Acquisitions Anonymous - #1 for business buying, selling and operating - A screaming deal on ecommerce cookware? The next Hexclad - Acquisitions Anonymous 234

Episode Date: October 6, 2023

In episode 234 of Acquisitions Anonymous, the hosts discuss a premium cookware brand with impressive patents and trademarks. They express confusion about why the business isn't larger despite its strong profitability and high return on ad spend (ROAS). They speculate that niche products and Kickstarter campaigns might limit its market potential.Today's deal comes from Axial.  Axial is a trusted deal-sourcing platform serving professional acquirers in the American lower middle market.Thanks to this week's sponsors!Employer Flexible will help you take action to streamline your company’s HR processes. They are the proud provider of flexible and adaptable PEO services. If you’re a small business trying to grow, and you’re struggling with a lack of internal HR or you’re just dissatisfied with your current HR setup, consider Employer Flexible as your next vendor for HR outsourcing services.Check them out at https://www.employerflexible.com/.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 to Acquisitions Anonymous, where today we're talking about our audio visual setup and something that's entirely interesting to us and boring to all the listeners. Anyway, Bill's going nuts. It underscores like, we're all just trying to be Michael Gurdley because I got this. I stole from the office this really nice microphone, and I don't know Jack about audio, obviously. And I'm like, trying to get it set up. And I'm like, okay, I think this works. And then I get on and I'm like, how's my audio? And Michael's like, hmm, it's a little echoey.

So true story for you. I created this co-working space here in San Antonio. And so two things have happened. One is everybody kind of walks by my office, which is ridiculous. Like it's just basically set up just to look good on Zoom. And then the second thing is like I've started to give away like stuff I don't need anymore. Where I'm like, oh, I didn't like this. Here you could just have it.

So like different cameras and stuff. So that's all like basically this whole place is turned into like over the top Zoom. So everybody's doing it. And it's one of the highlights of my life. So there you go. Today's sponsor is Employer Flexible. And what Employer Flexible does is really function as a fractional HR department for your company or business.

I've used them numerous times and putting together my companies. I've used them when I bought companies. I've used them when I started from scratch. And basically when you're moving quickly or when you don't want to spend the time putting together your own HR department, benefits, all that kind of stuff. and you want to get the scale of being part of a larger group, you can reach out to employer flexible. And what employer flexible does is give you that buying power

as if you're part of a bigger group and all that kind of stuff. And for me, I love working with them for numerous reasons. One is I know the owners and a lot of the staff, and they've always treated me super good. And then the second thing is I hate HR. Like, I don't enjoy it at all. And this way I can know it gets done right. I get the benefits of having a big fully staffed HR department

and the flexibility of having a vendor like Employer Flexible being there as a partner throughout my journey and making sure that everybody I work with is happy, taking care of, and we can focus on what really matters in our business, which is take care of our customers. So you can find their contact details, locations of their various offices, as well as more details on how they will help your business by going to employerflexible.com. And again, that's employerflexible.com. And thanks to them for sponsoring today's episode. first I want to brag about my t-shirt

this t-shirt so you may not recognize this t-shirt but it's the t-shirt that ad rock wore in the Beastie Boys Fight for your Right to Party video from the 1980s so the actual one just maybe totally dating me the actual one you bid on it

it was a silent option yeah yeah it kind of smells it's a 45 year old t-shirt no no I got it for $12 on Amazon but I was like I saw that video and I was like, I need that t-shirt. It turns out somebody's selling it on Amazon. It says Stuyvesant physical ed. And the funniest thing is watching people around San Antonio try to pronounce

Stuyvesant because they have to spend a, not a thing. I was not going to try on live audio. Definitely not. Yeah, Stuyvesant. I love like inside, I have a shirt that says, uh, the beats killer tofu tour, 1996 or something, which you would only get if you were of a certain generation and watched Doug funny growing up.

up because the band he was in was the beats and their song was called Killer Tofu. I love like inside joke t-shirts like that. I've tried to go back and watch some of those with my kids and it just doesn't hit the same way. Hopefully it does for them though because like you know, you got to be a certain age, I think. Like adults, like I watch this stuff and I'm like, this is terrible. Why did I like this? But you do. I see people watching SpongeBob and I'm like, is your brain rotten?

