Acquisitions Anonymous - #1 for business buying, selling and operating - Two Vice Businesses for Sale - Acquisitions Anonymous - e60

Episode Date: January 13, 2022

This week we review two businesses for sale in the Vice sector. No guest so you get us 100%!-----Thanks to our sponsors!David C Barnett Small Business Podcast - If you're interested in learning about buying, selling, financing and managing small and medium sized businesses then you should check out the David C Barnett Small Business and Deal Making Podcast on YouTube and all the major podcast apps. David is offering our listeners a FREE copy of his book; 21 Stupid Things People Do When Trying to Buy a Business.  You can find links to download your copy and find David's YouTube channel in the show notes below.”Trout CPA is a full-service accounting firm offering M&A specific services of valuations, quality of earnings studies, and due diligence review services.-----* 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--- Support this podcast: https://anchor.fm/dealtalk/supportSubscribe 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 back to another episode of Acquisitions Anonymous, the number one podcast on the internet for small business acquisitions. I'm hosting this week. My name is Bill Alessandro. I'm here with my co-host, Michael Gurdley and Mills Snout. We will be covering two deals today. Today, we are calling it the vice episode. So we've got two vice businesses that are for sale that we're going to break down and analyze. We have a wine tasting business and a casino in Costa, or eat. out. So this should be a fun one. So no guess this week. You just got three of our beautiful voices. So to kick this off, let me throw it over to Michael for our first sponsor read of the week. Yeah, we have two sponsors this week. So the first one is another podcast. So it's the David C. Barnett, small business podcast. You can find it on podcasts, the podcast app, all that kind of stuff.

I've listened to some of them. They're really pretty cool in terms of how deep David goes of the nuts and bolts for executing on small business operations and dealmaking. So he's also our first Canadian sponsor, which is quite an honor that a country's so nice would have sponsorship for us. So we're thankful to David C. Barnett, his podcast. And he does have a special offer for our listeners. He has a book called 21 stupid things people do in trying to buy a business. And if you go to David C. Barnett, he's a podcast. And he does have a special offer for our listeners. He has a book called 21 Stupid Things People People Do in Trying to Buy a Business. And if you go to David C. Barnett's YouTube channel in our show notes, you can find a link to that and download it for free. He has 421 episodes. That is impressive. Yeah, considering, like, I'm not sure I'll be alive by the time we get to 100. I'm pretty impressed. That is strong. That is strong. All right, so I have the, I have the first deal, and please tell me it's the casino. Yes, okay, let's do it. All right. So, our first deal is on buy-biz sell, and it is titled Fantastic Business Opportunity in Costa Rica. The asking price is $2.4 million. It has non-applicable in terms of cash flow. Gross revenue is not applicable. Inventory is not applicable. And profits is not applicable. And zero dollars of furniture,

fixtures and equipment. And basically, for those of you just listening and not watching on YouTube, you can see that there is like this kind of giant Tiki Hut looking thing. with like some, there's a picture of it. So I think this is actually the real place. There's like tables and some TVs and some lights and stuff like that. And in the background, it looks like it's in the jungle. So that's what we know. So the business description is it's a hotel and casino in Costa Rica named Rancho Mirador.

It's five acres, 12 miles from the San Juan Santa Maria Airport in San Jose, Costa Rica. And the property has a large casino that has the possibility of expansion bar, ballroom, restaurant and terrace with wonderful views and fully equipped for daily operation. In addition to a valid license for the sale and consumption of liquor to operate 24-7, it is an eco-friendly casino with an architectural design of 376 square feet, with high ceilings and freshness throughout the year. Okay. Okay.

The hotel is made up of one master suite, two junior suites, and 17 standard rooms, always with the possibility of new construction for the expansion. to the hotel, the large parking lot allows for parking in more than 120 cars simultaneously. In addition, it has an independent managerial house. The real estate is owned and the property has a large casino expansion and all that kind of stuff. And the owner is willing to finance up to half of the asking price. So what do we think about this casino in the jungle near the airport in Costa Rica? Well, let's just be clear about one thing up front. Casinos are licenses to print money, but also if you buy this, you will probably end up dead in a Costa Rican ditch within a

year. So tell us more about this. Explain how do I end up in a ditch? Well, so even in, I mean, obviously, if you are a, at all a student of the history of casinos, even in America, a country with a pretty solid rule of law, you know that it kind of is overrun with organized crime and kind of built by organized crime, even in America. Yeah. Because, as I mentioned, casinos not only are licenses to print money, there are also licenses to launder money.

