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Jan 19, 2016 · 21m · top-founders

Quick Way to Sell Your First Company For More Than $1m

Chad Wittman · 11m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Top, host Nathan Latka interviews entrepreneur Chad Wittman about bootstrapping EdgeRank Checker to a $2.8 million acquisition by Socialbakers and subsequently scaling his venture-backed logistics startup, Dolly.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 41% of the talking time here. How this is scored →

Nathan as informed peer 4.4 Guest teaching 2.8 Guest disagreement 0.8 Nathan pushing back 1.8
05100:0010:0020:000:59–5:31 · Nathan as informed peer 3/10 Chad Wittman's Background and Leaving the Agency Nathan guides the origin story of EdgeRank Checker and inquires about agency salary and equity splits. Chad willingly shares his background without any adversarial dynamic.5:32–8:21 · Nathan as informed peer 7/10 Scaling EdgeRank Checker and Early Acquisition Conversations Nathan and Chad reminisce about their previous acquisition discussions, where Nathan pressed Chad on SaaS metrics like churn, ARPU, and LTV. Chad openly credits Nathan with educating him on SaaS financial rigor.8:21–13:01 · Nathan as informed peer 6/10 Negotiating EdgeRank Checker's Multi-Million Dollar Acquisition Nathan probes the exact acquisition math, earnout terms, and valuation multiples. Chad details how user churn oscillation allowed him to avoid valuation penalties during the Socialbakers sale.13:01–16:44 · Nathan as informed peer 5/10 Founding Dolly and Scaling the Moving Platform Nathan asks about Dolly's funding and valuation metrics. Chad explains the labor acquisition advantage of targeting pickup truck owners over standard gig economy drivers.16:45–19:52 · Nathan as informed peer 1/10 Audience Promotion and Growth Geeks Sponsor Message Nathan transitions through sponsor reads and asks rapid-fire Famous Five questions. The interaction is completely cordial and routine.0:59–5:31 · Guest teaching 2/10 Chad Wittman's Background and Leaving the Agency Nathan guides the origin story of EdgeRank Checker and inquires about agency salary and equity splits. Chad willingly shares his background without any adversarial dynamic.5:32–8:21 · Guest teaching 3/10 Scaling EdgeRank Checker and Early Acquisition Conversations Nathan and Chad reminisce about their previous acquisition discussions, where Nathan pressed Chad on SaaS metrics like churn, ARPU, and LTV. Chad openly credits Nathan with educating him on SaaS financial rigor.8:21–13:01 · Guest teaching 5/10 Negotiating EdgeRank Checker's Multi-Million Dollar Acquisition Nathan probes the exact acquisition math, earnout terms, and valuation multiples. Chad details how user churn oscillation allowed him to avoid valuation penalties during the Socialbakers sale.13:01–16:44 · Guest teaching 4/10 Founding Dolly and Scaling the Moving Platform Nathan asks about Dolly's funding and valuation metrics. Chad explains the labor acquisition advantage of targeting pickup truck owners over standard gig economy drivers.16:45–19:52 · Guest teaching 0/10 Audience Promotion and Growth Geeks Sponsor Message Nathan transitions through sponsor reads and asks rapid-fire Famous Five questions. The interaction is completely cordial and