Host: Today's story is not about a single life changing acquisition that sets the protagonist on a new path. Instead, it's about five very small acquisitions that today's guest has gradually built into an enviable lifestyle business. Link Moser has been a web guy going back to the 90s when he landed his first small business clients for web design and hosting. But it wasn't until 2017 that the current incarnation of his business really took shape. That year he bought 35 clients from a local solopreneur who was earning hosting and design fees to the tune of about $35,000 per year. Small potatoes, but Link got great terms on this deal and he felt like he was onto something. Seven years and four micro acquisitions later, Link has assembled a portfolio of web hosting and design clients that'll generate north of $200,000 of SDE for him this year, then rise to $300,000 of SDE next year when earnout payments on his deals end. Oh, and by the way, at this stage Link works five, maybe ten hours per week. So while this isn't a story of millions of dollars, it is a story of buying your way to I'll call it almost passive income. And Link believes he could grow bigger if he chose to. $700,000 of SDE, even a million of SDE if he kept cranking his model. He's just a little over it actually. Listen for that bit. It's valuable to hear from someone who has achieved passive income. Reflect on how it's not all it's cracked up to be. Please enjoy this interview with Link Moser, owner of Wind Hill Design. 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. A PEO run by a searcher for searchers. If you're running a company with less than 100 employees and providing health insurance to them, you may secure better benefit plans at a 15 to 30% discount through a professional employer organization or PEO. Aspen HR run by search Fund veteran Mark Sinatra, understands the needs of search operators and provides HR compliance, flawless payroll HR due diligence support for your acquisition, and Fortune 500 caliber benefits, all for a fraction of the cost and tis the season to evaluate your employee benefit plan. Most new clients reach out to Aspen 90 days before year end or their renewal date. So before they get slammed, check out aspenhr.com or contact Mark directly at mark aspenhr.com link Moser welcome to Acquiring Minds.

[3:21] Guest: Thank You.

Host: Thank you link. You've forged an intriguing acquisition path for yourself in the web hosting and digital marketing agency space. I left our pre call quite impressed by the model that you have found for yourself. Let's get your story and learn that model. Start us off in the 90s link. When you and I both were kids early to the Internet.

Guest: Yeah, we're going back circa about 1995, beginning of the Internet. I was just two years out of high school and I'd always had an affinity for computers. Learned a little bit of programming through high school, but really, honestly, they didn't offer a lot of that training back then. So you just kind of figured it out and, and I think it was around beginning of 1995 maybe that I think my dad says, hey, why don't you build websites? You know, the Internet was just coming on and we, I was, you know, I remember we had Prodigy Internet and it gave you five hours a month of World Wide web access. And so we're talking brand new beginning of the Internet. And I barely knew what our website was, let alone how to build one, but. And for some reason I was, I listened, I was curious and I went to the bookstore and got a book on teaching yourself HTML. And I think it was teach yourself in 14 days. I got two weeks. I can do this. So learn some basic markup language and built a website and pitched it to a local real estate company that I was doing some print design work for and said, hey, you guys can have a website, one of the first here in the area, and put your houses on the market. And. And they went for it. And it might have been a few hundred bucks back then. And, and we got started and so

Host: how did that evolve into work?

Guest: Well, you know, like many, they led to one. They had another business that built houses. And this is where I give myself credit. Once you've built a website, where's this thing going to live? Right? It's got to be hosted on the Internet. So my early introduction to recurring revenue at the ripe old age of 20, hey, I got you this website. We've got to put it somewhere. You know, for 20, 30, 40 bucks a month, whatever it was, we can keep it online for you. Sure. It's got to go somewhere, right? And that was probably the smartest move I ever did because I was creating a base for recurring revenue. And I quickly learned it didn't take a ton of work to keep that revenue coming in. You know, you keep things up and going and you made some money on the maintenance of the Website. I of course built the website for myself. And when there wasn't a lot of competition back then, you would organically get business from search engines, Yahoo, Google, eventually, as well as word of mouth and you know, the same methods that we use to get new business these days, it just, it just sort of grew.

[6:29] Host: And to be clear though, on the hosting link, you're not, you weren't doing the hosting because indeed there, there actually is a lot to hosting and back then you were, you were co, you would have had to co locate servers in a data center. There was a lot of technical know how so. But web hosting companies at the time had reseller packages targeting web design agencies. And so you would, you would mark up those reseller packages so they'd sell the hosting to you for $10 and you'd sell it, resell it to your customer for $30 a month, take the margin and really not have to do any of the work, not have to do any of the tech work at all.

Guest: Correct, correct. There were, in those days, if you remember, there were people with server racks in their basement and paying big Money to have T1 lines coming in the door. And I knew a few people that did that and that just, I knew I didn't have the technical chops for that. So yeah, I took that model of be the reseller partner up with a company that would, would rent you an entire block of space if you will, however they chose to do that. And then you would sell up the chunks and you know, you, you know, I had to have a little base level of tier one support. But as long as there was someone there with more smarts than me to help figure that out, if I really ran into trouble, I could get most things resolved. But you're right, it was definitely harder back then and it was command line stuff and over a dial up, I mean it's not what it is today.

Host: Yeah, yeah. And the reason we're going into this detail is because in fact your model that I was applauding earlier is, relates to all of this. This model is still kind of kicking around as it turns out. Okay, but take us now from the, this early entrepreneurial kind of web design venture of yours through Fast forward us up until you know the story, our main story of today kind of starts to develop.

Guest: Yeah, I would say fast forward 10 years, organic growth starts to become more challenging. You've got more competition. Of course, web development, especially for the main street business, is becoming more a commodity product. You've got systems like WordPress and Joomla coming on that are making web development easier. So growth was harder for me anyway. And I also started to see other firms like me because by now everybody and their brother is doing this stuff. But you'd see some firms that disappear or you know where those guys go. Oh, they, they left the industry and they rolled their book into these guys over here. And so I, I learned really quickly when that happened to a local, you know, friendly competitor that I didn't get a seat at that table to say, hey, I, I would love to take over your, your client base. I got more purposeful about what we now call, you know, proprietary direct outreach. I started sending letters out to companies all around and I have continued to do that for the last 10 years intermittently. And it always generates calls and it would eventually yield some, hey, I'm looking to get out or got to find a home for my clients. And so I learned that growth by acquisition before I even knew terms like ETA or search funds or anything like that, I was just a guy that thinking, okay, I can spend all this effort trying to get one new client or I can spend similar effort to get, you know, 50 and roll those in. And that has con that has really helped me grow where I was getting frustrated with organic growth.

[10:11] Host: And great, well and link lend me. So let, but let's put some color around this. So did you basically continue to build a design agency slash or web design company or web services company, development, web development company slash hosting company through the arts and into the teens? Is that what you did all those years?

Guest: It, it was, it was there. But I, I, at the same time I got involved back. Let's go back to around, well, the late 90s, I got involved in residential real estate, which again was just a neighbor saying, hey, you should become a real estate agent. What do I have to do? Go take a test? So I, I got involved in that and I, I never identified myself as being maybe that, that type a personality real estate agent, but I enjoyed the marketing of it and my, you know, if you remember, the first website was a real estate website. So I found a little a niche for myself in the marketing there. And in the, in the teens I joined up with some other folks at Akela Williams office here in New Hampshire and, and we started building a real estate team. And so I had taken my eye off of building the web design business for three or four years which, and so natural attrition was kind of kicking in there. And I thought real estate, that's the direction we're going now. That you know, the market was, was humming and it had dropped a lot. My income for the web business, I think it dropped to $28,000 and 20. Yeah. A year.

Host: And those were mostly hosting fees.

Guest: That was pretty much all hosting. Yeah, I was, I was, I'd like to think I wasn't neglecting people, but it wasn't a focus.

