David speaks with Brandon Pindulic, President of Spacebar Ventures, a digital business incubator and investment firm. He also previously founded OpGen Media.
They talked about:
💼 Early business ventures and lessons
🎓 Reflections on college and early career
🏢 Building OpGen Media
🤝 Landing big clients and growing the business
🔄 Reflections on selling the first business
🚫 Learning from failed business ventures
🚀 The importance of going big in business
↔️ Making decisions as a founder, operator, and investor
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📹 Watch on Youtube
👤 Connect with Brandon:
Twitter: @bpindulic | https://twitter.com/BPindulic
Website: Spacebar Ventures | http://spacebarventures.com/
Subscribed | https://www.subscribed.net/
📄 Show notes:
0:00 | Intro
02:03 | Early business ventures and lessons
07:10 | Reflections on college and early career
11:15 | Building OpGen Media
12:38 | Landing big clients and growing the business
17:30 | Reflections on selling the first business
25:07 | Learning from failed business ventures
26:51 | The importance of going big in business
30:24 | Making decisions as a founder, operator, and investor
🗣 Mentioned in the show:
Spacebar Ventures | http://spacebarventures.com/
JasBerry Chauffeur | https://nicholasanglin.myportfolio.com/
Karmaloop | https://www.karmaloop.com/
Wasabi Ventures | https://www.wasabivp.com/
Workfront | https://en.wikipedia.org/wiki/Workfront
DocuSign | https://en.wikipedia.org/wiki/DocuSign
American Marketing Association | https://en.wikipedia.org/wiki/American_Marketing_Association
Master Service Agreement | https://en.wikipedia.org/wiki/Master_service_agreement
Companion Ventures | https://companyon.vc/
American Express | https://en.wikipedia.org/wiki/American_Express
Ziff Davis | https://en.wikipedia.org/wiki/Ziff_Davis
Planet Compliance | https://www.planetcompliance.com/
Regulatory technology | https://en.wikipedia.org/wiki/Regulatory_technology
HubSpot | https://en.wikipedia.org/wiki/HubSpot
Salesforce | https://en.wikipedia.org/wiki/Salesforce
👨🏾💻 About David Elikwu:
David Elikwu FRSA is a serial entrepreneur, strategist, and writer. David is the founder of The Knowledge, a platform helping people think deeper and work smarter.
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[00:00:00] Brandon Pindulic: A loss always kind of sucks, right? And we've had losses. Two of our businesses that we started, we incubated failed pretty much right away and the third one did well.
[00:00:08] Brandon Pindulic: So the feeling of losing money is never good. And I think this year in particular, it was more of a like, let's see if this works and let's learn.
[00:00:16] Brandon Pindulic: Now it's more, okay, let's apply the learnings that we've had and think about how I can scale this. So everything is about how do we scale this above a million dollars in cash flow to the holding company. Which would be after profit sharings are paid out, it'd be after reinvestments are paid, and that's kind of the North star metric of that.
[00:00:33] Brandon Pindulic: But, you know, probably the most difficult part about it is, it's forced us to buy some smaller businesses.
[00:00:44] David Elikwu: This week I'm sharing part of my conversation with Brandon Pindulic. Now Brandon is the president of Spacebar Ventures where he buys, builds and sells incredible digital businesses and he previously founded OpGen Media.
[00:00:57] David Elikwu: So in this episode, you're going to hear us talking about some of Brandon's early business ventures. And we both talked about what it was like building businesses in our teens, going to college, skipping college, you know, Brandon share some of his reflections on both college and his early career.
[00:01:12] David Elikwu: And then we talked about what it was like to build a seven figure business being able to land your first big clients and the challenges of scaling. And then selling that business and the lessons he learned there.
[00:01:22] David Elikwu: And then finally, we touched on both some of the lessons that he's learned in failed business ventures and then also the importance of making high quality decisions, whether it's as a founder, operator or as an investor.
[00:01:33] David Elikwu: So, you can get the full show notes, the transcript, and read my newsletter at thenowledge.io and you can find Brandon online on Twitter @bpindulic.
[00:01:42] David Elikwu: Now, if you love this episode, please do share it with a friend and don't forget to leave a review because it helps us tremendously to find other listeners just like you.
[00:01:54] David Elikwu: One of the first things that I actually wanted to ask you was, I saw that you started a business when you were in high school that I think grew to somewhere in the mid five figure range.
[00:02:03] David Elikwu: So I'd love to know two things, I guess. One, tell me more about that business, but then also what got you on that path? 'cause I think that is one of those things that for a lot of people, very early, maybe you see some data points around you in life. Maybe there's a relative or maybe you just have a natural aspiration for business or to create something that then leads to later success.
[00:02:23] Brandon Pindulic: Yeah. Yeah. It's funny, I, I don't get asked that question a lot 'cause I almost forget that I even did that. I had a handful of businesses back then. I had a landscaping, I made fishing lures at one point and was Sawman eBay.
[00:02:33] Brandon Pindulic: But the one that you're asking about was a clothing business. It was called JasBerry Chauffeur. I started with a friend. I was probably, I don't even know, 14 or 15 years old when I did it. And I probably ran it until I was, I guess, 18 maybe.
[00:02:46] Brandon Pindulic: Why I started that? Just wanted to do a business and then I, you know, clothing was just something that, you know, my business partner at the time wanted to do. So I said, let's do it. But it was fun. We actually had some designers, we had contracted designers that we would have. They were based in Jamaica. One of our friends was from Jamaica, introduced us to them. We were in New Jersey. I remember paying them in like, Louis Vuitton and stuff. Like, they couldn't get certain goods in Jamaica. So we would go to the, somewhere in New York, get like a belt or whatever and give it to him is kinda funny. But they didn't want cash. They just wanted like, stuff. And we're still friends with them today.
