My First Million - We Turned $5M Into $419M Buying Cashflow Businesses ft. Jeremy Giffon

Starting point is 00:00:00 All right, I've been chasing this guest today for six months, begging him to come on the podcast because I heard him on a podcast last year. And as much as this breaks my heart to say it, that was my favorite business podcast of the year. And it wasn't even our own. But he was so good that I asked him to come on. His name is Jeremy Giffon. He is, he was the first employee at Tiny, which if ever listened to the podcast, we've had Andrew Wilkinson on many, many times. They basically turned $5 million of starting money into about $500 million of equity just by buying businesses that cash flow. So they bought, you know, small businesses that cash flowed, kept recycling, recycling, recycling, and over 10 years turned into 500 million. So I wanted to ask

Starting point is 00:00:37 him, what was it like in the early days? What were those first deals like? He was there before they even had a name, before they were even called Tiny. So we asked him about his best deals, his worst deals, the weirdest deals he's ever done, negotiating tactics he learned. This episode is amazing. It's a 10 out of 10 for me. Enjoy this episode with Jerry. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On the road,

Starting point is 00:01:07 let's travel, never looking back. What's up, Jeremy, welcome to the show. We figure we've had your mentor on enough times now. Andrew, he's probably the most popular guest on the show.

Starting point is 00:01:18 Enough of Andrew. We got to go to his protege. We got to go to the young gun who was there from the beginning and have you on. Welcome to the show, man. Thanks for having me, guys. Let's put tiny into context,

Starting point is 00:01:27 because I think maybe somebody, listen to this doesn't actually appreciate what we're talking about tiny. The simple story of Tiny is they had a services business, an agency, and then they had excess profits, and I think you can correct me if I'm wrong, but I think the numbers are something like they took five or six million dollars of initial equity, and they put that into Tiny, and we're like, okay, we're going to go try to buy a business with this. And they've ended up turning five or six million of initial startup capital into roughly a $500, $600,000 public company. where they own, you know, or tiny owns maybe a portfolio of 30 businesses or something like that over,

Starting point is 00:02:03 over roughly 10-ish year. Eight years. Yeah, eight-year period. So kind of amazing. And eight years turned $5 million to $500 million. Like, okay, I'm doing round math here, fuzzy numbers. But first of all, is that the right math? Is that roughly the right story?

Starting point is 00:02:18 And then, you know, walk us through the beginning days of that because you were there at the very beginning at 19, 20 years old, employee kind of number one there. Walk us through that. Yeah, so I knew Andrew because when he was starting MetaLab and I was working on another startup, we shared the same studio apartment. Our office was in a studio apartment and he was in the bedroom area and we were in the kitchen and we would keep a blowup mattress in case the fire guy came around and we would just say, oh, you know, Andrew lives here but just have a lot of friends over, you know, working on stuff. And yeah, I mean, effectively, like, MetaLab, the short version is MetaLab, you know, was throwing off a fair amount of free cash flow. I think it was in that range of, you know, low millions a year. And the idea was just to go use that free cash flow to buy a business. And, you know, that's the thing with agencies, right? Like, there's not a lot of reinvestment. So you got to do something with the cash. And if you're not going to put in the S&P, like, that's too boring or whatever, then you got to figure out something to do with it. And so that's kind of what we did. It's funny, like people, a lot of people hold codes and stuff are really popular now. And people, you know, a lot of people ask how do I build tiny effectively? And the first step is like,

Starting point is 00:03:31 well, you know, bootstrap a business that makes millions of dollars free cash flow and then like get back to me. The rest is like pretty easy. And that's the first start. And you said it took eight years. In reality, I think Meta Lab, the agency, that was already eight years older. I don't know what it was. But yeah, that's right. Meta Lab is probably 15, 16 years old now. So it was a long, a long slog. I mean, Andrew just started really. young. It was also one thing that's really helpful is Andrew and Chris and myself. I mean, we were all big users and fans of dribble. And Andrew really had that company in mind for a long time, which I think is another really nice thing to have. Like, it's very good to start with a deal.

