2 years ago, Adrian Johnston had never run an e-commerce business.
Today, he’s the co-founder of Una Brands, a business that buys and grows e-commerce businesses with 200 employees.
So, how did he do it?
That’s what you’ll hear in today’s interview, including how he got the idea, how he raised $55 million, where he buys websites, how he does website due diligence, the 4 levers they pull to grow e-commerce brands, and much more.
Adrian’s story is so inspirational, and I’m really excited to share it with you today. You’ll see why there’s massive opportunity right now to sell smaller websites to big buyers, even if you haven’t thought about selling.
WATCH THE VIDEO or read the transcript below to hear Adrian’s insights on buying e-commerce websites.
How do you go from a complete beginner to raising millions of dollars to buy websites?
Matt Raad: Hi everyone. I’m Matt Raad, CEO and co-founder of eBusiness Institute, where we teach beginners how to buy and build websites.
I’m excited to have a very special guest, Adrian Johnston, co-founder of Una Brands. Today’s interview is special because Adrian has gone out there and raised $55 million to buy e-commerce websites here in Australia and New Zealand.
Adrian has kindly agreed to come onto our interview series today to inspire you and share some insights into what’s it like to buy websites at that level and raise funding to do it.
Welcome, Adrian. Thanks so much for coming aboard.
Adrian Johnston: Thanks for having me, Matt. It’s great to be here. Una Brands has built a solid track record acquiring and investing in eCommerce businesses
Una Brands has built a solid track record acquiring and investing in eCommerce businesses
Matt: I’m so glad you came up to me at that event because I’d already heard about Una Brands with your Australian eCommerce acquisitions.
When you walked up to me, you introduced yourself and said, “I’m one of the co-founders of Una Brands. Let’s have a chat.” I was like, “Oh, this is cool!”
Adrian: That was a great event. I think Flippa has done an excellent job there.
It was great to meet a lot of people in your community as well. It seems like a very close and tight-knit community, so I was impressed and grateful to meet everyone.
Matt: Likewise, so a big thank you for coming along.
Like I said, as you noticed, with our community, we are teaching people to buy and build websites. But no one is (at this point) spending $55 million on websites like you are.
It sounds super impressive to raise $55 million, especially when you’re such a young guy. Look at you, and I said at the event, “How have you done this?” And so that’s what I want to cover in this interview.
How Adrian Johnston started out his career as a math teacher before becoming an online entrepreneur
Matt: I looked through your LinkedIn profile, and I noticed you started out as a math teacher not that long ago, to now be sitting here. How did that journey start?
Adrian: Yes, it’s a bit of a pivot from a maths teacher.
I’ve had three careers which started as a maths teacher. In the UK, we have a program called Teach First. It’s basically where after you graduate, you spend two years working as a full-time maths teacher in what they call a school in challenging circumstances.
So, I was placed in a difficult school in London where there was lots of gang violence and behaviour problems. It was a super fascinating experience but very difficult. I learned a lot.
And so, after the two years, I spent a third-year teaching, where I helped set up a new school in London. After that, I decided to switch careers and move into the corporate world.
My second career after that was investment banking. I went to Goldman Sachs for three years.
Then I moved into management consulting. And actually, I guess this is now my fourth career, so I left consulting to start a business.
Matt: Wow, that’s incredible.
Even though his first startup failed, he learned valuable lessons of how to run an online business
Matt: Let’s look at that final pivot into this fourth career. Just a year or two ago, you didn’t really have any employees, and now you’ve got 60 employees around Asia.
Why did you decide to change so dramatically from an investment banking background into running your own business? You’re raising funds, going out on your own, and having 60 employees. What happened there? What was the thinking?
Adrian: It’s a good question. Una Brands is actually my second startup. I’ve always been interested in entrepreneurship, and my first startup was a dismal failure.
My first business was an online maths tutoring business. We paired math tutors based in India with students based in the UK. And by doing that, you could reduce the cost of tuition from £40 an hour to £10 an hour.
But the difficulty with that was, at the same time, I was working full-time in management consulting. We raised a bit of cash (about €40,000) to kick it off. So, we built a product, but essentially, we just didn’t have the time to put into it.