[00:03:16] Brandon Pindulic: So anyway, we'd make these shirts, we did hat shirts, sweatshirts, all that stuff. We'd sell them online. I mean, this is even before Shopify too. This is, I'm 30, so I was probably, you know, 15 years ago, let's say. So we were on big commerce, and then we would, manually send each package out. So it was kind of a pain.
[00:03:33] Brandon Pindulic: We got all of our sales outside of like, just, you know, friends and family that knew us. We got all of our sales online about 80%, and then the rest were in stores and we sold it through influencers. So people who had YouTube or Instagram or whatnot, either like a, a rapper, a model, somebody along those lines. And then they would drop a link in there and, and we would get sales that way.
[00:03:52] Brandon Pindulic: We didn't track it. I don't even know how we would've done that necessarily, but we had like promo codes a little bit. So manually tracking. And then there was a company called Karmaloop that's not around anymore, and they were based in Boston. I forget why, but they got shut down for some reason and we sold on their store. So that they had a an independent section and we got a bunch of sales that way. And then we just sold in stores. Like we were just kind of go door to door, you know, places in New York City and New Jersey put up the clothing in there. It was mostly on consignment. Nobody was paying up front for our stuff. And then it was an honor system. I'd come back in 30 days, see what we sold, but we didn't sell, change it out, get the cash, and that was that. So it was a funny business. It never did that well.
[00:04:29] Brandon Pindulic: We did sell actually a decent bit of stuff. I wanna say our last year in business we sold maybe like 55 or $60,000 worth of clothing. But we, I mean we're buying like all kinds of inventory and stuff. I think there's still inventory in my parents' basement somewhere, so, that one didn't do didn't do too hot.
[00:04:44] David Elikwu: That's awesome though, especially considering the time that you started. I don't think I actually realized that we're pretty much the same age, and ironically started my first business when I was around 13, 14, so probably around the same time.
[00:04:55] David Elikwu: So it's an interesting point in the internet, I think for a lot of people actually.
[00:04:59] Brandon Pindulic: Yeah, for sure. I mean, it was interesting. It was really easy to do. I mean, we just did it with LegalZoom and then I have no idea how we found Big Commerce. I just remember that being the back end of the site. We got a web designer to build it. And then off you go and we added, incorporated, like it was a legit business, you know, it was just not a very good one.
[00:05:14] David Elikwu: But you mentioned you did some other stuff as well, so love to know either more about those or like what got you into doing this? Was it just you needed money, you wanted money? It was just the allure of selling stuff and buying stuff.
[00:05:27] David Elikwu: What was going on there?
[00:05:28] Brandon Pindulic: Yeah, I got into it. I got into stocks and, and things like that before business. So I, had a few thousand bucks that I'd saved up from like graduation or landscaping or things like that. And oh eight, I invested all of it in mortgage companies thinking that they would bounce back and they didn't.
[00:05:43] Brandon Pindulic: So I lost all that money and I'm like, man, this is a lot tougher than I thought it would be. So I'm like, lemme just go start a business. And then I continued on with just like landscaping work, but then I started fishing lures, like making these, these lures. There's a company called Meps and I was just making like knockoff, like spinner beet kind of lures there.
[00:06:00] Brandon Pindulic: So I did that. I would sell on eBay. Again, I don't remember, I have no idea how much I sold or whatnot. It wasn't a lot, but it kind of got me thinking like, like I had a wholesaler distributor somewhere in Texas. I'd buy it. I, you know, kind of, I knew my margins and things like that on it, and then I would ship it and, just like manually go to the post office and do it.
[00:06:17] Brandon Pindulic: And then what was the earlier question? Kind of like how I started that, or why I got into that?
[00:06:21] David Elikwu: Yeah, but I mean, okay. I'll just give you a, a slightly different question off the back what you were saying just now. How old did you say you were again?
[00:06:27] Brandon Pindulic: I was probably 12, I guess
[00:06:29] David Elikwu: I mean, now.
[00:06:30] Brandon Pindulic: Oh, now I'm 30.
[00:06:31] David Elikwu: Okay. So how in 2008, how were you the same person that is investing in mortgage stocks and then also starting like a fishing law company?
[00:06:39] Brandon Pindulic: I well, I didn't know what I was doing. I was just kind of trying it out, so I was just like, all right, well.
[00:06:44] Brandon Pindulic: My whole thing was, I mean, the economy was going pretty poorly in oh eight. I had, I guess, a slight advantage, right? You know, I was living with my parents, right? I was in middle school, so I didn't need the money.
[00:06:53] Brandon Pindulic: So I think I had $2,500 and I opened up this account called Trade King, which is now owned by Ally Bank. I still have it open. They send me a letter every year. I have like few hundred bucks of some worthless stock in there. Yeah, I just, I don't know, I don't remember why I just did it. And then I lost all the money, so I didn't make anything doing that.
