$27M+ In Online Businesses Sold + Managing A Remote Team Traveling Abroad - Ask Me Anything!

[AndrewNC]

Note: MJ Approved

Hey everyone - my name is Justin Cooke and I run a company called Empire Flippers where we help others buy, sell, and invest in profitable websites and online businesses.

Along with my business partner, Joe Magnotti, we started building and selling our own websites back in 2009-2010, but eventually pivoted to a brokerage & marketplace where we bring together sellers, buyers, and investors to close deals.

Our company has grown quite a bit in the last few years - from $200K in sales in 2012, nearly $10M in 2016, and heading towards $20M in 2017 - enough to get us listed in the top 200 on the INC 5000 list two years in a row. To date, we’ve helped broker more than $27M worth of deals between our buyers and sellers. Our team has grown a lot too - we currently have a team of 25 people.

We built our company as a “distributed team”. We live/travel in various places around the world, getting together for company meetups 3-4 times per year.

We broker almost every type of online business (Adsense, Amazon Affiliate, FBA, E-commerce, Private Affiliate, iOS apps, SaaS, etc.) and have seen thousands of unique and successful businesses. We’ve seen quite a few online businesses come through our marketplace - you can read more about the 11 popular types of online business models here.

Feel free to AMA about buying, selling or investing in online businesses, building management teams, starting a podcast, growing our business, interesting niches, living/working remotely, or anything else!

Edit: Thanks for all the questions! I'll be checking in regularly over the next few days, so feel free to ask any questions you like and I'll do my best to answer.

Hey Justin,

Thanks for taking the time to do this.

I have an iOS app portfolio with over 1,220,000 downloads since 2013 which I'm looking to sell. I've recently been working on another business so I have neglected to keep up with monetizing the apps, so the revenue there isn't what it could be. I also noticed a lot of recent downloads being Chinese traffic (which could be a good thing for selling to someone in that market).

Do you see there being ways to arrive at valuations of this based on download count, aside from current revenue earned? Any ballpark figures of what I could expect (with the limited amount of info I provided)?

Thanks,
Andrew

 

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[MJ DeMarco]

Valuation = Net Monthly Profit X Multiple + Wholesale Value Of Inventory

The multiple varies in range, but is typically 25-35X for eCommerce.

So basically 2 or 3X yearly net. $40K/net for the year, the business is worth $80 to 120K. That's appears to be the range in the digital space for as long as I've been paying attention.

 

[Grahamj]

Great thread!

Are customer listings exclusive through you, or are they able to list with multiple brokers?
Do purchasing agents ever come to you representing a client? If so do you/would you give them a commission %? A similar scenario would be a real estate buying agent that costs the buyer $0 because of a commission split with the selling agent.

 

[amp0193]

@empireflippers

What sets you apart from the other large brokers?

Especially the one charging a 10% commission, to your 15%?


Empire Flippers is set up as a marketplace. Do sellers get to work with one broker from beginning to end of the process, or does the marketplace aspect of this change how the broker relationship works?

 

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[AgainstAllOdds]

Had a great time with @empireflippers Justin the other night, and informally continued the AMA ;-)

A couple points of interest that came up:

I asked if it's best to move to the Philippines for a bit to set up a remote team or if online is fine. Justin said that online is more than fine. Onboard the employee. Then pay them through Remitly. Use Time Doctor for tracking. That way you don't have to pay the ridiculous Upwork Fees.

We also discussed for a bit the concept of selling the online portion of a business, and then continuing supplying it. Essentially, if done right, you get paid to expand your distribution.

My thoughts: This has amazing potential for you to expand to other markets that you can't realistically serve. For example, separate Amazon Europe and Canada. Sell each off separately. Then teach both new parties how to do local distribution. Supply the distributors. Make money. Obviously this has a lot of risk in terms of being cut out as the supplier, but if you have a strong brand, complicated supply chain, or additional value that you can offer, then it's a win-win.

We also discussed which online businesses are best to buy. To summarize quickly - the best businesses are those that offer synergies and you can easily integrate into what you're already doing.

@empireflippers Thanks for a great time, and feel free to correct me if I wrote anything wrong. Keep killing it.

 

[MJ DeMarco]

Bump. @empireflippers

 

[Owner2Millions]

@empireflippers wow. You have had some awesome success! I'm going come back and edit this as I read through this thread slowly and do some more research about your company. Your opening post on here says a lot!


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[MUISaiyan]

Hey MJ,

Since we serve entrepreneurs looking to exit, we're typically 1-3 years behind the bleeding-edge types who are entering new industries/niches, trying out new monetization methods, etc. For example, we saw the slow-moving FBA businesses coming in 2014/15, but didn't get the first listing until December 2015 on our marketplace.

