Where did you get the figure of 50 million indie hackers out of interest?
With your first acquisition, what does buying it mean? Do you now have to take on running the business (or did it come with an employee who does that)? Also what kind of DD did you do? Did it include looking at the code base, making sure it could be easily runnable by someone else?
Seems like a great deal to me by the way, based on the revenue multiple!
Man, you know, I wrote that after having seen it and almost regretted it. I know it was a reputable source, but I must admit I don't have it. I'm going to adjust that statement until/if I find it -- thanks a lot for calling that out!
Buying means paying the purchase with all-cash and then operating the product myself. It means manning support, fixing bugs, adding any features I want, and doing marketing. Part of my thesis is to focus only on REALLY simple products that tend to have very very low support borden. They don't grow a ton, but the cashflow (which is my primary goal) is clean, low-churn and dependable. If I can manage to add a couple points to the net revenue growth and hold for 24 months, that's a lot of unlocked value!
I'm going to release a detailed post on how I do my DD, but you can get a general idea of the specific things I look for at the bottom of this post: https://microangel.so/p/analysis-1
Definitely looked at the code with the seller. I also am spending 1/2 of my training hours with the seller just going through the code, fixing bugs, writing tests and mock features together. I'm a full stack engineer too so I'll do all of the engineering stuff right myself for now. The code was great. Not rocket science :)
If I see breakout revenue from the product, I'll reroute the excess revenue into support/dev resources to maintain more actively than I would myself.
Thanks for sharing Eyal! Perhaps I missed this in the write-up, but I'd be curious how much time you plan on devoting to these investments. Do you see it as somewhat of a full time job, or a part time job?
I'd love to build up a small portfolio, and I do find opportunities, but I'm thinking it's really important that there's some level of vertical/horizontal integration amongst them, so that maintenance/testing/marketing efforts have increased returns. For example, I've just acquired an app in the digital-wellness space, and I think it would be beneficial for a second acquisition to also be in that space. If you have any thoughts on this, I'd love your take.
Hey! I went ahead and shared a part of the write-up via the Twitter thread. The deep-dive is available to my Substack subscribers
In terms of time devoted, part of my investment thesis is to only buy really, really simple apps that by nature have very low support burdens. They do one thing really simply, really well. As long as they have positive MRR growth every month, and I have a general idea of where MRR will land 24 months later, I'm comfortable maintaining the products and working on 'just fix it' items as well as some marketing. I expect to spend 1-2 days on my portfolio (up to such small 4 products). My full time job is growing sellwithbatch.com
You're right about horizontal integration. I only buy Shopify apps. Usually only Rails or Node apps (what I know how to write). All domains on Namecheap. Usually Heroku or AWS.
Importantly, there's a case for selecting products that are complimentary as cross-sells. But that's not always possible -- it is a goal though!
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Nice article!
Couple of questions:
Seems like a great deal to me by the way, based on the revenue multiple!
Thanks Lous!
Hope that makes sense!
Thanks so much for checking it out :)
Very cool extra info here, thanks a lot. I find this kind of thing super intriguing!
Thanks for sharing Eyal! Perhaps I missed this in the write-up, but I'd be curious how much time you plan on devoting to these investments. Do you see it as somewhat of a full time job, or a part time job?
I'd love to build up a small portfolio, and I do find opportunities, but I'm thinking it's really important that there's some level of vertical/horizontal integration amongst them, so that maintenance/testing/marketing efforts have increased returns. For example, I've just acquired an app in the digital-wellness space, and I think it would be beneficial for a second acquisition to also be in that space. If you have any thoughts on this, I'd love your take.
Hey! I went ahead and shared a part of the write-up via the Twitter thread. The deep-dive is available to my Substack subscribers
Importantly, there's a case for selecting products that are complimentary as cross-sells. But that's not always possible -- it is a goal though!
If you'd like to try out the newsletter for a day, here's a link you can use to get a free trial. After reading the piece, you are free to cancel your subscription if you want or keep it to access future stuff.
Thanks for checking it out and enjoy!
Nice Article Eyal - Venkat
Thanks much 👊