Laurie Barkman interviews brothers and business partners, David and Chris Sinkinson, about their experience as co-founders of AppArmor, a bootstrapped SaaS business with a $40 million exit.
They discuss the importance of understanding product-market fit, the role of unhappy customers in identifying issues, and the significance of recurring revenue in their app business. The conversation highlights the value of building relationships with potential buyers over time, which contributed to their successful exit.
They emphasize the importance of selling at the right time to capitalize on growth potential. The brothers also share their experience of transitioning out of the company and their ongoing efforts to help other entrepreneurs in their new venture called “Startup Different.” Check out their podcast and new book called “Startup Different.”
Enjoy this conversation with Chris and David Sinkinson and their succession story from idea to exit.
Listen in to learn more about:
- Building a successful business with a sibling partner – navigating the challenges and leveraging complementary strengths.
- Achieving product-market fit by deeply understanding customer pain points and iterating based on feedback.
- Strategically planning for an exit by proactively building relationships with potential buyers over time.
- Maximizing the value of an acquisition by selling at the right time to capitalize on growth potential.
- Transitioning out of the business after a successful exit and leveraging the experience to help other entrepreneurs.
Find Chris and David Sinkinson Here:
Website: https://www.startupdifferent.com/
LinkedIn: https://www.linkedin.com/company/startup-different/
Instagram: https://www.instagram.com/startupdifferent/
YouTube: https://www.youtube.com/@StartupDifferent/
❤️ Show us the love on Rate This Podcast: https://ratethispodcast.com/successionstories
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My Links:
🌐 Website: https://TheBusinessTransitionSherpa.com
⏰️ Meet With Laurie: https://thebusinesstransitionsherpa.com/connect/
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TRANSCRIPT:
Welcome to Succession Stories. This is the first time I’ve had two brothers on a show together. So this is a little bit of an experiment.
So welcome, Dave. welcome, Chris. I’m excited to talk with you about how you built your business and the exit that you had.
Let’s dive in. Dave, why don’t we start with you? Tell me about the business that you two founded together.
Yeah, absolutely. So our business is called AppArmor, and we’re kind of in a niche market. We built these unique products that were called mobile safety apps.
And basically, the gist of it is this. If you went to a university or college, because that was sort of our primary market, basically there was an app that was branded to the institution that you could press a button and it would call the campus security or campus police group on campus and also provide them with your location in real time. So if you think of sort of like those blue light poles, those emergency poles on campus, this is meant to be, in some cases, a replacement, in some cases, like supplementary to some of the services that were provided by those poles.
So it started out with a kind of like simple idea. And then over time, the business really grew very quickly and expanded. We actually ended up working with hundreds of different institutions and different organizations also in health care and K-12 schools, big, large, large multinational corporations.
And the app had tons of different features. So everything from, like I just mentioned that sort of that panic button will say, to being able to share your location in real time with a friend as you’re walking home, maybe from the library or something like that, or receiving what’s called emergency notifications, those emergency alerts, kind of like amber alerts that you get on your phone. But through the mobile app, when there’s an emergency happening, when it’s related to your organization, there are lots of different features built out.
And it was a real journey. We started out, I think, as a side hustle, I want to say back in about 2011 and led to some really good outcomes. I think what was it by the 20, 2022, it’s almost like 10 straight years of working on the business and growing it organically over time.
Yeah, and I’m excited to talk with you today and unfold that story about your exit. And before we go there, though, I gotta ask Chris, what was it like to work with your brother? Did you always say, hey, I’m gonna build a business with my brother and we’re not gonna kill each other?
No, we’ve always had a pretty good relationship. So I’m actually 10 years older than Dave. So as I was growing up, Dave was the little kid that was tagging along.
And then I think by the time he was 16, he had outgrown me. He was taller than me and bigger than me. So for the last, I don’t know, 20 odd years, everybody’s thought Dave is the older brother and I’m actually the younger brother.
So it’s been weird. But we work really well together mostly because we’re complimentary skills. So I’m the coder.
I’m the guy that writes the code, does all the nerdy things like that. Dave’s the guy who goes out and gets the sales. So when you think of a lot of different tech startups, there’s always been kind of like the nerd and then the sales guy.
So if you think of like Microsoft and Bill Gates was the nerd and Steve Bomber was sort of like the sales guy. There’s a lot of those types of setups in tech companies. So we were kind of like that as well.
Worked out really well. The first 10 years I was running my business, I was the solo entrepreneur. And quite frankly, everybody was owning me.
