Business acquisition is the process of buying a business from another company entity. Many business owners choose to go down this path for many reasons. In today’s episode, Chris Bell shares with us the lessons he learned through business acquisition.

Chris Bell is the Founder and CEO of Perch, a consumer brands company focused on acquiring and building direct-to-consumer businesses. Before founding Perch, Chris worked in Wayfair and Bain & Company. He now leads Perch to be a billion-dollar consumer products company using his years of experience with mergers and acquisitions.

In this episode, Chris describes his learnings and realizations from building Perch and working in the industry. He talks about the necessary things to grow a business, especially if you’re in the industry of purchasing other businesses.

Tune in to the full episode to learn more about the ins, outs, and in-betweens of business acquisition!

[04:45] So for folks who aren’t yet familiar with you or your company, let’s start off with that. Perch—what’s the company do? When did you start it?

  • Yeah. Perch started, essentially, January of 2020. And we buy great Amazon products and brands, and we add them to our technology platform, and we scale them. We scale them internationally to other eCom marketplaces, and starting to get into brick-and-mortar and wholesale channels. And so really what we’re doing is looking for the best of the best, and we want to take them to the next level.

[05:19] So the industry description would be like an FBA aggregator. Do you guys call yourselves that?

  • Not… I mean, yes. That’s an accurate description. We don’t refer to ourselves that way because that seems a little bit too mechanical and financial-oriented. And we truly believe we’re buying brands that could be future household names. And that’s what we think we’re building as a company. Amazon is one of the most competitive marketplaces in the world. And so if you’ve been successful on Amazonand there’s some other characteristics we look for, which we can talk about. But in general, you built a good product, right? If you have consistent profitability, you have a good ranking, you’re not going crazy on ad spend to maintain that, in general, we find these to be very durable products and brands. And ones that we think have a right to be kind of more broadly enjoyed.

[06:11] Yes, indeed. And folks in the audience, this is the third interview in a series that I’ve done with founders or leadership of companies that are in the FBA aggregator/roll up space. So if you are looking for additional interviews, there’ll be one with the founder of Thrasio, and there’s also one with the founder of what was called Recom Brands, but they’ve renamed themselves now to Elevate Brands. But if you search for those in the search box on, you will be able to find them. 

So Perch, today, 25 acquisitions? Is that right? Or has there been another one since you and I talked? 

  • There has been a couple more. So yeah, we’re growing fast.

[06:54] Excellent. Okay. So did youright in the beginning when you got the idea that, “Hey, this is the thing I want to do.” What happened after you got the idea of, “Hey, this is the thing I want to do?” Just kind of, like, elaborate on that.

  • Yeah, sure. If you don’t mind, maybe I’ll back up a little bit before that, until about my background is that—it feeds into why I thought this was a good idea. So really quickly, computer engineer by training. First job out of undergrad was doing product management. So designing and implementing software solutions. I learned a lot, that was a GE actually, in Milwaukee, and learned a lot. But decided I didn’t want to work at a company that size. So I got into sales. I was selling copiers and software for a couple years. Went to business school. And then after business school, I went to Bain & Co where I worked about a third of my time in the private equity group doing over 40 transactions with leading private equity firms. Two-thirds of my time at Bain was helping retail companies grow. I’m doing things like B2B sales, prospective pricing, new products, new markets, stuff like that. A lot of fun. 

After Bain, I joined Wayfair, where I helped build Wayfair’s North America’s supply chain, what they now call the Wayfair Delivery Network. It was an amazing three and a half years I joined Wayfair when they were just over a billion in revenue. And so it’s kind of a really pivotal inflection point for them. And in that three and a half years, we opened 50 sites across North America: 42 final mile centers, eight sorting centers, delivering things like couches, vanities, and hot tubs. 

And one of the things I’m most proud of was while we were there, we went from an average—it took about a month on average to get a couch from Wayfair, when I joined. Greg was just crazy in eCommerce to think about. And when I left, we were doing two-day delivery of couches, hot tubs, and vanities. And so just really paradigm shifting for the Wayfair customer. And these are complex because they’re in-home scheduled deliveries. So it’s not like they can just drop the thing on your front doorstep, two days later. We scheduled windows. We assembled couches. There’s all just a lot of variability in that. A lot of fun. But then I started looking for the next thing. I felt like I was running a team of about 1300 across North America, across those 50 sites. And it’s going really well. But I love the early stages of Wayfair. I love building and I wanted to go do that again. 

And so when I found this idea when I discovered more about Amazon and a third-party marketplace. And the sellers that, honestly I went to a conference down in New York and met a bunch of them. And I just think they’re great people in general. And they’re just really bootstrap and always build something real and profitable with their own money. So I enjoyed that. But then as I thought about my personal experience, feels like in the last decade of my career, 15 years of my career has been building to something like this where—I know M&A really well. I’ve been to a lot of M&A transactions have been—I know eCommerce and supply chain really well. Supply chain is a really hard part of running these businesses. And early in my career, worked on developing and designing scale software solutions, which is a really big part of what we’re building at Perch. 

