Essays for the Acquisitive Mind

Point of Frew

  • Start Here
  • Essays
  • Projects
    • Online Business Ride Along
    • Now Page
    • Online Business Ride Along
    • Appointment Reminder
    • QuotaGuard Static IP’s
    • PutsBox
    • PutsReq
    • Henuby
  • Newsletter
  • Media & Interviews

What is the question that people ask you most often?

July 29, 2020 by Michael Frew

The Problem with Limited Self-Promotion

If there is one question I hear from every friend of mine, it’s a variation of the question, “I’m sorry I don’t already know this, but what is it you do again?”

Wouldn’t this be the best time to have a smooth answer like “I’m sorry, I’m not authorized to tell you that”?

But alas, the truth is much less dramatic.

My teaser answer is, “I work in software.”

90% of people pull up, full stop, and move along to the next topic. Just saying “software” pulls many people into an area they know little about. It’s a field many aren’t excited to talk about at social events.

If there is a follow-up question, I’ve rehearsed my true answer, “I acquire and operate companies, primarily software businesses, in the B2B and cloud application space.”

What They’re Really Asking: “How Does This Guy Make a Living if I Never See Him Working?”

I do zero self-promotion and rarely talk about my career. I’m a proud introvert and a private person. I enjoyed the anonymity and privacy of this type of career choice afforded.

I am comfortable asking many questions about other people while volunteering almost nothing about my own background. When I seem more people-focused, it’s because I’m a well-rehearsed “professional extrovert.”

This fact has led many of my friends to be really close to me without really any understanding of what I love to do, what gets me up in the morning, or what I do all day.

They only know I don’t go to an office, don’t appear to have any job, am rarely out of flip flops, and seem to travel a lot.

With an entirely virtual set of business lines, traveling and working in a bathing suit is not that unique in our industry. The disconnect is that none of my friends knows anyone else that works entirely virtually and online. Since I do almost no self-promotion, almost nobody – including most of my close family – has any idea what I’m doing all day.

The Need For a Bit More Self Promotion

I want to start sharing my work product and lessons learned with my close friends and the world. Hopefully, these essays about my experiences as a software engineer turned online business owner will help.

I believe there is a strong future in the self-directed, small business online investment profession. I likely have a lot to share from what I’ve learned this past decade. If you’re interested in a similar career, hopefully, I can help.

Plus, now when someone asks me what I do all day, I can send them to my own website. Likely, they will find so much more about my career than they ever wanted to know!


Online Business Ride AlongWant to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned?  Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.

Filed Under: Blog

Why Buy Instead of Build

June 21, 2020 by Michael Frew

I have undergraduate and graduate business degrees, yet I never had a single class covering marketing automation, contractor hiring, cash flow management, online advertising tactics, distributed product development, remote team culture, multi-channel customer support, or converting email leads into online customers.

What if everything you’ve been told about starting a successful business, FBA Amazon site, web application, SaaS, or lifestyle business is wrong?

Maybe not 100% wrong… but at least super risky and prone to failure, especially if you’re thinking that starting from scratch will lead to a profitable business?

What if you knew you had over a 99% chance of guaranteed failure? Would you still try?

I bet you know the above is true, or at least said “yes” in your head, because you’ve tried to start your own business, product, service, or email newsletter and failed. I bet you’ve failed many times over.

I know I have. I have failed many, many times.

My Dropbox is full of archived projects, abandoned code, and dormant websites that were great ideas that never went farther than a few customers.

At least I wasn’t alone. Every message board, every discussion thread, every forum that talks about starting a business is overwhelmed with questions about what business, idea, or app someone should pursue.

All of my failed projects were quiet failures; none of these business ideas even got off the ground far enough to make even the slightest ripple across the ocean of commerce.

They don’t count in any organization’s statistics, but for me, they represented a 100% rate of failure.

And let me tell you, it hurts to say that, because aren’t I admitting that I’m a failure too?

Build It and They Will Come

Like almost every individual dying to be independent, break free from the corporate world, and be their own boss, I’ve lost track of the number of business ideas I’ve had, the number of projects I’ve started, and the number of stale domain names I’ve purchased that are still sitting at GoDaddy unused.

We all want to create something and become financially free. Or at least, calling our own shots enough to work for ourselves.

This is where we start searching for advice about “how to start our own business.”

Imagine the challenge to be number one for that search term?

Almost every single result from that search will assume you want to start from scratch with your own idea, and they will help guide you to your first customer, first sale, and first profitable dollar.

These are not bad programs, bad ideas, or bad people. The techniques and strategies they discuss are the building blocks of success for almost every business you could start.

These programs help you generate ideas, flush out a market for your idea to grow, and get you started building and marketing your product or service to a future customer base.

This is really great, isn’t it? People helping people….

Except that 90% of businesses fail in the first year. 95% of all businesses fail within the first five years.

And that doesn’t count the millions (likely billions) of small business ideas that never even get to the point where the SBA would even count them as a “business” to include in their statistics.

None of my dozens of failed ideas count in those numbers above because those projects never had a client, customer, product, or a dollar in revenue.

It would be safe to say that 99% or more businesses never make it to year five.

You can build it, but they likely won’t come.

Why Do People Keep Telling You To Start Your Own Business?

How many results do you get if you Google “start your own business” today?

Google Results for "How to start a business"

Okay, I did not expect 7 BILLION results when I rhetorically asked that question in my head.