[12:01] Host: Okay, but, and so it was $28,000. So frankly trending towards zero. Yes, but at the same time, that $28,000, you're not doing much for that. It's hosting, to be clear again with everybody, those are, that's not, you're not actually. Or web development services. You're just keeping, you're the guy they're paying to keep their website online. And, and really it's, again, it's a reseller model. You're not having to do any of the technology there. You're just marking up the hosting services, the actual host. Okay, okay. And, and by the way, so if it's a $28,000 kind of at the low point per year, how high had you gotten it to?

Guest: I think Prior to that, 2010 was my peak of around maybe 150,000 net.

Host: Okay, okay. Okay, great. Okay, so this is a little bit of a zero to one story because you did, you know, start your business. So, so you're, I'm breaking my rule here a little bit with your link because you start, you started your business, but it kind of went up to 150 net and our SDE and then it trended. It was trending towards zero when you discover acquisition. So, so this is me rationalizing your story in that kind of clawing your way, your way back up from almost zero is almost pure acquisition. It is an acquisition story. So, okay, so here we are back again. And what did you say? 2015, 16.

Guest: I'm looking at the numbers right now. In 2015 was 28,000. 2016 actually dropped to 18. So we're still, you know, hemorrhaging. We're close to zero. We're real close to zero and we're

Host: real close to zero. Okay, 18, 18,000 in hosting fees a year. So that's what, $1,500 a month. And, and this is because again, you've basically gone at least to yourself, you've gone all in on residential real estate. Correct. Just give us a minute or two on that, on that side adventure, your real estate adventure.

Guest: Yeah, so I had actually built a website that was generating a lot of leads and it was focused on high end waterfront luxury homes and this was all through Organic SEO. That site had really come into its own around 2012. And I was just getting these leads coming in and honestly, I didn't want to work them all, but I knew they had value in them. So that's part of what brought me to partnering up with a Kello M's office. Say, I've got these leads, let's build a team of agents to support these leads. And that was. That would work great. My real estate income, I did a few sales here and there, but I really like the, the leadership aspects of it and more. The support, the marketing role. Yeah, you know, my income had grown, you know, double. It went from in real estate, this is the real estate side, from 65,000 in 2015 to 136 in 16, all the way to a peak of 150 in 2018. So that's why I kind of had taken my foot off the gas on the web hosting and design business. And unfortunately, that ride came to an end in 2017 when I had some partnership challenges that kind of caused that real estate business to kind of blow up a little on me. And, and I realized real quick that I had to scurry here and shift gears.

[15:32] Host: Running payroll, paying your bills, closing your books, and producing financials. These are critical tasks every business owner must do or oversee. But spending time on them distracts you from the leadership in growth work you want to do. So let system 6 do it for you. Owned and led by a former Searcher, Chris Williams, System 6 is a leading outsourced finance team for hundreds of SMBs, including over 50 searcher acquired businesses. Chris, Tim and the System 6 team understand firsthand the challenges, the opportunities of jumping into a business as its new owner. So whether you own your business already or have one under LOI, talk to System 6 about how they can give you time back and improve your financial operations. Mention acquiring minds and they'll provide a free review of your books and financial ops, a $500 value. Check out system6.com link in the show notes or email helloystems6. When the real estate partnership blows up and you're like, okay, I gotta figure something out here, Scurry. As you said, your decision was, I'm gonna go back to my digital agency slash hosting business and build it back up. Was that, was that a kind of decisive move that you made?

Guest: It was. And part of that was also, this has been a good lifestyle business I've got. At that time we had four kids, now five, all quite little, all at home. Wow. And real estate, as anyone listening knows, is really a nights and weekends business. And that was getting harder and harder as the kids were getting older and finding themselves in after school activities and things. So, and, and let's face it, it's also commission driven, so you don't get paid until the very end. And I was starting to get a little frustrated with know, the unpaid work that went into that. So I did revert back to what I knew.

Host: And also maybe you appreciated the quality of revenue from your, from your web hosting years, having tasted what, what commission revenue looks like. Not, not, not nearly as high quality, although it can be lucrative as we know.

Guest: It's like a lottery ticket, right? You can get some real big checks, but they can be far and few between.

Host: Yeah, exactly. Okay, so you, so you decide to go back to return your attention to your hosting an agency business which has been lying fallow, let's say for a number of years. Okay, so you, you talk and tell us about this gentleman, his first acquisition.

[18:13] Guest: I was under the gun and, and so it was fortuitous that I pushed out a batch of letters. I started, I hired a VA to help me scour the Internet and build a list and we of course started close to home. So I'm, I'm here in New Hampshire, so we targeted New England and I would just get the kids and get the letters out. And we just started sending letters. I really believed in the letter. I liked to hand sign them. I really thought it was a personal touch. Now everybody's blasting out emails and I just always found a letter opened up doors for me that maybe email didn't. Or at least that was my belief.

Host: Well, I want to hear about that in a second here. Link. But just to be clear, so who you're reaching out to is small mom and pop hosting companies or digital agencies or who are you reaching out to? Who are you trying to buy?

Guest: So it's, what's the strategy? The strategy? Well, everybody calls themselves something different, so it's a little hard to know. But I was targeting people like me that were small, maybe one and two person shops, and some of those could have been freelancers versus full time employees, but had a mix of hosting revenue and project based revenue to kind of balance them a little. And that was the ideal fit because it was sort of apples to apples. Trying to identify those online can be tricky. You know, is it an ad agency, a marketing agency, a digital company? And so, you know, everybody calls themselves a little different. And I found that what someone's website shows isn't always what they're doing. So my net was kind of broad. If you seemed like you fell into that rapper somewhere, I was wanting to get a letter because I didn't, I didn't want to miss an opportunity.

Host: Well, and just crudely, that net was basically sort of digital marketing agency. Anybody who kind of fell under that rubric, you, of course, once you got a bite, you would really be looking for hosting revenue. You were trying to prioritize that, that very high margin recurring hosting revenue. But, but the, the category is kind of digital digital marketing agencies.

Guest: Correct? Correct.

Host: Okay. Okay.

Guest: Yep. And so the first gentleman was right here in my backyard. He was definitely traditional retirement age. Turns out he had started this as a second career. He had retired from a corporate tech job and probably found that he had a desire to do a few things and still wanted to put around. So he'd built up a nice little base of 30 or 40 customers and he was hosting websites and doing the web development side of it. And he had already tried to find a home for this client base and talked to another local company. Didn't have a good experience. So this is a case of just great timing. He was motivated and his wife was now ready to retire. So he's like, I want to just find a good home for these clients. It was not a significant amount of money. So he was not like trying to ring every dollar out of this. I believe that the amount. So it was about 35 clients and I think the gross revenue between project and so this would have been trailing 12 months for him was around $35,000. A nice little small bit size. I mean basically that's going to double my revenue. Right. I bought that with a $4,000 down and a 18 month earnout is what that shaped up like. And it came with. Most of these are around 50% recurring revenue. The rest is project based or what I call one time revenue.

[21:58] Host: And when you say project based in this context, it means doing some, doing a new website refresh or maybe adding a page or two to the website, a new logo or what have you.

Guest: Yeah, maintenance or adding this page, taking this off or give it a refresh. Yeah, that sort of thing.

Host: Okay, okay. And so this is a very small acquisition. But and you know, spoiler for your story, what you've done here is cobble together a lot of these quite small acquisitions into something that is still, you're, you're a sole proprietor, but you're doing well and not working very hard. And there's a model here that if you wanted to continue, you could kind of sky's the limit. And so we'll get into whether or not you know how you think about that. But just I wanted to kind of better set the stage for the audience is where we're to where we're going. Okay. Returning to this first deal. So very small, 35 clients, local guy, you said it was $30,000 in revenue.

Guest: 30, 35,000, I believe.

Host: 30, 35.

Guest: And again, as you said, the margins, he didn't have any employee, it was just he was a sole proprietor. So it's pretty much almost all profit.

