182 podcast episodes 🎙️

In today’s episode, Joe talks to Iain Poulson and Alex Denning of FlipWP, a private marketplace for buying and selling WordPress businesses. Buyers get vetted listings emailed directly to them, while sellers get access to quality buyers who understand their product and the opportunity they’re offering.

Iain and Alex explain how FlipWP offers a unique experience for both buyers and sellers, providing reasonable valuation for any business while ensuring that all deals remain exclusive to both parties, no middlemen. They aim to connect anyone to the right people to land a successful deal at 1% success fee.

What to Listen For:

  • 00:00 Intro
  • 03:53 Welcome to the pod, Iain and Alex!
  • 07:02 How did it start for FlipWP 
  • 10:29 What is FlipWP?
  • 15:30 From a seller perspective, it’s a combination of the maturity of the WordPress ecosystem
  • 23:09  Finding a place where you can sell your business
  • 26:42 Most FlipWP members are WordPress people
  • 29:33 Utilizing leverage in the email lists and the newsletters after launch
  • 35:59 Helping people with their business valuation
  • 40:06 FlipWP tries to guide people to make sure what they are putting is reasonable
  • 46:54 Some people are taking out competitors by buying similar business
  • 48:42 FlipWP connects people, but buyers should their own research
  • 51:41 The 1% success fee remains the same for now
  • 54:17 Helping buyers get better access and sellers better prices

Episode Resources:

Podcast Transcript:

[00:00:00] Joe Howard: Yeah, 30 folks, Joe Howard here. Uh, just a quick reminder before we start the show today that, uh, as usual, our guests are going to be doing an AMA in WP MRR community. So, uh, if you’ve listened to today’s episode with Ian and Alex, and you’re like, man, I got to ask those two questions. Either best-selling businesses or buying businesses or about the WordPress ecosystem and what the end, you know, acquisition space looks like right now.

Now it’s changed over the last 18 months, et cetera, et cetera. Uh, you can ask them. Uh, and so check out community dot WP, mrr.com, just headed into the AMA space. Uh, and when this episode goes live, they should have the post up, uh, for the AMA. So you can go in there and ask them anything. WP MRR, virtual summit coming up September 21st through 23rd.

And if you’ve listened to the past, I don’t know, 6, 7, 8 episodes. You want me to talk about this every week? So I wanted to change things up a little bit this weekend, instead of talking this year’s summit actually want to give you a resource from last year, there’s some of the 2020 virtual summit. It’s kind of related to this podcast episode.

This is more relevant to folks who are thinking about selling their business. If that’s. You run a WordPress business and you’re thinking maybe now, but maybe in the future a long time, if you train one to think about selling it, want to make sure you have things in order, you want to make sure your data set up analytics are good, your financial, it was a rockin.

Uh, so I wanted to give the resource of a talk from last year on our YouTube channel. That talk is titled the 80 20 of profits pricing and margins in a subscriptions not to talk by Ben McAdam, who is our CFO at WP buff. So I know for sure that he knows his stuff. So we’ll include a link. In the show notes and in the description in the YouTube video.

So you can go ahead and click through and watch that. Cool. That is all for pre, uh, show announcements. So, uh, let’s talk a little bit about today’s episode. I was lucky enough to have, uh, Ian. And Alex Denning on the podcast this week, out’s been on a few times, and this is his first time off. They do a few different things in the WordPress space.

We’ll hear all about that, you know, and one, two minutes when they talk about the stuff they do in WordPress, but I really wanted to have them on because they recently launched flipped WP. And that is really focused on the space of buying and selling WordPress businesses and everything we want in the acquisition space, the hot acquisition space, especially over the past a year, 18 months or so.

Uh, so it’s, I got to talk about what that space looks like in general. You got to talk about things from the perspective of buyers, from the perspective of sellers, uh, and. And what they think about what the future of this space looks like as well as just a little background about how they decided to, how they, how they met in the first place, when and how they decided that they needed to build flip WP and make it a real business, a little bit of talk about their pricing structure and why they’ve done it the way they have.

And yeah, really cool to talk to these guys. I’ve been friends with Alex for a while and, uh, and I’ve gotten to know a little bit more over the past six months or so, but, uh, also, uh, uh, a good friend of mine, so called to have him on the podcast, in addition to just, uh, just having them in as part of my, my personal community.

So I hope you enjoy, please welcome both impulsive and Alex, Denny to the podcast. Enjoy today’s episode. All right guys, we are live. I’ve got Ian Paulson, Alex Denning on the podcast this week, uh, money of each take like 15, 20, 30 seconds. Just tell folks a little bit about what you do in the world. Alex you’ve been on before, so I’m gonna have to be in go first then Alex you’ll follow up. So Ian good work.

[00:04:11] Iain Poulson: Oh, I was expecting it the other way round. Hey Jay. Thanks for having us on. Um, yeah, so I I’m I’m product manager for delicious brains, uh, by day, which is my main gig, I guess, um, delicious brains make WordPress plugins. They are like the developers developer plugin company. Um, and I’m the product manager sort of overseeing the main plugins, which is most recently added to, with advanced custom fields.

So that’s kind of crazy, kind of busy. Um, but I have number of side gigs that are side projects that I have. Um, I’ve run a couple of WordPress plugins and, uh, a couple of things that have come out and been sold recently. I ran plugin rank last year and into this year, and then it got acquired, uh, started a.

What press business trends, sort of a newsletter called WP trends. Um, and yeah, kind of a new thing that I’ve been working on, headstart guests coming on. So yeah, lots of things and not enough hours in the day.

[00:05:20] Joe Howard: Oh yeah. Ain’t that the truth? Cool. Thanks again. Uh, Alex, your turn.

[00:05:24] Alex Denning: My day job is I run a marketing agency called ellipsis. Um, we are specialized Marcy agency for WordPress businesses. Um, my job is to be managing director and that’s what I spend most of my time on get to solve interesting problems around WordPress, um, and pretty close to what’s happening in emerging in, in WordPress e-commerce spaces, which are very fun. Um, for the last nearly five years, I’ve co-authored a master BP.

Which is a weekly newsletter for WordPress professionals has been a lot of fun as well. And then, um, I like solving problems and he, and I figured we had a problem that people didn’t know how to sell their WordPress businesses. So we’ve, uh, made flip WP couple of, uh, weeks, months ago. That’s been a fun ride so far.

