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Welcome to the Million Dollar Sellers Podcast. I'm your host, Nick Shucet. Today we have Naseem from Carbon6 on the call, which has an amazing background story. He's in Toronto. He's a co-founder of Carbon6.
The guy has raised hundreds of millions of dollars for businesses. I'm excited to sit down with him and learn a little more about him. Welcome to the show Naseem.
Thanks, Nick. Excited to be here.
Nice man. I know you said you're in Toronto right now, I believe at least you're from Toronto, but your family's from South Africa. We were just chatting a little bit. You mentioned your mom is from Durban, which I think is super cool.
Talk to us, man. You got such a great story. How did you end up over here, a co-founder of Carbon6, after traveling all these countries and seeing all these great places? What brought you here now where you are?
I guess it's been a random walk over time. Grew up in Toronto, and spent my early career traveling. I moved to South Africa and worked there for a while. I was in the Middle East, and Africa, and worked in Kenya, Pakistan, UAE, and different parts of the states.
I found my way to business school at Harvard where I met one of our other co-founders, Kazi. That's the part of the story that we've been friends for a long time.
Spent the next decade or so between then and now, building startups. Built an education technology company that reached about 80% of the largest thousand universities. We sold most of it to a growth equity fund that had invested in a couple of our rounds.
Set up businesses in a couple of other spaces. Invested in a lot of the early moving companies in neuroscience and psychedelics, and set up a biotech. Came into Carbon6 as an investor.
Justin our co-founder and CEO, as well as Kazi, co-founder, and CFO. Kazi's my good buddy. The two of them were starting down this path. I was pretty excited. I threw in money at the beginning.
Then a couple of months later, I had a bit more time and there was a need for another partner at the table. Hopped in and we've been building it together ever since.
It's amazing. You're like a unicorn in the entrepreneur world. You went to Harvard, you have an MBA, you're this school-educated guy, but you're so involved in startups and businesses. That's pretty amazing.
You don't hear that very often. This keeps hitting me with Carbon6. You guys are just different. You know, you guys just do things differently, which I love, because I'd like to operate differently too.
You always hear people talk about the ups and downs.
Having a partner versus doing it on your own. God forbid you go into business with a friend that you went to school with.
My take has always been, well, if you're not a shitty person, you might be okay. As long as you're just a good dude and keep it real, things might work out. You could make this great dream come true.
What's it like for you guys over there? I mean, we all have good days and bad days, and disagreements are going to happen. How are you guys positively navigating those things?
It's a good question. I think finding people with complementary skill sets is really important. You can be friends with all sorts of people, but when it comes to people that you're gonna work with, there have to be different things that people bring to the table.
I know you're hopping on with Justin and Kazi, and they'll speak to that a lot because I think that that's a really important dynamic. The other thing that became important to me as I moved through life, has been the importance of working with good people that you trust.
When I think about Carbon6, it's nobody's first rodeo. We've all built businesses before, we've all exited businesses before. We've all worked with great people in our lives.
If I look at our leadership team, we've just pulled in people that we've known were great from different parts of our lives before, If I look around our executive table, Kazi and I went to business school together.
Our chief operating officer, Mumin, the guy's a SaaS veteran. He's IPO'd a couple of companies before, with multiple exits. He played every role in our software company Top Hat, literally from operations to M&A.
Brought him in because I knew him well. I knew that he was the type of guy that was going to build this thing well.
Brought in our VP of ops and VP of engineering and multiple others on our team from that company as well, because we knew the pedigree and I'd worked with them before.
Similarly, our VP of finance and CRO or people that Justin had known through previous lives and had vetted and brought strong skills to the table. Building a company with people that we trusted and could bring in that way.
It immediately cut out that whole testing out, feeling out period. It meant that as soon as you plug somebody in that person was gonna be able to ramp up and move very quickly.
Amazing. Like any great relationship, trust is key. I think you put it perfectly, it just cuts through so much of that stuff that you hear a lot of people bicker back and forth about day-to-day.
