He Built a $17M Ammo Stockpile Business

Ammunition shortages have plagued America for decades. That's when Dan Morton had a wild idea: What if you could stockpile ammo the same way you accumulate stocks in your portfolio?

This Hampton member is disrupting the $18B civilian defense industry by treating ammunition like a commodity - letting customers accumulate fractional rounds and store them in climate-controlled warehouses until needed. 

Dan’s company, AmmoSquared, has over 80,000 members and he believes this stockpile model could be replicated across countless industries.

In our exclusive Hampton interview, Dan breaks down:

• The "fractional rounds" innovation that turned a garage startup into a $17M ARR business.
• The unconventional marketing strategy achieving 12:1 ROI in an industry where traditional ads are banned.
• How they're building a billion-round network of warehouses to eliminate ammunition shortages by 2035.
• The blueprint for applying this model to other shortage-prone products.

If you want to know how to take a shot at disrupting a billon-dollar industry, here’s your ammo:

Hello! Who are you and what business did you start?

Hi Folks, I’m Dan Morton, Founder of AmmoSquared. We are “America’s Ammunition Reserve” with the long-term vision of eliminating ammunition shortages for the gun community. AmmoSquared is like a 401k for ammunition (but without any actual tax benefits).

We have a system that allows customers to set up a weekly or monthly autobuy of ammunition. Ammunition is managed online via our custom web app and physically stored in a climate controlled AmmoSquared warehouse until it’s shipped. Shipping can happen automatically with an “autoship” schedule or manually whenever the customers want their accumulated ammo. Our typical customer will ship once or twice a year and just build up a stockpile ammo the rest of the time. 

The benefit of our program is convenience and consistency. Our customers can set everything up in a few minutes, accumulate ammo slowly over time at a level that fits their budget and ultimately, have ammo when they need it. If there is a shortage, like we’ve seen over and over again, they have ammo with the click of a button. AmmoSquared started in 2015, so this will be our 10th year. We have just over 80,000 members across the country and we’re currently doing $17m ARR. Most of our growth has occurred just in the past 12 months - we’re the overnight success that took 9 years…

What's your backstory and how did you come up with the idea?

I’ve been into guns for close to 30 years now. I didn’t come from a hunting or shooting family so a lot of my early years were just plinking in the hills south of San Jose where I grew up. I took a pistol class when I was 20 and really got hooked. In fact, my first date with my wife was at a shooting range teaching her how to shoot. 

As a lifelong shooter, I saw the many ups and downs of the ammo market. It seemed like every few years we would have an ammunition shortage. I also witnessed the volatility of ammo prices when we had these shortages. That scarcity and price action was always in the back of my mind. 

I escaped the high housing costs of the Bay Area and moved to Idaho in 2005. I started a few businesses that failed to launch. I’ve always been an entrepreneur at my core, but nothing ever clicked for me. I eventually went to work for a tech company but needed to move back to the Bay Area. I called it my 13 month “tour of duty”. While I was working in the Bay Area I put my shooting hobby on hold, but always had plans to get back to Idaho and start shooting again.

When I got back to Idaho, the country was in the middle of another ammo shortage. This is where my ah-ha moment hit, I thought: “Great! I have no ammo and I can’t buy any, why couldn’t I have been stocking away ammo online like I’ve been funding my 401k?” Nothing like that existed at the time, so I started AmmoSquared as an Idaho LLC the same month we moved back.

Take us through the process of building and launching the first version of your product…

The first version of the site was rough. I was only trying to test product market fit so I did it as cheap as I could. I wasn’t a tech guy so I just used WordPress and a subscription plugin. We started with just four calibers: 9mm, 556 NATO, 45 ACP and 7.62 NATO. It took two months to even get a single customer. I still remember it: he subscribed to $5 of 45 ACP per month. That’s it! Five bucks. But it was an amazing experience to get just one customer willing to pay us anything. After that first customer we got nothing for four more long months. It was a short term high then depression. During this whole time I was trying different marketing tactics, posting on social media, posting on forums, whatever I could do on the cheap. Nothing seemed to be clicking. I was close to throwing in the towel.

Then in April 2016, I sent a “press release” to one of the industry blogs that got picked up. It was titled: “Ammunition: More Fun Than Getting a Box of Underwear or Razors Every Month”  That finally opened the floodgates. So after six months I had a total of $20 in revenue from one customer, but on the seventh month we added 30 signups, then 106 the following month, until the end of the year we were up to over 600 customers and $328k in ARR.

In those early days my wife, Danielle, and I were working out of our garage (see pics). She would handle customer service while I was working my day job and we would pack boxes one weekend a month. One of the unique aspects of our service is that our customers could sign up for $5 worth of ammo per month. When customers requested shipment we would calculate how much ammo they had in rounds and ship that - even if it meant taking rounds out of factory boxes or vacuum sealing a few rounds. It was extremely labor-intensive and not scalable so I came up with an alternative that we still use today: fractional rounds. 