That is that entertaining. Anyway, all right. I agree. I'm true. I hate being about Bob, but like, they probably think that about Doug and, you know, hey dude and all that stuff. But whatever. All right.

We have a cookware brand, which in another 19 years, I wonder if I'll think, geez, that's terrible business. But right now, this one seems pretty interesting. All right. So this is a deal, Mills and the memory of Bill. This is a deal off of Axiel. It is a premium cookware brand. And thanks.

again to axial. Man, it's changed the show, I think, Mills that we're doing these axial deals, because they're just, like, bigger. Yeah, this is good. Better. Like, I, so good stuff on there. And it's unique, right?

We can look at, like, the same things over and over and over again and, like, talk about the little intricacies, but, like, this is, there's actually something to this, and some of these ones that we've looked at, like, you know, it's a real country club, not like, you know, $200,000 revenue one. And it's a real e-commerce brand. 100%.

All right. So from Axial, here's the deal. Title is premium cookware brand. They design, manufacture, and sell cookware, I guess. So they have proprietary designs, 19 patents, and 10 trademarks. It is an e-commerce brand that has been built from the ground up, not to just sell online, but to be a preeminent real brand in the cookware space.

It can be sold via e-commerce marketplace and retail channels. The brand offers a premium, high-quality and proprietary line of kitchenware with many more products in development. The founder has created a range of cookware and kitchen tools, including pots, pans, and multiple patents and trademarks covering every product in protecting the brand's margins and equity globally. The products compete with some of the highest in cookware on the market, such as Lodge, All-Clad, and Tefl. The global market is enormous and a significant shift is underway towards a healthier, more sustainable, locally made products, particularly in the kitchen space. The brand is ideally positioned to capitalize on the shift. The founder of design

engineer is a qualified mechanical engineer with a business degree of over three decades of experience in the cookware industry. His town for innovation, IP protection, brand building, direct marketing, and business strategies help this brand pro afraid year over year and build a cult like following that continues to grow strongly. All products are made under contract exclusively for the business by manufacturers with no reliance on China with manufacturing agreements in place with key contractors. That's really interesting about China. They use digital marketing, various methods, advertising via Facebook and all that kind of stuff. They're generally strategy is to run traffic and conversion campaign side by side to achieve a baseline

baseline return on ad spend of 400 to 500 percent from there the budget is increased and the audience is broadened to maximize value. Google ads work well with the return on ad spend of 885 percent and so on. They also do affiliate marketing with commissions and that sort of thing, email campaigns also as well. So yeah, this is a digital marketing thing for sure. The customer is built on and with its community, each product in the store has been through the Kickstarter crowdfunding experience from the first launched in 2014 until now. The company has launched over 50 Kickstarter projects delivering every single one. The typical customer is from an AB income diffographic and likes

to collect many of the brands products for the kitchen. The seed demographic is also supportive, aspiring to own some products. So Mills, before I finish up with this, what is this ABC income demographic? Do you ever heard of this? I don't know why you're asking me. That's hilarious. I was like, what is this code for? Well, I didn't know your back, Bill, I was reading. Do you guys know what that ABC is? No idea. What does that mean?

Never heard of that before. I've seen a lot of stuff in business, so this is kind of an odd thing where I'm like, what is this? I've never heard of it. I got nothing. That may be their internal customer segmentation. Maybe that's all I can guess. So, all right.

