Principle: Sell First, Then Build It (A $27M/yr Case Study)

GM! It's Thursday, February 23rd - Today, we're covering the Morman Church fined by the SEC, a $27m/yr business built by pre-selling, and a Capital Letter reader sharing his $70m ARR business.

- Callum

FEATURE

Principle: Sell First, Then Build It (A $27M/yr Case Study)

This founder cold-called his way to a $27m/yr business. The best part? For the first 6 months of selling, he didn't even have a product.

What's The Business?

I asked Reddit users if they believe that startups should sell before they build. Then I got this epic story.

This entrepreneur manufactures and sells commercial truck parts in a small specific niche of the industry. He got into the business knowing next to nothing about the industry.

What he did know what that 2 $1B+ competitors controlled the market and that the product they built was a consumable that's required on every truck on the planet.

The Critical Insight

This product cost truck manufacturers $0.46-$12.00 and has always been made in the USA.

If he was the first to market with an import version, he could drastically undercut the market.

How Did They Do It?

1/ He bought a custom domain name so he could send emails.

2/ He cold-called 1,200+ potential customers, selling 6+ months' worth of inventory at a 60% discount.

That landed him a large dealership group, where he was able to collect 30% upfront (this put him in profit),

3/ He started a manufacturing partner he'd chosen in Asia. 100 days later, he collected the balance from the dealership.

45 days after that, he took a lunch break from work, so he could be on-site when his products arrived from Asia.

4/ After 7 years later of cold-calling "damn near every OEM, shop, fleets, and dealership group" they control the market.

They are 35-65% cheaper than their competition and sell direct (so no distribution markups), and they continue to grow fast.

5/ Fast forward to 2023, and his business generates $27m/yr (mostly profit).

Now he's exploring launching a product into a sister niche, same story, but bigger pie. He's also diversified his profits into real estate, RV parks, and oil & gas ventures.

Not bad for a business he started by cold-calling and $150 he borrowed from a friend.

His words of wisdom "Sell then buy when you cannot buy then sell."

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What Serve Is Doing So Far

Serve has already completed 20,000 commercial deliveries with a 99% fulfillment rate.

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Learn about Serve’s investment opportunity.

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ON TREND

The SEC Charges The Morman Church For Hiding $32B In Assets

You should know:

The SEC says it charged Ensign Peak Advisers, an entity operated by The Church of Jesus Christ of Latter-day Saints, to manage the Church’s investments, $5M for obscuring a $32B portfolio through shell companies.

• For more than half a century, the Morman Church quietly build one of the world's largest investment funds...Almost no one outside the church knew about it."

• Ensign Peak agreed to pay a $4 million penalty, and the Church agreed to pay a $1 million penalty to settle the charges.

• “According to the order, the Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences.”

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COMMUNITY

A Capital Letter Reader Built A $70M ARR Business in 4 years!

Last week, I got this email from a reader of Capital Letter. They took a business to $70m ARR in 4 years. Impressive!

If they give me the 'ok,' I'll share their story and the tactics they used to build this business.

Here's my ask to you: Do you, or someone you know, run an outlier business? If so, shoot me an email! I'd love to chat with them and share their story.