Host: Today's episode is for anyone interested in acquiring or even investing in digital businesses. Dom Wells has been building and acquiring businesses in the online space for a decade, which is generations in Internet years. And today Dom is an active acquirer of Internet businesses through his firm, onfolio. Our conversation is less his story and more about the state of digital business acquisition today in spring 2022. Among the many topics we touch on are affiliate EE Commerce and SaaS businesses and each one's pros and cons online course and content businesses where Dom sees opportunities in digital acquisition going forward, how to source deals, the leading brokerages of digital businesses, Flippa and Microacquire, and how to approach the digital space as an outsider. So if you're like me and you love the business of the Internet and online marketing, I think you'll enjoy my conversation with Dom Wells. 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. As we all know, reviews count for a lot online, especially for a young podcast. If you get value from Acquiring Minds, can I ask that you leave a review, even just two sentences? I read every one and I've made it easy. Just go to ratethispodcast.com acquiringminds ratethispodcast.com acquiringMinds thank you. Dom Wells, thank you for joining me this early morning on Acquiring Minds.

Guest: Yeah, thanks. Happy to be here. Excited.

Host: You are actually in Taipei so it's bedtime where you are not early morning. So I think we found the one hour in the day where our two schedules overlap enough to make this happen. So thank you for that. Really looking forward to this conversation. Dom. I'm in general wanting to have more guests on to talk about dinner digital business acquisition. So you are a perfect candidate. I've actually known about you for a while. I've seen you on other podcasts, I've seen you on in some of the entrepreneur groups that I'm involved in. So really excited to now have you on my own podcast. What we're going to do in this conversation, Dom, is hear your story in brief, just to set the context and then really just get into the topic of digital business acquisition, digital asset acquisition, which is really a core part of what you do today. So speaking of which, why don't we start there and work back? What is it that you do, Dom? What is on Folio?

Guest: Yeah, so I'm the CEO of Onfolio and we basically buy and Grow online businesses. Quite a wide range of business types which I'm sure we'll go into later on. But yeah, we were an acquisition company. We occasionally start businesses. The rest of the time we're looking to acquire. Great.

[3:19] Host: How many businesses do you have in your portfolio today, would you say?

Guest: Good question. It's probably about a dozen. We recently trimmed to the fat. Some of our portfolio was clients, some of them owned by ourselves. So in terms of things that we actually own ourselves, it's about a dozen. Okay.

Host: And can you give the audience like a sense of size or scale of these businesses? What using maybe annual revenue is the metric?

Guest: Yeah, I mean, we're pretty small. I mean, 2021, our total revenue was about two and a half million. So the businesses range from 300k a year to, you know, some of them are obviously a lot smaller than that. I think. I think the largest is about 300k a year.

Host: Okay, great. And so let's have more of your story and background, Dom, how you got into this, to this world of digital business acquisition. Take us back to wherever the most relevant starting point is and work forward for me.

Guest: Sure. So 2012, I read the four hour work week book. Wanted to. I'm not really sure.

Host: So many stories have started. So many entrepreneur stories have started with that very line.

Guest: I love it.

Host: Go ahead.

Guest: Do I need to continue? I just say I read the Four Hour. So for me, I guess what's relevant is I was living in Taiwan and still I am, but I wanted to find a different way of earning money without having to leave Taiwan. So a friend recommended Four Hour Workweek. I read it. I'd already read the rich dad, poor dad books. So for me it was just like, oh, I'll just read this book and kind of see. And a lot of people would say the Four Hour Work Week was a blueprint for them. For me, it wasn't really a blueprint. It was just like, okay, I read this and I realized, oh, I can figure this out. Because the book kind of says you can figure it out. Like, I didn't need to have got an mba. I didn't need to have done this. All I need to do is just keep learning. So I followed my nose and discovered affiliate marketing, which, long story short, you build a website, maybe a blog, you review products, you get paid a commission if people buy those products. And so I really thought, this is going to be easy. I'm going to make loads of money. So I sort of jumped in, started a load of websites. I think I started Four or five. Not at the same time. Like, I started one. I was later, okay, this one's not going to work. Started another one and you know, shiny object syndrome, like everyone has at the beginning. And after a year, I think I was making $500 a month. So it wasn't what I expected at all. I thought I'd be making like 10k after 6 months or something. But I had seen enough by that point to realize, okay, I can try and scale this. And then, okay, fast forward a couple of years. I actually started acquiring online businesses because I realized it's a much faster wealth creation. And by that time I actually had some cash so I actually could start buying them. So I went to Flippa.com, which I know how familiar your audience are, but essentially it's like ebay for online businesses. They would probably, Flippa would probably take offense to that, but that's what it felt like back in 2012. And yeah, sold a business for like $1,000 and started buying businesses and started building a business called Human Proof Designs, which we sold. Done for you. Websites for beginners. That was in 2014. And I spent the next sort of three or four years building that up, getting a name and a reput scaled that to a million dollars a year revenue. And then in 2019, I sold the business because I wanted to focus on On Folio. And what On Folio did at the time was there was a lot of other people out there like me who wanted to buy online businesses, but they didn't know how to buy them. Maybe they didn't have the capital. Sorry, they had the capital. What they didn't have was the skill set, or they just weren't interested. You know, they didn't want to buy themselves a job. Because investing in online business is actually not passive. A lot of these businesses earn money passively, but owning the business isn't a passive income. So it's kind of this weird misconception. And so we said, okay, you pay for the business, we'll run it, and we'll charge you a fee and some profit share. And very, very quickly it kicked off. I think within six months, I was able to pay myself a higher salary than at my previous job, or the profit was higher than at the previous business. So I was like, okay, this has got traction. I'm going to pour even more on this. And we got lots of demand. There's lots of people out there who like the idea of owning digital real estate. So a lot of people came to us and hired us to Buy them businesses and run them. And then in 20, the pandemic blurred everything. What year is it now? I think in 2020. In 2020, I realized it's way more lucrative and I don't have to deal with clients and investors. If we pivot everything into a holding company, rather than being like kind of, basically we were just a service provider, like a glorified SEO agency or something. So I said, okay, people can invest in the holding company and we're just going to buy 40 businesses instead of, like, have 40 individuals or 20 businesses instead of 20 individuals. And there's a few reasons for that, but the main one was whenever there was a Google algorithm update or something that happens in online business, which can basically screw a business, we might say, okay, we're running 30 businesses. Only one of them got hit in the last Google update. That's fantastic track record. But it sucks if you're that one investor who's just put like 100k into a business and then Google decides to take its revenue away. So I thought, but if all of our clients owned all of the businesses together, then risk diversification, basically. So pretty. I didn't invent diversification, but I realized it was very pertinent to the space. And so I also realized I wanted to build something big and substantial. So I thought, okay, this is what I want to do. It makes more sense for investors. And so that's what I'm going to do. And so we pivoted in. I think it was around April 2020 that I started talking to people about doing a different route. And we raised the first money in September, just shy of a million. We raised about 800k, bought a few more businesses, spent 2021 basically raising more money, and raised 2 million in September and about a million throughout 2021. And then the idea is that we're going to scale it larger and working towards an ipo, raise some money in the IPO and use that money to make more acquisitions and do it as a public company. So it kind of escalated quickly there from A to B to where I am now. But yeah, that's kind of.

[11:05] Host: And that escalation, yeah, thank you for that. The escalation is that because you feel like this latest model of On Folio that you've kind of backed into is just so much more powerful than all the things that came before.

Guest: Yeah. But also because I was in a place in my life where I was ready to build something, you know, for the next decade or two decades or three decades or whatever. But like I'd had an exit before. It wasn't seven figures, but it was enough that I'd scratched the, the itch of having an exit. And I thought the potential for on folio is there's no ceiling, basically. So I also realized, and this is a quote from Stephen Schwarzman from. He said it a lot, but it was in his book, the founder of Blackstone. He basically said it takes just as much effort to build something big as it does something small, so you might as well swing for the fences. And I was reading that book. While I was mulling over all the different options, I also considered starting a fund, which is what a lot of people do in the space. And I just thought, you know what, this is the, this is the ultimate big swing. But also it was something I believed could be done. So it wasn't pie in the sky. And I just thought, you know, okay, just had a kid ready to just buckle down and focus on something for the next, for the rest of my life, I guess. So, yeah, let's do it. And spoke to my team as well and they, they were just as excited about the idea. So sure, exciting. Made a lot of sense.

[12:53] Host: The end you going back now to 2012 and those first few years of you in the business, it's primarily focused on affiliate content websites and we're going to, we're going to define those a little bit in a little bit more detail in a second. But has that the, the types of properties that you acquire, has it evolved beyond affiliate or are you still mostly focused on affiliate style content websites as what you buy and hold?