Starting point is 00:04:08 Even when like, even when you're fundraising or whatever, to actually have a concrete thing that you want to go do and use that as the jumping off point for, you know, building whatever it is, I think it's always so much better to have that than to kind of be like abstractly, oh, I'm going to start a fund or I'm going to start a holding company or whatever. And so it was like dribble is really cool. We would love to, we would be the right owners for that. Andrew knew the co-founders there. And maybe we could buy that.

Starting point is 00:04:34 And now it would be a starting off point. And it's all very like real and concrete versus the, we're going to build a holding company of technology businesses or something like that. Now, you're three guys who've never bought a business before. Take me back to, you're sitting in the kitchen or whatever of your apartment slash office slash hangout lounge. are you guys like, hey, can we like buy like buying businesses for dummies? Like how did you even figure out how to do it and also if this was a good idea?

Starting point is 00:05:01 Because it's a big risk, right? I think, you know, probably four or five million bucks of equity went into that deal. That's like kind of like that's a big deal. That's not like a couple hundred grand at that stage. So like what were those conversations like at the beginning as much as best as you can remember? Yeah. I mean, it was, you know, like anything, there's generally one way that you can categorize sellers. It's people who care about what happens to the business after they sell it and people who

Starting point is 00:05:25 don't. And certainly for people who care, it's a lot about, it's this huge trust exercise of, you know, are you going to screw up my baby? Like, in their case, they've been working on it for a really long time. Their names were very attached to it. There's a big community. Community businesses are really difficult. You know, the community can really turn on you fast. And so, yeah, there's that whole piece. And then mechanically, yeah, it was literally like, I don't think we even had a book. We just looked it up online. I would literally go on Legal Depot and like get a LOI off there and edit it. And, you know, for the first few deals, like, you know, I was 19, 20 and Andrew would be like, can you go get a LOI for this? And I didn't know what that was. We just go download one and

Starting point is 00:06:07 write it up. And it's interesting because one thing that we didn't, like this is an example of just the benefit of not having a lot of experience. Typically, when you do an LOI, it's pretty far along in the process. And we would just fire them out. Because we read them, and in an LOI, the only thing that's binding usually is the exclusivity and nothing else, not the price or anything else. And so we thought, okay, like, this is a totally non-binding thing. So let's just, like, chuck it out there. It's nice to have something on a piece of paper.

Starting point is 00:06:33 It's kind of like a term sheet, although even term sheets, like, socially are more binding. And we didn't realize that, oh, in private equity in LOI is like a pretty sturdy commitment or whatever. And, you know, that was for better and for worse. On one hand, it let us move really fast. on the other hand, we learned quite quickly that, okay, you're not supposed to go back on like what you change in an LOI and that kind of stuff. And so there's all those little things we're just not being familiar with the process,

Starting point is 00:06:58 really kind of let us move fast, it let us be friendlier. And that was the whole point. Like, we had both had these kind of bad experiences with buyers. And we thought, you know, there's got to be like a better service to be done there, basically. I had a handyman come over yesterday and he comes to my front door and he's like, show me what you need done, whatever. And I said, great, that's what I need done. And he goes, here, before we start, I need you to do something.

Starting point is 00:07:20 And he pulls out a notebook and he writes, he writes, my rate is $50 one out per one hour. And he hands it to me. He goes, sign this for me. And I just, I go, okay, cool. I'm aware that. That's awesome. He's like, spits in his hand, shakes it. He's like, this is no official.

Starting point is 00:07:38 And I was like, I appreciate your style. That was like the tiny LOI. Yeah. At least he's understandable. So at the time was dribble like an obviously good business because it turned out to be an amazing investment, probably like a, I don't know, what is it? Like a 50x on your money there, right? Yeah, more than that. More than a 50x.

Starting point is 00:07:59 Amazing. What did you guys like try to underwrite the deal? Were you like in Excel like dragging some like, you know, 10% growth, like dragging it over 20 columns? Like how did you guys? What did the deal look like? And what did you expect? Again, it was pretty obvious that it was a great business. And I think Andrews told this story before.

Starting point is 00:08:16 but there was some immediate day one levers around like a big part of the business was advertising and we could find better advertising providers and things like that. So there was levers you could pull on day one that were going to improve the business. But yeah, it just felt like this big opportunity. It was a top 1,000 website and had millions of active users. It was very important. You know, when it launched, like I think I bought my dribble invite on eBay or something like that. It was really hot for a while.

