Acquisitions Anonymous - #1 for business buying, selling and operating - $3.9mm/yr eLearning business for Amazon Books - Acquisitions Anonymous 230

Episode Date: September 22, 2023

In episode 230, Bill (@billDA), Michael (@girdley), and Heather (@EndresenHeather) discuss a unique e-learning business opportunity about teaching entrepreneurs how to sell books on Amazon. They explore the business's recurring revenue model, impressive growth, and potential expansion into related services. The conversation also touches on the dynamics of the e-learning industry and the challenges of managing a competitive niche.Today's deal comes from Axial.  Axial is a trusted deal-sourcing platform serving professional acquirers in the American lower middle market.Axial partners with over 2,000 boutique investment bankers and business brokers who use the Axial platform for marketing their deals to lower-middle market acquirers.Thanks to today's sponsorsThe Science of Scaling, hosted by Mark Roberge. Mark is a Senior Lecturer at Harvard Business School. In each episode, he interviews the most successful sales leaders in tech to help you learn how to scale a business, whether that’s how to find outside capital or what to look for in your first sales hire.Search for “The Science of Scaling” in your favorite podcast app-----------------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, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.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]

Hey everyone, welcome back to Acquisitions Anonymous. My name is Bill Dallisandro. I'm one of your hosts. And today on Acquisitions Anonymous, we have a $3.2 million eBitDA business that does eLearning and training to teach you how to sell books on Amazon, not any product at all under the sun, but specifically books. They've got a really cool model where they take the old students and make them instructors. They got 45% EBITDA margins. I've been around for a while. There's some really cool things about this business. So we talk a little bit also about learning businesses in general and the pros and cons of those.

So it was a real good one. I hope you enjoy this episode of Acquisitions Anonymous. Hey, everyone, it's Bill. So funnily enough, today's episode is actually brought to you by another podcast. It's called The Science of Scaling, hosted by Mark Robbers. The cool thing about Mark is he's a senior lecturer at Harvard Business School. And in each episode, Mark interviews the most successful sales leaders in technology to help you scale your business. So if you're into tech, and especially if you're into SaaS sales, this podcast will be really interesting to you.

So whether they talk about how to find outside capital or what to look for in your first sales hire, I checked out a few episodes. And I was really impressed with some of the people he got. So Mark had the head of sales at OpenAI, Alyssa Rosenthal, and also Oliver Jay, who's the founding CRO of Hisana. So some pretty heavy hitters. So I encourage you to check them out. go to any place where podcasts are downloaded. Just search for the science of scaling. So that's the science of scaling in your favorite podcast app.

That's it. And thanks again for tuning in to this episode of Acquisitions Anonymous. We are back here at Acquisitions Anonymous. Michael's making us all jealous with the hole of Big Sky, Montana in his background looks fantastic. So Michael's background looks fantastic and Heather looks fantastic. And I'm just here in my office. So, Michael, where are you right now? I'm in Montana, big sky, and the sky is freaking big.

That's what I have to say about that. It's true, the whole place. I have been to Big Sky one time also for an Entrepreneur's Retreat thing in the winter, and we skied, and it was awesome. Loved it. Oh, I wish we were skiing. But it turns out you can't ski in August. It kind of sucks.

I feel like I was misled. I have a tangential big sky story that is worth sharing. I used to own an e-com brand called SkiBomb. It was basically windburn protection sunscreen for your face. And occasionally we would have celebrities buy it or notable people. And this is probably the biggest celebrity has ever bought anything from me. Matt Damon bought a whole case of it and shipped it to his house in Big Sky, Montana. And we thought it was the coolest thing. We put in all this freebie stuff, you know,

because we're like, who else is at Matt Damon's like six ski retreat in Big Sky? Like I'm like picturing, you know, it's Jimmy Kimmel and like all these other like, you know, people who are Fred, Ben Affleck, all this stuff. But we never heard anything from them. But it was pretty cool. It was a sweet house too. We Google mapped it. Your brush with celebrity. My brush with celebrity is very thrilling. About how rich the people are here, we were driving in and the driver from the airport, you know, the chauffeur was like, we were like talking about how wealthy like veil and Aspen, Colorado is and the driver was like,

those places are nothing. This place has really rich people. I was like, but they're stupid rich too. So that's my, that's my big sky thing. And then I asked like a bunch of like things showing I don't belong here, which is perfect. That's right on brand, solid. All right. We've got a fun deal today. It is an e-learning business, and Heather is going to tell us more.

