Ep 305: Global Financing For Online Business Acquisitions & Current State of The Market Flippa CEO with Blake Hutchison

Imagine being able to see a business for sale and know how much finance you could access to acquire that business all on one platform, regardless of what country you live in. Hi, I'm Jack Rouse. I'm the host of the Buying Online Businesses podcast. And today I'm speaking with Blake Hutchinson, CEO of Flippa for over six years now, which is the largest marketplace online for buying and selling online businesses serving over 2 million users and facilitating almost a billion dollars in sales, close to 1.5 billion in fact.

Now, in this podcast episode, Blake and I chat about so many things. We talk about the state of the market. We talk about not only how much businesses, transactions, sales and acquisitions Flipper has made and been a part of. We talk about current state of the economy. We talk about valuing businesses based on the economy, valuing businesses based on &A under 10 million.

We talk about the difference of valuing a business from one market to another market, different size of acquisition based on different business model. And Blake also mentions why multiples for online businesses really haven't changed that much compared to larger markets. We also talk about Flipper Privates, how Flipper has used other brokers to facilitate transactions like sales and or purchases as well and how that has scaled Flippa significantly.

We talk about the most popular business models that are being sold on Flippa, everything from Ecom to YouTube channels to newsletters. We talk about the price ranges of those different businesses. We talk about why Amazon is so big, why Ecom is such a large asset in the online business space and rightly so. And then we talk about Flippa financing.

Very, very cool that Blake and Flipper have partnered with a great fintech company that allows them to provide finance for not just people in the States, but Europe, UK, Australia, and some other places in the world, yet to be Asia as well, soon coming. We also talk about Flipper meetups. I've been to a bunch of Flipper meetups myself personally. I think they're awesome. I share with people to go to them.

Now this is such a valuable podcast. If you're interested in buying an online business and you wanna know the state of the market and you wanna know a lot about valuing and valuing a business for exit and for acquisitions, how to do so, this is the pod for you. Enjoy.

Blake, hello, welcome back to the podcast. This must be episode number four or so that you've been on, maybe more actually.

Yeah, something like that, Jaryd. Thank you so much for having me.

As always, really good to chat.

Thank you again.

Yeah, welcome. And there was a stage there, I was doing the summits that you came on, which is very appreciative of us for you to come on those. And I kind of feel like I'd like to chat about some of the questions and the things we used to talk about in the summit, like figures and numbers, Flipper and with what Flipper's been doing and changes and stuff like that.

We've got a lot to chat about. We just hit the record buttons before we spilt the juice on a Flipper meetup. So we'll get to those. But I wanted to ask around, since Flipper's inception, I'm not sure if you know the figures, but do you have a dollar figure on deals facilitated like exits and acquisitions? It's a great question. I don't actually know that number. I could give you an approximate, I reckon. So we've been around for 15 years now. We were founded in July of 2009.

So that's a long time ago. Yes. And off the top of my head, I'm going to say 1.5 billion. Okay. Wow. Congrats. So we're consistently growing. Certainly for the last six years, we've posted year on year growth. That was probably the case before that, although I wasn't here, so I can't comment on it exactly. But we've posted year on year growth for six years. And obviously last two years has been a challenging climate for everyone.

interest rates high, inflation high, &A climate not great, valuations at least perceived as declining and investor sentiment a little bit challenged, but we've still been able to e-cap really good growth. So yeah, I'm to say 1.5 bill at least. Cool. Congrats. So 2009, what have we got? Is that 13 years? 15 years. years. Amazing. Amazing. I did hear, I have spoken to a bunch of people that started buying off Flippa back in 2000.

They might have said 2008, but it must have been after 2009 for sure. so it started from, as you probably know, but we'll educate the community, it started from a forum called SitePoint. And so SitePoint was trading in 2008, trading digital assets, but it officially became a flipper in 2009. Cool, cool. Since you opened that, we'll expand this can of worms in the last two years. I mean, I've noticed myself with less access to capital interest rates increasing, we've seen as interest rates increase, people's debt becomes more expensive.

What I've realized is that more people want to keep their homes and want to keep their shelter where they live. So that would rather forfeit maybe a business or two. have them to not have to uproot their family, schools and all that sort of stuff. What are some of the things like that's pretty high level and then we've also seen multiples decrease for most of the assets.

We saw that with Amazon businesses first, obviously after the aggregation, the aggregator time. What, to add to that, what have you sort of guys seen through this two year period? I think it feels like it's accelerated through 2024 as well. Yeah, I mean, it's definitely a challenging climate. I'll give you some high level themes, a little bit similar to what you've just noted, and then we can go into specifics a little bit. So I think that my general market observations are that investor appetite is booming.

