Why Most Founders Set the Wrong Growth Goals

So, every business kind of lives within this certain DNA that there's upside and there's downside. There's gross margin and it all can kind of just get pushed around in the in a certain way in which it yields some sort of result. And so, rather than just having some sort of pipe dream of just thinking that we're going to this revenue number, earnings number and then we're going to flip it and we're going to sell live this lavish lifestyle. It's just being rooted in what's actually possible and then also being rooted in what is it that you actually want. — This episode of the e-commerce playbook is brought to you by Omnisend. If you're serious about growing your brand through email and SMS marketing, Omnisend has your back. It combines powerful automation, smart segmentation, and real-time performance insights all in a platform that's intuitive and built specifically for e-commerce. With pre-built workflows, dynamic sign-up forms, and full multi-channel capabilities, Omnisend helps brands scale without unnecessary complexity. Join over 125,000 e-commerce marketers who rely on Omnisend every day. Head to omnisend. com/ctc and start on the free plan today. That's omnisend. com/ctc. — Hey everyone, welcome to the e-commerce playbook podcast. I'm your host Richard Gaffin, director of digital product strategy here at Common Thread Collective and I'm joined today by a brand new face, a brand new voice here at Common Thread Collective, uh Mr. Randall Thompson, who's our VP of go-to-market here at CTC. Randall, what's going on, man? Welcome to the show. — Hey, thanks. Thanks for having me. — Yeah, well, so let's kick it off maybe diving a little bit before we kind of get into our topic of the day, diving a little bit into your background, uh how you came to CTC, kind of like what your expertise is, why the folks should listen to you. — Well, I guess, you know, be careful who you listen to, but uh yeah, my background is e-commerce. I started a company in 2016 and I spent about 10 years grow- the business and then towards the tail end of owning it, I sold it and I took a couple years off and then here I am at CTC with a go-to-market now. — So Randall, tell us a little bit about your role as VP of go-to-market. What does that mean in terms of your day-to-day? — The way that it's been explained to me and the way that I've been tackling it is new channels, new people, new things. So essentially just going out, finding new people that we can solve anybody that has problems we can go solve those issues for people. Where do these people live?

So new channels and then new things. Just introducing new solutions for new people. — Yeah. So that part of it sounds like it's just expanding outside of I mean we have the service that we provide but thinking about ways that we can provide similar or related services to a wider variety of people. Does that sound roughly correct? — Yeah. Yeah, that's fair. — Yeah. So I think then that segues nicely into what we want to talk about today which is how the Profit System I guess maybe a way to phrase it how the Profit System enables you to achieve a specific goal for your business. Now this is something that I've talked with Taylor before on the podcast but it's been a while and that's about setting a specific goal for your business, understanding what you're trying to do with the business which again many people come into their businesses without actually a clear sense of what that is. But once you have an understanding of what you want to do with your business, how to build a plan and optimize towards that goal. So and what that plays into is thinking

about ways that we can solve problems novelly which would be being sort of a second opinion and or sort of a due diligence partner. But Randall, why don't you talk to us a little bit about the sort of mechanics of setting a goal for your business. Maybe even in the context of the business that you started, your experience with goal setting and how that kind of played out. — Yeah, this is definitely lived experience in which like I live I lived an experience in which I was like, "Oh, we're going to the moon. We're going to grow it to 50 100 million dollars a year. We're going to get to a certain earnings level and then once we get to that earnings level, we're going to flip it. We're going to sell it for this multiple and I'm going to go live on an island somewhere. " And the reality is like none of that was really wrapped in into reality or what the actual numbers were telling me and what the numbers could actually be. So, every business kind of lives within this certain DNA that there's upside and there's downside. There's gross margin that it all can kind of just get pushed around in the in a certain way in which it yields some sort of result. And so, rather than just having some sort of pipe dream of just thinking that we're going to this revenue number, earnings number, then we're going to flip it, and we're going to sell live this lavish lifestyle, it's just being rooted in what's actually possible and then also being rooted in what is it that you actually want. — So, I think that there's a couple contrasting things there that are kind of interesting. One is this is sort of restating what you just said, but the idea that there is what's possible and then there's what you want and understanding what both of those things are is sort of key to setting the sort of initial goal. So, in your case in your experience, you had an initial goal of going to the moon, becoming so wealthy you could buy your own island. — But the actual DNA of the business didn't necessarily allow for that. So, that's one thing. But then of course, presumably there's other situations where maybe the DNA of your business and your goal kind of align or the other way around where the DNA of your business or

