How I Manage My $100M Portfolio In A Google Sheet | ft. Ali Moiz
Real Estate, Shopify Apps, and $100M Portfolio - November 14, 2023 (over 1 year ago) • 01:09:46
Transcript:
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Shaan Puri | I texted your brother and said, "Hey, I'm about to record with your brother." He got progressively more truthful. He said, "Tell him I said hi." Then he said, "Tell him I said honor the Ollie name." Finally, he said, "And tell him to stop. That one's his advice."
So, yeah, I've delivered the message.
Alright, we have Moiz Ali here. You've been on the pod before. People know you because you created Native Deodorant, which is sold everywhere I look—in Target, online, and in my wife's bathroom. It's there everywhere! So, congrats! You built that; you bootstrapped that business yourself, literally from a kitchen table to a $100 million exit to Procter & Gamble.
You spent a couple of years there, and currently, you invest in a bunch of e-commerce and non-e-commerce things. You have a podcast called *Limited Supply*, which is great. You and your brother are sort of like business sharks. So, if I just say, "Hey, there's a hot dog stand going out of business over here," you'd be like, "Let me get my jacket, let's go!"
You own real estate and a bunch of random things. It's always fun to have you on, man. Thanks for coming!
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Moiz Ali | well thanks for having me super excited to be here | |
Shaan Puri | is that the intro you want by the way or do you feel like I let I didn't do you justice in one angle | |
Moiz Ali | no that sounds that sounds like more justice than I deserve | |
Sam Parr | Well, you're also good at one-liners. You have a lot of like one-liners; you're very good with language. You've said a few things. You said my two favorite words in the English language: "distressed asset."
Then one time, we were talking to this person—it was you, me, and this person—and they were explaining what they do. It was like a supplement company and how great it was going to be and how they're raising all this money.
Then, she—or them, or he, whatever—walked out of the room, and you said, "That person's business is one Google away from me ruining it."
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Shaan Puri | Yeah, you have a couple of other classics. I read an interview with you where you said, "I forgot how you phrased it, but you go, I was put on earth to do one thing: raise earnings per share." Earnings per share.
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Moiz Ali | Yeah, that wasn't me who said that. Actually, it was the founder of some other company; I forgot what it was. It was such a great quote, I loved it, so I stole that quote.
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Shaan Puri | yeah you're like I killed him and now it's mine | |
Moiz Ali | that's right yeah yeah | |
Shaan Puri | The other story that I attribute to you—I wasn't there for this story, but I've told it to like 100 young entrepreneurs, and they get a kick out of it every time—is about Moiz.
Moiz started Native Deodorant, which is super successful now. When he first had the idea, he told people, "I'm going to create a natural deodorant brand." They were like, "Moiz, do you know anything about deodorant? Do you wear deodorant? Moiz, what's going on? What are you talking about? You're going to create a deodorant company?"
He said, "Yeah, I know nothing about deodorant today, but in six months, I'll know everything there is to know about deodorant."
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Moiz Ali | that's right | |
Shaan Puri | That attitude, to me, is like... that's the core of what we do on this podcast. So, I don't even know if that's a real story, by the way, but I'm going to keep telling it.
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Moiz Ali |
That's a real story. I remember I was in San Francisco, I was with one of my law school classmates and it was her boyfriend at the time (now her husband) who told me that. He worked at Pinterest and he's like, "What the hell are you doing here? What the hell are you doing starting a deodorant business? I've never heard anybody do something so ludicrous." I still remember the bar we were sitting at where it happened.
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Shaan Puri | alright so let's do a little segment that I'm gonna call story time with moiz ali | |
Sam Parr | so okay | |
Shaan Puri | Cue the music. Okay, so I'm going to ask you a question. I want you to give me your answer, Moiz. What is the worst way that you've ever made money?
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Moiz Ali | Yeah, you know, this is a great story. I think we don't tell it enough, or my brother and I don't tell it enough.
When we were growing up, we owned gas stations. This was really a family way we made money, not my particular way anyway. We owned a bunch of gas stations, and we would cash checks for people as a service.
So, if you brought in a check, Sean, and you were like, "Hey, look, this is my payroll check. It's $200 for this week or $2,000 this week," we would charge you a percentage of that check and give you cash for it. We would take the check and deposit it at the bank.
By the end of our gas station careers, we were doing this at a massive scale. One of our stores would cash $250,000 worth of checks on any given Friday. Like, a quarter of a million dollars of cash was going through our hands. We'd have Wells Fargo coming over and giving us cash.
You know, we had these crazy moments, like a bus full of Hispanic immigrants who were roofers would come to our store. The door would open, and it felt like 40 immigrants just came out to cash their checks with us.
But a long time ago, early on in our check cashing careers, there was this guy named FM Porter who came in with a check for his business. The check was for about $2,000, and we charged a lot. I don't remember why we charged a lot, but we gave him like $1,900. We charged 5% of the check, and we were going to deposit the check and earn $2,000.
You know, traditionally what happens is if you're cashing a check—this doesn't happen so much anymore, but it used to happen 15 years ago—you'd endorse the back of it and deposit it at the bank, right? So, he endorsed the back of it, we gave him the $1,900, we deposited it, and it bounced.
We're like, "What the fuck? This is a ton of money for us!" You know, we were poor immigrants working at this gas station, probably in 1997, earning $40,000 a year with all five of us.
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Sam Parr | of us working at this how old were you | |
Moiz Ali | I was probably like 13 at the time 12 or 13 at the time and like this was going on | |
Sam Parr | And so there's just... are you... I just imagine like 13-year-old boys pacing, smoking cigars, being like, "What the fuck, man?"
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Moiz Ali | like | |
Sam Parr | Is that what it looked like? I mean, I imagine you being the exact same way as you are now when you were 12.
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Moiz Ali | Yeah, I feel like I was the same way, but I didn't have as much confidence, so I couldn't take the cigar. I could have ordered people around, but anyway, the check bounced and we all freaked out.
We tracked down this guy and we're like, "What the fuck?" We knocked on his door. He lived in a small house, you know, it was just a local community. We knocked on his door and said, "What the fuck, FM Porter? This check just bounced! We're gonna kill you! We're gonna call the cops! We don't know what to do, we're broke now! Give us our money!"
He was like, "Relax, guys. The check was made out to his business instead of him."
So it took like 45 days to figure out all the rigmarole to get the check made out to him instead of to his business. Then we cashed it and deposited the money. I remember it went through the second time. I told my brother, "Hey, it went through!" and he's like, "That was the easiest $100 we've ever made."
I remember it was like the worst $100 we've ever made. It was just cash and checks that were going bad, and we were constantly afraid. This was early on in our career, and we weren't sure if we should do this as a service for our business.
It ended up being super profitable. When you cash $250,000 of checks on a Friday, you're going to make $2,500 to $3,500 on that just for your business on that day alone. But I remember early on, we were taking all these risks and we were like, "What just happened? We think that we're not gonna be able to pay our rent for the apartment that my family lives in."
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Shaan Puri | That's insane! Were you just going back to math class after your shift? Or how were you doing this? Were you going after school? What was your process?
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Moiz Ali | oh oh to the gas station you mean | |
Shaan Puri | yeah because you're like 13 years old | |
Hubspot | Yeah, we'd go on the weekends. When I turned 16, I could drive, and I would go after class or on the weekends. I wouldn't go every day, even when I was 16 years old, but I'd probably go at least one weekend, or maybe both weekends, when I started having a car.
Certainly, our software is the worst. Have you heard of HubSpot? Most CRMs are a cobbled-together mess, but HubSpot is easy to adopt and actually looks gorgeous. I think I love our new CRM. Our software is the best. HubSpot: Grow better.
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Sam Parr | We're in the story... We're in the story part of the show.
So let me ask you one thing that I don't know is true, but I want you to confirm it. Right by our office, the one that you and I shared, there was a café called Native Coffee. I think it was the Native Café.
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Moiz Ali | native juice native juice | |
Sam Parr | Native juice had the same color and the same logo as Native deodorant. Did you see it? It was right by the BART stop.
I believe, if I'm imagining what happened, you were on BART and you were just walking around SoMa. You saw it and thought, "There it is, that's mine now." Is that true or false?
