hi bay arius welcome to acquiring minds great to be here will hi mate you acquired a lead gen business business that generates and sells leads for a very particular local service in various geographic markets around the us a really interesting model i've dabbled in legion so i know something about it but you've got deep experi expertise in the space so in addition to hearing your story today we are going to learn a lot about online legion start us off jaime with your background and what led you to want to go out and buy a business sure thing will so first of all i'm puerto rican born and raised currently living in puerto rico but i went to school here all the way through undergrad studied mechanical engineering and then after i graduated from college i moved to the states moved to alabama and worked at a nuclear power plant there as a mechanical engineer for a number of years uh over five years um but pretty quickly after i got there even though i enjoyed the work i realized i wanted to do something different with my life because i saw the path that was kind of laid forward before me and it would lead me to be working in nuclear power plants which are usually in the middle of nowhere across the united states uh and that didn't really appeal to me and so i found out after i got uh working there about the whole concept of full-time mbas i wasn't really even aware of you know that going back to school to get an mba was really a thing i knew about people doing uh you know part-time mbas and stuff but not really full-time mbas uh and so i got educated on the on the whole concept and started applying to business schools i was fortunate enough to get into harvard business school and so i went there in 2016. um during my time at harvard business school i found out about this whole world of entrepreneurship acquisition search funds and all of its variations uh and really became intrigued and fascinated with the concept uh just didn't have the guts to do it right out of the gate when i graduated this school and so when i graduated business school i moved back to puerto rico not really having a clear professional plan uh because some family stuff pulled me back to the island before i was kind of i had it in my plans and then as i looked around for a few things to do on the island still wasn't ready to do the the search fund thing um i ran across a company called red ventures that is actually headed by a puerto rican ceo in their headquarters are in south carolina and he actually wanted to get reconnected with the island in some ways they perform and so he was hiring uh i call it uh initial cohort of puerto rican professionals to go to their south carolina campus learn the the trade and learn the business up there to with the intent to really come back uh and start a puerto rico office of red ventures um and then during my time at red ventures i didn't even knew what ventures did when when i found out about them when i joined them but um came to find out they are well number one they really just could totally transform during the time i was there and i'm sure they they kept transforming the one constant about them is it they're constantly changing but right now they're a big name in online uh publishing um they own a number of uh large digital brands uh give us some examples yes cnet helpline uh who's another the points guy creditcards.com bankrate.com and so they they have a bunch of these and they keep acquiring them and they develop an expertise and seo is really organic organic traffic is really their uh primary bread and brother and most of them make money at least when i was there through the lead gen business model so basically just leaked in at scale in in just selling these financial services and the variety verticals there and nowadays they do a lot more but that was uh their bread and butter when i was there uh but anyways i i did that for and what what what years were you there jaime what years were those yeah that was in 2018 uh yeah 2018 and 2019. and then i left at the in december of 2019 uh on my own just because uh i realized that i really wanted to do the search one thing i wanted to do this on my own didn't want to do it with another company and so i moved back to puerto rico uh to do the search uh in puerto rico because nobody was doing it at the time and nobody had done it for a long time here um okay great that's an awesome that's an awesome background let me follow up with a few questions first of all i have to uh needle you about the fact that you didn't know that full-time mbas existed and then you find yourself at harvard business school i'm sure i'm sure i'm not the first person to have pointed that out but um i mean that's that's pretty remarkable um sounds like the same thing happened with red ventures you didn't know what it was but but uh you find yourself there and and it ended up setting you on a setting you on a a really prosperous path so um yeah yeah just so calling that out just calling that out yeah well you never know i mean sometimes opportunities you know uh you know the best opportunities sometimes in life you aren't aware of them right and it just takes a matter of somebody making you aware and then recognizing them well and that's a perfect segue to my second question uh kind of the opposite happened with search you learned about it in a very academic way i mean you're at hbs learn learning about search but then you postponed it for a number of years to get i guess some more professional experience some confidence maybe that you were going to then go out and do it so um that one uh you learned about and knew about for years before you really decided to embark on that path yourself which we're going to get to in a second um what else did i want to ask you just just um to set the stage with uh with lead gen flow jumping a little bit jumping around here a little bit but um with red ventures so let's say let's like take one of their credit card sites like just walk us through people will know so you don't need to get into too much detail but just walk us through how having this deep expertise in seo is a legion model that leads to making money how do what does that look like what are they actually doing and how are they actually monetizing what they do yeah so let's say for example the points guy which is a big credit card site uh on the internet if you search best credit card for rewards or best credit cards for business you're very likely to find this side the points guy along some of the other sides of red ventures own in the top of the search results and so by virtue of that being good at seo they get millions of visitors uh a month and then the that article you know best five credit cards for reward is going to list five credit cards and more than likely those five credit cards are going to have an affiliate link that if you click on them uh and you apply for the credit card and you get approved ventures gets paid a bounty and you add that up then it uh it'll be millions of dollars yeah and and there and there are uh credit card applications is kind of the the the best example because credit card companies pay so much per lead because a new a new credit card customer is very valuable so one way to think about legion is like the the service that the consumer is looking for how valuable it is and in spaces where that is of high value then you're going to see a lot of legion activity there um because there's just there's more money there um cool great and so uh when you left red ventures to go do something on your own to do basically to do a search you decided you were going to do a search did you decide did you think that you wanted to buy a legion site or