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Freedom Flipping Podcast Ep 14 – Jon Haver from authoritywebsiteincome.com

On this episode I talk with Jon Haver from authoritywebsiteincome.com

Jon Haver read the Four Hour Work Week in 2005 and has been involved in online entrepreneurship for over 8 years but only quit his day job a year ago as had a family and put on himself steep metrics to hit before giving himself permission.

Jon has three main parts to his business, his blog, his portfolio of sites (making $10k+/m) and his services. His focus right now is his blog and building the right team in house for the long term in order to tackle as many projects as possible with world class abilities.
Jon is continually attempting to add new sites to his portfolio with a focus on buying discounted sites quickly as well as building his own sites. He feels the more he plays in that space the more he can find pain points and help people, even if not the best ROI on his time or money in the short term, but it’s something he enjoys and the better it will set him up long term. Jon’s goal this year is to grown his portfolio to $15k/m SDE and to be able to test as much as possible by doing a bunch of small deals as you learn as much in a small deal as you do in a big deal.

“Sell my website fast”…

Most of Jon’s deals come from inbound from content on his blog where he advertises the fact people can sell their site to him fast and receives a couple of deal offers a week and then once a month he will pull the trigger and purchase.

Jon’s first six figure exit was selling to a startup that needed to show growth which was a unique deal. He did the deal himself having not sold a site before but had purchased through Empire Flippers (episode 1 of FFP), FE International (episode 6 of FFP) and The FBA Broker (episode 10 of FFP) previously where he learned the process.

Jon doesn’t intend to sell any of his porfolio unless there is a strategic buyer but he does want to keep diversified and so it may make sense to reallocate but selling a big site at a premium multiple requires a lot of effort and focus. His best site makes $3-5k/m and if there is a premium sale option the effort to sell would be worth it but not for smaller sites.

His portfolio is 50-50 content based affiliate sites and ecommerce (including FBA). Small ecommerce deals take a lot of effort to close but he is open to anything if the deal is right. His team will always be building more sites from scratch to add to the portfolio as well.

Converting an affiliate site into an FBA business

In 2016 John sold 2/3 of his equity in an affiliate / FBA biz that was sold for $334k. He bought a small affiliate site that was making $100/m, added to his system to add content and links. He quickly saw that the earnings had tripled and dug into what the product was that was selling and realised it was an FBA product and so turned it into his own FBA business with a brand new product.

Partnering with private equity & the unhirables

Jon has partnered with Digital Assets International on the operations side, a Canadian private equity company that strategically acquires and manages a global portfolio of profitable websites. They are actively looking for builders to sell their website to them.

The big challenge in this industry is finding world class operators at specific models, the “unhirable types that want to play a bigger game” that they can incentivize to buy their deal and give them a liquidity event whilst at the same time using funds to buy other businesses that are right in their sweet spot (playing the multiple arbitrage game). They aim to keep them in their area of genius as much as possible and push really hard at getting them great deals.

Their strategy is to buy and hold for the long-term wherever possible. They raise capital on a deal by deal basis from traditional financial backers and are looking to partner with larger institutions rather than opening to retail investors.

Jon recommends the book The Fish That Ate the Whale: The Life and Times of America’s Banana King about smaller entities swallowing up the bigger entity.

Investing

Jon tried to avoid timing the market in terms of thinking when to sell a business and believes that we’ve had so much cheap money for so long that everything is so over-valued that there will be a correction at some point that will start in the public market and the echo effect of that will be that the capital coming into the online asset space driving  up these multiples will result in a retraction on the multiples in the course of a few years.owever until that correction happens the rate of multiple growth we have been experiencing will continue as people will continue trying to find value buys and they simply don’t exist, even at 30x, when you look at stock market or typical private equity deals even at a multiple of revenue when we are talking about a multiple of income, i.e. there is still a ton of value in the online space similar to other options.

