From building a solid foundation to navigating the challenges of scaling, George’s insights offer invaluable guidance for aspiring entrepreneurs and business leaders looking to achieve high growth and sustained success.
Key Takeaway
- Clearly distinguish between building a lifestyle business and aiming for a venture capital-backed startup.
- Conduct a thorough SWOT analysis and create a detailed five-year plan to guide your business strategy.
- Focus on customer acquisition and retention from day one to ensure sustained business growth.
- Stay updated on AI technologies and incorporate them into your business to stay competitive.
- Go beyond transactional e-commerce by providing exceptional customer service to build long-term loyalty.
- Understand that scaling a business requires different skills and sometimes different leadership than starting one.
- Use specific demographic and behavioral targeting to attract high-repeat clients and maximize marketing ROI.
- Invest in building a strong company culture and ensure consistent communication of values across the organization.
- Carefully consider the implications of taking venture capital, including the need for a clear exit strategy and additional board oversight.
- Maintain a healthy balance between work and personal life to ensure long-term success and mental well-being.
View Written Interview
Hey everybody, man, do I have an exciting episode for you today because I am going to be featuring a subject matter expert, but he also knows, let's say a lot of things about a lot of really important things. So there's not a lot of people who know a lot of stuff about a lot of stuff, but my next guest, George, he knows what he's doing. He is not only a managing partner at Red Rocket Ventures, but he's also CEO of a very interesting business called Restaurant Furniture Plus. And there's just gonna be a lot of really fun stuff that we're gonna talk about on this episode from acquisitions to how to grow your business to should you even be growing your business and are you in the right industry? So many fun things. So welcome George Deeb to the podcast. Super excited to have you, George.
Thank you, Samir. I appreciate the invite.
Would love to have you just kick things off and tell us a little bit about yourself and kind of what you're up to these days.
Yeah, happy to. I mean, I'm a serial entrepreneur. After an eight -year career in investment banking, I got bit by the entrepreneurial bug, and that led to becoming the CEO of a handful of different companies. Most of those are venture capital -backed, so I have a history in fundraising, I have a history in scaling businesses and selling those companies for good returns for our investors. When I'm not running my own businesses, I'm helping to consult others that need help and trying to figure it out, that I do under the Red Rock Adventures brand.
Those typically revolve around, you know, growth strategies. They don't know how to necessarily scale their revenues and they need a fresh set of eyes to come in and help them figure it out. So that's a little bit about me and I'm excited to kind of dig in here.
Yeah, same. Tell us a little bit about Restaurant Furniture Plus. What's unique about the business? What got you excited about it? We'd love to know more.
Yeah, I'll give a little bit of history there. The business was founded in 2012 by a couple entrepreneurs based in California. And they grew it from zero revenues to about two million in revenues between 2012 and 2018. And they didn't really know how to grow it from there. So they put the business up for sale. My partner and I had been looking for a business to buy. We looked at over 100 different e -commerce businesses. We knew we wanted e -commerce, but we didn't know exactly what was in e -commerce until we saw this one. And what we liked about Restaurant Furniture Plus was it was a B2B story. So we thought that'd be a little bit more easy to be defensible up against businesses like Amazon and other sites online where it's a much more competitive B2C market. So we like the B2B angle. We like the fact they were leaders in the space. They had a lot of traffic coming in from organic SEO. They had a good brand name. They had good reviews online.
I really liked the unit economics of the business. It was a high average order size and a low cost of customer acquisition. And we knew exactly what to do with this business in terms of how to sprinkle the fairy dust on it and start to scale up the revenues. And that's pretty much what we've done. I mean, it was aggressive Google marketing growth strategy. We're doing other things, but that's the primary thing we're doing.
And you know, our marketing budget has grown from zero to two million a year and our revenues have grown from two million to 20 million a year. And, you know, it's been a great story and we've got a terrific brand name in the market and we're perceived as a thought leader in our space.
That's awesome. That's killer. I'm curious because we actually, we even had the CEO of Flippa on this podcast. And for those of you who are listening to that episode, you gotta go listen to it. We even pulled up some listings on Flippa and broke it down, like certain things to look at and how to analyze the financials and all the different things, at least what they have on their platform, right?
I'm curious as you said you looked through like 100 businesses, right? As you were looking through those, I love what you said about average order value and all these other aspects which I definitely believe are important. Love what you said even like, hey, you found, hey, there's a little niche here, they got a great customer base, B2B is gonna be better for us than B2C. Were there other aspects that you analyzed and and and and maybe what I'm getting at more specifically is for other people who might be trying to do a similar thing Maybe they're doing a flip on maybe they're doing a private something. They're doing whatever right were you looking for gaps where you had Really like high skill sets and you knew that you could like you said kind of come in and sprinkle your fairy dust or Or was a little bit more of like the hey We're just gonna look for the perfect business and and and then we'll be able to make that happen, yeah, I'm curious just kind of, you know, for others out there who may be trying to do something similar. I've got a lot of friends myself that don't have any good great business ideas, but they're always like, I'd love to acquire, you know, whatever it is, you know, the local business or the online business or anything like that. I'm just curious at any learnings or anything that we can kind of, any of, yeah, your knowledge that we can share.
Yeah, that's a huge question and I'll do my best to answer it. So first, why did we acquire a business instead of building something from scratch? The first is because it is established, right? There's an existing revenue stream. There's an existing profit stream. The hardest part of doing a startup is, you know, you don't know if it's going to get the right product market fit. You know, what's the go -to -market strategy? Are customers actually going to gravitate towards this thing or not? And there's a lot of testing that you need to do in those early months or years of getting a brand new startup.
The fact that this business was already up and running for a six year period of time and had a loyal customer base with a high level of repeat sales and a high level of revenues that it was de -risked. Right. So the reason you go down the &A path is you're looking for a more sure fire successful story. That's certainly one way to do it is down the & A path. Now in terms of what you're looking for, I would say, you know, you want to make sure you're in a sizable industry. You know, so how large is the market you're serving?
How competitive is that market? In this particular case, there were not a lot of websites that were selling restaurant furniture online. It was relatively new in the e -commerce world and we like the idea of being a first mover in that market. So you got to look at your competition and kind of what you're up against. You got to look at the unit economics we talked about before. That basically means what's your average order size, what's your gross profit margin.
You know, what kind of return on ad spending or cost of customer acquisition are you dealing with to make sure the economics make sense so that when you actually go to scale it, you can actually get a good payback and return on that marketing investment. So, you know, we did a lot of homework on this business. We also, you know, we wanted to make sure we trusted the founders, right, that were these nice people. Did we trust them? Did we think we were getting sold some, you know, ridiculous story that wasn't credible? You know, they checked all the different boxes for us and, you know got us comfortable that we were making the right decision. And there's been no looking back. We've been very happy with it.
That's awesome. So I love a bunch of the points that you just made, because I think the team is super important as big as the business ideas and everything else, right? The team and the founders and everything like that. I think that's crucial when I mean, you've had successful exits at this point, right? Where you've had already learned from so much of that experience, which I definitely want to get to and touch a little bit on that, but do you feel like if someone is looking to potentially acquire a business or something like that or get into an existing business, do you think it's, because a little bit of what you're saying, I love the idea of even like franchises versus new startups in that sense, right? Because it's a little bit more, it's a little bit of what you alluded towards, right? There's a little bit more of a track record. You're more likely to succeed. It's why statistically speaking, someone opens a franchise versus a different type, you know, other type of business, like franchises will always win, right? And so do you feel like one of the major reasons, you know, for that success was of course kind of you've already successfully exited, you know what needs to happen in order to make that happen and, you know, alongside that, is that something where you feel, how do I ask this? Maybe, you know, is it, would you encourage kind of someone who's,maybe a little younger or something like that, or isn't, you know, isn't, you know, maybe, you know, an older generation that may have less experience to just go fail, go try something new and start it up and, and, and try to make that fail or, or, you know, or teeter along and then do that acquisition into something that's a little bit more proven. Or is it like, Hey, I've got this industry experience or you know, hey, the experience I've gotten from my day job or whatever, I feel confident enough to kind of run this business. I don't know if I'm asking that in the best way possible, but I hope that made sense.
Yeah, so there was a lot of questions in there. I'll try to answer them. What you're really talking about and part of your question is, does age matter for entrepreneurship? And in my belief, no, age itself doesn't matter. There are plenty of case studies where a 20 -year -old has had tremendous success or a 60 -year -old has had tremendous success. What matters is experience. And most likely, the 20 -year -old does not have the experience that the 60 -year -old has. So.
There's lots of lessons learned in those 40 years of difference that you're bringing to any new business initiative that you're doing. So in our case on Restaurant Furniture Plus, yes, we benefited from some of those years of experience. But if I was the 20 -year -old and I was looking for getting involved with the business again, I would almost prefer to go down the acquisition path because it's been de -risked. What they don't understand as a young entrepreneur.
Absolutely.
you've got a one in 10 chance of it actually being a huge hit. And if you could de -risk it and ensure that you're gonna have a future and a successful business and a good growth strategy from there, that's materially more valuable. I mean, I was looking at an article that only 90, or sorry, only 4 % of the businesses in the United States ever get larger than a million in revenues. Holy smokes, that means 96 % of businesses that are formed never get more than a million in revenue. So,
Hmm