Starting point is 00:08:41 And it was just this kind of like cool thing that didn't really exist. You know, there's not a lot of independent social networks. that have millions of users. And, you know, we, we negotiated a pretty fair deal, I think, like, you know, the other Buffett line is prices my due diligence. And that helps a lot. But no, we never thought, we never thought any of the deals could be, you know, 50 plus X's. We're always just like, you know, can we make 20 or 30 percent cash per year from this

Starting point is 00:09:08 business? And that would be great. And anything after that is just kind of, kind of upside. You know, I think, and yeah, regarding models, you know, Andrew used to make me do discounted cash flows because it was kind of like the thing that you felt investors ought to do. And then at some point, I was like, here is your spreadsheet, but I'm just making up all the assumptions in the spreadsheet. And I think it was like, so many of these things are just like comfort blankets or whatever.

Starting point is 00:09:34 You just like, it makes you, it's a big scary thing that you're doing and it makes you feel better that you have it so you can look at it and be like, yeah, like, we've modeled this out, you know, but it's like, it's bullshit. You're just making it up. You also had a great quote. You said something to me. You go, the more quantitative analysis. So the more numerical analysis you're doing about a business, the more you're commoditized

Starting point is 00:09:56 in your analysis. What does that mean? What does that mean? In the Facebook IPO, Barclays put out this research report where, you know, they say what they think the business is going to be worth. And the way they do that is to a discounted cash flow. and a part of that calculation is like, what is the terminal growth? What is this thing going to grow at forever?

Starting point is 00:10:16 And they put it at 3%, which is what most companies are. And so that got them to a $200 billion valuation. Now, the next 10 years, it grew 30% a year and it's a $2 trillion company. And it's just an example of like, you know, you do all this modeling and this research report and you're just so off. Like, you're an order of magnitude off. And so, like, what was the point of doing any of that? it would have been better to think really hard about how actually how much can Facebook grow like

Starting point is 00:10:44 just kind of this first principal stuff right of what percentage of the planet could use this like a lot more basic um and yeah that's a lot of the quantitative stuff also a lot of the quantum stuff is totally commodified right so people like know how to do this you can learn how to do this in school and therefore maybe it's like a useful table stakes thing but you're not going to get any edge that way because everyone can do it and where the edge is in quantitative stuff is you know in the two sigmas and Jane Streets and the MIT PhDs and you're not going to be doing that either. And so you're not going to like do a better model on a company than the next guy and somehow get some edge there. So then when you're looking at a deal, when you're trying to for like a small bootstrap

Starting point is 00:11:23 business, a business doing anywhere from a million to 30 million in revenue, what are you looking at to spot the opportunity? If it's not the, I mean, are you, how much do the financials and the cash flow statements actually even factor into that? Or are you just thinking, I can make this bigger? I mean, what part of the numbers actually matter to you? Yeah, it's pretty basic, right? It's like, okay, let's, you know, let's make up numbers. It's doing $5 million a year of revenue, a million dollars of earnings. And you think, okay, on day one, I could, you know, raise the prices by 30%.

Starting point is 00:11:56 I could reduce headcount. I could launch this new product, whatever. Would you pay, you know, would you pay a million dollars for that? Yeah, of course. Would you pay $3 million? dollars? Yeah, probably. And then you can just kind of go. And I think where modeling gets important is when you're like at the very edge of that, you're like, would you pay $10 million for that? And then it's like, well, a lot of things would have to go right, maybe or whatever. But there's some number there where it's like,

Starting point is 00:12:22 yeah, you know, I'd pay $3 million for business making a million dollars. And so then the trick becomes, okay, can you get the business for $3 million? And that's where it's like, you know, Tiny was in a lot of bids with other folks. And I don't think we were ever the highest. actual price, but we often won deals because we could offer other things. So that comes back to like why you on the deal. You know, it's because like the very common thing that would happen is we'd get pretty far with the seller. And then they'd say, hey, you know, we like you guys, but we've got this offer for 25% more. So we're going to go take it. And, you know, very often be like, great, like go explore that. And then turns out that offer was not as real