Yet, that goes to show how many people are possibly asking the wrong question, getting potentially the wrong answer, and not setting themselves up for long term success.

It’s no secret that many of the people selling you “how to start your own business” products are creating their own business from selling products teaching you how to “start your own business.”

Look at Ramit Sethi – a guy I very much respect and learned a ton from over the years – and what he is doing today. When I first started following him a very long time ago, his business was sharing financial advice for new college graduates.

One of his largest product offerings is teaching other people how to…wait for it…start their own business. (He still does financial advice, mainly because Ramit is an all-around good guy who shares his knowledge with customers to help them succeed.)

The reason these gurus changed their focus from their first successful business to selling information about You starting a business is that it’s a hell of a lot easier to make money selling the dream than realistically, predictably, and consistently succeeding in starting and building multiple different small business ideas in a row.

Once they realize that, they start packing up what they learned from one or two of their successful ideas and teaching what they believe are the principles that made those prior ideas successful.

That’s why you see so much information about “starting your own business” instead of information on why you should buy instead of build. It has nothing to do with the real reason you should be trying to build your business portfolio around cash-flow generating assets. If you want to be managing a profitable business, starting it on your own is easily the worst way to go about it.

Skip the Line In Good Company

The older I’ve become, the more I’ve realized that younger people are mostly focused on building a company. In contrast, older, more experienced, and successful people are more focused on buying companies. This is odd, as most successful startups are started by people in their 40’s and 50’s, but there you have it.

James Altucher, one of those old guys who’s been up and down enough times to ignore at your own detriment, always talks about skipping the line as a strategy for success. “The line exists for those afraid to skip it.”

Did Howard Schultz open Starbucks in his garage, or did he skip the line? You guessed it, he skipped it, bought Starbucks from their management team who wanted to concentrate on Peet’s Coffee and Tea, and made it a multi-billion dollar company.

Did Sam Walton set up his first Wal-Mart from scratch? No, he bought five-and-dime stores and skipped the line.

Warren Buffett was way too smart to build any business from the ground up. After Hathaway Manufacturing and Berkshire Fine Spinning Associates merged into Berkshire Hathaway in 1955, Warren bought stock in the company until he controlled a majority and moved the company away from the failing textile industry into the insurance and investment industries. The rest is history.

Don’t let the bombastic self-congratulatory rhetoric from Silicon Valley pull the wool over your eyes; young people aren’t very successful at starting new companies. Many younger career-oriented entrepreneurs would experience better long term success by saving money to make their first acquisition with the same focus many families use to save money for a down payment on their first house.

When you’re older with more experience and wisdom, you are in a prime position to choose between either acquiring an asset to manage or building one from the ground up.

So how should you choose?

Which Would You Choose?

This brings me to my final question, based on what I’ve described above, how should you approach your next business venture?

Let me propose a scenario…

Which would you rather have :

  • Business A) A great idea, no product, no revenue, no market analysis showing anyone would pay for your idea, no website, no customers, and no prospects. A lot of startup costs offset by zero income.

  • Business B) A tangible product or service, cash flow positive earnings, multiple engaged customers, functional website, profitable marketing funnel, growing email list, tax benefits, and SEO juice in Google.

If Business A is your preferred method for creating success, then there are many places where you can find more information on making that dream come true. Unfortunately, this is not one of them. This is a practical place, not one of fantasy.

If Business B sounds like a better idea, then you’re in the right place.

Buy Instead of Build

I am not going to spend much time on ideas or techniques for starting a business on this website.

This website will only be about acquiring appropriately sized businesses for your asset portfolio, keeping them manageable, scalable, growing, and positioning each entity for a potential acquisition just in case you decide to sell.

No slow ramp up like when you start from the back of the line; we’re skipping the line and investing, growing, and earning from day one.

If that might be of interest, I encourage you to look around at some articles and sign up for my newsletter.


Online Business Ride AlongWant to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned?  Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.

Filed Under: Blog, Buying Online Businesses, Featured

Unknown Unknowns of Buying Online Businesses

June 5, 2020 by Michael Frew

“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tends to be the difficult ones.”

We’ve all heard the Donald Rumsfeld quote about the “Unknown Unknowns” by now. It’s easy to laugh at until you find yourself faced with a situation where an unknown unknown from a business you bought, or a project you inherited, creeps up and surprises you. Hence, that is why they “tend to be the difficult ones”

One of the biggest unknown unknowns in taking over and running someone else’s project – whether it be their code base, their old business, or even a school project – is where the former user failed to point out – either on purpose, or malice, or through sheer neglect – a few details about their project that are essential for your long term success and viability.

I would wager that it’s not even possible to remember every single detail one would need to share with a potential new business owner, no matter how small or insignificant the business project may be to the seller or buyer.

Even the simple sale of a basic, low 5 figure Amazon Associates website will have a few particular unique qualities about it that might not be properly conveyed to a new owner.

Amazon Affiliate Unknown Unknowns

Many years ago, I purchased my first Amazon Associates affiliate website to get my feet wet and see if acquiring websites as assets for a portfolio of cash-producing investments was something I would enjoy. (The answer turned out to be a resounding Yes!)

What the seller forgot to mention was that all of the tracking ID’s that were passed to Amazon when a user clicked on an Amazon product link weren’t really set in the Associates WordPress plugin where it appeared they were set. Those settings were actually overridden from a different location, leaving the sellers associate ID’s intact and mine “accidentally” overwritten.