But investors are more skittish than ever before. there are more coming in, even among those who were there before. Their interest hasn't waned, but their want and desire to do a deal or their ability to do a deal has been challenged. And that's mostly as a function of capital being expensive. And so therefore, unless a deal is perfect, and everyone's definition of perfect is a little bit different, but they're not going to complete.

Now we're actually doing more deals than ever before, but I'm just giving you generally speaking investor appetite is moving, but they're more skittish. That would be theme kind of number one. Theme number two is owners are worried about valuations. So those who don't sell that have a good business are choosing to continue to run instead of selling because they're worried that they won't get the valuation that they believe they deserve.

And in many ways that is misplaced because subscale &A, call it sub $10 million, was never overvalued in the first place. You could never tie the multiples in this particular segment of the market to the multiples you were seeing in the public markets or in VC-backed businesses. But regardless, perception is reality and they worried about valuations. Now, we did see from September 22, a decline in the average and top decile multiples, but in the last half, that's come back again.

Right. But yes, sentiment, investor appetite booming but skittish, and then owners worried about valuations. Now, the third, which is challenging the marketplace right now is that debt laden businesses are hurting. So it used to be obviously that you got rewarded for top line growth. And therefore you could take out relatively inexpensive debt based capital or get access to debt based capital.

Now those businesses that aren't growing at that same level are forced with monthly quarterly repayments that are above and beyond their means. And so those debt laden businesses are now struggling to repay those growth loans that they secured from platforms like Facebook and Stripe and Clearco.

And that is also been sort of exacerbated by end consumers, you or I, trading down, not buying as much. And if we do still buy, we buy lower than we think. so e-commerce based debt laden businesses in particular have been harmed.

So they're the general things and that informs the narrative for what actually happens specifically. So what happens specifically is you have less sellers listing in theory, you have less buyers buying in theory, then you have less competitive tension. In theory, I'll explain why I keep on saying that in minute.

And therefore the businesses that sell sell for lower than we would have historically anticipated. Now all of that is quite theoretical because it does come down to your ability to execute.

So it's one thing to say that all of these general themes are impacting &A and that's clearly the case because that's what is being reported. But we've found a pathway through a new market expansion, new category expansion and just frankly, better efficiencies around our marketing, which have ensured that we're actually seeing more listings, we're seeing more deals and it's actually been okay for us.

Clearly, we would like to be growing even faster than we are. But the fact is, we are still growing. But the general theme has been tricky for people to get their head around. Yeah. Thank you for that explanation. I want to get to everything that Flip is doing in terms of like the evolution of your product and service.

Obviously at a time now it seems like you're laying down the groundwork for when the, I guess the bull run will come in as is if debt decreases and whatnot and cash frees up a little bit, which is just exciting. It's super exciting to see. when you've got the mindset, the long-term mindset, super exciting to see growth in a market like this within your business, right?

It's just hard to explain to some, I guess, staff that we're in a good spot, like despite it's the conditions of the market. Now, there's two things that you mentioned, one being with the debt laden businesses and people wanting to stay in business longer because they want to achieve a larger valuation, the compounding effect of how hard the economy or how bad the economy has gotten is it just makes it worse and worse and worse for that business owner in terms of like the debt becomes more expensive.

And then you've also got the compounding effect of less people direct to consumer acquiring their services and products and people wanting to hold out. It just gets harder and harder to hold out until that maybe they get to a point where they're like, damn, I've got to sell now. Like, unfortunately, and that's where people will have a desperation sale, which is where people start to see multiples, a lower multiple on that because they're like, well, this business is riddled with debt or they've gotten rid of their debt, but it's struggling.

If I'm gonna buy this business, it has to be a lower multiple. It makes sense for the buyer. As unfortunate for the seller, they had to wait out that long based on market conditions. So like just a note to business owners for the last sort of year to two years, if you're actually able to hang in there, like I've mentioned, you guys are actually growing or if you're slightly growing or just hanging in there, it's a good sign.

It's a really good sign depending on, there's also eosyncrasies of like micro niches and markets and stuff like that. A question I wanted to ask around valuations, as you mentioned 10 mil up in &A, that's more so what the valuations did increase significantly, but sub 10 mil, you don't believe that valuations had increased that much.

I'm going to assumption is that you maybe said, may have mentioned this because like in property market, smaller assets, there's more people can afford the smaller assets, which means there's more demand for those smaller assets. Why do you mention that like sub 10 mil with those value? So there's a lot of liquidity in bigger businesses. Let's go to the publicly traded markets first and foremost.

So if there's excess capital in a marketplace at a low cost, it makes it easier and the businesses that you're going after and pinpointing are growing fast as a function of consumer confidence being high, then it's easy to put money in because the risk is actually pretty trivial. You can watch the public markets and there's liquidity available to you. In the event that there's a downturn, you can exit. There's immediate liquidity there.

