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[00:00:00] Colin Keeley: Hello. And welcome back. This is Colin Keeley here,
[00:00:03] Brent Sanders: And I'm Brent Sanders.
[00:00:05] Colin Keeley: and we are two guys buying and building wonderful internet company.
[00:00:08] Brent Sanders: Yes. And speaking of which it is what second week of 2022. And we closed, our second business, right before the new year, which was pretty awesome. pretty awesome.
[00:00:21] Colin Keeley: Yes. Yeah, Sorry for the delay. We haven't recorded an episode in a while. I was away from my microphone and we've been pretty good. Working on two deals. And I we made this rule of not talking about live deals. So it's hard to record a podcast with all you're doing day to day.
You really don't want to be talking about.
[00:00:38] Brent Sanders: Yeah, I couldn't agree more. We were talking about it was just. quickly. And it was taking up a lot of time and having a couple of spinning plates in the air. It's hard to come up with other topics to spend time on to like research or even think about. But that's the beauty of podcasts.
It's it's, we're not on a schedule. Like we'd like to do it often. It's fun to do on a weekly basis, but it's when other stuff gets in the way it's good. It's always there to come back to.
[00:01:02] Colin Keeley: Yes. Yeah,
So talking about this new deal, we're not going to disclose the name, which we'll the, we'll talk about why at the end of the episode, to begin, where we found this one. So I'm always talking to folks about, trying to build up deal flow. And someone reached out to me about being a debt provider on deals for SAS deals specifically.
And this is a really nice offer because there's in this, Bigger than SBA loans, but like smaller than traditional loans. So we were in this weird spot of, it's too much money for us to use our own cash, but we'd like to do some bigger deals. And so they reached out and they actually sent me this company, through a broker.
And so that kind of kicked off the discussion and this was our first broker deal. So I guess, what was your experience with a broker deal? Brent, what'd you think.
[00:01:44] Brent Sanders: was a, it was interesting. I didn't love it. I think one of the things that I enjoy about this job is like meeting founders and getting to know them and communicating with them and understanding like their wants and needs and crafting a deal. That's going to be better than what's stock.
So to speak, working out something that, that might be, an exit that I don't know, I want to be more like participating in, in crafting that deal in the broker was very sanitary, but I guess. I totally get it from the seller side. They didn't really have to deal with us or get on a call or we're like deal with, tire kickers.
Cause I think it was on the market and other people had maybe made offers on it. I don't think it had gone into diligence with anybody. There was no LOI signed on it prior, but it sat on the market maybe longer than, I don't know, a couple of weeks, which right now in the market for B2B SAS sales is quite a long time, but, Yeah.
Going through the process, there was a lot of, regimented steps and a lot of like the responses we got is, oh, we just don't do that. It's oh, can you, first thing we do when we sign it, the white throw me on the get hub. Let's look at the code. Let's dig into the infrastructure. Oh no, we can't do that.
We're going to do a, a two-hour screen-share multi hour screen-share I was like, okay. And so in my mind, I'm like, that's weird. That doesn't feel very transparent and that's not really going to their best foot forward, but because of this debt piece, there was like, there was just a lot to gain, right?
So it's I'll give it a shot. And so I complained and bellyache about it. And then I did it and I got to say that the screenshot was great because it was like they managed to get all of the stakeholders, all the developers, at least like the lead developer lead dev ops person, the lead product manager.
On one call. And so every answer I got every question I got an answer to right away, which was great. So I'll give you the code through that and, I, you have to use sort of the heuristics of what a healthy code base what's, what was in place and without getting into too much detail, I saw a lot of really good stuff where it's okay, I can't go line by line and go through everything that I'd want to see.
I did definitely go through everything I needed to see. And I saw, some good. Not so good, but acceptable, like acceptable risk around technology. And. Yeah. So I, I I kinda came around to it at the end. I was pretty, I was like, I don't like the vibes on this deal. I don't like w when I say vibes, like just the sentiment and the broker was just very cold to us.