Instead of $5 worth of ammo, our customers could set any budget they wanted and the number of rounds they received would get calculated based on their budget divided by the price per round. If that meant they got 14.5 rounds or 73.2 rounds, for example, then that is what went into their online AmmoSquared account. It would add up over time until they had full factory shippable boxes of usually 20 or 50 rounds, depending on the caliber. That was a game changer for us and something nobody else was doing.

Since launch, what growth channels have been most effective for you?

Most folks don’t realize that since we sell ammo, many of the normal advertising channels aren’t available to us. For example, we can’t put ads on any social media platform which is typically a good way for a small company to gain exposure. We can’t. We also can’t do Google Adwords, or put any ads on Google properties such as YouTube. In fact, we can’t even have a direct link in the description of a YouTube video otherwise the video will get removed. 

We were reminded of this recently when we sponsored a Babylon Bee satire video that started to go viral… until it too was removed entirely because it included a direct link to our website…

When it comes to attracting new customers, we have found our biggest challenge is building trust and education. Banner ads, for example, weren’t an effective tool for us. We’ve used giveaways to generate a list of leads that we would put through email flows. The problem is that this group of prospects usually churned quickly.

One constant in our marketing tool box has been word of mouth and our refer a friend program. Once people learn about us, they want to tell other gun owners. It is just such a unique service for the firearms community. 

Starting in 2024 we made the strategic decision to invest heavily in podcasts and gun influencers on YouTube who could explain our service to their respective audiences. It is a bit ironic that we’ve seen a lot of success in this channel but as long as the influencer doesn’t directly link to our site the video won’t get removed. Since we don’t have those direct links we have found the old fashion “How Did You Hear About Us?” dropdown on signup allows us to track which influencers are performing and which aren’t. We will cut any non-performing influencers and double down on the ones that are. We are currently able to achieve a 12:1 return on our marketing dollars that way. 

Did you ever have an “oh shit” moment where you thought it wouldn’t work?

There have been a few times I thought the business could fail. The earliest one was our lack of traction out the gate. When you only get one customer in six months of grinding it out, you get pretty discouraged! Though thinking back now, it was getting that one customer that saved the company by helping keep the momentum. In my mind, if we had one person willing to pay then we could get 10, 100, or even 1,000… and we eventually did. We had some quick success in our first full year but that growth stagnated for two years while I worked a full time job and we struggled to grow the business. 

By December of 2018 we had essentially the same number of active customers as we did at the end of 2016, just a little more than 600. So two years of flat growth even though we were putting in all of our free time: nights, weekends and even lunch breaks for me at work. That was extremely frustrating and required a “leap of faith” moment for us. We decided after seeing early traction then stagnation, that we had to either close down the business or jump ship from my well paying Product Marketing job and work full time on the business. So we did what any dedicated entrepreneur would do and took out a $40k “home improvement” loan to live off of while we built the business. Looking back it was a pivotal moment for us. 

Our third pivotal moment came the following year. I was now working full time on the business but we were stuck on the technology side. Neither my wife nor myself had the technical expertise to build a custom backend to handle all of the crazy stuff we were using Wordpress for and we couldn’t afford outsourced developers. Heck, we couldn’t even afford to pay ourselves! We were overwhelmed and didn’t know what to do to fix the situation. In desperation, my wife, who is much more math and science minded than me, spent three months at coding “bootcamp” so she could learn how to program and hopefully build the site we needed. Luckily around that same time, Chris Corriveau, a customer of ours, reached out because he noticed some html/css code issues on our site. We got to talking and it turned out he was the former CTO for StockTwits - basically Twitter for stocks, and was now freelancing. After more back and forth we decided to bring him and a design guy he knew onboard and reform the company as a Delaware C-Corp so we could try to raise some money - which we did less than a year later through an equity crowdfund on Wefunder. 

Can you break down the keys to this business model for us? What makes it work? And what do outsiders typically not understand about your industry?

The key to our business model is that we take something specific: ammunition, and turn it into a commodity. When most people think about buying ammunition they think of it like buying printer ink. With printer ink you need a certain type for your printer (gun), but there are a variety of options you can buy in person at the store or online. It can be from the OEM or generic. Most people don’t care what ink is in their printer, just that it works the way it should. We realized that most people don’t care what ammunition they shoot as long as it goes bang and is reasonably accurate. 

The other key is that we store ammunition and allow it to be accumulated in non-shippable increments (ie: 13.6 rounds). Most people think of things in whole units - take the printer ink example. You either buy a whole cartridge or you don’t. But what if you could accumulate ounces of printer ink then get it delivered when you need it? It might work. I wrote a whole blog post about adapting this model for gasoline. I believe it is doable. We’re just looking at something differently and taking elements that haven’t been applied to the industry before, like fractional rounds and storage, to create a whole new business model. 

