The Exchanges

Q Gotcha. Tell me about the experience on acquire.com. You listed the business. What did the first week look like? How many buyers reached out? Were you surprised? What did that look like?

A Uh, so it was a very interesting, um, experience. Uh, this time, the same as last time, uh, things went quite fast. Um, I think this is the second time that I've sold to the first comma. So the first person who interacted with me, uh, eventually got to be the buyer as well. Um, that, that also happened during my last sale. So I listed the, um, Startup. Go index me on, on acquire. Less than a week later, I got contacted by a person interested in, in acquiring the, the startup. I signed the letter of intent that, you know, the startup got delisted temporarily. Uh, we, we went through due diligence quite quickly, like in a matter of two or three days. Everything was clear. Everything was set up. Uh, we went through one-on-ones, um, videos back and forth to clarify a few things. Um, escrow was quite quick. Uh, a quick tip here from the, uh, the buyer is to use USD as your bank accounts currency because apparently, uh, escrow works faster if you have USD versus Euro or some other currency. Uh, but all in all, like, from the beginning to the end, Um, Monday we had our first conversation and by Friday it was, uh, completely sold. The, um, cash hit my bank account, the username and password, everything was transferred. So it was really, really, really fast.

AI assessment note: “Monday we had our first conversation and by Friday it was, uh, completely sold.”

Q it can take a lot of time, and a lot of deals fall through in due diligence, just because emotions are high, people are tense, and you're sharing sensitive information about your business, so again, glad it all went smoothly, so we got to the end of it. And speaking of the end of it, I'm now curious, did you do anything to celebrate the acquisition when it first closed?

A Uh, yeah, I just went to a restaurant with, uh, with my wife, And, uh, you know, I think, uh, it, it's really, it's hard to tell when the deal actually closes. So, I mean, then there is this date when you sign, and you're obviously very happy about it, and, you know, it's like, you see this confetti at, uh, acquire.com, and it, it all sounds great, but the money, you know, you know, the money is still not in your account, and you're like, okay, is this actually happening? Uh, because I'm not gonna believe it until the money gets to my account, and then we were arranging the transfer. I think, uh, yeah, it really hit me when the, uh, the money was transferred in a few tranches. When the first biggest tranche, uh, got into my account, I'm like, poof, okay. Now I think I can celebrate. I was slightly exhausted from everything and feel, even after the transfer, I, I felt a bit of responsibility. I didn't want to just, you know, get off the grid. Um, I, I wanted to make sure that the, uh, asset transfer goes, uh, smoothly too. So, yeah, but I certainly took some time to celebrate with my wife. I went to a restaurant, and then I'm also a part of this, um, startup founder in the hacker community called Hackagoo. Uh, so, uh, I, Yeah, we meet up once per week, and we hack together, and we discuss our products, and make the demos, and, uh, yeah, I just bought some, you know, donuts, and,…

AI assessment note: “yeah, I just went to a restaurant with, uh, with my wife”

Q What would you say like a perfect acquisition target is for you? So size, category, if you could just describe like the perfect business that you would absolutely want to buy, what would that look like?

A Um, so we look at businesses that are between 208 hundred K of ARR. Uh, we look at businesses that are typically bootstrapped No team beyond the founders or maybe a few contractors here and there. Um, and with a lot of inbound free trial customers, um, like that alone is an amazing start. Like if you have that, uh, that's very interesting to me because, um, it's the right size, the right profitability. We look at businesses that are at least Profit margin, like beyond the salary of a founder. Um, and a lot of inbound means that there is a lot of levers we can pull, hopefully, to improve a business and grow a business. Um, and so then we have some playbooks that we know very well, like improving the user experience of a product sometimes, or the design, or improving Or making sure that the product is enterprise ready so that all the inbound enterprise customers can come. The last criteria that I didn't mention is that the business needs to be still growing. What is hard is when the business is not growing anymore or declining, despite having a lot of inbound or being very profitable, because you don't know why, what is broken and how, and you don't know how much time you'll have until the thing is immediately broken. So I'm, I'm, I'm more nervous about that personally.

