Flippa CEO Spills the Secret to 18,000 New Buyers and 40% Return Rate!

Summary

In this conversation, Jon Stoddard interviews Blake Hutchinson, CEO of Flippa, discussing the evolution of Flippa from its origins in a developer community to a leading marketplace for buying and selling online businesses. Blake shares insights on the company's growth, the importance of verification in transactions, the profiles of buyers, and the introduction of Flippa Invest, a new platform for investors. The discussion highlights the changing landscape of online business acquisitions and the role of community engagement in shaping Flippa's future.

Takeaways

Flippa originated from a developer community and has grown significantly.
The company has shifted towards a more professional sales and marketing approach.
Verification of listings has increased buyer confidence and repeat purchases.
There are three main buyer personas: entrepreneurs, side hustlers, and institutional investors.
Buyers prefer acquiring established businesses over starting from scratch.
Flippa uses a proprietary valuation tool to guide pricing.
Cash buyers dominate the marketplace, with seller financing options available.
Flippa Invest allows accredited investors to take equity positions in online businesses.
Community engagement is crucial for understanding buyer needs and improving services.
Flippa aims to democratize business ownership and exits for a wider audience.

 Watch the Interview:

Transcript:

Jon Stoddard (00:00.172)
Welcome to the top &A entrepreneurs today. have Blake Hutchinson is the CEO of Flippa. Flippa has sold over a billion dollars. That's top line numbers of websites, SaaS, e-commerce, startups, domains, et cetera. Welcome Blake. Thank you, John. Good to be here. Appreciate the time. So let's rewind a little bit and go back when you started this, why you started it.

how traction was taken off, then we'll start talking about some new stuff. Yeah, absolutely. Sounds good to me. So yeah, I mean, the beginning of Flipper is before my time on the CEO. been with the business for four years. Flipper is a really interesting story, actually. It started out of a developer community, which might surprise most people. So around 13 years ago, there was a bunch of developers, tens of thousands of developers engaging with each other on a business called Site.

or a website called SitePoint. I'm into that because 99designs. Exactly. Yeah. There you go. So SitePoint had a developer community and those developers were learning, but they were also engaging with each other. And two businesses were spun out of that. John, you just mentioned one of them, 99designs. And here I am representing the other one, which was Flippa. So that's a pretty cool story of two marketplaces deriving or originating from a community, which...

You know, most people sort of have written books about how you start marketplaces, right? You've got the cold start problem. And in this particular case, you know, we're benefited from a community which has been there for some time. So that's what Flipper harnesses to this day, as well as a very fast growing community around our core business. And four years ago, the founders tapped me on the shoulder and said, hey, we've got a big vision for this thing. We're doing really well, but we're being bootstrapped, we're being profitable.

We haven't necessarily orientated to a very growth centric approach. Do you want to come in and reshape and go again? So I had started a few businesses in my time, one of which I had attempted to, unsuccessfully, I should admit, John, sell on Flippa. So when they explained the business to me, initially under confidential terms, I knew what they were talking about. So that's the story.

Jon Stoddard (02:26.574)
How was it doing when you took over? mean, what kind of revenue are you allowed to say and was it profitable? Yeah, so we're doing probably subnet. So now we're doing about milnet. So that gives you some sense of the... Yeah, you've accessed it in four years. Not bad, Yeah.

Not bad, still small, but with substantial ambition around it. So I'd say we're going well. mean, we're growing well. The community's coming in fast and we think that we'll likely double this financial year. So what did you do when you came in and say, hey, it needs to be more professional or we need to do this or drive more traffic to it? What did you do? I think the big thing is

Yeah, I think the big thing is that Flipper has been a tech company. And so we've added a sales and marketing lens to the way we operate, which means huge amounts of customer centricity, understanding what our customers want, building products around what the customers want, and then adding the people side to our business. So we never really had any sales and marketing workforce. And we've added now a bunch of advisors. So helping our business owners every step of the way, both buy side and sell side. We've added a bunch of services, due diligence.

finance, data around various platforms that we plug into the ecosystem so that buyers can assess the quality of an asset and make informed decisions. We've got legal. Now that you can get templates, you can use our embedded letter of intent functionality. You can actually contract with a lawyer who's an expert in this space. This has all happened in the last 12 months. So from here, you go from what is a marketplace to a market network.

