Acquisitions Anonymous - #1 for business buying, selling and operating - 20mm for a K-Pop Website?! - Acquisitions Anonymous e71

Episode Date: February 22, 2022

Michael Girdley (@Girdley), Bill D’Alessandro (@BillDA) and Mills Snell (@thegeneralmills) discuss 2 fantastic deals in today's episode. An Online Psychic services company and a K-Pop website.-----* Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.* Do you enjoy our content? Rate our show!* Follow us on twitter @acquanon Learnings about small business acquisitions and operations.-----Show Notes:(0:00) Intro(0:59) Bookkeeping.com(2:00) Online Psychich Company(5:24) Financials(10:18) Finding the value in the deal(12:05) Where does the traffic come from?(13:08) Why are marketplaces beatiful?(18:25) Marketplaces are awesome to have and hard to start(20:53) What does "90% done" means for software projects?(24:25) Beyond8figures.com(25:40) International Media Company - K-Pop(29:38) Difficulties of the deal(34:12) Broker red flags of the deal(38:22) Who would buy this deal?(40:28) High asking prices and its effect on sellers.-----Thanks to our sponsors!CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth, with a “client service first” approach. They offer a full suite of accounting services that include sophisticated reporting, QuickBooks software solutions, and full-service payroll options.The BEYOND8figures podcast (Beyond8Figures.com) - is a podcast where entrepreneurs and experts speak up on topics related to business and life in general. Each week our guest will have interviewees from different backgrounds to discuss what helped them get ahead while succeeding at entrepreneurship; we'll learn how these people achieved success by exploring personal journeys along the way (both professionally AND emotionally). So if that's interesting to you, make sure you check us out ;).-----Past guests on Acquanon include Nick Huber, Brent Beshore, Aaron Rubin, Mike Botkin, Ari Ozick, Mitchell Baldridge, Xavier Helgelsen, Mike Loftus, Steve Divitkos, Dzmitry Miranovich, Morgan Tate and more.-----Additional episodes you might enjoy:#62 Two Landscaping Businesses for Sale - Mike Loftus CEO of Connor's Landscaping#66 Analyzing Software Businesses for Sale with Steve Divitkos, experienced industry CEO#42 $900k Moving and Storage Company / $500k Rural Mini-Storage--- Support this podcast: Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Welcome back, everybody, to another episode of Acquisitions Anonymous. This is Mills Snell and one of your co-hosts, joined by Michael Girdley and Bill D'Alessandra. Hey, guys. Hey, hey, good to be here. We're giddy with excitement today about the two deals that we're going to be talking about. They are, I would say, I don't feel like they're even that atypical because we either talk about deals that are squarely in someone else's, usually a guest wheelhouse. or we talk about kind of the odd, the, you know, and that's the nature of looking at small businesses, is that, you know, you can look at like countertop installers or cabinet makers or like things that there's,

you know, hundreds and hundreds of them on the market. Or once you've had a lot of reps, all of a sudden you see something that is just so outlandish and so enticing that you can't help but dive into it. So we've got two really fun deals in that category today. Before we get into that, we've got a sponsor sponsor, a couple sponsors, but we'll start with one. Michael, you have our first sponsor? Yeah, so longest running sponsor is actually my neighbor, Charlie, and his company, Cloudbookkeeping.com. So if you're a small business owner and you want to take the chore of bookkeeping off your plate and outsource it to a group of American-based bookkeepers, you can go to cloudbookkeeping.com. They've given us some stuff to talk about, but it's high quality, you know, very locally kind of U.S.-based people. and then all supervised by folks with a ton of experience,

both top to bottom in the organization. So they focus on QuickBooks and full service payroll. So if you want to focus on your business and get out of the bookkeeping business, check out cloudbookkeeping.com. And thanks to them for supporting us in our never-ending quest to make this podcast break even.

Great. Thanks, Cloud Bookkeeping. Bill, you have our first deal today. All right. Yes, I do. Thank you to Cloud Bookkeeping. We appreciate you. So this first one is pretty fun. and very unique. It is a online psychic services website, app, and telecommunication platform that connects users to 230 psychic advisors and has 17,000 current active user accounts.

