How would you like to own a portfolio of content sites that you eventually plan to take public?
Well, that's exactly what my guest Dom Wells from Onfolio.co plans to do. He has a portfolio of sites that he's managing for clients and a portfolio of sites that Onfolio own themselves. These are sites that they've acquired and now manage. They plan to eventually scale that business and go public.
In fact, in the next year, they plan to have a direct listing in the public markets.
In the podcast, we talk about Dom's history, how he started building content sites, how he started Human Proof Designs (a range of online business services) and eventually exited that business for a 7 figure sum, and what he's learned along the way about owning and managing a portfolio of websites.
It's a really good story that I think you're going to enjoy. I ask him a lot of questions covering the gamut of online business.
Watch The Interview With Dom Wells
Regarding growing Onfolio we dive into:
- What it's like to plan to go public
- The type of yield that he is offering to investors
- How he is raising money
- What the future of content sites is like
- The appetite in the marketplace for someone trying to go public
- How he plans to scale the business and website portfolio
And beyond Onfolio we discuss:
- Google updates
- Mitigating risk with content sites
- Pros and cons of portfolios
- Outsourcing YouTube content
- How he sold Human Proof Designs through FE International
- Pros and cons of putting your face on brands
Dom also answers the question, ‘are Amazon affiliate sites on their way out?' Watch the episode to hear what he thinks the future of niche sites is!
Read the full Transcript Below
Spencer Haws: How would you like to own a portfolio of content sites? That you eventually plan to take public? Well, that's exactly what my guests, Dom Wells from on folio.co plans to do. He has a portfolio of sites that he's both managing for clients and a portfolio of sites that on folio owns and manages themselves that they've acquired and now manage.
And they plan to eventually scale that business and go public. And in fact, in the next year they plan to have a direct listing. In the public markets. And so today we're going to talk about Dom's history, how we got started building content sites, how we started human proof designs and eventually exited that business for a seven figure exit.
And what he's learned along the way about. Owning and managing a portfolio of websites. And so it's a really good story that I think you're going to enjoy. I just finished the interview and here's a list of a lot of the questions that I asked. Here we dive into what it's like to plan to go public the type of yield that he is offering to investors, how he's raising money.
But then also kind of what the future of content sites and the appetite in the marketplace for somebody that is trying to go public and I didn't plan to, but I actually had this 10 K form from interactive Corp on my desk. And we actually talked about this a little bit as well. Interactive Corp is a publicly traded company that has owned.
Does own a large portfolio of internet businesses. And so in a way, Dom is trying to do a little bit. What this company is doing. Certainly this business is much, much bigger, but Dom plans to continue to scale his business, scale the portfolio, and eventually go public and grow the business. And so if you want to follow along with Dom and what he's doing, you can go to on folio.co or invest.
In on folio.com. Overall, I really hope that you enjoy the interview. We talk a lot about a lot of great subjects, including Google updates, mitigating risk portfolios, both the pros and the cons, and so much more so with that, here's the interview.
Hey, Dom, welcome to the niche pursuits podcast.
Dom Wells: Hey, thanks for having me really happy to be here. I think I started listening to this podcast in 2013 back when you first had on. So it's kind of cool these years later to. Did a chance to actually be on it myself.
Spencer Haws: Yeah, that's a walk down memory lane 2013, we're going back seven, eight years.
So thank you for listening in on the early days there. I appreciate that. And you and I have been in touch, you know, over the years since we've been in a similar space, For a long time. And we actually had a chance to meet in person at an event at traffic and conversion summit. About two years ago, it a little over two years ago, we were sort of figuring out, I think, in 2019.
And it's funny because it was at, I don't remember the location, you know, but just sort of You know a mixer at a bar there with quiet light brokerage. And I think you said your name first and I didn't hear you properly. And it took me about 10 minutes. I'm like, oh wait, you said Dom Wells, didn't you.
And so that was great to finally meet you after several years of sort of connecting with each other.
Dom Wells: Yeah, that was funny. I think Chris Guthrie was there as well. And it was the same thing. Like I was, you were just like, Hey, this is Chris. And I was like, hi Chris. And then he was talking and I was. I was sort of trying to get a look at his name badge, and I was like, gastric.
Oh, I made it. So it was kind of funny how we, we were speaking for like probably 20 minutes before it all. It will click.
Spencer Haws: And that's the last event I think I've been to. So almost, I may have gone to one other right after that a couple of months later, but. We'll see what happens in the conference world.
What I want to do is dive into your background just a little bit. So for people that are listening, that don't really know who you are. Can you give us a little bit of your background before you were even building out affiliate websites? What were you doing?
Dom Wells: Yeah. So. In 2008, I left England to go teach English in Taiwan for a couple of years.
And in 2008, the world decided to have its last sort of major crisis as well. And my parents were like, Hey, if you have a job in Taiwan, you might as well stay. Don't don't come back here. England's kind of not in a good place right now. And I was enjoying living in Taiwan, but after a couple of years, I didn't want to teach English anymore.
So long story short, I just started looking for different ways to make money. And online was the obvious choice given that I couldn't really speak Mandarin. And, you know, I was a westerner, so I thought, okay, I can just work online, see if I can figure out how to make money. So I discovered affiliate marketing.
Just through sort of reading lots of different things. And I thought, okay, that sounds like something I can do. I'll give it a try. And so this was at the end of 2012, which yeah, as we just spoke about, that's kind of when I started discovering your podcast and John. Who went by John Haber at the time he authority website income.
