In this episode of the M&A Launchpad Podcast, hosts Feras Moussa and Casey Minshew welcome special guest Blake Hutchison, the CEO of Flippa. Blake has been running Flippa for six years and shares many insights into how finds the edge to stand out as a giant in the industry. Flippa is a marketplace that allows buyers and sellers to transact on technology-backed businesses.
The discussion explores how the landscape of digital business acquisitions has evolved, particularly through Flippa’s unique marketplace that connects buyers and sellers of digital assets. Feras reminisces about the early days of Flippa in 2009 and reflects on its transformation into a diverse platform for acquiring digital assets such as websites, SaaS products, apps, YouTube channels, and more.
Blake shares insights into current market trends, multiples for different asset classes, and examples of successful acquisitions facilitated through Flippa. The episode provides valuable information for anyone interested in the potential of digital assets to enhance or pioneer their entrepreneurial ventures.
In this podcast episode, we discuss:
- How to Acquire Digital Businesses
- Improving Your Business Through Digital Assets
- A New World of ETA
- Current Investor Opinions in the M&A World
Time stamp:
00:00 Introduction
01:52 Why a Quality of Earnings is Crucial
02:36 Who is Blake Hutchison?
03:21 Flippa’s Evolution and Digital Marketplace
08:42 Buyer Sentiment in Today’s Market
13:51 Value-Add Through Strategic Acquisitions
20:26 Flippa’s Matching Program
23:00 Current Transaction Multiples for Industries
28:31 Flippa’s Unique Value Proposition
31:02 Rocket Round
You can connect with Blake by LinkedIn: Blake Hutchison – Flippa.com | LinkedIn
Additional Resources:
- Access our archive of video interviews on YouTube
- Get in touch with show hosts Casey Minshew and Feras Moussa at – info@equitylaunchpad.com
- Looking to invest in M&A opportunities or partner with an advisor to acquire, scale or sell your business? Visit Equity Launchpad
Transcript
00:00 all right on today’s episode we
00:01 interviewed Blake Hutcherson the CEO of
00:04 flipper and man this definitely you know
00:06 adds a new lens on how to think about
00:08 businesses right I remember fo from 2009
00:11 and it is a very different company today
00:13 than it was then and for those listeners
00:15 right a lot of us typically talk about
00:17 traditional m&a I’m going to go bu a
00:19 plating company I’m going to go buy a
00:21 plumbing company right boring businesses
00:24 that are usually you know something you
00:26 get your hands on but on this episode we
00:28 actually talked about not only digital
00:29 businesses but also how those digital
00:32 plays can actually help really
00:34 revolutionalize a more traditional
00:35 business and how you can really buy a
00:37 traditional business add digital as a
00:39 way to complement it and actually turn
00:41 it into something unique that can then
00:42 turn into your lead funnel so Casey what
00:44 was some your takeaways and I’ll tell
00:46 you one first off Blake love Australians
00:48 uh you know he’s just he’s been there
00:50 and but one of the things there’s that a
00:51 of intelligence that’s added just by
00:53 having Australian voice Australian
00:54 football and all that good stuff but at
00:56 the end of the day man here’s one of the
00:58 things as an entrepreneur that’s hunting
00:60 and looking for businesses the next
01:02 stage now that you have the business and
01:03 you’re in the businesses what does that
01:05 add-on what makes it more valuable than
01:07 the other and I never and I thought
01:10 about it but I didn’t know there was a
01:11 platform where I could go research and
01:13 look around digital assets that could
01:16 amplify my product my business yeah
01:18 absolutely and then for those that are
01:19 looking to buy your first business right
01:21 it’s probably a good opportunity to find
01:23 a business too right buy something that
01:25 makes sense for you size-wise that you
01:26 can go grind your teeth get some
01:29 experience understand how to oper
01:30 operationalize or how an operation even
01:32 functions and then grow from there I
01:33 mean so again Flipper’s got a lot of
01:35 diversity and this does sound like a
01:36 sales pitch for flipper but really it’s
01:38 not it’s really it’s just kind of
01:40 impressive to talk about the different
01:41 opportunities that are there to open up
01:43 for entrepreneurs and so definitely
01:44 listen into this one lots of
01:49 content welcome to the m&a Launchpad
01:51 podcast with your host Casey and Ferris
01:53 with Equity Launchpad on this podcast
01:55 you will gain insights on acquiring
01:56 investing in and selling profitable
01:58 businesses in the lower to Middle Market
01:60 whether you’re a business owner investor
02:01 or Spa entrepreneur at Equity Launchpad
02:03 we will provide you with the knowledge
02:05 guidance and capital to navigate the
02:06 world of emergers and
02:08 Acquisitions all right guys just take
02:10 one second here real quick when you’re
02:11 buying a business ensuring the financial
02:13 health of the company is critical and
02:15 that’s where our quality of earnings
02:16 partner comes in quality of earnings
02:18 gives you confidence in the financials
02:19 of the company that you’re purchasing it
02:21 aims to protect your investment and
02:23 ensure you that you’re stepping into a
02:24 profitable business on day one Patrick
02:26 of oconnell Advisory Group is your
02:28 Dynamic quality of earnings partner he’s
02:30 here to help you buy the right business
02:31 on your timeline Patrick’s entire
02:33 practice is focused on business
02:34 Acquisitions your Niche is his Niche and
02:37 over the past decade Patrick’s helped
02:39 more than 200 buyers like yourself
