Selling My Bootstrapped SaaS Business

Five years ago I built and launched the first version of a SaaS app on a single flight from San Francisco to Buenos Aires. Slowly and steadily, Storemapper grew into a healthy location-independent business for one person and then later a small dedicated remote team. At parties, I would describe it as, “not a startup; a healthy growing internet small business.” This year, almost exactly five years after launching, I sold the business for what, to someone growing up middle class in Florida, is a life-changing amount of money that will enable all kinds of exciting new projects and adventures. From start to finish, it has been an exciting ride, much of which I have documented here on the blog. With the sale concluded, I wanted to share as much as I could about the process of building a business that can be sold and how I sold it.

There’s always a risk that these posts turn into a 5,000-word humblebrag. But I really do think it’s worth a read because, unlike most business acquisition stories, which often feel like an out of the blue stroke of good luck, the way that I sold Storemapper feels very replicable for other entrepreneurs. When I spoke to someone two years ago about what it would look like if I ever sold the business I would say, “I’m not trying to sell it now, but if I ever did it would probably look this…” And six months ago I would tell a few folks privately, “I think that one of the people I met recently might be the one to buy Storemapper and if they do it will probably go like this…” And, then basically when it all went down it looked more or less like… that. There wasn’t some single huge stroke of good luck, though of course, I got lucky in the little ways that every successful business has to. An excellent outcome, but also a perfectly reasonable and achievable one that I think can serve as something of a template for other bootstrapped entrepreneurs.

This is a long and detailed post. I had so many questions going into this process and I didn’t find a ton of good posts from the founders perspective on selling bootstrapped businesses. So I thought I would just throw everything I could think of into a post and let you skip around or save it for reference when you’re considering selling your own business. Grab a pot of coffee and let’s get started.

First the obvious: why sell your software business?

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How to Get Startup Ideas: The Meat Grinder Approach

There are a million books and blog posts on how to get startup and business ideas. Many people think the biggest road block to successful entrepreneurial life is having that one great idea. Once you get even a modicum of success, lots of people will start asking you about how you got an idea like that, and for any tips and tricks on how to “come up” with a similar idea.

The concept is extremely tantalizing and sounds so imminently teachable that it’s a favorite tool of lifestyle business spammers everywhere. 7 Step Guide to Profitable Business Ideas. Join My Webinar on Finding Your Dream Business Plan.

But this is entirely the wrong way to think about it.

First of all you should be coming up with at least five possible business ideas every day. This part should be basically effortless. People trying to sell this part are scamming you.

If you are going to be a successful entrepreneur at all you should innately be looking around you at your life and the lives of others, thinking what are their problems. What are their desires. What do they spend money on. Which of those things are broken or could be done massively better or cheaper or faster. You should be constantly thinking this way. It should annoy people who spend a lot of time around you.

If you’re not doing that, you’re probably not going to be an entrepreneur… sorry. It’s okay. There are lots of other great life paths but this one isn’t for you.

There is one common exception to the rule. You might be hung up on one idea, and that stops the process of thinking of new ideas. It’s cool, you just need to build yourself a better meat grinder.

The secret to coming up with a successful business idea is putting hundreds of ideas through the meat grinder.

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Debt Free

I turned 30 last week and as a birthday present to myself I paid off the last chunk of the nearly $60,000 in debt I accumulated trying to build a software startup. I thought I would write a little about what that’s like and whether I’d do it again.

In the Summer of 2011 — four and a half years ago… dang — I quit my job.

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The Best Networking is Not Networking

My first job was at a research consultancy. I was learning and writing about the booming wind energy industry. A big part of my job, and that of and many of my colleagues, was to attend an ever increasing number of industry conferences. The goal was to be part salesperson, convincing potential customers that the analysts at our firm were smart people with interesting things to say, and to play journalist, getting nuggets of data and an informal consensus on topics for which we lacked data. The fact that I reverse-engineered the financial model for a complicated financing structure1 almost entirely from buying beers for CFOs at conferences was probably the only reason anyone in the industry thought I had anything valuable to say, for the first few years at least.

These conferences were like any other — people milling around in uncomfortable suits at random convention centers, and sometimes fancy resorts. The startup I worked for was still young so my business card carried little cachet, that meant I would have to do some networking… ugh.

I’m a slim 5’6” so nearly everybody, already packed into tight circles, was physically either taller or wider than me. Wind energy was already an old energy industry so nearly everybody was two decades or more my senior. The battlefield was intimidating to say the least.

As a natural introvert I hate this stuff. I don’t mind talking to people, but walking into a crowded room and trying to spark up conversations with strangers. Makes my palms sweat as much as anybody else. Except for extroverts who actually like that stuff, those people are lunatics.

