From Shark Tank to $60M: Adam Callinan on Scaling Lean and Building Pentane

In this special episode of Growth Mavericks, host Adam Callinan flips the mic on himself — re-airing his guest interview from EcommerceFuel
with Andrew Youderian. Together, they unpack a decade of lessons in building, selling, and reinventing how founders think about business, risk, and profitability.

Adam shares how fatherhood reshaped his approach to risk and time, why working 70-hour weeks crushed his soul, and how he and his partner built BottleKeeper to $60M in total sales with only six people - before selling the company.

They dive deep into the real math of profitability - why most e-commerce brands are guessing with their ad budgets, how discounting destroys margin, and how Adam’s latest SaaS company, Pentane.com
, helps founders finally connect marketing spend with financial performance.

Expect sharp insights on:

• Building a company lean enough to survive anything
• The hidden math behind ad spend, discounts, and contribution margin
• How AI and automation could have reduced BottleKeeper’s team from six to one
• The importance of performance coaching after an acquisition
• Why doing physically hard things—like ultramarathons—translates to resilience in business

Episode Highlights:

• (03:00) How being a dad completely changed Adam’s view on risk and ambition
• (08:00) Running BottleKeeper to $60M with just six employees
• (09:30) How AI could have made BottleKeeper even leaner
• (19:30) The birth of Pentane — and why connecting ad spend with financial data changes everything
• (33:00) Why most founders are guessing at their Black Friday ad budgets
• (40:00) How performance coaching created the space that led to Pentane
• (47:00) Why doing “hard things” physically rewires how you handle business challenges

Listen to Explore:
🎧 Growth Mavericks Podcast

🔥 EcommerceFuel with Andrew Youderian

🚀 Pentane — The Command Center for E-Commerce Profitability

Creators and Guests

Host

Adam Callinan

Adam Callinan is the founder of Pentane, a financial and advertising command center that empowers brands to drive predictable revenue and intentional profit. Previously, Adam co-founded BottleKeeper, a bootstrapped consumer brand that scaled to $8M in sales within three years – without employees – and was later acquired in 2021 as an eight-figure business with a team of four, marking Adam's second successful exit.

What is Growth Mavericks?

This podcast dives deep into the tactical moves that drive business success, as well as the mental and physical resilience required to sustain it.

Hosted by Adam Callinan, a seasoned entrepreneur with multiple exits, an avid outdoorsman, and an family man with crystal-clear priorities, each episode unpacks real-world challenges, actionable insights, and the mental and physical disciplines that fuel long-term personal and professional growth.

Whether you’re scaling a startup or refining your mindset, disrupting your default is how business and life strike a balance.

Adam Callinan (00:51)
In this episode today we are talking with me.

We are trying something different today in growth mavericks podcast history. were actually re airing an episode of a podcast that I was interviewed on with e-commerce fuel and Andrew you Darien. It seems to have resonated really well with his audience. So we decided to rerelease it over here. We spent a lot of time talking about how being a dad has entirely rewired how I see risk and particularly in building businesses and going and doing hard things, ⁓ how working 70 hour weeks.

crushed my soul for a decade and how all of that led to how we built Bottle Keeper really, really lean. And, you know, for the first number of years without employees and up through 60 million in total sales, we got acquired with a total team of six. were four outside employees, plus my partner and I, yeah, really tactical on some of the math and things around profitability. If you're an e-commerce brand or really anyone going into Q4, trying to sell something, ⁓ talking about discounts and how

Leveraging ad spend gets really important. All things that we did really, really well at Bottlekeeper, which is how we operated profitably for almost the entire life of the business. we also spent some time talking about coaching. used, ⁓ had a personal performance coach through that transition, ⁓ out of Bottlekeeper after acquisition and how that led to Pentane, ⁓ very organically and being forced to kind of sit still and take up woodworking and doing some things with my hands, which is now a huge part of my life. So this is all about operating intentionally.

Let us know what you think about the podcast. can always reach us at pod at growthmaverickspodcast.com. Otherwise, I hope you enjoy the show.

Andrew Youderian (02:28)
Adam, like I mentioned at the top, we're going to into a bunch of stuff about geeky business, performance, coaching, you know, how you make better decisions with your ad spend, et cetera, et cetera. But I always ask guests on the show what they're most excited about. And sometimes we don't talk about it all. Sometimes we save it till the end. But I really liked your answer and I'm curious to dive into it right out of the gates. And you said the thing you're most excited about right now is the evolution of your family and kids.

And I'd love to hear a little bit more about that.

Adam Callinan (02:59)
Yeah, I'm very, very clear on priorities. that's, I was not always like that. That's something that I learned and had to put in place as a result of making a bunch of mistakes and building up a bunch of scar tissue and going through this ⁓ entrepreneurial journey again with kids when, know, versus my last company, I did not have kids as we were building it up is just such an entirely different magical experience. ⁓

Think about things totally differently. You think about challenge and risk totally differently. At least I do. And watching my wife, Katie, and our young kids, I have a four and a seven year old, literally evolve through this. It's like the third, but it's really probably the 15th startup I've ever done has just been magic. And we're doing it in a place, obviously we live in Montana. We're doing it in a place where we get

access to the outdoors and my kids get to grow up in a place where they're really independent and get to go and explore and do things on their own at a very young age. And it's really exciting. It's just been a beautiful thing.

Andrew Youderian (04:09)
What, and you can get into this as much as you want, or you can just, you know, plead the fifth or tell me to pass, but what was some of the things that you did in the past, mistakes that you made that are informing your priorities right now?