Basically, the seller was hijacking my affiliate tags and substituting his despite it looking like mine would be used, and I would get credit for the sale.

(Incidentally, this is how Honey works; they hijack the transaction when you click “Apply Coupon” and slip their own associate ID into the mix, removing the ID of the originator that sent the buyer to Amazon in the first place. For some reason, nobody other than affiliates relying on Amazon Associates for income feels this is unethical, which I believe it is.)

Keep in mind, a broker specializing in transferring Amazon Affiliate websites swapped my associate’s ID for the sellers before transferring the site to me and didn’t even notice that the seller was still going to get credit for future sales. Trust, but verify.

At the time, I don’t even know such a problem was even possible; it was unknown to me that such risk even existed. One could argue it’s known that sellers might try to cheat you, and it’s just unknown how they will do it. Yet, as green as I was, it was unknown to me that someone would try to sell me their site and still keep their IDs in the process, and it was certainly unknown to me how to detect such trickery.

That’s the danger of being new, naive, and not researching as much as humanly possible when starting on a new venture.

Everything I read was public. Anyone could buy the same books and magazines. The same information was available to anyone who wanted it. It turns out most people didn’t want it.

– Mark Cuban on the secret to his success in the computer business

Only after days of digging into the WordPress source code (to solve a completely different problem) did I realize that this developer had set the ID’s in the child theme’s javascript, not via the plugin normally used to set these types of ID’s.

It was a bit of a magic trick – obviously on purpose – where I would change the IDs in the Amazon plugin he claimed he was using to set the affiliate IDs. However, unknowingly, those values were overridden by the javascript affiliate ID’s of his own that were still left in the theme settings. But only a certain percentage of the time, there was a rand() function that only caused this substitution to happen occasionally.

I wonder how that type of seller would trick many non-technical people? They would see a drop in sales immediately after the sale and think traffic was down 20-30% due to the seller removing a PBN or one of the many other usual downticks in income after a sale. There’s little risk to the seller, as the seller is still getting some perpetual income and a purchase price on top of it to boot.

That’s an unknown unknown that I never, ever would have thought of…until I found it. Now I know, but how many more unknown unknowns are still out there that I don’t know about?

Github Code Repo Unknown Unknowns

Could there possibly be unknown unknowns still lurking in a business you’ve been running for 5 years?

Obviously, yes, there could be…

Alerted by Dead Man’s Snitch to some issues with one of our proxies, we slowly discovered that a library we depended upon had been deleted in Github.

How could that happen? What library did we depend on – that we didn’t control – was lurking in our code?

After considerable digging, reviewing backups, and head-scratching, we realized that a prior developer that worked for us was cleaning out his Github repos that he didn’t use any more. He was interviewing for a new position and wanted to clean up his Github profile…a completely logical and sensible move.

Yet, one of those repos he was cleaning up was inserted at some point in the past into our codebase when he worked for us, but it still was called by one of our processes. Obviously, deleting it caused the problem.

The solution wasn’t too hard. We could pull back an old copy of the code and bring it into our private repo. However, what a shock to find that someone who was no longer with our project still had his hands deep within our business!

I’ve been at the helm for over five years, and a developer was able to slip in his own code into the project, leave, and still be able to bring my business to a screeching halt.

That’s pretty much the worst of the unknown unknowns.

Should I have caught it beforehand? Well, I guess so, I’m the owner, and all responsibility falls on my shoulders, the good and the bad.

However, our product is fairly distributed, and I’m not sure, even if I knew that there was code in our files that we didn’t fully control, that I could have found this particular situation.

There still may be some remote library reference that could go offline in the future and catch us completely flat-footed.

The only known thing about that situation is that it will cause a problem at the worst possible time because that’s how it always happens. That I do know.

Challenges for Non-Technical Buyers

I believe that one of the hardest parts for non-technical buyers of technical/online businesses is that by not knowing the nuts and bolts of the underbelly of the business, their blind spots increase, and the number of unknown unknowns that can devastate your cash flow increases exponentially.

I’m not saying that non-technical people shouldn’t buy an online business, far from it, but what I do want to point out with this essay is that not knowing how to build what you are running carries an unquantifiable risk.

In many ways, I think of online business buyers, like myself, like general contractors. General contractors (GC) manage a large project from the top, overseeing resources allocation, scheduling time management for personnel and little bits of code, and taking responsibility for the results.

What I don’t see very often is a construction project with a lead general contractor who has never worked in construction on his or her way to reaching that top-level status. In fact, I would expect that all GC’s know the fundamentals of electrical wiring, bricklaying, fabricating a structure, and framing a house. When you’re going to operate a business solely based on the Internet, technology, and code, and you don’t know your DNS from your DMZ, there’s a considerable amount of risk introduced by that lack of knowledge.

If you aren’t knowledgable in the area of business you prepare to invest in, you owe it to yourself to spend some time learning about the fundamentals of technology and online companies before you risk your time, money, and reputation on a business that’s completely virtual, rarely understood by outsiders, and difficult to protect if you don’t know the risks.

I’ll do my best to help educate via sharing my experiences, but make sure you utilize every resource possible. Read books, take classes, even do a small website design project yourself.

