[00:00:00 - 00:04:19]

Will Smith: Today's interview was a fun one for me. Clayton Collins bought a media business, HousingWire, a B2B publisher for professionals in the housing industry. Clayton has almost quintupled sales from 4.

Million in revenue when he acquired it.

To approaching 20 today.

He shares with us how he's done that.

You'll hear that strategic acquisitions are a big part of the story, acquisitions that added events and data products to the Housing Wire ecosystem. And you'll hear that Clayton began this journey with a big vision, an intention to transform the business he bought into something grander. As an entrepreneur, I love this. It's inspirational, it's bold, and it speaks so highly of Clayton that he's delivered on it.

But you'll also hear us talk about how his original search investors reacted to that initial vision. Not all got on board. Clayton makes a great point about the value of having diversified sources of capital, as opposed to just one or two who can effectively veto your project. This conversation should appeal not just to those of you who, like me, are intrigued by media businesses, but also to the visionaries among you who think less about multiples and more about what a little business you buy could could one day be. Here is Clayton Collins, CEO of HousingWire.

You are much more likely to have success getting an SBA loan underwritten for your deal if you understand how lenders evaluate risk when financing a business acquisition. Today, leading SBA loan broker Heather Anderson will host a webinar teaching the five key risks that lenders look for, how to spot them in your own deal, and how to mitigate them. Heather will cover customer concentration, buying into an unfamiliar industry, seasonality, businesses that require licensing and business valuation based on recent growth as opposed to steady eddy historic growth. Heather has years of experience doing hundreds of SBA deals, so come learn from the best. That webinar is today, Thursday, November 6, noon Eastern.

Link to register is right at the top of this episode's show Notes or.

On the Acquiring Minds homepage. Acquiringminds co.

Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. You know Inzo Technologies as one of the leading IT managed service providers serving the search community, led by Nick Akers, an Acquiring Minds guest who bought the.

35 year old business.

The team at Inzo regularly works with searchers and their acquisitions and one feature of acquired businesses that Enzo is seeing over and over is the need to implement cybersecurity promptly during the transition. So many Acquired small businesses either have glaring vulnerabilities, lack security best practices or both. That's step one to de risk the deal you just closed should be addressing these issues. INSO is your full service IT MSP for post close stability. They assess your target, surface the biggest risks in plain English and give you a day one through 30 plan to cut exposure, prevent downtime and even find cost takeouts like bloated telecom bills.

Check out enzotechnologies.com on I n Z O or email Nick directly@nickot technologies.com Clayton.

Collins welcome to Acquiring Minds Will.

[00:04:19 - 00:04:20]

Clayton Collins: Thank you for having me.

[00:04:21 - 00:04:43]

Will Smith: This is going to be fun for me. Clayton, you bought a media business and.

A media business in real estate no less.

There was a time when I had a media business in real estate much smaller than yours. So let's get into it. Clayton, some background on you please and take us up to what led you to want to buy a business in the first place.

[00:04:43 - 00:06:13]

Clayton Collins: Awesome.

Well appreciate it Will. I'll do the abridged version and we can go deeper. Where wherever you'd like. But I started my career in in banking in a management program at, at Citigroup. Had some awesome exposure leading people in retail and small business banking at a super early stage in my career.

After a few years in retail and commercial banking, went back to business school, pursued the investment banking route at RBC Capital Markets. And at rbc I was a generalist banker. But I fell in with a, a group that did a lot of tech, media and telecom deals and I had the chance to lead or take a leading role at a few sell sides, small sell sides at RBC of digital media companies and getting a chance as a you know, first or second year associate to work closely with, with the, the general managers and CEOs of these small media businesses that we were selling. Really got my like entrepreneurial interest kind of spinning and I thought more and more about where I wanted to take my career and it brought me back to something I I learned about in business school and that's, that's entrepreneurial acquisition and, and search funds. So after a few years as a banker, Will I I jumped left RBC and started a search fund to go hunt for a business to acquire and operate.

And that's kind of the, that's the background before we get to the, the beginning of, of the HousingWire story.

[00:06:13 - 00:06:26]

Will Smith: Awesome. That was great Clayton. So to be clear, you had an MBA and actually went into banking and then it was a few years later because often searchers will come right out of school to having decided to search. Not.

Not so for you.

[00:06:26 - 00:07:00]

Clayton Collins: I go into business school relatively young. I went back to business school at Duke after three years of post undergrad experience and I felt like coming out of my MBA I was still a little bit green and had a little bit more experience that I wanted to gain before pursuing the search route. So I learned about search funds in business school in 2011 or so, but felt like I wanted some more transactional experience and just exposure to the deal world before jumping down this path.

[00:07:01 - 00:07:07]

Will Smith: And as you reflect back, do you feel like the having been in banking that it ended up being really relevant experience?

[00:07:08 - 00:08:12]

Clayton Collins: You know, that's a question I've thought about a lot and it's certainly relevant experience and has shaped the type of CEO that I, that I am. I'm you know, pretty acquisition focused in our, in our strategy, but we certainly know how to pull the, the organic lever. But I, I, I do think that without the M and A experience I'd probably be a slightly different type of operator. Um, but when I think about the experience, it was most important to me. It was really those first couple of years out of undergrad and a generalist management associate like management training program that has prepared me best for the responsibilities as a, as a CEO.

So I thought that I'd be looking back at my investment banking experience with like all these like tools, tactics, modeling skills, negotiation skills that'd be so important as a CEO. But it was really that, that experience, my first few years out of school at Citi, leading teams that most prepared me for, for what I was going to face in this entrepreneurial path.

[00:08:13 - 00:08:19]

Will Smith: Because the entrepreneurial path is more about management than it is about deal making or the financial piece.

[00:08:19 - 00:09:10]

Clayton Collins: Yeah, I mean when we acquired Housing Wire, the business had 14 people. Before that I had led a branch at Citi in midtown Manhattan that had close to 30 employees.

So I had experience leading a retail branch with more employees in the business that I had acquired. Now that was a short lived experience at Citi. It was in the middle of the financial crisis, incredibly tumultuous time, which also shaped my management skills in a way. But that exposure of leading teams, opening the office every morning, getting people on task and ready for the day, particularly in 2009, which was just wild, definitely prepped me for these early, you know, early managerial challenges I'd face as a search CEO.

[00:09:12 - 00:09:36]

Will Smith: And when you've said that you are, your banking experience probably oriented you to being acquisition focused.

So that's not the only story here, but it is a big Part of the HousingWire story, which we'll get to. When you have done those acquisitions, Jumping ahead a little bit. When you have done those acquisitions, are you leading them? Are you the finance guy because of your banking experience?

[00:09:37 - 00:10:19]

Clayton Collins: Yeah.

I mean, over the years we've kind of formed more of a deal team which is, you know, two or three people depending on the deals we've worked on. I am definitely extremely hands on in our deal processes. But now that we've done five, I have a finance leader, Andrew, who is incredibly important at moving deals forward and I lean on him heavily for, for financial analysis and modeling and working with our accountants and lawyers and in the diligence process. So as we've gotten slightly more mature in our deal experience, it's not just me running solo, but the first few. It certainly was.

[00:10:20 - 00:10:26]

Will Smith: Yeah. Well, I'm picking at this Clayton only because there are a lot of listeners who don't have finance backgrounds.

[00:10:26 - 00:10:27]

Clayton Collins: Yeah.

[00:10:27 - 00:10:45]

Will Smith: And for those folks often hearing the preponderance of former bankers, people with MBAs, former private equity types can be like, oh, do I have to have that experience to go do this? So that's why I always press and try to understand from each source's experience who does have that experience, how relevant was it?

[00:10:45 - 00:12:18]

Clayton Collins: Ultimately, I think as a entrepreneur or an operator, a CEO, you are going to have to and you're going to want to. And the most important part of the job is hiring people with strengths other than yours to, to be around you. And hiring finance and deal talent is a very easy thing and smart thing to do. So if you're an operator going into an acquisitive strategy without deal experience, no, you shouldn't venture in blindly, but you should hire the right people around you, whether that's bankers and advisors and experienced chief of staff, tapping a board member or investor to kind of join you in the saddle as you go through the first tuck in or add on acquisition or if the business is of the scale, hiring a corporate development analyst or associate or someone to work on your, you know, your mini deal team. So I think as a operator you have to, and it's the most important thing of hiring people smarter than you to supplement your skill set.

