@anata_my_ecom Confirms what I've seen too! Just did an analysis of 300 brands: people who owned a warehouse were growing about 5%. Lease or outsourced fulfillment was more like 30% growth. Insane.
datawrapper.de/_/CHrMZ/?v=2
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Andrew Youderian
8K posts
Andrew Youderian
@youderian
Helping entrepreneurs gain elite control of their business & personal finances to build wealth, live richly, and create on their terms. Founder at @ecomfuelco.
Bozeman, MT Katılım Mayıs 2012
1.1K Takip Edilen17.8K Takipçiler
@youderian the outsourcing fulfillment stat is huge. we see it constantly -- brands that stop running their own warehouse free up cash and headcount to actually grow. the ones that hold onto their warehouse longest are usually the ones stuck at the same revenue 3 years in a row
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If you don't have financial fluency, your chances of turning business revenue -> personal cash plummet.
I have the data to prove it.
I surveyed 200+ store owners as part of the 2026 eComFuel Trends Report (full report coming soon).
One of the questions: rate your financial knowledge on a scale of 1-5.
Owners who rated themselves 5 out of 5 extract capital from their business at nearly double the rate of those at 3 out of 5 or below.
DOUBLE.
Why? You can't safely pull money out of a business if you can't forecast cash flow 3-6 months ahead.
If you don't know exactly what's driving your profitability. If you can't tell what's ROI-positive and what isn't.
Without that clarity, every distribution feels like a gamble. So you leave it in. Year after year.
And without financial confidence and knowledge, that capital compounds at a lower rate. Or just disappears.
Your business revenues may keep growing on paper. But there's a stronger chance your personal balance sheet stays flat.
Personally, I probably erred too far in the other direction. Took out more than I should have and wish I'd reinvested more in earlier years.
But if I had to pick a mistake I'd rather take out too much and have a cushion than reinvest everything and be left with nothing if the business hits a wall.
It's often the C+ students who build businesses. The ones who actually build personal wealth went back and mastered finance.
Realized that this was a class worth studying for.
Financial fluency doesn't just make you a better operator.
It literally puts more money in your pocket.
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True! Also means it’s easier to package up the AI skills / frameworks to sell to brands. Or build out in-house more easily. Or a new blend of agency/SaaS where you pay the experts to update your in-house workflows on a subscription basis. Saagency model.
Future going to be fascinating.
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The agency business model just got really interesting.
Shaan and I were talking about this thesis called "service as a software" on MFM.
I always thought running an agency was a huge pain in the ass.
But AI flips the math.
The old model requires an army of humans to get things done, which meant low margins and low multiples.
So you replace the human labor with AI, where one person can do the work of seven.
At the same time, private equity firms are shifting their budgets away from SaaS to buy up these new service companies.
A traditional agency that might run on 40% gross margins, is now an AI service biz that hits 75% and gets tech multiples.
Wild shift.
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@davegordon14 @JulieChangRE Looking forward to this on the S side. Do you have a rough timeline for groundbreaking?
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@JulieChangRE We’re working through designs, but it’s planned to include a skating rink at its core, surrounded by fitness, coffee shop, Montessori, dog daycare, 2-3 restaurants, boutiques, small market - all mixed with residential product and some office offerings. Also exploring a theater…
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“Blackwood Groves” - a 120 acre community master planned and developed by Bridger Land Group.
A highly walkable, pedestrian-oriented community on the South side of Bozeman. Linear parks & paseos connect all neighborhoods to each other, the planned Village Square & local schools.
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@TaylorHoliday That’s amazing, fooled me. What did you use to make it?
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This was 100% AI. Wild times…
Taylor Holiday@TaylorHoliday
More isn't always better. Better is better. Forecast more accurately, grow contribution more consistently all while saving money with the Prophit Engine from CTC. Big love to the boys: @Seanfrank @iamshackelford @Jaredorkin @stevenborrelli @steviej @SJohnson_89 for the acting brilliance. This one is a love letter to the DTC x community.
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I am proud to announce that late last year, I sold Mini Katana to a new owner.
