Host: Online courses can be phenomenal businesses. They can sell for $500, $1,000 more, and the gross profit of those sales is eye popping, like 80 or 90%. Now the thing is, online courses can be really tied up with the founder owner, who's often the face of the course, not to mention the developer of all the course material. So as appealing as the businesses are, you might assume that they are unsellable, or should I say unbiable by you, the acquisition entrepreneur. Well, not necessarily. My guest, Dom Wells bought such a course business and in today's interview he explains how to make an acquisition like this work. So for those of you interested in buying digital businesses, this should open your eyes to the opportunity in online courses. Couple quick notes. First, Dom and I didn't talk about the size of this business, so I'll say that here the course does between 3 and $3.5 million a year in sales. So 3 million bucks a year with extremely high margins. Pretty interesting business. Also, please excuse my audio. In the first 10 minutes. Little snafu there. My computer mic was picking up my audio instead of my proper mic. Fortunately, I realized as much and fixed it. But the first 10 minutes, my audio isn't great. Okay, on to the interview with Dom Wells, CEO of Onfolio. 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've probably heard me mention SM Bash, the conference in Orlando for acquisition entrepreneurs, SMB owners and investors. It was such a valuable event. I met no less than 12 acquiring minds guests there in person, hosts of other podcasts in this space. And if you're on SMB Twitter, it was a who's who of all the biggest accounts. Well, SM Bash is coming back around this time in Austin in April and and I'll definitely be going back. I'm told by the SM Bash team that this year they're going even deeper on content relevant to search, including a focus on finding investors for your acquisition and inviting a lot of investors to attend as well. For serious searchers or those who've recently acquired, S.M. bash is really the leading event. There are others associated with universities, but as far as I'm aware, this is the biggest and best indie conference for entrepreneurship through acquisition. Check out smbash.com six letters S M-B-A-S-H.com or click the link in the show notes. See you in Austin. Dom Wells, thank you for joining me again on acquiring minds.

Guest: Yeah, thank you for having me. It's great to be back.

Host: Dom, you're the CEO of Onfolio, which acquires and operates Internet businesses. This is your second time on the pod. You were a guest back in May and we talked about the different types of digital businesses that a acquisition entrepreneur, a searcher might buy. So E Commerce SaaS, lead gen online courses and in fact since then On Folio has acquired an online course and in fact it was one that you and I even spoke about. It's called Proofread Anywhere and it is a course that teaches people how to earn money as proofreaders. So I wanted to learn more about this acquisition, do a deep dive into it because as we talked about in that conversation back in May, successful online courses can be great businesses, very high margins, but they do suffer many of them from a particular weakness which is that they can be really tied up with in the brand of the founder, who is often the face of the course, the promoter of the course, and often the person who might even teach the course. And Proofread Anywhere is a perfect example. The woman who founded it is, is, was really kind of the face of the course as I, as I understood. So I want to understand how you are going to take this business forward with that key woman risk, taking into account that key woman risk. But start us off, Dom, with just telling us kind of the high highlights the bullet points about Proofread Anywhere, please.

[4:35] Guest: Yeah, sure, yeah. So as you mentioned, it's a course teaching people to build a career as a, as a proofreader. It's, you know, it's just a one time fee. People come in, they buy the course and there's various tiers so they can buy, you know, like with every course. There's like the basic course and then there's the pro version which comes with more teaching. You get access to a community and there's a few other kind of side offers, like smaller courses as well. So yeah, the main thing for us is we don't really think of it as a kind of how to be a proofreader course, even though that's what it is. We think of it more as it's like a career opportunity course or a something that can teach people one of the many ways to build an income online, which is part of the reason it appealed to us.

Host: So how much does. You said there was tiers, but give us a sense of the pricing.

Guest: So the Main one is $500, 497 and then there's a few other Smaller ones. So the main thing is there's no $50 starter course that you might see elsewhere. It's really. Yeah, there's like a smaller one which is still several hundred dollars and then there's the $500 one. Is the, is the main driver what most people go for?