Host: Well, it's all profit except the project work is going to take hours. So if half of that is hosting and half of that is project work, that project work you're going to need to do.

Guest: Right, right.

Host: Future project work.

Guest: Right, yeah.

Host: Okay. You buy it for $4,000 down. So that's very little down. Of course it's also a very small business. But how are you able to talk to us about that, that structure? Because you use that again and again.

Guest: I did you say this works $4,000 down, the earn out. I would always take the recurring revenue and the project based revenue and I'd break those down. So I'd use a different multiple because I knew the hosting was worth more so I had to value that more. And the earn out ended up being 50% of the gross hosting revenue collected in the previous month and then 35% in this case it might have been 30% but a lower number of the one time or project based revenue. And I would write a check to this gentleman each month and I, I'd take a copy of the income statement what was collected from the clients that he sold and there's a full accounting and gross. Basing it out on the gross was more transparent because I. Obviously you could mess around with your expenses and alter the. Yeah, yeah. And if there's. If they knew what their hosting rates were, they're going to know what they should be. And I agreed to not to raise them. And so that was as transparent as I could make it. And I did that for 18 months. And if clients left it was lower. If for some reason we sold a new website to somebody, it would be higher. And I didn't put a floor or a ceiling on that.

[25:00] Host: Fantastic. And the. He was amenable to this because I mean such terms that favor you so, so much because he really just wanted a way out and Great. And for a business like his that's so small, it was what were there other exit Options. Are there other exit options or is it kind of like this Link guy or nothing?

Guest: Well, I think one of the other options is just to tell everybody, hey, you've got to go find someone new, you know, to shut the doors. I suppose somebody could have taken it and packaged it and put it on a flippa or.

Host: Yeah.

Guest: You know, maybe a biz buy sell. That one might have been a little small. But I'm still. You. You still would have got nibbles.

Host: Yeah.

Guest: And marketed it that way. But in this case, as with many of them, the. The key here, and I think this holds for any business, is that seller motivation. You know, I. I made this easy. He was looking to just find a good home. We met for a beer and a burger. He's like, you know, I feel good about you. You know, I feel you'll take care of my clients. And I, I gave. I probably gave three options because I had done this before. One with a little more down, but shorter earn out, and the other and a middle one. And the third one being the least amount of down, but the longer earn out. So you'll get more, but you're gonna have to wait for it.

Host: Sure.

Guest: And most people picked the middle one, and I was fine, which is how

Host: you designed it, I assume. Yeah, yeah, yeah.

Guest: But I would have been fine with any of them. You know, don't make an offer you aren't. And then. No, most people didn't counter it. Like, you know, either they took it or they didn't. And he said, okay, that sounds fine. I think, I think there's very little data at that level of is this fair or not? And I think, hey, you know, here it is. This is what I'm comfortable with. Yeah, you're next.

Host: Well, as we've kind of said, Link, you're competing with zero. He gets nothing.

[27:01] Guest: Right.

Host: So when. When that's his alternative, it's pretty easy to take anything.

Guest: Right.

Host: If you're him.

Guest: Right. And you make it easy.

Host: Yeah.

Guest: And you feel good that your customers will be taken care of. I mean, you hate to say no to them and say you guys are all out the door.

Host: Exactly.

Guest: That creates more work for them. So.

Host: Okay, Link. And so what does. What does, quote, integration here or the transition, again, quote unquote, look like? There aren't employees. There's just this. These hosting accounts and this client, but real revenue coming in, although small. So what does it look like to. To bring that into your fold?

Guest: That's. That's the tricky part, because so many of these are personal relationships with these solopreneurs. And I equate it to, you know, you get the letter from your doctor saying, I'm not your doctor anymore. You know, this, this guy Bob is your new doctor. And you're thinking, I don't know who Bob is, Bob might be great, Bob might be better, but I don't know who Bob is. And, and so there's a transition that's gotta happen and it involves the exiting owner, which is another reason I like the earnout is like, hey, you know, exiting owner. I need your help to tee this up. I need you to let your customers know and you need to, you know, we need to brainstorm on what their concerns and fears are gonna be and alleviate those so that we make this easy for them to avoid attrition. And I like to see them reach out by phone if they would and, and you know, follow up with an email and just let's get ahead of that and then make sure that they know you're available, even if that's just in spirit for questions going into this. And I will sometimes. We're migrating the accounts onto my server to consolidate some of that, but really the transition is more of a relationship with the customer so that I can then follow up with the customer. I echo the same thing that the seller has said so that we are on the same page and we appear to be in unison. And hey, the only thing changing here is the place you send a check to. Really that's the hope is that there's minimal disruption because, you know, as you know, the savvy customer has choices here. And we're talking about, you know, in this case, Joomla Sites, but they're open source sites which can be picked up and moved over the drop of a hat.

Host: And so did this, did this work?

Guest: It did. There's always a little bit of attrition. And I've discovered with later experiences that some people already have their foot out the door. And if you're already buying a business where the guy's taking his foot off the gas like, like mine had been, you don't know what's lying in the shadows from an attrition standpoint. So. And you know, there's an experience there we can talk about a little later where it went right to zero. So it's real.

Host: Oh, wow. Wow. Well, what do you. Do you have kind of an average or a benchmark now for the level of attrition you expect when you, when you buy one of these?

Guest: I think around 10%.

[30:01] Host: Okay.

Guest: Is fairly normal. I think any business is shedding in this space anyway. So in the other, the flip side of that is you're also not usually acquiring any kind of growth engine. You know, it was the previous owner's sphere of influence and network that drove that growth. So when you plop them out of that mix, you're, you're taking over a client base that is naturally shedding. And so you're more of a maintenance. So it's. That in itself lowers its value. That's where the earn out lets me stay in a place of comfort from a risk standpoint.

Host: Great. Let's hear about the next acquisition. So as well, let's. How did this first acquisition, you know, 18 months later, how did it look for you? Was this a, was this a model that you wanted to repeat?

Guest: Yeah, this one went great. And I, my test is, can I still have that burger and a beer with the other guy? And we'll, we'll still both want to do that. And this guy's still, you know, good terms. And in fact, it made it, it made them look easy because I may have gotten a little overconfident after that one. That was, that was August 17th and I had teed up another one for September of 17. I'm like, this is like shooting fish in a barrel. You know, boy, just keep doing this once a couple times a month, boom, boom, boom. And you know, we'll be, we'll be getting that portion Ferrari in no time. So the second one was a fellow from Connecticut. This was a spin out. So he was not retiring, but he had decided to take his business in a focus, in a niche, in his case building municipal websites. So all the clients that did not fit that mold, he wanted to spin out. And there were about 100 this time. And in his case, he had built a proprietary content management system. He was one of those anti WordPress guys. You know, WordPress is evil. And he had these all on a server. And in this case I took over the server. So there was no migrating on the technical side, which made that easier. I got more confident and I think I put down $30,000 on this one because it was more clients and it was probably closer to 100,000 in gross revenue, maybe 80. Half of that was project based, half was recurring. And so I thought, well, the other one was really going well, let's go a little bigger. A hundred clients. The lessons learned in that one were that the handoff was pretty brief. He just mailed out a letter and half the people didn't get the letter. And they're getting bills from me and saying, who the heck is this guy? You know, why are you sending me a bill? I'm your new web host. Oh really? And I also learned that a lot of that project based revenue was in the rearview mirror. So that had been know looking at a trailing 12 months, you were looking at projects that had been completed in the rearview mirror and maybe 10% of that revenue materialized in the 12 months forward. And so that lesson was that yes, the recurring hold steady, you still have a little natural attrition, but that project based revenue is not nearly as solid. And the, the homegrown CMS system was also a challenge to maintain. But it did, it did create a stickiness which kept the client like if you move, you're gonna have to. It was more like a SaaS solution where you know, you can't pick this up and move it. You have to get yourself a new website. So it did, for better, for worse, keep some of those clients on board.

