He Turned Niche Websites Into a Multi-Million Dollar Empire—From Farm Roots to Digital Mastery | Ep214 with Matt Raad Co-founder of eBusiness Institute

0:00Hey, everyone. Welcome back to Founder Story. Today, we have Matt Rod, the CEO and co-founder of eBusiness Institute. and Matt, I'm really excited to dive into how you are talking through people about making money online, starting businesses online, buying and selling online companies. It seems to be, you know, these are the things that are really taking off. At least recently, I'm seeing a lot of people talking about this. And as we know, it's a global marketplace and a lot of people don't want to have the typical nine to five job. I experienced that. So let's first start off with your story.

0:38And what was the spark for you that made you say, I want to be an entrepreneur and this is the industry I want to go into? Yeah, really, really good question. I guess it's very appropriate, Daniel. I'm on your podcast and a founder's story. I think in this instance, our actual founder story is probably most important because people look at what Liz and I do. Liz is my wife. Like Daniel said, we buy and sell online businesses and it's obviously the place to be. But backing up to our actual story, I met Liz at uni. We were studying zoology, so red kangaroos here in Australia, which sounds totally bizarre.

1:14And ever since then, our life has just been very unique compared to most people. Neither of us ever wanted a nine to five job. We both come from rural, like from farms in rural Australia. And we decided somewhat stupidly at the time to buy a small manufacturing business as soon as we got finished university with the help of friends and family. And we absolutely loved it, but we made a lot of mistakes. It was going bankrupt. We got the wrong advice when we bought it. So to this day, we're really passionate about teaching people to do good due diligence. And looking at our founder's story, I guess, it was very challenging.

1:53People see what we do today, but this was 30 years ago. And this bit sounds like I'm making it too simple, but we were very successful with that business. Eventually, it took 10 years to get that one right. In that meantime, we bought and sold other businesses. We were exporting to America, were making parts in outdoor power equipment and we were, we bought and sold other wholesale or wholesale import businesses, you know, distribution businesses. And we're always buying and selling these businesses that revolved around physical inventory. And so what happened was we felt trapped. It was really difficult because we were hugely in debt for the whole, you know that that 10 years or 15 years actually we were massively in debt to the banks and maybe if you listen to this you can identify I know a lot of people you know invest heavily in real estate it's the same kind of thing we're investing heavily into stock heavy businesses and in that time what we started doing was we were hanging around mentors we had private mentors who are also buying and selling businesses and I think it was by doing that and we got into mergers and acquisitions.

3:04We started helping them buy and sell multi-million dollar businesses. And that just opened up our eyes. We literally were working with people that were, in our opinion, living the dream, basically using businesses as assets. And what they taught us was go for high cashflow businesses. And that's the trick to all of this. And they were literally making millions of dollars a year working two or three days a week. And I think that's what, that became our goal, obviously. And that's what set us on the path, meeting those guys, working with them and seeing that it could actually be done. That was absolutely eye-opening.

3:44So we learned a lot through that. And I think to this day, the power of high cashflow businesses, once we saw the online space, it was an absolute no-brainer. Online businesses are very high cashflow, the kinds that we buy. and for that reason we see them as much lower risk compared to what we used to do in the good old days of bricks and mortar businesses yeah i'm glad you bring that up because i think everyone wants to create the next beverage or they want to create their product but not realizing that they're going to not make any money for a very long period of time no matter how much revenue they're bringing in because it's all in this inventory and manufacturing and all these things that your capital stuck.

4:27So when you're looking at an online business, are there parameters like EBITDA or margins or what do you look at in terms of like, okay, I think this is at least viable in the due diligence? The main thing we're looking at, it is the EBIT or the net profit for websites to keep it simple. They're basically valued exactly the same way as a traditional bricks and mortar business. typically anywhere from one to three times multiple three to five times multiple of the profit if they're a much higher quality business and a much more automated um and or you know are recurring revenues but it thumbnail you know quick valuation of most online businesses if you're listening to this and you're used to how you value you know any business it's always a three times multiple so if it's netting around 100 grand a year it's probably worth around 300 000 and that's what we're looking for but what what we're what we're also doing daniel really important people hear us you know liz and i buy and sell online businesses the sorts of they think we're buying and selling e-commerce businesses because of my founder story there that's definitely what we don't do that we we avoided that we we made a pact with each other when we got online we are never going back to physical inventory businesses if we can help it.

