# How I Bootstrapped and Sold My Software Company By Maxing Out My Credit Cards – Bill Bither

Channel: Rob Walling
Video: https://www.youtube.com/watch?v=SShoE2RHrlY
Duration: 46 min
Language: English
Words: 8386
Transcript page: https://viewrankai.com/tools/youtube-transcript/SShoE2RHrlY

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[0:02] [Music]

[0:10] everybody hear me great well first Mike and Rob thanks for inviting me to speak here with all of you today I I've had a chance to talk to a number of you and I was really pleasantly surprised and and feel really comfortable the fact that ten years ago all of you or where I was and there's there's a I think a lot of things that I can I can tell you about some of the things that I didn't raw that I did wrong some of the things that I did right so by telling you this story I hope that you can leave this conference with some some ideas so you could take

[0:55] your company grow it up through millions of dollars and eventually sell it it's been a great experience wild ride and so let me so let's go get started by the way my twitter handle is up here my email feel free to contact me anytime I really like giving advice so here we go and by the way oh I also apologize for the I can't get this full screen it doesn't quite capture everything it's my first time using Prezi I know if you ever used Prezi it's kind of a kind of a cool presentation tool so what we have here is I have a snapshot of my business

[1:31] from when I started all the way through when I sold a less than a year ago and you can see you know I started out you know pretty pretty humble like my first year making $1000 in $15,000 and all the way up through about five million in sales and so lots of things happen along the way I'm going to try to skip through some of it so I have time for questions but let's so let's say oh I should say that I've really split my the evolution of my company in a few different phases I said most of you are in the moon lighting phase can I have a show of

[2:04] hands who's moonlighting now who has a full-time job okay it's like half of you or more you know I really think that that's a fantastic way to boostrap a company so I have some pointers there and then you know when you finally leave your job your full-time job and get started that's really sort of my startup phase then growing beyond a million in revenue I had the fortunate experience of going through a bad economy such as I'm sure many of you have and then eventually selling so let's start with moonlighting so well a little just a quick background about myself I come from humble beginnings I grew up in a sort of lower

[2:42] middle-class family my dad was a mechanic and I aspired to be to design either cars or airplanes and my dream came true I got my degree in mechanical engineering and I started with a company called Hamilton Sundstrand in Connecticut designing aerospace systems for hydraulic systems for airplane engines it was a cool job I loved it I had lots of responsibilities a great place to work by the way you know I had technologies but you know after a couple years and I got married bought a house I was kind of having trouble paying the bills my credit card for the first time sort of racking up a little bit and you

[3:24] know I I thought to myself well how am I gonna you know I talked to my boss he's like it wasn't really no way to get get paid anymore I was already making one of my peers so I figured I'd take that out myself and try to make some extra money on the side so instead of going back to my high school days of mowing lawns I figured what let me go ahead and use some of the skills that I gained in my engineering job so I sort of a built this reputation of automating these basic tasks in my design work so I had build these tools to take the design of

[3:58] a spring that would take an engineer two weeks to make I built a program that would do it in seconds just put in the parameters hit a button and you have a design of the spring so they used that throughout the whole company I taught myself visual basic and decided that I would take those skills and and build a software product that I would sell so this isn't an run 99 mm long story short my father was an artist I started building something for him so he could take his artwork generate web pages and images put online I realized that artists don't have any money so I would take just one

[4:31] little piece of that the batch Image Processor and brought that to market a screenshot is here the website which really looks awful on this screen is is right there that that was really when I got started in 2000 i rana CLE the same time that i think david collins got started doing google adwords i'm sure i read a lot of his stuff back then because I was part of the industry or the association to share where professionals and I learned how to drive people to my website and sell through e-commerce really hands off and shortly after in 2001 I made $15,000 which was great I was thrilled that I was able to

[5:13] build something on my own time but not put any money in it and made some side income no this is not enough to replace my my salary but I sort of gave me the bug of being an entrepreneur so in building this program I batch I built the relationship with a third-party component vendors this product called image X that did a lot of the backend image processing and I kept asking for so many features at the guy who owned it Gary started hiring me to add features for him then he invited me out to Microsoft at this component Builders conference where it totally opened my eyes to this huge

[5:49] ecosystem around developers of Microsoft technologies and I was right around on time that people that that no one and it was a few people out here that actually build their businesses on net I was one there they are they put a huge marketing effort around this and I could I really sort of drank the kool-aid and and believe that this is going to be something big and new I wanted to build developer components for done at developers so shortly after I got back 9/11 happened aerospace industry tanked they froze my salary that kind of pissed me off I decided that I would take it upon myself to build a business i gary