You can find this teaser on website closers. So, and Michael Sharon and also if you're watching us on YouTube. So make no mistake, this is not crystal balls, tarot cards, and voodoo dolls. This is a high-tech advisor experience for those looking for a little guidance. I mean, if you don't want to buy this business now, will you ever? For over 10 years, this company has facilitated comfort, emotional support, and direction for more than a million clients. Dot, dot, dot, dot, all billed by the minute. Just got to love the copyrighting here. So basically, what this is is it's upwork, but for psychics. So they don't employ the psychics. They are a platform for the psychics to make money on, and they match people who want psychic.

counseling with psychics, and I assume take a very nice fee by standing in the middle of that relationship. It says the company's psychic advisors assist clients with guidance on life areas of love, relationships, but also a broad range of topics like questions on family, career, finances, and their calling in life. This basically sounds like an unlicensed psychologist. They also offer horoscopes via SMS, daily, weekly, monthly, and yearly horoscopes, a Zodiac Love compatibility tool, which it looks like they use as a traffic magnet to get people's email address.

They've got psychic blogs, again, as a traffic and lead magnet, where they blog about psychic stuff and people read it and become convinced they want to talk to a real-life psychic. The company itself does not provide psychic readings. Rather, it uses an advanced technology platform designed to connect consumers of psychic readings

to contract providers to that service 24-7. The company is the epitome of how to generate higher turns with low overhead via the gig economy format. After three years of development over $200,000, the company has recently finished to complete redesign of their website and their beta testing a new mobile app.

It goes on to say, the psychic advisors, how's this for a Vig? The psychic advisors are paid approximately 25% of bookings, leaving attractive gross margins of 75% or more. Holy smokes. That is unreal.

Beyond these contract advisors, the company has one full-time general manager and three other FTEs who all work remotely. These FTEs do customer service, social media management, screening of new psychic contractor applicants, payroll management and quality control. It says, because of all these employees and everybody works remotely, there's no need for an office. Companies 100% virtual and relocatable and ownable from anywhere in the world. You could use this platform, their technology backend, to launch into other advice-based services. they say lawyers, doctors, veterinarians, mechanics, electronics, technicians, tax accountants, plumbers, etc., all facilitated potentially via their UpWorks for Psychics

Back-in technology. And then there goes a couple sentences about how Psychic is not total hokom. And it says 10 years of development, we look forward to assessing this amazing opportunity with you. Now let me hit you with the financials. They have $2.7 million of gross income and $1.2 million of cash flow. and they're asking $5.4 million.

So that is four and a half times cash flow, which is not super rich for a business with 50% cash flow margins and has been around for 10 years with six employees. Online psychic upwork. What do you guys think? By the way, people send me deals, especially interesting ones all the time. This hit the record for the most number of times people sent it to me.

I've got it sent four times. People sent it to me. And then when I emailed it out at my newsletter this morning, three of those people emailed me and were like, why didn't you give me a shout out? I was like, because everybody sent me this deal because it's so cool. So you love it, Michael? Well, I mean, I love the example that this is in terms of the ability to have a niche marketplace and have it be incredibly profitable and a beautiful business. Like a 75% take rate is just amazing. The thing I hate about this is it's totally inconsistent with my personal value.

values. It's like, hey, Girdley, do you want to sell snake oil? No, I do not. And I'm not interested in being in the psychic business. But I love the beauty that this business is just in terms of what they've been able to create, right? That niche marketplace idea that is just like so powerful and such a wonderful thing. I mean, I find beauty and the ugliness of this. Let me put it that way. What do you think, Mills? I mean, you know, I agree. I'm not going to, I mean, I'm not going to buy this business. But my mind does go to a couple different things. I mean, they say they have 17,000. and current active users. But I would think that a lot of those are people

who are getting their like horoscope for free via SMS and some of these emails. I wonder like if you parse into that, how many, you know, what's their like monthly average user count? And what are these folks paying? I guess, I mean, if you're an individual, is it hard? I don't know.

Is it hard to find a psychic? I legitimately don't know. I think, though, they probably have a really, really good, The reason they can take 75% from the psychics themselves is they go to them and they say, hey, look, we have this massive audience. You know, where else are you going to get this, you know, access to this many people who want to hire you? And that's the real leverage. Yeah, they got to have some kind of demand, captive demand that they're using to dangle that

carrot and get a 75% take rate. I mean, how much do you think it typically, I've never, you know, hired a psychic or anything? How much does this typically cost? is it like on par with like a massage like you know like $100 an hour or 80 to $100 an hour or something like that no idea I just so I just did a quick a couple quick math calcs for him while you're talking mills so they got about 2.7 million of revenue if they have 17,000 customers that's $159 per customer per year or six or 13 bucks ish per month per person which I think I think those numbers are inflated, right? Because I would be willing to bet that, you know, that of those 17,000, there's probably only a few hundred, you know, who are, who are paying. Maybe it's a thousand,

right? Maybe it's a few thousand. But I think the vast majority of these are people who are like, you know, in their lead funnel getting free horoscopes via SMS. So you think it's like that kind of classic, you know, whale distribution where you've got, you know, five percent of the customers contribute 80 percent of the revenue. And there are people who are spending 10, 10 grand a year or more on psychic readings. Yeah. Yeah. Yeah.

