Summary:
In this week’s episode, Coran sits down for a chat with Kevin Graham on his podcast Founder Mindset. During the interview, they discuss a number of topics including how Coran found his passion for buying and selling, of which he's done both, and his goal to get a piece of a billion dollar transaction that he’s been working towards over the last few years.
Contacting Kevin:
Mentioned this episode:
- The FBA Broker
- Founder Mindset Episode 7
- Kevin’s Episode on Truth About Exits
- The Choose Yourself Guide to Wealth by James Altucher
- Rich Dad Poor Dad by Robert Kiyosaki
- I Love Capitalism! by Ken Langone
- Shoe Dog by Phil Knight
- Total Recall by Arnold Schwarzenegger
- The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
- Losing My Virginity by Richard Branson
Transcript:
Great to have you on the show, and it's kind of nice to be in the host seat this time instead of the guest seat. For the listeners who might not know about you and your current business, can you give us a brief rundown on who you are and what your company does today?
Sure. My name's Coran Woodmass, Founder and Managing Partner of The FBA Broker. We are an eCommerce MNA firm, a business brokerage that focuses exclusively on eCommerce and Amazon-based businesses. I'm Australian as well, as you may or may not be able to tell. We've been doing this business since mid 2016.
Right. Before that there were some other ventures. I remember when I first met you, you're working on similar stuff to us with a portfolio of websites that were earning advertising income. Then there was an interim period there where you are actually an FBA seller yourself. Can you tell me a bit more about how you got started in your entrepreneurial journey?
Yeah, sure about six years ago now, I was working in a cubicle in Brisbane, Australia and I was working in digital marketing at the time. I was listening to podcasts while pretending to work and one of our mutual friends, Dan Andrews, had a podcast back then called Lifestyle Business Podcast. I really loved the show and all I was thinking about all day while I was doing my incredibly boring, sometimes interesting job was how to actually travel the world and build a business to support that.
My wife and I had saved up had a decent chunk of cash to set us up. Now our initial plan was to travel the world for a year and see if we liked it and we definitely did. It took me all of two weeks to go from being on holiday for a month minimum, to actually starting my next venture. I started looking at starting building eCommerce businesses through some training courses that were online, while we were midway through our trip through Vietnam. That's where I kind of started. A guy I met at the same hotel I was learning about eComm, was running an eCommerce business in the UK. That just happened to be our next stop. I went and met with him, started consulting on his larger eCommerce business. Also at the same time, I started looking at ways to first off, to stay in the UK longer because I was too old for a work visa. I started looking at business acquisitions and buying and selling businesses, specifically.
At the time, I was looking at brick and mortar businesses in the UK. Through some research, a ton of research, because that's all I was doing, I stumbled across buying online businesses. like I mentioned, affiliate advertising-based websites and I also built an eCommerce business from scratch, which we ended up later selling. We had a buy and build strategy, it was supposed to be buy, build and sell. It was a buy and build strategy and then a build from scratch strategy.
That's pretty much when I first met you, we had that portfolio going we got hit by Google update on a lot of those deals that we'd acquired, so that stung a little bit. But fortunately, we'd built the eCommerce business to a point where we could sell it. All through this time, I just wanted to see more and more deals. I started getting addicted to doing deals and looking at businesses for sale, and finding deals, and understanding how it deals with valued.
So essentially, I started as a broker almost for free, where people would ask me to take a look at a deal they were looking at and buy me lunch or something like that. In the beginning, I was doing it for fun and then I saw a real need in the market for experience in the space and a lot of people were looking to buy online assets. That's basically where I started the brokerage side. I started working for another brokerage for a short time and then saw the buyer demand in Amazon-based businesses because eCommerce, with real physical products, appeals to a wider audience than just an affiliate site.
One of the first deals I worked on actually was acquired by a grandmother in Florida. She was actually first time seller on Amazon, but she was a really sharp business person and she just got it. She loved the product, she also could see how she could sell that direct to her friends, and that's what really opened my eyes to this space being a thing.
Then fast forward three years of being in the FBA space specifically, the market has grown exponentially. we got in at a really good time. I saw the trend, got in front of it. I always expected to be in more verticals by now, but we've been too busy with this one, so it's worked out pretty well.
Yeah, there's a couple of points in your story there that very much tie up with mine as well. Firstly, where you mentioned only being a couple of weeks into this big holiday before you just had this desire to start working on your next business. This is the same thing I've done so many times, as well as that keen interest in that MNA space. Which as we spoke about on your podcast, I did a bunch of acquisitions over the previous 12 months in the web hosting industry, and I really enjoyed nerding out about all those deals that were coming through at that point.
