Roman Khan has built one of the world's best portfolios of e-commerce brands at Peak 21. The group generates hundreds of millions of dollars per year in revenue, with best-in-class profit margins. Some brands started from scratch, some acquired at scale, Peak has a very specific playbook for driving growth and profitability, and now Roman is giving it away. Their playbook emphasizes financial discipline, operational efficiency, and strategic customer acquisition over "growth at all costs."

Executive Summary

This playbook reveals Roman's proven principles for building and scaling profitable e-commerce brands:

• The Science of Sustainable Growth: Understanding customer economics and achieving escape velocity
• Operational Excellence: Building systems and teams that scale
• Financial Strategy: Maximizing cash flow while minimizing capital requirements
• Strategic M&A: Identifying and executing value-creating acquisitions

Who This Playbook Is For

• Founders of DTC brands generating $1M-50M in annual revenue
• E-commerce marketers and operators looking to improve unit economics and profitability
• Founders wanting to exit their e-commerce brand

Why This Matters Now

The e-commerce landscape has shifted dramatically. Rising customer acquisition costs, supply chain complexities, and changing consumer behaviors have made profitable growth more challenging than ever. Roman's framework provides a battle-tested approach to navigating these challenges while building lasting value.

Let's explore the four key principles that have driven Peak 21's success in building and scaling e-commerce brands that don't just survive—they thrive.

1. The Science of Sustainable Growth

Growth isn't just about pumping money into ads—it's about understanding the mechanics of how customers find, buy, and share your products. For brands generating $10 million or more in revenue, Roman's approach emphasizes three key elements: customer coefficient, calculated scaling, and market expansion.

Understanding Your Customer Coefficient

"The coefficient of a customer is one of the most overlooked growth levers in DTC," Roman explains. This metric measures how many new customers each existing customer brings to your brand through word-of-mouth, referrals, and organic sharing.

Different product categories have vastly different coefficients:

• Baby and kids' products can see coefficients as high as 2.0: "A mom buys baby clothes, and suddenly her baby is a walking—or crawling—billboard. Other moms ask, 'Where did you get that?' That mom might bring in two more customers."
• Jewelry and accessories often have lower coefficients (0.3-0.5): "For Linjer, the coefficient was closer to 0.3. A necklace or ring isn't something people are always asking about. We had to lean heavily on paid media and influencers to scale."

Knowing your coefficient helps determine where to focus your efforts. High-coefficient categories can lean into organic growth and customer evangelism, while low-coefficient categories need to invest more heavily in paid acquisition and influencer partnerships.

Calculated Scaling: The Path to $50M

For brands looking to grow to $50 million in annual revenue, Roman advocates for focused, disciplined scaling. The key is finding the right balance between growth and profitability:

"If you can break even or go slightly negative on customer acquisition cost (CAC) while being profitable on lifetime value (LTV), double down on what's working. Don't diversify too early."

Roman's Framework for Rapid Scaling (36-Month Timeline):

1. Focus on Core Channels
   • Maximize Meta and Google ad performance before expanding
   • Build systematic testing processes for creative and targeting
   • Establish clear performance benchmarks by channel
2. Design for Virality
   • Prioritize shareability in product design and unboxing experience
   • Create systematic ways to capture and amplify customer testimonials
   • Test and iterate on referral programs based on your coefficient
3. Monitor Key Metrics Daily
   • Track blended and channel-specific CAC
   • Monitor cohort retention rates
   • Watch contribution margin by product and channel
   • Keep close eye on inventory turnover rates

Strategic Market Expansion

"If you're in a market with a large total addressable market (TAM), double down there until you've hit significant scale," Roman advises. This is evident in Peak 21's portfolio approach:

• Raycon achieved nine-figure revenue with 90% from North America
• Linjer, with smaller, high-margin products, successfully expanded internationally with 65% of revenue from outside the U.S.

Before considering international expansion:

• Achieve comfortable eight-figure revenue with seven-figure EBITDA in your home market
• Run small test campaigns ($1,000-5,000) to assess CAC in new markets
• Build relationships with local logistics partners before scaling

Manage Your Growth: Balancing Ambition with Sustainability

One of Roman's strongest pieces of advice is simple yet often overlooked: manage your growth deliberately. Founders frequently fall into the trap of chasing explosive year-over-year growth without considering the risks, both financial and operational. According to Roman, this can quickly turn a promising business into a precarious one.

"Growth for the sake of growth is dangerous. You need to know when to push and when to hold back. The worst thing you can do is overextend yourself chasing a number."

He shares a cautionary tale about the dangers of unchecked optimism:

"Imagine a brand projecting 100–200% growth in a single year. They stock up on inventory to match that projection, confident the demand will materialize. But then, demand stalls. Suddenly, they're stuck with mountains of unsold product, cash flow dries up, and they can't invest in the marketing needed to recover. It's like steering a ship straight into an iceberg."

Growth requires not only ambition but also careful planning. Roman encourages founders to adopt sophisticated forecasting methods to understand the financial and operational implications of their growth strategies.

Here's how he recommends managing growth effectively:

• Cohort Analysis: Dive deep into customer retention and behavior over time. Know how often customers return and what their true LTV is.
• Scenario Planning: Model best- and worst-case growth rates to stress-test inventory, cash flow, and marketing strategies.
• Dynamic Adjustments: Revisit forecasts regularly. Monitor your CAC and LTV metrics, adjusting your strategy as conditions change.

For Roman, the emotional and psychological element of managing growth is equally critical. Founders often let optimism or fear dictate decisions, particularly around inventory and marketing spend. But by grounding these decisions in detailed forecasts and measurable data, businesses can grow with confidence—and avoid the pitfalls of emotional decision-making.

"It's easy to fall into the trap of taking every success or failure personally, but the truth is, growth should be driven by the business's capabilities and market realities—not by your desire to prove something to yourself or others."

The takeaway: Approach growth with a clear head and a plan. Combine optimism with pragmatism by grounding your decisions in data and regularly stress-testing your assumptions. Emotional resilience is essential in entrepreneurship, but it must be coupled with strategic discipline to avoid costly mistakes and achieve sustainable success.

2. Operational Excellence - Building Systems That Scale

Roman's approach to operations emphasizes delegation, focus, and a unique philosophy around decentralization and talent retention. His core principle? "My unfair advantage is being great at marketing and spending my own money. I do nothing but what I am uniquely positioned to do."

"I do nothing but marketing and M&A. Delegation is the name of the game. The people I work with are better operators than I am, so I stay focused on what I do best."

Building Teams That Stay for Life

Peak 21's operational model challenges conventional wisdom about centralization:

"People assume we centralize everything, but we don't. Fulfillment, for instance, remains fragmented and managed at the individual company level. The only things we centralize are paid marketing, influencer collaborations, and supply chain. Our biggest synergy isn't cost consolidation—it's talent. We retain high performers and give them opportunities to grow across the portfolio."

The promise to team members is clear: "If you join us, you can grow within the organization and eventually run one of our companies." This isn't just recruitment—it's a long-term investment in people that creates a deep pool of experienced operators.

Mastering Supply Chain Efficiency

Post-acquisition, Roman focuses on two key areas: leadership transition and supply chain optimization. Founders typically stay on for 1-2 years during transition, while Peak 21 gradually moves internal operators into CEO roles.

The biggest opportunities often lie in supply chain efficiency: "It's rarely in headcount—DTC companies are already lean. The biggest opportunities come from supply chain and COGS. For example, we buy $30 million worth of goods from China annually, and we've negotiated 85-day payment terms on average. This turns our suppliers into our banks. Many founders haven't been to their factories in years. For us, we build deep supplier relationships and often cut costs by 20-30%."

Roman's 9-Step Framework for Supplier Excellence (read the full tweet thread here):

