$500M of businesses sold, scaling advice, & acquisitions with Justin Cooke, founder of Empire Flippers
In this episode of our podcast, we had the pleasure of hosting Justin Cooke, co-founder of Empire Flippers. Empire Flippers, a company that has revolutionized the online business marketplace, stands as a testament to Cooke’s vision and expertise in the digital realm.
This episode delves into the journey of scaling an online marketplace, the nuances of acquisitions in the digital space, and the balance between profit and growth. Justin shares invaluable insights drawn from his extensive experience in selling over $500M worth of businesses.
“We started with a simple idea and grew it into something that profoundly changed the way online businesses are bought and sold,” says Cooke. This teaser barely scratches the surface of the knowledge and stories Justin shares, so buckle up for an enlightening ride.
Who is Justin Cooke?
Justin Cooke is the co-founder of Empire Flippers, an online business marketplace. As co-founders of Empire Flippers, Cooke and his business partner Joseph Magnotti have played a critical role in shaping the landscape of buying and selling digital businesses.
Empire Flippers emerged from a simple yet unaddressed need in the market – providing a reliable platform for smaller online ventures to find buyers. Over the years, Justin and Joseph’s vision have not only scaled the company to new heights but also established it as a cornerstone in the industry.
Empire Flippers’ significance is evident in its impressive feat of helping the sale of over $500 million in online businesses, a number that speaks volumes about its impact in the business industry.
Summary of the Podcast
Empire Flippers Origins and Market Niche
Timestamp: [00:01 – 01:26]
Justin Cooke discusses the inception of Empire Flippers, initially known as AdSense Flippers, in 2010. He elaborates on the unique market gap they aimed to fill: providing a platform for small online business owners to sell their ventures, especially those not large enough to attract traditional brokers. Empire Flippers emerged as a marketplace to connect profitable online businesses with potential investors and buyers. Cooke highlights the company’s growth trajectory, evolving from a small team to an organization with peak staff numbers around 70.
Founding of WebStreet and Passive Investment Approach
Timestamp: [01:26 – 02:59]
Justin Cooke introduces WebStreet, a subsequent venture by Empire Flippers aimed at creating passive investment opportunities in online businesses. He describes the challenge buyers face in actively managing their acquired online businesses and how WebStreet addresses this by enabling more passive investment options. Discussing the size of both companies, Cooke reveals that Empire Flippers is the larger entity, having sold nearly $500 million in businesses, and WebStreet, being a younger and more startup-like venture, has raised around $27 million for operators.
Resisting Temptation for New Projects
Timestamp: [02:59 – 04:55]
Justin Cooke stresses the importance of focus for founders, cautioning against the temptation to chase new projects or trends. He emphasizes consistency in business focus, advising entrepreneurs to become known for a specific niche or expertise. This consistency helps in gaining referrals and business growth, rather than constantly shifting focus which can confuse potential clients and partners.
WebStreet’s Inception and Market Needs
Timestamp: [05:30 – 08:23]
Cooke explains the genesis of WebStreet, driven by market demand. Many potential customers with investment capital but lacking time or expertise in running online businesses prompted the creation of WebStreet. The venture focuses on connecting these investors with skilled operators to manage the online businesses, creating passive income opportunities. The unique advantage of Empire Flippers in this model lies in its vast experience and network of proven online business operators.
The Balance of Hiring and Scaling
Timestamp: [08:51 – 12:52]
Reflecting on Empire Flippers’ growth, Cooke discusses the challenges of balancing hiring and scaling. Initially, they were slow to hire, missing some growth opportunities. However, in recent years, they experienced overly rapid expansion, leading to a need for scaling back. He highlights the importance of finding a balance between cautious growth and ambitious scaling.
Profit Management and Bootstrap Approach
Timestamp: [12:52 – 15:15]
Cooke delves into profit management strategies at Empire Flippers. Initially, profits were reinvested for growth, with minimal salaries for the founders. As the company’s revenue increased, they shifted to taking regular profits and distributions while maintaining a healthy business runway. Being a bootstrap company gave them flexibility in profit distribution and growth decisions.
Runway Management and Business Resilience
Timestamp: [15:15 – 16:48]
Discussing financial runway, Cooke reveals that Empire Flippers maintains a 2-3 month expense coverage, considering its cash-forwarded business model and historical revenue patterns. This strategy ensures business resilience without excessive cash reserves.
Acquiring Companies for Growth in SaaS
Timestamp: [17:21 – 22:54]
Justin Cooke advises SaaS companies on growth through acquisitions, discussing the benefits and challenges of acquiring other SaaS companies and the importance of aligning customer bases. He mentions alternative acquisition targets like media brands or newsletters, which can complement a SaaS company’s growth strategy. Cooke also touches on valuation metrics, such as seller discretionary earnings, and the negotiation dynamics in acquisitions.
Brand Building and Long-Term Content Strategy
Timestamp: [27:33 – 29:02]
Cooke reflects on the importance of consistent brand building and maintaining a long-term content strategy. He regrets discontinuing their successful podcast and advises SaaS founders to persist with content initiatives that resonate with their audience for long-term brand strengthening.
Transparency and Decision-Making in Business
Timestamp: [29:02 – 34:21]
The podcast concludes with Justin Cooke discussing the value of transparency in business, even in challenging situations like handling scams or over-hiring. He emphasizes that being open about such issues builds trust and credibility in the long run. The conversation wraps up with Cooke sharing insights on making tough decisions, like layoffs, for the overall health and survival of the business.
This podcast episode with Justin Cooke is filled with insights for anyone interested in the digital marketplace. Cooke’s journey with Empire Flippers illuminates the paths of entrepreneurship, scaling a business, and mastering the art of online acquisitions.
His candid sharing of challenges offers a realistic view of what it takes to succeed in this dynamic industry. For a deeper dive into Justin Cooke’s experiences and to gather more pearls of wisdom, listening to the full episode is a must.