I was working so hard, but I didn’t have like somebody who was like Dave, who was like the person out there advocating for us, getting the deals, doing all that side of it. So our real business really took off when we teamed up and started working together. The one thing too, that really works in our favor is that we both have the business training.
We both went to the same business school about a year apart. Like I did it when I was like in my early thirties, Dave did it when he was in his early twenties, but we both have the same business training. So that’s worked out really well.
And the business school that we went to is a team based MBA program. So you learn to work in kind of like this creative chaos. So Dave and I obviously, we were very candid with each other, but we learned that when we have these disagreements, the way to solve them is find data, because usually if we can find data, we can come to an agreement on something.
So that worked out really well for us. The other piece of advice I would give any other like sibling co-founders out there, when you have a fight, keep talking, don’t stop talking, because when you stop talking, that’s when things really get nasty.
And we tried to leave it on the field, right? We tried to leave the fights on the field, but I will point out that I did have a slightly higher GPA than Chris at 0.1.
He always brings this up. I don’t know how it happened. It must be some sort of rambling or something like that.
I have no doubt you guys are competitive, but you also have your strengths in your own swim lanes. One of the things I want to go back to is this 10-year overnight success. It’s so fascinating.
So many times I hear the number 10, and you guys were in that ballpark as well. Let’s go back to the growth phase of the business. How did you figure out product market fit?
How did you know that ultimately your product was solving some pain for it? You said you were selling the product to colleges and universities, right?
That’s right. It’s a good question. A lot of it was that we were noticing that these campus security, campus police departments, there was an active need for this.
Most of the time, these departments were talking about the equipment they were going to buy and these other needs, but at the end of the day, they were falling behind a little bit on the technology side, and they would have an interest in it as well. How can we keep up with the new trends and all that kind of stuff? Back then, a smartphone, I had a BlackBerry, it’s putting this in context, but a smartphone-
You are Canadian after all.
Yeah, exactly. I was going to mention that earlier, but you know.
It’s either Minnesota or North Dakota or Canada, so anyway, whatever that’s all about, but that’s fine. But we did notice though that these departments wanted to keep up, so we would provide them with different options, different new ways to attack old problems. We started to know it was going well once they started to talk to each other.
Early on, we would do, and I hate this term, Chris loves this term, this sweetheart deal. We would give these really good deals to early customers, try to establish that market share strategy, and then over time, get those referrals so we could do that figurative cross of the chasm, crossing the chasm to that early majority. What was interesting for us, I would point out too, is that as a Canadian startup, our home turf was Canada, and it was going pretty well, but the reality is the United States is the market of first resort, so getting to the United States, and crossing that border actually was pretty real, because a lot of our references in Canada didn’t have as strong relationships with United States and crossing that border actually was pretty real, because a lot of our references in Canada didn’t have as strong relationships with United States institutions.
So actually, we kind of started the business twice. We started it once in Canada, and we started it again in the United States. Mind you, we had a little bit of capital behind us, because we had had early profit.
And I should mention, too, we bootstrapped our business, so we didn’t get any funding or anything. So we were funding our marketing efforts through profit. But getting that jump and getting those American customers was a huge deal for us.
And then once we had that going, and I remember, it was the University of Florida, and we effectively bought that deal. We gave them an unbelievable deal, replacing an existing vendor there. Believe it or not, there were competitors in those early days too.
And we replaced that vendor there, and we’re kind of on our way expanding into the US market with a referenceable client that was also super thrilled with the product we had delivered and the way we had implemented it.
Yeah, I would just add that we had a pretty revolutionary way to figure out what our customers wanted from a features perspective and stuff. We asked them.
Yeah, wow. Look at this guy.
No, seriously. Yeah, we would do that.
You got out of your chair or you got on the phone.
It sounds silly, but our initial customer, our first Canadian client, I sat with them for weeks talking to them about what they needed and we iterated over and over and over again and it was hell. I bet you a lot of other people would have given up throughout that process and said this isn’t worth it, especially with what we were charging our initial customer. They got the sweetheart deal, so they weren’t paying very much, but we pushed through it and we were able to build out a really good product.
Then like Dave said, when we went to the US market, it was the same thing over again. That initial US client pushed us really hard on a bunch of features that we built out, but then it was incredible because then those features were applicable basically to every other client like that, or university college in the US market. It made our life easier later.
There’s something about leaning in when you get resistance, especially with clients, that’s the real way to find out what’s actually important to them.
Yeah, I think that’s a famous Bill Gates saying, which I’ll probably butcher here, but basically he’s saying, yeah, the really best way to find out what’s not working, what to do about it is to talk to unhappy customers. So getting a no is a very important thing at any stage of business, but especially when you’re in the startup phase and the growing phase. So let’s talk a bit about this business model you have.
So it’s an app and you’re selling, what’s the business model attached to as a recurring revenue?
Yeah, so early on, we used to have a one-time fee as well as a recurring revenue, and we actually like an annual recurring fee. We actually scrapped the one-time fee and just increased the annual recurring instead, gave us more of what we wanted anyway, and it actually reduced some obstacles for that institutional level purchasing. It just made it easier for them to buy it as opposed to buying it in different circumstances.
And over time, the game plan was always, okay, so we introduced, we have this mobile app product that is really good. And actually, we would introduce a base level of features that was pretty aggressive in the market. They would actually get a lot for their initial fees because we wanted to make sure that we didn’t want them to pay per module because if they paid per module, we were worried that they were going to dumb down the app to something that wasn’t going to be valuable anyway to the end user because that’s sometimes what happens in sort of committee institutional decision making.
And so what we did instead is they paid the fee and they got a really, a really strong set of features. And we still had premium modules that could pay extra for later on to we would proliferate our product offering and have additional functionality. So in this space, there’s also something called emergency notification systems.
They send like text messages, emails, voice calls on certain campuses. You can lock computer screens, make a big horn go off, like all this stuff like happens in a pretty fast and automated way. And that’s another offering that we put out there as well as an additional set of functionality we could sell.
So we started to sell into our own base. And as we added new customers or two, we could start to displace upstream competitors in that emergency notification market, because they’d be absolutely thrilled with our mobile app that’s so great. And then they’d go, well, what else you got?
And then they would see, okay, hey, we got these other cool things. Oh, we don’t like our emergency notification system vendor anyway. They haven’t worked that hard for us.
They don’t care that much about us, whatever, you know, insert reason. And that gave us the opportunity to go in and sell more to those existing customers. So we could suddenly go from, you know, those sweetheart deals that we’re at, you know, let’s call it like three grand a year, you know, four grand a year to, you know, in some cases tripling or quadrupling the spend per customer.
So naturally our bottom line looks pretty awesome after we started doing that for a couple of years and started to sort of cash in on this effort that we’ve put into building a really strong and loyal base of customers.
That’s great. I would assume that referrals were a big part of that growth plan as well.
Yeah. You know, one thing I’ll say here too, that I didn’t get to say what I was thinking about, which was one of the best pieces of advice was kind of this off the cuff comment. We actually mentioned this in our book, Startup Different, the Myth Busting Blueprint for Your Million Dollar Business.
We actually had this meeting where we were meeting with a large, here in Ontario, they’re a large funded, government funded organization to help startups. And we kind of refer to them as the dream crushers because they’re pretty mean. But anyway, so we go in there and we get our dreams crushed.
Chris in particular got a bit of a throwdown in that experience. After that person who had crushed our dreams left, some of the other underlings were still on the call. And they said, kind of this little comment where, you know, you have to go where your customers want you to be.
You know, you have to provide them with an option to buy or better yet, they want to be sold to in a certain way. And you have to be there when they want to do it. And it sounds silly, but you get kind of stuck in this rut of doing the same thing over and over, even if you’ve had like a little bit of traction, you know, say like a million dollars or something, an annual recurring revenue.
And so it’s hard to shift gears. But one of the things we started doing after that was evaluating, OK, like, how are we meeting the customer in the market? And we learned something kind of unfortunate, which was we had to do the stuff our customers wanted, but that we hated.
So two really easy examples here. Going to trade shows. And I don’t mean like going to one or two.
We went to like 45 trade shows in a year, you know, 50 plus in the next year, because we needed to be there. We needed to face time with customers. And then the second thing is responding to RFPs or the request for proposals, which is just like the bane of institutional purchase.
It’s you know, I was reading some data on it that it’s like 32 hours per RFP and over a hundred questions. And so you can imagine you’ve got a couple on the go. You’re talking, you know, many days of work to have a shot at a deal.
But we knew we needed to do that to get to the next level or to the next sort of wallet size for a lot of our customers. So it was kind of this little comment that we heard in a meeting where we were basically being crushed that actually led to a bit of a change in how we were doing things and fundamentally a lot more revenue and profit at the end of the day.
Let’s talk about building with the exit in mind. This is the premise of this show. This is the course that I’ve built.
How do we encourage entrepreneurs to build with the exit in mind? There’s so many MBA entrepreneurial curriculums that teach these startups that are looking for venture money to have an exit plan, right? We know that the people who crush our dreams are going to ask the question, you know, who are you intending to sell to, right?
