Acquisitions Anonymous - #1 for business buying, selling and operating - Acquiring a Houston Bar, A Mud Beauty Mask Co, Another Beauty Mask Co - Acquisitions Anonymous e2

Episode Date: September 23, 2020

This week we talk about three SMB M&A deals:* Acquiring a Houston Bar* A Mud Beauty Mask Co* Another Beauty Mask Co-----* 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.-----Past guests on Acquanon include Nick Huber, Brent Beshore, Aaron Rubin, Mike Botkin, Ari Ozick, Mitchell Baldridge, Xavier Helgelsen, Mike Loftus, Steve Divitkos, Dzmitry Miranovich, Morgan Tate and more.-----Additional episodes you might enjoy:#62 Two Landscaping Businesses for Sale - Mike Loftus CEO of Connor's Landscaping#66 Analyzing Software Businesses for Sale with Steve Divitkos, experienced industry CEO#42 $900k Moving and Storage Company / $500k Rural Mini-Storage#61 Two Manufacturing Businesses for Sale - Brent Beshore - Founder and CEO at Permanent Equity#24 $5mm pool services and lifeguard staffing co / $2mm septic services business -  featuring baller @WilsonCompanies as a special guest!#45 $800k/yr cleaning business in Midland, TX / a $565k/yr window cleaning business in San Antonio, TX #48 Two Landscaping Businesses for Sale - Mike Botkin of Benchmark GroupSubscribe 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]

All right, welcome to Deal Talk. Week number two, we survived our pilot episode, and we're here to record the second one. Mills, good morning to you. Good morning, Michael. Bill, good morning to you as well. You just turned off your video, so I hope you're still there. I'm still here. Good morning. All right. Our big news is Mills got a headset, so I'm super excited about that. He sounds awesome. So we got three deals today. Just a reminder for everybody, this is a podcast about small business M&A. We look at three deals. kind of in the sub $20 million enterprise value space. And we talk about them and how we would approach them. And then we get in, get out. So I think I have the first one, which is a good warm-up,

which is a bar located for sale in Houston. So this bar, and I'll read you some of the stuff from the teaser, this bar is located in one of Houston's most iconic bar scene areas with lots of foot traffic. The location is inside the 610 loop on why. Michigan Avenue in an old historical building. The owners bought this historic building. They fixed it up. They got some awards for doing the whole thing and really renovated the thing and put a couple hundred grand according to them in furniture, fixtures and equipment when they opened it in

2019. And they've turned into one of the coolest spots in one of Houston's most historical buildings, according to them, 93-person seats, indoor seating, patio, picnic tables and stuff like that. Owners wish to sell to focus on their other businesses. Again, located in Houston, 1900 square feet, six employees. The owners are willing to stick around for a grand total of two weeks to help train you to own their bar when you buy it. They are asking $198,000 for a business that they claim cash flows $80,000 in free cash flow on $246,000 in revenue. They also will include inventory of $5,000 and their monthly rent appears to be just shy of $4,000. So what do you guys think about this iconic bar for sale and a hot location in Houston?

Your silence is encouraging. Mills, I feel like you have strong opinions on bars in Houston. You want to go first? Yeah, I mean, I have a few issues with this. One is that I think anything in the restaurant industry probably has way lower margins than this. You know, 30% net margins in food service and hospitality seems a little bit of a stretch. But maybe it, you know, maybe they do very little food service and maybe it's all alcohol. And maybe that could push their numbers up. But that tells me, you know, I'm married and I have four

kids. There's no way I can operate, you know, a bar and, you know, still keep my family intact and, you know, be part of my kids' lives and everything. So to me, it's got kind of some characteristic differences with what I would try and optimize for. Everybody I've ever talked to in food service just says, you know, nights and weekends, it's really hard to keep middle level management. They only have six employees, which I guess is kind of impressive that they're able to, you know, keep that low of a staff. But I just think that probably means the owner is working full time. And, you know, I would say, no wonder they want to focus on their other businesses. That's just me. look, they're promising 40% free cash flow return on purchase price.

Like, seems pretty sexy, right, Bill? Yeah, well, I always wonder, as they say that, and in the next breath, they say, current owners having invested over 200,000 in furniture, fixtures, and equipment and leasehold improvements. So I go, well, when's the next time I'm going to have to do that? And have you, you know, have you baked it into the advertised free cash number? You know, because that's the thing about restaurants, you've got to keep them fresh. You know, so there's definitely some cap X there. you've got to include the number.