[00:07:10] Brandon Pindulic: And then I simultaneously was trying to start these businesses. So I basically had a, I mean, I guess I wouldn't really call them failures necessarily, but they didn't do that well. And then that took me to, you know, 18, 19 years old. I went to college for one year which is, I guess, Uni for you guys. And then I had a an unpaid internship with a VC firm called Wasabi Ventures. And I met him just randomly, the guy, his name's Tk, he is great. I still work with him. We're actually business partners in a small deal right now too. So I met him and then from there he called me up the year after my freshman year and was like, Hey, you know, did you find a job yet? Would love to give you one if you haven't. I didn't know what he was talking about. And I was like, no, I'm going to school. And he is like, oh, I thought you were a senior at Loyola. I was a freshman at Xavier. So he, I didn't even know if he might've hired the wrong guy. I have no clue. I've never really asked him. So I ended up taking that job. So I was only in school for a year. It was a, a low paying job, right? It was just, but it was remote. I was working at home in New Jersey. I'd go up to Manchester, New Hampshire, where he was at the time, probably once a month or something like that.
[00:08:12] Brandon Pindulic: And then from there, I started this, I wouldn't call it an agency. This was before my first actual business. I had like kind of more of like a freelance thing on the side. And then that was just like marketing work. I was working with businesses. I found the niche of working with B2B SaaS companies.
[00:08:27] Brandon Pindulic: So I took a full-time role with this company called Proof HQ. I did that for a year maybe a little more than a year, and they got bought. So now it's probably 20 years old. And then from that point in time, like 21 or so is when I started my first actual business, which was called OpGen Media. So that was kind of the, like the path of what got me on this route I'm on, I guess.
[00:08:47] David Elikwu: Sure. That makes a lot of sense. And it's funny, I think we've had slightly similar trajectories, but yours is obviously drastically more successful in that. I haven't a a seven figure exit yet.
[00:08:59] David Elikwu: I'm interested in, so at the point that you left university has that made you think anything about the value of going to college based on, okay, the fact that you got a job? First of all, did you have any concerns about, there's a traditional path that lots of people take, were you concerned at all that, oh, if I leave, then it might impact me at all down the line. At that point, you'd run some businesses in the past, so maybe you're thinking I can do just fine on my own. Being able to have a business that makes, you know, 50, $60,000, it's still more than an average person might make, and so maybe you felt like, okay, no matter what, you can kind of get yourself through things.
[00:09:33] Brandon Pindulic: You know, I don't, at the time, maybe I don't really remember exactly what I was thinking, but I don't remember being that concerned about it. I just kind of did it. I mentioned that that one job I had was not a high paying job. I think I was getting paid maybe like 1200 bucks a month. I mean, it wasn't a lot or 1400 bucks a month, I don't remember. And I was working a lot, like I was for sure below the, the minimum wage line. I didn't do that job for the money. I was like, you know, I'm working for this firm. Worked with smart people. Some of the people I worked with, alongside there built 20 to a hundred million dollars plus businesses. So it was great to work with those individuals. I don't remember thinking that a lot.
[00:10:05] Brandon Pindulic: And then when I worked at Proof HQ, I was, I got the job when I was 20, so I guess I was like 20 to 21 at that point. They sold to a company called Workfront, which then got bought by Adobe. So that one did well, I had no equity or anything. I was just I got paid 60K a year. This was in 2014. I was 20 and then I did, think it was 60k, 60k a year. And then I had like probably 20 or 25k a year in additional income from just like freelance stuff. So for me, I was like, my expenses were pretty low. It was fine for that, but I only did that for a year.
[00:10:34] Brandon Pindulic: Actually when they hired me, they asked me if I was going back to school. 'cause they weren't gonna hire me if I was thinking about doing it. They didn't wanna invest the time and, and money and then me go back. Honestly, I, I don't have any opinion on college for or against. I don't think anyone's asked me about it in the last 10 years, to be perfectly honest. It was kind of just something that I, I did for a little bit, didn't. And then my thinking at the time was I knew I wanted to start a business. I didn't do that right away. I didn't do it the second I left college. It took me about a year and a half or maybe actually a little bit longer to do that, but I was like, why, why waste the time and money? Right. It was expensive. So I just left, took the job, paid off whatever loans I had quickly, like within that year. And that was pretty much that decision.
[00:11:14] David Elikwu: Okay. Fair.
[00:11:15] David Elikwu: So then you went on to build OpGen media, I think, well said you built another business before that then OpGen media, which had a seven figure exit, which is pretty awesome by most ordinary people's standards.
[00:11:25] David Elikwu: I would love to know what was that journey like in terms of being able to build that business? What were the, the high points, the low points, how easy was that, I guess, considering your past experience as well?
[00:11:35] Brandon Pindulic: Yeah, for sure. So that, that was a good one. So that was my first actual business and I, that's kinda like why I consider my first real one. I started that, kind of on the side initially in 2015, but I went full-time with it February 1st, 2016. That was when I left, you know, ProofHQ slash Workfront.
[00:11:50] Brandon Pindulic: But along the way I was building it up a little bit on the side, so I probably technically started that in, you know, September of 2015. And I told myself I needed to match my income, which, you know, at the time was 60K a year, so I guess 5K a month. I was like, but I can make at least 5k a month off this side hustle for three months in a row. No exceptions. I'll do it. And I did it in the first three months, so it got to where I was making more money off that pretty quickly than I was from the job. So it just made a lot of sense to make the switch. I went full-time with it. it was a service business, so I didn't need a lot of money to start that. You know, I just had some clients and whatnot take on. And then, because I was started at three to four months previously I had built up some cash. I don't remember the exact number, but I had at least probably somewhere between like 10 to 20K in that account. So I felt like I had a buffer, and then whatever personal savings I had, I was like, let me go out and do this.
[00:12:38] Brandon Pindulic: But the first six months it wasn't crazy, you know, difficult, I would say in those first six months. In many ways, it was actually kind of a, an easier point because I had extremely low burn. I mean, I was a single guy, 22, living by myself, I wasn't spending a lot of money. I was actually living in Boston at the time. I had an apartment up there, so that's where I started it.
