Full transcript
The same company, the same products, and a $3.8 billion payday three years later
0:00This vitamin brand just sold for $3.8
0:03[music] billion,
0:04but that's not the whole story. 3 years
0:06ago, Thorne, this supplement company,
0:09was struggling. They were on the brink.
0:11They were about to fail. [music] And 3
0:14years later, they sell for a $3.8
0:16billion payday. It's the same company.
0:19It's the same products. So, how does a
0:21company go from almost out of business
0:24to a multi-billion dollar payday in 3
0:27years? That's what [music] we'll break
0:28apart in this video.
0:30We're going to cover the terms of the
0:32deal and how this business turned
0:34themselves around into a multi-billion
0:36dollar payday. But first, there's an
0:37important business lesson to this
0:39[music] case study. Thorne sells
0:42supplements. Everybody sells
0:43supplements. Supplements are a saturated
0:45[music] space, and what most people will
0:47tell you is that you should avoid
0:49saturated markets, that they're too
0:51competitive, that there's too many
0:53people selling the same things. But this
0:55is evidence of the fact that saturated
0:57markets are often where the money is.
The products sitting on my desk are all saturated markets, and that is the point
1:00[music] look at these products that I
1:01have in front of me right now. These are
1:03very saturated spaces. We have the fish
1:05oil, we have creatine, we have prenatal
1:08DHA. And I know you're wondering, Ryan,
1:11why would you take a prenatal DHA? To
1:14that I say, first of all, you're a
1:16judgmental Jeremy, and second of all,
1:18it's 2026. I might want to get pregnant
1:20one day. All of these products are
1:23saturated markets. In fact, pretty much
1:25everything that Thorne sells is in a
1:27saturated space. But they can win in
1:29that market because they do things just
1:32differently enough to stand out. I'll
1:34cover more about what that means in a
1:36second. Here's what you need to know for
1:37now. Saturated spaces are often where
1:40the most money is. [music] You should
1:42not avoid saturated markets in your
1:44business. Instead, what you need to do
1:46is carve out your slice of that pie. You
1:49do that by being just different enough.
1:52Now, let's cover the terms of the deal.
1:55Thorne is being acquired by Procter &
1:57Gamble for $3.8 billion. Now, at the
The terms: Procter & Gamble, all cash, and why a deal like that closes
2:00time of this recording, the deal is not
2:03complete, but the buyer is Procter &
2:05Gamble. They're worth over $300 billion.
2:08They can afford to acquire a $3 billion
2:10supplement company. Furthermore, it's an
2:12all-cash deal, which means that it's
2:14likely going to close. It's kind of like
2:17if a billionaire walks into your
2:19neighborhood and offers to pay cash for
2:21the house next to you. It's not final.
2:24They still got to do due diligence, but
2:26that deal is going to close. That's kind
2:27of like [music] how this deal is being
2:29structured. Now, that headline is what
2:31everyone will see. Procter & Gamble
2:33agrees to buy this company for $3.8
2:35billion. [music] But, the more
2:37interesting part of this story is not
2:39who the buyer is. The interesting part
2:41is who [music] the seller is. The
2:43current owner of Thorne Supplements is L
2:46Catterton. L Catterton is a private
2:48equity group. That's interesting because
2:50this isn't their first supplement
2:52[music] company. This isn't the first
2:53business that they have acquired and
2:55then resold. In fact, they have a
2:57pipeline of businesses that they either
2:59acquire or invest in and then they bring
The seller is the real story: L Catterton, from Kodiak Cakes to Nutrafol
3:02to market. And the interesting part of
3:04this story is the playbook that they
3:06used in order to grow and exit this
3:09brand. For example, L Catterton is the
3:12owner of Kodiak Cakes. Kodiak Cakes is
3:15that popular protein pancake company.
3:18They didn't start Kodiak Cakes. They
3:20acquired them. Just like they acquired
3:23Thorne Supplements. They're now running
3:25the same playbook on Kodiak Cakes of
3:27growing and modernizing the business so
3:30that it can sell it for a ridiculous
3:32amount of money. They did this with The
3:33Honest Company, the diaper company
3:35started by Jessica Alba. They invested
3:38in [music] that business before it went
3:41public. So, they invested in The Honest
3:43Company. They helped it grow, and then
3:45they made their money when it went
3:47public. They did this with Nutrafol, the
3:50hair supplement company. They invested
3:52in it, helped it grow, and then it was
3:54ultimately acquired by Unilever for over
3:57a billion dollars. Now, they're doing it
Buy the whole company, get it off the public exchange, run the playbook in private
4:00with one of my competitors, Mars Men.