So when I heard—when I started thinking about this idea, I just got more and more excited. Not only that this is a really exciting space, and that was underserved in terms of entrepreneurs who want exits. But also something that just I personally feel like I could differentially be good at. So as I had this year, I saw this realization, had the idea, I started talking as most people do. Friends and mentors, gotten them to challenge me, “Is this a good idea? How should I think about doing this?” A lot of investors pushed me towards software. Right? They said, “Don’t actually buy the companies just develop software that they can use.” because that’s—I think that a lot of investors like to underwrite the software, and software as a service type of things. Because I just thought about…

[10:45] That’s exactly about it.

  • Which is a good business, right? I just thought about what I think we can build and where the value is. I think the real value is in taking these products and brands that are amazing, and taking them to the next level. And it is possible to do that through software, but it’s hard because you can’t force people to use your software. You can’t force people to enter Europe or to sell on Walmart. And not that we can force people to sell to us either. And then once we own the brand, we can get really aggressive with it, right? We know how to run supply chains, and we know how to launch in Europe, we know how to launch on Walmart’s marketplace. Right? And so we can go—my thesis was that we can be much more successful by taking these products and brands, and taking them to the next level. 

So then I went…I thought about doing some of this with my own money at first. I started shopping for smaller businesses. I do okay, but I don’t have enough money to buy a whole bunch of these with my own personal money. So I thought about doing it myself. But in parallel, I started talking to institutional investors because I thought, to really do this you need money. Right? To buy companiesthis isn’t a business you can do over a few years with a computer. You need to get some cash and go out and buy some real business, especially because the thesis is that scale matters. 

Because entrepreneurs have been really successful but they get to a point where they don’t have as much access to working capital. And a lot of them could hire a team, but they just don’t want to. Right? They get to a point where they’re like, “You know what? Hiring people suck.” And I just don’t feel like doing that. And for us to hire the best and the brightest, for us to be able to build a technology platform. Technology, as you know, is more valuable the more you can scale it. Building an entire tech platform for two or three brands will not pay for itself. Building it for a hundred or a thousand brands, you can get meaningful scale leverage off that technology platform. And so I wanted to go big. I wanted to build sales so that we can do the things that I thought we could on the tech side, on the cost advantage side, like supply chain optimization, cost takeout, things like that. 

But I started shopping. I met with, I don’t know, 50 different investor groups. And I got a lot of people saying, “Yeah, seems kind of neat.” “Not sure.” “Yeah. Why don’t you do software?” A lot of people, “He should just do software.” And luckily for me, Alex, who’s my lead investor as part capital, saw it and he loved it. And he thought it was a great idea. And so once I met with him, it moved pretty quickly. This way, a lot of these investors work as they see something they’re excited about, that can move pretty quickly. And so I think we have a term sheet within a week or two, and we signed it. And then we start small. We bought a few really small businesses at first, because we didn’t want to buy something big and mess it up.

[13:37] Let me jump in with some questions there on that fundraising when you got the conversation with Alex. So when you’re talking to Alex, you’ve not acquired a brand. Correct? So no brand, no cash flow, no revenue. You’ve got basically like 17 slides in your pitch deck, and you got a term sheet off of that. Is that correct?

  • That’s correct.

[13:59] And are you at liberty to disclose the pre-money valuation?

  • No.

[14:04] Can you give us a range? Was it between five and 10 million? Or was it over 10 million? Or was it…

  • I’d say, yeah, call it five to 20.

[14:18] Okay, interesting. So this guy is basically looking at you, and your background, and thinking, “Okay, you’re a smart guy. You’ve got lots of relevant experience. And you’ve got this vision, which I happen to agree is a good vision. So we’re gonna basically make up evaluation.” I’m aware I’m sure they have a formula for it. But more or less, we’re all kind of just throwing darts at a dartboard in the early days. And so how much are you able to disclose? How much—was it millions or tens of millions that you raised? I imagine it was only just a couple million initially?

  • Correct. It was not 10. It was below 10. High single digits all-in. With that, we were able to get some debt on top of that as well.

[14:58] Okay. So some equity, some debt. What percentage is equity versus debt?

  • It’s about 50-50.

[15:04] And all from the same place? All from Alex?

  • No. It wasn’t. Once I got the equity term sheet, then went on the road shopping for debt. A lot of time talking to investors. Yeah.

[15:13] How long did it take you to get the debt after you had the equity?

  • The first time? Probably three or four months.

[15:23] Okay. So a lot of pitching. Pitch, pitch, pitch, pitch, over and over and over.

  • A lot of work. Everybody likes to look back and say like, “Oh, these guys made it because they got some money.” But it was not easy. Today, as people—I think you know—more and more investors are excited about the space. Back then, it was just a confusing different business model. It took a lot of pitching and a lot of conversations. And you just got to find the person that likes you. The other thing frankly, that Alex and I had, we met each other personally before. But Mark was one of the first investors in Wayfair. I think, the first investor at Wayfair. He’s been on Wayfair’s board for a while. He had left the board before I joined. But I got a nice, I think, very big recommendation from Niraj, the CEO and founder of Wayfair. And James, the COO, that helps as well.