something digital or were you open to anything what what were there were parameters of your search yeah no i actually did was not going to buy a legion site um because for a number of reasons number one i had a non-compete with the red ventures and that lasted a year and so i was kind of very nervous about that i didn't want to get into a competing space particularly the space which i knew which was financial services because that was a space that i worked in uh during my time at ventures i was afraid of anything coming up there and so i i decided to just go completely different and do just a local business search in puerto rico uh for a number of reasons uh number one because nobody had done it for a while in puerto rico i mean nowadays we see puerto rico on the news all the time and and you know there's all kinds of business press about it but um back in 2019 all the press around puerto rico was still very negative and everybody was still very bearish on on the island itself um and so i i thought that there was a lot of opportunity there i still think there's a bunch of opportunity here and i probably would have kept on that path had cove it not happened uh and the lockdowns ensued which brought about a whole bunch of uncertainty into the whole business climate i mean it's hard to kind of put ourselves back in those shoes back in march of 2020 but you know nobody really knew that this was like the start of another depression or or you know this was going to be like a two-week thing or there was a whole bunch of uncertainty around what was going to happen and then it also killed my funnel because i was doing a lot of networking coffee shops and and over here we had pretty strict lockdowns for a very long time um which which affected all that um and so during that time i started looking i started saying well it kind of you know i'm kind of not doing anything uh here let me start looking at some online businesses at least to keep my funnel going and and do some stuff and as i got more into it eventually started getting close to the year uh after i had left red ventures so i figured well not compete is a moot point at this point anyways um and then i just started going deeper into it okay and when you say that nobody had done a search in puerto rico for a while i assume you're talking about kind of from the like the big name business schools kind of an official kind of an official capital s search tradition maybe a traditional search fund or something because you know there's a lot of people buying businesses always under the radar you know but i assume you're talking about kind of one of these kind of well publicized known within the academics the search academic academia one of those types of searches yeah you're exactly right and i think that's sometimes the misnomers that researchers get into that you know if if nobody that's kind of in this inner circle of of searching as a name brand uh then then doesn't get counted in any of these statistics such but but yeah actually and after i've you know kind of been a community here for a while i did i've actually run across people that even people from kind of name brand business school that i ran across a mexican guy that bought a distributor here uh a couple years ago but he wasn't in any of the networks or anything so just nobody knew about it yeah yeah totally um okay and so tell me about the type of search you were doing self-funded um you and i on the pre-call talked a little bit about you know you you kind of chose self-funded because of your um your training at harvard business school which is kind of heavily lean self-funded talk to me about your decision to go self-funded versus traditional uh doing a traditional search fund sure so i decided to do a self-funded search uh primarily being heavily influenced by rick and royce who teach the harvard business school uh course on entrepreneurship through acquisition uh and that i really just was just very intrigued by the concept i think also i'm naturally somewhat risk-averse when it comes to these businesses and i think this self-funded uh model lends itself a little bit more to uh um somewhat risk averse because it generally the the businesses that self-funded searchers are going after are lower growth more stable and the the model is more about paying down debt and you know keeping things steady some growth on top you know kind of for gravy but not really uh uh you know these kind of high growth almost vc uh esque uh uh roll ups and things that uh the funded searchers get into uh so that that was one of the things that drove me there in the first place number two was control and autonomy uh and i know some fundamentals that actually feel like they have a good uh degree of autonomy and i i actually am good friends with uh with a fund that invests mostly in funded searchers here on the island um and so i i interact with funded searchers and the funded search ecosystem a good amount um but i just decided that for my personal reasons i prefer to do it for the autonomy um also because i was focused on puerto rico i thought that maybe there were opportunities that were very small uh yeah for a funded search um and so that's that's why i ended up going self-funded well i was going to say about the you know a traditional search fund are notoriously supposed to be at least in theory geographically agnostic or at least the regions in which you look are supposed to be quite broad supposed to be willing to move somewhere so if somebody's looking just in puerto rico and they've got kind of a thesis around puerto rico that's the opposite of geographic agnosticism so um yeah i i guess so i frankly i'm surprised to hear that there is this kind of funded ecosystem there uh are the criteria of these investors not that you have to be will you as a puerto rican searcher have to be willing to move anywhere there it's for puerto rican searchers for and buying puerto rican companies is that what it is just curious well they invest mostly in churches not really in puerto rico uh i mean the thing is but these two guys um jose stella and and uh pochito as they're known they started they did a traditional search fund in puerto rico back in the late 90s so one of the first traditional search funds outside of the continental united states to come out of the stanford model and all that and they actually searched for three years and didn't find uh they found a target but they but they wanted too much and then they they built up a competitor to them from the ground up and exited in like three years incredible success story um and then they went to the cell phone tower business which is what they're doing now in brazil and a bunch of other countries uh but then through the capital that they've gained through the years and through their their network they use that to invest in searchers um a lot of them latin american based uh that just come to them because they they know of them from the ecosystem interesting really cool i hadn't heard about them um yeah and then going back to rick and royce in your time at hbs so they're pretty and by the way for the audience that um doesn't know rick and royce are also not only the the professors who teach this course at harvard but they're also the authors of one of the two most famous books uh on search that so many of my guests have read the first is by then build by walker dabal and the second is rick and royce's book um it's kind of an orangish red color uh i don't even remember the name it's it's terribly titled frankly what's the name of buying a small business hbr guide to buying a small business there you go um so you were in these guys's classroom so they're pretty they're pretty