Acquisitions Anonymous - #1 for business buying, selling and operating - $50mm/yr Bedding Brand for Sale - Acquisitions Anonymous 179

Episode Date: March 28, 2023

Michael Girdley (@Girdley) and Bill D’Alessandro (@BillDA) look into $50mm/yr Bedding Brand for Sale. Things get weird.-----Thanks to our sponsor!This episode is sponsored by Acquisition Lab. Acquisition Lab, created by Walker Deibel author of Buy Then Build: How to Outsmart the Startup Game, is an accelerator with a highly vetted cohort-based educational and support community for people serious about buying a business. After going through the Lab's month-long intensive, you have ongoing access to almost daily Q&A sessions with advisors, regular live deal review forums with Walker, hand-picked vendors for your deal team, and a very active Slack group with other searchers on this path. Our team personally understands how to buy a business and will help navigate all the complexities of the process, as well as provide a trusted framework, tools, and resources to support you from search to close. The Acquisition Lab recently celebrated its 70th business being acquired and well over $100m in aggregate transaction value. The Lab is there to stand by your side, so you can take the right action (at the right time) and avoid wasting countless hours trying to "go it alone".For more information, check out acquisitionlab.com (link in the show notes) or email the Lab's director Chelsea Wood, [e-mail] 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, this is Bill D'Alessandro, and welcome back to another episode of Acquisitions Anonymous. This one really got me going because it is a huge e-commerce business with $8.5 million of earnings. So Michael and I dove into the complexities of this one. It has a factory in Cambodia and China. It sells through Amazon. They're asking nearly six times EBITDA for it. It's a $50 million deal.

Really, really interesting one. A lot of generalizable lessons about buying businesses. and separating businesses from their inputs and making sure that they have arms-like relationships there. I think you guys will really, really enjoy this one if you're at all interested in international manufacturing, e-commerce, or just larger deals. So without further ado, hope you enjoy this episode

of Acquisitions Anonymous. This episode is sponsored by Acquisition Lab. Acquisition Lab created by Walker Debel, author of Buy Then Build, How to Outsmart the Startup Game, is an accelerator with a highly vetted cohort-based educational and support community for people serious about buying a business.

After going through the lab's month-long intensive, you have ongoing access to almost daily Q&A sessions with advisors, regular live deal review forums with Walker, handpick vendors for your deal team, and a very active Slack group with other searchers on this path. Our team personally understands how to buy a business and will help navigate all the complexities of the process, as well as provide a trusted framework tools and resources

to support you from search to close. The Acquisition Lab recently celebrated 70th business being acquired and well over $100 million in aggregate transaction value. The lab is here to stand by your side so you can take the right action at the right time and avoid wasting countless hours trying to go it alone. For more information, check out Acquisitionlab.com.

Link is in our show notes or email the labs director, Chelseawood, at chelsea at buy-then-build.com. Bill, it is such a marvelous coincidence. We're both wearing the same clothes as last week. You know what? One week we should like switch clothes. Like we should premeditate and I'll be wearing the Dura Software shirt, you know,

and you'll be wearing the button up plaid shirt next time. Represent Dura Software. Yeah, well, you know, I went to dinner with Dura Software last night and I had two glasses of wine, which has made my motivation for today go, so I'll be working. It's amazing how that happens, right? Like you turn 30 or 40, I'm probably even worse for 50. Like I just like one drink, you're done. The worst was there was a guy who's childless there, you know, as part of the business

dinner. And after the second glass of wine, it was like, parenting, workshoping. I was like, oh, let me tell you about this with parenting. Let me tell about this parenting. I even brought out one of my, like, best bits, which is why parents are happy even though parenting sucks. I've ever given you this bit? No, give me the bit. So here's the reason. Here's the thing. Like, like objectively, you look at parenting, right? And parenting, everything sucks. It costs you a lot of money. You don't have any freedom anymore. You got to go on vacations when it's the most expensive time of the year. Like your kids clean up a lot of poop, vomit.

puke, poop all over you. If they're younger, they need your time all the time. If they're older and they're teenagers, they say the meanest stuff to you because they're just learning how to manipulate people. So, like, objectively, like, there is very little that's awesome about parenting. But every parent is, like, much happier. Like, if you look at the stats, parents report, self-report being happier than everybody else. And you have to wonder, like, why is that? Like, objectively, it doesn't match the facts, right? So the interesting, parallel is that if you look at it, what kids do to us is the same thing the Marine Corps does to convince you that the Marine Corps is great during indoctrination and basic training, right?

