Sramana: Is an M&A your primary strategy for growth?
Dan Roitman: We are going to buy, build, or license products to plug into our platform to allow us to scale. We are focused on consumer education businesses.
Sramana: So, you are looking for other personal development educational products that are in the B2C model, right?
Dan Roitman: Exactly. Our expertise is B2C selling. We want to leverage our strengths. When you look at which companies succeed in M&A, it is companies that stick as close to their knitting as possible. We have been presented with opportunities that would have doubled our EBITA, but they just did not make sense. Maybe in five years those opportunities would make sense. We are definitely focused.
Sramana: Do you have a list of companies you are tracking?
Dan Roitman: We have a constellation within this market and we have looked at the sub-segments. We know what is attractive to us and have done a lot of thinking about what is out there. We have a VP of finance who has done 120 acquisitions in his past.
Sramana: Are you planning to raise money to do this roll-up?
Dan Roitman: I would not call it a roll-up because we are looking at businesses outside of language learning. We have been able to raise debt in the past to support our working capital needs. Depending on the acquisition size, we will bring on the right partner to finance it properly. We are not opposed to bringing on a solid partner if that helps us accelerate our growth.
Sramana: Somehow the media has created a myth that entrepreneurship equals financing. That is just not true. It equals customers, revenues, and profits. Financing is an optional tool. Not all businesses are fundable.
Dan Roitman: Lifestyle businesses are great businesses. If you have something sustainable and you enjoy doing it, then enjoy it! I have plenty of friends doing that. I think people think too much about the Silicon Valley model.
Sramana: Not every business needs to be a billion-dollar business. There are a lot of people who can build a $5 million business and that is just fine.
Dan Roitman: That is actually one of the things I have learned. In the back of my mind, I have a thought that there is a bell-shaped curve at each stage of growth. As an entrepreneur, you have to be on the right side of that bell curve. You can’t just be average. You certainly can’t fall behind.
Sramana: I am very bullish on niche e-commerce. You have a great focus on B2C education. That is a very specific, niche e-commerce business. If there is enough TAM available, those businesses can do very well.
Dan Roitman: In some ways I wish our business was obsolete. If people learned languages in school, they would not need to learn at this stage in life. A lot of our products are mind improvement oriented, and all reflect skills that could be taught when you are young.
Sramana: I am a big fan of bootstrapped businesses. Congratulations on your success; it is well earned.