[33:33] Host: But it was, of course it means though that you have to maintain that tech, his homegrown tech stack. So when something breaks in his cms, you got to figure out how to fix it.

Guest: Yep. I kept him actually as a subcontractor because they were still in business and this guy had no documentation. So he super nice guy but you know, he held the keys. So I'm like, hey, if you will still help with this on a freelancer basis, great. We'll cross our fingers that, you know, we can move some of these clients eventually onto something like WordPress, which we have done because I said no way am I going to develop in this realm. We're going to go over to WordPress when you guys are ready. But I may have, I may have paid a little too much on that one. That was a 12 month burnout. But I still, you know, I still came out solid. You know, it just took a little longer to pay myself back but it still worked out well. And I, the lessons I learned from that was I had to pay a little more attention to the transition and how that happened.

Host: So that was, and the unpredictability really of the project revenue and so on that learning the project based revenue versus the hosting, beautiful, high quality revenue. Could you look for future acquisitions? Could you structure them such that the whole acquisition price is based on just the hosting and any project based revenue is just pure gravy? So they'll get a, they'll get a percentage of that, but there's no earn out. So there's no commitment to Paying a certain amount for that revenue. It's all if and only if it comes in sort of thing.

Guest: You could, I mean, I, I would just lower that percentage a little more on the project base. And I, I try to be mindful of, you know, what's the other guy sitting there thinking of this offer? You know, different sophistication and different sellers. Some of them are like, you know, have visions of thinking, you know, they're worth 10x, you know, and so you're not. Everybody says, okay, that sounds great. Certainly the stories I'm not sharing are the people that said, yeah, that's not going to work for me. I could just keep minting money here for another three years and I'll be ahead. I couldn't argue with that logic. The reason this works well for me works well for others too. So I learned to drill earlier on into why are we having this conversation? Why are you thinking of exiting and looking for a good answer? And I, yep, I still do that with, even in other industries. So you're talking to a seller. Did you just respond because you like my letter? You know, you think I'm, I'm PE level money here and I'm just sprinkling the world with lots of zeros, or is there something else driving this?

[36:22] Host: No, it's a great point. And with our fund with Mines Capital, it's one of the very first things that we, we also push on in looking at investments is why is the seller selling? And there are, you know, like we talk about high quality, low quality revenue. There's high quality and low quality reasons for wanting to sell.

Guest: Yes.

Host: And high quality reasons. Retirement is, you know, is typically at the top of that stack. Although on the other hand, with retirement, you always have the possibility that somebody who wants to retire can just push retirement for another year or two.

Guest: Right.

Host: But it seems like most people, once they've decided to retire, are pretty eager to do so, to go ahead and do so. So great. Okay, well, we're not going to go through all of your acquisitions because you've done well, you've done, you've done five. So, so let's do, let's do the next two. Yeah, I guess we can knock through these next three. Let's do them quickly with learnings.

Guest: Yeah.

Host: So acquisition three, 2017 now.

Guest: So actually seven, number three was started in 17, ended up in 18. That was a fellow in upstate New York who was exiting the business actually, ironically going from web dev to real estate. He was all Joomla Based. And I learned the lesson from the second one that I got to focus a little more on that hosting. Now this guy had built in maintenance into his recurring revenue. So his hosting packages were, we had upwards of, you know, $200 a month because he had rolled in, you know, that model by which you get X amount of time per month and it rolls over or you lose it or use it. It's sort of like built in maintenance. So I thought, wow, all right, this is going to make sense. I didn't really know Joomla. But I knew at least it was open source and at least it was portable and I bought that one. Red flag was this guy who was from Syracuse, New York and was really hot to close all of a sudden and drove all the way to Concord, New or a six hour drive to close. And I thought, man, there's a real sense of urgency here. Should I be worried? He kind of disappeared after the deal and that left me hanging. This was the first and only time I consulted the legal counsel. Like, do I have to pay this guy when he hasn't upholded it? Yeah, evidently you do have to keep holding up your end of the deal even if the other person doesn't. But you know, I got a good core base of clients takeaways from that was that not everybody's motivated by money.

Host: So what was his motivation?

Guest: I don't know. He just kind of disappears. So they were client. There were open projects, there were people saying, you know, this guy took a deposit on a project, you need to finish it. I, whoa, I don't know anything about that. He just really kind of disappeared. And that made that trickier. And you'd hear the horse, you know, this guy was, you know, the IRS was looking for. I mean it was, it was just, you know, a seller who had checked out and for whatever his reasons were. But it left me doing a little damage repair and scrambling with answers I didn't have. You know, I can't speak to what happened in the past, but here I am. Let's talk about a solution forward. So it still financially worked out fine,

[39:39] Host: even though you had to deliver on projects that he'd taken the money for.

Guest: But I had cranked down the terms even harder on that one in the, in the terms of the agreement. So there was a clause in there that says if you don't assist with transitioning effectively, you will get less, you know, your payments will be cut in a reduction. So that was the language. And I wrote all this myself so you know how legal and firm it was. But it was there And I interpreted it as such and he didn't challenge it. So I just kept mailing checks. But they got smaller because of the lack of that involvement. So I had learned that I needed to hold a guy to the, you know, you've got a small window to transition and we needed that help. So, so again, so after,

Host: and after this third acquisition, now what is, what is the overall picture of your portfolio look like?

Guest: So by the end of 2018, I had grown from 18,000 in 2016 to 124,000 in two years.

Host: Okay, and roughly would you say how much of that is hosting revenue? You know, basically 95% margin revenue. And what's your, another way of asking is what's your SDE on that 120 number?

Guest: Oh, that number is SC.

Host: Oh, that's SDE.

Guest: Yeah, that's SC yep.

Host: Okay.

Guest: And so we figure about 50% probably at that time, 60% margin. So, you know, double that for the gross. And I would say about 60% of that is recurring revenue, at least at that time.

Host: Okay, and did that number include this 2018 acquisition number four?

Guest: It started coming in and you know, I don't know if that number included the debt payments, if you will, for the earnout. So there were still some earnouts. That was an 18 month earnout on that one, but it had held. So,

Host: so, so 2018 SDE of $124,000. You're, you figured out a model here. What do you think about this model? Do you think that this is something you can do forever? It can do better, bigger and do bigger deals or, or what? Like what's the, what's the takeaway from these last couple of years?

[42:04] Guest: So present day thinking is it's, it's, it's, it's gotten harder. I had a dry spell from about 2018 until really last year of any significance. It was just getting harder and leading up to the pandemic value.

Host: What does harder mean?

Guest: Harder to find a good deal or deal that met my criteria. Some of that was me becoming more selective as I had learned through these. I like to think of these as micro deals, which helped me cut my teeth. Coming from no formal M and a background of any kind, and being a sole supporter of a family of now seven people, I was a little risk averse to just going all in and taking on debt. So these were good little micro lessons. But it became so I became more aware where the bodies were buried. Combine that with my perception of valuations going up pre pandemic, anything tech related, you know, I'M trying to move upstream, but now I'm bumping into more competition and more sophisticated sellers. So it was, it was deflating really, to be honest. And then you hit the pandemic and that pumped the brakes on things. And of course, during the pandemic, who doesn't gravitate to wanting to hang on to nice recurring work from home revenue?

Host: Totally.

Guest: You know, anybody that had this either as a side hustle or as their main gig was not really looking to get rid of it.

Host: Well, but you know, the question always is when you're a buyer and the market becomes too expensive and, but you also are already, you already have an asset in the market, do you become a seller in that market because the prices have gotten so out of whack? Did you consider flipping sides of the table and actually selling your business at that point into that white hot environment for businesses like these or.

Guest: No, I hadn't really. Mainly because I didn't have another branch to grab onto.

Host: Yeah.