If you're a fabulous deal person, you're probably going to need some great general managers and marketers and sales leaders around you. If you're a fabulous sales leader, there's going to be other parts of your skill set that aren't as developed. So being honest with myself as a CEO about where my strengths lie and where I need to in the early stages of the business put smart people around me I think was an incredibly, you know, important activity and incredibly important step in this, in this journey.

[00:12:18 - 00:12:46]

Will Smith: Great. Well, we're gonna, we're gonna hear about where you, what gaps that you saw in yourself that you then filled and how you did that.

But returning back to where we were in the story at the very beginning of it, Clayton. So it was actually working on deals that media industry, telecom media businesses that was finally got you excited enough to, to go out and search. And so that is to say that you had a, had a media related thesis. Tell us, take us into your search now.

[00:12:47 - 00:13:49]

Clayton Collins: My thesis was more so built around information services technology data with a little media bend around the broader financial services and real estate market.

But like most searchers I looked at deals in a lot of areas. But if I had like a, a generalized thesis, it's that I had a strong background interest and experience set around the real estate banking and financial services world. And I was looking initially looking for transactions that, that helped me leverage that that small experience that I had and like wanting to venture into conversations with sellers and founders where I could at least talk talk and understand their business and have some understanding of the challenges they were facing. So I was really looking at deals and trying to focus my thesis on areas where I'd have a slight advantage over someone who didn't have the work experience I had going into the search.

[00:13:49 - 00:14:20]

Will Smith: Well, you found exactly such a business.

But it's kind of remarkable to me because when I think about what your criteria were, the universe of, you know, media or data businesses in real estate and I guess you said finance too, but kind of secondarily has to be just tiny or ha at that time and probably still. Right. This isn't like a, you know, a fragmented industry with 10,000 mom and pop shops you could buy around the country.

[00:14:21 - 00:15:30]

Clayton Collins: Oh, absolutely. Yeah.

No, there was no, I can't say I had a thesis that said I'm looking at mortgage and real estate brokerage industry B2B publications. That would have been a week of activity like talk talking to everybody. And I quickly would have learned there's only one or two that met my, my size criteria. So this is one of the, the many spaces that I spent time in during my search. And the, the reality on, on locating and, and finding HousingWire is it wasn't direct outreach but I was very familiar with the brand.

So there was a point in my search where I was looking at data and like information driven software businesses around the Mortgage industry. And Housing Wire still to this day publishes a list of the top 100 mortgage technology companies. So I was using a Housing Wire resource for, for deal identification and like calling on people that had read about in, in, in Housing Wire. So I think trade publications are an incredibly smart deal sourcing tool for, for searchers or other entrepreneurial acquirers. And so Housing Wire was on my radar for, for a few reasons, but one that I was using it for, for deal sourcing.

[00:15:30 - 00:15:31]

Will Smith: How funny.

[00:15:32 - 00:16:35]

Clayton Collins: Yeah. So I had familiarity with the business and I was at a, a cocktail hour in New York for Duke's entrepreneurship program. Probably, I don't know, the first, the first year of my search and I, I met a Duke alumni who wasn't familiar with search but like later chose to take the search fund route. And early in his search process he met an investment banker who had shared a deal with him.

And his feedback was like, hey, this isn't a fit for me, but it might be a fit for somebody I know. And I got a call from, from this gentleman and Benjamin. And Benjamin's like, hey, this might be interesting. You might want to take a look at it. And I saw the teaser, like without the company name on it.

I was like, this sounds shockingly familiar. I know who this is. And I said, absolutely. Make the introduction. And so all the proprietary outreach, like knowledge of the business before actually meeting the founders.

The, the ultimate introduction came because I was vocal about what I was looking for and a friend made the introduction for me.

[00:16:35 - 00:16:46]

Will Smith: Great, Clayton.

And before we get into more about Housing Wire and learning what it was and the deal itself, your search format was traditional? A traditional search.

[00:16:46 - 00:17:55]

Clayton Collins: Absolutely.

So I, like I mentioned, I went to Duke for business school. At the time, Duke did not have any type of search fund or ETA club or curriculum. I learned about the search model at a class I actually took at Duke Law where there was one case study on structuring private equity transactions and the case happened to be about a search fund deal. And that was my like eye opener to, to the, to the idea of entrepreneurial acquisition because I was coming from a program and a school and really didn't have a network of anybody in the Search1 ecosystem. I made the decision that I was going to read the Stanford Primer and go like straight down the fairway, like, exactly.

The Stanford Primer. This has been successful for their entrepreneurs. I'm following this path as I raise search capital and pursue my search. So I went as like down the fairway as I possibly could. My investor group is entirely search Fund investors, folks with a lot of experience in, in the model and have, have proven extremely valuable in the search process, the acquisition process and and now as board members and advisors as we're operating.

[00:17:56 - 00:19:06]

Will Smith: What do the following Acquiring Minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursam. They all went through the Acquisition Lab, the accelerator and community for people serious.

About buying a business.

But they represent just a sliver of.

The Lab's success stories. The number of deals across the Lab's.

Cohorts now stands at over 120, with over $300 million in aggregate transaction value.

The Acquisition Lab was founded by Walker.

Deibel, author of Buy Then Build, the book that introduced so many of you to the very idea of buying a business.

The lab offers a month long, intensive, almost daily Q and A sessions with.

Advisors, live deal reviews with Walker, Deal.

Team introductions and an active community of serious searchers. Check out acquisitionlab.com, link in the notes or email the Lab's co founder, Chelsea Wood. Chelsea buythenbuild.com.

You know Clayton, first of all, what year was all this happening?

[00:19:07 - 00:19:12]

Clayton Collins: I learned about search in 2011. I officially launched my search fund in 2014.

[00:19:13 - 00:20:12]

Will Smith: Okay, 2014. And so as you said, you were at Duke's business school.

You didn't even learn about search from a business school class, but from a law school class, which is funny. There wasn't an ETA program or club or what have you at Duke that there is at Fuqua there. Of course there is now. You were basically kind of from a non search school at the time. Y.

What we hear around traditional search is that like tr the traditional search investors basically recruit searchers from a handful of schools that they have these relationships with. They're all the, you know, the, the top MBA programs in the country. If you are not at that phase of life or you are not at one of those schools, it is hard to get the attention of the traditional search investors.

Traditional search mafia.

But you did it because they, they weren't at Duke is my understanding.

Is there something to be learned from how you did it for other folks who are not coming out of the, you know, the top 10 or 15 business programs right now?

[00:20:12 - 00:22:12]

Clayton Collins: Well, I'll be like really cognizant that, that the ecosystem has changed a lot in the, in the last 12 to 15 years. So when I was launching, I put together a list, went through every single search fund website out there and put together a list of 40 investors who had backed search funds. Like that was the Whole I scoured the earth and that was like the scale of the ecosystem that I could uncover in 2013 and 2014. That is extremely different today.

And at that time like search investors were getting nearly all of the searchers they needed from a small selection of schools and getting really high caliber searchers. And like that was, that was kind of the, the ecosystem. But as search has gotten more popular and prominent and more exposure to different schools and every search fund that that launches, it's usually one or two, you know, friends, family, colleague, investors that, that come into the deal. And that's like usually the introduction of a person who realizes, oh I really like this asset class and like this is like, can be great returns and it's really interesting and it's really fulfilling. And the community of investors has expanded exponentially.

Individuals, family, offices as well as funds that have been raised to invest in search. And as the investor population have grown, has grown, it's also opened the, open the door for, for more searchers from, from different backgrounds, not from the, the couple schools who have search curriculums, more experienced professionals that you know, come in at different stages of their professional life or, or people who come in before business school. Like the door is the, has really opened up with you know, with some positives and, and negatives. But I, I will fully admit that my 2014 fundraising experience probably does not resemble the fundraising experience that somebody would have launching a search in 2025 or 26.

[00:22:12 - 00:22:22]

Will Smith: Sure, good, good point.

Yeah, great point. But the, but what you did was a classic. Build a list and email them all personally, set up calls and raise the money.

[00:22:22 - 00:23:08]

Clayton Collins: Email personally. It was incredibly important at that time, or at least I felt it was to get on a plane.

So I ran my fundraising process like an investment banking road show. I had, I developed a list, I had some pre calls and the little money I had, I went on the road for three weeks and just jumping between New York and Florida and Bay Area and Los Angeles and Sacramento and like a little bit in Dallas, jumping around every investor I could meet, getting in person meetings and in each of those meetings asking is there anybody else that, that I should know? Is there anybody in your network is anybody you've invested with or you sat on a board with that I should meet? And that question opens a lot of doors. And those warm introductions go a lot further than cold email introduction.

