Deal Flow with Yury Byalik

george grombacher 0:00
Hey what’s up? This is George G. And the time is right welcome today’s guest strong and powerful URI Bialik URI. Are you ready to do this?

Unknown Speaker 0:22
I am ready. Thanks for having me.

george grombacher 0:24
I’m excited to have you on let’s go. URI is the head of strategy and acquisitions with on folio holdings. They’re an organization in acquiring and managing a diversified portfolio of online businesses across a broad range of verticals. Yuri, tell us a little about your personal life some more about your work and why you do what you do.

Unknown Speaker 0:45
Sure, so just a quick background about me. I grew up in New York and New Jersey in the States. Although for the past five years, I’ve been living the digital nomad lifestyle. So traveling probably to, I don’t know, 20 or 30 countries in that time. My background is by education. I’m an attorney. I have like a funny story when I was sued, kind of when I was in law school. And I’m like, Well, you know, actually, I was sued before law school, I’m like, I should learn how to defend myself. So I decided to do that. But then kind of shortly after graduating, I realized that wasn’t for me and decided to go the digital marketing route. And so my background and experience has been in the digital marketing world, doing SEO for E commerce companies, consulting companies, agencies. And then over the last couple of years, I’ve transitioned a bit more into doing more holistic digital marketing, as well as mergers and acquisitions for unfold to and just a bit about on folio. So we are a publicly traded company as of about two months ago. And yeah, we just buy and run online businesses. We recently closed on three acquisitions and hope hoping to do more in the future. Nice.

george grombacher 2:00
So you got sued, and that that that motivated you scared, you prompted you to go and actually go to law school, that sounds like something that I really almost did right there without that without that getting sued thing. So has it served you having the having the law degree,

Unknown Speaker 2:18
I think it’s opened up certain doors, I’d say from a financial standpoint, it’s probably one of the more expensive and worst mistakes of my life. But it has definitely opened up certain doors. And actually, while I was in law school, I had built a couple of websites, which I ended up selling to a legal marketing company and then work for them after law school instead of pursuing law. So you know, everything in life has kind of a way of working out. It’s hard to know whether something makes sense at that time. But eventually, it all plays out.

george grombacher 2:51
It is hard to know if something makes sense at the time. You know, you have a framework for trying to look at a scenario and make decisions as to whether or not this is something you want to move forward with or not. You made the decision to become a digital nomad. I think a lot of people who are listening are like, wow, that’s really cool. And you’re in Vietnam. I’m in Arizona and the United States. So that’s that’s, that’s pretty neat. The framework, I’m curious about how you evaluate your, your potential acquisitions for on folio, how do you think about make decisions on which companies are going to be right for you?

Unknown Speaker 3:31
I think that changes and evolves over time, but you know, there are certain metrics we look at. So we look at, for example, Ebro. And like one of the and that goes up, as we make larger acquisitions, we try to make larger, larger acquisitions. So right now, our minimum is about 500,000. I’ve kind of spent most of my life online, so I’ve had a lot of like experience diving in into different businesses and seeing how they work. And so a lot of that is just based on doing due diligence. So you know, we look at the team, whether the team comes with the business, whether they have a solid team, we look at the marketing funnel, the sales funnel, where are they getting leads? So we get really granular, you know, we look at the customer acquisition cost, the Lifetime Customer Value, and we just we just evaluate all those things. But for example, now, you know, I think that we’re about to enter a recession. We don’t know how long it’s going to last or how how big it will be, or how bad it will be. And so one thing we’re looking at is now is how would a business like this do in a recession? And so that’s definitely like top of mind now as we look at different businesses.

george grombacher 4:39
Yeah. And do you have thoughts on and on on certain industries that maybe you’re going to focus on and not focus on because of the recession?

Unknown Speaker 4:53
I don’t know what we’ll focus on. I know there are some industries that tend to do better than recessions. For example, pets usually are recession proof no matter what people spend money on their dogs, and probably even more so as the recession comes, because they’re saving money from going out to restaurants and other things like that. I recently found out that like skincare and beauty is pretty recession proof as well. And people like the self care industry, people like to pamper themselves even in a recession, which is something I wouldn’t have imagined. But you know, we look at, we look at a lot of different businesses that come from different directions from incoming deal flow brokers, marketplaces. So even if we look at a business that’s not directly tied to a recession, for example, if we look at purchasing an agency, right, we want to know what kind of clients the agency has. Because if the clients are in a recession proof agency, that means that agency will continue to do well during the recession.

george grombacher 5:50
Yeah, that makes sense. So for your deal flow, potential acquisition targets come across your desk. How do you think about a company that’s actively trying to sell itself versus a company? That’s not? Does that plan?