vocal about not doing traditional search i'm interested yeah i mean they they are at the beginning they're not um they kind of present all the cards on the table and they they they you know they say that you know every every there's they're fit for everybody uh but you know if you were to ask them they say hey you know it's kind of hard to argue with the economics of the the self-funded you know they they lean heavily uh towards that even though they actually have you know they have funded searchers come on as guests you know they've had a number of funded uh searchers come out of the class that had success cases and all that too great okay so you're doing you've started doing a self-funded search in puerto rico um covet hits so your funnel kind of dries up because you can't do the in-person meeting and greeting so you're do you were doing a proprietary search then i i assume well you're probably every everything available to you including proprietary you were reaching out cold to to folks and were people receptive yes yes i found that people are generally receptive and i found that to be the case in in puerto rico as well um i mean it it ends up being a question of how you know with all this called outreach it's a question of how much you customize it uh how much you know the what's the point of diminishing returns in terms of the customization uh but you know if you customize something enough the you know you're bound to get a a a 50 to 70 response rate it's just how much time is it going to take you to you know find the right email and then you know craft the whole you know dig around through the person's linkedin for two hours and you know to find stuff to say no that's well put that that is the calculation how much time can you yeah the cost benefit of personalization yeah exactly exactly um and i mean it's a thing i deal with in sales they um we do cold outreach dentists and stuff now um but uh yeah i forgot where i was going with this um just how the proprietary outreach was going but you you answered it so you're so you're pr so your kind of funnel starts drying up it's covered tons of uncertainty you're getting toward the end of your non-compete with uh red ventures uh you know digital yet presumably you like digital so you turn your attention to digital what where how so do you um what marketplaces are you looking at yeah so so before actually going full steam on the on the digital search when i was still kind of halfway puerto rico halfway digital i bought a couple of small sites on flippa um and i i got burned on a couple of them i bought a total three well i got burned on two of them and then uh one of them actually turned out to be a really good buy uh and and so i just became excited about the whole uh a space uh understood kind of i felt like i understood where some of the pitfalls were when i was buying the other ones and so that that built up a little bit of confidence uh and me to say hey you know let's go out and look at this space more seriously and i came through you know i realized a couple really interesting things number one is i mean nowadays the internet has been around for like what almost 30 years uh yeah coming up commercialized yeah yeah exactly and so for at least unless they that for the first 10 years nobody was really making much money on the internet um except maybe online casinos and you know some select stuff uh but for the for the last 20 years at least you know the internet a lot of people have been making money on the internet and what's amazing to me is that some of these money making sites and businesses are still around in pretty much their original form than they were 10 or 15 years ago and you would think that that is not the case because you never run across them when you search or you know you don't run across them in your day-to-day life but they do exist um i know because i bought two of them now you know i bought about one very small one on flip up and then i bought a bigger one as my main business um and so i think there's there's actually still a lot of opportunity in you know on a lesser scale not only lesser scale but a more compressed timeline than what exists in the offline world of these uh mom-and-pop businesses that haven't been modernized and all that believe it or not there are still websites that aren't mobile friendly uh um you know don't have easy payment options there's all kinds of stuff um that is still optimizable on online businesses uh so that is a little bit of a tangent there but uh yep no it's a really interesting point and it actually won another interview that i recently recorded but haven't aired yet um somebody acquired in commerce business and you'd think that if an entrepreneur started an e-commerce business you know it happened in the last few years you know as most ecommerce businesses you know have started in the last few years and that somebody who's savvy enough to start an e-commerce business in the last last few years is also probably savvy enough to like do all the things to optimize that e-commerce business um but no they you know they they were happy in this particular case the entrepreneur happened to be really good at product but they hadn't done xyz abc thing to market the business and to do kind of just low-hanging fruit best practice sort of e-commerce stuff so my guest was able to acquire this business it was still you know again a pretty a pretty a young business but in by savvy entrepreneurs but they just weren't marketers and he could you know put in place some of these best practices in a short amount of time and just skyrocket revenue and it's just yeah it's just interesting to me too i think we're saying the same thing where you'd think that website owners are um website owners and founders um have because they've built digital businesses there's they're savvy across all of all aspects of digital optimization but they're not there there's often real big gaping um you know parts of their business that they've overlooked or haven't had time or whatever that you as the acquisition entrepreneur can can can can improve upon if you buy the business uh is that is that what you were saying okay yeah yeah for sure especially because a lot of these online businesses are you know one yeah mantras two max three you know uh there may be some va support and you know some uh contractor support but at most there's main maybe you know the biggest businesses have like three key people that are actually thinking about all the strategy and all that stuff and you know there's only so much that you can have expertise on and and even uh do yeah yeah um jaime tell us can you tell us about these two the three businesses you acquired on flippa and in particular the two ones that you got burned on what does getting burned mean yeah i mean i i bought the first one was an insurance site i really liked insurance because i well i already i actually i have a part-time business in pr in puerto rico selling interest plus in my time on revenues i dealt a lot with insurance and insurance is consistently one of the categories that has like the highest ppc cost on google because the leads are worth so much and so insurance lead insights when run properly and and optimized efficiently can generate a lot of money uh and so this site i i was looking at it was a site uh that was getting uh supposedly some organic traffic from google and it was monetizing through display ads and i thought well this this is exactly what i was looking for i'm going to get this it's already getting traffic i'm just going to take these display ads at out and i'm going to put insurance affiliate links and immediately it's uh revenue is going to triple