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Moiz Ali | that's false that's false no it's not it's not false okay this story | |
Shaan Puri | we gotta put the picture up because they're identical it's an identical | |
Moiz Ali | yes like it's | |
Sam Parr | I actually think they changed their branding in the last three years, but you can still find old logos on their Yelp page.
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Moiz Ali | yeah so the quick hey it's a little funny like it was actually a block away from where I lived so I'd walk by it all the time but you know the color I'm not sure if the color was the same I know the font was the same we actually didn't steal the font from them although I readily admit we did steal the font we stole the font of our website from harry's so if you look at harry's font it's the exact same font as ours and if you look at the colors of our site it was and I'm not sure if it still is the exact same colors that casper had so like you know when I was launching native it took me about you know 3 days to do the whole website and I was just like okay you know what I'm not gonna do is hire a logo designer and spend a fortune building a logo and spending a lot of money on branding I will steal the logo that harry's has which is just their name written out in a font I'm gonna do the same thing I can't steal the colors as well because that would be too too blatant so I'm just gonna steal the colors of another website which was casper at the time because they were doing really well and so that's how the that's how the font and the colors came together to be what native is today but I I would walk by that store all the time and like believe it or not right next to native juice co is the post office and I was packing all of the deodorants in my own apartment for the 1st 6 months or year of the business and so I would walk by native juice co with these bags of like you know filled with boxes of deodorants and I'd go to the post office and I'd hand them to the post office and they were like is this from nextdoor is this like the juice company you guys it says native on the packaging and I was like this is not the same native it's a different one and then what would happen is like you know two and a half years into the business native juice co came like the woman who started that business came to our office and she's like I'm getting so many fucking phone calls for your business for customer service issues where's my package all the shit people are just googling native san francisco we didn't have a phone number it was I think native still does have a phone number posted so she would be like I'm getting 40 phone calls a day for you this has gotta stop you gotta figure out a way to stop this and we're like we can't we don't know what to do like you know people just Google native san francisco and your name comes up it's not we're not saying call you and so she came in like several times and then you know I was like I told the doorman of the building I was like don't let her up any longer | |
Sam Parr | and that | |
Moiz Ali | seemed to put a bit to it | |
Shaan Puri | if she has juice accept it but don't let her in | |
Moiz Ali | yeah that's right | |
Shaan Puri | alright but then as doctor martis we | |
Moiz Ali | would still order juice from her to our office all the time but I was like I'm not sure if they like this or | |
Sam Parr | not yeah | |
Moiz Ali | yeah that's a rude I | |
Sam Parr | understand you definitely drink a lot of her spit I have to imagine | |
Moiz Ali | Yeah, that's probably true too. But the reality is, the logo didn't come from Native Juice Co; it came from Harry's.
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Shaan Puri | she just happened to also copy the harry's logo that's what happened | |
Moiz Ali | did the same thing that's right yeah yeah | |
Shaan Puri | Alright, so you said you had some ideas for us. What business ideas do you have on your brain right now?
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Moiz Ali | Okay, I thought about a lot of these ideas for a while. I think the first idea that someone should start, if I were starting a business today and really excited about it, is to create a stock market for all residential real estate.
I would say, "Okay, I'm going to start buying residential real estate and selling shares of that real estate that's rented out." So, I'd buy rental homes and sell shares of that real estate, sort of like a traditional limited partnership (LP) would invest. However, I'd make a really liquid market on my site.
For example, I'd say, "You know what? Rents have gone up. You paid $10,000, and you're waiting for us to sell this home." It would be like if you buy an apartment building today. If you're an LP in an apartment building, you're waiting for the general partner (GP) to sell the apartment building before you can realize all of your cash back. You might be getting a steady stream of income every quarter, but when the GP sells the apartment building, that's where you get most of your money back.
I would create a liquid market for all of these things. I would slowly start buying every single house in the neighborhood and say, "You can only buy and sell shares of this house on this platform."
Then, what I would do is empower local entrepreneurs to buy and sell houses on the platform themselves. I'd say, "Okay, you know what? Sean is going to buy a house. He lives in this neighborhood in California. He can buy a house, put it on this platform, raise money, and buy and sell. Other people can buy and sell shares of this house through this platform."
Sean would get reviews just like on Amazon. If he does a really good job, people will give him 5-star reviews because they're making a lot of money from him. If he does a really bad job, people will give him 1-star reviews because he's doing a poor job.
Then, when you go to underwrite new deals, people will be like, "Sean is trustworthy" or "Sean is not trustworthy."
I think people have tried this in the past with things like RealtyShares and a bunch of other models, but they've done a terrible job. In part, it's because they're not doing a good job underwriting. In part, they're betting on commercial properties, and in part, they're not creating a liquid market for it.
So, when I think of the biggest idea possible, I believe this idea could realistically own, you know, 200 years from now, the majority of real estate in the United States.
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Shaan Puri | Let's break that down. You said, "Sure, the reason that the current kind of investment options like buying a fraction of real estate or buying shares in real estate, which includes several crowdfunding platforms like Fundrise and RealtyShares," you're saying the problems that they have are...
Let's take them one by one. You said they're focused on commercial. Why is residential better than commercial for this?
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Moiz Ali |
It's way easier in terms of steady income streams. For example, if you build or buy a building that Starbucks is using and has a 5-year lease on, when Starbucks leaves that building, it's unclear who will be a good fit for it. It's not easy to rent that thing out.
On the other hand, if it's a house, everyone in the world needs a 3-bedroom, 2-bath house in a neighborhood. So it's a lot easier to re-let properties that are residential as opposed to commercial.
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Sam Parr | I invested in a company somewhat in the space called Dorsey. It didn't work out, but the guy who started it previously founded Stay Alfred, which I don't know if you remember that one or not.
Basically, it was like an auction website for homes, and they had two issues.
**First**, I'm shocked by this, but people just didn't want to buy a home online. It was a big thing that they couldn't figure out how to address. I think someone will eventually figure it out.
**Second**, negotiating with the whole broker industry seems really challenging. I know there was just a big settlement about five days ago. The broker industry has this market by the balls; it seems really difficult.
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Moiz Ali | Yeah, and it wasn't a settlement; it was a jury verdict of **$2,000,000,000** that went against the National Association of Realtors.
Like, yes, I think the broker industry is broken, but the liquidity market for real estate investing is huge. When you think about it, all these retail investors are now saying, "Let me invest in a startup."
You know how crazy it is for you to invest in something like Native when it's early on? I have no idea what I'm doing. I don't know if I'm going to get hit by a bus tomorrow. I might just be like, "Fuck it! You know what? I'm dating this crazy girl, and she wants to go to Hawaii for three months. Fuck this! This is going to be way more fun than running a business for the next three months."
So, if you're going to invest in startups, what's way safer than investing in a startup? Investing in real estate down your street where you know who's going to rent this house. I can monitor it; I can drive by it. It's a tangible piece of property. If this guy doesn't pay rent, somebody else will. It's not going anywhere; it's way safer.
I think when I think of retail investors, I believe they would be way more excited about investing in the local community they live in and being like, "Yeah, I own a share of this house," than they would be about investing in this Pakistani guy who really looks like he seems not to be that reliable. | |
Shaan Puri | And so, you have this idea: why do you think that the person who's buying these rental properties wants to do this? Is it just because they want the liquidity so they can go buy more properties?
What happens here, and how much of the property do you think would go on the platform versus what they own? You know, like in an IPO, they issue 20% of their stock or whatever to the public. What would it be for the house?
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Moiz Ali | Yeah, I think it's really the GP [General Partner] can be like, "Look, I want to..." The guy who's sort of underwriting the deal and sponsoring the deal, for better or for worse, could be like, "Look, I'm going to put in this house that costs $200,000. I'm going to put in $50,000 of my own money," or "I'm going to put in $20,000 of my own money."
In that same way, right now, if you invest in a much larger private equity fund, one of the common questions you'll ask is the guys who are running the private equity fund, "How much of their own money is at risk?" Because that means that they care and believe in their private equity fund. Similarly, here could be the same question: "How much of your wealth or how much investment are you putting into this real estate when you purchase it?"
The reason that the sponsors would want to do this is several-fold. One is, yeah, they want to create a liquid market; they want to raise money, right? They want to raise money from retail investors, and it's really hard to raise money from retail investors.
Two, they can buy and sell shares later on for themselves as well. They could be like, "You know what? I bought $40,000 worth of this house. Five years later, that $40,000 is worth $80,000. I want some cash off the table, but I still want some liquidity. I'm going to sell $40,000 of shares in this house and keep some money invested as well."
So, I think for the same reason that people want to invest in the stock market, or sponsors invest in their own deals, sponsors in this would invest as well.
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Shaan Puri | So, Moiz, I'm going to pitch you three other real estate ideas in rapid succession. I want you to tell me your favorite to your least favorite, okay?
Alright, the first one is this company I didn't invest in, but I regret it. I don't know how it's doing; I haven't talked to the guy in a while, but I regret not investing because I thought it was a good idea. It's called **Home Options**.
So, what he's doing is this guy goes to Sam. Sam owns a house. He goes to Sam and says, "Sam, I know you're not trying to sell the house right now, but here's the deal: I'll give you $1,200 right now, and all I ask for is that when you do decide to sell, you let me... you know, I own the option to be the broker on the house."
So, like, you know, I'll be your agent. Actually, what I do is I'm not myself the agent, but I partner with top agents in your network. They don't know when you're going to sell your house, and they don't want to keep having to knock on your door and bother you. So, I'll give you cash today so that they can be your broker, you know?
One of these top agents gets the right to be your broker 20 years from now whenever you sell. They're just buying up options—the right to sell these homes. Because when you sell a home, you know, the brokers take... let's just say the sell side's going to take 3%. The average is $15,000 or something for that sale. They're willing to buy that option today for $1,000.
So, that's idea number one: **Home Options**. Go on, go there and buy that.
Alright, idea number two is...
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Sam Parr | I invested in it | |
Shaan Puri | Oh no! The only thing that could have made me feel worse about not investing in this is that Sam invested in it. Is it doing well? Because every three months, I think about this business. I think, "That's gotta kill."
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Sam Parr | Through my email, I haven't gotten an update from them in a while. So, that's not a good sign.
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Shaan Puri |
Yeah, which unfortunately means it's probably not [doing well] or it's absolutely crushing it. One of the two, you know?
I used to think that's always a bad sign, but then I started hanging out with Moises' brother. He never... He's like, "Investor update? Why would I? I'm gonna kill it in this business. Why should I tell you about how it's going?" I need to know this.
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Moiz Ali | yeah that's right yeah | |
Shaan Puri | do are you that way too moiz do do you like yeah | |
Moiz Ali | we have | |
Shaan Puri | do you provide updates for me | |
Moiz Ali |
One of our investors was this guy named Jeff Hollander from Seventh Generation, and he's like, "You know what would be nice? A monthly or quarterly investment update."
I was like, "Here's your money back. You and I will never chat until I call you, and if you're not okay with that, nothing interests me anymore. I don't ever..."
Yeah, I'm like... I couldn't care less. I will never send you one piece of information about this business unless I want to or unless I need something from you.
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Shaan Puri |
I think it's good hygiene to, you know, just kind of... even for your own thoughts, to be like, "How are we doing? Let's just... let me take a step back here for a second and just write down, kind of for my own clarity of thought." Or no?
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Moiz Ali | I think that is good hygiene, but I don't think you necessarily have to share that with other people, especially with other people. Like, you know, I think the three of us are probably investors in similar businesses.
Oftentimes, I walk around and people are like, "Here are the numbers of this other business." I'm like, you know, somebody has leaked it to them. I try to be really careful as an investor to never leak information because I know I would never want my information leaked.
But that information gets around the street, and I've seen so many startups launch because they're like, "I heard this guy was doing really well, so I should just do the same thing."
Like, how many competitors of Athletic Greens exist because everyone's like, "Yeah, we know Athletic Greens is doing really well."
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Sam Parr | right what are the other 2 sean | |
Shaan Puri | Alright, second idea. This is your brother's idea, actually. I don't know if he told you this one: **Pipe for Real Estate**.
I think I can share this now because he's talked about this, like, I don't know, a year ago, and didn't end up doing it.
**Pipe for Real Estate**—the idea here is you're a landlord. You're going to collect rent every month. Pipe came through and was like, "Hey, let me turn those monthly checks into one annual check, and I'll take an 8% fee off the top."
So, let's say you were going to get $100 of rent from this property. I'll give you $92,000 today. I get to keep the $100, and you get $92,000. You can go invest in your next property or put it into tenant improvements that will let you raise rents or something like that. Here's cash flow today, up front.
So, **Pipe for Real Estate**—real estate's a huge market. Why do landlords have to wait to collect the check? No more waiting is our slogan.
Alright, now, idea number three, the final idea. I did invest in this one: **Steady Capital**. So, steady.capital is their URL.
They were like, "Hey, look, everybody knows that most millionaires build their wealth through real estate. That is a time-tested approach to wealth building. Most people actually even want to; they would love to own a rental property and be getting a rent check every month. But most people don't know, don't trust themselves to find a property, you know, vet it, buy it, manage it, all of that."
So, they were like, "We'll do a Robinhood for real estate type of thing where you just decide how much monthly you want to put into real estate. You say, 'I'm willing to put away $500 a month into real estate,' and they basically let you take the $500. They'll put it into a real estate project that they are kind of vetting from proven operators. Then, every month, they'll say, 'Hey, here's an, you know, you got $112 of rental income from your property this month.'"
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Sam Parr | yeah | |
Shaan Puri |
Or you now own pieces of these 6 properties in 6 different markets and you're making $600 a month of rental income. Like, I put $5 into one deal and I just get this check every month now. It's actually the first real estate that I've done that I didn't own because otherwise it just stayed on my to-do list.
Alright, so those are the 3 ideas:
1. Home options
2. "Pipe" for real estate
3. "Robinhood" for real estate
Oh, the... yeah, Steady Capital. Give me a rank from your most favorite to your least favorite. Go ahead.
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Moiz Ali | Okay, I wasn't expecting home options to be number 3 when you told me about it, but in fact, it's number 1: steady capital.
And then, PIPE for real estate. I'll tell you why. Yes, PIPE for real estate exists, and it's just called a cash-out refinance. You know that already exists where you're like, "Look, I'm getting money from these landlords, from these tenants, and I can take cash out of the property."
What's not going to happen for PIPE for real estate is someone's going to come in and be like, "Wow, you're 100% leveraged up with this debt. Let me also give you more cash." You're already paying for the debt; you know you're already leveraged.
So, I think PIPE for real estate exists. I think Mark Lohr started this company, and he just raised $350 million. Did you guys read this thing? I'm not entirely sure what it is, but it appears to be like a restaurant delivery business where he partners with, like, you know, fancy...
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Shaan Puri | I think | |
Moiz Ali | That's right, yeah. I feel like I'm not sure if this is the case, but it seems like that's sort of a startup branding to something that kind of exists in this space. I feel like Pipe for real estate is the same.
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Sam Parr | mark bought blue apron | |
Moiz Ali | oh he bought blue apron I knew they sold for a $102,000,000 I didn't know he was the cash behind it | |
Sam Parr | Yeah, he bought it. So, I think you've nailed it. That sounds like that's what he's doing. But go ahead.
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Moiz Ali |
Yeah, home options are... you know, I think the hard part about home options is right now, particularly in the last week, we don't know what realtor commissions are going to look like in the future. And you also just don't know how long an option this is. Is it $1,200 in the ground today for 20 years or 30 years? That's a really long period of time, for instance.
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Shaan Puri | What he's doing, yeah, is he's just reselling it right away. Or at least that's what I would do. I would buy the option and bundle them up.
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Moiz Ali | and I | |
Shaan Puri | Would go sell them to the brokerage tomorrow, you know, and just say, "Hey, you can hold these," and, you know, try to get... I don't know if the economics...
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Moiz Ali | all work I don't know if the brokers are willing | |
Shaan Puri | to do things like that yeah but like I think that's the idea | |
Moiz Ali | Yeah, I like it. It's innovative and different. It's unclear what will happen, but you could revolutionize an industry that has been the same for the last 150 years. | |
Shaan Puri | goddamn it sam's gonna be a part of that revolution | |
Moiz Ali | It can also be that the 6% drops down to 2% in the next, you know, 3 months because the National Association of Realtors is almost certainly bankrupt at this point.
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Shaan Puri | What was the settlement and what's changing about this broker situation | |
Moiz Ali | Yeah, it wasn't a settlement; it was **$2,000,000,000**. I'm not entirely sure what it was, but it was like price fixing across realtors, basically saying, "Hey, you can't be on MLS unless you agree to pay everyone like a 6% or 5% brokerage," something to that effect.
