Offer testing tip:
your category likely has a non-discount offer that was perfected decades ago in retail.
Beauty: free samples & GWPs
Food/bev: samples, variety packs, snack packs
Home goods: free design consults, free installation, bundles
Apparel: membership, earned rewards
Thiel values substance over status.
Status and prestige are zero-sum games.
In a world where real value can be created, substance and true knowers are the people to look for.
To assess winners before anyone else, he came up with 4 questions...
Ever since I began acquiring DTC e-commerce businesses, people have asked me which business categories are “the best.” But I’ve concluded there’s no such thing as a universally good or bad category.
I’ve heard the usual advice: look for categories with 60%+ gross margins, have a high average order value, minimize SKU complexity, feature lightweight products for cheaper shipping, etc. In my experience, though, these factors rarely—if ever—predict success.
Why? Because any advantage that makes a category appealing draws in more competitors, quickly eroding those advantages. Meanwhile, businesses in categories with difficult challenges often turn those challenges into competitive moats, creating a powerful point of differentiation for those who master them.
Some examples:
I often hear that apparel is a “bad” DTC category given SKU complexity. And it is true that apparel businesses constantly need to produce new styles, colors, sizes, and products. This is expensive and capital-intensive. But the businesses that get it right have incredible defensibility–think how difficult it is to replicate the thousands of SKUs required to compete with the best DTC apparel businesses like Bombas (socks), Vuori (athleisure), or True Classic (T-shirts). Their complexity is a moat.
Furniture is also supposedly a “bad” ecom category. Shipping a couch or bed frame can cost hundreds of dollars. True, but then consider how, for many consumers, having a 100-pound box shipped straight home is easier than lugging it themselves from a store. Wayfair, the ecom furniture company, is still worth nearly $6B.
Or consider categories which many merchants want to avoid because of onerous regulations. One category I know better than most is contact lenses, where the seller must validate every single customer’s contact lens prescription. This is burdensome and complicated but, once you establish proper compliance, serves as a meaningful barrier to entry for merchants who can’t figure it out. 1800 Contacts is a $1B+ defensible ecom business because they got it right.
Once you start thinking this way, you realize that it’s often the unloved “bad” categories that offer the best opportunities. For example, I remember a conversation in 2017 with the CEO of Dame—a brand specializing in women’s “adult” products—about marketing. Because of what it sold, Dame was banned from advertising on Facebook. No Facebook? Talk about a tough DTC category. But this forced Dame to figure out more creative, organic ways to acquire customers. As customer acquisition costs gradually rose on Facebook, eroding margins for brands in other, “good” categories, Dame thrived because its organic acquisition funnel insulated it from rising marketing costs.
The moral of the story is: the ecommerce market is more efficient than you think. There is no such thing as “good” or “bad” categories because the categories that are tougher for you to crack are also tougher for your competitors.
@Theholisticpsyc@selfhealerscirc Live in NYC, immigrated from Brazil in high school. Have been following you for a while and taking in your content. Would love to win and make the most of this experience ✨
I Was Struggling, and I Knew It!
I had just finished a pitch to ten senior executives. I thought the deal was solid, the numbers were strong, and the strategy was sound. But as silence filled the room, I realized something wasn’t landing.
Instinctively, I wanted to fill the silence—explain more, adjust the offer, or just say something to ease the tension. But I stopped myself. I remembered a piece of advice: “The first person to speak loses.”
So, I held my tongue. The room stayed quiet. The seconds dragged on.
Finally, one executive shifted in his chair and broke the silence. “I’m concerned about how this might affect our current revenue streams,” he said. Others followed, sharing doubts about timelines and returns.
That silence I dreaded gave space for real conversation. I stopped defending my pitch and started listening. Their concerns became clear, and by the time I spoke again, it was to address their actual needs. A week later, we closed the deal.
Silence is among the most powerful tools in leadership, negotiations, and life.
Why Silence Works
1 - IT REVEALS WHAT MATTERS
When you stop talking, others will fill the void. They’ll share fears, doubts, and hopes—the real drivers of decisions.
2 - IT SHOWS STRENGTH
Confidence lives in quiet. When you don’t rush to explain, you show you’re comfortable waiting for the room to come to you.
3 - IT SHARPENS FOCUS
Too often, we plan what we’ll say next instead of truly hearing the other person. Silence pushes you to pay attention.
How To Make Silence Work FOR YOU
→ In Negotiations: Ask a direct question, then pause. Let the other person speak first.
→ In Feedback: After someone shares, count to three before responding. Often, they’ll add more.
→ In Meetings: Instead of offering immediate solutions, ask, “What do you think?” and wait.
That meeting changed me. Sometimes, the most impactful thing you can do is not to say more, but to step back and listen.
I received a really thoughtful email today...
Subject Line: Is your agency a Doctor's office or a Restaurant?
Restaurant agency: caters to whoever walks in the door
Doctor agency: caters to specific groups with specific ailments
Restaurant agency: makes pitches
Doctor agency: makes diagnoses
Restaurant agency: fulfills requests
Doctor agency: advises and makes prescriptions
Restaurant agency: offers clients what they want
Doctor agency: offers clients what they need
Restaurant agency: doesn't ask many questions
Doctor agency: asks a ton of questions
Restaurant agency: in the sales process, avoids tension and red flags
Doctor agency: probes red flags before investing too much time
Restaurant agency: high energy
Doctor agency: measured
Restaurant agency: talks to everyone who walks in the door
Doctor agency: uses gatekeepers, schedules, and processes
Restaurant agency: fulfills custom orders and requests
Doctor agency: refers prospects and clients to outside specialists
Restaurant agency: chaotic atmosphere
Doctor agency: calm atmosphere
Restaurant agency: menu changes every few months
Doctor agency: practice area almost never changes
Restaurant agency: transactional
Doctor agency: longterm
Restaurant agency: high employee turnover
Doctor agency: low employee turnover
Restaurants agency: doesn't prioritize training
Doctor agency: continuous training via conferences and seminars
Restaurant agency: sells specials
Doctor agency: builds trust
Restaurant agency: client experience first, health second
Doctor agency: client health first, experience second
Restaurant agency: obsessed with brand
Doctor agency: obsessed with outcome
h/t to Dan @ Sales Schema for this email.
I really like the framework.