Your Safe Corporate Job Is a Dead End. This Is Your Only Way Out.

Sean Weisbrot: Kyle Kuderewski is the operations manager of Web Street, which originally came from the Empire Flippers Company. They operate a first of a kind investment platform that matches experienced operators of online businesses with accredited. Investors. This is a really unique business model because it allows investors to fractionalize ownership in private entities with profit share, and it's something that I've been personally looking at. This is not a paid interview. I am specifically interested in the business model, what got them started, what's. Got them growing how and and how they operate really. So in this conversation, we talk specifically about Web Street and what they're doing and why they're doing it, and who they attract to invest in their business and who they attract to run the businesses in their portfolios and how their fund structure works. And. These kinds of things. So I know you're going to like this interview if you're interested in teach me something type interviews and if you wanna know more about investing, let's get to it. So, Kyle, tell me what is Web Street's business model? 'cause I know there's different kinds of investing.

Kyle Kuderewski: Yeah. Um, so good question. Web Street makes it possible for people to passively invest in online businesses in a fractional way. So if you've ever heard of. Investing in real estate or art or wine or playing cards, any of these things in a fractional manner. There's a lot of different companies out there that do that, make it possible. Um, that's what we do for online businesses at Web Street. So it's an alternative asset class. It allows people to invest in online businesses. And if you want to, we can talk about what those type of businesses are, but that's it in a nutshell.

Sean Weisbrot: Yeah, we can definitely go into the kinds of businesses, um, in a minute. First, I'm curious why Fractionalize? Investing in businesses online?

Kyle Kuderewski: Yeah, sure. So really, we birthed out of a company called Empire Flippers, which is a brokerage just, um, for online businesses. So a lot of people know brokerages for physical businesses. Somebody builds a business, they wanna sell it, um, and the brokerage would find a buyer. Um, this was what Empire Flippers model was for over a decade. And as online businesses became more and more popular, these businesses became more and more expensive. So the, at the beginning they were selling businesses for 5,000, 10,000, $20,000. Um, you know, recently they sold a business for around $15 million. Um, so these businesses are getting larger and larger and. People want a piece of the action. Um, but a lot of people can't afford to go spend, you know, millions of dollars on a business. Um, so we make it possible to get a piece, uh, of these online businesses that are cash flowing, that are, you know, growing and, uh, continuing to grow with technology increases. Um, in a fractional manner so you can invest much less and get a piece, uh, you know, diversify your portfolio.

Sean Weisbrot: So when people look at investing, one of the first things they think of are like shares. They look at the public markets like, uh, NASDAQ. Yep. And they're able to fractionalize their investment at the price of a single share, which is, you know, depending on the company, anything between a few pennies to thousands of dollars. How do you. Allow people to invest in a company like that because it's a private entity, so you don't really have shares, right. Like that.

Kyle Kuderewski: Yeah, that's a good distinction. So what we do, our model is, um, basically we have what's called an SPB or special purpose vehicle. So you're investing into an LLC. Um, that LLC is run by, uh, somebody, what we call a portfolio manager or an operator, somebody that has a lot of experience running these types of online businesses. They go out and purchase multiple businesses. So by investing in one fund, you're getting exposure to it. It varies. Sometimes it's two, two to five businesses, uh, of different sizes. So you're actually investing, you're a partner in the LLC and as those businesses cash flow, we distribute the profits back to investors. So each quarter, whatever profits are made, investors receive, uh, their portion, you know, depend. Some of these funds are. $1 million. Some of 'em are two, two and a half. Um, so you might be in this fund with 50, 60, 70 other investors and depending on your fraction of the fund, that's how you get your profit share. Does that make sense?

Sean Weisbrot: Yeah. So if someone were to do due diligence, they would see that this entity has this LLC that's a shareholder, correct? Correct. Yep. Okay. And typically any sort of dividend that happens, like again in a public market is quarterly. Yeah. Um, some are single, you know, once a year. How do you guys handle payouts?