[6:07] Host: Yeah. And let's just explain to the. I have purchased multi hundred dollar courses and I suspect many people listening have. But I also imagine that a lot of people haven't imagine spending $500 or $900, sorry, 90997 because they always end a 7. That's pricing strategy. Of course they can't imagine spending that when they, you know, you might go to one of the big online course platforms and they're selling them. Like you said, there's probably a $50 option. Sometimes you'll see sales for 10 and $20 options. So just explain how courses position can. A course can position itself to be so premium, to charge such a premium when there is a lot of competition, it's a lot more expensive.

Guest: I think it's a few things, but first of all, yeah, they position themselves as being premium. They often come with a community and the people who are typically promoting the more expensive courses, they have a large audience, they have a lot of like brand affinity already. And just the depth of the course is usually better, but it's perceived as being better as well. Like at the end of the day you can go to Udemy and buy a course for $47.

Host: Exactly.

Guest: I guess the short answer is you kind of get what you pay for and a lot of people are aware of that. And it's not saying that people who pay a $47 course are cheap or anything. It's just people who buy a more expensive course are probably looking for a more premium experience.

Host: Yeah, yeah, for sure. It's just the old price communicates value psychology, but it's just such a Stark 10 times more expensive. But you know, I paid 500 for an SEO course and I, and I have, I've never bought a 25 SEO course, so it shouldn't be that mysterious to me. Okay. And just again, a little bit more about the business. So how old is this? How when was it founded? And you know, kind of give us a sense of like did it grow kind of its growth trajectory and then what you can share what you recall about the founder of the business and you know, which is really going to be the crux of this conversation. And like I know, I happen to know a little bit about her, Caitlin Pyle. I think, is her name and, and, and like what, what her story is and how she ended up doing a course about proofreading.

[9:03] Guest: Yeah. So she launched it in 2014. And the course has been, I mean, I would say it's the market leader. There's, there's probably more copycats around these days, but Proofread anyway still considered generally the best. Something like 15,000 people have gone through the, through the course over those 7 or 8 years and we actually so proofread anyway uses clickfunnels as its like back, backend for facilitating sales and giving people the access that they need and so on. And Caitlin's actually been like, she's spoken at events in the ClickFunnels community. She's well known in the community as someone who's built a good course. So when we saw Proofread Anywhere was for sale, we actually were already familiar with the brand. And I think that's part of the reason why Caitlin sold to us rather than some of the other bidders, because she, she knew we were, she was like, oh, you guys are in the ClickFunnels community. Like, you're my people, you know, I understand you. So she knew we weren't just like some private equity firm that were going to destroy her legacy, you know. So, um, you know, off the top of my head, I can't remember exactly why she chose proofreading rather than a different course, but from what I can remember, she built her own career as a proofreader first. Yeah. And then just was like, okay, I can teach others to do the same. Rather than. She was like, you know, like an SEO who saw that there was a keyword opportunity and built a course around that. It was more like, I learned how to do this and now I'm going to teach others how to do it. Which is part of the reason why the course is so successful, because she has, you know, that knowledge and the credentials to back, to back it up.

Host: Well, it end the perfect story. So that this is a perfect segue. So yes, she got into proofreading herself, was making 50 grand a year or something, and it blew her mind and, and that she could do this. And then so she wanted to teach other people how to do it. And so she just. Yeah, I mean, she just kind of personally invested in this mission. So how is it that, how are you guys going to, you know, take the, take the, the baton and when, you know, her personal story is so wrapped up in this, in this course?

Guest: Yeah, and it's a, it's a good Question. And I kind of want to break down the reasons why often courses are hard to buy when they're so wrapped up in the owner. Because there's a lot of reasons that we pass on courses on, like, other courses, and it being too wrapped up in the owner is a big part of it, but it's not. It's not necessarily the owner's face or the owner's story. It's often the owner is the one going out and generating business for the course. Like, they're promoting the course. They're selling the course. Maybe they're speaking at events like how to be a proofreader. Maybe they're doing the back end. Like, they're actually teaching the course themselves. They are doing webinars with students. They're fulfilling everything.

