Roman Khan's Frameworks Behind $200M/Year in E-commerce

Roman Khan runs $200M+/year in ecommerce across multiple brands.

In 2018, he nearly went bankrupt. That moment changed everything. In this conversation, he shares:
→ The supplier framework that protects your cash flow
→ Why world-class operators run single digit opex
→ His hiring philosophy (and why he avoids US talent)
→ The micromanagement system he swears by
→ How to budget when you can't predict supply chain
→ Where he's putting his time and money in 2025

No surface-level advice. We share the frameworks that scale.

Timestamps:
0:00 Intro
0:30 Q4 Learnings and What Went Wrong
6:51 Building for Exit vs Quick Cash
11:55 Planning the Next 5 Years
20:03 Origin Story
31:01 From Rocket Internet to Peak 21
38:00 Inventory Management Framework
53:29 Day in the Life at $200M/Year
1:04:17 The Micromanagement System
1:10:04 Why You Should Avoid Hiring in America
1:18:41 Company Culture and Retention
1:26:00 Investment Strategy
1:31:13 Where the Alpha is Going: SEO, Reddit, TikTok
1:35:42 Rapid Fire Questions

About Elevator Goods:
Elevator Goods is the home for modern DTC. We build brands, back creators, and bring founders together through capital, free education, and community.

Learn More: https://elevatorgoods.com/

About the Moderator:
Monish Sabnani is a Managing Partner at Elevator Goods. 

X: https://x.com/msabnani93
LinkedIn: https://www.linkedin.com/in/monishsabnani/

Transcript

SPEAKER_01 0:00

In 2019, when I went almost bankrupt, I made like a five-slide deck. First slide was like, I'm an idiot. Two, my ego got the best of me. Three, this is what actually happened. Four, this is how I'm getting out of it. Then I called all my rich friends where I just like one percent to them. They lent me seven figures to get out of this thing. Punchline, what I'm seeing right now is like picking the right category at the right time and hitting it really hard. That's like 80% of the people winning. 20% are winning because they're just cheating. What is cheating? Like not paying duties.

SPEAKER_02 0:28

Just so I understand, you place a purchase order. The inventory gets produced. It sits at the supplier, but it's not on your balance sheet. And because it hasn't left the supplier, they can't bill you for it.

SPEAKER_01 0:39

So there are three vectors to it. One is your payment terms with your supplier. The second thing is the third level is then doing what I call consignment terms. Now, why would the factory do that? That was my next one. Why would they do that? Yeah. My cash flow is your cash flow. So I'm just like, look, here's my ERP, here's the login. You gave them full access. Full access. All of this. Full access. You're the most important person to me. I want to make sure you get paid before I feed my children. That's what I say in the meeting.

SPEAKER_02 1:18

Roman Khan is an e-commerce powerhouse here in Hong Kong. He is the founder and CEO of Peak 21, an investment company that invests, scales, acquires CPG brands. He's been involved with multiple categories from jewelry to electronics, food tech, and so forth. When you think of e-commerce, certainly here in Hong Kong, but most likely broadly Asia Pacific and the world, his name is definitely top of mind. And more importantly, a genuinely great person. So when we chat, I chat with you all the time. And I just thought that you would be such a gem to kick off the elevator talk series with. Awesome. Thanks for having me. I'm really excited. Last time I saw you was last week. We were at the elevator holiday party and we were talking about Q4. You were telling me about the Q4 experience you've had. Just for those watching, it's December 19th, 2025. So we're kind of at the tail end here. You know, I know there's a little bit of Q5 coming up and um and a you know a little bit more juice to squeeze. But last time we met, we were talking about your experiences this year. What have you learned? What are you going to take away into next year?

SPEAKER_01 2:26

Yeah. I think to contextualize it, for us, you know, of our EBITDA, um, you know, we're producing more than seven figures a month, but like in Q4, we're producing eight figures a month in terms of EBITDA, including October. Like October is really big for us too, leading up to November and December. And I've tried to, you know, I would say anyone who's followed me over the years will say that I'm a big proponent of micromanaging. Anyone who's worked for me knows that I micromanage. People in the studio who work for me probably micromanage their employees. I mean, I'm excited to get into that. Yeah, by the way. So I'm a very big believer in micromanaging. I would say this year I decided to give this non-micromanagement way of doing things a go. Did not work. Yeah. Uh does not mean that I'm a bad leader. Does not mean that my people are bad. I think it's just like the construct of D2C, the devil's in the details. Because D2C is just retail 2.0. So we had a big miss in November and December versus budget, like a big miss. Yeah. But year on year, we were still up massively. So it's a little bit of a you know flip side of thing about the glass half empty versus half full. For me, it's always half empty because I'm never satisfied. Um and the team feels that. So I would say like if it were to grade us this Q4, it would be a C minus, a solid one.

SPEAKER_02 3:52

First of all, had a similar experience.

SPEAKER_00 3:54

Yeah.

SPEAKER_02 3:54

And I think a lot of people did.

SPEAKER_00 3:56

Yeah.

SPEAKER_02 3:56

Um, but what did you like? What were the key learnings? I mean, is D2C still the right place? Is it is it still a good place to make money? I mean, everything I see, and honestly, experience is just everything is getting more and more expensive. Yeah. And if you don't have the numbers as far as like sophistication in your KPIs, you can just get crushed. Yeah. And so a lot of the like basic level players are just losing. And like, how are you winning right now?

SPEAKER_01 4:23

Yeah.

SPEAKER_02 4:23

Great question.

SPEAKER_01 4:24

I think all businesses in general comes down to people process system, right? So let's say for us, people broke this year. We had like basic human error that led to massive losses and forgone revenue, not losses, but forgone revenue and forgone profits. Yeah. Um and we're talking about the Amazon instance. Yeah, you have to share from the company. I remember we spoke about that. Yeah. So we had like a big miss with Amazon. We we executed poorly on inventory and merchandising and we lost a lot of money, like eight figures of like forgone revenue and opportunity costs. Opportunity costs. Exactly. Um I think for me in D2C, it depends on what vector you're at. So if you're sub 25 million, um you're very channel dependent from my purview. Like we looked at more than a thousand companies at Peak 21 for acquisitions. Um probably have close to 400 mentees, which is pretty crazy. Huge. Yeah, it's huge. Bunch of them are moving here, very lucky and fortunate to have them move here. Um we can talk about that later, actually. That's something I'm very passionate about. So have a very broad view of what's happening, right? So the average mentee, I would say, does $25 million in revenue sub 30 years of age. So I think that's highly relevant to whoever is watching this.

SPEAKER_05 5:43

Yeah.

SPEAKER_01 5:44

What we're seeing there is that um I've been doing this for 13 years now. First five years when I joined like you know, Rocket Internet 2011, the distribution curve was very um even. So if the Y-axis is EBITA and revenue, broadly all companies, all categories, all DTC, all Shopify, all marketplace stores were benefiting because meta was so cheap. Yeah. And over time this bell curve has gotten more extreme. So it's gotten more concentrated. So you have super winners, like super winners. We're talking brands that are less than two years old doing 10 million MRR. Yeah. Right? 10 million MRR, two 20-year-old kids like running it out of their basement, kind of thing. Yeah, I can name 10 off the top of my head. Exactly. Yeah. So that's the extremity of it. And then on the left side of that bell curve, you just have a fuck ton of bankruptcies. Like a ton. Like a ton of things that are just going through havoc. Like, and obviously it's not, you know, completely mutually exclusive. You have channel risk, obviously, but you also just have the tariffs, you have the trade war, you have all these. It's a minefield. Yeah, it's a it's a minefield. So if you think about it from that context, I would say right now, I think there are two things at play. One is how do you manage tariffs, supply chain, lead times, all that stuff, like the physical part of the world. And number two is the channel risk, inherit channel risk. If you look at like a brand like we own, like linear, like this jewelry brand, it's growing. And not to sound narcissistic, but the only reason it's growing is because we're excellent at PPC and influencer. So we have a moat. But if that was just one of my 20-year-old kids running shop, it would never work. It just wouldn't work. Because you need like muscle. You need like PPC knowledge, you need an influencer database, and you need working capital. Like I don't need it because like I'm here, I can negotiate terms with my supplier, but it's not a category you can just jump into and have success with. You're not riding the keger. So I think punchline, what I'm seeing right now is like there are some easy wins, and the recurrent theme is picking the right category at the right time and hitting it really hard. That's like 80% of the people winning. 20% is win are winning because they're just cheating, frankly speaking. Right? Like they're just like What is cheating? Like not paying duties. Okay. I see that all the time. Yeah. These businesses are not viable because they're using third-party solutions to circumvent duties. It depends on your goals, right?

SPEAKER_02 8:18

If your goal is long-term success and acquisition, correct. Where diligence will come into play, then that's not going to work.

SPEAKER_01 8:23

It always comes back to the framework I talk about, which is you know, you want to be in the top right quadrant. If you're spending your 20s on something, right? So you want to do free cash flow and you want to do enterprise value. And obviously, if you're building something that's cheating on duties, you're violating something, you're doing channel arbitrage, whatever it is, you're building for free cash flow, and that's fine. And then just be very ruthless about them, take out dividends every month. Yeah. But it's not going to lead to an exit. Um, so I think if there are two hats of the world, and I think like a lot of people are crushing it by just cheating, because this trade war uh is just opening up this whole spectrum of people who have a margin advantage because they're not American. And I think this trade war is actually hurting Americans the most, like small businesses in America, because if you look at my MA pipeline and the people I talked to are my mentees, the Americans are the ones struggling the most.

SPEAKER_02 9:20

Yeah.

SPEAKER_01 9:20

Because they play by the book, right?

SPEAKER_02 9:21

So I was in New York um right before Black Friday, and it was really actually weird because this was sort of when the K-shaped economy theory was getting talked about a lot. Sort of like there's two economies in the US. There's the you know, wealthy that are just riding the stock market boom and the AI boom. Those are the people like you know, there was there's two products. There's Apple dropped uh a $200 Isimayaki sock, you know, $200 cotton sleeve, basically. And on the flip side, you've got Chipotle burritos, yeah. You know, $10 every man. Yeah. Apple's sock is completely sold out nationally. And Chipotle's burrito, I mean, their stock is down, they're getting crushed. Yeah. Um even sweet green sales are down big.

SPEAKER_00 10:07

Yeah.

SPEAKER_02 10:07

Um people are not spending on on basic items. Um so there's sort of like two things happening. There's the people that are really wealthy, they're making money, they're spending. But on the flip side, like real America, main Main Street is really getting crushed right now with inflation uh because of the tariffs. And people are just basically buying, I think, the same amount, but because the prices are higher, that equals less volume, which directly trickles into RPLs, basically.

SPEAKER_01 10:37

Yeah. It's interesting because like I think like the best case study would be something like Raycon, which is you know a large brand, right? Like I think most people know Raycon. We have more than you know, four or five million customers in the US alone. Forget like non-US, right? Like in the US alone, we have more than four million customers. I haven't checked the latest numbers, probably higher now, right? And we tracked that category really carefully because in 2018, 2019, 2020, during that three-year period, wireless AirBuds was actually the biggest category on the Amazon period.

