With a remarkable knack for navigating the digital landscape, Dominic is known for his strategic prowess in acquiring and managing online businesses. In this enlightening discussion, he shares invaluable insights into the methodologies and philosophies that underpin his success. Dominic emphasizes their commitment to long-term ownership, aiming to continuously grow and scale acquired businesses by reinvesting profits into further acquisitions. 

Listen to this Episode:

• Apple Podcasts
• Spotify
• Amazon Music

Evaluating Online Businesses for Acquisition

When evaluating potential acquisitions, Dominic emphasizes the importance of scrutinizing the digital marketing landscape. Regardless of the specific business model, the core value drivers revolve around generating demand through digital marketing and delivering products or services. While Onfolio initially focused on content sites, their approach evolved to encompass a broader spectrum of online businesses. They assess each business’s ability to operate autonomously and thrive without the founder’s direct involvement.

Navigating Risks and Opportunities

Dominic discusses the dynamic nature of risk assessment in the online business realm. Whether it’s evaluating the stability of revenue streams or anticipating disruptive factors like algorithm updates or geopolitical shifts, Onfolio adopts a proactive approach. Diversification serves as both a risk mitigation strategy and an avenue for capitalizing on emerging opportunities. By maintaining a diversified portfolio, Onfolio aims to mitigate concentration risk while remaining agile and adaptable in the face of evolving market dynamics.

Adaptability in a Changing Landscape

In an era marked by rapid technological advancements and macroeconomic uncertainties, adaptability is paramount. Dominic underscores the importance of businesses being agile and self-disruptive, especially in the face of emerging technologies like AI. Rather than predicting the future with certainty, Onfolio focuses on building resilience and flexibility into their portfolio companies. By embracing change and continuously learning, they position themselves to navigate the complexities of the digital landscape effectively.

Learning from Mistakes and Embracing Growth

Reflecting on specific examples, Dominic recounted early experiences, including acquiring a content site heavily reliant on Pinterest traffic, which faced a setback when banned by the platform. He emphasized the importance of adapting due diligence processes to identify dependencies on founders, ensuring effective transitions post-acquisition.

The conversation turned to the importance of founder retention and the structuring of deals to mitigate risks, such as implementing earn-outs tied to revenue or earnings. Dominic stressed the need for a tailored approach to optimization and scaling post-acquisition, advocating for a methodical, one-step-at-a-time strategy to stabilize the business before implementing major changes.

Identifying Opportunities in Undervalued Sectors

We explored Dom’s views on undervalued sectors in the online business landscape, with a focus on agencies, Ecommerce, and online courses. Dominic highlighted the potential of agencies and overlooked opportunities in Ecommerce, despite recent challenges. He cautioned against overvaluing SaaS businesses and emphasized the importance of nuanced valuation methodologies.

Looking Ahead: Growth and Expansion

For Dominic, his future plans include optimizing the existing portfolio, raising capital for acquisitions, and exploring opportunities in software and Ecommerce. He underscored the importance of continuous learning, honing skills, and compounding successes over time.

Final Thoughts

As Dominic Wells eloquently articulates, success in the online business M&A space hinges on a combination of strategic foresight, adaptability, and a commitment to long-term value creation. 

If you’re interested in learning more about Dominic Wells and Onfolio, you can visit their website at Onfolio.com or subscribe to Dom’s newsletter at Onfolio.com/newsletter. Additionally, you can connect with Dominic on LinkedIn and Twitter for further insights and updates.

Thank you for joining us on this enlightening journey through the world of online business acquisitions. 

Listen to this Episode:

• Apple Podcasts
• Spotify
• Amazon Music

Understanding the Landscape

Mike sheds light on the staggering numbers that define the small business landscape in the United States. With approximately 33 million small businesses, the majority of which (80%) are owner-operated, and a significant portion (16%) having less than 20 employees, Mike highlights the critical role small businesses play in the economy. However, despite their prevalence, Mike emphasizes the lack of accurate information and guidance available to small business owners, particularly concerning mergers and acquisitions (M&A) discussions.

Learning from Experience

Mike’s journey into entrepreneurship wasn’t without its challenges. He shares the poignant story of his first business venture, which started in the mid-90s from his living room alongside his wife. Despite significant growth over a decade, Mike found himself burnt out and ready to sell. However, his initial attempts to sell the business were met with rejection due to fundamental shortcomings in its structure and financials.

The Path to Saleability

Realizing the disparity between his perception of the business’s value and its market readiness, Mike embarked on a journey of transformation. He identified key areas for improvement, focusing on generating desirable financial results and building a business that could thrive independently of its owner. This strategic shift, though challenging, eventually paved the way for a successful sale, providing Mike with a newfound sense of freedom and perspective.

Reflecting on his exit, Mike emphasizes the importance of aligning business ownership with personal fulfillment and financial security. While the monetary outcome of an exit is significant, Mike stresses the value of achieving a level of independence and satisfaction that transcends monetary measures. He underscores the need for entrepreneurs to assess not only the growth potential of their ventures but also their ability to fulfill personal and professional aspirations.

Conclusion

Mike Finger’s journey serves as a testament to the transformative power of strategic planning and perseverance in the world of entrepreneurship. His insights offer a roadmap for aspiring business owners to navigate the complexities of business ownership, with a keen eye towards building businesses that are not only successful but also saleable. As Mike aptly demonstrates, always planning for the exit ensures that entrepreneurs not only build businesses but also create opportunities for future growth and personal fulfillment.

Mario’s journey into Ecommerce began in the late ’90s, a time when online resources for learning were scarce. He started by building websites, eventually transitioning into a career as a software engineer. However, the slow pace of enterprise-grade development left him craving more agility. Enter WordPress, a platform that revolutionized Mario’s approach, allowing him to focus on business logic rather than reinventing technical wheels.

Over the years, Mario’s focus expanded to encompass high-scale Ecommerce solutions, working with Fortune 1000 companies, startups, and digital publishers. Observing the industry’s evolution, he notes the dominance of what he calls the “Holy Trinity” – WooCommerce, Shopify, and Amazon – as key players driving Ecommerce growth.

The pandemic accelerated the shift to online shopping, with consumers becoming increasingly comfortable with digital transactions. This surge in Ecommerce, coupled with evolving consumer behaviors, presents a ripe landscape for aspiring entrepreneurs.

Three Pillars to Build a Successful Ecommerce Portfolio

Mario emphasizes three pillars for building a successful Ecommerce portfolio:

1. Diversify: Rather than diving headfirst into entrepreneurship, Mario recommends starting small and gradually expanding. Acquire a starter Ecommerce property – be it an Amazon or Shopify store – and use it as a learning platform. This approach allows newcomers to familiarize themselves with the nuances of Ecommerce without taking unnecessary risks.

2. Join the Community: Networking and learning from others in the industry are invaluable. Platforms like Flippa provide a wealth of resources and opportunities for aspiring Ecommerce entrepreneurs. Engaging with the community, seeking advice, and learning from experienced sellers can significantly enhance one’s chances of success.

3. Follow the Trends: Stay abreast of industry trends and market dynamics. Understanding how macroeconomic factors influence consumer behavior and Ecommerce trends is crucial for making informed business decisions. Whether it’s through industry publications, online forums, or networking events, staying informed ensures adaptability and relevance in a rapidly evolving landscape.

Advice for Future Entrepreneurs

Mario’s advice underscores the importance of strategic planning, consistency, and adaptability in Ecommerce endeavors. Whether you’re a seasoned veteran or a newcomer to the field, embracing these principles can pave the way for a successful Ecommerce journey.

In conclusion, as Mario aptly puts it, “Innovation comes from adopting technology.” By leveraging available resources, staying connected with the community, and staying attuned to market trends, aspiring entrepreneurs can carve out their niche in the dynamic world of Ecommerce.

Mario’s insights offer a roadmap for those venturing into Ecommerce, reminding us that success in this ever-changing landscape requires not only technical know-how but also strategic vision and adaptability. As the Ecommerce ecosystem continues to evolve, opportunities abound for those willing to embrace the challenge.