They just picture it that way. But there’s a lot of entrepreneurs in the US and Canada, wherever they are, they are going about their days as if this is a job, right? And it’s not an asset.
So I really appreciate your story because you guys have now done this. You’ve written a book about it and you’re saying, hey, it’s possible to be different and have a mindset for this ultimate transition. Tell me how and when you two started to think about an exit process.
Chris, you should take this one.
Yeah, absolutely. So the first thing I would say is I think a lot of the things around an exit, like it was always kind of in the back of our minds. But I think we were really focused on just like we didn’t have any investors.
It was just Dave and I, we were profitable. We were making, we had a couple of years where we did dividends to ourselves that all of a sudden we joked that we were making pro-athlete salaries. Not like LeBron James pro-athlete salaries, but like really crappy pro-athlete salaries.
But we felt really good about it and we had had this real success and we were always driving towards that profitability and we got to that point where all of a sudden it just felt really easy. It felt like we were really on top of it. We had really, I’d say we had really clean contracts, like all of our revenue was recurring, which I know if you’re looking at an acquisition, recurring revenue is, all other revenue is basically ignored.
It’s all about the recurring revenue that’s in that business and we had driven ourselves there. We had really built out a really strong brand just because we had really loyal customers. So like around our support and the way that we were helping our customers, we had very loyal customers.
So all these things, we kind of, they were like good things to do to run a successful business and they were incredibly helpful when we actually went to that point and we were going to sell our business. And like I know, Dave, you may want to take over at this point because we didn’t really go out and shop our business. They actually came to us.
So why don’t you take it from there?
Yeah, like I think what I will say is a quick segue. One of the big things about Startup Different too, is that we were sort of like myth busting. And one of the big myths in this category was we felt like there was definitely a pressure to get the bankers and start chopping the business around and do that kind of thing.
But our experience was a bit different, because we had actually built this highly profitable business that didn’t have any complicated sort of like cap table or anything like that. It was just Chris and I on the cap table. And so for us, we actually found that many suitors came to us.
And at first, it started out as kind of like businesses that buy businesses. And we see these all the time. They exist in every industry.
They kind of gobble up parts of the industry. And they’re kind of work in a big game to just sort of, you know, extract significant profit at the end of the day. Then we started to actually hear, though, from strategics.
When we started to actually hear from our competitors, we knew them. We’d see the email address. And we’d be like, whoa, why are they emailing us about anything?
And it would end up being this kind of this conversation around, hey, are you interested in potentially selling your business? And this is sort of what happened to us. So we had a couple of different suitors at the same time.
And for what it’s worth, it wasn’t our first interaction with these businesses, we actually had a few, I’ll just like call it that with other competitors, not the people who ended up buying us or anything like that, or even the ones I was talking to, but there was some sketchy stuff in the market. Sometimes other companies do kind of like weird things. And so one years before, I had actually warned the company that ended up acquiring us.
I had actually warned them, I sent an email, by the way, competitor B over here is doing some kind of shady stuff in the market and they might be trying to basically con you a little bit, so heads up for that. And that was actually the first interaction we had with them. And when we went back and later, years later, we were acquired.
The CEO of that company, one of the first things he said to us, said, by the way, I want to thank you for that thing with competitor B when they tried that sneaky business. And it was kind of interesting. So we actually were inadvertently setting the table, but and building rapport.
But for us, we actually had just a couple of suitors and we kind of went through this evaluation process with them and kind of a cagey standoffish, we’re going to do a call once every three months. What are you up to? What are we up to?
Hey, thinking about this, you’re still thinking about being acquired. And for a long time for us, Chris, that wasn’t something we were actively that interested in.
Yeah, I will add one thing, though, Dave. We were actively stepping on toes. We were our reputation in the marketplace was we were that nice little app company.
OK, and then all of a sudden we started building mass notification systems and command and control systems. And we were we were then competing and winning a lot of deals. So we were stepping hard on some toes of some very big competitors.
One was a publicly traded company that was in a crazy acquisition phase. The one that actually acquired us was owned by a private equity firm, and they were in there like, you know, for three to four year wanted wanted like divest this investment at some point. So we happened to I don’t know if it was totally intentional.
It was like we were just trying to grow our business and figure out where we could find more revenue and more profit. But we were really stepping on toes and we were competing with these big giants. And I know myself, I’m never really worried about big companies like taking us over as a company or anything like that.
I’m more worried about the small guy that starts to beat us up in the marketplace because we’re getting lax and, you know, not taking it as seriously as we should be. So I think we were in that role. We were kind of the little dog, you know, kind of nipping at the heels of the big guys.