However until that correction happens the rate of multiple growth we have been experiencing will continue as people will continue trying to find value buys and they simply don’t exist, even at 30x, when you look at stock market or typical private equity deals even at a multiple of revenue when we are talking about a multiple of income, i.e. there is still a ton of value in the online space similar to other options.

Productized Services

Jon owns a bunch of productized service based businesses for niche sites such as Content Refined (your in house content marketing team) and he believes his skill set is best aligned in this space as it’s a combination of processes, people and marketing to make it work. He’s grown it to over $30k of MRR in 8 months of launching! He enjoys digging into the data of content marketing and doing multi variable regression analysis to try and identify how they can create content that has the highest possibility of ranking in google.

Jon also owns Lightning Rank where you can use their PBN and buy expired domains and also check out their epic guide on how to build your own. We talk about how all link building is ultimately manpulative and on the same spectrum and how it’s up to you to choose how much risk you are prepared to take on.

He uses these two businesses to create content and build links to rank the sites in his own portfolio. Jon is also a partner of Brand Builders which offers done for you amazon FBA branded websites and affiliate websites.

Whenever Jon sees a new link building service he likes to pay to test the service, see the results and reverse engineer what they are doing well to benchmark their own services against perceived competitors and then close any gaps. He purchased some services in the guest posting space where nothing was delivered, he asked for a refund which he did not get and got so frustrated with the process that he offered to buy the business!

Jon is also running the excellent mortgage crushing challenge!

Freedom Flipping Podcast Ep 13 – Kevin Petersen from Webfolio Management

In this episode, I talk with Kevin Petersen of Webfolio Management about the Webfolio story and model.

Kevin has been an entrepreneur since childhood owning a lemonade stand and pretending to invest in the stock market at age 9!

He started Webfolio Management as a web appraisal business and discovered that there were already brokerages and marketplaces. The first business he bought was a tattoo blog for $900 to test. Kevin paid a developer $300 to optimise the site and started writing content himself and it started turning out $700/m so the lightbulb went off in terms of what happens if he were to buy 100 sites or buy much larger sites!

We discuss how these businesses are simple in concept but complex to run and his friends did not feel it was for them to operate so they decided to put up the money so Kevin could buy and run them and split the proceeds. So 3 years ago they tested a small fund and gave him an opportunity to build his team so he can support larger businesses and larger syndicates such as investment clubs for real estate and stock picking clubs.

Kevin’s Evergreen Fund (which has been extended to 1st October) fills a gap in the market in the $1-5MM range where the acquisition price it too big for individual investors but too small for venture funds. Minimum investment $25k per individual (max $500k) who are accredited or who will typically invest through their corporation

The biggest challenge with an innovative new fund such as this likely isn’t actually deal flow (which is what most people ask) as they can afford to pay more than current market rate due to the big capital pool and ability to improve the businesses (with the skills and team they have) to produce returns that are far higher than what you can expect from public markets. They are focused on B2B SaaS businesses that can have as high as 75% profit margin and they are prepared to trade margin for growth which a lot of sellers are not prepared to do.

They are focused on buying B2B SaaS businesses that can have as high as 75% profit margin and they are prepared to trade margin for growth which a lot of sellers are not prepared to do if they see it as a lifestyle business. Most of the low hanging fruit is actually in marketing. The favorite growth strategy is to retain sellers who are willing to stay on in some capacity and retain some equity to keep some skin in the game, as well as retainer key players within seller teams.

They prefer B2B SaaS vs say e-commerce as there is more stability with MRR being predictable and you can model growth like you can with a traditional business and know who your customers are. He doesn’t want to put investors money in a model where are managing a supply line that could change, that volatility is undue risk. And in SaaS there are levers you can pull to reduce churn or grow and doing both compounds the asset value.

They have a dividend hurdle set at 12% annualized return so if they are not paying out at least 12% they do not collect a management fee. Aim is to sell for 2-3x what they paid for it.

Near the end shout out to SaaS companies Justin @ Leadfuze and Jordan @ Carthook (who have been / will be in the show).