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My First MillionMy First Million

How To Buy A D2C Startup For Cheap and Sell It For Millions

Episode 439: Sam Parr and Shaan Puri talk to Mehtab Bhogal about how to flip direct to consumer brands to earn millions of dollars, underrated companies, Oprah, and more. — Check Out Shaan's Stuff: • Shaan's weekly email - https://www.shaanpuri.com • Visit https://www.somewhere.com/mfm to hire global talent (like Shaan does) and get $500 off for being an MFM listener. Hire developers, assistants, marketing pros, sales teams and more for 80% less than their US equivalents. — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth 💰 Pitch your startup for a shot at a $1M investment with Sam Parr as the MC https://clickhubspot.com/pitch ------ Links: * Sola Wood Flowers - https://solawoodflowers.com/ * Josh's Frogs - https://new.joshsfrogs.com/ * Fast Growing Trees - https://www.fast-growing-trees.com/ * Schlep Blindness - http://www.paulgraham.com/schlep.html * Corporate Turnaround Artistry - https://www.amazon.com/Corporate-Turnaround-Artistry-Business-Days/dp/1119539986 * The Messy Middle: Finding Your Way Through The Hardest and Most Crucial Part of Any Bold Venture - https://www.amazon.com/Messy-Middle-Finding-Through-Hardest/dp/0735218072 ------ Show Notes: (00:00) - Introduction to Mehtab (11:20) - How old were you when you made your first million? (18:50) - Josh's Frogs (23:50) - Fast Growing Trees (28:40) - What is your differentiator? (30:50) - Hiring Agencies (01:00:00) - Oprah For more quality videos subscribe here ➡https://www.youtube.com/channel/UCyaN6mg5u8Cjy2ZI4ikWaug?sub_confirmation=1 🔔 Turn on notifications to stay updated with new uploads

Shaan PurihostMehtab BhogalguestSam Parrhost
Apr 4, 20231h 14mWatch on YouTube ↗

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At a glance

WHAT IT’S REALLY ABOUT

Distressed D2C Investing: Buying Neglected Brands With Operational Moats Cheaply

  1. Mehtab describes his path from a teenage spinal diagnosis to guitar and hair-product e-commerce businesses, and then to investing in distressed D2C brands through a firm he runs with a co-founder he met on Reddit.
  2. His investing approach prioritizes how fast cash can be pulled out and entering deals far below market valuation, illustrated by a small adult wellness retailer where the firm got in at about $1 million on a roughly $6 million revenue business.
  3. He favors companies with operations moats, such as Josh's Frogs and Fast Growing Trees, because physical, hard-to-copy operations resist overseas undercutting and keep customer acquisition costs stable.
  4. He and the hosts brainstorm agency ideas, including a contingency-based site speed service for Shopify stores and Mexico-focused talent recruiting, citing lower costs than the US and better quality and proximity than the Philippines.
  5. The conversation also covers turnaround mentor Jeff Sands, the psychology of goals and feelings, and the Weight Watchers and Oprah deal, ending with the hosts planning an Oprah episode.

IDEAS WORTH REMEMBERING

5 ideas

Focus on liquidity, not just equity appreciation

Mehtab says his thesis is investing based on how much cash a company can generate short term, so most of the investment can be pulled out within a few months, which lowers risk compared with bootstrapping a new brand that keeps absorbing working capital.

Entry price largely determines outcome

Mehtab argues that if you pay next to nothing for a business, the odds of making money are much higher than if you overpay on entry, and he gave a deal where the firm got in at about $1 million on a $6 million revenue company.

Operating moats beat marketing-dependent moats

Mehtab says lean manufacturing practices carry over cleanly from company to company, while marketing strategies do not, so physical manufacturing with a reason to be in the US or Mexico is his favorite moat.

Buyers of stable businesses ask what could go wrong

Shaan observes that investors in cash-flowing companies think about downside and defensibility rather than dream end states, which is why businesses like frog breeding, which can't be shipped from overseas, appeal.

Site speed is a repeatable agency opportunity

Mehtab and Shaan describe site speed fixes like delaying pixels and compressing images as a portable checklist that could be sold on contingency via cold email, with customers needing it again every 6 to 12 months.

WORDS WORTH SAVING

5 quotes

if you pay next to nothing for something, the odds of making it work and making money on it are much, much higher than if you overpay on entry.

— Mehtab Bhogal

what people want is the feeling. You don't want the thing.

— Shaan Puri

anybody who actually wants to make shit happen in their life, you wanna focus on act two.

— Shaan Puri

In a lot of ways, running a turnaround is like running a startup.

— Mehtab Bhogal

Once you get a really good deal, you can't go back.

— Mehtab Bhogal

Distressed D2C acquisitionsLiquidity-focused deal structuringOperations moatsJosh's Frogs and Fast Growing TreesSite speed agency ideaHiring talent in MexicoTurnaround management and lean manufacturing

High quality AI-generated summary created from speaker-labeled transcript.

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