Dan Martell - Why SaaS Founders Sell with Kevin, CEO and co-founder @ SureSwift.com - Escape Velocity Show #33

00:00:00.000 There are a hundred reasons why people want to sell a business. They could be getting married,

00:00:04.960 they could be getting a divorce, they could be having children, they want to buy a house. 0.76

00:00:08.800 They got another project.

00:00:09.880 They've got, often they've got another project they want to work on. They realize that they're

00:00:16.140 sitting on a pile of cash and founders still get anxiety about their business going away.

00:00:22.040 And sometimes it's just like, let's take this pile of cash from here and put it over here,

00:00:27.100 and your risk goes away.

00:00:28.920 And it's a life-changing payday for anybody.

00:00:31.800 Admission sequence start.

00:00:33.840 Three, two, one.

00:00:45.060 Kevin.

00:00:45.660 Hey.

00:00:46.060 Thanks for being on, man.

00:00:46.900 No problem.

00:00:47.300 Appreciate it.

00:00:48.560 Shurswift Capital, you are the man who's bought in 34 companies in the last four years?

00:00:54.980 I'm one of the men.

00:00:55.840 I don't know if there's others.

00:00:56.720 But yeah, 34 companies in four years.

00:00:58.800 That's crazy.

00:00:59.400 All B2B SaaS?

00:01:00.400 Not all.

00:01:01.040 We have a few content sites.

00:01:03.400 Yeah.

00:01:03.680 Just because when we first started rolling them up,

00:01:05.520 they're so easy to manage.

00:01:07.440 It doesn't take a lot of effort.

00:01:09.280 So we do have some still in the portfolio that are pure content.

00:01:12.160 How do you manage?

00:01:13.540 I mean, most founders have a hard time managing themselves

00:01:15.980 and their one business.

00:01:17.580 How do you do 34?

00:01:19.340 Well, I don't.

00:01:20.320 I've got an amazing team of people

00:01:22.320 that look after the day-to-day operations of each business.

00:01:26.180 And so really, I am just running one company, and that's Shureswift.

00:01:30.360 Yeah.

00:01:30.640 Right?

00:01:31.040 So but it wasn't a linear path to get there.

00:01:34.900 Like, lots of stumbles along the way of, like, hiring too slow and then hiring too fast.

00:01:39.980 And I wouldn't say we've got it perfect, but we've got a really solid team, and we've got a better process for making decisions about, you know, hiring and firing and those sorts of things.

00:01:50.160 So in regards to, A, capital to even buy these companies,

00:01:54.240 the bazillion dollars, how do you do that?

00:01:58.140 Started with just myself and one co-founder pooled our own

00:02:01.440 capital and started buying.

00:02:03.140 And we bought small so we could make smaller mistakes.

00:02:07.400 And as we sort of spent through that,

00:02:10.100 we brought on three other partners.

00:02:12.360 And everybody but me put in materially more capital.

00:02:17.020 And my contribution was just saying,

00:02:18.780 This is what I'm going to do for the foreseeable future.

00:02:22.320 So we're now each own 20% of the business.

00:02:25.300 As we continue to make acquisitions and we've got a stable portfolio, healthy P&L, healthy balance sheet, then banks were OK with lending us a little bit of money to extend that runway.

00:02:35.520 Yeah, so that's how we've capitalized it.

00:02:37.240 All just a small group of like-minded people.

00:02:39.840 So what level does a banker, like what's the ratio?

00:02:43.020 Is it history and business?

00:02:44.840 Like you've been around doing this so you've got a track record?

00:02:47.320 or is it the acquiring entity has to look a certain way

00:02:51.060 so you can get some funding on it, like mezzanine?

00:02:54.780 So our deal, the way we worked it out,

00:02:57.200 is it's a war chest for acquisitions.

00:02:59.660 And we said, this is the type of business

00:03:01.240 that we are going to acquire.

00:03:02.840 But there's not a decision point.

00:03:04.980 As long as we're within those guardrails

00:03:07.120 that we set for ourselves, we can go make the acquisition.

00:03:09.780 The banks don't have to approve or-

00:03:11.900 So they give you the covenants.

00:03:13.600 Yeah.

00:03:14.160 They'll look a certain way, keep the ratios in check.

00:03:16.520 And so in terms of time, and we had been in business

00:03:19.100 for less than a year, I think, when all this started happening.

00:03:24.380 That's pretty impressive that they were willing to.

00:03:26.120 Well, but we're buying profitable companies, right?

00:03:28.580 So there's clear assets there.

00:03:30.380 The challenge we had was that this is a traditional.

00:03:32.660 Did they even know what SaaS was?

00:03:34.620 No.

00:03:35.280 I mean, yes, but they needed to have it explained to them.

00:03:39.140 Unlike now Stripe is giving certain businesses loans,

00:03:45.020 you don't have to tell them anything.

00:03:46.280 They just look at the data, and they

00:03:47.400 know exactly how much to give you,

00:03:48.680 and when to give it to you, and what the term should be.

00:03:50.520 So banks are like, if we don't get on this,

00:03:51.740 other people are going to start.

00:03:53.240 Banks are really, really old traditional businesses,

00:03:56.260 and I don't see them moving fast in this direction.

00:04:01.700 And there's a couple big ones, like Silicon Valley Bank and

00:04:04.820 Square One or something in Chicago that does this.

00:04:06.960 But the ones that I found are very traditional.

00:04:10.880 Good partners, but we had to kind of drag them

00:04:13.940 along to understanding what we're doing.

00:04:15.740 What does a traditional business, like a deal

00:04:19.200 that you would do high level, what does it look like?

00:04:21.480 What are their revenues?

00:04:22.860 How do you evaluate them?

00:04:24.020 How do you give them a multiple?

00:04:26.540 So a prototypical business would be founder, developer.

00:04:30.800 And it's not a hard and fast rule,

00:04:32.400 but we've only bought bootstrapped businesses,

00:04:35.040 partly because of the multiple expectations.

00:04:36.980 If somebody's even taken a little bit of angel money,

00:04:39.440 all of a sudden you've got another person with a vote,

00:04:41.540 which is a problem.

00:04:43.500 And we've had deals blocked by minority investors when me

00:04:47.260 and the founder had aligned on terms.

00:04:50.520 And so typically, a bootstrapper who's

00:04:53.840 a developer themselves, they grow to a certain scale.

00:04:57.240 They can afford to hire a team.

00:04:59.780 So they might hire a junior developer

00:05:02.080 or a customer happiness person.

00:05:03.660 We use the term customer happiness

00:05:05.040 versus customer satisfaction or customer success

00:05:08.760 just because it's a higher bar.

00:05:11.040 They might have a marketing person.

00:05:12.180 So typical business is a founder and three to five contractors

00:05:16.640 when they decide to sell.

00:05:18.420 And their revenues would be?

00:05:20.000 What's right in our wheelhouse is revenues from $25,000 MRR

00:05:24.640 up to $100,000 MRR.

00:05:27.900 It's kind of like a million in ARR kind of thing.