Guest: Yeah, I mean we're actually probably the least type of business we're likely to buy now. Yeah, it's evolved. We started out almost entirely SEO based affiliate businesses. Again, SEO for those not savvy is the art of ranking in Google. So not paying for your traffic, but getting your website to be like the number one, number two result in Google. So all your traffic is free and SEO is basically what you do to get that. Now we really avoid businesses that are heavily reliant on SEO, which basically means those affiliate content websites are basically not. They don't match our criteria anymore. Now we wouldn't rule them out entirely because you occasionally will find one that is a solid business, it's diversified, you don't fear the SEO, etc. Etc. But essentially no, we don't buy those types of businesses anymore. Similarly, we had a similar experience with E commerce where we thought maybe E commerce was the better solution. But E commerce is so cash Flow intensive. It's kind of like what's the point in owning this business Sometimes it's like the purpose of owning a business is to give you free cash flow and E commerce business is just a massive cash sinks. So again we're not ruling them out because there's occasionally ones that make sense and they do give cash flow. So we never rule anything out. But we don't buy a lot of E commerce anymore either.

Host: Actually Dom, let me jump in here. I think this is a perfect time to let's kind of bucket the different types of digital businesses because we're getting into it anyway. You've just touched on two affiliate and E commerce. But let's just define those in a little, just a little bit more detail. Obviously people know what E commerce is but. And while doing that. So let's do the main types of digital businesses. Obviously there's a very long tail. I mean anything that's online could be considered a digital business. But we hear about e Commerce, affiliate, SaaS, lead gen. So whichever you think are the biggest buckets that you think about and look at, define those for us. And then let's go through the pros and cons of each, what you do and don't like about them. Let's start again with affiliate. You've already said that affiliate businesses are extremely vulnerable to SEO. A change in the Google algorithm, your business can implode overnight. What else do you like or not like about those businesses?

[15:54] Guest: Yeah, so an affiliate business is essentially they've gone through an evolution of their own. Like maybe a few years ago you might, let's say you wanted to buy a water filter so you would Google best water filter or something like that. And in Google the first few results would be a website like bestwaterfilters.com or something like that. And they've just written an article and they're like, this is the best one. This is the best bang for buck. This is the best if you live in Arizona. Yeah, like this is the best for that. And you click on it, it goes to the manufacturer's website or it goes to Amazon. And if you buy a product, the owner of that website gets a commission. And they're typically low quality. So while they had their heyday and they were great because it's very easy to write the content, you can outsource it. The SEO used to be a lot easier. These days Google just doesn't really like to rank those types of websites anymore. And I think Google uses machine learning. And so what happens is, well, of Course they do. But I mean, what used to happen was if you ranked at the top of Google and you didn't do anything like bad in their eyes, like you didn't game the system, you didn't do anything spammy, then Google was kind of happy with you there. Even if maybe another website was better, they'd be like, well, you're fine. Whereas now every few months they roll out an update and even some of the best websites on the planet, their traffic just tanks. Maybe six months later it comes back up again because Google tweaks the dials again. And that's a very bad acquisition strategy. When you're like, I'm going to buy this business for a million dollars and it could lose all its traffic tomorrow. It's very asymmetrical risk. So that basically is it. All the reasons it's good are cash flow very well. The revenue and the profit line on a P and L are usually very, very similar. They can have very small expenses. Content is nice to create, it's easy, but it's all trumped by the fact that it's not reliable. You just don't know what's going to happen tomorrow. So it's, it's a fine business to own, but not a good business to buy.

[18:18] Host: Could I jump in with another observation just because I remember this so much? Of course. Also, you're, you're really reliant on the suppliers that the manufacturers paying you the commissions. They can also just on a whim, change the commission rate that they pay you. So there was an infamous moment a few years ago where Amazon was paying, call it 8% commissions on certain categories of products and overnight that went down to what, 4, 2%. And so those businesses, those affiliate websites that were generating commissions in this, these product categories saw their revenues quarter or, or worse than have overnight because of some bureaucratic decision within Amazon. Do I have that right?

Guest: Yeah, it wasn't even bureaucratic. Like they just did it. They did it two weeks into the pandemic. It was crazy. They went from 8% down to 3%. And as far as I'm aware, they didn't discuss it with some of the other departments within Amazon. They just announced it to, for example, Amazon US just told Amazon EU they were doing it.