So yeah, definitely a lot of parallels there for sure. So you mentioned that it was 2016 that you started your current company, The FBA Broker. What led you to decide to start the company?
I guess I never really worked well as an employee. I've always kind of done that to get from A to B, not been a career employee. I think you either are or you aren't, an employee. So always wanted to do my own thing, just didn't know what I wanted that business to look like. Initially, I kind of resisted this industry because of freedom to travel, which was really important to me at the time and having to work a lot of hours. In the last two days, I wouldn't even be able to count the amount of hours we've done in the last two days before this call.
It’s a roller coaster. There's high risk, high reward, and a lot of variations. I get to see a ton of new businesses every day, I get to speak to a lot of people with a lot of capital. The budgets we're talking about right now are insane, our buyer-side demand is over a billion dollars last time I calculated all the capital available and it's probably three or four times bigger than that, to be honest. The cash is huge, the business diversity is there, so it's actually a perfect fit for my personality. So that's really why this was a good fit.
Can you explain the business model to our audience, in terms of how your current business, The FBA Broker, makes money?
Yeah, sure. So we deal specifically with eCommerce businesses that are looking to go and sell their business. So that's our wheelhouse and we help clients, from the time they're starting to think about it when they're planning for that perfect exit. But we really make the bulk of our money when we actually sell a deal, when we connect the seller with a buyer. The value add really, and whether the revenue starts, is when we actually engage and we start working with a client, to dig into their business and figure out exactly what it looks like from a buyer's lens, an investor's lens. Then we make the real money when the same time as our clients, when we close that deal.
Got it. what's the fee structure look like on one of those deals?
We have an engagement fee upfront that runs anywhere from $10,000 to $50,000, typically, US. The success fee is based on the size of the transaction. So the larger the deal gets, it does scale down. So we use loosely the modern Lehman fee structure.
Right. So that's based on percentages of the total transaction value?
Correct.
Can you tell me about a point in the business where you started to get initial traction? And what do you attribute that success to?
Actually, this is a great question. I only just thought of this as you re-read this. I was in an airport in the transit in Berlin, and I was having a Facebook conversation in one of the FBA groups and someone had argued that you can't sell an Amazon FBA business. Before getting on a plane, I literally just wrote out my 2 cents on my phone. Thought, "Oh, okay, that's it." I think the plane was delayed, because I checked my phone again, and a guy reached out to me and said, "Oh, you seem to know what you're doing. Any chance we can jump on a call?"
I used a time zone calendar type deal to book a call, because we were flying to Chiang Mai. I got to Chiang Mai, it was about two days later we had to call and I had my first client. While I'd been building some exposure in the space through market data, that was actually my first client, was true to just engaging in conversation. Once that deal was live, it created a lot of buzz around what we were doing, and also a lot of buyer interest immediately. We'd actually built an audience first before launching that deal, which really helped. Then obviously once we closed that deal, the revenue came in. That was a very good sign.
I'd given myself six months, from starting, to do this full-time and figure out if I could make it work. About three months in, I made the decision that, regardless, I was going to keep doing this. Even if I had to take a consulting gig or do something else on the side, I'd still do this business. That's what I did. About six, seven months, I think it went just a little bit longer, I cashed in my first commission, and within the first year, we made well into the six figures in profit.
Nice. Just on that point, niche-specific Facebook groups are a really good way to get started with building a business. When I got started in the hosting industry, it was the same thing. I was very active in the Facebook groups of people that were running private blog networks, and just through answering people's questions and being there, it is a great way to get those contacts and get started with building a business.
Yeah, it's a really easy way to stand out too. If you plant the flag and say, "I just do SEO hosting," or whatever it might be. If you pick a narrow niche to begin with, and you understand that niche, you can start talking to that target audience, and then you can get cut through against competitors that have maybe been around 10 times longer than you or have bigger budgets, bigger audiences, whatever. You can really get to the core of that audience pretty quickly.
Definitely. Moving on from that and into the dark section of the podcast. We both know that business can be really rough at times. Can you tell me about an unexpected crisis that happened in one of your businesses and how you handled it?
Oh, I've never had a crisis. What are you talking about? I'll go with the brokerage, because this has been my entire world for, feels like 10 years now. But, I had an interesting thing happen, and I talk a little bit about, from time to time, time zones and how being in the US is, why we relocated here, is the time zone is the best for the buyers in our space. So that's why we're here.