Adam Callinan (04:23)
If I go back post college, I went into a medical device company. I was not a founder of that company. I was an employee and I worked my face off for a decade. And I did, you know, I did that thing because I expanded that company to Southern California in 2008. And we did spin off a tech piece that I was a partner in, but, but I worked.

so inefficiently and the business was built so inefficiently and it was big and it was heavy and it was uncomfortable and you couldn't get away from it. And the result of which is that I worked 70 hours a week for 10 years and it wasn't until sort of the end of that chapter and doing a lot of self-reflection and education that I realized how disastrous

that had been, I mean, was, look, you can't change it. It was an important chapter. learned a lot, most of which about what not to do and how not to build and how not to lead. But it would carrying that forward into bottle keeper, which I'm sure we'll, we'll get into again for the second time. Was a huge part of how we built that company. It's why I wanted to build that company with no employees was because the last one was a nightmare. So it's really informed everything since then.

Andrew Youderian (05:41)
Yeah. And I mean, sometimes I think with any, I'm a big advocate of having of modulating once you get to a point in your business where you start to reclaim things that are truly important again, like financial security is super important. And I think you've got to sacrifice a decent amount in the early to, you know, early mid years to make that happen. But the modulating is really important. ⁓ But for you, it sounds like this was different. It sounds like this wasn't just like, hey, putting in your time,

and some reps and saving some money and getting experience. It sounds like this was kind of a fundamentally flawed way of doing business for that decade.

Adam Callinan (06:18)
It was, you know, it's easy to point at that. What we were doing as part of that business model. mean, it was a medical device company. Like we had warehouses of equipment and delivery drivers and teams of people in sales reps and technicians. Like it was all this stuff. So part of it is just choosing to not build a business in that world, but it also could have been done a lot better. No question.

Andrew Youderian (06:41)
So when you say your family, is it just the evolution of your family and kids? Is it just having the space and the time and the freedom to really invest in those things? Or are there actually some decisions that you're making very differently ⁓ with how you spend your time with your family as result of that?

Adam Callinan (06:58)
I think it's probably a bit of both. mean, I'm just extremely cognizant. I've, you know, since that period and it, to be fair, it took me a while to transition out of that mental head space. Like going from working like that to having the freedom to go at the time we were in Southern California to like just go surf in the middle of the day. I was so guilty for so long. I mean, it was a, I wrote, was writing in a journal at the time. So these are like fun things to go and look back at. Like I was.

not mentally healthy while we were trying to do that. I was kind of a disaster because there was this huge acclamation period. But since then, I've been very, very protective of where I spend time and how I dedicate and use the time that I have. And I do quite literally now having kids look at it as if I say yes to a thing. Whatever time that takes, I'm quite literally taking that time away from my children. So it better be good. And it's OK. We have to do that. I will invest that time.

That is my decision-making process. I'm like, it's gotta be good. don't waste, I just don't waste time.

Andrew Youderian (08:01)
you were getting into bottle bottle keeper. So we did ⁓ a podcast six, seven years ago now, I think maybe longer about the e-commerce brand you started built sold called bottle keeper ⁓ was rewatching the shark tank episode. Great job. You seem like you held your composure super well on that with a lot of stuff going on. That'd be hard to do. ⁓

Adam Callinan (08:20)
man, no, that is editing. That is called editing 100%. They

treated us so well, they could have made us, particularly me, look like the biggest morons on the planet and they chose not to, so.

Andrew Youderian (08:34)
⁓ That's a humble take, but I'm sure it was better than you give yourself credit for. It looked good. Editing or otherwise, it looked good. Yeah. But you went through, that, sold that company. And even that company, this is pre-AI days, right? correct me if I'm wrong here, but you were, I think, 60 million in revenue with four employees. I don't think you even had an employee until you hit close to 10 million in revenue. You are, we'll talk about Pintain here in a minute. You're not running a physical

Adam Callinan (08:41)
It turned out well.

Andrew Youderian (09:03)
e-commerce business today. You're still very much in the e-commerce world and ⁓ helping merchants. ⁓ But where do you drool the most seeing what's possible to do with AI? This is in your bones, this is in your blood. You've been on the other side like you just got done talking. Now you've got this whole toolkit ⁓ of AI. Do think you could have run that $60 million business with one or even zero employees now given the tools that are available?

Adam Callinan (09:27)
Yes. mean, short answer, yes. think that I will clarify that we did 60 million in total sales. That was not our annual number. Most of that came in the last three or four years of the business, just for context there. again, we got into tens of millions. And the reality is we were doing it with a lean team built on automations that were all conditional logic. It was algorithms and math and systems that you could connect together that today are just table stakes for e-commerce. It's connecting Klaviyo to Shopify.

is happier to move things around. now you sprinkle in AI to that, like, holy cow. I mean, we wouldn't have had a customer service team. We would have had zero people in customer service, which means I wouldn't have needed a customer service director to manage offshore VA's that were executing support tickets. We would have had massive efficiencies in marketing and automation that we probably wouldn't have. That was one of the other positions was out of marketing. Probably wouldn't have needed that. ⁓

probably could have automated with AI and systems and all these agentic things happening, most of operations. And it was really just moving things from one hand to the other hand. There were important things. I mean, it was retail stuff, but like there are systems for that stuff now. So yeah, I think we could have done it even leaner than we did it, which was pretty lean.

Andrew Youderian (10:46)
Yeah. What, you know, this is one of my favorite topics to hear. I think a lot of us are in our own little silos and worlds chatting with chat GPT and using, you know, any number of AI devices, but, and tools. But one of my favorite things is that to learn how other people use it and for what things other people are using it for. So when you look at your obviously in the software business and apart from programming, you know, there's a huge, the obvious, the obvious one that can just

deliver massive dividends. But apart from programming and ⁓ coding, what do you mean are the top three or four ways you're using AI in your business and your personal life?

Adam Callinan (11:27)
Well, I will put a huge asterisk on the coding thing because I'm basically now and developers are gonna hear this and they're all gonna cringe. I'm like a 90 % developer with cursor. I'm like 75 % vibe coder, 25 % I actually understand what's going on. And can, you it's not as, you can't build like big robust systems, but just by telling what to do, you can create little goofy apps and do some really interesting things. But at some point you still have to connect it.