Casino type distribution. I pulled this one up. This is fascinating. This is the first kind of site link that came up when I Googled. Like I would like to do an online psychic reading. And their pricing model is super fascinating. Instead of like being like what I guess what you and I were just guessing, Bill, which was just like you say, okay, well, like it's $5 a minute, like the old infomercials.

Like they have this really complex like credit scheme. where you pay like $35, you get $20,150 credits. And then it's not clear. I just clicked five different ways through this website. It's not clear how you spend them. And I guess they have text credits and live credits. Like, I don't even know how these work. So maybe different psychics on this site, sign, charge different amounts.

It's really bizarre, which this goes back to my original part of the thesis was, I don't want any part of any sort of pricing scheme like this because it just looks so scammie. Like, ah, it's a beautiful business in a scammie segment, runs scam. Emily, which is so tough. But if somebody... Man, those margins, though. If somebody buys this, right? So let's say somebody does pay, you know,

$5 million for this business. I'm almost 100% positive. This doesn't qualify for SBA financing. Oh, really? Yeah. And so let's just say somebody does buy it, though. I mean, how durable is this business? Morals aside, I think this is one of those things

where if you provide the service, people will continue to buy it. I think this is, so in one, let me say, maybe it's durable because I bet people form attachments to their psychics, right? So I think psychics become kind of non-fungible, you know, over time. So it's not just any psychic, you've got to talk to your psychic. So I imagine that's quite sticky. On the other hand, I think you probably also have the classic marketplace problem of your, your contractors and around it. Yes. All the time. Yeah. So I don't know how that balances out. That's a good point. That may be why they have this kind of credit scheme.

is it makes it more difficult for them to go around because, well, maybe it doesn't. I don't know. Well, maybe you have a balance in their service, right? So if you're end around and you're leaving money in the service, but you can't take out. That would seem like it helps. Yeah, I mean, so I guess am I just too, like, steadfast in my personal values, and I should reevaluate them to say, oh, no, this is totally fine. if people want to buy, like, people want to buy something that's snake oil, like, should you just

be part of this? Or is it okay to just be a buyer with standards? I think it's okay to be a buyer with standards. But I guarantee you, though, there's someone out there, and I'll be the buyer business fit guy again. There is someone out there that believes in horoscopes and is looking to buy a business. And they should buy this business. Like, if you can own this business and sleep at night, which I think you would have to actually believe deeply in horoscopes to do, it's a freaking great business. Yeah. Right? From a, business model point of view. So are you just one, how dependent do we think this is just on Google AdWord positioning? So that's the question, right? Yeah. It's where does the traffic

come from? If you scroll back up a little bit, Michael. My sense is it's probably not paid traffic. I mean, there might be some, but I bet they've got some pretty good Google rank for some terms that convert. So like these psychic blogs they say they're doing, a free service and remark strategy of the company that is psychic blog, contain hundreds of self-help and inspirational articles. And then they've also got this love compatibility tool, which I bet is kind of like inherently viral.

People posted to, you know, their Facebook accounts, and it's like a quiz, and then you share your results on Facebook, you know, and all of that is both getting them backlinks, which is helping their site rank better and also driving traffic. So I bet they've got a lot of these kind of lead magnet

things going on, which then they probably convert via aggressive, email, if I had to guess. Yeah. And SMS. So Bill, Bill, maybe we've talked about this idea of how marketplaces are beautiful. Maybe if you're up for it, talk a little bit about why that is, especially subscale. Like, why did you and I get so excited when we saw this was a marketplace and the take rate and all that kind of stuff? Yeah. So just to give you guys some examples of some other marketplaces and their take rates, right?

So Amazon's FBA marketplace is a 15% take. rate, right? And they're moving atoms all over the world. And they have a ocean of consumer demand that can bring to brands. And brands, including me, pay that take rate super happily because Amazon brings so many customers. And that, you know, kind of marketplaces also can have returns to scale and kind of win or take all dynamics because they have network effects, right? Like the dominant psychic marketplace has the most psychics. So it's the most attractive to customers. Similarly, the dominant psychic marketplace has the most customers, so it's most attractive to psychics who want to make money.