It also means that there's more investors, there's more known about those asset classes, so there's more capital going into those asset classes. If you take venture capital, they're betting on five, 10, 15, 20 year and generational companies. So they're buying at high multiples, placing a bet that that company will be worth substantially more than it is today across core metrics, revenue and ultimately profitability.

In subscale land, in the subscale landscape, you never had valuations that high to begin with. You don't see 44 times revenue multiples on a half a million dollar business. And you never did. It didn't exist in the first place. You're saying 44 monthly or annually? Annual for a publicly traded SaaS business back in the heyday pre-September 22. Yeah. You never saw that for subscale SaaS businesses.

Because one, the liquidity is not in the marketplace. Two, the opportunity is not as great for that business. And so for people to then say, well, my market, my valuation has dropped substantially, or for investors to say, as a function of the public market drop, you equally need to drop. It's just fundamentally flawed. The business was never operating at that scale, one.

There was never the liquidity in the market, two. And three, the opportunity and forward-looking profile of the business was never as good as they publicly traded businesses in the first place. So it's just misaligned and it's a function of media really. If you say tech businesses are down, that is a broad sweeping remark. That's equivalent to saying that the entire real estate economy is struggling and Detroit and Manhattan are very different.

Absolutely. So it's a little bit analogous to say the Melbourne real estate market at the end of the day, premier real estate in Melbourne is flying. Just for the listeners of the narrative around last year or so, narrative around Melbourne real estate has been the opposite to that. Yeah. But Premier real estate in blue chip markets, real estate is doing incredibly well. In fact, growing very fast.

I think that you need to really narrow in to what we're talking about here today, which is subscale and businesses that are doing $10 million in turnover and substantially below that. Most of the under two mil. Five, five mill, the two to five mill range is not very big, but most is even under like.

Yeah. mean, the reality is 99 % of businesses never make it to an excess of a million dollars in turnover. That's just the reality of it. And that happens both. Well, that's everywhere in the world. It's largest economy being in the United States, 99 % of businesses do not deliver greater than a million dollars in revenue. And so.

That's the area of the world that people should be focused on if they are in it. And of course, if they're investing in a public market, it's then great. You can talk about it in that context. But for Flippa, are, in each asset's a little bit different. SaaS is obviously very different to Econ. But good quality businesses are still trading at the same multiples they were trading at pre-September 22, because they're still good quality.

Their growth profile is still healthy. They've got longevity. They're repeatable in the nature of the way they operate and their revenue predictability. Good quality founders doing good quality things that cash rich buyers are very interested in. Yeah, absolutely. And what I mentioned to people that are there when they're acquiring a business and they say they're doing it themselves, say they're gonna acquire something for 200K.

There's no point in looking at businesses smaller or higher. Look at the business model that you want for the price that you want in that price range and then you get to know that particular market because then you know the valuation of a 200K say Econ business that's in parenting.

versus a 200K e-commerce business that's selling sunglasses or apparel. And you can compare that market and multiples and valuations versus like maybe a 4K business that's a micro-SaaS business. It's not the same at all. Completely agree with you Jaryd, that's right.

I mean, the more narrow and the more segmented your search and the more niche-ified your search can become, the more likely that you're able to understand how it actually works for that particular business model and or category and the more likely you're able to negotiate in your favor. I think the interesting thing is valuation as well, particularly in this climate is very much determined by the seller's appetite to sell. And so some people say it's good deal making territory.

Well, it's only good deal making territory if you can find a seller who's willing to make a good deal. And so there are lots of sellers who are saying, bad luck buyers. Like if you don't want to pay me what my business, I believe my business is worth based on perception alone. need to understand it doesn't matter what valuation you throw at me and the reasonableness of that valuation.

If I can run this thing and pay myself a handsome salary and do that for the next three to five years, I have the breathing room to withstand whatever downturn you like to be throwing at me as a reason why you want to pay me what you want to pay me. On the flip side, you get some sellers who say, I've got a mortgage. I'm putting my kids through college. I've got other debt. Therefore, yes.

You can get a good deal. And so it just comes down to asking the question and we encourage all buyers. If something's listed at $5 million, then there's no reason why you can't ask the question around that 3.75 to $4 million and see if you can get a deal done. Then don't get offended if the seller says no. Equally, if the seller says yes, great. Yeah. I would, for a sophisticated buyer that wants to stay in the space, I would add to that.

Don't ruin your reputation by doing that on multiple businesses, like low balling too many times. It's a dangerous thing. You become a less attractive buyer and you can become known in the space by doing so. Yeah, definitely. we're, there's a lot of rhetoric right now, Jaryd, around no money down deals. And it is absolutely horrific. You're highly unlikely to ever get a deal done, regardless of what you watch on YouTube. And it's not in the interest of the business owner.

And we see, I'm talking one in a thousand deals might be done like that, but the number of buyers who are trying it on, this is great. Congratulations on building a fantastic two and a half million dollar business. I will pay you full ask. But there'll be no money down over the next 48 months. I will pay you back. What do you think? No, I think that's a terrible deal. Absolutely. It's disgusting. It's just saying thank you for building this business, but yeah, it's an absolute joke.

What you said about YouTube being the main culprit. Absolutely. And when people hear these stories, the same thing that we've been mentioning is they're relating one category of business, small sub niche category of business to a completely different category, sub niche of business. And for example, no money down deal, you might be buying a laundromat that has too much debt that's failing it's going backwards and there it's a desperate sale.

And the only reason you can sell that business is because it's going to be so hard, like no money down and somebody will buy it. No money down is because it's a desperate sale and it's going to be very hard to turn that business around. So basically you're acquiring kind of like an a liability, right? Versus an online business that's making somebody's working literally five hours per week in that business.

It's pretty passive business, maybe up to 10 hours and they can live anywhere and they don't It's not a depreciating business. It's maybe just a stable asset who like when a seller goes to the market and they can get all cash for that versus somebody that says, I want to buy this for no money down. just love getting laughed out of the room.

And I'm glad you mentioned that because I've created a bunch of content around this to share with people like, Hey, don't like you're comparing a traditional business market with depreciating assets to an online business market with appreciating assets. It's like the opposite almost.

And there's idiosyncrasies in between those comparisons. But this is the scary thing about people when we hear things online and see things online, we go, can do this, but in a completely different market or a completely different way. And then what happens is, unfortunately, is like, for my audience is they, they want to acquire business so they can have a better lifestyle.

And they got it in their head that they can do it with no money down or for very little money. And then they go to the market and realize they can't do it. and they spend a year or six months trying to do it and realize, they think this doesn't work. But it's not that it doesn't work. It's just like the strategy isn't aligned with where the market's at and you're gonna go run away back to your job and still do that for the next five years when you could have just understood how you could do this in linear fashion that will help you set yourself up for the long run.

It's just a massive shame that people are just hurting themselves doing this. Yeah, I mean, it definitely crowds the marketplace with a buyer who is misinformed and it's not helpful to the entrepreneurs out there who are legitimately running good businesses who are attempting to exit. Exactly. But there are creative deal structures that limit the initial outgoings and that benefit all parties. And they're pretty obvious and well known. You can look at things like seller financing for a percentage of the deal, not 100 % and not 80%. In fact, it's flipped. It's more like 80-20.

80 % cash down, 20 % seller financed, or 70 % cash down, 30 % seller financed. We do see deals where you are only paying 50 % of the enterprise value, but the profit share on the remaining EV is substantially skewed in the favor of the entrepreneur who's exiting. So an example of that would be a million dollar business, $500,000 upfront, and $500,000 is paid assuming that the performance of the business remains steady for the next 12 months.

And so it's not an earn out per se where you've got to achieve a certain milestone above and beyond what you have achieved to date. It's more like we will reward you for the consistent running of the business and that 50 % will be paid to you over a reasonable period of time and I would determine reasonable to be 12 months. So there are ways that you can limit your outgoings, but it's just about being smart about it in such a way that you protect your own capital outlay as well as protecting the opportunity for the entrepreneur.

Absolutely.

Where just another example in terms of like earn outs and seller notes and whatnot. I think it's a very fair deal for both parties. We're acquiring roughly a $2 million asset at the moment. And it's 85 % down 15 % over 7.5 % over one year and then 7.5 % over the following year to ensure we, you know, the business adheres to a certain revenue, like very conservative revenue goal, and obviously not net profit because that can be skewed for the new business.

Flipper Private, tell me more about this. So off-market deals, how does this work just for people on Flipper? What size are we looking at for private off-market deals? Million dollar plus for the most part. There are some smaller ones where for whatever reason, the brand needs to be protected in an atypical way. But mostly we're talking about million dollar plus businesses. And mostly it's a function of the owner operator having an employee base.

They don't want the employee base to find out about the accident, potentially materially impact their motivation or their productivity. And so they will sell in a private context. Now, frankly, almost all deals on Flipper are NDA protected anyway. So there is a huge amounts of discretion and all deals are protected around anything being leaked. private literally means it's not available in the marketplace.

You can't find it. And then what we're reliant on and we're blessed here because our roots are in technology. So we're then blessed by our matching engine. So we do 425,000 programmatic matches weekly, 20 million annually. And so a private deal is managed by one of our certified &A advisors slash brokers around the world. And they are then leveraging our AI matching. Buyers are then notified that a deal is a good fit for their mandate. The buyer is then coming into the platform.

