I Want To Listen To The Podcast!
This is a transcribed version of the podcast recording between Kyle Kuderewski and Streams of Income hosts, Ryan Reger and Stephen Hibbert. The recording took place on 3rd March 2023.
Introduction & Background
Ryan: Kyle Welcome to Streams of Income, man. Good to have you.
Kyle: Hey, Ryan. Hey, Stephen. Good to be here, thanks.
Ryan: So you are with Empire Flippers Capital now WebStreet. We’ll get into that. But tell me, I love hearing people’s stories, I know you’re here to represent your company, and I love that you’re not so corporate. You’re obviously working from home, too, which is so cool because we get to do that as well. But tell me a little background about you, and then we’ll jump into what WebStreet does.
Kyle: Perfect. Yeah. A little background. My name is Kyle Kuderewski, like you said I’m with WebStreet. I grew up here in the United States. Tennessee, went to engineering school and graduated, and got into a kind of a corporate engineering role, project management, operations, that type of thing, for about the last decade. Really great place to start, but I knew I didn’t want to stay in corporate America forever. Started looking at investing, did some real estate investing here – I live in a kind of a touristy area off the coast of Florida – and that’s how I learned about Empire Flippers.
I was looking at investing in or purchasing an online business. Learned a lot about them, really liked their culture and everything they offered and then kind of decided, well, you know what, That might be a cool place to work.
Ryan: Oh, that’s awesome. Did you end up buying the business that you were looking at?
Kyle: I didn’t. Which actually ties perfectly into WebStreet and we can get into all of that. I didn’t really have the skills to run the online business because I started working on them, and then an operational role came up in Empire Flippers Capital and, you know, worked really hard, went through the interview process and was able to join the team.
Ryan: Wow, that’s so cool. How did you go from being “Hey, I’m looking at buying one of the businesses on your site” to finding out that they had a job opening and applying there?
Kyle: Yeah. So Empire Flippers has a really cool culture-distributed team of about 80 to 100 individuals all over the world. And you know, I started listening to their podcast trying to learn how to run an online business or what type I would be interested in. And I just really got dug into their culture, got to know their podcast, read their blog, and was on their email newsletter. Yeah. So then I found out about some job openings in Empire Flippers Capital (now WebStreet).
Ryan: So cool because you were interested in passive income, which we all like.
Kyle: Exactly. And just the timing was perfect because Empire Flippers, as most probably know, is a brokerage for buying and selling online businesses. But Empire Flippers Capital (now WebStreet) was just starting up at the time that I was looking – and they provide a way for people to invest in online businesses without actually running them.
Ryan: That’s awesome! Steven and I talked about that a lot. I think Darren Hardy, who used to do the Success magazine, says be the chairman, not the CEO. And I have another friend that said, Be the chairman of everything, the CEO of Nothing. I mean, they probably talk to each other and got the same quotes. I don’t know. But I mean, there’s nothing wrong with running a business, but you’re running the business. You are in charge. You’ve got things to do. But. Investing in a business is a whole lot different.
Kyle: Yeah, 100%. And that’s our whole mission you know. A lot of people listening probably know about online businesses, like Amazon and content businesses, dropshipping and e-commerce and all that. But it’s still really early in the game, and a lot of people don’t have access or even want to run those online businesses. But just like real estate or any other asset class, there’s tons of upside. And so that’s our whole mission, is to make that accessible to anybody that wants to invest for sure.
Ryan: Stephen, remember when I sent you that video from somebody talking about Warren Buffett, and how much Coca-Cola stock he owns and how he makes more in dividends from Coca-Cola than the CEO of Coca-Cola makes. And the guy that runs Coca-Cola has to do all the hard work of running Coca-Cola. And Warren Buffett’s just over here – he loves Dairy Queen – he’s eating ice cream and making hundreds of millions I think in dividends a year from Coca-Cola. It’s just crazy.