Through that journey, I learned a lot about fundraising, putting a business plan together, and building a tech product. And also, just the simple things about starting a business.
I don’t know if it’s just me, but even the idea of filling in the paperwork to start a business felt a little bit intimidating. But then, going through that journey, you realise this is actually very simple. You just follow one step, then the next step, and suddenly you’ve got a company.
And so that was a really interesting learning experience.
He noticed a trend in eCommerce and found a gap in the Australian market
Adrian: I enjoyed that journey, and I was looking on the periphery for what could be the next thing I jump into.
I started to follow this trend in America of the e-commerce aggregators. I don’t know if you’ve heard of a company called Thrasio? Thrasio launched about two years ago, and they were the fastest ever company to become a unicorn (a $1 billion company). They did it in about 18 months.
Thrasio were then copied by a company in Europe called Razor, who overtook them to become the fastest ever company to become a unicorn. And then a whole bunch of other ones popped up.
But what I noticed was that nobody was doing this yet in APAC. And so, I started to think, “Hold on, I think maybe there’s an opportunity here.”
He saw that Thrasio raised $3 billion to buy eCommerce websites!
Adrian: I researched and spoke to 10 people at Amazon, 20 people at eBay, and a few at Catch. I wanted to probe the market and see the depth of the market and whether there’s an opportunity.
I came out of that research with the realisation that there’s a colossal opportunity in this part of the world and then started to build out the plan.
Matt: Well done! You saw the model Thrasio was following, buying up e-commerce sites. They’re called an aggregator, and how much did they raise?
Adrian: $3 billion.
Matt: You just heard Adrian say they’re the fastest-growing unicorn, and that’s through buying websites. Now admittedly, it’s e-commerce sites, which are not what we teach here, but it’s still buying websites.
Adrian decided to quit his corporate job to become an online entrepreneur
Matt: So Adrian, you saw this idea, realised no one is doing it down here in Australia and New Zealand. Were you still in London at that time?
Adrian: No, I was working for Boston Consulting Group based in Sydney.
I moved to Sydney two years ago, in July 2020. And then, after six months here, I left my corporate job to make money online.
Matt: Like a true entrepreneur!
How Adrian co-founded Una Brands to create the largest eCommerce aggregator in Australia
Matt: So, you’ve only been doing this for two years. You went out, got some mates together, and you all co-founded Una Brands?
Adrian: That’s right. There are five co-founders of Una Brands. We were put in touch with each other through various means, but mainly through investors.
I started reaching out to various investors to get funding for this. I came across one group of investors who said, “Adrian, we love the idea. We think this has big potential in Australia, but we can’t invest in you. The reason why is because we are already speaking to Kiren.” Kiren is my co-founder.
They said, “Kiren’s based in Singapore, but we know he wants to go to Australia. So, we don’t think we can invest in both of you. But why don’t you guys have a conversation and see where it goes. Maybe you can work together.”
So, I had a conversation with Kiren, and we decided to pair up and form a pan-APAC version of this business model.
Matt: You literally met through the fundraising process, introduced via the private equity funds.
Adrian: That’s exactly right.
Matt: Wow. And so, you started doing this based on an idea.
He had no prior experience in buying websites for profit – so this is how he learned his digital skills….
Matt: To help inspire our community, Adrian, here’s a question for you. I know you did your startup. But how much experience did you have online when you got this idea with e-commerce sites?
Adrian: I was very new to e-commerce. My previous experience had been working in consulting, specifically in retail. Some of that was online, but I’d never run an e-commerce business myself.
The first thing I did when I wanted to kick this off was figure out how to run a business. So, I started a very small Amazon business called Plarrow Sports. We sell pickleball paddles.
At the time, pickleball was the fastest-growing sport in the world. In fact, it still is the fastest-growing sport in the world.
By the way, this is totally independent of Una Brands.
This was an educational exercise for me to pick a product, pick a manufacturer, launch some PPC, and get a bit of a community and a website going.
And the business just took off, so it’s been a fun little side hustle. But it really was just for educational purposes.
Matt: That is brilliant. I love it.
The co-founders of Una-Brands all bring their unique digital skills
Matt: When you look up Una Brands, all your co-founders have come together because you originally had this idea. And you got out there with some private equity firms, and that’s when you’ve all met, is it?
Adrian: Well, there are different stories for each of us. We have one guy who’s the CTO based in India. He had previously worked with Kiren, my co-founder, so they already knew each other.
Kushal has the same story as me. He had also seen this successful business model, wanted to launch a Singapore version, and was looking for fundraising. So, he was put in touch with myself and Kiren through these fundraisers.
And then Tobias, the last guy, joined us from Lazada, and brought real deep e-commerce expertise.
Matt: He’s one of the private equity firms, isn’t he?
Adrian: Tobias joined us from Lazada, which is essentially the APAC version of Amazon. So, he has a real operational background.
Matt: Okay. That’s the team, and this was only two years ago.
How do you raise $55 million to buy websites?
Matt: Out of interest, what was it like to raise that money in Sydney two years ago?
When you were talking to people, would you say, “I’ve got this idea. I want to go out there and buy up a stack of websites. Can I have some money?” Is that essentially the pitch?
Adrian: That’s exactly the pitch.
I would say the funding environment changes based on the economy’s stability. That was definitely a boom period for raising capital.
Everything was going in a positive direction, particularly for e-commerce on the back of the COVID bump. But also, there were very low interest rates for a long period of time. There was also a booming NASDAQ and other things.
You get a lot of rejections too. But at the same time, that was probably a very good period of time to be raising capital.
Within 2 years Una-Brands has over 200 employees
Matt: And now, you got $55 million, and things have changed dramatically. For a start, you’ve now got 60 employees.
Adrian: Well, we’ve got about 200 employees now.
Matt: Oh wow.
I know you’ve brought on an operations person with deep expertise equivalent to Amazon. But for you personally running this, what’s that rollercoaster been like over the last two years?
Adrian: It’s been a super fun journey.
As you can imagine, I didn’t expect it to take off as quickly as it has. So, it’s been a big learning curve. There are lots of successes to celebrate, but also a lot of learnings along the way.
One of the things that’s new for me is managing a team and managing people. In my previous role, I’d managed a couple of people here and there on different projects, but I’d never put together a big team.
So, the experience of managing large groups is one of the things I’ve really taken away from it.
Matt: I can only imagine that baptism of fire going; you’re a young guy, there’s a lot of responsibility with $55 million, but also with 200 people to manage.
The benefits of selling your website to a big buyer
Matt: So now down to the nitty-gritty; the actual part that drives your business is buying these websites. That’s the key here.
Adrian: Yes, the buying and then the growth after acquisition.
Matt: That’s right. So, do you want to explain your model? And then can we have a look at your buying criteria and what’s happening there. In a nutshell, what’s the model that you follow?
Adrian: Sure. We buy small e-commerce businesses. Typically, they have revenue between about $2 million and $20 million. And then, we invest post-acquisition very heavily to grow the business and turbocharge the growth.
Benefit #1 – A big buyer has the funds to grow your online business
Adrian: By merging these businesses on the back end, you get a whole bunch of benefits. From a cost side of things, there’s enormous operational efficiency.
To give you one example, we have a consolidation warehouse in Ningbo, China. So, all the brands put all their products into this one place, and then we send it all in one go.
That means we get much cheaper shipping rates than if you ship as separate companies. All across the supply chain, you get that type of scale benefit.
Benefit #2 – A big buyer has the connections to grow your business into bigger markets
Adrian: And then, on the growth side of things, we are able to launch our brands into multiple markets, multiple channels, and launch new products very quickly because we have the expertise.
For example, getting it onto Walmart in America is very difficult. There isn’t a phone number you can call, and our experience is they’re not a super seller-friendly organisation.
But it is much easier for us because:
- If you come to Walmart at scale, they’re much more likely to talk to you.
- And once you’ve got one business in, you can then use that as your Trojan horse to put the rest of the businesses in.
That makes the whole process much quicker and easier.
What type of websites are Una-Brands looking to buy?
Matt: So, you’re building up this portfolio of websites. What is your buy price (the size)?
Adrian: The revenue is typically between $1-$2 million, all the way up to about $15-$20 million.
Matt: What’s your typical buy price at the lower end of the scale, and then up to the higher end?