[00:06:23] Joe Howard: Yeah. And that’s, uh, obviously I want it there’s so much that both you just said that I could talk about. Right. I’d love to talk more about master WP. I’d love to talk more about delicious brains about, you know, ACF, like there’s so much there, but I’m going to try and stay on flip WP ish, just because this is the new thing your tour are doing.

Um, as a WordPress ecosystem continues to mature, more money comes into it. You know, there’s been a lot of buying and selling over the past five years, but it’s even accelerated even more over, over this kind of pandemic time last 18 months or so. I mean, I’ve seen so much. And so it’s up WP is like, Yeah, that’s, that’s what I want to talk about a little bit today.

So the first thing I wanted to ask you too, which I actually don’t even know the answer to is how do you two know each other? And how did you two meet? Do you, have you hung out in real life and had the chance to do that? Are you older friends or are you kind of newer friends who have only been friends via video screen?

What was that process of actually initially becoming friends and actually thinking like, Hey, flip WP, we should do this thing.

[00:07:27] Iain Poulson: Yeah. Uh, yeah, we we’ve been relatively new friends, I think in terms of, um, the WordPress space. Um, we had Alex on, I do another podcast with Jack McConnell called pressing matters, which is kind of WordPress development, WordPress business, basically just me and Jack having a chat.

But we, when we first launched, I think 2018 or 2019, we had more guests on the podcast and we had Alex on to talk. Plugin marketing. And we were basically just trying to feed knowledge from our guests and we both run plugin. So we thought Alex would be a really good person to talk to. And around that time I acquired a plugin.

I acquired one of my main plugins, which is WP user manager. Uh, and I didn’t really kind of know the plugin as in, I didn’t know the space. It was in contrast to the plugin that I, one of my other Plains I run, which, you know, I had the problem. I developed it. It was something that I really knew a lot about.

So I thought, God, I don’t know how to actually know the best way to market this. Uh, and Alex had come on the podcast and obviously marketed himself very well about with ellipsis and what he can do for plugin developers and product companies. Uh, and so I kind of initiated him to help me with a content audit and strategy and how to grow user manager.

Um, and we got on and it was yeah, kind of a successful relationship from that point of view. But I think when we, when I started plugging it. He was the person I spoke to before it even launched to say, this is what I’m doing. This might actually be good for your clients because your, you know, managing their marketing SEO in Google as a channel.

But obviously wordpress.org is a channel. So maybe this could, you know, he could be my biggest enterprise client or enterprise, um, customer. Uh, and the more we got to chatting about it, the more we got talking about the WordPress plugin space, the ecosystem people buy and plugins and people using plugin rank to try and, you know, get information about plugins and all this stuff.

It just, it just led to talking more and more. Um, yeah, and we did meet at work at Berlin or camp Europe in Berlin for the first time, but that was a, like before we kind of really got serious. We got serious when we met, when we got serious. Um, yeah. And it’s kind of co culminated in, in launching a business together.

[00:09:50] Joe Howard: Okay, so relatively new friends. So you’ve met, you met, you met at WordCamp, uh, Europe, I guess I was like 2009 teams. Was that one that was in Berlin 19? Yeah. Yeah. I was there too. This is funny, you know, I was like, oh, I was probably leaning. I’d probably pass you two talking or something. And it was like, ah, but now I get the chance to talk about it.

So cool. Um, Matt in, in, in a real life, I guess like once and now have done everything else remotely in terms of flip WP. So, um, and for people who are like what’s flip WP flipped, wp.co, um, Alex, why don’t you give, give folks a little bit of background into the, um, what is flipped WP and then like, why, why now?

Like why, why did you decide that this was a problem that needed to be solved? As of a couple months ago when it launched.

[00:10:47] Alex Denning: So a marketplace for buying and selling WordPress businesses, um, it’s a private marketplace, so only members can, uh, see the listings and people can list their businesses. Typically what press product businesses.

Um, they get distributed to our members who were the possible buyers and, uh, we’re a platform. We then leave it to, um, people to take it from there as, as they want to. Um, the, on the buyer side, we, uh, have memberships which are paid, so that somewhat qualifies, um, people who are serious buyers. And on the seller side, we take a 1% success fee of people sell.

So pretty straight forward model. What we, I mean, as you said up top, there, there was more. No Dre and acquisition activity, um, in WordPress, what those sales were happening off of random tweets, random slack messages for like life-changing decisions. Totally. Um, which doesn’t see ideal.

[00:12:03] Joe Howard: People are just like, Hey, you want to sell it in your thing?

[00:12:06] Iain Poulson: Right. And private messages.

[00:12:10] Alex Denning: Like big sales were being done that way. And that we thought that that didn’t seem ideal. Um, it’s difficult for, uh, buyers to know what’s for sale sellers need, like, you’ve got to hope that the right people are online when you post in the post status slack. Like that’s probably not the best system.

Um, so with, through having a plugin rank in started doing Darby trends, Um, where it was looking at at, uh, interesting analysis from movements in plugins on wordpress.org. Uh, so Ian had basically a copy of the plugin repository data and could query it for, for insight. Dan, you thought that was super interesting and that meant, uh, and then it was also covering, uh, plugins that were for sale on a micro require typically.

So from that we had the buyer side sorted for ellipsis. Um, I was having more and more clients interested in selling and we were just getting asked more and more about like, if we want to sell in the next 18 months, what should we be doing now? I want to sell in the next 18 days help like these, these were, these are conversations, just have more and more.

And I started connecting people occasionally. And I, yeah, it’s, you know, you have product market fit because it hits you in the face and we didn’t even have a product and we were being hit in the face with demand. So it seemed like.

[00:13:52] Iain Poulson: Just based on tweets and right. Private stuff. Yeah.

[00:13:54] Alex Denning: Like very low tech stuff. Um, but it was very, very obvious that the demand was there. Um, so yeah, eventually we pulled the trigger on it.

[00:14:07] Joe Howard: Yeah. Yeah. Do you think that this has been accelerated by the past 18 months of pandemic and the economy and maybe WordPress economy? I guess my that’s not a super specific question. I guess my slightly more specific and easier to answer question is, do you think this is a more.