Stephen: It is a mind shift. And that’s why I’m more excited about doing this because, as a serial entrepreneur and always going after shiny objects, I look back and saw how much money that I was rolling into selling on Amazon. I was like, If I would have bought stock, I’d be way more wealthy than doing all the work. If I was just consistently buying stocks instead of rebuying inventory. It was a weird mind shift that I’ve had just recently and going like, Oh, it’s much better to have shares instead of actually working in the business, as crazy as that sounds at times. But even if you can start the business, build it, and then sell the business, that also seems to be extremely lucrative.
Kyle: Yeah, 100%. And that is a mindset shift, right? It kind of hits you.
Ryan: Do you have people who do both? They bought a business off of Empire Flippers, and now they’re coming to WebStreet and saying, “Hey, I just want to invest also.”
Kyle: Yeah, yeah, 100%, actually. You know, I don’t know the percentage off the top of my head, but a large percentage of our investors—or at least a decent percentage—have either bought or sold websites. And that’s how they know about it, right? They know the upside that they bring. Some of them are very familiar, and some of them still run the online businesses, right? So they’re running Amazon businesses, but they want exposure to maybe Kindle or a content site. So they invest through us, and they continue to run their businesses.
Types of Businesses
Ryan: So that’s awesome. Can you give us an idea of some of the types of businesses that are on Empire Flippers, but then also, is that the type of business that you’re investing in with WebStreet?
Kyle: Yeah, I can clarify for the audience. Empire Flippers is a really large marketplace for buying and selling online businesses. Ryan builds the online business—an Amazon site, a content site, a Kindle site, or an app and wants to sell it so he can move on to another site, or he just wants to cash out. Do something different, right? Come to Empire Flippers. We vet it, we list it, and we find a buyer.
Maybe Stephen wants to buy it, right? And that’s been Empire Flippers for over a decade. The largest site that we sold was over $10 million, all the way down to $30,000 or $50,000. So a huge range of businesses, right? So now you can invest in those businesses through WebStreet. And over the last two years, we’ve allowed investors to invest across 14 different funds, which have been over 30 businesses. And all of those businesses came from the Empire Flippers Marketplace. So it was really for years that we heard from our audience, “I want exposure, but I don’t know how to run these” or “I don’t want to run these. Can I just give you money and you run it for us?”
It’s like, well, no, we don’t really do that. But, you know, we heard it enough that now we still don’t do that per se, but you actually invest in the portfolio manager. So people that have bought and sold, you don’t know exactly which site you’re investing in, but you know, the type of site, you know their strategy, and you invest in a pool with other investors and then they go to the marketplace. And according to their acquisition strategy, they buy a business or multiple businesses and then run them for you.
And all of those to date have been done through Empire Flippers Marketplace because we trusted the marketplace. But part of the rebrand to WebStreet is to now allow those portfolio managers to go purchase from anywhere; other trusted online brokerages, private deals, and that type of thing. And just because of the amount of deal flow and the amount of interest we have from investors, the Empire Flippers marketplace alone isn’t large enough, right? So yeah, yes, it’s exactly those types of businesses. Most of them have been purchased through Empire Flippers, but now we’re starting to do other other brokerages and other marketplaces as well.
Ryan: That is awesome. Stephen, you were about to ask a question.
Portfolio Managers
Stephen: Well, I think this does tie back because, as a serial entrepreneur, I’ve built a bunch of businesses, and some of the business brokers we’ve talked to said, “Oh, you left a bunch of money on the table because you could have sold those”, whereas I would just gasoline and burn and bounce up to the next. But how do you become a portfolio manager? Is it one person or a team of people? And is it all in-house? Or are you looking outside to find those people?
Kyle: Yeah, great question. And hopefully some people in your audience find that interesting as well, because we’re always looking for more portfolio managers. So we have a whole team. I’m over operations, but we have an investments team that is always looking for new portfolio managers. So we have a whole process. There’s a very simple top of the funnel application, and it’s you applying. And then we have a whole process where we vet the portfolio managers.
Ryan: So, that might be like if I have a bunch of Amazon experience, I might run an Amazon fund, with ten Amazon stores.