It's like, ah, if you just, if you just kept it real and we're open and honest and you compliment each other well. That's amazing. I'm getting a little taste of that. I've been one year in with my partner a little over one year in.
It's been fun because things get hard, but we just get harder and we're stoked on it. We had a meeting at 5 a.m. today about implementing QuickBooks enterprise because of the fractional CFO that we brought in.
He's fractional. When I look back on it, it was just a bad idea. How can we expect this guy who's probably working like with eight other companies to add all this value to our company?
We've spent 12 grand on it and got nothing.
I'm like, man, let's just do this ourselves. It's so fun. I imagine you guys have a lot of fun at work too. I mean, is that how it feels, when Justin calls, Kazi calls, or Mumin hits you up? Is it just a fun, productive conversation?
How does that go with you guys in meetings? What does that look like a little for you guys? I think that would be valuable to know as well. Are you guys meeting once a week or once a quarter?
Do you guys have some structure to those things that you think other people would benefit from?
There's structure and then there's beyond the structure. I guess the structure is we have a weekly, weekly executive meeting. Then every quarter we try to bring a good chunk of the company to Toronto.
Justin's based in Puerto Rico. Kazi and I are based here. We set the office up here. More than half of our staff, at least our North American staff are based in Toronto. Every quarter we fly a good chunk of the company into Toronto.
We have team meetings, a little bit of a combination of some educational stuff, some rah-rah stuff, and just some productive move-the-ball forward stuff, which helps given that people are all over the place.
I think beyond that, we just talk every day. If there's stuff that's coming up, things to work through, people are either right beside you or right there at the dial of a phone and you're working through problems.
There was a lot more of it early when we were small because you're working together on absolutely everything.
Now that the business has scaled out a bit. It's not quite the same, but I think being in touch constantly and working through things constantly is so important so that you're always on the same page.
Nice man. It's always great to just hear stuff like that is inspiring to me. It keeps me going and I hope it's inspiring other people too.
I feel like whether you're going through school when you're younger or you're in the early days of your journey, that light at the end of the tunnel man. You might not see it. You know what I'm saying?
You're like, I don't know man. If I believe this is even possible anymore. I'm sure you guys all had those moments too, at some part of your journey. We all have to start somewhere. Man, when I started on Amazon, being a part of those groups was a big thing for me.
Going to events is so important. In this digital world, this remote working world, I'm seeing people undervaluing the importance of getting together and picking up a phone.
Everybody wants to blog their way through it or Facebook post their way through it or YouTube a video to get it done. I'm like, bro, I already did it. I called this guy on the phone. It's done. You spent three days researching stuff.
I made a 30-second phone call. It's good that you guys have all that stuff and it's great to see how successful you guys are. That shows us the things that we should be doing.
If you're wondering how do I grow a business to this level?
It's by working with great people, having that trust, getting in person, and doing all those great things, man. Thanks for sharing that stuff. I think people are gonna get a lot of value out of just knowing the way that you guys operate and do things.
I wanna talk a little bit about the way that you do things there, Naseem at Carbon6. I know you're raising funds, but you're also looking for businesses to buy. You're assessing those businesses and putting a value on them and seeing what can Carbon6 do this business.
I would love to hear how you look at that process, especially, what can I do with this business. What is the potential? Is there more market to address here? You tell us a little bit about that.
For sure. We talked about a few different things. There's the raising money part, and then there's the buying businesses part. Ultimately, I think a lot of it comes down to the same thing.
When people are buying, when they're investing, especially in the early days, they're investing in you. When they're looking to sell their business and they have multiple suitors, they're also choosing you.
A lot of success early on is about selling yourself, your team, and your capabilities. From the beginning, to get that first dollar or first few dollars, it's about people believing in you that you can make something happen.
As you grow, each step you take forward becomes less and less about you and more and more about what you've done and the machine you've built.
Now at Carbon6, we've raised a fair amount of money and we're going out for some growth capital which is gonna help with M&A and a few of the other things that we wanna do. The business, it's less about us.