00:05:29.640 Yeah, yeah.

00:05:30.100 A million dollar reoccurring business.

00:05:31.560 Yeah, and actually it could go higher than $100,000.

00:05:33.880 Like we've made offers on businesses bigger than that.

00:05:36.440 They just haven't come through yet.

00:05:38.340 And so market multiples, this isn't Kevin's opinion.

00:05:40.940 The market multiples are around four times trailing 12 profits.

00:05:44.820 Yeah.

00:05:45.260 And that's SDE, like seller's repressionary earnings.

00:05:47.900 Yep.

00:05:48.360 Yeah.

00:05:48.820 And that means their salary and profitability, essentially,

00:05:52.360 minus like one-time big expenses they can kind of.

00:05:54.840 That's right.

00:05:55.580 Yeah.

00:05:55.920 Anything that they've been taking out of the business for themselves

00:05:57.800 gets added back in.

00:05:58.900 And we're just looking at the ongoing expenses.

00:06:01.660 So the founders decided, you guys connect,

00:06:04.120 and we'll talk about that.

00:06:04.880 But they're ready to sell.

00:06:07.160 They agree.

00:06:08.100 Let's call it 4X.

00:06:09.220 um, let's say they're at, you know, probably what 40%, I'm assuming like 40% around that.

00:06:15.760 Yeah. We've had some that were as high as, you started margins. Yeah. Yeah. We've had some as

00:06:19.560 high as 70% margins. Yeah. And they still want to sell. Yeah. People it's, it's fascinating,

00:06:25.740 right? Cause like they could not sell and just keep it as an asset. Cause that's what you're

00:06:29.160 going to do. Yep. Um, and people sell businesses. I have learned, I learned this. I didn't know

00:06:34.160 going into it. I thought it was just all about the money and maximizing price. That's not it at all.

00:06:38.480 There are 100 reasons why people want to sell a business.

00:06:42.620 They could be getting married.

00:06:43.940 They could be getting a divorce. 0.96

00:06:45.140 They could be having children.

00:06:46.100 They want to buy a house.

00:06:47.840 They got another project.

00:06:48.900 They've got, often, they've got another project

00:06:51.020 they want to work on.

00:06:53.620 They realize that they're sitting on a pile of cash,

00:06:57.420 and founders still get anxiety about their business going away.

00:07:01.000 And sometimes it's just like, let's take this pile of cash

00:07:04.240 from here and put it over here, and your risk goes away.

00:07:07.900 And it's a life-changing payday for anybody, right?

00:07:10.660 So yes, some people think, well, why not keep the business?

00:07:14.860 And well, OK, keep the business, right?

00:07:16.720 But I don't like it when people think 0.98

00:07:20.540 of founders who sell an asset like that as being foolish, 0.62

00:07:24.480 because it's not.

00:07:25.540 It depends on their personal circumstances.

00:07:28.000 And they're getting a really nice return on the investment

00:07:30.640 that they've done.

00:07:31.180 Another really common reason is that somebody's

00:07:34.900 been working on something for five, six, seven years, and if

00:07:38.120 they were that prototypical founder developer, I want to

00:07:41.660 start my own business so I can quit my day job and stop

00:07:44.000 working for the man, then all of a sudden, they've got this

00:07:46.420 team of, you know, five contractors, and they are the

00:07:49.960 man instead of working for the man. And a lot of developers

00:07:53.800 are just like, I don't want what I want to do. Right? And so

00:07:57.040 it's that is also not about money. It's about personal

00:08:00.100 happiness. You know, they decide I will be happier. Money

00:08:03.520 helps with the happiness, but I will be happier doing something different. And then you've got

00:08:07.520 control of your life back. And not everybody's able to organize a business and run a business

00:08:12.820 while still controlling their life. So you bought, so let's say the number,

00:08:17.140 keep it simple, 50%, you know, trailing 12. So you get a million dollar business,

00:08:22.980 you pay them for 2 million because you're going to give them essentially

00:08:27.080 uh forex on that 500 so it's two million dollars and then so you've got your capital investors

00:08:33.780 capital you put that you buy the asset and then this thing is kicking off you know 40 some thousand

00:08:40.300 a month and like that's the that's some that's how this thing ends up like do you when you buy

00:08:46.680 the asset the the company is there like a playbook that you execute to kind of extract more value

00:08:52.580 or increase the value.

00:08:54.920 Well, first, I want to ask you the question.

00:08:56.820 What do the terms typically look like for a seller?

00:08:59.940 If somebody's watching this and they're like, hey,

00:09:02.180 Kevin seems like a good dude, but the numbers sound good,

00:09:06.420 but what is he going to expect me to do?

00:09:08.960 What's normal for the entrepreneur selling?

00:09:12.780 What should they expect?

00:09:14.020 What we typically ask, if somebody's

00:09:17.540 smartest founders have figured out

00:09:19.220 a way to extract themselves from the day-to-day operations

00:09:22.440 of the business already.

00:09:23.420 And that's the spot we would love for it to be in.

00:09:26.000 So the degree to which somebody has done that somewhat

00:09:29.340 changes the terms.

00:09:30.240 So that actually is a positive for you.

00:09:31.680 100% a positive.

00:09:32.880 If you've got, if you can.

00:09:34.020 If you're still writing the code.

00:09:35.280 If you're still writing the code and answering support

00:09:37.020 tickets, that is not a deal breaker.

00:09:38.860 It just changes the economics for us.

00:09:42.340 And there's more things that we have to replace.

00:09:45.100 More functions that the founder is doing

00:09:47.260 that we have to replace.

00:09:48.580 So kind of down-the-middle deal terms that we offer people a lot is we want you to help with the transition for six months.

00:09:57.060 For months one, two, and three, you keep doing exactly what you have been doing every day.

00:10:01.800 Let us watch.

00:10:02.320 And we're going to watch over your shoulder, and we're going to start executing our playbook.

00:10:06.180 And then months four, five, and six, you should expect that we have replaced all of the day-to-day functions with either a person or a process from SureSwift.

00:10:14.660 And we start with, like, the headaches that every founder knows that are HR, finance, accounting, keeping the lights on with the tech.

00:10:25.440 All those get, you know, pulled into the Shursworth machine.

00:10:30.180 So the role of the founder gets smaller right away.

00:10:33.320 And then we generally have a good idea before we even close what the plan is for the people.

00:10:37.820 but that those first three months give us time to hire the right person for that business

00:10:42.980 or take somebody from the existing team and put them in charge of that business.

00:10:48.120 And so we've got a playbook and a process for just about everything. And it starts actually

00:10:54.040 from when either somebody reaches out to me saying, I'm interested in selling my business,

00:10:58.820 or I might reach out to them and say, I love your business. If you're ever interested in selling,

00:11:03.280 please call me. And then there's a process and a checklist that takes us up through close day and

00:11:08.960 then 180 days after that. And it's all from the learnings of 34 acquisitions and some going really

00:11:16.800 well and some not going well. Is there escrow or what? Yeah.

