What should you know before buying or selling a software business?

A few of the founders I have interviewed have either bought or sold businesses through today’s guest.

Thomas Smale is the founder of FE International, a website broker. They started with small deals but are now brokering $50M deals.

I want to ask him about growing this type of company as well as his process for evaluating a company’s worth.

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Thomas Smale

Thomas Smale

FE International

Thomas Smale is the founder of FE International, a website broker.

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Full Interview Transcript

Andrew: Hey there, Freedom Fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses, and a few of the entrepreneurs who I interviewed either sold their businesses through the guest who you’re about to meet, through his company, or at one time or another contacted him and said, “Hey, Thomas. I think I’ve got the sale. I think we’re going to sell for this price. I think this is the company. Give me some feedback. What do you think? I’m going to sell it on my own. Give me input,” and he helped them do it. The guest is Thomas Smale. He is the cofounder . . . actually, the founder. Can I say founder?

Thomas: Founder. You can say founder.

Andrew: Founder of FE International. I thought of FE International when I first heard about them a little over half a decade ago as a business broker, you know, the company that you go to when you want to buy or sell a business. They’ve kind of become an investment banking company. That’s the way I see you guys now, investment bankers. You’re the guys that do the big M&A deals now.

Thomas: Yeah, definitely over the last half decade we’ve definitely gone more upmarket. We started working on bigger and bigger deals. It’s much more of what you would call an M&A service or mergers and acquisitions.

Andrew: Rumor is that you helped Shopify buy a business, that they did it through you.

Thomas: Yeah, we’ve worked with quite a few big companies in the last 12 months. Most of our deals are very much confidential, but sometimes some information gets out.

Andrew: It used to be in the thousands of dollars, right? Actually, what’s the range that you guys buy and sell businesses?

Thomas: So the first year we ever did would’ve been in the hundreds of dollars. Now we do deals up to $50 million, and that upper end is only increasing. At the moment, we will sell businesses anywhere between $50,000 on the low end to $50 million on the high end.

Andrew: $50,000 to $50 million? That’s where you guys are right now. That’s a huge range. All right. I’m curious about what you think Mixergy would go for if I decided to sell it. I’m curious about how you started this business buying and selling. I’m curious about what your revenues are, what your profits are. I’m curious about so many things. Why are you not wearing a jacket? I’ve seen you for years. You’re always the guy who comes to tech conferences where every one’s in a t-shirt and basically flip-flops wearing a suit.

And we’re doing this whole interview in my office thanks to two phenomenal sponsors. The first, if you’re looking to raise . . . no, not raise money. First, if you’re looking to hire a developer, you’ve got to check out Toptal. And the second, if you have a team of people who are working on Mac computers, Setapp will just give them these . . . you know what? I’m not going to oversell it. It’s great software for Mac. I’ll talk about it later.

Let’s start with your revenue. Where you guys now?

Thomas: We’re a private company, so we don’t disclose it publicly.

Andrew: You were on “Inc.” “Inc. Magazine” had you guys as, like, what, an Inc. 5,000, right?

Thomas: Yeah, “Inc.” does disclose some of our revenue, but it does not disclose our European revenue because we have two entities. We have a U.K. entity and a U.S. entity. We were previously in the mid-seven-figure range. We’re now in the eight-figure range.

Andrew: Over $10 million from your cut, your percentage of the businesses that you’ve sold?

Thomas: Exactly. In fee revenue.

Andrew: Fee revenue.

Thomas: Our transaction volume, so businesses we’ve sold, the cumulative value of that is well over $500 million now. Our fee revenue is obviously a much smaller percentage of that.

Andrew: What’s the percentage do you guys take?

Thomas: Depending on the size of the deal, usually 50%, but then it tiers down on bigger deals, so it can get lower than that.

Andrew: From 15% down to . . .

Thomas: So if it’s a much bigger deal, so, like, a $50 million deal, we might be at 5%.

Andrew: Okay. All right. That’s significant, and the whole thing started with you in college buying and selling domains. What do you think of Mixergy? We’re going to tell the story of how you started the business. What do you think Mixergy would go for? Be open. Don’t sugarcoat jack.

Thomas: Well, I’d have to ask you a lot of questions. So I’d say one thing that I’ve learned over the years is don’t give advice unless you can actually give an answer that you can back up with some sort of data or credibility. And another thing we do, there’s a lot of places out there where they will give you a ballpark or high-level valuation with very little . . .

Andrew: To get you started, and then they go off.

Thomas: Yeah, we don’t do that, and part of the reason we don’t do that is because if I gave you a number – and let’s say the number was $1 million or $10 million or $50 million – and I have no idea whether or not that’s accurate or not, either the number will be something that really excites you and you want to sell your business and then offers may come in at half that, you’re not going to be very happy, you’re not going to say good things about us, or I might say your business is worth $1 million, and it’s actually worth $5 million, and you’re going to say, “Hey, I met this Thomas guy. [inaudible 00:04:43].”

Andrew: “He doesn’t know jack.”

Thomas: “He just passed me a low valuation.” So we go for a detailed valuation process, which usually takes a couple of days once we’ve got a lot of information and data, and that means when we give a valuation, then we can be very confident that it’s accurate.

Andrew: Do you think that a business like this . . . because here’s the thing. I know you guys as the company that sells software businesses, right, e-commerce. Those are clear businesses to buy and sell because they’re clear numbers. They have clear churn rates and so on. You also do content businesses. Would you be able to sell a content business? This whole interview is not going to be about talking about me. It’s going to be about how you built this business and how you started off with nothing and built it to this level. But do you sell content businesses where it’s the person’s face that’s so connected to the business?

Thomas: Yeah, we’ve sold quite a few. Often, people use pseudonyms. Sometimes people don’t, and they use their real names. In the last 12 months, I can think of at least a couple we’ve done where the main guy or main woman would be well known and very much the face of the business. We’ve also sold sites that have podcasts as a component of it. They’re definitely challenging, particularly Mixergy, because I think with Mixergy you are the one who is doing the interviews, so that would be challenging.

Where we’ve done it in the past, my advice would probably be, “Hey, let’s not value it now. What we should actually do is put together a succession plan or an exit plan to get you out.” So what that might mean is bring in, like, a paid host. You might hire someone who then becomes Andrew, and they’re the ones meeting people and doing the interviewing.

I think outside of that it would be very sellable. Like, you have sponsors. You generate cash flow. You have a team. The brand is Mixergy. It’s not The Andrew Warner Show. So while you are very much associated with it, selling wouldn’t be impossible. But my immediate advice would be you can’t sell it now. It would take a little bit of time. If you were absolutely 100% desperate to sell tomorrow, then we would definitely look at it, but any buyer, if they wanted to take over the business tomorrow, there would be a lot of contingencies in the structure.

Andrew: Like, “Andrew’s got to keep going.”

Thomas: [inaudible 00:06:54] on keeping you.

Andrew: So one of the things I discovered recently is that a lot of the businesses that are in those infomarketing, “teach you how to make more money” space, those founders got burned out, and they sold it. Even though it’s the founder who was a big name in the company, they’re not there anymore. Somebody else is in command of the email list, and then they’ve got some online course, and then those guys have sold their business to someone with good copywriting skills, right, and [inaudible 00:07:19] skills.

Thomas: So those definitely do happen. I would say, playing devil’s advocate, you have . . . well, at least I have no idea what deal they actually got. So, yes, they might have sold it, but that doesn’t mean they got any sort of good deal in my mind. They probably have a long contingency with some sort of, like, licensing on their name. So if you sold Mixergy tomorrow, you would obviously get to keep your name, but the person who acquired the business would definitely want to have the previous association with you remain in place.

I think a lot of the infomarketers are a little bit different because the vast majority of their business is usually driven by email. Like, it is you. People physically hear your voice. So if they suddenly didn’t hear your voice – and you have quite a distinct interview style – people would be like, “Andrew’s not here. The interviewer has not done any research. They’re not asking direct questions.” They’re going to be like, “Well, Mixergy sucks now. I don’t like it.” [inaudible 00:08:20].

Andrew: It is very, very much tied into me. Let’s talk about another business that you can talk about – because there’s a big list that you helped sell that you can’t – Rob Walling’s business, Drip. This was an email business, right? He had a buyer already in Leadpages. Am I right?

Thomas: Yeah, that’s correct.

Andrew: And he told me in the interview, “I still went to Thomas. I still wanted him to sell the business.” What are you offering? I thought that the big thing that you offer is, “I know the players. I’ll make an introduction. I’ll help you close the sale.” In his case, it wasn’t like that, so what else do you give him? Why can’t he just go get a lawyer and do it by himself? Why does he have to give you a fee?

Thomas: Yeah, so I think to, like, preface that, I think when you build a good business, you will have people that credibly approach you that want to buy your business. So almost all of the clients you work with who sell a business let’s say above $1 million, which is a lot of our business but not all of it, they’ve almost always had an approach, and that’s often the catalyst for approaching us because they realize they want a professional to help.

So there’s lots of things we do. So, firstly, if you get approached by one buyer, as part of any negotiation it’s really important to have multiple buyers in that process. We have a network of over 50,000 active buyers. Yes, not all of them are going to want to buy a business like Drip, but a reasonable percentage of them would have the ability to and would be interested.

Firstly, it’s just volume of buyers. We are a professional M&A firm. People who have money and want to buy a business come to us. People that have money and want to buy a business probably do not cold email people like Rob and say, “Hey, I want to buy your business.” It’s not a very sustainable way to deploy capital. So you have a lot of very motivated buyers.

Another important thing if you’re selling a business, particularly if you’re the founder and you’re like Rob and you haven’t raised any funding, you’ve kind of bootstrapped it, put your life savings into building that business, it’s got a lot of his personal branding. Like, a lot of Drip’s success was because of the fact he would get on podcasts, get guest posts on places that would want to speak to him.

A lot of it is taking the emotion out of the process. So a lot of time we’re there as somewhat of a buffer between the buyer and seller to take the emotions out and very much be that buffer where, if there’s any . . . I don’t want to say problems, but if there’s any, like, arguments or disagreements, we’re very much the ones that kind of handle that, and then we can reword it, decompress, position it differently to the person.

Andrew: What else? Are you also helping them figure out what the right price is based on your experience selling other businesses? Is it also that you’re making sure that he gets paid?

Thomas: Yes, absolutely.

Andrew: All of that.

Thomas: The very first thing we would do if someone came to us and said, “Hey, I’ve got an approach,” the first thing we do is put together a valuation. So it’s a free service. We’ll put that together for you.

Andrew: So if I want to sell Mixergy, I’d call you up, and I’d say, “Thomas, I need . . .” I feel like we need, like, a better pronunciation of your name like Thomas. You’ve got such a, like, regal voice.

Thomas: Maybe we should make it more exotic.

Andrew: Maybe. Okay. So I call you up or text you.

Thomas: You would call me up, and I would introduce you to my team, who are much smarter than me.

Andrew: And they would ask me a bunch of questions. They’d give me a price. And so this is one of the things that you do.

Thomas: Yes, so that’s the very first thing we do, and the main reason we do that is it helps set expectations. For the vast majority of founders, what their business is worth today and the reality of what their business is worth today is probably not what they want to sell their business for today. You mentioned half a decade you’ve known us for. A lot of people that work with us today have known about us for many, many years. We may have had a conversation years ago.

So we set the valuation, and then from there, particularly if they’ve had an approach, we will establish what the best approach is to bring more buyers into that process, because if you’re a buyer and you’ve approached someone in good faith, you do not want it to feel like there’s thousands of other buyers coming into the process who can derail the deal you’ve wanted to do. So there’s an element of sensitivity there, which is part of the reason we do that process, because then, if there’s any kind of, like, hard feelings or, like, grievances, that comes to us from the buyer and seller, because if you’re negotiating any multimillion-dollar deal between buyer and seller and you are dealing with them directly, there’s going to be some kind of arguments and disagreements, and deals can derail and fall apart super quickly. People take things personally.