The owner works full time and focuses primarily on marketing and branding strategy, product innovation, IP management, and goals and actions for the team. He is willing to continue in a design. designer, advisory role for the company for several years if necessary. Full-time employees include an office manager and a part-time folks and everything else, sales marketing, marketing assistant, customer service lead, and logistics assistant. They've shown growth, and they're just recently have been put into 130 retail outlets, and the seller has not historically offered credit terms to any retailers in order to keep

the breaks on growth, in addition with a backlog of innovative products and development for launching the company years. 2022, they did $4.9 million in revenue, EBITA of $1.7 million for a 36, even a margin. They are located in the South Atlantic region of the United States, and that is it. This is an e-commerce brand doing about $5 million a year

and supposedly pretty profitable that uses Kickstarter to launch their products. What do you guys think? Okay, so I just had this overwhelming feeling while you read this listing, Michael. Like, they've got 800% ROAS on Google, 400% ROAS on Facebook. they talk about how they're doing all these launches.

They've been doing 50 successful kickstaters. That's unreal. Why is this business not bigger? Like, I'm really, like, this is bananas. Like, this business should be 10 times bigger. Something doesn't add up. I'm very confused. Potentially, because if everything here is true, what you do is you just buy this business,

never launch another product, and you 10x your ads, Ben. And boom, your business is 10 times bigger. I mean, I'm oversimplifying a little. but not that much. All right. Could it be, Bill, that they just are setting such a small marketing budget that, like, obviously, you think about, like, marketing on something like this, if it is one-to-one correlation, for every dollar I put in, I get out, you know, X number of dollars that is greater.

And in this case, for every dollar they spend on marketing, they're generating on Google, right, $8.85 in revenue. Yeah. So it either tells you that they have a limited amount of free cash flow that this doesn't point to to actually be able to allocate towards marketing or they have some kind of bottleneck in their workflow. They can't produce enough. They can't ship enough. They can't fulfill. Something.

I mean, they've got a 36% EBITDA margin. Like, that's incredible. They've got $4.9 million in sales and $1.7 million of EBITDA. Right. So either the founder just wants to make a 36% EBITDA margin and would rather be small. smaller. I'd find that hard to believe. Or that they find that they can't scale their Facebook ads more or the Roas just absolutely takes a dump. It usually would take a dump linearly, though, not like you wouldn't go from 800% to 0%. So, like, I don't really buy that. I mean,

the other thing that I know, like, I don't know if you guys know the brand Hexclad? Yeah. You don't? So HexCla has gone from zero to hundreds of millions. I mean, Gordon Ramsey is their spokesperson. And they are three years old. And now they have great technology. They have this cool hex, like diamond-encrusted non-stick thing. So they have some IP there, but it's very cool. But they are a marketing juggernaut.

I mean, they are spending millions a month on Facebook ads. So I know that you can spend millions a month on Facebook ads for cookware. I am just flabbergasted as to why this business is not bigger if everything here is true. It just doesn't add up for me. I just went into the Kickstarter cookware section and it is unbelievable how many projects there are.

Everybody in their mom is like, I've created the next cast iron pan or check out my knife. It is just out of the, like, and I do wonder how many of these are just from people going and finding some facts, in China and just repackaging it and saying, oh yeah, like, I'm doing this new thing.

But like, literally, like, here's how crowded the space is. And this is to me, this to me is always a sign when you can tell there's a crowded space, is if it's, like, super difficult to come up with, like, a good name. And literally, like, one of these brand names on Kickstarter is broccoli. Like, that's the name of their cookware line. They named it after a flowery vegetable. So, like, if you're looking to get into, like, a blue ocean

and not compete with people, like, find a place where you can actually find a name. and if you can't, that's a pretty bad sign. That's a great litmus test. I wonder, too, I mean, 50, to have 50 different Kickstarter campaigns, it makes you wonder how many actual skews do they have. And the average revenue per skew or the revenue dispersed across those products can't be that big.