00:11:18.800 Yeah. Yep. Always escrow. So how does that all look like?

00:11:21.360 Well, some of this stuff, it's deal by deal in terms of how much money is released at what

00:11:28.720 at times.

00:11:29.220 So I probably shouldn't talk about that.

00:11:31.100 What's the longest?

00:11:32.040 Well, if somebody agrees to a six-month transition,

00:11:34.960 there's almost always some sort of a holdback of money

00:11:37.780 for that end of six months, just to make sure they live up

00:11:39.820 to their end of the bargain.

00:11:40.780 But is there like 80% upfront?

00:11:44.320 Depends on the deal and depends on how complex that transition

00:11:47.620 period is going to be.

00:11:48.660 Could be that there's an earn out if a founder makes a case

00:11:51.320 like, hey, I could sell it to you now,

00:11:53.440 but it's going to be worth more in six months.

00:11:55.820 You say, well, if you hit those numbers?

00:11:57.100 Yeah.

00:11:57.560 Let's do that together.

00:11:58.820 And you'll make more money.

00:12:01.340 So you can get the deal done today and still get anything.

00:12:04.340 They can still get the deal done today

00:12:05.960 and participate in that upside.

00:12:08.120 That's right.

00:12:09.020 And it's a good way to just squash that rebuttal.

00:12:12.380 They're like, yeah, well, it could be worth more in a year.

00:12:14.000 Yeah, well, that's a year that you'll be running it.

00:12:16.160 Right.

00:12:16.660 The rebuttal is usually raise your selling price

00:12:19.960 because I know it's going to do well in the next six months.

00:12:22.800 That's a false argument.

00:12:24.980 This is what it's very worth today.

00:12:26.660 So if you want to hang out and help meet those goals

00:12:28.580 and extract more value, then that's fine.

00:12:32.640 And how do you find these deals?

00:12:35.860 Well, there's a group of brokers out there in the world

00:12:38.680 helping to facilitate transactions, some good,

00:12:41.480 some not so good.

00:12:43.280 So that's one channel.

00:12:45.120 The other two channels I kind of reference.

00:12:46.620 And I know that they like, and we've had a few.

00:12:49.600 We had Thomas from FE International.

00:12:52.840 I know that some, they like people they know are going to buy.

00:12:58.720 You're a buyer.

00:12:59.780 They know you've got the cash.

00:13:00.840 They call it execution certainty.

00:13:03.020 That's it.

00:13:03.460 So if Thomas would say, if you put Kevin beside a buyer

00:13:08.560 that they don't know, Kevin's the safer choice.

00:13:12.160 And that's, I don't abuse this privilege,

00:13:15.040 but even if the money, even if I'm offering slightly less.

00:13:18.120 They still said they'll recommend it,

00:13:19.500 because they're like, there's always

00:13:21.200 a deal that's going to happen.

00:13:22.520 Yep, and that's part of their value in the transaction

00:13:27.980 is coaching a seller.

00:13:29.180 Because usually, it's the one time

00:13:30.500 they've ever gone through this in their life.

00:13:31.880 And it's really stressful, really hard, very emotional.

00:13:36.700 They got to get it right.

00:13:39.340 And part of the broker value can be coach them through that.

00:13:44.080 Help them understand when a process is working as designed,

00:13:46.940 what's normal, what is not normal, what risks to look at.

00:13:51.320 Because, for example, if somebody offers 20% more

00:13:54.400 than me for a sale of the same business,

00:13:58.340 the seller might be more interested than that 20%.

00:14:01.100 And that's fine.

00:14:02.180 But the broker is going to, and we would coach them, too,

00:14:05.000 of there are other factors besides the price

00:14:07.600 that are important.

00:14:08.480 The terms, what are we going to do with the business

00:14:10.840 after the fact?

00:14:11.660 Are you going to be proud of the legacy?

00:14:13.440 People use analogies like sending a kid off to college

00:14:18.080 or giving up a child for adoption.

00:14:20.640 Because these founders are tied to their business forever.

00:14:25.000 Identity.

00:14:25.680 Right, or good or bad.

00:14:27.400 Yeah, it's part of their identity.

00:14:28.880 So we think about that a lot, and we put a lot of importance on that.

00:14:34.360 And we try to kind of make the founders part of our squad over time, long after their six-month or whatever month transition period is gone.

00:14:44.560 Well, it's a referral, word of mouth.

00:14:46.660 Other people are like, hey, I heard you sold your company, Kevin.

00:14:49.060 And did they do right by you?

00:14:51.080 So it's like you're playing the long game.

00:14:53.300 Yeah, but it's also just the right thing to do.

00:14:55.280 The right thing to do.

00:14:55.860 You know, like we like doing business with people

00:14:57.800 that we like and that we trust.

00:14:59.340 And that fondness doesn't go away after they're done.

00:15:02.880 Like there's a guy that sold me two businesses.

00:15:06.120 He's still in our Slack channel helping out with like, hey,

00:15:09.340 I saw this in the market.

00:15:10.420 Or I just heard about this feature

00:15:12.340 that you guys should think about.

00:15:13.520 Like we're friends.

00:15:15.220 And yes, he also refers people to me.

00:15:19.020 But we're not friends just so he would refer somebody to me.

00:15:21.600 Does that make sense?

00:15:22.260 Yeah, yeah, yeah.

00:15:22.780 You wanted to be friends with him regardless if it was.

00:15:24.640 I will be friends with him if SureSwift goes up in smoke

00:15:27.800 or I quit someday, which I don't have plans on doing.

00:15:30.980 But he and I are friends because it's a great relationship.

00:15:35.420 And that's true of a lot of people

00:15:36.740 that have sold us businesses.

00:15:37.780 And when you sell the companies,

00:15:39.960 do you always disclose to the customer base of that company

00:15:44.620 that it's been changed management or been acquired?

00:15:47.020 Or does it?

00:15:47.620 Yeah, well, there's varying degrees of how we do that.

00:15:50.580 So at a minimum, you've got to change the details on the website.

00:15:53.720 So if they want to investigate who owns this thing, we're being honest.

00:15:57.140 What we like to do is tell people after some time has passed, because I think announcing something the day it closes, we did that in one case, but there was reasons behind it that were more about a local market, which is usually not the case for what we do.

00:16:14.000 announcing something on a day and saying these are the good things that you can expect from us

00:16:19.620 is one approach. That's fine. The approach we prefer to take is announce maybe four or five

00:16:24.280 months into the transaction. You can be like, hey, we bought this four or five months. You

00:16:27.620 haven't noticed any difference because we're... Or, yeah, we bought it four months ago and now

00:16:32.420 you've got two people on the support desk when you're used to dealing with one. We've hired this

00:16:36.800 person. We're injecting more into development. Look at these features we've released. So it's

00:16:41.580 more of a, the story is, we're in a better place.

00:16:46.980 And let us know if you have questions, that type of thing.

00:16:50.220 Got it.