4:03That is a supplement company for men
4:05that primarily sells a testosterone
4:07booster. That brand is very new, and Al
4:10Qaedaron came in with a big check to
4:12invest in that brand. Guess what they're
4:14going to do? They're going to help that
4:15company grow, and then they're going to
4:17sell it for a ridiculous payday. That's
4:19the playbook that this company runs on
4:22businesses, and that's exactly what they
4:24did with Thorne supplements. So, what
4:26can we learn from this playbook? How
4:28does a big company like Al Qaedaron come
4:31in and help a business grow, especially
4:33a business like Thorne, which was really
4:36struggling just 3 years ago? They were a
4:3940-year-old company. They had just gone
4:41public, and they had lost more than half
4:43of their value. People were running for
4:46the hills away from this company. First,
4:48Al Qaedaron bought the whole company.
4:51That gave them control, and it
4:53eliminated them from the public stock
4:55exchange. That means that they don't
4:56have to report earnings, and they're not
4:58beholden to their shareholders. They get
4:59to do what they know works to grow a
The new CEO went back to basics and decided who Thorne was actually for
5:02company. They got to run their playbook,
5:03and they got to do it kind of in secret.
5:05And the first part of that is that they
5:06brought in a new CEO. They brought in
5:09Colin Watts in 2023 to lead the
5:12transition of Thorne to being an
5:14industry leader. And basically, he went
5:17back to basics. It's my belief that the
5:20reason why Thorne struggled for so long
5:23is because they had so many products.
5:26They were running an old marketing
5:28playbook, and they lost sight of who
5:30their customer was. That happens when
5:33you've got a hundred different products,
5:35and you're running an old playbook.
5:36Colin Watts came in and said, "No, no,
5:39no. We're going to get back to basics,
5:41which means we decide who we're going to
5:42serve, we use modern marketing, and we
5:45relentlessly focus on acquiring and
5:48keeping those customers. In Watts' own
5:50words, he said that his playbook was
5:53streamlining and focusing, and in some
5:55ways simplifying our go-to-market. Being
5:58really clear about who is our customer.
Direct-to-consumer acquisition, after years of selling only through physicians
6:01When I work with an entrepreneur, the
6:02first thing that we do is we have to
6:04define who our customer is. We just
6:07choose who we're going to serve. If we
6:09are selling a product to whoever will
6:11buy it, we're never going to be able to
6:13nail the marketing strategy that allows
6:15us to get in front of the people who
6:17want to buy our stuff. Watts knew that.
6:20Thorne was not doing that. They had
6:22raised a bunch of capital from their
6:24IPO, and they had all these different
6:26products, and their marketing strategy
6:28was scattered in a thousand different
6:29directions, and Watts said, "We're not
6:31going to do that anymore. We choose who
6:33our customer is, and we're going to go
6:35get them." And that was the starting
6:37point of their turnaround. The second
6:39part of the strategy is that Watts
6:40focused hard on direct-to-consumer
6:43acquisition. Before Al Khadra acquired
6:46Thorne, the marketing strategy that they
6:48were using was mostly through
6:50influencers and physicians. You couldn't
6:52find the products in stores, you
6:54couldn't acquire them on Amazon, and
6:56they had no acquisition funnels. Watts
6:59changed that. He knew who his customer
Auto-ship, and why keeping the customer was worth more than getting them
7:00was, and he went after acquiring them as
7:03aggressively as possible. But, it wasn't
7:05just about acquiring those customers. It
7:07was about keeping those customers. And
7:09so, Thorne released their retention
7:11strategies, which got people to keep the
7:13product on auto-ship and offered them
7:15discounts in exchange for them being
7:17auto-subscription customers. Now, if
7:19this sounds basic, you're right. This is
7:21basically the playbook for building a
7:24multi-million-dollar, or in this case, a
7:26billion-dollar company. Here's where it
7:28gets interesting. At the time, Thorne
7:31was not a multi-billion-dollar company.
