Buying a Viral Cat Video Empire? Think Twice Before You Do

0:00Welcome back, everybody, to another episode of Acquisitions Anonymous. Mills Snell, one of your co-hosts, me, Bill, Heather are joined by Travis from Capital Pad today. And we talk about a business that totally exceeded my expectations. It is a SEO business that focuses on niche cat content, has 95 % net margins. It's incredible. The business does over $800 ,000 in revenue, over$800 ,000 in net income. It's staggering. But Travis is an amazing guest today, he brings all kinds of really helpful information about this space. We talk about the layers of monetization, what's helpful in the value chain and what's not.

0:41They lead with a ton of SBA pre-qualified headers, and we talk about the nuances of that. It's the most entertaining conversation that we've had, I think, in a long time. It's a really, really interesting deal. We talk about the scenarios where it may or may not work. I hope you enjoy the episode. Stick around after a quick word from our sponsors. We'll set Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % ears anymore. And thumbs downing on just the plus inventory link. Big thanks to High Level for sponsoring this video and helping us pay for our editors.

1:15High Level is the all-in-one CRM that handles your emails, texts, funnels, and more all in one place. Think of it like the Swiss Army knife for small businesses, and you can try it for free for 30 days at gohighlevel.com slash Michael Girdley. All right. What a crew today. We've got Travis from Capital Pad as well as Mills and Heather. What's up, everyone? How's it going? Before you guys got on, it was just me and Heather talking. And I was like, we have a deal that is just salacious. It is so interesting. And it has all the buzzwords. But I didn't know if Bill was going to be able to talk about it, but we can because it's not e-commerce.

1:52We can. Well, not only can I talk about it. And I, so Mills says, Bill, I got this deal for you. And then I come on and say, I can do it. And then out of nowhere, a wild Travis appears, uh, who is probably the best person on planet earth to talk about an SEO site. All right. So this is jumping right in. Cause I'm so excited to hear what you guys have to say about this. Cause I looked at it and I was like, this seems cool. But Bill's first take was completely negative. All right. This is on, this is on quiet light it's an sba pre-qualified cat content brand with 3.9 million followers 920 000 in revenue and a staggering 95 percent margins net margins so the revenue is 872 000 which uh they say 920 000 in the top so i'm wondering if it's like you know run rate versus you know, I don't know, trailing 12 or something like that.

2:49But on 872 ,000 in revenue, their net income is 821 ,000. And they're only asking a 2.8 times multiple. So the asking price is$2.3 million. It says established in 2009. So this business is 16 years old. This cat focused content platform represents a rare opportunity to acquire a dominant player in the recession proof cat content niche. Of all the things that I might call recession-proof, maybe cat content is, I'm just not, I'm not the target demographic. Essential services. Essential services. Thank you. Yeah. It generates over$870 ,000 in 2024 revenue with exceptional 94 to 95 % profit margins.

3:34This 15-year-old business has built an extraordinary social media empire with 3.9 million engaged Facebook followers, 2.2 million monthly page views, and a trademark brand that has shaped storytelling standards within the cat content community. That's a mic drop right there. Okay. The business operates as a premium content platform featuring heartwarming cat stories sourced through established relationships with cat organizations worldwide with a proven revenue model delivering$22 to$30 plus RPM. And I have no idea what any of this means. So I'm just going to say it. Page RPM minus ad earnings per 1 ,000 page views.

4:20You guys will be able to translate this for us in a minute. Through premium ad partnerships, it generates consistent cash flow through organic traffic, 56 % direct visits, and premium ad placements. The simple cost structure of approximately$50 ,000 annually demonstrates organic growth efficiency that has never required marketing spent. What makes this acquisition particularly compelling is the massive untapped potential deliberately left unexplored by the current owner. Operating as a lifestyle business with just 30 hours weekly commitment, the owner chose not to pursue video content monetization, affiliate marketing, brand partnerships, or expansion of an organically grown 15 ,000 subscriber newsletter with over 29 % open rates.

5:06These represent immediate revenue opportunities competitors successfully execute. The timing creates exceptional opportunity as the owner's health considerations require stepping back from daily operations. However, fundamentals remain robust with clean SEO, strong grand recognition, loyal audience engagement, established cat organizations, organization relationships, provide ongoing content pipeline. And that's pretty much all they say. The advisor here is a guy named Pat who focuses on e-commerce. Guys, what does this even mean? All right. This is like served up for Travis on a platter here.

5:44So I want to hear the Travis take. Travis, what is going on here? Is this impressive? This is a lot of revenue for cats. I think it is pretty freaking impressive what they've done. Yes, I'm so glad. No, it is. This is not an easy thing to do. SEO people talk all the time, like, I do this to build revenue. But just to build this off cat stuff, that's really hard. And to replicate this, I'm never, ever going to say this thing has a moat because it does not. but someone else trying to start from scratch to build this would be it would be very very difficult because probably a lot of the reason they're doing this is 15 years old right 3.9 million followers on facebook you can't do that anymore it's just not a thing sorry so don't move on from that why can't you do that anymore so what what has changed from 29 from 2009 to right now that make both of those things so much harder we'll start on facebook i mean the whole algorithm them before on Facebook was promoting creators to make Facebook pages and build lots of followers.

6:45And so it was good for that. And now you can't, you just have to pay, right? Like that's the thing. You can't build organic followers. And I don't know the reach of these organic pages anymore. I have no idea, but you just, you just can't do it. I mean, you could, but it would just cost insane amounts of money. That would be kind of stupid to spend on cat videos, right? It doesn't make sense. The world spends a lot of money on cat videos, Travis. I watch a lot of them. It's crazy. So like, I get it. That's a good point here. So this business has 3.9 million, it says engaged Facebook followers.

7:13The question is, if you post something on that Facebook page, what's the reach of that organic post? Like, are you actually getting anything for that? So I'm, I think I found it. I just asked chat to PT and like one Facebook page about cats has 3.9 million followers. It's like this one. Like, all right. So, uh, it, it appears to have good reach. You Each post is like 416 likes, which is quite a lot on Facebook. Maybe a couple hundred comments. Oh, this one has 3 ,000 likes. So yeah, it's definitely getting it. So can we take one step back? What do they actually do? They're not selling a product.

7:51They are a content platform getting a bunch of eyeballs, and then people want to pay them for access to their views and impressions. Is that right? Yeah, they're selling sponsored ads, it looks like. That's what I see. They mentioned that they're not doing affiliate programs. It's not like they've packaged this into their own kind of brand of products and their contract manufacturing something and selling it on e-commerce. It's literally just, is it like paid placement? Like in the cat videos, there's like a product in the background or is it, you're looking at it, Travis. So I'm just trying to figure out exactly what they're doing.

8:31I see nothing that looks like an ad anywhere, which is maybe like even more impressive, right? If it's not like the banner ad and like the really gaudy, you know, kind of grab for attention, if it's maybe more subtle. Yeah. I mean, assuming this is the right thing that they found. I don't know. Well, you're just on the Facebook page, right? I mean, this is not, there's a website, right? There's content platforms. So the ads, some of it could be sponsored content. I mean, it might not be obvious. So this is just a dumb question from me. If they're a content platform, Bill, like we talk about with e-commerce, you've got to get people to your own dot com in order to make the economics as valuable as possible for you as the owner.

9:16For a content site like this, it seems like the majority of the flow would be, it's just getting reposted on Facebook or TikTok or Instagram or something like that. And you're just hoping that you keep the attribution or at least like, you know, the novelty of it. Are they actually redirecting that many people? Like, do people like wake up and log into their website, go to their website to be like, I got to see what new content is out today? Well, I assume the content that is being shared on Facebook is content from their site or that links to their site or something, right? Surely it's all the same.

9:50And the newsletter that they send out is just a weekly roundup of the best cat stuff. Yes. Yeah. Yeah. And they also did say further down the listing that they have strong SEO in place. So, you know, there are a lot of people that type cute cat videos into Google every day. Yeah. Or like cat versus bird or something like that. Like, yeah, like I want, I want my daily dose of this theme of video. Yep. So Travis, would you say this is like a, like an OG, like an old school SEO based content site that you can't really build anymore? And is that valuable or like, is this type of thing that someone should buy and probably will do well with or is this just a bomb waiting to happen?

10:35I would never buy this personally. There's just too much risk associated with it. I love optimizing and we'll say manipulating algorithms to my benefit, but I don't want to buy something based on that, right? Because just like that, it can disappear. And actually, here's an interesting story. So I bought a Australian Labradoodle from this lady who has the best website name ever. Her website name is already, I'm sorry, already trained Australian Labradoodles.com. And, and, and she just crushed it. There's a huge waiting list because she started one of these OG Facebook pages just about Australian Labradoodles and just posted cute pics day after day.

11:19Had like a million followers came in one day. I mean, you know, she's an older lady. She's her security. Wasn't that good. Her page got hacked. Facebook ended up banning it. She lost everything. That was her lead stream, right? Is people finding this and just putting it in demand. And now she's sold 20 % of what she once did. So there's a lot of risk for something which is one platform, especially built so much on just a Facebook page. Well, they don't say anything about TikTok. They don't say anything about Instagram. They don't say anything about AI, right? The things that they're not saying, I feel like are almost as important as what they're saying.

11:56I agree with you. And I do think there's probably a ton of low hanging fruit here. It sounds like there's been a 50 K a year on this. There's not a lot of like third party effort going to it's probably more like the founder, I would assume. Right. Not doing videos. They don't have their own e-commerce site. Why are they not selling cat furniture? Or T-shirts or T-shirts. Great one. Right. Yeah. I mean, collars like you should just be selling generic cat stuff. Like you have this much. these many eyeballs just be selling stuff yeah bill you gonna buy it so like no i don't want to buy it uh but but like travis i agree with you this if this goes well it's great right i mean it sounds like it is basically under optimized like if in the in the optimistic version of the world right you could crush it with this acquisition right in in a world where this doesn't go to zero overnight, which is totally possible, right?

12:55But if that doesn't happen, you're SBA pre-qualified, Heather. So you're putting down, I don't know, 500K on this thing. You're going to make 800K the first year. You can probably double it by monetizing it via e-commerce, by going to all the other platforms, trying to diversify off Facebook, et cetera, et cetera, etc. And now you're probably thrown off north of a million bucks a year on a 500k equity investment. And it's amazing. Until the Facebook page gets hacked, the algorithm changes, we haven't even gotten to the AI risk kind of thing like this. If you don't roll seven, right, if you can roll for long enough without rolling seven on this thing, you could do great.

13:41Right. And the lender might figure that out, Bill. So, you know, on one hand, they're going to go, oh, yeah, this is easy. Maybe someone comes in with some experience and says they can do this. But eventually, in a loan underwriting process, someone's going to start asking the question of the platform risk and the dependency and what happens. And I think it is actually tough to finance because of what you just said, because you have to roll sevens and lenders don't like that. Yeah. You know, they don't want to go bust. I wonder how much the reach is down since Facebook kind of changed their algorithm.

14:12You know, before it was Facebook page, you post on it, everybody sees it. Now it's more pay to play. There's obviously still getting some organic reach, but Facebook really wants you to sponsor posts to get those eyeballs. And so this is an example of any businesses this way, but you see it really here. You can't just like any random searcher, you can't just come in and buy this business without realizing that you got to get really smart. on the history of manipulating the Facebook algorithm, right? Like, because in order to win this business, in order to get where it is now, it didn't just post cute cat stuff, you know, kind of randomly.

14:52Like they did a lot of things right. They gave the algorithm what it wanted in 2010. And then again in 2011, and that was different in 2012. And it was different in 2013. So they were posting the things that the algorithm liked and they were doing all of the tactics that led to Facebook growth in each of the years and those changed it. And that's what you are signing up for is to stay on top of what works for growing a site and a Facebook page for the next 10 years. So you can get a return on your investment and you are also in order to do that, you need to understand what happened over the last 10 and whether those things were positive or negative for this page and this site's reach.

15:32And to your point, Travis, is reach declining? Why is it declining? Is it because the algorithm changed? Is it because they started posting differently? Is it because someone else is posting better and there's a new competitor that's formidable with cuter cat videos or more viral cat videos? Who knows? But you got to understand these things before you can't just look at the P &L and come in and buy this business. Bill, I have a recurring message I sent out I think you might agree with. So basically once a month on SearchFunder, somebody posts about wanting to buy an FBA business, e-com FBA. And about once a month, I have to come in and say, this is probably not a good idea for you because you need such deep niche expertise in this.