I wonder if these are like novelty rather than like really widely, you know, wide range appeal because you know you can find a kitchen gadget for anything and it's like okay how many you know really like have you seen those crazy pineapple core tools michael you know that like you cut the top off the pineapple you cut the bottom off and then there's this like huge corkscrew thing that'll like core it and peel the outside and like slice it up and stuff and it's like okay yeah how many people are actually going to spend $15 on that not not everybody maybe one in 10 i wonder if they just come up with a bunch of just crazy products. And so their tam is small because it's not like, it's not like regular pots and pans.

Like everybody needs a nonstick, like nine inch saute pan. But they may be like, well, that's too crowded. So we're not doing that. We're just going to sell, you know, a crazy silicone, you know, kitchen utensil or something. Yeah. And by the way, I'd like to give myself a co-host of the day award today because I almost just went and gave everybody a pineapple story. And then related to that is a, where do people in Hawaii actually go for a vacation

story? So I'll save you guys. I'll save you guys, save you guys both of those stories. That's where you're bringing back to the deal. I was like, oh, I have a story for this. Would you guys like to hear about like pineapples? Anyway, go ahead. I just think it has to be a small tam.

And like the product is so products. And a lot of them are so niche that they may be, it may be that they can continue to spend on ads and it does fall off of a cliff kind of linearly because there's just not that many people who actually need the specific product, you know. Yeah, an interesting play here, which it doesn't sound like they're doing much, is the number of brands and Bill, you're going to tell me this isn't new, but maybe it's just one of those things I haven't discovered until recently, but like the amount of like money going from brands to like influencers to promote them and doing like very sweet deals for the influencers

is much bigger than I'd ever imagined. Like some of these things going on. And it sounds like the way they write this here is that they get free stuff from influencers. And to me, like, you know, the ones who are going to win in this type of space are the ones who are dropping money to those influencers in the background to get them to talk about their product.

So anyway, Bill, I'm sure you have a lot of expertise in that, given your field. He dropped off for, Oh, but one thing to say about that that I think is interesting is when an influencer has an audience and then they find a product, you know, to go with that audience instead of just, right, I have an audience. And yeah, I would love to tell you about, you know, my shoes that I bought from Reebok or whatever that, you know, it's just totally incidental. My wife has bought all this random kitchen related stuff from an influencer on Instagram. I'm like, why do we need their flour? Like, how special. And like, they're shipping five. five pound bags of flour, you know, via FedEx. I'm like, there's something like really weird about this. And like, I'm sure we're paying, you know, 10 times the sticker price of regular flour for this special stuff.

We've never used any of it. I swear, I think we have a subscription. Yeah, I mean, it's an interesting question. I think it's an interesting question whether like influencer marketing is eventually going to stop working when people kind of figure out how it all works. And maybe, maybe they never will, but like the fact that so many influencers get paid so much to promote these brands, and some of them disclose it and some of them don't, you know, those are two things

where I'm like, hmm, I wonder if like in the future influencer marketing just isn't going to work as well, or in the end, I'm probably just like overestimating the intelligence of the American consumer. So I think that's probably the right answer now that I talk about it. I just think that like people, people sometimes, right, and it's probably selective, they have like decent BS radars. And so I think the people who really go far with this actually create a product, you know, and it's not that, I mean, not that hard. I'm not trying to minimize what they're doing, but they can come up with an idea and go contract, manufacture something. And it doesn't have to be all that unique. I had a client who had a really, really massive Instagram account, and she

started selling her own, it was like a, you know, green smoothies and milkshakes and stuff like that. She started selling her own protein powder. It's not totally, unique. It's just, you know, people trust her because she puts her name on it. I think that's where it's really, really valuable. Actually, all the protein powders are exactly the same. Yeah. Yeah, exactly. It's the crazy thing about it. It is interesting how, like, you can eventually see every influencer, like, basically ends up at some point selling some sort of supplement. Like, it's just because it's just like, you know, it's just like the perfect business, like recurring consumption, you have

