How an FBA Aggregator Bought a 100M+ Business with Chris Bell, CEO of Perch

 

David 0:00
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Chris Bell 0:46
I’m a first time entrepreneur and so this is a pretty terrifying process to be honest, you know, the biggest fear is absolute failure. Right? Like I’m gonna go do this and it’s just gonna suck and I’m not gonna make any money. I’m gonna waste years of my life. And you know, that’s obviously a big one. If you’re a hard worker, and you have some tenacity, take risks. It’s an amazing what I love about our business is these entrepreneurs have built such cool businesses, and I love getting to know these people and hear their story. And they have really high quality products. And you just realize, like this kind of quality can come from anywhere, right? It’s hard. These entrepreneurs have worked their asses off typically to get to where they are. So it doesn’t come easy, but it’s neat to be able to take what they’ve built and kind of take it to try to make it a household name. essentially try to make brands and products that you guys could buy wherever you wanted.

Welcome everyone to the firing the man podcast a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more then join us. This show will help you build a business and grow your passive income stream in just a few short hours per day. And now your hosts, serial entrepreneurs David Schomer and Ken Wilson.

David 1:59
Welcome everyone to the firing the man podcast on today’s episode, we have the privilege to interview Chris bell. Chris is the founder and CEO at perch. Perch is a technology enabled consumer products company that acquires and operates Amazon FBA businesses with winning products in their respective categories. Prior to Perch, Chris designed and built the Wayfair Delivery Network, delivering over 3 million heavy bulky orders annually. At Bain and company, Chris worked with fortune 500 companies on growth strategies and leading private equity firms on m&a working over 40 transactions representing over $90 billion. Yes, that’s billion with a B in value, including the largest tech merger in history. Prior to business school, Chris was a leading sales rep of office hardware and software. And he started his career at GE Healthcare. Chris has a Bachelor’s in Computer Engineering from Georgia Tech and an MBA from Carnegie Mellon. Chris, we’re incredibly excited to have you on the show. Welcome.

Chris Bell 3:01
Thanks David. Appreciate it. Happy to be here.

David 3:03
Yeah, absolutely. So first things first, tell us a little bit about yourself and your path on your way to perch.

Chris Bell 3:09
Yeah, well, I feel like I’m just going to repeat most of what you just said, but happy to jump in. So yeah, as a computer engineer, I went to GE where I was doing product management. So designing and developing software which GE is a great place to start a career in some ways, but was just a little bit too big and bureaucratic for me. So I wanted to get out and talk to some customers. So I left and I sold copiers and software for just a family run distributor based out of Madison, Wisconsin, which was a lot of fun, went to business school, went to Bain after Business School, you kind of summarized that pretty well, worked on some private equity deals about 40. And then I worked with tech and retail companies to help them grow their businesses. And then I was leaving wayfair thinking mostly I wanted to go join a small company help to build something. And, I’m sorry I was leaving Bain and then wayfair called me and said Hey, would you come build our North America supply chain or what they call the wayfair Delivery Network now, to which I said no, at first, I said absolutely not. I don’t know anything about supply chain, you got the wrong guy. And they convinced me it was really a customer job. And the supply chain was just the means to that end. And the more I talked to near edge, and James was the COO, I really have got on board with that vision. And I felt like yeah, if you think about why do people buy from Amazon? It’s not because they have the best website, right? It’s because same day next day two day delivery is really the driver why people buy from Amazon and wayfair was just at the time where they were big enough to be to be able to build that supply chain. And so I felt like it was a really interesting opportunity to help build something that I thought was really transformational for the Home Goods space. So I joined, in three and a half years we opened 50 buildings across North America. 42 find a mile sites, eight storage centers, I would say my favorite factoid is when I got there, it took about a month so 27 days on average from click to deliver for a couch. So for a heavy, bulky item like a couch. When I left we were doing two day deliveries of couches, hot tubs and vanities. And so it was just mind blowing to the customer. And my favorite thing about that, that I like to remind my team at wayfair was Amazon competes with the Media City, right, if you want double A batteries, you can go on Amazon, or you can just walk down to CVS and pick up some double A batteries. Where with a couch, even if you walk into a furniture store and you point at that couch, and say that’s the one I want right there, getting it in two days is really hard. Like usually it takes three, four days if it’s in stock, and sometimes a few weeks if it’s not. And so we were beating brick and mortar, we were able to get you a couch faster than physical retail, which was a really cool experience. And it drove a big lift in conversion and win loyalty and repeat. And that was a lot of fun. And then I left in late 2019 to start perch. And that was, it was a bunch of things. You know, James, who was the COO of wayfair and one of my key mentors while I was there, he announced his retirement. So that was one of those like, you pop your head up, like all right, you know, what’s life all about. And then I just I, you know, through a bunch of random connections, met a few people in this Amazon ecosystem, I went down to a conference in New York, I met a bunch of sellers. And I felt like it was one of these, where, you know, you read newspaper articles that say Amazon’s $300 billion in gmv in their third party marketplace. And it’s just such a big number you don’t like think about it, you’re like, Oh, $300 billion, good for them. And then you go to, I think it was AMZ innovate down in New York. And in one conference, I met like 10 sellers, who each had between like one and $10 million in revenue entirely bootstrapped. All of that money was going right into their own bank accounts. And I was like, Oh, my God, this is this is big, right? Look how big, look at these massive businesses that these people have built by themselves with no external capital. And so it just got my mind spinning of like, this is a really, really interesting space, how do I play in this space? And I thought about what I think I’m good at, which is, frankly, not, you know, creation, I think there’s a lot of people that are good at like, Adam is amazing at inventing new products and thinking about that stuff. And that’s just, you know, I’m better at process. And I’m better at scale. And I’m better at how do I take this thing that somebody else has created and how do I make it really good and make it so we can do it 100 times, 1000 times and 10,000 times and every single time be just like the last time. And so it felt like the right play for me was to come in and take some of these businesses where people have created something really amazing. And be able to take it to the next level and build a global supply chain capability around it and build kind of amazing marketing and analytics around it so that we can take it multichannel, and we can optimize pricing and advertising and things like that. So that sounds like a straighter path than it actually was. But that’s the short version of the story.

Ken 7:40
That’s awesome. Chris. Before I get into questions, I wanted to give you a shout out for those on YouTube or TikTok whatever, the logo, the first logos, I think it’s badass, it’s a on the bottom it says only the best. Is that right? Yeah, yeah, I love the logo.

Chris Bell 7:55
Thanks. I appreciate it.

Ken 7:56
Yeah. So Chris, so you left wayfair and you created perch, right? And so while you’re doing that, like what was one of your biggest fears kind of holding you back? Or what made you kind of say, you know what, screw it, I’m gonna go out on my own and do this?

Chris Bell 8:11
Yeah, a lot of fears. Right? Leaving. I’m a first time entrepreneur. And so this was a pretty terrifying process, to be honest. You know the biggest fear is, is absolute failure. Right? Like, I’m gonna go do this, and it’s just gonna suck and I’m not gonna make any money. I’m gonna waste years of my life. And you know, that’s obviously a big one. I’d say the second biggest one is I get a lot of energy from working with great people. And I was worried, like, at Bain, amazing people come and work in Bain, at wayfair amazing people come work at wayfair. And frankly, I was like, I was worried that amazing people wouldn’t come work at perch, because like, what the hell is perch nobody’s ever heard of it it just got started yesterday. And so those are probably the top two is like I really wanted to work with people I loved working with. And I wanted to be successful. And I wanted to build something that, I don’t need to be a billionaire or anything. But I want to build something that I’m like, proud to tell my family about and my friends about and it’s like creating real value in the world. And it’s something that I’m excited to go do every single day. But I feel very fortunate in just, you know, a little bit under two years, since we founded this, I think we have such an amazing team. Like just really, really amazing, inspirational people that are key to our success. And I think it’s going pretty well. Early days still, but it’s been a lot of fun.

David 9:28
Absolutely. Now, before we get into perch and everything that you guys are doing, I want to dive into that day that you put your notice in at wayfair. You know that our show is called firing the man. We talk about you know, quitting your job and going to for yourself in starting your own thing. And so can we dive into the mind of Chris on that day going in to put in your notice what’s going through your mind? What are you fearful of what are you optimistic about? Tell us about that day.

Chris Bell 9:55
Yeah. All right. This is a, it wasn’t quite as it wasn’t like, here’s my notice, and I’m out in two weeks, but there was a little bit of emotion there. So I would say, I mean, it started as probably with anybody who who ends up quitting a job it started before it ended. Maybe that’s an obvious statement, but it was like my last, you know, nine ish months, you’re starting to think about, like, man I just spent all day in meetings. And like, I just feel like I’m pushing paper around, and is this really kind of what I want to do with my life? And then, you know, a key mentor announces, he’s retiring. And he’s only like, early 50s, right? So I’m like, Man, this guy has the life he’s just gonna go and like, you know, hang out and do his thing. And he’d done very well for himself, he joined wayfair very early, so he deserves everything he got. And so it just got me thinking about stuff. But then the day I actually told James first was, there’s this meeting, where basically, it got really political people were yelling at each other. And I just grabbed James, who was the COO who’d already announced his retirement right afterwards. And I was like, I’m out. Like, I just can’t do this anymore. And he’s like, No, no, no, no, don’t don’t leave. We’ll figure this out. And so so yeah, but that was like, that was the first day, right? You say it out loud. And he kind of it wasn’t like a written resignation letter. It wasn’t even like, I wasn’t sure if I was really resigning or not, I was just like, so pissed off. I was like, I’m out, man, I don’t want to do this anymore. And so that was that was probably four months before I actually left. And so then, like, I cooled down and a week later, I went and talked to him. And I was like, you know what, I was upset. But actually, I meant what I said, and like, I don’t want to do this anymore. And then you know, I was in a role, I was managing about 1300 people across 50 sites. And so I really wanted to leave in a good way. So it also wasn’t, so at that point, I said, Hey, I’ll do whatever you need, right? I want to leave you in a good spot, you’ve been really good to me. wayfair has been really good to me. And so and really like a good company that I still think, has great people doing great stuff. And so I ended up doing kind of a three month line down where I was, I knew I was leaving, which was actually an amazing thing for me too. I think it put them in a better space because I was able to then readjust my team so people could be successful things like that. But I also could leave at noon any day and go and meet with some entrepreneurs or you know, take the Wednesday off to go down to AMZ innovate and not have to worry about health insurance for my family and all that kind of stuff. So, yeah, so it wasn’t just like a two week notice and I’m out type of thing it was a little bit more of a long burn. But yeah, that’s my story.

Sure. So yeah, it sounds like it was a pretty long transition, but it went smooth. Post the yelling meeting. So a lot of our questions here are just kind of like, trying to pull out, you know, like, you know, looking back, and so now you know, you’re kind of two years removed from that you’re off on your own, doing another adventure. Now, looking back, would you have done the same thing? What advice would you give yourself five years ago? Would you still go through that? Or would you do anything different?

Yeah, you know, I thought about that a lot. And I don’t know, it’s tough to say, I know that’s a non satisfactory answer, but I’m really thinking about it. I learned a lot at wayfair. And wayfair, honestly took a big chance on me letting me build the supply chain that right that we haven’t even built something like that here yet. So getting that opportunity in a place with smart people, where I didn’t have to do everything, like here I’m like raising funds and I’m hiring all sorts of people and there, I could just focus on building something that was really cool. So I don’t regret a single minute of that time at all it’s helped me become more successful. And the other thing is, as I mentioned, my second biggest fear was people having worked at places like Bain and wayfair early days, most of our employees came from Bain and wayfair, they were people that I had worked with that I felt like I’d kind of paid it forward to and I had invested in them and their career and you know was a little bit infamous in both places where people would come to me and ask me about my career and I tell them this place where we work today is not your entire career so I would always like focus on the person and say hey, if you stay here I would love that but if not let me talk to you about there’s a big wide world out there and so I think a lot of that made people then want to continue to work with me because they knew that I was thinking about them and what was best for them and not just Hey you should stay here because you know I need you on my team type of thing. And so that you know our ability to grow this quickly really then because of those relationships and those people that you know I’ve been in Boston for 12 years and I feel like hopefully left a good legacy a lot of places so it’s enabled a lot of what we’ve been able to do at perch but I would say you know a couple of thoughts is just continue to take, if you’re a hard worker and you have some tenacity take risks. Right? You know when I left GE to go sell copiers, right? My parents were so disappointed in me they were like why would you like the you know, also a very great company but the company went to sell copiers that is called the Gordon flesh company. And Gordon flesh himself started the Gordon flesh company and so it was a family run copier, sales company based out of Madison, Wisconsin, I left General Electric, which is like blue chip, jack welch. And my parents, you know, and all my extended family like Thanksgiving that year was very awkward because everybody’s like you had a real job and now you sell copiers. But it was, it was such an amazing career experience. And it opened up so many more doors for me. And so I would just say you take risks bet on yourself. I’ve also even before starting a company, I’ve taken a pay cut in every job change that I’ve ever taken. Right when I went from GE to selling copiers, I took a massive pay cut. By the time I left selling copiers, I was making twice as much as my peers at GE because of commission. But like the actual salary selling copiers is really low. When I left Bain to join wayfair, I took a big salary cut, but I was like, This is gonna be an awesome thing. I’m gonna learn so much. Obviously, when I left wayfair to start perch, I wasn’t paying myself, because I was starting a company. And so like bet on yourself. And you know, I can’t promise it’s gonna go well, but if you’re decently smart, and you work hard, and you kind of focus on where the customer is, and where the value are, there’s a lot of ways to make a really good living, that don’t involve going to meetings all day.

Ken 16:06
Yeah, great, great answer. Yeah. And you’re right, there is no perfect answer to that, or there’s no down the road answer. But like, you know, we’ve interviewed so many people on the show that, you know, you pull experiences from early in your career, where you cut your teeth, and whatever jobs that you were doing, you kind of just take those with you. And it sounds like you’ve compiled a lot of that and taken it with you and on your own journey. So that’s, that’s amazing.

David 16:29
So I’m sure there are some listeners right now that are like, Alright, what is perch? What are they talking about? Let’s get into that. What is perch? What is perch’s mission?

Chris Bell 16:38
Yeah, absolutely. So what perch is, what we do is we find great brands, we buy them, and we make them better. That’s like the really, really short pitch. And what that means is we started on Amazon, but we’re getting increasingly multi channel even today. But essentially, we find brands that are proven, high quality brands as evidenced by the customer, right? So we don’t all sit in a room and say, Oh, do we think this is good or not? The beauty of e commerce is you have so much customer data, you can see the ratings, you can see the reviews their return rate, what Amazon calls the MCX rate, which is if you have any quality issues, we can see how much you spend on advertising and make sure you’re not just buying revenue unprofitably that you actually have sustainably built an organic business. And so yeah, so we find great brands and great products, and we acquire them. So we acquire the, typically the entire entity, the entire company, so all the assets, all the trademarks, the inventory, all that stuff, we bring it onto our platform, typically the entrepreneur stays on between two and 12 months, but usually not any longer than that. And then the variation between two and 12 just depends on the size and complexity of the business, and so on Adam, who talked to you yesterday, he’s gonna he’s working very closely with us, and probably will for another kind of eight or nine months most likely, if not even a little bit longer, because he has a pretty big complex business. If you have a business that has, you know, one to 5 million in revenue, and three or four products, it can be even a little bit shorter than two months, right? Maybe you work with us for four or six weeks. And then we bring it in our platform, and we have about a third of our team is our engineers. Because again, because of ecommerce, what we’re doing is we’re constantly watching the ecosystem. So we see your products, we know what kind of merchandising works, we can really quickly understand the price elasticity of the category, understand how to optimize advertising within the category, push the products to Europe, push the products to different marketplaces, we have a number of growing relationships with brick and mortar retailers, we have products in target, and CVS and Rite Aid, we’re deep in conversations with Walmart. And so we can basically take these great brands and products that typically you know 90% of the entrepreneurs that we acquire, only sell in one geography and on one channel, usually Amazon us are the two because that’s just the biggest Amazon, we can take these great products and we can help them reach new heights. And we do that through a whole bunch of levers. And so we’ve been doing it for a while now it’s been, it’s an amazing what I love about our business, is these entrepreneurs have built such cool businesses, and I love getting to know these people and hear their story. And they have really high quality products. And you just realize, like this kind of quality can come from anywhere, right? It’s hard. These entrepreneurs have worked their asses off typically to get to where they are. So it doesn’t come easy. But it’s neat to be able to take what they built and kind of take it to you try to make it a household name, essentially try to make it brands and products that you guys could buy wherever you want to.

Ken 19:26
Very cool. So Chris, you had mentioned earlier on that you did a lot of hiring. And so I imagine, you know, over at perch, you’re acquiring these brands, and so can you explain maybe how you’re building out your team? How large is it and where do you go from there?

Chris Bell 19:40
Yeah, absolutely. So our team is a bit over 200 maybe like 220 230 right now, it grows every Monday I get emails from our HR system, and it feels like every Monday there’s like eight more people joining so it varies up and down. It’s growing pretty quickly and I would say 80% of those people we’ve hired directly, and 20% we’ve acquired, so like when we bought Adams company, web deals direct, he has a warehouse in LA, he has a talented team there that runs the warehouse. And so we’ve brought on and we have a couple other acquisitions that have employees. And so we will we bring on employees through acquisition. But most of our acquisitions don’t have any employees. Because typically they’re sole entrepreneurs, they might have some contractor agreements, and we’ll oftentimes take over those contractor agreements and continue working with them, but oftentimes no employees, then how do we hire them? You know early days, it was almost entirely through personal networks, you know, when we were just getting started, and had no money, and no brands. It was really just me calling people and saying, This is gonna be huge, you got to get on board now. And luckily for me, a few people believed me. And luckily, for them, I wasn’t lying. I didn’t know I wasn’t lying. But it turns out that this worked out okay. And then, you know, as we continue to have success a lot in the early days was through personal networking, my people I’ve worked with, and then the second degree connections people that they’ve worked with. Now, you know, we have, I don’t know, maybe an eight person talent acquisition team. And so we’re building out a whole capability around growth, because we think by the end of this year, we’ll probably be between 350 and 400 people. And by the end of next year, it’s hard to forecast but we might be over 1000 people by the end of next year, if we keep growing at this pace. At some point, your personal network stops working and you got to start.

David 21:33
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Chris Bell 22:43
Yeah, for sure. One thing 90% of the companies we have acquired are single channel single geography that’s not a filter we have, we actually love omni channel brands. And some of the best brands we found are already selling through multiple channels. And so we’re absolutely open to acquiring products and brands that are selling through multiple channels and multiple geographies. I would say the first and most important thing is and I can tell you more about how we decide this. But our mission statement starts with we want to delight customers. And so to do that, we need to buy products and brands that are delighting customers. And we look at reviews and rating count and rating stars. You know, things I mentioned, return rates, customer service inbox, and so we really want to make sure it’s a product that people like if it’s a product that typically has some repeat, we look at repeat. So like beauty products, for example, we want to make sure that if you buy one you often buy another because if people buy one and never come back again in beauty that’s not a great sign. And some other things right like soccer balls, like you know, unless you’re a soccer coach, you’re not you know, buying another soccer ball every 90 days. And so it depends on the category. But generally the most important thing is getting a brand and a product that we think is really high caliber and can continue to delight customers across your geographies and across channels, because that’s the most important thing and if we have the right products, everything else kind of falls into place. Like if people want these things and all we have to do then is essentially get it in front of them and merchandise it well and price it well and all that kind of stuff. And I’ll take care of the rest. You know there’s kind of the obvious table stakes stuff like you know, anybody who’s been doing blackhat things around reviews, we just stay away, we stay away, typically from high churn product categories. So we stay away from high tech electronics, we stay away from high fashion and we do some basic fashions we have like leggings and stuff like that. Because today 80% of what people buy in leggings is black leggings and in 10 years 80% of leggings sales will also be black leggings

No products found.

. And so today we’re not really set up to do really like high churn innovation, like we’re not going to stay up to date with the latest Bluetooth technology so we can keep updating our earbuds or something like that. So we stay away from all those things, but things that we think people will be by 10 years that have really good customer views is right in our sweet spot.

Ken 25:05
Cool. So Chris, one last question before I move on, now does perch look at let’s say someone had this one listing has a hero skew or something and they just kind of want to offload it, maybe raise some capital to do something else do you guys buy, like individual skews? Or do you buy an entire account?

Chris Bell 25:21
It’s important to us to have the brand because you’re getting that Brand Registry and protections around the brand is important. So we will buy a brand. If that one brand and one skew is aligned, then yes, we can buy that. But if you say, hey, I want to keep the brand, but do you just want to buy this one skew from me and kind of like be an authorized brand reseller or something we don’t do that. So we have acquired brands where somebody had like two brands on one account, and we bought this brand and they kept their other brand, and they use the capital to invest in the other and we just transferred that brand to one of our seller accounts and kept it going. And so yes, but with that caveat of like if we don’t own the brand, then we don’t really own the product.

Sure. Yeah. Fair enough. So at the brand level sounds good.

Yeah. So if there’s someone listening right now, and they’re like, you know, this criteria that you’re laying out, kind of fits my brand, and I’m getting ready to sell, what’s the next step? Do they pick up the phone and call perch? Do they get a broker? How does that work?

Yeah. So they can pick up the phone and call us. Most people email us first, but if you want to just pick up the phone and call us you can do that. Old school, but I like it. But yeah, it depends a lot. I would say that it’s pretty easy to find us and other people today. And so, you could do that with, I’m trying to be balanced. The pros and cons of both are calling us directly, we are very fast, fair transparent, we give generally, we don’t give the same offer to everybody. But that’s not that we like give you a different offer from a broker versus us. It’s just some people say my business is going to triple next year. And we say Great, let’s do a heavy offer so that you get some of that upside if it triples. And we have other entrepreneurs who say I’ve took all the risk I want to take, all I want is cash at close. And we say great, we can do a deal like that, too, right? So we very much listen to the entrepreneur. So like no two deals are exactly the same. But the rough pricing that we give doesn’t vary meaningfully, whether it comes through a broker or comes directly to us. I can’t speak for other people in this space. And if you get that same treatment then but with us, we’re generally pretty fair and transparent and rapid about our pricing. And so if you wanted to kind of maximize the cash in your pocket and not pay a broker fee or things like that, calling us usually within 48 hours, we can tell you yes or no if we’re interested. And then after that, usually it takes another couple of days, and we can give you some more strong price indication depending on, we need a little bit more financial information from you to actually give you a price we need to know your cogs and things like that. So we can really quickly turn around and give you an LOI right basically a strong indication of pricing within usually five days total. And then we can close pretty quickly after that. And so what I might recommend, if this was like my friend, I would say call us, hear us out, see what we have to say if at the end of that you’re like, I don’t know, I don’t have enough information. I’m really confused about this whole process and you really want to talk to a broker, you can I think the benefit that a broker can lend is they charge you a fee, right? So just, some of the money that we would send you will go to them. But what they can do is walk you through the process, they can hold your hand through different parts of it. If you have a bunch of questions, if you want just a sounding board, which I get right. I’m not trying to disparage people who want a sounding board, right? There’s different times in our lives where we need advisors to just talk to us about if this is a good idea, how should I think about this, should I sell both my brands, just one of my brands. And so I think brokers can be good, independent arbiters of that. But in general, I think the price you’ll get is probably about the same, at least from us. And we’re also happy to talk to you about anything like if you don’t know what an APA is, we can send you our draft APA and you can just see what it looks like and we walk you through, our in house counsel will walk you through it. And so, so anyway I have a little bit biased of an answer, I’ll be honest, but I would say just call us and you know, we have one of the things Nate who runs m&a for us that we use as a key indicator of how he’s doing is called NPS which is net promoter score. So after every deal, we ask the seller on a scale of zero to 10 how likely are you to recommend perch to another seller and we get all nines and 10s. People like we are very fast we know what we’re doing. We’ve done a lot of these, we really really believe in transparency and treating sellers like clients like they are one of our key customer constituencies and it’s important to us to treat them really well. And so you won’t get a strong sales pitch. We’ll be very upfront and honest about what we’re seeing and what we think is a fair offer. So you can’t go wrong. We’re not a hard sales. We know that if we do really if we like treat everybody like they’re a customer we’re going to win eventually. And 50% of our acquisitions today Are referrals. So fully 50% of the companies that we’ve acquired over the last, I think six months have been because somebody sold the business to us, and they told their friend, just call perch those guys are awesome. And so it’s working.

Ken 30:13
Yeah, I respect that transparency and the referrals. I mean that speaks volumes right there. So yesterday, we interviewed Adam Feinberg, of web deals direct, that was a very large acquisition for perch, I assume, can you walk us through that experience?

Chris Bell 30:27
Yeah, it was, Adam has a great business. It also as with any large business, there’s a lot of complexity in there. I’m trying to remember when we first talked to Adam, it feels like so long ago, but I think it took that one took a little bit longer, usually we can go from like, first conversation to closing, like money in your account within 30 to 45 days, for a more of a simple business. Adams deal I think took four or five months. But a little bit of that was Adams requests, there were some things that they were sorting out on their end. And so we were ready to close, I think six months before we actually closed and he asked us to delay. So maybe a more reasonable timeframe, if somebody has a similarly sized business, you know, think about like two and a half to three months or something, but there’s a lot in there. So, to start we did our normal diligence, which is get into the seller account, understand, you know, we always do asin and or skew level analysis, because you don’t want to get caught out where like the hero skew is declining. And it’s just, you know, being propped up by 10,000 other tiny skews that they just keep selling like onesies and twosies of. And so if you just look at the brand level you can get, you can get in trouble. So always so with just that many skews, and that many asins we had to go in, we actually hired a third party firm to help just crunch through all the data, we because we have this technology platform we plug in, we can download all your data into our platform, and really quickly see a lot of the trends but then just to like sort through all that to assign the cogs to it, which is a manual process because we got to sort through all of your invoices and things like that. Um, so that took a little bit of time. But then the bigger and the meatier part was Adam runs acid base warehousing operations out in LA. And so we had to understand the lease, understand all the capex, you know, you have forklifts, you have racking, you have got to make sure we understand the employment contracts, because we’re going to be taking over these employees. And so there’s a lot of stuff like that. And then after we got past that, and we’re into actual documentation phase, there’s all of the people things that we wanted to do that you just don’t have to do for a solo entrepreneur acquisition. So we flew a team out to LA to meet with the future perch team, because, right these are people they’re going to be on our team soon, we don’t just want to send them an email and be like Welcome to team perch, I hope you don’t quit tomorrow type of thing. And so there’s just a bunch of stuff like that, that in a, you know, more of a business acquisition, where there’s employees, and there’s a lot more moving pieces. And the other thing we had to do actually was a physical inventory count in his la warehouse. So usually when you just use FBA, or just use 3 PL’s, those people are counting your inventory and we can trust the numbers typically that we see from them. Where adam had his own warehouse, so we actually flew our team out and then we actually hired some local contractors, and we scanned everything in the warehouse, because you know, it’s big, with a business that size, you have a double digit million inventory balance, and you don’t you know, you don’t just say Yeah, no problem, we’ll just, you know, figure that out later type of thing. So there’s a bunch, but it was Adam was awesome. Adam knows his business really, really well. Every single question we had, he knew the answer to, and he was really collaborative through that entire process. Because the other thing you have with businesses of that size is just a lot more moving pieces in terms of, you know, I don’t know, I’m trying to think of an example, a bunch of inventory on the water as we’re closing, right? And how do we deal with the live you know, he’s paid some of that we got to pay the rest of it, we got to figure out how to make sure the importer of record is lined up, right. There’s just a lot of moving pieces to actually transition a business like that. And so it was really tight teamwork between Adam and our team, Adams team and our team to get that done. Yeah, it was a great partnership all the way through.

David 34:13
Very nice, very nice. Now, what are a couple things that small business owners can do to prepare for an exit? You know, before they pick up the phone and call, what are some things they can do?

Chris Bell 34:25
I would say the only thing that matters to us is build a great business. We no matter how, like for example, no matter how good your accounting is, we recreate your p&l. It’s not that we don’t trust you, it’s just we have a process. It’s the way that we do things. We have investors, we need to make sure that we have full faith in the numbers. And so and then if you build a great business, that’s really the only thing that matters. We can do all the rest of the heavy lifting for you. We can recreate your p&l. We have lawyers we can recommend we have you know if you want somebody to help you clean up your books, we have accountants we can recommend like we’ve been in this ecosystem and worked with a lot of people and so we can help with essentially everything else. I would say though, if you’re thinking about which I assume you would be, if you’re a small business owner maximizing your exit, then things like maximizing your EBITDA or your STE, as people call it is helpful. And so if you have been, for example, investing heavily in advertising to get to a solid organic ranking, I would say, right when you finish that is not the ideal time to sell your business, you want to prove that you can pull back on that, you know, if you’re, if your tacos, if that’s what you call it, basically, if your ad spend divided by total revenue is like 20%. And you think, actually, it could be like, 5%, don’t sell it, right when it’s still 20%, because we’re gonna assume that’s what it needs to be. And so we’re gonna price the business off of that 20%. So show us And oftentimes, we do things off of a full year, trailing year, but if you have had a material change in your business in the last, you know, six months or so we can, what we call pro forma that in, which means we can assume that that will continue. So you don’t need to have a full year of running at 5% tacos. But if you show us that you can run for six months a 5% tacos, then we can we’re open having a conversation with you that Yeah, you’ve proven that this isn’t an ad dependent business that actually that ad investment was just to get you to that organic ranking. And now you’re kind of your steady state is something that looks more like 5% tacos. And so we can have, you know, we’re again, we’re very transparent, thoughtful people, we like to understand your business and understand the ins and outs of it, and we can work with you on it. But if we haven’t seen that at all, right, if you come to us with a 20%, tacos business, and you say no, no, don’t worry, it could be a 5%, you give me 15% of revenue back and margin, right? Sorry, no, you know, show us show us that you show us that that’s real. And then then we’ll talk about it. And so right now, as you guys are probably know, is a really tough time with the global supply chain. Right. So that’s one where we actually still do have a lot of people selling their business to us. And we’re honestly working through we’ve done a lot of things where we’re like sharing container costs through the end of the year, so that it’s not all coming out of your multiple, right. So you can still get an exit like this will end at some point, I don’t know when it will end. And so we’re being creative and thoughtful with entrepreneurs who want to sell their business now, but are also saying like, hey, paying $15,000 a container is just like not normal. And we agree that it’s not normal. And so we also can’t just take all that cost ourselves, but this is what I mean. Like this is why we get nines and 10s on our survey, is like let’s talk about the business issues. Let’s come to something where we’re sharing the ups and downsides of these businesses, because this is what we do all day too. And typically, we can get to something that makes sense for both sides.

Ken 37:40
Yeah, no, that’s fair enough. So yeah, all the listeners, you know, run up that profit run up that STE, before you pick up the phone. So awesome. David, Chris, is there anything else we want to cover before we get into the fire round?

David 37:54
No, nothing on my end.

Chris Bell 37:56
Why do you call it the fire round? What is that? Is it supposed to be the man or is it because you’re firing questions at me?

Ken 38:03
Yeah, it’s fast.

Chris Bell 38:05
Okay.

Ken 38:06
It’s supposed to be fast so…fire round. Chris, you ready?

Chris Bell 38:10
Yeah.

Ken 38:11
Awesome. What is your favorite book?

Chris Bell 38:13
How to Win Friends and Influence People by Dale Carnegie.

David 38:17
It’s an oldie but a goodie.

Ken 38:20
Very cool. What are your hobbies?

Chris Bell 38:21
I have two daughters five and seven. And so that is I know maybe not technically a hobby but that takes up almost all of my free time. And then I enjoy running and reading when I can.

Ken 38:31
Okay, very cool. What is one thing that you do not miss about working for the man?

Chris Bell 38:36
One? You just want one? You know, just all the administration all the paperwork, all the hoops you got to jump through to get something done. It gets exhausting.

Ken 38:51
Very cool. Awesome. Yeah. What do you think sets apart successful ecommerce entrepreneurs from those who give up, fail or never get started?

Chris Bell 38:59
A couple things. One is just kind of focusing on the right things, right? Like, you got to understand that the goal of whatever business you’re in, is almost always to delight the customer. And so remembering that, you know, I see too many entrepreneurs that get super idealistic with, like, I want to change the way this industry works, or I want to change the way people think about this thing. And they forget that to make money, you actually have to get somebody to buy your thing. And so just always being maniacally focused on the customer is critical, right? And that’s the way that you get customers. And that’s the way you keep customers. And that’s what builds a business. And so remembering that is really important. And then also grit, right? You just got to wake up every day and you got to put your all into it. And to be successful, I don’t think anybody has ever, well maybe some super lucky people, but most people are not successful in business without working their ass off and hitting a lot of walls and just climbing over the wall and keep running. And so it’s a lot of hard work and you got to get yourself in the mind space every day to get up and go at it again.

Ken 39:59
Great advice. Appreciate that. David you want to close out the show?

David 40:02
Yeah, how can people get a hold of you?

Chris Bell 40:04
You can shoot us an email at info@perchhq.com or just go to perchhq.com And we have a nice easy form you can fill out, reach out anytime.

David 40:12
Sounds good. And we will post links to all that in the show notes. wanted to thank you for being a guest on the firing the man podcast, and I look forward to staying in touch.

Chris Bell 40:21
Thanks, guys. Appreciate it. It was fun.

David 40:23
Thank you, everyone, for tuning in to today’s firing the man podcast. If you liked this episode, head on over to firingtheman.com, and check out our resource library for exclusive firing the man discounts on popular e commerce subscription services. That is firingtheman.com\resource. You can also find a comprehensive library of over 50 books that Ken and I have read in the last few years that have made a meaningful impact on our business, for that head on over to www.firingtheman.com/library. Lastly, check us out on social media at firing the man, and on YouTube at firing the man for exclusive content. This is David Schomer

Ken 41:03
and Ken Wilson. We’re out

David 41:21
Before you go Fun fact for all you Amazon sellers out there when you start selling in international marketplaces, all of your reviews come with you. At the beginning of this year, Ken and I sat down and talked of ways that we could double our businesses in size and landed on international expansion as our number one initiative this year. We partnered up with Kevin Sanderson from maximizing ecommerce and he has made the process an absolute breeze walking us step by step through the process. If you want to grow your revenue and reach new customers head on over to maximizingecommerce.com/fire and connect with Kevin Sanderson today. Now back to the show.

Transcribed by https://otter.ai