16:17It's not, if you find a port-a-potty business that you're going to buy, right, you don't know how that works, but you can figure it out. But for things like e-commerce and things like this business we're looking at here, you need a long history of understanding how to really optimize these algorithms and how to play these different games to get your products and the eyeballs in front of stuff. And it's just not as simple as buying and owning the business, right? You have to have this historical context. You have to have this deep industry knowledge. And I tell these guys all the time, just go work for somebody for a year in this space.

16:49You need to really understand it before you buy it. You can't just hire out that talent. You have to really know it as the owner, I think. I think so too. And I've seen people buy digital businesses. Like this is an SEO business. There's e-commerce businesses. There's all kinds of digital businesses or Amazon businesses. And they buy it. And nine months later, it starts declining. And they have no idea why. If you buy a port-a-potty business and it starts declining, we're not answering the phone. We're not going around to empty the port-a-potties as frequently. Like there's only so many things it can be online.

17:23It can be a total black box. You know, it could be all the things I listed before, new competitors, algorithm changes, you know, all sorts of stuff, all sorts of things. And you have to go in there. And by the way, this happens, I should say to every digital business. And the difference is because it's such a competitive marketplace, it happens to every digital business all the time. And the only way you survive and grow is being able to successfully diagnose, troubleshoot and recover from all of the meteors that you get hit by, you know? And the only way you get good at doing that is like 10 years of practice, or in this case, 15 years of practice of figuring out where the puck is going and constantly being used to it changing, you know?

18:03Figuring out what happened to you. I mean, it's like, I know it sounds crazy, but like it can be sometimes hard to figure out why your business is down 30%. Because there's so many levers and also you're competing against billions of other people, right? Again, the port-a-potty business, you're competing against the people in your town. So it's a little bit different and there's not as many levers that can change to pull stuff. So this, I mean, this is obviously a great business. It's making 800 plus thousand dollars a year at 95 % margin and it's relatively under optimized. Someone could buy this and do really great, but you could also buy this and get creamed overnight.

18:38Right. So I think you need some sort of risk sharing structure here over a number of years in order to avoid losing your shirt. But the seller is an illness, is what I believe it said. So I think to your point, yes, that's the way to cover the risk, but you need to know more about the illness and how available the seller is going to be long-term to teach you what you need to know. That's a good point. Okay. But maybe that just changes the buyer profile. You know, Travis said he doesn't want to buy this, but someone like Travis at the right price is a great buyer for this, right? Because the chances that this goes well for Travis are much higher than the chances this goes well for Mills, right?

19:23Because Travis knows what's going on. A hundred percent of the time. I promise you, Travis. Yeah. He's going to out, out peddle me on this thing. It, Heather, you bring up an interesting point though, too. And And I've done this, I haven't closed the deal with this, but years ago I had an instance where there was kind of a, you know, there's a quirky situation with a seller and they couldn't really benefit from all of the compensation from selling the business. And they didn't really have any errors. So it wasn't like there was going to be a trust that could receive the compensation and then it be passed on.

19:59But we used kind of a philanthropic kind of angle to say, you know, you're going to receive the vast majority of the purchase price, you know, directly. But then there's also going to be like a perpetual, it was through a donor advised fund, a perpetual kind of giving vehicle with part of these proceeds that, you know, is towards this cause that was really important to this person, which also related to the business. and the deal fell apart for other reasons, but it was really, really appealing. Like it was going to be like a$250 ,000 like nest egg that would never dip into the principal and would just live on perpetually like in honor of this person.

20:35So it was kind of a, that's not normal, but it has been an interesting tool that I've seen before. And somebody else told me about at that time, just as an idea to follow away. Yeah, that's a great idea. You listen to cat videos, Bill? i know that who's meowing i hear some it's my cat it's heather's actual he's hearing us talk about she's like hey i love that your first thought was bill's definitely gotta be watching cat video he was looking to the side like he looked engaged i'm trying to find the maybe travis you could just text me the link i'm trying to figure out which one it is i i'm less certain that i'm right based on the website but i'll text it to you afterwards i was gonna say your whatever prompt you put in chat gpt was better than mine i thought i did the exact same thing and I couldn't find anything.

21:19So it was really tough. It was like cat content brand of 3.9 million followers on Facebook. That's basically what I did. And they gave me stuff with 9 million Facebook followers. All right, well, let's talk about the, in all honesty, Heather hit on it, but the SBA side of this, is there a scenario where a lender gets comfortable? I mean, does the person have to be a cat expert? Probably not. Do they have to be an SEO expert? maybe if they have like a portfolio of seo businesses could could a lender get comfortable and say oh this is just going to be one of many things that you know are part of your portfolio i i think that's what it would be for a lender you know best case is it's part of a portfolio it's a strategic buyer if you will that already does something like this and has the expertise and knows just what to do um it still would be a really weird underwriting though i i can't imagine what the credit memo looks like when it's 95 % net margin and how you explain, you know, how that is even possible.

22:25But yeah, I think that that kind of buyer could actually get the loan. I think someone coming along as this is the only business they're going to own and they don't have enough experience to convince the lender that they know what they're doing here. I think that's a tough one. So SBA pre-qualified. And actually it kind of made me laugh. The headline here, it starts, it doesn't say cat content. It starts with SBA pre-qualified. So a little too much emphasis on that, but yeah, I don't think that it's going to be so easy for just a standalone SBA loan just predicated on this revenue. Are you ready to take a leap into business ownership, but you don't know where to start?

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23:38So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. One thing we haven't talked about is, like, I wonder about these relationships with cat organizations worldwide. So, you know, if this person was just generating content from their own cat, even if it was a famous cat, like, it's a very limited pool. You're going to get bored. People are going to get bored. Your cat could die. But they've got this kind of network, so to speak, of people who send them stuff.

24:15And they say heartwarming. So I don't think it's all just the funny cat videos. Like it might be, you know, this cat saved my life when I was, you know, on the verge of despair. I mean, like all that to say, you've got all these people who are sending stuff. It's all inbound is what it seems like. That is actually maybe a little bit valuable. Yeah. I mean, it's certainly easier than having to create all of your own content from scratch. I think I found it. I put it in our, in our host chat. But like examples, like one eyed kitten meets cat and they hit it off in the sweetest way. It's like that, just like on repeat.

24:48So it's just cute cat videos. And there are banner ads. I think Travis, you must have ad blocker on. But I think it's just banner ads. You know, I don't really see any sponsored content. I just see banner ads all over it. So, but like, that is a lot of banner ads, 900 grand a year banner ads, which kind of stinks. Like to me, that is, it's obviously the highest optimization strategy, but it kind of dilutes the quality to me. Like it cheapens it as a, as a user kind of experience. But there's just, I mean, yes, no, there's just so much you can do with it. I mean, 2.2 million monthly page views.

25:28like if the facebook followers are really that engaged like actually pointing that traffic at something that is much more monetized like banner ads are the worst way to monetize yeah like it's the lowest quality way to monetize so like even just like affiliate is probably better if you're a 20 million dollar cat brand you should buy this there you go yes so are they every fourth post is plugging your stuff on Amazon. Absolutely. Well, it doesn't even seem like they're plugging anybody else's stuff on Amazon, right? Like so many folks who have even like a 10th of this much content are direct linking to Amazon and they're monetizing that.

26:08I don't see any of that happening here. No. And that's what I mean by affiliate. So like, you know, like the tiering of online business models, like banner ads is like the lowest quality monetization. And then you can go up from there and be affiliate, which means you're going to get paid X percent of revenue if you send traffic. And that is so easy to do as an Amazon affiliate. I mean, you don't even need any prior permission. And then you can go from Amazon affiliate up to more kind of custom affiliate networks or one-to-one affiliate arrangements, which generally pay better, more custom deals.

26:41And then you can move up to selling your own stuff. There's so many ways. If you've got real targeted 2.2 million monthly page views. so like again if you are good at this and you buy this you could crush it here because they're not doing any of the like you know top five cat carriers from 2025 like bingo you could just crush it i would think yeah yeah free advice to this um this seller sorry for your health condition but we're really excited about your growth opportunities well so someone's gonna to buy this and do all these things and crush it or lose all their money in nine months. Right. Or, right.