Monthly Letter #02 - Bento
Hey everyone,
Thank you to all the subscribers of this newsletter. We've 30x the number of subscribers since last month !
Ok… last month it was just me & my wife who had signed up and she actually didn't receive it properly because of a set up issue. But still. Hockey stick growth. 🚀 🚀
The way Substack works, you don't receive the latest edition of the newsletter when you sign up, so a lot of people just didn’t read the first post. Here is the link for those who want to catch up with what happened previously : Read Month #1
Today we're going to reflect on Month #2 of Bento. And to do that, I’m going to drop some QUOTES :
Quote #1 - "Software companies taste like chicken"
This was said by Robert Smith of Vista Equity, one of the billionaires who got there by buying and operating software businesses...
He added “They’re selling different products, but 80% of what they do is pretty much the same.” The idea is that even though everyone thinks their baby is cute and unique, the way they operate is similar. If you have good processes in place, if you know how to pick the right market, iterate on development, hiring, sales & marketing etc, well, you can do that multiple times and you have a recipe for success.
I also think he under-estimates how good chicken can be, and the art of cooking. But I digress and well, he's the billionaire. He probably ate better chicken than I have, so I won’t argue.
A more detailed portrait of Robert can be found on Colin Keeley’s website.
Vista’s style is much closer to traditional Private Equity, with billions under management and a huge focus on the financial aspect of it, rather than a indie hacker working in its garage. It’s one end of the spectrum.
Quote #2 - "Too few people just trying to make a nice Italian restaurant in the webspace".
It’s the other end of the spectrum and this one is by DHH. Pretty old quote in this talk but I think he said it elsewhere too. Still relevant. Not everyone needs to create a McDonalds and have millions of employees. It's also pretty awesome to do your thing, make delicious & unique food, and have a loyal, happy customer base.
Yet too much of the content we hear / read in the tech space is about creating the next unicorns, raising VC or selling to Adobe.
I was fascinated by this documentary "Jiro dreams of sushi" showing the relentless pursuit of perfection in his craft by this Chef.
This got me to discover this notion of shokunin.
The Japanese word shokunin is defined by both Japanese and Japanese-English dictionaries as ‘craftsman’ or ‘artisan,’ but such a literal description does not fully express the deeper meaning. The Japanese apprentice is taught that shokunin means not only having technical skills, but also implies an attitude and social consciousness … The shokunin has a social obligation to work his/her best for the general welfare of the people.
I even thought about it as company name. In the end I picked Bento, which is also Japanese, and also food-related :)
To sum it up, I'm more excited about Quote #2 than Quote #1. And while I think the business model of acquiring & operating software companies can work at any scale, I'd be happier with a smaller structure with a good team of experts who obsess over product, creativity, bringing value to customers and testing clever marketing strategies. Rather than a super capital-intensive structure that's all about returns and competing for higher and higher deals.
QUOTE #3 - "What did you get done this week ?"
Alright, back to reality.
This one is by Elon Musk, and it's a slap in the face.
During the discussions about acquiring Twitter, some conversations have become public because of a lawsuit that took place. And it's crazy. If you think you're playing in the pro league, think again. Big boys like Marc Andreessen negotiate 250M investments in a one-liner over a text.
But now imagine you're the CEO of Twitter (Parag), and you're trying to explain stuff about all the mambo-jambo happening over Twitter with some legal jargons in it and you make long sentences and Elon Musk totally ignores what you're saying and just replies “What did you get done this week ?” :
Scary 😱
So let’s look into the mirror. Here is a list of stuff we got done this month at Bento
OPERATING
Product 1 : SurveyNuts.
We have a new designed wireframe for the homepage, and the start of a new design system. Looks much better than the current one. But it took weeks working with Alice (part time / freelance) to get to a point where it’s advanced. And we haven’t started development for it. Things always take longer than expected !
We tackled and fixed some issues with the “Export” feature. This is a small win, but a win for everyone. First, the feature now works much better for paid customers. Second, we tested a new approach where Ben, a super talented senior engineer, came to the office and coached me to discuss different ways to approach the problem together, and after that work session I had a clear idea and did the development myself. Third, this allowed us to cut costs as we no longer use Redis for it and it was using an increasing amount of data (and money). Cool ! 😎
We had to change our billing system as we previously used Octobat, but after being acquired by Mirakl, they’re now discontinuing the product. By doing that I also took the time to simplify some things in our Stripe set up. And I also think it participated in reducing churn as October was a good month on that front.