It's more about the achievements that we've had over the past couple of years and that's what we're being measured on. When I look back at the last few years, it wasn't always the case. When we were convincing people to sell us their businesses, it was the same thing.
Now I think it's a little bit easier in the sense that we're a little bit vetted. When we come in, in our industry, in our little sector, people know who Carbon6 is.
They might not know what we do, but they've heard our name, they've seen our people at an event, and that helps. The other thing that I think has helped us on the M&A side is we actively partner with everybody.
Our mindset is let's just work with everybody. One of the best ways to get to know somebody is by partnering with them.
Do a deal with somebody, work on something with them, start seeing how they operate, and if that aligns with the way that you operate, then it's a similar thing to what I talked about earlier with pulling in people you've worked with before.
You just get to vet people differently as partners, and it's part of the vetting process on both sides.
Nice man. I love that idea of just testing the waters with something small and seeing how that goes. What a great way to start. It's great to be able to have those opportunities. Where you can even do something like that.
What about looking at a business and seeing, let's say you were an Amazon seller and you're like, man, I think I want to buy another business and see what I can do with it. Another Amazon business, maybe a competitor, or maybe not a competitor.
Let's say it's in a different niche and you want to be like, Hey, how much more can this niche grow? How many more people are out here, not just on Amazon, but in general?
Do you have a top-down approach to go about that and say, Hey, I think this market is this big and we can carve out this, here's the chunk these guys have now, but I think we could get this.
For sure. I think there's generic stuff that works in every industry. When we came into this industry, we just tried to understand what it looked like. None of us had sold online on Amazon before.
Part of it was just getting as smart as we could by talking to as many smart people as we could. There was also a little bit of math involved. We could say, okay, well, here's Amazon's TAM. Here's the typical amount that a seller is spending on SaaS and services.
TAM is what, total addressable market? I think, yeah, I didn't know that term, a year and a half ago or something.
Here's the GMV flowing through Amazon. Say it's 700 billion is sold on Amazon, a couple of percent is being sold, spent on software and some services beyond that, take you to a few percent.
That's the total addressable market, so to speak for software and services.
How do you find out about the software and services? How do you put a number on that? How do you say we think 2% of this total market is software? Is that an industry average type thing, or is there somewhere you go to get that information?
There are industry averages and industry benchmarks that you can look at, and it's typically a range. Then the way you can verify that is you can do the bottom up.
You go talk to a bunch of sellers and see what they're spending on their software, and then talk to some others and see what they're spending on their agencies.
Ultimately, if you think about software as a category, the biggest thing software does is just replace spreadsheets and replace manual labor.
If you can look at the stuff that people are using spreadsheets for and where they're spending their time, you can quantify a cost or area where there probably should be software.
If you look at agency-type functions, there are a lot of agencies that have functions that your software is not gonna automate out, but if it's manual tasks that you're farming out to a VA, chances are there can be a lot of automation there.
Those are some ways where you can start just by talking to people and then understanding how they're spending their time and then talking to more smart people and seeing what needs to be built.
You can start building that bottom-up view at the same time. When we came into it, we had the top-down view. Then we talked to a bunch of people and we read a lot and we realized, well, there's a pretty big software and services market, but super fragmented.
No player had more than a couple of percent market share. That's a pretty good opportunity because it's rare that you find an industry that's growing as fast as this one is.
That's such strong tailwinds behind it where it's going to continue to move and where there just wasn't a leading player. That got us excited.
Then part of how we picked our category was we said, well, within this, it's super fragmented, not yet that competitive, but some areas are more competitive, like Amazon, PPC is more competitive.
There was Pacvue, there was Skai, there was Perpetua, there was Teikametrics, there was Quartile, and the list goes on.
When we looked at certain other categories, there just simply wasn't the same level of competition. That was one of our overlays. The other overlay for us was thinking about, OK, well, who is the customer that we want to go after?
Where does that customer sit and where is that customer? What does that customer buy?