So this is just how we're going to do it. And, in my mind I was one foot out the door. I was like, I really. I think this is going to happen. And, because of the reasons, it just felt uncomfortable. But once we did that, multi-year screen-share and I asked, it was able to get access to a couple of things that I needed to see, I'm able to make a pretty quick decision.
And so we ended up saying, yep, given the thumbs up there. And then I started getting excited about it. Then we started to negotiate in the negotiation process. I feel like. Super fast. Like they, that was the one thing I really appreciate is w I, we were under a timeline cause we wanted to get it done before the new year,
[00:04:44] Colin Keeley: so, we didn't, the seller did the seller was afraid of tax changes. So he's. I want, so this has been on the market for a little bit. They had a pretty high asking price and he was like, I want this done December 31st. Can you get it done? We're like, Yeah.
we have this financing in order. We can do it. And we made an offer in two other offers, came in and negotiated initiation happened over the weekend, like Friday night.
I think it was when he called me to get like an offer clarified. So our offer was. The lowest upfront amount, but a competitive total amounts. So we had more, a much more seller side financing than other folks did. And it was really weird cause you're not negotiating with the seller. Like we, we talked to the seller once, before.
Like the deal actually closed. And it was very brief, like a half hour or something like that. And even as you're talking about the technical diligence, even the financial diligence, the broker was really buttoned up and did really good financial diligence, but they wouldn't let me see the like primary sources.
Like I wasn't allowed to see the bank accounts, read only, like I normally ask. A Stripe account. I think maybe I just got exports for, so all that was like, you're trusting the broker a lot because you could definitely be faked out by some of the stuff, but maybe the dollar amount was not sufficient to really trap you.
And I, realistically, we weren't really on the hook for it. It was, not our money that it was going up front. It was the debt source that was, being pretty risky.
[00:06:06] Brent Sanders: And by the way, they brought the deal to us via the broker. So it was like, there, there was some sense of okay, there's a fair amount of debt going on here. You guys are, have basically pre-approved this, which means that you trust the broker enough. So that gave me a little confidence, but yeah, it felt by the way, the broker was really young.
I'm just going to say it like he was really young. I think, based on LinkedIn, but he had a very reputable history and everything else, but it's I have no track record with him. I have no track record with this from. It's not like an elaborate fraud scheme, but could have been maybe, I don't know that that's where it was in my mind, I'm like this could totally be across my mind more than one time that like, we could just be like the ponds and some, wire fraud, fucking mess.
It didn't into our confidence, even if the broker had, an established history it's like you ever seen, what was the movie that. With Michael Douglas where like they spin up, these, he, it's basically a, an experience for him, but they basically spin up a fake office and he goes around from things to things, and he shows up the office like three days later and it's empty and everything's gone.
And it's oh, I got, I've been duped. And so it's I felt like that a little bit. So I definitely wouldn't feel like that again, doing business with this broker, but I also not sure what. Do this again with a broker? I don't know. It's definitely, I know what to expect now. The upshot here though, I feel like the negotiation did go a lot smoother there wasn't.
And w when we asked for things, we just said, we need this. And, there was someone greasing the wheels a little bit, although it didn't seem like this was his top priority where it's like, we wanted to, once I decide, I want to do it, I'm like, let's do it. Let's get it done right away.
And we weren't like. for some things for for six hours and it's Hey, we're coming up on the end of the year here. We want to, because in our mind we only had exclusivity until the end of the year.
[00:07:55] Colin Keeley: Yes. Yeah, that was
[00:07:56] Brent Sanders: think that was the kind of strange thing that they were they wouldn't do X, oh, we don't do exclusivity.
It's w what's the point of the LOI, if it can scoop get scooped out from under us. So I get it like they're working on behalf of. The seller. My favorite thing, the whole process was the $1,000 fee that they charged. I think that was definitely the point at which I think we're about ready to just be like, all right, forget it.