That’s the type of focus and engagement with your future that can help eliminate those types of unknown unknown risks…

The Future – Customize Solutions Trojan Horse

I still have an unknown unknown that I have yet to solve to this day.

I purchased a business from a very skilled technical owner who had customized a considerable amount of an open-source shopping cart platform. It created really wonderful solutions for customer problems, but I always had a nagging feeling that something in the platform was there waiting for me, watching my every sale.

The whole business was too specialized, too personal, and too difficult to figure out where every piece fit without intricate knowledge of how each piece fit together and why it was done that way in the first place.

With this particular project, the seller-financed a majority of the purchase price (so he was still invested in the success of the business), and I was always concerned that if he were disappointed in how I was operating the business, he would reassert his control over the entire platform and shut me out of it. Certainly, he had left some Trojan horse or backdoor in there somewhere, right?

What would be my recourse? You can shut someone out of a software business very easily by changing a few permissions, records, or ownership details. Even if you can’t gain full control back, you can certainly keep someone from operating their business at 100% capacity for long enough that you could prevail in a hostile takeover (would that be a “takeback”?).

Was this something worthwhile to be concerned with on this project? Should I have someone looking for backdoors or a name record not properly listed for my business somewhere? Or would that be a paranoid waste of time?

Fortunately, nothing ever came of it, as the business was never harmed (as far as I know).

Yet, that’s the flip side of unknown unknowns…what if you try and know something by assuming it must exist, but it doesn’t?

One could wrap themselves in a pretty tight knot over these types of concerns, fabricated or not.

So what unknown unknowns are there lurking in your business right now?


Online Business Ride AlongWant to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned?  Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.

Filed Under: Blog, Featured, Operating Online Business

Online Business Operations During a Pandemic – April 2020

May 11, 2020 by Michael Frew

Writing this at the end of April, we now have a full month of global shutdowns behind us, with the partial reopening of some Chinese manufacturing and small portions of the US economy.

Many businesses have rapidly adopted a delivery or curbside pickup service to try and keep the doors open.

(If you haven’t read March’s report, you can find it here: Online Business Results During a Pandemic – March 2020 Results)

April QuotaGuard and Pandemic Thoughts (B2B and B2E Customers)

Fortunately, QuotaGuard customers in April continued March’s generally unresponsive reaction to the global pandemic, with a normal level of new customers, growth in current customers, and rate of customer churn.

I made a point of responding in customer service emails that we were running the business as normal since the team was already remotely working around the United States, so the shutdown didn’t require any changes for our support and development teams.

Surprisingly, none of our customers were concerned we’d be unresponsive or working fewer hours.

In fact, I felt that April was one of our busier months. It is not just due to the usual work with customers and continued development, but also because now our offices are full-time out of our homes and since we can’t leave, we can’t really leave the office either. It felt like work was constant and never-ending.

Very few customers mentioned the ongoing business challenges, and even if they did so, it was mostly to wish us health and good fortune in the coming weeks.

Takeaway (Reemphasis): IT Departments Are Essential Businesses…*

Just like I mentioned in the March update, it’s eye-opening how business operations continue on normally for essential IT services.

I would love to pretend this is something I had the foresight to envision when I decided to work on products and services that are part of the cloud ecosystem’s infrastructure. Still, I don’t have anywhere near that level of futuristic insight.

I’ve seen new projects started this month that I would have assumed would be put off for a few months until the economic picture became clearer. Once again, the marketplace disproved some of the assumptions that I believed in heading into this economic headwind.

*…Until they are not

I’ve been developing and managing software projects through a few seminal periods in the last 30 years of seemingly non-stop technology-based business growth.

I learned COBOL for Y2k, shuffled around San Francisco following the crash of the Internet dot.com bubble in 2000, scrambled for new consulting clients during the 2008 recession, and now find myself trying to navigate the Unknown Unknowns of the 2020 pandemic.

Those prior events in my career left me with a strong level of skepticism that this downturn should spare IT spending simply because this time, “it’s different.”

It’s intellectually reckless to believe that IT spending can’t or won’t be impacted by the looming 2020-2021 recession, as those prior implosions decimated vast swaths of technology spending and tech infrastructure companies, just like mine. Yet, fortunately, so far, I don’t see it showing up on the top line or the bottom line.

That leaves me wondering, is IT investment more bulletproof today than it was in the past, simply because IT continues to be more and more of a core aspect of business continuity? Or is the momentum of IT spending just enough to push the hard decisions down the line for a few months before the bottom starts to fall out, as it has in the past?

Takeaway: Price Points Matter…Maybe?

There are many articles and people out there that constantly tell you to raise your prices, raise your prices, RAISE YOUR PRICES!

There is nothing wrong with that sentiment. Many companies have increased their prices significantly, and it has worked out for them very well.

Yet, I wonder how that is going at this very point in time.

The price points we operate QuotaGuard are a line item that’s not (yet) coming under scrutiny for medium to large-sized businesses. Many of our customers are on a subscription plan that’s not enough to move the needle to save a struggling business. Still, it would certainly be a challenge to continue operating without the service we provide for this low price point.

Still, I wonder if that would be the same if our prices were doubled what they are today.

Maybe this is a chance to raise new customers’ prices (never, ever on current customers) and see what happens? I’ll leave that as a thought experiment for myself for another time.