There were a lot of people out there who were targeting newbie sellers and that was a great business years ago whether it was course creators, literally keyword research tools, or product research tools.
Everybody needs a product keyword research tool. The problem with the category a little bit is that given the relatively low amount that people pay for the software, you need a pretty high volume of customers so you're constantly having to fill up your funnel with newer sellers.
One of the things that made us not choose that category aside from the fact that there were a couple of strong competitors in Jungle Scout and Helium 10 was that we felt there were larger contracts to go after in other places.
With bigger sellers who had different needs than where they would pay more for things, you could get the same amount of revenue with a far smaller number of customers.
Those were the types of things we started thinking about. What we realized was there are millions of people trying to sell online.
A couple million have an active listing on Amazon. It's 150,000 that represent 80% of Amazon's sales volume, something like 10,000 3P sellers at least, control close to 50% of the 3P market.
The 1P side is even more concentrated.
If you could build a business that was doing just that and then had a few products, you could start cross-selling. You could start increasing your customer lifetime value. Those are the types of things we thought about.
If I were to take this back to your question and think about this from the lens of an Amazon seller, an MDS seller who has great skills in growing Amazon businesses in particular.
I'd start thinking about, well, cool, what are the interesting opportunities out there and where can I add the most value?
Part of that might be exactly the exercise you're mentioning where there are a bunch of tools out there that can help you calculate market share.
Whether you're looking at your Jungle Scout or a SmartScout or doing it yourself or any of the other tools to start looking at market share, there are a bunch of tools that will help you assess different categories.
You can say, well, what is fragmented? What's not? I think there are also some other overlays that I'd probably have if I were an MDS seller.
I'd say, well, what am I truly excellent at? MDS sellers in general are excellent because you're entrepreneurs, you may be able to figure things out that most people haven't. That for me is just a transferable skill set.
It tells me that you're already in the top fraction of a percent of people that can do that thing and surmount that and they climb and climb the mountain top in such a way. I think that's kudos.
It means that you can do a lot more than this, but when you're focused on this, so what are the specific unique things you bring to the table? One thing I think about is D2C, because what we do a lot of analysis out is okay, how much GMV is there in different businesses?
We see that there are a couple of flavors. There are Amazon-first businesses and we serve a lot of them that don't go outside of Amazon because as you know as a seller, there's a lot that goes into optimizing your Amazon business.
It's very different to be selling on Amazon, especially if it's a slightly more commoditized product than building a D2C brand.
A lot of the folks on the D2C side, either ignore Amazon because they don't understand it, or they ignore Amazon because they think that the margins are too low.
They're just worried about the brand perception being on Amazon and they just don't touch the channel. When we look at GMVs across a pretty large sub-sec of D2C sellers, typically we find them to be very under-optimized on Amazon.
Amazon has 40% of online sales in North America. Yet for most of these D2C businesses, you're seeing, zero, three, five, 10% of their sales on Amazon. Where there's a zero, that's a huge opportunity for somebody that's an MDS member.
It's like, okay, find a D2C business that's doing whatever it might be doing. Take a look at branded search terms and see, okay, well, are people looking for this on Amazon? This could be a great logical product extension.
Now you're bringing something to the table that nobody else brings because you've got, you know, the skills to operate the Amazon business.
Equally interesting is an under-optimized D2C business where you've got an Amazon business, you've hired some agency that may or may not be good to run your business, or maybe you've hired some people that may or may not be good to run your business, do the assessment.
Say, how well are these people operating this business? How much headroom is there for me here? That's just a logical opportunity.
The second thing that I would look at is okay, where you know a category and you know something well, then yeah, who's performing well, who's not? That would be the second category.
Amazing. Yeah, man. In that conversation, you could tell you have a lot of experience. You're the marketing lingo, the finance lingo, the acquisition. You're seeing the 360 view of all that stuff, which is just super cool to hear that come through that message.
I love the different perspective as well as looking at a D2C business and seeing what you can do with it on Amazon and looking at those branded terms. I know you're not an Amazon seller, but you sure as hell sound like one.