So if you have a bunch of illicit cash or whatever, if you own a casino, it's really easy to go into your casino and just lose a bunch of money. And all of a sudden, that is gambling revenue for the casino, and it is clean. So with so much cash moving around through a casino, it's an awesome opportunity if you're not organized crime to pay people off by letting them win. making it look legit, you know, washing your money, you know, through the casino and making it look legit. So that's in America. This is in Costa Rica. And it kind of seems like it's off the side of a highway. It's five acres of land, like 300 or 400 square feet. It just feels to me like, A, maybe it's printing a ton of money. It must be at $2.4 million in Costa Rica. So I would think that's probably a fair bit of money. But also, you're going to own this thing. You know,

Mr. Gringo from America is going to go down there, buy this thing, and you're going to get shaken down within a week after showing up in Costa Rica. And also, good luck if you think you can own this absentee. You're going to find all your cat just walking out the door every single night. So I have looked it up on Google Maps here. I'm sorry, Dr. Remil's, but I thought this was important. Here's some photos of the place. It has 137 reviews. in Costa Rica here on Google Maps. And yes, it looks like it's right in the middle of the jungle. Here are some photos of the interior of this.

By the way, for those of you that have been working on your own Google reviews for your business, this has 4.6 stars and 137 reviews. It looks like this was their Halloween party. Here is, man, that is some fried food, a picture of that. A cool view of Costa Rica, a picture of a guy doing shots right here in 2019. and they have a pool, a parking garage, and some shacks, and more food, and like a weird green drink. Okay, so that's what we know about this. But at least you're buying some good Google reviews, Mills, you like that or no?

I don't know. I mean, to me, obviously, we don't know anything about their revenue and we don't know anything about their cash flow. But it's five acres in Costa Rica. And I think the building, just based on the dimensions that he said, if it's 362 feet, squared, that's, that's like a hundred and thirty thousand square foot building. This is like from the picture that's on biz by sale, it looks like it's like a restaurant slash casino in one like Tiki Hut. So I mean, if it's 130,000 square foot casino, two point four million dollars is not enough. It's way, it's way underpriced. I agree with Bill in the sense that, you know,

you're, you're going to die if you buy this thing kind of sentiment, but it's also, I mean, regulated businesses like this are just, I mean, the regulatory hurdles to go through, you could go down there, hit it off with the guy, find out it's 100% legit, it's at a decent price, all those things. And then you could be in limbo for like a year to two years with the Costa Rican government just trying to get approved to buy this thing. So I don't know. To me, honestly, this would be a great business to be able to talk about having owned and how poorly it went, like when you're in your 70s. but you definitely don't want to try and do this in your 30s or 40s. It would just make for a great story and a great way to lose a bunch of money.

It does look like looking from the photos of this business, like this mainly caters to locals. Like I don't see everything's in Spanish. I don't see a bunch of foreigners looking folks. They all look like native Costa Ricans from the big city. So which makes it doubly interesting that they're marketing it to Americans through by Bissell, right, which is primarily an American-focused, you know, listing platform. The other thing that's really apparent with this, the food looks really good.

Like if this was a standalone restaurant, you know, this is like, you know, for being some of the stuff, I'm pretty impressed. So Michael, do you think that we should put onto Twitter that we're going to crowdfund a trip for you to go down there and just do a site visit? I don't think that's thinking big enough. I think we need to put together a Dow to take all these crypto bucks that people have, put together a $2.4 million, and we will be the first podcast-generated, internet-owned, fully distributed Costa Rican casino that actually everybody owns. Well, thinking about it. If we buy this with a Dow, who's going to end up in the ditch? They can't put everybody in the ditch, right? Like, you see what I'm saying? It solves our... That's right.

That does. It also solves all of your regulatory problems, which I'm pretty sure is the point of Dow's in the first place. Pretty much. Make regulatory problems go away. So this is perfect. In all seriousness, I mean, I think I've seen, this is the type of business that I've seen often people buy like at the end of their marriage.

Like when their merit, to try to save their marriage, this is the type of business people buy for that. So like, like I've gone time and time again. What's that? How does it live your marriage? Oh, no, they just make it worse. They just make it worse. It never helps.