routine.0:59–5:31 · Guest disagreement 1/10 Chad Wittman's Background and Leaving the Agency Nathan guides the origin story of EdgeRank Checker and inquires about agency salary and equity splits. Chad willingly shares his background without any adversarial dynamic.5:32–8:21 · Guest disagreement 1/10 Scaling EdgeRank Checker and Early Acquisition Conversations Nathan and Chad reminisce about their previous acquisition discussions, where Nathan pressed Chad on SaaS metrics like churn, ARPU, and LTV. Chad openly credits Nathan with educating him on SaaS financial rigor.8:21–13:01 · Guest disagreement 1/10 Negotiating EdgeRank Checker's Multi-Million Dollar Acquisition Nathan probes the exact acquisition math, earnout terms, and valuation multiples. Chad details how user churn oscillation allowed him to avoid valuation penalties during the Socialbakers sale.13:01–16:44 · Guest disagreement 1/10 Founding Dolly and Scaling the Moving Platform Nathan asks about Dolly's funding and valuation metrics. Chad explains the labor acquisition advantage of targeting pickup truck owners over standard gig economy drivers.16:45–19:52 · Guest disagreement 0/10 Audience Promotion and Growth Geeks Sponsor Message Nathan transitions through sponsor reads and asks rapid-fire Famous Five questions. The interaction is completely cordial and routine.0:59–5:31 · Nathan pushing back 2/10 Chad Wittman's Background and Leaving the Agency Nathan guides the origin story of EdgeRank Checker and inquires about agency salary and equity splits. Chad willingly shares his background without any adversarial dynamic.5:32–8:21 · Nathan pushing back 3/10 Scaling EdgeRank Checker and Early Acquisition Conversations Nathan and Chad reminisce about their previous acquisition discussions, where Nathan pressed Chad on SaaS metrics like churn, ARPU, and LTV. Chad openly credits Nathan with educating him on SaaS financial rigor.8:21–13:01 · Nathan pushing back 2/10 Negotiating EdgeRank Checker's Multi-Million Dollar Acquisition Nathan probes the exact acquisition math, earnout terms, and valuation multiples. Chad details how user churn oscillation allowed him to avoid valuation penalties during the Socialbakers sale.13:01–16:44 · Nathan pushing back 2/10 Founding Dolly and Scaling the Moving Platform Nathan asks about Dolly's funding and valuation metrics. Chad explains the labor acquisition advantage of targeting pickup truck owners over standard gig economy drivers.16:45–19:52 · Nathan pushing back 0/10 Audience Promotion and Growth Geeks Sponsor Message Nathan transitions through sponsor reads and asks rapid-fire Famous Five questions. The interaction is completely cordial and routine.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 60.9% · guest 39.1%0:00 · Nathan 60.9% · guest 39.1%3:00 · Nathan 21.8% · guest 78.2%3:00 · Nathan 21.8% · guest 78.2%6:00 · Nathan 44.1% · guest 55.9%6:00 · Nathan 44.1% · guest 55.9%9:00 · Nathan 18.3% · guest 81.7%9:00 · Nathan 18.3% · guest 81.7%12:00 · Nathan 45.5% · guest 54.5%12:00 · Nathan 45.5% · guest 54.5%15:00 · Nathan 51.6% · guest 48.4%15:00 · Nathan 51.6% · guest 48.4%18:00 · Nathan 46.2% · guest 53.8%18:00 · Nathan 46.2% · guest 53.8%21:00 · Nathan 0% · guest 0%21:00 · Nathan 0% · guest 0%
Sharpest disagreement ▶ 2:25 Rejecting the agency boss's spreadsheet