So I was reading all your sites. And I think you had just finished the niche site project too with Perrin, but like all that content was super fresh, so I just was going through it and getting caught up. And so I started learning about PBNs and all of that stuff back in the, in the glory days. Well, I mean, Maybe it was glory days for a bit, but then obviously you have a slightly different outcome, but yeah.
And so at the same time, as I was doing all that, I was browsing on flipper. Which for those who don't know flip is kind of like eBay, but for buying and selling websites. And to be fair, to flip that they've improved a lot over the years, but back in back then there was just so much garbage being sold on the platform.
I think it was basically anyone can list. So there were great websites, but there was also garbage. Right. And I noticed a lot of these garbage websites were sort of marketed as like businesses in a box done for you websites. But it was like, it was like all based on our life. So it was something like, oh, this domain name is based around this keyword, which gets 10 million searches a month.
You buy this website, you'll make a million dollars a month without doing anything. And I would laugh at it. Like, like you just laugh because it's like, come on. That's so obvious. But people were buying them. And I was like, why are people buying these things? I could do a much better job. And so one of my friends just said, well, why don't you just do that?
And so. I was like, yeah, I can create real legit websites where I've research. It was really like following your methods. Actually, it was like get long tail pro research, sort of 20 keywords that have. Was it KC score, UAC score. Keyword competitiveness. Yep. Yeah. So it was like a KC score of like less than 25, that kind of thing.
And then build a website around those sort of 10, 15 articles, and then. Like, you know, put a theme or the plugins. And then I put it up for sale on flipper with a sales page. That wasn't very good because I didn't, I didn't know anything about like copywriting or anything. And it was essentially there's these scammers going, Hey, buy this website, do nothing and you'll make a million dollars on autopilot.
And then there was me being like, Hey, buy this thing, work really hard for six months, build some links and you might make like a thousand dollars a month. After six months. And no one bought my website because why would you exactly. So that's what I realized. Okay. I'm going to have to build a website and do some content marketing and just like teach, teach why these businesses work.
And so I started doing articles like you know, how to set up an Amazon affiliate site. And then at the end of the article, it's kind of like This is how you set up a good affiliate website, but if you want, we can just do it for you and that, and that kind of thing. It was very similar to what actually John used to do.
He'd be like, here's how you set up a PBN, or if you want, you can just buy lightning rec. And so I started getting a lot of traction there, fast forward, I guess, a year, a year and a half. And I had. Something like 200 open contracts and Upwork from freelancers. We had a team of about 20 core people. We did a million dollars in revenue in 2018 because we just really got traction.
We'd done all of these done for you services. We added on content and links various other things like keyword research. And so it just grew into this. Beta most, I guess Done for you website company.
Spencer Haws: That was a human proof designs, of course. And so it started as sort of this done for you website, but like you said, it kind of evolved to provide additional services.
Even if people didn't buy a website from you, they could also bring their existing site. Right. And order content or links, or do do other things. But, but your core was, was building those done for you sites and either selling it or helping people scale that. Right.
Dom Wells: Yeah. And I think in the beginning, when I was trying to get traction, I did start adding on some of these extra services.
And then some feedback I got from people was you should just niche down and just become known as like the domain for your website guides. So we just went all in on that. And then later when we were getting like 20 or 30 new customers a month and we had. Sort of like a, a customer base of maybe 300 people.
A lot of our customers were saying, well, we want articles. We want SEO. We're going to buy from someone else. We might as well buy it from you. And now I had a bigger team. We can actually facilitate those services. So we realized, okay, it's not time to niche down anymore. And so we, we we just expanded and I think by the time I sold the company, we probably had.
Maybe 10 different services.
Spencer Haws: So you started human proof designs around 2014. End of 2013. Something like,
Dom Wells: yeah. Yeah. I think I registered the domain very late 2013. It wasn't really 2014, so yeah.
Spencer Haws: And so ran it through 2018, said he did a million dollars in revenue. Congrats. That's huge. And then sold it.
Was it early 2019?
Dom Wells: Yeah. It was actually the money arrived in my bank account on my birthday in 2019. So that was nice. Yeah, I was about to go to bed. I think it was like 11:00 PM. And then I checked and saw the money when, and I was like, okay, I'm going to go by, but no mine.
I've got to get through this bottle. So yeah, it was April, 2019 that I completely left. That
Spencer Haws: that is, is, is awesome. Congrats, huge exit. Who did you sell it through? And was it a pretty smooth transition process?
Dom Wells: I sold it through Effie international, so. Not particularly I I'm I'm broker agnostic.
Like I could've sold it through empire flippers. I could have sold it through quiet light. I know a lot of people have their preferences for me. I've worked with, I've never actually worked with quite light, but I liked them, but I've worked with empire and fel a lot. And really what it came down to was I was having a conversation with Thomas.
From Effie, he's the co-founder and CEO. And I basically, I already had this idea for on folio and I wanted to transition out of human proof designs into one photo. And basically I was saying to Thomas, this could be a problem for a potential buyer because we haven't really talked about on folio yet on this podcast, but I'm sure we'll get there, but audio.
Fundamentally different from human proof designs, but there was enough overlap that I thought about it. I might like if I sold HPV and then Sandra and I started on photo, a bio might be a little aggrieved about that. Thomas basically said, well, if you start on photo first, it's already out there. And then anybody who comes to the table is going to know about it.
And then you just have to tell the story, right. And it's like, I'm leaving. Cubic decides to go in on, on folio, this new guys coming in to run human proof designs. He can choose to say whether he wants to, he can choose to say whether he's bought it or whether I've just brought him on as a manager, like, cause he's the buyer, it's his, it's his prerogative.
