Blake Hutchinson 10:51
know, and that’s changed while wildly since then, but I turned up here and essentially was copying what was a tried and true content distribution method, which has become popular again in 2023. So it was a daily newsletter. And yes, it’s funny how
John Corcoran 11:15
that’s kind of come back around again, newsletters are hot again.
Blake Hutchinson 11:18
And so the daily newsletter, which was a copycat of, you know, daily candy thrill list, urban daddy, those types of publications that some people in the US will be more familiar with, was my first business back here. And so all we did was, we had publications in Melbourne, Sydney, and Perth. They’re three of the biggest cities here in Australia. And the whole idea was that instead of going to a website to find out what was new and hot, you got a daily recommendation. Now, by nature of that publication, being about foodie spots, bars and things like that, we started to amass Well, we did amass a really large audience. So we had 100,000 people receiving our newsletter a day, very, very high open rates. But of course, making money from that publication back in 2010, was quite difficult. People weren’t used to sponsoring newsletters. So the short answer to your question, John, is I had to come up with a new concept that utilize the 100,000. Audience. And so we started asking, right, you know, and, and ultimately, we found out that they, they loved specialty food, they were high income earners. And we started to think well, given the, the huge landmass, that geography that is Australia, what if you could amass in one spot and curate at scale? A great selection of very, very high quality providers of specialty food, chocolate makers, winemakers, honey makers, cheese makers, butchers, the list goes on. And that led us to create that that specialty food marketplace and you know, I’ve worked to an extent but to I wouldn’t be sitting here today if it was clearly a rocket ship like success.
John Corcoran 13:09
And you actually we were chatting beforehand. There’s this crazy story about Airbnb. So when they were establishing Airbnb, the founders of Airbnb, in 2008, during the presidential campaign went out, and I’m not making this up, I created a cereal, one of which I think was called Obama O’s. And the other was McCain something it was like, and they went on, they sold these, these boxes of cereal, and it was a way of funding their startup. And you actually did things like that for your startup.
Blake Hutchinson 13:39
Yeah, and it was probably around the same time. Clearly, we’re not as wildly successful as Airbnb, but I think the things that entrepreneurs do to sort of survive most people would think are a little bit silly. And I was telling these stories in San Francisco two weeks ago, to a number of different people and middlee. We’ve had a few beers, but they certainly weren’t laughing. So you know, first thing I did was I created a box of goods and sold it before it existed. So what do I mean by that? Well, we dumbass this 100,000 audience. We were making no money. I was really struggling. I’d moved my Mexican American wife from San Francisco to Australia. And you know, life was life was pretty lean. And so I put up a landing page on on top of our blog, and it was called you taste and so it was a photo of a box. And in that box was really Gourmet Goodies.
John Corcoran 14:41
Now, that hard to find in Australia or Gourmet Goodies is there there are a lot of gourmet providers but
Blake Hutchinson 14:47
all my providers and people love it and I thought that a curated box delivered monthly much like a Birchbox there in the US for cosmetics and makeup and things like That would probably resonate. The problem with my concept, John was it didn’t exist when I sold it. So put up the photo
John Corcoran 15:09
I put up so you didn’t have like providers lined up, you figured you’d go find that afterwards. Okay. All right, had you penciled out whether the economics would make sense?
Blake Hutchinson 15:18
prints it out with the the economics and make sense of in pencil out whether I had the energy to go and pack the number of boxes that I just sold the 24 hours prior, how many did you sell. So we sold 300, within 60 minutes.
John Corcoran 15:33
I hate going to the post office. So that sounds like my own nightmare.
Blake Hutchinson 15:37
Obviously shut things down, and then said to my one and only employer at the time, let’s go shopping. And so of course, we had to go and buy the boxes, we had to go around to all the providers and they didn’t know who we were, they were gonna give it to us for free. And they certainly weren’t giving us discounts. So the first box was a function of driving around 20 different providers, buying as much produce as you could try to negotiate bulk, bulk discounts for those goods, heading back to the office, packing those boxes and then packing your own car. And then around because it happened to be somewhere in Australia, so you don’t want to put perishable goods,
John Corcoran 16:14
I’ll see you go and deliver them to ya. Oh,
Blake Hutchinson 16:17
wow. Um, so that was sample number one. And that was pretty ridiculous. To the extent that you know, it was a good way, though, to keep a roof over our head while we built the marketplace. Because we ended up running that that concept in that business for about 18 months. And we were able to satisfy what our subscribers wanted. And they really enjoyed it. So that was kind of fun. But that
John Corcoran 16:46
was is it profitable, though? So it’s profitable. You have 100,000 email subscribers, you have people buying the box. So at some point, did you decide you just didn’t want to run that kind of business or what happened?
