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
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
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
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 F 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 buy 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 operate
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 it’s just kind of impressive to
01:40 talk about the different opportunities
01:42 that are there to open up for
01:43 entrepreneurs and so definitely listen
01:45 into this one lots of
01:49 content all right guys just take one
01:51 second here real quick when you’re
01:52 buying a business ensuring the financial
01:54 health of the company is critical and
01:56 that’s where a quality of earnings
01:57 partner comes in quality of earnings
01:59 gives you confidence in financials of
02:00 the company that you’re purchasing it
02:02 aims to protect your investment and
02:04 ensure that you’re stepping into a
02:05 profitable business on Daya Patrick of
02:07 okam Advisory Group is your Dynamic
02:09 quality of earnings partner he’s here to
02:11 help you buy the right business on your
02:12 timeline Patrick’s entire practice is
02:14 focused on business Acquisitions your
02:16 Niche is his niche in over the past
02:19 decade Patrick’s helped more than 200
02:20 buyers like yourself successfully
02:22 purchase and operate enduring profitable
02:24 businesses in fact Patrick’s helped some
02:26 listeners of this show so if you’re
02:28 buying looking for help with a quality
02:30 of earnings Financial due diligence
02:32 Network capital and more head to
02:33 oconnell advisory group.com or just
02:35 click the link in the show notes hey
02:37 Blake welcome to the show thank you so
02:39 much for having me it’s good to be here
02:41 no likewise I’m excited you know because
02:43 I remember flipa I was telling this to
02:44 before the show right I mean I came up
02:46 that internet early 2000s internet world
02:49 and I remember the day or maybe the week
02:51 or the month that Flippa first got
02:52 created and I was excited to actually
02:54 kind of have you on the show and learn a
02:55 little bit more about what’s going on
02:56 over the past 15 years and so welcome
02:58 he’s even joining from Australia so hey
02:59 we’re Ross the world now all the way
03:01 from Australia it did it did throw me
03:03 off whenever I saw the accept for the
03:04 invite at 6 a.m. and I was like wait are
03:05 we scheduling something that early but
03:07 then realize what was going on awesome
03:10 so I am on the other side of the world
03:11 but hopefully it’s formative to everyone
03:14 absolutely and so instead of me kind of
03:16 take your thunder you want to go ahead
03:17 and maybe share to the audience a little
03:19 bit about who you are and what you’re
03:21 doing yes so I’m the CEO flipper I’ve
03:23 been running the business for six years
03:26 I mean in short the best way to describe
03:28 flipper is it is a Marketplace it’s to
03:30 decided we have buy and investors and we
03:33 have entrepreneurs those entrepreneurs
03:35 are looking to exit the investors and
03:36 acquirers are looking to buy it’s a
03:38 Marketplace and platform to buy and sell
03:39 businesses probably the unique
03:41 difference between us and maybe lots of
03:43 others is we only do digital so we only
03:45 do technology backed
03:47 businesses and so so let me ask that
03:49 because whenever you know in 2009
03:51 whenever I was we kind of first heard of
03:53 flipper it was really geared more
03:55 towards online websites right hey I have
03:58 a website it’s got you know 10,000
03:60 unique traffic a day and it’s making
04:02 $500 a day off of Google right like that
04:04 was kind of the I think the
04:05 stereotypical business but today are you
04:07 guys kind of the A to Z in the software
04:09 space or is there a specific Niche that
04:11 you’re looking at a to z so anything
04:13 that’s built on top of the platform
04:14 economy is the best way to explain that
04:16 so we’re really built around and
04:19 dependent on big Tech so Google’s a very
04:22 very critical part of our ecosystem
04:25 obviously AdSense Powers most blogs and
04:28 we reach and we sell and exit lots of
04:30 blogs that same technology is used to
04:32 power advertising for YouTube channels
04:34 and you can exit a YouTube channel on
04:36 flipper of course the IOS and Android
04:38 ecosystem connects at an app on flipper
04:41 so alltech so SAS Ecom online publishing
04:46 call it SL blog digital agencies as well
04:50 as of course e-commerce if I didn’t
04:52 mention that both direct consumer and
04:54 that’s typically a Shopify big Commerce
04:56 or wood Commerce or a Marketplace back
04:58 e-commerce business typically
05:00 FBA so fulfilled by Amazon it really
05:03 does run the gamut for a long time there
05:06 it really revolved around four key
05:10 categories so SAS apps online publishing
05:13 and Ecom as I alluded to that’s expanded
05:16 dramatically over the last probably six
05:19 months where we’ve seen good demand from
05:21 investors for other types of digital
05:23 assets so I alluded to this but YouTube