Host: Wow, devastating.

Guest: Yeah, it cost me a lot of money. I had some businesses I was about to sell. Suddenly it's like this business was worth 150k. Now it's only worth 50k, you know, so it devastated bloggers as well because, okay, for me, I have diversification I just bought different businesses instead. But there were a lot of mummy bloggers out there or people with one website which some of, some of the income categories went from 8% to 3% commission. And so that's like, imagine you're making 7K a month, you have 5K a month in expenses, so you're okay. And then suddenly you're only making 2K. You know, it was brutal. And it was the second time Amazon's done that. It's not the first time they've done it. So it's like, fool me once, shame on me, fool me twice, don't buy Amazon sites again. And you know, Amazon are one of the better people to work with as well. So there are other. If you work with an individual business, you don't even know if they're gonna necessarily pay you up. So. Right, yeah, it's very, you're very much. It's essentially not a business because you're not. There's so many things you aren't in control control of and you're relying on so many other things. And so when Amazon changes it, it's like, well, okay, they're a business. They did it for their business reasons. Like, it sucks for you, but you built a business that relies on Amazon so, you know, kind of get what you deserve to some extent. So that's why we try not to. We try not to do that.

[21:08] Host: Great. Let's hear about E commerce. People know what E commerce is, but you were talking about how cash hungry e commerce businesses are. Talk to me more about pros and cons, please.

Guest: Yeah, and that's a generalization. I'm sure there's other people who own e commerce businesses who might disagree with me. E commerce is essentially physical products. So you're the manufacturer. You might even have affiliates who are promoting your products. So you're basically the other way around. But maybe you're selling supplements, maybe you're selling sunglasses, you know, anything. But people come to your website, they see your products, they send you money, you send them the products. That's E commerce. So the pros and cons are paid traffic works. You can buy traffic or Facebook or Google. With affiliate businesses, usually the margins are too thin. You might spend $10 to get someone to buy something off Amazon and Amazon pays you $3, so it doesn't work. Whereas with E commerce you can do that. Everything's in your control. Like it's completely the opposite of what sucks about affiliate stuff. So we went, oh, let's check out E commerce instead. And then we Discovered with E commerce, you kind of never actually get to enjoy any of the cash flow because you're always buying more, more inventory. You're always just like, you have products stuck on containers from China waiting for them to arrive. There's just other headaches. And if you have one e commerce business and it's your sole thing that you do and you can make it very profitable, then fair enough. But for a like us who were trying to scale, we were just like, let's just buy something else. Why are we doing this to ourselves? And a lot of e commerce businesses are hurting after the iOS 14 update, where essentially Apple stops allowing Facebook cookies to track iPhones and so on. So suddenly you might be paying $3 to acquire a customer. Now you're paying $6 to acquire a customer because the Facebook algorithm can't find. And you might be break even at $6. So whereas before you had 50% margin, now you're break even. So a lot of businesses got screwed by that. And luckily we only owned one or two at the time. So once again, diversification saved us.

Host: And once again, like the affiliate websites, there is a lot of platform risk. So where affiliate websites are really vulnerable to Google, you know, tweaking the dials, turns out e commerce businesses that rely on paid traffic from Facebook or Instagram are really vulnerable to some change related to that. In this case, it was Apple making a change that affected Facebook, but it's like one big tech company making a policy change, and all of a sudden your business is turned upside down or implodes. Just, you're just a lot of. Yeah, a lot of platform risk in E commerce, it turns out.

[24:08] Guest: Yeah, exactly. Just Internet marketing in general, there's always something that you rely on. Yeah, you know, but, but e commerce also, you are. You typically own everything. Like, yes, you might use Shopify, but typically you own everything. The customers are yours. You can move your business to another location and still reach out to people. Unless you're just like getting your customers from Twitter or something, which Donald Trump experienced. What happens? What happens there? But yeah, like, there's a lot of pros that e commerce has. The other thing is, I discovered that paid traffic people and SEO people are wired differently. So my bread and butter was always SEO and content. And so e commerce was fun, but it just wasn't. It didn't come naturally to me, although people in my team, it does come naturally to. But that was an interesting observation. So it's about figuring out what you're good at and doubling down on that.

Host: Take Me to whatever you think the third category of digital business people should know about.