I am really grateful for the whole team and everything that MK has given me.
It was my first measurable success.
I started it when I was 23 and had nothing to my name.
Advertising bans didn’t stop us, tariffs didn’t stop us.
Last year a potential acquirer approached us. They buy and run YouTube channels.
My job was done:
Scaling our YouTube presence to 30m subscribers across two channels.
1b views a month
8 figures in our first 2 years.
Hiring some of the best people and having a culture I’m immensely proud of.
I have a lot more free time. I will be shifting my full focus to my other ventures.
(Picture of our first ever warehouse space outside of my apartment).
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I started a little marketing agency 7 years ago called Homestead, named after the street I grew up on.
I had the vision to build something special and looking back now, I think we did exactly that.
Today I’m excited to announce that Homestead has been acquired by Verndale (also recently acquired VAAN Group) in an effort to create a DTC growth platform built to support brands across the entire commerce lifecycle.
I’m extremely grateful to my business partner @_RileyTrotter for all of the time he’s given this company and all the incredible work that he’s done. Riley took over as CEO a few years ago and Homestead wouldn’t be where we are today without his leadership and pursuit of greatness.
I can’t say enough about my other partners @kellybird__ and @jsappington. These two have shown a level of commitment to building this company that is unmatched. Watching them both grow as leaders over the last few years has been nothing short of inspiring.
To all our current and past team members, thank you for always giving Homestead and our clients 100% effort. Will forever be grateful to you all for helping us get to where we are today.
To all of our clients, thank you for trusting in us to help grow your businesses. This is not an easy task and we have never taken it lightly.
As for me, I’m officially stepping out of the agency business, but as most of you know I haven’t been involved in the company for some time as Riley/Kelly/Jacob have been and will continue to lead Homestead for years to come. Expect to see more updates on the brands I’ve been building in weeks to come.
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My wife thinks my new sandals are ugly but she doesn't get it
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@youderian @operators got it - then yes, i would definitely agree with your original post - this type of financing is rarely available to brands sub 25m
drew@irisfinance.co hmu!
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good post from andrew, however many these problems are very, very solvable
if i had a stake in the brands growing 50%+ on iris and paying themselves the millions (if not tens of millions), i would retire this year
Andrew Youderian@youderian
Extracting capital from a fast growing eCom business is nearly impossible. But there's a sweet spot where it does make sense. I surveyed 200+ store owners to figure out where. Here's what I found: The magic growth range is 10-20% annual revenue growth. Half of store owners I surveyed growing 10-20% are able to pull money out. Every other growth bracket? Way less. Why is 10-20% the magic number for distributing capital? Because you're not bleeding cash to fund explosive growth. The business is often mature enough to generate excess. Hypergrowth owners growing 60%+ top line? They look financially identical to sub-$1M businesses when it comes to extraction. Both are pouring everything back in. One by choice, one by necessity. The $1M revenue threshold matters too. Below it, less than 10% of owners are taking anything out. You're still building the machine. That's expected. Once you cross $1M and settle into moderate growth, the window opens. And it widens fast as you scale. At $5M-$25M growing rev 10-20%, three out of four owners are extracting capital. The other thing most people underestimate: margins. Below 5% net profit margin, less than a 1-in-5 chance of pulling money out. At 10-15% margins, that jumps to better than 1-in-2. So the real question isn't "should I extract capital?" It's "am I in the zone where I can?"
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@drewfallon12 @operators Yeah almost all of them are under $25M, so that's almost certainly at play.
Will reach out to you via email (think I have it) to do a podcast episode something, would be a ton of fun.
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would love to come on the pod anytime just let me know !
i wonder if there’s a bias toward the companies you’re looking at who aren’t necessarily eligible for debt? cuz you’re right it comes with lots of strings. For example if the company doesn’t have sufficient operating history it almost doesn’t matter how good the business is. or if you’re under 30/40m you’re not going to get much besides an MCA (which to bills point doesn’t really solve this). anyways, it’s a good topic and I suspect you’re right in many cases
thanks for the kind words!
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Thanks! Appreciate the details. High profitability and smart financing/LOCs make total sense.
