How to Build Trust to Close Acquisitions & Sell Products

Colin and Brent discuss how to build trust to close deals with sellers and investors.

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All right. Hello and welcome back. This is Colin Keely here, and I'm Brent Sanders and we are two guys buying and building wonderful internet companies. Yeah. And this week we wanted to talk about something that we are reflective about as the, the year is drawing to a close way too fast. So it's the what, middle November now?

2022. And I don't know about you. Does it feel like this year has gone unusually fast? Yeah, I mean probably as you get older it feels like every year moves quickly. Is that a dig ? Yeah. I dunno, man, it probably feels really . Yeah, I'm just like, people are putting up Christmas decorations, which this always happens.

And I, and not to be morbid, but I always think about like, it's just that, that time of year where everybody gets depressed, I feel like the daylight savings thing is, is really. Impacting me this year. I'm, I'm usually don't even notice it, but like the, the getting home and it's dark out or the, like, leaving work and it's dark out.

It's like four 30 and you're five o'clock and it's like, snowy and it just happened. It, it all escalated very quickly here in the Midwest. Yeah. Yeah. I'm ready for Austin. Ready to move to the warmth. Yeah. Yeah. So is that. It's not official. It will be soon. Okay. Hopefully they don't listen to this, but we intend on accepting

But yeah, not great for your negotiation, but yeah, hopefully they're not listeners. I, it is funny you'd be surprised on the, the folks that do listen. I, I feel like. People will say, oh yeah, I've listened to like a handful. Somebody said to me, oh, I know more about you than you know about me. Let's just put it that way.

Which is Oh, yeah, hundred percent. Which is the point of it. It's good. I'm really happy to hear that. But, I I guess you're a funny thing. I mean, you just, it's very intimate, like you're in people's brains is they're like walking or doing the dishes or whatever for like, 30 minutes, an hour every week.

People really feel like they know you and you don't know them at all when you like encounter them for the first. Yeah. Yeah. It's cool. But one of the topics we wanted to chat about this week, again as the year comes to an end, is kind of looking back at some recent deals, and trust, like we were talking about this, we weren't really sure where this conversation would go, but like how we can do a better job of earning seller trust early on and like building upon that, like I feel like we, upon retrospective.

Deals that we've done. The first one was like the most trusting, the first one, I think, kind of spoiled us. We were working with, a seller that was pretty experienced. Mm-hmm. had already sold the business and then it came back to him. And I think at that point it didn't feel like there was a ton on the line.

Also, that the dollar amount wasn't huge. It was significant to us. It was significant enough to like, It's not something like if it went to zero, this is not like a, a trivial amount of money, but like that went really well, right? Like we were kind of trusting from the beginning. And I think, the seller was really experienced and he liked us maybe from some of the podcast stuff, maybe from like, just our, our interactions.

It was like super positive. It was all cheery. I don't really feel like we've negotiated maybe again, rose colored lenses. This is two years ago, but I feel like. that was. Kind of ruined us for all the other ones. Yeah. I said this on a call recently that we got tricked into like, oh, this is amazing. This is the easiest thing ever.

Like, why doesn't everyone do this in every deal since it's been harder? But yeah, that one Brandon's awesome. So now he has a new startup that's doing like electric motorboats. Like electric speedboats. Yeah. So that's super cool. He was an awesome guy. and why there's trust there is like, he, so my first call with him, he looked into our background and like read a bunch of my writing and I thought that went a long way to build trust.

And maybe he was just, , he is a Texan, he's default trusting or something. Mm-hmm. . But yeah, every deal since it's like, you think this is more spreadsheet investing or something, it's like, oh yeah, this deal looks good, deal or no deal and like move forward. But it's, it's been just a slog of like building relationships and building trust.

It's, , Different than, , just numbers and being creative right around. So I feel like the, the second deal we did was this, that one's very broker driven. I don't feel like we even spoke to the seller until like the very end. Yeah. But even then the broker was like hard line on, on certain things and it just felt, that one felt, I didn't think was ever gonna happen because it was just, it felt too icy.

The broker was very, And had strange requirements. We couldn't get access to certain parts of the code. It was, I didn't, I didn't like that, but it, it softened and then we ended up meeting the, the seller and he was great. And I probably would've been talked about, probably been easier to deal with. We recently talked about our, our third acquisition, which was a challenge from a, comfort perspective.

And then as we look forward to, to future deals this problem, it's not really gonna go away. Right. It's, it's probably gonna get as we move up market, we're talking about higher stakes. And we want to buy from bootstrap founders. Like that's, that's not gonna change. We're not gonna start working with, so going to your point around like, this is spreadsheet investing, like I think if we were dealing with institutions, that would be definitely much more the case where it makes sense financially and there are parties incentivized accordingly.

