AMDP Draft

TO: Clark Hansen, CEO, AMDP

FROM: Ryan Murphy, Research and Development Analyst

 

DATE: September 30, 2020

 

SUBJECT: Recommendation to Invest in CAUSEBOX

 

As a Research and Development Analyst for Anima Mundi Development Partners (AMDP), it is my responsibility to find and propose worthwhile investment opportunities for our company that meet our high standards. After considerable research, I have found that CAUSEBOX satisfies our rigorous standards and would be an ideal company to invest in. I’ll now be taking a deeper dive into our rigorous standards, and how CAUSEBOX is an exemplary fit for our portfolio.

 

AMDP Standards

 

AMDP’s focus on four concepts is what differentiates our investment strategies and success from other funds. These four ideas are explored below.

 

Triple Bottom Line

The bottom line of companies has traditionally been profits. However, the Triple Bottom Line (TBL) has gained significant traction in recent years, and AMDP ensures that each of their companies meets these bottom lines of profit, people, and the planet. Profit is, of course, the traditional way of measuring a business. The people aspect refers to how socially responsible a company has been, and the planet part refers to how environmentally responsible a company has been. These give a better indicator of a company's overall costs on our society than financial statements (Kenton, 2020).

 

Corporate Social Responsibility

Corporate Social Responsibility, or CSR, is a measure of how a company is being socially accountable. This can include positively contributing through philanthropy, environmental efforts, volunteering, and ethical labor practices (Schooley, 2020). 

 

Social Enterprise

A Social Enterprise is a business that has specific social goals that serve their primary purpose. These enterprises seek to maximize profits while also maximizing benefits to society and the environment. The profits are typically then used to fund social programs (Barone, 2020). 

 

Carbon Footprint

A Carbon Footprint is the total amount of greenhouse gas emissions that come from the production, use, and end-of-life of a service or product. These gases include carbon dioxide, methane, nitrous oxide, and fluorinated gases. It’s typically measured in tons of CO2 per year, and it’s important because greenhouse gases become trapped in the atmosphere and cause global warming (Albeck-Ripka, 2019). 

About CAUSEBOX

Started in 2014 in Santa Monica, CAUSEBOX is a quarterly subscription box service that curates products that are ethically made, sustainably sourced, and cruelty-free. They create sustainable work for at-risk women in underserved countries, have donated over 10,000 trees through their partnership with Trees for the Future, and have partnered with a variety of charities such as Freedom Firm, Books for Africa, and Speak Your Silence (CAUSEBOX.com). 

 

There are other big players in the subscription gift box game like FabFitFun and Birchbox, which both have over $200 million in annual revenue. However, CAUSEBOX is unique in its dedication to providing the most socially conscious products from international artisans who need the help the most. Here are some of the highlights from their website of the good that CAUSEBOX is doing for their disadvantaged workers:

·      Producer groups are 100% women-owned

·      They have grown their female workforce to 286

·      38% of these women artisans are the sole providers for their families

·      10% of these producer groups are disabled workers

·      60% of artisans lacked the ability to read or write, and are now receiving literacy training

·      The starting wages for these workers are 3 times above the national minimum wage

·      92% of artisans earned a verified fair trade wage

·      27% of artisans started savings accounts for the first time

·      93% of artisans are able to send their children to school (national average is 50%)

 

The founders are Brett McCollum and Matt Richardson, who recently graduated from UCLA and Claremont McKenna respectively, before starting the company. According to LinkedIn, they currently have about 30 employees. Customers pay about $55 per quarter for the box, which includes 6-8 products like clothes, jewelry, and beauty products geared toward women. Since their founding, they have received $0 of outside investing, and yet they still have over 4,000 subscribed customers, $1 million in annual revenue, and are at the breakeven point (gust.com). 

 

It may seem counter-intuitive that AMDP is guided by investing in profitable companies, and yet CAUSEBOX has not shown any true profits. However, great investing is based around the idea that a company has a clear path toward profitability in the near future, and the fact that CAUSEBOX is breaking even with no outside investment means that they can easily move into profits with the extra push that an investment from AMDP would provide. Their most obvious approach would be to increase their marketing efforts with a portion of the investment, since they already boast a phenomenal customer retention rate of 93.7% (gust.com). Their current lack of substantial profits and the fact that their shares have not yet been diluted by other investors means that AMDP would be able to get a great valuation for their investment. 

 

Expert Opinions

Liz Cadman, a popular subscription box reviewer for mysubscriptionaddiction.com, says in her CAUSEBOX Winter 2019 review that “even after reviewing CAUSEBOX for years…it’s incredible…that they can include so many quality, useful, high-design items for such a low cost AND give back, support fair trade, etc.” (Cadman, 2019). She “loves their mission of working with brands and companies that have ethical production practices” (Cadman, 2019), and this added intangible gives the box a distinct advantage over competitors. 

 

Megan Buchter, a researcher for AIM2Flourish, notes how CAUSEBOX “supports companies that make difficult decisions to be better- for society and the environment- that may come at the cost of profits.” Along with the added business of purely including these companies’ products in the boxes, CAUSEBOX also includes information to their customers about the information and missions of their providers so that CAUSEBOX customers can support these socially conscious companies outside of just what comes in their boxes. Through their providers, CAUSEBOX supports “less plastic in oceans and landfills,” “safer personal care products,” “companies that give back,” and many other great causes (Buchter, 2018). 

 

My Recommendation

CAUSEBOX is a prime example of what AMDP hopes to invest in. They are already on the verge of satisfying the TBL because they’ve got the people and the planet aspects covered with the myriad of great causes and companies they support, and an AMDP investment will push them over the edge from breaking even like they are now into profitability. They take care of CSR with their extensive volunteering efforts as a company, and they excel as a Social Enterprise because they are driven by maximizing benefits to society and their female artisans over only pursuing financial profits. Finally, their artisans’ green forms of production trump the pollution-heavy factories and sweatshops that produce clothing and products that compete against CAUSEBOX’s providers. All of these factors combine to create a relatively undiscovered company that will be catching many more investors’ eyes when they are putting up impressive profits within a few years with our help.

 

Works Cited

Albeck-Ripka, Livia. “How to Reduce Your Carbon Footprint.” The New York Times, The New York Times, 2019, www.nytimes.com/guides/year-of-living-better/how-to-reduce-your-carbon-footprint.

Barone, Adam. “The Aims of Social Enterprises.” Investopedia, Investopedia, 29 Aug. 2020, www.investopedia.com/terms/s/social-enterprise.asp.

Buchter, Megan. “Better Products for a Better World.” AIM2Flourish, 2018, aim2flourish.com/innovations/better-products-for-a-better-world. 

Cadman, Liz. “CAUSEBOX Winter 2019 Box Review.” My Subscription Addiction, 20 Dec. 2019, www.mysubscriptionaddiction.com/2020/01/causebox-winter-review.html. 

“CAUSEBOX.” Gust, gust.com/companies/causebox. 

Kenton, Will. “Triple Bottom Line (TBL) Definition.” Investopedia, Investopedia, 16 Sept. 2020, www.investopedia.com/terms/t/triple-bottom-line.asp. 

Schooley, Skye. “Corporate Social Responsibility.” Business News Daily, 26 June 2020, www.businessnewsdaily.com/4679-corporate-social-responsibility.html.