00:00:12:12 - 00:00:32:12
Unknown
Welcome to the Amazing, the podcast for anyone buying or building small businesses in the UK and Europe. Each week we bring you real conversations with acquisition entrepreneurs, operators and advisors, plus breakdowns of real business listings. Where we sit, what makes it their work and whether we decide. So whether you're searching for your first business, analyzing your 100th listing, or sharing a whole code.

00:00:32:13 - 00:00:55:12
Unknown
You're in the right place. We're back this week with another by side breakdown, and this time we look at something a bit different from us or owner managed SMEs, which can be music creation. SAS doing around $700,000 in revenue, profitable and priced at a level unusually accessible for tech products in such a fast growing space. Different kind of business, but we'll break it down in the same way we normally do.

00:00:55:12 - 00:01:18:05
Unknown
So what's real, what's risky, where the opportunities might be? And could the buy for a company like this end up? Indeed. Yeah. It's an interesting one. This one's on acquire com, and I think it's the first one we've done from Qualcomm but also big fan of what Andrew and the team have built and it just goes to show what 11 million us in venture money can can get you.

00:01:18:08 - 00:01:47:00
Unknown
They've they've built an amazing product a quite a common you know we with our poultry half a million of angel money which we're very grateful for in the UK ecosystem where we're doing our best to how to build something equally competent. But so this particular listing stood out because of its low multiple. This, this really kind of impressed me because they don't want a great number of turns of of EBITDA for it.

00:01:47:03 - 00:02:07:09
Unknown
And that was the first thing that got me concerned. Do we think, Alfie, that we've identified which company this one is? I think so. I looked at the one that you sent over to me and I've done a bit digging around and yes, I mean, the thing that acquired do quite nicely is they list the competitors. So it gives me a nice list of companies to rule out.

00:02:07:11 - 00:02:29:11
Unknown
And given the size some of the other few details that we pulled out from this and yet rolling out some of the other big names that we probably know, Sue, Sue knows, and Jumbles and so on. Yeah, I think we can be pretty confident on who this is. Okay, Awesome. Good. Well, let's try not to break any confidence or, you know, malign anybody unnecessarily.

00:02:29:11 - 00:03:06:29
Unknown
But Yeah. So this, this purports to have 3 million users. Yes. Users, not subscribers but from which they are doing $559,000 in profit. Yes. It is none too shabby. It's. And 95 K dollars in revenue. So it's about 80% profit. Well yeah. So you should expect from a size. Right. You'd expect it to be high margin. But the thing that stood out was anyone 3.5 times revenue to as a, as a valuation.

00:03:06:29 - 00:03:28:32
Unknown
So they're asking for 2.4 million for what should be a bleeding edge tool and sizes are normally attracting what, six, eight, ten times revenue because of the 80% gross margins. Yeah. So why so modest in their valuation? Yeah, I mean, that's what stood out to me first is the low multiples. But I think what you dig into the context, it does make a little bit more sense.

00:03:28:32 - 00:03:55:10
Unknown
I think the number here that gives me pause and is probably why that multiple is so low is the slow growth. So they are about 2% annual growth at the moment, which is effectively flat, especially for a SaaS products. Now it's difficult because they were founded in April 2023. So to go from zero to, you know, 700 Cato, a trailing 12 month profit in just over two years is excellent.

00:03:55:10 - 00:04:16:08
Unknown
And they must have hit some growth levers and done very well along the way. It's what slow them down to this 2% hole. That's where the concern is. And that's probably why they are being more reasonable with their multiples. Flip side of that, though, is they haven't gone to zero like it wasn't a flash in the pan. They didn't just appear, you know, capitalized for a moment.

00:04:16:08 - 00:04:43:09
Unknown
And then vanish. They've disdained and I would argue in in a sort of DTC B2C type context here where they're they're effectively a curiosity. On the one hand, that becomes a kind of, you know, habit for some creative community. And, you know, they're going to have its loyal member base. But, you know, the conversion from trial users to paid subscribers, there's got to be a feral churn on on the subscription.

