How a Water Bottle Company Turned Into a $17M Empire

0:00Welcome back, everybody, to another episode of Acquisitions Anonymous, the Internet's number one podcast for small business M &A. We talk about a really interesting e-commerce business today. It is a hydration additive business. You've probably seen these on the shelf at the pharmacy and at the checkout line. It's a 99 % Amazon FBA business. And between Bill and Travis from Capital Pad, they have so much experience on this. If you've ever looked at anything e-commerce related, one of the first questions you ask is, how much of it is FBA? This business just owns it. It's almost all FBA and makes for a really interesting discussion.

0:37We talk about their gross margins, their net margins. What does that actually mean about what's happening inside the business? The business made a pivot from selling motivational water bottles. Like there's a lot that we cover in this episode, really interesting discussion, really fascinating business. And, uh, you'll find who likes it, who doesn't, what do we, what do we like and not like? Think you'll really enjoy the episode. Stick around after a quick word from our sponsors.

1:04Hello, another episode of Acquisitions Anonymous. We don't have 100 % peers anymore. And thumbs downing on just the plus inventory line. Big thanks to High Level for sponsoring this video and helping us pay for our editors. High Level is the all-in-one CRM that handles your emails, texts, funnels, and more all in one place. Think of it like the Swiss Army knife for small businesses and you can try it for free for 30 days at gohighlevel.com slash Michael Girdley. All right, welcome back to Acquisitions Anonymous. It's another Friday episode and this is the second episode of the day. So Heather's a little bit more awake for this one.

1:37My eyes were open. I had coffee. It's good. The coffee's kicked in. We've also got my good buddy, Travis Jamison from Capital Pad with us here today. Good to see you, Travis. We've got a fun deal. So when I have Travis, Travis is one of my favorite e-commerce people. So I always love to pull a fun e-com deal for Travis. So we have a good one today that I found. So this is from our buddies over at Quiet Light Brokerage, who I think just personally, they're not paying me to say this, I think they're the kind of most prestigious slash best run e-com brokerage out there for e-commerce businesses. So if you want to buy an e-commerce business, I'd be sure to be on their list.

2:13This is an electrolyte brand, so hot right now. US-based manufacturing, 65 % year-over-year growth, 20 ,000 subscribers, 17.5 million of revenue and 2.5 million of SDE. So it says multiple NA, A asking price, not disclosed, quiet like getting savvy, not with an asking price. So 17.5 million of revenue, two and a half of net. Here's a little bit more about it. This hydration and wellness brand offers a line of electrolyte powder supplements designed to support hydration, energy, and overall wellness. The brand features a portfolio of 40 SKUs, including low sugar, sugar-free, immunity support, caffeinated energy formulations.

2:57Initially gaining popularity through motivational water bottles in 2019, the business strategically pivoted in 2021 to consumable subscription-based electrolyte products, recognizing the long-term sustainability of recurring revenue. All right, so these guys weren't born yesterday. The brand generates approximately 99 % of its revenue from Amazon, achieving robust growth with a 65 % year-over-year increase in revenue. With over 20 ,000 active subscribe and savers on Amazon, subscription and repeat customers constitute 37 % of total revenue as of early 2025. Gross margins average approximately 86%, reflecting highly efficient operations supported by U.S.-based manufacturing, automated PPC advertising, and strategic inventory management through Amazon's warehousing and distribution, AWD, program.

3:48Key growth opportunities include expanding direct consumer sales via the recently redesigned Shopify website, which is 1 % of sales, let me note, launching new flavors that have already been fully formulated, entering brick and mortar retail, and tapping international markets such as Canada, the EU, and Brazil. The business's primary manufacturer has existing capacity to immediately support a 1.5 to 2x increase in production with additional capacity to scale production up 4x within two to three months, ensuring rapid growth potential. with streamlined operations requiring about 10 hours per week from each founder.

4:21The business is primed for smooth ownership transition and significant scalable growth. Again, 17.5 million in sales, two and a half of SDE. Travis, what do you think? Well, first of all, the founders see this. Great job. You knocked it out of the park with this one. That growth rate is insane. This is a very, very competitive niche on Amazon. So I'm really impressed. Yeah. I mean, the electrolytes, they already dive it down. So like, first of all, Travis, what is this? Do you know what this is? This is an Amazon FBA brand. That's all it is. They sell electrolyte packets, I assume, maybe some like powders you can scoop in there.