[6:29] sort of to lose interest in his product so i offered to buy it and then right after he sent me all of his financials and said think that's a great idea I had this other thing I'm working on so I basically negotiated a this was 2002 I negotiated I think it was twenty five thousand dollars plus meeting an extra ten thousand dollars over the next year to buy his product already had customers he's making about forty thousand a year so it was a pretty good deal only problem was I don't have any money in fact I was already in debt my family didn't have any money so the only thing

[7:08] that I had was credit this is where the credit cards come in back then it was a lot easier to get credit I think I had about thirty five thousand dollars of credit I was already ten thousand in the hole so what I did was I took 25 one thousand dollar cash advances gave him the cash had the IPE I had a really cheap lawyer write up the contract and now I had a product that made forty thousand a year and I had my share a product made fifteen thousand a year and my goal this is this is just for Visual Basic 6 developers to improve this build

[7:39] a business around that and really get going with this company because I was I was going to do this well one month after I went is in as much debt as I could possibly go into I had a baby girl she's Noblet the obligate I had to show that the kids pictures I actually took this out of the presentation but then that was a cool thing I had to put it back in here they are now my ten-year-old daughter and six-year-old son anyway so my daughter was born and you know I kind of figured at that point what I want to do I wanted to take image

[8:17] X and build a business sustainable enough so likely but also be the first to the market with an imaging tool kit for dotnet developers in order to get there I had to work my ass off the hundred plus hours a week is no exaggeration I would get a bet seven go to my engineering job and I'll get home at like 6:30 spend maybe an hour with dinner get back on the computer till 2:00 2:30 sometimes 2 a.m. every single night for a full year I will never ever ever do that again I don't think it's humanly possible to do that more than a year but that's kind of what it took

[8:54] I can remember I was actually giving an eating a my day job and like six of us in the conference room and as soon as I was done with the conversation went to my boss I fell asleep so I knew at that point that it was about time fortunately I made more money at Attalla soft then as then I did my as my engineering salary so I was able to afford to to leave I formed a tile stuff tank some people asked me when was it how so I found it I usually say 2002 that's when I was really serious about it and I left my my engineering job my five year

[9:35] anniversary with my firm okay 401k was vested so before I get to the next I want to just kind of give you some takeaways about what I think makes make you successful bootstrapping through moonlighting I do think that that's probably you don't have cash in a bank for a one two years of of your expenses this is the way to go really you should keep your day job pay those bills work on your product on the side and focus on building revenue replace your income it is possible and you know through sophisticated marketing techniques what I did 10 years ago isn't going to work now but there are so

[10:12] many resources out there that you know it's it's certainly a good way to go the other sort of key point is you really should leverage an existing community existing framework where there was a place you know where to market to don't be too broad in my case I was really focused on the Microsoft developer community all the way through when I sold I was always focused on a Microsoft developer community and it worked for and worked for us so the you definitely want to take risks I don't know any entrepreneurs are pessimistic you got a you know really be optimistic believe in yourself believe in your intuition and and you need to be

[10:53] so passionate that people think you're nuts I can certainly say that my friends thought I was crazy my family thought I was crazy everyone did you know I shared with them how I afforded to buy this company and not many not many people have the have what it takes I supposed to to actually go in in that much debt but I will tell you that it's worth it so next phase is really getting started yeah I told you I quit my job I start hiring employees I found one of my friends who didn't finish his comp so I'd agree I started paying twenty five thousand dollars a year salary for the

[11:34] first few months I know that's not something that's very feasible now I happen to be in an area in western mass where there wasn't a lot of was a lot of other software companies it was in a downturn he now is my top pain - paid engineers to the company so I end up launching you know I met my goal to launch the first imaging toolkit to the market for dent developers later that year and one of the key things that I learned is that we had to separate ourselves from the competition one of the crazy things about this is for those that know the imaging SDK industry there

[12:08] was very established players out there fierce competition this this industry was saturated and it really if I look back at it was kind of stupid what I did and if I look at my strategy now I would say there's no way that you'll succeed but I did so really a sort of takeaway here is you know don't if you're if you're getting started don't necessarily listen to advice you can make it work as long as you passionate about it so you know I figured out that we had to establish a brand because we had such established can put established competitors so we went to our first