Kyle Kuderewski: Yeah, so ours are quarterly, so we do quarterly cash distributions. Uh, we have what's, uh, on our platform. It's called our, we call it our Web Street Wallet, but it really just goes into your Web Street account. And each quarter you can either withdraw those funds, you can reinvest 'em, you can let 'em sit there and grow. And then reinvest, you know, whenever you're ready. Um, so yeah, quarterly cash distributions. And I guess one thing that's important to hit on is it's a two third, one third split. So, because you're not actively running these businesses, right? You don't own, you have no say in what's done in the businesses. You, the investors receive two thirds of the profit every quarter. And when these businesses are sold, which is generally in the two to four year range, after you invest, you receive two thirds of the profit on the exit. So if it's a. For, let's say it's a million dollar fund, has three businesses. They all grow to, uh, collectively to a million and a half. That half million dollar growth is the investors receive two thirds of that when the business is sold as well. So two third, one through third split throughout the life of the business until it's exited.

Sean Weisbrot: So it's quite lower than other funds, which typically would do 20%. 20% of, so like t typically, so like, um, any sort of profit share, it's like the management company, right? The LLC, the team running, the actively managing the investment would receive 20% of the profit and the investors, the LPs would receive 80%. So what is, what's different that allows you guys to. Charge more than that?

Kyle Kuderewski: Well, it's not, uh, we're not taking one third, so it's just, I was simplifying. So investors receive two thirds, one third goes to the, uh, is split between Web Street. We actually get 10% of the profit and the operator, so the, per the operator running the businesses, um, they get the other 23%. And the reason they get that portion is they have no salary. They actually invest in the funds as well. So. If they invest 5% to begin with into the LLC, so they have a lot of skin in the game. If it's a $2 million fund, they're investing a hundred thousand of their own money, then they're running these businesses day in and day out without any salaries. So the reason for that model is, um, you know, we put a lot of, a lot of thought and effort into aligning incentives. Um, we don't get paid and the operators don't get paid unless the investors get paid. Um, so they have a lot, they have to put their own money in, they have to run the businesses, and then they have to, you know, be successful running the businesses to make money. And then, um, the, you know, of course the investors get two thirds for doing essentially nothing besides investing their money. The other thing I think that's important to, to point out is, um, for, for people that are really interested in online businesses and the things they're investing in, in addition to the distributions, you get quarterly reports. So the operators run, um, they do a quarterly report showing what businesses you own, what they did to grow them, what worked, what didn't work. And so a lot of investors enjoy that side of it as well.

Sean Weisbrot: Do you have examples of these kinds of reports that are visible or downloadable, privately shareable with, uh, potential investors? Yes. When they're looking at this, we do. We

Kyle Kuderewski: do, we share, um, redacted versions. Um, only the people that invest actually know the names of the businesses that we buy. It's just for competition purposes. Um, obviously some niches are very competitive, but we have redacted reports where you can see the operator commentary, you can see the return numbers. You can see. Um, you know, basically everything that's, that doesn't give away a competitive edge. So yes, those are all available.

Sean Weisbrot: Okay. Now you were talking earlier about, uh, basically cash distribution based on revenue. Um, I invested in a e-commerce liquidation company in Canada a little bit more than a year ago, and we were. Before it was equity. It was meant to just be like profit share. But the actual deal was so good for me that it prevented the business from growing. Like it, it actually stopped growth. And so I had to tell the founder, stop giving me cash. You need like to stop. I, I need you to be able to grow. So we then ended up switching to an equity model. Because he still owed me money and he didn't really have the cash flow to, to pay because he was building the company. Um, which I'm fine with because as the business grows, the value in it becomes more, and eventually it will grow to a point that it can afford to give me cash without destroying the ability to grow. So how do you balance those things? How do you pay out a quarterly dividend to all the investors without destroying the company's ability to grow?

Kyle Kuderewski: Yeah, that's really insightful. Um, and I can see. I could see that happening in a lot of different scenarios. So really that's where Web Street comes in. So some people might be wondering, you know, what, what does Web Street do to earn any part of this other than provide the, the website? Um, so we like to say, uh, we provide a fund in a box, so. All the legal, all the taxes, all that stuff. I want more people with that. But the part you're talking about is where we really come in. Um, so we help ensure these operators, um, of course we audit all of their bank accounts, their, uh, p and ls, um, but we also make sure they're making the best strategic decisions. So a lot of times we will hold back distributions for a quarter or two, um, to help with fluctuations in inventory. So some of these that are FBA Amazon businesses. Um, you know, these are very experienced operators. They can definitely be trusted to, to run the business as well, but that doesn't mean they're perfect. Right? So our team has a ton of experience in the online business, you know, industry. So accounting for things like seasonality, accounting for things like Google updates that may be coming down the road or advertising, pricing changes, things like that. Or. You know, supplier issues with, you know, we all are aware with COVID and different, uh, supply chain issues. Um, so there's a lot of times where we'll hold back working capital and we'll tell investors, Hey, these were the profits this quarter. You're getting x percent, you know, $500,000 was held back for working capital. That is still profit, that is is yours. But we bought X amount of inventory. Because, you know, the holidays are coming up or, or whatever. So does that kind of answer your question? I'm, I'm, I'm speaking a bit in generalities, but there's, um, a lot of different scenarios where we would do that to ensure the businesses grow and try to ensure returns are the best they can be overall.

