Leveraging The AI Revolution

We issued a press release in late May about launching an AI tool for one of our subsidiaries, Mightydeals.com. The market response was immediate, with 73M shares traded on that same day.

This example shows just how much excitement there is around AI and why we are focusing on the opportunities around this revolutionary technology.

For us, the MightyDeals AI tool was just our first foray into the world of AI and GPT. The impact of that first tool to the actual subsidiary may turn out to be minimal, but it represents something bigger.

One small step for GPT, one giant leap for Onfolio!

We are excited about the many ways AI can transform our business, and this post will hopefully offer insight into those opportunities.

Buying businesses that are not AI-enabled and adding AI to them

As a company that buys and grows a diverse set of online businesses, we often utilize the private equity “playbook.”

Find a business that hasn’t fully utilized the resources available to it, buy that business, use those resources to improve it.

In this context, AI is a resource we can use, and we’re still uncovering the possibilities. We believe there is a window of opportunity to execute this playbook that will last several years.

We’ll go into more detail below, but essentially there are hundreds of potential online businesses we can buy that are already in our wheelhouse, and we can use AI to improve their fortunes, either through revenue growth, productivity growth, cost savings, or all three.

We stumbled across this opportunity by taking a look at our acquisition strategy over the past few months. With every new potential acquisition, we paused and asked “Will AI enhance this business or hurt it?”

Suddenly, we found ourselves seeing a lot of opportunities.

Most online businesses do not currently utilize much, if any, AI. Many have the potential to use it to improve their margins, make their business more efficient, and expand their customer reach.

For example:

  1. We’ve already seen some businesses that create a lot of content massively reduce costs by using ChatGPT and prompt-engineering processes and human editors. Contentellect.com (one of our subsidiaries) is pioneering some of these processes, too.
  2. Companies can expand their reach by cheaply and quickly repurposing their content to fit other platforms.
  3. Companies can train AI on their content and use it to create new, unique content that fits their brand and even improves their messaging.
  4. For businesses that use paid media, we are seeing AI help improve ad conversion rates, audience targeting, and even rapidly iterate on ad copy.
  5. For online courses, people are using tools to generate AI avatars of themselves to create new video lessons and course content.

And these are just a handful of examples. We are seeing more things that you can do that we aren’t sharing, and we are discovering new opportunities daily.

We acquire small online businesses operated by a team of 3-10 people. In many instances, the founder of the business was strong in one area (say, content creation) but weak in other areas (email marketing). The cost to hire somebody to manage every opportunity for marketing, traffic generation, and sales was often prohibitive to the founder. In some cases, you’d need to hire a whole team.

AI changes all of this.

Imagine an online course business that uses Facebook Ads to bring in potential customers through a free offering or webinar of some kind. The business then uses email follow-up sequences to re-market to those leads in the hopes of a subsequent sale.

A small team can do this well, but that’s about all they can do without eating into their margins considerably. Many founders choose to just stick to doing one thing well instead of taking the risk of expanding.

Now imagine Onfolio acquires that business and utilizes its AI-trained team members to either join or consult with that business.

One or two new hires for the team can transform the business. Suddenly, they can analyze their Facebook ad data faster or create new advertising campaigns, ad copy, and images in an afternoon. They can create dozens of new email campaigns to test, new blog content, and they can repurpose content across social media platforms. They can even use AI to create new course content or entirely new offerings.

This is already a reality we are seeing with the existing AI tools and capabilities, and AI is simply getting better every day.

Or, put another way, this is the worst AI is ever going to be.

Now, imagine a small B2B marketing agency. Most of its team will be focused on performing the services they sell, and a handful of people (perhaps two or three) will be working on marketing to bring in new clients.

They might create one or two articles per week, some podcast content, and do some outbound lead generation. They might send one or two emails per week to the subscriber list and a few follow-up emails using something like Hubspot to reactive leads.

Adding AI workflows and content creation tools to that business essentially allows them to expand their marketing efforts by 100x and potentially improve the quality at the same time.

And that’s just on the marketing side.

It’s highly likely the actual services they’re providing for clients can be improved with AI as well.

We See More Than Most

Running a diverse portfolio of online businesses gives us an informational edge where we can see what works and what doesn’t and hone our playbook and strategies faster.

As mentioned above, we believe there will be a multi-year window where other business owners are not fully utilizing AI to improve their businesses. By acquiring them and running our playbook, we can capture a lot of value-creating opportunity.

For those who haven’t followed Onfolio for long, this is not a new concept. We have always been buying online businesses at lucrative prices and improving them where we can. AI has just unlocked a new opportunity for us to pour gasoline on that playbook.

Adding AI Tools or Offerings Onto Existing Businesses

If you’re following the AI space closely, you’ll see new AI tools emerging every single day. What many of them lack is an audience to launch into.