Also - what gets listed/sold with us isn't necessarily indicative of the market but, rather, our marketing efforts, where we choose to spend our time/focus, etc - make sense?

That being said - we've been listing/selling quite a few Amazon FBA businesses in 2016 and that's continued through 2017. The best of those have unique/branded products, include the Seller Central account in the sale, and have blended traffic and sales channels. (eCommerce sales outside of Amazon exclusively)

We list/sell dropshipping sites, for sure. They're typically in our lower-mid range - Mid-5 to Low-6 figures. The business model is far from dead, but I think the shiny object chasers have mostly jumped ship to FBA, Amazon Merch (new), etc.

You hear a lot about this biz model being dead, that biz model dying, etc. What's fascinating to me are the entrepreneurs quietly plugging away at these "dead" business models and niches - often in boring or at least less-interesting niches - and making quite a bit of money. They continue to bring in sales and cashflow and we're happy to take them on our marketplace.

It's not hard to speculate, though, that Amazon has come AFTER dropshipping stores in a massive way. They'd love to "crush" them all and put them out of business, to be sure.

That being said, there are niches (hobbyist niches, in particular) that require really knowing the market, have an educational piece around them that buyers appreciate, etc. These are still doing well today, for the most part, as Amazon doesn't compete well there.

You've probably seen this before, but here's a very public case study from eCommerce Fuel on the sale of their dropshipping store. I think that's a good example.

If you can share what "dead" business models are these entrepreneurs working?

Thanks for the great AMA


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[empireflippers]

Hey Justin,

Thanks for taking the time to do this.

I have an iOS app portfolio with over 1,220,000 downloads since 2013 which I'm looking to sell. I've recently been working on another business so I have neglected to keep up with monetizing the apps, so the revenue there isn't what it could be. I also noticed a lot of recent downloads being Chinese traffic (which could be a good thing for selling to someone in that market).

Do you see there being ways to arrive at valuations of this based on download count, aside from current revenue earned? Any ballpark figures of what I could expect (with the limited amount of info I provided)?

Thanks,
Andrew

Hey Andrew!

Unfortunately, an app portfolio's valuation, without any significant revenue/profit to speak of, (and based on accepted standards of valuation) wouldn't be sellable through our marketplace. It's not that there isn't ANY "value", it's just that it's not likely valuable to a portfolio buyer - someone looking to pick up the cashflow and build on that. There may be some very specific/particular strategic out there that would be willing to pay for this...but then again it might be unicorn hunting on our end!

Things that would significantly improve your chance/ability to sell a portfolio like this:

1. Add monetization and get it earning. (Obviously)
2. Have a documented process (and team/employees) for discovering the niche, executing the app, marketing the app, etc.
3. Have the app be in a related niche/industry. (Even if they're NOT in a related niche, the users/customers should have something tying/binding them together that a strategic might have interest in)

Obviously #1 is required to list/sell with us, but you'll likely want #2 and #3 if you go shopping on your own for a strategic buyer. (Or have a few calls with your peers or competitors about potentially purchasing)

Probably not the answer you were looking for, but does that make sense?

 

[empireflippers]

So basically 2 or 3X yearly net. $40K/net for the year, the business is worth $80 to 120K. That's appears to be the range in the digital space for as long as I've been paying attention.

Slightly below 24X you might see younger affiliate sites with less established/diversified traffic streams. Above 36X you'll find some solid month-over-month SaaS companies with hockey stick growth. (Or at least potential) You'll find "most" businesses in the 2-3 year multiple range though, for sure.

You might see some chatter about, "XX business multiples are going up", "YY business multiples are going down", etc...but those are often quite slight changes and some inside baseball talk/gossip.

I'll get speculative here, but one thing I think may really change the industry would be financing. Leverage and easier access to capital in this range would likely drive demand (and multiples) up.

 

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[empireflippers]

Had a great time with @empireflippers Justin the other night, and informally continued the AMA ;-)

A couple points of interest that came up:

I asked if it's best to move to the Philippines for a bit to set up a remote team or if online is fine. Justin said that online is more than fine. Onboard the employee. Then pay them through Remitly. Use Time Doctor for tracking. That way you don't have to pay the ridiculous Upwork Fees.

We also discussed for a bit the concept of selling the online portion of a business, and then continuing supplying it. Essentially, if done right, you get paid to expand your distribution.

My thoughts: This has amazing potential for you to expand to other markets that you can't realistically serve. For example, separate Amazon Europe and Canada. Sell each off separately. Then teach both new parties how to do local distribution. Supply the distributors. Make money. Obviously this has a lot of risk in terms of being cut out as the supplier, but if you have a strong brand, complicated supply chain, or additional value that you can offer, then it's a win-win.

We also discussed which online businesses are best to buy. To summarize quickly - the best businesses are those that offer synergies and you can easily integrate into what you're already doing.