7:33They were a hundred-million-dollar
7:34company, for sure. And that's a
7:36nice-sized company, but that's not a
7:38business that usually sells for billions
7:41of dollars. What [music] Watts did is he
7:43sprinkled in some of the modern
7:45marketing playbook, and that means
7:47carving out your audience and creating
7:49D2C acquisition and encouraging those
7:51people to stay around for as long as
7:53possible. It's basic marketing 101, but
7:56Thorne wasn't doing that before the
7:59acquisition. So, they bought this
They refused to discount the brand, and that is what protected the margins
8:01company with a good product base and a
8:04loyal customer following. Sprinkled in
8:07modern marketing, which allowed them to
8:09scale the company into the
8:10multi-billion-dollar range. There's one
8:12more thing that Thorne did extremely
8:15well, and that is that they refused to
8:17discount the brand. A lot of
8:19entrepreneurs, especially in the
8:20supplement space, will drop their price,
8:23do flash sales, do whatever they have to
8:25do in order to acquire the customer. And
8:28Thorne said, "Nah, we don't do that. We
8:29focus on having the best product
8:31possible and now sprinkling in modern
8:34marketing to acquire the customer and
8:36being the best service to our core group
8:38of raving fans. If we do that, then we
8:40don't have to discount." And as a
8:41result, they were able to maintain
8:44really strong margins, which helped them
8:45scale. Instead of trying to be the
8:47cheapest, they just tried to focus on
8:49acquiring their core raving fans. And
8:52that is what allowed them to carve out
8:54their slice in the supplement vertical.
8:57If they did not know who their customer
8:59was, they would not have been able to
Plain old fish oil, sold to the person who wants the best fish oil
9:00carve out that slice. But because they
9:02focused on the more educated consumer,
9:05the person who was persuaded by
9:07influencer recommendations or the person
9:09who was persuaded by double-blind
9:12studies, that was their target audience
9:14who was willing to pay a premium and
9:16willing to stay around for a long time.
9:18They focused on getting that slice. So,
9:21even though they sold plain old fish
9:23oil, they stood out to the people who
9:25wanted the highest quality fish oil. It
9:28is because they knew that customer and
9:30served them relentlessly that they were
9:33able to carve out their slice of the
9:35giant supplement pie. It wasn't about
9:38what products they sold, it was about
9:40what customer they targeted. And that
9:43customer was a loyal, raving fan who was
9:46willing to stay on auto ship for a very
9:49long time. And if you do that, then you
9:51can build a really healthy company that
9:53sells for a life-changing amount of
9:55money. So, here are the lessons that we
9:57can learn from this acquisition that
9:59will impact your business. Number one,
Lesson one, follow the money: Nutrafol, Gruns, Onnit
10:01follow the money. If there are
10:03acquisitions happening in a vertical,
10:05there's probably money to be made there.
10:07This acquisition is not the first
10:10supplement sale that was in the hundreds
10:13of millions or billions of dollars. If
10:14we look at the last several years,
10:16Nutrafol sold for a billion dollars.
10:18Gruene's sold for 1.2 billion dollars.
10:21Onnit sold for hundreds of millions of
10:23dollars. Olly sold for hundreds of
10:26millions of dollars. There's money in
10:28supplements. If you see brands selling
10:30for nine-figure or 10-figure amount of
10:33money, you might want to pay attention.
10:35And has that been a
10:37sort of industry that you might want to
10:39go into? Everyone else will tell you not
10:41to go into saturated markets, but you
10:43can do that if you follow the playbook
10:45that Al Sears and followed. That's
10:47lesson number two. Choose the customer
10:49that you most want to serve and that you
10:51want to do an awesome job for. And in
10:54doing so, you will call them out in your
10:56marketing and get them to be loyal,
10:57raving fans of your brand. Number three,
Thorne grew by doing less, and retention mattered more than acquisition
11:00Thorne grew by doing less. I would argue
11:03that the reason this brand and got stuck
11:05is because they were launching tons of
11:08products, going in a myriad of different
11:10directions, managing way too many supply
11:12chains. And that's why they sort of
11:14stalled out for about a decade. Number
11:17four, retention is just as important, if
11:20not more important, than acquisition.