[12:46] Host: Maybe.

Guest: What else? There's those two. There is the fact that they're the face of the brand. So that's the third one. And they're also usually doing a lot of backend operations. So there's this kind of danger where you take over the brand and it just kind of dies because everyone's like, oh, you're not teaching the course anymore. Or like, oh, you're not out there in Facebook groups or at conferences, like, evangelizing the brand or just all of these things, but with proofread anywhere. Caitlin was the face, and she recorded all the videos, but she's not really doing anything else. She wasn't running the business. There's a guy called Cody on the back end who was the CEO. And actually the cost of replacing him as CEO were built into the. The P and L, which is very rare in an online business. So we didn't have to increase our expenses to hire someone to run the brand. She's not really. And then back to Caitlin. Caitlin's not going out and actively marketing the course. A large part of the course comes from Facebook ads. And those can all. You know, those can all continue. And she's recorded something like six to 12 months worth of, like, ad creatives and videos for us to use already. And that was part of the. Part of the arrangement. We also have the rights to use her image for, I think, two years after the. After the acquisition. So we've got plenty of time to transition away from her and into somebody else. And, you know, there were some other things in our evaluation where while Caitlin is the face, there was also some. And I don't want to go too much into this point because I think Caitlin's great, but there was some language on some of the sales pages. Which was, we thought actually was a little bit antagonistic where, you know, it was like, why is my course? Why do I need to pay for your course? And the reply was kind of like, why should I give it to you for free? You know, that kind of faq. And so we thought there's actually some things we can improve about the brand and the way it interacts with its audience. And so it wouldn't be the end of the world if like, you know, two years from now, Caitlin's not the face of the brand. Like, it's not going to affect our ability to generate sales, it's not going to affect people's experience of the course and it's not going to affect our ability to run the business. But if she was just going to bounce on day one, not let us use her image anymore, then that would be an issue and we probably wouldn't have bought it. And she understood that there was no negotiation needed. She was like, yeah, of course. So that's kind of how we approach that particular risk. And it is unique because most businesses, yeah, like the reason I knew it could work was because that was actually how we did it when I sold my previous company and I was the face of the brand but I wasn't involved in the fulfillment of anything. I wasn't really involved in any of the biz Dev. It was just my face. So we just said to the owner, yeah, you can keep my face and just transition me out over time. And I think if you go to that old brand now, I'm not there at all. And from what I can tell, he's grown the business. So seeing that play out gave us a bit of confidence that we could do the same thing.

[16:37] Host: I want to share an update on the acquisition Lab. As you know, the Lab is a highly vetted cohort based accelerator and community for people serious about buying a business. After going through the Lab's month long intensive, you have ongoing access to almost daily Q and A sessions with advisors, regular live deal reviews with Walker Deibel, author of Buy, then build potential Deal team introductions and a very active slack group with other searchers on the path. Well, the update is that the Lab recently passed 60 businesses acquired and for well over $100 million in aggregate transaction value. Also, all members now enjoy lifetime access to the Lab because when you buy a business, it's often just the first of many and the Lab wants to support you in every deal, not just your first. Lastly, check out my recent interview with Shane Ursum. Episode 105. Shane acquired a business with over $1 million in EBITDA in just six months. And he attributes a lot of his deal success to what he learned in the Lab. Check out acquisitionlab.com or email the lab's director, Chelsea Wood. Chelseieve. Okay, so the core of this is that basically she was, while she was the face of the business, all of kind of the back office and, and running the business, she had done a great job of hiring people to do, to delegate. So none of that is wrapped up in her. And that she, that you have this plan to use her likeness, her image for some transition period and she's on board with that. She gets that to eventually kind of ease her brand, her face out of the brand. What, what does that look like? What does it look like in month 1218?