@empireflippers Thanks for a great time, and feel free to correct me if I wrote anything wrong. Keep killing it.

Great meeting with you, man! Glad I caught you here in Saigon before you resumed your travels, hehe.

I was a few drinks in when you arrived, but I think you've got our conversation right!

I'd just add:

When we moved to the Philippines, setup the corporation, etc. we did everything the "right" way. We knew it would make it easier to hire better employees and also wanted to be on the right side of, well, everything since we were living/working there. It also let us enter into contracts, order services as a local company, etc.

Ultimately, it was pointless, and we wouldn't likely do it again.

We were originally worried we'd have to pay some "protection money" (No joke) to some of the rebel or fringe groups. Apparently this is a bit more common outside the major cities, but we never actually had an issue there.

We ran into more issues with local/regional "legitimate" government. The mayor of the city we were in (Now the president of the country!) was fine enough (Although more like a regional "boss" than what you might think of as a mayor), but some of the agencies we were dealing with just had a ton of bureaucracy - to the point where it seemed intentional.

We also ended up getting sued in the Philippines which we talk about here. It wasn't financially crushing, but the time, effort, energy, and thought put into it was a real PITA.

If we had to do it over, we wouldn't even bother setting up a "legitimate" company. Having our foreign company employee people directly online would have been the much better option, IMO.

Lastly - if you can regularly reproduce a marketing/sales arm factory-style, I think there could be a ton of value in that. It's the franchising model, but instead selling an already profitable business and doing it again and again and again.

 

[empireflippers]

If you can share what "dead" business models are these entrepreneurs working?

Thanks for the great AMA


Sent from my iPhone using Tapatalk

Sure! Plenty of people saying AdSense is dead, for example:

Is AdSense Dead?
AdSense Is A Dead Horse
AdSense Dying A Natural Death (2012)

Dropshipping too:

Is Dropshipping Dead?
Why Dropshipping Is Dead
Is Dropshipping Dead? (Here on this forum)

We're still listing/selling, today, websites that are monetized via AdSense, make money via dropshipping, etc.

I won't give away specific niches that any of our sellers are in for obvious reasons, but these could include things similar to:

• High-pressure paint/air guns (Industrial/Commercial)
• Airsoft gun/battle equipment (Hobbyist w/ disposable income too - good customers!)
• Impact wrenches, hammers, etc. (DIY / Home Improvement)

 

[MUISaiyan]

Sure! Plenty of people saying AdSense is dead, for example:

Is AdSense Dead?
AdSense Is A Dead Horse
AdSense Dying A Natural Death (2012)

Dropshipping too:

Is Dropshipping Dead?
Why Dropshipping Is Dead
Is Dropshipping Dead? (Here on this forum)

We're still listing/selling, today, websites that are monetized via AdSense, make money via dropshipping, etc.

I won't give away specific niches that any of our sellers are in for obvious reasons, but these could include things similar to:

• High-pressure paint/air guns (Industrial/Commercial)
• Airsoft gun/battle equipment (Hobbyist w/ disposable income too - good customers!)
• Impact wrenches, hammers, etc. (DIY / Home Improvement)

Thanks appreciate you taking the time to include links also.


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[empireflippers]

Thanks appreciate you taking the time to include links also.


Sent from my iPhone using Tapatalk

No problem! Hope it was useful.

Happy to answer any other questions you guys have...

 

[Gigi Rodgers]

Note: MJ Approved

Hey everyone - my name is Justin Cooke and I run a company called Empire Flippers where we help others buy, sell, and invest in profitable websites and online businesses.

Along with my business partner, Joe Magnotti, we started building and selling our own websites back in 2009-2010, but eventually pivoted to a brokerage & marketplace where we bring together sellers, buyers, and investors to close deals.

Our company has grown quite a bit in the last few years - from $200K in sales in 2012, nearly $10M in 2016, and heading towards $20M in 2017 - enough to get us listed in the top 200 on the INC 5000 list two years in a row. To date, we’ve helped broker more than $27M worth of deals between our buyers and sellers. Our team has grown a lot too - we currently have a team of 25 people.

We built our company as a “distributed team”. We live/travel in various places around the world, getting together for company meetups 3-4 times per year.

We broker almost every type of online business (Adsense, Amazon Affiliate, FBA, E-commerce, Private Affiliate, iOS apps, SaaS, etc.) and have seen thousands of unique and successful businesses. We’ve seen quite a few online businesses come through our marketplace - you can read more about the 11 popular types of online business models here.

Feel free to AMA about buying, selling or investing in online businesses, building management teams, starting a podcast, growing our business, interesting niches, living/working remotely, or anything else!

Edit: Thanks for all the questions! I'll be checking in regularly over the next few days, so feel free to ask any questions you like and I'll do my best to answer.

