211: E-Commerce Profitability: Data-Driven Growth
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In this episode of The Richer Geek Podcast, we are joined by Adam Callinan, founder of Pentane, an innovative e-commerce profitability system. Adam shares his journey from medical devices to creating the wildly successful BottleKeeper and how those experiences led to the development of Pentane. Discover how Pentane transforms raw e-commerce data into actionable insights, helping businesses of all sizes, especially early-stage consumer brands, achieve sustainable profitability. Learn how to move beyond guesswork and emotion and embrace a data-driven approach to your e-commerce strategy.
Adam dives into the critical mistakes many businesses make, including arbitrary ad budgets and the hidden impact of fixed expenses, and how Pentane provides the tools to make informed decisions.
In this episode, we’re discussing…
E-commerce Success Formula – Adam Callinan, founder of Pentane, shares how understanding financial and customer acquisition metrics helped scale BottleKeeper into an eight-figure business with just four employees.
The Power of Real-Time Data – Pentane provides a live dashboard integrating expenses, revenue, and ad spend to help e-commerce businesses make data-driven decisions instead of guessing.
Optimizing Profitability – Businesses can set financial goals (e.g., a 10% net margin) and use Pentane’s system to backtrack the exact ad spend and revenue targets needed to achieve them.
Beyond Trial & Error – Many e-commerce brands operate blindly, throwing money at ads without knowing their impact. Pentane replaces uncertainty with precise, actionable insights.
Who It’s For – Ideal for early-stage consumer brands (<$20M revenue) looking for clarity in their financial and marketing strategies.
No Long History Needed – While lifetime value metrics require 12 months of data, most of Pentane’s insights can be leveraged immediately with accurate financials.
Resources from Adam
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler: Hey, everybody! Welcome back to another episode of The Richer Geek Podcast. Today, we have Adam Callinan. He's a founder of Pentane, an e-commerce profitability system. His system transforms existing e-commerce data into guidance on the exact revenue, ROAS, advertising spend required to get to profitability, and beyond. When combined with Pentane's real-time e-commerce KPI dashboard, changes to expenses, revenue, and ad spend can be adjusted in real time. That's very interesting. This is where the magic happens. How are you doing, Adam?
Adam Callinan: I'm doing great, Mike. How are you doing?
Mike Stohler: I always like to start, Tell us a little bit about yourself, what got you started in e-commerce and Pentane off the ground.
Adam Callinan: Yeah. First and foremost, I'm a dad of two little kids and a husband of an amazing wife, born and raised in Flagstaff, Arizona. I know you're in Arizona and I live in Montana. I did not intend to go into e-commerce. It sort of fell upon me. After college graduation, went into a medical device company as the first employee. I was not an owner of that business, but got to build that up and out. Ended up in Southern California, expanded the company out there. We had spun off a tech component that dealt in health insurance, reimbursement, and all this very not sexy, but interesting stuff that sold. My position in that business in 2013, and my cousin, Matt, who's out there in Phoenix with you, had this idea about a beer product that was basically cut a water bottle in half and stuffed it with neoprene. We created this product called BottleKeeper. We were smart in hindsight where there's a lot of dumb things we did in BottleKeeper. But we were pretty smart early on and built a really lean, scalable business that did some pretty cool things before we got acquired.
Mike Stohler: Yeah, find me an entrepreneur that didn't make some mistakes, my God. If I could go back, I don't need to do it more than once, but man, there are some things that would have changed our lives but we are here because this is our path that we're meant to be. Let's talk about Pentane. Everyone knows e-commerce. Everyone that does Amazon type things may have their own website, or they use some type of e-commerce platform to download stuff. That's not good enough, is it?
Adam Callinan: Absolutely not. To your point, you do the best with what you have. And over time you figure it out and through making endless mistakes, taking it right to the edge of burning it to the ground enough times, it gets better and better. And, you don't realize that when it's happening; you look back at it in hindsight and realize that those iterative steps added up to something that ultimately worked. Matt and I did really well at BottleKeeper, because we had a deep financial understanding of how to operate the business. That's a combination of the operational expense side, as well as the customer acquisition side in an e-commerce business. Typically, you're spending money to acquire a customer somewhere, and there exists this gap in an early-stage business in between the financial side and the customer acquisition. We were really good at filling that gap with math. We were both, we had figured out how to do it. We broke it a bazillion times and it worked. And then we got in, we grew from there, ended up on Shark Tank when we were way too big to be on Shark Tank and the company got acquired. And we were an eight figure revenue business. And we only had four employees. So those systems are the basis for Pentane. I didn't realize that when we were doing it, we were just solving our own problems, but many of the systems that we had created, I plugged into, post-acquisition, plugged into companies my wife and I had invested in, and it completely changed their businesses because they were operating. You throw everything against the wall and hope some things stick. When you understand how to pull the levers inside the financial side of the business and the customer acquisition side, you can define the outcome you want, let's say net margin, you want to create a 10 percent net margin. You can start there and use math to back out exactly what to do, so it becomes much more intentional and strategic than hope and guess and pray, which is how we tend to operate.
