Who is Mushfiq Sarker and why is he famous?
Based out of Chicago, Mushfiq is one of the most prolific internet HoldCo builders. Since 2008, he has been acquiring, improving and “flipping” internet real estate, such as content-based websites, newsletters and marketplaces.
All in all, he’s flipped 220 websites so far. The guy’s a machine!
What’s more, he has done so in public. TheWebsiteFlip.com is a treasure trove of resources, such as: listings of brokers and marketplaces; due diligence checklists; and, crucially, step-by-step value creation playbooks based on actual case studies.
Since Mushfiq is very buy – and I’m far from the first person to interview him, I kept our Q&A short. If you’re curious how Mushfiq got started; what his day looks like; and how much he makes, you should check out the 1-hour interview he did with Jon Stoddard from the Top M&A Entrepreneurs podcast.
Mushfiq’s investment criteria
AP: In your interviews and blog posts, you put a lot of emphasis on two aspects. One, the turnaround aspect. Two, the quick flip. At the same time, we see a lot of permanent capital pouring into software rollups. Could newsletters and websites be next?
MS: I like to acquire assets that have easy wins. Wins that can be notched up in the first 1-3 months, resulting in increased revenues for example. That doesn’t mean that I will necessarily trade the asset.
In my portfolio, I have businesses I’ve owned for 10 years. I need to see if a business is the right fit for my portfolio, my interests, and my team. I keep the ones that are a fit. I sell the ones that aren’t. These are not bad businesses per se. They are just not a fit for me.
My investment philosophy can be summarized as buying businesses that offer both immediate turnaround potential and downside protection. Can I sell the business for at least the amount I paid for it? Is it cash flow positive? Which is different for many first time acquirers: they just want to buy a business. They don’t properly analyze its cash flow potential because they’re under pressure to deploy.
Managing increased buy-side competition
AP: Acquisition marketplaces like Flippa and Empire Flippers have surged in popularity in recent years. Their listings have swelled. However, buyer ranks have swelled even more. Is it getting harder to spot a bargain? How do you stay ahead of the curve?
MS: I’ve been buying off Flippa ever since they started. I have witnessed the growth of the marketplace and broker industries. Competition has definitely increased. Compared to even a few years ago, your average seller is much more aware of how much his/her business is worth, and ways in which it can be sold.
Because of that, and increased buy-side competition, I don’t see as many bargains as I used to. Competition has probably tripled in the last couple of years.
AP: The good deal flow is harder to come by, and yet you’re managing to make lucrative investments. How do you maintain that edge? When I spoke to Dominic Sullivan from Flippa a couple of weeks ago, he talked about building a personal connection with the seller. Any other tips?
MS: Hands down, it’s hard for first-time buyers. The easiest way to get started is to buy off marketplaces, where I’m also a seller. And yet, when first-timers reach out to me, instinctively I don’t trust them. Why? Because I know that many of them are wasting my time. They have no idea what they want to buy.
Here are some words of advice if you’re looking to buy from me on Flippa:
- Give me a run-down on who you are. Do you have a website, a LinkedIn or a Twitter account I can check out? Feedback from other sellers?
- Describe what your offer could roughly look like – no opportunistic lowball offers please!
Why many SaaS founders struggle with marketing
AP: Your holding company Inventige does much more than buy and flip websites. Tell us about your other businesses, and how these came to be.
MS: I bought my very first website back in 2008. Back then this type of activity didn’t have a fancy name like “HoldCo”. I was just a guy with an LLC buying intangible assets. Then in 2019, I left my day job. A side hustle became a full time occupation.
First thing I did was launch a newsletter that talked about acquisitions. With that, I’ve been getting more deal flow. Gradually, we began to transition into bigger deals, beyond websites. We started a few agencies. We bought a few agencies. Recently we acquired our first marketplace.
It was a natural transition. Our core competence is organic SEO. Growing traffic on websites. This expertise can be applied to any type of online real estate. Whether we’re talking about video content, social media or enterprise software. What’s more, most SaaS founders aren’t marketers by background. They tend to come from developer or product backgrounds. They tend to outsource marketing. We, on the other hand, follow the opposite approach. We outsource development work because it is highly structured. Let’s say I need feature X, and I need it done in a week. I can plan around it. Whereas marketing is more of an art. It takes more time. You have to know what to promote. It doesn’t always work according to plan.
With this tried-and-tested playbook, we don’t need to own 100% of an asset. We’re also open to partnerships where we receive a percentage of equity in return for operational value add.
Would you be interested in partnering with Mushfiq and his team? Get in touch on [email protected]