But, like, so many times I've been to, like, the Bahamas, and you go to, like, the Bahamas is a ton of islands, and you go to, like, one of the islands. And they'll be just, like, out in the middle, nowhere, like a little resort like this, right? With a casino and a bar. And you realize that it's owned by a husband and wife team, and they hate each other. Like the husband has a drinking problem. The wife developed a drinking problem because the husband has a drinking problem. And like the whole business is going to go under when that marriage finally ends.

And they just realize, oh, this getting away from Philadelphia where we lived and hated each other isn't going to make us hate each other any less living in the Bahamas. So I can't really blame the broker for promoting this because there's a segment of the market that is, you know, so trying to run away from bad marriages that will buy this thing. So anyway, that's the pattern I've seen. with this stuff. That was an amazing motif that you just kind of wove through that. I really like it, Michael. I aim to serve. I mean, you've got to ask yourself why a business like this that clearly caters to locals that, you know, has kind of very Costa Rican style motel rooms. The clientele appears to be all Costa Rican. Like, what are they doing here with this listing, right? Like, do they, are they trying to find a sucker American to buy something like this and cash out?

Yes. Yeah. That's the game that's going on here? Unequivocally, yes. So this kind of raises an interesting question for me, and I'll be interesting to hear your y'all's takes on. Would you ever consider buying or investing in a business that was not domiciled in the United States, a small business, I should say?

Yes. Yes. No worries about kind of. rule of law, not understanding their local laws, not being able to enforce your agreements, you know, because their laws are different, anything like that? No, I think that's entirely how, like, the deals get priced differently, right? You know, I think you get penalized, the lower the jurisdictions rule of law is, the further the culture is away from yours.

Like, all of those things mean you need to price in more risk or just because it's more difficult, right? So, you know, like at the high end of the spectrum, you have, like, the, the Italy way of doing business where they like, nobody tells you the truth. You have the Brazilian French thing where like the whole world is angled against you as a buyer, investor of stuff, especially being a foreigner.

Or you have places like northern Mexico where they see guys that look like us show up. And it's like, okay, like let's let them have it. So all that really depends. But if you're like, hey, like let's look at Canada. Like, okay. Like Canada is like more. Canada is in some ways the America I want us to have. So like, I'll put somebody in Canada. Yeah, I should probably make an exception for, you know, Canada or even the UK, although still there's, you know, if you're writing a debt document, like you can't just take your debt document or your operating agreement, like,

off the show for an American company, you know, you're going to have a lot more legal work. You're going to have to really hire a lawyer from the jurisdiction that understands what the hell is going on. Yeah. Or I feel like you're going to get taken advantage of by the locals. Well, you know, we just did, you know, we just did a private equity deal, right? And it's taken us six weeks to get some cash out of a Chase bank account that's in like Finland. Like a lot of times these companies don't let you have your money. So you got to worry about that. Like, you know, there's, there's besides just getting ripped off, there's just a lot of times these countries make it really unfortunate to do different stuff that's, for us, it's pretty easy. Like you can send money from Mississippi to

Texas all you want. You know, that is what it is. But, A lot of these other jurisdictions make it really hard. But you're exactly right. Like in a place like this, like if I was going to go pursue a Costa Rica and whatever, probably not, you know, not this particular path to sleeping in a ditch. But like if I was to pursue something else there, the first thing you want to do is go find those lawyers and accountants who are accustomed to helping foreigners acquire assets in the country.

Ideally, you are part of a firm that also has representation in the U.S. So like the times we've done stuff like in Denmark or Spain, like we'll hire. are local attorneys and accountants, but they also have partners that are in New York, San Francisco, Texas, whatever. And those advisors can help you fix some stuff and make sure you don't get yourself into trouble. And it is interesting.

Like in countries like Costa Rica or Nicaragua or Columbia, like there's an entire industry set up to help foreigners do business there. And it comes from the government and then there's like all kinds of networks of folks who are just like lawyers, avogados, who just help you

open up there. So, you You know, getting the right help, I think is the way to make it work. But it's going to cost you. And it increases the risk. I think you're exactly right. Yeah. So we lost mills, but, but man, I think, I think let's do the Dow. Let's get it out tomorrow.

You guys, how many ether are you guys in for? You know, a couple. It's all fake money anyway, right? It's all fake money anyway. Yeah, you know you're not really living in reality when you start talking about money and denominations of ether Bitcoin. That's what I feel. That's when I know my friends are really lost.