Adrian: The way we value our business is based on the last trailing 12 months’ profitability.
We typically buy businesses for about 3 – 4.5 x the trading 12-month profitability.
The profitability metric we use is called the SDE, which stands for the Seller’s Discretionary Earning. That’s a uniform standardised way of looking at the profit for these types of businesses.
Matt: What’s the smallest deal you would look at?
Adrian: Let’s suppose the business had revenue of about $1 million and a profit (or an SDE margin) of 20%. That would be about $200K profit.
If we bought that business for say 3x the annual profit, then that would be about $600K. We then purchase the inventory on top of that. And the inventory in that scenario would probably be another $200K. All in all, that’s about $800K.
We then also offer a profit share mechanism and an earn-out.
Why online business owners are choosing to sell their websites to Una-Brands
Matt: What typically happens for the seller? For anyone who’s reading this who has a smaller e-commerce site, what happens then? Do they get to join Una Brands as well?
Adrian: We will typically offer an earn-out broken into two components:
- One is a stability payment, paid at the end of the first year, on the condition that the business has remained stable. So, we’re not expecting major growth, but just that the business hasn’t fallen off a cliff.
- And then the second component is more on the outside, which is that we’ll pay 50% of any increased profitability for a fixed period after the deal’s closing.
Matt: I like that. Do you find that attractive to the sellers?
Adrian: Very much so because people have poured their heart and soul into these businesses. They really want them to succeed and believe in their businesses.
One of the differentiating reasons why people will choose Una Brands over another company is because they believe in our ability to grow their brand.
The upfront money is important to people, but at the same time, this is their baby. They don’t want to see it just die.
People say to us, “Wouldn’t it be cool if in two years, I was walking around London and I saw my product on a billboard and whatever.” There is that desire to see the brand succeed, which the profit share mechanism supports.
Is there an opportunity for sellers of smaller websites here in Australia?
Matt: How are you going with finding the deals here in Australia? Has that niche worked well? What’s the opportunity here in Australia for Una Brands?
Adrian: There are many more brands here than I expected when we initially kicked this off.
Australia seems to be a hub for e-commerce businesses. I know that many look at content businesses, and the content community here is enormous as well. But there are just so many of these independent brands.
Australia has a global reputation for natural and Bohemian-type products with good design and characteristics. We’ve found loads of really great businesses here.
Matt: So, you’re not finding it difficult to find deals?
Adrian: No, absolutely not.
Matt: That’s awesome to hear.
How does Una-Brands value the websites they buy?
Here’s what Adrian looks for when doing his website due diligence – and how you can prepare your own website for sale…
Matt: We’ve talked about valuing these websites. You’re buying up this portfolio of websites. Are there any quick tips you can give that you’re looking for when you’re doing the website due diligence?
Adrian: Well, there are a few things that make the due diligence much more straightforward, which people can do to their businesses.
Tip #1 – Get your books in order
Adrian: One, ensure you get all your books in order to segregate your business from your personal accounts.
We value many businesses where we are trying to keep things apart. For example, was this expense for my personal telephone or part of the business?
It gets very painful, and it’s more likely that the deal will trip over somewhere.
Tip #2 – Know your time spent – the less time needed to run the website, the better
Adrian: Secondly, one of the questions we ask people is, “How much time per week do you spend on your business?”
The lower the number, the better for us. If somebody spends 10 hours a week on their business, that’s a super simple business. It’s going to be easy for us to take over and manage.
One of the ways you can create a business like that is by cleverly outsourcing everything you can. You can use software and technology to streamline your processes.
Obviously, your business needs to get to a certain scale before you can do this. But outsource your tasks to a virtual assistant or tools like Helium 10 or Jungle Scout, where you can.
There are 20 different tools that you can use that really reduce the number of hours that you have to spend on your business without costing an arm and a leg.
Matt: So, the big thing you really like to see in these websites is fewer hours and a semi-passive website business?
Adrian: Exactly right.
Matt: The more passive it is, the more valuable it is to you as a buyer?
Adrian: Yes, that’s right.
How can you outsource your eCommerce website and increase value?
Adrian: For example, this is specific to e-commerce, but if you’re doing your own fulfilment from your garage downstairs, that will be difficult for us. So, you would put it into a 3PL, a third-party logistics provider.
More often than not, you’ll find it’s cheaper than doing it yourself anyway. You get better rates, fewer product returns, better customer service, and more efficiency.
So, there are lots of things that people can do to prepare their business for sale.
Matt: For all our readers, the message here is to learn how to outsource as your online business grows. As you’ve just read, Adrian has $55 million to spend on online businesses, so get outsourcing setup on your websites.
Where does Una-Brands buy their websites?
Matt: Here in Australia, where are you buying these deals? Do you go through website brokers, or are you making private approaches? How are you purchasing these great websites?
Adrian: We do use leading website brokers, including Flippa. But the majority of our deals come from direct outbound research.
We have a tech team in India, and one of the things they have is scraping algorithms. They scrape all the e-commerce websites; Amazon, eBay, Catch, Kogan, Lazada, and Shopee.
They provide us with lists of businesses, and we then have tools to filter out which ones look attractive to us. We then literally just email them and pick up the phone.
Matt: You email the owners, and that’s how we’ve always done it too. That’s where we get our best deals.
The benefit of buying websites through private deals
Matt: Website brokers are awesome at bringing in outstanding businesses, but you have to pay the full price. Direct approach is very effective, and it’s interesting. Is that your preferred method?
Adrian: Absolutely, and it’s our main channel.
Realistically, for really good businesses, the owners haven’t even thought about selling them. So, you’re the first person to have that type of conversation with them.
Matt: You’ve got a huge advantage, and maybe our readers can think about this way of structuring it too.
You come in as Una Brands, and the business owners will Google you. They’re going to see not only do you have money behind you, but you can offer them that nice upside, that continued ownership.
Adrian: Yes, that’s right.
Matt: We teach that as well, where you can negotiate any deal when buying a website. You don’t always have to pay the full amount. You can do an earn-out or offer a share in, they can leave 10 to 20% in, etc.
It’s good for the owners if they deal with you as the buyer. They get to take some cash off the table after all their years of hard work, plus they can still stay in the business and grow it. They’ve got the security of being part of Una Brands.
Adrian: That’s precisely the value proposition that we offer.
This is why Una-Brands don’t flip websites…
Matt: What’s your plan with exits? I know private equities like to see shorter-term exits, so where does Una Brands go from here?
You’ve got this profile of websites. So, is it planned that you’re going to do an IPO? Are you going to list it on the stock exchange? Or are you going to exit at a profit?
Adrian: We’re not an investment fund, so we don’t buy and flip businesses. We are more of a house of brands. So, you can consider us a digital version of Unilever or P&G.
For us, the long-term plan is to IPO. Or there could be a potential merger or acquisition with other aggregators or other strategic buyers. That’s how we look at an exit.
Matt: So basically, Una Brands is a long-term buy and holder of websites?
It would literally just keep growing. You own a portfolio, and that’s your business; just buy, hold, and grow.
Adrian: Exactly right.
Una-Brands strategy for growing ecommerce businesses
These are the 4 levers Una-Brands use to add value to existing online businesses…
Matt: What’s the main growth strategy? Obviously, the selling bit is not important for you guys, so presumably, you want to grow these brands.
What key things do you do to grow these brands once you bring them on board?
Adrian: From a revenue perspective, there are typically four levers that we call:
- Digital Marketing Optimisation: We do a full brand refresh of the website and the listings in terms of SEO optimisation and content marketing.
- International Expansion: If your brand is only selling in Australia, we’ll expand you into the United States, the UK, potentially Singapore, and other countries in the region.
- Channel Expansion: Typically, people might sell on their Shopify website, but they haven’t looked much into Amazon or eBay. So, we’ll expand the scope of the channel reach.
- Product Expansion: We have a product development team and a sourcing team based in China who can assist with product development.
Matt: Awesome. It sounds like you’ve got a nice, very straightforward system. And it’s cool because you can also explain that very quickly to the owners you’re acquiring. You can show them a clear growth plan.
If you own an existing small website – selling to a bigger buyer could be a huge advantage for you
Matt: The majority of people reading this have relatively smaller websites. So, that can be the advantage of selling your website to a bigger buyer.
