The Exchanges

Q cause I assume you enjoy, um, Fitness and helping people in terms of getting in shape, so that's awesome, but I do, before, before I start diving into questions on that acquisition, um, before we started recording, um, I wanted to know, are the, are there really abandoned, like, Ferraris in Dubai, like, from people who just are so rich, they can't get them out, so they just leave them?

A No, so that's not, not what happened, but it, it did used to be a thing, so it was more so around, like, the crash in oh eight, So over here, there's kind of no fail safe, right? The government aren't going to bail individuals out, bail businesses out. So, and back then as well, it was, it was basically illegal to miss payments, right? So what happened was, there was loads of expats, loads of guys from the US, UK, all around the world who had these Ferraris on finance, a crash happened, the bottom fell out, they couldn't afford repayments, so they just drive them into the desert, get on a plane, and leave, basically, and so that's what, that's how that started happening, but, ah, they could probably fill a desert again at the minute, because the cars out here, as I was saying before we went live, it It's obscene. I did a video for one of my friends this morning because I do my work in a golf club. I work out at the golf club, have a coffee in the morning, and I walked outside, and there was a Lamborghini Urus, a Rolls-Royce Wraith, a Rolls-Royce Cullinan, um, a Mercedes G-Wagon, and there were only about eight cars in the car park, and that was like four or five of them.

AI assessment note: “No, so that's not, not what happened, but it, it did used to be a thing”

Q can take a year. So you kind of skipped over that, that year where you're just eating glass, begging customers to just look at the product. Um, so that's, that's awesome. So now I'm just wondering, um, where, like how, how far do you, How do you plan to take this? Um, what's, if you just had to say two years from now, where would you love Stratus to be?

A I think we've, I see two options for our future. So I'm super confident in, you know, us getting to a few million revenue a year. Super confident. Um, I don't think it'd be easy. I think there'll be periods of just stuck, but I think, um, I think we can do that. I think that's an outcome we can get to in the next couple of years, two, three years. I'll have a decision to make because, you know, I can see us getting to 5010 thousand users. Beyond that, I think it's a world of pain in the industry that we're in. It's so fragmented, um, and just a very difficult industry in general to scale in and bring together. Couple of years, a few million revenue, and then it's out of the decision to, to maybe sell or, you know, take that swing for the fences, maybe with the same company.

AI assessment note: “us getting to a few million revenue a year... in the next couple of years”

Q Yeah. Sellers. So I'm a startup founder. I'm looking to sell my business. What would you say? What like three tips would you give me in order to increase my chances of you being comfortable acquiring my company?

A Yeah. So the first thing is like a call and just having a conversation with the founder is, is great. Some, and some founders are understandably standoffish. I'm sure sometimes they feel like someone may be wasting their time, but just having a conversation, being able to have a conversation with a founder is just a massive help and having that early if they're willing to do that. Um, often I will ask, you know, What are the challenges and what are the problems? And you can tell straight away if somebody's just sugarcoating the true challenges that the business may face or the software may face. Um, and if, when we have, so when we had a conversation with Mike, he had a developer on the call and you know what some developers are like. They just, it just comes out and they had kind of have no, um, filter. And he was just incredibly honest with what he changed, how it improved the platform. And that really put our minds at ease. Cause he was kind of giving us the, the roadmap to make sure this thing worked in good scale. So that really helped us. Um, and then I suppose just being super responsive once we get to the point of due diligence, um, you know, quick responses, quick questions, quick answers. It's just all incredibly helpful for, for a buyer.

AI assessment note: “the first thing is like a call and just having a conversation with the founder”

Q I, I've just seen the picture of all the Ferraris, I was like, whoa, so thanks for clarifying that. Alright, let's get back to the good stuff. Um, so, uh, you go on to Microquire, um, you come across this company that seems like a, a great, um, fit. How did you initially reach out to the buyer, and what was that experience like, um, going through the acquisition process?

A Yeah, honestly, I, you know, not to blow smoke up, you know what, um, microacquire just makes it so easy, right? So the plan for me last year, just to roll back a little bit, was to start acquiring small companies. Um, so I actually acquired another company on microacquire just before Stritist, um, just a small acquisition, and the plan was I was going to do a few, and then I came across Stritist, light bulb moment, you know, Huge domain expertise for me, area of expertise, so I reached out to Mike, the guy who was selling it, and he was basically a client of a coach who used a different platform, and in, in the fitness industry, there are, there's lots of competition for what we're building, but they've been around for, you know, 1020 years, and none of them are liked, they're all just tolerated, so that's kind of what he discovered as a client. We spoke to Mike back and forth, and You know, we used your documents, your templates. The first offer we actually put in, I think, offended him slightly, um, and maybe I was a bit naive, and I did, I didn't purposely lowball it, but I was probably too logical in my approach to valuing it based on his MRR and the fact that it wasn't growing.

AI assessment note: “I reached out to Mike, the guy who was selling it”

Q company acquired. So, um, I guess, you know, my, my, my last questions would be, um, you know, how did, how did you get into this, um, in terms of, you know, acquisition? So, you know, you, you, you had gyms before, like, what made you decide that, you know, entrepreneurship through acquisitions was, you know, a pathway for you? And how'd you learn, you know, what you know today?

A Honestly, I think it is just probably reading bits on maybe Twitter, Andrew Wilkinson, Wilkinson, I think it is, and a few other guys who kind of, I don't want to call them PE companies, but they're almost, um, holding companies of numerous small or larger size. And I remember just, you know, reading about Constellation and other companies like that and thinking that'd be pretty cool to just own, like, I know I can, so my strength is marketing and sales. Um, so Microacquire came along, and that's probably when it started, when, when kind of you started, um, coming along with Microacquire, that opportunity to maybe acquire some technology companies, and not necessarily technology, it could be agencies that were struggling to get clients, but had everything in place. I just thought I could come in, um, I've got team members who work with me in my course business, who could come in, we could market it, install operators pretty easily, I've installed managers before, uh, and then step back. Uh, just, it felt like where I was heading at the time, um, before obviously I came across, uh, Stratist.

AI assessment note: “Honestly, I think it is just probably reading bits on maybe Twitter, Andrew Wilkinson”

Q Where was, um, where was the monthly recurring revenue when you first got it?

A I think when we first found it on Micro Acquire, it was around just over a thousand dollars MRR, um, and just flat line, no marketing, no presence online. Um, and I think, you know, maybe we, we offered 2.5 to three X ARR. In fact, it was probably a quite a good offer. Yeah, so, but the reality is, because I knew, like, I could at least have a successful launch that would pay back a reasonable amount, I probably would have been willing to pay quite a lot more. Um, so when we increased the offer, there was quite a bit of back and forth, um, just through diligence, as, as there often is, but I think from getting that second offer right to close was probably Two and a half months. Max two months. Um, yeah, so not too long. I think probably quite standard. I know people nowadays are getting them done a lot quicker. I think I listened to your podcast with Joe Spicer, is it? Um, who moves quick. So not that quick, but, um, yeah, it didn't feel too long to us.

AI assessment note: “it was around just over a thousand dollars MRR”