On this episode of the Domain Magnate Show, join host Michael Bereslavsky and Jim Mann, the Director of acquisitions at Thrasio, as they chat about how Jim joined the team, the company’s rapid growth, and the secret to its success.
GUEST BIO:
After 10 years supporting Fortune 500 & FTSE 100 leaders executing transformation in their organizations, Jim had his first child and decided to move to Europe’s wind sports capital, Tarifa in Southern Spain. Here he met the 10x world champion kitesurfer where they decided to build a world first kitesurf academy in a 6,000 square foot unit Jim had built just 100m from the beach.
In 2013 he learnt about the Amazon FBA model and launched a brand which quickly reached 7 figures. Fast forward to 2021 and Jim is currently working with Thrasio as Director of Acquisitions, the leading acquirer and investor in Amazon and eComm brands.
Digital consumer goods company Thrasio is the largest global acquirer of Amazon FBA brands. By acquiring nearly 100 top-rated brands and managing the scale of nearly 15,000 category-leading products, Thrasio’s brands are more profitable, grow faster, and outperform almost every other seller on Amazon.
SKIP TO THE GOOD PARTS:
- 0:47 – 1:34 Jim Mann gives a quick overview of Thrasio.
- 8:12- 8:47 Jim and Michael discuss Thrasio raising 1.2 billion dollars.
- 11:49 – 13:22 Figuring out a relationship with Amazon.
- 31:32 – 33:11 Jim walks us through his unique hire process with Thrasio.
- 41:32 – Jim gives some advice on how to acquire an FBA business.
SHOW TRANSCRIPT:
Michael Bereslavsky 0:12 Hello, listeners, welcome to another episode of the Domain Magnate Show. Today we have Jim Mann, Director of acquisitions at Thrasio with us. Hi, Jim.
Jim Mann 0:24 Hi, Michael, how are you?
Michael Bereslavsky 0:27 I’m good, glad to be able to connect. So for those of our listeners who might not be familiar with Thrasio, and that’s probably not many of them. But still, would you give us some numbers, some more details about the company?
Jim Mann 0:47 Yeah, I mean, Thrasio, we are now probably the largest acquirer of FBA econ businesses globally. We started in 2018, with a very simple idea of bringing together some FBA brands, building a team that allowed us to leverage some synergies around skill sets. That allowed us to deliver some pretty amazing gross numbers with the brands we acquired, which in turn allowed us to raise more equity. And if you fast forward, just over two years, we did 500 million in revenue last year, we’re scaling up our team way ahead of where we need to be. We’re now 700 people. We have dedicated teams for SEO, we have a data team of PPC, creative brand managers. And we’ve built this big engine to drive growth in FBA and econ businesses that we acquire.
Michael Bereslavsky 1:35 Yeah, that’s pretty cool. I like to get more into the numbers. So you have 700 people. Where are they based? How many of them have been in North America?
Jim Mann 1:47 We’re still very centralized. So the majority of those people are in the US in Houston, New York, and Boston, and the team were founded in Boston. So that’s where the kind of heart of the businesses. And then we have myself in the UK, we have colleagues Sammy running the German team. But the main core of the business is US centric. And then we have specific roles like myself, where you need feet on the ground in local markets. So we have in market analysts for each country. We have an acquisitions and deals team for each country. We have some M&A specialists, we have, you know, some finance guys. But the main, the main core of that team is in the US. And then we have offshore for the Philippines, we have a big team about 80 offshore for customer service in Philippines, and around 90 in Pakistan who are doing all the logistics. So making sure that we have all the inventory in warehouses, whether it’s Amazon or Thrasio, warehousing. And, as you’ll probably know that shipping this year has been has been quite interesting. So those guys have been working hard just to make sure that we’re getting the best prices, we’re making sure that we’ve got inventory and on time, and dealing with the logistics.
Michael Bereslavsky 2:58 Nice, so what’s the most the several 700 people do?
Jim Mann 3:04 I’m trying to picture this. So we have at the heart of the business, we have our brand management team. And those guys are organized into categories. There’s a brand director, brand manager and brand associates, they operate in pods. And so there’ll be looking at niches like health or technology. And they are charged with owning the p&l. They’re effective, like many CEOs, entrepreneurs in the organization, so they build a business plan. They sign off the budget to grow. They then work with the data team and then market analysts to look at opportunities. They’ll work with the creative team around the listings that work with the copywriters, they work with the PPC team for Amazon PPC. And then we’ve got two teams outside of that which are one is direct to consumer. So we’re working very hard on building branded websites now. And those guys are driving in traffic from Facebook, Instagram, Google. And the usual external sources outside of Amazon PPC. And then we have a VP of retail, who is taking off sort of retail ready brands back out into retail, which is probably a bit counterintuitive for SEO, but we’re pushing hard this year to go out into retail as well. So on direct to consumer retail and our main e commerce engine for marketplaces.
