FBA Businesses are Hot Right Now

Michael:    Hey, Philipp. Welcome to the EcomCrew podcast.

Philipp:    Hey Michael, it’s good to meet you.

Michael:    Great to meet you as well. We’re doing this series on aggregators in the FBA space and really thrilled to have you on. Maybe to get started, it’d be good to just give people a quick intro to who you are and who your company SellerX is.

Philipp:    Yeah, absolutely. Very happy to. So my name is Philipp. I’m one of the two co-founders of SellerX. I’m from Germany originally, but spent the last 22 years abroad, spent 10 years in the UK, finished high school there, went to university there, [00:00:37] then started my career at Goldman Sachs in a group that invests the bank’s own capital really in interesting opportunities. There are a lot of growth equity investments. A lot of investments in family owned businesses. That was from 2004 to 2008. And then I moved to the US in 2008 and got an MBA at Harvard Business School. That’s where I met my co-founder, Malta for the first time. And we had two fun years in Boston together. And then I moved down to New York afterwards and lived there from 2010 to 2020 for 10 years. Great 10 years.

First, I built a business in the education sector with another classmate of mine. We started that business really in our room. We were roommates at the time and they had the first few team members come to our living room every day, and then scale that business relatively quickly to around 200 employees. And I was running that for five years. My co-founder is still running the business today, but I have spent the last five years focusing on roll ups. So looking at fragmented sectors where you can buy lots of smaller businesses and bring them together under one roof, not just eCommerce businesses, but also other businesses and under other spaces, including healthcare services, basically buying businesses that are family owned, founder led, doing anywhere from one to 10 million of revenue and buying them, aggregating them and putting in place processes, systems, technology to help make them run more efficiently and accelerate the growth.

And then in March of last year, I was still living in New York. I went on what I thought would be a four day ski trip to Switzerland. And that was the weekend when Trump initiated the travel restrictions from the Europe back into the US, so I found myself stranded in Germany for the next few months and then spent a lot of time with my parents, which was for silver lining for me, for COVID, but still felt a little weird being in your late thirties and basically moving back in with your parents. But here we go, that’s what I did. And that was around the same time when Malta, my co-founder was back from Brazil, he spent 10 years after the NBA in Brazil, where he built the leading platform e-commerce platform for fashion and lifestyle products, a platform called Dafiti, the equivalent of Zappos in the US, if you will, or Zalando in Europe, they grew that business from zero to three and half thousand employees, more than a billion of sales, and ultimately took it public as well.

And he was doing that as chief commercial officer and subsequent to that, became a seller himself under Brazilian marketplaces and also bought a beauty business. So he found himself back in Germany, we looked into the e-commerce sector closely and realized that there was a huge potential to build a great business in this space. [00:03:30] And also, Malta and I, we have very complimentary skillsets. Myself, more on the sort of investment finance side of things and Malta, with a deep expertise in e-commerce and operations. So we said, let’s give it a shot. And we are now… So 13, 14 months later, I guess we’re talking here today.

Michael:    Yeah, here we are. So how many deals have you guys completed so far?

Philipp:    We’ve done over 30 deals.

Michael:    Okay.

Philipp:    The first deal we did in October [00:04:00] last year.

Michael:    Okay. So it’s been about 11 months or something like that. And so you’re doing three a month. You guys are yeah, moving right along.

Philipp:    Yeah. It scaled up initially it was one and we’re now doing a bit more, but yeah, it scaled up pretty quickly.

Michael:    So a year ago when you were thinking about getting into this, what was so appealing about Amazon FBA businesses and obviously there’s a lot of other aggregators in this space, everyone’s kind [00:04:30] of flocking to this. I mean, what makes this so appealing from your point of view, especially with as much background as you have in this?