Mike Stohler: Throw something on the wall, see if it sticks. Till next week, try it again.
Adam Callinan: Exactly.
Mike Stohler: Most of us do that, and I know I did that before I finally made some money. It'd be nice not to have made those mistakes. And where were you 10 years ago, 15 years ago?
Adam Callinan: I bet on what feels like a different life, certainly a different chapter.
Mike Stohler: Absolutely. So let's get through those steps a little bit. Let's dig into Pentane. No, how'd you get the name? I gotta ask.
Adam Callinan: Yeah, Pentane, the short answer is that because I'm a nerd. The literal answer is Pentane is a five carbon molecule that makes the shape of a W in organic chemistry, which I flipped and made into a graph that goes up. My degree was molecular and cellular biology. I know I had to take a lot of chemistry. When I was naming the company octane, there's these chemicals that live in a family called alkanes. It's like pentane, octane, hexane, methane, propane, ethane. The easy version is I could buy pentane.com for $2, 000 and there was zero sound around it from a business perspective. It's a solvent they use for oil refineries. So it was a very quiet name.
Mike Stohler: There you go. So let's dig into Pentane a little bit and talk about different steps I have taken in e-commerce. Let's start number one: What type of e-commerce companies do you help? We'll start there and then let's dig into what it is that Pentane does.
Adam Callinan: It's interesting. The math inside of Pentane is the same for ExxonMobil, a landscaping company or a dry cleaner as it is for a consumer brand. That being said, I'm not interested in being everything to everyone. Where we can be the most helpful, because of my last decade of experience in consumer. So, we're focused on consumer brands, particularly early-stage sub-20 million in revenue because we can be the most impactful. The product can be the most impactful there. If you visualize yourself as the captain of a rocket ship and you have a mission objective and that is to go to the moon, you need to deliver a payload to the moon. When you get into your rocket ship, you look up at a series of screens that are your command center. On those screens are high level metrics like airspeed direction, fuel, all the things that you need. To operate the machine, you can click into those and get diagnostics in more detail on each of them. Some alerts will pop up and tell you if there's a problem. Then, you have a guidance system, which tells you if you're going to add weight, you need to change your fuel. You need to increase your efficiency. You need to make some changes in the ship now, but this is the direction you need to go. I look at business the exact same way. As the captain of your ship as the head of your business, or the head of marketing inside of a business, you need a command center to have real time metrics, telling you what's happening in the business. Typically, we don't know whether it's "good or bad" until we get a P&L next month, and that is a horrific way to operate a business.
Mike Stohler: Yeah.
Adam Callinan: I get it. That's not a judgmental statement. We did that for a while, and then we had to create solutions. You also need to set your mission objective. You need to put a stake in the sand that says we want to get to break-even, a 10 % margin or a 20%, whatever it is that makes sense for you. Because of the way Pentane is structured, it has all of the expense data that pulls via APIs out of your, for example, QuickBooks account. It has all your revenue data because it's connected to Shopify or Amazon, it has all your advertising data because it's connected to Meta and Tik Tok. And it compiles all that and applies math to start answering questions like, you need to set your ad budget at $12, 472 per month at a 2. 9 return on ad spend to accomplish this goal. And if you add fixed expense, which in a rocket ship is weight- it's payload. In a business, it's weight, it's payload. How does that math change? Where does your ad spend need to change? Where does the performance on that ad spend need to change? If you're going to offer a discount, where does the performance need to change? Answer all these questions that we typically have as early-stage operators, we make it completely in the dark, just operating in the dark. So answer the questions before you make the decision, so you can at least see where you're going.
Mike Stohler: It's unfathomable . I remember my friends just throw stuff on Amazon and they just wish and pray and they're doing different types of things, spinning the wheels in order to try to gain more revenue or likability, DPIs, it's crazy. So, you're saying 20... How soon can someone that has a business use this functionality? Do you need a year's worth of metrics for the computer to crunch in order to set these goals?
Adam Callinan: No, for 98 percent of the system, no. If you're trying to get answers around lifetime value or LTV, then yes, you need a year worth of data. And that's just because of the way LTV is calculated. You have to have at least 12 months of data to calculate. But that's one metric of 40 metrics in a robust system. For everything else the minimum entry point, the barrier to entry to a small company is just having accurate financials. For example, if a company, they might have a QuickBooks account. They might be managing it. They might have someone managing it. If they're living out of the company bank account, then it's all inaccurate. It doesn't matter. You can't make real decisions off of that. The business just needs to have a functioning P&L . That could be a $100,000/year company. We have a company that we talked to the other day that's about to launch. So, they want to do it with a projected P&L. They have idea. They think they know what it's going to be. And let's be honest, anything is better than nothing. You can adjust the system as you go, but using a projected P& L is a great place to start because at least there will be making decisions with data and more data and less emotion.