With our existing and growing portfolio of businesses, we can launch new tools to ready-made customer bases.

The MightyDeals tool mentioned previously is just one example, but another example would be the Contentellect “AI-assisted content” service.

We could also launch an AI offering for ProofreadAnywhere that helps professionals proofread faster.

Or we could launch a Search Engine Optimization (SEO) tool that our large SEO audience would benefit from.

And similar to the first point above, we can also create internal tools that might not be monetized directly but will enable our businesses to operate more profitably or work at the parent company level to help us with due diligence, deal flow, and analysis.

Using Free Tools For Customer Acquisition

In the online business world, creating a free tool as a way of attracting customers to sell your products to is a tried-and-true practice. One great example of this is creditkarma.com. This company grew to the size it did by taking something everyone else was charging for (credit reports) and making it free, and then making its money on back-end offers.

We’ve known this idea can be repeated in other businesses for a while, but it has been fairly cost-prohibitive to create tools for every business we own, and it’s never certain which tools will be a hit and which won’t.

AI has massively decreased the costs and time required to create these tools, which gives us a unique ability to scale the strategy before others catch on, if they ever do.

For example, we can (and will) release free SEO tools that can attract clients for our SEO agencies.

Or we can create a content budget tool that compares your competitors’ content creation strategy and generates a budget for you to spend with one of our content agencies (or another AI tool).

Or we can roll out new free WordPress plugins to bring more users into our WP Folio WordPress plugin ecosystem.

I hope I am making myself clear on the opportunities.

Building Internal Tools

One tool we are already working on is a Due Diligence tool which will allow us to analyze businesses faster, and spot opportunities more easily. As we are a heavily acquisition-focused business, this is going to make a significant difference to our ability to find the right deals at scale.

There will likely be many more tools we release internally (and perhaps commercially) that improve our processes too. Performance tracking and optimizing are areas where we think AI can help almost immediately.

Another area for internal tools is filling in gaps in our “AI-enabled businesses” strategy. Part of our ability to execute on that strategy will be becoming familiar with all the AI tools on the market, and how they can improve our existing and acquired businesses. The other part will come down to building our own tools to fill in any gaps.

Not only will this allow us to accelerate the strategy, but some of those internal tools will ultimately have commercial viability too.

Acquiring or Building New AI Tools and Businesses

Not every tool we launch will fit an existing business. As we learn more about AI and what works and how it fills gaps, we will have the opportunity to launch our own tools to attract new audiences. These could be paid or free tools like the above that can be used to enter new markets.

Similarly, we will actively seek out acquisition opportunities for AI tools we can use with our skill sets to help us grow our scale.

The AI Flywheel within the Onfolio Flywheel

With each new development in AI, we build our AI muscle and are in a better position to benefit greatly.

The general Onfolio business model is a flywheel of acquiring businesses, optimizing them, and recycling those cash flows to make more acquisitions. With AI, we can accelerate that flywheel and also create a mini flywheel-within-a-flywheel where each AI offering we launch makes us more proficient for the next one.

And there is no shortage of opportunity.

Just like a product incubator gets better at developing, launching, and marketing its projects, each time we launch an AI tool we’ll produce better results. Not only that, but as we understand the capabilities more, we’ll be able to apply more tools to our own systems and businesses in order to make the most of this rapidly emerging technology.

A Winning Strategy Not For Everybody

It might seem like anybody can execute on our strategy, but it’s important to understand we are wrapping this strategy around our wider acquisition playbook. It’s not easy to acquire an already profitable business, and it’s even harder to operate that business.

Simply acquiring a volume of businesses and attempting to plug AI tools into them will lead most people to failure, but if you know what you’re doing, the opportunity is real.

Onfolio’s AI Roadmap

We have a loose roadmap based on the order we think we’ll roll things out.

1 – Release Mightydeals AI tool – complete

2 – Launch Contentellect “AI-assisted” content service – coming weeks

3 – Launch our first Search Engine Optimization tool – coming weeks

4 – Launch an AI WordPress plugin – coming weeks

5 – Launch our second Search Engine Optimization tool – coming weeks

6 – Launch internal due diligence tool – coming weeks

7 – Launch/Partner with an AI consulting agency – ideation

8 – Expand Search Engine Optimization suite – ideation

9 – Launch proofreading tool – ideation

10 – Launch dedicated AI Special Purpose Vehicle (SPV) – ideation

Regarding item 10, some of the tools we’ve considered building would need more capital and expertise than currently is in the scope of our core business model. As such, we are considering launching a dedicated subsidiary (Onfolio AI LLC) and raising funds from investors into the SPV.

We would then use the funds to build out more tools, acquire tools, and hire dedicated team members. If you’re interested in investing in this subsidiary, click here and we’ll contact you with more information in the near future.

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