Just found out my neighbor’s business sold for $450M
My First Million
Deep Dive
What is the story behind Muscle Milk and how did it become successful?
Muscle Milk was started in 1998 by Greg Pickett and his family. Initially, they bought a sub-brand called Cytomax from his employer, but it wasn’t successful. They pivoted to creating a protein supplement powder that bodybuilders were willing to drink despite its chalky taste. Over time, they expanded their market by focusing on flavor innovation, particularly creating a vanilla flavor that tasted like dessert. This shift helped them go mainstream, and by the time they sold the company, it was generating over $200 million in revenue with $60 million in profit. They sold the brand for $450 million but retained their flavor technology company, which they later developed into a separate business called Flavor Insights.
Why did Scott Galloway invest in FTX bankruptcy claims?
Scott Galloway invested in FTX bankruptcy claims because he saw an opportunity in the chaos. FTX had gone bankrupt, leaving $10 billion in customer funds lost. Galloway noticed that FTX’s founder, Sam Bankman-Freed, had invested heavily in companies like Anthropic, a leading AI company. Galloway calculated that the value of these investments could significantly increase, providing a potential return on the claims. He bought claims at $0.22 on the dollar and later sold them at $0.90, tripling his investment. This was a high-risk, high-reward move that paid off due to the recovery of some crypto assets and the success of Anthropic.
What was Bill Ackman’s $460M investment decision during the 2008 financial crisis?
During the 2008 financial crisis, Bill Ackman made a $460 million investment in Wachovia after spending just four hours analyzing the bank’s situation. He concluded that the panic surrounding Wachovia was overblown and that Wells Fargo, which eventually acquired Wachovia, was in a stronger position than the market believed. Ackman bought 178 million shares at $3.15 each, and within a week, Wachovia was bought at $7 a share, effectively doubling his investment. This decision was made at a time of extreme market panic, showcasing Ackman’s ability to identify value in distressed situations.
What is the Headway app and why is it considered a successful business?
The Headway app is a book summary service created by a Ukrainian entrepreneur. It provides 15-minute summaries of popular books, either in text or audio format, allowing users to quickly grasp key ideas. The app has 1,500 book summaries and charges $12-$13 per month. It has grown to $200 million in annual revenue with 30% profit margins. The success of Headway lies in its ability to simplify complex ideas, save users time, and market itself effectively through ads that emphasize the value of appearing well-read. The company raised funding at a $2.3 billion valuation, making it a standout in the book summary industry.
What is the significance of the ‘too hard pile’ in investment decisions?
The ‘too hard pile’ is a concept popularized by investors like Monish Pabrai, inspired by Warren Buffett. It refers to investment opportunities that are too complex or uncertain to evaluate effectively. Instead of forcing a decision, investors place these opportunities in the ‘too hard pile’ and focus on simpler, more obvious investments. This approach minimizes risk and prevents wasting time on uncertain ventures. For example, Pabrai avoids crypto investments because he considers them too hard to understand, even though they might have potential. The ‘too hard pile’ helps investors focus on opportunities where they have a clear edge.
- Muscle Milk started in 1998 as a family business.
- Key to their success was developing appealing flavors.
- Sold for $450 million, retaining ownership of their flavor technology which led to the creation of Flavor Insights.
Shownotes Transcript