[12:45] trade show Microsoft PDC in 2003 we bought our first magazine ad visual basic magazine and really made a statement that you can trust us you know we're we're a real company we kind of were a real company but we made it yeah I didn't exactly use the honesty approach here hey I made ourselves look a little bigger than we really were if they asked me how many employees he had I lied I think I said depends on where we were I think we were four people I probably said we were ten you know I didn't feel great about it maybe I didn't have to if I

[13:19] yeah listen to Jason and tell the I wasn't a mistake but so that year you know we were growing pretty pretty well about two hundred thousand in sales just barely made it though that trade show cost us about twenty grand barely could pay for it but it got us but when you didn't so 2004 we went about seven hundred thousand of sales just to it a key thing here I really didn't know what the [ __ ] I was doing really really didn't I started reading and I started to figure out what would it took to run a software development organization you know I'm not I don't I

[13:55] took one Comp Sci class and there's this book here under pressure on time it's a little dated now but it totally revolutionized how I ran a company from an engineering point of view and you know implemented automated builds and you know testing and all that good stuff I also spent in a lot of time automating our systems we bought Salesforce com back when they were just just getting started and we you know I would spend all my evenings on systems work just you know automating our you know automatically messaging our customers to make his hands off as possible I mean that's what I was good at and you know

[14:30] it started to push more of the product development to the other people that I hired the other key thing was you always have to differentiate we differentiated in our pricing so we came in pretty low cost run time royalty free pricing were the only company that marketed ourselves that that offered that we we really started looking at the web is something different and we focus a lot of our energies there which really led to the successful acquisition years later so 2005 the significance here is that we Himalayan dollars in sales I will tell you that that it was a I was really really happy with that you know when I

[15:09] started the company I just kind of wanted you know a side income I wanted to replace my my normal income I really didn't know that I could do this but I did and you know I started splitting out the team as a sales marketing support we closed our first six-figure deal that took us another five years to figure out how to do that again by the way so but that was that was pretty cool so really just some takeaways here you know always think about differentiating your product always you know never forget that you have to be different in some way and you need to know what that

[15:43] is and and make sure that you let your customers know you know don't waste time fundraising I can remember spending one evening I drove to Boston went to some VC angel group and kind of figured out what they were looking for and I wasn't for them I was pretty proud that I had like half a million dollars of Revenue they're like well you know can I get a 10x you know return in three five years like what do you mean it wasn't it wasn't for me so everybody this room here you but you're bootstrapping if you can avoid raising money avoid it definitely so the other thing that you

[16:18] know really was key to me to figure out how to hire when to hire people is build a cash flow model you kind of have to be you know as a founder as a bootstrapper you need to really understand the accounting the economics your business and my Excel spreadsheet has evolved and I still use it to this day to really map out on forecast the cash flow in the business and understand when to hire so basically you know when I run rate would support a new employee for two months I would hire that employee so I would you know invest back in the business and continue to hire as fast as possible

[16:48] when my cash flow could could sustain it the I mentioned before you know automated processes I'm sucking up LD actually yesterday said he put his best developer on building systems you know not product but systems I can't tell you how important that is at the time I might have been the best developer and I was working on that you know at least eight hours a day that's a really important and then you know at this point you want to think about keeping your employees really motivated to grow your business we weren't necessarily the highest paying company maybe in the area but certainly not you know when it comes to

[17:25] a software Valmet organization so I offered initially I have 15% of the of the equity I basically gave to the employees and a pool used just FYI a phantom stock program don't do that you stock options because all my employees that were very grateful that they had this had to pay normal income tax or I paid capital gains when I eventually sold so the so next is really the growth phase I'm gonna kind of skip through this you know we're now yeah we're hiring like crazy we moved into new office it was actually the same office we're in today about 5,000 square feet we start figuring out how to

[18:07] monetize reassign customers look better charging for support instead of making it free really important I hired an office manager to help with the day-to-day tasks let's see so no 2007 up to 2.8 million still hiring a lot of people we started become real profitable I will show you a key chart here so this is the average deal size for a new customer from when I started the company through when I sold and the way that you kind of have to figure out how are you going to scale your revenue and you know i selling dotnet imaging developer toolkits it has a relatively small niche there's only so many people out there

