Joshua Chin 11:23
a lot more control.
Adrian Johnston 11:26
Yeah, certainly, certainly a lot more control. But there’s also a lot more ability just to direct what you’re doing in any direction you want. And that’s, that’s not only true for the co founders, but also really, I hope for everybody owner brands, you know, if if people have an idea, they can really just pick it up and run with it. And I can give you lots of different examples of people who’ve done that, I mean, the guy who built our inventory management model, you know, just built this, you know, model from scratch with, with really, it’s a really incredible model that is now used in every one of our brands across the whole portfolio. So So yeah, you know, other people have opened offices in different countries, other people have, you know, formed relationships with various different suppliers, people, people really do, you know, take the, their roles in whichever direction they want to.
Joshua Chin 12:23
You grew the business from zero employees to over 150 closing in on 200. Now, and you’ve raised over 55 million in in funding, and raising more I presume, at that speed that you’re that you’re operating at. My from my point of view, things change so quickly, that you have to be on top of knowing what’s most important, and what’s going to move the needle the most in your position. How do you make a decision around what to focus on versus what to focus on tomorrow?
Adrian Johnston 13:10
Wow, that’s really great. That’s a really great question. One of the thing that I that I found that happening after about six months in the organization, I found that my day was just absolutely backed about wall to wall meetings from Hope I stay in the morning, till 9pm at night. And then after 9pm, I’d finally get some time to actually do my own all the work that I needed to do kind of solitary work. And those meetings were just literally literally back to back without a single break for that whole time period. And I sort of sat down at six months. And I said to myself, like, Is this really the most efficient and productive way to spend my time. And I and I became ruthless with my calendar, in cut in removing meetings. And what I did was I actually blocked out two hour period at the start of every day. So between numbers nine and half past 11, every morning, I block out a two hour time period, where I give myself space to do exactly what you’re asking, which is to really focus on the key important decisions that need to be made that day and the important tasks that needs to get completed. Because otherwise it’s very easy to get to get distracted by a whole bunch of other stuff. And in terms of actually deciding what you know, what is most important Well, I mean, there’s a lot of like, firefighting that happens, but sure which which way you can kind of triage what’s most important, but on a more strategic level. You know, there are certain milestones and certain goals that we have as an organization and I say to people when they join And we have these various targets. And I say to people, you know, if what you’re working on doesn’t somehow directly or indirectly contribute to this target, then stop doing it immediately and do something else. Because everything we’re doing at this point, should be laser focused on achieving these goals.
Joshua Chin 15:18
So it sounds like you’re giving up on a lot of things kind of midway, because you realize that, yeah, that’s not going to move the needle, that’s not going to impact anything. I’ve invested this much time into this thing, but that’s okay. That seems like something that’s really hard to kind of overcome psychologically, because of I mean, sunk cost fallacy aside, it’s still an emotional investment in something that you’ve done for maybe X amount of hours X amount of time. How do you overcome that? And is that do you think that’s a part of just who you are, and being able to make those decisions on the fly?
Adrian Johnston 15:53
I think it is part of who I am. Yeah, I’m not a perfectionist. I tried to be rigorous. And I tried to make sure that things are correct. But I’m also definitely like an 8020 type person. And I think that is quite helpful in a startup. Because really, nothing can be perfect in a startup, everything needs to move at 500 miles an hour. So. So I think that is that is a person, I think we’re probably something that I’ve worked on in this environment as well.
Joshua Chin 16:23
What What was it like for you, in terms of what drives you, at the beginning of a career versus what it is today, and you’ve been? Even? Well, you’ve been through a lot, and you’ve succeeded a lot. And for people listening, Adrian graduated in his MBA program as class valedictorian. And you were one of the leading consultants in the BCG group. And it’s, it seems like at every juncture in every phase of your career, you’ve given it 100%. And you left nothing behind. At least from what I’ve what I’ve been able to observe. What what drives you to do? Do that, versus, you know, I’ve done really well, let me just keep continuing doing just just that, versus what you’re trying to do right now even more and bigger things?
Adrian Johnston 16:23
Yeah, that’s a really great question. I think, I think what drove me at the start of my career was I felt like I needed to get some good sort of credentials under my belt in terms of you know, have, and I would recommend this to a lot of people like to haven’t getting a good solid foundation and a good corporate benefit experience, so that you get the basics of, you know, if you come out of the three years out of Deloitte or whatever, you know, people know that you’ve had a certain amount of training, they know that you, you know, a comp going to be comfortable with it with Excel and PowerPoint. And, you know, they just know that not gonna have to worry about the fundamentals, which at which I definitely would recommend to getting, I think, I think later in my career, like, so now I’m motivated by doing things that I find super interesting and super fascinating. And I find this business model and ecommerce super fascinating and interesting. One thing that’s that’s not on my it’s not, that I don’t necessarily talk about so much is that I actually spent the first three years of my career working as a high school math teacher, we have a program in the UK called the Teach First program, which is where you spend two years after university working in what they call a school in challenging circumstances, you know, straight in at the deep end as a teacher, and then after the two years, you can either carry on teaching, or if you want to, then there’s the route to go into kind of a corporate world. And so I actually decided to stay on. So in my third year, after, you know, after I left university, I decided two years in one school, and then I decided to set up a new school with a group of other teachers, which was based on a new philosophy of education, which was very successful in the US, but hadn’t really been tried in the UK. And so we brought this method of teaching was called the KIPP program, the knowledge is power bearing and we brought this program to the UK. And, and it was actually very successful in the UK as well. The school went on to become one of the highest performing state schools in the country. I think, I think, to answer your question of like, what drives me to work harder things is, you know, in that instance with the school, if the school is a success, then kids who come from difficult backgrounds get really good education and go into great universities have great life chances. For me that’s super motivating. And, yeah, and now within Una Brands Like if we do a really great job, we build products that people love. And again, I find that a motivating thought, to me, there always has to be a why again, so it has to be something deeper. What motivates you to where you are? Because because you’ve had incredible success with the with your guys business?
