How to Raise Capital for an Ecommerce Acquisition Company - Going Public, E:66 Dominic Wells CEO Onfolio

Welcome to the top M&A entrepreneurs. Today I've got a special guest back is Dominic Wells. Dominic was one of my first top M&A guest on my podcast. Uh, and today we're gonna be talking about his company On Folio, which is going public. So welcome back, Dominic, how are you? Yeah, I'm good, thanks. Yeah, great to be back. It's been what, like a year, I think since I was last time. Yeah, it's been a little over a year now you've got some big news that you're are raising capital because you're going IPO on the NASDAQ and you're raising capital for An Folio. So let's talk about that. So, What what's, what's on folio from the last time we talked to today? What, what does it look? Yeah, I mean, it hasn't changed a lot since we last talked, but for those people who haven't seen that talk, it's essentially, we're a holding company, we buy online businesses, um, no, no real specific vertical, like we're not a, an Amazon aggregator or something. We plan to hold those businesses for the long term rather than try and flip them. Part of the reason we're going public is Um, we think it would give us increased deal flow, increased visibility, you know, you can use the stock symbol as a, as a currency, it attracts more talent to work for you and your companies. So, Yeah, and we're using the IPO as a, as an opportunity to raise capital as well. Now, how much are you trying to raise? 8.5 million. 8.5 million. And how's that going so far? Yeah, I don't know if I can talk about the exact numbers, but, um, it's been like we're right in the middle of the roadshow now. So it's, um, um, yeah, yeah, some people love it, some people don't love it. It's kind of the way it goes. But, um, yeah, it's, it's, it's going. Now, are you talking to, uh, retail investors or institutional? Both. So, we're working with EF Hutton, who are our, our, our underwriter, and they have institutional clients, they have, um, funds, family offices, and they also have retail clients as well. So it's. Uh, it's kind of been, been everything. A lot of, um, you know, given the size that we are and the, the money we're trying to raise, it's been mostly, uh, uh, family offices or, or, or small institutions. Yeah. And what are you using? I understand it's warrants. You're trying to raise, use these warrants, and why warrants? Uh, well, it's not just warrants, it's also, it's, it's a unit offering, so you get one share. And 2 warrants for, for every unit. The warrants are just there. I mean, it's kind of from what I understand, I've not done an IPO before, but it seems like a lot of IPOs, um, it's kind of standard to, to include a warrant or, or two warrants. It just gives extra incentive for the, for the IPO investors, like maybe people think, why, why don't I just buy your share. after the IPO, once you're already traded, and it's because, well, then they wouldn't come with a warrant. But that, uh, there's acute uh warrants are delutive, but investors actually like to use them to leverage their positions and their security, like hedging and it's a downside too also. Yeah. Yeah. I think some people, again, I don't really know too much about everyone's individual strategy, but some people will probably buy the, they'll buy the unit, maybe they sell the share and then they keep the warrants as It's kind of like a, a, a cool option, I guess, whereas others use the warrants just as extra incentives, and yeah, they're diluted, but they also raise capital. So it's kind of a, it's just like maybe instead of raising 8.5%, we actually end up raising more like 24. It's just the remaining 16 sort of drips in over the next couple of years as people exercise the warrant. So let's talk about the strategy, uh, and what makes the bell ring for you, and that's acquiring. Smaller companies are are are is there a range that you're gonna try to acquire? Yeah, kind of like 1 to 5 million acquisition sizes, so that would be. Say 2500 to 1.5 million either. Now, are these profitable, unprofitable, distressed or what? Yeah, profitable, yeah. So that's kind of the, the point of what we do. It's typically we pay no more than 4 times. Earnings. So, um, Ebida, uh, profit, seller discretionary earnings, often pooled in the space. So for business profits, 250k a year, we might get it for sort of 7500 to a million. Um, and that's, that's kind of the, The beauty of what we do, because, yeah, we always try and grow these businesses afterwards, but if we don't grow them, we can still expect 20 to 30% cash returns. And if our cost of capital is, we expect it to be, I don't know, 8 to 12%. Um, then it gives quite a good margin for us to keep scaling that. And where are you finding these acquisitions? Uh, everywhere. Some of them find us as well. Um, so we, we, you know, all the familiar brokerages like Empire Flippers, FE International, Quiet Light. And then we also do some direct outreach. We don't, like some people kind of just span the internet to see who's interested in selling and then decide if they want. To buy that business, whereas we see businesses we like and we reach out to them. We also have people who know that we're a buyer in the space, so they come to us, either as, as a broker or just like an actual seller who's trying to avoid a broker. Now what's that approach look like for a business that's not interested in selling? I understand what the broker, they're ready to sell, but somebody that's not interested in. What's that approach like? It's just like, hey, uh, we like your business. Are you interested in selling? That's, that's essentially like, we don't word