Just that there’s more money coming into the WordPress space. It’s maturing that it’s WordPress based is just at this as when most ecosystems mature. There’s just happened. There’s more coming together because it’s jus at some point, I guess that’s, I don’t know how capitalism works or how the world economy works.

The other side of things is just like, is this potentially due to the past 18 months of COVID, uh, is, has the past 18 months been harder for more people on average to run their business either from a financial standpoint or from like a mental health? Like I’m just kind of. Done with this right now. Just cause I’m not feeling so hot right now.

Maybe it’s a good time to sell. Maybe it’s a combination of both. I don’t know if either of you two have like background, I mean, you’ve talked to a lot of sellers, you know, so maybe you have a little bit of background on this and of course I don’t need any specifics on terms of specific buyers, but in general, what’s the vibe like in terms of the large number of acquisitions we’ve seen in the past 18 months or so?

[00:15:40] Iain Poulson: I think from a seller perspective, it’s definitely a combination of the WordPress maturity of the ecosystem. You know, you get in some sellers who have been around for years, like advanced custom fields Elliott who was building ACF for 10 years and you get to a point where are you going to be doing it for another 10 years? Or is it the right time to sell it? And you know, people who have just they’ve gone quite far with it.

They decide that maybe it’s the right time. And so it’s not, not necessarily, I think the pandemic has such baby that has taken its toll on mental health. But generally I think most plugins have done well over the time that a lot of people were online during the pandemic and going to online communities rather than doing real world stuff.

Um, but yeah, I think buyers now just view the WordPress ecosystem as really tasty and, and there seems to be a lot of money from hosts and other big companies that just think this is, you know, that there’s a place we can, we can expand and it’s plugins.

[00:16:52] Joe Howard: Yeah,

[00:16:53] Alex Denning: I don’t. So you’ve got, we’ve got a couple of categories of, of people on the buy and sell aside.

And I think what we’ve seen, especially in the last six months is a, uh, happy mixing of a number of unconnected forces, which have made now a, uh, like a hot time to sell. Um, and also means that like, we are doing this now you’ve got, so you’ve got people that used to be the case, like 10 years ago in WordPress, you just have to exist this is mostly true.

You just have to be there and you would be successful that you would build whatever sort of business. and some of what we’re saying is like, those just maxing out. But I don’t think that that’s a necessary, but not sufficient reason to sell. If you’re in that position. I think the reason to sell has come probably being driven by a headline, like big headline acquisitions predominantly from hosts.

and that’s come from capital being cheap, but like at scale at the moment, and I think that plus whatever other factors for press in general grew a lot last year. boosted people’s numbers that may be plus I don’t know they to go to the beach, who knows? Um, it’s just a Cappy mixing of those things.

I think the. We did have a fairly quiet period for M and a through the first half of last year, but things started picking up and then things started picking up some more. And then we have, we had the big headline acquisitions and suddenly this FOMO, which is driving, uh, acquisitions across all parts of the market.

I think I’ve put, set, uh, puts, oh, we could buy something on the mind of like Joe Howard, uh, WP buffs, and also on the mind of liquid web, and also on the mind of whoever it is, plus people from completely outside WordPress, that last category hasn’t, we haven’t really seen that, uh, fully emerge yet. So that is going to be an interesting thing to look out for, especially if, uh, we have any IPOs this year.

I think we would see more of that. I think starting to see a little bit of it, of like people who do nothing about WordPress, um, and see. Seeing opportunity. And it’s just this magic convergence of all of these things happening all at the same time. Um, there’s really like, I would describe the market as halt right now and yeah.

[00:19:51] Joe Howard: Yeah. I, I vibe with what you two are saying about the last year being maybe not surprisingly, but fortunately very good for a lot of WordPress companies, not just the big ones, the hosts, but a lot of the smaller ones as well. I mean, like we had a great year last year. Thank goodness. You know, but still the fact remains like a lot of WordPress companies did well in the past year, which would make it a better time to sell than an average year.

Um, you know, I’d be lying. If I said I hadn’t at some point thought about selling WP bus at some point, has it ever been at the forefront of my thoughts? No, but like, it would be silly of me to have never thought of that concept before. And I know that again, let’s keep this conditional, if at any point I were to ever do that, like I would probably like set up in advance, right?

Like I want like the last year to like, look pretty good and like maybe minimize some of my like marketing and growth spend to like maybe increase some of the profitability of the business. And like, I dunno, I’m sure there are some things that can be done to so that the buyer is like, look at these numbers.

Like here’s the multiplier that, you know, we’ll be offering, you know, you get a higher multiplier. If you can show and prove that your, uh, at a certain potential profitability level or a certain level of success. And over a past successful 18 months, a lot of companies have had probably a lot of signups, a lot more new revenue coming in.

Maybe lower churn, maybe, you know, a higher MRR growth or ARR growth. So it’d be a good time to sell has led to more sales happening and more exits happening at maybe like a local maximum, right. For folks who can get the most, you know, the bigger potential buyouts, maybe a bigger one than potentially next year when the past year has been maybe average again.

So I think that’s an interesting concept that I buy also, Ian, what you said about just like, I’ve done this for the past 10 years, will I be doing it for the next 10 years? It’s a really big question for a lot of people. And I think a lot of people like just starting off. They’ll say like, why not? Like, of course you’ve been successful for 10 years.

Why wouldn’t you keep doing it for another, another 10 years? But like, once you were doing something for 10 years, it almost like becomes not about the like success. Like you almost like forget about growth liberal. I don’t know. Maybe it’s just me, but like even after five years I’m like growth will happen.

Like kind of whatever. Like I want to be happy. Like what’s going to make me happy. Like, do I need to change right now? Like, do I need like, cause sometimes like change is a good thing, often changes a good thing. And so I think people have known that for 10 years. They’re like, I’m ready for the next thing I’ve been successful.

This thing, like I’m I want to close that chapter and have the choice to be able to do that myself. So selling is actually like a, something that doesn’t just make sense for me financially. It makes sense for like me actually being able to move to a new chapter as opposed to kind of feeling like you’re in this, but not necessarily.

Success loop of like doing the same thing you’ve been doing for the last 10 years. So I buy that too. Yeah.

[00:23:09] Iain Poulson: And I think having, if you’re at a certain scale, that’s a certain size of your business and you’ve got offers coming in and you’ve got, you’re connected to the people offering you lots of money.

