Business Integration and Predictions

Host – Yoni (0s):
Today. I sat down with Philipp Triebel. He’s the co-founder at SellerX. And today we spoke not just about his background, which we touched on. We focused more so on the most recent acquisition that seller X has made in KW commerce. They have acquired 450 people in this operation, and it really gives them far reaching access into China and having a real global footprint when it comes to production manufacturing, and of course, supply chain logistics. So I really dug in to ask around the strategic moves that seller X to making and what he foresees the next year to really entail when it comes to the aggregators. We talk out what it is to handle integration of a company with another company. This isn’t just the acquire a product or a brand, and effectively roll it up into your operation.

Host – Yoni (45s):
It’s actually integrating to operations. So super fascinating episode for me. I hope for you, you get just as much out of it. As I did welcome come to successful scales. The show where I talked to world-class professionals on what it takes to scale successful businesses. I dive deep asking questions to people who are running unicorn businesses to raising funds, to buying businesses, mergers, and acquisitions, IP, and patent law, performance management. I mean, the list goes on. The idea really is how do I create knowledge and learning for you guys listening in? And of course, myself getting the floor with people who I many cases would never dream to share a room with.

Host – Yoni (1m 27s):
Before we jump into the episode, I’ve got to give a special thank you to our sponsors. Firstly, over a Global Wired Advisors – a leading digital consumer products, investment bank focused on optimizing the sales process. Incredible team, always happy to pick up the phone and educate you or anyone about the sales process and what you should really consider and can obviously help take you to market or even acquire businesses. I ring them for just about everything these days, us over at MultiplyMii. We are the end to end executive search and HR function into the Philippines, helping find better talent and onboarding them effectively. And last but not least Escala, our management consultancy focused on process improvement where we help build better systems for your business.

Host – Yoni (2m 13s):
That’s all the ads you’re going to get from me, ladies and gentlemen, the rest is all about learning. I hope you really enjoy and get as much out of these sessions. As I do sitting face to face with some of the world-renowned leaders in their respective fields, asking them the tough questions that are not often asked, all right, fill up. Well, it’s the welcome back to the successful scales show for me, but realistically, the first line hasn’t gone live yet. You know, we had a back and forth, you know, I honestly candidly admitted to you that I’d lost the video recording, but not the audio, but it’s a really exciting time. It’s seller X. And I would love to talk about some of the key things that you guys have actually achieved in very impressive and significant moves that you’ve made in the last couple of weeks.

Host – Yoni (2m 59s):
So before we dive into all of that and all the things that you know are going to be super interesting, exciting for people to listen into. I’d love you to just reset for a second and talk through a little bit about your background and give people those insights that I think are important so that we move into it. They understand who, who they’re actually listening to.

Guest – Philipp (3m 19s):
Sure. It’s great to be back and put this year again, just a bit of background on me. I’m from Germany originally grew up, grew up in Dusseldorf in the west until I was 16, then moved to the UK finished high school that I went to university in, in, in England, studied economics, and then started my career at Goldman Sachs in London and the principal investment group called special situations group, which is a group that invests Goldman’s own capital, really across the capital structure and a lot of credit and depth investments, but also a lot of growth equity and investments was there for four years and then moved to the U S got an MBA at Harvard business school. That’s where I met my co-founder Malta.

Guest – Philipp (3m 59s):
We had two fun years in Boston together. And then off the bat, I always wanted to spend a year in New York. So I moved out of the one that I initially planned to be that turn that turned into 10 years. I was there from 2010 to 2020 first top of that built a business in the education sector with actually with another classmate from, from, from business school, grew that to several hundred people was running that as co CEO, but stepped away from the day-to-day operations around years ago. My co-founder from and is still running the business today almost 11 years in.

Guest – Philipp (4m 38s):
And then I focused on roll-ups. So looking at fragmented sectors where you can buy lots of smaller businesses and bring them together under one roof LA, those were actually in healthcare. So those things that’s the clinics. That’s lots of testing labs, insurance brokers buying lots and lots of smaller businesses implementing processes, systems, technology, operations, run more efficiently and accelerate the growth. And then in March of 2020, I went on what I thought would be a four day ski trip to Switzerland. And that was the weekend. When the president at the time put in place, the travel restrictions from Europe back into the U S I found myself stranded in, in Germany.

