How ScrapingBee Went from $2K MRR to an 8-Figure Acquisition

0:00And so as I was saying 2020 is that when we you second batch you got you got into tiny seed and do I remember you were at like were you at a thousand MR something 2000 somewhere in there and the last public correct me if I'm wrong on any of these um I believe Kevin I'm sorry I believe Pierre your co-founder tweeted the last public ARR number and my memory is it was 5 million ARR and that was six or eight months before you sold exactly Yeah, [applause] really impressive. And they have been public uh 8 figure cash exit. So um what did you buy? What did you buy with the

0:43money? I asked I asked Pierre this as well, but I haven't heard from um a bigger house. Did you? Yeah, I did. And you live in France? Yes. Okay. So what is what is uh that kind of money buy in France? Do you have like a mansion that I need to come check out? A

0:56spare bedroom? Is there the Rob bedroom? It depends where in France like uh All right. So, you got a house. Um, and I want to I want to ask one question about the sale. Kind of roll back, tell the story, and then we can get more into it. I think the biggest thing for me is there's got to be some people in the audience here and Sher and I have thought a lot about this in writing exit strategy, right? And talking to founders and the question is when is the right time to sell? There's never you don't know. You don't know when the right time, but I'm curious how you and Pierre

1:29figured that out. Okay. So, um I think maybe you'll have um a different answer if you ask Pierre. Um for me the I would say that the right time to sell especially for first-time founders because I think it's it really depends on the stage you are in life and stuff but um it's when you basically your um stake in the company uh is worth more than uh your um I would say magic number meaning the number where you never have to work again. uh your freedom number, you can call it however you want, but that's um I think that's a good um

2:12starting point. Got it. I think that makes sense. That was definitely a factor in my exit, too. Um I've heard, you know, some founders will sell for less than that and then they have to do it again. You know, you have to and that's not the end of the world, but it is kind of nice if you can get to that point of and living in France, I think the cost of living is quite bit lower than where I live, so I

2:33bet our numbers are probably different. Um, now let's let's run back earlier in the story. So you and and we've told the scraping bee story on the podcast and I don't want to retell that. You can go Google scraping or go to startups restfest.com scraping be if you want to hear kind of the the early days and how they came up with the idea and there's a microcom talk that Pierre did I believe you know so you can hear that. I want to dig into some other things around the more recent events. I I think something we haven't talked about before is you guys ran it really lean and it if I

3:03recall it was just the two of you no employees and you were doing approaching 2 million ARR which is like that's a really interesting lifestyle business and then you guys started talking about exiting and ANR and I are like you this is a really hard business to sell because everything relies on you right and it goes against maybe the the advice I would give you at 2 millionaire is have pay someone to do your support you know or pay someone to do customer success So talk me through your thought process there and in retrospect was it the right choice for you or would you have done it

3:35differently? I would done it completely differently. Um I would listen to Rob and an [laughter] I'm I'm sorry Rob. I'm sorry an I don't know where you're at. Um yeah was a huge huge mistake from our end. um for many reasons. Um I think so we started scraping B at the age of uh 26 27. So I think there was um some lack of maturity. Um and basically I didn't want to uh manage people. Um I I was kind of scared of uh you know delegating what I was working on because um the quality wouldn't be the same. um the you know many I had many um you know

4:25um limiting um thoughts about myself about hiring about how to run the company and uh that's what so I mean many times when we say that that we um managed to get to you know 2 million or AR with only two or even 5 million AR we were five people uh so many people uh like are congratulating us but I I don't I mean there's nothing to brag about. It

4:52was a really really bad idea to do it. And uh I think that it um I mean maybe we were um uh it made made us more um tired. Um maybe also it limited the growth of the business. Uh so yeah, lots of drawbacks. That wasn't the answer I expected actually, but um Got it. So the the reasons you it made you tired because you just had to keep doing a bunch of

5:20stuff you didn't want to. Yeah. And you do think it probably may have had an impact on on the growth. Yeah, I think so. Speaking of growth, was there answer this the way you will. The the question I have in mind is like was there one thing that you did right that allowed you to have this incredible growth trajectory or was it was it more than one thing or was there I think basically it comes down to two things. Um first it's uh the product like we had great product and product market fit like people wanted to buy our product and then second thing was SEO

5:54definitely uh we had uh really great SEO and when you combine the two well that's where the magic happens. H do you having done SEO again for the past six, seven years and been really good at it, do you have a take on how it's changing now with AI? Um I mean I what I'm observing from our end is that um um impression are down, clicks are down but like um we're like we're seeing um same or more uh new signups and users than before. So we're getting a lot of uh visitors from

6:39all the LLMs. So at the end of the day, it doesn't really change anything uh at least for us. Um, and from the conversation I have with many other founders, it seems that some companies are in this case and others have are seeing the impression and clicks down, but no traffic from LLM. So, guess it depends. That's right. And just so folks know, you and Pierre still work. You're still working on scraping. So, you're going to you do still see in inside it. It did it close in January or February of this

7:08year? February. Okay. What are we in September? Seven months ago. Yeah. Yeah. Um, talk to me about, you know, aside from I want to learn about a mistake or a misstep that you made. Aside from the staying two people to 2 million, was there anything else you felt like was a big fumble or or a point in time where you thought I really wish we had done

7:29that differently? Um there was some um yeah so definitely uh hiring uh and then the way we um the structure uh the way we structured the the company and the processes which means [snorts] uh there were no processes um and no OKR no KPIs um no no meetings uh at all like kind of a chaos uh up until the the end. So, um I think um that was bad um because um I mean at the end of this like even if we were only five or six person uh sometimes we weren't communicating enough uh between us um and yeah the and that's a big learning from uh the

8:28company that acquired us. We were learning a ton in this area. That's a question I have actually that's not on my sheet here is that after I remember after I sold Drip after we sold Drip um I went to work for Lead Pages for I wound up being there about 22 months. I didn't have to be there that long, but I was dreading it because I hadn't had a job in a long time. And a good friend of mine, Ruben, founder of Seinwell, said, "What are you going to learn? What are you going to learn in this new thing?" You know, and I learned a ton. I went from being a 10 person

8:59company to 180 person company. And a lot of what I now teach tiny seed companies and put in the SAS playbook. a bunch of the stuff about team structure and hiring and titles and like all that stuff really came from that time uh at Lead Pages. I'm curious in the past seven months, you know, what's a couple things that you've learned from a bigger company because I mean in this room I

9:21think we all believe smaller is better. Two person teams, you know, hand clap at 2 million. But there are well-run companies or there at least well-run departments and there are um structures that I would tend to I don't love process but sometimes it's really good you know and so what are a couple things maybe you've taken away from the past seven months in terms of learnings so there are a lot um so [snorts] basically the the companies that the company that acquired us um is um part of a larger group which which is called Tesonet in Lithuania it's a a big tech company in Lithuania they they own

9:55NordVPN, their know their own Hostinger and bunch of other stuff. And we feel like um we are a bit uh it's like we are at SAS University because there are lots of great product leaders, great marketing leaders, um you know really um well engineered organizations and um and we're learning a ton. So for example um we've implemented a weekly KPI meeting that is really short like it's not if you had told me a year or two years ago okay you're going to have a weekly KPI meeting I would have say oh no please but in fact um like in 20 minutes uh we get all the metrics from all the

10:36departments and and people are just explaining okay this is what I uh worked on last week this is what I'm working next week this is what's blocking me things like that and it's just simple as that and it um it made the communication flow uh really um nice and easy to all the company and everybody knows what everyone is working on and it's just great and we should have implemented this years ago. Um and there are many many other small things like that. Um the way um you know um the the information is shared among the company tools and stuff. So, it's really um like we're learning a ton and