I haven't gotten into the details a bit, but the judgment was **$2,000,000,000**. I read this Wall Street Journal article where, once the judgment was made, plaintiffs' firms filed lawsuits against the National Association of Realtors in every single state. They said, "We think that we'll get **$40,000,000,000** in judgments as a result of this," which will certainly bankrupt that organization.
Can you talk a little bit?
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Sam Parr | About this FoundersCard thing, because I know you've been tweeting about that for like two years now. That actually surprised me that you were interested in it.
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Moiz Ali | It feels like there's a club that I'm a part of, like a FoundersCard sort of thing. I can't talk about the name of it because they would ask me not to.
As a result of paying my $100 a month membership fee, I get a discount that's worth about $800 a month to myself. What do you think?
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Sam Parr | you get a discount for | |
Moiz Ali | just saas software that I'm like really want that I have to pay for | |
Sam Parr | but do you have to be a new a lot of those cards you have to be a new customer | |
Moiz Ali | No, this one you don't. Yeah, wow! You just pay $100 a month, and they're like, "Here's discounts to, let's say, Mailchimp, and let's say Shopify, and like all these other SaaS platforms that an e-commerce company might want to be a part of or might want discounts to."
So then you go and say, "Great! I paid $100, I get all these discounts, and I'm going to go use those discounts for my business." You’re never going to cancel that $100 a month subscription because that $100 is actually saving you $1,000 a month.
I don't understand why there aren't more of these for smaller niche industries. I think e-commerce is a great one. You know what P&G does? They go to Snapchat, Pinterest, and Facebook and say, "Look, we're going to spend $250,000,000 across our portfolio on your platform, but we need a discount because we're spending so much money."
They get that discount. They definitely get it from Facebook because I've seen it. I'm pretty sure Pinterest and Snapchat give it too, but I guarantee you they get a discount from Facebook because I've seen it. I saw it when I was running Native as a part of P&G.
So, I'm not sure why smaller businesses don't organize and say, "Look, we're spending this much. Let us also try and negotiate discounts with platforms." Why don't we all negotiate a discount with Yotpo, or with Okendo, or with Postscript, or with Klaviyo, and say, "Look, there are going to be 400 of us together. A lot of us are going to use this software, but we need a big discount. That's a lifetime, like a lifetime monthly recurring discount."
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Shaan Puri | And so, sorry, you have one of these? This is not an idea. You're saying you have one of these cards, but you're saying it's like a secret? Like, they don't want more people to have the card or what?
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Moiz Ali | Correct, they would not want me to talk about who they are. But yes, as a result, I get discounts on software that I wouldn't get otherwise, and it costs me $100 or $140 a month. | |
Sam Parr | why don't they wanna talk about it | |
Moiz Ali | Yeah, great question. I'm not entirely sure, but I'm sure they would tell me not to talk about it. Do you think it would be $100 a month?
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Shaan Puri | well like there's yeah wouldn't they wanna hold | |
Sam Parr | A customer’s spidey sense is going off here. You know, like, what's going on? Why? I mean, is this a shady thing?
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Shaan Puri | Sam, this was your idea. Well, not originally, but Sam told me, I mean, I don't know, seven years ago when you were running The Hustle, you were like, "I'm trying to think of a new product." You had three ideas, and I remember one of them was basically trends, which is the thing you ended up launching. Another one was this idea for the Founders Club card or whatever, which I think you were comparing to the AARP. You were like, "AARP for kind of like millennials."
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Sam Parr | well aarp yeah then I can talk about the aarp in a second but yeah | |
Shaan Puri | That was the second one. What was the third one you had? You had one more, but I don't remember that third one. I thought the card was the best idea. I was like, "Oh, you should for sure do this card." If I had this, and in fact, actually now I'm just going to do the card off of the MFM audience because I'm like, this is way better and it's a win-win.
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Moiz Ali | I am | |
Sam Parr | I I might be a few months ahead of you | |
Shaan Puri | why didn't you do that card | |
Sam Parr | The reason why I didn't was that I couldn't find a way to differentiate from all the other offerings that already existed. It was also quite challenging to get in with some of the brands in order to negotiate bulk deals. The argument being, "Well, you know, these companies already spend with us. Why am I going to give them a discount?"
I couldn't come up with the perfect rebuttal for that, and that is where I was trying to figure out how to make it happen. | |
Moiz Ali | and what is the rebuttal to that | |
Shaan Puri | the rebuttal for that is your competitors are offering it right so you basically have to go get the number 2 | |
Moiz Ali | yes | |
Shaan Puri | Of every space, say, "Hey, we can move you some customers if you make this attractive." Then you go back to number one and say, "Hey, number two is offering this and their people are moving. You should match it."
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Moiz Ali | yeah and like new people who get get in are gonna use number 2 instead of number 1 because they get the discount | |
Shaan Puri | Exactly, exactly. We continue to have new customers, and we're just going to keep telling them, "Yeah, go with this company because they can offer you a benefit."
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Sam Parr | And the reason why I was interested in it is AARP. So, AARP, I actually don't know what it stands for, but it's a club for people above 60 or 50. I think 50.
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Moiz Ali | american association of retired persons | |
Sam Parr | yeah is it so retired people | |
Moiz Ali | so so | |
Sam Parr | I guess it's 60. They do about $1.5 to $2 billion a year in sales and they have 1 million members. The way they generate business revenue is, I think, they only charge about $100 a year to be a member.
Like most everyone, when you turn 60, you get an invitation in your mail. What you do is you get discounted health insurance. Another side of their business is making money through affiliate fees. I think they partnered with UnitedHealth and they have the UnitedHealth AARP plan, which is a discounted plan specifically for people aged 60 and over.
They are, I think, one of the largest lobbying groups in America. It's a huge lobbying group. They basically shape the government in some regard. I thought that was super fascinating. It's a really fascinating company that's existed for decades. Is it going to go away anytime soon?
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Moiz Ali | And there's already other businesses doing this. Think about Y Combinator. If we can get into Y Combinator, I think they offer $250,000 in AWS credits. You also get a bunch of Stripe processing charges for free.
These businesses are like, "You're going to grow, we're going to make money at the end." But it also makes sense when Y Combinator is selling you, "I'm giving you $120,000 for 7%." They're also saying, "Here are the other benefits that you get in this business."
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Sam Parr | right so anyway I'm on board with this you wanna do one more | |
Shaan Puri | Yeah, what's the other idea you had? Something around Shopify for high-end or something for high-end D2C? What was that idea?
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Moiz Ali | Yeah, sure. You know, Shopify is fantastic. I'm a big shareholder in Shopify; I love them. I built my career in e-commerce.
The reality is, it's wonderful for businesses going from $0 to $50,000,000. However, it's not as good for businesses north of $100,000,000 that are ready to spend a lot more on improving their conversion rate with a custom checkout page.
If the Shopify people were here, they would say, "That's crazy! We have big businesses like Fizz and Allbirds and a lot of other big businesses on it." But the reality is, you can't customize so much, and it's particularly difficult on the checkout page.
I think there is room for somebody to come in and say, "I'm going to build my own shop. I'm going to build Shopify but for businesses doing north of $100,000,000." There are a lot of businesses doing north of $100,000,000 that have left Shopify, like Away, Travel, and Ritual Vitamins, because they're like, "Look, we've outgrown this platform."
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Sam Parr | where did they go | |
Moiz Ali |
Probably like usually a custom-built stack, sometimes with this backbone of an old brand, an old business called Spree, which I think was like this open-source e-commerce platform. When you're growing your business... but I don't think it's around anymore.
But they're... I don't... you know, they'll often go to their own custom tech platform because they're like, "Look, we're doing enough business if this makes sense."
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Sam Parr | which is a pain in the ass | |
Moiz Ali | It is a pain in the ass, but you know, it's a pain in the ass that's worth it when you're doing $500,000,000 in revenue. A quarter percentage bump in conversion rate on your checkout page is going to lead to an extra $10 to $20 million in revenue. It's completely worth it then.
You know, Shopify's one-page checkout was launched in the last six months. That's been something that people have wanted for a really long time. Shopify subscriptions have been really bad; all the subscription platforms have been really bad until more recently. I think Shopify is trying to catch up in that larger segment, but I think they've done a lot of that.