Guest – Philipp (5m 21s):
And that was around the same time that Malta my co-founder came back from, from Brazil. He had spent 10 years in Brazil building what is today the biggest e-commerce platform for fashion and lifestyle products and all of that in America. And he came back to Germany as well. And the two of us looked into the e-commerce space, the aggregator space in, in the Sutton of 2020, we’re really excited by it saw a massive opportunity to build a, build a great business here. Also realized that we are very complimentary skillsets myself on the investing finance side of things. Having built a business, having made a lot of mistakes the first time around, but my co-founder with a deep expertise in the eCommerce as an operator.

Guest – Philipp (6m 1s):
So we set out and got started at the end of the summer of 2020. And, and here we are. So one and a half years later.

Host – Yoni (6m 11s):
Yeah. Wow. Super impressive. And super fond to dig into. I know in the last time we caught up, I really dug into a lot of those aspects that relate to your roots, like your education and the fact that, you know, that relationship really sprouted what is seller X today, and, you know, the complimentary skillsets. I mean, you know, anyone listening in or watching can clearly see the, the different complimentary skill sets, so would help drive a business like seller X forward that the, the episode today, you know, we talked a little bit about having focused on some of these big strategic moves that, that I believe you’ve made in, you know, in recent weeks. And we’re going to release this episode pretty close to the time that we’re actually recording it, which isn’t necessarily always the case, just because we like to build a bit of a bank here, but super interesting for me to be able to dig in after also sitting with co-venture, who invests in a lot of different aggregators and sits on effectively the, the weekly meetings and gets a appear in, you know, that was a really interesting discussion.

Host – Yoni (7m 11s):
So I started carrying that on, I mean, you guys have clearly built out a very, a very long-term strategic play on what it is you’re looking to build. And, you know, you just raised, I believe it was a 500, another $500 million, if I’m correct me, if I’m wrong and you’ve already started putting some of that capital to work, I would imagine in the, you know, the acquisition that you’ve just made if KW commerce. So, I mean, I would love for a second to, I mean, if there’s other things you want to touch on by all means, but I’d love to sort of understand, like in building your strategy and looking at what KW commerce brings to the table, cause it’s not the traditional acquisition that we’re seeing today.

Host – Yoni (7m 52s):
It’s not like the acquisition of a simple brand or, you know, a number of products that you integrate into your operating system. You guys are actually requiring a very established business that has, you know, far reaching capabilities all the way into China with Chinese built teams. So yeah, we’d love to hear, you know, straight from the horse’s mouth, as they say a little bit around, you know, how that came to be and how that integrates into your long-term strategy.

Guest – Philipp (8m 18s):
Yeah, absolutely happy to, to dig in more. It was indeed a what we believe a very strategic move for us that didn’t just happen overnight. We actually got to know the founders of KW commerce, max and Yens, right when we started Selex they were introduced to us by one of our investors. And we actually got both of them on board as angel investors in seller X. So right from the very beginning. And I remember still back in the fall of 2020 when we were looking at the F our first initial acquisitions, those guys, and, and some of that helped us in, in, in the due diligence process and navigating some of the diligence items around marketing, supply chain, all these things that were new to us, having looked at, having just started looking into this and into this space, but really what we did since then is built a great relationship with the, with the two founders.

Guest – Philipp (9m 17s):
And they, a lot of trust, a lot of respect, but also really a great friendship that we have established with both of them. And, and we’ve stayed in close contact since, since, since we started. And then, you know, last, last summer after we raised our series B started to conversations again, you know, about, you know, does it make sense to potentially sort of join, join forces and create something bigger? And then it just felt like it was the right time for us. And what we felt was it’s absolutely critic when it comes down to it and what is required to be successful in, in, in this space and aggregated, but also as an, as, as an Amazon seller is really operations.

Guest – Philipp (10m 2s):
And what KW brings first and foremost is that operational backbone, that infrastructure that really enables us to it to have a very resilient and robust supply chain. And that’s anything from, you know, the, the sourcing team in Hong Kong is 70% sourcing team in Hong Kong that has direct relationships with suppliers to a very robust warehouse infrastructure, both in China and Europe that allows you to do your own fulfillment and also reduce your, your overall logistics by, by cutting out third-party logistics service providers that you would need to, to, to use.