Careful, weirdly, the crypto bros are going to come get us if we go much further. So this is far out, you know, and I think the takeaways here are if you're going to use a casino to save your marriage, never works. Resort of the Bahamas never works. And, you know, if you're going to go do business in another country, definitely find the right people to help you and hope that they're not the ones that are going to put you in the ditch. That would also be the thing you cross your finger on. Yep. Yep. All right, that's vice business number one.

I will say I would love at some point to own like a minority share in a casino. I bet they're extremely lucid, but probably not this one and outside of wherever it is in Costa Rica. Yeah, not this one. This should sell to a Costa Rican. Yes, that's exactly who should buy this. But I mean, look, I think if you're somebody that's like from Costa Rica and living in America and has a bunch of cousins there and understands this business, maybe it's, maybe that's not such a big stretch for a bunch of gringoes. to go down there and do this.

Yeah, maybe not. Well, there's also, it's not just owning the business, it's owning real estate because the business owns the real estate, which sometimes internationally also can come with a whole set of challenges, you know, that are separate from business. So I think there's a fair bit of complex in the year. Well, you have, you know, besides just the ditch risk, right, on something like this, you have the risk that comes with another small country

that isn't a sovereign currency, right? So Costa Rica, you know, last time I was there was pegged the dollar. That still may be the case or not. So they don't know, they don't control their currency. You know, Costa Rica actually doesn't have an army. I don't know if you knew that or not. They, they are one of the, one of the few democracies in the world without an army. Though it's kind of messed up because if you go around Costa Rica, all the police look like army people. Like, they're all carrying M16s and they're dressed up like that way. And then the other thing that's, that's crazy about Costa Rica is when you drive around San Jose,

there's no street signs. That's their capital. And I asked, I asked, Why? Because you take a taxi and they're like, they stop every corner and they're like, hey, tell me how to get to wherever. And like, that's how the, that's basically how the Google Maps works. You stop at the corner and like yell at people. And they're like, go this way. And the reason is, is because back when Costa Rica 30 years ago or whatever was controlled by, you know, horrible dictators, that people went and took down all the street signs to make it harder for the secret police to find you. And they just never put them back out? And they've never gone back up. That was what they told me. That was like, that's the kind of stuff that, you know, why I am really pro people traveling around the world and seeing how the other 90% lives, you know, not like we do in our beautiful manicured suburbs with, you know, at least reasonable police protection and safety nets and all that stuff.

Like, there's some bad stuff out there. And it still echoes in the way some of these countries live. Yep. All right. Well, you want to move on to our second vice-based business in the day? Let's do it. All right. So you want me to read this one? Yeah, yeah. Go for it.

Sure. All right. Oh, we got to do a sponsor. Oh, we got to do a sponsor. Yeah. Second sponsor. Go. So today is a first time sponsor. And this is Trout CPA. And so they are a CPA firm. And one of the things we wanted to talk about with what they do, and let me pull up my notes here because I don't want to miss anything. They are a really good firm to help with ERC, which is the employee. retention credits that have been a big deal for all of us business owners and prospective business owners to have the government underwrite a lot of what we've done to help people keep their

job. So it's called employee retention of retention credits. So they have that as part of their practice. And Mills, I believe you use them, right, in terms of helping with your business. Yeah. Yeah. So Mitchell Baldridge, CPA, I don't know what his handle is, but most of our listeners will probably know who I'm talking about, referred me to Daniel Choden from Trout. And he helped Aquacil with the ERTC and incredibly knowledgeable. But it's interesting. There's this thing going around with the employee retention credit where there's some like snake oil salesmen who are like, oh, yeah, you'll get it.

Like you qualify and just like kind of play in the gray. And they're charging like crazy high fees, like a percentage of the credits you receive, like 20, 30 percent. It's just kind of crazy stuff going on. So I asked Mitchell and Mitchell said, here's the guy. He's like the foremost expert on ERTC and Dan was just like encyclopedic about it. And it's a very, very significant tax credit a few different ways. But reach out to me if I can help connect you to Dan or reach out to Dan or Trout because there's the way he talks about it. I think maybe next go around we'll read his blurb about it. But there's a few different components. and it's almost like a no-brainer.

