Acquisitions Anonymous - #1 for business buying, selling and operating - YOU can Make $4.7M Selling Mobile Accessories

Episode Date: August 16, 2024

Today’s episode is one of our favorites. We checked this mobile accessories business that’s making $1.7M EBITDA. They sell phone cases and other cool stuff online, and they’re doing pretty well. But, as always, there’s more to the story. We’ll talk about the competition they’re up against and how much they depend on online sales to keep things going.Listing: We found this one on Acquire.Thanks to this episode's sponsor:Acquisition Lab and their team have been longtime supporters of the pod.Acquisition Lab exists to help people buy a business and navigate all the complexities of the process, as well as provide a trusted framework, tools, and resources to support you from search to close.If you are serious about buying a business, check out acquisitionlab.com or email the Lab's director Chelsea Wood, [e-mail] and mention us ;) Subscribe to our NewsletterSubscribe 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]

Yeah, not their name. I would bet you a ton of money. They're a licensing company. Ooh. Sales might fluctuate based on team performance, but I will recoup my $10 million with a high degree of likelihood. The deal looks so bad that I think there's a possibility. It's good.

Hello and welcome back to another episode of Acquisitions Anonymous. My name is Bill Dallisandro, and this is the internet's number one podcast on buying, selling, and operating small businesses. And this week we have, which is in my totally non-biased opinion, one of the best episodes of Acquisitions Anonymous we have ever recorded. This week, we did a cell phone case business for sale. Cell phone cases are the number one keyword globally on Amazon. So by that measure, it is the largest market in the world in e-commerce. So it's Mills, Michael, and I this week.

And we talked about what it's like to compete in a red ocean. Cell phone cases as competitive as it gets. This business, though, is really interesting. It has some really unique moats, some intellectual property, and it has a really unique go-to-market strategy in that they're 80% through a single retailer. So we talk about the pros and cons of both intellectual property licensing and also a concentrated customer base. And there are a number of great side stories from all of us.

I also tell the story of meeting the founder of Popsockets and how I passed on investing in that business when it was nothing. And I would be retired today had I done that. So a great story about the history of the Popsocket cell phone case brand as well. So this is a great episode. I hope you enjoy this Acquisitions Anonymous. This episode of Acquisitions Anonymous is sponsored by Acquisition Lab. Acquisition Lab and their team, they've been longtime supporters of the pod, and they provide a really great service for people who are looking to acquire a business.

So it's created by Walker Dybul, who's become a friend, the author of Buy, Then Build, How to Outsmart the Startup Game. So Acquisition Lab is an accelerator with a highly vetted, cohort-based, educational and support community for people who are. are serious about buying a business. So a lot of our listeners like you, you tune in every week to our deal reviews. You want to get in on buying a business. You know, you're on this podcast because you're trying to learn how to buy a business. But if you're not quite sure where to start, Acquisition Lab is a great place to start. So they exist to help people buy a business and to navigate

all those complexities of the process, everything you hear us talk about on the show. They provide a proven framework, tools and resources that support you all the way from search to close. They do it. There's a whole bunch of educational material and support. So if you're serious about buying a business, check out AcquisitionLab.com or you can actually email the program director Chelsea Wood directly. Her email is Chelsea at buy then build.com. So we're recording a podcast. So Mills just got done telling us how he got recognized in real life from the podcast, which is interesting because it's mostly an audio podcast.

Yeah. Good times. We've had, they saw the beard and they were like, oh, that's got to be the guy. There's only one, there's only one homeless guy beard that looks like that. Yeah. If you, if you do see us in public, we are not famous enough that we think it's weird. So like, definitely come up to us and be like, hey, I listen to the pod. We still think it's cool.

We're not that famous. In the last week, though, we've had so. What caveat, I charge 20 bucks for selfies. No freebies. It's because I'm like the Pete Rose of this podcast. That's because everybody's so much shorter than you, Michael, and it requires like the height difference. It's like, you're paying for this, man. I'm way up here.

