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My First MillionHow To Buy A D2C Startup For Cheap and Sell It For Millions
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CHAPTERS
- 0:00 – 5:18
Meet Mehtab and the Podcast Banter
Shaan introduces Mehtab as a friend from the D2C and cash-flow business world who has shared tips and story ideas. The hosts and guest swap jokes about the show, Dharmesh's tactical marketing habits, and Mehtab's vocabulary like EBITDA and distressed buyouts.
- •Shaan says Mehtab's world of profit-focused vocabulary differs from the tech world
- •Banter about the show being a shower podcast
- •Dharmesh's small, tactical marketing tests, as the hosts describe them
- •Mehtab is 29 and lives in Utah
- 5:18 – 7:37
What Mehtab's Firm Does and Its Portfolio
Mehtab explains that his firm buys distressed or mediocre D2C brands and improves them, operating as an independent sponsor on a deal-by-deal basis. He describes three majority-owned platform companies (succulents, Sola Wood Flowers, apparel) plus minority equity and debt positions, with the core platforms in the mid-eight figures.
- •Independent sponsor means deal-by-deal equity and co-investors
- •Three platform companies plus 8 to 10 minority equity and debt positions
- •Core platforms are in the mid-eight-figure revenue range
- •Sola Wood Flowers is the one he is most bullish on because of margin expansion room
- 7:37 – 11:32
Origin Story: From Guitar Porn to Dropping Out
Mehtab recounts being diagnosed with spinal stenosis at 17, which pushed him toward e-commerce. He built a guitar business, a men's hair product company and a guitar pedal company, each reaching low seven figures, and dropped out of school. He says he made his first cash million around age 24 or 25.
- •Diagnosed at 17, so physical work was out of the picture
- •Started a Facebook page, then guitar pre-order runs, then a retailer
- •Guitar pedal company was very profitable with a Grammy-nominated partner
- •Dropped out because he saw more opportunity in business
- •First cash million at about 24 or 25
- 11:32 – 18:05
Getting Into Distressed Investing and a Sample Deal
Mehtab explains the appeal of private equity that makes money regardless of outcome and his thesis of investing for fast cash liquidity. He gives an example of a minority investment in an adult wellness retailer bought far below market valuation and sold later via secondaries, and describes finding partners on Reddit.
- •Thesis focuses on how quickly cash can be pulled out, not just equity appreciation
- •Example: a $6M-revenue company, market valuation 10 to 15M, entry around 1M with a royalty until repaid
- •Co-founder helped build operations while Mehtab helped raise debt, taking it from 6M to about 12M
- •Met his co-founder Alex and others through an entrepreneurship subreddit
- 18:05 – 26:51
Under-the-Radar Companies: Josh's Frogs and Fast Growing Trees
Mehtab walks through under-the-radar businesses with strong operating moats. Josh's Frogs breeds frogs and their feeder bugs in-house and cannot be undercut from overseas, and Fast Growing Trees is a large online tree seller. Shaan notes that buyers of stable businesses think about what could go wrong rather than dream end states.
- •Josh's Frogs has a steep ops moat and stable customer acquisition cost
- •Mehtab says a moat like that could earn a premium of a few turns over typical D2C multiples
- •Fast Growing Trees reportedly sold for 100 to 120 million and Mehtab guesses revenue near 150 million
- •Shaan contrasts tech's dream-state thinking with cash-flow buyers' focus on downside
- 26:51 – 30:19
Beddy's and the Checklist for a Good D2C Business
Mehtab describes Beddy's, a patented zip bedding product for kids, as a business with a strong IP moat. Sam asks for the checkboxes of a great D2C company, and Mehtab says physical manufacturing in the US or Mexico with lean practices has been his most portable moat, plus buying cheaply.
- •Beddy's is patented, bootstrapped to roughly 40 million, with healthy margins
- •Operating moats carry over company to company, unlike marketing
- •Lean manufacturing practices are portable across companies
- •Entry price matters: paying next to nothing raises odds of success
- 30:19 – 36:57
Agency Ideas: Mexico Talent and Site Speed Fixes
Sam raises agency and recruiting ideas, and Mehtab argues that talent in Mexico offers better quality and in-person access than the Philippines at a modest premium. Shaan then pitches a site speed agency for Shopify stores, and Mehtab outlines the checklist-style fixes and how he would find customers.
- •Mexico talent costs perhaps 30 to 40% more but allows in-person visits and higher retention
- •Example hire: a former Uline director for about $5,000 a month
- •Site speed is a recurring problem from plugins and uncompressed images
- •Customers could be found via BuiltWith and cold email, possibly charging on contingency
- 36:57 – 39:50
Time Allocation, Schlepp Work and Playing on Hard Mode
Mehtab says most of his time goes to the floral business, with a Mexico manufacturing base meant to lift EBITDA to five or six million. Shaan relates this to Paul Graham's schlepp idea and says Mehtab plays on hard mode, and Mehtab says he likes a good deal.