In terms of business metrics, we make money like an e-commerce site would. We just recognize the sale when the ammo is allocated to the customers’ account - even though it hasn’t shipped yet, which is typical. Our gross margins are in the 25-30% range - so not huge like a true SAAS company but more in line with a physical product company. The difference is we have recurring revenue like a SAAS or subscription service. Last year we grew revenue 127% from $4.3m to $9.9m. More impressive was our active customer and ARR growth which was 153% and 215% respectively. Most of our ARR growth occurred over the past 12 months: 

Our customers tend to stick around for a long time. Based on our annual churn rate of 16.8%, the average customer tenure is nearly 6 years. After taking out COGS, the LTV of a customer is around $750. We target a $75 cost per activated customer so our target ROAS is around 10:1, but with the right channels, has been as high as 20:1 for us.

Our company mission is to create a nationwide network of climate-controlled warehouses storing one billion rounds of ammunition for America’s armed citizens by 2035. That is our company “BHAG”— Big Hairy Audacious Goal. 

Our ultimate vision is the complete elimination of ammunition shortages which have plagued this country for decades. No other staple, other than toilet paper for a brief window of time, has seen persistent random shortages like ammunition.

What platform/tools are absolutely crucial for your business?

We tend to use non-standard tools for our operations. That is partially because many of the standard tools aren’t open to us (like Stripe, PayPal, Google AdWords, etc) and partially because we like seeking out alternatives that align with our values. 

• For our subscription billing we use Chargebee. 
• Hosting: American Cloud
• Internal analytics: Metabase
• Web analytics: plausible.io
• Blog: Ghost.io
• Company Communication: Slack
• Company Docs: Google docs
• Email client: Google
• Project / Product Management: fibery.io
• Job Posting: Red Balloon
• Banking: Old Glory Bank
• Customer Support: Zendesk
• Shipping Software: Shipstation
• Inventory Software: SKUvault

What have been the most influential books, podcasts, or other resources?

One of the most influential books I’ve read, and one that I recommend to every aspiring entrepreneur, is: “The Millionaire Fastlane” by MJ DeMarco. I admit the name is pretty cheesy but the message is great and has driven me to keep trying to solve problems that add value to the world instead of settling for a 9-5. I read a lot of books. I feel like that is one of the keys to personal and professional growth - keep reading everything you can. I usually have one audiobook going and one physical book. Right now I’m listening to Scaling Up: How a Few Companies Make It.. and Why the Rest Don’t which is based on the Rockefeller habits. Another book I would highly recommend that has changed our business is Traction. My whole executive team just finished reading Traction and we’ve started to implement its concept of an “Entrepreneur Operating System”. The idea of an Accountability Chart instead of an org chart and holding weekly Level 10 meetings have really been pivotal in moving us forward. 

For podcasts, I just listen to a few including My First Million. I like to download a bunch of episodes and listen to them while I’m working in the yard or travelling. Another one I’ll recommend that is pretty new but related to my space is the Open Source Defense podcast and blog which focuses on the rising “Civilian Defense” Industry which AmmoSquared is part of. 

Where do you see untapped opportunity in the market? What business do you wish someone else would build that would make your job easier?

 There are a couple of broad categories here. The first is to look at what AmmoSquared is doing for ammunition and replicate it for something else like I mentioned earlier: gasoline, printer ink, food storage, who knows. That is the great thing about America - someone can come up with an idea and if they are adding value the world will reward them for it. Early on, one guy I talked to was planning on doing something similar for lumber. So anything is possible. 

The other category is to look at opportunities in the “Civilian Defense” space. This space has been severely neglected by investors and tech entrepreneurs in the past. We are only one of a handful of “tech companies” in the firearms industry. Companies like ours have had to bootstrap or turn to equity crowdfunds to raise money but there are 100 million armed Americans and represent a huge market. It is just often overlooked by mainstream investors. This space includes everything from guns and ammo to drones and body armor. Anything related to serious civilians protecting themselves and their communities. There is a great opportunity here, and we’re witnessing a massive culture shift since the COVID-19 days as regular folks look for ways to take their personal security more seriously.

What are some strong opinions you have about leadership, and how do you actually put those into practice in your company?

I am very transparent as a leader, both inside the company and outside. Transparency is actually one of our company values. I feel like if you are truly being honest and transparent you also have to leave your ego at the door. Big egos, turf wars, and hiding information are all recipes for business failure in my opinion. 

Some of the best leadership practices we’ve implemented recently have come from the book Traction. One of them is to set quarterly “Rocks”, or priorities, then have weekly meetings where we set action items that align with our quarterly rocks. Each member of our executive team is held accountable for accomplishing their action items and if they don’t there is peer pressure to get it done or ask for help. I also believe in trying for 1% improvement every day. If you make just a tiny 1% improvement each day, by the end of the year you’ll have a 37x gain overall. So we’re big on incremental process improvement both personally and in the business.

Where can we go to learn more?

Check out AmmoSquared.com also I write a lot about my ideas and business on our blog. I’m not big on social media, but I want to change that in 2025. My personal X account is @ammo2dan and the company’s is @ammosquared.