Hey Justin! Thanks for doing this AMA.
I have a question about hiring and remote working.

I was reading an article on OkDork about a guy that purchased 29 business' and he's crushing it.
He mentioned his hiring process and how he hires, not the "A-players" but the "B-C-D Players" and trains them up to be "A-players".
For example, he hired a woman who just came from the Peace Corp - who didn't know how to use an iPhone, didn't know what Twitter was, and didn't know proper business etiquette.

But he liked her attitude.
Trained her up.
And now she's killing it as his right hand person and running product operations (or something).
This is my dream scenario.
I'm a solid "B-Player" who is looking for someone to take me under their wing and show me how to build a business from all aspects (or run social media strategy, or build out a community, etc).
Creating their right hand person.
And I want to do this remote (3 months of training under them in-person, and the rest, remote work with quarterly meet ups)

My networking skills are good. But they're not that good.
This entrepreneur is completely under the radar.

Getting to the point, how can I position myself to FIND an entrepreneur of this caliber, who is looking for a protege to help build their business?
Note: Once I find them, I can lock in the deal - depending on the scope of work (I've become VERY GOOD at creating proposals and I have a fantastic personality). But how the hell do I find them?

Any guidance you have to offer, I would appreciate it.
Cheers!

 

[empireflippers]

Getting to the point, how can I position myself to FIND an entrepreneur of this caliber, who is looking for a protege to help build their business?
Note: Once I find them, I can lock in the deal - depending on the scope of work (I've become VERY GOOD at creating proposals and I have a fantastic personality). But how the hell do I find them?

Any guidance you have to offer, I would appreciate it.
Cheers!

Hey Gigi - thanks for the question!

I could go on a serious rant about those who say things like, "I only hire A-players". That advice is about as helpful as saying, "We need to give 110%" or "Follow your passion" - garbage, IMO.

I don't actually like the idea of a grading system for hiring or for our team at all as it doesn't take into account the value of the work they do to the company, their variety of skillsets (some better, some worse), etc. In any event, I understand it's a quick way to grade them, so I'll use it below.

I think (for the most part) that A-players are developed, not hired. This is especially true when you're hiring for a role that isn't VERY well defined, staffed, with established KPI's in place, etc.

We've hired quite a few apprentices to our team - usually a few a year. (Positions are filled, but see an example here) We call them apprentices because the roles aren't well defined and we want people that can help to CREATE the jobs/positions in our company. We also want them to have a well-rounded view/experience with EF as we believe that makes for the best team members. None of them were "A-players" to start, but we helped them develop into integral positions that help grow the company.

In terms of finding a position or apprenticeship, we've talked about this quite a bit on our podcast. Here are some resources to check out:

Podcast episode on the Rise of the Apprentice
Guest post on how to become an apprentice
Our updated list of apprenticeships available (In our network)
Friend's company GetApprenticeship that helps to place you with companies

Our buddy Taylor Pearson talks a ton about apprenticeships and his book "End Of Jobs" is def. worth a read.

This is a bit older, but check out Charlie's TedX talk on a new way to work. It's been around for 6+ years and I still reference it regularly:

 

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[Gigi Rodgers]

Hey Gigi - thanks for the question!

I could go on a serious rant about those who say things like, "I only hire A-players". That advice is about as helpful as saying, "We need to give 110%" or "Follow your passion" - garbage, IMO.

I don't actually like the idea of a grading system for hiring or for our team at all as it doesn't take into account the value of the work they do to the company, their variety of skillsets (some better, some worse), etc. In any event, I understand it's a quick way to grade them, so I'll use it below.

I think (for the most part) that A-players are developed, not hired. This is especially true when you're hiring for a role that isn't VERY well defined, staffed, with established KPI's in place, etc.

We've hired quite a few apprentices to our team - usually a few a year. (Positions are filled, but see an example here) We call them apprentices because the roles aren't well defined and we want people that can help to CREATE the jobs/positions in our company. We also want them to have a well-rounded view/experience with EF as we believe that makes for the best team members. None of them were "A-players" to start, but we helped them develop into integral positions that help grow the company.

In terms of finding a position or apprenticeship, we've talked about this quite a bit on our podcast. Here are some resources to check out:

Podcast episode on the Rise of the Apprentice
Guest post on how to become an apprentice
Our updated list of apprenticeships available (In our network)
Friend's company GetApprenticeship that helps to place you with companies

Our buddy Taylor Pearson talks a ton about apprenticeships and his book "End Of Jobs" is def. worth a read.

This is a bit older, but check out Charlie's TedX talk on a new way to work. It's been around for 6+ years and I still reference it regularly:

Hey Gigi - thanks for the question!