[00:23:08 - 00:23:42]

Will Smith: Yeah. Yeah. You know, it's funny, I haven't as, as we talk about it Clayton, I'm not sure I ask have asked many traditional searchers like what their fundraising process. I usually looks like. I usually just kind of gloss over that.

It's like I raised my search fund and then we hear about the search. So. So I don't know how common or not getting on a plane and going out and meeting these investors personally would be today, but it's probably, if it's not common, it's probably even more effective today than it was back then because it's, because there's more search. As you said, it's just a more crowded marketplace.

[00:23:42 - 00:24:53]

Clayton Collins: I, I think anybody getting on a plane today becomes a differentiated outlier.

There's like, I think all of our inboxes are full of prospective searchers who want to do a zoom call at the most before asking for a capital commitment. As a, you know, a semi, I'm not, not an active investor, but I've done a few search deals. The person who gets on a plane, I get to meet in person. That's interesting. And the searchers that I keep in touch with today, the ones that are putting more deals under LOI and have a higher probability of close in their search process are the ones who get on a plane and go to conferences and meet founders face to face and don't rely on.

On email and zoom calls as their primary communication tool with prospective sellers. So I think there's a, maybe a little bit of a. What's old is. Is. Is new again.

Well, yeah, that like our digital life is so cluttered and busy. The person who can differentiate with a, with a handshake is going to improve their probability of success in a totally different way way than it did for me 12 years ago.

[00:24:53 - 00:24:54]

Will Smith: Yeah.

[00:24:54 - 00:24:55]

Clayton Collins: But similar outcome hopefully.

[00:24:55 - 00:25:12]

Will Smith: Yeah.

Yeah. Great, great points, Clayton. Okay, back to Housing Wire. Tell us about the business as a business. You've already told us that you know, kind of what it.

Well to tell us about what it does and then we'll get into the. The numbers and such, what it looked like behind the curtain.

[00:25:12 - 00:26:47]

Clayton Collins: Yeah. So Housing Wire is a business media and information services company serving mortgage, mortgage and real estate professionals. So we believe in a.

A media and data flywheels. We have a team of reporters and editors that cover everything that happens in the real estate, housing and mortgage market. Whether we're talking about mortgage rates, housing inventory M and a executive moves technology innovation. We have an awesome team of content creators and reporters who has tight. Who have tight relationships with the industry and we publish all this through housingwire.com newsletter, newsletters, podcasts and event stages.

So there's the media element and then over the years We've built out data, subscription and and and software elements of the business organically and, and through M and A. So my vision for, for Housing Wires to be the Bloomberg of housing, I believe that housing professionals should turn to us to access data on what's happening in the housing market performance information about who's growing market share, who's losing market share, what originators are having the most success, what real estate brokerages and teams are having the most success. And, and then the, the media element of the business can help our audience learn from, learn from that data and understand how it, how it impacts or can be applied to their business so well. At a high level I'm trying to build a Bloomberg of housing HousingWires and media and information services business serving housing professionals.

[00:26:47 - 00:27:01]

Will Smith: Great.

That was awesome Clayton. And we're going to unpack that a lot in a little bit. But, but what did it look like when it, when you were first exposed to it? Because that grand vision that you have today was not what it was back in 2015. 16.

[00:27:01 - 00:29:16]

Clayton Collins: Yeah. So the business we bought in 2016 was a digital first B2B trade publication for, for the housing industry. So there's a lot of similarities to what we were then to what we are now strategically. So Housing Wire was initially founded in, in 2008 during the financial crisis. And one of the founding beliefs of the business that we still hold on to strongly is that it's incredibly important for mortgage and real estate professionals to think about the housing sector as a whole and not just think about their little, their little niche of it.

And we look at a lot of the, the things that went wrong and the things that made the housing crisis and the GFC worse than maybe it potentially needed to be was information asymmetry. Mortgage originators didn't have any idea what was happening in the real estate sales or home building market. They were consuming different media and data sources. Loan servicers weren't talking to and paying attention to what was happening in the loan origination front capital markets or, or mortgage backed security. Investors did not have a direct line into what was happening in, in real estate sales and, and, and in new home construction.

They all had separate newsletters and digital and print publications that they followed, but they were all niche. And what Housing Wire sought to do and what we continue to do is bring together all that information in one place. So whether you're a loan servicer or a real estate agent, you can think about the housing market and the housing sector in totality and learn from what your, your, your peers and colleagues are doing in their business that that helps make you better understand what's happening in the market and hopefully offer better advice to your your clients and employees and make better strategic decisions so that that founding vision sticks till to today. Like, we still believe that while a real estate agent might not be interested in everything happening in loan servicing, they should have the opportunity to understand what's happening in loan servicing and the massive shift we're seeing in the market right now because ultimately it does impact their consumer.

[00:29:17 - 00:29:34]

Will Smith: Can you give us some numbers around what it looked like at eight years of age in 2016?

Housing wire, by the way. So it launched in 2008 to kind of redress this information. What the founder saw as an information siloing. They they were like.

[00:29:34 - 00:31:58]

Clayton Collins: And there was a, in that like 0509 period, it was a little bit of a emergence of entrepreneurial bloggers who were, who were publishing publishing content.

Like the early stages of digital media when launching a site or a blog was, was pretty accessible. And so the founder of Housing Water was part of that that emergence. I mean he was publishing while he had a day job, was publishing at night about what he saw happening in the housing market and with some initial digital traction that formed the baseline for what later became became Housing Wire. So when we bought the business in in 2016, Housing Wire was a digital first publication, but still had a print print magazine which is relatively small, but we were still in print. Most of the revenue was coming from digital advertising and newsletter advertising and the business was just over 4 million in revenue.

So relatively small digital media company, but the growth rate was averaging around 20%. The audience growth was really interesting. There was a moat forming around the business in terms of audience loyalty and the growth rate of newsletter subscribers and talking to mortgage professionals and clients in the, in the technology and technology and services areas around the housing space. HousingWire had a great brand and reputation and was well regarded as a, as an innovator in the space. And when you look at the world of B2B media, you're often faced with these sleepy print first publications that are way more comfortable on a monthly publishing cycle than they are on a daily publishing cycle and sort of seen as a, as a press release outlet more so than a, than a news organization that brings unique insights to, to the audience.

And Housing Wire was the latter and is the latter like we are focused on really fast daily or hourly publishing cycles. There's days where our newsroom pushes out 22 to 25 articles which is a mix of, you know, quick hit Housing market updates to more investigative interview first work and that I saw that foundation when we bought the business in 2016.

[00:31:59 - 00:32:04]

Will Smith: $4 million in revenue. I imagine margins in a media business are pretty good.

[00:32:05 - 00:33:17]

Clayton Collins: Yeah but I, I think you know, in, in hindsight they were too good.

So like I think there's a, there's a, a level you can run media businesses at where you kick off great eta but still have the capital and margin to invest in growth. And then there's a level you can run at if all you're worried about is, is, is cash flow and boosting EBITDA margin. And I definitely evolved the business to a, an EBITDA percentage that lets me invest in growth while simultaneously growing, growing cash flow each year. So like when I think back on like the business we bought, buying at nearly a 40% EBITDA margin was a, was, you know, was kind of a level that yeah, we could have stayed there but we would have stayed at that same size forever because all resources were coming straight out the door. But if you really want to invest in a modern technology infrastructure, marketing, growing the newsroom, building data products, launching an events business, that that margin profile wasn't sustainable at the growth rate I wanted to run at.

Sure.

[00:33:18 - 00:33:45]

Will Smith: Well, even at 40% of $4 million in revenue, that is, that is going to be on the small side, quite small for a traditional search fund. But as you just put it, those 40% margins were kind of not sustainable if you wanted to have any sort of growth. So your kind of forward looking margin was going to be less than that. How did you get comfortable with the size of the business being a little bit smaller than you or your investors envisioned you buying?

[00:33:46 - 00:34:34]

Clayton Collins: Yeah, I mean so we're just shy of that 2 million in EBITDA level. It wasn't like shockingly lower than a lot of the, the places search deals were getting done at and okay in 2016. But like no, you're right like that was a size was a, was a hurdle. The vision for what we wanted to do with the business and the platform that I saw in Housing Wire is what helped me, me and investors get, get comfortable with the, with the starting point. And we saw a business where there was products that hadn't been launched yet.

Subscription events. We saw business be a platform for, for M and A and having that strategic vision for the growth path is, is, was, were really important elements of what made what gave me conviction in this, in this platform.

[00:34:35 - 00:34:43]

Will Smith: Yeah. And I, and I really, I want to have you double click on that in a second but just before we get there, Clayton. So how many employees was it in.

2016, did you say?

[00:34:44 - 00:34:55]

Clayton Collins: 14 people in 14 Las Colinas. So we're out in Irving, right outside of Dallas by the airport. And yeah, that first office was, it felt great at the time but in hindsight I'm very happy to be out of there.

[00:34:55 - 00:35:03]

Will Smith: Okay, and the you said it was newsletter sponsorship and sponsorship on the website?

[00:35:03 - 00:35:04]

Clayton Collins: Yep.

[00:35:05 - 00:35:09]

Will Smith: And they were selling $4 million of.

Ads in those on the across newsletter and website.

[00:35:10 - 00:35:34]

Clayton Collins: Print was about 10, 15% of the business initially and, and we kind of had the, the budding, a budding content marketing arm but that wasn't like nearly what it is now. So like we were doing some content marketing, webinars, white paper type work.

So the revenue was diversified across different marketing products, but it was all advertising and marketing services.

[00:35:35 - 00:35:51]

Will Smith: And how do you think about the quality of revenue for marketing? Not what it is today, but what it was back then. Do you think of advertising campaigns? Where is it on the scale of quality of revenue in the broader media.

[00:35:51 - 00:36:43]

Clayton Collins: And information services space? I'd say, you know, digital advertising revenue is kind of like middle of the pack, print incredibly low. You know, print tends to, I mean part of just the technology evolution, but tends to be like the most cyclical revenue stream. When markets are great, marketers are willing to throw brand dollars at print advertising. When they're not, those dollars disappear really quickly.

And as we've looked at M and A opportunities over the years, particularly of businesses that have a print element, the volatility in the print revenue line, it doesn't shock me anymore. But to someone who hasn't seen it before, it would shock you on the year to year volatility and imprint. So I put print at the bottom, digital in the middle and would love to talk more about the high quality revenue sources and in subscription and events that, that we've migrated to.

[00:36:43 - 00:36:50]

Will Smith: Yeah, when you say digital is middle of the pack, but digital is all digital sponsorship is also quite cyclical.

[00:36:50 - 00:37:56]

Clayton Collins: It's not.

Okay, so there's different, like digital can take a lot of different flavors. And you look at the broader digital media field and you know that you, you hear the, the venture backed media companies who have, you know, hired thousands and fired thousands because of digital advertising volatility that is often programmatic. We have always maintained direct relationships with all of our advertisers. Which was, was one of the really compelling diligence points when we bought the business is there's clients that we've been working with at that point for for eight years at this point, 20, nearly 20 years that we've been pretty integral parts of their, their launch and growth strategy. So while revenue might move between digital products a lot at that time and still to this day the, the spend from certain accounts was, you know, relatively consistent.

So that's why like even as we look at M and A, like a pure digital advertising business can have way more consistency than you know, the headlines would imply.

[00:37:57 - 00:39:08]

Will Smith: Yeah. And just for the audience, I don't know, I don't want to presume knowledge of online advertising models, but when you said programmatic acquisition, being a media guy myself, that's all very familiar concepts, but just in case. So programmatic the media business is the whatever the buzzfeeds of the world within. And that's an old story, but maybe they're more recent ones.

But these venture backed very large scale media businesses that expand and then contract. The ads that you see are generated by third parties, namely the social networks like Meta or Google. And they're not selling directly. And selling directly means you have a direct relationship with your sponsor. And there's often some sort of kind of bespoke.

Not always, but often there's a bespoke offering to them. So like with my, my sponsors on acquiring minds, I have direct relationships with them. They're, I'm not having any sort of programmatically injected ads into the podcast, although even in podcasting land that model also exists first of a really, really big podcast. They might be able to make money that way. But, but for niche podcasts, usually the relationship with the sponsor is very direct between media publisher and sponsor.

[00:39:08 - 00:40:15]

Clayton Collins: Yeah, I think the modern publisher has kind of moved to a place where direct is the most important advertising revenue source. And you know, that's me calling a client directly, building relationship with the CMO and, and doing a, understanding their, their growth strategy and doing a direct insertion order or contract. And Programmatic, that's good. Google Ad Manager or one of the social platforms or the thousands of other ad marketplaces that feed ads to digital publications. The difference between the two is in direct we have the chance to actually hear a company's growth strategy and help them develop a advertising approach that moves their ideal client profile targets through the funnel.

So helping them build brand, build product awareness before we move into call to action marketing and actually try to drive leads or conversions on their, on their website where programmatic is often, or at least what we see in B2B land, way more direct response like bottom of the funnel focused and we're able to help Clients move people through the whole funnel.

[00:40:15 - 00:40:34]

Will Smith: Yeah, yeah, that's a great point. Also with Programmatic, you don't have relationships with your end customer. All you have is, is the little snippet of code that you're embedding on your website that then dynamically populates with, you know, meta's client, not yours, not, not a very, not a very strategic place to be.

[00:40:34 - 00:40:51]

Clayton Collins: Yeah, it's an important part of the strategy.

Like, I mean, I think programmatic and retargeting and social campaigns are like all smart marketers are using those to some extent. But there is also huge power in the direct relationships with content creators like, like you will and, and publishers like Housing Wireless.

[00:40:51 - 00:40:54]

Will Smith: Great.

Clayton, can you tell us about the.

Terms of the acquisition?

[00:40:55 - 00:41:38]

Clayton Collins: Yeah. So it was a founder transition scenario. There was two founders, 5050 owners that were both interested in moving out of the business. So the terms were very focused on helping make that a reality. And so we used senior financing, a small seller note and investor equity to fund the deal.

From my vantage point, if you're not planning on having a founder or seller stay in the business as an, as a key executive, rolled equity or large earnouts are a little less, a little less relevant. So we went with the structure that supported the management plan and transition that we had in place.

[00:41:38 - 00:41:41]

Will Smith: Did you say there's conventional debt there? There was, there was a debt piece.

[00:41:41 - 00:41:48]

Clayton Collins: We did, yeah, we used conventional senior debt.

It was about, about two turns of senior. At time of acquisition.

[00:41:49 - 00:44:11]

Will Smith: If you ask owners in the ETA and search community which insurance broker provides highest quality work, great outcomes and has a practice dedicated to searchers and acquisition entrepreneurs, one name comes up again and again. Oberle. Oberle Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by a two time successful searcher, August Felker, which makes Oberle a specialty insurance brokerage for searchers.

By a former searcher.

And if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way to get to know August and the team at Oberle. To take advantage, check out oberly-risk.com that's O B E R L E hyphen risk.com link in the notes. You know.

Now returning to your vision, Clayton, as.

You put it, I do think this.

Is a story of, you know, capital ETA where there's sometimes people will say don't forget that ETA is about entrepreneurship through acquisition because sometimes there can be an approach that's more about, you know, harvesting revenues from a business and kind of running it. And, and maybe it's financial engineering, where there's going to be value creation or extraction versus entrepreneurship, where there's, you might say there's, there's more vision involved. There's not where are we today?

But where can we take this? And, but, but again, stories of, of real kind of entrepreneurial vision, I'd say are probably less. There are less. Less or of those in our world. But you seem like a great case study of that.

You saw some, you saw the raw ingredients of something that was, you know, what they had built, the founders had built is very impressive. A $4 million media business is great. But you saw where this could go, and that was a much larger vision from, from what it currently was to where it could go. And that was. You had to sell that to yourself.

You had to sell that to your investors. And that was really what this whole project was about. Care to respond to that?

[00:44:11 - 00:45:44]

Clayton Collins: No. I mean, I think everything you just said is 100% spoton.

And you know, at. When I think about search, I think about capital eta. I like how, how you put that. I mean, I think those are, are synonymous and I've always had a, a viewpoint in, in this space that if you're looking to use ETA or Search as a launch point to a private equity career, or you mix up the terms with independent sponsor, you don't understand the space well enough. Like, search is about helping aspiring entrepreneurs find a starting point and get into operations and lead a team.

And the acquisitions that we do help these aspiring entrepreneurs, like get a leg up, start with a great platform and a, and a strong team they can run and build with. And I think over the years, and I've owned and operated this business for nine years now, that has only gotten stronger in my view, that this path is about entrepreneurship, it's about leadership, it's about general management. There's times where it's about capital allocation and the finance side. But only the best operators get to a point when they can really start thinking about using their business and its cash flows for their investment and a lot of, you know, strategic finance activity. So I think anybody who doesn't want to actually get in there and lead people and then build product and sell and market this is a tough path that's not going to be as fun for you as it has been for me.