Guest: And I don't know that I, I knew there'd be a market for it. I just thought, well, man, if I sell it now, the clock is ticking on figuring out the next move. And I thought I should figure that out before. No, I think that speaks to the point that right when it's the right time to sell is. Well, sometimes when somebody's looking to buy and nobody sent me a letter, but I can imagine that makes you think, hey, let me take this call because now maybe this is the time and that's the mindset a lot of folks have when I speak to them.

Host: Speaking of letters, let's return to that now. Link. So you are sending letters to the owners of these digital agency, quote unquote, digital agencies with hosting businesses. So these are tech forward people, although they might not beat up on the latest and greatest if they're of, of retirement age. And so that, so just say more about that strategy. You've said that the personal touch, you know, it, it kind of penetrates the noise. People are just, just doing the inbox, just doing email. This is a, a different channel, an overlooked channel. Say more.

[45:07] Guest: Yeah, I. So this letter came from somewhere back 10, 15 years ago. It was a letter that I found in a book on buying businesses that I've tweaked a little, but it's really, it's a one pager. I put it on my letterhead. I up until the last mailing, I hand signed it and used a real stamp and I put a URL to my LinkedIn address because I know the heck, these guys are going to Google me. And I think being in industry helps because they get it and they look this guy up and they think, all right, well, yeah, he's sort of like me. And you know, it gives a little bit of credibility. I've tested this letter in other sectors and it's been a little harder. You know, why the heck does an Internet guy want to buy an auto repair business? Yeah, so it is. But I've also had people tell me, hey, I got your letter. I get these all the time. But there was something about your letter that got me curious or seems sincere. I looked you up, I'm curious, you know, and that starts the conversation. Now many of those don't yield to let's do a deal, but they have told me I've even had other guys like, hey, nice old school letter, you know, so there's plenty of people banging on their door through other means and for some reason this seems to open up some doors.

Host: Do you have any sense of the marketing funnel here? For every hundred letters you send, how many conversations do you have becomes how many actual leads?

Guest: Last time I looked at it I was estimating between 10 and 12% response rate and that would mean an email or a phone call of curiosity. I hadn't really looked at from breaking that down to an loi. I would think it went real lower because I would make an offer on, let's say for every 10 people I talk to I might make an offer on two. I'd be lucky to get one accepted because it was just. What I learned is that some of these sellers are not traditional retirement age. The digital marketing realm is a little bit of a younger industry having really only started in the mid-90s. So a lot of these were curious people and thinking, you know, are you offering enough to push me off my stool? If not, you know, then it's not going to work.

Host: August Felker is a two time successful searcher. First with a traditional search fund. The second time around he did a self funded search. Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. A great no risk way to get to know August and team. They love helping searchers. They've worked with hundreds. Oberly is a specialty insurance brokerage for searchers by a former searcher. Check out oberly-risk.com O B E R L E- risk.com link in the show notes for the duration of COVID or just before COVID Through Covid, you're just holding steady. Your, your acquisition activity comes to a, comes to a halt primarily because you've, you've stopped it because you're seeing prices get elevated. Primarily is that. And you'd already started to see that before letters out.

[48:41] Guest: I mean, you did. I did. I kept at it. I mean I knew I had to, but there was a lot of soul searching during that time. And you know, is this the industry for me? I mean, you know, because you're, you know, you're kind of chasing the competing nature of it and the commoditization. And so you do start to think, is the juice worth the squeeze? Because anything.com related seemed to come with an inflation of like I can't pay four times for this, knowing the risks that are involved. When I could buy this plumbing business here that's making more for two times. At some point, you know, the economics is like, you know, I don't love it that much. I'm not going to overpay and take on the risk now that I know what that risk looks like.

Host: You mentioned the plumbing business. So at some point in here, despite kind of figuring this, this path out on your own, you discover capital s search eta.

Guest: Yes.

Host: Podcasts like this one, search funder, et cetera. So what does that do for you?

Guest: Oh man.

Host: Slot that into your, your thinking and your story.

Guest: There are so many folks that listen here, it's like drinking from fire hose. When you first discover 201718 was when I learned about search funds through an HBS grad who had completed a traditional search fund in the mid teens and really had reached out to me. It was a cleaning company, like a disaster relief company and he was doing outreach for that business to real estate agents. So we just happened to connect and he was super nice to sit down with me and explain this all and I thought, wow, there's a way you can acquire a business through means that are beyond your own means. I thought, man, if I don't have the capital to put that equity and I, that's never going to happen. But you know, I, so I like everybody else.

Host: Wait, wait, wait, link. Even even though you've been doing precisely that.

Guest: Yeah.

Host: But even even though you hadn't, you've been using very little equity. These big earn out big kind of seller financed deals, you didn't think that you weren't, you didn't think that that translated or maybe because they were micro deals. You didn't think that you could do them at a larger size or what.

Guest: I didn't think you could raise capital. I mean, I never came from that world. So I was thinking, you know, I was limited to what I had of my own and when I was starting out, it was less.

Host: And what you could convince a seller to finance, those were the, so the,

[51:00] Guest: the whole ET model is you could raise equity for your 10 to 20% down, go SBA, get some seller financing. And the traditional search deal at the time was still, you know, Ebitdas of a million and up, which is. Was kind of the model in the HBS book. And so I thought, because honestly, these little deals is a slow way to grow and it would get frustrating. And this guy said, link, you know, same amount of effort goes into a little deal is a big deal. And I think it was a confidence thing for me. You know, man, I can't see myself doing a deal that big. And so the little ones helped me gain some confidence of. All right, I talked to sellers. I know a little more. I felt a little more confident having done a few and that, that was just a path for me. But yeah, so, you know, to your point, discovering this realm, this world has, you know, I love it. I think it's super interesting stuff. And it just, to me it seems like it only continues to grow and create opportunities for people of all walks of life. And you know, you think, oh, I'm mid career, you know, I'm not the traditional, you know, late 20s, MBA grad from, you know, Stanford or one of these places where you're thinking, man, this doesn't work for me. Well, it can and does. And you have shared stories of so many people from so many walks of life that inspire the rest of us that don't take that traditional path. And so I did look. I've always looked and held this against the metric of other potential investments to say, all right, at what point does this not make sense? Does that traditional home service business or other, you know, diaper cleaning or plant watering or whatever else is out there, compare diaper cleaning?

Host: I'm unfamiliar with this one.

Guest: Oh, somebody somewhere did a diaper service. Um, I remember reading about that somewhere.

Host: Oh, like those things where you, where you don't the reusable diapers, reusable company

Guest: pick them up and sort of like probably like a uniform service cleaning company. Sure. That doesn't happen around here, but in probably certain neighborhoods there might be a market for that. I'm sure there is.

Host: But yeah. Did you search officially or did you just kind of take an interest in ETA and search and keep your eye on biz by sell sort of thing, or did you ever embark on a proper search?

Guest: I've done some outreach other industries, I've done landscaping, I've got an affinity for cars. So I have looked at auto repair. Really like the auto repair niche where they are, you know, you take classic cars, you restore them in a way that's a lot like web work because it's time and materials and they're, they're working off of a retainer in a way, so you're not having a big arm. I actually looked at a company that did that right before the pandemic hit and I really liked it. But it was over an hour's drive and that lifestyle component has been part of that. Right. How do you all of a sudden you go from working remotely at home to a commute. So trying to balance all that in one's individual life is a tricky algorithm.

[54:20] Host: Let's put a pin in that and return to it in just a second link because I do think that that's a big part of your story here. So I want to round out where you've landed because you do have one more acquisition and so tell us that acquisition. Bring us up to speed on where things sit.