And the conversation just kind of happened that way. So naturally I just said to Thomas, like, okay, if you can make that happen, let's do it. So you know, well done there for him. And then the transition. Had a few hiccups for sure. But the, the stage from saying I'm going to sell it to selling, it was quite smooth.
Actually, there was a few buyers interested. I think I had four offers on the table. I picked the one that I thought would be best for me and also best for the team. Because I wanted to make sure my kind of question before I sold was if I could sell it for enough money, that I can buy some websites to like replace my income and seed on folio and the team aren't going to get fired so that they're not going to get, I'm not going to sell it to someone who's just going to strip all the assets out and fire the team.
And I think the business will grow then, like that seems like a win and, and most of the office, I think that would have happened, but Brian, the guy I sold it to, he definitely wanted to keep the team in place and even add the team. So. That was important for me. And the transition was hard because selling a service business, there's just so many moving parts.
And so it, it just took a while for Brian to go through everything and double check the numbers were correct, or, or like, Oh, hold on. What's this WP rocket thing, you forgot to include that in the finances and stuff like that. Like just the small thing. So it took longer than I liked and definitely longer than he liked, but we got it done.
And I went off and grew on folio and I'm not really in touch with human proof designs anymore, but. By all accounts, he's grown. It potentially even doubled it. So you know, it was a win for both companies. Yeah.
Spencer Haws: Now did Brian have other investors involved? Or was it a, he a hundred percent buyer owner?
Dom Wells: Yeah. I mean, as far as I'm aware, he just, he was just a cash buyer. So he just, he'd been looking for a kind of marketing. Internet marketing tire brand to buy and he had the cash. So some of the other offers were not all cash, whereas brands was so I'm pretty sure it was Oklahoma. Yeah,
Spencer Haws: that's awesome.
So again, congrats there on the exit of human proof designs, and as you alluded to, you have started on folio which is another business. So let's talk about what on folio is. And kind of everything, I guess, just give us an overview of, of on folio and everything you're involved with right now in your business.
Dom Wells: Yeah, sure. It's, it's had a short history, but I guess it's evolved a bit, so maybe I would just walk through that evolution. But I started on folio because some of the human proof designs audience basically said, we don't want to buy done for you sites. We want to buy like established sites off of places like empire flippers, but we don't know.
We don't know how to vet them. We don't know how to run them afterwards. And so I thought, okay, either I'm going to make a course to teach people that, or I'm going to do it as a service. And at first I thought the course might be more lucrative because, you know, you just make the course once. So over and over, but then I realized it was way more demand for the service.
So, because I was already thinking about selling human proof. I wasn't sure whether to do it as a service on human group or whether to start a second brand. But I thought if investor type people come to a human proof designs and we're talking about Amazon affiliate links and like how to change your like doing a review of link whisper or something, they might be like, oh, this is far too confusing.
And then if I'm trying to talk about investing in websites, then people the kind of. Again, our affiliate crowd might get confused. So I thought, okay, let's just start separate brands so I can have separate conversations on, on the, on the websites. So initially on folio had two services. One was you're the money man.
Welcome and find a business for you. We'll buy it. We'll vet it and we'll run it. And you'll wa so we won't buy it. You'll buy it. We'll help you buy it. And you'll own the website. And basically we'll be your consultants and we'll run it for you. So it was similar to what income store we're doing with the same, with the obvious exception that we weren't upon Z and that income store was controlling all of the money.
Whereas we were saying you control all of the money, like your own, the website, the money goes into your bank account. We'll just run it for you.
Spencer Haws: And then they just pay you a monthly fee or something to run it that almost like a cost
Dom Wells: structure. Right. So it was like a map. Yeah, exactly. So it was like a consulting fee.
So they gave us a management fee and a share of the growth. And if we didn't grow it, we didn't, we only just got the management component and then the other service was similar, but it was for people who had existing websites. So maybe like you have a website, you can't be bothered to run it anymore and you just give it to us and we'll run it.
And those were the two ones. And then over, over the years, I had been trying to figure out a way to combine investor's money so that instead of one investor buying one website and then another investor buying another website, all investors were pooling their money to buy multiple websites. And the reason for that was like 20, 20.
It was pretty turbulent with Google updates. And so it was 20 19, 20 19, probably more so. And at our peak, we were running 45 websites and some of them were big, like 20 K a month. Some of them were like a grand a month, but whenever a Google update happened, most of our sites were fine. Some of our sites gained traffic and one or two sites lost traffic.
And I would be telling investors like, yeah, we have a good track record. We have 45 sites. Two of them have been hit. Which is like, less than it's like a very small percentage. Right. But it kind of fell still bad because if someone's invested a hundred K on their site gets hit, it doesn't matter what, I can't really turn around and say, oh, but the other 44 sites are fine.
Spencer Haws: But you know, 99% of the portfolio is just fine. It's just, you lost your money, right. It doesn't, it doesn't feel good. Yeah.
Dom Wells: And it was, it was outside our control as well. So it wasn't like something where I could say, oh, we dropped the ball here. Okay. Let's fix, let's fix our systems. Let's hire better people.
It was often like no one saw that Google update coming. So I'd been thinking, okay, how can we, how can we fix this? And one of the options was to start a fund, which a lot of other people are doing right now. The space is quite exciting. And one of the options was to have a holding company. One of the options was having sort of lots of mini mini group bio-type things.