[00:45:44 - 00:46:36]

Will Smith: Yeah, yeah. Well, I'm, I'm totally on board with all of that, Clayton, but putting on my investor hat now I could also see how search investors looking at your deal would say, you know, I'm, I'm inspired by your vision. I too can see the vision, but there's just too many unknown unknowns there. Who knows if this category can support an event? Who knows if you spin up an event that it, you know that whatever, any, any number of things can go wrong when you have, you're starting with zero events and envisioning launching events.

Same with a data business. Who knows if there's a data business to be had there? There's just a lot more ifs when you're buying a vision or when you're investing in a vision versus just doing more of the same. So really this is just a Phil philosophical back and forth. But I'm curious, did in, did all of your investors choose to invest?

[00:46:37 - 00:48:02]

Clayton Collins: They didn't. Definitely did not. So like we for that reason it's about, I think it was 60% of search investors participated in the deal. Some of them at 60 significantly larger than pro rata, others at at less than pro rata. And I still had a, an equity gap and brought in a few new investors from the search community who have proven to be wildly helpful partners.

So like the, I think that's another like great point Will. And you think about the ETA path. You know, a big part of it is conviction by the entrepreneur. Is this a business that you want to buy and lead and see yourself being successful in? And if so, that is a reason we build diversified investor groups.

Every deal is not going to be the right fit for every investor. And when you look at some of the evolutions of the, of the ETA model where searchers might be backed by a single private equity firm or a single family office, that that's a different consideration. If the deal is not a fit for 100% of the investors, you're one investor. It doesn't get done. Where traditional search was built to bring capital diversity to every deal.

So new perspectives, new convictions could influence whether a deal gets done. And that's exactly what I learned as I went through funding this deal in 2016.

[00:48:02 - 00:48:12]

Will Smith: That's great. I had never heard that point made about, about the kind of diversity of capital sources in the traditional search has that kind of baked into the to.

[00:48:12 - 00:48:55]

Clayton Collins: The model as the model's gotten more mature and hundreds of deals have gotten done, most industries have been invested in and investors often form strong positive or strong negative convictions on certain business models in certain certain areas.

And if I'm talking to a recent business school grad who's building an investor group strategically, I advise them to think about that. Like are you bringing in people with different backgrounds and business experience and investor interests? So if you do stumble upon a deal that you have high conviction in everybody in your search group doesn't kind of fall into the same thought pattern or.

[00:48:55 - 00:48:56]

Will Smith: Yeah.

[00:48:56 - 00:49:03]

Clayton Collins: Or maybe have the strong negative convictions around.

Around one space. So capital diversity I think is one of the big selling points of traditional search.

[00:49:03 - 00:49:22]

Will Smith: I want to spend time on how you have now effectuated this vision because you have and it's really, it's really impressive and exciting, especially as a media guy. But anything to say about the first year, the early years, the transition or should we get right into your big strategic moves over the years?

[00:49:22 - 00:50:12]

Clayton Collins: Yeah, I mean I'd say the like the biggest point I'd make is the first few years were were tough and media businesses and like probably one of the biggest surprises that I had was the, the sales intensity and moving.

One of the founders was running sales in the business. It was always part of the plan for him to transition on and hire a new sales leader. One of the things we we learned is that he was that sales leader was playing a pretty important role in the pipeline development of all of his account executives. So like the account executives weren't exactly like lifting as much weight as the data the data showed. And so the first few years were largely spent rebuilding and like re strategizing.

[00:50:12 - 00:50:13]

Will Smith: Our.

[00:50:15 - 00:50:56]

Clayton Collins: Direct sales approach. And the first like senior move I made in 2016 we bought the business was hiring a new head of sales, Jennifer. She's still with us today nine years later. But the number of times that her and I over the years have essentially rebuilt the sales team to match the match the market match our opportunity handle attrition.

It's probably like three or four times and it's just been such a fabulous experience in building and leading sales orgs. But I certainly have to acknowledge that building a sales org in those first few years was my number one challenge and got nearly all of our energy.

[00:50:58 - 00:51:20]

Will Smith: And was that because the $4 million in revenue that that they were currently selling was there. There just wasn't a lot of reoccurrence of that revenue. And so you needed to improve the quality and that's what needed to change or, or I mean or.

Or did revenue collapse when you got in there or something like that? Didn't collapse. It made it such a priority.

[00:51:20 - 00:52:52]

Clayton Collins: It didn't collapse. There was just things that that were we learned so we then one of the big ones was single point of contact relationships.

So if you have a strong relationship with the CMO of a company, that CMO moves on. You haven't built like downstream relationships with the marketing VPs and marketing managers who might stay after a CMO leaves. That's a challenge. So like, like building a sales org where we can build multiple touchpoint relationships was a critical part of that. So that was.

That meant going from just having account execs to also having like an account management and client success function, which helped us have multiple touch points from our organization, but also create multiple relationships inside of our client organizations. You mentioned this on the front end. We bought a media business in the housing industry. But both media and housing have some cyclical factors. No one really outside of the industry remembers this, but in 2018 and 2019, the mortgage industry ran into a pretty strong margin compression cycle where mortgage lenders were not profitable.

And so Covid was a big savior to this margin compression era that we've been running in in 2018 and 2019. So that was also another element. We're managing a new business with a new sales team in a really constrained environment. And so learning's all over the place.

[00:52:52 - 00:53:06]

Will Smith: Will great.

So you emerge from that or you kind of get your arms around that. And when do you decide to start making some of these strategic moves that you had envisioned from the outset? New new product lines? Essentially.

[00:53:07 - 00:55:18]

Clayton Collins: Yeah.

So inside of our advertising business, we were launching new newsletters, building out sections of the website, focusing on certain audience segments from day one. But we didn't really start making strategic moves until about. It was about two and a half years into owning the business. We launched our. Our first event.

We had that. We hosted three events before COVID and felt like we were really getting our. Getting our, our feet underneath us and learning the event industry. In 2020, we had the opportunity to do our first acquisition. So our first M and a deal was four years after we owned the business.

That was a company called Real Trends. Real Trends continues to be the most important source of real estate agent team and brokerage performance data. We do performance tracking and recognition for top performers in real estate. And that business also had an event, and that event was fabulous. It was called the Gathering of Eagles.

It brought together 300 of the most powerful real estate brokerage owners in the country. But we bought it in a year where the event wasn't hosted because of COVID So we had the bones of a lot of event knowledge that we had informed internally. I'd say we were kind of doing things on a shoestring decent events and this was executive powerhouse White Glove. Awesome experience. And the first year we hosted at the Broadmoor in Colorado Springs and incredibly nice venues and that experience that we kind of acquired into the organization changed the face of how, how we do events.

So that kind of elevated our strategy to serving executive audiences. So today we have five events and all of those events are focused on the owners, executives and decision makers inside of real estate brokerages, home builders and and mortgage lenders, which is different than where, than where we started. So that first strategic move in 2020, acquiring real trends was kind of the real testing point. Are we good at add on activity? Are we good at integration?

And can we grow businesses post deal at a much faster rate than they were being grown at previously? And we definitely proved that out with.

[00:55:18 - 00:55:28]

Will Smith: Real Trends and and so Real Trends was both data and event business because it had these, these rankings and then the gathering of each Eagles event.

[00:55:28 - 00:55:28]

Clayton Collins: Yep.

[00:55:29 - 00:56:03]

Will Smith: And of course if it's not obvious to the audience, one of the amazing things about a media business is that you are your own distribution.

So turning on an event, you have a captive audience that you can then drive ticket sales to. In theory, as with all of these things, it may never go quite as it should. In theory. How did, how did that particular piece go? Were you able to grow these acquired businesses pretty readily because you had such a such incredible reach, such incredible distribution?

[00:56:03 - 00:57:40]

Clayton Collins: Yeah. Each of our M and A deals had a little bit of a different strategic complexion. So with, with Real Trends that was propelling our strategy forward of bringing mortgage and real estate closer together. And the biggest challenge we had as we later moved the Real Trends gathering of Eagles to Housing Wire. The gathering, which is our event that is for all housing executives and senior level professionals, is convincing the audience segment that have been going to that event for, for decades that we weren't diluting the quality and we were going to give them a better experience.