uh and so and when i got it like traffic was still uh you know i got some traffic for a couple months and then it went to zero and i never made any a single penny out of that site because all the traffic was fake uh but it was it was spoofed at uh at a more advanced level than i was looking for in my cursory overview because they were no go ahead go ahead yeah it wasn't if they were spoofing u.s cities it wasn't you know this obvious oh there's you know 10 000 hits coming from pakistan you know it looked like u.s organic traffic coming from different cities but when you looked at it closely all the sections were exactly the same length it was coming in at the same time every hour and it really it was obvious once once you looked at it uh you know it didn't match up with any of which you could find on the third-party tools as ahrefs you know if the site's supposed to be getting a lot of organic traffic you should be able to externally validate it in some way shape or form uh so what what you find in a business like in in in businesses like these um maybe or small small content businesses or affiliate or whatever business is being sold on flippa is that in fact it's a it's a complete bad actor selling business that they're that they're actually generating fake traffic for basically their frauds fraudulently gen like showing traffic that is as you said spoofed or phony or whatever so like you're dealing with legit fraudsters exactly yes there's there's mostly there's three kinds of people on flippa three kinds of sellers in flippa there's these actual legit back actors actual fraudsters and you will see that you'll reply your report uh to flip and to be fair i know flippa has done a lot of changes to their management and all that over the years so i haven't checked on it lately but it's not easy you know some of these are like repeat sellers and you know they keep scamming people um they use different names and so it's it's not uh you know they're prevalent on the platform the number twos the other kind of people are say they're not uh bad actors but they are professional flippers and so it you you may not find the great value you're not going to find the value buys because just just with like house flipping you know if you buy a house from a flipper you know it's already had all the quick wins taken out of it uh and then number three which is where i really think the value is there's actual real people selling their side projects which kind of micro acquire has become uh famous for nowadays but yep um there's people selling their their side projects there um and that was i ran across one of them you know had the site the this guy had built a course for certified nursing assistants in florida back in 2008 and he had kept the site up forever and they were still making him a couple hundred bucks every month um and he just said i just want to get rid of it i don't check this report email i get paypal disputes because i never replied to anybody um i just want to i just want to be done with it uh and so i acquired it and you know it was making like 300 bucks a month when i got it and nowadays you know it's consistently making me 1500. i've been thinking about selling it but um i'm just keeping it for now cool and how much does a site like that cost so that one i got for three six hundred dollars so one so that's one x basically it was making that one yeah yeah yeah it ended up being we uh we agreed on 18 x uh well we were doing a monthly multiplier by one to five basically yearly uh revenue yeah yeah cool and and then and so to take it from 300 to 50 should be 1500 a month did you just do can you can you give us a minute on that yeah yeah so it did a couple things number one is i just raised the price by like 30 um and nobody nobody dropped off um number two i did seo i added a whole bunch of spanish stuff um and number three i built an email funnel and i kind of everything was paywalled and i just unlocked some of that content put it put it in and made it into freedom thing where you get the first few lessons for free with an email opt-in and then you get you know you've got an email sequence that converts people over time cool really cool uh and then give us a minute on on the other website that was uh that was a fail yeah so i bought a serbian dating site serbian dating site i love it yeah yeah that was the most certainly the most eccentric one that i that i bought um and what i learned there is that there's no good way to verify traffic from social media um and basically you you can go into ga you can go into google analytics and see that it you know that you're getting facebook traffic but you don't know where in facebook that traffic is coming from um and so unless you you get access to the actual facebook pages and can see the outbound traffic going from inside facebook you don't know and so what i what happened to me is i bought that side and then the owner what i suspect was happening that could never verify for sure but he had a bunch of different facebook pages and he had other dating sites that depending on which one he was trying to push he would push traffic from those facebook groups uh and so once he sold it he stopped pushing traffic from some of those facebook groups and so i still kept the facebook groups that were tied to the dating side but those weren't really generating the traffic so it was another instance of like traffic just kind of collapsed after a few months or less yeah yeah and that one didn't go to zero that was still i mean i still own it actually and it makes uh you know it still makes some money every month uh but yeah so with the the nursing training site you got a little bit of confidence and you said and kind of got excited and you said let me maybe take a bigger swing right yes that's correct uh so tell us what's up tell us how you found patience for you yeah yeah so i i started doing my proprietary search in the brokerage search and initially i was really i got really excited about membership sites because that that was what this online nursing site was using uh to lock the content and so i just i went on a cycle built with and i built a list of all the websites on the internet that were using any of the main wordpress membership plugin uh and i started emailing every every person on that list and i came across some really interesting sites uh one of them i remember was a golf stats business they they just had this proprietor this it was this one guy who sold uh uh statistics actually to the pga and everybody because he was just like the number one golf stats guy and they had this subscription service and they were looking to tell but they were looking for some big exit uh which which didn't really make sense but anyways there was a whole bunch of these really interesting businesses that i came across through this proprietary search but um in the meantime i also set up all my alerts with all the brokers and on biz by cell and one day on this buy cell bus i sell email i noticed this uh dental lead gen business uh for sale and that just really caught my eyes because i always knew the dental was a high money niche uh i liked legion in general um and i just said well it's worth knowing a little bit more about this um and then the fact as i learned more i really liked it more number one it was it had been around since 2008 uh you know which what i found with businesses you know when in doubt go old uh that that always seems to work and they had recurring revenue you know the average client had been with him for seven years you know no customer concentration and uh yeah everything it kind of ticked all the boxes and so uh i decided to move forward with it and