Yeah. Well, I think the takeaway for business owners for sure, and every company I'm in that qualified did it, it's to some extent the government giving you a rebate, so free money given to business owners. And if you're not claiming it, it's one of those things that you're just missing the opportunity. And if you go to somebody like Trout, they're going to charge you typically a percentage

of what they collect for you from the government in terms of retention or in terms of those rewards. So I hate to use the word free money, but if you're not doing it, you're losing opportunity if you're a U.S.-based small business in 2022. So cool. All right. Over to you, Bill.

All right. Let's read our second deal of a day, which is an 11-year-old wine and spirits tasting competitions portfolio. It is 80% recurring revenue and the owner only works five hours a week. Probably tasting wine. Sounds pretty good so far. So recognize the owner-creator of one of the most impressive portfolios of alcohol-tasting competitions in the world. This 11-year-old digital service provider has created multiple platforms

to the world's leading wine, spirits, and beer producers. Suppliers pay to enter and participate in multiple competitions annually, while judges sign up for free to judge. I assume that means you get free booze, so people sign up for free. Clients are based on all corners of the world, Europe, Asia, United States, and United Kingdom. Winners then pay to receive digital and print medals. This already sounds like a great racket. A mainly passive endeavor, the seller has put processes, procedures, and staff in place, and only works about five hours a week. The company has spent in their first several years curating a proprietary database of both judges, who remember, volunteer for free, in exchange for free booze, and suppliers from years of boots on the ground work and research and can now tap into that resource at will. With that, growth opportunities are massive and readily executable, such as expanding for new niches like craft spirits or sparkly.

wine and new key geographic areas and then it says i.e. USA, but it already mentioned USA as a place they already were earlier. So now I'm a little confused. It says the owner's got a great playbook. The seller has bought 11 years of her life into building this business from thin air and has also just released her first novel. Okay? She is ready to take for a new owner to take this business the next level. So it's very scalable. I'll skip over some of this because it's basically kind of broker gobbly gook. Revenue comes from a cross-section of over 10 competitions. with close to a thousand regular suppliers slash contestants. So I think those would be a thousand kind of alcohol and wine brands that are competing.

80% of revenue is from repeat customers. Again, in this case, customers are the alcohol brands. It says this is lean business model with high margins, which is true, because they have $940,000 of revenue and $725,000 of earnings, which is pretty nice. They've been around for 11 years. They've got a solid team of six individuals working virtual. Consisting of one manager and five contractors doing accounting customer service, IT, et cetera.

And they remind you again, the owner works five hours a week. So they do 940,000 of revenue, $726,000 of earnings. And they're asking $3.27 million, which is a 4.5 times multiple exactly of their profits. So what do you guys think about this one? Interesting business model. Man, I mean, it's super cool. It's also like just totally stunning, right? Because, you know, we all get hit up for these, like, every small business gets hit

up from the small business journal to like all the way up to the big businesses, right? J.D. Power. This is the JD Power business model, right? Like, pay us to give you an award. And I don't know if you guys have ever bought like a website and you ever noticed like your web designer builds you a website. And then every time you win the award for the website of the year. Like every new website I've ever bought is one website of the year for one of these things.

because it's just a racket. But it's so cool, right? It is also fascinating that the business has gone this far with an owner who apparently is just totally interested in working on her novel and not really growing the business beyond, like, what is just like the best lifestyle business I've ever seen in my whole life. Yeah, I mean, they're making $726,000 a year and working five hours a week, if that's really true, I'm a little skeptical.

Yeah. But I think the business model is basically this. You approach, I think the reason they focus on wine is because wine is really fragmented. There's all these kind of family wineries. So I think they probably approach all these small wineries and go, hey, we're this big time competition. You know, if you would like to enter, you know, here's the entry fee. You know, you'll be judged and, you know, blah, blah, blah.

If you win, then we'll try to sell you your awards. So I think there's sort of an infinite market of these little small-time wineries, which I would have been skeptical about, but this business kind of seems to have proved out that they can get these people to pony up to participate in the competitions. I assume this is probably also easy to do virtually because you just mail the wine around to your testers' houses. They drink it for free and I'll probably really psych because they got free wine in the mail and then just judge it.