And I'm going to be out of the frame unless somebody else takes the picture. Yo, we have had more listener interactions in the last week than I think we've had in months. And some of them, which we won't go into a ton of detail now, but a lot of them have been from the owners of the businesses that we've been talking about anonymously. And it's been kind of overwhelmingly positive. It's been really cool. It's very neat. So just to reiterate, the show is called Acquisitions Anonymous. We only ever have the teaser.

We never know the name of the business when we record. Sometimes we're able to sleuth it out using a Google, as we sometimes do live in the show. But we never know. We haven't signed an NDA. We don't actually know which business it is. So what's happening is we record an episode and then it gets passed around and makes this way back to the ears of the owner who then goes, hey, that's my business. Right? And reaches out to us to say, you guys are geniuses or you guys are idiots in varying degrees and tell us what we got right and what we got wrong. And it is really, really neat. We really appreciate it when people reach out. We love hearing when we're wrong. And it's also nice to hear when you're right about something. But that happens, you know, few and far between. Yeah. So we've heard from, who do we hear from? The founder of the towing company that we just did, Cole called Mills in his office, which was not as creepy as it sounds.

It was amazing. And he might be a future guest. He's a listener and he follows me on Twitter now. This is so cool. And then also, Benson Boone from the Bourbon one tweeted at us. And was like, hey, thanks for covering my brand.

And I'm looking for the right investor partner. So this is like great feedback. Yeah. And we've had, I mean, on the flip side, we had the cruise ship operator. He was pretty mad.

He was pretty mad. Who's like, I'm not trying to sell. You're trying to sell. That's right. It's the first time I've ever done a podcast that caused somebody an issue of violent denial. Like, no, that's not us. Here's a PR release.

Like, we're just like some dudes looking at a listing we found on generational equity. So if you're not an avid listener in the pot and maybe not don't know what we're talking about, several episodes back, maybe 20 or 30 episodes back, we profiled a cruise ship company up in like the Pacific Northwest. is a whale watching cruise ship company. We didn't know what it was. We got the teaser from a broker that the company had hired to represent them on the website. Yeah, we didn't even have to request. Brokers public website. Right?

So we do a whole episode about what we like and what we don't like about this cruise ship company as we do. Several days after publishing, several of the hosts get outreach from like the Pacific Northwest Maritime News, trade. Rade Rag or whatever, wanting to know if we have comments on the fact that X, Y, Z, businesses for sale. I think we all did not reply and make comments because we didn't even know if it was XYZ business for sale.

Don't want to get sued. Well, we don't want to sue. There's nothing to sue us for, right? All public information. No, he did nothing wrong. It's a joke. That's a joke. The article that gets published is in the Pacific Northwest Maritime News or whatever,

and it includes a press release from a named company saying the agriculture, position out on this guys, don't know what they're talking about. We're not for sale. We've never been for sale. In fact, we're very bullish on our growth and we have amazing growth prospects. So the CFO of this company, like, we still don't know. We assume it is the company that we profiled. We don't know. But based on his vehement denial, he kind of has self-outed. And it created this kind of tempest in a teapot in the maritime industry in the Pacific Northwest as a result of little us speculating wildly from publicly available information. So while we didn't like that as much, it was still pretty funny, we do love hearing from

people who own the businesses that we profile. It is an interesting thing about the podcast. Like, we are a positive group. We don't really like drama. We're like bizarro all-in podcast. That's why I would describe it. Those guys are all drama, all love drama. Like, we don't want that.

So it kind of makes me feel bad when somebody's like, no, don't talk about it. what's like, well, we did nothing wrong. Like, best thing you should do is don't post a listing that you don't want people to see. Like, that's just going to think. But anyway, we're being more anonymous. And don't let us just Google the opening sentence of the listing. And it redirected the exact same quote on your website. That's right.

