Getting Acquired - How an Entrepreneur Built and Sold his SaaS Startup with Andrew Gazdecki: An EOFire Classic from 2021

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot. podcast network, the ideal destination for business professionals with great shows like I Digress. Today, we're pulling a timeless EO Fire episode from the archives, so the giveaway may not be active, and we'll be breaking down how an entrepreneur built and sold his SaaS startup. To drop these value bombs, I brought Andrew Gazdecky into EO Fire Studios. Andrew is a four-time founder with three exits, former Crow and founder of Micro Acquire. Andrew has been featured in the New York Times, Forbes, Wall Street Journal, Inc.

0:35Magazine, Entrepreneur, TechCrunch and VentureBeat. And today, Fire Nation, we will talk about how when you build a company, it becomes part of you, how it's essential to listen to your customers, and so much more. And a big thank you for sponsoring today's episode goes to Andrew and our sponsors. The Hustle Daily Show, hosted by Juliet Bennett-Ryla, Rob Litturs, Ben Berkley, and Mark Dent, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. The Hustle Daily Show brings you a healthy dose of irreverent, offbeat, informative takes on business and tech news, like a recent episode on hackers versus casinos, where the hosts talk about MGM Resorts and Caesars Entertainment and the devastating potential of cyber attacks.

1:15Listen to The Hustle Daily wherever you get your podcasts. Is now your time? Visit Thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at Thrivetimeshow.com. Andrew, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, John? Thanks for having me. Excited to be here. Okay, so coming out swinging. One thing that I believe that you need to be successful that others don't.

1:56I would say you don't need experience. You don't need – so this comes from personal experience. My first company, no experience, didn't have any capital, didn't have access to investors. So I think one thing that people need that people would probably disagree with is just the ability to work really hard and the ability to learn anything. If you have those two things, I think you can go pretty far. But I think a lot of people would agree with that too. So that's a hard question. I only ask hard questions, except from this point forward, because now we're going to be talking about getting acquired.

2:37We're going to talk about Fire Nation, how Andrew built and sold his SaaS startup. In fact, I want to talk about a couple of these things right now, but I want to start at the beginning. How did you start your career? Where did you start your career? Walk us through that process. Yeah, so I've kind of been an entrepreneur my whole life. I've been building businesses since I was like 10. And when I say businesses, I mean like I had an eBay store. I used to sell like World of Warcraft gold, which is kind of embarrassing. so I've always just kind of had a passion for business and I guess I really started my entrepreneurial career in college when I started a job board I just connected mobile developers with businesses and this was in like 2009 so this is when iPhone first came out and I basically spent a whole winter vacation from college just commenting on a bunch of blogs that talked about iphone apps and long story short people started posting on this job board um for mobile app development again specifically iphone android wasn't even out at this point everyone sold blackberries so that was that's how long ago it was um built that up to a decent scale sold it for you know what felt like 50 trillion dollars in college which was like 30 or 40 or 50k i can't remember.

4:04But, you know, everyone's broke in college. That was huge. But yeah, so I sold that job board because I kept seeing people post the same type of job over and over and over, specifically like luxury restaurants looking for a way to offer loyalty programs or send push notifications or display events. And so I thought and people were paying like 40 or$50 ,000 for these very simplistic iPhone apps. So I sold a job board and I built a template, kind of like Wix or Weebly or Squarespace, but for mobile apps. And that was the genesis of business apps. I ran that company for about nine years. But that's where I got started.

4:50I hope that's helpful. Kind of a long-winded answer to the question. Yeah, it is helpful because that's what we want to know. We want to know the evolution. We want to know the story. And I kind of want to now backtrack a little bit to business apps. Like, talk to us about how you came up with this idea. Again, kind of walk us through this hero's journey. I mean, you've already kind of dropped that it was a nine-year process, you know, overall. But, like, what was that aha moment that gave you the idea to start business apps? How did you actually start getting initial traction, momentum, growing clients, customers, users, etc.?

5:26And then I would love to actually get in at the end on the actual sale process. I think a lot of people don't really even understand how to exit and how to sell a company. So take us to all of that. When I first launched business apps, it was a very, very humble beginnings. It was really, again, I was 21 years old. I was in college. I just didn't want to get a job. So the idea with business apps when I first launched it was I was going to have like a mobile app development agency. the MVP of the template was so bad like only I could use it it literally was like a white page with fields that you'd fill out it looked like you were filling out a DMV form but I understood how to use it so I just swap out images and text and very simple items and I built these mobile apps and being I was in a college town it was kind of the perfect area to launch that business so a lot of my initial customers were acquired just by walking in the business speaking with the owner and again this is 2010 so a big part of or a large segment of iphone users were college students you know young individuals and so bars and restaurants were all looking for ways to connect with you know these you know young students and draw them into their restaurant or bars for happy hours or discounts or events or whatever it might be.

