Investing

College Dropout Sold $15k of Lip Balm And Is Tracking to Be A Millionaire

Austin Smith

Published: November 7, 2024 9:34 am

Last Updated: November 7, 2024 9:40 am

Key Points

• Kobe Harris has built a monster company in short order
• It shares similarities with billion dollar brands like Burt’s Bees
• It is deeply profitable, and will likely help them become a millionaire and retire early
• See which investments can help you retire early by speaking with a financial advisor today. They can help you choose the best investments to get there sooner.

We love a good entrepreneur origin story, and few are as eye popping as Kobe Harris’s. In 2019, Harris was in college at Loyola in Chicago, conducting research for a professor on sustainability, and bees. The idea struck to try making his own products, and with just $200 in funds from his mother and some curiosity, Kobe began experimenting with different ingredient combinations on his bedroom floor.

Then things went parabolic. Kobe sold $15,000 in a single day and decided to focus on the venture full time. They’ve since gone on to build Kobee’s lip Balm, which promotes the following benefits:

• All natural ingredients
• Handmade
• Sustainable

Packaging is compostable and products are paraben free. It’s also incredibly lucrative. Let’s look at what Kobee’s is doing today, and what money lessons we can learn from the experience.

What’s Working Well

Kobee’s hasn’t simply rested on it’s core original product. Today they sell a range of products from lip balms and scrubs, to hand salve and lotion bars. They have a decidedly modern style with a premium price point. a 10 pack of balm costs $50, while their neck butter costs $42. For comparison, Burt’s sells a seven pack of lip balm for $27.5 today, and did $270 million in revenue in 2023.

The company is already profitable. Their 2024 sales are trending to $4 million, and roughly $750,000 in profit. We don’t know the ownership structure and whether Kobee’s has debt, but that’s a remarkable achievement and a highly profitable business at any level.

When Things Went Supernova

Harris went on the famous small business show ‘Shark Tank’. There they offered the judges 6% of the company for a $300,000 investment. That would have valued the company at an eye watering $5m. After some back and forth with Kevin O’Leary, who was pushing for more favorable terms, the investment fell through.

While that seems like a break in the wrong direction, it shows guts and will very likely pay off for Harris. Here’s why.

The Key Takeaways

Owning equity in profitable businesses can catapult your wealth.

Kobe stuck to his guns and didn’t give away more than he needed to the sharks. And why would he? Things appear to be growing well, and his business is deeply profitable. Small businesses are typically valued on a growth multiple of seller’s discretionary earnings, or SDE. At the projected 2024 profit figure we can assume (after taxes, interest, and other potential expenses) that Harris is still taking home close to $350k per year. If his business was simply valued at 5x SDE today it’s worth $1,750,000 and growing.

Given that O’Leary valued the company at $2m in their counter offer that Harris rejected, even that figure may be too conservative.

While we don’t know the exact details of their situation, these rough assumptions show just how well Harris is doing, and how much value they’d be giving up by selling their company at a lesser valuation.

The bottom line is that equity can make you rich, and help you retire early. That’s why so many retirees rely on their investments in stocks, and the income they generate through dividends and appreciation.

But figuring out exactly how much you need to retire, and which investments are best can be a challenge. That’s why smart investors meet with financial advisors to choose the best option for them.

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