Andrew Youderian (11:36)
You're a vibe coder, right?

Adam Callinan (11:54)
you know, to an AWS SES system that has to connect to a Versel headless thing. Like you do have to know how to use some of the things that will change 100%. ⁓ so outside of, of that very obvious one, which is a really exciting place to be because I'm now at the point where I can work harder and make it go faster, which has always been my problem with software, not being a developer. We, I personally use it a lot to

have a conversation around very complex topics. I'm really careful and I particularly with my kids and AI is going to be a part of their life. So I'm not pretending that it's not. mean, we're we are as parents. We choose to be careful about how they do screens and all that all that sort of stuff. But I am really careful to not use AI to replace things that are creative and part of. Developing my own brain, if that makes sense.

Like I don't use it to write. I don't use it to create ad copy. I do use it to brainstorm. ⁓ but I, you know, if, if I'm trying to think through a problem, the process of thinking through that problem to get to the solution is where the education happens. And I'm really careful to not use it for that stuff. So, I mean, I go down these nerd rabbit holes talking, you know, through some specific question and like quantum mechanics that I have that.

Andrew Youderian (12:58)
Mm-hmm.

Adam Callinan (13:19)
It's just like a fun debate to have with this thing that's smarter than me in that topic. ⁓ you, we look up birds and stuff with my kids and those, those sorts of things.

Andrew Youderian (13:29)
One of my favorite ways to use it with kids, my kids love using it for images and creative images. ⁓ Sometimes for storytelling and writing and stuff. But my favorite is if we're on a car drive and we're trying to talk about something or learn about something, I'll hook it up to the car stereo through CarPlay, go to chat GPT voice mode, and we'll just have a conversation. And the stuff that we can ask it, you know, we'll just have it's almost like it's a, you know, an extra person riding in the car that just has, you know,

It's tapped into 95 % of the knowledge in the world. And it's such a fun way to dive deep on topics and to have it be interactive and for kids to really be able to explore, which is

Adam Callinan (14:08)
Yeah, we, we use it very similarly in that I'll, you know, my I'm big in science and sort of been thinking along the scientific method. So my daughter has a question. We will set up a thought experiment and talk through that thought experiment. And then we'll open up that conversation the exact same way. Like put on chat GPT voice mode. She calls it cat IP because in French, guess chat GPT means cat IP, which is funny. So she calls it, can we talk to cat IP?

Andrew Youderian (14:31)
you

Adam Callinan (14:34)
Like that's, let's talk through it first. Let's get our own conclusion and then we can use it as a reference.

Andrew Youderian (14:40)
Yeah, I've even used, may have mentioned this in the past, but in prepping my kids for debates or some debate for part of the homeschool curriculum we were going through and, and, ⁓ it was like, I was going to take nuclear power and my daughter was going to take wind power. so to prep her for our debate, I had chat GPT pretend to be me and mock debate her, you know, and then after she debated, analyze her debate and tell her where she did well and where some of her points were weak. it was, it is shocking.

I mean, it's not perfect, like that is that would have just made my I would say if you would ask me three years ago if that's possible even two years ago if that's possible even after chat gbt came out I would said no we're like five to ten years away from that but the fact that it can do that so well and I think I'm reminded of that too where occasionally I showed someone last week chat gbt voice mode and their head kind of exploded and this week they downloaded it and they're like this is amazing this has been out for how long so good reminder how far we've come

Adam Callinan (15:36)
Yeah, it is.

The evolution's nuts in a very short period of time.

Andrew Youderian (15:40)
Yeah.

Do you use it? I know health is important to you. Do you use AI chat CPT for any health related stuff?

Adam Callinan (15:49)
No, I don't.

I use it when I'm like trying to find something specific about the Land Rover that I can't figure out, like shortcut me to the answer to the question. So no, I haven't gone down the health. Yeah, you're 100 % right. There is a mental health component there. Yeah.

Andrew Youderian (15:50)
I'm shocked.

Hahaha

That's mental health related because otherwise you could spend. Yes.

Totally mental health related. Yeah, we were ⁓ I got a tour of your for I mean, we don't have to spend too much time, but just very quickly, maybe give people a sense. mentioned the Land Rover, ⁓ the Defender. ⁓ There's a handful of people listening who their ears perked up because they love kind of cool older cars. Give people a quick little teaser on what it is and what you're doing with it.

Adam Callinan (16:28)
Yeah, I about two months ago bought a 1994 Land Rover Defender 110 pickup out of auction in Pennsylvania. So it spent most of its life in Turkey and Europe and whatever. it, uh, it came to me in really good condition for a car that needed love. And now I'm getting to put all this time and love into it. they're, they're so analog. There's no computer. There's literally not electronics outside of the radio and the tail lights, I guess.

So it's fun. Take two bolts off of anything and it comes off the truck, which is just epic.

Andrew Youderian (17:00)
Yeah, that's just cool. ⁓ Also reminded me too of just it's the need for problem solving with those things. It's just a really good little playground for applying problem solving skills. I know it ⁓ probably more than average number of entrepreneurs that like to work on those older cars. And I think especially digitally, one, maybe because it's tactile. We were talking about that earlier. It's nice to have as a compliment to the digital building. ⁓ But secondly, too, it's just there's a lot of

systems that go together and it requires a lot of thinking and it's super frustrating sometimes, but there's also a lot of satisfaction about building something out, getting it working, and then being able to go take it for a drive or adventure. It's pretty cool.

Adam Callinan (17:40)
Yeah, getting for me, it's all about learning how the thing works. I deeply believe I can I can do or fix anything if I can is at least figure out how it works. And this is a perfect example of that. And that's different in new cars where they're all computers like not going to happen. You need actual systems and structure and other computers to deal with that. But these old cars like just learning how a diesel motor, a simple diesel motor works gives me the ability to then know how to

Fix it. And I like that. That's interesting to me.