Guest – Philipp (10m 46s):
Alternatively. And with that also comes a product development capabilities. I mean, these guys launch up to a thousand new products every single month, and that is no small feat it’s it’s, it’s, it requires everything from of the technology, the automation to have the relationships with the suppliers that enable you to have some minimum order quantities that make sense to try out new products, because it’s not every product that you try out will, will succeed to, you know, then having the, the logistics and the, the whole infrastructure to, to be able to do that. So, yeah, it was the timing was right. And we felt a very strategic move that will ultimately enable us to have a very robust operational backbone that has been built over nine years since they started.

Guest – Philipp (11m 38s):
So, yeah, we were happy to have made that move and, and, and currently, already starting to see the first set of benefits from that, from that acquisition. I mean, that’s quite to see, to see, you know, some, for any form of ROI

Host – Yoni (11m 53s):
In that, you know, in that timeframe is pretty impressive just given. And I really want to ha I really want to sort of dig into this because there’s two things first is I, I mean, that’s, that’s an incredible relationship that historically you’d built having them believe in you so much to be your angel investors and understanding that level of strategic relationship going into this is, you know, it’s a stroke of genius. If I might just say so myself here, because I’m thinking about, you know, and realistically it’s selfishly, you know, I started this show, you know, puts me in a unique position to speak with guys like you, who are doing super far reaching and really strategic moves when it comes to how you’ve built that relationship, what that relationship looked like and what it ultimately has turned into, and that friendship as you call it, which, you know, is the best part of relationship.

Host – Yoni (12m 44s):
When it turns to building deep roots into what this transition will look like. You know, you already have a feel for the pulse of the culture cause you’re, you’re close with the founders. And so I guess the, the question in all of this is that, or the point that I’m trying to highlight is that when you’re going over, are you going after an acquisition like this? And we can talk more about the capabilities in a second. It is that transition management, you know, this isn’t, we’re going to buy a brand, we’re going to acquire their products and off we go and integrate it. We need to understand, you know, all of the personnel that exists. We need to understand how the Celebrex driving focus actually fits into the KW commerce, existing historical nine years of, you know, what their culture looks like and how that actually ultimately fits in together.

Host – Yoni (13m 33s):
So I’d love to hear sort of what is, what is your planning look like when it comes to actually, how do you integrate the two businesses? You know, what does that transition plan look like?

Guest – Philipp (13m 43s):
Yeah. And you’re completely right. It is very different from a traditional seller that does, you know, 10 million or less of, of, of, of revenue and comes with way fewer employees as well. And many, many of the sellers that, that, that sell to aggregators, they have, have met on, you have a couple of freelancers or virtual assistants and don’t really have any full-time employees. So it’s, it’s a very different case here. KW comers has fun with 50, but almost half of them are in China and the other half fine in, in, in, in Germany primarily. So that comes with a lot more complexity and requires a very thought out post-merger integration, plan that in.

Guest – Philipp (14m 33s):
And we’re in the process of doing that right now. What is most important though, is there needs to be a cultural alignment and that starts from the top, but then sort of cascades down into the level two level three, level four, and to ultimately all that until you use them. But it all starts with a vision and mission. And what we realized is, is the vision and mission of the two businesses are very, very similar. So that’s complete alignment that don’t require any changes on one company to adapt. The vision of the other. The vision overall is, is, is, is, is very similar. And also culturally having gotten to know them, not just the two founders, not just in the context of this acquisition, but having had the opportunity to get to know them over a 12 to 18 month period basically has, has shown us that we can work very well together.

Guest – Philipp (15m 25s):
And there’s no egos. I think that’s the most important thing there’s no, no, no egos. We just want to build a great business, have fun and, and build a great business together. So I think that once those things are, are there, yes are the rest is, is, is not easy by any means and requires so proper planning, but it’s basically the prerequisite of being successful. And then what we found now in this process, this integration process is it needs to be done buttons up bottom up. So it cannot be just top down, you know, the, for the two founders on each side dictating how so the integration needs to look like it needs to be done bottom up from the departmental level, driven by the departments themselves.