it exactly like that, but that's kind of the, the, the concept. And um sometimes people Say I want to sell one day, but not right now, and sometimes they, we've actually had one or two people who have said, yeah, actually I am thinking of selling, like, what are you? You know, what have you got for me? Um, so yes, it's kind of, especially if we know them, so a lot of the people we target, maybe we actually have a relationship with them already, and we say, hey, have you thought about selling? Sometimes they have. I think, I think them knowing us. Makes it a lot easier because, you know, how many people get spammed, like, hey, do you want to sell your business? And you, you're not even sure if it's legit, so you don't even reply. Whereas when we know people or they know us, um, that's like half the battle already. But it's a little bit different today now that you've got some currency, you're, can you offer shares for an acquisition? And that's because a lot of people are gonna come up today and say, hey, well, you're a public company, publicly traded. I'd like some options or yeah, yeah, and we can and um sometimes we will, we'll offer that sometimes. Maybe giving some options helps seal the deal, um. You know, like if someone else is only offering cash and we're offering cash plus warrants, I guess it's about the cost of capital or, you know, for us, depending on how, You know, like the price of our shares at any given time, is it better for us to, to, to raise debt and offer cash, or is it better for us to use shares? In some situations, I think shares will be better and, in some situations they won't be. So, but yeah, we absolutely have that option, which is pretty cool. Yeah, that could actually sweeten the deal. You raising this 8 million plus, is that to acquire companies? What is going to be, what do you going to use the capital for? Yes, the vast majority will be for acquisitions. Some of it will be, you know, a little bit of working capital, DNO insurance, stuff like that, but um, yeah, the vast majority will be for acquisitions. Now how is the deal stack or the offer change if you have $8 million in your bank account and you're public, so you have public information, you start making these offers to companies and they know how much cash you have and You know, I said, look, we'll, you know, we'll sell it for 5x, not 4X. I mean, what, what's the deal stack look like also? We won't know until we're public, but yeah, one of our theories is that people will either be more willing to sell to us because they know we're actually. A real buyer, they can see our SEC filings and stuff, or some people will, will be more willing to do seller financing, either like, you know, finance a a larger percentage of it, or finance it over a longer period of time. And I think just the increased visibility will help with deal flow in the first place. So we, we might actually get more people approaching us because, you know, people have heard of us. So I think there's, there's a lot of, a lot of benefits, but until, Yeah, so we're actually public and we see how it plays out, we won't know for sure. As far as your deal flow now, what does that look like? Are you acquiring 1 business per month or is it 6 per year? What does that look like? And right now, we're not acquiring anything because we're kind of in limbo until we finished the IPO, but We're not really targeting. OK, we're going to acquire 20 businesses next year, or we're gonna acquire a business every month. It's really how Quickly and safely can we deploy our capital on the right deals? So, is that 10 deals a year or is it 10 deals a month? It really depends what's out there. So the, the, the most important thing is that we just, Deploy the money the best way we can rather than, you know, trying to hit a certain um speed. So, in reality, I just have no way of knowing because it really depends what business we, we see. But um What was your think around uh buying the smaller companies 1 to 5 million, because let's say that, you know, you'll buy a bunch of these, you know, let's say you 10 of these or 1 a month, it gets to 1 a month, right? And that gets you to, let's say $1 million each and that's $12 million. But your bandwidth is stretched to the limit versus saying, let's go buy a $10 million business, just one, because you're doing the same thing to each one of those. Yeah, it's a good question. I think at some point we may, we may increase the deal size. I think a key thing is that we don't want one particular deal to be too large a percentage of our. Our revenue or our e-bidder. So, you know, if we, if we've got 10 million revenue and there's a business out there for 100 million, maybe that's too big for us. So we have to slowly increase our, our overall revenue so we can buy a big one and still be diversified. I think if we had one business that was a huge chunk, the market would just think of us as that business rather than a holding company. So yeah, over time, we may increase the size because, yeah, like, like you say, like running a $10 million business isn't really. that different from a Even like a $500,000.01 so. As you increase the deal size expenses and uh like labor and stuff should go down. Yeah, let's talk about that. So I was looking at your deck and you mighty deals you purchased, um, acquisition price 750K, profits 300K, and what you do is because of your experience and your team, you come in and You look at it and goes, where, where, where, where is it not working? You expand verticals, increased margins, reduced expenses. How, how do you look at business, you know exactly what to do? I mean, you never know exactly what to