AI assessment note: “we look at businesses that are between 208 hundred K of ARR”

Q What's, um, out of the five startups you've acquired, what would, what's your favorite one? If you had to pick, or just in terms of a story or whatever you're comfortable sharing, what's the best acquisition you made? Maybe, maybe it was a turnaround. Maybe you bought it at a certain size. It's grown the most. Maybe it's just, yeah,

A I mean, the, I would say that out of the five, I wouldn't say that we've been successful with five. First of all, we've had We've had one where we had to sell it. Actually two, we had, we, we sold some, we sold it, we sold first two. Um, um, so out of the ones that we keep operating, um, I would say my lap, the fourth one is probably our biggest success so far. It's a company called Centric. It's a, it's a very simple feature. I mean, it's simple in theory, but it's hard to do well. Uh, at scale. It's, uh, it allows people, uh, email marketers to add countdown timers to their emails, um, also to their website, but it's mostly used for emails, and, um, we bought it. It was one of the larger acquisitions we made, uh, both in terms of, it's actually our largest acquisition in terms of, um, enterprise value. Um, it was a good size. We've been able to grow it, grow MRR to X at least already in less than two years. Um, and, um, what I like about it is that one, we've been able to, to grow it really well. Two, we had a very good partnership with a seller, but even Anymore. He has helped us in numerous occasions and, and we have a good relationship, uh, like a trusting relationship where he's as bought in our success when, um, I would have hoped. Um, and so I think that's today's the best acquisition. Um, the last one we did, um, which was, uh, Company out of Chile is a promising one, …

AI assessment note: “the fourth one is probably our biggest success so far. It's a company called Centric”

Q Nice. And then in terms of your representation, do you focus primarily on the buy side or the sell side? Are you, are you exclusive on one or the other?

A We're not exclusive on one or the other, but 90%, 80 to five to 90% of our clients happen to be buy side just based on the place that we, um, happen to be receiving work from, which is the entrepreneurship through acquisition community, the social media community, which happens to skew a little bit younger. Uh, but we do represent a number of sellers and what we're seeing is there's, there's a relatively fast life cycle. You know, guys and gals will go out and buy businesses when they're 35 and fresh out of business school or whatever, and then 18 to 24 to 36 to 48 months later, they're oftentimes looking to sell. Um, so we do have a number of, of sell side clients as well.

AI assessment note: “We're not exclusive on one or the other, but 90%, 80 to five to 90%”

Q Nice. What was the name of the first company?

A The first company was called Paisy, uh, which Paisy was a, uh, well, it was developed by basically some college kids, uh, who graduated and were trying to figure out what to do with the platform that they created. Uh, they, they basically shut it down, and we took a look at it, and so it was a student-to-student marketplace, and as we were kind of talking with them, as we were, you know, thinking through the business models and things of that nature, Uh, we developed a pretty interesting business model with it and we decided to acquire it. Um, and now it's kind of morphed into campus roots. So, campus roots helps college students. Um, enhance the college experience and it's everything from a social media. Uh, component of student to student, uh, social media, uh, to groups to calendar to the marketplace and we've recently added jobs. Uh, for part-time jobs, internships, and first jobs out of college, and then deals. And so that's really looking to morph into a super app for college students.

AI assessment note: “The first company was called Paisy”

Q Google reviews. Because if you type in, because as you know, if you type in, like, insurance agent in, I don't know, San Mateo or whatever city you're in, you'll rank at the top. So it's super, super important. Um, tell me about how you got your first customers, because I can't, I, I know selling to insurance people isn't, you know, a straightforward thing. How'd you figure that out?

A I mean, you know, it is and it isn't. Like, now that I'm out of the industry, I feel okay saying this. Insurance agencies, We're the easiest clientele to start with because I started without, like, knowledge of, like, Apollo or Seamless or ZoomInfo, so I don't know how to find people's names online. So if you look it up, just look up insurance agencies near me, you're gonna see it's, like, Allstate Insurance Todd Smith, Allstate Insurance, you know, Sam Johnson, Allstate Insurance Luke Shepard. So it says the name of the decision maker right there. And so that's why I chose insurance agencies because I knew exactly who I needed to talk to, and there was one gatekeeper on the way.

AI assessment note: “look up insurance agencies near me, you're gonna see it's, like, Allstate Insurance Todd Smith”

Q I was there for like a day. It was when I was, um, in between companies, and I had way too much time on my hands. Um, all right, so, okay, so that's awesome. Um, I have an Xbox, and I, I love playing Madden, the football game. Um, so now I'm wondering, um, you know, how did you go and get customers for something like this?

A Right, right, yeah. I mean, I basically just started out by putting it on the Chrome Web Store and made a post on Reddit. Um, I honestly didn't expect much. And initially I wasn't charging anything either, but it just kind of took off within that community. Uh, folks who play cloud gaming on xCloud, I think this is like a real thing that a lot of people, um, wanted. And so at some point, uh, as I was adding more features, I started charging a few bucks via one time charge for the extension. Um, so that was really how I got my first customers. Uh, people started using it originally through that Reddit post. Um, and then once I started charging, you know, people Uh, were willing to pay, although there was definitely some backlash initially making that transition from free to paid. Um, cause I had, there was a lot of people like kids in Brazil and things like that. They were using it that I wasn't even fully aware of. Um, so I got a lot of like review bombing and stuff like that when I first started charging, but, um, but I think a lot of people saw the value and we're happy to pay, uh, for the ability to use the keyboard and mouse on it. Um, so within like a few months, I had like, 250,000 active users. Um, and was making about 4000 dollars a month or so in new activations.