Product 2 : Velocity
Steph has been working hard within a limited number of hours to do more marketing. Setting up analytics, emails with Hubspot / Lemlist, first ad campaigns to test different value propositions etc. But some of those doors seem to be dead ends. So this + high churn brings a certain level of frustration. Let’s hope we see some light or find a good user acquisition channel before end of year !
On the tech side, we’re now more confident in understanding the overall architecture of the app and we’ve been able to tackle customer issues coming in support quite quickly. This looks more stable now, but it’s still the most complex app in the portfolio due to the data-heavy nature + dependency on Asana API.
Product #3 - Seasons
It’s smaller than the two first products, but it’s quite sticky and is used every day by the nutrition coaches working with it, so it’s a very cool product to work on.
We’re just starting to test Adwords campaigns, working with Jess - another freelancer - on this first iteration. I don’t think paid search ads have been tried in the past, and the previous owner had a failed experience with FB ads, so let’s see !
Others
I’ve been working a bit on Pollbagel, which was initially just a side project I used when I hired my sister and she didn’t have experience with Ruby on Rails. But it’s passing 40K visitors a month in October with a small amount of work and a little bit of ads, so it’s promising. + It can be a lead magnet for SurveyNuts. Also testing monetization with Adsense, or perhaps other platforms (such as Ezoic, but the experience of trying to set up was really bad).
Trying to do a very small update of HeyCrowd iOS app is taking longer due to an update in the tech stack for the backend and small issues. I’m also working with a freelancer on this but even then, it looks like a distraction. It’s possible that I should stop working on more than 3 products at a time. Especially during the first months.
I just hired another freelancer to work on admin stuff, starting with getting all invoices in order for accounting etc. Delegating is not something I would do well in my previous experiences, but it’s now much easier to do & experiment with when you can hire freelancers for just a few hours per month. The mental space it is freeing should allow me to focus on other things which are top priority / I’m good at / I enjoy doing more.
SCHMOOZING
About 30 meetings this month. Was this useful ? Probably only some of them. For the others, Elon Musk would probably be mad at me for wasting time. Even worse, I went to a conference !
I went to SaaStock in Dublin with Moritz (Refiner.io) & Alex ! It was a lot of fun. Plus I got two uninterrupted nights of sleep which without any baby crying at 3am, which is my new definition of luxury.
Met cool people like Dirk from saas.group, Thomas Smale from FE International, or Nathan Latka from Founderpath and meeting IRL is still better than online. For example, Thomas told me about Boopos which is an option I didn’t know much about but which seems a very good fit if you want to add debt in a small SaaS acquisition deal.
By the way, this newsletter is already bringing random interest from a small number of highly relevant people, like Michael Frew (another “acquisition entrepreneur”) who also has blog =>
ACQUIRING
I haven’t been looking much into building a bigger & more structured dealflow process, engaging with potential targets etc. Mainly due to lack of time
I still had a few discussions and made an offer on one of them, after finding it in a podcast ! But the offer was too low compared to what the seller had in mind.
Interviewed several candidates for an internship position focusing on “Acquisitions”. The goal is to have someone start January 2023. Decision hasn’t been made yet, so hit me up if you know someone !
Quote #4 : "Everybody's got a plan until they get punched in the mouth"
This one is from Mike Tyson. One of the few people than Elon Musk can’t f**k with.
Yes, it’s good to have a plan. But two months in, it’s already not going the way I planned. I need to focus much more on the operational aspect of running each products, and things go slowly. Product is hard. Tech is complicated. Marketing is wild and can be a money pit. And I’m not going to acquire a company every month. Maybe not every 6 months. And when I do, it’s going to be a pretty small asset, and it’s going to require a lot of work, and still it can always go sideways.
Let’s be transparent about that so at least we don’t feel alone. Thank you to the others who are sharing their journey, the ups and downs, like Andrew Pierno at XO Capital who is sharing honestly when it sucks.
TLDR
Revenue is not moving much. Basically the same in the past 4 months. Velocity net revenue (my most recent acquisition) is decreasing in Sept/Oct.
Expenses are going up as I'm trying to delegate to free up some time, and also investing in growth strategies who are not yet paying off.
No interesting targets to acquire in the pipeline, and worst than that, no process in place to source, analyze and make decisions on dealflow.
On the bright side, I’m really having fun & enjoying the journey. And will be even happier when there are good news to report 🍱
Not my space at all but I truly enjoyed reading the newsletter. It is well written and I could feel Manu’s humour transpiring everywhere.