05:26 channels Chrome extensions slack plugins
05:29 any anything AI driven of course and we
05:33 think obviously that will be a big
05:35 category for us into the future Amazon
05:37 KDP so Kindle publishing assets have
05:40 become very fast growth for us as a
05:42 platform so anything that is digital
05:45 anything that is revenue generating
05:47 anything that a digital asset investor
05:49 can imagine taking over either operating
05:51 or finding an operator to run for them
05:54 where they’re looking to generate an Roi
05:56 off a cash flowing asset it’s pretty
05:58 amazing because I’ll tell you the I did
06:00 not know you could monetize like YouTube
06:02 channels and I I started doing some
06:04 research about a year ago I ended up
06:06 buying uh or I bought into one of the
06:09 passive Amazon stores right so you buy
06:11 in they were GNA manage it it was total
06:13 did not work out right it was one of
06:15 those like markup that was a bad idea
06:17 but I learned a lot as I started
06:19 searching in that space looking for that
06:21 like how do you generate that income and
06:22 I ran across YouTube stuff and I thought
06:24 that was the coolest thing to see
06:26 somebody be able to take a channel from
06:27 nothing and build it up get it automated
06:29 all these things just did not ever know
06:32 that that could generate income so
06:33 that’s pretty neat there’s it it’s a
06:37 fast growing category for us and there’s
06:38 a few reasons for it I mean one it is
06:41 there’s no such thing as completely
06:43 passive as you both would no doubt agree
06:45 but it is it is one of the more passive
06:48 asset classes or asset types and the
06:50 reason being is one it’s mostly about
06:52 the back catalog so it’s not necessarily
06:55 about creating new content and
06:57 continuing to strive for that next hit
07:00 it’s really back back catalog it’s
07:02 equivalent to buying a royalty’s a share
07:04 of a back catalog of a music in the
07:06 music industry so that’s kind of Piece
07:08 One Piece two is it’s a good complement
07:10 to an existing business doesn’t matter
07:13 what industry you’re in if you can
07:14 acquire a YouTube channel that has a
07:16 very very large following within that
07:18 industry it’s a great way to capitalize
07:21 on that community and move them across
07:22 to your to your other assets that’s
07:24 really true you could probably advertise
07:26 on those you could do your own stuff is
07:27 that kind of the idea yeah that’s
07:29 exactly how it works I mean we’ve seen
07:31 people who own you know they’re
07:33 tattooers they own tattoo parlors for
07:35 instance they’ve bought YouTube channels
07:37 within the tattooing space and then
07:39 they’ve obviously gone and rebranded
07:41 that they’ve utilized the viewership of
07:42 that to promote their core Services yeah
07:45 and I think the other thing too at least
07:47 you know and I don’t want to go too far
07:48 down the the video rabbit hole but
07:50 ultimately everybody understands video
07:51 they know how to make it right to start
07:53 a blog you do need to be more technical
07:55 than to start a YouTube channel right
07:56 every you know so it’s become that’s why
07:59 you have a lot of people that you know
08:01 can FL fluctuate into that but I think
08:03 you know that’s a good segue to Blake I
08:05 think to the the thing that maybe our
08:06 listeners really want to hear right
08:08 which is you know you’ve been running
08:10 foa for six years right and really what
08:13 have you seen in terms of the influx of
08:15 appetite right Casey and I we go to a
08:17 lot of different conferences and you
08:20 know the I like to call it the ETA
08:23 acquisition entrepreneurial ecosystem is
08:25 you know growing I mean I think like
08:27 wildfire right I think it’s right now is
08:29 really that golden age of really
08:31 starting to get a lot of more momentum
08:33 behind it and what have you seen on your
08:34 side because the thing that people
08:35 really struggle with is finding a
08:36 business F was a great platform to go
08:38 look through businesses so who have you
08:39 seen show up and what has been kind of
08:41 that growth yeah so investor abti is
08:44 birming obviously it’s a tricky climate
08:45 out there for obvious reasons but
08:47 interest rates High inflation are high
08:49 therefore investors may be hungry for
08:51 deal making but they are a little bit
08:52 skittish right now and so that’s
08:55 something we’ve clearly seen over the
08:57 last 24 months but as a general theme
08:60 there are hundreds of millions of
09:03 digital assets it is the new small
09:05 business economy and I find this
09:06 interesting line up 100 people on a
09:08 street you say please draw me a small
09:10 business you give them a piece of paper
09:11 draw me a small business they’re not
09:13 going to draw you a digital asset but
09:15 the reality is the next generation of
09:17 small business owners are digital native
09:20 and that’s the important thing to think
09:22 about so these digital assets are the
09:25 new small businesses therefore the types
09:27 of businesses that we will be acquiring
09:29 for the next 50 to 100 years will most
09:31 likely be digital businesses and so