placebo effect. Like, it just totally, yeah. 85% gross margins. 85% gross margin. No spoilage. Yeah, I mean, it's like, it was no shocker to me when, I guess you guys have seen that guy,

the Johnson, what's this guy, Eric Johnson or Mark Johnson, the guy who's like trying to make himself live forever. You know what I'm talking about that influencer? Oh, yeah, Brian Johnson. Brian Johnson. I think he's a good person, but it's also no surprise to me

that he's like, okay, well, I'm going to be selling some supplements now. Like, I've got no shit you're selling supplements. Yeah, I could have called that one. To figure out the supplements that work, right? You know, why does Bill keep freezing every time I tell a story? Like, this is really hurting my confidence. This is brutal.

Every time I tell a story, you freeze, Bill. I'm sorry. I don't know what's going on. All right. Give us some hot takes on this. deal because Mills and I, Mills and I feel like we're waiting for you to bring in the heat. Okay. So what's interesting to me,

so you say like everybody ends up selling supplements, right? Everybody ends up selling supplements or kitchenware. Because kitchen is a huge, huge market. So I don't know if you guys know this, but Holman Kitchen category on Amazon is the top selling velocity category in Amazon.

So, I mean, when you think about it like literally everyone cooks, right? I mean, almost everybody cooks. So this category, I mean, this is up there with like wallets and, you know, clothing for market size. I would argue it's probably even bigger than supplements for market size. So that's great. I mean, like one thing I have learned in business is just like, don't fight market size. Like you want to be in a big market that is growing. Otherwise, everything is brutally hard. It just, it just is. I love niche businesses and all that stuff. It's cool.

But if you're trying to build a big business, be in a big market. It's just way easier. And then if there's some tailwinds in there, it's even better. One of the things we were talking about with this one is if they have 50 Kickstarter campaigns and, I mean, God knows how many skews, the dispersion of revenue across those skews is so small if they're at $5 million in revenue. So part of me wonders, like, are they, are they, like what I was telling Michael when you dropped off was, are they just like making a bunch of random kitchen gadgets? It doesn't seem like they're

making like, you know, nonstick saute pans. And like, like, I feel like that's how a lot of these companies have come on is they do really something like a little bit innovative and really unique on one, like one pot or pan. And then they can just grow that because everybody needs one of those. But if like this guy is making like things that cut grapes into quarters, like how many people actually want to buy that, you know? I completely agree, Mel. So I think it's one of two things. Like 50 Kickstarter is so many kickstaters.

Like that is exhausting. Like it's so much work to do one kickstar. He should teach a course on that and probably will make a decent amount of money because that seems hard. Probably more money than he will sell in pants. Yes. Agree. So I think one of two things either going on.

Either it is the thing you described, which is they're just doing Kickstarter for everything. And I think we've talked in the past on this podcast about how some founders are product founders. And like when they want to grow their company, like all they just do is create another product, create another product. And they end up with these incredibly large skew catalogs that are overly complex, expensive to maintain and working capital, and kind of nothing scales. No one, they don't have a hero skew, right? And very often, like, the huge opportunity is coming in and buy a business from a product founder, because the product is probably really good.

But usually the marketing is terrible. And this business actually reminds me a lot of natural dog company when I bought it. When I bought it, they had rabidly loyal fans. They had nearly 50% EBITDA margins, just bananas. But they, she would not spend more than $9,000 a month on Facebook because she literally hated Mark Zuckerberg. She had like a personal problem and thought like Facebook was ruining America. So she would not, she had a 10x Roas, not too dissimilar from this business, but she would not spend over $9,000 a month because of like a personal hangout, right? And they had all these different products and all these different skews and all she did was skew innovation. And I'm like, why are you making it so hard? 10x the ad budget. Like,

you already have everything. So this reminds me, and we did and we scale that business more than 10 times since I bought it. So this reminds me of that business. I think this could be a product founder who just launches new stuff all the time and never like finishes taking a good skew and a big market to scale. Or, or, this product line is part of a bigger company. And the bigger company has done 50 kick starters in all kinds of other different areas. And they're trying to carve off this brand and sell it. It's either, like they could just be a Kickstarter machine. And Like maybe they just kickstart things and then get it started and then sell it. I'm not saying that's inherently bad, but that could be what's happening to.