And that started to make them nervous.
And then they started to reach out to you. So you weren’t officially running a process with an investment banker or an M&A intermediary. And then you were testing the water, so to speak.
You’re building relationships. In some cases, you were that annoying little, you know, fly on the wall. But then you were getting to be bigger and bigger.
And they wanted to think strategically about how they might gobble up the market share that you were getting.
So we briefly looked at using a banker to go through an M&A process. But we already had two potential buyers. And we were already like everything was so clean.
Like our cap table had just Dave and I on it. Like it was it was very straightforward. So we just decided to go it alone, which is pretty.
I think that’s actually you could tell me, Laurie, but I think it’s actually pretty rare that companies do it the way we did it. Maybe it’s another different thing that we did.
But yeah, I mean, there’s a lot of people that say, oh, gosh, you know, now in retrospect, I wish I had some help. I think one thing, though, that I’ll point out that’s interesting, and I have brought this up in other episodes, is when we do try to canvass the market. And one of the things that sounded like it worked well for you is you were doing it over time.
So it wasn’t like you were running a process and you were building some trust and relationships with strategics, which sounds pretty, pretty cool. Flash forward in the story for me to the point where there’s an IOI on the table, you know, kind of like an offer term sheet, but not as formal as an LOI or they jumped into the LOI. What did the paperwork side look for you?
When did you get serious about selling and the dynamics of that between the two of you?
So I’ll tell you. So the conversation around maybe we should sell this thing actually happened when Chris and I were at our family cottage. Again, we’re brothers, the family cottage, and we’re sitting by the water.
And we were kind of talking about it. I was like, would you ever be able to sell it? He kind of turned to me and was like, yeah, definitely.
And I was like, whoa, what did that happen? And so we kind of had this more serious conversation about it all of a sudden. And this was actually during the pandemic.
And we had actually done a bit of a pivot during the pandemic. And we had gone from, you know, you can imagine having a product that’s mostly focused on the physical safety of people who are congregating together being not such a great product during a global pandemic where nobody can be in the same place. So we actually pivoted to some more health functions and all that kind of stuff.
Long story short, we had an unbelievable quarter, our best quarter of the company in 2021. And that was actually, and this might be interesting as well, we actually got two term sheets and this was the first one we got. And they’re both from the same company.
Okay, so the first one was, you know, actually it was a letter of intent, LOI. So we looked at it. It was a big number.
And Chris and I at this point were also pretty exhausted. We’ve been running the business for a long time. The pandemic was tough.
You know, a lot of, it was a lot, right? And so we looked at it though. And kind of when we looked though at the strings attached, you know, there was a tough earn out.
There were some big restrictions here and there that we weren’t super comfortable with. And it was all tied to, you know, some pretty material sales numbers. It was hard to know, like, were we going to be as potent as part of one of our major competitors, you know, as we were by ourselves.
Oh, and then the last curve ball there too, was I had my first child on the way.
And it was all around this time that everything was going to be promised.
And I was a little concerned about being able to meet these kind of daunting objectives. So we actually rejected it. We actually said no, it was a, and I’ll put it out there, it was a $20 million offer at the time.
And we pushed them hard. We got it to like 22 million because we, you know, it wasn’t, we thought we could do better. We thought we could get a better multiple.
And we said, you know what, we really want to do this, but just maybe later. And so we bet on ourselves. We had another unbelievable year through the pandemic, you know, jump forward to, I think December of what year are we, Chris?
December of 2021, I want to say. Does that sound right?
Yes. Yes.
And we got the, yeah. And then we got the, an updated LOI because we had sent them updated financials with how we had done and how our year went. And they doubled the offer and the offer doubled to 40 million dollars.
No earn out.
Well, earn out was three months, which is effectively nothing. They took a bunch of stuff, all these different requirements off the table. And we got to add some of the stuff that we really cared about.
And we had these three altruistic principles around our people, our technology, and our customers. And we wanted to make sure they were all well-served through the transition and acquisition. And so that was something that was also actually added to that LOI as kind of like, we’re going to work on this as part of the dreaded due diligence process.
But yeah, so we also knew they were planning on an exit or the private equity organization that owned them was looking at an exit, you know, within the next like year or two. So they actually cut us in on a little bit of equity in that because I think they wanted to keep us around so that due diligence on that next acquisition, we were there to talk very effectively about the AppArmor side of the business and that sort of stuff. So, that worked out extremely well for us, yeah.
How big was AppArmor at this point in revenue, ARR?