[00:12:55] Brandon Pindulic: And then Interestingly enough, one of our first clients was Oracle, so we landed a big account pretty quickly. Now, they didn't pay me until like nine months later. So that was, if you're talking about a low point, I had to float, I had to float the expenses on that account, which was big. I had to pay our commission only sales rep who ended up staying with us for the entire lifecycle of the business, which was great, and I can get into that. But I paid everybody out of pocket first. So I had like, I don't remember no money at that point, 'cause Oracle was taking forever to pay me. I was floating expenses along the way of creative and contractors and sales and all of that stuff.
[00:13:28] Brandon Pindulic: That was probably a tough point, but I was kind of, you know, I had other clients coming in, so whatever money was in, I was able to, to get that. And then when they finally paid me, it was a, I don't remember the exact amount, but it was probably north of 50K. So once I got that, it was pretty good.
[00:13:40] David Elikwu: Okay. Fair. So tell me about, some of the other the war stories along the way. I mean, you had one job for one year and then you from that to having to hire people to build this business. So, you know, what was that process like of hiring people? Were there any things that I guess two categories of things, like one is maybe underrated wins.
[00:13:57] David Elikwu: So for example, being able to get Oracle, I think the process of getting to that exit. Was there anything that, there's lots of business advice that people might typically give, right? Get the big things right, but I think simultaneously there's also a lot of maybe underrated things that you could innocuously get right very early on. Maybe not even intentionally, or it could be intentional, but by virtue of getting those things right early on, then you get the wins later.
[00:14:19] Brandon Pindulic: Totally agree. So unintentionally I got a lot of things right and I didn't realize that at the time and I don't think I realized that until recently too, 'cause you know, now that I'm in the business of starting and buying other businesses. I realized that OpGen was smooth sailing from the get go, and that is absolutely not the norm for most of these businesses.
[00:14:36] Brandon Pindulic: So things I got right and didn't necessarily mean to was, this was 2016 and I was doing all enterprise tech 2016 in 28, if I remember correctly. I could be wrong, 2016 and 2018, I think were not great for SaaS companies in the public markets. But it had no, no impact that I saw, at least from our business because especially, you know, with sales cycles and budgeting and whatnot. If you have a down year in 2016 usually affects the, in 2017 is because budget's already planned out. Unless there, there's something drastic that happens. But I got that right? So I was riding a wave essentially with tech companies and I sold the business in 2021. So I never had a bear market from that business. And that's just something you, get lucky with.
[00:15:16] Brandon Pindulic: So that was really important. Getting Oracle was huge. I knew at the time that was big. I, I just don't think I understood how important that was because then once we got Oracle, I don't remember how quickly after, but relatively quickly after, then we got Citrix and then we got DocuSign, and then we got, you know, you name it. We worked with a lot of larger, a lot of larger, more mature tech companies. Those are really our ideal clients.
[00:15:36] Brandon Pindulic: And for the first two and a half or three years of that business, we were pretty much purely a lead gen company. So we were performance based. That was the other thing too. So the sale was easier. They were basically like, Hey, we need this. And I said I would get them that, whether I knew we could or not. And I don't think we ever, I mean maybe a couple times, like some small deals for the large companies, we definitely never dropped the ball for them on that. mean, if we had to go out of pocket to make something work, we did.
[00:16:00] David Elikwu: Okay, so how did you land the first big fish? Because, I mean again, you're a 22 year old kid. How do people trust you to bring home the bacon?
[00:16:08] Brandon Pindulic: Yeah, so we had a commission only sales rep. His name was Jess. And he had worked on American Marketing Association previously he was at about.com. He was at a few others. So he had been in the media space for, you know, north of 30 years. And the initial contact at Oracle came from one of his contacts.
[00:16:26] Brandon Pindulic: So that, that ended up being a very common theme with us. We would get one person eventually it was, you know, split between whoever at the company. But Jess initially got those first couple of deals in for us. We had one contact, one small division of the company. And then we would just land and expand from there.
[00:16:42] Brandon Pindulic: So with Oracle at the time I think they had over 200 different companies under the Oracle umbrella. We were working with one of them and I can't remember the name of the business now, but it was one of their e-comm businesses like e-comm SaaS companies.
[00:16:56] Brandon Pindulic: So then from there we did well, but you sign an MSA, Master Services Agreement. So now I can go and sell into any company with an Oracle. And it's not like as helpful as you might think it is, but you can't do business with other companies that have that. So you go through this whole painful process of getting approved as a vendor, and then once you're approved, now you can go and sell internally within that business, and it's a lot easier for those employees to bring you in.
[00:17:19] Brandon Pindulic: And then same deal with agencies. So from there we would get one contact at an agency or one contact at a brand, and then we would just spend all of our time making sure we did well with them and expanding from there.
[00:17:30] David Elikwu: Okay. So how do you go from selling your company to then having a company that owns loads of other companies?
[00:18:24] Brandon Pindulic: Well, I ran that business for six years. Never really thought about selling it. It was extremely profitable. And we never did more than a million and a half in revenue. Like we never grew that big, but the net margins were really good. When I sold it, the average net margin was 38% after paying myself a salary as well. So the margins are really strong in that business. And then I sold it, you know, I had a multiple of cash flow for it.
[00:18:45] Brandon Pindulic: So when that happened, this was March of 2021. There was basically for the rest of that year, I was transitioning out of that role. So that only took me maybe four months to really deeply get out of that business.