5:01Not much to it, but this industry has been on fire lately. I think, what was it? Element? Elementee? LMNC. Yeah. I mean, they kind of like set the stage. I don't know how they just ignited this electrolyte push even more, but sometimes they did because it's been around for, you know, decades and decades. But wow. Yeah. Everyone's consuming it now. Yeah. So this, these guys sell powders that you put into water and they have, you know, supplement type benefits. I think, Travis, the reason this is suddenly caught fire, I think this is downstream of the water bottle craze, right? Over the last 10 years, everyone bought a freaking water bottle.

5:39And now everybody's convinced they got to be permanently hydrated all the time. And they're carrying around water bottles. And it's very easy to sell them, hey, you're not really hydrated unless you put electrolyte powder in there. And also it tastes delicious. So this is totally downstream of that. And I think you see it. And again, kudos to the founders here. They started this business with motivational water bottles. So I assume water bottles inscribed with fun sayings and realized that that was all also a red ocean, and they pivoted to at least a different red ocean that has recurring revenue.

6:10So kudos to them. Sounds like it might have been like accidental thing. Like, oh, we're already selling these. Maybe we can try to sell the electrolytes along with it. Like, oh, this is a way better product. Let's just go here. Yeah. And 37%, is that a pretty good subscription level? I felt like it would be to me. Especially if some of that revenue is still water bottles. I would think yes, right? Which you're not going to subscribe to water bottles. I assume the water bottle revenue is like 1 % at this point. I'm just guessing. I don't know. I have no idea. Yeah, you're right. Those SKUs could be completely dead.

6:40I mean, that's so competitive at this point. The 86 % gross margins, that's electrolytes for you. It's salt flavor powder, basically. I love that. It's been interesting seeing a lot of the older brands kind of get their butt handed to them the last little bit. For like, I think one big reason, all the new brands have quite a lot of sodium and salt and the old brands don't because salt is bad it used to be right and now the new brands are putting it in there and everybody just soaking it up like crazy it seems like the old brands are um learning very slowly for some reason yeah well and also like the old brands are just not good at the tiktok marketing the just like the way you have to sell consumer products especially impulse purchase consumer products which I think this is, you know, food, taste-based, relatively low price point, like you've got to be a really good digital marketer to play here.

7:34Yeah. With that, I would really love to know how they're getting the sales growth. Because the rank on Amazon, which is, you know, basically I assume all this is, like you don't just throw it up there. You have to be very, very active in marketing, especially in this industry, to make a splash. So I'd love to know their strategies for doing that. The net market makes it seem like they're obviously paying for customer acquisition. in a hefty amount. Because if the gross margins are so good, and that margin... But again, Bill, like you always talk about this, it depends on where they're booking their customer acquisition costs.

8:06So they've... I mean, I know. So they've got an 86 % gross margin. That's product cost. I don't think there's anything else above that. So I'm going to round that to 80... to call it 85. And they've got roughly a 15 % net margin, which means you've got 70 % in the middle, right? And I'm telling you, this is an FBA business. You don't have a lot of employees. So you're spending easily 50 % of revenue on ads. And the rest is just Amazon fees, right? Is 20 ,000 active Amazon subscribe and save? I mean, that sounds impressive to me and I don't know anything. Is it impressive? Yeah. I mean, I think so.

8:49Right, Travis? I think so. I don't know it as well, but it sounds it to me. Bill, do you have any other stickiness of subscribe and save? It depends a lot by product. I mean, so Amazon, they used to just tell you nothing and they would just tell you how many subscribe and savers you had and you couldn't see churn or LTV. They're starting to roll out some more brand dashboards for that. So that is one of the things I would dig into pretty quickly on this business is how sticky they are, what the lifetime value of a customer is. I would assume, I mean, if these guys are paying through the nose for marketing, which they are, obviously just based on our back of the napkin P &L, and the fact that if you weren't, they wouldn't be competitive in the niche.

9:26You are probably losing money on first order here on Amazon or darn close, right? Or breaking even or losing money on first order, which I'll tell you what, is a sphincter puckering way to go through life. It just, I mean, and I've sold supplements on Amazon for a long time. And like we have to live that way because when it's an auction-based business model for ads, right? So when you and all your competitors know that you have really good lifetime values, pretty quickly people start going, I can lose money on the first order and we'll make it back over time. And so if you're not willing to also play that game, you can't pay the ad prices to win the auction.