It plays to human psychology and kids brainwashed their parents into thinking that they're happier. So let's walk through it. So, for example, you go into the Marine Corps and the first thing they do is they give you a person who screams at you unpredictably with commands that you don't really understand and you are unintelligible to you. Who else also does that? Babies. What else does the Marine Corps do to you when you go to basic training? They prohibit you and they do not permit you to get a good night's sleep. You go through sleep deprivation. Who else does that to you? Babies. What else happens to the Marine Corps when they want to indoctrinate you? They challenge your boundaries of cleanliness and nastiness, right? So you're in there with your toothbrush, cleaning up the toilets, right?

happens, what do babies do? They vomit and poop all of you. The first thing you do when you bring home a new babies, you discover that you better be careful because there's a good chance they're going to pee in your face when you're changing that diaper, right? So let's continue on.

They make you miserable in all ways, right? It keeps going. What else does the Marine Corps do to make you feel like you're part of a team and part of a winning thing? They put you through a challenge that you're not sure you're going to make it through, but then you make it through as a team together

on the other side and you develop a cohesive bond. Who else does that? Children. How many parents have you heard when they have a five-year-old? They're like, I don't know if I could do this for 13 years, 13 more years. I don't think it's going to happen. Yep.

So that's the idea. Like, if you look at it objectively, parents are not happier. They just think they're happier. And you can see it because they're brainwashed because nature has set us up to be brainwashed by children and parenting. And so the truth is you are all miserable. You just don't know it. Including you, right, Michael?

Look, okay. So here's the part about it, right? So if you're if you're objectively unhappy, but you think you're happy, who really gives a shit? Because you're happy. It doesn't really matter if you're really not happy. It just matters what you think you are because it's a feeling. So who cares? I'm fine with it.

Like, yeah, brainwash me all you are. I don't care. I'm being deluded. It's fine. It's fine. Well, it's kind of like, you know, there's a lot of evolutionary biology, too, though, that it's very important that you like don't ditch your kids. 100%.

You know, that's why they look like the dad when they come out. It's so the father doesn't abandon, right? there's all kinds of evolutionary biology to make you happy with this. Like all the chemicals, literally everything is stacked to make you enjoy this chemically. And there's one or two more parts of the bit, but that's the whole bit.

But it's really true. And yeah, this poor guy at the dinner was like, I'm not sure coming to San Antonio was a good idea. So if you ever go out drinking with Michael, this is what you have to look forward to. All of our listeners, like, man, it'd be really cool to get a beer with the acquisitions, anonymous guys.

Like, you're getting lectured about parenting. Wait, this sucks. How much did I pay to win this auction again? I'm not sure. I'm not sure. Tony was such a good idea. All right. So we got a big boy deal today.

So let's talk about $8 million in earnings. Ooh, it's a big one. So this is from my favorite business broker in the world. The folks at website closers, if you are a long-time list for the pod, The sensationalism in these listings is bananas and very, very often. I've not signed India on this deal, but very, very often, there's a lot more sizzled than steak in deals from this broker. So this is a home betting e-commerce brand.

It is the number one seller of betting products on Amazon. It has a $140-a-o-year-over-year growth, so it's doubling, and it's one-one. 100% Amazon FBA. That means all orders are done through Amazon. Amazon warehouses all the inventory and ships all your orders for you. It has $48 million in revenue and $8.5 million in EBITDA, and they want $49 million for it. So that is a 5.75x multiple of earnings. They don't say EBDA or cash flow.

They just say earnings. So this is a chunky boy. So website closer presents a middle market company in the home betting vertical. There are various product offerings in place to meet all user preferences, but it's historically positioned as a luxury offering. But they also recently launched a lower price point version of their product. There are two owners of the company. One handles the manufacturing piece of the business and is a prolific inventor with 25 patents.

Throughout his career, he is focused on creating high quality and in-demand products for large retailers like Toys R Us, Target, Walmart. He has 3,500 employees in China and Cambodia. Sounds like an unfair advantage. I sure hope he sticks around after the deal. The other owner is a serial entrepreneur and a strategic operator of the business. He started his e-commerce career in 2007 as the head of sales in a multi-channel e-commerce software firm and quickly decided to start his own company, taking large-scale manufacturers

directly to Amazon. From there, he launched his own Amazon brands and hired multiple virtual assistance to run them. after that so much success developing and training VAs. He started a virtual assistant company that today serves high profile e-commerce brands worldwide, assuming I think this one. And together they manage 19 companies and have never raised capital. So, you know, you got to buy a business from any business. And the first thing you ask yourself is like, am I smarter than the guy that currently owns his business, right?

