Episode Transcript
Hello. It's Andrew from XO capital. And today we are preparing for liftoff. So a quick update on the flip fund, we've soft circled, six 50 so far, and I'm totally blown away by the support and feel really grateful that A few of you are going to come along for this ride with us. If you're interested in investing in our accredited, you can check out our deck.
It's really, really simple. You should be able to get through it in about five minutes and understand hopefully on this first slide. Exactly what we're trying to do. We're trying to buy one SAS company raising between half a million to a million. We're trying to double revenue and sell it in 12 to 24 months. Hence the name flip fund.
There's no fees. We're doing a standard 20% carry and you can kind of go through our, our history and there's quite a few questions that we've gone through and answered and the deck and that's about it. Of course, you know, six 50 soft circle doesn't mean much until people actually write checks.
But so far it's been lovely chatting with A few of you and getting to know you, we're doing this under a 5 0 6 C offering. So if you know your legal stuff and are wondering how the heck I'm able to talk about this stuff publicly, we are doing this again under 5 0 6 C. So we are allowed to generally solicit investment provided that everyone in the in the flip fund is an accredited investor.
So you will have to verify that you are an accredited investor before being able to invest, but, and a week or two, we should be all set to start taking on. Some cash. We're literally just waiting on an EIN number from the government. We put together a very, very simple LLC operating agreement and a subscription agreement. It's literally as simple as you could possibly do.
It's only a few pages long it's written in plain English. It's five pages in total, including the subscription agreement. I have never seen docs this concise and this human readable. And it's really lovely to be able to just quickly scan through and be like, okay, I understand a hundred percent exactly what this operating agreement means. I don't know if you've ever read through like a normal kind of standard Stripe Atlas operating agreement, but it's pretty dense.
It's pretty long and pretty confusing. Whereas this, I think hopefully is Incredibly transparent and anybody can make sense of exactly what's going on in here. That's available in this link here. So a year ago I would often walk around the streets of Santa Monica. Wondering how the heck people raised discretionary capital.
I didn't come from the private equity world. Right. I, you know, I still don't. I don't even consider what exa does is real private equity. It's still too small, frankly, to be considered. What I would say is traditional private equity, but I wondered how the heck people raised discretionary capital. You know, you, you hear about the
You know, these big funds and it's, it turns out that they had some connection to some kind of money and, you know, a few people like three or four people knew them and there is a $50 million fund I'm like, okay, well that's not the path I'm going to be able to take. And it turns out my formula was this. And you know, this of course I don't mean to be celebrating a little early, but roughly the trajectory is looking good.
It turns out the formula for me was write a blog blog post every week for three years, gather a list of people who find what you're doing. Interesting. Do 10 deals, nearly bankrupting yourself to prove out the model with your own cash first. And then only then can you raise a tiny amount of discretionary capital to do one company?
I'm sure there's an easier way. At some point, I'm sure we'll move upstream and be able to take a little bit of money from family offices. Et cetera, but for now this is pretty solid and I'm pretty, pretty stoked and excited for a flip fund. One. We've also started identifying some targets. So
Yeah, the quicker we can close, the more likely these initial ones that we're we're chatting with, won't be scooped up by the time we actually have the capital to go deploy this. A little portfolio progress. Most of the focus has been on growth bar. We're making incremental progress elsewhere, but these are kind of some of the most interesting experiments of the week.
We removed forced credit card payments. So when you signed up to growth buyer in the past, you had to put your credit card in. And then at the end of the two weeks, if you didn't cancel, they would auto charge you a full annual subscription. And it was super aggressive and I'm sure, you know, maybe a few got through where people said, okay, fine. Yeah. I'll try this tool for a year. No big deal. But there was a ton of disputes and Stripe.
People really did not like this. We have like 30 grand sitting in Stripe jail because of all of the chargebacks and refunds and disputes. And so it turns out Stripe really, really doesn't like this and it makes the MRR numbers and Stripe look really wonky too. It's it's wildly, wildly inaccurate. Like when we log in, it says 30, some odd thousand and recurring revenue, which is not the case.
Certainly not the case in terms of, of cash collected it's it's way off. So we removed the requirement to put it in a credit card before a two week free trial and unsurprisingly signups have doubled on average so far, it hasn't been very long and we're not past the initial two week waiting period where people, you know, sign up and then they wait there two weeks and we see what kind of conversion numbers come out of that.
But. My guess is it's going to be somewhat better. And generally speaking, it's just a better experience for the consumer to have a free trial. They don't have to put their credit card in, and if they like the tool, they get value out of it for the first two weeks. Then they pay, it's like a very kind of normal standard process. And we'll give this a shot if we're wrong, we'll revert it. But if we revert it back to a credit card to sign up, I think the two week trial will revert to like a monthly subscription instead of an annual. And hopefully that will alleviate some people's surprises or at least their eyebrows.
When they see a bill for like a thousand bucks, for some things, some tool, they tried like two weeks ago, I forgot about. There was another kind of interesting part of this equation too, where the previous owners had excluded all of India from being able to sign up and use the tool. And, you know, I've seen a lot of other people do this. The reason is there's just a ton of abuse people sign up and we'll go to great distances to save a dollar or two.
And people will sign up with multiple accounts. Even though you can't really get very far in the tool. Or get like a meaningful and to add blog posts on the on the, on the free trial, you just kind of get a taste of what the tool can do and maybe like three quarters of a blog post, or maybe one short one.
But we'll start to track and see what kind of abuse is is going on. I'm sure that there will be an increase in it, but something we'll be monitoring, but ideally then that is a positive that users are happier to sign up and give the tool a try and more and more people end up converting because they like the tool as opposed to while they paid for a year.
So they might as well. They might as well use it. We're also trying to recreate a relaunch, a riding marketplace that the previous owners had tried and gotten some traction with previously. It's really cool to buy a SAS company when you're a service business. So you have an existing service business. You buy a compliment mentoree, SAS company. That is a very well-worn path. What isn't talked about as much is if you have a SAS company bolting on a service to really increase a revenue service revenue is somewhat more labor intensive, somewhat lower margins, but for us, the color of money is all green.
And if there is demand for a marketplace like this, And then we will happily meet that demand. So I love an experiment like this, where we can essentially create a form very light on engineering and have a meaningful, positive impact on revenue just by being a broker between ourselves and some content writers.
And thankfully we already have a great partner that we use to they write our articles and so we're going to be using them to. Test out this marketplace idea. We did take an L this week on support guy, we did a product hunt launch support guy is a way to kind of upload all of your support documents. And then you can kind of chat with them. It's sort of a variant of like the.
Being able to upload like a PDF and chat with your PDF and all those tools, but we launched a slack bot. So it's pretty cool. If you uploaded all your HR info, for example, you could have an HR slack bot. And your employees could just chat with the slack bot in slack and not have to email your head of HR or your head of people.
That's the idea, but we did the product launch and we got zero new paying customers. So a little bit of work there on product market fit looks like we haven't quite hit it yet, but we bought this particular tool knowing that we were going to have to find that ourselves. Even though that's generally not something we sign up for. Random note I've been really into this book. 10 X is easier than two X, which is super ironic. Given that our mission for the flip Monday is literally to try and go to X and not intentionally go 10 X.
But they have this really cool concept called the gap versus the gain. The gap is when you're sort of measuring progress against some ideal and it ends up like being, you know, you move the goalpost on yourself and you never sort of feel satisfied when you reach your goals versus measuring against the gain where basically you measure against your past your previous progress.
So it's not so much. Have you reached your ideal state yet? It's sort of like a year ago. Where were you? Two years ago? Three years ago. Five years ago. And measuring your progress in that way has just been a total 180 for me, in terms of Measuring my progress and kind of feeling good about.
Where I am, as opposed to always sort of pushing up against this, this idea on this, the state that I want to in particular, get XO to. It's such a compelling thing that I ended up building a slack pot using open AI to ping me every day to record my three wins from the previous day. And it's it's stupid, but it's, it's lovely getting a text message that says like, oh, what were your wins from yesterday? And I don't have to.
Remember to go into notion or wherever I, you know, right. I usually have like just a Google doc that I read in everyday, but this is nice and to be able to record it and then have this system. Maybe eventually kind of like play those back or do like a weekly play by play or like a monthly recap in terms of like how much progress I've made is just kind of a cool concept. So that's it stay tuned for updates on the flip fund? I hope that the next episode will be me saying that we're ready to start taking in cash. Take care of.