11:14yeah, I'll ask you in a minute about future plans, but I'm curious um if you could talk a little bit about the acquisition process. You'll hear founders who go through it say it's very stressful. You'll hear me say it's very stressful. You see, every other line of the exit strate of of exit strategy says it's going to be pretty stressful. People will often tell me, "I don't think it's going to be that

11:41stressful and then they get they do it." And usually it is. There's been a couple exceptions, but was it stressful? And what what was it like for you? How long did it take? And you know, just talk us through it a little bit. Yeah, it's funny because we we talked about this a lot with Pierre. Uh so we've read your book um before the It was before it was published and I had a PDF copy of it unedited and then I gave it to them because we were at a tiny seat gathering. It was in December maybe of last year and so you were just you had just got an offer. I don't even

12:10remember the specifics but yeah you read it Pierre gave me a bunch of feedback so yeah. Yeah. And so um in your book you you really emphasize on the fact that it's really stressful. Um so we maybe we were overprepared for the stress. I don't know but I would say that if if I had to rate the stress level I would say seven or eight out of 10. So very stressful but

12:33not like um end of the world stressful. Mhm. Um the so the thing that um made us um less stressed is that um we had um uh we tried to sell the business the year prior and it didn't work out for uh some reason like we could talk about it but uh we were prepared for the worst scenario which which was uh like no deal and we were fine with it. So um we had like a growing company that is profitable. So even if we didn't sell it, like life was fine. So maybe it's it depends on the situation. If you have a company where I don't know, you're break

13:15even, you you're um you really have to sell it or elseh you're in a bad situation, it increase the stress level. For us, uh that was not the case. Uh and also thanks to your book, we were very prepared. Yeah, that's cool. Um what was I going to ask? Oh, was there is there a moment that you can remember like the worst part of it or the you

13:39know like the most stressful thing? Yeah. Uh it was definitely the due diligence process. So every everything uh before the LOI is pretty chill like you are talking to different acquirers. um I mean conversation are nice and then once you start the LOI I wouldn't say that the convers once you sign the the LOI I wouldn't say the conversation is not nice but you're entering the due diligence uh phase and it's another world like you're talking to auditors to accountants to um you know external uh people uh at the acquirer side and um that can be that can lead to stressful conversation ations and um they ask you

14:25about things that you may not have anticipated. You know, all the contract that you've ever signed with your business, uh all the, you know, nitty details about everything and and that's um that can be stressful. Yeah. I remember feeling accused all the time and they weren't meaning it was just a lawyer or a CP an accountant and I just felt like, well, no, I don't have that. Should I have that? And they're like, well, we need it for the thing. And I would just get so I was so defensive about everything, you know, and I actually we had our IP agreements signed with everybody with every employee and every contractor with

15:00Drip except for one. And I had somehow I had missed he was an employee but he was a contractor for like two months and then employee and I never got it as a as as a contractor. And so I went back to him. I'm curious if this happened to you at all, but I went back to him and I was like, "Hey man, can I buy you a bottle

15:15of wine? Can I take you out to dinner?" And we went out and I talked about it and he was like, "No problem." Like he signed it. You know, we still lived in the same town. Did you have anything like that where you were like, "Oh, no. We really messed up." And you had to

15:25kind of go back. Uh yeah. Yeah. A couple exactly the same situation, but we didn't have any problem by uh to make them sign. So yeah, I have heard of some founders go to sell and like a contractor will kind of hold them hostage, so to speak, and be like, "Pay me 10 grand or 15 grand." And it's like, "Fuck." And this is usually before you have the money. So you kind of got to either come out with out of pocket or you got to, you know,

15:47whatever deal with the the negotiation. We're going to take questions in just a second. I think I wanted to ask you one more question before we go to the audience. And it's let's fl you know you're you're working for the acquirer now. You're learning a lot. Let's flash forward and you're still a young dude. Do you 30 33 33. Yeah. So you have you have you have a a life and a career ahead of you. If

16:07we flash forward two, three, five years. Do you feel like you've done you've done the SAS game, you've learned a lot about it. Do you feel like you want to take another at bat or Yeah. where where do you go, you know? Yeah. Yeah. So, um um I I think I've um like if you have had asked me this this exact same question five years ago, I would have probably answered that no, I want to uh uh retire early or whatever. But now uh I came to realize that I just love uh the game. Um I love uh working on technology and SAS and and growing a business and um yeah I

16:51have lots of ideas for uh the next adventure. Um also PI also have a lot of ideas. Um we were considering a lot of different things starting from scratch or uh acquiring uh an existing SAS. Um so if anyone wants to uh to sell uh his business have cash can close. Yeah. Yeah. Can come and see me. Um yeah. So so that's uh we have different options on the table. And of course before that um I will take a few uh months off with

17:26my family. Please do. Yeah. Very cool. All right. Do we have questions for Kevin? throw your hands in the air and we'll get catch boxes. All right, let's do the yellow catch box first over here. [laughter] Oh, it's good. We're cool. Anybody go here? Okay, yellow. Uh, can you hear me? Yes. All right, so if I just curious, if you had your magic financial number and you worked regular business hours or regular

17:55hours, would you have ever sold or not? So, if I if I had already my magic number? Yes. Okay. And your your question is uh would I would you have would you have sold or would you have continued to run the business? Okay. And you worked regular hours, not crazy hours. Yeah. Do you mean if he already had that much

18:13in the bank? Yes. Oh, okay. Good question. That's a good really good question. Yeah, it is. Uh the the honest answer is I don't know because um there is um more to the this uh exit than money. Um there is also the fact that uh Pier and I we've been working in the web scraping industry for the past 10 years and so we also [snorts] wanted to do something else. So maybe I think maybe I would have given more thoughts about uh stepping down as CEO, hiring uh a CEO to replace me. Uh that maybe would have been the the other road. Uh yeah,

19:03it's a good question. Thank you. What do we have? The blue blue catch box. Michelle, you mentioned that working for the acquirer has been like going to SAS University and being at university often involves reading. So are there any books that you have read in the past year since the acquisition that you would

19:21recommend? Uh yes. Um, so the first uh book that comes to my mind is uh the SAS playbook. Of course, [laughter] uh, it's a really good one. Didn't pay him to say that. Thank you. He he didn't pay me to to say this. Uh, no, I I I really think it's a good one. Um, another one that um I read that I really liked is called I think the great CEO within from Matt McCari. I think um it's a a really really great book um and I think um the so there are many um I I've had many books recommendation uh over the years and I think um that it really depends on

20:08the stage you're in. I think the great CEO within is great once you passed two one two million AR because uh it's about you know hiring processes and stuff and you probably don't really need that before this stage. So yeah over here

20:37you said you had Hello. Yeah, you said you had weekly KPI meetings. How is your KPI structure set up? Is it like per team member, departmental, like how? Yeah. So um basically um uh there is um an owner for each KPI. So for example we have um um marketing uh within marketing we have uh organic paid ads then we have product engineering uh and each uh category has a an owner uh that is um uh both reporting the the the actual metrics but also explaining what's

21:18behind the metrics.

21:24Any Yeah. So specifically like to due diligence process, have there been any like issues that could have been like a showstopper for the whole deal um that you wish you were better prepared for? Yeah. [clears throat] So due diligence is uh issues 24/7 basically for uh four weeks. He's not lying. Yeah, that's what were like the most serious ones. um you know issues about uh it's really a complex topic but uh like revenue recognition policies uh you know I don't know if you've heard of this um as uh Rob said uh IP transfer things uh contracts um for example they in most uh tech due diligence they will ask you uh to scan

22:16all your codebase and uh look for um uh all the open source license that licenses that you're using and make basically a a sheet with uh everything uh and I hope for you that you're not using GPL um you know all the I mean there are hundreds of uh details like this and everything can be uh a problem sales tax if you're in the US it's like where do you have nexus that comes up your books like our books were it was Stripe into zero I believe and it was mostly automated cuz like I was kind of the bookkeeper and then they come in and actually audit it and try to do gap

23:00financials and I'm like I've heard of that phrase before. You know what I mean? It's like it's just stuff like that. It's just like one thing after the next. It depends on the size of the deal too, right? If you sell for a million or two, it's different than if you sell for 20 or 30. Like it's like a proctology exam, you know, the bigger it gets. So, we talk we do talk more about that in Exit Strategy. You you should have a copy um here. But and honestly, what's the other book? It's John Warllo's third

23:24book, uh Art of Selling Your Business. He goes into it in a really really cool way. But I love the way you put it because Iran Galperin uh of Gym who, uh exited to growth equity, sold a majority stake to growth equity, and that topline number for his majority stake was like 32.5 million. So, also a tiny seed company, sold for a lot of money. He said the same thing. He was because he's in Japan and he was dealing with folks in the US time zone and he said, "I just felt like I was up 18 20 hours a day constantly and it was like every day it

23:54was something new and everything felt like it could end the deal." That's the shitty part is every even in retrospect I'm like I remember freaking out about my IP thing I just talked about with that contractor being like the deal's done and never we're not going to sell the company. And in retrospect, I'm like, it wasn't that big of a deal. But everything feels like that when it comes across from the lawyers because the lawyers are not particularly set up to have good bedside manner. They're set up to kind of just say it and make you feel bad about or at least I always felt bad

24:19about it. And so if you there I have one anecdote to uh um give you a more um precise view of the situation. So we saw the the 7th of uh February um of this year and um so at the same moment um um so I was at the maternity hospital for the birth of my uh first uh child. And so like 20 minutes before going to the uh maternity hospital, I had a call uh from uh the acquirer CFO uh telling me, Kevin, we

24:58have to talk. And I was like, "Oh, no." [laughter] And so I jumped on the call uh and um you know, I answered the question, we solved the problem. Uh it was an accounting stuff and uh and yeah, it was done. But I mean to the uh very end uh there were uh problems to solve. Yeah. And the more the later you get, the more problems seem to crop up. It kind of sucks. We have a question up here. Yeah,

25:30over here. Yes. Uh, we have a question up here. Hello. Yeah. Um, congratulations on the exit. Um, I also exited my my first company. It was much smaller exit. I definitely have to work again. Um, and I'm curious since uh you said you want to build again and that's also what I figure for myself, but I find it um kind of hard. It's a it's a privilege definitely, but I find it hard also to find out what to build next. And I'm curious, how do you do you have any thoughts or um yeah, how do you approach that? Are you open in in industry and vertical or Yeah. How how do you

26:11approach that next thing that you want to build? So I think I have um um let's say I'm more uh lean towards um um spaces like uh data um um dev tools, APIs. That's what I know and like uh I like to market to developers. Uh it's a very specific uh uh market to address. So I think about ideas in this space, but I'm not putting too much pressure on myself regarding the ideas. Um I mean uh I think you have the best ideas when you just uh walk into the nature without thinking about it. So that's just what I do. I walk a lot and uh and uh hope for

27:02the best. We do one more question. No more questions. That's it. All right, Kevin. All right, they're telling me no more. I'm gonna say one more. Someone has the thing over here. No, no more. All right, Kevin is gonna Are you going to be around tonight at the reception? Uh, I will. Okay. If you have a question for Kevin, come up to him and ask him. He's happy to talk about it. Don't ask him how much he sold for. Don't ask him if he has my Maserati parked next to his Ferrari in

27:37his garage, cuz I I think it's there. But let's give a big round of applause for Kevin. [applause]