Guest: Yeah. So for us there's also what's called digital products businesses, which is where instead of selling physical products, you're selling digital products like a course or a membership or there's a lot of paid newsletters right now thanks to things like Substack. So these are kind of marrying the two where you've got the cash flow ability and the less like sort of cash intensive sides of content businesses. But you can also make paid traffic work. You're not necessarily relying on the whims of a vendor because you are the vendor if you're selling like your own course or something like that. So right now we're very much interested in courses and we have a couple and we will probably go out and buy more as we, you know, as we scale. But yeah, that's a third type and then a fourth bucket.

Host: Could I hear some pros and could I hear some pros and cons on courses?

Guest: What?

Host: Well, the pros you've already mentioned, just the economics are great. What are some of the cons about digital products?

Guest: That's a good question. I haven't discovered them yet. People can rip off your courses like you get people who download your courses and sell them cheaper for free and you can, you know, you can, sorry, they sell them like they pirate your stuff so you have to chase them down and use like cease and assists and stuff. Also there's typically courses are sometimes a dime a dozen, so it's hard to stand out. It does take effort to create a course and if you're buying a course as the acquirer, you often have to make sure that the marketing isn't too reliant on the founder teaching the course because they're usually going to step out. Yeah, those are really the hardest parts about courses. You just have to be good at marketing really for a course. It's harder to sell them. But if you have a good course and a good funnel and all of those things, then they can be very good acquisition targets. Great.

[27:30] Host: Okay, next category, SaaS.

Guest: So SaaS being software as a service, SaaS is basically software. You used to pay for it, once you got a cd, you installed it. Now pretty much every software you sign up and you pay a monthly fee or a yearly fee or something. So that's SaaS. SaaS is great. We just aren't very good at coding. We don't have a good development team. So we, we haven't merged, moved into SaaS yet. Will we in the Future, like if it makes sense to. But right now we don't have any. A ton of SaaS, the pros and cons. So the pros are it's subscription based, which is typically the best revenue because it's reliable, you can scale quite easily, and typically you get good cash flow as well, although you have large development costs as well and server costs and so on. The cons are, again, a lot of software is not that defensible. There's 50 of everything. Like just choosing Riverside FM to record this podcast, you probably had 10 other options.

Host: Right.

Guest: But the real challenge we have with acquiring SaaS is a lot of SaaS founders do everything themselves. So you look at this business and they're like, yeah, it makes 20k a month or it makes 5k a month or whatever. And you think, okay, cool, so let me see your spreadsheets. And then you see their expenses and they've got just server costs only. And you're like, where's the developer? Where's the development costs? And they're like, oh, I do all that myself. So we're like, okay, when we buy this business, we're going to have to hire someone to do all that. So it's actually going to lose money. So we can't do that. Now we could go out and buy a $10 million business and maybe it has all of the team and everything built in the P and L, but we don't know enough about SaaS to be confident dropping that kind of cash. So for us, that's the limit.

Host: Is that to say, dominant, that the people should be wary of SaaS businesses at the low, low end of the market, because if they don't clear the $200,000 or maybe $300,000 ARR, which is, which is SaaS for annual revenue, annual recurring revenue, that there probably isn't just enough, enough meat on the bone, because, I mean, you need to have at least one developer. And as we all know, developers are really expensive.

[30:06] Guest: Yeah. And also ARR, I think MRR is a much better metric. That's another problem with SaaS. They get like three clients and then they extrapolate that to their ARR, and it doesn't necessarily work that way. And also SaaS just cost more. So a lot of SaaS founders are expecting Silicon Valley startup valuations and they're not going to get them. So it's actually quite hard to buy a SaaS from a solo founder because there's a kind of. And I'm not trying to belittle SaaS founders too much. It's just the reality is a lot of SaaS founders, there's like a cognitive dissonance between what they think their business is worth and what it's actually worth. Whereas other founders typically, for whatever reason, they know what the market rates are for their business. But that's more about buying a business from a SaaS founder and less about problems with the model. So that's, you know, SaaS is one of the best business models out there for online business. It's just one of the hardest.

Host: So from this menu of options, if I wanted to get into some sort of online something to some digital business, where are you seeing the opportunity? So you've already touched on it a little bit. You don't like E commerce affiliate had a tay day or the certain types of affiliate sites that you described had its heyday, that is now on the downswing in a big way. So what are we looking at for the next three, five years? Or maybe digital moves too fast for that. So the next two years.