02:40 successfully purchase and operate
02:42 enduring profitable businesses in fact
02:45 Patrick’s helped some listeners of this
02:46 show so if you’re buying looking for
02:48 help with the quality of earnings
02:50 Financial due diligence Network capital
02:52 and more head to oconnell advisory
02:54 group.com or just click the link in the
02:55 show notes hey Blake welcome to the show
02:58 thank you so much for having me it’s
02:59 good to be here no likewise I’m excited
03:01 you know because I remember flipa I was
03:03 telling this to before the show right I
03:04 mean I came up that internet early 2000s
03:07 internet world and I remember the day or
03:09 maybe the week or the month that Flippa
03:11 first got created and I was excited to
03:13 actually kind of have you on the show
03:13 and learn a little bit more about what’s
03:15 going on over the past 15 years and so
03:16 welcome he’s even joining from Australia
03:18 so hey we’re across the world now all
03:20 the way from Australia did it did throw
03:22 me off whenever I saw the accept for the
03:23 invite at 6 am. and I was like wait are
03:24 we scheduling something that early but
03:26 then realized what was going on awesome
03:29 so I other side of the world but
03:31 hopefully it’s formative to everyone
03:33 absolutely and so instead of me kind of
03:35 take your thunder you want to go ahead
03:36 and maybe share to the audience a little
03:38 bit about who you are and what you’re
03:40 doing yes I’m the CEO of flipper I’ve
03:43 been running the business for six years
03:45 I mean in short the best way to describe
03:47 flipper is it is a Marketplace it’s
03:49 two-sided we have buy and investors and
03:52 we have entrepreneurs those
03:53 entrepreneurs are looking to exit the
03:54 investors and acquirers are looking to
03:56 buy it’s a Marketplace and platform to
03:58 buy and sell businesses the unique
04:00 difference between us and maybe lots of
04:02 others is we only do digital so we only
04:04 do technology backed
04:07 businesses and so so let me ask that
04:08 because whenever you know in 2009
04:10 whenever I was kind of first heard of
04:12 Flippa it was really geared more towards
04:15 online websites right hey I have a
04:17 website it’s got you know 10,000 unique
04:20 traffic a day and it’s making $500 a day
04:22 off of Google right like that was kind
04:23 of the I think the stereotypical
04:25 business but today are you guys kind of
04:27 the A to Z in the software space or is
04:29 there a specific nich that you’re
04:30 looking at Z so anything that’s built on
04:33 top of the platform economy is the best
04:34 way to explain that so we’re really
04:37 built around and dependent on big Tech
04:40 so Google’s a very very critical part of
04:43 our ecosystem obviously AdSense Powers
04:46 most blogs and we reach and we sell and
04:48 exit lots of blogs that same technology
04:51 is used to power advertising for YouTube
04:53 channels and you connect to a YouTube
04:55 channel on flipper of course the IOS and
04:57 Android ecosystem connect at an app on
04:59 flipper
05:00 so alltech so SAS Ecom online publishing
05:06 call it SL blog digital agencies as well
05:09 as of course e-commerce if I didn’t
05:11 mention that both direct consumer and
05:13 that’s typically a Shopify e-commerce or
05:15 wo Commerce or a Marketplace backed
05:17 e-commerce business typically FBA so
05:20 fulfilled by Amazon it really does run
05:23 the gamut for a long time there it
05:26 really revolved around four key
05:29 categories so SAS apps online publishing
05:32 and Ecom as I alluded to that’s expanded
05:35 dramatically over the last probably six
05:38 months where we’ve seen good demand from
05:40 investors for other types of digital
05:42 assets so I alluded to this but YouTube
05:45 channels Chrome extensions slack plugins
05:49 anything AI driven of course and we
05:52 think obviously that will be a big
05:54 category for us into the future Amazon
05:56 KDP so Kindle publishing assets have
05:59 become very fast growth for us as a
06:01 platform so anything that is digital
06:04 anything that is revenue generating
06:06 anything that a digital asset investor
06:08 can imagine taking over either operating
06:11 or finding an operator to run for them
06:13 where they’re looking to generate an Roi
06:15 off a cash flowing asset it’s pretty
06:17 amazing because I’ll tell you I did not
06:20 know you could monetize like YouTube
06:21 channels and I’ve started doing some
06:23 research about a year ago I ended up
06:25 buying uh or I bought into one of the
06:28 passive Amazon stores right so you buy
06:30 in they were going to manage it it was
06:32 total did not work out right it was one
06:34 of those like markup that was a bad idea
06:36 but I learned a lot as I started
06:38 searching in that space looking for that
06:40 like how do you generate that income and
06:41 I ran across YouTube stuff and I thought
06:43 that was the coolest thing to see
06:45 somebody be able to take a channel from
06:46 nothing and build it up get it automated
06:48 all these things just did not ever know
06:51 that that could generate income so
06:52 that’s pretty neat
06:54 and a it’s a fast growing category for
06:57 us and there’s a few reasons for it I
06:58 mean one it is
07:00 there’s no such thing as completely
07:02 passive as you both would no doubt agree
07:04 but it is it is one of the more passive
07:07 asset classes or asset types and the
07:09 reason being is one it’s mostly about
07:12 the back catalog so it’s not necessarily
07:14 about creating new content and
07:16 continuing to strive for that next hit
07:19 it’s really back back catalog it’s
07:21 equivalent to buying a royalty’s a share
07:23 of a back catalog of a music in the
07:25 music industry so that’s kind of Piece
07:27 One Piece two is it’s a good compliment