Mike Stohler: And that's it. I keep telling entrepreneurs, there's zero . It comes down to math, basically P&L's and making decisions. But I want to sell cupcakes. How many cupcakes do you need to break even? And they're like, "I don't care. I want cupcakes." And four months later, guess what?
Adam Callinan: That Mike, I might disagree with that.
Mike Stohler: Yeah. Common sense might you're in a $5,000 a month rental space. That's a lot of cupcakes.
Adam Callinan: That's one of the things Pentane can answer. It can tell you because the system understands the underlying margins. I don't want to go too far down the nerdy rabbit hole, but I like understanding contribution margin. You, as the operator, don't need to do, but it is an important metric and it lives in the system. If you're going to sell cupcakes for $3 and it costs $2 to make. And then you have to package it and you have to advertise and do all these things. You might only have 10 cents of contribution margin left at the end of that 3. And that's not a business. I'm sorry. Math is going to disallow that from working. If you ever want to make money on it, that's like a break-even business. The larger the system can tell you that before doing it.
Mike Stohler: Yeah, that's fascinating. Number one, people need to know that. I've always wanted my whole life. I love doing this and I'm like, don't make money, won't survive. So talking about those issues, name two or three of the biggest problems in early-stage companies. Number one might be just emotions, but what are some of the big problems that you see for early-stage companies that could be solved with your company?
Adam Callinan: The number one problem in consumer brands, it's different for other businesses is that they are arbitrarily defining their ad budgets. They're just making them up. It's emotional because they don't have the experience or the financial expertise to understand the amount of fuel that business needs to pay for its weight, to pay for its expenses. It's fixed expenses, operating expenses.
Mike Stohler: Yeah. Yeah.
Adam Callinan: If you have a business. That is going to make these numbers up is spending 100, 000 a month in fixed expenses. That's payroll office, health insurance, employee benefits, all that stuff that you pay regardless of whether or not you make a dollar, and you set your ad budget. Let's say, you're on a 75% gross margin, which is strong. If that business is going and defining their ad budget at $10,000 a month because that's what they feel comfortable spending. There was a 0% chance. That they are going to get to break even because in order for them to get to break- even. That business might need to generate $200,000 on $10,000 in ad spend in order to get to break even that's a 20 X return on ad spend. That is not going to happen. We need to spend enough money so that return on ad spend can come down to four or three. And that's one of the key features in the guidance systems of Pentane, it takes that and it plots it on a curve, which is, it's a negative log curve, but it looks like an upside down hockey stick. So they can look on the curve and see the relationship between the needed ad spend and the output row as in order to accomplish their goal, so that they can at least make decisions with real data. But that is the number one thing we see. Typically because it's risk capital, companies dramatically underspend on what the company actually needs to accomplish their goals. So literally, it's just set up for failure.
Mike Stohler: Yeah. And that's not fun money, right?
Adam Callinan: Not at all, painful.
Mike Stohler: I know a lot about domain ratings and the pain for the bloggers and trying to get keywords. And it's like going, I don't care about keywords. I don't care about the stuff. You know what Google does. And you're like going, "How much, $6,000-$7,000 a month, just for you to blog and keyword me and get my domain rating?" It doesn't even guarantee anything, and they get people to come to the website, but there's all this other stuff and landing pages that people just don't realize. You've got to spend it.
Adam Callinan: Yeah. Those are critical parts of the whole system. The company is like a puzzle made of a thousand pieces, but all the pieces aren't the same size. They're not equally weighted. Those are important pieces to the puzzle. Companies really get in trouble when they go to spend on Facebook and they go to spend on TikTok, they want to go pay to acquire a customer. And it's pure risk capital to them because they don't understand how it needs to perform to be good for the business. So that's the first thing, let's answer that question with data and not emotion.
Mike Stohler: There you go. What are some of the other things? Because the first one was great.