Blake Hutchinson 16:59
We lay it out into the marketplace. So became a became an offering on top of the subscription food marketplace we were providing for all of these providers. So imagine saying, for our marketplace exists, we’ll actually retail our own rocking chair. Yeah,
John Corcoran 17:19
yeah. Okay. what Amazon does, creating their own their own Amazon brand. Yeah.
Blake Hutchinson 17:24
Nest startup press in Australia, at the time was very, very, very difficult to come by, you couldn’t convince a journalist to write about you. They wrote about big boring businesses, and to some extent still do today, here in Australia. So I created a fake PR company. And this is a bit embarrassing to admit, but it was called secret squirrel, PR, and PR, okay. And there was a huge foodie culture in Australia, as I’ve already alluded to. And so I couldn’t get PR for my marketplace, despite having 50 Great vendors on it. I couldn’t get PR for it. So I created this concept, which was a rip off of the patroon PETRONAS dining society secret dining society in the US. And I created this thing called Secret dining society. And the secret dining society could only be purchased on my marketplace. Okay, so I sent this press release to all of the journalists here in Australia, who were food related journalists, not tech startup journalists, okay. And said, Hi, Mr. or Miss journalist, you know, my name is Jude Smith gave myself a fake name, sent them the press release, and started taking phone calls about this secret dining society. They then said, well, we want to photoshoot Of course I couldn’t attend, but I got a top celebrity chef to attend. And that top celebrity chef fronted secret dining society. And all of a sudden, we had all of this traffic coming to our marketplace to purchase secret dining society, but of course, we had all around that our vendors and as a function of that I got some press for the company. I won a lot of customers to the to the actual marketplace, but I could never reveal myself at these great dinner parties because of course, who I said I was wasn’t actually who I was, but sometimes John you’ll do whatever it takes and I’m not sure I’m not proud of those examples, but ultimately it got us got got me a little bit further along.
John Corcoran 19:29
Gotta do what you got to do to survive. Yeah, well, I want to flash forward a bit to luxury escapes and then eventually to Flippa. So luxury escapes. Talk a little bit about what that business was kind of a a high end luxury business luxury travel business.
Blake Hutchinson 19:47
Yeah. So I think you know, you’re very much a relationships guy and you understand the benefit of and the power of those relationships. There was one potential acquired Ira of mine I business, that potential acquirer happened to be the founder of luxury escapes. And so his his business, which at the time was called Ozzie commerce, which was a network of E commerce businesses, was interested in acquiring a business. Ultimately, I waved the white flag said, I can’t do this anymore. It’s been a really, really tough six years. And I went to work for one of the fastest growing cloud accounting, SAS businesses called zero. But I kept in touch with that individual. And so over the growth of his business, in particular, luxury escapes, we got talking. And he said, I’ve got lots of businesses, this is my biggest and best performing, would you consider coming in running that for me? So that’s what I did. So it was an online travel agency. And it was essentially flash sales for luxury travel. And it still exists today. It’s absolutely killing it does a billion dollars in transaction value. And you know, when I took that over, we were doing really well, we took that to around 350 is the fastest growing company, not even the first strike travel company, fastest growing company in Australia at that stage, and a wonderful learning experience of the power of high transaction value businesses,
John Corcoran 21:22
rather than these specialty food, inexpensive, little jar honey type things. Yeah,
Blake Hutchinson 21:28
the power of community because the word of mouth when someone went on a luxury escape was just so extraordinarily and infinitely powerful for us as a company. And Frank, frankly, despite the the attractiveness of tech, the power of sales. And so that business still today, is is so extraordinarily dependent on a relationships driven sales team. And that sales team has some of the most revered relationships around the world with some of the biggest hotel brands and best hotels, from far flung locations like Alice Springs all the way through to the Maldives. So that business works really well. And I was proud to have had a part in its history.