Andrew: Do you also help make sure that the person gets paid?

Thomas: Yeah, 100%. So, obviously, we only get paid . . . it’s important to distinguish. Unlike a lot of M&A firms, a lot of M&A firms and business brokers or whatever you want to call it will make their living from retainer fees, so they don’t actually have to deliver anything. They get paid.

Andrew: You only get paid whenever they make the sale.

Thomas: Absolutely, [inaudible 00:13:14].

Andrew: And when the cash it’s the bank.

Thomas: Yes, so we only get paid when the seller physically gets paid.

Andrew: All right. You said that I’m known for certain kinds of questions. Do you personally take more than $1 million out of the business a year?

Thomas: No.

Andrew: No. $500,000?

Thomas: Some years.

Andrew: Where do you put your money?

Thomas: Personally?

Andrew: Yes.

Thomas: So my business partner recently bought an apartment, so that’s what he did with his. I invest a small amount in index funds and keep it very [inaudible 00:13:40] outside of . . .

Andrew: That’s it? You’re not buying real estate? Nothing like that?

Thomas: It’s worth noting as part of that my business partner and I reinvest a lot back into the business. We also launched a fund about a year and a half ago, and a lot of our cash went into that. So, yes, we work with investors who put more money in.

Andrew: This fund is fascinating to me.

Thomas: But we also put our own money in. So we’re not saying to people, “Hey, give us money. We’ll go buy businesses and run them and then give you cash.” We’re also saying, “Hey, look. We’ve put our own money in. We’ve done it successfully before. Do you also want to invest [inaudible 00:14:13] us?”

Andrew: The fund you created . . . I talked to an entrepreneur. I don’t know if I can say who it is. He invested in the fund, and he said, “What they’re doing at FE International is they are buying SAS companies. They are increasing their revenue, and at some point they can sell these businesses, and that’s their model. They’re not investing in SAS companies. They’re not investing in an entrepreneur or an idea. They know what’s working. They’re buying those businesses. They’re growing them,” right?

Thomas: Yeah.

Andrew: That’s a great model. How much did you raise?

Thomas: We just raised about $6 million.

Andrew: And you closed already?

Thomas: Yeah.

Andrew: Oh, that’s a brilliant model. The whole thing started when you were in college. I asked you what you did in college. Were you an entrepreneur? You basically said, “Not really.” Did you know what you wanted to be when you grow up? I want to get into the story of how you started, and I’m going to adjust your mic here because I’m hearing a little bit of your shirt as we talk. Okay. You’re good.

Thomas: Yeah, so definitely, as I was growing up, I wasn’t an entrepreneur. I hear all these stories about . . .

Andrew: The lemonade stand.

Thomas: They have lemonade stands. I never sold lemonade.

Andrew: No? What did you do for fun as a kid?

Thomas: I don’t know. I used to play a lot of sport. That would be, like, golf, which [inaudible 00:15:13] . . .

Andrew: Golf?

Thomas: There’s a sport in the U.K. that no one in the U.S. knows.

Andrew: Cricket? Okay.

Thomas: But it would be similar to baseball in a very [inaudible 00:15:21] way.

Andrew: Did you have aspirations of being a big baseball or golf player or something?

Thomas: I just liked being outside. I lived in the countryside. I had never really been to the city. I didn’t like cities. Ironically, now, yes, I live in the center of San Francisco, but back then, no, I was a country boy. I had no idea what I wanted to do career-wise. So when I was 18 and having to decide what to do next . . .

Andrew: Sorry. Before we go to 18, high school. You told me didn’t go to high school because . . .

Thomas: Like, the traditional school system, I didn’t find it particularly engaging. I didn’t find it particularly challenging. I don’t think I found it particularly interesting.

Andrew: I didn’t either.

Thomas: And I guess I was kind of fortunate I did well academically without having to be there all the time.

Andrew: Did you graduate?

Thomas: Yeah, I did.

Andrew: You graduated. Meanwhile, what was the job that you had?

Thomas: Oh, so I worked in a bar.

Andrew: You worked in a bar?

Thomas: Yeah, it was my first job. I remember when I was 16 years old my mom said to me, “Happy birthday.” And in the U.K., 16 is the legal age where you can get a job.

Andrew: Really? Okay.

Thomas: She said, “Now you’re old enough to work.” My parents, they do okay, but they were not well-off. They said, “Go get a job.” So my first job was, like, washing dishes in a bar, and then I kind of graduated or got promoted to actually working the bar and the restaurant area.

Andrew: To become a bartender.

Thomas: Exactly, but it was very much, like, a country bar. It was not a city bar making fancy cocktails. This was, like, beer.

Andrew: In my imagination in high school, working in a bar would mean that women and girls would talk to me. Is that why you did it?

Thomas: You can ask my wife. It was definitely not the case.

Andrew: What do you mean? What would your wife say? Why would your wife say, “No, it’s not the case.”

Thomas: She would laugh and say I didn’t meet any good women until she met me.

Andrew: Because you weren’t dating much?

Thomas: No, not at all.

Andrew: Because you were what? Introverted?

Thomas: Introverted, working a lot.

Andrew: Working at what? Oh, working at the bar?

Thomas: I wasn’t particularly interested. I don’t know. I would say that the bar I worked in was in the middle of nowhere in the countryside. The demographic that came into that bar was primarily male farmers who like drinking.

Andrew: Got it. So it’s the bar, but I’m trying to get an insight into who you are or who you were back then, and it seems like you were just into living life day to day as a kid. You weren’t thinking 10, 50 years in the future the way I was.

Thomas: I wasn’t thinking. It never occurred to me that I could build an eight-figure business or anything bigger than that. Even when I started FE International back then, I generally believed that if I could personally make $1 million, if I could be a millionaire by 30, that would be . . . made it.

Andrew: That was it. How old are you now?

Thomas: I’m 31.

Andrew: So did you do it?

Thomas: Yes.

Andrew: You did it with $1 million in the bank.

Thomas: Yes.

Andrew: Yeah, and so now you don’t feel like it’s over because . . . why not say, “Hey, I hit my childhood dream. I got my wife. We’re living in San Francisco. We can live anywhere.” Why are you still at it?

Thomas: Well, firstly, in San Francisco, $1 million doesn’t really go anywhere at all.

Andrew: It hit me after I said it, yeah.

Thomas: Where I grew up, yes, $1 million goes a little bit further. I think, also, coming from not a rich background, I did not really know rich people. In my mind, millionaire was as big as it got, which meant, like, singular $1 million or $2 million. You had a big house. You had a job. You maybe had a second job. You took some nice vacations.

Andrew: Yeah, I grew up in New York. There’s a word that they had for people who had just $1 million. It was “loser.” Seriously. It’s like, “What is wrong?”

Thomas: So I didn’t know, and then once I got there, I was probably on paper a millionaire at 25 or 26.

Andrew: Okay. What I’m getting at is what’s the ambition? What is the part of you that you still need to fulfill through this job? And then we’ll get into how you started out.

Thomas: What I still love – and this is what brings you back to work or the office or conferences where I am every day – is just helping people and helping the founders. I think there’s nothing more rewarding. Selling a business is probably . . . there are many hard things people do in their life. It’s probably one of the hardest processes the majority of entrepreneurs will go through. I would love to say, like, yes, we have a good process. Yes, we have a good team. But every deal is hard. There’s no such thing as an easy deal. There’s always problems. There’s always challenges to deal with. So every deal we complete, I still get a buzz whether it’s $50,000 or $50 million.

And the other thing is a lot of people sometimes hear that we’re doing $100,000 deals, and they kind of laugh. They’re like, “Oh, why are you doing $100,000? You could just be doing $10 million deals.” But in my experience, there’s almost no correlation between the size of the sale and how lifechanging it is for that person.

Sometimes you can sell someone’s business for $100,000, and that pays off all of their debt, and that debt has been crippling them for years. It’s been causing them to be depressed or not moving on with their life. Often, we sell someone’s business for $1 million. If you sell your business from $1 million, you’ve probably been making hundreds of thousands of dollars for many years, so you’re probably not short of cash. Yes, you’re not rich, but you can probably go to nice restaurants, go on vacation, buy a house, so often that million dollars is not actually that lifechanging for that person, whereas $100,000 can be.

So that’s what gets me up in the morning every day, that you’re changing people’s lives for the good. Most of the founders we work with are self-funded, and it’s their own cash that’s gotten them to where they are. So if they sell for $1 million, $5 million, $10 million, that all goes to them, maybe their business partners. Maybe they have some very minority small investors, but they don’t have venture funding, or at least it’s very uncommon. Everything they get is theirs, so $1 million, $5 million, $10 million can be lifechanging, and that’s really what gets me coming back.

Andrew: I get that. I would have been so cynical about that answer long time ago, but I really do enjoy even every freaking interview.

Thomas: Yeah, I used to think it was cliché, and I used to think it was bullshit, and I used to think, “Well, it’s not really true. You can’t really truly be passionate about helping people because you have to have, like, a self-motive.”

Andrew: Right. Me too.

Thomas: But I feel like once you do it enough times, the compounding effect, I see enough people around the world that I bump into and they’re generally . . . it’s not like when someone sells a business with us they send us, like, a thank-you card and, like, send me a bottle of whiskey or wine and be like, “Thanks, Thomas. I could not have done this without you,” because that’s not really how people react. But I know we’re doing a good job when people talk about it and it gets back to us or people on the team that someone has mentioned that they sold their business through us and they had a good experience.

And because of the nature of confidentiality around the deals we do, like, the vast majority of deals are completely private and we can’t talk about them. The buyers and sellers often don’t talk about them publicly, so they’re probably not coming on to Mixergy and talking about these [inaudible 00:22:11].

Andrew: I’ve had a few. Less Accounting came on, and they mentioned you. Drip. Rob Walling came on and talked about how he used you to sell. There are a couple of others. More likely, they’re talking about it to me in private.

All right. Let me take a moment. I want to go back to high school and how you started the business. I know I kind of got off-track here, but first I’m going to take a moment and talk about my first sponsor. It is a company called Setapp. Have you heard of Setapp?

Thomas: I have not.

Andrew: You have not. Are you a Mac person or a Windows person?

Thomas: I’m a Windows person.

Andrew: You are?

Thomas: Yes.

Andrew: Why Windows?

Thomas: I just like Windows. Quite honestly, the first time I ever used a Mac, I didn’t really understand how to use it, and I’m quite a simple person. I like my routine. I like the same thing.

Andrew: I see you’re also Android.

Thomas: Android, yeah.

Andrew: Anyone who’s Windows or Android is not going to get this. Here’s the thing. This works only on Mac. There is an artisanal quality to some Mac apps where you sense the designer. You sense the aesthetic in the software. If you’re a Mac person and you’re deep into it, you know it, and you know what I’m talking about.

Personally, if I have a problem with my Mac, if I have something I want to do, I have no problem going online, finding the right software, paying $5, $20, $50 for it, just getting it and installing it. No problem for me to do it.

Like, for example, my accountant is a freaking great accountant. I’ve had them now for a long time. The one problem I have with them is they insist on sending me this big tax binder. I don’t want paper jack. I don’t want any of it. They’re so good that I deal with it. So what I do is I take the binder part. I stick it in this scanner that I have. I digitize it, and then I fill out their questions, a million different questions. “Did you buy real estate this year? Did you sell anything? Do you have any kids in school?” Inevitably, these questions will lead to something that will help me save money, so I’m willing to put up with it.