And the thing that always cracks me up also is, as Mills said, owners wish to sell to focus on their other businesses. That always makes me go, well, then why are you selling me the crappy one? Right? Clearly, you don't want to own it. Like, clearly you've got other opportunities that are so exciting, and you're trying to dump this one on me. You know, I don't know, I can't believe people come out and say that this is the worst

business sale because it's basically what they're saying. Yeah. Well, there is, you know, I know people that own bars like this and have owned And the one thing that comes out in bars is, well, two things that come out. So number one, bad things happen at bars like you guys talk about if you're trying to have a healthy balanced life. Like a lot of people go there because they're working out issues or they're looking to do something outside their marriage, like all kinds of stuff that needs alcohol to kind of lubricate bad things to happen. So you're going to pay for it in terms of your personal life if you're getting into owning something like this. the second thing that's rarely talked about is how much people from a state level,

especially here in Texas, the people that own bars feel basically persecuted by the state enforcement officials. My buddy who now owns a fitness center, he's just, every time the enforcement officials come into his fitness center and are like, oh, okay, yeah, things look good. Yeah, oh, that door's not working correctly. Yeah, like, fix it later.

He's shocked at how welcome they are and how happy they are and how helpful they are to help him in his fitness center, compared to when he owned a bar and the TABC, the Texas Alcoholic Beverage Commission, would come in and be like, yep, that door's not perfect. You're shutting down, get all these people out of here. It's 1130 on a Saturday.

Like, you're done. Like, I'm going to arrest you. So nobody tries to arrest the gym owner in comparison. That's a good point. The other thing that I just wonder about, right, is the fact that the location is so critical, it seems like, for them. and I'd be really curious about their lease.

How long could the buyer of this business continue to operate there? Because, right, what happens notoriously is a neighborhood kind of is starting to get gentrified, some really cool restaurants or bars or, like, folks who can operate on the fringe move in. They get in at a low rent. And I don't know Houston geography. This may already be a hotspot. But just rent's going to rise, right? Payroll is going to rise.

Food costs are going to rise. And you won't be able to raise prices. on a pint of beer as quickly as those other things you're going to go up. Yep. Well, and you're totally in Texas, we're in a three-tier system. So if you want to sell Miller Light, you've got to pay whatever the distributor is going to charge you. So you're kind of stuck in between a rock and a hard place. And there's a reason that no bar owners on private jets, but all the people that own the liquor distributors and the beer distributors, they all have private jets.

So there's a reason for all that. So, okay, so we love this deal. You guys are putting an offer's tomorrow. Should I hold off? Well, you know, a thing that I think might be interesting is to talk about under what circumstances or are there any in which a restaurant or a bar makes a good investment. I had a friend who told me, he said, owning a restaurant is like the classic rich guy folly. Because people make money doing something else and they go, man, it wouldn't be cool to own a restaurant or a bar? I'll go into my own establishment.

Everybody will wave at me as I come in. I can have my friends over. I get a table whenever I want. And it turns out what they really want to do is be a good customer at their favorite restaurant, which is way cheaper than owning a restaurant or a bar because the quickest way to make half a million dollars is to start with a million dollars and buy a bar. So are there any circumstances under which you guys would buy a restaurant or a bar? I have some friends here in South Carolina who owned.

a chain of about 30. They were franchised, but they owned a, you know, quick service, kind of fast casual group of franchises. And at that size, you know, 25 to 30 units, they had a ton of mental management. They weren't the ones getting the phone calls unless, you know, something really bad happened.

They weren't the ones who were having to go in and, you know, work on a Friday night because people, you know, decided to quit their job, things like that. And that's a fairly turnkey model. You know, they were, they had, I think, about 18 to 20% EBITDA margin in that concept specifically. So they did well and they ended up exiting for a pretty nice multiple because a consolidator, a bigger franchisee who was trying to just continue to gobble up units came and paid them a

pretty good premium. But interestingly, Bill, like you had said, they had a really nice arbitrage opportunity. They would go and buy single locations from doctors and dentist who thought, oh yeah, I could totally own one of these as a side hustle, you know? Yeah. I could buy them at like one times EBITDA and they folded them into their operation that they eventually sold for six or seven times EBDA. But there was a lot of scale and a lot of infrastructure. And granted, I was talking to them, you know, 15 years in, in the first few years, they were rolling up their sleeves. You know, they were getting the calls at, you know, when they had one unit, they were working the food line, so to speak.

