# This Took 11 Years to Be An "Overnight Success" - SaaS Exit Strategy

Channel: Rob Walling
Video: https://www.youtube.com/watch?v=hxkpTJvRSuA
Duration: 1 hr 14 min
Language: English
Words: 16310
Transcript page: https://viewrankai.com/tools/youtube-transcript/hxkpTJvRSuA

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[0:16] Uh yeah, thanks for having me. Um Mike Mike Rob, thanks for inviting me to speak. Xander, thanks for coordinating. So, this is um this is by far the most uh personal talk I've ever given, and it feels fitting to me that, you know, I'm doing it here at MicroConf among um hundreds of people who I respect, many of whom I've come to know, and uh many of whom I admire. So, thanks for kind of coming along on this journey both with Mike and I through the years of MicroConf and, you know, with me through the podcast and uh from beach towels to a life-changing

[0:51] exit. We haven't had as much of it this year, but um it's been a a little bit of a MicroConf tradition to talk about why we do the things we do. And a couple years ago, Patrick McKenzie said, "You know, all the rest of this, I'm going to give you some tactics or something to think about, but all the rest of this all of this is dust compared to this." So, this is my wife, who you'll be hearing from tomorrow from the stage, as well as our two boys going

[1:15] to see the Nutcracker in San Francisco. All right. So, this talk uh it's broken up into five parts, and it's going to be about 40 minutes, maybe 45 if I tell some extra stories. And the whole point of this, there's two things I couple things I want you to take away from. One, um you know, it's a long journey. I think most of us know

[1:34] that already. Another one is probably the most popular question or the most common question I get about selling Drip was why why what made you decide to do it? What was your thought process? What did you go through? And uh that I want to talk I'm going to dive really deep into that here in a way that I haven't I've already talked about it on the podcast and other places, but if you've heard that, you're still going going more about it. And then the third thing I'm going to talk about is go really in-depth as much as I can, uh you know, given that there's an NDA. I'm

[2:01] going to go in-depth to what it looked like from the inside and what it really felt like, including like graphs and charts showing how often we spoke over these months. It's pretty It's just a pretty fascinating process. Um and I should make a note here that this was my thought process. Derrick and I, uh along with our our spouses, frankly, uh we kind of made this decision We made this decision together. Um and so this is just from my perspective of my motivations, uh you know, and and realizing at a certain point that I had started building products for certain reason and I had gone off the rails at one point

[2:31] and and thinking about how can I get back uh how can I get off this crazy train? Boom, that was Do you like that? That was right off the cuff. I didn't even know. All right. So we're going to start with part one. We'll walk through some different years, different phases, and then I'll I'm going to dig really really deep into it in terms of the acquisition and what that actually looked like. So part one, this is 2005 to 2009. I was transitioning from There was some salaried work in here, but there's a lot of consulting. Okay? And consulting for me was very life-sucking. I just

[2:57] despised it. Didn't like working for other people. Didn't like the lack of freedom. Made really good money for how old I was, um 150k, 180k some years. Uh but I really wanted to get into products. I felt like that was the golden ticket. And so during these years, um I either acquired or launched products like DotNetInvoice, uh WeddingToolbox, just a random assortment, uh Apprentice Lineman Jobs, which is a job board for uh electricians. Um and then Just Beach Towels, which is the beach towel reference in the um in in the the uh title. And Just Beach Towels was an e-commerce website and it did a couple grand It did zero when I acquired

[3:37] it, and then I learned how to market reasonably well, and it did a couple grand by the time I sold it later on realizing I don't want to be in physical products, right? This was a big realization, but then I took that knowledge, parlayed it up in into my other products. Um DIY Duck Boat is an interesting one. It was a uh duck boat plans that you could build. You go to Okay, so there was a whole instruction list and a shopping list. So, you could go to Home Depot. And why is that so funny? My wife

[4:00] gives me so much [ __ ] about this one. And I'm like I This thing So, I bought it from a guy who built duckboats. He had testimonials. He had the whole thing and he's just like, "I don't know how to sell this." And it was doing 50 bucks a month and I bought it from him for a couple hundred. And then I did SEO on it. This is 2007 maybe. And it was doing 500 bucks a month later. And I And I was

[4:19] like, "This is a car payment, dude. Don't don't mock me for the DIY the duckboat. You love duckboats. You love to mock me about duckboats." And then CMS Themer, which was a really a productized service before we we called things those. So, this collaboration, this collection, the the portfolio as if you will, of products was on the low end, you know, DIY duckboat did 500 bucks a month. And on the high end, best month dot net invoice did five grand. And so, combine that all together, I was running all these. It was just me. I was a coder. I was doing SEO. I was doing some

[4:49] AdWords. And I had a couple VAs that were were helping me out. And this I made less doing this than I did consulting, but I was way happier. So, give or take on any given year, maybe 110 to 130 in terms of that. But I I had so much freedom, right? And the whole point of me getting into products, why I did that, why would I take a pay cut to go do something else? I was asked that by my friends whose souls were slowly

[5:14] being sucked out of them by their job. And I said, "Over time I realized that there were three reasons that I had to do products, that I needed to own kind of own my destiny, I guess, is the way I said it." Um the first is freedom. Second is purpose. And the third is relationships. So, I'm going to dive a

[5:33] little bit deeper into each of these. Now, I didn't come up with this. I actually heard it on a podcast years ago and then I brought it up to Sherry one time and she said, um this is my wife, and she said, "You know, this is a whole There's psychology. There's research around this." Like this this isn't some unique thing I've come up with, but I've come to own this. Like, when I don't have all three of these things, I'm not happy. And I would actually and I slowly kind of go off the rails. And I would actually say that most people in this room, if you, since you are

[6:02] entrepreneurial, if you're here, you probably need these three things as well. And any one of them, if you remove it, you're going to you're going to be unhappy eventually. That's my That's my hypothesis today. So, freedom, what does that mean? I think for most people in this room, it means the I'm sorry, I was one behind. It means the ability to choose what you work on, right? You want to work on interesting things. You don't want clients dictating something. You don't want a boss dictating. And the other thing is to be in control of your time, your income, and your mobility. Tim Conley, not to you, but it's to be in in

[6:36] control of of can I take a week off? Can I take a month off? Can I work 3 hours a day? Can I work when I want to? To increase, decrease your income, and to be able to perhaps travel the world if you want, or not. Um these three things are very hard with traditional jobs. They're actually hard with traditional consulting. Even when I was a consultant, I didn't have these. So, this was the freedom that I sought, and I think it's the freedom that a lot of us in this room seek as founders uh or

[7:00] folks who are are aspiring to do this. And then the last one is that I learned later. I didn't realize this up front, but not having your life consumed by your business. Because if you're thinking about your business all the time, even if you're traveling the world and doing things that are fun, you don't have the freedom that that you you won't have the freedom that you

[7:18] want. The The next part was purpose. Remember, freedom, purpose, and relationships. So, purpose, I think is personal. I think each of us needs to find our own purpose and find what ignites you. For me, I have learned over time that it is two things. And I could probably do a whole talk just on these two things. But, for me, it's learning new things. I've found that you know, I took the StrengthFinder test and I'm a learner. Or there's some Yeah, I think it's learner. And when I

[7:41] stop learning, I like shrivel. Uh metaphorically. And then um when I stop teaching and teaching is this is why I do a pod two podcasts every week. This is why I I've written a couple books. This is why I have the blog. This is why we do MicroConf. This is why I do talks. Um I've made exponentially more money from software

[8:02] products. But over the years, right? Then then the actual teaching and selling of stuff and and MicroConf tickets or whatever. But it's if I don't have those things, then I'm not happy. Just doing software doesn't allow me to learn and teach enough. So, I found this. Um for you, you're going to have to figure out what your own purpose is. So, this purpose is. So, um that talk this talk's probably not going to do that for

[8:23] you. The third thing is uh relationships. And this is the one that I think most of us as maybe technically oriented people forget or I I think it's forget. And I forget this for 6 months at a time and suddenly realize oh yeah, I really have kind of [ __ ] this up. Like, you know, my wife is pissed off at me or I haven't been with

[8:43] my kids as much as I should have been. This is the one or your friends. This is the one that I think that we overlook for work and for the um even as bootstrappers when we have more control of our time, I think we tend to focus it on on the on driving revenue forward or whatever. And relationships tends to be naturally the last thing on a lot of our minds. I think relationships um is as important I think this applies to everyone. I don't think you find your own kind of relationship uh

[9:07] equilibrium. I think relationships having having this um kind of value or this the freedom of relationships means two things. One is being able to choose whom you interact with. Um I worked at a bunch of jobs where I was either managing people who I didn't pick. I was managed by people who I didn't like or I had co-workers who weren't as motivated,

[9:28] weren't as good, weren't as whatever. I'm sure everyone in this room has experienced this. And so, the ability to perhaps as a founder build a team that you like and you're like, man, I there's like 10 people on my team and I I would hang out with all of them. I really enjoy working with them. Like the ability to have that control is I think amazing and I think that's one of the reasons I became a founder and and I would guess a lot of folks in this room

[9:50] as well. The other one other part of relationships is having time and head space. So, it's not just time, but it's the head space that your business is not sucking the life out of you or when you're with your kids, you're thinking, oh man, is the is the database going to grind up tonight or oh boy, we got a text that the queue is down or the whatever, you know, or the marketing thing, someone's beating us to the punch, right? So, it's time and head space to be with the people that matter to you. So, this is why I got into products and I would actually guess

[10:15] that's why almost every even if you've never realized this, I think it's why most of us get into products. So, products allowed me to quit consulting. And this was awesome, right? And it was like a dream come true. And again, I was making less money, but it was the days were just magical, um honestly, for like the first couple years, I just pinched myself all the time thinking, so I don't have a boss anymore and I can just kind of, you know, hang around and do stuff. And so, I achieved freedom in

[10:42] in 2008. 2008, 2009, right as I had stopped consulting, I I achieved this, I achieved freedom, I achieved the purpose, which was driving my business forward and hanging out with my family, and I had amazing relationships and I really enjoyed it. So, this was a win. But, I soon you're going to there's a lot of butts in this talk. I I go down a road and then I realize, no, not like

[11:03] that. Not butts like that. I heard you chuckle. Um so, I go down a lot of roads and then I realize uh this isn't actually it either isn't what I wanted or there's kind of a something that comes out of left field and and knocks me on my butt. Um sorry, that's as good as it gets with me. So, this is why I have intermissions, remember with the videos and stuff? Okay, so the what happened is this would happen to a number of my products, but dotnet invoice revenue in

[11:30] 2008, actual revenue numbers. Don't die. Yeah, you can read that. All right. So, we start in May of 2008 and it goes to March of the following year. It's a one-time sale product, right? It's not a SaaS app. So, we see 1,500 1,500 1,500 swings all the way up to five grand cuz I did some big deal with a web host. And then you can see October it drops down and it bottoms out around 500 and then it swings back up. And this was around the financial crisis, but this this was a little extreme, but it was also not totally uncommon. And so, I had five six

[12:00] products at any given time and they were doing this. And for me, I suddenly had freedom of purpose and relationships, but I was stressed the hell out all the time because I'm thinking, "Am I going to Can I Am I going to do this for five years? Or am I going to go back to consulting, which I

[12:15] couldn't imagine fate worse than death. Or am I going to go back to salaried employment, which is even a fate worse than a fate worse than death." And and I just couldn't imagine like I I need something that's going to last here. I'm a very long-term thinker. And so, I added one more item to my list. So, we have this freedom you've heard about. We have this purpose of of learning and teaching. We have the relationships, obviously. And I added this one stability. Okay? It's the stability or the longevity, maybe a better way to put it, is like something that's going to last and I don't have to

[12:45] worry about every day. I don't have to think about every week of am I going to have to, you know, sell the kids to pay the the mortgage or something. And so, um I started with how like how do I achieve this? That's the big question. So, I think of of products that I've just shown, you know, all these one-time sale products and such as being kind of stability 1.0 and realizing that was not

[13:08] that was not going to cut it. So, I was thinking like how do I How do I get stability? This is Keep in mind, this is 2009. And in fact, in 2010, like the kind of the cool part of the story is we had our second son and I took about eight or nine months where I worked eight to 12 hours a week just cuz I had these products that were really mostly on autopilot and they got you know

[13:32] organic traffic and such. And now that is time I will I will never I will sorry, I will never in my life regret the you know the months that I spent with him. Huh, you practice a talk and you don't do this and then you get in front of people. I will never in my life regret the time

[13:49] that I you know spent with him. Later on there is time that I will regret and I'll loop that back. But not spending with him, not yeah all right. So this was like this was the this was my dream come true from the time you know I was whatever 20 something years old was to be able to have products and be in control of this and have the freedom. But realizing that it could be taken away at any time was was frightening to me as someone who wants this stability right or wants long-term longevity. And so I realized that what I really needed was instead of these

[14:19] stupid one-time sales and again this is 2009 2010 I wanted recurring revenue. Okay, so we all know this now but give me a break it was 7 years ago. We didn't even SAS didn't even exist it did but we didn't call it that yet. So recurring revenue was absolutely I thought the golden ticket. It was the holy grail and indeed it was the best thing since sliced bread

[14:42] and it turns out it was. In 2011 when I went back to work cuz I did eventually get bored of I I love being with the kid but eventually you got to do your next thing right? You got to learn and teach. So in 2011 I went after stability 2.0 and this is where I said I need to I need to build or I need to buy a SAS app. And you know I basically took the revenue so the way I acquire you know acquired and built all those other apps that I showed you earlier Dot Net Invoice is I had enough

[15:13] money in a bank account from consulting. I had $15,000 I'd saved up over a year and I bought Dot Net Invoice for 11 grand and then I took that revenue I grew the business, and then I had another 10 grand, and I bought the next one. And then I had 5 grand, and I bought this. So, that was it. It was It was no there there was no trust fund. It came from a working-class family. My dad was an electrician. This was just me

[15:32] working and saving money and doing it. Same thing with HitTail. So, that was a SaaS app I acquired in 2011, and I have an in-depth talk. In fact, it's one of my It's one of my favorite talks I've I've ever given. It was 3 or 4 years ago at MicroConf. And uh it's called how to 10x in 15 months. And um it's about Yeah, it's like 51 minutes of just talking about taking it from whatever 1,500 a month in revenue and and growing it up. And I go month by month. It's It's just I've watched it in the in you know, recently and just been like, "Man, that's You nailed it on that

[16:02] one." And uh I don't I tend to be my worst critic, so I don't pat myself on the back very much. So, the story was I I buy the SaaS app that's doing 20 grand annual revenue, right? So, right around 1,500. Paid 30 grand for it. And again, I didn't have a trust fund for the 30 grand. The 30 grand was revenue from DotNetInvoice and Beach Towels. And I'm

[16:22] just building and building and building. And of course, the night I wired the 30 grand, I told Sherry, "I What the What the [ __ ] have I done? Like, I've never had that much money in my life, and I just sent it to someone, and I bought this piece of [ __ ] app." And uh and she said, "But this is what you do. This is what you do. This is who you are. If you weren't doing this, what would you be doing?" And I didn't have an answer. So, I worked over the next 18 months with a couple contractors, mostly on my own, and uh got it up to a 300K run rate,

[16:50] which was a life-changing moment for me. Because you think I'm kind of cruising, living in, you know, Central Valley, California with my family, which is great. And again, but you know, from those products, I was making 110, 120K, which is a great, you know, great living. We could afford a house and such. And then this This was a game-changer because this, you know, you know, SaaS, especially um when you don't have a lot of uh I didn't need a lot of developers cuz I was just kind of coding it myself. 80% margins, right? Maybe more. Net margins. So, I was just making more money than I had

[17:19] ever seen and we we we banked a lot of it and we used it to, you know, travel a little more, but it was it was an amazing it was again that next step of the dream. You know, it was going from kind of making a living to then, wow, holy crap, I I've I've made it. Like I remember as I was like, I think I've like made it. This is it. I'm

[17:36] done. I'm going to retire when I'm 65. I'm doing this forever. But, there were some things that kept happening. So, about every 6 months Google would do that and not intentionally, but Google has a way, just like a lot of big companies do, of accidentally just breaking all your [ __ ] if you rely on them. So, they had they had not provided. Remember when they used to give keywords? That's what HitTail used and so then they went not

[18:04] provided and HitTail was like decimated. So, I was freaking out thinking, I've sold most of those other apps. My whole income, my whole, you know, kind of livelihood is based on this this app. And if it goes under like I what am I again? Am I going to go back to consulting? Like salary? Like this is too I'm too far along in this to take that step

[18:25] back. You know, and and I probably wouldn't have had to consult for long, but um it was scary to me. I I didn't have the stability that I wanted. And and then Google did this about every 6 months. They then broke a I was scraping something and then they broke that and then Google Webmaster Tools and then they broke that and they just kept doing it and it always happened when I was like I was at MicroConf about to go on stage and then I did 600 errors cuz you can't import anything. It's like, oh my gosh. And I'm