00:16:51.480 And in regards to due diligence, and somebody

00:16:57.580 says they want a company, or they've

00:16:59.640 got a company for sale.

00:17:00.420 And you're like, hey, I'm interested in the numbers.

00:17:02.080 You get the prospectus, whatever.

00:17:03.940 Like, what do you look for?

00:17:06.220 What's the Kevin kind of like, what am I looking at?

00:17:08.960 Well, there's some easy filters that then get down to hard.

00:17:12.620 Like, we're pretty clear on a website

00:17:14.360 what we like to buy, bootstrapped, B2B, SAS.

00:17:18.360 Is there any companies that you can disclose that you've bought?

00:17:22.120 Sure.

00:17:22.620 Well, the guy that I told you about,

00:17:24.080 that sold me two, his name is Moritz Dowsinger.

00:17:27.440 He's a German-born developer living in Paris with his family.

00:17:32.580 He sold us a business called MailParser,

00:17:35.400 which takes data from email and extracts the relevant stuff

00:17:39.200 and puts it into a CRM or a Google Sheet or any one

00:17:42.160 of 100 integrations that we have.

00:17:45.160 Built a great product, built it the right way, solid team.

00:17:49.920 Code is amazing.

00:17:52.140 And he knew he was sitting on a really valuable asset,

00:17:56.640 and so he decided to sell it.

00:17:58.120 And even though he knew he could just

00:18:00.440 hold it for a period of time, but at the same time

00:18:03.340 He had built sort of a sister company

00:18:05.480 that he was smart enough to have a separate LLC for.

00:18:08.740 That may not be the right term because it's a French business,

00:18:11.020 but a separate legal entity called DocParser,

00:18:15.120 doing much the same thing, but with documents.

00:18:18.700 And so when I saw him, I'm like, this business is amazing.

00:18:21.900 It looks like the other one's going to be amazing.

00:18:23.740 Can you please sell me both?

00:18:25.000 He's like, no, no, no, because DocParser 1.00

00:18:26.580 is going to be worth more than MailParser is.

00:18:29.340 And he was right.

00:18:30.180 So we bought the first business, MailParser,

00:18:33.140 did the transition. He's an amazing person, an amazing founder. So it was like our best

00:18:38.900 acquisition to date. The business kept trending up. He did all the right things in transition.

00:18:44.340 We put somebody else in charge of running it. We remained friends. And he and I would

00:18:48.500 just catch up every once in a while on the phone or I'd see him at a conference or something

00:18:51.560 like that. I was like, oh, how's Doc Parcer doing? Oh, it's fine. And he was like, it's

00:18:56.500 struggling with this. I could do better. But, you know, and I really enjoyed working with

00:18:59.560 your team. And so at one point he and I both knew where it would probably end up, but he was waiting

00:19:06.080 to maximize value. So we, we structured a deal that let him take the chips off the table. We got

00:19:13.020 the, the, the deal directly, you know, he didn't make it a competitive process, but because we

00:19:18.780 both knew it would be worth more in 12 months, 18 months, we just set, we set an earn out. And so

00:19:24.580 So he was right.

00:19:25.160 He got way more money for Doc Purser than Mel Purser.

00:19:28.260 That's awesome.

00:19:28.960 Yeah.

00:19:29.660 What's it like having so many companies that do you,

00:19:36.820 I guess because you have a team that helps operate and monitor

00:19:39.100 kind of the KPIs, do you ever worry around gateway processing

00:19:44.620 or your servers go down?

00:19:46.080 I guess it's all distributed.

00:19:47.000 It's like all, everyone's its own little thing.

00:19:50.940 So it's not like you're going to have one major system that's

00:19:53.420 going to bring down your revenue stream.

00:19:54.920 I worry about those things like any business owner would.

00:19:59.260 I am fortunate that I have the broad portfolio.

00:20:02.180 So if some business has a really bad day or a really bad month,

00:20:05.240 it doesn't kill the portfolio.

00:20:06.560 So that helps me sleep at night.

00:20:09.360 But stuff happens.

00:20:12.140 We acquired a business, and later my technology team

00:20:15.760 found that somebody was mining Bitcoin inside our app

00:20:19.420 or something crazy like that.

00:20:21.080 We had a couple of businesses that

00:20:24.840 are independent of one another go down completely

00:20:27.320 for a matter of hours just a few weeks ago.

00:20:30.520 Just ramming.

00:20:31.420 And I called Jim, my VP of technology.

00:20:35.140 He alerted me.

00:20:35.840 He's like, hey, listen, something bad's happening.

00:20:37.440 I'm working on it just FYI.

00:20:39.560 I'm like, what happened?

00:20:40.220 He's like, Amazon web services went down for this one region.

00:20:43.920 I'm like, that's not supposed to happen.

00:20:45.620 Yeah, it's Amazon.

00:20:46.720 It's Amazon, but it happened.

00:20:49.520 I'm not a technical guy, but big pharma servers went down.

00:20:53.420 So I have learned that my personality is one

00:20:58.300 that I try not to get too high on things that are going well.

00:21:02.960 And I try really hard not to freak out about things

00:21:05.160 that are going poorly and just focus on do the right thing

00:21:09.760 every day, hire smart people, stay out of their way,

00:21:13.400 that sort of thing.

00:21:14.780 Does it still kind of blow your mind

00:21:16.940 how predictable some of these SaaS companies are.

00:21:20.840 Because I would just, I've always

00:21:23.180 been an active entrepreneur.

00:21:24.740 I'm pushing the boulder up the mountain.

00:21:26.960 And I just assume that if I stopped,

00:21:29.840 that it would roll all the way back down.

00:21:32.180 And I remember just recently, I sold my company Clarity

00:21:34.460 as a marketplace.

00:21:35.300 And marketplace, if you can get the flywheel going,

00:21:39.240 it's pretty cool.

00:21:40.040 It goes, yeah.

00:21:41.500 But I never stopped pushing on it.

00:21:43.000 But then it's been four years.

00:21:44.560 And then I was talking to Will, and I was like, how's it doing?

00:21:46.400 And he's, dude, it still keeps growing and doing its thing.

00:21:48.700 And I was just like, but you guys haven't done anything.

00:21:51.220 He goes, it's good.

00:21:53.020 Yeah.

00:21:53.800 Well, I don't think, I think it's good to be active. 0.99

00:21:55.720 And then it goes back to like, shit, I should have kept it. 0.98

00:21:58.020 Yeah, there's a couple of things that I think of. 0.99

00:22:00.020 Robert Smith, you know who he is?

00:22:01.400 He's the CEO of Vista Equity Partners.

00:22:03.840 Oh, Robert.

00:22:04.340 Yeah, we both have a man crush on Robert Smith.

00:22:06.080 Yeah, we've talked about this.

00:22:07.100 I have a professional man crush on him.

00:22:09.320 He's just an amazing business person running a business

00:22:12.200 that looks a lot like mine times a million.

00:22:15.440 A billion assets under management.

00:22:16.760 So there's stuff to be learned from him.

00:22:18.900 And he has a famous quote.