And it's interesting seeing all the different solutions that people are doing. So you've got F capital, which is a pretty cool solution. And then you've got a, I don't know if you're familiar with Michael off Steve from domain magnate, but he's starting a fund. Good solution fan solutions, SAS fund.
So they're going that way. And then a UN Wizner has his out mountain thing going on. And so there's all these interesting solutions. And the one we landed on was a holding company and. Eventually taking that holding company public. But then also offering preferred shares in that holding company. So we can give people a fixed dividends and I'm sure we'll go into this more later, but for now it was like, that's kind of where we pivoted to because the, the, the idea was how can we mitigate the downside risk that is really inherent with having Having internet businesses.
And so we did that. We made that pivot late last year, I guess, September just in time for the big December update. And yeah, that's kinda where we're at, where we're at now. So it's, it's kind of in a short history, I guess I only started on folio. 2018, but lots. Yeah. We've, we've moved quite quickly and evolved to two or three times.
Spencer Haws: Now, so you've kind of given us a little bit of your vision, you know, where you want to take on folio. You want to go public. Can you explain that decision just a little bit more? Why, why do you want to go public? Why are you you know, why is that the goal? And what's kind of the process for doing that?
Dom Wells: Yeah, I mean, it was definitely. I wrote down in a notebook like five or six pages worth of pros and cons of like a holding company, pros and cons of a, of a fund and pros and cons of just working with individuals or trying to make like SPV is the investors combined to and, and so when, when I looked at all of that, to me, the obvious solution was a holding company, but the problem with a holding company was.
It locks up investors' money for a kind of indeterminant time. And if you look at our mountain, for example, every time they want to raise money, they have to start a new LLC and investors put their money into that, LLC. And then that LLC buys like four businesses. So new money doesn't come into it.
Doesn't get a piece of the overall pie. And so they're just creating lots of different pies. And I, I didn't like that. And when I looked at how public holding companies work, I realized that wasn't the case because they can just sell shares and the shares represent everything. And if they want to raise more money, they just issue more shares.
And so I thought, oh, public could, might be a good end goal. Like, you know, we, we grow for three or four years and then we go public. Like, I think that's the kind of thing that through SEO we're doing with FBA businesses. But anyway, long story short, I connected with someone who made me realize that you can go public.
You can just do a direct listing, go on one of the smaller exchanges, and then you can grow faster as a public company to then like go onto NASDAQ when you're bigger. And it will actually make it easier to raise money because right now we've had a lot of. A lot of people, we advertise our preferred shares in various different places.
People come to us who don't really understand the internet marketing world, but they have a lot of capital they want to put in and they kind of like, how do I know this is legit, blah, blah, blah. And we're like, well, Whereabouts to become a public company, sec reporting issuer with audited financials. And they're like, oh, okay.
That brings a lot of trust. And with talent recruitment as well, I can hire really good people and say, well, we can, you know, we can give you stock options in the company as well. So there's a lot of advantages to going to public sooner rather than later. So that's kind of, it's very short. So that's something that took me a long time to come to.
So it might not make a lot of sense.
Spencer Haws: Yeah, no, I mean, it's a complicated, you know financial avenue to go, right. To be able to take a company, did a direct listing, hopefully grow it enough. You know, to eventually maybe get listed on the NASDAQ and Do you think that there's a lot of appetite or, or maybe explain to me because you you've mentioned sort of some range, you said, Hey, we have some bigger sites that are, you know, doing like 20,000 a month and some they're doing like a thousand dollars a month.
Right. Do you think there's an appetite in the public markets for Websites of that size because just some background as well, generally speaking, that's it extremely, you know, small business to be listed publicly. Right. Like, and I didn't plan this, but I'm actually looking over right now, actually, you know here's interactive, corporate is a publicly traded company that has a portfolio of online businesses.
Right. They've been around for a long time, decade or more. Right. And they own companies like Vimeo that just got spun off match.com. They just got spun off as its own company. And dozens and dozens of other really large websites, right. Doing millions of dollars a year started kind of anyways, you know, the history, but for listeners right about.com was a big part of that.
And they split that off into lots of different individual entities. And anyways, Really interesting company. Right. And so they're publicly listed, but their websites are doing millions a year versus you want to have a portfolio of sites. You tell me in what range are you kind of shooting for, for size of sites that you're hoping to accumulate?
Dom Wells: Yeah. I mean, there's a lot, there's a lot in that question. So bear with me, but Yeah, we sold off some of the smaller websites as soon as we decided to go public because no, one's really interested in a company that has like a thousand dollars a month websites, but we sold one of them on motion.
That's actually, so thanks. But
Spencer Haws: not to say that, you know, a thousand dollar a month sites, aren't good. Right? Like they are, but just thinking about a larger market, right. Is there an appetite for people looking at that.
Dom Wells: Yeah. I mean, there is, but also we're not going to stay small for a while. It's kind of like, it's kind of like a three-year plan, I guess, to get on to NASDAQ.
And when we get on NASDAQ, maybe the 20 K a month site won't be in our portfolio anymore, or it will be like one of the smaller ones. But what we're not doing is. Well, we want to get to is having websites that are doing like, yeah, 50 K a month, a hundred K a month, but right on bought one of those websites.
Now it would represent like kind of 80% of our portfolio. And so there's a bit of a risk. So it's more slowly. Our next acquisition should be a million dollars. And then after that, maybe the next acquisition can be 2 million because then every new acquisition only represents a smaller. Yup. A certain percent.
The other thing is the appetite is for the company overall, rather than like, you know, they weren't people weren't looking at us and be like, oh, you have a website doing a thousand dollars. They'll look at us and be like, oh, your portfolio is like a hundred K. And then it's interesting in the public markets.
So private markets are all about how much did this business make last year? That's how much it's worth, whereas the public market. So. How much do we think you're going to do in the future? And so therefore how much will it be worth in the future or not even that, how much do we think someone will pay for it?
Spencer Haws: Right. Right. Price is based on expectations. Not necessarily reality. Yeah. In public markets. For sure.
Dom Wells: Yeah. And so the appetite for on folio won't come. When people look at how big our portfolio is, it will come when people think, okay, they've grown from here to here. So, is there any reason they can't grow from here to here?
And as soon as people realize that there isn't, that's when the appetite for what we're doing comes in and then that gives us the money to become that. So it's kind of self-fulfilling. Yeah, no, that makes sense. It's really, it was definitely a bit of a shift in my thinking when, when I was like, how can we be worth that much if we haven't got there yet?
And it's like, well, You're worth that much. Cause people think you will get there. And it's like, you look at Tesla, people, Tesla, so overpriced in my opinion, anyway, and everyone goes, oh yeah. But in 10 years they're going to have this much revenue. And it's like in 10 years, they're going to have more revenue than the GDP of the U S you know?
And so But it doesn't matter if people just buy it because they think it's going to grow. Yep.
Spencer Haws: No, that makes absolute sense. So So fundraising is really interesting. Right. So you're having to raise funds now, correct? I mean, you're, you're raising funds to build the portfolio. And then at some point in the future in the next year, I think the goal is to maybe do a direct listing or something.
Where of course that brings an additional infusion of cash at that point.
Dom Wells: Yeah, so, okay. So September last year we raised just shy of a million through selling equity and on folio. And then that, that money we bought, bought a website with it. We hired some people cause we, we now have cash. We didn't have to wait until like the income was coming in.
And then the rest is to pay for marketing. The preferred shares and to pay for like the direct listing and stuff. And then, so the preferred shares are also equity in the company, but then non-voting shares. So it's different from common shares. Common shares is what we usually buy and they appreciate and price.
But a lot of people wanted income and our common shares won't come with a dividend. So because we basically just cycled all the money back into grow. So the preferred shares. Come with a 12% annual dividends which is quite high, but that's because we're quite small and we want to attract capital.
And then all of the money from the preferred shares. Well, like 90% of the money goes to further acquisitions and just towards marketing and things like that. And then. The idea is we'll keep raising throughout the year and we're aiming by the end of this year to do the direct listing. So right now it's it's May 27th for you.
And where, where we're just at the beginning of a funnel, actual audit process, which will take up to two months. So I don't know exactly how long once that's done. We can actually submit. Our S one filing to the OCC, which can take anywhere from 45 to 90 days for them to to them to approve. Just depends if they, they approve it without comment, or if they're like, what's this, can you clarify, blah, blah, blah.
So now we're looking at what, two months plus 45. So maybe four or five months. And once that's done, we can complete the direct listing on the exchange. So. Maybe October, November this year. Well, maybe later, because sometimes stuff gets delayed, but that's what we're aiming for.
Spencer Haws: Yeah. It sounds like a lot of work, a lot of legal paperwork to file financials, to button up and work with accountants.
And I'm sure it's not an easy process, but I wish you luck in doing that. Right.
Dom Wells: Nice though, like being like, oh, I have to have, I have to be mature now I have to grow up and I have to like, like you say, buttoned down your financials. What's bad about having like regular audit and buttoned down financials.
It sucks to go through, but it forces you to actually like build a better business. So, yeah, it's a surreal kind of way. It's actually, I'm actually enjoying it.
Spencer Haws: Good. So I wanted to kind of clarify the 12% dividend. Can you explain how that works? I mean, are you, what, what are you sort of guaranteeing or promising or are you guaranteeing or promising anything or is it all just purely based on sort of profits of the portfolio itself?
Dom Wells: Kind of neither. So any of that, so we can't guarantee anything. Like if we did. People should run away from us. Yeah, that's kind of the issue that income still had. But it's also not based on profits of the company. The idea is a preferred share often works like debt. So if someone let's say someone invests a hundred K, then we'll pay them 12 K a year and we do it in quarterly payments.
So it would be three K every quarter. So we don't say so. Yeah. So it's not guaranteed because like, if the company goes bankrupt or whatever, like, you know, we can't, we can't guarantee it in that sense, but assuming that everything works out fine, then, then it's paid. And it's not based on profit in the sense that some people said to us, oh, So what happens if your company only makes 11% or what happens?
If, so you buy these businesses, typically you can make sort of 25 to 30% from these businesses, and then you're paying out 12% to investors. What happens if you only make like 13%? Yeah. So you, what you give us 12 and then you only keep one, but it doesn't really work that way. It's it's it's like if we took a loan from a bank.
The bank call. I'm going to say, we're not going to pay back based on how much we made. It's just like now we have to pay it back and then we just have to be more profitable. So the idea is we make sure we have cash reserves. And so if our mom, if our companies go through a bad quarter maybe we didn't generate enough to pay for the preferred shares that month then.
Okay. We've got cash reserves to pay for them. And then, you know, we make another acquisition. We grow the business more and it's okay. So it's essentially just like selling a bond or debt, except it's not it's equity. But so the idea is it's a fixed dividend. If the businesses grow really well, we already paid 12%.
If they go badly, we paid 12%. So the idea is like, Offering a dividend, which is really above average compared to what you can get elsewhere and with a lot of the downside protection.
Spencer Haws: Yeah. So there's, there's a lot there and we'll maybe leave it as that. I mean, just people that are maybe interested in learning more, just know that there's a lot to consider pros and cons, you know, to.
To everything. Right? Any type of investment, sort of understanding what a preferred dividend is, what sort of the yield might be, what the risks of the business are. And so, yeah, as, as you say, you now have, or will have sort of public financials, that'll give people the opportunity to look at that and analyze that and make a decision based on, you know, what, what they research and find out.
Yes. So How many of the sites in the on folio portfolio are sites that on folio owns and how many sites are those that you just manage and get, get a management fee or a consulting fee from,
Dom Wells: yeah it's, it's probably about half, half right now, or a little under half are our own. Up until late 2020.
And it was very much the other way. So the majority of sites we were running were managing for other people. But what happened was when we raised money, we let some of our smaller clients go. We basically, we have some clients that have been with us for years and they were paying us like $500 a month management fee.
And so we just said to them, look, we can't, it doesn't make sense for us to work with you anymore. Unless you pay us more, but your business isn't making enough to pay us more. So we basically just said, we'll keep running your site and we'll help you find someone to run it for you instead. And then we'll, we'll let them we'll we'll move on.
And then some of some people. Naturally leave after a few months. And we just didn't take on new clients. So it's just like slowly. So rather than firing people, we just, people left or they sold a couple of people, sold their websites or have their websites for sale now. And we're just not taking new people in.
And since we. Raise money. We've acquired two businesses as well. So it's kind of just kind of move the dial more in our favor. So is,
Spencer Haws: is the plan then to, to continue to do that until primarily you are just owning all the sites. Are you going to continue to manage clients and take in new clients?
Dom Wells: We will continue to take in new clients, but it sort of needs to be more or less a while now.
So yeah. Before we did this, we had a lot of people who had a budget of like a hundred K who wanted to work with us and we don't work with them anymore. It just doesn't make sense for us. And it doesn't make sense for them either because we're not going to be focused on their business. And so, you know, we just said to people, sorry.
But if someone, we have a couple of people right now who already have one business with us and they're looking to buy another one in the sort of one, one to $2 million range. And so that's worth our, while we can charge them a decent management fee and we can we can put people like dedicated people on their business, so we know we can do a good job.
Spencer Haws: You mind, if I ask how much you charge, like what's a typical rate. Like if somebody is buying a wa you know, a site that's making $25,000 a month that, you know, maybe is a, a million dollar acquisition,
Dom Wells: it depends really because. So, for example, we had someone who did just that they, they bought a business for a million, it was making about 30 K a month.
And we realized that they'd need a dedicated person running that business, but that a dedicated person was overkill. So it was like they needed a dedicated person, but maybe only like part-time and you can't get a good dedicated person part-time. So it's like, you know, imagine needing to pay someone seven K a month.
So that they'll work for you. But they only have 10 hours a week or something to give you your business only needs 10 hours a week. So for them, we said, well, why don't we hire that person? We'll use them on like two of our other businesses and yours, and then you pay for a third of their salary. And then we just added a little bit more on for the management fee.
So for them, I think they they're paying us like four or five K a month, but then other businesses. They want us to do everything. And so maybe we charge them more and then maybe others, they don't need us to do much at all. So we're just sort of charging them like a couple of grand. You know, maybe we have one person right now he's looking to buy a business and he's kind of like, well, I want to run this business and I want you guys to help out with.
These particular tasks and I want to hire someone to be the face of the brand. And so I'm going to pay you that person, but you're going to supervise that person. And so we then go, okay, so the management fee for that's probably going to be like a grand a month or something. So it's kind of, it's kind of complicated, but it's the best way to make it work.
Whereas before we had like a kind of fixed management fee, like, okay, if your business is making three grand, we charge you. 750. If it's making five grand, we charge you one grand. And we realized that because every business is different. It was really hard to fit that in. And we had to come back to some people and say, actually we need more.
And then they don't feel good about that. Or we didn't make a profit because we had to give them more for the same fee. So now it's a lot more, it's a lot more bespoke. Yeah. Yep. For example. So today, before I came on this call, you posted on Twitter about. Outsourcing a YouTube channel and you were like, can I CA can I completely outsource a YouTube channel?
So if we, if this is a soft pitch, it's just an example. But if we, if we were, if we were like in that kind of scenario, we would be like, okay. So do you want us to just manage the YouTube channel and create the videos? Like, okay, that's going to cost this much, but if you want to hire someone to be the face of the YouTube channel, do you want to hire them and pay them?
Or do you want to like. Share one of our team members. And then, so then the management fee would be different depending on all of those scenarios. So it's a little complicated to explain, but it's custom pricing. Sure. But it's the best way to make sure that everybody's happy and the investor doesn't get charged too much and, and stuff like that.
Spencer Haws: Yeah. So I'm not quite ready to outsource a YouTube channel, but. I'm thinking, you know, I just have ideas. Yeah. I think it's doable and certainly large companies. Right. They hire somebody or have somebody in house that can do it. But you know, I just this is kind of going off subject. I was just thinking about it today.
A random Twitter thought, right. That's what Twitter is for is just like niche pursuits doing well. I'd love to scale it. There's a ton of opportunity, but I don't have the time or the desire myself to be making YouTube videos all day. Right. Could I get somebody that's not, Spencer has to be the face of the niche pursuits channel.
I don't know if that would even work and how much would that cost to do right. It's it was just a thought. Right. And But it's fascinating. Yeah. I
Dom Wells: mean, I know we're off topic here, but I think it's probably quite interesting to the listeners. So that's fine. For example, back when you had parents. And I think, I think when he then later joined the authority hacker, they did it quite well as well.
But what you could have done is let's say you were using YouTube more back then. You could have gone on a YouTube video. With parents. And then later the parent just does one by himself and then, you know, eventually you just never turn up. And it's just, that's what I did with the human proof podcast.
I was like, okay, I'm doing the human proof podcast. And one day, if I sell the business, what's going to happen there. And I don't want to do the podcast anymore because it was really a struggle coming up with topics every week. And so one of my team members. Was a natural fit. So we did a few podcasts together and then I just sort of.
Didn't turn up for a few episodes. I mean, you know, that was the plan. It's not like he was just saying like, don't where I I just, I just go sit here and have fun. And, and then, and then I would come back for a few episodes and then maybe we, and then he did one by himself again, and then eventually I just.
It was just, yeah. And people, it was a good transition. He was better than I was, which was also a big, a big factor. But that's how I would do it with like, with your brand. Like just if I was going to do that.
Spencer Haws: And you know, that makes sense. And other sort of random thought is I think we often put too much value and like our own.
Personal brand, like as much as it hurts to kind of swallow my own pride. Like the reality is, is that somebody could do way better than me at creating YouTube videos. Like I'm not, you know, a TV, YouTube personality guy. Right. There's certainly people that would be way better at. Add it then me and I do think if it was done properly, sort of transitioned in, you know, me doing some videos with them that eventually people will be like, this is just the new face of the YouTube.
That's fine. We're still watching. It's good content. It doesn't matter if Spencer's not there.
Dom Wells: Yeah. I mean, people right now are listening to this podcast because of you, they're not listening because of the brand, but they can, they can continue to listen because of someone else just as easily. Right.
Spencer Haws: And, and hopefully they're listening because of the value of the guests that we bring on.
Right. And the, and the strategies like we're doing tonight, obviously. Right. I th the people come, I mean, the reality is, is I just ask questions, right. And then ask some follow ups. So really it's, you know, it's. Time to shine a spotlight on Dom Wells and whoever the guest is and let them share the valuable business lessons.
And so, as long as the podcast is doing that, you know, people will still tune in. And I guess that's kind of ties it full circle with again, websites, right? There's no reason that somebody like an on folio, can't be running a website for you, even though people think, oh, I gotta write every blog post sometimes.
It doesn't, it's even easier with a blog of course, because people often don't know who's writing the article.
Dom Wells: Yeah. I mean, it depends. I think in some cases it is hard to outsource, like if it's technical knowledge or if the, the, the audience are like fans of, of the personality. And in some cases, I actually prefer that type of brand because it's more protected.
But it's not, it's not a great brand for my company to buy. Like I I've used authority hacker as an example a few times, and I don't know why they're just the thing anchored in my head. So theirs is a great brand because I don't know if they check their Google analytics that often they check their Google rankings.
They probably do because Gail's a better than that. But You know, self, self descriptive, but I don't think they sweat when there's a Google update. Like, oh no, our business is going to tank because we lost Google traffic. People are gonna follow them. People are gonna buy from them. I've got an email
Spencer Haws: list.
They've got a YouTube channel. They've got social. Yeah.
Dom Wells: So that, that kind of brand where it does need to be you creating it is a great brand to own, but it's really bad. Well, not bad. It's really hard brand to buy. Right. So, you know, for us, it's like, Yeah. W like we want to try to create brands like that, but we can't really just walk in and be like, oh, Hey, I'm Dom from authority, hacker.
Everyone would be like, you know, so yeah, you have to, it has to be done. Right. But it is doable. But yeah, I, I know what you're saying. I agree.
Spencer Haws: So I've got two sort of final questions here. One is we talked a lot about the pros of owning a portfolio. Like you explained, right? Most of the sites do well or are not impacted with the Google update, but then there's the couple that, you know, they lose rankings and the site owners aren't happy.
So the pro of a portfolio obviously is to mitigate that risk. What are some of the cons of owning a large portfolio of sites, which you guys are increasing your portfolio size? What are the challenges? Risks.
Dom Wells: I think the challenges are that you can spread yourself or your team too thinly. And this is another reason why our solution is to raise money and buy bigger sites.
Cause bigger sites, a they have more budget to hire people and B they often come with people, but someone who's trying to build their own portfolio, which has probably, you know, maybe a significant part of your audience. It is a challenge because maybe someone's like, okay, I've got a hundred K, should I buy four businesses instead of one?
Well, Yeah. If you want to diversify, you should make four, but now you're running four businesses. So do you run them all yourself and you struggle with focus and time, or do you hire people to run them? Well, those four businesses are probably only bringing in like three grand a month total. And so who are you going to hire for three grand?
So that's a challenge. And, and if we do a D the solution we chose was, well, why don't we buy businesses that are doing 30 grand a month? And then we can hire people to run them. Right. So for the average person, I haven't really found what the best solution is. I would say, try to find a business that is diversified rather than.
Try to diversify through quantity of businesses. So by that, I mean, by a business, that's not just relying on Google traffic, or it's not just relying on like one traffic source or worse, like three or four pages to generate a lot of the money. Which again is hard because actually, if you look at the average site that sold for 50 to a hundred K a lot of them still have those issues where it's like, The majority of the income or traffic is sort of going into five or 10 pages.