That's not their focus. Their focus is: you've decided you want to start a business. You go, you know, in the shower, you come downstairs, and you start a Shopify store. That business is doing $100,000,000 in revenue. There are solutions that are competitive or even more competitive than Shopify, and they're worth it because small changes on your website are going to be worth so much. They're harder to implement on Shopify than they are on other platforms.
Candidly, you know, Native was a $50,000,000 e-commerce business built on WordPress. The reason we chose WordPress was because it was a cheaper option and allowed us a lot more customization. We could do post-purchase pop-ups and add-to-cart pop-ups at a time when you couldn't on Shopify. We could do subscriptions that didn't charge us, which aren't allowed on Shopify.
We could have our own servers, which you may or may not want based on Shopify. We could achieve instantaneous page loading, which you couldn't do on Shopify. So, there were a lot of benefits for a business using WordPress because it was open source, as opposed to Shopify. | |
Sam Parr | You use the **$300 a year** WooCommerce, which is like the **steal of the century** and the **miss of the century** for WordPress.
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Moiz Ali | it's $300 a year it's free it's free | |
Sam Parr | is it free yeah I mean I I used it too | |
Moiz Ali | yeah I thought it | |
Shaan Puri |
Yeah, you know all those features that he just said were benefits? That's not why he did it, to be clear. He picked it because he was like, "$3,000 for Shopify? Outrageous! Over my dead body! I'd rather this business fail than pay you $3,000."
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Sam Parr | A year ago, we used WooCommerce, which I remember is owned by WordPress now. I recall looking at WordPress's revenue and thinking, "Okay, so WordPress controls a third of the internet, and Shopify makes this much money, yet they're giving this to me?" What a bunch of idiots! It's a massive missed opportunity for WordPress.
WooCommerce is great; you just need a developer sometimes to help you do some stuff. But it's still way cheaper than Shopify.
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Moiz Ali | That's right, but I'm like, really? It just goes to show, like, you know, we did a post-purchase pop-up at Native.
After you click checkout, we showed you a pop-up saying, "Buy travel size deodorant." We've only sold $700,000 of those travel size deodorants every single month and made, you know, $400,000 in net profit off those travel size deodorants.
We could only do that in WordPress; we could not do that in Shopify.
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Shaan Puri | You also had something you were like, "I would do Shopify apps for India" or something. I found this interesting because our Shopify app bill—now granted, I could go through and prune some apps that we're not using anymore that are probably still just recurring charges—but I think we spend like $10 a month on Shopify add-ons.
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Sam Parr | do you really | |
Shaan Puri | Wow! Because whatever you want to do, they're like, "Oh, would you like to collect email addresses? Pay me $1,500 a month for this pop-up." Like, what are you talking about?
And they're like, "Well, your store is big." It's like, that doesn't matter! This is an email pop-up. Who cares how many people type into the form? Google Forms is free! What are you talking about?
And like every little thing, we added a post-purchase upsell and there was like $900 a month. I was like, "What is happening? Why would this be so expensive?" All the review platforms are crazy expensive. Shopify apps are, you know, an absolute rip-off in the pricing.
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Moiz Ali | Definitely. I think that if I were a developer in India, I'd be like, "I'm going to hire a team of you guys. We're going to knock off every single app, and we're going to charge $20 a month." That's going to be our entire business model: $20 a month.
The other thing I'd say is the more apps you use, the cheaper it gets. So if you're using five or more apps, instead of paying $100, you're paying $75. There is no reason that "Just Do No Pop Ups" should be $1,500 a month. There's no reason that a post-purchase upsell should be a percentage of revenue and not $30 a month.
The reality is that everyone's tiered percentages of revenue because you can make so much money doing that. This is software that could have been written within a week or a week and a half by almost anybody and should be $30 a month.
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Shaan Puri | I talked to a guy. I tried to buy this one Shopify app that all it did was add a maximum to your cart. It's a feature people don't even think about.
Like, why would I ever stop someone from buying more? Well, let's say you're doing a limited edition thing. You don't want resellers to buy all your products.
These guys, for like 7 years, have been doing $2,000,000 a year with $1,000,000 to $1,500,000 in profit just on one Shopify app that caps the maximum someone could buy of a unit.
That’s gotta be like, you know, two lines of code or something. It's crazy! But there are so many of these that exist out there, and people have smartly tried to roll some of these up.
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Moiz Ali | Yeah, and how many of those customers of that app are probably customers who don't look at their bill on a monthly basis? They're like, "Oh man, I'm getting charged $200 a month," and they never think about it.
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Shaan Puri | Yeah, because it's built first. You never whip out your credit card. Once you connect to Shopify, it's going to pay you through Shopify. Yes, and then it's buried in the billing tab under all the stuff. So, yeah, there's definitely very low friction in racking up those charges. | |
Moiz Ali |
There's a massive business opportunity to be built here, which is cloning the top 100 Shopify apps and just charging a flat fee. It might be a longer-term business because you don't have a sales team, and you're not going out calling everyone saying, "Switch from Yapo to me." But every single new business is going to go to you because it's way easier to use.
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Sam Parr | You have some controversial opinions. You have a lot of them. A few of them include: data is overrated, wealth managers are just used car salesmen, and you hate real estate.
I want to hear some of your thoughts on those things. We'll start with an easy one: data being overrated. What do you mean by that?
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Moiz Ali | let's start with an easier one which is twitter real estate | |
Sam Parr | if you | |
Moiz Ali | don't mind like | |
Shaan Puri | wait wait say say the unpopular opinion what is it about twitter real estate | |
Moiz Ali |
It's full of complete shit. Yeah, they're full of frauds and they're... I can't begin to tell you how many people where I read their tweets, some deals I'm in, and I'm like, "How is nobody calling you out on this?" You know, people are like, "Are you on the phone?"
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Sam Parr | Give me the listener perspective here. So you own maybe dozens or a hundred or a hundred.
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Moiz Ali | 100 | |
Sam Parr | 100 of either single family homes or multifamily homes is that right | |
Moiz Ali | that's right yes okay and then I'm an investor in dozens of real estate deals through as being an lp | |
Sam Parr | okay so you that that's your perspective | |
Moiz Ali | That's my perspective. I'm, you know, an LP [limited partner], and a lot of people will be like, "Did you unfollow me because of my opinion on the Middle East crisis?" And I'm like, "No, I unfollowed you because you're a fraud. You're pretending like you're a good real estate investor, and you're a complete criminal. I know it because I'm an LP in your business." I get, like, you know, even now I get to deal with their boycott.
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Shaan Puri | they're tweeting | |
Moiz Ali | They're tweeting out their returns. They're like, "Here are our returns," and I'm like, these are not returns that I've realized as an LP in your deal, as an LP in your businesses.
You know, they have gas. Like, I'll be like, "Hey, we're like, you know, before interest rates were going up, I was like, we have floating rate mortgages. What the heck is gonna happen when interest rates go up?" And these guys are like, "It's gonna be fine, it's gonna be fine."
Now they're like, "Actually, we need more money." You know, startups are one thing where you might need more capital as a business grows because you're trying to expand for some reason or another. Real estate is a business where, once you own the asset, you should not need more cash. You're not expanding the real estate anyway; you're operating an apartment building.
The problem is, when interest rates go up and you have more debt to pay every single month because you're on a floating rate, you need more capital to be able to pay that debt. The rents don't service it. Rents are going down, interest rates are going up, and these guys who have promised making fortunes are caught with their pants down.
Then they have the audacity to say, "Hey, actually, our returns are fantastic." And then they have the other audacity, which is, "Okay, now all of the deals you invested in within the last 5 years with us are bad because interest rates are up. But now we can buy things at a lower price because prices have gone down and our interest rates are up. So buy with me now; it's a good time to invest with me."
I want to be like, "I want to freaking kill you," is really the answer. You know?
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Shaan Puri | hate that | |
Moiz Ali | type of bullshit | |
Shaan Puri | you said why isn't anyone calling these people out | |
Moiz Ali | yeah | |
Shaan Puri | Why aren't you calling them out? Would you like to name some names? We have a great audience here that would love to hear the names of some of these folks.
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Moiz Ali |
Yeah, I don't want to name names because... you know, some of these people I'm friends with and I know their wives and families. I don't want them to suffer. I was like, "I don't want to see you suffering in that way." You just want to kill them, but... like, yes, I do want to kill them.