00:22:20.200 He says, software tastes like chicken.

00:22:22.080 I don't care if it's marketing tech or business

00:22:24.760 automation or whatever.

00:22:25.960 Marketplace may be a little different,

00:22:28.000 but you do the right things.

00:22:31.880 Keep the code current, release new features,

00:22:35.460 incent the right behavior, keep customers happy,

00:22:37.700 and good things will happen.

00:22:39.660 So we're active.

00:22:41.300 And the other thing I remembered as you were saying that was I

00:22:43.420 saw Sahil from Gumroad give a presentation at a conference.

00:22:48.300 And he was talking about this.

00:22:49.440 He's got an amazing blog post about the roller coaster

00:22:51.860 of Gumroad and how exciting and tragic,

00:22:55.660 and now he's in a good place or whatever.

00:22:57.500 And he was showing this chart of his MRR going.

00:23:00.380 And at one point, he just walked away.

00:23:02.860 He had a team of 20 people, and then everything

00:23:05.980 went really badly.

00:23:07.040 And he had to fire everybody, and it was just him.

00:23:09.340 And there were times where he was just

00:23:11.260 bummed out about the whole thing,

00:23:12.460 So he wasn't doing anything.

00:23:14.260 And the MRR chart just keeps going.

00:23:16.460 And he showed it.

00:23:17.200 He's like, guess when those time periods were?

00:23:19.820 You can't, because the business did what it was going to do.

00:23:23.180 And that was part of his point.

00:23:25.180 You can only push the boulder up so fast, I guess.

00:23:28.400 His point was the market determines

00:23:30.580 the size of your business, not your effort.

00:23:34.260 So that's another thing that I tell myself,

00:23:37.020 is we got to have a plan.

00:23:39.520 Plan the work, work the plan, and do the right things.

00:23:42.460 always try not to let things fall through the cracks, which

00:23:45.520 is a big thing for me in the portfolio.

00:23:47.380 You can't forget about any of the businesses.

00:23:49.700 So we have systems in place to do that.

00:23:51.760 And I trust our people, and I trust our process,

00:23:55.000 and I trust that if we do those right things,

00:23:57.900 and if, yes, we'll make mistakes,

00:23:59.580 but then learn from that and don't make the same mistake

00:24:02.200 twice, then generally good things should happen.

00:24:05.140 And how do you prioritization framework

00:24:09.640 For all these companies, do you allocate

00:24:13.240 budgets for GMs to invest in those businesses?

00:24:16.480 How do you think of it?

00:24:17.560 Because most people have a hard time

00:24:19.300 doing it for their own product, let alone that many products.

00:24:24.140 And there's obviously opportunity in the market.

00:24:26.480 Certain markets have more opportunity.

00:24:28.480 How do you decide how to invest in improving those assets

00:24:32.280 versus saying, I think this one's maxed out.

00:24:34.800 Let us spend more time over here.

00:24:36.820 Yeah, well, we measure everything

00:24:38.740 as much as we can.

00:24:39.820 We have general sort of guidelines

00:24:41.560 about like X percent should be on.

00:24:43.700 Benchmarks.

00:24:44.260 Yeah, like customer happiness and Y percent on development.

00:24:49.540 We try to learn everything from the founders

00:24:51.880 who have sold us the business because they're

00:24:53.320 the smartest ones.

00:24:54.120 And they usually have really good ideas about like,

00:24:56.260 if it were me and profits weren't as important,

00:24:59.140 which they know it's not for us, growth is important,

00:25:02.720 I would do X, Y, and Z. And so we generally listen to that,

00:25:06.220 take that feedback.

00:25:07.020 We also listen to the team.

00:25:08.240 Some of the best ideas come from their existing team

00:25:10.940 that nobody ever asked them.

00:25:12.640 Either they weren't asked or they didn't take the advice

00:25:17.220 or what I don't know what reasons there would be.

00:25:19.700 Or they're just like, we're prepping this business for sale.

00:25:21.720 We're not doing anything wild here.

00:25:24.120 So we get some great ideas from them.

00:25:27.100 And yeah, just to answer your question more directly,

00:25:31.000 businesses that are doing better get more investment

00:25:33.040 than the ones that are not, of course.

00:25:34.980 And we've got a pretty good process about like either the leader of that business or Tom, my VP of product, will make a case that says, hey, I think if we add a developer to this business, we can knock out, you know, these 10 features a lot faster.

00:25:50.700 These are some that people will pay for.

00:25:52.760 And so we have just like the return on investment conversation.

00:25:56.060 It's interesting because I think a lot of founders

00:25:58.100 get romantic about vision and features.

00:26:01.020 But you guys, it's like, hey, we're

00:26:03.060 going to spend some dollars because it's going to increase.

00:26:06.940 How often do you guys, like is that

00:26:09.520 for one of the first playbooks is increase price,

00:26:11.620 look at expansion revenue, maybe tweak the value metrics.

00:26:15.400 Yeah.

00:26:16.900 How do you, what are some of the value, the things,

00:26:18.940 the first things you're going to do to a new asset?

00:26:21.640 Well, we've got a checklist for just about everything.

00:26:23.640 So we, you know, do SEO checklist, you know, technology checklist, look for like small wins or small things that we can fix that might have a big impact down the road.

00:26:33.440 We always look at pricing.

00:26:35.160 We always test paid traffic.

00:26:38.720 We that's we don't like businesses that are reliant on that.

00:26:42.640 We like organic traffic.

00:26:44.620 But if they've got organic working, if they got organic working, then you can throw some paid on it.

00:26:49.280 And most of the founders that we have purchased from either

00:26:54.800 never tried, because they didn't want to spend the money,

00:26:57.080 or they tried, and it's really hard.

00:26:58.940 They were really good at marketing.

00:26:59.780 Or they didn't want to pay a consultant to do it.

00:27:04.460 And so we at least have the expertise in-house to try it

00:27:07.220 and see if it's something worth reinvesting in.

00:27:11.720 Yeah, I mean, there's a list of, you know,

00:27:14.240 Robert Smith has 110 standard operating procedure.

00:27:18.500 We're at like 60.

00:27:20.120 But they're all like some big, some small.

00:27:22.560 We always pull the customer base just as a routine,

00:27:27.120 like once a quarter every six months.

00:27:29.520 To help guide product?

00:27:30.620 Guide product.

00:27:31.560 How are we doing?

00:27:32.440 Where can we improve?

00:27:33.440 On product or service?

00:27:35.060 What can we do to better meet your needs?

00:27:36.520 Yeah, what other ideas do you have?

00:27:38.020 Or tell us something you like.

00:27:40.180 What do you not like?

00:27:40.900 And you get some really interesting insights

00:27:42.360 from customer base, too, on guidance of the product

00:27:45.620 or where to invest.

00:27:46.360 Just asking them.

00:27:47.220 Just ask, yeah.

00:27:48.380 Don't be afraid to ask people.

00:27:50.120 And be prepared for some tough feedback

00:27:51.880 if things are going bad.