At first I was very analytical about figuring out how to network in the least painful way possible. I observed my colleagues who were good at it, read Dale Carnegie books and that awful Never Eat Alone book, read some blogs and experimented continuously. I learned some stuff that does in fact work.

I learned if you are young you need to dress very sharply to be taken seriously. If you manage a billion dollar private equity fund, everybody takes you seriously even if you’re in an oversized mustard yellow three-piece suit, a bolo tie and cowboy hat with an eagle feather in it. If you’re in your early twenties with nothing to trade but your wit and charm, you need a dark well-tailored suit, pocket square, some strikingly neon dress socks in polished kicks.

I learned about a “whatzit” or a conversation piece. Sometimes the tiniest ice-breaker can kick off a great conversation so it’s good to dangle something, anything really, that someone can make an off-hand comment about to break the silence. In my case it was a metal and tortoise-shell business card holder that I deftly whipped out to distribute cards while everybody fumbled in their wallets for crinkled pieces of paper. “Oh nice card holder,” they’d say. I’d respond, “Thanks, what are you investing in these days?” I’m aware of the American Pyscho business card analog here but you gotta admit, Bateman was a smooth operator.

I learned to get to the conference really early because everybody is off their guard and bleary-eyed at the coffee line. I learned later to spend hours before the conference emailing attendees because hard to reach people were 10x more likely to agree to a 15 minute side meeting at a conference than a 30 minute phone call on their normal calendar.

These are just a few snippets, there’s mountains of advice out there on how to network better. And a lot of this stuff does technically work, it will improve what you get out of a networking event and it totally worked in some ways for me.

But then I discovered a networking tactic that worked 100x better. All the other marginal improvements I’d made were worthless by comparison.

The secret to power networking is: Make something awesome and tell people about it.

The way to crush a conference is to give a compelling, data-rich, slightly funny and slightly controversial talk. It’s as simple as that.

I learned this when the CEO of our company was supposed to give a presentation at a reasonably important conference and couldn’t make it at the last second. So my boss thought, “Tyler’s been working for us for like six months now, why not have him do it instead?” (Yea, everybody there was awesome like that).

So I worked my ass off, put together a really interesting deck, nervously told a joke or two and pulled it off. I made something and told people about it. And then an amazing thing happened, everybody wanted to network with me! My talk was on the second day, so people who had actively ignored me the first day were now introducing themselves, or sending their lackeys to arrange a meeting. I got invited to the cool nerdy after parties where everyone gets too drunk and tells you all the juicy data.

This isn’t even an 80/20 effort. Just giving a 15 minute presentation yielded 99% of the value of the conference with 1% of the effort. Unless you have a deathly fear of public speaking, sitting on stage and saying “look at this cool thing I have” is a lot less scary than walking up to a stranger and saying “Hi I’m Tyler.” At least to me.

After that my conference trips were both more effective and much more pleasant. I focused almost all my efforts on getting a good speaking slot and giving a kick ass talk and mostly didn’t worry about the rest.

The general pattern holds well too. Since I put my suits in storage and quit my conference jockey gig, I’ve spent the last four years making stuff and blogging about it. Blog posts have been by far the best source of any kind of networking for me.

Inbound requests from folks who want to partner or help with my businesses all come from blog posts. Interesting people who just want to have a chat, come from blog posts. Fellow entrepreneurs who want to swap stories, find me through my blog posts. The blog-first startup is getting a lot of traction as a business tactic because it allows you to cheaply make something useful and show it to people before you ever pitch an investor. If done well, investors read what you’re putting out there and reach out to you!

I’m sure I’ll think of other good distribution methods for the make and tell people about it but for now it’s all about the blog game for me. Or rather the full pattern is: make something awesome, blog about it and then Buffer it, and then later repost it to Medium.

People always think the end-game to actually get value out of your blog is to monetize it with ads or something. But I think the biggest benefit by far is it allows you to do “pull networking.” You write down “these are the things I’m thinking about and like talking about” and others can read them and reach out to you if they like thinking and talking about those things too. That is infinitely more valuable than the $0.00005 per page view for one weird trick ads in your sidebar.

Making things, by the way, is also the only way to network upwards. What do I mean by that? Well let’s say you want to meet someone you look up to and admire: a writer, film star or entrepreneur. If you deploy all the traditional networking tactics incredibly well, they might be impressed and maybe you would get to meet them and gram a selfie with them. But let’s say you actually want to become friends, confidants and colleagues with these people. No amount of cold-calling, leveraging alumni networks or stunts can get you there. But write a best-selling novel, Kickstart a film in Sundance, or build a fast-growing startup and now you get invited over for drinks and conversation. The only way to build a real relationship with someone who has hugely asymmetric demands on their time is to make something they admire.

Sadly there’s no one weird trick here. The making of awesome things is massively harder than becoming a LinkedIn Group power-user, but it’s massively more rewarding too.

  1. “tax equity” for the energy geeks