that's where today and what was your budget what size of business were you looking for yeah so it went down slowly over time basically as i was doing uh uh as i started my search eventually to when i closed it um so initially i was looking for businesses in puerto rico from seven hundred fifty thousand ebitda to one million even though after kind of self-funded sweet spot exactly yeah and you know kind of off the record i was really willing to go down to five hundred thousand dividend um because the economy is just smaller and the businesses are smaller here um but then as i moved over to online i said well you know if i can find a business that i can do if i can find a deal that i can do on my own with sba and i don't have to bring investors in then i would be willing to just go um all the way down to 200 000. so i was really looking for a wide range anywhere from 200 000 cash flow to a million dollars in ebitda i was looking for the online businesses this agency in particular came in at 150 000 which was below where i was looking to go but i liked everything about the business uh and i decided to pull the trigger on it anyways now when you went from uh 750 million range or kind of 500 to a million range um and then you said okay well if i don't bring in investors i'll let myself go down to 200. you know i assume when you were at the the the 750 to a million kind of self-funded sweet spot it was because of all of the things that we always hear you want there needs to be enough meat on the bone to be able to you know really invest in the business that's the big thing and a larger business like that uh with ebitda like that is going to be a a less risky investment than a business doing a third or a quarter of that ebitda is going to be more fragile how did you when you decided to kind of lower your ebitda bar how did you rationalize that to yourself yes you wouldn't have to get investors but still all of those factors would go away you'd be buying a riskier business and and you'd have less to reinvest so how did you how did you rationalize that yeah the the only reason i could get comfortable with it is because it was a space that i knew and i felt good about if i didn't have the expertise and kind of prerequisite knowledge i wouldn't have done it um in in in in that space um so because i felt good about um knowing the space and and knowing the the risks and the in and out i felt that i could operate it um a relatively simple business model with uh low overhead and and still make it work uh you know in hindsight i probably would have gone bigger uh i maybe would have like stuck around a little bit more and waited for a bigger business um but you know at the end i i think it was still a good uh it's still goodbye and when you say in hindsight are you is that because you're finding that it's a little bit there the capital that you'd like to be able to reinvest in the business isn't quite there yeah yeah i think basically if you buy a business that kind of barely covers your lifestyle you have like one two choices uh to grow it like you can cut back on your lifestyle and if you buy you know a business that uh you know kind of barely covers your lifestyle then you're kind of you know have a whole room to cut there um or you need to find something else to add to the business i mean well it's always like uh you know you know the question but it's it's you are kind of on survival you are you are stepping it's almost like you're stepping you know uh uh entrepreneurship acquisition is all about you know catching the running train uh when you buy smaller it's you're still catching a running train but you're you're you're catching it like it's barely getting uh uh barely catching on a little steam um and so you know you still there's a little bit of grind there yeah yeah so tell us more about patients for you so it was doing 150 k in uh in cash flow and you've referred to it as a legion business but also an agency explain exactly to us what it is what the model is yes so patience for you is really a legion agency call it um so our clients are independent dental offices that have anywhere from one to four locations and they pay us on your monthly basis or per results basis for providing them with patients or patient leads and we specialize uh only really in the emergency dental niche and so you know client comes to us they say hey we want uh you know we want 20 new patients a month and we say hey that's that's going to cost this much and then we we generate leads for them through google ads local seo and our own websites okay and can you so so when a consumer searches for a dental procedure that they need like an urgent dental care can you give me give me an example of what one of those might be yeah let's say for example like you i mean you just uh you were skating and you you fell down and you know a tooth fell out or you chipped a tooth and you need to get um you can go to the er but they're only going to give you some antibiotics and some pain medication they're not really going to fix your tooth um and so you would search for the you know emergency dental or or something along those lines and you would find one of our clients ads um um wherever you're searching and when you call you would be connected to their phone number okay and so you guys but what you bought and what you own now are the websites that are kind of um in between so so so the the consumer with the chip tooth searches they see a the website of a dental office a local dental office they click and now they're on this website and it's got a phone number and they call the phone number and it's and it's actually you guys and then you direct them you i assume maybe you collect some information kind of qualify them as a lead and then you direct them to the actual true dentist's office your client and the lead trans and then and then they go to that dentist and have work done and so you've pre-arranged with this dental office to to send them a certain flow every month a certain quantity of leads every month according to a process like this great and so what you really bought here the asset that you really bought here was were these websites uh that were kind of well positioned in seo since you know because they have age they're you know probably many of them go back to 2008 talk me through what what the real value of what you acquired was yeah so the value was in two things number one it was the websites i mean we have over 200 websites from existing clients and previous clients all across the u.s you know with some really old domains that can rank well across a whole bunch of different cities and number two the book of clients really because uh you can anybody can make money in legion but where the real money is at the end is if you can go directly to the retail lead buyer which in this case are the dental offices then in that case you don't you don't have to go through an intermediary elite broker um and take a little bit of margin there um so those two things are where the real value was so you're saying that in other digital online legion businesses say i own one such a business the leads that come into my website i can either sell directly to the business that's going to use and convert those leads for their own book of business or to yet another lead broker yet another intermediary who who themselves has relationships with the end buyer of the lead so there can be there can be various degrees of separation between you and the in the business who's actually the lead is actually meant for and in your case and patience for you your this business had direct relationships with the end buyer of the lead and that's valuable and rare yes that