So there's this kind of winner take-all dynamic in marketplaces, and once you control the customer demand, you can take bonkers take rates. And I think these guys are able to take such an incredible Vig from their psychics because there is no marginal cost of providing psychic service, right? Just your time. You know, Amazon, like all the brands on Amazon, have to manufacture the product, ship it, all that stuff. There's all these other things taking margin. In this case, just the person on the phone. So, you know, as long as 25% of the bill rate is like above the person's however they value their time,

which I think we know in general, people don't value their time enough, right? They can charge an astronomic big on this. Anything to add to that, Michael? Yeah, I mean, the other, I'd love that. The other upwork is a marketplace. You know, we talked about upwork being there. And what's cool is, I think marketplaces are different than say, enterprise software or SaaS, which is, you know, you see these big benefits when you're at a Salesforce level size

as a software company that maybe you don't get when you're at a $10 million revenue run rate, because you haven't had that level of impact and power. And the cool thing about marketplaces is they can scale down, right? If you become the de facto marketplace where people trade Legos, for example, like you're not going to be that much worse of a business

than, say, a $600 million dollar enterprise SaaS business. And to some extent, you're going to be better because it could be easier to run it. So, no, but I thought that was a great summary of why, well, when I saw this, I was like, this is a great business. I never want to own this. This has expanded sort of my list of businesses I would love to buy one day to include a niche marketplace like this. You know, imagine like niche marketplace for handyman as you're trying to rewire your light switch or something like that. If you could have scale and it was niche enough and you could dominate a niche, I think would crush.

Oh, yes. Michael's phone-up. Go for it. Yeah, Ranch Works is one of my favorite micro-nitch marketplaces. So, Peter is, am I pressed in his name right? Peter Askew? S-Q? Anyway.

Yeah. So he's a Twitter kind of micro-celebrity, and he has a job board that's a really cool marketplace, which is the job board for people that want to work on ranches. So basically like a subset of what Indeed. is or a subset of what Monster.com is. And he does that. And so job boards are marketplaces. So like it's great. Like you you have the you have the supply and the demand and you scale both of them and your job board gets even better. So that's why you'll see a lot of serial acquires, especially in the digital space, loving job boards, especially niche ones. Dating sites is another

example of really good marketplaces, you know, Bumble, Grindr, what are some of the other ones that people are using these days? Those are all niche marketplaces. specialized around a specific audience. So very cool. The other thing that's interesting about it to me, right, is like an Airbnb, a two-sided marketplace, you're able to open it up monetization. Like before you put your house on Airbnb, you're not making any money. And then you, the alternative, right, is zero money or some form of monetization. I think it's probably somewhat similar, right, in the psychics mind in this case, which is I can continue to operate out of my house and hope people drive by and see me, but I don't.

don't really have a great customer acquisition model other than that and maybe some word of mouth. This all of a sudden, it's like, okay, maybe I'm willing to lose 75% of the revenue because I'm turning on so much potential revenue that I wouldn't have otherwise. Yeah. Yeah. Well, and then adding on to that too, like, and they've done a little bit of it here with the psychic business, like how do you start to sell ancillary stuff to them, right? that you're a fitness marketplace where you start to sell like your own brand of supplements to them

or you start to add services or you're an upwork and you start to sell insurance like all those are things where you have captive people on both sides and it can become a great place to expand and build ancillary businesses where you can you know basically turn your customer acquisition cost to nothing because you've already acquired them it's pretty beautiful oh yeah and the last thing I'll say about marketplaces is they are awesome businesses to buy and really tough businesses to start because a two-sided marketplace is like in like business classic classically the hardest business model because you need to bootstrap both the supply side and the demand side in parallel and keep them roughly even right if you have way too much supply and no demand your supply contracts

right because your psychics aren't getting any reading so they're like screw this I'm not doing it if you have way too much demand and not enough supply your customers bail because they can't get a psychic they need. So it's very hard. You can't build these two businesses in parallel with a two-sided marketplace like this. So because they're so hard to build, if you can find one that is even at micro scale like this, it can be very hard to compete with because it's hard to build a new one. So that's why marketplace are awesome businesses to buy, but really tough businesses to start. Yep. Oh, yeah. One question before we move on from this, and I see this in listings a lot, where the listing will describe, hey, look, we've spent, in this case, $200,000, you know,