07:30 to an existing business doesn’t matter
07:32 what industry you’re in if you can
07:33 acquire a YouTube channel that has a
07:35 very very large following within that
07:38 industry it’s a great way to capitalize
07:40 on that community and move them across
07:41 to your to your other assets that’s
07:43 really true you could probably advertise
07:45 on those you can do your own stuff is
07:46 that kind of the idea yeah that’s
07:48 exactly how it works I mean we’ve seen
07:50 people who own you know their tattooist
07:53 they own tattoo parlor for instance
07:54 they’ bought YouTube channels within the
07:56 tattooing space and then they’ve
07:58 obviously gone and rebranded that
07:60 they’ve utilized the viewership of that
08:02 to promote their core Services yeah and
08:05 I think the other thing too at least you
08:06 know and I don’t want to go too far down
08:07 the the video rabbit hole but ultimately
08:09 everybody understands video they know
08:11 how to make it right to start a blog you
08:12 do need to be more technical than to
08:14 start a YouTube channel right every you
08:16 know so it’s become an that’s why you
08:18 have a lot of people that you know can
08:20 flu fluctuate into that but I think you
08:22 know that’s a good segue to Blake I
08:24 think to the the thing that maybe our
08:26 listeners really want to hear right
08:27 which is you know and you’ve been
08:29 running flip for six years right and
08:32 really what have you seen in terms of
08:33 the influx of appetite right Casey and I
08:36 we go to a lot of different conferences
08:38 and you know the I like to call it the
08:41 ETA acquisition entrepreneurial
08:43 ecosystem is you know growing I mean I
08:46 think like wildfire right I think it’s
08:48 right now is really that golden age of
08:50 really starting to get a lot of more
08:51 momentum behind it and what have you
08:53 seen on your side because the thing that
08:54 people really struggle with is finding a
08:55 business is a great platform to go look
08:57 through businesses so who have you seen
08:59 show up and what has been kind of that
09:01 growth yeah so investor appetite is
09:03 birming obviously it’s a tricky climate
09:04 out there for obvious reasons but
09:06 interest rates High inflation High
09:08 therefore investors may be hungry for
09:10 deal making but they are a little bit
09:11 skittish right now and so that’s
09:14 something we’ve clearly seen over the
09:16 last 24 months but as a general theme
09:19 there are hundreds of millions of
09:22 digital assets it is the new small
09:24 business economy and I find this
09:26 interesting line up 100 people on a
09:27 street you say please draw me a small
09:29 business you give them a piece of paper
09:30 draw me a small business they’re not
09:32 going to draw you a digital asset but
09:34 the reality is the next generation of
09:36 small business owners are digital native
09:39 and that’s the important thing to think
09:41 about so these digital assets are the
09:44 new small businesses therefore the types
09:46 of businesses that we will be acquiring
09:48 for the next 50 to 100 years will most
09:50 likely be digital businesses and so
09:52 therefore it’s logical that there’s an
09:53 m&a platform that enables startups and
09:56 online business owners to find a pathway
09:58 to exit and then it’s just about it’s
10:00 actually very similar it’s about the
10:02 metrics that govern those types of
10:04 businesses it’s about understanding the
10:06 operational nature of those businesses
10:08 it’s about understanding what the
10:10 multiples are what basis they’re traded
10:13 on and then what your Roi is on that
10:15 investment and so we are seeing a huge
10:18 appetite among highet worths but in
10:20 addition probably the most surprising
10:23 thing is that institutional investors
10:25 are coming down market and entering this
10:28 subscale asset class very very fast and
10:31 most of that is for the reason that
10:32 we’ve spoken about right now or already
10:34 today which is that they see an
10:37 opportunity to get a creative growth out
10:40 of their portfolio companies or some
10:42 other company that they already run
10:44 through the acquisition of a digital
10:45 asset so kind of thematic wise that’s
10:49 why it’s played out the way it has and I
10:51 think interestingly enough you know if
10:53 you take 2023 as we end up 2024 but if
10:57 you think about 2023 that was a record
10:60 year for business starts in the US so
11:02 there were 5 a half million new business
11:04 applications filed that’s the highest
11:06 ever recorded in the US and so the vast
11:11 majority of those business owners are
11:13 going to mature as digital Natives and
11:15 then therefore again I’ll stated the
11:17 next generation of business owners that
11:19 we end up acquiring will be digital no I
11:22 completely I’m Bing to that thesis back
11:24 in 2009 and so it’s been fun to see it
11:26 play out and I think you know you kind
11:28 of mentioned the institution going down
11:30 the ladder right I mean it’s exactly
11:31 what we’ve seen in the lower middle
11:33 mid-level markets right and I think we I
11:35 do want to shift the conversation to
11:36 multiples here in a second but again the
11:38 multiples right start to compress as you
11:40 get further down and you can go find
11:42 better yield now the trade-off is the
11:44 big institution guys have you know a100
11:46 million do they need to deploy it’s hard
11:47 to deploy that 500,000 to a million
11:49 dollars at a time and so you know we’ve
11:51 seen the fund of funds that are out
11:53 there trying to just really how do you
11:55 scale up in a smaller dollar amount
11:58 ecosystem and it’s been you know I’m not
11:59 surprised to see it also translate to
12:01 the digital side right it’s the same
