Welcome to the 2X eCommerce Podcast. The 2X eCommerce Podcast show is dedicated to digital commerce insights for retail and eCommerce teams. Each week on this podcast, we interview either an eCommerce expert, a founder of a digitally native consumer brand, or a representative from a best-in-class commerce SaaS product. They have a tight remit to give you ideas you can test right away on brands that you run to improve eCommerce growth metrics such as conversions, average order value, repeat customers, your audience size, and ultimately your gross merchant value or GMV or sales. We are here to help you sell more sustainably. Welcome to The 2X eCommerce Podcast.

—

This episode is a special one. I’m joined by my business partner, Ayo Disu. Hi, Ayo.

Hi, Kunle.

How are you doing?

Not too bad. I’m doing well, thank you.

Is this your first podcast appearance?

This is the first official podcast appearance. When I was on holiday, I went on a radio show.

You haven’t told me about that one.

It was a random thing. We went out one night and some guy was like, “You guys look cool. You look interesting. Would you like to come to my radio show?” We’re like, “Why not?”

What country was that?

This was in Miami.

We have known each other for over a year. It was February or March of 2021. We’re building something. And I thought, “This format is the best way to bring it to the fore and let the audience know about what we’re doing.” Before we jump right into that, to give people an idea of what we’re doing or a glimpse into what we’re doing, I’d like you to give a bit about your background. Who is Ayo?

I was born in Lagos, Nigeria. I then came over to England for boarding school and then schooled here more or less. I then worked in private equity for a while for a $200 million fund called Verod Capital doing buy-side work. Those exposed to industries like TMT, consumer goods, financial services.

What is TMT?

TMT is technology, media, and telecom. I was doing that and looking at some deals there. After that, I did a Master’s at Cass Business School in management. After that, I worked for a family office. I’m leading their digital transformation and fundraising initiatives, which was pretty successful. It opened my eyes to this digital first-world. It led me to do another Master’s in business innovation and e-business. It’s something that you and I share a passion for. After that, OCP was born.

What is OCP?

OCP is Octillion Capital Partners. What we do is that we’re looking to acquire diamonds in the rough eCommerce businesses, direct-to-consumer businesses, as well as marketplace businesses. The goal is to improve their operational efficiencies by looking at a customer-centric, socially conscious, and omnichannel expansion approach that could potentially unlock retail opportunities as well as fundraising opportunities for these brands. With the brilliant head of Kunle Campbell leading our operational activities as well as helping with the sourcing and diligence of these businesses, we’re really onto something.

I would accept the accolades there. I’ll give you my own story. I’m writing a book. I have this never-ending project. Touchwood, it will happen. I was trying to write a bio for the book. I recall when I was searching for universities, Master’s back in the northeast. I applied to the University of Birkbeck, Warwick, and Westminster. They all had e-business degrees. The two of them rejected me, Birkbeck and Westminster. Warwick, the top seven school, accepted me. I told my folks, “Bye. I’ll see you guys later.” I took off.

I was trying to juggle my memory on Birkbeck. I typed up e-business Birkbeck and your profile popped up. Months prior, I’d been reading a lot about private equity. I got an audiobook. When I want to get into stuff, I would tend to read at least 3 or 4 books around the stuff or listen to podcasts. I would search through Spotify or iTunes. I came across your profile on LinkedIn and I was like, “This is what I’m doing. Let me hit you up.” We had a meeting. You put me in your Notion as a low priority if I’m not mistaken. That’s how most stories start.

I remember you sent me a message. I didn’t respond for maybe a day or two. I was a little bit busy. We finally caught up and then I was like, “Woah.” I like the approach. The way you came about was nice. When we finally spoke, we got on. The openness from your end, most people would think that shows weakness. For me, it showed your strength. It’s been a pleasure.

My Mrs. says it’s TMI, too much information. She keeps nudging me, “TMI.” I looked into what you’re doing at OCP and we kept things going. One thing that struck me was how organized you were, how prepared you were with what you were doing from a search fund standpoint, an acquisition company standpoint. We synergized a bit and dipped our feet in the waters a little bit. We’ve been through over 250 deals. We hired an exec over there at the time who was going through deal flow for us. We were going to make an acquisition. We go further up the value chain. It’s been incredible.

We’ve spoken to 60 or so founders and sellers of their businesses. For some of these guys, it’s life-changing. Some are stuck with their businesses. Others want to do something more meaningful. Others have hit a plateau in terms of know-how in finances. We’ve bought in an opportunity for undervalued businesses and people keen to sell their eCommerce businesses. What would you say our mission is? You talked about acquiring, building, and growing culture-defining commerce brands. Deeply, what is the mission of OCP?

