately not proud of. Today our deodorant is much better than it was 4 years ago and we realized that by launching a product and getting feedback. There is no excuse for not doing that.

When you're wrapping your head around new ideas or have something to consider. Who do you surround yourself with? What types of people do you put yourself together with to feed or bounce ideas with?

When we were running Native, I started hosting an e-commerce brunch once a month and we would host people in the e-commerce industry every Sunday. It was crazy because there were businesses that were doing $50 000, and there were businesses that are now doing $200 000 000 that showed up to that e-commerce brunch. We were sort of all over the place and we really learned from each other. Everyone was sort of going through the same problems like; how do you scale your marketing, how do you scale your operations, what are the pick and pack challenges and shipping challenges that we all suffer from?

It was really great to have that community and I remember every time I'd go to that brunch on a Sunday, the rest of my Sunday I'd go back to work because I just got 12 great ideas that came out of this thing. It was really inspirational and I love doing that type of stuff. I feel like when people are excited about their businesses, I get really excited about mine or their own and it brings in that passion.

Is this kind of what has evolved to the new podcast that you launched?

I have launched a new podcast called Exit Strategy. Has it evolved into that? I'd say a little bit. A lot of the questions that I asked during the podcast are questions that we would ask in that brunch which is like, "What are the marketing channels you use? How are you scaling that? What are the troubles that you're facing? How are you getting over that?"

So it's been a lot of fun and a lot of those people that I interview on my podcast have sort of come to those e-commerce brunches in the past and it's great to chat with them. That's a great way of just reconnecting with these people that I've been in the trenches with for a long time.

You're in a very unique position after exiting your business. Are you working on anything or are you just taking a break? What's it like?

Right now, I'm certainly working on the podcast, advising some businesses, and investing in some businesses. I invested in this women's bra company called Pepper which I'm really excited about. It's by two girls who went to NYU Business School and it's so fun to watch them grow. They're 10x better operators than I am and it's great to see that.

Conclusion

We thank Moiz Ali and the team at AW conferences for this informative interview. Moiz has generously shared a wealth of knowledge and hopefully, we believe that a lot of our readers have got a lot of useful insights, and tips out of this.

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