April Appointment Reminder (B2B Customers)

April proved to be right about where I expected it to be for Appointment Reminder based on what happened to revenue at the tail end of March 2020. We were down 8.7% for the month on the top line. Due to some cost rearrangements I’d made a few months ago, the bottom line wasn’t hurt quite as bad, which is very fortunate considering revenue is down around 18% in six weeks.

I hope that there is some stability coming in May as two factors converge; small pockets of business reopening and the exhaustion of the number of businesses that need to cancel because of the pandemic. Only time will tell, of course.

Opportunity from Adversity

One opportunity that will occur in the future is that more companies will need appointment reminder-like services that didn’t need them before.

I doubt we’ll be able to sit in a barbershop for an hour before being called into the chair. The world’s barbershops will now need to take appointments and text their customers when it’s their time to come to get a trim.

This could open up a new market for businesses that never needed appointment reminders previously.

To take advantage of this, I’ve written targeted ads for Adwords, put up landing pages addressing this need for new companies, and will monitor their performance over the next couple of weeks to see if there is an uptick in need for new services in the future. I’ll pass along what I learn in May 2020.

There is Heartbreak. This Is Not the Same Type of Churn

Churn is the enemy of a SaaS-based business. Every churned customer is lost long term revenue, customer interaction, and mutual support.

I get upset whenever a customer cancels on me. I take it personally, even though I shouldn’t. It’s just business; it’s not me.

Yet, I feel they are saying my business that I work hard on every day isn’t worth their support anymore. It can influence my entire day. Sometimes I’m in a bad mood, and I can’t remember why. Then I think about it, and it’s “Oh, that’s right, a $5/month customer canceled this morning…” and it ruins my whole day. Over $5, that’s how much it affects me.

The churn that’s happening now does not have that same feeling. The churn now is one of sadness and empathy. That’s one more business that is scrambling to survive. Our monthly costs are low, so if $49 is the difference between a business surviving or never reopening, I know it’s getting desperate very quickly.

A majority of the people we meet in my life are not business owners. They are W-2 employees, independent contractors, bartenders, retirees from the public sector, etc. Very few of these people understand the incredible toll it takes to start, operate, and sustain an ongoing company.

I believe running a business is one of many noble professional callings because it is difficult to be successful by continually creating and delivering value for your customers for a long time. It is hard. Many business owners do it because it is hard.

Therefore, it really pains me to see owners losing all they have worked for, forced to lose their business, and no way to fight for their own survival.

I do hope I see every customer come back at AR because that hopefully means their business survived and will continue to prosper. We need more business owners running companies, delivering services, creating jobs, and propelling the economy forward. Hopefully, every prior AR customer – whether they return to us or not – is operating again soon and continues that mission for our global community.

It Could Be Worse. I Could Have Tried To Be A Tech Unicorn

It’s tough to complain that AR’s income is going down during these extraordinary few months of adversity, considering we have not had to lay off any staff and are vastly more profitable than AirBnB, Uber, and WeWork combined.

None of those companies ever seriously planned for adversity, and they are now suffering for that lack of foresight.

I won’t say I saw any of this coming, but I know I try to build and manage my businesses with a lot of flexibility to adjust to the eventual adverse market conditions. Ask my wife. She knows I’m always planning, “What if this or that goes bad…then what?”

Tech unicorns are only (sometimes) successful in a perfect environment where investors continue to give them cash to stay afloat.

This is no longer that environment.

Takeaway: Never Operate Your Online Business Like What You See From Silicon Valley

Don’t ever mistake Silicon Valley’s hubris for how a real online (or any…) business should be run.

Frankly, I only study their business actions to learn how not to run a sustainable business. Ignore profit and rack up losses to grow top-line revenue? Over hire because we’ll need them “someday…”? Take on debt to build a product nobody asked for in the first place?

Unicorns can sometimes get away with little marketplace education, poor business acumen, and out of control execution, but never assume you can do the same in your business.

Ironically, behaving the opposite of how tech unicorns act allowed my companies to weather this storm better than the most well funded, professionally advised, industry experienced, and over-promised companies from California.

For that, we can call April a manageable, yet also sadly disappointing, month. One that we survived.

Now, onward to the challenges looming ahead of us for May…


Online Business Ride AlongWant to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned?  Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.

Filed Under: Blog, Operating Online Business, Pandemic Updates

Online Business Operations During a Pandemic – March 2020

April 1, 2020 by Michael Frew

The Coronavirus pandemic has closed a majority of economies, banned retail and in-person businesses, and brought the global economy to a halt in a manner unlike any experienced before by anyone alive today.

I’m pretty sure a lot of business owners learned a lot about how stable, solid, necessary, and vulnerable their businesses were in the first few weeks of March.

At the start of the closures in early March 2020, I’m managing two online businesses (and a few smaller projects) with a few thousand customers spread as far across the globe as possible.

Some customers are operating directly in the most affected spaces, like retail, travel, and entertainment. Other customers are working harder than ever as more and more of their business success is dependent on their continued – and increased – online productivity.

For a business-to-business company focused on a set of products and services, I’ve seen both sides of this issue play out in various ways in the first month of the shutdown.

Hopefully, I can capture just a few down on paper for posterity.

Initial Reaction

Like almost any business owner the world over, there was some initial disbelief that the solution to a global medical crisis was to shut down the economy of every country on the earth immediately.