Guest – Philipp (16m 15s):
What’s the ideal sort of structure for the combined entity on the department by department level, because each department is also very different. China, all the Chinese China operations was non-existent on the Southern side. That’s something that, that the, the people, all the M and a capabilities, the investment team integration that did not exist on the KW side that was just built up on the, on the select side. So each department is, is, is very different and needs to be driven by the departments themselves for that to be successful. And there’s a detailed planning phase. And that’s when, sort of at the end of that detailed planning phase.

Guest – Philipp (16m 57s):
And then there’s sort of an implementation phase that again, takes some time, but depends very much on the departments themselves. So there’s not one size fits all within each department for all departments. It very much depends department by department.

Host – Yoni (17m 12s):
Yeah. Yeah. I mean, you definitely preaching to the choir here. This is a lot of what we do inside of a Scarlet is all about that integration. You know, we work with a lot of aggregators helping with brand integration at that level. This is, like I said, a whole lot more complex and addict different, you know, at a different level here, but how, what will the relationship look like moving forward when, when you talk about the existing founders and now you guys effectively acquiring them, like, are they going to continue to run? You’re going to slowly merge together. Like how do their roles change in the business?

Guest – Philipp (17m 49s):
Yeah. Great, great question. I, we spent quite a lot of time talk talking about that. What even some of the top leadership team looks like as a combined entity and what was very important to us, even though it’s an acquisition by selects of KW commerce from a team’s perspective, it’s, it’s a merger, it’s a merger of equals and what will happen or what’s already happened now is that both max and Yens, the founders of KW commerce have joined the senior leadership team of the combined entity and have responsibilities for certain, certain departments that they oversee overseas.

Guest – Philipp (18m 29s):
So we have basically a senior leadership team of now four, where it’s very clear what, which of who is responsible for what department. And for, for instance, one of the funders of KW commerce is oversees the operations, which is sort so the China operations, the, the logistics, the supply chain, all of that is, is overseen by max from, from KW commerce, given some of that expertise and what they’ve built out in China specifically. So he was the natural person to oversee that, for example, on the investment side, that that’s an area that I oversee in that of no, no change that.

Guest – Philipp (19m 10s):
So it really, again, they’re part of the senior leadership, senior leadership team have very clearly defined roles and, and, and responsibilities for specific departments.

Host – Yoni (19m 22s):
Yeah. I mean, you know, you, you know, it’s, it’s the whole one-on-one makes three conversation or sort of position is that you really now have acquired skill sets that you guys didn’t have. And as a result, you can divide and conquer and, you know, that’s, that’s the beauty of an ever evolving and growing business is that as you grow, people become more and more hyper specialized in what they bring to the table. And you’ve just, you know, you’ve created this massive shortcut in what that looks like, I guess, I guess that leads me to set up my next question. And this is like starting to border on the predictions or, you know, I mean, it’s, no, it will come as the last person that’ll surprises you that, you know, this, this arms race really of their, the roll-up model is really like who will, who will emerge to be the next, you know, e-commerce PNG or Unilever.

Host – Yoni (20m 13s):
Like, you know, as a, let’s just say, that’s like one, let’s say one or a few become those, you know, those new industry leaders. And that’s like the driving goal. Again, everyone has their own strategy and that might not be the ultimate goal, but just humor me for a second. Does that mean that for you guys, the strategy will now shift because if you have the capabilities to now design bring a thousand products to market yourselves tests, small MOQ is have these relationships, you know, consolidate all of your operations and your logistics and start to cut corners that way, or create efficiencies rather. Does that mean that you move away from the traditional or historic sort of now three, four year trend of let’s acquire as many brands as we can we’ll now we can actually just build from scratch with all the insights and information, like, is that, is that on the roadmap?

Host – Yoni (21m 5s):
Is that a conversation or are we far away from that?

Guest – Philipp (21m 9s):
Yeah, that’s a good question. I think the, the, the short answer to your, to your question is no, no real changes to our, our strategy as a result of this. I think what, as a result of this acquisition, we were continued to acquire the typical third party sellers that sell on Amazon. What this acquisition has allowed us is to faster and more seamlessly integrate those businesses, and then hopefully accelerate the growth and optimize the supply chain. And basically also bring down costs, which is a critical element to anyone selling on Amazon. It comes down to costs. So if you have a great, some operational structure that allows you to sort of lower your costs, that is a significant advantage that you have in, in, in the marketplace.