Well, because what happened. And I do feel for the business owner a little bit because typically what happens is the broker or an intern in the broker's office needs to write the anonymous description, goes to the company's website and copy and paste the About Us page. They're like, ooh, that's great. That works. That works. That works.

It's a great description in the company. right? And they don't reward it. And then you just put it right in Google and boom, you know who it is. So don't do that in turns. Speaking of, we got a great deal to talk about today. We got a great deal, which we do not know the name of. Yeah. And this one, Bill, I'm so glad you're here for it because I think I've looked, we've looked at things adjacent to this. And this is just it. There's so much to say about this. But it's an Acquire.com deal. And it's getting a lot of attention. I don't have it pulled up. I have a pulled up on my phone, but if somebody can screen share, we'll put it up. But it's getting a lot of attention. A hundred and twenty-nine buyers have viewed this listing. I think the next category up on Acquire.com is things are getting interesting, and it's like a certain number of people have submitted offers. So this may be relatively new.

It's an e-commerce startup in Idaho. It says mobile accessories brand offering practical protection through its quality cases. Asking prices $10 million, which is a $5.9,000. times multiple of profit and a 2.1 times revenue multiple. Asking price reasoning, robust financials, including a consistent revenue stream with 4.7 million in 2020, and a high profit margin of 30 to 35% with major retailers like Best Buy and a significant online presence. Additionally, it poses valuable intellectual property with multiple U.S. patents and trademarks. So 4.7 million in last 12 months gross revenue, $1.7 million in last 12 months net profit.

And their monthly revenue was $267 last month and monthly profit of $73,000. Description, valuable intellectual property and partnerships with Best Buy Walmart, Target, and more leading mobile accessory e-commerce brand with established market presence and strong and intellectual property portfolio. It was founded in 2013 based in the U.S. Their high-quality protective cases and accessories for mobile devices. They mentioned retailers like Best Buy, Amazon, Staples, and more. We've kind of already been over the financials, so I'm going to scroll past these.

Total units sold several million to date. That's kind of broad, but customer base over one million B to C and B2B customers, major revenue sources. Okay, here we go. We're getting into some good details here. Best Buy is 80.55% of their revenue. I'm guessing maybe this is cumulative or maybe it's just in the last 12 months. Shopify store 7%, staples 6.8%. Says they have a team.

And yet they describe themselves as an e-commerce company. Yeah, yeah. Yeah, that's a great point. We'll double click on that. Team size, it says, is between 21 and 100 people. Their tech stack is Shopify, competitors, Zag, SpyGen, and Otterbox. Otterbox is the name that I really recognize there. Growth opportunities, increased content marketing, new product features,

social media marketing, improved conversion rates, expand to new markets, increase digital marketing, focus on SEO. They mentioned some kind of typical key assets like customers, trademarks, inventory, and they want to sell because of a new venture. What do you guys think about this? Fascinating. Fascinating is right. I just went through like the case purchase process because my son needed a new phone and

why did he need a new phone because he broke his old phone? That's pretty much when you have teenagers. That's how the story goes. Why else you get a new phone? Well, actually I kind of admired him. He got so mad at being addicted to his phone at some point that he broke the phone. Wow. And I was like, I was like, first of all, like that's a waste of money.

But second of all, like doing something about like a problem like that, I was like I really admired it. Right. If that makes sense. But we go to get him a new phone because he hasn't had one for a few months. And we go into, first we go to the Apple. store and he's like because we got to get the new phone because he's got an iPhone and they're like there's all these cases on the walls and they're like one dollar pieces of rubber and they're selling them for like 50 dollars and I'm like bro I'm sure that's a great case but like we can get much

better deals other place so don't buy one here right and uh like and the TLDR it ends up go to Amazon that's what you do um then we go to AT and T and like I don't know if you guys have seen what's happening with the AT&T stores, but it's a total, they're a total disaster because people don't need to go to the stores as much anymore. So AT&T can't make money on the store, so they've stopped investing in them. So the places, we get the phone all set up, get hooked up. And then the places all has my son, you know, while we're sitting there, like they're trying to sell you cases. And they were trying to play the same game the Apple store is playing, except because they're not investing in their stores, it's all these like super old designs. So it's like sparkle, like the

