The End of Easy Mode

Hey everyone,

Welcome back for another bite to chew on.

We recently sat down with Mehtab Bhogal to talk about where DTC is headed in 2025.

Mehtab has a unique perspective because he has been on both sides of the table - he's built multiple DTC brands, and now invests in/turns around consumer brands through Karta Ventures. 

Did you know Karta can usually evaluate a DTC brand within 24 hours? 

That kind of speed only comes from operating over a dozen consumer brands themselves. They've saved multiple companies from bankruptcy, been featured in WSJ and HBR, and created hundreds of jobs in the process.

Let’s go over some of the insights he shared…

On the Menu:

• The Reality Check Every DTC Brand Needs

• The Tools That Actually Matter

• The Growth Game in 2025

BTW - Are you a brand facing major headwinds in 2025? Check out Mehtab’s Tactical Guide to DTC and eCommerce turnarounds. 

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The Reality Check Every DTC Brand Needs

It’s easy to say DTC is just getting harder, but in truth, the industry is actually evolving. 

Money isn’t cheap. There’s no more long LTV:CAC plays. And digital advertising is increasingly competitive. 

VCs have largely pulled out of consumer brands. Why? "We don't have the advantage of margin expansion or operating leverage that comes with scale," Mehtab explains. "If I'm selling a SaaS product, my cost of servicing 10,000 customers is essentially the same as servicing 10 customers. 

But in consumer, my COGS can only get so low. It means capital needs to be deployed with as little waste as possible - because operating leverage isn’t covering for our mistakes."

The digital arbitrage game is over too. Meta and other platforms are being used by massive companies now. A single outbound click (actual site traffic, not internal Facebook engagement) costs at least a dollar in even non-competitive spaces.

Meanwhile, traditional channels are looking attractive again - stuff like Linear TV where CPMs have dropped below digital and trade shows, which gives you a look at the retail landscape, where over 70% of commerce is still conducted. 

Mehtab notes that the landscape has fundamentally shifted → 

• Higher interest rates = expensive inventory financing

• Post-COVID Consumers shifted back to spending on travel/experiences

• Platform changes that can tank revenue overnight

"Everyone needs to think like a real consumer brand now," Mehtab told us. "Not just a company that sells through Facebook ads."

The Tools That Actually Matter

Optimizing your operations can happen in a million different ways. Mehtab stressed that, to some degree, every brand is unique when it comes to the stuff they do well and the stuff that needs attention.

However, he mentioned two key tools that Karta Ventures often leverages to spot opportunities and cut the fat:

• Cash flow analysis 

• Team Assessment

Cash flow

First, the reality is that most DTC founders running brands are still flying blind when it comes to cash flow.

At Karta, they look deeper, starting with the 13-week cash flow model. 

Forget traditional financials - Mehtab considers them "nearly worthless" for high-growth or distressed companies. A properly maintained 13-week model shows you:

• Exact cash movement through your business

• Revenue timing and processing

• Payment optimization opportunities

The payoff? They've found millions in “hidden” cash within companies doing $10M-$30M revenue just by getting granular with cash flow.

Team Assessment

Karta uses the  EOS GWC framework (Get it, Want it, Capacity) to evaluate teams within days → 

• Get it: True understanding of role requirements

• Want it: Demonstrated effort and urgency

• Capacity: Ability to execute effectively

"We have a pretty good idea of how much output people should have for specific roles," Mehtab says. They benchmark everything - from warehouse picks per hour to revenue per head. What they often find is that what seems like a margin problem is often a team efficiency issue. 

In fact, they've seen cases where reducing headcount by 30% actually improved speed and performance. 

We actually went through this not too long ago at Obvi as well:  

You can read how we handled the issue here. 

The Growth Game in 2025 

Not too long ago, the game in DTC was fairly simple: 

Find a product → make great ads → develop an offer funnel → Profit!

More than a few DTC brands scaled wildly and exited just by executing this plan. 

But these days you need more nuance and operational strategy to be successful. 

Take Karta’s succulent plant company investment. The supply chain was chaos - the founder literally driving around California farms picking plants. 

Once Karta came on board, they didn’t just run the direct response/performance marketing playbook. Here’s what happened instead: 

1. They acquired a farm (vertical integration)

2. Built major retail relationships

3. Became the drop-ship supplier for Urban Outfitters, Home Depot & More!

"The main thing was cleaning up supply chain and integrating the farm we acquired," Mehtab says. "It worked better than we thought."

For 2025, here's what we discussed around channel strategy and expanding beyond the typical DTC playbook…

Channel Strategy

Linear TV is getting surprisingly affordable for DTC brands - often 70% cheaper CPMs than streaming. But you need the right unit economics. 

"We've seen brands with high AOV make this work really well," Mehtab says. "Especially if you're expanding into retail."

Trade shows are critical even before you're ready for retail - they help you understand how the majority of commerce still happens and build relationships early.

That’s right - getting out there in real life should probably be on your to-do list this year. 

Retail Timing

The sweet spot for major retail expansion is typically $10-20M in revenue, but it's category-dependent. Mehtab talked about how “retail” also varies drastically: from sales to small, independent shops (DTC brands can and should do this early), versus big box, which is another animal altogether. 

Mehtab emphasizes what you need to do to know for mass retail work:

• Your cash flow needs to handle 90-day payment terms

• EDI systems take time to implement properly

• Packaging and labeling requirements vary by retailer

• Returns can crush you if you're not prepared

"A lot of brands wait too long to think about retail," Mehtab told us. "By the time they're ready revenue-wise, they're missing the infrastructure."

Sum it up

The easy money in DTC is gone.

But as Mehtab's work shows, there's still massive opportunity if you build real operational excellence and think beyond pure digital channels. The winners in 2025 won't just be good at customer acquisition - they'll be excellent at running sustainable businesses.

The consumer brands that survive and thrive will master cash flow, build multiple sales channels, and treat digital as just one channel in a broader strategy, rather than a business plan. 

All the best,

Ron and Ash