do. Like with My deals, we didn't know, some of the stuff we tried didn't work, some of the stuff we discovered afterwards that maybe this was a better idea or that was a better idea. But when you've looked at Hundreds of deals and you've run dozens of businesses, you kind of get a rough idea, um, and you get a good idea of, It's probably gonna be one of these 10 things, so let's start there. With Mighty Deals, it was kind of obvious because there was a million people on the email list. And the seller of the business didn't do a ton of email marketing, so it just seems like, OK, that's an obvious place to start. And expanding the verticals made sense because it was very much there were a lot of similar deals there, but then competitors out there were a lot broader, so we thought, OK, let's start expanding verticals, and that's something we actually haven't done that. Greater job at, yeah, we, we could have expanded faster. Yeah, we also have people on our team. There's people who are good at email, there's people who are good at paid traffic, there's people who are good at SEO. So if we see a business, like there's one we did due diligence on recently, it's got no SEO and it's got a lot of paid traffic. So the person on our team who's good at paid traffic, we say, you know, can you look at this business? Tell us what the risks are, but also see if there's any opportunities. And then the same with the SEO, we say, well, this one doesn't really have much SEO. Do you think we can add that in? And so by kind of, like, divide and conquering the due diligence, you, you get a pretty good picture of what you think is gonna work. And if it doesn't work, That it's OK because you, yeah, try something else, but also we paid a pretty decent price for that business. So if it doesn't work as long as it doesn't die, then like all good. There's a margin of safety in there. Yeah, exactly. Let's go back to this and uh so vital reaction, supplements website, molecular hydrogen tablets. You acquired that for, you know, small price, like 120K. How did you fix that? You, it looks like you uh expanded customer markets. Tell me how you did that. Yeah, um, so we didn't really fix that because. It wasn't broken, but yeah, how we essentially, a large part of the people who could benefit from molecular hydrogen tablets or inhalers are athletes, and the business wasn't marketing to athletes. So we actually have had a couple of celebrity athletes buy their products, but apart from that, no one was really marketing to them. So we did some content marketing really just around education, but like, Geared for athletes, the idea was to try and rank in Google for that, but also paid advertising. We also, as well as that, we expanded the product line, added a few more um products in, got a different manufacturer, a faster manufacturer, because one of the biggest problems actually was, uh, the Japanese company we were using sometimes just took forever to Correspond with us about shipments and stuff and then. We also did better email marketing. It's kind of a common theme, just do more email marketing is a very common thing we do. What else? Yeah, just, just. Oh yeah, the, the previous owner of the business didn't have any, like abandoned cart sequence. They didn't even have any one click upsales, which is very common with Shopify. So now we do it where if someone buys one tablet, Uh, one bottle of tablets, it's like, oh, do you want 3? Um, and that works very, very well. So just stuff that's like, yeah, I, I mean, we give them a discount. So it, instead of our margin being like $20 per bottle, it becomes $15. But the average order value went from 20 $25 to $100 or something crazy like that. So it's well worth it. Abraham, right? Increase the number of customers, increase the size of the car, increase the frequency of purchase. Yeah, so it's stuff that to us is like obvious, but maybe the seller either didn't. There's kind of two reasons. There's two things. One, the seller doesn't want to do it for some reason, like they're, they're anti upsells, or B, they don't know how, or C. They just take their upper limit, right? Yeah, yeah. Or yeah, they just, they tried it, but they didn't do a good job, because no one could be great at everything. Right. And uh all things dogs, uh, where did you find that? That's an acquisition price 120. You increase profits 300%. That's pretty amazing. Where did you guys find that and Well, we bought one business off a broker, uh, in 2019, and the seller came back to us and he said, Hey, I've also got all things dogs, do you want to buy that? And this was probably about one year later, uh, and we, we said, yeah, because it was, it was a good website. So that's what I mean. Sometimes people just come to us directly because they know we're a good buyer and they don't want to pay 15% to a broker. How are you buying these? Are you buying 100% of the company, or 80% with 20% seller financing, what? Well, we always buy 100%, but yeah, sometimes it's 100% cash upfront, sometimes it's um. Uh, 20 Vida reaction was actually 100% seller financed, so that was pretty good. Mighty deals was like. 500k up front and then the rest over the next couple of months, um. But all things dogs was a smaller one, so yeah, that was all cash. Actually no, it wasn't, I think we did. Over 3 months. I think we did like 70% and then 2 months later we did 10%, and then 3 months later, the other 10 like that. Yeah, one thing we've heard has changed a lot in the 2022 markets is you can find, get the sellers to finance more and, uh, for longer periods, but we haven't. We haven't really tested that yet because we're kind of in limbo until the