Adam Callinan: Second, is that we don't understand how negatively impactful fixed expenses are to a company. I want to be clear, I understand this because I have been guilty of it. I have learned this lesson the hard way on a number of occasions including after I already knew the answer to the question. So I am not immune to this, we have a company, it starts to have some success. Success, meaning generating revenue, the sales are increasing, setting aside whether or not it's making money. That's a whole separate thing. We think that we need more people in order to continue that growth and success. So we start solving problems with bodies. Although it feels nice to say at your cocktail party like, "Hey, we're up to 17 employees or 77 employees." The reality is, unless you deeply understand how the revenue needs to respond in order to pay for those employees, it rarely works out well. And you typically, companies grow on like an S curve. If you look at their P&Ls over time, they grow, and then add a bunch of weight to the business, sales suffer. And they're like, "Oh shoot, we're hemorrhaging money. They cut it all." That prompts a growth phase. They get lean and smart and healthy, and then they grow, and then they do it again. They go through these cycles, understanding how fixed expenses, how actually detrimental they are to the business is super important.
Mike Stohler: Yeah. I can see that. How much is it? Another thing that early-stage companies do is they'll actually not only grow employees, but they'll either brick and mortar too fast. Or set up shop all, they're just, "Wow, I'm popular. Everyone loves me." And they just bam, does that something that you guys can analyze and say, "Hey, you know what? That's not quite time yet to do this."
Adam Callinan: We can't today have the conditional logic to say, if you were thinking of expanding into brick and mortar, expanding to Australia, which we did when we shouldn't have. We don't have the conditional logic to say this is. A good idea or not, what we do have is the ability to add expenses, costs, price increases, discounts and sales, and have the system tell you how the business needs to respond to pay for those things. To tell you how much revenue you need to drive, how your conversion rates in your website need to change to be net positive. It can answer a lot of the "does this make sense" questions, as long as you can distill that down to what it's going to cost to do.
Mike Stohler: Yeah. And that's good enough that type of proforma cause you can figure out this is how much it's going to cost. Does this Australia even want your product? You know, there's a lot to analyze before I let you go. I got to ask, I watched Shark Tank. I'm going to go back and try to find what it was like. You got some pretty smart people you're in front of.
Adam Callinan: The experience is exceptional. If you, as a consumer brand operator at any stage, have the opportunity to do it, just say yes, figure it out. You'll have time to figure it out. For us, it took a couple of years to get actually on air. Over the course of that couple of years, we grew from a million dollar a year business to a 10 million a year business. We were on the bigger side of Shark Tank companies. As expected, they spent 50 of the 55 minutes we were taping, beating us up for not reading, not needing to be there. If you recall, if you saw the episode, Mark Cuban saying "You're either the worst business people in the world, or you don't need to be here," was his opening line quote. It was an amazing experience. It's so good for the company, regardless of your emotional concerns, which we certainly had. We built structure to mitigate them, but around them making you look stupid or making the company look bad or whatever. They can make it into whatever they want to make it into. If they have enough footage to do what they want to do. So obviously it's not in their best interest to make everybody look stupid. We did a great deal on TV. We did not end up doing the deal in real life; for that's a longer conversation, but it worked out well. We had a great relationship with Mark and Lori, and it was an amazing experience.
Mike Stohler: Mark went to my alma mater.
Adam Callinan: Oh, nice. Nice.
Mike Stohler: I'm a Hoosier. Before I let you go, is there anything else I did not hit upon that you want to share with everyone? I want to get into a little bit about, they go to the website and what happens?
Adam Callinan: There are some demo things on the website. You can sign up for a demo and see the product. We're still relatively early, not making a lot of noise, so you're not going to see it. I'm not building the business on paid media like our last company was.
Mike Stohler: We love showing you the product. We love finding ways to help other early-stage operators answer questions that are difficult to answer, or frankly, in many cases, you may not even know the question to ask. That is the point of the system that defines my next chapter in life. pentane.com, is it? What's the website? P E N T A N E.
Adam Callinan: Yeah, you can find me on LinkedIn, Adam Callinan. I'm doing a little bit of yelling there, but again, it's mostly around just helping people answer questions. I love helping early-stage operators. Anything I can do to help answer questions around intellectual property, we had a crazy patent portfolio that we grew from nothing in that consumer world. I'm happy to help.
Mike Stohler: Adam, thank you so much for coming on The Richer Geek Podcast. I don't know if it's snowing up there yet. I was going to say, enjoy some skiing. Pretty sure
Adam Callinan: It has been snowing. It's been an early snowy fall. It's been great.
Mike Stohler: All right. Take care. Bye.
Adam Callinan: Thanks Mike.
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ABOUT ADAM CALLINAN
Adam Callinan is the Founder of Pentane, an eCommerce profitability system that turns data into real-time guidance on revenue, ROAS, and ad spend for sustainable growth.
Previously, he co-founded BottleKeeper, scaling it from $0 to $8M in three years with no employees, investors, or debt. The brand later secured a top Shark Tank deal and was acquired in 2021 as an 8-figure company. With deep expertise in operational finance and customer acquisition, Adam is passionate about helping early-stage founders build profitable eCommerce businesses.