So I have figured out how to identify these product founders like immediately. Like you have a meeting with them. I'll tell you about the business and they'll walk through how the business works and they will spend 98% of the time just talking about the product and the technology and zero percent of time talking about sales, marketing or anything else. Like exactly the lens they bring to the world is how they'll describe the business to you. and for me, like, I can discover it in like 30 seconds or even 30 minutes.

It's just like, what are you going to talk about? And like, they don't even talk about anything else other than like product and tech. That's their whole lens for looking at the business. And to some extent, I think their whole lens for looking at the world. I love it, though. Like, that's not a red flag. I think this is like a green flag. Like when you as a business person, like, because I will admit, I am not like the most

producty product person, you know, at all. Like, I'm a business person. So if I come into a company that has, really great products with product market fit that are designed within an inch of their life, that is a better product than I would have created from scratch anyway. And that means that company has a huge blind spot in places where I'm very good, which is marketing and go to market. So I love to buy a business from a product founder with the huge caveat of you have to remove

them or you've got to put them in a corner and they're not CEO anymore. I was going to ask, what actually happens with this deal? And then part two, Bill, who do you think, or what do you think their dispersion is between FBA and their own dot com? It said that in there, didn't. Are they like 76% dot com or something? Did it say it? I think this is a pretty serious dot-com business.

They say they've got 1,600 members in a Facebook group. They do all this UGC. They do Kickstarter. This does not sound like an Amazon business to me. Yeah, 70% of the revenue is B2C direct. And the brand is only just recently stocking 130, retail outlets. They might not do marketplaces at all. I don't see a ton of

even mention of marketplaces in here. Yeah, yeah, you're right. When they said B to C, I just assumed they lumped Amazon into that. You wouldn't. In ecom world, B2C means Shopify. Okay. Okay. All right, so what happens with

this deal? We have 22 financials. So we're three quarters of the way through 2023. Do you think this deal got done? Do you think it gets done? Who buys it? And what does the deal look like? I definitely think. This is on the face of it a great business. I mean, there's the giant flashing caveat of why is it not way bigger? And my worry is that when you come into this thing,

you will find that either the margins are garbage. Well, but the margins can't be garbage because they've got a 36% EBITDA margin. So that can't be it. I think when you come into here, you'll find that either they got too much inventory or for some reason the Roazas are not as good as he thinks they are, or there's something wrong. But if there's not anything wrong, this is a screaming deal. Like, this is real, like basically, you buy this. If they've got, in fact, 50 successfully launched kickstaters, which means they've probably got 50 good products. And then it says that comes to the backlog of innovative products and development for launch in the coming months and years. If that is what you really have here and you really have 800% ROAS is,

you step into this thing and try to turn it into Hexclad. Well, and Bill, You and I've talked about this some in the past offline, but I wonder if this is a case where you mentioned inventory. I wonder if inventory and working capital is just like squeezing this founder to death. Because with that many skews, right, and they're talking about they just, I think there was some, there was some mention of like they just made a big buy or they just placed a lot of product. I wonder if this person is super cash strapped, even though they have high margins because they order way too much product and it moves on a different schedule than they anticipated.

And too many skews, right? I mean, if they're done 50 kickstarters, like, I think you take this business, you cut half the skews, you 10x the marketing budget and you release, you do a drop two or three times a year with a new skew, but it's entirely marketing. If what they already have here is real with great Roazas, which means the brand resonates, they've got kind of product market fit or at least message market fit, right? You scale this thing up. You simplify the business, 130 retail outlets.