Yeah. Is there a score that you had on, let's say if I buy, you know, three years ago, I bought the business and I say, well, I'm not really sure about these five elements of the business, but now you secure them somehow in the last three years. Yeah. So I think there's a few things there. So one, you know, when, somebody lists now it's, it's verified, right? So we have a team, that, both

Jon Stoddard (04:48.143)
experts in the operational nature of a business as well as the financial financial nature of a business. And they are they are verifying the financial and operational performance. And that is a human side of our business that we haven't historically had. so when you say verify, meaning most of these businesses are small, you know, one man operations and it goes PayPal or Shopify right to the bank account. So you go in and verify those deposits or.

Yeah, so we do two things. One, if they are connected to one of our data sources, and I should say that by the time we're on air, John, we will have launched another nine integration sources. So today we have QuickBooks Online, we have WooCommerce, we have Stripe, we have Shopify, and a multitude of others. Very shortly, in fact, live by the time your listeners tune in, no doubt, we will have Xero, we will have BigCommerce, we will have PayPal, we will have eBay, we will have Amazon.

So that's what we call verification at the source where we're pulling down the data, not only for the buyers, by the way, I should say it's also to make the listing process easier for the sellers.

So, but for the buyers, can then tap into that data to assess the performance. But I should say that regardless of that happening programmatically, we then have a team, it's a team of nine, and that team of nine is responsible for verifying that data above and beyond what the actual data platforms provide to us. Is that something you charge them more percentage of?

Off the top or just, just, it's just part of the improvement. I would say of the, platform's veracity. Yeah. So is this like, I know that the Intuit has an SDK that in an API that you connect to. So you would just, you've got the code that connects to their API and that downloads all their QuickBooks online entries.

Jon Stoddard (06:47.022)
Correct, it's the end user obviously under an opt-in permission basis, they OAuth into their QuickBooks online account as much as zero, as much as any other service that we connected. And we then tell the user what we're gonna pull down. So in this particular case, we'll pull down balance sheet, we'll pull down profit and loss statement. We'll then rationalize that, present it back to the seller and they just hit authorize.

And the reason we sent it back to the seller is in the event that there's certain confidential information that they would not want to display within that. And then we take that and we display that to buyers. Yeah. And is that automatically or do you actually have a human in that process? I don't know. That's programmatically. The seller does that on an opt-in basis and we pull it down. What's it done for your sales to have a more verified purchase or more confidence that

the purchase that buyers making is true and in fact, you know, accurate. So I think it's done two things. The first thing is that we have a fantastic repeat rate. So 40 % of our buyers repeat. Yeah. And that's a really important thing, right? Because we're talking about small business &A. Yeah. So you would imagine that the average by... 40%. You said 40 % of your buyers are...

return. How many buyers do you have? Well, we have hundreds of thousands of buyers for those that are active in any given year. We do about 12,000 active buyers 12,000. Yeah, that's a lot. Yeah. Now, that says a few things. One, it says that they're happy with the purchase they might write. It also likely means that whatever they've acquired has actually experienced growth. Now that's not guaranteed. But

It's likely to have experienced growth. So otherwise, why would you double down to that? Right. Now, is that a result of the data or is it a result of the quality of the asset? It's actually a result of the quality assets, just the data gave them the confidence to make that make that step. Let me get a profile of these buyers. I think I actually bought something on your site many, many years ago. You have to check that. But.

Jon Stoddard (09:04.494)
Who is, who comes in and buys a $5,000 or $1,000 domain or, you know, small business, online business? Yeah. So there's three personas that we sort of talk about internally. And then when we're speaking to these individuals, you know, we orientate our discussion and our services in that way. So you've essentially got the entrepreneur and that entrepreneur is buying their next job.

Right. want income. That's buying their next job, not something they're going to turn over. It's just that they know this. Yeah. Buying the next job. So I want to be an e-commerce operator. I'm going to spend X call it 10,000 call it a hundred thousand call it 250,000, whatever it is. They're buying it because they want the income derived from that asset. Yeah. The second buyer is your side hustler and they are not, leaving their current day work. They work.

Nine to five, no doubt more than that for many. And they are then buying to supplement their income. Okay. And the third buyer is institutional. So they're a private company. And this is our core business today, actually. They're a private company. They're a private equity. They're a fund. They're a search fund. They are there to acquire against a portfolio strategy. Yeah. And there are search funds out there looking for businesses on Flippa? yeah.

Yeah. I know that I interviewed Michael Barislawski. Is he one of your main customers? Yeah. Michael's great. He's been with Flipper for a very long time and he buys content sites and does a very good job at it. Yeah. I love his pragmatic or view of just, look, we're only doing four things. We're going to do these four things. And as soon as we're done with those, we sell them. He stays with that role right there. Yeah.

You know, he's he's professionalized this this industry as much as anyone. Yeah. And he's on his third fund or fourth fund. I don't know. I haven't talked to him in six months. So he's doing really well. I mean, he's very, very smart guy. Yeah. What what have you started to see? got 40 percent return buyers. And it's like that's anybody that's purchased over to. Right. Yes, that's correct. Yeah. And are there people that

Jon Stoddard (11:31.406)
purchased over 10? Yeah, absolutely. I mean, there's plenty of stories around this. There's a guy out of Toronto and COVID is an excuse for many people, but in his particular case, he had essentially retired, but he was meant to go traveling, couldn't, down, started acquiring content sites, had no expertise in digital at all, and he's acquired nine sites in the last 18 months. Now he's received, he's re-

He's returned 200 % on his invested dollar and he spent about $250,000. Yeah. I got a question about this. Like, why don't they just go start it themselves? Are they, is this the idea? It's already started and go, no, you know what? I'm not a startup guy, but I could definitely take it from not zero to one, but one to one and a half or one to two. So there's a couple of.

Answers to that. mean, I'll give you a little bit of a narrative. People with some level of capital can essentially fast track their way to bigger businesses and greater earnings. And so the startup process of going from zero to one is actually quite complex. And for those people who don't have a digital skill set,

IE, building the tech, not necessarily required these days, obviously, because there's great platforms out there and now we use the start, writing the content, which engages an audience, working the Google machine, plugging into revenue channels, all of that's actually quite complex. And not only that, it's time consuming. If I've got the capital at my disposal to get an asset, which is three to five years old, which is generating

call it anything from a 10 to 50 % gross profit margin, that's hard for me to achieve doing it myself. And so for somebody who has the means, you're essentially fast tracking your way to that critical optimization stage where the green shoots of the business are there for all to see. You can assess its seasonality. You can therefore get some predictability about it.

Jon Stoddard (13:59.936)
You understand it's called customer base. Therefore, you can continue to engage with that existing customer base. You can see problems with it. Therefore, you can plan to execute and improve against those problems. So there's a multitude of reasons. Most of it's because they're investors. That's what they do. They deploy capital and they get a return on it. And these sellers, what's the kind of profile of them where they just...

You know, they got it. Hey, I got this great idea. I got this great domain and I've got a little bit of sales, a thousand a month or whatever it is. And then they sell. Are these the zero to one people? Yeah. I mean, so most of our total transaction value is actually derived from a thousand dollar plus assets. Now, if you reverse engineer a hundred thousand dollar plus asset.

and you're talking about anything from sort of two to four times net profit multiple, you're actually talking about businesses that are doing between 25 to $50,000 net profit. Okay. So for an asset doing 25 to $50,000 profit, it's most likely that it's actually beyond that first year anniversary mark, right? They didn't just start it to flip it. Good brand name.

But in reality, the average person has sat on this asset and nurtured this asset. In fact, they've been passionate about this asset for an extended period of time. So the average asset sold on Flipper is actually four and a half years old. geez. Yeah. Let me ask you about this. If I just share my screen just a real quick. Here's like this top one here. Three hundred sixty thousand dollars, nine year old site that would

fall into right what you were saying, 9,000 a month profit. Now, who assigned it to the multiple? Are you just going by industry, current trends? Who put that together? There's a couple of things playing out here. One, we have a proprietary valuation product.

Jon Stoddard (16:19.63)
And that informs not only the valuation when you go and get one, you can see the valuation tool on your top right there, as well as it informs pricing guidance when the person goes to onboard with the Flipper platform. So onboarding with the Flipper platform is analogous to building a listing for your apartment on Airbnb, right? It's a 10 to 12 step process. And we're helping you every step of the way based on our

historical understanding of assets in your category, of your business model, in your location, and of your financial performance. And accordingly, we give you a range, a low, middle, and high range from where you can price your asset.

Yeah. mean, they're reasonable. They're rational. It's not like I come here and go, that's a five or 10 X. That's a really important piece of our learning over the last couple of years. There's no point having great assets on your platform if they're all overpriced and unrealistic. Yeah. I've seen that on some other sites. How does somebody buy this? Do they buy a hundred percent cash credit, you know, put it on their credit card or they have some kind of funding?

mechanisms. mean, so we have various means to get capital. The reality is cash buyers always outpace someone who needs finance. So that's unfortunate thing for all the people out there who look at this space and say, wouldn't it be great to quickly go and do this and get some capital to do it? And there are ways and means and there's every YouTube channel out there that's talking about the idea that you can get capital fast through SBA loans, etc. Yeah, it's not that fast. It's 90 days.

Now, we love that we love the innovation in this space, but the reality is cash rich buyers outpace anyone else. And so the vast majority of people who will buy that asset will buy it on a mostly cash term basis. Now, sometimes you see seller financing. So in that particular context, I think you said it was $360,000. Maybe I'm putting down 250 and the remaining 110 I'm paying over

Jon Stoddard (18:35.758)
12 months using seller finance terms. So that can play out. Occasionally you'll have earn outs for bigger deals. know, last week there was a six and a half million dollar sale on the platform and clearly that was done on the basis of part cash, part earn out. So it kind of does depend on the actual size of the deal and the nature of the buyer. But generally speaking, it's the cash buyers.

And you are not involved in the negotiations there. I reach out to this super seller and I start saying, I love your site, but I'll give you, 300,000 now 60,000 over a couple, you know, 12 months. We are actually involved. So in that particular case, if you, well, it take some time, but the, particular asset is actually run by a broker called Joe Borrell.

And Joe Borrell is a broker, third party. So he's not related to the flipper entity, but he's a third party broker that operates on the flipper platform. You can see him on the right-hand side there. so Joe represents this, the owner of that business. And he uses our platform to conduct that sale. Now, if you look at the number of views there on the top right, you can see that it's been viewed by nearly 31,000 people.

Yeah, that's worth spending a little bit more money to get in that sponsored, huh? Yeah, so he he's very good at this, Joe, and he moves almost all of his assets and for Ask All More. So that's that's Joe. Now, where it's not represented by Joe and where it is valued in excess of one hundred thousand dollars and all the way up to, I should say, you know, forty five million dollars.

we have advisors in-house who are assisting sellers end to end. You've got sites on here for $45 million sales? Yep, 45, yes. Why would they go to flip a versus hire an investment banker? That's a great question. One, access to a global buyer base looking for digital first assets. And so, that's unique. You go and hire.

Jon Stoddard (20:49.484)
And we've spoken to many of them, we're partnered with many of them. They use our platform and we like them a lot. If you use an &A advisor, most of them have less experience with digital based &A still today. And most of them don't have the network of buyers. I just to be clear. would say why wouldn't an investment banker not just copy what Joe Burrell just did? Exactly. That's the point, right? And so last month,

I'll bring it up on my screen, but we had 18 and half thousand new buyers join. 18 and a half thousand new buyers came on your site. What happened? What dropped? Like what came to your site? Well, it's actually most months. So most months we will see, I'm going to load up our data lake right now just to give you the accurate numbers here. So it's not that something happened last month necessarily. It's just that each month there is a

great natural replenishment of our buyer pool. And so what that means is we're able to drive to your question before about, you know, why would Joe, in fact, let me just, I'll be, I'll share my screen here if you- Yeah, yeah, yeah. Let me give you, multiple participants can share a screen. There you go. All right, so it's a very quick sneak peek here, right? So you can see we're obviously in the current month of October, so it's 1,400 new buyers that have joined, right? But you can see here,

point to 18,257 buyers joined last month, 18,3179, 13,1127, et cetera, right? So these are new registered buyers with credit profiles on our platform, okay? And so then we pick up a bunch of stuff. All right, so where's the gaps? Where are you not meeting some needs? Sometimes you discover these needs, you just ask and you go, all right, what are we looking for? Like a partial sales, investment, what?

Yeah, it's a good question, right? So for the last 12 months, we've been asking our very, very large valuation pool. So each month people come in and value assets from all over the world as much as those buyers that we just looked at. So for the 18,000 buyers that joined, we asked them a bunch of questions about their mandate, their wants, their needs, desires. And what we were able to discover is that many people actually want to raise capital, not just sell.

Jon Stoddard (23:15.862)
And many people want to invest capital, not just acquire. And so accordingly, Flipper has launched Flipper Invest. And so Flipper Invest enables people like you or I, as long as we're accredited, I should say, that is a very, very important statement. As long as we are accredited, it gives us the ability to invest in a thriving online business and take an equity position in that asset without having to operate it.

What's the mechanism behind that? mean, are you a broker dealer or what's? So under regulation 506 C, which enables us to solicit so long as the individual is accredited, we do not take a management fee and we facilitate the creation of a special purpose vehicle using a company called a sure code and a sure code is the manager of the fund governing the special purpose vehicle.

The special purpose vehicle then takes equity holders like you or I, and that special purpose vehicle then converts into a equity holder of the online business. Yeah. So when does this become available? And I suspect you'll have a different category where you're just seeking investments. Yeah, that's exactly right. So when you come to Flipper, you will be able to say, we will ask you categorically, are you there to sell or are you there to raise?

And accordingly on our marketplace, you will see buy and sell, right? And you will see raise and invest. And of course the buy side will be organized separately as much as the sell side will be organized separately. In short, you'll go to the marketplace, you'll hit search just as you did before, and you'll see a secondary tab, which says investment opportunities. And that search filtering will play out just as it does today, but in the context of investing versus acquiring. Yeah.

And I suspect let's go back to that one I showed you is $360,000, 3.2. They're going to still sell a percentage at the same multiples.

Jon Stoddard (25:21.322)
Yeah, I mean, think when you that's a great question, actually, Ron, I think the way it will most likely play out is, you know, when you're raising, you're actually raising for the opportunity, as you and I both know. And when you're selling, you're actually selling on the prior the historical performance mostly. Right. So I think that what you'll find is, while the multiples will be similar, it will tend to be that your

probably investing on a multiple of forward-looking 12, I would suspect, right? So what that might be is something along the lines of, I'm doing a million dollars top line today. I'm not gonna let you come in on a million dollar valuation. I'm forecasting based on my growth rates, they'll be doing two million by next year. So my post-money valuation is two mil. I'd like to raise $200,000.

And so therefore I'm giving away 10 % equity in my company.

How, now how are you making money from this? You know, like if a start engine will charge you like 7 % with reggae's or 506 C's. How do you guys make money? Initially we don't, we make our money in the future on the carry. okay. That's 2%. We take a 10 % carry, most likely 20 % carry. we're a cheap. Excuse me, that was the admin fee. Usually it's two and 20. Yeah.

Right, yeah, two and 20, right? In our case, basically, the investors will pay for on a pro rider basis, they'll pay for the special purpose vehicle setup. So that will come out of the proceeds. And then what Flipper will do is take a carry. So we take the difference between the amount raised and the amount on exit. Yeah. So that's going to be held at some point in the future. huh. Yep.