6:52So, yeah, I ran around my college town and got, like, 50 paying customers, and I thought, okay, I have a business. I don't have to get a job now. And then I pitched our CSU Chico State business plan competition, and I ended up getting first place, and that story is kind of funny. The other contestants kind of had, like, ideas and stuff, and I remember building an iPhone app for the competition in front of everybody and just kind of the looks on their faces were like, well, you built this and you have customers and it works? And I was like, yep. And that led to me meeting an individual named Christian Friedland and another angel investor named Robert Stroussarino.

7:38They invested about$100 ,000 into the business and that's kind of when things got serious. I guess you know that's kind of when we grew up a little bit but it was still very scrappy um got a little office and then we started cold calling um if you've ever cold called a restaurant especially it's not easy so you got to find the owner if you're selling to small businesses there's a tip there so I didn't know that and we were pitching apps to restaurants so some people would be like you know iphone app like appetizers and we realized that wasn't going to work and so fortunately when we had launched we had been featured in some really high profile publications like tech crunch covered our seed round i don't know how or why and then business insider wrote about us in the new york times we had it was just a really good story that we had like college students building mobile apps for small businesses really easily and affordably.

8:38And so we had a lot of inbound traffic as well. And what I'm trying to say here is it's definitely important to listen to customers. So I saw this one user building these really nice apps for hotels in Switzerland. So these like multi-million dollar Ramada hotels. And I thought, okay, cool. There's this like millionaire using my platform to build apps for his hotel. I assumed he owned the hotels, which he didn't. So I got on the phone with him and I chatted with him a little bit and quickly found out he was building these apps on behalf of his clients because he was doing the marketing for these hotels.

9:14And I just asked him one simple question. I'll never forget it. I just asked him, how can I help you sell more of these apps? This is incredible. And then that's when we shifted over from selling directly to small businesses. So we stopped cold calling and we shifted over to a white label reseller model where we partnered with web design agencies all across the world. So our first white label partner was in Switzerland. And so we translated the apps in a bunch of different languages. And then instead of selling one app at a time, we'd partner with web design agencies that had 10 clients or 100 clients or sometimes even 1 ,000 clients.

9:54And they would use our software to build apps for all of these customers. So that's when the business kind of really took off. So that was our initial kind of go to market. Long story short, cold call didn't work. Listen to customers and, you know, they definitely had some good ideas and that kind of really helped change the trajectory of business apps. I mean, one thing I always talk to you, Fire Nation, about is are you solving a real problem for a real individual, for a real business? Are you providing an amazing solution, preferably the number one solution to a real problem? And if you can say yes, then guess what?

10:34Even though it's still tough, you can call these businesses. You can talk to these individuals and say, hey, I have a real solution to an actual problem that you are experiencing. Would you like to hear more? Or I love exactly what Andrew did and go, hey, what is your biggest struggle? What is your biggest challenge? What are your obstacles that you have? is there something that I'm hearing back from these individuals and businesses that I want and can create a solution for and to? So of course, there's so much more with the biz, with the business app story that we can't get into today because I still want to talk about altcoin and micro acquire and some other questions I have.

11:11But just let's skip ahead of all the jazz and get to like the exit. Like what did that look like? I think people are really kind of curious about how exits start and what that looks like. And let's not go into super detail here, but just take us through the process of business apps exiting. Yeah, definitely. So we sold to a private equity firm almost three years to the date. I believe we closed May 30th of 2018. So that'll be cool to celebrate when that day comes again. But yeah, it was crazy. You know, because as an entrepreneur, you work so hard for a decade and then all of a sudden that's kind of your the culmination of all of your work all at once um so i i did it all cash deal um i had met the private equity firm years before we actually uh did the transaction and yeah i mean when you sell a business especially for me with business apps, it was my baby, you know?

12:16So, you know, we had spoken with other potential acquirers. There's financial acquirers and there's strategic acquirers. Strategic would be like Google or GoDaddy or web.com or Endurance Internet, like big companies, financial or private equity buyers, and they buy businesses for different reasons. So we grew business apps to about 10 million in revenue. And so that was kind of the main focus when we were selling to the private equity firm was our, you know, revenue, our churn, our growth, all that fun stuff. And just, I mean, it happened pretty quickly. So I was getting married. And they had reached out like two months before that.

