E-commerce Becomes Blue-Collar
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Sean Frank believes that running e-commerce brands has become increasingly difficult and less trendy, but can still be highly profitable when done correctly. As the founder of Ridge Wallet, he's built a $200M+ profitable business without raising money or taking on debt.
Key Points:
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E-commerce has evolved through several phases:
- E-commerce 1.0: "Selling random shit on the internet"
- E-commerce 2.0: Marketplaces (eBay vs Amazon)
- DTC 1.0: First brands coming online (like Allbirds)
- DTC 2.0: The COVID boom period
- DTC 3.0 (current): Small service providers pivoting to brands with lean teams
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Running e-commerce has become "blue collar work":
- "In 2021 running an e-comm brand was incredibly cool, it has gotten less cool every single year"
- "The best marketers have more or less left the industry"
- "Everyone wants to be shipping cool AI products" instead of physical products
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Profitability is possible despite industry challenges:
- Ridge has never raised money or taken on debt
- "Every dollar on my balance sheet is profit that has been reinvested"
- "I've been able to make millions of dollars a year for the past couple of years"
- "I bought a house in LA directly because of selling wallets on the internet"
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Common e-commerce mistakes to avoid:
- "You can't outmuscle a TAM" - understand your market size realistically
- "You're not better than the trend" - products tied to trends will crash when trends fade
- "LTV isn't real - lifetime value only works if you're alive" - most brands die waiting for LTV
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First-purchase profitability is critical:
- "I have to be profitable in the first purchase"
- Must cover all fixed costs with each wallet sale, not just contribution margin
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Best current e-commerce model:
- Service operators who've seen "the rise and fall of different brands"
- Launching "targeted hyper specific brands" with small teams
- Examples: Create Gummies ($40M/year with 8 people), Hollow Socks ($30M/year with 5 people), Brez ($5M/month with ~20 people)