[18:52] developers out there doing this I mean it grows but it's not huge so to grow my company's revenue I had to continue adding more value to our products through modules and really increasing price never have I gone back an increasing price I started out $169 for you know the core product that was gone up to like five thousand plus all these other modules that we sell and you can see our deal size when we started in the SDK market right around here or this is when we had our net product so that kind of went up there's only one year that that kind of flatlined think that was the bad year

[19:33] and then it keeps on going up so figure out how you're in a scale revenue and it might not be adding new customers it might be just increasing value in price okay so so the so now our 2008 where we're still growing pretty fast one of the things that you know my philosophy was always reinvest back in the business I never really took much out I pay myself well but you know I really really wanted to get to five million in sales that to me just Amy just interview me yesterday and asked you know why well I do so few companies sell when they're you know just a couple million of

[20:14] revenue and and the answer is because it takes the company the acquiring company it takes it takes a lot of time and money to hire M&A brokers to buy a company they don't really want to waste time on a small two million dollar company you kind of need to to have at least say a ten million valuation for it to be worth their time for the most part there are exceptions of course so you know I really wanted to keep feeding the funnel and figure out how to continue to grow and we started flattening out a little bit so I started thinking that geez maybe we need to do something else

[20:48] okay this is where I made a big mistake so we took our our really differentiated technology which is a zero footprint document viewing technology allows you to view your documents really nicely very fast you can annotate them in the web without having to download any ActiveX or anything like that and we saw so a SharePoint Market was taking off in the enterprise and they didn't have any document imaging like this is perfect this is like right on time same thing like when we were in net I can go and apply this there it's gonna be great so we hold online in business so went all in

[21:22] I hired I hired a guy to project manage it took some of my best developers put him on that spent two million dollars in two years on this product it did not make two million dollars in two years it did grow faster than that image but the mistake is this was really a different company as a separate company and the reason is because it's a different market or selling to the IT pro not to the developers this now I could have done this but what I should have done is made as a second company and probably hired some you know at co-founder or something like that but I didn't and

[21:58] ultimately I had to spin this out of the business for me to even sell and for for the business to have a reasonable uation so there is a key takeaway there you know we said something you see the pictures here we have some cool things once you get - you know over 20 people it's a lot of fun we had all these company events we played volleyball we would weed beer Friday that was you know 4:30 beer 30 we called it and we would just just have a good time really a really good time in the growth of the company you know figured out how to become a manager I'm

[22:34] certainly even now I kinda know how to manage now but you know what experience do I have really mechanical engineer worked five years as just an entry level engineer that's it all this I had to learn on my own it's not about school here so sort of the key takeaways here I talked about a lot of them you know figure how to scale your revenue ya reinvest in your business but don't reinvest in a different market reinvest in your existing customers as long as you have existing customers focus there have fun build your own unique company culture and you know figure out how to you know

[23:07] your now you have to I know Peggy's talking about flat organizations I don't know I couldn't do that about seven people as most I could manage so I needed to introduce managers that were more than just managers they you know effective you know it had produced you know real results you know tactical results they were also developers but you can't have to figure out how to manage them by objectives so there's plenty of materials on how to do that okay so this is where things get a little rough by the end of 2008 I mentioned that I was investing in this new product well I have this thing about

[23:46] credit I was able to I was able to through two different banks I had seven hundred thousand dollars line of credit and I used it you know here and there for various things but with this new product I kind of wanted to feed it a little bit you know as a startup that needed some extra funding and starting the end of 2008 I was probably about 200 200 2000 dollars into the line of credit you know I knew that those financial crisis is going on but didn't notice really any negative impacts the end of December close out the year it was a pretty good year Rieger like 25 percent

[24:22] wasn't amazing but it was still pretty good and then and then the sky fell so January first a switch was turned off literally like after the towards the end of January I was looking at the numbers like what the [ __ ] is going on like there's basically what happened was that IT budgets they rebooted in January they were frozen they were reduced nobody was buying any new products for IT with some limit you know just limited exceptions and that severely impacted us the first six months in 2009 we went from grow grow grow to down 25% and you know I would always you know I was

[25:06] always hiring and I was always spending right in the edge so this was a problem yeah we I was losing about a hundred two thousand a month maxed out another credit but this one was much much bigger it was also personally guaranteed so that meant not only the business but my house my entire lifestyle was tied to this I get a call from the bank the bank says so we're gonna have to call your line of credit you're gonna have to pay your debt now and I have never been so scared like oh my god I can't and you know I must have been you know totally