13:00And I'd been in the business for like eight, nine years. And, you know, I started thinking, you know, maybe this is a good time to move on to something else. Candidly, I was pretty tired because when you run a startup for eight years, it's kind of like 100 years. It's like every year in a startup is like dog years. Oh, yeah. Yeah, so they approached me and we did some back and forth negotiations. Due diligence was definitely a good amount of work. We got through that and then we closed May 30th. It's not that exciting of a story, but it definitely was life-changing. Well, you say life-changing.

13:42You were willing to share your$30 ,000-ish exits from your first exits. What was this one? I have actually never told anybody. Oh, there's always a time to start, right? I appreciate you trying to pull it out, but no. The one thing I will say is, so you can kind of do the math. Like private equity buys from like two to five X ARR. At the time of close, they bought the cash in the business, which was a little below two million. We also did a stock purchase, which means the tax implications on the business were far lower than you typically see if you do an asset sale. So it was definitely a bigger transaction than the job board.

14:30I'll just say that. So we're talking probably somewhere around five to 10 million. Yeah, that's a good guess. Fire Nation, we will be right back when we get back from thanking our sponsors. Can you believe we're already in Q4? This year has flown by, but Q4 is an exciting time. And not just because the holidays are right around the corner. Something magical happens when the third quarter ends and the fourth quarter begins. The energy changes. The fourth quarter is where games are won, where champions are made. And in business, it's where sales teams become legends. That's why HubSpot built Sales Hub.

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15:42Are you ready to grow your business now? What if you could learn the proven systems and processes that have been used to grow thousands of multi-million dollar success stories at Thrivetimeshow.com? See testimonials of how Clay Clark's proven business coaching has helped over 2 ,000 clients to increase profitability dramatically. Clay's proven business coaching program is month to month and less money than hiring a minimum wage employee. Sounded good to be true. Go to thrivetimeshow.com to see over 2 ,000 documented success stories. Because Clay only takes on 160 clients, he personally designs your business plan for you.

16:15Then Clay's team of talented designers, videographers, web developers, workflow mappers, and accounting coaches will help you to implement that proven plan. See over 2 ,000 verified success stories and schedule your free one-on-one 13-point assessment with Mr. Clay Clark himself today at Thrivetimeshow.com. Knowledge will not attract money unless it is organized and directed through practical plans of action. Become the next success story. Schedule your free 13-point assessment today at Thrivetimeshow.com. All right, Andrew, I want to talk now about Altcoin. Kind of take us through that process as well.

16:48Like what even gave you the idea for Altcoin? How do you start, get that initial traction? And then let's talk very briefly again about the exit. Yeah, definitely. So Altcoin was, I started that actually when I was in due diligence with business apps, I knew I was going to be leaving the business. So other things to note on that transaction was I had a 90 day transition period. So immediately, you know, when you build a company, and it kind of becomes a part of you i just wanted to have another company i was running um i i wish i took a break to be candid but uh this is when you know bitcoin was doing its first you know big run and everyone was talking about it and i'd always been a fan of cryptocurrency so i fell pretty pretty hard into the whole of ethereum and essentially what we were building was a faster way to transact um uh ethereum tokens so we were basically trying to speed up like when you send bitcoin or ethereum it takes like 20-30 minutes and we're working with um a framework that would allow for instant transactions and so the premise of altcoin was basically speeding up um transactions on the blockchain So I started that business, hired a very, very talented team, but it was hard.

18:11Building anything in blockchain or crypto is very, very challenging. So I can't say it wasn't as successful as business apps, mostly because of the limitations in user experience. and just the, I guess the problem we were trying to solve was such a technical problem that we kind of chipped away at it to a point. And when we felt like we had built something of value, and I should also add this business was kind of a built to sell business. So when I started the business, I mapped out who would be potential acquirers because we felt this would be a good piece of IP to sell to a larger business that is in the crypto industry.

19:00And that's kind of how the acquisition happened, too. So once we started to really have the product at a point when it'd be ready to launch, rather than us going and getting regulatory approval, which could cost, you know,$2 million in 18 months, we sold it to a company that had that regulatory compliance. So from start to finish, that company was built and then sold within, I believe, 14 months. So it was a pretty quick turnaround for that one. This is the thing, Fire Nation, once you kind of get into the flow and get into the process, you should start to understand how these things operate, start to build relationships that are already there and in place.