But for LOCs/revolvers, aren't there usually covenants that limit dividends, at least within certain ratios?
If 50%+ likely also growing capex meaningfully to keep up, in addition to inventory, which is another cash constraint. Then there's the interest on the debt also pressuring FCF.
Would go back and rephrase my OP to not say "it's nearly impossible to extract....". Obviously some are making it work.
But of the 62 companies I studied growing 50%+ only 13% of them were taking meaningful dividends.
Seems to take great P&L economics, smart financing + financial management. All things we're both trying to evangelize.🫡
Best of luck with IRIS, let me know if I can ever help spread the word or you want to come on the pod to geek out about numbers.
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thanks! they have strong profitability to start of course.
If you think about it in the context of the cash flow statement; the first line is net income. This is a big, positive number.
Then - the working capital adjustments. This is generally what causes a decrease in the walk from net income to operating cash flow
but there’s another section of cash flow statement called cash from financing, this is where cash goes back up via borrowing by the amount that it went down during the working capital adjustments.
All of a sudden, cash flow looks a lot closer to net income - and that cash is available to be distributed
you’re using debt to fund the inventory instead of what would be retained earnings (equity)
usually this in practice is a revolver or LOC, which comes at some cost of course
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@timopowerz Plenty of 8+ year, $30M+, 15% topline growth companies taking nice dividends. In fact, that's kind of the sweet spot.
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Extracting capital from a fast growing eCom business is nearly impossible.
But there's a sweet spot where it does make sense.
I surveyed 200+ store owners to figure out where.
Here's what I found:
The magic growth range is 10-20% annual revenue growth.
Half of store owners I surveyed growing 10-20% are able to pull money out.
Every other growth bracket? Way less.
Why is 10-20% the magic number for distributing capital?
Because you're not bleeding cash to fund explosive growth. The business is often mature enough to generate excess.
Hypergrowth owners growing 60%+ top line? They look financially identical to sub-$1M businesses when it comes to extraction.
Both are pouring everything back in. One by choice, one by necessity.
The $1M revenue threshold matters too. Below it, less than 10% of owners are taking anything out. You're still building the machine. That's expected.
Once you cross $1M and settle into moderate growth, the window opens. And it widens fast as you scale.
At $5M-$25M growing rev 10-20%, three out of four owners are extracting capital.
The other thing most people underestimate: margins.
Below 5% net profit margin, less than a 1-in-5 chance of pulling money out. At 10-15% margins, that jumps to better than 1-in-2.
So the real question isn't "should I extract capital?"
It's "am I in the zone where I can?"
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@eugeniolabadie Serious question: what are some of the ballpark metrics (like debt service coverage ratio) or other 1-2 key metrics you look for when underwriting div recaps?
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If you have a profitable ecomm business and want to get some liquidity *without* having to slow your growth to 10-20% and *without* selling a chunk of your company to VC or PE, then DM me.
We can finance dividend recaps that will put cash in your pocket without dilution.
Andrew Youderian@youderian
Extracting capital from a fast growing eCom business is nearly impossible. But there's a sweet spot where it does make sense. I surveyed 200+ store owners to figure out where. Here's what I found: The magic growth range is 10-20% annual revenue growth. Half of store owners I surveyed growing 10-20% are able to pull money out. Every other growth bracket? Way less. Why is 10-20% the magic number for distributing capital? Because you're not bleeding cash to fund explosive growth. The business is often mature enough to generate excess. Hypergrowth owners growing 60%+ top line? They look financially identical to sub-$1M businesses when it comes to extraction. Both are pouring everything back in. One by choice, one by necessity. The $1M revenue threshold matters too. Below it, less than 10% of owners are taking anything out. You're still building the machine. That's expected. Once you cross $1M and settle into moderate growth, the window opens. And it widens fast as you scale. At $5M-$25M growing rev 10-20%, three out of four owners are extracting capital. The other thing most people underestimate: margins. Below 5% net profit margin, less than a 1-in-5 chance of pulling money out. At 10-15% margins, that jumps to better than 1-in-2. So the real question isn't "should I extract capital?" It's "am I in the zone where I can?"