But if you’re not that, and your, you know, a kind of a medium sized business where you think, oh, all these other ones are getting sold. How do I, I quite like that, but actually, you know, before flip though, your P there wasn’t w would you go to flipper? Would you go to micro acquire? Would you go to, like, where would you flipper?

Oh my God. Yeah. Not the place for WordPress businesses, but do you know what though? I’ve got a, I’ve got a love, hate relationship with it because I acquired WPS and manager from flipper and like, and it was, to me that seemed super scary and super strange, but it’s turned out really well and it worked out at the time, but I didn’t, it didn’t go through the auction process.

It was almost like a buy it now. Um, yeah, so, and that’s how, for me, it’s kind of all started because ever since then I’ve thought, well, I should really keep an eye on flipper because this opportunity came up. Maybe others will. And should I keep an eye on all of these other sort of places where people sell side projects or, you know, and it might be a WordPress plugin on and might require, which is why I started just tweeting all these opportunities that I would never not necessarily be interested in myself, but trying to put them out there and syndicate them to people because otherwise you’ve all got to keep looking at all these disparate places.

So, you know, keeping it in one place with flipped WP, even just, just from that point of view, make sense.

[00:24:39] Joe Howard: Yeah. I like that. I kind of, I kind of wanted to go back a little bit to that. Mentioned of like, you know, Alex was mentioning like product market fit, like slapped you in the face. Like, if you can just like go onto Twitter and like, just like hashtag WordPress and put out opportunities out there.

And like, you’re getting a lot of likes. You’re getting a lot of replies, like, okay, like you’re getting a lot of activity. People are like D taking the time to like DMU separately. Maybe they’re like moving it into a slack. Right. They’re like, messaging me, like, Hey, saw this opportunity. Can we talk about it?

Like, you’re like, that’s something right. It sounds like magic something. That’s like, oh, like I’m not even like doing very much to gain traction, but like somehow we have traction. I don’t really know how it happened, but I just tweeted a few things happen, like that can create a business too. So, um, I had, I did have one question and I kind of was thinking of, in terms of just in general, like who.

Buyers are who have signed up. I’m sure you have some confidentiality of people who signed up. So I don’t need specifics about things, but like I w w WP buffs has an acquisition unit, like I’ve signed up to mostly hear about like, you know, there’s a few different kinds of businesses we’d like to acquire, but like the biggest one are like care plan businesses or website management, subscription businesses.

I’m always on the lookout for those. Um, but I was like, I thought I saw your tweet go out and I knew announcing it. And I signed up immediately and I was like, first, like, yes, it’s like, I you’re like, no, sorry you were third or something like that. I was like, ah, almost first. But I think that there are, I’m sure most of the major acquirers in the WordPress space.

Have signed up or will in the future sign up as you continue to gain momentum? Uh, I won’t name any specifics because people probably, well, Hey, let me name some specifics, like, you know, there’s awesome. Motive clearly has big acquisition unit. Uh, neither of you have to confirm nor deny any of this, but I’m gonna name a few.

Uh, so there’s, SIADH over there. There’s um, you know, the stellar WP liquid web acquisition unit had done some major acquisitions. Um, and I guess those are two. I know the, my question is out of all of the folks who have signed up, I just named three WordPress specific, pretty work, maybe not in general in their company, liquid web is like a big company, right.

But also motives pretty WordPress specific. AWS is WordPress specific of all of the signups. Like what percentage of buyers are, what you would consider internal to WordPress versus. External to WordPress more in the tech scene, more people who are like, what is this open source thing? I used to think it, how do you make money?

Just giving away free software, but like, oh, there’s money here. I should think about getting into the WordPress space. What’s the split there in general.

[00:27:24] Alex Denning: False majority of people inside WordPress in some capacity. Yeah.

[00:27:30] Iain Poulson: That there are some people that have come through the door and you look at the email addresses. You think I don’t recognize that and this, and they might be just generally in tackle or people that are more into their sort of from the micro acquire world of small SAS. And they can see the potential in owning a plugin. Um, but yeah, the vast majority are WordPress, WordPress people. And it does range from, you know, like, like you said, the big acquirers, the big companies, the big hosts to others.

Larger plug-in companies, um, all the way down to people that I would, I would sort of class similar to myself that are single developer people with maybe one plug again and looking to acquire another. And, you know, so you’ve got a very bright spectrum of, of folks, uh, which I think is good. Um, rather than it just being the hosts who have just got all the money and then nobody else interested.

And therefore they’re only interested in a certain type of product or a certain type of sale. Um, it’s, it’s very fair.

[00:28:35] Joe Howard: Yeah, throwing the WP MRR virtual summits, like half of my sponsors are hosts. It’s like, clearly know where the, like, uh, the, the money, money and financial power is coming from. Um, so, you know, no wonder liquid web has now an acquisition, you know, no wonder they’re putting a bet on the WordPress space.

Right. I mean an essence of it, but, um, okay. I also want to talk a little bit about like flip WP as a business and how things are going. Uh, obviously it’s like pretty new. Um, but you know, I think the, uh, when we booked this podcast recording, you mentioned you’re still, you do annual recurring revenue. So you have an annual subscription for the buyers on the buyers side.

And also a 1%. It sounds like fee at the, uh, when a sale is made through flipped WP. Uh, I guess once that deal is complete, um, What is, I guess, I guess my question is like, how’s the business going in terms of, I guess the things you’re working on right now, are you trying to drive more buyers, more deals you have more specific focuses or more general focuses?

Are you still in the mode where you’re just kind of like, we, like, this is cool. Like let’s just keep getting feedback and improving different stuff. Uh, what’s the, what’s the status of, uh, of things over there.

[00:29:57] Alex Denning: So, uh, I mean the, the strong product market fit has kind of is we’re still riding that wave.

We’re doing nothing to get, uh, listings and we’re, we do a maximum of four each week. Um, and.

[00:30:13] Joe Howard: And those are free to sign up for, for the seller. Right, right.

[00:30:16] Alex Denning: Um, uh, yeah, I mean, we we’ve, we’ve been, we’ve had for nearly every week, um, since launch. So you had great deal flow and that, that continues to happen organically.

Um, the seller signups are solid. Like we had a big influx at the start, um, that by naturally a slowed down that’s to be expected.