[18:48] the only guy that developed on it. So, it was or we were in Europe and then it happened and it was always like, I don't want to do this until I'm Am I going to do this when I'm 50 or 65? Like is this app actually going to be a decade or two decade long app? Can I bet

[19:00] my future on it? Cuz if not, I need to find Yeah, okay, so I didn't have stability. That's the whole point. But if not, I need to find stability 3.0. Right? That's I I realized there was something else that I needed to do to feel for me like I had something that was going to last a decade or maybe even longer, assuming

[19:21] I live that long. Boom, I have life insurance, don't worry. So, um All right. Stability 3.0 I realized was not being reliant on a single external data source, right? So, not being like a Twitter client or needing all of Google stuff in order to function. And so, this was a big one for me. There were two other things that I didn't love

[19:40] about HitTail. One was the price point was pretty low, and so churn was pretty high, and it wasn't a core business application. So, it was just something that was going to it's doing well. I sold it about I don't know, 15 16 months ago, and the new owners love it, but it just I didn't think it was, you know, in my my

[19:57] long-term interest to keep doing it. So, part two is the next step after HitTail. Okay? And that was of course Drip. Derrick, um who you heard from earlier, he he broke ground on code in uh late 2012, and we launched in 2013. I've talked extensively about the Drip and the process of growing it, finding product market fit, and stuff. I'm not going to rehash that here. Suffice to say for those who haven't heard it or even just to refresh your memory, uh

[20:27] 2013 was really the year we launched it. 2014 was the year we found product market fit. All of this is actual revenue. I've This is online. I've published this uh in previous talks, but that was um the launch, right? So, you see the $7,500 was in November, December of 2013, yeah. 2013, and then we kind of it took us about 7 months to really find product market fit. You can see it dip down, and we just built Mail Part of MailChimp, and nobody wanted it, and then we eventually, by the time we added uh automation in July of 2014, that's where the 10/8 happens. And we had completely

[21:04] stopped marketing between then and then, and yet, you know, all the numbers went in the right direction. So, that was an amazingly fun adventure, and by fun, I mean it totally sucked because I'll get to that later. But, and this is the the starting to scale, which is the same It's just an extension of the graph, right? So, you see the 7501 there, and then eventually, um and I can't even you know, I can't read

[21:26] it. It's in mid-2015. Yeah, we got up to 45k. So, this is the last time I really talked about HitTail revenue, and uh you know, there's a reason for that cuz we started getting acquisition inbound acquisition interest, and it just didn't make sense to keep doing it. We also had a bunch of competitors, some of who were um stealing our ideas and claiming they were their own. So, that didn't quite That didn't quite fly. So, I started being a little um you know, a little more tight-lipped about it. All that to say, um this looks amazing, right? This is the This is the next dream. This is the

[21:56] dream of every SaaS founder is to have this amazing growth curve. And yet, this is what Drip Drip net profit looked like. Uh and from June 13, I'm sorry, June 2013 to March 2015. I'm not going to put a scale on the left, suffice to say um that red line is zero. So, it's all negative, and that is each month. So, that's not

[22:18] accumulative. Each month was negative. Um and it was negative by thousands or tens of thousands, that's all I will say. I did I was not dropping six figures a month. All of this was subsumed. The reason I had this money was I was just taking all the profit out of HitTail. So, taking HitTail profit as it starts HitTail starts to go down cuz I'm not working on it anymore. Derrick and I are working on Drip, and I'm just bailing bailing money out of one into another, you know? So, you can see where this is going. So, we finally, you know, we break even just on one month, we break

[22:47] even. So, it doesn't pay it back, but at least we broke even by uh it looks like yeah, March of of 2015. Now, what this meant was in 2014, um I had the hardest year of my entrepreneurial career, by far. And it was especially the latter half. Um I had, at the time, again, the most money I had ever seen in my life in an in a bank account, and it was all basically HitTail revenue and and Summit Drip, and it was $150,000, and I could not believe there was that much money in the account. I did not

[23:20] grow up with that much money. And I was dumping it all I not dumping, but I was pushing it all into Drip. I had We hired a head of revenue to try to move faster cuz it's such a just such a competitive space, right, to be in marketing automation. And within 60 days, I had a 60 or

[23:37] 70,000-dollar tax bill. Um some expenses came due that I didn't expect. Um I forget what the other thing was, but I Suffice to say, I wrote $120,000 in checks out of that account. Poof. So, now I have $30,000 in a bank account that I used to have 150. And I essentially had enough money to make payroll for 45 days. And it was myself, it was Derrick, and it was two engineers that we had just hired. We

[24:01] were with 3 months past hiring them. And I realized I made a It was my fault. Like, I made a shitty cash management decision. I'm I messed it up. There's no doubt. But it took six or seven months to recover. Cuz I had no other outs, right? I don't have a parent who I could borrow money from. I actually could really consider borrowing from a 401k, which is very much against who I am. I was trying to figure out if I could borrow against

[24:21] credit cards. I mean, it's just stupid. You just get to a point where you're like, "I don't know what I'm going to do. Am I going to lay somebody off that I just Like, my whole community knows. We had this little tight tech community, and it's like, I don't know, man." So, you know, hopefully my mistake can be just a warning to everyone else. But this was the year that I regretted. I talked to you about that I will never regret the time that I spent with with my son. This is the the 6 months that that I deeply regret because I realized I

[24:51] I really didn't have freedom anymore. I had a purpose, that was cool. But I was certainly [ __ ] up my relationships. And around this time, this is when I told my wife, I said, you know, this this is it. I can't I can't do this again. Like, I'm not going to start another one from scratch. I'm assuming we're going to make it out of it. I'm going to figure it out. But but I'm done after this. Like, whatever I don't know what after this means. Maybe maybe I run it

[25:15] till I'm dead and then I really am done. Or maybe maybe I, you know, whatever. Maybe Derek essentially eventually buys me out or maybe we just have so much cash we hire a CEO or maybe we get acquired or maybe we whatever it is, I'm not doing another one of these. And my wife, she's so she's very tactful, right? She's a psychologist. Way has a way with words and kind of can ease you into things and help you try to see what the deeper meaning in what you're saying. She said, "Yeah, that's

[25:40] bullshit." Because this is what you do. I don't think it's [ __ ] That's unsettled. She still thinks it is. I don't I don't think I'm going to do another one. Um Okay, so been a little heavy and uh I don't like talking straight for 40 minutes. So, I have a couple This is a really quick intermission based on normally what I have. So, first lesson is don't leave your phone unlocked with your kids in the house. Okay, so I got I picked up my phone and I uh all right, there it is. So Yeah, and then there were videos and there were so there were

[26:16] like 400 of these on my phone. And I'm sitting there like delete delete and then finally someone showed me uh that you can bulk delete. So, thank you. Thank you, Anna. So, and then here's the other one. Do we have volume on video? All right. So, this is this is a short one, but little joke and I think I I think maybe this kid takes after me. This listen

[26:36] this joke here. You're in a concrete room with a saw and a table. What do you do? I don't know. What do I do? The answer is you saw the table in half, two halves make a whole, climb out the hole. That's it. Sorry. I Poor kid. He has me as a as a humor role

[26:55] model? Can you imagine? Yeah, exactly. So, anyways, it gets better. Um hopefully he'll learn from his mom in long term. Okay, so we come we did make it past 2014. I did not um you know, I did not completely spontaneously combust uh even though I felt like I was going to. So, we make it to to 2015 and now the profits starting to come in, right? And so I'm like, all right, we're we're crossed over that barrier, SAS, we're growing fast, we're going faster than you know, the curve I showed you like we started accelerating past there. We introduced um uh workflows. Is that right? Yeah, we I

[27:29] think that's No, it wasn't till 2016, sorry. But uh automation really picked up and we were really starting to take a lot of of our competitors' customers. And so um Drip net profit and again, there's no don't give me a scale on this, but it's thousands to to tens of thousands, like I said. This is what it looked like from March 2015 to uh for

[27:47] about the next year. April 2016, which is just a few months before the acquisition closed. So, anybody who's run a SAS app in a highly competitive space where you're fast growing and you basically need to hire bodies as soon as you have the revenue in order not to get killed uh by the competition or you could slow growth, but anyone who's been in that that situation knows that as soon as you have 5 or 10 K, you hire another body. And as soon as you have 5 or 10 K, you hire

