E27: Maison21G Co-Founder: Scents of Success, Real Estate Investing and Venture Building

29:15It's like because I'm a strategist, I had a frugal mindset of allocating resources. And then basically being a strategist, you plan ahead every single action. You take in steps, you have objectives for each of them. you iterate so you experiment each of the steps until you optimize to the to the number that you're trying to reach for for each of your actions each of your experiment but the bad side potentially of being a strategist is that you don't always take action because you you you basically sit and strategize for a long time before you can actually take an action because you consider every single variable until you find the best hypothesis paralysis by analysis yes very well described.

29:58And the good thing that happened to me is that I met Joanna, which you had on the podcast as well, who is my partner with Maison 21G, the main founder, the main person behind this idea. And she's the complete opposite of me. I'm a strategist. She's a machine. She's a doer. She goes into things. It's also a problem for her because she doesn't, you know, think things too long ahead. She really feels. She's more emotional. so she feels that it's gonna work she works with intuition and she goes into it while I strategize a lot

30:36how has your mindset evolved since you started Maison 21G in terms of personal growth what's the impact of building a business in how much you evolved as a person

30:52that's a very tough question I mean there's so much to say about it but I think dealing with people is something that is very challenging on a daily. Because when you start a business, it's just you, your partners, your ideas. But when the business starts to grow and be a bit more consequent, then you have lots of players to deal with. So you have the suppliers, the clients, the investors, the whole ecosystem to deal with. And so it's really this relationship with people. I think that I grew with Maison 21G while I was a bit more of a financial strategist guy in the beginning of this adventure.

31:28At the end of the day, you really have to put your hands in the machine. And so go and meet the customer, go and meet the investor, really understand who and who are these other stakeholders, what do they want as well? Because that's how the business will evolve is by satisfying all the different stakeholders of the business, the customers, the suppliers, the investors. Can you tell us how Maison 21G started? And tell us also how, whether basically the idea of product is the same today as in the beginning. It changed. So I'll tell you how. So Maison 21G started in 2019. The idea originally came from Johanna Monange, who was a creative director at IFF, which is a perfume multinational.

32:20They create fragrances and juices with perfumers and deliver those recipes to brands so that they can then sell to end customers. And so Johanna, by designing all these blockbusters perfumes like La Vie Belle, One Billion, etc., started to get a bit bored because there was less and less budget, more and more budget constraint onto these juices. And the end goal of these brands were really to fit the mass. And so Joanna's idea was to go against that and to provide personalized perfume for everyone. For me, I was not so much of a fragrance person, even though I worked with Joanna at IFF. And so I had the jigs of it and I was interested in the field.

33:01what I had was more of my little experience in M &A advisory and fundraising advisory in an investment cabinet. And so from my perspective, what was super attractive about this idea was that other beauty industry had been disrupted. The skincare, the makeup, they had been disrupted with direct-to-consumer models, with the NVB, the digital native vertical brands. so basically online brands that were indirect with consumers that were really engaging with the consumer on a personal level and understanding the trends and answering the trends and being really revolutionizing their industries while in the fragrance industry we were still quite it was still quite an old industry with top revolution was perfume centered around perfumers so bringing a bit more quality into the juice, etc.

33:57But at the end of the day, all the brands and the top seller in perfumery were based on a nigeri that would wear it and that would say, it's the best perfume you just wear it. There was no transparency, nothing. So the discussion with consumers was not there at all. There was very little direct-to-consumer brands or projects in perfumery that were bringing transparency, sustainability, basically answering all the trends that consumers in the beauty industry we were expecting. And so I felt like there was a huge gap. And so her idea was super interesting in a business perspective. And so that's where I started to completely deep dive into it with her, building up the business plan, the pitch.

34:38And this is how we went on the road trail and started to raise funds. Originally, our idea was very much tech because we thought our assumption was that consumers were wanting to have a very different retail experience. We're wanting to have something, as I said, revolutionary, so something very, very different. And so in this tech approach, we started the concept with Dylan, the third co-founder that was really the technical guy. He's a machine in everything that is web two, web three, but also mechanical engineering. And so we built a machine, a machine called La Source that was basically an espresso of the perfume of perfume.

35:19So we had capsules that were patented, that were containing the raw essential materials. And that basically when you put those capsules into the machine, click on the button was creating your perfume creation. That was when we launched in 2019, Maison 21G, really the center of attention. That was what was the brand. but ultimately we realized that consumers loved the experience of crafting of coming to the shop of doing a one-hour workshop sitting down with a scent expert and creating their own fragrance by themselves with their own hands and so the machine had zero value the machine was not even good as a marketing tool it was really it became kind of useless and so we had invested all these efforts, all this money into this assumption to revolutionize the consumer journey.

36:13But at the end, what customer was expecting was this human feeling, this human touch, this service, this education brought by a human person. And so we turned around that idea and we started to invest our time, efforts, and money into building up this workshop experience. And so that was a big turnaround for the company. for the company. How long did you make to make this decision? Because you invest a lot of time, you invest a lot of money and you also have probably kind of your ego. I mean, ego because you think you know what people need and what they want, but you're going to disrupt the perfume a certain way and then realize actually people don't necessarily care about that.

36:57So what's the process there to make such a, But basically, you call that pivoting in a startup, meaning I'm just going to do something completely different or very different as long as it works. And so how quickly did you do that? Very quickly. To be honest, we are not in love with our ideas at all. And as I said, the end goal is to satisfy stakeholders. Not me, me included as a customer, but we need to satisfy everyone. And if people are wanting that, we need to change. and that's no problem to turn it around. It's not about conviction. You can have conviction, but they must stay assumptions at the end of the day because you need to try them.

37:39You need to test them, experiment them. If it doesn't work, you change. You change quickly, you adapt quickly. That's the startup mindset any startup should have is to basically adapt to what is the demand. Yeah, you have your North Star, but you don't know how you get there and you try something and you have to be very kind of low ego and just realize I don't care. I'm just going to do whatever is needed or whatever people want to reach my North Star. And maybe my North Star is actually in the South or in the East. And so be it, as long as it works. Yeah, at the end of the day, it's customer satisfaction.

38:15It's the number that are growing. So if the machine is not needed moving, then bye-bye. Absolutely. So I think you guys raised about 7 million so far and you played a significant role in this. So how do you value a business? Let's talk about valuing a business in the different stages of a startup to attract and close capital. So let's start with how do you value and justify a startup in a seed stage? Maybe you want to explain what a seed stage is first and then explain how the kind of valuation and raising fund game takes place in that seed stage. Yeah, so I think there's a lot of experts out there that can describe this a lot better than I do, but I'll tell you about my own experience.

39:01When you're an entrepreneur, basically, you have this idea, this gap that you want to bring, this idea that you want to bring to life, and you need to fuel this idea with some cash, right? To build a team, to build a concept, to build whatever you need to build, the website, the store. And to get this cash, there's two possibilities. either you go you raise debt either you raise equity and so usually when you're a startup it's very complex to raise debt and so you will turn to investor so the seed there's multiple rounds of fundraising in a startup and in jargon you call it seed for the first one and then series a or pre-series a and then series a and then series bc etc as many rounds as there is into the growth lifetime of a company but the seed round is really the the original round of fundraising and usually go to friends and families.

39:51That's where everyone is usually going because that's the low-hanging fruit. That's really the easiest way to raise money is through friends and family because it's all about trust in the beginning. It's trust in the entrepreneur, that this entrepreneur is the MVP and will make this project to life and successful. So in the seed round, I think the weight on why I would invest or not is really onto the entrepreneur himself. Of course, also on the project. So what is the project potential? So is this idea really revolutionary? Do I believe in this idea? Is it going to really be adopted by a large portion of user, of customer, et cetera?

40:37And how fast can this idea grow and what will be basically my return on capital? So there's a bit of this. At the end, investors, they want a return on capital. So they still look for, if I invest X today, what will I get in three years, five years, 10 years, whenever the exit strategy is planned for the entrepreneur and the startup. And so then you talked about valuations. So in a seed round, in any round, basically, you build your valuation onto different, your enterprise valuation onto different methodologies. So the most common ones are, and depending on your business, there's several ones, but the most common ones are DCF, discounted cash flow, company comparatives, and previous transactions.

41:24So comparables, sorry, and previous transactions. So in a seed round, you can, based on your business plan projection, do a DCF, but it's not extremely relevant because it's very hard to predict your forecasted. Yeah, it's very theoretical. And so you mostly base it on what are the industry multiples. So those are the other methodology, the comparable or the previous transaction. So you go into Bloomberg or you go through your network and find out what are the applied multiples for this kind of very similar company to yours. And you apply this same multiple. In the same stage. In the same stage.