John Corcoran 22:16
Well, so given that Flippa historically didn’t have a sales team, and didn’t spend money on marketing, and didn’t have those relationships, and yet was still already quite successful, I can see why they would bring you in then given that you’d run that with luxury escapes, they wanted to add that to their portfolio, that was probably the next level of growth opportunity for them. Before we get into that, though, tell a little bit of background about the history about Flippa has been around for 13 years. How did it come about?
Blake Hutchinson 22:48
So origin stories are really interesting. And we talk about the cold start problem in marketplaces a lot. Flippa was benefited because it came out of a developer forum and community development forum and communities still around today. It’s called SitePoint. So sitepoint.com, which people can go and check out spun out to businesses, business number one was 99designs, we alluded to that before. So 99designs was, of course, for designing logos, landing pages, anything design related. And that was founded, if I remember correctly, probably in 2007. And of course, Flippa then came after that. So what they recognized was that there was a large community of people exchanging assets by design, or in our case, websites and apps. So that’s the origin story. And that was smart enough to realize that there was more value in the brands spitting them out, standalone, then there was trying to run them all as part of SitePoint as a as essentially service offerings. So that was the beginnings of Flippa, it’s a really cool story in the sense that bootstrapped profitable Australian run Bob with a global customer base from day one without a single sales rep and certainly not $1 spent on marketing. And so you know, that was probably a little bit easier back still a wonderful story, of course, but probably a little bit easier back then just because competition was was just not as intensive as it is now. But regardless, that was very attractive to me. Because I recognize that if you could add a strong reputation management layer to the business, if you could improve the marketplaces integrity by adding a managed part of the marketplace, and managed marketplaces, of course, a very common today, things like open door, things like Uber things like Airbnb to an extent. My sense was that you could scale this and Not only scale up, but you could actually move up the value chain and go from very, very low transaction values to very, very high transaction values. So we applied that theory, yes, we put a sales team in the US. And we started to build relationships on the ground. And in addition to that, we approached our marketing from the perspective of two things. One was community. And second one was owned media. So community was is a function of being on the ground regularly meeting, your customer base, much like Yelp did in the early days, much like enterprise sales does with their, their fancy dinners, where they look to woo, bigger enterprise customers, where we’re doing that with a community of online business owners and entrepreneurs. And the sales piece, of course, is really interesting because much like say, Zillow, people are as obsessed with understanding the value of their online businesses as much as they are their homes and condos, apartments. you orientate your sales team is in providing that value. It’s worked really, really well for us and is still the cornerstone about our growth, our growth flywheel that we have architected, and we’re really proud of that. How did you
John Corcoran 26:15
figure out what services to start offering from more of a self service model to now I’m looking at your website, and I see you have Flippa due diligence, you flip a legal you flip a private flip a broker, you’ve got financing, you’ve got all these different offerings? How did you figure out what you would offer?
Blake Hutchinson 26:31
So back back then, and we’re talking about five years ago, now we had to figure out which side of the marketplace we’re actually serving. And so we decided by nature of taking listing fees off people and, and contingency based success based off people when something sold, that clearly the paying customer was the seller, the business owner, the entrepreneur. And so as a function of that, that’s where you are in tight, your initial focus. And then you look at what the pain point is for those customers. And the pain point was, well, I’ve built an asset up and running that business now for three to five years, but I don’t know what it’s worth. And so we noticed that a lot of people were inquiring about valuations, but we didn’t have a product. And so the first product that we built was a function of parsing all of our historical data into a model, and coming up with a fairly rudimentary algorithm, which is now very sophisticated, to ascertain the value of someone’s asset based on multiple different variables, age domain authority, revenue, expenses, platform that they operate on. And, of course, you know, lots of usual elements around how you value a business. Now, that proved to be really successful to the point that, you know, we went from having a three week turnaround time, to a valuation to a 32nd turnaround time, because we had the data that we were sitting on. So that was really pivotal. Because now we were sitting on three to 5000 valuations a month. And that you can build a sales function, you’ve got leads, you can score those leads, you can organize those leads by geography and business model, you can train staff on those business models. And that’s still today, the biggest lever that we can pull, it’s where we win our customer base.
John Corcoran 28:32
Yeah, yeah, that makes total sense. I want to ask you about how the pandemic, two years into your time at Flippa, how that affected things. But before I do, were you the first SEO professional SEO brought in after Mark and Matha. Okay, what was that like coming in as the first CEO from a founder led business? Because that’s, I know, that’s not easy.