The jury is still very far out regarding whether heeding this extreme reaction was advisable, but that is what we collectively did, so we have no choice but to move forward with the situation we have been given.

Once it was obvious that governments would close all non-essential businesses that had a face-to-face interaction component, thoughts of how to survive became paramount for everyone invested in the ongoing viability of their companies, businesses, and their own livelihoods.

I can only speak of my small visibility into the businesses that I manage, so I wanted to write about what I experienced during the months that this shutdown continues in more of a journalistic fashion.

So here goes nothing!

First Month for QuotaGuard (B2B and B2E Customers)

The month of March 2020 seemed to be the longest in human history. I thought it was just me until I saw multiple cartoons and memes pointing out how painfully long March felt to everyone.

Obviously, it was a busy few weeks trying to prepare for the unknown of what was about to happen.

Fortunately, as of March 31st, not a single QuotaGuard customer has written us using any variation of the phrase “because of the pandemic, we are doing X, Y, Z…” which is surprising. In fact, the month of March continued to be business as normal.

Overall Picture from QuotaGuard’s Point of View

In total, for March, I didn’t see cost-cutting at a level that would cause me concern at this early phase of the pandemic.

Sign-ups continued at a normal, to even a slightly accelerated pace. Since QuotaGuard is part of the overall move to a more cloud-based infrastructure focus, the business may be benefiting increasingly from the overall growing need for cloud services occurring from businesses moving to WFH across the globe. But that’s just a guess, considering no new customer has said they are starting with us due to current events either.

In fact, if I weren’t aware of what was going on outside, I’d have no idea – based on my interactions with the QuotaGuard customer base – that anything had changed in the economy.

One Customer Example of (Possibly) Cancelling Due to the Closure

There was only one prominent larger retail store chain that I saw go from a large plan to $0, yet they did not cancel their subscription.

Not canceling a subscription is usually a good sign because when customers cancel a subscription, they lose all their configuration, historical data, and integration within our infrastructure.

But, if a customer needs a short pause, they usually switch to a lower plan, but they don’t cancel.

Maybe they are moving their integration from staging to production, or maybe they intend to pick back up on a new project again soon. Therefore, I always look to see if a customer cancels or downgrades, to see if they are churning or just pausing for a bit of time until our service is needed again.

In this particular case, I saw that company closed their entire national chain of stores the day before they downgraded with us, so I’m hoping once those stores open back up, that account will go back to its normal level of usage, and we’ll be back in business with them.

Takeaway: IT Departments Are Essential Businesses

One lesson that I learned from this month is, “IT departments are ‘essential businesses,’ they need to keep operating, continue to pay their vendors, and operate as if the business is running and will continue to run in perpetuity, even if their customer-facing business is closed.”

In mid-March, I wrote on IndieHackers, “If a national lock-down occurs, will customers cut off “in progress” projects and cancel current subscriptions…possibly to pick them up again in the future? Or will most tech companies (by far our biggest customer segment) continue to work, deploy, and create new projects from remote locations?”

I guess now I know a bit more about the answer. I’m never going to feel 100% confident we’re going to sail through this with no issues, but I’m feeling better as of the end of March.

If you’re trying to think of a product or service to build, buy, or have designed for you, having an offering that is integrated into a company IT department might be a good idea, as IT never closes (even if the Internet is down for days, the IT department will still be working).

No matter what is happening globally, IT departments’ tools are likely to continue to be needed and/or increased during periodic changes to normal business operations, such as pandemics. It’s not a bad idea to be selling those tools as a long term business plan.

Takeaway: Not All Customers Quit For Financial Reasons

I spent one Saturday morning at the end of March compiling a list of customers who churned in the preceding four weeks, assuming that some of them did it for financial reasons. I emailed each of them saying that if they were having cash flow trouble, write back, and we’ll figure out a way to make it work for them during the pandemic time frame.

Not a single one wrote back, not one!

Those customers all left because they no longer needed the product. Not for financial reasons that would have been strong enough from my offer to help to save the project they were using QG for in the first place.

This really surprised me, I thought we’d get more of a response, but alas, that’s what I got! A bit of a head-scratcher, for now. I haven’t given up on some “win back” campaign, but so far, it looks like that’s not going to be a very successful endeavor.

First Month for Appointment Reminder (B2B / B2SMB)

(At the time the first half of this was written, there was no shutdown order in the USA yet, so I’m keeping it in there to show what my thoughts were at the time and how they changed through March 2020)

Appointment Reminder is the type of business usually in higher demand at this time of the year since it is tax return prep time. That demand causes an increase in CPA / Tax Prep company customers returning from years prior.

What I obviously didn’t expect was a pandemic at the same time.

With the extension of tax filing dates, I could see the CPA revenue stream continuing a few more months out than usual, which is obviously good for business. Yet, some CPAs also wrote in saying, “they’d be back in a few months,” implying they were going to take some time off until taxes are due again in July.

But that small bump will likely be dwarfed by the pandemic and the public/government reaction to it in the short term for Appointment Reminder.

AR is predominately a business that customers still need to keep setup and running during a short term loss in business velocity. At the beginning of March, I didn’t see a wave of cancellations, nor have I seen a diminishing number of signups vs. a typical March. Yet, many of our customers are SMB’s and a prolonged (by which I mean 4 weeks plus) shutdown of their business will likely cause bankruptcies for some of them.

