On this episode I talk with Ewen Finser of Owl Mountain about how he is building the “Berkshire Hathaway of Digital Assets”.
Ewen believes that cashflowing web assets are the real estate investments of our time.
Discussed on this show
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Ewen’s background is a builder, building and flipping websites from the ground up – his perspective was it made more sense to hold rather than sell.
I’ve recently published a post with the opposite perspective documenting a website flipping model.
More recently he has been trying to solve how to apply capital to this digital asset space in a programmatic way that can deliver returns in the aggregate.
Ewen saw the potential for Owl Mountain from seeing others raise funding in the space such as Wired Investors and how there are many talented website operators out there that could benefit from organization, structure and discipline.
Ewen states that smart, community-based capital needs to come in before private equity truly comes in and buys everything up.
We talk about how specializing in one area in website building and operating is key (for me that’s site structure and content pruning).
With Owl Mountain, Ewen has an outside capital source and is building a team of specialists who he can bring together into a deal and incentivize them whilst not having to sell the asset to someone else to unlock value (and in doing so avoid brokerage fees).
He is looking to purchase sites where you can stack traffic channels and monetization channels and to purchase related sites in different verticals where buying a site with a big email list can increase the value of other sites.
A Portfolio Manager would run these verticals (and potentially have equity participation) and then within each asset you could have a more junior Site Manager.
Someone needs to be P&L responsible but also growth responsible so they are trying to incentivize that structure however a specialist, such as a link builder, may not be the person for this role.
Ewen is a big believer of skin in the game so there would either be time up front and in return receive a nominal fee, or participate capital in the deal; otherwise there is a danger that someone will be jumping on for the ride rather than a key figure in the trajectory of the site.
They have a hurdle to get past for their investors before accessing cashflow, but any money they pay back they get to recycle so there is a compounding effect.
He is also considering a vesting period for portfolio managers where upside is received once capital is repaid or the asset value has increased.
The return to investors has to be better than alternative asset classes, even though we both think websites are the best asset class in the world.
Owl Mountain is the top company and will most likely have a new LLC for each website / deal where the Topco will have majority or close majority stake in the asset. The large investor invests directly into Owl Mountain.
Ewen states that content is a foundational layer to any business and if you are good at content you can instantly add value to a business. Ewen wants to get into SaaS, FBA, info products but is starting off with content sites.
Right now Owl Mountain does not need any additional capital which is great as means in dealing with just one investor there is no traditional investor relations to do.
However increasing capital generally will lead to increasing efficiencies in this space as long as not purchasing assets for the sake of it.
Mention the Quietlight Brokerage podcast with Brad Wayland in how he bought a bunch of content sites, rolled them up and sold to a private equity company.
Ewen with Owl Mountain would be interested in an offer with a very high multiple such as from a public company that have high price to earning ratios, otherwise is happy to hold.
He is about being an “enlightened craftsman” rather than rolling up assets for the sake of the exit or buying sites for the cashflow and letting them die.
Ewen is looking at this in terms of building a collection of trusted, cared-for brands in a similar way to Berkshire Hathaway – it’s not a leveraged play, it’s about how we solve the problem the space is facing.
Every year Ewen hears more private equity companies come in at the sub $10MM level and fears that operators will get squeezed. So how can we create the Y Combinator of our space?
Ewen would love to become more public with what Owl Mountain is doing and could get to a point where they put a call out for operators for deals or create some kind of rolodex.
Ewen mentions Chris Yates the founder of Rhodium Weekend will be advising on the direction.
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