While still in high school Nolan established a six-figure e-commerce brand – a remarkable achievement that set him up a future of online business ownership. Alongside Sean, Nolan ventured into the realm of digital marketing, providing invaluable assistance to small to medium-sized direct-to-consumer (DTC) brands in navigating the intricacies of paid advertising.

Their entrepreneurial drive soon led Nolan and Sean building their own e-commerce brands.   Among these ventures was their notable creation, Tags Mate, which would ultimately become their biggest success. Identifying a gap in the market surrounding trackable accessories, particularly in the wake of the release of products like the AirTag, Nolan and Sean capitalized on this opportunity by combining innovative design with cutting-edge technology.

Their journey to success was not without its challenges, from sleepless nights and moments of doubt, however, their shared passion for online business and entrepreneurial drive to build a thriving e-commerce business. They founded and sold the business within 2 years, growing the business to over $2.1M in annual revenue at its peak.

Central to their success was their astute understanding of the e-commerce landscape. As the business flourished, Nolan and Sean recognized the importance of strategic planning, laying the groundwork for a seamless transition when the time came to exit. 

Reflecting on their journey, Nolan and Sean impart valuable insights garnered from their experiences in the e-commerce arena. From the importance of content creation to the leveraging of AI and technology, their advice serves as an insightful guide for aspiring entrepreneurs venturing into the ever-evolving world of online business.

Their story serves as a testament to the boundless opportunities that abound in the realm of e-commerce—a realm where dedication, innovation, and a willingness to adapt pave the way for success. As Nolan and Sean bid farewell to one chapter of their entrepreneurial odyssey, they eagerly anticipate the adventures that lie ahead, armed with the invaluable lessons gleaned from their remarkable journey.

Spencer Patterson, a former New Yorker turned South Carolina resident, shares insights into his entrepreneurial journey, shedding light on the challenges, triumphs, and decisions that shaped his path.

From Financial Broker to Online Innovator

Spencer’s journey into the realm of entrepreneurship wasn’t a conventional one. With a background in financial services, he gleaned invaluable insights from high net worth clients, discovering that true wealth often stemmed from ownership rather than advisory roles. Motivated by this realization, Spencer embarked on a quest to transition from advisor to business ownership.

Seizing Opportunity: Building a SaaS Platform

The start of Spencer’s entrepreneurial venture emerged from a critical observation—a gap in the market for intuitive and affordable content creator paywall systems. Armed with determination and a clear vision, Spencer set out to bridge this gap, leveraging his bootstrap mindset and strategic networking to grow his SaaS platform.

Scaling Against the Odds: Overcoming Challenges

Despite lacking technical coding skills, Spencer’s determination fueled the growth of his SaaS platform. Through strategic hiring, relentless networking, and innovative marketing tactics, he cultivated a thriving ecosystem, empowering content creators while navigating the complexities of scaling without substantial upfront capital.

Navigating the Sale: A Seamless Experience with Flippa

As Spencer’s SaaS platform grew, the prospect of starting a family prompted Spencer to reassess his journey, leading to the decision to seek an exit. 

Enter Flippa—the #1 M&A platform that offered Spencer the white-glove service he sought. From listing creation to post-sale transition, Flippa facilitated a seamless selling process, alleviating the burdens of M&A negotiations and allowing Spencer to focus on his next endeavors.

Spencer’s Vision for the Future

With a seven-figure exit under his belt, Spencer’s entrepreneurial journey continues to evolve. As he embraces fatherhood and balances new ventures, his focus remains on empowering fellow bootstrap founders, guiding them towards transformative exits and shaping the landscape of tomorrow’s innovation.

Conclusion

Spencer Patterson’s journey epitomizes the essence of entrepreneurship—resilience, vision, and determination. From humble beginnings to multi-million-dollar exits, his story serves as inspiration for aspiring entrepreneurs worldwide, a testament to the boundless possibilities that await those willing to embark on the path less traveled.

Humans of Flippa Experts

Sophie Howard: With a track record of building, scaling, and selling six and seven-figure online businesses, Sophie Howard is a force to be reckoned with in the entrepreneurial sphere. As the founder of Aspiring Entrepreneurs, she not only shares her expertise but actively participates as a buyer on platforms like Flippa. Sophie emphasizes the importance of recognizing when it’s the right time to sell, especially if you’re not inclined towards the optimization phase of business growth. For her, the thrill lies in the creative aspect of entrepreneurship, and selling allows her to pass the baton to someone who can maximize the business’s potential.

Neil Bostick: As the CEO of FIH.com, Neil Bostick specializes in sell-side M&A services for online businesses, particularly in the SaaS, digital media, and e-commerce sectors. With a wealth of experience in negotiating win-win deals, Neil underscores the importance of packaging businesses effectively and determining appropriate valuations. His approach focuses on facilitating seamless transitions for business owners, ensuring a smooth journey from listing to sale.

Ben Zogby: Ben Zogby’s entrepreneurial journey began with a side hustle that evolved into HighStrike, an online educational stock trading business. After successfully selling the business for $1.8 million on Flippa, Ben founded ExitFrog to assist fellow entrepreneurs in achieving profitable exits. For Ben, the decision to sell was driven by a desire to refocus on the creative aspects of entrepreneurship while still contributing as a consultant to the business post-sale. He highlights the liberating aspect of selling, which not only provides financial rewards but also grants the freedom to pursue new ventures and projects.

Through their diverse experiences and expertise, Sophie, Neil, and Ben offer invaluable insights into the dynamics of selling online businesses. From knowing when it’s the right time to sell to navigating negotiations and transitioning post-sale, their collective wisdom serves as a guiding light for aspiring entrepreneurs and seasoned business owners alike.

Deciding When to Sell

In the dynamic world of entrepreneurship, knowing when to sell a business can be a pivotal decision with far-reaching implications. Ben Zogby, Sophie Howard, and Neil Bostick share their perspectives on this crucial aspect of the entrepreneurial journey, shedding light on the complexities involved and the factors that influence their decisions.

Ben reflects on the fluid nature of determining the right time to sell a business, likening it to trading stocks or investing in companies. He emphasizes the importance of assessing opportunity costs and evaluating whether one’s time is being utilized effectively and in alignment with personal preferences. For Ben, the tipping point occurs when the balance shifts towards feeling constrained or unsatisfied with the tasks at hand. While financial considerations are significant, operational dynamics and personal fulfillment play a pivotal role in his decision-making process.

Sophie recounts her experience selling her Amazon business, a milestone that marked one of the first significant Amazon sales at the time. Despite being relatively early in her entrepreneurial journey, Sophie recognized the value of her business after completing her first year’s tax returns. Motivated by personal circumstances, including having a young family and a mortgage, she swiftly acted upon receiving an offer and used the proceeds to pay off her mortgage entirely. Sophie’s journey underscores the importance of seizing opportunities when they arise and leveraging them to achieve personal financial goals.

Neil provides insights into the typical timeframe and process involved in selling businesses through brokerage services. While congratulating Sophie on her swift sale, Neil outlines a more traditional timeline, which typically spans several months. From initial valuation and contract negotiation to due diligence and finalizing the deal, the process involves meticulous attention to detail and thorough examination of the business’s operations and potential growth opportunities. Neil acknowledges the complexities that may arise during the process, from uncovering unforeseen challenges to addressing potential concerns raised by prospective buyers.

Valuing and Pricing Your Business

Ben reflects on his experience with HighStrike, an online educational stock trading business, which saw an initial valuation of $1.3 million before ultimately selling for $1.8 million. He attributes the success of the sale to market trends and strategic positioning, highlighting the importance of being in the right place at the right time. Ben underscores the significance of identifying emerging markets and anticipating future growth trajectories, which can significantly impact a business’s valuation. While financial metrics play a role, Ben emphasizes the value of being attuned to market dynamics and leveraging trends to drive valuation.

Neil offers insights into the psychology behind business valuation, emphasizing the role of perceived risk and potential returns in determining price. He distinguishes between businesses with one-time revenue streams, such as traditional e-commerce or digital media, and those with recurring revenue models, like SaaS businesses. Neil explains that while businesses with one-time revenue streams are typically valued based on profit calculations and multiples, SaaS businesses command higher valuations due to their scalability and predictable revenue streams. He highlights the importance of understanding buyer psychology and aligning valuation with perceived value and future growth potential.