09:33 therefore it’s logical that there’s an
09:34 m&a platform that enables startups and
09:37 online business owners to find a pathway
09:39 to exit and then it’s just about it’s
09:41 actually very similar it’s about the
09:43 metrics that govern those types of
09:45 businesses it’s about understanding the
09:47 operational nature of those businesses
09:49 it’s about understanding what the
09:51 multiples are what basis they traded on
09:54 and then what your Roi is on that
09:56 investment and so we are seeing a huge
09:59 appetite among clate worths but in
10:01 addition probably the most surprising
10:04 thing is that institutional investors
10:06 are coming down market and entering this
10:08 subscale asset class very very fast and
10:12 most of that is for the reason that
10:13 we’ve spoken about right now or already
10:15 today which is that they see an
10:18 opportunity to get a creative growth out
10:20 of their portfolio companies or some
10:23 other company that they already run
10:25 through the acquisition of a digital
10:26 asset so kind of thematic wise that’s
10:30 why it’s played out the way it has and I
10:32 think interestingly enough you know if
10:34 you take 2023 as we end up 2024 but if
10:38 you think about 2023 that was a record
10:40 year for business starts in the US so
10:43 there were 5 and a half million new
10:44 business applications file that’s the
10:46 highest ever recorded in the US and so
10:51 the vast majority of those business
10:53 owners are going to mature as digital
10:55 Natives and therefore again I’ll stated
10:58 the next generation of business own
10:59 leers that we end up acquiring will be
11:01 digital know I completely I’m bothering
11:04 into that thesis back in 2009 and so
11:06 it’s been fun to see it play out and I
11:08 think you know you kind of mentioned the
11:10 institution going down the ladder right
11:12 I mean it’s exactly what we’ve seen in
11:13 the lower middle mid-level markets right
11:15 and I think we I I do want to shift the
11:16 conversation to multiples here in a
11:17 second but again the multiples right
11:20 start to compress as you get further
11:21 down and you can go find better yield
11:24 now the trade-off is the big institution
11:25 guys have you know $100 million they
11:27 need to deploy it’s hard to deploy that
11:29 $100,000 to a million dollars at a time
11:31 and so you know we’ve seen the fund of
11:34 funds that are out there trying to just
11:35 really how do you scale up in a smaller
11:38 dollar amount ecosystem and it’s been
11:40 you know I’m not surprised to see it
11:41 also translated to the digital side
11:42 right it’s the same kind of story well
11:44 what’s kind of shocking to me is like
11:45 you know so we think about in our
11:46 Acquisitions especially how we so we
11:50 look for a platform right we look for a
11:52 business and then we want to acquire and
11:54 make it prettier and make it better
11:56 right and ultimately you know hold it
11:59 maybe hold it forever maybe somebody
12:01 Taps us on the shoulder whatever it is
12:03 that is our strategy here so feris and I
12:04 we’re just joking is that we’re working
12:06 right now closing our second platform
12:07 we’re expecting it happen at the end of
12:09 the month and then what is our next
12:11 acquisition so then we can then Focus
12:14 about going deep so Blake in that you
12:16 know one of the things that kind of hit
12:17 me is you know as being the guy that’s
12:20 searching for businesses that’s my job
12:21 my job is to search find get the guys to
12:24 the table I mean we we we’re a small
12:26 group over here but you know we we go
12:29 out and we’re focused constantly about
12:31 finding businesses finding business now
12:32 we found a business take our chrome
12:34 plating industry and now you sit back
12:37 after we’ve owned it almost a little
12:38 over 18 months and you sit there and you
12:40 go what are the other things we could be
12:41 doing that maybe the future private
12:44 Equity wants to know or or maybe it
12:45 makes us just make more money and
12:47 however it is so thinking about these
12:49 ancillary things that we can add
12:51 digitally to the business is fantastic
12:53 yeah so I’m just going to go ahead and
12:54 just ask the question in case you’re
12:55 beating around the bush all right Blake
12:57 I need to buy a plating YouTube channel
12:59 right something about Metal right that’s
13:01 my takeway from this episode I hadn’t
13:02 really thought of that but I mean again
13:04 the more and again we’re not going to
13:06 get a rollup opportunity through that
13:08 but you do start to build brand
13:09 recognition potential clients will come
13:12 out of that and it’s those kind of
13:14 complimentary things maybe more so to
13:16 what we’re doing right which is
13:18 different than clients of yours that are
13:19 just that is the intrinsic business is
13:21 that Channel or is that that stream and
13:22 so it’s kind of an interesting thing and
13:24 all our listeners are they’re out
13:26 searching for businesses they’re looking
13:27 to buy a business they get the business
13:29 and then they think about these what are
13:31 these other things I can do that may not