SPEAKER_03 11:11

Yeah.

SPEAKER_01 11:11

Because obviously AirPods was transaction true, transacting true Amazon. And I think it's like the canary in the coal mine kind of metaphor because our average weighted uh sales price for wireless AirBuds, X AirPods, has gone down 10%. Right? It's gone down 10% over the period of hyperinflation with the trade war. So everyone is paying more. Everyone makes this stuff in China. Good luck making wireless AirBuds else elsewhere. We're building the infrastructure for it now. We will be there eventually where we can be non-China dependent. But does that mean Vietnam? Vietnam, Malaysia, Thailand, we're just doing going all nuts because we just have so much volume, right? Like so we can. So we're just doing everything. We've already started. But those are all Chinese factories in those countries, anyway. Chinese factories, but also some like local operators, actually. Like, you know, it's like it's a mix. JVs, you know, so it's like, you know, it's a mix of things. But that being said, you know, you have a 10% decline in pricing power, and then margins are being compressed because everyone pay is paying duties, right? Yeah. Like it's it's it's pretty interesting. So on the mass market side of things, you're seeing prices come down and uh margins going down for uh for large businesses like Raycon. But then you have the other end of the spectrum where you have hyperinflation for everyone who's like working in tech, working in these like fancy firms, making bank, and you're selling $200 socks, right? So it's like a it's a very weird thing to observe and see.

SPEAKER_02 12:47

Yeah. Um but I guess just to take a step back. Yeah. So again, end of Q4, you're looking at 26. Do you feel good? Is it a is it a sort of moment where you're just kind of doubling down on the strategy you put in place? Or is it a bigger pivot, like, hey, everyone internally, we need to, you know, rewrite sort of the direction we're going.

SPEAKER_01 13:10

Yeah. I think um I've been doing a lot of self-reflection. So something I do, like I always have my mentees kind of do it, is something I call the vivid vision. And I think it's extremely important that everyone does it because it kind of so the framework of a vivid vision is you to answer a question in a little bit long-winded way. So I I turn 40 this year in August, and I'm writing a letter to myself, 4th of August, 2030, when I turn 45. And I want to visualize it and manifest it in a way where I'm talking about like, okay, you know, I'm sitting in my beautiful house, I'm with my beautiful wife, we don't have three kids, we have four kids, whatever it is, but by the different vectors. And I was going very deep into business, right? Like just segmenting that out. You do it for family, you do it for relationships, you do it for all these things.

SPEAKER_03 13:58

Yeah.

SPEAKER_01 13:58

So I was doing it for business, and I was like trying to be as intellectually honest as humanly possible. So we know this company, I mean, Manish, you know, but like I can't talk about it publicly, but you know that I bought that company in Salt Lake City June 2024. Eight-figure check, right? Like I wired the founder, eight figures, all secondaries, no primary going into the company. It's been a good success, right? Like it's I feel very good about it. Can I take it from where it is today to 100 million? For sure. I feel very confident about it. But if I go went back in time and I put the exact same amount of money into Metestock, yeah, I would have had twice the money now, liquid.

SPEAKER_03 14:37

Yeah.

SPEAKER_01 14:37

And I wouldn't have to fly around like a ping-pong bowl to solve the stick. Stay up in the middle of the night. Stay up in the middle of the night. Yeah. So if you're completely intellectually honest about it, what is my weighted average cost of capital? Right. Like this is what you, you know, when I worked in finance back in the days, it's like something we always thought about. Basically, a very fancy way of saying opportunity cost. If I'm gonna spend $10 million on this business, it's not even just the money, it's the time. Time and energy. Like it comes in three vectors. Uh, there's uh in this in this order in my life right now, energy, time, and then it's capital. Because capital is abundant. Raising money for me, no zero issues. Especially in Hong Kong. Zero issues. Yeah. So it's just uh it's it's it's you know, think about intellectual honesty. I was just like, oh, I would have made like eight figures if I just put that into meta. I would have made eight figures because at the time I made that transaction, meta was at 330. Now it's at 700 or whatever. You know, you get the point I'm trying to make. Yeah, of course. So I think the bar is even higher because if I'm completely intellectually honest about this, this business was spending less than a million dollars on meta. That that's where the opportunity was. All the sales were organic. Founder was in the mindset of I make money by saving money, you know, like that mindset is sort of like the degenerate. The dollar saved is a dollar earned. The degenerate we know is like, oh, spend, spend, spend, and like, oh, do we have more. Still doing that. Exactly, exactly. We're all in that trap. So hyper successful guy because he took this mindset. And then I was just like, okay, I'm gonna put like 10, 20, 30 million dollars into meta over the next five years into this business. But if I took the same working capital principle and I put it into meta stock, would I outperform meta? Big question. Big question, right? So I think for me, the opportunity and the way that average capital has gone up so much the last 12 months, because I mean I talked about on the operators pod, but I had a life-changing event with like App Lubin. Like I bought the stock at 60 or 80 or whatever, way that average below 100, and I rode that whole wave, right? And I think for me now, I just see that there is a huge liquidity premium. And what I urge people to think about when they think through the opportunity cost, just to just to kind of normalize it. Let's say you do $100 million in um, let's say uh Peak Twin One, these are numbers that are close to true, right? Like I'm spending 60 million plus on paid and definitely more than 40 million.

SPEAKER_02 17:06

This is across all the.

SPEAKER_01 17:07

Yeah. Probably more, to be honest. I should know these numbers, but I don't as the CMO de facto, more than the president or whatever, you know. But I like I actually just work as a marketer. We have a professional CEO. Poor guy, uh, horrible job. Yeah. But you know, it's like uh we spend like a gigantic amount of money. Let's keep the numbers round just to illustrate the point. 60 million in paid. To do to support 60 million dollars in paid, I need to spend another 40 million dollars on cogs, let's say. Okay, that's a hundred million dollar PL. So there's this guy, a friend of mine, he became the CEO of DESHA at the age of 28. You know, he's 45 now, but like you can imagine how smart it is. DESHAW is the hedge fund that Jeff Bezos worked for, very numerical, right? Yeah. And he was my mentor as I was going bowls to the walls with Applovin. Like 115% of my portfolio was AppLovin, right? Like liquid portfolio is like completely like meme coin for me, right? Uh and um the I was just thinking, if I deploy 100 million in this infrastructure in e-com, I'm running a hundred million dollar risk, right? You know how it is with e-comm. It's not a perfect math. Maybe that will yield me 20 million in distributions, maybe 40 million EBITDA, but 20 million in distributions. Yes. Like actual cash in my personal account. Yes. For the shareholders, whoever my shareholders, I can get 20 million in distributions. If I put 100 million at risk in the hedge fund in an industry, whatever, in any other industry, actually, frankly speaking, it will probably yield more with a lower risk profile.

SPEAKER_02 18:40

It sounds like you're coming, you're having a come to Jesus moment. Yeah, 100%. 100%. You know, like Roman, you are the e-com guy. Like lit, I've been in the you said 13 years, right? So I've been in it uh eight, and ever since I've been in it, ever since I've been in uh in and around Hong Kong, I've heard your name. You know, we only became close uh a few years ago, but I've certainly known that you've been around longer than that. Um sounds like you're having a real come to Jesus moment.

SPEAKER_03 19:08

Yeah.

SPEAKER_02 19:08

Um Hey, I'm Onish, and I just want to quickly give you more context on the world of Elevator. I'm one of the managing partners. Elevator is broken out into several groups. We've got Elevator Goods, our very own in-house brands and agencies that we're currently building every single day. Brands like Fluffco and Jiggies. Elevator Capital is where we invest in other brands, young founders who we believe are on the come up. If you're one of those people and you're looking for either capital or mentorship or strategic connections, please get in touch with us. The studio is our physical space. Our first location is in Hong Kong, and there are many more coming soon. This is a D2C membership club. If you're in Hong Kong anytime soon, please come check us out. Think founders, amazing conversations, and just learnings left, right, and center. Lastly, Elevator Talks, our newest show where we'll be interviewing the biggest and brightest names in e-com. This is not a show for service level. This is a show for tactics and systems where we get super, super detailed. So last but not least, thank you so much. Please subscribe because that will help us a ton in getting you better guess and more wisdom and more value. We really appreciate it. And back to the show. I want to take a step back for a second. So kind of dial it back all the way to the beginning. In, you know, and and we can kind of cruise through this at at whatever pace you'd like, but like tell me about tell me how this all started. Yeah. You know, like you are I know you today, you talk big numbers. You can use terms like $100 million and and you really mean it. Like you can show that, you can prove it, you open your dashboard to anyone. How did this all start? Like, how did you get to these numbers?

SPEAKER_01 20:43

Yeah, good question. So the story is really simple, actually. So, like uh I was born and raised in Norway. My parents were from Bangladesh. They moved to Norway in 1968. So Bangladesh had a separation with Pakistan. It was really nasty. And my dad luckily had the foresight to see it coming and left in a timely manner to move to Norway. So uh I grew up in Norway, public housing, like you know, 600 square foot flat, five of us there. So I think anyone who comes from it's not poverty, right? It's an oxymoron because you I won the lottery. I have a Norwegian passport. Like, get the fuck out of here. Yeah, like I'm the luckiest guy in the world, right? Like, so I grew up in Norway where on merit, you know, I go to the best private school. So the equivalent of like HKS, I get financial aid because I'm smart. You know, and like I don't, you know, my parents can't afford to send me to that school, but I go to this school. So I get exposure to really wealthy kids. And that kind of seeing is believing, right? Like you're just like, wow, you know, this guy has a pool. We live in Norway. You can use that pool three days a week. You like three days a year, and you're fucking rich, right? Like it's like, and it's heated. This is very nice. Uh so you just kind of you get that vision, right? By just pure exposure. And I think like inherently from there, I was just like, I want to be really rich. Like, you know. I want to be really, really rich. Long-winded story, and I want to cut to the chase and get to your question. When I was 1920, I actually became a US dollar millionaire. It's a story for another time. But basically, I got very lucky. I put all my money in this stock. It popped. Trading has been consistent. I've always been a degenerate gambler, right? Like I went 100% plus on this thing. Yeah. So I became a millionaire at a very young age. And I paid like 30% capital gains because I didn't have like my dad was like a fucking welder. And my mom worked at a chocolate factory, right? And then became a daycare nanny. So I didn't know that you can have a trust structure and you could have like avoid capital gains tax.

SPEAKER_03 22:41

Yeah.