I think we were pretty close to 7 million in ARR at that point. And so it was a good multiple. When we did the math on it, we were like, okay, we can’t say no to this.
This is a really good multiple right now.
Multiple of revenue, I assume.
Yeah, yeah, that’s right.
Yeah, that’s amazing. A couple things I want to just to kind of go back and double click on in that story. So the one turning down the initial LOI because it wasn’t the right time for you.
I’m sure that was difficult, but a lot of respect for you guys to know what was important to you as sellers. And if you couldn’t just from a personal standpoint, you know, handle it, you weren’t ready. And a credit for them to come back to you and for it to work out what enabled the deal to double in that duration If you go back to the conversation we were having about pain points and understanding the pain points of your customer for product market fit, I kind of have this concept of M&A market fit, right?
“Your business was clearly solving a pain point for who bought you, otherwise they would buy someone else or they would build you themselves, which time, money, people picked two, right? So what was the big pain point that your business was solving for them, and what warranted that amazing second offer?
Two things. One is that, you know, I think for them they needed to see proof that we could maintain our double-digit growth. We had been named one of the 200 fastest growing companies in Canada in 2020, which is kind of funny.
It’s like the world’s smallest big screen TV, but it was something. And so, you know, we were in this really good position, but they wanted to see that we could keep that growth going. So I think they didn’t quite believe in us on the multiple perspective.
The other thing though, that was very important was that the company that was, so we were talking to the private equity group, but the company that specifically was buying us was of the kind of like a little one totem lower on the ladder there. They had missed their sales targets for two years effectively. And so I think that when the venture capital firm was considering, how are we going to package the big everybody together and offload this thing, they thought, okay, if we can bring in this other company, we add that to the, you know, to the, you know, obviously the revenue of the organization as a whole, that makes up for a couple of years of frankly missed targets.
And we’re back at a really good place to be able to package the entire thing. So I think those two things coming together for us definitely made it super, super viable. And let’s also add as well as that there, it wasn’t just that they were missing their targets is that some of their products, their growth was slowing on some of their stuff.
And I think that adding kind of like our growth “metrics was also going to make that a much prettier picture.
Yeah. I’m glad you brought up the growth potential side. And Chris, if you want to jump in on this one, one of the things that I see, and it’s a myth I want to bust out there is that companies don’t sell when their growth potential is at the peak because they want to capitalize on that for themselves.
And I think that’s a miss, right? Because then what happens if we mistime it and now we’re on the other side of the hill and we’re headed into Death Valley? I’ve heard those stories.
Sounds like you guys demonstrated the growth and you sold on the upside, right? You were selling when the growth potential could still be harvested by the buyer. Can you talk about that?
Yeah, I can talk briefly about that because we were definitely on that upswing. But what was interesting is that when we got acquired, I don’t know the exact number, Dave, was it about 30 salespeople that Rave had in their organization? And so you think about then injecting our product into a sales department with 30 salespeople when we had five or six salespeople.
So it was just like that curve just went skyrocketed because we were selling more than ever. So we knew that we were on the upswing, but we knew that it was good for Rave because they were then going to be able to just to take our product and go to all their existing clients and upsell them that product. So it was incredibly effective.
Actually, Dave, you should talk about this because it’s more of a sales and marketing side of the business thing.
I mean, just really quickly, I mean, it was a product that they could immediately turn around and talk to all their customers about because we actually also had some mutual customers, but they could talk to their existing customers as an immediate upsell at like 10 to 15 K a pop, and Rave had thousands of customers. Rave Mobile Safety was the company that acquired us, just if we keep saying Rave over and over, that’s what we’re talking about. There was an immediate tool for them, and it was also something for if they had sales opportunities that had died or that had gone very cold, this was a piece of news that could turn around, and we knew how to really quickly deploy this thing.
It was a valuable tool in their toolkit for as salespeople to go out and get things moving, and it became a very important part. In the first year after acquisition, we demolished all of our sales objectives, so we did actually hit all of our targets, and my job was in sales enablement, which was getting everybody to sell all the stuff and be one big happy family, and it worked out because there was actually a lot of synergy between the two companies.
That’s awesome. So let’s talk about what you did in the transition. You mentioned you were part of the organization for a period of time, and then both of you have since transitioned out.
That can be hard, right? You’re finally saying goodbye, or it can be easy and you’re saying goodbye because you’re ready. That readiness and that desire to do something different.“You guys have done something different. Tell me about that.
Yeah, I’ll start this, Chris, and then feel free to slam dunk it. There’s a book I really like called Built to Sell by John Warelo.