As we expanded the size and expanded the audience to match that Housing Wire thesis that I talked about in the very beginning. We're not just for one segment. We want to bring people together across the housing sector. So that was one of the biggest challenges will and growing that business was helping the audience and attendees see the unique value that our vision would bring. And we have 1,000% achieved that.

It just took a few years. And the digital strategy, having owned and operated distribution gave people a taste of our approach and how we think about content and how we think about community 365 days a year and you know, 360 days a year before the, before the event. So people aren't exactly walking into an unknown when they bought a ticket to that event. They already see our approach, they see our style, they see our access, the energy. And I think that helps in launching event businesses outside of a, inside of a media business at a pretty high degree.

[00:57:40 - 00:58:49]

Will Smith: Well, so, okay, so that's kind of a, a subtle but important point. So because on the one hand you talk, we talk about distribution. You have distribution, you have a list and you can market the event to the list and you don't have to pay rent lists from other people or pay for distribution other ways or pay Google or whatever for ppc, whatever it is. However, however event organizers who don't have their own audience do it, that's one benefit. But the thing that you just said is you're also kind of treating the year round news that you're putting out via Housing Wire as, as an exercise in branding the event, almost kind of working people down the funnel.

Or, or maybe that's not the. Because if you don't, if you don't have an active event being sold, but this idea that like, because a lot of event organizers just kind of promote the event two, two, two months before the event versus what you guys are able to do is this year round reinforcement of where the people behind the event we are, this is the kind of content that we're, you know that you're, you're building trust and authority and credibility all year round, not just when you're pushing to, to sell tickets.

[00:58:50 - 01:00:55]

Clayton Collins: Exactly. And so we don't think of the audience in a, in a funnel. We think of it in a, in a flywheel.

And a news article might move somebody to being a new a newsletter subscriber, to listening to a podcast, to signing up for an event, to testing out a freemium subscription on our Alto SaaS platform for, for housing market data, depending on paying subscript subscriber for Altos or a paying subscriber for, for Housing Wire. And as that flywheel rotates, people move through our business experiment with the different products that we have and then hopefully share content and refer Housing Wire Altos to, to clients. So we think of it as a flywheel model that, that spends 24 hours a day, 365 days a year, which I think is the right way to run this type of business. But the challenge that presents in comparison to the example you shared of someone who just runs an event and markets hard for two months before and you know, then you know, sits back for a Little bit afterward is that person, that organizer gets to think about one thing all month, all year, and that's the event. I wake up every Monday morning with six important revenue lines that need attention and a in an eight person leadership team who, who divides and conquers extremely well.

But all have our respective focuses in the business that you can operate. Still can't operate in a silo though. They have their focus. But to run a flywheel the right way, our editor in chief needs to know what's coming up the pipe from product and needs to know what marketing's working on and needs to know if there's any content launches from the sales team that impact editorial. Our sales leader has to understand the audience development process.

Our product leaders working with everybody in the company on technology or data initiatives. So we have all these different focus areas that we've learned to, to communicate well, integrate well, like have, have the right meeting and communication structure where everybody can stay up to speed. But we think about six meaningful revenue streams every single week. And that's the, that's the difference.

[01:00:55 - 01:01:29]

Will Smith: Yeah, yeah, yeah.

No it's, it's. It's certainly a more complex ecosystem that you have than versus just an event organizer. Y But it is so powerful. Your flywheel. They're so complimentary all of them.

I mean to, to use the annoying term, they're, they're really synergistic and if you catch a new reader, a new, a new potential entrant into your ecosystem with one of the six product lines, there's a good chance that those, one of the one or two or three or all of the other five will at some point also they'll need value from that.

[01:01:29 - 01:02:13]

Clayton Collins: And yeah, and so like yeah, the sum of the parts is definitely more valuable than the, the pieces and the integration is, is how it all works. So like for an example is our. Our lead analyst Logan Motashami might be on CNBC talking about housing market data. He's referencing HousingWires, coverage of.

Of Altos data. So we're introducing Altos that whole CNBC audience. The next day he's on the Housing Wire daily podcast hosted by our editor in chief Sarah Wheeler. He's referencing a conversation he had on cnbc still talking about that Altos data and talking about the event stage he's going to be on on next month. Talking about like so like the pieces flow together and in a, in a, in an organic way.

[01:02:13 - 01:03:08]

Will Smith: Organically. It's not forced. It's very natural. Yeah, no, that's so cool. I just love it.

Tell the audience. So we're talking about these product lines, but they're also individual business models. Each of them give us a two minute primer on both the events business and a data business. So, so in the events business, I'll just tee you up by saying media people B2B. Media people know that events can be great businesses, very lucrative, very high margin.

If you have a banger of an event, they can also be they they. There's just a lot of volatility in the performance of an individual event. I don't mean from year to year, I just mean you. Event day does great in event B as a money loser, but when they do well, they can be the jewels of the crown for media organizations. Tell us more.

[01:03:08 - 01:05:29]

Clayton Collins: Yeah, so today we think about the business in three core core components. Media events and and subscription and subscription and data as a third tier. We never have sought, nor do we seek to be to have events be the like the most important leg in the stool. It is one of the legs and a reason that events has gotten a lot of attention from our executive team and a lot of resources that we've launched more events in the last few years is because of the role it plays in the flywheel and because of the role it plays in our audience and customer relationship. So as a digital media company and you know this will you get to have one way conversations with with your audience of of thousands of listeners.

But there's not a lot of great opportunities for those like listeners of the podcast to communicate back with you and have a conversation and put a face with the name and shake hands. That that's what events has really enabled for us. So we have this 365 day year relationship through people's inboxes and and phones. But that's not a great like two way path. Events have helped us put faces with names of these people who have been great sources, readers, clients for years.

And that it 1 helps with loyalty and retention but 2 gives us a much better beat on what our audience and key listeners or readers want and expect from us. So when we have those interactions at our events, it helps our editorial team build out better source relationships. It helps our editors better understand strategically what our audience is interested in. It lets our account managers and account executives get face to face time with key advertisers and marketers to see what audience segments are most valuable to them or what products they're having the most success with. It's our executive team build relationships with the other CEOs and operators and understand if the strategic direction we're taking this business in continues to, to make sense.

So you can do all those things at other people's events, but it's a lot more impactful under your own roof. And that's one of the like the big learnings we've had in the event side outside of running profitable, like attractive margin events.

[01:05:30 - 01:05:50]

Will Smith: And do you find that there is. The performance of events is difficult to maintain. And as what I mean by that is, you know, I'm thinking of an event that in its first year, everyone talked about how great it was and then went back for the second year and the second year wasn't so great for whatever reason.

[01:05:50 - 01:05:51]

Clayton Collins: Yeah.

[01:05:51 - 01:06:04]

Will Smith: And so third year now they're having a hard time with ticket sales. And it always, I've always had the sense of events that it's not that you stop trying to execute, but there's a, there's a certain unpredictable.

[01:06:08 - 01:06:08]

Clayton Collins: Yeah.

[01:06:08 - 01:06:15]

Will Smith: In the magic of an event and it's hard to just playbook it and replicate it reliably. We've been fortunate.

[01:06:15 - 01:08:11]

Clayton Collins: Or every event that we've hosted in the last few years, we've left with the feeling of all right, I don't know how we're going to top that, but we'll figure out a way like the feedback and the energy has just been so high. And when the feedback and energy is high post event, that's the right time to capitalize on getting people to sign up for, for, for the next year and, and encourage them to bring a friend or colleague and that even inside of the little event flywheel that, that keeps spinning for us.

But one of the things that I've seen, as I've observed other events, is that genesis qua, as you mentioned, or, or the energy means that it gets lost when organizations start to treat events as a, as a product suite that's, you know, fully delegated outside of like the, the core leadership team and executives don't actually attend. They market. They're not there. We think of these events as incredibly important, like touch points that reflect our DNA and our, our energy and our, and our people and, and that's really reflected. So I, I think as I think about the elements that are most important for us to maintain, not to lose at je ne sais quoi is like making sure that our president and myself and our editor in chief, our, our hands are still on the speaker selection and, and so I mean in the creative side, the music selection and like the, the way we treat guests and the hospitality element, that all has to stay high in the model that we're running, which focuses on the executive attendee.

And we're fully cognizant that our, our, our, our rates are not, are not cheap. We're not trying to serve the mass market here. We're trying to serve the leaders. And if you want to keep attracting leaders year in, year out, you better provide an experience that, that, that matches the, the client.

[01:08:11 - 01:08:19]

Will Smith: Great Clayton.