[28:15] that next body just to keep up. Especially if you're scaling an app that requires a lot of um lot of queuing, lot of technology intensive stuff where the database is falling over every 4 months and you have to redeploy it and the Amazon instances go from 1,500 to 3 grand to 6 grand a month just to keep the service going. And that that's what this curve means. That's why even after hitting profitability, you know, you can see November and February we're basically uh breaking even when the line

[28:41] hits the zero at the bottom. So, the line Yeah, the x-axis, I'm sorry, is the zero. I'm not to say not here to say SaaS apps don't make money cuz SaaS apps mint money, right? I mean, it dep- if if you hit a place where you don't have a ton of competition like we do, you hit a place where you have a hit tail, you hit a place where, you know, maybe your growth is a little slower, or even you just have a different scenario than this. You don't have 500 people uh 500 other companies coming after you. In our situation, it was uh this is what it

[29:05] looked like. This is as as well as I know how to manage a company and and build a product and you market in this this this was it. So, again, I could have slowed We could have slowed growth and just said, "We're just going to grow slower." And not hired these people. Um but it was it was not something that that we were looking to do. We were looking to, you know, to keep keep

[29:24] taking market share. And the thing I learned from this, of course, is something we all probably know, but maybe don't. We know it intrinsically, but maybe haven't said it out loud, is that fast-growing companies are very, very rarely profitable. And so, while fast-growing sounds great, it is something where you have to ask yourself, "How long am I willing to go forego profit for growth?" It's just a gut check. Your answer may be, you know, if if I was if I was 25 years old and I had fire in my belly, maybe I'd be willing

[29:52] to do it for 10 or 20 years. I'm going to be 43 this year, and I've done a lot of these. And um at a certain point, you know, you look around and you think to yourself, "I'm all in on this. I am all in. I am 43 years in. I'm 15 years of an entrepreneurial career, or I guess maybe that's only 11 or 12. But everything I have is here. If this company goes under, if something happens and it explodes, if we can't keep up, if a competitor kills us, I am going back to consulting. I mean, I don't I don't know if I would have done

[30:25] that, but can you imagine me like coding it? Can I get a job? I'd be coming to a micro company like, "Anybody hire me for the I see sharp, guys. I'm really good." I just it was scary. And and I I thought about this a lot and I reflected. And and again, you know, remember Derrick and I were making all these decisions and stuff. So, this is not necessarily his experience, but this is this is mine. I go back to this quote from Rand Fishkin, who is the CEO of SEOmoz, which is a often admired SaaS company. And they, you know, have been uh they were fast-growing. They raised a

[30:55] round of funding around this time. And there was a whole thread online. This is 5 years ago, maybe. It was well before Drip. And he says, "At the time we raised buckets of money." I think they raised 10 or 20 million, I don't remember. He says, "We had I had personally, as a CEO, 25K in a checking account. I had no car, and I had a rented apartment in a in walking distance to my office. And at this point, they were doing a million a

[31:17] month, more than a million a month." And there was a whole conversation about He was like, "This is How do Isn't it supposed to be different? Like, when I watched The Social Network, this is not what happens." The What's amazing is So, I did this I did a part of like some of this talk in Europe. Since then, since the our

[31:34] acquisition, this happened in November. This is like 4 months ago. You can't read it all. I'm going to hop down and read it. So, this guy named Will Reynolds, I don't know who he is. He tweets. He says, "Beware of the illusion of success. Most people you look up to are more invested in looking successful than being successful." And Rand Fishkin tweets back to him. I love

[31:53] I love Rand for this. He is so honest. Every time I you hear him He's He's transparent, not for the [ __ ] transparent so I want to market my company. He's transparent because that's who he is. He replies and he says, "I just want one win. Just one." And Will replies, "Does a win for you require an exit or going public?" And Rand says, "An exit of any kind. Sale, IPO, private equity buyout, etc. I want to go from aspiring entrepreneur to successful

[32:19] entrepreneur." Now, I don't agree with Rand's definition that you have to have an exit or an IPO to be a successful entrepreneur. But what I do see in Rand is that it sounds like he's [ __ ] burned out. It sounds like he is just taking punches in the gut. He's been running this business for over 10 years, as far as I

[32:35] know. And to him, I don't know if he still has 25k in his bank account. But I would sure feel like [ __ ] if that were my situation. And I had watched this evolve over time. And I So, in mid-2015, my personal state of affairs is we've reached profitability for some months. Do I have freedom? And the answer was no. We were hustling. We were We were busting our asses on this business. I was thinking of it along with Derek day and night. Do I have purpose? I did. Because the purpose was to grow the business. And I actually really loved that and talking to people

[33:08] on MicroConf, getting, you know, new customers, all that stuff. Did I have really healthy relationships? No, because I was thinking about my business all the time. And did I have stability? I mean, I had a growing SaaS business, but it isn't the 20 year stability. I would kept thinking, am I going to be doing this when I'm even 50, right? I'm 40 42 at the time. Am I going to be doing this when I'm 50? That's only 8 years out. And it was like, I don't know if I have I don't know if I have another 8 years of this pace. It might just kill

[33:35] me. So, Derek and I were talking like, all right, what what are we doing? We're growing fast. We can keep doing this. We can slow growth. Um we started talking about funding. Are we going to just Let's raise a small round, you know, do a 250 or 500k? Is that going to fix our

[33:48] stuff? How long will it will it fix it? And so, we evaluated that and we talked it through. And there are pros and cons, especially in our in our shoes at the time, right? It would definitely have cut down on the monetary stress within the business, cuz I was still hadn't paid myself back for all the money that I'd pulled out. And I felt like um just never having to put money in again and being able to take investor money would have would have

[34:08] been easier. Um which is almost never the case if you ask someone who's done it. Uh but it was going to delay profitability for years, right? Cuz if you take the money, then you're taking it at a pretty hefty valuation. We weren't going to value the company at 2 million bucks or something when we're doing seven figures in revenue. So, we're going to take this hefty valuation and now we're in it for 3 5 7 more years. And I feel like by this time I'm like, I don't know. I I don't know if I can do it for some more years. I don't know

[34:33] that I can commit to that. So, during this we were evaluating this constantly, every week, every 2 weeks. I'm like, "Derrick, what do you think about this? What do you think about raising money?" I'd talk to Anna about it. I What did What does this look like? And during this time, 2015, is when

[34:45] acquisitions started coming in. So, we had a lot of offers um of of differing types, right? So, we had I got two to three, maybe four emails a month with funding offers. A lot of you in here do that. If you're on anybody's radar, you get the junior, you know, junior uh person at a at a VC fund,

[35:03] they're just doing lead gen and stuff. Some of them were more serious than others, I will say. Won't go into details, but it would have been pretty easy to raise a round. Um I I don't see that being a problem. The more interesting thing was we had five potential acquirers inbound contact us who all have Actually, four of them had the money to acquire us at a multiple that made sense, like a you know, a startup multiple, not um not some some garage sale. And that was interesting only in the sense that I really was not built We We didn't

[35:40] build Drip to sell it. It wasn't on the radar before that. But, as we started getting this inbound interest, it was like, "Huh, so what is the choice here?" You know, we could sell, we could raise this funding, we could keep doing what we're doing, maybe slow it down. Could grow out of revenue. Then, one email came through. This is one of the five, actually. And it was one that was perhaps the most

[35:59] interesting. So, it's from Clay Collins. And he says, "Love Drip, interested in selling it. Would you ever consider selling Drip? I really like it." And of course, my answer was in my head, like, "No." Really not interested, right? And then, I gave it a little more thought and realized under what circumstances would I sell

[36:19] it. Reframe the question. Is there any Does everyone have a number? You know, as as Natalie said. Everyone have a number, and it's not just a number, right? There are terms, there are deal breakers. So, I started making lists and the nice part is I took 6 months um I had retreats, I had all this stuff and I just kept making lists of what would it look like? What would I What are my absolute deal breakers that I will not sell for? And what are the deal breakers that um if, you know, if someone delivered all this stuff that it

[36:46] that would work. Again, Derek's list was probably different. We merged them in the end, but this is just, you know, I'm speaking for myself. So, I realized that perhaps for me Stability 4.0 was sunset money is what I'm calling it. So, some people call it [ __ ] you money, but that's just not my style. So, I just I don't know, it's just aggressive and like I'm not going to tell anyone to [ __ ] you. But, I came up with sunset money when someone asked uh someone on a podcast, they said,