12:02 kind of story well what’s kind of
12:03 shocking to me is like you know so we
12:05 think about in our Acquisitions
12:07 especially how we so we look for a
12:10 platform right we look for a business
12:12 and then we want to acquire and make it
12:14 prettier and make it better right and
12:17 ultimately you know hold it maybe we
12:18 hold it forever maybe somebody Taps us
12:20 on the shoulder whatever it is that is
12:22 our strategy here so fairis not we’re
12:24 just joking is that we’re working right
12:25 now closing our second platform we’re
12:27 expecting it happen at the end of the
12:28 month and what is our next acquisition
12:31 so then we can then Focus about going
12:33 deep so Blake in that you know one of
12:35 the things that kind of hit me is you
12:37 know as being the guy that’s searching
12:39 for businesses that’s my job my job is
12:41 to search find get the guys to the table
12:44 I mean we we we’re a small group over
12:46 here but you know we we go out and we’re
12:49 focused constantly about finding
12:50 businesses finding business now we found
12:52 a business take our chrome plating
12:54 industry and now you sit back after
12:56 we’ve owned it almost a little over 18
12:58 months and you sit there and you go what
12:59 are the other things we could be doing
13:01 that maybe the future private Equity
13:03 wants to know or or maybe it makes us
13:05 just make more money and however it is
13:07 so thinking about these ancillary things
13:09 that we can add digitally to the
13:11 business is fantastic yeah so I’m just
13:12 going to go ahead and just ask the
13:14 question I inan case you’re beating
13:15 around the bush all right Blake I need
13:16 to buy a plating YouTube channel right
13:18 something about Metal right that’s my
13:20 takea away from this episode I hadn’t
13:21 really thought of that but I mean again
13:23 the more and again we’re not going to
13:25 get a rollup opportunity through that
13:27 but you do start to build brand
13:28 recognition potential clients will come
13:31 out of that and it’s those kind of
13:33 complimentary things maybe more so to
13:35 what we’re doing right which is
13:37 different than clients of yours that are
13:38 just that is the intrinsic business is
13:40 that Channel or is that that stream and
13:42 so it’s kind of an interesting thing and
13:44 all our listeners are they’re out
13:45 searching for businesses they’re looking
13:46 to buy a business they get the business
13:48 and then they think about these what are
13:50 these other things I can do that may not
13:52 have to be a massive acquisition or
13:54 going out and starting well wow I never
13:56 even thought maybe I buy a YouTube
13:57 channel or what if there’s a a digital
13:59 service out there that’s selling
14:01 something you know that that it
14:03 complements what we do and now we might
14:04 have a little bit of recurring Revenue
14:06 in our business so those are some of the
14:08 things what are your thoughts around
14:09 that yeah so I think that you know
14:12 people buy for different reasons and
14:15 obviously um we can explore those so an
14:18 Institutional Investor will will
14:20 typically be buying for you know a
14:22 creative growth or inorganic growth of a
14:25 of a portfolio company and it could be
14:28 that they’re looking to roll up assets
14:30 within a given industry but it could
14:32 also be that they’re just looking to
14:34 bolt on a revenue generating digital
14:37 asset to an existing asset within an
14:39 existing industry and so we’ve got a
14:41 classic example of that where you know
14:43 private Equity out of New York owns a
14:46 chain of um apparel um retail stores and
14:51 they’re looking for ways in which to
14:53 complement that so they go hunting for
14:55 Ecom businesses which are in the
14:57 sporting and ath leure
14:60 Niche and for them that’s about adding
15:03 Revenue but it’s also about getting new
15:06 eyeballs and it’s about Distributing
15:07 their existing range of products to a
15:09 new channel and to a new community and
15:12 so that’s a pretty obvious play that
15:14 we’re all familiar with the other reason
15:17 that people buy assets is really um as
15:19 you spoke about before you know you’ve
15:21 got a a metal plating business you’re
15:24 never going to acquire a YouTube channel
15:26 so we all kind of need a pathway to new
15:28 users and if you look could say flippers
15:30 marketing mix this a kind of a good way
15:31 to think about it we have a very big
15:34 podcast we started that from scratch but
15:37 in theory we could buy a podcast that
15:40 gives us the same access to the same
15:42 Community you then get a fast start and
15:45 you fast track your pathway to having a
15:47 successful podcast through acquisition
15:50 rather than the Blood Sweat and Tears
15:51 you might have to put in to grow that
15:53 from scratch we have a big email
15:55 newsletter couple of well 600 700,000
15:58 people on now newsletter but I could in
16:00 theory buy a newsletter that is just
16:04 around my specific topic that is going
16:06 to complement my business give me access
16:08 to a new community help me funnel users
16:11 into my core business flipper also has
16:14 an education arm where we’re trying to
16:16 coach online business owners to get
16:19 acquisition ready or exit fit and so we
16:22 could go on buy a learning business
16:25 where they already have the skills they
16:27 have the technology they have the
16:28 capability
16:30 so when people think about Acquisitions
16:32 you need to think about them through the
16:33 lens of what are you trying to achieve
16:35 by acquiring that company is it
16:37 incremental Revenue great you’re
16:39 acquiring the business revenue is it for
16:42 the eyeballs great well you’re acquiring