Sean Weisbrot: So if I am. Right. Correct me if I'm not, you look at the p and l for the quarter and based on that, decide if there's gonna be a dividend, and if so, what does that look like?

Kyle Kuderewski: Correct. Simplified. Yes. And also when the businesses are purchased. So if we raise, if you know, if the, they're gonna buy, say they have a million dollars to spend and they go buy a $700,000 business, um. But their strategy is to introduce new products and build up inventory, and they see that, you know, this business could be doing better, but they ran it in outta inventory three times In the last year, we might hold back an extra, um, a hundred thousand dollars for inventory, uh, making it a $800,000 purchase instead of seven.

Sean Weisbrot: Okay.

Kyle Kuderewski: I guess it's important to point out there that like if we, if we raise a million bucks and we only buy 800, a $700,000 business, that chain, the difference is given back to investors. So in that scenario, we might hold an extra, whatever amount we decide just to make sure the businesses can grow and have the money they need working capital wise.

Sean Weisbrot: Okay. So I guess let's come back to then, what kind of businesses they are in these funds. In these portfolios. Sure.

Kyle Kuderewski: So some of the most popular ones would be in the Amazon, you know, ecosphere. So Amazon fulfilled by Amazon, FBA, um. I'm sure you're familiar. Uh, do you want, do you wanna touch me to touch on what, how FBA works? Or

Sean Weisbrot: If you want Sure. Why not? I, I know how it works, but

Kyle Kuderewski: go for it. Sure. So just generally, um, they, they handle everything besides the sourcing. Um, so if you source a product, say from China or somewhere in the world, have it shipped into an Amazon warehouse, um, the person that goes and buys that product. It's then shipped from Amazon's warehouse to their front porch. And the, so owner of the business never has to actually touch the product. So that's fulfilled by Amazon. Um, that's a very common, that became super popular during COVID, um, even prior, uh, still popular but super competitive. So that's one of the niches or one of the monetizations we're in. Uh, while I'm on Amazon, this one's less popular, but still can be pretty lucrative as, uh, Kindle Direct Publishing. So. They changed the publishing game. You can directly publish without having to go to one of the large, uh, publishing houses, you know, here in America or somewhere in the world. Um, SaaS is one that we are doing a lot of. So software as a service, um, everybody knows the, the big ones Zoom, HubSpot, um, different, uh, ones like that. But there's tons of different SaaS softwares out there, uh, that people use on a recurring revenue. That's what's really nice about SaaS is um, you can generally. Project your revenue. A lot of it's recurring. People often don't cancel the softwares that they start using either. Sometimes they forget about 'em or sometimes they just, you know, they integrate them into their lives so much that they can't work without them. Um, and then, you know, content and affiliate sites, all of these sites that you go visit, blogs, uh, review sites. Anywhere where you see a product, you click on it. Um, and if you happen to purchase it, usually the person that uh, built that website gets some type of affiliate commission. So those are the big four. Obviously, display ads come into play in a lot of different places, uh, direct to consumer, drop shipping, Shopify, things like that. Um, or other types of monetization. So those, anything that's a physical bus that is a, a business without a physical location, um, is something that we might be interested in.

Sean Weisbrot: So if someone were interested. Is it something like Kickstarter where you can see individual companies that are available to be invested in? Or do you say, oh, I want the e-commerce fund, or I want the SaaS funds? Like how does that work?