[25:52] irresponsible to do this so I had to make a pretty radical change and you know I started reading there was this article I was at Claire Perkins or Dan you probably know it basically they said you need to cut once and cut deep you know get back to profitability so there was two people to my sales people that really weren't performing it was kind of no-brainer I should have let them go anyway they were gone but then I was look at the org chart and I have to cut 25 percent every single person I looked at is say you know it cut that person fire that person it would have a severe

[26:26] negative impact in the business and we were running pretty efficiently so you know I started thinking outside of the box I really like this is this gonna be bad if I have to fire this person or that person you know I reduce my salary and what what I ended up doing was I anybody making over 90,000 a year mandatory 20% salary cut anybody making under that optional 10% salary cut but I create a profit sharing program so the difference in what you would have been paid and you know and and through your salary cut goes into a profit sharing pool where 50% of profits the next 18

[27:05] months would go to pay that back with no upside so you're in it just like just like me and it actually went over really really well everybody knew that you know all these companies are having big problems people are getting laid off businesses were failing so I had the entire company working with me to get out of this hole and it literally overnight we went to profitability the next quarter we started paying the you know the profit sharing and at the end of 18 months the employees ended up with something like maybe it was a 30% bonus on their normal salary what they would have been paid because we got out of

[27:44] this the other important point was at that time in January 2009 only 30 percent of our revenue was recurring is unfortunately I didn't have the option of having a SAS model then I hope all of you are looking at SAS models recurring revenue because is huge and you don't have to worry about this nearly as much as I did so we made some changes to our licensing required maintenance and built up our recurring revenue so actually by the time that I sold we were about 60 percent recurring revenue so that had a big positive impact so alright so some takeaways here I talked about all of

[28:23] these and I guess a final one take care of resisting customers you will still have your customers so make sure you keep them happy I've always been about providing amazing support to our customers and we continue to do that right through this this period okay so here we are 2010 we're back to really strong growth I said 60 percent recurring revenue my balance sheet we've literally paid off that debt with I think it was six months so it's like 600,000 and debt we paid a write-off and then I started looking at the business well a couple things one visit product was telling about was just dragging all

[29:08] of our profits it if you looked at the company the valuation a whole we were kind of you know we went through a stumbling block it wasn't growing a lot it wasn't very profitable what kind of valuation is that if I ever were to sell which wasn't the first thing I mind by the way I figured in a few years so I ended up spinning it out or putting the process together spend a higher demand team it see an advisor actually took took it over I gave up quite a bit of equity to get that out of the business which made us become a very very

[29:37] profitable so I did that the other thing I was then I did this is what just two years ago is I was looking at acquiring another company there about did about a million in revenue I thought that was a good way there in our in our space another way to grow I was really shooting for how to make 10 million in in sales so so that so that that was a right before the the exit opportunity came and how am i doing on time by the way okay so in right at the end of 2010 I had an inquiry from company called Koufax they are related

[30:16] leaders in our space and they basically expressed interest in buying buying at all soft and I I wasn't ready for it yet we were just got back into the groove the process of spinning out visit we're going to be really profitable again we had this really cool recurring business model we were making we were closing deals that were three-year contracts hundred thousand dollars a year things were looking really really good but you know I I had to look at this because you know when you're in the sort of a niche market like this there's only a handful of companies that would really be interested in buying you and I'd also

[30:52] been through a pretty rough patch in 2009 that scared the hell out of me so I started I think Jason said this yesterday I started calling all my advisors you know trying to figure out what the hell to do actually I called Jason and if you go back about a year ago there was a couple blog articles that he wrote that that some anonymous person that that yeah you might you might know what you're talking about that was me so Jason really helped me out and made me realize that this is really a personal decision you know I kind of have to look at what I want to do

[31:29] whether I want to become a serial entrepreneur or not and this is my first company and you know whether this was enough for me to feel like my my family my kids were pretty set ultimately I decided that this was a good decision and negotiated with Koufax a price and sold the company so huge made ups and downs it was insane basically I felt like I was back to starting my company I worked non-stop through you know I mean this was the West Coast company East Coast I mean I was doing stuff on the phone till midnight every night negotiating whether I'm an AAA guy it was hard I thought I

[32:17] was done when I figured out the price of the company like the overall value and then came the year now they're not negotiation was way harder than the initial negotiation so you know you have to do things that go through due diligence I took quite some time you had to make sure all the finances all your documents are in order you know I had a really good team I had about three people that I sort of let inside I'd let them know that you know that we're going yeah looking like it we might go forward with this I could not tell the rest of the company there are public software