But I think with these bootstrap hunters, the biggest, X factor has been reputation of like, well, what's gonna happen to this product? After it's done in my reputation is attached to this product, I, everybody thinks of me when they think of this brand, thinks of me when they, they think of my products and they won't really know if they see it kind of go downhill or, or kind of go in a negative direction.

They won't really bifurcate, oh, well you sold it and then something happened to it, they won't know. And so that's been a, a big, Thing that, we try to say, Hey, we want to be, we wanna take your baby. And we take it seriously. It does become our baby, but it's, it's hard to kind of convince somebody that we're not like, some evil trick.

Yeah. I, I think, I mean, we're doing everything we can. So I think building in public, having the podcast where we kind of talk through our thinking, makes us more approachable, makes us like, helps people see us as like real people. So like podcasts, a lot of my writings to Twitter, I think that transparency builds trust.

The other, the biggest thing that we haven't done, and I think we clearly should do, is just like fly out there and meet people in person. Yeah. Someone phrased it as meeting belly to belly, which I thought was like a hilarious phrasing of it. . So we just gotta meet more people belly to belly when we can.

I honestly, like, one of the things that jazzes me up about doing the work that we do is the international aspect of it. It's, from working with people all over the world and like, I have a total dream. I wanna, like, I really wanna do it this next year is like, go visit. We've been working with some teams for over a year.

They're, they're all over the world. Armenia. Where else India for, for some of the folks, Vietnam, Korea, Brazil. Like take a tour and spend time with these people and like go work with them like nothing crazy. Like, go to their office or go to their, their place of work. Like spend time with them.

And, and furthermore like doing that with sellers I think would be, would be really fun. Like we don't do that many deals that it would be prohibitive. But going back to this like, Just getting to know other people, whether it's traveling internationally or not, of just like, Hey, let's grab lunch. And I think that would be a good thing for us to like just budget, set a small budget for, and even if it is like somebody in Australia like that, that's a, that's a big ask to, for lunch.

Yeah, yeah. For lunch. Weekend outta it or something. A 20 hour flight for, for lunch. But, it, it may be the difference. Between getting a deal done and not, and, and frankly, like, I think, think about the terms that, not that we're necessarily gonna get a better deal, but if you're able to, contrast travel time and cost with legal fees.

Yeah. Like if you get, even a quarter way through a deal under loi and then it falls apart due to trust. A, a first class ticket to to Australia might, might be cheap. . Right. And, and so I think it's a good investment and I, I think we talk about it, we haven't really done it. But I think it would be worthwhile to, to try out.

I think of it. So meeting founders I think is a no brainer. Like flying out there, it's just like, I dunno if you wanna deal closing costs, like just roll it in. It's not a, a huge amount of money. And then meeting LPs, so I've been going to some conferences and it's just, you build a lot more trust just meeting someone in person, like your real, even if someone is listening on your podcast and like read all your words, it's not quite the same as like just standing next to someone and talking.

So, hey, some of these conferences are super expensive. Like capital Camp is 12, $10,000. Mm-hmm. , it's like, I mean, it's justified if you get like one LP from it, but it, it hurts, it hurts to pay that amount to do that kind of thing. Yeah. I mean, we're bootstrapping ourselves, right? Like we're doing these, these deals with our own money, our own, with our own debt, so to speak.

I mean, it makes sense to, to. To your point, like investors. But it, the fun thing about this space though is, is like you've gotta kind of pull multiple things together at, at a given time. And, yeah, you have to be able to, to move quickly. And without trust, you can't, you just like, things get drawn out and dragged out.

But, I, I think reference, we talked about this port reference are good references, could be helpful, but then again, it's like you don't. Oh, did this person get paid to, to say that they're, they're trustworthy. Reputation, I think is one thing that, I don't do a great job. Like my LinkedIn is very bare.

My, like, I don't do a great job of like surfacing that. And I think that would be something that as I look to the new year of like trying to improve, I don't know how to do it. It's not, is it like a portfolio of past deals? Portfolio of human interaction. People that will vouch for. I, I think that's where like, hey, talk to so and so.

It's best like, do your, take some references and, and do your best to ask them questions. But I don't know that sellers really want to do that work. I mean, they should, right? They should do their own diligence on the seller, but, or on the, the buyer. But, yeah, it's a little, a little fuzzy, I think. Yeah.