hoop thing, like the sparkle case that like, you know, so I, I was trying to pay my, of course, I'm like, okay, buddy, I know that one that has leopard print on it is $50 and it's very feminine, you know? And I was like, I'll pay you $50 and buy that for you if you'll use that case, you know, as a dad does to a 15 year old and he refused. But it's, you know, but it's guy, they've got like all these iPhone six cases in there and stuff. We're like on iPhone 15. But it's just a super interesting model how and then what you should do, you just go to Amazon. And you can get one just as good as the Apple case for like $12 without an Apple branding on it. That's what I have.

So, like Michael, I think what your long rambling dad story is illustrating is that. Having a bad day, Bill go easy on me. I think what you're making, I was trying to say you're making a very good point, which is the criticality of having the cases in the place where you buy the phone. And Best Buy sells a lot of phones, right? And they're doing 80%. So being the cases that are right next to the new phones in Best Buy, is very, very lucrative to the tune of 80% of this company's revenue.

Which is, I mean, we're talking it's like high three, low $4 million a year. Yes, exactly, of just cases. And as we've learned, the margins, as we learned from Michael's store as well, the margins are bananas, right? These are pieces of plastic and they're sell for 30 to 50 bucks at retail. And you should probably go to Amazon. And also, see, Michael, it was a long ad story, but there are lots of really good points in it. The third good point was that a lot of case businesses done on Amazon, and this company does not list Amazon as a revenue source at all.

They listed in the description, but it doesn't even make the top percentiles. Well, yeah, I mean, they list out 95 percent of their revenue, Best Buy 80, Shopify, 7, Staples, seven, right? So that's 95 plus. I mean, that's the whole business. And Amazon's not on there. So that is super interesting. And it makes me think that there's probably a big growth opportunity for going to Amazon. Okay, but isn't Amazon cell phone case, like if you had to rank all of the, you know,

from like least commoditized to most commoditized, cell phone cases have to be number one. Yeah. It's the highest keyword search on Amazon cell phone case. Wow. It is the reddest of oceans. It is the redest of oceans. If you want to see what a red ocean, like I says, so for those of you don't know, there's this idea of a blue ocean where you can.

can go out and it's just you and the other dolphins and you're the only one you're the only that type of fish right think about that as a company so you can sell that stuff so classic blue oceans are like uh circta soilay right circto sale is a blue ocean you have this beautiful market that you're in because you've made circus not about popcorn and you know maltreated you know elephants doing tricks but you made it about art and people gibbering gibbering in quebecua french right so that's a blue ocean. A red ocean is like you're doing hand-to-hand combat. You're having to compete on price. Your stuff is totally not differentiated and you have to pay up and somebody else extracts all the value. There's blood in the water. That's what we're talking. Yeah, there's blood in the water because sharks are

eating you. And in this case, Amazon is the shark and it's killing everybody. So we should probably pull it up. So people could be like, yeah, this is a market. I don't want to be in selling generic cell phone cases on Amazon. So yes. All that yes. huge, but it is also one of the biggest markets in the world. 100%. So like, it is red, but it is huge. But it makes me wonder, right? If they say intellectual property, which I think, I mean, it's probably not a patent, right?

I don't know that they've, if it's a five, I have a strong theory on what this is. Okay. If it's a $5 million revenue company, they probably don't have, they haven't invented a way. Like Otterbox is probably $500 million. right or more because they have proven hey we are better that better at most people than protecting your phone if if they had developed like a screen protector that won't break or something like that they would be much bigger than this so there may be some name recognition right there may be some intellectual property around their name and bill's raising his eyebrows yeah not their name i would bet

you a ton of money they're a licensing company oh so i would bet you a ton of money they're a licensing company oh So I would bet you a ton of money the intellectual property being referenced here is not their own. Dude, that is so good. But strong licensing deals with brands people know. That is really interesting. So like, for example, this is probably not because of the size of the company, this probably isn't like we have the exclusive, you know, rights to putting NFL logos, NFL team logos on phones. But maybe, I mean, they might have Marvel. They might have blueie.