Andrew Youderian (18:13)
Yeah, one thing I have learned from working on my old vehicle. And I could have learned this any other place, but for some reason, it happened through this. I, you know, sometimes it's really frustrating. You get in there and you can't figure stuff out and your stuff is broken or leaking and there's a mess and you've got places to it's just it's frustrating because you can't get things done. And what I realized, I don't know how this came to me, but the frustration doesn't come from having a task be hard.

The frustration comes from not understanding how a system works and understanding how to fix it. And once I kind of realized that, it shifted things a lot for me because I was like, okay, I'm frustrated. Why am I frustrated? I'm really not frustrated because this is difficult. I need to better understand this whole system. I don't have a great understanding of why this is happening. And once that clicked for me, whenever I get frustrated, I just take a step back and try to deeply understand where my gap of knowledge is.

And usually if I can do that calmly, ⁓ sometimes it takes a while, but then I can proceed with a lot more clarity. But anyway, I don't know why that was such a breakthrough for me. Frustration equals not understanding, but I think that applies in a lot of things. So.

Adam Callinan (19:22)
⁓

that's perfect. Makes perfect sense. Completely agree.

Andrew Youderian (19:25)
Yeah. Pentane. So you had Bottlekeeper, you sold it, took a little time off, started something that necessarily didn't, you know, had one or two ventures that were not right fit. But you've been working on Pentane for a while here. We've got a mutual friend who's been using it. Malcolm over at PACT, it's been transformative for his business. Talk, give people quick, I mentioned it at the very top, but give people a quick summary of what Pentane does and how it came to be.

Adam Callinan (19:53)
Yeah, there are, I mean, what Pentane does, the short version is that it takes in all of the expenses from a business. And I'll come back to why that's important. And it takes in the revenue and advertising and it puts that into a bowl of soup and it applies a lot of math, not AI math. And it tells the operator changes to make in the business to be profitable or to be more profitable. So the operator sets their goal. They say, want to get to break even or. ⁓

13 % net profit and it tells you what to do to accomplish that. Which is in itself unique because most of the time these systems just give you information and expect for you to figure it out. But because I've actually operated a consumer business at scale, at least at reasonable scale, like I know the answers to the question. So I've written math to be able to provide those answers to other people. So it is literally the system that we ran Bottle Keeper on from start to finish.

Andrew Youderian (20:46)
And so you can optimize for different things. can say, hey, we want to gain market share at low margin. Hey, want to, know, maximizing profit is most important. ⁓ You can, you can set your, goals at different levels and then it will optimize around those things.

Adam Callinan (21:01)
Yeah, there's in reality, you know, inside of a business, there are all these different levers that you can pull that change the outcome. And in in a business, and this is particularly relevant when you're spending ad spend. So in generally a consumer business of some sort, you have this bucket of expenses and you have the bucket of revenue and those. you have like marketing technology that deals with the revenue and you have financial technologies that deal with the expenses, but they never overlap.

They don't ever overlap. And that's a really, really important piece. So there's like never ending Martech and there's never ending FinTech, but nothing connects those things. And that's where all the levers are. That's where all the magic is. You can't build an ad budget to accomplish whatever it is you're trying to accomplish, whether it's just drive top line or it's drive bottom line. You can't do that unless you have a really deep understanding of how the business spends money. They're inherently connected. And that's something that we did really, really well at Bottlekeeper, which is how we...

You know, we got to the scale we did with no investors and only a handful of people. So it wasn't until after we got acquired that I thought, I realized that could be valuable to other companies and that all happened organically.

Andrew Youderian (22:02)
Can you?

Go a little deeper on this, if you would, maybe use an anecdote. Let's say you've got somebody who's got a business, they're spending ad, they're spending on meta. ⁓ And their goal is, let's say their goal, they've got some traction, really their goal is profitability. ⁓ What's a way in which maybe they're spending money now on their, setting their ad campaign, optimizing, et cetera, that is suboptimal?

and kind of walk us through why that's suboptimal and then what would be a better outcome and feel free to use any numbers that are easy but maybe make it a little more real for people listening and tangible.

Adam Callinan (22:45)
The mistake that we see constantly, particularly in, I mean, literally in every, if you're under 20 million in revenue, you might be making this, you're probably making this mistake. The smaller you are, the more likely it is. Ad budgets as a whole are largely made up and that's okay. Like I totally understand. I have been in that position. The challenge is that

We operators see advertising budget as risk capital because it is at risk. I get that. And how we define what we're going to spend in order to achieve an outcome, if that's to get to breakeven in your circumstance, completely depends on how it performs. But if we don't spend enough, I'll get into like the semantics on this. Like if we don't spend enough, we don't spend the right amount, it is a mathematical impossibility for you to achieve that breakeven.

And this is what happened early on as I was helping some companies. started replicating a lot of the systems of math that we had at Bottlekeeper and realized the companies were just dramatically underspending on ad budget. They had a crazy ROAS. They were at an eight return on ad spend. That's high. But they were still losing money. So at that point, ROAS is a vanity metric. It doesn't mean anything if you're still losing money.

So the reality is they just weren't driving enough margin dollar in order to pay for their fixed expenses. And again, we can use math to answer those questions. If we can say you want to get to break even, you can put that in Pentane or put it in your spreadsheet or however it is that you're tracking and building these things. And we can work backwards from that to decide how much ad budget needs to be spent, how it needs to perform. What happens if you do a discount? Cause all the math changes. What happens if you add a new employee? All the math changes.

What happens as you pull these levers in the business, we can really, really clarify that outcome again with math, not my personal opinion, not conjecture, not AI.