I could go on a serious rant about those who say things like, "I only hire A-players". That advice is about as helpful as saying, "We need to give 110%" or "Follow your passion" - garbage, IMO.

I don't actually like the idea of a grading system for hiring or for our team at all as it doesn't take into account the value of the work they do to the company, their variety of skillsets (some better, some worse), etc. In any event, I understand it's a quick way to grade them, so I'll use it below.

I think (for the most part) that A-players are developed, not hired. This is especially true when you're hiring for a role that isn't VERY well defined, staffed, with established KPI's in place, etc.

We've hired quite a few apprentices to our team - usually a few a year. (Positions are filled, but see an example here) We call them apprentices because the roles aren't well defined and we want people that can help to CREATE the jobs/positions in our company. We also want them to have a well-rounded view/experience with EF as we believe that makes for the best team members. None of them were "A-players" to start, but we helped them develop into integral positions that help grow the company.

In terms of finding a position or apprenticeship, we've talked about this quite a bit on our podcast. Here are some resources to check out:

Podcast episode on the Rise of the Apprentice
Guest post on how to become an apprentice
Our updated list of apprenticeships available (In our network)
Friend's company GetApprenticeship that helps to place you with companies

Our buddy Taylor Pearson talks a ton about apprenticeships and his book "End Of Jobs" is def. worth a read.

This is a bit older, but check out Charlie's TedX talk on a new way to work. It's been around for 6+ years and I still reference it regularly:

Well, be still my heart, if it isn't Charlie Hoehn...
It's because of this guy and a blog post he wrote, YEARS AGO, that I started to approach companies in the "proposal manner".
He wrote this article, and provided the script, on how he approached working for Tim Ferriss - which he did for a few years.

I've reached out to multiple companies, via cold emails, and created a personalized proposal on how I could be a benefit to their company.
I demonstrated (with screenshot analytics) where they are, how it can be improved, and how I can help them get there.

I'm not applying for free work, but I am showing my worth and that I've done my homework, before they respond back.
And it works. Oh man...does it work.
I've had 2 phone interviews this week because of this approach, but they weren't the right opportunities.
And some other job offers and interviews that again, it wasn't a good fit.

And that seems to be the big dilemma.
Not the right mix of opportunities that will wet my whistle - so it can be a win for both the company and myself.

Thank you so much for the links!
I already signed up to the apprenticeship website. They're mostly remote which is a MUST in my book.
And I'm eyeballing a few positions on your site as well.

Again, thank you so much. And I look forward to staying in touch with you and telling you how it goes - either way.
Cheers!

 

[ZeroTo100]

Hey Justin,

Thanks for doing this - great to have you on.

I have a question in regards your vetting process. I understand it's on the buyer to do their own DD but I'm wondering what kind of research you guys do on the sites you list before they go up. From what I know of Empire, you've done a good job in building a brand where buyers can be a little at ease as oppose to buying on sites like flippa. Is that just your branding or do you really vet sites out before you list them for sale?

If so, what kind of link research or blackhat research? How serious is your research into the financials? I would still do my own but it's nice to have a second look.

I notice a lot of sites on your site are using PBNs. Do you personally believe it's fair to the buyer that some of these sites using PBNs still ask such a high multiple in regards to those that don't?

In regards to sites that are purchased, have you guys checked in on them a few months down the line to see "where they are now?" Is it common that some of these sites shit the bed or are they still going strong (I'm talking due to a seller misleading a buyer).

Sorry for the questions but I've been shopping your site for a while and I'm always open to scooping up properities.

I appreciate you doing this for the forum and thanks MJ

 

[MJ DeMarco]

Thank you @empireflippers for the continuation of this AMA. Rep+

 

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[G_Alexander]

Thank you for doing this, @empireflippers

Two questions for you:

1. Have you ever sold (or marketed) a business upstream to one of your seller's suppliers, distributors or manufacturer's? For example... a retail ecommerce store is selling more than $1,300,000 for "Supplier A" and $600,000 for "Supplier B". Their suppliers/distributors would have an interest in protecting those sales, so it would be to the benefit of one of the suppliers to purchase the retailer to stonewall the revenue from their competition.
   • The business could also just be a great bolt-on for a competing website to buy
2. Have you ever sold an ecommerce business that was doing 70% website sales / 30% amazon sales (or any combination or split revenue streams - eBay, Walmart, Jet, etc)? How does this effect multiples (if at all)?

Thanks again for your insight! Rep+

 

[carlos_]

Question about Control:

After a listing has been made, is there anything preventing a business owner from selling directly to a VC/private equity firm in an attempt to sidestep your commissions?

 

[Blaise84]

Note: MJ Approved

Hey everyone - my name is Justin Cooke and I run a company called Empire Flippers where we help others buy, sell, and invest in profitable websites and online businesses.