Guest: Yeah. Also, predictions are always wrong.

Host: I mean, where are you guys putting money?

Guest: Courses and content, but content, not, you know, content like a YouTube video or a podcast for example, or a newsletter or a blog, but where it's not trying to make money from affiliate. So now's a good time actually to talk about another type of content, which is advertising or sponsorships. So we have some content websites that just make money from adverts on the website and they still, Google doesn't hate them as much as it hates the kind of low quality, crappy affiliate sites. So the SEO risk is lower but still very real. And it's very, very passive. Like you just people come visit your website, there's adverts on it, you make money, it's great. So there is a side of content that's very much alive. I think the distinction is that you just need to really have higher quality content and I think you need to have content that people find educational and entertaining. So like a podcast like this, for example, is an excellent example and I think. Did we meet in Trends in the Trends group? Is that where we met?

[33:09] Host: Or at least I've seen you in Trends. I don't know if I first reached

Guest: out to you there. Okay, yeah, well, anyway, so Trends or the Hustle or things like that are great. You know, I would love to have been been HubSpot and bought, you know, Trends or the Hustle. I do think there's a little bit of a gold rush with newsletters right now in that everybody and his dog is starting a newsletter and they will probably. I don't know about you, but I signed up to way too many newsletters and now my inbox, I don't read half of them, so I think newsletters will go out of favor to some extent. But good content that's not just surface level will always have an audience. So. So courses and things like that will always be of interest to us.

Host: And if I'm interested in sourcing deals or at least maybe dabbling and just seeing what's out there, what are the primary ways? I mean, when you, when you're going to go out and look for a business to acquire, where do you go?

Guest: Yeah, I mean, there's a few marketplaces. I typically, the best ones are empireflippers.com, feinternational.com, quiet light. And all three of those are also. Or maybe fe, not so much. But all three of those are really good at educating buyers and sellers as well. So they're actually really good. Like ambassador has two, actually maybe even three podcasts. They've got a couple of YouTube channels. They have a blog, Quiet Light have a really good podcast. I don't know if they have a blog anymore, but there's definitely like oodles of content you can go and read. And FE the founders actually put out some of the best content out there, but they do it on other people's podcasts. They don't really host any of their own content. So it's a good place to go and learn and also a good place to actually look at deals and not pull the trigger on one until you've learned a ton more. But yeah, that's where I would tell people to start just trying to dig deeper.

Host: Okay. And really, I mean, we're just talking about three websites and correct me if I'm wrong here, but I would guess there's probably only 20 to 100 listings on each website or listed by each of these brokerages at any given moment. So we're not talking about Biz Buy Sell, which is the American website for Main street businesses, which has many, many thousands of websites at any given moment, or a flipper, which has many, many listings. Many, many thousands of listings. It's pretty manageable to basically keep your eye on all three of these websites. The volume isn't too. Too much.

Guest: Yeah, that's one of my biggest. One of the biggest problems with the space is there just isn't enough deal flow because there's only so many good online businesses out there that you can buy. But yeah, they definitely have the best deal flow out there and the best content out there about the, the space that we're in. So yeah, well worth checking them out.

[36:14] Host: And now let's talk a little bit about the platform. We've already touched on Flippa, but let's talk about it more directly. And then it's the up and comer Microacquire, which is sort of a Flippa competitor, although it's quite differentiated. So tell us about these two well known platforms, Flippa and Microacquire.