42:05Is this, because this is still very theoretical. Is it, especially in a state stage where there's nothing out there? Okay, if you're pre-revenue, you cannot even do this methodology because those multiples are applied to revenue. So if you're pre-revenue, it's really… The team. You can still do, you know, a projection, a DCF, etc. But at the end of the day, again, it's about the trust. And so it's really a buyer-seller kind of situation where you say, my company is worth that much because I think the potential is that much. But again, it's really about trust. So it's mainly how much leverage can you build as an entrepreneur?

42:37And this is mostly on what did I do before? Yeah. How successful was I? And therefore saying, I'm almost, by offering you some equity in my company, I'm making you a favor at this valuation. And then it's all a game of kind of supply and demand on whether people, you find the people were willing to pay this price. Exactly. If you're comfortable to pay this price, then we have a deal basically. But you also have to consider that if your investor in seed stage is paying X, but that is not. then when you start the business, get revenues, you don't achieve the kind of growth that the investor was promised in the first raising round.

43:16Your value would then decrease and that's never good to show. So you have to be humble and also start with relevant valuations. Yeah. How does valuation become easier to justify at a later stage? well at the early stage you cannot really much justify as we discussed so it's more about how much the person is willing to pay and how much are you willing to give out as a percentage of your company because basically we didn't say but if you're raising equity then you will give out a certain percentage of your company to an investor and so at a later stage valuation becomes a lot more, not easy to define, but at least you have a lot more assumptions and more data and metrics that you can use to build up this valuation that you made.

44:14So what you use is, for example, all your historical revenues. Then you draft out your business plan for the next year. And this business plan, the more data you have in the previous year, the more accurate this business plan could be or should be as an investor. You will, of course, look at all the assumptions, see that anything is credible as an assumption, as growth assumption. And then if it makes sense on what are the projected free cash flow for the next few years, then the valuation will make sense. You can combine this with also using the average multiple of similar companies in your industry and say basically the same company as me was sold at this price when she was doing that much revenue.

44:59So that's the kind of multiple that I will apply to my own business. Yeah, absolutely. But at the end of the day, you probably have an idea of the valuation you want to get, and then you go get the data and get the methodology that enables you to get the next valuation that you're looking for. So it's basically sales. it's basically sales but you again you don't want to be lying over promising or under promising so you want to be in the spot and that spot is justified you're right you i can build a 10 or 100 million valuation based on assumptions that i would put behind but and it's then how well can i convince how well can i back it this can i back these assumptions but but think a bit long longer term because the next round is not going to be justified.

45:54If you're too greedy in the short term and get an amazing valuation too early, you might think it's amazing, but it's actually not that amazing in the long term. Because you're under-promising. Exactly. You're over-promising. And so this is really what you don't want to be doing. And so that's what we were really careful about is to really put out their business plans and growth assumptions that were reachable for us. And then the valuation is just a calculation of this growth, this business growth potential. Valuation is just an outcome of it based on the multiple that's from the industry. And so we just use rationals that were realizable.

46:32And then indeed the huge work of an entrepreneur is not building up this valuation is to actually do the work and make the business grow at the pace and at the level that was promised in this valuation. And so that's then the whole entrepreneur's work of like making the business grow. Awesome. So there is a new trend since a few years that people are talking about, which is this crypto blockchain NFT thing. So what do you make of this crypto blockchain NFT thing as an entrepreneur in the perfume world? Perfume world? In the perfume world. I think world's... World. It's a hard one, man. So on a Wednesday at 8 p.m., it's a hard one.

47:21No. Wait, before going into, I'll do transition with crypto. With this perfume world, as you said, so what's the really fun part in my business today? I think it's the growth. As I said to you earlier, it's like I'm really interested into growing stuff, into growing myself, personal development, but also growing my business. And so this growth is both looking at the numbers in details, but also going down in the shops, looking to the customers, really understand what's needed. And so in this growth, what I look at is four different leverage to grow this company. You will look at market expansion.

48:00You will look at new product developments. You will look at optimizing the productivity of your current stores. so that will be basically your market check market share penetration in one given market so you you don't build up your new product you don't open new markets you stay focused on your markets and you make your production factor optimized basically true optimization of the different levels of a store so if you look for example for us of a perfume boutique it will be a growth of your top line growth of your bottom line so growth of your sales and growth of the cash that you get in your pocket at the end of the day, at the end of the month.