[00:18:59] Brandon Pindulic: I thought it would take a lot longer than that. And then from there my plan was to take a little bit of time off in that summer and then kind of figure out what was next. But what ended up happening was, I started working with a VC firm. So they're called Companion Ventures. I'm an LP in them. And then they just needed a bunch of, you know, kind of like fractional marketing leadership work. So I turned them down initially because I didn't think that was really the right fit for me. But then I went from exiting the business to basically I remember that early, that summer in 2021, I had basically nothing to do for like two days. And then one day later I got a client to go in. And then next thing you know, I had three or four, one big, 1 anchor client, and then maybe two or three others. So for the rest of 2021, I ran a consulting business and I did 30K a month, a little bit more if you count stock options and things. And I was working across a few different businesses and it was pretty good because it was a lot less stress than running the business.
[00:19:52] Brandon Pindulic: But there was, there was no scale either, right? It was basically I was capped out at that amount. So I did that through the end of the year and then that's what took me into starting Spacebar Ventures.
[00:20:01] David Elikwu: Okay, that makes sense. So now that you are both building and buying a ton of companies, are there any lessons learned in retrospect that you look back at your sale of your company and either think, maybe I would've operated it differently, or maybe I would've sold it differently, maybe I would've ran it differently?
[00:20:16] Brandon Pindulic: Yeah. So the, in terms of the sale, I think it was pretty fair. I think at the time it was a good price for the business. The seller did really well. I had an earnout in that, you know, it was obviously, it was my first company. All my clients and employees were very close with each other. In fact, my sister still works at that company. She worked for OpGen media and now works for real access to company that bought them. So she's still there. So all of that was really important for me to get right.
[00:20:38] Brandon Pindulic: So I don't have any regrets in that process, but what I realized I learned a lot more in that transition period than I think I did in the six years of running that business. Because you think, there's certain things that I think is common in your first business where you're like, okay, you know, very important in this process of the company, or this is the way we, we do it because whatever reason. And then you realize how another company does it, and you start to see other people closing deals without your involvement or whatever the case is. Which only really happened on the lead gen side. The backup we had lead gen, and then we had the agency, the recurring component of the business as well.
[00:21:12] Brandon Pindulic: So what I realized was like, wow, I, I just didn't delegate enough and that's why we never scaled the business. So if I had done that, I probably would've never have sold it because we would've grown more. Our net margin for sure would've been lower from a percentage basis, at least in the short term. But we would've been much bigger.
[00:21:27] Brandon Pindulic: So I take that approach and that's actually why I started the holding company. It's a very common thing now, at least on Twitter, you see a lot of people talking about holding companies. For me, the reason I did it is not necessarily because I think I have all these great ideas and all this money that I need to, like, put to work and all this stuff. I did it because it was the only way that I could think of for me to go and scale a business without getting that bottlenecking that business.
[00:21:49] Brandon Pindulic: So I thought if I start a business from the get go or buy a business and install an operator in it, someone that has profit sharing and equity and things like that, and they're better at going from one to whatever, then I want to do that.
[00:22:02] Brandon Pindulic: I think I'm good in the starting phase. I think I'm like, okay, you know, average to probably even below average at kind of that scale up phase and then anything after that. that's why I ended up taking that route.
[00:22:14] David Elikwu: Okay. Interesting. That makes a lot of sense. But I guess in what you do now, there's a lot of decision making wrapped up in that, so I'd love to know, first of all, tell me about Spacebar Ventures, and particularly how you think about like structuring the business and what type of businesses you want to build or hold or acquire.
[00:22:30] Brandon Pindulic: Yeah, for sure. So from a, a legal structure, this is something that we're just finalizing that too, because we had it set up a different way previously, but we have it set up where it's a holdings company and it's an escort. So me and then our operating partner, George are the only employees at the company that are getting paid from the holding company vehicle. I own a hundred percent of that. And then Spacebar Ventures, the holding company has equity in each business we bought or incubated. But I'm not a hundred percent owner of any of them except for one. Which was actually our first business that we acquired, which I can talk about that as well. So the rest, I don't, I don't, I'm not a hundred percent in and I really don't have a structured day-to-Day role in it. So that's kind of the legal structure of it.
[00:23:10] Brandon Pindulic: But Spacebar Venture is really what it is. Technically we're two years old, but I look at it only being a year old. Just the way I operate it now versus what I did two years ago.
[00:23:20] Brandon Pindulic: We're a holding company that starts and buys businesses. So we'll incubate a company, meaning either we have an idea, someone comes to us with an idea, we mutually come up with an idea, and we hire somebody and give them money and they go and start the business. And we support, we support pretty actively, especially that first year. So we do that and then we'll agree to a an equity split with that operator and co-founder. And then we have you know, the acquisition side of it, which is just simply we acquire businesses.
[00:23:47] Brandon Pindulic: We're not a fund and as of today, we're not a syndicate either. So we have not raised a single dollar for any deal that we've done. I have not used debt. I do have a potential LOI going out for a deal where we're going to use debt either seller financing or SBA, it really doesn't matter to us, we're working through those details right now. And then another one, which would have debt, but it would be more of an earnout and seller finance as well.
[00:24:11] Brandon Pindulic: So eventually we'll do it, but we, we just haven't done anything with investors or debt yet.
[00:24:15] David Elikwu: The previous business that you ran, OpGen Media, did you own the majority of that? So you got the most of the money from the sale?
[00:24:21] Brandon Pindulic: Yeah, I a hundred percent of that one.
[00:24:23] David Elikwu: Okay. Awesome. So I guess that leads me to my next question. Just off the back of what you were saying now, I'm interested to know, you talk about, okay, you're putting a hundred percent of your money into it. How do you validate the businesses that you choose to, to either build or to acquire, especially when it's a hundred percent of your own money?