Philipp:    Yeah. I mean, generally what I looked for over the last five years well before starting SellerX was industries, sectors that grow, that have great sort of from a macro perspective, great sort of trends, growing sectors that you would bet on for the next 10, 20 years. And I think e-commerce is it’s very hard to find any research [00:05:00] paper that sort of says that e-commerce is going to shrink or is going to stop growing. Yes, last year was clearly an exception. And it clearly accelerated that growth, but overall, if you want to bet on a sector, I don’t think you’re going to be wrong betting on e-commerce. So that’s important point number one. Point number two is, it’s a very fragmented space with lots and lots of smaller players. And that sort of lends itself to some sort of consolidation aggregation.

And then number three is there’s, [00:05:30] through the FBA model, clearly a business model that where you have a little bit less complexity and are able to buy businesses at a large of pace, for example, I was doing a few rollups in healthcare services, which is an interesting sector as well, I think has a lot of growth and it’s so fragmented as well, but it has a lot more complexity, especially [00:06:00] around people, dental clinics, any sort of doctor labs. There’s so many people. That introduces a lot of complexity, a lot of staff. With FBA, Amazon takes care of a complex part of the e-commerce business, which is obviously the fulfillment. So you are able to sort of scale those much quicker. And then the last piece is that it’s also a sector where [00:06:30] you can really add more value and do, if you sort of work out the operations and build strong capabilities internally and strong technologies, that’s value you can bring to those businesses and really accelerate the growth post acquisition on Amazon, as well as off Amazon.

So those are really the key four factors that made this such a compelling sector for us, but for a lot of other [00:07:00] folks as well.

Michael:    Yeah, it is crazy just how many people have, relatively quickly, flocked to the space. I mean, I think that everything you said makes sense, and it’s one of the main reasons that we’re in this space ourselves as sellers. But the one thing that always stresses me out about this space is that, even though Amazon does take care of a lot of the complexity and we’ve been on both sides of the fence, we’ve had our own warehouse and ship orders out the door ourselves, and really appreciate how easy Amazon does make it. [00:07:30] But the flip side of that is that you’re in their sandbox. And at any point in time, they could just be like, well, the referral fee is now 20%, or we’re going to change our storage limits, or we’re going to change advertising in some way, or we’re going to just suspend your account or anything on the list of things that can kind of go wrong, which kind of gives me the chills.

Is that something you guys think about, but just kind of think about it at scale, it’s not really [00:08:00] that big of a problem over 30 brands. If one of them has a problem, so be it, but the chances of everything kind of going down the tubes is pretty small.

Philipp:    Yeah. That’s… We’re not losing any sleep over that because also, and it’s, by the way, a question that pretty much any investor that I’ve ever spoken to has brought up as well. It’s clearly something that we spend a lot of time thinking about. But fundamentally this trend, what we’re seeing with aggregators acquiring [00:08:30] Amazon sellers is we believe, and what we’ve heard is in the interest of Amazon, because for a few reasons. One it is essentially professionalizes the sellers, it ensures that because… What does Amazon… Amazon, let me take a step back. Amazon wants happy customers, offering high quality products at the best prices. That’s what Amazon wants and the aggregators [00:09:00] are sort of meeting that goal by professionalizing and continue to grow them. They’re well capitalized so they will increase the stock availability, reduce stockout, which is an Amazon’s interest and the customer’s interest.

Do sort of more, in some cases, more rigorous quality checks really ensuring that the quality… That the products are high quality at good prices. And then FBA, Amazon is in control of the fulfillment [00:09:30] and the customer service around that. So it’s sort of in their interests as well if these aggregators continue to do that. And then beyond that point, number two, that I find very interesting is what is Amazon is keen to attract more sellers to its marketplace, to increase the selection and there’s no better advertising that Amazon could do than to showcase sellers [00:10:00] that have started successful businesses on Amazon and were able to exit and cash out and have a liquidity, which in of itself will attract more sellers to the platform. Because yeah, if you come to Amazon, you build, you have a great product, you scale successfully and then have an exit. I mean, you can make a lot of money. You can have a great outcome in a relatively short period of time, which makes Amazon’s marketplace even more attractive for more sellers to enter.

Michael:    Yeah. That makes a lot of sense, obviously. [00:10:30] So the majority of your deals to this point, is it people coming to you, do you have friends out, fielders out over the place, do you kind of cold call and knock, one of those people that send us emails every day? Like we’re interested in buying businesses, I get 12 of these a day now, it feels like that for me… [crosstalk 00:10:49]. What is most of the deal flow come from?

Philipp:    I mean, it’s a combination of everything that you just mentioned. A lot of inbound, and that’s a function [00:11:00] of building a reputation in the market, having some credibility, having closed a number of transactions. The seller community, in some cases, it’s very small, people talk. If someone had a successful exit, they do talk, they talk about who the buyer was, what the experience of selling that business was. Was it sort of a fair, transparent process that went on that was done so pretty quickly and smoothly? Or was it, did it not go as well, or did it not even [00:11:30] conclude? In the worst case scenario. So reputation is tremendously important. And we place a lot of value on that to really become a seller-centric buyer.

And that’s also how we chose in the name SellerX, the X, so that variable that describes our sort of ability to customize things to each seller and recognizing that each seller has different motivations, different incentives and different [00:12:00] circumstances, and trying to sort of customize a tailor-made solution for every seller.

So it’s a lot of inbound, but also we do reach out as well. We try to be considerate and I don’t think we bombard sellers. We don’t do sort of any mass outreach emails. It’s really, we identify specific, categorized specific niches that we really like in some cases where we already [00:12:30] own a brand and like to sort of add another business that we really like. A lot of portfolio products to our portfolio. And then we would reach out in a very targeted way. And then you do have a network of brokers as well. A lot of them have popped up as well, just as, probably just as many or even more than there are buyers. There’s just as many, if not more brokers that we also make sure we have a good relationship [00:13:00] with as well. So it’s lots of different channels that we get great targets from.

Michael:    Yeah. And I definitely think the word-of-mouthing is where the majority of this is going to probably come from over the years the come. I mean, yeah, I’m speaking at Roedean weekend, for instance, tomorrow actually, we’re recording this right before that. And it’s just, you’re in a room with 300 people and everyone’s talking and a lot of people have exited and how’d it go? Well, it was a great experience or it was an awful experience. And if it was awful, [00:13:30] you’ll probably never get anyone in that room, never to deal with you ever again. And same thing with e-commerce fuel, or MD Us, these types of communities. And there’s been a lot of deals that have closed and people are discussing them. And the ones that have gone well, I think are just easy word of mouth for getting the next deal.

Philipp:    And by the way, that’s what I would recommend any seller to do in any case, get some references, talk to other folks who have sold to a particular buyer and see what their experience was [00:14:00] like. Don’t just talk to a potential buyer and believe them, do your own research, talk to other sellers who sold to that particular buyer.

Michael:    Yep, absolutely. So what’s the ideal business that you guys are looking for. I mean, if you were to kind of on the back of a napkin kind of sketch out what you’re looking for, it sounds like pure FBA. I mean, are you looking for things that also have a [00:14:30] Shopify or other presence, or do you want things that are exclusively FBA?

Philipp:    No. On that, we’re flexible. The majority of our acquisitions so far have been, have had majority of their revenues through some Amazon FBA, but there are some acquisitions that we’ve made that have a sizable portion of the overall revenue through either sort of FBA in some cases, but also in others also off of Amazon, through [00:15:00] Shopify as well. So we take a pretty flexible approach and are open to non-FBA sellers. I think that the majority of acquisitions have been sort of FBA sellers. In terms of other criteria, we’re flexible in terms of size. We acquired businesses from as low as, just under a million of revenue all the way to 30 million plus or 40 million plus. So it’s, it’s a wide spectrum, [00:15:30] there’s categories that we really like, that we’ve identified. A lot of them fall within the, or most of them, within those evergreen product categories that I think a lot of buyers go after. Things around the household, garden, pet supplies, health and beauty, fitness, things like that.

Michael:    Makes sense.