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@scottberenstein My early analysis shows brands absorbing roughly ~50% of tariff costs vs. passing them along. 🤯
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@youderian Good breakdown. Most brands will use tariffs as an excuse, and that might be a contributor, but I’d bet their opex has more than a few skeletons buried
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Thanks Joey. I did, compared across competitive advantages and business models (manufacturing, private label, etc). Some variance but the biggest signal by far with growth ranges.
Organic heavy pulls slightly higher for modest dividends (36% vs. 25%) but lower for meaningful dividends (14% vs. 21%).
Dividend rates for high-repeat businesses vs. normal is vertically identical.
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@youderian Man super interesting post. Did you go deeper as well on the underlying business models?
Feel like this can still look very different for more organic/brand focused brands vs high LTV ones vs those that rely fully on new customers
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@KanishDigital Don't have any experience or data for the Indian market - sorry!
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What do you think the revenue number for Indian ecommerce is where founders can take some cash out of business while still growing healthy?
My in-experienced guess is 1 crore per month, but very vague
Andrew Youderian@youderian
Extracting capital from a fast growing eCom business is nearly impossible. But there's a sweet spot where it does make sense. I surveyed 200+ store owners to figure out where. Here's what I found: The magic growth range is 10-20% annual revenue growth. Half of store owners I surveyed growing 10-20% are able to pull money out. Every other growth bracket? Way less. Why is 10-20% the magic number for distributing capital? Because you're not bleeding cash to fund explosive growth. The business is often mature enough to generate excess. Hypergrowth owners growing 60%+ top line? They look financially identical to sub-$1M businesses when it comes to extraction. Both are pouring everything back in. One by choice, one by necessity. The $1M revenue threshold matters too. Below it, less than 10% of owners are taking anything out. You're still building the machine. That's expected. Once you cross $1M and settle into moderate growth, the window opens. And it widens fast as you scale. At $5M-$25M growing rev 10-20%, three out of four owners are extracting capital. The other thing most people underestimate: margins. Below 5% net profit margin, less than a 1-in-5 chance of pulling money out. At 10-15% margins, that jumps to better than 1-in-2. So the real question isn't "should I extract capital?" It's "am I in the zone where I can?"
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@RomanEcom @AaronOrendorff "Maybe I have a selection issue because the people who book me have traction but a dividend first mentality is becoming more and more common."
...or maybe your championing the dividend / $2M mindset is starting to spread.
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I think this applies to 8 out of 10 stores.
1 out of 10 are 3 years in and have done a proper audit and qualify for nice loans with their local banks. Raycon is a great example. Worked like a light weight version of a dividend recap and we have an incredible CFO
1 out of 10 have a local supply chain or >90% GM margins with extremeyly short production leadtimes and a very supportive factory. I’m seeing a lot of this via MentorPass nowadays. Quasi dropshipping brands.
Maybe I have a selection issue because the people who book me have traction but a dividend first mentality is becoming more and more common.
I also think with AI a lot of operators are realising the terminal value of their brands might go to $0 and they are more than ever focused on just extracting cash
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@RomanEcom @AaronOrendorff Great nuance Roman and agreed. My point was just these are the broad, macro trends across 300 stores. Definitely exceptions. LOCs help you scale more efficiently, and 90% GMs help with just about everything!
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I think what you're saying is it's a bad trade to knee-cap 50% growth building big EV to be able to take divs out?
Don't necessarily disagree with you. Just think it's a balance. Early to mid, I think doubling down on growth makes a ton of sense. Especially if you're seeing really strong inventory demand and PMF.
But the bigger you get, the more concentrated your risk. Things change, markets shift. I've seen brands focused exclusively on rev growth wake up one day to realize they are $40M topline pulling 2% net profits.
And very, very few eCom brands reach 9-figures.
It's a lot about personal risk tolerance, diversification, ROI return on doubling down. My point is only that the data shows it's really hard to pull cash outside those ranges mentioned.
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@youderian At 10-15% growth enterprise value is not awesomer if it is less than 9 figures
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