Yeah, this one is from Axial. So this is always interesting. They've got a lot to say about this deal. E-learning business that trains entrepreneurs how to sell on Amazon, recurring revenue, average LTV is 4,000, custom-built, software, a five-year-old e-learning brand that fills a valuable niche in the business world. This highly efficient low-op-x company focuses on product training and mentoring services for aspiring entrepreneurs. These quality training sessions are geared towards helping customers

learn how to make a profit as e-commerce retailers by buying and selling books on Amazon. The company has seen outstanding growth, astounding growth, excuse me, since its founding, and with an average customer lifetime value of $4,000, it is clear that this deal will be won for the books. Unlike its competition, which focuses on customers who already have some prior knowledge on how to operate in the e-commerce field, this business targets newcomers learning everything from scratch. As a result, their training is much simpler and easier to understand, giving the brand a wider demographic appeal. Bundled with community access software, their training packages offer the advantage of allowing clients

to connect with other like-minded individuals in the world of business. This package makes up 80% of company sales reflecting its popularity. Rather than paying a one-time fee, however, clients pay through a subscription service instead, offering monthly or annual options. Given that the average customer retention rate for the company is seven months, it's evident that customers find the product worthwhile and enough to commit for extended periods of time. The company services don't stop at just their training software, Clients can also purchase several other tools to help them succeed in their business endeavors.

The first of these tools is done for you research for booking sales opportunities, quote unquote. And it does just that, providing a list of published books that are profitable, easily stocked, and can be delivered to customers in real time. This tool is invaluable in helping customers keep track of which books in the market they should focus on, giving them a leg up over their competitors. The other service offered is group coaching mentoring. It is more in-depth training taught by members of the brand's community, experienced coaches, all of which at least,

all with at least six figures worth of revenue under their belts, can provide clients with an organically growing database of tips, tricks, and possible consumers to make note of. Additionally, these same past clients also tend to do advertising, for the company as well, advocating for the effectiveness of the program and citing their own success to support them. The group coaching mentoring can be thought of as a self-sustaining cycle in that regard, with new clients coming in, being trained by mentors, and then going on to become mentors themselves. Already benefiting from word of mouth, brand also participates in various joint ventures,

other business by hosting webinars, their JV partners, then send out emails. They've got a lot of things going on. Future is bright for this business with two website apps and several mobile apps in the works with anticipated release dates coming up in the coming year. Buyer could also improve on sales by adding even more offered services to the company's roster. Some ideas include credit repair service. That sounds interesting on an LLC formation service, business bookkeeping, etc. Revenue, let's see, in 2022, revenue was 7.6 million. EBITDA, 3.2, so an EBITDA margin of 42%, which is pretty big. So, wow, Bill, what do you think? How about that EBITDA margin? It's nice selling software and educational courses, isn't it?

Wow. What's interesting about this to me is in some ways how nichey it is, right? There's a ton of how to sell stuff on Amazon content on the marketplace. I mean, a ton. But this is how to sell books on Amazon, which I think is a little bit more specific, and I think probably in a good way it lets you stand out from the noise. I tried to play Gurdley and Google it and try to figure out what this one is. And I was shocked to find that there are several pages of SEO optimized results on Google for how to sell books on Amazon. So this must be a pretty competitive niche and kind of like a. well-known way to make money selling on Amazon. I assume it's like used books or drop ship from like big book distributors or something. I think the reason this works is because books are such a

long-tail category. You know, there's like infinity amount of books. So what you're, what this course probably teaches you to do is figure out what books are selling well, but do not have a lot of inventory or sellers. And that is, if I could boil down like all of the how to sell on Amazon courses in the world. It basically comes down to try to find something that is very popular, but not a lot of people are selling and then sell that thing. That's basically what they all are. And everything is just a churched up version of that when it comes to how to get rich quick on Amazon. You're doing a great job, though. But could I tell my hilarious Amazon book story? It's my favorite one. Yes, definitely.