But again, they're coming into the platform without that deal being exposed to anyone but that buying community outside the the public marketplace environment. And then it's the same as the time goes on. You've got the due diligence offering, you've got the data connectivity, you've got the legal services layer, you've got our new insurance product, and you've got our payments layer.

And all of those things are still there. So really the only difference is for the small few people who want to do deals in a completely private environment, it is what it is. It's private, you can't find it in the public arena. Yeah, cool. Cool. I like it. Makes a lot of sense for first sellers and for their protection. Also, you mentioned brokers. So you've got &A advisors that will facilitate these transactions.

But I've noticed, especially in the last year, you've got a lot more brokers coming on Flippa. And it's not just the average Joe listing and the average Joe buying. You've got both sides coming on, like even myself, like I'm looking as a buyer side advisor on Flippa for deals over the million dollar range, of course. But how did you facilitate and make this happen?

Because what I've noticed is this is, I could be wrong here, but this is what has seems like what has helped Flippa have far more transactions and grow. Am I right in saying that? Yeah, you're definitely right. I mean, we've seen more transactions across all price points. So we have two parts of the marketplace.

And it's very much up to the business owners to decide what is right for them. We're a price agnostic managed marketplace. And so what that means is you can list on Flipper, regardless of price, everything from as low as $10,000 up to as high as $50 million. Now, really a $10,000 deal can be achieved in a self-service context.

The platform's there, the service layer's there, all of the tricks and tools you need to be able to facilitate a deal of that size are available to if you're doing a deal that is of a high value nature, one, you're highly unlikely to be able to negotiate that deal yourself or want to or want to.

And two, the volume at which we will throw buyers at you, which is one of our superpowers, makes it cumbersome for you as a seller to deal with that volume. So then again, or want to. And so we have this team of certified &A advisors and they are located everywhere from our office in Austin to our office in Amsterdam and everywhere in between.

And their job is to act as an advisor. They are no different to a traditional business broker, albeit they are certified, they are accredited, they are well trained, they only do digital. And in many cases, they have both traditional &A advisory acumen or investment banking acumen. So we've gone to a very professional services layer with the quality of the individuals that we've recruited to Flippa. And yeah, that's enabled us to represent bigger deals and better quality deals.

And it's also enabled us to woo a better quality of buyer to the platform because supply breeds demand. They're beneficial and they're funny. They'll tell you this. They're like, wow, I didn't, I rated my own capability, but it is interesting to see other brokers come on and work for Flipper who may or may not have just as much experience as I have and do more deals than I can.

And that's simply a function of the tooling under the hood that is so unique and different to what other people have at their disposal. So with the click of a button, literally the click of a button, I can issue thousands upon thousands upon thousands of programmatic invites to bring in relevant buyers.

So I'm not working off my iPhone. I'm not working out of a CRM. I can drive demand at the click of a switch. And so yeah, we have the capability and the talent in-house now. And that's been really critical for how people perceive Flipper and our ability to help sellers architect and be part of that creative deal structuring process. But it's really the technology under the hood that's enabled them to operate at scale.

They can handle more deals. They can be an active participant in more negotiations as a function of that tooling. But I think you're right, Jaryd, call a spade a spade. Flipper as a self-service engine is going to be able to represent certain deals and Flipper as a managed marketplace like we are today, is going to be able to represent both those deals and new ones.

Yeah. I just see it's like so much more exciting now for myself when I'm working with seven figure buyers. It's just like, okay, this is a better deals on there. Like because you've got sellers realizing, wow, okay, like I can actually get these, you're attracting more premium buyers, which means you can have more premium sellers and you can do more premium deals.

And then I think what actually happens from that happening is as the marketplace becomes more established with bigger and better deals, even people that are wanting to sell something for 10 or 20 grand or buy something that's 10 or 20 grand, they can see that the brand of Flipper is a lot stronger because of it.

Andthey might start at a smaller scale, but then stay the whole way through versus maybe just trying to sell on a Facebook group or something like that. They can see that like, well like, yeah, well, hint, hint, our repeat buying and selling behavior is actually very, very strong. And so you're bang on. You actually get a network effect. Exactly. If you encourage smaller buyers, smaller sellers, they evolve and mature as your platform evolves and matures.

And so we have so many buyers who started out doing 20 and $50,000 transactions who are now doing 500,000 and million dollar transactions. So it's very important for our flywheel to remain price agnostic. And you say, for example, you got somebody, maybe it was like eight years ago or something that came on the marketplace and they're like, want to sell my business for a million dollars.

And they're just getting people that are bidding 750 for it. And you're like, it wasn't there yet. Flipper wasn't there with the premium buyers. So then you could lose that person to maybe another place, you know, a business broker or somewhere else to go away and sell it and have a better experience in that time period. But when now you're increasing your customer lifetime value, say somebody sells a business for a million dollars, what are they going to do with that million dollars?