Michael Bereslavsky 4:19 Nice. So sounds like quite a diverse team. And how many brands do you currently operate? And are they are all FBA brands?
Jim Mann 4:31 We have over 100 and we hit this 100 acquisition milestone recently. I think it’s probably 104, 105 now. So yeah, there’s 100 brands under management. We made our first 100% direct to consumer acquisition recently. And that’s definitely a strategic focus this year. We’re on target at 100 million in revenue on direct to consumer, not on Amazon. And that’s going to be a key pillar going forward for the business. So it’s a big investment right now, in different traffic teams Instagram, Facebook, Snapchat, Google. And they’re charged with building the direct to consumer websites. We’re running 20 DTC branded websites at the moment. And then aside of that, are part of that better said, we are investing quite heavily in affiliates relationships. And we’re actually acquiring some influencer sites now, as well as the influencer stays on, but we own the site. And that allows us to direct traffic wherever we want to have it to help with the SEO, whether it’s our direct to consumer website, or whether it’s on Amazon sending signals in times in which the algorithm responds very well to for ranking products.
Michael Bereslavsky 5:41 Pretty nice. And do you focus on a specific product, specific niches or you quite broad?
Jim Mann 5:48 Were a broad charge, also a broad charge, but there are some things we shy away from. Fashion is a hard place to be, you know, stuff goes out of fashion, like by definition every six months, if not every quarter. And then shoes, you know, it’s very hard, but they’re all the variations from a size 6 to a size 14, to manage the inventory of shoes, the edges of the compound effect of fashion, and size variation, which is impossible. And then we avoid stuff in technology as well, you know, it’s stuff gets outdated, to be honest, it’s a category that’s increasingly dominated and very well managed by Asian suppliers direct. So we’re moving more towards categories where we can build a genuine brand and a store in differentiate with a premium product rather than a commoditized. In a meteor product with technology that can expire within 6 to 18 months, because, in effect, you then you’re having to relaunch from scratch all the time. It’s just hard work.
Michael Bereslavsky 6:50 Yeah. Right. So you have about 100 brands, and you mentioned how half a billion dollars in annual revenue currently. Yeah. And can you tell us the profits also?
Jim Mann 7:03 I can’t tell you the exact profit, we have a very simple business model. And you probably, you know, read that we got back, we got a billion dollar valuation in August 2020. And this is when the real interest was sort of drawn towardsThrasio. Now, the reason we’re able to keep raising money, and we’ve, you know, Josh and Carlos have raised at 1.2 $1.3 billion in the last six weeks. And the reason we’re able to raise those kinds of funds is because the track record we’re delivering continually, and that track record is on our first 80 acquisitions. We grew 156% year on year, and we have to operate around about 20% EBITDA. So providing we’re growing 156% year on year to two and a half times annual growth and maintaining 20% average EBITDA, we’re in a good place. And that’s, that’s why we keep raising money. So it’s a very simple formula we deliver, we deliver great growth and profit that allows our sellers that we acquired to have fantastic and unmatched earnouts. And then private equity. I’m very happy to keep feeding that growth and our acquisition strategy, as long as we keep delivering that performance on acquisitions.
Michael Bereslavsky 8:12 So how much have you raised to date in total? And what’s the calculation?
Jim Mann 8:18 Total raised? I can’t really tell you, but it’s around 1.2 billion very recently, we’ve raised 750. And another 500, just before Christmas. So as it’s been a very aggressive raise in the last few weeks.
Michael Bereslavsky 8:30 And that’s in totals, like for the past three years or so, since you’ve started, right?
Jim Mann 8:34 Yeah. And, yeah, we’re looking to just accelerate growth all the time. We’re ahead of target this year, we have very aggressive growth targets already. It’s great. So it’s a good place to be.
Michael Bereslavsky 8:47 That’s pretty good. And how many deals have you done? combined, like how many aquisitions?
Jim Mann 8:53 It’s over 100, I think we’re probably around 100. And I couldn’t tell you exactly. More than 100, you know, that we’re accelerating all the time. So I mean, our current number of businesses going into diligence is triple what we were seeing before Christmas. So it’s great. We have it’s an overused word, but we have a massive flywheel going on right now. And there are different reasons for that, you know, there’s, a lot of people are capitalizing on the COVID bump. You know, a lot of people are seeing a massive growth in the businesses last year. There are a lot of people acquiring homes and businesses right now. So, you know, multiples are the best they’ve ever been selling on Amazon is getting harder all the time. So whilst everyone’s experienced massive growth, or most people experience massive growth, they’ve also lost a lot of hair in the process. You know, you put that all together, you’ve got great multiples, increase valuations are really stressful last 12 months, and you’ve got a lot of entrepreneurs, I think it’s a good time to, to hand it over and let someone else run the business and cash out. Yeah.