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Shaan Puri | oh yeah | |
Moiz Ali | I do think that there are very few people I would ever invest with again in real estate Twitter. The one exception to that rule, rather than the rule itself, is Moses Kagan.
I've invested in several deals with him, and I'm like, this guy underwrites conservatively, like I underwrite. He's thinking about the game in a long-term way, where he's like, "I want to manage my reputation. I want people to make money. I'll make money when people make money."
I would invest with him again. In a lot of other deals that I've done with people on real estate Twitter, I'm like, I would need to be a heroin addict to invest with you again.
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Shaan Puri | You said last time you were on the podcast, you did a pie chart, which normally people do as percentages. You did it as dollars, which I thought was such a boss move and really enjoyed.
So, I want you to tell me how it's changed since then. You said at the time, this was mid-2022, so it's been about a year since then, a little more than a year. You said, "I got $10,000,000 in private equity and $40 to $50 million in cash," which is short-term bonds. I'm waiting for bond prices to come up. You said then...
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Moiz Ali | I was so smart | |
Shaan Puri | Then you said $25 to $30 million in real estate that we own and operate ourselves, and then $10 million in real estate as a limited partner (LP) in other people's funds. You said $10 million to start up investments and $10 million in the stock market.
Has that changed? Have you made shifts since then in how you are investing?
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Moiz Ali | Yeah, sure. Good question. It hasn't changed dramatically. I would say the $40 to $50 million in bonds is probably somewhere at $60 to $70 million today, but it's still in short-term bonds, which are yielding a lot.
I'm starting to get a little bit longer as the yield curve starts to flatten. Right now, if you buy a 1-year bond, you'll get about 5.5% interest in a year. If you buy a 10-year bond, it's a little bit under 5%. You know, a year ago it was like 5% for a year but 4% for 10 years.
Now, the curve was inverted, and now it's starting to flatten a little bit. As it continues to flatten, I invest in longer-term bonds rather than just short-term bonds. I probably have $15 to $20 million in the stock market at this point, heavily concentrated in Facebook and Shopify, and probably PMG.
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Sam Parr | You tweeted out this funny thing. It was your IRR versus S&P, and you quoted *Legally Blonde*. You were like, "What? Like, stock investing is hard?" | |
Moiz Ali | it's hard yeah that's right yeah and what | |
Shaan Puri | what were what was the returns what was the comparison | |
Moiz Ali | yeah it's probably up 30% for the year | |
Sam Parr | yeah versus s and p was like 3 or something or or | |
Moiz Ali | 10 12 or something like that yeah | |
Sam Parr | but I don't you didn't say what you owned and in my head I was like I bet that is literally just facebook | |
Moiz Ali | Facebook. Yeah, yeah, it's a lot of Facebook, Facebook, and Shopify, and PTT.
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Shaan Puri | And your brother kept buying the dip. Like, Facebook was getting crushed, you know? Yeah, I don't know, a year and a half ago to like, you know, up until six months ago or something.
Every time it went down, I remember your brother and I think you also were like, "Hey, is everybody insane? Great! I can't wait to go buy more Facebook today."
And the earnings... psychologically, it's hard, right? Earnings come out or, you know, a big stock move happens, it goes down, and to be like, "Alright, whoo! Let's go! But let's buy in more, buy in more." That takes a totally different mindset.
What's your... what drives the conviction? Because it's obviously not a reaction to the... you're not reacting to momentum. In fact, you're going... you're betting against the current momentum.
Sure, so what made you believe that that's like a place that you wanted to be investing?
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Moiz Ali | I would say 2 things 1 is literally every single business I know if it's an online retailer is entirely dependent on facebook whether they realize it or not like anybody I think it look the best businesses in direct to consumer are entirely dependent on facebook the worst businesses are diversified and it's that simple if you're entirely if you're like my business lives or dies by facebook I'm like you're gonna have a better outcome than if you think your business lives and dies by youtube ads brick and mortar actually brick and mortar is an exception to that but like youtube ads I'm diversified with my advertising strategy I'm investing a lot in tiktok that means you can't get the thing that works for everybody and is the biggest advertising engine in the world to work for you you're gonna miss out on a ton of opportunity and and so I'd say that is one of them but like the reality is and this is a little bit of a longer story when the financial crisis hit my father who had been conservative his entire life he was probably like 70 years old at the time and he's like this doesn't make sense how cheap these houses are and so he bought one house and it was probably like a 1500 square foot house and he paid a $150,000 for it and it just sold for like 2.25 like you know a couple months before and he's like there's a $75,000 discount after 60 days and then the next 60 days later that 1.50 was probably worth like 75,000 and rather than get scared and be like oh fuck I lost $75,000 and we don't have a lot of money at the time he's like this doesn't make any sense now this house over here that sold for 2.50 4 months ago is for $75,000 and so he kept purchasing real estate and you know there was one half duplex that he purchased for $8,000 and it generates like $1900 in rent a month today like within you know within a year we purchased back the entire duplex every single year and he never lost convictions like this is a deal of a lifetime and I've got the conviction that I'm right here and you know honestly you know people talk about my brother and I and how we've like had financial success the reality is that financial success is based on the idea that we will not need a lot of money in the future because he he started purchasing real estate and created a steady stream of income for our family that would be very hard to lose we had the benefit of that and sort of the solid foundation of like not worrying about money and sort of being able to take a lot of risk because we could fall back on real estate and that gave me a lot of conviction where I'm like wow it it is possible to buck the trend here and say you know what these people are wrong this like you know this is on sale and you're selling this incredible asset and it's 50% off and I know it because I'm looking at you know 25 ad accounts on a daily basis and seeing that these people are still investing ad dollars on facebook so how could it be 25 how can be 25% off how could facebook stock be 50% off this is a buying opportunity not a selling opportunity | |
Sam Parr | Of your portfolio, what percentage of it came from Native? Did Native make up the bulk of it? And then it's grown nicely since then.
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Moiz Ali | I would say "native" is... you know, it's hard to answer that question because, like a lot of these situations, when native sold, let's say I made virtually the entire amount. But my net worth is significantly higher than that now.
It's based on... you know, I wouldn't own $50,000,000 in bonds were it not for the $100,000,000 I got from the native sale. So, while the interest... I don't know if the interest is attributable to native or not. Presumably, it is.
You know, certainly if I were getting a divorce and I didn't have a prenup, I'd say all of this is native money. It all came from native; that's pre-marriage.
So, you know, the bulk of my financial net worth is a result of selling in native, but at this point, the cash itself from native is probably less than a majority of my net worth.
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Shaan Puri | When you talk about, like, "Oh wait, your dad saw that opportunity." This is, yeah, underpriced when Facebook stock is crashing. You feel like this.
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Moiz Ali | is a | |
Shaan Puri | Underpriced asset. What do you feel like are the kind of underpriced opportunities or assets today?
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Moiz Ali | I think San Francisco real estate, and possibly office real estate in a lot of other cities, is an interesting topic. The question is, how do you want to get in there?
When my father was buying this real estate in '08, I was... it must have been a little bit later, actually, it must have been like 2010. I was an attorney, and all these wealth managers try to talk to attorneys. So I was like, "Look, I need a loan for $500,000. My family needs a loan for $500,000. We bought $1,000,000 of real estate. We just want 50% LTV."
Wells Fargo would be like, "The only way we're going to give you a loan is if you give us $1,000,000 in cash. Then we'll give you a $1,000,000 loan." I was like, "I don't understand if you guys know how money works, but if I had $1,000,000 in cash, I wouldn't come to you for a fucking $1,000,000 loan. I wouldn't give you that."
So anyway, we were strapped for cash and trying to deploy it. What my father did was dollar-cost average into the real estate. He didn't know that that's what he was doing. He was just like, "Okay, we got another $50,000 to spend. Let's go buy a house." He would get that $50,000 from rent that he was collecting. So he just dollar-cost averaged his way in and was really aggressive.
If you were dollar-cost averaging your way into office space, I'd probably start in 2023 or very early 2024. If you were trying to time the bottom, which is really hard to do correctly, obviously, I'd probably still wait 4 to 5 months because there are probably still some deals that have to go... that have to light on fire before the rest of the world realizes, "Okay, my real estate is now worth $100,000,000. It's actually worth $30,000,000 today."