So I'm fascinated by this and I'm sure you could expand it to, you know, maybe local breweries, which also there are a ton of. I think liquor would be a little bit harder because it's much more concentrated, although there are some craft spirits. There's a smaller craft beers industry in the, in the United States. But I don't know. I mean, like this model, as you said, Michael,

like you see it in like best places to work. Like all the time we get these emails. It's like, you've been selected to the, you know, Joe Blow, X, Y, Z, best places to work in, you know, Raleigh, North Carolina. I'm like, okay, we're in Charlotte. So, you know, great job. Do you know.

You know, congratulations. Like, here, you know, for your prize pack. Like, we will, you know, for only $199, we will mail you this trophy, et cetera. So this business model is pretty rampant, but I've not seen it applied to our model producers. What are we actually buying when we buy this business? What are the assets here? So you're getting, you're getting obviously a customer lists and some people that have engaged and bought your stuff in the past. What else are we getting here? Are we getting a brand that customers actually trust?

Do we know, do we know if anybody cares about this thing? I don't know. I think that's the hard part. I mean, you imagine, though, like if you were going to try and start this, it would be a really uphill battle because people would be like, wait, another one, you know, or like I've never heard of you. If they had some name recognition, obviously like J.D. Power, right? People would know that. But if you called around to a couple wineries and they were like, what, what award, you know, what competition? I've never heard of that. Then the brand probably, but you're right, that's the only place that the brand matters. It's not like wine consumers, right,

go in and they're like, give me your, you know, give me the top pick from, you know, so-and-so awards. No, they're just like, what is the, which label looks cool? Does this only work for wine? So wine has a very fascinating dynamic, right? Like you, you, unlike beer, you typically go into a place and there's a bazillion wines and you have no idea how to compare them. So maybe the wineries are like, okay, like, we're going to try to differentiate by winning this phony award. Does that happen in beer or other stuff? Because they're telling you,

hey, you could maybe expand beyond this to spirits and that sort of thing. But it feels like, at least in spirits and beer, there's much stronger brand recognition and loyalty than in wine, right? People are Bud Light people or whatever, you know, Sam Adams, IPA people or Tito's vodka people. Is, is, does it, are they right here?

Does that really work outside? of outside of wine? I don't know. I think it would. I mean, some people are, I mean, the thing, too, is we've got to remember wine. A lot of people are walking to the grocery store and buy the cheapest bottle of people as well, right? Yeah. Well, I got to imagine the audience here is people who are actually interested in wine, you know, might

understand this award. Or really what it is is the wineries are using this award to market their wine to people who buy wine from boutique wineries, right? So you're really providing a marketing tool to the winery. And so similarly, I think there's probably a lot of upstart craft beer brands or upstart craft liquor brands and say, hey, we need a marketing tool to somehow stand out from all of the other craft beer and craft beers brands. You know, maybe I'll pay a thousand bucks or whatever to try to win this competition. I think, though, in beer, it's a little bit more crowd sourced. Like, there's, yeah, I think there's a few different ones, but I'm thinking about an app like untapped.

Like, if I go into the grocery store, the liquor store and I see a beer I haven't tried, I'll look it up, right? I just Google it. And usually the first listing ahead of the manufacturer's website or the brewer's website is untapped. And it's going to tell you from a crowdsourced thing. It's like Yelp, right, or rotten tomatoes. It's going to say, hey, look, a thousand reviews and these people say it's garbage. Then I don't really care what, you know, the authority, so to speak, says. I'm just crowd, I'm just crowdsourcing it and trying it or not. To me, wine is a little bit, I don't know, it's like a little bit more high brow. And maybe there is some of that. But it seems like independent verification is more important to the wine community or even perceived independent verification is more important. Yeah. We looked at untapped or maybe a copy of untapped. We looked at that for sale. Shockingly bad business. Like we looked at it and we're like, wait, beer is this big of a business? You guys are only doing two million a year. Like it was just one of those things where it was like fascinating to me how little they had managed to monetize both the data they had and then what benefit the suppliers were seeing from having good reviews. It was amazing.

So do we do a Dow for this one? Because this seems like this is much more Dow than the casino in the gutter thing, right? Like five hours, a sponsor could put together a Dow. Like, it seems to be somewhat, somewhat, you know, straightforward. Like, is this a Dow candidate for us? Because you're totally stuck. Why don't you want to share it? Why don't you want to share it? I think we should buy it. I think it seems like a good business. My big question is, is the competition, like on the spectrum from a total, you know, legit, like third party verified, like very prestigious all the way down to it's a total hoax, right?