that's correct that um yep cool and so and the reason it's a recurring revenue business is because you have these contracts with dental offices around these markets in the u.s um that are monthly on a monthly basis and it's like they pay you whatever a thousand dollars a month let's say i don't know i don't know what your pricing is um for x number of leads a month month in month out you bill them a thousand dollars and it recurs you have a contract of some kind yes that's correct really really interesting okay and um so i'm curious for like so for a business that's doing 150 000 of sde how much revenue is it doing how are margins in an online legion business like this yeah so when i bought it it was really doing like 225 230 revenue um oh so it was really it's highly profitable yeah yeah extremely so um nowadays we're doing a little bit north of 300 in revenue and margins have compressed because we're doing a lot more as we get newer clients we've added a a few clients over the past few months and with newer clients we can't get organic traffic as fast and so we we have to run more google ads which are just lower margin in general um but yeah uh that's then we're kind of probably around there and so uh the sources of leads that you deliver to your clients um are either seo so people are your you know your websites these these 200 websites that you have are ranking organically for certain search terms or uh actually you're actually paying for the traffic meaning you're paying google google ads your you know typical pay-per-click kind of campaigns for certain terms and that's more expensive obviously because you're paying per click but there's still enough arbitrage there to capture leads that way and then turn them around to your clients to make a profit but you see margin compression in doing that but it's more reliable presumably yes yes and that's actually why you know these clients are so hard to find number one is you need to find a dental office that's you know willing to do this it's hungry for new patients and such but also because we are on a pay for performance model we're highly dependent on their conversion process so the office has to have an efficient process for getting those leads in the door and and so you know over the years we found that many offices are not a fit um and so the ones that are we really value those relationships and we try to grow them that seems like an opportunity for your business to grow is to expand you know up the value chain and offer the these cl these dental offices that are your clients you know more parts of the funnel like to manage more parts of the funnel for them is that an opportunity for you yeah yeah yeah and we've been finding that uh you know over time we keep getting referrals and you know there's a certain part of one state that we've got like you know five offices within a a a five-mile radius there and we tell everybody hey you know we're happy to work with you we're also working with these other four guys um you know where we could actually uh um yeah do a little bit of better um lead matching and and just you know own a little bit more of that customer funnel um because you know another another golden rule of the internet is you know whoever has that customer relationship and has that customer attention is really who has uh you know captures a lot of the value in that uh you know in that interaction so if if you're able to like in one market you've got i i so i think the model is that generally let me back up can you explain uh explain rank and rent yes can you explain that yes reckon rent is a business model where generally you have a whole bunch of small sites that rank well for hyper local terms or or to say differently they rank well for a small geographic area say a small city or something like that and the idea is you get the site ranking in the first place you get it generating traffic and generating leads and then you offer those leads to a local business that needs those leads and one of the classic examples i mean really red ventures and some of the bigger guys do this in just really in a mega site way but home advisor is is a site that does rank and run basically but you know you know with a mega site um and people the way they compete with those kinds of sites is they just build these hyper local sites um and yeah the the idea is you're renting the digital real estate that you've built which is this tiny site to the local business owner and then your job is to keep ranking it and then his job is to keep printing it and paying you for the site right so okay so it's like you have you have a website that ranks organically in google when i put in you know um tooth repair tallahassee and so you've ranked that's the ranking part and then you go to a local dentist's office in tallahassee and say look i've got this great this website that ranks for this term i will rent i will rent you on a monthly basis we'll have a contract where any leads that flow through this site will go to your business and so the cool thing for from your perspective of this model is you know if if you you work with one tallahassee office and for whatever reason that relationship ends or they no longer want to continue there are you know 15 other dental offices in tallahassee that you can then approach um as as backups right exactly or also another thing that happens too is if you know if a client gets behind on paying them on pain you can you can turn off the phone and you know there's all kinds of you have a lot more control versus um you know just a general seo oh we're already ranking we don't need you anymore bye yeah yeah now the question that i always ask anybody who's acquired a website one particularly one that relies on seo so heavily is how did you get comfortable with so much platform risk or or you know google google algorithm risk yeah on this one in particular the way i got comfortable with it is it was already doing a mix of google ads ppc and seo and so the way i got comfortable is i underwrote well what if you know all you know we take a massive algorithm hit and we just have to run at all on ppc and it compresses margins but it would still work um and so that's basically how i get comfortable with it wow so if if the seo went away or at least dropped significantly the business still pencils and with your loan and everything still doing we're just doing paying for traffic yeah yeah yeah it services the debt at that point you know it doesn't i'm not really even taking uh much home but you know it's still it still services the debt yeah yeah yeah that you don't have to worry about that personal guarantee you're still at least safe say that okay speaking of of the loan um i don't think i asked you how many but what did you acquire the business for and what would it tell me the structure of the deal if you would yeah so i got it it was listed for 500 i got it for a little bit below that and the structure ended up being um 10 down 15 seller node and then the remainder and an sba loan great okay so you brought so is it basically about fifty thousand dollar or four hundred forty five thousand dollars ish down um in there and the rest with 55 65 with the you know legal fees and closing costs great okay and um you tell me about just biz by cell uh we we all know the audience will be very familiar with biz by sell of course but buying a digital business on biz by cell you don't hear as much you usually hear flippa or micro acquire as you had as you as you mentioned earlier um so but biz by cell i guess does have some volume of digital businesses did you see was this a total fluke or is there like did you see other interesting digital business