Kyle Kuderewski: Yeah. Right now the model is not seeing the actual businesses, it's seeing the type of type of fund and the operator that's behind that. So, um, because we've had such a long history in the e-commerce online business space, we have a big network of people that have bought and sold many sites, right? Over the years, they've come to the marketplace, empire flippers or otherwise, and bought and sold multiple sites. They have a good track record. We bring them on because they, whoa. If they have different reasons for wanting to come on board with us, some of 'em want to do buy bigger and larger businesses than they've been able to afford in the past. And um, uh, some of them, you know, just want to. Implement their strategy again on many, many different businesses. But whatever the case is, you come say, see, like, okay, I wanna invest in this fund because it's in the SaaS monetization and I trust this operator's background. He's built and sold five different websites or five different, uh, softwares. You know, he's got a great team behind them. And you get all of that information ahead of time, you can see what their track record is. And the last thing I'll say on that is, uh, a lot of these operators, they come work with us multiple times. So they'll come run a fund. They have a track record, they distributed, you know, 20% IRR over the last four years and they're ready to do another fund. That might be one that you want to jump in or the opposite, right? Hey, this operator's in FBA, I'm a little bit scared of FBA right now because it's super competitive and I'm gonna stay away from this fund and, and wait for the next one.

Sean Weisbrot: So you said the name, uh, the word operator, is it like one person comes and runs each? So let's say there's like four different brands inside of a fund. That person is. Different from the fund manager or, or are, is the operator actively managing four different brands at one time?

Kyle Kuderewski: Um, they're actively managing multiple brands. Usually it's, it's two to three. Um, sometimes it's just one. Um, and generally they, they're not completely on their own, right? Usually they have a team, if they're building sites and writing content, they've got a team of, of writers, or if they're doing. If their, uh, strategy is to up marketing and or introduce new products they have, you know, their team that they've worked with before. But there is generally one, we have some funds where it's two people. They're partners, they've built all of their businesses together or many businesses together in the past. Um, but generally, you know, the one or one or two people that are. Are in charge of running this brand.

Sean Weisbrot: I think it would be interesting to be able to see, even if you don't see the name of the brand, to be able to see like, oh, here's an e-commerce, to be able to like, you know, like, like mutual funds, right? You can create an index of like different brands, so you can kind of go maybe to like a Robin Hood or a Vanguard and say, I wanna create this kind of custom index. Is there something like that that you guys offer or something that you might do in the future? 'cause I think that would be really cool.

Kyle Kuderewski: Yeah, not currently. Like I said, the um, once you invest and once the brands are purchased, you as an investor do know, but I, I understand completely what you're saying you would like to know before you invest. That's a model we've definitely considered. It's not one we're offering at the moment. Um, but I think probably down the road we will, there's some different things you have to do, uh, from a regulation standpoint and then also, um. It would be a little bit different. You would probably get commitments ahead of time. You need to be able to have the cash to go out and buy these businesses, right? So that's one of the things that makes, uh, us pretty competitive in the space is not just that the operators are great at running these businesses. When we go decide we wanna buy, buy a business, excuse me, we have the money ready to go. So we can be really aggressive in our negotiations and get a good price on the business. Um, which is of course great for investors.

Sean Weisbrot: What if it takes too long to raise the funds and the brand you wanna buy has already been purchased, and then what you were hoping to put into that fund is now not possible to put into the fund.

Kyle Kuderewski: In terms of from the, I mean, there's certainly been, yeah, there's certainly been times where. They're identifying businesses while we're raising the money, and then we're not able to purchase those. Like that definitely does happen. Um, what we do, if, if we raise money and the, the operators aren't able to find a business that they wanna purchase within 90 days, so they have a 90 day acquisition period, then the funds are simply just return to investors. And we, we've done that. We would much rather return funds to investors with interest then. Buy a bad business.

Sean Weisbrot: What does that interest look like?

Kyle Kuderewski: Uh, it, it varies just based on the tbi, current TBI rate. Right now I think it's around four and a half percent. It's pretty good. But, uh, that,

Sean Weisbrot: that, that's 4% annual. That's like a PY. Yeah. Yeah. So if you hold the fund for.

Kyle Kuderewski: This is just during that 90 days. I mean, this is just during that. Yeah. Correct. I mean it's,

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Kyle Kuderewski: because we are holding, holding the funds and we know that interest is, you know, you can get in a savings account now you can get what, four or 5% interest. So, um, we don't wanna sit there and hold investor funds and then just return it to 'em without interest. Yeah. So that's been a change. That's when we started years ago, it wasn't an issue because interest, you know, you were getting half a percent or less in that savings account or. Uh, or whatever, but you know, that's not the case anymore. So we had to adjust.

Sean Weisbrot: Right. And then you have people that are holding, uh, Shiva Innu, and they'll get 30% in a day.

Kyle Kuderewski: Exactly. Which is sometimes the first thing that comes to mind when we talk about online assets. They're like, okay, so you're doing crypto. It's like, well, no, not exactly, but if you wanna do that, it's available. True.