AI assessment note: “putting it on the Chrome Web Store and made a post on Reddit.”

Q Tell me, oh, that's so for the, um, for this podcast, let's focus on, um, uh, ESG analytics. Um, cause I want to know, um, uh, for just what's like the quick pitch of ESG analytics. What does it do? What problem does it solve?

A Yeah. So it's really meant for investment managers. And so what we're looking to do is use more real-time data to benchmark, uh, corporate sustainability and ESG performance, which is Environmental, social, and governance. And the issue is solving is that today when people are looking to invest in these kind of invest in companies and want to, you know, see how they rate and that kind of stuff, there's all these rating companies, but they use like the reports from the companies, which are like six months to a year old. And so everything you get is like quite lagged. And so we started doing like some NLP, like natural language processing and sentiment analysis to extract all of this data on a day to day basis, map it to all the companies and then deliver it as a, an easy to use like SAS solution and API. Which wasn't the case for any other company trying to do that, um, at the time. So we were able to get like a better, better portion of the market and make something that looked, you know, really, really neat and cool, uh, in a business that was kind of purposeful.

AI assessment note: “what we're looking to do is use more real-time data to benchmark”

Q That's awesome, man. How'd you get your first, um, customers? It's always hard.

A Um, yeah, the first five, I think they're like the first seven or eight was friends, uh, reached out on LinkedIn and just said, Hey, Thomas. Hey, Kyle. Hey, Dimitri. I, you know, started this thing and remember how I'd helped our company that I was working with or for them at the time. Remember I did that Thing. I'm doing that thing for other companies now. And they were like, oh, cool. You know, what are your ideas? Give me a call or let's have a conference call or let's, let's do a zoom call and come up with some ideas. I did. I, I completely underbid way back then. Cause I didn't know the worth of this to companies, but I said like a thousand dollars, I'll launch a product, you know, for the next 30 days, get you a ton of traffic. Um, it works, you know, almost every time for those initial dozen or so people that I reached out to. And they said, all right, how do we do this the next month and the month after that kind of thing? And I said, well, give me, you know, 1500 dollars a month and I'll do this for you consistently. Um, we started to have those monthly or every two week conversations and I would just come up with ideas, lead magnets, um, live video, AMAs, product hunt launches, Reddit posts, you know, answer core questions, all kinds of stuff. And it worked very well for them. On top of the SEO, the pay-per-click and everything else they're already doing. It was a gro…

AI assessment note: “the first five, I think they're like the first seven or eight was friends”

Q which features to build that'll have the most impact on the most users. So that's, that's definitely a moment when, you know, you have, um, product market fit. I, I forgot one question though. Um, I know it's stock alarm does, you know, it's soccer alarm does. Do you want to just give like a brief sort of pitch on, Uh, what's like the problem that stock alarm was solving?

A Sure. So I'll go over the problem and also the value of products. There's always a question afterwards apply, but I was talking, the idea is super simple. It's, Hey, I want to get alerted when something happens in the stock market, right? So it's like an alarm for stocks pretty much. Um, so the idea, the original idea was, okay, if the price of something goes above a certain limit, give me a phone call and specifically a phone call, cause it goes through, you know, like if you don't have data for some reason, or you don't have internet, it'll still go through, right? That you can set. Even if you have D and D on, you could set like emergency bypass for certain phone numbers. So that was like a value prop, right? It's like, Hey, they'll still call you. Um, but then as time went on, it became, Hey, you can customize kind of strategies, uh, that'll alert you when something happens. Like for example, a certain technical was hit or there's earnings coming up or some mixture of those. Right. Um, so it became like a compound alerting like kind of platform.

AI assessment note: “I want to get alerted when something happens in the stock market”

Q kind of fun to watch because you'll meet, you know, founders of public companies. You'll meet heads of large private equity firms, individual, everybody in between. I guess, um, now, now I'm kind of curious in terms of, you know, you, you go live and acquire.com. You have all these buyers interested in, in both these businesses. How did you figure out who the right buyer was for these businesses?