[00:30:44] Iain Poulson: Yeah. The buyers. Yeah.

[00:30:45] Alex Denning: Yeah. Um, and now we’ve just got to get those first, uh, first big batches of, of deals done. Um, we’ve had a handful of people complete sales through the site, which has been great.

Um, you know, we’ll, we’ll get success stories out. We’ll show people what can happen through the platform. Um, And that will keep things moving nicely.

[00:31:17] Iain Poulson: Yeah, I think we, we, we, we tried our best to sort of do the launch really well in terms of, um, you know, utilizing leverage in our email lists and, and the newsletters, which are very much aligned with those goals.

Folks and WP trends had a massive crossover with people that were just basically there for acquisition opportunities. So if you’re going to send them some from around the web every month or so, and instead you just point to a single marketplace is going to cause it’s going to create traction. Um, and, and from a marketing or from a, from a launch point of view, we, we tried to hit as much as possible in terms of the WordPress, other WordPress newsletters and the WordPress, uh, new sites, like post status and the Tavern and stuff.

Um, and it went well and yeah, as Alex said, the buyer signup was good. there’s definitely room for more. and there’s definitely people that probably initially thought, am I going to part with $300 until I know what kind of what the deal is here? they perhaps didn’t know us. They perhaps didn’t, you know, a lot of it was based on trust because we’ve signed up buyers before we had listings published, even though we had listed.

In the pipeline and wheat, we knew what we were getting and we knew what we were going to be publishing. So yeah, that is a trickle coming in now of extra buyers that see what’s, what, and we kind of slightly tease what’s on the site in terms of listings. We don’t show, obviously it’s all private, but there is some stuff on the homepage.

that just says, look, these are the types of deals that are out with some blown out info, but, ballpark ranges of asking prices and revenue. So you can see that, if you’re looking to buy something for $500, it might not be there. But if you’re also looking to spend five figures on a business, this is the place to come and look.

So, yeah, as Alex said, it’s, we’re riding that wave and this there’s more stuff that we need to do to encourage people. And you know, it’s great to have deals being done. We’ve got testimonials on the site from buyers and sellers. It’s great, but we need to just do a bit more, I guess.

[00:33:27] Joe Howard: Yeah, I think I would be remiss in saying that I feel like you two have been really successful so far, even though you’re saying like, yeah, we have this to improve or that to tweak, like doing a two-sided marketplaces really hard, like it’s way harder in some cases than like a, um, just like a B2B business and B to C business.

That’s always just a super challenge. But the, um, like Airbnb, you know, you have to get the people renting the houses and then you have to get the people who, the people who are renting the houses of the rent tutors, you know, two-sided one person has a house that they’re renting the other person who’s renting the house.

Right. So, and that’s hard to get people on both sides. And just the fact that you’re already like having deals go through and having signups on both sides of things. Like that’s, that’s a win in itself is just not only hitting product market fit, but hitting the fit of like. Forward movement in both those areas, because in order for your business to be successful and definitely to be successful at scale, you’re going to have to have pretty predictable, like sign up bend activity from both those sides.

Um, the, I, I L I like the idea also of, because when you do a two-sided marketplace, it’s kind of like, who am I charging? Like, how is this monetized, like who’s paying for this. And I think it’s totally the right. Like, usually the best practices is like charge the people who have the super high, high return on investment for whatever they’re buying or whatever they’re paying for.

So for me, when I saw like, whatever, 300 bucks a year or something, like, I literally didn’t have to think twice about it, like swipe my credit card and signed up for it, because I’m thinking about buying five figure businesses were actually not quite the point. We’re doing like six figure businesses. It’s still out of our, our price range as a business for WP buffs acquisition unit.

But I’m definitely looking at more than like $500. Like I’ve got some money to spend, so like $300. The only thing I could think of is like, okay, I’m spending $300 to like, maybe see one deal that ends up working for me this year. Like yeah. Acquisition costs like Etsy, easy decision, right. To spend $300 to like have a good chance of landing one businesses.

Yeah, where do I sign up? Right. Like, what’s that, you know, the future album memes, like shut up and take my money, like sure. So I think that’s, uh, makes a lot of sense because that acquires sure. $300 is, is, you know, that’s fine for the year of seeing all these listings, um, I’m interested about the 1% fee at the end of deals.

Does that mean part of this? You’re obviously like sending out listings to buyers and all that stuff, but are you actually like, what’d you call yourself like a middle maker slash deal maker here in the middle, like helping with like contracts and stuff or is it just deals that are done through the platform?

Get that 1% fee? Like how do you track and like measure that stuff and like, how involved are you in the actual buying and selling process?

[00:36:34] Alex Denning: This is the first time that, uh, done a business and we’ve like hired a lawyer before we started. So the, we are so legally, there are a couple of parts, like we are not party to the transaction, but we do take the, uh, fee.

And there is, uh, when you, when you sign up to the list, you sign a contract committing to that. Yeah. Yeah. So we, we don’t need to know the details. We just, you know, send over an invoice. Um, when the, when the deal is complete and we’ve got like cool contract behind that, pretty straightforward from our end.

But we, we, we don’t want to be, we don’t want the liability of being involved in the deal. Um, so we don’t touch that. We have ended up helping people a lot with valuation. So it’s been really interesting. Um, a lot, most like probably the vast majority of our inquiries have been, oh, Hey, I want to list, I’m thinking of these numbers.

Like here, here are three metrics. What do you think I can get? Um, and that’s been interesting and that’s been the case even at, uh, like hundreds of thousands or millions of dollar asking prices, you know, I’ve seen a few of the seven figures, right. So come through and it’s been like, what do you think?

Which has been interesting. I’m pretty good at valuing WordPress businesses, by sense of smell alone these days, you just have a five second look and that’s your number. That’s been interesting. Um, those numbers are based on what we think, what, like what we see in real time, the market reacting.

[00:38:18] Joe Howard: I want to dig into that a little bit more actually, because I feel like there probably people listening now who run WordPress businesses, who maybe they’re interested in selling now, or maybe they’re not.

Why wouldn’t you have it at least somewhere on your mind in terms of an exit strategy that has potential. So I think it’s important to talk about these things like valuation right now. I know a lot of people run their businesses, not necessarily to sell, but what the idea that they might want to sell in the future.