What I’m not willing to put up with is checking off the boxes, writing in it using the app that comes on my Mac. So I pay a little bit of money. I pay for a PDFpen, and it lets me quickly go through their PDF and fill it out. PDFpen is a beautiful piece of software. It costs a bunch of money. I’m willing to do it. My team is less willing to spend my money, even for $50, which is not a big . . . do you have a price that you allow your team to spend money on?

Thomas: No, not usually.

Andrew: For me, “Just spend within reason,” is what I tell people, but that’s not enough. I can tell them, “Spend within reason up to $50 and then come back.” They still won’t do it. Are you like that? Are your people like that?

Thomas: No, I find with 50 people, some people on the team, definitely, but we just have to have policies that work for everyone.

Andrew: So is your policy anyone can spend money up until a certain number?

Thomas: Not really, unless you’re out with clients.

Andrew: They have to come check it out with you?

Thomas: With clients, we are definitely more chilled out. There’s no limit on what you can spend on clients within reason.

Andrew: So that’s the problem. Someone’s computer could be slow. It could be giving them a problem, but they won’t come to you and talk to you about it, right? They won’t go and spend a couple of bucks.

Thomas: No, I definitely wouldn’t be very helpful either.

Andrew: Right. So what I would do is I would go get CleanMyMac, install it on my Mac, boom, clean the Mac, speed it up. Now my Mac is better, and I’m more productive, and I feel like I can get stuff done without having the computer get in the way. I don’t think that Andrea, my assistant, would be willing to spend that money on herself.

So what I do is you get Setapp. Setapp gives you over 100 amazing apps that will do things like clean your app and speed it up, help you write faster, fill in forms better, mount cloud-based drives on your computer like desktop drives and all that stuff all in one package. You give it to your people. They have access to all this for free – in a minute, you’ll see how – and then afterwards it’s included as part of the package. You buy it once, and they have it, and their superpower is that they have a great computer that works for them.

All right. Here’s the deal. If you have a Mac company – and you don’t – but if you have a company that uses Macs, go to setapp.team/mixergy. When you go there, they will let you have the software – all of it – for free for you and your team. Make them faster. Make them more productive. Make them really enjoy their jobs and their computers, because we work on our computers, not in an office. Go to this URL. Give it to them, and they’ll love it. This ad’s going a little bit long, right? I think I’ve finally figured out, like, how to sell this thing. That’s why I’m so excited. I’m spending a lot of time. It’s setapp.team/mixergy.

Is it weird that I’m doing the ads with you sitting here in my office?

Thomas: No, it sounds kind of handy. I need to go buy a Mac.

Andrew: I don’t know why you . . . actually, at this point, it doesn’t really matter because you’re probably living in Chrome, right?

Thomas: I live in Chrome, yeah. My life is saved in Chrome.

Andrew: I wish I could, but I don’t trust Chrome anymore. Here’s why. So we’re drinking scotch. Which scotch did you bring?

Thomas: Lagavulin 16.

Andrew: And you even know how to pronounce it. Lagavulin. This is really good.

Thomas: I was practicing.

Andrew: Actually, I literally did that too. There was this, like, video of a guy showing me how to pronounce the whiskeys. I hit Play and . . .

Thomas: I could’ve got it wrong there knowing me.

Andrew: You’re not ready for another, are you?

Thomas: Maybe another.

Andrew: All right. Let’s do it. Do you want to down what you’ve got there, or are you ready? You’re ready. Okay. So I have people come to the office, entrepreneurs, all the time. They tell me all the shenanigans that they do, and a lot of it is what I consider to be privacy violations. They have these plugins. They do great, but they’re looking at what people do, and they’re looking to see, like, which famous person that they know or that they admire, what they’re doing. That’s why I can’t do Chrome anymore. I got rid of it.

Thomas: I would say while Chrome is used for things like that, I spoke about our deals being private. Like, with anything related to deals, like, we save it down with an extremely secure process, and we do spend a lot of time making sure people aren’t kind of sharing files in a way that’s not secure.

Andrew: It’s happening. There’s a company that is known for being . . . like, the guys are admired. They’re great guys. I go to their house. I don’t even drink whiskey. They’re not talking because they’re drinking whiskey or beer. They’re talking because they’re so proud of their egg-headed abilities, and they’re showing me the freaking Google Drive accounts of their competitor. I saw your face sink. The documents. Go through. I’m really good at being accepting of anything that people do. I’m also very paranoid myself. This just hit me in the gut, and this is basically what’s, like, Silicon Valley culture. There’s an egg-headed, “Can we do this? Let’s do it,” type of attitude that freaks me out.

Thomas: Yeah, we’re very paranoid about stuff like that, particularly as the team grows. Like, we’re over 50 people now, so kind of confidentiality around files is super important. We’ve closed over 800 deals now, and we have to keep all that data for years. So every single deal we’ve ever done, I can still pull out details and the P&L account from a deal we did in 2011. We keep it all, so privacy is a big thing for us, but I get it.

Andrew: What do you do to save all those documents and make sure nobody has it?

Thomas: So we use a third-party, file-sharing data room solution. So they secure it all securely. It’s a five-figure-a-year subscription.

Andrew: What’s the name of the company that you use?

Thomas: So, currently, we use a company called . . . we just moved. We moved to SharePoint for all of our, like, internal work, and then the company we moved to, if I can remember . . .

Andrew: It doesn’t matter. I mean, if it comes to later, bring it up, but I don’t want to slow it down for that.

Thomas: Yeah, so I generally don’t work on the . . . the team will save stuff there quite often, and we keep it so private. Like, if you’re not working on a deal, you don’t have access to that data, and then we have people with, like, admin permissions who do. We’ve moved around quite a lot because we’ve found that a lot of these products often, like, aren’t that good. So we make the investment to continue to invest and make sure that we have it, and I think that’s kind of important because if you’re selling a business, you want to make sure the company you’ve giving the information to are not sharing it on Google Drive. We’ve banned Google Drive.

Andrew: Why? Why is Google Drive a problem?

Thomas: Just because I feel I don’t . . . well, what’s good about Google Drive is also bad about Google Drive. I think it’s very easy to share quite openly, but at least I know personally it tends to be shared with, like, personal Gmail accounts, which gets really messy, particularly if we have an issue with someone and we have to let someone go. Then they might still have access to Google files, and as you can probably imagine, as you had given that example of the company in their house looking at competitors’ accounts, there are lots of people out there who would want access to the data we have and keep [inaudible 00:30:38].

Andrew: Yeah, because I want to get a sense of what’s possible. That’s what I would like. If I could’ve started working for you right out of college, I would’ve understood a lot more about what businesses work, how business can be sold, how a business secure its customers, and reducing churn so that they could sell.

All right. Going back to college, you started by buying domains and selling them. Where did you buy them?

Thomas: I think the very first domain I bought was on eBay.

Andrew: eBay?

Thomas: This is going back to, like, 2008, 2007, maybe. You could buy domains on eBay, and about the only forum out there talking about domains was Digital Point. I don’t know if it exists now, but back then, that was the place to be and the place to hang out.

Andrew: It was that, and it was Matt Mickiewicz’s site. I forget what that was called.

Thomas: They had SitePoint.

Andrew: SitePoint.

Thomas: Which then became Flippa, which still exists now, but it’s declined as far as I know.

Andrew: So you went on there and you started selling it. Were you good at it? Did you make money selling domains?

Thomas: So I was terrible at domains.

Andrew: Why?

Thomas: Firstly, I think young, naïve kid who had never really done any, like, negotiating or selling in the past. People would kind of overplay how much their domain was worth, and they would say, “Hey, you can go resell it for this much.” So I would fall for a lot of the hype. So I probably lost a bit on some early domains. [inaudible 00:32:03] a lot. It might have been, like, $100, and then I only managed to resell it for $100, not the $10,000 they promised. I realized I didn’t really, like, get domains. The challenge with domains is because they don’t make any money unless they’re parked domains with a lot of traffic, which is unlikely. It’s very difficult to [inaudible 00:32:22].

Andrew: Parked domains with a lot of traffic or domains that people will type into search for something like combucha.com, right?

Thomas: They’re not that common, and even then you’re only making dollars a month. You’re not making ten thousands. So I realized you could buy an established website, and an established website could make money. I thought, “Well, that makes more sense to me.” I was doing a business degree, and I kind of understood that if it’s making money, then it has much more [inaudible 00:32:49] money.

Andrew: But in college, you understood that a functioning website with real revenues, ongoing traffic, and so on did well, but you weren’t buying and selling businesses back then.

Thomas: Right.

Andrew: You graduated from college. You said, “It’s time for me to go be an adult.” You got a job working for an investment bank, or was it an internship in college?

Thomas: So during college, I was working at an investment bank for an internship. That’s where I started buying domains and quite quickly I began to get into buying and selling websites. That was through 2009 and early 2010. I graduated May 2010, and I said to myself, “I need to make enough money in the next 12 months so I don’t need to go get a job.” So I set myself a target of $100,000, which was a completely arbitrary number. I said, “If I can make that, I’m not going to go get a real job.” I didn’t really have any entrepreneurial friends or family, so it was very much go out and figure it out. I had been buying and selling for a while, and I’d been moderately successful turning $100 into $500, $1,000 into $2,000.

Andrew: What did you do well? Looking back at the time, what did you do well that allowed you to do that?

Thomas: I think quite honestly a lot of it was literally just presenting things properly, and when I was, like, reselling, I was presenting it in a better way and I was communicating a lot better.

Andrew: So it’s going into the forums and then saying, “Here’s all the information you need, the traffic on the site, the age,” whatever.

Thomas: Just presenting it better, more clearly communicating. What I found – I don’t know if you’ve ever bought anything on eBay – but the professional sellers, the reason they have 10,000 sales and 5-star reviews is they reply quickly. They have a process. They have a system.

Andrew: And you did that?

Thomas: I was doing that. A lot of people, you would message them and say, “Hey, I want to buy your site. What’s this stat?” And they’ll reply three days later and say, “Oh, I’m not answering that question.”

Andrew: It is really hard to keep up with all the messages that come in, so I get it. You stood out.

Thomas: I was just doing the basics.

Andrew: Do you love doing that? Do you love sitting down at a computer and responding? Why did you give me that look what I asked you that question?

Thomas: So I went to the bar before, and I was thinking, like, “I kind of like the service industry, and I like dealing with people. I’m quite a natural introvert, so I think I like the online thing.” It’s like, “Well, you can talk to someone online. You can make money online, and you don’t actually have to . . . at least at that stage you don’t really have to go meet them in person. You probably don’t have to be on the phone.”

Andrew: But you were okay with them sending you messages. You respond back.

Thomas: I don’t mind. I like work. I’m kind of weird. Like, I enjoy work. I always have enjoyed work since I was kid.

Andrew: Did you live with your parents at this 12-month period where you’re trying to prove that you can do $100,000?

Thomas: No, because as soon as I . . . I moved out within a couple of months. As soon as I made my first, like, chunk of cash as in multiple thousands, I used that to go rent an apartment and left.

Andrew: So you were in the apartment late at night. I picture you late at night.

Thomas: All the time.

Andrew: All the time?

Thomas: At the time, I was living in the U.K., and I’d be dealing with primarily people in the U.S., so I would work until midnight or 4:00 a.m. every single day.

Andrew: Just sitting at your computer desktop or whatever.

Thomas: Every day, yeah.

Andrew: Just responding to people, talking to people, chatting them up, buying and selling. Then you discovered, “Look. I know a little bit. I’m going to write a book.” Is that what it is?

Thomas: Yeah, it was a book, and there was a an accompanying forum. I liked forums back then. I still like forums now. I like being able to share knowledge with people in a genuine way, and I think that’s good for any business. I think for any business you have, forums are good for sharing what you know.

Andrew: So you created a book and a forum.

Thomas: And a course.

Andrew: And a course.

Thomas: Back then, if you bought it, you also got a physical CD-ROM with the course on it.

