Anyone who knows me knows that I am super pro ownership and generational wealth. I believe we need to build assets or buy assets and keep them forever, forever ever. I think this is why so many people are asking my opinion on the Bevel sale. Here is my take.
On one hand, I am grateful that he built a business that was worthy of being looked at and acquired by a company like Proctor and Gamble in the first place because that is one thing people will say is not possible. On the other hand, I think that despite the economic troubles Bevel has, which will be discussed later, I think its best to get over that hurdle yourself and capture the economic benefit in your community for your community. I am not in favor of selling but I will support the brother in his decision. It is great news nonetheless.
Don’t be a crab
I think that one thing our community tends to do is look at something great and then find reasons to hate. I saw this when Tyler Perry paid off $400,000 in layaway and then Tone Talks and Yvette swooped in to talk about him not paying people enough. We tend to always criticize people who do something under the guise that they didn’t do enough, meanwhile all Tone Talks and them do is make videos and they never actually build anything. I think that is just a version of crabbing.
I don’t want to crab out Tyler and I don’t want to crab out Tristan. Crabbing keeps you down. Promoting others elevates you. You can’t build your own mega company by bashing how someone decides to exit theirs. All we can do is support and do things our way. I choose to support his decision not criticize it from the sidelines.
Many people think that he should have kept the company but that is a lot easier to say from the outside. The Bevel sale is completely unlike the Carol’s Daughter sale in that Bevel is not a strong cash flowing business. Bevel is not letting the community down. They are actually elevating it. What they managed to do is what a lot of black businesses aspire toward. Instead of finding the flaws lets find a reason to celebrate.
The sale could make the company more accessible
The problem with Bevel is that they aren’t yet profitable and they aren’t even that successful. What we see is the image of success not actual success.
Bevel lacks the distribution of a big brand which is exactly what Proctor can and will do for them. They will take an online brand and put them in every Target, Wal Mart and Sally’s. This is something Bevel would have struggled to do on their own.
In doing this they then allow the company to be truly successful not just Instagram successful and your fam can’t eat Instagram success. In the sense of distribution this was a smart move for Tristan.
Economies of scale will make the product less expensive
Most of Bevel’s products are too expensive for the average consumer. Their trimmers cost more than twice that of an Andis clipper and their shaving kit is well outside of the reach of their target market. The concept is great, the execution not so much. What we are celebrating isn’t the profitability but really just the existence of what is.
Bevel should be in every barber shop but barbers can’t make sense of paying twice for clippers even if the product is more durable and is sharper. In theory they should but in practice they don’t. This is because the product is not competitive in the market. The partnership with P&G will finally make them competitive in the market which will then earn them market share that they deserve.
More revenue with less expenses make the business profitable
One of my favorite Warren Buffet quotes that most people have never even heard is that you should never sell a profitable business for money. Instead you should just keep the business and keep the cash flow. A lot of times people will sell their business only to be left holding a bag of money that loses value every year against inflation. They then must put that money to work and many don’t have the skills to do that. Selling a business for money is a losing proposition.
The problem is that Bevel is not profitable. So this rule is not applicable.
One thing I realized about the “sale” to P&G is that they never disclosed the price. I don’t think it sold for much because the way business valuations work is they are based on a multiple of your profit. Since Bevel has none, the valuation is likely a lot smaller that they would like to publicize.
So right now Bevel isn’t the company that we think it is. They get talked about a lot but they aren’t making money. Its one thing to not make money and be largely accepted (Amazon), its another to not make money and people don’t even use your product. The partnership with PG will allow them to cut prices, market to the masses, distribute to the masses and get their product in more hands. By doing this they can then decide to raise prices if they so decide but being the premium brand can only carry you so far. Eventually you have to build a Model 3 (Tesla).
In conclusion. I am impartial. I think that it would have been great to see him keep the company and its great to see him able to sell the company. I think we should support him either way.
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