10:08So all of these kind of LTV based businesses are almost always going to converge to a very white knuckle level of ad spend. And so you've got to be really dialed in on your retention and your lifetime values. Yeah. And on that, it probably means there's not a lot of ability to change pricing much. You know, Amazon Subscribe and Save hates it if you change prices at all. But also in this industry, highly competitive. There's tons of other companies selling basically the exact same thing. You got to kind of like stay in this range of everybody else. Yeah. On the plus side, I mean, on the plus side, we've got 86 % gross margins.

10:46So I don't think we have a pricing issue, at least not right now. Hopefully, we're not importing all the stuff from China and that we get 500 products. No, they say American manufactured or something like that, which I don't think this is a highly manufactured process. 99 % of supplements import from China, test it, and then manufacture it in the US. That's just how it's done. I was going to say that, Travis. Let's say vitamin C is one of their main ingredients. We're not making vitamin C here in the States. They're buying it from China and blending it here in the States. That's something I would really want to also look through in diligence.

11:21I'd want to look through their contract manufacturer to the actual end markets or rather original markets where all the costs, all the actual ingredients are coming from and understand my tariff exposure. I'd be super curious to hear their pivot story. I mean, to pivot from motivational water bottles, like it makes me wonder if there's a like a influencer, you know, or a person behind this brand and they had some distribution and they're like, what can we sell? Like we're a fitness influencer. What can we sell? motivational water bottles like the motivational term really stands out right yeah yeah did y 'all ever see those big water bottles that like had the measurements on the side and then there were like funny kind of sayings along the rest of the day where it's like you know 7 a.m like you're starting off great and then like at the middle of the day it's like you know you go girl keep going like stuff like that yeah and then at 2 p.m it's like time to go pee yeah you know like yeah like 5 p.m.

12:19You're almost there. 215, 220, 225. Right. But I think that pivot is kind of is interesting and impressive that, I mean, they clearly made it. It's been successful. I don't, they don't say how much they did in revenue selling water bottles, but I have a hard time believing it was 17 million. You guys have talked about before, aren't there like some really strict terms and conditions that people sometimes flirt with the line with Amazon on? Like you can't like put stuff in the packaging to try and like migrate them to your own, you know, e-com subscription? Yes, very. So yeah, Amazon calls that redirecting the sale and they really hate that.

12:59So like you can't put inserts inside the bag of your electrolytes or the box of your electrolytes and say, hey, next time 20 % off on our Shopify website, which leads me to the other comment. I'm glad you raised, Mills. They talk in here about your growth area of scaling up the Shopify website. I have beat the table on this a thousand times. Taking a brand that is 100 % Amazon and building a meaningful Shopify business, in my opinion, is one of the hardest things to do in e-commerce, period. I would even argue it is easier to get into retail stores from 100 % Amazon business than it is to build a Shopify business.

13:35It's just so brutal. Do you agree, Travis? Quite honestly, all of their growth levers that they mentioned, I discount all of them i don't give them none of them international okay that's that's also hard yeah i mean you can go international amazon fine but like international otherwise no and even international amazon it's it's a coin flip getting into stores i mean bill you know better than anybody uh pretty impossible for most brands and even if it is it's not necessarily going to be meaningful for most brands um and definitely expanding to shopify like that one i mean i've done it myself had an amazon brand tried to go to shopify maybe it was like three percent of sales and we just, we left the Shopify up, but we just abandoned all working on that.

14:14Like, it didn't make sense. It's brutal. I mean, you have to be, to do it right, you have to, it's a totally different skill set to be good at Shopify. You need this whole meta ads, content creation funnel in order to make it work. With the small caveat that if you get into this business, you discover that the reason, the way they're growing on Amazon is a ton of off Amazon traffic. like an already viewing a ton of UGC, ton of influencer, ton of TikTok shop, ton of meta ads directing to Amazon, then I will give you, you could probably siphon some of that over to the Shopify store and build a Shopify store.