Andrew: What year was this?

Thomas: 2010. You got a physical CD. Part of the reason is it kind of added a lot of perceived value, and it was also a way to get around chargebacks, because we were taking payments through PayPal, and if you were selling digital products through PayPal, there was no protection. We were selling the course for $100. If you’re selling a CD for $100, you have protection because they have to post you back the CD to get a refund.

Andrew: Got it. Got it. Okay.

Thomas: So that’s part of the reason we did it, and then I [inaudible 00:37:00] the actual CD [inaudible 00:37:02]. It worked.

Andrew: So you say “we,” but it was you by yourself at the time.

Thomas: Yes, and then we had, like, a couple of people who would help out and be involved.

Andrew: Friends?

Thomas: Kind of, like, people I’d known on the forums, basically, and the people early in the course. They’re like, “Oh this is cool. Can I help out?” Forums need moderators. They need people to help out.

Andrew: Eventually, people came to you and said, “I like what you’re teaching me. Can you just take this business, this website, and sell it for me?”

Thomas: Yeah, exactly. So I thought, “Hey, I’ve figured out what my business is going to be for the rest of my life.” I had no intentions back then to build anything big. I didn’t even consider anything beyond $1 million was even [inaudible 00:37:42].

Andrew: I’ve got to stop. This is where I get, like, too deep into people’s lives, but what did you imagine your life was going to be? Some, like, 40-year-old man going to a work that you loved on forums and living in a house with a wife and kids and what? A two-car garage?

Thomas: I don’t think I knew. I was like, “This is kind of cool. I’m just going to do this.”

Andrew: You don’t even think that far ahead?

Thomas: No, I think I just did it.

Andrew: This just blows my mind in so many interviews. As a kid, I always thought, like, how far ahead. “What type of bathroom do I want?” We talked about KKR, Kohlberg Kravis & Roberts. What I loved about them was they were an investment bank that was buying and selling businesses, but I also loved the lifestyle that came with it. They had their own kitchen with their own chef in Manhattan. I wanted that. You didn’t want any of it.

Thomas: I just didn’t know. I didn’t know it was possible. I didn’t know it could be achieved.

Andrew: You were just like, “How do I get to the end of the year and hit $100,000?”

Thomas: I [inaudible 00:38:28] income.

Andrew: That’s it?

Thomas: Yeah, I didn’t even think about hitting more. I liked helping people. I was like, “Well, I’m helping people. I’m making money.” Back then, when I was just selling courses, I didn’t have to be available that often. I could, like, check out. No one would be calling me. It was email support, so it was like, “This is easy. I like this.”

Andrew: So they come to you. They say, “Sell my business.” What type of businesses did they want you to sell?

Thomas: Yeah, then they came to me, people who had gone through the course. They’re like, “Thomas, great course. Thanks so much. Love the content. I’ve thought about, like, selling my website, but I don’t want to do the process myself. Can you just do it for me?” Again, I didn’t really have much money back then. I didn’t know what a business broker or an M&A firm really was. I was like, “Okay. Well, I’ll help.” I didn’t even really know what to charge. I thought, “I’ve never done this before, so I’m not going to charge you anything upfront. I’ll just take a fee on completion.” Back then, it was 10%. The first business I sold for someone was about $20,000.

Andrew: $20,000?

Thomas: Yeah.

Andrew: That’s great. What did they have that they could sell for $20,000?

Thomas: They were selling a product that helped you get extra traffic. So if you remember, for those of you have been around long enough, you didn’t use Google Analytics. You used, like, Allstats or AWStats, and they would track hits, and you could buy traffic, which would, like, increase your hits. It would be like, “Buy 10,000 visitors to your site for $10.” It was that kind of thing. I was like, “Okay. I can sell this.” Again, all I was doing is patching up what you had, listing it on forums like Digital Point, and dealing with buyers as they came.

Andrew: So they had a thing that would help websites get more traffic so they could show up.

Thomas: Yes, they were like a reseller.

Andrew: Of traffic?

Thomas: Yeah, exactly.

Andrew: Like page traffic, essentially.

Thomas: Effectively, yeah. Like, bought traffic.

Andrew: So you get $2,000. How do you feel about that at that point?

Thomas: I was like, “Wow. $2,000.” I was like, “All I’ve had to do is, like, answer a few emails.” A lot of people are really bad at communication, so I was like, “Well, I’m good at communication. Therefore, all I have to do is what I’m good at any way, and people are going to pay me.” My outlay of cash was close to zero. It might’ve been you buy a few, like, sticky posts on forums which could’ve been, like, $50, but it was no great investment other than time. Back then, my time was worth approximately zero, so if I could do it and make money with no outlay, I was like, “That’s great.”

Andrew: That’s it.

Thomas: I had all the knowledge, but I did not have to buy something big enough to make a living for myself. I would have needed to have $50,000 to $100,000, which I did not have. I had no idea where to get that from. So it was like, “Why not sell for people?” At the time, no one else was really doing it. There weren’t really any marketplaces. There weren’t really any other brokers. Like, over the years, as we’ve got bigger, more and more companies have been like, “Well, FE International do this. We can do it too.” So what you see today in the industry is definitely a lot more than it was back then.

Andrew: So you started. You said, “Look. I’m making now 10%, $2,000. It doesn’t take a lot of time. This is way better than selling an e-book with a forum. More money. I’m going to start to shift into that.” You started shifting into that. How did you get clients for that business?

Thomas: So from there, again, just from, like, I’d say the forum connections. Because we were the only ones really doing it, people would talk, and entrepreneurs, particularly successful entrepreneurs, network for a living and talk to people for a living. So people would sell their business, and they would go tell all their friends about it. They would tell their Mastermind group. They would tell their, like, business partner, their investor, their customers, whatever that might be. So very early on, it was that with people talking about it. It was us talking about it.

Andrew: Again, you being on other forums. What else? Do you remember others beyond SitePoint?

Thomas: I think, like, SitePoint and Digital Point were the main ones.

Andrew: Sorry. Digital Point was the one that you were big on.

Thomas: Yeah, I would go on there, and I would literally just talk about what we did. I would be like, “Here’s how we . . .” I was being extremely transparent about it.

Andrew: What’s your name on Digital Point? I’m going to go search you by member. What’s your user name?

Thomas: I have no idea.

Andrew: Really?

Thomas: I haven’t logged in for 10 years.

Andrew: Wow. Okay. It wasn’t like thomas20 or something?

Thomas: I honestly do not remember.

Andrew: Wow. All right. You didn’t have a handle that you went by all the time?

Thomas: Possibly.

Andrew: I remember Alexis Ohanian went by kn0thing all the time, and I think the O was a zero or something, the founder of Reddit.

Thomas: I don’t know, but, I mean, I know forums were good because you could share your knowledge similar to what we do now. We’re very open about how our process works. We will tell you almost every element of our process. There’s no secret sauce other than the fact that we do it consistently, but the vast majority of people and companies can’t replicate what we do because it involves a huge amount of skill and quantity. You couldn’t build a network of 50,000 buyers and investors overnight.

Andrew: Okay. Let me take a moment here to talk about my second sponsor, and then I’m going to come back and see how this thing evolved. At this point in the story, you’ve figured out that it’s not selling just empty domain names. It’s selling domain names with real businesses on it. It’s largely you helping people sell and then taking 10% cut, and it’s you on forums. Then we’re going to talk about the evolution of the business, how you ended up with a cofounder and so on.

But first I should tell you about my second sponsor, Toptal. Great company for hiring developers. You need to see this. If you and I had to start from scratch, a little bit of a developer. Let’s say we have a little bit of knowledge. We want to hire a developer from Toptal to build a SAS product for us, something simple. What’s a good idea? Having seen so many SAS companies get bought and sold, what do you see?

Thomas: So I personally really like Shopify apps at the moment.

Andrew: Shopify apps, plugins for Shopify store.

Thomas: Shopify apps.

Andrew: Give me an example of one that’s done well recently.

Thomas: So there’s an app I’ve seen called Product Customizer.

Andrew: What does that do?

Thomas: So Shopify natively does not let you have personalized products. So if you want to have personalized t-shirts and you want to sell them, Shopify does not natively let you do that within checkout. The good thing about the app store is there are a lot of different apps like Product Customizer that let you do different things with Shopify itself. Product Customizer, you add the app to your store. It’s $10, $20, $30 a month, so it’s very chap and affordable, the recurring fee, and then you can make edits, like, in-cart to personalize t-shirts on the spot. So if you have a small store selling personalized products, you can add this, and you can sell personalized products. That’s what I’ve seen recently.

Andrew: Tell me if I’m wrong. What I like about Shopify as an app store is they’re charging their customers anyway, so they’re going to charge them a little bit extra. They’re basically collecting money for the app maker.

Thomas: Yes, that’s the beauty of the Shopify store, which a lot of people overlook, and part of the reason why . . . well, churn on Shopify can still be quite high because of the nature of the demographic.

Andrew: How high? What are we looking at, really?

Thomas: You generally expect between 7% and 12% churn.

Andrew: Okay. Monthly?

Thomas: Yes.

Andrew: Wow.

Thomas: For Shopify apps. So Shopify themselves do not disclose their churn data, but I suspect their churn is also in about the 10% range.

Andrew: Really?

Thomas: Yes.

Andrew: [inaudible 00:45:43].

Thomas: Because of the fact that a big part of the Shopify demographic are people who want to make some money online. They’ll set up a store. They’ll go through the free trial. They’ll realize that actually running a business is tough. They won’t set [inaudible 00:45:57].

Andrew: But they won’t keep the store going anyway?

Thomas: They’ll shut it down. Some will keep it running for a while.

Andrew: I would keep mine. Even if it failed, I would just keep it going forever it seems like.

Thomas: At the moment, I feel like – again, this is my personal view – the economy is good. Most people are doing quite well financially. Most people have, like, side hustles or side gigs.

Andrew: Yeah, yeah, yeah, [inaudible 00:46:12].

Thomas: If you’re making any money, paying $50 or $100 to have a website up which sells Andrew Warner t-shirts could be quite cool. If the recession hits . . .

Andrew: Then churn could go up, absolutely.

Thomas: . . . and people start losing their jobs, then people are probably no longer going to keep funding their, like, fun weekend subscriptions. They’re going to be like, “Well, where can I cut back in my life? Probably my Shopify subscription.” Yeah, so I suspect Shopify churn is quite high. We’ve looked at, as an M&A firm, lots of Shopify apps. I think the lowest I’ve ever seen is 7%. I’m sure someone can prove me wrong with something lower than that.

Andrew: What’s 7%?

Thomas: Seven percent churn.

Andrew: Oh, 7% churn. Really? The lowest you’ve seen is 7% monthly churn?

Thomas: Yeah, and the reason is even if you lose no customers yourself, that’s just from [inaudible 00:46:57].

Andrew: Oh, because Shopify is losing their customer.

Thomas: Yes, exactly.

Andrew: And so if they’re not paying Shopify, you’re not getting . . .

Thomas: Yes.

Andrew: Okay. This is why, by the way, it’s really helpful to talk to other companies about their churn. I think it was . . . what’s his name? David Cohen from WPEngine. From what I understood, he was really worried that he had a high churn until he talked to his competitors, and then he saw, “Oh, my churn is actually not bad.”

Thomas: [inaudible 00:47:18] is brutal for churn, yeah.

Andrew: Right. And so he realized, “All right. It’s not that bad, and you don’t have to try to beat the industry average all the time or beat yourself up for failing.”

All right. Let me say this to close out the Toptal ad. One of the things I’ve noticed in doing interviews is people will need a thing for their company, and they’ll go and create it just for themselves. And the thing to do is to say, “I’m going to create it for myself, but I’m also going to make it available to others.” So if you’re going to hire a developer to create something like a Product Customizer for your business, you might as well get a great developer who’s going to make it work for you and for other people who are in your same situation. If it’s on the Shopify platform, so much the better because Shopify is going to sell it. They’re going to promote it for you, collect the money for you, and then send it over to you. Am I right about that?

Thomas: Yeah, exactly.

Andrew: That is the approach to take. What’s the name of the guy? Ezra Firestone. Is that the name?

Thomas: Firestone, yeah.

Andrew: That’s basically what he did. He said, “I’m selling cosmetics for women over, like, 40 or 50,” right? That’s the business that he’s in. “I need an upsell. After somebody buys one thing for their cream, I want to be able to sell them something else. We’ve already put a credit card in. I’m going to get a developer to create an upsell.” But the thing that he did was say, “It’s going to be for me, but I’m also going to put it in the Shopify store and sell it to others,” right?

All right. So Toptal is a phenomenal place to go and hire great developers. If there’s an idea that you need for your business, if there’s more development needs that you have than you have team time to do it, go to Toptal. Hire the best-of-the-best developers. They will give you a product you will be proud of. You’ll be able to sell it to others and grow your revenue.

I highly recommend that you don’t just go to Toptal to hire these phenomenal developers but you go to toptal.com/mixergy where you will get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to two weeks. If at the end of the period you’re not 100% satisfied, you will not be billed.

I talk too fast, don’t I?

Thomas: It sounds like a really good deal and like I should be signing up while I’m in the interview.

Andrew: You freaking should. All right. Let me spell it. toptal.com/mixergy. Look at this. Let me show you the phenomenal model that they’ve got for that. Don’t be afraid to ooh and ah. Even in our me-too society, that isn’t . . . right?

Thomas: It’s good.

Andrew: toptal.com/mixergy. By the way, I noticed that you’re a little afraid of putting your glass on the table, which I appreciate because it annoys. Take one of the napkins in there. Then you can put it underneath the glass. I actually really prefer to have a guest in the office to do the interview.

Thomas: Yeah, it’s cool because, like, I looked at your office, and I was like, “Oh, you’re five minutes away from my office, so why not come in?”

Andrew: You’re a guy who’s done a bunch of podcasts. As I understand it, the first thing that took off for you was going into forums, being the guy, having people talk about you and so on, and helping other people. The next step was podcasting. As a guy who has done a bunch of podcasts remotely and now doing it in person, how does it feel to do it in person?

Thomas: I definitely like doing them in person. I think it’s much easier to build . . . it’s probably the reason we now do a lot of conferences with FE in general. I think in person you just build a completely different connection than you can over the phone.

Andrew: Yeah, I like it too.

Thomas: Yeah, and I think the prep beforehand and afterwards, you’ll probably be able to, like, share more stuff that you might not necessarily be able to share very publicly.

Andrew: Oh, yeah. Heaton Shaw and I did an interview in person. I think he was the first person to let me try it in person at the office with me recording it all myself. We went out for dinner. It was such a freaking good conversation because we had this whole conversation.

Thomas: [inaudible 00:50:38].

Andrew: Yes, and the fact that we had this hour of rapport-building and these good vibes, we then went, and he’s got tons of good inside information.

Thomas: Yeah, the thing that makes it interesting as well, a lot of people spent a lot of their time behind their computer screen all day, so sometimes it’s nice to get out and meet other good people.

Andrew: But I’m watching you as you drink, because I watch everything. I’m watching you as you drink. I think you’re being restrained. You’re trying not to drink too much because you don’t want to reveal too much. You’re afraid that I’m trying to, like, trick you into drinking alcohol and saying too much.

Thomas: I think we need to be a little bit further through the bottle before I start revealing everything.

Andrew: It that a concern? Are you somebody who is, like, so on point that you’re going to watch what you drink to not go crazy?

Thomas: Oh, no, not really, to be honest..

Andrew: Yeah, this is just the way you drink?

Thomas: Yeah.

Andrew: If we were to drink at home at your place, this is how you drink?

Thomas: It would depend on the day. Sometimes I would drink more and faster.

Andrew: Do you have a place at your apartment to drink?

Thomas: Yeah.

Andrew: You do? Where? If we came over after this . . .

Thomas: A balcony overlooking the bay.

Andrew: The balcony?

Thomas: Yeah.

Andrew: And that’s where you bring friends over?

Thomas: Yeah.

Andrew: Have you made friends enough here in San Francisco to drink with?

Thomas: I’ve made a few. My wife has made some friends as well.

Andrew: Because she works at a company.

Thomas: At a bank, yeah.

Andrew: Got it.

Thomas: So she has friends there. We have a lot of wine in our apartment from various Napa trips, so it’s a good place to host, and the view from our apartment is amazing.

Andrew: Really? I don’t want to reveal it by accident. I’m so paranoid. There are some famous buildings in San Francisco, right? Have you noticed that people will talk about certain buildings?

Thomas: Yeah, I was talking to my wife the other day, and it occurred to me. We were walking along by the Ferry Building down the Embarcadero, and I was looking at the Salesforce Tower, and it occurred to me that Salesforce Tower is such fantastic advertising because if you live in San Francisco, everyone knows the Salesforce Tower. And, yes, I’m sure the Tower cost a lot to build, but you’re always going to think of Salesforce.

Andrew: My freaking three-year-old knows the Salesforce Tower.

Thomas: And when he launches his first business or she launches her first business, it’s going to be using Salesforce.

Andrew: Right. It does actually make themselves . . .

Thomas: They’ll know about it.

Andrew: And you know what they did that’s interesting? First of all, it does stand out in the city. It’s tall, so the kid can’t help but bring it up. They’re also using a video of an aquarium with fish swimming around.

Thomas: That’s what we saw when we were walking. My wife was like, “They’ve got a [inaudible 00:52:44] show on the top of Salesforce.” I was like, “[inaudible 00:52:47].” It was on the thing. That seems like actually great advertising.

Andrew: So Russell Brunson comes to San Francisco, the founder of ClickFunnels. He sees this freaking thing. His eyes open up, and he goes, “I’m not thinking big enough with ClickFunnels. Look at how big this company is. There’s a Salesforce this. There’s a Salesforce that.” Do you feel that way coming into San Francisco? Do you start to think bigger because you’re here?

Thomas: You do think bigger.

Andrew: You personally.

Thomas: I made the $1 million joke, and that was some flippant comment because, yes, $1 million is still a lot of money wherever you are in the world, but in San Francisco, it’s the same in New York where you have [inaudible 00:53:23].

Andrew: I’m not being flippant. I’m serious. In New York, you’re a loser if you have $1 million. That’s the attitude there, but when you come here – come to you – do you feel as you’re looking around and you’re driving past Optimizely Business, you’re going through Airbnb’s office, which has a beautiful lobby, do you feel like, “There’s so much more I want to do?”

Thomas: It definitely is . . . it’s not really lack of motivation, but it’s a re-motivator, and it definitely helps you see what can be done.

Andrew: Who’s the person who’s inspiring you the way that Mark Benioff and the Salesforce this and that inspired Russell Brunson?

Thomas: I don’t know that I necessarily have an individual person that inspires me, but I do know there are lots of different people who have lots of different . . . I’ve worked with lots and lots of different successful people, and all of them are completely different. Like, people have completely different . . .

Andrew: You don’t have a person who inspires you?

Thomas: Not really. I’m kind of weird like that.

Andrew: I feel like you need that.

Thomas: I just don’t have it.

Andrew: You don’t?

Thomas: I don’t have it.

Andrew: Could it be me? Do you want it to be?

Thomas: I just work with so many people who have so many different approaches. I’ve always thought there’s no right or wrong way to do everything. Like, I don’t know how much you’re on Twitter, but at the moment there’s lots of people arguing about how many hours you should work. There’s people saying, “Oh, it’s bad to work 80 hours a week. You want to work 10.” I like working 80 hours a week.

Andrew: You do 80?

Thomas: Most weeks. But if you want to work 10, who cares? Work 10. I don’t think there’s a right or wrong answer. I don’t think the guy who works 80 hours a week is wrong, and I don’t think the person who works 10 is wrong.

Andrew: That is the problem that they’re arguing over who’s right about something so silly. It reminds me of my two kids who argue whether the best color should be purple or their favorite color should be blue.

Thomas: It’s irrelevant.

Andrew: Who gives a rat’s ass?

Thomas: It’s the same with wine and whiskey.

Andrew: No, no, there’s an answer there.

Thomas: If you like the pinot noir, drink the pinot noir. If you don’t want that, don’t drink that.

Andrew: No, there’s a real answer with whiskey. Okay. So then you go on to podcasts. Who’s podcast did well for you?

Thomas: So I was on Mixergy many years ago. Mixergy was great. We spoke a bit about the Drip deal. So Rob Walling’s podcast, Startups for the Rest of Us, was a good one, and I think primarily because there’s a lot of entrepreneur podcasts that have quite a generic audience. One thing that’s done really well for us over the years is not necessarily going where the biggest audience is, going where the most specific audience is. So it could be a podcast that on the Apple Store has maybe two reviews, and it seems like no one listens to it, but the audience is so specific.

Andrew: What’s a topic that’s so specific to you that’s great?

Thomas: So, for example, it could be like How to Build a Blog That You Can Sell Using SEO.

Andrew: Oh, got it, because you’re okay taking these guys who are selling the sites for $80,000.

Thomas: Yeah, exactly. One lead for us is worth, like, five figures in fees on almost every deal or more, so we don’t need a huge number of leads.

Andrew: And it’s no longer you doing it. It’s someone on the team who’s doing it, and if they’re getting practice by selling a blog for $50,000 or $20,000, great. They then will know the process, and they’ve created a relationship with someone who might then go on and sell something else through you.

Thomas: Yeah, so myself and my business partner are involved and oversee all parts of the deal process, but on an individual basis, you are very rarely working with Ismael, my business partner, and you’re very rarely working with me. On bigger deals, I’m often more actively involved. Smaller deals, I’m aware what’s going on, but I’m not the one making the calls and doing the negotiating.

Andrew: Okay. So we talked before we got started. Forums got to you to $1 million in sales.

Thomas: In revenue, yes.

Andrew: In commissions.

Thomas: Yes.

Andrew: For your business.

Thomas: Yes.

Andrew: Annual.

Thomas: Yes.

Andrew: From being on forums.

Thomas: Just forums.

Andrew: And you still don’t know the forum name?

Thomas: Ask me why I’m not still on forums. I generally don’t remember. We stopped forums many years ago once we started to get the word of mouth, and then email became quite a big source. We always focused on email.

Andrew: Your email list?

Thomas: Yes.

Andrew: Because you built your email list. [inaudible 00:57:05] was good.

Thomas: And the nature of it is, if you’re already selling businesses and you’re telling people about new businesses all the time, one thing people tend to do – and it’s very difficult to track, but we know it happens – people will, like, forward emails to their friends. So if we send them, like, “Hey, famous podcast,” we wouldn’t say Mixergy, “famous podcast for sale,” you’re going to forward it and be like, “Hey, is this Andrew’s podcast?”

Andrew: Oh, because you’re not allowed to use the person’s name or the company name that you sold, you get some credibility for it.

Thomas: People start to forward stuff around. It’s very difficult to track, but we know it happens.

Andrew: You’re not right not to drink. I didn’t eat lunch, I don’t think. No, I had a grilled cheese sandwich at 11:00. This whiskey is hitting me hard. We’re going to go to dinner.

Thomas: [inaudible 00:57:49] the good stuff.

Andrew: You have a good place for dinner for vegetarian food?

Thomas: I have no idea.

Andrew: You don’t? I’ll find out.

Thomas: [inaudible 00:57:55].

Andrew: Do you like Burmese food?

Thomas: I love Burmese food.

