cjisakow

Great insights especially the last one, some of the smartest investors we spoke to saw the end game being we can offer special perks for customers like an amazon prime like program. It’s interesting and I wonder why the traditional conglomerates like P&G don’t do it; probably because they don’t have a direct relationship with the customers? On the PE job post yes for MBA interns were were looking for folks who have the skills to find and evaluate potential acquisitions

We've been hyper focused on executing on finding great companies and now operating and growing them with the entrepreneurs, so embarrassingly haven't posted any content yet. BUT we just brought on an awesome content marketer and will begin telling our story. magnetoboards.com was among our first acquisitions if you are looking for a longboard!

Not sure i ever want to be the uber of anything, but you are spot on that there is a ton of data, that we can use machine learning to both better identify acquisitions and grow brands. And yes for many founders the process is broken

I'd also add that its hard to run an e-commerce business, you need to source products, manage supply chains, manage teams etc... We know this is going to be hard and went in eyes wide open this is not just about marketing or just about financial engineering. And we have experience running operationally intensive companies that utilize and develop technology.

for sure Berkshire inspired Mark Leonard at Constellation which informs our approach

Affinity Labs! So far ahead of their time...

Clearbanc and others super useful to help short term cash flow, but its tough to get enough money out to take money off table (a lot of founders have a chance to take money off to go buy a house etc...). For example one of our portfolio company was started by 4 guys with $20K, and we just were able to pay them $4M, and then if they keep growing it they get more upside. One of the ways to grow is to increase the inventory and then increase the velocity of sales through new channels and increase in advertising. They didn't grow it in the past because they didn't want to make that investment but we have access to capital to make that investment.

would be awesome to talk and hear more about your experience. we absolutely are looking at omni-channel, something that is different from some of the early players in the space. We are starting with ecommerce because these founders have developed product market fit and are doing it profitably. As a platform we can help them get on other marketplaces (e.g. walmart, target, international amazon) and then into physical retail. The sale cycle there is longer as you know, but having a top rated product on amazon is already catching the attention of brick and mortar buyers.

Thanks we are moving fast and building things that don't scale! its just a form right now, and then I email you a referral agreement that say's we will pay you if we close the transaction. I'll go in and update the text on the form to make it all more clear.

oh i also see you know a lot of folks who buy companies, if they grow them to $3M+ and are looking to take money off the table send them our way! We pay referral fees for successful deals https://www.moonshotbrands.com/leads

We are looking at companies that are doing at least a few million dollars in sales. The sellers are super impressive in my opinion, its hard to get there! So yes sometimes they don't have the best records, but we are looking at companies with a relatively few number of skus so if we need to go back to the bank records and invoices to recreate cost structure we can. So far most sellers we work with are great entrepreneurs that either don't have the resources, capital or experience to take the brand to another level.

I'd add after we agree on terms we do a light weight due diligence process with accounting/law firms to confirm what we saw

Yes and yes. We are building out integrations to automate, right now we are doing a mix of manual and automated processing. There are a bunch of different companies that have built pipes into the platforms and then there is clean up and analysis. One of the nice things about these busiensses is that they are not super complex and by doing a data dump from amazon and their DTC site you can get almost all you need on revenue side, then if they are spending on facebook/insta or google you need to pull that data in as well.

cool, will have to check it out, do you know them? feel free to intro or i can find them.

if a tree falls in the woods..

but seriously how we are defining it for our business is private label sellers of physical goods. So you own a brand that sells on Amazon or DTC, and your products have your brand on it. The supply chain varies from folks who own their own manufacturing to others who source from suppliers and never touch their product it just straight to amazon FBA. But not drop shippers, not software, not online marketplaces.

Its probably too early to say how Aterian (mowhawk) acquisitions will work out. In terms of structure we are early enough that we are creating deal structures for each entrepreneur that makes sense for them. Some would prefer all cash, others would like to have more upside in the future. We want to meet the entrepreneur where they are and create a deal that aligns incentives. And we are not public so its a different conversation around including Moonshot equity in any deal

Participating in YC was hugely valuable for our team, we had great mentorship, access to an amazing network of founders who have provided advice as we launched Moonshot, and of course investors. I don't know what their criteria is for accepting us, but I think the fact we were multiple time founders that had built operational and technology company and that there is a big opportunity to apply technology to every step of acquire, operate and grow in our model. We also love the idea of building something like Startup School for ecommerce entrepreneurs. One day we hope that ecommerce entrepreneurs want to be a part of Moonshot the same way we wanted to be part of YC. Finally as we build tools for ourselves we could potentially make those available to the millions of ecom sellers out there.

Which part of their business?

yes focus on EBITDA. In some cases there is a metric called SDE which is seller discretionary earnings that has some additional add backs.

good point, here is basic criteria: Private label brands $3M-$30M in revenue 15%+ net margin Predominantly on Amazon but also open to Shopify/DTC brands that are profitable. Allan built HomeSav focused on home goods ("everything from couches to candles"), and we also like sporting goods, office, home improvement, etc... In terms of products staying away from fast fashion, electronics that can become obsolete. We don't do drop shipping, software etc... Looking globally

Not a typo though we haven't announced it yet, whoops....

For sure, we are focused on ecommerce brands instead of services/software. I love how they think about partnering with founders. And we share a Canada connection.

We are both entrepreneurs ourselves, and have lived through working with PE shops that might gordon gecko style fire everyone and flip. Its not our model, our ideal seller stays and grows within Moonshot, where we can both create more value. That being said there are sellers ready to cash out, and for them we have a platform so we can operate and grow the business.

On your point on brokers, we get our leads a variety of ways, including by building great relationships with brokers.

And your last point for sure the higher the ARR the higher the multiple generally (at extreme someone like Proctor and Gamble trades 20x-40x). What we find from our experience is that there are folks that are asset rich (meaning the company is ebitda positive) but cash poor because all the money goes back into inventory/product launches etc... Moonshot is flexible and can help them take money off the table, and then get upside in the future.

We plan to be long term holders, eventually taking the company public. We look at Constellation Software up in Canada (where Allan is based) as a great model. The entrepreneurs often stay with the company since they know the customer and product better than anyone. Then with shared resources, best practices, and talking to their peers they can grow their business.