A Yeah, for SwimGen, I felt quite strongly about making sure the right person was taking it on, and so the private equity firms, family offices, the more businessy folks, I was shying away from a little bit. In the end, I did sell it to sort of like passionate, semi-retired dev who would be handling it all themselves, just, just like myself, which was awesome to see, and then, yeah, and his, his wife, Helping as well. So it kind of just went from, you know, one passionate couple to another, which I was really, really happy to see. On the Zendesk side of things, I didn't feel as passionately that it had to be, you know, passionate solo dev. And so that one went to like a group of investors that are just scooping up a bunch of smaller, smaller apps and things like that. Yeah, it was, it was really interesting though, to see the different perspectives too, as far as Especially in the due diligence, like what financials they want and everything, or it's the, you know, the passionate solo dev versus the investment group.

AI assessment note: “for SwimGen, I felt quite strongly about making sure the right person was taking it on”

Q Thanks. Let's, let's take a little step back. Um, tell me what, What did, what problem, um, did, uh, Minnow solve? I know you mentioned, um, aggregators, um, but just, uh, so I can wrap my head around it in terms of.

A Yeah, yeah, so you sit down at the college after a long day, you crack a beer, uh, and you just kind of open up Netflix and start scrolling, you open up Hulu, start scrolling, Disney Plus, start scrolling, um, and, you know, it's like, there's no playlist, you know, unlike Spotify or Apple Music, you open it up and you know what you're going to listen to right away, and you get greater information right away, but with Film and TV, the sampling time with music is like three to four seconds. You're like, I kind of like this or not. Tilbury TV, like, you have to watch it in 20 minutes to something to figure out if you like it. You do that two times and you're done for the night. Like, you're not going to keep watching something. Um, so, so sampling doesn't work the same one day in film and TV that it does use it. And so the content discovery became the problem, that hair on fire problem that we really wanted to solve. Um, and a part of solving that is building a robust recommendation algorithm. And, um, you know, everyone has their own internal That no one did horizontally across all of them, and that's what we tried to solve for.

AI assessment note: “content discovery became the problem, that hair on fire problem that we really wanted to solve.”

Q Nice. So how did you, so tell me about the distribution channel. How did you, um, get this in the hands of users?

A I'd say there was probably two distribution channels that worked for us on the B to C side. Um, one was organic social and the other was PR. Um, you know, we, because we developed on a big channel, we, we felt that it was probably worth it to spend on PR. Uh, so I'll speak to that first. Um, a lot of, I mean, This is, there's a lot of, like, controversy on whether you should pay a PR firm for launching or not. Um, you know, we didn't really want to be on TechCrunch. We wanted to be on a more, uh, mainstream periodical. And we got our first press break from Mashable, um, and then we got a follow-up from FastCup. And those two pieces, um, and we worked with the PR firm Rogers and Cowan, um, in Los Angeles, they're right down the street.

AI assessment note: “two distribution channels that worked for us on the B to C side... organic social and... PR”

Q Entrepreneurial spirit. I love it. So tell me about, um, how you built, um, Barclay HQ. What was the, the idea behind it? Why, what made you decide to build this company? For sure. Yeah.

A So I always sat and I remember I used to sit in a four by four cubicle, um, for one of the SaaS businesses that I used to work for. And I always just kind of thought of ideas and drafted ideas of my own app or SaaS business. Um, and I was always kind of trying to find a niche market because I really liked Um, the messaging of going deep, not wide, that sort of thing. Um, the grooming industry kind of fell onto me by accident. Um, I adopted a dog and then I started bringing the dog to local groomers and I noticed that they were using pen and paper, um, operate their business. Um, so with my SAS experience and my entrepreneurial spirit, I thought, wait, there must be a better way for them. Um, so four and a half years ago or five years ago at this point, I went online to see what tools were available for these pet groomers. If there's anything Specific for that industry. Um, there was very minimal, um, and what was out there, I didn't think had the features that they needed, um, nor were they marketing it correctly. Uh, so I kind of jumped all in and, uh, started Barkley HQ.

AI assessment note: “I adopted a dog and then I started bringing the dog to local groomers”

Q you're going after, and it really makes a value prop really clear for customers, because if you're a dog groomer, and it's specifically made for them, ah, you know, the chances of you building the best software for that specific customer is just so much higher. So now, now I'm wondering, how did you get your first customers? How did you get dog groomers to To adopt this, this software.