I can tell you know all the lingo, the big players, you know what's important and what the focus on, man. Very cool. Thanks for sharing that, man. One last question I have for you. What newsletter do you read?
Where do you get your information at the level you're at to understand and stay up to date on the things you just talked about? I think that would be valuable to know. I would sign up for that newsletter.
I think one of the things I think I feel fortunate about is just having lots of people in my network that are sending me stuff. I'm in a bunch of chat groups where people are all over Twitter, who have a lot more time on their hands than I do.
They're just sending me constant tweets and insights and this and that. If you're around friends who are news junkies, get into chat groups with them. That's my first piece.
In terms of the podcasts I listen to, I'm sure you might have listened to this one like a lot of folks do, the All-In Podcast, it's awesome. Do you listen to the All-In Podcast?
I've heard of it, but I haven't listened to it.
I'm just a huge fan. I think if there is one business podcast to listen to, that's the one because it's on every week, it's four brilliant dudes in the tech space, just talking about everything from what's happening in business to geopolitics.
You get a pretty good rundown of the news stories of the week, but then also their views on what's happening. You get it from an investor's perspective, which I find pretty fascinating.
They try to take a balanced view or they're having any presidential candidate who has them on the podcast. They had Vivek on there, but then they got the democratic guys on there. They haven't had Trump or Biden, but they're getting a decent cross-section.
You get differing perspectives coming up, which is quite cool. The other one that I like a lot is the Acquired Podcast. This is a lot not for news, but from the perspective of a founder and an entrepreneur, these guys go deep.
They'll do four-hour episodes where they will dig into everything about the story of this business and what it is that allowed a business to be truly exceptional. They'll take businesses like NVIDIA.
Obviously, in the AI space, is the defining company of like, well, I guess Open AI, but if you look at picks and shovels being the most important thing in the gold rush, they're the picks and shovels company.
Going through the story of day 1. LVMH, what is it that drove them? Nike, what is it that drove Nike? That would be another one that I like.
Amazing. I know there are some websites out there where you can see some pretty good industry, average-type stuff. I forget what they are. I've come across, I think some of them are paid.
Do you mess with any of those or recommend any of them?
It's a good question. I don't look at many of the paid sites for information. I'm just reading typically what's happening in the news. When I think about our industry insights, we have access to a lot of our data at Carbon6.
We're auditing billions of dollars of Amazon GMV. We can typically tell interesting things. For example, from Q3 of 2022 to Q3 of 2023, your average Amazon seller shrank by 7%. Q4 to Q4 shrank by 13%.
It said things were getting worse last quarter versus the previous quarter.
We're talking about the stock market's rising. There are conversations about how we're coming out of it, but the underlying data suggests that the consumer is being hit far worse, at least progressively worse.
I do think we're going to come out of it. I think when interest rates, I'm not an economist, but as interest rates decrease, it stands to reason that things are going to get better.
It speaks to me a lot about what's happening in the economy and the challenges that are being faced by our customers and you know by sellers in general.
The MDS seller though interestingly, that if I think about the categories that are worst-hit, the categories of sellers that were doing the worst are the tiny ones. The sub-$500,000 seller was the second hardest hit.
The aggregator was the hardest hit. The aggregator shrank by the largest chunk followed by the small seller.
Well, it sounds like there are some opportunities out there, man. I mean, that's what me and my business partner have done a couple of times. Nothing crazy big, count on one-hand type thing.
It just seems there are some opportunities out there, with everything that's going on in the economy and stuff like that. Naseem, this has been a great conversation. Thank you so much for coming on.
I appreciate and respect what you bring to the table. Thank you so much for sharing some wisdom with us. Am I gonna see you in Vegas for Inspire? I know you guys are co-hosting this year.
We're co-hosting. I'm going to be giving a keynote at Inspire, so looking forward to hanging out with you guys there.
Yes. All right, man. Well, I'll see you in Vegas.
Good stuff. Cheers, Nick. Appreciate you having me.
Yep, thank you.
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