Michael, do you think you're smarter in this area selling Amazon than this guy? I don't know, man. I think, by the way, my hold code course is launching soon. I think I should take a whole code course from this guy. It's kind of a bad thing to write in your listing. I mean, I think we rarely see something like this where the broker spends the first three paragraph kissing the butts of the seller. And it's like, well, why do I care?

Like, that's actually a bad, it's actually a bad thing to do. And exactly what you're talking about, which is like, oh, first thing it makes you think of is like, how much is this business dependent upon? upon these two guys being involved in it. And the way they paint it, like these two guys walk on water and scares a crap out of me. What also scares a crap out of me, because anytime I am buying a business from someone, I would like to feel confident that I'm the smartest person in that transaction, right? Do you want to enter a multimillion dollar transaction where you're pretty sure you're the

dumbest person in that transaction? Well, that's every transaction. But, you know, but like, this is like, I just don't understand why brokers do this. They're like, you are buying this from the smartest, most savvy dude ever. You know, and he doesn't want this asset. Don't you want it? All right. Well, keep going.

This guy, these guys sound like ballers, though. I mean, I want to. Oh, yeah, 3,500 employees in China and Cambodia. Like, this is a global business. Products for this brand are made in China and Cambodia. Orders are placed every three to four months and payment terms are 30 days after shipment. The business makes use of a 100% stock inventory model. Full containers are shipped directly to Amazon facilities, assuming using Amazon Global Logistics, and they distribute and fulfill orders.

The company utilizes a 3PL for filler stock to feed the Amazon DCs when stateside stock is lower. All products are FBA slash prime. Furthermore, management works with Amazon Global Logistics. Yep, for most of its shipping is often quicker and less expensive. The retail giant works with the company to coordinate containers being shipped directly from China to their warehouses in the the USA. This is actually really great. If you saw on Amazon, you were bringing in full container loads, Amazon's program called AGL, Amazon Global Logistics, instead of bringing your container, you importing it, importing it through probably the port of LA, if it's coming from China, clearing it into a bonded warehouse

or your own 3PL parsing it. If you prep it right, Amazon will bring it directly into their own fulfillment center. So you save that second step. It saves a ton of cost. And you also get to, to piggyback on Amazon's ocean freight rates. So if you can do AGL, you have to push a lot of prep to the Asian side because everything has to be already barcoded the right way and packaged the right way. Like it can't require any more touch. But if you can have it come prepped in the container, AGL saves a ton of money. I did not know that.

So it's cool that they're doing that. It's definitely a way to save money if you're making stuff in China and selling on Amazon. So currently sales are exclusively on the Amazon platform and a favorable supplier terms and insatiable customer demand provide the business with excellent cash flow. Typically $7 to $8 million of inventory is kept on hand, which ensures products are always in stock and supports the current growth rate. The company is not seasonal. However, Q4 is the busiest with holiday spending.

There's also a peak in summer because of a surge in camping trips. Okay, maybe that's air mattresses. Both owners spend less than 10 hours per week on this business. One focuses on operations and architect's seller Central, Delegates tasked to VA's and performance market research on competitors, the other spends time working his factories on quality and coordinating logistics. Fully trained team of VAs in India runs daily operations and is transferred to the buyer, or a buyer can use services of the VA company at cost that the existing owner owns and operates. Business is thriving. Management has no intention of slowing down. They have a lot of intention of selling this business to you for 5.75X, Ibutta. Firstly, in addition to the premium line, the company is launching a new lower cost product line. Secondly, they want to experience.

of the UK and Canada, and the owners are interested in staying on in some capacity with the buyer. They plan on acquiring assets with the buyer, such as distressed Amazon brands and putting them through vigorous programming to make them the top selling products in their categories, just as they have done with this company and multiple other Amazon brands. That's a very weird thing to tack on to the end of a listing. So, all right, Michael, $8.5 million of betting products on Amazon. What do you think? Yeah, it's interesting who they're kind of reaching out to here.

and interesting that they're doing it through website closers, right? Like, I think if you read into this, I'm like, oh, these guys actually are looking for some sort of partial liquidity, you know, type deal where a growth equity firm might come in or a buyout firm might come in and buy 40 to 60, 80% of the company and give them some sort of package as part of it to continue on and then right off under the sunset. But, like, people don't do that with website closers, right?

it's typically like $500,000 a year, like wedding blogs. And it's just bizarre to me that it's like in website closers. Yeah, I mean, this is a $50 million transaction. You can't get an SBA loan. No. No, like you're hiring an investment banker. They're putting together a SIM and they're calling like every private equity firm that does the size of deal because they're going to be the best payers.