00:27:53.340 But generally, if you ask for feedback,

00:27:57.120 people, you learn a ton from talking to customers.

00:27:59.940 How many companies do you think you could manage?

00:28:03.080 Or is there a point where it's better

00:28:06.060 to have bigger companies than so many little ones?

00:28:08.920 Yes.

00:28:09.620 So we have been slowly growing the check size

00:28:12.000 that we're willing to write.

00:28:13.240 I do think that will probably plateau, though,

00:28:15.760 because the space that we're playing in,

00:28:17.380 like you went through some numbers,

00:28:19.480 there aren't a lot of really professionalized operations

00:28:23.020 playing in that space.

00:28:24.140 There's a lot of entrepreneurial people

00:28:25.920 who have access to money, and they'll go buy a business.

00:28:28.900 But there aren't a lot of people building out

00:28:30.500 a portfolio like we are.

00:28:32.980 You get into bigger checks, like the north of $10 million

00:28:36.080 range, you're going to hit a lot more strategic competition,

00:28:39.220 a lot more PE competition.

00:28:41.440 And it's just not a space.

00:28:43.300 Do you think the assets you buy eventually

00:28:45.020 become those kind of, like, you buy them, build them up,

00:28:49.600 they buy them from you, and they kind of.

00:28:51.320 Yeah, it's possible.

00:28:52.200 But our strategy is buy and hold.

00:28:53.940 Buy and hold.

00:28:54.320 So we're not flipping the businesses.

00:28:55.220 OK, so you're all about return on capital.

00:28:57.320 So we look at it differently, where

00:28:59.860 if we have an asset that's making this great money,

00:29:02.660 I would not want to be a seller in that space.

00:29:04.680 So I have kind of two numbers tied to each business.

00:29:08.000 The sort of buy it now, crazy price.

00:29:10.700 If somebody offers us that or above, yes, deal.

00:29:15.000 Or if something is just underperforming,

00:29:17.940 and we think, OK, if we just shed the asset, recoup some cash,

00:29:22.540 and move on, we've got a price for each business there.

00:29:26.400 And so this is a quarterly decision

00:29:27.920 that the team and I make about the whole portfolio.

00:29:32.520 What's the trajectory?

00:29:33.420 What do we want out of this?

00:29:34.380 Should the buy it now price go up, and things like that?

00:29:37.240 It's funny, because I think, Kevin, you've done this so much

00:29:40.560 that it's just kind of like, yeah, it's what you do, right?

00:29:43.140 But to somebody else, buying a company

00:29:45.260 sounds like such a foreign frickin' concept.

00:29:48.460 Because they're like, I don't know where the bodies are

00:29:51.120 buried, blah, blah, blah.

00:29:53.200 Who taught you this stuff?

00:29:54.760 I learned.

00:29:55.820 It was a foreign concept to me.

00:29:58.340 And I freaked out about the first purchase.

00:30:01.800 I had to learn what Esquire was.

00:30:03.380 And you're talking SureSwift, or did you learn it before?

00:30:05.200 No, I did.

00:30:05.760 Technically, in my old corporate life,

00:30:07.620 I was involved in an acquisition of a smaller

00:30:10.020 company into my division.

00:30:11.640 So I saw kind of how, but that was a way bigger thing.

00:30:14.220 There was investment bankers involved on both sides.

00:30:18.060 And we had an army of like,

00:30:19.560 Lawyers and accountants and lawyers.

00:30:21.100 Like, I was the business person making the final.

00:30:22.920 Yeah, you were going to run it after the fact,

00:30:24.260 but they were making sure that.

00:30:25.680 Right, so I didn't really under,

00:30:27.020 that process is so different than what we're talking about.

00:30:30.840 So I learned on the job.

00:30:32.580 I just became a student of my craft,

00:30:35.440 which is acquiring and operating businesses.

00:30:40.580 But yeah, early days, I freaked out about it.

00:30:43.760 And I made some mistakes.

00:30:45.500 There were times where I trusted people a little bit too much.

00:30:48.140 There were times where I overestimated our ability

00:30:53.580 to operate a business when we didn't really

00:30:55.760 have the right team or add value beyond the fact.

00:30:59.760 So yeah, it's a learning process.

00:31:02.420 If I sound or feel pretty zen about it now,

00:31:04.860 it's because I've made so many mistakes that I've learned from.

00:31:07.920 And now I have a team of people that are generally

00:31:10.260 smarter than me and know what to do.

00:31:12.480 And so I'm like trying to narrow my focus to just hire smart people and get out of the

00:31:18.420 way and manage the culture of SureSwift.

00:31:21.180 Those are my jobs.

00:31:22.520 That's it.

00:31:22.960 And like the VP of tech, because I'm assuming that each one of these things are built in

00:31:25.880 different programming languages.

00:31:27.580 He helps guidance on, hey, maybe we should upgrade this framework.

00:31:32.220 But like, is that person like a programmer in PHP and Ruby and Python?

00:31:37.220 He is a programmer.

00:31:39.080 Languages, I couldn't tell you.

00:31:40.260 He still digs in and writes code every once in a while

00:31:42.440 because he thinks it's fun.

00:31:43.360 But he has a team of people.

00:31:45.460 And each one of the contractors or the teams

00:31:47.820 at the acquiring assets, they kind of end up

00:31:50.840 reporting to him on the tech side.

00:31:52.480 Yeah, we have kind of a matrix organization.

00:31:54.000 So I don't know if I said that.

00:31:55.160 Whenever we acquire a business, we bring on the team.

00:31:57.680 The plan is usually for the founders

00:31:59.220 to go do something else that they want to after six months.

00:32:01.940 But we always hire the team.

00:32:03.960 Bootstrappers are great at having amazing teams, I have learned,

00:32:07.320 because they don't let anybody that's not pulling their weights

00:32:10.160 to stick around.

00:32:11.760 So we've had so little unplanned turnover with team,

00:32:16.060 it's shocking.

00:32:17.240 Because they're uncertain.

00:32:19.320 The founder may or may not have told them

00:32:20.840 that they're selling the business.

00:32:22.220 But even if they do, it's a transition.

00:32:24.660 And they're like, what's the SureSwift group all about?

00:32:26.780 Do you have a comp structure to help retain them?

00:32:28.860 Or what's the?

00:32:30.260 Usually we say, keep doing the same job you're doing

00:32:33.400 at the same comp.

00:32:33.980 And we'll pay you at what you're paying.

00:32:35.340 Yeah.

00:32:35.640 No profit sharing, no.

00:32:36.780 Whatever deal you had with the founders,

00:32:38.400 we're going to give you that same deal.

00:32:39.860 And you get the opportunity to work at a much larger company

00:32:43.640 with much bigger opportunity.

00:32:45.560 So for example, we bought a business

00:32:47.840 where one of the developers lived in Brazil,

00:32:51.360 and he was working half time because the founder felt

00:32:54.980 like that was all he needed because he was still writing

00:32:57.260 code and things like that.

