Half a year.
Ok folks. It’s been 6 months. And it has not really gone the way I expected.
Entrepreneurship is haaaard (especially when you’re bootstrapping, and when you have young kids) and time goes by extremely fast. I knew that, but it’s always easier when you theorize about some hypothetical company vision. And in the trenches you just have your face covered in mud.
I can feel the pressure increasing, and the heat has turned up a notch. Just this week:
an intern I had hired just a few weeks ago who was already shipping some great features ended up getting a job offer that she could not refuse.
a service provider that I won’t name (hint: they acquired Heroku a few years ago) is asking for an unexpected, really high payment (advice : never sign annual contracts thinking you can get a good discount, you’ll pay for it later)
I had to hit the pause button on paid google ads for SurveyNuts (ROI is not great).
I shut down PopSurvey, the first app I ever acquired (it was in 2016). Story for another time, but just remember I acquired it from a company based in Memphis, Tennessee.
But I don’t want to be the grumpy entrepreneur sending negativity in your inbox. So let’s focus on some good news, and there are a few. I’ll talk a bit more about how I acquired Seasons and what we’re doing now, and next month we can do a focus on SurveyNuts.
Seasons : the acquisition
Here is the story of how I acquired Seasons.
I was just browsing Flippa looking at several business listings for sale. Some people browse Zara when they're bored to buy a new pair of jeans, or travel websites. But you should try business shopping.
The hyped-up business M&A marketplace in the past couple years has been Microacquire (recently renamed Acquire.com). But I find that businesses are often over valued there, and that there's at least as much junk as in the others marketplace. Flippa or EmpireFlippers are often viewed as less "qualitative" marketplace, but I don't think it means anything. In the end they're all just marketplaces. As a buyer, I think you ought to look everywhere to find something that can be a good fit, and you want volume / market liquidity for that. Flippa has it.
Anyway, so I found one business which was confidential at the time, with just a title like "SaaS software for nutrition coaches". I reached out to the founder, who was not a software engineer but a professional in the fitness and nutrition world, based in Chattanooga. In Tennessee, again!
We started talking, first via email, and then through a call, and it ticked several boxes. The tech stack was in Ruby on Rails (the one I know best), she was juggling between a job and another business she owned so she had to let something go, and she was more interested in finding the right person to take it over than just the financial aspect.
There you have it! It’s not just about ARR multiples or a good Letter of Intent templates. Relationship building, trust, making sure the acquirer will take care of the product and its customers in the best possible way is also super important for sellers. It’s also why Constellation has been able to acquire 134 businesses in 2022 alone!! With an average deal size & multiple which seems super reasonable. They have a track record of knowing how to acquire a business the right way, and even providing a good career path for the employees.
In the end, we made a transaction for buying Seasons very quickly and smoothly. I think it's really interesting when someone with domain expertise (in this case, nutrition coaching) starts a business. They have validated some sort of Product Market Fit with a unique insight into a specific market that you would never have as a business creator / software engineer.
Growing with the community
While the product is extremely useful for coaches that use it and their clients, and churn is low, we had not found a really good acquisition channel.
In the past few weeks, we've experimented with paid ads a little, and then Eleana worked on setting up a partnership program with some of our most active coaches who :
provide us with constant feedback so we can keep building features that match their needs
talk about Seasons in their community and on social media, which can bring new leads of nutrition coaches interested in trying out Seasons.
create content for coaches that we can distribute to our audience
Since they already know the software perfectly and use it everyday, they’re in a great position to recommend it to their peers. And hey, it works! It's only the start, but the impact so far is really encouraging with some new customers coming directly from these efforts. Time for Seasons to take off!
I agree with you on MicroAcquire (or whatever they're called today). It's just Flippa with an influencer hype-person front-end.
At least Flippa provides some coaching to sellers before they list. The valuations on Acquire.com can be just straight up comedy, like you said.
Seasons sounds like it's starting off well for you. Hope it continues and we get more updates in the coming months on how it's doing.
What's the deal with Salesforce's contract?