Michael Bereslavsky 9:56 And so you’ve grown to quite a impressive size now, do you have a special relationship with Amazon? Like, are you able to get things that most Amazon sellers might not be able to accomplish?
Jim Mann 10:12 Look, we definitely, you know, we have relationships and we have a track record. And, you know…one of the big drivers, you know, you’ll know, Amazon has a lot of bad actors, and there are a lot of there’s a lot of manipulation happening on the platform. And, you know, we have to act, we have to be good actors. And so, you know, I think Amazon respect our team and the way they operate, because you know, that we’re playing with a, you know, with a straight back into a cricket, you know, we don’t we don’t do any of the sort of manipulation tactics that they would frown upon and effectively devalue the perception of their platform. We don’t have, we would like straight answers. We probably have some direct relationships, which are helpful. But I wouldn’t say we have anything, we still have the same frustrations, we know, our team still have to deal with Seller Central, you know, we still have the same frustrations any other seller would have. But do we have other relationships to help? Absolutely.
Michael Bereslavsky 11:13 Yeah, because Amazon has a reputation now for making a lot of ambiguous policies and then one sided decisions. So if someone doesn’t like your account, they might just suspend it. And if we’ve had many, many clients who run into issues, even though they didn’t do anything, they were good actors. We didn’t do anything against policies. Yeah. So have you run into some similar issues? Have you had any problems with with any of your brands that maybe got closed and suspended here?
Jim Mann 11:49 All the time. So in the early days, I think our suspension was 56 days, we lost a massive account 56 days. And it was a critical time. Now on average, we get listings back up within 36 hours. So we have an internal legal team, who are very, very, very well paced on, first of all, identifying why the suspensions probably happened. And a lot of the time, there are a lot of tactics going on with you know, keywords being prohibited keywords being put into listings, true or false trademark infringement, very easy to take a listing down, if you want to play that game. Unfortunately, when you have category leading brands, which we do in most categories, you’re always going to be under fire. So I, you know, our team are very much in that and living it every day. And as a result, you know, we get listings out very quickly, but when we don’t have any way of avoiding that, that’s part of doing business on Amazon, unfortunately.
Michael Bereslavsky 12:44 Yeah, that’s great. So you’ve basically figured those problems by by going through them, and handling things as they come up.
Jim Mann 12:54 Yeah, yeah, we’ve got over 15,000 skews now, you know, and so there’s not a lot that the brand directors or managers haven’t experienced, you know, with that many skews under management. So I’m just have to go with it. It’s part of it, you know, and you know, business is easy. And running a business on Amazon is just running a business like it is anywhere else, you have day to day things to keep you on your toes and bad, bad actors doing black hat tactics to try and get you suppressed is day to day in the ecosystem, unfortunately.
Michael Bereslavsky 13:23 And so Jim, tell me a little bit more about your criteria. How do you pick businesses you buy? And also what what kind of…how do you evaluate them?
Jim Mann 13:34 Very simple. You know, coming back to what I was saying earlier, when we have to deliver massive growth, profitable growth and any brand we acquire. And as long as we keep delivering that, our sellers get fantastic exits and and outs, and private equity, keep giving us money to carry on with the same model. So coming back to my role in leading up acquisitions here. We offer on about 10, to 20 of the businesses we look at. And what we’re looking for, is a business or a brand, that we see that when we put our team of 700 people unlimited cash flow, and marketing expertise, or operational expertise that probably no other team does have on Amazon, to grow brands. And if we see that, we’ll say to the seller, look, this is what we think we can do. And here’s what we’re willing to pay. And here’s what your exit structure would look like. And we look to close the deal with them. But we only see that in 10 to 20% of brands we look at So in short, we’re looking for brands that we can invest and scale profitably and aggressively in the shortest time as possible.
Michael Bereslavsky 14:35 So what’s the minimum or minimum maximum in terms of revenue that you look at a profits?
Jim Mann 14:41 There’s no maximum. You know, we’re looking at 100 100 $50 million revenue businesses now. And at the other end of the scale, we want $300,000 of EBITDA on the trailing 12 months. You know, the cost of acquisition has some pretty high fixed costs, you know, the legal transaction And then so we’re looking at two things, we’re looking at the trailing 12 months profit, we’re looking at the growth opportunities in the category or the brand. And then we’re looking at the operational cost of that brand. So $300,000 of trailing 12 months profit across 50 skews is not something we want to go near because we’re having to manage PPC campaigns on 50 skews. So the operational cost of 50 skews is the set is very different. The operational cost of five skews doing the same level of profit. So revenue concentration of cost less skews is definitely more attractive to us.
Michael Bereslavsky 15:36 Yeah, it’s similar to us. Even though we’re on a smaller scale, when we look at businesses and websites to buy, we have to look at bigger sites, because the economies of scale they do work here. And so what’s the multiple that usually pays at a multiple profit on the revenue?
Jim Mann 15:59 It’s the million dollar question everyone asks, the deal structure is that we pay a multiple of the trailing 12 months, EBITDA upfront. And then we go into an earn out structure. Now reality is every seller and every deal is different. So some sellers, I’ll give you two extreme examples. Both sellers say, look, I don’t trust the earn out structure. I’ve heard horror stories, not from you guys. But there are other horror stories out there where people never see their own earns outs. And as a result, and also a lot of entrepreneurs have an iron rod or sell beliefs. That’s why they’ve done so well. They just built a business from nothing themselves often bootstrapped. And so they don’t believe that anyone can run their business as well as they can. So at that extreme, they will say that I don’t trust the earn out, and I want all the money up front. That’s one extreme. The other extreme we had a few weeks ago, it wasn’t on…didn’t come to me as one of my colleagues. We had a guy who was financially independent, and said, look, I don’t want any money for the business. Just give me equity in Thrasio. So he believed in us and the journey we’re on so highly, that he didn’t even anyone any money for the business that was just like, give me equity interest. Yeah. So you know, those are extreme examples. Now, what I can say is, if we pay 100%, up front, which we do do, sometimes, the exit for the seller, is almost always going to be less than if they’re going to an earn out structure, you know, and that’s a risk reward. So, if you trust in the earn out, you will always get a much higher multiple, but there’s no guarantee, there is no guarantee that our track record is fantastic. But it’s a bit like an insurance advert you see on television, right? You know, they’ll say, here’s what we’ve done in the past, but then send a small print at the end that, that, you know, Future, Past performance is no guarantee of future performance. And that’s true with us, our track record is phenomenal. I mean, our top 10 acquisitions last year grew on average, 397%…397% in our top 10, on average. And if you scale it down to the top 30, still, the top 30 acquisitions still grew on average 226%. So when you map that growth, profitable growth onto an earnout structure, we’re given people amazing access. But you will still find people who don’t believe in you. Now, the other thing I should say is that my experience has now taught me that some people who refuse to have an exit, often have a time bomb sitting in their business. So for me, I have a big alarm when someone won’t stick around for an earn out. Because they’ll say that they don’t trust us. And they don’t believe in our notes. But often actually, there’s something coming downstream that they know about. They don’t want to share with us as they just want to get the money get out.
Michael Bereslavsky 18:47 Yeah, that’s the same as me. Then people flat out refuse and earn out. That’s a bit of a red flag.
Jim Mann 18:55 Yeah, absolutely.
Michael Bereslavsky 18:56 However, it’s still quite common. We see this seller a lot that maybe people just want cash they don’t really want to be involved as well. Yeah, they don’t want any continued involvement in that. They want to sell it, get the cash and then just move on to something, to the next thing.
Jim Mann 19:15 100%. A very common profile is and you relate to this, you know, you start a business, you don’t know what you don’t know. And then five years later, you have a seven figure seven figure business. And you realize you’re in something you’ve lost the passion for. And you’ve made many mistakes along the way. And you’ve now got a new idea that’s bigger and better, but you haven’t got the capital. So a lot of people not not a lot, a significant number of people I talked to actually they want to exit to recapitalize and start again. And so those guys sometimes have a legitimate reason for front loading the deal, and they’re happy to give up earnout final exit valuations because they see more value in capitalizing now to start a new venture. So that’s different. That’s very different. But when you get these people go, I just don’t trust you. I just want 100% upfront. Usually, that’s like you said, it’s a red flags, that means something is not right.
Michael Bereslavsky 20:04 So when we’re talking about those people who want just cash upfront, I’m curious about the multiple, but from the EBITA from the past 12 months profit, will it be something like, three, four times the past 12 months profit?
Jim Mann 20:20 I mean, we’re delivering exits of two and a half to 10x. For our sellers. And with the earn out model, it’s very common to be around six times. So I think there’s a perception with aggregators that they buy cheap. And multiples have gone up. So you know, I think in up for multiple, a year ago, two would have been common now three is common, you know, but it’s, I can tell you from, you know, from having many conversations with sellers, it’s frustrating, because the real money is in the tail is in the earn out.
Michael Bereslavsky 20:53 And how does does it earn out usually work? Can you give an example of a typical earnout?
Jim Mann 20:58 Yeah, you we share the profit for two years after the acquisition. So we peg, the trailing 12 months EBITDA, at close. And then every dollar above that, for the following two years, we share 50/50 with the seller, the seller has to do nothing, we put in all our cash flow, our team of 700 people, and we drive as hard and fast as we can to accelerate that business profitably. And for the first two years of that journey, we share the profit with the seller.