[18:22] Guest: Yeah. And who knows how, exactly how it's going to go because online businesses are so dynamic, it may, it may end up changing. But the general idea is you. The way I've seen it work well before and how we're planning to do it is you basically just slowly introduce other people over time. So there's like an overlap period where so let's say for example, in the Facebook ads, sometimes it will be Caitlin, sometimes it will be whoever the new face is going to be. And then sometimes, obviously in an ideal world, you do them together, but we probably won't have that ability. And so people get used to seeing the new face and then the old face kind of appears less and then one day it's like just the new face. So it's a classic thing. Like if you wanted to get rid of, if you no longer wanted to host this podcast and you were worried that people were going to be, they're attached to you, they've got used to your voice and they're kind of like, who's this new guy? There probably would be a little bit of a drop off. So what you would do is you would bring your new host on to co host with you for whatever, however many episodes. And then every now and then they do an episode by themselves. You know, they're like, oh, Will's busy right now. And then eventually it's just them. And again, I've done that before with a podcast pretty successfully. It helped that the person that replaced me was actually better at podcasting than I was. So that's always a bonus. And we took over a brand about a year ago where the founder was doing all the Facebook ads and training videos and stuff. And we, yeah, we introduced a new person who was going to Come on and, like, run the business. And then now that person's just in all the videos and everything. And it's almost as if the original founder never existed. So I think the fear of what happens is actually often greater than, like, most people don't care, you know, and of course, people who bought the course because of Caitlin, if she left, they might be like, oh, Caitlin's left, that sucks. But new people, like, a year from now, a lot of people won't necessarily know that Caitlin ever existed. I mean, you know, not in a. I'm trying to say that in as positive way as possible, but if it's like, hey, I'm Sally, here's Proofread Anywhere. And the main thing is, what works about Proofread Anywhere with Caitlin is, first of all, Caitlin's personality. She's great. But also, like you said, her story, it's authentic. And we've got 15,000 students who. Not all of them have the same success that Caitlin had, but some of them, many of them have done just as well as Caitlin because of her course. So that's actually an even more powerful story. So if we have the ability. And so what we're. I don't know how far along we are on this because A, we've only been running the business since October, and B, I'm not the general manager of Proofread Anywhere. But the idea is we're going to find one or even two or three of her students and, you know, ones who are charismatic and good on camera, but crucially, ones who actually had a very good success through the course. And then there'll be the new brand evangelists. And I actually think that's even more powerful because they can even say, like, hey, I've been through this course. I learned. I built my business because of this course. Because, again, I don't know, people who take a lot of online courses will know this. Some people don't. But a lot of online courses are built by a founder who had success once and then taught what worked for them. And a lot of time there's a bit of luck involved and you can't teach that in a course. So there's a lot of times you buy a course and the founder of the course is genuine. They've told you everything that they did, and it worked for them. 100% authentic, but it still might not work for you. If I was considering taking a course and the course was now being taught by three or four people who had gone through the course and had success with it, I'd Actually, I'd be more encouraged by that, so completely.

[22:48] Host: That's such a. That's such a great point.

Guest: Yeah. So I think long term, you know, the future's more than bright for the brand. And actually, as you talked about, you know, $500 is quite a jump. We actually would quite like to implement, you know, like a $90 offering or, you know, just the ability for people to get their feet wet and know that we're legit and then. Or that, you know, they want to. That this is a career for them and then have the ability to go to a more expensive course later. So really the only part to manage is how do you make it so that when you buy the business, it doesn't die immediately, like while you're. What, you're transitioning and. Yeah, I think I've spoken to that already.

Host: Yeah. Yeah. And then just the other thing that a founder can, of course, founder really brings is like, the vision for the product. They're also basically the product visionary. You know, all of the content, the syllabus, all of that comes from their mind, and they, you know, they really bleed into that. Now, I recognize that a lot of people can do courses, and so maybe I'm answering my own question, but is it as simple as finding other people who just basically know how to develop proofreading skills and then go out to market and get jobs as proofreaders? And it's really. While she might have poured her blood, sweat and tears into this product,

[24:13] Guest: it's

Host: not hard to find other people who can develop new content for the course on an ongoing basis.