Yeah. I've had a couple buddies who have also invested in franchises. And the first one or two are tough. You've got to work in them. And oftentimes, the franchisor requires you work in them. But then when you have a portfolio and you gets to be multi-unit, it can be really great. I've seen a lot of people make a lot of money owning franchise restaurants. I've seen almost no one make money owning individual bars and restaurants. Well, I think you and I've talked about this, Bill, because I've got a family member in the Charlotte area who owns, a pretty large restaurant group. I think they've got maybe 20 or 30 units. Braswells is one of them, and Ink and Ivy. Yeah.

Some of those. And they do well, but it's well run, and they definitely have learned and kind of hit their face on the pavement, you know, a lot to kind of learn what works and what doesn't work.

But it's a slog. I mean, you were putting in a ton of work, and they don't have margins like this bar in Houston. You know what I mean? They're scraping by for probably 10 to 15% margins if I had to guess. Yeah, yeah, it's tough business.

Cool. Well, let's move on to deal number two for the second time. So, Bill, I think you have the second one. Yeah, so I brought, I actually have two that are very interesting juxtapositions. So these are a couple years old because I want to make sure they weren't super recent, so I wasn't breaching any confidentiality agreements. So a couple years ago, maybe you guys will remember face masks, and this is not the 2020 COVID-19 face masks. This is the 2018 exfoliating, you know, put paper soaked in, soaked in lotion that you put on your face and it helps.

And it helps, you know, you let it sit and it helps with your skin. 2018 version of face masks. We're really hot around that time. So this first deal is a holding company, really. They have six or seven different brands of face masks. they are, they're doing about, they did about 11 million in sales in last year. And then this year that they brought the SIM to market, they were projecting 18 million in sales, big bump. And what was really interesting to me is looking at their income statement. On 11 million in sales,

they projected, or they did 1.3 in EBITDA. And on 18 million in sales, they're projecting 4 million in EBITDA. But when you look at the 4 million of EBITDA, there were 3.9 million dollars of EBITDA adjustments to get there. So they went from 11 million to 18 million sales and from 1.3 million EBITDA to zero million in EBITDA year over year. And this business, when you look into it, the reason why, there's two reasons. One, they're extremely heavy retail. So their primary business, they got 50% of their revenues concentrated in two retailers, two large national retailers. You know, think Walmart Target, something like that. And so they've got some customer concentration.

They just opened up a couple new retailers. And when you open up a new retailer, you typically have to do a whole bunch of what's called trade spend. So that means you've got to give them a bunch of free product or you've got to fund a discount. You know, a lot of times you walk through a Walmart and you see that stuff on rollback or whatever it is, you know, all that discount is not coming out at Walmart's pocket. They bill it back to the brand. So a lot of times you buy stuff on sale, the grocery store, wherever.

the brand is eating that discount, not a retailer. So when you roll out in one of these big retailers and make you eat a ton of stuff like that. So they had a lot of expenses there, but they tried to add them back as kind of one time. So that add back, let me see, just for kind of the rollout, was a million dollars with just one chain. They had to spend a million dollars in kind of promo going into the store. And then they also separately added back another million dollars of what they called holiday markdowns, where again, they funded discounts to get their product to move at holiday. And they claim that both of those, $2 million in total, were one-time adjustments. But in fact, if you're in this business, you know that the retailers ask for this crap every

year. Just next holiday is going to roll around and they're going to go, who funded markdowns last year? And they're going to go right back to you and go, you know, same deal or you're out. You know, we'll put you on clearance and charge you for the clearance markdown. So $2 million of that. And then they also, and this one just made me chucked. and maybe it is a one-time cost, but they spent $1.1 million trying to launch an e-commerce website, which is a staggering sum, even in 2018, trying to launch what amounts to a Shopify store, $1.1 million, and they added that back as well. Then I see here they also have some freight charges?

So, yeah, so what this was is a lot of times with these big, there's about $800,000 of air freight, incremental that they added back. So it says non-recurring excess costs from air shipping product to customers resulting from lack of financing and inability to fund inventory costs to have enough inventory to ship product by C. So basically what happened was they couldn't get their stuff together and they're running behind on manufacturing and they didn't have enough inventory in the States and they had to air freight a giant PO to one of the retailers and it cost them in their, as they say $800,000 of extra air freight to make the deadline with this manufacturer. And so they're saying that it's because it was their lack of financing and inability of fund inventory costs.