00:32:58.300 And we learned he's super talented.

00:33:01.080 So right away, we said, would you like to work full time?

00:33:03.440 Full time, yeah.

00:33:04.140 And by the way, here's all these other businesses

00:33:05.780 that we have.

00:33:06.300 He's a Ruby developer.

00:33:07.320 So we're like, hey, could you, you

00:33:09.180 want to lean in on this business and do some work here?

00:33:11.460 And now he is the team lead for all Ruby stuff.

00:33:14.940 So any business in the portfolio that

00:33:17.320 has anything to do with Ruby, he helps manage that.

00:33:21.420 He helps manage the team and manage the code

00:33:23.280 and manage the strategy and things like that.

00:33:25.420 That's so cool.

00:33:26.280 Yeah.

00:33:26.820 And you kind of touched on it, but I

00:33:29.380 should say that the acquisitions have gotten easier

00:33:31.800 and better because it's now a team sport.

00:33:33.440 Like everybody plays a role in just like Jim

00:33:37.140 We'll look at the code, look at the tech,

00:33:38.880 talk to the developers and understand more about that.

00:33:41.800 And he gives a thumbs up or thumbs down.

00:33:43.920 And if he gives a thumbs down, it's over.

00:33:45.320 Like, it doesn't matter how good they are.

00:33:47.040 Yeah, everybody can veto a deal.

00:33:48.800 That's right.

00:33:49.640 So thumbs down.

00:33:50.740 And this is for everybody, like anybody

00:33:52.620 involved in due diligence or whatever.

00:33:54.280 Do you guys look at support tickets?

00:33:55.680 What else do you do?

00:33:56.740 Yeah, we look at the support desk.

00:33:59.200 We look at it like a customer.

00:34:00.540 Like, we'll often sign up for a free trial

00:34:02.680 and just see how the software works.

00:34:04.060 What's the experience of signing up

00:34:05.880 with their onboarding process and their team.

00:34:09.420 Yeah, we look at all the finances and things like that,

00:34:12.420 kind of study competitors and see what they're doing

00:34:14.940 and how does the potential acquisition stack up in that case.

00:34:20.580 That's so cool.

00:34:21.540 And I mean, Robert Smith, for sure, he's incredible.

00:34:26.500 I mean, one of the first African-American billionaires

00:34:28.880 or one of the wealthiest guys in the US.

00:34:30.640 But who else do you study?

00:34:32.220 What other people do you feel has some really smart thinking

00:34:35.380 around this?

00:34:37.180 One guy that I've gotten to be fairly good friends with

00:34:40.240 is named Brent Beshore.

00:34:41.920 He runs a business called AdVentures.

00:34:44.780 And we have a lot in common, just personally,

00:34:47.980 how we see the world.

00:34:48.820 But business-wise, he has a much bigger business

00:34:52.180 than I do with fewer portfolio companies.

00:34:54.160 OK, so he's a buy and hold as well?

00:34:56.540 But he's in the offline space.

00:34:58.240 So he has a pool building company in Arizona.

00:35:01.480 He does nothing with software.

00:35:03.400 Yeah, so he and I can swap ideas all day long

00:35:07.680 about how to structure the team.

00:35:09.280 How do you look for acquisitions?

00:35:10.960 And he's also probably five years ahead of where I'm at.

00:35:15.040 He's been doing this for longer than me.

00:35:16.880 And he's just a wonderful human being.

00:35:18.500 It's a giver of his time and his advice.

00:35:20.640 But because we're not competing for the same deals,

00:35:25.520 I can be an open book with him about what am I?

00:35:27.800 There are other people that are acquiring software businesses.

00:35:30.860 And those conversations always, there's

00:35:32.500 It's kind of weird.

00:35:33.340 There's always a little bit of a dance.

00:35:34.340 Yeah, not friction, but people just

00:35:35.980 don't want to be as open in sharing about what they're doing.

00:35:39.720 So yeah, Brent does a lot of things right in terms.

00:35:42.220 And software people could learn from him

00:35:44.180 in terms of the way he does lead gen.

00:35:46.780 And he just gives out information

00:35:49.620 to the world that draws people to him.

00:35:52.700 A lot of the typical tricks of business

00:35:55.520 that we know today he's been doing for a long time.

00:35:57.440 How many SaaS companies do you think

00:35:59.500 are out there that are in this sweet spot for you?

00:36:02.820 That's a good question.

00:36:03.920 I wish I knew.

00:36:04.920 And you asked earlier, how many do I think we can operate?

00:36:09.320 And I never answered that question.

00:36:10.620 I don't put an upper limit on it because I've seen us go from zero to 34 in four years.

00:36:18.320 And there were times where the wheels got a little wobbly because we acquired too many

00:36:22.320 too fast, or I hired too slow, or I made bad hiring decisions.

00:36:25.860 but we got through it and we're in a really good place. And our most recent acquisitions have been

00:36:32.340 our smoothest, like we're getting really good at this. So, and it's sort of a linear thing,

00:36:37.340 you know, we, you need to add sort of leadership levels to make sure that each business gets the

00:36:43.000 right attention. But, um, you know, it's, I think we could scale very large, but it does become

00:36:50.160 more about quality, not quantity.

00:36:53.700 But if we want to stay in this range, like I told you,

00:36:56.520 I think is our sweet spot, then it is about numbers

00:37:00.600 and just doing it right over time.

00:37:02.860 And I forgot, you asked another question.

00:37:04.460 I jump back to this.

00:37:05.320 I can't remember what it was.

00:37:06.400 How big do you think, how many of these companies

00:37:08.400 do you think there are out there?

00:37:10.120 Yes.

00:37:13.060 I think it is uncountable and growing extremely fast.

00:37:17.460 It's crazy.

00:37:18.720 we're at Business of Software.

00:37:19.980 And you see all these niche SaaS products, right?

00:37:25.160 Like, what's some of the most niche?

00:37:26.260 When these are the people that have been doing it for 10

00:37:28.400 years or more, like some of them.

00:37:30.780 But now, on the other end, every time

00:37:32.820 I walk into a coffee shop and I see a young woman

00:37:34.760 with a laptop open, I assume she's

00:37:37.120 starting a software company, right?

00:37:38.680 Because that's how easy it is.

00:37:41.200 And so I think we're tip of the iceberg

00:37:44.300 in terms of where this, especially in the bootstrap

00:37:46.740 world where it's going, because I think more and more people are realizing that's a really,

00:37:50.840 really healthy way to run a business and to run your life.

00:37:54.280 The subscription model.

00:37:55.800 No, no VC funding, I'm saying.

00:37:58.380 Yeah, bootstrap. 1.00

00:37:59.160 Bootstrap and get the MRR going, write some software, and there is a very clear public

00:38:04.700 playbook of how to build a company well like that in a million niches that you would have

00:38:10.880 never known existed, right?

00:38:13.320 So I don't think the supply is going to be a problem for us.

00:38:17.000 I don't think we'll run out of businesses that, you know, could be acquired.