opportunities on biz by sell from time to time yeah i saw i saw a lot of opportunities on this myself i communicated with uh with a lot of brokers there um basically all of the brokers list their the businesses that they're selling on best buy sell as a lead generation for them so it's a marketing channel for the brokers um so it's a really good way to find out about niche brokers which in the online space are kind of popping up more and more all the time so that's how i came across it i found a lot of interesting i mean there's like all kinds of crazy stuff in there and there's like outright scams or like people uh selling actual not even businesses just like business opportunities uh but there are you know very legitimate businesses i found that the best way to use it is really to find out about niche brokers that you wouldn't otherwise have been aware of or aren't captured you know sometimes these are new brokers um they just have one listing yeah yeah yeah i've noticed like like the big names in digital business um brokerage are quiet light fe international um empire flippers for smaller um typically smaller businesses but on biz by sell for example i've noticed like website closers a lot so they're obviously website closers which is a decent sized digital brokerage or just syndicating all their deals on biz by cell they're a slightly lesser name than the other guys and so but for example i have not seen quiet light put their stuff on on on biz by cell interesting okay and did you do your own diligence were you were you expert enough in seo and and in this whole space to do your own diligence or did you also work with like a centurica or somebody i did work with centurica um particularly because i i wasn't super skilled at ppc um i still am not i outsource that stuff today and i also wasn't very savvy on local seo which is a whole nother beast from you know traditional organic seo and so i did i did contact with centuricum and they helped me out a good amount and is centurica um cost effective for a tiny site like your serbian dating site or your insurance site or or no is it like you know you need to be doing a more sizable transaction for for to make sense yeah i didn't really even inquire um but basically i'm sure the answer is going to be no those sites you know even even spending once you get into the sub 10k you know even spending a couple um you know 500 or something is really going to mess up you know can it can influence your uh your thing and they won't be able to give you that much anyways for at those lower price points all you're really getting is a lot of these automated reports and such um which you're better off probably just spending that money on you know getting the tools like the ahrefs and and such and doing the dirty work yourself yep going back to the growth that you've that you've seen since acquisition jaime and and you said it's primarily been through um increasing your ppc spend google ads is that something where the growth that you've seen now you've hit the ceiling or could you continue to dump more money in google ads and continue to push push your top line number higher and higher yeah we still have a little bit of ways to run there so we still have more expansion with our current clients available we just it's not always um so cut and dry because um the thing that i've also found that makes it harder to tune that is that we don't exactly know uh basically we charge as i mentioned a couple times we for performance and so we rely on the dentist to tell us at the end of the month how many people showed up yeah and so that is actually really affects the feedback loop of the whole google ads optimization and actually realizing even how profitable we are or not on a particular client because we spend all this money and then we gotta wait see what the return on that was and then make the optimizations for that um so that feedback loop is is what slows down the growth on that a little bit um but yeah we we're we still have some growth there but we're also exploring other other niches within the dental space like a lot of our clients have always asked us for dental implant and this whole cosmetic patient um and we just haven't been like super uh super excited about it because it's a lot more competitive and and a lot of different dynamics but our clients keep asking for it so we're trying to make it work and we think there's a big market in there okay you know what's interesting is like when you bought the business and and and you're doing a rank and rent rent strategy where you have all these websites that are a decade old and they're ranking really well and organic um and that is really kind of the this this moat that you have but if you start relying on on google ads and it then it really does become kind of a lead arbitrage thing where you generate you generate the lead and then you sell it at a profit to the business um to the dental office so on the one hand like yeah there's there's a lot of the margin compression which we've already talked about but on on on the other hand like it expands dramatically you can just you can just turn on a new market like you could just go into tallahassee or go go into sacramento or whatever because if you're no longer relying on some 10 year old site that's been ranking you know that's ranked in that market to generate your leads you can just flip a switch and turn on google ads so and and what you just said you can also expand not just geographically but in the the types of terms you're um you're trying to capture leads for so dental implants as an example uh so that seems cool like all of a sudden it seems like the ceiling of your possible expansion has just gone way up on the other hand like when you're in the google ads game it would just seem to me that it's and you have acknowledged that it's competitive but that it's highly competitive because so many local service businesses and this will be really relevant to a lot of listeners so many local service businesses um you know are getting all their leads from google ads and there are marketing agencies that have been for years you know doing ppc campaigns for the local you know the local plumbers and the local dentists and the local xyz it seems like it would be late to be getting into this uh into the google ads game for local services whatever that local service it might be can you any reactions to everything i just said yeah i mean i think um the thing about ppc is that it can also be highly market dependent so there could be some markets where it's just impossible to make it work because the the competitors are just paying so much that and and your client is isn't you know that that lead is they can't pay that much because it's not worth that much for them and so if it's not worth that much for them then there's not even any margin for you to cut off um there to get together exactly um and so that does happen in some markets and so every market's uh different and i think where we uh we see we don't see google ads as the only as the only source so we have also this ranking rent right and so when we land a new client we see google ads we're also willing to take a loss on the first couple months um to get the clients some leads in the meantime we're always building the organic presence even as uh you know as soon as we land a new client with the intention over time you know we're gonna uh move over more organic and get healthier margins over time so um yeah i think i think with google ads there's there's difficult things definitely the agencies that i've seen you know be be successful at ppc they certainly they you know they focus on one specific niche or or something