00:04:43:09 - 00:05:02:19
Unknown
So to be replacing them and converting and having a sort of a, you know, continuous top of funnel hats off to them. But yeah, they've definitely plateaued with only 2% growth around them. Yeah. And I think with any tool like this, it kind of reminds me of the early days of the App Store, right? And there were so many apps coming out and it was a bit of a novelty and it was so many people trying it.

00:05:02:19 - 00:05:24:15
Unknown
And then it kind of boils down into a community of people that are going to pay for it and use it. So they said they have about 3 million users but acquired do a lot of things really well. But this kind of brackets subscribers in between 1005 thousand, which is a which is a fairly wide bracket. So it's putting their conversion rate from 3 million users somewhere between sort of 0.07 and 0.13%.

00:05:24:18 - 00:05:50:27
Unknown
So the conversion rate is low. Yeah, there is a huge difference between somebody who has seen a funny meme or heard of an artist and gone out in search for this who tried it once and somebody who is going to pay for this and use it on a on a regular basis. Yeah, great. And that's probably it is a difficult one to be in from a marketing point of view because you want as many people to come in and try it as possible.

00:05:50:30 - 00:06:10:10
Unknown
But I wonder if maybe that next step for them might be to move away from that and to drill down into specialize it, maybe pick a route and really go go for it. If it is the company that I'm thinking they are fairly broad and general and they kind of treat themselves almost like a novelty to a certain extent.

00:06:10:12 - 00:06:36:15
Unknown
And maybe many of these are are playing that novelty card because it is so leading edge, Right. I mean, I mean, in preparing for this analysis, I did spend quite a lot of time going down the rabbit hole with these different tools. And yeah, we've been far too long, according to my wife, on several of them. And there is a you know, is a fine line between science and magic.

00:06:36:15 - 00:06:58:11
Unknown
You know, this stuff super impressive what it's producing, you know, and I'm kind of worryingly heralds of the death of human creativity on the which which, you know, that's a whole other conversation which I'm sure we'll get into. But my point is, it was a curiosity. I didn't pay for any of them. I just used my free credits on about five different flavors of these things to compare the results.

00:06:58:18 - 00:07:13:32
Unknown
So I'm sure I'm not the only one that sort of like, you know, just put a toe in the ocean on this one who is going to win the race? Because you mentioned the early days of the App Store and it was like, you know, it lowered the barriers to entry. Everybody was able to spin up an app, but actually the strongest survived.

00:07:13:32 - 00:07:45:11
Unknown
And, you know, there was a sort of consolidation, if you will, a washing out. So I think that's maybe where this particular wave is getting to is like a maturing of certain providers, again, probably correlated with how much funding they've had. Yeah. What do you think? I think funding is going to be a real big driver of this, not only for customer acquisition but for retention, because in this world of A.I. models, whoever has the most money to train is going to have the best products, you know, and over time that quality is what's going to drive the retention.

00:07:45:11 - 00:08:10:17
Unknown
So if it is the company that we think is they there, there are other firms out there that have had almost the same in funding that these guys have had in revenue in the last year. Right. And that's and that's really tough. That's going to be really tough to overcome. So, yeah, I think that's probably where the winners realize who's got the most money, which is not the, you know, startup dream that we would all hope it would be.

00:08:10:19 - 00:08:41:10
Unknown
But but yes, sadly, I think it's just the reality of of of large lot of large language model training. Well, tellingly, the seller says they wish to divest in order to go and start a new venture. So, you know, that typically is code for I I've even lost interest or I'm this isn't as lucrative as I thought it would be or I better get out quick before someone comes in, eats my lunch, and the big one coming over the hill looks to be Eureka, Eureka!

00:08:41:13 - 00:09:04:22
Unknown
Which is brilliant. Still also missing a trick or two, but obviously has the benefit of being owned by Lynn of China operating out of Singapore $5 billion organization behind it. So yeah, there was a question of resources and depth of pockets. I guess you'd be thinking they might win. Yeah, that's going to be a real, a real tough hurdle to overcome.