Along with my business partner, Joe Magnotti, we started building and selling our own websites back in 2009-2010, but eventually pivoted to a brokerage & marketplace where we bring together sellers, buyers, and investors to close deals.

Our company has grown quite a bit in the last few years - from $200K in sales in 2012, nearly $10M in 2016, and heading towards $20M in 2017 - enough to get us listed in the top 200 on the INC 5000 list two years in a row. To date, we’ve helped broker more than $27M worth of deals between our buyers and sellers. Our team has grown a lot too - we currently have a team of 25 people.

We built our company as a “distributed team”. We live/travel in various places around the world, getting together for company meetups 3-4 times per year.

We broker almost every type of online business (Adsense, Amazon Affiliate, FBA, E-commerce, Private Affiliate, iOS apps, SaaS, etc.) and have seen thousands of unique and successful businesses. We’ve seen quite a few online businesses come through our marketplace - you can read more about the 11 popular types of online business models here.

Feel free to AMA about buying, selling or investing in online businesses, building management teams, starting a podcast, growing our business, interesting niches, living/working remotely, or anything else!

Edit: Thanks for all the questions! I'll be checking in regularly over the next few days, so feel free to ask any questions you like and I'll do my best to answer.

@empireflippers

Thank you so much for making yourself available in this this way. It's much appreciated!

Note: MJ Approved

Hey everyone - my name is Justin Cooke and I run a company called Empire Flippers where we help others buy, sell, and invest in profitable websites and online businesses.

Along with my business partner, Joe Magnotti, we started building and selling our own websites back in 2009-2010, but eventually pivoted to a brokerage & marketplace where we bring together sellers, buyers, and investors to close deals.

Our company has grown quite a bit in the last few years - from $200K in sales in 2012, nearly $10M in 2016, and heading towards $20M in 2017 - enough to get us listed in the top 200 on the INC 5000 list two years in a row. To date, we’ve helped broker more than $27M worth of deals between our buyers and sellers. Our team has grown a lot too - we currently have a team of 25 people.

We built our company as a “distributed team”. We live/travel in various places around the world, getting together for company meetups 3-4 times per year.

We broker almost every type of online business (Adsense, Amazon Affiliate, FBA, E-commerce, Private Affiliate, iOS apps, SaaS, etc.) and have seen thousands of unique and successful businesses. We’ve seen quite a few online businesses come through our marketplace - you can read more about the 11 popular types of online business models here.

Feel free to AMA about buying, selling or investing in online businesses, building management teams, starting a podcast, growing our business, interesting niches, living/working remotely, or anything else!

Edit: Thanks for all the questions! I'll be checking in regularly over the next few days, so feel free to ask any questions you like and I'll do my best to answer.

@empireflippers

First of all, thank you for making yourself available in this way.

From 200k to 20 million is a HUGE leap. I'm curious about your mindset. Did you require a major shift in the way you perceived the world of business, and even life in general, in order to tolerate such enormous growth? Or, was it more like just keeping your head down, eyes focused, and executing each next step without thinking about or worrying about the outcome? (or, maybe something else altogether...).

I'm fairly new to Fastlane ideology, and adopting a mindset that is so completely different from everything I was taught growing up can at times be challenging-- that's where my curiosity about your mindset comes from.

 

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[empireflippers]

Hey Justin,

Thanks for doing this - great to have you on.

I have a question in regards your vetting process. I understand it's on the buyer to do their own DD but I'm wondering what kind of research you guys do on the sites you list before they go up. From what I know of Empire, you've done a good job in building a brand where buyers can be a little at ease as oppose to buying on sites like flippa. Is that just your branding or do you really vet sites out before you list them for sale?

If so, what kind of link research or blackhat research? How serious is your research into the financials? I would still do my own but it's nice to have a second look.

I notice a lot of sites on your site are using PBNs. Do you personally believe it's fair to the buyer that some of these sites using PBNs still ask such a high multiple in regards to those that don't?

In regards to sites that are purchased, have you guys checked in on them a few months down the line to see "where they are now?" Is it common that some of these sites shit the bed or are they still going strong (I'm talking due to a seller misleading a buyer).

Sorry for the questions but I've been shopping your site for a while and I'm always open to scooping up properities.

I appreciate you doing this for the forum and thanks MJ

Thanks for the questions!

We do put all submissions through our vetting process. Some require more verification than others, depending on how complicated they are, the number of moving parts, etc. For the most part, we really focus in on the seller, the earnings, the traffic (if any), and the niche/industry. With financials, this may include logging into their Amazon account backend (or having them do it for us via screenshare/video), matching earnings to bank deposits, etc.

I shouldn't go into too much detail regarding our vetting process, unfortunately. Laying out exactly what we check and the tools we use would give a blueprint to those looking to cheat/break our process if that makes sense?

