• Club Acquire
  • Posts
  • ⏳ If You Thought The 4 Hour Workweek Was Nice..Check THIS Out

⏳ If You Thought The 4 Hour Workweek Was Nice..Check THIS Out

February 25, 2024

We’re back! Good day, lads and lasses.

What’s the only thing better than someone doing their thing?

Someone doing their THANG.

So let’s do our thang.

On the deal docket this week:

  • 💸 Riches in Niches: TikTok ads and the 30 minute workweek

  • ♣️Deal Me IN: Highly under-monetized model car site

  • 🧠Idealation: To partner or not? Thoughts on becoming a duo

  • 🔗 Helpful links: Is NOW really the best time to start a business?

💸 Riches in Niches

I found this listing and wanted to touch on it because this business is doing a couple things I’d like to copy in the future:

  1. It’s automated basically every part of the business through outsourcing (requiring 30 minutes of oversight per week).

  2. It’s riding on the back of a big-picture trend (TikTok influencers), doing something simple for a large group of people who can’t do that thing themselves.

What we have is a SaaS (or maybe a tech-enabled agency is more accurate) company that helps Spotify artists and TikTok creators grow their channels with TikTok ad campaigns. The company also prepares press kits and manages inbound brand deals on behalf of their clients. 

Costs: It looks like they have 3 contractors doing most of the work:

  1. Client relationship manager ($1500/month)

  2. Marketing contractor ($1500/month) for email lead gen

  3. Back-end contractor ($200/month) handles submission of ads

    Total = $3200

Asking Price: $130K

Key Metrics

Let’s do a quick SWOT analysis to see what we can learn

Strengths:

  • Good website with tons of social proof

  • Recurring revenue was introduced only three months ago, so there isn't a lot of data. However, they have 70 clients on monthly plans ranging from $98 to $295.

  • The business is highly automated, with low workload. The seller claims to spend no more than 30 minutes per week just to receive updates.

Weaknesses:

  • Inconsistent pricing plan over the last year

  • High churn rate (50% churn out within the first month, but the customers that stay on remain for at least a year - could this be improved?).

  • Fully dependent on the TikTok platform, assuming the competitive, algorithmic, regulatory, etc. risks of high concentration.

Opportunities: Here is the fun stuff. UGC (User-Generated Content) is a big buzzword when it comes to TikTok. Brands with high “virality” like Tabs have built huge businesses solely with this strategy. I’ve had the idea to create a platform to make it easier for companies to manage their TikTok creators with a built-in affiliate management system and tools. I think this direction could be the best opportunity to really transform the business. This would require some investment to build out a product. Right now, I think people are using things like Discord to communicate with affiliates, but it’s a serious organizational job to create the systems to track everything. Of course, there are businesses already doing versions of this successfully, but it’s a big space, and you can potentially niche down to find a place in the stack.

Threats: There is a pretty low barrier to entry in this business. If it can all be outsourced (from email outreach to running ad campaigns), how long until there are many more players doing the same thing? How skilled are the contractors, and how hard would they be to replace? I would look at the history of Facebook ads (or any place that captures attention) to get a sense of where this is all heading. At first, ads are cheap, and companies scale quickly. As more advertisers enter, ROAS (return on ad spend) goes down, and it becomes harder to scale by throwing money into the machine. An agency like this one will be able to maintain margins as long as ads are relatively inexpensive, but margins will decline as the market becomes more saturated, and CPMs (marketing jargon for cost per thousand impressions) increase.

The business has had some inconsistency in revenues, and with $39k in expenses each year, there is not a ton of room for the business to shrink before it becomes a bit scary. If the details are accurate and the current owners are not putting much time into the business, then maybe there is room to grow with some actual effort to run in new directions. This business could be ideal to team up with an influencer in the TikTok growth niche (that must be a niche), who is underutilizing their audience. That brings us back to UGC as the driving concept to fuel growth, both utilizing and providing access to it.

Again, if you’re interested in checking out the listing here it is.

♣️Deal Me IN

Business Model Arbitrage

I was going to do another write-up on this listing, but I’ve already emailed a friend about it, so I’ll just paste that below. Unfortunately, you can’t see the full listing details for another 9 or 10 days without Flippa Premium. So, if you want me to send you screenshots of all the details, just reply “screenshots” to this email. Here’s the exact message I sent to my friend about this listing. I got pretty excited, as you might be able to tell.

Hey, you used to be a model car guy, right?

Check out this site (premium domain) and listing. I think this is seriously way under-monetized for the amount of traffic. The seller has a detailed write-up on what he would improve; he runs a lot of sites and claims not to have time for this one as it’s too small to move the needle. The traffic here is insanely high (130K views/mo) for the low profit it’s generating ($1,215/mo). Currently, it’s a dropshipping business, which I almost always think is indefensible, but the domain and SEO are so good in this case.


