Notes About Acquiring Websites
A friend of mine, who prefers to remain anonymous, recently purchased two websites while holding a full time job in an effort to build up his permanent capital and generate passive cashflow. These are my notes from our conversations, if you’re interested in buying small companies while holding a full time job, you’ll find this interesting. Enjoy:
Purchased a pair of information products language learning niche
$4k net cash flow together per month
Paid 3x multiple, in partnership with family
Learned how to get a site backup using SSH and command line programming in the middle of the night
Trying to figure out a PayPal integration error on site
18,000 on email lists
Sell info products, YouTube channel brings in around $200/mo
Need lots of customer service
Broker for the sites was FE International
Centurica: due diligence for online businesses
Use Onfolio for operations of the website
Being an Owner
Not drawn to index fund investing, shifted out of stocks and looked for cash flow investments
Looking to use real estate model with businesses in building passive cash flow
“Investor operator model” like working with a property manager
Owning companies alongside a full time job, set a limit to 5-10 hours of work per week
View business ownership as sidecar to career
Take action where it feels like you could live with worst-case scenario. Start small and manageable, give yourself a margin of safety. Important to understand why you’re doing it: post-acquisition when things slow down, you want to be drawn to improving the business
All about derisking. He works with operators (Onfolio) who do this every day because he doesn’t have time. Worst thing would be to run these himself when he doesn’t have sufficient time and let them begin a slow decline. Work with operators who know what they’re doing to derisk the investment. Doesn’t intend to enter acquisitions where it’s unclear where the growth opportunity is and wants to leverage his time.
Drawn to net cash flow vs general appreciation
Patrick O’Shaughnessy wrote a fantastic reflection about his 2 years running the podcast Invest Like the Best that really resonates with me and my experience with Think Like an Owner.
This article about the history of animation is fascinating, there was so much about animation I didn’t know but found very interesting.
Kevin Kwok wrote an interesting article about Superhuman’s acquisition loops, it’s a great read about generating interest in your product/service and building a user base.
Bradley Jacobs, CEO of XPO Logistics, had a great interview with the Wall Street Journal about his experience acquiring more than 500 companies.
If you found an interesting article, podcast, or interview that I missed, please let me know, I’m always looking for interesting stuff!