We definitely look for inconsistencies that don't make sense or aren't clearly/reasonably answered. We reject businesses that we can't independently verify, that don't match up, or that have some sketch going on.

We're fine with listing businesses that have or don't have PBN's as long as it's disclosed. We think that transparency is key. (Other brokers/marketplaces don't disclose this, for example) Potential buyers can then dig through the backlink profile to determine whether they think it will work or not work for them. On average, sites using a PBN sell for a lower multiple - we've talked about this at length on the blog, on the podcast, etc.

We DO hear back from buyers post-sale, but it's mostly anecdotally and only if something good (or bad) has happened. It's mostly up to the success/failure of the buyer. There were a couple of instances, though, where the seller was clearly at fault. In one case, a seller sold the business, removed the PBN links post-sale, and then redirected them to the sellers new, competing site. We released all of the seller's information to the buyer and a lawsuit was initiated.

It's not all doom/gloom, though. We regularly relist/sell businesses that have sold previously on our marketplace - for 20%, 40%, and even 2X or more. It's usually 1-2 years down the road. There's one case in particularly where a buyer of ours bought an eComm business and it's since doing 30X better than when he first purchased it. Bought it for around $20K and worth around $700K or so now less than 2 years on. That's the biggest increase I've heard of, though.

We've done more than a thousand brokered transactions at this point, so we've seen almost everything!

Hope that helps?

 

[empireflippers]

Thank you for doing this, @empireflippers

Two questions for you:

1. Have you ever sold (or marketed) a business upstream to one of your seller's suppliers, distributors or manufacturer's? For example... a retail ecommerce store is selling more than $1,300,000 for "Supplier A" and $600,000 for "Supplier B". Their suppliers/distributors would have an interest in protecting those sales, so it would be to the benefit of one of the suppliers to purchase the retailer to stonewall the revenue from their competition.
   • The business could also just be a great bolt-on for a competing website to buy
2. Have you ever sold an ecommerce business that was doing 70% website sales / 30% amazon sales (or any combination or split revenue streams - eBay, Walmart, Jet, etc)? How does this effect multiples (if at all)?

Thanks again for your insight! Rep+

Thanks for the questions!

1. I can't remember any deals going through in Scenario 1 you mentioned. I know that we've been in talks and "shopped" the businesses to suppliers before, but some other buyer came along and picked the businesses up. I can't think of any instances where the supplier actually purchased the biz.

2. Yep - this definitely happens. Although I'd say it's often reversed (70-80% Amazon, 20-30% website sales). This will typically help your valuation. It shows that the business is viable outside of one singular channel. (i.e. Diversification) It's particularly helpful (from a buyer's perspective) if the seller has left some money on the table when SEO could be improved or they're not doing as great of a job on Amazon - something that leaves room for improvement on the buy-side.

 

[empireflippers]

Great thread!

Are customer listings exclusive through you, or are they able to list with multiple brokers?
Do purchasing agents ever come to you representing a client? If so do you/would you give them a commission %? A similar scenario would be a real estate buying agent that costs the buyer $0 because of a commission split with the selling agent.

Thanks!

We require 6 months exclusivity on all the businesses we list. It doesn't typically take that long (Especially for the 5 to low-6 figure listings), but some can take longer than others. Most brokers require exclusivity, so if you find one that doesn't you'll likely have to be exclusive to them anyway.

We work with just a couple of buying agents. We've gone through the process of setting up more co-broker agreements but, if I'm being honest, most of them were just a complete waste of time. Lots of talk, not a lot of deals...so it ends up being a waste of time. A couple people in the industry we work with, though, and have great relationships. Yep - they get a (small) cut of the fees. Many times, though, they're actually investing (at least partially) in the deals themselves anyway)

@empireflippers

What sets you apart from the other large brokers?

Especially the one charging a 10% commission, to your 15%?


Empire Flippers is set up as a marketplace. Do sellers get to work with one broker from beginning to end of the process, or does the marketplace aspect of this change how the broker relationship works?

I don't want to bash other brokers that are out there, but happy to highlight a few things that make us different/unique:

• Largest Buying/Selling Pool - Outside of Flippa, we have the largest audience of buyers/sellers of online businesses in the industry. This reflects in the number of listings, the visits to our site, and you can see it in our marketing. (We're all over the place) Even other brokers don't really dispute this.
• Deposit Process - We require interested buyers to place a (refundable) deposit to get the details/information on any of our listings. Other brokers require a digitally signed online document - which can by done by anyone/everyone. Our process requires them to have (at least) access to a certain amount of money, verification as to who they are, etc.
• Buyer/Seller Calls - Some brokers require you to "sell" the business yourself. They'll set you up with a call with a buyer, but then sit back and have you do the work. Not true with us. We do a prep call with sellers, drive the buyer/seller call, and do a post-mortem with the sellers as well. Much more detailed and (I think) helpful.
• We Handle Migrations - With a few exceptions, we handle the migration process from start to finish. It can be quite a bit of work (and scary) for buyers/sellers going through this for the first time. We handle this for our customers and ensure everything goes smoothly.