Guest – Philipp (21m 55s):
And then the new product launches has always been one or four key growth leavers that we see that we started to do PR even prior to the acquisition of KW, we’ve launched a few products. Most of those have been just a dish, just new variants of existing set of products, whether it’s different color products, different sizes, et cetera. But now we can just accelerate that growth lever much, much, much more following the, the acquisition and the capabilities that we now have, but absolutely we will still continue to buy your regulars of FBA businesses. But now, you know, we do have the ability to also do our own fulfillment.

Guest – Philipp (22m 39s):
So we are more flexible than, and a little bit less reliant on, on Amazon’s fulfillment capabilities, which we will continue to use.

Host – Yoni (22m 53s):
Yeah, absolutely. I mean, it continues to make, to make sense to leverage, especially when you talk about FBA and what that actually enables you to, to achieve. So that makes, that makes sense to me. Wow. Exciting, exciting times over at seller X.

Guest – Philipp (23m 9s):
Yeah. It was a busy, it was a busy quarter last year, but I don’t expect things to slow down this year. I mean, this, this space continues to be very hard. Things move very, very quickly. I’m so excited to see. So what, what 2022 brings brings to us and, and, and, and the rest of the, the space,

Host – Yoni (23m 29s):
For sure. For sure. Listening. I think, I think it’s going to be a very interesting and exciting year, or at least the next couple of years, you know, there’s going to be a lot of movement and, you know, there’s a lot of just forever changing landscapes, you know, particularly on the supply chain and logistics front. That’s that definitely something that is keeping everyone guessing. So, I mean, any predictions that you have in terms of some of the challenges or some of the things that you believe will be true in, in, you know, in the year of 2020 now that we’re sitting at the start of it.

Guest – Philipp (24m 1s):
I mean, I think one thing that you’ve seen, I mean, you have, I mean, I think just having listened to a number of your, your, your episodes. I mean, there’s probably around a hundred plus aggregators. You may know the number better than us. It’s, it’s a lot. And I think it’s, it’s probably pretty clear that, you know, there’s not room for a hundred plus players, but what the, the right number is, how many will ultimately be, be able to successful? I don’t think any of us know it could be five, it could be 10, it could be 15. There’s not going to be a hundred, but it’s not going to be 70 or 80. So I think what you will see is consolidation, and you will see that faster.

Guest – Philipp (24m 41s):
It still is pretty young industry, but things move so quickly. And I think you already see you, we already see some consolidation that, and that’s driven by, by a few things. One of which is also that what I’m hearing scale scale doesn’t matter. Also being global matters in, in, in, in, in our view, which is also one additional reason for making that strategic acquisition and getting to scale at a quicker getting to, to have that global footprint faster, we think that’s, that’s, that’s, that’s critical. And you’ll probably see some of the smaller players being, finding it harder to raise capital.

Guest – Philipp (25m 25s):
And then you have the, you always have the choice, you know, do you want to raise capital or do you potentially want to potentially join forces with, with, with, with another player, with a bigger player that doesn’t mean you sell the and exit the business. It could also be a strategic rationale for joining forces and, and keeping both businesses, especially if there’s no such geographic overlap in, in some of the operations, if there’s really, you know, a complimentary set of skillsets and capabilities that can be sort of brought together by, by joining forces. So one might one projection, I think that’s, that, that we have is that there is going to be consolidation in, in some form that the number of players, even though there’s still new ones popping up, we see, especially in, in, in, in other places around the world, outside of Europe and the U S and a little bit behind banks, very quickly catching up to the U S and Europe, there will be some that will be consolidation to get to scale quicker, to also create a great equity story for, for, for investors.

Host – Yoni (26m 36s):
Yeah, absolutely. I mean, yeah, you’re right. I speak to a lot. I feel like I speak to a new aggregator every week. Like the, the, the still perceived value or the perceived opportunity, rather from the outside, looking in for many people, like I said, every week, there’s a new one that pops up. It’ll be very interesting to say at what point the people start to sort of understand that those levels of complexity and once an operation hits, you know, you guys have just acquired 450 additional team members on top of that. I don’t know how many hundreds you have today, right? It’s yeah, we have over seven, we have around 800 employees now say, you know, that’s, that’s now a very serious operation.