Kyle: Exactly. And it’s a really thorough vetting process. So, you know, at the top it’s easy to enter at the beginning, but then as you go through the stages, it’s pretty competitive. Most of these funds are between $1 million to $3 million. So we’re going to raise that money for the portfolio manager. He’s going to invest some of his own money. So they invest 5% of the total fund amount. So they’ve got skin in the game, right? And they go through the vetting process.
We actually have them go to the marketplace, do what we call due diligence, not on a business they’re actually going to buy, but to show that they know how to do the due diligence, we look at their track record, we share their track record with investors, and then they put in 5% of the money. We raise the money once the raise is complete, which is usually 60 to 90 days, they get to take that money and go purchase businesses.
Ryan: So they’re using other people’s money. I mean, a little bit of their own, but they’re getting to play in the marketplace and buy businesses. If it’s Amazon, they’re buying Amazon businesses. That’s so cool.
Kyle: Exactly. And the last point for you there, because you hit on it was that most of these portfolio managers do have teams in place. They have content teams or some of them like one of our operators or portfolio managers, we kind of use those terms interchangeably, has his own warehouse. He says he’s done multiple Amazon businesses before, and of course, for all those teams, we have third party accounting and bookkeeping. All of their team members are paid at that cost.
And then, yeah, each quarter, the profits are distributed to investors and to the portfolio manager. So there’s cash distributions each quarter. Investors get two thirds, we take 10%, roughly 3% for any external advisors, and the portfolio managers get the remaining share. So there’s one third and two thirds split. So on the portfolio manager’s side, 5% that he puts in, he gets no salary, nothing like that, but he gets 20% of the profits. So there’s a lot of skin in the game for the portfolio managers – on a $2 million fund, that’s $100,000 they’re putting in.
Stephen: Is there a scaling pay too for performance?
Kyle: There’s no scaling pay. But what there is, is that each quarter, like I said, there’s distributions based on profits. And then, in the 2 to 4 year range, when they decide that they want to sell the business, they also get the profit. And so do investors at the same split on the sale of the businesses. And now we have multiple portfolio managers who have repeated. So they’ve done one fund with us, built several businesses and then come back. And what we do for them is they actually drop a percent, so they get to put in 4% when they repeat. So we want portfolio managers to keep coming back and keep growing with us. And so far we’re seeing that, which is great.
Stephen: So if there was a team and there was a pseudo fund that was started, but it wasn’t put together through all the legal means, could you guys help raise additional funds and really help with the legal side of things? Because I have started a fund, but it’s very much learning as I go and I’m realizing like, “Oh, there’s a bunch of legal stuff to this where you can raise some, some you can’t raise. If you fall under this, you could be considered this.” It’s just like a lot of learning. I guess I’ll ask after. But if somebody had experience with it already, either with a team or without a team, or say like Ryan that has an Amazon business and says, “Hey, I’m done with my Amazon business, but I do want to move on”, Does that have a higher qualification where you’re really looking for like previously run fund managers?
Kyle: It doesn’t do a ton for us for qualifying them if they’ve run funds before. We do have a portfolio manager—at least one that comes to mind—who has managed his own funds before. But really our offering and our model is what we term “a fund in a box”.
So we let you run businesses, and we do everything else. We set up the LLCs, the SPV, we do the taxes, the K-1s. We do the distributions and just allow you to focus on running the team because of exactly what you just said – A lot of these guys have done funds before and they know how much goes into it and they don’t want to do that. They just want to run the business.
Investing vs Owning + Crowdfunding
Stephen: I have another question now, going back into maybe more community, if you’re looking for your first deal, do you recommend going through more like pooling money or going to buy a whole business? Is there a monetary amount to that consideration? Because I know some businesses, if you’re dealing with a minimum, are going to require a lot more down payment.
Kyle: Yeah, that’s really personal preference. So if you’re looking to buy a business, I mean, definitely if you have no experience, I recommend starting small. You know, there’s Empire Flippers, which doesn’t do too many small businesses anymore, but there are other marketplaces. There are ways to do it for sure from an investment perspective.