The fact that they have volunteer judges makes me think it's more on the hoaxy kind of into the spectrum because it's like, hey, who wants free wine? Like the people who raised their hand for that, right, are not necessarily the most astute wine tasters, right? There are just the people who were like, send it to me. I'll drink it. You know? Right. I would volunteer for that. That sounds great. Yeah. Well, okay, so if the Dow is not the idea, is this, is this the first deal for the Acquisitioner's anonymous rolling fund that buys the coolest businesses we see and then hopes for the best fund? Maybe we could use some better help on the marketing.

So, I mean, so I'll go again aside here, right? Like, this business has 80% margins, net margins, right? There's no cogs. There's one employee and a couple VAs, and it's for sale for four and a half times, which is not that crazy. If this were a software business, it would have sold in 10 seconds, right? Yeah. So, you know, and there might be some recurring-ish aspect to it if some of the same brands are entering over and over again. If there is like a real system here, and this woman who owns it actually works five hours a week. And we don't have historical financials here. But if it's doing well and maybe this had a COVID bump, maybe it didn't.

But assuming that kind of the historical trend looks flat to up and this woman's working five hours a week, I think this is a very interesting business or could be. Yeah. The one thing we haven't talked about to grow this is just launch like another brand that does the exact same thing. Because these wineries, they don't just want to win one award. they'll win all your awards. So you might as well, you might as well just launch,

just have the same group, but be like, you know, oh, that was Jim's, Jim's Wine Award. Okay, this year we're going to have Joe's Wine Award, right? And like, yeah, like I love it. I love it. I love it. You know, and I will say this also about these kind of classic, I'll call it four hours, this five hour work week,

but four hour work week businesses, right? Where I see these occasionally where the owners done an awesome job of creating a almost totally self-sustaining internet. that money machine with a combination of no-code tools and virtual assistance overseas. And they can be great, great businesses, but the commonality in all of them is that the owner is trying to work as little as possible, which also almost always guarantees there's a ton of growth left on the table. Yeah.

So you can buy these things and clean in, and I think do quite well. The thing that blows my mind about that five-hour situation is I look at it and I'm like, well, like if this thing works this well with me just working five hours, like how great would it work if I hired somebody who's incentivized to work 40 hours a week? Like, and maybe that's impossible, but it's also like, like, I don't understand also like, well, if you're going to work five hours a week, why don't you hire somebody and only work one hour a week? Like, that sounds much better. I mean, the thing that I know, the thing that I know to be true about my business is I can always spend more time in it, right?

Like, I could always find more to do. And Bill, I think you're right. and Michael, you too, like, these folks are doing the opposite, right? They're like, all right, as little as possible. But if you put somebody in there with the opposite mentality of, like, how could we grow? The current owner is probably like, yeah, we could do a second award, but like, nah, it's too hard. I'm already making $700,000 a year. Right.

Why don't I want to work six hours? That sounds horrible. Yeah. I got a novel to write. Consider how much opportunity costs this person has paid to write their novel. Yeah. And then multiply that by 4.5. At some point, we should do an episode on how horrible the economics of book publishing are for authors.

Like, unless you're Danielle Steele, like, it is the worst. And that's why people on Twitter are like, you should write a book. I'm like, have you looked at the economics of book writing? Like, you're lucky to work a whole year and make 25 grand. Like, it is not pretty. It is not pretty at all. I would love to do an episode as anonymous episode on this because I have seen, a couple times these portfolios of Kindle Digital

books for sale. They kind of throw off royalties every month because they're sold on Amazon or whatever. And they're priced like SaaS because they're just recurring. I mean, book is almost a little generous for these things, right? Because they've never been printed or bound. They're just Kindle, their KDP files, Kindle Digital Publishing. But I'm starting to learn about this industry.

I'm interested by it. Is it a terrible industry, Michael? I just know the way it's set up for independent authors is a terrible job. That's what I'm saying. That's why everybody I know who does that, they only publish a book to make money someplace else as itself is pretty tough unless you're part of the power law that does really well. Now, the Kindle, digital publishing and stuff like that or a business where you're paying

other people to write them, like that sounds like a publishing is a good business. Like, let's definitely look into that. So if anybody in listener land for us knows anything about the Kindle Digital Publishing or being on the publisher side or wants to come in and argue with me that being an author is a good business, let's talk, DM us, and we'd love to have you. I can't really talk about it in a ton of detail, but in the past I looked at a really interesting business that was basically like the democratization of publishing. You know, like everybody wants to have said they wrote, like they wrote a book.