IPO. Right, right, right. Are are any of the, in your portfolio, you know, Jack Welch, he said if you're not performing in a certain level, like below 10%, we get rid of the product line. Do you have any of those that you just say, uh, we can't fix, gotta get rid of. Yeah, I mean, we've sold a lot of our smaller businesses. So in 20, 2019, we were running. We were managing websites for a lot of clients, and we were managing some of our own websites that were like, you know, making 10 a month or 2000 a month. So once we raised money and started making bigger acquisitions, we said, OK, let's get rid of the smaller ones that are not worth our time. So we let some of our clients go, and we sold off some of our smaller assets. And I think we'll probably continue to do that as we, as we increase our size. What was the thinking around not selling? Let's say, you know, you, you manage 15 businesses and you hold them for the long term, but some of these businesses are Uh, super niche capped out upper limit, you know, they'll never get above 3 million, no matter how much more money you put in paid advertising, no matter how much more you do SEO or or email market. We bought it for 100,000, now it's worth $500. Let's sell it. What was the thesis around not doing that strategy versus holding? I think in that case we probably would like because, because You know, then the question becomes, OK, if we sell it now, we can get 4 times earnings for it, let's say maybe 3 times, maybe 5 times. Can we, will this business stay alive if we do nothing with it for 6 years? Like, if it will, maybe we should just cash flow it. If it won't, maybe we should get rid of it. And then the other question is, can we deploy that money somewhere else? So can we buy, can we sell that business for 500K in your example, take that 500k, buy a business that does have upside and grow it that way. So, yeah, I think in that case we would sell. So when I said earlier, we don't, we're not looking to sell, it's more of a. An approach, because if you approach it like, hey, I'm looking to flip businesses, then First of all, there's actually a significant The different amount of, like, legislation that you have to, uh, be compliant with, but also, um, yeah, there's like the whole 1940 Investment Company Act and, and stuff that you have to start paying attention to if you're going out there flipping businesses. Uh, but it's also when you're flipping businesses, you tend to look rubbish businesses. Like, I want to find a bad business that I can fix up. So our thesis is more, we want to buy businesses that we would be happy to hold forever, because then, You buy good businesses, it's a very Warren Buffett philosophy, so it's not like we, we discovered this, but yeah, there will be times where it makes sense for us to sell a business, but it's just not how, It's not the end goal that we have in mind when we're doing our due diligence. Yeah, I mean, I, I, I think the story on Warren Buffett buying sees candy, you know, I, I think, I, I don't know, $8 million or something. Did that have an upper limit? You know, he didn't know, it was just a well-run business that he kept forever. It's thrown off for a billion dollars in cash over the last 20-30 years. Do you guys have you guys raised capital before on your um Yeah, 3 times. 3 times and that was it, uh that was uh I'm looking on this uh the S1, it was a uh private placement and series they preferred. What happens to those investors? Do they, they, they stay long, convert to warrants, or what, what, what happens to those guys? Yeah, I mean, 3 of our raises, 2 of them were common shares, one was preferred shares. So the preferred shares are separate. They're not involved, they're not convertible, they're just straight preferred, straight, uh, straight interest. Um. And they'll just continue to be preferred shareholders. Common shareholders will continue to be common shareholders. So they'll, you know, um, hopefully do very well for themselves because they bought cheaper in a private way than. Hopefully the shares will trade. So um yeah, they'll they'll, some of them. Their shares will be restricted because they either own a significant amount or they only bought them a year ago. Uh, whereas others bought 2 years ago, 3 years ago, and maybe they only have like 10,000 shares, so their, theirs will be unrestricted. So, um, yeah, but they're, they're the same class of shares that we're, we're IPO. Yeah, do you have a date on that IPO? Uh, as soon as, as soon as we've reached the level of 8.5 million that we're trying to get to, we, we IPO. So it's, it's not like, hey, we set the date and we hope we raise, it's more like. We're, we're roadshowing, we're speaking to investors, and some investors say, yep, I'm in, 500K, a million, something like that, uh, 100K, whatever. And then by the time, yeah, and then as soon as we get to like, OK, we've got 8.5 in commitments, then the next day, The investment bank work with all those clients, they. Raise the money and we IPO and then the shares trade um the day after. Right. On, on Nasdaq. Let's talk about your team. You've got, uh, if I pronounce it correctly, SB Van Heerden, Adam Trainer, and Jack Hawkins. So how did you meet SB who seems to be your kind of Yeah, we were in some of the same circles, basically, and I, when I very started on folio, I realized quite early on I needed someone to take care of the ops because we were growing quite fast and. I'm not great at operations myself, so I just, like, I posted a job ad, and she already knew me, and she saw it and she applied. And because I kind of peripherally knew her as well, it was just a natural conversation that we had, and she seemed like the right fit. So, so I offered her the job. So she's been with Onfolio since. Pretty much the beginning. And what does Adam Trayer do? He's chief operations officer. Yeah, so he, we just, we promoted him in, uh, January or February. He was originally a portfolio manager. I've known Adam for years. He was, he was actually running Vital Reaction. And I hired him away from Vital Reaction, and the owner said, Do you want to buy it? Because he didn't want to replace Adam. Yes, Adam was originally just running Vita Reaction and a couple of our other businesses, and now his job is really working with. The portfolio managers and the in-house team. So, like we have an internal SEO team, a digital marketing team, graphic design team, stuff like that. So Adam helps make sure it all works together. And then myself and ESB, I'm like more of the long term, high level vision, and she's the, OK, how do we actually Put that into a tangible short-term vision and then Adam is like, OK, how do I actually make their vision work, so it's kind of a, The way it plays together. And then you've got Yuri Ble, head of strategy and acquisitions. He's a young guy, 37. Well, SB's only 29. Yeah, Yuri looks a lot older than 3. Yeah, I mean, I guess we're all pretty young. I only just turned 37 as well, so. Yeah, that is pretty young, a lot younger than I am. So your director is uh Robert Lipstein, audit committee. Jack Hawkins the 3rd, chief financial officer, and let's see, a couple other directors. Andra Lawrence, David McKeegan, and Robert Lipstein. Are these your Directors, mentors, advisors that you run your challenges through or a business thesis through. Yes and no, like I have other, so like, uh, we have Joel Aberman, who's a strategic advisor, he's more of the. Like the bridge between us and the investment bank, and he's worked in public markets for 40 years, so he's, he, he's the advisor really helping us understand. Like, what do we need to do to be public? What do the market want to see that kind of thing. Um, the board. They, yeah, they give great advice as well. Um, the board's real job is to represent the shareholders and make sure we're doing a good job. So, we have board meetings, we update them on what we're doing, but because they all have so much experience, they, they give advice. And they question our decisions, and they suggest alternatives and stuff. So I wasn't, I wasn't really hiring them thinking, oh, I need mentors. I was hiring them thinking, I need a board, and I need a board that's got audit committee experience and public company experience, because, like you pointed out, we're a young team, so we need People who have the experience. Um, and another board member, you didn't mention, Mark Schwartz. He, he's worked with a lot of big companies. He worked with Starbucks when they had like 5 stores, I think. So they have all those, they've seen a lot of things we haven't seen, they have experience that we don't have. So they kind of mentor us just as a, as a result of that wealth of knowledge that they have. Where are the efficiencies, if you're buying a fishing store, a mighty deals, uh, you know, and a variety. of different types of e-commerce, content type business. Where are the efficiencies of scaling it? Because each one's gonna need something different. Whereas the, you know, uh, somebody that's expert in email, you might not have on staff or somebody that's expert on the SEO, you might not have on staff. Yeah, well, we do, but we, we have one of the things we've been doing is building out those internal teams. But no, it's a good question. One thing we've started doing because all, all of those are just very disparate businesses, but We're going to start building mini portfolios around a theme. So maybe we have like 5 SEO service agencies, or we have 5 or 10 just agencies, and then maybe a few things related to fishkeeping and maybe a few things related to, uh, molecular hydrogen supplements so that over time, We start getting those efficiencies, which could be in the business model, or, or the, like the type of business, or it could be in the actual vertical. But one connection they all have already is that digital marketing is like the main driver of the business. So, Even though they're completely different topics and industries, they're all still digital businesses that rely on digital marketing. So those efficiencies, they're kind of, yeah, because, because of that. And as I mentioned, we've built out the SEO team, we've built out a paid traffic team and an email marketing. Team, as we buy more businesses, that team won't necessarily need to expand, so the efficiencies come into play there. OK, let's talk about something really uh specific. I'm sure the investors kind of zero in on this, is that your fiscal year ended 31 compared to fiscal year ended 32. Your revenue went from 751, 751,000 to 1.8 million. Cost to revenue was 14,000 to 1 million, uh, professional fees, 31,000 to 208,000. I suspect that's uh that big increases to all the attorneys to the filings, etc. to go public, yeah. Uh, for the professional fees, yeah, for the cost of revenue, um, which went from, yeah, it was like a big jump from 1 million, which is a little bit, yeah. It's a little big. I mean, if you look at it, the revenue 1.8 and the cost of revenue 1 million, that's a 40% profit margin, which is, we've seen in, um, similar holding companies. So we're, we're comfortable with that. But the reason for the huge jump was, Um, Mighty Deals was acquired, and Vital Reaction was acquired in like December 2020, so none of its cost of revenue is, uh, and Mighty Deals was March 