Starting point is 00:13:00 as you thought or it was six months of whatever. There's more debt or they didn't have the financing and then you actually figure out that, oh, there is like other things than deal that are important, like the ability to get it done, the ability to be honest, to be trustworthy, to do things fast, like all those other soft things. And so it's more like, are you able to get a price that's really a no-brainer? At least that's how I look at it, versus I've really think I'm smarter than everyone else and I can pay slightly more. I mean, that works for people. People do do that, but it's just a totally different game. I'm always fascinated by the people behind these businesses. What can I learn, you know, tiny

Starting point is 00:13:35 he's a great business, but it was created by people. It was great by Andrew, by Chris, by you. And I'm like, how do they think about things? What do they know about what they're doing? What worked for them? What are their, ultimately, what are their superpowers? And I asked you, what's Chris's superpower? Because forget Andrew. Everybody knows Andrew. He's popular. He's out there. He talks. He's got a big following. Almost nobody knows Chris. I had dinner with Chris. And I was like, I fucking love this guy. This guy's, he's dynamic. He's really engaging. He asks great questions. And so I've only known him for a couple hours in my life. You've known him for a lot. longer than that. What is Chris's superpower that that he brought to tiny? I mean, Chris's superpower

Starting point is 00:14:12 is just being able to, Andrew is so high pace and so high energy that Chris is just able to modulate that and kind of be the sober second thought, you know, we're not going to do this or that's way too much or whatever. You know, a very interesting piece of the tiny partnership, at least at the beginning that I thought was really quite unique and interesting is that you know, Chris and Andrew had tiny as this vehicle that they would share together, but then they could also do things on their own, you know, investments, businesses. And that actually, like, I don't even know if it was intentional, but that provides this great release valve of, okay, like, all the time, you know, Andrew would come up with some,

Starting point is 00:14:54 you know, cockamamie motion about some restaurant or whatever. And he would just say, okay, I'm going to go do that on my own. And Chris could have the same thing, like Chris was great in investing in public equities, and he could go do that on his on. And I know that doesn't directly answer about Chris's superpower, but it is this like interesting structure. I think one thing that can really go wrong in partnerships is if it's like you're dedicating your whole life to this thing and everything you do is going to be through it,

Starting point is 00:15:19 it can really turn into this prison if you don't share the same taste as your co-founder. And so having this like release valve and being aware of that is really nice. People normally pick partners who are like them, right? But Andrew and Chris are not like that. I guess what did you learn from that? Yeah, I mean, I would also say like Andrew is really good at sales and kind of creating this new vision. And then Chris is really good at being kind of the negotiator and actually like getting a good deal and structuring it well and everything. You know, there's all kinds of things about negotiation.

Starting point is 00:15:52 Like one thing that would be like structurally another interesting thing is, you know, I would I would be kind of the front guy on a lot of deals and would come back to them. and they would kind of be quarterbacking it. And what was nice is like I would throw out an offer that I thought was really aggressive. And it was kind of the most that I could like emotionally stomach. Aggressively high? Aggressively high? Low. You know, really low, really low.

Starting point is 00:16:17 And so this is, I want to be clear, this was back like in the early days when we had no money and we were really trying to like be scrappy. Tiny is not really like this anymore. But and then I would say, okay, like I've really got this down, you know. And then they would just look at me in because they'd never talk to the seller and just say, I think you can do like 25% at less. And like sometimes I feel like I want to throw up, you know? Talk through that when you have to present a shit offer to someone. I imagine some, a lot of times, maybe not a lot, 10, 15% of times, they're like, okay. Yeah, more than that.