48:38And so optimizing those numbers is really a day-to-day for me, for us as an entrepreneur is to really look at our growth funnels of customers and increase the traffic, increase the conversion rate of our customer, increase the top line and the bottom line of our stores. And so that's the market pressure. I talk a bit about it because that's really my fun. But another thing is also diversification, right? And so building up new product or launching even new, completely new products is also a way for your business to grow and also to edge your risks because you're going to tap into new industries.

49:18And so talking about cryptos, because that was your question, we, today there's a trend on, you know, all the luxury brands, all the beauty brands, they are trying to tap onto this new trend of blockchain and of NFTs. so of course it crossed our mind to see what could be interesting for us to do in this environment, is it a metaverse is it the universe we want to go in as a perfume brand is it, basically the real question was is it going to bring value to our customers that was the most important question and we didn't want to go into it for a sole marketing communication purpose and so which is probably what most of these big brands do every time there is a new trend And big data, I mean, AI now is different because it's very, very, there is like concrete, like very, I mean, there's concrete applications that no one can ignore anymore.

50:15But you talk about data, big data, AI a few years ago, then blockchain, like most of these big brands, they kind of like do something because it's kind of like a PR play. Like they need to say, oh, we're doing that. We have this department basically focused on that, but there's probably not much happening. Whereas you are a smaller company, so you need to make a decision on whether there is something practical there that can get out of this. Super true. Completely true. Yes, for us, it's very much more practical. They have like massive PR budget, so they need to be surfing on every trends and be in the latest news to stay relevant.

50:51And for us is more practical in the way that we have much, much limited cash compared to these big brands. And so we need to decide where we're going to allocate this cash. Is it going to be really relevant to build up our brand, to build up relevance to our customer and to build up market shares? And so we have this idea that is not yet activated, but we've started to work on this idea whereby we could allow customers to own their own perfume recipe. And so today, you cannot even own a perfume recipe. It doesn't exist. You cannot, as a brand of perfumes, we cannot go to the government and file a patent for a perfume recipe.

51:34You cannot have rights for it. And so blockchain and the NFT technology could help us to provide this good to consumers that today was not possible to grant to customers because you would give and authenticate an ownership of this perfume recipe to Mr. X or Mr. Y. and why is it relevant for our business is because we are every day creating new perfume creations to you, to other consumers that come and make their own perfume recipes. And this would allow us to actually give you an ownership of this recipe that you have created. So it would belong to you. It's much stronger. You could potentially own royalties on it.

52:25You could potentially say that it's no longer for sale. You can potentially trade it. Exactly. You can resell it if someone else really likes it. Yeah. So you could, of course, then give it utilities and access to a community. There's many things that you could do through the NFT tool. But the most important aspect is that we would bring value to the consumer by potentially giving the consumer ownership of this perfume recipe that he would create. So what's the actual, to stay very practical. Yeah. What would be the main one or two kind of direct impact? Is it you think people think it's so cool that more people will come by or talk about you?

53:11Or is it actually, is there a way for you to actually make more money out of that? Like what's the actual direct impact of implementing NFTs and tell people actually you can own your own recipe? like so it's it's a very good question i think again it comes back to what i briefly discussed earlier on the the performance of the business when you look at all the different levels but you look at all the the growth funnels so your acquisition of customers your activation of customers your conversion and then your retention then your referral right and so as a business and through the the life cycle of a customer what's very important for us is of course the acquisition because we want to talk to a lot of people and we are very happy to grow the community of aficionado.

53:59So the acquisition, the conversion, because of course, when you're a customer, you really experience our products, so you really leave our products and be our brand. But then what's super important is the retention. So we don't want people to come, have a fun experience and be like, cool, that was Maison 21G and then don't ever think about us anymore. We really want them to become, to adopt Maison 21G as a lifetime, to become part of our community, to animate our community, to live with us and to basically help us grow this business, to be complete shareholders of this business. And so when you create your own perfume, you're already a little step in.