They might have, I mean, I don't know, right. They probably got some corner of the intellectual property market, right? And if you're Best Buy and you're the merchandiser of Best Buy, you know, we need the NFL cases. We need Marvel. We need whatever. We need whatever. And maybe they've got Major League Baseball. Yeah.

Or something like they've got some corner and Best Buy's got to have it in the assortment. And that's their whole business if I had to guess. Holy cow. That just changed everything. This is great, Bill. I like this business now. Now you love it? I don't know. I like it. Love is very strong.

It's got to be, I don't have that kind of emotion. It's got to be something with permanence, right? So if it's bluey and all the sudden Disney, you know, makes a total gofall and they say, hey, we're not renewing Bluey again and it goes off air, then like watch the, you know, lifetime value of your brand, you know, and your licensing deal just go off the shelf. Right. So that being said, right? So this is, it's a strength, right? Because you can't just, you can't just walking off the street and license MLB or Bluey or. or like any of these, right? They've been around since 2013. This tells me they probably got this licensing deal a while ago, and they've performed. Right? Now, let's talk about licensing here.

If they lose this licensing deal or it's not renewed, they're dead, right? It's over. I wonder also if this is why they're not on Amazon. It is possible their license expressly precludes it. Because if you had a license, for MLB, throwing that on Amazon is a money machine. It is possible that MLB has licensed the Amazon channel to someone else. And licensing agreements will work that way. Hey, you go take big box stores and you take, you know, e-commerce. Yeah, exactly. Or Best Buy even specifically

sometimes. Yeah. So that's my hypothesis here. What's interesting is that their revenue is actually declining. So in 2022, they did 6.1 million of sales and 2.7 of EBITDA. And in 23, they did 4.7 of sales and 1.7 of EVVADA. There's that operating leverage going the wrong way, which you don't like to see. But still a 30 to 35 percent profit margin. I bet this is also a great business to run. Like, I bet you can almost precisely match Best Buy's purchase orders with purchase orders from your vendor. And you probably have to carry pretty little inventory. And that's why your margins are great. Like, you don't have to even hold it. Like, you've probably got a 3PL. You know, maybe your manufacturer even ships it straight to

Best Buy and is familiar with Best Buy's requirements for how it must be packaged. Like, they might even touch the majority of their inventory. I have seen a couple of businesses like this and they are beautiful. Hi, Heather here. When I'm not breaking down deals with these guys, I'm helping people get the right SBA loans for their business acquisitions. Because when you're buying a business, the best financing isn't one size fits all. There's the best rate, fastest to close, the specific loan structure that you need, or a little of all of those things. That's why my company, Vizob Business Capital, works with over 30 different lenders to find you the best funding in less time and with less friction, so you can focus on the deal. Sign up for a free live Q&A session on SBA loans at Vizoccap.net.

Then click Zoom sign up in the top right corner. That's V-I-S-O-C-A-P dot net, and click Zoom, up. You could really underwrite this thing too, like as a, as like the declining revenue stream and say, okay, even if this business is on the decline, it may, it may kind of print money till the end of at least the underwritable life of the licensing agreement. So like, if it renews in five years, you could say, let's just stress test this revenue stream for the next five years and assume that it doesn't renew. And you know what? Like there you clip a coupon and make sure you fulfill orders when Best Buy places them. Yeah. So there is a parallel story to the risks of this business. And you know, I was in the Halloween business for a while. And I, I complain about it because as a

small fry, you're totally, you're totally at the mercy of the wholesalers. And there was a company called Ruby's that had the licenses to sell all this stuff, the Marvel stuff, the different Ghostbusters, whatever, to small fries like us. And they would just hammer us on price. Like they would, it would be, we would have been better off buying the costumes from Walmart and reselling them at our store than from buying them from them. Like, that's how bad it was. But anyway, like, I would just point out, it is not a ticket to print money forever. Rubies ended up turning into like a $250 million year business. They lost a couple of licenses. got pressure from price pressure from China and went into Chapter 11 back two years ago.

So it can still go very wrong, but it's much better than being in the reddest of Red Ocean, Amazon, like fighting no-name folks for, you know, for placement spots. So to explore, let's say I'm wrong. Let's say it's not licensing because there's one, there's one sentence in here that makes me wonder if I am wrong, which is it possesses valuable intellectual property with multiple U.S. patents and trademarks. It is also possible that they've got a patent on some niche thing, like a kickstand or like some sort of loop or, you know, some some excess, some freaky type. Yeah, built-in wallet.

Like there's these little, like unique things people do. Built in mirror. Like, I don't know. Like something like that. And Best Buy thinks that they have to have it and it sells well at Best Buy. and Best Buy feels good as, you know, nobody else really carries this type of thing. We have it at Best Buy. It does well, and they keep getting renewed.

That's the other end of this business. I like that a lot less. Because that depends on the Best Buy buyer, merchandiser, still feeling like that Eddie is one that they want to serve. And it's also pretty clear that this company has not had much success convincing anyone else, except the Best Buy buyer that this is an Eddie that the other retailers need to serve. I mean, it seems like Staples carries it, but it doesn't do a ton. You know, I would be wondering, like, how hard have we beat down the door at AT&T and Verizon and T-Mobile, right, to get it carried there?

I would also be asking myself, you know, show me a list of the top 10 cell phone retailers in the United States. And why are we not in all these, right? Can we get into gas stations? Like, that's a whole different channel. There's distribution there. It's very weird. But I'd be asking myself, where a cell phone sold, where a cell phone case is moved in America, and have we beaten down those doors yet or not?

Do we know for a fact? Have you guys ever speaking of IP in this space? Have you ever looked into the pop socket business? Are you familiar with this? I know the founder. Yes. Do you know about this, Mills? No.

Tell you what, pretend like you don't. That way I can talk about it. I don't. Go for it. Okay. Okay. So do you know what a pop socket is? Like every, for the longest time, every lady with nails had one because you basically, it's the little

circle that snaps onto the back of your cell phone and it's like a 30 cent piece of plastic. And I just looked them up. And it expands out the back. It basically pops out the back. It gives you a way to like slide your fingers around it. So you can hold your phone, hold the big phones. You can hold it with one hand like this. Yeah.

So like, I bought one of these before. I have a. Yeah. Well then Bill can tell us about the founder and his island slash boats slash everything. So basically, this is like the best example outside of kind of like biotech and medical device and all that kind of stuff where a patent actually made somebody a ridiculous amount of money. But basically this guy got a very good patent around this design. He's in Boulder somewhere. And this happened about a decade ago. And the dude like invented the pop socket. And like basically

if you want a pop socket, you have to or anything that looks like one, like you have to go through him. So I think the sales last I saw bills were estimated like 150 million a year, something ridiculous for those things. I don't know if they're still popular. I don't seem as much. Oh, Bill's let's give me the thumbs up. I can keep going up. 250, 550. Yeah.

So the guy's doing a half a billion dollars in sales at like 95% gross margin and has all the money in the world to protect his patent. I bet he spends two to three percent of that on lawyers just suing everybody and going hog on Amazon and probably is making two or 300 million a year just from having a patent. on a piece of plastic that everybody seems to want, like just crazy. Yeah. Like just goes back to that story. You only got to be right once, just like us, starting the world's best podcast. Like, we only had to be right once. So here's my pop socket story.

