Read on Twitter
(1/12) DTC micro-brands functionally go through 4 key revenue milestones/stages.
1) $0-1m
2) $1-5m
3) $5-25m
4) $25m-x
High level notes
1) $0-1m
2) $1-5m
3) $5-25m
4) $25m-x
High level notes
2/ $0-1m stage
This stage is toughest. It’s riddled w/ product challenges, inventory constraints, creative, etc.
Founders work tirelessly to achieve product-market fit.
VC-backed cos are managing expectations consistently.
Bootstrapped owners are fighting their own battles.
This stage is toughest. It’s riddled w/ product challenges, inventory constraints, creative, etc.
Founders work tirelessly to achieve product-market fit.
VC-backed cos are managing expectations consistently.
Bootstrapped owners are fighting their own battles.
3/ Channel mix in stage 1 is normally just FB, PPC and email.
Besides COGS, ad spend is the largest expense on the P&L. FB/IG will be 80%+ of the media mix since it’s focused on demand generation.
Creative is the most critical lever to pull for performance marketing.
Besides COGS, ad spend is the largest expense on the P&L. FB/IG will be 80%+ of the media mix since it’s focused on demand generation.
Creative is the most critical lever to pull for performance marketing.
4/ Most of the work is typically outsourced by brands.
Brands in this category often trade on EBITDA multiple, so building strong foundation in stage 1 helps drive greater value in following stages. There are exceptions to this (e.g. patents, unique IP), but they’re rare.
Brands in this category often trade on EBITDA multiple, so building strong foundation in stage 1 helps drive greater value in following stages. There are exceptions to this (e.g. patents, unique IP), but they’re rare.
5/ $1-5M stage
You’re achieving product market fit. Channel mix remains same as stage 1 but more refined & polished media strategy.
Creative & messaging are starting to get dialed in as you approach $3-5m in rev.
Media mix should slowly diversify here w/ small tests.
You’re achieving product market fit. Channel mix remains same as stage 1 but more refined & polished media strategy.
Creative & messaging are starting to get dialed in as you approach $3-5m in rev.
Media mix should slowly diversify here w/ small tests.
6/ Scale feels like an exciting challenge at this stage.
Sometimes brands push too hard on growth & top the S-curve. This isn’t a bad experiment; it can be good to know where you’ll see diminishing returns. Pull back & ramp up again accordingly.
Sometimes brands push too hard on growth & top the S-curve. This isn’t a bad experiment; it can be good to know where you’ll see diminishing returns. Pull back & ramp up again accordingly.
7/ Demand planning starts to become increasingly important; esp as some suppliers may require 90+ days.
You’ll start building out the org chart in earlier parts of stage 2. VP of Marketing will be your most impt hire assuming you have product & ops in a good place.
You’ll start building out the org chart in earlier parts of stage 2. VP of Marketing will be your most impt hire assuming you have product & ops in a good place.
8/ $5-25m stage
People, process, tools. What got you here won’t get you there.
Invest in talent. Hire experienced people that know your category & the job. Share OKRs / expectations w/ them before hiring. Get alignment.
Outsource accordingly but manage expenses carefully.
People, process, tools. What got you here won’t get you there.
Invest in talent. Hire experienced people that know your category & the job. Share OKRs / expectations w/ them before hiring. Get alignment.
Outsource accordingly but manage expenses carefully.
9/ Most brands get stuck in this stage. 90% of all brands live between stages 1-3.
They over index on new customer acq, not enough on retention.
Invest in retention. This feeds your growth engine.
Invest in organic growth. Organic / paid ratio should always be prioritized.
They over index on new customer acq, not enough on retention.
Invest in retention. This feeds your growth engine.
Invest in organic growth. Organic / paid ratio should always be prioritized.
10/ $25m-x stage
Escape velocity. Few micro-brands achieve $25m+.
People, process, tools. Repeat.
Hire the right people in the right seat at the right stage, give them the right tools & work to build smart processes. Get out of their way. But keep a close pulse on activity.
Escape velocity. Few micro-brands achieve $25m+.
People, process, tools. Repeat.
Hire the right people in the right seat at the right stage, give them the right tools & work to build smart processes. Get out of their way. But keep a close pulse on activity.
11/ Diversify your channel mix. Indexing on any one channel is a function of risk management.
Focus on profitability.
Be profitable. Always.
Focus on profitability.
Be profitable. Always.
12/ The list above is by no means exhaustive.
Comment on what opportunities and challenges you’ve observed.
Comment on what opportunities and challenges you’ve observed.