Each round we have two different models. So far, we’ve been open to accredited investors. Only our first round had a $10,000 minimum. Right now we have four funds available, and you can do $60,000 across those four funds. So you get 15,000 in each and then each of those funds will probably buy 2 or 3 businesses, right? So you get a lot of exposure.
Stephen: And the timelines on those are normally 2 to 5 years?
Kyle: Exactly,they take about 6 to 9 months to start cash flowing because they have to acquire the businesses, the net payment terms and the migration and all that stuff. But we are actually in the process in the next week or two I guess – depending on when this is published – opening up to non-accredited investors as well. So we’re going to do a crowdfunding option.
Ryan: That’s brilliant, though. You’re listening to your audience. That’s exactly what I’ve done. My whole business is like, if enough people say it, let’s create something to meet that need. So that’s so awesome.
Kyle: You’re 100% right. And I’ve always done that in my personal life as well. Just listen to what the market’s telling you, right? Yeah, so we’re going to be opening that up really soon. It’s going to have a little bit less terms than the accredited investors as far as the reporting you get and all of that. But we’re really excited about that.
Ryan: That’s cool. What’s the minimum for the crowdfunded option?
Kyle: It’s a $1,000 minimum. A $1,000 minimum will get you exposure to a couple of different funds. That’s going to be through Wefunder, so definitely be on the lookout for that. You know, another cool thing too – we don’t teach people to run the online businesses, like I said earlier, but we do along with the cash distributions, we do quarterly reports. So when you get those reports, you see the websites that you’re invested in. You get commentary from the portfolio manager that says what they’re doing to grow the businesses, what’s going well, and what’s not going well. So a lot of people find that interesting just from a dinner conversation perspective, right?
Ryan: That’s so cool. Give me an idea of what somebody might be looking at as far as, you know, the return they might get if they’re in the accredited versus the crowdfunded option.
Kyle: Yeah. So we’ve done four rounds of investments. We have a few different funds in each – 3 to 4 funds in each. Round 1 which started two years ago, is now cash flowing. Our projected returns by our financial model is 20% over the life of the funds. But of course, that’s just projections. Some are projected to go up, some will go down, and some will remain the same.
Ryan: Is that paid out annually to the investors or paid out quarterly?
Kyle: Paid out quarterly. And then of course when the businesses are sold, hopefully there’s a larger windfall there.
Ryan: Yeah, and is the goal to sell it in 2 to 5 years?
Kyle: Exactly, and so projected is 20%, and our Round 1 investors so far have received 15% over the last year. That doesn’t include the sale of the businesses. So we’re right on track for about 20%. We’re really excited about that considering, you know, what the market’s done the last year.
Ryan: Give me an idea, just a totally hypothetical example. I guess I just want to get a ballpark or even just a guesstimate, or even just a totally hypothetical guess is that if somebody puts in $60,000 and it sells in five years and they’ve been getting 15% a year for those five years, any guess as to how much that person might get as a lump sum? Like is the is the lump sum more than what they might make over five years of 15%?
Kyle: Well, let’s say this. So let’s say it was only one business in a fund, and the business they bought was worth $1 million. Then the profits have been getting distributed each quarter based on the profit per quarter, and there might be seasonality. There almost always is, right? If it’s an Amazon site, it might do better around Christmas time and then down in the summer or whatever. Let’s say that the $1 million business sold for $1.5 million, so it went up 50% – that’s $500,000. Two thirds of that is distributed to the investors. So whatever your percentage of shares are in each group, typically it’s around 80 or so. We have our largest investors that invest up to $1 million, and our smallest are just right there at the minimum. And it’s all streamlined through our platform. So we have our own in-house wallet. You can leave the funds in there. You can reinvest them in a different fund. You can just remove them to your bank account.
IRAs
Stephen: Can you invest using a self-directed IRA into one of these funds?
Kyle: Actually, yeah. As soon as we wrap this up, I’m helping an investor today invest through an IRA. We partner with Alto, and they’re super helpful for anybody that’s looking to do that. There’s others as well. Not every IRA/custodian allows you to invest in alternative assets, but more and more are starting to. And there’s several that we work with. So yeah, absolutely.