Founder's name is David Barnett. And we lived in Boulder at the same time. Founded in the company in 2012. I lived in Boulder from 2012, 2015. I met David because he was a philosophy professor at C. you Boulder, did not know Jack about business, right? And he was trying to learn about business. And someone introduced him to me as a guy that knew about e-commerce. Wait, why is it this story on your resume?

Well, why aren't you on the table more importantly, Bill? Yeah, I'm not on the table. Yeah. Spoiler, I'm not on a cab table. So I have dinner and lunch with David several times. And at the time, he's got a case for like the iPhone 4. I mean, this was like a long time ago. And the original idea was it held your wired earbuds and you wrap them around. There were two pop sockets on the back of it.

So imagine instead of one, which is where it ended up, imagine two, it was a case for your phone with two integrated pop sockets. you would pop them out the back and wrap the earphones in a figure eight around them. And like that was the idea. And he was trying to figure out how to like do e-commerce with this idea. No wonder you didn't write him a check because you're like, I don't, I can't put that in my pocket. That's right. At the time I was like, this is kind of nichey. Like I guess it's cool.

Like whatever. Like I gave him the best advice I could and we kind of stayed friends. And then like I hadn't talked to him for like a year. and then I start seeing pop like, you know, I'm on a trip and someone has a pop socket. And I'm like, hey, like David, you know, somebody has your thing. And then it blew up over the course of like a couple years. I, and of course he iterated on design and ended up with instead of a case with the integrated pop socket, just the single pop socket that sticks on the back.

And then he did licensing as well. And he also did custom popsockets where you could upload a picture and he would print your own like your family, your loved ones on the back. And my mom still has a pop socket with my dad's face on it on the back of her phone. And so David, this, the story culminates. I'm in Thailand on my honeymoon. And I'm in a mall in Bangkok. And I'm walking through the mall and I see some pop sockets at like in a retailer halfway around the world.

And I take a cell phone pick and I texted David and I go like, wow, man. like you're in Bangkok like you're like you're everywhere where he made it uh and at this point he had already made it he did not name me to tell him he made it uh and uh he texts me back and he goes thanks so much for sharing that's an unauthorized replica our lawyers will be on it immediately what he goes what is your exact location like we will have the we will have basically the swat team on these guys in 48 hours yeah like i needed a quantity exactly right it turned into an IP protection business, period. But he made Buku dollars.

I mean, absurd dollars. I mean, they have a 50,000 square foot building in Boulder. The woman who I met at the time, who was his, like, one of his early employees was she was like his outsource bookkeeper, went on to be the CFO of Popsockets, left and found her own business and like, she did great. It's an amazing story. And there's even more to the origin story. And he had a huge dispute with CU Boulder.

They tried to cancel him because he stood up for some basically, this was before me too. I don't know how much of this I'm supposed to are allowed to say. But basically like a student was trying to get canceled or the university was trying to cancel a student for an allegation that had not been proven and seemed specious. David stood up for the student and CU fired him. And he had to sue the university to get reinstated. All this is going on while the pop socket thing is going. It's a wild story. I mean, like very happy for David.

You know, he's, he's a good dude. I'm glad he won. Well, Gustavo has given us, Gusov, our producer has given us the, hey, like wrap it up eyeballs. I can tell because we're coming up on 30 minutes, which we're not supposed to go over 30 minutes. But I mean, I think there's a pattern to what you're talking about, Bill. Like, I read a Twitter thread the other day about a guy that passed on investing in Airbnb because they showed up and there was like a total mess and like they had like some sort of cereal box demo that they were trying to do for the guy. And he's like, he never got past the demo being a total mess.