00:09:04:29 - 00:09:26:00
Unknown
I'm not necessarily impossible. I think it's going to be winner takes most rather than winner takes all. So they still will be space for competitors out there. And maybe that does come down to, like I said, you know, picking a nation and going for that would be I'd be really interested to know how this particular company got to the numbers that they're on.

00:09:26:00 - 00:09:59:07
Unknown
Where did those customers come from? Who are their power users? Because they are doing really well. They turned over 45 K last month. 38 K Yeah, that was profit. They say that they've got really well dialed in, adds, you know, all their ads particularly well optimized or are they just capturing low hanging fruit at this. The million questions I would like to ask the founder of this now they also talk about how they've adjusted some of their marketing spend in recent months, probably in anticipation of trying to improve the profitability for sale.

00:09:59:10 - 00:10:19:05
Unknown
But but yeah, they talked about tweaking that for seasonality and also tweaking their compute to optimize their as well. So they're clearly trying to wring out as much profitability as possible, which yeah, kudos to them. But you know as well as I do that with with a B2C offer, it lives or dies on its visibility on and on whether you're filling the funnel.

00:10:19:10 - 00:10:43:09
Unknown
So you have to bleed a lot of customer acquisition cost on on your advertising. Yeah. And I mean I'm not sure what the outgoing split is. So you know, of the seven K they spent last last month, you know, to, to make that 38 K profit where how much of that is going on ads, how much that is going on, you know, paying for the tokens for the model.

00:10:43:09 - 00:11:02:04
Unknown
All they use in their own model is a real big one actually that we haven't quite got to is this a proprietary model that they've built themselves? Are they picking backing of someone else's? If so, that's a big problem because are you buying a customer list really from them and the marketing that they've set up rather than any sort of IP?

00:11:02:07 - 00:11:26:03
Unknown
Yeah, you're buying a burning platform if they're dependent on a third party API. I mean, everything's built on APIs these days, right? And it's normally about the sort of secret sauce that you've got in how you string all these together and make a unique product from it. But if, heaven forbid, they're just running on the Murica API, then they're effectively feeding a competitor that could flick them off in, you know, a stroke of a finger.

00:11:26:06 - 00:11:58:02
Unknown
Yeah, but also, you know, their margin is a little bit limited because they can only arbitrage that so much. So, you know, hats off to them if they are taking the path of least resistance and they've, you know, put a new skin on America API and make it their own kind of flavor, great. But, you know, have they actually built anything proprietary and are they at risk of of kind of losing out to innovators that are pouring loads of money into building, you know, unique features and unique functionality?

00:11:58:09 - 00:12:31:00
Unknown
I don't know. It's quite telling that their public site is it screams loveable. What do you think? Yeah, we had a chat about this yesterday about sites that you can look at once and tell that they're loveable sites. And I think this is this is absolutely one of those which maybe also speaks to other tech that you know if that if that's the kind of storefront is built on lovable which is a great is an absolutely great tool but perhaps not the home page for your site that you want when you're turning over this kind of money.

00:12:31:02 - 00:13:04:03
Unknown
Yeah. If you get them side by side with others that have built proprietary front ends and therefore kind of lead the user to think they must have built proprietary backends, there is a you know, there is a stark contrast, but yeah, it speaks to Moat. How defensible is this or is there going to be another clone that pops up, you know, with a Gemini three UI bond over the top of Murica API and then sort of, you know, takes the 700,000 or whatever it is off of these guys at a stroke.

00:13:04:05 - 00:13:29:04
Unknown
It doesn't feel very defensible, does it, to, you know, not particularly. I mean, again, we could be wrong and they could have built their own proprietary model for this and it could be that that's where the founder's expertise lies. And that's why they haven't put the time into the front end potentially. But yeah, it doesn't it doesn't scream premium build, and yet it doesn't feel particularly defensible.

00:13:29:07 - 00:13:49:25
Unknown
Another important thing to note is and I'm not quite sure on the language on this from the acquired listing says that the churn rate is 10% and then as the note next week downwards, does that mean the churn is getting worse or getting better? Is that 10% is going down or I would imagine that higher churn number, bad launcher number good, you know, is that 10% a month?

00:13:49:25 - 00:14:14:11
Unknown
I imagine so. That means users don't last a year. Well, yeah, well you're losing your entire customer base every ten months. Yeah. Or is that or is that per annum now has expressed again. I don't know. I'm not quite sure. Are they likewise users tell us in the comments but I guess worrying and it speaks to that whole DTC kind of cycle of you know, disposability, curiosity.

00:14:14:14 - 00:14:35:03
Unknown
You've just got to find a whole new set of customers next year which doesn't feel defensible. I wonder what they could do, whether revenue stream wise or model wise to make it stickier because they're aiming at the creators, they're aiming at people that want to just do the text of music thing and have songs created, but then that that user generated content, well, that's surely got a value to it.

00:14:35:03 - 00:15:09:07
Unknown
How can you can you monetize that? But none of these folks seem to be doing anything sort of a Spotify model on the back of it to monetize the UGC? Yeah, that's really interesting. And I don't know if that's something that they've ever explored. Maybe users aren't that interested in it. I'm not sure. I mean, my mind immediately goes to maybe this is just because my background goes to maybe it was more of a sort of B2B model where I think these air music generation tools have more longevity is in building, you know, interest for podcasts and use it for events and ambient background loops for indie game developers.

00:15:09:14 - 00:15:24:18
Unknown
These are the kind of places I see it having real utility over time when it moves away from being more of a kind of novelty place where I get Homer Simpson to rap a Dr. Dre album, you know, wherever the people seem to be using these for now, I see on Instagram, I'd like to hear I have seen that one.

00:15:24:18 - 00:15:55:11
Unknown
I'll send you the link. So yeah, maybe that's the kind of direction to take this in. And that's kind of what was alluding to when I said about specializing and finding a niche. Maybe that's the way to go with this and to move towards that B2B market. And even then, if they were, you know, built on other platforms too, you know, if they are using Mary Kay, it could even be that they build such a solid market within this niche, they could actually be acquired by the competitor and kind of sell that list on and that could be a a move for them or whoever purchases this.

00:15:55:11 - 00:16:11:19
Unknown
That's probably where I would go with it. Yeah, And this is sort of like the kind of fast follow up pieces of like we weren't the first in the space, but we've done something a bit different. Yeah. And so, you know, we've now built a bit of a niche following as a consequence of that model or that nuance difference.

00:16:11:21 - 00:16:33:01
Unknown
Yeah. So biased because we're annoying and you know, you'd rather have us do it yourself. And so I wonder if there is an avenue there to kind of make it more be to be an annual subscriptions rather than monthly and, you know, contractual bits that guarantee them more recurring revenue. That I think is, is got it's got its merits.

00:16:33:01 - 00:16:53:07
Unknown
But I also think you know, monetizing the content could be something even even more lucrative. But, you know, again, that's that's hard I suppose. Yeah. So I think the difficulty there is you're trying to take on the incumbents like Spotify, you know, and as we spoke about earlier, there are artists already on Spotify, so you're going to have to pay.

00:16:53:10 - 00:17:17:12
Unknown
Listen to them, right? Yeah, some more out there and open about it than others. I mean, you've got breaking rust being a being a country fan that likes to put on country on radio from time to time, you know, listening to Breaking Rust break into the scene and being wholly kind of open about the fact that, yeah, I make all these beats with I that's, you know, that's quite an eye opener.

00:17:17:18 - 00:17:46:21
Unknown
But then you've got whatever is Velvet Sundown like were they weren't they. I I'm still not sure we know but certainly their, their imagery suggests but so I think we just get loads of this right. And just like it's now becoming impossible to detect generative I kind of essays and academic work it's going to become nigh on impossible in the long term to detect creative content like music that's come from.

00:17:46:24 - 00:18:11:09
Unknown
So what does that mean for humanity's creative future? I think it's difficult because who who are the line of defense between sort of artists or people using AI to create music and pretending that it's real or not. So I have a friend of mine that owns a record label that I work with. I can tell he started to get some submissions through that he suspects might be, and his way of working those out is talking to the producers and asking them some questions about their method.

00:18:11:12 - 00:18:32:13
Unknown
And if they can't answer some questions on how they made it, then it's more likely that they use AI to generate it right kind of make sense. Yeah. But then you could use a distro kid or something to distribute your own music on Spotify anyway. And if you get picked up by the right playlist, you know you can generate a profile and never ever see your face and you can just pick up plays and and start to bring cash in as well.

00:18:32:14 - 00:19:00:25
Unknown
Right. So what about how much cash could an artist actually earn? What does that translate to if like, if, if Breaking Russ managed to get 100,000 plays on Spotify that translate to a meal at Denny's, all well. So I think breaking rosters had a couple of million runs. Yeah. So I had my artist Spotify rap today and I about 25,000 plays in the last six months, which equates to about 150.

00:19:00:28 - 00:19:27:20
Unknown
It's not a lot of money. So if you scale that up, it could have made 100 grand from 2 million plays for the cost of whatever they've spent on on I music generation credit. Yeah. So so yeah, yeah. It's potentially very lucrative maybe maybe don't buy business maybe just music generate country music. I go generate country music. I think I'd take that advice.

00:19:27:23 - 00:19:46:05
Unknown
A lot of country music is very, very formulaic, right? There's a lot of similarity to it. And it comes down to the, you know, the wittiness of the lyrics and I guess the personal brand of the artist. So we're going to be devoid of personal brands here, right? This is is that was a sweeping statement. But we're going to miss that.

00:19:46:05 - 00:20:07:23
Unknown
We're going to get, you know, formulaic music created on the fly by models, but we're going to lose the sort of human story. Well, I mean, the thing is, are we going to start to get some artists that are actually completely my generation and people don't know, you know, you could you can create a character that you can use again and again, again in something like Nano Banana to generate images.

00:20:07:23 - 00:20:31:19
Unknown
If you've got a voice that you've created for this person that you could replicate in 11 labs or something, you could feasibly have an entire social media caricature and person that releases music. And it would be really hard to tell. I mean, in the old days where they would generate extra fingers and odd, you know, bits and pieces in the photos, it's really easy to tell someone, say, I'm up, but these days it's harder and harder.

00:20:31:19 - 00:20:58:16
Unknown
So I don't know. Someone's doubtful. So we've got to expect sort of like a conflation at some point if Tillie Norwood meets Breaking Rust because there was this whole controversy about silly. No, it wasn't that this is is this actress there isn't really a real person who's got this massive Instagram following and is now closing the next writer's strike or act or Actors Guild Strike and the Californian because no way you bringing alien actors to Hollywood.

00:20:58:23 - 00:21:24:02
Unknown
Well, it could be happening. It could be coming. So, I mean, could you imagine simulated synthetic content of the artist alongside the the music dystopian? Is it? Yeah. I mean, especially if you think about what's happened with pop music over the last couple of decades where you do have more sort of manufactured artists and it's more about sometimes the way that they look than the music they make.

00:21:24:02 - 00:21:53:14
Unknown
They might not even have to make the music very soon, you know, as long as they can go into interviews and prance around in a music video and look great, the music can be taken care of for them. Lip synching on stage. Maybe I'm being cynical, but it is is is worrying. Well, that's the thing. So touring, you know these artists and how are you going to monetize events because most of the actual revenue most of the income for artists and then we can include simulated artists in a sense.

00:21:53:16 - 00:22:15:32
Unknown
But like, you know, you get it from ticket prices, right? So, so what are you ticketing? I suppose that is because you make you don't make much back from the streams compared to how much it costs to produce an album and to go and spend studio time and pay session musicians and all this kind of stuff. Whereas if you don't have those costs anymore, if you are making, you know, a couple of hundred K from streams a year, that's not bad.

00:22:15:33 - 00:22:37:08
Unknown
Maybe sell a bit of merchandise on the side and maybe you don't you don't have to tour, get super interesting stuff is is a bit scary. But let's get back to this listing in particular because they are at the vanguard and it's an it's an interesting one, but there's always this growth opportunity section on the acquired dotcom listings.

00:22:37:08 - 00:23:07:20
Unknown
And this one talks very specifically about basically how you have to spend more money on marketing, improve conversion rates, increase content marketing, increase digital marketing, social media marketing, focus on SEO. So basically says spend money where we're reluctant to at the moment. Yeah. Do you think that would I mean, I wonder what the sort of conversion rate might actually be, how much you'd have to hemorrhage on marketing to fill the funnel in order to get that 0.1% conversion from the from the premiums?

00:23:07:23 - 00:23:24:09
Unknown
I think it would have to be some very smart marketing. Like I said, I would love to get into there and dig into the data and see who their sort of power users are and where that comes from and maybe just laser focus it there and then you can still hoover up your hobbyists and, you know, your novelty users that will come in and find it.

00:23:24:12 - 00:23:52:29
Unknown
But I would be loathe to go out and do some sort of brand based marketing for this because that conversion rate to paid users is just so low in the first place. So yeah, there is probably some room to grow there. I mean, one thing I've been trying to figure out is what the lifetime value is, because on that point we have to work out what an acceptable customer acquisition cost would be.

00:23:52:32 - 00:24:16:31
Unknown
Yeah, great. I don't know if they actually disclose that in this listing, to be honest. No, they don't think so. The thing that makes it tough to work out is we can't a bracket is 1 to 5000 subscribers, so that makes it the five x difference on what that customer acquisition cost is and what the lifetime value is.

00:24:16:31 - 00:24:41:33
Unknown
We can work out what the CAC is from there. So yeah, this has got to be a real delve under the hood one as always, you know, stuff to come out in due diligence. If this is the sort of business that appeals to you because maybe there is a real good sort of hard core bedrock of a certain type of user that you could do some real niche specific advertising to try and keep those costs low.

00:24:42:02 - 00:24:57:23
Unknown
And all the while, you know, you'll get more and more users through. I would be probably tempted to tighten the freemium model as well, because how much are they spending on credits for? Like you said, you went in there and you used up all your credits and five different songs and you had no intention of ever paying for it, Right?

00:24:57:25 - 00:25:19:19
Unknown
And I may or may not have used a few different email addresses. Right? Okay. So, you know, do you tighten up so that everyone can create one song for free and you laser focus your marketing on those people that are actually converting? And as the kind of novelty of this dies off, you know, you might your user base might shrink, but your conversion rate and your subscriber base will grow.

00:25:19:22 - 00:25:54:28
Unknown
Yeah, I've just actually found in clicking the see more. Thank you Icloud.com. Lovely bunch of bullet points. 3715 subscribers currently $14 Average revenue per user $95 Lifetime value 3.4%. Refunds. Okay. How to acquire a customer and get a decent return if you're only getting $95 out of their lifetime use of your product? Yeah, I'd be really interested to know what the cost of serving that customer is.

00:25:54:29 - 00:26:15:29
Unknown
Out of that $95, how much does it cost to provide the tokens? Again, this comes back to what they used in their own model or whether they're paying for tokens from somebody else. And if you are using somebody else's model, the difficulty comes in what happens if your price increases that you know, you work on this out based on a 95 quid lifetime value mark out, your customer acquisition cost is.

00:26:15:29 - 00:26:45:03
Unknown
But if suddenly the cost of serving those users goes up so much, you could lose profit in a heartbeat. So we know it's 80% gross profit or thereabouts and assuming there's not a lot of overhead. So yeah, you're you're $14 is effectively costing those what, to $2.80 whatever it is to serve them over that average revenue period so well to serve them and actually to acquire them I guess because they all do some advertising.

00:26:45:06 - 00:27:12:29
Unknown
Yeah. Is the age old where do I put the marketing? Is it above the line or below the line? Yeah, true, true. But, but you know it's coming out of, it's coming out of somewhere so Yeah. Interesting opportunity. Who buys it? Who's this ideal for? For me, it's probably other strategic buyer that wants an instance of buy music capability or someone that's tucking it in.

00:27:12:29 - 00:27:34:08
Unknown
Basically. That's what I think. That's the kind of buy this. I don't think it's necessarily a search funder, not a first time acquirer or an independent sponsor for that matter. I, I'd be surprised. Feels like it goes to a trade acquirer as a tuck in. I think you're absolutely right on that front. That's where they're going to get this kind of value from.

00:27:34:11 - 00:27:59:24
Unknown
I do think if you were a savvy SAS operator and you'd been a founder before, I feel like you could come in and do a good job with this again, Once you've looked under the hood and looked at the analytics and figured out who the users are and maybe try to knock them down on that multiple bit, I feel like it could work, but yeah, it screams talking to me.

00:27:59:26 - 00:28:32:04
Unknown
Yeah, because it's only a part of the process, right? It's very good and it's generating the content and then, you know, it only plays in, in the player in the cloud. So and I guess there must be a plan for downloading it, you know. So what about syndicating it, publishing it, distributing it, monetizing the actual content. It feels like it needs to go to someone that's got that part of the infrastructure nailed down and just needs the content creation piece that we're getting in order to sort of, you know, feel the funnel.

00:28:32:07 - 00:28:59:13
Unknown
Yeah, yeah. Or it goes to like a gen spark or someone like that. It's got, you know, has just collected a whole bunch of different kind of generative AI functionality. Yeah. Or a video creation platform, you know, maybe like Adobe Express or something like that. And you can generate some backing these. It's go in the back of your stories or your podcast or something like that, you know, maybe one of the feed.

00:28:59:15 - 00:29:21:05
Unknown
Yeah, Yeah, exactly. So something like that, maybe even like a Premiere or DaVinci or something along those lines. So those could be some options. Yeah, But again, they probably just directly call the API that this is built on unless you guys own the API. But yeah. Yeah. Questioning. Yeah. If they own the API, surely that would be a much bigger revenue play.

00:29:21:08 - 00:29:44:18
Unknown
This is a this is a layer over the top and some fortunate customer acquisition potentially. Yeah. I mean we're giving the benefit of the doubt. Maybe not, but that's, that is what it seems like. And again there are some little things that make it seem that way. The not great lovable side over the top. This is a few little indicators that make it feel like, yeah, this is a looks at a layer over the top rather than proprietary work.

00:29:44:18 - 00:30:08:09
Unknown
Yeah, but again, hats off to them for getting up to sort of 700,000 and making some decent money from it. Why sell it if if you could just, you know, work out what the optimum balance is of your customer acquisition, spend what your CEO budget and you know what your your lead funnel costs will be and then just have it keep ringing the cash register even at 60% gross margin or net margin.

00:30:08:09 - 00:30:32:03
Unknown
Sorry. Yeah. Well why would you wouldn't you keep it? Well, I mean, I was thinking about this and maybe the founders looked at it this way that they want full time. They want four times three 34.3 x profit as the multiple. And maybe they just don't feel like they can sustain it for another 4.3 years. Maybe they can sort of see it going off a cliff and they'd rather get the two and a half mill.

00:30:32:03 - 00:30:49:20
Unknown
Now they don't think that they can extract that from the next couple of years without a huge amount of work. You know, maybe they've collected all the low hanging fruit that they can. And the work that I said about, you know, delving into uses and improving the marketing and the conversion rates and maybe they just don't feel like that's worth the time.

00:30:49:23 - 00:31:08:17
Unknown
But isn't that the estimate? Isn't that the net present value paradox that we face all the time? Like, well, if the founder doesn't believe that own company doesn't believe that they're going to get that ROI over that period, why would I want to pay that multiple to acquire it? Because I won't want it back. Well, yeah. And I think that's where you probably will knock them down on the multiple.

00:31:08:17 - 00:31:25:23
Unknown
But just because they believe they can't do it, doesn't believe there isn't someone out there that can do it doesn't mean there isn't someone out there that could make this work. Yeah, but yeah, I'd, I'd probably be haggling haggling fairly hard on the asking price, I think. So to that end, if you're up for a haggling, does this deal appeal?

00:31:25:23 - 00:31:47:02
Unknown
I mean, you are obviously from the industry. I mean, does this make you want to run a mile from it or does this make you want to embrace it with open arms and find $2.4 million on the couch? I'm all I actually would probably go for this. I'd want to know. I'd want to know more. I'd like to go to the next stage of this, because I do think that I do know the industry.