Guest: Today was last summer and just actually crossed the one year mark last month. This fit the mold real well. This was a company in upstate New York that was a husband and wife team. Typical retirement age. They have already started to sort of downsize. So they probably at their peak had three or four in house employees. Had, had shed those employees and was working with contractors, doing about 80,000 a year in web services and then maybe another 80,000, it might have been more, maybe close to 100 of project based revenue. So but let's say 50, 50. And this was a broker deal too, which these had all been proprietary. So I don't even know how I landed in this one because I don't think it was a biz buy sell. But my guess is somewhere through the outreach we found them, we meaning me. And it was just a good fit. I drove out, met with these folks, they were ready to retire, they had a plan to do. So I offered 60 down. $60,000 down with a 24 month earnout, 50% on the gross for the, the web hosting, the recurring revenue and then 35% on project based. And, and the numbers worked out fine for me. Even if the, the print, because these guys did print design as well, which I had not done and I don't want to say I didn't care about it, but I was really focused on that. And, and these guys had healthy monthly amounts and some of them were annual. So they had built in maintenance into this. So you know, we're talking $70 to 250amonth for these sites. So these were, these were larger companies, they added value added in there. So that was a good, it was about 60 clients on the website side of things. But they definitely had good margins in there. So I took that over, we moved them in and this was a little longer transition. Kept the owners on board as freelance contractors to kind of help manage that. They sort of stepped back in time. So I would say now a year in, it's definitely settled in. I've got a, I hired a freelance graphic designer to kind of help manage the print side of things. That's going well. So all my team is freelancers, contractors globally. And it's humming away, it's working and I think it's stable. And that was, I don't want to say that one saved my bacon, but it renewed my faith a little and yeah, okay, there's some stuff out there still and it's just, it feels like a needle in the haystack sometimes. But it has worked out well. I think by 10 months I had recouped my down payment.

[57:25] Host: And so as we said here, October 1, 2024, what is gross income of your business and what is sde?

Guest: So at this point for this year, gross income is projected for 2024 at $413,000 SDE.

Host: If you.

Guest: My true SDE, because I'm still making those earn out payments for another year, it'll be around 226. If that were to go away, I'd be at around 295.

Host: And that'll go away next year, right?

Guest: Next year, yeah. Assuming things stay stable and steady, no

Host: attrition, you pay down your whatever $75,000 in earn out and this time next year, toward the end of next year, you'll be basically taking home 300,000 in ste.

Guest: Yeah. At least. Trailing forward would be with no growth and no loss if things stay stable.

Host: Right. Great. Looking for and, and owning everything outright at that, at that time.

Guest: That's correct. Yep. Debt free.

Host: Okay. All right. Well Link, that's a pretty, I mean, and how much you working? Big question.

Guest: Oh, I'm embarrassed on this one, Will, but I think right now if it's an hour a day. Yeah. You know.

Host: Okay.

Guest: Short of putting out fires. It's pretty minimal an hour.

Host: How often do you put out a fire? Let's, let's, let's add that in here just to get a soaking wet number.

Guest: Maybe there's a little baby fire once a week. You know, somebody's email isn't working. Working. That requires a little more attention. But it's, it's very rare, you know, to be putting out.

Host: To be conservative, let's double your hour to fully two hours. Sure. Okay, so here we are, 10 hours a week. You're, you're taking home 220ish. This time next year, assuming things are stable, there's not much attrition. You'll be high twos approaching three. Now that sounds like an amazing lifestyle link. Why isn't it, why is it not just totally amazing? Because you and I talked and it's very, very illuminating that it's maybe not all that it seems. Well, or maybe just not for you, but for others.

Guest: I mean, you know, it's, it's, you know, I'm 48 years old and I've been doing this lifestyle my entire life. And you do reach that point where you wonder is this it? What else is out there? My kids, this is, this fall. All of them are in school now. So you're home alone and you know, it feels like retirement for some guys that think, man, I just want to sit on my butt and watch. Well, that's not all that fun. I'm an entrepreneur, I'm a doer. You know, I'm not, I can't sit around and just surf the Internet. And what I realized there's not a lot of people to hang out with when everyone else is working during the day and at night, you know, the kids are home and so your nights and weekends are or family time. And so it's me and the dog sometimes. And it is, you know, it's, it's, it's what a lot of people experienced during COVID when they had to switch to remote. And if that wasn't, you know, your, your human, your need for connection and working with other people. When I worked at Keller Williams, I was going down to an office of several days a week hanging out with other people that were growth minded and, and driven. And that's an intangible that I did not expect to get from that experience. But boy, I remember that being a very positive emotional driver for me. It pushed you to push harder to challenge yourself. I live in a fairly rural area so co working spaces that might address that are not plentiful I don't have a lot of entrepreneurial friends. And so you do find yourself in a void there and having this self motivate to push yourself to, you know, sit here and lick these letters and send those suckers out the door and take the phone calls and, and push and push and push and it's hard. I'm not going to mince words.

[1:01:22] Host: And it's hard now or it's always been hard or you just, are you a little bit over it?

Guest: It's always been a challenge. And I think, I think the older I get, the more I start to ask that question, you know, is this it? You know, yes, I could keep doing this and keep growing it. And then you, you, you hear folks that at what point do you're making enough money to, you know, I'm paying my bills. So the drive of just growing it for the sake of money isn't always the motivator.

Host: So if I said, well Link, why don't you just use your other 30 hours a week to push this to 600,000 in SDE or a million in SDE, that's like, yeah, I could, but it's just, it's not very motivating. No. Is that, that's the answer?

Guest: That's a fair statement. Yeah, I mean I, I've, I sent out 3,000 letters last month. I've to ad agencies. So I've talking to people that have your revenue of millions of dollars. These are brick and mortar agencies. I'm targeting much more older, traditional retirement age folks. Many have realized they do need to do an earn out. You know, some of these are deals where I don't know that I have the capital to put down on them. Some of them are local, some of them are all around the country. And I've, so I've got some deals that like, man, I could tee these up, I could make a few of these happen. But you know, something's missing. Will, to make me push through.

Host: Even if you found a brick and a brick and mortar agency, that wouldn't be the answer. You go into the office and you make your employees go in a la Bezos.

Guest: I don't know, I might, you know, if it was right now, you've got to factor in commute and brick and mortar doesn't work if it's, you know, in D.C. and I'm up here in New England. But some of these pivoted to remote so they're, they're so those, those are the conversations. So it's, it's, for me it's not hard to make it rain opportunities, leaves. Now I'm just thinking, all right, I'm at that point of. Is, do I pursue that or do I, you know, go and change gears?

[1:03:31] Host: Well, well. And I want to keep exploring that link, but just going back to the. Going back to your current model. So you told us how deflating 2019-2023 was. Um, but now you're back to feeling like opportunities are plentiful. So in one year's time, you've gone from feeling like, man, this is too competitive and the window has closed to, no, I can. I can. I can spin up opportunities kind of pretty straightforwardly.

Guest: That's. Yep, that's fair. That's fair.

Host: So what happened? What happened in the last year? Did the market changed? The multiples have come down on your particular asset that you pursue?

Guest: Well, I think I can only theorize that things cooled a little with economic cycles. Maybe it's just sheer luck, maybe it's perseverance that continuing to send those letters out during that window of time, there was certainly some small, hey, I've got a dozen clients. I mean, there was a little mini ones that popped in, so there was something to chew on. In fact, just a few months ago, that second acquisition we talked about, that gentleman was completely closing up shop and rolled over another 10 to 12 clients that he just gave me. And he moved them over. He did all the work. I'm like, all right, I'll take them with that proprietary cms, which drives me crazy. So I think it was a combination of just sticking to it and maybe becoming a little more aggressive in my. All right, I'm have to pay a little more for some of these things where I was trying to grind these guys for one and two times deals. I may need to go up to three on some of these because that's fair. That's where the market's at. And now maybe you're also a little

Host: bolder because you're in a better cash position, so you feel more comfortable looking at maybe less tight deal. Like you've loosened your own standards a touch.