Michael Bereslavsky 21:28 But that’s a profit after all the expenses, all the money or invest in growth?
Jim Mann 21:33 Yes, but we, in the sale contract, we cap our operating costs. So we can’t artificially kill EBITDA in the name of growing the business. So we guarantee…and also we can’t keep raising money if we’re not growing profitably, you know, Goldman Sachs are not going to give us money anymore. So for the seller, and for private equity, we have to deliver profitable growth. And like I said, at the top of the call, it has to be around 20% EBITDA every year.
Michael Bereslavsky 21:59 Okay. That makes sense. And in terms of investors, are you public currently or what, how can people invest in Thrasio?
Jim Mann 22:08 You can’t. It’s a private company. You know, the there are lots of rumors flying around around sort of IPOs, I can’t really comment on that. I mean, the one thing that you and I know is that when goldman sachs and JP Morgan put money into a privately held company, they’re not…at some point, they will probably want to see that IPO or something of that nature, but there are no current plans. But I would imagine it will happen at some point in the future. And the other question I often get, which may be related to this is, do you ever plan to sell the brands you buy, and we don’t, you know, our model is to acquire, grow and operate, we have no intention to sell off or flip, you know, flip brands and cash in on the growth, it’s we’re building a long term, consumer products, growth engine.
Michael Bereslavsky 23:02 So if you’ve never sold any of your brands, and you don’t plan to even if they don’t fit…like brands with another in the main…your main niches, in the main industries you want to be in?
Jim Mann 23:15 Yeah we’ve never sold a brand, never plan seller brand, we may, you know, products products have life cycles. So, you know, part of a lifecycle of a brand is to release line extensions or new products. And we do that, so certain products will be sold through because they’re not performing and you know, the categories become too crowded, and so you’re launching in it, but fundamentally, the brand managers, like any business owner, are charged with being on top of that, so that over time, while certain skews, go through a product lifecycle, there are new ones coming and overall, the growth is there.
Michael Bereslavsky 23:54 And to talk a bit about the management. How is the brand management structured? Do you have, like specific managers assigned to a brand? Or is it all managed by the same team more or less?
Jim Mann 24:05 Yeah, I mean, I say this to all the sellers, because the big concern when you give your brand to a company like Thrasio, like, how does it work? It’s actually quite simple. The effectively…the new CEO is the brand director or the brand manager. They own the p&l. So at the heart of the business, we have our brand management team. Those guys own the number. And then they have fractional access to this amazing team of data scientists. We’ve got Casey Gauss, who’s heading up SEO, we’ve got a huge team of creatives who are looking at listings a plus content. Within that there’s a team of animators and video production guys who are giving assets over to the traffic team. The traffic team have an Amazon PPC specialists, we’re using portal for AI based PPC management, but there’s a human wrapper around that. And then we’ve got the traffic team for Facebook, Instagram, Google, Snapchat. So you know the brand manager has fractional access to all of those resources, but they can’t be like a kid in a candy shop, because they’ve got to run the business profitably. And that’s where they have to find that balance between driving profitable growth and every brand we acquire.
Michael Bereslavsky 24:58 So how many brands with each brand manager manage?
Jim Mann 25:19 Oh, I couldn’t tell you exactly. But the brand director will…a typical brand director has about $100 million under revenue. So it’s not so much about the number of brands, it’s about the number of skews and revenue that they’re looking after. Because workload’s not driven by number of brands, it’s driven by number of skews and revenue per skew. So, you know, the complexity is the skew number. And the category expertise. So they’re organized into categories and pods. And they are more or less the prime directors managing about 100 million in revenue with the team below them.
Michael Bereslavsky 26:00 Sounds good. And can you tell us about maybe some bad deals you’ve done, some brands that you’ve acquired, and they didn’t go very well? And dumb things that you missed during due diligence, or just got unlucky? Something like that?
Jim Mann 26:14 Yeah, I mean, we’ve…there’s two sides to that. One side is the stuff that’s out of our control. So early on, we had some big suspensions may not have been as good identifying some of the tactics that were going on, you know, 2018, we were quite a new team. And so, you know, the learning curve was very, very fast at the beginning. So some of the early acquisitions I think, probably weren’t as good at operating, we probably weren’t as good at picking the brands that we were good to grow. Then along the way, we’ve had, like I mentioned earlier, we had one suspension for 56 days on the brand, and really hit revenue, that hits your numbers quite simply. And then we’ve gone into categories that like there’s, there’s two things I can think of, one acquisition was a weighted blanket. Now, the weighted blanket, as you probably know, is a bit like fidget spinners. In the Kickstarter, massive copycat everyone piled in, sheer price competition, and it became a race to the bottom. And we I think we bought one of the big weighted blanket brands, but we knew what was coming. So it was a bad acquisition, but as smart acquisition, because we actually managed to agree with the seller, a very fair multiple, based on what was happening in the marketplace, the seller was in a bit of panic, everyone was, you know, it was everything was beginning to fall apart. And they had a huge exposure in inventory. And so we kind of we took the brand, we didn’t pay huge amount for it, because it was clear what the trajectory was. The nature stabilized now, you know, so the seller, and we’re happy with that. Yeah, they’ve been no real car crashes. There are definitely some categories that get harder. We have a brand in the massage guns, which is another one, which just took off like crazy, and become very price sensitive, very commoditized. And, you know, the team’s just got creative, we’ve had to just, you know, walk around talk, and we’ve come out with new variations, with a spec and a price point, that’s just accelerated the brand again. So I don’t think there’s…there’s no such thing as a bad acquisition, as long as your team have the ability to realize what’s going on. And, you know, the bigger we get and the data we have, it’s very rare for us to make an acquisition that we don’t make it
Michael Bereslavsky 28:49 Makes sense. So you’ve gotten pretty good at this recently, what would you say was the biggest advantage and what really allowed you to learn so quickly and improve rapidly?
Jim Mann 29:06 Like, I can’t take much credit for this. I mean, I joined six months ago, and prior to that I was an FBA seller myself, so I kind of I know the market place pretty well, but I can’t take huge credit for what the guys have delivered, but you know, the leadership team so you know, Stephanie, leading up ops and Brandon and and those guys, you know, delivering the traffic. You know, Ken heads up acquisitions, Mike…there’s a very, very, very smart and humble leadership team, who just are very good at rolling their sleeves up and working out what needs to be done. And I think, you know, what we have…our model is really simple, which is why Vons now trying to copy it. But the execution is really difficult. And I think what we’ve got is a leadership team who just know how to roll their sleeves up and get on with it. And that Just trickles down in the whole organization. You know, I was nervous about taking what I’d call a proper job with SEO. You know, I’ve been on my 60,006 as an entrepreneur and I launched an FBA brand in 2013. Prior to that, I was doing other stuff. So, you know, I, my friends, when I told them, I was getting a job with Thrasio, they’re like, you’re getting a proper job, they’re like, You’re crazy, you’re not going to survive, you can’t go back into the company. And I say to them, it’s not like a normal company. There’s like 700 people, but it’s a bunch of entrepreneurs is working out how to make this thing work. Because it’s growing so fast, there is no time to build a structure and a process around what we’re doing. So you have to be a team of people that can be thrown in. And on a common direction. Everyone knows where we’re headed. No one quite knows how to get there. And so everyone is just working out how to get there. And it’s phenomenal. And you know, I used to work in consulting, I work with a lot of Fortune 500 companies and footsie 100 companies in Europe, I’ve seen a lot of smart leadership teams, and mid management teams in high growth hypergrowth. I’ve never seen a team like we’ve got a Thrasio. And I think that’s the secret…not the secret. I just think that’s how, you know, we’re delivering the results we’re delivering. And I think that’s also the surprise that many who are trying to emulate, I can’t have it, it’s that it’s not easy. It’s all about the team and the team is incredible.
Michael Bereslavsky 31:24 Yeah. And so you joined six months ago. What was the application process like? How long did it take you to get hired?
Jim Mann 31:32 I had a slightly odd one because Steph, who is the COO is in a mastermind with me and Amazon mastermind. And I had a travel brand, multi seven figure travel brand, I got killed by COVID last year. So I had to take a step back and sort of get the business out of ICU, I had a lot of inventory all over the world in FBA. And the tap demand tap was turned off overnight. So I had about three months of kind of getting the business out of ICU and hemorrhaging money, I had to let go the whole team move stuff out of FBA into three PL to reduce the costs. And then I was faced with decisions like what do I do next. And again, I’ve given the brands a couple of buddies or brand managers, I realized that I wasn’t enjoying the fight of Amazon anymore. I’ve been doing it since 2013, 14. And I reached out to Stephanie COO and said, it’s definitely my my brain has been killed. You guys are rocket ship. I love what you’re doing. I don’t know that much about acquisitions. I’m pretty sure I can learn about it. I used to work in consulting, I know FBA. And she’s like, great to talk Danny, who’s the president head of m&a. And long story short, they said write your own job description, so I wrote my job description. And two years later, I joined as head of acquisitions in the UK as we build out Europe. So it’s very fast. And let’s say, that’s the application process.
Michael Bereslavsky 32:55 You just wrote your own job description, and then you basically hired yourself for it.
Jim Mann 32:59 I didn’t hire myself, kind of. You know, I just sort of pitched who I am and what I can do and where I’d fit. And luckily, it resonated. And very quickly, that was it.