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Sam Parr | yeah I I agree with the san francisco thing | |
Moiz Ali | what do you think what was your answer to that question | |
Shaan Puri | I didn't have an answer, but I wanted to know your opinion on some of these D2C (direct-to-consumer) companies that have just been smashed in the stock market.
For example, Allbirds. I don't know what the market cap is, but it was like $50,000,000 or something. It's come down... way, way, way down. Revenues are over $100,000,000, but the market cap is around $50,000,000.
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Sam Parr | today is 138 | |
Moiz Ali | yeah no I think it has to go bankrupt before you can touch that | |
Shaan Puri | and why is that they just totally mismanaged it or it's too much debt like what's the problem with that that business I haven't looked | |
Moiz Ali | At it, probably like real estate is not good. Their team is too large. They might have some financial obligations to their suppliers that are really holding them down. They have a lot of accounts payable, and you need to wipe that all out before you can get into it.
I did look at this with Honest as well. I talked to some serious people and I said, "Hey, I want to buy. I'm thinking about buying Honest." That business had different problems. They had gross margin problems, which was that if they sell a diaper for a dollar, it actually costs them 70 cents. Generally, in this industry, it should cost you like 30 cents. You should have, you know, 60 to 70% gross margins. These guys had 30% gross margins.
So, they had a different problem. But with Allbirds, I think it's more severe. It's systemic. It's a brand issue. I think it'll have to go through bankruptcy in order to be fixed. | |
Shaan Puri | Do you look at things like AI? Do you pay attention to it, or are you just like, "I'm a merchant"?
I used to cash checks at a gas station, and then I sold deodorant, you know, through Facebook ads. Now, are you into real estate? Those are the only things I can touch and feel.
Do you pay attention? Do you get swept up at all in the crazes of the day, like AI?
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Moiz Ali | I think I get swept up a little bit, but I'm probably more cautious. I'm like, "I want to see how this thing makes money."
I remember our last podcast, Sean, you were like, "How much do you have out of Bitcoin?" Because that was one thing on my pie chart I did not talk about. I was like, "You know, probably less than $500,000." And today, it's probably like, probably less than $200,000.
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Sam Parr | you know I like to | |
Moiz Ali | I know how I'm going to make money. I guess I'm far more risk-averse than most entrepreneurs. That risk aversion means that I probably won't invest in businesses unless I have a good idea of how this business makes money, who purchases this business, or how we exit this business 5 to 10 years from now. I need a realistic vision of that. If I don't have that, I'm probably less inclined to get behind it.
I think that's made me shy away from Bitcoin and AI, probably to my own detriment.
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Sam Parr | Are you managing everything yourself? And what tools are you using? Is it just a sheet, just an Excel sheet?
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Moiz Ali | Yeah, there's a Google Sheet my brother and I share where we track our investments.
We have details like, "Here's your investment," and if it's a fund, we note how much we've committed and how much we've invested. If it's a startup, we specify how much we've put in.
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Shaan Puri | Do you guys still have like one bank account? He told me once, he was like, "Yeah, it's kinda just like a family pot of money." I'm like, how is that?
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Moiz Ali |
That work bit... a little bit... a little bit... Yes, is the honest answer. Is it still, in very many ways? I think the answer is yes to that when you see...
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Shaan Puri | him buying something stupid you're like you're spending our money bitch what are you doing | |
Sam Parr | Well, I knew he was going to buy you a gift one time, and I was like, "Well, he's kind of buying himself a gift, right?" If it's our money, you don't like wealth managers. So, do you manage everything yourself? Because that's a full-time job almost.
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Moiz Ali | That is a full-time job if you want to be good at it. If you don't want to be good at it, it's less of a full-time job.
At this point, I'm mostly content with my investments. If I'm not making a startup investment, I'm generally thinking of the S&P 500 or the U.S. Treasury. I'm not chasing the extra yield. For example, if I put a lot of effort into this instead of the U.S. Treasury, maybe an Uber bond dated in 2025 is paying 6.2%. But you have to analyze the tax implications of this Uber bond versus a U.S. Treasury to determine net yields.
I'm not like that. I'm just thinking that giving the U.S. Treasury the extra 1% yield isn't worth it. I'll go make a percentage elsewhere.
I've been through several wealth managers. I've been with Goldman Sachs. You know, I would like Goldman Sachs to always consult me before I make an investment. They would just give me their real opinion. I did that for a while, and I was like, "Okay, I thought you guys were just going to tell me if this is a good idea or a bad idea." But they're always like, "No, give us the money instead."
I used to tell this story: I went to my Goldman Sachs wealth manager's boss. I had her come over to the native offices, and I said, "Look, I believe that if I told my wealth manager that Bill Gates was ready to give you $1,000,000,000 tomorrow if I let him borrow this pen and he signed a contract to that effect, and put the $1,000,000,000 in a briefcase and gave it to me, you would say, 'Don't do that deal. Give us the pen instead.'"
They would not let you loan a dollar to Bill Gates if he was going to give you $1,000,000,000 tomorrow and he prefunded it. They'd say, "Give us the dollar. We can do better with it. Let us earn fees on your dollar. Don't take the $1,000,000,000. Let us earn fees."
I told my Goldman Sachs wealth manager's boss, "This is how I feel at your organization. It is horrific." And I still feel that way about them. You know, I'm still angry at them. And then I went to...
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Shaan Puri | this tell me how you really feel | |
Moiz Ali | yeah yeah I'll tell them | |
Shaan Puri | Phil, one of the funniest tweets I ever saw was you saying, "Oh, here's a photo of every 3PL owner that I've ever seen," and it was a picture of the Hamburglar.
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Moiz Ali | that's right yeah yeah it was so funny yeah | |
Shaan Puri |
That was so funny! Oh my god, I couldn't even imagine what you were going through that would get you to the point where you're like, "I'm gonna wait this out." And where's the picture of the Hamburglar? Because that's how clownishly criminal these guys are with how they rip you off.
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Moiz Ali | It's so true and so funny. My last Wells manager, about a year and a half ago, said, "You should invest everything into bonds right now. We think the Fed is gonna engineer a soft landing and everything's gonna be perfect."
So, you want this through; you'll get a 3% yield if you invest in a 5-year duration. Basically, you'll get 3% a year, but you have to commit to that money being invested for 5 years. I put in, I think it was like $5 or $7 million into that strategy.
Then, a quarter in, probably about 3 months later, I was like, "You know what? I don't believe in this. Sell everything right now. I'm gonna take a loss." I didn't think we were going to engineer this soft landing. Interest rates are gonna go up; inflation is 9%. What the heck are you guys thinking that we could engineer a soft landing here with interest rates staying the same and inflation being non-freaking percent?
You think that I should get a 3% yield? So, we sold the $7 million, and I probably lost about $125,000 to $150,000 in that 3 months.
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Moiz Ali | Doing this for 3 months, I lost $150,000 because I bet against them. People started to realize interest rates would rise, and since then, I've just invested in 3-month, 6-month, and 1-year treasuries to take advantage of the yield.
So, like, the guys who are the wealth managers, their job is not to understand markets. Their job is to understand how to sell you an asset. They're just car salesmen who sell financial instruments rather than cars. They're just as sleazy, just as slimy, and just as charismatic as well.
You know, have you seen *Seinfeld* where George Costanza is in a car dealership? A car dealer is walking towards him, and he's like, "Stop right there, or otherwise I'm gonna leave." That's whenever my wealth manager is like, "Let me sell you this asset." I'm like, "Stop right there! I'm gonna hang up the phone if we continue this conversation."
No, U.S. treasuries—don't try and sell me anything else. I know how you guys think.
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Sam Parr | are you ever gonna start another company again and and make that your thing you missing it | |
Moiz Ali |
Yes, definitely. You know, I think that I can't turn $100 million into $1 billion. I can only start a business that sells for $1 billion. So I think the answer is yes. In fact, I'm certain.
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Shaan Puri | Hey, what happened to the guy on Twitter who said, "Hey, money is not gonna make you happy. It's your friends and your family"? What did you say? You had some tweet about this the other day that I was like, "Do you hire a ghostwriter? Who is this? This is not on brand."
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Moiz Ali | this is | |
Shaan Puri | Not the guy who said, "I was put on earth to increase earnings per share." I like the old boys. Yeah, the guy who was like it.