Starting point is 00:16:49 And actually, what's even rare is at least I, I always have this fear that they're just going to lose it, you know, like, how dare you? And that almost never happens. It happens sometimes, but it almost never happens. And another nice dynamic there is you can, always say, well, hey, like, I'm on your side. Like, I, you know, it's the old car salesman gamut of like, my manager's killing me. It's the same exact setup, right? And that's, that's super helpful. And, you know, Chris shared all kinds of tricks with me. Like, one great one is it's always best to just kind of, when you float an offer, to just not say anything else, people will immediately start negotiating against themselves. And so one trick that

Starting point is 00:17:28 you can use if you're on, I guess it probably doesn't work on Zoom, but if you're on just call is you can like say your offer and then hit mute and then you can like be like you can start saying oh you know whatever but they'll just hear the science silence and um that's a big thing as well because oftentimes you just need to let it float and sit out there but it's like too uncomfortable for you to actually do that dude i've got this friend who works in the CIA and i was talking to him and he has to negotiate with people you know basically his job is to convince people to become spies So if he goes to the Middle East, he has to convince a guy who's loyal to some country in the Middle East to commit treason. And when he goes to these negotiations, his tactic, because he said the same thing.

Starting point is 00:18:11 He goes, I say what I want and what I want to happen. And then I shut up. And his other coworker was there. And he was like, who's not part of that? He's like, dude, they do this to me all the time just at work. I'll notice they say something. And I just want to fill the silence and I want to keep talking. because it makes me uncomfortable.

Starting point is 00:18:29 And I ended up just talking, talking, talking, and they sit back, not saying a thing, and they always get their way. Yeah, totally. I mean, one very cynical way of looking at negotiation is that it's just who can bear to be uncomfortable longer. And that's certainly true. You can do that in a retail setting, you know? Sean does that all the time.

Starting point is 00:18:50 Sean, I think we, would he negotiate? The king of the awkward silence. Yeah, he's very comfortable. I have a condo on awkward island. Yeah, he's the mayor of that area where he's just very comfortable being uncomfortable in a conversation. Jeremy, you told me something else that Chris taught you that is less about kind of the gamesmanship. I think when we think about negotiation, we often think about the gamesmanship. What do I say?

Starting point is 00:19:16 And I think you already said one interesting thing, which is a lot of times is what you don't say. It's to stop talking and let them talk. But another piece you had mentioned to me was like, it's not you versus them. Can you explain that? Like how Chris taught you, it's not you versus them. The way that I like to frame it, the more kind of mature, the way that you can really do, I think, for your entire life and not kind of get, you know, be known as this like bastard who's just relentless to negotiate against.

Starting point is 00:19:40 It's kind of, I love this idea of an traditional negotiation. You're sitting across the table from one other. And the way that I really like to reframe it is you're both sitting on the same side. And what's on the other side of the table is the problem. And the problem can be you want $50 million for the business. I want to pay 20, but it's still this like, okay, this is a problem. Let's work together to figure this out. And it's this very subtle thing, but it makes a huge difference. And that's, I think that's how you start to unearth. Okay, maybe like it's actually not, it's cash and something else that's

Starting point is 00:20:12 more important for you. Why do you want 50? What is it that's 50 about so important and why can I feel like I only can pay 20 or whatever? And that works really well. I use that every day. You can use it in like relationship problems and everything of kind of like making the problem other and then putting it out there and being like, let's work together on solving this thing. And there's just something so much better about that than the kind of like, I'm going to hit mute and stare at you and like break you. Like, well, see, Jeremy, the problem that we're trying to solve is I want the money in your bank account to be in my bank account. Yeah, exactly. I want that, I want that chase account to say five zero. Yeah. No, it is true though. You know, one of the things my dad taught me, one of the best

Starting point is 00:20:54 things my dad ever taught me. He's like when you go into a negotiation, it's not the same thing. It's not us first them. He goes, make a table of your needs and you're like basically your needs and then your gives. So like, what do you have to offer? And then what do you need back? And then what do they have to offer? What do you need back? And they're never like perfectly symmetrical. It's not like. And so for example, some of the things they need are very easy for me to give, to cost me nothing or I'm totally comfortable giving that. And it's actually their fear or their their big sticking point was something that's not so hard for me to give on. Or maybe. I could go out of my way to give more even than they're expecting in that area.

Starting point is 00:21:29 And in this other area, I need something and then they're happy to give it. And so that's usually the better way to do it. My favorite question is what would need to be true? So it's like, okay, you want to sell your business for $100 million. What would need to be true for me to pay $100 million for it? And you can just lay it out. Like, like, what would make this a no-brainer? And you can do that in any situation.

Starting point is 00:21:50 And, you know, sometimes it's impossible, but oftentimes it's far more possible than you think when everyone actually lays that out. Because usually there's some sticking point that you don't realize or, you know, it's something that is kind of outside of the scope of things you've already talked about. And I'm always amazed by how much that works. That works like, as I've been fundraising, it works there. Like, what would need to be true for you to be like, oh, it's easy to give you money or, you know, for a trip?

Starting point is 00:22:15 Like, what would need to be true for everyone to be excited about going on this trip? Like, it's just such a good question. And it really sets that up as like, let's collaborate on this. That was my pickup line. What's a guy like me got to do to be with a girl like you? And then she's like, do you have a friend? What's his name? You have this other thing on here where you talk about how, what do you say?

Starting point is 00:22:37 A cold email is the most asymmetrical trade and that you've actually cold emailed a bunch of people. There's one guy in particular who you listed that I want to ask you about. But it sounds like the cold email has done well for you. Explain more. Yeah, I think it's funny. I've been saying this a lot more. or like publicly into groups and stuff. And it's still like if everyone cold email, the R would go away.

Starting point is 00:23:02 But I think it's just too scary or whatever that people don't do it. It's still a huge opportunity. I will say like the addendum to that advice is you got to have the goods when you show up for the meeting or the call or whatever. I think like, I think I don't know, maybe it's just like anecdotally because I talk about this a lot. I get a lot of cold outreach. And you also like the second part is you've got to be really good when you show up.

Starting point is 00:23:25 But if you're good when you show up, like, it's just this incredible, incredible kind of hidden secret, which is there's always a scarcity of talent. Like, no matter who you are and, you know, how much money you're worth or whatever, there's a scarcity of really awesome people. And so everyone has an infinite appetite to meet people who are interesting, talented, have a unique view on things, whatever. And if you can present that, like, you will really kind of go a long way. And the downside, I can't even remember.

Starting point is 00:23:56 I'm sure I've sent hundreds that have never been responded to. I've never got a bad response. It's usually just no response. And I don't even remember the non-responses. But the ones that I've got responses from have been amazing, you know. And so I think I definitely think more people should do it, especially if you're young or you're a student, that alone can be enough of a hook that, like, most people will meet with a student if they seem switched on and interested.

Starting point is 00:24:19 And yeah, I've still amazed that people don't do it. But I've started to see people do it and then they show up and like they don't have anything to say or they don't have questions prepared or whatever. And that can be really bad. We already know your first deal, but that was the first one. But I want to know first deal, worst deal, best deal, weirdest deal. It's like the fuck murder Mary of probably. We did first deal, dribble, which might also be best deal. What's the worst deal that comes on? What's a big mistake you made? The worst deal. And name names and list. email address and social media handles. Yeah, the worst deal is actually the one that I can say the

Starting point is 00:24:57 least about, which should indicate how bad of a deal it was. But give us the abstract. The worst one was just that the person was dishonest. And I should have known and I didn't. And I ignored it for for greed reasons. Because I was just thought this was such a good deal. I could look past these things. When you say I should have known, I ignored it. What are some things people could look out for? What can I learn from that? Yeah, it was it was not this deal, but there was a friend of mine who buys similar types of companies did a deal where they flew in the founders to meet them in person. And the first night, the founders wanted to know where they could get drugs. And, you know, that is like in and of itself is not a strong signal, but in that context, in that situation, it's like kind of what more do you need to know?

Starting point is 00:25:47 And it turned out that they were doing a bunch of stuff that they didn't disclose or whatever. It's always stuff like that. Like someone who's really flashy is almost always a bad sign. All these little things. And, you know, even like in the case of this deal, I introduced the person to a bunch of different friends and, you know, experts. And they're all like, this guy is really something. You know, like you, I don't really know why you're dealing with this person.

Starting point is 00:26:11 And it is funny how you just get the blinders on when something is so good. And I think we've all made that mistake. And so, yeah, that one, it just turned out that there was a bunch of things that we didn't know about, and it went very badly, and we lost all our money. It was a really small check. Fortunately, that was like the one upside, but that one was pretty rough. What's the most unique or weird deal? The best one, I mean, it's kind of too early to tell. One that I really, I really, really love is this company called Mealime.

Starting point is 00:26:46 It's a meal planning app that Tiny bought in 2018. Meal planning made easy. So four and a half million people, it says in the website, use this app. And what do you do? You say what ingredients you have and it gives you like a bunch of recipes to cook and lines them out for breakfast, lunch, and dinner. But it was just this really awesome app. And it was made by this really amazing technical guy who had just built this really

Starting point is 00:27:10 great product. Like I remember the moment that sold me is like they, you know how the iPhone turns off when you put it close to your head. He realized that you could use that sensor. If your hands are dirty while you're cooking, you could wave your hands over that sensor to go to the next part of the recipe or stuff. All just these little things.

Starting point is 00:27:26 And they have these huge butterfly flax. It turns out when you do that, Apple thinks that's really cool. And then they feature you in the app store. And there's all these small details. And we bought that business, and it grew a lot. We got all of our money back in the first couple of years.

Starting point is 00:27:39 And then this was the only business, Tiny is sold to date that, we saw we made two major grocery retailers came along and I guess like in a boardroom somewhere they had just decided you know we need an app and so they both became interested and it was kind of funny because I you know the company that I was up before tiny we had sold the company to work day and it was a pretty difficult experience and so I kind of viewed it as like my chance to get another go at selling a company to a public business and really kind of it was going to be my turn to get a good deal. And then we sold it. We sold it for, you know, a huge revenue multiple,

Starting point is 00:28:20 made a lot of money, you know, excess of 25 times of our money. And it's still today. It's like if you look it up, it's still used. It's this great thing. I think the original team is still there. They were very happy with the outcome. I just loved that because it was like, it was this kind of perfect little situation and this great little almost like like craft app, just someone who cared a lot about making a great product. And I love those. And the weirdest deal? It was basically this company, a big Fortune 500 tech company bought a business,

Starting point is 00:28:52 and the business had two business units. And the Big Fortune 500 only wanted one of those units. And they basically had to divest a bit very quickly. And so we were able to buy it for it was doing $10 million of recurring revenue, and it was shrinking. The business was shrinking because it was built on top. of another platform that was becoming less popular over time. And we were basically able to buy it for so little that we borrowed all the money and then paid back the loan in like three or four months.

Starting point is 00:29:24 And so we basically got it for free. We were able to, we bought this out of the tiny fund. And we could write this great update to our investors saying, hey, you know, we didn't call any capital, but you now own this new business. We're going to do a distribution scene. And it was like small dollars, but it's cool to pay nothing for a business. And then the interesting part is like we also got a domain that's probably worth a million or two million dollars depending on how fast we wanted to sell it and so it was kind of this like fun little deal of like can you actually do a business for can you buy a company for no money down and um you know it won't be a business it will not be a 20x and it's not going to grow for 10 years but we'll make many multiples

Starting point is 00:30:00 of our money on it um and it's fun like in the actual fund statement that like kpmg does they have to list the cost and so the the accountants uh listed as like a 30 $36 cost basis, which is, I guess, like, the actual money that went into the deal. And those are cool. Like, you can be really, really creative. You don't have to put a lot of money down. How did they find you or you them? In that case, we knew a board member.

Starting point is 00:30:25 And it was the situation where, again, we made a bid there and they didn't like the bid. And they went and tried and shopped it around. And turns out, like, there's a very limited set of buyers for that kind of thing, especially ones who can do a deal really, really fast. And so it was kind of this. We understood why we had the right to win this deal. We understood that money was not the most important thing here. And so we were able to get it for this great price.

Starting point is 00:30:47 That's it for part one. We actually kept talking to Jeremy and it was so good that we're going to turn it into a two-parter. The second part is actually all about what he would do today. So the first part was kind of like how they built tiny, the deals, the lessons learned. That was the past. And now I asked him basically, if I was going to do tiny today, what would I do? What deals would you be looking at? What businesses do you think are great buys?

Starting point is 00:31:07 What opportunities do you see? And he tells us the single best investment. an opportunity he sees today in this next part. Enjoy. That's coming out tomorrow.

My First Million - We Turned $5M Into $419M Buying Cashflow Businesses ft. Jeremy Giffon

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