Episode Transcript
Hello, it's Andrew from XO capital. And this week I wanted to talk about us exiting sheet best. So we got about almost a 500% return on investment for this one. And we'll walk through the details of that in a second. As a side note, you know, we've always had a little bit of a community. We have a little discord group.
There's not much value. I don't feel like we're contributing to that community at the moment, but we're trying to figure that out. And so as a first step, what we did is we took five people, put them in like a pod, I'm calling it and we're going to try and help them buy their first SAS company and just walk them through. You know, whatever, whatever they feel like they need help with.
That's what we're going to help them with. And I don't know if we end up putting some more structure behind it. I'm not really a chorus guy. So I don't know. Maybe there's a course in our future, but if we do it. I don't know, it might be free. I feel weird about courses. You shouldn't, I that's just a me thing. But if this one's successful, we'll do another one.
And so plenty of people have reached out and asked if they could jump in and we'll, we're going to cap this one at a relatively small number of people. If this one works, we might do another one. That's a little bit bigger or do two groups of five. So. Back to sheet bests. So we decided earlier this year that we wanted to focus on a smaller number of deals instead of having this wide portfolio of, you know, seven to nine companies that are. Where each company is actually quite small operationally that, that ends up being. A nightmare.
I don't know how else to put it. It turns out that, and this is a pretty unremarkable realization. It mattered a lot to us, the quantity of businesses that we were managing and not so much the size. In fact, it's, it's almost the opposite of what you would think. Or maybe this is obvious to everyone, but me. If you have a larger business, you can staff dedicated people to it. That's beautiful.
That's lovely. Shared services is tough. There's almost always a fire and multiple places across the portfolio of, you know, seven plus companies. And so the. Amount that we can reduce our surface area will give us more time and more energy to focus on a smaller number of things that we can execute really well.
So that's what we're trying to do. Most of our portfolios is currently for sale except for journey, which we just acquired. And we're going to be focusing on making room for about up to 2 million that we have to deploy on a one to two deals where we're. Pretty hyper-focused on distressed venture for, for the next ones that are for about a million or 2 million purchase price.
So back to sheet best, we bought it in 2021. It was the second deal Xcel ever did. It was a relatively small dollar amount that we bought it for. And it was doing about 800 bucks an MRR at the time. So I really don't know that Xcel would be. Where we are today without sheet, best frankly, it was one of the first companies that gave us confidence that we could actually source.
Cause I think I just DM to these guys on Twitter source. Grow cashflow. Operate all of the above. This is one of the first deals that gave us confidence that we could do it as a group. This was one of the original ones that I had bought with, with two other gentlemen that are no longer part of XL great guys, but it just wasn't, it just wasn't a good fit longterm.
And that's when we found Henry and Danny. So this was kind of one of the ones that we dragged along, you know, bought out the old. The old partners and brought in some new people and it survived all of that, which is pretty cool. So really the two channels that we use to almost five X, this business, I really wanted to get to five X, but we only got 4.8 ish. Really the only two channels we use were Google ads, which is fine.
I'm. I'm totally fine with finding any channel that works, even if it's paid, right. If it's ROI positive. In, in some ways, ads is a really nice one. Because we can just kind of step on the gas and figure out where that starts to where that starts to taper off. So Google ads were actually profitable and kind of kind to us. And then randomly, we had a couple influencers and these other, you know, kind of developer influencers start making videos.
And one of them just went, you know, stratospheric. Relatively speaking, I think it got maybe a million views, something like that, but it was very impactful to our revenue and that was really cool. And so the growth really wasn't. Other than that video, which frankly has a long tail or had a long tail where people were kind of trickling in from that there wasn't really anything special that we did. That video, you know, we got lucky, we didn't try and replicate that with other with other influencers, although that could be something that the new owners try and that might, that might bear some fruit. But again, this one was really consistent, slow. We held it for a long period of time.
Revenue grew consistently. It was light on engineering. It was light on customer support. It costs very little to runs on digital ocean. It was like 300 bucks a month to run this whole thing. And again, like no real support tickets, it was a horizontal product. So it was really fun. Seeing what everybody's use cases were a lot, a lot of random stuff that people were using this thing for, which was kind of fun and kind of a nice to get that kind of variance.
You know, typically if you have a vertical SAS you're selling to. You know, one ICP or just a few, and it's, it's really, everybody's trying to do kind of the same thing. So this was cool. In terms of hard numbers, 493 and a half percent ROI. MOIC so this is multiple on invested. Capital is 5.93, and these are, these are all kind of rough.
I, I did these calculations quickly and the IRR, especially this one's, this one's pretty rough one, a hundred and thirty five 0.5% might actually be a little higher. I use 2023 profit for 23 and 22.
And I didn't go back before that and have a 21 handy. So we are again, focusing. Focusing on making room for the a 2 million of fresh capital. We have to deploy and journey, and we're trying to offload the rest of the portfolio. This is nice too, because a lot of times when we talk to investors or just people in general, they want to see realized exits it's very nice to have paper gains, but it's much, much nicer to say. You know, we bought, we held, we sell old here's the money.
People really respond to that. It's pretty hard to argue against that. So this is a really cool one for us. So we're thrilled to have the new owners take over. And, and I think that they have a really nice ride ahead of them with this product. It's been really kind to us, and I think it'll be really kind to the new owners.
So do you have any questions, feel free to jump in our discord and talk to you soon.