Social proof is an obvious one. Like, if you're selling a product, testimonials or views on a website, you'll help. Mm-hmm. . So we should probably do. Just ask some folks to Adam. The other thing that I think a lot about is just like, if you're trying to sell something for $3,000, you wanna like just deliver a lot of value and then it becomes like more, more of a no brainer to buy that like more expensive thing.

Mm-hmm. . So I think of delivering a lot of value. We do it with this podcast, like we talk through the process. , I think we could do like guides and valuations or deal process or like on my course. Like all those things are like kind of stepping stones of trust where people trust me more and more.

And then, maybe the next step is selling a business to us. Yeah, just like, oh, what I do on Twitter, LinkedIn is just like talking about what we're dealing on a, weekly basis, like writing one thread on that. And that seems to work pretty well. One thing that I would throw out there that has, has kind of come up indirectly, it's like, qualifications around, the idea that like, I'm gonna sell you my baby.

What business do you have in growing it? You're not smarter than me. You don't have more experience than me. You don't have more resources than me. What qualifies you to take my baby and, and necessarily grow it? And like, I'm not. I'm not big on like talking a big game. I'm big on performing, right? Like it's speak speaks softly, carry a big stick kind of thing.

But you know, I think that's where when we approach sellers, I think having some proof around, Hey, we've done this. We have confidence in our ability to do it. We have confidence in our ability to, to grow the thing. I think that that's where I'm finding it. It's a little hard to, to have like tangible proof because I, I don't have.

a bunch of stuff on my resume that shows, oh, well I've, we bought 10 of these and turn 'em all around into to home runs. And, they've been wonderful exits cuz we're like doing it now. It's like one of those things where you go apply for, for the job, your first job, and they're like, well, we need more experience.

Like, well, how do I get more experience? I don't Right. Get the job first. I, I mean that's a good argument to throw, every company we buy on the website, right. It's just like, yeah. Show you've done it. You once you've done it three times, five times, 10 times, 20 times, like eventually it gets harder and harder to question you, cuz you clearly have done it.

Yeah, yeah, that's right. I think that, yeah, I think that is is like building a portfolio, being more open with, I always push back on that cause it's like, ah, from like a, a technical like attack vector perspective of like a hacker knowing that, there's a common thread. Not that, that's like, that's not driving our decisions of like, oh, well, the more we can anonymize these companies, the more we can kind of keep them separated.

It really doesn't make sense cuz they get attacked either way. Right? They all, when it comes to. Intrusion and, and all that stuff in the tech world, it's not necessarily a personal attack, it's just if you leave your doors open, people come walking in. So I guess I need to just get over that. What about, I was thinking about that.

So even if, rent goes full of Kanye and starts, saying all this racist stuff and antisemitic stuff, it's like, it, are our customers gonna go like Google Brent's antisemitic or something? Like, no, they're just gonna pay for the dog walking software. They're like gonna have no sense tied to.

I suppose so like, yeah, I guess I keep my, my profile low enough, but, it's, I was gonna say, it's like, I, I wonder if it, it does turn into a little bit more of a, like a portfolio site. Like I started my career doing more so like creative work, like creative technology and, and that was always the thing you put together your prior year portfolio of like, here's what I did here.

The steps and you kind of outline case studies and you kind of show, hey, this is how I think, this is how I work. And it's always that thing that gets neglected throughout the year cuz you're busy doing it. You're busy putting together, but it always came into this time of year, once Thanksgiving would hit things would start to slow down, put together the portfolio of the prior year and share that out.

And I think that might be a good exercise to, to publish, which is just like, okay, this is what we did last year. I mean, This isn't the recap episode, right. We're not gonna go through all the stats, but you know, we, I do feel like we are progressing every, every quarter is better than the prior.

Every year we're doing, it's not necessarily what we, we didn't close everything we set out to close. We didn't crush everything we we set out to, but we're progressing and that's good. Like, it's, it's definitely getting better and we're, we're building this, this base up. So, sharing that I think would.

That might be my takeaway from this. Yeah, we're pretty good about sharing on the podcast, but like, I guess case studies on the website of like, this is the product we bought and this is the product as it is today. I think that would be pretty impactful. Cause I think. A lot of bootstraps think, well, they're just, they're going, , double prices.

They're gonna gut the team and then it's gonna run it for cash flow. And that's not like what we do. It's like, we ask, , what's the most annoying thing? What features would you like? And you revamp the UX and it all looks better. And, , customers actually way happier after an acquisition goes down than like before.