- •About 15% of Mehtab's time goes to investments and the rest to the floral business
- •Mexico manufacturing base aims for 5 to 6 million EBITDA
- •Shaan connects the willingness to do schlepp work to defensibility
- •Mehtab says once you get a really good deal, you can't go back
- 39:50 – 44:00
Writing, Copywriting and Turnaround Mentor Jeff Sands
Sam praises the clarity of Mehtab's writing, and Mehtab credits early copywriting culture and swipe files. He recommends Corporate Turnaround Artistry by his mentor Jeff Sands, describing his speed in decision-making and taking action.
- •Mehtab's guide opens with a clear statement of who it serves and what they get
- •He learned copywriting from sales-letter compilations and swipe files
- •Corporate Turnaround Artistry is written by his mentor Jeff Sands
- •Turnarounds resemble startups: act quickly on light directional data
- 44:00 – 49:47
The Joy of Distressed Deals, Layoffs and Made in America
Mehtab explains what motivates him: repeatability, fast learning, low equity needs, and the chess-like negotiation with lenders and founders. The group discusses Carl Icahn's layoff story and Elon's handling of Twitter, and Mehtab shares his view on American entrepreneurship.
- •Distressed deals involve negotiating with creditors, cap tables and emotional founders
- •A distressed brand doing 100 million might need only 10 to 15 million in equity
- •Discussion of Carl Icahn's floor-by-floor layoffs and Twitter's cuts
- •Mehtab says Americans are more willing to write a check and take risks than Canadians
- 49:47 – 55:15
North Star Formulas, Goals and Mehtab's Long-Term Vision
Shaan describes boiling a business plan into a simple equation, with examples like 10,000 times 10,000 and Andrew Wilkinson's 6 million into 600 million. He asks Mehtab about his seed capital and goals, and Mehtab says they started with a couple hundred thousand, reinvested everything, and aim to grow the floral company and raise a large fund.
- •North Star formulas make a plan instructive by working backward
- •Mehtab and his co-founder started with roughly 200 to 300 thousand dollars and reinvested proceeds
- •Floral company could reach 100 million in top line
- •Short-term goal is a sale or re-leverage, then raising a large fund
- •His early dream was making $5,000 a month
- 55:15 – 1:00:01
Faking the Feeling: Schemes, Simulated Wealth and Why We Want Things
Shaan tells the story of an underground blackjack club he and friends planned in college, and Sam describes manually adding a big number to a net worth tracker before his company sold. Shaan concludes that people want the feeling, not the thing, and suggests practicing it through smaller things.
- •Shaan's college blackjack club planning was over-engineered and never launched
- •Sam felt much of the joy during the six months before his sale
- •Shaan argues people want a feeling, not the thing itself
- •He says the post-success letdown comes from a weak muscle for that feeling
- 1:00:01 – 1:02:02
Social Media Presence and Watches
Sam asks why Mehtab has a small Twitter following despite his success. Mehtab says he doesn't like it and that distressed sellers and conservative senior lenders don't care about social media, and he describes his hobby of collecting vintage and independent watches.
- •Mehtab has about 5,000 followers and posts only about things he cares about
- •Distressed deals deal with forced sellers and traditional bankers
- •Social media may help more with growth equity or healthy business deals
- •He treats independent watch brands as a kind of angel investing
- 1:02:02 – 1:11:25
Weight Watchers, Oprah and the Messy Middle
Mehtab uses Weight Watchers as a closing example of a private equity win involving Oprah, and Shaan reads the numbers about the stake and returns. The conversation turns to Oprah's story, Shaan's interest in the unglamorous middle of success stories, and Scott Belsky's book The Messy Middle.
- •Oprah took a 10% stake in Weight Watchers in 2015, per the numbers Shaan reads
- •Shaan reads that the firm put in 226 million and got out 5.37 billion over 19 years
- •Shaan wants to know what happened in Oprah's act two, not just her origins
- •Sam recommends Scott Belsky's The Messy Middle on the long uncertain middle of building something
- 1:11:25 – 1:14:16
Facebook Message Reveal and Life Expectancy Map Wrap-Up
Mehtab reveals he messaged Sam on Facebook in 2018 hoping to invest in The Hustle and never got a reply, and Sam finds the message. Shaan then riffs on a Reddit life expectancy map before the hosts thank Mehtab.
- •Mehtab messaged Sam in 2018 as an angel investor interested in The Hustle
- •Sam finds the message and apologizes
- •Shaan describes a life expectancy heat map showing large regional differences
- •Hosts thank Mehtab and close the episode
