This Business Sells Lights for Lego And It’s Making $500K!

0:00Hey, Michael here. If you are a Lego nerd, we have the deal for you. Heather and I went through this one and it's actually located in Europe and involves the Millennium Falcon. So come listen to this one, see what you think and see what we think. And let us know what you think in the comments below. All right, here's the episode. Cool set. Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % ears anymore. Thumbs down on just the plus inventory link. Hey, everyone. I just want to tell you that this episode is brought to you by VeriVend, which is the only platform purpose-built for independent sponsors and private market investors who want to move faster and eliminate friction.

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1:18So you can check it out and learn more at veryvend.com. V-E-R-I-V-E-N-D.com. Okay. So just for the audience to know and catch you up, last 10 minutes, Heather and I just been talking about why neither one of us has tattoos, but it's actually a fascinating generational thing about tattoos, Heather. Like one of the things I've noticed is you're at a restaurant, right? And like it used to, this was a few years ago, you walk up and somebody at our age, like in forties and fifties walks up and has tattoos. you're like, ooh, bad life choices there. That person's lived a rough life. Somebody walks up and they're 28 and they have a metric ton of tattoos.

1:56You're like, oh, cool, a millennial. Yeah, it's fine. Oh, where'd you get this one? What is this one about? Yeah, it is. It is. Our age just didn't do it at a young age or you were really out there if you were doing it at a young age. You know, you're getting tattoos. We're like, whoa, what is he doing? That's crazy, you know? One of the guys that has started a mountain bike with us, which is fun that, you know, if you stay active as a middle-aged person, you do things with cool young people and sometimes not so cool young people. This guy's cool. He's 24 years old, 25 years old, kind of still figuring out his life.

2:29So he's less than half my age. So pretty fun. And he's a nice guy and he's got tattoos and he's like, oh, like, you know, he's got one around his neck and I kind of joked about of being the no regrets tattoo you know with the miss bellers yeah and uh he goes oh that's not my biggest regret tattoo let me show it to you and he pulls down his lip and on the inside of his lip it says eat shit oh my gosh i was like what dude what where are you thinking he's like i was 14 i was like who gave you a tattoo when you were 14 in your mouth ow ow he says he says it actually doesn't hurt there's no nerves on the inside of right there do you know that's where you tattoo racehorses their number oh really and their lip so he's like a racehorse i guess you don't okay so uh amazing segue let me tell you about this lego business that i bought or brought legos all right so it's from talon estonia so you're familiar with where estonia is let's start with that uh not no it's somewhere in eastern europe it's one of the baltic countries so if you like you know where finland is right there's russia finland it's just like it's down there it's the ones on the baltic sea i see so there's a bunch of little kind of baltic countries there in estonia is one of them um i think that estonia was one of the first ones to let you have like digital citizenship like you could become a dual citizen of estonia and the united states and stuff if you wanted to anyway okay don't worry about that part okay so the name of this one is lights for Lego and it's a game of bricks and they are asking$3.5 million.

4:10And so this, the picture here looks like it's some Legos and this is the millennial Falcon. Yeah. Best I can tell. I recognize it. And it looks like there's Lego kits that are built. And then what this has is lights in the Lego kit. Yeah. It's like really fancy Lego, you know, that are already constructed, but they must add the really cool lighting to these kits, I guess. Yeah. It does look nice. if you're into Legos. I did a whole video actually when I went to New York. While my family takes naps, I go do like economist and business nerd videos and I went down and actually showed, I did two ones that I was really proud of.

4:44One was I went to the Lego store and basically like showed how Lego, Lego went from losing a million dollars a day as a company in the early 2000s to being the biggest by revenue toy company in the world. Wow. Yeah, it's a pretty crazy turnaround. But you go into the stores, there's no kids. Yeah. It's all kidults. It's like adults who are buying nostalgia and Harry Potter, like Lego kits. It's crazy. Wow. Anyway, stay tuned to my YouTube channel. You can hear all about it as I walk that through Chelsea in Manhattan. All right. So the asking price for this business is$3.5 million. Gross revenue is$3.7 million.

5:23It was established in 2019 and has EBITDA of$500 ,000. So they're asking seven times EBITDA, basically? Yeah. I was going to get my calculator. Yes. Bill GPT is on vacation today. So I have to use an actual calculator. The Game of Bricks is an e-commerce business dedicated to Lego enthusiasts and anyone who loves to build and create. Since launching in 2019, we've experienced consistent, significant growth each year. So far, 2024 has been our best year generating$3.7 million while maintaining a solid profit margin of 13%. We have a 20 % customer return rate and millions of views on videos featuring our lights thanks to our web partner support?

5:59question mark. I don't know why there's a question mark there, but there's a question mark. Yeah, there is. So, they have an extensive LEGO-focused product range. We specialize in high-quality lighting kits and accessories that enhance any LEGO set, appealing to a wide audience of LEGO fans who are passionate about making their builds truly spectacular. Strong online credibility with a domain authority of 28, Gamer Bricks has established a significant online presence, reinforcing his reputation as a trusted destination for LEGO-related products. Big online presence and strategic partnerships, impressive customer support and stellar ratings and they have remarkable customer loyalty.

6:30They have an impressive customer return rate of 21 % in assessment to the satisfaction and trust our customers place in us. There's an outstanding market opportunity for those seeking a profitable e-commerce venture. Game of Breaks offers a unique investment opportunity with consistent revenue growth, a strong customer base, and a clearly defined niche in the Lego community the business has posed for continued expansion. There's some tremendous opportunity to grow the business, they said you can sell to passionate lego lovers e-commerce oh and they have like a video here hmm hmm

7:20he lit up the lego town that's cool hopefully the editors can put a little lego guy all right that's cool cool employees five facilities they have a logistical customer support and they manage systems that integrate logistics to ensure fulfillment across the globe blah blah blah man this just keeps really going here and then here's the website gameofbricks.eu oh yeah and it's here in Estonia oh here's here's a map of Estonia oh there we go okay now I know where it is oh okay I see Yeah, supposedly this town where they're in, Tallinn, T-A-L-L-I-N-N, this supposedly is like a really cool place to visit.

8:03Yeah, I bet it is. Yeah, if you go to Finland, this is a cool place to go across this way. And then here's Russia right here. Yeah, right there. Right. Yeah. Interesting. It's too bad we can't go to St. Petersburg anymore. That's a place I like to go in my life. Yeah, that would be cool to go. Okay, this is interesting. So e-commerce, I guess it's in Estonia, but does it, I guess it could be located anywhere. They don't tell us if they drop ship. Yeah. It's not really clear where they're shipping from. Here's their website. They put their website here. So we're not doxing them. But yeah, these are, so in its core, it's lighting for Lego.

8:40Yep. Right. That's what this is. Right. Which I think is cool. Like if you're into building these models and you want them to look great and just right, I think lighting would be something, you know, next level, right? It looks really cool at night. Of course, you know, put these little bricks that have lights in them and the whole thing just looks a lot better. So I like the product. 13 % margin. It feels kind of skinny. Like maybe there's a lot of marketing costs here. That feels thin for what the product actually is. but you know good community of buyers only 20 repeat buyers though what do you think of that i felt like it should be higher yeah it feels like it should be higher it feels like they end up being a source where people by and large are mostly like doing one thing like they're building a lego kit like some of the ones we're watching in the video here and then they go through and like do that one thing, they light it and then they never come back.

9:42It's over. Yeah. Yeah. Are you ready to take a leap into business ownership, but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert, Walker Deibel, the lab is your fast track to success in the search diligence and acquisition process. With hands-on support, world-class resources, and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey. And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast.

10:13They're passionate about helping entrepreneurs like you take the next big step. So 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. So that is maybe why margins are thin, because 80 % of your customers you got to go find every day. And that costs a lot of money in terms of marketing. Yep. Yeah, so they don't manufacture this, or did they say? They just probably get it manufactured somewhere else. Yeah, I think that ties into a big question that I have, which is, what is the sourcing plan for this?