Our fees are in-line with the market. Anyone offering 10% is discounting - why would they need to do that? What are they missing to where they are willing to offer less fees?

Ultimately, it comes down to what gets wired to your bank account. Our sellers realize they're happy to pay 15% on a $200K sale as opposed to 10% on a $160K sale. (And buyers are willing to pay a premium with us because of our process overall)

Finally - when working with Empire Flippers you may end up working with a number of people on our team. That's because we don't work like a traditional brokerage where one person "owns" the deal. We do this to provide better coverage and to allow multiple people to be able to step into any deal as needed. To be honest, this can be a bit confusing when first time buyers/sellers work with us (and there are downsides to this), but we feel the benefits outweigh the negatives here.

Hope that helps?

 

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[empireflippers]

Question about Control:

After a listing has been made, is there anything preventing a business owner from selling directly to a VC/private equity firm in an attempt to sidestep your commissions?

Thanks for the question, Carlos!

We require 6 months exclusivity when listing/selling businesses on our marketplace. This is made clear in our terms and when a seller submits to list with us. We've had a few instances where sellers were looking to sell off-market, but we're pretty good at catching these and bringing them around and back on-track. Ultimately, it's because they're going to have to pay us out in the end anyway, so they might as well use the benefits that come with it.

(An aside - the WORST is when this kills a deal. There was one case where the sellers was trying to do a sneaky deal off-market with a BS buyer, when we had a real, repeat buyer with us interested and making an offer. The sneaky buyer ended up dropping out as did our real buyer because of the situation...UGH! Really frustrating...)

VC's and PE firms are actually less likely to try to go around our terms/process. They have more to lose and are generally in the same industry and not looking to burn brokers that provide their dealflow.

We actually encourage sellers to bring off-market buyers to us so that we can vet them and (if they're really interested) have them compete with our portfolio buyers. Sellers are usually happy to do this - whatever we can all do to get the business sold is good for everyone.

 

[Xeon]

@empireflippers
From 200k to 20 million is a HUGE leap. I'm curious about your mindset. Did you require a major shift in the way you perceived the world of business, and even life in general, in order to tolerate such enormous growth? Or, was it more like just keeping your head down, eyes focused, and executing each next step without thinking about or worrying about the outcome? (or, maybe something else altogether...).

I'm fairly new to Fastlane ideology, and adopting a mindset that is so completely different from everything I was taught growing up can at times be challenging-- that's where my curiosity about your mindset comes from.

The above question by Blaise84 is what I would like to see answered too! Very curious about your mindset.
Also, did you plan for such growth from the start or it was something that came along the way?

 

[RogueInnovation]

Hmm, I guess I'm most curious about the stages your business went through
You obviously changed your business model a bit during your growth but it is still a little mysterious to me
You started building and selling
Then went into brokering deals

I assume it was because your sales process was successful but the time spent building websites was a time waste right? So you reached out somehow to find more guys willing to sell the kind of work you were doing and then used your own sales method and pipeline to become a broker. Then in order to popularise maybe you pivoted a little to look more like a thriving marketplace for buying and selling websites. How did you get from that awesome sales mentality to that frightening level of detail without going craaaazy?

Am I right to assume that, or would you say it went differently?
Like maybe there was a learning curve for you regarding all the different website types and business types.


What your model most reminds me of is like a publisher, taking in all kinds of different products then selling them off through your channels (or business real estate agent)
Its interesting to me that you got to that, from just dropping your own product creation...
This is a pattern I've been seeing recently, where products are out there but the real trouble is getting it from point a to point b, and in some cases some quality assurance is needed in order to solidify the reputation and branding of that sales channel.

All that seems so intense to me, how did you guys handle it without unravelling at some point?
Anyways, awesome stuff, thanks for sharing

ps: after reading the whole thread, you remind me of my old mentor, the level of "ins and outs" awareness is just at a whole other level than competitors, giving YOU the edge. I wish I knew how to do that! I do understand your sales process and vetting proceedure though, you are so on point with that, its really only something I understood this past year how to do, and it totally changed my sales relationships into this super confident thing, and you obviously have that nailed down tight. How did you popularise your sales process, and develop such detailled awareness of the whole scene... Geez, mindblowing, I'm shaking my head in disbelief.

 

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[rudyofer]

@empireflippers, Sad to read your bad experience with my fellow Filipinos..

 

[amp0193]

Hope that helps?

Yeah, that was a great response, and brought to light several things I didn't know about you.

Thanks