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- On 27. august 2019
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Michael Cammarata: He Was Expected To Fail Due To Dyslexia And Then Made $1M At 13 And Over $100M By Age 20 DealMakers podcast
Michael Cammarata is the CEO of Neptunes Wellness Solutions which is a publicly-traded company around health and wellness products with a valuation north of half a billion.
Inspired in his own life to make health improvements and conscious environmental changes, Cammarata is channeling his passion for bettering the livelihood of the human race.
He made his first million at the ripe age of 13 and later translated that prodigy into a variety of other sectors including biotechnology, advertising, electronics and entertainment.
Then I decided one summer, I was like, “Dad, I want a computer, and these guys are going to set it up, and we’re going to play a game.” From there, it turned into 80 hours a week.
It’s like you get your confidence destroyed off the bat because you learn differently, probably by people talking to people than written format.
I think that’s the area, and I think it has a lot to do when you used to be able to learn by communications, and then when the paper mills came and started making books, books are not exactly the best thing probably for people with ADHD or dyslexia to learn.
I think it requires time, but it’s really about building that confidence because in the beginning of school, it destroys your confidence, and you have to build it.
The real-time when it turned into making natural income was when I had a server built that let’s say my brother was helping me fund because I caught him doing something my dad would kill him for when he was in college.
Then I was like, “Five million people a day go into my websites.” He’s like, “Well, it sounds like you need to learn how to monetize that.” That’s when I had to learn how to monetize it to be able to pay for my server bill.
Then I was very lucky – right time, right place, right abilities, and collaborations, and we made a very successful hosting company.
So, it was a very successful hosting business, and we automated it because we didn’t have the money to pay for a whole bunch of staff initially.
Looking back at it now, and seeing things, it was right at the merge of an industry, and it was cool because it launched me into a couple of different industries right off the bat.
So, they got the hosting accounts when I sold those, and I had the servers, but I also had a whole bunch of contracts because I was promoting the web hosting company by giving people big websites and free hosting in exchange for all the advertising rights.
A group of investors wanted to buy it, but I saw dedicated servers starting to come into the market, and I was primarily shared hosting.
I thought that was a good idea because dedicated servers, which is ultimately the reason why you can pay like $9 a month now, or $2 is because people get their own servers and sell the space off of it.
But people start selling servers to people, who then started giving space to their friends, and then that’s what started bringing down.
Then when I got out of the hosting business, and I had all these advertising contracts, I’m like, “What do I do with them?” What I ended up doing, my dad introduced me to a group in New York called C I Sales.
Then they started selling the inventory on these sites, and I very quickly realized that the advertising business was emerging, and then that became pretty big.
I think my specialty there was being able to sell to networks who sold to people, to advertisers as well as being able to sell directly to advertisers.
Michael Cammarata: I guess the best way to calculate it is that I was generating, looking back at it, my accountants were quite amazed at it because I was generating between 17 to say early 20s, I was generating like over 100+ million dollars.
Then in online advertising, we were signing web hosting contracts where it was like “I own all the online advertising rights, and I’ll give you a 20% commission of what I sell, and I may throw in free web hosting for you.” Then by the time I was 17, it was more along the lines of the publishers of the websites getting 80% of the contract, and they give you 20% of the commission, and they want free web hosting as well.
That’s when I learned about due diligence, and probably started getting a good accounting team and a good legal team around me because the first wave of it was probably not the best.
Then I started realizing over time, if you don’t continue to adapt your business model, your margins start to shrink.
So, that’s when I started focusing on the business attribute of it and the due diligence and investing and understanding corporate structures.
That’s really where I learned that – the first couple companies I started were service-based businesses, and service-based businesses over time, the margin shrinks, and you have to offer more services to your customers.
Our first handful of employees were people I played video games with when I was – actually, to this day, my CTO of Schmidt’s now, was helping me with my web hosting business when I was 12 years old.
So, I’ve had a lot of great employees that have come over the years, but again, it’s like the accountants and stuff on those lines, and investments, it’s like you start making deals.
Michael Cammarata: I don’t even keep track in my head, but like probably now we have over 50+ that are deployed overseeing probably a couple of hundred companies.
Michael Cammarata: It’s definitely been something that – that was the biggest key that we did well in the web hosting company is like six people managing 10,000 accounts.
We automated so that as soon as they put in the credit card information, they validated their information, then it automatically set up the account.
That was probably what allowed us to be that successful because the web hosting companies on average had a couple of hundred people, and we had like maybe a max in web hosting like 15 people.
That’s where you start to realize to be able to scale, you have to be able to have the right partnerships, the right employees, and the right technology.
He was a chief marketing officer there, but he worked his whole way up through the big corporations, and I’m sitting here without a business plan, without really any focus.
So, when we’d try to talk about business, I tried to explain what I was doing but remember, he didn’t even know what a server was when we first started out.
If anybody wanted to help out or be part of it, or people I met playing video games, I was like, “Let’s build companies together.” And we built tons.