rather you have a goal to I don't know, you just want you have a passion for this thing and you want to continue to build it, but it turns out that you have like a growth machine that you didn't realize. So, anyway, there's a number of different combinations, but speak a little bit to how you understood or how you get to the understanding of what the DNA of your business is versus your goal. — Yeah, I think one of the most important things is you have to have historics, you know, you have to be able to look back and see what the past what what's happened in the past. But there also is just some things in which that you are your cost of goods is your cost of goods. So, sometimes you're just limited by your cost of goods. the actual repeat rate of the customer, whether it's consumable or it's not a consumable or, you know, sometimes in my circumstance I was selling mugs. Most people don't need more than one mug. So, there's just certain things within the business that are part of the DNA that you're never going to escape. And because of that, you can only model it in specific ways that gets you to a certain earnings number. — Yeah. So, talk to me then how your personal goal for the business evolved then as this became more obvious. — Well, I mean I think that anybody that's that lived during the COVID boom versus the COVID doom versus kind of the stabilization, there was like a three-year stretch in which you didn't really know what the ceiling was and what the floor was. And so, looking back and trying to make sense of the historics was hard to do because the numbers were not rooted in reality. So, as you kind of continue to see the writing on the wall of what is reality, and that's kind of a moving target in itself because the next 12 months aren't going to be the same as the 12 months prior. So, it is a bit of a moving target, but within reason you can kind of get an idea of what is reality, what is the DNA of this business. And as you kind of get rooted in that and you kind of understand what that is, based on like those things that are kind of the non-negotiables, the repeat rate, the gross margin, the customer acquisition cost. As you begin to really understand those numbers, then what the future looks like based on

kind of a you know, a 6-to-12-month past, you can kind of get rooted in that and really put together goals looking forward in the next 12 months and you can start to shape what your future looks like based on everything that we just discussed. — Yeah, so I think what would be interesting to talk about then is uh maybe a what's the word? Like a taxonomy of the types of goals that maybe make sense for business. This is again something we've talked about on podcast before, but it has been a while of like what are the kind of the basic categories of goal that you've come across? So, one obviously is like I don't know, maximizing profitability over a short-term window for the sake of acquisition, one is growing for the long term, another is just keeping a business chucking chugging because you love doing it. So, maybe speak a little bit to like the types of goals that make sense beyond just hey, we want to grow this into the stratosphere. — Yeah, I think you can ultimately put it in three buckets and one of the buckets is you're building the business to sell it. Uh and then another bucket would be you're trying to maximize the business for I hate to say it, but maybe optically you're trying to maximize the business to go and raise money to grow it even bigger. And then the third would be the goal would be for you to kind of understand what you need to get out of it for your specific life and optimize and maximize and optimize to that specific need within your life. So, I would say that that's the

three buckets that you would look at it. And one thing that I've grown to believe that if you're starting your own business and you're running your own business, it's a lot of headache. It's a stress. And it kind of makes sense that your goal should be make to make money along the way, to have the profits. So, all things lead back to profit no matter what. If you're going to sell it, raise money, if you if you're just trying to create a lifestyle out of it, no matter what, you want to be able to optimize towards profit. make money. — Still juggling multiple tools for email, SMS, and push marketing? Omnisend brings them all together in one powerful platform built for e-commerce. You can launch pre-built automation workflows, build audience segments based on shopping behavior, and even gamify your sign-up forms without spending weeks learning the tool. It just works and it's built to scale with you. Every account starts on a free plan. And unlike other platforms, Omnisend gives

