Hindsight is always 20/20, especially in an environment when the reckoning of the ‘growth at all costs’ business model is coming to an end across many industries.
But the real question for many apparel brands is, how fast should you scale?
The formula the current batch of famous startups use to scale so quickly is simple:
they undercut the market and overpay for customer acquisition.
While that’s a sure fire way to grab market share, it’s also a guaranteed formula to be unprofitable. Brands that are propped up by investors always come to a point when the valuation can no longer rise and the influx of new dollars hits a cap.
Only at that point does everyone suddenly prioritize and focus on sustainable customer acquisition.
But what if you prioritized a sustainable CAC from the beginning? What if you scaled your adspend by reinvesting profit?
Do you really need 100s of people when most paid campaigns can be managed semi-autonomously?
It can be debated whether it’s the inexperience of the wide-eyed founders or the growth-hungry investors that force the need to grow-and-exit in just a few years.
But what can’t be debated is simply running a profitable business that grows each year has been proven to build long lasting brands.
As Bill Gates famously said:
“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
If you prioritized long-term growth, how would you manage your brand differently?
Jeff Bezos once asked Warren Buffett, “your investment thesis is so simple…you’re the second richest guy in the world, and it’s so simple. Why doesn’t everyone just copy you?”
Warren Buffett responded: “Because nobody wants to get rich slow.”
Why don’t we change the narrative from “why aren’t you the next Nike already” to “how many months in a row have you been profitable?”
Let’s make stacking profitable months in a row a badge of honor.
There are brands at all stages of growth but the one fundamental you need is profitable customer acquisition.
Once you have that, you are ready for a sustainable scale.