Interview with Gregory Elfrink from Empire Flippers

Hi Greg,

We first met at the Chiang Mai SEO conference a few years ago when you presented for Empire Flippers, a business that helps connect and broker the selling of online businesses. Every year since we have bumped into each other on the conference circuit.

You work for Empire Flippers one of the most popular online business brokers around that has helped buy and sell over $100 millions worth of businesses over the last few years.

I and my readers would be interested in knowing about your role at Empire Flippers and how you see the state of the buying and selling online business market today and the coming few years.

In preparation for this interview, I took a look at others you have done. I wanted to take a slightly different approach and to also focus on your lifestyle as this is what also fascinates me about online entrepreneurs.

So, thanks again Greg for taking the time today to answer these questions. Let’s jump straight in with question one.

It would be good to get a bit of background information on you. So, where are you from and what did you study?

I grew up in Alaska, born and raised. Where I come from you have three life choices you can make after high school. You can go to college, join the military, or get into the oil field. I’ve thought about college, at least in the USA, to always be primarily a scam for most people.

People who don't want to say that, who would want to say it was a bad idea they just spent $40k-100k+ on a degree to get a job where they never needed that degree? My friends always thought I was somewhat of an idiot for this, but I still hold pretty firmly to that belief all these years later.

There are GOOD degrees to get for certain industries, I just don’t think getting an overpriced info product is a good trade for most people.

There was a time I heavily considered joining the AirForce, but I grew up amongst the punk rocker crowd in Alaska, and therefore had a healthy disregard for authority. It’s not that I don’t listen, most of the time I do, but I only do if I think it is a good idea and typically don’t care what other people think if they disagree with me. So, that felt like a quick dishonorable discharge waiting to happen haha.

The only thing I had left was the oil field. I went into the field at 18 and worked for close to 10 years on oil rigs in the Arctic Circle six miles off the north coast. That show about ice road truckers? I worked with them all the time, and those guys are crazy lazy. Can’t tell you how many times had to freeze my ass off in -50 Celsius (-50 in celsius is actually the same as Fahrenheit at that point, but I like to use it to impress my European friends haha).

I also worked in the Gulf of Mexico offshore, even worked on the famous BP rig that would create a huge oil spill about a year or so before that event actually happened. I had friends on the rig when it happened. Later I would work in North Dakota on a bunch of land rigs which was probably the roughest oil field I ever worked from a pure safety perspective, people's perspective, and workload. It was 18 hour days 7 days per week, and if you took a day off that means you had gotten fired or quit.

I eventually got back to the Alaska oil fields. But I hated everything about it. I’m just not good with mechanics. I’m a smart guy, not in the academic sense considering I barely passed high school, but not that great when it comes to the blue-collar trades.

I wanted out. I always wanted out. I wanted out since I was in 8th grade and use to stay up late with my TV in my room blaring at 4 am with some guy on some infomercial selling me an eclectic mix of dreams revolving around no money down real estate, government secrets (the dude in the question mark suit, some of your audience might remember him), and random startup business franchises.

The normal life would never be me. I remember back then in middle school thinking to myself, I am the kind of guy that will probably end up incredibly wealthy in some fashion or I’ll be one of those poetic writers that struggled through life and lived in an awful kind of fiscal and spiritual mediocrity for wanting to try to be something more and always failing.

For a long time, I had accepted that the latter was my lot.

But then, as things do when the night waxes and begins to wane, my lot changed.

Throughout my oil career, I bought every course I can imagine. Scams, legit, didn’t matter. They’d tell me over and over “This course is only this many cups of coffee” and I would say, “You’re right” and buy and buy.

I racked up some great debt ironically, the same kind of debt I had tried to avoid skipping college!

In the end, though, all of that led me to what I foreshadowed above. My lot changed.

I’m now one of those guys that a lot of my friends consider an overnight success, but I know the horrors of that night, that night lasted for a solid decade. A long, long night indeed for my early life.

But that is the beauty of life.

Everything is negotiable. Even the harshest circumstances can bend and shift and change if you keep debating with it long enough.

You lead an interesting life that involves a fair amount of travel. I regularly see you in various exotic places around the globe. Where are you mostly based, and where do you spend your time during the year?

Funny enough, I actually hate traveling. Don’t get me wrong, I think it’s awesome but I just prefer to live in one place for the majority of the year that is somewhere exotic and interesting and buzzing. If we could magically get rid of airports and planes and I could just teleport, then I’d probably like to travel again.