Guest: Yeah, I think it's a mixture of both. Like, you need people. You need people who have the subject matter expertise, who can teach the course and represent the brand and be like, yes, here's how you become a professional proofreader. But you also need people who know kind of online business or online course businesses, and people who can think of how to improve funnels, like sales funnels, how to do product development. And that's what Proofread Anywhere did really well before because you had Caitlin, who was the teacher, she does product development. She still helped with marketing, but Cody was the guy that did all the real sales and. And everything, at least for the last couple of years. I don't know if Kaitlyn started out on her own. And so what we did was when we were considering hiring somebody to be the new CEO of Proofread Anywhere, we said, here's the business, you know, sign an NDA. We're thinking, to buy this one, what do you think about it, what would you do to improve it? And so on. And they recorded like a 25 minute loom video of just awesomeness. You know, they're like, oh yeah, this is a great business. Here's what's great about it, here's what I think I could improve. This is confusing. You know, he found some things where, for example, I know people like to hear tactics. So a lot of the introductions to the brand, like the customer journey is a free webinar, a free like one hour workshop, a free ebook, and then pay $500. And so a lot of the feedback from students is just a little bit like, like I wasn't expecting to have to suddenly pay for something. And so there's a little bit of dissonance there where we can either kind of be more upfront, like, look, we have a paid course, this is what we do. But you can get a free taster of it here or here's like a $50 course to get involved first and then you can stair step to the 501. So just things like that that he identified. And we don't know that these are going to work because you never know until you try them. But it gave us the confidence that from a product development side and operations and a biz dev side, okay, yeah, we've got someone who knows what they're doing and then we've got a lot of student feedback and a lot of successful students who can make sure to help us with the, the other stuff we talked about, like the kind of subject matter expertise.

[27:11] Host: One thing that you just said there reminds me of something you said to me in May, which is like a big part of the success, of course, is where the operational intelligence that you need to do a course well is that funnel mastery. I mean, a lot of the online course game is about funnels. Hence why. Hence why Caitlin was a regular face at ClickFunnels events and so on. ClickFunnels being a big SaaS tool for people doing funnels for those who don't know.

Guest: Yeah, I mean that's actually the downside of Udemy. So a lot of people launch a course, they stick it on Udemy, job done. But you go to Udemy and you can see how many students a course has. There's a lot of very good courses on udemy with like 1000 students. No, let's say even worse, like a hundred students. And the course has been around for four years. So they've made lifetime. They've made like four grand in four years from creating A very good course. So if, if creating a good course was the, the thing that's going to move the lever, you know, they'd have a lot more students. So, yeah, like you say, it's, it's about the, the ability to build the sales funnels.

Host: I want to compare this to sas. So margins are very similar in SAS and courses. I mean, the marginal margin, you know, for selling a new unit cost you nothing, essentially in both, it's just bits that you're selling. But one of the things. And so it's one of the reason people really like software, the margins are so good. But of course, if you buy a SaaS business, you do need to price in the fact that there will be ongoing product and, you know, feature development. You're going to have to, you know, the product never is never static, it's never finished. So. So you need to basically allocate resources every year to continue to build out Your product, your SaaS product in a course. Is it the same thing or is this course done, like what Caitlin has? You know, the content is basically done maybe around the edges. Need to, you know, you need, need to keep things current. You know, the job market for proofreaders probably evolves a little bit year over year, but you don't basically. How much are you allocating to ongoing development of the course?