00:38:20.120 I think we are showing a path for founders who are, like, really happy with the results.

00:38:26.300 You know, we take care of their business.

00:38:27.820 We take care of them financially.

00:38:29.280 You know, they're successful.

00:38:31.900 Because they're really, I mean, like, there's not, where else do they go other than a transaction

00:38:37.240 where they're uncertain of what's going to happen with that, you know, their entity, right?

00:38:41.260 Right.

00:38:41.520 Right. It's a tough one.

00:38:43.780 Yeah. Yeah. And it's a it's a it's kind of a messy market out there in terms of like, you know, who's going to do the right thing with the business and who isn't.

00:38:54.700 And like you said, it's a really uncertain process that there isn't a clear playbook for a founder who wants to sell a business.

00:39:02.320 One of the things that we're working on as a team is just like, how can we share more of what we know to help people, whether they sell to us or not?

00:39:10.460 Because there's a whole segment of the universe that we won't touch.

00:39:13.140 Anything that's related to Amazon, any e-commerce business.

00:39:16.540 A ton of that stuff.

00:39:17.300 We're not doing that.

00:39:18.300 Yeah.

00:39:18.580 And there's still a seemingly infinite supply of businesses.

00:39:21.040 B2B SaaS products that are catering to those customers.

00:39:23.960 Right.

00:39:24.240 But if we can share with people what we have learned, either from successes or mistakes.

00:39:29.400 What's a neat niche that you guys have bought?

00:39:32.740 Like a product?

00:39:33.720 So we acquired a business called Feedback Panda.

00:39:36.840 Yeah.

00:39:37.080 And it is a, it's software to help English as a second language teachers run their business.

00:39:45.320 So it's B2B.

00:39:46.840 So we're selling to business people, but mostly they're independent contractors helping mainly, mostly Chinese children learn to speak English.

00:39:57.040 And it's for them to manage their work schedule, their billing, their invoicing, their workflow, checking, checking the work.

00:40:04.480 It's like a mini ERP.

00:40:05.340 Yeah.

00:40:05.580 Yeah. For that niche of English as a second language teachers. And it's an amazing business. Two co-founders, Danielle and Arvid. Danielle was an English as a second language teacher struggling with how to run her business. Arvid is a super talented developer.

00:40:23.080 Perfect.

00:40:24.100 They're now married. I don't think they were married at the time.

00:40:27.220 But they did they meet because no, no, they were together.

00:40:29.980 They were together.

00:40:30.460 And he saw her being frustrated and said,

00:40:33.980 I can fix your problem with software.

00:40:36.600 And they realized they had an amazing product

00:40:38.180 and started selling it to her network of other teachers.

00:40:41.460 Yeah.

00:40:41.800 Yeah.

00:40:42.300 Kevin, I always love asking, based

00:40:45.280 on where you were in your corporate life

00:40:47.120 to where you're at today as a CEO and entrepreneur,

00:40:49.820 SureSwift, who did you need to become to be the CEO today

00:40:54.340 and to continue going forward?

00:40:55.640 What shifts in mindsets or beliefs did you have to kind of overcome to become this person today?

00:41:02.640 That's a really good question.

00:41:05.540 There have been a lot over the last four years.

00:41:10.440 Originally, I would say I needed to trust myself a little bit more and be okay with personal risk.

00:41:17.620 There was a period of time in my life where I cared way too much what other people thought of me

00:41:22.360 and the decisions I was making, the work I was doing.

00:41:25.640 I was sort of, and I think corporate America is designed that way to, you know, like titles and

00:41:31.980 promotions and how many people report to you and all that stuff. And I cared way too much about

00:41:37.960 that. And I needed to be able to say, I'm doing this thing that all of you corporate America

00:41:44.940 people are going to try to talk me out of because you think it's crazy. And I don't care anymore

00:41:50.240 what you think. And even some of people in my family were like, is this a good idea? And I had

00:41:55.320 to, I needed to get to a place where I cared less. You can't not care at all, but I, I can now care

00:42:01.000 less. Um, and it's super healthy. And then as we grew, I had to be a better business person,

00:42:08.380 frankly, you know, like when you're in a corporate job, you can be great at a few things and suck at

00:42:14.580 other things. And there's like a lot of machinery to prop you up and like, you know, you hire a

00:42:20.720 person or, you know, whatever. But when it's just you, the things you suck at get exposed really 0.94

00:42:27.120 fast. And so then I had to like, start looking for those things and admitting that I suck at 0.99

00:42:33.900 certain things and then hire people are better at that. And I think what I'm, the person I need to

00:42:40.160 become now is being even better at trying to make my job small and, you know, get even better at

00:42:48.640 hiring great people and even better at like just staying out of the way. This morning, Amy from

00:42:54.420 my team sent me a note over Slack and she's like, yeah, we were in this meeting and we made this

00:42:59.460 decision. And it is the opposite decision that I would have made. It's not a huge thing. And

00:43:05.480 normally I would be like, uh, hold on, did you consider these other things? And I think maybe

00:43:09.840 the way I would have done it might've been smarter, but I'm now thinking, okay, well,

00:43:14.960 So it's a good decision.

00:43:17.780 Let it go.

00:43:19.680 It's not like anything bad is going to happen.

00:43:21.860 It's not like a right or wrong.

00:43:23.240 It's just like preference type of thing.

00:43:25.080 Yeah, I like to tell my clients that 80% done by somebody else

00:43:28.240 is 100% fucking awesome. 0.61

00:43:30.080 And that's the way I think about it. 0.82

00:43:31.340 It's like, I got to let those things go, because in the grand

00:43:36.400 scheme of things, it is a preference.

00:43:39.520 Well, just like I was talking about,

00:43:41.700 the founders that we love buying from

00:43:43.480 of the ones that have removed themselves from the day-to-day operations, and they're ready to turn

00:43:47.440 the business over to somebody else. I think about that in my job, not because I'm ready to sell the

00:43:51.320 business. I love what I do, and I love what I do, and I'm unemployable. Now that I have

00:43:58.300 swallowed the pill of founderhood, it's over. I'm not going back to work for anybody else.

00:44:05.360 But I still want to make my job really small and have most decisions made by other people,

00:44:09.900 because that frees me up to do other things that are more long-thinking,

00:44:13.780 more strategic, you know, that sort of stuff.

00:44:16.480 So I'm trying to make my job as small as possible.

00:44:19.180 Buy back time, hire good people.

00:44:20.960 That's awesome.

00:44:21.760 Kevin, I really appreciate you coming on and sharing, man.

00:44:23.660 Happy to do it. This was fun.

00:44:25.160 Thanks for watching this episode of Escape Velocity.

00:44:28.320 Be sure to like and subscribe and leave a comment

00:44:31.080 with your biggest insight from our conversation.

00:44:33.800 Be sure to check out the next episode.

00:44:39.900 Thank you.

Dan Martell - July 30, 2020

Why SaaS Founders Sell with Kevin, CEO and co-founder @ SureSwift.com - Escape Velocity Show #33

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