CastleFlexx from $5m -> $500m

TLDR;

• Catch the 🌊🌊🌊

• Want me to Roast Your P&L?

• CastleFlexx’s Profitable Growth & Unlimited Runway

LBAB Community: The 🌊🌊 is building

Today’s edition starts with a shout out to 2 LBAB! OGs, Dan Castle and Ben Perkins, who are building 2 of the fastest-growing, most profitable eCom bizs. If you don’t know &Collar (Ben’s Biz) or CastleFlexx (Dan’s biz), hit those links.

Today’s newsletter is the most unique 1 yet because Dan is sharing CastleFlexx’s FULL P&L with us today. 

That’s right. Dan has given us full access to his books, and we’re going to tear down CastleFlexx’s 2023 FY performance. 

THIS. RIGHT HERE. Is the reason I started LBAB!. 

To show Founders/Leaders the financials of top tier eCom bizs and combined with growth strategies 7-9 fig brands can use.

But before we get to the meat of it, we gotta talk about Ben’s bravery in posting his LBAB!-Style 2023 P&L Review on LinkedIn. He did this completely on his own. My LinkedIn notifications just started blowing up 1 day.

Check it out. Those are small %’s on BIG dollar volumes… BUT more importantly: 

• The analysis that Ben did. What did and didn’t work?

• The thought he put into his biz. What do I want to prioritize?

• The goals. What are the challenges he poses to himself?

That’s what makes Ben a Top Tier founder of a Top Tier brand. That process is what’s going to provide him and his biz the clarity to crush 2024. 

Not because of hacks or the tech stack he uses. But because Ben knows his biz cold. Those emojis are fun to use, but trust from someone who does this weekly: it’s really hard to distill a perspective on an annual financial KPI down to 1 reaction.

Now we’re going to take it 1 step further with Dan, the bravest of us all.

CastleFlexx isn’t for sale, but that isn’t going to stop us from trying to Buy This Biz!

Let’s Examine This Biz

I’m calling it now. CastleFlexx will go public. A medical device with fashion buying habits + celebrity endorsements. It’s going to take years-decades but this has the bones for a massive biz. 

There’s no public market cap/stock price since CastleFlexx is a private, bootstrapped biz. But, a profitable biz with this level of growth doesn’t need outside money.

That’s not going to stop me from investing, though. 

As I’ve told Dan on calls, this biz should hit $50m on Sales + Revolvers. Honestly, it could get to $100m. But I’ve got plans to take this to $500m.

Financial Summary

Don’t believe me? Here’s a screenshot of CastleFlexx’s 2023 P&L in their Finaloop dashboard.

TLDR Analysis: This Biz is RIPPING

Almost Tripling YoY to $4.8m is very impressive for a profitable, bootstrapped biz that’s also putting up 6-FIG Net Income. For context, that’s more Net Income than 17 of the Public bizs we’ve analyzed so far.

This type of profitable growth is particularly rare given CastleFlexx invested more in Marketing in 2023 than all their 2022 Rev.

But they made it work. YoY Growth:

• Topline +172%

• Net Income +271%

• The biz has incredibly strong, but has slightly decreasing, margins.

  • Not worth ringing the alarm bells yet, but something to look at.

• SG&A is incredibly light at 6% of Rev.

• Overspending in Marketing (+192% YoY) vs. Topline (+172%). Currently 51% of Rev!

• Net Income at 4.4% of Rev is healthy. But imagine the cash this biz throws off at 8-figs with 10-15%.

We can’t Buy This Biz. It doesn’t need to be taken over. But let’s dive into how we would 100x this biz -> $500m.

Let’s Explain This Bet!

How can I predict that a 3 year old biz @ ~$5m in topline is going to go public?

1. GM % =  50%+

   1. At scale, all costs increase. The more GM you have to weather that storm, the more aggressive growth can be. 

2. Extremely rapid growth @ scale. 

   1. The biz is almost tripling YoY at Millions in sales. 

   2. The % always slows, but this type of compounding creates BIG $$ volumes. Quickly.

3. Ability to turn the firehose on to scale.

   1. I personally think CastleFlexx overspent a little relative to Topline growth in 2023. But when you can crank ads that hard + it works, there A LOT of room left for aggressive growth.

4. Cutthroat SG&A.

   1. I don’t know the rest of the team personally. But ~$5m on a $0.3m SG&A? This is a team of seasoned pros who knows what they’re doing.

5. Net Income this early.

   1. This biz can rapidly grow + kick off cash. Investors (debt & equity) will throw money at this biz to fund more aggressive growth to accelerate their future.

What will happen in CastleFlexx’s future is for them to figure out. But if I jumped in and got my hands on the gear sticks today. This is how I’d take CastleFlexx from $5m - $500m.

Let’s Scale This Biz!

Here’s my 3-step playbook on scaling this from $5m - $500m.

1) Go all in on Multi-Level Influencers

Ronald Acuna, the 2023 NL MVP (Baseball Player), is already an Ambassador. 

TLDR: In 2021, Acuna had a “Career ending” ACL tear. During Rehab, the Atlanta Braves Dr. told him to use CastleFlexx as a part of his recovery.

Now, 1 of the most influential, on-the-rise Baseball players is promoting their product. And for better or worse, he won’t be the only one to suffer this kind of horrific injury while playing sports. Locking in the gatekeeper (pro who understands your product’s value) brings in the influencers.

The same thing happened to us at LuMee back in the day. Vogue ran a cover on Kim Kardashian’s Selfie Secrets. That was the linchpin that drove the brand from $1m - $10m in Topline in <1 year.