14:53But it's going to be likely a little bit cannibalistic to your Amazon. And the really scary part about that is rank on Amazon is entirely, not entirely, but largely based on velocities. So if you cannibalize 20 % of your, call it artificial velocity, and move it over to Shopify, you're going to get punished in rank and you're going to start to lose some of your organic velocity, which is what's so diabolical about Amazon. So this is a tough business. It is. I mean, I've had a ton of success, but this is a brutal business. On your point, Bill, I haven't been involved in this a long time, but when we had an Amazon brand, we would eat, when we're launching a new product, we would run Google ads directly to the Amazon brand ourself, like not through Amazon, just to build up that sales velocity.

15:36So you rank higher than Amazon, but you have no data on where those sales were going, where the traffic's going. You just hope that enough of it boosted up. So yeah, if you start siphoning it off to a website, it could have materially very, very big impacts on it. Hey everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called CapitalPad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition entrepreneurs, that is people who want to buy a business and need capital, to list their deals and solicit capital from other people who want to invest in acquisition deals.

16:20So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing too from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically, CapitalPad professionalizes investing in small businesses and the returns can be really, really good. I'm so stoked they exist.

16:57It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out capitalpad.com and tell them that Acquisitions Anonymous sent you. I would not buy this business unless you really know what you're doing in Amazon. First of all, this is a big business. There's$2.5 million of EBITDA. And Quiet Light, I think, has gotten wise that this is probably not a 4X deal. Well, they didn't list an asking price, right? That's what I mean, yeah.

17:36I think seller here is going to be looking for a little bit higher multiple, just given the size and the growth rate. The buyer here is clearly not an SBA buyer. I mean, this is going for north of 10 million, I would think. So it's private capital, private equity. If you're a searcher, I would be real careful unless you really know what you're doing in e-com, you have an e-com background. You've got to be an Amazon shark, 100%. And I look at this, this is probably like basically an Amazon SEO business. They've got 40 SKUs, all these different flavors, and they've added, what was it, like immunity support, caffeinated.

18:10I think they're just going after these little long tail Amazon keywords and trying to gather up as much for each product as they can. Heather, are there boxes that the SBA would need checked for e-commerce? Like take the size of this one out. I feel like you've already got the deck stacked against you with e-commerce and SBA. But what are the, like, okay, recurring revenue would almost be a must, do you think? Well, it's got 37 % subscription and that would maybe overcome some of it. But I think most SBA lenders are sort of trained to be very wary of anything that's 100 % Amazon. They feel like it just does not give the borrower, their borrower, enough control of the business.

18:51And frankly, lenders aren't experts in e-commerce, just don't do it enough because they are reluctant to do it. And so it's just kind of, it's kind of an area that most lenders have, take a lot of caution with. I think it would be a tough one. They watch the ratio. They know what's up. Right. Yeah. A lot of people lost a lot of money in all FBA buyouts. Yeah. This is a fascinating one and I got the email, but I'm, I'm thumbs down on it, but I would love to hear the story and I would love to know which brand it is because at this size, like, it's likely that we've never heard of it. And because there's so many, you know.

19:29I don't think this is liquid IV or one that's got massive distribution. No, definitely not. I'm thumbs down on it just because I don't want to live in this world anymore. Selling supplements at a loss in the first purchase, 100 % Amazon, that's just too scary. Someone will buy this, I'm 100 % confident, probably for five plus times, but it's not going to be me. yeah if I see an FBA brand I say no it's just that easy for me yeah yeah I agree uh and Heather you're not look you're not lending to this one because it's all thumbs down thumbs down I don't need that much hydration we never did before why do we why do we drink so much water it's just crazy I I agree I don't get it I I am I am fascinated by the business huge kudos to the founders for building something super awesome.

20:22I just think this is really challenging to lever up and buy, especially if you're not really confident in your Amazon abilities. A good business to build, maybe not a great one to buy. Totally. Yeah. I agree. All right. Thank you to Travis for being here. Go check out Capital Pad if you want to invest in other small business deals. It's really awesome. He curates the deals. It's like, how many? Like one per month? One or two per month? Roughly. That's the cadence we're aiming for. Yeah. So the really high quality is not like a deluge of deals, but they're really vetted. A lot of good information.

20:54For credit investors only. For credit investors only. If you're a credit investor or qualified purchaser, go check out CapitalPad.com. And also, if you like this episode, there are 400 more like it on ACQUAnon.com. Some of them with Travis as a regularly recurring co-guest or frequent guest, which we love having. So go look at those. A bunch of e-com ones, a bunch of quiet light ones, etc. And thank you for joining us on this episode of Appositions Anonymous. Thank you.