5:50And we never have. So we never bought e-commerce style businesses. We buy businesses that make money off selling information products or advertising or sponsorship packages, which is a really big thing these days. And or traditional affiliate style businesses, which are still very, very popular these days. They can still make great money. And in particular, what we like, I guess, is niched online businesses that have unique communities or audiences behind them. It's all about the audience now in this day and age of AI and the way that the search engines are working. So are you finding that? Are you buying businesses that have like a complementary community to another business that you've already bought?

6:38Like over time, or do you just, is it kind of like, you know, this industry over here, I like this on this. or are you putting them together as an ecosystem? Ideally, yes. When you're starting out, you just buy anything that's got a good profit and good recurring revenues and good traffic. That's the other thing we look for when you're asking before in due diligence. It's all about the traffic and the profit. That's probably our main metrics, but we love doing exactly what you just mentioned because that's what we used to do and our mentors used to do with bricks and mortar businesses is going to a niche so for instance we would help these guys buy every as many wholesale import businesses in the electrical components niche you know electronics or whatever um and so we do the same online we go into one vertical niche and we try and buy you're right businesses have complementary audiences so the um but there is also merit in having websites in different niches as well and we we own a broad range of sites across a broad range of niches but for us these days with it's particularly this last year or two the way the the online space is working it's all about community or audiences now and and all things being equal I guess that's one of the other main things we're doing our due diligence on now it's about the audiences because with AI and the way our AI search is working, people are following, yeah, the audience or the community is hugely valuable.

8:10And it means you can have recurring revenues, particularly if it's got an email list or like even a social media following. And we can create multiple followings as well. That becomes assets in and of itself as well now. So when you look at the company, and thank you for explaining that, are you looking at these digital assets i guess i'm just making that up but these digital assets that they have uh are you seeing okay they may not know that they can monetize it this way but we know we have monetized it this way so when you're when you're going through the due diligence or going through the phase of trying to figure out if it's even worth buying or how do you look at those things yeah that's that's a key point and that also explains why what you're saying is spot on.

8:58It's also why we find or we love buying, do I say bargains? I don't know, diamonds in the rough in what we call passion niches. So niches where people that don't typically know how to make money online love to blog about, for instance, like food blogs, travel blogs, gardening blogs, photography blogs, how to play guitar, all the classic evergreen niches have been around for many years. Believe it or not, these sites are quietly the big ones now are worth millions of dollars. We know like go and speak to any website broker, you know, these days I'll tell you, yeah, we're selling food blogs for millions of dollars, which never happened when we first started online.

9:37So we've been doing this for nearly 15 years now. But one of the advantages of going for these passion niches is that people will set these websites up. They chip away at them for a couple of years and then they basically lose interest because they're not making much money, but they've actually created a lot of assets there. There's age, that's an asset that's worth money. They've created a following, which is worth huge amounts of money these days. And they've created valuable online real estate. So a great example of like what you're saying is we have a young couple who are, they're actually coaches for ours, but Nathan and Alexa, they learned off us many years ago and they want to do the laptop lifestyle.

10:19They're a young couple. They traditionally tried real estate investing, but they just maxed out with the banks. They had no money. Nathan was an electrician and Alexa worked in customer service. So they started buying and selling these passion sites, got really good at renovating them. And they found that they could work in the gardening niche. They owned a couple of sites in the gardening niche. They're not gardeners. They're literally living on laptops. They were traveling around the world, doing the young person's thing where the visa would run out and they'd have to move to the next country.

10:50So they're three months at a time in a country on a laptop. They are definitely not gardeners. So they'd hire experts to write the articles. But they noticed that there was this neglected site here in Australia. It had been around for 14 years and they could see the guy had stopped blogging on it. So they reached out to him and said, hey, do you want to notice you're not working on the site? You're interested in selling? and he said, sure, I'm just going to close it down, about$400. So they bought it for$400 and that site now, because they've assimilated it in with their team and their other gardening site, they've got a much bigger gardening site, that site is making$4 ,000 a month net in peak gardening season.

11:32So they renovated it, add more content, and now they get sponsorship. They've gone to local trade shows. Big gardening companies are paying to advertise on there or to do sponsored posts and things like that. And I think that's a great example. It's just in this humble gardening niche. And exactly like you said, Daniel, the gentleman, he just was bored with it, never made that much money. And it's just a great example. These guys knew exactly what to do. They knew all the keyword research. They knew how to grow it. And now that wasn't a get rich quick thing. Please don't think they just immediately started making that.