Andrew Youderian (24:44)
And can you slide the optimization like we kind of talked about the barbells of this? Hey, I want to just spend money at breakeven ideally and grow my market share. Hey, I want to juice, you maximize for profit. I would imagine a lot of people are kind of in the middle probably, right? Like, hey, I want to be able to grow my business. I want to more market share. I want to do it profitably. So is that something you can kind of slide throughout that entire spectrum to kind of really dial that in?

Adam Callinan (25:07)
Yeah, I mean, there is quite literally a slider where, where, yeah, I mean, it's like you set the goal. can be, you know, there are still companies that are doing the growth at all cost thing and they are fine losing a 10 % net margin indefinitely because they think they're going to raise money forever and maybe they can, that's fine. That's up to them. You can set that and take this slider and juice your ad budget and see how all that changes, how it changes, how much you're losing, how much you're making, where the margins are at, how it needs to perform in order to create this outcome.

Andrew Youderian (25:10)
Hi.

Adam Callinan (25:37)
you have complete and total control over that. But that is the number one thing we see is just unclear ad budgets drive all sorts of problems.

Andrew Youderian (25:41)
Do it.

Do you have any like little friendly advice icons that pop up if people put negative 10 % margin on their growth? pops up that maybe gives them just a little loving talking to you to ask them to reconsider their assumptions about life. Do you really?

Adam Callinan (25:58)
We do. Yeah, I mean,

yeah, we literally do. say, you know, because when you come to Pentane, you onboard happens really quickly, you know, it pulls in. if you're using QuickBooks Online, for example, and this is again, this is a thing that there is no MarTech that comes close that does any of this stuff. They only focus on some input number to try to give you a contribution profit number and then tell you a net profit, which is just wrong. I mean, it's...

You're like giving somebody a net profit number while just pretending this whole half of their business expense doesn't exist, which is their payroll, their offices, their health insurance. Like that's where companies get in trouble. And you're just pretending that's not there. So problem. When you come into Pentain, the system goes in and takes and analyzes all of that data in your QuickBooks account and pulls that in because it's critical. It's mission critical. And if you set your net profit goal at 35 %

and you're at a negative 5%, it says, that's a really, really good goal. Maybe we should make that more realistic and bring it down to within 10 % of where you're currently operating, which is a 7.2 % net margin. So there is some guiding that happens.

Andrew Youderian (27:12)
seems like there would be a lot of a lot of room for some pretty fun creative copy in there. That would be that'd be fun to write. What are when you think about all the math and this relates to pending, but of course, this relates to anyone who's running a business, advertising, marketing, along with their entire just kind of PNL stack, in of variable and overhead costs. Some of the relationships are very obvious, right?

Adam Callinan (27:15)
for sure.

Andrew Youderian (27:40)
can relationship, for example, between conversion rate and revenue, right? Conversion rate goes up, you know, in general, all with, you know, your your revenue is going to go up pretty straightforward. Some I'm guessing as the man who has modeled these are much more complicated to model because they have maybe, you know, multiple effects down the chain of different things. What is what are some of the less obvious relationships or some of the more difficult relationships to be able to think about when people are trying to make these decisions about how much do I spend on my

Adam Callinan (28:09)
Yeah. We know as marketers, there's an expectation that as we increase advertising dollars, performance, however you measure it, whether it's any ROAS, like pick your metric is going to decrease. Now why that happens congestion and the things like there's a bazillion reasons we can, we can point out to why that happens. And, but we know what happens. The other side to that is that.

Andrew Youderian (28:25)
Mm-hmm.

Adam Callinan (28:37)
and I'm happy to like very specifically talk through the math and how this works. As you increase your ad budget, what you need to achieve in a return on ad spend to meet your goal also goes down. It follows, it's called a negative log curve. It's like an upside down hockey stick. So the more ad budget you spend, if your goal is a 10 % net profit margin, the more ad budget you spend, your ROAS, the needed ROAS to achieve that goal also comes down. So it's okay.

that as we spend more, our performance goes down. We don't want it to, we should try to not have that happen, which is why we're doing conversion rate optimization and trying to increase AOV and do all the things that we do inside of a business. But a business, you know, for a business to get to break even at $10,000 a month in ad spend, they might need a 25 ROAS for that to happen. At $30,000 in ad spend, it might be down to eight. At $50,000 in ad spend, it might be two and a half.

Like it's significant how that happens. Now, I mean, if you wanna talk the mechanics of why that happens, that's where the unknown relationship is. And it's all about contribution margin or contribution profit. The same thing, one's just a ratio. That number is the difference between what you sell, the revenue dollars you make and the expenses related to earning that revenue.

So if you sell a thousand dollars and you have $900 in expenses, that's cost of goods, shipping fulfillment, credit card fees, Shopify fees, know, meta, all that stuff. You have $900, the Delta, the difference between those two, that $100 is contribution profit. It's that amount of money that goes to pay for your, operating expenses. And what you have left is your net profit. That's where your net profit comes from. So like the magic equation for.

net profit at the end of the day is your net profit is equal to your contribution profit minus your fixed expenses. So the two big levers that inside them have a bunch of little levers, the two big levers that you can pull to positively impact or negatively impact to impact your net profit or to increase your contribution profit, which is hard, or decrease your operating expenses much easier. Every dollar you save in operating expenses goes directly to the net profit pile.

The problem with increasing contribution profit is it's a ratio. So to cut $10,000 in fixed expenses goes directly to net profit. To earn 10,000 more dollars in contribution profit based on that ratio I just said, you have to generate $10,000 in revenue. No, $100,000 in revenue. Because you're operating at a 10 % contribution margin. So only 10 % of that 100,000 is contributing. So you have to increase your revenue.

if at the same level of efficiency by $100,000 to create the same net profit impact as subtracting $10,000 out of your fixed expenses. Does that make sense?