Michael Bereslavsky 33:12 And you basically, you designed a job description around being an acquisition manager in Europe. And you saw that there was a, there was something there was a demand that they have, right. So it must have been something that they’re looking for as well.
Jim Mann 33:27 Yeah, yeah. And I, you know, I’ve got a slightly odd and quite unique background, which probably doesn’t work in many places, but it works really well here.
Michael Bereslavsky 33:37 And what did you used to do before you got into FBA?
Jim Mann 33:42 I started off, I did at 9-10 years in London, working in consulting around leadership, very specifically, we were working with organizations trying to execute massive change as quickly as possible. The biggest barrier to change an enterprise is usually the people’s engagement with the change. And so we would work alongside McKinsey would often do strategy, and then you’d be left with people in process and technology. And then there’s the people bit. So we work with the people to engage with the change so that when they’re executing the strategy and the change, they could do it as quickly as possible. And you know, it’s often post m&a, so a lot of experience in an m&a but on an enterprise level, whether you’re bringing two organizations together who are effectively at war. And as you know, most eminent mergers fail miserably. And a lot of that is because, you know, we’re bringing two leadership teams together, who knew that, you know, 22 we’re gonna work, we’re gonna become 11 it was, you know, but at the same time, they had to make the merger work. And so, it was, you know, it was pretty dicey. It was pretty…it was fun, it was challenging. But I after nine years of doing that had enough so I decided to sign that radical and move to Spain, I had my first child. I bought some land in a place called Tarifa, which is the southernmost tip of Spain as a big kite surf and windsurf capital, snatcher quite a digital nomad how, and I bought some land as an investment. The plan was to build a resale unit rented out, move on and do something else, I got caught completely with my trousers down in the end of 2007, eight, when the crisis hit, my building was halfway up. And so at that point, I wasn’t gonna be able to rent it. So I decided to open the store myself. So I ended up opening a retail store, selling surf gear, North Face, Patagonia. Next year, open a kite surf school with a 10 times world champion, which is great love that. And during this, I was going back to London, doing a bit of freelance consulting, because the money was good. And I had an amazing lifestyle in Spain, you know, safestore, and turriff. It doesn’t doesn’t pay the bills, and I had four kids as well. So my bills were mounting all the time. Now, during that time, I worked with eBay’s management team. And I saw their strategy deck and it talked about the move of e commerce into marketplaces. And then about three months later, a friend of mine told me about a course the amazing selling machine, which was how to sell on Amazon. And as you’ve got my attention, and just send the eBay’s managment deck. And so we said, right, let’s do it. We bought the course, we followed the thing stuck some stuff up on Amazon, and I got the sales, it’s real. And that that turned into a multi seven figure travel brand. Which was great until COVID hit.
Michael Bereslavsky 36:38 How long did it take you to grow that new brand?
Jim Mann 36:43 It was seven figures within year and a half, you know, it was 2013-14 on Amazon was a was a bit of a sweet spot, you know, is this…not a lot of people realized the opportunity at that stage. So all you needed was cash flow to grow very quickly. So you know, the guys that got in at that time with unlimited cash flow, they built, you know, seven, eight figure businesses very quickly, very different different, very different environments from now. You could pick a top, you know, best, a top 100 best seller product in any category. And and pretty much take them on. Now that would be almost impossible.
Michael Bereslavsky 37:28 So what would you say is kind of the main challenges right now for Thrasio, in terms of growth or finding deals or increasing sales?
Jim Mann 37:39 Yeah, I think now one of the biggest challenges for us valuing is COVID. You know, the COVID bump, has had two big effects on brands, a revenues have gone crazy. And B, a lot of people have priced up. So they’ve got a trailing 12 months of profit, that’s completely artificial. So we spend quite a bit of time trying to remodel p&l. And having a very frank conversation with sellers, because no one knows, there’s been a long term change in consumer behavior, more people are going to stay on Amazon. But for anyone to say that when retail opens back up again, that they’re going to sell the same amount of home exercise equipment, I think is probably naive, right? So but no one knows how much is going to start to settle down by, so we spent a lot of time at the moment trying to price fairly and fair is really subjective. Because there’s no model for COVID. There’s no…there isn’t there’s…no one’s ever seen this before. So that’s where we’re spending a lot of time. And sellers respect and understand the conversation, but their heart wants to sort of believe that it’s going to keep on going. So that’s quite a lot of robust conversations around that. Which means we walk away from a lot of deals, because some sellers believe is that this honeymoon period is going to go on forever. But generally, it’s our challenge right now is managing the growth. So we have more LOIs going out than we’ve ever had, we have more deals to look at. And so the sharp end of the business are the deals coming in, when we close and buy an acquisition a brand that then has to be operated and the performance has to be as good as as always been. So you know, it’s definitely an ops and the m&a guys doing diligence. We’re trying to just make sure that everything’s calibrated that if we’re accelerating deal flow that the organization can keep up and keep delivering. That’s probably our biggest challenge at the moment and touchwood they’re doing a great job and, you know, Josh and Carlos, the founders and Danny our president. Amazing, and this is one that stuck with me when I joined. They always like hire ahead. If you’re thinking about it, do it and hire now because you’re going to need it within three months. I’ve never seen that in an organization. Like I said, it’s working consulting, I’ve seen a lot of organizations, that’s very rare that those words are followed by commitment. And thrasio, you know, we’re always hiring ahead of the curve, so that when the deal flow comes in, accelerates, there’s a team there to catch it and operate it. And that’s, I think that’s probably one of the key things to success at the moment.