So they didn't have enough on hand. So that's what that was. Which would that happen again? You know, I don't know. I could I could maybe see that as an ad back. But the promo and the markdowns, you know, that's something. That's why indiligence you're going to want to talk to customers and say, hey, is this actually one time? Is this recurrent? You're going to ask me for Markdown again next year? And the other thing that was interesting about this business, they have almost a thousand skews across all of the different brands. And that is a nightmare because they also include in their sales deck a slide on what they call fast beauty, which I guess is like the fast fashion book for beauty. And they basically talk about their strength of how they can go from product

concept to delivery in as little as 16 weeks. Well, that sounds great. It sounds like a strength. But when you have 500 skews and you're doing this every 16 weeks, that is exhausting. So what this business is is basically a fad chasing business, right? You're, A, kind of chasing the macro fad of face masks, but then you're chasing all of the microfads of various ingredients that get hot that you put in the face mass. So there's a lot of kind of R&D and then there's working capital risk here too as you chase fad products. If you don't exactly guess how many of these fad face masks you're going to sell, then they end up sitting on the balance sheet and you can't sell them or you got to mark them down. So when we look at the balance sheet of this business,

they were carrying about $9 million of inventory at the time they're trying to sell this business up from $3.5 million of inventory of the prior year. So I would immediately ask, of that $9 million of inventory, how much of that is actually saleable? How much of that is in skews that are actually moving versus stuff that is effectively discontinued or on markdown? Because that can be a real gotcha in businesses where you're paying for the inventory. Not all of it is always saleable, especially in these kind of, I mean, if this were a clothing, fashion business, that's when you really have a lot of risk. But even in this business, which is a little bit more of a trend chasing business, you can end up sitting on a lot of aged inventory that you can't

sell. So the other than the last thing I'll say is their average selling price on this stuff is between $2 and $4, which is great as kind of an add-on at the register, if you're in Target or Walmart or wherever, but nearly impossible to sell online. You can't make any money selling anything for $2 to $4 online because of the shipping, the ad costs. There's just not enough dollars in there. even if you have a good gross margin, there's fixed dollar costs per order in e-commerce. So I have a sense there are probably some other debacles that led to them spending $1.2 million on a failed e-commerce implementation. But even had it worked, I would have had serious doubts about their ability to make any money

because you can't sell one mask at a time. You need to end up selling a 10-pack or a 20-pack of $299 face masks. And now you're really convincing a customer to take a bigger $20 or $30 gamble on what amounts to an impulse purchase. So this business model, I had serious reservations about its ability to translate online because of its price point and kind of its impulse purchase nature. So I've talked for a little bit on this one. What did you guys notice about this? I think hearing you talk about it, like if you draw a two by two matrix of like easy business to run and run well, like this is in the hard business, the quadrant where it's like hard business to run really poorly. Yes. You know, like the

The dead giveaway for me is looking at the balance sheet and all these adbacks we're talking about and what we talked about with having to do the last minute air freight because they didn't manage their shipment. Those are all the kinds of things where you see a business like this that has to win in the details, doing the details very poorly. And even so far, and we haven't really talked about it, you know, how they've structured everything. There's like six different entities and all these interrelated stuff and this person owns 8% and that kind of stuff. It's just like, It smells like a group that takes the easy things and makes them hard and then takes the hard things and makes them impossible just by, I don't use the word, an aptitude, but pretty close to that. Yeah, a complicated entity structure is an immediate red flag.

You know, you go, why in the world do you have eight entities all with different shareholders? You know, it kind of tells you a lot about who you're probably dealing with. Yeah. And this is a hard business. I mean, you look at their cash flow dynamics. So they've got to pay these overseas suppliers way out. ahead of time. And then you said they're in the fast fashion, basically equivalent of beauty. Like, then they got to try to turn that around in cash selling to the, you know, the CVS's and

the Walgreens of the world who are maybe going to pay them someday and want net 60 terms and all these concessions. Like, it sounds like a recipe for a really hard life. I think, Bill, you've probably seen this, you know, regardless of this segment, but these companies that start in brick and mortar and have these very kind of complex. love-hate relationships with big box retailers who then try and pivot and go into e-commerce, that just seems like a real uphill battle. I've seen some, and I'm sure you've seen some, where they start inverted, right? They start more direct-to-consumer, and then they get pulled maybe into, you know, big-box retailers,

and then they have the leverage, right? They can say, no, look, if you want our product, we're going to negotiate this stuff up front. We're not going to pay markdown dollars. We're not going to pay slotting fees. We're not going to be like all these things that they can really dictate the terms on their behalf. Because, you know, like we saw on this, and like you alluded to earlier, if this stuff doesn't sell, you're taking it back. And then how sellable is it, right? Mentioning the inventory, non-million of inventory.