you 24/7 human support no matter your tier. Check it out at omnisend. com/ctc or click the link in the description. — Yeah. — Right. And so, we're at the end of the day, it's it is about making money. But the difference between what you're saying and just going into it saying, I want to make money or like you're go to the moon, is that there's very specific ways that you kind of pull the different levers that you have available to you based on in what based on what window you want to maximize profitability within, I guess is kind of what you're saying. So, if it's a lifestyle thing and you want to pay yourself in a way that makes sense for the way you want to live, that's a certain approach to it. If you want to again maximize profitability over certain window in order to raise money or build your company towards acquisition, then that looks different as well. So, uh maybe talk a little bit then about how this all ties into CTC's profit system and how we approach the way we serve the brands that work with us. — Where my whole mind goes with this is I went from 1 to 3 million, I went from 3 to 8 8 to 15 million, I went from 15 to 25 million. And as I kind of grew the revenue number, my my understanding of the correct motions to take to not only grow the revenue number, but also to grow the profit number, there was a huge disconnect. It's much easier to inflate the top line than it is while the bottom line is inflating with it. So, with that said, you know, like it's a relatively simple concept to say, "Okay, I spend more and it generates more revenue. " But you start getting into certain levels of business and into the game that different things are needed. Uh different tactics are needed. Deeper understandings are needed. I mean, I think that's what's so special about Common Thread Collective is you know, we have a data scientist on staff. He's on here all the time. Steve. Being able to actually break down certain metrics that are going to lead to more profit, especially as that revenue number grows, I think is kind of the secret sauce here. So, being one — Being a founder and trying to rely on the team that you have to optimize just based on metrics like our return on ad spend, when you start getting to a certain level, that's just not enough. And so, I think that would be the secret sauce that CTC has.

— Yeah. Okay, so let's talk through I want to go on a little bit of a tangent or just sort of a bit of an offshoot here, which is talk to me about your experience. You had mentioned going from 1 million to 3 to 8 to 15. Talk to me about how they experience A of being a founder, owner, operator, whatever, how that evolved. And then how the way that you had to track profitability, success evolved through each one of those stages. So, how did a million look different than three? How did three look different than eight? How did eight look different than 15? All those sorts of things. — I just Well, for whatever it's worth, it felt like the whole time I was just going through imposter syndrome and I just had no idea what I was doing. Yeah, yeah. You know, and I think that everybody kind of feels that in one level one some cases. But, yeah, I mean, really it just came down to the basics of just understanding my numbers and then how the all those numbers work together. I think one of the secret sauces of CTC and something that if it were me and I could go back in time and something that you know, ultimately that CTC could have helped me with is they part of a system that they have they're able to tell you your optimal AMER for each month. I kind of just blindly just kind of just blended together quarters and kind of just like, this kind of feels like the right spin and trying to model that out and try to really understand like, how much should I actually be spending for this day or this month? And what does that ultimately lead back to? It's a hard thing to take on, especially when you're in this high growth environment. So, if you had somebody come to you and say, "Hey, here's your optimal spend for this month or for this day and this is what your MER should look like on a monthly basis or a weekly basis. " Um and it's backed by like real data and not just like hunches. Uh yeah, it So, to answer your question uh I just did all the same activities, just more of them and I even know if they were necessarily the right activities. — So in hindsight being 20/20 of course, like where do you think you should have evolved? Let's say between 8 and 15 or something. — Where should I have evolved as we doubled the size of the business? I should should have definitely better understood probably like 90-day or 120-day LTV. — Yeah. — I should have better understood that and what that actually did to our bottom line over a longer time horizon. And I should have introduced more product launches. Should have understood the relationship of those customers coming back for those product launches. Should have better understood the relationship between my customer acquisition cost and what like for first order profitability and what that actually meant on a 90-day horizon. There's all sorts of metrics that I now understand. Not necessarily would know how to go and dig up, but I definitely understand and uh that I can apply to into today's environment that would take a $15 million company with lots of profit on the bottom versus just saying, "Okay, let's just get to this revenue number to just get to the revenue number. " — Yeah. Yeah, kind of seems to me that the that part of like the reflection is maybe what I would put it is that like it what it seems to me is like what you have to do is connect every day to or the performance and execution every day to a to the broader outcome. And what tends to happen is you take sort of a broad picture look like we need this AM over, I don't know, the last couple of quarters or we need this AM just generally speaking. When really what you need to do is say like for today we need to hit this AM number in order for an outcome to happen in the next like 6 7 8 months. And getting to that precision level is the type of thing that would have been helpful, but it's the type of thing that's very very difficult to do unless you have a system in place like the one that we have at CTC, right? So, do you have Does that make sense? — Yeah, I think the single most important thing is understanding the big picture first. What is it that you actually want, you know? — Yeah. — And then layering on top of that, what is the DNA of the business? And then the intersection of those two things, and then map down to the day-by-day day-to-day. And yeah, and I think and then actually focusing on the