16:43 the community is it because they are
16:46 skilled at something that you are never
16:47 going to be skilled at and acquiring
16:49 them is a faster pathway than it is to
16:51 assemble that team then that’s the
16:53 reason you can do that so it’s it’s all
16:56 unique ways and they’re really kind of
16:58 manyi rollups but the really to
16:59 accomplish one specific point right
17:01 almost like a micro rollup right is
17:02 maybe the best way and you know hadn’t
17:04 really thought through that lens more of
17:06 the unique examples you’ve seen people
17:08 come and hey make or something that you
17:10 know an acquisition through flip on
17:11 they’re like man that really impacted
17:13 the business right those things I think
17:14 are the most interesting things and
17:16 something that very few people talk
17:17 about across kind of the rest of the
17:18 people that we’ve interviewed yeah so I
17:21 think there’s a there’s a couple of
17:22 pieces here the first one is and you
17:24 made this point before multiples are
17:27 actually lower as you move down market
17:31 so the cost to entry at for subscale m&a
17:35 is lower and that’s that’s a good thing
17:37 it makes it more accessible to many but
17:40 it also makes it a very very viable
17:42 Pathway to growth and so I’ll just
17:45 quickly tap into kind of the reasons why
17:47 that is you know one is the risk profile
17:49 smaller businesses typically carry
17:51 higher risks therefore the multiples are
17:52 not at high growth potential you know
17:55 large or Venture back companies are
17:57 often valued based on future growth
17:59 expectations of future earnings whereas
18:01 smaller businesses are more likely to
18:03 not have that same level of growth
18:05 potential they’re not moonshots that
18:08 same inflection point opportunity isn’t
18:10 necessarily there and and scalability
18:12 and infrastructure they seem they
18:14 they’re often a bit more limited in that
18:16 regard and therefore these are some of
18:17 the reasons why multiples are a little
18:19 bit lower which means the entry points
18:21 are really good for strategic thought
18:24 like the question you’ve just posed
18:26 which is you know what are the examples
18:27 of people doing this successfully to
18:29 grow their businesses there are just so
18:31 many I mean I told you the quick story
18:33 offline which I’ll share now because I
18:35 think it’s really really fun we had a a
18:37 business in San Francisco um they’re
18:39 called sparkel check it out SP p o r c
18:44 sporcle.com it’s the world’s largest
18:47 online trivia business and so if you go
18:49 there you’ll see that you can just
18:51 participate in trivia contests you can
18:52 start trivia events with your friends
18:55 with your family Etc sounds kitchy but
18:57 this is actually operating at since
18:59 severe scale multi-million business they
19:03 also own I seriously think it’s like a
19:05 50 50 to a75 million business they own a
19:10 number of pubs so pubs and taverns where
19:13 people obviously go to participate in in
19:16 trivia events now their whole thing is
19:18 to a bit like Google says we’re going to
19:20 organize the world’s information their
19:22 whole thing is to bring a crowd together
19:25 for trivia testing in games that’s their
19:27 whole shtick that’s their whole strategy
19:29 now there’s only so many ways you can do
19:31 that some people already own a
19:32 particular Niche within that overall
19:35 theme and strategy so they came to
19:36 flipper and they set a mandate on the
19:39 platform that mandate ultimately matched
19:41 them to a business called typing test
19:44 and you don’t have to be a genius to
19:45 figure out what they do um they test
19:47 people’s typing capability and skills
19:50 you can also learn how to type within
19:52 the typing test environment now that
19:54 business was based in Finland if I
19:56 remember correctly and therefore you’ve
19:58 got a San Francisco based business that
20:00 is operating at scale certainly not a
20:03 subscale business and they’ve gone and
20:05 acquired a subscale asset but the
20:07 subscale asset was subscale by Revenue
20:09 it’s not subscale by users I’m talking
20:12 tens of millions of users using typing
20:15 test every month so the opportunity for
20:18 Sparkle to capitalize on that audience
20:20 is going to change their business
20:22 substantially now middly that business
20:24 was is is in transition it’s only it was
20:27 only acquired about 3 months ago but
20:29 word on the street to talking directly
20:30 to Ali the founder at sporl he believes
20:33 it’s going to make a very substantial
20:34 strategic difference to their business
20:36 and that’s just one example of many many
20:38 stories like that I just would have
20:40 never thought of that right I mean
20:41 that’s the thing it’s like you sit there
20:42 and your brainstorm to make that
20:44 connection right so inside of flipa
20:47 you’re saying there’s you have some type
20:48 of a matching program right explain a
20:51 little bit more how that works because
20:53 obviously he did not sit there and think
20:55 like this would be a perfect match right
20:57 it was connected there was probably like
20:59 wow I’ve never thought of that and does
21:01 the buyer just say hey we do this does
21:02 anyone have any cool complimentary
21:05 business ideas we’ll buy your business
21:07 or how does that work so kind of right
21:09 you know you’ve got the biggest software
21:11 aggregators in the world you know voft
21:13 constellation these types registering
21:15 their mandates on the platform looking
21:17 to find an easier Pathway to deal flow
21:19 and deal origination so yes kind of the
21:22 way it technically works is someone like
21:25 an Al who we alluded to before the owner
21:28 of sporl he or one of his staff will