So it's just kind of a bizarre way of going after it. And I think part of why we chose it, it's like, oh, this is an unball deal. Let's take a look at it. But $50 million deals don't trade with like four paragraphs of text on website closers. So I have seen deals like this, right? Like the way too big Amazon-only brand that eventually sells to private equity firm. I guarantee you what's going to happen is some lower middle market private equity firm who's never done e-commerce before is going to buy this.

they're going to install, the seller is going to piece out. They're going to install some CEO like from the betting industry, right? That has nothing about Amazon but knows about betting. And they're going to lose all their money in like 12 months. And the thing will come back to market with half the revenue and negative EBITDA. I've seen this play like five to ten times. It's, I mean, I know a guy, I know a guy here in San Antonio that's in aerospace. and like he has made a career out of building companies selling them and then buying them back

at a discount. So he'll take these. Pick the stupidest buyer on purpose. He'll just take and grow these companies. He'll get them to five or six, $10 million in revenue. He'll sell them for two to three times revenue. The next buyer comes along and totally screws it up. And then a year later, he's like, they are like, okay, well, like, I'll buy it back for

one third the price. And nobody else wants it because the thing is suddenly losing. money and shrinking. And he's, he's done that three times. So he has a jet. I don't have a jet. This guy has a jet. So, there you go. So notice the guys who have the jet are the guy that sells the company and then buys it back, not the guy that buys it and owns it in the middle. That's how you get, that's how you lose your jet. Yeah. Yeah, pretty much. Well, I don't know. A lot of those guys are expensing their jet to their funds, right? You go raise a $200 middle market fund. you know, they're a middle market buyout fund.

You're charging 2% a year in management fees plus expenses. You know, that's a lot of cash flow to fly around on net jets if you want to. So maybe you just have to rent a jet if you're the private equity guy. That's true. So speaking, this is why I think this is going to be a dumpster fire if this sells to private equity. The betting category on Amazon is brutal. It is one of the biggest categories on Amazon, absolutely massive, massive, massive, huge volumes. And it is cutthroat competitive.

There are a ton. There's no coincidence this stuff is made in China and Cambodia. It's all made in Asia, right? And it's all, like all these Asian sellers are coming online in this category in a big way. Black Hat is absolutely rampant, rampant in this category. I would be confident that this company's listings, like at this volume, you're doing 50 million of sales on Amazon, these companies listings are getting attacked daily with Black Hat strategies, you know, putting, you know, cancer-causing chemical names in their description, hoping to get their

listing suspended, one-star review bombs. I mean, this stuff is like constantly happening. And if you don't have like a crack team of how to fend this off, your number one listing that you bought in a year is going to be number 10 because all this stuff is going to aggregate and you're not even going to realize it's happening and you just don't know why you're not ranking anymore. And that's why this owner probably is spending hours each day checking in on these listings. I mean, you see that from the other Amazon sellers on Twitter. They're just like, guess what happened to me today? Like somebody claimed I have cancer causing chemicals in my toys.

So brutal. Yeah. And some categories are worse than others. Betting, betting, kitchen gadgets, and human supplements. are some of the most wicked categories on Amazon. So what do you think they are other 19 companies are that these guys have built? Like, what else they do? I would not shock me, by the way.

It would not shock me if, like, this is the mattress company and the other companies are all bedding and pillows and sheets, you know, like all that other stuff. And this is the shitty one because it's mattresses and it's bulky and like the freight's a pain in the ass. and they're like, you know, we want someone else to have this problem. Dude, I think you have to like that these guys at least are vertically integrated. They appear to be like going all the way up to the factory, controlling that aspect of it and then controlling the listing side. So at least that's a bit more defensible than people that are buying from, you know, other intermediaries or factories that are not custom. Because if they have 3,500 employees, they have to have cap, this has to be captive factories, right?

Like they can't, otherwise you wouldn't have 3,500. I think so. Yeah, this implies that it's captive factories. But what it also implies is like right now it's captive factories, but they're not selling you the factory and the 3,500 employees. You're about to become a customer of this factory. Right. So all that tight integration is going away.