Stephen: Yeah, we do a lot. We use our self-directed IRA to do a lot of real estate, but they are constantly having “lunch and learns” with a lot of uncommon investing opportunities. A lot of people are sitting on that kind of money in their IRAs, not doing anything with it and this seems like a great opportunity.
Kyle: Exactly, yeah. We’ve had a lot come through IRAs, way more than we expected from a few different companies. And a lot of the custodians, like you said, are leaning into that. It’s really, you know, at its core, the model is proven to work in real estate by our competitors like Masterworks and FundRise and YieldStreet, and all those others. We’re on a very basic level that we’re doing the exact same thing but for online businesses.
Stephen: I think as more people become investors, you kind of want to stick in the lane that you are in. I think small business owners, now that online is becoming more popular and there’s more money in that space, I think things like this are going to be very alluring to them – to be able to buy into a fund that does online business things with their IRA money. Because of some of the conversations I had even yesterday, I think people were looking for other non-real estate opportunities, because real estate is starting to kind of level off and dip. And I was like, I don’t know the business space enough, but this seems like a great opportunity to be able to tap into those consistent returns. I don’t know if they’d want to talk to the portfolio manager – that might not be the best thing to do – but there’d be a lot of money there.
Kyle: Yeah, you know, they do get to hear from them, though. Like I said, each year, PMs (Portfolio Managers) will do a video where they explain the sites, they’ll do a video and show what they’ve done to grow them and what that’s going to do. And people really like that, right? And just like you said, there’s tons of things out there where you can invest in real estate, but there’s not a lot of ways to invest in online businesses, especially passively. And so that’s exactly what we’re trying to do.
And it’s all about diversification, right? So you want to diversify – even among us, you want to diversify across Amazon and content. And we have a Kindle portfolio manager who’s doing a great job and that’s part of WebStreet going out to other marketplaces, right. We want to be able to invest in apps and SaaS and all types of digital products.
Stephen: That’s interesting.
Crowdfunding
Ryan: So I think that hypothetical example might have been for somebody who’s accredited. What about if somebody invests $1,000 in your new crowdfunded option? Any guesses as to what their return might be?
Kyle: So when I say their terms are limited or different, we’re still planning to do the two thirds split. So the returns would be no different. It’s just that the access is going to be a bit different. So right now in a fund, when I say we have 80 investors, the investor relations is, you know, it’s still a lot of work, but it’s manageable. If we’ve got thousands of investors in a fund, they may not have as much access to us from a customer support standpoint, from a reporting standpoint, and things like that. So that will all be very clear before you invest. But the returns are planned to be at the same profit split.
WebStreet Wallet
Ryan: Okay. Question here – I have a friend who is actually developing something. They’re developing an app. Essentially they’re doing some investing in the defi space, and they’re taking investors or creating a fund. They’re wondering how they’re going to pay people back the easy way, because, I mean, that can be very manual, like going to PayPal or whatever they choose. Do you guys have an easy way, like an automated way to pay investors like especially at the $1,000 level? You get $500,000 investors and you’re trying to pay them quarterly. You certainly don’t want some employees sitting around trying to pay everybody manually.
Kyle: Yeah, 100%. This will sound a little bit selfish in the answer, but I don’t know of an easy way – We have an in-house engineering team. We built our own platform. And that really falls directly under my role with the company. It was extremely difficult to build. Yeah, and we’re really proud of it. We call it our WebStreet wallet.
Each quarter, you’ll get an email that says your funds have hit your wallet and they’re there. You log into your account, the money’s there. But to answer your question, we built that in-house.
Ryan: Is there is there a way for somebody to be able to like tap into that?
Kyle: Our engineers might be thinking that when they built it.
Ryan: That’s exactly how we do another revenue stream for you guys. I don’t know software at all, but I imagine there’s a lot of fund managers that would love access to a tool like that. Is that a way to potentially monetize it and say, “Hey, you can use what we’ve built”?
