The Smart Debt Playbook for DTC Brands
Debt has a bad reputation in e-commerce — often associated with failed Shopify loans, risky ad spend, and brands that grew too fast for the wrong reasons. But in the latest episode of the Scalability School Podcast, Zach, Brad, and Andrew make the case that when used intentionally, debt can be one of the most powerful growth levers available to a DTC brand.
Zach shared the story of scaling his DTC brand from $1M in revenue to $20M+ without raising a single dollar of equity. The approach he used is more systematic than most people expect.
It Starts With the Math and Most Brands Skip This Part
Before any conversation about debt or scaling, the episode grounds everything in unit economics. There are specific benchmarks for CPCs, conversion rates, and CPAs in 2025 that paint a clear picture of what AOV you actually need to make the numbers work — and a lot of brands are operating below that threshold without realizing it. Landed margin plays a big role here too, and the target the group lands on might be higher than what you're currently hitting.
Everything Is Negotiable
One of the more practical threads in the episode is about margin improvement — and it has nothing to do with raising prices or running better ads. Zach walks through how Hollow systematically negotiated across multiple parts of the business, and how savings that seem small per unit become significant at scale.
Why Debt Over Equity
When Hollow hit its first meaningful revenue milestone, the team faced a choice most growing brands eventually face: slow down, give up ownership, or borrow. The episode explains the reasoning behind choosing debt — including what gave them the confidence to do it and what type of asset made borrowing feel like a low-risk move rather than a gamble.
How to Actually Get Funded
Securing favorable terms as a young brand isn't just about having good numbers — it's about how you present them. Zach gets specific about what lenders actually want to see, and it goes well beyond a growth projection. The models Hollow built to win over lenders are detailed in the episode, and the approach is replicable for most product-based businesses.
When Debt Makes Sense and When It Doesn't
This is where the episode gets most useful. There's a clear line between good uses of borrowed capital and bad ones, and crossing that line is exactly how brands end up in trouble. Zach's framing for how to think about this decision is straightforward and worth hearing directly.