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$300m revenue, yacht type wealth and CEO of gambling business

Lesson nr1: You don't have to be a founder to become super rich

Author

PrivatEquityGuy
June 13, 2024

A quick note before we jump in…

Learn to make rejection your best friend and you’ll do VERY well in whatever company or investment firm you build.

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A funny thing with small niche businesses:

Buying new $450k worth of fiber lasers and press brakes is easy.

Spending $10k a month on online ads and getting back $125k+ worth of business is hard AF.

Solution:

Hire a good growth agency that converts strangers into repeat customers.

Relying on referrals is great, but it can be painful as it lacks predictability.

So FIX IT.

Here’s how to do it:

  • Step one: map out the biggest growth opportunities

  • Step two: set up a documented strategy to grow and promote the business

  • Step three: follow that exact strategy

That said:

You can learn to do it yourself or hire a good growth agency.

Make sure they know the following:

  • Email workflows,

  • A/B testing,

  • technical SEO,

  • CRO,

  • optimize product pages,

  • build & test landing pages,

  • define buying journeys.

I decided to hire an agency 18 months ago.

Our sales has grown from $25k per month to $90k per month.

Still small compared to most people, but by the end of 2024 we’re on track to do $150k per month.

This growth stuff is critical!!

I’ve used Conversion-Ninja.com to increase sales for two of my companies and I’m also an investor in the business.

Let me know if you’d like an intro!

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The little secret to success in private equity and M&A.

24 hour fast once a week.

I was reading some scientific studies and it's pretty crazy how much it benefits your body compared to not doing it.

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Once you’re rich AF, you only have one goal in life.

To survive.

The 82-year-old gentleman who has more than enough (~ $500m)

“My biggest goal now is staying alive. I’m trying to live long enough to see the success of gene, nano and stem-cell therapies which will keep us alive.”

On top of that he takes up to 100 tablets per day, exercises regularly and every day will hang upside down on a machine with a backwards tilt to increase longevity.

- - - -

The fact that a company has a large building, huge machinery and lots of employees does NOT necessarily mean that it is a great business.

…and that it generates a lot of cash flow.

- - - -

An interesting approach when adding another business to the holding company.

From the man who runs a $300mm AUM firm that implements a buy-and-build strategy.

“We try not to touch the business for the first 6 months… Maybe even up to a year”

Then when the time comes, we ask:

“What can we go and work on?

We look for low frequency activities with the highest impact possible.

The more we find these types of opportunities.

The more we want to operate in this space."

Example would be:

  • Rebranding the company

  • Building a completely new online lead generation program

  • Re-incentivising the sales team

  • Hiring a new CFO These are very low frequencies (if doing right)

A company shouldn't have this competency in-house.

Because that's where the value is created.

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Shared a dinner table with a lady who is the CEO of a large online gambling company.

Lamborghini and yacht type wealth.

Revenue 100s of millions.

HIGHLY profitable.

Premier League club shirt sponsor.

She started as an intern 10+ years ago.

Today, she is a small shareholder with more than enough.

The company itself celebrated just its 20th anniversary.

Some lessons I learned:

  • You don't have to be a founder to become super rich.

  • Success takes time, most large companies are older than 10 years.

  • Find great people to work with.

  • Be humble AF (because even she was).

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How to grow small biz 101:

Let’s say it does $2-10 million in revenue with 10-15% EBITDA margins.

Consumer goods type of business.

Manufacturing, banking, finance, healthcare, construction, logistics.

You want to grow it 10, 20% annually.

The 4 KPIs to look at:

  1. Average ticket (average sale)

  2. Conversion rate

  3. Call booking rate / form fills to take leads in

  4. CPA (cost-per-acquisition)

Knowing these you can almost fix and grow any business.

Very boring stuff, but that's what I was thinking during my walk on last Sunday.

- - - -

Had a 30-min chat with a US single family office based in Colorado.

Their current portfolio is mainly in the public market, mostly due to liquidity.

Their next big step is to invest in private companies:

  • Both majority and minority

  • $5-10m equity investments

  • Management in place

He asked what I would do in his place?

(I'm honored that he even asked this in the first place.)

So, the very first step:

Here is a list of ALL the things I recommend him to check out:

Important note: He probably has more resources and capital than 95% of searches, but still…

You gotta start somewhere.

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What I believe to be a recipe to beat your competition in business AND in life?

Even if they have MBAs from Harvard and Stanford or simply have more $$$ than you…

It's the MINS - the Most Important Next Step

(This is also what VERY smart folks hate about dumber, less smart folks.)

It is their ability to act without overthinking too much and act quickly…

Here is the example:

What is your most important VERY next step?

It's very often this simple 5 minute task.

Everything in life can be boiled down to a series of little two, three, four, five minute tasks.

For example, "I have a high paying job but I want to buy my first traditional cash-flow business?"

Okay, what's your most important first step?

Most people think it's about having enough money — Yes and No. 

Go deeper.

What is the most important VERY next step?

(This is what actually gets you closer to buying that first business.)

  1. Go to BizBuySell and look for companies on the market and look for who's listing those businesses.

  2. Buy a database of businesses in your area and call them to ask if they would be interested in selling their business in the near future. (Who knows, you might get lucky because some of the founders would be interested in selling.)

Simple, isn't it?

Yes, and your entire future for where you want to head in life all comes down to a simple task of going to a website, searching for some businesses.

Or calling the founders to ask if they would be willing to sell their business in the near future.

Yes, that's all it is.

(The reason we fail to make progress on our goals is not because we lack the ability... it's that we haven't defined what the next step is.)

So, to sum it up.

1. What do you want?

2. What is your most important VERY next step?

3. Now go do that.

Defining your next step and then putting that on your calendar — you can literally accomplish anything.

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This is our small family.

The main reason I’m in the game of acquiring & growing niche businesses.

It was her 2nd birthday.

The whole day was spent in the kitchen baking a cake.

(Kidding, it wasn’t me)

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How has been the week in the small private equity world?

Traditional companies

Monday was great.

I woke up at 4:30am

Traveled all the way to Finland to meet the business owner.

He didn’t disappoint me. FAR from that.

  • $3.5 million revenue 

  • 60% net margins 

  • Less than 10 people 

My two notes from the hour-long meeting:

  1. Such companies exist

  2. Riches are in the (weirdest) niches

More updates soon.

Take care,

Mikk Markus / PrivatEquityGuy

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This week’s podcast:

This is pretty wild and I'm not even kidding.

On Tuesday a gentleman reached out.

Said he really enjoyed my weekly HoldCo Builders podcast.

Turns out he works for a very large firm owned by Berkshire Hathaway

Hint:

  • Pritzker family

  • Marmon Group

In 2008, the Pritzker family sold a 63.6 percent interest in Marmon Group to Berkshire Hathaway for $4.8 billion

Keep showing up, you never know who’s listening.

So…

This week I got to talk to someone very special.

Eran Efrat used to work as an airport security while starting the business to pay the bills.

Today, VerDiesel Group does $1 billion in revenue…

Turns out KFC's and McDonald's used cooking oil can be a VERY big business.

Add biodiesel, biogas, feedstock… it gets HUGE.

I hope you enjoy it.

Thanks a lot for following the journey.