Sophie shares her approach to finding the right buyer for her businesses, emphasizing the importance of screening potential buyers and prioritizing cash transactions. Drawing from her experience in the self-publishing industry, Sophie seeks buyers who can complement her business’s strengths and leverage synergies to drive growth. She emphasizes the value of strategic acquisitions and identifies high-net-worth individuals with related businesses as ideal buyers. Sophie’s strategy involves targeting buyers who can appreciate the strategic value of her business and are willing to pay a premium for the potential synergies and growth opportunities it offers.

Advice to Business Owners Looking to Sell: Maximise Business Value

As entrepreneurs navigate the journey of building and growing their businesses, the question of maximizing value and preparing for a potential sale looms large. Sophie Howard, Ben Zogby, and Neil Bostick offer invaluable advice to business owners seeking to enhance their business’s value and position it for a successful sale.

Sophie emphasizes the importance of productizing services and automating payments to create sticky, recurring revenue streams. She advises business owners to focus on introducing new features and outlining a clear growth plan to appeal to potential buyers. Sophie underscores the significance of selling at the right time, cautioning against waiting too long and missing out on optimal selling conditions.

Ben advocates for proactively structuring businesses as sellable assets, even if selling isn’t an immediate consideration. He highlights the value of systemizing processes and minimizing the incremental costs associated with acquiring new customers. Ben emphasizes the importance of recurring revenue and recommends adopting a subscription-based model to attract potential buyers and maximize scalability.

Neil echoes the sentiment of building a good business as the key to making it sellable. He emphasizes the distinction between lifestyle businesses and venture-backed startups, noting that both paths can lead to successful exits. Neil underscores the importance of increasing recurring revenue across various business models, from e-commerce to SaaS, as a fundamental strategy for enhancing value and attracting potential buyers.

In conclusion, the journey of selling an online business is multifaceted, requiring careful consideration, strategic planning, and a dash of entrepreneurial spirit. As echoed by Sophie, Neil, and Ben, it’s not just about closing a deal; it’s about embarking on a new chapter of growth, innovation, and possibility. So whether you’re contemplating an exit strategy or exploring new horizons, remember that the world of online entrepreneurship is filled with endless opportunities for those bold enough to seize them.

In this episode of Humans of Flippa we are joined by three experts and cover diverse topics including:

• Buying a business to scale it or to hold?
• Is buying a business during a recession a bold move or a strategic one?
• Purchasing exactly what you know
• How to discover and assess businesses deals
• How to assess deals, and much more! 

Flippa’s intelligent valuations engine is the industry’s most accurate tool, taking into consideration thousands of sales and live buyer demand. Find out what your business is worth with our free valuation tool and plan your next move.

Get a FREE Valuation Now >

Meet our Experts

Codie Sanchez | Contrarian Thinking 

Codie Sanchez is a reformed journalist, turned institutional investor to cannabis investor and adviser, to now Founder at Contrarian Thinking and Cofounder of Unconventional Acquisitions. She thrives on helping people think critically, and cashflow unconventionally.

Sieva Kozinsky | Enduring Ventures

Sieva Kozinsky is an entrepreneur and investor. He’s raised over $10M+ in venture capital and scaled his businesses to tens of millions of users. Today he is the Co-Founder of Enduring Ventures which buys beautiful businesses and holds them forever.

James Camp | Nano Flips

James Camp is a Digital Strategist, Advisor and Founder of Nano Flips, a weekly newsletter which helps people buy, improve and flip online businesses for a profit. A true entrepreneur at heart, James built a successful strategy consulting firm, then exit it at the right time to start his own business adventure.

Buying an Online Business: episode breakdown

Short for time? We’ve narrowed down the most important moments of this episode, so you can skip right where you need to.

• 01:13 – 05:25: Introduction
• 05:26 – 11:01: Buying to scale/exit VS buying to hold
• 11:02 – 16:06: Should businesses be bought during a recession?
• 16:07 – 19:43: Buying what you know
• 19:44 – 31:50: How to discover and assess business deals
• 31:51 – 44:06: Assessing and adding value to a business
• 44:07 – 52:28: How to stand out from the crowd

Ready to own your own business? Find your perfect match on Flippa.

Check out more episodes here.

In this episode of Humans of Flippa we are joined by four experts and cover diverse topics including:

• How to generate organic traffic to your website
• How to increase the value of your website and generate more revenue
• What sellers need to focus on when preparing to sell
• What buyers need to look out for, and much more! 

Flippa’s intelligent valuations engine is the industry’s most accurate tool, taking into consideration thousands of sales and live buyer demand. Find out what your business is worth with our free valuation tool and plan your next move.

Get a FREE Valuation Now >

Meet our Masterminds

Diana Richardson | Social Media & Community Manager | Semrush

Diana Richardson is the Social Media & Community Manager at Semrush, a widely used platform for SEO, PPC, SMM, and Keyword research. With over 15 years of experience Diana has a wealth of knowledge when it comes to SEO, PPC, Social and Email Marketing.

Nik Ranger | Senior Technical SEO Specialist | Dejan Marketing

Nik Ranger is an award-winning Senior Technical SEO Specialist and the head of SEO Collective Australia — an educational organisation that shares the latest in search trends, algorithm updates and transformative strategies. Published in two books,  Nik was ranked #87 of 202 Top SEO Experts You Should Be Following by Search Engine Journal.

Nick Brogden | Founder and SEO Lead | Earned Media

Nick Brodgen is the Founder at Earned Media. He’s a content optimisation specialist who has guest lectured on the topic of content marketing at the University of Technology of Sydney. Nick is a regular marketing expert for the Network 7 TV show Kochie Business Builder, and is a respected author in the digital media industry.

Mike van der Heijden | Founder | Portal Ventures

Mike van der Heijden is a veteran of the digital marketing industry and founder of Portal Ventures, a hybrid SEO/Consultancy specialising in helping online marketplaces generate revenue through effective and scalable search engine optimisation strategies.

The Value of SEO when Buying and Selling an Online Business: episode breakdown

Short for time? We’ve narrowed down the most important moments of this episode, so you can skip right where you need to.

• 00:00 – 02:24: Introduction
• 02:25 – 10:26: Ways SEO can increase or decrease value of your website
• 10:27 – 22:43: How SEO impacts your business exit
• 22:44 – 28:05: Factors buyers should be aware of when they purchase an asset
• 28:06 – 33:30: SEO vs Paid Marketing
• 33:31 – 38:05: The economics of paid search
• 38:06 – 41:57: Top SEO tips

Ready to own your own business? Find your perfect match on Flippa.

Meet Max Fontaine, a driven and ambitious entrepreneur who turned his passion for dropshipping and Ecommerce into a successful full-time business. 

After graduating from college in Nashville, Max decided to stick around and kick-start his professional career. His first job landed him in the finance industry, working as a stock analyst at a small financial firm. Max quickly realized that the role didn’t offer the excitement and challenges he sought. That’s when he decided to explore the world of Ecommerce.

The Beginning of It All

Max began creating a few dropshipping websites in various niches. He single-handedly managed every aspect of his business, from product design to marketing and customer service. His hard work and dedication paid off, as some of these sites achieved remarkable success and were sold back in the day. The income generated allowed Max to quit his finance job and pursue Ecommerce full-time.

While growing his expertise in the Ecommerce industry, Max recognized the importance of advertising and marketing in driving sales. Motivated to further enhance his skills, he took on a role as a Senior Paid Search analyst at a local advertising agency.

The job gave him the opportunity to master the secrets of effective advertising and elevated his marketing expertise. After a year of valuable industry knowledge, Max decided to quit the job and launch two, brand-new Ecommerce stores.

The Launch of Two Successful Ecommerce Stores

The first store, which has been in operation for three years, is a jewelry dropshipping store boasting an impressive $1 million in sales. The second store, specializing in unique watch bands for Fitbit and Apple Watch, has already made 10,000 orders in just under two years. 

To maximize the reach of his stores, Max has been using various advertising channels strategically. Smartly executed ads on Google play a significant role, targeting diverse objectives specific to each store. He leverages Facebook ads for remarketing purposes, and utilizes SMS and email channels to ensure efficient customer acquisition.

Planning an Exit with Flippa

As Max’s businesses thrived, he made the decision to sell both of the stores, and he turned to Flippa to do so. The experience on Flippa proved to be exceptional, as Max found the platform easy to use and secure. 

‘Flippa makes it easy to list a website, step by step, verifying everything.’ 

Max confirmed Flippa creates a trustworthy environment by verifying individuals, both buyers and sellers, and by making non-disclosure agreements (NDAs) available to sellers.

‘I like that you can verify everyone on Flippa, both buyers and sellers’ , said Max.

Within days after his businesses were listed on the marketplace, Max started receiving offers. Although the first buyer failed to complete the due diligence process within the agreed timeframe, Max quickly found another buyer and successfully sold his businesses in just over two weeks.

The Experience with Flippa

Throughout the selling process, Max was assisted by Flippa certified M&A Advisor Nick Carlucci: his support and guidance proved instrumental in the sale process.

While Max doesn’t have any concrete plans for the immediate future, he intends to focus on new projects involving his recently acquired house. Max’s passion for Ecommerce remains strong, and with his knowledge and experience, he plans to venture back into the industry soon.

The Flippa sale also opened new doors for Max: his expertise and experience as a one-man company, juggling all the aspects of his businesses, led to him being hired as a consultant for other ecommerce business owners, providing assistance with coding, search ads and website building. 

Watch more Humans of Flippa stories here.

Read the full transcript of the conversation below.

Max’s Entrepreneurial Journey

Blake Hutchison: Hi everyone, and welcome to another episode of Humans of Flippa. It’s a series of videos with some of our favorite customers from around the world. Today we’re joined by Max Fontaine, who’s been with Flippa for some time, has had some success selling his businesses on Flippa, and so we’re going to get to get to know Max today as part of another episode of Humans of Flippa. Thanks for joining us, Max. How are you today?

Max Fontaine: Hey, I’m doing pretty good, Blake. Glad to be here.

Blake Hutchison: Thanks very much for joining us. For everyone’s benefit and setting the context, where are you in the world right now?

Max Fontaine: I’m in Knoxville, Tennessee. Went to college down there at University of Tennessee and just stuck around afterwards.

Blake Hutchison: Fantastic. Stuck around afterwards. For the benefit of all of the listeners and watches out there, your main play right now is Ecommerce. Is that something that you got into straight after college? Can you tell us the story and how you got to be an Ecommerce entrepreneur or the Ecommerce entrepreneur you are today?

Max Fontaine: Sure. The first job I had out of college, I was actually very interested in finance and started working at this small financial firm as a stock analyst. Believe it or not, I had a lot of free time, which you don’t hear that often in the industry, but our boss just didn’t really give us enough to do. So I was like, “How can I maximize my time here?” I remember a friend in college talking about Ecommerce and dropshipping and all of that, and so I looked into it, watched countless videos and read books and stuff like that, and ended up creating a few sites. Of course, the first couple ones were duds because I didn’t really know what I was doing, but eventually I created some that were successful enough to be able to quit the job.

Blake Hutchison: Tell us about the duds quickly. What were some of the categories that you had the duds in?

Max Fontaine: Yeah, everything you can imagine. It was different games that were popular at the time. A good lesson to learn, I was young right out of college. I probably didn’t think this all the way through. My first two successful sites were one was selling PlayersUnknown’s Battleground merchandise and the other one was Roblox. Don’t do that because you will get cease and desist, eventually. That lasted for a while and it was great and all until I got cease and desist and I was like, “Okay, so I’ve going to have to create websites that are my own brand, obviously.” To anyone that’s thinking about being an entrepreneur and selling any kind of merchandise, it’s got to be your own and you can’t do anything like that or you will get cease and desist.

But what was good about the whole thing is that I actually got a ton of experience in advertising during that time because as learning and watching videos, I have to do Google Ads, Microsoft ads, Facebook ads, all that. After those websites were gone, I ended up getting a job as a senior paid search analyst at an advertising firm. That was even great because it was like a free education except I was obviously getting paid for it too. I did that for about a year, and I built the websites that I have now that I’m selling, which is the Moissanite store and the Apple Watch band store.

Max’s Two Big Projects

Blake Hutchison:  That’s awesome. From finance to a couple of duds, as you put it, some learning around not necessarily taking over or launching brands that have clear copyright, as you said. The cease and desist letters would’ve been quite nerve-wracking for a young guy, I would imagine. Now you’ve got these successful sites and you’re currently going through the sales process on Flippa. Let’s set the scene a little bit though. How old are those sites? Give us some sense of the financial performance of those sites. Set the scene before we get to telling people how the sales process is actually going.

Max Fontaine: The Moissanite store, which is a popular diamond alternative by the way, sells Moissanite jewelry. That store is around three years old, almost three years exactly. I remember the first sale was on January 1st and I was like, “Oh, that’s great for tax reasons, especially.” It’s about three years old exactly. It’s done about 1.7 million in sales, almost 4,000 some orders. Then the watch band store, which sells Fitbit bands and Apple Watch bands, that’s about two years old. It’s done a little over 10,000 orders and probably around 400 some thousand dollars in sales. I can’t remember the exact number, but somewhere.

Blake Hutchison: Max, how do you pick those two categories? How do you suddenly land on those two? The success is there for everyone to see. You’ve got a two-year-old site, a three-year-old site. Both are doing very, very well. But what was it about those categories that drew you to them?

Max Fontaine: With the bands, both are dropshipping stores and Fitbit has been around obviously for a long time, and so has Apple Watches. When those have been around for a long time, you have a very wide selection to choose from, unlike AliExpress, for instance. And not just that, but when it’s that old and that long and been around, like that store, for instance, it dropships, but only from within the United States. Everything’s actually USPS shipping. A lot of people don’t even know they can do that on AliExpress. You don’t have to ship it from China. It can be from… You can select ship from the US. And so the fact that I was able to ship those from within the US and have a huge selection, that was part of it. What I liked about jewelry and bands is that you can have unique designs to where if I was selling something incredibly basic, I remember when the pandemic happened, people kept wanting to sell masks and create stores for sanitizer and stuff like that.

I’m like, “You’re not going to be able to compete. You’re just not.” But if people see a specific, unique piece of jewelry that they like or a specific band that they like, they’re not necessarily going to be like, “I can re-look up this exact band with this colorful design on Amazon.” If they see it and they happen to really like it, they’re going to buy it right then because they don’t know where else they’re going to see it per se. That’s what I really like about fashion and that kind of industry. It all just ties together. When it comes to the Moissanite, I liked that it was a higher margin asset. So even though there’s not so many options to ship from within the United States because the margins are so high with the average order value of 400 some dollars, you’re able to select FedEx IP or DHL shipping because that extra $20 isn’t a big deal. Even though both stores are AliExpress dropshipping stores, it’s not your typical, somebody bought some $14 piece of garbage and then has to wait three weeks for it to arrive. Both of them have their own unique way of working out well.

Max’s Customer Acquisition Strategies

Blake Hutchison: Super good learnings there, I think. I mean product range is a really good point from which to consider dropshipping. I think you’ve pointed that out really well. Love businesses that have high average order value, as you just said. It’s a function of margins, but it’s also a function of you being able to get the product to the customer and them willing to pay a premium price to get it to themselves is a really key piece. I often find that really good operators, like yourself, tend to make this sound a lot easier than it really is. Let’s talk a little bit about customer acquisition a little bit. How do you acquire the customer? What platforms have you used, if you don’t mind getting into some details around how much it costs you would acquire the customer and even the creative process you’ve gone through to refine and get good bang for buck or good ROAS, return on ad spend?