Joshua Chin 20:22
Oh, that’s a good question. At the at the beginning, it was just, and this is my first job again, like I mentioned before we hit a record. So we don’t have a lot of experience that we can back ourselves, too. So a lot of the learning that we have had, has been true conversations like like, like these. And that’s why Yeah, that’s what makes these interviews so much fun for me. And also the people that we’ve met, it appears of the friends who have made along the way competitors that we’ve learned from peers in this incredible industry. The, the there’s a, I read this somewhere, where if you’re looking for if you’re looking to learn, and to be a part of an industry, where everyone helps everyone, where it’s not like a zero sum game, look for the fastest growing industry and be there typically, that’s where you find people. That’s why ecommerce, yeah, and it’s a great place for me to start with a lot of experience because people are willing to kind of help you out. And over time, we’ve kind of build a decent reputation name for ourselves, we’ve done really good work, generated amazing results for clients, and build amazing relationships,
Adrian Johnston 21:46
people listening to this, you know that the results of these guys get is truly remarkable. So I can vouch for that.
Joshua Chin 21:53
Thank you. Thank you. And now it’s about building meaningful relationships through meaningful work. And I think that that’s a It’s a phrase borrowed from Ray Dalio and his book Principles. And that has shaped a lot of what we pursue and what we do. But But even then, I’m still kind of questioning the whole purpose thing as well. It’s an ongoing journey, I presume. So that’s why I love asking these questions. Because no one really has a, like an absolute answer that I want to change the world no one ever says that, like no one in you know, the positions that you’re in, ever say that because they they’re, they know that there’s a tiny part of the world that they can impact and change. And that takes time to really make a massive dent in the world. So So yeah, that’s where I’m at right now. But it’s absolutely a journey. And a good friend and mentor of mine looks at entrepreneurship as a spiritual journey. More than anything. Interesting, prospective, interesting take on entrepreneurship. Yeah, I suppose that’s that’s the case. What about what about the people that you’ve spoken to and met over the past one year? Because you’re you guys have spoken to countless entrepreneurs and founders looking to sell your business and get the hang of the evaluations? What do you see as a common thread of successful entrepreneurs? What separates successful ones for those who are? Maybe not so?
Adrian Johnston 23:34
Do you know what there’s one of my favorite parts of the job actually is every day I get to speak to incredible entrepreneurs who’ve founded these brilliant ecommerce businesses, and, you know, have been really successful. And we have such a wide range of people. So to give you a couple of examples, the first business we bought was from a lady called Kim Adams, based in Melbourne, and she just decided that she wanted to get into ecommerce, so she’s sort of I’m not sure exactly how she has maybe 40 or so. And she and at the age of 40, she just thought, you know, I’m going to become interested in ecommerce. And so she did a course online, started a business and four years later, you know, she’s got a million dollar business and, you know, she’s selling it to Una Brands, she taught herself. Pretty much you know, everything in terms of, you know, dealing with suppliers, you know, supply chain logistics, all of those sorts of things. And she’s super on top of the admin she’s super on top of the, you know, everything around that. We we bought a business from another guy, different end of the spectrum. He was 13 years old when he decided to ecommerce business. We He bought the business from him after being over two years. So when the guy is 15 years old, again, million dollar business, very successful from a 15 year old. Totally remarkable. Yeah. And so, you know, you asked what makes people successful. I think it’s people with tenacity people who just will bite something and not let go, they will just like dig, dig really far deep into some subject matter and really understand, you know, how does PPC marketing work? How does you know how, what is the best way to do product selection? You know, these topics and just really master them. So I think I’d say tenacity is probably the greatest attribute that makes ecommerce founders successful.
Joshua Chin 25:48
What about the cycles of buying and selling? Makes Una Brands successful today? And what do you think it’s it’s time for, for ecommerce brands to consider selling?
