The 2025 DTC Playbook: What We'd Bet On Today

Hey everyone,

Welcome back for another bite to chew on. And happy New Year! 🎉

It’s the first day of 2025, so we’ve decided to change things up. We’re going to do a bit of a thought experiment…

If Obvi disappeared tomorrow and we had to start all over again, what would we do? 

Given our experience scaling Obvi past 8-figures and seeing countless brands succeed (and fail), we’re going to go over the fundamentals as if we were starting fresh in 2025.

Think of this as our New Year's gift to you - the exact playbook we'd use to evaluate (or build) a new DTC brand today.

On the Menu:

• The Foundation Triangle

• The Growth Levers

• The Operating System

The Foundation Triangle

First things first - there are three absolute non-negotiables. Miss any of these and nothing else matters.

1. Product Market Fit + Differentiation

Yeah, we know. Obvious, right?

If you don’t have something people want to buy, then you don’t have a brand or a business. But it’s also important that your product stands out in some way. It’s easy to think of stuff everyone buys or wants like shirts or socks or cars or food or makeup (or supplements). 

But it’s much harder to make something that is different enough to compete in those crowded markets. 

At Obvi, we didn't just create another collagen supplement. We spotted a gap in the market for innovative, fun flavors that turned a daily supplement into something people actually looked forward to.

And remember - differentiation doesn't always mean reinventing the wheel. Look at Liquid Death. They didn't revolutionize water. They revolutionized how it's marketed.

The question isn't just "is this product good?" it’s "why would anyone care?" and “will anyone remember you?”

2. Founder Market Fit

Here's where it gets interesting. The question isn't just "can you build this?" It's "why you?"

A lot of folks can spot an opportuinity or cook up a cool product idea. That's great! But it's not enough.

There’s a tendency to default to generic markers like an Ivy league education or experience working at big brands or in finance. Those are…fine? But it’s more important to have a clear insight or leverage point that makes for true founder + market fit.  

It also helps to be motivated more than just basic monetary rewards or not liking your current job. 

How determined are you to win?  

• What makes you stay up at night thinking about this opportunity?

• What's your specific insight or unfair advantage?

• Most importantly - what will keep you going when everything goes wrong?

Trust us on this one. When your manufacturer ghosts you, your ad costs double overnight, your Meta account gets paused, or you're not sure how to make payroll - you need more than "it seemed like a good opportunity" to keep pushing forward.

3. The Magic Number: 70% GM

Here's the cold, hard truth about 2025 - you need a 70%+ gross margin to make it work.

"But what about scale? What about..." - Stop. The margin squeeze is real, and it's getting worse.

There’s no more zero interest rate loans or frothy investment markets to prop up unprofitable “growth at all costs” schemes. 

You need enough room to:

• Invest heavily in marketing

• Handle increasing shipping costs

• Deal with inevitable supply chain hiccups

• Build a team

• Put some money in the bank

At scale, you want to target a 65% contribution margin. That means it costs you $0.35 on the dollar to get your product to customers, including COGS, shipping, freight, packaging, payment fees, and warehousing. Everything.

Can't hit 65% CM on day one?  That’s understandable. But you want to have a clear path to get there.

The Growth Levers

Once you've nailed the foundation, here's what separates the six or seven figure lifestyle businesses from high growth potential companies…

High AOV or LTV

Most DTC founders gravitate toward consumables these days. Makes sense - customer acquisition is expensive, so you need to keep them coming back.

But look at brands like Hexclad, Ridge Wallet, or Simple Modern. You can win with durables IF you have at least two of:

• High AOV

• Clear market advantage

• Strong product catalog/development pipeline

The Emotion Engine

Here's where DTC brands can eat legacy players' lunch - story and mission.

P&G isn't filming heartfelt founder videos about why they make toothpaste. They don't have to.

But in the age of social and viral marketing? A genuine mission or compelling founder story is rocket fuel.

This isn't just fluffy "brand building" either. A strong emotional hook:

• Drops your CAC

• Boosts retention

• Drives organic sharing

• Creates a true brand moat

Community & Viral Potential

Warning: Brutal truth incoming →

If you're planning to pay for every customer you acquire in 2025, you're planning to fail.

You need organic spread potential. Ask yourself:

• Does your target audience actively discuss this problem online?

• Do audience or topic-relevant creators get strong engagement?

• Do your keywords/topics regularly trend on social?

Building around topics people naturally care about and share means you have opportunities to build awareness and sales outside (or on top of) pay-per-click performance marketing.