[37:14] "You sold your company." It wasn't me. They said, "You sold your company, do you have enough money to just ride off into the sunset?" And the guy said, "Yeah, I did." And I thought, I like that's a better way to say it. Like, sunset money. So, I realized, "Huh, maybe that would make sense, you know, if I could if I could do it and never have to work again?" I don't know. I think about it if if the terms are

[37:30] right. And so, you know, again, as you look back at all these these things that I parlayed. So, I start, you know, I again, can't working-class family, I made 17 bucks an hour at my first job out of college. And then I programmed and I learned to code and 60 bucks an hour as a developer and then just bought Drip and then Invoice, bought the others, bought HitTail and then those are gone. Take all the money from HitTail, put it into Drip. And then, you know what, 2 years by this time we were This is um uh Datanyze and we're 10th on that list, right, of market share of marketing

[38:02] automation. And we were four people in a damn closet in Fresno. And it's HubSpot and it's Marketo and it's Pardot and it's Look above us uh Eloqua, ActiveCampaign, and then SharpSpring and then it's Drip. And it's like, "Who are these freaking clowns? Like, do these guys even know what they're doing?" And so, it was really like we had built something pretty special with a very small team. And so, it wasn't exactly something I wanted to be like, "Yay, if they can offer us, you know, a million dollars, we're going to sell." Or if they can offer me enough

[38:29] sunset money, I'm I'm going to be done. Because we we had I viewed Drip as a once-in-a-lifetime thing for me. I I I don't know I don't I don't know if that's going to happen twice for most people. Unless your name is Jason Cohen or Hiten Shah, but let's get My name is not either of those. So, there are always objections to selling. And this is what I started thinking through is

[38:48] why shouldn't I sell? Why should I sell? Um objections objections to selling that you will hear, especially in maybe our community of of bootstrappers, but maybe even for for any startup founder is, you know, my startup is my baby. Uh I I can't sell it. And I always think of this like yeah, that's a negotiating tactic. Like

[39:09] your your startup's not your baby, guys. We we all have kids and trust me, you like even if they're my kids, you like them more than than your startup. Um I just I've never felt this way, right? I've built a lot of different apps, and so uh this wasn't necessarily a deal breaker for me. I've heard this one interesting We talked about this at dinner last night. Selling is selling out. And this is always said by someone who's never built a business that's worth selling. I've never heard a founder at MicroConf tell me that selling is selling out. It's always some guy When Mojang sold for a billion

[39:40] dollars, right? The Minecraft thing. Notch, this programmer who built this thing. I was just like, "Mad props, dude. A billion dollars, that's insane." And we were at some dinner that night in like a friend of ours, again, who had never had never been an entrepreneur. He's like, "Not sold out." And I'm like, "What does that even mean? Like, what does that mean? Come on. The guy busted his ass for years. Like, so I I just don't buy

[40:01] this. I think this is bullshit." "What else would I do?" is another one I've heard. "Well, if I sold my company, what else would I do?" I hope you have an answer to this, cuz if you don't have anything else but your company, then you might need to talk to get some consulting from a really good trained psychologist like my wife. No, I mean you need to have hobbies. Like what else would I do? Just off the top of my head, this is not your list, but my list is well, I'm going to run three conferences a year, probably write another book, I'm going to do two podcasts, maybe I'll

[40:28] start a third, maybe I will I'd travel a little more, maybe I'll spend more time with my family and kids. That's what else I would do. So, the what else would I do thing I've always thought like that sounds like an excuse. So, that's those are the those are the why not to sells. Reasons to sell now,

[40:44] this is the interesting part. We all think we hear about, you know, Zuckerberg coming in and buying Instagram in a weekend. That never happens ever except for that one time. Um and uh you like that never ever except for the one time. Um but the thing is is that you will hear countless tales if you if you poke into it and actually look at at sales, you'll hear a lot of people that ride their they ride their company over the top for one reason or another. Uh

[41:10] you'll ride it and it's growing, man. Woo, we're just on a And then something happens and it may be you maybe you lose your CTO, maybe uh you have a big outage and you lose people, maybe you just you hit that plateau cuz we all hit a plateau where churn meets your acquisition and eventually once you hit the plateau, you're not worth nearly as

[41:25] much. I'm talking multiples less. And it may even move from where you're talking revenue multiples down to like net profit multiples, which is a you know, a 10x or a 30x uh a discount. It's insane. So, the while you have while you're growing and while you have inbound interest, that's the other thing. So, let's say we hadn't you know, we hadn't sold Drip and then right now I'm totally burning out and you know, I'm I'm want to sell it and we then go into the market to sell

[41:51] it. That's not good because then you're trying to sell something and you're going to be taught you're not going to be talking revenue multiple anymore. You're going to be talking net profit multiple, which is such a different it's a different orders of magnitude. So, this is where the startups are bought not sold thing comes from. You've probably heard this before. When you have inbound interest there is a school of thought that says strike while the iron is hot cuz that inbound interest is not going to be there forever. You're not going to be um as hot in a hot market as you are, you know, cuz marketing automation was was

[42:19] was a hot thing, it still is, but there's only so many years that's going to happen. It's not going to last for a decade where everybody wants to buy marketing automation. Um so it's hard to look at you know, when you if you get inbound interest, it's hard to just say no, I think. I have heard regrets. So, as we're going through the process, I talked to several founders, some of whom sold and some of who

[42:39] didn't. The ones who didn't sell, most of them regretted not selling when they did, because if they sold later than than they had, you know, a lower multiple. The other thing is is this is the really counterintuitive one. The best time to sell is when you don't need to sell, when you're going fast, when

[42:54] everything's going up into the right. Because once you plateau, then um you're you're worthless. So, my Oh, this is Yeah, and this is the best quote here on this topic. Once again, Jason Cohen bringing the thunder even when he's not here. So, he wrote a blog post about him selling his company. It's called Rich or King.

[43:11] And he says, "See, it's good to be king. King is when you run your company forever. It's a DHH thing, right? Or a Joel Spolsky. It's good to be king. But what do you do when you're at Trudy's North North Star Tex-Mex restaurant tucking into a chili relleno and the guy across the table looks you in the eye and offers you enough money

[43:26] that you never have to work again?

[43:33] [ __ ] gets real. It's interesting to talk about it in the in the theoretical and to say selling is selling out. But what do you do when someone looks you in the eye and they said, "Your kids' college paid for. And if you want to give, you know, if given the choice, you never have to work again." And that number, by the way, for different people is totally different, right? Some people in this room might need 10 million to never have to work again, other people maybe it's one or two, but there's, you know, maybe it's maybe it's 100 for some folks, but it's really fascinating to think about

[44:03] this. So, get this was the the process and the thought and that the my reply, back to the story, Clay Collins emailed June 2015 and he says, "I'd like to buy it. Would you be willing to sell it?" And my reply was, after consulting with Derrick, of course, "I'm flattered that you would consider acquiring Drip. Drip has grown quickly and we're profitable, so selling now would need to make a lot of sense for me. And you were here a couple years ago, so you probably remember how that

[44:28] feels." And went from there. I'll get into continue the story there. I realized during this time, as I said, I came up with my deal breakers on retreats and other things. And I had four deal breakers. One is that since I did genuinely see this as my last one, I had it had to be Sense At Money, cuz there was no I wasn't going to do this again. So I had to be able to, you know, given my current assets and whatever else is going on, I had to be able to kind of compile all this and feel comfortable given math and and retirement that, yeah, I don't need

[44:59] to work anymore, you know. Um I did not want anyone to lose their job. The team is just too precious to me, it still is. Um I didn't want to screw our customers, meaning I didn't want the road map to go in some weird direction. I didn't want um the product to get shut

[45:14] down as as a lot of startups do. And I had to keep doing what I do, right? This is the teaching. So I need I wanted to keep doing podcasts and MicroConf and such. And so turns out there was one acquirer that was really on board with this and in fact suggested some of these before I

[45:30] even did. And that was the cool part. And of course that was that was Leadpages. You know the end of this. So um this is what acquisition activity this is when we dive into like what this actually looked like from from inside. This is what the activity looked like for about a year from his first email

[45:44] all the way to the day it closed. And this is the number, approximately, of of back and forths uh via email or um I think Voxer. I think it was the two. And so you can see Clay made first contact in June of 2015. He sent that email. I replied with the reply you saw. And we we kind of went back and forth, and then things kind of drifted. That's

[46:04] actually when they raised their round. They raised a I think it was a $28 million uh B round, and it was to acquire companies. It was right in that month, and so I was like, "Oh, huh, cool cool. They said they're actually serious about this." And then things just kind of, you know, you can see July, August, September, they really almost zero contact. Um I you know, I don't know. I can't speak for what was going on there. I don't know if they were busy, or I don't know if my reply scared them off, right? My reply was kind of like, "Needs to be worth my while." You know, kind of it

[46:28] was a negotiating thing. I mean, I think that's There was a lot of that coming from both sides as there will be in a in a deal of this size. I think once someone makes contact with you, every interaction from then on is part of a negotiation. Some a friend of mine advised me on that, and I thought it was I wouldn't have thought of that. It was

[46:42] pretty clever. Um so in October, uh someone got back in touch for, you know, with me again, and uh that was when they really asked for like, "What What do the numbers really look like?" Cuz I think I'd just given them blanket MRR, but they wanted churn, you know, they wanted like numbers and like my churn grid, all that stuff. So, that was when it was like, "I don't necessarily know, like should we sign an NDA? I don't know what the standard is." And that's when I talked to uh to Thomas at at FE International. Um I'm actually doing Q&A with him tomorrow Q&A up here tomorrow

[47:10] um about buying and selling businesses. But they, you know, are definitely better at this stuff than we are, right? We will do in our lifetime, right? Each of us max one or two of these, whereas a company like FE or, you know, whoever else you were to find to represent you, they're going to do hundreds. And the person on the other side of the deal is going to be doing hundreds typically. They have someone, you know, big company doesn't just hire Joe Blow founder to do something. They actually have experts if they're going to spend a lot of money on

[47:36] a company. So, that was when I did that, and then we again went We went back and forth, and then, you know, stuff just kind of trailed off December and January. We launched workflows, which is our visual builder. We launched that at the end of January, and that's when we really started getting into stuff, and and it got really stressful. It was at the beginning of the year, and that's when, you know, you see a number on a piece of paper, and you're like, I Derek and I walked out into a parking lot cuz we couldn't tell the team, you know, that we were like, can even considering this

[48:04] cuz you don't want to derail everybody, and you feel guilty cuz you're keeping a secret from them. But, Derek and I walked out in the parking lot, and I'm like shaking. I'm like, I can't even but this is it's just got real, man. There's like a number on that thing that there's a lot of zeros. And And so, that was this was a

[48:17] negotiation back and forth. We couldn't agree on a price, and then we reconnected. So, this is it. I'm showing you this. It feels tedious, right? Just on this slide. This was a [ __ ] year of my life. I mean, this it was talk about tedious and a year of my family's life, too. Talk to Sherry about

[48:32] it later on. Um you know, so then we agreed on a price eventually. We signed a letter of intent, got lawyers involved, and um what Yeah, it was about a month or 2 later that uh we closed. July 1 of uh of 2016. Um incidentally, I'll talk about this a little later, but we started telling the team like 2 weeks

[48:52] before it closed. And I think that was absolutely the right decision because you you just can't You can't distract your team. It's so distracting to to be going through this. All right. Last section's coming up. We got to We got to finish this one off, though. You're in a concrete room with a table

[49:13] and a mirror. How do you get out? I don't know. How do I get out? You look into the mirror. You see what you saw. You grab the saw. You saw the table in half. Two halves make a whole. You climb out the hole. This guy's got swagger. Uh all right. So, last section here. Um So, reflections on this and what's cool is I So, I gave a good chunk of this talk in Europe, but I'm I was like I would think we were 60 days, you know, past acquisition. 9 months now. So, I really have a lot, you know, some

[49:45] thoughts and reflections. Um So, July 1 of 2016, yes, we were uh we were acquired and it um it we made it public I think a week later cuz you just got to write press releases and all this stuff. And and they announced it. Um now you probably were thinking July 1 of 2016, this was me, right? Perhaps even this,

[50:10] both Derek and I. But indeed, I was at with that same funny kid, I was at a uh Suzuki cello camp and I was Suzuki cello you're supposed or strings at all, you're supposed to be in with the child as the uh you know, as the instructors are doing stuff and you're kind of working with them and I like phone and they they look at me like, "Why is your your phone supposed to be out there?" And I'm like,

[50:32] "I got to sign documents. Excuse me." And so I run run out and I'm feeling like so ashamed, you know? And I'm like signing this deal size on my damn phone. was just the irony of I'm just like, "This is it though, but like relationships, right?" Like I was there for the kid. The kid didn't know and it So, it was a it was a fun time. It was a fun time. And that's when you know, Derek texts me with a screenshot of the bank account and where I was like,

[50:55] "Whoa, all right." Here are a couple takeaways and then and then I'll wrap up. If you have if you go through this, it's going to take a long it takes a long time. You saw from the that graph that is absolutely typical from all the research I did. I listened to audiobooks on this. I listened to there's entire podcasts that just interview people who've had real acquisitions like this, not Instagram and TechCrunch and all that crap, but the people who really sell in our in our space for like a a nice, you know,

[51:22] like an actual acquisition. It's going to take a long time. It's going to take longer than you think and absolutely longer than you want it to, period. So, you have to the one piece of advice I would give you is to run your business as if you are not being acquired. Because if we had suddenly stopped hiring, stopped spending money on ads, stopped done anything different the day that Clay acquired you know, emailed me, we would have had a year of just I don't know, what slow growth? We would have imploded. We would have I mean you just can't do that. You

[51:50] don't know how long it's going to take. So, right up until the last minute, I mean it was like maybe 2 weeks before, I was still telling Sherry, I just don't know if this is going to go through. I don't know if this is going to go through. And she's like, you we can't do that. We're like moving, dude. We're moving to Minneapolis. So, you I I really this was a mistake people said that they made pretty commonly in these interviews with folks who had sold their businesses that they started like trying to keep hoard cash or not hire or do weird things and you you just can't

[52:16] do it. We hired two people within, you know, three or four months before um the acquisition closed and you know, it is what it is. It was a good decision. The other the last thing I talked about earlier is like, it is so distracting for everyone, but firewall them until the last possible days. And and it's tough and I went Derek or I or both of us went and sat down with every member of our team. There were only eight of us, so we were able to do that. Individually, we went and we said, I'm going to tell you news that's going to s- I'm going to tell you something

[52:46] that's going to sound like bad news at the start, but trust me, it's it's going to be good for all of us. And then we went through it. And in the end I I actually if you asked anyone on our team, I think they would agree that it was it was good for all of us in the end. There's a bunch of good stuff that happened that I don't have time to talk about, but um in the end, the reasons it went through, at least for me, are that none of my deal breakers were ever even questioned or ever even, you

[53:12] know, not not on the table as terms. And when I think about it, you know, does long term does this give me freedom? Yes, absolutely. And even in the short term it gives me freedom to not have to be worrying about the business so much. Do I still have the purpose of growing Drip? Yes, cuz Derek and I and the team are still everybody's still there, right? We all all are still

[53:30] working on the app. Does it give me more time for relationships? Absolutely. And does it give me my stability 4.0? And yeah, it does. So, what happened next? Um we were We're given the the choice of, you know, move to Minneapolis uh or not. Minneapolis is a really cool city, so flash forward a couple months and this was me walking to work in my Han Solo almost frozen in

[53:51] carbonite outfit. Um it was 30 below that day. And that was a new experience for me. That I'm in the lobby of Leadpages. That's it's crazy. And then this is Sherry and our and our I think our 6-year-old and she has a water bottle in her hand because it was so cold that day the snow doesn't stick together. It was so Let me say that again. So cold snow doesn't

[54:15] stick together. Where do we live? So it was it was not like this all the time, but it was it was a shocker. So they're trying to build a snow fort and she's spraying it with water. It was insane. And then I pulled my phone out to take a picture and it promptly died because it was literally 20 below and the phone like the battery freezes up or something. So that's the it's the Minnesota joke, I

[54:33] know. Minnesota's actually really cool. And then this is us in Cancun getting away from it. And this is 2 days ago and Minneapolis is back to looking like this. This is one block from our house with Minneapolis in the back. So it's definitely been a a good move for the family. Um Drip became Drip from Leadpages and we have a you know, really good acquisition or I'm sorry, integration with them now. And I've personally a lot of stuff's changed for the team in terms of more resources and stuff. Again, from my perspective I've been able to hand

[55:03] off HR and legal, payroll, benefits. These are not things I personally enjoy. Most of operations, hiring support personnel and more. Derek and I focus on the product a lot. We hire engineers. We've tripled our engineering team in the past 6 months, 9 months I guess. And so far it genuinely A bunch of people have asked me before, you know, today like