SPEAKER_01 22:42

So two things happened out of that. One is that I realized capital gains is crazy. Number two is I was reading about China all the time. So this is like 2005, 2006, that period of time. And I was like, I need to be in China. Like, what the fuck am I doing in this country? Like, they don't like rich people. Yeah. I want to be rich, so I can't be here. Number two is like, there's no growth here. I need to leave. So I came out here and went to uni and HKU. Uh HQ. Unfortunately, I wish I went to HQ. HQC is like a better school by resume, but there's a horrible school. Go to HQU. I mean, my alum will probably watch this, but that's actually advice. Uh the because they just drill you to the bone, which is kind of good. But like for me, it was, you know, it was good. Anyway, so I go there and I have one class with this professor called Chris Dorn. He's amazing. He's in Hong Kong. I actually want to hire him to train my people because he he taught me more in his class than I've learned from anything, anyone else. He was an AP at McKinsey, I think, or engagement manager. I can't remember, but he was at McKinsey for a long time. Basically, in one semester, distilled everything you learn in McKinsey in one course, but in a really digestible manner, like a very succinct digestible manner. I remember as I was graduating, I was asking him, like, you know, Chris, what should I do? Like, should I go work for McKinsey, Goldman? Where should I go? It's like, you should not go to McKinsey. It's for insecure overachievers, and your ego is too big, and you'll get fired within probation. And you're too smart for that. He was just like, you can't do that. So he told me the best thing you can do, and this is a fucking life-changing advice. Life fucking changing advice. He said, you change you choose in the quadrant, because it's all about quadrants. Ideally, you choose both industry and geography. So to give you an example, you don't want to go and do paper in Germany because Germany is growing 1% a year and people will stop using paper. I think we can agree on that, right? Or gasoline cars in Germany, right? Like you don't want to work for like a German car maker right now in a low-growing economy. You want to ch choose the top right quadrant. So I got the job in finance after graduating, but I always had my preferred vision out for high growth. So when uh Rocket Internet came to town and they were hiring, they didn't even have a website, by the way, when I joined Rocket Internet. They were like kind of winging it. Like early days of Peak Ton, same same thing. I basically just like, oh, they're doing e-com in Southeast Asia. I just have to show up and we'll win. High growth industry, high growth geography. And that's how I kind of stumbled on e-comm. Yeah. So it's driven by that framework. Because I was just like, okay, how can I choose something that's so high growth? If I could go back in time, because I would have chosen another industry, frankly speaking. You would have. I would have. I would have. If I'm completely intellectually honest, I would have chosen anything. If I came from a place of privilege, if I'd understood, like, you know what all the my kids go to HKS, like when I meet their parents, like my kids are gonna have such a fucking advantage. Yeah. Understanding where you make where you print money, right? So it's like I would have chosen another industry, but I chose it on that framework. And I have no regrets, right? So it's it's it's it's it's interesting. That's kind of how I stumbled into it. So you actively said, I'm choosing e-commerce. Correct. And I was like, I'm gonna go wherever. I'm gonna go to like I was like a pingbong bull. They sent me, I did a led like Zalora, Hong Kong. I was like, okay, you're needed in the Philippines. Like, yeah, let's pack up my fucking bag. I lived out of a suitcase, flew out to the Philippines, was there for like six, seven months, and I flew to Bangkok, uh, did a lazada there as a CFO uh and ran operations. Uh it was just like, I'll go wherever to like just where the growth is. Follow the money. Yeah, follow the money. Follow the growth, follow the K-gurve, be in the top right quadrant. And I think if you're in your early 20s watching this, because I feel like a lot of my followers are, they're doing a drop shipping store of like, you know, two, three million a year. Maybe they're doing 20 million a year, that spectrum. I think that's the best, most life-changing advice I've ever gotten. And it set me up for success. Follow the money. Yeah. Follow the money. Yeah.

SPEAKER_02 26:45

And that's kind of what the Middle East is right now. Yeah.

SPEAKER_01 26:48

100%. GCC is like, I mean, if I were now, right? Like I'm looking at the industry now, e-commerce reached a maturity curve. I was born in 1985. There was not a single e-commerce transaction in 1985. So I think what's really important to understand is like if you're young now and you're entering college, that industry did not, you should pick an industry that did not exist when you were born.

SPEAKER_03 27:12

Yeah.

SPEAKER_01 27:13

That's a good framework. Great framework. That's a that's like a simplified framework. Instead of going in a needle in a haystack, oh, what's high growth? Let me look up like Kager of this industry. Just think about it. Like, if that industry did not exist when you were born, that is probably an industry that is in the top right quadrant.

SPEAKER_02 27:30

I can see why you think e-commerce is a little bit less viable, in particular when you're targeting the US. Yes. But do you feel that same way when you look at global markets, global shipping? I mean, it's definitely a bit more of like a blue ocean. There's much more opportunity if you're built to ship globally.

SPEAKER_01 27:47

Yeah. Let me give you my margin breakdown. So 60% of my revenue comes from North America. So I include Canada, because I see American Canada as one, like from a pure PL standpoint, in terms of margin economics, Facebook scalability, all these things. It's one market, you know? Uh 40% of my revenue comes from non-North America. That's substantial at my scale. Like that's large, large, large numbers. The interesting thing is that 65% of my IBITA or 70% of my IBITA comes from non-US, non-North America. So you're selling less, but you're also making more. Yeah. So I think the reason for that construct is because the US, yeah. CAG. CAG CAG, but also because the US is so homogenous. So if you think about our brand, we've done a one out of ten job on localization still today, right? Like so our sites are not localized. Some of them are, but like that's not driving a lot of revenue. But it's so homogenous, it allows me to go crazy and spend $20 million a year on YouTube influencers. And then we are consuming YouTube influencers here in Hong Kong. So I'm targeting the person who looks to North America for cultural influence, for cultural assimilation, indirectly by going balls to the walls in the US. Right. So I think by going big in the US, you go big everywhere else. And it's like, you know, the big juggernaut for me is like obviously GCC, which is a derivative of the US again, by the way. It is. But then like, for example, if you want to tackle China, which I haven't, if I want to go into mainline China and I don't want to, I don't want to compete with like Chinese merchants, I'll get murdered. Yeah, race to the bottom. Zero, zero tenacity compared to like the average Chinese e-commerchant. Like if you come to my events, you have guys who are doing 500 million a year. 500 million fucking dollars a year. Actually, they do more than that. Um, and I'm just like, I don't want to compete with you. Like, I just like won't win. Like, it's just like you're a much better operator than I am. So it's like, but if you weren't to want to go into China, you don't go straight into China. You go into Japan and Korea. You go into the soft culture of what people consume in China before you enter China, right? Like, so the reason I speak good English and like don't have an accent is because like Friends was my English teacher. Snoop Dogg was my English teacher, right? Like it's just like consuming culture. So if you think about like going big in the US, I'm I'm not bearish on e-com overall because I still see margin. I just wonder at my scale now, where do I spend my 40s? The incremental. Incremental. Yeah. Like, how do I make, like, let's say, if you want to really think big, right? Like, how do I make a billion dollars? And it's like blasphemy saying that out in Norway because it's just like, okay, if you truly want to think about making a billion dollars in liquid net worth, there's a really big great book written on it by Brad Jacobs. Um, one of my work stream in my vision is to turn him into one of my mentors. So I have a work stream where I'm gonna email him every day next year. Not joking. You can just get an AI A. Yeah, yeah, yeah. But I want to be like, I actually want to write it uniquely every day and take pictures of myself, selfie with my kids. I'm gonna go ham on this guy. Poor guy. Doesn't know what's coming. Send flowers to his secretary, just like complete full-on assault. But he wrote a book called How to Make a Few Billions. It's fucking excellent. It's gold. It's such a well-written book. I'm gonna gift it to everyone on Christmas. I bought like a hundred copies. It's coming through Amazon. Uh, but basically, reading that book, I was like, you know, the difference between him and me is definitely privilege, the starting point. But number two is like he just thinks way bigger. And I think I think I have some natural constraints with D2C. Yeah. So I think I need to continue buying one company a year because I have the infrastructure. And there is too much money to be made doing that. Is that really gonna move the needle in a way that's extremely substantial? Question mark. In the next like 10 years. Is the best is that the best use of my time? Question mark. Um I'm not sure. I'm not sure.

SPEAKER_02 31:55

So again, dialing back a little bit, yeah. And I I do want to get to like your systems in a second, but I'm still kind of at the journey a little bit. So, okay, Norway, that's your beginning, clear, rocket internet, Southeast Asia, correct. HKUST, clear, clear. Peak 21 comes about. What was the turning point where you were like, this is a real business? And I don't even know if it was for Peak or if it was one of the sub-businesses within that that's great question. Like, when were you like, holy shit, this is real?

SPEAKER_01 32:27

Yeah. Um It was slow and steady, right? Like it's like to build a business at my scale, it did take 11 and a half years, right? Like I left Rocket Internet. So the first thing was like rocket internet allowed me to see a business go from one order a day to a million orders a day. Yeah.

SPEAKER_02 32:45

Fucking insane. Once you see that scale for the first time you're gonna be able to do it. It's insane, dude.

SPEAKER_01 32:49

Your life changes. Our first warehouse was the size of this. And then by the time I left, it was like three football fields just in Thailand. Just in Thailand. Yeah. It's pre-robotics, right? Now we have robots and all that shit, right? So I saw that. I was like, okay, I'm gonna start an e-com company. Rocket Internet made it really easy for me because they treat people like shit. Equity agreements were horrible. I knew that. I was like, this is an NBA, whatever. I don't give a shit. I just want to learn. It's also Southeast Asia. There's no rules. Yeah, exactly. So I'm just like, Sahinara, it's fine. So I just learned that. So it was very accidental, and I thought I wish I was more methodological about it. But like we basically, Jen, my wife, who's a management consultant, couldn't get a good job in Thailand. She was working as a management consultant in Dubai because she also hates taxes, it was a zero personal income tax. So she moved to Thailand to live with me to make the relationship work, which I'm extremely grateful for. Is Jen from Hong Kong? She's from Hong Kong, born here. So she she moved in with me and she's just like very entrepreneurial. So she actually started Peak 21, not me. So she was like, she saw that I had a laptop bag I hated, and she was like, I'm gonna make a new one. Because I didn't we went to a store to buy a laptop bag. I couldn't find anything I liked. She's like, let me just fucking make you one. So she just made one. It's crazy, crazy woman. So she made one, we launched on crowdfunding, kind of took off. She saw that I was getting burned out at Lazada. So she's like, why don't I pay the bills and then you do this full time? So she got a job for Square or Block pre-IPO. Like we moved to San Francisco, best decision of our life, being living in the right postal code. Like in my co-working space with Sam Parr. Yeah. Like I was an advisor on the board of like the hustle pre-exit to HubSpot. I got to know Sam early on. Yeah. Mois Ali was there. Like, you know, Fahim, like this amazing. It was like a category manager.

SPEAKER_02 34:30

Moiz Ali was working on the same co-working spot.

SPEAKER_01 34:32

Dude, I moved in two weeks after after he comes into the floating desk of like uh it's called the founder dojo, David Grossblock. David Grossblock, he was there. Uh he he like gave out the space for free. So it attracted these like cheap skates like myself, and that's what we had in common. And like I think it was just like we just had insane people coming through that co-working space. It was insane. It was just insane. Epic. So uh I was there, I was in that environment, we were all figuring out Facebook ads basically. Uh we scaled, scaled, scaled. Uh, and that was basically how linear took off. Linear would never work today if we launched because cost of advertising is too high and we picked the wrong category. But what happened was in 2018, I almost went bankrupt because of ego and hubris. I was like, we're gonna go big. I was chasing revenue numbers. And we've all been there, right? In the e-com. Yeah. We've all been there, and you start taking cash flow risks that you can't substantiate because I had no investors. Are you talking about specifically on inventory? Yes, correct. So it was like Titanic. I bought like all this fucking inventory. But even if you fast forward, have you ever had a year where you nailed inventory? Because I I nail it from a free cash flow standpoint. So I move the liability over to my suppliers. I don't carry the liability. So I make inventory mistakes, don't get me wrong, but I'm never caught off guard from a cash flow standpoint anymore. Yeah, I heard you say your supplier is your bank. Exactly. So I'm completely insulated from all inventory risk and I don't hold the bag.

SPEAKER_02 36:03

So just so I understand, you place a purchase order. The inventory gets produced, it sits at the supplier, but it's not on your balance sheet. Correct. And because it hasn't left the supplier, they can't bill you for it. Correct. But it's branded as your brands. So if you ever said, hey, I actually don't need it.

SPEAKER_01 36:23

Yeah. So that there are three vectors to it. Um answer first question, how peak21 accidentally happened after. But three vectors to free cash flow. One is your payment terms with your supplier. That's level one. Yeah. Okay, that's level one. Like you go from net paying up front to net 90, net 120. We have that. Yeah. That's a one-off effect, by the way. If you truly understand free cash flow statements, once you get this payment terms, it's a one-off. It's not like, oh, this improves my cash. And then it normalizes. So I think that math, if you don't understand it, think about it very carefully. Talk to an AI about it. Because if you don't have a finance background, it is a little bit complex, but it's a fucking one-off. Yeah. So don't go out and be like, I have net 90, I'm King Kong now. Let's fucking go balls to the walls. Do not do that. Yeah, yeah. Right? That's not the takeaway from this call. Uh, this this pod. The second thing is you have to manage the duration of your inventory. So let's keep keep it in layman terms and oversimplify it. If I sell some pieces of jewelry, I need to produce it in two weeks, which we do, and then I need to pay my supplier 90 days later after delivery. So it is 90 minus 15, 75 days in like working capital that I get in days. So you need to manage that. So we have that check, right? The third level is then doing what I call consignment terms. So in inventory procurement, there are two ways to buy inventory and the way you do it from an accounting standpoint. You have consignment and then you have outright. Outright is what everyone in this office does. You take the liability on your balance sheet. Outright means that I'm sending a PO to my supplier and saying, I take ownership of this inventory at this point in time and I owe you X amount of money. Yeah. Consignment is I take your fucking inventory, I put it in my warehouse, and I only pay you when I sell it. So it's a true like drop shipping business model, right? Dropshippers do this, but you're moving all your terms to consignment. Now, why would the factory do that? That was my next. Why would they do that? Yeah. Obviously, because I'm a good salesperson, I will go in there and they will believe me and they will see my track record and I open up all my books. So I'm just like, look, here's my ERP, here's the login. My cash flow is your cash flow. You gave them full access. Full access. All this. Full access. My cash flow is your cash flow. You, the supplier Manish, you're the most important person to me. I want to make sure you get paid before I feed my children. That's what I say in the meeting. I'm going to make sure you're paid. I want to make sure you feel reassured. Here's access to my books. I have nothing to hide. Is it ongoing access? Yes. You can log in too. I have like for one our largest businesses, we use Net Suite. So you can build a module for it. Dude, with lovable now, you can just wipecoat something. It's like very easy, by the way. Yeah. But we just like for the biggest business, NetSuite, one module. Uh supplier C is like, oh, why the fuck is this model selling slower? Blue? And then we have a conversation about it. And it's just like, yo, like, you know, I turned off the ads. Something was not working. Let's but it starts with a dynamic, transparent, win-win conversation. So you move from outright to consignment on those terms.

SPEAKER_02 39:43

Yeah. I think level three is the rarest thing I've heard. 100%. Level one and two is pretty commonly known as you get into some level of level. What you're talking about, level three, is frankly unheard of.

SPEAKER_01 39:54

Yes. So there's one very large business. I can talk about a pod that does this for their business. I'll tell you off the record later. And that's where I kind of it like really was like a light bulb moment for me. I had something similar before, but it was not truly consignment, but would do weekly disbursements of cash. So I would take my percentage of free cash flow. So let's say I'm selling $100 a day. $20 would be cost of goods sold. I'd be like to the supplier, hey, let me wire you $10 every week. Let me drip you money all the time. Let's not do the net 90 because I'm actually fine. Let me just give you because net 90 is just predatory and for ego. Like what really matters is the delta between on lever number two, right? That's that's what really matters. So I would just wire 10 bucks here and there, right? Like off the 20 that I've made because I'm just like, hey, I'm gonna get refunds. I'm, you know, I have cash flow. If I wire you 20, we're just not gonna grow as fast. Do you want growth or do you want like 10 bucks? And it's like all suppliers would take 10 bucks, right? But then this other brand came in with the consignment thing, and I was like, this is pretty genius. And we pivoted to that two years ago. So that's why we have this free cash flow machine. That's why, like, you know, for me, in my purview, we run much lower risk than the average DTC brand. And that comes with scale and with good people and all these things. Yeah.

SPEAKER_02 41:17

Uh but I think it's at the end of the day, even though the the quote unquote risk is not on you, as you kind of said, you're a good businessman. I mean, if something were to happen, it's still a situation where you need to work with the supplier to resolve, right? If for whatever reason you're over-inventoried, it's still like, okay, well, what are we gonna do about it? It's not a hey, risks on you, see ya.

SPEAKER_04 41:45

I think it is a little bit on them. Okay. Think about it. If let me flip it through you.

SPEAKER_01 41:57

Will your customers bail you out if you overstock? No. Absolutely not. So why would a factory why would you bail out a factory as a customer?

SPEAKER_02 42:07

So then you really have put yourself in the best possible position.

SPEAKER_01 42:10

Why would you bail out a factory? Obviously, barring, I never let a factory sit in the shit themselves. But if there's a Titanic event, I'm gonna take care of my family first. Of course. And but the thing is like it is of course, but then I see all these founders, you know, on my mentor pass thing, right? Like, like I talk to 50 kids a year who YOLO and take on debt to bail out their factories. And I'm just like Yeah, what are you doing? Let's uh peace out here. Let's let's stop.

SPEAKER_02 42:38

Well, there's a difference between, right, like you said you turned 40. Most e-com people I know in Dubai are 18. 100.

SPEAKER_01 42:44

100%, exactly. Right? Like so much more sophisticated. Don't take on the debt and bail out. So the same principle applies to everyone. Like, I always think our customers are right. And in this dynamic, I'm the customer. So I'm always right. And I think you need to put on that hat where you like overextend yourself for these customers on DTC. You should not overextend yourself as a customer for your supplier. And I think it's a big mindset shift. And I think going into the nuance of the details of your relationship with your supplier and really drilling into the details of how this flow does flows down to your cash flow statements is key. It's absolutely key. Because if you just go in and you just go in and you're like, I'm gonna bail out, like I'm fully liable for this. I'm sitting on this, I'm carrying this burden in this relationship. Because the factory are is very good at making you feel that way because they're much more experienced than you.

SPEAKER_03 43:36

Yeah.

SPEAKER_01 43:36

What factory owner do you have that's younger than you? I mean, all of the factory owners are older than me. Now I'm getting older, so they're marginalized. Yeah, exactly. Stepping in. Yeah. But it's just, you know, they're they have decades and decades of personal experience and institutional experience. So they're AP departments, AR departments. And their banking facility a lot. Everything is built around it. So they've been in the ringer a hundred times more often than you, and they get destroyed by the big guys and they make money with the small guys like ourselves. Yeah. So I want you to put that on as a lens when you go into a negotiation with your factory and don't be overly kind and don't overextend yourself. I wish I told myself that. Yeah, be more ruthless. Be more ruthless. Yeah. Like in 2018, when I went bank almost bankrupt, I made like a five-slide deck. First slide was like, I'm an idiot. Then I called all my rich friends. Like they were like, they kind of grew up with me and were like hedge. I was really lucky. Like they lent me seven figures to get out of this thing. No equity. Yeah. Paid interest on it. I was like, I'll happy to pay interest on it. But like I broke down the slide of why we led to this. Okay, I'm an idiot. Two, my ego got the best of me. Three, this is what actually happened. Four, this is how I'm getting out of it. It was like a five slide deck where I just like one presented to them. It's like, I'm gonna sign a personal guarantee on this. You know, if I fail in this, I will go out and make it. This is you somewhere in mainland just digging yourself. And then it's like, you know, it's like, you know, you have my word. Yeah, so you have my word, I'm gonna pay you back in full. And it was like, then I had a slide like, okay, this is the earning power between me and Jen. If we go back to corporate, we'll pay you off in the next eight years, you know? It's like that was that was the math, right? So like I had this thing, and then from that point on, I was like, you know what? Like, I'm gonna take off my gloves with my suppliers, and I'm just gonna go in and be like extremely ruthless. And now I've toned it down where I'm more like, let's create win-win, because that's ultimately what you want to do in any relationship. But I think like this idea that you carry the liability on your own, I think is false, you know? And I want everyone Yeah, this is straight wisdom. Yeah. I want everyone who watches this to stop thinking about it as a liability on your balance sheet. Business is very simple. Asset equals liability plus equity. I want the liability for any founder that works with me to be less than assets. This is not the case for my founders. My founders make less money, EBITDA margin, than they spend on cost of goods sold. It's retarded. Yeah, it's retarded. It's fucking retarded. So when you go into this, if you're gonna have less EBITDA than you spend on cost of goods sold, let's say your cost of goods sold is 30% or 20%, and you're making 10% EBITDA margin, that 10% better be fucking free cash flow. So it comes in three vectors, right? You want free cash flow, you want profits, EBITA, which is not free cash flow, Google it. Number three is you want revenue growth. And it's in that order, right? You you want free cash flow, EBITDA, and then revenue growth.

SPEAKER_02 46:42

To this day, eight years later, inventory is the biggest headache of my life. I it it's like the curse of e-commerce. And so to hear your POV on it, I think is honestly incredibly uh frankly motivating. Uh it's a POV that genuinely I've not heard. We've not even talked about this before. So this is um wisdom in uh in its purest form. I mean, literally last night I was talking with my business partner and being like, you know, everyone is so intense with us, our suppliers when they need something. Yeah, whoever, right? Yeah, um uh you know, chargebacks, uh visa will just take the money from your they have the proxy to literally take the money from your Bank of America without permission. The money just disappears. Yep. And so I think there needs to be more intensity on the flip side.

SPEAKER_01 47:36

Way more from the founder side. Yeah, I think it's like, you know, definitely on the spectrum of aggression, I'm definitely at 10, you know, like and like my co-founder and business partner and partner in life, Jen, is like the opposite. So it's a good balance, right? So I will go in, you know, I had a call coming over in the Uber now. My wife was in the car with me, and I'm not gonna name any names, but like one CEO calls me because I kind of yeah, last night we were talking about that earlier before we started recording. I'm working until 12 30, right? Like midnight, past midnight. Yeah. And it's like I don't really need to, frankly speaking, but I am because I just want to win.

unknown 48:14

Yeah.