21:30 create a mandate the more specific that
21:33 mandate the smarter the matching is
21:35 going to be now it’s genuine AI we can
21:37 do that because we’ve got 1.6 million
21:40 registered buyers on the platform
21:42 globally we pick up another 20,000 net
21:44 new buyers each month we’ve got 3 and a
21:46 half thousand assets coming to the
21:47 platform each month so there’s lots of
21:50 data that we can then use to drive
21:53 basically what called graph neural
21:55 networks there’s two graph neural
21:57 networks they’re basically plotting the
21:59 likeness of each asset to each other and
22:02 the likeness of each buyer to each and
22:05 so what they’re then doing is looking at
22:07 intense signals and it’s trying to
22:09 predict whether a buyer would be
22:11 interested in a particular asset now
22:13 sometimes it’s very simple sometimes it
22:15 is location category business model
22:18 sometimes it’s more specific than that
22:21 it’s I want an asset which is sub 5%
22:24 monthly churn in the metals industry and
22:27 then that’s going to be difficult for
22:29 for us so what we’ll then do is watch
22:30 what other buyers like that buyer look
22:32 at and then we will serve up assets that
22:35 other buyers liked that we think this
22:36 buyer will therefore there therefore
22:38 probably like too and so in AR’s case
22:41 he’s literally waiting for an asset to
22:43 hit our platform that matches his
22:45 mandate we then programmatically will
22:47 make him aware P new asset has matched
22:50 come and check it out now he will enter
22:51 the deal room and that’s essentially how
22:53 the matching works but it happens at
22:54 scale we’re doing 425,000 programmatic
22:57 matches each week so for those listeners
22:60 right I mean I think you know one of my
23:01 takeaways is that there’s a digital spin
23:04 for any business right it does not
23:05 necessarily have to be the core of the
23:07 business it could be something you know
23:09 like we’re talking about whether the
23:10 tattoo paror the trivia company or
23:12 something else um but for those that are
23:13 looking to buy an immediate business
23:15 right I feel like the the business is
23:17 not complimentary but it is the business
23:19 like do you want to walk through some
23:20 sample multiples for people right you
23:22 know what are you seeing in the
23:23 multiples both in terms of you know what
23:26 they are relative to different sizes as
23:28 well as do see kind of variance in the
23:30 the different categories as well I would
23:31 imagine SAS is a little different than
23:33 YouTube and all that so very interesting
23:37 that’s right so a bit of a blatant plug
23:39 we do make this completely transparent
23:41 and it’s available for all it’s free so
23:43 if you go to flipper.com Data Insights
23:46 Data Insights this is published there
23:49 for all to see it’s always up to dat and
23:51 you can see that by business model so in
23:54 2024 half one obviously we haven’t
23:56 concluded half two yet that will get
23:58 released in in early January but half
24:00 one multiples were slightly up we’ve
24:02 obviously come off a slightly
24:03 constrained period for obvious reasons
24:06 we’ve gone through this but High
24:07 interest High inflation consumer
24:09 sentiment you know investor sentiment is
24:10 not quite as good as we would like it to
24:12 be right now so half one we did see a
24:15 slight bump on what it was in 2023 half2
24:18 so let’s just check check out e-commerce
24:20 that’s pretty familiar to most people
24:22 top desile four to 4 and a half we’ve
24:24 seen some some businesses list as high
24:26 as five and six but they get pushed down
24:28 to around that 4 4 and A2 times and I’m
24:30 talking top Desa let’s have a look at
24:32 SAS well let’s look at apps just go
24:34 through the order here apps a little bit
24:36 higher actually we’re topping out just
24:38 an excess of five times profit by the
24:41 way Revenue multiples are not really a
24:44 factor in subscale businesses we’re
24:45 talking profit multiples okay for a SAS
24:49 asset let me just have a look here top
24:52 Des all achieved in half one was 6.2 so
24:56 6.2 times profit top Des off for SAS but
25:01 the average importantly the average for
25:04 a SAS business was just sub four sub
25:07 four times so that gives people a
25:10 sense of multiples right now no And for
25:13 those listeners that you know are in the
25:15 kind of the ETA m&a acquisition space
25:18 right software is the sexy thing SAS is
25:21 a sexy thing because we think about big
25:22 multiples but again you’re in that
25:24 subsize and so this a you know flip is a
25:27 great way to go find a interesting you
25:30 know vertical that you really like you
25:32 can buy that out of Forex multiple and
25:33 if you grow it right you can actually
25:36 pretty quickly get to that 8 to 10x
25:38 multiple right because the problem is
25:39 most people think software they think
25:40 they have to buy it at a 10x multiple or
25:42 an 8X multiple something really high but
25:44 again if you’re in that substack size
25:45 you get a much better multiple now you
25:47 have to still do the leg work to build
25:49 it up and and maybe Blake I’ll actually
25:51 add this add-on question are most of
25:54 those single person businesses or are
25:56 some of those you know a team of 10
25:58 people right what are the scale of those
25:60 from the kind of operational side that
26:01 you’ve seen just depends when we’re a
26:03 price agnostic Marketplace so you we we
26:06 will look at businesses that are you
26:08 know between literally 100,000 up to 50
26:11 million so clearly a $50 million
26:13 business is going to have a a big team
26:15 around it or or most likely will have a
26:17 big team around it whereas a a business
