Invest1 publisher3 min readPublished
Baton priced two million small businesses off PPP loan data and public records
A former Zillow executive is betting that most small business owners shut down because nobody ever told them what the company was worth. Baton has now told two million of them, for free.
The Investor · Invest desk
What happened
- Baton has posted public valuations and local competitor rankings for two million US small businesses in a launch it calls Business Profiles.
- Co-founder and CEO Chat Joglekar spent years at Zillow before starting Baton, and says he is running the same playbook of publishing a free public number.
- The company has operated for nearly five years, has worked on hundreds of sales, and says it is now closing seven deals a week.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- exposure A competitor, a buyer or a landlord can now look up an estimated value and a local rank for any of two million businesses whose owners never asked to be valued in public.
- contradiction Fortune reports Baton citing roughly 2,000 valuations and 100 total sales a few months ago against hundreds of sales and seven closings a week now, and says the gap needs clarifying with the company, so the growth rate cannot be checked from the record.
- capability McKinsey found fewer than one in ten owners can name their company's value within 10%, and those owners now have a figure to argue with before they ever call a broker.
- cost The owners who sell fund the free valuations for everyone else, through a monthly retainer and a success fee, so Baton's revenue tracks conversion rather than coverage.
Seven closings a week is 364 a year [1]. Baton has published a valuation and a local competitor rank for two million businesses [1], which works out to one closed sale for every 5,495 of them [2]. Converting one per cent of that base, 20,000 sales, would take about 55 years at the current rate [3].
The base covers most of Main Street. Fortune puts boomer ownership at roughly 41% of the country's small businesses, about 2.3 million companies employing more than 25 million people and holding an estimated $10 trillion in assets [5]. Those two figures imply about 5.6 million small businesses in total, so Baton has attached a public number to roughly 36% of them [4].
McKinsey's Institute for Economic Mobility counted about 510,000 small and midsize businesses exiting the market in 2022, of which 92% simply closed, 5% were sold and 3% transferred to new owners [8]. Five per cent of 510,000 is 25,500, so 364 deals a year is 1.4% of the businesses that changed hands by sale [5]. "The competition is kind of the 92% of people that just shut their business down," Joglekar told Fortune [9].
McKinsey's projection of six million transitions by 2035 and up to $5 trillion of enterprise value [6] averages about $833,000 a business [7]. Baton's fees are charged against sales of roughly that size [11]. Fortune does not report the retainer amount or the success fee percentage.
The published number leans on PPP loan data and other public records, and Baton folds in an owner's real financials only once someone claims a listing and engages [14]. Zillow, whose approach Joglekar says he is copying [2], discloses a median error of roughly 2% on homes currently listed and around 7% on homes that are not, with fine print saying 99% of Zestimates land within 20% of the actual sale price [15]. Zillow has an MLS and standardized square footage behind those figures, and small businesses have neither, nor a comparable-sale database anyone can query for free [16]. Baton says it holds tens of thousands of comparable sales [10]. Read at the generous end of that range, 90,000, it is one comparable for every 22 profiles published [6].
Two ways this runs. If awareness is the binding constraint, as Joglekar argues ("Awareness is our biggest competition, not other competitors," he said [4]), then publishing the number reaches owners who would never have called a broker, and the deal rate compounds off a two-million-name list. If the proxy valuation misses badly on the businesses actually worth selling, the first serious conversation begins with Baton revising its own published figure, and a monthly retainer is harder to charge after that. I would want the conversion rate from profile view to signed mandate before backing the first version, and on the fee model Baton has chosen a wrong valuation costs it a conversation, not a write-down [11].
What to watch
- Whether Baton discloses how many of the two million profile views turn into claimed listings and then into signed mandates.
- Whether published valuations move materially once an owner claims a listing and supplies real financials, and whether Baton reports those revisions.
- Whether brokers or franchise networks answer with free valuations of their own, and whether any owner asks to have a profile removed.