SPEAKER_01 48:14

It's a personal pride and ego. This is something I want to get into shortly as well. But you just want to win, right? So I'm on this call. I don't need to be on the call, but I'm just like, this is far beyond the level of excellence that I've set out to achieve. And the whole team is underachieving. So I kind of flip and I wreck the walls, but there's always someone who can kind of pick up the pieces. So I don't want this to I don't want people to watch this and go away and be like, okay, I'm gonna be like Roman and be like rude to my suppliers. But you need to, you need to, you, you, you definitely need to push the liability on someone else.

SPEAKER_02 48:49

I think it's it's just being crafty. Yes. And thinking through critical genre critical thinking skills. Like this is a real problem. How do you get around that? Yes. Um so I want to finish the sort of like what was the real business moment? And then I've got uh you know a billion other questions.

SPEAKER_01 49:09

Yeah, yeah. Okay, perfect. So started linear accidentally, uh, horrible category, wrong timing, just everything was off. And then I uh I basically did three or four Kickstarter campaigns with Jen. Two of them were really successful. We raised a million each, and a bunch of founders saw them because I we ran the classic founder ad with Jen, right? So we were getting our DMs were blowing up, right? Like because millions of people were watching these ads to do a million on Kickstarter. I don't know, two million views or three million views, whatever it is, right? And it's a founder story. And a bunch of founders reach out and they're like, hey, you know, how how did you do a million on Kickstarter? This is like early days, right? So we talked to them, but like, you know, this is happening around 2018 when we're Titanic is happening. And Jen is like, we need to fucking diversify. We need to like divide and conquer. And we have a unique skill set in paid acquisition. This is early days of dot.com, right? Uh of DTC. So I took on um three companies. So Raycon, Nutrition Kitchen, and AlphaPol. Oh, in one go. Like over a period of 12 months. I don't have the exact timeline, but from 2018 to like 2021, all these relationships kind of organically formed. Okay. And I basically managed to take equity in all of these companies, sweat equity, some cash, but minimal. And um fast forward 2019, 2018, we almost went bankrupt. I take on this loans. 2019, we're doing maybe 50 million as a group, you know, yeah, asset level revenue, very profitably. And I've just had my almost bankruptcy with inventory. So now my gloves are off and I'm like completely savage. It's like rampers out. I'm a different person. Yeah. But I'm overly aggressive. I like lean to the other end, like going from being naive and kind to being like fucking Terminator, right? Like it was too much. Uh, can talk about that later. But, you know, and we just ballooned to 200 million overnight, like literally overnight, because I knew what not to do. COVID just propelled me to 200 million, right? Like it was crazy. Yeah. So I was like right time, right place, but also I had so many reps in me that I knew how to do that. So that was the that was the holy shit moment. COVID, the 50 to 200. 100%. And then Jen was in Forbes 30 under 30, and Forbes is actually owned by a Hong Kong family, the Yam family. Uh, Jeffrey's an amazing guy, uh uh, the son of uh TC. So we were invited to, you know, um, I think K-11 hadn't opened yet. Like, you know, there was like a Adrian had this like closed door event for all the Forbes kids, and we were there, and Jeffrey recognized Jen from the ads. The same way all these founders came to us. It's like, oh, you're kind of like a founder celebrity, let me take a picture. Yeah, yeah. So it takes a picture of Jen uh and we chat off. And basically, we end up um, we end up like having a conversation with him and his father, I think. And Jeffrey's like, I really want to invest. You know, tracio is happening shortly after. He's like, you need to do tracio. You should not be owning 40, 60%, you should be owning 100% Roman. And if money is a problem, I'm gonna give you the money, basically. I say no, I'm like, life is good. Like, we're doing nine figures a year, each figure each dollar. I don't want the stress. I like just I just lost all my hair in 2018. I'm just like, dude, bro, I'm out of this. Then this guy, this fucking guy, he shows up at my office every day for 15 days. True story. Yeah, he's at my office. I heard this on the operator. Yeah, and you know, I think Momo works here in this office. Yeah, I mean, that office but was fucking like, I mean, you know, it was like a debt trap. You go up, there's like cockroaches everywhere because I was like notoriously famous. Again, Terminator mindset. I'm not spending more than a thousand Hong Kong on per C tier. No coffee machine, nothing. Like this is bare bones. All money goes to Meta, all money goes to Google, right? Like that was the mindset. So he came up the staircase. I think that even drew him in even more because it was like, oh my God, who is this guy? You know, why is he spending nothing on rent? Like this like disgusting. Um, so you know, uh, he he sat there and uh he convinced me to like formalize it. So in 2021, we have like these four companies in the personal entity or in my personal names or Jen's names. Um Peak 21 is a little bit confusing because I just say it as one to keep the funnel simple when we talk to founders. But we have these four companies that are uh owned by me and Jen. And then we have this blank shell entity that we formed with the YAM family and a couple of other institutional investors. We still have majority in that entity, but we use those funds now to acquire companies at larger scale. Aaron Powell That business is not Peak 21. It's got a different name. That business is peak twin one. That's the actual Peak Twin One. That's the actual Peak 21. That's the actual Peak Twin. Yes, correct. I understood. But you know, from an infrastructure standpoint and the way people view us, it's all under the same umbrella. It just happens to be a different cap table structure.

SPEAKER_02 54:22

Aaron Powell The next bit I want to get into is like system-oriented. Sure. Let's start with some easy ones. Um I want to know like what does your day look like, and even more simply, like how much do you sleep? And I'm asking it in a way, not that you would do this, but don't romanticize it. Don't make it sound more or less like what's the reality? And again, asking because people should know, right? Like, okay, you're doing all these big things, these numbers. What does it take to do that?

SPEAKER_01 54:50

Yeah. Great. Uh from zero to fifty million, let's talk about that. 18 hours a day, six days a week. And it's full-on founder mode, and you're doing everything and anything, right? Everyone can relate to that. 50 to 100, I was still in that founder mode. I shouldn't have been, and that hurt growth. I should have hired better people, delegated more, been more hands-off, practically speaking. We had enormous success, but like I didn't build an infrastructure of people uh early enough. 100 to 200 million, I started hiring really good people. Like really good people. I started delegating, I started doing a lot more, and my work hours went from like 18 hours a day to like six hours a day. Okay. So what about like today? In present form. Yeah. I mean, this week is very unique because of the massive fuck up we had in Q4. Yeah. So now I'm like found remote and just like in the weeds. So now I'm working like 12 hours. But I think it's different when you've been in an industry for more than a decade. 10 hours of my work now is the equivalent of like 40 hours, right? Like so, especially with a team. Exactly. With a team, exactly. And all these tools. Exactly. So you're you can maintain higher intensity per hour than when you're on your own, because there's no guessing, oh, what am I doing? What am I doing? Like, you know, it's like when people come in to me on mentor pass, they don't know what to do. For me, that's never an issue. Because it's just like there's been so many repetitions, right? Um, so I would say right now I'm working 12 hours. Probably by the end of Q1, I'll be back at six hours a day again or seven hours again.

SPEAKER_02 56:29

So where you're at, Roman 25, 26, um, six hours a day.

SPEAKER_01 56:34

Yeah. Um first hour of the day is email. So 9 to 10 a.m. is just knocking out all the emails and all the fires. 9 to 10 a.m. is usually firefighting, like there's some issue that I have to be involved in. 10 to 12 p.m., I'm working on what's going to move the needle this quarter. And then from after lunch, I'm moving on to next quarter. And then the last hour I'm working on our moon shots. So there's a rule I prescribe to everyone. It's called the 70 2010. I stole it from someone on a podcast. I loved it. 70% of your energy goes towards what's paying for the bills this quarter, 20% next quarter, 10% on the moon shots. And that's actually how I split my time. So in my calendar, I do it accordingly. Now I'm at the stage where I've deleted all external calls, like all of them. The only thing I have on my calendar that are external calls are um with mentees, actually, because that gives me a lot. I think that's the best form of giving back, is like actually training the next generation of entrepreneurs. Uh but beyond that gives me a lot of pattern recognition too, because I look at 100 ad accounts, which I can leverage in my own businesses. Um, but and then I would say uh all external calls is done by my team. And this is the biggest leverage point. I feel like when I'm talking to founders who are doing like 75 million plus, they're still doing external calls. You don't need to be the one talking to your supplier bare knuckling when you're 50 million plus. Get someone to do all the dirty work and then come in the street. But until then, you really kind of should. Yeah. Until then you should. Yeah. You should be in the weeds and not hire some idiot to run it for you. No one is going to care as much as you as a founder because of the industry economics. You're not running a hedge fund. You're not running something where you have the base salary of millions of dollars. So you're not going to attract the creme de la creme in this industry and then be able to incentivize them appropriately.

SPEAKER_02 58:36

How do you split your time or thought energy between the different brands? I split it up by days. So Monday is one business, Tuesdays one business, one day is one business. But how do you drown out the distractions? Because just because you're focusing on linear today doesn't mean there's a billion things kind of happening or notifications or emails or whatever. Like the business doesn't stop just because you're not it's not linear day, right?

SPEAKER_01 59:04

Yeah. I use superhuman. So 9 to 11 a.m. I uh do the email firefighting stuff that I talk about. Then I should just pause my inbox until the day after. And my assistant has access to my inbox. So if there's something that's really like if there's an emergency, emergency, someone will call me. Emails can wait.

SPEAKER_02 59:23

Have you like clearly you have a system. Have you iterated and optimized this multiple times? Like have you changed your systems?

SPEAKER_01 59:32

All the time. I'm always looking for improvements.

SPEAKER_02 59:34

So this is the latest version.

SPEAKER_01 59:35

This is the latest version. Can you swear by it? I don't swear by it because I'm always looking for better ways to do the same things, but this is what I'm doing right now and it's working really well. And the team is getting the most out of me with the system.

SPEAKER_02 59:48

Aaron Ross Powell But what's your um POV on focusing all your time on one business? Like getting Raycon to however, you know, that's the same thing. That's what I did actually. That's what I'm saying. Versus, hey, I have a portfolio now, and now I gotta, you know, work four different bets at the same time. Some people would say, okay, well, like you said, you're diversified. Others would say that's a giant, colossal waste of precious focus opportunity on just one giant leap big opportunity.

SPEAKER_01 1:00:17

100%. Easy with 2020 hindsight, but doubling down on Raycon would have been the right move, right? All in. All in. It would have been the right move, probably. I would have had a simpler life, but it felt way too risky at the time. So you make decisions with the information and the emotional state you're in at that time, right? At that time, I'm going bankrupt. I want to start a family. We don't have the money to start a family. Like we just literally don't have the money. Liabilities are greater than assets, right? Going back to that framework. And I'm just like, you know what? What is the least what is the risk-adjusted way of ensuring that we actually are taken care of? Because I took this gigantic amount of risk and I dragged Jen into the mix, right? So I've like that guilt drove me into working on overdrive and doing, you know, four companies at the same time. Which you wouldn't do again in hindsight. I wouldn't have done it again in hindsight, but given the situation, I had to.

SPEAKER_02 1:01:14

But was that and I'm asking because I'm also running a holdco with multiple different brands. Is that is that you saying that in hindsight you didn't you didn't need the concept of holdco? Like because you being hey, I'm Roman from Raycon positions you as, hey, I own one brand, I'm an electronics guy. Yeah. Versus, hey, I'm Roman from peak and I own and run multiple brands. I'm a diverse guy. I can invest in anything. You can talk to me about anything. Those are different like personal brands, so to speak.