A Yeah. So actually, um, before I think I even started developing the software, I just created some presentations and I actually went to the local groomers and sat with them and told them what I was working on. Um, a few of them validated the idea. Uh, so then that's when I started putting the developers to work. I'm a non-tech founder. So I had to source the developers to actually build the product. Um, so once I had enough validation from these local groomers, I started building the product. Um, actually funny story. One of my best customers, even to this date was one of the early signups. They had multiple locations. I didn't know that I actually just went in there, um, dropped off like a little marketing package for the owner. Um, weeks later, they got back to me. We met at a pizza restaurant cause I didn't have an office at the time. Um, and they gave me their input. They said, we love what you're working on because we're using all these different tools and it's just a mess with all of our customer data, etc. Um, so from that pizza restaurant, I literally signed up multiple locations and, uh, got to work. So they were really early adopters in adding, uh, what features it should have, what direction we should go in terms of the functionality of the software.

AI assessment note: “I actually went to the local groomers and sat with them and told them”

Q Nice. And what were they, just out of curiosity, I, I'm not a dog, I'm not in the dog growing business, but what are the, the main pain points that, um, your company saw?

A For sure, yeah. So the big one was we replaced the big paper calendar by having a, a digital calendar. Um, so if you walk into a pet grooming business, chances are, Some of them are still on these big paper calendars, but that's hard for a groomer to manage their business. Cause if someone calls or messages them on Facebook, they want an appointment time. The groomer has to go to that calendar. So if they lug it around with it, it was really the digital calendar first, then it was a CRM tool. So you'll notice that these pet groomers who are running on pen and paper, they had these paper cards and they would have file cabinets and they would go and look up the client's history. So just a big mess of a paper everywhere. So we were the CRM tool, but then I also even came up with the phrase Uh, PRM. So CRM obviously stands for Customer Relationship Manager, but because groomers, clients are pets, I called it a pet relationship manager. So attract the clients and the pets details like breed, um, um, behavior of the pet, size of the pet, all sorts of things.

AI assessment note: “the big one was we replaced the big paper calendar by having a, a digital calendar”

Q level of professionalism and that preparation can really be the difference between, uh, Successful acquisition and no acquisition. So, uh, good job on that. I guess my next question would be, um, what was your like impression of acquire? Like you, you listed on acquire, um, how many NDAs did you get? Like, tell me about just kind of the overall, you know, experience where you found the initial buyer.

A Yeah. Um, so I don't remember exactly how many NDAs we got, but at least a few dozen, I'd say probably in the thirty-ish, 30 to forty-ish range, um, and, you know, had conversations with about maybe 20% of them afterwards, um, who were interested, uh, and then, um, you know, deeper conversations with the buyer that we ultimately went with, and then we also had another buyer, um, who was interested that we met outside of the platform, someone that we had been talking to before, Beforehand, um, who was sort of a larger player who had raised a fund, uh, solely looking to purchase Health and wellness type products like ours. Um, so, you know, ultimately it came down to sort of fire that we went with and also this, this other buyer that was off platform. Um, we decided to go with the buyer on acquired because they were able to make an all cash offer. Um, the other buyer wanted to do sort of a mix of stock and earn outs, um, which just made it a little bit more messy. And, uh, we were looking for something A little bit more clean, uh, which is what we found, um, with Byron acquired. Um, the diligence process was, uh, about a month. And then also, uh, they, we also went into exclusivity with them for deeper diligence, um, where we didn't talk to, uh, any other buyers. Um, so I think from when we joined the platform, we got few NDAs and conversations over a couple of weeks. Uh, did a b…

AI assessment note: “probably in the thirty-ish, 30 to forty-ish range”

Q So now I want to hear about, uh, Studio. So what made you, um, decide to build that product? Um, what problem was it solving? Um, do you want to just take an overview of that business?

A Let me show you the story because it's, uh, I think it's a nice story and together with my, with my partner, right? Like we, like we are true in this business, uh, literally. Um, so first of all about, about the business, what we created is basically an agency. It's nothing extremely disruptive. It's an agency for helping students mainly from Africa to pursue their higher education in the U S uh, completely financed. Um, so we were basically tackling and helping students that are brilliant and very talented, but didn't have the monetary resources to actually go on and study abroad. Um, so what we did is partner with a lot of universities in the US and Canada and partnering with a couple of financial institutions that were going, going to help through student loans, uh, for these students from, from Africa and some countries in Asia to pursue their master's degree, specifically in, in STEM, um, and basically changing the life of these students, right? Like we're Sending students from, from Kenya, from Nigeria, from Pakistan, for example, to the US, to a master's in cybersecurity, to a master's in data science and like, ah, the, the jump in their lifestyle that they were getting after that is massive from a salary maybe that they were getting in Kenya or Nigeria of 300 dollars per month to the salaries that you can get being a, you know, graduate in data science in, in the US. So…

AI assessment note: “It's an agency for helping students mainly from Africa to pursue their higher education”

Q Yeah, yeah, yeah, we'll have to, we'll have to see how that plays out. Okay, so I want to get to the, the fun start, the, the fun part. So, um, you, you list on, um, acquired.com, uh, what kind of preparation did you do, um, before you actually, like, went on the marketplace and started speaking to buyers?