Chad recounts forcefully dismissing his agency boss's confusing earning model to strike out on his own startup path.

 Hardest push from Nathan ▶ 6:43 Nathan notes Chad wasn't serious about selling

Nathan bluntly explains why their earlier acquisition talks stalled, asserting that Chad was not truly ready to give up his company.

 Biggest teaching moment ▶ 9:49 Explaining churn oscillation to protect valuation

Chad educates Nathan on why high churn didn't tank the acquisition price, explaining how campaign-based customers repeatedly churned between free and paid tiers.

 Nathan holds their own ▶ 7:37 Nathan breaks down acquisition negotiation rationale

Nathan demonstrates SaaS M&A expertise by explaining how he uses churn discrepancies as leverage to negotiate acquisition discounts.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Chad Wittman's Background and Leaving the Agency 3212 Nathan guides the origin story of EdgeRank Checker and inquires about agency salary and equity splits. Chad willingly shares his background without any adversarial dynamic.
Scaling EdgeRank Checker and Early Acquisition Conversations 7313 Nathan and Chad reminisce about their previous acquisition discussions, where Nathan pressed Chad on SaaS metrics like churn, ARPU, and LTV. Chad openly credits Nathan with educating him on SaaS financial rigor.
Negotiating EdgeRank Checker's Multi-Million Dollar Acquisition 6512 Nathan probes the exact acquisition math, earnout terms, and valuation multiples. Chad details how user churn oscillation allowed him to avoid valuation penalties during the Socialbakers sale.
Founding Dolly and Scaling the Moving Platform 5412 Nathan asks about Dolly's funding and valuation metrics. Chad explains the labor acquisition advantage of targeting pickup truck owners over standard gig economy drivers.
Audience Promotion and Growth Geeks Sponsor Message 1000 Nathan transitions through sponsor reads and asks rapid-fire Famous Five questions. The interaction is completely cordial and routine.

Statements from this episode (11)

Assertion Not checkable as stated
EdgeRank Checker prototype quickly reached 10,000 regular free users
“I had built the very, very, very smallest prototype, and that was starting to gain some steam, maybe 10,000 free users using the app kind of really regularly, some big brands took us about maybe two months to build out a kind of a professional version of that.”
Chad Wittman Jan 19, 2016 ▶ 3:23
Insight
Adjust bootstrapped founder equity splits based on opportunity cost
“Let's start at 33% for each. And then how do we distribute it based on what else we could be doing? And so like my co-founder who was doing all the development, like he could have worked at, you know, Google or something or Facebook of that nature. And so it w…”
Chad Wittman Jan 19, 2016 ▶ 4:59
Assertion Not checkable as stated
EdgeRank Checker reached $20,000 in monthly revenue within two months
“I can't remember the exact number, but I know within two months we were making about 20,000 dollars a month with that drain checker.”
Chad Wittman Jan 19, 2016 ▶ 5:42
Assertion Not checkable as stated
EdgeRank Checker reached $60,000 in monthly recurring revenue at its peak
“So I think we were doing about, I think about 60,000 a month at the, at its peak.”
Chad Wittman Jan 19, 2016 ▶ 8:22
Assertion Not checkable as stated
Socialbakers acquired EdgeRank Checker for a 4x revenue multiple
“I believe we got a four,”
Chad Wittman Jan 19, 2016 ▶ 10:49
Assertion Not checkable as stated
Socialbakers' acquisition of EdgeRank Checker was 75% cash and 25% equity
“Yeah, so we did a roughly 75, 25 cash equity split just in general.”
Chad Wittman Jan 19, 2016 ▶ 12:03
Assertion Supported
EdgeRank Checker was fully bootstrapped with no outside investors
“A hundred percent bootstrap, which was a really fun experience,”
Chad Wittman Jan 19, 2016 ▶ 12:58
Disclosure
Dolly raised a $10M Series A and takes a 20% cut
“Yeah, so we've raised ten million bucks through a series A, and the way that people pay us is that they sign up, they use the app, they, we take a 20 percent-ish cut, depending on the job of everything that happens within the network.”
Chad Wittman Jan 19, 2016 ▶ 14:09
Disclosure
Dolly was valued around $50 million in its Series A
“The range, let's, in the fifty million range.”
Chad Wittman Jan 19, 2016 ▶ 14:44
Prediction Not checkable as stated
Dolly leverages pickup truck owners to avoid competing for Prius drivers
“And a lot of them are, and I'm confident Dolly will be one of them because of the unique asset that we're leveraging, which is pickup truck owners instead of Prius owners, which if you look at Postmates and Instacart and all these other companies, they're all …”
Chad Wittman Jan 19, 2016 ▶ 15:36
Disclosure
EdgeRank Checker was built entirely based on Jason Fried's 'Getting Real'
“That, that book is what I read, Quit the Agency, and I built an edgering checker entirely off of it for better or worse. So we definitely made some bad decisions by following it entirely like a Bible, but fantastic.”
Chad Wittman Jan 19, 2016 ▶ 18:00
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