Jon Stoddard (27:22.414)
What we're banking on is that we can bring to the table thriving online businesses of which they can tap into a network of accredited investors of which we have tens of thousands operating on a platform. By the way, there's something like 13 million accredited investors in the US. So it's not exactly a small addressable market. but it's, it's, everybody's trying to get their attention going, Hey, I have this better investment, right? But most people on our platform,

are already on our platform and of that ilk. So we've got a market we can tap into. How are you deciding who goes on there? And I used to do this for companies in raising capital. You worked on reggae and 506 season, finding somebody that is to the point where, gosh, I need more money because if I put a dollar in, I get $5 out versus somebody that said, you know, I'm still working the kinks out.

I'm growing, but I'm not a hundred percent sure what the levers are. Yeah. That's a great question, right? So, you know, the good, the good news here is that we will use our data integrations to tap into the operational financial data. So we'll pull down that, we'll be able to make an assessment on that as well. The, the prospective investor as to who can go on the platform. They first and foremost, they're digital. So they're operating on Shopify, Amazon, WordPress, work on that, et cetera, et cetera, et cetera.

Secondly, generally speaking will there are some anomalies here and I should admit that but generally speaking, they are already cashflow positive. And generally speaking, they are mature in nature, right? So they're two to five years on average in age. And generally speaking, they will be deriving greater than $500,000 in top line revenue today.

And is that an equity investment or could it be participating pervert like bridge loan or something? Initially, it'll be either a common stock. So standard straight equity investment will not be preferred and or it could be safe. So convertible note. Yeah. Is that converting say, my God, I changed my mind. Can I put a putter call action to pull it back out or is it going to be locked up for?

Jon Stoddard (29:48.108)
Yeah, that's a really great question. So once it's committed capital, I am in that fund for the life of the asset until there is a liquidity event or liquidity or exit. Right. Yeah. Now, that's today. As for tomorrow, you can hypothesize what we might be working on, but that's for today. Gotcha. And when you're releasing this, when?

By the time we're live, John. That's good. I mean, that's a great idea. Yeah. So look, it comes down to when you've got that many buyers registering each month and we're seeing around three and a half thousand assets a month as well. And so we have this valuation data. And so for the last 24 months, those valuations have been coming in and we know that only a small percentage of those business owners utilize our platform to sell.

because many of them are currently in a growth mindset. And so if we can't tap into our core customer base and offer them the services they need, then we've got to innovate beyond the current platform. And that's what we've done. Yeah. Well, I think it had put you an advantage over the start engines and the other equity, because a lot of those companies haven't worked out their business model and they're unprofitable. And a lot of the stuff you have on your side are net profit.

You know, 9,434 a month for shift preparedness or shift dad. That's cool. Yeah. Yeah. I mean, we, you know, we see, we see apps, we see sass, we see content back by advertising and we see, Econ and you know, we know that the marketplace for buying and selling online businesses is, is fantastic. It's thriving. It's doing extraordinary really well. But the reality is there are far more people out there who are good at investing.

and less good at operating. So why not let those people get access while helping business owners all over the world, grow their businesses above and beyond what they have today. And so, yes, we have the business model, but we have the tappable market. Yeah. What are you looking for as far as does each seller or whoever posts their, you know, looking for an investment, it post their minimum? Like I'm looking for $5,000.

Jon Stoddard (32:14.03)
10,000 or 100,000? Yeah, so it's not crowdfunding, which means we've raised the minimum. So the minimum is actually 25,000 for the investors only. then valuation as well as parcels, as well as max capital for deployment is up to the business owner. And so we've got for the initial tranche,

You've got businesses raising as small as $250,000 with a minimum parcel size of 25K. And you've got businesses raising up to 10 mil with a minimum parcel size of 250K. Now that's clearly appealing to a different buyer within our ecosystem. that's, you've already incubated some of this. Yeah. And that business is specifically looking for private equity and family office investment of which Flipper has many. So

The good news about flipper is regardless of your size of business, you will tend to be able to find a buyer such as the nature of our buying pool. Yeah. So you're catching them at all different exits, you know, whether it's a partial exit, full exit. Yeah. Yep. So partial exit, full exit. So today full exit, but somewhere live partial exit. And the good thing is right, flippers, flippers are

a marketplace with advisory. So we tap into the expertise we have over 13 years of seeing businesses bought and sold. We bring in the people who are capable and have the history and the acumen to do that job while utilizing the incredible tech platform and the backbone that we have at our disposal to match. And that matching algorithm is what powers the marketplace that buys and sells as well as the marketplace that raises and invests.

And all we're really doing is tapping into the existing tech, the existing expertise to bring more people together. Yeah. Was your intention to move the price point up and get more quality sales into that when you first came in? Yes. So certainly to move the price point up. Quality is an interesting term. Yeah, it's subjective.

Jon Stoddard (34:35.854)
Yeah, so there are, I will say credit by credit's due, there are some very small assets which are high quality. And so the strategy, yes, is to continue to move up the value chain and ensure that Flipper is like any other great marketplace, which is that it's price agnostic. It's got opportunities for all. We are democratizing the exit. We are the investment bank for the 99%. We're making

exits available and business ownership accessible for everyone. And that's our mission.

Let me ask you about the, SAS apps. mean, what, categories kind of surprising you with the growth and the, you know, the turnover you got SAS marketplaces, content, e-commerce domains, apps, websites, and services. Now, because every SAS business, every Ecom, any asset out there right now is looking to acquire eyeballs and do that.

efficiently and economically. Content businesses are the fastest moving assets on the Flipper platform. And so e-commerce business owners will buy a content asset to amass eyeballs and use it as an acquisition. Very fast, tuck in. SaaS will do the same and publishers will also be buying content businesses because they already sit on an advertising sales workforce and they can utilize that to...

derive additional monies for their clients. So short answer is a content business backed by an advertising revenue stream is your fastest moving asset. Yeah. Do you sell any groups like Facebook groups? I know that's a way to get eyeballs. Yeah. So yes, it's not a big area of our business right now. I can imagine it will be in the past. So we've sold YouTube channels. We've sold podcasts.

Jon Stoddard (36:41.09)
We've sold Facebook groups, but it's not, I wouldn't say it's core right now, but I can imagine it would be. And Flipper's entire premise is that you can sell anything that is revenue generating that is a digital asset.

Do you have, I got to go back to your partial invest, Flippa invest. Do you have expectations about what that'll do for you in the next one, two, three years? Like a number? Yeah. It's a great question. The short answer is we're extraordinarily patient with Flippa invest. Yeah. Obviously we're taking a carry and we're not taking cash upfront. Right, right, right. That's patient with it, right? So you're looking at.

a two to five year horizon. how are you that carry? Are you so these even if they take this investment, say this dad's for three hundred sixty thousand dollars takes a partial investment and are you requiring them to sell at some term? You can't require somebody to sell on the flipper platform. We would only ever allow people on the platform who had expressed and.

stated that they were motivated to exit at some point in time in the future. It's a little bit like venture capital investment, right? So, know, Flipper takes on venture capitalists, therefore we have capital at our disposal, we use that to grow. Are we motivated to exit our business as is required by our venture capital investors? Right. Yes. They only make money if they exit. Exactly. So you're talking about motivated sellers.

in this particular case, motivated capital raises as much as you are motivated investors. And the two parties can come together to discuss those motivations. We have the flipper deal room where they can engage and fill each other out in that way. Much like raising capital from anyone, it's somewhat of a marriage. So we are in a unique position where we can match up not only capital, but skill set. So for instance, we could actually say to someone raising capital, would you like to

Jon Stoddard (38:56.714)
see all of the investors in our universe who have some level of capability with free PL warehousing or SEO or buying or merchandising, whatever it might be, right? So capital and skillset match with a motivated business owner should get the job done. But no, we will not mandate that you have to use the Flippa platform, but we will actively encourage you.