So they want to like prepare to do that. Now they want to like, get organized. They want to make sure all their stats are there. They want to make sure all their metrics are set up so that if, and when that time comes, they can do it easily. And I think that’s just akin to running a good business anyway.

So why wouldn’t you do that? But I, I feel like I’ve, I’ve seen, and I’ve had conflicts with people who are like actively selling or want to sell a lot, just like they just don’t even like. No, what? Like they would list that, like they kind of know, have an idea of like, what would make them happy actually a lot.

Don’t, that’s probably the most important part. It’s like, what are you going to, like if I offered you this figure, like, would you just move forward? Well, you know, that’s an important thing to think about, you know, if it was half that no, no way part of it is, you know, the buyer and the seller are going to come together and find a price that makes sense for everyone.

But is that, are you going to be happy walking away at that price? Are you going to be like happy that that went through? It’s important. Think about now, but like, I know a lot of people don’t even have, like, I don’t know, M and a professionals come in or like have, uh, financial reports done for their businesses to like tell them what, like maybe not exact valuation, but like what the range may look like in terms of the, uh, uh, an acquisition.

It sounds like you’re helping people a little bit with that as they come through. But are you finding that a lot of people who are selling. Also just to have their stuff in order and just like, know what they want to post or people maybe seeing flip WP, knowing they want to sell and just kind of posting to, I guess, see if they can attract any acquirers and then have more conversations about it without thinking much about what the actual amount might be at the beginning. What does that usually look like for the folks coming to you for selling?

[00:40:39] Iain Poulson: I think the majority have an idea. I think they’d been in the people who thought of the people that do have an idea, have a reasonable idea that nobody’s coming in thinking they want a 20 times valuation and think that’s realistic.

They’ve kind of got anytime and around annual revenue multiplier. But, but this is, I mean, this is, I didn’t, I do want to mention it, but the fact that we try it. We try and guide people if they don’t have an idea and we try and make sure that we’re putting reasonable, asking prices on the site, because there are like MicroAcquire I don’t think they do that, that there is a, that seems to be a sassy explosion of micro SaaS at the moment where people have built something and it’s making $200 a month and they, list it for like, six figures or something, and people are like, whoa, okay. I get that.

You’ve, built this thing. I get that. You’ve put blood, sweat, and tears into this, but we don’t necessarily need to pay that. we need to be realistic based on the revenue. so yeah, I, think we’re trying to keep it to a more realistic level within WordPress. And, I think that generally shakes out as a three to five times valuation. Is that kind of the goal. We go down.

[00:42:02] Joe Howard: And is that on, I’m sorry, just to clarify like three to five times, would that be off of like an annual marker or like an annual off of three to five times annual recurring revenue?

[00:42:15] Iain Poulson: Yeah. And we are getting businesses that don’t have the recurring aspect. Like there’s a lot of, a lot of people that are still on places like ThemeForest or code canyon and they’re, they’re doing good revenue, but it’s based on single purchases, the lifetime type purchases.

So it’s a lot harder to command a bigger multiple when you don’t have the recurring revenue that to back it up. So, um, because buyers, aren’t going to want to invest in a, uh, a five yearly return or something that basically could drop off tomorrow because new sales tank, um, Th th there’s this movement within the spec in that range, isn’t it.

[00:42:58] Alex Denning: So the three to five multiplier on our hour has a bunch of assumptions baked into it, which is generally true for your average WordPress product business. Um, if you don’t, those assumptions include like assumptions on margins on a straight up profitability on renewal rates, et cetera, if you are abnormal in any way.

And that goes both ways, then that number changes. So if you say don’t have recurring revenue, then, then it becomes down that that 20 times valuation does exist somewhere. Um, we thought we talked to a lot of people doing M and a before during launch. Um, one of the readings and conversations I had, um, was with, uh, I guess it was a banker was his job and he really objected to.

Any like filtering on the valuations because that he felt that that was his decision to make. Um, and I was, at the same time we had feedback like that say the micro require valuations were through the roof and people didn’t like that. So that was me trying to explain sure, like, I, I, for your average business, we want to keep it what we consider like reasonable, but this there’s some leeway in that, but yeah, that 20 times valuation does exist where you solve the strategic need that can, you know, do whatever.

So it works both ways. In general, three to five, ARR having your, having your details in order, like you’re talking about Jeff, um, doesn’t S right now doesn’t seem to actually be a, a big mover on the valuation. The product and potential seems to be impacting it more. And when I say have your deals in order, I mean, like having, I don’t mean having like separate bank accounts, et cetera is a, is a requirement regardless.

I mean, in terms of profitability, specific growth rate, that kind of comes into the conversation. Um, we’re not seeing that weighted as much as you would think, which I think is just indicative of a hot market right now.

[00:45:09] Joe Howard: Yeah. Yeah. Interesting. I think, I think I could see that being true, even, not in as hot of a market, because I think that having your stuff in order obviously is very important, but all of that gets taken care of and due diligence anyway, like all acquisitions go through some form of due diligence, right?

Like you have to like actually give access to like some accounts so that someone can look in and make sure you’re telling the truth about your numbers or just to make sure that things are. Either what you said they are as a seller or just what you expect them to be as the buyer, in terms of offerings, you know, making a certain investment in this, but initial conversations don’t usually happen around that.

Usually initial conversations, maybe there’s some basic financials, right? Like I want to know what your monthly recurring revenue is, or like, you know, maybe like a general profit margin. Like, what am I looking at acquiring? Like, especially if you’re looking to acquire a business, like for the profit of it, like WP buffs, like we acquired WPZ late last year, early this year.

And a big piece of that was acquiring a business that was already profitable and kind of like plugging that profitability and the WP bus. So like, you know, bumped our profit margin every month, which is great. But that was also the kind of, that was the kind of acquisition it was right there. Kind of like different kinds of acquisitions.

Right? Maybe some people are looking for profits. Some people are just looking for a. Home run like a big investment on something with potential that maybe doesn’t have the stats yet, but they want to hit a home run on it. Some people maybe it’s like an Aqua hire. They have that team that like, Hey, is doing great work.

And they want that team to work for them as well. Some I’m sure a lot are mixes of all three of those, but yeah.

[00:46:54] Iain Poulson: And there’s people taking out competitors, people buying similar, similar businesses within them, within their sphere to just to kind of consolidate it is a, um, a mixed bag of reasons.

[00:47:06] Joe Howard: Just like kind of what WP does buffs acquisition. And it does put, it’s like, not our goal, like, yes, technically we’ve acquired a competitor. Like WPZ like, yes, technically they were like a competitor of ours, but like that wasn’t even our real thought process. But I guess it’s also like, kind of true. Like, I guess I do have to face that fact a little bit, like that’s.

That’s not untrue of our acquisition unit in terms of acquiring other Eric Kaplan businesses. But I guess we think about trying to think about it a little differently in terms of like WPZ was not going to be running anymore a year from when we acquired it. So like there were a hundred, hundred and 50 customers who would’ve lost management of their website and like we wanted to come in and help with that because we have the infrastructure too.

And it makes sense. And we can, you know, invest in that or customers. Yeah. I mean, it’s good. It was good for everybody, you know, everybody won from that acquisition. So I think the that’s like how we’d like to think about it, but I mean, in the world we live in like acquiring competitors is also, I think probably some companies do it somewhat more strategically.

Like I’m sure like big tech companies. They’re probably really fucking strategic about like, oh, that company is growing too fast. Like let’s just acquire them, you know? Cause they kind of can and it’s, Hey, there’s some monopoly issues and all sorts of issues with that, but they’re kind of too big to fail at this point.

So like it was really going to stop them at scale, you know? So anyway, I think that’s something that I think about too.

[00:48:42] Iain Poulson: Your point about due diligence, um, is again, linked to the role we are trying to play, which is very limited because you know, we’re providing some initial numbers to start conversations, but yeah, people, people need to do their own due diligence.

We’re not vouching for these numbers. We’re not, you know, we could go down the road of hardening the platform to show verified numbers from Stripe or verified numbers from PayPal or whatever, which is, I know flipper does that. And it does that. Well, it does it with Google analytics and stuff like that.

But again, If you’re serious in buying, you’re going to do your own due diligence. We are, we’re connecting people and then letting them go and do the process they would go through. If someone knocked on their door and said, will you buy my book? Right?

[00:49:27] Joe Howard: Yeah. So WP is like, it’s more of the handshake piece than it is the, uh, it’s like, uh, a souped up handshake, as opposed to literally walking you from a to Z and the acquisition, which I, I actually liked that model a lot because I feel like you could have gone YouTube could have gone in two directions.

One is the direction you’ve gone in, which is 1% finder’s fee and shake, sign a contract easy. There’s also like, okay, we take like 3% and or we take 5%, whatever that percentage has a higher percentage for actually. Taking on a little bit more legal responsibility, probably actually having to put a lot more time and energy into each one of these deals, probably tens, if not hundreds of hours as the person going through these, maybe for some of these seven figure deals, it’s a lot of time, but you get a bigger payoff in the end.

And I think a lot of people, and maybe at some point you’ll grow into that second model. Right. Who knows like maybe that’s the next step of the business right there. Of course you could do that. But I really liked that you guys actually chose to go the more minimalist, easier route for a less of a percentage, because you can have higher priorities in terms of running a business like this.

Like not spending all your time on it. Like you can still grow the business and do a good job making instructions and do all sorts of good networking with folks and just. Do it in like a more fun, less pressure filled way. And I think a lot of people are going to be initially drawn towards like, what’s the biggest revenue driver.

What’s the biggest, what’s the, how are we gonna make the most money with this? Which, you know, has, it’s important to, I’m not saying finances, aren’t important for a business and profitability is important and driving revenue isn’t important, but equally as important to make sure you’re like one enjoying running the business and to, to taking like steps into it.

And this seems like a very good step into, like, if you want to do more, you can always choose to do that. But you’ve chosen this, this initial, uh, model that is, it’s just going to be maybe drive a little less revenue, but it’s going to be way easier and less probably. Yeah. From a legal standpoint, like less onus on this hairy,

[00:51:41] Alex Denning: I mean, in terms of my enjoyment of the business, let’s be clear a 5% fee. It makes me enjoy it a lot more. We have no plans to change the success fee just to be clear, but, uh, I don’t actually see, I, we could, we could keep our current model and charging differently frequently more. If we could show we can get you a significantly higher price. So the value can be that regardless of how much work we’re doing and maybe, uh, maybe we, we do no work, but provide the value.

And if, if we’re providing sufficient value, I will happily charge however much. I think we can get away with this right now is 1%. And to be clear, not changing it, but yeah.

[00:52:28] Joe Howard: Yeah. Got it. I honestly, as like, as a buyer, Who’s going to stay signed up. Like if my fee next year gets doubled as a buyer, but you’re able to show me like, I’m able to get a better, uh, you know, have more success in my acquisitions based on what you’re doing.

I have honestly, no problem with that. So I think that the, I like the idea of like, wherever you’re starting off, pricing-wise like, it’s wrong. Like it’s always wrong. Like, no one’s ever like, there’s what is perfect pricing. It doesn’t think of it. This is like, that’s a oxymoron almost. So I think that getting the feedback and working with these deals and creating case studies and really like getting to, not only people’s like most obvious pain points, but like the like sub subtle pain points that like buyers have that like other people may not know.

Cause I haven’t worked with hundreds of buyers before. Pushing that to the forefront allows you to potentially increase pricing without ever like being more legally responsible or doing more than the deals. If you can just, it’s like, it’s, it’s more proof that what you’re already offering is solid. So if people have a higher chance of being successful, either as a seller or a buyer, and maybe sellers are getting higher evaluations based on your model or buyers are, maybe they’re paying more, but they don’t really care because like, if they’re doing a hundred thousand dollar deal, like who’s going to do a hundred thousand dollar deal.

And then say like, it was 105,000, like I’m not doing it like, okay. Maybe someone, but like, if there was me, like whatever, like let’s get it done in my opinion.

[00:54:08] Alex Denning: So just have the price of your next acquisition. Go up 5% here.

[00:54:13] Joe Howard: Hey, I’m just helping you guys out there.

[00:54:17] Alex Denning: There are many, the amount of revenue we’ve done is completely doffed by the amount of value we’ve created already. Uh, just from the fish and the purchase prices. Um, I think it is true that we can help people. We can, we can make both sides happy. We can get the buyers better access, um, and we can get the sellers better prices. And that is good for both ends. Um, and yeah, I mean there’s, as, as we get more, uh, more success through the platform, for sure that opens up opportunities.