My favorite one is a guy wrote an e-book and published it on Amazon. And the title of the book was How to Sell a Book for a Million Dollars. And then he priced his e-book at a million dollars. It's just the funniest thing I've ever seen. Anyway, please continue. Please continue. I don't know if he sold it, but it was amazing. No.

That reminds me of that iPhone app. It was called I Am Rich and it cost like 10 grand or something. And it just didn't do anything except display the words, I am rich on the screen. he sold like quite a few of them and then apple i remember that then apple was so lame they took it down because they felt like it was like not appropriate for the iphone platform but it's totally cool right so funny classic all right taking a quick pause here i have something to tell you this is michael i hate bookkeeping i hate bookkeeping i hate doing HR i hate doing all that kind of stuff uh but for bookkeeping

I have found a solution. It is my friend Charlie's business called cloudbookkeeping.com. So that's cloudbookkeeping.com. They are your perfect partner if you want to get bookkeeping out of your hair and focus on making your company, your customers happier and more successful.

So please give them a call. Call Charlie, cloudbookkeeping.com. Tell them we sent you. They're a great way. If you're a business buyer, if you're a business owner, you're tired of hassling with getting your bookkeeping done.

He's got a whole fleet of people that are well-trained and work for him. He's located here in St. Antonio, so I can tell you because of that, he's awesome. And they're a great partner for you to potentially call to help with all your bookkeeping needs so you can do the important stuff in your business rather than worry about getting your books right.

So give Charlie a call, cloudbookkeeping.com, and now back to the episode. So, I mean, like, overall, I mean, there's a lot to like here. I think, you know, there's always new books coming out, You know, a ton of people want to make money on Amazon. It's very crowded. But if you have a good brand here and people are coming to you, and it seems like they've got this kind of repetitive thing

where the old students who have success come back and are professors, the reason I really love that is a lot of these kind of online course businesses are not saleable because they're usually about a person. Usually it's about Bill, who is an Amazon guru, and learn from Bill and he's had all this success. well, Bill can never sell that business, right? Because, or I mean, you can sell it, but you got to keep doing all the courses and stuff, you know, because people are there to learn from the guru, not from the brand.

So one of the things that I think I like about this business, if it is true, is that they seem to have put the former students front and center teaching, which means that they're learned to sell on Amazon, you know, brand must be, you know, a brand, not a person. If you want to see something that is sort of like this, there is a website called bookseller academy.com that I just found. They did not pay us to promo. But you can go there and it's like an example.

You know, is it really possible to earn income selling books on Amazon? And there's a free PDF. And then I assume eventually they'll start to sell me something. So it's kind of like that. Have you guys ever done a deal for like an educational product or course company? I have done for training programs. They're more geared towards like corporate clients. I have not done something like this where it's just sort of a, you know, a course for anybody.

But I have done some different training businesses. They're very interesting and they can be very sticky. I'm curious about what's in it for the mentors here in that cycle of, you know, bringing the students back up as mentors and having them sort of, you know, become the educators, so to speak. If you're a success story from their program, do you want to keep doing that? I don't know. Just questioning it. I guess they get paid.

Yeah, they have to. I mean, yeah, Michael Berlis created a shitload of free content, though, just for the followers, just for the engagement. A lot of, you know, as of I, and, you know, but people will do more than you think for free. Okay. You know, you have a little success. You want to be like, yeah. If you're training your competitors, I guess is maybe what I should have said. You know, if you're selling books, right?