So like documenting that whole process could be cool. You know what, that's a funny thing that actually now that we're, we're talking about that I didn't really think about that every, I guarantee you. Even on, on products where we have RA raised prices. I guarantee you if you poll the customers, they would be happier.

Cuz we, we actually, we invest a lot in the customer support. That's one part of it. I guess we, we respond to their needs. But yeah, general, I mean, maybe it's just this phase that we're in where it's like the first couple years you're, you're improving, you're, know. But I just don't see us like letting anything languish to the extent that when, when things come to us sometimes, Things have kind of languished for the, the lower end of the customer base is, is ignored.

The, yeah, that, that's an interesting metric that is probably worth highlighting is like, your customers will be way happier if you don't have to deal with them and we can take this over. And I think that is the thing that is also in common on all the deals. Even ones that have had like, properly customer support structures.

There still is never that like stakeholder. Involved or there's a stakeholder that's involved in everything and there's no support structure. So it's like we tend to bring in both of those things that yeah, definitely make, make for a happier customer. Yeah, we juiced the initial number a little bit on Scout cuz we waited like, I don't know, three weeks to pull customers.

So we had already changed customer support a little bit, but yeah, that'll be the first one. We, where we have more of a baseline, we can see we, pull 'em in six months or. See how it goes. Yeah, I mean, I'm on my, let's see, I spoke to a customer yesterday. I'm just looking at my list of customer conversations.

I'm on my probably eighth, ninth customer conversation directly. I, I would say everyone has kind of, echoed the same thing that, you know, Hey, this is, there's not a lot of solutions in the space. Some are happy, some are, are not so happy, but in general, they're happy that they're on this.

Platform, but that was like the big thing that they were like getting ready to hop if they weren't gonna start getting some more answers. Which is, I think, a common situation, especially for Bootstraps that are like, Hey, I'm at my limit. I don't wanna deal with support. I actually spoke with, this seller last week around this time, and I was just like, how, how are you doing post sale?

It's been three weeks. Like, do you feel different? He's like, I uninstalled intercom, and I feel so much better. , which is the tech, the, support line. So, I'm, I'm always happy to hear that. And so far things have been good, not without challenges and problems, but you know, I think that's like the, the thing that is probably our number one metric at this stage is just customer satisfaction.

Yeah, my only other idea was like, kind. So all this was about building trust kind of in advance. This is like building trust as it's going, is just do what you say you'll do. So like set timelines and meet them, like, Hey, we'll have the APA to you within a week and actually do that and we'll get back to you in 24 hours and do that.

I think that just like slowly builds trust, like as the deal progresses. And then just, sticking to simple deals, nothing. Well, so yeah, I was about to bring this up. So like simple deals from a terms perspective makes sense, but like, I'm curious, like, I like being creative. I like blending the lines of like, Hey, normally you would go through your broker and an attorney and,  all this stuff.

And I, I, in my mind, I like this idea of like, let. Let's spend a full day to, let's go camping and we'll go hiking or whatever and like spend some time together and hash out and share with me your. And, and we'll go two ways, like let's hash out and because like the, the best way to get through some of the, the trust issues is not through an attorney.

Not through a broker. It's like just get head. The problem with that is, is like you guys, two people put their heads together and like, come up with this fanciful deal and then the attorney comes and well, what about this? What about this, what about this? What about that? Yeah. And basically squash the love party,

So, but I do, I do like being creative. I just think. That tendency may not serve us as well in the future. Especially as like, as we get too far down a process and then, you, you come to, okay, well how are you going to paper that? How are you going to, to make that official and the trust? I guess that's where you have to have some sort of Yeah, like benchmark where you can tell the attorney.

I actually, I think it's gonna be okay. I mean, I, in selling my first business, that was the, the final thing, and I'm sure it is for all of our sellers. . You have to just say like, okay, I think this person's I'm gonna, I'm gonna like open my, be susceptible to some aspect of this. And that's just how it has to be in order to sell a business.

You have to kind of, yeah. We talked about this last week and I think we're kind of getting the same point, but it's, it, it's, it would be nice to be, I like being more creative, but I, I don't, I feel like that's, it's almost counterintuitive. Yeah. Yeah, I don't know. Any, anything else you wanna talk about?

Any other thoughts on this? No, no. Other than, you got, you got the baby coming. What is the due date? Basically the end of the month probably. Is it like 38 plus a couple days right now. Wow. Okay. So you're talking the next two weeks, all the prep is done. All the prep is done. Got, the car seat in the car, the mirror room for the car seat in the car.

We set up the nursery kinda yesterday. All the bags are packed. Got an air mattress to bring to the hospital.