11:22Thorne was not the best in the world at
11:24acquiring customers, but they were very
11:27good at keeping their customers. Now,
11:29this This just basic math. If you can
11:31keep your customers for longer and they
11:33keep paying you, then you're ultimately
11:36going to profit more in the long term
11:37than someone who takes in more customers
11:39but can't keep them. There is something
11:42very wise about spending more time
11:45keeping your customers than trying to
11:47get as many customers as possible. If
11:49your retention strategy is broken, it
11:51doesn't matter how many customers you
11:53get. Thorn was among the best in the
11:55industry at keeping the customers that
11:57they had and that made them worth
11:59billions of dollars even though they
The part that shocked me: sales doubled, the price went up more than 5X
12:00were not the best at acquiring new
12:02customers. Now, there's one more
12:05takeaway from this case study and this
12:07actually shocked me. When Al Kattan
12:09bought the business, it was doing about
12:12$300 million a year in top-line revenue.
12:15That's cool, but at the time of the exit
12:18to Procter & Gamble, the business is
12:20doing on pace for about $650 million.
12:23That's a little bit more than a doubling
12:26of the business. That's great growth,
12:28but it doesn't explain
12:30why this company will sell for $3.8
12:33billion.
12:34Al Kattan bought this business for $680
12:38million. So, they doubled sales, but
12:41they increased the value by more than
12:43five X. What that means is that the
12:46value of this business was not just
12:49driven by the increase in sales. It
12:52means that there were other things that
12:54were driving up the valuation of this
12:56business. Those are the things that you
12:58need to know as you're maturing a
What actually moves a valuation: leadership, a growth story, and timing
13:00business and maybe thinking about
13:02selling a business in the future cuz
13:04ultimately, where you will make the most
13:06money is when you grow your business and
13:08have a ridiculously fat exit. That's
13:10what changes your life. So, what are the
13:12things that impact the valuation of a
13:14business rather than just sales and
13:15profit? One is leadership. Al Kattan
13:19knew that the old leadership team was
13:21not going to bring this company into the
13:23future. And so, they brought in new
13:25people and a new playbook in order to
13:27modernize this brand. The second is the
13:29growth trajectory. Previously, this
13:32brand did not have any growth trajectory
13:35and nobody wants to buy a company that
13:37is failing, but Alquarton knew what to
13:40do and as a result, they were able to
13:42create a growth story around this
13:44business that made them attractive to
13:46multiple potential buyers, ultimately
13:49partnering with Proctor & Gamble for
13:50$3.8 billion.
13:52And the third is timing. When Alquarton
13:55came in and bought this business, there
13:57were a lot of small companies that were
14:00just getting crushed in the wake of the
14:03COVID crash. Interest rates were going
14:06up, new sales were going down,
14:08valuations were cratering. So, Alquarton
14:11saw an opportunity. Today, they now have
14:14a growth story and a leadership change
14:16and the timing is just better. Now, they
14:19were able to create a bidding war from
14:21multiple different potential buyers,
14:22ultimately partnering with Proctor &
14:24Gamble. Those three factors impacted the
14:27valuation of this business just as much
14:29as the fact that sales had doubled and
14:32these are the factors that a lot of
14:33entrepreneurs miss when they are going
14:35to sell a business. They just say, "This
14:37is my profit. I'm going to attach a
14:38multiple to it and that's what I'm going
14:40to sell for." No, there are a myriad of
14:42other factors that can get you more at
14:44the closing table and if you know how to
14:47implement them, it can mean millions of
14:48dollars in additional payday when you go
14:51to sell a business. To close this out,
14:53let's talk about speed because Alquarton
14:56came in and had their multi-billion
14:58dollar payday in three years, but the
The two ways to compress forty years into three: buy a neglected brand, or run the playbook on your own
15:00brand was over 40 years old. So, how do
15:03you get the end result of your big
15:06payday in three years instead of 40
15:08years? Now, first of all, there's
15:10something very, I guess, politically
15:11beautiful about a business that you're
15:13going to grow and compound and slowly
15:16grow over many decades. And when you
15:19play the long game, you don't have to
15:21grow fast. You can have 20% compounding
15:23returns and build a ridiculously
15:26awesome, profitable, valuable company.