SPEAKER_01 1:01:49

I think like definitely peak to one and having multiple brands gives you a lot of status in our industry. What is ultimately going to benefit you as a shareholder? Right. Like if we put on the mantra of like if I'm an AI and I'm making decisions on behalf of Roman, then the decision would just be like maximize profits, maximize time. And if you want to do those two things, you double down. Right. So if I think about like where I've made most of my money, you know, we've been running nine figures for multiple years now, multiple years of eight-figure EBITDA. But I've made more money from investing in meta and app loving than I have done from distributions from my businesses the last five years. We spoke about this at the holiday party, though.

SPEAKER_02 1:02:32

Like the reason you're investing in app loving and meta is because you have a front seat into platform metrics or in the industry, you know what's going on. You're talking to people, you're seeing the momentum. Like you're you have a front seat to the world of e-commerce and ad spend, which is driving your investment decisions. Absolutely. Without that, I mean you're not making the same investment decisions. Now, of course, you can invest in other categories of stocks, but I guess my point is a lot of your like stock success is because you're in the world of Tom.

SPEAKER_01 1:03:07

What I realize now with stock success is that you know conviction is not easily built. So for example, okay, you have 115% of your liquid net worth in one stock, right? You are leveraged to the tits. Excuse my English, right? Like you're just leveraged like crazy from a full PL concentration standpoint. Now, the reason I'm successful is because it's not because I'm, you know, you're smart or you're uh, you know, have an information advantage per se. It's just because I had ultimate conviction. Like you read this like books by Warren Buffett and like Charlie Munger's like thing, and you never understand why this guy is like living to 95 and like has a full head of hair and gonna eat McDonald's every day. And it finally clicked for me. It's just because they have done their homework, they have full conviction, yeah, and they understand the numbers. So I think like for me, um, the success from that comes from uh to go to go back to your point. I'm gonna still be an operator and run as a CMO in these brands because it gives me an information advantage. But I realize where I'm gonna make my money is off like 60 names, right? Anything from shoppy uh C, sorry, all the way down to like meta, right? Like so that gambit, I'll have an information advantage. Got it. And I understand more than you know the average hedge fund. I think I can create alpha there. Um so you know, I think that's probably one that what's gonna uh dictate my 40s. Like probably like I'm setting up a formal hedge fund, I'm hiring people for it, I'm seeding it with my own money. Yeah. Um, but you know, I'm probably gonna spend a lot of my time in these private companies um over the next five years. Um the next decade, basically. Exactly.

SPEAKER_02 1:04:51

So one of the other, like again, going back to systems, one of the ones I really want to talk to you about was the micromanagement. Yeah. I I l actually love that. And you know, it's it's like the most un PC thing ever. Yes. Um, because uh especially post-COVID, remote workers, everyone's sort of free in terms of management of their time. And you come and you say, Hey, I'm gonna micromanage the hell out of you. It's it's your choice, right? At the end of the day, they're correct. Correct. Right? It's it's ultimately their choice, and you're saying, hey, when you join, you need to send me a status report of what you're gonna do at nine, and then you gotta send me an update of what you did at six.

SPEAKER_04 1:05:40

Is this a new thing?

SPEAKER_01 1:05:43

We've been using this system for three years, I believe, or four. And it's hyper effective. But going back to your sort of That's just one vector, by the way, just FYI. So we do the we do the uh beginning of the day, end of day reporting. Yeah. Number two to this vector is that we don't have remote employees usually. Like so we have a hub here in Hong Kong, Shenzhen, Singapore, London, New York, and now Salt Lake City because of this acquisition, but it's really New York, London, Hong Kong, and Shenzhen. And people work in the office, just you know, just to make that clear. So like micromanagement per se at my scale happens by just having accountability beyond people showing up in the office. Yeah. Showing up is 90% of the game, by the way. Yeah. Just show, show up. Um, number two is like actually checking in daily. So like people don't believe it, but then they open up my Slack and they see, like, okay, I got 100 DMs today. So like the direct manager is responding to the daily Slack. Okay. But I have visibility in it. So if we end up unfortunately parting ways with someone or promoting someone, I have a full chronological story of like, okay, Manish, you're the PPC manager for Linear, did a fucking fantastic job, and I can see it because you've I have a whole log for a year. So I don't even need to ask your manager what happened. What happened? I'm just like, I know Manish intimately. And this is how he writes, this is how he communicates to me.

SPEAKER_02 1:07:08

So going back to your focus, right? You were now you're at the six hours, you're doing one business a day. You're not actually reading all 300 notifications you're getting daily. You'll be surprised. I actually brushed through them. Okay.

SPEAKER_01 1:07:20

I didn't read them, but I brushed through them.

SPEAKER_02 1:07:21

So there's an hour where you're like just crushing those on the Trevor Burrus.

SPEAKER_01 1:07:23

That's within the email three hours.

SPEAKER_02 1:07:25

Because I think this is the most infuriating part of e-comm. Like just speaking from my experience, like the amount of notifications is email, we chat, WhatsApp. They're coming from everywhere. You go for lunch, you come back, there's another hundred. You know, you go into a meeting, you're getting distracted, there's all these pop-ups happening in your computer. Yes, you can do the do not disturb reduce interruptions, but nonetheless, you know there's so much activity.

SPEAKER_01 1:07:49

Yeah. Tangible advice on that, just like breaking that out specifically what you can do to manage that. Yeah. Number one, what you can do is you can um have an assistant that marks all the garbage emails, like all the newsletters, all that stuff. Yeah. Mark it, and so it doesn't even appear in your inbox. That's first, you have automations in superhuman, but I still like to have my assistant do it just in case she knows me, so like let her do it. So that's number one. And I think that reduces a lot. Number two is I have no notifications on my phone and I don't have the Shopify app. I have nothing. So that brings me to the third vector of micromanaging. The third and the most important vector of micromanaging, I've shared these screenshots on some other talks before. I can send you one so you can put it into the YouTube video here so that people see it. But we have something called blue light, green light, red light. Yeah, we've talked about this. Yeah. So blue means that you're we break down our annual forecast into days and we're maniacal about the details. Obviously, we go day by day and we understand year-on-year evolution. But then in Slack, to kill my notifications, now we've used AI, we don't have VAs doing it anymore. I get notifications automatically in an analytics channel with the red, green, and blue lights. Then there's an SOP. So in that thread, so let's say Amazon is down 10K versus forecast, we're supposed to do 80K today, we're doing 70K. The Amazon manager has to explain why we're at 70K and not 80k. And it always comes down to first principles like sales equals traffic, multiply with conversion rate, multiply with AOV. One of these three things are off, and you need to explain it. You just need to explain it to me. So by having these systems in place and turning off all notifications so that you have two domains that you dominate in email and Slack, you can operate at much higher efficiency. Once you start getting out of these two systems, it gets very distracting, very overwhelming. And I highly recommend just turning off everything.

SPEAKER_02 1:09:50

Yeah, because it's it's more the distractions, distractions break focus, focus breaks. You know, frankly, like brain power. Yeah.

SPEAKER_01 1:09:59

And the average D2C founder doesn't respect himself or herself as an executive. Yeah. They don't act like running around like chickens. Do you think I ran Lazada, like CFO? Like we went from like zero employees to six thousand employees at like in Thailand. Like, do you think I ran it like a fucking like winging it like D2Z? You can't do that at that scale.

SPEAKER_02 1:10:17

So let's talk about hiring. Yeah. Because again, I'm I'm asking you questions from my perspective, which means that many people have the same questions, right? Like how do you think about hiring? For us, we're quite conservative. Yeah. And um, it's one of those things where you know you need someone, but you're too cheap to hire them until it's like a real problem. Absolutely. Like the the need for them is just so abundantly clear versus, you know, I've been in environments where it's the opposite. It's like love a big or chart. We need ahead of this, ahead of that, ahead of this, overhire, overpay, and all of a sudden you're bleeding yourself out in payroll. Yeah. And we're sort of like, I I I've I I have scars from that, and I'm just thinking now we hire based on need, and we're trying not to overhire, but then it's a double-edged sword, right? 100%. On one end, you're you're hemorrhaging cash. On the other end, you're just burnt out all the time. You're doing too much as a founder. How do you hire? How do you place your bets?

SPEAKER_01 1:11:18

Yeah. Let's talk about it because it's like contrarian and like, you know, cancel culturists there, fucking cancel me. I don't give a shit. But like, you know, number one, do not hire in America if you can. So keep your American talent to a bare minimum because of cost structure. Because in D2C, in e-com, your opex as a percentage of revenue for rural class operators is always sub 10%. Yeah. Single digits. Single digits. The best operators I've seen. So we operate with 7%. Yeah. And I think we're fat. Yeah. You know, just to give you an idea. I have a lot of friends who are operating at 5 and 4%. If you go to these big guys in China, like the friends who came to my event, 500 million plus a year, 3, 4%. Yeah. Amazing. So just understand that if you're an American founder looking at this, whatever you can do, go outside the US and lower your cost base. That's rule number one. Could not agree more. When Lazada got acquired by Alibaba, I've only heard this because I was not at this, I left before the Alibaba acquisition. Lucy Peng, who's a right hand uh woman of uh of Jak Ma and Jack Ma supposedly came to Lazada and they instituted an immediate head comp freeze because they said we have a revenue per FTE KPI. So we need to solve things with technology, not with people. So for us, just oversimplify the framework. If you're growing less than 20% a year, you should have seven million dollars of revenue per FTE. If you're growing more than 50%, so if you're in between 20 to 50%, trust your gut, come up with your own metrics. But for us, that's the key metric.

SPEAKER_02 1:12:57

So your hiring framework is really numbers driven. It's not gut feeling driven. It's not, hey, for sure. We have a budget. Overworked.

SPEAKER_01 1:13:05

We have a need help. Yeah, we have a budget. Like we have a clear budget which is grounded in revenue per FTE and opex as a percentage of it. Basically just 5% of what you're projecting to the next year. Then obviously, if you're growing more than 50% a year and you have clear visibility in it and your confidence is above 80% that you can maintain this, that it's not a flash in the ball kind of thing, a one-off event, then you are allowed to lower your revenue per FTE down to three or two. Right? Yeah. You can go all the way down to 1.5 if you really want to meet demand because you can always let go of people if something changes, right? So 1.5 million if you're in this hypergrowth stage, but going below 1.5, in my opinion, and I don't include our virtual assistants that we pay $500 to $1,000 in that metric, just to be clear, right? Yeah. I'm talking about in my big expenses offices, like Shenzhen, Hong Kong, London, New York. Here I want to have those FTEs, which is roughly 70 people for me, like to give it an idea. I want to have a anywhere between 1.5 to 7 million, depending on how fast the business is growing.

SPEAKER_04 1:14:13

How okay, understood. Yeah. How do you look at budgeting like for the year ahead?

SPEAKER_02 1:14:25

You know, the perfect example. Looking at next year. Yeah. Literally, how are you planning next year? Knowing you had some, you know, fuck ups, this Q4. Yeah, great.