There was a trend, by the way, in the fireworks business, which is kind of similar, where people started running the scam where they would go to the Americans and say, like, we want to sell you a factory. in China. And then you look up and it turns out you can't really own a factory in China. So these people would be like, I own it. And then the CCP member would show up and be like, you what? That happened like a bunch of times.

Total, total scams. Oh, boy. Yikes. Man, this is the scariest list thing I've ever seen. It seems like a great way to lose a lot of money really fast. Why didn't, I guess, I guess they, had to have been approached by Thrasio and all the Amazon roll-up folks, because this seems like a Thrasio, perfect Thrasio thing.

That's why they hired website closers. They want to sell this to an aggregator. Yeah. But aren't those guys all dying now? That's what I've read is they're all. It's a tough time, yes. That whole industry has raised a shitload of money. And then they bought companies at a ridiculous pace in 2020 and 2021.

Most of those companies source from Asia. and then in 2021, all of the Asian supply chains broke. So you had these companies that had laid out hundreds of millions of dollars of capital, which is about 80% debt capital. They had about 100, you know, some of these aggregators have bought hundreds of brands. So they had maybe a hundred parallel subscale Asian supply chains that all broke at the same time. And that, in summary is what's going on in the Amazon aggregator industry right now is the fallout of that. You know what I do like about this listing is like when you look at people who make a lot of money and become very successful entrepreneurs, like it doesn't ever look like, you know, it doesn't ever look like Lawrence of Arabia, like taking a mad leap at the beginning. It's like they just do it like incremental steps all the time. Like this guy, he started his e-commerce career in 2007 and his head of sales at a multi-channel e-commerce software firm. Then he got bored of that and he decided to go start his own company taking large-scale manufacturers directly in Amazon. And, and he started to go start his own company taking large-scale manufacturers directly in Amazon. And, and,

no point was at a million dollar bet, right? That was just a small bet. He probably just said, okay, like, you know, flew over to Asia, found some orders, and then went and put him on Amazon, and then he just kept rinse washing and repeating it. And then he said, okay, well, I'm going to take that and turn into my own brands. Just, it's incremental stuff here. And then he did the virtual assistance thing. And then he's like, oh, people want this. Like, I'll sell them to other people, incremental bets. Like, at no point here, did he do any sort of like, oh, I'm going to do the next Uber. It's all like, oh, okay, like, I'm going to incrementally this. And I talk about this effectuation way of doing like new venture creation.

It's exactly this. Like you try things, you do little experiments, you go all in on what works. And then you do it a bit more. So I love that. And then I have another point about the listing, but I'll pause there because otherwise this turns into. I mean, 100%, right? Like this guy, this guy like hired one VA one time. And then like 15 years later, he has 30,100 employees in Cambodia.

Like, that's how these businesses get built. And you're like, oh, geez, you know, if I hadn't like Googled that one thing that one time and actually took action, I would never be here. You know, most big ventures, like, you don't just like have the grandest of all ideas. Like, I know I'm going to fly to Cambodia, hire 3,200 Cambodians to all make mattresses, right? And then we're going to, like, that's not how it works. It's incremental. Yeah, 100%. And then I love this, the second thing here, which is, I think, a lesson to learn about partnering.

Like, he met his co-founder in 2015, and they quickly realized that their skills and interests complemented each other. One was really good at sourcing and managing factories, and the other one was really good at the sales side, right? The other end, and they partnered and complimented those two things together. And they grew really quickly. I mean, they just rode the Amazon platform like crazy. And again, you think about this. They started this business in 2017. Five years later, five years later, they're doing $8 million a year in earnings and $4.4.4.

49 million in revenue. Like, that's a crazy rocket chip. Crazy rocket chip. You see it. You see it on the internet, on Amazon especially. The scale of the internet is just crazy. Just crazy. It really is.

Hard to tap into, but when you do, man, it just happens. So, well, what else do we want to talk about on this one? I'm still confused by how the summertime is like a big sales thing for them, like in camping. Do people, is this like really cheap betting that people buy for camping? They must be selling camping natuptu. or air mattresses or something or toppers or something. There's got to be something. Yeah.

Some angle to it. The thing about this listing overall that I take away is I just look at this and I go too complicated, like too intertwined with the seller's other businesses. It's intertwined with the seller's factory. And like one of the partners owns the factory. Like they're getting preferential treatment. They're flying in Cambodia all the time. One guy probably lives there.