Now tell us about data businesses and, and kind of the structure of them and what to what to like, what not to.

[01:08:19 - 01:11:26]

Clayton Collins: So we got our toes wet with data with the Real Trends acquisition. We really propelled the organization forward in 2022 with the acquisition of Altos Research. And Altos tracks all active market real estate listings across the country. We have over 99% national coverage, which is an incredibly high bar to, to pass I'd say from like a data perspective we you know, compete in some way against MLS data, but MLS data alone doesn't get you to 99% national coverage.

So we're an incredibly important data source that appends other data sets or serves as an independent data set for, for clients who don't need the intellectual property assets of real estate listings. Like like listing photos like we are purely in the numbers. We're not like, like are not fueling the next Zillow. We're in the the analysis and numbers side of, of the real estate market. Altos has two revenue lines, data licensing as well as SaaS.

So our SaaS product sells to real estate agents, title reps and loan originators, giving them a real time pulse of what's happening in their, their local, city, regional, state, national markets. Let's they can lets them compare what's happening in Des Moines to what's happening at a national level. We all know that people read national level real estate headlines about inventory and home prices, but those national headlines rarely apply to what's happening in local markets. And ULTA is the tool that helps housing professionals understand that in that acquisition we, we acquired a great data process and, and product but we also gained a really strong team. And today we have a product engineering and data team that's nearly a dozen people now that just didn't exist prior to that M and A deal.

And bringing those people into our company has changed the DNA of the business for the better. That we now have product engineering and data integration capabilities that we can apply across the business into housing, wire into our subscription product, into our events. Yeah, primarily those three things that we just weren't able to do before because we have the talent in house. And like reflecting back on our, our pre engineering team days where you, you have an aspiration, something you want to build, something you want to fix and you have to lean on a, a third party vendor contractor to do that. That slows you down a lot and you lose the intellectual property and intellectual capital that you gain through multiple projects on, on one data set really quickly when you're just relying on vendors.

So the DNA of the company like was in an additive way went from like newsroom DNA to like news and data DNA that are now connected like at the hip. And that, that's pretty cool to see.

[01:11:26 - 01:11:30]

Will Smith: Well, you, I, you're smiling with excitement. I can, I can feel, I feel it.

[01:11:31 - 01:12:35]

Clayton Collins: Dude, it's nuts man.

Like I'm at a point now where like I had a vision for HousingWire and a vision for media and data together, but now I have a, a team who's like executing on the vision but pulling forward functions and features that I never could have dreamed of. And like it's the integration and the way that we're now able to hire editors who know Python and know how to use AI to integrate data into content. It's like the, like the, the team has just changed for the like, for the better in a dramatic way of technical talent who understands the housing industry, understands the importance of real time, real time data and understands what our audience demands and that's that. I'm couldn't be more pumped about the, the product launch launches and feature improvements that we have rolling out in the next six months. We just had a product like a, a town hall where our product team gave a kind of an overview of the pipeline for the next six months.

And I think everybody left that with like their jaw on the ground. Like this organization is changing.

[01:12:35 - 01:13:34]

Will Smith: No, that's really exciting. Well, Clayton, one thing that really comes across is. Well we, we've already said it but the how all of the how unsiloed everything is, everything is very tightly integrated and it all kind of bleeds together and you know, some being greater than the whole of the parts or whatever it is, whole being greater than some.

So, so this whole ecosystem, this content and data and, and media ecosystem that you've built just becomes kind of more and more robust also as you think about, I don't know when, but it's completely differentiated. I mean there's only room for one such business in any industry and you're it for one of the country's biggest industries. So how do you think about the value you've created here? Dollars and cents. I mean not to say put a valuation on the business but, but give us something about how we can think about it.

[01:13:34 - 01:15:16]

Clayton Collins: Yeah, I mean so I think about building value. Yeah. I think about customer retention, reducing churn and transitioning as much revenue and growing as much revenue in our highest quality areas as possible like subscription and data really matters. And so the SaaS revenue growth, data licensing growth and HousingWire subscription growth was our content. Subscription gets a lot of energy inside of our organization but we also have this massive like responsibility to serve our advertisers in a really hands on VIP wag because we know that our clients on the advertising side have been incredibly important in helping us build this business and build the knowledge and partnerships that are helping us carry it to the future.

So there's emphasis across the organization on NPS churn reduction, the metrics that really matter toward building the highest quality revenue base we can. And then I don't know what else I should be thinking of from valuation. We think of scale. Like we still look at M and A. We know like there's, you know, there's some power that comes with size and resources and every time we've done a deal so far it's brought in a new capability and in some financial firepower to help us go further faster.

Yeah. So when I'm thinking about building valuation, well, it's about scale and revenue quality are getting a huge percentage of my attention.

[01:15:16 - 01:15:18]

Will Smith: And where does revenue stand today?

[01:15:18 - 01:15:40]

Clayton Collins: So we'll finish this year between 4, 4 and 5x the where we started at 4 million in, in 2016. You know, a percentage of that growth has been organic, a percent through, through M&A.

Proven we're pretty good at acquiring small businesses and, and helping them grow faster than they were before.

[01:15:41 - 01:15:45]

Will Smith: So yeah, we're both approaching 20 million. Amazing.

[01:15:45 - 01:15:46]

Clayton Collins: Yeah.

[01:15:47 - 01:16:29]

Will Smith: You know Clayton, I don't think there are that many B2B publishers in single categories that are doing $20 million of revenue.

Also, as you've given us a picture of what Housing Wire is today, as I just said, it's very differentiated. It's, it's, it's kind of its own animal. You've been figuring out how all the pieces fit over these years. All to say that like when you go to a conference for media business owners, does such a thing exist? I, I don't feel like there are many you that you would have many counterparts around the country.

This, this feels like a pretty unique animal what you've built like, I'll give.

[01:16:29 - 01:17:35]

Clayton Collins: The one event organizer that matters to me A shout out. Jacob Donnelly, a media operator. I don't know if you followed Amo, but Jacob puts out a fabulous newsletter media product and he hosts one event each year in October in New York and that's an event that I, that I don't miss. So yes, you're right, there's very few others.

A lot of other media events have focused on the, the traditional trade publisher, the, the, the print publisher and like I've attended a few of those in my earlier years at Housing Wire and quickly learned it wasn't for me. All the conversations were very Woe is me. The world is ending. Print is dead. I don't know how to run this business in a digital world.

And like we were fortunate to have like the, the energy, the digital like native team, the aspiration and resources to achieve something bigger. And so I got myself away from the gloomy side of media pretty fast. I knew that wasn't the game we were playing.

[01:17:36 - 01:18:01]

Will Smith: Yeah, well, but let's now turn our attention to the, to the gloomy side here. Clayton, for the benefit of the audience, who is somebody who might like the idea of being in a media business of some kind?

What do you think that there are opportunities for searchers? Maybe the Playbook is taking a, a print publication, digital, maybe not. I don't know. What, what, what do you think?

[01:18:02 - 01:19:52]

Clayton Collins: I mean there's a lot of investors and, and aggregators who are, who are running that Playbook.

I think someone that is, you know, looking at business media or, or print publication in any vertical and thinking about hey, I'm going to take this digital. There's like, there's a lot of considerations so like 100 great brands can move from print to digital and like, like there often is. There's, sometimes there's a reemergence of what's old is new again. There's print publications that were killed that are now coming back now in a very premium format for a, for a more niche audience and that, and that can be a profitable business as well. What I would caution is that the time to take a, a traditional print public publishing brand to a scale digital audience is not, doesn't happen overnight.

So that needs to align with the timeline of the investment thesis to really achieve what I would assume is a multiple expansion strategy. So you can buy print at very low multiples, very low, very low and digital trades higher, subscription trades higher. So you can make the conversion. But make sure you're realistic with the timeline and realistic that the team probably needs to change out 100%. Maybe there's an editor.

Maybe there's a, an editor. I think that's probably it that needs to stick around in that conversion. But the sales team that sells print is not the same as the sales team that sells digital. The product manager or ops person that manages the logistics of a print publication is not the same one who manages a website and digital ecosystem and and, and and modern email database. The executives different people.

So like that would be something I'd be very cognizant of that. There's probably a complete staffing change to, to take you know what's old and.

[01:19:52 - 01:20:10]

Will Smith: Make it new which then is just like then probably the strategy is built from scratch, not by. So if you want to be, you know the H Vac industry's go to authority. It's probably try just start from scratch and do a podcast and go From There or YouTube channel and go from.