This is weird. So I don't know if it's like a token amount, cause it's $1,000 is less than 1% of the deal size.
[00:08:29] Colin Keeley: And to be fair, the broker fee here, I think they made like six figures. It was something close to six figures. So they made a good amount of money. Cause they, they're working on behalf of the seller and then to like ding the buyer $1,000 at the last minute where I think I've drawn up the LOI and drawn up the documents.
It's no. No. I think we're going to drop the documents. We're the buyer. We have fair documents and everything. At the last minute, they're like, all right. And we need our thousand dollars added back in there. like, we're going to spike the deal over this amount, which is it's such a tiny fraction of the total deal price.
[00:09:00] Brent Sanders: Yeah, but it was just like enough to be like, yeah, I think your response was like, we don't need your help. We don't need your docs. We don't need the thousand. We can, we're going to take that out. We don't need any, what did they call? It was like an administrative fee or something. Service charge.
They're like Ticketmaster.
[00:09:16] Colin Keeley: Yeah, it was an administrative fee and it was like, we don't need any administration. Like we have our own lawyers. We've done deals before, like the buyer or the seller needs administration. That's what you're doing and that's who is compensating you. So Yeah. it was really frustrating, but the whole process, like it did work and it did work out well in the end.
It was just, pretty bumpy and we're all like trying to race. Cause we had two weeks to complete the whole deal to right around, new years.
[00:09:41] Brent Sanders: Yeah, but now it's closed in super happy with, that's the thing that I'm, I was very happy. So I started digging into, now that we've got access to everything and we got access to everything. The seller was super organized, had a one password account, which is I'm totally convert.
Everything's going over to one password now. So every business we start, we've been using spreadsheets or whatever else, which is, not great, but, then we got an open channel to the seller and I got to know kind of him and his story around the business. And he seems like a really smart guy, really cool.
Somebody I would definitely buy business directly from again. So If I had to do it over, like what I rather deal with him, for sure. But would it go as fast? Probably not. Like it was nice to have somebody who was like on the hook to get this thing done a little bit. So maybe it was worth a thousand bucks on our end.
It really didn't matter. But, now that the dust is settled and we're off and running like super happy with the.
[00:10:37] Colin Keeley: It all worked out. I wish we were able to talk to the seller earlier because we were, I think, misinformed about a few things around the deal that got cleared up. Once we actually started talking to the seller. So all that stuff was pretty well. Yeah, nothing bad came of it, but it was just like, if we could just talk to you earlier, we could have settled this better.
I would say almost everyone in this space is pretty cool. They're doing the same thing we are. But it's been a great relationship. Hopefully we could buy something else off of them in the future.
[00:11:05] Brent Sanders: Would you ever start a broken.
[00:11:06] Colin Keeley: You definitely could. And I know you, this is a thing that people do, especially, search funders or something like you see a bunch of deals and you could pawn them off to other people and manage the relationship. I don't know if I would, I guess it would be easy to fall into that based on where we sit right now.
[00:11:21] Brent Sanders: I am just curious if we think that model, I don't know. We had on prior episodes, we've talked about. Like standardizing the docs we talked about, how do you, how can you make this like a more transactional and easy to do thing? And I would say they made, they try to get you in.
They tried giving us their attorneys. Do they, if you need an attorney, we'll give you one, we'll even give you the purchase agreement. It's I took that as maybe that's like a malicious thing they're trying to just, get the best terms for them as possible. But could you position yourself as like a, an arbitrary arbitrator of market terms and fairness versus just trying to get the seller the best deal possible?
I guess you'd probably wouldn't. Attract people who are really trying to maximize, which is really what a broker should be doing is like trying to maximize the sale price. And, but if you could just be like, Hey, we see all the deals, we know what market terms are, and we'll make sure that this sells in a fair and market oriented way, or like least drive those terms.
