The Exchanges

Q Nice. And I asked this question, and I think you've touched on a lot of good points, but I asked this to pretty much every person I talked to on this podcast, but you know, if you had to give maybe like two or three pieces of advice for founders looking to sell, what would it, what would it be and why?

A Yeah, I think in, in this space in particular, the first piece of advice would be document your code and document everything you're doing, because it might make sense in your head. Um, and you might feel like you're slowing down by just writing down all the steps that needs to, you know, you need to do to run your business. But the reality is if you're looking for an exit or if you're even considering an exit in the future and you're not sure, having everything clearly laid out and, and kind of making yourself No longer mission critical for your business is a very, very powerful thing because it means that someone else can take it over. It doesn't mean that there's no work going forward. It just means that that handoff is smooth and people will reward you for that. Like having something that's quote unquote plug and play, um, is super valuable. Uh, and so that would be like my number one piece of advice. And then the number two piece of advice would be like, no matter how small your business is, try and run it professionally, right? Like try and have clean financials, try and have well-documented code. Like I mentioned, Um, because the clearer it is for external parties, I find the clearer it comes in your own mind, and then you can make better decisions as you go.

AI assessment note: “the first piece of advice would be document your code and document everything you're doing”

Q Nice. So I, I assume you talk to, um, a lot of different sellers and with that, you know, sometimes you have a great experience and sometimes you have a bad experience. Um, what are some of like the pet peeves or maybe yellow flags that, you know, you, you see common with, with founders?

A Yeah, maybe one of the biggest red flags, Andrew, is like, I understand that some people might have pressing needs for cash, or maybe they're working on a super exciting new project, but whenever someone says like, I want to offload this really quickly, like this needs to be done ASAP, kind of like Raises its suspicions for me, just because it's like how, you know, how quickly is quickly? Like, why do you want to get it done so quickly? You've spent months, if not years building this, like what's going on? And so making sure you don't put yourself in time pressure, or you have the time to answer questions and, you know, you might have to go through multiple buyers. Like that's super important because, um, it kind of allays people's concerns.

AI assessment note: “whenever someone says like, I want to offload this really quickly”

Q Yeah. I appreciate that. Um, in terms of, you know, the Shopify ecosystem as a whole, there's, there's so much potential with e-commerce going forward. Is there any other categories that get you, you know, super excited specifically?

A Yeah, I think, um, Right now we kind of separate the world from like two, two points here. It's like, what's nice to have and what's neat to have. So you might have some apps that make your website look super cool and they give a really sleek feel. But, um, if there's a, you know, tough economic environment and people are starting to look for ways they can save money, um, is your solution mission critical? Are you saving merchants time and money? And when you think of things like, um, Fulfillment solutions or anything that'll like increase conversion rates. Maybe it's like a bundling app or something like that. Um, Those tend to have pretty clear measurable ROIs. And so I would, I'd be hard pressed to find a merchant who's like, oh, you know, times are tough. Let me delete all my bundling capabilities on my website because you're going to hurt yourselves. Right. And so we kind of like right now, anything that'll save a merchant time and money. And there's a lot of like new and exciting things, especially with the updates that Shopify pushed to its checkout, um, functionalities that, you know, are Right in the, in the middle of our focus right now, but, um, it's not to say the other apps don't have a place. It's just that, you know, what is that churn going to look like if the world gets a little bit tougher and what does success look like for that app?

AI assessment note: “Fulfillment solutions or anything that'll like increase conversion rates. Maybe it's like a bundling app”

Q Nice. What is your, uh, what is your due diligence process look like? I can ask just from like a high level, you don't have to go into like super detail. Yeah.

A Um, uh, it's pretty straightforward, um, because of the fact that we're only focused on the Shopify space. Um, the things that you want to look for become pretty standardized, right? Like we'll get access to someone's Shopify partner dashboard and, and they do a great job just kind of streamlining the data so we can get in there and poke around Revenue customers. We can understand, um, you know, the positive reviews you've been getting and why, um, and that's kind of on the, on the growth revenue side of things. And then we'll take a look at the, uh, expenses as well, right? And so we'll do a full financial due diligence, understand like what the monthly, uh, financials have been. That's one pillar of our work streams. We'll go across, you know, similar things across tech operations, legal, like really a full review of what the business is alongside some of our advisors. And, um, and that's, it feels like pretty overwhelming for someone who hasn't done it the first time, but it's super important to be able to get a full and accurate picture of what you're potentially buying.

AI assessment note: “we'll get access to someone's Shopify partner dashboard and... poke around Revenue customers”

Q curious about is, was there anything in particular that the seller did that just gave you confidence given the size of this acquisition? You know, you really want to Cross your T's, dot your eyes on this one. Was there anything that the seller did that gave you additional confidence? Um, maybe things that you would like to see every seller that, um, you interact with, um, do the same?

A Yeah. I'd say like, um, once you put together a really good package and you first get someone's attention, that's kind of the first step and you want to give yourself the best possible chance of like a good solid conversation with potential buyers. Um, then it kind of becomes like, how do you perform? And you get a little bit off micro require, but like, how do you perform on the initial call? So we'll hop on the phone with opportunities that we think are interesting, um, and chat with the founders and ask basic questions. Like, why'd you get started? What are the issues facing the business every day? And through those conversations, you can see two things. Number one, like how, um, well the founder understands their own business and is able to clearly communicate that. And number two, does it match up with this stuff that was on micro acquire in the first place? And usually it does. Right. But, but it's pretty, um, common to have like, oh, it's like a slight detail that was different in your listing. And so it's really important to just like Be completely transparent and, and as upfront as possible because the buyer will probably figure it out and it's, it's better to just be upfront about stuff than to have them figure it out later. And that, that, that's something that the seller did particularly well was just, Hey, this is what it is. This is what it isn't right. We wish it…

AI assessment note: “that's something that the seller did particularly well was just, Hey, this is what it is”

Q Microquire, as you know, there's lots of different Shopify apps that you could acquire. Um, can you walk me through, you know, aside from just the product, um, how did this one really come to close? Um, you know, you spoke with a buyer, um, You know, what, what made you confident that this was, um, a good sound, um, acquisition imperative to maybe the other options, um, on Microquire?

A Yeah, I mean, listen, you guys do a great job, um, Uh, putting up opportunities that are compelling across a bunch of different industries and size ranges. Like we're always poking around microfire, even looking at stuff that we wouldn't buy just because it's interesting. Um, and so it's a really good first filter, um, to figure out, you know, what's going to be, uh, within our investment thesis and within our size range. Um, I think what really jumped out to us is, um, the capability set that we'd be acquiring here. Uh, and the, um, financial metrics. Like there's nothing to, to prove how good your company is then like showing a bunch of growth. And, um, you know, healthy margins. And so for folks out there who might be thinking of selling their app, like having really good metrics and financials in place just makes life easier for people who want to take it over for buyers to examine it, because the more you have to dig and figure out, you know, what's really going on, the longer that process can take. And so micro acquire, you guys do a great job of laying out all the metrics, all the financials at a quick glance, you can see what's interesting and what's not interesting. And Kind of make everyone's life easier deciding to either move forward or pass.

AI assessment note: “what really jumped out to us is, um, the capability set... and the, um, financial metrics”

Q Nice. I love it. Um, I guess final questions would be, um, I always like to ask this, um, who's, who's, um, one entrepreneur that you look up to?

A Um, that's a tough one. I, um, Listen, I think, uh, people who do things, uh, you know, very differently tend to fall in the entrepreneurial bucket because they're not conforming and they like want to do things their own way. Um, and so I don't really have an answer to tell you, frankly, like I'm not really, uh, reading entrepreneurship books and like looking up to people specifically. It's more like, uh, people in my own personal network that have done that. And then like friends that I really look up to, um, where I see them do something completely differently. And, and whether it's inside a real company or they're founding their own company, I think you can be like an intrapreneur as they say. Uh, and so it's more like personal based than it is, um, like, um, looking up to public figures, if you will, for me at least.

AI assessment note: “I don't really have an answer to tell you, frankly”