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Zero to $170M without VC
115 Plays1 month ago
How we scaled Lifeboost Coffee from $0 to $170M in sales without raising a single dollar from investors. In this video, I break down the 4 key strategies we used to grow lean, fast, and profitably—from aggressive reinvestment and supplier negotiation to ruthless simplicity and building a powerful subscription engine.
If you're an ecommerce founder, this is the blueprint.
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Transcript
Lifeboost Coffee's Financial Strategy
00:00:00
Speaker
Here's how we scaled Lifeboost Coffee to over $170 million dollars in sales without venture capital. First, we stayed super lean in our expenses so we could invest everything in marketing.
00:00:11
Speaker
We paid ourselves nothing over the first year. We basically had a 50% gross margin, which means that you produce some sales because we're selling a physical product. We've got coffee costs, packaging costs, shipping costs, all those sort of things, credit card processing, after those expenses that are related to exactly the units that we're selling, we were left with about 50%.
00:00:31
Speaker
So if we produced a million dollars in sales, we had 500 grand in product costs, and then 500 grand left in gross profit for everything else. So we have about 50% gross profit margin.
Supplier Negotiations and Growth
00:00:42
Speaker
of that we spent 45 of that 50 or about 90 of our gross profit on marketing that left only five percent to invest in expenses people cost anything else that was not marketing or product costs that's how we ran for the first year of the business super lean so we can invest literally everything in marketing and acquiring new customers Second, we negotiated with our supplier so that we didn't have to pay for inventory until after we actually sold it. Now, this is kind of unique in our industry, but it's not impossible to do, at least to some extent, and almost in almost any industry.
00:01:17
Speaker
You can negotiate with suppliers to at least not have to pay everything upfront. The more you can do that, the faster you can scale without needing money from external sources. Now, I have a friend who built and sold a pet business for about $200 million. dollars He at one point had to buy a bunch of inventory upfront because his business was scaling so fast.
00:01:37
Speaker
He basically ended up $10 million dollars in debt in the short term, but then had an amazing exit only a year or two later. big risk and that can be the case if your business grows extremely fast, but that doesn't mean you can't negotiate with a supplier or get into a certain industry where you're able to sell the products before you actually have to buy them. That's the holy grail of this business, but the longer you can push out your supplier payments, the
Sales Channels and Marketing Tactics
00:02:01
Speaker
better.
00:02:01
Speaker
Number three was simplicity. We didn't sell on anything else other than our Shopify store with Facebook ads for the first year and a half. That's the only way we got sales. That's the only place we sold. That's the only traffic that we got for the first year and a half.
00:02:17
Speaker
I had been selling on Amazon for over a decade. I had taught 30,000 people how to sell on Amazon and some of the top Amazon sellers today took training that I created. So I knew a lot about Amazon, but that didn't take away from the fact that it was gonna be a distraction for our business until the time was right.
00:02:33
Speaker
Then we slowly added Amazon. Then we started adding other ad channels. But even then we were sort of ruthless about we would test a channel and if it wasn't proving out, even if it was doing okay, but we were only spending say 10 grand a month while we were spending 700 grand a month on Facebook ads, we would cut it out just for the mental space because that,
00:02:53
Speaker
is something you have to be ruthless about in business if you want to scale without external funding. Same thing applies to products. We would throw products against the wall. If something didn't work, we would kill it and cut it out.
00:03:04
Speaker
Amazon has been fantastic about that. They've thrown all kinds of stuff against the wall, and if it doesn't work, they'll kill it. That's what I think you have to do in business if you want to scale lean.
Building a Sustainable Business Model
00:03:13
Speaker
And fourth, we built a subscription base that funded everything else.
00:03:18
Speaker
In business, as you start acquiring more and more customers and as your sales grow, your cost to get new customers is likely going to increase. If you're driving a lot of Facebook ads, the reason that happens is, is at first with a small budget, Facebook is able to find you a very narrow target audience that's extremely likely to buy from you.
00:03:36
Speaker
But when you go from spending 10 grand a month to 100 grand a month to even a million dollars a month, Facebook has to reach wider and wider to find you more and more customers. That means your costs to get a new customer are gonna go up.
00:03:48
Speaker
And so the way we've been able to keep scaling is we built this subscription base by turning as many one-time buyers into subscribers as possible so that that cash gave us enough money to fund all of our operating expenses, most of our marketing and everything that allowed us to be more patient on customer acquisition.
00:04:05
Speaker
That meant that at first we were trying to break even on new customers in the first month, but today we're okay losing money when we acquire new customers for the first year That means that any new people that jump in this market, copying us, trying to compete with us, they're just gonna burn cash trying to advertise against us because we're willing to wait a year before we make money on any new customers.
00:04:26
Speaker
If you can do that, you win this whole game. Today, we have about 50,000 subscribers across Shopify and Amazon, and that still funds our growth every single
Key Takeaways on Business Strategy
00:04:36
Speaker
year.
00:04:36
Speaker
So as a quick recap, first, we had to be super lean so we could invest everything in marketing. Second, we negotiated so that we could pay for inventory after we actually sold it.
00:04:47
Speaker
Third, we tried to keep the business as simple as possible, the least number of products, least number of sales channels, and least number of ad channels possible. And fourth, we've built up a big subscription base that funds everything else.
00:05:00
Speaker
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