[16:11] That was the missing piece. And I think you told me that in our pre-interview, and I had forgotten because there wasyeah, that makes a lot more sense. Because I’m like, “Wow, this guy’s a really, really aggressive investor.” Here’s this guy. He’s never met him before. He’s got 17 slides. And he’s like, “Yeah, let me write you a seven figure check.” Okay, so you close the round, and what happens then? I’m assuming hiring.

  • A little bit. I didn’t want to hire a whole big team of people and then not have a business. And so I had a friend from Wayfair, who is leaving Wayfair, and just helped out part time. But mostly it was me in a— we were— we worked, work style, kind of monthly office rental. And I started calling the brokers. Right? We didn’t feel like sitting about how that works so we started calling the brokers, digging through them. We hired some outside diligence support because we didn’t want to make a mistake. Got a couple deals under LOI, and kind of marched forward. 

I mean, the first few dealslike right now we have a really well-oiled machine. And we are fast. I believe that we’ve gone from first call to closed in 13 days. That’s abnormally fast. Usually it’s more like 30 to 40 days. But we’re a really well-oiled machine. But as you might expect, these first few deals, diligence took a really long time because we were just afraid of the unknown unknowns. Documentation took a while because we didn’t have standard docs. And so we were kind of creating an asset purchase agreement out of thin air, and it didn’t… So yeah. So it took a while. It took some time to make the first couple acquisitions. 

In parallel, I think my first employee started, we had a deal under LOI, but I hadn’t closed yet. So once I got a deal under LOI, I said, “Okay, we might have a business here. Let me go hire one person.” And then, I made a second offer. And he started. I think once we had two acquisitions closed at the time he started.

[18:32]  Let’s talk about the first deal for a minute. So are you able to disclose what the brand is?

  • Sure, yeah. It’s Flathead Straws. It’s actually—I use it every day. The number one silicone reusable straw on Amazon.

[18:25] Okay. And Flathead Straws, so you bought them, you closed on the deal when?

  • January 1st, 2020.

[18:33] So and what were they doing in monthly revenue back then?

  • I think they were close to $700,000 or $800,000 in the trailing 12 months. So not monthly.

[18:47] Okay, but or actually… know our business… 

  • Yeah. And I remember—and they were about $200,000 SDE, was the number we pay more attention to. Right? We do a multiple of profit and revenue.

[19:00] And so the founders of this company now, are they still with you on or are they long gone?

  • No, we had a one year run out on that. And he actually made a bunch of money on there. Now we did quite well with the brand. But he’s not involved anymore. 

[19:15] Okay. So there’s this guy, he’s launched this brand. He’s basically—he sounds like maybe a solo entrepreneur. He grew it to three quarters and a million dollars. And now he’s at a point where he’s probably bumping into some of his own limitations. He’s probably bumping into the fact that he’s got to hire more people that maybe he doesn’t want to do. And/or he’s bumping elbows on this product, maybe not much, but capital issues with respect to the ability to fund inventory. Were any of these things reasons why he wanted to sell?

  • Yeah, it was twofold. It was a bit of capital constraints. Like, these businesses are cash intensive. You’re putting down deposits in Asia well before products are sellable.

[19:54] Months and months before you get paid. 

  • Yeah. So he hadthe business growing really rapidly. So over the summer of that year, he’d been air freighting a whole bunch of stuff, and rushing orders, and paying a lot of money. And so his actual cash balance was not moving as much as the business would. You’re asset rich and cash poor type of thing. So it was part of it. And then the other one was, I think frankly, this was way bigger and more successful than he thought it would be. And he kind of wanted to catch it at the top. Right? He felt like this already exceeded his expectations. And so why not take a bite out now? And then I think he wanted—I don’t know if he ended up closing it—but he wanted to acquirehe had his eyes on some rental property near him for a while and it was available. And so he wanted to have to go and invest in another.

[20:41] Got it. Okay. So I went down that rabbit hole, because I know that there are people listening to this, who maybe have a young brand. And they’re thinking that because they’ve never grown a brand before, they’re notthey don’t know the potholes that are ahead of them. Even for successful brands, there’s all these things that are going to come up and potentially really hamstring your ability to get past a certain point. It’s not like you’re going up an escalator. 

Growing any business is like walking up stairs—and only sometimes the stairs from the third to the fourth stair—it’s a huge step, whereas from the second to the third stair was not a very big step. It’s not a linear process. And I wanted to highlight that because if someone is listening, and they’re running a brand, and they’re coming into that, they might be listening to you and thinking, “Well, maybe I should just be selling my company to this guy instead. Or maybe I need to talk to somebody or raise some money,” or what have you. But these are very real issues that all of us entrepreneurs have to deal with on an ongoing basis. 

All right, so now you’ve closed 25, 26, 27 deals. We all are not very good at things when we’re doing them the first time. We make lots of mistakes. When I say we, I mean me. And maybe other people, but I know me because I live with me every day. And then I get better. And I figure things out, and I dial things in, and I make better systems, and I make fewer mistakes, and things get better. 

Looking back with hindsight, what are some of the lessons that you learned about acquiring businesses? From say, the first three. I know, you said you got faster at it. But from the first three or four to like the last three, what are some of the takeaways? Because some people are going to be listening to this, and they think, “Well, I’m never gonna start an Amazon integrator or roll-up, or whatever. But I like the idea of buying a business,” and they’ve never done it before. And I’m trying to add value for that member of the audience.

  • Yeah, for sure. A lot. A lot of things. Same as you. Right? It’s hard every time you do something the first time you end up making a lot of mistakes. Where do we start? 

One thought that strikes me right off the top is that these are the entrepreneurs’, typically, their most valuable asset. Right? Think about selling your home, and then multiply that by 10. And so obviously, the dollars and cents are important, but you need to develop trust with the entrepreneur. And you need to have credibility with them. Honestly, our first couple of businesses, and we stay in touch with a lot of the entrepreneurs, and I’m so thankful that those people sold to us. Because, frankly, it was pretty clear we didn’t know what we were doing at that point to them. But they’re not that… Maybe we tried to cover it up. 

But at the end of the day, if you’re selling your business, or you’re thinking about buying a business, showing the entrepreneur that you know what you’re doing. And now, we’re at a point where we can introduce an entrepreneur to our supply chain teams or our advertising team. We have a lot of credibility and depth in these spaces, and we really know what we’re talking about. But early on, if you’re not—if you’re somebody who’s thinking about buying your first business—really make sure you’re a student of the industry. 

Because from the entrepreneur’s perspective, especially if there’s an earnout, or some sort of structure like that, they want to know that you know what you’re doing, and you’re credible. And even, take away the earnout, closing risk is a real thing. It’s easy to have fun conversations about, “Oh, I’ll pay you $5 million for your business”, everybody gets starry eyed. And then you get into it, and the entrepreneur’s fear is, “I’m going to spend all this time doing this.” And then this person is going to get cold feet, or they’re going to try to re-thread the deal and give me less money for it. They’re going to nickel and dime me about… 

One acquisition we made recently. I had an offer from somebody else, they turned down, and the person was trying to add in a salary for this person. “You don’t have a VA, and you should have a VA. So I’m going to subtract 50k from your SDE.” Right? And it’s like, “Right. Nobody wants to deal with that shit.” And so just developing relationship, letting them know that you’re serious. And you know that you’re serious because you actually know what you’re talking about. And you know the industry. You know that. Right? Every business has works. And if you’re a buyer who’s gonna run away at the first sign of a work, then you’re probably not a serious buyer. So developing that trust with a seller, and letting them know that you know what you’re doing, and you know what you’re talking about is really important. 

And then you know, I could go on for hours about the long list of things we’ve discovered post-close that we add to our diligence checklist. There’s no perfect recipe.

[25:08] Give me an example.

  • Man. We had a seller who had just launched with a new manufacturer, and we got excited because it was lower cost. Already had a container on the water from China, and so it was gonna be here soon. And so we did diligence everything. Everything was great. We closed. The container arrived in LA. We put it directly into Amazon. The seller hadn’t QA’d it at all. It was a really low-quality product. Star—reviews went down. We got shut off by Amazon for NCX issues. It was—and then it’s really, yeah. We had our returns going back to Amazon FCs. And they automatically were putting them back into stock. So it was really hard to actually hit clear. Right?  

And so luckily, when we were in that we actually then had another acquisition. This was back—this was like March of 2020. Right? This is earlywith another one over the summer, same thing. And the seller was saying, “Hey, I already have another manufacturer. The orders’ going in, they’re going to ship it tomorrow.” And we said, “No, stop. Stop the order. It’s okay, if we go out of stock for a week. We want a sample flown in. We’re going to QC the sample before this stuff is in the water.” So thankful we did. Right? There’s a bunch of issues.We stopped it from going on the water before it got shipped. We cleared the QC issues, and we got it going. Right? 

So things like that, that just in general, you need to make sure that there’s no changes in the business that are in-flight, that haven’t settled through the system. Because the existing manufacturer, they’ve been selling that for years, usually. And so you can see the reviews. You can see the return rate. You can see all these things, and you can have confidence that if only you can maintain that relationship, you’ll be okay. 

That’s one—other things—we bought a company who had been buying reviews. And actually, Amazon’s getting scary good about this. So when we found out about it, we found out about it from a notice from Amazon. We contacted the seller, he was very transparent. Once we found out, he was transparent about it. He said, “Yeah. You’re right.”

[27:12] Once he got caught, he was very transparent about it.

  • Yeah. And we closed. Right? When he released escrow. But the thing was, surprisingly, one because when you pay for review, he actually had the list of every review he paid for and the order it was associated with. And Amazon had already deleted 98% of the reviews that he paid for.  Right. So the good news is they’re scary good at this. And so the actual rating that we had was the real rating. Right? So it didn’t actually end up gettingit was just a scary heart-stopping moment. We got that notice from Amazon. We submitted a POA, we did the right things, and it was all fine. 

But it’s one of these moments where we’re like, “All right, let’s push just a little bit harder on this one,” because a lot of stuff like that. Right? And there’s always the unknown unknowns. And that’s why early on, if you’re a buyer, people might push you to an all-cash offer. And maybe that’s what you have to do to get the deal done if you don’t have any credibility in the market. 

But getting an earnout in place from a buyer’s perspective is really important. One, because it aligns you incentives. Like we have entrepreneurs reach out to us all the time, saying like, “Hey, did you notice this? Did you see this thing? I heard about this new exciting thing. I want to make sure you’re doing it on my brand.” And we love that, right? It’s helpful, because in general, I’d say at this point 90% of stuff we already have our eyes on because we’re growing. And especially early on, it was helpful to have that aligned interest where they want us to be successful. But it’s also helpful in the downside case of, right? 

If you’re a first time buyer, there are real unknown unknowns that you just can’t uncover if you’ve never run a business like this before. And so I really encourage you strongly to put some earnout or deferred payment structure into the acquisition because, it’s really hard to know to be running the business for a while.

[29:00] Tell me about your opinion about what makes a really great product or ASIN, as those of us in the biz will refer to them. What makes a really great ASIN?

  • Yeah. We follow the data. We look for things that have consistently maintained or grown share, have been able to maintain price leadership. Have ait doesn’t have to be price leadership as in being priced the highest, but they’re not competing against a kind of slowly decaying price, or our rapidly decaying as the case may be. We look for ratings and reviews that are remote versus competitors. Right? So by count and by rating, we want things that are clearly better products, and customers are voting with their feet, and they’re voting with their willingness to share their perspectives on the products. We get that into the account. We make sure return rate is good. We make sure NCX is good. No IP issues.

[29:59] What’s NCX? I’m not familiar with that.

  • Sorry. Negative customer experience. It’s an Amazon metric. Right? People return stuff and they say, “wrong size.” They don’t think you’re on NCX, that it’s just a return.

[30:11] It’s not just a return.

  • Yeah, exactly. Or like chafing, or like real customer quality issues. Then you get the NCX thing, and if that gets too high, we’ll shut off your ASIN. And we made sure that, at the end of the day, the beauty of Amazon is millions of people go on every day, and millions of people transact on there. And so, we do some subjective tests around. We want to make sure we’re not buying fidgets spinners at the height of fidget spinners. We want to make sure we’re not buying, we don’t buy things in really high product term categories like high tech. Because we don’twe’re not going to come out with the next best bluetooth headset. That’s not our business model. 

But as long as we can see people buying this thing in 10 years, and we can see at least 18 to 24 months of consistent leadership in the category, we think—and that’s not, you can’t take that for granted. Right? Winning on Amazon is not like financial arbitrage where you just buy it, and it kind of flows its way along. But we think we have an engine, where if you have shown that you’re leading within the category, we can take that. And we can accelerate it, and we can bubble and through other channels.

[31:21] So how are you accelerating? Are you typicallyI’m sure you have a playbook or a formula that you’re following for this. MaybeI would assume these listings are reasonably well-optimized already because otherwise they wouldn’t have got the success that got you interested in buying the company. I mean, are you doing better jobs at PPC? Or are you creating some new variations? Are you going into a new international market? Do youwhat are some of the things you’re doing to cause the brand to grow?

  • Yeah, a bunch of stuff. And we do have a playbook. The thing that I love about this business is one, we learn something every day. Right? It’s fun, to kind ofand Amazon’s changing. Right? It’s a competitive—millions of sellers, Amazon’s changing, so we’re always innovating on our playbook. 

But the other thing that we find, my general theory is successful entrepreneurs typically have at least one superpower. Right? But they arerarely is anybody, myself included, good at everything. Right. And so that’s why we’re building a team of people who are great at all these things so we can hopefully be best at everything. So it varies. Like we find some entrepreneurs who are amazing at merchandising, and so they have great imagery, and they have great videos and spend zero on PPC. Right? And they’ve just one amazing product and amazing merchandising. And then we see the other side where people don’t have that good at photography, and don’t have a good copy, but are just blasting PPC, and are winning through PPC. Right? 

And so like it varies. The playbook is pretty consistent, but where we find the value varies a lot by what the entrepreneur was differentially good at. And they almost always have a couple of line spots. Right? And so in, for example, supply chain is often one of those. We find a lot of entrepreneurs, air freighting a lot of things, going out of stock, or some consistency, which is maybe supply chain/cash. Right? People don’t have unlimited cash if you’re growing a business. So it varies. 

But in general, we find international expansion to be a really consistent lever. We find, usually, PPC optimization. Sometimes, people have done like a truly “best in class” job. And there’s a little bit less for us to do there. But in general, we find we can be better.

[33:31] What’s your favorite software tool for managing PPC campaigns?

  • We are currently using four different software tools and also building an in-house overlay on them. We foundthere’s a bunch of pretty good ones out there. We haven’t found one that’s doing it the way that we want to do it quite yet. And so we’re building a bunch of our own stuff. The thing is, it’s a—to do it well—PPC does not exist in a vacuum. Right? PPC depends on your competitive landscape. It depends on your organic ranking. It depends on your price versus competitors. And so it’sand to get an integrated view on that, and to create an algorithm that takes those things into account is something we haven’t found. 

So there’s a bunch of people who are going to PPC as PPC only. Right? As kind of an ad optimization engine, which we’re still leveraging those platforms to do that. Once we’ve kind of done our math around, ‘Is this a price elastic category? Or is this an aspirational category? We can price up by 30% and use PPC to support that.” Really, you need to be thoughtful. It’s not one size fits all with PPC. It depends a lot on the category, the competitive landscape, your margins, your price point, things like that, your organic ranking. And so yeah. 

So we find that that’s a viewpoint that we found a lot of success with but isn’tit’s hard to execute. Right? Like we are building a software platform because we are managing this point probably tens of thousands of keywords a day, and hundreds of ad campaigns a day. And integrating those, right? Organic rank ad campaign, price competitor share gains and loss, and doing all that math every day now, and soon to be hourly is pretty unique, and is helping us get…

[35:21] That’s a lot of work.

  • It is, which is why we’re not doing it with humans, right? We’re doing it with software. And that’sour third of our team, our software engineers. And we’re continuing to build in that way because that is I think where we win. And I’m not saying we win at the expense of other people’s winning. I think this is so big, many people will likely win over time. 

But our secret sauce is that if we create the right technology platform, we can continue to buy hundreds and thousands of brands. And we throw them into this machine that is just really good at what it’s doing. And then we have a bunch of mechanics working on making the machine better, not people trying to go line by line through PPC campaigns, and trying to figure out a bid or not.

[36:06] How many people are on the team now?

  • 32.

[36:11] So 10 of them are engineers?

  • Yeah. Nine, maybe.

[36:16] Nine? And how many are in M&A deal flow? 

  • Three or four. 

[36:23] But you also now probably have a pretty decent network of brokers who are not employees, but they’re essentially working for you, and that they’re continuously looking for deals for you.

  • Correct. Yeah, we use a lot of brokers. We also have a really hot…one is Nate, who runs M&A for us. I always tell him, he’s running a B2B sales team. Right? His jobwhat was that?

[36:44] I agree completely. A year and a half ago, I interviewed a guy who was buying brands and his deal flow strategy was brilliant. And it was all basically reverse B2B sales.

  • Yeah, it’s exactly right. And so, there’s a lot of parts of that that we could talk about. But the most important part to me is customer service. At the end of every deal, we should get an NPS of 10. NPS is Net Promoter Score. It’s a way of measuring customer satisfaction. And so we get a lot of our deals through referrals. We get sellers telling their friends, “Call Perch. Those guys are fair, they’re fast. They know what they’re doing. I’m getting my earn out,” right? “They tell you—they’re going to give you—they’re going to deliver on this earnout. They’re delivering on their earnouts.” And that is really how we went on the M&A side because there’s a lot of people out there. 

And a lot of people are calling every seller, and saying, “We want to buy your company.” And like I said earlier, sellers don’t want to get into another lie with somebody who might nickel and dime them, and who might back away at the last minute, or not have any funds, things like that. And so we find it’s really powerful to have that referral network.

[37:47] Yes, it’s the Warren Buffett buying strategy. Be the very best, most credible, most trusted buyer in the marketplace, and you’ll get first kick at the can at most of the good deals. And in some of those cases, as I’m sure it’s happened for Berkshire Hathaway on many occasions, there is no other buyer. That company just comes and says, “We want to sell to you.” When Warren Buffett’s famous for making handshake deals, and doing, multia hundred million dollar, or maybe even billion dollar transactions in a matter of hours. I’m sure your diligence team’s going in after that and doing their thing. But Warren and the seller come to an agreement in a very, very short period of time. 

  • Yeah, I agree. Yeah. 

[38:29] So let’s close out with this. What do you see for the future? Both in terms of opportunities, which I’m assuming is just more. And then challenges?

  • Yeah. The opportunity isI really believe that we can build a consumer products company that is taking these really impressive products and brands, and making them household names. And that’s not a 2021 thing. Right? It takes a long time and a lot of effort to get your products in all the Walmarts, and all the Targets, and across eComm channels, and DTC. Right? It’s not just… so it’s not an Amazon only play. 

So I think we areeverybody, this is why we don’t call ourselves an Amazon aggregator internally, because that is like step zero of the strategy. Because we think it’s just the barriers to entry for new products has come down so much. You have five or 10 years ago, you probably needed $100,000, if not $250,000, to launch a new consumer product because you had to buy a whole container load. Right? And ML-key was so high you had to buy a bunch of it. You fly yourself to Asia because Alibaba didn’t exist. So you fly yourself to Asia, find a factory, if you’re lucky enough to get a good deal and not get ripped off, and then buy a whole lot of it. I’m over here, find retail distribution, start… you float the working guys really hard. 

And today, you can launch a product on Amazon sourcing through Alibaba, and launch it on Amazon for $1,000. And so millions of people are gonna keep watching these products. And the beauty of what’s happening is that quality wins, reviews win, social coverage wins. You don’t care about super—we like Superbowl commercials are fun to watch, but people buy based on reviews, and organic ranking, and social because they trust their peers more than they trust the $5 million social or Superbowl ad. 

And so we think the trend is that this is going to continue. Micro brands are going to continue to take meaningful share of overall retail. Consumers want it and they trust these brands. And so our job is to capture, accelerate the best of those brands and make them into global household names. And we’re just getting started. It feels like the first picture, the first inning on what we’re building. 

And then the challenges, is, it’s really hard. Right? This is a really hard business to run. And we’re leaning heavy into technology. I think most other people at our scale, probably have a hundred employees. And we have 30. And a third of them are engineers. And so we’re leaning deep into the technology, because we think, especially within eCommerce, that’s a path to… If we were hiring a whole lot of employees for every brand, at some point, you just run into a wall. You just can’t hire enough people to keep doing that forever. And we’re going to be able to continue to accelerate, and go cross channel, and do that in a really, really skilled way. But it’s really hard to have the discipline to invest in technology. That’s the easy path is always hire a 22-year-old to go do this thing. It’s really hard to go multi-channel, multi-geography. Really hard managing a physical supply chain of scale. Right? There’s a lot of moving pieces to these businesses. And there’s a reason why. 

Procter and Gamble and Unilever are highly acquisitive. They spend between $20-40 billion a year on M&A. And the reason they’re not doing this is because they know how to run a $500 million business. They don’t know how to run $105 million businesses. And the reason is, for example, they’re just talking about the headcount model, right? Their model is they have brand managers, and inventory managers, and all these people in every single brand. And obviously, they’re worth hundreds of billions of dollars, and they’re being successful in their own way. 

But the real differentiator that is hard is managing a whole lot of discrete moving pieces on each brand is a massive challenge and complexity, just to keep them from not falling apart. And then add on top of that, growing them and taking them to new geographies, and taking them to new channels, and all the variations that come with that. So we don’t take it for granted. We feel like it’s been an amazing ride. But we’re also just getting started, and there’s a lot of hard work ahead of us.

[42:40] All right, gang. The company is Perch. My guest has been Chris Bell. Chris, if people want to get in touch with you to talk, start a conversation about selling their brand to you… I’m assuming if they just go to, there’s probably a forum somewhere on the website that they can fill out?

  • Absolutely, yeah.

[42:56] Thank you so much for listening. If you’d like to get to the show notes for today’s episode, you can do that by going to And if you haven’t already done so I would be absolutely thrilled and filled with gratitude if you would take a moment and leave a rating and review for the show on your favorite podcast listening app. Thanks so much for tuning in. Have an absolutely wonderful day. Bye.

Chris Bell’s Bright Ideas

  • Take Amazing Products to the Next Level
  • Understand Why Owners Want to Exit Their Business
  • Lessons in Business Acquisition
  • Know What Makes a Good Product
  • How to Grow Your Business Like Perch
  • Have Great Customer Service and Referrals

Take Amazing Products to the Next Level

In this episode, Chris shares with us the story behind Perch. Chris recounts that he was very excited about coming up with this idea.

He says, “not only that this is a really exciting space, and that was underserved in terms of entrepreneurs who want exits, but also something that just I personally feel like I could differentially be good at.”

As a successful Amazon FBA business, Perch buys products in Amazon and adds them to its technology platform. They then scale these products internationally to other marketplaces.

Chris believes that they are upgrading these products for people to enjoy the service of these products. He says, “What we’re doing is looking for the best of the best, and we want to take them to the next level.”

Understand Why Owners Want to Exit Their Businesses

For Chris, the reasons why owners decide to exit their businesses are twofold.

  1. Restraints in Capital

These businesses are cash-intensive. Owners have to put down deposits to their products in online retailer platforms even before they would be sold months after.

So, sometimes their cash balance is not moving as much as they thought it would be.

  1. Sometimes the businesses become more successful than expected

In times like this, owners feel like the business has exceeded their expectations. So, they would like to get out of the business and move on with their lives.

Business Acquisition Lessons

In the industry of business acquisition, Chris has learned that it’s never easy to start a business.

“It’s hard. Every time you do something the first time, you end up making a lot of mistakes,” he says.

Aside from this, Chris shares with us more lessons he learned in this industry:

  • Develop trust and credibility with the entrepreneur

You have to show the entrepreneur that you know what you are doing and are sincere in taking their business. Remember that what you’re acquiring from them is a great asset.

Because, as Chris mentions, “from the entrepreneur’s perspective, especially if there’s an earnout or some sort of structure like that, they want to know that you know what you’re doing, and you’re credible.”

  • Always check the quality of the products.

Make sure that the products you’ll be acquiring in the business are of high quality throughout.

“You need to make sure that there are no changes in the business that are in flight that hasn’t settled through the system,” Chris shares.

  • Put some earnouts and deferred payment structure in the acquisition

“If you’re a first-time buyer, there are real unknown unknowns that you just can’t uncover if you’ve never run a business like this before,” Chris says.

Putting earnouts and deferred payment structure in your business acquisition will protect you from these unknown unknowns.

Know What Makes a Good Product

In Perch, Chris identifies which products are considered good in quality by looking at the data. They look at two things:

  1. Growth and Price Leadership

The products must not be competing against a rapidly decaying price in the market.

  1. Customer Ratings and Reviews

To consider a product as good, the customers must leave better ratings and reviews for the products versus their competitors. The products’ return rate and customer experience rate must be reasonable, and there must be no IP issues.

How to Grow Your Business Like Perch

Chris shares with us two tips on how he grows his business to where it is now today.

  • Have a playbook

A playbook is where your business process, policies, and SOPs are listed down. Since Perch deals with Amazon products and Amazon is constantly changing, they always update their playbook.

  • Find people with superpowers.

For Chris, “entrepreneurs typically have at least one superpower” that is based on the skill they can do perfectly.

Thus, when building a team, you should include people with different superpowers to have a well-rounded team.

Have Great Customer Service and Referral Systems

Chris is stern in his vision with Perch. “I really believe that we can build a consumer products company that is taking these really impressive products and brands and making them household names,” he says.

A sure way to reach this goal for Perch is through having excellent customer service and referral systems.

For Chris, customer service is the most crucial part of the business.

They aim to have a Net Promoter Score of 10 at the end of every deal. They value as well the network of referrals circling their business.

In reflecting on the future of the Perch, Chris says, “We feel like it’s been an amazing ride. But we’re also just getting started, and there’s a lot of hard work ahead of us.”

What Did We Learn from This Episode?

  1. In acquiring a business, you should build trust and credibility with the entrepreneurs.
  2. The quality of the products must always be at its best.
  3. You should put earnouts and deferred payment methods in your business acquisition.
  4. Have a playbook for your business.
  5. Build yourself an excellent team.
  6. Good customer service and referral systems will help you grow your business.

Episode Highlights

[04:45] What is Perch?

  • They buy great products on Amazon and add them to their technology platform.
  • They scale those brands internationally to other marketplaces.

[07:09] Chris Realizing What He Wants To Do

  • He was initially a computer engineer. His first job was product management.
  • After he finished business school, he went to Bain & Company to work in the private equity group doing transactions with leading private equity firms.
  • Afterward, he worked in Wayfair, where he helped in building North America’s supply chain.
  • From his experiences in Bain & Company and Wayfair, he realized that he liked to build things, which inspired him to make Perch.

[11:31] Starting the Business

  • He thought at first that he could do this with his own money.
  • He realized that he has not enough money, so he began talking to institutional investors.
  • He met Alex Finkelstein, who became his lead investor.
  • The business moved forward quickly after their meeting.

[14:50] Journey of Perch

  • It took a lot of time, effort, and talking to investors to reach the point where they are now.
  • He got recommendations from Niraj Shah, the CEO and Founder of Wayfair, and James Savarese, the Former COO of Wayfair, that helped him attract investors for Perch.

[15:49] The Next Steps for Perch 

  • Slowly he grew the business and started calling brokers and outside diligence support.
  • Chris only began hiring people when he was sure he had a business running. That was when he got a deal under LOI.

[19:43] Why Owners Want to Sell Their Business

  • There are two reasons why owners want to sell their business: capital restraints and businesses exceeding the owners’ expectations.
  • Chris realized these based on his first deal with Flathead Straws.

[22:32] Lessons Chris Learned in Acquiring Businesses

  • You need to develop trust and credibility with the entrepreneur.
  • Make sure to check the quality of the things you’ll be acquiring.
  • Put some earnout or deferred payment structure into the acquisition.

[29:11] What Makes a Great Product

  • Chris follows the data.
  • They look for products that have consistently maintained growth and price leadership.
  • They also look for ratings and reviews versus competitors.

[31:48] How Did Chris Make Perch Grow?

  • They have a playbook where clients can find their processes, policies, and standard operating procedures.
  • Every entrepreneur has something they’re good at, but they also miss a few things.
  • Find excellent people that will be part of your team.

[33:38] Software Tool for Managing PPC Campaigns

  • They’re developing their own software tools and are using many different ones as they haven’t found a single best one yet.
  • It’s not a one-size-fits-all in PPC as it depends on a lot of categories.
  • They are building a software platform because they manage a lot of keywords and campaigns a day.

[36:55] The Importance of Customer Service and Referrals

  • At the end of every deal, they should get a Net Promoter Score of 10.
  • As they get a higher customer satisfaction rating, they get more customers through referrals.
  • They get more sellers through this network of referrals as well.

[38:41] The Future of the Industry

  • Five or ten years ago, you needed $100,000 or $250,000 to launch a new customer product.
  • Nowadays, you can launch products on Amazon, sourcing through Alibaba, all for $1,000.
  • People buy products through the reviews of their peers over the ads and campaigns they see on media.

Leave some feedback:

Connect with Trent Dyrsmid:

Want to Discover Even More Bright Ideas?

Recent Posts

Today’s Guest

Chris Bell is the founder and CEO of Perch, one of the top 200 sellers on Amazon and a leading acquirer of great products and brands.  Prior to Perch, Chris designed and built Wayfair’s “Wayfair Delivery Network”, a $3B supply chain and the first to enable 2-day delivery of large items like couches, hot tubs, and vanities. Before Wayfair Chris was at Bain & Company, where he worked with fortune 500 companies on growth strategy and leading private equity firms on M&A, working on over 40 transactions representing $90B+ in value.  Earlier in his career, Chris was a leading sales rep of office hardware and software and he started his career in software product management at GE Healthcare.  Chris has an BS in Computer Engineering from Georgia Tech and an MBA from Carnegie Mellon.

Links Mentioned