Blake Hutchinson 28:53
So they certainly had jams and things like that. I mean, the good thing about Mark and Matt is, they’re extraordinarily good marketplace, entrepreneurs, but they recognize that they are zero to one guys. So they’ve pretty good at the hustle. They’re very good at ideation and early stage execution. And I’ve got a history of working for founders. So luxurious types, I was running that business on behalf of the founder. At zero, I had very, very close ties in a working relationship with the founder at nylgut. In San Francisco, I was reporting to both founders. So you develop a bit of an understanding of founder DNA, different personality types and the extreme eccentricities of different founders. And so I think for them, it was a bit of a safe landing because they had a history of understanding that hack parcel growth at any cost, I wouldn’t say growth at any cost, growth growth endeavor that those types of entrepreneurs will come at a problem with. So that was good. I mean, what I needed to do was live their vision. And their vision is to democratize the exit, to enable business ownership for everyone to build the investment bank for the 99%. And enable people to transact with each other celebrating the endeavors of those that have come before with what those that are coming next want to achieve. And I bought into that funny story, John, I sold my own business on Flippa. So when I was contacted about the opportunity, they were quite discreet. In mentioning who that company was, well, it’s very obvious to me that the company
John Corcoran 30:52
could figure it out.
Blake Hutchinson 30:55
So I think that helped them a little bit, knowing that, you know, I understood the use case, I empathize with the customer journey. And ultimately, I bought into the vision. So that was actually wonderful.
John Corcoran 31:09
Yeah, yeah, definitely having been a customer. And then tell me about March 2020. What was that like for you? At that point, you know, you’re a couple of years into implementing these new ideas. And then the pandemic shuts everything down.
Blake Hutchinson 31:25
It was a bit of a nightmare. We just built our first us. Team, but I hadn’t met them. And I was due to fly over there. If I remember correctly, this is November 2019. Yeah. And, you know, I was saying, Well, no, I’m gonna get on this plane. And the board was like, No, I don’t think you are getting on this plane. Because of course, we thought it was pretty short term. And we didn’t know what to expect. I mean, long story short, Flippa has not yet been impacted by the pandemic, but we will be and positively. So what do I mean by that? The average age of a business that sells on Flippa is four and a half years old. So I didn’t get the peaks and troughs that many businesses got. And but I expect a spike in one to two years time. Because as all of these businesses have matured, and more and more people seek out side hustles financial security, financial freedom, as they use the platform economy, which is more prolific than ever before, Shopify, Amazon, Google, the iOS and Android ecosystems, I would imagine that Flippa very well positioned to capitalize on all of the entrepreneurs that have been in all the entrepreneurs that will come as a functional shifting mindset.
John Corcoran 33:03
Now, it’s interesting. So you’re, you’re viewing it as are, the influx will probably come, you know, four to five years in after this influx of people who started businesses. Yeah. Yeah. We’re almost out of time. But I want to ask about what are you excited about in the role with Flippa? Now looking forward to the future.
Blake Hutchinson 33:25
So we’re building some, some really, really great products, which make, you know, micro m&a possible for more people. And one of the challenges right now is, of course, you’ve got fewer assets, and so many buyers. And so there is a paradox of choice going on when a seller lists on Flippa, on average, they’re getting 150 inquiries, that’s a lot. Yeah, there’s a lot you’ve got to do. A great deal to help that business owner understand the right buyer, and, and adequately match them. So it’ll sound a bit funny, but for simplicity of of explanation is like Tinder for buying a business, we’ve essentially architected it’s real AI, it’s learning on the fly, it’s to graph neural networks sitting on top of our business owner, database, and our buyer database. And it’s looking at hidden and latent and hidden intent to ask a time when someone would be a good match. And as a function of that, we’ve essentially answered that question Who would buy my business? And the question that so many business owners ask us, and so now as a business owner, a broker or an advisor, you can log into the Flippa. And once you’ve connected all of your data sets, because we connect to Shopify and Stripe and PayPal and Amazon and all those different things, the matching engine goes to work, and it spins up In front of you, those buyers that are most likely to want to buy your business. And then from your keyboard, you can pick and choose who you would like to invite to consider your deal. And so that takes away the necessity and need to have a public marketplace. In fact, what you can do is move to more of a private marketplace environment,
John Corcoran 35:21
which is good for a lot of sellers who want to have that
Blake Hutchinson 35:24
where someone lists of any price point, and Flippa will serve up, excuse me, Flippa will serve up the most relevant buyer portfolio. So we’ve been working really hard on that. And in fact, yesterday was the first day we sort of attempted that at scale. So there were almost 15,000 matches and invites issued yesterday. And it was quite extraordinary, extraordinary to watch this play out. The rates on the emails was 70%, click through rates were very, very high and and ultimate number of discussions created as a function of those invites was at 6%. So you’re talking about 6% of all of your invites, resulted in a new discussion for a prospective business owner or prospective buyer to business owner. So we’re really excited about some of those initiatives. And we’ll continue to build on that so that it makes just so much easier for buyers and sellers to do business together.