Sean Weisbrot: Yeah. I have opportunities come to me for investments and it's like. Private business loans, and I'm like, I could, but like, you want to return me 10% a year for five years, but like I could make 50% on my crypto in the next few dates. Why? Why should I do that? You know? So it's crappy because I'd like to help people. Yeah. But the re but the returns are so good. I hear you. So you're saying that, so do you have any funds that are like, let's say one, one e-commerce, one SaaS, one product info or whatever? Like do you, do you have mixed funds to help diversify the risk within that fund?

Kyle Kuderewski: 100%. Yeah. Um, actually yeah, we have some of both. We had some where you could go select just a single operator and he would only go buy FBA businesses. Um, this is what we're recording March of 2024. Our, we currently have a fund available. To invest in. That's a mix. It's got two SaaS operators and, uh, one content slash he, he does agencies as well. So he purchases, uh, different types of, uh, content and, and marketing agencies. So yeah, if you invested in our current fund, it would give you exposure to three different, uh, operators. Two SaaS and one content.

Sean Weisbrot: Okay, interesting. What makes you excited about doing this?

Kyle Kuderewski: I think it's still really early. I mean, you and I, you know, work in kind of online space every day and, um, it's kinda second nature to us, but this is an asset class that, uh, a lot of people still aren't aware of. It's every site they visit, every tool they use, every purchase they make, there's multiple people getting paid. And I think it's still early to be able to take advantage of online businesses. Um. If, if you look at the way the brokerages have continued to grow, uh, I've mentioned the Empire flippers a couple times, but there's several others out there, quiet, light Effy, international, et cetera. Um, I. Over the life of those brokerages. Uh, I know a few stats where they've done over half of half a billion dollars in sales in businesses brokerage. So these are businesses that are, people are growing and selling from multimillions of dollars. Um, to me it's just a form of digital real estate. I mean, now I should, I don't think you, anybody should go invest all of their money with us or with any individual provider. But like if you're heavy into real estate and the stock market, like why not look at another alternative asset class? Um. So to me it's really exciting and we're kinda at the forefront of it, um, making it possible for people to passively do it. So that's what, that's what gets me really excited about it.

Sean Weisbrot: What do you think is a reason why someone would look for this specifically?

Kyle Kuderewski: Yeah. The majority of our investors, uh, are more entrepreneurial type, right? They're aware. They, they may maybe they've built and sold sites and they want to, um, continue to be involved in that space, but they're not interested in running 'em anymore. Um. Like I said a minute ago, like a lot of people are heavy into stock markets. They've got their 401k, they invest in s and p 500. Um, maybe they've played around with a little bit of real estate, but they still have other money they want to invest and diversify. Um, we get a lot of those type of investors. We get investors who really enjoy just. Learning, owning a piece of websites, knowing what those websites are, being able to talk about 'em with their friends at dinner table or talk to a party, whatever. So, um, but generally it's people that, um, they don't wanna be active in running these sites, but they are more interested as like an active investor, right? They wanna know what they're invested in and they, they get more from it than just the monetary benefit.

Sean Weisbrot: So you make it possible for an investor to directly communicate with the managing team? Uh, no.

Kyle Kuderewski: No, we don't. Um, they know that, they know that. I mean, I suppose they could go find them on LinkedIn or they could reach out to them. Um, but we don't advertise their email addresses. We don't put their phone numbers out there. Um. We have, you know, we do have some who reach out with, have, have they thought about trying this? Have they thought about trying that? But generally that's not the, that's not the model. No.

Sean Weisbrot: The reason why I say that is like if, if I were to invest, I'd be looking at probably the e-comm fund because I have relationships with different providers that could potentially help them in scaling the business. Right? Yeah. So. I would love to be able to help them knowing that I, I have insight into what they're working on.

Kyle Kuderewski: Yeah. And I'm not saying that would never happen. I mean, certainly you could reach out to us and, and we, I mean, we're in constant communication with them. We, we could, um, we do masterminds with them and things like that, but we don't, we just don't open a, a line of communication. If you've got 70 investors in your fund and half of them are trying to reach out, um, you know, would be a major distraction. But I'm not saying that this, it would never happen. It's just not like an open line. I should say though, like. When we're, when we're doing these funds, we're constantly doing webinars. We're bringing the operators on, allowing you to ask questions, allowing them to have back and forth. Um, it's just once they're past the fundraising point and they're growing the businesses, we just don't want, you know, 20, 30, 40 investors reaching out. Um, if there is somebody with skills, you know, or connections that can help them, certainly we would facilitate that.