Um, something that is interesting that is very under utilized right now in WordPress is like early investing angel investing. Um, that is not a thing that really is done right now. Um, but I bet you get isolated examples of that happening, but you, if you want, if you want to raise some money and you want to do it within WordPress right now, you call like four or five people.

Um, that’s a big opportunity. That’s something we can definitely look out in the future. People who want to raise money without exiting, also going to be interesting. And then whatever happens when, um, we do get more serious interest from outside of WordPress in like, how do we approach this? Who do we talk to the answers, call Callie and call.

[00:55:53] Joe Howard: Yeah. That’s an interesting model to go into as well. I mean, I know. Like I forget what it’s called. It’s Mike it’s run by Rob walling and it’s Mikey does MicroComp but it’s a tiny seed, tiny seed. I was going to say micro seed. I almost had it, so yeah, tiny seed. Um, and I, there are some, I don’t know if I’d call them WordPress companies, but companies that kind of are WordPress adjacent or that have WordPress plugins as part of what they’re doing.

Um, like, um, cast dos, uh, like they have a WordPress plugin, right? So it’s like it’s adjacent and kind of paralleled into the WordPress space in terms of marketing opportunities and target markets and stuff like that. But the, yeah, I mean, I don’t know a ton of like, uh, uh, angel investors who are, uh, actively working on stuff like that.

Um, there are a few, I, there are a couple, you know, one of which I’ve already named here on this podcast, but I think that. The acquisitions slash in just investing in WordPress companies, whether that’s buying, whether that’s investing for the future, whether kind of what you’ve said already, Alex, maybe there’s bigger things like, uh, like really big investments that are, have like future IPO, uh, implications into them.

Right. You know, w P engine, you know, people who’ve invested in that five years ago are going to be happy at some point, probably in the next five years. So, uh, anyway guys, thanks for jumping on. This has been a ton of fun. We’re going for the hour long episode, which doesn’t usually happen. And every time it does happen, it’s because we were having good conversations.

So I had an extra long and super valuable episode today. Uh, Flipping WordPress products, sites, service companies, uh, and maybe not just flipping, selling something you’ve been doing for a long time and it’s time to time to put in somebody else’s hands. Um, so why don’t we finish off, uh, and just let folks know where they can check out flip WP, obviously, where they can find you too on social media, all that jazz.

[00:58:07] Iain Poulson: Yeah. So flip he’s flipped, OVP dot co@themomentassoontobe.com. Um, we just launched a bit, a little bit early, but we, we, we like rushing things. Um, and I, um, uh, povert web on Twitter and around the place. And yeah, if you’re interested in, um, press monthly kind of business insights and market trends, then WP trends.co is the place to go and sign up for that.

[00:58:35] Alex Denning: Sweet. Yeah. Um, I’m Alex Denning on Twitter. Um, Get ellipsis.com. Is Dallas a site? Um, yes.

[00:58:50] Joe Howard: Cool. I’m on flip wp.co right now. And I was kind of an early adopter in this year. Like I was in pretty early. I was checking it out. He and I gave you like a little bit of feedback on some things. So I was like, oh, this would be cool.

Or that would be cool. And then you messaged me back like an hour later, like, oh, Hey, I did that thing. So you got listings in here. You can order them by, by everything, by, uh, you know, type model, ARR, TTM, installs price, you know, when it was added. I mean, you know, so you can see a whole list of everything that’s, uh, uh, for sale right now.

And I’m seeing like, I don’t know, they’re like 20 or so here. 25, 17 currently 17. Okay. So 17 things for sale right now. So if you’re a buyer, um, definitely time to check it out. And if you’re a potential, if you’re potentially think about selling now, you know, go to flip WP, it’s free to list and you can talk to Ian and Alex about, you know, potentially a proper, uh, number to throw up there for evaluation, and then go ahead and post.

And if you’re thinking about it for the future, it’s just good to keep flip WP, uh, in mind. Cause you never know when you may want to make a big decision about your business could be next week could be 10 years from now, but, uh, you know, have with WP in mind for that. So thanks guys. Uh, last thing, uh, Ian, I’m going to ask you, since you haven’t been on the podcast before, if you wouldn’t mind asking our listeners for a little apple podcast review,

[01:00:15] Iain Poulson: Yeah, sure. Um, if you enjoy this episode and if you enjoy listening to Joe on the WP MRR podcast and yeah. Drop him a lovely review and let him know how good the episode was or any of the episodes in the past, he would really appreciate it.

[01:00:29] Joe Howard: Yes. Excellent. Thank you, sir. Uh, WP mrr.com forward slash review gets you right, uh, redirected right to the apple podcast page.

If you were on an apple device or a Mac, um, if you are a new listener to the show, uh, we’ve got 150 plus older episodes. You can go feel free to binge some of, any of that content. We’ve got episodes and all sorts of stuff. So if you go to WP mrr.com forward slash podcast, we have a search bar right there.

You can go and look up your keyword, find an episode and get some learning done about your topic of choice. W P M R our community, uh, built on circle, uh, got as of this point and got like 150 or so people in there, I think a little bit more than that, we’re like on our way to 200. So things are growing slowly and steadily and, uh, Ian and Alex are going to be doing an AMA, uh, that they will probably have posted as you’re listening to this episode.

So if you go into the AMA space in the community, you can ask them any questions you have about flipped WP, about buying, about selling, about the state of the WordPress ecosystem. I know I’m going to be in there. I’m going to have ten five questions I’m gonna think of after this episode. So I’m going to be in there asking them as well.

So check that out for a M a WP MRR virtual summit coming up September 21st, 22nd and 23rd. Uh, signing up for the WP MRR community automatically registers you for the summit. So all you have to do is sign up and you’re automatically added to the summit space. If you’re serious about growing your monthly recurring revenue and you want to not only grow it, but you want to do it responsibly in a way that’s going to allow you to spend time with friends and family have fun while you’re doing it.

Enjoy the journey. That’s a virtual summit for you. So we’d love to have you cool. That is it. For this week on the podcast, we will be in your earbuds again and on YouTube next Tuesday, Ian, Alex. Thanks again for being on. It’s been real

nice to get buddy.

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