12:06They had to work at that. That took about a year or so to build that up. but in the meantime they're in multiple sites that are doing now they've got one in crochet another couple in gardening so for them it's just a they've got the team already in place and that's what they do this reminds me of in 2020 i wanted to travel for free i'm like you know what i just want to travel for free so i'm such a huge proponent of what you're talking about I bought into a Facebook group for$300. It was like$250, a travel group. It had 90 ,000 people. I then went, while I was on vacation, I reached out to a hotel and said, hey, I have this group.

12:46I want to review your hotel. Will you let us stay for a few nights? They let us stay. We got upgraded to a four seasons presidential suite. I mean, this is because nobody was traveling. Nobody was traveling at that time. but we took like about a year to build that up and then we built other sites and then like you said i'm a huge proponent of what you're talking about and i love the fact you're bringing up uh and this is you know people like you're saying they're looking for the they want to they want to get into something that's making a million dollars today which we knew highly unlike this you have so much cash to spend um but finding these diamond in the roughs where you know these websites that people have been blogging on that they're not really using these assets that you know they don't even know how to make money on it's just a waste of their time i think that is huge this is the website i mean the internet probably has millions of these i'll say it does that that's the exciting thing and and the main risk is your knowledge risk you just got to know what you're going to do with it and and be thinking out five years in advance that's the the thing and you know what else is really exciting Daniel this is how the small guy can end up selling out to the big guy because we can buy these assets up build them up and then we sell out for much bigger numbers because with business valuations what we learned all those years ago and what everyone knows is once your business gets over a certain size the multipliers jump up and the big buyers start coming in like the private equity firms and the high net worths and stuff and that's the really exciting space So once you get over a million dollars with online businesses, it's a really interesting space for acquisitions and things like that and generating wealth because you can flip websites at a very high level.

14:32But that's why we love teaching people. This is the way we get them to transition from corporate careers and stuff is you can't really lose by having fun with this. Doing like you're saying, buying these smaller niche sites that people have neglected. There's no real downside to you as the buyer because you're getting them cheap. You should, you know, you buy them small, keep under 50 grand, keep under$10 ,000 and just build them up, learn your digital skills that you need in this day and age anyway. And then you can hopefully sell out at a much bigger price down the track or you keep for the cash flows.

15:05It's a really cool strategy if someone's looking to not immediately quit their jobs, you know, do as I guess you call it a side hustle, you know, over time. And that's where we've seen some absolutely fantastic success stories. I love this side hustle. I love when people tell me, you know, I was able to replace my income and then I moved over. So when somebody comes to you with the nine to five or they're like, look, I hate working for this corporation, Matt. I know I have skills that I've been building. I want to leave. What is like two or three things that either that I need to know or I need to do in order to leave?

15:40Awesome. My favorite topic is firstly, don't quit your job because it gives you financial stability, which helps with your mindset. it you've got to carve out time to learn first how this online space works and my number one bit of advice just we've been coaching people for more than a decade now we've got huge success stories with it and the thing that we noticed gave the gives the best result the quickest is learn how to build a website and just understand how all this space works so like Nathan Alexa they could very quickly because they'd built lots of websites they could very quickly look at that gardening site and go oh I know how to renovate that I know how to fix this we know how what to put here and then more importantly, how we can monetize it.

16:20Most passion site owners don't really monetize very well either. So your first step is learn in the evenings, which is a lot of fun. Stop watching Netflix for a while. Just turn off, carve out a couple of days or in the evenings. Treat it like a part-time diploma or something that you're going to study. And then the next step is buy or build a very small site first where there's very low risk. So you can't really make too many mistakes, but the upside is huge. Even if you just get it to making a couple of hundred dollars a month, that's a major win. Because believe it or not, the same skill that gets you that first couple of hundred dollars a month is the same skill sets that we use on$10 ,000 a month websites.

17:06So learn and start small. That's probably my main bit of advice. So let's say they do those things. I'm fired up. My site's making money. I want to start buying other types of sites. Is there a certain place or way that you find these diamonds in the roughs or these sites or these digital assets that you find works the best either for you or your students? So we start everyone out on the world's biggest website brokerage site now called flipper.com. And the reason it's really good is because it does list sites under$10 ,000 that actually do make money. So you still need to learn how to do due diligence.

17:51Sorry, that's the other key step you should learn in life as well. If you want to get good at this is obviously due diligence. It's something that we made big mistakes on in the early days and particularly with bricks and mortar businesses. But that's the other beauty of going onto a place like Flippa. You can start out small and do practice due diligence. There's lots of other website brokers out there. Now, obviously buying off a website brokerage means you're not always going to get the best bargains, but we do have clients that get amazing websites. So we just had a client recently buy a really cool snowboarding site for, I think it was$12 ,000 and it's making $1 ,000 a month semi-passively.

18:32And it's all about the topic of snowboarding and it was started by an expert snowboarder and it's got a really good following um and so you can and that was bought on flipper and no one else bid on it no one saw it because on flipper the inside secret is the best listings on there are the ones that are in the classifieds once you know what you're doing people seem not to hunt through those enough they just look at the it's like an auction site or the the one that demonstrates all the statistics and everything if you look in the classified listings that's where you can find the diamonds in the rough but once you get experienced and you've practiced our go-to our favorite strategy still to this day and it's how we bought bricks and mortar business is where we developed the strategy is literally what we call the private approach it is in good old days it was door knocking we drive around industrial areas in in you know where there's factories and things in the afternoons and we just go and door knock or go and identify businesses to see if they wanted to sell.

19:32We do exactly the same thing online. So we look for rundown websites in our niches that we know and we'll send them emails and say, hey, would you be interested in selling? They even don't have to be rundown websites, but when you know what you're doing, and interestingly, people find this surprising, we don't even approach the sites that are on page one of Google or anything. Often we go to like page five, six, seven, eight, nine, the really low-ranking sites. because you can pick them up for bargain prices. And if you know what you're doing, you can fix them up. So there's lots of opportunities for private approach once you know what you're doing.

20:05That's for getting the diamonds in the rough of the bargains. So when you look at this private approach, I'm very fascinated. I've used Flippo before as well. But I like this private approach and going five plus into Google because I think I stopped at like maybe two. But yeah, right. Yeah, I mean, if you're already on page one, how much more upside is there? But if you're on page five, there's a lot of upside. So when you're looking at these, I would imagine that most people are, one, afraid to reach out for whatever reason. Maybe they don't know what to say. And then two, how do you offer? I would think that many of these sites are not making money.

20:47So if a site isn't making money, how do you know what to offer them? Yeah, it's a really good question. And I guess coming back to like Nathan Alexa, it's a really, you know, they did exactly that. We look, the reason we go so deep into Google, like five to 10 pages back is there's no competition there. There's no one else approaching those. People just think those websites are dead, which they kind of are a bit. That little gardening site, literally the guy was just going to close it. He was just happy for 400 bucks just for someone to take it over. You don't always get that, obviously. Some of those sites will be making money.

21:19It is interesting. some sites on page five still make okay money. And people, you know, there's always people that overvalue things, but then we just gently educate them. If we can jump on the Zoom and chat to them, what we say to them, look, we're real, we're cash buyers. Typically we pay three times a profit. And they say, well, I'm not making very much profit. And go, oh, well, there you go. So it's not really worth that much. Do you want out or not? And sometimes people are just happy to sell it for a realistic price. If they're not realistic, that is the biggest problem, the challenge with this.

21:54If they're not realistic, we just move on to the next deal. That's the bottom line, being blunt about it. You can't convince someone to sell their baby if they think it's worth too much. But typically we will say to them, look, go and look at Flippa. You'll see what sites like yours are selling for. We're here private now. We can do the deal tomorrow. That often gets people across the line you say we're cash buyers we'll do it tomorrow you know the money will be in the bank account um we use escrow by the way escrow.com which is really handy way to um uh buy websites like when you're doing private deals but in essence that's that's what we're doing i don't think people understand how important escrow.com is oh okay okay i'll take it for granted but yeah yeah it's very good yeah it's like in the old days when we buy bricks and mortar businesses you put your money into the lawyer's trust account.

22:47Escrow is an online version of that where the money's held by escrow.com until both parties agree that the assets have transferred and then the money transfers to the seller. So it works really well. We've been on six-figure deals and we've had to back out of the deal and we've just said to escrow, no, we haven't proceeded with it. And the way escrow checks it with online business is actually really easy because they just see if the domain name's transferred. And if the domain name hasn't transferred, you can back out of the deal. Yeah, these are things that, like you said in the beginning, these are the things when you mess up, it could be huge.