[55:25] does this feel like a win type of thing? And so yeah, we it's kind of cool to be able to grow the product with resources of a funded company, but I didn't have to raise the funding. Um I've handed off most of the work I didn't enjoy, and I've achieved that stability. And I've genuinely, and I'm not just saying this, like I have not There's never There has not been a day since the acquisition closed that I've woken up and thought, "Man, I really I really wish that hadn't done that." It hasn't happened. And Derek and I were having beers 2 weeks ago, and I asked

[55:52] him out of the blue, "Have you ever had any regret, you know?" And he said, "Nope." So, it feels good. It You have a year to think about something, and you agonize over it enough, I think you eventually probably make the the choice that's right. So, there's some potential drawbacks to selling. Obviously, there's a bunch. Um leaving money on the table could be one, right? Cuz we're still growing. So, yeah, if I sold now, we probably would have sold for more because you have more

[56:15] revenue. That's something you got to think about. Working for someone else could be could be a crappy one. Uh we've actually had a pretty good transition in, and I've really really enjoyed working for them. It's a good team, and they've left us relatively autonomous, which has helped a lot. And then, obviously, you could lose

[56:30] control of your product. This we didn't. We still own the road map in general. And uh obviously, if your identity is tied to your product. If it's the only thing you've ever built, and it really is your baby, then maybe it'll be tough for you. So, I I want to leave you with one thought, and this is the thing This was a question that I've thought about, and when I've posed this to other founders who have sold, they said, "Man, that helps me feel so clear about why I made

[56:52] that decision." The question is this: If you had the opportunity for a deal structure that works for you and sunset money, is it worth saying no for a chance at two times that amount? Or three times? Is it worth the risk? So, that's a question you can Uh you may say yes, you may say no, but

[57:15] I think you know what my answer is. I'm out of time. Thank you so much for listening.

[57:32] So, Rob, have you bought anything ridiculous yet? such I've been asked that on a bunch of quest Sherry knows what it is. So, until about 3 months ago, the answer is no. And then I drive a crappy I drive a a beat-up car, you know, that's I just always have. But, I was I like investing. So, I've been investing in stocks and and all this stuff and a little bit of gold and Bitcoin and all that. But, I have I realized that collectibles is a good way to um to diversify. And when I was a kid, I used to When I was a kid, I used to collect

[58:02] comic books. And I now have the money to buy some really expensive comic books. So, I have you know, you can you I get graded in this like slab and they're all like collectible. So, yeah, I've spent a lot of money in the past like 4 months on I don't amazing Spider-Man number one, Fantastic

[58:19] Four number one, Amazing Fantasy 15. Keep going on. So, yes, they're in a safe deposit box, but damn, that's been fun. I didn't realize it. I could give a crap about the Lamborghini, but the stack of comic books that I have is so It's so embarrassing. I go I I pull them out. I like look at the front. You can't read them cuz they're like encased in the slab and then I like ooh, yeah, this was worth

[58:39] This is this all worth it. Freedom, purpose, relationships, and epic comic books. Relationship with a comic book? Yeah. Sherry.

[58:54] Thanks for that talk and the transparency. It was super insightful. Um how stable was the revenue? Meaning, if you had decided to to milk it, to cut costs, fire everybody that you thought you could get away with etc. Yeah, you know, you know, extreme no contrary to our values etc. Yeah. How quickly do you think the revenue would have evaporated? And related to that how um could you have gotten anywhere close to that level of of payout in profits just by milking it over an extended period of

[59:27] time? What are your thoughts on that? It's a good question. I actually did the analysis and I talked it through with with Ruben one day on a call, Ruben from Bidsketch. And we were doing loose math, but we we did say exactly that. What if I would it wouldn't have couldn't have been able to fire everybody, but let's let's say we had, you know. Um I said, "What if we just cut it down to a couple people and and did exactly that?" Cuz the revenue was definitely stable, right? I mean, it was just going up into the right. It's SaaS. Eventually it would have trailed off. But by our

[59:52] estimations, it was and this this is going to sound like it's in my favor, but after we did it, we were like, "Oh, that's pretty interesting." It was it was 10 years. 10 years to get the same amount of money. Yeah. And I'm not That doesn't imply any multiple, right? But that's just I'm saying based on our our calculations, it was going to be take 10 years for there to be that much net profit as as what we're going to get out

[1:00:13] of it. So. Yes, sir. So, after this acquisition, how has the leadership change changes occurred? In Drip? Yeah, in Drip. Are you like CEO and then you built a a leadership team? Cuz I saw operations up on there. Oh. Yeah. How's that work now? Yeah, so really we just came over as a you know, Leadpages already had has two software products, and we just came in as a third business unit or department. And um so we had a support person who merged in with with Leadpages support, and they started a little Drip support pod. So I don't have manage support, but there's we went from one to seven full-time

[1:00:51] support people in 9 months as an example. Operations really was just handed up to the corporate, if that makes sense. So I Yeah, I'm not a general manager. Um right? I don't want to run like a big organization, that's part of the thing of being able to hand off these pieces around product, but then product we've we're our own little department. So we've not merged engineering uh of Drip with say engineering of Leadpages, cuz we do things differently, right? They're a a much like maybe 40 engineers or or something, and we're eight right now. So you just have to have different processes. So it feels again it feels kind of like the best of

[1:01:24] both worlds so far. Um you know, there's always there's trade-offs. I had a really tough time giving up like the marketing side at the first starting. I Clay was like, "We're going to redo the marketing side." I'm like, "No, but I every line of copy, every video, it's my voice, you know." And but he was right and I'm so happy to not be doing that anymore. It's funny the things you think you really want to do until they're not there. So,

[1:01:45] yeah. Hey Rob, could you tell us a little bit about what the role FE played in advising you in this process? Yeah, FE International, yeah. Um a big role. It was a big sanity check for me. There were a couple things So, they were essentially like an investment banker or a broker on on my side and they were able to tell me I'd get these terms in this contract and I'm like, I so, you're going to retain this much and there's a percentage here and it's like, is this normal or is someone trying to take advantage of you? And so, I would ask them and they would say,

[1:02:14] "Yeah, that's standard, man. You just you can't negot- you're not going to negotiate out of that. Every deal is like that." And that was or they would say, "This one you know, this line here has negotiating room." So, that was really the role. It was the sanity check. Um and then even a sanity check on when we were talking back and forth with Leadpages about let's say numbers or um different terms you know, FE brought up like um uh you know, maybe figure out try to get try to get as much as you can in writing by the time you hit the letter of intent cuz once you sign a letter of intent,

[1:02:46] it's it's um exclusive until it closes unless you guys back out, right? So, you really don't want you don't want to just agree on price by the time you get to an LOI. You want to agree on like price and terms and you know, there's typically like an earnout where you have to work a certain amount of time and salaries and are the employees coming with you and what are their salary? I mean, there's a lot of stuff and so, they really front-loaded it which felt uncomfortable, but I think was the right choice because then by the time we really got into due diligence, it was

[1:03:13] kind of like, oh, most of this is decided. That was really a pain in the ass, but now we're here, so it was it was a good advisory position. Again, they have and will go through hundreds of, you know, acquisitions and I'm going to have just a couple, basically. So, my question goes back to where you were basically saying I didn't really have freedom, I really didn't have um you know, my relationships were suffering and I didn't really have the stability that I wanted. Yeah. And I kind of identify with being in that place, right? And I think I'm sure I'm not the only one. But um

[1:03:47] I don't think an acquisition is really going to help me out. Mhm. Uh and so I'm wondering, you know, are are there other ways of achieving that or do you have advice for somebody who's in that position and trying to see their way past it so that they can regain some of that freedom and some of that stability and time for the relationships? Yeah, that's a good question. Right, cuz this was just my path, right? I mean, this was not a framework or anything. It was kind of the the road I traveled over these 11 or

[1:04:12] 12 years.

[1:04:18] I think I I don't know that I have an easy answer for that. I think that if if um I had something that was unacquirable or unsellable, I think that the relationship piece is the one that doesn't necessarily depend on an acquisition. I think it can be a more of a state of mind and that maybe that maybe uh mean conversations with you know, a therapist, a consultant, a psychologist, somebody that'll kind of smack I would have loved to been smacked around and been like, "Dude, here's what you need to do. You need to carve out time for your kids. You need to carve out time for your wife. You need to do

[1:04:54] this." I actually think that one I could have achieved. It was more of my mental It was not a time thing, if that makes sense. That's probably the easiest one to fix is to get somebody to sit to smack you around a little bit. Um so to speak. The freedom one is a little tougher, right? Because if you really do need to work 10 or 12 hours a day um in order to make the business run, I'm not sure other than outsourcing it's stuff where you're hiring like, you know, you asked the question to Natalie today about what if I can't afford to hire. So, I'm not sure that that's going

[1:05:23] to going to solve it, but that's I haven't thought about that a lot to be honest, so I don't have, you know, a great answer, I think. Yes, sir. Hey Hey, Rob. Um so, uh question I've got is what gave you the confidence to invest the the money from from Hit Tail into Drip? Was it a case of you had a gun to your head cuz Hit Tail's going down? Was it because you really wanted to see email marketing automation in the world? Was it because you had product market fit and you knew you just had to put more money in? What gave you the confidence to to invest

[1:05:59] that money? Yeah, I think I think it was like that's a really good question, by the way. Um it was a couple things. One, it was confidence in I I had successes in the past, you know, this Drip was not my first rodeo and I felt like I had the skills to do it. I had built the skills to do it. Um another is I knew that I had uh a network and an audience, you know, I had network of people I could go to to say, "Hey, influencer or hey, friend, like I know you have an audience." Like I I knew that I had the pieces to make

[1:06:32] it work and I just I was fairly confident that that that would happen. Um another thing was working with Derrick. I just knew we we we tend we build good software together, you know, and I knew that if we It's not always the best product that wins, but I knew we could build a damn good product. Um that was it and I wasn't 100% sure, but I felt like we were onto something, especially when folks I I had There were there were signposts along the way, right? Um Brennan Dunn was one of our very early customers, Ruben from BidSketch, Jeff from Ambassador. These are good product people and they kept

[1:07:02] saying, "This has This has something, but like you just need one more thing." And they were different people. Drew Sanocki is another guy and they kept saying, "Add automation. I think you can get there." And so, as the automation started trickling and the revenue went up, I was like, "Oh, we're not getting there fast enough, but I think I can add more flames to this fire." So, it was a balance of getting some positive signals back and also feeling finally, for maybe the first time, I felt confident enough in my own entrepreneurial ability, you

[1:07:27] know? I probably should have felt that way years ago, but it took that long to build it in me. Hey Rob. Uh I I just got one of those emails recently, so this has been super relevant. Cool. Um how how did you think about uh your personal freedom with in in any kind of acquisition offer? For any kind of leader of a company, there's usually some amount of time where you're tied up uh at that company and whether that made a difference to you or didn't. I was surprised that it wasn't on your list of

[1:07:59] four deal breakers. Besides wondering how you thought about that. days Yeah, I want to work for somebody else for zero days. thing. Question was how important was it? Um for me personally, I had listened and read and done enough research that I realized that there's only two at startup acquisitions in kind of realistic space that I've ever heard of where the owner doesn't have to go with the company. So, I just that was never even a not really a question, you know? I knew that I was going to have to go for some period of

[1:08:25] time. I also realized that I I disliked working for companies in the past. I disliked my jobs because I often worked with people I didn't necessarily like or respect uh often didn't have the autonomy or the control. I You know, there were a bunch of reasons I didn't like it. It isn't that I hate working for anybody else. You know, I'm not a complete sociopath. It's uh only half a sociopath. It um And so, I started weighing that and especially, you know,

[1:08:49] you you build a relationship, right? Clay Collins, we he'd been on the podcast. We had talked. Like I I came out and met people. Derek and I flew out and met people at Leadpages and I'm like, "It's kind of cool. I never worked at a startup." Like they you know, they have the the whole shebang and it just felt like an creative environment that we could potentially thrive in. We were going with our gut that I think this could work, you know? And of course, there was there's negotiation around all of that. There's duration, and there's, you know, what that looks like, but um

[1:09:18] that wasn't a deal breaker for me. Yeah. And I don't regret it. I don't feel 9 months in like, I've just pissed away 9 months of my life. Like, I don't feel like that at all. Actually, feel like I've learned a ton, right? You work with I considered Leadpages when I did before. I used to say this, Leadpages, I think, is is one of the best in the world at top of funnel marketing. Like,

[1:09:34] they're they're amazing SaaS marketers. And so, I've been inside that engine for 9 months. Like, tell me that's not kind of a cool tour, you know? I've also seen how they run development, and they it was a big team, and I I've just learned a ton about how I think from a much larger company cuz they're 170, 180, and I've seen how a pretty efficient, well-funded startup at that scale works, and I've never been exposed to that aside from, you know, social network or Silicon

[1:09:59] Valley or something. Yeah. Yeah, so um I'm curious how does your team reacted to that? Like, you know, were they were they nervous? You know, what kind of questions did they ask you? Yeah, the How did the team react was the question. Um almost almost without fail, it I said, "I'm going to tell you something that is going to sound like bad news, but trust me, it it's going to be good for us. Just follow me, you know, give give me a few

[1:10:21] minutes to explain." Um almost without fail, everyone was like, "Oh, yeah, I'm in." And we even had someone who was like, "Are you moving?" And I was like, "I don't know." And on the spot, it was like, "If you're moving, I'm moving." Like, we we started getting that. We had a small team, and

[1:10:35] we were all very loyal to one another. Like, I would back them up when [ __ ] hit the fan in terms of customers or, you know, stuff coming. And I felt like they backed us up, you know, they backed me and and Derek up. Um there was one one person had been at two separate startups that had each been acquired over the past several years, and [ __ ] had just gone sideways. And so, that was a different story. We kind of he's like, "That's fine, but I'm sure stuff's going to, you know." But it was what it was. He's like, "Oh, you know, I'll I'll hang around and see what

[1:11:04] happens." And so we're 9 months, and of course he still works with us, you know, he still works with us, so. Um we definitely handle it with kid gloves though, right? We didn't get everybody in a room and and then and make some big proclamation. This is what's happening. Here's your HR paperwork, people. I mean, it it was a lot of time and and I don't I don't regret you know, spending that time to kind of help everybody cuz it's a shock when you hear this, you know, to kind of help everybody get used to it. We'll take one more question

[1:11:28] after this. Uh and on an earlier slide you shared startups are bought. Uh and you also shared that you were approached multiple times. Yep. Um did you leave some bread crumbs or tea leaves? How did how did these companies, when you're a private company, how did they recognize that you were gaining market share? Were there studies showing the market leaders? How Why would they Why were they coming to

[1:11:55] you? Good point. A good question. Um we of Well, so one Yeah. One advantage we have is we had the widget with the powered by Drip, and people started seeing it everywhere, right? The little UI pop-up. Even without that, we were number like I said, number 10 on Datanyze, and people look at that stuff. Um we were we got written up in places like Market No, what was it? I'm sorry. A VentureBeat, um which is a like a big VC-backed thing. They chose us. They did a big analysis of all these marketing automation. They chose us as the choice

[1:12:27] for a small business, you know, thing. And it's like, "This upstart, unfunded upstart in Fresno, California?" So once that happened, actually, we got a ton of like inbound funding interest. And I don't know if some of these people heard about it there, but it just you just kind of go, you know, SaaStr, Jason Lemkin, he says, "When you hit" cuz we were we were doing seven figures in revenue, right? That's no secret to anybody. Um he said, "When you hit about one, one and a half million in ARR, you develop what's called a mini brand, and you're not a brand like GE yet, but everyone kind of

[1:12:56] has heard of you, you know, you you're big enough in at least in that space that uh the people at least know who you are. And if when they hear so acquirers like people people who haven't raised funding because they don't have to deal with investors, and they know that the it's the price is probably going to be less than if you'd raised a bucket of money. So, if they do then hear that you're bootstrapped, it's actually you're a better target, you know, and not in a target in a bad way, but a an actually, you know, a good

[1:13:22] acquisition potentially. Last one, sir? Uh if if you couldn't have found any anyone who would have honored all of your deal breakers, and you didn't get an acquisition in this period, would that have been fine, or were you at a point where you really wanted to get out? Nope. I was for all that I portrayed there like 2014 was really hard. We were genuinely past that. Um we may we may have raised it a some that small round because cash was constraining our growth. Lack of cash was constraining it. But yeah, I would not I actually don't think I would have imploded. I don't think certainly that the team

[1:13:54] wouldn't have imploded. Like yeah, no, we'd still be running the business. It was It was profitable. It was growing. Everything I told Clay was true. Um but it's just, you know, the the the things all all met. The stars aligned, as they say. Thank you very much, Rob.

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