That might be interesting as an extension of the way of standardizing. It's just becoming a broker, but, I could see like a micro acquire being that. Hey, we get the people together and then, Hey, we have a way to transact and close. It's what I'm thinking versus a brokerage
[00:12:29] Colin Keeley: MicroAcquire is trying to do that. I wonder if you could ever do it fully, if you're the second. And you want the easiest experience possible. You need this intermediary to make a nice prospectus, sell your company in the best way possible. Do a bunch of research.
Micro acquire is never going to spend that much time doing it. So it's always going to fall. I'm like the seller's job. And a lot of these people are like pretty technical. They're not marketing folks. They're certainly not writers. They're not financial people. So you like, there's always going to be a place for the broker.
I don't know if we could do like a broker light where we just kind of dial step up and they'll do all straight market terms. There's definitely some possibility there.
[00:13:08] Brent Sanders: Yeah, it's interesting. Yeah, the deal's done. We're happy about it. Really excited, spinning up, part of what we're doing. We're doing a, like a 30 day, transit, because it moves so quickly. We just asked for, Hey, keep running the business for 30 days, you have your dev team, you have your support team, and it's given us a chance to spin up, our own Devin sport teams.
And they're working well together and transitioning over. And then, Yeah. Start looking at the product, start talking to the customers and start doing some marketing.
[00:13:36] Colin Keeley: Yeah. So do you want to talk about why we aren't saying the name of it?
[00:13:40] Brent Sanders: Sure. Yeah. I'm, I'll even throw it out there that we're doing this building in public thing, but I just don't really see what the upside is necessarily. If you want to email me and ask me and you seem like you're sane person, I'd be happy to tell you, if you want to.
Prove that you're a, not a psycho or not somebody malicious, but I just don't really see what the upside is like. What's, I guess we'll probably end up putting it on our site in our portfolio anyways, but, there's, I said this to you. It's it's, don't really see what is the upside of every after every deal we do, we push the name.
It's even if you have the best of intentions, it's just doesn't seem like a great idea. I also think that from a tech perspective, it's not great for this business in particular, because there, there could be security issues, right? Like we don't really want to disclose that from a, just is, are we opening ourselves up to, a vector of attack that we're not thinking of.
So it's just better to be more buttoned up with.
[00:14:37] Colin Keeley: Yeah. So I actually wrote a nice thread, like a Twitter. I have we bought this business. This is why we like it. This is what we don't. This is what we plan to improve. And then I was thinking about it, do I want to disclose this in the morning that I wrote that it was the same morning that Nick Hoover, sweaty startup on Twitter kind of was getting canceled and attacked.
So he said, He definitely plays the game on purpose, where he says outlandish stuff. And I think he knows it's outlandish and it blows up. But this one that he said was not that I'll add is that he hired 18 people or something like that in the Philippines, that do work for $5 an hour and basically help his business run.
And he said, he tries to hire in the U S it's really hard to hire right now. And these people are. And that blew up on Reddit, which is like the most hateful group in the world, all their Reddit users. And so everyone just started attacking his employees, his businesses, leaving, once they are used everywhere, trying everything they could do to hurt him.
And then they started giving death threats to his family and his businesses and his employees. So that was like, oh, this is like the real downside of building in public. Like maybe we don't want to disclose, the company we just.
[00:15:46] Brent Sanders: Yeah, I guess the idea is that if your ethics or your like business practices, Generally accepted by some group of people. And the thing that mentioned here, it's like, it knows who these people are, but in my sight, my own mind, it's it's, I go on Reddit. I like Reddit, but yeah, it's like gamers.
It's generally no, I'm almost 40 years old. Maybe I'm too old for it, but I it's a wide range of ages, but I think it's certainly people who are super active on the internet, like me, I spend at least eight hours a day near a computer or on a device of some sort. And it's it's real easy to, to tweet.
It's really easy to send hateful messages. It's really easy to do all of those things. And I don't really know like the context of any of this stuff, but I do know that. and take it out of context and make it seem super evil. And w what, so he's just said I've hired, was he saying I've fired a bunch of other people or that, that might be implicit in what he's saying?