Like there's no way you're going to be able to. extricate this from the factory side. And the factory is always going to own you because without the factory, you're screwed. Right. Like you have no way to replace that factory. And it's fine because he owns the factory. So he's not going to screw himself. Plus, it's definitely intertwined on the virtual assistant side with the other owner's virtual assistant business. Like, this just does not give me the vibe of a business that is very separable. You know, you buy this and you're going to do a ton of work to tear it out of the sellers respective empires. And even if you do tear it out, you know, you can become a third party customer of this

mattress factory in Cambodia, like, they own you, you know, and suddenly you're not the same guy. You know, it's just, this is, I don't like this because it doesn't already have arms length relationships with its inputs. Well, I think that's, you think about our buddy, Michael Patron from, who does exactly this just for power tools on Twitter. and like I don't know if you know it, but he has an unfair advantage,

which is like he has relationships with some people in China that like, they go to each other's, they like, we're best men in each other's weddings. Like, that's the kind of unfair advantage these folks who develop these relationships

over years have, and it's just like a crazy, a crazy thing to try to compete with. And just, anyway, just talks back to what you're talking about, like, scary to do that. And then secondarily, like,

if you own a business, there's these, there's actually these checklist. I'm sure you've seen them, but they're like transferable transferable value assessments. And it's basically a checklist where you go through

and you look at your business and you give it a score that says how much of this business could I actually, how much of this business is really dependent upon me and how much can I transfer to somebody else?

And it's crazy when you look at a business like this that's doing eight million a year in profits and like they're going to score terrible on that because there's very little they can extract from themselves. But the thing about

those transferable value things, like you have to start working on them a year, years ahead of time to have a good score. You can't just start doing it when you try to sell the business. Like, you have to start premeditating. Like, how do I extract myself and make this thing a unit that can transfer to a new owner without me having to work in it and keep it going? And this is definitely one of those. Because it usually involves hiring and training people and getting to arms life contracts with any relating parties. And it's, it's a lot of work. Well, it's interesting also because, like, you look at these guys and how they work and what

types of employees they talk about. They only talk about very low-level employees. VAs, automated people, that sort of thing. So they've been geniuses around that, but you don't see anything in here about them talking about hiring people who are like higher-level knowledge workers, right? And it's kind of a mistake. Like, you end up with this business that will only scale to a certain size because it's a hub-and-spoke management model. You have one person with 500 systems and 300 employees reporting to the CEO. And I've seen people run businesses like that. And it's fine to do it that. It's just, not transferably valuable unless you have like a real management team built into a hierarchy, which would help these guys a lot if they had done that. But they just may not be the type of

people that can do it. Not everybody can't. It's hard. It's really hard. Cool. All right. Well, this is like the one of the most interesting ones we've ever done. This is super cool. But I love your, it's hard comment. Like, you compare this to the tent business we looked at last episode. And like, that's super easy. Like, they're like, bring tent this day. What size tent do you want? I bring you a tent. I take tent away, you send me money, much, much easier than this, you know, like much, much easier than this. Just the pain in the ass factor is not there for sure. And the risk factor of, you know, like, you're spinning 10 plates in this mattress business,

right? Anyone could fall apart. I mean, I would guarantee you, when you get the SIM, this business got annihilated in 2021 with all the supply chain stuff. Like, they're shipping mattresses across the Pacific. The container rates went from $4,000 to $30,000. You know, I mean, craziness. Businesses like this, you have high fixed costs, you have variable demand,

you have tenuous relationship with your number one customer who is Amazon. Amazon is not your partner in this. Amazon is your customer, and they can cut you off like a light bulb. And a business like this can go to lose money very quickly and go from making $8 million a year to losing $3 million a year. And there's not much you can do about it because you just have, you got all those 3,500 miles to feed in Cambodia and China. Like, what are you going to do with them?

Like, it's, it's tough. It's tough. And stuff like this is tough to transact. Unless you find a dumbass, a dumbass private equity firm with a lot of money, and it turns out there's a lot of those. There's a lot of few of them than it used to be. That was easier in 2020.

It's crazy. It's crazy. Cool. All right, this is a great one. And ask for everybody. Or do you want to do the ask this week? What ask would you like to do? All right.

I'm going to do the ask. So the ask is, if you like, this episode. We want you to not only send it someone who you think would like it, send it to someone who you think would get value out of sponsoring it. Because we would really love to book a couple sponsors. Our audience is entirely people who are buying businesses, running businesses, borrowing money, right? Looking for banking relationships. They need accountants, they need lawyers, all this types of things. If you know anyone in your professional network, they would get value out of sponsoring Apposition Anonymous, please send them our way.

We really appreciate it. Thanks, y'all, and we will see you next week.