Flippa revenue, CEO Blake Hutchison, team size, customer count, churn, and more in 2023.

hello everyone my guest today is blake hutchison if the name rings a belt because he jumped in full feet 2018 into running of flippa coming from a different company he's scaled companies before but now focus on helping all kinds of brands and businesses sell quickly and effectively via flip up a marketplace for again buying and selling your company blake you're ready to take to the top yeah absolutely nathan thanks for having me so let's dig into your personal story here for a second you could do anything in the world in 2018 you're working at i think you're working really this this thing that helps people book luxury experiences correct luxury rentals yeah that's right luxuryescapes.com which is a uh i guess a flash sales engine for beautiful holidays around the world and uh yeah super fun company to run so what happened i mean did the folks at football approach you and say blake you're the guy we want you in here here's where i excited come join please i mean how did that work yeah so i really like working for founders i really like running businesses on behalf of founders and had some success at luxury escapes great founding team there but as you say uh i was tapped on the shoulder so to speak so the the board and the founders at flipper had said we've got a great opportunity for you we're a global marketplace we've got customers all over the world we're helping to democratize the exit and uh that's where i've ended up and it's a lot of fun it's different to luxury holidays that's for sure so what about consider sort of exits but a different kind of exit instead of luxury goods it's it's it's digital assets and insights businesses but what did you see in the space of the time i mean again you're sitting on a great cushy thing i assume it's going well you have to have real conviction around that vision to jump out and start leading football full-time what did you see in the mma marketplace back in 2018 i think there's really uh one thing for me and then one thing that relates to the macro environment the thing for me was that i'm based here in australia flip is a technology company it's a global technology company it's bootstrapped it's profitable it's organically grown and that's a that's a rare thing to find um in the australian market of business which is truly global so that was the thing which appealed to me as it relates to the macro environment there is clearly huge amounts of growth in the small business digital sector and the small business digital sector has been one that you and i are very familiar with but the mainstream community has taken some time to jump on the back of and so with platforms like amazon and google and shopify and big commerce and recurly and any other platform that enables a digital asset owner to scale there is a fundamental paradigm shift in the opportunities for those businesses and that that struck a chord with me so let's sort of start with a very specific question and then take a step back in terms of growth of football and how it impacts sas so you help sas founders sell their company you always have interesting listings one of the top listings right now you've got editors choices swiftify.com it's a website they monetize via subscriptions they're doing 8 800 per month in net profit the multiple asking price is 450 000 for a 4.2 x sort of multiple is that the multiple you're seeing right now for sas company is that the expectation a new seller should have coming to football so the interesting thing is that it does differ by size of companies so the smaller the company the lower the multiple uh the the the larger the company the higher the multiple uh that's a very very simplistic view of the world but what we're seeing on average is a three times net profit multiple or sde multiple seller discretionary earnings on a stas asset which is between two and four years old and just people that might not be familiar with what sda means can you explain how people can calculate that yes sde seller discretionary earnings and what that relates to is uh non-carry forward costs are removed from your cost base and therefore the net profit line is adjusted and so what that means is if you've paid a um a freelance developer a large amount of money to re-platform your technology and that's a non-carry forward expense you would remove that from your p l and therefore it would impact your profit line and therefore impact profitability and ultimately uh businesses are priced against the sda versus a standard net profit so building around seller discretionary earnings should make your bottom line look better because you're removing expenses that the future buyer you know in theory would not have to incur is it accurate that's absolutely accurate how do you how do buyers get comfortable with that like how you know it's a whole combination of the buyer going well what would i actually need that expense would i have to go replace that developer with somebody else how do they get comfortable with how that sda sda is calculated yeah i think it's critically it's about is it can the buyer imagine that that expense that has been removed is no one-time expense that is non-carry forward and that's a that's a really important distinction and therefore the discussion has to happen with the current owner i see that you have removed these expenses could you tell me a little bit more about those expenses and then the buyer needs to make a judgment call as to whether those expenses should have been included in the cost base or whether it is fair and reasonable to remove those because they are non-carry forward but you're absolutely right the buyer does need to be comfortable with that and that can sometimes take some time and some digging interesting okay let's sort of get you know any marketplace business model you got to have both sides built out help us understand how effective flipa has been at that in 2018 well if you add up all of the sale prices of all the websites you sold how much total gmv went through the platform in 2018 so we so we uh well each each month is a little bit different each each year is a little bit different we didn't we do around uh well i'm not going to reveal what we do gmv wise but we um we see around four and a half thousand listings a month on the platform across the collection of digital assets and those digital assets are sas businesses as if you as you've alluded to so well nathan and i know your community is very passionate about but they can also include e-commerce content assets marketplace assets and apps so if you're not comfortable talking about gmv is there a different number you can point to that highlights football's ability to move inventory so that these 4500 listings don't just sit there yeah absolutely so so we converted 35 so 35 of all assets list on flipper uh sell on flipper and the important thing about that is that remember how many assets we list each month so this has nothing to do we're not a broker that's a really important distinction flipper is a marketplace it's a peer-to-peer environment where high quality digital uh real estate owners so sas founders for instance can uh find a pathway to the largest network of buyers globally so we have over three million users in fact it was two weeks ago that flipper signed up its 3 millionth user so that should give you some sense of the scale that we operate and when you say user you mean a seller looking to sell or a buyer looking to buy actually the combination of both buyers and sellers combined is a combined community of 3 million people okay got it so how many how do you measure sort of an active buyer on the platform because as you and i have discussed i mean the best way to move an asset is to get a bidding war going which is measured by when you list it on flippa how many people do you push it out to and how many buyers actually place a bid to create that bidding war yeah it's a great question so um i'll answer it um at a very high level first so we have 1.5 million active buyer accounts so those are buyers looking at the platform and they have looked at the platform and considered a listing within the prior six month period okay so that so that's that's the first piece the second piece though is remember that buyers have varying budgets and so you can have a buyer who's looking to acquire a small template so that they can start their first online business and they might have a thousand dollar budget and then we've got private equity vc high net worth uh and big budget buyers operating up to sort of the 10 million dollar mark or at least that's the that's the budget that they are sitting on the platform that's not 1.5 million users it's far less than that but it's uh it's a it's a large number we have sort of 50 60 000 buyers operating it what we would call high value range now the way a marketplace works which is fundamentally different to um delivery just to quantify that when you say high value range does that mean you've said okay we know they have at least a million to spend or like is there some yeah high value is defined as 750 plus 750 000 plus how do you know they have that available to spend on m a though uh they set preferences on the platform and uh we haven't gone and there's no credit check of that buyer we haven't looked at their personal bank account um but they have set preferences accordingly and then that informs our matching algorithm so we see somebody lists on flipper our marketplace dynamics take over and we ensure that any given asset as long as that asset is reasonably priced which you and i can perhaps get into and as long as that asset has the requisite detail on the listing we let our matching algorithm play out and then uh plot a path to matching as many possible buyers to any given asset blake what's the average sale price of a company listed on football the average sale price is 75 000 oh interesting okay that's higher than i would have thought um do you see drastic differences in average sale price depending on the cohort of companies selling you know an e-commerce brand versus sas company it's a great question um i don't think we've actually got it broken down that way but i imagine that would be the case i imagine that a content asset the content asset type is probably uh from an average order value standpoint perhaps a little bit lower than sas um and i imagine that e-commerce is perhaps a little bit lower than content interesting interesting okay you talked about you hinted sort of here at reasonably priced so so tell me more about that i sense either some frustration there maybe people list it too much or have unrealistic expectations or how do you reasonably price an asset especially a sas asset when you list on football yeah it's a really really challenging um problem to solve so as a marketplace uh we do put a lot of um power in the hands of our sellers and therefore accordingly in the hands of buyers when they go on to contact or sell it but as it relates to pricing we can provide pricing guidance so what we have is we have 10 years worth of historical sales data now of course 10 years ago there were very few high-value digital assets being sold in a marketplace context and so um let less less data than we would like but over the last three years we've got a pool of assets that we can call upon as examples to provide a valuation range for any given asset however today on flipper a seller can ignore our pricing range and they can as we would uh describe overpriced the asset and in the degree of reasonableness uh be far in excess of what we would consider reasonable and so we are often encouraging sellers to look at examples of what has sold on the platform and used that as the benchmark for pricing and so if what people forget is that um buyers do set budgets and that's how the match the matching algorithm works so if a buyer has a two million dollar budget and you've priced it 2.5 that would be consi and that was considered unreasonable you're going to miss all those buyers who have set budgets up to 2 million which means your catchment is far smaller than it should be and so what people need to understand about a marketplace is that you want to get access to as many possible buyers as you can and flippa will do its job to do that and put you in front of more buyers than anyone else can globally but that requires that you give the marketplace as much accuracy in your listing and price reasonably yeah i mean i you know in terms of benchmarking data i don't know that anyone in terms of an online marketplace has more historical data than you have i mean have you guys published what through your life total amount of transactions the platform it hasn't passed a billion yet no so at about 600 million 600 million um in in transactional ttv so total transaction value yeah uh so not a billion yet and that's a big number you've got a lot of sales data there uh but you know the critical thing is actually what buyers are looking for so we see just over 10 million monthly keyword searches on flipper say that again you see 10 million 10 million keyword searches on flipper what's that much like so much like any other search engine flipper has its own search environment so someone could type in sas and hit search they could type in amazon and hit search now if they type in sas they're clearly looking for sas assets if they type in amazon they could be looking for merch by amazon fba fulfilled by amazon they could be looking for kindle publishing so that's that's a keyword search now we therefore know what business models people look for and not only that what categories and niches people look for and of course through this weird covert 19 pandemic period we've seen the number of searches for particular categories rise and fall on the basis of buyer confidence and that's been super interesting to watch and so what we can say is we have categorically got demand for the following types of assets therefore if you're a seller that meets one of those keyword searches at the top of the pops top of the tree you've got a very very high chance of finding a buyer blake everyone listening is going okay well what's the demand for sas it's a sas podcast come on blake give it to us how many sas searches are you seeing monthly yeah so sas is in our top 15 our top 15 searches so what that means is you've got just under 100 000 searches a month just under 100 000 searches a month for sas oh wow okay so significant demand there and look i mean the reason you came across my radar is heard about footba i want to say this back probably in 2017 2018 but more recently i had a friend who has a sas coming in it's doing over a million dollars a year list on flippa and i've started hearing this you know a couple different people listing on flippa and i said you know one of the questions i always get that i don't always have the perfect answer for is founders coming to me going nathan what would you value my company at and blake my response is always the same it's a combination of art and science it's worth what a buyer is willing to pay so the best place to go find that information out is whoever has the most the largest buyer list of sas assets with the most historical transaction data so they can put up accurate comps and that's when i pinged you and said blake i want two things from you i want you to come on the podcast so we can help sas founders and number two i want to set up a specific landing page where i can send all these people who ask me for valuations and they can get a quick valuation done so i actually put in one of my sas side projects into your evaluation tool and got back actually what i would consider a fairly you know fair price i wasn't offended by it it didn't feel like a big stretch and so it seems like that little chatbot you guys are work have built really pulls on all that benchmarking data is that accurate that is absolutely accurate the valuation bot um has an api and that api is being informed by sales data historical sales data as as well as what we see on the platform by way of buyer demand and so it's an important tool that people can use to get a baseline valuation and as you just said nathan it is uh a combination of art and science so we've seen ludicrous things happen on flipper where we we might have valued something at 2.2 times net profit multiple and it sold it five times now why because it was in a niche which lots of buyers were after it was a strong business model it had a very very high ltv there was very very limited churn and against all other assets that we compared it to it was very very strong so guys if you email me and ask me for your evaluation i'm going to say go to nathan latka dot com forward slash flippa that's f l i p p a you do the valuation bot you're basically getting the brain of someone who's done 600 million dollars in deals over the past 10 years at your fingertips it's free to use i encourage you to test it out you guys listed mine again about 1.1 million which was again i think an interesting comp but to your point blake just now a lot of the ways that you sort of beat comp is psychology it's bidding wars and you build a lot of psychology into football i see right now a bunch of these listings it's x days left this many bids so what can a a seller what can they do with their football profile to as best they can encourage a bidding war should they intentionally under price for example i don't think they should intentionally under price i think this there's three uh there's three tips i would provide one be as transparent as possible because you want bids to come in as soon as possible if you leave too much to chance you are slowing down the bidding process and when i say to chance leaving too much um for the buyer to ask about what should they definitely list blake can you actually paint a picture p l google analytics what else uh definitely google analytics if it's relevant for your business in some sas contexts it's less relevant uh but i would definitely list ltv i would definitely list mrr i would list your churn rate and ultimately yes a p l how has the business performed against the cost base that's super super critical blake before we wrap up you guys are a business you're profitable you're bootstrapped how the heck do you guys make money if you're not a broker so we take a success fee and our success fee is uh well best in class one there's a best price guarantee but for any asset over a hundred thousand dollars which is most of the founders that we'll be talking to on this podcast uh it's a five percent success pay okay yeah i mean that's that's obviously compelling you know i've used to sort of put referrals into other brokers that don't have as much gmb behind them as you do they're not as automated but they'll take 10 15 sometimes even higher than 15 which to me breaks a little piece of my heart off because these founders work for six years building their company and then basically give 15 up at the at the wedding altar as you would call it so five percent for above a hundred thousand dollar five percent above a hundred thousand dollars quite quite simply as a as a marketplace we back ourselves in and we back our leverage in the leverage is the world's largest amount of buyers globally or i said that didn't i the world's largest number so that means we can um match you and therefore we have confidence in our business model and at our scale five percent makes absolute sense and blake as we wrap up here i mean true or false if someone goes to nathan maca dot com forward slash flippa and does what i did with that valuation calculator and they end up actually listing on flippa they're essentially getting for free and email blast out to 50 60 100 000 buyers because you're going to promote that listing is that accurate yeah absolutely i mean there's a sas asset that's on the platform right now you can check it out on ninjuroutreach.com i think you can see that it's got over 20 000 buyer views when i last checked uh that that's that's impossible to match you don't match that you don't you don't meet that global scale um without having marketplace dynamics playing out positively all right blake let's wrap up with the famous five number one what's your favorite business book my favorite business book i would say um wow i'm gonna go back to blast the past i'm gonna go go to uh richard branson's auto biog from back in the day number two is there a founder you're following or studying right now uh so i i follow brian chesky at airbnb very closely because as a marketplace founder we can learn a lot from what he's achieved number three what's your favorite online tool for building flippa uh at the moment we're we're trying uh a little product called flow xo which is a sas business interesting number four how many hours of sleep to get every night uh not enough like under five six no i'd say five six yeah fair enough in situation married single kids uh married no kids no kids yet okay and how old are you blake i'm forty forty last question what do you wish your twenty year old self knew everything will be okay guys football.com over 600 million dollars in sales of companies over the past six seven eight years blake now leading the company over 50 to 60 000 buyers waiting with more than 750 000 to spend each for you to go list your sas company invite it's a great way to get a bidding war going check out their evaluation tool to get an accurate idea of what your sas company might be worth they take five percent if you end up selling for more than a hundred thousand dollars as a success fee blake thank you so much for taking us to the top thank you nathan i appreciate that one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya