Rod Gunn was looking for a way to pivot his life-long career in the oil and gas industry: that’s when he found Flippa.
Three years ago, the industry he always worked in started to slow down and Rod was wondering what he could do next. That’s when his son came up with the idea of Rod becoming a digital entrepreneur…
Rod acquired and sold numerous small businesses on Flippa.
‘Having a resource like Flippa, that has all these businesses ready to be purchased, was a great fit for me.’
He also made a bigger investment on Flippa, and purchased a social media promotion agency. Whether it was musicians trying to make their music popular, random people wanting more likes and followers, or brands wanting to establish social media presence, the agency helped people, profiles and pages to become viral and gain followers.
Rod didn’t know much about social media at first, but he successfully managed to scale and optimize the business. He worked tirelessly to offer a better product: packages and bundles were added to the offering, the website was rebuilt, and Rod introduced a focus on customer service.
The business was booming at this stage, but Rod’s previous career also started to get back on track. That’s when he knew it was time to sell, and he turned to Flippa.
‘I knew Flippa, I knew the platform, and what it has to offer. When the thought process came up, Flippa was on my mind.’
Rod spoke with Maliha, one of the Advisors at Flippa, and together they scoped the perfect exit strategy, from the initial valuation to finding the right buyer.
“Anytime we got on the phone with a Flippa team member, it was a very positive experience. The team is engaged, and active in the space, and wants buyers and sellers to succeed. The whole experience was excellent.”
The business sold in just under three months on the marketplace for mid-six figures.
The best part of selling his business on Flippa? The team helped him through every step of the journey. Listen to how Flippa changed Rod’s career and life.
Watch more Humans of Flippa stories here.
Read the full transcript of the conversation below.
Rod’s Entrepreneurial Journey
Blake Hutchison: Good morning, good afternoon, good evening, wherever you are around the world. This is another episode of Humans of Flippa. My name is Blake Hutchison. I’m the CEO at flippa.com, the world’s largest marketplace to buy and sell online businesses. And today I’m joined on another episode with Rod Gunn, who is based out of Houston, Texas. And as early as last week, he was actually with our team in our Austin office at a Flippa meetup. So Rod, fantastic. Thank you so much for joining. Appreciate you being with us here today and looking forward to hearing your story on Humans of Flippa.
Blake Hutchison: Now Rod, what I’d like to do is tend to start with a broad question. How did you get to where you are today? What was your entrepreneurial journey? If you could tell us a little bit about that and help us understand your beginnings and where you are now.
Rod Gunn: It’s a long story, Blake, but I’ll try and shorten it as best I can. I’m not from this industry. I’m an oil and gas guy. I’ve traveled around the world selling oil and gas equipment, services, processing solutions, etc. Things started slowing down in my space about three years ago and it was, the phone wasn’t ringing as much and not as many emails coming in. I’m getting bored, so what should I do? And my son, who’s since graduated uni, he said, why don’t you get into Ecommerce? That sounds great. What is Ecommerce? So he sat down and showed me some things. This looks really good. So we looked at some sites and possible services, solutions, products that we might be able to sell and sites that we might look to buy. So we got in that way nearly three years ago with the site that I’ve hung onto, done some things with, spun off a mirror site.
I still have the base, and grew from that. No real big successes until this one site I just sold recently, I acquired a little over two years ago. But there were some other smaller sites that I bought and sold. A couple of them were on Flippa, and then the large one we just sold a couple of months ago. But the journey was interesting in that this is not really my traditional space and having a resource like Flippa that had all these already set sites you could step in and purchase, should you opt to do that, was a great fit for me and worked out well, both buying and then eventually selling.
Blake Hutchison: That’s interesting and quite common. For those listening out there, we do meet a lot of people who have come from one industry, not necessarily would they consider themselves digital entrepreneurs, or in many cases they wouldn’t even consider themselves entrepreneurs at all. But they tend to have a conversation, it’s a serendipitous conversation, and they find themselves all of a sudden as an entrepreneur and operating within the digital economy. The business that you recently sold, would you mind stepping us through that business? What was it, what did it do, what was its service proposition?
Rod’s Most Recent Exit: A Social Media Promotion Agency
Rod Gunn: It’s something that I didn’t know much about until I acquired the site. It’s a social media promotion site. So again, appreciating my age and where I came from, Instagram, TikTok, things like this were things that I really wasn’t that familiar with. But I looked at the site, the valuation looked good, and I thought, I can do this. I can figure out Instagram, TikTok, SoundCloud, Spotify, and support those users on those platforms that were looking for, I’ll say a boost, a promotion, to their post, to their content, whatever it would be. And that’s what we did for a couple of years.
Blake Hutchison: You’ve taken somewhat of a risk, you’ve bought this business in, I hope you don’t mind me saying, but you admitted it’s certainly an industry that you weren’t, well at least not an expert in, but I suppose clearly worldly enough to understand that the world of social media was strong and viable and that businesses were operating in that ecosystem and doing well doing so. And so the business, if you don’t mind me saying, was called Boost Your Presence and it’s essentially a social media promotion agency. Is that a fair description of it?
Rod Gunn: That’s very fair. That’s exactly what it was.
Blake Hutchison: How did that business make money, and then how did you take it from what it was when you acquired it to what it became when you exited it?
Rod Gunn: A lot of work. I’ve talked to people that are looking for, I want to get a website so I can obtain passive income. That sounds wonderful. But I think where I’ve come from, there’s a direct correlation between the amount of work you put into something and the return you get on the back end. Now, not 100% of the time, but usually you put work into it, you figure things out, you develop solutions, you get creative on how you go to market. You listen to your customer base, you come up with something that might be a little bit different from the others. You try and differentiate the best you can, and you bring a product forward. And from then on, it’s just supporting that customer base, tweaking ads as you go, tweaking the offering as you go. But really just focusing on the customer, responding to them when they have needs, and appreciating that anyone that buys anything on a site, especially this kind of site, has a strong potential to be a return customer. So you treat them as equals and you take it forward.
Analyzing the Agency’s Structure
Blake Hutchison: Just for simplicity’s sake, who was the paying customer? Was it the influencer looking to boost their presence, or was it the brand looking to get access to the influencer?
Rod Gunn: That’s a great question. Very few established influencers would come. A lot of it would be musicians that want to get their music out there and they have music, they want to get heard. You’re more apt to listen to a track that’s got a couple of thousand plays and some likes versus something that has nothing. A lot of respect for them to try and get their music out there, and this was the way they saw that they could do it. Small businesses getting new products out there, getting their brand known. That was a fairly large percentage of the business. And then just random people that wanted their posts, their page, popularized, wanted that perception that I too can be famous and this was a way to take a shortcut to get there, maybe build up that perceived following to establish more of an organic growth.
Blake Hutchison: Opportunity to brag a little, if you don’t mind. You bought this business when, as you said, maybe it was a risk, maybe it was a little bit of a speculative business back then. It wasn’t proven in its operational model, and you’ve taken it to something which you’ve ultimately sold for mid-six figures. What was fundamentally better about the business by the time you exited it?
Rod Gunn: The site had improved. One of the big changes we made is that we had built in upsells. Upsell is a large part of econ, but instead of buying this and you get a discount here, I would just bundle views and likes. I would do packages and those were a large part of our business, and it hadn’t really been there before. The pricing became a little bit more competitive, but my costs came down as well. I found other service providers… The main service provider used optimized his costs a little bit. We were able to have a more competitive offering. And again, it just gets back to responding to customers when they complain. No matter what kind of site you have, no matter what kind of business you’re in, something’s going to go wrong.
Whether it’s oil field equipment that goes down or likes that don’t get there in time on your TikTok page. If you just address them in the right manner, if you give a few extra likes or views and show the customer that you generally care, things fall in place no matter what business you’re in. I think there’s a large part of that here, and it worked out well. As you mentioned, we sold, not a huge valuation compared to some of the things I’ve seen on your site, but it was about 270 x what we paid for it. So from that perspective, it was a nice turn.
Blake Hutchison: How long did you own it for?
Rod Gunn: Right at two years.
Delving Deeper into the Exit Process
Blake Hutchison: I would’ve thought 270 x in two years is about as good an IRR as you can possibly expect, congratulations on that. Now you’ve come from a completely different industry, and then you find yourself owning this business, and ultimately you then pursue a sale. What made you want to sell it at that point in time? What was the motivation to do so?
Rod Gunn: I mentioned earlier on, I’m an oil and gas guy. In that business, I still had a side consultancy doing a lot of work in that space. It was starting to pick up, phone was starting to ring again, emails were coming in, I was traveling a lot more. Still am. I really wanted to get back engaged in what I’ve really known for the last 25 years of my career. And to be quite honest, it was getting very difficult filling three to 400 orders a day, and a lot of the people in this space that come to my site wanting likes, views, followers, expected immediate results, and got to sleep sometime, and need to take a break from it. The hours became a little bit longer than we initially thought they would when we came in, but that’s because there was more business. It’s not necessarily a bad thing, but we were looking for an escape. Escape’s not the right word. We were looking for an exit, and that’s where Flippa came in.
Blake Hutchison: Fantastic. Now take us through the experience. Lots of buyers on Flippa, and of course our job is to try to find the right one, but that can take some time. For those people who have never been through an exit of any business of any size before, would you mind just articulating that process a little bit, how you found it, and what some of the challenges were in doing though? What were the frustrations in going through that process? How did it play out for you?
Rod Gunn: I was familiar with Flippa from two years prior. I’d purchased a couple of smaller sites, resold those sites at a very small multiple, but knew Flippa, knew the platform, knew what it had to offer. And when the thought process came up that, okay, we need to start selling, Flippa was foremost in my mind. I spoke with one of your consultants, he gave me a valuation on the business that was far more than I thought the business would ever sell for, and thought, okay, there’s no way this can happen. Spoke to a couple of other people at Flippa, set expectations a little bit lower but not much, and I thought, based on where we are, what’s going on, I do think I want to make the exit and if we can get this price, great. If we get near that price, fantastic. Still happy to do it. I was assigned an advisor…
Rod Gunn: Maliha, and she was awesome. Had a lot of conversations with her. It didn’t sell right away. The valuation was really high. There is a level of risk in this business. You never know what might happen in the US right now with TikTok or whatever else. And there’s a lot of saturation in this space. There are a lot of competing websites. I really was hesitant to think I would sell it for what I ended up selling it for, and certainly what it was initially valued at. It took a few months, three months, to find the right buyer took three months, and that was fine. We were still making revenue, we were still making income. But working with your team there who, I would say, were engaged in my success, they would take that extra step to try and find the right buyers, including going back, re-engaging those when the price dropped. There are a lot of things they did that, even coming from a sales background, I didn’t do.
The Timeline of an Exit
Blake Hutchison: I appreciate you saying all of that. For those out there who are listening for the first time, considering buying or selling, it is important to understand the process. It is not an overnight thing. And I think, Rod, you’ve just said it took approximately three months to find the buyer, and that’s about right. We would tend to say to most of our customers that, for an asset that is mid-six figures, that you can tend to imagine a 12-week sale cycle or thereabouts. Tell us a little bit, obviously without revealing too much, tell us a little bit about the buyer. What was it that they liked? What was their background? Were they from an oil and gas background as well? Probably not. Who did you end up meeting on the platform, and what was it about that buyer that made the deal work?
Rod Gunn: You mentioned the platform. That’s what made selling on Flippa so easy. You would see the engagement coming in, you could see their profile. Flippa did some vetting up front. When these people came to the site, or this, I’ll say, this person initially came to the site, I could see a little bit of his background. There was some back and forth chatting engagement, which is fantastic, and you guys have oversight for that, so you could come in, take a look at it. Talking to him, well initially chatting with him initially and then engaging on the phone, and knowing what his background was, you get a good feeling for that person was the right one to sell to.
And I’m going off subject a little bit, but I also asked Maliha to do a bit of an internal check within Flippa to make sure this guy’s legitimate, and she did that. Came back all good. Other people here have had engagement with him. This is a solid buyer, this is someone you want to talk to. So went back and forth with him for a while. They put a letter of intent together, which took a long while to work through, negotiated a price, and we settled.
The Specifics of an Exit: LOIs, Contracts and Due Diligence
Blake Hutchison: Was there anything about that letter of intent which was, well for want of a better description, funky in nature that gave you any cause for concern, and I guess forced your hand around tougher negotiation? What was it about the letter of intent which was right or less so right?
Rod Gunn: The LOI was, I think, 13 pages in length, which ended up to be half the size of the contract. I’ve read contracts throughout my career, I was okay with that. Non-compete for a longer period of time than I was comfortable with. I really don’t expect to be back in this space, but it was a long time. Payments spread out over a longer period of time than I was comfortable with, a lower price than I was comfortable with, and a few other clauses that just weren’t really satisfactory for me.
And that’s part of the reason probably the sales process extended a little bit longer. And there were other buyers that came forward with an LOI that wasn’t really what I would consider acceptable. So reviewed this, did a few red lines on the contract, on the LOI, took it back, and then we had a workable LOI, which initiated the due diligence process with the customer who, to get back to your original question, was a couple of friends that work in California knew each other from university and have a team of people working with them to support the website, e-comm type businesses.
Blake Hutchison: I appreciate you going through this with such transparency. A couple of bullet points there. You talked about the fact that the non-compete was far longer than you would’ve liked. I think you talked about the fact that the monetary terms of the LOI were lower than you would’ve liked, and a bunch of other terms. And so it’s really important that people understand that LOIs are in fact negotiable. We often hear from sellers who say, oh, I’ve got this LOI, I’m walking away. And it’s very important that people treat the terms of an LOI as something which is clearly preferential for the buyers, and that we invite and welcome everyone to negotiate that. How did you find the negotiation, Rod? Were they open or was it difficult?
Rod Gunn: The LOI was, I’ll say, simple. A little bit of back and forth, some red lines. We came to an agreement on price, structure, things like that. The contract was much more difficult, just a lot of things in the contract, and I was dealing directly with their lawyer, and I’m not a lawyer. And it took a while, but there was baby steps made here and there, but it was taking too long. Eventually the seller himself said, look, let’s get on the phone and work through it. And half an hour later we had an agreement, and it wasn’t that hard. Any negotiation, there’s a little bit of give and take, and there was here, but I felt at the end it was a fair contract on both sides, and I’ve supported them for a period of time, we’re outside of that period of time, happy to continue to support them, but I think the site’s doing well and they don’t need me anymore. But it was a negotiation, it took longer than it should have. But once you get on the phone and work these things out, it went quick.
The emotional rollercoaster of an exit
Blake Hutchison: I’ve checked it out. Boost Your Presence is still operating and appears to be doing really well. So congratulations on a great exit, and it appears the buyers are no doubt happy. The price. Were you disappointed? Were you content? Were you ecstatic? How far removed was it from your expectations? How did you rationalize the emotions around that?
Rod Gunn: Content plus.
Ecstatic would’ve been the price we initially listed at, which to be honest, I thought was somewhat unrealistic. But you try, and we weren’t in any rush. So it came down a couple of times. We ended up at this figure, which was a little bit higher than the offer, but very content with where it came in. I mentioned the sell price to friends in my orbit, my circle, and they are ecstatic.
We’re very content with it. It’s a great exit. It gives us a sum to do other things with, which we’re in the process of doing, partly on Flippa, partly on just our own personal space. Very content. It worked out really well, and I hope it does for the buyer as well.
Blake Hutchison: We do our best to follow up with the buyers and in almost every case, buyers of assets of your type and of your size tend to end up becoming very, very successful in their own right. That’s really something we’re very proud of, and we’re excited to ensure that we keep in touch with the buyers who do ultimately acquire on our platform. First time you’ve gone through this, at least at this size. As you said, it was a social media influencer platform, or a social media platform. It was a new experience for you. For those out there who are listening to you and want some sort of tips and learnings from the experience, how would you summarize what you learned from your exit of this size?
Rod Gunn: Great question, and I really don’t know how to answer that. I came into something knowing a little about Ecom, but not understanding social media. All the tools you need are out there to learn about anything you want to pick up. At your meeting in Austin, there were a lot of Amazon FBA people there. So within a couple of hours and some follow-ups later, learned a lot more about the Amazon FBA space. There’s so much potential in everything that you have on your side and elsewhere. If you don’t know it, you can figure it out. It’s not super challenging.
The answers are out there if you just make a little bit of effort to figure out how to run Google Ads properly, as an example. That was one of the biggest obstructions I had. I did not really understand Google Ads. In fairness, I still really don’t get it all, but I learned enough to make my ads more effective, and we had a conversion rate of near 18% when we were done, which in our little space is quite high. And it was really the quality of the ads, and YouTube’s helpful, articles, there’s so much out there that you can read, watch, learn from, that will help you build your site and create it beyond what you thought it would be coming in.
The Experience with Flippa
Blake Hutchison: Final question for me, and again, thank you so much for the transparent interview today. You obviously mentioned that you were content plus, and it’s enabled you some flexibility obviously to go back into what you know best: the oil and gas industry, but obviously given you, I suppose, some capital from which to do whatever you want with. You’ve summarized this a little bit. You said maybe do some more things on Flippa, maybe do some things for yourself. But how would you summarize, if you don’t mind, the Flippa experience as a whole?
Rod Gunn: Oh, very positive. Go back to your rating system earlier, that’s where… Close to ecstatic. Your team, Maliha specifically, some of the other guys as well, and I can’t remember the name of the gentleman in Austin that first approached me and said, look, this is what your business is worth. I thought, no, there’s no way. Whatever you’re doing in Austin, whatever’s in the water there, can’t be right. And just the platform you guys offer to engage with people that are looking to buy, the support from your team, be it Austin, Amsterdam, Melbourne where you are, to me it’s been, anytime I’d get on the phone with a Flippa person, it was a very positive experience. And the Flippa people I met in Austin, the one I met at the Houston gathering a couple of years ago, meeting some of your people in Las Vegas, you’ve got a great team that’s engaged and active in this space and are wanting buyers and sellers to succeed. And that’s obvious. So the overall experience has been excellent. Near ecstatic.
Blake Hutchison: Content plus on the price level and near ecstatic with respect to the Flippa service, so thank you so much.
Ladies and gentlemen, that was another episode of Humans of Flippa. We had Rod Gunn join us from Houston. Rod was, well, I suppose a buyer and seller on the Flippa platform, but most recently had success selling a social media platform, Boost Your Presence was the name. Go and check that out and support the new acquirers of that business. Thank you so much, Rod. Really appreciate your time today and thank you everyone for listening into another episode of Humans of Flippa.
