The Business Inquirer #018
In this week's issue I highlight two SaaS listings, an affiliate site, and what I learned last week.
Every week I highlight interesting online businesses which are for sale adding my own commentary. This newsletter is for those who are interested in business, finance, and entrepreneurship. Subscribe below to receive it directly in your inbox.
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In this week’s issue:
SaaS - Text Based Customer Support
SaaS - Plagiarism Detection
Affiliate - Automotive Niche
What I Learned Last Week
SaaS - Text Based Customer Support (Asking: $10k)
Description
For sale is a micro-SaaS which helps deliver customer support over text message via Slack.
Details
Founded Feb 2020
Competitors: OpenPhone, Avochato, HeyMarket
Priced at $27/mo
TTM: Revenue $1,649; Profit: $1,565; Margin: 95%
Asking: $10,000
Profit Multiple: 6.39x
🤓 Why I’m Highlighting This Business
I use OpenPhone as my business phone number and to communicate with (smaller) clients over text. I think this type of support is more personal than e-mail and is just as easy to provide. Clients love it and I think this type of service will only grow. This micro-SaaS could be well positioned to take advantage of this trend and there are many avenues to grow this. Valuation is rich but I’d consider this a “starter” SaaS so valuation is less important at these low revenue levels. More important to focus on product quality and market fit.
✅ What I Like:
Follows growing trend of providing multi-channel support - over text/SMS
Some market validation with clients willing to pay
Tech stack is simple with React, Firebase, MongoDB, Node
Healthy margin
❌ What I Don’t Like:
Requires to build out the sales & marketing plans and functions
Additional features may be required to accelerate growth or to niche down
Have to think about the pricing. I pay $10/m for OpenPhone. Does the pricing here make sense at $27/mo? Listing says that it can be increased. Have to research this.
🚀 How I Would Grow This:
Look at reviews for all the competitors and isolate the negatives. See if those can be addressed with this product
Perhaps it makes sense to niche down and make this industry specific.
Could this be integrated with another platform like Shopify?
You can view the listing on MicroAcquire.
SaaS - Plagiarism Detection (Asking: $706k)
Description
For sale is a 4-year old plagiarism detection SaaS. The main target markets are in the education space with some users from content and SEO industries. Very detailed listing.
Details
2 technical founders
Main offering priced at $9.99/m
MRR: $83,057; Profit: 63,057; Margin: 74%
Customer Lifetime Value: $61
15% customer churn
No marketing spend or CAC costs - all organic
Asking: $706,000 (reserve not met)
🤓 Why I’m Highlighting This Business
I like that this is primarily an ed-tech company but has clients in other verticals as well. Mushfiq Sarker recently discussed buying media liability insurance for niche websites. Running website content through this type of SaaS to make sure it doesn’t infringe on any copyright would be extremely helpful.
This listing would certainly require a good team of operators to grow and take it to the next level. You’d need a few tech folks and some strong marketing talent. Meaning, this isn’t for a beginner.
Interesting to see the seasonality in demand but overall I see lower highs…
Looks like CPC is in the $4-$5 range with not a lot of competition…
✅ What I Like:
Competitors are large VC backed companies
Existing growth has been organic
High CLV
3.6m e-mail list
Multiple uses for the software
❌ What I Don’t Like:
Grammarly is tough competition
Growth rate is steadily slowing
No proven marketing blueprint as all existing growth has been organic
Valuation isn’t cheap
Compliance liability that’s being addressed - per the listing
🚀 How I Would Grow This:
Create enterprise plans for universities and school systems
Examine the benefit of targeting outside of the education system
Develop and test a marketing strategy to have a reasonable CAC
Raise pricing if appropriate
How to make this attractive for a large competitor to acquire?
You can view the listing on Flippa.
Affiliate - Automotive Niche (Asking: $41.8k)
Description
For sale is an affiliate website in the automotive niche founded in July 2019. WordPress website contains reviews of products and accessories for a specific type of vehicle. The website generates revenue from Amazon Associates.
Details
Built on an expired domain
Content outsourced to a writer
Traffic is 93% organic, 6% direct, 1% referral
97% of traffic is North American
Monthly revenue has ranged from $4,715 to $256 (Latest: $1,114)
Monthly unique visitors has ranged from 13k to 3k (Latest: 3,743)
Asking: $41,764
Multiple: 37.49x
🤓 Why I’m Highlighting This Business
A lot of due diligence is required for this listing but there may be an opportunity here to come in and reverse the declining traffic numbers as well as to diversify the revenue stream to additional affiliate programs and add display advertising. This is a cheap listing if you value it on LTM avg profit but not so cheap if valued simply on last month profit (as I did above).
You can view the listing on Empire Flippers.
🧐 What I Learned Last Week
NFTs and a Thousand True Fans
Chris Dixon of Andreessen Horowitz published an interesting quick read on the NFT (non-fungible token) space. His basic points are as follows:
#1: Blockchain-based sales and ownership are more efficient than current models.
I checked Amazon’s website and found publishing a new work there will cost you 30 percent of every sale. But if there were blockchain based solutions that specialized in your sort of writing, they would compete away most of that 30 percent and allow a writer to keep more of the purchase price. Potential “fans” would know to go to these sites to find writers like you.
#2: NFTs allow for more granular pricing.
Dixon mentions NBA Top Shot cards, which sells virtual trading cards online for anything from a quarter million dollars down to almost free. The advantage here is the potential for sub-penny pricing if the NBA wanted to sell or promote these digital products at large scale. Dixon points out that many online currencies allow for very small transactions, and this does help with engagement.
#3: NFTs “make users owners, thereby reducing customer acquisition costs to near zero”.
The NBA is a good example, generating $200 mm in sales over the last month while spending very little on marketing the Top Shot initiative. Online currencies are another case study, generating billions in market cap with essentially no marketing.
You can read Chris Dixon’s NFTs and a Thousand True Fans.
Here’s another good read on this topic: NFTs - Partially Justified Hype
I’m trying to learn about this space. I purchased a few “Moments” from NBA Top Shot and actively looking to acquire digital art through Nifty Gateway. Evaluate.market is a good platform to track transaction volume.
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Turning $500k in micro-acquisitions into $1.4M
Eyal Toledano is the founder of microangel.so. His goal is to turn $500k into $1.4m over the next 24-months through micro-acquisition(s). The best part is that he’s documenting the whole journey through his (paid) newsletter. Below is what he’s looking for in his first acquisition.
Investment focus: Shopify Apps
Shopify is eating ecommerce and arming the rebels vs. Amazon
The Shopify app store used to be full of app clones, but now more and more brands launch on Shopify + raise capital to grow
There’s a massive and growing long tail of incredible opportunities
Net negative churn is the ultimate goal and requires expansion, which Shopify merchants are already used to
I’m looking for apps that are:
Default alive, especially organic-based
Possible to acquire under $200k with plenty of upside to either buy+hold or buy+grow
Operating at 90%+ margins for high free cashflows to either be banked or invested into growth
Extremely low support burden creating second-order benefits like being able to buy-and-hold or reinvest more cash into the company for growth
You can checkout his newsletter.
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Self-directed IRA (SDIRA)
I was recently introduced to the self-directed IRA (SDIRA) in the Trends Facebook group. It’s a type of IRA that can hold a variety of alternative investments normally prohibited from regular IRAs. You can buy investment real estate to hold in an SDIRA account. You can also hold partnerships, tax liens, crypto, and even franchise businesses. I assume this could be used to hold a portfolio of website assets.
Some comments on this post…
There are few areas that I’m less knowledgeable about than tax/accounting but this caught my eye and something that may be worth exploring.
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That’s all for this issue of The Business Inquirer!
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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, 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.