People think, I’m going to build my business to sell, as in they’re targeting selling from day one. What that book is actually about, though, is about building structures and systems so that the business can function without you. That way, when you do sell, you can just basically throw in the keys and walk out the front door.
I think that our objective, we got somewhere in the middle. What we were trying to do during the transition was, how can we make it so that this business could easily thrive without us? I knew that I had a number of different responsibilities, so handing those off right away, HR to sales chief revenue officer, RFP guy, marketing dude, handing all these things off to the different people was hugely important.
Then building a structure so that the things that I did on a daily basis could easily be repeated by other people or be automated became my ongoing never ending, well, not never ending, but my daily exercise. And Chris, I know you had a similar experience as well.
Yeah, big time integration, lots of code being written to kind of bring the two products together, reduce friction for clients that were using both platforms. So that went really well. Definitely merging in our development team with Rave’s development team was a really big deal as well.
So yeah, it was a lot of integration type work. But with the view of Dave and I weren’t going to be there forever. So that went quite well.
I think we worked really hard when we owned the business, but we really left it on the field through that integration process. We didn’t want, we wanted to be really above board that there was no question that Dave and Chris went to the mat. I’m sure there are stories of founders who get acquired and then just start mailing it in during the integration process once they’ve got their check and we definitely didn’t want to be like them.
So yeah, so it went, it went extremely well.
So the math on the doubling the offer, that put the offer in the 40 millions?
That’s right. Yeah, absolutely.
That’s incredible. Good for you guys. That’s an amazing story.
Thank you for kind of the rewind there and tell me about the book that you’ve written. It’s out in the world. It’s so exciting.
I know you have a podcast. You two continue to work together and continue to go to the cottage, and you continue to be brothers, and you haven’t killed each other yet, which is amazing. You’re absolutely a wonderful team, I can tell.
Tell me about how you’ve been leveraging your experience to help other entrepreneurs.
Yeah. So I love business books. I just mentioned one that I really like.
And I think throughout a lot of my early days as a founder, I was just absorbing so much information, particularly when the business was a side hustle. I had actually a very long commute. And so I was reading probably a new business book, I don’t know, every, definitely every week, maybe less depending on how motivated I was to finish it.
And it was really kind of setting me up and to have a successful business. So what I wanted to do and Chris wanted to do as well was author something that we think could help entrepreneurs who are starting out their businesses and try to avoid a lot of the mistakes that we made. And then it also tells the story of our business as well.
How we went from, you know, like literally like the idea generation, which, you know, of course, started with Chris and I drinking in a bar one day to at the very end, you know, the the transition out of the business. So it’s actually a chronological take of the entire story of our company. And all along, we are just squashing myths.
In the book, there’s over 33 different myths that we have crushed. And that and it’s not just like our take, it’s like data driven. Now, these are actually myths and some of them we even bought into at certain times.
So for the book, you know, it’s really meant to sort of pay forward to new entrepreneurs and current entrepreneurs and give them the advice that I wish I had had, you know, 10 years ago.
Yeah. One thing I would put out there as well is that I’ve read a lot of business books as well. I’m a business book junkie.
One thing that sometimes I don’t like about business books is it’s like one little idea and it gets drawn out for like 200 to 250 pages. This book is a fast moving book with a lot of information that you’re going to be able to take away and use as you’re building your business right away. So it’s kind of like that overview of how to build a successful business without being like super drawn out.
And it’s super funny. You’ll laugh at times. Definitely check out the footnotes as you’re reading the book.
It’s a lot of fun
So if you’re an entrepreneur, walk, run, click, whatever you’re going to do to get the book and it’s called?
Startup Different, The Myth-Busting Blueprint for Your Million Dollar Business.
Awesome. Awesome. Guys, as we round down today’s conversation, which again, I really appreciate both of you being here with me, what’s the drop the mic?
You’ve got three takeaways or two each, whatever you want to do, make it even, Steven. What are the things you want to leave our audience with today?
I think the first thing I’d say is that starting a business is a really intense psychological challenge. As you go from zero to hero, it’s extremely difficult. And I think one of the things that you want to think about, even if you’re considering, I want to build this business because I want to be acquired someday or because I want to build a big empire or because of whatever, is that you’re going to have this never ending obsession over credibility.
You want to be taken seriously, you want to be respected and frankly you want to be important. And that’s hard to do, especially in the early days, that’s going to weigh you down. But then it’s going to change to over time.
At other times, I actually think one of the biggest challenges for entrepreneurs too is not losing your mind. Sounds kind of crazy. Luckily, I had my brother to keep me very much in check the whole time.