Think Global on Day One

Here's something most US founders get wrong - they wait too long to go international. 

We changed our mind about this recently after finally committing to expanding overseas and seeing what works. 

Yes, the US market is massive. It's also insanely competitive with the highest CACs in the world. We're seeing Facebook CPMs 2-3X higher than other regions, and that gap is widening.

At Obvi, we waited until we hit $30M+ in the US before seriously exploring international markets. Big mistake. 

When we finally launched in the UK and EU:

• Our CACs were 40% lower than US campaigns

• Our engagement rates were nearly double

• We faced way less competition

This wasn’t a cakewalk, of course. Our international expansion playbook is here if you want a full rundown. 

But this has been one of the biggest growth unlocks for Obvi this year. And we realized we should have been far more aggressive about this opportunity, sooner. 

Here's what to look for in international markets:

• Strong English-speaking population (easier entry)

• High disposable income

• Developed logistics infrastructure

• Lower digital marketing costs

• Underserved by US brands

Simply put, don't wait until you've "won" the US. Start thinking about how you can move upstream into new regions once you have product-market fit. 

The Operating System

Finally, let's talk about how to run this thing in 2025:

Lean Machine

The days of raising millions and building a 50-person team are OVER. We're seeing 8-figure brands run with 5-10 key people.

Here's the modern lean stack we're seeing work:

Core Team (2-3 people):

• Founder/CEO (vision, strategy, key relationships)

• Growth Lead (marketing, acquisition, analytics)

• Product/Ops Lead (supply chain, fulfillment, customer service)

Depending on your founding team and their experience/skills, this can vary a little bit. In fact, a single founder with a strong vision and some experience can probably get to 7-figures annually on their own these days. 

There’s also never been more DTC knowledge and education available for free. 

Anything from paid media to creative strategy to finance to operations and logistics is out there to learn if you look. You also have mastermind groups, communities, and 1-and-1 mentorships that are cheaper than adding more bodies to your payroll.   

Everything else? Outsource or automate:

• Creative → Freelance network + Agency + AI tools

• Customer Service → Offshore team + automation

• Fulfillment → 3PL partners

• Finance → Fractional CFO + bookkeeping service

• Tech → Agency or fractional CTO

Out of the gate, the goal should be 15% or less of your revenue going towards ops. This gives you financial leverage to invest in needle movers like growth marketing and product R&D. 

With a blend of founder determination, education, automation, delegation, and outsourcing, it’s never been easier to get to 8 figures annually with a small, core team. 

Market Fundamentals

The "riches in niches" is true, but you need room to scale. 

Everything starts with your TAM (Total Addressable Market):

• Global market size: $20B+ 

• US market: $5B+ minimum

• Clear path to mid-8 figures in revenue

• Multiple customer segments

Getting a small slice of a big pie is much easier than trying to eat the whole thing. 

It’s not impossible to make a good business from a smaller market, but it means you’re going to have to gobble up a huge portion of market share just to get anywhere. 

On the other hand, if you’re business can get to 8 or 9 figures with a sub-1% market penetration, then you only have to appeal to a tiny fraction of your target audience to make things work. 

Growth Indicators to look for:

• Category CAGR: 7%+ annually

• Social mention/trend growth

• Rising search volume

• Increasing retail shelf space

• Growing adjacent categories

Big markets that are also steadily growing = an expanding ocean of potential customers and opportunity. 

On the other hand, a stagnant or shrinking growth rate can indicate a dying industry, which is something to be avoided.

Other red flags to watch for → (🚩)

• Sudden viral trends 

• Single demographic dependency

• Heavy regulation exposure

• High seasonality

• Capital-intensive operations

Remember - you want steady, fundamental growth driven by real consumer behavior or demographic shifts, not hype cycles or fads. A sudden trend can add a nice little revenue bump for an established brand, but it can snuff out a new company that relies on it to survive. 

Sum It Up

This is not the playbook for spinning up a get-rich-quick dropshipping scheme. Nor can founders depend on a long LTV-to-CAC payback period to find traction and get profitable “eventually” these days. 

In many ways, DTC got a lot harder after the end of the COVID pandemic. 

Investment dried up, money became more expensive, CACs skyrocketed, and things like shipping COGS costs went up. So, new brands need a great product, brand differentiation, a committed founding team, and a focus on big opportunities + lean operations. 

BUT! If you can nail these fundamentals? We don’t think the opportunity has ever been bigger.

Here's to building something great in 2025 🚀

All the best,

Ron & Ash