"Diluted on LinkedIn, Concentrated on X": The CEO Scaling a Bitcoin Empire

Timothy Kotzman (0:00)

Welcome back to The Bitcoin Treasuries Podcast. I'm Tim Kotzman. I'm here with Scott Ellam. Scott, how are you today?

Scott Ellam (0:06)

Yeah, good. Thank you, yourself, Tim.

Timothy Kotzman (0:08)

I'm doing well, but my main question is, were you holding back from us at the Bitcoin Treasuries Conference in New York? You have this big M&A transaction, and I'm hearing about it on the Internet. What's going on?

Scott Ellam (0:21)

Yeah, I wasn't holding back from you, but as a CEO of a public company, I'm restricted in what I can or can't say. So I probably looked quite confident when I was delivering. This is what our first deal might look like. But yeah, when I flew across to New York, I'd been preparing to speak at your event on the Monday. I flew across very early on Sunday morning, had a couple of hours in the morning on a board meeting, dropped into a presentation, finished, flew back, and then we were into completion on the acquisition from Wednesday to Friday. So it was a fast-paced week.

Timothy Kotzman (0:58)

So I mean, this transaction didn't come out of the conference, but it did happen right before and after the conference. Is that fair?

Scott Ellam (1:07)

Yeah, we announced the heads of terms five weeks before we completed. So I went from heads of terms announcements to completion in five weeks.

And it could well have completed a couple of days after the conference. I would say the conference probably delayed it a day or two.

Timothy Kotzman (1:22)

Okay. Well, we apologize for the inconvenience.

Scott Ellam (1:25)

Oh, thank you for hosting me. It was a great conference, incredible conference.

Timothy Kotzman (1:29)

Well done. Yeah. Now, we really appreciate you joining and speaking. And can you walk us through?

You've mentioned, I know I've heard you speak several times on the relationships and the tight-knit community. So many of the businesses similar to XCEs within a few blocks, really, of each other from physical locations. Can you speak to those relationships and how this transaction came about? Like when was the first initial conversation, kind of all the way through the details of the announcement?

Scott Ellam (2:07)

Yeah. So I mean, just for people who haven't followed XCE and haven't followed the news, we announced a transaction that increased our pro-forma last 12 months revenue by about 97 percent. So effectively doubled the XCE group. So we had Spencer Riley, our original business that I started and built and then put into the IPO. And then we've just bought James Gray, a 20 year construction and consulting recruitment firm based up in Glasgow and operating in the UK and the USA as well. So they're up 20 percent in the last 12 months, doing about 1.8 million revenue, 1.27 million gross profit, and they've done 431,000 EBITDA. Now, we did this transaction and it's the model that I've been telling you that we will be able to effectively just copy and paste and keep doing in our industry. And you ask about what our industry is like. There's 1,000 owner managed firms in the UK, there's 10,000 owner managed firms globally, and they have no exit strategy. Private equity are not interested. Trade buys very rarely happen. So when you ask about the relationship that the owners have in our industry, in leads, which is not where this business is based, there's probably 60 businesses, all like this. And the owners don't really network together that much.

And they keep the cards close to the chest in respect of who the biggest billers are in the business and all that type of thing. But they all have one big problem. There's the only route to exit at the end of their career is a management buyout. So we provide that solution to them all. And since launching XCE as the solution to owners' problems and allowing them to join the group and build value in the business as they continue to run, scale, and grow their companies, I've had a lot of those business owners reach out to me. I mean, after our announcement on Monday, I went for lunch with an owner, our CEO, I've never sat down and had a conversation with before. We've worked in the same city, sat down with them, had lunch, talked to them through the model. We've had other people reach out where we'll be sitting down having lunch with them as well. It's a very attractive proposition in our industry.

There's a WhatsApp group that I'm in with probably 250 directors and owners from all around the country. There's a lot of networking groups. On my street, it's a little different. But there's a lot of networking groups across the country. And the acquisition, Richard, who's managing director of James Gray, he's also in a network of about 50 to 100 owners of these businesses. So he's bringing his own pipeline into me and saying, look, I've got this owner who would like to have a conversation. Now, how did me and Richard first have a conversation? Well, funny story is, Richard liked my post on Twitter just the other day. So I clicked follow back on Richard's Twitter, and then it opened up and I realized he dropped me a message earlier on in the year and I didn't know. So I've never met Richard before.