Philipp:    We do look for categories, we want to look for growing niches that we take a view on. We do a lot of work to figure out, [00:16:00] take a firm sort of opinion, a strong view on specific sectors or categories and ongoing trends in those categories. And then we do, obviously the quality of the product is key, which can be assessed by through the ratings and the reviews that’s absolutely critical because that’s very much the core of what you buy is the product. And then last but not least it, it is [00:16:30] profitable businesses. We look at a contribution margin three, which is revenues minus all the variable costs and we want that margin to be above 20%.

Michael:    Got it. Okay. Makes sense. And so, are there any types of things that you avoid? I mean, is it big, heavy items or a particular, adult toys or something, or whatever. Are there things that you guys have just kind of identified as off limits for your portfolio?

Philipp:    Yeah. [00:17:00] I mean, yeah. Heavy, bulky products is… We don’t categorically sort of exclude that, but the bar is significantly higher. Fashion, unless it’s very basic. We generally avoid consumer electronics. Same, we’re not too bullish on, but outside of that, we’re opportunistic. There’s certain categories that we’ve identified that we like, but we would look at lot of these [00:17:30] others of evergreen product categories.

Michael:    Got you. How do you guys stand out from the crowd? I mean, one of the things that’s kind of dawned on me, as I’ve seen all these emails come through, it’s all kind of the similar pitch, right? It’s like we buy businesses, we’ll help you cash out. We’ll pay top dollar. But again, the message is kind of similar from a lot of people. So what do you guys do to stand apart from everyone else?

Philipp:    Yeah. I mean, a lot of players are funded. [00:18:00] That’s capital. I think the way you differentiate is in a few ways, one is, and I would put that highly and categorize that under sort of just people, the team. Because it goes from anything from the operational capabilities that you have, the operations team that’s sort of behind then growing the brands once you acquire them. Because I don’t know what you’re seeing Michael, [00:18:30] but most of our deals have a portion of the purchase price comes in the form of an earn out that’s linked to the future growth of the business. So in that case, it is in the seller’s interest to choose a buyer who has a great track record, has a strong team, a credible team, and is in a great position to maximize the growth post acquisition.

Clearly a lot of us, including us are not that old, but they’re [00:19:00] still now with more than a year of history, there’s sort of a track record that you can build. You can point to sort of case studies, what have you done to brands? However, you grow those businesses on Amazon, as well as off Amazon, whether have you been able to achieve. So I think that’s sort of one part of the business. And we do have an operations team, just the operations team alone is close to 200 employees for in our case already. Then, yeah, that’s across marketing, [00:19:30] supply chain, customer service, content, brand management, all those areas. And then it’s also the technology that you build, basically your capabilities to grow. What can you do with the businesses? A little bit similar to why an investor would invest in SellerX or in any aggregator. What do they look for? They look for sort of the strongest team that can execute and can achieve sort of growth of [00:20:00] the businesses that you buy.

And that’s really what we focus on. We see this as a consumer business, and that’s sort of the DNA of our company, is that operations matter. Technology to building great brands and businesses. That’s what we focus on. That’s sort of the DNA of the business. We don’t take the so finance approach that just buy up lots of businesses and then we figure out what to do with them. We really see this fundamentally as a consumer business. And [00:20:30] then I think it’s the reputation and that I mentioned and the credibility, the ability to run smooth, fair, transparent processes and get them to conclusion because that’s also what the sellers then rely on. Once you sign an LOI and in exclusivity and do your due diligence, the seller wants to get that done quickly. And also doesn’t want to deal with a buyer who renegotiates last [00:21:00] minute, drags things out. It’s just a pain in the ass to deal with. Yeah, it’s always a little bit painful. I mean, there’s no due diligence that’s just done like that.

Michael:    It’s always going to be a painful process.

Philipp:    It’s always a painful process.

Michael:    No one ever looks forward to their proctology exam.

Philipp:    Exactly. But you can make it less painful as a buyer. And I think a lot of that comes also with experience prior to, I mentioned prior to starting selects I have acquired more than a hundred smaller businesses. There’s a lot [00:21:30] you can learn that you do learn from doing a lot of these deals. And you figure out a way to streamline those processes, to make them a little bit less painful. And you also, most importantly, really focus on what matters. There’s lots of things you also diligence, but there’s several things that really matter. And let’s focus on that.

Michael:    That is one of the great things about an FBA business is it is definitely a lot easier due diligence than a non-Amazon business [00:22:00] or just other businesses in general. I mean, you get access to the Amazon account. The data is impossible to fib and then it just really comes down to making sure you understand what cogs are and any other expenses. But most of these businesses run relatively simply. I mean, it’s not overly complicated business. And that’s when I get right things where you’re kind of talking about Amazon makes it so easy, because you don’t have a warehouse, you don’t have employees doing pick, pack and ship and doing all the other expenses that [00:22:30] you can kind of start to sweep some things under the rug or kind of make the puddle of poop look like a rose a little bit more. It’s kind of hard to do that in the world of pure Amazon FBA.

Philipp:    True. Very true. Absolutely.

Michael:    So I’m sure. I mean, I’m just taking a guesser that every deal is a little bit customized in some way. I mean, I think in order to get things closed, there’s always, you got a little give and take here and there or whatever [00:23:00] it might be, but what what’s like the basic framework that you guys use? Someone who’s looking to sell their business, you mentioned there’s an earn out component. How do you guys structure again at a top level? What is kind of the going multiple? What’s the blend between earn out to cash out. How do you guys handle paying the inventory component? And again, the basic framework before you start negotiating, what does that look like?

Philipp:    Yeah, [00:23:30] we try and keep things pretty simple. That’s basically three components. One is, and we value the businesses think, which is sort of commonplace in this space based on sort of the STE multiple last 12 months, typically. And you put a multiple on that and then a portion of that, the biggest portion that comes is paid up front. I think that’s what a lot of sellers want to see [00:24:00] it take. A lot of them, not all of them, but want to take the chips off the table and get the purchase price up front. We add the inventory at cost. We pay one for one for that, unless it’s sort of inventory that’s crazy sort of aged and just been sitting in the warehouse for like three years and no one would buy it, but generally pay for the inventory one for one.

[00:24:30] The biggest portion is upfront. And then there’s a small portion that’s deferred by a year, sometimes six months, six to 12 months where that’s linked to it, just revenues not declining. We don’t want the business to sort of fall off the cliff, something really bad happens that we missed. So that’s a little bit of protection, very much. We have a bar. We expect to pay that in every single situation and [00:25:00] there’s not one business that we have acquired where I do not expect us to pay that. And then the third is an earn out that’s linked to growth, which is a percentage of the future contribution margin that’s generated by the business, post acquisition.

Michael:    And is that perpetual or is that how about a finite amount of time on the earn out part?

Philipp:    That comes down to negotiation. It could be anywhere for one to two, typically one to two years.

Michael:    Got you. Okay. And you said the bulk of the cash up front, I mean, what [00:25:30] is it? 80-20, 90-10? I mean, what’s the typical?

Philipp:    Around 80-20.

Michael:    Yeah. That’s usually what I kind of been hearing a lot. And then on the inventory component part of it, you said you pay one for one, is that typically right at deal closing or is that paid off over time? How does the inventory-

Philipp:    Typically pay that right at deal closing.

Michael:    Got it. Okay. Excellent.

Philipp:    I guess you’re bringing me some up ideas that maybe we shouldn’t do that, but no, we do that always right at closing for the entire…

Michael:    I’ve seen things get [00:26:00] creative. I mean, I think that again, everything’s kind of give and take. I mean, if you, sometimes people are looking for a higher multiple, for instance or maybe they are looking for more cash upfront or a larger long term equity piece or some other thing that’s important to them. And then maybe they’re willing to take a note on the… For us personally. I mean, I can just tell you for the last deal that we did. We did a note on the inventory and got paid for that over the next 12 months. But I think that helped kind of get the deal closed [00:26:30] and helped with some other stuff. We also got some interest on that, which I was happy to to get. So, I mean, everyone’s in a different position.

Some people just want the cash and want to go buy a boat or something or whatever. And for me, it wasn’t just about getting the cash. But I was looking to… Immediately knew I was going to try to invest the money in something. And I understand with a lot of buyers that the inventories is an expensive component. You then have to go buy more inventory to make sure that you don’t run out of stock. And so it’s another cash. [00:27:00] And they just happen to be the people we were working with, they were looking to just kind of keep their cashflow in check as well. And it was a win-win for everyone.

And so it was just something that kind of came up afterwards. I just was kind of curious what the standard operating procedure for you guys was. And again, I think that’s why I said, I think a lot of it’s probably there is no exact deal, right? I mean, I think every deal’s a little bit different, because it depends on the buyer and what they have, and what their business is and how strong it is and [00:27:30] how much leverage they have, et cetera, et cetera.

Philipp:    Yeah. No, absolutely. And that’s what we’ve also explored again, is to sort of continue to be creative, is to have sellers roll some of the shares and their business in post acquisition into their business where they sell that at a later point and potentially even rolled some of that into the combined [inaudible 00:27:56], into selects and have a piece [00:28:00] in the buyer and benefit from sort of the continued growth. That’s typically, we would do that in situations where also the seller is keen to stay on board beyond sort of its transition period, and really wants to take a more active role in the business going forward.

Michael:    Yeah. And I think that that’s got to be one of the hardest things for aggregators that just do a complete buyout and the owner just disappears. I mean, trying to find the talent to run these businesses post acquisition, [00:28:30] that’s what kind of gives me a headache thinking about from your guys’ position having to do that. I mean, it’s really hard to… You think about the number of people in the world that are entrepreneurs that can run these types of businesses and have the criteria that you got to be a little bit crazy. You got to be able to not be risk averse. You got to be able to juggle multiple balls and you’re innovative in some way and made these products. And these are just traits that are hard to find and you [00:29:00] lose that. I mean, it’s like that person just disappears. How do you continue to run that business at that same excellence level?

I mean, we just purchased another business ourselves and it’s hard to imagine you having 10 of these under our roof and trying to replace, every time replace the old CEO. That’s the part I would say would be the most difficult.

Philipp:    Yeah. I mean, we have an onboarding team that basically manages the transition [00:29:30] and over the first 90 days, post acquisition, and then it sort of gets transitioned to our brand management team. But the good thing about sort of building up a structure is yes, there’s sort of a brand owner and you need to find great people who basically own the brand, run the brand, are responsible for the P and L and cashflow of a brand. But then you can leverage, that person can leverage sort of our entire infrastructure that we’re building. [00:30:00] Whether it’s a content team, supply chain team, demand planning, supply planning, marketing, content, customer service, all these things that can sort of leverage.

And there’s a lot of expertise that gets built within the team that each sort of brand owner can tap into to, to maximize the performance for the brand. But yeah, you need great people and they’re always hard to find. And so a big part of what we do also, what I spend a lot of my [00:30:30] time on personally is recruiting, is finding great people to join and help us on this journey.

Michael:    Makes sense. Yeah. Definitely, and it’s I think harder than ever trying to find these people. I think the employment market’s just nuts right now-

Philipp:    True.

Michael:    … It’s kind of an interesting time in the world.

Philipp:    Yes, it is.

Michael:    Just a couple quick things that wrap up here. I want to be respectful of your time, we’re already getting kind of close to being overtime here. But I’m [00:31:00] interested in what the end game is for you guys. I’ve gotten a lot of interesting responses from going public to taking the whole thing and reselling it to a roll up and kind of doing multiple arbitrage. I’ve gotten in responses of… We plan on keeping this long term as just a cash flow generator for investors that looking to get a better return and they can in the market. I mean, what is it that you guys see as the like 3, 5, 10, whatever year plan down [00:31:30] the pike?

Philipp:    Yeah, I mean, for now we’re clearly laser focused on building a great business and growing it and not spending too much time thinking about an exit. Having said that we also are mindful of the fact that we do have investors that have backed SellerX, venture capital investors, growth and private equity investors, who have invested their capital into SellerX also to generate a financial return. And to realize that does require an exit. And the most likely scenario [00:32:00] here is, in my view is an IPO, is going public. Which, once you reach a certain scale is a very sort of feasible path in our view.