They're going to want to probably reinvest. One thing I'm exceptionally proud of and that the team here celebrates a lot for six years consecutively, the average transaction value has increased. on film. So it doesn't matter what people say externally. What matters is it's actually what is actually happening on the marketplace. What is actually happening on the marketplace is that the maturation of the platform, our ability to acquire customers and the experiences of buyers and sellers having on the marketplace not only continues to increase by quantity, but the value of each deal on average is high.

And that's part of the proposition really, because someone who sells something once becomes a buyer. And someone who buys something once and has a good experience becomes a second time buyer. And it's not like someone places the same bet each time.

They don't say, I'm only ever going to buy $100,000 things. They do mature as most investors do in most other asset classes. Yeah. When you buy something and have a good experience doing so, or when you sell something you have a good experience doing so as a user to go somewhere else is a risk. Yeah. So it just makes total sense.

Like what's the, like you said, for the last six years, the average transaction costs has increased. What has that gone from? Are you able to share? Yeah, yeah, I am. Try and remember six years back, I think it was like the average, and of course averages are skewed by big deals, but the average six years ago was 14,000 and the average now is 446,000.

Well, that's an average that's skewed by big deals, bringing the entire cohort up, but regardless, that gives you some sense of the substantial difference between what was a marketplace which was predominantly self-service to what is a marketplace now where a good percentage of the transaction value is managed. What percentage of transactions are managed compared to self-service at the moment?

On a value basis, it's probably 65% a quantity basis, it would be 20%. So 65 % self-managed? Yep, managed. So brokered. Brokered. And what about models, business models? Like what are the top three business models sold sub 200k and then the top three maybe above 200k? Yeah, it's a great question. across the board, regardless of price, we still do see more e-com businesses sold than any other.

And that is simply a function of how big that universe is. And so to give everyone some context here, Shopify alone has six million entrepreneurs running e-commerce businesses on top of their platform. Amazon has in excess of nine million. So that's just two platforms out of 50 or 60 different e-commerce platforms around the world where you're talking about 15 million as a target addressable market, just among those two platforms.

Now, That's therefore different to say newsletters where the two most predominant platforms are Substack and Beehive for self publishers. But in their case, you're talking about hundreds of thousands in those communities. And so they're nascent business models in that are good quality, but where the absolute addressable market is substantially lower. So a couple of, guess, themes for you.

The most sort of exciting asset class for us right now, if you can call it asset class, maybe category, is YouTube channels. Now, however, your question was sub 100K or sub 10K, whatever you said, let's call it sub 100K. The reality is that as an industry is still nascent. Now that sounds weird because YouTube's been around for a long time, but I'm talking about it from an &A context. The number of people who are interested in buying YouTube channels versus the number of people interested in buying e-commerce businesses, it pulls apart. But it's an exciting category and they move exceptionally quickly.

They move exceptionally quickly because the due diligence on a YouTube channel is a piece of cake. Yes. And the asset transfer is a piece of cake and the value typically is lower. So we did sell out, we sold our first million dollar YouTube channel a couple of weeks ago, but most YouTube channels that we sell are still between $10,000 and maybe up to $150,000. So they're very, very small, but they're great assets. Our buyers are loving them.

You do have some power buyers who are snapping them up as fast as they can, building a portfolio, knowing full well that over the next five years, YouTube's not going to lose its place as the second biggest search engine in the world. It's just not. Yeah. It's crazy big. Like, people are searching tutorials now on YouTube. Well, I should say a lot of people are. And the crazy thing about it, and I must admit I couldn't even believe it ourselves, myself. So we hired a new category manager just for YouTube.

Recognizing how big the opportunity was. And he said, Blake, have you seen the time to sell? And I said, yeah, yeah, I look at Flipper's data insights all the time. He said, no, have you looked at time to sell for YouTube? And I said, no. I was like, show it to me. And so we're talking about sub 30 days from listing to exit with your cash in your back pocket, transfer the YouTube channel, walk away, go and have a cocktail on the beach.

Sub 30 days end to end. Now that is, that's fast deal making. That's list on the platform, connect the data, expose and merchandise the asset find the buyer through the AI matching tool, begin the negotiation, take the money into escrow, transfer the asset, release the money, walk away. That's fast. And that's really exciting to watch. I agree. We bought a, a client buy us about 200K YouTube channel dollars. And what I like about YouTube channels, especially if they're like faceless YouTube channels or they don't have a personality is mostly YouTubers are thinking about revenue from ad revenue alone.

When what we've done in just like two calls is like, just added three products and a possible service to the business like this, right? Like, and it's just, you can double the revenue pretty fast on a YouTube channel. And it's really exciting for somebody that wants to start in like a, in that, you know, 20 to 150 K range. Yep. Yeah. And then the second one along a similar vein is Amazon.