Kyle: Yeah, we haven’t really gone down that route. We were really focused on getting it launched on our platform. But yeah, it does work really well. You can wire the money. You can ACH the money. I’m working on being able to invest through crypto and withdraw through those options.
Stephen: So there could be a huge opportunity with no buyers because that’s a constant problem they’re dealing with is how to pay all those people out, and the stewards of that charge a lot of money.
Kyle: Yeah, 100%. At this time, we don’t actually charge anything at all to use it either. As far as fees, wire fees, anything like that. I can’t say that will always be the case, but certainly not in the plans to charge for it.
Ryan: When is the crowdfunding option going to be able to launch?
Kyle: So we’re talking right now at the very beginning of March. I believe we’re launching the crowdfunding in the next week or two. Part of our team’s at a conference right now – an SEO conference out in Vietnam – and they’re kind of running that part of it. So I don’t know what the update is this week, but I know it’s very close to launching. I know the page is up and we’re really close to that.
Diversification
Ryan: That’s so cool. Where do you want people to go? Just go to WebStreet.co?
Kyle: Yeah. WebStreet.co, and you can log in, create an account. Takes 30 seconds, if that. Then you’ll be on our mailing list. Through our page it is accredited investors only but you can make an account and you can read – we just did a recent blog post on our two year performance review where we went through the good, the bad, what we’ve accomplished in the last two years, what investors are getting. So you can check that out.
Ryan: I love it. I love these passive types of options where somebody can say, Look, I don’t want to I mean, maybe I am running a business, but I want some passive income on the side. Just put some money over there. And I mean, it’s way better than most other types of ways to get passive income.
Stephen: And 100% access, especially for just $1,000.
Kyle: Yeah. And like you said, I mean, I’m smiling because you guys are speaking my language. I mean, that’s part of the reason I came on board was looking to passively invest on a personal level and get exposure to something other than the stock market.
Ryan: And it seems like it’s fairly low risk. Like, I mean, every single one of those businesses in the portfolio would have to completely tank right?
Kyle: We do push diversification big time. I mean, if you just come in and pick one fund, you know, you do have the ability to do that, but we don’t recommend it. You know, a bit like throwing a dart at a dartboard. We will often get that from people, right? Which one do you recommend? What’s your favorite?
But yeah, if you diversify across multiple funds, you know, it’s relatively low risk.
Stephen: And since this is new, the managers don’t have a huge track record, but if they are consistently rolling over, that would only help with that to be able to go like, “this guy’s been with us for so long. This is his track record.” I think that would be a great thing.
Kyle: Yeah, and that was always, always part of the plan and we’re excited to see it coming true because right now we have four funds available at this moment and one of them is a repeat guy. And each time we’ve had a repeat portfolio manager, that fund has filled up the fastest. The whole plan is to have a public track record, right? Kind of a scoreboard of sorts.
Ryan: And that’s so cool. So obviously individuals can get involved with this. But you said you’re talking to an IRA guy later – Like if I was a financial advisor and I had a whole bunch of accounts, wouldn’t this be something I’d also be interested in getting my clients money into something like this?
Kyle: 100%, yeah, we’ve had several discussions with different family offices, with different financial advisors. We have a few that have come in on a personal level so they can see what it’s all about, learn about it and then take it to their, to their customers. So I know for sure we’ve had a few do that.
Ryan: I’ve always wondered, having an Amazon business, I know what the returns are like for an individual Amazon business. I have a friend who does investing and I thought, “Man, it seems like there should be a way to marry those two together” because the amount of return an Amazon seller gets is insane compared to 15%, 20% or real estate even. I mean, there are some risks involved in Amazon business, things can happen. But most people, even if you lose your account, you can get it back – 80%, 85% of the time at least – or more. There’s so much money out there that if people knew they could invest in a business, an Amazon business, without having to know anything about it, that’s just incredible.