building the app, building the website, whatever, overhauling. Like, they mentioned some sunk cost associated with the, you know, the platform from kind of a hardware or an infrastructure standpoint. To me, I never know what to think when I see something like that. Like, the cynic in me is like they probably didn't spend this money wisely or shrewdly because this wasn't like their fifth time doing it. It was probably their first or second time doing it. But you guys who have a little bit more expertise in that, I mean, is that, I mean, in this case, it doesn't seem like it's that much money, right, relative to the

amount of revenue they're generating. But do you, do your warning flags go off too because it, you might be buying this kind of, you know, buggy thing? I'll let Michael talk to code due diligence, because he has way more experience than that than me. But I actually, don't think this is that much money. They've been around for 10 years. It's very possible they added up all the money they've ever paid to devs over 10 years, and it was 200 grand, and that's what they said it cost to bills. So, like, I wouldn't put too much stock in that, but then also I wouldn't put any stock in that because it's a sunk cost, right? The valuable thing here is the network, not the code. But I think sometimes the code is valuable. So, Michael,

how do you figure that out? Well, so I think this is a testament to how low capex this, like, business requires. People coming to the site are not looking for the latest, like, Web3 NFT-based psychic stuff. So that I think the fact that $200,000 for a business throwing off $1.2 million is like a big number in the way this is written is a good sign. It's like, oh, like ongoing like this is pretty low and it's not going to be something that's going to be sucking a bunch of cash. You know, the dangerous thing with code is people that are new to it think that 90% done in code is equivalent to 90% done with the construction of a building, right? And so many times I come to people who've hired, or people come to me that have hired

like contractors to build a site or a system for them, especially with software. And they're like, oh, the contractor says it's 90% done, but I'm mad at, I'm mad at my contractor. They're not doing a good job. I want to pay you the last 10% and you just finish it. And basically, that is code for the whole thing is crap and you're going to have to start over. again. So, you know, really what you're looking for ideally is somebody's, in this case, put in 200,000 and the thing's gone through that final, like, process to get that last 10%, so to speak, done and out and working, because the reality is, like, software, like, you think it's done, but it's really not. And so, so anyway, that's just the thing to be careful. And whenever there's, like, a software, like,

as part of the deal or a key component of it, like, bring in an expert to, like, look at that software and do technical due diligence on it, you cannot absolutely trust what the sellers are going to tell you. Because a lot of times they just don't know. They don't know that dynamic I just described to you. So it can really get you in trouble if you trust their word and you don't get an expert to come in and do that diligence on any customer software you're buying.

And that seems particularly important on something like this where you're processing a few million dollars a year in credit card payments. And you know, you're having to basically write collect that allocate it to certain client accounts and then disperse it back out to certain psychics. Like one way I could see this going very, very badly, right, is if all the sudden everybody's used to remitting payment and receiving payment and then you buy it and 30 days later, you're like, oh, I just need to fix this thing with the code. And all of a sudden, like, you know, customer history's gone, payments aren't getting

where they're supposed to. Like that's what scares me about a business like this besides all the moral stuff. Or if they just, instead of paying 25% take to the psychics, they, you know, for a few weeks, pay 250%. That would kind of suck. All right, this is a great one. Really fun. Yeah, this is really good.

Somebody needs to buy this and then when you buy this, we want to have you on the show. That would be, wrong. It would be so good. I want to understand how it went and go through all that stuff. And, yeah, just please, someone buy this. Someone buy this with low morals and then. come see us. We want to have you on our show. Just the seller, can you imagine

the site visit with the seller? It would be amazing. I mean, it should be filmed. The funniest thing would be if you showed up to do diligence and before they said anything, you just pulled out some tarot cards. It's been like the death card indicates I may be in trouble on this deal.

Tell me why. I need to reduce your evadavit by 25% because I just pulled the death card. Crazyer things have happened. Michael, you have our second sponsor and then our second deal. Yeah, right on. Okay, so second sponsor, and usually I don't read the script. People give us for the sponsors, but this time the script's so good, I'm going to read it verbatim.

And so this is the Beyond Eight Figures podcast. It's brought out by our friend A.J. Lawrence. And this is what he said. As a massive fanboy of Acquisitions Anonymous, I demand they take my damn money for their Acquisitions Anonymous roll-up fund. So just so you know, guys, know, somebody thinks we're smart enough to give us money. Anyway, we have an anchor LP is what you mean. He's going to pay us at Chili's gift cards.