00:31:47:05 - 00:32:04:13
Unknown
I think I have obviously been in SAS for a long time. I think if there is a decent sort of bedrock of users in there and there's some little nugget that you could run with, then yes, but I would be haggling fairly hard on that asking price. So I think actually it's a yes from me. Wow. Great. Really pleased to hear that.

00:32:04:16 - 00:32:40:03
Unknown
Well, so in my misspent youth, like everybody, I was in a band and then I messed about with Ableton and Logic and stuff for ages and thought I was going to be the next to VG before he was born. Probably. Yeah. And so you think this would be right in my wheelhouse. But I. I'm a no. Okay. I'm a no on this because I don't think I could guarantee its future for long enough to get my ROI back, to get my original investment back so that four years seems like a long time.

00:32:40:03 - 00:33:00:27
Unknown
And even if I picked it up at three, I'd feel this is an existential challenge that someone's going to come along and eat my lunch overnight. Yeah, and I'm going to get into sort of, you know, attrition ing of my profitability. I'm going have to put more and more money in to fill the top of the funnel. All the while my, you know, I'm on a kind of eroding platform, so I'm a no, okay.

00:33:00:29 - 00:33:26:31
Unknown
It's usually the other way round. There's been a couple of times you've been a guest and I've been a no. So they got this and it's an interesting one. Yeah. Again, it may be more of an interesting for me. I would just love to know what's happening under the hood there. I do think that the right person could come along and stabilize it enough to start bringing some new users in and improve the conversion while alongside it, trying to, you know, go and win some enterprise contracts and going on that B2B route.

00:33:26:32 - 00:33:47:33
Unknown
And it could sustain itself long enough for you to move in that direction. But yeah, without looking under the hood, you never know. I genuinely hope that they get a sale on this to somebody that is going to be able to, you know, like the blue touch paper under it and send it to the moon because, you know, it does have a lot of promise and someone's done the heavy lifting to get it to this far.

00:33:48:02 - 00:34:13:27
Unknown
It just needs, as you say, that time, dedication and a bit of investment to get it further. And it currently has according to acquire 28 buyers in active conversation with the seller right now. So good luck to them. I think there's a heavy chance that they're probably going to end up exiting this one and I look forward to hearing that they have, but it's not for me if we find that Mr. Lamba is the new owner of land based organization.

00:34:13:30 - 00:34:28:13
Unknown
Yeah, well, hopefully the 28 people they're talking to, our old sidekick is like my age. Just when I a look at what's look, look what's going on under the hood. But yeah, I really hope they do. I think it would be nice if it wasn't just, you know, the company that gets the most funding does the best in this.

00:34:28:13 - 00:35:01:05
Unknown
I do like to think there is probably is a buyer out there that could that could turn this around and make the most out of this as much as I do. I have my reservations. I generated music, I think for the B2B space. I think that I yeah, I think this could really work. So yeah, I'll keep an eye on this is the company we think is I'll give them a following some social platforms and see see if anything changes over the next year and you know your next album could be produced in record time by even though it would be a lot less headache.

00:35:01:07 - 00:35:19:21
Unknown
Indeed. But I mean, understand the economics of this, if you just got to get to that easy 2 million listeners and you're in clover, could afford a new car. If I turn up to the next bus, I break down. We're in a cowboy hat. You know that I've gone down the country music route. I feel nothing would surprise me anymore.

00:35:19:24 - 00:35:46:17
Unknown
I'm not sure I even notice. So that was super interesting. I'd love to know what what our listeners feel about this one. Is it a yay or nay? If anybody's got any insight into this particular industry, then please do as ever. Let us know and drop us a comment because yeah. Is it a yes or a no for you out there listening to this week's bus breakdown for the Amazing?

00:35:46:20 - 00:35:57:08
Unknown
We'd love to know. Thanks loads for listening to us today and we look forward to listening to your generated music content very soon. And until then, keep on crunching, keep on.