[32:48] company if that got out there'd be like insider trading issues so that would have been bad you know I really wanted to tell more people I couldn't so and we figured this out and one of the things I should point out is you know in the revenue charts I'm showing you the the cash flow of the business sales revenue sales when I transitioned the business to recurring revenue I pushed a lot of that revenue out deferred it which mean that which meant that my 2,000 revenue see my 2010 sales were like 4.6 million I think 2010 revenue was 3.6 million from my concern that 4.6 I mean it was there was cash I had in

[33:33] the bank and you know we already sold it it made it difficult for the negotiation because they had to look at the valuation of the you know the gap revenue and had to you really ended up having to push more of that in the earn out that I would have liked but the good thing about recurring revenue is I knew that I negotiated that earn out peace so that I would be able to make it I'm I can tell you year later there's no doubt in my mind that that will make the full value of the business so I'm gonna show you something you probably don't see

[34:02] very often for from a software company that is been a pretty small exit I found out three days before this was announced that they were going to release all the financial details of the acquisition I thought why are you doing that none of my other people that I know that sold their company had to do that not only that but they made it sound like this was a fire sale that this was such a good deal that their their stock price is gonna go up because you know they found this company and they paid so little for it and this was how it was written and this is going to be my

[34:39] permanent record of me selling my company so you know I talked to the CEO and he by the way he he's he has quite the reputation industry very well-respected but very very feared for a good reason he's very successful by the way so anyway I I pretty much had to go forward with this so this is basically a I took the good pieces of the press release and put it here if you really want to read it I'm sure you can find it but so I sold the towel soft for my goal by the way was a so my company for more than ten million dollars and I can tell you

[35:20] that I managed to do that at least as long as I know don't make any serious like big mistakes and next year through they run out but it really sounded like I sold it for this five five because that was a cash upfront and you know I had just I just nearly did five million in sales I doesn't sound so good but part of that were things that were basically guaranteed for me it's just that they wanted to make sure that that number was as small as possible to appease their shareholders and their board of directors and ultimately you know there's things like I was able to

[35:57] take cash out of the business before I sold I was happy and I guess that's all that matters right I was able to achieve what I what I desired I was successfully started my company yeah without anybody it's money except for the banks and in sold for what I thought was a reasonable amount and you know now I can go in do something else do something different so there's a couple things here I didn't expect to sell when I did but you really need to think about you might get that offer you should know what you'd want to sell for at least have an idea you know

[36:39] and even when you to have an idea when it really comes down to it it might change but really be prepared you know go through you know make sure you have a good accountant so you have accurate got financials also important if you have a poor performing product get it out of the business make sure that your company you know is really you know it has good profit and good revenue growth make sure you have a CFO like a part-time CFO I hired I hired one just in time actually maybe six months before the offer came thankfully and yeah just be prepared so I guess one final just list of

[37:19] suggestions for you know all of you there are bootstrapping your company just some ideas things to think about how to make millions don't do b2c if you're doing b2c you know raise money go to the VCS go to Silicon Valley get you know hundreds millions of millions of users and monetize your business that way b2b you know companies will actually spend money in your product you can grow your revenue by increasing price it's much much easier the hard part is you kind of need to know the business that you're selling to in our case developers will bit easier you know I maybe I could have sold into aerospace

[37:56] but I guess the second thing you know really make sure that you know how to scale your revenue prices and adding new features and or value I should say to to your product is a really good way to do that make sure you spend time out of a in your systems monetize your existing customers don't create a whole new market I told you about that experience hire for your weaknesses so you know we all were pretty much as a CEO founder we're generalists you know hire specialists to fill in bind you and you know what you're we got and the other key thing is you got to decide whether

[38:35] you're a product company or a service company I don't know anybody who's been successful doing both I had a friend who grew a twenty five million dollar service company he's doing great and I have lots people I know that I've grown very successful product companies but if you do both it's just not gonna work so that's really it for my presentation I really wanna open up this for questions I hope we have time

[39:04] yep we have time for a couple of questions okay just a quick question your last point product versus service yes were you guys a product or service oh we're product so imaging SDK was a product we packaged it we didn't provide any services we just provide a really good support I see so you know if you're building your application you'll maybe call us to say you know I have trouble with this part of your product or that part your product and we would help okay so your product but with good customers we've got good customer support yeah turnout I imagine that might be a question some people might not know what

[39:38] an earn out is yeah so you know in turnout basically you know if if the company is buying you has one idea of evaluation you have another idea evaluation and or not as a way to sort of bridge that gap a good way to appease your shareholders by showing that the actual cash upfront is is less it's basically have to meet certain goals one of the very large goals is a is a basically a new feature that we've been building for the company and it will also benefit us I should also say I didn't mention this that one of the reasons why I wanted to sell to Koufax

[40:11] and not a competitor because I had that option was that a competitor would have just decimated the company they would have fired everybody you know it's too much overlap Koufax they really had a a use for our technology so so I sold to them but but we've been able to keep the business running autonomously we're continuing to grow we've actually we've hired more people we went down to 20 when we spent out visit but we're back up to 25 and you know it allowed us to basically most of the employees haven't their job has not changed mine has but most everybody else is really doing the same thing they

[40:43] did before Patrick

[40:50] how long I assumed there was part of that negotiation is you had to stay an employee of Koufax for a certain amount of time how long is that and then it sounds like you have no intention of leaving because of the autonomous thing oh I do have an intentional yeah correct me can you give us just yet so the it's actually not an employment contract because I have to be careful well my taxes and so forth I prefer you know capital gains supposed to income but I need to make sure that we need our goals so it's really my best interest to stay employed the period of time so I the

[41:24] announcement we actually closed at the end of May last year September 2013 is when it's finally done although I will say that my job has gotten much much easier because we are totally blowing away our goals so it's you know it's kind of nice to be able to do things like this I still have a full-time job but I'm able to take time out for other things advise other people you know do you do more things like what did I want to do from my time so your goal was to sell for 10 million do you think if your goal had been 20 million you would have

[41:58] gotten 20 million no no not at that point if I waited two years yes and that was a big question I had that was I mean I put the roller-coaster picture there for a reason you know I could get in I could spend an hour hours talking about this you know depending on the day I was going to not sell or to sell I drove my wife totally nuts right up until the day like I think three days before the announcement I was walking away it was it was just total rollercoaster it really came down to how confident I was and you know whether I wanted to keep

[42:40] doing this and what would make me happy what would satisfy me as you know to take the next step in my career so and I will say that I was burnt out the thing that that I don't know if I regret but I never was able to go forward with that acquisition there was something about you know I was looking at buying a couple for a couple million dollars I was getting up cash and I would've been able to do that I bought some other smaller companies but nothing that substantial the reality is if I went forward with that it was adding way more risk to my business if I

[43:19] you know spent two million dollars on this on this business that I wasn't sure was going to work or I could mitigate all my risk by taking all off the table and you know I chose to go out the table over here so I'm noticing a trend with a lot of the speakers here that most of you have kids are about to have kids and and you mentioned kind of you know maxing your credit cards and then having a child and now you have to you have any advice for those of us who you know have a supportive spouse and and in kids and how you kind of manage the ups and I

[43:55] think a supportive spouse is a requirement you know my wife definitely let me you know she believed in me and let me do my thing and you know didn't have a lot of family time the first year so I think I made up for it but it it's hard you know it's hard with kids I will say that the thing that coming up to 2:00 a.m. is that is I was the one that

[44:16] that fed my my daughter at 2:00 a.m. every night and so that kind of made sense we have time for one more hi so we actually got a an acquisition offer from a company a few years ago and the perception is that in a term sheet there's very little that can actually do real damage but I was surprised to find that there were some things in there about if the deal fell through that we would actually be responsible for the acquires legal costs is there anything that you would identify that people should keep an eye out for in a term sheet well I certainly didn't have that

[44:57] provision in the term sheet oh boy you know they you start out with a you know basically you first have to come up with the business terms and that's really what matters in terms of negotiation when it comes to the term sheet I mean it was like 30 pages long you know you really need to find a really good attorney that's done this before and you know I managed to do that as a good firm that use in Boston and pretty much you're just going through to make sure there's no no gotchas in there I most of my issues were in the urn out the you know the cash was pretty

[45:36] straightforward it was pretty complex in terms of what things I could do you know I needed to keep autonomy in the business so what if they told me do something I didn't agree with you know good arbitration I could say that you know if we didn't you know there was various things that that you have to keep your eyes out for but I can't think of it you know one in particular other than I wouldn't sign one that says that I would pay for the legal expenses great thank you Bill okay and I'll be around tonight [Applause] you

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