[00:24:38] David Elikwu: I can imagine there might be a bit of a sunk cost feeling when, okay, you've worked for six years to build up this nest egg that you've got from selling the business and now that's exactly what you're deploying. You're not leveraging, you're not using other people's money. You're not taking you on any debt or raising funds. 'cause I think, the principle agent balances is very different there. If you are going out and raising, let's say 250 million and, and then with that, oh, you sure I'll buy this business. Sure, I'll take that. And sure, I'll try lots of different things. When it's your own money, maybe you feel differently about it.
[00:25:06] Brandon Pindulic: Yeah. I mean, there's a loss always kind of sucks, right? And I've done, we've had losses. Two of our businesses that we started, we incubated failed pretty much right away and the third one did well. So we did three incubations this year, and we were one for three. Next year we're gonna do two, but there's a lot of learnings behind. How we're gonna do that differently, which I'm happy to share.
[00:25:25] Brandon Pindulic: So the feeling of losing money is never good. And I think this year in particular, it was more of a like, let's see if this works and let's learn. Now it's more, okay, let's apply the learnings that we've had and think about how I can scale this. So everything is about how do we scale this above a million dollars in cash flow to the holding company. Which would be after, you know, profit sharings are paid out, it'd be after reinvestments are paid, and that's kind of the North star metric of that. We're not gonna get there next year, I don't think outside of, you know, maybe some of these acquisitions that we're gonna do, because I'm investing in decent bid back into the, the incubated business and the businesses we've bought.
[00:26:02] Brandon Pindulic: But it does make it a little bit more challenging. But, you know, probably the most difficult part about it is, it's forced us to buy some smaller businesses. So if we take plan compliance, for instance, I literally bought that deal for $65,000. So it was a, a niche media business. It was actually based in the UK. So when we were talking before the podcast, I mentioned when I was in London, it was because of that deal. And that one, it was a cash deal. I literally just bought it on an Amex because Joe Osh, who was, he's my friend now, and he was the one running it. We were like, what's the easiest way to do it? I forget why we didn't use an escrow. I told him, I'm like, listen man, I can pay you in Bitcoin , or I could pay you on a credit card. I really don't know how else to do this. 'cause we wanted to do it really quickly and just move. I, again, I don't remember why I didn't wire the money. I, I really don't recall the scenarios two years ago now. But I just threw it on a credit card and then I called up the credit card company and paid them that next day to to do that.
[00:26:51] Brandon Pindulic: And then that business has grown you know, this year we'll probably end at like 140K in revenue, something like that. But it's pretty much all profit because it's not, it's just a website. That one's grown. it's done nice, but then it forces your thinking, okay, what do I do from here? Do I just cash flow this business? Do I look at strategic options like bringing in an operator because that one, I technically just run that one or sell it or whatever.
[00:27:13] Brandon Pindulic: So you have to think about capital a little bit differently. I don't have to sell it or I don't have to bring in an operator, but as I've proven the concept out of you know, incubating or buying these, these smaller businesses, now it's time to go larger. So each of the deals we're looking into now all do over a million in revenue, you know, a million and a half in revenue, really. Mostly earning 25 to, I guess in one case, maybe closer to 40% net margin. So, owns a little bit of a, of a lighter business.
[00:27:38] Brandon Pindulic: So looking at some of those businesses and then, you know, time will tell if we go above that, I'm sure we will, but right now I'm pretty comfortable in that area. So I'm trying to kind of tear up the approach from that. And when you only have your own capital and I haven't taken on debt yet, it does kind of limit you and what you can do. So I've quickly learned, all right, concept was proven now how to go bigger and map this out back into the cash flow targets that we have.
[00:28:02] David Elikwu: Sure that makes sense. So what went into making that first decision? I mean, putting 65K on the credit card, like how do you decide that this is the right business to do? And then also, what did you do that within just two years, you can go from like you're now making in revenue, double what you bought the business for, or more than double actually.
[00:28:19] Brandon Pindulic: Yeah, that business is only doing, I think, 22k a year in revenue. So two things, one the entire thesis initially at Spacebar Ventures was to buy B2B media properties. So planet compliance is perfect, it's a website that just writes about business regulation and compliance topics.
[00:28:34] Brandon Pindulic: The issue I found was there's not that many of them out there that are for sale. A lot of them are owned by conglomerates like Infor or Ziff Davis, or there's like some smaller ones as well, you know, even like business journals or things like that. So I ended just being a little bit of a pain, so I'm like, all right, well, we can build them or look for other opportunities.
[00:28:52] Brandon Pindulic: I bought Planet Compliance. I did quite literally nothing with it. The first year it was a it was a membership based business, so companies were paying 600 pounds. It was a British company, 600 pounds a year just to get access to the website, like post content, have their business on the directory. It was RegTech and legal tech companies.
[00:29:09] Brandon Pindulic: And then on January 1, 2023, so this year I shut that down so I completely shut the revenue down completely. what I did was I said, all right, we're just the media business. The recurring revenue thing is overrated in this industry. Let me just sell sponsorships. And then that's what I did. So it was sponsorships and lead gen. So email a little bit of sponsored content, but primarily just email. And then companies back it out into lead gen. And then we did, you know, like we'll end up probably around 140K this year maybe a little more depending on how some of these deals shake out. And then that's pretty much all margin. 'cause we have hosting cost, we have email, you know, or whatever our ESP, which you pay maybe 600 bucks a month for. And then I have part-time editor. And then our content is free 'cause people write content on our behalf, like thought leadership content. That's really it, so.