Andrew: Oh, Burmese food is good in San Francisco. All right. So you go on to podcasts. You start doing this. You’ve mentioned a cofounder or a partner or something, right? A 50/50 partner?

Thomas: Yep.

Andrew: Why did you give him 50% of the business?

Thomas: At the time, first, we were much smaller when he joined. He joined in 2012, so approximately 2 years in.

Andrew: This is after you had that big $30,000 site sale?

Thomas: Yeah, so we were making hundreds of thousands. We were not particularly profitable because I had been investing in team. I wouldn’t say it was necessarily directionless, but we were still doing lots of different things. He came in. Like, the first thing he did was, “Let’s focus on M&A or brokerage. This way, we make our money. It’s the least capital outlay. It’s the easiest thing we’re doing, so let’s keep doing it.”

At the time, we thought, “Well, we’re going to be doing this for a long time. We can’t build an M&A firm.” It’s sort of like a software business. You can’t go viral with an M&A firm and quadruple in a year. You just physically can’t build the infrastructure to do that. It’s not possible. You can’t go viral and have a 2-year exit, so we knew it was going to be a 10-year-plus project. So back then, I was like, “Well, big picture, does it really matter to me if I have, like, 55% or 50%?” Ultimately, I think with a partner it’s good to be equally aligned and incentivized because it is tough.

Andrew: I get it, but forget about the incentive. What about the say-so? You now have given him 50%. You could’ve done 51/49 or something.

Thomas: That’s definitely something. First, are you surprised that we have that dynamic? One thing we decided early on, we were at 50/50, and what we used to do is every big decision we would both make. And then we got a couple of years in, and we said, “Okay. Ismael is going to be CEO. He’s better at being CEO than me. I like being out. I like talking to people. I like bringing in business. I’m not a good CEO, so he can be CEO.” And we just decided back then, even though technically and legally, yes, we’re 50/50, so decisions are joint, we said, “Any decisions, if we’re unsure, he makes the decision.”

Andrew: What I understand is he is good with team. He has the patience to manage, to have people complain about stuff and deal with it. You don’t have the patience for that.

Thomas: Less so.

Andrew: Less so. He’s also great with numbers. And what you do is you go to conferences and wear suits in a freaking conference full of techies. Do you always wear a suit in a conference?

Thomas: Always wear a suit.

Andrew: Yeah, that’s why you freaking standout. You also have the beard, which now looks like you’re relaxed. Obviously, no one’s watching. He’s wearing a collared shirt. You were working from home all day. Collared shirt and a sweater over it and nice shoes. Did you have those shoes polished?

Thomas: They’re relatively new.

Andrew: Oh, they’re new. I was going to ask you if you have them resoled.

Thomas: But my wife made me polish them.

Andrew: Okay. So did you have them polished, or did you polish them yourself?

Thomas: I had them polished.

Andrew: Does it ever feel to you like, “All these people are walking around in t-shirts. What am I doing here? I could go downtown.”

Thomas: So part of the reason, one thing, so in our two offices in New York and London, our whole team wears suits and ties. When I’m in San Francisco, I tend not to because I find a suit and tie in San Francisco, you’re way out.

Andrew: Yes, you’re too weird.

Thomas: I really try and dress to our audience to some extent.

Andrew: No, you wear a collared shirt. You wear a suit jacket to conferences.

Thomas: Yeah, conferences are different.

Andrew: If you were to talk to Rob Walling about selling a company or buying a company, would you go to his meeting or to lunch wearing a collar?

Thomas: Yeah, I would wear a collar, yeah.

Andrew: You would?

Thomas: I wear a collared shirt all the time.

Andrew: Because it’s who you are? It is who you are.

Thomas: I just feel like the perception, if you are hiring someone and you’re going to pay us five or six figures or maybe even more than that to sell your business, I think the collared shirt adds an element of credibility.

Andrew: It stands out at a freaking conference. I forget what conference it was. You go in there.

Thomas: It was Traffic & Conversion. I remember.

Andrew: Yes. Did you come to our scotch night?

Thomas: No, I think . . .

Andrew: Yes, you did.

Thomas: At another event. Oh, that was the Converted conference where I came to your scotch night.

Andrew: Okay. Right. Again, it stands out. It does look like, “Okay. Here’s this serious guy in the room.” The reason I bring this up is this is also part of your next strategy, as you told me before we got started. You said, “Look. The next thing was going and meeting people in person.” Did you go to 100 conferences in a single year at one point?

Thomas: Last year, I did about 50. The team as a whole, we did about 75.

Andrew: Okay. So if you’re doing 50, that means you’re spending at least 100 days away from home in a year.

Andrew: It was about 150 last year.

Andrew: How are you keeping your marriage together and doing that?

Thomas: With a great wife.

Andrew: Do you guys FaceTime every night?

Thomas: No, not really. My wife works full-time, so she’s pretty independent, but it is a big sacrifice. I would say as the company’s grown and got bigger, you definitely start to get more of the personal rewards. We’ve got to the stage in the last year or so where my business partner and I have started to pay ourselves a little bit more, so you start to see it, and that helps at a personal level because you actually start to see the fruition of your labor.

Andrew: It really does, yes. I didn’t realize that, yes.

Thomas: I got the nice apartment in San Francisco with a nice view, which is way more money than I even considered I could even, like, make in a year, so it feels excessive.

Andrew: You’re renting?

Thomas: Rent.

Andrew: Why didn’t you buy? Why didn’t you buy an apartment?

Thomas: We considered buying. We haven’t been here long enough that we want to figure out where we want to live.

Andrew: The best answer I had to that was Jason Calacanis. We lived in the same city for a long time. I guess maybe we still do. I don’t know. I said, “Jason, you’re a freaking animal.” I had seen his wife socially without him because he’s working. At the time, he was working all the time. He might still be doing it.

I said, “What do you do to keep this wife from leaving you?”

He had the best freaking answer. It was so thought out. He goes, “When you take her out, go, like, excessive to the point where she would want to tell her friends about it.”

I said, “Well, give me an example.”

He goes, “Oh, here’s one.” I forget the mountain where you can go hike in Santa Monica. He took his wife up there on a hike. He had a picnic lunch for her. He goes way big. That’s a clever idea, a clever response.

Do you have anything like that?

Thomas: Well, so, firstly, the nice apartment. My wife says, “Well, if you’re away a lot, I want a nice apartment.”

Andrew: Okay. That makes sense, right? Okay. What else?

Thomas: Which makes sense. We go to nice restaurants. One thing I make a big effort to do when I’m around. I used to come back, and I’d be really tired. I’d be like, “You know what I want to do? I just want to sleep,” and she said, “I’m not going to stay married to if you keep just wanting to sleep.”

Andrew: I need that, yes. [inaudible 01:04:22].

Thomas: [inaudible 01:04:23], and I said, “Okay. I’m tired, but I’m just going to have to get over it and go out.” So we now make the effort, particularly in San Francisco, over the weekend. We have a car, so we’ll drive out. We’ll go hiking. We’ll go to vineyards. We’ll go to different places. So every single weekend, you’ll never find a weekend where we’re at home watching Netflix.

Andrew: And you’re not working weekends?

Thomas: I’m traveling weekends. I’m often away. Last year, probably about 15 weekends I was away, but I’m around enough where we can make the most of it. I’m always working, so if you email me, I will always read it within an hour, basically, any time, any day, all the time. It’s a bad habit.

Andrew: Will you read email on a date when you’re out?

Thomas: Potentially.

Andrew: You will? Oh, really?

Thomas: I’m bad. It’s miraculous that I still remain married.

Andrew: I think, actually, that’s great. Going out of town is a great idea. I remember when I lived in New York and I finally discovered there’s a world outside of Manhattan, and it was so freaking accessible. In New York, you could get on a train from midtown Manhattan, go to Boston, go to D.C.

Thomas: Yeah, it’s a few hours on a train.

Andrew: And hotels, even nice hotels, are not that expensive on the weekends especially. If you go to Hilton, Hilton has become the conference hotel. If you get them on the weekend, you can do it for like $60 or $100.

Thomas: I’ve always done Hiltons, yeah.

Andrew: Right? Totally.

Thomas: So we do that all the time. I don’t know Jason that well at least, but I have a similar approach where we try and make the most of the weekends and somewhat reap the benefits of working hard and doing well. Why not spend a bit? You don’t have to [inaudible 01:05:56].

Andrew: It does also inspire me to go back into work because I see what it is.

Thomas: It gives me the motivation. I’m like, “Well, we just spent a lot of money on dinner, so I now need to go back and make some more money.”

Andrew: I don’t think I’m revealing something that I shouldn’t, but Wil Schroter, the guy from Startups.co who bought Zirtual and a bunch of other companies, when he was living here, one of the things he did was he would go to the highest-end – like, I didn’t even know these freaking places existed – hotels and resorts with his wife and daughter. He now has a son too. So he would just go, the three of them, and it wasn’t just inspiring for him. He would talk about the people he would meet and the conversations he would have because who could afford these places, right?

Thomas: Yeah, $1,000 a night, $1,500 a night.

Andrew: Right, right. Who knew? So you’re sitting there, and you have these interesting conversations, and even if you don’t do work together, you get inspired in a different place. Like, some people get inspired by scenery. I think we get inspired by the possibilities that other people have discovered and share with us.

Thomas: I like to do the same thing.

Andrew: Okay. So conferences. Why did you decide to organize your own conference? When I asked you, “What is your role in the company?” you said, “I’m the guy who goes to conferences. I’m the face of the company,” right? Are you the face of the company?

Thomas: Somewhat.

Andrew: You are? I only ask because I saw your eyes blink three times when I said that. Why? Why do you not like that I said that?

Thomas: I would say we’ve probably tried to get away from that a little bit. Now people know. It used to be people knew me, Thomas Smale. Then it was people knowing the FE International brand. Now I’ve tried to get a little bit more involved again where people know me, but we try to use me where I’m helpful. So I’m not micromanaging. I’m not involved in every single deal, but sometimes it’s value-adding to bring me in. And the same with conferences and events. Sometimes it’s useful for me to be there. Other times, if we have a booth, for example, at an event, there’s no point in me being there chatting to random people and handing out business cards. I’m not good at that.

Andrew: Are you a schmoozer?

Thomas: No, I’m not.

Andrew: You’re not a schmoozer?

Thomas: I am a terrible schmoozer.

Andrew: So you came to my scotch night. I saw you there for a second. I remember you came with Kim Walsh Phillips, right? And then, boom, you disappeared. Did you have a drink? Who knows?

Thomas: I probably had a drink.

Andrew: Is that part of the process? I’ll be honest with you. For me, that is a systemized process. I get a great room. I get a bunch of bottles of whiskey. I get to meet people, and it creates this familiarity. Rob Walling and his wife got in my bed with their clothes on at the party, but it became, like, a hook for conversation with his wife. So Sherry and I now became friends even though we had a five-minute interaction. I take her to a restaurant or a bar or something, it’s not the same feeling, right? So for me, it’s all thought through. For you, when you go to conferences, thought through or not?

Thomas: Definitely thought through.

Andrew: So what’s your process?

Thomas: We host a lot of, like, mini events like that, so drinks events, happy hours, we quite often call it, where we might just keep everybody simple and casual. I’ll still be in my suit, but we’ll order some pizzas or food that everyone likes.

Andrew: And you’ll do it where? At the bar?

Thomas: A local bar. Maybe in a hotel bar.

Andrew: Oh, you go outside, maybe?

Thomas: Yeah, maybe within the conference hotel but maybe, like, the next-door bar or rent a small area. We’ll invite clients and tell clients to invite other likeminded people, so it feels somewhat exclusive, but it’s not pay-to-play.

I used to be super paranoid about getting buyers and sellers in the same room because I thought, “Well, people are just going to do deals together,” but, ultimately, it’s very similar to when I wrote the e-book years ago and realized that people actually want your help. Even if they do not necessarily work with you directly, people still remember who helped them, and people still talk about us. I think before the interview we were talking about a couple of familiar names, and, yes, they might not necessarily have been a client of ours . . .

Andrew: I’m going to throw one out. [inaudible 01:09:34].

Thomas: That’s a good example. We’ve spoken many times over the years.

Andrew: He sold. He talked to you freaking over and over. Were you personally hurt that he didn’t use you to sell his company?

Thomas: No, not at all.

Andrew: You’re not hurt at all. No, I can see, actually, just like I can see your eyes flutter at times. You’re not at all hurt.

Thomas: No, I think people have to make their own decisions. One thing we never do, we never hard-sell people. I’ve never ever wanted someone to sit on the other side of the table and say, “I regret hiring FE. I could’ve done it myself.”

Andrew: But on an emotional level, you’re not hurt by that. If somebody listens to another podcast, I feel like a failure. I literally shave, thinking about my buddy Colin when I first met him.

People ask, “What do you do?” This was, like, a parent group.

I say, “I do a podcast.”

He goes, “Do you know what’s a good podcast? The Economist.”

I go, “Dude, what are you talking about? Like, I don’t need you talking up The Economist right here.”

And he did it again two times after he knew me. Still, that bothers me while I shave. I can’t shave sometimes without thinking thoughts like that. You don’t have that problem.

Thomas: No, I think [inaudible 01:10:36].

Andrew: You’re not going freaking [inaudible 01:10:36]?

Thomas: So for us to build a billion-dollar business, which is what we’re going to do, the industry has to be more than $1 billion. We cannot be 100% of the industry and it be $1 billion. It’s just not possible.

Andrew: But this is going to go beyond you. You’re not growing the business by being a nice guy.

Thomas: Yeah, the only way that happens is if other people are doing well and they’re talking about it, and that brings more people into the industry.

Andrew: So by reducing the need to close the deal, you’re more likely to close other deals?

Thomas: Our job is to make sure we’re within every conversation, and we’re giving the right advice. Sometimes the right advice is, “You should not be working with us.”

Andrew: So your serious plan is, if you’re in every conversation, as many conversations as possible, giving advice, eventually it’s going to grow your business.

Thomas: We give very specific advice. We will tell you what we think your business is worth. We will tell you what you need to do to get the business to a state where we think you can sell it. If you don’t like that number and you want to do something else, most people go away and work on it and then come back to us at a later stage.

If you want to go and run a different process or do it a different way, a lot of people that work with us have multiple options. It might be sell. They might want to go raise money. They might decide to go get a business partner. They might decide to pivot. They might decide to go get a coach. There’s lots of different things for them to go do. In my mind, as long as people continue to be successful and build good businesses and they’ve had a good experience with us, you don’t necessarily have to hire a company and work with them to have a good experience and build goodwill.

And opposite to that, not every single person that works with us would say, “This was a fantastic experience.” Some people aren’t quite as happy at the end of the process. So you can get just as much goodwill from people who haven’t worked with you but have had a conversation, and people, particularly smart entrepreneurs, you can’t bullshit smart entrepreneurs and build a good business on a consistent basis.

If you give people honest, direct, and true advice, they will appreciate that, and they will talk about it. I think to be really good at sales, you have to know when to say no, and you have to know when you’re not the best fit. And the nature of what we’re doing, we’re not always the best fit for what people have.

Andrew: You know what drives me nuts is in doing all of these interviews there isn’t a thing, a one approach. I’ve talked to a few entrepreneurs. I told you I grew up wanting everything, and I thought that was the only approach.

Thomas: There is another approach. We’ve definitely got some competitors, and their belief is what they do is best, and you should always hire them, and they’re right.

Andrew: Empire Builders. Is that the name of the company?

Thomas: There’s a company called Empire Flippers. They have more of a marketplace. You can list your business for what they say it’s worth.

Andrew: Don’t they do brokering too?

Thomas: I think they, like, help in the process, but they’re not really, like, an M&A firm like we are positioned [inaudible 01:13:26].

Andrew: Here’s the thing that I’m getting back to. You don’t have the same approach that I had of, “I’ve got to do something. A million’s not enough,” and life is okay. But you do have the billion-dollar vision. What would happen if you didn’t hit $1 billion? Would you feel like a failure?

Thomas: Yes.

Andrew: You would?

Thomas: Yes.

Andrew: Okay.

Thomas: So things definitely changed. I would say part of the reason having a business partner was important to me is Ismael always had a much bigger vision. He came in, and he will joke about it. If you were interviewing him now, he would joke about the fact that when he met Thomas, Thomas thought the biggest business you could build is $1 million because that generally was. I thought that was the biggest business you could build in this industry

What we really didn’t know years ago because the industry didn’t exist, the industry was less than $1 million in fees. Now it’s significantly more than that. I also think, like, we’ve caught up to our location. We moved to the U.S. We were based in London for very many years. We still have an office there. We moved out here. The U.S. is a much bigger and more affluent place than the U.K. People are much more entrepreneurial, so straightaway our eyes opened toward what was possible.

And different cities like New York and San Francisco, in my mind, it’s just completely different to London where London, yes, is an affluent city, but a lot of it is old money. San Francisco, yes, has some of that, but people here are entrepreneurial. People are making their own money. Maybe the generation before them also made money, but it’s newer money. It’s more entrepreneurial.

I feel like the biggest thing you can build in San Francisco is much, much bigger than somewhere like London. You can walk into a room here, and if you have $10 million, you’re nothing, but you can’t even get into the room with $10 million. In almost any room in somewhere like London, as an entrepreneur, you would be able to walk into basically any room with a $10 million business.

Andrew: I think you could walk into a lot of rooms. If you have the right swagger, $10 million is enough or the right friendliness. They love, like, the friendly . . .

Thomas: I definitely think there are definitely ways that you can get into the room.

Andrew: No, no, I don’t mean literally that way. I mean that it’s more posturing and also more . . . but I guess you’re saying something different. I’m going a little too [inaudible 01:15:49] on it.

Thomas: I’m just saying in terms of vision I just feel like New York and San Francisco in particular are, like, big-thinking cities, and a lot of our clients aren’t based in these places. They’re based elsewhere, middle America.

Andrew: Did you come here to get those clients, to get the businesses that are more Silicon-Valley-like?

Thomas: So New York, yes. San Francisco, yes. We have a lot of clients here.

Andrew: But you personally moved here because of that?

Thomas: Yes, we have a lot of business in California.

Andrew: Already?

Thomas: Yeah, a lot of buyers and sellers based in California.

Andrew: Funded companies?

Thomas: Somewhat. Like, definitely more funded companies than we have elsewhere, but the vast majority are still self-funded. The thing with this area, though, is there’s a lot of people that have . . . years ago, if you go back 20 years and you work for a company and you make $10 million, you would invest your money in real estate. Everyone invested money in real estate in California, maybe the stock market. You might go to Vanguard and buy an index fund, which I also do, so there’s still room for that.

Nowadays, you have a lot of very successful tech workers who might be even, like, mid-level engineers at places like Apple making $500,000 a year salary plus $500,000 bonus, and they’re spending $200,000 a year, so they’ve got a bunch of cash. Where are they going to invest it? Do they want to buy real estate? Yes, some do. Do they want to buy an SAS business someone has built to a stage where it’s worth, say, $1 million, a small but midrange deal for us, so it’s probably kicking off $20,000 or $30,000 a month?

Developers generally build extremely, like, time-efficient businesses. I have a business which is labor-intensive. It is a service. It’s unavoidable for me. If there’s a problem, I have to pick up the phone.

Andrew: You’re saying that these people who are making $500,000 a year in salary plus $500,000 in bonus, they would buy a software company, possibly?

Thomas: They are buying, yes.

Andrew: They’re buying software companies and running it on the side?

Thomas: Yes.

Andrew: This is happening already?

Thomas: Yes.

Andrew: So you came here for the clients, not for the businesses. For the buyers, not for the sellers.

Thomas: A combination of the two.

Andrew: So there are buyers in San Francisco who bought software companies?

Thomas: Yes, and they’ll either run it on the side or they’ll be looking to quit their jobs because they want to go remote. Well, we joked about this when I walked into your office a few hours ago. I was talking about how the big trend is people wanting to get out of San Francisco. So we have a lot of people who are making the money, and they’re like, “Well, what if I can just buy a business?”

Andrew: And get out.

Thomas: “It’ll make $250,000 a year, and I can move to Minneapolis.”

Andrew: All right. Let me turn it around then. Thomas, if I wanted to buy a business that would be compatible with Mixergy, what’s a business that you think I should be buying to expand Mixergy? Let me see how you think.

Thomas: So one thing I think that everyone should do — and this is a mistake that a lot of people make – the question I get on podcasts all the time, people ask me, “Hey, Thomas. What’s hot? What’s the best business model?” There’s no best business model, because the best business model is what you’re good at and what you know about. I had a conversation with another podcaster about a month ago who actually called me and asked exactly the same question. I was on his podcast years ago, and he said, “Hey, Thomas. You know my podcast. You know what I do.”

Andrew: Who was the person?

Thomas: Yaro from . . .

Andrew: Starak?

Thomas: Yes.

Andrew: Oh, really? Okay. So he would ask you, “What’s a good idea for a business to buy?”

Thomas: Yeah, he was like, “Hey, I’m thinking about buying a business.”

Andrew: I’m not saying generically. I’m saying me. How would you think about me buying a business?

Thomas: So my answer to him was, “Hey, you need to establish, like, what you’re good at and what you like.” A lot of people say, “Oh, you should buy a SAS business because they’re really stable, and they’re great.” But, I mean, do you write code?

Andrew: No.

Thomas: I mean, neither do I. So should you buy a SAS business?

Andrew: Maybe I shouldn’t. Maybe I can get my brother to do it.

Thomas: I don’t know. Maybe you hire a developer on Toptal. I don’t know.

Andrew: No, they won’t. If it’s just me, they will not let me hire a developer. You need a developer to watch the developers work.

Thomas: Oh, that sucks.

Andrew: No, this is why I get a lot of complaints from people who go, “I just want to hire a developer from Toptal.” I go, “No, they’re not looking to, like, get you started with a cofounder who you’re going to pay a few bucks for.” It’s a whole other approach.

All right. So you’re saying to me, “Andrew, you need to know what to do.”

Thomas: You also need to know your audience.

Andrew: I need to know my audience. You don’t do that kind of analysis with me. You won’t help me understand my audience the way that you would a seller. So you came on a while back. You even did a master class for us about how to get your company ready for sale. I’m looking at the freaking notes from this. This is great. I love that we kept it. This wasn’t me doing the pre-interview on you. This was April Dykman doing the pre-interview on you, our producer. We kept insisting on more screenshots, more data. You sent us, like, emails from people that you got permission for. This was after a conversation with her. You sent us agreements documents, which as long as it’s empty I can understand you sharing. I love all that.

But you do that for the seller to help them prep for selling. Do you work with the buyer to say, “Let me help you understand yourself and your needs so you can buy the right company?”

Thomas: Yes. It is worth clarifying that the seller is our client. The seller is the one that pays us for our service. It is in our best interest to build relationships with buyers and help them buy something. So if you come to us with money, we want you to buy a business.

Andrew: All right. I’ve got money. I want to buy. Will you spend time helping me understand what I should buy?

Thomas: The first thing that I suggest . . . there are lots of different ways to look at it. Firstly, think about what’s comfortable for you financially. You might have $1 million, but if you have $1 million, you don’t go invest it in one stock. At least you shouldn’t. You should probably buy an index fund or diversify. There are lots of different [inaudible 01:21:07].

Andrew: Who do you use? Vanguard?

Thomas: I use Chase and then [inaudible 01:21:11].

Andrew: Okay. So you’re saying you want to know how much my budget is.

Thomas: We need to know how much you are willing to invest. A lot of people come and say, “I have $1 million,” and the bad salesman in my mind says, “Okay. You need to spend $1 million.” We’ll say, “Okay. You should probably look at something for $200,000,” and then you’ll probably be like, “No, no, I’m going to spend $1 million anyway.” You can do that. What we then do is we’ll send you a selection of businesses we have, and we’ll say, “Andrew, you don’t know what you want, and I can’t tell you what you want until you look at what we have.”

Andrew: And they’re customized to me?

Thomas: Yes.

Andrew: It’s not a general list of what’s available on the site, right?

Thomas: You can do that as well, but we might send you three different businesses, and they’ll probably be completely different. Let’s say you had $1 million. I’ll send you a $100,000 business, a $300,000 business, and a $1.5 million business. It’s similar to if you’re looking at apartments. You say, “Hey, I want to buy a two-bed apartment.” They’ll probably show you a three-bed. They’ll probably show you one on a different side of the city that you don’t want to live in. Until you see it, you might look at it and be like, “Wow. I actually love this three-bed in the neighborhood I’ve never been to before.”

So there’s definitely an element of that, but we always say, “Look at them.” Until you look at it, you will start to understand very quickly what you like and don’t like once you’ve actually looked. Most people come in with a laundry list of things like, “So I want something that targets entrepreneurs that are the same kind of people that probably listen to Mixergy. I like good content. Therefore, I want something that’s producing content. I already have a podcast, so I don’t want a podcast. Maybe I want a blog with a newsletter.”

Andrew: Or a blog with a newsletter with maybe some relationships with writers already and traffic.

Thomas: Yeah, exactly, and then, in a year’s time, we’ll come sit down again and have another scotch, and you say, “Hey, Thomas. I’ve not bought a business yet.” You don’t have anything, and the challenge if you set really specific criteria is you’ll never buy anything because the odds of that perfect business coming along . . . I mean, we sold 150 or so businesses last year, which is a lot in comparison to the industry. It’s almost unheard of in the M&A world, but that’s still only 150. So the chances of that thing checking all your initial criteria are pretty slim.

So most people end up buying something that is similar to what they thought they wanted to buy, but it’s highly unlikely to be exactly what they thought they would buy. That’s why we avoid going through a very specific checklist and saying, “This is exactly what you should be buying,” because it just won’t be there.

Andrew: I think, actually, Rob Walling . . . by the way, I’ve got a guest coming on Mixergy in a little bit. We’re about to drink one of the cans of drinks that he sent me. This is Bill Moses. Fascinating guy. He created KeVita. You probably don’t know it, but if you saw the bottle or the can or whatever . . . I think it’s a bottle that it comes in.

Thomas: I feel like I’ve heard of the it. Maybe I’m [inaudible 01:23:56].

Andrew: It’s the kombucha that you see in Whole Foods.. Once you see the bottle, you’ll know it. He built it, and then he sold it to I think it was . . . let me see. Was it Pepsi? Yeah, he sold it to Pepsi. He has been scheduled to come on here. He very generously sent me . . . he said, “Look. The next thing I’m doing is I’m doing kombucha with alcohol.” I don’t know if you remember. There was this big issue where a lot of kombucha makers ended up having a tiny bit of alcohol in it, and then they got in trouble because . . .

Thomas: Because it, like, ferments or something.

Andrew: Yeah. So he goes, “You know what, actually?” He initially got into wine afterwards. He sold his company to Pepsi. He gets into wine. He goes, “This is not a real business. This is a real passion project. This is going to suck all my money out.” Then he decided, “I’m getting back into kombucha, but now I’m going to do the thing that it’s meant to do, which is give it alcohol.” He sent me a bunch of cans. You saw it, right? You’ve seen the package and all.

Thomas: Yeah, I’ve [inaudible 01:24:42].

Andrew: I don’t think I’ve chilled this one properly. It’s called Flying Embers. It did chill, actually, on the bottom, but the top is a little warm. Flying Embers Hard Kombucha. We’re going to try the lemon orchard flavor. Let’s see what it tastes like, all right?

Thomas: All right.

Andrew: So I think that Rob Walling actually specifically said that he didn’t want an email marketing company. Didn’t Drip at first collect email addresses using these little widgets and then he added [inaudible 01:25:11]?

Thomas: [inaudible 01:25:12] collect emails.

Andrew: Crack it open.

Thomas: Almost every successful business I’ve ever seen does not end up exactly how it started. One thing that probably does stay similar is the audience, or at least they establish the segment of the audience that they’d like to target, but most people start [inaudible 01:25:33]. I started to targeting business owners, and I was like, “Well, actually, I want business owners who have money.” Then I wanted a business that’s actually successful, and that’s where everyone has a different style. That’s where I feel like we are good because we give very direct and honest advice. Generally, people like direct and honest. The bigger and more successful your business is, the more you like direct and honest advice. If you’re early stage, I would be terrible as a startup mentor because the advice I give would upset people. I’d say, “Hey, your business sucks. Your idea’s terrible.” As it gets bigger, you have to get direct advice.

You’re saying, “Hey, Thomas. What business should I buy?” I’m probably telling you things that you initially thought you didn’t want to hit. You [inaudible 01:26:19] give me a pitch [inaudible 01:26:20].

Andrew: I thought you would have thought of my business enough. You’d be like, “I know Mixergy. Andrew, I’ve got the thing that you need. What you need is this.” I really thought that you would come out like that. No.

Thomas: That’s definitely one approach to sales. You can be like, “Hey, I have the perfect business for you,” but we know that the [inaudible 01:26:36] . . .

Andrew: There’s a big know-it-all, and I admire them, the know-it-all approach, the people who can give you a quick answer. I really admire that they can do that. We talked about Heaton Shaw. He’s not a know-it-all in an arrogant way. You bring him a problem. He at least can come up with a quick answer for you even if it’s not the ultimate answer, but it starts a conversation, and he’s got a . . . wait, before I do, let’s do cheers. We’re going to try this Flying Embers together. Let’s see what it tastes like. Let’s see.

Thomas: This is interesting.

Andrew: I totally prefer this to kombucha. I can’t drink kombucha. This taste a little vanilla-y and a little bit like lemonade.

Thomas: It tastes like lemonade.

Andrew: Yeah, I would not want this around my kids. It just tastes like a drink that kids would be into. Not sugary sweet. Actually, they’d be into it for a second, and then it would taste a little too flat for them. It’s not sweet enough for kids. It is good, but I’m not a kombucha drinker. I like drinks that are hard in the mouth, that feel like they’re punching you in the mouth. That’s what I like about whiskey.

Thomas: Yeah, this is a direct approach. It’s the same with drinks.

Andrew: Oh, we’re definitely going to have to have dinner. All right. How’s this interview going for you?

Thomas: Good. I think it’s been an interesting chat.

Andrew: An hour and a half.

Thomas: Are we an hour and a half? Wow.

Andrew: We’re an hour and a half in there.

Thomas: My wife always complains I talk too much. I’ve finally found an outlet.

Andrew: Wow. I didn’t even ask you about your sex life or your, like, relationships before. Did you date a lot before you got married?

Thomas: No.

Andrew: No, you did not?

Thomas: No.

Andrew: Was she your first?

Thomas: I met my wife when I was very single.

Andrew: What she your first?

Thomas: No.

Andrew: She wasn’t? All right. Okay.

Thomas: But, no, I was very single for a long time.

Andrew: Why?

Thomas: Well, I honestly worked too much. I just worked all the time.

Andrew: Did you feel like a dork doing that, going home like, “What’s wrong with me?”

Thomas: Kind of. Yeah, sure.

Andrew: I remember going home from my office in New York in midtown to my office in Upper East Side, going and watching all these people coming out of these bars full of parties.

Thomas: Yeah, and I’d still be working. Yeah, I know [inaudible 01:28:34].

Andrew: And I doubted myself, but then I also said, “I’m going to make enough that it compensates for this.”

Thomas: I think it gives you the determination to make it.

Andrew: Yes. Did it do that for you?

Thomas: Yeah, for sure. I didn’t really think, like, I was missing out on that much, and you can, like, make up for overtime anyway. Now I can go out as much as I want, drink where I want, eat where I want, and it’s fine.

Andrew: It’s not the same, though.

Thomas: I do think the sacrifices begin to pay off, and if they don’t begin to pay off after a while, you’re probably not doing the right thing. You should probably quit.

Andrew: I agree. feinternational.com is the website. Since we’re being honest, I don’t love your website. I’m looking at screenshots of your site over the years that I’ve had in my own notes. It’s never been the prettiest site. It’s always been, like, a WordPress site, right?

Thomas: It’s WordPress, yeah.

Andrew: Here’s what I’ve noticed over the years, though. You feature your clients. You have phone numbers on the site all the time, which is unusual for the web. And for your line of business, you also always have collected email addresses. You’ve always done all that. I think what you guys have done now is created in the M&A company for this space. Like, if you look at Allen & Company, didn’t Allen & Company build themselves up in the entertainment industry as the guys who were going to put deals together, right?

Thomas: Very possibly.

Andrew: There is nobody in the software space. I know you do content and e-commerce. In the software space especially, there is not a company that does this. You know what there is? It’s a network of angel investors, right, and VCs that you call up. Is this what you guys want to do? Just as tech is growing, I feel like FE International wants to and is growing into being the M&A company.

It’s like you’re shooting me daggers with your eyes.

Thomas: No.

Andrew: You hate what I said about your site.

Thomas: I’m inspired by the description.

Andrew: I feel like that’s where you’re going. That’s the thing. Am I right?

Thomas: I think that’s a good description.

Andrew: Billion-dollar business.

Thomas: Yes.

Andrew: Are you going to kick yourself and say, “I only have $500 million in this?”

Thomas: I would kick myself if we didn’t get to $500 million.

Andrew: You really would?

Thomas: If we only got to $500 million, yes.

Andrew: Deathbed, if I talk to you, you’re not going to say, “Well, it’s been a good life anyway. I only hit $500 million in the company.”

Thomas: I’m sure as I get older. Like, we talked about the, like, Twitter disputes about how much you should work. I’m sure on my deathbed I would say, “I should have worked less and done different things.” But for now, I’m happy doing what I’m doing.

Andrew: All right. And on a personal note, one of the things that I appreciate about you is I think it’s a couple of times at least . . . I never know who’s BS-ing and who’s not, and I hate podcasters where guests will come on and talk about how great they are, and they do jack research. I’ve texted you last minute saying, “I’ve got this guy. He’s coming on. I’m really paranoid that he’s, like, a liar,” and you’ve responded quickly. Do you even remember this? It’s okay if you don’t. You gave me amazing feedback that helped me understand whether I should go with the person or not. And amazing feedback doesn’t mean, “Here’s their finances. Here’s secret information.” It’s like, “Andrew, here’s what I know about them.” It’s super useful, and I appreciate that.

Thomas: Cool.

Andrew: All right. Sorry if it leads to, like, the end of your marriage because it might have come at dinner time, but I appreciate it.

Thomas: My wife definitely won’t listen. I think we’re fine.

Andrew: All right. Thank you so much for being on here. The website for everyone who wants to go check it out is feinternational.com. I want to thank the two sponsors who are very patient with me and allow me to talk about all kinds of stuff even though it may be a little bit off-brand. You know what? It is on-brand for Toptal especially. They really want the hard-hitting stuff, and I appreciate them for supporting me for so long. If you need to hire a developer, go to toptal.com/mixergy. And if you have a team that’s running on a Mac, and if you’re running on a Mac, go check out setapp.team/mixergy. Over 100 amazing software apps for your computer. All right.

Thomas: Cool.

Andrew: This was great.

Thomas: Thank you so much.

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