š§ What I Learned Last Week
Week ending Friday December 17, 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.
Letās connect:Ā LinkedIn,Ā Twitter,Ā Facebook Group, Calendly
Hello Friends!
Things are slowing down. Iām seeing less interesting deal flow, less interesting content, less interesting Twitter threads. The holiday season is upon us.
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š° Articles
I want to give a shout-out to Jon Stoddard of Stack Acquisitions. Jon has an excellent podcast called Top M&A Entrepreneurs where he interviews participants in the M&A space. I recently sat down as a guest on his podcast which will be released soon. I really enjoyed Jonās interview style and high level of curiousity.
Every week, we talk to the "Top M&A Entrepreneurs" active today to ask them about their process, where and how they source their deals, Industries they work in, how they analyze deals, valuations, and pricing, negotiating the deal, due diligence, transition planning and closing.Ā Ā Ā
Our guests have acquired over 600 businesses and over $52 Billion in Value!Ā
We talk about their successes, failures, their acquisition model, their acquisition scorecard to evaluate potential acquisitions, finding the right type of seller, identifying the right type of characteristics in an acquisition, deals to avoid, the financial deal stack, buying a business with no money down or raising capital to financing the deal, what M&A means to their business, their results, how they do it and why they do it. Ā
Stack Acquisitions: Top M&A Entrepreneurs
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Opportunities.so writes about the topic of scale. A $10M annual revenue business inside Facebook is a failing product group but as a stand-alone business, itās a wild success. This was a great read.
The Idea
Here's a common pattern: a big company acquires a popular service only to shut it down shortly afterward.
Big companies place many small bets and naturally, most of them simply don't work out.
But only because it doesn't make sense for a big company to continue operating a service, doesn't mean there's no demand for it or some other fatal flaw.
A bet needs to succeed in a spectacular way to be considered a success for a companies with billions in yearly revenue.
A business that plateaus at, say, $200k yearly revenue certainly does not move the needle for Google or Amazon.
Similarly, many VC-funded startups get shut down simply because they did not grow fast enough.
Many of these businesses that get shut down could be healthy "lifestyle" businesses.
As the saying goes: one man's trash is another man's treasure.
Side note: if you ever wondered why so many startups within big companies fail, read this case study.
Framework: One man's trash is another man's treasure
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SaaS Mag published a guest post from the CPO of Calendly highlighting the 2022 predictions for the enterprise SaaS market.
By now, itās clear the pandemic has permanently altered the future of work. The technology required to meet todayās needs and tomorrowās challenges stretches beyond IT and touches every corner of an organization. Businesses are rethinking enterprise-class data, systems, budgets, and the SaaS solutions required to adapt and thrive in permanent hybrid and remote work environments.
As Chief Product Officer atĀ Calendly, I am both a witness to and an influencer of many of these changes firsthand. Companies are adopting our modern scheduling SaaS platform as part of a strategy to boost productivity and collaboration, enhance the employee experience, optimize the customer experience, and revamp their tech stacks. Weāve watched our 10M+ users adjust to the distributed, digital workforce over the past year. ThreeĀ particular themesĀ have surfaced as indicators for SaaS adoption in the enterprise in 2022.āÆĀ
2022 SaaS Predictions for the Enterprise from Calendly
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FE International has an article providing tips for scaling a SaaS business from founders who have done it.
Scaling your SaaS business (the right way) will enable you to handle an increase in sales in a way that is not only cost-effective but also sustainable. You want to ensure that every aspect of your business, from product development to your employees, will be able to withstand the changes when the time comes to scale. Ā
We have compiled advice from 7 SaaS founders who have successfully scaled their business. Their expertise will help you decide how to scale your business and the best time to do so. Ā
7 Founders and Their Best Advice for Scaling a SaaS Business
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This is finance-related but I really enjoyed reading this article by Joel Modestus on the overabundance of capital. Itās a long read with a lot of informative charts (Yes, I love picture menus too).
TL;DR
There is too much money in the system relative to the real economy
This capital superabundance has been turbocharged post pandemic
Ultra low interest rates for a decade and money pumping by central banks have inflated assets massively
Assets all around are inflated - equity prices, private company valuations, crypto, housing etc.
The music has to end sooner than later; Inflation in consumer prices will mean inevitable rise in interest rates which might pop the bubble
One hope is that in the bubble a lot of innovation and experimentation happens; This can probably push society forward in the longer run
We should still be wary of what will be the second order societal effects when the bubble pops
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Marketplace Pulse published their e-commerce 2021 year in review.
The Year in Review looks at the growth of e-commerce and global supply chain issues. Amazonās GMV growth versus Shopifyās attempts at a marketplace. The industry of Amazon aggregators and the impact of Amazon advertising. Social platformsā effect on shopping and the role of Amazon as the default search engine for e-commerce. The success and growth of third-party sellers, the brands those sellers are building, and the growing presence of sellers from China. Finally, Amazonās twenty marketplaces and the status of Walmart, Target, Etsy, eBay, and Wish marketplaces.
Marketplaces Year in Review 2021
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Spencer Haws of Niche Pursuits recently sat down with the co-founder of Mediavine to discuss the future of display ads. There are a lot of interesting (and worrying) takeaways for those in the content website space.
Changes are coming to how we monetize our sites with display ads...whether we like it or not.
By the end of 2023, Google will follow Safari and Firefox by banning third-party cookies.
No third-party cookies would result in a significant drop in income for almost all content creators who use display ads as a monetization method.
Eric Hochberger, co-founder of Mediavine, was just interviewed for the Niche Pursuits podcast! During the interview, he shares some worrying revenue numbers regarding an estimated revenue-loss test carried out by the guys at Mediavine and what they are doing to combat it.
āItās not all doom and gloom, but we need to be aware of the changesā is one of the stand-out statements during the interview.
THE FUTURE OF DISPLAYS ADS WITH ERIC HOCHBERGER, MEDIAVINE CO-FOUNDER
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Benedict Evans published his annual presentation exploring trends in the tech industry.
The most exciting themes in technology today are transformative visions for 2025 or 2030: crypto, web3, VR, metaverseā¦ and then everything else. Meanwhile, hundreds of start-ups take ideas from the last decade and deploy them over and over in one industry after another. And trying to keep up, the old economy faces waves of disruption from ideas we first talked about in the 1990s.
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Empire Flippers published a great guide on SaaS valuations back in September. I apologize if I highlighted it previously but I think itās worth another read for those who are looking to acquire or sell a SaaS business.
Software as a Service (SaaS) has taken the market by storm.
Entrepreneurs want to build them, buyers want to acquire them, and investors are looking to fund them. Despite all of this, though, there is still a lot of ambiguity when it comes to valuing a SaaS company for sale. When the penultimate moment comes for you to exit your SaaS business in return for a life-changing capital windfall, it can be an arduous task to figure out just what your valuation should be.
But if youāre reading this article, that means youāre up for the challenge.
Letās begin by looking at how SaaS valuations actually work.
How SaaS Valuations Work: Multiples, Metrics and MRR
Also, check out this piece from bloom equity partners that explores factors that impact SaaS valuations. Valuations 101
š§µ Twitter
Proprietary sourcing remains the best way to get valueā¦
Yes, that is pretty cool. Entrepreneurship for the winā¦
Exchange a depreciating asset for an appreciating oneā¦
DueDilio and I were featured in this morningās newsletter from Kernalā¦
A good FAQ on the laundromat businessā¦
š¤ Thoughts & Commentary
2022 Trends
A friend recently shared a Google folder with a collection of reports on 2022 trends. It includes reports from Accenture, Deloitte, Ogilvy, Gartner, Hubspot, PwC, and more. A lot of the focus is on consumer and online trends but there are also reports on cybersecurity and other topics. I havenāt had a chance to really dive into all the reports but I think youāll find them interesting.
Hereās the link to the shared Google folder: Trends 2022 Reports
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Alternative Data
YipitData recently announced that it raised $475M led by Carlyle Group and surpassed unicorn status. From 2013 to 2019 I was very heavily involved in the alternative data industry. I know all the players and products.
YipitData started life as a coupon aggregator in 2010 and rebranded around 2013 into an alternative data provider. They were never highly regarded in this industry until a few years ago. Itās incredible to see some of these startups go from glorified web scrapers to unicorns.
This industry was the wild west and Iāve seen everything from data manipulation, data theft, and other questionable business practices. Today, many of these firms are being acquired by big-name financial institutions, getting investment from prominent VCs, and more.
For me, itās a great lesson in perseverance. The phrase āfake it until you make itā comes to mind.
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Pre-Approved Financing
I recently came across Boopos. They provide flexible financing for buying or growing a business. On their website, you can find a list of businesses that theyāve already pre-approved for financing from various brokers. Itās an interesting and creative way of doing things. Instead of browsing broker websites, you go to a lenderās website where they already list all the businesses that you can get financed by them. Not saying that this is the most convenient way of doing things but itās a creative approach.
Along the same lines, I wonder if it would be interesting to have a listing aggregator that only shows listings that are already pre-approved for financing? Just a thought.
š Tools & Resources
These are tools & resources that I personally use or have used. They may contain affiliate links so Iāll get a few pesos if you sign-up.
Calendly - Leading scheduling platform to easily schedule meetings without the back and forth. Iāve been using it for several years now. Free 14-day trial.
ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount using code āduedilioā at checkout.
BizNexus - Proprietary deal flow, deal aggregator, and exit prep.
PrivSource - Deal aggregator for lower and middle-market listings.
Logology - Best automated logo & brand identity tool Iāve come across.
DeepBench - Access a cutting-edge expert network. $200 discount.
OpenPhone - The best business phone solution that I have found. $20 credit.
Eloquens - Knowledge marketplace. Iāve bought a few guides and templates here.
Deal Flow Scout - peer-to-peer deal flow exchange. Free, open, transparent.
Thatās all for this issue of What I Learned Last Week!
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Letās connect:Ā LinkedIn,Ā Twitter,Ā Facebook Group, Calendly
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.