🧐 What I Learned Last Week

Week ending Friday, Sept 3, 2021

What I Learned Last Week curates the most interesting content relating to business acquisitions, operations, entrepreneurship, finance, and more. WILLW is a publication of The Business Inquirer.

Let’s connect: LinkedIn, Twitter, Facebook Group, Calendly

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Hello Friends!

Welcome to the inaugural issue of What I Learned Last Week (WILLW).

For those who missed the announcement, this will be a weekly newsletter that is sent out on Friday or Saturday. It will be a curation of interesting articles, Twitter threads, conversations, and commentary. I’ll be playing around with the format so bear with me. This first issue is a bit longer than I envision simply because I have a lot of saved content.

If this additional newsletter isn’t your thing, just scroll down and hit unsubscribe. You’ll still receive the original The Business Inquirer.

As always - any and all feedback is very appreciated.

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What I Learned Last Week is brought to you by DueDilio. DueDilio is the first M&A due diligence marketplace connecting business buyers and investors with quality, verified due diligence experts.

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📰 Articles

SMEVentures writes about the 5 main reasons that search funds fail - Skeletons, Working Capital, Emotions, Time, Third Parties
The 5 serial killers of search fund deals — SMEVentures | Search Funds in Australia

Amazon’s crackdown on Chinese marketplace vendors using fake reviews has resulted in 50k accounts being removed and $15.4B of annual revenue wiped out.
Amazon Hits Chinese Sellers With Crackdown on Fake Reviews

A bit unrelated but I thought this was a good read. Lebanon’s underground cryptocurrency market is thriving. Meet the men making a fortune.
The crypto dons of Beirut

Orchid Black is a member of the DueDilio network and they just published an interesting white paper on leveraging proven models of growth. It outlines why growth is a pivotal stage in a company’s lifecycle, how to move from validation to scale, and how to leverage the PE growth model without actually working with PE.
White Paper: The Democratization of Growth

Crescat Capital is a very successful asset manager. Their latest blog post looks at US stock market valuations today compared to past bubbles. It’s a fascinating read that I would highly recommend.
August Research Letter: The Tech Bubble Then and Now

Common Thread Collective put out an awesome data-driven article on the best e-commerce holiday campaigns. It’s a must-read for anyone in ecommerce.
Data on 437 of the Best Ecommerce Holiday Campaigns: 10 Strategies & 1,897 Examples with Downloadable Screenshots

Data scientists at CB Insights built an algorithm to reduce the subjectivity inherent in assessing founding and management team quality. It allows investors to quickly identify the best startups. This one will be interesting to watch.
CB Insights algorithm scores quality of startups founding & management team

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🧵 Twitter

John will help you buy and operate a home service business…

John Wilson @WilsonCompanies

Want to own a home services company? @AizikZimerman and I are looking to back the next generation of entrepreneurs to build asset-heavy home services businesses (think septic, drains) How does it work?

Thanks, John but maybe owning a “sweaty startup” isn’t all champagne wishes & caviar dreams…

Royce Ard @royceard

So you want to own a house cleaning business. Here’s what our morning looked like today. Got in the office and had a solo cleaner call out due to a sick child. No problem- we can handle. Rearranged a team and was able to get her schedule cleaned. Next, we need to confirm that…

Learn from Nick Saban. Shift your thinking from outcome-based to process-based…

Michael Mauboussin @mjmauboussin

1/Nick Saban, coach of the Alabama football team, is asked: "How has your own approach to coaching changed over the years?" He replies: "I’ve actually become, through the years and through the experiences, a lot less outcome-oriented and a lot more process-oriented."

Premiering next week of Bravo - “The Real Business Flippers of Utah”

Andrew Gazdecki @agazdecki

Seeing some repeat buyers on @microacquire with a model similar to @Opendoor. All cash, easy due diligence, easy for the founder, and relists with a market up, documents processes, transfer plan, financing, and waits patiently for a new buyer. Like a certified preowned startup.

No matter the industry, business has more in common than we think…

Tom Birchard @birchard_tom

I really love business...I enjoy studying it, talking about it, and doing it. Despite all the complexity/nuance though, I've realized that most all businesses in whatever industry are more similar than different. A short thread on what I consider to be the universal Big 3 🧵👇

Do your due diligence…

Matthew Hinson @MatthewGHinson

Day one of on-site diligence:

Eventually, you get paid for who you know, not what you know…

Ahmed H @1ahmedh1

When I first started on Wall Street, one of my managers said something to me that has stuck for +20 yrs: When you start out, you are just being paid to learn, then after about 5 years you are paid for what you know. Somewhere in your 30's you start getting paid for who you know

Having SOPs adds value to your business. Not just for SMB…

Travis @RogueT__

For the SMB crowd - have you considered creating SOP's either before or right at the beginning of your acquisition? Here is a quick thread inspired by a convo with @SamtLeslie and @RegZeller --- 1/13

Important to tailor your communication to the audience…

Justin Vogt @J_M_Vogt

Know your audience! When meeting small business owners I talk more about growing up in a rural, midwestern town and helping my dad run a flooring warehouse than I do my time as an investor at Bain Capital

SBA loan without a personal guarantee? Thanks, I’ll take a dozen…

SMBAcquisitionAttorney @SMB_Attorney

SBA Loans & The Personal Guarantee Has anyone ever found a way around the SBA’s personal guarantee requirement, b/c I think I may have found a loophole that can shield certain assets .... A thread:

In the dark, the blind man is king. In a zero-interest rate world, the story is king…

Brent Beshore @BrentBeshore

"All valuations are a number from today multiplied by a story about tomorrow." That story includes not only predictions about the company, but also about the buyer's future preferences, opportunity costs, and holding period, along with stories about others' future valuation.

Morgan Housel @morganhousel

All valuations are a number from today multiplied by a story about tomorrow. When interest rates are zero the story part is way more influential and this is 100% true: https://t.co/vnNBJ3LcIt

DueDilio gets ~30% of requests from Twitter. I have fewer than 300 followers. Imagine the power of Twitter for those who have a large following…

Sieva Kozinsky @SievaKozinsky

I've said it once, I'll say it 100 times... Twitter is a magical place. 8-months ago I started to post. Since then I've: Connected with 100+ investors. Built real friendships. AND raised money for a $12M deal... My story, and what worked for me ⬇️👇

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🤔 Thoughts & Commentary

MicroAcquire for Mainstreet
Who’s creating the MicroAcquire of Mainstreet (offline) business? It feels to me like many (not all) of the same industry dynamics are at play.

• Few online destinations with terrible UX/UI, notifications, and a lot of junk listings to sift through

• Fragmented industry - tons of brokers

• Outdated marketing & content

• No standardized listings

MicroAcquire disrupted Flippa, Empire Flippers, and other online marketplaces and business brokers. Could a similar approach work for Mainstreet business? Can BizBuySell be innovated on?

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Due Diligence as a Business Expense
I was recently asked if someone can expense due diligence for a business acquisition. I’m not an accountant or CPA but I think the answer is yes. A buyer forms the LLC, funds it, LLC pays for due diligence, LLC buys the assets of the new business, due diligence is classified as a business expense. Is this kosher? I don’t see why it wouldn’t be.

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Building Chrome Extensions
I want to give a shout-out to a reader who recently started a newsletter called Chrome Extension Ideas. Each week he presents several ideas for launching a new Chrome extension. The ideas are not random. They are well researched and sourced from podcasts, conversations, and social media. Check out: Chrome Extension Ideas.

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Pet Rocks
I was in high school when the dot-com crash happened. I was an investment analyst when the 2008 crash happened. I don’t have a lot of first-hand experience with asset bubbles and dislocations. We’re seeing some wacky stuff. Last month an NFT of a digital rock sold for $1.3M (priced in ETH). Didn’t we go through the pet rock phase in 1975? History doesn’t always repeat but it always rhymes.

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Valuations
I’ve written about valuations many times. They’re going up. I think we haven’t seen anything yet. With the introduction of Fannie Ma…I mean…Founder Path plus tons of other “we’ll give you money to purchase a business“ offerings, the buyer pool will increase and valuations will skyrocket. This is just the beginning. Seeing tons of chatter on Twitter about “If your startup makes $4k, you can sell it for $800k. Let that sink in” type of posts. Not saying any of this is a bad thing but I have a strong feeling that we’ll look back at 4x-6x SaaS multiples and be amazed at how cheap things were going for.

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⚙ Tools & Resources

These are tools & resources that I personally use or have used. They may contain affiliate links so I’ll get a few pesos if you sign-up.

ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount.

PrivSource - Deal aggregator for lower and middle-market listings.

Logology - Best automated logo & brand identity tool I’ve come across.

DeepBench - Access a cutting-edge expert network. $200 discount.

OpenPhone - The best business phone solution that I have found. $20 credit.

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That’s all for this issue of What I Learned Last Week!

Please, please do share feedback. How’s the format? Are the Twitter threads too much? Any other thoughts?

• 👍 Interesting & relevant

• 😐 Eh - not sure.

• 👎 Not interesting or relevant

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Important Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, it has not been independently verified. The Business Inquirer makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. References to any companies, securities, listings, investments, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any business, tax, or investment decisions. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.