13:33 have to be a massive acquisition or
13:35 going out and starting well wow I never
13:37 even thought maybe I buy a YouTube
13:38 channel or what if there’s a a digital
13:40 service out there that’s selling
13:42 something you know that that it
13:44 complements what we do and now we might
13:45 have a little bit of recurring Revenue
13:47 in our business so those are some of the
13:49 things what are your thoughts around
13:50 that yeah so I think that you know
13:52 people buy for different reasons and
13:56 obviously um we can explore those so an
13:59 instit tional investor will will
14:00 typically be buying for you know a
14:03 creative growth or inorganic growth of a
14:06 of a portfolio company and it could be
14:09 that they’re looking to roll up assets
14:11 within a given industry but it could
14:13 also be that they’re just looking to
14:15 bolt on a revenue generating digital
14:18 asset to an existing asset within an
14:20 existing industry and so we’ve got a
14:22 classic example of that where you know
14:24 private Equity out of New York owns a
14:27 chain of um apparel um retail stores and
14:32 they’re looking for ways in which to
14:34 complement that so they go hunting for
14:36 Ecom businesses which are in the
14:38 sporting and athleisure Niche and for
14:42 them that’s about adding Revenue but
14:45 it’s also about getting new eyeballs and
14:47 it’s about Distributing their existing
14:49 range of products to a new channel and
14:51 to a new community and so that’s a
14:54 pretty obvious play that we’re all
14:55 familiar with the other reason that
14:58 people buy assets is really really um as
14:60 you spoke about before you know you’ve
15:02 got a a metal plating business you’re
15:05 never going to acquire a YouTube channel
15:06 so we all kind of need a pathway to new
15:08 users and if you look at say flippers
15:11 marketing mix this is kind of a good way
15:12 to think about it we have a very big
15:15 podcast we started that from scratch but
15:18 in theory we could buy a podcast that
15:21 gives us the same access to the same
15:23 Community you then get a fast start and
15:26 you fast track your pathway to having a
15:28 successful podcast through acquisition
15:30 rather than the Blood Sweat and Tears
15:32 you might have to put in to grow that
15:34 from scratch we have a big email
15:36 newsletter couple of well 600 700,000
15:39 people on our ml newsletter but I could
15:41 in theory buy a newsletter that is just
15:45 around my specific topic that is going
15:47 to complement my business give me access
15:49 to a new community help me funnel users
15:51 into my core business flipper also has
15:55 an education arm where we’re trying to
15:57 coach online business owners to get
15:59 acquisition ready or exit fit and so we
16:03 could go and buy a learning business
16:06 where they already have the skills they
16:08 have the technology they have the
16:10 capability so when people think about
16:12 Acquisitions you need to think about
16:14 them through the lens of what are you
16:15 trying to achieve by acquiring that
16:17 company is it incremental Revenue great
16:20 you’re acquiring the business revenue is
16:22 it for the eyballs great where you’re
16:24 acquiring the community is it because
16:26 they are skilled at something that you
16:28 are never going to be skilled at and
16:30 acquiring them is a faster pathway than
16:31 it is to assemble that team then that’s
16:34 the reason you do that so it’s it’s all
16:37 unique ways and they’re really kind of
16:39 many rollups but they’re really there to
16:40 accomplish one specific point right
16:42 almost like a micro rollup right is
16:43 maybe the best way you know hadn’t
16:45 really thought through that lens more of
16:47 the unique examples you’ve seen people
16:49 come and hey make or something that you
16:51 know an acquisition through flip on
16:52 they’re like man that really impacted
16:53 the business right those things I think
16:55 are the most interesting things it’s
16:57 something that very few people talk
16:58 about across kind of the rest of the
16:59 people that we’ve interviewed yeah so I
17:02 think there’s a there’s a couple of
17:03 pieces here the first one is and you
17:05 made this point before multiples are
17:08 actually lower As you move down market
17:12 so the cost to entry at for subscale m&a
17:16 is lower and that’s that’s a good thing
17:18 it makes it more accessible to many but
17:21 it also makes it a very very viable
17:23 Pathway to growth and so I’ll just
17:26 quickly tap into kind of the reasons why
17:28 that is you know one is the risk profile
17:30 smaller businesses typically carry
17:32 higher risks therefore the multiples are
17:33 not at high growth potential you know
17:36 large or Venture back companies are
17:38 often valued based on future growth
17:40 expectations or future earnings whereas
17:42 smaller businesses are more likely to
17:44 not have that same level of growth
17:46 potential they’re not Moon shots that
17:49 same inflection point opportunity isn’t
17:51 necessarily there and and scalability
17:53 and infrastructure they they they’re
17:55 often a bit more limited in that regard