metrics that actually drive that. Yeah. And I think that's the secret sauce of CTC. And that I think that's ultimately the secret sauce of just growing something profitably. — Yeah, that's a really good point actually because like one thing that I will hear a lot is when you would ask somebody like what do you want out of your business, they'll say something like a three ROAS, which is like a sort of middle-of-the-pack a metric that is like important in some ways, but only in the context of this other this whole constellation of metrics. And so actually understanding like no no, what I want is this contribution margin, this profitability over this specific period of time. That's the big picture kind of North Star, right? And then at the bottom, like what are all the sort of like the whole array of metrics that are going to lead up to that and how I can how can I be precise about the little stuff in order to bring the big stuff about? — Yes. — Yeah, that makes sense. So, one thing that you mentioned kind before we hit record here is this idea that maybe there maybe money's coming back into e-commerce. So, obviously, you know, during COVID, there it was a huge boom for the e-commerce industry. Then COVID ended. People started going to regular stores again, and that kind of dried up. Now, with you know, some recent kind of high-profile acquisitions, it seems perhaps that's changing. So, maybe speak a little bit to that and then kind of how our CTC service that he plays into it. — Yeah, I don't I'm never going to claim to be somebody that actually understands what the heck's going on, but I think that one of the things that I am good at is I'm good at identifying patterns relatively early. And it does seem as if that there are acquisitions that are happening. It does seem like acquisitions are happening, but it's it it's happening with uh of course omni-channel brands. It's people aren't so leveraged into just the e-commerce world. The DNA of the business, the acquisitions are happening with the companies that have the DNA that make up the repeat purchase rate. Uh kind of like your traditional consumables. It seems as if that uh that's going to be something that people for money to flow into that there's going to have to be some sort of consumable aspect. retail play as well. Uh but yeah, I think there is a possibility that money is going to flow back into e-commerce. What you know, what comes up must go down and that's exactly what happened from 2020 uh through 2023, 2024, 2025. It kind of seems like things have stabilized and the gang sters of the e-commerce world have figured it out. They have survived. And now that things are stabilized, I do think that there's going to quite possibly be another rush that comes about with the change in behavior on how we're searching for things. Uh people are moving from Google and going into ChatGPT or what wherever else. And anytime that a new ad channel like that opens up, typically it's a lot less to could go and acquire a customer. So, that change in behavior might actually drive down the acquisition costs, which might actually make more money flow into e-commerce. Uh but yeah, it and it so if all this is true, if there is truly money that is positioned and coming into e-commerce, yeah, I it's I think it's just it's just smart to identify what it is you want. It's smart to get an opinion about the DNA of your business. And you know, everybody thinks their kid is good-looking. And so I think it's good to get a second opinion of whether your kid is good-looking or not, metaphorically speaking. And uh yeah, and then and then just optimize towards what's actually within your goals and what what's within your DNA. So if there's money coming in the e-commerce and you want to sell your business and uh and it matches your DNA, then get hooked up with somebody that can give you a deeper understanding of how that's actually possible and it's not just I'm going to drive I'm going to