This thing could be on the freaking doorstep. I really want to know why they're selling. There's got to be a reason. Yeah. Well, I mean, it is interesting. You do see founders sometimes like these product guys who get to a point where they're just like, I feel bad because I know I can't grow this business anymore. And I also don't have the capacity for risk it's going to take to keep going.

Like you see they said here in the teaser, like, we're not going to spend any more money or the founder doesn't want to spend any more money on growth just because. And it's just like, oh, like they're not capitalized right. And often these like product founders, like they don't have any appetite for risk whatsoever. Right. They want things they can control. And that's like products and things and what happens in kickstaters. And it kind of shows in the way they've built the business too, right? Like they are getting proof on Kickstarter before they're doing anything.

Like it's like, oh, we're going to run this. business in a very conservative manner. And I agree with you, Bill, I think. Which also helps on their working capital because they, I mean, with most Kickstarter, they're not spending any money on inventory until it's already pre-sold. No, you have an amazing, like, you know, whatever it is, like net capital. Yeah. Net days to capital, you know, coming in because he's getting ahead of time from Kickstarter.

Bill, I really want you to sign the NDA on this. I guess now that I've recorded the episode after this, I can sign the NDA and learn a little bit more. There's something, there's some really cool nuggets in this business. Like, this is one of the better econ businesses I have, if the teaser is right, this is one of the better econ businesses I have ever seen for sale. Look, this checks, not that we made a checklist yet, but this checks a lot of boxes for the first Acquisitions Anonymous host deal. It's got, it's something we're good at.

It's something that our audience will buy because you know all you out there need a new frying pan and like it seems like a lot of fun like and like it's within the price range of where we can we can make it happen so like like just saying this would be a good one for us to look at or bill you just do it by yourself and then tell us how rich you get if you weren't on YouTube you should you should log on and just like whatever this point is timestamp look at it because I could see a light bulb go off like my the faces Michael was making it was like he was talking himself into the deal, like, before we can get it out. Yeah.

Let me give me this idea, guys. That's exactly what it was. This is the type of business that you would back at, like, an e-commerce experienced searcher in that could absolutely murder it. Like, somebody that buys this, like, that maybe has already had a win in e-com and is looking for their next thing, buy this and 10x it. I mean, this could be a smash. The reason I like it.

for us doing this deal is I would 100% be the low person on the totem pole among the four of us and you guys would not ask me to do anything for it. Except maybe sweep the warehouse out, you know, on weekends or something.

But, no, Mills, I want you to be the face of it. I want you on camera. The manly cookware brand with the beard and everything. You know, like Dr. Squatch style. That's you. All right. I will consider doing that. But like, you know, if we Mills are going to need you to fly up to New York. somebody has to be on Fox News this morning talking about our cookware line.

Mills. That's right. If we bought the worm farm. Can you do a fake Cajun accent for us? You'll be like, hey, Mills, we need somebody to drive the tractor.

Will you go, you know, will you go handle that for us? But this, you're not going to be asking me about, you know, any Roas or anything like that. Ironically,

I would also want you to be the face of the worm farm. Either way. Hey, what's going on with the worm farm? Did you get the information yet? Are they still hard to guess? Yes, yeah, but it came in the most hilarious packaging. I got, I think I got like maybe 23 different attachments.

And it's like in some really weird, like it's not share file, but it's some really weird file sharing thing that. I'm scared. But I think I like, I'm pretty sure I got tax returns. And I can't remember what all the different attachments were. But it was not, it was like not very organized, not great financials. and I'm still trying to figure out how to actually get it in y'all's hands

because the packaging, the delivery method and distribution of it was so bad. Yeah, sounds about right. We should check it out. Also, I thought worth bringing up, we did have a broker get mad at us for me and Heather commenting on their typos and said we publicly shame them.