10:54My guess is it's made somewhere in China, and this looks like Chinese stuff. Here they're showing some of the things here of how to do it. But these are very straightforward little kits that are basically Chinese. It looks Chinese made. Yeah, Chinese electronics, basically. Yeah, so you've got a factory in China that's producing. You're probably doing a little bit of design, keeping up with the latest Lego kits that are out there and that are popular, getting it manufactured there, probably carrying some inventory somewhere, and marketing, spending a lot on marketing so you can find your customer.

11:30Yeah, I think, you know, dropping to the bottom line, 13 % as a profit margin, you know, it's not that far off of, you know, your typical Main Street business. So I, that actually, I wish it was higher, but actually, I kind of like seeing that because it's not like, you know, it's, it's not crazy, right? It's not like they're operating at 40 % net margins, which would be scary if they were that high that they were pulling some shenanigans. Given this seems like pretty commoditized product in the grand scheme of things. Yeah, probably. But so what am I buying when I buy this business? So I get a customer list.

12:05You get a customer list, some inventory, some designs, and some kind of relationship with the manufacturer in China. Yeah. And ultimately, buying and owning a business like this, I'm really just betting on the future of Lego. I mean, that just seems like what this is, right? Is Lego going to keep going that direction? The good news is millennials love nostalgia. So they keep buying Hogwarts Express kits. There's a chance they're going to keep doing that. And they've got a long run. And they're going to start making more and more money. So I like that aspect of this business. I think I'm bullish on where Lego is as a business.

12:44Yeah. People keep doing this. They will keep doing it. It's probably very stable. You're paying seven times, though. And so to me, for a company of this size, if you're asking seven times, you should have a lot of growth opportunities. And I don't really see that here. I feel like this is something that might just be more stable than growth oriented. What are they talking about? One of the biggest challenges in this business is that our lights consist of many different parts, such as connecting cables, expansion boards, etc. And since there's no robot to pack them all, human error can sometimes occur.

13:14Plus, we have significant opportunities on the horizon, a range of new products that could potentially double our revenue in just one year, as well as the possibility to expand on Amazon and stock lights directly in the EU USA. Together, these factors can give our business a substantial boost. they do talk about how long their delivery is which was ship in one day get there in nine days uh they also here i'll show you this here our promise one day business dispatch three to nine days delivery so that smells like they are drop shipping these straight from china under the de minimis rule so that's another aspect of this like tariffs are not going to be these have been shipping tariff-free and that's not going to continue.

13:58And we don't know where the customers all are. Are they European? Is it a 50-50 European customer versus US? It'd be nice to know that in terms of tariffs as well. Yep. Yeah. Don't know what the mix is. All right. Well, it seems like at first glance, it seems like a good business. My first takeaway is assets continue to be expensive. like I applaud these guys for seven years ago being like you know we should do sell kits for lego and we're going to create a ton of value for ourselves so I think I think it's another testament to me like you know creating businesses is where the alpha is these days but secondarily just you know for what it is is an e-commerce business that's kind of undifferentiated and doesn't have a u.s presence I'm with you it just feels expensive yeah but cool business at a lower price for the right person who's like into legos i think it could be a good business yeah uh if you are a lego rich lego nerd who wants to live in the facebook meta ads ui for the rest of your life and loves dorking out about this stuff it's a good business i mean and there's something to be said for estonia it's not if you want to escape the u.s move to estonia yeah but yeah i don't think especially with an estonian business like this i don't think they're getting seven times for this business.

15:17Like, that's insane. Yeah, doesn't seem like it. Super fun. Okay, so where are you at on this one? I'll pay no more than 4X, probably three and a half. Oh, Heather, I knew you were a closet Lego nerd. I like it. At that price, I like it. That's a cool business. Yeah, I have a thumbs up on business category, thumbs down on price. And I probably also, this is a business that's just going to have a hard time selling right now. Just there's so many moving parts, geopolitically around China and all this stuff. Just, I don't know. I don't know how this sells. Yeah, I agree. All right. Well, thanks for being here this week, guys.

15:54This is a fun deal. Let us know what you think in the comments below. And if you enjoyed this episode, please send it to a friend and we'll talk to you next time.