not just I'm going to drive a two-merger to to the moon. — Yeah. Yeah, no, that makes sense. It's the fundamentally what CTC's service can function as is a reality check. And that definitely could be something that's hard to hear and I know that's been an experience of some clients across the years here, but the idea is that yeah, there is sort of there are fundamental almost unchangeable elements of your business, which is not something any, especially any entrepreneurial-minded person wants to hear. Is it that there's something that they can't control, but that does happen a lot, right? And so there's certain maybe we could speak to a little bit of like again, what what what's would be an example of brand DNA being sort of You already kind of brought one up with your own brand, but an example of brand DNA being at odds with somebody's stated goal. — Well, you know, I think one of the most underrated things on a brand DNA side of things is like fame or status. — Yeah, totally. — And because then the product release kind of becomes irrelevant. I mean I live in a headspace in which that I believe that product is mostly everything. If you have a great product, you don't have to market it as hard, sell it as hard. You just share it with people and you do it at a profitable level. But when you have some sort of baked-in optics or fame and you just introduce a product to the people that just kind of put you on a pedestal or extol you in some sort of way, it's just very, very easy for somebody with that fame to share that share the product and it creates, especially if you've built your audience on an organic level, it just creates a really great scenario of profitability. So, I think that in the DNA of what's going to end up becoming a very valuable business is some sort of personal brand that's attached to it. — Yeah. — So, yeah, that consumables obviously and distribution is always going to be the bugaboo. They're going to get more expensive and I think having an omni-channel and having different modes of distribution is going to be Well, it just is. It's just critical to get the good DNA of a company. — Yeah. Well, yeah, your first point there the sort of the Alex Hormozi theory of

