$3.4B Thrasio Goes Bankrupt - What You Can Learn

Marketing School - Digital Marketing and Online Marketing Tips

Eric Siu and Neil Patel

Marketing, Careers, Business

4.6 • 1.4K Ratings

🗓️ 20 December 2023

⏱️ 6 minutes

🔗️ Recording | iTunes | RSS

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Summary

In episode #2639, We discuss the recent bankruptcy of Thrasio, a $3.4 billion aggregator that acquired Amazon businesses. We talk about the risks of relying too heavily on one formula or platform and emphasize the importance of being cautious and responsible when scaling a business. We highlight the need to save for tough times and avoid over-leveraging oneself. Additionally, we share a cautionary tale about a friend who regretted raising unnecessary funding and the negative consequences it had on their company. Don’t forget to help us grow by subscribing and liking on YouTube! Check out more of Eric’s content (Leveling UP YT) and Neil’s videos (Neil Patel YT) TIME-STAMPED SHOW NOTES: (00:00) Today’s topic: $3.4B Thrasio Goes Bankrupt - What You Can Learn (00:26) Thrasio's strategy of buying and rolling up Amazon businesses (01:25) Factors that led to Thrasio's downfall (02:58) Lesson on not relying on one formula or platform (03:47) Importance of being cautious and responsible in scaling business (04:35) Example of regretting raising unnecessary funds (05:05) Mistake of getting too aggressive without thinking things through (05:26) That’s it for today! Don’t forget to rate, review, and subscribe! Go to https://www.marketingschool.io to learn more! Links Mentioned in Today’s Episode: Thrasio Leave Some Feedback: What should we talk about next? Please let us know in the comments below Did you enjoy this episode? If so, please leave a short review. Connect with Us: Single Grain << Eric’s ad agency NP Digital << Neil’s ad agency X @neilpatel X @ericosiu See omnystudio.com/listener for privacy information.

Transcript

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0:00.0	All right, so 3.4 billion dollar aggregator, Thrasio has gone bankrupt.
0:05.8	So Neil, do you want to explain what an aggregator is and then we'll share some takeaways
0:08.8	for everyone?
0:09.8	Yeah, what an aggregator is, at least in Thrasioios case is they're buying up a lot of Amazon type of
0:15.8	website or Amazon sellers people who are selling on Amazon aggregating them into one
0:19.6	business and rolling them all up into one they're assuming that they're going to get a higher
0:23.7	valuation because they're at scale.
0:25.7	Yep and so what they were doing this is probably starting around I don't know when they started
0:29.3	maybe 2018, 2019 maybe 2020 or so but they started buying Amazon businesses that were doing well.
0:35.1	And their whole thing was like, look, we can have efficiencies with like a front office
0:39.5	or shared resources, which means you're sharing like HR finance or whatever and you are basically
0:46.3	you're arbitraging and in the last episode we talked about arbitrage right so you're
0:50.0	buying ads on Facebook or whatever and this was before all the iOS changes,
0:54.9	before the tracking changes and all that, right?
0:57.0	And it was pretty, it was easier
1:00.8	to get a high return on ad spend, so Roas, right?
1:03.8	And a lot of people are doing it.
1:05.3	Also at the same time, I believe Amazon's take
1:08.2	was like 15% or whatever.
1:10.2	They've actually increased that take to, I don't 20 25% or whatever right I could be wrong on that but my point is at a certain point once
1:18.1	2022 hit when interest rates started going up the the arbitrage no longer work because Amazon's take rate went higher, and then also the
1:26.8	calculus on running the ads, the ad arbitrage, it was no longer working, so everything went reversed.
	...

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