But… probably wouldn’t ever actually DO teleportation because of that old Star Trek theory of “is it really you that comes out on the other side of the teleport, or a copy of you?”

Probably an existential conversation to have over a few beers haha.

For the most part, I live in Ho Chi Minh City, Vietnam. I absolutely love Vietnam. The country has a haunting past that speaks to the tragic writer in me, and the people are iron-strong with their willpower and desire to become more than they were. It is a beautiful place, and economically speaking it is going nuts right now.

Outside of Asia, I recently got to visit Venice Italy, and while that is a way different vibe than the megacities out here in Asia. But, I absolutely loved it. I could see myself spending some solitary months with just myself and a notebook in that beautiful, weird city that shouldn’t be.

I remember a story from a few years ago when you had a particularly interesting night-out in South America (can’t remember where now). I believe you still have a few body souvenirs from the occasion. What happened?

Ah yes, my infamous Medellin Medallions. The story isn’t overly interesting other than the level of violence that happened in an otherwise pretty mundane scenario. I was out with a few friends and decided to go home. I went to the official taxi line up asking the first guy if he knew where my place was on google maps, he said no, went to the second guy and that guy said hop on in.

So, I did.

Then he took a wrong turn, made it sound like he was going to do a roundabout to fix the error, I thought nothing of it. Soon, we were careening down this alleyway at high speeds and just thought to myself… this probably is not going to end well for me as the buildings rocketed by my window.

He pulls into an industrial parking lot, jumps out of the driver seat, opens my door behind him, and just straight up goes to stabbing me in the shoulder. He could’ve easily killed me, my neck was just a few inches up, but think he thought I was a big guy and just wanted to make sure I wasn’t going to fight back. Not that I would’ve anyhow if he hadn’t started off that way, I’m not a big believer in physical fights of any kind solving much of anything.

Anyhow, he gets my phone and my wallet, and I’m left staring at him while bleeding on his seat. A bit of shellshock probably coursing through me as I ask,

So you said you know where my place was, can you at least drop me off there?

He looked a bit shocked, grabbed me by my shirt, and threw me out to the pavement before speeding off in his car.

I was left walking some pretty dark streets smoking a cigarette while bleeding out of my arm and wondering with some chagrin at how unrealistic it was that the Hound would survive Arya’s stab wounds in Game of Thrones. I judged this based on how much blood was coming out of me.

I found a taxi to a hospital, but since I didn’t have GPS with me I thought this guy was ALSO going to stab me so I offered him a cigarette to get me to the hospital safely.

Luckiest day of my life, it could’ve gone much, much worse.

I was actually in an Empire Flippers shirt when it happened. I had a flight to Bangkok the following day for a conference too. Flew all stitched up and since I didn’t know anyone at the conference, I figured my stabbed-up EF shirt would make for a good icebreaker.

I was right, I leveraged that into quite a bit of influential connections that eventually led to tens of thousands in media placement/mentions of us, podcast episodes, and now keynote speech in front of around 1,000 people coming up.

Always use the resources you have, eh? 🙂

You have been working at Empire Flippers for 3 years now. How did you first get involved with them and can you outline what you guys do and your role?

April will be 4 years for me!

I got involved because during that long night I mentioned earlier, I had given up on ever thinking I could start an online business and escape my quiet life of desperation. This bit of nihilism in me led me pretty bad burnout, but I had bills to pay and so I decided to just write articles for people.

I write fiction all the time, I’m a fast writer, and I knew I was desperate enough to break my cycle of credit card debt that I would undercut anyone to get ahead of it. That is when I started writing articles for a bunch of local SEO agencies across the USA, mainly sourcing the jobs from random Facebook groups. I knew quite a bit about SEO and one thing that holds true to this day all these years later is that SEOs absolutely hate writing good high-quality content.

My first jobs were PBN gigs, writing for their private blog networks for $0.01 per word. I was fast enough to get this up to an average of $20 per hour, and that led to bigger projects.

Eventually, I got a bit of my confidence back but lost none of the nihilism. One of my clients found out I was still working in the oil field and told me, “Man you’re doing this and that? I’d be so burned out if I was you…” and I told him, “Well, I’ve been burned out for years man. Doesn’t change the calculus of my bills.”

My spark of confidence led me to launch an affiliate site and go all-in. I’d work my 12-hour shift, then work 1-3 hours per day on the site writing all the content, keyword research, etc. you name it.

My plan was to sell it to these guys at Empire Flippers I’d heard about through Warrior Forum posts and other places, pay off what was left of the debt, quit my job, and just go live somewhere super cheap as a $1,000 per month freelance writer.

Obviously, that didn’t happen.

Instead, I joined their mailing list and saw the job role for an apprenticeship in content marketing. I put my hat in expecting to get denied like I’d been denied dozens of times at various agencies and marketing positions. But, turns out they liked me and I got the job 🙂

Fast forward almost four years and I’ve gone from apprentice to content manager to now the director of marketing. My role is very dynamic and there is a lot of moving pieces, but at the end of the day, I lead the marketing team in an effort to grow our brand reach, nurture trust in the market, and ultimately provide leads to our sales team.

We’re a 100% inbound organization, so this is a pretty vital role to keep our sales team fed with quality people to talk to every single day.

Recently, I’ve been growing the team and the brand’s thought leadership through a series of podcast shows and conference speaking engagements which will build into a few of the other big masterplans I got in the pipeline for 2020.

I have and still am a little risk-averse buying an existing online business. I know at Empire Flippers you guys aim to mitigate the risk by having a robust system in place to audit the business. Can you go over what sort of things you look for?

Every buyer needs to never forget about the risk that comes with investing in online businesses.

It can be incredibly successful, wild-aggressive ROIs, and there is no other investment like it on earth in my opinion. It also can mean you lose 100% of the money you invested in it. Online businesses are volatile, risky, and the reward does not come guaranteed.

Outside of that, I would say we offer the absolute best protections when it comes to buyers and sellers in our industry. At the very outset, we have an entire team dedicated to vetting a business to make sure it is a legitimate business earning real revenue and generating real traffic. Now, that shouldn’t be confused with replacing your due diligence. Vetting is just making sure things are correct, that doesn’t mean the business is correct for your skill sets or situation.

Our sales team will help guide you towards a business that is a good fit, and if we don’t think it is for you then we’ll be straight up with you and recommend for you to look at a different one. Obviously, we can’t stop you from buying the one you want if it goes against our recommendations, but we’re in it with you.

We have so many repeat buyers and sellers, it just wouldn’t make sense for us to give you anything other than our honest best advice. We want you to win so you’ll come back and buy again or even sell that business with us once you’ve improved it

Next is the actual migration. We have an entire team dedicated to this as well to make sure the business is transferred over properly. During this time we're holding the money you sent for purchasing while we transfer it over. Once everything is transferred we give you what is called the Inspection Period.

The Inspection Period gives you 14 days to review everything and make sure everything looks right. As long as the business isn’t showing less than 50% revenue or traffic, then it won’t fail the Inspection Period and during those 14 days, you’re earning the revenue from the business, not the seller.

Once that is past and you’ve given us the go-ahead, we release the funds to the seller and the brand business is all yours.

For anyone with an online business considering what it’s worth and keen to exit what recommendations do you suggest? This is both for preparing for a sale and helping with a clean transfer.

I would make sure your business has a clean profit and loss statement.

This is something surprisingly few entrepreneurs have and it’s a powerful document to show potential buyers. Now if you’re an affiliate or content site creator, usually your various affiliate and display advertising dashboards are going to have everything you need so you don’t need to create this document as much. For e-commerce, though it is powerful to have.

Also don’t try to increase your net profit for a higher valuation by firing people or cutting out essential systems.

There’s a fine line you need to walk in making sure the business is both profitable and attractive at the same time. If you’re making $10k per month and working 80 hours per week, which is far less attractive than a $5k per month business where the owner has built a team so they only have to work 2 hours per week.

Some people focus too much on the final valuation sales price instead of thinking about what a buyer really wants. A buyer is a type of investor after all, and very few want to buy a job.

Now, you can have a huge business where the owner is still working those kinds of hours and a buyer is fine with it because you’re building something really special. Alas, those are more the exception to the rule.

If you have any kind of special deals in places, such as special affiliate agreements or supplier relationships, you want to make sure those are all transferable. Paypal is a common culprit on this for recurring revenue businesses since Paypal can’t transfer the people on those invoices to a new Paypal account. You’d need to hand over your entire Paypal account to do that.

If you’re planning to go the private route instead of a broker, make sure you have ways to qualify a buyer’s intent. The last thing you want is to open up your books to a competitor that will just copy you. Verify the buyer’s identity, have a conversation on the phone, use things like an escrow service, and all that kind of stuff to make sure you’re safe.

If you’re using a broker like us at Empire Flippers, we basically do all of this for you. We’ll even build you the profit and loss statement for you to make sure it is clean and accurate.

For larger exits, or even small exits in the $100-200k range, we do offer exit planning services with our team of business analysts. These are completely free and they range from a simple 30-40 minute call to a monthly call for bigger businesses to make sure you’re hitting the various action milestones we’ll help you build to make sure you get the best possible exit for the business.

As you only offer quality online businesses for sale in your marketplace you must turn away some opportunities. What percentage of online businesses do you pass on and what advice do you offer the sellers?

Right now we turn away over a third of businesses that get submitted to us. For some monetizations like dropshipping, this percentage is actually much higher to ensure the quality of the business.

If you get turned away from us, usually it is because we feel the business is just not sustainable. As a seller, I’d focus on building a real brand no matter the monetization you’re working on. Buyers want something that can grow, but they also want something that has gotten some weight under it already and proven itself to be a moneymaker.

Very few digital entrepreneurs, unless it’s their personal blog, ever really focus on building a long-lasting brand and it’ll set you apart from the herd.

Outside of that, we’re very clear why a business is rejected so if you’re one of them, you’ll often have a roadmap of what you need to do in order to make that business sellable at a later date with us.

The selling multiples have rocketed the last year years and it’s not uncommon to see online businesses selling for 50x monthly net profit. Do you see this continuing and what factors may challenge this trend in the near future?

I would say 50x net monthly net profit valuation is still very aggressive.

Our State of the Industry Report analyzed 2017-2018 data across close to 500 businesses and the multiples were around 25x. In 2019, though this has gone up quite a bit, and it is not uncommon for us to see businesses being sold for 30-35x.

Unfortunately, I can’t give the exact number since we haven’t compiled that data yet. Our new refreshed State of the Industry Report in 2020 will show it though and compare it against the other two years.

I do think multiples will continue to go up as more money enters our space and drives up the demand. Though, the market is fragmented and larger than our marketplace shows. For every online entrepreneur with a content or e-commerce store or SaaS app that knows they can sell the business, it feels like there are a dozen others that don’t realize they can for a multitude of reasons.

I think the supply will continue to grow, but the rate of money is coming into the industry will likely lift the sails of all ships when it comes to the actual sales multiples we’re seeing.

We’re also starting to see several sellers of ours now becoming buyers. They’ve sold enough with us to bankroll a little war chest or fund themselves, and now are using the skills they used to build from scratch to acquire instead and grow the businesses for an eventual flip.

What’s next for you Greg and where do you see Empire Flippers in the next 1-2 years?

Ah, there are a ton of things coming down the pipeline.

We just launched our brand new marketplace that speeds up due diligence by a huge margin. That will eventually be replacing our public marketplace in full, hopefully in the coming weeks.

I am actively looking to grow my marketing team next year, with an emphasis on content creation. I’ve hired two this year and would like a whole sub-department dedicated to content as that has always been our strongest skill but the biggest bottleneck.

We have a few other initiatives that are all working in tandem. I can’t talk about them all just yet, but one piece of that puzzle is we’re working on a best-selling book that will likely come out near the end of 2020. Think Rich Dad Poor Dad meets The 4 Hour Workweek for buying and selling online businesses.

The book is just one ingredient though. This year I spent a heavy amount of time refreshing ALL of our marketing campaign funnels and getting them set up for the big stuff unveiling in 2020. Happy to say we’re almost there.

One example of our email funnel change is that at the end of Q4, anyone that fills out our valuation tool is going to get a custom email funnel based on their monetization. So they’ll only see content that is incredibly relevant to them and where they are and about their chosen business model.

Sounds simple enough, but marketing automation tools are great at making things sound simple haha.

The marketing plan I have for Empire Flippers, and what I believe we really can accomplish, won’t be done until five years from now.

At the end of that five years, the only competitors we will truly have in my opinion is the idea of investing in stocks or real estate.

I’m looking to help us enter that conversation with a third solution – investing in digital assets.