17:57 and therefore these are some of the
17:58 reasons why multiples are a little bit
18:00 lower which means the entry points are
18:03 really good for strategic thought like
18:05 the question you’ve just posed which is
18:07 you know what are the examples of people
18:08 doing this successfully to grow their
18:10 businesses there are just so many I mean
18:13 I told you the quick story offline which
18:15 I’ll share now cuz I think it’s really
18:17 really fun we had a a business in San
18:19 Francisco um they’re called sparkel
18:21 check it out SP p o r c sporcle.com it’s
18:26 the world’s largest online trivia
18:29 business and so if you go there you’ll
18:31 see that you can just participate in
18:32 trivia contests you can start trivia
18:34 events with your friends with your
18:36 family Etc sounds kitchy but this is
18:38 actually operating at a severe scale
18:42 multimillion business they also own I
18:45 seriously think it’s like a 50 50 to $75
18:47 million business they own a number of
18:52 pubs so pubs and taverns where people
18:55 obviously go to can participate in in
18:57 trivia events now there thing is to a
19:00 bit like Google says we’re going to
19:01 organize the world’s information their
19:03 whole thing is to bring a crowd together
19:06 for trivia testing in games that’s their
19:08 whole shtick that’s their whole strategy
19:10 now there’s only so many ways you can do
19:12 that some people already own a
19:13 particular Niche within that overall
19:16 theme and strategy so they came to
19:17 flipper and they set a mandate on the
19:20 platform that mandate ultimately matched
19:22 them to a business called typing test
19:25 and you don’t have to be a genius to
19:26 figure out what they do um they test
19:28 people’s typing capability and skills
19:31 you can also learn how to type within
19:33 the typing test environment now that
19:35 business was based in Finland if I
19:36 remember correctly and therefore you’ve
19:38 got a San Francisco based business that
19:41 is operating at scale certainly not a
19:44 subscale business and they’ve gone and
19:45 acquired a subscale asset but the
19:48 subscale asset was subscale by Revenue
19:50 it’s not subscale by users I’m talking
19:53 tens of millions of users using typing
19:56 test every month so the opportunity for
19:59 foral to capitalize on that audience is
20:01 going to change their business
20:03 substantially now middly that business
20:05 was is is in transition it’s only it was
20:08 only acquired about three months ago but
20:10 word on the street talking directly to
20:12 Ari the founder at sporl he believes
20:14 it’s going to make a very substantial
20:15 strategic difference to their business
20:17 and that’s just one example of many many
20:19 stories like that I just would have
20:21 never thought of that right I mean
20:22 that’s the thing it’s like you sit there
20:23 and your brainstorm to make that
20:25 connection right so inside of Flippa
20:28 you’re saying there’s you have some type
20:29 of a matching program right explain a
20:32 little bit more how that works because
20:34 obviously he did not sit there and think
20:36 like this would be a perfect match right
20:38 it was connected it was probably like
20:40 wow I’ve never thought of that and does
20:42 the buyer just say hey we do this does
20:43 anyone have any cool complimentary
20:45 business ideas we’ll buy your business
20:48 or how does that work so kind of right
20:50 you know you’ve got the biggest software
20:52 aggregators in the world you know Val
20:53 soft constellation these types
20:56 registering their mandates on the
20:57 platform looking to find a an easier
20:59 Pathway to deal flow and deal
21:00 origination so yes kind of the way it
21:04 technically works is someone like an Al
21:07 who we alluded to before the owner of
21:09 sporle he or one of his staff will
21:11 create a mandate the more specific that
21:14 mandate the smar of the matching is
21:15 going to be now it’s genuine AI we can
21:18 do that because we’ve got 1.6 million
21:21 registered buyers on the platform
21:23 globally we pick up another 20,000 net
21:25 new buyers each month we’ve got 3 and a
21:27 half th000 assets coming to the plat for
21:29 each month so there’s lots of data that
21:32 we can then use to drive basically what
21:35 called graph neural networks there’s two
21:37 graph neural networks they’re basically
21:39 plotting the likeness of each asset to
21:42 each other and the likeness of each
21:45 buyer to each and so what they’re then
21:47 doing is looking at intense signals and
21:49 it’s trying to predict whether a buyer
21:51 would be interested in a particular
21:53 asset now sometimes it’s very simple
21:56 sometimes it is location category
21:57 business model sometimes it’s more
22:00 specific than that it’s I want an asset
22:03 which is sub 5% monthly churn in the
22:06 metals industry and then that’s going to
22:09 be difficult for us so what we’ll then
22:10 do is watch what other buyers like that
22:12 buyer look at and then we will serve up
22:15 assets that other buyers liked that we
22:17 think this buyer will therefore there
22:19 therefore probably like too and so in
22:21 Al’s case he’s literally waiting for an