Right. So I would almost say buy a smaller business. You know, if someone had a hundred K maybe buy 2 25 K businesses and then invest up to 50 K. On growing, because then you can get your ROI that way. And then of course that's a completely different skillset, but I think, I think that that could work and that's kind of how UN's approaching it.
I don't know if he's ever been on this podcast, but he's been on a few podcasts talking about what they're doing with our mountain and, and their approaches. Try to spend a hundred K building businesses up from zero, rather than try to spend a hundred K buying a business. And then all your risk is that the business goes down.
And that's a different solution. I think it works very smart guy. So yeah, I think the biggest challenge is just the costumes with trying to run a portfolio when it's like you know, it's even worse when the average seller is like, oh yeah, there's no expenses in this business. I write all the content myself and they're like, Great.
So how much are you going to write for me after you sign it? Oh, you're not gonna, you're not gonna write for me. Okay. So there's expenses. So yeah, that, that's definitely the biggest problem. And the other is you kind of miss opportunities as well because of split focus. Like if you're just focusing on one business all day, you have ideas like, oh, I should, I don't know.
Maybe you see an ad on TV and you. You think that would be a great thing to talk about on my website. I wonder if they have an affiliate program or. I've got an idea for a new content vertical. And when your focus is split across multiple sites, those things don't happen as often. Or if they do happen, it's not harder to implement them because you're busy doing other stuff.
Yeah. So those are the real challenges
Spencer Haws: kind of, kind of a follow-up to that. You know, what do you think the longterm viability of content sites are? You know, we've mentioned several times, Google is always making updates and certainly if, as you said, you know, most of the traffic is coming to five or 10 pages, right.
That that's a little bit risky, but in terms of just looking at the macro view of content sites, And, you know, with the lens of, of Google ever evolving, like as the long-term viability is still good. And is that the only type of business that on folio is investing in, or you will also, do you have a mix of types of websites you're investing in.
Dom Wells: Yeah, I'll answer the second question first. Cause it's easier. We're we're also investing in service businesses. I mean, I've run two service businesses before three actually. And we, we also invest in some equalness. We haven't done FBA yet. Partly because you'd get trampled on right now. I think in FBA because there's so many brands just raising a ton of money and buying FBA businesses.
And also I just. I don't really trust Amazon anymore. But yeah, so we're investing in multiple. And then in terms of the content question, I think content sites are always going to be viable, but I think what content sites are, is going to have to change. And so the kind of Amazon affiliate site that we all built for years, Probably is on its way out, or I think it is on its way out.
I don't know how long it's got, I think generic affiliate sites where the content can be replaced with AI is an interesting one because on the one hand, if it can all be replaced by AI, then you would say, okay, they're not viable longterm, but then on the other hand, And AI is replacing them while it's still replacing them as a content site.
So, you know, it's not like Google's not ranking content site
Spencer Haws: sites who is controlling the AI at
Dom Wells: that point. Yeah. Yeah. So it's probably going to be a lot of the big media brands that can just pump out like content. So it might be harder to compete. Where I think they will be viable is exactly what the kind of business we just talked about where it's like people come to the business because they love the content and they.
They want to read it over and over again. And maybe they joined the Facebook group and the email list and it doesn't have to be built around a personality. It can still be a brand there's many there's many websites. I read where I type in the website's name and I read the content, but I couldn't tell you who wrote it.
I couldn't tell you the name of the person that owns the website. So I'm still very much into the website, which means the average person who doesn't want to be. The persona behind the brand that I'm not sitting here saying to everyone, you need to be like a tech talker. You can still have these types of sites.
You just need to do better. Really. You need to have content where I think one example I've used once or twice before, and it's a really good one. I actually saw someone saying this in a Facebook group. So I wish I could remember who it was, but I can't take credit for it, but they said something along the lines of, when you look at a niche, what if you take drones as an example, traditionally, we would all just build a website, like best drone, best drone under 100 drone X versus drone, Y and then we just build links to it and, you know, make money until we get penalized.
Whereas now you would have to ask yourself, well, who. Who, who is buying drones? Like maybe you have drone races. Maybe you have drone builders, like drone, hobbyists. Maybe you have construction. People like who are actually using drones to survey their sites. Maybe you have like. Hikers you know, and then you can build the content that those people want to read.
So if you did drone racing, you could just build a website about drone racing and put out the type of content that drone races want to read. And, you know, you'll be able to community around your website, whether it's an actual, tangible community, like a Facebook group, or just a, a conceptual community of people that read your blog.
That I think that's always going to be the best way and you can still monetize that type of website in many different ways. And so I think that type of business will always do well and it is harder, but the payoff is. Just as good, if not better. So we just have to kind of level up our game a little bit,
Spencer Haws: a hundred percent agree, and I'm really love all that you said coming onto the podcast and sharing your wisdom once you guys are doing over it on folio and you know, your plans to go public and everything that's involved with that.
Very exciting. So if people want to keep tabs with you and kind of follow along with you or be involved with on folio, where should they go?
Dom Wells: On fonio.co is the main website and I'm active on Twitter where my handles team on folio. And if people want to learn more about the preferred shares, they can go to invest in, on folio.com.
And yeah, just send me a message anyway. I'm pretty responsive and just, yeah. Feel free to reach out.
Spencer Haws: Perfect. Thank you so much for coming on Dom. It has been a pleasure so glad that you could come on to the podcast after you started listening way back in like 20 12, 20 13. So great to have you on
Dom Wells: you.
Have a great day. Thanks so much. Thank you. .