And are you training your competitors? And if you are, then you're going to train them everything. really know? Yes. I mean, I think, yes, you're training your competitors. And insanely, that doesn't stop people. All right. I mean, I think it really doesn't. I mean, I bet to Michael's point they get paid as well. But there is so much, I mean, Michael, you probably see it on Twitter. People write this stuff. Actually, a good example. So a good example is Nick Huber, our friend Nick, a sweaty startup on Twitter. He has trained legions of self-storage entrepreneurs competitors, like for free. I mean, I would say maybe not single-handedly, but he had a big part in creating a huge kind of boom in

self-storage, right? And good for Nick, and he is an incredible promoter and everything. And he's done extremely well, but I think he's also created a lot of competitors. So I'm always surprised at how much people share. Right. That's the downside of sharing. And I also kind of wondered, if you're mentoring your, if you're training your competitors, is there some kind of like override they're getting? You know, are they creating some sort of pyramid here where their, their incentive is to make the new trainees successful? I'm just curious if anyone's ever seen that model. Maybe. Maybe it's hard. I think it would be actually hard to enforce the collection of the royalty from the trainees because they're just going to go sell on Amazon and what? You can send

them a bill, but like they don't have to pay it versus all of these like, you know, the MLM type businesses, the way they enforce it is you have to buy the product from their central office, you know, like the supplement or the clothes or whatever. Um, so they have some control over your supply chain, so you can't get more unless you're in good standing. Um, I think it's probably the type of thing. I mean, they have a freaking $4,000 lifetime value over seven months. Uh, I think it's the type of thing where you probably pay $5.99 a month or something and you get access to the whole course, the community, the live sessions with the coaches who are the previous successful students, all the materials, all that stuff.

And then basically it takes you seven months to either make it or realize you're not going to make it. And then you spent like four grand over the time. I would guess that's essentially the business model. That makes sense. And being in the education space, I'll tell you, it is a nightmare to try to get a hold of your past students, like to your royalty kind of set up, like, they just disappear. And like I, when we're, when we loaned our students tuition and we were like the loan servicer, like, they would just

stiff us. Because they just didn't answer the phone. Like it just happens all the time. So yeah, you got to get paid up front for this type of stuff to work. I mean, the other thing I want to comment on that I like a lot is you will see situations in which, you know, train the trainer kind of models like this. They go hire somebody who's not a practitioner to be the, you know, to be the follow-on coach. So you have the initial guru and then the follow-on coach. And like, like I've seen situations where I knew of a training organization and a coaching organization for CEOs that's spinning up.

And the next generation of people that they hired, zero of them have actually been CEOs before. And like they just hired these like randos to be like CEO coaches and they've never done it before. The original guru, he knew it super well. But like the new people, it's like, how are you supposed to talk to somebody? But if you're like, you know, it's like, it's like training somebody about horse racing and you've never been next to a horse. So anyway, I like that these people like at least have had some integrity to only hire people that actually know the space well. And that gives me, you know, some optimism that this is a good,

sustainable business. One thing that kind of scared me is they go for, a buyer could improve upon sales by adding more offered services. And the first thing they reach for is a credit repair service. Ahead of LLC formulation, business bookkeeping, tax preparation, and FBI prep. That makes me wonder who their customers are. That was a curveball for sure. When I read it, I was a little shocked. That is a strange thing to kind of mix in with all of the rest of this stuff.