22:24 asset to hit our platform that matches
22:26 his mandate we then programmatically
22:27 will make him aware P new asset has
22:30 matched come and check it out now he
22:32 will enter the deal room and that’s
22:33 essentially how the matching works but
22:35 it happens at scale we’re doing 425,000
22:37 programmatic matches each week yes so
22:40 for those listeners right I mean I think
22:42 you know one of my takeaways is that
22:43 there’s a digital spin for any business
22:46 right it does not necessarily have to be
22:47 the core of the business it could be
22:49 something you know like we’re talking
22:50 about whether the tattoo parlor the
22:52 trivia company or something else um but
22:54 for those that are looking to buy an
22:55 immediate business right I feel like the
22:58 business is not complimentary but it is
22:59 the business Blake do you want to walk
23:01 through some sample multiples for people
23:03 right you know what are you seeing in
23:04 the multiples both in terms of you know
23:06 what they are relative to different
23:08 sizes as well as you see kind of
23:10 variance in the the different categories
23:12 as well I would imagine SAS is a little
23:13 different than YouTube and all that so
23:16 very interesting that’s right so a bit
23:19 of a blatant plug we do make this
23:21 completely transparent and it’s
23:22 available for all it’s free so if you go
23:24 to flipper.com
23:26 insights Data Insights this is published
23:29 there for all to see it’s always up to
23:31 date and you can see that by business
23:33 model so in 2024 half one obviously we
23:37 haven’t concluded half two yet that will
23:39 get released in in early January but
23:41 half one multiples were slightly up
23:43 we’ve obviously come off a slightly
23:44 constrained period for obvious reasons
23:46 we’ve gone through this but High
23:48 interest High inflation consumer
23:50 sentiment you know investor sentiment is
23:51 not quite as good as we would like it to
23:53 be right now so half one we did see a
23:56 slight bump on what it was in 2023 half2
23:59 so let’s just check check out e-commerce
24:01 that’s pretty familiar to most people
24:03 top desile four to 4 and a half we’ve
24:05 seen some some businesses list as high
24:07 as five and six but they get pushed down
24:09 to around that four four and a half
24:11 times and I’m talking top Desa let’s
24:13 have a look at SAS well let’s look at
24:14 apps just go through the order here apps
24:17 a little bit higher actually we’re
24:18 topping out just an excess of five times
24:20 profit by the way Revenue multiples are
24:23 not really a factor in subscale
24:26 businesses we’re talking profit
24:27 multiples okay for a SAS asset let me
24:31 just have a look here top desol achieved
24:34 in half one was 6.2 so 6.2 times profit
24:40 top Des Al for SAS but the average
24:43 importantly the average for a SAS
24:45 business was just sub four sub four
24:49 times so that gives people a
24:51 sense of multiples right now no And for
24:54 those listeners that you know are in the
24:56 kind of the ETA m&a position space right
24:60 software is the sexy thing SAS is a sexy
25:02 thing because we think about big
25:03 multiples but again you’re in that
25:05 subsize and so this a you know flip is a
25:07 great way to go find a interesting you
25:10 know vertical that you really like you
25:13 can buy that out of forx multiple and if
25:14 you grow it right you can actually
25:17 pretty quickly get to that 8 to 10x
25:18 multiple right because the problem is
25:20 most people think software they think
25:21 they have to buy it at a 10x multiple or
25:23 an adx multiple something really high
25:24 but again if you’re in that substack
25:26 size you get a much better multiple now
25:28 you have to to still do the leg work to
25:29 build it up and and maybe Blake I’ll
25:32 actually add this add-on question are
25:34 most of those single person businesses
25:36 or are some of those you know a team of
25:38 10 people right how what are the scale
25:40 of those from the kind of operational
25:42 side that you’ve seen just depends when
25:44 we’re across agnostic Marketplace so you
25:47 we we will look at businesses that are
25:49 you know between literally 100,000 up to
25:52 50 million so clearly a $50 million
25:54 business is going to have a a big team
25:56 around it or or most likely will have
25:58 big team around it whereas a a business
26:00 that’s trading sub1 million tends to be
26:02 a soul Trader a onean show and so um
26:06 that that’s an important consideration
26:08 obviously because the you know the
26:09 bigger the business the more complex it
26:10 is to operate harder to just stick in to
26:13 an existing business and and expect it
26:15 to run just the same way it has so you
26:18 know for a new investor we would
26:19 typically regardless of your capacity to
26:22 pay we would typically encourage
26:25 firsttime digital investors to look at
26:27 clearly sub 1 million opportunities um
26:30 for those more sophisticated strategic
26:32 software operators who come with a team
26:35 or a skill set themselves that can
26:37 complement the asset you know clearly