Guest: Well, Flippa used to be a lot worse. So even though I didn't really recommend them, they've come a long way and they're still improving and they just raised some money so they, I'm sure they're going to improve even more. The issue with Flippa is because anyone can list a business on there. There's just a lot of stuff on there which is just not good. So I just find it very hard to find something good on Flippa. So that's it really. No issues with the platform. I just never see anything good on there. What Microacquire does differently is it's they don't charge any commissions whereas all the other brokers charge commissions to the seller. And it can be 15%, it could be 5%, depends on the valuation and the platform. Whereas Microacquire charges buyers a subscription fee to get access to the listings and then sellers, it's free. So Andrew's built a pretty cool platform, Andrew Kazdecki, and he basically just his kind of shtick is brokers are a bunch of thieves. They steal money. You can sell your business for more if you don't have to pay a broker fee. We could debate all day long about whether or not that's true. I actually think the broker's fees are often priced in just like with everything else. But founders like it. So you know, a lot of, a lot of people sell their businesses there. Microacquire has a lot of SaaS because Andrew is big in the startup scene. He's kind of like you're building a startup, you could raise venture money or you could have like a micro micro exit. And so he's done a lot for the space in a lot of SaaS. Founders didn't know they could sell their business. They kind of thought I either have to get venture funding or kind of that's it. And so he's done a lot for the space. However, I was talking earlier about cognitive dissonance between sellers not knowing what their business is worth and what it's really worth. And Microacquire is the prime culprit of that. We see businesses listed there, like we kind of have a deal flow joke of the week in our Slack channel. And it's always a micro acquire business. There might be something there like, like trailing twelve months profit, trailing twelve months revenue, a million dollars. Trailing twelve months profit 100k last month profit 10k, asking price 7 million. And you're like, what? Oh, okay, I can build a business that doesn't make any money and sell it for 7 million. Sure, I'll do that. And it's just. And the problem, another problem is brokers go on Microacquire and pitch the sellers like, oh, take your business off Microacquire. I can sell it, I can get you a way better price. And so we come to sellers and we're like, look, you've got a good business, but it's not worth this. It's actually worth like a fraction of what you think it's worth. And they're like, oh, but somebody else is telling me they can sell it for the double what I've listed it for. And it's like, okay, we just have to end these conversations. Like there's too big a gap. So Microacquire has good businesses and I think micro requires a good platform. But good luck trying to buy anything off there. That's my, you know, that's my unfortunate honest truth. Now that being said, there are businesses bought and sold on there all the time, so maybe we just don't want to pay the prices. Maybe other people out there see value in the businesses, but we just think the businesses there are way overvalued. So we don't buy off there.

[40:21] Host: Dom, in the world of digital business acquisition is cold outreach, or what the searcher world calls proprietary outreach. Is this done and can this be effective? Particularly when you talk about kind of this inflation effect of micro acquire where it sets sellers expectations inordinately high. So is it a practice and is it an effective practice? Practice? Have you used it at Onfolio?

Guest: It is a practice. What a lot of people do is they just sort of spam the Internet, like, hey, are you interested in selling your business? And I know that because I receive a lot of those emails. Is it effective, probably, that you have to kiss a lot of frogs, which is probably true for the rest of the searcher community. Again, you're going to get cognitive dissonance. So we did it in the past where we emailed a lot of people. We had very Specific criteria. We had a SaaS company who scraped Google looking for certain websites that met certain criteria and then emailed them like, hey, I'm a buyer, are you interested in selling? And there were just people who were like, make me an offer so high I can't refuse. And I'm like, well no, I'll make you a fair offer, but you need to tell me about your business and never hear from them again. People, you know, someone cold outreaches you and say, hey, I want to buy your business. You know you're going to go on the defensive or you're not going to believe them. So that being said, we actually had a few conversations that I was like, yeah, actually I would be interested in your business, but I don't have that much money right now or something like that. So it's worth exploring. Yeah, it's worth trying to. I think the problem with proprietary outreach, or however you phrased it is we just call it outbound deal flow. But a lot of people do it thinking that they can save money that way. Like if you can get off market deals, you can pay like half price because you get an unsophisticated seller. And I think really the reason to do proprietary outreach is to get the better websites and just pay whatever they're worth. And so yeah, basically I think, I think people just do it for the wrong reasons and they get crappy results. So

[42:50] Host: in the world of search, again to compare digital to non digital, it's actually common that a searcher will acquire a type of business that they are not. They're an industry outsider and they acquire into an industry. So let's say H Vac, although they are expected to learn and learn quickly and there can be licensing issues. So it's, I don't mean to understate the importance of learning the industry into which you acquire, but even lenders recognize that in the world of search this is, this is a, this is a thing. And so essentially they look for quick learners. But talk to me about an outsider or a non technical person or somebody new to digital breaking into this world, would you? And also just feeding into something you said at the top about how some of your early investors or the clients that you serviced in the, in the previous iteration of Onfolio were these types of people who kind of sounds like they just didn't want to learn or they wanted to outsource the, the placement of, of these investments to somebody who's so digital savvy like Onfolio. So say I'm not digitally native. These are new business models to me. What do I need to. What would you advise me to stay out altogether or can I learn or what?