I learned that a TV show can spawn a music group, can spawn a phenomenon essentially, and then at retail be very successful with licensing, so that in Big Time Rush had a Nickelodeon TV show and it also had a music group with Sony.
If you can take a TV platform, and you can take media platforms, and you can create a group, and it resonates with the consumer, and then you can create opportunities at retail, then I was like, “Okay, wait a second.” The longevity of making a product and the impact that you can have on the planet is much greater than just being in the service business.
Michael Cammarata: I was looking for investments in the deodorant space in the natural area, mainly because of the consumer concerns about natural deodorant.
I looked at a crystal company, and I looked at a lot of different companies in that space are big and huge, but the consumer reviews weren’t exactly there.
She was selling natural deodorant in a jar at this time, and she had been working on a lot of different formulas, but she was selling the product in a jar in Portland at different regional retailers and stuff like that.
So, my simple thesis was, I called Costco, and I was like, “How big of a market is natural deodorant or deodorant?” They told me a number, and I was like, “Wow.” So, my thesis was: let’s Jaime and me start a company.
What I didn’t know at that time is that the reason her product in a jar was so successful but wasn’t mainstream is because no one could figure out how to put the powder-based deodorant, which is what the key is: powder-based, plant-based deodorant into a stick because there was no co-packer that could do it.
What I realized if you can break down your company to different elements and say, “This is what my cost structure is,” and you can involve your cost structure to even like, “We’re just starting this company.
Can you give us 90 instead of prepaid?” Or like, “We’re building this cash flow model from the very beginning” and involving those as your partners, and it doesn’t have to be financial partners, but work with your vendors, and then be extremely disciplined on what you use your money for.
We’d obviously gotten the machinery, and we’d jump-start, but then getting it running so that then it starts generating revenue, and then managing that cash flow appropriately.
Maybe a couple of million in some of the investments, but it’s really focused on building and accelerating brands that have purpose and meaning, but it was cash flow management.
At that point, I was actually going to raise capital with different partners because, obviously, going IPO you have to, and we were growing rapidly like quadrupling every month.
I invest directly into companies, and I bring in management teams that I recruit over the years to help focus on making sure that money goes right into things that can then generate revenue, and then managing that revenue with the pace of the growth of the business.
I think the previous natural deodorant for liquid-based formulas, and there’s machinery out and co-packers to do that, but there wasn’t the machinery to make the powder-based deodorant.
We use pure essential oils that come from like Bulgarian flowers that are extracted, then distilled, and then put into essential oils, and then put into the formula.
We started out like in a couple of hundred thousand, and very quickly we became, within the year, in the millions, and then became tens of millions, and a lot higher.
My idea was I’m going to pitch him all my ideas of what I’m going to do in an IPO, and he’s going to tell me how many things I’m doing wrong because he’s going to want to sell me to sell to him, and I’m going to learn how to adjust my IPO strategy.
It’s all because of a fluke chance and Dr. Jane Goodall that I actually had to – the worst part about the process was I was going down the IPO, path and I actually culled money from one of these hedge funds that I had to call off and say, “I changed my mind.
Michael Cammarata: It was an opportunity that emerged and what was really unique about it is learning what I learned about fragrances, essential oils, and naturals that the extraction methods are probably one of the most crucial parts to personal care, home care, and consumption items.
So, the science that’s being developed today in research today has such a huge impact, not to some of the consumables, but on the personal care items and the home care items.
And also, the attraction you can make high-end fragrances, essential oils, with as big as companies are switching out of synthetic fragrance, and the natural fragrance put these companies in very good position to capitalize on several different things: 1) the research and plant-based ingredients, going beyond just consumables, but into personal care and home care items.
When I had that opportunity to become the CEO, and I even invested into the company, it was something else that – it was a hard thing to make that call because I love Schmidt’s and the brand, but after we got to the global launch and I trust Unilever totally;
I felt that it was the right time for me to be able to jump into this emerging market and really be able to add that level of quality, transparency, and knowledge into.
I always wanted to run a publicly-traded company, so again, it was right on par, and to be able to deliver plant-based ingredients and make traditional products alternatives.
So, making essentially a plant-based alternative through traditional product, but now do it not only just in the stage and with just a handful of products, but actually be able to utilize cannabis ingredients and plants into the mix is a whole different thing.
in business, being in a large corporation like Unilever as well, and now running a publicly-traded business, if you had the opportunity to have a chat with your younger self, perhaps that kid that was 13 years old and give that little kid one piece of business advice, what would that be and why before launching a business?
Michael Cammarata: I think there are a couple of things I would tell myself, but mainly it would about like 1) I wish I would focus on getting confidence early, 2) don’t look at trying to do things the way people are telling you to do them.
I think some people go and they try to raise money more for a stamp of approval, and they rely on – even in the beginning, my attorneys at that level in the beginning and my attorneys now are a lot different because when you hire people and all that, don’t be afraid to voice your opinion.
- On 7. maj 2021
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