The real question for the CastleFlexx team is: How can you repeat this process with every team in every sport?

1. Secure the Training staff to get celebrities’ usage for massive Promotional opportunities.

2. Trickle down to all Drs/Trainers/PTs (College, High School, Regular People).

The insane opportunity here is running Nike/Under Armour’s + Big Pharma’s playbook. 

1. Win over the Professional sports leagues -> College & High School Follow. 

2. Leverage the credibility of Celebrity Medical professionals to trickle down to every day Dr.s and Physical therapists.

From here, create a playbook around this and scale it to the moon. 

The medical professionals for all sports leagues have groups/conferences/meetings. Do whatever it takes to turn current ambassadors into evangelists and capture the market. I’m getting real Olaplex vibes here.

The brand grows like wildfire in 1 league then jumps to the next based on how the products can solve specific injuries. Take the most catastrophic, most frequent injuries, position or create product(s) to solve that need and…

Then the narrative writes itself. Become the essential component to the best athletes’ comeback journeys.

The Earned Media and Paid Content factory is a combo of best recoveries, biggest faces, and greatest hits until it runs out of material.

Takeaway: If you want Influencer promotion, win over the gatekeepers.

How to qualify:

For the first 3 brands that reply to this email with their version of a 2023 Emoji Review*, I'll create a 15 min video based off your 2023 Actual P&L:

1. P&L teardown of your biz

2. 1-3 Profit drivers - (Make/Save) money

3. 1 Out-of-the-box Big Growth Strategy for your biz

If you don’t know where to get started, Ben’s Emoji Review is a great example.

*The post must include the financial KPIs YoY % comparison w/ emojis reaction and your take/action items for your biz. (If you're not comfortable sharing $$ that's fine but the YoY comparison is essential).

Excited to see the community share their insights, so we can all learn together.

2) Product Extension through Licensing

Let’s put aside the opportunity of actual new form factor opportunities for the next $100m-$200m in Rev. The greatest growth opportunity is designing the core form factor in more colorways/designs. Especially for Sports teams.

Currently, there are only 7 Color options currently available for the core product. That’s a great start, and this brand should scale to $10-20m+ on that alone, but at the next level, more customers will want more options. Especially as this brand targets more than 1 gender.

Also, they can extend the big win from Point #1. The slam dunk will be throwing Teams’ logos on the product. The global Sports apparel market is $195.5B, growing to an est. $271B by 2030. 

I hope you see where I’m going with this one:

1. License the rights to put every major sport team on products.

2. Sign contracts with players to have specially designed products for them.

3. Scale, baby, scale.

This adds a Fashion Buying process + 1 of the best gift-giving behaviors (Sports for the Holidays) to a medical device. 

Licensing is a well-established, expensive, and hard model to get into. But once you’re in, it's a goldmine. + I’m not too concerned about them breaking into the league. 

When they do, they’ll have another moat around the brand.

Takeaway: Throwing people’s favorite designs on a killer product = 🏦🏦🏦.

3) Find an Entry-Level Offering

This is probably 1 of the only bizs I’d recommend introducing a lower priced product—rather than going more expensive (though, down the road, they should do that, too). But as they scale, there will only be so many people who can afford dropping $150-350 on a medical recovery item they’ve never used before.

As the biz scales, Marketing will need affordable introductory products that don’t take as long to sell and customers can try out. 

It fuels the brand as more products go into more consumers' hands, increasing usage + word of mouth. X% of those consumers will upgrade into the core product. Eventually, when CastleFlexx builds the $500 or $5k version. The upgrade path builds itself.

Then the product mix can handle Bulk ordering, Retail sales, + Other sales channels to rapidly expand. Nailing this will be existential for a buying moment (injury) that is so crisis/ trigger-driven.

Once CastleFlexx hits meaningful scale ($100m+), being on Retail shelves, brand building early, + remaining top of mind will become crucial for long-term success.

This product set will be sold in many channels other than DTC, Amazon, and the major Retailers, but having the right product mix that is both desirable and attainable is going to be the key.

Takeaway: Mastering the Product to Channel mix is how real brands hit scale.

We definitely should buy this biz! It isn’t for sale, and I can’t imagine Dan has any interest in selling. But I’m still putting in a buy order.

Final Thought

I’m tired of seeing Shopify Dashboard screenshots.

Saying the unmentionables out loud is something that has always fascinated me, and talking about your real Financial data has always felt like an unmentionable in the Shopify space. It’s encouraging to see more brands finally being more public about this data.

It’s time we start sharing our Net Income/EBITDA screenshots instead of our Shopify Sales, just like public brands do. Topline is great to understand someone’s biz size, but without the rest of the P&L, it means little/nothing.

Having the context of everything above and below the line is the key to understanding if the emperor has any clothes.

I want to thank Dan again.

Being willing to share his P&L with so many people speaks volumes to the incredible brand he’s built and how proud he is (rightfully so) of it. He’s also been 1 of the most active repliers since LBAB!’s inception.

Honestly, I’m just looking to meet more people like Dan.

🧠 The Takeaways

CastleFlexx will go public. The perfect mix of amazing product solving a need, strong unit economics, Influencers, and the right playbook is cooking.

1. When you want the influencers, win the gatekeepers. They make money in their own right.

2. Licensing is hard. But slap some lovable logos on a hit product. Great way to acquire new customers and increase repeats.

3. Every biz needs an In Up Max offer. What’s yours?