Guest: I would. I would probably invest in a fund that takes care of running the businesses for you and is diversified. So, for example, Empire Flippers has EF Capital, where you can see, say six operators who are raising funds and you can give them 10k each or like 50k each or whatever you need to be accredited, of course. But FE International have a SAS fund. There's a bunch of other funds out there. Those don't give you a ton of insight into exactly how to run these businesses, but they give you exposure to the space and they give you diversification. If you did it, say the other way. So how we used to do it, people would just find a company like On Folio and hire them. The challenge is you need to. You should still buy multiple businesses because we were good, but we couldn't completely prevent someone's. We couldn't completely prevent the risk. And so it's going to cost a lot of money because if you want to buy multiple businesses, if you buy small businesses, then the team running them are going to be spread too thin and not able to do them justice. And so the only real way to do it is to buy big businesses and then the team can have the budget they need and you've got the diversification, but that might cost you millions. So the best way to do it is to just really just invest in a fund or something, like a group buy or something like that. Alternatively, right at the other end of the spectrum, if you kind of want to play, you could buy a couple businesses for 5k each and just learn through, you know, skin in the game, like buy your way into the space and just learn by doing. I wouldn't go out there and buy one business for 100k and hope for the best, which is the opposite of exactly what I used to do for people. So I've learned through experience that's probably not the best way to go.

[46:17] Host: That's great. Now, Dom, just in closing here, why don't we. You've been in this world for 10 years, which is not a lifetime in many industries, but in the digital world it kind of is a lifetime or two. Talk to me about just looking at the span of your career in digital. Talk to me about a few of the takeaways or the learnings that you've had from these years.

Guest: Yeah, I was trying to think before the call about things that would be useful for people who are maybe not that used to the space, but are not like kind of noobs to business. So basically someone who's inexperienced in this space, but sophisticated in online business, in business in general. Perfect. And I think the three pieces of advice I came up with actually would have been applicable even if they had beginners. You need to have tenacity is the first one, because the feedback loop in online business is really long. Like you can be doing the right thing and you just need to do it longer, or you could be doing completely the wrong thing and you have no idea yet. So actually I imagine that applies to all business, but definitely online. So you just need to keep going because eventually you'll figure it out. The other is that you should test stuff for yourself. So there's a lot of people out there talking about what works. A lot of survivorship bias where someone does something once and then goes and blogs about it. And when you run multiple businesses like I do, you see that actually what works for A might not work for B, and what doesn't work for A might definitely work for C. So you just have to read what other people are saying and be like, okay, I'm going to try that, but it might not work. And then the third thing is just network networking has been by far the. One of the most powerful things I've done over the last decade. So people should always be networking just in all walks of life. And it's kind of an obvious one, but it's very important, in my opinion.

[48:16] Host: You had mentioned something about going public right at the very in your intro.

Guest: Just dropped that in casually.

Host: Yeah, I wanted to make sure I picked that back up. So can you elaborate on that at all or what?

Guest: Yeah, I mean, obviously there's things I can say and things I can't, but basically the idea is we're going to go public. And by the time this podcast is aired, we hope to have filed Rs1 with the SEC, which is basically the document you file when you're like, hey, sec, we want to go public. And so then the idea would be to IPO shortly after the SEC declares that effective. So I can't really talk about the timeline, but the plan is to go public soon and use the money we raise to acquire businesses and grow our revenue significantly. So that's just something people can follow along with, I guess.

Host: And so pouring over the onfolio S1 would be another great next step for people to learn about digital business acquisition.

Guest: Is that fair if people are into S1 S140 pages of bedtime reading yeah, definitely. That is something people can do. Or they can, you know, they can. I also recommend checking out the content From Empire Flippers FE International, Quiet Light and people can go to onfolio.com and see all the other podcasts I've done, the blog posts I've written and so on, and follow me on Twitter as well. So yeah, it's a fun space. So if people approach it from an educational perspective, I think that's a really good way to learn more.

Host: What is your Twitter handle, Dom? Is that the best way people wanted to reach out to you personally? Is Twitter the best?

Guest: I think using the onfolio just emailing me dom@onfolio.com is the best, but my Twitter handle is teamonfolio.

Host: Thank you for the primer on digital business acquisition. We could have talked for another hour, but you have a hard stop and so do I. So maybe I'll have to have you come on for round two. But in the meantime, thanks very much for the time and staying up late to make this happen.

Guest: Yeah, definitely, definitely. I'd love to come on again and thanks a lot for having me this first time.