We used to have this line in the business, Chris would say, don’t start a business with your brother as a kind of a joke. I always turn around and say, don’t start a business with Chris. I think success, though, is kind of sneaky.
It can make you into a really different person, which ironically can actually maybe lead to a more negative outcome for your business. One of those things is that a lot of the time, there’s a focus on the extroverted or the extrospective stuff. But I think there should be, as an entrepreneur, a big focus on the introspective, understanding yourself and understanding your motivations.
Because ultimately at the end of the day, that was the thing that got us a really, really good outcome in our acquisition.
I just add one thing. I’d say one thing that we really had a lot of fun at work. And I think that’s because we really celebrated the successes, like every milestone that we had.
I remember we got 100 clients and then all the entire office, we dropped everything we were doing. Cause we had said we were going to do this, but we dropped everything we were doing at that moment. It was mid-afternoon and we walked down two blocks to this bar that was like a ping pong-themed bar.
And we just played ping pong because we said, when we hit 100 clients, we’re going to get up immediately and walk out the door and do that. So I would look for opportunity, like starting a business, like you’re running the show, you can make your culture whatever you want it to be. So find that opportunity to lean in on fun and really enjoy going to work.
I miss it so much. Obviously, Dave and I are going to start another business at some point. Don’t have it figured out what that’s going to be.
But we will definitely be doing it again because we just had so much fun. It was a great way to spend our time rather than going to a job that you may not be super interested in.
No, absolutely.
I get that.
And you probably celebrated a little bit. You had some money in your jeans, as John Worla likes to say. I’m a big fan of his show.
He’s been on my show and I’m a certified value builder advisor. So I appreciate that you guys brought up Build to Sell. So tell me, because he always asks the question.
I don’t know if you guys have been on the Build to Sell radio, but did you buy a trophy? Did each of you buy a trophy? Something to commemorate the acquisition?
You know what’s interesting is we were actually given a trophy.
A literal trophy? Because it wasn’t beautiful.
It’s nice.
I mean, so it’s kind of funny. It’s one of those Canadian American things. But what was the quote on it?
Chris, this is going to kill me.
Oh, it’s Paul Revere, right?
Yeah.
Yeah. What if I see you do a fight?
Yeah. Something like that.
But it’s kind of funny. This is bad because being Canadian, we don’t know that quote. You probably know it.
What did Paul Revere say? The British are coming or something like that. But then you had this other quote.
You’re trying to warn the people in Boston.
Yeah.
I mean, we’re the British.
You are. Yeah. That’s interesting.
Okay. So let me re-ask the question then. Not the trophy, but did you buy something for yourselves as a reward?
As a congrats to me.
Yeah. One of the first things I did was a few weeks later, I took my wife and daughter and we went to Europe for six weeks. And we did lots of exploring.
My daughter was a year and a half at the time. So it was kind of like a big lift. You might be like, that doesn’t actually sound very relaxing or nice, but it was actually amazing.
We saw some pretty amazing things and spent tons of time together. And it was kind of like foreshadowing my life to come, which is where I get to spend so much more time with them. And it’s really, really meaningful to me that I have that opportunity.
So that’s my gift.
That’s amazing. Chris, what about you?
I’m really into water sports. I love windsurfing, things like that. So I bought a electric surfboard.
I don’t know if you’ve ever seen these things, but it comes out of the water and does all these wild things on the water. So yeah, I bought myself a surfboard, I guess, is the best way to describe it.
I love it. I love it. Guys, thank you so much for being here.
I don’t know if you each have a favorite quote or something that you can share from an inspirational standpoint. I do tend to ask my guests if they have something just to wrap it up of something that inspired you as an entrepreneur.
Can I go first, Dave?
Yeah.
Cause I love these. When you’re going through hell, keep going. Who said that, Dave?
Do you remember Winston Churchill? Chris used to claim this was him.
No, it wasn’t Chris. It was Sir Winston. Okay.
Sir Winston. We live by that because when we had tough times, just keep your head down and keep getting through it. That was driving force for us.
Great advice for an entrepreneur. What about for you, Dave?
I don’t know if I have one. That’s really good.
We’ll put Chris’s. No, we’ll put it in the bag. That’s great.
Guys, if people want to learn more about the book or your show, what’s a good way to get in touch?
Obviously, you can find us on social at Startup Different. You can also go to our website, startupdifferent.com. Of course, if you’re just looking for the book or the podcast, just Google search Startup Different, you will find us.
We are out there on your favorite podcast platform and also on all the major online retailers.
Amazing. Guys, thanks so much for being with us today on the show. To our listeners, thank you for being here.
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