Andrew Youderian (31:29)
Yeah, I've,

hundred percent. I've mentioned this a number of times on the podcast, so forgive me, regular listeners. ⁓ And I need to revalidate this with some more recent data, one of the biggest surprising findings I had from one of my state of the merchant reports was that the most profitable companies were not the ones with necessarily the highest gross margins or that grew the fastest or the best return on ad spend. They were the ones that had

their OpEx, their overhead was as low as a percentage of possible of the revenue. They were just super lean. And that's for exactly the reason you said that was the biggest driver of how profitable you were as a business, which blew me away ⁓ and ties exactly what you're talking about.

Adam Callinan (32:11)
Yeah,

there are three huge efficiencies that I look at when I look into a business. So this has all been built into Pentane and the reporting that we have just a general profit efficiency, a variable margin or variable expense efficiency and a fixed expense efficiency. What are your fixed expenses relative to your revenue? That is a huge indicator of your ability to be profitable because the reality is the lower that ratio, the less contribution profit you have to earn to get to break even.

Like it just that much easier gets and you see that happen in real time. Like you set your ad budget in pentane to $50,000 a month. And it says your ROAS is 3.5 to get to break even. If you go and remove, which is an option, one of the levers you can pull, you subtract $10,000 in fixed expenses out of the business. That 3.5 will drop to 2.8. mean, so anything above two, these are guard rails. Anything above 2.8 is above a 0 % a break even. So it, it's just wild how.

how the weight of operating expenses sits on a business.

Andrew Youderian (33:14)
Yeah. Any last question on this, topic, any thoughts given your experience running businesses, running Pentain, we got, we got Black Friday, you know, Cyber Monday coming up, uh, super busy time for e-commerce store owners in a couple of months. And I mean, you talk about, uh, a lot of times people set their ad budgets, just, you know, kind of lick the finger, put it up in the air, pull it out of her hat kind of thing.

I think that happens a lot with Black Friday. People discount heavily. They run a bunch of promotions. They feel good when they drive revenue. But to your point, the revenue is, you know, there's a lot hiding in that revenue number. You know, if you're discounting like crazy, is it worth it? Anyway, I think there's probably even less thought necessarily, you know, potentially to, and then, course, all of your ad spend is going to be less efficient because everyone's fighting for attention.

Any advice you would give people given your deep experience here with how to think about their Black Friday Cyber Monday strategy?

Adam Callinan (35:02)
I mean, you're you're completely right on and the discounting and sales. I'm not going to tell you not to do them. That's not I mean, that's an emotional response to something. The math. In and around your business should answer the question what you should be doing and whether you can even do it. And if you're going to do it, what is the needed performance change in order for that to not be a disaster? Like, let's not find out when you get your PNL.

five weeks after that happens, that it was a disaster. So as an example, if a business is operating on a 70 % variable margin, so that's 70 cents of every dollar goes to those sales related expenses, right? But let's take out of that paid media, okay? In that circumstance for that company to get to break even, they have to be at a 3.3 return on ad spend. If that company,

Like that's okay. I mean, it's high for some company, maybe low for another company, but like achievable. It's realistic. That same company, if they do a 20 % discount, that return on ad spend to get to break even goes to 10. Like they have to now get a 10. So if you can achieve that, that's great. If you want to test that great, but you want to know that that's what the number is while it's happening. So if it's not working, you can make some changes in these. It's just that the discounts.

are really, really hard on companies unless performance dramatically improves. You gotta know what that performance is when you're doing it so you don't find out again in a month that what you thought was great wasn't actually great.

Andrew Youderian (36:43)
Yeah. And again, when you're talking about the 70 % margin and that 3.3 break even for ROAS, you're incorporating again the overhead you have to be because I think a lot of people don't do that, right? They just, they kind of, oh, hey, you we got a 50 % margin for everything, 2X ROAS break even, easy math, but there's, again, like you mentioned, I thought you're not thinking about all of the fixed expenses you got to cover, the other expenses that go into it, et cetera.

Adam Callinan (37:06)
Yeah, and let's be clear, that math that I just did, that's just breakeven on the order. That's not even taking into account the fact that you have $30,000 month in payroll and a $5,000 a month office. That's just for the individual order to be contribution profit breakeven.

Andrew Youderian (37:20)
How does that work? So I'm thinking like, if you had a 50 % margin for everything, all order related, excluding your overhead, you should be able to break even with a 2X ROAS, right? Am I thinking about that wrong? So if you had 70 %...

Adam Callinan (37:35)
You break even on that order, but you're not adding contribution profit to the business. And that's how you pay for your fixed expenses. At that point, you're at a 0 % contribution margin, because you've spent $1 to earn $2. And half of that $2 goes to pay for the fixed expenses. So you're at 0%.

Andrew Youderian (37:39)
Right. Yes. Yeah.

Yes.

Yes. Yeah, OK. Got it. Yeah. So.

Adam Callinan (37:57)
So that's the big kicker

is you can't be at it too. You need to be at a two and a half or a three depending on the volume, which is a whole other piece of the equation in order to create enough of that contribution profit to pay for all of your fixed expenses. And if you have $30,000 a month in fixed expenses, you need to generate $30,000 a month in contribution profit to be at breakeven. Remember that's net profit equals zero is net profit, you know, is contribution profit minus your fixed expenses.

Andrew Youderian (38:01)
More than two.

Yeah.

Yeah, yeah, I think a lot of people just think about it's easy to think about because the math is easier and it's universal spending with just your direct contribution margin per order, you know, margins. But if you're not thinking about your overhead and it's just, you know, you're doing yourself a big disservice. ⁓

Adam, tell people super cool product. I've heard great things from people I trust about it. Pentain.com, give people a quick little couple thoughts on how, know, anything else that you do for people who you're a good fit for and how they can try you out.

Adam Callinan (39:02)
Yeah, I mean, we're the math is the same inside of Pentane for every company on the planet, but we are very focused on e-commerce mainly because my experience with bottle keeper can be really helpful there. Obviously Q4 and Black Friday, Cyber Monday are around the corner. so understanding how you're going to discount and being able to see mathematically, you know, in very simple.

charts and reports exactly what's happening while it's happening, if, know, sort of air quote, if it is working, you will know the answer to that question. So the timing is really, really, really helpful going into Q4.