SPEAKER_01 1:14:36

So let's take a business that's like with constraints. Let's take a business with constraints. So take linear, for example. 70% of my business comes from solid gold, 30% comes from silver.

SPEAKER_04 1:14:50

Majority of volume comes from silver.

SPEAKER_01 1:14:53

Volume, like action number of orders. Units. Units. I have huge problems with silver supply chain. We've all seen the charge, gold is going to the roof, silver is going to the roof. Lots of systematic issues there that I have no control over. So hard to predict what is my gross margin is going to be pie in the sky, right? Like we raise prices four or five times this year alone in one year. Really? In my career, I haven't raised prices that much, you know? It's like crazy in one year.

SPEAKER_02 1:15:19

Yeah.

SPEAKER_01 1:15:20

So how do you do a budget in that situation? I think that's like an intellectually interesting exercise, right? So I can't scale my supply chain with silver where demand is more abundant because the average SRP is lower. My moneymaker, the gold, God knows, maybe gold goes to $8,000. So there's systematic risks there. So I can't put my all my eggs in that basket. What you do in that situation is you remove your ego. You're just like, okay, we grew like fucking crazy this year. Next year, maybe only grow 20%.

SPEAKER_02 1:15:50

Yeah. The biggest lesson I learned this year, me personally, was sometimes if it's too good to be true, it is too good to be true. Exactly. Well said. Like at the end of the day, you can't, I mean, not every company is going to be Apple, right? Like just freaking blow past everything or all expectations every year for 50 years.

SPEAKER_01 1:16:09

And you shouldn't go on the Twitter spare and be like, yo, oh my God, this company is doing $500 million a year in no time. Who the fuck cares? You're not in the same category. Yeah. Don't benchmark yourself. It's like going to the gym and me trying to compare myself to Arnold in his 20s, right? You're going to be deeply unhappy in your life. Yeah. So I think like in this situation, how do you come up with the budget? So we cap growth. That's the lever number one. You're just like, we're not going to grow more than 30% this year or 20%, whatever the number is. I don't know what we're deciding on, but like figuratively, let's say 20%. You say, okay, if we're only growing 20% this year, what does that look like in budget for OpEx? Okay, we can hire 10 people. We're going to hire three people or four people, you know, like whatever that number is. And it's going to influence our growth. And this is the plan for cross margins. This is the plan for operating margin. This is a plan for marketing spending. And you like outline it accordingly. The most important lever you have, which no one does, by the way, that I talk to in revenue forecasting is like I set the top line goal because of supply chain constraints and cash flow constraints. So I said, like, linear can only grow 20% this year because our silver production is shit. Our factories cannot meet demands.

SPEAKER_02 1:17:20

That's out of your control.

SPEAKER_01 1:17:21

It's out of my control, right? Yeah. Now I take this input and I'm like, this is what my free cash flow is going to look like. Then the most powerful lever you have is you just do cohort-based revenue forecasting. Linear has huge repeat at this growth rate. Like this year, repeat is above 25%.

SPEAKER_03 1:17:40

Yeah.

SPEAKER_01 1:17:40

Even though we're growing like gangbusters. So I know my LTV behavior. So I know next year if I'm growing 20%, repeat is going to be 40% of my business, 35%, whatever the number is, right? Yeah. So I take that and then my cat comes down naturally. Do you look at macro at all? Do you look at No, fuck it. We're so small. Like, you know, uh Moyes came with this metaphor. I love this metaphor. Uh so I'm paraphrasing Moise. But he said, like, you know, CPG is amazing, he said. It's like there's these big whales, and we're the small fish eating off this big whale. Yeah. That's what they talk about native, right? Like he just said, like, this big whale is like the stale deodorant catalog, whatever is the incumbent was. It's like, I'm this small fish just eating off the whale.

SPEAKER_03 1:18:20

Yeah.

SPEAKER_01 1:18:20

Better USP, better pricing, whatever it is, but I'm just eating off this big whale. So macro doesn't matter. To give you an idea, like let's take linear, just to stay on the same tangent, right? I use Seeking Alpha because I'm intellectually curious about these things. Seeking Alpha is an amazing product. It's $60 US a year. Love that product.

SPEAKER_03 1:18:38

Yeah.

SPEAKER_01 1:18:39

What I do is I go in and I construct portfolios. So I have a portfolio called Jewelry. So I follow Choi Tai Fuck, Pandora, all these guys, Brilliant Earth, whatever, the gambit. So you get an email notification every time they do something.

SPEAKER_03 1:18:50

Yeah.

SPEAKER_01 1:18:51

So every time there's a Q4, this is like my coffee moment over lunch, right? Like I'm sitting there, I'll pull up like uh the quarterly results of Pandora and just read through their thing. Jewelry, according to Pandora, grows 6% a year and they're growing 9% a year because they have 10% of the US market or something, whatever, 10% of whatever market share. So they grow faster than Kager and are rewarded accordingly. Um and I'm just looking at their numbers. They're doing like 4.5 billion. Like we are a day of a day of revenue for them, like for Adam, right? So it's just like it's a joke. We're a joke compared to these guys. So I think looking at the market is overrated and uh yeah.

SPEAKER_02 1:19:31

Um last question on systems, and then I want to get to the last bit of this. Um retention kind of I forgot to ask you this in the hiring moment, but you're my you know clearly you have a culture of intensity, right? Work hard. Yep, yep, yep, yep, yep. And I don't think that's a bad thing, by the way. I think that's an amazing thing. Yeah. Show up, work hard. It attracts a certain type of person who wants to do well. Aaron Powell So how do you retain these, you know, your people? Like because are you just looking for that type of person that starts to that challenge?

SPEAKER_01 1:20:02

Trevor Burrus, Jr. It starts 90% of the game is that. So if you look at our in the beginning of Lazada, 50% of people ballparking it would quit within 12 months of joining. We were horrible at hiring. I was actually head of HR for all of Lazada. Can you believe that? Me, head of HR. I actually can't even fucking believe that. Like Max made me managing director of HR or people or whatever the fuck it was for the first year. Because I think he probably just wanted someone to talk to the MDs we were hiring, right? Like that to convince the leaders to join. Anyways, I was head of HR, I was horrible at it. I then picked up a book that I quote all the time called The A Method. Incredible book, fucking life-changing. They actually run courses. I'm gonna hire the coaches to come to Hong Kong, run a group for YPO and for my friends and family on hiring because they're so good at it. So we implemented that process. So 90% of it is actually just hiring the right people. And then retention just happens by being yourself. Because if you hire the right people and you bring in the scorecard and you actually bring in the best version of yourself to work, people aspire to be the best version you bring to work, right? So I think it's just leadership at the end of the day. Like I think like people who work for general levels. Yeah, and we pay well.

SPEAKER_02 1:21:15

Honestly, working for you under your style, you're learning a lot.

SPEAKER_01 1:21:18

You have to pay well, right? Like so Opix as a person's revenue, you control, right? Because there are two factors into it. There's the number of people times the salary. Yeah. Right? So you can control the number of people, so you can have less people pay more. So think about it like this, like the 300 movie, right? Instead of hiring peasants, you hire Spartans. That's why I talk about at my company. I said like, there is no room for peasants in this company. We're all Spartans.

SPEAKER_02 1:21:44

Yeah. Like how often do you do like company-wide speeches? Like get up in front of everyone. Zero. What about like email, inspirational emails or like Slack?

SPEAKER_01 1:21:53

Zero. So it's really just a proxy of the Everyday talking I'm as intense as I am now. If you work for me, you have an interaction like this every day with me.

SPEAKER_02 1:22:03

And it's just about whatever you're working on, but it's never like a big picture.

SPEAKER_01 1:22:08

A big picture all the time, because I will go in and like change the vector on something because we're very agile. We have three cultural values at the company. One, we're merit-based. So like it doesn't matter who you are, doesn't matter your pedigree, I don't give a shit. Yeah. You get promoted on the fast track schedule. Right? Like it doesn't matter. There's no structure. Yeah. No structure. No career ladder, whatever. I will raise your salary discretionary. I hate about banks and by the way. It drove me insane. Exactly. Yeah. Second value is humility. If you fuck up, you go on Slack and you apologize to everyone, even your VAs, I don't give a shit because they're equals, because they perform better than you. If you fuck up, you own it and you buy everyone a donut. And you like fucking come in with a tray and you say, I am sorry. Because I do that all the time at my company. I am sorry, I fucked up. Like, you know, this Q4 is.

SPEAKER_02 1:22:55

So there was a lot of donuts around the Amazon.

SPEAKER_01 1:22:57

Yeah, exactly. Exactly. Uh and the ones who don't apologize, get the fuck out. Like there's the exit sign. The third cultural value we have, which I think is the most important, is that we're agile. So I will come up with a pie in the sky forecast for linear now. If we in one quarter in see that that's not working out, we completely abandon it. Yeah. And this is key in the way you build your org structure. Because what you see on these big companies when I acquire them, like I'm looking at a company now, does $125 million revenue, probably going to close it. I have to shrink revenue down to $75 million because they're losing money. Like again, degenerates, right? I just want to make money. The biggest issue in that company is that you have a Google manager, you have a meta manager, you have a TikTok manager, and it just becomes political because I'm just like, TikTok is not working. Turn off the fucking tasks.

SPEAKER_02 1:23:46

Yeah, turn it off.

SPEAKER_01 1:23:47

And this person will be like, oh no, you know what happens to my job, right? So I think like the key thing in the org structure is making sure that people feel safe regardless of where the business is going and creating an agile culture. So whatever you can do to be Spartan and have less people, this is why the revenue per FT is so important. Because you never get stuck in the mud. Rather have fewer people and pay them more if they're more capable. Exactly. And then power them, empower them with VAs and AI.

SPEAKER_02 1:24:18

That's definitely my philosophy. It's also hard to manage people. Yes. Last section I want to get into is advice. So clearly you have been doing this a long time. You're certainly at the more mature stage of your not just career, but e-com career. Yeah. Um, you're you know talking about getting more into investing clear. But a lot of people are just entering e-comm. And they're not entering e-com 1.0 or 2.0 or 3.0. They're it's like it's like we're at 4.0 at this point, right? And we can skip the semantics of what those generations were. What is your advice to anyone literally just getting started today? Like someone who says, hey, I've got an idea for a brand. Yeah. And then we'll quickly touch on someone who's at like zero to one and then like a five to ten.

SPEAKER_01 1:25:07

Yeah. Number one is don't think about it brand, think about it as category. That's number one. So I think like Justin Kahn said this really well. People fall in love with products. First time founders fall in love with products, second-time founders fall in love with distribution. And that's the mistake I made. Like with linear, we fell in love with product. I was solving a problem for myself, niche market, horrible supply chain, no kegger, no growth, like in that category, no explosive growth. I wasn't the small fish eating off the big whale, you know? Like I was just doing the same as the big whale. How are you gonna succeed? How am I different, right? So advice number one for zero to one or zero zero to ten, actually, is do not be married to brand, be married to product. Yeah. And then pick your product really carefully. And you don't need to pick one. You can pick five, you can pick ten. In the world of AI and a 4.0 version, you can just spin up sites using AI. Do you think that like when you see let's let's use grounds.