[01:20:10 - 01:21:33]

Clayton Collins: There potentially will there is like there are some business verticals with very strong legacy media brands and like brands are powerful. Like we've learned at Housing Wire that you can acquire transferable credibility through brand acquisitions. I think Real Trends instantly gave Housing Wire a lot more credibility at the real estate brokerage audience. We just bought a publication this summer called the Builders Daily and The editor, John McManus joined our team. John is helping bring credibility to Housing Wire inside of that, inside of that homebuilder segment.

And I've seen that play out in a lot of other non business media verticals as well where a legacy print brand with a lot of loyalty and history can be transitioned into something else. It just takes money and it's probably not a strategy that you'd want to use like a big senior debt or SBA loan on and you probably have to over capitalize a little bit to cover the trough of the J curve. But it's a just, I mean it's recognition of like the path you're running down. Probably a lot of money, a lot of money made in that. But it's not going to be money you can make if you're carrying three times senior and heavy covenants and no, you have to spend to grow well.

[01:21:33 - 01:21:58]

Will Smith: And given that do you see opportunities for this audience in other ways in media or is that so it doesn't have to be B2B trade publications necessarily. Maybe it's something else. Is there, is there, is there an entry point for searchers into media of any kind or is it probably just not the right format to go after media because media is so, so influxed still?

[01:21:58 - 01:23:14]

Clayton Collins: No, I don't think of media as the right areas, as this volatile influx area. I think business media has a lot of strong businesses.

The challenge is uncovering companies are at the revenue and EBITDA threshold that, that searchers want to buy at. One of the, the, the great and tough things in media is companies are often perceived as being significantly larger than they are because of the, the brand reach and audience size. There's a lot of media publications that we've approached from a an M and a perspective where you know, I assume there's a 10, 15, $20 million publication. You get under the hood like oh, this is a fraction of that great brand, no monetization. And then you have to ask yourself is there a reason for that?

Like was it, was it just a bad strategy or is there a ceiling in that vertical that the company can't grow past a certain size? So understanding the tangible market, like are you getting into a vertical that can grow to 10, 20, 50 million in revenue and are there hundreds of millions in advertising dollars and subscriber dollars out there to chase after? Then it gets interesting. But a lot of niche media is by definition niche and some of those niches aren't as big as people think they are.

[01:23:15 - 01:23:48]

Will Smith: Well, and I said about that the industry that you're in is one of the country's largest.

So and, and I'm hearing you kind of say something similar now. So it does feel like that there are a lot of industry publications and there are a lot of very for that are small because their industries are very small. There aren't that many really large, large industries and housing is one. I mean of course there are a lot of large industries, but I mean you're, you're in one of the very biggest. And so the industry itself you kind of.

You'd start with that and that's a short list.

[01:23:48 - 01:25:05]

Clayton Collins: Yeah. The two characteristics will that I think are most important when you look at the successful business, media and information companies are is there high regulatory and government involvement? If there's high regulatory involvement, that means change is going to be frequent and news information and data about regulation, governance. Government involvement becomes really important and that means that everybody in the industry has to follow it.

So I mean think of your examples there. Logistics, healthcare, housing. Like areas where government involvement plays a big role in the success of the industry. The second is capital intensity. So industries like commercial construction, manufacturing, logistics.

Again where there's big capex spend, people are buying tractors or concrete or like something that like, like moves earth and costs millions of dollars. That means the advertising dollars are Going to be, going to be attractive. When clients are selling a 10 million dollar tractor, they tend to spend a lot on, on advertising it. So I think capital intensity and government or regulatory involvement become pretty important boxes to check when evaluating verticals and business media.

[01:25:05 - 01:25:53]

Will Smith: It's a great point, Clayton, and it's one I heard from my guest Nathan Gregory of a couple years ago.

Nathan bought Auto body news, traditional B2B publication. And one of the things that he pointed out was that the what is being advertised in the pages of Autobody News are, you know, a hundred thousand, three hundred thousand dollar lifts for, you know, repair garages sort of thing. So, you know, one sale every two years from an ad, spend pencils for the advertisers. And that always stayed with me and I've heard you just restate that. So those two and then that and, or the regulation piece.

Great, great insights there, Clayton. Anything that we didn't get to, that you wanted to share with the audience.

[01:25:53 - 01:26:09]

Clayton Collins: Man, I think we covered a lot today. Will, I appreciate you digging into, you know, parts of my story that I haven't, haven't, you know, talked about publicly. We definitely went into areas that, you know, that made me think and hopefully we added some value to the, the audience today.

[01:26:09 - 01:26:16]

Will Smith: I can tell that you're comfortable in media. You're a very natural guest. You, you have, you've been the host of your own podcast.

[01:26:17 - 01:26:55]

Clayton Collins: Yes. Yeah, I launched a podcast called Powerhouse a few years back for Housing Wire.

I've hosted a couple hundred episodes of that. And last year the president of our business, Diego Sanchez, took over, took over hosting. I found it an incredibly valuable tool for building relationships in the industry and now he has the opportunity to do that. But I am, you know, actively thinking about my, my next show. We're in a new office, Will.

We just built out a space in downtown Dallas and have a podcast studio that is like right outside my door. So now I'm just like tempted looking at the space every day. Like, now what's, what's my next show? What am I going to host?

[01:26:55 - 01:26:57]

Will Smith: And why did you hand it over to Diego?

[01:26:58 - 01:27:21]

Clayton Collins: The other one, it was two factors. It was one time management. I felt like I was stretched too far. I was trying to host a weekly show and like, and I, in the beginning I was really good at scheduling months in advance and planning content months in advance. And then like, it got to the point where like Monday morning had come around, I'd be like, all right, who am I going to host tomorrow?

And that was just like being over committed On.

[01:27:21 - 01:27:22]

Will Smith: On.

[01:27:22 - 01:27:58]

Clayton Collins: On time and I needed. I needed a little more bandwidth in my life. In the second being that what I, What I just mentioned about like the how hosting a podcast or.

Or another media format can help with relationship development and in meeting cool people that you learn from that you also may have an oppor. Opportunity to do business with. Yes. Podcast hosting provides that and I kind of saw that as a. A gift I could give Diego and our.

Our business by giving him some of the. The advantages that I had kind of found through hosting the show.

[01:27:58 - 01:28:59]

Will Smith: Yeah. Yeah, absolutely. That's great.

Well.

Content is.

Is wonderful and fun, but there's a lot that goes on behind the scenes that, you know, it's easy to underestimate the, the lift that is getting. Getting content out the door because it, you know, on the one hand it is like just flip on the mics, hit record, upload the MP3 to Transistor and you got a podcast. But to. To do it well and consistently and professionally, it adds a lot of hours to the week all of a sudden.

So it's, it's a very, It's a very. It's a very interesting product because it's like very low barriers to entry. Truly. It's very easy to get either audio content or written content out into the world. Super easy.

Technology makes it easier all the time. But for that reason, a. It's a lot more crowded out there. So to rise above this has become much more competitive. But again, to kind of like do it well and produce that.

Produce a good content product takes a lot more than just that.

[01:28:59 - 01:29:22]

Clayton Collins: I was gonna say our most popular show at Housing Wire is called Housing Wire Daily that Sarah Wheeler hosts every single day. And like the lift of doing five episodes a week is significant on, on her. Her guests and, and our editors and producers. It's.

It's pretty wild to see the amount of effort that goes into that show, but It's a top 10 business news podcast on. On Apple.

[01:29:23 - 01:29:24]

Will Smith: Well, wow.

[01:29:24 - 01:29:40]

Clayton Collins: Get close to 2 million listeners this year from what I'm projecting right now. And so when you put the right effort, the right product, the audience pays attention.

And while the bar might be low to launch a podcast, the bar is pretty high to have a. To have a quality show.

[01:29:41 - 01:29:48]

Will Smith: Yeah. Yeah. Amen.

Well, let.

Let's leave on that note, Clayton Collins. Yeah. Cheers to you. Cheers to us.

[01:29:48 - 01:29:50]

Clayton Collins: Cheers to acquiring minds.

[01:29:50 - 01:30:01]

Will Smith: Thanks for coming on, sir. Thanks for your transparency. I just personally selfishly was really looking forward to this one for obvious reasons. So I thank you for saying yes and for joining us.

[01:30:01 - 01:30:03]

Clayton Collins: Thank you Will. It was fun.

[01:30:03 - 01:30:47]

Will Smith: Hope you enjoyed that interview.

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