1. Build Professional Relationships
   • Don't be an obnoxious foreigner
   • Don't discuss politics, religion or state of affairs
   • You're not there to win hearts and minds
   • You're there to make money
2. Prioritize Factory Visits
   • Focus on 2+ factory visits per year
   • Your factory is your most important partner
   • Attend trade shows regularly
   • Build relationships consistently
3. Master Cultural Elements
   • Buy chopsticks off Amazon for $2
   • Learn to eat with chopsticks
   • Small investment, big impression
   • Avoid looking like a fish out of water
4. Negotiate with Transparency
   • Focus on payment terms, margin, and lead times
   • Avoid throwing random numbers around
   • Focus on finding common ground
   • Present intelligent, data-backed scenarios
5. Plan Production Carefully
   • Undersell and overdeliver first 4 quarters
   • Build trust through accurate forecasting
   • Avoid overestimating capacity needs
   • Remember unutilized capacity hurts factories
6. Master BOM Negotiations
   • Maintain detailed BOMs for every SKU
   • Update monthly for bestsellers
   • Update quarterly for slower movers
   • Keep documentation current
7. Stay Informed on Economics
   • Know China's interest rates
   • Stay updated on economic conditions
   • Use this knowledge in negotiations
   • Be transparent about cost sharing
8. Control Quality Rigorously
   • QC every shipment
   • Don't trust anyone
   • Hire reputable QC agencies
   • Consider in-house QC at scale
9. Balance Negotiation Style
   • Negotiate hard but fairly
   • Ensure fixed factory margins
   • Remember: starving partners are liabilities
   • Build sustainable relationships

Through these methods, Peak 21 achieves significant cost savings while building stronger supplier relationships. The key is combining trust with strategic negotiation to drive both profitability and scalability.

3. Financial Strategy - Maximizing Cash Flow

Roman's financial playbook focuses on maximizing cash flow, leveraging negative working capital, and avoiding common financial pitfalls that can derail even the most promising businesses.

Rule #1: Don't Raise Equity for Inventory

For Roman, one golden rule is clear: equity funding should fuel customer acquisition costs (CAC), not inventory purchases. Suppliers are a critical part of financing growth and should be treated as partners in your success. Instead of raising equity for cost of goods sold (COGS), focus on leveraging supplier relationships to extend payment terms and keep cash flow positive.

Rule #2: Ensure CAC Backs Out into Profitability

Every dollar spent on acquiring customers must translate into profitable lifetime value (LTV). Roman emphasizes that reckless growth fueled by poor forecasting or unrealistic assumptions can quickly destabilize a business.

Leveraging Negative Working Capital

Negative working capital occurs when a company collects cash from customers before paying its suppliers. This creates a cash flow advantage that can be reinvested into growth, such as marketing or new product launches.

This is one of Roman's most powerful tools for scaling efficiently:

"We buy $30 million of goods from China every year and negotiate 85-day payment terms. That means our suppliers are essentially financing our growth."

How it works in practice:

1. Negotiate extended payment terms (85-90 days) with suppliers
2. Sell products and collect revenue before supplier payments are due
3. Reinvest the positive cash flow into growth without taking on debt

But achieving these terms requires a strategic approach. For Roman, it's not just about asking for extended payment terms—it's about building true partnerships with suppliers and understanding the financial ecosystem.

Strategic Financing: The Three-Lever Approach

For managing working capital, especially during high-inventory periods like Q4, Roman advocates for a sophisticated, multi-lever approach:

"You need to be very pragmatic about stacking these three things in combination to alleviate your working capital going into Q4."

Lever 1: Supplier Partnerships and Sinosure

Start with maximizing supplier payment terms:

• Begin by exploring Sinosure coverage with suppliers
• If Sinosure isn't viable, offer 1-2% more on specific POs for better terms
• Maintain transparency throughout negotiations
• Split financing costs fairly with suppliers

"If you're talking to your supplier in a transparent manner, and you're truly a partner, you're splitting that financing cost in half. They shouldn't eat all that cost. You shouldn't eat all that cost."

Lever 2: Asset-Based Lending (ABL)

The second lever involves securing an ABL, which typically finances 40-60% of your current inventory position. This provides a stable foundation for working capital management.

Lever 3: Alternative Financing

The final lever involves alternative financing sources like Wayflyer. While these options can be more expensive, they complete the capital stack when used strategically as part of a blended approach.

"Be greedy in your ask, and then level down from there. And then you go in parallel. Simultaneously, you apply for an ABL. And then lastly, you layer in something like Wayflyer, and then it should be locked and ready and good to go."