But actually, I was in Prague, we lived in Prague for a number of years, on and off. I woke up extra early, at the time it was 6:00 AM and I thought, "Wow, I'm up early." But for some reason I get up earlier than that now, but by choice. But for some reason I'd woken up at six, and I just knew there was a deal closing and I wanted to check my email. I checked my email at 6:00 AM Prague time, I saw her an email and I leapt out of bed, and I think I took two steps to get to the next room, and I was on the phone immediately.
The escrow service we'd used for closing this deal had actually had third party check people, compliance people. One of them had read the asset purchase agreement or the deal that we were working on misread that agreement, and had initiated a refund of the entire deal value to the buyer, that day before my time. So when I went to bed at whenever or whenever we did this, maybe 12 hours earlier, we had initiated the close and the payout of the seller and myself. So overnight, the escrow service we were using had reversed the payment and was about to send it back. I had about 20 minutes, from the time I woke up, to stop this.
If I had of slept in, I didn't have an alarm on, mind you. If I had of slept in, that would have been an absolute crisis. I hit the roof, I'm normally very calm most of the time. I was not calm at this point, I got very aggressive. My old project management days came out to play, and I got onto the right person and stopped it. The company didn't actually care, they couldn't care less that they were about to reverse a mid six figure deal.
That was fun, but we got it handled. It was good timing, but I often think what would've happened if that wasn't the case. If the deal had of got a little bit edgy at the end, that would have been different. So what we did to overcome that is we don't use third party escrow services ever again. We actually do what big companies do, we use the attorneys that are already in the deal, they see the contract, they respect contracts. Whether it's the buy side or the sell side attorney, they respect the contract and will release payment. Usually they don't charge for it, which is great.
Sometimes you have something happen and it actually makes your business better. So that one did, not sure if, I don't know, if that had gone the other way, who knows? But there's so many twists and turns like that in business that you can't really focus on what could have happened. It's just, this is what happened and this is where we went from there.
Yeah, this is what happened, this is what we've learned from that, and this is how we're addressing this process differently in the future.
Yeah, absolutely.
With three-ish years into The FBA Broker now, but I know the sort of guy you are, you are always excited and pumped about what's next. If you can just keep it to one thing, what is one thing about your business that gets you excited today? If it's more like 10, then just go for it.
Yeah, I'll keep it to one. I'm really excited about the level of talent that we're attracting to the business right now. We're about to expand, it's been a very small team for a long time. we're about to expand, and I think expanding on the right way. So I'm excited about the level of talent and the caliber of partners that are looking to come into the business. That's what I really wanted, I wanted to build a partnership model, not a employee-employer relationship.
So, it looks like we'll be able to move towards that. I'm really excited about building the team, sharing what we've built as a base and helping more clients get the best result, best deal terms possible, highest values in the industry.
Awesome. Basically the same way law firms are structured, is that right? This new person would be a partner in the organization?
We're bringing in multiple people. I'm switching my focus to, in my downtime, selling people to come into the business. But yeah, very much like a law firm model.
Awesome. Where do you see the future of the business then?
I could see us becoming a niche boutique commerce investment bank, and that's what we're moving towards. What that means to me is opening up to the offering that we can help our clients with. Not just selling a business, maybe it's helping on the acquisition side, maybe it's raising capital, maybe it's going public. I'd like to build a network where we can make that happen for our clients and get them the best result for them, because selling a business outright isn't always the best option. In the US at least you need licensing to deal with any other of those options and also team members that have done that work before.
I know that I'm not experienced in say taking a company public but I can partner with people that have done that before and groups that can make that happen. If that's the best option for one of our clients, I would like to be able to help them do that.
Awesome. We now into the section that we discussed off air as being the Amazon affiliate section of the podcast. What books do you think had the biggest impact on you in deciding to become an entrepreneur?
Oh man, there's so many. I read a lot. One of the favorites actually, and this won't be for everyone, and it was definitely a moment in time book for me, was James Altucher's Choose Yourself Guide to Wealth. I read this book the first year I was in Prague and I was really lost. I had had some success with buying and building the businesses that we were talking about before, the websites and the eCommerce business, and I really felt unfulfilled by that whole process.
Once we had the acquisition, we had the cash coming in, it was day-to-day operations, I was just bored. I didn't like it at all, and I couldn't figure out why. When I got to a goal I thought I wanted, I wasn't happy. This was one of the books, it took a long time to get to this, but once I got into this book, I've read this book probably six or seven times, and a couple of the frameworks that James Altucher steps out, really helped me, and actually ended up with me becoming a broker.