I don't even think the room. So, you are gonna have a child just for the listeners. Say you're gonna have your first child at the same hospital. I had my first child. Yeah. And most people in Chicago have it. Most people in Chicago have their, their child at, at the same hospital and the rooms are teeny, like, so I since had two chil, or I since had one child, moved to Ohio, had our second child in Ohio, in, in, in Rocky River or Fairview Hospital, which is like a suburban hospital where it's.

A three bedroom , you could fit like 12 people in the room easily versus in Chicago. At At Children's, or not at Children's? What is it? It's the women's hospital right? Apprentice. It's called Apprentice. Thank you. The rooms are tiny, like I remember. And you're significantly taller than I am. I could barely fit on the bed and, but there was nowhere else to put.

I don't know where you're gonna put that mattress. Yeah, people told me there's space. My wife's a doctor and a bunch of her friends of doctors, and some are there. They seem to think that there's plenty of space for a twin but not a queen. So I was told I can't, my can't . And I was also told I can't possibly fit on like the little couch that they give you.

So no, this is my solution. Is there a chance that you can just go home? It not unless you wanna get divorced? No. I suggested that it was not, well received. So, no, I don't think so. . Because I'm only like, 10 minutes or whatever driving or less. It's not very far, but yeah, it's so funny cause I the same deal as last time for with our first it was like, oh you're gonna stay and we lived blocks away.

We lived at 500 North Lake Shore for, so literally could walk home. And, and sleep in a bed. But yeah, it was the first baby didn't, we didn't know what to expect. You don't want to miss it, I guess now upon like, thinking about it, but it was literally the, one of the most uncomfortable nights of sleep ever.

Yeah. But yeah, and I've shared my one tip with yous, like, let the nurse keep the baby in the nursery as long as possible. Like, get your sleep. It's the last chance you're gonna have before taking the baby home, and, and you'll be fine. But, yeah, it doesn't, that first one that was, that was a, That was a tough night of sleep, , and then that got, it was like an hour or two.

But either way, plans for taking time off. What do you think? It's weird, right? Cause I don't really have a boss. I mean, I'm accountable to partners and, other people. But I, I was kind of thinking like a week or two where it's, I'm mostly like disappeared and then mm-hmm. . From there on part-time, I think, you the baby sleeps a lot.

I could pop in, pop out and help kind of as needed. And that's roughly what you did? I don't know. Yeah. Do you have any thoughts on that? Yeah, I'd just keep it loose. I would not, my main thing was I was shutting down all my, anything I was accountable for. That was my big thing is like, A month in advance.

I was doing a fair amount of consulting work and, odds and ends for, for other projects. And it was like, I'm not if you need it, like get it from somewhere else. And so I set everybody up with like other contractors, other people to finish things off. And I was just, and as I think about it, I was not productive.

Like I was not sleeping, I was spending time. The days kind of went, went differently and I don't remember how much, I feel like I took like hardcore two weeks completely off the grid and. Yeah, you're bored. Like you're sitting around and there's time to do things and you still want to get busy. I just didn't apply like structure for maybe like a month of like, okay, I'm gonna start going to the office.

And then the second time around, I don't really think I took more than a week, week or two. And yeah, it's just like, it's, I mean, it's different when you have the second, the other one's running around. You already have a nanny. You already have like structure built in. Yeah, it's, it's all about just making it comfortable for your partner.

That's like the, so you know, I would definitely recommend, brushing up on your cooking skills and plan on just feeding everybody and cleaning , get your vacuuming game on point. That's a Roombas for Aruba does a good job, but yeah, yeah, yeah. You got a Roomba. That's right. I do basically all the cooking anyway, so that's not really, much of a change.

Oh really? Yeah. We have a very similar. Similar domestic situation, it sounds like. Yeah. Well, anyway, we're excited. I don't know if, this is the last podcast for a while or we got a couple more, beforehand, but have you guys decided on a name or are you going last minute? It's down to a few. Okay.

Yeah, people are pressuring us more and more to hear the name, but I don't think it's, completely concrete yet. Yeah. I don't know. I, I'll never forget Cousin Max. Named his son Axel. That was a, that was a big surprise. That was a, I hadn't heard a baby named Axel. We went with Oliver and Sophie.

They're very far more conventional, but, yeah, it's, wait until the moment. Cause you gotta see their face and see, are they truly Now they all look like blobs. You won't be able to tell anything. Yeah. Some people have said other variations. I don't know. Whatever. We're excited, we're ready for.

Well, if it happens before the next podcast, good luck. Yeah, thanks and take care everyone. All right. Thanks for watching.

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