Guest: That's true. That's true. You know, I feel like, you know, some of those years you were just hovering, hoping to stay afloat and crack the nut as inflation was running rampant. And you're like, I gotta stay ahead of this animal now. I feel I can. I can rest a wee bit. That all right, I'm cracking the nut. The bills are paid, there's a little left over. I can get maybe a little more aggressive. With a down payment amount. And granted I've continued to save all that income from real estate over the years I've put away. So I've got a little more to grow with. But yeah, it's a turning point in a way.

[1:06:09] Host: And so Link, why not then you've said that you're a car guy, you've said that you're really intrigued by search and kind of home services or blue collar businesses, the type that are much more common on this podcast than, than your type of business. Why not use your 30 hours a week to search and buy one of those businesses and keep it all?

Guest: Yeah, I think, I think that's the current plan. And you know, look that, look at this as sort of the start of a little Holdco, if you will.

Host: Yeah, exactly.

Guest: Keep this business in there. I have thought of selling it at some point if I found something to, you know, free up resources to that I could do more with maybe.

Host: Careful who you're talking to here. Like you got 6,000 people who are business buyers hearing those words.

Guest: As I said, I don't get letters. So. And then I wondered, you know, I wondered is, you know, is, is the partnership is somebody that wants, you know, I've taken it this far and I sort of. There's a model here, as you said and there's a, there's a path to 600 to a million, you know, to whatever someone wants. And does someone want to, you know, do I need to find that person that wants to hungry for that growth to be a part of that? I don't know. That's entertaining.

Host: What. And so what is that? You, you, you bring in a president, you or a gm, whatever we want title, we want to give them a right hand. I mean it's just you. So it's hard to know what this, the title, this person would be you. They learn how to do what you've done, they learn how to do the management but most importantly they learn how to do the inorganic acquisition, the letter writing, the negotiat. And over time they're. And you're paying them a salary, but over time they're earning equity in this.

Guest: Yeah, that could be the model or it could be someone that wants to build this and wants to gobble me up or wants me, you know, I'd help tee this up. I'm pretty comfortable being a number two. I don't need to be the number one guy. And so if someone has a vision to go there, here, I'll tee this stuff up. Let's run with it. You know, I mean, it doesn't have to be my name on the, on the desk. Doesn't have to be my ownership. You know, it's just, I think I'm at a point where I want to work with people more than I am, in a sense, whatever that looks like. Right. You know, that human connection, that relationship building. I like at this point. I like the idea of leadership. I like motivating people on a team. And when you have a business that kind of runs itself, they're, you know, just kind of humming along and you don't have that opportunity as much. And I, I remember that from the real estate time of building a team. And, and, and I, I see it as being a parent too. You, you, you kind of are pouring into your kids and helping. I've got teenagers now, so they're starting to think a little about the future, at least college level maybe. And, and you feel like you can help lead, and that's very gratifying.

[1:09:08] Host: Yeah, well, isn't it so interesting link. I take all of your points because I've spent most of my career behind a screen, you know, often working in a room by myself in various capacities, not. And not my full career. And, and I've often had partners, so I did have a human connection, but it was still remote. And, and you know, this might be a little bit of a grass is grass is always greener situation because the flexibility that you have now is, is, is just coveted by 90, 90% of the human population. So, so, you know, making good money, you know, not, not working very hard. Right? That is the, that is the, I mean, passive. I mean, I hate to, I hate to use those, I hate to use those two words in the same sentence. It's kind of a passive income deal, man. But, but I take your point. So when I first started doing acquiring minds, you and I have similar backgrounds, similar skill sets. I'm digital. I'm kind of a digital guy. Digital businesses, it's my background. And so my, my interest initially in the types of businesses that I thought I might buy were all digital of some kind. And as I have done these interviews and, and just, and heard, you know, brick and mortar, blue collar story, business story after story, I quickly found myself drawn to that much more than digital businesses. And I think it was, I think it was also that human element hearing so many of my guests say, you know, I probably got into this for the napkin math, the financial opportunity here, but, but what I have found is that the most rewarding element of this journey is actually Being a leader of an organization and helping my team and so on. Now, I don't want to be naive, not everyone feels that way. And, and, and the flip of that too is also the biggest headache of all is the people piece. We hear that time and time again. And so you and I may are probably glorifying, glamorizing, overestimating that people piece like it is, it is the headache often. But I, I hear you just working in a room by yourself, even if you're making good money and not working very hard, it does feel a little empty. It can feel a little empty. I get that.

Guest: It can, it can, it does. And I think that you, I think you hit it on the head. It's that, that the human side of it is the double edged sword. I've, I've had to fire people not from this business, but from other acquisitions as well as in the result. And I had to hire, I've trained. And it can be both. It pulls out on those extreme emotions, but it also, at least for me anyway, is the challenge. I think it's that challenge of I really pour into people and I see that my personal life as well, maybe to a fault almost, but to understand what it is that gets someone up in the day because I feel like we all have a choice every time we get up what we're doing. And I feel the entrepreneur feels like we have no limits as individuals. So what is it that makes you tick? What is it that I can do in the frame of our, you know, as an employee or, you know, to help you get there? And I did not grow up having any sense of how big one could think. And so when I started this business, I was thrilled to get a hundred bucks here and there. I had no idea how big, whether big is where you're going or not, but just how big your visions could be and how great your world can be. And you know Gary Keller, who founded Keller Williams, I was fortunate to hear him speak at many times. And whether it's real estate or not, I learned a lot about personal development and learned a lot of, you know, read a lot of books, Traction, you know, the E Math, all of these books that transcend any industry that help us, you know, what's his name, Grant Cardone and 10X. And there's a lot of books that really can motivate you and you realize how big the world is and how big you can think and there's no limit to it. So I, I love trying to help people see that a little and it's that's hard to do in this context. So I think that's a missing element for me.

[1:13:34] Host: Yeah. Well Link, we're not. This, this, this interview is not an ad for you or your business but we should, we should enumerate here. I think the, for people listening who might like you, some, some, some possibilities here. There's a possible, I guess business for sale, your business. Maybe you know, there's a maybe possibly partnering with you. Maybe you know, there's you buying a business, a traditional business, non digital business. There's also you, you mentioned that you're keeping an eye on Smith List. There's also you getting a job as somebody's operator, as somebody's right hand, as somebody's, you know, second in command.

Guest: Yep.

Host: So if somebody's looking for that, listening, you know and you like lingq, reach out to them there. So, so you sure are at a kind of a fork in the road. Interesting. It'll be interesting to see what you choose. But congratulations on having kind of the flexibility now to, in the financial breathing room to, to be able to make a, you know, a decision that, that suits you and not have your hand forced.

Guest: Yes. Thank you.

Host: Just, just to, just to net it out again, Link, this time next year. 300 grand a year for barely lifting your finger every week. Not that is, that is, that is the dream of many.

Guest: So I am not complaining and I'm, I'm, I, I want everyone listening to that. I'm still very humble and I don't, I don't, I don't share, I don't share those numbers that comes. It's.

[1:15:01] Host: No, no, no, no, we get that, you know, because I'm, I'm pushing you for them.

Guest: Yeah, you are. And I'm, I'm. There's no secrets here. I'm an open book. But it is, there's a cost with everything and you know, careful what you wish for. Right. You create it and there you are and then you know, you're a different stage in life. But.

Host: Well Link, let's close. Just getting back into the weeds a little bit. Just on, on, on the business of agencies and hosting to get, to paint a picture for people. So I think hosting speaks for itself. You're, you're basically again it's the reseller model. You're not doing much there. You're just the, the, the conduit, the liaison between the actual tech company doing the hosting and your client and you're marking it up. That's pretty self explanatory quality of revenue is amazing. Almost all profit. And, and, and, and as you pointed out to me in the pre call web hosting is, is, is that that beautiful sweet spot that private equity looks for where low ticket need to have but essential. So it's not something that is, it's is discretionary. If somebody wants to have a website they got to pay for hosting.

Guest: Yeah.

Host: But it's not a bit, it's not a big fee. So it's not something that they're going to try to negotiate you down on and they're never going to cut it.