A Yeah, um, getting the books in order, I think is the first thing, like, we had, I, I kept Pretty solid, you know, P&L and notes and whatnot. Um, I just wanted to make sure I had to go back, you know, I was putting, like, our DigitalOcean bill was, like, 800 dollars a month. I just kept putting 800 every month because I wasn't going to go in and check what our actual bill was. It was, like, eight 82, then it was, like, seven 53. So anyway, I had to go back and, like, really get those numbers, like, hammered out and, you know, check all of our receipts on everything. Um, had to then, you know, think about, like, What is the, the right range here? So that involved actually looking at, like, customer churn, water flows, waterfalls, and whatnot, um, then putting, like, pen to paper on, okay, like, here's our revenue, here's our monthly growth, here's our churn. What do we even think a reasonable number is? And of course, as you well know, like, the numbers for, for small startups can be kind of all over the place, which is what we began to realize. Um, and then we worked with Paul on your team. He had a bunch of other Stuff that he needed us to do, like, you know, get approved for seller financing.

AI assessment note: “getting the books in order, I think is the first thing”

Q So, um, did you buy anything, anything fun?

A I did. Um, I bought, uh, a CC three AMG, um, Mercedes and put on like, uh, like an aftermarket exhaust. I'm, I'm like a big car guy. My dad, um, uh, was, was in the car industry. And so he kind of, from an early age, I just remember him working on cars. Um, so I bought like, uh, well, I bought a, it was a 2012 Mercedes Benz C-si-three. I bought it for 32,000 off this kid who, it was his high, it was his fucking high school car. And I'm buying it as like my, like, Dream Gar. I'm like, damn, you kids in LA. Um, but was it worth it? I resold it, um, uh, recently for like 40 grand.

AI assessment note: “I did. Um, I bought, uh, a CC three AMG, um, Mercedes”

Q That's awesome. Is it, are these pictures of your dog?

A Yeah, so that some of them are, um, we actually have doggy models. So we actually did photo shoots with doggy models. And then there's a lot of photos on there that are actually UGC content from customers. So we, um, as part of our influencer marketing strategy, we gifted to a lot of these, there's this whole world of doggy influencers. And specifically outdoor doggy influencers, where the, uh, the owner is usually a photographer, and they build a following with their dog, taking photos of their dog outdoors, and so our, our customer base is really that outdoorsy person with a dog, and that's probably what you're seeing there, a mix of the models and the, uh, yeah, the doggy influencers and customers.

AI assessment note: “Yeah, so that some of them are, um, we actually have doggy models.”

Q So how did you get your first customers? So you, you get the idea. I assume you manufactured the products and then now you got to sell them. Uh, and so it sounds like influencer marketing was the initial strategy or was it something else?

A Yeah, that, that was, The, the biggest channel that we focused on in the beginning. Um, and my wife who isn't here because she's on baby duty, of course, she was the, the co-founder in, in Wolf Republic. And she, um, she had experienced, she was working at the time for fashion swimwear brand and had influence, uh, experience with influencer marketing. And we created this ambassador program where we gifted products To these doggy influencers with a certain following in the space, and we were just gifting product to them. We weren't actually paying them any fees at that point. And then from that point, we, we didn't even ask them to post necessarily. They just started posting because they liked the product. And then we used that content. That was part of our deal with our ambassador program is we would use the content and then post it on our own social. And so we built up a social following primarily on Instagram of all these cool outdoor photos of these dogs, you know, on trails and beautiful photography from these different, uh, dog influencers and photographers. And that's really how we initially started growing the brand. Um, after that, so we, we started entering into different products. We added on leashes, collars, um, the camp bowl, uh, the first aid kits, things like that. All the things that, you know, an outdoor enthusiast would use with, you know, with their dog out o…

AI assessment note: “Yeah, that, that was, The, the biggest channel that we focused on in the beginning.”

Q an investment banker and he gave me just small tips and it made all the difference. So having someone even just as like a therapist, like that's just go to bed, Mike, just don't send that email. Just anyway. So what made you comfortable with the buyer? What, what about this individual made you feel like this was the person that was the right person to sell the business to?