Max Fontaine: For the band store for instance, it’s almost entirely Microsoft Ads and Google Ads. By that, it’s just mainly search, not even display or anything like that, just search ads, which of course, historically, have the highest return on ad spend, the most valuable clicks. I think maybe in the past, in earlier days, you might have been able to be really profitable on Facebook and stuff like that, but recently, or not even that recently, maybe the last two, three years, Facebook has become very expensive advertising wise to where it would be very difficult to become very profitable selling such an item on Facebook, especially when the item’s only $24 and it costs you $8. You would have to have a really low cost per sale. For that, I just do the Microsoft and the Google, which of course of all advertising mediums as far as I know, have the highest return on ad spend.

With the Moissanite store, it’s a little more difficult because of just the way advertising works. When you’re doing less expensive items like bands, it’s able to easily get all that conversion data really quickly and within a 30 day period. Those advertising platforms are able to really become efficient on their own without you having to do much, as long as you set the campaign up correctly in the first place. Whereas with Moissanite and these higher cost of sale items, you need to have, and of course Google will even say, and it goes to stand for Microsoft, at least 30 sales within the last 30-day period because they only take that last 30 day period. When all of these sales are split across Facebook, Google, and Microsoft, that’s not enough conversion data and it’ll start very skewing things right after 30 days because one ad group just happened to get four sales, something like that. And so for those, I actually pitted two different types of advertising against each other.

One was return on ad spend, the classic what you’re supposed to do on Google. And then a different type was essentially, Google Analytics made a couple custom conversions. So whether it was one was giving an email, one was staying on the website for two minutes, four minutes, and then 10 minutes. I said for each one to count as a conversion. And then I put that into Google Ads and I let it… Because at that rate, it’s now getting hundreds of conversions a day. So if somebody stays the two, then the six, then the 10, it gives that more importance and et cetera, et cetera. After that, I got to see my bounce rate drop exponentially. The time on the website became almost four minutes per visitor. You were actually making more money not setting your Google Ads on target ROAS, but on these custom conversion events. For the Moissanite it was a bit more complicated. Facebook is still good to use. I do use the Facebook for the Moissanite store, but for remarketing purposes. It’s great for remarketing.

Then I also have a kind of cold campaign on Facebook where it counts every cart and person that gets to check out as a conversion. Then it’s able to get a lot more conversion data than a sale per se. That’s really good for getting people into the advertising funnel and remarketing because that’s down to a $2.50 cents person that gets the cart or checkout. And then when you get them in that, they’re getting hit with the display remarketing, they’re getting hit with the Facebook remarketing and then of course, I have a pretty extensive SMS and email remarketing campaigns that are automated and set up. So it’s really just about finding the most efficient ways to spend your ad money. Of course, that takes so much time to do. Anyone can set up ads, but to set them up correctly is a whole different deal.

A One-Man Show

Blake Hutchison: Often people misunderstand the importance of having data to feed the engine right. I think you’ve pointed that out so well. You can have few conversions and the data engine or the algorithm’s not going to be as helpful to you, or you can change up the way you think about your conversion data. In your case, time on site, that’s a fantastic way to think about it from an Ecommerce optimization standpoint. Sounds like that proved to be very meritorious for you. Do you do that yourself, Max, or do you have somebody else helping you with that?

Max Fontaine: I just do it all myself.

Blake Hutchison: Just so everyone understands, you’ve got these two awesome businesses. Is it literally just you? What does the structure of the organization look like?

Max Fontaine: It’s just me. I did the websites. I created all the content. I did all the SEO optimization. I did all the ads, which of course I have a lot of experience at the ads, specifically. I’ve done all of it from vetting the suppliers, which was really important, to uploading all the products, which took forever and I definitely should have outsourced in retrospect, to a lot of other things. Actually when selling the sites, I got a lot of interesting conversations from buyers because they were like, “Wait, you’re doing this all yourself? You don’t have this or that?” I’m like, “Well, I’ve thought about it, but it just sounds like a lot of work, for instance, to hire somebody to do customer service.”

I was like, because in my mind, I’d have to literally interview somebody at my house, do all this kind of stuff. Then little did I know, it’s incredibly easy to even hire people in some of these other countries. The largest businesses growing in those countries, or the largest industries, I’d say, is customer service. That’s outsourced from here. And so in retrospect, after talking to so many people, even on Flippa, I was like, I can’t believe I’ve been doing my own customer service this whole time, stuff like that. The opportunity cost is insane, but whatever. Lesson learned.

Blake Hutchison: Lesson learned. Fantastic learning. I’m glad you have come to that realization. Certainly you can get some good, low cost resource to assist you with customer service and do a really good job. You’ve mentioned they’re two and three years old and it sounds like you are essentially selling them as a bundle. Just talk us through the exit process. Why have you decided to sell in the first place?

Max Fontaine: Well, at this point, the websites were largely a means to an end, a.k.a. to not have to work at my corporate job that I was working at to be able, to have enough money to not worry about money. So they pretty much fulfilled that process. They’ve done their job. I really do like websites. I wanted to make sure they’re going to a good buyer. If you look at the stats of the websites, everything’s only continued upwards. I mean, yeah, especially with the jewelry site, just even returning customer rate and all of that makes it just easier to be profitable every month and year. But they did their job. I’ve saved up quite a lot of money from running the sites. Then after I sell them, just that influx of cash as well will be enough money to not have to worry about working and I can focus more on little things that I’m interested in, stuff like that.

Delving Deeper into the Exit Process

Blake Hutchison: Fantastic. You decide to sell, you’ve listed them on Flippa. Tell us about that sales process. How has that been and what learnings have you got for our audience out there?

Max Fontaine: The sale process is fairly easy. Flippa makes it easy to list the website. They go step by step, and I like that you guys verify everything. It makes it easier for the customer too, so I don’t have to constantly prove to them everything. I really like the fact that you have to verify your identity on Flippa. I remember I used to sell some very low level random, like I’d just make a site, dropshipping site, run it for a month or two and then sell it on Shopify Exchange, which is no longer around, I believe, but sites like that. Half the inquiries were just scams.

There was no verification process for the buyers or anything like that. It would just be like, “Hey, we’ll send you a check for this much money. Just give us the assets and everything.” It was always a scam. The checks would always bounce and stuff like that. So I like that you can verify everybody on Flippa, both the buyers and the sellers. I also like the fact that you could do the NDA. That just made me feel a bit more secure. But yeah, it’s been a nice process. Everyone’s been friendly. It didn’t really take that long to sell the websites at all.

Blake Hutchison: How long, Max, are we talking?

Max Fontaine: The first buyer that ended up not buying it because they didn’t finish within the 45 day process, but had they bought it, it would’ve been from the time the websites were posted, it was probably two weeks till I had a buyer and actually had plenty of buyers before them, so it probably could have been sold within a week. But the most of them were wanting to do financing or something like that over time. I would be open to financing, but you’d have to put a very large percentage down, otherwise I was just like, “I don’t know you. I don’t know if you’re going to run the business into the ground.”

So I was really just looking for a cash offer. Also, because like I said, I want time to do my own stuff now. I know if I’m involved at all with the website, I’m going to care too much to not be involved and so I was looking for cash offers. So the first person that was willing to pay cash only took two weeks. They didn’t finish in the 45 day process, which is fine. And so essentially immediately after that was over, I already had another buyer.

Max Fontaine: I just sold it to them and they’re doing cash as well, so it worked out really well.

The Timeline of an Exit

Blake Hutchison: That’s good. You mentioned that you’d had a few buyers come in before that initial cash buyer. That cash buyer didn’t get the job done within the 45 day period. Just explain that, for all of the listeners out there, was a LOI, was it a letter of intent with a 45 day due diligence window?

Max Fontaine: Exactly. We did LOI, 45 day due diligence. The 45 days came to an end. Of course, people at Flippa were really helpful. I was working with a guy named Nick, and he was contacting them as well, “All right, it’s time to do this,” blah, blah. They just didn’t… They weren’t ready. They didn’t have it all together. They were like, “We just need more time. We still fully intend to buy.” They were saying, “We intend to buy still, we just need more time.” But I felt like they were just keeping me around to eventually buy… Maybe they didn’t have the cash on hand and they just didn’t want to lose the sites to somebody else, so maybe they were just trying to get me around, but they just couldn’t finish it in time.