Unknown Speaker 6:08
Yeah. I mean, if we’re getting the deal flow, usually it means it’s coming from like a broker or marketplace, or somebody selling it. So that means it’s already somebody who is trying to sell it. But if you try to reach out, like doing cold outreach to see if somebody wants to sell their business, it’s kind of a hit or miss. A lot of people have unrealistic expectations as to what their business is worth, just because they put so much, you know, of their like life into it, and they want to get it back, even though from a financial standpoint, it doesn’t necessarily make sense. So yeah, I think that’s kind of the tricky part. But it’s always better to get something that’s not listed on the market, because there’s less competition available, which means you might get a better deal. And you just, I think you have an advantage there when you can get something privately.

george grombacher 7:00
And so when you’re looking at this opportunity, it’s it’s let’s just make up a fictitious company that is in the self care industry, and they’ve EBIT of million dollars a year, they’ve got the marketing funnel, that solid, a sales funnel, when you take it over, and you guys y’all shake hands, you buy it, it’s now yours, your thought process is that we can make this more efficient? Or how, why did it? Why is it or how is it you think that you can drive that EBIT a number higher?

Unknown Speaker 7:33
So actually, with the position that we’re in, we don’t necessarily have to grow the company. Because if you think of like, you know, if you think of it as real estate, you know, you buy you buy a building, and it’s making you $2,000 A month in rent, right? You’re not thinking about how are you going to get that 2000 number to 8000. Because it’s kind of, you know, there’s only so many units you can do, obviously, our goal would be to grow it as much as we can. But that’s not necessarily our number one priority, our priority is making sure that the revenue stays where it is, and doesn’t decline. But of course, yeah, we would love to grow it. Usually, when we acquired like, when we acquired businesses, we try to keep the entire team in place. We’re not, we’re not like a venture capital fund or private equity, where we’re going to come in and try to cut expenses and fire people. You know, we ideally keep the entire management team in place. We put in an operator, it might be somebody promoted internally, who’s already there, or we’ll bring somebody new. And then it’s yeah, it’s their job to run and ideally, grow the business.

george grombacher 8:35
So the idea is, is that you have an owner that is wanting an exit?

Unknown Speaker 8:43
Correct? Usually, that’s the case.

george grombacher 8:45
Got it. Okay. And is there an end or a limit to how many organizations that on folio is looking to acquire?

Unknown Speaker 8:57
I hope not. As, as we grow, we’re gonna you know, the goal is to continue to continue buying businesses. Yeah, there’s, you know, there’s a lot of players in the space now. And, you know, they started with one or two, and now they have like, 4050, and they continue to grow it. So yeah, there’s definitely no no ceiling here.

george grombacher 9:18
That’s interesting. This, is this a new industry? This is what you’re doing? How long has it been around? How long has it been a business model?

Unknown Speaker 9:29
I wouldn’t say it’s a new one. But I’d say it’s something that’s recently been booming. Because these like real estate investors and family investors, they’ve, they’ve sort of looked at the profits and the kind of the multiples and the ROI that they get from their real estate deals. And, you know, it might be like 7% 8% where they look at online businesses, and it can be 2030 40% depending on the business, which is very attractive to them. So this entire industry has been growing very berkelium been getting a huge influx of money. I mean, if you look at kind of, I would say maybe the predecessor of online businesses would be domain names. It’s been a big industry now for, I don’t know, 1020 years where people are buying domain names as digital assets, like real estate, and sitting on it, or maybe turning it into other assets, selling and renting it out. So that was like the predecessor. And now people are doing the same thing with online businesses. It’s just the last couple of years, it’s really taken off.

george grombacher 10:31
So you are y’all are? That’s fascinating. I don’t know why I didn’t think about it like that. Perhaps it’s because I’m not fully prepared for our conversation today, Uri. Or maybe I just who? Who knows. So you are constantly raising investment capital as well.

Unknown Speaker 10:53
So we’ve raised some capital, in preparation for the IPO, and then we we IPO and using those proceeds for the acquisitions.

george grombacher 11:03
Got it? And so you are not looking for additional funds, or you are?

Unknown Speaker 11:09
I think our CEO is looking at other sources of capital, like debt financing, things like that. I don’t really work on the finance side. I’m more of on the marketing and acquisition side. But yeah, I mean, we’re listed on NASDAQ. Right. So if anybody just wanted to buy shares, our you know, our ticker symbol is O inf O. So that’s kind of one way to if somebody wanted to get involved.

george grombacher 11:34
Got it. Nice. All right. So walk us through what what your marketing processes.

Unknown Speaker 11:45
So I mean, we have, you know, a lot of different assets, and each asset has a different operator SEO, so the marketing is going to differ. For example, I’m also the CEO of two SEO agencies that I’ve recently taken over and one of them was the acquisitions, that was one of the acquisitions that we made. So basically, it took over all the operations. It’s something that hasn’t had a lot of marketing in the past, it’s been sort of relying on word of mouth and past clients. But now I’m coming in and starting the different marketing campaigns, we have Black Friday, special running now, we’ll be starting Facebook and Google Ads shortly, adding new services, working on email marketing, different funnels, lead lead magnets, so kind of everything from A to Z.

george grombacher 12:32
Do you have a favorite lead magnet strategy that you commonly used?