Adrian Johnston 26:02
I mean, the ecommerce acquisition market is totally booming at the moment. It is definitely a seller’s market at the moment. So if people are interested in selling, then certainly now is a relatively good time. And, you know, if you have to ask, why is now a good time? I guess there’s a few different factors. One, the the probably the most obvious one is that on the back of the COVID, pam pandemic, there’s a real behavioral shift in the way that people people do their purchasing. And that’s going to be with us. You know, that’s, that’s a pretty permanent shift that we’ve seen, you know, there was a bit of a worry, when all the lockdowns lifted, you know, is is are people going to go, you know, reduce the ecommerce spending, but actually, we haven’t really seen that materialize. And so off the back of that there’s been a whole bunch of investment in the space. And there’s a really great chart that’s produced by market pulse, which is a website. And they and basically, over the past pretty much a year, there’s been $15 billion of capital raised by the institutional markets to invest into ecommerce businesses. And that’s that, as I say, that’s off the back. But the reason why it’s because that’s off the back of revenues people have ever seen. Yeah. And, and so what that’s meant is that the multiples that people are paying are now the highest they’ve ever been. It’s unclear how long that’s going to last for, you know, my view is that I don’t expect that that will hugely decrease per se over the next six months to a year. But I think we probably have seen a flattening out now. So I don’t expect to see them increase hugely, you know, while there is this investment capital in the market that, you know, there are also obviously, macroeconomic headwinds at the moment, particularly, you know, Ukraine and, you know, AI, energy prices and all those things. So, you know, that’s, you know, it’s going to have some effect, but I don’t think we’ll have too much of an effect.
Joshua Chin 28:19
What are some? What are some of the most ideal businesses that that owner brands seek out to acquire?
Adrian Johnston 28:28
Yeah, I mean, an ideal business for us is a business with $5 million of revenue, or 20%, SD profit margin, with more than 80% of their sales coming from online channels, with a strong brand, a private label brand, rather than a reseller. We like businesses with few SKUs. So ideally, less than, you know, the best businesses have less than 20 SKUs. But less than 100 SKUs is great for us. In a category which is fast, growing, defensible, and with a with a unique and patented product, that will be the best business for us. So let me give you an example. We bought a business which makes and this is a super niche random product. They make fish hook protectors, protectors that you put in an inefficient it’s a $1.5 million business. It’s they literally have like five five skews. It’s a patented products 100% of their sales are online. And yeah, so yeah, really great. product. So that’s kind of an ideal business for us.
Joshua Chin 29:42
That’s super interesting. For for an owner, product owner or brand owner looking to sell their business. What should they expect post acquisition? Do they stay on? Do we have the option to leave? What what’s happening
Adrian Johnston 29:59
so So thus, so far, we have only done 100% acquisitions. So we buy 100% of the equity. And that means that we essentially take over full operations of the business where the businesses are large and complex, we typically do ask the founders to stay on. So when I say large, I’m talking about, if you have revenue of greater than, you know, five to $10 million, then we would probably want the founder to agree to stay on, at least for six months to a year where the revenue where the businesses are smaller, so less than $5 million. Typically, there’s there’s no kind of obligation for the founder to stay on. And if we’re buying 100% of the equity, then at that point, the founder will also decide that that’s the point that they want to exit the business as well.
Joshua Chin 30:48
And what kind of what kind of multiple multiples can can people expect? Is there a range that net? Yeah, meaningful?
Adrian Johnston 30:56
Yeah, sure. So so we, so the multiple has been paid in the market at the moment are between 2.5 and 3.5 times the SDE, which is the seller’s discretionary earning. That’s the SDE is generally is a more generous metric than the EBIT. EBIT as typically smaller than SD if you look at the multiples of EBIT, then it’d be in the range of three to five ish around that range.
Joshua Chin 31:25
Gotcha. That makes sense. So for people listening, SDE stands for sellers, discretionary earnings.
Adrian Johnston 31:33
earnings, or some people call it CM3 contribution margin three. And it’s basically equal to the revenue minus the advertising costs minus the cogs minus the fulfillment costs. Literally, that is literally that from beginning to end, the revenue minus the cost minus the advertising minus the fulfillment.
Joshua Chin 31:54
Perfect, perfect. And for people listening, interested to learn more about Una Brands, and potentially explore getting their brands valued and explore what it looks like for an exit, where should they go to? And what’s the best way to connect with you?
Adrian Johnston 32:12
Yeah, sure. I mean, people can people can message me directly if they want to my email address is Adrian@una-brands.com Una-brands is U N A – brands.com. Or they can go onto our website, and they can fill in a contact form. And that will take them to the relevant person as well. But yes, we are very interested, very keen to speak to any sellers. We’ve acquired 30 businesses so far, and we’re looking to acquire many, many more. So if you if you have a business, then then get in contact. If you know somebody has a business, then we offer a very generous referral fee for introduction to those businesses as well. So feel free to refer your friends to us as well.
Joshua Chin 33:00
Perfect. This has been incredible. Thank you for the conversation. I’ve learned a ton and I’m sure our listeners would appreciate it as well.
Adrian Johnston 33:08
No, this has been really fun. Thank you so much for having me.
Outro 33:13
Thanks for listening to the eCommerce Profits Podcast. We’ll see you again next time and be sure to click subscribe to get notified of future episodes.