2021. So, um, none of their cost of revenue was in 2020. So, not only that, but included in our cost of revenue, which is something when we were going through the audit the auditor wanted to make sure we Uh, we've included all of the labor costs. So it's not cost of goods, which some people will look at it, they think it's cost of goods, but it's, it's cost of revenue. So it includes, for example, if we have a client and we're doing SEO for that client, And that's a team member who puts 40 hours in, and that, that's included in the cost. And so throughout 2021, we, uh, just expanded our team significantly as well in anticipation of going public and everything. So that's where the huge jump from like 14,000 to 1 million came from. And then professional fees is, yeah, that's pretty much almost entirely the audit and the guy who prepared the S1 and all of those fees. Yeah. So your general administrative went from 1.8 million to 2.479 million, which is the biggest percentage of your sales, 246%. What what was the What was the reason for that jump? Sorry, which line was that? Uh, general administrative costs, 1.851 million to 2.479. It's kind of the same. It's basically, I mean, we can try and answer it again, but it's basically we've been enhancing the team size and anticipation of having all this money to deploy our acquisitions, basically. Yeah. And when does that, look, this is not a problem because Amazon was unprofitable for over 6 years. And they turned a profit. So what is the, when do you turn the corner, uh, we're so optimized, we've got a great Ferrari, we're going into the 24 hour a month. Nice analogy. Um. Have to be careful about making um, projections and, and, you know, predictions and stuff with marketing and IPO. But if we, if we, if we look at the cash loss in 2021, it was about 1.1 million, total was $1.8 million loss because there was about 7000 in, um, like stock options and, um, so like non-cash expenses. And then if you think, OK, raising 8, 8.5, so net proceeds would be about 7.3%. Uh, after, you know, people take their, their, their cuts, and legal fees and so on. 7.3%, if we deploy that at the same multiple that we've historically been able to acquire businesses, we think, you know, that could bring in about 1.8 million in um. In, uh, in profit. So that, that's enough to turn the corner and be a profitable company. So, um, you know, we, uh, so then it's just a question of how, uh, how, how quickly can we deploy it, or, you know, how quickly can we find the businesses that we want to buy. And then from there, each new acquisition only adds profit because What was responsible for that 1.1 million cash loss was legal costs of going public, audit costs, which are mostly ongoing, but we've had to audit three years, so they're a little bit higher than. Um, the ongoing costs will be, and massively expanding the team in order, in anticipation of having these new acquisitions. Um, but the team is good now. Like, I'm sure we'll hire more people as time goes by, but the core team can handle a lot more acquisitions. Um, acquisitions do you think you can handle? 5, 10. No, more than that. Well, again, it depends on the business, but a lot of businesses come with a team, and the majority of their expenses baked into the PL P&L already. So we might add one person to a business here, or someone who's running 3 businesses now we run 4 businesses, but, um, we, you know, we could probably acquire quite a few without. Like getting our expenses from 1 million to 2 million, like for example, and if we can buy these businesses with with non-dilutive capital, then it's just only going to be adding profit for shareholders. So the plan post IPO is to deploy the IPO capital but then use debt to Uh, fund further acquisitions. And another thing we think that will happen when we're public is cheaper across the capital or just availability of capital will increase. Your balance sheet looks pretty strong, cash and equivalent. This is from your S1 section 52, you've got $1.7 million. What concerns you? I mean, what is the biggest concern for you aside from, you know, what the S1 shows is like, You know, yeah, well, you have to put a lot of risks in there in here, you know, acquire additional capital, cannot predict future capital needs, and there's like 20-30 of these uh what keeps you up at night about this? I mean, the challenge right now is that we're kind of running two companies. There's the company that's losing money. And so can't hire this person or shouldn't spend that money. And there's the company that is about to IPO and have a bunch of money and will become profitable, you know, hopefully quite soon after the IPO. And so it should hire those people because why wait if you need them now, for example. Um, so that's a challenge. So, I guess what keeps me up at night is, you know, making sure I can balance that after we IPO and everything's all good, and, you know, we're executing our, our thesis. I think, I think we've got a straightforward path. I just have to make sure that there's no missteps. You know, it's like you're trying to get across a river, there's, there's stones that you can step on to get across it, but the stones are slippery, so you need to make sure you don't fall in. Like, I'm not worried about Google or I'm not worried about this because we're diversified. That's kind of what we're trying to do here. So, um, I don't have any like specific risks. It's more, yeah, so I'm not kept up at night by anything, but it's more, you know, what do I need to be wary of, it's just making sure that we continue to execute well and deploy capital well, and the rest should take care of itself. So I