Host – Yoni (27m 19s):
And, you know, there’s probably only, I would have to guess maybe four or five aggregators that would have a larger footprint globally than that. If, if that at all, I mean, you know, obviously thrashier comes to mind with something like 1500, but I just, you know, maybe heyday or boosted or, or perch might be up there as well. But you guys would surely be a it’s a lot. It’s a lot of heads. It’s, it’s a lot of mouths to feed, and it’s a lot of moving pieces, is that the point I’m making here, and if you are going to be the best and the most global and the biggest, you know, most people, when we talk about that hundred plus minus, they’re not built for that. They’re not built to run the operation. They might’ve seen the early opportunity in a let’s call.

Host – Yoni (28m 0s):
It just the, the sheer or the pure arbitrage model of ICWA for X, I grow, Y percent I sell and off we go, but it’s that compounding complexity around the operation, which again, coming back to your decision to make the acquisition just really shows that, you know, there’s a way to build mutual win-win scenarios, where you find the right partners and you have strategic alignment, both from a core principles and vision perspective. And also, you know, it makes a whole lot of sense to bring on two more people that have expert knowledge and two areas where you guys didn’t necessarily have that level of depth of insight into things that will really propel you.

Host – Yoni (28m 40s):
And, and, you know, is a, is a pretty key differentiator. I mean, for me, I’ve been sitting in really thinking mostly to myself. I don’t talk about it all that much in public, but, you know, just in the nature of being honest here, you know, it, it’s very hard to see what differentiation looks like from the outside, looking in from a lot of aggregators, you know, when I get to speak to a lot of people on the, on, you know, on the acquisition side, and it’s always the same product categories, plus minus the minimum SDE or EBITDA, you know, looking for more or less the same metrics, like there’s no clear, you know, I can name off the top of my, my hand intrinsic focus on medical there, one that has like clear differentiation or, you know, one of the, you know, smaller ones, but greenhouse only look for products that sell and are manufactured in the U S like they’re really sort of, you know, laying a, you know, drawing a line in the sand of like what they’re looking for.

Host – Yoni (29m 38s):
So I’m very interested to see as this market continues to evolve, like, is it the first mover Tarascio style? Okay. We just acquired everything really, really quickly before people knew what was going on. We invented a marketplace and, you know, you sort of want you win that war of attrition just from that first mover award and building a big enough mode, or is it something like this where you acquire the resources rather than trying to build yourself and taking 3, 4, 5 years to become experts in and sort of pushing it forward. So I’m on a rant here, but I just find it really fascinating. Like, I think this year is just going to be such an exciting year to say, like, you know, what tricks are people going to pull, pull out of this sleep?

Guest – Philipp (30m 21s):
Yeah, yeah. It, it, it, it won’t, it will certainly be full of change movement and, and surprises. I’m sure. But one thing again, that will differentiate and will help any player be successful is so that operational excellence, and you can build it yourself. You know, you don’t, it doesn’t need to be acquired. It just takes longer. You know, we, we, we w building out some, a warehouse infrastructure has always been, has been on our roadmap for a while, but you need to supply. There’s a lot of things that need to be built, especially for business. That’s not even two years. Things take time to, to, to build an instant prioritize. You can’t do everything at once.

Guest – Philipp (31m 2s):
At the same time, you need to prioritize. One thing that we always felt was was necessary is to have your own of warehouses mostly. So for, you know, for, from a cost perspective, but also to be so flexible and the flexibility and optionality perspective, but that takes time. You don’t build that from one, one day to the next, you don’t need to build your own warehouses. You would probably be rent them, but even to get the warehouses to be fully functioning at scale, where you are at in a position to reap those cost advantages will take time. I mean, that’s sort of a big investment and just takes time. So we, we really think that this acquisition has so propelled us forward by took probably a couple of years from an operational perspective.