Kindle publishing, so KDP, they are equivalent. mean, they are, there's nothing truly passive as you and I both know, but they are as passive as you can probably get. You're talking about selling a back catalog of content. The back catalog of content is sitting on one of the search engines in the world, Amazon. Amazon is a search engine and they will consistently serve you up as users.

You optimize that channel to the hilt. It's a piece of content that gets repurposed thousands upon thousands of times across as many Kindle devices as possible. It's a good asset type and they are flying, flying off the shelves. Absolutely. And I think what most people don't understand about the say Amazon being a search engine, which it is, and Google being a search engine, which it is, is the difference between how people use Google and how people use Amazon.

And when people search for something on Google, they like searching for something to buy on Google. They're sort of just still discovering and seeing what's out there. But when you go, when somebody searches on Amazon to purchase something, they have their money ready and they're looking to buy already. They know they want to buy from Amazon. And so there's so much closer to the sale, which means like PPC, Amazon PPC for Kindle books and also, now, FBA businesses and stuff like that is the ROI is you can see how close they are to a sale. So ROI is quite good.

Yeah. Amazon is like, this is 9 million business owners on Amazon. That's astonishing. It is astonishing and very fast growing, of course. And so it's funny because when we talk about downturn, you and I started out chatting and you said gone are the heady days of the aggregator economy. And that's true, but people are still buying FBAs and that's not going to stop. And people are still creating FBAs and people are still growing as FBA sellers. Yes, the climate is trickier.

Yes, valuations aren't as high but it's still an asset and it's still an asset that there is great demand for. So I think that sometimes, you know, people read the news and like, wow, you know, the aggregator economy is finished. That must mean FBAs are done. No, FBAs won't be done. It's Amazon's entire business model. So not going to be done. It's like a third of their revenue is from these 9 million sellers. Yeah. Amazon is definitely not going away, but for a very, very long time, if anything, they're only going to scale. It's a tricky one to buy when it's very difficult because they're so good.

But there's also the risk of like, you've got so much single source dependency on like, they can just take down a listing at the drop of a hat. But it's like, there's people that sit in the middle of it like, well, I'm willing to take that risk for the benefits of how amazing Amazon is as a platform as a seller. One thing I want to get to before we wrap up is financing. I've mentioned this to you before. I think it might've been years ago. It's like the biggest thing that sort of slows our space down is access to capital for acquisitions.

And as soon as that starts to become a bit more abundant, when I think it's only a matter of time before we get some FinTech lenders sort of, and maybe after this, things change in the next sort of, let's not get too political, but as things sort of change with the economy, I'm hoping to see more of this sort of open up. You've got Flipper financing I've seen on Flipper here, and you've partnered with some lenders. How does it work just for people listening?

You've got, it mostly just for you? It looks like it's mostly just for US residents because that's the majority of, well, the majority of people that can get finance is SBA with SBA backed loans. Yeah, it's definitely tricky. Globally, it's tricky. And the US is best placed to take advantage of what we might call acquisition finance. And that's because it's a more established industry there. But even that's challenged in a high interest rate environment. As you say, the most predominant way in which a US based acquisition finance deal is completed is with the assistance of an SBA, a small business administration loan.

Now, just to be clear, it's not the actual Small Business Administration that provides the loan. They essentially provide insurance to the banks who provide those loans. And therefore, it's a safer banking product to issue with the SBA behind you, insuring you. So where we are, the way it works is in short, some percentage of the deal is obviously underwritten and the capital is provided by a banking institution, be it a traditional bank or a non-bank lender, and they're essentially providing you either under a personal guarantee or using the business's value to underwrite the loan.

And they will provide you obviously an interest bearing account from which you must repay. And it will typically only cover a certain amount, albeit you can get up to 80%, much like a home and to acquire a business. Globally, it's been challenged as you said. So where Flipper's going is we've just done a deal with a great company called SWOOP funding and SWOOP will power acquisition finance for the UK, the USA, Australia, and as they expand their product into Europe, European markets as well. Asia is on their roadmap, but we don't have a timeframe for that. So what does SWOOP do and what is Flipper's involvement in this? So first and foremost, let's define acquisition finance.

So acquisition finance refers to financing used to fund the acquisition of a company or business, as you would expect. It can utilize different financial instruments, debt or equity, provide the necessary funds, but essentially you're using it to acquire a target company. Now, Swoop's role in all this is they basically take all of the data inputs from Flippa and they pass those data inputs through to a calculator and they will serve you up.

The percentage of the business that you can derive acquisition finance for. At that point, they will serve you up all of the different banks that they are partnered with. They're like a search engine for acquisition finance. So they will provide you all of the different banks that will satisfy the needs of your purchasing structure, acquisition structure. And you will be able to pass through the details of the deal, as well as the details of yourself dynamically to as many different banks as you want.