Here’s a list of improvements I’d make:

  • Increase conversion rate - target 1-2% - currently below 0.5%.

  • Update Website - can look and navigate better.

  • Consider adding a chatbot or a customer service phone number (big sales to schools and prisons have been made by phone in the past, but it’s hard to find a number and he says they only pick up half the time).

  • Find more vendors than the current single one - and add F1 cars!

  • Hold some inventory to improve margins (paying $4 fee per order now).

  • Maybe create a newsletter with that 28k email list.

  • At least be sure to utilize the email list in the best way possible - use a more advanced email provider like Klaviyo vs Shopify to run more sophisticated campaigns.

  • Try running re-targeting Google ads after improving conversion.

  • Add products to TikTok shop or other 3rd party shops (Amazon, Walmart?) and create user-generated and paid marketing there.

The thing I like about this more than the easy optimizations is that you could honestly convert this into a content site as the domain is so good…or even just add ads to the homepage - it might cheapen the look but it’s an option. The site has been around for 14 years, and the traffic is consistent.

Seller is asking $77k ($20k for the domain), which is a high asking multiple (5.3x), because he knows the potential here. I think I would do it for $60k...he says he’s open to negotiation. As of now, it’s only making $15k/year, which isn’t great, but I think there’s a margin of safety here with that domain. I would want to gear up for Q4 (more products, maybe hold popular inventory if it can be predicted at all and make those CROs). Then see about building or converting to more of a content site (and instead of affiliate links, just link back to the store). Could be an opportunity to fix it and flip it. It’s also fully automated - he’s spending 5 minutes per week on the business (supposedly lol) but it would obviously be more work to fix it.

Anyway, what do you think?

So that’s it, I think it’s an interesting listing that jumps out as being uniquely under-monetized. But it’s a lot of work and a steep multiple.

🧠 Idealation

To Partner or Not? That Is... A Question

Lately, we've seen the word "solopreneur" explode in popularity. The term was actually first used in 1992, and it means exactly what it sounds like— a combination of the words "solo" and "entrepreneur." The idea that people have access to more tools and resources than ever before to go it alone is catching fire right now. A lean, mean business machine. All alone. No-code tools, AI copilots, Upwork, and Fiverr. All these things let you create, automate, and find the help you need without partnering up and sharing any of that sweet, sweet equity. This is great for the lone wolves out there. Sam Altman even thinks there will be a one-person unicorn soon (or he’s just selling more OpenAI subscriptions... probably this). But are these solo renegades missing something important?

History is full of dynamic duos - Luke and Han, Bonnie and Clyde, Thelma and Louise, Cheech and Chong, Will Ferrell and John C. Reilly. These (mostly fictional) duos make great teams because they excel at different things. They have different personalities and gifts, and they see the world in different ways. When they come together, they create a more complete whole, and their strengths complement one another so they can bring down the empire, carry out armed robberies, drive off a cliff, get super high, or perform at the f**kin’ Catalina Wine Mixer. Doing most of those things alone would just be less cool.

In the business world, the winning formula that VCs have looked for in the past is a technical co-founder and a marketing/business/visionary/eccentric lunatic co-founder.

Bill Gates and Paul Allen, Steve Jobs and Steve Wozniak, Larry Page and Sergey Brin, Warren Buffett and Charlie Munger. This short list alone has created trillions of dollars in market cap. There must be something to this duo thing, right?

“If you want to go fast, go alone. If you want to go far, go together.”

Proverb?

A good partnership is something that can be more than the sum of its parts. You add two brains together, but you get the output of 3 or 4. You motivate each other, know when to pick up the slack, and know how to play with ideas in ways that bring out the best ones.

I like what the Oracle of Omaha, the Buff-Daddy himself, has to say about the topic. When asked what he looks for in people to work with, Warren Buffett said there are three important qualities:

Integrity, Intelligence and Energy.

You need all three. If you have only two, you’ll get one of the following:

An honest, smart bum; an intelligent, hardworking cheat; or an honest, energetic person heading in the completely wrong direction.

This is not so easy to determine sometimes; it may take a long time to get to know someone on a level adequate to judge their character. That’s why so many ambitious people are opting to go solo; it’s one less variable to worry about. That said, if you are in need of a partner for a project and want to take a leap, I’ve compiled some ideas to potentially help you find like-minded people (But you can’t get mad at me if they turn out to be serial killers, or worse, lousy businesspeople).

Give it to me no chaser (I can handle it)

Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

If you enjoyed this issue

for more!