but but that there are there are markets where it's it's going to be difficult um but you know there's still opportunities in other places and so so the game is kind of finding geographic markets and or kind of service markets like dental implants versus whatever tooth replacement that um might still have some margin left because they're not they're not yet it hasn't all been competed away yeah yeah yeah and i mean there's people everybody's spending millions of dollars on on google ppc uh every day so you know they're still even if it has gotten more expensive or such over time you know it's still profitable for for many people otherwise they would cut spend um right and so you know and and every day there's people who are not who weren't spending that they're actually spending you know getting on the platform and all that um so yeah there are certainly opportunities i would say i think you know with these with all these agencies the real what i found actually what differentiates the agencies that grow from those that don't isn't really even in their service delivery it's more in their sales process and actually getting those um local businesses in the pipeline and signing contracts um you know getting those lead buyers actually oh interesting so it's not the problem is not that it's too competitive to get these leads the problem is just getting that that local dentist on the phone and explaining to him the value proposition and converting him and then making sure that his funnel is is tight enough that it actually like you know he does something he he works the lead that you deliver to him appropriately and and so on 100 yeah yes that's basically like that's my main problem like uh is is just getting new dentist in the pipeline and you know signing them food for thought chewing on that um hi mate so you said earlier that like in retrospect you know you did 150 000 of sde is a little low maybe in retrospect you would have gone higher um any other things about this acquisition that you've learned that you would do differently for the audience out there who might be looking to buy a digital business or a content or or a lead gen business yeah i think well the the things that i would probably repeat is i would really i would really like to find another really old business um like this one because i think there's there's just something that you know um another searcher that that i talked to i remember he when he was going through the the process at the beginning he would ask a lot of questions and then he would say well you know people have been buying from this business for for so long you know the same people have been buying they're doing something right i don't know exactly what it is but uh they're doing something right and we'll figure it out um i i think that's something that i will look for when i buy another business maybe it's not going to be 13 years old but it'll be i think i'll go five years plus um if i'm looking at another online acquisition um in terms of other things that i would have done differently aside from the size is i'm trying to think do you still like lead gen as a as an entire category i i like legit yeah uh what do you like so much about legion well i like legion the legion ends uh is is very um how do i explain it the thing i really like about legion is it is it provides a high value per visitor a traffic and you can focus on what's really driving the value which is generating the traffic and you don't really have to worry about the product or the service delivery and so it's almost like having an e-commerce that you have already got you know outsourced all the supply chain and all that and then you just got to worry about the funnel um that's basically what vgen is to me and said another way like you gotta love marketing it is it is a pure marketing business that's all you're really doing is marketing and and converting a lead so if you don't like marketing marketing is not your thing i mean you probably wouldn't even be entertaining lead gen business anyway but let's just be explicit about it don't because this is a marketing business that's correct that's what it is okay okay um yeah and your point about age um you know i always kind of um use the term internet years like five years and internet years is is the equivalent of whatever x number of more years and offline years and one of the big reasons for that particularly in a rank and rent kind of seo business like yours is it has withstood the google algorithm for this long um google's tweaking it's out google used to update its algorithm and these kind of big updates and then as i understand it over the years it's it's kind of tweaking the algorithm all the time at this point it's kind of constantly tweaking another algorithm um and so if a website uh domain is 12 13 years old and or 14 years old and still generating traffic through organic search it has withstood all of these algorithm changes over time and that just tells you that google thinks that there's that there's value to the site and it's nothing is for sure you you still you know you're still kind of operating at the behest of the google algorithm so there could be a change that could just you know that could just decimate your traffic but that's less and less likely the more and more age there is to the business to to the website to the domain yeah that's correct and and the other thing that was also another things i i liked about patients for you is you know the people that are paying us are the actual dental offices so if there is some kind of catastrophic google event like it won't immediately result in decline revenue you know it resulted in the decline in results in performance for the clients and it will result in some decline of revenue because some of them are directly tied to performance but we have the opportunity to make up the results to the clients you know if we can figure out how to um you know get back uh from the google penalty or whatever uh but you know there is a little bit of buffer there or we can talk to the clients and we can explain hey you know we um you know sites aren't ranking as well so we're going to do this other service and and such yeah right and so it that's a great point so that's kind of to contrast your business with you know like an affiliate business that's just selling that's that's sending people to e-commerce sites like there's no if if your traffic collapses tomorrow then those links that we're generating affiliate kick you know affiliate payments to you will just evaporate whereas in your case you you really and that's kind of how you really are an agency you have direct relationships like your your your clients are basically like just deliver us leads we don't really care how so if something with the google algorithm that hurt you happen tomorrow you still have these relationships they're still going to keep paying you so long as you can figure out some other way to send them clients so yeah there's there's a little bit more buffer there than um like a pure affiliate business for example yeah great well jaime if somebody um a listener out there is looking at sites like these or opportunities like these uh can they reach out to you directly yeah yeah for sure you can find me on linkedin or you can go to heightmanage.com i have all my stuff there too oh great yep great i hadn't i don't think i'd seen that um i'll put your linkedin and and your personal website link in the show notes and uh really cool this is really interesting to me jaime thanks for for being so transparent about it sharing everything you know about legion um and eager to see what you do with patience for you thanks for having me we'll