For us, we’re looking to take these businesses to a new level that could not only make a significant impact in the finances but also in the community for each one of those businesses. If we buy a business that has roots in maybe some wildlife preservation or something like that, we can look to do something good in that space also.

We’re in a unique position because we’re going to own portfolio companies and each of those portfolio companies might be in different areas. We can maybe have an impact in all those different areas. The goal of OCP is to take companies that are doing well now, preserving the legacy of the owners that we’re buying these businesses from, and then take it to the next level with the goal of doing well but also doing good.

It’s like a parent when their child has done well, “That’s my child.” It makes a ton of sense. Should we give how we’re thinking, our criteria on potential businesses we’re looking for? One thing to note that sets us apart is the fact that we’re boutique. We’re looking at a limited number of acquisitions over the next few years. I want to speak to why we’re doing what we’re doing. We spoke about the mission. You’ve worked in private equity and in a family office. These are substantial organizations. Why the route of an entrepreneur? It’s rough.

The route of the entrepreneur is rough but we have to be cognizant of the new type of entrepreneur, which is the acquisition entrepreneur, which is what we are and what we’re looking to do. We’re looking to buy businesses and take them from more or less like we wanted to as opposed to taking them from 0 to 2. That’s easier and that’s where our skillsets lie. Taking businesses that already have proof of concept and then take them to the next level using our skills, expertise, partnerships with key partners that we have, and building the right team. That’s where I’m going.

In the States, you’re seeing this thing with the SBA loan. What we have is a transition of ownership from Baby Boomers, Millennials, and Gen Zs. We’re transitioning business assets from the Baby Boomers to Millennials who are now the greatest percentage in the workforce. People need to sell their businesses. It’s not always the case whereby if you have a family business, maybe the son or daughter doesn’t want to own that business. Maybe you have to sell the business. That’s what has led me and led us to pursue this path of acquisition entrepreneurship and this buy and build model. That’s what it is.

From an acquisition standpoint, you’re buying traction and buying time. With the right systems in place, you could shoot to the moon. If you know what you’re doing, you’ve done your diligence on the market in which we operate on how the operators are operating it, there is a lot of potential to further drive growth, which is fascinating in itself.

You speak for both of us in regards to why. For me, it’s about freedom for the sellers, giving them life-changing retirement funds. In many cases, some people want to do more meaningful things. Giving it to them and handing over the baton. We being caretakers are patrons to the legacy they’ve built and further grow them significantly, which is fascinating in itself.

On one of the investor calls, they asked you this question and then you said that it’s financial liberation through the exit for sellers.

You said it better now.

No. I had some time to think about it.

We’re in a capital raise. $5 million is what we’re looking to raise. There’s been a lot of traction thus far. We’re looking to close in Q1.

Before the end of Q1 with the way that we’re going. Exciting times. It’s about putting our heads down and doing the work. Let the work speak for us.

With the fund, how’s that going to work?

Our acquisition overview is that we’re targeting for acquisitions. We’re looking to buy businesses between the range of $700,000 to $2 million with $1.5 million being our sweet spot for these businesses. We’re looking to grow these businesses with a time horizon of seven years, more or less. The geographies that we’re looking at are North America, the UK, and Europe. In Europe, we focus on Germany, Spain, and France. That’s a little bit of our acquisition overview.

The target companies have to have a moat component in them. Be it active community retention as exemplified in their retention rates, they should be profitable businesses already. Most of them, the turning profits are between $300,000 to $500,000 per year. Most of them would be a 30% net margin.

They should be operating for two years or more. It’s giving us the ability to study the patterns and identify trends so we can make informed decisions, “Should we acquire the business?” We want a positive and ethical business. We’re not looking for drop-shipping businesses or anything like that. We want real brands that we can grow for the long term and make them culture-defining, like we say.

In terms of sustainability, we’re also on the lookout for people that are doing things that are helping the planet. There’s no greenwashing here. This is a big macro trend. This is something that myself and KC care about. We need to make sure that we are thinking about this. Also, we’re looking out for businesses like this.

We’re not saying we’re going to be buying a business that is sustainable from the ground up. If we see one that meets our criteria, we will. We’re trying to do some things. As we acquire these businesses, we’ll be doing things like implementing an offset at checkouts, creating clear recycling policies, maybe adding or updating the brand ethos, adding new sustainable products, and things like that, small changes.

Today’s consumers care about how they consume, how things are produced, and how things are disposed of. If the numbers make sense and an operator is building something sustainable from the ground up, we’ll be on to it. It’s important for the planet, for consumers, and for longevity. We need to keep us all going.