Then don't make typos in your listing. I have no sympathy. Proof-read. It's like, Well, at least Michael, maybe you should meet the sim. At least it was that and not their appearance. You know, like, you know, hey, he's wearing a hat.

He's touching his face in his profile photo. Like that you can't come back from. But at least typos, it's not like a character attack. Instead of public, she's shaming me for writing a poorly grammatically composed letter. Perhaps you should, I was like, well, no, we were just, we weren't picking on you. We were picking on the letter. It's just the T's, run the checker through, run the spell checker. or please. That's all we're asking.

So bringing back to this deal, the one thing I also want to call out that also makes this even better is, if you look at the very top, the titleless thing is proprietary designs, 19 patents and 10 trademarks. Yeah, we didn't talk about that. Which is another thing that you don't see a lot, is like actual IP protection in these big markets that are very often generic products, you know, like cookware. You know, I would want to understand if that's really real patents and trademarks or if they're stupid and not really providing any protection.

But if you have patents and, you know, 19 patents and 10 trademarks, you get 50 skews using them. Like if you've actually got this thing ring fence like that, spend more on marketing. I do understand. Like, I mean, this thing is just dying to have the candle put on a hill. I'm so curious about this deal. So that means, all right, 19 patents, that means they've done something unique from a product perspective that is protected. but the trademark would be unique names, right? I mean, so that that tells me that there's even probably some like actual brand.

Like if, like Hexclad, right? Like that's a name. Nobody can steal that. That's trademarked. The patent would be around their, you know, unique products specifically. But so 10 trademarks to me tells me that there's at least like maybe diversity in the brand, that it's not just, you know, this kind of large kind of homogenous things. It's like maybe they have different product lines and maybe some, you know,

uniqueness underneath the umbrella. This screams product founder to me again. Like they're launching every single product with its own like kitschy name and trademarking it. Because like really you need, you don't need 10 trademarks. You need like one or two. Like you want to go in all in on hexclad, right? Or natural dog company.

Not like the trademark on the name of the product. Now that's nice to have. Like I'm not belittling it. But like there should be one mega mark that that is. is your name. It's the 19 patents that are a little bit more interesting to me. Again, screaming product founder also. But if that's actually defensible, private equity loves. Like, this is the type of thing. If you could scale it and those patents are defensible, then you can sell to private equity for a really big number. What do you think, Bill,

if it's, what do you think this deal actually trades for? If there's no like huge red flag, like thing that just erodes the value. I think you'd go for. five times, I think you go for 10 million bucks, probably. And then how big does it have to be to really be able to exit to private equity? It's got to be five million in EBITDA, probably. And then it'd be worth 100 million. You know, so I think you could conceivably turn 10 million into 100 million on this deal with three to five years of really good execution.

Yeah. Please sign the end of you. I'll at least circle back to you guys when I learned more. Yeah, yeah, yeah. All right, you guys want to wrap it up there? Just a reminder to everybody, so we found this deal on Axial. We've been doing more Axial deals lately just because you find stuff like this. It's a little bit bigger.

It's a little bit more professionally represented. There's definitely going to be an intermediary here. So, you know, the seller's going to have realistic valuation expectations. I've just really enjoyed, like, sort of the higher quality deals that we're doing from Axial. this one kind of being a proof point. I love that they're like selected through, so I don't have to go through. And at least these,

the Axio deals, I don't end up making fun of people's grammar. So thank you Axiol for doing that for us. Yep. All right. That's all we got. I'm going to go sign the NDA. All right.

Let us know what you find. All right. Maybe we do two deals. So Worm Farm and this one. Yeah. Same. Yeah, Warm Farm and Hexclad. Don't combine them.

Let's go. Let's go. We're going to have mills like frying up some worms on our Acrovisianonymous pants. These are artisanal worms from our farm outside of Sacramento. That's right. That's right. All right.

We'll catch you guys next week. See you guys next week.