Commerce Chronicles 009

The Ides of August…

It’s been so fun getting to chat with some of you from the community. Hopping on calls with y’all 1-on-1 has been really helpful in helping us determine how we want to grow Commerce Chronicles.

That said, we’re working on something cool for our community… More to come ;)

In today’s email:

• STRATEGIC FINANCE MADE EASIER

• MOIZ ALI SHARES HIS P&L SECRETS

• SCREENGRABS OF THE WEEK

• BRAND OF THE WEEK

If you were sent this issue, join the most on-the-ground community in e-commerce and subscribe:

You vs. Allbirds, Solo Brands, Oddity, and Warby

Curious how you stack up against the competition? Read on...

If you’re a founder or finance operator at a growing consumer brand, it pays to look at and learn from the big guys.

The successes and stumbles of DTC OGs like Warby Parker and Hims & Hers, icons like Lululemon and YETI, and newcomers like Oddity can teach us a lot. These brands have found their market, seriously scaled up, and eventually gone public – all with varying degrees of success.

What if you could benchmark your own financial metrics against some of the biggest public consumer brands?

The Drivepoint DTC Index can help. It’s a hand-picked group of public companies that represent some of the more mature business models in the DTC eCommerce consumer brand space.

You could sort through Finviz, Koyfin, and individual company filings, but you’re busy and don’t have time for all that.

With updates every week, the Drivepoint DTC Index lets you quickly benchmark your company against:

• The share of revenue from DTC channels at Crocs

• Median gross margin of The Honest Company

• EBITDA margin at FIGS

• EV/Sales multiples at SmileDirectClub

• And much more

To make things even easier, Drivepoint delivers a weekly email with a rundown of:

• All the latest financial benchmarks from consumer brands

• Top news stories on Index companies and commerce trends

• Earnings previews and analysis

Check out the Drivepoint DTC Index here and see how your brand’s financials stack up. Who knows where the data might lead you?

MOIZ ALI SHARES HIS P&L SECRETS

If you’re a brand founder, have you been doing your own P&L? That’s one of Moiz’s pieces of advice—at least for the first few months (or year) of your business. His post is a great summary of everything to consider when running your org, except through the eyes of a P&L.

Are you spending too much on ‘dumb marketing expenses’? Or are your employees expensing things like… dog food? Funny enough, both of these things happened to Moiz and he found out about them by way of P&L.

Doing his P&L himself allowed him such deep visibility into the health of his business. I’d liken it to a doctor who can run such in-depth diagnostics.

Here’s a Quick Summary of the Post:

1. P&Ls vs. Balance Sheets: Think of a balance sheet as a snapshot, capturing a single moment in time. P&Ls, on the other hand, are like a video, showing you the flow of money over a period (30, 90, or 365 days).

2. DIY Approach: Building your P&L from scratch every month for the first year is a must. It forces you to scrutinize every expense and understand your business on a micro and macro level.

3. Common Mistakes: Watch out for errors like misinterpreting accrual vs. cash or gross revenue vs. net revenue. These can lead to inaccurate representations of your financial health.

4. Smart Mistakes: Some mistakes might actually be beneficial, like recognizing revenue when an order is made rather than when it's shipped, or not including freight in the cost of goods sold.

5. Benchmarks to Aim For:

   • COGS: Your Cost of Product should be less than 30% of your revenue.

   • Marketing Spend: Aim for 25-40% of revenue, depending on your business stage.

   • Salary: Keep it under 15% of revenue for a DTC business (excluding founder salary).

6. Sample P&L: Moiz shared a sample P&L that breaks down revenue and expenses in a way that makes sense. It's not real, but the percentages are genuine benchmarks in the industry.

7. The Importance of Understanding: Simply put, understanding your P&L will make you a better operator. It's not just about numbers; it's about knowing where your business stands and where it's headed.

HAVEN ATHLETIC (CONT.)

I had the pleasure of chatting with Caleb earlier this week, and we jammed on all things growth and more importantly CrossFit!

We covered the deal a bit more in-depth than what he shared on Twitter, so you’ll want to tune in for this one. Subscribe below so you don’t miss out :)