The other thought I had was if you look at kind of their brand overview and the sales by brand, the oldest brand is the best performer. And then they've had this rollout every year to two years of new brands. And it doesn't really seem like I'm painting in broad brushstrokes, but it doesn't really seem like this company can innovate and incubate new brands. It seems like they kind of have this legacy thing that's working. It's generating the vast majority of the revenue. And then they're kind of throwing good money after bad, you know, trying to come up with new stuff.

But these things that they've incubated are generating, very, very nominal revenue. And so part of what I wonder, right, in the mismanagement potentially is did they stock up on a ton of this inventory for these newer brands thinking that they may generate the same amount of volume or just, you know, higher volume? And then they're stuck with inventory that they can't sell. Yep. Absolutely.

The retail business, as you said, Mills, it's much easier to go from e-commerce to than it is to go from retail to e-commerce because there's so much about that retail business model that is so different. And also, there are even some products and face masks as an example of one that they work really well, you know, kind of on the shelf or at the register, but they just, that buying experience is hard to translate to e-commerce. So there's all kinds of pitfalls, you know, going both ways, but it's very hard for a brand to make a transition from all retail at a low price point to something that works online. So, Bill, you got one more? So I have one more, and this is the polar opposite of the face mask business we just talked about.

This is face mask business number two. I received this teaser almost the same time a couple years ago. And this business, they are primarily direct consumer on their website, on their dot-com website. The business, upon seeing the CM, it has a note, and it says the company is only eight months old. So what they have presented is an annualized number based on the first eight months, because they haven't even been around for a full year. And then they put a 3.3x multiple on it. So they are saying that this business is doing about a million dollars in sales and a little

over $200,000 in earnings. And they're asking $700,000 for the business. So it's about 3.3x. But they haven't even had a full year. and then if you dig in to kind of how they did the projection, you know, they didn't annualize the first couple months where they didn't sell anything. It's like a backweighted annualization. It's more like a run rate. So I basically laughed out loud. And the way they did this business is it's basically all on the back of Facebook ads. So they've spent

several hundred thousand dollars on Facebook ads. This is one of those. It was a very trendy mask at the time where it was like a specific ingredient in the mask and it was very hot. So they ran a whole bunch of Facebook ads that were very visually compelling, and they acquired a whole bunch of customers. But if buried in the SIM, one of the standard questions of this broker asks is, what is your repeat customer rate? Their repeat customer rate is 0.88. So 0.88, so less than 1% people of these people ever come back and buy again. It's about a $17 tube of stuff. You squeeze in your hand and rub on your face. So they've had. add, you know, 50 to 100,000 orders and less than 1% of these people have come back ever.

But elsewhere in the Sim, they talk about how it's a consumable product and people will come back. So this one, I just kind of was a great example of the hubris you will sometimes see from brokers and then these people who kind of spin up a, quote, brand, right, and then try to flip it to an unknowing buyer. In this case, the most egregious example I'd ever seen after seven months old. Oh, Bill, eight months, okay? Eight months. Eight months. I guess it depends on how long it takes them to sell the business, right?

The business is getting older by the month. This is my favorite part of the thing. It says, please list your opinion of the company's top three competitors. And they answered, this is from the seller. We don't have many competitors. The main competitor who sells a similar product to us are and enlists a bunch of different competitors. So contradicted sentence, one incident's two. Did you catch, though, about that, Michael, that literally they all use the same

vendor, I think. Yeah, this is a private label product. There's a billion competitors. Well, and they're saying, hey, look, the vendor, we all use the same vendor. They just can't put our packaging on their products. That's the only exclusivity they have. It's literally the same stuff in the tube for five or six or ten different people. Yeah. Well, and then please note, they all sell the same product, but none of them advertise on social media. And those who do have not seen the success that we've had. So basically the entire ability for this business to even be anything near profitable for the long term is hoping and praying nobody else figures out that Facebook ads work. Pretty much.

Well, and you see the reason, so the reason these guys want to sell is that they want to focus on their other businesses. So again, kind of like the earlier one with the bar where it's like, well, okay, what business is that? And would you be willing to let me look at that one and see how good it is. Yep. Yeah. So this being the polar opposite of mass business at retail that was struggling to get online, this is a purely digital.