But anyway, in the meantime, I want to share my podcast BeyondAidfickers.com with the audience. I'm A.J. Lawrence, an entrepreneur with a few decent exits and a fascination with the entrepreneurial journey. Every week, I interview successful entrepreneurs and experts about how they got to where they are and what helped them the most, not just about their business. There, we dive into what it takes to ensure that you get real,

insights to help you accelerate your business and become a better entrepreneur. So definitely check out Beyond Eight Figures and thanks to AJ for supporting us and for the compliment. I need it. It's been one of those Fridays. Thank you, AJ. Let's move on to number two in our themes of deals. So this is a buy-biz sell deal, Mills, right? The Biz-by-Sale deal. And it is a fast-growing international media company and is the title, with a 10 million AMU Korean focus based out of River Edge, New Jersey.

So it's an international media company. And what is 10,000 AMU, 10 million AMU mean? Average monthly users. Average monthly users with a Korean focus. And the photo on the listing is a bunch of K-pop. Yeah. So K-pop being Korean pop music and culture. So the asking price is $20 million.

It's cash flowing $330,000 a year. Gross revenue is listed at $1.2 million. EBITA is listed as not applicable. They have $180,000 furniture, fixture, and equipment, and they pay rent of $5,500 a month, and it's been in business for 15 years. So $20 million business, cash flow of $330,000 doing revenue of $1.2 million. Business description is an opportunity, all caps, to buy the company who now owns about 60% of the space and growing, their main competitors sold in 2015 for $10 million.

this company has already facilitated major collaborations between McDonald's and BTS. So, BTS is an all-boys band, right, of K-pop? Yes, yes,

this is the Backstreet Boys of K-pop. Okay, so Backstreet Boys of K-pop. They're actually, I've watched some of their YouTube videos. They seem like nice guys. Yeah, the music's actually catchy. It's very good.

It's got to get you. Yeah. So actually, speaking of Asian bands, have you guys ever heard of a band called Baby Metal? No. You've got to check.

this out. So baby metal is a all heavy metal band with the front singers are three looks like 21 year old Japanese girls and they dance and scream in Japanese these songs and then occasionally sing out English phrases

in between heavy metal riffs. Go on YouTube, it will change your life. Check out this band. They are very popular. It's called baby metal. Anyway, they're Japanese, so totally off topic. All right, so countless media companies are focusing on K-pop, but very few are seeing the sensational growth and momentum of this one, strategically positioned

to be the TMZ of K-pop. So, TMZ is like a, it's called 30-mile zone. It's like a gossip site, a gossip and photo site about U.S. kind of Hollywood people. So this business comes with multiple properties, one of which is already the go-to platform for all cutting-edge K-pop news, views, content, and gossip with 50 million monthly users. This is an opportunity to purchase this online media company providing content and entertainment around pop culture and current events and a niche market. Expanding news and information about the latest trends in technology to our audience, one of the primary property news site covering entertainment news like TMZ Reddit with K-pop of K-pop with content, creators, reporters, user interaction interface, where users can update news as well.

Seller is asking 20 million based on competitive acquisition activity and near-term projected growth under the right ownership. They are based in RiverEd, New Jersey have six to ten employees, and it's included in the asking price for furniture, fixtures, and equipment. They do have some competitors, but they claim to be first in the space, breaking news and brain recognition, and then they have a community that they have built through their stuff, which I think is good. And they recommend, if you want to grow this business, you should do NFTs and blockchain. Now I know why they want 20 million. Okay. I didn't realize it's NFTs now.

Then click. All right. So look, guys, K-pop is not psychics. What do we think? This is such a interesting listing. I mean, because like you whipsaw between these guys are smoking crack. And wait a minute, is there really something here, right? There's, if it's true, that they have 50 million monthly users.

10. 10. That's a lot. Yeah. 10 million. 10. But still. Still.

That's a lot. And also, it's kind of hard to tell. you know, what, what this is? Is it a network of blogs that breaks, you know, K-pop gossip news, it sounds like? So I assume their revenue's got to come from advertising, which it's very hard to diligence these businesses because it's all about kind of Google rank. You want to know how they got there, you know, are they doing Black Hat SEO stuff that could disappear overnight? And then also, how do you monetize it? You know, if your audience is 14-year-old girls, it does not monetize, right?

Because they don't have credit cards. Like, they can't buy stuff. Right. If your audience is 50-year-old dudes, or 50-year-old women, even 50-year-olds, right, that have credit cards and are, like, really into a hobby, they monetize awesome, right? So you can start to build an affiliate business on top of it. So this is fascinating. I was just trying to figure out, you know, Google K-pop site, New Jersey.