Michael Bereslavsky 40:25 And what did the founders do before they started Thrasio? Did they have experience in similar businesses and private equity?
Jim Mann 40:32 Yes. They both had a few exits. I don’t know the exact details, they’ve both…they’re savvy street fighters who’ve had exits, you know, they’re nice guys they’re down to earth, but they know what they are doing.
Michael Bereslavsky 40:46 It sounds good. So how many deals do you guys usually look at before you go and buy one? Would it be like 20, or 50, or less?
Jim Mann 40:56 10 to 20% is what we end up acquiring.
Michael Bereslavsky 40:59 So you look at the 100 deals you would buy like 10, 20?
Jim Mann 41:01 10 to 20, yeah.
Michael Bereslavsky 41:04 That’s pretty good. Alright. And so for many of our listeners, they are looking to acquire their first FBA business, or a commerce business by themselves. So what advice would you give them? What are some things that…what would be some things that people often miss, or people often don’t expect when they buy their first FBA business?
Jim Mann 41:32 It depends on their background. So for someone that doesn’t…is not a very experienced Amazon FBA operator, that’s a really high risk maneuver, because there’s a lot to learn. And there’s a lot of stuff that doesn’t, you don’t get taught in the manual. And you certainly don’t get taught, you know, Amazon, don’t really kind of explain the reality of operating. And then operating on Amazon. Now, you’ve got to, you’ve got to be good at supply chain and sourcing, because if you don’t source the right product, you’re dead in the water doesn’t matter how good you are at marketing. So it starts with product selection. So you’ve got to be very, very disciplined and very, very good. And resourcing. That’s the first thing. The other thing, you know, the stuff that’s slightly easier, as you know, the creating of the listing, but it needs to get great creative is very good copy that needs to be driven by fantastic keyword research. So you’re targeting the right consumer. The other thing is increasingly difficult, I think is PPC, you know, Amazon’s fastest growing revenue channel, not by total revenue, but growth was their PPC platform. And it’s becoming, you know, cost per clicks going up all the time, because of the competition on the platform. And then you add to that, that they’re releasing different widgets and ways to advertise. You’ve got to be really, really sophisticated in PPC now to do well on Amazon. And it’s very hard to be amazing at PPC, amazing SEO amazing, creative, amazing at sourcing, as a solopreneur. So I think the day of launching a new brand, the days of launching a new brand as a solopreneur on Amazon, I think are getting increasingly difficult. For for a small operator or inquirer. If you’re coming in from if you’re an existing Amazon operator, you know what you’re letting yourself in for, you know, what you’re looking for, you know that if you do your research, you look at the keyword traffic, you look at the conversion in the account, you look at how they’re spending on advertising, you look, see if they’re missing any potential keywords, you do diligence around that. Are they profitable? If they’re not, can you make it profitable, you decide what it’s worth to you, and you make an offer. I think that the risk comes from the guys that are coming in off Amazon and there’s a perception that Amazon’s automated and you just put a listing up and off you go and Amazon has so many people coming in with high intent to buy which is true. But yeah, my God, it’s a warfare to get those…to get to be on page one for a a keyword that gives you some sales volume. You’ve got to be pretty, pretty sophisticated and professional about what you’re doing.
Michael Bereslavsky 44:06 Right. Well, thank you, Jim. It’s been a pleasure to discuss things, I’ve learned quite a lot from this conversation. Any parting words? Or how can people find out more about you and Thrasio?
Jim Mann 44:19 No words of wisdom but it’s been a pleasure to spend some time with you. For Thrasio, you can reach out to me jim.mann with two m’s @thras.io — jim.mann with two m’s @ thras.io or on our website, thras.io. There’s a form there and that will find its way to myself or or whoever it is that you want to speak to there on what the inquiry is about.
Michael Bereslavsky 44:45 Thank you. Have a good day.
Jim Mann 44:46 Thanks, Michael. Take care of yourself, feel better soon.
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