John Corcoran 36:24
Yeah, I think that’s a great idea. Because, you know, I’ve recorded podcast interviews before where we talked about that my company raised 25, we are this year going to be set as a goal to do our first acquisition. And even though I’m a lawyer by training, and background, it’s an you know, it’s an overwhelming process, Alan, learning about educating yourself and then sifting through all the different opportunities out there. And I just remembered something this morning, I send an email to this, this brokerage firm that has four or five different reps who are sending me and my business partner emails, every time a new opportunity comes along, we get four or five different emails asking us to opt into an NDA. And then we just have to send these follow up emails, and then there’s like five or six conversations happening. It’s an absolute mess. So I think I’m your use case is someone who’s looking for better matching engines. So that’s really cool that you guys are building that. Yeah, I
Blake Hutchinson 37:20
mean, look, this is this is complex, right? You’re talking about an emotional decision for the business owner, and you’re talking about a high a very high value transaction for the buyer. So you’ve got to get this stuff right up front, because the relationship you can build between the two parties upfront, is actually pivotable. pivotal to getting a deal done downstream. Yeah, absolutely.
John Corcoran 37:41
Yeah. I forgot to warn you beforehand that I like to ask this final question, but I’m going to ask it anyways. And I’ll just preface it by saying that I’m a big fan of gratitude. I’m a big fan of expressing gratitude to people who’ve helped you along the way. And while a lot of people people will mention, you know, their family or friends or their team, what I’m really like to hear people talk about is their peers and contemporaries. Maybe colleagues, maybe a founder of one of these businesses that that you came in and you ran, who would you publicly want to just acknowledge and thank for helping you in your journey. Like,
Blake Hutchinson 38:22
you want to think there’s a couple of people for sure. I mean, the founders of Flippa are extraordinarily positive in their outlook for this company, regardless of the peaks and troughs that all startups go through. So a very, very big shout out to them. Because when you join a company, you know, those relationships are going to be absolutely critical, and they’ve been steadfast in their support. Secondly, I would, I would thank our, our people and culture head. So her name is Rebecca O’Connell. And she is very much a silent achiever behind the scenes ensuring that not only do we have the fun perks and benefits that all of your staff one, but that I am given the support, I need to be the best possible leader I can be while she takes care of some of the really, really critical people and culture initiatives, and in many cases, issues. She just handles those so seamlessly, and I’m very thankful for that. That’s great.
John Corcoran 39:29
Like this has been a pleasure. Where can people go to learn more about you? And Flippa? Yeah, LinkedIn
Blake Hutchinson 39:35
is my thing to get me there. Blake Hutchinson, I’m sure you can find me. Otherwise, obviously, we’d love to help any business owner or buyer out so feel free to give me an email to on a [email protected].
John Corcoran 39:46
And also you guys are doing these local meetups in different cities around the United States around the world. Where can people get more information about those?
Blake Hutchinson 39:55
Yeah, so we we do meetups all over the world and you can also request where you would like to meet Up to happen. So the best way to find out about those is literally to type in exit meetups Flippa, exit meetups into Google or you can go to flippa.com/the-exit-meetups, and you’ll see a range of meetups happening all over the world. We’ve got London coming up San Jose coming up, which is down the road from new John. Yeah, we’ve got new Chicago and Phoenix coming up in August, September and November as well.
John Corcoran 40:23
Very cool. Blake. Thanks so much. Thank you, John.
Chad Franzen 40:29
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click Subscribe to get future episodes.