54:37It's not like you buy something off the shelf that you can easily replace. It has a bit more of an emotional value because you created something that is you, that belongs to you, that is your own, that no one else own, but going a step further and making it authenticating the ownership of this perfume recipe, make you the owner of it, make you the landlord of this perfume. And so it's a way for us to build up a bit more, to go a step further and to build a bit more loyalty into our customer, to make them a bit more part of Maison 21G by owning part of Maison 21G, by owning their own recipe. And as I said, they can even, you know, earn from it afterwards.

55:22So it has more than an emotional value. How do they earn from it, for example? If someone else says, hey, I want, if someone says, hey, I want the same perfume, then you will distribute a part of the profit of this perfume to this person who owns. When you own the perfume recipe, anyone who then would purchase this perfume recipe, you would get royalties out of it. Very cool. Okay. So it's really to build up loyalty into our customer. That's really the main reason why we thought of this concept. But then there is, of course, a lot of other potential. So a new side hustle for people out there in Singapore, in Asia, or actually now in Dubai, who want to build a side hustle is to go to the Maison 2 Energy shop.

56:07That's where you should invest. And then you build a lot of different recipes. you get the NFTs and you just wait for people to buy your recipe and then you're going to start to make passive income. Yes. Actually, it's very cool. The more Amazon 21G grow, the more potential you can get from your NFT. Is there something, are you thinking about something, so you said kind of like basic people, so the basic step is people build their own perfume, then they can kind of own their recipe. Is there something even higher, like a greater vision for all this NFT thing that you thought about but that would be more difficult to implement?

56:42Yeah, of course. There's always a long-term plan in everything that we think about. I think this idea came to me at first because I really wanted to focus on retention and building up this community of Aficionado to have them part of the project. But then there is a lot of potential behind and the idea is to create a marketplace and that's where come Dylan, the co-founder, where we would be a whole marketplace where those NFT would be dropped and where potentially we could then retail any other rare exclusive objects from the luxury industry. So we start with perfume because it's our brand. But that's what we do.

57:26That's what we know. But later on, we would like to, we potentially could provide this service for other brands so that they could build their own community a step further into their own brand and product. so that's one of the ideas and then the the next idea is also to to to work on on artist collaborations because at misanthony we love to work with creators because we are creators we create perfume and so we love to work with artists that are creators in in whatever field they do and so as you know perfume is is intangible and so we really need to materialize it and to to to make it live and so we want to work with artists whereby they would design something that would correspond to the perfume recipe so the bottle the packaging the art itself make it very artsy of a very artsy representation of the of the scent and then we could build limited edition kind of very rare perfumes so they would be like in a so pay on the rarity of the build up on the rarity of So exclusive collection with very exclusive kind of boxes, materials, and go a bit more in-depth, endless math.

58:38Awesome. What's the best advice you've ever been given? It's a tough question. What's an advice that you think you've heard that is really relevant to your life mindset and that you think would be really useful for people to think about? One thing I apply and I think is very, very important is really to take your time. Okay. Take your time, doing everything you do. But that's, again, the discussion we had on strategizing and not taking too much time. At some point, you need to jump in the water, but take your time. Make sure that what you're going to do is relevant to yourself, is going to really move the needle to what you want to achieve in life, to who you want to be.

59:26Stay in line with who you are basically and take a step back always to build stuff durably and to build yourself durably. So take your time. That's when I need to apply more actually. Yes. Growth is good, but sustainable growth is much better. I'm more the kind of guy who does the crazy growth, fall, crazy growth. Back like, basically, it's called mean reversion. So you grow experientially, mean reversion, co-expression in regression. It's a bit more, yeah, it's a bit more crazy for the mental health and everything, but it's definitely a good advice to take from you. If there was a summary or key takeaway that people should remember from today, what would it be?

1:00:13It's really to write down your objectives, write down your priorities. It's indeed take your time. It's basically take a step back, reflect on really what you want to achieve if you want to achieve and then retro retro plan so look at 30 years at 20 years at 10 years i mean our life is very short so let's make it make the best out of it right so let's maximize um all the the moments that we can have in it um by by basically planning a bit better but that's also my my will the ocd mindset to plan everything and to to to to have basically boundaries in the mess that I create inside. Thank you so much for your time, Max.

1:00:56Thank you for having me, Kevin. Thank you, everyone, for listening. A pleasure. Thank you, everyone, for listening and watching. Please smash the like button and give us your feedback in the comments. Highlights will be posted on YouTube, Twitter, Substack, LinkedIn, and Instagram. And I'll see you all in the next episode.