One of the exercises was, he's big on the 10 ideas list, and one of the exercises was to think of the most outrageous, crazy ideas that you can think of and write them down in one to 10. Could be relocate to Mars, it could be ... for me, I wrote down get a piece on a billion transaction. I wrote down a bunch of other stuff. That was the one that just stared back at me. Then he says, "The next step is to pick one or two of them and write what is the first step to go into that?" So you don't go straight to Mars, you break it down into steps. What's the first step to get to that?
I think I've just been working towards that next step for about five years now and it's all because of that book. I've recommended it to a ton of people. Some people didn't like it, some people loved it. But I think if you're really thinking about what do I do next? Or you're unsatisfied with what you think success looked like or should have looked like, and you're looking for the next thing, that may actually be the book to read.
Interesting. I have heard you mention that one goal, a number of times when we've hung out in Berlin, in Chiang Mai, in Austin, this thing of I want to get a piece of a billion dollar transaction. It's interesting to see where that came from and how you're working towards that.
Absolutely.
Were there any other books that had a big impact on you in deciding to become an entrepreneur?
Yeah, there's many. As far as the biggest impact in the last couple of years, I could go to that, because there's a laundry list of them. But in becoming an entrepreneur, I think, actually if I went right back, it was probably something like Rich Dad, Poor Dad, where it was explaining the different quadrants and getting into sales. That was kind of my first step into being an entrepreneur. From there it was more sales books, and realizing that generating revenue means that you could start a business at will and get customers and revenue. So anything sales related is good when it's at the beginning.
Cool. Well, let's move onto the second part of that question then, which was the books that have had the biggest impact on you in the last couple of years, in terms of how you run your business.
The book that had the biggest impact on me in the last couple of years, and who I actually want to be when I grow up, is Ken Langone. He wrote a book called, I Love Capitalism! An American Story. He has a very similar background to me, he started out in investment banking, helping companies raise capital, but really hit his stride once he started helping companies, not only raise capital, but also take a piece of that company and help them grow. He's a founding investment partner in a number of multi-billion dollar companies. Home Depot's probably the most famous of them.
At 76 or something, he still works seven days a week. He gets up, goes to work. Similar to Warren Buffet's quote, he skips to work, loves what he does, and wouldn't have it any other way. I think that if you can find something you're passionate about and that also has, in my opinion, a high reward for time invested, then it's a good thing to do.
Yeah. Moving into that space, whether it's the company or the role within your own company that really fits your personality type, is such an important thing, in terms of really enjoying what you do on a daily basis.
Well, also just to add to the kitty. I love the Amazon affiliate angle. I'll give you a couple more books to add to the list.
Awesome.
Shoe Dog by Phil Knight, the Founder of Nike. Amazing book. Not what I thought it would be at all, but a book that you just can't put down. Arnold Schwarzenegger's story, Total Recall autobiography, that was really good. That was one of the few books I've read that I immediately changed something in my life, and has still changed two years later. So yeah, one of my friends in Prague actually has a stack of those books and he gives them out to people, that particular book, Total Recall. So yeah, highly recommend that one.
The Snowball, the closest thing we'll ever get to an autobiography by Warren Buffet. That was a really good book, understanding what it takes to achieve that level of success. I like anything by Richard Branson, but I don't really feel like it sticks, I feel like it's just interesting to read. You know, they're probably the main ones that I can think of off the top of my head.
Well, so to wrap this one up, how can people reach out and get in touch?
The best way is probably TheFBABroker.com. You can go there, and we've got a lot of market data on this eCommerce Amazon space. You can register if you're interested in buying a business there as well, and we'll send you absolutely everything that we find each week, not just what we're pitching. So that's a good resource. Something I've been working on, and you've been on the show too, is Truth About Exits. It's a podcast dedicated to figuring out and getting to the bottom of what it takes to close a deal. I'm a dealmaker, so this is something that I love talking about, is what it takes, getting to get a deal closed.
That's what we talk about. We talk to people that have sold businesses, raised capital, gone public, acquired other businesses, decided not to sell, bought nine hosting companies in a year and then decided that wasn't such a great idea, and everything in between. So yeah, if you're interested in dealmaking it all, that might be one to check out.
Awesome. TheFBABroker.com, and your podcast, Truth About Exits. I'll include the links to both of them in the show notes, as well as the link to my episode when I was on your podcast, for people who want to listen to us talk rubbish and drink beers.
I love it, and congrats on starting your own podcast. I love it, we'll share this with our group too.
Awesome. Yeah, it's been a lot of fun starting this podcast and jumping on calls with interesting people. Well, thanks for your time this morning/this evening, Coran. It's been great having you on the show, and diving into your story and entrepreneurial journey a bit more.
Cheers. Bye now.