Guest – Philipp (31m 49s):
But yeah, we think that’s, it’s, it’s, it’s a strategic move. I think there’s others, you know, acquisitions that that could make sense. That can be strategic. That I think we are thinking about that I think others are thinking about as well, that can enable you to get to scale and that operational backbone, the technology, the know-how, the expertise that you can build up. And again, acquiring that maybe, maybe they may enable you to get that faster.

Host – Yoni (32m 22s):
Yeah, yeah, absolutely. Absolutely. I mean, that’s a, you know, that’s one of the quickest ways that you can get that. I mean, that’s the whole roll-up model, right. Is acquire businesses that have already been in, been, you know, up and running and let’s sort of propel them forward. So I want to change gears for a second cause, you know, there’s, there’s one thing that’s really applicable to those that are building large businesses and that are going through that process. And that’s really what I mean, that’s my real passion and driving interest here is like, how far can these things be pushed before they, you know, before they become a real big corporate, which, you know, I think at the pace that everyone’s growing, like, there’s just going to ha it’s going to get there at some point, but for people who are actually maybe not quite there yet, you know, and that can’t afford to necessarily invest in building out, you know, their whole warehouse operation and acquiring companies, you know, I’m talking more so about the businesses that would likely be inside of your sort of lens of acquisition.

Host – Yoni (33m 20s):
Like what are some of the things that you see is really valuable? Like, why would you, why would you offer one seller, a larger, multiple than the other from, from that side? And what are some of the things that they can potentially do if seller X was the right, you know, the right home for their business, because they don’t have, you know, a half, a million dollars, half a million dollars, $500 million that they can, you know, go out and raise and, you know, make all these strategic moves, any, any advice that you would give to, to businesses in that position?

Guest – Philipp (33m 49s):
Yeah. I mean, I think that it ultimately comes down to product, be obsessed with the product and the quality of the product. So I think that that’s, there’s no shortcuts there. I mean, that’s, that’s ultimately, the most important thing is, is, is, is having a product or portfolio of products that meet some customer’s demand and, and, and, and high quality given the, given the price. So I think that there’s no shortcut, you need to be obsessed and it’s rates listened to customers feedback and just come up with, with great products and then take keen it’s it’s, it’s obviously, you know, I think even in your podcasts, a lot of, you know, discussions have been around.

Guest – Philipp (34m 32s):
So some of the black hat tactics and things that, that people use, I mean, aggregators have, you know, learned from, from, from, from, from the past. And I think cannot tolerate that. We even acquired another business that enables us to test the authenticity of the, of the reviews. So to, to, to determine what percentage or what, how many, if any of the reviews are sort of unnatural, unnatural. So, you know, take, take keen, be obsessed with the, the, the, the, the, the, the, the product, and also be okay to leave a little bit on the table for the, for the, for the acquirer.

Guest – Philipp (35m 21s):
So if a business is, is fully optimized, it’s already expanded across all regions, multiple channels. There’s not that much of growth potential outside of maybe the, the growth of the, the underline category, which is obviously an important aspect as well. If the category grows and you grow with the category, I mean, that’s, that’s, that’s great, but certainly what aggregators look for is to accelerate the growth of those businesses. And that’s important for the aggregators, for the story for the investors behind the aggregators. So if there’s, there’s, there’s still, you know, growth potential in those businesses, those make the businesses a more attractive acquisition targets and ultimately warrant a higher multiple, because ultimately the multiple that as a buyer, you’re willing to pay as a result of, I mean, amongst other things, the, the growth that you can achieve post, post acquisition, and the more potential there is to grow the businesses, the larger, the, the, the multiple lists that you can, that, that business commands.

Host – Yoni (36m 30s):
So, so like hypothetical here for a seller to sort of break it down for them. So if they came to you and they said, right, we have a roadmap to expand that, say they are us focused, that they have a roadmap to expand into the UK and Europe, and they have 50 new products that they want to bring to market. They just simply didn’t have the funding for it. And, you know, all these things like packaging it up that way. Is that going to be more valuable too? Or would you say, Hey, you know, launch a few of these products don’t care too much about your trailing 12 months. And we’ll actually say like, proof of concept, like, I guess I’m trying to understand, like, if I’m a seller, do I just say, right, I’m obsessed with my brand.