23:26A thing like that could be. You could lose$100 ,000 plus. $3 ,000 could be a whole year's salary for some people depending on where they're at in the world. So leveraging these tools. And I think now with AI and the ability, at least generative AI, great content, like you could automate so many things. You don't have to have a huge team or maybe they had a huge team that doesn't really need to be there anymore. You can really create a lot of profit or profitability. How are you looking at this? Yeah, this is the really exciting part. And obviously, this is rapidly evolving. I've got to say, even as we record this, Daniel, even in the last two months, we are blown away.

24:12in our team, we're all testing all the different tools because all of us in our team and our coaches, we all own content sites or buy and sell websites or variations of those. And we're using Claude, ChatGPT, Gemini, and we're all getting different results. And now we're using a combination of them all. It's very... Pardon me. It's a very exciting time. And the good news is already for us and our clients, we are noticing we are significantly reducing our team sizes, particularly writers and editors. We're now using AI to edit human written content, which is interesting. It used to be the other, you know, like a year ago when we're using AI.

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26:25You know, so you get human writers to write it and then tweak it up or you draft everything with AI. But now it's the other way around. We can edit old human written content with AI and make it a lot better. So it's a really interesting space. And I'll just come back to something you said there when we're talking about escrow as well. Just made me think, like you said, things, if you don't know what you're doing, you can lose money if you're not careful. But this is the beauty of, if you're listening, is please don't rush out there and buy a six-figure website straight away or anything. Just buy a little site under$5 ,000.

27:03That's normally our starting point for everyone. Why? Because you can. You can hunt around. There's always sites for sale. On Flippa right now, there's probably hundreds of sites for sale that are under$5 ,000. And that way, you'll learn how escrow works and all those things work. And jumping back to what Daniel and I are talking about now, if you've never used AI with websites, on a$5 ,000 website, there's no downside. You can practice to your heart's content. It's a great place to learn how all these AI processes work. And you'll be very excited. So Daniel, we just ran a boot camp this weekend where we run this challenge.

27:43It's a really cool challenge where we get our clients. It's a whole group. It's about 100 people at this boot camp. It's an online boot camp. And they have to build a website. And they've got 10 days to do it. So we started this a decade ago. Guess how long it takes now to build those websites by the next break? fully done yeah literally 45 minutes to the next break and whilst we're presenting people are say i've done it have a look and it's fully written oh not fully written but the it's got like the home page about page and a few articles because we say to them you're allowed to use ai now so we've got and it's always the young people all the all the all the millennials and the sorry the gen z's and stuff literally and i think the record the record for us was it wasn't actually this year it was last year was 10 minutes just drafted up done and and the site was about extreme ironing so really niche we said go niche and and he showed us the keyword research there was volume for it everything apparently it's a sport extreme ironing who would have thought so in 10 minutes so that that's the power of learning these tools on small websites and getting out there and having ideas so if you're a bit older like me and you haven't grown up with computers again i think this is a really important skill to learn for the future, the way the world's going.

29:04You need to learn how to use AI. Why wouldn't you use it, learn it on your own little side hustle? I think that can be a very effective strategy for the future. Well, Matt, this is super exciting. Who would have thought about extreme ironing? I think you've got me really excited because there's, I think there's so many different niches. There's so many different things that people do that I would never think of, but have a very it's like you know riches and then niches like it's like yeah it has a great community of people they are hyper focused on it and they love it and they are passionate about following it but there's barely anyone or places for them to even go yeah but this this has been great i'm fired up i can't wait to join and i'm gonna go on to google four five and six right now because I want to see if I can buy something this week.

29:59That's my goal. Almost seems like very small, maybe$400. Let's see if that works. Why not, right? But man, this has been really great. If you want to get in touch with you, they want to find out more, they want to join one of the boot camps, how can they do so? They just come to our website, ebusinessinstitute.com.au. It is a.com.au. We have lots of American clients on there though. And we've got a free masterclass. So we actually go through actual examples from students, recent buys, and we show our strategy of what we're buying, how we're buying them, how we're valuing them, and the sorts of niches that we're going into.

30:39There's a free masterclass on there. There you go. Free masterclass. How can you beat that? But, Matt, this has been great. I'm very excited for the future and how many more people can be, you know, a laptop entrepreneur traveling the world, doing what they love, not having to work for corporations who maybe don't believe in them or don't give them the respect that they think they deserve. So I'm very excited for this, by the way, creating entrepreneurship creates a lot of revenue jobs. It's the future. So I can't wait to see in a year from now how this is going. I can't wait to be a student and I want to get started.