In this episode, the hosts dissect a fast-growing mattress manufacturer with $43M in revenue and shrinking margins—raising questions about customer acquisition, product differentiation, and whether this red-ocean DTC business is salvageable or doomed.
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This week, the hosts examine a mattress manufacturing business located in the southern U.S. that scaled rapidly—from $16M in revenue to $43M in just three years—but saw EBITDA fall from $5M to $3.7M in the same period. Despite strong DTC sales through Amazon and Shopify, the business is stuck in a red ocean, with heavy competition, low differentiation, and rising customer acquisition costs.
Key Highlights:
- Revenue: $43M; EBITDA: $3.7M (down from $5M in 2020)
- 3-year revenue growth from $16M to $43M
- Over 50 branded SKUs and 1,000+ accessories
- Owners seeking a minority equity partner for expansion
- Major red flags: undifferentiated product, expensive growth, brutal ad competition
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