how to grow your business in some ways. Like if you can just become famous yourself, then the association of the product with you will be sort of enough. I think there's still obviously an element of like if the product really sucks, like that could be a problem. But it papers over the fact that there's a lot of as particularly in spaces that are really commoditized is that there's a lot of brand par- product parity where all the products are like actually pretty good. But there's nothing to distinguish them other than the personal brand of the person selling them. So, in that case, like that may be a sort of a difference maker. But then yeah, it feels like the then the other factors would be like hard costs are called hard for a reason. And there's those are things are like fundamentally really difficult to change and you have to find a way to sort of break out of that. But yeah, I think so talk a little bit then about and we've sort of been circling around this, but like CTC can function for you, particularly the profit engine on our profit system, as a reality check, as a way to maybe do sort of like a the human genome project or whatever, but about your brand, right? Get a sense of a DNA scan, let's say. Uh and then we can build out a plan to like unlike human DNA, let's say, like we could build out a plan to build something for you in light or in spite of the DNA of your brand. So, talk to a little bit about how what we do can function as a form of due diligence, as second opinion, as a reality check, all that type of thing. — Yeah, for first off you took me on a tangent, I'm going to take you on a quick tangent. Please. You your ability to take in information and just keep it so compact and so precise, it it's a that's a talent. Yeah. — Thank you. English major, you know. — Oh. Okay. Yeah, you're great with words. Yeah, I mean I can only speak from my experience. And my experience is that in my journey of growing my business, I came across a bunch of different things that I paid a bunch of stupid money for that did nothing. Yeah. You know. And like you kind of look at it and hindsight obviously is 20/20. You you go why like you know, for somebody to analyze some sort of something and you know, it cost X amount of dollars and you just kind of look back on it now and you go what was I actually thinking? And so the beauty of stepping away for a while is you do get clarity. And then I I've stepped into CTC and I've been here for a few months. And I think that the beauty here is that I understand there's a long list of things that CTC would do. You know, you hand over your data and they go through this long list of things that ultimately gets you information that I don't know if you're going to get anywhere else. Like if you go and work with another partner, the motions that CTC goes through to get you the data that you actually need in order to drive your business forward towards either a sale or to maximize profits or to go raise money, whatever it is, they take that data in and they hand something off to you that is actually something that you are going to apply to make yourself more money or to go and sell your business or go raise money. And so I guess my point to this is that there's there is dumber money to go go get spent. I don't know if that's like a a good that's a good point, but you know. — The compelling thing is yeah, yeah. I think it's it is interesting. That's a good point. I mean like so I work with a lot of brands directly who are smaller, right? Brands that are six or early seven figure. And that's that is their I would say their number one problem is like they feel like they're constantly throwing bad money after bad. You know what I mean? — Yes. — And they're hiring agencies that suck or you know, you've hired a freelancer who just ran up your ROAS, but it was all remarketing or something or you hired a consultant that didn't actually give you any information that was useful. There's this I've said it on this podcast before, but it is marketing is a very weird world because let's say if you go to like a I think I was using this analogy with Luke. If you go to a car mechanic and the car mechanic fails to fix your car like 80% of the time, like that's a problem with this industry, you know what I mean? And that often is the case with marketers. There's just and in some sense there's probably too many of them. I think one thing that's compelling about our offering is that what we're tell like this particular the profit system doing due diligence, getting like a second opinion, a second look at your business. So what we're offering you is like what we'll give you is bad news. The bad news being that your business is maybe not built for the goal that you want to get at. We can tell you how to get there, but as it stands right now, we can tell you exactly why things aren't going to work out the way that you think they are. And I think a lot of the time where bad marketers fall flat, bad agencies fall flat, is what they say is like, "Hey, we're going to show you how we're basically going to just demonstrate how everything's going to be great all the time. Like, we're going to get you a fantastic growth. this amazing result here and there. " But those metrics are all inflated, they're all ultimately meaningless. What we're offering is a picture of what reality looks like

which maybe is not doubling your business this year. But maybe it's growing it by 15%, which is better than what was going to happen otherwise, which is that it was going to shrink based on what we're looking at. You know what I mean? So, anyway, that was just, yeah, maybe a way to encapsulate kind of what we're offering here. It's like, we're going to give you we're going to shine a light on things, and whether there's going to be good stuff and bad stuff, we'll tell you all of it and build a plan to go from there. — Yeah, and and it's information that you're going to not going to really get anywhere else. — Yeah. — So, somebody's [clears throat] going to say launch more campaigns and try to get more creative and drive this to this number versus there's actually going to be detailed data and information here that you otherwise aren't going to get anywhere else. — Yeah. Yeah, that's exactly right. So, any anything else that you want to hit on this, anything you want to kind of draw out in terms of how our profit system can help with this specifically? — Yeah, I think that the single most important thing is that you got to sliver off some time to really ask yourself what it is you want out of your business. And once you've slivered off that time to really understand what it is you want, I would say go hire somebody that really understands numbers and understands data, and have them model it for you. And I think that's like kind of like the distilled version of everything that we're talking about here. Understand what it you want and then go find somebody that really understands numbers well beyond anything that you'll ever be able to comprehend and go pay them to go and model it for you. And to your point, it's going to be a dollar that goes a lot further than the next consultant. — Mhm. Yeah. And by the way, we know a guy who does data and understands it at a level we never could. It's Steve and he works here. So, if you're interested in having this kind of like thought work done for you and shining this light on your business, you know where to find us as always, CTC at CTC. com. That is not our website. Common Thread Co. com. Hit the highest button. Let us know. — Just when I told you you're good with words. — I don't know if I should forget the name of our own company or our own website. Anyhow, folks, you can find us there. Randall, thank you for joining us. Well, obviously, we're going to have you back on. So, appreciate you joining us here. But, until next time, folks, thank you for listening and we'll see you.