[00:29:58] David Elikwu: That's awesome. That's the perfect kind of business.
[00:30:01] Brandon Pindulic: Yeah, it's easy to run. Honestly, I legitimately spend less than five hours a week on that, but I think about it, so it's like, you know, you have that in there too, but I don't spend a lot of time on it.
[00:30:11] David Elikwu: Yeah. You think about it when, when the checks come right,
[00:30:13] Brandon Pindulic: Yeah. or the, or a random problem. We have an email scheduled and, you know, you gotta jump in at midnight to like change an HTML thing in there. Just like little things like that. But overall, it's not a heavy lift.
[00:30:24] David Elikwu: Okay, fair. But then you also had some other swings which didn't go as well as that. So what were the lessons learned there and and how do you pattern match, like what the difference was between the good decisions you've made, the ones that didn't turn out so well?
[00:30:36] Brandon Pindulic: So it really comes down to not going big enough. The two incubations that did not work out, we hired people part-time you know, they're a little more inexperienced or one person was experienced, but his background was SaaS and self-serve and we were trying to have it more in like an enterprise service role.
[00:30:50] Brandon Pindulic: So you have to match people based on their strengths. I think the incubation model only works when someone's doing this full-time. We had one person work, our company, Spacebar Visuals. Ryan runs that business. He was part-time, but he is just like a different breed. Like he had it in him right away. I knew it was gonna work that business, we create animated videos, explainer videos, repurpose content, things like that. So I always tell Ryan if I could find 10 of them, I would do that deal 10 out of 10 times. But so it comes down to the person and not going big enough.
[00:31:17] Brandon Pindulic: Same deal with, we bought an agency called Axamo, so it's axamo.co. We bought that in, I don't know, March or April, maybe. It was a small agency doing 150K a year mostly profit because the operator there, the owner of the business was doing most of the work himself with some freelancers. And I bought it for 20K. And I'm like, all right, perfect. If nothing else, I'll, I'll make my money back on the design work that we need.
[00:31:41] Brandon Pindulic: But what ended up happening was, I just didn't think about the business at all. So for the first six months of owning it, or five months owning it we brought in some projects and it was fine. The work we did was really well, but I didn't think about scaling it. So now what I did with that one is I gave our operating partner, George, 30% of that business, and he is spearheading it and now it's getting better. I just did that deal with him though, so it's taking some time. But we're, we moved over to the unlimited design model. We're playing around with pricing to be transparent, it's $2,500 a month now, and we have a few clients on that. But we're probably gonna come out with a lighter tier and then a heavier tier as well.
[00:32:16] Brandon Pindulic: But I wouldn't do that deal again regardless if it works out or not, because it's just too small. Like, it's just, it's just not worth buying a business that small because it's the same thing as starting one. Unless there's like planet compliance or the, it was such an obvious opportunity on what to do. It was a great asset with a bad business model, you know, I wouldn't do that again.
[00:32:32] Brandon Pindulic: So this whole year was just kind of like testing stuff out, like, will it work? Can we make a business out of it? And now, next year as we're gearing up to, you know, potentially acquire two businesses that are, you know, north of a million dollars and obviously continue to incubate businesses, I think it'll be a lot, it's a lot different of a mindset now.
[00:32:49] David Elikwu: Okay. That's interesting. And you mentioned a few times this idea of buying things that are too small.
[00:32:54] David Elikwu: What changes in nature of the business? Is it simply just like finding product market fit? It seems like there's a, a chasm to cross. There's a point at which, okay, you're having to do a lot of work in the early growth stages, and then it gets to a point where suddenly a switch flips and things are very different on the other side of that.
[00:33:09] Brandon Pindulic: Yeah. So I think it's gotta have a couple things. I have said enough, if you're gonna buy a business, I think it needs to have enough money to where you can hire an operator to run it and still cover whatever, you know, debt service you have on that. I think that's extremely important.
[00:33:21] Brandon Pindulic: We have a business in mind, so out of the two businesses that we're gonna potentially acquire, one, we know exactly who the operator will be. We've already kind of talked through that with them, and now it just comes down to actually doing the deal. The other one very solid, very niche business. It needs a very specific type of person to operate that. And I don't know who that person is yet, that's a big risk in it.
[00:33:41] Brandon Pindulic: So that, that has to be solved for if you're buying a business the way that we intend to do it, which is in a holding company structure and not just like a searcher going out and buying a business and running it yourself.
[00:33:51] Brandon Pindulic: The other thing is these small businesses, like with Axamo, we'll get that one to work and we'll probably keep that one forever because it's gonna cash flow well, and we use their design services a ton. So every website built in our portfolio is built by them, all of our ads, landing pages and stuff like that.
[00:34:06] Brandon Pindulic: So it's kind of been a cheat code in that instance, but like from a spreadsheet, it doesn't look very good right now. So that small business, I could have just built it and then just, you know, not had to go through the process of buying it and things like that.
[00:34:19] David Elikwu: Fair. I guess that makes sense. And I think it's interesting because as you are going on this journey, you are learning, you've already to learn everything for the first time as you've gone so far. But continually, as you are acquiring businesses, as you're building new businesses, you are learning and iterating. And I guess what you are building is your pattern matching ability, and you're building intuition, right? You've had those three businesses that you acquired or incubated, you've seen, okay, when I've tried it this way, here's how it went, here's how it worked. When I tried these other two, here are the lessons that I learned. Here are the nuances that I wasn't considering beforehand.