So after the 45 day thing was up, the websites technically went back for sale because the LOI was over. Then I just got a different cash buyer from somebody that was honestly nicer and cooler anyways, in my opinion, willing to pay cash. So I was just like, “Okay, these guys couldn’t pay me on time, so it’ll go to you.”

Blake Hutchison: Fantastic to hear. And as much as you’re willing to share, obviously we spoke just before our session here, but am I right in saying that it’s one buyer buying both sites?

Max Fontaine: Right. They were for up for sale separately, but if somebody was interested in one side, I wouldn’t mention that I also had the other one for sale. If they’re willing to buy both, of course I’d offer some kind of deal. They were initially only looking at the Moissanite store, but then the more they looked at the other store, they really liked it too. They ended up just making an offer on both, which makes it easier for me and it actually makes it easier for them too because you only have to go through the process once instead of twice.

The Exit Process with Flippa

Blake Hutchison: That’s fantastic. And has there been anything about the exit process which has caught you by surprise?

Max Fontaine: I don’t think so, no. I mean, it’s all reasonable. The due diligence is completely reasonable, and especially as long as both parties are really open with everything and set actual dates and this and that. It’s a pretty smooth process.

Blake Hutchison: Fantastic. For those who have never thought about listing a business on Flippa, once you are into that deal room experience where all the buyers are then coming in and having a chat and talking to you, is there, I guess, some wisdom around how you work through the buyer base? Did you have assistance from a Flippa staff member? How did that process play out for you?

Max Fontaine: There was quite a lot of chat. There was a lot of different buyers or people that are, even if they’re not buyers, interested at the very least, hitting you up all the time. It’s honestly a little overwhelming because you have so many different types of offers and you’re writing them all down, which of course is a good problem to have. Don’t get me wrong. But yeah, I did have Nick, again, and I believe he is in Austin, Texas. Nice guy. He was helping me through the whole thing. Especially with those last buyers that ended up pulling out, Nick was really helpful in calling them and getting answers out to them. When they weren’t interested, helping me be like, “Okay, let’s move on,” stuff like that, so it was helpful.

Max’s Future Plans

Blake Hutchison: Fantastic. You’re in the process of that exit right now. You’re about to have your hands on, I guess, a good amount of money, which is fantastic. Congratulations. So what does that mean now for Max? What do you do? Do you take some time off? Do you continue the entrepreneurial journey? Do you go and take a corporate job as an Ecommerce exec? What does it look like?

Max Fontaine: Well, I might. You would think I would have a much more concrete plan. However, I’m probably going to get into a couple things. I just bought a house. Me and my wife live here now and there’s a lot of things I want to do. I want to build a deck out back. I want to do a lot of landscaping. So I’ll probably do stuff that I didn’t quite have time for beforehand. I’m going to do some projects. I’m going to get into some kind of hobbies like Unreal Engine 5, some game making engines, stuff like that. I probably, I might get back into Ecommerce. Honestly, I probably will eventually, especially now that I have so much more knowledge.

Even now looking back on the website’s already made, I mean, they’re phenomenal websites, but if I were to go back into it, I probably would’ve done things slightly differently. It would almost be kind of a waste of everything I’ve learned if I didn’t go back into Ecommerce because I’ve put so much time and mental energy into it. If I did go back into it, I would definitely do things like outsource the uploading of products and customer service and just worry more about the complicated aspects of the website and business and ads. I very well might go back into Ecommerce. I would go into different businesses. I probably wouldn’t do a band store or Moissanite again. I would do something else. Also just for the fact that I feel like that’d be kind of scummy to do to my current buyer, so I would do something else.

I’ll probably eventually do that. One cool thing that’s come out of the Flippa selling process is I did get some consulting gigs, which I’m not even a consultant, but people, after talking to them for an hour on Moissanite store and an hour on Axios Bands and just being like, “You did the entire thing?” A lot of people are hiring me on, whether it’s to help them with their ads or how the drop shipping business works as a whole, because it’s easy to get somebody that only knows ads or only knows SEO or only knows how to do coding stuff in Shopify or this or that, but I think I can at least bring to these people a whole, how it all fits together real properly aspect and suppliers and what I look for on AliExpress, et cetera, et cetera. So I’ve gotten some consulting gigs that it’s great because they pay phenomenally and all you have to do is talk to them for an hour here and there and help them with this and that. So maybe I’ll keep going into consulting or something like that. Who knows?

Blake Hutchison: Well look, Max, I mean, as you’ve just figured out, I mean, Flippa’s a huge network of buyers, huge network of entrepreneurs and owners, and you each have such extraordinary skill that you bring to the table. Some of that you don’t even realize how rare it is and how sought after it is. I guess you’ve discovered that now through the Flippa platform. So both the combination of an exit and a consultancy gig, that’s a pretty good story, I think.

Max Fontaine: Yes. I’m happy with it. A lot of things I could do now, so we’ll see.

Blake Hutchison: Well, ladies and gentlemen, that was another episode of Humans of Flippa. We had Max Fontaine with us today, and he has just exited both a, I hope I get this right, Max, a wristbands Fitbit and Apple Watch band Store, as well as a… How do I pronounce this? Moissanite Ecommerce dropshipping store. Had some success with the Flippa platform and also was able to pick up a consulting gig in the journey as well. Max, thank you so much for joining us on another episode of Humans of Flippa.

Max Fontaine: Thanks, Blake. It’s been a pleasure.

Rod Gunn was looking for a way to pivot his life-long career in the oil and gas industry: that’s when he found Flippa. 

Three years ago, the industry he always worked in started to slow down and Rod was wondering what he could do next. That’s when his son came up with the idea of Rod becoming a digital entrepreneur… 

Rod acquired and sold numerous small businesses on Flippa.

‘Having a resource like Flippa, that has all these businesses ready to be purchased, was a great fit for me.’ 

He also made a bigger investment on Flippa, and purchased a social media promotion agency. Whether it was musicians trying to make their music popular, random people wanting more likes and followers, or brands wanting to establish social media presence, the agency helped people, profiles and pages to become viral and gain followers.

Rod didn’t know much about social media at first, but he successfully managed to scale and optimize the business. He worked tirelessly to offer a better product: packages and bundles were added to the offering, the website was rebuilt, and Rod introduced a focus on customer service. 

The business was booming at this stage, but Rod’s previous career also started to get back on track. That’s when he knew it was time to sell, and he turned to Flippa.

‘I knew Flippa, I knew the platform, and what it has to offer. When the thought process came up, Flippa was on my mind.’

Rod spoke with Maliha, one of the Advisors at Flippa, and together they scoped the perfect exit strategy, from the initial valuation to finding the right buyer.

“Anytime we got on the phone with a Flippa team member, it was a very positive experience. The team is engaged, and active in the space, and wants buyers and sellers to succeed. The whole experience was excellent.”

The business sold in just under three months on the marketplace for mid-six figures. 

The best part of selling his business on Flippa? The team helped him through every step of the journey. Listen to how Flippa changed Rod’s career and life.

Watch more Humans of Flippa stories here.

Read the full transcript of the conversation below.

Rod’s Entrepreneurial Journey

Blake Hutchison: Good morning, good afternoon, good evening, wherever you are around the world. This is another episode of Humans of Flippa. My name is Blake Hutchison. I’m the CEO at flippa.com, the world’s largest marketplace to buy and sell online businesses. And today I’m joined on another episode with Rod Gunn, who is based out of Houston, Texas. And as early as last week, he was actually with our team in our Austin office at a Flippa meetup. So Rod, fantastic. Thank you so much for joining. Appreciate you being with us here today and looking forward to hearing your story on Humans of Flippa.

Blake Hutchison: Now Rod, what I’d like to do is tend to start with a broad question. How did you get to where you are today? What was your entrepreneurial journey? If you could tell us a little bit about that and help us understand your beginnings and where you are now.