[00:16:42] Colin Keeley: No, it was, just that he's hiring, not Americans, basically, which I mean, if that's a crime, like literally every business everywhere is committing that crime of outsourcing and hiring people, on the internet nowadays. So it was just a, I think it just blew up by one of the subreddits and had a lot of angry people, justified or not.
I definitely not just about. But my issue with building in public is just like you're giving people opportunity for attack. If you disclose too much information. And if you don't, then you know, they don't really have the ability to attack you or your employees as easily.
[00:17:15] Brent Sanders: Yeah. Going back to. Billing in public, but then there's also just like tweeting in general. I don't even do the upside that, I keep my Twitter account light and stupid. Like it's I, it's I know you can make friends on Twitter and unbelievable access to people that you otherwise wouldn't.
But I don't, I'm like old school on the internet from the sense of, you have a handle or a screen name and it's, this idea. Disclose. It's here's who I am like even setting up the account initially. It's I don't feel all that comfortable doing that. I wasn't really, IRL friends from the internet.
Like I have internet friends, and I have, people that I know in real life. And what I talk about with them are vastly different. It's you can be incredibly hurtful and painful. And I've spent a lot of time on message boards, in my early twenties, like in college.
And again, when there was no, no one would put their full name as their handle. It's like a pseudonym or like a screen name. And I guess. The doubt that is that people can be, you can still do that on Twitter. And so there's a group of people on Twitter that put their full name and their identity and talk about themselves.
And then there's a bunch of people with, fake accounts that threatened your face, threatened to kill your family. And it's like hard to then bifurcate that it's what's a real statement. What's not. So it's, I'm just the side. I'm going to stay on the, be a wall. I read it. I would tell you like the more time I spend on Twitter, the unhappier, I generally am.
So I try to stay off of it unless there's something really interesting, it generally makes me feel like I'm not doing something right. And so I stay away from it. So maybe Nick should do the same.
[00:18:50] Colin Keeley: Yeah. There's so many upsides to building a public like. Yeah, serendipity vehicle basically of you just have so many people that, want to support you, or it could be beneficial connections like you, the upside is just so great. You don't actually know where it's going to go. So like for us in particular, maybe our next deal comes through.
Or likely to come through there or an next investor or many investors. So all of that, like I'm going to keep building my presence, but I wonder if I'm just going to do it with no personal information. Like I'll never update my profile photo. I'll keep getting older, but my I'll look less and less like my profile photo.
And it'll just be like my voice in my words, and like nothing about my physical location or it's just my name that people know.
[00:19:32] Brent Sanders: Yeah. Yeah. I don't know. I feel like there's a lot there that my, my sense is go outside, go, do, go do that, all that networking go do, if you want to go network, go out. I guess it's hard with COVID, but spend more time with people. One-on-one, the one thing that I do like about building public and you've really kicked off this project.
For me, I never did it before knowing you, the opportunity to meet people that you otherwise wouldn't like through the podcast that is gold. That's really awesome. Like we had a, we've had a couple of guests on and other, even other podcasts that's all we would do is just give you an excuse to talk to people.
So I did that and, Canceled over something stupid. I feel it's just, there's so much rage, so whatever, just be yourself, be authentic. And if people don't like it, fuck them. That's my take. The less you care, probably the better off you're going to be.
That being said, when people are like threatening you, that becomes not so much.
[00:20:21] Colin Keeley: Yes. It only takes one crazy person, create a real issue for you. That, that's why I don't like sharing personal information, but w Y network on the internet, because it's one to many, it's just like a magnet to people that are interested in what you're doing and, one-to-one in person, is it doesn't scale as nicely?
[00:20:36] Brent Sanders: True. That makes sense.
[00:20:37] Colin Keeley: Anything else you want to talk?
[00:20:38] Brent Sanders: No, I can't think of anything. We've been heads down on this deal and I guess maybe a little retrospective, I think we should like, high-five on the podcast. know we're in different locations, but like in looking back at 2021, we did two deals. We had never done any of this stuff before.