Unknown Speaker 12:42
I wouldn’t say a favorite one. You know, I like different tools and templates. I think the best one is actually a lot of companies do they, they create like a side project. And they have it coded and they use that as a as a way. I know one company did it, they created like a free stock photo site. And that was like their lead magnet. If you think about it, like for example, Credit Karma. Are you familiar with Credit Karma? I am. So they’re basically like the largest affiliate site in the world. And what did they do is they took something that was paid, which was credit reports, and they they made it free. And now you know, they released something that was free, they were the like, the first probably the first ones to do, it provides a lot of value for consumers. And now every single consumer is a lead for them, and they should give them credit card offers home loans, all these offers that pay, you know, a crazy like amount of money and affiliate commissions. So I think like creating tools is probably one of my favorite ways as far as lead magnet goes.

george grombacher 13:43
And it’s interesting. Fascinating. I hadn’t I’m aware of Credit Karma, but I didn’t think about them as as this large affiliate site, but what you just laid out makes all sense of the world. So is the email list? Is that still really at the top? Is that one of the most powerful ways to sell your service product?

Unknown Speaker 14:07
Yeah, I still think email is like one of the top acids. If you look at like conversion rate, right email is always going to have the largest conversion rate of any traffic channel. It’s the only audience that you truly own aside maybe from some people are doing some SMS and things like that. But you know, when you’re dependent on a platform, and they make changes like Apple did with iOS, which affect affected Facebook ads, you know, a lot of E commerce companies and anybody relying strictly on Facebook, they suffered a lot of them weren’t able to recover similar things with AdWords. If you’re selling on Amazon with like an FBA business, you know your business can be gone in a day if somebody reports you and Amazon suspends your account. So having an email list is still like the number one way where you can truly own your your own audience.

george grombacher 14:53
Yeah. In terms of you mentioned the SMS So text messaging, how has that grown evolved? Is it been surprising? Has it been less than less less exciting than people expected?

Unknown Speaker 15:11
Um, I don’t I don’t see very often, I have read case studies where it has worked for some companies. I just think there’s so many companies that they have so many other things to work on that SMS is not really top of mind. I personally don’t like getting advertisements on SMS. I’m not sure how other people are. I prefer emails. It’s not something we focus on right now. It might be in the future. And I think some of it is actually how people interact with like SMS. In other countries. For example, there’s like WhatsApp, which they might use for communicating with customers. But WhatsApp is not really a popular app in the US because we have SMS telegram I see a lot of things happening on telegram as well. But again, I think it might be more international rather than for US companies.

george grombacher 15:59
Yeah, that’s interesting. You’re right. I personally don’t enjoy receiving advertisements on text either. I don’t mind in my email. So fascinating. Here in the United States going through the election season, I think that everybody, every political campaign seemed to get my phone number and texted me relentlessly. So

Unknown Speaker 16:21
I love when they do that. Because no matter what, I just respond, I’m voting for Trump just because

george grombacher 16:29
it’s a good idea. I should adopt that for sure. I like it, they

Unknown Speaker 16:34
will, they will instantly remove you from that set. When you say.

george grombacher 16:38
Has there ever been a more more triggering word in language than Trump? I’ve done? I don’t know. Everybody’s got an opinion on it. For sure.

Unknown Speaker 16:47
Elon Musk is is going up there right now. So no doubt.

george grombacher 16:51
Yeah. Interesting. That’d be, it’d be interesting to look at. How would How would I know that URI? What, like Donald Trump versus Elon Musk, how often that searched or put into the internet.

Unknown Speaker 17:07
I say, you could do a comparison with Google Trends, you can put both of them and see the trend line of either of them. You can also use like a keyword research tool to look at the volume. But for that, I would just use Google Trends.

george grombacher 17:18
You know, that’d be interesting. Where you are thank you so much for coming out. Where can people learn more about you? And how can they engage with you and on folio?

Unknown Speaker 17:27
Yeah, so they can visit our website on folio.com. Email me personally, if you’re worried that’s why you are why@appfolio.com they can look me up on LinkedIn or company. I try to do a lot of these podcasts. If they want to learn more, they can google my name. And yeah, I’m always interested in helping other people so they can just reach out.

george grombacher 17:49
But if you enjoyed as much as I did, show your appreciation and share today’s show with a friend who also appreciates good ideas go to on folio.com Shoot us an email URI at on folio.com Find him on LinkedIn. I’ll list all those in the notes of the show. Thanks, Gary. Thank you. And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai