Five-time founder and angel investor; founded and sold Tickle, BranchOut and Talk.co.
When they bought Grindr it was generating $100M in revenue and $45M in profit despite a 1.8-star App Store rating, which they read as a sign of a severely undermanaged but cash-rich business.
“And how are you doing $100 million of revenue and $45 million of profit with a 1.8-star rating? So we look at this and we just see opportunity.”
They paid about $600M for Grindr doing ~$45M EBITDA — roughly 12-13x — while comparable public companies traded around 20x. The discount came mostly from the lack of competing bidders.
“we bought it for about $600 million. It was doing less than $50 million, about $45 million of EBITDA. When we bought the company. So, you know, call that kind of 12, 13x EBITDA, and the market was probably trading at more like 20, the public companies.”
The $600M Grindr deal used only ~$200M equity (some personal, most raised), $200M of debt from Fortress, and a $200M earnout paid to the seller on exit — minimizing the cash actually at risk to juice return on equity.
“So the deal structure, the $600, there's about $200 of equity that went in. And, you know, some of that was our personal money, but most of it was outside money that we raised. There was $200 million of debt. So Fortress was our debt provider. And then there was another $200 million that was due, basically an earnout upon the exit.”
Steal thisStructure an acquisition so debt and a seller earnout cover most of the price — keep the equity check small to multiply return on equity.
Grindr went public at $2B on the NYSE 2.5 years after purchase. With only $200M of equity in (debt stayed on the business, $200M earnout went to the seller), they created roughly $1.6B of value — about a 9x return on equity.
“we took Grindr public and we'll talk about how we got there, but we took it public for $2 billion on the New York Stock Exchange, 2.5 years after we bought the company.”
Grindr's Chinese owners had ruled by fear with a decayed tech stack and a disengaged engineering team. The turnaround ran in three serial steps: reset the talent (firing ~70% of staff), fix the tech stack, then rebuild the product to drive revenue.
“And we ended up having to fire about 70% of the staff, mostly the engineering team. We didn't expect it to go that deep, but when we got in there and realized how bad it was, how bad, badly the tech stack had decayed, we realized at that point that we needed to do a kind of a three-part serial process. The first part was reset the talent. The second was fix the tech stack. And the third is where it got to be fun. And that's where Jeff really shines, which is rebuild the product and start to drive revenue.”
Steal thisIn a turnaround, sequence it: reset the talent first, then fix the tech, then rebuild the product — don't try to do all three at once.
They bought JibJab at 4x EBITDA ($20M on $5M EBITDA), financed $15M with debt so only $5M equity went in. The business threw off so much cash they paid the debt in ~3 years, then recapped to borrow another $15M and bought out half the investors.
“On JibJab, you know, we talked about— we had to come in quickly. The company was doing about $5 million of EBITDA, and we bought it for $20 million, so 4 times EBITDA, which is a low multiple. But, you know, Greg needed to sell it quickly, and, and, and that's where we came out. And we were able to put $15 million of debt on that. So really, we only put $5 million of equity in.”
Steal thisFind a motivated seller, buy at a low EBITDA multiple, load it with debt, then let the cash flow pay the debt and recap to return capital.
Marini's repeatable formula: buy a stable cash-flowing business with recurring revenue at a reasonable entry multiple, add debt, have a clear thesis to double revenue in 3-5 years, then exit at a higher multiple. The combination yields a 5-10x.
“let's go find an existing business with stable cash flow that has, we love recurring revenue, even, you know, consumer, uh, recurring revenue, subscription-based revenue is great. Let's go find something that's stable where, you know, the, the owner is ready to, to exit. And, and be able to put some debt on that business.”
Steal thisBuy stable recurring-revenue businesses at a fair multiple, add debt, double revenue in 3-5 years, and exit at a higher multiple for a 5-10x.
Marini recalls asking Naval Ravikant how big Bitcoin gets when it traded under $1,000; Naval answered 'a million' and, asked when, said 'before we die.' Marini's regret is that he should have bought more.
“I said, what's the price of Bitcoin? He said, a million. And I said, a million? It's only at like, you know, $800. And I said, when? And he said, before we die. And I was like, well, hang on, before we die? He's like, I don't know when, but it will be a million dollars before we die.”