Andrew Youderian (39:38)
Yeah, pentane.com. That's P-E-N-T-A-N-E.com. check them out. It's a really, I mean, it makes a lot of sense. ⁓ And if you're not thinking about this analytically, you're probably thinking about the wrong way. ⁓ Last thing I want to talk about, Adam, is performance coach. I just, think this is such a performance coaching, business coaching in general, I guess, is such an interesting area. I...

had a coach for about a year and there was one or two really valuable things that came out of that that made me happy that I did it. But a lot of the time it wasn't necessarily as helpful as I had hoped. I'd love to hear your experience with with the coach that you're working with. So who are you working with? How long have you been working with them? Maybe we can start there.

Adam Callinan (40:25)
Yeah, the, the coach that I had, I'm not working with now, ⁓ but I did see for over a year, which was extremely helpful over the process of that transaction and kind of what to do next. I'm not a, as most of the people listening to this are not really probably sit still for long people. ⁓ my, the, coach was his name is Dr. Jeff Spencer. He was exceptional. He was like the 75 year old wise sage that has.

Andrew Youderian (40:43)
No.

Adam Callinan (40:54)
Fully, and I say fully because I have seen other coaches that did something very specific. This was very much like a lifestyle because as entrepreneurs, our business blends into our lifestyle. there, we can talk about work-life balance till our heads fall off, but the reality is they're very blended. ⁓ He was really, really good at helping me frame my next moves and while at the same time.

getting me out of my own way, because naturally I wanted to just go jam another startup into reality as soon as that first week of doing nothing happened. he helped me to realize that that was not the right thing to do. Of course, I didn't listen and did it anyways and learn the hard way because that's what you do. ⁓ But that created the space. I got into woodworking. I got into doing things with my hands, which is now a huge part of my life. And that created the space for Pentane to evolve organically. I did not mean to start us off with.

I never in a million years thought I'd have a software company doing what we do now, but it happened ⁓ really organically, which is how things should happen.

Andrew Youderian (41:57)
Yeah, well, you mentioned too, uh, when we were chatting earlier, you sold, you you sold and then instead of taking time off, like you just mentioned, you jumped into something. It was really hard for you to take the time off. And then after that, something that you started did not work. You did take the time off. So in general, would you, even though you fought against it and it was difficult, would you say it was helpful having that? I don't know how long it was three, six, nine months, maybe a year, whatever it was. If you sell a business again in the future, will you force yourself to do that?

Adam Callinan (42:25)
Yeah, it was game changing. You know, here's the thing that you don't, if you've, I've been very fortunate to be through a couple of transactions. The bottle keeper transaction was particularly difficult, not because of the state of the business. we were, COVID was actually good for our company and the timing of the transaction was fortuitous. It was good. It was lucky. But the transaction process is horrible.

It just goes on. mean, it took nine months. We had two different companies. One of them was private equity. One of them was a roll up company. And it's great that you got them competing against each other. And that worked out really well for us. But the process, the transaction process is honestly for me was probably the hardest part of that eight year journey. Just because you're, trying to run the company while this thing is happening that, that can quite literally blow up at any minute.

I mean, up until the day of the transaction, until you get on the call with all these attorneys and they, you know, do this like 1800s era, everybody say I thing up until that point, it can blow up. And that's a really heavy thing to carry while you're also trying to like run a company. It's, it was very difficult for me to, manage those things. So going from that insanity, that like super intense roller coaster, like that's what made me lose sleep. And I sleep really well.

to then you have that call and it just turns off. That was really, really challenging. So having somebody there on my side telling me what was going to happen, which is exactly how it all played out. ⁓ And then taking that six months until I got to the point where I was like, holy cow, I'm bored out of my mind. My brain's melting. It was critical. I would absolutely do it again. I'd probably do it for longer. Forced myself to pick up some new hobby.

Andrew Youderian (44:17)
This is a very crude analogy, but almost like, if you're married and you, ⁓ God forbid, lose your spouse, you know, don't want to run out a month later and get remarried, right? I always joke with Amy. I'm like, hey, baby, if I kick the bucket, give me six weeks and then you go find someone else and be happy, to which she always replies like, six weeks? Is that how long you're going to wait if I get, you know, I disappear? ⁓ So probably wise to wait a while, ⁓ except for me, I would never give

Adam Callinan (44:46)
Yeah.

Andrew Youderian (44:47)
I would never get remarried. would just pine for Annie forever. ⁓

Adam Callinan (44:50)
Yeah, it's like, feel like a jerk complaining about a transaction, but it's

like you have nine years of up and down or eight years of up and down. And then you stack the super intense up and down right on the end of it. And then it just stops that transition part.

Andrew Youderian (44:59)
Yeah.

Yeah, that makes a lot of sense. Gives you some clarity to and rest. What is it? So performance? What was the what were some of the things? mean, obviously having someone who could help you through the process of of closing the transaction was helpful. Giving you advice and trying to push you to to to recharge to reset is helpful. From a performance perspective, when you mentioned Dr. Jess Spencer earlier, you mentioned he was really focused on performance to

What elements of that were helpful or from a mindset perspective, from a thinking perspective, anything that's relevant, or was he more really helpful for you just in getting you through that closing process?

Adam Callinan (45:45)
No, there were, there were so many things that he pushed me to go and do. I'm an open-minded person. I'm pretty, pretty gullible when it comes to that. Like I'll pretty much try anything short of some highly illicit addictive compounds. ⁓ But he, you know, he pushed me, like he was the performance coach for team USA for all their two at a France wins. He's coached Tiger Woods and Branson and like some epic entrepreneurs through transitions.

