The Exchanges

Q Now, walk me through how you made that happen, because I remember when the shutdown announcement came out, a lot of customers came out upset. The co-founder had the viral tweet go out. Did you just reach out to one of the founders? Did someone approach you?

A Yeah, I had a, um, Acquittance that I was connected with on LinkedIn. It was on the C-suite, so I reached out to them and asked to be connected to board, and they, uh, they connected me to some of the board members, like the, I think the, yeah, a few different board directors, and anyways, picked up the conversation there, so it was, uh, it's a whirlwind. Uh, I didn't see much that weekend, nor did our team, but it was, uh, it was a quick turnaround, and it was kind of on our radar, like, take a step back, like, this wasn't some random acquisition. We had bought, um, a ERP component, like, uh, enterprise resources, like, plan, like, component, and we were looking for an accounting, like, general ledger solution that we were going to API into, or, like, either partner with, or, or build our own, um, solution, and so when this came about, it was very opportunistic, because I had just talked to my co-founder and CTO, Ben, a week prior about this, uh, this exact type of, like, thing we need to build in Q-one, so it was just very gratuitous timing for all kinds of purposes.

AI assessment note: “so I reached out to them and asked to be connected to board”

Q Yeah. What other acquisitions are you looking at? You don't have to give specifics, but I assume your strategy is to buy other companies and continue growing your portfolio products, or do you plan to build other products?

A Yeah, um, it's really just a market, like, timing thing. I think, uh, right now we look at, like, the pace paradox, like, how long does it take us to, like, build, and then, like, go to market with some products, um, to get the same revenue, versus just buying today and arbitraging that delta, uh, in time, take that time. Um, but we'll, we'll continue to build around, like, Everything that gives you full data insights across, um, the financial stack from like contracts to invoicing to, you know, bill pay to, to, um, S and B, uh, banking, which we just rolled out and lending eventually and other things and everything in between. So basically at a full, like, you know, financial stack for S and B's in one platform.

AI assessment note: “how long does it take us to, like, build... versus just buying today”

Q Nice. How do you value a business like that? Because they were technically shut down, and then I assume you acquired The assets and the customers, but the customers also technically were, I assume canceled because they, in that announcement that they were seasoned to operate. Like, how'd you value that?

A I, it was definitely more difficult than most, uh, with like a lot less information, uh, very condensed diligence time window. Um, so in that case, like all things, it comes down to price, right? So like, uh, they got a really good price, I think on the business overall to make that make up for the fact that things were not in the best of shape. Uh, and I mean, by the way, and also further going to go into further decline come Monday or Tuesday of the following week, right? Because now you have like a melting ice cube effect where you have an ice cube in the hot sun, all your customers are just churning out, right? And all the competitors will be reaching out over the weekend and Monday, right? So that's, uh, plug being is you, you would get a very good price. I think some of the reports, um, I want to say by Axios and others had, uh, reported, I think nine million or something like that cash Um, something like that. Like, that's what was reported. I can't confirm the exact price, but some, some number there was a lot lower than overall, I think, like enterprise value from my perspective.

AI assessment note: “now you have like a melting ice cube effect where you have an ice cube”

Q Love it. Where are you going with all this? Are you trying to take these companies public? Are you keeping them private? Are you focusing mainly on profitability?

A Um, we're focused on, on growth. Um, uh, contrary to like, we obviously like to operate in the black, um, um, is how I call it. But, uh, you know, I think focused on growth and, but like sustainable growth, right? So instead of like burning money, we'll, we'll spend exactly every dollar we earn towards growth. Um, and long-term, you know, we want to be the number one accounting software platform, you know, for SMB and it, Eventually mid-market and enterprise customers, um, in the world. So I think like, you know, we want to be like the modern day, you know, QuickBooks essentially, but with a full platform for some of these, which I don't think exists currently in the, uh, everyone's using lots of point solutions, right? So you use like Carta and QuickBooks and like Gusto, right? Like, but you should have a platform that has all of those together. Um, not that we're competing with Gusto on the payroll space, but more so like finance and capital management and accounting. All of that, so.

AI assessment note: “we're focused on, on growth... but like sustainable growth”

Q Nice. Tell me about the main street acquisition. Was it in a similar spot where they needed a buyer? I know they had raised a lot of venture capital. I assume maybe they were underwater on that capital and they were listening to sell, or was it different?

A I don't know what their water, I don't look at waterfalls so much. I think the, um, I can't speak to, like, what their valuation, I don't actually know, like, what the previous valuations were. I think there's some TechCrunch articles that talk about that, but, um, what I would say is that, more importantly, we've become, like, a very good, like, um, like, steward of businesses that are, like, really great. I think Main Street, the R&D tax credit solution is a fantastic product, right? Like, it's a business that's scaled to, you know, eight figures in revenue, and it's profitable, and doing really well. But the tough part right now is, again, when you go back to, like, that distribution Channel is like, do you have a path to be like a venture scalable company, be a ten million dollar company, or are you kind of stuck in this couple hundred million dollar valuation range and like you have like steady growth, but it's not like parabolic, right? Which is where VC dollars go long term. So, um, we, uh, got introduced, uh, by one of their investors to, to Main Street. And again, this is because we've had a good track record working for other funds like Prelock and Excel and others that brought us, you know, businesses they've rolled equity into, um, And, and same thing, I think, applies for, for Main Street, uh, without getting specific to the deal, but, um, they, uh, have a fantasti…

AI assessment note: “are you kind of stuck in this couple hundred million dollar valuation range”

Q and how important that relationship is when the time comes to sell their business. So completely agree there. Let me ask you this. If you had, let's say, a million bucks and you were starting over entirely, you didn't have any businesses, you could go acquire businesses, you could start something new and an interesting space. What do you think you'd do? You have to rewrite everything that you know.

A I'll give you, I'll give you a better, a better answer to your question. I'll reframe the question. I had zero dollars. How would I go scale to, like, a lifestyle business of, like, one to two million error? You can do it with zero, so that's really cool. I've been telling people this for, like, I've been trying to shout this from the rooftops on, like, Twitter and stuff, but, uh, and I got way too many DMs, but there's lots of businesses right now that, like, took venture capital, founder got burned out, left, and they're stuck at, like, a hundred to 500 K, and those businesses go through zero. They literally, I've had a deal, um, like, two or three years ago where we, I won't mention anybody, any names of anybody, but, like, I offered. 75 K on a business that like ended up going to zero, but you can do different things. Once you have like a base platform, let's say like, uh, let's say you have, you build something yourself and you spit up some like no code solution. It costs you basically nothing. Let's call a couple hundred bucks, right? Now you can say, Hey, my goal is to add on these other platforms. We're not like a micro role, like a tiny co like Andrew Wilkinson's company, right? Where we're just going to plug in all these great, but we're going to do it for Microsoft or like Greg Eisenberg, right? That's done something similar. I think there's some different products. …

AI assessment note: “I'll give you a better answer to your question. I'll reframe the question.”