And the good news is, Ron, that by way of these integrations, we get to watch the asset perform. So the asset will stay connected to Flippa. And accordingly, we will get to see how the asset's performing month on month and play an active role in helping the investor understand how their portfolio is performing. Let me ask you about some of these specific categories of assets you sell. Many years ago, I sold my

e-commerce site on Empire Flippers, but they were not, know, they were all over the board. They were doing e-commerce and fulfillment by Amazon. Now they're really focused on FBA. Does that, has that affected your business when somebody starts niching in a category? I mean, it doesn't look like it. You got 18,000, a growth of 18,000 buyers now, but just curious. Or is it just the universe?

is freaking growing with people that want to buy sites. Yeah. I mean, so the universe is growing plus, you know, most brokers will tend to use Flipper to move their assets anyway, such as the power of the marketplace. Right. So what I would say is that the, there's a few things going on, right? There's the macro economic trends here. There are more people creating online businesses and digital businesses by way of the power of the platform economy.

every month, every year. And let's face it, before I commented to you that the average age of the asset sold on Flippa was four and a half years old. So for this massive growth spurt that we've seen over the last two years, nobody has seen that group of assets find their way into the buy and sell marketplace ecosystem yet. So there is a growing ecosystem, that's macro. And then, you know, internally for Flippa, we've built

Jon Stoddard (41:21.13)
now over a long period of time, an understanding that not only are we a very low cost place to exit, but we are able to do that quickly and efficiently for you by nature of not only the tool set, but the people and then of course the scale of buying pool. Yeah, that's amazing. I mean, I think you're doing a

Fantastic job. Obviously, you know, five X in four years and now off to new projects. Yeah. I mean, we, we've got extraordinarily big ambitions for Flippa. and we're extraordinarily thankful for, you know, what a very, very passionate community. And when, when you figure out, that 40 % of your buying pool is actually

coming back to the platform and repeating, you spend your time understanding what they want, right? That's a really, really great position. I think that's just like Jeff Bezos sitting there going, you know, we've got a lot of people coming to us. What do you think we can do? How about creating Amazon Web Services and now becoming the most profitable services business, know, far surpassing the book sales. Yeah, I mean, one of the, it's simple things though for anyone listening out there.

It's really simple things. One of the things we started to do only about a year ago was we host meetups all over the world now. Right. And this is not this is not. You got that. Where are you? Where do you. is that just with buyers or you have to be a member or what? Yeah, both buyers and sellers. So we we were in Berlin and Frankfurt last week. We're in Islamabad, Islamabad in Pakistan the week before that. Next week, we're in Las Vegas. We've been in New York. We've been in L.A.

Austin, Texas, Melbourne, Sydney, Brisbane, and we just keep on hosting these. And they're an extraordinarily rich community of people who are building great businesses and are so passionate. And we obviously let them have their time in the sun and talk about the great things they're doing. But from time to time, we'll say, well, what do think we should be doing? Or what would you like to see from us? And it's become this fantastic feedback loop. Yeah.

Jon Stoddard (43:36.974)
How did you decide to go to the Flippa Invest versus, well, how do we help other people raise the capital to go buy more businesses to stimulate more sales? why did we decide to go and Flippa Invest versus, I guess, provide capital? that- Yeah, I mean, could lend it out for, you know, like the group that out of Canada started lending to e-commerce companies. Yeah, I think that the best answer to that question is,

that we are a marketplace and we've always seen ourselves as two-sided and therefore we operate as the nucleus sitting in between and so we can be a conduit to that match and so there are lots of fantastic businesses where you can go and get growth capital but it's debt and debt instruments are good for some people but ultimately it's debt for a reason. You've got to repay it and there are penalties if you don't.

And we feel like given the sophistication of our ecosystem, there is a bunch of people who will actively invest and help you thrive. And that is a good proposition for them as much as it is for the business owner. And so you get access to capital at no cost. Of course, you carry someone or multiple individuals on your cap table. And therefore, there is a

a motivation and a needed intent to sell. But we felt like giving capital was working against the nature of our marketplace dynamics. Yeah, gotcha. Blake, I want to thank you so much for being on my show, Top &A Entrepreneurs. We are five minutes up on the hour. So I really greatly appreciate you being here.

Thank you so much, Ron. I appreciate the interview.