I mean, that being said, maybe it is informative about the customer. customer set, which is important to know. I would also, if it is informative of the customer set, in fact, I would do this anyway, when you have a course like this, I'm sure they are very, they have a very well-defined SOP around, are we making a guarantee, do we give refunds or not, etc. But when you are selling a course that even if not marketed, essentially amounts to get rich quick, right? Like, let me teach you how to make money. You're going to have a fraction of people who do not make money are salty that they've paid you four grand to not make money and are going to file a charge back on that credit card. And if that happens too much, you lose your

ability to charge credit cards. So that would be an area of diligence for me is what's your refund rate and include your chargeback rate also? Because you want to, that to me, there's almost no other metric to measure whether this is a good course or not. What's your refund rate? Yeah. That's a point. What other, just kind of a meta comment about this, if you're looking for ways to go find new business opportunities, like, arguably this is a pretty, you know, pretty, pretty red ocean, full space in terms of this education for Amazon now. But five years ago, if you got into this space, there's a good chance you were pretty early in terms of creating one of these things. And my guess is these folks got in early. And so there's this model where you go find an emerging platform like this

or Salesforce. And when you know it's going to be the winner or Shopify, you just say, what should somebody want if they're a Shopify user? And you go build that and extend their platform. And I think this is a great example of that, like created a beautiful business. I mean, let's say how awesome it is. 7.6 million in revenue, 3.2 million in EBITDA, which is probably all cash flow. Like, that is sick, good.

Like, that's a great business by any measure. And it's all just because they saw a platform in terms of Amazon realized it was, There was a problem for users, hard to sell books and hard to compete there. So I'm going to help people do it. I'm on charge of money. Just, I don't know. I appreciate it as a business nerd. Awesome.

Yeah. This is a killer business to own. Where do you think this thing trades? I mean, because it's Axial, these are bigger businesses. Axial does not list asking prices. So you kind of just have to bid. So where does this go for? I mean, it's not reoccurring revenue.

The customers stroll in and scroll out after seven months. You've always got to get new ones. I don't think it trades that high. I want to say a five or a six, but I probably too low. Yeah, I was guessing somewhere around 16, 18 million. I think it'll trade there for sure. I agree with Heather, you know, maybe at the high end of all that. They clearly have a demonstrated, like, flow that they've figured out here.

You do the webinar. hard sell, bring people in standard, standard online course type sales. And the competitive nature of Amazon is not getting any easier and people still want to publish books and Amazon's dominating more and more.

I think the future is bright for this platform. So yeah, I think it's definitely trading there. And I haven't seen specific ones, but it would not shock me if there is a roll-up of these type of communities and educational platforms that PE is backing somewhere because these businesses are just too good for PE not to be putting together a platform of this somewhere.

So I bet you're traced to somebody like that. Yeah, I would worry, I think I agree on valuation. I worry a little bit on are the owners going to stay, and how integral are the owners. I would hope you see a lot of really good SOPs, but you do probably have to replace management even if there are really good SOPs here. That can sometimes be a struggle.

at equity. And I just realized something that I really don't like about this listing is hidden at the bottom and it says represented by website closers. Contract website closers today to learn more. This is a flag for me if you've been in ecom a while. Website closers is one of those guys that you read the teaser and then you get the SIM and the Delta is just massive. They will sell anything at any time for any price. There are discerning business brokers out there that won't take on certain listings. Or they don't want their name to be associated with it.

Or we've done stuff on this show where you're like, this is a seedy business or this is a, I don't believe the accounting at all or whatever. I have seen website closed to put their name on absolutely anything with a freaking heartbeat. So anytime I see their name on it, I immediately go a huge dose of skepticism. That does also explain.

why the listing is so verbose. I was like, this is a really verbose listing. It's like, oh, yeah, that's the other thing about website closers. They cover up the lack quality with a lot of content to make you feel good about the business. Yeah. Their listings are like Chad GPD for a business listing. Chad GPD, website closers, GPD to write these things. Kudos to them.

Kudos to them. Anyway, yeah, they have made, by the way, just such a crap load of money selling e-com businesses, but I'm extra, extra spoonful of skepticism if they're representing it. All right. I think that wraps it up for today. Cool business. Just a reminder, check out Axial if you haven't. There's some cool stuff hiding on there, some bigger deals, which is where we're fine at some of them lately. And with that, we'll wrap it up. Yep, good stuff. Thanks for tuning in. We'll see you guys next time.