A Yeah. The buyer, This buyer was, was great in that they had a lot of previous experience, um, within the industry, within, uh, pet goods, pet, uh, e-commerce and their skillset was also complimentary to our skillset. So my wife, both my wife and I, we, both of our, our fields are, we specialize in marketing and this buyer had more of a, um, product and, Um, you know, understood more of like the logistics, product fulfillment, uh, inventory planning, that side of the business. And so this buyer came in and the offer was a bit different too. We, the offer that we got from him, um, was actually an offer that wasn't, we were initially looking for, you know, an outright buyer that would just buy 100% of the company, but his offer Was unique. It wasn't what we were asking for, but his offer included, um, a percentage of equity that we would retain a small percentage, 15%. And we ended up going with that because we number one believed in the future of the brand with this new buyer and where he was going to take it. He had experience and, um, yeah, it was, it was good vibes all around. Um, it wasn't rushed. Really. And he was very helpful throughout the process too.

AI assessment note: “they had a lot of previous experience, um, within the industry”

Q I always love when entrepreneurs, you know, find, you know, expertise in one area, but they uncover a way to build something bigger through, you know, maybe a smaller prior business. Um, so walk me through, I'd love to know, um, just the acquisition process. So, um, you know, you, you list a business for sale on acquire.com. Uh, what happens within the first Two weeks. What was your experience?

A It was incredible. Like, it was absolutely, and I don't say that to be broodicious or, or to big you up in any way. We had a phenomenal response. Now, part of that may be because I only did a, a 0.8 X valuation on revenue. Um, so I think that made a big difference. I think the other thing that I did maybe was I wrote it up very clearly and I explained that it was super process driven, that they could speak to every single one of our clients, that it was all organic, That if someone came in and really added some paid for marketing, et cetera, et cetera, it could do incredibly well. Um, and maybe that, that made a big difference. I didn't have a pitch deck, which, which surprised me. I did have my financials. I did have projections. I did. I could show that I only lost two clients a year for the last three years. Um, I could show that people were on multiple seasons, right? They were on like season eight and season nine and season 10. So that showed that I had something good enough for people to stay. So the LTV was incredibly high. And our profit margin is 78%. So I think that was another sort of big win for someone. And we got lots, um, we got lots of people signing the NDA. I think out of that, we probably got about 30 to 40% that did follow up with an email that asked, like, what's your secret sauce? What's your defensible moat? You know, why are you selling? That was the big…

AI assessment note: “We had a phenomenal response. Now, part of that may be because I only did”

Q Nice. And then, so how did you find the right buyer out of that? How did you, you know, vet buyers? How did you narrow it down to the one that eventually acquired the business? And you don't have to name names or anything like that, but just on a high level would be great.

A Yeah. So I can tell you exactly. So the first thing I thought about was I I'd like them to keep as much of my original team as possible, but I definitely want them to keep every single client. That I'm working with. That was really important to me. So I needed to know that whoever I pass this on to needs to care as much or more than I do. And, you know, all jokes aside earlier about saying I cared less and less about the job. I still cared about my clients and about their messages and about their missions and about their stories that they were telling. Um, so I would do a lot of questions. I'd allow them to sort of bombard me, bombard me until the point where they were like, okay, I'm ready for an LOI. And I'm like, hold on, hold on, hold on. I was like, I have some questions now. What is your first 90 days looks like? How are you stepping in? You know, is it going to be a big shock when you come in and say, I'm the new owners, and we're doing this, and we're doing that, or are you happy for a very slow, gradual, I'm, I'm there, I'm there, I'm there, I'm there, I do a handover, I'm still there, I'm still there, and then I sort of disappear into the darkness. That works really well for me. If you're not happy to do that, then I'm not happy to continue. The next thing I looked for was any sort of niche expertise. Could they bring anything in that I couldn't? And the top Top three…

AI assessment note: “I was like, I have some questions now. What is your first 90 days looks like?”

Q That's an efficient business. Congrats. Also a great use case too, just in general, helping people go see their families again, you know. That's awesome. Okay, so let's move on to the, what was the second startup that got acquired?