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Sam Parr | All of it could be true. It all could be true, right? You could want to get after it. You don't have to do it just to make you happy; you do it just because it's exciting.
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Moiz Ali | And I think it all depends on the mood you're in. When you're feeling lonely or spending a lot of time with friends, you're like, "Wow, this is great."
Then, I'll spend time with friends, and this guy will be like, "Yeah, I'm making... I started this direct-to-consumer business. It'll be a $100 million business. This is our second year, $20 million EBITDA." And I'm like, "Fuck friendship, I need to get that."
So, I think the grass is always greener. I had this other thought where sometimes I want to be like a warrior and make a lot of money, and other times I want to be like a civilian and just spend time with loved ones. I don't have a good answer to that. I see a therapist, and she doesn't have a good answer to that for me either.
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Sam Parr | Hey, no. There's a quote by Sun Tzu: "It's better to be a warrior in the garden than a gardener in war." So, you know, you could still be this crazy person and chill every once in a while.
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Moiz Ali | In a while, that is a great quote! I've never heard that before; that's awesome.
What are some business ideas that you guys have? What's a business idea that I should start? You know, if I want to start a business, what do you guys think? You talk to a lot more people than I do. What's a business idea I should start?
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Shaan Puri | Well, my honest opinion is that you now have new advantages. You could start a new business from scratch, but I really do think the thing you should do is take a huge slug of capital and buy something that is already worth $100,000,000.
You could take something from $100 million to $500 million, or from $100 million to $1 billion, much easier than going from $0 to $500 million with a new product in the marketplace.
So, I think that's where I would start the process of thinking... yeah, thinking.
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Moiz Ali | about it | |
Sam Parr | I think you'd be very successful doing that. Or buying, like, I forget the guy's name... Nat, Nat something. The guy who bought the trading car company. Like, an old... what was it called, Sean? Yeah, Nat Turner, is that his name?
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Moiz Ali | nat turner | |
Sam Parr | He bought a trading car company and he's like, "I'm gonna make this cool again." I think you would succeed doing that.
But my read on you is that you are significantly more of a creator and an artist than you want people to think. I saw how careful you were about customer service and about the brand. Even though you want to act like this tough guy, you were like, "I'm gonna answer 200 customer service emails and I'm gonna delight them."
I remember talking about the website. You act like, "Oh, I just copied this, I copied that," but there's a lot more thought and care than you give off.
So, if I had to tell you what to do, it would be to start something from scratch and make it art. Then also have that 50% of you that only cares about EBITDA or whatever.
But my opinion of who you are is that you need to be a little bit more of an artist than you have been lately.
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Moiz Ali | I couldn't agree more I appreciate that | |
Shaan Puri | Yeah, I actually agree with that. I also think what I would not do is start another D2C brand. Even though you know how to do it and you could do it like you know in your sleep at this point, you're just playing the same level of the video game that you've already beaten.
What's more valuable than the money you would make is that you have a certain number of years where you're in your peak mental and physical abilities right now. Use those years wisely. Either go do the funniest things you can think of around the world, travel, and do all that good stuff, or if you are going to do a creative project, make it one that puts those abilities to good use and presents a good challenge.
If you came to me and said, "I'm starting another D2C brand and it's going to be, you know, not deodorant but whatever," I would be like, "Oh yeah, that's cool. I'm sure it's going to be successful." But I don't think that's what will make you more successful. | |
Sam Parr | Because Native Deodorant, like I use the soap, is a brand I trust. I mean, it's a trusted brand, partially because I know Moise. I don't know the owner now, so I don't actually know if they're sticking to what they promised.
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Shaan Puri | don't know procter | |
Sam Parr | Why? I don't know if there is actually... it's the opposite. I think if they own it, they're probably going to ruin it.
But, like, if you were to create some type of food that is a healthy option, or something like baby formula that's a healthy option, I actually think that that would start and look silly. But it actually has massive implications and could make... I don't like saying this, but it could make the world even a slightly better place.
You could find some fulfillment in that. It would look just like another e-commerce brand, but as long as it's not something stupid that doesn't matter to people—like, for example, another Allbirds thing—but something that I put in my body, you know? Or something that makes my kid healthier. Something like that, I think that could fulfill you. | |
Moiz Ali | I appreciate that, and I appreciate that inspiration as well. I think there's truth to both of those things.
I want to build something big, but one of the reasons that I haven't really gotten excited about anything is because I want it to be, you know, ten times bigger than my last business. That's hard to do, hard to be excited about, and hard to say, "You know what? I'm going to spend the next ten years of my life building this business."
That's what's made me really cautious about it, but in a way, I think it's making my mind less flexible than it was five years ago.
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Sam Parr | well you better get on it man you don't wanna be a has been or a one hit wonder I I I think that tell | |
Moiz Ali | me about it | |
Sam Parr | I think that native is only a home run for everyone else. I think it's a base hit for you. But I'm like, every day, I'm like, "What's he doing? What's he doing? Is he doing it?"
I'll see you tweet something and I'm like, "Is that gonna be the thing? Is that gonna be the thing? Is he gonna actually call in?" You know, you're gonna be like Uncle Rico bragging about how you both took state in high school. Like, I want you to know.
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Moiz Ali | what I mean that's right yeah yeah | |
Shaan Puri | yeah yeah I did what a what a nag | |
Moiz Ali | what an amazing nag well hey look | |
Sam Parr | I know that's great. Hey, it's not a nag. I'm saying you're, you know, it's a compliment. It's a compliment. Look, it's a compliment. You're going to do great things, but whether you're going to finally nut up and actually do it, that's what I'm eager for.
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Moiz Ali | Yeah, yeah. In fact, my banker from the native sale texted me yesterday. He said, "You know, November 8th is the 6th year anniversary of the sale."
So, it's been 6 years since I sold the business. And, you know, I think so far it's been my bad...
Hey, Moiz.
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Shaan Puri | you wanna not good you wanna feel some anxiety today | |
Moiz Ali | it's been 6 years since | |
Shaan Puri | you wanna fuck up your day here | |
Moiz Ali | You go, you know what that is? He's doing home options for investment banking. He's like texting me once in a while. He'd be like, "Hey, when it's time to sell this in your next business, don't forget about me. I'm still texting you."
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Sam Parr | What was the sales now of Native? I bet you that's doing $200,000,000 or $300,000,000 a year now, right?
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Moiz Ali | 500 this year | |
Sam Parr | 500... oh, coulda, woulda, shoulda. No, I'm joking. I would have sold probably as well.
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Moiz Ali | I don't think I could have done what P&G has done without them. They've made it an amazing brand. They think about product development, shelf space, and things in a way that's really spectacular.
I'm not to say that there aren't things where I look at them and think, "Oh, I wouldn't have done that." I definitely see that once in a while. But ultimately, the reason that I sold and what I did was that I wanted to learn from people who are masters at something about how to grow something from 30 to 100 or 500. I think I learned a lot of that while I was there.
People are always like, "Do you regret it?" There's not a day that goes by where I go to bed and think, "Man, I shouldn't have sold." I'm always like, "That was the right decision."
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Sam Parr | We'll wrap up with this one line that you told me. You were saying, you were telling me about the sales process, and they were like, "So how are you going to expand?" You looked at them all dumbfounded and said, "Are you...?" And you go, "Well, can you write the words 'native' on a shampoo bottle?" | |
Moiz Ali | how how | |
Sam Parr | About toothpaste, can you write that? Okay, that's how you expand, and that's exactly what they've done. I actually don't use the deodorant, but I use the soap. The soap is my favorite. You've even had like Melissa's cupcake soap, and you have all this other soap. I love the soap.
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Moiz Ali | the body wash is that right the body wash | |
Sam Parr | Yeah, yeah, yeah, yeah, yeah, yeah, yeah. And your body wash... and your smart-ass reply was, "Their strategy," and it worked. So, congratulations!
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Shaan Puri | yeah they're like that's right yeah sickly guy in | |
Moiz Ali | the back just | |
Shaan Puri | taking notes taking notes | |
Sam Parr | yeah he's gonna call someone hey guys can we write native on this bottle | |
Moiz Ali | can we do that it was bananas I remember that | |
Shaan Puri | right on moiz thanks for coming on man | |
Sam Parr | and we appreciate you coming on thank you very much | |
Moiz Ali | talk to you next week |