26:39 that’s a different story and they’re
26:40 very capable taking over return and what
26:42 are you looking at on the YouTube
26:43 channels what I know those probably
26:45 trade very different really likes those
26:46 YouTube channels he’s thinking about
26:49 back no this total selfish questions
26:50 because I I mean look I know how hard it
26:52 is to run a business and I know how
26:54 difficult it is but when you can get a
26:56 content right that YouTube is massive on
26:59 content right and if you can control an
27:01 audience you can drive that traffic
27:03 right so it’s got a be it’s a beautiful
27:05 way I think to complement almost any
27:06 business and so they’re interesting
27:08 because the revenue and profit multiples
27:10 are actually similar because they
27:12 operate at such high margins so you know
27:14 clearly there’s not a lot of cost that
27:16 goes into producing you know good
27:18 quality video content these days
27:20 sometimes there is very very high
27:21 production quality I obviously
27:23 appreciate and respect that but a lot of
27:24 YouTube channels have sold you know
27:26 where Revenue margin and profit margin
27:28 are very very closely tied so I mean I
27:31 can’t imagine you’re getting a real p&l
27:33 you’re probably just getting a
27:34 screenshot of the AdSense account and
27:35 call it a day it’s exactly right so you
27:38 are getting a p&l which exists of a
27:40 single Revenue line and a single cost
27:42 line the revenue line is AD revenue and
27:45 the cost line is production cost and so
27:47 they’re simple businesses but come with
27:49 a good strategic bit of punch and so
27:52 yeah they are selling for quite high but
27:54 they’re also nent right now so they’re
27:56 small so you might be able to buy a you
27:58 know YouTube channel with couple hundred
28:00 thousand views a month in a particular
28:03 industry which matters to you and you
28:05 might be able to buy that for sort of
28:07 five times Revenue but five times
28:09 Revenue you’re coming off a low Bas so
28:10 you might be talking about doing it’s
28:12 it’s an asset doing $50,000 in Revenue
28:14 so you might be able to buy that for
28:15 $250,000 the key piece is not its
28:18 Revenue percentual the key piece is its
28:20 audience capability and quality for you
28:23 and the business that you currently run
28:25 love it now definitely uh some new new
28:28 things to think about about here kind of
28:29 as we kind of continue down this journey
28:31 so when you guys take a look at flipa
28:33 just kind of in your in your in your
28:34 broad picture you know you talked about
28:36 you guys G be doing podcast you’re
28:38 growing the Baseline you’re going out
28:39 there the to our audience and to our
28:42 members what is really that pitch to the
28:44 to the m&a group right what is that kind
28:46 of closing remarks that you want to kind
28:48 of say to those guys in the sense of you
28:50 know obviously you told us a lot of
28:51 great stuff about flip how to utilize it
28:54 what’s what’s your really your thing to
28:55 the to the m&a
28:57 guys yes so number one platform um
28:60 therefore more deals uh more buyers so
29:02 if you’re an investor you don’t get more
29:04 deal flow than um you don’t get more
29:06 deal flow anywhere else and if you’re a
29:09 entrepreneur and you’re looking to
29:10 access the world’s largest collection of
29:12 investors and acquirers there’s no real
29:15 other choice for a platform that can
29:17 connect you at scale with the efficient
29:18 deal making that we make available we’re
29:21 kind of end to endend so it’s really
29:23 interesting so we are a Marketplace and
29:25 we are a platform but we have 22
29:27 certified m&a advisors on staff and they
29:30 are helping business owners find a
29:32 pathway to exit they’re a conduit to
29:34 deal making they’ll help you with deal
29:36 structuring so between the access and
29:38 the reach plus the service layer on top
29:42 of that it really is an endtoend m&a
29:45 opportunity I think for those people who
29:47 are used to traditional m&a the key
29:49 message is to school yourself up on
29:51 digital because it’s not actually the
29:54 same but it’s kind of like a mini
29:59 business school opportunity you go to
30:00 flipper it’s it’s all there you sign
30:03 some ndas you get a very good feel for
30:06 the metrics that matter against a given
30:08 asset type call it SAS we’ll show you
30:11 the churn rates we’ll show you the LTV
30:14 we’ll obviously show you the revenue
30:16 performance we’ll show you the
30:17 operational detail of the business we’ll
30:19 connect the data directly to a stripe or
30:22 a Shopify and show you the raw
30:24 information coming and flowing through
30:26 those platforms you can then learn about
30:28 the business and how it operates it’s
30:30 like a mini business school so you’re
30:31 interested in just browsing before you
30:34 buy get a feel for the assets that are
30:36 on the marketplace and how they operate
30:39 It’s Kind quite inspirational to think
30:41 think about what these entrepreneurs
30:42 achieve before they go into this exit
30:44 pathway AB sounds fantastic window
30:46 shopping for businesses I love it yeah