And so it's part of it. He was also an Olympian. He was a cyclist and is still a cyclist at 75, you know, crushing a hundred miles a week or something. So part of it is very physical. He pushed me to go in and push myself physically in ways that I, had never done before. And that I, honestly didn't know that I was capable of it opened up this whole other side of life that is now a huge part of my life. I now I have a podcast about it, about going in.

doing really hard things physically makes the stuff we do in life and entrepreneurship seem much easier because you like retrain your brain. So for me, I went and ran this crazy run in Montana called the rut. was a couple of years ago and now it's a thing we do every year. It's going and doing really physical, hard things that are way outside of your comfort zone does magic for your just everyday life. But you gotta keep doing it though.

Andrew Youderian (47:10)
How did, I

Adam Callinan (47:12)
that kicker.

Andrew Youderian (47:12)
the rut was six, five, six days ago here. How'd it go?

Adam Callinan (47:18)
I broke my toe two weeks ago, so I didn't do it this year. I dislocated my pinky toe in the yard doing literally nothing exciting 10 days ago. And so yeah, I couldn't even get a shoe on, but that's all right. I mean, we do plenty of other hard stuff just normally now, but, that was a huge thing at the time. was like, this is this. Uncomplishable feat. What do mean? I'm going to go run, you know, 25 miles up 10,000 feet of a mountain, but it was epic. It was life-changing for sure.

Andrew Youderian (47:20)
⁓ I'm sorry. That's right.

⁓ That's right, I forgot about that.

Yeah.

And why, so I think you mentioned you're not working with them anymore. What made you decide to stop working together?

Adam Callinan (47:52)
You know, a big part of it. Well, one, I don't, it wasn't ever his intent to be your sort of like personal therapist forever. We had set goals at the beginning of, working together. ⁓ and we had accomplished them and there was, you know, I, had the tools and the toolkit, which is how he set it up. I mean, from his deep domain of experience to where at the end of our, our kind of cycle.

Andrew Youderian (48:01)
Mm-hmm.

Adam Callinan (48:18)
I had the tools necessary to go and be able to just implement and operate those things on my own. So I mean, I still check up with him. We're still friends. I still communicate with him. But ⁓ it was never his intent for it to be this long term we're doing this for a decade therapy kind of thing, which I respected. I liked that. I mean, that's one of the things that was really interesting about him.

Andrew Youderian (48:37)
Yeah, I think.

Yeah, come in very purpose driven for a period. Yeah, I think the coaching for me, the thing that was the most valuable was sometimes having people look at your life and say, Hey, where do you want to go? Here's where you are now. Why are you not doing A, B and C to get there? And for me, sometimes it's like, well, A is too hard or B is too expensive or C is just that seems ridiculous. And they'd push back and be like, that's silly. You want to go here. You have the resources to do this. Why aren't you doing this? And

For me, that was the most helpful part of coaching, even though I'm not also doing it ⁓ on an ongoing basis either, although I think it's something I need to revisit. ⁓ Having someone with independent perspective, seeing where you want to go and challenging you as to why you're not putting more resources towards getting there, I think is super powerful and helpful. And sometimes it just gives you the permission you don't need, but helps you get there to actually start going down that road. And for whatever reasons, lots of different times they can be different things. ⁓ You're kind of blocked.

So that's cool. was helpful for you.

Adam Callinan (49:43)
Yeah, I mean,

the independent third party is generally helpful, particularly when they come from a wide, completely different base of knowledge and experience.

Andrew Youderian (49:53)
Yeah, I'm looking at Dr. Spencer's LinkedIn page here. So he's got some epic looking movie I'm excited to play as soon as we hop off here, learn a little bit more about him. ⁓ Yeah, very cool. Well, again, if you're listening, Black Friday Cyber Monday coming up, if you are just guessing at your ad spend, your marketing budget on the paid side particularly, ⁓ without thinking through the financial implications or ramifications, pentain.com.

Adam Callinan (50:03)
Yeah, it's an amazing guy.

Andrew Youderian (50:23)
super reasonably priced for what it will potentially save you. ⁓ So P E N T A N E dot com. ⁓ Adam, there's been a lot of fun. Thanks. It's been great to connect to Bozeman. Looking forward to hopefully doing it more in the future and congrats on the past business success you had selling, ⁓ selling bottle keeper. We really get into that too much on this one, but a big part of your story and also what you've built over at Pentane. It's super cool. So appreciate you coming on and talking through everything.

Adam Callinan (50:50)
No, it's

been great to connect. I did forget to mention you can use any of your listeners can use code fuel. We'll give you the first month free. It is super cheap for what you're getting. It's very, super reasonable. You work with me directly. So you're not going to get passed off to a handful of team members or whatever. We'd love to see you there. Thanks a ton for having me, Andrew. It's been awesome to get to hang a bit here in the mountains.

Andrew Youderian (51:12)
Yeah, that's my girl. one thing I did forget to mention too, everyone listening, of course, is a podcast listener. You have a podcast as well. I give people just a quick little preview of that and where they can listen and subscribe if it kind of is a good fit for them.

Adam Callinan (51:24)
Yeah, it's called

growth mavericks. spend most of the discussions are with other Ecom operators, small and large, as well as just people that I find particularly interesting ⁓ with the caveat that the other half of the discussion is around these things that we can go into and build in our life to get comfortable being uncomfortable and to remain resilient for all these like wild ups and downs and get get to that next big inflection point. Those things that happen luckily that we don't plan for. So.

That's growth mavericks. It's a fun time. I really enjoyed doing that. And we're gonna have you over there here at some point. That'd be super fun.

Andrew Youderian (51:59)
Awesome. Well, Adam, yeah, it would be fun. Look

forward to it. be a great time. So turn the mics around, but give it a listen. He's got some great guests on there. And yeah, Adam, appreciate you doing this and thanks a ton.

Adam Callinan (52:09)
Yeah.

Thanks, Andrew. Thanks for having me.