have a question, uh, after interviewing like 65 people, there's a common thing to some of these very successful, uh, M&A entrepreneurs is that they are part of a mentor or mastermind like YPO uh or entrepreneurs organization or something. Are you part of any group that, you know, you're hanging around guys or girls or people that are building $100 million dollar businesses? Yeah, I'm part of two. The first one I've been a part of since 2015, which is the Dynamite Circle, and it's, um, I've never heard of that. Yeah. Yeah, it's more for lifestyle entrepreneurs. It's like where I came from. There's not many people there trying to do what I'm trying to do. So I'm just part of it because, well, first of all, it's actually a decent source of deal flow. There's a lot of people there building the types of businesses I want to acquire, but it's also a good source of talent, and just, you get exposed to lots of different business models. Um, and then a couple of years ago I joined one called Baby Bathwater, which is not the best name in the world, but it's a good community of people. Baby bathwater. It's like, don't throw the baby out with the bathwater. That's the, the kind of mantra they live by. But there's people in there who are like running. Billion dollar businesses or $300 million and that exposes me to a lot of different ways of thinking and a lot of different people, and they're not all digital either, like there's dentists in there, for example, um. People that made money in oil, people that um have done e-commerce, software, AI so it, it just kind of, Increases my awareness of what's possible in business. But there's, I'm not in a group of people who are doing exactly what I'm doing, which is probably gonna have to change at some point, but, uh, yeah. Yeah, let me ask you about the competition. Are you running into anybody, uh, you know, Andrew Wilkinson over at eCommerce, those guys, Interactive Corp, Red Ventures, Thoracio Thoracio laid off a lot of people, yeah. Yeah, I heard that. I mean, not really. I mean, IAC are obviously way bigger than us, and we're not competing for deal flow or anything. Yeah. The, we may bump into more because they were originally like, you know, just an Amazon aggregator, and we pretty much buy everything except Amazon businesses, so we had no overlap, but I know Thracio are trying to, um, Well they, they actually are, I think, expanding into e-commerce, and they just bought a, a conference business. Um, so yeah, maybe in the future we'll, we'll compete for deal flow. Uh, eCommerce, they focus on Shopify apps, and we don't. So we're kind of alone in our space, but of course every business we buy, there's usually a few different people trying to buy it. Yeah. Yeah, there's no one that I'm kind of like. Shaking my fist out or anything, so, um, is it, it, you know, competition could be status quo, like, people don't want to sell to a bigger organization, they want to sell to, you know, another mom and pop person, right? Yeah, I guess there's a, yeah, we, I mean, people don't want to sell to the big bad public company type thing. Um, no, I think the competition is more, each of our individual businesses has its competitors, but us as a holding company. Yeah, maybe don't have competitors, if that, if that makes sense. Right, right. So I, I, you and I talked last year and we talked about your origin story where you used to be an ex-teacher. How have you changed around being a teacher now to a holding company going public? Who's I still in a lot of ways. I still teach in a lot of ways, like, you know, I, I, I put out a lot of content educating people, um. But um, I think, I think very differently. Like I think more like an investor these days or a, a capital allocator, whereas when I was a teacher, I didn't even know what those things were. um and it's just been a. I think what I've always done is Sort of Analyze what's happening around me and, and evolve what I'm doing based on that, so. If you look at my first business and then coming up with the idea for On Folio, and then on Folio was very different 3 or 4 years ago, and then that evolved. It's always been, see what's working and see what people are interested in, and then kind of evolve that. Um, and when I was an English teacher, I just turned up and taught English and left. So, you know. It's, it's kind of hard for me to answer that question actually, um, well, you're probably gonna think about that. So let me ask you about you pitching institutional investors. What was kind of some of the hardest questions you could answer, they didn't like, couldn't answer, you know, like expose some kind of weaknesses in your pitch or your business model. I think, I think the hardest is some people just don't get it, and that's not. That's not like Dismissing people who don't get it. It's just some people, so some people would get halfway through our pitch and they're like, oh yeah, this is great. Like, I'm gonna invest something. And they ask us questions like, the same questions you've been asking me, like, uh, do you keep the team on board after you hire, after you hire, or where do you find businesses or, um, Uh, you know, how do you grow these businesses? And then you get other people that don't really care about that, and they just want to dig into the financials, and they might ask me some of the questions you asked, and we answer them, and some people are like, oh, OK, that makes sense, and others just think we're lying. But the real hardest challenge is people hear your pitch and they're like, oh, OK. And they just, you can tell, they just, it didn't resonate with them. And that's frustrating because you, you know, deep down, we're like, no, no, no, this is a good investment. Like we're great, but if, if they don't see it, then what, what can you do? You just have to try to learn from that and figure out how you can change the pitch to help more people get it. And I think we have. We, as we've been doing our roadshow, I think we've not only got better at it, but I think, um, We've had a higher percentage of positive calls as we've done it, so yeah, it's kind of an iterative process. Have you had to close anybody say, hey, you know, why, why should investors invest in your own folio? What do you mean by close them? I mean, yeah, tell me why I should invest in you, you know, it's you, right? Yeah, I mean, that's kind of the whole roadshow, I guess, but um. Some people would say, yeah, why should I invest in this versus something else, for example, and um. Again, some people get it, some people don't, but the, the basic narrative we give is But we're a company that has operating leverage and we have financing leverage, so. The financing leverage I've talked about a couple of times, we can get capital for say 10%. And Deploy and earn 20%, so that's the leverage. And then we have the operating leverage where we've built the team, and each new acquisition shouldn't require us to scale our operations even more. And if you think about those numbers and that, that fact, and then you ask yourself how much capital is there out there for us and how many acquisitions are there out there for us. Then, you know, it should be fairly, I, I have to be careful what I say, but it should be fairly easy to start to put things together and where on follio can be in 35, 10 years. Um, and that's, you know, people either get it or they don't. And if they don't, I'm not really sure what more, what more I can say because it's like, it's kind of that simple. You're, you're in or you're out, right? So, let me back that when you say should, uh, when you bring on a new acquisition and it needs these four things, you're just hoping that you don't have to hire more people. Is that what your concern is? In the due diligence, that's what we're looking for. We don't acquire it and hope. Like we, we'll know before we acquire it, but. Sometimes you see an acquisition where it's a good business, but it doesn't have half the people that you need, so then you think, well, do I still want to buy it, and if I do, how do I price that in? And so when I say it shouldn't need more. It's like maybe we see a business where the CEO is going to leave, but they've priced that into the business. So we think, OK, yeah, we're going to have to pay a new CEO but that's priced in. So, If we get to a profitable state from deploying the, the IPO funds, then. Every new bit, it's not like buying another 10 businesses is going to mean we're, we're losing money again. Like once we get to that state, every business is just going to be adding profit, and we don't know exactly how much because some of them, we might need to hire a CEO or a paid ads expert, but most of them, that's either going to be priced in or those people are already in the business. Yeah. Do you have a HR kind of contact or team that you work with that said, oh, we're gonna need a CEO for this? Um, I mean, we have an internal H. I guess you mean more like recruiting. Um, and somebody's gonna need somebody leaves, you buy a company, the CEO leaves and then you need to replace it. We do, yeah, and we also just have an ever increasing network of people that we think would be good CEOs. So one of the, one of the buckets that I work on as well as raising capital and deal flow is. Uh, I, you know, I treat recruitment as like a sales funnel, so I'm always trying to put content out there to get potential future employees to become aware of on Folio and to get a feel for what we do. And there's a lot of people who are like, hey, what you're building is what I'd love to build. Maybe I'll just do it with you instead. And so, then we say, hey, we just bought a business, we need someone to run it. There's usually a few candidates that we already have in mind. And if we put, Put something out there, people will respond to it as well. Yeah. And so all of these, you you're not, are you hiring, firing CEOs, they're running individually, or they're all together and you're sharing resources. Or uh yeah, it's a bit of both. It depends on the business. Like some businesses just need one guy running them and some businesses one guy can run for, um, and. Some businesses say, hey, I want to hire my own SEO person and other businesses say, hey, I'm gonna use On Follio's SEO team, um. And that's one of the toughest things to get right, but we've spent like 2 years iterating on it, so it's um. Yeah, I mean, I, I don't think it's ever going to be perfect, but it's, it's flexible anyway. So. Yeah. Where do you want to go with this? I mean, do you want a market cap of, you know, $50 million NASDAQ $100 million. Where do you want to go? I don't think there's a ceiling, so I kind of want to just grow it as high as we can. I think $100 million market cap, sure, $300 sure. Um, a billion dollars, I think it's possible. I, I can't say, oh, I'm going to go out and build a billion dollar market cap, but I think it's possible. So as long as we, um, As long as we are Um, Yeah, execute well, like I mentioned, then I think, I think we can achieve that. Yeah. Brilliant. Dominic, I greatly appreciate the time explaining your opportunity to me. Thank you so much, and this is the 2nd interview Dominic has done with me 112 months apart. So thank you so much. Yeah. Thanks so much for having me again. Yeah, well, we'll see you again in a year.