15:28But, if you want to go the fast route,
15:31there's two things that we can learn
15:33from this case study. Number one, you
15:35can buy a brand and implement the
15:37playbook to grow it and then have your
15:39big payday. That's what El Kateron does
15:42and that's what they did with Thorn. You
15:44don't have to start a business, you
15:46don't have to come up with a product,
15:48you don't have to invent anything. There
15:50are plenty of neglected brands in big
15:53markets that you can buy given the right
15:56time and the right opportunity. And if
15:58you implement the same playbook that El
16:00Kateron used to acquire customers and
16:03treat them really well, you can turn
16:04that losing brand into a profitable
16:07winner. The second option is that you
16:09can use that playbook on your own
16:12business to make it grow faster. What is
16:14that playbook? That playbook is choosing
16:17who your customer is, creating the best
16:19product possible for them, acquiring as
16:22many of them as possible, and keeping
16:23them for as long as possible. It's
16:25simple, it's basic, but that's the
16:28playbook to growing a business as
16:30quickly as possible. And specifically,
16:32if you can spend more than your
16:33competitors to get your ideal person to
16:36stay with you for as long as possible,
16:38you're probably going to elbow your way
16:40to the top. That is how a company like
16:42Grooons can go from zero to a
16:44billion-dollar exit in 3 years. [music]
16:47That's how a company like Mars, one of
16:50El Kateron's investments, can go to a
16:52nine-figure valuation in less than 2
16:55years. For most people, they're not
16:57eyeing a billion-dollar exit or even a
16:59nine-figure exit. They just want to have
Primal Kitchen sold to Heinz, and the big money made it better
17:00a seven-figure business they can sell
17:02for a life-changing amount of money. If
17:03that's you, that's where we specialize
17:06at capitalism.com. We help entrepreneurs
17:08build brands, get to seven figures, and
17:10then position themselves for a
17:11multi-million dollar payday. And you can
17:13download the playbook that we use to
17:15build brands to seven figures, or at
17:17capitalism.com/100k.
17:20It's going to look like choosing the
17:21customer that you most want to serve,
17:23acquiring as many of them as possible,
17:26and being really good to them so they
17:27stay with you as long as possible.
17:29That's the playbook. And of course, the
17:30specifics change based on the industry
17:33that you're in and the goals that you
17:34have. That's what the playbook looks
17:36like. And if you want to download that
17:37so that you can implement it into your
17:39business, you can get it for free at
17:40capitalism.com/100k.
17:43I love the supplement space. And I love
17:47case studies like this because [music]
17:49it sort of shows you how simple it can
17:51be. This is a company that does not have
17:53any innovative, [music] great products.
17:55In fact, their products are kind of the
17:56same as everybody else. But they had a
17:58very core group of people that they
18:00wanted to serve. And they did a really
18:01good job serving them. And the the
18:03buyers of this business, [music] the
18:05investors, El Carador, did not change
18:08much about the business. They just
18:10modernized the playbook. There are a lot
18:12of people who will see this transaction,
18:14and they will say, "Oh, the big private
18:16equity, the big money people, they're
18:18going to come in and they're going to
18:19water down the quality. Let's run away
18:21from this brand and buy from somebody
18:23else." I see it from a different
18:24perspective. I see that when a business
18:27comes in and does an excellent job at
18:29serving their customers, then it invites
18:31the big money to come in and help them
18:33serve even more people. I'm going off
18:35script now, but there is this case study
18:37a few years ago where Primal Kitchen
18:40sold to Heinz. And Primal Kitchen was a
18:43healthy food company that people said,
18:46"Oh, now Heinz is going to come in and
18:47pollute it." And that's not what
18:49happened. The big money came in and made
18:51the good products more available to more
18:54people. That's the beauty of capitalism.
18:56If you do a good job of serving your
18:58customer, the big money has to come in
19:01the company serve even more people. It's
19:03a beautiful thing. And I think that's
19:04what will happen with Thorne as well.
19:07All right, I help entrepreneurs build
19:08multi-million dollar brands and have
19:09really big exits. If you need help, go
19:11to capitalism.com/100k.
19:13My name is Ryan Daniel Moran, and I'd
19:15love to help you build your version of
19:17Thorn. Thanks for watching. I'll see you
19:18guys on the next video.