26:20 that’s trading sub1 million tends to be
26:21 a soulle Trader or onean show and so um
26:25 that that’s an important consideration
26:27 obviously because the you know the
26:28 bigger the business the more complex it
26:29 is to operate harder to just stick in to
26:32 an existing business and and expect it
26:34 to run just the same way it has so you
26:37 know for a new investor we would
26:38 typically regardless of your capacity to
26:42 pay we would typically encourage
26:44 firsttime digital investors to look at
26:46 clearly sub1 million opportunities um
26:49 for those more sophisticated strategic
26:51 software operators who come with a team
26:54 or a skill set themselves that can
26:56 complement the asset you know clearly
26:58 that’s a different story and they’re
26:59 very capable taking over a 10 and what
27:01 are you looking at on the YouTube
27:02 channels what I know those probably
27:04 trade very different really likes those
27:05 YouTube channels thinking about back
27:08 just total selfish questions because I I
27:10 mean look I know how hard it is to run a
27:12 business and I know how difficult it is
27:14 but when you can get a content right
27:16 that YouTube is massive on content right
27:19 and if you can control an audience you
27:21 can drive that traffic right so it’s got
27:23 a be it’s a beautiful way I think to
27:24 complement almost any business and so
27:27 they’re interesting because the revenue
27:28 profit multiples are actually similar
27:30 because they operate at such high
27:32 margins so you know clearly there’s not
27:34 a lot of cost that goes into producing
27:36 you know good quality video content
27:38 these days sometimes there is very very
27:40 high production quality I obviously
27:42 appreciate and respect that but a lot of
27:43 YouTube channels have sold you know
27:45 where Revenue margin and profit margin
27:47 are very very closely tied so I mean I
27:51 can’t imagine you’re getting a real p&l
27:52 you’re probably just getting a
27:53 screenshot of the AdSense account and
27:54 call it a day it’s exactly right so you
27:57 are getting a pen which exists of a
27:59 single Revenue line and a single cost
28:01 line the revenue line is AD revenue and
28:04 the cost line is production cost and so
28:06 they’re simple businesses but come with
28:08 a good strategic bit of punch and so
28:11 yeah they are selling for quite high but
28:13 they’re also nent right now so they’re
28:15 small so you might be able to buy a you
28:17 know YouTube channel with couple hundred
28:19 thousand views a month in a particular
28:22 industry which matters to you and you
28:24 might be able to buy that for sort of
28:26 five times Revenue but five times
28:28 Revenue you’re coming off a low base so
28:29 you might be talking about doing it’s
28:31 it’s an asset doing $50,000 in Revenue
28:33 so you might be able to buy that for
28:34 $250,000 the key piece is not its
28:37 Revenue percentual the key piece is its
28:39 audience capability and quality for you
28:42 and the business that you currently run
28:44 love it no definitely uh some new new
28:47 things to think about here kind of as we
28:49 kind of continue down this journey so
28:51 when you guys take a look at flipa just
28:52 kind of in your in your in your broad
28:54 picture you know you talked about you
28:55 guys are going be doing podcast you’re
28:57 growing the Baseline you’re going out
28:58 there the to our audience and to our
29:01 members what is really that pitch to the
29:03 to the m&a group right what is that kind
29:05 of closing remarks that you want to kind
29:07 of say to those guys in the sense of you
29:09 know obviously you told us a lot of
29:11 great stuff about flipa and how to
29:12 utilize it what’s what’s your really
29:14 your thing to the to the m&a
29:16 guys yeah so number one platform um
29:19 therefore more deals uh more buyers so
29:21 if you’re an invest you don’t get more
29:23 deal flow than um you don’t get more
29:25 deal flow anywhere else and if you’re a
29:28 entrepreneur and you’re looking to
29:29 access the world’s largest collection of
29:31 investors and acquirers there’s no real
29:34 other choice for a platform that can
29:36 connect you at scale with the efficient
29:37 deal making that we make available we’re
29:40 kind of end to end so it’s really
29:42 interesting so we are our Marketplace
29:43 and we are a platform but we have 22
29:47 certified m&a advisors on staff and they
29:49 are helping business owners find a
29:51 pathway to exit they’re a conduit to
29:53 deal making they’ll help you with deal
29:55 structuring so between the access and
29:57 the reach
29:59 plus the service layer on top of that it
30:02 really is an endtoend m&a opportunity I
30:05 think for those people who are used to
30:07 traditional m&a the key message is to
30:09 school yourself up on digital because
30:11 it’s not actually the same but it’s kind
30:16 of like a mini business school
30:19 opportunity you go to flipper it’s it’s
30:21 all there you sign some ndas you’ll get
30:23 a very good feel for the metrics that
30:26 matter against a given asset type call
30:28 it SAS we’ll show you the churn rates
30:31 we’ll show you the LTV we’ll obviously
30:34 show you the revenue performance we’ll
30:35 show you the operational detail of the
30:37 business we’ll connect the data directly
30:40 to a stripe or a Shopify and show you
30:43 the raw information coming and flowing
30:45 through those platforms you can then
30:47 learn about the business and how it
30:48 operates it’s like a mini business
30:50 school so you’re interested in just
30:51 browsing before you buy get a feel for
30:55 the assets that are on the marketplace
30:56 and how they operate it’s quite
30:58 inspirational to think think about what
31:00 these entrepreneurs achieve before they