Guest: Yeah, good question. I think with most courses, there's always going to be a few things here and there. The update. Like, for example, let's say you're teaching a course about Facebook ads. That video is going to be fundamentally. The courses are going to be. The course is going to be fundamentally sound up until, like, say, a big thing like iOS 14, which changed the game for Facebook ads. But even outside of a big thing like that, which changes the game, it's more or less going to be sound for years. But. But Facebook changes their back end, like, every, I don't know, three months because somebody gets paid 400k a year. They need to do something. You know, it's like you log in and you're like, why is it moved again? Well, I don't know. There's no reason for moving around that back end every six weeks. Yeah. So it must be that someone gets paid 400k a year. You kind of saw that with all the Twitter layoffs and joke layoffs, where people are like, yeah, I was paid 500k a year to change the color of the like button every now and then anyway. So what some people do is every time there's a small change to something like if we're teaching people how to install WordPress so they can build their proofreading website, maybe the version of WordPress is no longer up to date so it doesn't match the video. So you can kind of just say to people like, look, the back end changes. If it changes significantly, we'll update this video. If not, don't worry about it because some people do get quite annoyed. Like you said, click the button that says start here, but it's actually start there. But the fundamentals of if you take this course and follow these steps, you will succeed in the outcome that the course is teaching. Usually that doesn't change. So kind of back to your question about how much are we allocating? I would say we're more focused on additional product development. So like I talked about bringing in some lower end offers. I don't know if we're going to do this because we're still doing a little bit of R and D for it. But a lot of people are like, will you guarantee that I get a job as a proofreader if I take this course? And we don't, because that's actually not what the course is for. But maybe there's something out there where people can pay us to find a job as a recruiter or maybe there's something out there where we can partner with recruitment agencies to find a proofreader. Sorry I said recruiter because I was thinking ahead of myself. But like they can partner with a recruiter to find a job as a proofreader. That's just an idea. Like I have no idea if it's viable. Maybe it won't be. But we're focusing more on like, okay, what can we do to augment the current core suite? And then we just update it where it's necessary. Like if something, it needs updating because maybe there's a module about how to file your taxes as a proofreader and then the tax laws change, something like that, you have to go back and change that. But otherwise essentially a course is done. So it's different from SAS in that way, but it's also different from SAS because it doesn't have recurring revenue. So SAS has a little bit of the forecasting looks different with sas. Although many, many courses do have recurring revenue. So yeah, there are similarities. Sure.

[33:10] Host: Dom, last question for you. So given that you've laid out this kind of roadmap for or playbook for acquiring a course that or you've spelled out what sort of course would be a good candidate for acquisition, even when the founder might be the face of that course. Does that mean that there are a lot of courses out there? Does that mean that digital acquisition entrepreneurs listening to this should consider looking for courses out there? What's the opportunity here? What's the opportunity take away from this conversation between you and me, I mean, or. I mean, or is it going to Udemy and finding some really great, but, you know, really great course that the poor Guy's only made $4,000 over four years, but the content is, you know, great and he should be selling it for 997 and approaching him and buying his, you know, what would you. What would you tell the audience is their next step? You're smiling. Is that, Is that already your strategy?

Guest: Maybe I forgot it was video. I was like, I've got someone on my team who will be annoyed if I answer that question. I would say it depends on your skill set. Like, what it, you know, is your skill set? Like, yeah, that could be a viable strategy. Is your skill set selling courses? Is your skill set creating courses? So an acquisition entrepreneur is probably going to want to look for a course. Yeah. Buy a course, improve the back end. I still think it's. I think there's risk involved with buying a course and taking it off Udemy because you have no idea if it's going to sell and you have no idea if the Udemy course create is going to want to sell because, like, who knows? I think that is a potential strategy for sure. I think the better thing to do is find a course that's already doing well and ideally where there isn't some like, kind of key man or key woman, key person risk with the course owner, slash, founder, creator. Like, you know, there are courses out there where there is no face. Yeah. And you could. Not only does that remove that risk, but also it gives you an opportunity because generally courses sell better when there is a face. So you can then add in a face. If I was going to buy a course off Udemy, I'd probably try and buy one that was doing well on Udemy and just keep it on Udemy. And, you know, I try to avoid uncertainty. But that being said, like, yeah, I mean, that's not a bad idea.

[36:02] Host: Well, I'm going to leave it there. Dom, thank you very much for talking to us about proofread anywhere. This acquisition and the strategy of acquiring a course, super fascinating to me. As I said, I've ponied up for a number of courses, so I really appreciate the business model as both a consumer and an acquisition potential. Acquisition entrepreneur. So until next time.

Guest: Yeah. Thanks a lot, Sam.