19:39So maybe you can get that initial ball rolling when it comes time to exit or at least start the conversations. And did that have any aspect or play when you moved into micro acquire? Can you kind of talk about that process? I mean, every time I had sold a business, I had friends reach out like, how did you sell it? Like, what did, what do you do? Um, there's people that you can hire. You can hire an investment bank, you can hire a broker to help with the process. But I just saw a big void in the market where exiting a business for an entrepreneur, Even if you go through it twice, you're kind of viewed as an expert, but you're really not.

20:16There's so much nuance and so many different types of buyers, deal structures, earnouts. How do you even negotiate with buyers? How do you get on the radar? So I just thought it would be really interesting. And I guess I looked at the industry and I thought it was really interesting that no one was really talking about this. There's so much content on how to raise venture capital, how to grow your startup, how to do basically everything but sell your startup. So I thought, you know, I kind of know a little bit about this, not everything. And I just thought there needed to be an easier way to sell your business.

20:49And that was kind of the idea with MicroQuire. And just for context on what MicroQuire actually is, it's a marketplace where you can buy and sell SaaS businesses. So you can go on MicroQuire right now, go through the listings. There's over 500 startups in the marketplace ranging from, you know, a small pre-revenue application for$5 ,000 all the way up to something that is making millions in revenue. And I launched that about a year and a half ago. So, I mean, again, Fire Nation, it's one of these things where once you understand the process, it's not like exactly rinse and repeat because everything's different.

21:25Things do change, all these things. But at least you understand the process. You're building relationships. You're having and acquiring these connections and you're making things happen. So Andrew, you've told us three fascinating stories. I mean, business apps, altcoin, microacquire. I mean, not even to mention the company that you were rocking when you were in college and making$30 ,000 plus. You know, when most people, you know, like myself, by the way, back in college was literally living on$75 a week. Thanks to my ROTC stipends. So I mean, just mind blowing stuff across the board. What is the one key takeaway that you really want to make sure Fire Nation gets from everything we talked about here today?

22:06Give us any call to action you have about how we can learn more about you, what you have going on, connect with you, and then we'll say goodbye. Yeah, definitely. I would say if you want to just kind of follow my journey, just follow me on Twitter, A. Gazdecky, or feel free to add me on LinkedIn, Andrew Gazdecky, if you can spell that. or check out MicroQuire if you're interested in learning about how to sell your SaaS business. And a lot of it applies to generally all startups. But yeah, also if you're interested in potentially looking at buying a business as well, you can do so for, you know, again, 5K to 100K to upwards.

22:42So feel free to reach out. AndrewMicroQuire.com is my email. I'd be happy to connect. Fire Nation, you have to take advantage of these opportunities when there's people who are willing to connect, who have been there, who have done that, who have the experience, who have the knowledge, and who have the success and are willing to have these conversations with you. So please take action on these things because you know that you're the average of the five people you spend the most time with. You've been hanging out with AG and JLD today. So keep up that heat. If you head over to eofire.com and just type Andrew in the search bar, the show notes page will pop up with everything we talked about here today.

23:18Best show notes in the biz, links to everything that Andrew just mentioned. Reach out to him via email, check out Micro Acquire, a lot of options for you here. And Andrew, I want to say thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you, brother, and we'll catch you on the flip side. Thanks for having me, John. Hey, Fire Nation, today's value bomb content was brought to you by Andrew. And over the last decade, Fire Nation, I've interviewed over 3 ,000 of the world's most successful entrepreneurs, and I've created a revolutionary 17-step roadmap to your financial freedom and your fulfillment.

23:54I put it all into my first traditionally published book, The Common Path to Uncommon Success, personally endorsed by Erica Mandy, Dori Clark, Neil Patel. The Common Path to Uncommon Success is the step-by-step guidance that you need for your nation to achieve the lifestyle of your dreams. So visit uncommonsuccessbook.com and you can learn more there. Order your copy today and I'll catch you on the flip side. Peace. The Hustle Daily Show, hosted by Juliet Bennett Ryla, Rob Litters, Ben Berkley, and Mark Dent is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

24:31The Hustle Daily Show brings you a healthy dose of irreverent, offbeat, informative takes on business and tech news, like a recent episode on hackers versus casinos, where the hosts talk about MGM Resorts and Caesars Entertainment and the devastating potential of cyber attacks. Listen to The Hustle Daily wherever you get your podcasts. Is now your time? Visit thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at thrivetimeshow.com.