[00:34:51] David Elikwu: I guess beyond that, as you talk about some of these other businesses that you are looking to build and develop, how do you think about the way in which you plan to, I guess, refine your intuition? Is it simply just by the experiences that you have when you go and do something, or are there any other levers that you think about pulling?
[00:35:08] Brandon Pindulic: Yeah. So couple things on the incubation side. We're trying to build a little bit more of a defensible and well researched idea before going out and testing it. So I was pretty open to whatever. At the beginning of this year, we had an idea, if the person we identified had an idea, I'm like, let's just try it. Let's see what happens.
[00:35:25] Brandon Pindulic: Now what we're doing is we're trying to pre-vet ideas and pre-vet operators further out. So I'll give you an example. We have a business idea, I've had this for years. It's not, not anything novel, but I'm a hundred percent gonna to do this, where we wanna partner with a SaaS company that's doing at least 20 million a year in arr. I think it has to be at least 20, maybe it's up to 50. And we're gonna set up a, an agency or a consultancy that specializes in that product. So it has to be an enterprise SaaS company. And think of HubSpot and SAP and Salesforce and whatnot. They have preexisting partner ecosystems, right? They have, there's, you know, gold tier, you know, platinum diamond, whatever. We're trying to get in with that business before they get to that point. And we're saying we're gonna hire two to four people some overseas one operator in the US or Europe or wherever. And for the first, you know, probably at least three months, we are going to do nothing but understand your product, learn it, research your industry, talk to customers, things like that. And we're building alongside you to be a professional service that can implement and consult on your product. All of the money we put in, we're not charging them anything, we're not billing the software business. What we hope in turn, and we'll have some language around this, is that they can pass us leads for deals that make sense. We can get some sort of official certification from that company that we're a partner agency and then we're just doing this ahead of the curve. So the idea is that they continue to grow. They eventually build out this ecosystem, and then we were, you know, kind of one of the first or, or the first agency in it.
[00:36:51] Brandon Pindulic: So pre-vetting that idea is critical. We'll find the operator based on the company that we choose. We have one in mind. I can't really go into that too much right now, but we are beginning these conversations now and my thought is that we'll have a higher success rate doing that. When we do that, I'm gonna hire this person full time, so we're gonna have, you know, six months of runway, we'll get money, seed it in the account and we'll work with them quite heavily in that six month period. Peel off a little bit from there and then you know, probably after 12 months, sort of, sort of be a little bit more on the back burner.
[00:37:21] Brandon Pindulic: The other thing on that note is how do we pay ourselves from this? So we own equity in each business and we have profit sharing from that. But it's really easy for me to, to not want to take the profits out and just keep putting it back into the business. And then the operator can then, you know, get paid their base and then their portion of the profits. But what we're thinking we're gonna do, and this is a little bit TBD, but I think what we settled on is essentially charging a management fee to the portfolio company in an incubated scenario. You know, maybe it's 2k a month, 3k a month, 5k. It really depends on the size and the scope of the work that we're doing. That will count as an expense to that business. And then they would have to keep us on for at least 12 months. After 12 months, they can pause us or resume us at any point they want. But if they have a way to take that 3K or 5K a month and put it to something that they feel is more productive, that's perfectly fine with us.
[00:38:09] Brandon Pindulic: I mean, we still have our equity. We're still backing that, we're not in this to make a few grand a month and and management fees, if you will. But it's one way for us to kind of build up a, make sure that the portfolio company knows that we are a, a paid resource and they can use us or they, or they can roll us off.
[00:38:24] David Elikwu: Sure, that makes sense. And I guess you've mentioned a few times this idea of picking the right operator. And I know, okay, you used Ryan as an example in terms of how great he was. If you could have 20 of him, that would be fantastic. And then also you mentioned before in the other business you incubated was, you know, you had someone that was part-time and actually now that you know, you probably have someone fulltime.
[00:38:44] David Elikwu: Are there any other, maybe aside from just the context in which you put them in, so for example, like being, part-time or full-time, are there any personality traits that you look for in operators that either might come from Okay, your own personal experience? What was it that made you special as an operator and what made you able to build the business that you ran? Or also some of the people that you've met, people like Ryan, people that you've already brought in. What are the, the traits that you look for?
[00:39:06] Brandon Pindulic: Yeah, for sure. So I think it's they have to be a self-starter and ethical and, you know, you have to kind of fit within our team and can we work together. Another thing I think I'm gonna do is before making that offer, you know, work in person for a week we didn't do that in Ryan's case. We did that afterwards, but there's a lot of unlocks you have in person because we're, we're fully remote, so that's critical.
[00:39:25] Brandon Pindulic: I think they have to have either equal parts or 60, 40 one way or the other, an operator mindset. And then also more of you know, is willing to get out in front of customers and sell. The businesses that we start are not technical. They're niche B2B services or B2B media businesses. So for us, operations and sales are, are critical. And they have to have people skills.
[00:39:44] Brandon Pindulic: So that's what we look for, tech talent and you know, things like that don't matter as much to us, we can fill that in. Marketing is helpful, but doesn't matter as much because my background, our DNA within Spacebar Ventures like getting leads is not an issue for us. Our portfolio companies get hundreds of leads a month that's just not, it's just not a challenge for us. Getting the right kinds of leads in and then convert, of course that's always a challenge. But there's certain things that we know we do really well. And if we have an operator who can do some sales or a salesperson that can do some operations, we're gonna be fine. We'll make that work more likely than not.
[00:40:16] David Elikwu: Thank you so much for tuning in. Please do stay tuned for more. Don't forget to rate, review and subscribe. It really helps the podcast and follow me on Twitter feel free to shoot me any thoughts. See you next time.