It is important to point out that AR only runs for businesses in the USA and Canada, so any economic changes in those two countries will have a heavy impact on AR.

By the end of March 2020, we saw about a 10%+ pullback in customer billings almost exclusively coming from customers who had to cancel due to their businesses’ shuttering.

Almost all of them said they would be back as soon as this was all over, but that’s only if they are all still in business.

Many of AR’s customers are small businesses, nail salons, barbershops, yoga studios, exercise class locations, etc. Obviously, these are the types of businesses that everyone worries will fail before the economy can get back to a respectable level of traction, as they likely have a high fixed cost and little flexibility to survive a sudden cessation of income.

I imagine April will see the same contraction level – if not an accelerated amount of closed or postponed accounts. Obviously, that hits our viability as a going concern as well, as fixed costs are tough to get out of quickly.

Takeaway: Software Margins Save Your A** in These Situations

We all know that software has a higher margin and much more of a variable cost structure (I’m generalizing a lot there. Bear with me, as I realize some online businesses aren’t this fortunate), and with less usage, our costs will go down a bit. I’d guess maybe 2-3% reduction in costs for every 10% in lost revenue.

Compare this with the total loss of business for an Amazon store selling travel-related products, or an e-commerce business with no recurring revenue structure as part of the income plan, or an FBA store that either has a warehouse full of product they can’t sell or lost its Chinese production pipeline for a few weeks. Each month, those types of businesses must find new customers, convince prior customers to buy again, and struggle to keep their supply matching demand.

When you’re working with software products and services – especially those with a recurring revenue model and high margins – your business product is likely integrated into the way your customer makes money from their customers. Because of this, you may find that software businesses are a more stable bet than most other online businesses when times get rough in contraction periods, recessions, depressions, and even pandemics.

The higher margins help your business weather the storms because even if many customers need to cancel, your margins can keep you in the black through a prolonged storm… and even the occasional global hurricane.

Like many small businesses, if AR can survive to the point where the economy is allowed to function again, and most of the customers come back, it will survive through the pandemic. If a loss of 40-50% of customers is permanent, then AR would still be profitable from its margins, fun to operate, and continue to help SMB’s recover in the future as the business environment gets back to normal.

End of March Thoughts

This will continue to be a tough time for non-governmental employees, gig contractors, and small business owners in particular. I am afraid that governmental steps to curb real and perceived threats to public health and safety will come at the expense of those three groups almost exclusively when the dust settles (hopefully) in a few weeks.

The best we can do is move forward, accept the things that we can not change, and double down on the things in our lives that we have control over and manipulate for the better.

The ongoing viability of my type of software products and services, especially ones with a strong recurring revenue / SaaS component in the revenue model, further highlights why so many businesses are moving rapidly to a subscription-based economy.

Just imagine if my local car wash had created a monthly subscription-based service before this pandemic (I kept telling them to do it)? They would likely still have many customers paying for the subscription, even though they can’t get car washes right now.

I’m still paying for my gym membership, not because I can go to the gym, but because I know it will help out the small gym owners get through this difficult time and open soon. I’d be paying my car wash too, but they never opted to consider a subscription-based business model.

Looking ahead…April 2020 will have a full 30 days of lockdown, and those results will prove to be very interesting, I’m sure.


Online Business Ride AlongWant to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned?  Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.

Filed Under: Blog, Operating Online Business, Pandemic Updates

Don’t Buy A SLB

July 4, 2015 by Michael Frew

I’ve been thinking a lot recently about niches to buy businesses and software projects and can’t get a lecture out of my head from a guest speaker in my graduate school program.

It was titled “Don’t Create an SLB“.

Wait, what is he talking about? This sounds interesting…

And it was, his core message was “Do not invest in a Shitty Little Business, ever.”

My Attempt at an SLB

When I was working at my second company, I wanted to start a T- Shirt printing company on the side. I got together with a college friend and we had these great plans of creating funny T-Shirts and selling them online (Hey, I know, original huh? Give me a break, this was in 2003).

We had all the designs in our mind and could easily see how quickly we’d become millionaires simply by wearing our own T-Shirts around Chicago as advertisements.

So we started getting into the specifics of exactly what we needed to do to start printing T-Shirts.  Certainly, this couldn’t be too hard, right?   Create design, add shirt, press, sell, repeat…retire in luxury.

Well, we came to realize that the business had massive upfront costs and that each shirt would only net us about a dime in profit.  That would mean we’d need to sell something like 10,000 shirts a month to break even.

Hmmmm…maybe this wasn’t a good idea what all.   But what was our problem?  Millions of people wear T-Shirts, we loved funny ones, how could this not work?

Isn’t this a valuable niche that somebody has to fill?

Yes, it was.  However, that business is what I would later learn to call an “SLB”.

What is an SLB?

An SLB is a business that’s too small, hard to scale, and many times start off as an activity of passion, like a hobby.

An SLB likely has huge upfront costs to sell items that retail for less than $10.00, requiring massive advertising, sales, and distribution networks to make any money.  An SLB likely caters to a small niche that will never provide the opportunity for the business to grow or scale outside of an immediate area.

SLB’s have :

– High Start-Up Costs

– Low Price Points

– Low Barriers to Entry (No Way To Preserve Your Unique Selling Value)

– High Volume, Low Margins

Want some SLB examples?

  • T-Shirt Companies
  • Coffee and/or Tea Shops
  • Ad-based websites
  • Restaurants
  • Most importantly, “Fad Businesses”

What Are Fad Businesses?