And you will then get a phone call from Swoop basically saying, are your options, which loan would you like to take out in the event you did want to take out one of those loans? Now the reason we're doing that is whenever we've partnered with a single provider, there are limitations. Certain deals they can do, certain deals they don't want to do, certain jurisdictions they cover. The benefit of Swoop is it's a bit like a health insurance meta search. It's similar to the SBA, right?

SBA sort of backs the lenders. It's like insurance for the lenders and SWOOP has access to all of these different types of lenders. So it's actually seems like it's an analogy for SBA, but global sort of thing. Yep. So all that will happen is you'll be inside the deal room. So the deal room is the environment you are in when you inquire on any asset on Flipper and you do that through the Flipper platform.

So once you're in the deal room, you will simply see a acquisition finance layer and the acquisition finance layer, you will click the button on and it will show you all the different providers for acquisition finance for the jurisdiction that you are in. You will then hit submit, submit, submit, submit to enter as many of those as you want and then you will get five calls. Wow, amazing. That's cool. And to have a sort of mention rough deal terms or anything like that. So unfortunately they are beholden to the cash rate like the rest of us. And so obviously in tricky interest rate climates, the banks are not providing healthy terms.

But as we expect, going into 2025, there should be some interest rate relief across the globe. All that if there are major tariffs incurred as a function of the new administration in the US, then maybe you put some upward pressure on interest rates. But regardless, we expect that to shift a little bit. And therefore, I can't really comment as to what the interest rate structure is, but yeah, subject to terms. Subject and subject to the business model as well, right?

Yeah, and subject to how much and also subject to own credit score, right? If you're a good borrower, the terms are typically more favorable. Yeah. Well, congratulations. That's actually quite exciting that I can see that being a very, very valuable thing for Flipper users, for sellers as well. mean, having buyers with more access to capital, pretty exciting. can decrease time on market for sure.

Yeah. And what people forget is, most sellers say, I don't understand it. You know, it's a good quality business. We're like, yeah, but it's still $5 million. Like, there's actually, there's very few people, high net worths, family officers, even institutional, they don't just sit on $500 in capital.

They tend to go to capital sources for that money. And so the more we can make that available, the faster the deal should run. Absolutely. Absolutely. You know, as high net worth individuals aren't just going to have not, doesn't make financial sense to have millions of dollars is sitting in a bank account, they're appreciating anyway. Meetups, let's just finish on meetups. I've been to some meetups in Oz with you a bunch of times and I actually posted about the meetups that you guys have coming up in the States.

Tell me more about the meetups. The reason I mention this guys is because I think you guys should go to these Flippa meetups because it's a great way to get into the community of acquisitions. Yep, six meetups beginning next week.

First one's in New York on Tuesday night. I think that's Tuesday, the 12th of November. I personally will be at that. I personally will be presenting. So that's New York City. We then head across to Boston, into Miami, then across to San Francisco, LA and Austin. We are doing that in partnership with a great firm called Ezoic. Ezoic is a premier publishing platform for online publishers.

You are welcome to attend regardless of the business model that you are interested in or currently are an entrepreneur representing. So come one, come all, we've got, I think, over 2000 people registered to attend. In reality, it's a free event. I expect to see over 1000 entrepreneurs over a two week period of time. great fun. They're not formal. You don't have to be intimidated. They're so informal. It's really cool, isn't it? Deliberately informal. Have a beer, have a wine, have a soft drink, have a water. don't mind. Lots of food going around. We do do it very, very quick.

10 minute presentation just to warm up the room, make sure everyone feels comfortable in their own skin. And then really informal, you walk around, have a chat to other entrepreneurs, talk to flipper staff, do whatever you want to do. But they are fun and they're really effective for us.

They do work because people want to know how the industry works. Yeah, absolutely. And it's not just limited to America, right? You've got them in Australia and you've just mentioned the one in Asia that I unfortunately didn't hear about and missed out on. Now, time of recording, this will go live.

After the US events. So you'll have more coming up in the new year in 2025 anyway, right? Yes, we're working on some announcements for all of 2025 and we will do that globally. So you'll get a feel for all of the events happening all over the world, Asia, Europe, the Middle East, and of course the USA, where we're likely to do an excess of 50 events next year, probably do one a week. So that should be really big. Very clear part of our strategy moving forward to try to educate the industry a little bit more.

You as I said, they're free, come along. There's no reason why you shouldn't attend, they're a lot of fun.

Yeah. Awesome. Congrats Blake on what you've achieved with Flipper as CEO. It's amazing to see the growth of it since you've been working with Flipper and yeah, everybody else check it out. be a link as you know, Flipper.com. But yeah, thank you for your time again, Blake.

Thank you, Jaryd. I really appreciate your time.