SPEAKER_02 1:26:08

Yeah, right. Everyone's favorite conversation. Yeah. When you see gummy bears rocket like that, is your gut instinct let me jump on that bandwagon? Or is your gut instinct skip that because it's already overdone? You know, focus on the next thing.

SPEAKER_01 1:26:27

Yeah. You remember we were talked about in the beginning of the conversation? There's free cash flow and then there's enterprise value. Enterprise value means I'll have an exit one day, I'll make a hundred million dollars. Free cash flow is like the distributions that take out of the business every single month, right? So you look at Gruins. That's a good friend of mine. He sold the company to Alibaba, like a different company, not Lazada. And I was like, yo, why, why, why, why did you sell the company? You're printing money. It's like, Roman, there are four ways to make money. One is B2C, one is B2B, one is B2G, government. And the fourth one is of investors, you know, like that's what he said. Like, and this is bucket number four. I've been doing bucket number two for a long time now, but I want to do bucket number four. So when I see Grunz, I think, you know, the founder, I don't know him. He's done a fantastic job of bucket number four, right? Like, that's like, you know, it's clearly uh enterprise value player. He's like the Sam Altman of CPG. Exactly. He's a deal maker. Great, great metaphor. Fantastic metaphor. So I see that, I'm like, I applaud him. Chasing that bull is really hard. You could be a guy who pick up picks up pennies in front of a steamroller by trying to do a gimmick and like clone it and like do a grunz half the price and like try to mimic it. But that's uh that's a game of low free cash flow and no enterprise values. You're in the bottom left corner. So when I see that, I have no FOMO. I'm just like good for him, you know, obviously. Um, you know, um and I think Chasing things like that is hard. The lesson there though is that e-com 4.0 now is actually that we've been in D2C for 15 years. Now Warby Parker is probably like 20 years old, right? So let's say 15, 20 years, whatever, shop five, 15 years. The lesson now is that there is a second mover advantage. So you take AG1, which is a D2C native company doing God knows a billion a year, and you go in and you do a 2.0 version of it. That's the reason for success for grunts. So you want to be in the top right quadrant. Like it's the career advice I got, right? Where is the growth? Follow the money, as you said, right? Like, where are you just gonna have to show up? Where are you solving a real pain point in people's daily lives that is really current? Validate it. Like, are people actually searching for this on OpenAI and Google? Is there demand? And I think don't be married to brand. Just like try 10 things because it's so cheap now. When we started out, dude, like photo shoots, fucking website developer, you couldn't wipe code a website. You could not integrate with AliExpress and drop ship a mediocre product to test demand.

SPEAKER_03 1:29:10

Yeah.

SPEAKER_01 1:29:10

Now, like all of that, we built that infrastructure. We built that by bringing scale into D2C. So anyone entering now is benefiting from all the work we've done.

SPEAKER_03 1:29:20

Yeah.

SPEAKER_01 1:29:20

And the barrier to entry is even lower, way lower. And I think you could just go in and supercharge yourself now and not be married to a brand.

SPEAKER_02 1:29:30

You talked about um sort of like the 10% moonshot that you work on.

SPEAKER_01 1:29:35

Yeah.

SPEAKER_02 1:29:36

When you look at like D2C 5.0, are you making investments into like the next wave of commerce, which is widely talked about like people on chat GPT saying, hey, I need a Christmas present for my mom? Okay, here are ideas. Okay, I like that one. Give me five examples. Okay. Add to cart buy. Yeah. Like you broadly speaking, LLM SEO. Yeah. Are you, you know, are you making investments into things like that? Or is it sort of like you said, a second mover, wait and see what happens? How are you how are you investing into the future of e-com?

SPEAKER_01 1:30:09

Yeah. Great question. So going into like how I allocated money in the past versus what I'm doing moving forward, right? So 60 to 70% of my money will stay in the public markets. So anyone who follows me knows that I did AppLob and did Meta really early on. I write about them notoriously. But you also probably saw that I did Prenetics. And, you know, I was a part of that pipe that just came up. So that's like a D2C listed company. Then I did uh I looked at pets before everyone else. They just got an acquisition offer, but I looked at that. I went deep on that company. I thought about buying 30% of it. You know? It's like a $40 million market cap company. When I looked at it, it was like $30 or something. Now it's like maybe $60. I don't know. I haven't checked the price today because it just got acquisition offers. $250 million or $230 million of subscription revenue in pets, trading at $35 million at break-even. No brainer, right? Like I was like, but it was just too heavy of a lift. So 60% of my capital will be in these big caps, like Meta, AppLovin, Shopee, whatever, you know, like publicly traded things where I have an information edge and you can move big numbers. 20% will be in this like parenetics, pets, like illiquid small cap D2C, because D2C is getting destroyed in public market valuations. I would say 20% is going to go towards, 10% is going to go towards like I'm an investor in Northbeam. I'm an investor in Skio. Yeah. I'm an investor in a lot of this infrastructure. And then I'm an investor in everyday dose, you know, the mushroom coffee brown, like the sea brown. So I have a lot of these, like that's maybe 10% of my capital because that keeps me in the mix and I like the tech stack. You get the information too. Yeah. And I can grow MRR. Like, you know, I go into Northbeam, I can be like, hey, I'm going to get you 100 clients, right? Like, or Skio, same thing. So then the remaining 10% will probably be allocated towards uh buying private companies, like what I bought in Salt Lake City. So that's that's how I think about the broad strokes as I'm doing this vivid vision vision. Uh in terms of like where I'm investing within my operating companies, obviously a AEO, like the AI SEO is the name of the game now. We're making a lot of moves there. You are. Yeah. We are. Uh we're investing heavily in that.

SPEAKER_02 1:32:21

Um, what is that? What is like where are you investing? Because I think that's a big question mark for a lot of people. The general one thing is.

SPEAKER_01 1:32:29

So you do influencer marketing, but on Reddit. You don't fake it. You actually find genuine Reddit accounts. You build an authentic relationship with Redditors in that subreddit, and you say, Hey, I'm gonna send you some linear jewelry. I just want a review that's honest. Just talk about it. Just talk about it. Because I take a lot of pride in this. Maybe it's doing a Zoom call with 20 Redditors, just being like, hey, Jen, the founder of Linear, is coming on to explain the next collection. We just need some help getting visibility on Reddit. It's even at the level where we have negative reviews planted by competitors on Reddit, and Jen will just go in with her old 10-year-old Reddit account and talk about it as a founder.

SPEAKER_02 1:33:09

Would you say that's the single most important place to invest uh for the future, or is there another one that trumps AEO? Like, oh, good question.

SPEAKER_01 1:33:20

First, just to close on on the Reddit loop, we find that Reddit is the bottom of the funnel. The actual top of the funnel for AEO is like listicles and like these placements and PDF or then they AEO will go through the listicles to find out what to review, and then they validate it using Reddit. So linear ranks high on the listicle, like, oh, but on Reddit they say it's bad.

SPEAKER_03 1:33:41

Yeah.

SPEAKER_01 1:33:41

Just to give an example, just to close off that loop for anyone watching. Um where is the alpha going to come from, right? Like if we like kind of extrapolate and look towards the future, future being the next 36 months. For me, TikTok will be on fire still. AOV for TikTok shop went from $30 to $60 to just give people an idea. So the early days of TikTok shop was genuinely just cheap shit. Yeah. Now it's moving up market. QVC launched there, did $22 million or something crazy like that on their Black Friday weekend or something. Don't quote me on this, but you can look up QVC. It was like some crazy number that was unbelievable, but it's true. And all the data is public. So TikTok for me is still the place to invest and be very focused on TikTok. Because you think about it, like once it gets acquired by a US buyer, they are so non-Chinese in their way of operating, they want to make money off their ad product and not econ.

SPEAKER_02 1:34:39

Yeah.

SPEAKER_01 1:34:39

So I think like a lot of changes are going to be. Exactly. So just stay on top of TikTok and continue to invest, even though it doesn't drive volume for you. Just continue to be in that ecosystem build. I think that's more important to me than AEO personally. Because I think contextual marketing is much better. Uh and I think TikTok is big. Second thing I would say is in a world that's getting commoditized by Amazon and dehumanized by AI, people are going to matter. And influencer marketing is going to be more important than EPR. Yeah. So if you're a founder, you were saying like zero to one or five to ten million. You don't need to have a big influence or you don't need to work with the celebrities I work with and stuff. You can just go in and be yourself and like live stream yourself, record like, why did you start your brand and just explain that to your people? So just be human. Like I think that's like a very underrated factor in the world of e-com. And you rarely actually see founders being in front of camera when you think about it. Yeah. There's a lot of founder stories. We know them because we follow these companies. But let's be honest, the consumer doesn't know Jen at Linier. They don't really know her. But the emails that hit the most during Black Friday. It's Jen from Linear. Yes. Because people like buying from humans. And that's going to continue to be true. So I think like from an investment standpoint, I would say TikTok influencer, but you can be your own influencer. You can be your own influencer. You're empowered to do that. And I would say the third vector is just go outside the US. The more I talk to people, the more they're homogenous and fully loaded in the US. Fucking localize. With AI, it's very easy. You can translate your site into 200 languages. You can have CX. You can do all these things. So just go outside your comfort zone.

SPEAKER_02 1:36:28

Awesome. Awesome. We have this rapid fire question thing.

SPEAKER_01 1:36:32

Yeah, go for it.

SPEAKER_02 1:36:33

Quick ones. Quick ones. Let me pull up the list. Do it. Do it. Okay.

SPEAKER_04 1:36:40

Favorite brand, not yours. Wow, good question. Maybe suit supply.

SPEAKER_02 1:36:47

Favorite e-commerce city or community.

SPEAKER_01 1:36:51

Wow. I think Hong Kong, by the time I'm done with Hong Kong, it will be. So yeah.

SPEAKER_02 1:36:55

Yeah. Favorite software or tool that's changed how you operate?

SPEAKER_01 1:37:00

We built a BI tool ourselves using AI, and that's my favorite tool. Favorite operator to learn from? Wow, that's a tough one.

SPEAKER_04 1:37:10

I want to be really thoughtful about that one. Um There's so many. At Brad Jacobs. Um most overrated founder habit. Or tactic.

SPEAKER_01 1:37:24

Uh revenue growth focus. Like, you know, like just like grow, grow, grow. Like tactic in the sense that spend more, you know?

SPEAKER_02 1:37:31

Most underrated.

SPEAKER_01 1:37:33

Save more.

SPEAKER_02 1:37:34

Hell yeah. Um and then last two, ideal revenue and EBITA range to maximize personal happiness.

SPEAKER_01 1:37:43

Wow, great question. Uh 15% is the most optimal between balancing between growth and um personal distributions.

SPEAKER_04 1:37:55

And revenue range? So 15% EBITA.

SPEAKER_01 1:37:59

20% plus growth.

SPEAKER_02 1:38:02

And uh favorite perk of being in the e-com industry or being an e-com founder.

SPEAKER_04 1:38:09

Um autonomy. Yeah. And a lot of points. And a lot of points. Awesome. Awesome. Thank you. Roman, thank you. Oh, thank you for having us. Thanks so much.