And so this company would take more of like a flat. that fee approach, you know, no royalty, right? No, like, advance. It was just like, hey, look, you know, you pay three or four thousand dollars, you get published, we print your book, we help you pick out cover art, we do like some, you know, probably algorithmic editing, and you get an ISBN, and it's on Amazon and Barnes & Noble.com, and, you know, just tell us how many copies you want to order. And, you know, most of them sell like an average of 50 copies. But yeah, those businesses are really interesting and really, really lucrative because, you know, every financial planner, every, like, lawyer, like, every, like, moderately successful person is like, I think I should

write a book about, you know, my whatever thing that's not that unique. It definitely, like, the ROI is not direct, but, like, I've written four books. Like, I don't talk about it much, but, like, when people are, like, I'm trying to impress people, which happens sometimes, like, that's one of the highlights I bring up, like, oh, I wrote four books, mediocre books on computer programming, and, like, it comes up. And you can go to to Amazon and you can see I wrote most of the reviews for my own book. So yeah, that's how that that's, that's like you liking your own tweets, Michael. Look, look, if you, if you're on Twitter and you don't like what you wrote enough to like it, why did you write it? That's what I, that is my logic.

That is my logic to it. So I don't understand why you guys are writing stuff that you don't like enough to like. That's the way it's. You also have like a hundred times more followers than I do. So clearly you're doing something better than me. Apparently, it's just dad jokes and Chili's memes. That's the way it all goes. The number of Chili's references I get tagged in every day is unbelievable. Unbelievable. Has anyone from Chili's reached out?

We'll do like a biweekly poll to you. Have you heard from Chili's yet? Oh, yeah. Chili's and me are BFS now. They follow me and they respond to my posts. Yeah, like, there's chili. Seriously, yeah. The Chili's social media team knows me.

Yeah, like we have Connect. I want to know when you hear from somebody on the C-suite because that day is coming, I think. If I get to fly on the Chili's private jet, I think that'll be the moment. I would just be curious to understand, though, what kind of food do they serve on the Chili's private jet? Like, do they have Chili's food there?

If so, that sounds pretty dark. It's probably Buffalo Wild Wings, to be honest. Like, here's your subway. It's your sub. Anyway, all right, well, hey, we love this business, I guess, right? Coming back to the original point of this podcast. Yeah, I do. Have one of you all signed an NDA on this yet?

I think we should. No. I think I'm going to put this in my newsletter tomorrow. I need a deal. Yeah, that's a new one. Like it. And very cool. Yeah, I saw this come through my inbox and I was like,

this is a crazy business. We've got to talk about this. And this is one that, you know, won't get you in a ditch in Costa Rica. Yes, considerably safer. Considably safer. And probably makes more money, too. That's $750,000. For sure, for sure.

Yeah, and less alcohol and marriage problems. Well, less marijuana. Should we thank our sponsors and call it a day? And Merry Christmas to both of you guys, by the way. This is the last year episode of where we were before Christmas. And happy holidays and Merry Christmas or whatever you celebrate to all of our listeners. It's been a great year for the podcast. and we're just so grateful for everybody that's been involved in it,

everybody from the advertisers to the listeners. So those of you that tell your friends about it, to the patrons that give us money to hopefully get to our never-ending quest to break even. We're getting there. So it's been a great year. But yeah, so anyway, that was Merry Christmas to you guys. Happy, Happy Hanukkah, whatever you celebrate. Yep, you too, Michael, Mills, and everyone out there in Internet land.

We will see you guys in 2020 in the next episode. Yeah, let me thank our sponsors one more time. and we'll wish them a Merry Christmas and Happy Holidays to you. So David C. Barnett, Small Business and Dealmaking Podcast, thanks again for sponsoring today. Definitely give that a listen. David's got some good stuff in there. And he's our number one Canadian sponsor, which we're so thankful for. And then Trout CPA based out of Lancaster in PA.

So you know they work hard your path to get your ERC credits and also a full service CPA firm that Mills has used. And it looks like at least look at their website and here at Mills, talk about it. Sounds like they really have their act together. So really very cool. So that's it. Thanks for our sponsors.