Guest: Yep.

Host: So we love that eight but agencies give us a little bit of a picture of what a, what it's like to run a digital marketing agency. Yeah.

Guest: So and tell me, interrupt me if this is not the direction you want to go in it. But I think the sweet spot is that smaller agency that does have the base of web hosting and web maintenance. I like the web world because it is not requiring as much human capital. You start diving more into the SEO, the true marketing side of things. Whether that's on or offline. Your human capital costs go up a lot and the touch points with the client go up a lot. So there's some really attractive retainers that can show up in that realm. But your profit, I don't think your margins are necessarily getting better and I personally believe your churn rate can be higher because if you're commanding a 3 to $5,000 a month retainer, that client. We're not talking about a $50 hosting fee anymore. We're talking about for fair amount of midsize companies. That's a number they're not going to turn an eye on. So you've got to earn that every month and justify that. And a lot of companies struggle with showing that value there. You know, they're good at sales, they get them in but they're. The retention is a small window of time. And I've had some companies, I bought some that we didn't talk about today that fit in that mold and they didn't survive. So I've kind of revert back to this. As you said, the sweet spot of the web hosting is like utility. Now I've never bought a straight web hosting company because those multiples are insane. So I've had to, I don't want to say I don't like the project based work but it comes with it and that is a little under the radar niche that I think still exists in these small businesses. And then there's some of them out there that are making 300k. I mean guys like me out there, they're not all little ones. So I know of one right now that is doing 300k a year in a bigger market. One man shop. I don't know, could you pick him up for three times? Maybe those are out there.

[1:18:21] Host: And a lot of that is hosting revenue.

Guest: A lot of that's hosting. And so when you start having a building and you've got payroll, I've looked at agencies that have 80% of their expenses is payroll. So they're thrilled.

Host: That's all that they, that the human capital is about. Their only expense and rent if they're brick and rent.

Guest: Yeah, you're right. But you're still talking a 20 to 30% margin, which isn't not shabby but oh boy, they make 2 million a year, but the owner's still only putting 250300 in his pocket and he's got to babysit all these employees and, and you know, as fun as that is, it still has a cost to it.

Host: Are you now talking yourself back out?

Guest: No, I'm sure they're having happy hour on Fridays and, and playing ping pong and you know, how do you, you can't all put that, you know, on a spreadsheet. Right, right, right, right. But if, if someone, you know, if someone was thinking to do what I, you know, to grow from where they don't have to start at zero, I think you can find this nation, grow it. If, if portability and, and the true remote nature of it exists, there's, there's plenty of that out there. If that's what you want to do. You know, if you're listening and thinking, wow, this guy's, you know, that's where I want to be. It can be done and it can, it's not, it's not terribly hard to find them. And sometimes, okay, I've got to say, some of these brick and mortar ones, there's an opportunity to, to shed some of that or to pivot to remote. So all of a sudden you get rid of the building and you start replacing employees in house as they leave with remote talent, you can get those margins way up.

Host: Way up. Yeah. Well, a couple quick reactions to that. First of all, when you talk about 20% margins to my audience who's look, generally looking at blue collar businesses, 20% is fine. That's what the world that they're swimming in anyway and often less and, and often so, so that's not going to scare anybody off who's otherwise considering buying an H vac services business. So then the other thing that I think is a key thing to point out here is that is the human capital is much more accessible. Right. So yeah. Whereas if I buy a plumbing business, finding plumbers, as we all know, the, the labor pool for good blue collar talent is tight. Very tight. I think it's, it's eased some in the last year or two but still very difficult. So many of my guests who have bought those types of businesses have said that that's the bottleneck. Not the demand side, but the supply side. Finding people for, for if you have an agency business or some kind of digital marketing business, it is not that at all because they're, I mean you can find digi capable people to do your graphic design or your Joomla. Management or project, just broader kind of digital agency project management all over the world.

[1:21:19] Guest: Yep.

Host: And there are some really clear channels where you'd go after that job, boards, upwork, what have you. So. So it does also have the benefit of lots of available labor to build out such a business. So, so it becomes more of. Like you said, I think the challenge is, is really in sales and retention of your clients more than it is figuring how you crack the labor nut.

Guest: Right.

Host: So just an important difference between typical business we hear about and acquiring minds in this, in this kind of business.

Guest: And you know, it's portable. Right. If you, if your family needs to relocate or you've got to move, you could take this anywhere you need to.

Host: Yeah.

Guest: Versus you know, my, my base of business, the plumbing companies, you know.

Host: Exactly.

Guest: Radius.

Host: Exactly. Exactly. Although, but, but we, but we should also highlight the thing you said about retention. The While those retainers are ostensibly recurring, you've got you know, $3,000 or $5,000 a month retainer with, with one of, with some of your, some client. Those are, those contracts are often. Are they annual contracts or just month to month?

Guest: I think at that level most of them seem to be month to month. If you, if you got up to a big bigger true agency, they may be annual contracts that a true agency. But these, these, these would be more digital only marketing contracts for you know, a business that might be in that size of the typical search fund business. So we're not talking, you know, working with a ten $50 million year business. These are the businesses that gross a few million a year. So that tends to be an annual.

Host: So, so, so these are going to be monthly contracts?

Guest: Typically. Yes, monthly.

Host: Monthly retainers.

Guest: Okay.

Host: And so therefore can be cancelled at any time. So the quality of that revenue while an agency owner may try to tell you oh I've got X in recurring revenue with these retainers that's very low frankly very low quality revenue and marketing is one of the first things to get slashed in a recession. So it's very cyclical and very vulnerable to cost cutting. It's top indeed. When we, you know when you talk about a customer and their expenses that they have kind of top to bottom and you want to be low on that list and low cost. Low cost but essential.

Guest: Right.

Host: This is high cost and non essential.

Guest: Right. This is the opposite end of the spectrum of straight hosting.

Host: Yeah, yeah.

Guest: So and when there's a change of ownership that relationships the relationship those that revenue is even more dependent on the human relationship which is often with an owner who sold them that and when they go it's more at risk.

[1:24:08] Host: Well great. Well then all to reinforce that the kind of the, the sweet spot that you found where it's really about the hosting and that project work is maybe a nice to have or maybe it's a Trojan horse into the hosting revenue.

Guest: Great.

Host: Is the best, best way to think about it. Best way to. Excuse me. Best strategy to build something here with high quality recurring.

Guest: I think so, yeah.

Host: What else? Link anything we didn't get to.

Guest: I'm sure there is but I think we've did pretty good here to cover it.

Host: Okay, great. How do you, how do you want people to reach out to you if they want to buy your business or partner with you or hire hire you or sell you their H Vac business in New Hampshire?

Guest: I'm on LinkedIn so LinkedIn is great. There's not a lot of guys with name Link Moser on LinkedIn so it could be found there. Email is fine. You know my website will get an email to me.

Host: What's your website?

Guest: It's windhill.com windhill.com Yep yep.

Host: Okay.

Guest: However anyone wants to I I and I, I said that earlier and I really mean it. I, I'm thinking myself as really liking to help others and you know I've in the search community is full of so many nice people. You think it would be so competitive and, and everyone would. I'm not sharing that but boy, I, I found people to be very open and willing to talk and I've often tried to pay that back you know to either be a river guide or someone looking in this space. I've said hey I'm happy to help you with due diligence or look at something just we're all trying to figure out our path. And if I can take some of the learning out for someone, I'm more than happy to do so.

Host: Very generous of you, Link. Thank you for coming on. Thank you for sharing your story so transparently. All your numbers, congratulations on what you built. Even if it's not. Even if you're kind of sort of looking for something else now, it is still really impressive. Like I I've said a number of times now, it is the dream of many. So we applaud you for that accomplishment, and I'll be eager to hear what you do decide to do at this fork of the road.

Guest: Thank you, Will. I appreciate having a chance to be here as well. Page.