Host – Yoni (37m 11s):
I’m just going to build every single thing that I know is going to sell and get to a point where, you know, hopefully you can find capital somewhere, right. But you’re, you’re at that point, because obviously it’s sort of a, a bit counterintuitive, right. If you’re looking to sell your business and how things are typically, you know, the multiples, when we talk about multiples here, we’re talking about multiples on, on the SDA, on the EBITDA and, you know, it can be counter-intuitive. So just curious to understand, like, would you prefer a seller to really sort of get the ball rolling or just build you the plan or not even have the plan and just say, this is, so this is as far as I’ve gone,

Guest – Philipp (37m 47s):
Probably the latter. I mean, both, both, both potentially, but the latter. I mean, if there’s, this is as far as he’s gotten and you know, that the taking the business to the next level requires an investment in someone working capital product development requires you to maybe hire a few more, more people to take a tour to Europe, translated into all like the copy into other languages and deal with some of the regulations and all of that. And, and you know what, I’m just not, not, not there, that’s sort of an ideal business for an aggregator to, to acquire. And certainly what, what would be viewed very favorably even when it comes to the valuation of that, is that so potential, you know, just looking at, we are sort of a European based aggregate.

Guest – Philipp (38m 35s):
The majority of our revenue, actually in, in, in, in Europe, if you are a hundred percent selling in Germany or a hundred percent selling in the UK. I mean, that’s, that’s, that’s very attractive for a buyer because yes, it requires work and requires an investment, but that’s sort of exactly the infras have, have built up that enables them to sort of expand to other geographies. So if a product is already everywhere, it’s, it’s, it’s a bit tougher because geographic expansion is a, it’s certainly a very real sort of growth driver growth lever.

Guest – Philipp (39m 22s):
That’s very achievable in, in, in, in a fairly short period, short period of time. So having that as, as, as, as still as a buyer, having that still left on the table, that potential is, is, is a big class. And it’s certainly being considered when it comes to of valuing, valuing a business.

Host – Yoni (39m 38s):
Yeah. And so just to like, make it crystal clear for anyone listening in, you know, if you didn’t expand to Europe and you had a purely us or us Canadian audience having that might actually drive up your multiple because it’s a share, or it’s a very easy thing for seller X to pull the trigger on because they have the infrastructure to allow it. And it makes sense that, you know, they’ll give you a high, multiple, because they’re going to turn that around a lot quicker. And you know, there’s not a whole lot of work that needs to be done. Listen, I want to be really mindful and respectful of your time here. And I know, you know, especially now knowing what I know, there’s lots of different people that might want to interact with you, whether it’s, you know, potential clearly are acquiring software.

Host – Yoni (40m 22s):
And now it’s, you know, supply chain and logistics and partners into, to Canada. And obviously it’s the brands looking to sell into the seller X portfolio and, you know, get that large payday that, you know, realistically you don’t, you don’t make, if you’re just simply running a business that the big paydays come upon exit. So who are some of the people, or how can people get in touch and, and, and who are you looking to actually engage?

Guest – Philipp (40m 47s):
Yeah. I mean, anyone people can get in touch, just send me directly an email. I mean, that’s the easiest way a phillip@clx.com. It’s P H I L I P P@sellerx.com. It’s the easiest way I will always get, get, get back and always look forward to hearing from, from anyone in the community, really. I mean, at the end of the day, whether you’re a seller or anyone else in the community, we’d love to hear from you. It’s, it’s an exciting space. I think there’s a, there’s a lot we can do also to support one another, help one another and grow, grow together. So I think it’s, it’s an exciting space. Anyone who’s who’s in, in, in, in whatever capacity I think is, is, is, is in it for four fun rides and yeah, he’s do not, no one should hesitate to get in touch with me through.

Host – Yoni (41m 37s):
That’s awesome. You’re a good bloke, as we say in Australia. Awesome. Well, again, thanks for coming on a second time. Really. You know, each time I get to sit down with you, I feel like I learned so much and yeah. Just enjoy the conversation, you know, take, take Philip at his word there. If there’s something that’s really, you know, an interesting topic or something that you think he’ll get a lot of out and vice-versa, I mean, reach out. We’ve really enjoyed this. So thanks a lot, mate. Yeah. Good

Guest – Philipp (42m 9s):
Talking to you, Yoni. Thank you.