And actually an article from the New Jersey, you know, NJ.com, the Jersey website, claims that New Jersey is the K-pop capital of America. So I don't know. I was like, what heck is this business in New Jersey? I was thinking the same thing. And I guess it's because New Jersey has become the K-pop capital for this in Newark. I have no idea. Wow. Yeah, this is clearly a subculture that I don't understand, so I don't want to poop on it at all.

I mean, this could be, first of all, the asking price is ridiculous. $20 million is crazy. The fact that they're only making three. 60 times. Yeah, they're making 330K of cash flow after they've been around for, what, 10 years? I don't know. I mean, that being said, K-pop over the last two to three years is way different than the first seven years of their existence. So I'd be interested to see kind of the annual, I would expect to begin to see a hockey stick. If I don't start to see a hockey stick in recent years, that would concern me because I know the market has grown substantially. The interest in K-pop has grown substantially the last couple of years. And if they're not catching that, I would have questions about why. K-pop-T-M-Z into Google. That doesn't end up for anything good. No, this is not where you want to go, Michael.

This is not where you want to go, Michael. I mean, yes. This type of business is so odd. Well, look, I mean, as a huge BTS fan, I got to know. Go ahead, Mills. I mean, it's, I think, Bill, you hit on this in the very beginning, which is like, what does this website actually do, right? It is, you know, it's very, very, very. very kind of quick turns of little snippets of information and gossip, right?

Writing an article is probably like a lot of like clickbait kind of, you know, driven traffic. And I don't know. I mean, I just, I never, it's very hard for me to wrap my head around the monetization because never once in my life, and Michael just beat me to it, I've never once been on TMZ, right? And I don't think I've even inadvertently gotten there because I'm Googling about something and that's the top, you know, the top hit on Google. So it's hard for me to wrap my head around the fact that this business has traffic that is, it is eye-popping, right?

10 million average monthly users. But can you actually do anything with that traffic? It doesn't necessarily seem like it. It's interesting. I just pulled up TMZ and clearly they're doing display ads. They're also doing, this is pretty interesting. interesting. They're putting paid songs in players

in the, so people want to promote their songs. Like, they're actually doing that in your feed as well. Don't fool yourself, Michael, half those articles are paid placements too. And yeah, that's a good. Oh my gosh, people are not wearing clothes in these pictures. Yeah,

the YouTube is a little R-rated. All right, close it. There's a deal. Adel has, there's a picture of Adele and she has sleeves on, which we'll leave it at that. That's good. So let's talk, if we go back to listening for a minute here. There's a couple kind of broker red flags

here that are not unique to this deal, but really bother me. So, as we talked about in the title, it says 10 million average monthly users, but then in the text, and Mills, this is where I got it, it says 50 million monthly users in the text.

So it contradicts itself, which makes you obviously not believe any of their numbers. Yep. Right? I mean, the difference between 10 million and 50 million is a lot. You know, that's an entirely different business, right? Especially a media business with 50 million users, that's like a real media property. So they don't even know whether they're a real media property or whether they're, you know, a tiny little blog.

So that freaks me out a little bit. The other thing that freaks me out a little bit is if you scroll down, Michael, to competition, it says they have breaking news brand recognition. They have stickiness. Users are coming back. MTV and Billboard tried to compete, but we're not successful. So, okay, but you only have $330,000 of EBITDA. So either, this is a terrible market, you own all of it, and all the value can extract is $330,000 or your full shit, basically, right?

So my sense is, if this market is $330,000 and they own all of it, MTV has no desire to be in this market at all. And they did not, in fact, fail to compete with you. They abandoned the market. they abandoned you in your backwater is what they did. If, in fact, that's as big as the market is. Or the market is much larger and you're not disclosing your actual competitors. Right?

It's kind of those things are not compatible. So when I hear a company say, you know, oh, big competitors tried to compete and failed, it almost always means you're either in a tiny market and they didn't want it or you don't understand why they're not competing with you. Yep, yep. Hey, Michael, I think we have a new red flag from a broker standpoint to add to the list. Yours is if they're touching their face in the picture

or if they're wearing a hat, I think we also need to add to the list if the photo is from their car, inside their car. That's completely. Look, the good news, this broker, he's smiling, he looks friendly and trustworthy, and he's also wearing his seatbelt. So you know this is a man that cares about safety,

which I appreciate. But, yeah, so, I mean, The tell about the tell about the hats and the touching your face is like covering your face or covering your mouth is like one of the key like basic tells that you're lying. Like if you see somebody cover their face, they're much more likely to be lying. Like or, you know, so that's why I'm like, don't do that. Just like show us your teeth. Look at the camera. Click, click send on the photo.