Rod Gunn: It’s a long story, Blake, but I’ll try and shorten it as best I can. I’m not from this industry. I’m an oil and gas guy. I’ve traveled around the world selling oil and gas equipment, services, processing solutions, etc. Things started slowing down in my space about three years ago and it was, the phone wasn’t ringing as much and not as many emails coming in. I’m getting bored, so what should I do? And my son, who’s since graduated uni, he said, why don’t you get into Ecommerce? That sounds great. What is Ecommerce? So he sat down and showed me some things. This looks really good. So we looked at some sites and possible services, solutions, products that we might be able to sell and sites that we might look to buy. So we got in that way nearly three years ago with the site that I’ve hung onto, done some things with, spun off a mirror site.

 I still have the base, and grew from that. No real big successes until this one site I just sold recently, I acquired a little over two years ago. But there were some other smaller sites that I bought and sold. A couple of them were on Flippa, and then the large one we just sold a couple of months ago. But the journey was interesting in that this is not really my traditional space and having a resource like Flippa that had all these already set sites you could step in and purchase, should you opt to do that, was a great fit for me and worked out well, both buying and then eventually selling.

Blake Hutchison:  That’s interesting and quite common. For those listening out there, we do meet a lot of people who have come from one industry, not necessarily would they consider themselves digital entrepreneurs, or in many cases they wouldn’t even consider themselves entrepreneurs at all. But they tend to have a conversation, it’s a serendipitous conversation, and they find themselves all of a sudden as an entrepreneur and operating within the digital economy. The business that you recently sold, would you mind stepping us through that business? What was it, what did it do, what was its service proposition?

Rod’s Most Recent Exit: A Social Media Promotion Agency

Rod Gunn: It’s something that I didn’t know much about until I acquired the site. It’s a social media promotion site. So again, appreciating my age and where I came from, Instagram, TikTok, things like this were things that I really wasn’t that familiar with. But I looked at the site, the valuation looked good, and I thought, I can do this. I can figure out Instagram, TikTok, SoundCloud, Spotify, and support those users on those platforms that were looking for, I’ll say a boost, a promotion, to their post, to their content, whatever it would be. And that’s what we did for a couple of years.

Blake Hutchison: You’ve taken somewhat of a risk, you’ve bought this business in, I hope you don’t mind me saying, but you admitted it’s certainly an industry that you weren’t, well at least not an expert in, but I suppose clearly worldly enough to understand that the world of social media was strong and viable and that businesses were operating in that ecosystem and doing well doing so. And so the business, if you don’t mind me saying, was called Boost Your Presence and it’s essentially a social media promotion agency. Is that a fair description of it?

Rod Gunn: That’s very fair. That’s exactly what it was.

Blake Hutchison: How did that business make money, and then how did you take it from what it was when you acquired it to what it became when you exited it?

Rod Gunn: A lot of work. I’ve talked to people that are looking for, I want to get a website so I can obtain passive income. That sounds wonderful. But I think where I’ve come from, there’s a direct correlation between the amount of work you put into something and the return you get on the back end. Now, not 100% of the time, but usually you put work into it, you figure things out, you develop solutions, you get creative on how you go to market. You listen to your customer base, you come up with something that might be a little bit different from the others. You try and differentiate the best you can, and you bring a product forward. And from then on, it’s just supporting that customer base, tweaking ads as you go, tweaking the offering as you go. But really just focusing on the customer, responding to them when they have needs, and appreciating that anyone that buys anything on a site, especially this kind of site, has a strong potential to be a return customer. So you treat them as equals and you take it forward.

Analyzing the Agency’s Structure

Blake Hutchison: Just for simplicity’s sake, who was the paying customer? Was it the influencer looking to boost their presence, or was it the brand looking to get access to the influencer?

Rod Gunn: That’s a great question. Very few established influencers would come. A lot of it would be musicians that want to get their music out there and they have music, they want to get heard. You’re more apt to listen to a track that’s got a couple of thousand plays and some likes versus something that has nothing. A lot of respect for them to try and get their music out there, and this was the way they saw that they could do it. Small businesses getting new products out there, getting their brand known. That was a fairly large percentage of the business. And then just random people that wanted their posts, their page, popularized, wanted that perception that I too can be famous and this was a way to take a shortcut to get there, maybe build up that perceived following to establish more of an organic growth.

Blake Hutchison: Opportunity to brag a little, if you don’t mind. You bought this business when, as you said, maybe it was a risk, maybe it was a little bit of a speculative business back then. It wasn’t proven in its operational model, and you’ve taken it to something which you’ve ultimately sold for mid-six figures. What was fundamentally better about the business by the time you exited it?

Rod Gunn: The site had improved. One of the big changes we made is that we had built in upsells. Upsell is a large part of econ, but instead of buying this and you get a discount here, I would just bundle views and likes. I would do packages and those were a large part of our business, and it hadn’t really been there before. The pricing became a little bit more competitive, but my costs came down as well. I found other service providers… The main service provider used optimized his costs a little bit. We were able to have a more competitive offering. And again, it just gets back to responding to customers when they complain. No matter what kind of site you have, no matter what kind of business you’re in, something’s going to go wrong.

Whether it’s oil field equipment that goes down or likes that don’t get there in time on your TikTok page. If you just address them in the right manner, if you give a few extra likes or views and show the customer that you generally care, things fall in place no matter what business you’re in. I think there’s a large part of that here, and it worked out well. As you mentioned, we sold, not a huge valuation compared to some of the things I’ve seen on your site, but it was about 270 x what we paid for it. So from that perspective, it was a nice turn.

Blake Hutchison: How long did you own it for?

Rod Gunn: Right at two years.

Delving Deeper into the Exit Process

Blake Hutchison: I would’ve thought 270 x in two years is about as good an IRR as you can possibly expect, congratulations on that. Now you’ve come from a completely different industry, and then you find yourself owning this business, and ultimately you then pursue a sale. What made you want to sell it at that point in time? What was the motivation to do so?

Rod Gunn: I mentioned earlier on, I’m an oil and gas guy. In that business, I still had a side consultancy doing a lot of work in that space. It was starting to pick up, phone was starting to ring again, emails were coming in, I was traveling a lot more. Still am. I really wanted to get back engaged in what I’ve really known for the last 25 years of my career. And to be quite honest, it was getting very difficult filling three to 400 orders a day, and a lot of the people in this space that come to my site wanting likes, views, followers, expected immediate results, and got to sleep sometime, and need to take a break from it. The hours became a little bit longer than we initially thought they would when we came in, but that’s because there was more business. It’s not necessarily a bad thing, but we were looking for an escape. Escape’s not the right word. We were looking for an exit, and that’s where Flippa came in.

Blake Hutchison: Fantastic. Now take us through the experience. Lots of buyers on Flippa, and of course our job is to try to find the right one, but that can take some time. For those people who have never been through an exit of any business of any size before, would you mind just articulating that process a little bit, how you found it, and what some of the challenges were in doing though? What were the frustrations in going through that process? How did it play out for you?

Rod Gunn: I was familiar with Flippa from two years prior. I’d purchased a couple of smaller sites, resold those sites at a very small multiple, but knew Flippa, knew the platform, knew what it had to offer. And when the thought process came up that, okay, we need to start selling, Flippa was foremost in my mind. I spoke with one of your consultants, he gave me a valuation on the business that was far more than I thought the business would ever sell for, and thought, okay, there’s no way this can happen. Spoke to a couple of other people at Flippa, set expectations a little bit lower but not much, and I thought, based on where we are, what’s going on, I do think I want to make the exit and if we can get this price, great. If we get near that price, fantastic. Still happy to do it. I was assigned an advisor…

Rod Gunn: Maliha, and she was awesome. Had a lot of conversations with her. It didn’t sell right away. The valuation was really high. There is a level of risk in this business. You never know what might happen in the US right now with TikTok or whatever else. And there’s a lot of saturation in this space. There are a lot of competing websites. I really was hesitant to think I would sell it for what I ended up selling it for, and certainly what it was initially valued at. It took a few months, three months, to find the right buyer took three months, and that was fine. We were still making revenue, we were still making income. But working with your team there who, I would say, were engaged in my success, they would take that extra step to try and find the right buyers, including going back, re-engaging those when the price dropped. There are a lot of things they did that, even coming from a sales background, I didn’t do.