Kyle: Yeah. And Stephen, like you said, even the ones that aren’t repeat portfolio managers with us yet, we put their previous track record out there on the fund page, so you’ll see all the details. Here’s their growth strategy, here’s their team, here’s what they’ve built and sold before. We consider them the best portfolio managers in the world. Out of the 14 that we’ve had so far, I think we’ve had 600 or so applicants. So it’s a pretty rigorous process. Again, doesn’t mean that they’re guaranteed to do well, but they certainly have the track record.
Parting Advice
Ryan: Yeah, that’s awesome. So speaking in terms of our audience, there are a lot of ecommerce sellers, a lot of people that want passive income. Any parting advice for them for passive income?
Kyle: Yeah, I mean, other than diversify, if you’re interested in this type of thing – I can nerd out on it. I think you’ll really enjoy checking out our website. You can see the past portfolio managers. You can see we don’t reveal the sites that they purchase other than two investors for obvious competition reasons. But you can get an idea. So from an investment standpoint, obviously there’s upside, but also just from an interest standpoint for people that are listening to the podcast, they’re probably a bit passionate or interested in learning about investing in online businesses. I think we have a lot of resources out there that would just be interesting to people, whether you invest or not.
Stephen: Maybe an odd question but do you guys work with any private equity firms where you can build it, roll it up and then sell it to them to have a client on the other side when you’re ready to sell?
Kyle: We haven’t done that yet. It is something that we’ve talked about. It’s another one of those where if we get enough demand or if the market kind of pushes to that.
Stephen: If you start looking into private equity, they’re looking for very served up portfolios. And it seems like you guys are in a perfect position to be able to do that.
Kyle: Yeah, and that is part of why we get a lot of questions around that. You’ve seen over the past couple of years the aggregators right – some of these are raising enormous valuations, going out and buying tons of Amazon portfolios and rolling them up. Our model is different, but it’s very similar. So I can definitely see where that question is coming from, and we get that a lot.
Stephen: Well, I’m just saying you could serve them up, say you have six different funds and you go, they’re all going to kind of end at the same time – we work with this private equity that’s looking for 100 million. This could be a part of their rollup.
Kyle: It’d be really good for investors too most likely.
Stephen: So there are bigger pools of money that are looking for opportunities for them to come and buy portfolios. What their fund is doing is taking these smaller businesses and putting them together into one fund with smaller investors. But then when they’re ready to sell in 2 to 5 years, they could put a couple of those funds together and sell it to one of those much bigger businesses. Because the private equity firm is looking for what’s normally like $500 million,but they’re looking for large, large portfolios that they can just come in and evaluate.
But I don’t know if there are companies out there that specifically serve up in the business space. I can only imagine because they do it in the real estate space. And I’ve seen some companies like that that are just like playing the middle, where they get a bunch of investors together. They understand all the rules and regulations, then they start raising funds at the same time so they can run the funds up and then have a person to sell all of them to.
I don’t know how you guys are selling those businesses. I don’t know if you sell them in portfolios or you sell them off one at a time, but those companies are able to sell the portfolio so they don’t have to sell like the apartment buildings one at a time or the houses one at a time. They just sell them all in one portfolio, and it catches up. It makes it very easy. So they’ve just gotten their process down to an assembly line. Essentially, we need this many people to raise this much capital. We buy this many buildings, we hold them for two years and then we sell them to this private equity firm. I think that makes a ton of sense.
Kyle: Yeah, that makes a ton of sense. And it definitely could be a fit for us. Right now we’re selling them individually, but we’re certainly open to whatever’s best for investors and kind of the numbers you were hitting on. I mean, that’s the whole reason for WebStreet opening up to other markets. We know the deal flow in the e-commerce industry based on what we know about the numbers we’ve raised, like I said, over 20 million over the last two years. Our plan is to be doing 100 million in deployment per year. We think the market’s that big.
Ryan: Yeah, that’s so awesome. Wow, wow, wow. Well, so people can find you at WebStreet.co?
Kyle: Yeah, WebStreet.co is the best place to start.
Ryan: Awesome, thanks. Appreciate you being on the podcast.
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