That's what you need to do. But yeah. What I also love about the way this one is written is sometimes you see. the culture or the business itself seep into the listing. And this guy almost wrote this listing like he's writing a TMZ article, right? It's like the numbers keep getting bigger. Like it's all caps. There's like 14 exclamation points.

Like it is basically, you know, you could not distinguish this listing from the way a TMZ article is written, which I definitely appreciate. I absolutely love the fact that he says, you know, the company already facilitated a collaboration between McDonald's and BTS. I mean, that is my favorite part. I guarantee you they didn't make, you know, a nickel off of that. And it's not worth, right, anything. But they feel really good about it.

And in right, yes, like, okay, that's some validation. You put some people together and they made some money. But like, you have to extract value as a business for doing things like that. Yeah. Well, this, I mean, this could be interpreted a lot of ways. This could also be we called McDonald's and we had some chicken. and McNuggets delivered to their hotel. Like, you know, it's just sort of wrong.

You just don't know. You just don't know. So, I mean, who would be the right buyer for this? I have some ideas, but I'm curious what you guys think. It's someone who owns another media property in either a related or even different verticals, someone that knows how to run this, right? That's already got an army of writers that has other traffic that they could sell bundled ad, you know, ads to advertisers for, hopefully with some audience overlap.

like even if it's not K-pop, if it's something else 14-year-old girls from New Jersey like, that would be killer. Because then you can sell a package to an advertiser that wants that audience. The other thought I had is if you have the love for this space,

like if what you do all day is just talk about K-pop and study K-pop and read the stuff and go to the shows, like I feel like a smart person could take that love and translate that into learning how to run a business like this over time.

So that was the other kind of thought I had like, man, if you just want to like have a lifestyle business and talk about K-pop all day and that, and you would pay to do that job, maybe this is one for you. Would you pay $20 million for it? Only if I just made a bunch of money on NFTs. I didn't have anything else to do with it. I love K-pop. But other than that, like, you know, what you talked about, Bill, it's tough to see this

business being worth $20 million ever, right? It's just, you know, the signs are not there that this is ever going to get to that size. you know, this thing would need to be growing, like, crazy to make that kind of price worthwhile. But I do like the broker just took what the other company sold for, doubled it and put it on the website. Kudos to him. You're not going to get it if you don't ask for it. So well done. The reality is, too, when people ask for that kind of thing, I think they're just hoping, right, for something that's pie in the sky and like TMZ, right? Or somebody like that, the whale, the 800-pound gorilla is going to come along. The reality is, though, is that if someone has enough money to buy a business like this,

they almost certainly will not pay what you're asking because they know that they're the only buyer, right? TMZ isn't going to pay up for this thing because they look at the universe of other buyers and they're it. Yeah. Well, this is kind of the, I mean, all these listing sites have the same problem, right? You're seeing it here on Bizby Sell, you see it on BizQuest, you see it on micro-acquire, like the sellers basically take the number they'll take triple and come up with some astronomically huge thing. And unfortunately, like, you end up with this problem where buyers who know what the things should be priced, they oftentimes don't even talk to you. And, you know, I'm kind of conflicted about it. I understand why they're doing it, but at the same

time, like, it hurts these sites to see crazy prices like this. And in the end, it also is maybe not the optimal strategy for the sellers. And I think I'm personally just kind of coming around to just ignoring these asking prices on stuff. And if I'm interested in something, I think it's good, like, okay, well, like, I'm going to make the offer I'm going to make, not based off what your crazy-ass asking prices. Yep. Yep. Yep.

I think all, I mean, I understand what they got to have them, but they should just delete asking prices from all these marketplaces. Mm-hmm. Because they're fantasies. Totally, totally. Okay. Well, if anybody buys this one, come see us because we want whatever, we want to know about the BTS collab,

so we can do the Acquisitions Anonymous BTS collab with McDonald's, which could mean we all just hang out and eat chicken big nuggets, which we're totally cool with. Just tell us where to be. And listen to BTS. It's a collapse. We're doing something wrong. We should have done that like six months ago.

All right. Thanks again to our sponsors to cloudbookkeeping.com and Beyond Eighth Figures Podcast. Really appreciate you guys supporting the podcast and allowing us to go for another week on our never-ending pursuit to not lose money on the podcast. Thanks, Michael. Thanks, Bill. We'll see you guys next week.