Sean Weisbrot: Okay. Yeah, I think that's a, a huge thing for me. 'cause I work with e-commerce brands all the time and I've, I've invested in this e-commerce liquidation platform and, uh, I've, I'd invested in an e-commerce brand previously that did FBA actually, and I'm still close friends with the, the founder of that brand and he has a third party logistics company in China. Got it. So there's a, a lot of different people in my network that provide these services to e-commerce brands.

Kyle Kuderewski: Yeah. How long have you been in the. Liquidation brand. That sounds pretty exciting.

Sean Weisbrot: Uh, 14 months. Okay. Yeah, they're based in, uh, Nanaimo. It's on Vancouver Island. Okay. So it's like an hour ferry to Vancouver City. Right. Cool. So they have some, uh.

Kyle Kuderewski: Logistic advantage Advantages.

Sean Weisbrot: Yeah. Actually they were in the center of the island and I convinced the founder to, to just liquidate everything and move to the, the Port city because it was a headache to be there. And the population in the Port City is 10 times the size of the town he was living in. So the, the opportunities are much better now. He's got, um, a mall location. He is getting ready to open up in March and the location looks beautiful. So I'm really excited to see how that goes. But I also, I remember we talked about this once ago, I think the idea of investing in a fund in Web Street is, is interesting, um, because for me, I, I've run companies before and I've learned that I hate running companies and like I could advise the hell out of anybody on how to run a business from the things I learned, whether they're positive or negative. Um. But I just don't wanna run it. Yeah. I would much rather invest in somebody and have them run it and, and help them to make sure that they're making the best decisions they possibly can. Um, and to connect to 'em, to my resources so that they can work with people that will help them on their way. Yeah. I mean, you kind gonna hit the nail on

Kyle Kuderewski: the head there. I mean, that's where a lot of our investors come from, right? They've done this before in whatever capacity, and then they. They know there's upside there, but they just don't have interest in it. And that's also, I stumbled a little bit earlier talking about why our operators want to come work with us. Um, sometimes it's hard to explain. Sometimes it's, you know, you might say, that seems like a huge pain. Why would you wanna do that? But they have whatever, you know, I. Maybe they've been outta the game in a while, a little while, and they wanna get back in, or they, they all have different reasons for wanting to do it, but, um, you know, it's definitely a case by

Sean Weisbrot: case basis. So how many funds do you have ongoing? Right now

Kyle Kuderewski: we have active, um, 17 active portfolios or funds. Um, that's about 40 assets. So, like I said, some of 'em are one, some of 'em are two. None of 'em are really more than more than three. Um, that's about, let's see, we've raised, I think. Just over $40 million in the last three years. Um, and that's about 25 to 30 million worth of businesses. So we've returned, you know, we raise the money and then whatever money doesn't get spent, we return. So we've raised about 40 and spent about 30, um, on 40 assets. Those are round numbers, but give or take.

Sean Weisbrot: And you were talking about an exit potential. Have you sold any of the companies? Yeah, so we

Kyle Kuderewski: actually, we started just about three years ago and we have our first assets for sale. Now, none of them have actually exited, but we have them. Some that are actively for sale as recently as this month. So, uh, we talk again, you know, in a few weeks and the answer will probably be yes. But at this moment, no.

Sean Weisbrot: What is your process? Do you have like a, a buyer network? Do you have an m and a partner? Like how do you guys think about this and, and handle it?

Kyle Kuderewski: Yeah, so when we first started, we, and this is talking on the buy side, um, obviously as we haven't completed any exits yet, but, um. When we first started, we only bought from the Empire Flippers Marketplace because we really trusted their process for what sites they were gonna list, what assets they were gonna list. Um, now we're open to all brokerages and private deal flow. Um, on the exit side, it's, uh, we're really starting to build that out. Um, certain brokerages, I. Certain communities specialize in different monetizations over others. So that's one way we're kind of looking at it like, um, maybe broker A does a ton of FBA business and we know they have, you know, they're gonna sell the quickest, at the highest, multiple. Um, and then broker B does a bunch of SaaS businesses or maybe. Uh, this operator, you know, has a great private network and he wants to sell directly to somebody, and we don't have to pay a brokerage fee, um, but we know it's at a good price. So it really is case by case, but, uh, there's a lot of thought and effort that goes into, you know, a when should we sell the businesses? Right? Are they still growing? Is there more potential there? Or have they gotten all the, you know, all the juice they can out of, out of the squeeze? Um, and then b like, where do we wanna sell it at?

Sean Weisbrot: Yeah. 'cause that's something else I've been thinking about as well, is I feel like. The brokerage fees can really stack up pretty fast.

Kyle Kuderewski: Yeah.

Sean Weisbrot: If you have the right people to work with. Yeah, certainly. So I, I've got, uh, an m and a firm I work with out of UK and I've been building up, uh, investor network myself for this because I think especially for e-commerce brands, if you can finance their purchase orders or you can invest in them early for equity or you can help them through the different services I have and then get them to exit. Like, there's so many ways to help these brands to, to grow really fast and to make a lot of money in the process.

Kyle Kuderewski: Yeah, certainly. I mean, private deal flow is huge. I, you know, you have to know what you're doing. Of course, sometimes, sometimes brokerages are worth it, sometimes they're not. Some, you know, some of these assets that have tons of different, um, migration requirements, right? So when they sell, they have all these different accounts, ad accounts, et cetera, uh, inventory that they have to offload. Um. There's times where the brokerages certainly earn their commission, but other times, you know, it's just, just not needed.

Sean Weisbrot: Sure, yeah. Typically, so like with the m and a firm, their focus is like, oh, we do your valuation, we do your, you know, data room. We do all the sorts of prep, and, and then we have a buyer network, right. Where, um, when I don't work with them, it's typically I have the people that would directly be buying, but I'm not gonna help you with any of the rest of it. I'm just introducing because I, I can do those things, but if you want me to do them, yeah, you have to pay me. I would rather remove friction. So if all I do is introduce the investor and the person pays based on success, then I'm fine with that.

Kyle Kuderewski: Yeah. Yeah. It makes perfect sense. I mean, if you're gonna do all that work more than just an intro, you certainly need to be paid for it.

Sean Weisbrot: Exactly. Which is why I like the m and a firm, because they'll do all of the heavy lifting. Mm-hmm. I just have to introduce them.

Kyle Kuderewski: Yeah. Yeah. I mean. The ones that are full service or kind of white glove all the way from, like you said, they vet the businesses. They don't, they won't list just anything, right? Or they won't sell just anything. It has to be quality. Um, they're going through the p and ls, they're introducing a valuation. Maybe the buyer agrees with that, maybe, or the seller agrees with that. Maybe he doesn't. Um, they facilitate the negotiations, they bring different buyers in, and then they see through like the migration, after the assets are sold, they do the APAs, they do the legal, they make sure everything's transferred correctly. Like that's a lot of work. So maybe the 10% or 8% or whatever they're charging is worth it. Yeah.

Sean Weisbrot: I'll, I'll tell them to increase their rates 'cause they weren't charging that. I kept telling them the, these guys in particular, they're in the UK so they look at business a little bit more differently and they're looking for businesses that are gonna sell for eight or nine figures. And so they tend to skew a little bit lower on the percentage, and I keep going. These guys, like if I come to you and I bring someone like you need to charge them at least this percent, because I know they're gonna know that that's the market standard. You're charging too low. And they're like, I. If you can get them to pay more. Okay. I'm like, but you have to be willing to work with me to like actually tell them that price, because if I tell 'em the price and you see something lower, you're just basically wasting the opportunity. Yeah. Sometimes people are really great at what they do. Like my dad's a dentist and he is great at being a dentist, but he is not so savvy with the money side of it. So it's uh, sometimes frustrating to work with people that are really good at what they do. They're professional, but they don't understand how to maximize the value that they can get from the client based on the incredible value they're providing to the client. Right. Yeah, I totally understand that. Um, yeah, which is why I understand why you guys charge 33% and. You know? Yeah, it seems fair. If you're actually working with them doing webinars and all this stuff, then like, okay, you guys are, are working to earn that money is fair enough.

Kyle Kuderewski: Yeah, exactly. And we think, you know, again, it's not for every operator out there, but we, the, the ones that do wanna work with us, we see it as an advantage to do all the investor relations, to do the distributions, to do taxes, to do all of that so that they can just focus on. Being a dentist or whatever the case is. Right? Like they don't have to deal with any of that. Um, so

Sean Weisbrot: is there anything that we haven't really talked about that you think would be quite valuable in rounding out this conversation? Yeah, good question.

Kyle Kuderewski: Um, not really. I mean, I, I think we've, we've kind of talked the structure and the different business models, um, in depth. I, I just would encourage people if you're interested in investing, whether it's with us or whatever, um. Whatever asset class you wanna be involved in to, to really do your due diligence and get educated on it. I mean, that sounds pretty basic, but if you're not understanding, you know, if you're not asking the types of questions that you're asking me or that we're discussing and really understanding how these models work, you're just gonna be disappointed as an investor. Uh, it's more fun when you're educated. You understand what you're investing in, and then you know you're gonna have some investments that are gonna do well and some that won't. And if you don't understand how they work, um. I, I, I think that's a pretty big mistake. So that's kind of what, what I would wrap it up with. But I think we've talked Web Street and, and online businesses

Sean Weisbrot: pretty in depth. So you said it's important for people to do due diligence. My question was going to be how do people do due diligence? And you sound like you said, I'm doing due diligence.

Kyle Kuderewski: Well, you're understanding the model, right? You're understanding the model. Now, you wouldn't turn around and go invest in our currently open fund without actually looking at. Which operators are in there, what monetizations are in there? Do I want a piece of this monetization? What's their track record? Have they been around for two years? Have they've been around for 10 years? So I guess there's a kind of a difference. Education and understanding what asset class and what type of investment you're doing, what the structure is that you were asking about. Structure. I think that's important. Um, but then true due diligence on what. You're actually investing in? What are the businesses or what are the operators? What, you know, what apartment building are you investing in? Like what does the real estate look like around that, et cetera. Now I think you can probably go too deep down the rabbit hole and do some, uh, analysis paralysis, but, um, having a deep understanding is important for sure.

Sean Weisbrot: I guess I have a, another question that just came to me. Do you, do you have people that refer investors to you? Do you have like a referral setup?

Kyle Kuderewski: Yeah, we do. Um, it's pretty much to this point just been previous investors, so yeah, we do, um, it varies from fund to fund, but generally we give them a, a break on their, any of their fees. So like when you invest, um. There's a first time 1% fee. We would waive that for any referral, both for the referer, how do you say this correctly? For the person referring and the The new investor refer. And the referee, yeah. Yeah, exactly. So yeah, we do have a referral program. We also are building one out on the operator side because we know a lot of these people that build online businesses have friends and colleagues in the space. Um. I don't have the details off the top of my head on how the operator referral side's gonna work, but, uh, that's something we're working on right

Sean Weisbrot: now. So, like for example, if I had people that wanted to invest into different funds in Web Street, would there be some sort of cash commission or, or, uh, equity in that fund? Like as the commission instead of cash?

Kyle Kuderewski: No, just a, just a refer. Currently there's not a cash referral. I think that's, um. I think that has to do with SEC regulations on broker dealer, uh, registration. But, um, there is, we are fee. Yeah, yeah, exactly. So our current model is to waive some percentage or all of, uh, that, uh, the a UM fee. Okay.

Sean Weisbrot: All right. Well, I think the most important question that I ask at the end of every interview is, what's the most important thing you've learned in life so far?

Kyle Kuderewski: Going with a deep question last, I like it. Uh, I think. I think that I've, you know, we didn't really get into too deep into the background, but, um, you know, I, I started out in the engineering world, corporate America, and got into investing, real estate investing now online business investing. Um, I. I think it's super, super important to get into, to design your life around something you enjoy. Um, I enjoy travel. I enjoy being able to work a flexible schedule and not being scared, uh, to try new things, right? So, um, not that there's anything wrong with working a stable, you know, corporate America or whatever type of role if you enjoy it, but if day in and day out you're not happy, don't be scared to get out. You know, learn a new skill and, and take risk that you can. Um, I dunno if it's Tim Ferriss or one of these famous podcasters always talks about, um, basically looking at the worst case scenario, if you try something new and fail at it, like what's the worst that's gonna happen? Generally, it's not that bad. If you take a risk on a new career or a side hustle or something like that, if, if you're smart about it, even if it fails, you're gonna learn a bunch of new skills along the way. And if you're successful, it can completely change your life. So I think not being afraid to try new things is super, super important, um, and has a ton of ancillary benefits, learning new things along the way. Um, I know you, you're always trying to, to learn new things and, and do different things in different realms of your life. I think that's super important. So a bit of a vague answer there, but hopefully that makes sense.