Pretty awesome. Like in terms of, as I look back to where I was this time last year, we were starting businesses, but no, Buying them and of the businesses that we started last year, none of them are around, or I should say the year before in 2020, none of them around, and now we have these businesses that are much more sticky and I think that the key differentiator there is revenue.
So yeah, I think I'm just somebody. Yeah. Us. We were on a call yesterday with somebody. They were like, how did we get into this? And it's trying to trace that back was an aha moment of wow, it's weird. How things work out where you just get wind of an idea and then it takes hold.
And I give you a ton of credit because when you're out there finding the deals and I feel like it's been a great partnership and it's working.
[00:21:40] Colin Keeley: Yeah.
I wanted to do like a retrospective of 20, 21, but I didn't have my mic, so we kinda glossed over it, but it is awesome. It is a real pivot to, never, I guess you bought a candle business before, but I had never bought a business before like studying up to like actually putting it into.
[00:21:57] Brent Sanders: Yeah.
[00:21:57] Colin Keeley: we're off to the races and, Yeah. it's been really fruitful and, boy, it is nice to see these like Stripe emails come through all the time of this large amounts is being deposited in your bank account
[00:22:06] Brent Sanders: Yeah.
[00:22:06] Colin Keeley: not having that, a year or whatever.
[00:22:09] Brent Sanders: Yeah. Or that was like a, a rare occurrence it's every single morning I actually turned those off finally, which is a true sign of wow. Like I just didn't trust that there's going to be some amount hitting each account and that's recurring revenue and it's just before it was, yeah, it was like, oh my God, we've got a customer on.
We got some to pay us. Oh my God. And now it's yeah, it's just old hat. Major change that I, I I would totally celebrate. And as we look at, we're working on a new deal, it's much bigger and, really working hard on getting into this world. I see a pretty major change of. No, what, how and what we're spending our time on, it's just not, trying to build product features.
It's more so putting the right people in place, which is where I'd like to be playing. It's not, it's funny. I think it was, I was telling somebody on a call, I got a new Mac book pro this suite. Mac book pro, but it, I can't really run all my software projects on it. Like I Docker doesn't work great on it, and it's probably been the best thing though for me to like leverage other people, to be like, My inclination on a lot of things, when there's an issue on any of our products, it's like, let me just go push a fix.
And that is how you get pulled back into the code and pulled back into the lower level. And I just feel like we're spending way more time now, at least it's only two weeks in a year, but just maybe the last 90 days, it's been way more strategic. And it feels like where I've been setting my goals and it feels like they're getting achieved, which is always a great.
[00:23:35] Colin Keeley: Yeah. I, this is going to be a fun year. So we have a much larger deal that we're going to close. And then my kind of goal for the year, it sounds like yours as well is just to scale things up. Like right now we're both doing maybe too much hands on work and I want to start delegating more, bringing more people in.
And I talked about this after the ESW episode, but like putting systems in place. So it's not just dependent on us to do stuff.
[00:23:57] Brent Sanders: Yeah. And by the way, the more I leverage other people, the more I realize I suck at what I do, like I'm good at I'm good enough at coding. I'm good enough at, design. I'm good enough at these things to I'm passable, but it's oh, when you like hire in pay professionals that's their only focus.
And this is how I am on everything. Going back to music. Like I was never the best player, but I could also do other things, is like a school. Everything is, I'm like a mile wide and inch deep. And so it's probably best for me to leverage other people. Cause I'm just like so happy when I see commits or changes to products that we're doing.
It's oh, that's way better than I would have done. It's like a very good.
[00:24:33] Colin Keeley: Yeah, I am exactly the same way. That's very well, but, but it'll be a good year. I'll be fun.
[00:24:38] Brent Sanders: Yeah. Thanks for listening.
[00:24:40] Colin Keeley: Yeah. Take care everyone. Bye-bye.