Let’s talk about how we think from a macro trend standpoint. You mentioned macro trends. It’s important that we talk about it. There was a time we spoke to a macro trend like electric cars on the umbrella of sustainability. Do you want to give an overview of this founder you spoke with? I didn’t get on that call but you got on the call with him. What were you thinking about going into electric vehicles?

For us at OCP, the way we think about our deal sourcing is that we take a macro focus view. We’re looking at or identifying patterns that are shaping the world and then we can then tailor our sourcing activity based on those patterns. For example, with this sustainability company that we could have acquired, the seller was selling accessories for Tesla owners. It’s exclusively for people that have Tesla cars. He’s a young chap, a bright and hardworking guy. He was doing $7 million in revenue around 32% net margins more or less.

He was looking to sell the business and move on to something because it wasn’t his passion. He was having maybe some family thing. He wanted some liquidity or some enhanced liquidity. That’s telling me from a sourcing perspective that we have to think about these things before we acquire a business. We’re not just acquiring businesses because they are profitable. We need to acquire businesses that have the right industry tailwind behind them. We can acquire the business and then accelerate the growth backed by industry tailwind. That’s how we’re thinking.

Backed by industry tailwind is important. It’s the momentum. We’re going in the right direction following those macro trends. We’re potentially looking at a roll-up strategy in that respect if need be. It all depends on what we see when we land. It’s about landing first and then absorbing the landscape and then making the right moves and decisions off the back of it. That’s fairly important. We’re not a run-of-the-mill operation. Should we give entrepreneurs some guidelines on how to prep up their house for potential acquisitions not necessarily from us but to get the highest value in the markets? That is valuable. Do you have any tips for operators?

One is to make sure you have a business bank account that’s separate from your personal account. We dealt with a seller and their finances were a bit muddled up. What that does is increase the time and also complexity. The other thing is to get all your assets ready. For example, if you like P&L, screenshots, and things like that, have them in a file ready to go. If any potential buyer wants to access some of these things quickly, you have it there. It makes it more of a professional and a seamless process as opposed to if they’re asking you for this, you have to wait for this. The buyers can get frustrated because they’re seeing a lot of things in the market, so as long as you’re prep and ready to sell.

The other thing is understanding the multiples of your business. Your business is not valued based on your revenue, it’s based on your net profit. It’s understanding, “I need to take out all the cost to sell. I need to take all the expenses. I can then get my net figure and then use the appropriate multiple to value that business.”

Be flexible to different structures. Maybe you might even reinvest, rollover a portion of your money into the business. You’re like an investor in that business moving forward. There are different things. If you can read any books or listen to any videos. Shopify has a guide as to how to buy a business as well as how to sell a business. Maybe look at some resources like that.

The only thing I’ll add there would be the processes. Make sure you codify everything in your organization. It’s almost like a turnkey. You’re handing over some of the buyer systems. With that, you’re good to go. You’re maximizing your multiples. Build your brand. Build your brand, folks.

We’re all about the brand. We love the brand. We want to buy consumer brands that are listed with real passion.

Speaking of brands or branding, what are your thoughts on brand equity? I’ll share mine. If you don’t have a brand book, if you don’t have an identity, if I go into your Instagram feed and I remove your username on Instagram, I browse through your feed top level and I don’t know who you are, you’re doing a bad job at branding. That should also translate to other experiences. Branding is about experiences and feelings. It’s primal. It should touch people emotionally. It should trigger an emotion when people come across it.

For more quantifiable bits for branding, you should have your brand book and everything should be in order. If an acquirer is coming to acquire your brand, they know your branding systems. You should have systems. Not just systems on how we fulfill orders or how we buy media but you should have a brand system. That maximizes it.

It’s about the feeling it delivers to people, to your audience, to your community. The outcome of branding is community. Sometimes you could brand with certain words and products. If all of what you’re doing is colors and typography and it doesn’t translate to bringing people together as a community or through events or what have you, you’ve not necessarily done the full job on branding.

Before we wrap up, I want to say that Octillion Capital Partners for me is legacy building from my personal point of view. I’ve served in the industry for a while as a helper and I’m still a helper in the industry. Moving into ownership, being an operator is key. That’s one big reason I’m in Octillion. Ayo, do you have any final words?

I’m excited about the future. I look forward to acquiring brands and taking things from there, growing these brands to household names, and making a positive impact on the communities that we serve. We’re looking forward to working with KC and building the team. We have a couple of interesting people in the pipeline that we’re going to be bringing on should everything go according to plan.

We’ve been having some interesting conversations with potential members of our team, all the players, which is exciting. Ayo, thank you.

For those of you who want to find out more, it’s OctillionCapitalPartners.com. Thank you for being here. You’re going to get much more shows in this format. I like the in-person experience, it is completely different from Zoom. Expect more shows in this format. Thank you for reading. Cheers, guys.