They can’t pull those four levers themselves as they don’t have unlimited funds. They need the profits to live off. And so, you can come in and really drive these businesses.
Adrian: That’s exactly right. We have the resourcing capability to drive that growth.
To give you a sense of our flavour:
- We have a 20-person digital marketing team based in India.
- We have a sourcing and procurement team based in China.
- We have an operations and logistics team in Singapore.
- We’ve got a tech team in India.
- And we’ve got a growth team based right here in Australia, which looks at international and channel expansion.
Matt: This is pretty cool and what we used to do when selling traditional offline businesses.
We would sell to private equity firms like yours or big corporates. You buy up small businesses, get them to a certain level (especially when you’re a young entrepreneur), and then sell them to bigger guys like yourselves. It’s a win-win model for everyone.
Our audience wants to work at home and start a side hustle.
They can build up a site over a couple of years, and then there’s always a buyer like yourself who has unlimited funds to take it to the next level and grow it. It’s a great ecosystem out there.
Adrian: That’s right.
Adrian Johnston’s advice for becoming an online entrepreneur
Matt: That is so awesome, Adrian, and a big thank you for sharing exactly what you guys do. Hopefully, any of you reading this just got some awesome lessons there.
Bringing it back to yourself, Adrian, running this and thinking of your journey, do you have any advice for beginners? Because it was only two years ago that you were a beginner in doing this.
What advice do you have for someone who’s maybe an ex-professional person wanting to quit their job? Or for someone who just wanted to have a crack at this?
Knowing what you know now, have you got any advice for those guys?
Adrian: One piece of advice is to keep your ear to the ground regarding what’s happening in other markets.
For me, the real big break was spotting something successful and then bringing it into a different context and a different market, then adding some innovation that makes it work here.
But really, it was being very connected and in touch with the developments happening in other markets.
Matt: Awesome. And from paying attention to what’s happening in other markets, you got the multimillion-dollar idea. You’ve gone out and made it happen in the space of just two short years. That is absolutely awesome.
This is fantastic advice – look around and keep your ear to the ground; look out for those opportunities. You executed, and that’s what is so important.
Liz and I are Angel Investors, and we’ve seen over the years that everyone has a great idea, but it’s all in the execution.
Searching for opportunities in online business requires brave new thinking…
Matt: Adrian, I did look up your valedictorian speech, and you titled it, “We should all be rule-breakers.” Where did you come up with that? Obviously, that’s helped you here, but give us some context around what you spoke about at your valedictorian?
Adrian: The idea here is that people tend to associate what’s been done previously with how things will be in the future. But the big way that innovation happens (and that change happens) is by being confident enough to break the rules of what’s been done previously.
The context that I was giving in that speech was concerning climate change. For us to transition to sustainable energy, if we’re not going to be able to do it by using the rules of the past, it’s going to take some pretty brave new thinking (and brave new actions) on that side of things.
The same is exactly true in business. And so that’s how I think about it.
Matt: That’s fantastic. I mean this most sincerely, too; seriously, well done.
I was grateful when you came up to me and introduced yourself. We’ve coached many people over the years, and I think you’re the perfect example of someone who’s come up with an idea. You’re driven, and you’ve just gone out there and executed so well in this industry.
You started out as a maths teacher and then got into corporate. And now you’re running this big organisation of buying and building a portfolio of websites.
I want to say big congratulations. This is such an inspirational story.
Adrian: Thanks a lot. That’s very kind of you to say.
Looking for a big buyer to sell your website to? Here’s how to contact Adrian…
Matt: We’re really appreciative of you sharing this with us. If someone out there was listening to this and maybe thinking of selling their e-commerce site, what’s the best way to get in touch with Una Brands or yourself? What would you like them to do?
Adrian: We’re always looking for great businesses to buy, so definitely get in touch.
Matt: Thank you so much, Adrian, for coming along today.
Adrian: Thanks for having me.
Interested learning more about building small websites to sell to big buyers?
Matt: If you want to hear more inspirational stories, then checkout the eBusiness Institute student success playlist here.
But also, if you’re just starting and want to learn how to buy websites (and learn the skills that Adrian’s got), then attend our free masterclass, where we go through our strategy, very similar to what Adrian just talked about. Register here.