31:02 go into this exit
31:04 pathway sounds fantastic window shopping
31:06 for businesses I love it yeah and and
31:08 Blake quick question last question for
31:10 you you know what’s harder for you guys
31:12 to find is it invest is it buyers or is
31:14 it sellers sellers seller side so you so
31:18 you out there looking for good quality
31:19 sellers awesome all right well we can go
31:22 ahead and move into our rocket round
31:24 where we ask the listeners the the
31:26 attendees the same three questions so
31:27 the first question is what do you like
31:29 to do in your free time Blake and this
31:30 is about you Blake the person not Blake
31:32 the CEO of flipper yes so I’m part of a
31:36 WhatsApp group it’s called gbg and it’s
31:39 great blokes golfers and we are a
31:42 group of golf tragics um and we meet
31:45 each weekend and we try our very best we
31:47 don’t post good scores but it’s fun and
31:49 so I got into that I started playing
31:51 golf um when I was 40 so I probably took
31:54 it up a bit late I think uh and so I’m
31:57 now mid 40 I’m not that much better uh
32:00 but yeah golf is the thing for me that
32:03 is exactly my story I started about
32:06 35 obviously with all the kids don’t
32:09 have any time I’m a terrible golfer I
32:11 love the game you know and so right now
32:14 I live like care sleep through my
32:15 daughter but man like I’m just gonna be
32:17 what I am you know I’m not GNA be that
32:19 guy I’m gonna play four or five times a
32:20 year when I do I’m just gonna love
32:22 playing and be a hack so I know the
32:24 feeling I’m still yet to learn Golf and
32:26 we had uh the the author of uh m& for
32:28 dummies Bill snow and he basically said
32:30 it pretty straight he’s like if you’re
32:32 going to be in the m&a space you have to
32:34 be a golfer so I got to go pick up that
32:36 that’s for here so all right next
32:38 question what’s your most memorable
32:40 moment in your business Journey oh look
32:42 it’s it’s a bit embarrassing so I’ve
32:44 started a few businesses in my time um
32:47 basically needed to figure out a pathway
32:49 to earn some revenue from a particular
32:51 business I was running we had a large
32:53 siiz community they were passionate
32:54 about food I created a snackbox um it
32:57 was a you could subscribe to this
32:59 monthly snackbox uh we published it um
33:03 we sold 200 in an hour I had to pull it
33:06 down because I didn’t have the boxes and
33:07 I didn’t have the snacks but I did need
33:09 the revenue so I shut it down went
33:12 shopping bought the 200 boxes started to
33:15 fill it with snacks myself got in the
33:17 car and started to drive around over a
33:18 48 hour period of time delivering these
33:20 snacks all across
33:22 Australia memorable time I love it
33:25 that’s huge what a KN man yeah I mean
33:28 herey you got to start somewhere right
33:29 and it’s not fake it to you make it but
33:31 it’s have the werewolf thought to solve
33:32 it when you get something some traction
33:35 that’s got to really BS down to awesome
33:38 and so then last question what is your
33:39 favorite tool or resource you know what
33:41 I’m I’m a big subscriber to blinkist
33:44 which is um a really cool app where they
33:46 summarize books for you in a 15minute
33:48 blink as they call them and so obviously
33:51 being a CEO of a a venture-backed
33:53 Marketplace I’m very busy I’m traveling
33:56 a lot I’ve got a family and so blinkers
33:58 has been a lifesaver just to get through
34:01 as much learning material as possible
34:03 and it’s been it’s been really great so
34:04 check that out awesome yeah blink us is
34:07 good my problem is like I feel like it’s
34:08 it’s add because it’s even more
34:10 compressed so like I’ll listen to an
34:12 audio book or podcast and then I’ll
34:13 still lose focus so then blink I’m like
34:16 oh shoot I just missed a whole 15
34:17 minutes so I G to go relisten to it so
34:20 but it’s all high you know what
34:22 sometimes think of it as like a preview
34:23 to a movie so if you really like the
34:25 blink then you can read the book so I
34:27 did that with a the hard thing about
34:29 hard things um I listen to the blink and
34:31 I was like yeah that sounds pretty cool
34:32 now I’ll go and get the book all right
34:34 perfect we’ll put that in the show notes
34:35 but oh well Blake pleasure interviewing
34:38 you I mean definitely I think a wealth
34:40 of knowledge and it really changes the
34:41 perspective for a lot of listeners right
34:43 a lot of our listeners come from that
34:44 traditional m& a side they think of
34:46 digital as its own thing but not a
34:48 complimentary thing so I think you got
34:49 two people right here that are gonna be
34:51 signing up on flip because I I I it just
34:52 connected some I don’t know about you
34:54 I’m going to go back and see if my
34:55 account from 2009 or 10 is still there
34:57 that’s going to be the having a check
34:59 all right perfect but pleasure pleasure
35:01 thank you very much thank you so much
35:03 thank you for listening to the m&a
35:04 Launchpad podcast if you’ve enjoyed
35:06 today’s podcast and would like to
35:07 support us please leave us a rating and
35:09 a review after you listen if you’re
35:10 looking for guidance on your next
35:12 business acquisition or sale Capital to
35:14 support your next business transaction
35:16 or to invest in a private Equity
35:18 opportunity visit Equity launchpad.com
35:20 to learn more and to connect with our
35:22 team if you know of an individual who
35:24 would be a great guest for the show head
35:26 over to equity launchpad.com for/
35:29 nominate where you’ll have the chance to
35:30 refer yourself or someone else to be a
35:32 guest on our show I’m Casey muu and I
35:34 look forward to talking with you next
35:35 week