Fad businesses are topics that some companies are quick enough to create (Atkins, P90-X, etc.) and are trendy for about 12-18 months.

The problem is people mistake the 12 months of interest as a market change they should try and create a long-term business around.

Some recent examples of fad businesses that people are pouring their life savings into and will soon leave them bankrupt or in legal hot water.

  • Curves Studios
  • Crossfit Boxes
  • Diet-based products
  • Cupcake Shops
  • Secure Tokens and other shitcoins
  • Tattoo Parlors
  • Supplements
  • Vaping stores
  • I’m even going to put Dropshipping in this list, even though it’s not a business, but manufacturing and logistical methodology. Let’s look back in 2025 to see if I was right. 

Pro Tip: Anytime you see a lot of one niche for sale on Flippa.com, that’s an SLB. It means the owners know they need to cash out fast because the ship is sinking. In 2020, that’s vaping stores, alt-coin sites, and anything to do with coronavirus.

Yes, many of you may swear that these are wonderful philosophies and great business ideas. If you lived in the 80’s, you’d say the same thing about Jazzercise and Rice Cakes. If you lived in the 90’s you’d say the same thing about Beanie Babies, pagers, and No Fear clothing. If you lived in the 2000’s, it was Virtual Reality and E-Bay stores.

Laugh now, but back then, they were the Crossfit Boxes and Cupcake stores you see today. People build entire businesses targeting these fads and lose a ton of money on them.

And every one that back then swore would be the new thing. And they were, for a few minutes.

Do not be that person. You’re too smart for that. If it’s a fad, enjoy it, but look for stable niches to focus your future talents and efforts into for your business.

So, be honest with yourself when you’re choosing your niches. Is this business niche a fad? Is this idea an SLB?

Real businesses can grow, scale, and make money for a long time. Make sure the niche you’re choosing isn’t an SLB or fad niche.


Online Business Ride AlongWant to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned?  Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.

Filed Under: Blog, Buying Online Businesses Tagged With: business

  • « Previous Page
  • 1
  • 2

Who Am I?

Moving to Grand Cayman
Acquisition Entrepreneur (a hoity-toity way to say I get really excited about buying and running companies) based out of Las Vegas, NV.

I write essays about my experiences as a buyer of online businesses at MichaelFrew.com, steward the The Best Damn Newsletter for Buying Online Businesses, and provide back stage insight into running a real online business portfolio at Online Business Ride Along.

Most Popular Posts

Failed Acquisition – Lessons Learned from Acquiring the Wrong Business

In 2016, I purchased an E-commerce business that sold … [Read More...]

Software Engineers Need a Backup Plan

My first job was as an Associate Engineer in an Artificial … [Read More...]

Online Business Acquisition Costs You Won’t Find In a Broker Prospectus

Whenever an online broker lists a business for sale, the … [Read More...]

8 Buying SaaS Businesses Insights I Learned from David Newell’s SaaS Business Valuation Guide

David Newell from Quiet Light Brokerage is one of the most … [Read More...]

Unknown Unknowns of Buying Online Businesses

“Reports that say that something hasn't happened are always … [Read More...]

Why Buy Instead of Build

I have undergraduate and graduate business degrees, yet I … [Read More...]

Hours != Value: What Makes a Small Software Project Sellable?

I’m continually surprised at how smaller project developers … [Read More...]

Built to Sell – Jon Warrillow – Book Essay

This Built to Sell book essay is part of a series of essays … [Read More...]

Gigalixir Software Acquisition (SaaS)

New owners, who just happen to also be Passionate … [Read More...]

Recent Posts

  • Gigalixir Software Acquisition (SaaS) February 22, 2022
  • Built to Sell – Jon Warrillow – Book Essay October 27, 2021
  • LetterStack Online Business Acquisition May 3, 2021
  • What Did We Learn From The Pandemic? March 11, 2021
  • Online Business Acquisition Costs You Won’t Find In a Broker Prospectus February 15, 2021

Online Business Ride Along

Online Business Ride Along

Online Business Ride Along is an all-access backstage pass to learn how I manage my 7-figure portfolio of Internet-based businesses. I share exactly how I’m operating these companies, the monthly P&L’s, and all the behind the scenes activities of managing multiple online companies.

If you ever found yourself saying “I’ve spent years taking courses to learn more about online business, but none of them explain what is it really like?”, then this is your answer.

Recent Posts

  • Gigalixir Software Acquisition (SaaS)
  • Built to Sell – Jon Warrillow – Book Essay
  • LetterStack Online Business Acquisition
  • What Did We Learn From The Pandemic?
  • Online Business Acquisition Costs You Won’t Find In a Broker Prospectus
  • Failed Acquisition – Lessons Learned from Acquiring the Wrong Business

Online Acquisition Newsletter

Point of Frew

A buyer’s perspective of online business acquisitions

Not one sided information pushed by an online broker or business marketplace.

  This is from in the trenches, from an actual buyer of software, SaaS, content sites, and E-commerce stores, sharing what really goes on behind the scenes in the world of online business sales.


The Best Damn Newsletter about Buying Online Businesses

Privacy Policy Terms and Conditions
Copyright © 2022 Tyler Crown, LLC, 5348 Vegas Dr., Unit 192, Las Vegas NV 89108