30:49 and and Blake quick question last
30:50 question for you you know what’s harder
30:52 for you guys to find is it invest is it
30:55 buyers or is it sellers sellers sell
30:58 side so so you out there looking for
30:60 good quality sellers awesome all right
31:02 well we can go ahead and move into our
31:04 rocket round where we ask the listeners
31:06 as the attend same three questions so
31:08 the first question is what do you like
31:10 to do in your free time Blake and this
31:11 is about you Blake the person not Blake
31:13 the CEO of flipper yes so I’m part of a
31:17 WhatsApp group it’s called gbg and it’s
31:20 great blokes golfers and we are a
31:23 group of golf tragics um and we meet
31:26 each weekend and we try our very best we
31:28 don’t post good scores but it’s fun and
31:30 so I got into that I started playing
31:32 golf um when I was 40 so I probably took
31:35 it up a bit late I think uh and so I’m
31:38 now mid-40s I’m not that much better uh
31:41 but yeah golf is the thing for me that
31:44 is exactly my story I started about
31:47 35 obviously with all the kids don’t
31:50 have any time I’m a terrible golfer I
31:52 love the game you know and so right now
31:55 I live like cariously through my
31:56 daughter but man like I’m just going to
31:58 be what I am you know I’m not going to
31:60 be that guy I’m going to play four or
32:01 five times a year when I do I’m just
32:02 going to love playing and be a hack so I
32:05 know the feeling I’m still yet to learn
32:07 Golf and we had uh the the author of uh
32:08 m&a for dummies Bill snow and he
32:11 basically said it pretty straight he’s
32:12 like if you’re gonna be in the m&a space
32:14 you have to be a golfer so I gotta go
32:16 pick up that that sport here so all
32:19 right next question what’s your most
32:20 memorable moment in your business
32:22 Journey oh look it’s it’s a bit
32:24 embarrassing so I’ve started a few
32:26 businesses in my time um but basically
32:28 needed to figure out a pathway to earn
32:30 some revenue from a particular business
32:32 I was running we had a large siiz
32:34 community they were passionate about
32:35 food I created a snackbox um it was a
32:39 you could subscribe to this monthly
32:41 snackbox uh we published it um we sold
32:45 200 in an hour I had to pull it down CU
32:47 I didn’t have the boxes and I didn’t
32:48 have the snacks but I did need the
32:50 revenue so I shut it down went shopping
32:54 bought the 200 boxes started to fill it
32:56 with snacks myself got in the car and
32:58 started to drive around over a 48 hour
32:60 period of time delivering these snacks
33:01 all across
33:03 Australia memorable time I love it
33:06 that’s huge what a not man yeah I mean
33:09 hey you got to start somewhere right and
33:10 it’s not fake it to you make it but it’s
33:12 have the werewolf thought to solve it
33:14 when you get something some traction
33:16 that’s kind of really what it PS down to
33:18 awesome and so then last question what
33:20 is your favorite tool or resource you
33:22 know what I’m I’m a big subscriber to
33:24 blinkist which is um a really cool app
33:27 where they summarize B for you in a
33:28 15minute blink as they call them and so
33:31 obviously being a CEO of a
33:33 venture-backed
33:34 Marketplace I’m very busy I’m traveling
33:36 a lot I’ve got a family and so blinkers
33:39 has been a lifesaver just to get through
33:41 as much learning material as possible
33:44 and it’s been it’s been really great so
33:45 check that out awesome blink is good my
33:48 problem is like I feel like it’s it’s
33:49 add because it’s even more compressed so
33:52 like I’ll listen to an Audi book or
33:53 podcast and then I’ll still lose focus
33:55 so then blink I’m like oh shoot I just
33:57 missed a whole 15 minutes think so I
33:60 going to go relisten to it so but it’s
34:01 all highl you know what I sometimes
34:03 think of it as like a preview to a movie
34:05 so if you really like the blink then you
34:07 can read the book so I did that with the
34:09 um the hard thing about hard things um I
34:11 listened to the blink and then I was
34:12 like yeah that sounds pretty cool now
34:13 I’ll go and get the book all right
34:15 perfect we’ll put that in the show notes
34:16 but oh well Blake pleasure interviewing
34:19 you I mean definitely I think a wealth
34:21 of knowledge and it really changes the
34:22 perspective for a lot of listeners right
34:23 a lot of our listeners come from that
34:24 traditional m&a side they think of
34:27 digital as its own thing but not a
34:29 complimentary thing so I thank you got
34:30 two people right here that are going to
34:31 be signing up on flip because I I I it
34:33 just connected some I don’t know about
34:35 you I’m going to go back and see if my
34:36 account from 2009 or 10 is still there
34:38 that’s gonna be the first time to check
34:40 all right perfect but pleasure pleasure
34:42 thank you very much thank you so much
34:44 thank you for listening to the m&a
34:45 Launchpad podcast if you’ve enjoyed
34:47 today’s podcast and would like to
34:48 support us please leave us a rating and
34:50 a review after you listen I’m Casey mchu
34:52 and I look forward to talking with you
34:53 next week