And he would, his fund would have made a billion dollars on Airbnb if they put money in the terms. That was that. And I've gone through similar stuff where like I remember being pitched to invest 10 grand in a local. local bar and grill. Like it was before kind of the patio style grill like type stuff got got popular here in San Antonio. And we're like sitting there like on December 26 and there's not a customer for miles. It's like four degrees in San Antonio. It's like horrible. And they're like, yeah, we'd like you to invest $10,000 for 10% of bar at grill. I'm pretty sure that same establishment is producing 10 times that amount of revenue or profit for that particular investment. I would have made, you know,

a thousand percent of my money per year forever if I'd have just taken that taking that $10,000 in chilies on the ground floor. But you look around, you're like, wait, like it's who who wants to sit down in a field next to a road? Well, you know, like it's free. Like, no this makes sense, but there's a lot of times where, you know, you have to be careful. A lot of times, like things that turn out to be good investments, like you have to get past

some of the things that don't matter, but that's, you know, set off your spidey senses. So anyway, thank you for my fourth dad story of today. I appreciate that there. All right. So to wrap this up, are we thumbs up or thumbs down on this thing? So it's doing $1.7 million in profit and declining, though. Mills gave a quick thumbs up here. But Mills, I forgot to tell you the price.

The price is $10 million. Well, I'm not saying that I'm paying $5.9 times profit. I'm saying thumbs up. I want to know what's the IP. like this is you definitely just for your own learning curve you sign this NDA and you find out more about this business because I don't know I mean if they have what okay bill that price what if they have 10 years or 20 years left on a licensing agreement with like the Atlanta Braves or something like a brand that is you know somewhat durable and you go okay sales might fluctuate based on team performance but I will recoup my 10 million dollars with a high degree of likelihood. it might not be that far off. Yeah. I mean,

I think you're underwriting both sides of it, right? You're underwriting the IP and you're also underwriting the fact that Best Buy wants to keep carrying it. Yes. Because, right, that's the other side of it, even if you still have the Braves, but Best Buy is out of business. Yeah. Right. Or is out of the cell phone business or is out of cell phone case business or decides they don't

like MLB anymore. You're also screwed. Yeah. So it's kind of, it's pairing the two contracts in diligence. I think it looks like a thumb down, but it looks so bad to me that I think it's worth digging into because there could be a surprise just like that barn drill investment that I told you about. So that's where my, that's where my head down. The one that got it.

It looks like the circle of terrible. Like the idea is so bad, the deal looks so bad that I think there's a possibility. It's good. So that's whatever that thumb is. Orchew theory of acquisitions anonymous. Yeah. If that's the thumb where it's kind of up here, up the backside. then that's the thumb I am.

Yeah. Yep. All right. I think I'm cautiously thumbs up on this one. I would want to understand also why they are so concentrated at Best Buy. I mean, like, can you take this thing to Amazon? It could just be such a slam dunk. I mean, because some people buy the case once at Best Buy, get a new phone somewhere else and go,

geez, I really like that case. I got a Best Buy. Like, can I get it on Amazon? Like, at the very least, even if it's the reddest of oceans, you're going to have people looking for repeat business and you're not there and you're losing those sales. So I'm just so curious to why it is there something about it that it only works at Best Buy. This is such a good case. Like this is such a good episode.

This is so unique. Like where else do you see stuff like this? Was it the dark story? And that's where we're going to do. I mean, where like there are so many facets to e-commerce to wholesale to like intellectual property. Like there's so much going in this one teaser. It's amazing. Yeah.

This is like an MBA in a box right here. MBA in a cell phone case right here. So this was a great one. Thanks for listening to everybody. Reminder, if you liked this one, check out Acquire.com. They have more deals like this. Also check out our website at ACQUanon.com. We have all of our e-commerce deals.

If that's the thing you're into, you like this episode. All the deals for e-com are all tagged e-com. You can go listen to all three or four of us ramble about e-com for 70 episodes if you want. You can also get on our email list where we send out one email a week. It includes all the apps from the week. A couple cool links to the things the hosts are doing outside of the show. It's not a lot of email, but it's really high value.

So I hope you check that out. Thanks for listening at Acquisitions Anonymous this week, and we will catch you next time.