Michael:    Yep. So last question I want to ask, and I’m not trying to put you on the spot, or make it uncomfortable in any way. I promise. Just something I’ve been thinking a lot about. When you think about markets cycles, you see this in college textbooks, you see it in practice in real life. [00:32:30] There’s some sort of a cycle that every market goes through and towards the end of the cycle is like, when all the money rushes in, when all the big players come in and the repercussion of that can be good or bad. And I’m still trying to figure out exactly how all this ends for us as sellers, for consumers. At some point, I’m sure there’ll be three to five, eight to 10, whatever aggregator is kind of standing [00:33:00] on the top of the mountain as the big boys that have acquired the most businesses and become a multibillion dollar aggregator and have a lot of brands under their roof.

How do you see it playing out in terms of, how this works out for small sellers? I mean, it feels great right now, right? It’s a great sellers market and all of us are, I think in a great position to sell our businesses because there’s just so many more buyers than the other way around. [00:33:30] But at some point, just like, I can’t, and again, I don’t know the answer, I’m just still trying to figure out, I’m just curious from your point of view what the repercussions of all this are? One? Two? Maybe three years down the line?

Philipp:    Yeah. It’s a great question. I mean, I had sort of a great answer here, but this is sort of how I see this and similar to what you said. I mean, I do expect… It’s a huge market, so there’s going to be more than a handful of successful players, aggregators that will have [00:34:00] a great portfolio of brands under their roof, but it’s not necessarily just those that acquire the most businesses. I think what will be more and more important is, and it’s sort of stating the obvious is the quality of the assets. And this is something I think right now you’ll see most sellers, I think can find a home. And I think that will change and buyers will become more disciplined. You will see [00:34:30] some aggregators acquiring businesses that are not continuing to grow.

And if you also, we’ve seen some portfolios where you start the early signs of a consolidation, there’s some portfolios that have hit the market. And there’s some that are great portfolios, but there’s others where half of the brands have been declining for the last six to 12 months. And it’s of a very competitive market. Margins are compressing [00:35:00] and it’s a tough situation to be in. So I think from a seller’s perspective, as long as you focus on having great products, building great products and brands that also maybe bit differentiated, I think there would always be capital. There would always be an exit opportunity for those sellers. I do think though that at some businesses that are sort of maybe hyped just by Corona, as [00:35:30] we would all hope is sort of a one off event and have sort of rode that wave and don’t have a fundamentally solid sort product and not a great sort of business. I think it’ll be harder for them.

But anyone who launches great products, grows them, gets them to a certain scale, shouldn’t worry in my view. There would always be capital, even if so, I completely agree. There’s got to be a cycle. [00:36:00] That’s one thing that everyone knows for sure is that there is a cycle, no one predicts of the timing, and I’m not going to make any predictions here, but it’s not going to continue forever. That’s for sure. History has taught us that, but how long it will continue like that, who knows? But one thing that I do know is that there will be successful players coming out of this. Those will be those that are disciplined, have selected great assets and have the capabilities to grow those businesses. I think the operations, [00:36:30] that’s what it comes down to. And then sellers that build, have great products that they sell on Amazon in other marketplaces or through Shopify, et cetera. There will always be exit opportunities. There will always be those sort of buyers and others that will gladly acquire those businesses.

Michael:    Yeah, absolutely. Great insight. Appreciate you letting me put you on the spot a little bit there for that one. Can’t thank you enough for coming and doing this. People are listening and are interested [00:37:00] in potentially selling their business to you guys. What’s the best way to get ahold of you and or SellerX?

Philipp:    Yeah, no, I think we would love to hear from anyone. Best way to get ahold of me is just to email me directly. Always love to hear from sellers or anyone else in this ecosystem, email address is philipp@sellerx.com. It’s P-H-I-L-I-P-P at sellerx.com. Great talking to you, Michael. Really appreciate it.

Michael:    Definitely. Thank you so much, man. I appreciate [00:37:30] it.

Philipp:    Bye bye.