The Timeline of an Exit

Blake Hutchison: I appreciate you saying all of that. For those out there who are listening for the first time, considering buying or selling, it is important to understand the process. It is not an overnight thing. And I think, Rod, you’ve just said it took approximately three months to find the buyer, and that’s about right. We would tend to say to most of our customers that, for an asset that is mid-six figures, that you can tend to imagine a 12-week sale cycle or thereabouts. Tell us a little bit, obviously without revealing too much, tell us a little bit about the buyer. What was it that they liked? What was their background? Were they from an oil and gas background as well? Probably not. Who did you end up meeting on the platform, and what was it about that buyer that made the deal work?

Rod Gunn: You mentioned the platform. That’s what made selling on Flippa so easy. You would see the engagement coming in, you could see their profile. Flippa did some vetting up front. When these people came to the site, or this, I’ll say, this person initially came to the site, I could see a little bit of his background. There was some back and forth chatting engagement, which is fantastic, and you guys have oversight for that, so you could come in, take a look at it. Talking to him, well initially chatting with him initially and then engaging on the phone, and knowing what his background was, you get a good feeling for that person was the right one to sell to.

And I’m going off subject a little bit, but I also asked Maliha to do a bit of an internal check within Flippa to make sure this guy’s legitimate, and she did that. Came back all good. Other people here have had engagement with him. This is a solid buyer, this is someone you want to talk to. So went back and forth with him for a while. They put a letter of intent together, which took a long while to work through, negotiated a price, and we settled.

The Specifics of an Exit: LOIs, Contracts and Due Diligence

Blake Hutchison: Was there anything about that letter of intent which was, well for want of a better description, funky in nature that gave you any cause for concern, and I guess forced your hand around tougher negotiation? What was it about the letter of intent which was right or less so right?

Rod Gunn: The LOI was, I think, 13 pages in length, which ended up to be half the size of the contract. I’ve read contracts throughout my career, I was okay with that. Non-compete for a longer period of time than I was comfortable with. I really don’t expect to be back in this space, but it was a long time. Payments spread out over a longer period of time than I was comfortable with, a lower price than I was comfortable with, and a few other clauses that just weren’t really satisfactory for me.

And that’s part of the reason probably the sales process extended a little bit longer. And there were other buyers that came forward with an LOI that wasn’t really what I would consider acceptable. So reviewed this, did a few red lines on the contract, on the LOI, took it back, and then we had a workable LOI, which initiated the due diligence process with the customer who, to get back to your original question, was a couple of friends that work in California knew each other from university and have a team of people working with them to support the website, e-comm type businesses.

Blake Hutchison: I appreciate you going through this with such transparency. A couple of bullet points there. You talked about the fact that the non-compete was far longer than you would’ve liked. I think you talked about the fact that the monetary terms of the LOI were lower than you would’ve liked, and a bunch of other terms. And so it’s really important that people understand that LOIs are in fact negotiable. We often hear from sellers who say, oh, I’ve got this LOI, I’m walking away. And it’s very important that people treat the terms of an LOI as something which is clearly preferential for the buyers, and that we invite and welcome everyone to negotiate that. How did you find the negotiation, Rod? Were they open or was it difficult?

Rod Gunn: The LOI was, I’ll say, simple. A little bit of back and forth, some red lines. We came to an agreement on price, structure, things like that. The contract was much more difficult, just a lot of things in the contract, and I was dealing directly with their lawyer, and I’m not a lawyer. And it took a while, but there was baby steps made here and there, but it was taking too long. Eventually the seller himself said, look, let’s get on the phone and work through it. And half an hour later we had an agreement, and it wasn’t that hard. Any negotiation, there’s a little bit of give and take, and there was here, but I felt at the end it was a fair contract on both sides, and I’ve supported them for a period of time, we’re outside of that period of time, happy to continue to support them, but I think the site’s doing well and they don’t need me anymore. But it was a negotiation, it took longer than it should have. But once you get on the phone and work these things out, it went quick.

The emotional rollercoaster of an exit

Blake Hutchison: I’ve checked it out. Boost Your Presence is still operating and appears to be doing really well. So congratulations on a great exit, and it appears the buyers are no doubt happy. The price. Were you disappointed? Were you content? Were you ecstatic? How far removed was it from your expectations? How did you rationalize the emotions around that?

Rod Gunn: Content plus.

Ecstatic would’ve been the price we initially listed at, which to be honest, I thought was somewhat unrealistic. But you try, and we weren’t in any rush. So it came down a couple of times. We ended up at this figure, which was a little bit higher than the offer, but very content with where it came in. I mentioned the sell price to friends in my orbit, my circle, and they are ecstatic.

We’re very content with it. It’s a great exit. It gives us a sum to do other things with, which we’re in the process of doing, partly on Flippa, partly on just our own personal space. Very content. It worked out really well, and I hope it does for the buyer as well.

Blake Hutchison: We do our best to follow up with the buyers and in almost every case, buyers of assets of your type and of your size tend to end up becoming very, very successful in their own right. That’s really something we’re very proud of, and we’re excited to ensure that we keep in touch with the buyers who do ultimately acquire on our platform. First time you’ve gone through this, at least at this size. As you said, it was a social media influencer platform, or a social media platform. It was a new experience for you. For those out there who are listening to you and want some sort of tips and learnings from the experience, how would you summarize what you learned from your exit of this size?

Rod Gunn: Great question, and I really don’t know how to answer that. I came into something knowing a little about Ecom, but not understanding social media. All the tools you need are out there to learn about anything you want to pick up. At your meeting in Austin, there were a lot of Amazon FBA people there. So within a couple of hours and some follow-ups later, learned a lot more about the Amazon FBA space. There’s so much potential in everything that you have on your side and elsewhere. If you don’t know it, you can figure it out. It’s not super challenging.

The answers are out there if you just make a little bit of effort to figure out how to run Google Ads properly, as an example. That was one of the biggest obstructions I had. I did not really understand Google Ads. In fairness, I still really don’t get it all, but I learned enough to make my ads more effective, and we had a conversion rate of near 18% when we were done, which in our little space is quite high. And it was really the quality of the ads, and YouTube’s helpful, articles, there’s so much out there that you can read, watch, learn from, that will help you build your site and create it beyond what you thought it would be coming in.

The Experience with Flippa

Blake Hutchison: Final question for me, and again, thank you so much for the transparent interview today. You obviously mentioned that you were content plus, and it’s enabled you some flexibility obviously to go back into what you know best: the oil and gas industry, but obviously given you, I suppose, some capital from which to do whatever you want with. You’ve summarized this a little bit. You said maybe do some more things on Flippa, maybe do some things for yourself. But how would you summarize, if you don’t mind, the Flippa experience as a whole?

Rod Gunn: Oh, very positive. Go back to your rating system earlier, that’s where… Close to ecstatic. Your team, Maliha specifically, some of the other guys as well, and I can’t remember the name of the gentleman in Austin that first approached me and said, look, this is what your business is worth. I thought, no, there’s no way. Whatever you’re doing in Austin, whatever’s in the water there, can’t be right. And just the platform you guys offer to engage with people that are looking to buy, the support from your team, be it Austin, Amsterdam, Melbourne where you are, to me it’s been, anytime I’d get on the phone with a Flippa person, it was a very positive experience. And the Flippa people I met in Austin, the one I met at the Houston gathering a couple of years ago, meeting some of your people in Las Vegas, you’ve got a great team that’s engaged and active in this space and are wanting buyers and sellers to succeed. And that’s obvious. So the overall experience has been excellent. Near ecstatic.

Blake Hutchison: Content plus on the price level and near ecstatic with respect to the Flippa service, so thank you so much.

Ladies and gentlemen, that was another episode of Humans of Flippa. We had Rod Gunn join us from Houston. Rod was, well, I suppose a buyer and seller on the Flippa platform, but most recently had success selling a social media platform, Boost Your Presence was the name. Go and check that out and support the new acquirers of that business. Thank you so much, Rod. Really appreciate your time today and thank you everyone for listening into another episode of Humans of Flippa.