But in some ways, the first mass business might have been even a little bit more durable than this because at least they had brand names and partners, customers, you know, big customers that have been buying repeatedly. This business has less than 1% of their customers that buy repeatedly. So we ran screaming from this one, but I thought it was a pretty interesting example for the group. The other thing that's really telling about this, I'm sorry if I interrupted you, Mills, but the thing that's really interesting is you can often tell in how the questions and how the Sims get prepared or the teasers get prepared into where the people spend their time talking.

And this, you look at the kind of fundamentals questions like competitors and stuff like that, and these guys clearly are not, you know, the owners are not big strategic thinkers. but then when it's like, how do you manage your Facebook stuff, right? These guys give like two and three paragraph answers, like these big detailed, like, okay, here's how our funnel works. Like, we do this, we do this, do this. But then they want to talk about, like, tell us about your warehouse. We have warehouse.

Like, that's it. So you can tell a lot about the kind of the disposition I think of the sellers when you take a look at some of these disclosures about the businesses. Yep. These guys aren't coming with the business. And clearly the entire competitive advantage of this business is, the ability to run Facebook ads really well, which is clear that these guys are wizards at it, right? So I would have serious doubts about, you know, the buyer's ability to continue that wizardry

if these guys clearly aren't coming along with the right. Well, Facebook is a, you know, $400 billion or whatever it is company because they're pretty good at running efficient auctions that benefit them. So it's just a matter of time until that this channel doesn't work anymore for these guys. And I think they know it. That's why they're selling. Yeah. What were you going to add meals? If I take the other side of this, though, the one detail that jumped out at me is they've got, you know, 225,000 visitors on their e-commerce site, which is obviously driven by the $2,000 a day they're spending in Facebook ads. But to their credit, they've captured 50,000 email addresses.

So if I'm in this segment, right, and I'm not, but if I understand how to make e-commerce work and if I understand Facebook ads and how to really drive conversion, you could probably come in and buy this business for a lot less than they're asking. And you could take those 50,000 email addresses and really work them in a prudent manner so that you're not, you know, just spamming those customers. But I think that's a huge missed opportunity. You've got 50,000 email addresses and you only have 500 repeat customers. That's a huge glaring omission in my mind where you can really take something and, you know, do something with that. Yeah, well, they've only owned it for seven months, though. They haven't had any time to do anything. People are still on their first two.

It does make, it does make me wonder if the product is any good, you know, their low repeat order rate. I mean, surely somebody's done three scrubs. I don't know how many a tube will get you through, but three or four masks, you know, since they've been in business and their repeat rate so low. And one thing, and we can't share this with the visitors, but if you look at the website of this company, they do have a great, like they've done a good job on the branding side. And they've also done a wonderful job on kind of getting user-generated pictures of people using the product and saying how great it is. And that's what they're then turning into ads and then acquiring more users.

So as Mills kind of said, if I were, if someone were to give me this business and say, make it better, I think the key would be to immediately try to launch more products because that would get your average order value up. Right now they're selling it for like between $15 and $20. But if you could sell two, you know, a second, you know, a shampoo or something with it, you could double your average order value, which always helps online because you pay the same amount for advertising, right? Just the more you get an average order value, the more profit you make per customer. And then hopefully you could also introduce some new products that were more repeatable than this mask, which clearly is not.

And then working that email list and trying to get people to reorder the mask, but also reorder these other, you know, the shampoo or the bodywash or whatever. you introduced, you know, kind of ride on your ad methodology, which seems to be working, and a well-designed website and good brand, and try to scale from there. It does look like looking at the website, which you're right, is totally gorgeous. It looks like they've added a bunch of stuff, pimple-popping kits, shampoo, shave kits, and stuff like that. Okay, so they have done this. Yeah, I think they've done what you've said.

Looking at the number of products on their website that are listed as on sale, I wonder how much they're actually actually sold on those things. This is actually part of their strategy is that it's always on sale for like half off. So you feel you're getting a deal. So that kind of classic internet marketer strategy, right,

just double the price and then market down 50%. It has told me three different times now that somebody from Lakewood, Colorado, has bought shampoo. So definitely pulling out all the e-combers tricks. They're clearly like they know what they're doing on the e-commerce side. Totally cool.

Well, great. That was a great one. So, well, I think we are done with our three. We'll go ahead and wrap up for this episode. You guys did awesome. Big shout out to Mills's new headset. Yep. You sound amazing. All right, guys.

Great job. We'll see you next episode. Take care.