A Just after that first one, I got introduced to my current co-founder. A guy called Mike, and we started to bat a lot of ideas around. Initially we were there to meet up and talk about freelancing, but we never got onto speaking about that. We just got tons of ideas in our head and we're both very similar people. So we're just like, you know, screw freelancing. Let's just go and build out our own ideas and just run with a couple of things. So we started playing in the AI space when the GPT three AI APIs were coming out from open AI and it was all becoming a lot more accessible. And the first use case that we came to maybe questionable ethics, but it was a tool to help students write their university applications in the UK, which is called a UCAS statement. Um, and the kind of generic generative model was fairly average. And when we started to train the model on a bunch of examples, we realized that we could create this really powerful, quite unique tool to create these pretty bespoke and high quality, um, University applications. We actually wrestled with open AI a few times because we were like right in the gray area of like what's acceptable for doing with generative AI, at least when they, when they were coming out with it. Um, and we suddenly paused and thought, okay, maybe the bigger opportunity here is actually with the fine tuning because fine tuning an AI model is quite …

AI assessment note: “a tool to help students write their university applications in the UK”

Q street. I'm going to be potentially, you know, selling my business to you and you say X, Y, Z. I'd like to just verify that. Um, so just a tip there. Okay. So you, you found, you found the buyers and now you move into, uh, due diligence. How did you go through, um, Due diligence. How did you think about it? How did it work out with the buyers?

A Yeah, so I'm fortunate in that I've come from a background where I've raised money before, spoken to investors, had to put together data rooms for, for previous businesses, you know, data room for listeners who don't know, you know, essentially a collection of all your important documents as a business from your financials to pitch text to sales pipelines, whatever is relevant to you, but basically, you know, a bit of a dump from all your internal systems and knowledge repos. So I had some experience putting these things together and knowing what makes a good data room. Obviously these weren't as sophisticated as ones who were trying to raise, you know, much larger amounts of money. Um, but the core components of answering all the questions about how you, uh, how you're acquiring your customers, what are some of those economics look like in terms of the costs? If you're running Google ads, maybe some exports of some of the campaigns you've done there on Facebook, for instance, that kind of stuff. Obviously your financials, whether you're tracking that yourself or in my business's case, always Stripe. We always just had the latest Stripe extract. It was a little bit cleaned up and organized with some charts as well so buyers could just jump in and see all of our data and even play around with themselves. And we, we had to do a sharing link basically instead of giving them Stripe…

AI assessment note: “So I had some experience putting these things together and knowing what makes a good data room.”

Q monthly recurring revenue. And then, um, I signed up like four accounts. I was like, all right, you gotta quit your job now. So it was good to see, good to see how everything comes full circle. But, um, uh, so, so let's talk about potion. Um, what did, what problem did it solve? Why, what made you want to build it? Um, how'd you get it off the ground?

A Yeah. So I was, I really had this thesis back when I started it that like the best kind of business to build for like an indie hacker is to build on top of another platform. And I had seen some different people that had done this with like intercom and Shopify and, you know, WordPress, like there's those different platforms. Um, and so I was kind of looking for a platform to build on top of. And the other thing that I kind of noticed, you know, back then is that a lot of the kind of businesses that were early to those platforms were the, Were ones that like did well. Cause you know, they're kind of early to the space early to that platform. And, you know, I was a notion user for a year at that time. And I was starting to see like some people start to build on top of notion. There was this thing called fruition, which was. Kind of this way you could like really hackily like put, uh, basically point your own custom domain to a public notion page. So you can kind of have like your website on notion, but it's all hosted on notion. And it was like, you had to like hack this code together. Through Cloudflare to do it. Um, but when I looked at that, I saw there were hundreds of people that have, that had done that. And it was like this free little thing. And so that's kind of where the idea sparked of like, you know, people are trying to do this. It shows there's demand. Um, could I m…

AI assessment note: “could I make something that just makes it really easy to build like a website”

Q I got, I got some questions on that, but I'll, I'll save them for, um, the end. Let's, um, so let's go through, I, I just, I'm so curious about, um, the actual acquisition process. So, um, You list on, uh, acquire. Uh, what, what happens within like the first two weeks? How was your experience? Um, yeah, good, good and bad. Like what, how did that go first?

A Yeah, it went well. I, I first listed it at 400 K and I knew that was maybe a little bit higher, just kind of looking at different numbers. And I had a friend that kind of knew kind of, you know, what's normal for acquisitions and SAS and, and SAS like my size and stuff like that. So that was really helpful to talk to him. Um, Yeah. The first two weeks, I don't know, probably had 10 different people kind of come through that were kind of interested and kind of chatting with a couple of people. Um, but I kind of did get the vibe that like, maybe it was a little high. So after two weeks, I lowered it to 350 K, um, had more people come through. I think I had like 25 ish people sign the NDA to kind of see more data, see more info. And out of that talk to around six people on like a call. Um, and then out of that, three people like actually gave offers, um, two of them being more serious that I can kind of negotiate in between those two. Um, but yeah, I mean, it, it went pretty smoothly. Like I think it, from the time I listed to closing, I think was around two months. So it was decently, I guess I don't really know what's normal, but that seems fine to me.

AI assessment note: “The first two weeks, I don't know, probably had 10 different people kind of come through”