Using Contribution Margin as a Compass

Contribution margin serves as a critical guiding metric for decision-making. This metric represents the profitability of a single unit after variable costs:

Contribution Margin = Selling Price per Unit − Variable Costs per UnitContribution Margin Ratio = (Contribution Margin/Selling Price per Unit) × 100

For example, if a product sells for $100 and has variable costs of $40, the contribution margin is $60, or 60%. Use this metric to:

• Identify underperforming products or channels: A low or declining contribution margin flags potential inefficiencies, such as rising costs or price competition
• Adjust pricing strategies: A slight price adjustment can sometimes improve margins significantly without sacrificing demand
• Focus on scaling the most profitable SKUs: Products with consistently high contribution margins often provide the best return on marketing and operational investment

This metric enables Peak 21 to diagnose issues effectively, from supply chain inefficiencies to pricing missteps. For example, a decline in contribution margin might signal that raw material costs have increased or that customer acquisition costs are creeping too high. By focusing on this metric, businesses can remain agile, addressing challenges before they snowball.

4. Mergers & Acquisitions - The New Reality

The M&A landscape has undergone significant shifts in recent years, with declining deal volume and the collapse of several high-profile aggregators. According to Roman, many of these aggregators were doomed from the start, often managed by individuals lacking deep eCommerce experience.

"Volume has dropped like crazy. There's no clear signal of where the market is going right now."

Despite market uncertainties, Peak 21 continues to close meaningful deals with founders who value strategic partnership over pure financial transactions. "We're finding amazing opportunities to partner with founders," Roman explains. "If you'd asked me in 2021 if we could acquire companies of this caliber, these companies wouldn't have even taken my calls. Today, pragmatic founders are choosing to work with operators who can truly add value."

This shift in the market has created unique opportunities for founders to partner with experienced operators who can accelerate their business's growth and preserve their legacy. Peak 21's track record of operational excellence and brand building makes them an attractive partner for founders looking for more than just an exit.

What Peak 21 Looks For

Peak 21 focuses on acquiring profitable eCommerce brands with annual revenue between $10 million and $50 million. Their evaluation process is straightforward but thorough, typically completing within two weeks. Key criteria include:

• Sustainable Profitability: Businesses with consistent EBITDA margins and positive cash flow remain a priority. They do also look at distressed deals– there are always exceptions.
• Untapped Growth Opportunities: Roman looks for brands with clear potential to scale—through marketing improvements, product line expansion, or operational efficiencies. Notably, Peak 21 is both category and geography agnostic, allowing for a diverse range of acquisitions.

How to Get Acquired by Peak21

The acquisition process is as straightforward as it is founder-friendly. Roman believes in removing unnecessary friction and even providing actionable advice to businesses that don't meet Peak 21's criteria:

1. Submit Your Business: Reach out via the Peak 21 website or email with a high-level overview of your brand.
2. Evaluation Process: Key materials—such as management accounts and ad account performance—are reviewed over a ~2 week period to provide Peak 21 with a picture of the brand's operations.
3. Feedback & Offer: Within two weeks, Peak 21 provides an LOI or actionable advice. "If we don't acquire you, we'll tell you why—and give you recommendations to make your business more attractive in the future. A 'no' now is not a 'no' forever."

For founders, the takeaway is clear: preparation and alignment are key. Whether it's optimizing your financial metrics, streamlining operations, or fostering strong supplier relationships, these efforts not only make your business more attractive to buyers but also set it up for success post-acquisition.

Key Takeaways from Roman's Playbook

Sustainable Growth

• Focus on customer coefficient to guide growth strategy
• Scale deliberately with clear metrics and forecasts
• Expand into new markets only after dominating your home territory

Operational Excellence

• Build systems that enable delegation and focus
• Retain talent by creating clear growth paths
• Master supplier relationships with strategic negotiation

Financial Strategy

• Use negative working capital to fuel growth
• Apply the three-lever approach to working capital management
• Let contribution margin guide key business decisions

M&A Preparation

• Focus on EBITDA and market leadership
• Build scalable systems that can thrive post-acquisition
• Document your operational processes and supplier relationships
• Create clear growth opportunities for potential acquirers to unlock

Learn More from Roman

Want to dive deeper into these strategies? Book a 1:1 session with Roman on MentorPass to discuss:

• Scaling your DTC brand
• Optimizing operations and supply chain
• Negotiating terms to achieve negative working capital
• Preparing for potential acquisition

Book a Session with Roman →

‍

Written by Karly Craig, Marketing & Operations Mentor at MentorPass.

‍

Watch the full 60 minute workshop with Roman below: